3 Customer Stories

Several customers shared their stories of working with financial managers and brokers. Here are the ones that resonated the most.

"I currently have a financial advisor [who] advised me to sell Intuitive Surgical which cost $21 when I suggested I buy it in August 2009 (we all know what has happened with its stock price). He also ignored me when I suggested that I invest in Caterpillar, in February 2009, when it was trading in the $20.00 range. He has sold off [12 different stocks, and] when I suggested he purchase Celgene, he bought Celanese instead! All of this has happened in three years and has increased my total wealth by only $46,000.  

"Since then things have gotten so bad that I've tried to take a more active role in my financial planning, but I only know enough to be a potential hazard to my financial well-being. ... I love The Fool's Stock Advisor but I don't know how to analyze the stocks that David and Tom suggest and most of the core holdings are out of my price range.

"My advisor, if you can call him that, has encouraged me to buy bonds and mutual funds that I've never heard of and I am very skeptical of them. I don't even think bonds are a very good place for ANY investments at this time. When I first talked to him I said that single most important thing to me was that I have a 'sleep-at-night portfolio.' As you have been reading, I have anything but. He told me that he knew about taxes, but it was only after I learned that his fees were tax-deductible that I got the tax benefit for 2011. He is also holding a REIT in my taxable account instead of my Roth IRA. It is very difficult for me to get him to listen to me and I'm very frustrated.

"I also learned, from The Motley Fool, that the best kind of financial advice can be sought from a fee-based advisor. [My broker] charges me by the quarter. His fees for 2011 were $2,342. I am at a loss as to where find a financial advisor who is also a tax expert, as that, too, can make a difference in purchasing financial products. My biggest problem, on that front, is that most financial advisors that also handle taxes want a client with a minimum portfolio of at least $250,000, which I don't have. Just think of how much I might have now if [my broker] hadn't sold the securities that he did.

"When I first interviewed him (and didn't know then what I know now) he seemed so affable and concerned that I fell for his song and dance hook, line, and sinker. I won't let that happen again. But in the meantime, I have hit a wall because of my portfolio size and have no one who can recommend an advisor and tax expert who will accept my paltry $197,000 portfolio. Do you have any suggestions as to how I might go about finding a better advisor?"

"Our relationship with our financial advisor is cordial, but not personal, i.e., we don't socialize with him outside of functions that he hosts for his clients.

"I am quite confident that he is doing a good job of keeping abreast of changes that might affect our finances, that he thinks a lot about alternatives, and is conscientious about doing what he feels is best for his clients. He is not always as attentive to details as I'd like, but when I point out something that does not make sense to me, he either explains it or corrects it.

"I have not been surprised by the fees. Before engaging him to manage our portfolio, we paid him a fee to which we agreed up-front for some financial advice. He then proposed a contract for a fixed annual fee, based on the size of our portfolio, for managing our portfolio and doing our income taxes.

"Besides the fee he gets from us, our advisor probably receives some kickback from [the firm] he uses to hold the portfolio, but I don't know that.

"We had previously been with a financial advisor, also a fixed-fee advisor, who was a very competent technician, i.e., he could handle financial math and tools very well. When he retired, the firm we were with passed us on to an advisor who had been his assistant. We had no confidence in her and were considering moving our account when she passed away at an early age from cancer. Around that time our accountant set up a new financial management company with a partner. We do have a personal relationship with our accountant. We've socialized and have attended each other's children's weddings. Our accountant managed the tax portion and his partner the financial planning.

"Our financial planner's main strength is that he is the first advisor I've worked with whom I feel really understands finances better than I do and he has the passion to continually read about the latest and search for improved methods. He is not as sharp with the mathematical details as our previous advisor, but I keep him on track there as I am quite comfortable with the math. It has proved to be a good working relationship."

"I've been with the same broker for 12 years. He's a peach of a guy. I have a company we started a 401(k) for in 2002, and at that time, utilized another investment advisor that was a college buddy of a guy who was an employee. It worked out OK, but there's a day and night difference between the level of service. ... From what I know of friends of mine who have had similar experiences, got me to be a big fan of this guy because he does a little bit more than everybody else. His management philosophy is not so much buy-and-hold as it is watch the market, see what it's going to do, and try to predict and manage my money like it's his. To that end, he started a fund around five or six years ago that does just that. If you buy in at any level, when he makes a trade for himself, my stuff gets traded equally. I know he's watching my stuff like it's his because it's in the exact same fund.

"I have friends in the market who experienced results that were far less than what they market was generating. What makes a big difference here is in 2008 there was a pretty large correction in the year; I heard of people taking big losses. We didn't make a lot that year, but overall I had a 1% gain, whereas a lot of people that had the same stake in the market were experiencing 30 or 40% losses. I didn't have a big gain, but 1% is still better than a 30% loss.

"I took a call from [my broker] who said, 'Well, buddy, we're up for the year.' I said, 'How much are we up?' and he said, '1%.'

"I'm satisfied. It's a good program, not necessarily a buy-and-hold strategy but predict. He's got some program that he follows different market trends and there are 20 indicators that tell him buy or sell.

"I try to put money where I can and it's continued to grow. Something that's nice about this fellow is he's got accounts all over Colorado, Nevada, Arizona, and he makes it a point to see everybody. Everybody whose money he manages, he'll be with you physically once a quarter, give you your reports, go over where he thinks things are going. It's just nice to know that he's engaged.

"[My broker] recently changed brokerages, I don't know how that works but I know how I signed a bunch of paperwork, and there was a big difference in fees between the two agencies. They used to stack up when [my broker] was with the other firm. I understand that some fees you can't really get away with. I asked him last November why there were so many. I told him they seemed high to me. He said they seemed high to him, too, and he'd try to do better. 'I'll tell you about it in the spring,' and sure enough, when he was here last we switched over. It costs me a little less each year.

"I'm charged an annual fee and there is a quarterly fee for a different fund. One private placement that he found and brought to me: a Roth IRA. It's a great 20/20 plan that's a general fund with stocks traded with everyone who's in there. For his managing of my 401, Roth, and Traditional, it's a fee because while I could do it, I'd do far lesser job than he would. I don't understand that stuff, and I'd rather have someone I know and really trust to do it for me. And whatever that costs me each quarter is money well spent.

"I am pretty aware [of how my broker makes money]. As long as it seems to work in my favor, and watch what happens year over year, I don't question a lot except I know that [he] gets paid somehow based on these fees. But the specifics, I don't.

"I believe he's got my back. He knows that despite the fact that we're friends about 12 years, he knows it's a business relationship. And if it's not good for me, I have to find someone else. He understands that. He's very focused on making sure my interests are satisfied. Including networking with his other clients. I don't know that I see that with anyone else; to get a business lead for my day job through my financial advisors. I'm in the construction supply business and recently completed a transaction with the first client [my broker] ever had.

"It's good for me so far. I have a low threshold for pain."

"I work with a financial advisor or broker because..."
Do you work with a financial advisor or broker? Go it alone? Have a success or horror story? Please share it with us below.

Molly McCluskey doesn't own shares in any of the companies mentioned. Follow her on Twitter @MollyEMcCluskey. The Motley Fool owns shares of Intuitive Surgical. Motley Fool newsletter services have recommended buying shares of Intuitive Surgical. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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