Richard Abrams (UBS Financial Services)

If you’re looking for a financial advisor in New York, you might have heard of Richard Abrams. Richard Abrams UBS is a senior financial advisor who might even face a class-action lawsuit. 

His firm has numerous ethical issues which make it quite challenging to trust their recommendations. 

In the following Abrams Group review, I’ll elaborate on these points so you can make a better-informed decision.

If you’re a client of Richard Abrams UBS and faced losses because of UBS’s YES program, you should contact your attorney. You can participate in the class action lawsuit against UBS Financial Services. 

Richard Abrams – The Abrams Group UBS 

Richard Abrams bus

Richard Abrams is a financial advisor based in New York. He has been working in the industry for many years and is the managing director of the Abrams Group. 

Richard is affiliated with the UBS Financial Services. However, he has faced many disputes, due to his shady investment recommendations prior to the 2008 market crash. 

His firm has a ton of ethical conflicts too, which I have discussed later in my Richard Abrams review. 

Barron’s and Forbes have ranked him among the top financial advisors multiple times. But seeing how many disputes he has on his profile, I wonder what they based their assessment on. 

Richard’s firm, the Abrams Group UBS, is among the most prominent financial advisory companies in New York. Their address is 299 Park Avenue, New York, NY 10171. They offer retirement planning, education financing, and many other investment services.

But all that glitters isn’t gold. And that’s especially true in the case of Richard Abrams UBS. 

The following points illustrate why it might be risky to work with them. 

Richard Abrams and His Various Disputes

Richard Abrams is the managing director of The Abrams Group. He has received many accolades and awards in his career. However, that doesn’t mean his services are that attractive.

In fact, Richard Abrams and The Abrams Group have multiple disputes against his firm. And the recent class action lawsuit against their parent firm, UBS Financial Services, doesn’t help.

Having multiple disputes in your FINRA BrokerCheck profile isn’t a good sign. It means there’s something definitely wrong in your offered services.

After reading all of Richard’s disputes, I realised that he was involved in the Lehman Brothers Structured Notes controversy in 2007-08. Because all of these cases are of that specific time period. 

I have discussed that case in detail later in the article. But first, we should talk about Abrams’ various disputes. 

In the case of Richard Abrams UBS, you’d find the following five disputes:

First Dispute 

the Abrams group dispute

This case is dated 9/10/2010 and is settled. The client had alleged that Richard had misrepresented them in connection with the sale of structured products in 2007. Richard’s client had requested $385,000 in damages.

The settlement amount was $170,000. 

Second Dispute

Richard abrams UBS dispute

This dispute is dated 5/6/2009. The client alleged that between September 2007 and December 2008, Richard misled them regarding specific investments. Moreover, they also alleged that the investment in structured notes was inappropriate for investing a quarter of the client’s retirement savings. 

They had requested $19,897 in damages and settled the case for $15,000. Richard responded to this case by saying that the client’s husband used the structured notes complaint as an opportunity to bring baseless complaints. 

He goes further by saying that he had many meetings with the client and claimed that he never engaged in any transactions without the client’s authorization. 

This is a common defence financial advisors use: the client knew what was going on. In my opinion, it’s one of the worst arguments you can give. 

For example, if someone robs you and tells you that he is robbing you, can they get away with it by saying “you knew what was happening”? I don’t think it’ll hold up in any court. 

Third Dispute

Richard Abrams

This case is dated 5/4/2009. Here, the client alleged that Abrams misrepresented them in recommending structured notes in 2007. They requested $533,000 in damages and settled the case for $275,000 

Fourth Dispute

Abrams Group UBS

This case is dated 11/20/2008. According to the disclosure, the client alleged Richard had recommended him unsuitable investments and the purchase was unauthorized during October 2007 to November 2008.

His client had requested $133,000 in damages and settled the case for $150,000. 

Fifth Dispute

The date of this case is 9/23/2008. Here, the client alleged that they hadn’t authorized the purchase of structured products in January 2008. They had requested $142,000 in damages.

The settlement amount of this case was $258,000. 

All of these disputes are related to the Lehman Brothers structured notes case, which I have discussed in detail below: 

What was the Lehman Brothers Structured Notes Case? 

Remember the 2008 market crash? The crash which caused countless people to lose their jobs? 

The Lehman Brothers Structured Notes case was behind it. 

In 2007 and 2008, many brokerage firms and stockbrokers had aggressively marketed the Lehman Brothers structured notes. Because Lehman Brothers was a reputed company, investors didn’t suspect the investment. 

The structured notes offered 100% returns, which sounds too good to be true today. But the investors didn’t know Lehman Brothers were struggling with paying their creditors. 

So, many people bought those structured notes, including Richard’s clients. Yes, Richard was one of those brokers who sold these structured notes aggressively to his clients in 2007-08. 

After a short while, Lehman Brothers went bankrupt. And most investors lost 100% of their investments. Although some of them were able to recover 20% of their investment in 2012, it’s nothing compared to the amount they had invested.

