Not sure if I should trust financial advisor

I’ll preface that this is more of a rant and confession than anything else. I am a 29 year old “financial planner” for a major brokerage firm that I have been with for 7 years now. I am always so impressed as I scroll through this sub the savviness of the average poster - from saving strategies, bogle head inspired investment strategies, and the overall effective simplicity. In my day job as a “planner” (salesman) we are taught to muddy the waters, complicate the process, and create fear to sell simplistic and unnecessary financial services. I wish I could give real advice ( max out, index, save, etc) but that simply won’t pay the bills. Saving aggressively, maxing tax deferred accounts, and indexing is a simple yet the most effective strategy that anyone can do.

It gives me quite the morale dilemma of pursuing a career in something I don’t believe there’s real value in. In my opinion, for 95+% of folks there is no need for a financial planner/advisor. The only real value in paying for any type of financial service I see is a tax advisor for those in complex situations; but there is simply no need for a financial advisor. I love the planning side of my career, but absolutely hate the sales side, which has stalled my career progress because I have turned down promotions to avoid the majority of my income becoming commission based and to stay in the space of helping rather than selling, which is hurting my own income / FIRE goals.

If I could go back in time, I would have become a CPA or perhaps an estate planner - where real value can be provided. Anyways, I know I am preaching to the choir here but, don’t get sucked in by a financial planner/advisor.

This is the type of advisor that deserves more than just a punch—maybe an eye gouge, a knee to the groin, or even a "people’s elbow" from The Rock.

I had a client whose mother was doing business with another advisor a couple of towns over. The daughter had a funny feeling about the advisor, so she urged her mom to transfer to me. When her mom brought in her account statements, I couldn’t believe what I saw. I had asked both the daughter and the mother what the intent of their investments was, and both agreed that the safety of the principal was a major concern.

The mom had living expenses to meet, and she was going to need to cash in some of the investments in the not-too-distant future. When I hear an 80-year-old widow tell me that she’s worried about her principal and needs access to the money in a short amount of time, I immediately think of CDs, money market accounts, or a savings account.

Well, not this advisor. No, this advisor put most of her money into different preferred stocks and long-term bonds. One of the preferred stocks had a maturity date of 2040. Now, for those of you who don’t understand how preferred stocks work, they resemble a hybrid of a stock and a bond. So, they can fluctuate like a stock and pay interest like a bond.

Well, when the time came that the mother needed the money, interest rates were fluctuating, and in just a few months' time, she saw a 30% drop in principal on those preferred stocks. When she needed to cash out those investments to generate some cash, she was taking a huge loss in principal. Sure, her investments were paying a very high dividend at the time, but that was of little comfort after taking such a huge hit on her money.

Lesson learned: If you think you need to access the money in your investments short term, don’t let an advisor con you into buying anything other than a CD.

In the fall of the year 2005 and when the real estate market was going crazy and all kinds of real estate investors were giving speeches and masquerading as advisors, I attended a local seminar about real estate investing.

I already had my rural land property/investment business model developed and most of my current advisors in place. A mortgage broker was speaking about loans for real estate.

These so called mortgage financial advisors were recommending people take interest only loans to fund their real estate purchases because the rates were low and it cash flows easily. There are many problems with this dumb advice.

Here are some:

• Debt at some point has to be paid back. Anybody who has done any investing and used debt with real estate, stocks, or a business knows this. Delaying indefinitely paying off a debt is foolish.
• Even if an interest only loan for any type of investment cash flows today, it might not tomorrow, next month, or next year. The investment might quit paying. For example:
• The tenant lost his/her job. The property flip did not work as the foundation crack was not discovered during the euphoria when the property was bought. Funds (from more debt) were needed to fix the crack when an engineer who looked at the property to buy it discovered it.