Wendy Holmes Investigation (Source: https://www.youtube.com/watch?v=vlSb9zD9qac)
Wendy Holmes is a prominent name in the financial advisory world. She has a lot of experience in the field but she might not be as ethical as you think.
I found many ethical conflicts in the offered services of her firm, Wittenberg Holmes Partners. And I realized that many of her clients might not even be aware that they were getting poor advice.
On top of that, I found many disputes against her and her business partner, Eric Wittenberg.
Then, there’s the class action lawsuit filed against her firm due to the UBS YES program. In my following Wendy Holmes review, I have covered all of these topics in detail to help you determine if you should work with her or not:
Wendy Holmes: Who is She?
Wendy Holmes is a managing director at Wittenberg Holmes Decarlo Partners (Witternberg Holmes Partners, in short). She is also a financial advisor and family office consultant. Wittenberg Holmes Partners is a New York-based UBS Financial Services firm. Their address is 1285 Avenue of the Americas 15th, 16th, 17th, + 18th, New York, NY 10019.
Wendy’s firm claims to put their clients’ values first but evidence suggests otherwise. Wendy Holmes and her firm, Wittenberg Holmes UBS, has numerous SEC disclosures. They suggest this advisor has had multiple conflicts with her clients.
Moreover, Wendy Holmes and her firm are facing prosecution as part of a YES arbitration case.
Prior to working at Wittenberg Holmes UBS, Wendy has worked at the following firms and enterprises:
- Salomon Smith Barney Asset Management
- Citigroup Private Bank
- BBR Partners
- UBS Private Bank
- Credit Suisse Private Bank
Wendy Holmes also has received many accolades and awards. These accolades might make anyone think she is a reliable financial advisor. But if she was really that reliable, I wouldn’t have written this review.
Following are her accolades:
- Working Mother magazine Top Wealth Advisor Moms from 2018 to 2020
- Forbes Best-in-State, Wealth Advisors, New York, 2019 to 2021
- Forbes America’s Top Women Advisors from 2018 to 2020
Wendy certainly has a ton of industry experience. But it seems she is using this experience to manipulate her clients and they might not be receiving the quality of services they were promised.
I’m saying all this because the various disclosures and the numerous conflicts of interest present in this firm paint a horrible picture. They suggest that this firm benefits more from offering subpar and biased investment advice to its clients.
In the following points of my Wendy Holmes review, I have shared the various details that point to the shadiness of this advisor’s operations.
Disclosures Against Wendy Holmes and Eric Wittenberg
Whenever you’re interested in getting the services of a financial advisor, you should check them on FINRA BrokerCheck.
It’s a database by the SEC which tells you about a financial advisor’s past and if they have had any disputes or not.
Wendy Holmes and Her Disputes
When I checked Wendy’s profile on FINRA Brokercheck, I found two disclosures. She has had two customer disputes recently.
Although the first one was denied, it’s worth noting that it was a case of misrepresentation and unsuitable recommendations. The client had requested damages of $1,000,000.
The first dispute is dated 8/8/2019.
The second dispute is dated 4/15/2019 and is still pending. Wendy’s client has alleged here that since September 2016 till this date, Wendy had misrepresented them and had given them unsuitable investment recommendations.
The client has requested $400,000 in damages.
Having disclosures on your profile is never a good thing for any financial advisor. These are customer disputes Wendy has had in the past.
Keep in mind that in this industry, most clients don’t even realise that they are getting subpar or unsuitable advice. They trust their financial advisor too much to identify these issues.
Eric Wittenberg and His Disputes
Wendy isn’t the only person at Wittenberg Holmes Partners to have had so many customer
disputes in the past. Eric Wittenberg, the other managing director at Wittenberg Holmes UBS has six disputes in his FINRA Brokercheck profile.
Two of those disputes are quite old as they took place in 2001 and 2002 so we’ll ignore them. However, the rest of the disputes are all recent.
This shows Eric Wittenberg’s clients have just recently started realising that they were getting poor services.
The most recent dispute is dated 10/22/2020 and is still pending.
Here, the client has complained that between spring 2016 till the date of filing the dispute, Eric had given unsuitable advice to them. In response to this dispute, Eric says that he denies these allegations and believes them to be false. In my opinion, no one would file a dispute if it was false. It’s an entire process with a lot of paperwork.
Eric responds by saying that he worked with this client for many years and built a comprehensive plan for them. They updated the client about their long-term plan and incorporated the option strategy with other changes.
