Q: My question pertains to potential breach of fiduciary responsibility by my financial advisor, Merrill Lynch.
I have been a client of Merrill Lynch (ML) for more than 20 years. Not until 3 months ago did any of my advisors at ML ever mention that I should be purchasing US Govt issued iBonds, as part of my portfolio, which in almost every year of my ML relationship have paid a substantially higher return than that generated by ML. In essence, because ML makes no commission from the upfront sale of iBonds, nor any ongoing management fees, as these iBonds are held within a US Treasury account, outside of ML. Per my calculations, I can substantiate a more than $8M impact on my net worth as a result of ML's silence on this far safer and higher return investment over the term of my ML relationship. Per my ML advisor, ML claims this is not a breach of their fiduciary responsibility as its not a security they can sell. After more than 20 years with ML, they are now also requiring that I move my accounts to another firm. Is there a basis for a claim of breach of fiduciary responsibility?
A:
California law finds that stockbrokers and financial advisors are per se fiduciaries to their clients. Thus, the fiduciary has to act in your best interest first. There are a number of other duties that arise when a stockbroker is a fiduciary, such as keeping their clients abreast on changes in the market. That may include moving into a defensive posture when the market shows signs of decline.
It is difficult to tell you whether you have a potential claim against Merrill Lynch without analyzing your account statements and comparing that to your investment objectives, risk tolerance, and other factors. I suggest that you find an attorney who specializes in suing brokerage firms like Merrill. To find such attorneys, you can visit www.piaba.org, which is an organization of attorneys dedicated to the rights of investors.
I'd also be happy to answer further questions. Good luck!
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A:
The advice Mr. Neuman gave is good advice. If I may add a couple of thoughts. 1. Merrill does sell iBonds. They're a low commissioned product so they may not recommend them much. 2. I doubt your damages are as high as you think as you cannot buy more than $10,000 in iBonds a year. 3. The fact that they asked you to move your account may mean that some of their advice wasn't the best.
As Mr. Neuman said, the only way to get a better idea is to have someone look at your statements.
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