Our family investment advisor that we have had for 25 years just left one big firm to go to another (e.g., from J.P. Morgan to Merrill Lynch or, say, Goldman Sachs to Morgan Stanley). She has done this before. We have no problem with that. The firm that she left had a new team reach out to us to try to keep our business. They analyzed our previous broker's performance and said "Since the beginning of your portfolio at \[this firm\] on June 13, 2016, the portfolio didn’t just underperform the S&P 500—it fell behind by an astounding \~122.42%. In dollar terms, that’s roughly \[amount lost\] of lost potential wealth the family could have had today simply by keeping pace with the market."
A few questions:
1. My family finds that loss of potential money they are reporting kind of unbelievable (the actual amount of the money is a lot). I don't think it is a fake statistic, but does that seem realistic? I mean, our previous advisor was presumably a competent advisor (we believed her to be). So, did we really "lose" the amount of money they are saying if we had invested how they would have invested it? Or, is it just an illusion because our advisor was taking into account all sorts of things so, yes, it is fine that we trailed the S&P that much.
2. If what the new team is saying is accurate (that we would have had SO much more money if things had been invested properly), then that raises the question about supervision at the firm. That sounds like gross mismanagement to us. At places like Merrill Lynch and JP Morgan and Goldman Sachs, are there supervisors that look over the individual investment advisors to see if they are "screwing up"? I presume they are looking for any illegal activity (nothing like that is alleged here). But, is there any sort of supervision going on at these firms or basically every advisor is just an island unto themselves (if they are not part of some greater team)?