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Dec 8, 2006 5:37 pm

A few weeks ago one of my client's account was liquidated and prepared to be transferred to another firm.   I was surprised he was leaving me but it happens.   Anyway, I had a conversation with him and after our conversation he signed a rescision letter to keep the account with me.


Two days later my back office receives another request to ACAT and the account is liquidated.    My back office is awaiting word from me whether this cash should be transferred to the receiving firm.


What's stange is I see this client a few times a week as he comes into my branch quite often and he hasn't mentioned anything about being dissatisfied with my services.


I'm wondering if anything "shady" might be going on.


Any feedback appreciated.


scrim


Dec 8, 2006 7:09 pm

The account was liquidated???  You mean he has been sitting on cash??


I would be straight up with him and ask him why he is leaving especially since he changed his mind once. 


You might ask him if you have done something that has made him unhappy.  Maybe he is being promised investments that are unrealistic, or maybe the investments are something he doesn't think you can do for him.  Possibly he is moving from you to another firm because of pressures from family or friends.  Who knows until you ask.


If he is mad at you or disappointed with your service you will want to know so you can improve.


Also just in case it IS something shady like the requesting firm continuing to put in the transfer without his knowledge, you will want to speak to him as soon as you can.

Dec 11, 2006 12:19 pm

Why are you asking us???  Ask the client.


He probably thinks it is very strange you have not asked already.

Dec 11, 2006 2:12 pm

I have only been successful in stoping  a transfer twice and that was the same client who was mad I didnt call her enough. I have also had people sign the recission letter only to see it still leave shortly after. Remember, someone convinced them in the first place to leave and while you fought back, so did they. Many times they look over the account and find some flaw in it. Whe I left my previous company I had a broker say that my client had too many 30 year bonds and they were going to get hurt when rates went up. The bonds were the 25 dollar preferred stock we all do. You can say something negative about any account if you want to. I do not believe in doing that because karma will get you in the end. Other brokers have said that fees are too high on the fee based account, you have too many C shares, why did he not put you in A shares, you account underperformed the S&P (and it was a balance account). Some people will say anything to get the account.


Just ask him why he is leaving. If you want to drip on him later but my history is that if they want to come back, they will call you back

Dec 11, 2006 6:08 pm

I spoke to the client today.


He's transferring his assets to an annuity with another firm.


The new advisor didn't disclose clearly the costs or the tax implications of liquidating his investment.


If he didn't have enough respect to come to me first I'm really not very upset losing this one client.   Addition by subtraction.    His assets were .5% of my book.


Another lesson learned,


Scrim

Dec 11, 2006 7:58 pm

Scrim,


1) You have no clue as to what the new advisor disclosed or didn't disclose regardless of what your client told you.


2)From previous postings, it still obvious that you are not yet knowledgeable enough about annuities.  Regardless of what you are recommending to your client, it is important that you make sure that your client understands the pluses and minuses of annuities, MFs, and UITs.  I'm guessing that one of the reasons that your client switched was that you never took the time to tell him about the advantages (and disadvantages) of annuities.  Therefore, someone else probably just painted a one sided picture for your client.

Dec 11, 2006 8:53 pm
scrim67:

A few weeks ago one of my client's account was liquidated and prepared to be transferred to another firm.   I was surprised he was leaving me but it happens.   Anyway, I had a conversation with him and after our conversation he signed a rescision letter to keep the account with me.


Two days later my back office receives another request to ACAT and the account is liquidated.    My back office is awaiting word from me whether this cash should be transferred to the receiving firm.


What's stange is I see this client a few times a week as he comes into my branch quite often and he hasn't mentioned anything about being dissatisfied with my services.


I'm wondering if anything "shady" might be going on.


Any feedback appreciated.


scrim




What seems strange to me is that the guy's account was liquidated prior to the transfer.  I thought most people do transfers 'in kind.'

Dec 11, 2006 11:08 pm

...not if it's in funds and going into an annuity.

Dec 11, 2006 11:22 pm

ahh the annuity. the last of the large one time payout.


I have recently started doing a little in the annuity side because if we do not at least show it to clients, someone else will. I  over disclose the negatives and some people still want them. I do not like them and would never own one myself. I tell people this but they seem to buy them. There are so many bells and whisltes in these things and they change so often. I will say one thing, the insurance industry has WAY more lobbying power that the brokers. Elliot spitzer gave them a pass.

Dec 11, 2006 11:48 pm
mktsystms:
scrim67:

A few weeks ago one of my client's account was

liquidated and prepared to be transferred to another firm. I was

surprised he was leaving me but it happens. Anyway, I had a

conversation with him and after our conversation he signed a rescision

letter to keep the account with me.



Two days later my back office receives another request to ACAT

and the account is liquidated.    My back office is awaiting word from me

whether this cash should be transferred to the receiving firm.



What's stange is I see this client a few times a week as he comes into

my branch quite often and he hasn't mentioned anything about being

dissatisfied with my services.



I'm wondering if anything "shady" might be going on.



Any feedback appreciated.



scrim



What seems strange to me is that the guy's account was

liquidated prior to the transfer. I thought most people do transfers 'in

kind.'





I don't know if it's still the case, but the Edward Jones ACAT request form

had a check box for "Liqudiate and Transfer". We were 'encouraged' to

use it.

