KSODAPOP - Help disabled investor sort out advisor mess

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KSODAPOP
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KSODAPOP - Help disabled investor sort out advisor mess

Post by KSODAPOP » Tue Mar 18, 2008 2:16 pm

Note from admin alex. I split the following off from a Depression looming? since it represents issues that are better addressed on this forum.
JW Nearly Retired wrote:
KSODAPOP wrote: I've lost over $8000 in the last six months from two tax free Franklin and Putnam muni's, both of which I was told by my advisor were perfectly safe to place my life savings into, I'm disabled with spine injuries and have to live off of social security and dividend income.

My advisor is sticking by Muni's as the safest bet out of any investment options.
If you are living on SS and dividend income and are highly agitated over paper losses of $8000, you sound like you have a pretty low income/tax bracket. Why are you in Muni's then? High expense ones at that, the ORNCX muni fund you mentioned has an ER =1.39%. Yikes!

If you want some investment advice I suggest you show us your investments in the usual format and let the smart folks here take a look. IMO they could help you do better at investing then you are doing now.
JW


Thats a very kind offer you make, I appreciate that very much.

I've been communicating with a gentleman by the name of Paul who has literally gone well out of his way to be helpful to me.

Forgive me, but I'm new to investing. Show investments in the usual format? How would I actually do that? I'll try here;

As I've written in other posts, I've had a very difficult time with my advisor from Webster Investments.

I'm 48y/o male, three children ages 10,16 & 19. Live on SS $1600 monthly with $425 additional for each child. Amounts are Net.

I have been told by others that I should have been in some annuities, maybe a couple quality munis, a money market, etc..., annuities were never discussed or offered by my advisor, nor my bank. My investor swore up and down for the past two years these funds cost me nothing, I only now find out I am paying one way or another.

My investment experience= NONE!

the ONLY options ever offered to me since 5/06 were muni's, FRFTX, ORNCX-(purchased 5/07 w/ $20k) and that Putnam tax free FD Class C fund (cusip pending), all three I only recently learned have some of the highest loads out there.

I was also repeatedly told these were some of the best funds on the market, were perfectly safe, I wasn't loosing.

Since my initial deposits/purchases in May '06 with $150k, I never felt comfortable. These were Medicare Set Aside funds I received from a spine injury settlement to be placed in safe interest bearing account, preferrably tax exempt, and a third to remain fluid.

He put $50k in a Treasury Cash Series (not much interest), $50K in FRFTX and $50K in the Putnam fund.

The cash series was linked to my medicare set aside checking to pay doctors/meds/therapy. At the time Webster was using Pershing Fin. Service.

I also opened 3 $10k 1yr CDs for my children, 1 $20k 1yr CD and $20K Money Market fund. I can't even begine to guess what the rates were paying then.

Three months into these, Webster gets rid of Pershing and goes with UVEST, now my accounts were not linked to my checking. When I needed funds, I had to wait 2,3,4 days for FedEx to show up, I was also now getting charged $12.50 to get my check. This went on for 8 months. My Investment web page also completely changed, before I could see exactly what what going on with my funds.

I began to notice losses, I was told not to worry, you know, all the "hang in there, there's no problem" lines sales people always tend to pitch.

Also in May 07, he talked me into taking my two youngest daughter's CD's and put them in two Alliance Bernstein Collage bound funds. As of last week, they were both down a thousand dollars. So, he took my 16year old's $10K college fund and put in a less volitile college fund.

My biggest toubles began when he talked me into just stop watching my funds every day and week, I was driving myself crazy. I was watching ORNCX nose diving, I got nothing but constant assurances, he was on top of it. So, I stopped watching them, in doing so, after the sixth month, this past January '08, I figured I'd take a peek, well, it was down over 15%.

I was livid, paniced, sold it, took the loss. I opened a Federated Capital Reserves fund. After finding all my funds down this past week, I took the lesser of two evils, either watch my funds continue to loose more and more value, or, suck it and take my losses. So, I moved all my investment funds into Federated upon the advise of his secretary who says she has the same.

I now find out she only has 3 years working for this guy, she is trained in sports medicine! GREAAAAAT!

At this point, I'm left with $93K in my medicare funds that still need 50% to remain fluid.

I've had to spend so much over the past two years for health care that combined with losses, all my funds are dwindling.

If you go on the Morningstar website, you'll find some of my posts titled something like "Is my advisor taking advantage of me". Something like that, In those posts it has many replys from some very hekpful people who, based upon my complaint/concerns that I posted, they seem to agree that the relationship between my advisor and myself has deteriorated and I should dump him.

I spoke to a new advisor at Peoples bank securities here in CT, she was very helpful but wanted me to convert my CD's to cash and then go to Peoples for better rates before the Fed drops rates further. I don't want to rush here, I want to make a more educated decision for my children and remaining funds.

The sale of my muni's was completed today, by now its too late because the fed cut rates Sunday night, and again today. So, I have no clue where I'm at, or what to do, especially after hearing that bad fed report 30 minutes ago.

Thats the jist of it. Thanks again for the concern and help!

Kev

ViperAttacks
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Post by ViperAttacks » Tue Mar 18, 2008 2:34 pm

I recommend reading the Bogleheads book. It helped me a lot.

leonard
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Post by leonard » Tue Mar 18, 2008 2:56 pm

ksodapop wrote:
Show investments in the usual format? How would I actually do that? I'll try here
the usual format is explained in Laura's posting here: Asking portfolio questions
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

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KSODAPOP
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Post by KSODAPOP » Tue Mar 18, 2008 7:25 pm

leonard wrote:ksodapop wrote:
Show investments in the usual format? How would I actually do that? I'll try here
the usual format is explained in Laura's posting here: Asking portfolio questions

OK, I understand now, I'll sit down over the next few days and figure this all out. Laura provided clear instructions that I should be able to follow just fine.

I posted some political views that violated the board rules in my original post, I'd like to apolgize if I offended anyone. I understand the rules now.

JW-Retired
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Post by JW-Retired » Tue Mar 18, 2008 10:07 pm

the ONLY options ever offered to me since 5/06 were muni's, FRFTX, ORNCX-(purchased 5/07 w/ $20k) and that Putnam tax free FD Class C fund (cusip pending), all three I only recently learned have some of the highest loads out there.
From what you say, I am completly baffled why any FA would offer you mostly muni bond funds. It makes no sense at all. Does your wife make a high salary? Are you in a high marginal tax bracket? Muni bonds pay low interest rates compared to taxable bonds but it isn't taxed, so they are on balance good for people who are in a high tax bracket...... like 33% or more. Is that is you?
You really need to educate yourself to be your own financial advisor. You can't expect an FA to sell you anything but something that they can make some money on. That means funds with sales loads and high expenses. These funds hardly ever do any better than average and so you end up with average minus big expenses = poor net investment returns.
If you read books like the "Bogelheads Guide to Investing" and keep using this web site, I think you can be your own advisor and do much better.

A lot of us here invest in index funds at Vanguard. The expense ratio will be something like 2 tenths of a percent. Read first, then look into their low cost funds at https://personal.vanguard.com/us/FundsS ... omeoffer01
good luck to you,
JW

Topic Author
KSODAPOP
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Post by KSODAPOP » Wed Mar 19, 2008 6:37 am

bdpb wrote:
KSODAPOP wrote:
I guess my post could have been better explained, but it was early and the coffee wasn't ready yet.


I wasn't trying to inject religion into finances. Maybe, maybe I'm watching too much Glenn Beck and Lou Dobbs. But, I am listening to the Bloomberg and CNBC finance channels as well, these men and woman are supposed to be professional financial people, so I kind of put some belief in what is being said and combining what I am seeing, hearing and experiencing.


Maybe I have too much time on my hands, but I have no choice.
Lighten up, you're driving yourself into a frenzy.

Stop listening to the talking heads. They're entertainers. They do what
they do so that they can pull down a big paycheck.

With so much time on your hands you could spend more time reading.
This forum has an excellent reference library. Read a thousand posts
before you write another one. You'll better understand what it takes to
be a successful investor.

Consider setting some new life goals. If you can read and write,
you can get a college education.


Well, I'm certainly not lazy and I actually volunteer for State and town Veterans assistance agency when I'm up to the task. All I'm doing is reading (and yes watching these finance/news channels as well) trying to gain a better understanding on things. My kids and grand kids keep me busy.

I began reading the Morningstar and other finance/investment websites and books only recently and i'm begining to understand some of what funds I am, and was actually in. I only started reading the BH website about 6-8 weeks ago when a nice guy (Paul) offered his help with understanding all this and he mentioned this website.

Being pretty much a preschooler at all this, and seeing my funds dwindling pretty rapidly over the past two years, not only from volitility in the funds I have, but in having to use a lot of savings for medical and other needs for my children.

Many people both on these boards, in others and different advisors and friends, all basically tell me I've either been taken advantage of by my advisor, or misled. So, I've become pretty skeptical and maybe overly cautious.

I hear, see and read of all different opinions and options, many times feeling pressured by the bank advisors to do business with them over the my advisor who swears to have my best interest at heart.

Just last week I was referred by a close friend to another highly recommended advisor at a different bank (my friend, a successful, honest guy who seems to have his life in order).

She advised me I would benefit with their bank at a higher dividend if I closed my CD's I have now, but I should do so by this past Monday before the Fed dropped the rates again. I kind of felt pressured, but also concerned about just jumping around and trusting what everyone says.

She also could not understand, as many of you do, why my advisor put my six digit savings in two high load muni's and a treasury cash series fund instead of also mentioning annuities and other options.

My neighbor, a close friend (another successful/responsible gentleman) who has much of his savings in annuities told me "don't talk to her, talk to my advisor", then my brother, another responsible and successful business owner, said talk to his advisor.

I'm sure you can understand the confusion I now face.

I'm trying to take it and understand investing/savings one step at a time, trying not to learn it all in one day.

I'm picking peoples brains, getting a wide range of advice, understanding I need to be diversified, preferably tax exempt or as little tax as possible, wanting to earn as much as I can without big risks.

I'd like to think long term, but also need to have 1/2 funds fluid or with as little penalties for early withdrawl as possible.

The worst part of all this, as with anything in life that requires decision making, is a lack being educated on investing. Thus, the advise I get is take it one step at a time, don't react out of fear.

This is what I am doing, but, I reacted out of fear, fear for loss of my funds; fear of not knowing; fear of loosing confidence in my advisor and having the confidence that he has my best interests at heart.

I can blame myself for my losses, for not demanding straight, understandable answers from him; I can blame myself for not acting on my gutt feelings, all of which have panned out to be just as I have felt all along.

I now understand that what I have now taken in realized losses in the past 6 months may be my own fault by possibly over reacting out of fear and being uneducated with investing, but I know that I know that my advisor did not have my best interests at heart.

Was I to sit and continue to watch my funds suffer from this volitile market? Or was I to act as I had done, sucking up my losses, not willing to accept any more so my remaining funds are as safe as they can be, other than to stuff it under a mattress out of fear for a possible further severedecline in the markets?

Many people mention these losses are "paper", honestly, I have no idea what that means yet, but I will.

Last Thursday, I sold my FRFTX and Putnam munis, opened a Federated Capital Reserves muni (FRFXX?) with my remaining funds.

