Trading My 401k for a Questionable Insurance Policy
It was once suggested to me by a “financial advisor” to cash out my 401k and reinvest it into a whole life insurance policy.
The “12%” Advisor
A few years ago, I was competing for a client’s business. I was one of two other advisors who were being interviewed, and I gave my traditional spiel. It turns out that one of the guys I was up against had guaranteed to the potential client that he could make 12% in the stock market.
Now, keep in mind that this was not before 2023, and even if it was, it wouldn’t matter. The advisor was using basic mutual funds and still had the audacity to claim to my client that he could net him a guaranteed 12% return.
I was in shock.
Lesson Learned: If you ever come across any type of advisor that guarantees you any rate of return, and isn’t quoting you a fixed annuity, a CD, or some type of insured bond – don’t fall for it. It’s too good to be true. Get out of their office fast.
Nokia will rule the cell phone market
My 1 experience with a financial advisor 18 years ago. I did my high school senior project on investing. So my “mentor” was this financial advisor. I had 5k from my grandmothers to invest in (my great grandmother has mutual funds for all the grandkids so I cashed mine out and my grandma also threw in $1,000 for me)
Anyway.
His can’t miss these are about to be the next big thing picks were Nokia and Pioneer energy services. So Nokia only ever went downhill, I bought I think around $16 and sold at $5 some years later. Pioneer it actually had tripled at one point to $18 then a year later it was $2 then they went bankrupt so bye bye to that money.
I was really into computers back then, I had built my own and talked to him about how everyone in gaming was using Nvidia GeForce graphics cards. He has no interest in it. I can still hear his whiny voice saying how computer industry moves so fast and there will always be some new better faster thing on the market so that would be bad to invest in. And how Nokia was going to rule the cell phone market for years and years.
What are some signs that your financial advisor is stealing from you?
He is a new friend
He is a long-lost relative
He approached you in church with a Bible in hand
He offers you a guaranteed high steady return
He is addicted to something that is expensive
The name of his company includes the name of any of the Founding Fathers, any prestigious US or British University or sounds like it is affiliated with Veterans or the US government
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The Impact of Bad Financial Advice
Getting poor financial advice can have serious consequences, from financial loss to emotional distress. More and more investors are choosing to take matters into their own hands – and we're here to help.
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