The Bromberg Group Morgan Stanley – $6 Million Dispute & More

Based in San Francisco, the Bromberg Group Morgan Stanley is a financial advisory firm that has a ton of skeletons in its closet. The firm seems genuine and highly trustworthy at first but it has shady provisions in its disclosures that suggest otherwise. 

For example, this firm charges performance-based fees, a highly notorious practice in the finance industry. In the following review, you will read about a few more issues present in this firm so you can make a better-informed decision about the Bromberg Group:

About The Bromberg Group Morgan Stanley

The Bromberg Group Morgan Stanley is a financial advisory firm based in San Francisco, California. Their office address is 101 California St 23rd Fl, San Francisco, CA 94111, US and their contact number is 415-693-6876. 

Jesse Bromberg runs this firm with his team of advisors. Some of the services he offers at this firm are financial planning, wealth management, executive financial services, corporate cash management, sustainable investing, institutional services, alternative investments, and more. 

Other notable people at this firm include Nelly Berkovskaya, Sean Pipkin, and Alex Pulido. 

The firm claims to provide a high level of service while developing wealth management strategies. However, their terms and conditions tell a whole nother story. 

According to the disclosures of the firm, it’s more profitable for the firm to ignore your financial requirements. Moreover, Jesse Bromberg has a history of client disputes, which he tries to hide from his current and prospective clients. 

In the next section of my review, I’ve thrown light on how this firm traps unsuspecting investors into unfavorable agreements: 

Issues in The Bromberg Group Morgan Stanley They Try to Hide:

Multi-million Dispute with Client

The Bromberg Group makes many boastful claims about its expertise and the quality of service it provides its clients with. However, the firm’s leadership isn’t as reliable as it claims itself to be. 

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Checking the FINRA BrokerCheck profile of Jesse Bromberg reveals that he had a multi-million client dispute in December 2000. One of his clients had submitted a complaint letter alleging that the financial advisor failed to recommend the liquidation of COVAD during the first three quarters of the year 2000. 

His client requested $6,000,000.00 in damages. 

Jesse’s firm denied the claim as being without merit and avoided taking any responsibility. 

Financial advisors rarely face a legal dispute and very few of them face one worth $6 million. This dispute is proof that Jesse Bromberg has a history of ignoring his clients’ interests. Either he is too careless or too greedy. 

According to the insights present in his disclosures, it seems it’s the latter. 

Still, facing a $6 million dispute is a big deal. You should keep this in mind while considering the Bromberg Group as your fiduciary. Below are some provisions in their disclosures that make it more difficult to trust them:

Charging Performance-based Fees

When your financial advisor charges performance-based fees, it means they earn money only when they beat a specific benchmark or index. On paper, this seems like an excellent fee structure. But in reality, it incentivizes the advisor to implement high-risk strategies that are extremely detrimental to your financial well-being. 

High-risk strategies can wipe out most of your invested capital in down markets. Moreover, financial advisors tend to double down on the risk while implementing such strategies, generating poor returns for their clients. 

Your investments might “outperform” the benchmark but the returns would be horrible. That’s why charging performance-based fees is heavily looked down upon in the financial industry. 

You should avoid this fee structure and be skeptical of advisors who suggest getting it. 

12b-1 Fee Conflict

This firm offers products that charge 12b-1 fees. The 12b-1 fee is a marketing fee which adds no value to the security. It only increases the cost of the investment.

The 12b-1 fee goes straight in the pocket of the advisor and offers no returns for the added cost. It’s one of the subtle ways how shady financial advisors steal funds from their clients. 

Some people might think that the increased cost of the 12b-1 fee might offer some benefits but they would be mistaken. In fact, a study by the SEC found no difference between the returns of the investments that charge 12b-1 fees and those that don’t. It also found that the ROI of the investments that charge this fee was worse because of the increased cost. 

This is a huge red flag and is one of the many reasons why you should avoid the Bromberg Group. 

Earning Commissions from Companies

When you work with a financial advisor, you expect to get advice based on your financial requirements and goals. However, in the case of the Bromberg Group, the advisors recommend investments based on the commissions they can earn from them. 

This firm is a part of Morgan Stanley, one of the largest banks in the world. Morgan Stanely has various proprietary investment products which offer lucrative commissions to the advisors. 

Earning commissions from such products can cloud the judgement of the advisors. They have monetary incentive for ignoring your financial goals and requirements. Moreover, it restricts the variety of investments an advisor would recommend to their clients. 

Most cases of unsuitable advice and misrepresentation occur because of this. Just recently, UBS had to pay $358,000 to investors because its advisors recommended its proprietary product without checking its suitability. Hence, be wary of advisors who earn commissions from such products. 

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Conclusion

The Bromberg Group is not a good choice for most investors. They are unreliable, shady, and highly selfish. From charging a redundant fee to having questionable leadership, this firm has everything that a financial advisory firm shouldn’t have. 

Due to these reasons, it would be best to avoid doing business with the Bromberg Group. You should find someone else. 

2.8Expert Score
Not suitable for most investors

The Bromberg is unsuitable for many investors because it is unreliable, shady, and highly selfish. They charge hidden fees and trap clients into horrible agreements. All of this indicates that you should avoid this firm to secure your interests.

Trust
3
Service
2.5
Experience
3.5
Concern for Clients
2
Pros
  • None
Cons
  • Faced a $6 million dispute
  • Charge 12b-1 fees
  • Charge performance-based fees
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