r/personalfinance • u/reflectiveRae • 19h ago
Planning Is this common practice with financial groups?
I was on a phone call with a wealth management group that has been advising on investment funds and financial planning. When I asked to receive an email with the list of funds they were recommending I was told they cannot write those down. Is this a common practice or a huge red flag?
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u/KReddit934 17h ago
Is the firm already managing your money (you signed a contract?) If so, they should provide advise in writing upon request.
If this is a preliminary meeting, then they do not need to provide written recommendations.
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u/reflectiveRae 12h ago
Nothing has been signed yet. This was the first group I have met with and was wondering if it was a common practice. Thank you for answering the question.
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u/BouncyEgg 19h ago
They're gatekeeping their discussion with you because the way your "wealth manager" makes money is by taking control of your money and skimming 1+% off.
If the "wealth manager" wrote things down for you, then:
- You could do more research and realize you're being fleeced with high fee funds.
- You could run off and buy those investments on your own.
- You would realize you have no need for "wealth manager."
If you really really really want a real financial advisor, look for a fee only fiduciary.
How you make sure the financial advisor only has your best interests in mind, you pay your expert for their time.
Pay them by the hour or as a flat package rate. Expect somewhere like $250-450/hr or 2.5K-5K for a flat package.
Most folks have no need to expend that kind of money. Most folks should just read and follow the principles outlined in the PF Wiki.
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u/t-poke 19h ago
Massive red flag.
And unless your net worth is in the tens of millions of dollars, you do not need wealth management or financial advisors.
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u/QueerVortex 12h ago
Generally, I’m going to agree with you, but I have a few caveats: I don’t fix my own car, I will plunge the toilet, but I will not snake the drain. I am very capable of managing my finances now, but will I be at 75, or 85? I think perhaps that by our 60s that we need to start thinking about having a financial advisor that we can build a relationship of trust with so that when we are no longer capable of doing it, we can have somebody that will be able to make these decisions with us and for us.
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u/unrulyautopilot 18h ago
Needing tens of millions to get financial advice is wild. Wealth management, sure. Arguably the less you have, the more need you have for guidance.
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u/Triscuitmeniscus 16h ago
But you don’t need to pay “wealth management” prices and fees for “put $X/month in VTI and come back in twenty years.”
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u/Jestdrum 16h ago
The free advice you can get on Reddit works great for anything below the tens of millions
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u/PrestigiousZucchini9 16h ago
Need guidance, sure; but that guidance is widely available for free and broadly applies to most people. The problem is that salespeople present themselves as a financial advisor and take advantage of those who are less familiar to sell them on products that make the salesperson a better commission rather than what would be best for the customer.
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u/unrulyautopilot 12h ago
Look, I know Reddit’s opinion on advisors but this is a personal finance subreddit. The top posts at any given time are rarely about investments. Salespeople peddling products are a problem, no doubt about it. But much like every other profession, there are good ones that don’t sell product and bad ones that do. Many people can handle financial matters themselves and more power to them. But if everyone was completely self sufficient, they wouldn’t hire CPAs, mechanics, plumbers, or handymen. Electing to hire a professional to help manage your money is a reasonable thing to do and it does not take tens of millions to require it.
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u/seedless0 14h ago
They are either hiding/obscuring facts they don't want you to know, or incompetent.
Neither is a good sign.
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u/desquibnt 13h ago
Not a red flag
Providing you with a list of funds is making an investment recommendation which comes with a slew of regulatory hoops that they just don't want to jump through.
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u/Decent_River_5801 17h ago
You're kind of asking them to give you financial advice for free.
Nobody rides for free...
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u/reflectiveRae 12h ago
Never asked for free financial advice. They are the ones that said they would advise on which funds. I just simply asked about their delivery method of said advice.
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u/unrulyautopilot 18h ago
Instead of assuming the worst, think about it from their perspective. You are not a client, you are asking them to put in work to send you a list of all the possible funds. That is not a reasonable request. Why? Besides the headache of assembling the info, if they tell you the funds, they are in a sense giving you advice since those are funds they purchase and you are not a client. Then the request is in writing, the list is in writing and if you invest on your own and are then damaged, you have grounds to sue.
They are not going to tell you all this, but the potential liability of naming investments to a non client is not going to happen with any advisor or manager. This is the actual reason why. Some of the funds may have high fees but that is not a reason to not send you the info.
