Investors Beware: UBS Financial Services Inc.’s Schultz Group Under Fire for Unreliable Services

If you live in or around Phoenix, Arizona, and you’re seeking someone to provide you with financial advice, you might come across the name of the Schultz Group. However, before you begin working with them, you should be aware of their inconsistent disclosures from the past and the present.

You would be able to make a more educated decision about working with them if you had this information:

A Brief Introduction of the Schultz Group UBS

UBS Financial Services Inc., with headquarters in Phoenix, Arizona, is the parent company of The Schultz Group. It may be reached at the following address: 2575 E Camelback Rd Suite 900, Phoenix, Arizona 85016, United States.

The phone number to call to get in touch with this business is 602-957-5132.

This company is led by Steven Schultz, who serves as the managing director. Other notable employees of this company include Stockton Schultz, Justin Low, and Joseph Varga, all of whom hold the position of senior vice president at the company.

At first glance, it appears to be a typical financial advisory firm; nevertheless, the disclosures made by the company paint a quite different picture.

Flaws Present in Schultz Group UBS You Should Know

Shady Past of the Leadership

The Managing Director of the Schultz Group at UBS, Steven Schultz, has been involved in many disagreements with his customers. The first disagreement between the parties occurred in 2004 when the customer claimed that the mutual funds that were recommended were inappropriate for them. Additionally, the client had claimed that they had been misrepresented and that they had not received adequate counsel regarding the expenses.

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This dispute was resolved by paying a settlement of $1,962.00.

His second conflict occurred in the year 2016. In this case, the customer claimed that Schultz took advantage of them by failing to provide them with information on the costs that were associated with the accounts. In addition, the customer lodged a complaint alleging that there had been illicit trades as well as the formation of managed accounts without their permission.

The total amount that Steven paid to settle this dispute was $24,705.

schultz group ubs

These disagreements provide a lot of insight into how highly Steven appreciates his customers. It is not a good sign when there are several arguments regarding misrepresentation and costs. It indicates that the advisor has a history of using deceptive practices with his customers.

Commission-based Earning

The fact that Schultz Group UBS makes money off of commissions from the “sale” of some investments is a significant problem with the company. Because of this, their products and services have a number of different conflicts of interest because they have the motivation to disregard your needs.

Ideally, a financial advisor would work with you to understand your financial requirements and goals. Then, they would suggest investments that align with those goals and requirements. However, when your advisor earns commissions from certain investments, they might ignore your goals and requirements to make an extra buck. 

Earning from commissions limits the choices an advisor would present to you. They would ignore the investments that don’t earn them commissions even though they might be the best for you. 

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Because the Schultz Group is a broker-dealer, it becomes very difficult to trust their investment recommendations. 

Excessive Fees (12b-1 fees)

The Schultz Group recommends securities that charge 12b-1 fees, which is a huge downside of working with them. The 12b-1 fee is a marketing fee that usually goes into the pocket of the advisory firm. It simply increases your costs without giving you any benefits. 

SEC conducted a study to compare the returns of mutual funds that charge a 12b-1 fee and those that don’t. They found no difference between the two. 

The returns of mutual funds with 12b-1 fees were lower because they cost higher. 

This means you’ll be paying extra for getting the same returns with his advisory firm. It would be best if you review your investments and see what fees they charge if you’re already working with them.

Insurance Broker

The advisors at this firm are insurance brokers. This allows them to earn commissions from the sale of insurance products. It might not seem like a big thing but your advisor might recommend you unnecessary insurance products simply for the higher commissions. 

Many people assume their advisor is suggesting them insurance products because they care about their security. They don’t know that their advisor is recommending them useless insurance products out of greed.

Unnecessary insurance premiums and 12b-1 fees would rack up your costs significantly. So keep that in mind while considering this firm. 

Proprietary Investments

The Schultz Group is a division of UBS, one of the most prominent financial institutions in the United States, which offers a vast array of investment options and strategies. They have a greater motivation to advocate the proprietary investments of their parent firm, UBS, regardless of how suitable those investments may be because they are a part of UBS.

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UBS advisers in particular have a well-deserved reputation for proposing proprietary products to clients, even when those investments do not meet the client’s needs. Consider the example of the class action lawsuit against the YES program. Because UBS’s advisors advised some investors without caring for the company’s customers, the company ultimately had to pay hundreds of thousands of dollars to those investors.

schultz group ubs

Charges Depending on Past Performance

This financial advisory firm bases its fees on the client’s actual results. If a financial advisor charges this fee, it indicates that they will only earn money if they outperform a particular index or benchmark.

Because of this, financial advisor is forced to take needlessly high risks with the investments of their clients. The financial industry has a strong bias toward fees that are contingent on a company’s performance. This is because it creates an incentive for the advisor to increase the risks that their client takes, regardless of whether or not the client is suitable for those risks.

Strategies with a high level of risk can result in you losing a significant portion of your money. According to the findings of research, performance-based fees result in bad results since they encourage unwarranted risk-taking.

As someone who invests carefully, you should steer clear of doing this. Because of this, it is extremely challenging to put one’s faith in Steven Schultz and the company he works for.

Side-by-side Management

At the same time, The Schultz Group UBS manages both huge hedge funds and small retail accounts. This type of management, which is referred to as side-by-side management, makes things challenging for investors who have tiny accounts.

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When this occurs, financial consulting firms devote the majority of their resources to serving their more significant customers, leaving the smaller investors to receive generic recommendations. Advice that is generic and cannot be personalized in any way is potentially harmful on its own account because of its high level of generalization.

Buying and Selling Suggested Securities

Last but not least, this company struggles with the issue of trading the securities it advises its customers to purchase. In spite of the fact that it is analogous to “eating your own cooking,” doing so leads to a variety of conflicts of interest.

For instance, the financial advisor may engage in front-running, which is when they buy or sell a certain investment before recommending that investment to their customer. It gives financial advisors the ability to profit off of their clients by using their clients’ money.

Should You Believe the Statements Made by the Schultz Group UBS?

After observing the numerous conflicts of interest that exist within this company as well as the several lawsuits in which this company has been involved, it does not appear to be the most prudent choice to work with them.

Even one or two potential conflicts of interest could be considered acceptable, but this company has much too many of them. Because of these factors, we do not advocate investing in the Schultz Group UBS.

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