In an effort to learn what everyday clients really think about their advisors, and what all advisors can learn from them, we talked to Walt Eldredge, 72, a semi-retired trainer for a major oil company living in Baton Rouge, La.
Back in the 90s, I worked with a New York City financial firm that was basically in the business of calling me up and telling me to buy something. He'd cold-called me one day, offered me some suggestions, so I decided he could make me some money. I didn’t do too bad. But in the post 9/11 confusion, we fell out of touch. Their office was in the Twin Towers and their business fell into total chaos, with most of their records lost. Also at that point, we were sending our kids to college and I didn’t have the cash to play with anymore.
So, I didn’t really do anything else until I was retiring in 2007. When you’re nearing retirement, you start receiving all sorts of dinner invitations from people who want to convince you to be your advisor. I got a lot of free meals. I had a sizeable amount of money from my retirement plan and also from an inheritance from my parents and I eventually decided to put my assets with two firms—eggs in basket … you know.
The first was a referral from my son, who had been in the financial advisory business for a while and he told me that there wasn’t a nickel’s worth of difference between most firms. What makes the difference is the integrity of the person you’re dealing with. And he recommended someone, telling me you’ll never find a guy with higher integrity than him.
The other was a place I learned about at a dinner. They talked about their quality control standards and how they evaluated their fund managers. A number of people from my old employer also came away very impressed. I started working with this one advisor and I thought he gave me good advice.
After a year and half, he recommended I buy some international CDs that had a lot of tax advantages and were getting a better percent than other CDs. Turned out, it was a Ponzi scheme. What happened was, in 2009, we got a letter from the authorities, someone appointed by the court to oversee the mess. The head of the firm disappeared with about 20 percent of my assets, though he did finally go to prison. It was a nightmare. But I was doing contract work for my company and still had half my assets with the other advisory firm. And I’d never taken any interest payments from the CD. I’d just let them accumulate. Otherwise, there would be a clawback and I’d have had to pay it back. Some people lost their homes.
Around the second half of 2009, I found a new guy, who’s part of a firm with about eight advisors. I went with him because a number of people from my company who were in the same boat recommended him. These are very smart, high-caliber people and if seven or eight of them all make the same suggestion, you can stop doing your homework. Also, the firm had been my mother’s advisor and the head of it had married an engineer from my company. So I knew a fair amount about the place to begin with. Because the FBI had frozen all my assets, I didn't meet with him until early 2010, when I got those assets back.
I now meet with both of my advisors quarterly. I’ve told each of them to use different strategies. The other guy, I’m not planning on pulling anything out of those investments for at least 10 years. Ideally, I’ll pass it on to my kids. He can take a very long-term view. The investments with the newer guy? I plan to make withdrawals from those accounts.