Threadgill Financial Red Flags: Why You Should Avoid Them

What would you think if your friend invested in a restaurant and then recommended the greatest places to eat in town? Or would you treat their advice with skepticism?

You probably would choose option two.

But suppose you were unaware that your pal was a part owner of the eatery. You’d never guess that the restaurant they claim is the best in town is one they own. Do you think it’s dishonest of them to recommend their services to you while concealing this information?

Threadgill Financial, a seemingly honest Texas advising firm, is experiencing similar issues. Clients likely have no idea if they are receiving optimal returns on their investments.

Threadgill Financial appears to be a potentially harmful organization with a primary goal of exploiting its customers based on the shady nature of its terms and conditions and the services they provide.

Who Are Threadgill Financial?

Located in The Woodlands, Threadgill Financial is a full-service financial advisory firm. You can find them at 1610 Woodstead Ct # 194, Spring, Texas 77380.

In 2018, they registered to serve in one state, where they are responsible for $255.3 million. They have 324 customers but just two employees to serve them.

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They have less experience and fewer employees compared to competing financial planning firms in the area.

There are now two employees at Threadgill Financial, as of the writing of this review:

  • JD, CFP Zachary Threadgill
  • Threadgill, Adam J., CFP

Formerly practicing as a tax attorney, Zachary is now a CFP. His bio on the company website alludes to the fact that he has worked as a financial planner for a while, but doesn’t specify how long. The majority of his time is spent counseling individuals on retirement strategies.

Adam, a US Marine, was sent to the Iraqi city of Fallujah. He returned to school after being discharged from the Marine Corps and earned a BA and a JD. In addition, he holds the CFP® designation.

They run Threadgill Financial as a team. Their resumes make it look like they should be able to manage a wonderful organization, but their products and services show that they lack the necessary expertise.

Because there are a lot of drawbacks to choosing them over other financial planning firms when comparing their services. The following part of my evaluation of Threadgill Financial will elaborate on the reasons why you may want to look elsewhere.

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Why You Should Avoid Threadgill Financial

Threadgill Financial’s service has a lot of problems. The following arguments will show you why I keep insisting that you avoid doing business with this company.

They provide Mutual Funds with 12b-1 Fees that are extremely risky.

The motives of a financial planner or advisor become suspect when they suggest clients invest in mutual funds that charge 12b-1 fees.

If you compare mutual funds with and without 12b-1 fees, you’ll notice that the latter have lower expense ratios. The expenses associated with promoting and selling a mutual fund’s shares are covered by 12b-1 fees, which are deducted from the fund’s assets.

It’s one of the sneaky extras brokers might tack on to a client’s bill. This is why I don’t advocate working with financial advisors who provide 12b-1 fee mutual funds.

It’s a common misconception that a mutual fund’s higher expense ratio means it’s a better investment.

The SEC compared the effectiveness of mutual funds charging 12b-1 fees to those that did not. There was no noticeable difference in efficiency between the two. Therefore, if a mutual fund charges 12b-1 fees, it is not a good financial decision to invest in it.

Threadgill Financial advises its clients to put their money in mutual funds that charge 12b-1 fees, which raises serious credibility concerns. It’s particularly unethical if they’re suggesting them more for their financial gain than for their clients, which is possible.

They have Performance-Based Fee Products.

A financial advisor who charges clients depending on how well their investments do relative to an index or other benchmark is called a “performer.”

This pay plan appears to be excellent on paper. After all, your financial advisor would be compensated solely upon the achievement of a predetermined objective. But pay for performance has a major weakness that needs to be addressed.

Most RIAs are prohibited from charging performance-based fees by the Investment Advisers Act of 1940 because doing so encourages the employment of unethical and hazardous investment practices that put the client at greater risk.

After 1985, the SEC finally began allowing RIAs to provide products with performance-based fees, but only under strict regulations meant to protect customers’ best interests.

The returns on performance-based fee products and those without this charge structure have been studied by numerous specialists. They discovered no distinction in sales performance between the two goods.

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Therefore, investing in such items exposes you to the increased possibility of financial loss.

Threadgill Financial suggests goods that charge a percentage of sales as a fee. Putting your money into these items is a surefire way to see it disappear soon, with little you can do to prevent it.

Such investments are fraught with peril, especially in bear markets (like the one we’re in now, brought on by a global pandemic). However, most customers do not realize the extreme danger inherent in these investment options. This makes it possible for dishonest financial advisors to suggest these products to their clients in exchange for increased fees while exposing them to needless danger.

Management is done “side by side” with them.

The approach of side-by-side management, which Threadgill Financial engages in, is widely disapproved of in the financial consulting industry.

