An investment advisor at Raymond James was recommended to me. Has anyone here had any experience with this company, or know of others who have? I'm considering transferring my IRA portfolios to them -including our two fairly small Roth IRAs sitting in the Credit Union in cd's giving almost nothing, and my IRA at Scottrade (total amount fairly small percentage of our investment accounts).
We've had a few conversations. One of the investments he recommended in December 2011 was ProtectiveRewards II Variable Annuity from Protective Life Insurance Company. I've always been very suspicious of variable anythings, even more so of annuities.
Now that I've finally completed the majority of my Mom's trust administration, I'm hoping to have some time to be able to rejoin in participating in this wonderful Forum.
Thanks for any help with this.
Cathy
Comments
Nice to find you here again. Hoping that everything is a bit smoother now.
I can not offer anything regarding Raymond James; but this MFO link for a long thread may answer some questions about a VA.
http://www.mutualfundobserver.com/discuss/index.php?p=/discussion/2537/401-k-rollover/p1
Have you decided to not be an independent investor?
Take care of yourselves,
Catch
Take care- OJ
Most of what you're getting is an individual, not a company. How attentive that person is to your needs, how well you can work with him, how your ways of thinking mesh. Where the company comes in is in terms of resources - what they can offer (investment products), the quality of the proprietary research, the ease of execution. I figure that a good broker is good enough to have selected a firm that matches his or her style - the types of offerings, etc. When I interviewed real estate brokers, I asked them about the company they worked for - why they wanted to work there, what they liked, and what they saw as differentiators. That gave me insight into both the broker and the brokerage.
All that said, you can always turn to lots of surveys on how good (relatively speaking) the large full service firms are. Here are a few links:
http://www.ehow.com/info_8563669_highest-full-service-brokerage-firms.html (overview of other surveys; feels that Raymond James was noteworthy in many surveys but not overall in the top three)
http://www.smartmoney.com/invest/markets/2011-broker-survey-ranking-the-fullservice-contenders-1304555683356/ (SmartMoney survey mentioned in article above article; #1 in SmartMoney)
http://www.cbsnews.com/8301-505123_162-37743595/jd-powers-ranks-full-service-brokers/ (RJ came in above average).
My impression is that Raymond James is generally rated at least fairly well. But as I said, I think it depends more on the individual broker.
One other thing - people may respond that you shouldn't be paying so much for products, whether it's an annuity, a load fund, trading commissions, or whatever. That's the way the broker is getting paid for his help, his advice. That advice is something you want, else you wouldn't be seeking it out. It's only fair that the advisor get paid. Whether it's a fair price is a more nuanced question. It depends on the level of involvement (just a one time review vs. periodic checks vs. continuous monitoring and discretionary trading), complexity not only of portfolio but of investment objectives, size of the portfolio, tax issues, etc. Keep all that in mind when thinking about how the broker (or any broker you might work with) is compensated.
P.S. Regarding the VA - I never say never to anything, and believe that VAs have value for some people. But "some people" are few and far between. And if he's suggesting a VA for your IRAs, then he'd better be able to come up with a darn good reason. Because the number of people for whom an IRA inside a deferred VA makes sense is a very few of the already very few for whom a VA makes sense.
I've got your link on another tab and will check it out. I definitely want to remain my own investor for the majority of my assets, unless the market gets so crazy that trying to figure it out keeps me up at nights. So far, though, with all your help, I have been happy with my returns and overall portfolio. So I will keep and maintain the largest taxable account, but am now concerned about some of my bond funds going forward (like PRIIX, and my muni's if California goes further downhill).
I am considering the possibility of transferring my IRA's mainly because I don't want to have to add my Roth's to two separate new Scottrade accounts, making 4 accounts there, so thought it would be nice to have a company take over the 3, leaving me the main one that has enough investments for me to try and keep track of.
