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You Won 50 Million Playing PowerBall Decided to Become an Investor. Is Your Adviser Honest?

GiveFive's avatar - Lottery-026.jpg

Imagine you hit a $50 million jackpot and you've decided to become an investor.  Therefore you'll need to hire an investment adviser.  You're told the adviser you've just been introduced to is honest, but how can you be certain he or she truly is honest? 

The short answer is you cant be absolutely sure your newly found financial wizard is honest.  For the record, the vast majority of financial advisers are completely honest.  But then, some aren't.  Also, your new adviser might be honest these days, but has a very dubious past.  He/she could have declared bankruptcy, or was fined thousands of dollars for "churning" an investment account.  How would you know if they had previously been arrested for forgery, or ran a ponzi scheme?  The SEC has suspended financial advisers from the securities industry for six months or more for violating the law. Is your guy among those advisers that The SEC has suspended for doing something with their clients money that they should not have?   

Let's face it, your 50 million dollars represents a big, fat, juicy (not to mention tempting) target, and they're not going to tell you (or their employer if they work for an investment firm) about any illegal activities they might have engaged in.  Would you invest with an adviser that had legal or disciplinary issues?  I wouldn't.  G5

Stat$talker's avatar - animated sphere.gif
In response to GiveFive

No one knows that, right away in the potential business relationship between the 2 of you , except the Advisor for sure...

That's the purpose of vetting your Financial Team .. if they aren't certified or have unfavorable reports from The Better Business Bureau, SEC in their History files, then it'd probably be best not to hire them..

Business ventures don't operate solely on "trust"... specific clauses in the agreement between the 2 parties, should spell out remedial procedures, should either of the parties breach their agreed to obligations to the other..

If the Advisor fails to manage the client's funds in a profitable way, then the Advisor's administrative fees should be commensurately reflected...or fails to make known any previous SEC violations to the client..

If the Client fails to compensate the Advisor by the agreed to due time, then there should be fines or late payment fees imposed..

Only then, can the joint Business relationship be reciprocally enjoyed..!! Thumbs Up

 

-Stat$talker 

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Go with a big name firm that has billions to lose if they get caught with their hands in the cookie jar.

music*'s avatar - DiscoBallGlowing
In response to Stack47

I Agree! My big name firm is Charles Schwab. I will invest in Index Funds. Mostly Charles Schwab's Index Funds but Vanguard Funds may be attractive as well.

GiveFive's avatar - Lottery-026.jpg
In response to Stack47

I agree.  That said a big bank like J. P. Morgan Chase could have somebody working for them that has a shady past.  I'm sure they vet the people they hire pretty thoroughly but even somebody they vet could do something shaky.  I doubt J P Morgan would come out on the short end of the stick if one of their employees was arrested for securities fraud other than reputational damage.  G5

Lottomeister's avatar - white face.jpg

I'm putting 50 mil in a shoebox. Don't need to trust anyone. I've got all I need.

Stat$talker's avatar - animated sphere.gif
In response to Lottomeister

LOL That's gotta be one hellava "shoebox"..!!

1 small step for Lottomeister,... 1 GIANT footprint

for the Banking Industry...!! Crazy

hearsetrax's avatar - alien on_computer.jpg

nothing is 100% fool proof and even the most seasoned investment pros will have an off day,week or quarter

keep your investments simple and triple check your balance sheet every week 

Lottomeister's avatar - white face.jpg
In response to Stat$talker

Right on brother!Lurking

Ranett's avatar - NBie0qv

or you could;

 

Give adviser A -500k

Give adviser B -500k

Give adviser C-500k

 

and see who does the best job after a year.

 

I personally had no problems with Vanguard and do not work for them either.

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You just don't know until you personally find out if you made the right decision. I have heard it said " You can't buy an honest man, unless the price is right."

A sense of trust is sometimes hard to come by. People in positions of power have disappointed many. I can think of Falwell Jnr for one. We talking miscalculations.

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In response to GiveFive

I had a problem Merrill Lynch over some warrants I was given as part of a stock buyout. When I decided to sell them, a ML broker told me my 401 didn't allow me to own warrants. The problem was really with the broker I spoke with and took almost a year for my lawyer to get it straightened out.

Never had any problems purchasing or selling regular stocks, bonds, or ML mutual funds, but with any large purchase, be careful.

music*'s avatar - DiscoBallGlowing
In response to Stack47

  Happy Birthday again.  I am sorry to learn of your legal headache. Did you take it up with Superiors of this ML broker? The so called chain of command.

Avatar
In response to music*

It happened a few years ago and the guy should have asked his supervisor but didn't. I called again before and after the warrants expired and was told because my account didn't allow me to have warrants, I was out of luck. I went to my lawyer and in less than a year I got a check for almost double what warrants were worth the day I tried to sell them. And they were ordered to pay all my legal costs too.

Don't know if it applies to all 401k accounts but mine prohibited trading stock options and warrants. The first broker wrongly assumed I wanted trade warrants when I just wanted to sell the warrants I was given. The second broker said the warrants were useless after they expired which wasn't true. My guess if my lawyer hadn't got on it quickly, that broker would taken the money. 

The moral of the story is even reputable financial firms make mistakes whether honest or dishonest. And why a cringe every time I read "the first thing I'll do is hire a financial adviser" especially when they never had one before. I'll hire one too, but only after doing my homework 

Unless I need one to give me directions to lottery headquarters. LOL

music*'s avatar - DiscoBallGlowing
In response to Stack47

I Agree! with your good advice about doing your homework before hiring a financial adviser. Or anybody else. 

 I made plenty of mistakes when I joined Lottery Post and will make some post win. Although I have a written plan and that should slow me down and order my actions. 

 Some may be low on cash and need to cash in asap. Some get so excited that they get wrapped up in the moment and throw caution into the wind. Some do not know better and that is where Lottery Post comes into to help. 

 LP's Search has so much past experiences recorded. Learn from other peoples mistakes and other's wisdom.

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