Trapped in Complexity: How a Boutique Firm Turned Simple Finances into a Lifetime of Fees
My husband’s family has used a boutique firm of financial advisors for years, and honestly, they are probably the best of the best. Independent, fee-for-service—they are very good at what they do. However, I still have some massive issues with them.
Essentially, they have overcomplicated everyone’s finances to a point where the family is now reliant on them for everything. They could probably never extract themselves from their services even if they wanted to. I think this is their ultimate business model. My in-laws have a highly complex portfolio of 30-40 investments (shares, managed funds, etc.), and yet their fund grows less than my simple VAS/VGS portfolio. They pay these guys something insane like $30K per year in fees.
The same firm took on my sister as a client, despite her having extremely simple and minimal finances, charging her $5K per year for insurance and tax advice and complicating her super and other things to the point that now she can’t manage it by herself. I think they honestly should have told her she didn’t need a financial advisor.
Prior to learning about finances and “going it alone,” they had my husband involved in several managed funds that were charging him 1.5% per year and making around 5-6% before fees. Way worse than a simple ETF. I worked out that his money grew about half the amount it would have if we had just been using ETFs from the beginning. And yet, when we mentioned our change of plan, they still recommended we didn’t go with ETFs and stayed with the managed fund. It didn’t make sense.
Again, my theory is simply that they don’t charge commissions on these things, but by having them manage our money and invest into funds for us, they can charge us fees for service and keep things sufficiently complex so we need to keep using them year after year. I think it’s all a bit of a rort, really.
Related Horror Stories
"Safe investments"
Just filed my taxes and I’m looking more closely at my finances. I’m pretty good with the basics but feel completely out of my depth with investments.
In 2021 I started a Morgan Stanley investment account with the financial advisor who has been managing my parents’ money for many years.
I invested $67,000 in 2021 and let the advisor choose the stocks/bonds/funds/etc, telling them that I’m extremely risk adverse and I needed safe investments. On Jan 1, 2022, the value was $71,950. On Dec 31, 2022, the value was $58,587. In 2022, I paid $1,025 in trade commissions and $984 in service/advising fees. So basically I paid my advisor $2,000 for her to lose me $13,363 over the course of 2022.
Is this normal? Every time I ask my parents or advisor they tell me “the market is down for everyone.” But my parent love their advisor and thinks the sun shines out her butt and my advisor has a financial incentive to keep me.
Surrounded and Pressured
At one time, just after returning back from UK, I had a significant balance in my HDFC savings account. HDFC people started calling me stating that they will send a special advisor to help me get good returns - better than savings account; all free. So I invited them to meet me at my home (COVID times).
At the first instance two gentlemen came and started preaching about HDFC Life Sanchay Plus scheme. I was not interested but I did not wish to sound rude. So I told them that I will think about it and meanwhile they can send me prospectus, etc. The next week the two came back.
They first called and said that their senior, a lady, would also like to meet me to explain the plan, options, benefits, etc. They came with rather good looking lady. This is a typical ploy. There is a group of people about 3–4 who come and target you. One of them is a pretty girl/lady who will go on to explain how life is uncertain, how one must be ready for the future, how their scheme works the best, etc. This is a psychological ploy.
First you are surrounded and hounded. Then the pretty lady, without saying so, tell you how you are making a colossal mistake. They play on your fears. You don’t wish to look stupid in front of a pretty lady. So you cave in. Once again, I was not convinced. I said I didn’t need insurance plans or pension plans. I may be open to look at investment plans and retirement income plan. Again, they went (or tried to go) for the jagular. They said that this plan they were suggesting “guarantees me” income for any term that I chose - 10 years, 30 years, life. The amount is free of tax. At my death, my nominee/heir will get the full invested amount, etc. I told them - let me think.
Just realized how much we are paying for financial advisor
We are invested with a big name financial investment company but have a good relationship with our financial advisor. Until today I never thought about how much it cost. The rate is 1.35%. I always thought that was 1.35% of the profit but apparently it’s the entire balance. Our rate of return last year was -8%. Yes that is negative.
Well on top of this we were charged our fee of $3600. I have no idea what to do. My husband and I both have IRAs a few stocks, a CD, 2 529s for our kids. How do I get this money out and how can I invest this. I had luck with vanguard in the past when I was single but had some tax issues once we got married that is when we went to the financial advisor. Edit: so the -8% is actually April 2022-April 2023. My actual rate for jan 2022-dec31 2022 was -23.4% plus they still charged the 1.35% so in actuality in 2022 I was down 24.75%!!!!! I feel like such an idiot.
Share Your Story
Have you had a negative experience with a human financial advisor or other human “financial expert”? Share your story to help others avoid similar issues. Together, we can shed light on the importance of reliable, unbiased financial advice - its been a big motivator for us to build PortfolioPilot.
Global Predictions provides investment advice only through its internet-based application, PortfolioPilot, and only to individuals who are advisory clients of Global Predictions pursuant to written advisory Client Agreements ("Advisory Services"). The publicly available portions of the Platform (i.e., the sections of the Platform that are available to individuals who are not party to a Client Agreement - including globalpredictions.com and portions of portfoliopilot.com) are provided for educational purposes only and are not intended to provide legal, tax, or financial planning advice. To the extent that any of the content published on publicly available portions of the Platform may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Nothing on the publicly available portions of the Platform should be construed as a solicitation or offer, or recommendation, to buy or sell any security. All charts, figures, and graphs on the publicly available websites are for illustrative purposes only. Before investing, you should consider whether any investment, investment strategy, security, other asset, or related transaction is appropriate for you based on your personal investment objectives, financial circumstances, and risk tolerance. You are also encouraged to consult your legal, tax, or investment professional regarding your specific situation. Registration does not imply a certain level of skill or training. Investing involves risk. The value of your investment will fluctuate, and you may gain or lose money.
The contents of the Platform may contain forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates, and projections about the financial industry, the economy, or Global Predictions itself. Forward-looking statements are not guarantees of the underlying expected actions or future performance and future results may differ significantly from those anticipated by the forward-looking statements. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements.
Note: our use of the term AI refers to all artificial intelligence models used including large language models, proprietary economic models that incorporate regression or dynamic factors, and machine learning methods like supervised learning.
2. As of February 20. 2025
3. $30B Assets on Platform as of February 20. 2025. Aggregated across all plans (including the free plan). Assets on Platform represent the total value of connected and manually inputted accounts (including assets like real estate and private equity) and does not in any way represent Asset Under Management as Global Predictions does not manage any client funds.
8. Case studies presented are hypothetical scenarios and intended for illustrative purposes only. They do not represent an actual client, investment or experience, but rather are meant to provide an example of the intended investment process and methodology. An individual’s experience may vary based on his or her circumstances. There can be no assurance that the Firm will be able to achieve similar results in comparable situations. No portion of this case study is to be interpreted as a testimonial or endorsement of the Firm’s investment advisory services. The information contained herein should not be construed as personal investment advice.