Lyon Polk is a prominent financial advisor. He is based in New York and runs the reputed Polk Wealth Management Group.
However, his firm’s disclosures suggest that he might be deceiving his clients. It might not be safe to work with Lyon Polk and his firm.
In the following review, I have illustrated the various reasons it might be unsafe to work with him and his firm:
Lyon Polk’s Firm: the Polk Wealth Management Group
The Polk Wealth Management Group is a financial consultancy firm based in New York. Their address is 1585 Broadway 22nd Fl, New York, NY, 10036, US.
They are a Morgan Stanley firm and have been operating for many years. The firm derives its name from its managing director and founder, Lyon Polk, who is a highly respected financial advisor.
However, it seems Lyon Polk is using the name of his brand to deceive his clients. That’s because his firm’s disclosures suggest they give suboptimal advice to their clients.
The firm doesn’t specify how many clients it handles. However, they have mentioned what kind of clients they serve.
They work with ultra-high net worth families and handle their investment portfolios.
Other people that work beside Lyon Polk at the Polk Wealth Management Group are Deborah Montaperto, Edmund Agresta, Taillie Taylor, Samuel Polk, and others. The total team members at this firm amount to 31.
Polk Wealth Management AUM (assets under management) are $12.4 billion. The average account size Lyon handles ranges from $50 million to $2 billion. And the minimum account size required to work with Lyon Polk is $25 million.
Lyon Polk Bio:
In this section, I’ll cover Lyon Polk wiki and his bio.
Lyon Polk comes from a very prominent and respected family. He is a graduate of Hartwick College. Lyon Polk wife and his daughters live with him in New York.
He is the founder of Polk Wealth Management at Morgan Stanley and works on portfolio construction, investment management, and alternative investments. There’s no information about Lyon Polk net worth.
Forbes ranked him #3 in their Best-in-State Wealth Advisors list for 2021 and #10 in their America’s Top Wealth Advisors 2020 list.
Apart from managing his clients’ accounts and running the Polk Wealth Management Group, Lyon Polk also speaks at conferences and events across the nation.
His family name and his various accolades have helped him create a strong brand in the financial industry. But recent findings suggest that he’s using his influential brand and his family name to give poor services to his clients.
Lyon Polk’s firm, the Polk Wealth Management Group, has various conflicts of interest, which make it beneficial for him to ignore his clients’ welfare.
But before we discuss the various red flags surrounding Lyon Polk’s services, we should talk about the class action lawsuit his firm might be liable to.
Lyon Polk Wiki: His Past Disputes
Before selecting a financial advisor, it’s best to check their FINRA BrokerCheck profile. It tells you about their qualifications, past employers, and their customer disputes.
There is only one person in the Polk Wealth Management Group with multiple client disputes in their FINRA BrokerCheck profile. And that’s Lyon Polk.
Although all of them are quite old, they are worth mentioning. Because they give you an idea of what you can expect from the advisor. Most top financial advisors don’t have any customer disputes in their profiles at all.
So, having multiple disputes in one’s profile is a huge red flag.
Lyon Polk has the following disputes in his FINRA BrokerCheck profile:
<one to fourth dispute>
The first dispute is dated 11/23/1993. The client alleged unauthorized trading common stock and requested $90,910.20 in damages. Lyon Polk had settled this case.
He also requested that FINRA archives this dispute so it doesn’t show on his profile.
The second dispute is dated 7/1/1993. The client requested $175,000 in damages and alleged misrepresentation and unsuitability regarding biotechnology stocks.
Shearson had settled the matter for $20,000 out of which Lyon had contributed $10,000.
The most notable disclosure on Lyon Polk’s profile is the third one. In 1992, the National Association of Securities Dealers had censured and suspended Lyon Polk. They fined him $27,500.
In response to this consent order, Lyon’s lawyers said that he consented to the findings only for the proceedings and didn’t admit or deny the allegations of the complaint.