This is not earning much at all, yesterday it was 2.68%, but I wanted to make all my funds fluid in case of the worst case senario should happen in the markets, this way I figured if I wanted to deal elswhere and with someone else, I could simply put it in my checking accounts for the time being.

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KSODAPOP
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Post by KSODAPOP » Wed Mar 19, 2008 7:28 am

JW Nearly Retired wrote:
the ONLY options ever offered to me since 5/06 were muni's, FRFTX, ORNCX-(purchased 5/07 w/ $20k) and that Putnam tax free FD Class C fund (cusip pending), all three I only recently learned have some of the highest loads out there.
From what you say, I am completly baffled why any FA would offer you mostly muni bond funds. It makes no sense at all. Does your wife make a high salary? Are you in a high marginal tax bracket? Muni bonds pay low interest rates compared to taxable bonds but it isn't taxed, so they are on balance good for people who are in a high tax bracket...... like 33% or more. Is that is you?
You really need to educate yourself to be your own financial advisor. You can't expect an FA to sell you anything but something that they can make some money on. That means funds with sales loads and high expenses. These funds hardly ever do any better than average and so you end up with average minus big expenses = poor net investment returns.
If you read books like the "Bogelheads Guide to Investing" and keep using this web site, I think you can be your own advisor and do much better.

A lot of us here invest in index funds at Vanguard. The expense ratio will be something like 2 tenths of a percent. Read first, then look into their low cost funds at https://personal.vanguard.com/us/FundsS ... omeoffer01
good luck to you,
JW


Thanks for the concern!

My deal is the following;

age 48,

disabled with spine/neck injuries, failed 3 level neck fusion, fractured surgical screws, face future major neck surgery to remove broken heardware, re-fuse failed levels (I'm holding off out of fear of morbid surgery, two previous surgeries failed. Low back, two level herniation. Degenerative disk disease. Injuries from job.

divorced
3 children ages 10,16,19 (two youngest live with me)
2 grand children ages 3mo & 18 mo.

Income; Social Security (monthly) $1600, under a $1000 additional SS for both children (monthly).

Medical; Medicare A,B,D

Haven't filed taxes since 2004. I was filing head of household after divorce and had oldest daughter w/me while she was still concidered a dependent.

I don't believe I had any tax liability prior to investing in 5/06, but could be wrong. I meet with tax advisor next week to file 2007, other past returns and to square up anything I might owe. I'll tell you now, I didn't earn much off these investments, in fact they cost me and I had a lot of expenses.

Exwife claims children as dependents (this is screwy!) Court ordered in 2003 she would have physical custody of two youngest kids. We share flexable joint legal custody.

She lives in different CT. city, neither child was learning, she even started home schooling (so she claimed) them against my wishes. She pulled them out of a perfectly good school system in my town. Learning they were suffering in education, we agreed they'd come home w/me and attend school. How we file has not been worked out since, so I anticipate I'll file single. My attorney wanted $5k to go back to court.

May 2006, settled workers Compensation case. My attorney took $65K for himself out of the settlement.

I'll have to go over all the numbers and get back to this.

Topic Author
KSODAPOP
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Post by KSODAPOP » Wed Mar 19, 2008 8:09 am

leonard wrote:KSODAPOP - you posted this in the "Portfolio Help" forum.

Was there a specific request for help with your portfolio in your posting? You mentioned problems with some non-VG Muni funds, but I didn't see a specific question regarding those investments.

Just inexperience as what and where to post. I'm new to the boards and investing, so I'm reading a lot of the rules for what and where to post.

I'm not sure what you mean by "non-VG muni's" but I'm still learning all the abbreviations, this too I will learn as I become more educated.

I've outlined many of my concerns in these most recent posts, even got a slap on the wrist for bringing political views into it, I should not have done that, but, I'll concider myself as an investment preschooler who's lost his way from lack of confidence in my advisor who I know has misled me and put me in high load , little return risky funds; and so I'm just frightened for my children's/grandchildren's futures and finances.

I'm gaining a little more confidence as I learn, nothing wrong with educating ourselves!

I have to lay everything out on the table, figure out what I started with in May 2006, what I have left, figure my taxes out (meeting with tax advisor next week), figure out my debt to income ratio, figure what I need to keep fluid, what I need in the long and short term for myself, my children and I'd like to put something away for my grand kids too.

I know I need to diversify, cut unneccesary expenses, set goals long and short term and refigure my budget.

I've always heard good things about Vanguard funds, so I want to learn more on that, but my advisor steered me away (better put-advised against).

So many people tell me I need to think for myself, act for myself and not take every word my advisor tells me as the golden rules, I'll only be able to do that with educating myself and picking peoples brains. Only one drawback, everyone seems to have their own opinions. I guess thats where my gutt instincts and good knoweledge from what I'm learning comes from.

I just can't figure out why, after I clearly stated my needs and situations, why I've never had annuities mentioned.

Like I've said, I've lost confidence from being misled and misinformed by those I needed to put my trust in, so I'm skeptical.

I also have to listen to those people around me, friends and family, successful/responsible people who are happy what they have with savings and investments, with different banks and advisors who all seem to have their own thoughts and practices they stick with.

One friend or family member will tell me, don't talk to him, talk to my advisor, the next person will say the same. So, while I'll learn things based upon their experience, I'm also getting confused who to trust has the best advise and options.

I've been bit a few times already and I don't want to get bit again, this is where the fear comes in. Then we have to look at the economy/markets and where they are headed. I don't want to keep jumping around, I want options and safety.

I guess the best bet right now is just learn as I go.

Thanks for the advice!

Topic Author
KSODAPOP
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Post by KSODAPOP » Wed Mar 19, 2008 8:31 am

retired at 48 wrote:Hi KSODAPOP!
It is not clear how you "lost" $8000 in Franklin Muni's? Is this current market value loss? Waiting to bonds maturity gets that money back, and meanwhile you still get interest. No defaults yet, right?

retired at 48.

Retired, you're words are very kind, I wish you the best as well.

My losses I am learning were from three funds, FRFTX, Putnam tax exempt FD class C muni (cusip pending), then theres the worst which dropped over 15%, ORNCX.

I'm still trying to learn what the difference is in "PAPER" losses compared to actual realized losses.

I may have panicked and sold these funds after loosing confidence in my advisor, feeling misled and misinformed. Being told repeatedly these funds cost me nothing; my funds were fine and I had nothing to worry about, he was watching them closely.

I havent even brought up the two Alliance Bernstein RI College Bound funds that have been on the loosing end of the stick since he sold me them, both are down about $1000 combined.

One is age based, the other balanced (thats what he tells me), I don't know what a 529 is compared to another.

My kids are ages 10 and 16. From what I can feel in my gutt, he knew he placed at least my oldest child in the wrong fund and he ended up changing it to a less risky college fund two weeks ago.

Honestly, I can only feel that he was only out for himself at my, and my childrens expense. Whether it was deliberate, or irrespnsibly, I don't know.

At this point, I've lost too much sleep over it as is, I'm stressed and concerned, primarilly for my children's and grand childrens future.

It'll all work out in time, everyone on these boards have been more than halpful. I just need to take it one step at a time, not trying to learn it all at once. I would however like to lock in higher rates with as little tax and risk as possible before I loose out on that too.

Thanks for the tips, and best of luck to you as well.

kenner
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Post by kenner » Wed Mar 19, 2008 1:13 pm

Your topic is so broad and covers so much territory (financial, political, legal, etc.) it's difficult to know where to begin. Everyone who responds to your post would love to help you in some way.

For starters, it seems obvious that you put your trust in advisers who had their own financial interests at heart, but not yours. I spent about five minutes checking out Putnam, Franklin Templeton and Alliance Bernstein and, even though I could not totally zero in on your specific investments, each of these companies have either very high front-end loads (purchase fees), back-end loads, high annual total expense ratios, OR ALL THREE. Depending on which specific fund you were sold, one of the companies charges 5.75% of your total investment as a purchase fee, operating expenses of over 1.00% per year, and a 1.00% fee on your total remaining investment when you sell. You do the math.

On top of that, none of those funds is statistically likely to beat a correlated index fund over any long term period. Such index funds exist (Vanguard is the leading provider, but do not hesitate to check out T. Rowe Price, Fidelity and others). You can probably buy them at a TOTAL cost of about .20% - .50% per year.

However, that is now in the past. Use the past only as a learning tool. Educate yourself, set specific goals (current income, some growth of capital, etc.), and find low-cost funds that are geared to what you need based on your current and reasonably anticipated future needs. No one can control the stock or bond markets, but we can make educated decisions that give us the highest likelihood of success based on all that is knowable.

Given your sources and amounts of income, it seems outrageous, as others posters have mentioned, that any financial adviser would sell you a low-yielding, tax advantaged municipal bond fund. Any chance the underlying fund company was offering a sales bonus on that product when it was foisted upon you by the salesman?

Again, get educated, as others have suggested. Park your remaining funds in a safe place like a money market fund, CD, etc. to hang on to your principal and receive at least some interest income while you bring your investment knowledge up to speed.

I would also suggest that you investigate a fund like Vanguard's LifeStrategy Income Fund, annual expense ratio .24%, 10 year annualized 5.77% total return, yield 4.14%. It is actively managed, not an index, but its costs are still very low. Besides, if you don't like its exact asset choices (check its "Holdings"), you can change them by choosing a different fund or by customizing your own portfolio when you feel comfortable doing so.

Best wishes. Better days are ahead.

Topic Author
KSODAPOP
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Post by KSODAPOP » Wed Mar 19, 2008 3:50 pm

kenner wrote:
For starters, it seems obvious that you put your trust in advisers who had their own financial interests at heart, but not yours.

Given your sources and amounts of income, it seems outrageous, as others posters have mentioned, that any financial adviser would sell you a low-yielding, tax advantaged municipal bond fund. Any chance the underlying fund company was offering a sales bonus on that product when it was foisted upon you by the salesman?


Than you as well Kenner!

In January, I opened the Federated Capital Reserves fund, to this day, neither my advisor, nor his secretary could tell me how to locate this fund on any ticker search or other fund look up search box, what ever they're called. They emailed me the prospectus, but that had three different funds in the twenty page doc.

I went to the Federated website, found a long list of funds. She told me this is a MM fund, others say its a Muni.

After getting no where, I finally found a possiblity, FRFXX? But I'm not sure.

To show you what I've been up against, I emailed her and my advisor the following this morning because I'm getting a bit ticked that I've received little direction on this;

I wrote;
I have searched high and low to find the identifier code or cusip for the Federated account. The website lists several funds, many with similar names. If you go on their website for individual investors, click on munis, click all and then search through the list of funds, you will see that each one has fund numbers, cusips and symbols, I need G* to provide me with this as soon as possible.

There's no reason why he wouldn't know what it is. I'd like to be able to watch this Muni to see how it performs. If you'd be kind to check that for me I'd appreciate it. Its been three months since I've purchased this and still don't know which one it is, I still get no answers, the prospectus itself has nothing listed for what I'm looking for. END


She wrote back;
This is something that is setup specifically for Pershing by Federated so there wouldn’t be anything online about it. The suggestion that I got from the supervisor that I spoke with would be to call Federated and they will be able to give you more information and walk you through their website on how to research this Money Market. END

Since day one, I can NEVER get a straight answer from this guy. He's not a bad guy, he just uses very technical terms, talks fast, almost refused to let me get a word in edge wise, I'm kicking myself for not heeding the warning flags


NOW, what gets me more confused is when I originally opened all funds I had through Webster Investments (at my bank), I was told Pershing handled their investments.

