Ferguson, Is The Advisor Worth avoiding?
There are different kinds of wealth advisory firms present in the industry. Some place their clients above everything else. On the other hand, some firms take advantage of their clients and abuse their funds. The Ferguson Smith Cohen Group Morgan Stanley falls in the second category.
They have multiple problematic provisions present in their disclosures. These provisions put their clients in compromising positions and allow the firm to get away with carelessness and greedy recommendations. In the following review, you’ll learn about these provisions and understand why they are not what they claim to be:
The Ferguson Smith Cohen Group Morgan Stanley: A Brief Intro
The firm claims to have seasoned wealth advisors who understand wealth management deeply. They claim to work hard to preserve their clients’ wealth and help them create a comprehensive financial plan.
The firm claims to help its clients with reducing their tax burden, planning for retirement, and all other kinds of financial goals. Some of the many services you can avail with this firm include:
- Divorce financial analysis
- Institutional services
- Asset management
- Retirement planning
- Executive financial services
- Endowments and foundations
- Lending products
- Professional portfolio management
- Business succession planning
- Cash management
And several more.
Scott D. Ferguson is the managing director of this firm. Apart from him, other notable people at this firm include Dianna L. Smith, Andrew H. Sigler, Patrick L. Cohen, Chris Malmgren, and Ryan G. Widrig.
Did You Know?
Scott D. Ferguson is a prominent name, he has served as a director of several public companies. He is the founder and managing director of Sachem Head Capital Management LP. Also, he has been a key advisor for Elanco Animal Health, olin Corporation and Auto Desk.
However, don’t let these claims fool you. The Ferguson Smith Cohen Group has many skeletons in its closet and it’s crucial that you know about them before you start believing these empty claims. In the next section of this review, you’ll learn about these issues and more:
Issues Present in the Ferguson Smith Cohen Group Morgan Stanley
Scott Ferguson’s Unreliable Leadership
Whenever you start looking into a financial advisor, you should check out their FINRA BrokerCheck listing. The listing would tell you about the advisor’s past experience, employers, state licenses, qualifications, and most importantly, past disputes.
I checked the FINRA BrokerCheck listing of the MD of the Ferguson Smith Cohen Group Morgan Stanley. There, I found that Scott D. Ferguson has faced one dispute so far.
Scott’s dispute occurred in 2002. Here, the client alleged that she did not authorize the use of margin in her account but didn’t specify any damages. Scott’s firm didn’t take any action on the dispute.
What’s bothersome is the lack of information available on the dispute. You can’t find out why the firm failed to take any action on the dispute. Also, you can’t find out whether the client withdrew her complaint or not. That’s because Scott Ferguson has kept most of the details of the dispute hidden.
Putting Clients at Excessive Risk
The Ferguson Smith Cohen Group Morgan Stanley charges performance-based fees. This is a highly notorious practice because it incentivizes the advisor to put the client at additional risk.
When the advisor follows this fee structure, their pay is directly proportional to the performance of your fund. This encourages the advisor to use high-risk strategies as they can perform better in a short amount of time.
However, high-risk strategies are unsuitable for most investors. These strategies generally result in poor returns and losses for the investor.
What makes performance-based fee structure worse is the lack of accountability. If you suffer losses because of your advisor’s recommended strategies, you can’t hold him responsible for it. And because the firm would make more money when it puts you at more risk, it would ignore your risk tolerance.
So, if the Ferguson Smith Cohen Group causes your capital to suffer losses, you can’t do anything about it. They shrug it off by saying that you “understood the risks”.
The advisors at the Ferguson Smith Cohen Group Morgan Stanley are dual-registered as brokers. This exposes their clients to various conflicts of interest such as revenue sharing with mutual funds, earning transaction-based fees and asset-based fees from the same security, and giving preference to affiliated securities.
Although the regulatory authorities try their best to keep these broker-advisors in check, it’s quite difficult to monitor every little transaction.
Furthermore, broker-dealers charge their retail RIA clients higher fees than their brokerage clients. They prefer institutional share classes of the same underperforming mutual funds they offer brokerage clients.
Research shows that such advisors fall short of the fiduciary standard.
All of the above points indicate that the Ferguson Smith Cohen Group Morgan Stanley is a major disappointment. No matter how many claims it makes about its expertise, the firm is a nightmare for any modern investor.
It has numerous problematic provisions in its terms and conditions which it uses to trap gullible investors. Hence, you should try your best to avoid dealing with them altogether.
The Ferguson Smith Cohen Group Morgan Stanley disappoints on multiple aspects. For starters, the firm fails to meet the fiduciary standard. Evidence suggests that you wouldn’t get reliable advice here.
- Unreliable leadership
- Putting clients at excessive risk
- Broker-dealer conflict