THANK YOU ALL

Thanks to all who replied to my panicky call for help in coming to terms with my mother's broker. It is painful to witness the process whereby she has been--and is being--manipulated by this man. 

I am amazed that my little blog, which has a very small footprint in the big world of blogging, should attract people so willing to share their expertise. It means a lot to me that my misgivings and suspicions have been corroborated by others.

My father, whose death propelled my mother within a few weeks into the "arms" of a broker to whom she gave total control of her assets, would, I am sure be horrified. I began this blog a few months before my father's sudden and unexpected death. In rather ironic timing on the part of the universe, my father died in November 2008, in the midst of panic about the Great Recession, revelations about Bernard Madoff, and an uncertain future for many.  My father and I had, to be plain, a terrible relationship, which still pains me to  contemplate.  But he was very good at finances and enjoyed managing his money. I learned a lot from watching my frugal dad. 

Question About Mom's Broker...Help!

I know I usually write about thrift shopping, so the readers out there might not have any answers. But  you had such good advice about my dental woes (actually dentist office woes) that I am back with a bigger issue.

Backstory: After my father died unexpectedly in 2008, my mother gave her taxes to an 80 year old accountant recommended by a neighbor. (Note: the accountant is recently deceased. He understated my mother's income in 2012 by about 75%--less than the lowest social security--which has made her liable for huge penalties and interest fees.)

The accountant recommended his broker. Within a day, my mother had given the broker part of her money to manage. He now has 100%. At our initial (and only) meeting, he was very evasive about compensation etc.

I have been worried about this guy over the years since my mother has no idea what her holdings consist of, what her rate of return is, etc. I spoke to him on the phone last summer and asked him a few questions and he told me "Your ego is too involved." He didn't answer the questions.

Luckily, my brother who has been uninvolved now ways we should look over the broker's records. Since my mother likes and trusts men more than women (she says this! to me!), this is good.

So, with her permission, I sent the broker these questions.

1. What specifically are xxx 's holdings? For instance, there is a category TIAACREF[note, the broker had my mother remove her TIAA money; it is now under the broker's mangement)--what are the specific holdings under that rubric?

2. What is the asset allocation? 

3. For stock holdings: what percentage is in mutual funds and what percentage is in individual stocks?

4. What percentage of assets is in IRAs and similar pretax vehicles? What percentage is in post-tax?

5. What kind of turnover does her portfolio have? How many sells/buys have been engaged in?  What are her total transaction/investment expenses for 2014? 2013? 2012?

6. What is her total return for 2014? 2013? 2012?

Thank you for your attention. We look forward to hearing from you.

Here is the reply: Good questions.  I think it is time to reevaluate the portfolio.

Any suggestions about how I might reply to this? Anything I should do?

Little Guy Fights Back!

Did you miss this uplifting story? A small investor fought back against the big hedge fund managers and may make a difference. If you link to the story, you can also link to a recording of his argument before the court. Believe it or not, I listened to it.

The whole 2008-09 financial debacle only reinforced my feelings that all is rigged in favor of a small group of rich, powerful, and connected. I am a good saver and all, and I engage in frugal practices, but ....trying so hard not to whine.

So hats off (my hat, anyway) to Mr. Thoma. He did a lot of work poring through company records.

My First Investments!

Not really: I've been buying mutual funds for a long time. I decided to let Frugal Son guide me, mostly because he doesn't have very much by way of investible funds.

So my first purchases are

PGH (a utility)
GE (you know, General Electric)

I did this through a Vanguard brokerage account, which Frugal Son helped me set up (actually, it's simple). I only pay $7.00/trade.

After witnessing the performance of financial professionals--with both my in-laws and now my mother--I figure I might as well trust the advice of my guy.

Needless to say, most of my retirement money remains in good ole index funds. I'll keep you posted on my progress--or regress.

Favorite Books of My Financial Adviser...errrrr....Son

I conducted a short interview with my financial adviser (Frugal Son) via chat.

Me: What are your favorite finance books?

Son: So far my favorite has probably been Bogleheads. I'm also reading a book right now called Warren Buffet and the Interpretation of Financial Statements, which is shaping up to be pretty good. And the way I choose my stocks is, so far, very simple, but will hopefully get a little more involved once I'm finished reading this book.

Right now, I look for a P/E ratio that is not too much higher than 15 an consistent, positive EPS. I like dividend paying stocks, so I look for companies that have a history of paying dividends even in down economies. I also like stocks that have a price-to-book ratio of near or below 1 (ideally).

Me: So it's not brain surgery.


Son: Nope. That's about it. This latest book is teaching me how to look at underlying financials to get a better idea of the financial state of the company like about debt ratios etc., but the price-to-book ratio below 1 is nice because theoretically (emphasis on theoretically) that means that even if the company goes bankrupt you won't lose money theoretically.




I am amazed.

Frugal Son has a Net Worth!

So, fingers crossed, Frugal Son is about to graduate from college. He went to State U, incurring costs of zero. I had a lot of ambivalence and conflict about his not going the private route, probably more than he did. As far as I can tell, he is no more or less happy with his choice than other kids he knows, whether they chose private or public school.

Over the years, he has amassed bits and pieces of cash, either from working, or from gifts. This last year, he decided to buy stocks and utilities! He is ahead of me, since I've stuck to mutual funds in my fearful way.

He informs me that his net worth, some of which is in a Roth IRA, is a little over $16,000. And he has no debt.

I think this is a good start. In fact, he's bugging me about letting him choose investments for ME. I think I'm going to buy a few things.

MY SON THE FINANCIAL ADVISER. Any mom would be proud. Of course, I'm his only client and he's doing it pro bono. Credentials: a BA in English. Wow!