If you were to search for a financial advisory firm in California, you would likely find several options. Bordeaux Wealth Advisors is one such company. It’s a young company compared to the industry giants, yet it has numerous opportunistic clauses in its terms and conditions.
These clauses make it very hard to have faith in the management team of this company. There are a lot of problems with this company, from placing you at unnecessary risk to charging you excessive costs.
If you’re an investor, you can make a more educated choice by first familiarizing yourself with all the challenges that advisors face:
Introduction to Bordeaux Wealth Management
Menlo Park, California is home to Bordeaux Wealth Advisors, a financial advice firm. You can reach them at 650-289-1105 or visit them at 1550 El Camino Real, Suite 100, Menlo Park, California 94025, USA.
The company operates Monday to Friday, from eight o’clock to five in the evening. They have 18 advisers who provide a wide range of financial planning services, such as retirement planning, college funding, estate planning, and more.
Investors at the organization include Thomas Myers, David Murdock Jr., Jon Ekoniak, Brain Vowinkel, and Jon Snare. To put it simply, Thomas runs the show here.
The advisors at Bordeaux Wealth say they can function as “personal CFOs.” The firm claims to have your best interests in mind as CFOs, yet its provisions and disclosures indicate otherwise.
Losing $700,000 in Client Funds Due to Inept Management
You should check out a financial advising firm’s history on FINRA BrokerCheck or Adviserinfo.sec.gov before engaging in their services. The information contained in these databases is quite useful and includes things like a financial advisor’s years of experience, certifications, and disciplinary actions taken against them by clients.
In 2003, Bordeaux Wealth Advisors CEO Thomas Myers had a dispute with a client that cost both parties several million dollars. The claimant in this case stated that they lost $700,000 on a portfolio worth $5 million. They stated that his risk profile did not match the planned asset allocation he adopted.
All equity and bond purchases completed in 2001 were included. The plaintiff asked for $700,000. The client eventually dropped the lawsuit.
However, this is a major warning sign. This means that putting your trust in Bordeaux Wealth Advisors’ management is a tall order. They have a poor track record. A loss of $700,000 would have a devastating effect on your financial situation.
They also appear to have several methods in place to bleed money from you, as seen by the present stipulations in their terms and conditions. Their disclosures include the following exploitative clauses:
Creating Undue Peril for Customers
The fact that it bases its revenue on client success is the company’s first and, arguably, biggest problem. The practice of basing fees on a client’s success is frowned upon in the financial services sector.
The only way your advisor makes money on performance-based fees is if they outperform a predetermined benchmark. This requires the advisor to take unneeded and unreasonable risks.
Although high-risk investment strategies may “outperform” a benchmark, they typically result in subpar returns for the client. In addition, high-risk techniques are so-called because they frequently result in financial losses.
Because of this, based-on-performance compensation was prohibited until 1985. Finally, you cannot hold your advisor responsible for any losses you may incur as a result of his use of high-risk strategies.
When you sign on as a customer of Bordeaux Wealth Advisors, you promise not to sue the company under any circumstances.
Endorsing Investments Affiliated
The investments suggested to customers by Bordeaux Wealth Advisors are underwritten by several affiliated companies. The company can expect bigger commissions from these investments than from others. That’s why they might push these investments on you whether or not they make sense.
You may find that your financial advisor recommends a less-than-ideal investment over one that generates larger commissions.
Since your advisor stands to gain financially from the sale of certain investments, you should not put your faith in their advice. Clients of Bordeaux Wealth Advisors should investigate the investments they have suggested.
Dispute Over 12b-1 Fees
Products with 12b-1 fees are available from this financial advisor. The 12b-1 fee is a marketing fee that does not provide any value to the investment itself but does enhance the investment’s cost.
Some investors mistakenly believe that purchasing more for security means that they will receive higher returns. You would be wrong, though.
The SEC performed research on this topic and concluded that investments with 12b-1 fees do not outperform those without these costs. The investments that impose this fee also have a lower return on investment (ROI) because their overall cost is higher.
Conclusion
Numerous warning signs point to Bordeaux Wealth Advisors being fraudulent. The 12b-1 fees and performance-based fees that the company requires its clients to pay are extremely risky. There have been reports of mistreatment at the company, and the CEO is responsible for losses to clients totaling $800,000.
This evidence points to Bordeaux Wealth Advisors being an untrustworthy firm. Changing advice firms is something you should consider.
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