In the third month, I was notified Pershing was no longer with Webster, it was now UVEST Financial who handled the funds.

On the "back" of my statements though, under terms and conditions, to this day, it is all about Pershing, the front of the statement says UVEST.

Are these two companies tied together somehow? I've always been unsuccessful logging on to my accounts with either one.

I was going over my original deposits from 5/06 compaired to what I have left today, I can't believe how much less I now have.

I see a lot of you love Vanguard, this is another name he strongly advised me against.

If I listened to my gutt in May 07 and bought gold like I wanted to, another no-no with him, I think, until yesterday we wouldn't be having these conversations today. I'd be in the Islands. Oh well, hind sight is still 20/20.

Education, education, education! We can never stop learning.

kenner
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Post by kenner » Wed Mar 19, 2008 7:03 pm

Just a quick follow-up. Federated Investors, Inc., has a general money market fund named "Federated Capital Reserve Fund". It is also called "Capital Fund" in Federated's prospectus, which is available online at federatedinvestors.com. The cusip is apparently 608919304 and (Pop, you were right) the symbol is apparently FRFXX.

The fund, if it's the right one, carries an annual expense ratio of 1.33% (very high), but the fund is temporarily paying .33% of the expenses to attract investors. The total annual return for the year ended 12/31/06 was 4.15%. If you call Federated at 1-800-341-7400 you should be able to get a current 7-day yield.

By the way, Vanguard's Prime Money Market Fund has an expense ratio of .24% and is probably the best general money market fund on the planet. Check the long term record.

Hope this helps.

Topic Author
KSODAPOP
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Post by KSODAPOP » Mon Mar 24, 2008 9:23 am

I wanted to get a little more info on the RI College Bound funds from Alliance Bernstein that my advisor also put two of my children in last year, and they too just keep dropping in value.

This guy has done nothing but mislead me in ALL of my investments and placed me risky, high fee funds, telling me they cost me nothing, never telling me of risks involved, that I guarantee!

In one fund for my 16 y/o he had me put $10k + in, this morning, it was at $9080. I asked to close it and put the funds in my cash fund, the college funds have done nothing but been dropping since I opened it, the same can be said for my 10 y/o, which has lost $500 to date.

He now tells me to do so would loose that $1000 that its down, for each fund I'd be charged $50 closing fee, plus a 10% penalty, PLUS $96.75 for early WD, plus I'd be taxed at my oldest daughter's rate, I'd pay my tax rate for my 10y/o.

Do I have any legal recourse? This is rediculous! To try and save my funds from collapsing further, I'm gonna get wacked regarless. NONE of this was explained to me, none of it.

The only thing he said when I opened these accounts with my workers comensation award check was "that check is not working for you in your pocket." Well, it sure as H has done nothing FOR me in these funds he lied to me about. YES, he lied![/b]

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Orion
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Post by Orion » Mon Mar 24, 2008 3:46 pm

I'm not sure if you've figured this out yet or not, but these advisors you're talking to, and whose collective brains you continue to want to pick, are sales people. The advise you against Vanguard funds because Vanguard funds have low fees and no loads which prevents them from making lots of money by selling them to you. Any "good" salesman prefers to sell what he has and what he can make money from.

And in the interest of full disclosure, I'm not sure if you realize that the Bogleheads is a Vanguard-oriented group, (John Bogle founded Vanguard.) So, of course we love them, though they are very lovable with their low fees and straightforward prospectuses.

Legal recourse? Did you read the prospectuses for these investments? Did you receive any? Did you sign anything that said that you read them? I don't know. I know that Franklin funds have prospectuses that spell out the high fees. On the other hand I know that the prospectuses for some private investments are practically incomprehensible when it comes to fees. I remember one private REIT that someone tried to sell me that had 6 pages of "contingent fees". Stuff like: if we sell a building at a loss on a day that is overcast and the sales price is not a prime number, then... That's not an actual rule but they were complex and more importantly, almost completely unpredictable in advance. I couldn't even tell if it was in the management's interest to make investment money or to trigger those contingent fees. I passed.

kenner
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Joined: Sat Mar 01, 2008 8:45 am

Post by kenner » Mon Mar 24, 2008 4:27 pm

First and foremost, I would strongly suggest that you do nothing until you know a lot more about what this "adviser" has gotten you into.

Although he may not have revealed the whole truth when he got you into those "investments", he may be telling you the truth now when he states that you could incur very substantial losses, penalties, costs, taxes, etc. if you terminate these investments early. You may be "locked in", at least until this situation can be better analyzed. Many people have lost a lot of money in the stock market over the last few months. That fact, in and of itself, does not make an adviser negligent or otherwise legally liable for "paper losses". After all, losses are not "real losses" until you sell the underlying investment; and the value of your investments could increase substantially over the next few months.

If you had a lawyer handle your Social Security/work comp case, can you call him or her and ask for a recommendation about who you can consult to get the help you need? Every state has different laws, and you may have legal recourse, but you probably won't know until you talk with an expert in the investment field. If you can't afford a lawyer, maybe your state or county provides legal assistance for people in your situation. Call your state and/or local Bar Association and see if they can find help for you. There may also be a mediation or arbitration system that could help.

Save every piece of paper that has anything to do with your dealings with your adviser. Get expert help. Find out if these investments could ever have been considered proper recommendations for a person in your situation.

Plenty of people on this site would like to help you, but there is not sufficient information available at this point, in my opinion at least, to provide more specific recommendations.

Topic Author
KSODAPOP
Posts: 40
Joined: Tue Feb 12, 2008 6:19 am

Post by KSODAPOP » Tue Mar 25, 2008 8:28 am

Orion;
“I'm not sure if you've figured this out yet or not, but these advisors you're talking to, and whose collective brains you continue to want to pick, are sales people.”

Unfortunately, yes, I realize this now after learning a hard cold lesson over two years and as I’ve become a bit more educated on what he placed me in and how they work.

I never expect ANYONE to work for free and my financial advisor is certainly no exception to this. That being said, it is the way he misrepresented himself, the bank and each of the funds he highly recommended that I question (saying “there’s nothing in it for him, it’s his job to serve me”).

Kenner;
First and foremost, I would strongly suggest that you do nothing until you know a lot more about what this "adviser" has gotten you into."

It may be too late for that now. Out of shear panic I put my remaining funds in my checking acct. yesterday. I describe this below. But, at least I’ll finally sleep tonight.

I can ONLY describe my savings/investment experience as at the level of a preschooler. To years ago, the ONLY savings experience I had was… I put my money in a savings account; the bank gets to use my money; in return, I receive interest.

The six figure sum of the funds in my check in May 2006 was going to be placed in various CD’s, a savings account, MM and a small portion in two checking accounts, one a personal account, the other a Medicare set aside checking.

One thing I was somewhat aware of was any dividends would be taxable. The branch manager said I needed to sit with their financial advisor. I thought his position with the bank merely handled larger sums of deposits.

What was presented to me then and to this day, I now view as being misleading, misrepresentation, undisclosed risks, high pressure, false promises, Omissions of material facts, excessive risk, over-concentration, illiquidity and tax considerations, Unsuitable Recommendations.

But, I can only blame myself for not educating myself and being better prepared even though I felt pressured into acting “now”.

He himself and the branch manager knew my entire situation damn well, that I could not and did not want to take risks. He knew I was disabled; he knew the funds were for medical needs and future care and a third to live off of.

The funds he placed me in were described to me as follows;
“I have the exact same funds for myself and my children”;
“Absolutely safe, four and five star funds”;

When asked what was in it for him and the bank…”nothing!”

His repeated statements and reassurances have cost me because (and I can’t make this stuff up) I did not know my rights; I was not educated, I believed he had my best interests at heart, I believed he understood and respected my concerns, situations and needs;

Statements I fell for such as;
“I’m W****** Bank’s senior advisor because I’m one of the top ten in the business in the US and I’m privy to meetings many advisors do not get invites to!”
“I speak to and attend meetings with the top people in the business.”
“Kev I didn’t listen to you’re voice message but I see you called, I’m calling you back”, or, he’ll tell me my emails which listed my questions/concerns was too long and he prefers to talk instead (this shows he doesn’t read my emails or listen to my messages. I write an email so I don’t forget what to ask; so I don’t forget 5 minutes later what he said; I’m able to take my time).
He’s said;
“I’m very comfortable with the funds I have you in”;
“I watch you’re funds very closely”;
“I have you in the most conservative funds 4&5 star funds”;
“I don’t know what you are worried about, your money is fine, you haven’t lost any money; it’s only on paper!” –(take a look at ORNCX performance since May 07 when he talked me into that one and never stayed on top of).
“Leave the funds alone, Muni’s are your safest bet and will out perform everything in 2008, I expect that muni’s will even see 20% gains this year.”
“You are way over reacting, we just had a very long conversation and three days later you have the same concerns”.
‘You were WILLING to take more risks, now you don’t”; (Risks? What risks? I was told there are no risks. All I understood was I’d receive a 5 star Oppenheimer fund with higher interest).
“you don’t have any issues that I am at all concerned about” (he said this when ORNCX was down 15%);

Then he said “ORNCX had taken a little bit of a hit because of the tobacco settlements, but this is only temporary, this was a great fund to be in”

He’s tried to tell me my FRXTX and Putnam tax exempt FD Class C funds have performed very well for me since I bought those for $50K each in May ’06. I don’t know, you tell me, but I don’t see any great dividends to me. I only recently learned about these fund’s loads or fee’s.

He’s said “you watch too much Fox News”, “you need to stop watching the markets every day and week”, “you need to trust me”, “I want to help you”.

There have also been two occasions when he failed to execute a sale in a reasonable time, his response after five days of the funds not hitting my other accounts…”oh sorry, I forgot!”

He’s made statements that I cannot sell one or more of my funds unless I “speak to him first”, which I still have on my voice mail.

To discuss my funds, he’s called me from his cell phone while he’s driving from one meeting to the next, fast talking me, discussing my fund’s immediate concerns without even sitting at his computer to see what was going on.

NEVER once in two years has he EVER replied to an email I sent him with a return email which would prove my point. He’s never replied to a text message either. So, he’s pretty slick not to put anything in writing except that which is required by law or bank policy.

When I tried to get other opinions, information or advice and contacted my investment companies directly with my bank a/o investments, or even my branch manager to simply check CD rates…

trusting that anything said would be in absolute confidence, being verbally assured this would be upheld, well, this was in vein as the FIRST thing they did was to contact my advisor and ask why he was not answering my concerns and questions.

This strained our relationship as it showed a lack of trust on my part and instead of its true meaning, to merely clarify what he was unable to make me understand

As far as me reading the prospectuses from my funds, oh, sure I’ve read them (not every detail because it makes no sense to an untrained eye), but it’s like reading a legal dictionary with their 47 pages of fine print gibberish. I’ve also on many occasions had an opportunity to vote for fund managers and was told to disregard it, “it did not concern me”, I was told “don’t confuse yourself.”

In January ‘08, I had seen a $25 administrative fee on each the two RI college funds he put me in. I inquired about this, he said they don’t charge anything (and again, he has the same funds for his kids).

IF I had been forewarned that I would be locked into these funds, If I was getting charged, IF there were so many penalties, fee’s, restrictions, IF they have the SAME risks if not worse than my other funds, I would have NEVER accepted this.

