Soundbites and Sales Tactics: Why I Couldn’t Trust a Single Financial Advisor with My Money
I’ve had initial chats with two, and met two at parties. No horror stories, but all four left me certain that I wouldn’t trust them with a penny of my money. The two I met socially gave me the strong impression they had no idea what they were doing and just parroted dubious soundbites like “you’ll never lose money in property” or “you can’t go wrong with bonds”.
One had been in agriculture before getting a job at his father-in-law’s advisory firm.
I tried to chat to them about more complex post-recession low-interest rate stuff and they kinda changed the subject and just went back to soundbites. The two I actually spoke to about getting advice, one didn’t know how to deal with crypto and promptly ghosted me, the other also appeared to lose interest once it was clear I wasn’t just gonna buy life insurance and commission products. All four did the 1980s sales-y bullshit like using my first name constantly (one of them calling me by the wrong name over and over).
So (while I know every industry has its bad apples), my own personal experience has been that 4 out of 4 had strong scammy used car salesman / estate agent vibes. So basically, they’re the last people I’d hand over money to.I manage my ~£0.5m portfolio myself.
Related Horror Stories
Escape While You Can: The Hidden Costs and High Fees of Edward Jones
Run, don’t walk, away from Edward Jones. The damage is kind of done already, but they will inflict more unnecessary costs and will keep steering you to high load, big fee funds. It’s ridiculous in this day and age.
The “I Like to Churn” Advisor
And no, we’re not talking about churning butter. I was talking with another potential client who was considering switching advisors and although they lived in a small town in the Midwest, they had somehow started doing business with an advisor out of New York. They had been with this person for several years and had a hunch that things weren’t all what they seemed.
They thought perhaps the advisor was selling funds and buying other funds just for the sake of earning a commission, and since I was the guy they were considering hiring, they were interested in me taking a look. After reviewing their account statements and the trade confirmations, it was quickly and easily obvious that was what was being done.
Sure enough, the advisor was selling A-Shares; another type of mutual fund, and turning right around and buying other B-Shares, sometimes it was the exact same fund. It made no sense other than the fact that the advisor made a commission on each of those trades.
Lesson Learned: If you are using an advisor on a commission-based relationship, be on the lookout for an influx of unusual trade confirmations. If you see a lot of activity, it might be worth inquiring about.
The Financial Planner Who Missed the Tax Benefits of Donating Appreciated Stock
A financial services guy told a lunch group that it made no difference whether people donated appreciated stock directly to a charity or sold it and donated the proceeds to charity. He claimed that, either way, “you still got the charitable deduction. ”While this is true, he completely ignored the capital gains tax that would be triggered when the person (rather than the charity) sold the appreciated stock. He could not comprehend that a direct donation of the appreciated stock to charity could save the donor from having to pay tax on that capital gain.
He was totally obsessed with the relatively minor charitable deduction on their tax return. I thought this was horrible advice and a disservice to anyone who followed his financial advice.
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