Eric claims that he discussed the strategy with his client many times and the client made the decision of implementing it himself. This is a common tactic among financial advisors when they are caught .
Eric also says that the client had attended a meeting with two principals of the strategy. His argument is the client was well-aware of the high-risk strategy.
This dispute is dated 5/19/2020 and is still pending.
Here, the client alleges that in the beginning of May 2018, Eric Wittenberg misrepresented them and gave them unsuitable advice to hold an options overlay strategy. The client requested $420,000 in damages.
Eric has given the same response to this dispute like he gave in the previous one. His argument is that the client was fully aware of the risks he was taking and he took the decision willingly.
Like in the previous dispute, Eric has claimed here that the allegations are false and he denies them.
This dispute was denied. However, it’s still worth mentioning as the client had requested $1,000,000 in damages. It’s dated 8/8/2019.
Probably, it’s the same client who had filed this dispute with Wendy as both of these disputes were denied and have the same filing date. This was a case of misrepresentation and unsuitable advice.
This dispute is dated 4/15/2019 and is still pending. The client alleged that Eric had given them unsuitable advice and misrepresented them to hold an options overlay strategy.
As you can see, it’s a similar dispute like the last ones. The client has requested $400,000 in damages.
In response to his client’s allegations, Eric has said that he had clearly explained the risks of the strategy to the client both in writing and verbally. He has said that the client had expressed disappointment in the investment’s performance.
It’s worth noting that the timing of these disputes is quite close to the YES arbitration UBS Financial Services is facing at the moment. I have discussed the lawsuit in detail in the next section of my Wendy Holmes review.
What do these disputes mean?
Both Wendy Holmes and Eric Wittenberg have multiple disclosures in their FINRA Brokercheck profiles. And all of these disputes point out the same issues: misrepresentation and unsuitable advice.
You should know that filing a dispute against your investment advisor is a very tedious task. There’s a lot of paperwork and hours involved. Moreover, financial advisors try their best to avoid such disputes.
Still, these guys have numerous disputes. This indicates there’s something seriously wrong in the investment advice these people give to their clients. It also puts the reliability of Forbes’ method of ranking advisors, but that’s a topic for another article.
You must have noticed that in all of these disputes, Wendy and Eric responded by saying “the client knew the risks”. This is a terrible response.
Even though they informed their clients of the risks, they still “recommended” the investment. If you hired an advisor and they told you, “This investment is risky but I recommend it.” Keep in mind, they are a “Best-in-state advisor”. Would you invest your money or ignore their recommendation?
Chances are, you’d invest. This is what all of those clients did and many others are still following their advice.
THESE DISPUTES INDICATE THAT THE ADVISORS AT WITTENBERG HOLMES PARTNERS GIVE BIASED AND POOR INVESTMENT ADVICE TO THEIR CLIENTS.
The various ethical conflicts I found on Wendy Holmes, don’t help their case either.
But first, we should cover a more important topic. An active lawsuit:
Wendy Holmes is Facing a Class Action Lawsuit
UBS is facing a class action lawsuit because of its YES investment program. Wendy Holmes is a UBS financial advisor and if you’re a client who she recommended YES program to in 2018, you can become a part of this lawsuit too.
Claims for this lawsuit have reached over a billion dollars. Investors had invested around $6 billion in UBS’s Yield Enhancement Strategy (YES) program and faced severe losses.
Wittenberg Holmes Partners is a prominent UBS-affiliated firm. And chances are, they recommended this strategy to many of their clients.
UBS’s YES program is a short volatility / short option strategy. It is unsuitable for investors whose risk tolerance is low or moderate or whose investing objective is income.
However, many UBS advisors still recommended this program to their clients. In Fall 2018, investors in this program lost around 20% of their capital.
Deutsch & Lipner, a law firm based in New York is pursuing a legal case against Wittenberg Holmes UBS as their client is a victim of the YES program.
The law firm found that UBS knew the equity markets were showing enhanced volatility but they ignored such warning signs. Hence, they still recommended YES to their clients as it offered high fees.
They aren’t the only guys who are pursuing a lawsuit against UBS’s YES program. On December 22, 2020, a FINRA dispute resolution panel awarded $90,000 to an investor after concluding that the YES strategy wasn’t suitable for them.
The Yield Enhancement Strategy charged an annual fee of 1.75% of the invested capital. And now the investment has turned out to be a failure.