The final disclosure on Lyon Polk’s profile is dated 7/2/1992. The client alleged excessive trading and violation of commissions discount agreement. They requested $80,000 in damages.
Lyon and his firm settled the matter for $15,000.
It’s obvious that Lyon behaved in a very unprofessional and rash manner in the early days of his career, causing his clients to lose hundreds of thousands of dollars in the 90s.
Lyon Polk Might be Facing a Class Action Lawsuit
Lyon Polk’s company, the Polk Wealth Management Group is a Morgan Stanley firm. Recently, Morgan Stanley is receiving a lot of flak because of a serious data breach.
Law firms all across the nation are going after Morgan Stanley and are preparing to file a class action lawsuit:
Morgan Stanley had announced last year that it faced a huge data breach leaking confidential data of its various clients. They notified their clients in July 2020 that a third-party contractor failed to scrub data completely from two of their data centers in 2016.
The company also found that some of their old servers were missing and contained sensitive information.
This sensitive information contains clients’ social security numbers, addresses, and other private data. Polk Wealth Management is a Morgan Stanely firm, hence, there’s a good chance that the data of its clients was lost during the data breach.
If you’re a client of Lyon Polk or Polk Wealth Management and have received a notification of the data breach, feel free to contact your attorney or participate in the class action lawsuit. You can mitigate your losses.
Morgan Stanley has had many issues in the past. However, losing the private information of its clients is quite a significant error and you shouldn’t take it lightly. In the wrong hands, this information could wreak havoc.
Why Lyon Polk and the Polk Wealth Management Group are Unsuitable for You
Apart from facing a class action lawsuit, Lyon Polk’s firm, the Polk Wealth Management Group has several conflicts of interest, which its clients might be unaware of.
These ethical issues can influence the quality of service these financial advisors offer to their clients. And most clients don’t find out about any of them because they get distracted by the accolades and reputation of the advisor.
Following are the main conflicts of interest present Polk Financial Services’ offerings:
Makes Money from Commissions
Lyon Polk and his firm, the Polk Wealth Management Group are among the most expensive financial advisors in the country. But that’s because of the fees.
Apart from charging a hefty fee, Polk and his firm also earn from commissions. When a financial advisor earns from commissions, it means they get a percentage of the investment their client makes in a particular product.
It’s exactly like the payment model for car sales professionals. However, it introduces a lot of bias in a financial advisor’s offerings because it introduces heavy bias in their recommendations.
The advisor might suggest investments that offer him higher commissions instead of offering better returns to the client.
Earning from commissions can cause the firm to ignore its clients’ interests for its own. And the risk increases significantly when the investments are worth millions.
As a Morgan Stanely financial advisor, Lyon Polk is a broker-dealer. This can lead to various conflicts of interest such as revenue sharing from mutual funds, sale of proprietary investments, or cross-selling of commissioned products.
There are dedicated studies on how being a broker-dealer negatively affects the recommendations a financial advisor makes.
It’s found that dual-registered advisors tend to prefer institutional share classes of the same underperforming mutual funds they offer the brokerage clients. Research also found that most advisors registered as broker-dealers fall short of the fiduciary standard.
Working with such a financial advisor can be highly detrimental to your long-term financial well-being.
That’s why if you’re a client of Lyon Polk, I recommend reviewing your investments or at least, getting a second opinion.
Offer Mutual Funds with 12b-1 Fees
According to his firm’s disclosures, Lyon Polk and his company offer mutual funds that charge the 12b-1 fees. The 12b-1 fee is a marketing and distribution charge that generally goes in the pocket of the broker (the financial advisory firm).
Mutual funds with such fees offer no additional benefits to their clients even though they are way costlier.
According to a SEC study, there’s no difference between the returns of the mutual funds that charge 12b-1 fees and those that don’t. In fact, the returns of the mutual funds with 12b-1 fees are lower because they have higher costs.
This means working with Lyon Polk might be costing you significantly more than necessary. And such fees add up overtime, causing substantial damage to your returns.
