It seems that a number of Raymond James financial advisers aren’t entirely clear on which mutual fund share classes investors should be steered towards, and how much they should pay for them. Which is bad, because that’s pretty much the whole reason one goes to—and pays—a financial adviser. Or, in this case, pays a financial adviser too much, because said financial adviser put your retirement-account funds into the wrong fund, or forgot to waive the sales load, which proved good for them in terms of how much money they made but obviously bad for you.
And bad for Raymond James: The advisers clearly screwed up. But to admit that they screwed up and make them pay for it might make them look incompetent, which might make a client say, “If these guys don’t know what they’re talking about, maybe the guys at Merrill Lynch do.” And even if Merrill Lynch is a bad example in this particular case, you get the idea. So Raymond James has decided to pretend that things are really more complicated than they are, and to eat the loss.
"Given the complexities of the subject – including policy variations among fund companies, lack of clarity in prospectuses, and a gap in the industry’s and Raymond James’ abilities to systematically identify waiver availability, we felt this would be the best way to limit distraction for advisors and minimize confusion for clients," the spokesperson said. "In addition, our decision should serve to eliminate any concerns that the chargebacks may have implied negligent or deliberate actions by advisors. As always, we are confident our advisors are working in the best interests of their clients…."
As of Thursday, the firm was planning to send letters to clients on March 23 explaining the situation and mail rebate checks by April 13, according to advisors familiar with the matter. "It needs to come off as an appropriate gesture, without making it look like the advisor screwed up," the advisor said of the upcoming communications with clients.
Raymond James Backtracks on Clawbacks [WealthManagement.com]