Freestone Capital Management is a company in Washington State that helps people with their investments. The place where they work is in Seattle.
At first glance, Freestone Capital looks like a great company that deals with money. But they have a lot of problems that make it seem like you shouldn’t work with them.
This company has too many problems to count, from a lot of bad Freestone Capital Management reviews to conflicts of interest. Because of this, I put them in the points below.
They will help you figure out if this firm is worth your time.
FREESTONE CAPITAL MANAGEMENT CHARGES EXCESSIVE FEES, HAS TOO MANY NEGATIVE EMPLOYEE REVIEWS, AND PUTS ITS CLIENTS AT EXCESSIVE RISK. IT MIGHT NOT BE SUITABLE TO WORK WITH THEM.
Freestone Capital Management: People Behind the Firm
Freestone Capital Management LLC is a company in Seattle, Washington that helps people with their money. They also have offices in San Francisco, California, and Santa Barbara, California, in addition to Seattle. The address of their headquarters is 701 Fifth Avenue, 74th Floor, Seattle, WA 98104.
The company has been in business since 1999 and has a good name in its field. They have 35 people on staff who help 4,000 clients.
Freestone does business in 31 of the 50 US states.
Over the years, this consulting company has built a strong name in the country. But their regulatory records show that they may be cheating their customers.
Freestone Capital Management is mostly run by:
Larry Miles
Larry Miles was just named CEO and President of Freestone Capital Management. Before he joined Freestone, Larry was a Principal at AdvicePeriod. He works at the firm’s office in Seattle.
Gary Furukawa
Freestone Capital Management was started by Gary Furukawa. He is a senior partner and client advisor at the firm. He is also in charge of running the business and managing its investments. Gary works for Freestone Capital Management out of their office in Seattle. He worked at EF Hutton and Salomon Smith Barney before starting his own company, Freestone Capital Management.
Andrew Erisman
Andrew Erisman is a partner at Freestone. He is a client advisor and handles firm management. Andrew has the CIMA certification. Before Freestone, Andrew worked at Oppenheimer & Co. While he’s highly experienced, Andrew also has a multi-million dollar customer dispute in his FINRA BrokerCheck profile.
Erik Morgan
Erik Morgan works at Freestone Capital Management as a senior partner. He is a customer advisor and is in charge of managing investments and running the business. Erik Morgan Freestone Capital Management has been together for a long time. He used to work for Arthur Andersen. Barron’s has put him on more than one of their lists of the best financial advisors in Washington state.
Michael Allard
Michael Allard works at Freestone Capital Management and is a managing director there. He works at the firm’s branch in San Francisco. Michael worked at Charles Schwab before he joined Freestone.
Freestone Capital Management has a lot of other people. With a staff as well-known as Freestone’s, it shouldn’t be hard for the company to serve its clients well.
But what they have said shows a different picture.
Some of the most selfish and unfair conflicts of interest are found in the services of Freestone Capital Management. But most clients wouldn’t notice them because the staff has earned so much praise.
Before we talk about Freestone’s moral problems, we should look at the Freestone Capital Management AUM:
Freestone Capital Management AUM
Freestone Capital Management has $7.2 billion in assets under management (AUM). This means that they are in charge of more than $7 billion worth of assets. But they only have 35 people on their team to handle so many things.
Through Freestone Capital Holdings, Gary Furukawa and his wife Della own about half of the company.
If you looked up the word “Freestone Capital,” you wouldn’t find anything bad about the company. This might make you think that their services have been perfect since 1999.
But that’s not at all true.
In fact, FINRA BrokerCheck profiles show that many of the people who work at Freestone Capital have made reports.
Freestone Capital and its Multi-million disputes
The ADV filing for Freestone Capital Management shows that there are no complaints. But that doesn’t mean there aren’t any problems with the company.
In fact, the FINRA BrokerCheck profiles of a few of their advisors show that they have been in conflict. Andrew Erisman and Robert Philip Carter are two of the most well-known.
They are both client managers at this company. Andrew is much higher up in the company than most people because he is also a partner and is in charge of running the business.
I looked at both of their FINRA BrokerCheck pages and found the same disclosure:
This dispute is dated 3/15/2010. The claimant here was a public company that claimed breach of fiduciary duty, negligence, unsuitability, and failure to supervise regarding auction rate securities bought in 2007.
They had requested $14,450,000 in damages. And they settled it for $3,000,000.
Both Andrew and Robert have given the same reply to the dispute. They deny any admission of wrongdoing or liability. Moreover, they point out that they didn’t pay the settlement amount, their past employer did.
Andrew and Robert deny any involvement in the case, but that’s highly unlikely. If they were really not involved, the case wouldn’t appear on their BrokerCheck profile.
Still, no one would want to admit to a $14 million mistake, would they?
So, even though Freestone Capital Management has no disclosures in its ADV filing. Its staff members have significant disclosures and that says a lot about its services.
Even a small customer dispute shows a lot about an advisor’s competence and ethics. The dispute on these Freestone Capital advisors is in millions. Certainly, they made grave mistakes in the past.