Sell Proprietary Products
Morgan Stanely is among the most prominent financial companies globally. It has many proprietary investments and products.
As a Morgan Stanley financial advisor, Lyon Polk would earn more commissions from recommending his company’s proprietary investments.
Proprietary products tend to offer substantially higher commissions. That’s why many advisors prefer them over other investments. However, it influences their service-quality greatly because the advisor might even recommend an unsuitable investment.
If you’re a client of Polk Wealth Management, be sure to ask them about the commissions they earn from the products they recommend to you. Also, ask them about the non-proprietary alternatives available to you.
That’s because many financial advisors that sell proprietary products don’t inform their clients about any non-proprietary products no matter how beneficial they could be.
It’s very dangerous to work with advisors that sell proprietary products. For example, Wendy Holmes, a UBS financial advisor, is facing a lawsuit because she recommended an unsuitable investment to her clients.
UBS’s YES program is attracting a lot of lawsuits because many advisors recommended it to their clients regardless of checking its suitability. Over 1500 clients lost their invested capital because of the UBS YES program.
Charge Performance-based Fees
When a financial advisor charges performance-based fees, it means they earn for beating a specific index (or another benchmark). This is a highly notorious practice.
When financial advisors follow this compensation structure, they follow highly risky strategies. And such strategies are quite dangerous in down markets.
In many cases, financial advisors that charge performance-based fees put their clients at excessive risk unnecessarily.
Congress had banned performance-based fees for financial advisors in 1940 because of its danger to investors. It returned in 1985 when the SEC started allowing RIAs to follow this compensation structure for qualified clients.
The Polk Wealth Management Group charges performance-based fees. And that’s not a good sign.
It means they might be putting his clients at unnecessary risk.
Recommend Securities from Affiliates
As a financial advisor affiliated with Morgan Stanley, Lyon Polk might recommend securities Morgan Stanley has recently taken over.
While recommending these investments, he might ignore his clients’ interests and long-term benefits for his personal gain.
This issue is similar to the commission-related conflict we discussed before. Would Lyon Polk prioritize his personal wealth or his client’s?
Trades Recommended Securities
Another prominent red flag in Lyon Polk’s services is that he and his firm trade recommended securities.
This means they trade the investments they recommend to their clients. And it has many issues.
When an investor trades recommended securities, they might use their clients’ funds to manipulate the returns for themselves. This means, they might use their client for their selfish gains.
For example, front-running is a notorious practice where an advisor buys or sells a particular investment and then recommends it to his client to gain an advantage.
This is a particularly dangerous red flag for family offices. Be sure to consult with your firm about which investments they hold and how much of them they have recommended to you.
Should You Trust Lyon Polk and Polk Financial Services?
Lyon Polk and his firm, the Polk Wealth Management Group have a ton of red flags. First, it’s possible Morgan Stanley could have lost some of his clients’ data in the 2016 data breach.
Many clients lost their sensitive information and are preparing to file a class action lawsuit against Morgan Stanley. On top of that, the various ethical conflicts present in Lyon Polk’s services suggest that he could be using his clients’ funds for his personal benefit.
He is a highly experienced professional. It wouldn’t surprise anyone if he used his brand to deceive clients.
Most of these red flags go unnoticed because people don’t read the fine print. It allows financial advisors to get away with recommending investments that offer subpar or slower results.
After all, not every investment has to result in a loss. If an investment gives you suboptimal results, it’s not suitable for you.
Be sure to share this article with others.
This review is only to help you make an informed decision about the services of Lyon Polk and his firm, the Polk Wealth Management Group.
Lyon Polk and the Polk Wealth Management Group seem like a dangerous firm to work with. Their disclosures indicate they might be offering subpar or unsuitable financial advice to their clients. They have more financial incentive to ignore their clients’ interests. Beware of them.
- Highly experienced
- Respected and recognised
- Has multiple disputes
- Might have lost sensitive data of his clients
- Charges performance-based fees
- Trades recommended securities
- Sells proprietary products and investments