I recently saw a few cases of nice mis-selling by a big wealth manager. I will not name him but if you Google for how some retired people were defrauded, you will be shocked.
Modus operandi is this: The sales guy is designated ‘Wealth’ Manager, Wealth Head, …or something to do with wealth. So this retired person is intrigued or some other retired person introduces him. After all these people keep asking for reference so they get introduced. So he goes to this retired person about 67 years of age. The retired person has a good IFA who has created a lot of wealth over the past 15 years and it is lying in 4 mutual fund houses – in about 7/8 schemes. Obviously when they need a statement they go to Camsonline and get it. The whole portfolio is lying (and is updated regularly) in Valueresearchonline.com.
However the Wealth Manager says “We will consolidate everything and keep it in demat account”.
The sexy words here are a) being more organised and b) all details will be in one place. So the senior citizen (a widower) asks his son and son says ‘go ahead’. Remember he is a NRI in USA and has no clue about what is happening.
So suddenly all the mutual funds are put into the demat account being controlled by the ‘wealth manager’.
The second carrot was – if all this is in one place and there is a nominee, on your death all the assets will go to your son.
Note: the same would have happened even in a non demat form.
All this happened in 2015.
Cut to 2017.
Senior citizen is now 69 years old. He has a MORE risky portfolio. He has started TRADING and Investing in direct equities. I guess he is having fun, and making some losses, but he is paying more brokerage than profits.
Some of his mutual funds have changed from big 3 fund houses to mid level fund houses – clearly the mandate is to churn (post tax) and keep showing the senior citizen “see we have booked profits”. Impressive.
Last week the son showed me the old portfolio (when it was with an IFA) and the current portfolio.
I would happily call the ‘manager’ a Wealth Damager.
As the snr citizen was not making a balance sheet, HE HAD NO CLUE about how his portfolio had not increased in the past 23 odd months.
He also found out how some of his shares were sold to be put in a PMS. Sadly the PMS never happened. One of the representatives had sold the shares and siphoned off the money. End of story.
Now they are wondering what to do.
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