I am trying to help my mom get a better hold on her finances, and, in reviewing her brokerage accounts, I have uncovered some things that concern me. I would like some help in figuring out what is going on. Please share some advice about what questions to ask the broker, and even some wisdom about helping a parent who is not so financially sophisticated.
As background, my mom is 63, single, and makes about $50,000/year. As best I can tell, she has a mortgage of unknown size on a $300,000 house, and has about $200,000 under management at Morgan Stanley with a woman she "really likes." By watching how my mom was taken by a previous adviser, I learned when I was young that financial advisers are not to be trusted.
With my mom's permission, I plan on speaking with the adviser about the overall strategy. I will try to get a handle on the expenses, but I know that might be difficult given the abundance of complicated instruments wrapped in complicated instruments (convoluted annuities, etc.).
The most recent transactions I can see are the purchase of two individual corporate bonds for a total price of under $10,000. They are bonds in Qwest and Pitney Bowes, with S&P credit ratings of BBB- and BBB respectively. The statement lists a "processing fee" of $13.00, but I have a hard time believing that this is the total that Morgan Stanley and the broker made off this transaction.
So, is there any good reason to invest in an individual bond or two rather than a bond fund? Is this a red flag, or am I overreacting? What questions do I need to ask when a broker says that there is no commission on this stuff?
I am fairly certain that my two siblings and I will be supporting my mom in her retirement given the way she has managed things. However, I'm trying to delay that time as I'm not currently in a position to help much (I'm 26 with 2 years left of professional school).
I plan to speak with the "adviser" tomorrow, and any advice about how to handle things would be greatly appreciated.
Last edited by phdbound2010
on Sun Jun 30, 2013 6:34 pm, edited 1 time in total.