Re Raymond James. I found one link that sounded simply awful about this company. If it's not too much trouble, would you mind taking a quick look at these complaints? They all seem valid to me and, if they are, doesn't sound like the kind of company I want to get involved with.
http://www.stockbroker-fraud.com/lawyer-attorney-1222573.html
http://www.stockbroker-fraud.com/lawyer-attorney-1222573.html
The advisor is just a young kid (well, to me anyway), but was recommended as "someone who will bend over backwards to comply with client's goals and wishes, even at his detriment." He does seem sharp and knowledgeable, but it's hard to completely disregard his political views (appalling to me).
I would only be transferring about 25% of my total investments if I decide to do this, but it would be so nice to let them manage the 3 out of 4 smaller portfolios so I could concentrate completely on the largest one. I already don't fully understand all the funds I manage that I would like to at least understand all a lot better.
I don't mind paying the percentage fees... IF there is enough expertise and active management of my portfolios and they are able to do slightly better than the 75% portfolio I will continue to manage. I definitely do NOT want USB-type management that kept some investments for a century, and most others for decades, not only making my taxable gains on non-step-up accounts horrendous, but mainly by doing almost NO rebalancing over the last 100 years, letting losing funds drop 80% and having 85%+ equities for almost all retired beneficiaries. Still makes my blood boil, especially since they still have the largest Trust there which doesn't dissolve until 2021.
I know squat about Raymond James as a financial firm. I'd be willing to bet that they have a fair share of good and bad brokers alike. I know probably even less about annuities with the exception that most people have little use for one, that they are a place to shelter your money after you've exhausted all the other usual suspects, that rare indeed is the appropriate setting for one within an IRA, and that the seller is better served by the annuity than the buyer.
So really, I'm no help whatsoever. Re-read msf's comments and then read them again. Are you really looking for an 'investment advisor' or are you looking for a 'financial planner'? There's quite a difference and I'm not sure that any brokerage firms stock a whole lot of the latter.
I don't need a financial planner... I do our own "budget", and we are fortunate enough to not have to worry about current or future income (barring total market crash).
I wouldn't be surprised to find stuff like this (and more) about any large brokerage. Not that that excuses any of it. What I am suggesting is to compare RJ with any other brokerage, to see if one can do better. (One alternate approach would be to look at independent financial planners - not a recommendation, just an observation that there are alternatives, but you might have to expand your search to find them.)
As an editorial comment, the law firm you located sounds like a bunch of shills: "The firm’s website chronicles a truly boring 45 year-by-year history, including the name of the firm’s first client and its art show sponsorship. This litany is highlighted by ever increasing additions to and/or replacements of its headquarters. " Is that tone really necessary or professional? Here's a much more professional presentation by a different law firm (basically same info): http://www.dkrpa.com/Brokerage-Firms/Raymond-James-Financial-Inc.shtml
Regarding the wrap account fine, here's Investopedia's take: http://www.investopedia.com/articles/pf/05/042705.asp
It acknowledges the fine, but provides background and notes that "With advisory products, the advice provided by financial services professional is considered to be a material part of the process. With non-advisory products, the regulators view the advice as incidental. ... [This was problematic for] the traditional ... wrap account because it was classified as a non-advisory product, even though many advisors included ongoing advice as part of the package..."
That's consistent with RJ's defense: http://registeredrep.com/news/averitt-scolds-nasd/ ("It's not a price issue, it's a relationship issue.")
Wrap accounts were designed for at least two reasons: to reduce/eliminate the motivation to churn accounts (if commission-based), and to generate revenue. Nothing wrong with either, unless it goes too far, and to some extent at least, that's what NASD seems to have found.
The law firm pages note that RJ shut down its wrap account operation rather than comply with NASD rules. But was that petulance or prescience? The Investopedia article goes on to note that a couple of years later, NASD itself shut down all wrap accounts. (They were then reconstituted by firms as non-discretionary accounts.)
