McKelvy Group Morgan Stanley – Unreliable and Selfish?|2023 Updated Edition
If you’re looking for financial advisors in Menlo Park, California, you might come across the McKelvy Group Morgan Stanley. Run by Dorian McKelvy, this firm looks very promising at first.
However, it has a ton of issues it tries to hide from unsuspecting investors. I’ve highlighted those issues in this review to help you make a better-informed decision:
About the McKelvy Group Morgan Stanley
The McKelvy Group Morgan Stanley is a financial consultancy firm based in Menlo Park, California. Their address is 2882 Sand Hill Rd Ste 200, Menlo Park, CA 94025, United States.
You can contact them by calling on 650-234-5130. They offer various advisory services including wealth management, retirement planning, estate planning strategies, trust accounts, alternative investments, and many more.
The managing director of the firm is Dorian McKelvy while the vice president at this firm is Pierre Manneh.
Although they have accumulated many accolades and awards, the firm has many shady provisions in its disclosures. Hence, before you start doing business with them, it would be best to understand the red flags present in their offered services:
Prominent Red Flags in the McKelvy Group Morgan Stanley You Should Know
Multiple Disputes with Clients
The first and probably the most crucial issue with the McKelvy Group Morgan Stanley is the number of disputes its leadership has had with its clients. To find out if your financial advisor has had any disputes with their clients before, you should look them up on FINRA BrokerCheck.
FINRA BrokerCheck is a database that tells you about the advisor’s qualifications, employment history, and the disputes they’ve had with their clients.
Dorian McKelvy, the managing director of this firm, has had 2 disputes with his clients so far.
The first dispute was in 2002 when the client made multiple allegations about the recommended purchase of an annuity and the designation of Dorian as a beneficiary of the annuity.
In his response, Dorian simply stated “Gregory Tevis is handling the matter”.
The second dispute was in 2016. Here, the client alleged, inter alia, that investments purchased in the client’s accounts were unsuitable during the period 2010-2015.
The client requested $83,917 in damages and their claim was denied.
Maybe the reason why Dorian has had so many disputes is because of the shady provisions present in his terms and conditions. I’m sharing some of them below:
Charging Performance-based Fees
Another huge drawback of working with the McKelvy Group Morgan Stanley is that it charges performance-based fees. When your advisor charges performance-based fees, he makes money only when he outperforms a certain benchmark.
On paper, it seems like an excellent fee structure. But in reality, it incentivizes the advisor to follow high-risk strategies regardless of their suitability for the clients.
High-risk strategies can wipe out significant chunks of your invested capital in down markets. That’s why they are heavily looked down upon in the finance industry.
Moreover, if you lose your investment, you can’t hold your advisor liable for it. At best, your claim would get denied as you agree to all the risks when you start working with the advisor.
Selling Proprietary and Affiliated Products
The McKelvy Group is part of Morgan Stanley, one of the largest banks and financial services providers in the US. Morgan Stanley has many proprietary investments and affiliates who own investments.
For the McKelvy Group, it would be more profitable to sell those investments as they would generate high commissions for them. Selling proprietary investments limits the selection of investments an advisory firm can suggest to its clients.
Moreover, it can cloud their judgment and promote them to suggest unsuitable or subpar securities.
UBS is facing a class-action lawsuit because its advisors suggested one of its proprietary products without seeing its suitability.
Hence, you should be cautious of firms that sell proprietary investments to their clients.
Charging 12b-1 Fees
The McKelvy Group offers investments that charge 12b-1 fees. This is a marketing fee that goes in the pocket of the broker (your advisor).
The 12b-1 fee doesn’t add any value to the investment. It only increases the cost of the security and makes it seem like the investment is better than those that don’t charge this fee.
The SEC conducted a study to compare the returns of mutual funds that charge 12b-1 fees and those that don’t. They found no difference in the returns of the two. Furthermore, they concluded that the investments with 12b-1 fees were inferior because they cost more.
This fee, coupled with the commission-motivated suggestions of your advisor, can wreak havoc on your financial security.
Take Freestone Capital Management, for example. Many of its ex-employees highlight how bad the firm is, let alone its clients. They also charge performance-based fees and 12b-1 fees.
Conclusion
The McKelvy Group Morgan Stanley’s managing director has had multiple disputes with his clients. Keep in mind that many clients don’t even file a claim when a dispute arises. They discuss it with their advisor and part ways.
Very few clients actually file a claim against their advisor. So, having multiple disclosures on his FINRA BrokerCheck profile doesn’t make Dorian McKelvy look good.
It would be wise to find a different financial advisory firm, preferably an independent one.
