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Buyer Beware!!!
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I’d like to open this review by stating that I am a customer of Advantage Gold and that, best I can tell, they completed my requested transaction to my satisfaction in the literal business sense (I’m assuming the specific precious metals I ordered are sitting in the vault, but I haven’t visited the vault to confirm). Furthermore, I would add that, like many other reviews, I had a very positive (5 star) experience working with Advantage in most ways. These include the initial process/discussion around the investment options, discussions on the market, rolling over my 401k to a self-directed IRA, etc. I was impressed with their “business operations.”
So, why am I giving a 2 star review? That will become clear by the end of this review, but as a preview, there are 3 main reasons:
1. Transparency on the transactional costs associated with a purchase (call these commissions)
2. The “relentless push” to purchase specific (likely higher margin) products, irrespective of customer wants/needs
3. Rudeness bordering on a toddler like temper tantrum
In the case with Advantage Gold, I asked a simple question to Kirill (managing Director/founder at Advantage and the person who was working with me on my rollover and metals purchase): I will paraphrase our discussion on this point:
Issue # 1 – Transparency on transactional costs (we’ll define that as commissions for now)
Me: So how do you earn commissions on the transaction? I have no problem paying what I view is a fair commission but I like to understand these details to ensure that you have my best interests in mind as we discuss potential ways to invest $100K+ in metals.
Kirill: What difference does it make how much we make on the transaction, all that matters is that you pay a fair price, right? I’ll show you how our prices compare to the market/competition.
Me: Look, I understand you probably can’t share internal specific details on margins or commissions, I’m just looking to directionally understand whether you earn more commissions on certain products and less commissions on others. Most sales organizations I’ve worked with have products they use to attract people and then they work hard to “upsell” them which is where the real profits and commissions sit…I’m assuming this is how Advantage operates or at minimum, you’ve seen this in play in other organizations, do you agree, does that make any sense?
Kirill: I’d say that’s a very astute observation. Look, what I can tell you is that our prices are extremely competitive compared to rest of the market and I will show you this right now, do you want to review some websites of our competition?
Me: So what sort of commissions % or range would you expect to make on a $100K+ purchase?
Kirill: What do you think is a fair commission, do you know how much brokers and fund managers are charging in the stock market? They do that every year whereas your costs are just once.
There was some more back and forth but you get the point…so he basically dodged my question and I didn’t take it any further because his response told me what I needed to know. However, I made it clear that I was looking to get “a good deal” and he quoted those words as well. Now that conversation was a bit disappointing, but certainly doesn’t warrant a 2 star or 3 star review, but it’s important context for the next elements of my experience with Kirill at Advantage.
Issue # 2 – The “relentless push” to purchase specific (likely higher margin) products irrespective of customer needs/wants
I would say Kirill and I spent at least an hour, maybe more, debating the merits of investing in non-generic bullion. I outlined various reasons why I thought it made no sense (for me at least). I won’t go into all the details but he got rather animated a couple times and needless to say, several times during our conversation (as he struggled to win me over with his arguments) Kirill said: “Look….I just want to make you happy”…of course, he said this not as if he really felt this way (he didn’t sound the least bit sincere) but rather as if he was reminding himself not to get too worked up (likely because he had failed to convince me to buy the products he was pushing). At no time, did he acknowledge any of my points but rather made me feel uncomfortable and even stupid for not going with his “favorite” options.
So here’s where it gets even more interesting, after he acquiesced on the non-generic bullion purchase because (Kirill quote) “I have already spent way too much time with you talking about this”, he abruptly switched to pushing the purchase of gold kilos on me. Here’s a paraphrase of our conversation:
Kirill: Ok, so clearly all you care about is buying something as close to spot as possible so I can set you up with 2 or 3 kilos.
Me: Umm, maybe, let me think. (something didn’t seem right to me here…I was expecting Kirill to “work with me” to talk about bars/kilos vs. generic coins, you know, to patiently listen to my questions and discuss what may be best for me, similar to what most of my experience was like at Advantage before I began pushing back on non-generic bullion, but instead he just went straight to trying to close me on purchasing kilos/bars.)
Me: I guess with gold bullion coins you pay more over spot on a % basis but they are portable. Of course, I would own more gold with bars and I probably don’t care about portability. That being said, let me ask you, when you buy back gold bars, what do you buy them back at? What percent below spot to you buy bars at?
Kirill: Ugh, about 5% below spot.
Me: Ok let’s assume I pay around 1% over spot for bars and I can sell them back at 5% below spot. I assume your buy back is just as “competitive” as your sell price?
Kirill: Yes
Me: Ok, so there is basically a 6% spread if I go with bars. I know on generic bullion I buy it around 3% over spot with a bit of a range depending on what country the gold is from, but how much do you buy back generic gold bullion for? What % below spot?
Kirill: Usually it’s a few dollars over spot.
Me: Wow, so that’s a pretty huge difference, the % spread (which is essentially my transactional cost for doing the deal) on bars is more than twice that of generic bullion. Assuming the market dynamics that cause these spreads remain in place over time, I’m much better off (in fact, several thousand dollars better off) buying generic gold coins and I get the portability benefit….that’s what I’ll do.
