The 650 Team Morgan Stanley is a financial advisory firm based in California. This firm makes bold claims about its expertise and services to attract unsuspecting investors and traps them with its shady terms and conditions.
I’ve highlighted the conflicting provisions present in their offerings so you can make a better-informed decision about this firm:
Who Runs the 650 Team Morgan Stanley?
The 650 Team Morgan Stanley is based in Menlo Park, California. This firm has 4 managing directors:
- Richard Petit
- Timothy Emanuels
- L Steven Ashley
- William L Ross III
All of these guys have decades of industry experience. They also have an office in downtown San Francisco and claim to be one of the largest and most successful wealth management teams worldwide.
Don’t let their boastful claims and accolades distract you from their selfish and greedy policies. Many investors don’t pay attention to the fine print when they start working with such advisors.
The 650 Team of Morgan Stanley has numerous shady provisions in its terms and conditions which put you in a compromising situation. Their disclosures suggest that it’s more profitable for this firm to ignore your interests and financial security.
Below are some of the many red flags present in the fine print of the 650 Team Morgan Stanley.
Issues in the Fine Print of the 650 Team Morgan Stanley
Untrustworthy Leadership
The first and the most prominent red flag in the 650 team Morgan Stanley is the FINRA BrokerCheck profile of its managing director, Richard Petit. FINRA BrokerCheck is a database where you can find out all the necessary information about your financial advisor.
This includes information about their professional experience, state licenses, passed exams, and the legal disputes they’ve had with their clients.
Richard Petit’s profile shows one customer dispute which occurred in 1993. Here, the client alleged that in the beginning of September 1984, the purchase of partnership interests, securities trusts and an annuity were inconsistent with her investment objectives. Hence, they were a violation of Section 10(B) of the Securities Exchange Act Rule 10(B)(5) and the NASD rules of fair practice and breach of fiduciary duty.
The claimant had requested $54,000 in damages and settled with $14,999.99. Richard has responded to this complaint by saying that the accounts she complained about were all profitable.
Note that clients rarely file a legal dispute against their financial advisor. Usually, they avoid such disputes and try to resolve the matter before going to court. So, having such a legal dispute listed on his profile says a lot about the kind of care Richard puts into his service.
Furthermore, the below provisions in Richard’s disclosures make it extremely difficult to take him to court, even though they put you at a great disadvantage:
Putting Clients at Excessive Risk Unnecessarily
The 650 Team of Morgan Stanley charges performance-based fees, which is a highly notorious practice in the finance industry. When your advisor charges you performance-based fees, they earn money only when they beat a specific index or benchmark.
This compels them to employ high-risk strategies. Such strategies are unsuitable for portfolios that focus on long-term security.
Moreover, these strategies rarely offer positive returns, hence the name “high-risk”. In most cases, these strategies offer subpar or poor returns and the client can’t do anything about it because they agree to the risk when they sign up as the client.
This is why charging performance-based fees was illegal before 1985. Many people have lost their fortune to this terrible financial practice.
You should stay away from financial advisors that charge performance-based fees.
“Selling” Investments Instead of Recommending Them
Another prominent issue in Richard Petit and his firm is that they don’t recommend investments but sell them. The 650 Team Morgan Stanley, is part of a bank with many proprietary and affiliated investment products.
Selling these products offers hefty commissions to the firm. Financial advisors who sell proprietary products and earn from commissions tend to prioritize their profits over their clients’ interests.
Selling proprietary and affiliated securities restricts the variety of investments an advisor can recommend to his clients. Furthermore, it makes it difficult to trust the recommendations of the advisor.
Just recently, UBS faced multiple lawsuits because its advisors were recommending a proprietary financial plan to its clients without any regard for its suitability. Hundreds of clients lost millions of dollars because of the unsuitable product they were recommended by their UBS advisors.
Charging a Redundant Fee
Many investors ignore the multiple fees their advisor charges them. Some advisors take advantage of this fact and add unnecessary charges on the bills to ramp up their profits.
The 650 Team Morgan Stanley is doing something similar by offering investments that charge 12b-01 fees. This is a marketing fee that only goes into the pocket of the broker-dealer (your advisor).
The 12b-1 fee is quite notorious in the finance industry because it enables advisors to charge their clients for providing nothing in return. The SEC had done extensive research on the returns of investments that charge 12b-1 fees and the ones that don’t.
They found no difference in the returns of the two. In fact, the ROI of the investments that charge 12b-1 fees was worse because their cost was substantially higher.
ROI (Return on Investment) is the term to calculate the returns fetched via the total investment made by an investor/firm. A negative ROI means loss and positive indicates profit.
The 650 Team Morgan Stanley Review: Conclusion
From having serious disputes with clients to putting clients at a disadvantageous position through shady provisions, the 650 team Morgan Stanley is a very greedy operation.
All the evidence suggests that this firm doesn’t care about its customers. It would be more beneficial for you to find a different service provider who doesn’t have such terrible terms and conditions.
