The Latest Antics from a Few Financial Professionals –To Watch Out For
Some financial advisors are working really hard. The head of UBS Wealth Management has publicly congratulated a financial advisor at UBS. What did the adviser do? He made his one millionth cold call. This guy started in 1998. 24 years he's been a stockbroker. Five days a week, 166 calls a day. That's 23 calls an hour, three phone calls every minute. They didn't congratulate him on how well he's serving his clients, only on how well he's harassing homeowners across the US.
Merrill Lynch, meanwhile, sold thousands of clients Class C mutual fund shares instead of cheaper shares, and FINRA has now levied a $15 million fine in restitution. Why would anybody be paying front end load mutual funds today? Why would any financial adviser or brokerage firm be selling them? The only reason is because of the fat commissions they earn by doing so. You should be dealing with no load funds, low cost ETFs from a fee-based financial advisor and not somebody selling you a commission based mutual fund that costs far more.
A radio listener told me about this one. I checked with some lawyers. They seem to think there might be something to this story. So I'm sharing it with you. There may be a scandal in the midst of being uncovered. Let's say you invest in a venture capital fund or a private equity fund. You don't write a check. You instead commit to investing over a period of time. And occasionally, as they find companies to invest in, they issue you a capital call. And that's when you send in the money you've promised to invest. They have a high fee schedule, too, a 22% annual fee plus 20% of the profits. Now, you only pay a fee when you've invested the money, that's at least when you buy these investments from your registered investment advisor.
But apparently there are now allegations that major brokerage firms are charging their clients the fee on the amount they've committed to invest, not the amount they actually did invest, which is a lot less. So if you promise to invest $100,000, but you've only actually invested $10,000, you ought to be charged on the $10,000. But these firms are apparently charging you on the entire $100,000 commitment. You should check with your firm to see if maybe that's happening to you. There may be class action lawsuits as this story progresses, and I'll keep you posted.
And finally, Germany has 1500 beer brewers. They're paying 400% more for electricity than a year ago. Barley prices are higher than ever. And the biggest crisis? There are no longer enough glass bottles to go around. We know there are supply chain issues globally, but this is too much.