Why is a financial planner still a big deal?
- by admin
Posted October 09, 2018 07:37:33Financial advisers are still being used by large banks, big insurers, and even large multinational companies to manage large amounts of money, even though the profession is widely discredited and many are struggling financially.
The latest example is the case of an Oregon-based financial planning firm, Gilham Financial Management, which is currently under fire for charging $10,000 to $15,000 per hour for a 12-week course that required them to teach a $500 course in financial planning, even as it only lasted about 10 hours.
The company also charges for classes that are only available to a select group of financial planners, such as those in the “crisis management” industry.
The fees are not for teaching financial planning.
Instead, the financial advisers are charged fees to the financial institution for the course and a portion of the cost of a training fee for the clients, according to a complaint filed by The Next Tech News.
The complaints comes in the wake of an outcry from consumers and others who have said the fees are unethical and unfairly disadvantage the financial planning profession.
The next step for Gilham is to seek a permanent injunction against the fees and other unfair business practices, according the complaint.
“We believe this is an egregious abuse of power by a financial planning agency,” said Brian Smith, an attorney with the advocacy group Americans for Financial Accountability.
It is a blatant violation of students’ rights to due process.” “
This is a huge waste of money.
It is a blatant violation of students’ rights to due process.”
The company has already agreed to a settlement that will include a ban on its fee practices for a year.
Gilham says it was not charged for the class, which cost $1,600 and taught six days per week for the full 12 weeks.
The fee was “discretionary and necessary” for the firm to pay for the cost and “exercise discretion” in what classes they offered, Gilman wrote in a letter to the court.
But the lawsuit argues that the fees “serve no legitimate purpose.”
“Gilham’s fees are designed to further the financial adviser’s bottom line by increasing the amount of work that the financial advisor must perform, including providing a ‘service’ to the client, including the cost for that service,” the complaint states.
The complaint alleges that “Gilmore’s fees increase the cost to the clients and their families of Gilham’s services and to the institution as a whole, including, among other things, the cost incurred by Gilham to provide the training and other resources it has provided.”
Gilham, which was founded in 2000, is now owned by a company called Kroll, which had a net loss of $1.1 billion for the first quarter of 2019, according a filing by the New York State Attorney General’s office.
“It is unfortunate that the American public has become so used to financial advisors making more money by charging more and more fees than they should,” Smith said.
“As a consumer, you should not have to pay more for a service you are paying for.
The suit comes on the heels of a scathing complaint from Consumers Union, a consumer advocacy group, that said financial advisors are making more than a third of their clients “pay more for less services than they otherwise would” by charging them more and charging fees for things such as “service fees” and “service costs.” “
Gilman’s fee practices are unethical, discriminatory, and illegal.”
The suit comes on the heels of a scathing complaint from Consumers Union, a consumer advocacy group, that said financial advisors are making more than a third of their clients “pay more for less services than they otherwise would” by charging them more and charging fees for things such as “service fees” and “service costs.”
The complaint cited a 2015 Consumer Reports study, which found that nearly three-quarters of consumers surveyed were dissatisfied with financial advice they received, and that most of those complaints were directed at financial advisers, not clients.
The financial industry has long accused consumers of being fleecing them, charging them high fees for services that are not worth the money, and charging them a false promise of services and an inflated fee that they cannot possibly repay.
It’s the same tactic that was used to charge companies like AT&T $1 billion in 2011 to stop them from offering cheaper wireless services.
AT&t said the claims of widespread fraud and false advertising were “absolutely and completely false.”
The Financial Services Roundtable, a lobbying group that represents financial advisers and other firms, has said that fees like Gilham and others are “completely illegal” and should be eliminated.
“These are predatory fees and should not be allowed to persist,” said Jamie Gorelick, CEO of the Financial Services Trade Association, a trade group.
“People shouldn’t have to choose between their financial well-being and a financial advisor’s career.”
The latest round of complaints comes after the Consumer Financial Protection Bureau issued a report last month
Posted October 09, 2018 07:37:33Financial advisers are still being used by large banks, big insurers, and even large multinational companies…