Investment Management: Whose Money Is It Anyway?

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A couple of days ago, I posted about a reader’s question regarding SMAs (Separately Managed Accounts).

You may recall that the reader also said that “Last time I had a SMA with that broker they made it so difficult to close it. I am now afraid of opening another one with them.”


Unfortunately, this is nothing I haven’t heard before and it happens from time to time. There seems to be some confusion within some investment firms as to who owns the money that is under their trust. They treat the customer with utmost disrespect and use some intimidation by either making it difficult to close an account or delay transferring it to another custodian.

From my experience of having transferred assets over the past 20 years, firms with this uncooperative attitude are in a minority, however, they still exist. One of my clients had a recent experience with Genworth Insurance that, as he described, made it almost impossible to withdraw money from his account.

The final transfer of assets to my custodian took a long time in addition to my client having to call, sign and notarize documents (special seal was required). They finally found him worthy of receiving his own money and finalized the transfer.

If this has happened to you, don’t accept that type of harassment. It’s your money and you are in charge! Call them up, read them the riot act and threaten to contact the regulatory authorities. This industry is tightly regulated and no one wants to be another pot of gold in the hands of the Attorney General.

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