Dec 12, 2006 10:47 am

I liquidate and transfer if we are going to be doing something completely different with the investments. 


For example I have an incoming account that the client has expressed desire to buy individual stocks and not mutual funds.  We could liquidate the funds after they arrive, but why should I incurr the ticket charges twice. Once for liquidating and again for placing the trades.

Dec 12, 2006 12:32 pm

anonymous,


Points very well taken.   I guess I was a little frustrated when making that post and shouldn't assume what the other advisor said since I wasn't present.   That wasn't fair.


Perhaps I should talk more about annuities in my initial presentations and why they shouldn't be used.   My reason for doing this is mostly due to the KISS theory when trying to keep things relatively simple for my clients and prospective clients.


Bottom line in my mind is since losing accounts is not happening very frequently this is not a major concern at this point.


scrim


anonymous:

Scrim,


1) You have no clue as to what the new advisor disclosed or didn't disclose regardless of what your client told you.


2)From previous postings, it still obvious that you are not yet knowledgeable enough about annuities.  Regardless of what you are recommending to your client, it is important that you make sure that your client understands the pluses and minuses of annuities, MFs, and UITs.  I'm guessing that one of the reasons that your client switched was that you never took the time to tell him about the advantages (and disadvantages) of annuities.  Therefore, someone else probably just painted a one sided picture for your client.

Dec 12, 2006 12:52 pm

Perhaps I should talk more about annuities in my initial presentations and why they shouldn't be used.   My reason for doing this is mostly due to the KISS theory when trying to keep things relatively simple for my clients and prospective clients.


One of the first things I do when making a presentation to client's or prospects is to try to find out what is their level of investment experience.  You can keep it simple in explaining investments "in general" by using the pyramid model showing income/growth and income/agressive growth and showing that there are taxable/tax free/and tax deferred investments.....here is your opening to discuss annuities as a general concept and when they might be appropriate for your clients. 


I never discuss product at this level, just general concepts...sort of investments 101.  The entire presentation can only be about 5 minutes long or less.  For some people it is information overload and their eyes roll back in their heads, other people really get into it and want more details.  You can tell which is which and when to shut up by watching their body language.


At least if you have discussed the tax deferred concept, when your clients area approached by the annuity sharks, they will know that you are also familiar with these products and may decide to get a second opinion from you.

Dec 12, 2006 4:03 pm

Scrim,


You have to be careful with your anti-annuity bias.  There are definitely times that they make sense for clients.  They are neither "good" nor "bad".  They are either appropriate or inappropriate based upon the situation.  Many clients like the idea of having an underlying guarantee.  Many clients also love the idea of having income that is impossible to outlive.

Dec 12, 2006 4:23 pm

why they shouldn't be used


Why shouldn't they be used? I don't do very many, but they do have their uses.  As Anon says you need to keep an open mind.

Dec 12, 2006 7:57 pm

In a previous post, you indicated that the transferring client did not know about the negatives of an annuity. (I'm assuming it's a variable annuity.)


If you want to cause the transferring broker to get a headache, send the attachment below to your ex-client. It's a section describing VA's taken directly from the SEC website. If your competitor did his/her job explaining this to your client, nothing will happen. If they didn't fully explain the VA, then you may get the account back along with a very grateful client. 


http://www.sec.gov/investor/pubs/varannty.htm


I once lost $100,000 to a competitor, who was getting ready to screw my client on some leveraged bond funds. I did some research, sent it to my client, and a few weeks later, I got the money back. Seems my competitor failed to do their job properly explaining the investment to my client. (The other broker lost $5,000 in commish. I still laugh about that!)


 

Dec 13, 2006 12:19 pm
anonymous:

Scrim,


You have to be careful with your anti-annuity bias.  There are definitely times that they make sense for clients.  They are neither "good" nor "bad".  They are either appropriate or inappropriate based upon the situation.  Many clients like the idea of having an underlying guarantee.  Many clients also love the idea of having income that is impossible to outlive.



I try all the time in my own mind to make a case for annuities in an overall investment plan.  I just can't rationalize it to this point since the negatives way outweigh the positives in my professional opinion.  If I ever use annuties I will have a client take a very small portion of their nest egg and buy an immediate annuity.   


Perhaps this is retarding the growth of my business but my peace of mind is worth the price.


scrim

Dec 13, 2006 12:26 pm

You still haven't said why you think annuities are bad.


Why in the world and in this low interest rate environment would you ever use an immediate annuity?   I have used them in the past.  Just curious why you would.

Dec 13, 2006 12:29 pm

I agree Scrim that you should only use annuities where & when appropriate but somehow I just can't stop selling those damn VA's. Here we are in Dec. & they have made up 20-25% of my ytd production.


Seriously, I would have a couple of well respected VA wholesalers pay you a visit & have them roll play the presentation, feature, benefits, &  close of a VA to you. Then you do it to them, continue this process until you feel comfy.


Will it be worth it? Only you can answer that but you may find you're missing a huge opportunity to help your clients.

Dec 13, 2006 12:36 pm
babbling looney:

You still haven't said why you think annuities are bad.


Why in the world and in this low interest rate environment would you ever use an immediate annuity?   I have used them in the past.  Just curious why you would.



I would only use an immediate annuity to give them an income stream they cannot outlive.


Again, only use this in a very very small percentage of situations


scrim