Investment Advisor Woes

[broken_legs]

Guys I need some help here.


My mother has some money with an investment adviser and I think she is getting dicked around by this guy. Heres the story:

Mom is 60 years old. 5 Years from retirement.
Has literally no savings
Lots of equity in house
Low to medium income stream.

An investment adviser explains the never fail rule of 72 and how she can borrow money to invest. Without asking me or anyone else, my mom was convinced by this adviser to take out a substantial loan (for her) on her house.

So the adviser takes her large loan and puts it into US Small Cap, Agressive International Growth, China/INdia funds etc... Not exactly a conservative mix of mutual funds for someone 5 years from retirement.

Of course this was all in August 2008 one month before the reckoning. She lost a lot of 'value' in her portfolio. It was down 32 % within 3-4 months of her investing with this guy.

Miraculously the market had a 44% rally off the lows and my mom wanted to take some of her money out of the market and put it in cash in case things went back down... She can't afford to lose any of this money as shes retiring soon.

She calls the adviser and explains she wants to take 30% off the table. This was at 930 SnP btw...

He explains hes 'not in town' and she'll have to fill out all sorts of paperwork.

A week later when hes supposed to be 'in town' he's not returning her phone calls. She waits another week or two.... Stock market is selling off in the mean time.

She goes in to see him and he is adamant there is no way to get her funds into cash. That its a 'lot of paper work' and 'will take a long time', and that the market is 'going up' trying to convince her to leave her money in.

Mom is adamant she wants it out. Sets up a registered account at the bank to transfer the cash over.

Now the adviser says the only thing she can do is a transfer in kind, and she can't sell her funds. So she must write up paperwork and send it in the mail and it could take 30 days to transfer in kind... plus shes still stuck with these crap mutual funds.

My mom doesn't know much about investing and I think this guy is taking her for a ride, stalling to make things difficult so she keeps her money with him. She has explained to me that he's rude and defensive and basically just dismisses her when she tries to ask questions and get at her money.


So i guess what I'm asking here guys, is can he actually do this to my mom? I have mutual funds through TD and I buy and sell them with the click of a button. WTF is going on with this guy? I would call him myself but I am way outta the country right now.

Is there any reason why she can't just liquidate her funds to cash at the end of the next trading day?



Thanks

[Cos]

man good luck. This just goes to show you the maturing age of beyond.

Hope you guys pick the right path out of this, however it seems to me that things will increase over the next few months (6 - 18) so even though you could argue it now, it probably isn't worth it in the end.

This is just nonsensical knowledge not expert knowledge so take it with a grain of salt.

[Mark_Nguyen]

Originally posted by broken_legs
Guys I need some help here.


My mother has some money with an investment adviser and I think she is getting dicked around by this guy. Heres the story:

Mom is 60 years old. 5 Years from retirement.
Has literally no savings
Lots of equity in house
Low to medium income stream.

An investment adviser explains the never fail rule of 72 and how she can borrow money to invest. Without asking me or anyone else, my mom was convinced by this adviser to take out a substantial loan (for her) on her house.

So the adviser takes her large loan and puts it into US Small Cap, Agressive International Growth, China/INdia funds etc... Not exactly a conservative mix of mutual funds for someone 5 years from retirement.

Of course this was all in August 2008 one month before the reckoning. She lost a lot of 'value' in her portfolio. It was down 32 % within 3-4 months of her investing with this guy.

Miraculously the market had a 44% rally off the lows and my mom wanted to take some of her money out of the market and put it in cash in case things went back down... She can't afford to lose any of this money as shes retiring soon.

She calls the adviser and explains she wants to take 30% off the table. This was at 930 SnP btw...

He explains hes 'not in town' and she'll have to fill out all sorts of paperwork.

A week later when hes supposed to be 'in town' he's not returning her phone calls. She waits another week or two.... Stock market is selling off in the mean time.

She goes in to see him and he is adamant there is no way to get her funds into cash. That its a 'lot of paper work' and 'will take a long time', and that the market is 'going up' trying to convince her to leave her money in.

Mom is adamant she wants it out. Sets up a registered account at the bank to transfer the cash over.

Now the adviser says the only thing she can do is a transfer in kind, and she can't sell her funds. So she must write up paperwork and send it in the mail and it could take 30 days to transfer in kind... plus shes still stuck with these crap mutual funds.

