Jim Wohlgemuth Morgan Stanley is a name that can come up if you are seeking a financial advisor in the Washington, District of Columbia area. He is a well-known counselor in the area, and he is known for taking advantage of his clients in unethical ways by employing a variety of deceptive strategies.
It is in your best interest to educate yourself on these strategies before putting your faith in him to manage your finances going forward. You would then have a better idea of what you are getting yourself into and whether or not you should put your full trust in him.
Who is Morgan Stanley’s Jim Wohlgemuth?
Jim Wohlgemuth, who works for Morgan Stanley and is based in Washington, DC, is a financial advisor. His office may be reached at the following number: 202-292-5430 and is situated at 1747 Pennsylvania Avenue NW, Suite 900, Washington, District of Columbia, United States.
Rich families are the focus of Jim Wohlgemuth’s business, where he serves as managing director and also responds to their needs. The company asserts that it takes a holistic approach to assisting ultra-high net-worth families with all facets of their financial lives and that this approach is unique to the organization.
Clients can take advantage of a wide range of services from this company, such as risk management, family governance, comprehensive wealth planning, investment management, pre-liquidity planning, and an open-architecture platform. The company makes the idea that it can assist clients in increasing their financial, social, and family capital while also preserving it.
In spite of the fact that his company purports to care about its customers’ futures, the fact that their disclosures contain terms that are deceptive and hazardous reveals something entirely different. Because they result in a variety of different conflicts of interest, it is important that you are aware of them.
The following part of my evaluation will provide an in-depth explanation of these provisions so that you have a better chance of comprehending the warning signs that are inherent in Jim’s services.
Conflicts with the Law and Dubious Disclosures Relating to Jim Wohlgemuth Morgan Stanley
Dispute with the Client Over $500,000
Checking a potential financial advisor’s profile on FINRA’s BrokerCheck should be the first thing you do whenever you start looking for a new advisor. It is a vast database where you can find out all you need to know about an advisor, such as their prior work experience in the field, the examinations they have passed, and the legal issues they have had in the past.
According to Jim Wohlgemuth’s profile on FINRA BrokerCheck, Morgan Stanley has been involved in one legal issue. It took place in 2008 when the customer claimed that Jim Wohlgemuth had failed to inform him about the liquidity of his investments in auction-rate securities.
In order to comply with FINRA Regulatory notice 09-12, Jim Wohlgemuth’s firm offered a settlement in the dispute for the amount of $500,000.
Confrontation with a dispute that is worth $500,000 is not a good sign. It is conclusive evidence that Jim Wohlgemuth cannot be relied upon to the same degree as he portrays himself to be. In addition to this, it demonstrates that Jim is a self-centered advisor who does not hesitate to put his personal interests ahead of those of his clients.
The fact that the following clauses are included in his disclosures is more evidence that he simply does not care about his customers.
Using Fees That Are Determined Based On Performance
This company is infamous in the financial world for its use of performance-based fees, which they charge their clients. If a financial advisor bases their fees on a client’s performance, it indicates that they expect to earn money by outperforming a particular index or benchmark.
A performance-based fee system may appear to make a lot of sense on paper, but in reality, it can lead to a wide variety of complications and conflicts of interest if it is implemented. To begin, the adviser is given an incentive by this fee structure to implement high-risk strategies, regardless of whether or not those strategies are appropriate for your portfolio.
It’s possible that high-risk strategies will exceed a benchmark in the short term, but in the long term, those strategies will produce awful returns.
The majority of the time, the returns that these techniques provide to investors are subpar or even negative (losses).
In addition, you are unable to hold your advisor responsible for proposing high-risk strategies because of their lack of liability. They can easily declare that you were aware of all the potential consequences and still get away with it. On the other side, if the plan is successful, your financial advisor will be able to charge you significant fees.
The practice of charging clients based on their achievements is frowned upon for the reasons stated above.
Using the 12b-1 Fee Structure
The investments known as 12b-1 fees are made available by Jim Wohlgemuth and his company. This is a marketing cost, and there is no value reflected in it. It is completely pocketed by the financial advisor in exchange for advocating the investment.
The investment is made significantly more expensive as a result of the 12b-1 costs. There is a common misconception that if an investment has a larger initial cost, it will also provide better returns; however, this is not the case with investments that have this fee attached to them.
The Securities and Exchange Commission (SEC) carried out an in-depth study to examine and contrast the rates of return generated by investments that are subject to a 12b-1 fee and those that are not. It was discovered that there was no difference in the returns of the two. According to the findings of the study, assets that require a 12b-1 fee have a lower return on investment (ROI) than those that have a larger cost.
To put it another way, you will be required to pay additional fees without receiving anything in return. In addition, given that the advisers benefit financially from the receipt of this fee, the advisors would typically recommend investments that demand a higher fee overall.
The fact that this cost is calculated as a percentage of the total is still another significant negative. This indicates that the total costs you’ll pay will be determined by the size of your portfolio as a whole. The greater the size of your investment portfolio, the more the fees you’ll have to pay.
Because Jim focuses primarily on catering to high-net-worth families, this is an especially significant problem for investors who manage substantial portfolios. Because of its variable character, the 12b-1 fee makes it possible for financial advisors to charge clients additional, covert costs.
You should stay away from financial consultants that suggest investments that come with a cost like this one.
Conclusion
Working with Jim Wohlgemuth at Morgan Stanley has a number of drawbacks that should be considered. He is currently engaged in a court battle with one of his clients that is worth $500,000, and he bases his compensation on the client’s performance.
His company has made it possible for them to charge secret fees. These are all significant problems, yet the vast majority of his customers are probably not even aware that they exist.
If you are a conservative investor, it is in your best interest to steer clear of this company and look for a different advisor instead.
