Greetings Fellow Mustachians,
My mother is getting on in years and I have gradually taken on her finances per her request. I now have Power of Attorney and am using it to help her the best I can. Most of it is just balancing her checkbook and paying her bills but other things come up from time to time.
In 2006 my mom inherited a portfolio of stocks and bonds from a family member. She and my Dad transferred it to First Eagle. They had an advisor that my Dad knew tangentially. As my husband and I went into our FI journey I thought about my parents' investments. They divorced in 2014 and I offered to take a look. At first my mom said "But I trust my guy! He went to Stanford." I asked if he was a fiduciary but she didn't care to learn what that means or why it's important. My husband noticed he was charging her $75 a month to buy random bonds but she wouldn't listen. She was getting a few hundred a month in dividends so we let it go.
Eventually my mom realized maybe we did know what we were talking about with regards to money. Since the markets were down and she wasn't making dividends like she used to, she asked for help. She had an accountant who was in business for himself and we spoke with him about transferring my mom's portfolio to mostly Vanguard index funds and some bonds. We asked for something that was "set it and forget it." He said he would do that and told my husband how smart he was. We assumed he did what we asked.
That was not the case.
This past October 2023 my mom asked me to look at her statement from Lincoln Financial, the firm her accountant had used. She said it didn't seem right and she hadn't made any money. I was surprised as the market had been going up and we had made money. Her portfolio was allocated similarly to ours, right?
Wrong! The money had been put into two different bond funds and an "Adaptive Intelligence Model" stock fund.
"Adaptive Intelligence Model (AIM) recognizes the importance of a forward-thinking approach to investing. The discipline utilizes a an Asset Alocation Nueral Network (AANN) that makes predictions as to the potential relative strength of asset classes representing the major domestic and international equity and debt sectors. AANN adapts and learns from past expereince by reviewing thousands of historical inputs, and identifying and interpreting patterns and casual relationships as they relate to these major domestic and international equity and debt markets. the AIM Index Portfolios combine the benefits of a tactically managed portfolio with the broad diversification featues of Vanguard index funds."
[Spelling errors original.]
For this they were charging $500 a month in fees. My mom's portfolio made almost exactly that amount last year and she got none of it, even though she had to pay capital gains taxes. When we realized this we were outraged. When we explained it to my mother she agreed to let us take over her portfolio management.
I opened an account with Vanguard on her behalf in early November and got the paperwork to initiate an in-kind transfer. We needed to get a medallion signature guarantee which required going in person to a bank that offered this service. This took a few weeks to align my schedule with my mother's and the bank's and we had it delivered to Vanguard by December 29, 2023.
A few weeks later I got a notice from Vanguard that we couldn't transfer one of the Lincoln bond funds. So we called Lincoln, sold it and hoped the rest of the money (about $400K) would be transferred soon. $5K from the bonds was immediately available but we would have to wait for the rest.
Also at this time we had a bit of a fiasco with Vanguard. My mom is older and does not use technology. She can accept FaceTime calls and read emails and that's it. She doesn't know how to text, send an email, use the web, etc. I only set up online banking for her last year. She doesn't really trust it. Duing a call with Vanguard around this time they asked her the security questions I had set up for her. They were really easy things but she got confused as to why someone from a bank was asking about her personal life and thought it was a scam, and didn't want to answer. This locked her account until we could call back and have her answer correctly. This happened twice. Even though I set up an email for her various needs she doesn't care to remember the email address, since she only uses it to read our church newsletter and see pictures of my son I send her. The login is saved on her iPad so she never has to think about it. Just a note of caution if you have elders you are helping, explain in detail what security questions are and why a banker will ask them.
On March 6 we called Vanguard. We had gotten a strange letter from Lincoln which stated they couldn't do the transfer unless they had the PIN number (?) of all funds requested. Vanguard staff seemed really perplexed by this and said this was not standard practice at all. They called Lincoln with us on the line. The Lincoln staff member said that they didn't need the PIN numbers after all and there was one more bond that couldn't be transferred and then they would send the rest of the portfolio. The money from that bond ($15K) was transferred immediately and they told us that a transfer of the entire portfolio had been initiated on February 13 and should be completed in 4 - 6 weeks.
On April 5, over seven weeks after the transfer was supposedly initiated, we still didn't have the money. We called Vanguard again and they called Lincoln with us on the line. Lincoln said that the transfer was initiated but not confirmed or completed and they couldn't tell me why even though I pressed for details and asked them to explain this, several times. Imagine someone telling you they "don't know" where $400K is. They said the money would be there in 10 business days. I told them I was looking into filing a complaint. That afternoon my husband and I filed a FINRA complaint on my mom's behalf.
This morning the money was finally there. I'm glad this is over and look forward to my mom having some extra money that's not all going to someone who audaciously took advantage.
I want to ask Lincoln to refund my mom any fees charged since January 1 (about two thousand dollars) but I'm not sure I have a case to do so.
Please never use Lincoln Financial. Your money would be better in a mattress.
