Financial Advisor question

[Rich LeGrand]

Hello,
We are using a fee-based financial planner and she increased her fees
without telling us. I'm wondering that besides being a questionable
practice, are there any SEC or similar requirements for disclosing
this information?

Thanks,
RAL

[BMS]

Did she give you her ADV Part 2?

What is in her fee agreement?

Who does she work for?


"Rich LeGrand" > wrote in message
om...
> Hello,
> We are using a fee-based financial planner and she increased her fees
> without telling us. I'm wondering that besides being a questionable
> practice, are there any SEC or similar requirements for disclosing
> this information?
>
> Thanks,
> RAL
>

[Tad Borek]

Rich LeGrand wrote:
> Hello,
> We are using a fee-based financial planner and she increased her fees
> without telling us. I'm wondering that besides being a questionable
> practice, are there any SEC or similar requirements for disclosing
> this information?

Rich-
Fee advisors (ie registered investment advisers and adviser reps) are
required to provide you complete information about fees, for a number of
reasons, but especially under what's called the "brochure rule." We
usually do it by giving a copy of the filing of a regulatory document
called "Form ADV Part II." Technically it's OK to provide that identical
information within another document, but it's usually easier to provide
the filing itself. Full disclosure of fees is required, though.

What were the specifics? I can think of plenty of scenarios where fees
go up without any new disclosure being required. The obvious one being
when you're paying an asset-based percentage fee, and the assets go up
(or down, perhaps - to the point where it triggers a minimum fee). Or
some new service is provided that's still governed by the original fee
agreement. You do have a written fee agreement, yes? Is the billing
being done in accordance with that?

Another option: billing error - it happens!

-Tad
(fee-only advisor)

[Rich LeGrand]

We have a fee schedule that is a percentage of our managed securities.
The fee goes down as the balance increases. What's odd is that it is
clear that the _rate_ increased within the last year while our balance
also increased. (The fee went up as expected, but I'm concerned with
the rate.)

We meet with her next week to go over our account, but I wanted to get
the facts.

Thanks,
RAL

Tad Borek > wrote in message >...
> Rich LeGrand wrote:
> > Hello,
> > We are using a fee-based financial planner and she increased her fees
> > without telling us. I'm wondering that besides being a questionable
> > practice, are there any SEC or similar requirements for disclosing
> > this information?
>
> Rich-
> Fee advisors (ie registered investment advisers and adviser reps) are
> required to provide you complete information about fees, for a number of
> reasons, but especially under what's called the "brochure rule." We
> usually do it by giving a copy of the filing of a regulatory document
> called "Form ADV Part II." Technically it's OK to provide that identical
> information within another document, but it's usually easier to provide
> the filing itself. Full disclosure of fees is required, though.
>
> What were the specifics? I can think of plenty of scenarios where fees
> go up without any new disclosure being required. The obvious one being
> when you're paying an asset-based percentage fee, and the assets go up
> (or down, perhaps - to the point where it triggers a minimum fee). Or
> some new service is provided that's still governed by the original fee
> agreement. You do have a written fee agreement, yes? Is the billing
> being done in accordance with that?
>
> Another option: billing error - it happens!
>
> -Tad
> (fee-only advisor)


======================================= MODERATOR'S COMMENT:
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[Andy]

Rich LeGrand wrote:
> We have a fee schedule that is a percentage of our managed
securities.
> The fee goes down as the balance increases. What's odd is that it
is
> clear that the _rate_ increased within the last year while our
balance
> also increased. (The fee went up as expected, but I'm concerned
with
> the rate.)

Just applying the basic principles of contracts law, there can be no
change in the rates without your consent. That being said, I don't
know if there is some federal regulatory scheme which allows them to
jack up rates without client consent by filing some disclosure with the
feds.

I personally would politely tell the advisor that you never consented
to the rate increase, nor were you given advance notice of it so that
you could have taken your business elsewhere before the increase was
imposed, and so you would like the rate increase retroactively rolled
back. Regardless of regulatory technicalities, I think it is
unacceptable to have rate increases imposed without notice and an
opportunity to take your business somewhere else.

Thanks,

Andy