So, I feel I was misrepresented and misled, even lied to, much of what was vital to me and my children was placed at risk of loss.

True, I did notice in black and white the words “NOT FDIC INSURED, NO BANK GUARANTEE, MAY LOOSE VALUE”, I was instead told if I read on that I was protected by the SIBC.

Only after reviewing the SIBC website did I learn this had nothing to do with market volatility and losses.

I’m confused as to what to do with my college funds now as I’m locked. My oldest daughter will be 18 in Jan. 2009 and plans on college. My advisor tells me if I close her fund, I am guaranteed a realized loss of $1000 in an original investment of $10k, plus I’ll be whacked with penalties, taxes, fee’s and so on which can also amount to another loss of $1000.

If I keep it as it is, am I to sit back and watch it deplete in value further with no guarantee it will at the very least give me back what I originally invested, and knowing I am still paying administrative fees and loads, further depleting the value? He told me he moved it to a less risky college fund.

My other 10 y/o daughter’s college fund has also lost value and is about $500 less now from a $10k investment. I thought that college funds would have greater degree of protection and would earn a moderate interest for their education. In one year, both have only lost value, not very encouraging!

As far as my new Federated fund goes (FRFXX I believe), after getting to the point where I could not sleep at night worrying, as most people are now a day, I sucked up my losses from the Franklin and Putnam muni’s, placed the remaining $93k into FRFXX;

Then not hearing from my advisor a/o his secretary for six days after requesting they check into the college funds last week and not hearing from either one, they forgot, I got that sick hypertension “enough is enough” “gut wrenching” P***ed off” “I can’t win no matter what” feeling, I had them move my funds to my checking account so I can place then in my MM and CD’s for now till I know what to do. I just had enough.

I can blame my advisor all I want, but the reality is, I once again hadn’t learned my lessons from my life’s mistakes, screw ups, and from dealing with people with no integrity, good morals or good sense of judgment.

I placed my trust in a man’s word and empty promises; I went into this as an unknowing, uneducated investor with the best of intentions and desire to finally succeed for not only myself, but for my children and grand kids.

I jumped unknowingly into a risky venture without fully investigating what I was about to get myself into, nor checking with other investors, banks, brokers, advisors, and if I had know about this BH website and Morningstar, I may have made better decisions and never been in the situation I am in now.

But even as I can blame myself, my advisor has also proven that while advisors may not exactly lie to our faces, they are also not fully disclosing everything we need to know, they are only out to make a buck, and the person he has his best interests at heart is really his own self.

But one would think that through educating their clients and acting in a positive manner as a good business man or woman should, with integrity and good morals, that his/her client would be a happier client, with confidence and able to make better decisions which would be a win-win situation for all involved.

I will certainly look into the Vanguard funds and heed much of the good advice I receive on these boards, hopefully I’ll be able to slowly recover what I’ve lost. I’ve heard only good things about Vanguard.

I’m just very weary now, very cautious, watching the markets closely and listening to a lot of advice from every one. I’ll have my brother recommend his advisor, my friend says, no, talk to his advisor, then another and another.

One advisor from a local bank who came highly recommended from a very successful friend of mine, she agreed with everything I’ve been concerned about, BUT, even with her, I got that ‘ACT NOW, DON’T WAIT” sales pitch, this only creates more confusion and hesitancy with me.

My funds I’ve lost are gone, I’ll never see that again, but I do want to see if I can legally get out of my 2 Rhode Island AB college bound funds without all the fees and penalties. These I know that I know I was misinformed and misled on, I guess I need to contact the Connecticut Bank commissioner’s office of someone else, my attorney want $350 and hour just to sit down to discuss it all. We end up loosing our shirts no matter what.

I should end with that, I’ve blabbered on and taken up enough of you’re valuable time as it is. Unfortunately, none of this can be said in any simple description.

Thanks again for you’re help and concern!

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Orion
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Post by Orion » Tue Mar 25, 2008 10:42 am

I hope that works out, though for future situations, acting out of "pure panic" often leads to bad results in investing. Not that I'm suggesting you change back! Please read the books mentioned before making additional moves. Possibly re-read them and let them sink in before making major changes again.

You still haven't presented the full picture of what happened so it's hard to say whether you were taken advantage of or not. For example, you talk about an $8K loss, but I don't think you've ever given enough information to determine what percentage that is or exactly what fund it was. Could be noise, could be major. For that matter, it could simply be the load rather than a market fluctuation. There's just not enough info to tell.

A few more comments:

"I have the exact same funds for myself and my children"; Good, if true, but the children probably don't plan to withdraw for a decade or two, and he may have a much higher risk tolerance than you. Also his tax situation is probably much different than yours.

"Absolutely safe, four and five star funds"; Star ratings are ratings of past performance with little to no predictive ability. Expenses, however, tend to be much more predictable so always look at those first. Absolutely safe? Hah! I'm sure the prospectus said absolutely NOT safe. Sometimes right on the cover. In fact safe in a bond fund is always a complicated term. For example longer term funds have more fluctuation of NAV which can scare people but they provide more stability of income than a shorter term fund or a money market/bank account. So you have to decide which of those is more important to you.

When asked what was in it for him and the bank…”nothing!” Well that's when you ask: then why are you providing this service? You know they're making money off your bank accounts too, right? Only the bank accounts don't have to hand you a prospectus, which shows you how much. I don't mean to scare you back into a fund. I'm just saying they're moving you around into things that all make money for the bank. At some level, they're not that concerned as long as you keep your money in their products.

“I’m very comfortable with the funds I have you in”; This is probably true.

“Leave the funds alone, Muni’s are your safest bet and will out perform everything in 2008, I expect that muni’s will even see 20% gains this year.” I hate to tell you this, but he's far from the only person saying this. Bill Gross, who some call the "bond king" is recommending munis too. Munis have gotten beaten down. Therefore many are expecting them to do very well moving forward. But no one can guarantee that. Again, please read up and take your time before making another move.

On the college funds, look at the prospectuses. Many funds, especially stuff pushed by sales people, have redemption fees and early redemption penalties. If they kept a prospectus out of your hands, then you may have some kind of case - at least if you didn't sign something agreeing that you have read the prospectus... I'm not a lawyer though - just guessing here.

I tend to agree with his too much watching of TV comment. Much of what you have mentioned watching on TV is what people here call "financial porn". Turn off the TV and read those books. Then read them again. It takes awhile for it all to sink in. I know - I used to watch too much TV too. TV is another money making product that is often not in your best interest.

Topic Author
KSODAPOP
Posts: 40
Joined: Tue Feb 12, 2008 6:19 am

Post by KSODAPOP » Wed Mar 26, 2008 5:55 am

Orion wrote:I hope that works out, though for future situations, acting out of "pure panic" often leads to bad results in investing. Not that I'm suggesting you change back! Please read the books mentioned before making additional moves. Possibly re-read them and let them sink in before making major changes again.

You still haven't presented the full picture of what happened so it's hard to say whether you were taken advantage of or not. For example, you talk about an $8K loss, but I don't think you've ever given enough information to determine what percentage that is or exactly what fund it was. Could be noise, could be major. For that matter, it could simply be the load rather than a market fluctuation. There's just not enough info to tell.

A few more comments:

"I have the exact same funds for myself and my children"; Good, if true, but the children probably don't plan to withdraw for a decade or two, and he may have a much higher risk tolerance than you. Also his tax situation is probably much different than yours.

"Absolutely safe, four and five star funds"; Star ratings are ratings of past performance with little to no predictive ability. Expenses, however, tend to be much more predictable so always look at those first. Absolutely safe? Hah! I'm sure the prospectus said absolutely NOT safe. Sometimes right on the cover. In fact safe in a bond fund is always a complicated term. For example longer term funds have more fluctuation of NAV which can scare people but they provide more stability of income than a shorter term fund or a money market/bank account. So you have to decide which of those is more important to you.

When asked what was in it for him and the bank…”nothing!” Well that's when you ask: then why are you providing this service? You know they're making money off your bank accounts too, right? Only the bank accounts don't have to hand you a prospectus, which shows you how much. I don't mean to scare you back into a fund. I'm just saying they're moving you around into things that all make money for the bank. At some level, they're not that concerned as long as you keep your money in their products.

“I’m very comfortable with the funds I have you in”; This is probably true.

“Leave the funds alone, Muni’s are your safest bet and will out perform everything in 2008, I expect that muni’s will even see 20% gains this year.” I hate to tell you this, but he's far from the only person saying this. Bill Gross, who some call the "bond king" is recommending munis too. Munis have gotten beaten down. Therefore many are expecting them to do very well moving forward. But no one can guarantee that. Again, please read up and take your time before making another move.

On the college funds, look at the prospectuses. Many funds, especially stuff pushed by sales people, have redemption fees and early redemption penalties. If they kept a prospectus out of your hands, then you may have some kind of case - at least if you didn't sign something agreeing that you have read the prospectus... I'm not a lawyer though - just guessing here.

I tend to agree with his too much watching of TV comment. Much of what you have mentioned watching on TV is what people here call "financial porn". Turn off the TV and read those books. Then read them again. It takes awhile for it all to sink in. I know - I used to watch too much TV too. TV is another money making product that is often not in your best interest.



OK, let me see if I can clarify this;

*AGE; 48M
*Divorced/Disabled
*3 children ages 10, 16, 19 (two youngest live with me)
*2 grand children ages 3mo & 18 mos.
*Medical; Medicare A, B, D
*Income; Social Security (monthly/net) $1600, under a $1000 additional SS for "both" children (monthly/net).


**Original investments date 05/31/06;
*Franklin tax exempt FD Class C - FRFTX - $50K.
*Putnam tax exempt FD Class C - $50K - (CUSIP Pending) (NOTE; this may have has a symbol "QAWVQ", found on my original purchase confirmation).
*Treasury Cash Series MM - $49K.

May 2007;
Sold $10K FRXTX
Sold $10K Putnam
*Bought $20K ORNCX
Leaving roughly $39K in each Franklin and Putnam funds.

**Also in May 2007;
Two 1yr. $10K CD's matured for my two youngest daughters (ages then 10 & 15 1/2); the Advisor recommended two Rhode Island Alliance Bernstein College Bound Funds instead... I took this advice.

**January 2008 - PANICED after seeing ORNCX down 15 +%, about $3300. SOLD ALL ORNCX; Bought $16,800 Federated Capital Reserves (FRFXX?).

*(Original Treasury Cash Series MM was completely used up by this time for Medical/dental expenses for self and children, paid off past due bills, other living expenses, appliances, furniture, helped oldest daughter wedding, etc...), Closed this MM Fund.

**March 2008 - FRFTX and Putnam funds had unrealized loss of -$3400; AB College Bound funds down a combined -$1500.

Was NOT willing to have a heart attack over this any longer; SOLD remaining $74K combined funds from FRXTX/Putnam, placed in Federated MM to allow for funds to convert to cash easily.

Found out all the cons of the college funds I.e. fee's, penalties, risks, locked in, NOW was not ONLY P****d, but in a virtual panic and confused, and acting on advise of other *BH members, family, friends and recommended advisors, I transferred ALL remaining Federated MM funds into my checking account (under $94K).