Now, UBS Financial Services, the firm Richard Abrams is an advisor at, is facing a class action lawsuit. And chances are, if you’re a client of Richard Abrams at UBS, you wouldn’t hear of this case.

Because UBS has made sure that not many people don’t hear about this case. 

The following section of my The Abrams Group review will help you learn more about the class action lawsuit:

The Class Action Lawsuit Against UBS Financial Services (Important)

UBS Financial Services had released a Yield Enhancement Strategy (YES) program several years ago. 

The advisors at UBS marketed YES as a safe, market-neutral overlay that would offer incremental returns to an investor. However, in the Fall of 2018, YES lost its investors 20% of their invested capital. 

Many advisors at UBS knowingly recommended this strategy to their clients because it offered higher commissions in comparison to other ones. Estimates say that around 1,500 investors lost their investment.

As an UBS Financial Services’ advisor, I’m certain Richard Abrams had suggested this strategy to his client. If you’re a client of Richard Abrams and have followed the YES strategy before 2018, you can participate in the class action lawsuit against UBS. 

You might even be eligible for damages.

Many investors have filed cases against UBS due to their YES program throughout the country. 

In December 2020, UBS had to pay $90,000 to an investor. The FINRA Dispute Resolution Services panel concluded in that case that the YES strategy was unsuitable for the investor, yet the advisor recommended this investment. 

YES is unsuitable for investors who want early returns or income. It’s a high-risk strategy, so when the market became volatile in 2018, investors lost a lot of money. 

If you suffered losses due to the YES strategy, you can file a securities arbitration claim against Richard Abrams. It would help you recover your losses to an extent. 

Why You Should Avoid Working With Richard Abrams UBS 

Richard Abrams and his firm, The Abrams Group, have several disputes against them. They are also liable to facing a class action lawsuit. 

But that’s not it. There are many issues with this firm. 

As an UBS advisor, Richard has a ton of ethical conflicts. These ethical conflicts incentivize him and his firm, The Abrams Group, to give subpar advice to their clients.

What’s the worst thing about these conflicts is not many people are aware of them. Advisors such as Richard Abrams and Threadgill Financial could take advantage of this fact. 

You should know about the various conflicts of interest present in an advisor’s services. Following are the ethical conflicts in Richard’s services: 

Earns from Commissions

When your advisor makes money from commissions, they get a percentage of the investment they recommend to their client. 

They receive this commission from the firm whose investment they sold to their client. It’s similar to the sales field. Just as a salesperson earns commissions when they sell a particular product, an advisor in this case makes money when they “sell” an investment.

In such cases, your advisor benefits more when they recommend specific investments. It introduces bias in their advice. And they might even ignore your financial goals and requirements while suggesting investments because they are too focused on commissions. 

Richard is a Broker-Dealer

Richard Abrams is a broker-dealer. This can lead to various ethical conflicts such as revenue sharing from mutual funds, cross-selling commissioned products or selling proprietary products. 

Moreover, when your advisor is a broker-dealer, they might charge you hidden fees and you wouldn’t know about it. This would increase costs for you and would put you at a huge disadvantage.

Not only is the practice of charging hidden fees highly unethical, but it’s also quite difficult to find out. 

As a broker-dealer, your financial advisor would benefit more when you invest in particular investments. This can cause them to overlook your requirements. 

The UBS YES class action lawsuit I mentioned above is an excellent example of such dealings. However, it’s better to be safe than sorry, isn’t it? 

Charges Extra Fees for Same Returns

According to his disclosures, Richard Abrams and his firm, The Abrams Group offer mutual funds that charge 12b-1 fees. 

Such mutual funds carry an additional fee but they don’t offer any extra returns. The 12b-1 fee is simply a distribution and marketing fee that usually goes into the pocket of the advisor (the broker). 

Many people think just because these mutual funds cost more, they might offer more returns. However, according to an SEC research, there’s no difference between the returns of mutual funds that charge 12b-1 fees and those that do not. 

Your costs would be higher with such mutual funds because of the extra fees.

In other words, Richard charges you extra for offering the same returns. You pay more while getting nothing extra in return. 

Richard Abrams is an Insurance Broker 

Another prominent red flag in the Abrams Group’s services is they are insurance brokers. This means they have monetary incentive for recommending insurance products to their clients. 

When an advisor is an insurance broker too, they might suggest their clients to get various insurance products even when they don’t need them. 

As the client, you’d think your advisor is genuinely suggesting you insurance products. While, in reality, you’d only be filling their pockets. 

Being an insurance broker might also  influence the kind of insurance products your advisor recommends. They might suggest insurance products that offer better commissions instead of the ones that match your needs. 

Sells Proprietary Investments

As a UBS advisor, Richard also sells proprietary investments. A huge conflict of interest arises when your advisor sells proprietary investments. 

Proprietary investments offer more pay so the advisor might ignore your needs and financial goals completely while suggesting them. Keep the Lehman Brothers case in mind. There, the advisors ignored their clients’ welfare and focused solely on their wallets.

