question about changing brokerage account

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Topic Author
capran
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question about changing brokerage account

Post by capran »

I thought I'd ask this before I call Vanguard. My mother in law is getting taken to the cleaners from her long term Morgan Stanley broker. It looks very much like he is churning her account, as I see buys and sells of the same stock. Last year, for 2016, he took in over 11,000 in commissions and she netted 6,000 on a 600,000 portfolio. We have about 1.15 m under Vanguard, but not in a brokerage account. Since Morgan Stanley bought her stocks portfolio, do they own the underlying stock certificates, or could we get her hooked up with a Vanguard brokerage account to better manage and reduce fee's?
livesoft
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Re: question about changing brokerage account

Post by livesoft »

You can transfer her assets "in kind" to any other brokerage. But you could also tell Morgan Stanley right now to have "no further trades whatsoever."
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Topic Author
capran
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Re: question about changing brokerage account

Post by capran »

Thanks. Are there transfer fee's associated with that? We had one conversation about no more trades, and several weeks later he called he again to run some things by her, and she agreed to let him do one transaction. When she got her trades receipts she found out he did two, a buy and a sell. We're going to meet with him as a family next week. Just browsing through her buys and sells and looking at open and closed positions. In 2015 he Bought 100 shares of a company named Precision Cast Parts in 2 trades, and sold the 100 shares 5-6 months later. His commissions totaled $1,246.43 on 21,225.54 invested. Her profit after commissions was 534.76. But on another trade he did over 7 months in 2016-17 he bought two 300 share blocks of Symantec and sold after 6 months. Invested 14,997.48. At least that one she walked away with $2,202.37 profit to his 995.33 commission, so that's palatable.
aristotelian
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Re: question about changing brokerage account

Post by aristotelian »

Transfer in-kind should cost you about 50 bucks, and they should refund a pro-rated portion of your assets-under-management fees. I would say don't meet with him, just do it. Fill out the papers at Vanguard and you likely don't need to have any contact at all.
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BolderBoy
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Re: question about changing brokerage account

Post by BolderBoy »

capran wrote:But on another trade he did over 7 months in 2016-17 he bought two 300 share blocks of Symantec and sold after 6 months. Invested 14,997.48. At least that one she walked away with $2,202.37 profit to his 995.33 commission, so that's palatable.
I wouldn't find that palatable. That is a short term capital gain and therefore taxed at her marginal tax rate.

She needs to get away from this guy and his organization.
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Pajamas
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Re: question about changing brokerage account

Post by Pajamas »

You should do a three-way call with your mother and Morgan Stanley's Compliance Department to express your concerns. The broker is probably covering his tracks but just raising the issue should have a positive effect. You can do that whether or not she wants to move the account.


https://www.finra.org/sites/default/fil ... 011944.pdf
Topic Author
capran
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Re: question about changing brokerage account

Post by capran »

Thanks for your advice. Is the transfer fee of fifty per stock, or for the whole stock portfolio? He has her in many, many stocks! (he basically puts in buys so that she rarely has any cash in her account, so if he sells 25,000 in stocks from XYZ, her at the same time buys 25,000 in stocks.) we think she will need cash to pay living expenses as her living situation costs rise. She is 91 going on 92 and will need some assisted living at some point.
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roymeo
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Re: question about changing brokerage account

Post by roymeo »

I'm not sure that the right way to evaluate this is comparing his compensation vs. her profit.
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capran
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Re: question about changing brokerage account

Post by capran »

Here's a "SIT-REP"... It was decided to only have two family members, and since I'm in son in law I didn't go. Apparently the family, after meeting with the Morgan Stanley guy, is fine with the commissions (41,000 in the past 5 years!!!, and the total portfolio is only underperforming the S&P500 index by 19.5%), although they are going to curtail stock buys. I do appreciate all your input. When I think back to my years at Vanguard, instead of having 1.8mil, if I was paying the kind of commissions they are charging her, I'd have 450k less. Well, I tried to share my thoughts. Hopefully won't become my problem if the money runs out. Fun times! :confused
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