My mom doesn't know much about investing and I think this guy is taking her for a ride, stalling to make things difficult so she keeps her money with him. She has explained to me that he's rude and defensive and basically just dismisses her when she tries to ask questions and get at her money.


So i guess what I'm asking here guys, is can he actually do this to my mom? I have mutual funds through TD and I buy and sell them with the click of a button. WTF is going on with this guy? I would call him myself but I am way outta the country right now.

Is there any reason why she can't just liquidate her funds to cash at the end of the next trading day?



Thanks

Chances are the account is setup as a client name account. Meaning no trades are able to be done unless approved by the client on a trade ticket detailing the sell. Another alternative path would be a nominee account where the investment adviser does not need signatures to buy/sell.

But the problem that your mom is currently facing is that if she sells now it will take 3 days to settle and who knows how long before her institution sends the money. And also most likely that the IA bought her DSC funds meaning they take time before the funds mature and you can sell them without penalty. (IA'a dont work for free, they get paid by the fund companies that they choose to invest with) So what happens is that if she holds the mutual funds for say 7 years then there wont be any fees to sell. As each year passes more and more units become mature and free to sell. The reason why you are able to buy/sell mutual funds through your trading account without any fees is most likely because you are purchasing a no load fund.


But if your mother doesnt trust the adviser its best to transfer to another institution and have them switch the funds. (IE:From small cap DSC fund to a LRG CAP CDN EQTY DSC fund) so it will always be a DSC version until the unit expires

Hopefully that helped

[Amysicle]

Just curious, where did you mom find this guy?

[s2k_boi]

As Mark mentioned there is different variables. DSC being one, GIF funds etc....

But if you really wanted to go towards the extreme you maybe able to file a complaint against the IA with the regulator as well.

[Rat Fink]

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[broken_legs]

Originally posted by Rat Fink
Man, it pisses me off hearing about this. There are so many good people who would do this asshat's job in a second. Why are there deadbeats like this who haven't been cut out the system like an unwanted tumor?

Personally, if I was an IA I would treat my small accounts and large accounts equal, and try to provide the best customer service I could. Some of these guys seem to forget the idea that word of mouth often brings in more clients (i.e., more money for them anyways) so why not spend the time on everyone. A small client could even bring in a large one through word of mouth, or a seemingly small client may then reveal that he/she has a much larger amount to invest with and was just "testing the waters" with you.

Geez....Is this guy one of those 50 dollar suit guys who will never make more than 35K/year because of his horrible business ethics or what??

I want to punch him in the face. My mom was only 3 years away from paying off her house, now she has taken on this loan which puts her another 2 years behind.

:guns:

My mom just gets frazzled by this kind of stuff. She's starting to give up and is accepting that her money is stuck.

i sent an email to the BCSC. I want to see what they say. I'm sure at the least that this guy never did the required investor profile with her before taking her money.


Originally posted by Amysicle
Just curious, where did you mom find this guy?

My aunt recommended him... Funny thing is that my mom had money with this guy for SIX YEARS and didn't make a single dime. For some reason my Aunt kept telling her to invest more so she put in good money after bad...

[s2k_boi]

Hey, your inbox was full.

But I really hope your mom didn't do something like this:
http://www.agf.com/static/en/products_services/1905.html

not saying that is a bad situation but not everyone can take that much risk.

But at the same time I am thinking they maybe using the smith manoeuvre theory as well.......

[Rat Fink]

.

[max_boost]

Dude, you should have been looking after your mama's investments! You would have did better via self direct. Anyway, hope everything works out for you.

[B4tMan]

Originally posted by Rat Fink
Why are there deadbeats like this who haven't been cut out the system like an unwanted tumor?
... because money is to be made when one exploits stupid ?

[broken_legs]

Originally posted by B4tMan

... because money is to be made when one exploits stupid ?

I hope you're not inferring something about my mom!

:guns:

[Masked Bandit]

Originally posted by B4tMan

... because money is to be made when one exploits stupid ?

I don't think "stupid" is the right term, uninformed / over-trusting is probably closer to the truth.

[urban.one]

http://www.iiroc.ca/English/Investors/MakingComplaint/Pages/default.aspx

Read the info in the three links on the lefthand side of that page.

The third link, the PDF, should help get you started.