The “I Can Use Anything, I Just Happen to Use My Own Company’s Mutual Fund” Advisor
I had just met with some folks who had recently moved in-state from the East Coast. They were referred to me because they were unhappy with the advisor that they’d been with. The advisor had worked for one of those big insurance companies that also have their own proprietary mutual funds.
The advisor had always made the claim to them that he could use any type of investment that he wanted. What I found funny about that statement was when you actually looked at their account holdings, over 80% of all their investments were with that company’s mutual funds; their own proprietary product.
What was even more a bunch of crap, was the actual funds themselves were horrible.
Their track records were bad, their fees were high, and their performance resembled that of a 16-year-old trying to make it in the NFL; it just wasn’t cutting it. Lesson learned: If you’re using an advisor who works for a big company, be on the lookout if they always recommend their own company’s funds.
Related Horror Stories
Whole life insurance before...your 401k?
Not advice that I was given, but I've worked with plenty of clients who were told by someone else to buy whole life insurance BEFORE investing into IRA or 401(k)...young, no kids, no spouse...just bad financial advisors looking for commissions.
How a Crooked Accountant and Pension Planner Led Me to Take Control of My Financial Future
I had lots of commission fuelled bad advice from so called ‘financial advisors’.However one piece of advice really sticks out as the worst and also the turning point in my investment life.
The first part of the scam was my crooked accountant recommending an Executive Pension Plan at around age 34.
A pension planner was wheeled into my office and I was signed up and within a few days was then paying 250 GBP/Mth into this wizard investment that would give me a pension at age 60 totalling a zillion GBP p.a. OK first two rip offs, crooked accountant got a nice lump sum and commission for the next 10 years and pension planner got a lifetime rake off of everything I paid into the plan. In fact for the first two years all of the contributions I was making went into their pockets.
Fast forward a few years and the pension planner is back and well guess what my plan is underperforming so I need to increase the payments to 1,000 GBP per month. Holy shit ! I sign the papers and away we go. Now being curious, I do some investigation about how much commission I was paying. For the next two years half of my extra payment goes straight to the pension guy.
That was 9,000 GBP so I could see where my pension was going, exactly nowhere except into the advisors trouser pocket. Well that was it payments stopped and I realised I was being ripped off on everything, pension, investment plans, insurance the whole nine yards. Roll on 6 months I had my own pension fund and I was the trustee, I also had an insurance broker business with a very important client, me.
I never looked back and educated myself and will never ever in a million years take any shit from so called financial advisors. Look after your own money because if these guys were any good they would not need money from a loser like you. Remember Bernie Madhoff, there are plenty more out there.
Leave the clowns at the circus
Put it this way, have you ever been to a circus? You have! Well, remember those people who made you laugh? Finance advisers can also do this. But they can also make you cry. Here’s a funny story—true as well.
We had a clown, visited us as they do for many years, charging us fees, etc. Also, fees that were not revealed to us, which we discovered later. Well, after 13 years of having him sponge off us, we realized he had F.C.ED us, big style. He said the investments were not taxable as they were a specific type of investment.
Well, we realized these were taxable when we questioned him, asking, "Why did you set these investments if they are taxable?" He ran away and left us with a tax bill of 13 years, plus interest.
People will say, "Why did you not make your own enquiries into what is taxable and what is not?" Well, the answer to that is because we were paying a professional.
Well, it cost us dearly, so make sure it doesn’t happen to you. Leave the clowns in the circus!
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