Freestone Capital Tries to Mislead You:
On its website, Freestone Capital tries to trick its clients about what it says about its disclosures. They have a page on their website called “Important Disclosures” that is just for that.
On this page, the first thing you would see is not their ADV file but their different awards. To be clear, a declaration on FINRA BrokerCheck could be a customer complaint, an arbitration, the end of a job, a bankruptcy filing, or a civil or criminal case they were involved in.
So, by calling them “Important Disclosures,” Freestone Capital is letting you know that you can find information about these parts of their business there.
And just for kicks, they put in one line on that page that they don’t have any disclosures.
But “Important Disclosures” does not mean “Our Awards and Honors.” It’s a sneaky way to trick people.
Funny enough, they start the page by saying that past success doesn’t show what will happen in the future. This is their way of saying, “Just because we won awards doesn’t mean you should expect an award-winning performance.”
You can see why it made me angry.
They are using words that aren’t clear. And by any measure, it’s a very shady thing to do.
Freestone Capital Management Reviews: Evidence of Poor Leadership
Freestone Capital Management says that it is a company that is owned by all of its employees. But it’s easy to say that when the founder of the company also works there.
As I did the research for this piece, I came across many reviews of Freestone Capital Management that showed how things really are at this company. It looks like the people in charge at Freestone Capital don’t care about the people who work there.
If you want to work for Freestone Capital, you should read the reviews below about Freestone Capital Management:
“Lays off for No Reason”
This review says that the people in charge at Freestone Capital tend to fire people for no clear reason. They also say that the company wants its workers to put in 12 hours of work for 8 hours of pay.
This is just taking advantage of people, and no company should make its workers work like this.
In the “Advice to Management” part, the reviewer says the company should make it clear how much a staff member is expected to work.
“Dysfunction and Unclear Roles”
This review says that the company’s owners support being dishonest. During this person’s interview, it sounds like they were told they were a good fit for the company.
But then they cut their pay right away.
If a company’s owners can lie to their own workers, they can definitely lie to their customers. And that’s a very big worry.
It makes me wonder if I can trust Freestone Capital.
Freestone Capital Careers: Are They Worth It?
I don’t think it would be a good idea to work here, even if you’re interested in Freestone Capital jobs or Freestone Capital Management pay.
From what these reviews say, it sounds like this isn’t a good place to work. You don’t have to go to Freestone Capital Management if you want financial advice. There are a lot of other places you can go.
You should choose a place of work that makes its workers feel at ease. Also, this company has a lot of problems with its leadership.
If there hadn’t been disagreements about who should be in charge, they wouldn’t have needed a new CEO. Larry Miles just took over as CEO of this company, so it’s too soon to tell if he’ll be able to run it well.
Based on the Freestone Capital Management reviews I read, it seems like you should stay away from this company.
This is why you should learn more about a potential company before you start working for them. Even though the amount of money that Freestone Capital Management is in charge of is in the billions, their work environment is too bad. Your mental health might suffer if you work there.
Why Freestone Capital Management Might be Unsuitable for You
Freestone Capital Management has a lot of other problems on top of having bad leadership.
When looking for a financial advisor to work with, it’s important to keep these things in mind. This is because many clients don’t pay attention to these things. Some of these things are also things that firms don’t want their clients to know.
There are a lot of conflicts of interest in Freestone Capital’s filings. They say that this company could be giving its clients bad advice. There’s a good chance that their clients don’t know about these problems.
The following points will help you see why you might not want to work with Freestone Capital Management:
Charge High Fees
Freestone Capital Management’s financial advisory services have a maximum rate of 1.50%. This is a lot higher than the average for accounts with $1 million in assets, which is 1.02%.
The fees could be lowered, but advisors rarely do this for their customers. With such high fees, you would pay a lot more than your peers.
Freestone Capital has three different types of fees: fees based on assets, fees based on results, and fees for private funds.
Their high prices would make it hard for you to pay for things. Their fees are almost 1.5 times higher than the average in the industry. Surely, it would cost more to work with these people.
When you think about the other ways this firm has conflicts of interest, their high fees don’t look so good.
Earn from Commissions
In their disclosures, Freestone Capital Management says that they accept fees. The companies whose investments they sell pay them these fees.
It lets them offer different investment choices and use different management styles, but it can also change what they suggest. Their advisors may suggest investments that give them higher fees but don’t take into account your financial needs.
Some people might say that pay based on performance turns financial advisers into salespeople. And because of this, they might give you bad advice.
For example, Christopher Aitken, a financial adviser at UBS, is being sued because he told an elderly couple to invest in something that wasn’t right for them. This happens more often than you might think, which is why it’s a big warning sign when an advisory company makes money through commissions.
It gives them a reason to put their own money before yours. Would the company care more about you or its own bottom line?
Offer Mutual Funds with 12b-1 Fees
Freestone Capital Management has 12b-1 fees for its mutual funds. These mutual funds cost a lot more to own than those that don’t have these fees. But mutual funds with 12b-1 fees, even though they cost more, don’t offer higher returns or other perks.
The promotion and distribution fee is called the 12b-1 fee. Most of the time, it goes into the pocket of the advisor.
