Corporate Fails Do Hurt Advisors And Clients

When clients and advisors are bound to a specific company they become vulnerable to the decisions and failures of those companies.

Nobody ever expects that it will happen to them, but here are just a few examples of US cases where Advisors and Clients were harmed:

• Global accounting firm Arthur Andersen vanished (dissolved) after the Enron bankruptcy (Oct 2001), 85,000 employees were let go worldwide.
• Thousands of Financial Advisors were affected by the collapse of global investment bank Bear Stearns (April 1, 2008) followed by the $691 billion bankruptcy of Lehman Brothers (Sep 26, 2008)
• Mortgage Brokers working at Thornburg Mortgage were devastated when the lender suddenly filed a $36.5 billion bankruptcy (April 1, 2009) resulting from the housing crash and credit crunch. All assets were sold and the company ceased operations.
• MF Global reported a shortfall in customer accounts of $891,465,650 as of the close of business on Friday, October 28, 2011, which represented the largest financial services industry victim in the U.S. of the European debt crisis. The, ultimately, $41 billion bankruptcy stunned the Financial Advisors working at the firm.

There are many more cases like these.

We recommend that Advisors should own and control their clients and processes.  Ideally, it should be possible to change companies whenever it is in the client’s best interest to do so.