To be safe, once this sale was complete and funds were transferred, I moved $90K into my bank MM (with it's "fabulous" rate of 0.40%) and $1000 into a special savings paying even less, doing all this until I can figure out what to do next.

I realize the numbers are all over the place, but this is where I get confused as to what these past funds cost me in load fee's/expenses and penalties.

I estimated aprox. $8K in losses. Math and book keeping has never been my strong point.

I also now have to catch up on my State and Fed tax returns for the past two or three years which will cost a few bucks, but trying to get organized in the is a daunting task because of the pain from my spine.

Then I want to see if I have any legal recourse to get out of the College funds without getting screwed, It will be one full year on May 31st that I'll have those funds, maybe there’s a way out?

Like most families in America these days, we're all feeling the big pinch with the huge increase in our every day expenses and stagnant income, so after seeing a third and then some of my settlement deplete so much in less than two years, its scary, but I'm hoping to take that as a learning experience, cut out all the unnecessary spending, and hopefully, hopefully make what little I have left and put it to work to rebuild some of what I lost and used.

My future, both near and distant will be changing; I’ll be faced with a housing situation if and when my mother (an elderly widow) passes away or can no longer care for herself, or if she defaults for not keeping up with the terms of her agreement such as not paying the insurance premiums.

My mother holds a Financial Freedom reverse mortgage which was just turned back over to HUD and some other mortgage company because some law or rule about interest being 2% or more to the maximum allowed loan amount.

I rent one side of the house and live with my two youngest children. So this can be a huge expense in my not to distant future which will surely eat up my savings. Few young people and families can’t even afford to look at housing price tags in our area as the minimum house for sale recently was $265K.

There's an awful lot to learn, a lot of recommendations, but I'll take it one step at a time and try to make better judgments and decisions more responsibly. I can’t afford to risk my or my children’s entire futures by trusting just every Joe Blow salesman with a shinny smile and suit who talks a good talk and make one promise after another.

My advisor’s dream of 20% gains in Muni’s just may be short lived when he learns that towns, cities and States are going broke and will be cutting back on everything, including infrastructure. I have learned that no one can read how the markets will be from day to day, but we can see the warning signs.

I knew enough in 2007 to make better choices and make my own decisions, I didn’t heed that and I paid the price.

For the same reasons a car owner should educate themselves when they take their car to a mechanic, instead of relying on and trusting every word from the guy who is paid flat rate, likewise, I’ve learned that although it may take a long time to learn finances and investing, a little education each day will always pay off. It took me long enough, but hopefully I've learned just in time.


User avatar
Orion
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Post by Orion » Wed Mar 26, 2008 10:34 am

It looks like your Franklin munis lost around 4%. Based on some quick browsing of some other long term muni funds, this looks fairly typical. Long term bonds do fluctuate in value as interest rates and sentiments change.

ORNCX is "high yield" munis. "high yield" also means below investment class and/or "junk bonds". Yields are higher - hence the name - but so is risk. (But no one wants to name their fund "High Risk Bonds" - bad marketing.) High yield munis are more stable than high yield corporates but they do fluctuate. Munis have been hit especially hard recently. Vanguard's high yield muni fund has not fallen nearly as far but Vanguard's high yield funds tend to be very conservative. (Lots of AAA-rated bonds vs. almost none in ORNCX.)

I haven't figured out the college funds. I couldn't find them in a quick google.

What I've been able to check seems largely to be an expectations/suitability issue. For example your advisor said: "You were WILLING to take more risks, now you don’t." My own munis are not down so much but they are also shorter term and therefore have lower yields too. On the other hand, I have other funds (not munis) that are down more than that, and, like your advisor, I'm not really concerned about them. There is a risk vs. return trade off that everyone has to decide on. Somehow you and your advisor seriously miscommunicated on this.

I see above that you said that you said you read the prospectuses and parts made no sense to the untrained eye. It's time to hit those books. Next time try to understand them all before putting money in. If you use an advisor again, make sure to interview several at least and find one who seriously connects and understands your level of risk aversion. I interviewed about half a dozen before deciding to do it myself. Some really didn't listen to me and offered canned solutions. Some just didn't seem to offer anything more than the books offered and the books are cheaper. One of them set up a meeting with the firm's accountant to prove to me that the advisor was correct. The accountant told the advisor that I was correct. The advisor was trying to sell me a variable annuity that would have broken even vs. a simple taxable investment only after 50 years. The accountant agreed that my math was correct after the advisor told me for weeks that I just didn't understand it. Then when the advisor left the office for a minute, the accountant leaned over and whispered: "You're so analytical, you could do this all yourself". So I did. Problem is: anyone who wasn't "so analytical" would have just followed the advisor. Soon after that, my parents were offered a variable annuity by another advisor. I did the same return/tax analysis on theirs and determined that theirs would break even in 75 years. - when they were 150 years old!

It may be that bank accounts and CDs are the only vehicles that are right for you. On the other hand, you need to check your needed return as well. If these two things don't match, which happens for many, that can be rough.

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dmcmahon
Posts: 2020
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Fire your adviser

Post by dmcmahon » Fri Mar 28, 2008 10:09 am

Seriously, dude, there is no way you should be in munis of any kind in your tax bracket. Especially not using high-cost funds.

With less that $100k to invest, you could put it all in an FDIC-insured money-market fund. Want a slightly better yield? Ladder the money in $20k chunks into CDs, i.e. $20k into a 6-month CD, $20k into a 1-year, $20k into an 18-month, $20k into a 2-year, and $20k in money market. Keep rolling over the CDs as they mature, i.e. in 6 months when the first one matures, put it into a 2-year, because now all the other ones on the ladder have shortened, i.e. what was once the 1-year is now the 6-month, if you see what I mean. You could use smaller chunks and a longer total time period if you like. One caveat here is that as you've noted we are in a period where the risk of bank failure is abnormally high. While I have every confidence in the FDIC, you could be at risk for some unknown period of time that your money would be "tied up" in some sort of liquidation procedure. To guard against that, you should be careful about the financial health of any bank you choose, and, as a precaution, perhaps split your assets between at least two banks.

Buying a bond fund doesn't make sense unless you want longer maturities, and that will involve more risk since even completely safe bonds can drop in value as interest rates rise. Plus the fund will take some of your interest income for expenses, and with interest rates as low as they are now, it's very significant. Yields on bonds are terrible right now - most of the returns people have gotten on bonds this year have been due to rising bond prices as paniced investors run to safety. That ship has sailed - you really shouldn't count on bonds continuing to rise in value much beyond where we are now, because interest rates are absurdly low.

If you need better yield, you really can't get it without making some investments that involve risk (i.e. stock index funds). I will defer to everyone else regarding that, other than to strongly urge you to avoid actively managed mutual funds, funds with any kind of load or sales charge, etc., and use indexes.

Re. the college savings, have you looked at Vanguard's 529 fund? This gives you a choice of many different funds, including stock indexes and money markets. I personally use this for 4 kids. The 2 oldest are in high school, and their money is in Vanguard money-market and short-term bond funds. The 2 youngest are pre-schoolers, I have their money divided between the Vanguard total US stock market index and the Vanguard total international stock market index. Vanguard has pretty good materials showing you how conservatively you should allocate the money based on when you're likely to need it.

Rose21
Posts: 530
Joined: Fri Jul 27, 2007 9:26 am

Post by Rose21 » Fri Mar 28, 2008 11:18 am

Ksodapop,

May I suggest that you stop panicking right now. I guarantee you're not going to help things, and you're likely to make things worse, if you react out of fear and desperation.

Take a week or two out and read the books recommended by the folks on this board. They offer no "quick fixes," but will present a simple and understandable method of building a well diversified portfolio--which is the best that you can do in today's unpredictable economic climate.

Expect to see a decline--even an appreciable one--for the foreseeable future. Things move in cycles.

Just about every sector is getting hit right now, and those that appeared to be immune from the fallout just two weeks ago are now having their turn. So avoid the temptation to risk your nestegg further by making rash decisions based upon what's happening in the short term.

Tune out all of the advice you're getting from neighbors and fund managers, and focus on getting your basic asset allocation squared away. The folks on this board will help you with the details.

Good luck to you. ~Rose


P.S. May I also recommend that you pick up Harry Browne's little book "Failsafe Investing," which is the subject of another current thread. It can be read in one evening. While the specific allocation it recommends is a little different than the Boglehead one, the underlying philosophy is the same, and it might help you to gain a better appreciation and understanding of the role of diversification.

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Post by Christine_NM » Fri Mar 28, 2008 12:59 pm

Ksodapop,

Sounds like you are dissatisfied. Pay whatever it takes to get rid of the salesperson. It is your tuition in the School of Wising Up.

You are learning three lessons:

One: Set a wise course and stay on it.

Two: Always remember that if she had put you in winning funds you would be singing her praises to us, or snubbing us as not knowing the right people. But it is virtually all luck -- time and chance happen to all, especially investors.

Three: She is right that you are taking the media too seriously. They are salespeople too. Watch news knowing today's headline has to change tomorrow to sell papers/TV advertising.

I'm not criticizing your move to cash. That may be all you can handle right now. FDIC is a powerful inducement in bad times.

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Post by Alex Frakt » Sat Mar 29, 2008 10:38 am

I split the following off from a Depression looming? since it represents issues that are better addressed on this forum.

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Post by Alex Frakt » Sat Mar 29, 2008 2:28 pm

It looks like you've moved everything to cash. Fine. Leave it there until you educate yourself sufficiently that you can make plans you can stick with. We can help you plan, but you are going to have to manage this yourself if you don't want to continue getting ripped off and you need to understand what's going on so you don't panic and make bad decisions later.

I'd start by turning off the TV and reading one or more of the basic investing books before going any further. "Investing for Dummies", the "Bogleheads Guide to Investing" and Bogle's "The Little Book of Common Sense Investing" are al good choices and at least one of them should be available through you local library (have them order it if not).

Once you've read one of the books, you'll know enough of the terminology and basic concepts to reasonably frame your questions and make sense of the answers.

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Post by Die Hard » Sat Mar 29, 2008 3:13 pm

Ksodapop,
Turn off that TV and radio!! Stop listening to all the confusing, opinionated people telling you what you should do. They don't know your situation, so how can you follow any advice from them? The financials will only make you DIZZY! You don't need that right now. The people on this post truly want to help. I agree with all that have said to park your money until you get yourself educated. Two good books that set me on the path were "Mutual Funds for Dummies" by Eric Tyson and "Index Funds" by Richard Ferri. Very well written and easy enough to follow and understand. You've got way too many stresses in your life.

Get you a copy of these books, then print out a copy of Vanguards "funds by asset class":

https://personal.vanguard.com/us/funds/ ... /bytypeSec

Write notes beside the funds as you learn from these books. Take a deep breath, don't panic and you will be OK. I promise. And you'll also be proud of yourself!

blood_donor
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File a comlaint

Post by blood_donor » Sat Mar 29, 2008 6:40 pm

KSODAPOP,

Look into filing a complaint with NASD and arbitration with your former advisor; if the Muni funds, especially high yield muni funds were not suitable for your situation, you may be able to recover some or all of your losses.

Also, you absolutely MUST watch your spending, like a hawk. Every time you want to hit the savings acct, you need to ask yourself, can I afford this? You must realize that under the best circumstances, you can't expect to peel much more than 4% from your safe investments in a year, and sometimes less, depending on how things go. If you are disabled and living on SS and your settlement, you need to be very conservative.

