When Trust Turned to Betrayal: How a Sizable Inheritance Was Bled Dry

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.

I feel like we may be getting shafted by our financial advisor and unsure what to do next.

Some background info: My brother and I inherited a $1 million that was put in a trust in 2018. Since my brother and I were young and dumb, my mom was appointed as the caretaker of the trust and she gave it to here trusted financial advisor to invest/manage until we wanted it transferred. He manages other family funds as well (529s), including her retirement. So we thought it was fine. This amount basically makes up all of our assets.

Cut to now, I’m in mid 20s, my brother is slightly younger, and it’s time to transfer and split the trust. We go to meet this financial advisor, and we were thinking, hey he probably didn’t preform as well as the market, but there should be some gains here. We both thought we were going to stay with him and maybe just tweak our portfolio. Then the meeting happened, and I feel like we’re getting f*cked. I’m not financially literate though, and so I would really appreciate others perspectives to see if I am being crazy.

Reasons why I think we may be getting reamed:

• Over 6 years our total gains on our $1 million principal is $100,000One of the main reasons it’s that low is because, for the last 6 years, the portfolio has consistently been 70 % CDs and 30 % no cost basis at & t stock my grandparents bought in the 80s.
• He has our money invested this way because he swears the market is going to crash. Yeah, he has been timing the market INCORRECTLY for 6 YEARS. I asked if he would do anything differently at this point and he said no b/c it’s going to crash this year. I asked him what would his investment strategy be if it doesn’t crash this year, and he said it will crash and did not give me a straightforward answer.
• When I asked him what commission he was getting off a portfolio like this, he tried to tell me none since it’s not a fund like ETFs(which he gets 1%). After some persistence he finally told me he gets commission from the bank for every CD he buys/sells. Idk if that’s normal so any insight here is great. My mom’s portfolio that he manages is diverse and is mainly stocks and index funds. She is about to retire, yet he puts her in a riskier portfolio than us. And for us, with longer outlooks, he puts all our funds in cds because he swears the market will crash. If he really thought the market will crash, why didn’t he push for my mom to reinvest more of her funds in cds as well? This really bothers me and maybe there is something I am missing here, as I know little about investing. So please let me know.
• He spent the whole meeting talking about how the market will crash, showing as data and graphs as proof. This data is all public info, and I understand where he could be drawing conclusions like this, but if you’re wrong for 6 years, you’re wrong for 6 years. He went on for 40 minutes before I had to push the conversation towards our actual portfolio. Idk why but this really rubbed me the wrong way.

There is maybe more, but this is what I have for now. I asked him to call me once the first cd is up so we can discuss what to do with it, and he called today. I honestly feel like I should just ask him to transfer the funds to me and I’ll put it in an index fund. But this puts us in a situation where every time a cd is up I’m slowly transferring. Idk what to do.

I understand I was an idiot for not taking agency in this situation earlier. But all I can do at this point is focus on the now. My brother is more financially illiterate than me and my mom gets defensive when I start asking questions. So, what do you make of this? Am I reading this wrong or is he screwing us? If he is screwing us, from a range of incompetent to malicious, how bad?

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.)