Background: My parents are not finance people and have limited understanding of the markets, in general. They have been with a financial advisor since about 2007. This guy got started in 2005 and I even had him invest for me as I got an early start as an entrepreneur at a young age and he invested around $20K on my behalf before I got out of high school (more to follow in college...). All of this money was accumulated through a ton of hard labor/small business I started at a young age, no handouts...
It seemed like the "right" thing for me to do at the time to follow in my parents' footsteps and start investing, but it is clear to me now, this was a HORRIBLE choice (more correctly, choosing this advisor was). He was individually picking stocks early on (nothing special, a lot of AT&T and Apple and other big name stocks) and he then proceeded to shift my accounts throughout the latter part of my college years to HEAVILY short the market with 3X leveraged ETFs (TZA, SDS) and leveraged metals ETFs (GDX). In short order before I knew what was going on, those 3 ETFs were 95% of my overall portfolio...
Admittedly, I was not keeping up with things like I should have (I was in college and young and dumb and trusted him as my advisor to make the right choices) and before I knew it, my account was destroyed through his decisions in these ETFs. Looking at it now, it is clear to me, those ETFs are beyond speculative, honestly it looks like it is straight gambling and I can't imagine ANY advisor recommending this strategy. Am I wrong?
Fast forward to today... I have severed my relationship with him, but have some of these ETFs still that are all down at least 50% (TZA worse than that)... I worked my a** off with the hope of getting ahead early in life and most of it was squandered away through his decisions...
This guy has gained a following and I've been told by one of his analysts (who I saw at a bar in 2015 randomly, he was intoxicated and spilling the beans) that they have grown their AUM to >$500 Million. Ever since 2010, this advisor has been predicting a crash and sends out weekly emails (more less fear mongering articles) to his clients, many of which are simple working class people, many of which I would guess do not understand the market... Given that the market fluctuates every 7-8 years, I'm sure his game is to try and look like a genius when there is a correction and until then, talk about it (can't lose this way)...
As his AUM has grown, he has increasingly been pitching and converting people like my parents to invest in insurance based products and annuities, OBVIOUSLY with HIGH FEES for him under the premise that he wants to "protect" their money as the "market is going to crash"... In my opinion, he is doing all this to shield his AUM and GUARANTEE his AUM fee with NO RISK. As long as he can convince his clients to get into these products, he locks in his AUM for however long the period is...
I'm still pissed about this personally (and ashamed I didn't see this earlier), but at least I now have a much better grasp on things and have a good career, so this should hopefully just go down as a hard and expensive lesson... Soo... to my original thread titled, not that it matters, but would you call this guy a con or am I crazy?
Also, my parents are still with this guy and I've tried to show them there are MANY better options out there, but they won't hear it... They are recently retired and I believe all of their accounts are tied up in insurance based products and annuities and they are paying him, I believe a 1% AUM fee each year for "signing them up". They don't see a problem with this as these products are "locking in 5%" and come with some sort of "bonus" of several percent as well??? Something along those lines... I'm not all that familiar, anyone seen these before? I can get the names later, but that's the premise.