Smith Barney ??

Hi,
I know this question is going to sound very naive. I have never considered a full service brokerage before, but am looking at a Smith Barney rep to assist with finances. I have probably above average understanding of market principles, but no time to dedicate and a reasonable sum (for me) in mutual funds. Can anyone comment in general terms on a Smith Barney relationship? Or is it just too dependent on the rep you get to be able to make broad statements?

thanks for any help!

check out the rep at www.sec.gov for broker check. also, check out the firm as well. if either dont have a pristine record (in this industry that means more than a few whackings behind the woodshed) i would feel ok. also, this has A LOT to do with the relationship you have with your advisor. you should look at it like a marriage. if you wouldnt marry this person, i wouldnt hire them. you will be seeing each other for many decades to come!!!

I've just been put into a situation where I need to know more about SB.

I've had an account with Edward Jones for 4 years and have been VERY happy with them. My broker is now leaving to go with Smith Barney/Citigroup. He still likes EJ but feels it's too restrictive- they're so conservative they don't even let clients write COVERED calls on stocks, for example. I'm mostly in mutual funds and bonds, but am not averse to doing something more aggressive with a small part of the portfolio. He has assured me that the assets can be transferred without having to liquidate them and incur tax liability.

One thing I didn't ask and could not find out from the Web site even after registering- do they rake off a 1% annual fee on managed accounts? I'm in mutual funds with a front-end load and am OK with that (particularly since I have enough in American Funds to get the 2% fee) but I don't want to pay another layer of expense charges. I'm inclined to stick with the advisor and not the firm, but this would be a deal-breaker.

Anybody know anything about how SB operates?

Thanks.

Athena53,

You're right; their website only wanted a prospective client to contact a financial advisor. Maybe your advisor can let you know more when he gets settled over there.

I found some archived some SEC filings referring to a 1% annual fee, but those cases date between 1996 and 2005, so I don't know what their current rate is.

I found this, but it does not seem to be a regular, managed account:

TRAK®: Personalized Investment Advisory Service
If you're overwhelmed by the number of mutual fund statements you receive each month, Smith Barney's custodial service may be the answer. Now, you can have investment advice on select no-load funds through Smith Barney's TRAK. The maximum annual fee for participating in the TRAK program is 1.5%. (The fee for retirement accounts may differ.) It can simplify your life by consolidating your mutual fund holdings onto a single monthly statement.

i think your advisor is considerably more important than the company ... up to a point. if you dont have a solid relationship with an advisor, then i look amazingly strongly at the company.

that said, if your advisor is really a professional person i would be very curious about why he opted to sign on with SB. not so much because of SB but citigroup is like signing over your soul to the devil. check them out at the SEC website at http://www.adviserinfo.sec.gov/IAPD/Content/ViewForm/ADV/Sections/iapd_AdvDrpSection.aspx#Criminal (did you see the last word in the URL? i think that says a lot!!!).

citigroup also controls another financial services company called Primerica. in my personal opinion the worst firm on the face of the planet for like a gazillion reasons. not the least of which is they churn their employees to make a quick buck and then drop them cold. this results in customers being taken for a ride.

finally, on the 1% concern you have. if he wants to retain your business and also wants to charge you something you dont want to pay, tell him no. i am unsure of policies at SB but a true independent and professional advisor has leeway in these matters.

Thanks, 1mo. The link just takes me to a generic SEC Search page and if I input Smith Barney I can get some pretty general forms they file. I"ll have to do a little more digging. I don't get crazy about charges against any particular brokers- if you look at e-pinions.com, any customer can have a bad experience anywhere if they get a bad broker. I'd be more concerned about patterns such as the one at Prudential back in the 80s, where they pretty much just pressured their brokers to sell whatever they were told to sell and not ask questions about whether the products were appropriate for their customers.

You're preachin' to the choir about Primerica. My son, who's just out of college, was telling me a friend of his got a job with them. I asked him if he wanted a job where he'd have to drag all his friends and relatives into the office so they could be subjected to a high-pressure sales pitch. He's looking at saner fields now.

Today I'm going to call my advisor and just ask him how the account would work. He's a straight-up guy and that's the best way to find out.

Water way under the bridge I know, but I am curious about prudential in the 80’s. Can you expound on that a little?

There's a book called "Serpent on the Rock" the goes into all the dirty details but in general they were selling limited partnerships to people who had no business buying them. The expense ratios were awful- one manager flew to London for a meeting of the general partners. On the Concorde. With his wife, daughter and the daughter's nanny. They all stayed at the Savoy. The general partners would have dinner at expensive restaurants and were each encouraged to order 2 entrees- one to be bagged and taken home. The "investments" were being marketed to retirees who had saved their whole lives to provide for their retirement. Returns of principal were frequently made to look like investment income. Then there was the churning of life policies- you were told that you'd do better if you let your current policy lapse (or took out a loan against it) and boght a shiny, new policy with more front-end expenses. Agents who asked questions were pretty much told to shut up and sell.

When the story broke, Pru tried to claim it was just inappropriate selling by a few "rogue brokers" but investigation of their marketing practices showed that management knew darn well what it was doing.

I am very familiar with someone who worked for Prudential as a broker in this time frame. There is a soiled financial family history that does have ties to Prudential. Unfortunately decorum prevents me from directly asking too many questions about what went on back then. I suspect prejudice and bias would cloud any answers I would get even if I could ask anyway.

I just picked up the book at lunch and I am looking forward to reading it. Maybe it will provide me with some additional insight. Thanks for responding.

LP's were not the main area of misconduct. Pru reps were mainly in the business of taking the cash or dividend inside old Mod polices and using it to buy additional polices..."paid up" policies they touted. I think we all know what happened next.

The GIANT class action lawsuit against Pru for this... Pru lost.

sorry about that ...

type in smith barney
then click on citi group
then on the left hand side click "part 1a Disclosure Information"

while i am no expert, their business practices seem to be fairly systemic to me. again, SB is a subsidiary of the evil incarnate that is citigroup. i suppose the son of the Devil may be a nice guy ... i would just be careful playing poker with him.

Thanks, 1mo. It looks like most of the actions were by the Attorneys General who claimed that SB (along with Merrill and most of the majors) pressured their analysts to give glowing ratings to stocks of companies who were lucrative customers of the investment banking side. One AG started and then the AGs from about 25 other states filed "Me, too" actions.

As I said earlier, I'm going more with the person than the firm. I trust him. He seems to have chosen EJ because of their squeaky-clean reputation and their honesty with their customers and I don't think he'd sell his soul to the devil. He's got a $50 million book of business that he built up in 4 years so I think he could have gone anywhere he wanted to. And heck, EJ got in trouble along with all the major firms for supposedly pushing only a limited number of mutual fund families. Who ya gonna trust?

As with any advisor, I'll do secondary research and also sound out my husband for his common sense. But over 4 years this guy has never pushed an investment I considered inappropriate, has prided himself on calling his customers when the market is down, and has a long history of trading oil on Wall Street prior to this job so I don't have to teach him investment 101. If something happens in our relationship after he moves to SB, I'll have to re-think it. He has confirmed that I still won't be paying a % fee on my account, so I'm happy.