By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@paladinregistry.com
Site: http://paladinregistry.com
About: Jack writes for the InvestorWatchdog website and Worth magazine. He worked in the financial services industry from 1976 to 2004. For twenty of those years he was the president of a Registered Investment Advisory firm and a Broker/Dealer. Jack is the author of Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor and is a co-founder of PaladinRegistry.com.See Authors Posts (87) | June 5, 2009 | Bad Financial Advice, Financial Advisors, Report Fraud

A recent visitor to the Watchdog blog site reported a fraudulent way an investment advisory firm ripped her off for decades simply because she was too trusting.

Cathy and her former husband used the services of this firm for 25 years and she continued to use them for 12 years after her divorce. After all this time, Cathy decided to determine how much she was paying for financial advice and services.

She found she was paying 1% of her assets as an annual fee which is an appropriate way to compensate financial advisors for their knowledge and services. When she dug a little deeper she found she was also being charged $938 per quarter that was described as a "Base Fee" on her statement.

When Cathy asked for a description of the services she received for this fee she was told the fee was for all of the "discussions" the advisor had participated in. According to Cathy there were no dicussions.

The company offered a $1,250 refund and said it would discontinue charging the base fee in the future. What a crock. In 25 years Cathy and her ex-husband had paid more than $100,000 of excess fees.

There are three issues at play. Cathy should never have waited this long to question the fees she was paying and the services she received for the fees. Second, there is no question, some advisory firms take advantage of clients for money – even clients who have trusted them for years. Third, how do you trust a company with your assets when they charge excess fees for no reason other than they can get away with it.

Cathy is seeking an attorney to try to get some of her money back, but that will be a long arduous process with no guarantee of success. The firm will argue she should have reviewed her statements sooner. Cathy had better fire the firm and quick.