Protect the Elderly in Your Families

It was just over a year ago. My Aunt Gene (we always called her FLAG – fun loving Aunt Gene) grabbed my hand at Thanksgiving dinner and said, “Rob, can we talk after dinner?”

“What’s wrong, Aunt Gene?”

“I’m worried,” she said. “I’m worried I’m going to run out of money.”

This is a woman who watches pennies like a hawk. If anyone in our family is reluctant to spend a dime, it’s Aunt Gene.

She had had a long career in advertising as a secretary at J. Walter Thompson, and still swears by their clients, and their client’s products (the only car brand she’s ever even considered buying is Ford).

Aunt Gene has always been single (she claimed to have a wealthy boyfriend once, but – as a devout Catholic – she gave him up for Lent), lived with and cared for my grandparents until they died, and has lived a simple life.

Her retirement from JWT should have enabled her to be set for life.

While at JWT, she and others at JWT met…and invested their money through…a financial advisor, currently at Wells Fargo, who I will simply refer to by her initials — MF. Aunt Gene, and she tells me her friends from JWT, had complete confidence in MF’s ability.

I took Aunt Gene into another room and we started talking about her money. First, I assured her that our family would never let her fall penniless, and we would always be there for her. But then I asked about her retirement account.

“Rob,” she said. “I think half of it is gone.”

“Gone? Aunt Gene, can I see your statements?”

That started a process I wish I had begun 15 years earlier. Aunt Gene granted oversight of her account to me. I began looking at her holdings and was stunned.

Aunt Gene was – at the time – an 85-year-old woman. 85-year-old women should not be invested in aggressive equities, which, in 2011, was exactly where MF and Wells Fargo had her.

I spent 14 years at the New York Stock Exchange listening to Dick Grasso and other leaders preach the “know your customer” rule…and specifically heard Dick say “anyone who would consider putting an 80-year-old customer in exotic instruments should look for an alternate career path. There’s no room for that type of individual in this business. That’s a recipe for disaster.”

Aunt Gene lost 52% of her money in 2008. Granted, 2008 was a terrible year for the stock market. But Aunt Gene, then at 82, should never have been invested in such a potentially volatile portfolio.

I told Dick about Aunt Gene’s account and he replied, “If ever there is a 405 violation, this is it!”

I decided to pay MF a visit in the Park Avenue offices of Wells Fargo. We scheduled an appointment two or three weeks after my initial call and I had discussed with her why I wanted to come in and visit.

You would think, in this time in our lives when information is so readily available, that MF might have done a little background check on the person coming to visit her.

I know I did some background on her. In her official Wells Fargo bio, she bragged about “appearing with Ron Insana of CNBC.” I know Ron very well. So I called him and said, “Tell me about MF.”

Ron’s response was “M who? I have no clue who she is.”

I visited MF on Park Avenue and began questioning her about Aunt Gene’s account.

“We’re talking about a single, 85-year-old woman. Do you think she really should be invested in the aggressive equities portfolio you have her in?”

“Well, I guess it is a bit aggressive,” she said. “Let’s move her into more conservative stocks.”

MF’s next comment floored me.

“We look to put people your Aunt’s age in the pharma stocks, but I don’t like many of their pipelines. I think Bristol-Myers would be a good stock for her. They have lots of other businesses – consumer products and the like. We should move her into Bristol-Myers.”

I had spent the six years prior to my visit with MF working as a member of the Management Committee of Bristol-Myers Squibb. Over that period, we had sold or spun off every non-pharma asset we owned. Today, Bristol-Myers Squibb is a pure biopharmaceutical company. It was pretty obvious MF had no clue about what she was recommending.

“Let me think about it,” I said.

After leaving her office, I worked with Wells Fargo to quickly have another rep put on Aunt Gene’s account. We adjusted the portfolio and, within a few months, I moved her account to another Wall Street firm where I have a relationship with and complete faith in an advisor who now oversees her account.

But still, I verify. At least once each quarter he and I talk about Aunt Gene, and how her investments are performing, and what she should be doing.

Had I done this 15 years ago, Aunt Gene would not have some of the worries she has today. I urge those of you with elderly loved ones to check on their portfolios and make sure the financial rep they have entrusted their investments to is worthy of your family’s faith.

Posted by Bob Zito on 01/02/2013

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