These are the answers we did not provide in our humor piece. We actually think these are a little better.
- A client calls (you don’t personally know them or can’t verify who it as, but they have enough information (acct #s, etc). Maybe it’s the client’s accountant, or the trustee of a trust. They want to change their address of record to a P.O. Box
WHAT DO YOU DO?
NEVER accept a PO box. Many custodians will not accept them anyway. Tell the client you don’t recognize that the Regulators (always blame the Regulators when you can) require you to have a street address. (Their local Post office can forward their mail to a PO box say, if they’re leaving the country or are in county lock up.)
- Suppose it’s a PO Box in the Cayman Islands?
NO NEVER. Your Compliance person (another handy person to blame) will not allow it..
3 A client you do know. (Somewhat new) calls and says they have been the victim of an identity theft. Account #s stolen, SS #, DL, etc.
FIRST check their account and go over it with them. Flag the account for withdrawals or unusual activity (There has to be a way to do this at your custodian). If there is a debit/credit card attached, check the activity with the client. If nothing peculiar, close it and get a new one for them (or tell them to do it and stay on the line with them—That’s the kind of service they’re paying you for.
- You get a call from the spouse of a client with a joint account. She says they are having a domestic dispute and she wants to withdraw all the money. (Remember, it’s a joint account)
You…. FREEZE the account immediately. You DO NOT want to be caught in the middle of a domestic dispute.
- A client dies . What do you do with the account?
FREEZE the account until you get an official WRITTEN notice of how to disburse it (probably to the court appointed executor first. Follow the court orders TO THE “T”.
- Then an adult child calls and says that there’s an estate dispute. The account you have is not an estate account. It’s still in the dead client’s name. Adult child said Daddy told he he wanted to leave all his money to her. You heard Daddy say this several times. But, she says Daddy left a handwritten note (signed) saying he was leaving everything to Dolly Wood of Two Mounds, Tenn. Nobody ever heard of her. AC says the stupid lawyer said there was nothing else he could do. AC wants her stolen money?
WHAT DO YOU DO?
ABSOLUTELY NOTHING. ( SEE 4). Not In the Middle !
- You get a call from Bootleg Frankie, AC of Big Frankie your Jersey City, NJ client. BF says send Big money.
Bootleg is not on the account. Caller ID says “Unknown” and voice sounds like Pee Wee Herman.
You only have one leg left to break.
WHAT DO YOU DO?
CALL BIG. He needs to sig something. If there’s one thing Big should understand it’s law enforcement. Compare signatures. Consider dropping the client.
- You get an email from a friend of a friend who says their sister in law is a Japanese citizen living in Japan and has a lot of money in a Bahamian bank that she wants to have invested in US securities. You think FinCen is a breath mint.
PASS. There are some really tough anti money laundering rules, and you HAVE to follow them. It’s really complicated and the risk is high. You really shouldn’t take the account. Blame the regulators.
9, You have a client who wants to be in the market. He has $7244.
WHAT DO YOU DO?
TAKE THE ACCOUNT. Pick a market fund and forget it. Don’t charge him.
- You get a call from the 82 year old mother of your former probation officer. She’s very excited. She got an official email notification from the assistant to the former finance minister of Lagos, Nigeria , and..she was selected as a good Christian lady as the beneficiary of a $5 million (US) fund for good Christian ladies. She sent them all her contact info, social security and everything they wanted, but has to wire them $817 for processing and wiring her the money. She wants to open an account for the coming $5 mil and wants you to wire $817 from her personal account right away. YOU….
DO NOT DO IT. Try to break it to her gently, realizing she won’t understand. Look for some sympathetic children, siblings or others to help her. You do have to be careful not to do too much. Be a provider of information, only.
- Bootleg Frankie again. He says Big has a company. New Jersey Disposal, Inc. that he wants to take public. Big wants to offer shares at $.99 and then actively promote it with a constant contact campaign to everyone in Ohio, Indiana, Iowa, Arkansas and Mississippi with an announcement that NJDI has accidentally discovered a new drug to cure for cancer from the hypodermic needles washed up on the Jersey shore, and is guaranteed to go to $100 in a week. He wants you to be the market maker for the unregistered security. You still have that leg intact, SO….
TELL HIM THAT IS PROBABLY ILLEGAL. He doesn’t want to draw too much attention to himself, after all. Regulators, law enforcement, remember?
- You get a call from Big, himself. You never actually got a call from Big before. You know it’s Big because his voice sounds like a garbage disposal eating a plastic spoon. Since he does not want to register NJDI because he “don’t want no feds knowing his biznes”, he wants you to buy him a million shares of this pink sheet listed $.36/share company, Global Garbage, Inc. He says he expects to own it for a week until he “gets the word out”, at which time he expects to sell it for “large profits”. He offers you 5% of the action in lieu of commissions ($6.95). Big is your largest (in more ways than one) client.
WHAT DO YOU DO?
TELL HIM THAT IS PROBABLY ILLEGAL. He doesn’t want to draw too much attention to himself, after all. Regulators, law enforcement, remember? But, if he still want to do “something”, tell him you do not want to know.
- You have a client that wants an S&P 500 index fund. DO YOU SELL HIM THE VANGUARD FUND OR THE RYDEX FUND?
EMBEDDED COSTS. Vanguard, hands down. Forget about the fees to you.
- Bond interest rates have gone back up to pre-90’s rates. A couple in their late 50’s want to generate some income for retirement. You can
- a) build an immunized bond portfolio that will throw off an average of 6% per year until the couple turn 66.
- b) you can put them into a managed portfolio of equities, with an average 2.5% dividend yield using only blue chip established companies.
- c) put them into a 5.25% front load total return fund that significantly outperformed the S&P 500 last year.
WHAT WOULD YOU DO.?
NO WRONG ANSWER. It’s a personal behavioral finance type decision. Give the options and see what they like.
- You have a new high net worth client who is a picky, detail-oriented accountant and a tax lawyer wife.
After much scrutiny and criticism they reluctantly signed the new account paperwork. When you submit it, compliance bounced it because one acknowledgement on the bottom of page 11 had NOT been signed by the client. You cannot get the account opened for them until it is signed. WHAT DO YOU DO?
YOU HAVE A VERY APOLOGETIC PHONE CALL TO MAKE. Sorry, but that’s the right thing to do. Suck it up,
SO, there it is. If you have compliance questions or comments or a real fact pattern, please share with us.
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