Finally, and I realize that I am jumping to conclusions here, your long emotional posts sound to me like you are under stress, jumpy,perhaps depressed. Please, slow life down, maybe go talk with clergy or counselor, get things under your control. If there is anybody job you can work at, even if it is a crappy part time job, consider it for its healing benefits, of giving life some order, not to mention that with earned income you can put $$$ into a retirement fund! :D

Sitting around worrying and getting ulcers will shorten your life, and cause you to make rash decisions.

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KSODAPOP
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Re: File a comlaint

Post by KSODAPOP » Sun Mar 30, 2008 11:01 am

blood_donor; “sound to me like you are under stress, jumpy, perhaps depressed. Please, slow life down, maybe go talk with clergy or counselor, get things under your control. If there is anybody job you can work at, even if it is a crappy part time job, consider it for its healing benefits, of giving life some order, not to mention that with earned income you can put $$$ into a retirement fund!”




Sir, (I say this with all respect and appreciation for all the advise and honest help by everyone here and this reply should not be viewed as a snotty response to your post above); I assure you, I do not sit around ALL day everyday simply watching television and placing all of my faith in every word each TV commentator and news anchor reports and although I do not believe every word out of their mouths, I don’t believe everything they report is all lies either and I also believe they do offer some enlightening information and the current and future market situation is being both reported and confirmed in every paper and on every channel, that is obvious.

Honestly, we don’t have to be NASA scientists or financial experts to see, hear and feel the obvious, that this nation has been mismanaged and we are in a dangerous situation, and there is no easy way out of it. Yes, this causes more anxiety.

I apparently have given the impression that I may need to see a psychiatrist or priest due to depression, hey, maybe even an exorcism?

I have a very full life considering my constant and even often debilitating pain, numbness and headaches, and although I’m lucky if I get more than 3-5 hours of sleep each night, I still manage to make all my appointments on time as well as meeting all my children’s needs and responsibilities with meals, shopping, school meetings, homework and house cleaning, and I get no help from anyone.

I have taken everyone’s advice on these boards and I am acting for myself, and doing my homework. Sure it’s overwhelming with so much to learn, but I am taking one step at a time.

I also care for an elderly mother who is blind and lives alone, and that’s a chore in itself as my sister who normally cares for her meals, shopping, medications and appointments, she was diagnosed with HER2+ breast cancer and underwent a double mastectomy, now chemo and Herceptin treatments, loosing her hair, fighting great depression as she cares for her two over active little boys and two teenage daughters. So, my responsibilities have grown quite greatly now, and I have no choice but to take over for mom’s care, whether I can walk or not.

My other sister lives 1500 miles away. My niece, durable POA for mom has mismanaged mom’s bank accounts and savings and almost just cost her the house for not keeping on top of property taxes.

We’ve had 4 deaths in the immediate family in the past 5 years, my dad, my oldest brother, an uncle and nephew. My other nephew (who I’m close to) serving his third tour in Iraq, hit by an IED and still wants to serve (God bless him and all our troops!), my oldest daughters husband (who can’t get his s*** together) leaves for active duty Air Force, she’s planning on moving with my baby grandsons to who knows where;

I had a wife who could not remain loyal to me when I was injured due to a coworker and his GD negligence and practical jokes costing me two great military and civilian careers; she lives in a dump and expects my ten year old to sleep on a couch, her dysfunctional behavior jeopardizing my children and grand children’s welfare and education, but when I call dcps, they call her and notify her they’ll be doing an inspection a week in advance, giving her plenty of time to fix things up? But show up on my door step unannounced? WHERES THE JUSTICE?
That’s all enough to create depression and anxiety in anyone, but life goes on and I deal with it.

I can go on and on until the cows come home with all the problems and dysfunctional family stuff that’s been going on, so yes, there is a lot of anxiety in my life, but depression is not a symptom I suffer from. Depression causes one to withdrawal from every aspect of ones life, I am certainly not withdrawing, not from my children, not from family, not from responsibilities or the fun stuff in life, in reality, I am attacking the problems head on, but I need help in the things I don’t know. It’s just all overwhelming and happens so fast that I’m unable to keep up with it all on my own.

To keep busy, I’m an active member and chair officer of two local clubs, I am a service officer for our local American Legion, a volunteer for my Town and run the veterans information and advisory center; along with that, I am associated with a State agency for needy honorably discharged veterans and their families. I was receiving a monthly income, although small, it was something. I have had to step back for a time to deal with my health and family responsibilities, but hope to return when I feel up to it, the problem is I have no idea when I am able to physically handle the day or chores. This morning, I can barely move, tomorrow I may feel fine.

While yes, like many people these days, I do have quite a bit of anxiety, and yes, maybe some depression, but if I were to nail it down, I’d say I was pretty P**s*d off! And p**s*d at the absolute mismanagement of my and my children’s funds, and the state of our economy due to bumbling fools that run our nation.

This situation with my finances I’ll admit I could have made better decisions, but I will also say it is viewed by me as mismanagement by my advisor, and his absolute neglect, greed, misinformation, and even white lies. He has taken advantage of my disabilities and lack of investing knowledge. He betrayed my trust.

“your long emotional posts”, emotional? Yes, Long? But there is no easy way to describe what is going on. I have written many posts describing myself as a preschooler when it came to investments, in my opinion I have now graduated to the first grade.

I spoke with my attorney who has charged me $65K to handle my comp case; he now wants another $5K to look into and illegal/neglectful practices by my advisor, I’m not spending a dime unless I have to. It just keeps getting better, its tax time and I just don’t have the energy. But, I’m not giving up.

Those Vanguard 529’s look interesting, but it will cost me big time to get out of what I have with Alliance Bernstein.

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Dan Kohn
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Slow down

Post by Dan Kohn » Sun Mar 30, 2008 12:46 pm

I read the entire thread, and find myself emotionally exhausted at the end of it, so I can only imagine what you've been going through. Here are a few thoughts:

+ You got really bad advice from multiple financial advisors. This sucks, but is also reality for most Americans. Be glad that you 1) realized it and 2) have found the Bogleheads forum where you can get really good advice from people who are not seeking a commission.

+ You seem to have moved all of your assets into money market funds. This is very good, as they are a nearly risk-free way to hold your assets until you decide on your investment plan. You should open an account with Vanguard, and transfer your funds into the Prime Money Market, in order to take advantage of Vanguard's lower fees, and get away from your current advisor. Terminate your relationship with your current financial advisor entirely. Do not buy any more mutual funds or any other financial products from Vanguard or anyone else until you have a clear asset allocation plan and know exactly what you aim to accomplish and what risk you can afford to take. It is perfectly fine to leave your funds in the money market for several months while you educate yourself.

+ You ask several times about annuities. A fixed annuity is unlikely to be suitable to a 48 year old, and a variable annuity is suitable for almost no one. Be thankful that you never got waylaid into an annuity by a financial advisor. They would not only have wasted much more of your money, but you would be locked into an instrument you couldn't get out of.

+ You complain repeatedly about funds that lose money and also about ones that have very low return. As you read more, you'll realize that there is a fundamental tradeoff between risk and return. If you can't afford to lose any of the money, than you need to invest it in very safe instruments like money markets that provide very low return. But there is no free lunch. Please realize that although you got particularly unlucky with you muni funds (since they were unsuitable for you in the first place and also have had a historically bad few months), the stock market is down over 10% the last few months and so lots of people have losses.

+ While there is no free lunch, there are bad investments. Investments with high expense ratios are almost guaranteed to cost you more than similar ones with low expense ratios (which is why people on this forum like Vanguard). There are also investments like muni funds which while very helpful for people with high incomes, are totally unsuitable for your situation.

+ You asked what "paper losses" meant. That means that when a fund goes down, you haven't actually lost the money until you sell. However, you have sold, so those are now real losses. This will be challenging, but you need to stop thinking of your money as $150 K. You have as much money as you have. Am I correct in understanding that you have $90 K in your checking and $10 K each in Rhode Island 529s for each daughter?

+ There's nothing wrong with the Rhode Island Alliance Bernstein College Bound Funds. Could you please specify how much money and how it's allocated. You can get good advice here on how to split your children's holdings between Total Stock Market and bonds, and increase the bonds as they get older.

+ You may have a case for arbitration against your broker for putting you in extremely unsuitable muni funds. However, I would be hesitant to pursue it, as I'm not sure that's where you want to be putting your time and emotional energy.

+ I'm concerned that you never mentioned debt. Do you have credit card or medical debt? What is your rent? Do you have a monthly budget? Are you able to reliably live on less than what you get from social security? Are all of your medical bills covered?

+ When you have educated yourself more, I suspect you'll find that you'll want to keep a small emergency fund in Vanguard Prime Money Market and put the rest in Target Retirement Income, which will provide a higher expected return in exchange for somewhat higher risk. However, please don't make any decisions yet. Just get all of your funds into the money market and try to a little reading so that you're ready to make a decision. We really need to understand what you aim to do with the money and on what timeframe before we can provide specific advice.

+ Finally (and I hope my adding this won't cause you to disregard what I wrote above), I think it is likely that you are clinically depressed. You need to understand that it is a physical condition and has nothing to do with a failing on your part or some sort of weakness. For what it's worth, you have every reason to be depressed, and it would be somewhat surprising if you were not. But depression is a real physical, debilitating condition, just like a broken ankle (or a spinal injury). The important thing is to understand that there are very effective treatments. Please schedule a visit with your primary care physician and/or a psychiatrist he refers you to. The feelings of helplessness, of panic, and of exhaustion are very real, and they are fixable. With the appropriate medication (often an SSRI like Zoloft), your whole world (including your finances) all of your problems can start to seem much more approachable and fixable.

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KSODAPOP
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Re: Slow down

Post by KSODAPOP » Sun Mar 30, 2008 1:05 pm

howdy wrote:I read the entire thread, and find myself emotionally exhausted at the end of it, so I can only imagine what you've been going through. Here are a few thoughts:
LMAO! NOW that was funny, I sure feel better already.

TY

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Post by JW-Retired » Sun Mar 30, 2008 2:44 pm

Ksodapop,
That was very good advice you got from howdy. You ought to take it.

Two other comments. Why is tax time a problem? You have little income and should not have much at all in taxes. In case you don't know a lawsuit settlement is not income.

I would not throw good money after bad trying to get something back from the advisor. The lawyer will make money and you won't.
JW

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Post by bolt » Sun Mar 30, 2008 4:49 pm

I'll read your whole post later........My name is kevin too, i'm a few yrs older, and had C-3 C-7 fused/fixed/worked on/ lamenoctomy,blahblahblah DR speak...and have many other health issues as well,... so your not the only one out there. Educate yourself by reading ALL the books advised here that you can and set up a specialneedstrust for yourself, W/A SNTLawyer =alot of your needs will not be taxed on withdrawals ...........The posts above are great advice... to be continued. DO NOT ANNUITIZE IMO your to Young.. Good Luck!

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Considerations

Post by Laura » Sun Mar 30, 2008 6:38 pm

ksodapop,

You mention having money set aside for your children. While paying for their education is definitely a worthy plan you are on a very tight budget. No one will loan you money for retirement or health care but your children can receive education loans that you can help them with if your financial situation stabilizes. I know this sounds harsh but it is a simple fact. You need to focus on your own future. It sounds like you are already making huge contributions to your family in many other ways.

