Jeffrey Buk was working in a Milpitas branch of Washington Mutual Bank as a financial consultant for WM financial services. My family member unfortunately used his advice for Traditional IRA (retirement) investment. His advice turned out to be the most lucrative advice not for the investment, but for the commission of his financial service.
First, he advised to put IRA money into a variable annuity, a hybrid mutual fund/insurance product. It is absolute not fit because annuitys benefit is to keep your investment gain tax free, but the IRA investment gain is already a tax exempted. It does not need to pay for this feature from annuity at all. Also, this type of annuity charges lucrative annual fee to keep a minimum return guarantee, which may not even worthy the annual fee you paid. And this annuity locked you up with steep penalty if you want to withdraw within 7 years.
Secondly, at that time when the foreign stock market had already been up and hot for several years and ready for a down turn adjustment, he still advised to put a large amount of the investment into foreign stock mutual funds with a top price. I do not blame him for the judgment. Anybody could believe hot stock could go hot forever when his brain is hot, even though he should not as a financial advisor.
The ethic problem is that the funds he advised all charge fat up-front sales charge (around 5%) and high annually expense rate. This means your investment immediately loss 5% value when you buy these funds. And it may take one year or more before your money to grow back to original value even if the market is going well, not to say the market was near the end of growing very soon. He said that by forfeiting the 5% up front fee, it can bring the annual management charge down to fewer than 2%. But later we got to know that we could buy the same investment combination with other funds (such as ETF funds) which have much lower management charge rate and no up-front sales charge at all. His advice apparently only brought benefit for his commission from the funds but not for the investment.
We eventually realized how ridiculous his advices were, after we later talked with other financial institute and advisors to evaluate our existing investment combination.
Now this guy is working for another big bank in Fremont, CA. We hope that by filing this report. No more people be rip-off by his advices, which bring big benefit for the advisory, nor for your investment.
0 comments