On top of that, when your advisor sells proprietary investments, they would have quite a limited number of investment options they can offer. 

Chances are, you’d be missing out on a lot of lucrative investments while working with such an advisor. 

Puts Clients at Excessive Risk

Richard Abrams and his firm, The Abrams Group follow a performance-based compensation structure. When your advisor charges a performance-based fee, they get paid only after they outperform an index (or a similar benchmark).

Such fee-structure is highly notorious in the finance world. That’s because it incentivizes the advisor to use high-risk strategies. And high-risk strategies are quite dangerous. 

In a down market, high-risk investment strategies can wipe out a huge chunk of your invested capital. That’s why experts don’t recommend this compensation structure.

In fact, the Congress had banned performance-based fees for RIAs in 1940 with the Investment Advisers Act. They did so to reduce the use of high-risk strategies that harmed investors. 

RIAs were able to charge performance-based fees only after 1985 when the SEC gave them the permission. And the permission was only for qualified clients. 

A research found that mutual funds that follow a performance-based fee structure take excessive risk unnecessarily. They offer poor results too. 

Richard charges performance-based fees. This suggests that he might be putting his clients at unnecessary risk by using high-risk strategies. 

If you’re one of his clients, I recommend reviewing your investments and getting a second opinion. 

On top of that, many clients don’t even realise how dangerous a performance-based fee structure is. They aren’t aware of its risks. And financial advisors take advantage of this fact. 

Side-by-Side Management

Richard performs side-by-side management. 

This means he handles large funds and small retail clients at the same time. The problem with side-by-side management is it leads to unequal trading costs and unfavorable trade executions for retail clients. 

If you have a smaller retail account, it would be best to avoid financial advisors that perform side-by-side management. In many cases, you might not receive the necessary attention from your advisor because of this. 

Suggests Affiliated Securities

Because Richard Abrams is a UBS-affiliated advisor, he might suggest investments that UBS has taken over. Like the previous conflicts of interest, this one can affect the quality of his investment recommendations. 

He might push products that offer him better commissions instead of caring about your finances. 

Trades the Investments He Recommends

When a financial advisor trades their recommended securities, it causes numerous conflicts of interest to arise. 

It can lead to front-running where the advisor buys or sells specific investments before recommending them to their clients for price manipulation. 

The biggest issue with this conflict of interest is you wouldn’t even know that your advisor is using your funds for their own benefit. Many clients are unaware of this issue. 

And this red flag alone can cause an expert to reject a particular advisor. 

Why these conflicts are bad for you: 

All of these conflicts of interest indicate that it would be more rewarding for Richard Abrams to give you biased investment advice. 

A financial advisor’s duty is to understand the unique requirements of their client and suggest investments accordingly. But with such conflicts of interest, they might ignore their client’s requirements altogether.

After all, a financial advisory firm is a business. 

When the investors of the YES program were suffering losses, UBS was raking in huge profits. You can understand why it was so. 

The case of Richard Abrams is quite similar to that one. 

He would benefit more when he would offer biased investment advice his clients. Certainly, it means you can’t trust his investment recommendations. 

Summary

Richard Abrams is the managing director of The Abrams Group. However, he has several disputes in his FINRA BrokerCheck profile and might even face the class action lawsuit. 

Moreover, his firm has numerous conflicts of interest when it comes to giving investment advice. 

Due to these factors, I don’t think it would be best to work with Richard Abrams UBS. 

You should look for an investment advisor who benefits more when you get better returns, not when you “buy” a specific investment. After all, you are hiring a financial advisor, not a salesperson. 

If you’re a client of Richard, I recommend reviewing your returns. And if you had invested in the YES program and suffered losses, contact your attorney! 

3.4Expert Score
Richard Abrams UBS Review

Richard Abrams has too many ethical conflicts and disputes. Hence, I don’t think it would be safe to work with him and his firm, The Abrams Group.

Fees & Charges
3.3
Honesty & Transparency
3.5
Trust
2.5
Experience
4
Reputation
3.5
Pros
  • Has received many accolades
Cons
  • Multiple client disputes
  • Offers mutual funds with 12b-1 fees
  • Trades recommended securities
  • Charges performance-based fees

2 Comments
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  1. Thank God we have some strict agencies like FINRA in place. If it wasn’t for them, these advisors would keep scamming us with their crooked advice. I’m pretty sure if FINRA wasn’t here, these guys would drag on cases for as long as they could. I’m glad that guy won the lawsuit.

  2. It’s never worth it to hire a financial advisor. The whole business model is flawed. Richard Abrams seems like one of those high-profile advisors who manipulate their clients with a lot of pomp and show. In any case, it’s not good for the consumers. The best way to handle this problem is to learn more about personal finance. It only takes a few months to get familiar with the stock market, ETFs, and mutual funds. When you know about all that, you don’t need to hire a financial advisor who has a sketchy background like Richard Abrams.

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