Good luck with all of the challenges you face.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

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Post by jh » Sun Mar 30, 2008 7:37 pm

...
Last edited by jh on Thu May 15, 2008 1:12 pm, edited 1 time in total.

blood_donor
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Pursue remedy

Post by blood_donor » Sun Mar 30, 2008 10:53 pm

KSODAPOP,

Don't hire a lawyer, rather try these things. Call the broker (bank?) who sold you the s*** munis and ask how to file a complaint for an unsuitable investment. They have a process, arbitration.

Also, go to the NASD web site and read up on it, as you may need to file a complaint with them. FYI, brokers are nervous about having these complaints show up on their records as they are bad for business. They may agree to reimburse you for some of your losses, which are relatively modest (by their standards).

I am no expert, but it might be worth a shot. It may take some paperwork, and some waiting, but there is a path to try.

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KSODAPOP
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Post by KSODAPOP » Tue Apr 01, 2008 6:02 am

bolt wrote:I'll read your whole post later........My name is kevin too, i'm a few yrs older, and had C-3 C-7 fused/fixed/worked on/ lamenoctomy,blahblahblah DR speak...and have many other health issues as well,... so your not the only one out there. Educate yourself by reading ALL the books advised here that you can and set up a specialneedstrust for yourself, W/A SNTLawyer =alot of your needs will not be taxed on withdrawals ...........The posts above are great advice... to be continued. DO NOT ANNUITIZE IMO your to Young.. Good Luck!


"Not the only one out there"


Yes I know that, I appreciate that. Obviously I've given the impression that I think the world owes me something and I'm seeking sympathy through my miniature violin.

Obviously I've also given the impression that some think I'm clinically depressed and not seeking medical help, or in this case, not trying to learn all I can on my own. That sir couldn't be further from the facts.

I mean NO disrespect.

Please indulge me here, but I can better describe this as clinically P****d off from the root cause of rip off syndrome.

I was asked questions, and I answered them. I was merely trying to give the readers a good picture of my situation and in doing so went overboard and expressed how I feel about the inept, negligent and dishonest buffoons in every profession who affect our entire lives because they think they are Gods and instead of having our best interests at heart, upholding their sworn oaths, they only betray our faith and trust we place in them.

I have 5 broken titanium screws embedded in three cervical vertebrate, a plate hanging from one screw, broken fragments left behind after surgery causing vocal cord nerve damage and swallowing difficulty, three levels of bone graft failure, multiple levels of failed lumbar disks, and to "try" to correct these failures, the physicians want to put more metal in me through an even greater risk to my body, and the ONLY guarantee they give is that I will be worse if not face the risk of permanent paralysis. Considering that, I think I've done pretty darn good at keeping my faith and trying to remain positive.

The bottom line comes down to regaining trust in business people, financial advisors, health care professionals, those who we vote to place in power in government, those who prepare our foods, you know? Those who we place our lives in their hands?

Let me give you a for instance in what I'm talking about if I haven't made my point;

Five weeks ago, I called my dentist for an appointment to finish two crowns, both temporaries he put on three months prior came off their bonding. I was told he was out of the office all week, call back.

A week later, I hear his name on the radio, I caught the end of the story, but they said he faces 108 years in prison. I did a Google search and found multiple articles that he was arrested and found guilty of over 400 illegal prescriptions for opiate pain killers for friends, his office staff and himself, totaling over 11,000 pills.

His defense was that he was addicted. I'm not going to document his name here, but you can find the story in a Google search, just type in "Fairfield, CT. dentist found guilty".

Heres a guy who's dental practice was well respected in our community, I could eat off the floors it was so clean there. Everything sparkled and shined and was covered in fresh protective plastic.

In the five years I've been going to him, he never once gave the impression that he was ill or high. He didn't sweat, he wasn't withdrawn, he was a perfectionist, he was generous and patient with payments, the equipment...state of the art. I mean this guy, and his staff and hygienists had it all together.

I've referred my mother, daughters and friends to him, believing and trusting that he practiced the highest level of cleanliness from contamination, that he was highly educated and experienced. This is a guy who's face is 12 inches from ours, he had us ALL FOOLED!

Read the articles and you'll see why.

I now wonder if he was actually sterilizing his equipment, or if he merely shined it up with Windex. How many times was he high when I placed my healthcare in his hands?

I have ask if he even had a valid license to practice over the past year as that is now in question with the State.

I have to wonder if a Novocain shot he gave me created an abscess from filthy needles and showed up a month later, or if it was from a cavity, do I need a blood test?

I have to ask why if the State charged and found him guilty on all counts and knew this was going on for two years.

I have to ask why if the State of Connecticut found him guilty and will be sentenced on April 30th, WHY, WHY, WHY are they allowing him to continue to practice dentistry?

I have to ask, what happens to all the money I paid him for the two expensive crowns I was supposed to get, and I still get bills from him for the balance.

With the recent reports of possibly thousands of people at risk of hepatitis infections in the Las Vegas area because of pure negligence and inept medical practices by so called "medical professionals", who can we trust anymore when our very health and lives are at risk?

As I’m writing this, there is yet another report on CNN of a California doctor being allowed to continue to practice medicine and reconstruction cancer surgery, even as he is undergoing alcohol treatment.

This same negligence can be said for many people in the financial industry but who also practice greed and dishonesty for self gain, this includes those in government and the investment/banking systems.

We elect these people because we trust them for what they tell us, such is the case with Gov. Elliot Spitzer who swore to uphold the law and prosecute criminals, but instead he practiced double standards for self gain, and a few other things.

So, I'm not sure how to take you're comment "you're not the only one out there", whether it was a direct shat at me or not, but I'll take it with a grain of salt and give that comment the benefit of the doubt.

Most criticism I will always accept as constructive and I appreciate that many of you have taken valuable time to offer advice in order to help. I even accept the other gentleman’s suggestion of seeking medical help for clinical depression, I assure you, I am NOT suffering from depression, no matter how it caused.

In the past 6 years I’ve had my share of doctors from all professions; I’ve tried many medications, treatments and follow directions to a tee. I see my PCP six times a year as well as a psychiatrist in whom I elected to see on my own to keep my head on straight.

I’ve spent countless hours with counselors for myself, and my family, not because it was ordered, but because I felt it would help my children (and myself) understand my physical and physiological condition and why daddy can’t afford the nice things we used to enjoy, including vacations.

Many of the medications I’ve been given had caused countless negative side effects from, but not limited to head aches, vivid nightmares, hypertension, hives, bladder incontinence, severe bloating and digestive problems. The side effects outweighed any benefits.

Many of the medications all these doctors swore by, handed out like candy and prescribed for pain, depression and anxiety actually knew little about the meds as many of them were either later taken off the market, or were found to place our hearts at risk.
Trust me when I say, the FDA doesn’t tell us much and many medications that haven’t been approved by the FDA are already on the market. Many claims made by the pharmaceutical companies are over blown, this is why we see all the commercials expressing a drug’s benefits, and then they talk fast with the warnings…”risk of high blood pressure, heart failure, sexual dysfunction and death.”
Once you receive the medication, I always ask for the spec sheet that comes with the drugs with all the fine print warnings. We don’t receive these when the scripts are filled from bulk dispensers. I’ve already lost one nephew from multiple drug toxicity; I’m NOT going to do that to my kids or myself!

Believe me when I tell you, I am in treatment, I receive regular blood tests, I see my doctors regularly, but my condition is NOT clinical depression, its anxiety from chronic rip off syndrome.

So, like everything, we need to do our homework, whether it’s buying a car, seeking a physician, whatever… which is where I am at with my investments, doing my homework, picking brains.

I’m a perfectionist, a detailed oriented person, I know this, and as you can see, I tend to write novels, that’s just me. There are many details I haven’t even brought up where I could prove to you my complaints or concerns are justified as I did above regarding my dentist, and I’m NOT trying to seek sympathy, but only need help and direction because of inexperience.

I apologize if I’ve depressed many of you, I merely wanted to offer a wider picture of my situation, and many people have asked questions that I have given my best honest answers to.

Maybe it would be best if I didn’t continue to post on the boards any longer, it’s obvious it is upsetting some, and giving the wrong impressions to others. I know many of you have replied with heartfelt and generous offers to help, and I’m eternally grateful, but apparently I’m giving the wrong impression. I’m simply tired of getting ripped off and screwed by those I place my trust in.

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Post by bolt » Tue Apr 01, 2008 10:53 am

KSODAPOP......I mean't there are alot of people out there worse off than you or I. I was initially on about 6-10 meds,.....like you I got fed up! Nurontin, mexiltine, dopamine' BlahBlahBlah,.. F'rea'k em all I said to myself and STOPPED cold turkey. It was no big deal. I was becoming a pawn(or less) for the drug companies. Now I only take 2 meds. I used to vollenteer for the V.A,.. those guys have it worse than most FWIW.. Now thats rip off syndrome. Good Luck!

Topic Author
KSODAPOP
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Post by KSODAPOP » Tue Apr 01, 2008 8:33 pm

bolt wrote:KSODAPOP......I mean't there are alot of people out there worse off than you or I. I was initially on about 6-10 meds,.....like you I got fed up! Nurontin, mexiltine, dopamine' BlahBlahBlah,.. F'rea'k em all I said to myself and STOPPED cold turkey. It was no big deal. I was becoming a pawn(or less) for the drug companies. Now I only take 2 meds. I used to vollenteer for the V.A,.. those guys have it worse than most FWIW.. Now thats rip off syndrome. Good Luck!


No Problem.

I'm the service officer at our AL post, volunteer for the Soldiers' Sailors' and Marines' Fund of CT. and volunteer head rep for our town veterans information and advisory center. I work closely with the VA hospital here and Rocky Hill with many needy veterans.

I had to step down to heal my neck and back for a while, can't wait to get back to that, those positions were the most rewarding things I've ever done in my life. If just to give back a small bit of help for all our veterans and troops for the sacrifies they and their families made, and make for us all, its all worth it!

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KSODAPOP
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Re: Pursue remedy

Post by KSODAPOP » Mon Apr 07, 2008 7:58 am

blood_donor wrote:KSODAPOP,

Don't hire a lawyer, rather try these things. Call the broker (bank?) who sold you the s*** munis and ask how to file a complaint for an unsuitable investment. They have a process, arbitration.

Also, go to the NASD web site and read up on it, as you may need to file a complaint with them. FYI, brokers are nervous about having these complaints show up on their records as they are bad for business. They may agree to reimburse you for some of your losses, which are relatively modest (by their standards).

I am no expert, but it might be worth a shot. It may take some paperwork, and some waiting, but there is a path to try.



Just a quick update;

Curently I am still in a MM, probably going to move and divide those funds into 3 and 6 month CD's until I learn more options; and I'm also looking into getting out of the RI Alliance Burnstein college bound UTMA/529 funds which are both completely counter productive to what I had come to expect based on the information (or should I say LACK of information) my advisor provided or my wishes.

The NASD/FINRA websites were very helpful and according to the "prohibited conduct" section, I believe I have a good case to file a complaint against my advisor/bank.

One problem though, looking up my advisor's back ground information, I found he has a pretty impressive background and certifications, with no complaints against him that I could find.

I am filing a complaint with the State of Connecticut, and the investment company; contacted my Congressmans office and they provided some further contact numbers.

