The Schultz Group – UBS Financial Services Inc.

If you’re looking for financial advisors in Phoenix, Arizona, you might’ve come across the name of the Schultz Group. But before you start working with them, you should know about their conflicting past and current disclosures. 

It would help you make a better-informed decision regarding working with them: 

A Brief Introduction of the Schultz Group UBS

The Schultz Group is a part of UBS Financial Services Inc. based in Phoenix, Arizona. Its address is 2575 E Camelback Rd Suite 900, Phoenix, AZ 85016, US.

The contact number of this establishment is 602-957-5132. 

Steven Schultz is the managing director of this firm. Other prominent people at this firm include Stockton Schultz (Senior Vice President), Justin Low (Senior Vice President), and Joseph Varga (Senior Vice President). 

At first, it seems like an ordinary financial advisory firm but its disclosures tell a whole nother story. 

Flaws Present in Schultz Group UBS You Should Know

Shady Past of the Leadership

Steven Schultz, the MD of the Schultz Group UBS has had multiple disputes with his clients. The first dispute was in 2004 where the client alleged that the suggested mutual funds were unsuitable. Steven’s client had also alleged misrepresentation and not getting proper advice on the fees. 

schultz group ubs

This case was settled for $1,962. 

His second dispute was in 2016. Here, the client alleged that Schultz took advantage of them by not informing them of the fees involved on the accounts. Moreover, the client complained that there were unauthorized trades and opening up of managed accounts without authorization. 

Steven settled this case for $24,705. 

schultz group ubs

These disputes tell a lot about how much Steven values his clients. Having multiple disputes for misrepresentation and fees is not a good sign. It means the advisor has a history of manipulating his clients. 

Commission-based Earning

A prominent issue with the Schultz Group UBS is they earn commissions from the “sale” of certain investments. This introduces various conflicts of interest in their offerings as they have incentive to ignore your interests. 

Ideally, a financial advisor would work with you to understand your financial requirements and goals. Then, they would suggest investments that align with those goals and requirements. However, when your advisor earns commissions from certain investments, they might ignore your goals and requirements to make an extra buck. 

Earning from commissions limits the choices an advisor would present to you. They would  ignore the investments that don’t earn them commissions even though they might be the best for you. 

Because the Schultz Group is a broker-dealer, it becomes very difficult to trust their investment recommendations. 

Excessive Fees (12b-1 fees)

The Schultz Group recommends securities that charge 12b-1 fees, which is a huge downside of working with them. The 12b-1 fee is a marketing fee which usually goes in the pocket of the advisory firm. It simply increases your costs without giving you any benefits. 

SEC had conducted a study to compare the returns of mutual funds that charge 12b-1 fee and those that don’t. They found no difference between the two. 

In fact, the returns of mutual funds with 12b-1 fees were lower because they cost higher. 

This means you’ll be paying extra for getting the same returns with his advisory firm. It would be best if you review your investments and see what fees they charge if you’re already working with them.

Insurance Broker

The advisors at this firm are insurance brokers. This allows them to earn commissions from the sale of insurance products. It might not seem like a big thing but your advisor might recommend you unnecessary insurance products simply for the higher commissions. 

Many people assume their advisor is suggesting them insurance products because they care about their security. They don’t know that their advisor is recommending them useless insurance products out of greed.

Unnecessary insurance premiums and 12b-1 fees would rack up your costs significantly. So keep that in mind while considering this firm. 

Proprietary Investments

The Schultz Group is a part of UBS, one of the biggest banks in America with tons of investment products and schemes. As a part of UBS, they have more incentive to recommend the proprietary investments of their parent company regardless of their suitability. 

UBS advisors, specifically, are notorious for recommending proprietary investments even though they are unsuitable for the client. Take the YES program class action lawsuit for example. UBS ended up paying hundreds of thousands of dollars to investors because its advisors recommended them without caring about the clients. 

schultz group ubs

Having proprietary investments discourages the advisors from suggesting suitable investment outside of their catalogue. You might miss out on a lot of positive returns or growth because your advisor wouldn’t earn commissions from those investments. 

Performance-based Fees

This financial advisory firm charges performance-based fees. When an advisor charges this fee, it means they earn only when they beat a specific index or benchmark. 

This causes the advisor to take excessive risks with their clients’ investments unnecessarily. Performance-based fees are heavily looked down upon in the finance sector. That’s because it incentivizes the advisor to increase the risks of their client regardless of their suitability. 

High-risk strategies can cause you to lose a large chunk of your investment. Research revealed that performance-based fees lead to poor results because of unnecessary risk-taking. 

Clearly, it’s something you should avoid as a cautious investor. That’s why it’s very difficult to trust Steven Schultz and his firm. 

Side-by-side Management

The Schultz Group UBS handles both large hedge funds and small retail accounts at the same time. This is called side-by-side management and it makes things difficult for investors with small accounts. 

In such cases, the financial advisory firms allocate most of their resources to their larger clients, leaving the small investors with cookie-cutter advice. Cookie-cutter advice is dangerous in itself because it is highly generalized and lacks any kind of personalization. 

Finally, this firm has the problem of trading the securities it recommends to its clients. While it’s similar to “eating your own cooking”, it leads to various conflicts of interest. 

For example, the advisor might perform front-running where they buy or sell a specific investment before recommending it to their client. It allows advisors to use their clients’ funds for their personal gain.

Conclusion: Should You Trust the Schultz Group UBS?

After seeing the various conflicts of interest present in this firm and the various disputes this firm has been involved in, it doesn’t seem like a smart choice to go with them. 

One or two conflicts of interest might even seem okay but this firm has too many of them. Due to these reasons, the Schultz Group UBS is not recommended. 

2.8Expert Score
Risky

The Schultz Group is a part of UBS but that’s about the only thing positive worth mentioning. They have terrible policies and provisions which put the client at excessive risk. The advisors at this firm have more incentive for ignoring your interests than to care about them. Hence, avoid them.

Trust
2.5
Expertise
3.5
Experience
3
Concern for Clients
2
Pros
  • Part of a reputed brand
Cons
  • Putting clients at unnecessary risks
  • History of disputes
  • Excessive pricing
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