The “My Products Don’t Have Fees” Advisor
This is the kind of guy that I don’t actually want to punch in the face; I’d rather just have a good chuckle with him. One time, I was competing with another advisor who was offering a fixed annuity as their only investment solution. They were a pure insurance agent, and apparently, that was all he could offer.
When the client chose me as their advisor over the insurance agent, they were not happy, to say the least. They were so disappointed in my client’s decision that they felt compelled to tell them (in a condescending tone) that their products had no fees, whereas mine did, and that they (my clients) were making a horrible decision.
No fees, huh? Well, yes, if you buy a fixed annuity that guarantees you 3%, you do get 3%. But for someone to use the argument that their products have no fees is ridiculous. There’s a fee for everything; there is no such thing as a free lunch.
Lesson learned: If your advisor tells you that their products have no fees, I would suggest you first prevent yourself from bursting into laughter. Then, kindly remove yourself and sprint out of their office.
Keep the case!
Related Horror Stories
"Financial Planners"--the grifters of the business world
A recent series of encounters with a "financial planner" would be funny if it wasn't so predictable. I have a reasonably healthy amount of money in the care of the investment department of a regional bank. The new "financial planner" at the bank apparently noticed this money, and started to send me emails pitching me on---wait for it--single-premium life insurance. His idea was that I could use the money to "build a family legacy that will last for generations" Barf.
It would be funny if it wasn't so predictable. I had to meet with him about changing some investments within my SEP/IRA. In the meantime, he was helping me set up a Donor Advised Fund. This is a fairly labor-intensive process, with no immediate benefit to him or his bank, and he was taking care of every step of it for me. If the process of setting up the Donor Advised Fund had involved him wiping my backside, he would have done it with smile, while asking me whether I preferred Charmin or AngelSoft.
Two days ago, we met at my office. After we did the necessary stuff for my SEP/IRA, he turned to the life insurance pitch. I cut him off and said, "If this is about life insurance, I'm not doing it." At that point, he left my office. Yesterday morning, bright and early, I got a email from him giving the contact information of various people who I needed to talk with to finish setting up the Donor Advised Trust, along with his sincere best wishes that I could successfully complete the task on my own.
As long as he saw me as a live prospect for high-commission financial products with high internal costs, he was willing to wait on me hand and foot. Once the prospect of selling me life insurance was over, I was "dead to him." Again, it would be funny if it weren't so predictable. Something to keep in mind concerning the priorities of "financial planners." (Hint: It 's not you.)
My financial advisor isn't listening to me
I hired my FA for one thing—to manage my retirement investments. Outside of retirement I have a plan for how I manage my cash flow that fits with my personal lifestyle choices, but I feel my FA wants me to change to fit an investment plan he has picked for me.
We have been saving for retirement about 30 years. One day he called us into his office so he could model our retirement expenses. He asked a number of questions but ignored my answers. Then he came up with a model based on a lavish lifestyle that showed my 30 years of savings would be gone in just one year if I retired early.
I should have fired him on the spot. Apart from not listening to my answers, it’s demoralizing to feel like I have worked a lifetime to support myself for just one year. I felt angry and discouraged.
His plan must have been to convince me to maximize my retirement contributions. I was not ready to do that, and I had told him why. When I was younger I had done that, but got badly burned when my finances went sour and I had no emergency funds—everything I had was locked into an untouchable retirement.
Since then I shifted my finances into six parts:
- Money I need to live today, month-to-month
- A decent rainy-day savings for major purchases or emergencies
- Aggressively paying down all debt, including mortgage debt
- Helping my three children as young adults, buying their first car, providing their college education
- Saving a little in a (matching) 401k
- Enjoying life at middle-age, spending time with family and friends
The last point in particular I am not willing to compromise on. I don’t want a lavish lifestyle but I should be able to travel and enjoy activities. I have minimized personal expenses and nearly eliminated all debt. Today we could live comfortably on $3,000 a month. I am not willing to see my children take on further student loan debt, as I consider 5% interest rates criminal for an investment in our future.
We are not maximizing our tax-deferred contributions today. We did when much younger, but accumulated debt in doing so, and became “house poor”. I’ve learned from our mistakes.And there’s no shame in paying taxes. Part of the point of increasing retirement contributions is to lower my tax burden, I get it. But unless I am also debt free I am losing the game—I would lose far more to interest payments than I would ever pay in taxes.
I need to find a financial advisor who is on board with my plan and will work to maximize the return on my retirement investments and my savings funds. I lack the time to figure this all out for myself. But I don’t need an FA who is set on changing my ideals.
Surrounded and Pressured
At one time, just after returning back from UK, I had a significant balance in my HDFC savings account. HDFC people started calling me stating that they will send a special advisor to help me get good returns - better than savings account; all free. So I invited them to meet me at my home (COVID times).
At the first instance two gentlemen came and started preaching about HDFC Life Sanchay Plus scheme. I was not interested but I did not wish to sound rude. So I told them that I will think about it and meanwhile they can send me prospectus, etc. The next week the two came back.
They first called and said that their senior, a lady, would also like to meet me to explain the plan, options, benefits, etc. They came with rather good looking lady. This is a typical ploy. There is a group of people about 3–4 who come and target you. One of them is a pretty girl/lady who will go on to explain how life is uncertain, how one must be ready for the future, how their scheme works the best, etc. This is a psychological ploy.
First you are surrounded and hounded. Then the pretty lady, without saying so, tell you how you are making a colossal mistake. They play on your fears. You don’t wish to look stupid in front of a pretty lady. So you cave in. Once again, I was not convinced. I said I didn’t need insurance plans or pension plans. I may be open to look at investment plans and retirement income plan. Again, they went (or tried to go) for the jagular. They said that this plan they were suggesting “guarantees me” income for any term that I chose - 10 years, 30 years, life. The amount is free of tax. At my death, my nominee/heir will get the full invested amount, etc. I told them - let me think.
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