I know everyone is down, but I feel as though he is getting hosed.

2 months ago he sold his 2 package stores for a decent chunk of change. He had no mortgage etc, so he gave $400k to a financial adviser.

Now, I don't know any of the details of what he is invested in, but he is down $30k in these past 2 months. I thought that was ridiculous.

In the opinion of the guys here who do this for a living... is he getting screwed here? Should he be saying something?

should he pull out now and cut his losses? Find a new advisor?

 

No offense pal but if you don't know what he invested in, what his investment objectives were, if the financial advisor had discretionary authority or not, or what risks he was taking and if he asked them, you have no bearings to suggest a 7.5% loss is getting "hosed" by the financial advisor.

If you were in an index fund over the past 2 months you could have lost about that much if luck wasn't on your side timing wise.

Now if he asked for conservative holdings and was down 75k, that might be worth investigating even with a lack of knowledge on other topics. The market is in executioner mode right now and the fact is the market is down 18% from its highs not that* long ago.

I'd say if you want to help your uncle or complain about his advisor ask him all the details about the above.
a) discretionary authority or not
b) investment objectives
c) investments
to start with.

 

My uncle has zero experience in the market and investing. Once selling his businesses A)he entrusted a financial advisor to invest for the long term, to retire at xx age. He is 47. b)Now, he did mention that he gets statements about what he is invested in and their returns, but doesn't pick or choose on his own. c) I don't know what he is invested in. We were just having a conversation and I thought a loss of 7.5% was a lot for 2 months.

Maybe my ignorance is showing in my post, but I was just looking for opinions from those that have experience.

 

You should not panic with a 7.5% loss in 2 months. Remember to always look at moves on a percentage basis in relation to a benchmark.

 

It sounds like the advisor doesn't have discretionary authority but it's still quite possible they agreed on some rather conservative mutual funds and those funds are down 7.5%. See if that's the case otherwise you are right, there is a chance the advisor is not doing his job well but I seriously doubt that. I have taken all the appropriate securities exams to be a financial advisor and it's extremely dangerous for an advisor to miss handle a client's funds. He can not only lose his job but also his right to work for a relatively light infraction.

 

[QUOTE=dusti,Aug 6 2008, 07:24 PM]I know everyone is down, but I feel as though he is getting hosed.

2 months ago he sold his 2 package stores for a decent chunk of change. He had no mortgage etc, so he gave $400k to a financial adviser.

Now, I don't know any of the details of what he is invested in, but he is down $30k in these past 2 months. I thought that was ridiculous.

In the opinion of the guys here who do this for a living... is he getting screwed here? Should he be saying something?

should he pull out now and cut his losses? Find a new advisor?

 

No offense to sahtt or any other professionals, but another consideration is did he give the money to a financial advisor who charges a % of the account balance in addition to the fees charged by the brokerage on buys/sells? Someone on a % has a real incentive to grow that account value. Someone strictly paid by number of transactions will (in my experience) be more inclined to trade more often.

 

I'll be talking to him later tonight and get more details.

 

I'm not sure what this is referring too? I would think with that kind of money, and his lack of experience it would make more sense to have an advisor invest for him rather than try it himself.

 

^^^ Ask your Uncle how much of that money lost was lost in fees and commissions paid to the advisor.

Andrew