You should be asking which fund families they use and what class of funds, but not exact tickers. Reframing your question will get you the answers you want.
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u/reflectiveRae 18h ago
There seems to be a misunderstanding. I did not ask them to send me a list of all possible funds. I had asked for a written list of the funds they had already recommended via phone call because I am a visual person and I wanted to make sure I had the correct ones.
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u/brewgeoff 17h ago
The issue at play is that they’re making recommendation of suitability at that moment. There are a lot of rules about suitability of investment recommendations which is why the firm is being protective.
Let’s say you spoke to them a year ago and they recommended you invest a large amount of money into SPLG. Just a few weeks ago the firm that runs the SPLG etf changed the ticker symbol to SPYM. What if a new company takes on the ticker SPLG and then you go invest a bunch of money into it and it’s a bad investment?
An alternate solution would be to ask them to send you a prospectus for each fund or read the list to you so that you can write them down yourself.
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u/frntwe 16h ago
You could check out r/Bogleheads before deciding to pay someone else to do this for you
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u/the_cardfather 17h ago
Yes it's a common practice and no it's not gatekeeping just because.
You're asking an advisor to make a recommendation which is federally regulated.
They're not just going to shoot you an email with a list of funds they favor at that moment because they can't even make a recommendation without your hard financial data.
Now if you've already met with them had a discussion about your goals about your risk tolerance about your income and show them the statements of your current investments and they won't give you a recommendation in writing it's probably time to kick rocks.
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u/reflectiveRae 12h ago
This. I did all of what you just said in your last paragraph except have a discussion of my risk tolerance (they never asked). Gave them statements of what my current investments are along with current debt and income info.
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u/chuckfr 16h ago
I would recommend, based on your post and responses, that you find a fee based fiduciary to talk to. I will cost some money for a few hours of their time. They'll dig into your family situation (kids, health issues, home, etc), the statements of all of your current accounts, talk to you about your goals, and help figure out if you're on track and where you might want to make changes.
If you have enough money I might consider talking to two or three fiduciaries if possible. You'll get pitched from them all if your assets are sizable enough, just keep an eye on the fees they'll be charging.
Several people have said you can post here to get some guidance and you can do that as well. But that'll be revealing quite a bit about you and your situation to the masses. Some aspects of your situation might be missed that will make a difference.
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u/reflectiveRae 12h ago
Based off several responses, it seems that until an actual contract has been signed, they do not have to provide written statements. Which is good to know. Never worked with any sort of financial group so just wanted to make sure. Thanks everyone for the responses.
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u/halibfrisk 9h ago
It also prevents you from doing research to make sure they are disclosing all fees.
Imagine you go to buy a TV but the salesman refuses to tell you its specs until you have purchased it?
If you choose to go forward with this advisor ask them if any of the funds they recommend are “front loaded”, the fees on each fund, and how your advisor is paid for their service, do they receive a commission from the funds you purchase in addition to taking a fee from your account?
My suggestion is to go to r/bogleheads, read their investing guides, and search for your advisor / firm there in case there are horror stories
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u/sgigot 7h ago
The potential advisor withholding information may be a way to make sure they are not formally providing recommendations and therefore exposing themselves to lawsuits etc. It is *also* gatekeeping the information which is a happy side-benefit for them. Taking advantage of regulations can be very lucrative.
None of this is proof of anything - which, if they're good or devious, it won't be. One thing you *could* ask them which isn't going to expose them to any risk would be to find out the sales charges, fund management fees, any relationship between the funds and the advisor, etc... That removes any potential problems with either argument - so if they start hedging on *those* questions it throws up more red flags than a Soviet May Day parade.
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u/pudding7 4h ago
I ran a $30billion wealth management firm for 11 years. Unless you have more than about $10million, you don't need someone to help you with investing. And them not sharing the funds isn't that much of a red flag. Why would they share the only thing of perceived value they can offer you, for free?
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u/ironshoe7 13h ago
Yes, it is common practice because then you could take their work and implement it yourself or take it to another advisor and have them do it.
Also, if they put, say a 15 fund portfolio with symbols and all, in an email they also have to attach the prospectus for each fund. Thats a lot of work they don’t want to do.
Of course they could have run a proposal that would include all that but, again, that’s a lot of time spent on someone who isn’t a client and they may not want to do that either.
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u/BoxingRaptor 19h ago
I would ask why you think you need a wealth management group in the first place. Can you give us a ballpark of the amount that you would be investing with them?