The selling of B shares where A shares would be cheaper is an industry disgrace, and has led to most mutual funds to stop offering B shares. This particular violation was one shared by many funds, see, e.g. http://www.finra.org/Newsroom/NewsReleases/2004/P117398 ("Fifteen Firms to Pay over $21.5M in Penalties to Settle SEC and NASD Charges"). And in case you're wondering about some of the firms not on that list, here's another: http://www.morganlewis.com/pubs/WhitePaper_2005EnforcementMatters.pdf
(Merrill Lynch fined $14M, Wells Fargo $3M, Linsco $2.4M; plus make restitution. Citigroup accepting censure and $20M civil fine for selling inappropriate B shares and other violations.)
My take is that, yes the violations are real, yes they're serious. All the more reason to make sure you understand what services you're buying, and what the costs are.
- ProtectiveRewards II prospectus (appears to be dated May 2011): http://google.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?ID=7762216&SessionID=g0fHHe9tsQ5lnl7
- Compensation schedule: http://www.sorrentopacific.com/mybd/marketing/index.php?option=com_docman&task=doc_download&gid=860&Itemid=
This shows a 7% commission, plus 0.25% trailing fees starting after seven years; for back-loaded shares, the net fees are similar, e.g. B shares gives 6% up front, and then 1/4% for years 2-7, for a total of 7.5%, after which the 0.25% trailing fees match A shares.
Okay, I will presume I have enough coffee in my body to be sensible this morning.
First, this is a link to the VA you mentioned. If you have not read through parts of this, once the page is open....do the "control and f key" on the pc to bring up the search/find window. Type in the word........fee........... Click find. You will find the base fees for the various functions of this VA.
http://google.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?ID=7762216&SessionID=g0fHHe9tsQ5lnl7
Second. I did read your link regarding the various machinations of the RJ company. I find any of this troubling, regardless of the company. Would be a good upfront question to one of their brokers, eh? Like: "What are your (RJ adviser) feelings about all of this?"
Third. You mentioned you are appalled by the young adviser's political leanings. His/her political views should find no place in a discussion with a potential client. Only if I knew a person very well, would such a discussion subject be involved.
Fourth. You mentioned consolidation of accts......credit union and Scottrade. If a married couple each has a Roth and Trad IRA, you'll still have a total of 4 different accts.; no matter where the accts. are held and this is the least number a couple would have. Now if the couple has more than one of each type of IRA with different vendors, then consolidation may be the way to go. But, in the end; each person will remain with one of each type, eh?
What caused you to consider a VA? Our house would have a VA on a long list of choices, but not for any death benefits or long term payout functions. All VA's are not the same; although likely 99% have the common thread as used by most insurance companies.
As Mark and msf noted, too; a VA may have a place, after all other avenues are exhausted. Some of this depends on one's current employment or being retired. Being the ability (income limitations) to contribute to an IRA and related.
In the money !!! If our house were to come upon a fairly large sum of money via inheritance or lottery or........ We would have to consider what to do with these monies. A few quick and dirty thoughts come to mind.
1. Trad. IRA's could be converted to Roth's
2. Split the monies into taxable and deferred tax accts.
--- the taxable could go to muni funds and/or the most efficient and viable funds available for dividend/long term captial gains taxation rates.
--- another choice could find a VA here, too. Current tax law would find these monies taxed as ordinary income upon withdrawal. The VA of choice today (without further in depth study) would be from Fidelity. Their plain jane VA is for deferring current taxation. No bells and whistles for future guaranteed payouts, no death benefit and no surrender period charges. One has access to 57 funds, most of which are Fidelity. One pays the normal expense ratio (same paid by other retail holders) of the fund, plus a .25% fee.
In the near future, our house will rollover accts from employment accts. (401k's and 403b's) into existing trad. IRA accts.
In the end, we each will hold a Roth and trad. IRA via Fidelity.
Your house surely has much different considerations via California and the tax rates there.
We currently do not have any investments in ongoing taxable accts.
As to the credit union IRA's you mentioned. This money surely is not earning much, eh? But, it is insured via NCUA, yes?; if this is a part of a consideration.
Past this, you may choose to consolidate the trad. and Roth IRA's to one vendor. As noted, we will remain with Fidelity, as we are most satisfied with their "paperwork", easy of use, very nice online acct. pages and functions and access to more investment areas than one could fit onto a list.
