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| Building Your Family's 100 Year Plan: The Series |
100 Year Plan Part II: Are You Being Served?
Michael Sisk
01/01/2004
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"Like a lot of people who come into money, he was totally reliant on his bank, and this is the nightmare come true," says John Piper, an attorney at Portland, Maine-based Preti Flaherty, who represents Mayeux. "On the one hand, they can be a financial advisor; they can court you, woo you, and tell you how they are going to invest your money. At the same time, they’re trying to sell you a loan, and when they do that, they are not your friend," says Piper.
The lawsuit contends that Fleet failed Mayeux (whose erstwhile fortune derived from amassing Fairchild stock over the course of a 32-year career) in three key ways. First, the suit alleges that Fleet did not apprise Mayeux of an "upheaval in Fleet’s Private Client Group." Nine managers resigned or were fired, leaving three remaining officers to manage $2 billion
in assets and several hundred clients. Stretched so thin, the group did not realize until too late that a problem existed with
the declining value of the stock being used to collateralize a
$4-million loan. Mayeux contends that the bank then panicked and sold Mayeux’s stock during the middle of last spring’s war
in Iraq, when its price was severely depressed. Fleet counters that the losses are Mayeux’s fault and is suing for $238,770,
the remainder of money owed on the loan when interest
and fees are included.
Piper notes the lessons learned from Mayeux’s experience: "Know your relationship manager. Talk to him frequently. If there are long silences, or if your relationship manager keeps changing, that’s a danger sign that things are not going well."
Of course, even if left unattended, few private banking relationships devolve into such acrimony. Given the complications and time involved in severing a private banking relationship and beginning a new one, many simply endure less-than-perfect
relationships. Finding a new private banker is not like changing your dry cleaner, observes Bradley
E. Turner, the senior managing director at the McDonald Financial Group, who runs the firm’s wealth management area. However, we have every reason to remain watchful and constantly be aware of our bank’s financial health—as well as the health of our relationship with it.
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