Management of Fixed Income at Zager Morgan Stanely is a well-known name in the Los Angeles area for financial services. The company brags about its services and how good they are.
But the company’s rules show that it doesn’t put its clients’ needs before its own. They actually say the opposite.
Before you sign any contracts with this service provider, you should look at their disclosures to see if there are any sneaky or self-serving clauses. This way, you would know what to expect.
About Zager Fixed Income Management Morgan Stanley
Zager Fixed Income Management is located in Los Angeles, California. The managing director of this firm is Drew Zager while the senior vice president at this firm is Joseph McCullough, CFA.
Its office is located at 1999 Avenue of the Stars Suite 2400, Los Angeles, CA 90067, US, and the contact number of the firm is 310-788-2130. Zager Fixed Income Management offers many financial advisory services to its clients including pre-liquidity planning, investment management, and risk management.
Also, the firm claims to offer many advantages to its clients such as having tailored, high-grade, cash portfolios, dedicated fixed-income managers, and providing direct access to the portfolio manager and the trading team.
All of these highlights make this firm seem like an excellent choice for investors. However, their policies and professional history tell a different story.
According to their disclosures, the firm’s policies put its clients at a huge disadvantage. I have discussed them in detail below to help you determine if you should trust them with your financial future.
Issues in Zager Fixed Income Management You Must Know
The fact that Drew Zager has a dispute on his FINRA BrokerCheck page is the biggest red flag that you shouldn’t trust him. If you don’t know, FINRA BrokerCheck is a website where you can find out everything you need to know about a fiduciary. This includes where they went to school, how long they’ve been working, and if they’ve ever had a problem with a customer.
Zager Fixed Income Management Morgan Stanley Zager Fixed Income Management is in the California city of Los Angeles. Drew Zager is the executive director of this company, and Joseph McCullough, CFA is the senior vice president.
Its office is at 1999 Avenue of the Stars, Suite 2400, Los Angeles, CA 90067, US, and the number to call is 310-788-2130. Zager Fixed Income Management gives its clients a lot of financial advice, such as planning for pre-liquidity, managing investments, and managing risks.
Also, the company says that its customers can get many benefits from working with it, such as customized, high-quality cash portfolios, dedicated fixed-income managers, and direct access to the portfolio manager and the trading team.
With all of these good points, this company seems like a great choice for buyers. Their policies and work experience, on the other hand, tell a different story.
According to what they said, the firm’s policies are very bad for its clients. I’ll talk about them in depth below to help you decide if you should put your money in their hands:
Things you need to know about Zager Fixed Income Management
When you look up Drew Zager Morgan Stanley on FINRA BrokerCheck, you find one dispute listed on his profile. This dispute occurred in 2008. Here, the client alleged that his investment representative failed to follow his instructions by purchasing securities other than municipal bonds. However, the client didn’t specify the damages.
The settlement amount of the conflict was $650,000.
There’s a good chance that this dispute was related to the Lehman Brothers crisis. Trusting an advisor who has caused such humongous losses to his clients becomes very difficult.
Keep in mind that many financial advisors avoid legal disputes by trapping their clients in shady agreements. Here are some of the additional red flags present in Drew’s services:
Charging Performance-based Fees
Zager Fixed Income Management charges performance-based fees, which is a very notorious practice in the finance sector. Why is it notorious? Because it creates a compromising situation for the client.
When your advisor charges performance-based fees, they earn only when they beat a specific benchmark. So it’s better for them to follow high-risk strategies.
If a high-risk strategy works, it can yield you great returns. But if it fails, which it does in most cases hence the name “high-risk”, you’d lose a significant chunk of your invested capital.
That’s why it’s best to avoid financial advisors who charge this fee. They would put you at excessive risk for no reason other than to make an extra buck.
Selling Investments Instead of Recommending Them
Another drawback in working with this firm is that it’s a part of Morgan Stanley. Morgan Stanley has many proprietary investment products as well as securities that its affiliates underwrite.
For Drew Zager and his firm, it would be more profitable for them to recommend (or sell) these investment products to their clients. It wouldn’t matter if the proprietary investment is suitable for your portfolio or not.
Because these experts rarely suggest investments that don’t pay them a commission.
Before you follow a suggestion from this kind of advisor, you should ask yourself, “Does he put my financial needs ahead of his?”
Keep in mind that proprietary and affiliated goods aren’t just investments. They can also serve as insurance. Because of this, you should be careful about getting insurance from them. Unnecessary insurance costs more and doesn’t help you in any way.
Using clients’ money to make money for yourself
This is a problem that is especially dangerous for ultra-high-net-worth clients, both people and institutions. The products that Zager Fixed Income Management suggests to their clients can be traded.
This leads to a lot of different conflicts of interest, just like the other problems. But in this case, the advisor can use the big amounts of money that their clients have to change how certain investments work and get the returns that they want.
Making money from commissions can change what a financial adviser recommends, and trading the securities they suggest can change the long-term financial plans they make for a client.
Zager Fixed Income Management, for example, can trade a certain investment before suggesting it to you. They might sell a stock short and make you sell the same stock so they can make money. This may be a very simple example of how fiduciaries can use their clients’ money to make money for themselves, but I hope you get the point.
So, before you accept their advice, you should ask your financial advisor what investments they make for themselves.
Review of Zager Fixed Income:
Morgan Stanley’s Zager Fixed Income Management is not a company you can trust. They have a lot of red flags that say you should stay away from them. They have too many problems to count, such as charging fees based on how well investments do and selling investments for commissions. Don’t forget that Drew Zager and his customer had a $650,000 fight in 2008.
Instead of working with Drew Zager and his company, it would be better for you to find a smaller company that puts a lot of importance on being honest and open.