So, basically the summary of this exchange is that Kirill wasn’t interested in really understanding what I wanted and why and helping me get to the right purchase for me, he was interested in selling me non-generic bullion or “worst case”, the kilos; both of which have substantially higher transactional costs to the buyer and I presume, substantially higher commissions and profits for Advantage. It’s highly disappointing that I had to engage in a tug of war and forensic Q&A to figure out what I should purchase when based on our earlier conversations, it should have been extremely obvious to Kirill (a company founder who has spent thousands of hours talking to clients about this stuff) what I would want to purchase…and also what I would NOT want to purchase.
Issue # 3 – Rudeness bordering on a toddler like temper tantrum
Let’s continue the paraphrase:
Me: Ok, so we’re going with the 1 ounce Canadian Maple Leafs at $1276.00
Kirill: The price is going to be $1278.87
Me: Hmm, maybe I wrote it down wrong but I deal with a lot of numbers for a living…I guess we’re only talking about $300 or so on the price difference...let me see, JM bullion has them at $1275 and I thought you all were the best?
Kirill: I said we were extremely competitive but not always the best
Me: Hmm, ok, well when you showed me examples earlier you gave me examples where you were the best but I presume you didn’t necessarily claim you’re always the best, ok, so I don’t expect you to match JM but I’d like the $1276 price since I’m pretty sure I wrote it down correctly and it’s still higher than the competition
Kirill: Nick, I’m not going to sit here and haggle with you over this so if that’s what you want, then maybe it’s best for you to take your business somewhere else.
(At this point keep in mind, my account had already been debited $100K+ and frankly, I wanted to enter my gold position and didn’t want to deal with trying to “get my money back” and set something up somewhere else over a “relatively” small amount of money, I have a day job like most)
Me: Wow, you’re threatening the nuclear option after all the time we’ve spent and we’re almost closed on this? I don’t know what the commissions are but based on the existing spread and the size of my purchase at $1276/coin, Advantage should be clearing $3K-$4K on this transaction and all I’m asking is that you meet me at the price we spoke about earlier which is still $1 more than JM bullion.
Kirilll: (close to shouting) WE ARE LOSING MONEY ON THIS TRANSACTION, WE ARE NOT MAKING ANY MONEY ON THIS AND THERE ARE HARDLY ANY COMMISSIONS TO BE EARNED ON THIS SALE
Me: (somewhat taken aback by Kirill’s hostile response but at the same time, trying to figure out why he reacted this way). Hmm, I can tell you guys do a heavy amount of marketing so your cost of acquisition is likely very high. I’d be surprised if it was $3K per customer but I know there are plenty of other costs you need to absorb beyond marketing. I’m sorry if this was a waste of time or didn’t end the way you wanted but I do think this was the right decision for me.
Summary
Ok, so net, net, items 1 and 3 that I reference above probably only knock down a company to 3.5 or 4 stars. However, item 2 is a big ethical issue and conflict of interest and the reason I’ve written a detailed and exhaustive review. I’m unsure if my experience with Kirill was a one-off or not. However, my years of business experience, working with many salespeople and executives, and my specific experience with Kirill lead me to believe that the company’s strategy is to spend a good amount of time “educating” customers up-front to gain their trust, only then to push the margin rich products intentionally and irrespective of what the customer really needs or wants. I also believe (based on my experience with Kirill) that Advantage trains their salespeople to intentionally avoid having honest discussions about the risks inherent with non-generic bullion, likely because their entire business model (and the majority of salesperson commissions) depend heavily on the customers purchasing that type of product.
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Business's response - on 7/31/2017
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We sincerely appreciate all the feedback from our valued clients. Advantage Gold has become the absolute leader in the precious metals industry not only for our commitment to education, low transparent pricing, and excellent customer service, but for most importantly focusing on the only thing that matters ....the clients' best interests. We were very shocked and saddened that after hundreds of raving testimonials, "only positive" five star reviews, and customer service awards reflecting that commitment, that Mr. Artukovic felt we fell short of that goal. Mr. Artukovic was provided with over seven hours of consultation/education over a six month period, and ultimately paid less than 1% for his entire acquisition. He also received more than $200 cash back. Taking the necessary time to educate first and then acquire precious metals that met his objectives at a low transparent price is always how Advantage Gold will define putting the clients' best interests first. However, it is apparent that we somehow still failed in the most important aspect of the the transaction- which is customer satisfaction. We will continue to do everything in our power to improve in this regard. Despite Mr Artukovic's unnecessary personal insults, we are thankful for his feedback and even happier that Mr. Artukovic has clearly expressed a desire to acquire even more metals from Advantage Gold in the 35 minute follow up call that followed his initial review. Furthermore, we feel fully confident that any miscommunication that led to Mr. Artukovic's feelings will improve so that he receives the typical 5 star experience moving forward that has been the clear standard our clients have come to expect of Advantage Gold.
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