IF YOU’RE A CLIENT OF WENDY HOLMES WHO INVESTED IN THE YES PROGRAM, YOU SHOULD CHECK YOUR RETURNS AND CONTACT YOUR ATTORNEY.
Why You Should Avoid Wendy Holmes and Her Firm
Apart from having multiple disclosures and a lawsuit against her, Wendy Holmes’ firm Wittenberg Holmes Partners has a ton of conflicts of interest as well.
Whether you’re an existing client of theirs or someone interested in their services, you must know about these conflicts. They would help you understand if you can trust Wendy and her team or not.
Many people aren’t aware of the ethical conflicts their financial advisor has.
For example, UBS Financial Services has hidden this simple example of their ethical conflicts in their T&Cs so you can’t hold them legally liable:
Financial advisors such as Wendy Holmes, Threadgill Financial, and might even take advantage of this fact.
To be fair, the numerous disputes are proof that Wendy Holmes and Eric Wittenberg are clearly taking advantage of their clients.
Makes Money from Commissions
There’s a huge difference between commissions and fees. When an advisor earns from commissions, they get a percentage of the investment they recommended to their client.
The advisor gets this commission from the company whose investments they sell. You can say that when an advisor earns commissions, they act like sales professionals.
A huge issue with a commission-based compensation structure is that the advisor will benefit more from recommending specific investments. This can affect their advice substantially. And they might ignore the unique requirements of their client and focus on their commissions.
After all, you don’t expect to hire a salesman when you hire a financial advisor, do you?
Wendy Holmes is a Broker-Dealer
As a UBS financial advisor, Wendy Holmes is a broker-dealer. This creates a wide range of conflicts of interest such as cross-selling of commissioned products, revenue sharing from mutual funds, sale of proprietary products investments, and many others.
The biggest issue with this compensation structure is it allows the advisor to charge hidden fees and so, increases costs.
You can understand how adversely it can impact your finances. Many clients don’t realise how much hidden fees they are paying because of this issue.
Instead of helping you find investments that match your goals and help you advance your growth, your financial advisor would focus on “selling” the investments of their affiliated partners.
Certainly, it would affect how Wendy recommends investments to you. And it’s probably why she and her firm has so many disputes.
Offers Mutual Funds with 12b-1 Fees
A huge red flag in Wendy’s services is she offers mutual funds that charge 12b-1 fees.
The 12b-1 fee is a marketing fee and in most cases, it goes in the pocket of the advisor. This fee makes the mutual fund more expensive, forcing you to pay more.
You might think because you have to pay more for this investment, you might get better returns. However, that doesn’t happen. SEC had conducted a research to compare the returns of mutual funds that charge 12b-1 fees and the returns of those that don’t charge this fee.
They found no difference in the generated returns of both of these investments. In fact, your returns would actually be lower because you’d be paying an extra fee.
This is among the biggest drawbacks of working with Wendy Holmes. You’d be paying more for something that offers no additional rewards.
Wendy Holmes is an Insurance Broker
As a UBS advisor, Wendy actively practices as an insurance broker or agent.
It means she has a monetary incentive for suggesting insurance products to her clients. You’d think your advisor is suggesting insurance because she cares about your financial security. In reality, she might only be focused on her commissions.
Being an insurance broker can influence the insurance recommendations of an advisor. They might suggest insurance products that offer higher commissions to them instead of suggesting the ones that suit their clients more.
You can now understand why so many of Wendy’s and Eric’s clients have filed disputes of offering unsuitable investment advice. These advisors have too much incentive for offering unsuitable clients to their clients.
Sells Proprietary Products and Investments
Wendy recommends proprietary investments to her clients that might offer better commissions than non-proprietary products. UBS is a prominent bank and has many proprietary products.
As a result, it would be beneficial for Wendy to overlook her clients’ requirements and “sell” UBS’s products.
Take the case of the YES program for example. UBS’s YES program offers high commissions and it’s probably why many of UBS’s advisors ignored their clients’ requirements and recommended this proprietary product. Now, clients are filing a class action lawsuit against UBS because of the poor results this program offered.
Moreover, when a financial advisor sells proprietary investments, it limits the diversity and number of investments options they provide to their clients.
As a client of Wendy Holmes, you might be missing out on many investments because of this reason.
Charges Performance-based Fees
When your financial advisor charges performance-based fee, they get paid only after they outperform a benchmark (such as an index). On paper, this compensation structure might seem very lucrative. But it’s very dangerous.
