Friday, February 25, 2011

Shady Dealing

There's kind of a sad story out of Florida this week, where a retired divorcee has decided she was taken to the cleaners by her broker at her local Wells Fargo branch - twice! The woman, Peggy Boyles, has filed for an arbitration hearing with FINRA, the Financial Industry Regulatory Authority, which is how these things have to be settled.

After getting a divorce settlement worth over $800,000 in 2007, Boyles decided to invest with what was then Wachovia, but her investments promptly lost about $300,000. The broker convinced Boyles to give him another shot, only to lose another $128,000 from her portfolio.

Now, any investment carries some risk with it, but the more you look at this story, the shadier it becomes. Boyles, as a 60-year-old retiree, should have been funneled into relatively safe investments, but the broker put her into such high-risk vehicles as Latin American mutual funds. Even more damningly, the broker filed paperwork listing Boyles' income as $60,000 per year - she was actually unemployed - and her assets as $1.2 million, even though all she had was her divorce settlement worth around $800,000.

The last part is very troubling. If your financial advisor isn't thoroughly familiar with your entire financial situation, it's time to find a new advisor.

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