Elderly Investor Allegedly Overcharged by Financial Advisor, Sparks Concerns Over Fiduciary Duty

An 80-year-old woman was allegedly subjected to excessive fees and misrepresented performance reports by her financial advisor, raising questions about the responsibilities of those managing the wealth of vulnerable clients.

The situation came to light when the investor’s daughter, recently granted power of attorney, began reviewing account statements and discovered discrepancies between the advisor’s claims and actual documentation. Initially told fees were 1% of assets under management (AUM) with average returns of 6%, a closer examination revealed fees as high as 3% and annual returns closer to 1.6%. After confronting the advisor, who initially claimed to have adjusted the fees to 1%, communication ceased. An Assets in Custody (ACAT) transfer to a larger financial services firm has been initiated.

“While it’s not illegal for an adviser to charge 3%, it’s certainly excessive,” stated Joe Favorito, a certified financial planner at Landmark Wealth Management. Mark Struthers at Sona Wealth Advisors added, “There are very few situations where charging a 3% advisory fee could be considered reasonable.” Experts emphasize the importance of reviewing client agreements and documenting all communication. Elder law attorney Patrick Simasko at Simasko Law recommends saving copies of statements, emails, and phone records while details are still fresh. For those seeking a new financial advisor, resources like the CFP Board can help locate qualified professionals.

Financial professionals warn that even large firms aren’t immune to potential conflicts of interest, such as pushing proprietary products with hidden fees. They advise seeking fee-only advisors who are transparent about their compensation and utilize a third-party custodian to hold client funds. This case underscores the growing need for investor vigilance and the importance of understanding the fees associated with financial advice, as improper management can significantly erode retirement savings.

Authorities have been notified and are encouraging anyone with similar concerns about their financial planner to submit questions to [email protected].