My attorney was willing to sit and discuss this at no charge, he'll advise me as to whether I have a good case or not, and what his retainment fee will be if we have a case.

In the meantime, I'm still reading and looking into the advice from these posts and Boglehead articles.

I have noticed in the past 4 weeks that my advisor has better things to do and is basically ignoring my calls, so I pretty much have to deal with his secretary. I think that alone would justify a complaint in itself.


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Taylor Larimore
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The best investment you will ever make: Read a good book!

Post by Taylor Larimore » Mon Apr 07, 2008 12:39 pm

KSODAPOP wrote:
blood_donor wrote:KSODAPOP,

Just a quick update;

Curently I am still in a MM, probably going to move and divide those funds into 3 and 6 month CD's until I learn more options; and I'm also looking into getting out of the RI Alliance Burnstein college bound UTMA/529 funds which are both completely counter productive to what I had come to expect based on the information (or should I say LACK of information) my advisor provided or my wishes.

The NASD/FINRA websites were very helpful and according to the "prohibited conduct" section, I believe I have a good case to file a complaint against my advisor/bank.

One problem though, looking up my advisor's back ground information, I found he has a pretty impressive background and certifications, with no complaints against him that I could find.

I am filing a complaint with the State of Connecticut, and the investment company; contacted my Congressmans office and they provided some further contact numbers.

My attorney was willing to sit and discuss this at no charge, he'll advise me as to whether I have a good case or not, and what his retainment fee will be if we have a case.

In the meantime, I'm still reading and looking into the advice from these posts and Boglehead articles.

I have noticed in the past 4 weeks that my advisor has better things to do and is basically ignoring my calls, so I pretty much have to deal with his secretary. I think that alone would justify a complaint in itself.

Hi KSODAPOP:

Today I read through this thread for the first time. Your fortitude in the face of so much adversity is inspiring.

It is clear to me that your lack of investment knowledge has cost you thousands of dollars and many days of needless worry and anxiety. If you do not educate yourself. you will continue to throw money down the drain making additional mistakes.

Several Bogleheads have recommended that you read a good book on mutual fund investing. Until you do that, it is impossible for you to evaluate the information (much of it self-serving) that you are getting from your advisors, your banker, the media or on internet forums.

If you will give me your name and address, using the personal message (PM) link on this page, I will send you a free copy of "The Bogleheads' Guide to Investing."

Best wishes.
Taylor

Topic Author
KSODAPOP
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Re: The best investment you will ever make: Read a good book

Post by KSODAPOP » Tue Apr 08, 2008 4:48 pm

Taylor wrote:Today I read through this thread for the first time. Your fortitude in the face of so much adversity is inspiring.

It is clear to me that your lack of investment knowledge has cost you thousands of dollars and many days of needless worry and anxiety. If you do not educate yourself. you will continue to throw money down the drain making additional mistakes.

Several Bogleheads have recommended that you read a good book on mutual fund investing. Until you do that, it is impossible for you to evaluate the information (much of it self-serving) that you are getting from your advisors, your banker, the media or on internet forums.

If you will give me your name and address, using the personal message (PM) link on this page, I will send you a free copy of "The Bogleheads' Guide to Investing."

Best wishes.
Taylor
Taylor, you're compliment certainly put a smile on my face, I sincerely appreciate you're thoughtfulness, the same goes for everyone else here.

Is the guide to investing available through the web links in BH? I've been reading through Investing - Portfolio Help, Investing - Theory, News & General, as well as through many message forums.

Sometimes we go through life with the false sense that our problems are exclusive to ourselves, until we then wake up and understand that so many folks are going through the same, simular or worse situations.

I've had a terrible last 6 years with multiple deaths in the family, a divorce, child custody issues, multiple spine injuries with failed surgeries, loss of my civilian and military careers, a sister cursed with breast cancer, trying to care for a blind elderly mother, a voluntary repo of a leased family vehicle with 3 months left on the agreement, and on and on.

It seemed like the black cloud just wouldn't go away. One BH gentleman wrote he felt I was now dealing with clinical depression, I denied that, refused to believe it. Actually I think concidering all that has occured in the past 6 or 7 years, I've held my head high and try my best to remain positive, I have to, for my three children and grand kids of whom I am very attached to.

But, for the past week or so, I've been doing a lot of thinking, and I can honestly say yes, I had dealt with depression, sought treatment, still do, but probably while trying to remain strong for everyone else, I've hidden that depression, found myself fighting through a mountain of anxiety, and even anger against those who have taken advantage of my kindness and generocity, and even lack of investing knowledge.

I mentioned the arrest and conviction of my dentist for illegal opiate prescription writing, another person in whom I placed my trust for several years, as well as for my mother and daughter's dental care.

I was absolutely floored to learn he admitted to opiate addiction and his illegal actions. He will be sentenced on April 30th, possibly facing up to 108 years in prison.

I've always been a good judge of character and could usually spot someone with a heavy drug dependancy or addiction, I have always had a very discerning heart and could usually tell if someone was being deceiving me, but like with my advisor, some people hide their skeletons pretty darn well, and I got burned.

I think this whole thing really wacked me hard in the past several weeks, after learning of the deceptive business practices and misleading information from my advisor, now my dentist. Who's next? I've been asking, who can we trust? Certainly not the politicians.

Its nice to know that there are still some people out there like yourselves to offer a word of encouragement and helpful advice.

I'm surely learning quite a bit in only the past 3+ months since I decided to start thinking and learning for myself instead of taking every word from advisor as golden rule.

My advisor told me to read Allen Greenspan's book, could it be our economy is suffering partly from many of his idea's, actions a/o inaction as Fed chairman?

Best wishes to all!

Laura
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Boglehead Guide to Investing

Post by Laura » Tue Apr 08, 2008 9:13 pm

KSODAPOP,

You are very lucky to have Taylor offer to send you the terrific book he, Mel Lindauer, and Michael LeBoeuf wrote for investors. You can find out more details about The Bogleheads’ Guide to Investing on this link. If you send him your contact information through a private message then take the time to read the book you will be miles ahead of most investors including most financial advisors.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

johnjtaylorus
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Post by johnjtaylorus » Tue Apr 08, 2008 11:29 pm

Ksodapop:

As a JD myself, I invite your attention to blood_donor's suggestion.

Zillions of people have been sold lousy funds by fee-seeking advisors.

The lesson is to think in terms of Vanguard, or T Rowe Price, or Dodge & Cox, or some good outfit when you invest.

pkcrafter
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investing

Post by pkcrafter » Wed Apr 09, 2008 8:43 am

Hello Kev,

I also suggest you forget the lawyer idea. I doubt you have a case and getting a lawyer involved will just cost more money. Currently your Franklin and Putnam funds are down 0.4% YTD. Both funds show gains over the past 12 months.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Topic Author
KSODAPOP
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Re: investing

Post by KSODAPOP » Wed Apr 09, 2008 10:52 am

pkcrafter wrote:Hello Kev,

I also suggest you forget the lawyer idea. I doubt you have a case and getting a lawyer involved will just cost more money. Currently your Franklin and Putnam funds are down 0.4% YTD. Both funds show gains over the past 12 months. "

Paul




Well, hello there Paul! How are you?

In case I haven't mentioned in other posts to the members here (I think I had), Paul has been a HUGE help to me since I originally began posing in Morningstar in January when I fianlly had come to the conclusion that my advisor was squeezing me with misleading misinformation and high load/fee funds.

Paul had replied to my post and directed me to Bogleheads (for which I'm eternally grateful!), since then we've been communicating in private messages, and I cannot begin to express my deep gratitude for all the help and advice he has offered on several occasions, and way over and above the call of duty might I add.

Paul, once again I thank you!

My attorney is pretty good to me, he too has been very helpful and generous with his time. Trust me, I know all about attorneys as they charge for every minute on the phone or in person. Like many people, I've been charged in the past $350 and up (1 hr. Fee) for 32 minutes worth of phone time, so I've very tuned to their fees.

He's willing at least to give me an hour at no charge reguarding my rights and options, but I will certainly take the other gentleman up on his offer today.

I just determined I hadn't filed taxes since 2002 (haven't had tax liability until '06), so I'm trying to get all those papers together for a tax advisor, but need to take frequent breaks.

My daughter wants me to do her taxes, I bought her a car and need to get that registered before her husband leaves for AF Basic training. Now ny nephew is up from Florida with his new wife, my sister is flying in tomorrow and we need to go over all of my mothers bills and expenses; my 16 y/o is leaving for a florida vacation this weekend with her friends family, so I've gotta type up a medical authorization in case of illness or injury. I'm getting overwhelmedwhich is exassebating my pain.

These people just have to realize that I need to take care of my obligations and responsibilities first, I guess I should probably realize that for myself first huh?

I've been trying to get ahold of the Connecticut Dept. of Banking to file a complaint regarding my investments, then need to type a written complaint to my bank.

I'm not expecting any money back, but I want to get out of the RI college funds without loosing any more money. So that is my next priority to get done today.

Thanks again for everything! Best wishes.

Kev

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Post by psteinx » Wed Apr 09, 2008 11:37 am

I read some of this thread and skimmed other parts. I can't guarantee that the following post fully accounts for all aspects of your situation. I am also *not* a financial advisor, so take these suggestions as thoughts only...

KSODAPOP - there are 3 issues, each somewhat separate, that you should consider.

1) Advisor fees and advice quality
2) Market risks vs. expected returns
3) Personal spending

While all 3 have been touched on, it seems the focus has been mainly on item #1. While I certainly agree that it is important that you resolve any issues here, I think you need to focus at least as much on #2 as #1, and probably more on #3 than either of the others.

Regarding #2: You will ultimately have to decide between very low risk investments like CDs and money market funds, and higher risk investments like mutual funds focusing on bonds or stocks. Most of us would love to be able to earn high returns without enduring much risk, but the reality is that doing so is not realistic, especially in today's markets. You need to educate yourself so you can understand the tradeoffs here. If you accept higher risks in pursuit of higher returns, you need to be psychologically prepared for the fact that your investments may go down.

Regarding #3: This is especially important. Without sorting through all your posts in detail, it sounds like much of the roughly one third drop in your investment value is due to you withdrawing the money to spend it. Frankly, the difference between getting a 3% vs. a 5% return on your portfolio is fairly trivial if you will be spending ~$30K per year of a ~$100K portfolio - you will be out of money in about 3-4 years regardless of whether you earn 3% or 5%.

While there is considerable debate about the exact rate, most folks around here would say that if you have a broadly diversified investment portfolio, in low cost funds (including stocks, whose volatility seems to make you very nervous), you should probably only spend about 4% of the balance each year. It's actually a bit more complicated than this, and there are different theories, but 4% is a rough ballpark. But frankly, if your investments are in high cost funds or in low risk CDs and such, you might even want to spend less than 4% per year (even if you are earning 4% on a CD, inflation is eating away at the value of the principal).

It seems you may be spending dramatically more than that. I strongly encourage you to get a handle on your finances. Prepare a budget of what you've been spending, and try to figure out what you can get your spending down to going forward. Don't expect others to see your predicament and stop making demands against you - ultimately, it is up to YOU to say no when and where appropriate. You mention buying a car for your daughter, who is apparently married. If she is married, I would think hard about whether you should be in the role of providing major financial support to her as buying a car would suggest (you don't give details as to when you bought the car or how much it was, but still...)

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