I suppose your choice(s) boil down with which vendor to remain with for your taxable and IRA accts.
But, I would not personally choose a VA of the type mentioned.
Lastly, as to muni bonds (potential problems), bonds in general and let us not forget equities, eh? Nothing much has changed. I will not dismiss that yields are very low and should have no place to go; but up. One may ask the same of equities in the current market. Do they have more room to move upward? I will attempt to note some of this in the Funds Boat, as my time this weekend adjusts. Although anything can happen over the weekend, I do suggest to note what direction Treasury issues take this Monday opening and through the day.
Okay, I must get to some chores.
Take care,
Catch
I checked out your link -wish I had known how to access this myself, but probably just felt I wouldn't understand most of the provisions anyway. Lots of "Fees, Expenses, Charges", etc., but much of it without having any figures/percentages next to those, so I still wouldn't know nearly enough to feel comfortable with this. I didn't choose having any annuity... this was just one part of a portfolio recommended by the advisor there. And, unless members here highly recommended variable annuities, in general (if can find better ones), I don't want to invest in anything I can't understand well.
Re the 4 accounts. I know I would still have 4 accounts, but thought if I transferred 3 of them to one place, I wouldn't have to be actively involved in the specific investment decisions of those 3 and could concentrate on the largest taxable account.
Re the politics of the advisor... I didn't ask, but it was right in the middle of the early campaign news and he mentioned that Trump would make a good president.
The end result for me after reading all the links is that I'm just not comfortable transferring any of our accounts to this Company. They, and the advisor, may be good but if I'm this dubious now, it can't be a start of a good relationship. I will most likely wait until the end of this summer to see if there is any good news about actual economic fixes, then transfer the 0.45% Roth cd's to Scottrade and, assuming another bad Spring, maybe get in at the lower end of the prices for the funds I invest in. There just seems to be no point in keeping Roth's at this ridiculous rate when the whole point is to not have to pay taxes on the gains.
P.S. I did wonder why it was law firms like the one I found that made such a strong, negative review of Raymond James. Guess they want clients who have had bad experiences there.
7% commission sounds huge, and am suspicious seeing so many fees and expenses listings. I just don't have the knowledge about these type of investments to understand what I am getting... and feel there are enough funds I have a reasonable understanding of to invest in instead.
Thanks again for all your input!
Cathy
According to Morningstar, Protective Rewards II has a 7-year, 7% declining deferred sales charge. Total annual expenses are 1.3%, on top of the underlying fund expenses. Did he disclose this information to you? You remember the Wizard of Oz? "Run, Toto, run!"
After reading comments here, and other reports, I politely told the advisor yesterday that we would not be investing with them. I think the VA was the kicker for me to pass on investing there. This was just something I followed up on based on a recommendation (and my hope to not have to manage more than one portfolio). But my gain goals are so low that I have easily been able to do better than match this advisor's recommended portfolio - and the old USB-managed conservative portfolio - without having to pay any advisor fees. If I thought the U.S. and world economy was even close to being stabilized, I would be fine with managing it all. But I keep waiting for the next collapse to come, so was hoping someone who watched the market much closer than I do could do better at rebalancing to the best investments enough before this happens so I would lose less there.
"If I only had a brain" much more knowledgeable and prescient about what's coming......
My Mom had an independent FA 5+ years ago before I transferred it out because his record for her returns were definitely sub-standard considering her age and risk requirements. So, even then, I could see no point in paying his fees for those results.
Hey, why use a middle-man at all?
Why not just open account(s) at Dodge & Cox? Invest in DODIX if your needs are fixed income.
Or, Vanguard. Invest in VWIAX, if your needs are conservative.
Or, open account with SEQUX, FPACX, WBMIX, or COBYX? If your needs are moderate.
From what I've seen, anybody that can post on MFO does not need to pay Edward Jones, Raymond James, etc. to invest their money with attendant fees.
Advisors, most anyway, are part of an endangered species. Seriously.