Human Financial Advisor Horror Stories

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.

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!

We are invested with a big name financial investment company but have a good relationship with our financial advisor. Until today I never thought about how much it cost. The rate is 1.35%. I always thought that was 1.35% of the profit but apparently it’s the entire balance. Our rate of return last year was -8%. Yes that is negative.

Well on top of this we were charged our fee of $3600. I have no idea what to do. My husband and I both have IRAs a few stocks, a CD, 2 529s for our kids. How do I get this money out and how can I invest this. I had luck with vanguard in the past when I was single but had some tax issues once we got married that is when we went to the financial advisor. Edit: so the -8% is actually April 2022-April 2023. My actual rate for jan 2022-dec31 2022 was -23.4% plus they still charged the 1.35% so in actuality in 2022 I was down 24.75%!!!!! I feel like such an idiot.

When I was preparing to buy my home, my financial advisor who arranged the mortgage told me that the lender ‘didn’t accept’ help to buy ISA’s, so told me to transfer the money to my savings account and withdraw the full sum in bulk.

I later found out that’s not how it works…! I missed out on the government grant. I would have reported but I have no evidence as the advice was via email while I was using my work email address of a workplace many workplaces past!

Still bugs me when I pass his office 🙃