9 crazy client investments

Published
  • November 28 2016, 2:16pm EST
Roth IRAs, 401(k)s, real estate: Many investments are routine. After feeling safe in conventional instruments, clients can get a little stir crazy and make outlandish decisions. From gambling (sometimes quite profitably) on vineyards, racehorses, sailboats and baseball cards — to even ostriches.

We asked planners about the most unusual investments they’ve seen.

Roth IRAs, 401(k)s, real estate: Many investments are routine. After feeling safe in conventional instruments, clients can get a little stir crazy and make outlandish decisions. From gambling (sometimes quite profitably) on vineyards, racehorses, sailboats and baseball cards — to even ostriches.

We asked planners about the most unusual investments they’ve seen.

Austin Frye

President and founder
Frye Financial Center
Miami

A Frye client in the cement and construction business doesn’t like investing in stocks and bonds because he finds them boring.

Instead, he built a pen on land behind his house in southern Miami-Dade County and installed 25 ostriches, at a total cost of $300,000.

The business couldn’t lose, he told Frye. He would sell the meat, feathers, skin, eggs and chicks.

“As Murphy’s Law would have it, everything went wrong,” Frye says. “Ostriches grow to eight feet tall and 250 pounds, and they’re very hard to handle. They can be dangerous. Some of them killed each other in fights. Others got sick, and treating an ostrich isn’t easy, because of their size and disposition. These birds wouldn’t breed. They needed a special diet. And last but not least, the price of ostrich meat fell.”

The client sold off the flock after about a year for $100,000. “He was very relieved to have them gone,” Frye says. “He lost $250,000 on the 'can’t-lose' business.”

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Melissa Sotudeh

Wealth adviser/Chief compliance officer
Halpern Financial
Ashburn, Virginia
Rockville, Maryland

Sotudeh has clients who raise Wagyu cattle, a Japanese breed highly prized for its marbled beef.

“The clients invested in the cattle farm because they are very committed to keeping it in the family for years to come. It also produces income that they can enjoy in retirement, though they also have a conventional investment portfolio tailored to their retirement needs and financial goals,” Sotudeh says.

Sotudeh tested multiple retirement projections for this family — including projections without the cattle income — to make sure that they’d have enough money even if they someday can’t run the farm.

“We wouldn’t recommend cattle farms as an investment to the average person on the street, but it works for this family because they were already financially secure,” she says.

Kerri Kimball

Apogee Wealth Advisors
Founder and managing partner
New York

Individual oil well ownership is the most unusual investment Kimball has seen.

“A client's father bought oil wells in various states across the country. When he passed away, probate wasn't opened in those states, so title wasn't transferred properly,” she says.

Now Kimball is helping her client work with multiple attorneys to clear up the mess, so his very anti-oil, pro-renewable energy heir can sell the wells.

Jamie Milne

President
Milne Financial Planning
St. Johnsbury, Vermont

Milne recalls a client couple who had investments of less than $200,000, most of it in IRAs that were fully invested in gold.

“The more I looked, the more complicated and ridiculous it was — even beyond being 100% invested in gold,” Milne says. “Removing the gold from the IRA was done at something like 80% of the gold’s value, though no doubt the buy-in was at 100%.” The fund’s annual holding and management fees were extortionate, too.

Even so, the client seemed happy to own the gold.

“They didn't seem to care that I thought it was all a bit too much. Even if they did hear my comments about diversification, they wouldn’t sell without a clear profit,” Milne says.

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David Blain

CEO
BlueSky Wealth Advisors
New Bern, North Carolina
Pleasanton, California
Santa Clara, California

The most bizarre client investment Blain remembers was a Bowie Bond. “Back in the late 1990s, the musician was the first to sell bonds backed by the income from his recording catalog,” Blain says.

Jon Ten Haagen

Ten Haagen Financial Group
Huntington, New York

“I have sailed boats all my life and seen dreams go up in smoke,” Ten Haagen says.

Many years ago, he met a man at the local marina who wanted to start his own boat sails business.

“I explained that it was a bad idea, but he insisted, so I set him with with a franchise from a dealer I used to work for.”

The man was out of business in about three years.

Tim Neuville

Senior director
Marcum Financial Services
Irving, California

One of Neuville’s clients has invested in a promissory note that is convertible to equity in a company that makes and distributes THC–infused soda, he says.

“The client is personal friends with the president of the company,” Neuville adds.

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Mark Thompson

Senior V.P.
Thompson Wealth Management
Melbourne, Florida

Thompson has seen an array of nontraditional investments: “Gold hoarding, horse racing partnerships, baseball cards, coins, art, real estate, cars, ammunition and guns,” he says. “Just your typical diversification tools.”

Steven Kaye

President & founder
AEPG Wealth Strategies
Warren, New Jersey

Ten years ago, one of Kaye’s clients bought a baseball card for $400,000. “It’s worth $2 million today,” he says.