State Farm & Chase Regulatory Issues

State Farm Getting Out of the Investment Business

If you have any investments with State Farm, you should probably move them. Currently, State Farm has about 12,000 agents licensed to sell mutual funds and other retirement investment products. The policy of putting customers in commission-laden, proprietary State Farm mutual funds and variable annuities puts State Farm advisors in conflict with the DOL rule imposing on advisors a fiduciary duty to act in the customer’s best interest. These agent/brokers have previously been held to a less-stringent standard of suitability.

At the end of 2015, State Farm managed $11.3 billion in assets. Come April 2017, they will no longer be offering mutual fund investments to State Farm customers.

Unfortunately, agents may try to steer current investment customers into fixed annuities (not covered by the DOL rule) which are insurance products. These are usually not the best option for investments. But, once again, agents will be making insurance commissions when the customers buy these annuities.

What about the accounts that folks currently have at State Farm? Account holders will be directed to a call center where customers will be on their own to manage their accounts.

My office will be happy to perform a portfolio review, prepare a retirement financial plan and make recommendations for any State Farm investment accounts. Please give me a call.

Chase/JP Morgan – A Cautionary Tale  

You probably have heard about the hot water that led to Wells Fargo being fined $185 Million. Prosecutors alleged that Wells Fargo advisors pushed customers into costly financial products that they did not need or even request that could generate additional fees to Wells Fargo and bonuses to the employees for opening these accounts.

I have recently reviewed several Chase investment clients’ accounts and found the following:

  • Customer “A” had 3 individual accounts (all the exact same type of account). It seems that each time her advisor changed at Chase, the new advisor would open a new account to receive the additional funds being deposited. Were they receiving bonuses for opening new accounts?

  • Customer “A’s” last statement was 97 pages long without even a performance report!

  • Most of the clients’ investments were JPMorgan/Chase mutual funds. The Morningstar reports on these funds’ performance show most of them to be in the bottom half of their categories.  

  • These fund companies are owned and managed by JPMorgan and the fund management fees are higher than many other funds.

  • The advisor fees charged investment customers are 1.25% and up to 1.6% for fund management fees.

  • A client was talked into opening a new investment account with “only $25,000.”  However, the market went down and the balance fell below $25,000. The customer was charged $50/month until the market went back up or the customer added more funds to the investment account.


These business practices are clearly not in the Chase customers’ best interests.  I think that it is only a matter of time before Chase is investigated for misleading their customers into thinking that their accounts are being professionally managed.

Share this information to save others from having their savings compromised.

Please feel free to give me a call to discuss any issues that you may be having with Chase.