Re: Financial Advisor question

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date Re: Financial Advisor question Rich LeGrand 03-11-2005  Re: Financial Advisor question Andy 03-11-2005
Posted by Rich LeGrand on March 11, 2005, 9:55 am We have a fee schedule that is a percentage of our managed securities. The fee goes down as the balance increases. What's odd is that it is clear that the _rate_ increased within the last year while our balance also increased. (The fee went up as expected, but I'm concerned with the rate.) We meet with her next week to go over our account, but I wanted to get the facts. Thanks, RAL > Rich LeGrand wrote: > > Hello, > > We are using a fee-based financial planner and she increased her fees > > without telling us. I'm wondering that besides being a questionable > > practice, are there any SEC or similar requirements for disclosing > > this information? > > Rich- > Fee advisors (ie registered investment advisers and adviser reps) are > required to provide you complete information about fees, for a number of > reasons, but especially under what's called the "brochure rule." We > usually do it by giving a copy of the filing of a regulatory document > called "Form ADV Part II." Technically it's OK to provide that identical > information within another document, but it's usually easier to provide > the filing itself. Full disclosure of fees is required, though. > > What were the specifics? I can think of plenty of scenarios where fees > go up without any new disclosure being required. The obvious one being > when you're paying an asset-based percentage fee, and the assets go up > (or down, perhaps - to the point where it triggers a minimum fee). Or > some new service is provided that's still governed by the original fee > agreement. You do have a written fee agreement, yes? Is the billing > being done in accordance with that? > > Another option: billing error - it happens! > > -Tad > (fee-only advisor) ======================================= MODERATOR'S COMMENT: Please trim the post to which you are responding. "Trim" means that except for a few lines to add context, the previous post is deleted. Posted by Andy on March 11, 2005, 4:21 pm Rich LeGrand wrote: > We have a fee schedule that is a percentage of our managed securities. > The fee goes down as the balance increases. What's odd is that it is > clear that the _rate_ increased within the last year while our balance > also increased. (The fee went up as expected, but I'm concerned with > the rate.) Just applying the basic principles of contracts law, there can be no change in the rates without your consent. That being said, I don't know if there is some federal regulatory scheme which allows them to jack up rates without client consent by filing some disclosure with the feds. I personally would politely tell the advisor that you never consented to the rate increase, nor were you given advance notice of it so that you could have taken your business elsewhere before the increase was imposed, and so you would like the rate increase retroactively rolled back. Regardless of regulatory technicalities, I think it is unacceptable to have rate increases imposed without notice and an opportunity to take your business somewhere else. Thanks, Andy Similar Threads Posted Becoming a Financial Advisor...How??? March 1, 2007, 5:00 am financial advisor May 19, 2007, 4:56 am Financial Advisor Liability September 13, 2008, 8:04 pm Pitfalls to avoid when chosing a financial advisor/planner April 9, 2007, 12:25 pm Good source to find, or recommendation of Fee-Only financial advisor in NJ/PA? March 15, 2005, 10:47 am So I got a financial planner now but one question...... October 6, 2006, 7:08 pm Financial Planner question June 25, 2009, 5:14 am What Kind of Advisor March 30, 2010, 2:48 pm Can anyone recommend a good advisor in Philadelphia/South NJ? October 27, 2006, 4:55 am Weiner's "Independent Advisor" for Vanguard Funds December 3, 2006, 12:23 pm