Mega-advisor Ron Carson’s RIA intends to dispute a $500,000 arbitration claim sought by an investor who said he was overcharged by Carson.
The client is charging Carson -- who helms Omaha, Nebraska-based Carson Wealth Management – with improperly notifying a product sponsor that the client had terminated CWM. As a result, the client alleges he was overcharged fees, according to an arbitration case listed on FINRA BrokerCheck.
“The client also alleges that CWM's investment advisory fees were excessive,” the FINRA disclosure states.
Like many RIAs, CWM negotiates with product sponsors on behalf of its clients to obtain lower, preferential fees than a an investor working directly with the product sponsor would obtain.
However, according to the client’s arbitration claim: CWM “improperly notified a product sponsor that the client was no longer a client of CWM, resulting in the client being charged the product sponsor's standard fees (instead of the lower negotiated rate),” according to the BrokerCheck disclosure. “As a result, the client claims that it was overcharged fees by the product sponsor.”
Carson is disputing the claim, Carson’s spokesperson Jessica Torchia told Financial Advisor Magazine by email.
“For clarification, Carson, in fact, negotiated on the client’s behalf to save the client millions – not cost the client, as stated in the dispute. The firm never received any of the aforementioned fees from the client, a sponsor, or any other third party in exchange for services and, by negotiating great terms, actually made the client millions of dollars on their investment,” Carson said in a statement.
Carson gave up his FINRA license January 31 and has not had a regulatory event in 15 years, according to FINRA records.
The arbitration case will be an interesting one to watch not only because of Carson’s stature and three decades as an industry leader but because both securities and privacy laws require advisors to notify product sponsors in a timely fashion when they’ve been terminated by a client. Otherwise, advisory firms would continue to receive private data on their former investors.
The growth of Carson’s enterprise has been astronomical. Last year, the firm set a company record, adding 49 new practices. As a result, Carson Wealth Management, which operates as an office of supervisory jurisdiction (OSJ) has grown to 96 advisory firm partners advising more than 22,000 households.
The firm’s client assets have soared to $7.5 billion, with firms with $4.4 billion in client assets signing on with the firm in 2018, according to the firm.