A performance-based fee structure incentivizes the advisor for pursuing high-risk strategies. Such strategies could seriously harm your investments.
According to a study, mutual funds that follow a performance-based fee structure take unnecessary risks but offer poor results. A high-risk strategy is particularly dangerous in a down market (such as the current pandemic-ridden one). That’s because in a down market the high-risk strategy can wipe out a large chunk of your investment quickly.
The legal history of performance-based fees isn’t any good either. The SEC started allowing advisors to follow this fee structure only in 1985 and that too, only for qualified clients.
Before that, The Congress had banned it through the Investment Advisers Act for RIAs in 1940. They had done so because to mitigate the use of high-risk strategies that harmed investors.
Wendy charges performance-based fees. This means she might be putting her clients at excessive risks. And such high risk means you might lose a lot of your investment.
Now you can understand why Eric Wittenberg constantly said “the client was aware of the risk” in reply to his disputes. Performance-based fees are looked down upon in the finance sector.
However, many clients aren’t aware of its risks, which is why financial advisors get away with it so frequently.
Performs Side-by-side Management
Wendy Holmes and her firm perform side-by-side management. This incentivizes them to favor larger funds and leads to unfavorable trade executions and unequal trading costs for retaining clients.
It’s another red flag because it adversely affects the service-quality of the advisor. In most cases, a financial advisor that offers side-by-side management would offer subpar advice to their smaller retail accounts as they would prefer working with larger funds.
Recommends Affiliated Securities
As a UBS financial advisor, Wendy might recommend securities that UBS has recently taken over. This can influence her investment recommendations as pushing those products might be more beneficial for her than focusing on her clients’ interests.
Like the previous commission-related conflicts, this issue is also related to the priorities of the advisor. Do they value their own pocket over their clients? I believe that the answer would be yes in most cases.
Trades Recommended Securities
According to her disclosures, Wendy trades recommended securities. This means, she and her firm recommend securities that they trade for themselves.
If leads to multiple conflicts of interest.
Suppose your friend has a blog that rates the top 10 restaurants in the city. Would you trust their recommendations if you found that your friend is also the owner of several restaurants in that list?
Certainly, you can’t trust your friend’s ratings. They would want to rate their restaurants over their competitors as it would benefit them more.
Similarly, Wendy would prefer to recommend securities that would yield her more benefits. There are many ways an advisor can exploit this service.
For example, they might be involved in front running. Here, the advisor trades particular securities before recommending them to you to manipulate their returns. Again, not many clients realise that their advisor is recommending them traded securities.
And it’s sufficient reason to avoid working with a particular advisor.
What does it all mean for you?
Wendy Holmes’ services have too many ethical conflicts. It’s obvious that you can’t trust her recommended investments.
Even if we ignore the class action lawsuit and the various disputes filed against her and her firm partner, these ethical issues are sufficient as red flags.
Keep in mind that Wittenberg Holmes UBS is a business and it would always prioritize its profits over other things. And with so many ethical issues in its disclosures, it has more reasons to exploit its clients.
The primary duty of a financial advisor is to understand their client’s financial requirements and goals. Then, they have to recommend investments that match those requirements and goals the most.
However, when the advisor has incentive to ignore their client’s interests, it becomes difficult to trust their advice. After all, everyone likes to make money.
Wendy’s offered services incentivize her to recommend subpar investments to her clients. For example, she accepts performance-based fees, which means she would put you at unnecessary risk.
Even though Wendy and her company have a lot of experience, it’s obvious that they don’t operate ethically.
Wendy Holmes and her firm, Wittenberg Holmes Partners have too many red flags. They are facing a class-action lawsuit, have multiple customer disputes, and have a plethora of conflicts of interest.
It would be better to avoid working with a financial advisor who benefits more when she recommends subpar investments to her clients.
If you’re a client of Wendy Holmes and had invested in the YES program, you can take part in the class action lawsuit as well. Alternatively, you can also check Wendy’s recommended investments to see if they offer you the best returns you might get.
It would be best to avoid their services.
Wendy Holmes is facing a class action lawsuit, has several customer disputes, and her firm has multiple ethical issues. It would be best to avoid working with her.
- Has won many accolades
- Facing a class action lawsuit
- Offers mutual funds with 12b-1 fees
- Has multiple disclosures on FINRA BrokerCheck