Last year during tax season I warned a few clients about concerns of what I was seeing in their financial portfolios.
In the distant past I worked for a couple of firms that wanted an anal CPA to handle the compliance for their advisors. So when I see things that concern me I warn my clients for these findings with some confidence.
One instance had a client doing a tremendous amount of trading between too many mutual fund companies. One of the reasons that financial advisors keep clients in one or two mutual fund families is to save the client money by hitting investment breakpoints. Fees charged for their initial investment in Class A funds.
Another concern that I have reported, is the amount of trading that is occurring within accounts. If you have a plan in place with and a reasonable asset allocation there should be no need to have a tremendous amount of trading occurring. I have yet to find an advisor that can accurately time the market. But advisors get compensated for every transaction that occurs. So make sure the trades are authorized and that they are in your best interest and not your advisors.
The final concern, which I am not always party to, is the year upon year returns that are earned. As part of the tax process I usually do not always see the year end statements. I only see the 1099’s B, Div and Int. But if the market closed the year up and you closed down, you need to be questioning as to why this occurred.
So last month I was meeting with a client and they have been listening, but were not ready to move until they lost money in their qualified plans for 2014. I am sorry that they waited as long as they did to investigate my findings. But I am glad that I was able to assist them in locating a problem and will be able to assist them in rectifying the problem.