When a financial advisor handles hedge funds and mutual funds alongside retail accounts, the two are managed in tandem. The planner’s motive to side with the larger fund results in higher trading fees and less-than-ideal trade executions for the retail clients.

Threadgill Financial has stated in their disclosure that they engage in the trading of suggested securities.

That is, they engage in the trade of the securities they advise their clients to buy. You can see how that could lead to tensions.

A financial planner’s returns are susceptible to manipulation if they propose certain securities they have traded themselves. Therefore, you would receive untrustworthy financial advice that isn’t tailored to your needs.

In other words, your financial planner would act in his self-interest by using your funds. I wouldn’t hire a financial consultant who also trades in recommended securities because it’s unethical.

Threadgill Financial could be engaging in frontrunning. Your financial advisor is “front running” you if he or she trades specific securities before you do.

In a nutshell, they stand to gain financially by giving you bad advice. You have no idea how much money you might be making if you did this.

Poor Advisor/clients Ratio

Threadgill Financial has an advisor-to-client ratio of 1:162. This suggests that one financial advisor at this firm has a very high caseload of 162 clients.

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Providing individualized service to clients is challenging for a financial planning firm with a high advisor-to-client ratio.

Think about advising a hundred people. Do you believe it would be feasible to provide each of them with highly tailored recommendations?

When this occurs, the financial planning organization often provides standard recommendations. the counsel given to customers by financial advisors that are based on premade templates is known as “cookie-cutter advice.”

Cookie-cutter counsel is bad since it doesn’t take into account your unique circumstances and objectives. Every single investor has their own set of needs and objectives. Financial planners have the responsibility to provide their clients with unbiased and tailored guidance on how to best manage their money.

threadgill financial review

Therefore, it is unethical for a financial planner to provide generic recommendations. Because it shows the planner has no interest in their client’s needs and aspirations. Results from following generic pieces of advice would be subpar compared to those from following specific, detailed guidance.

Take the heavy feeling you have in your chest as an example. You can now tell if you’re unwell in two ways. You can either go to a doctor or look up your symptoms online (including on blogs). The former is analogous to receiving generic recommendations, while the latter will allow you to obtain tailored recommendations.

They offer no guarantees for their work (Very Important)

The lengthy disclaimer found at the bottom of Zach and Adam’s website is the primary reason I do not endorse working with them. Most readers won’t even see this disclaimer because it’s so small:

The disclaimer reads as follows: “Diversification does not guarantee a profit or protect against loss in a declining market.” It is a strategy for controlling financial risks.

This seemingly innocuous phrase serves as the company’s “Get out of jail free” card. See, if your financial adviser steers you astray, you can take the matter to the Securities and Exchange Commission.

However, Threadgill Financial is safeguarded by this terse disclaimer. If you hire them, you accept this disclaimer and waive any claims you might have against them based on the results of following their financial advice.

If you were to complain to the Securities and Exchange Commission about their poor financial advice, their attorney would point out this provision and have them dismissed. This is a major problem, and it raises concerns about whether or not Zachary and Adam are acting in good faith.

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They are confident in the quality of the services they provide, so they have included this provision in their terms and conditions. I’ve already laid out the reasons why you shouldn’t follow their advice, and this provision just guarantees that they won’t face any consequences if they wind up costing you money.

What does it mean for you?

In my earlier sections, I discussed the major issues with the services provided by Threadgill Financial. Many of the services they promote work against their customers’ best interests. They have positioned themselves to benefit financially from providing consumers with biased or dishonest financial advice.

It is already extremely challenging to tell trustworthy financial advice from that which is not. Customization is crucial in this field because it guarantees you’ll get the best service and recommendations possible.

Unfortunately, Threadgill Financial’s small team of two cannot provide the individualized attention your financial situation requires.

Knowing these things will help you decide whether or not to hire a financial adviser.

In addition, if they gain money off of you by recommending certain things, it’s a red flag that they’re putting their interests ahead of that of you, their client.

Threadgill Financial: Final Verdict

While Threadgill Financial may look like a fantastic financial planning agency on paper, their offerings, and experience level indicate that you shouldn’t put your trust in them. They know their clients aren’t getting the greatest financial advice because they’ve added a sneaky disclaimer in fine print to protect themselves from any lawsuits.

Furthermore, there are just two personnel at the company serving over 300 customers. Because of this, they are unable to provide individualized attention to each customer. It’s quite unlikely, thus it’s unfair to assume they will.

The trade-off is that you’ll have to take their advice with a grain of salt, as it’s likely to be the same for every consumer.

Finding a company with greater expertise, more tools, and more investment in its clients’ success is preferable.

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