When you invest in mutual funds with this fee, your costs go up, and you get worse results. SEC did a study to compare how much money mutual funds made with and without 12b-1 fees. No change was found.
Working with Freestone Capital has a big drawback in this way. You’ll have to pay more for no extra perks.
They are Insurance Brokers
Insurance agents are the people who work as advisors at Freestone Capital Management. This means that when they sell insurance goods, they get a commission.
You might think that your advisor is getting you insurance because they care about your safety, but the truth is that they only care about their fees.
Since they are an insurance provider, they might recommend insurance products that you don’t need. It makes it more likely that the advisor will recommend insurance goods that aren’t right for you.
Sells Proprietary Investments
Freestone Capital Management has offices all over the country. They have a number of their own businesses.
Their advisors are paid to promote and “sell” Freestone Capital’s own investments and goods. They might not care about you at all while doing this.
When selling their own investments, advisors don’t care about assets that pay them less in commissions. So, you might miss out on a lot of good ways to invest because your advisor wouldn’t get paid fees from them.
Charge Performance-based Fees
The fact that Freestone Capital charges fees based on how well its services do is a big red flag. This way of paying people has a lot of problems.
When your advisor is paid based on how well they do, they get paid more if they do better than a standard, like an index. On paper, it makes a lot of sense. But financial advisors often use high-risk methods to beat the benchmark, putting you at risk when it’s not necessary.
Too much danger can hurt your finances, especially when the market is going down. In a down market, you can quickly lose a big chunk of the money you have spent.
In the 1940s, Congress made it illegal for RIAs to charge fees based on how well they did. It came back in 1985 when the SEC said that RIAs could charge this fee to clients who met certain criteria.
Advisors at Freestone Capital Management get paid based on how well their investments do. So, it’s likely that they are putting their clients at an unnecessarily high risk.
Working with these people wouldn’t be safe.
Side-by-side Management
Side-by-side handling is done by Freestone Capital handling. This means that they work with both big hedge funds and mutual funds and smaller retail accounts.
Side-by-side management can lead to unfair services and less care for smaller accounts. It is a big problem for large advisory companies.
Side-by-side management firms tend to give more attention to their bigger clients. This means that the smaller accounts have to pay more for trades and get worse service.
Accept Soft-dollar Benefits
When a company suggests affiliated securities, it means that they are recommending securities in which they have ownership. Without a doubt, it affects what they say.
The experts at Freestone Capital would rather recommend stocks that their company has recently bought.
It’s like the dispute about the commission that we talked about earlier. Advisors get more commissions from affiliated stocks, which gives them a reason to ignore what their clients want.
Accept benefits that aren’t monetary
Freestone Capital Management says that they accept soft-dollar perks in their disclosures.
In the finance world, soft-dollar perks are very well known. Because they make it easy for a financial advisor to take advantage of a client.
It implies that the managers might try to get their clients to make trades through brokers that are better for their company than for the client.
Like the other conflicts, this one makes an advisor’s advice seem biased, which makes it hard to trust them.
Trade Recommended Securities
The experts at Freestone Capital Management buy and sell the securities they tell their clients to buy. This is a very big red flag because it could lead to a lot of problems.
Advisors can use their clients’ money to boost their own earnings. Most of the time, buyers don’t even know this. One common example is front running, in which the advisor trades certain securities and then suggests them to the investor.
Trading in recommended securities has a big effect on the advice the expert gives.
They might not pay attention to what their clients want and instead focus on how much money they can make for themselves. And that would be terrible for your financial health.
Terrible Advisor / Client Ratio
At the time this review was written, Freestone Capital Management said they had 3,988 clients and 35 managers.This means that for every 100 clients they have one guide. In other words, there are 113 customers for every advisor. It’s a bad ratio because it makes it very hard for an advisor to give each client the care they need.
Managing 100 or more people on your own can be very bad for an advisor’s business. People at Freestone Capital Management seem to have gotten greedy.
Think about what it would be like to be the guide. Would you be able to listen to 113 different people at once and give each one your full attention? Most likely not.
When a company has so few clients for each adviser, they have to give their clients the same advice, which is one of the worst things that can be done in the finance industry.
You must have specific goals and financial needs. And I know for sure that your financial needs are not the same as mine. Then, would it be okay for a financial advisor to tell both you and me to invest the same way?
When advisors give their clients the help that is the same for everyone, they don’t take into account their specific needs. They use a template and make investment suggestions based on that, without caring about the well-being of their customers.
Granted, there are some good things that can come from following standard advice. But they don’t compare to the gains you could have gotten if you had made your own plan for investing.
Conclusion
Freestone Capital Management is not as great as it looks. It’s a business that takes advantage of its employees and has rules that help it take advantage of its clients.
As a shopper, you should know about these things. Financial advisory companies, on the other hand, don’t want their clients to know all this. This company even tries to trick people by using the word “disclosures” to talk about its successes, even though it means “disputes” in the finance world.
It’s clear that this company doesn’t have good goals, so I suggest you stay away from them. If you know anyone who wants to work for Freestone Capital Management, please send them this story. The better, the more people know about this side of them.
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