The “Telling the Truth is Optional” Advisor
I had a client who was retiring, and we were in the process of rolling over his 401(k) and pension. In our conversations, I learned that he had purchased a fixed annuity at his local bank a couple of years prior.
Since they wanted to consolidate all of their investments, they were more than comfortable transferring everything to me – but I knew that they had just taken out the fixed annuity a couple of years prior.
My inclination was that there was probably some type of surrender charge attached to it. I inquired about this to the client, and they were under the impression that there was not a surrender charge and that they could take their money; principal and interest, and walk away at any time.
Why did they believe that you ask? Because that’s what the advisor had told them. The advisor had told them they could take out the investment, take their guaranteed interest at any time, and walk away with everything without penalty. Now, once I heard that, as much as I wanted to believe them, I knew something sounded fishy. I had them call the bank and talk to the advisor to clarify how it actually worked. As it turns out, it wasn’t that way at all.
Yes, they could walk away with the principal, but all the interest that they accrued would be forfeited, and in their case, it was approximately $7,000 that they’d be leaving on the table.
Obviously, we weren’t about to give up a big chunk of money just for the sake of consolidating, so we left it as-is to revisit when the surrender period expired- which was four years away! Lesson Learned:Just because the advisor tells you something doesn’t necessarily mean it’s true. If something sounds too good to be true, ask for it in writing.
Related Horror Stories
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!
They must be the good guys, right?
Stay away from FirstCommand! They sell themselves as "military-friendly financial advisors," but in reality they're just commissioned salespeople.
I thought I was doing the right thing as a new officer for my financial future by promptly going down to the local First Command office and signing up for their investment and life insurance products (they sponsor events on base and their "advisors" are prior military, so they must be the good guys, right?), but it took me 12 years to realize I was being taken for a giant ride.
One of the funds they had me in was so awful that when I went to liquidate it as part of transferring my assets to Vanguard, I found out that the fund had lost so much in value and so many people put in redemption requests that the fund had stopped distributions (TFCIX).
I've since moved all my assets to Vanguard, but I still have $2K in TFCIX languishing back at FirstCommand because I still can't redeem those shares to this day. Bottom line is that you can do a lot better for yourself elsewhere; don't give these guys your hard-earned money.
Financial advisors are very annoying
Does anybody else find cold calls from financial advisors extremely annoying? I have 3 accounts.
Schwab holds retirement accounts and it does what I need it to do. I use TD as a brokerage and it does what I need it to do. They fulfill their purpose and never bother me and are great. But I also have bank account w Bank of America / Merrill lynch and I get a call from them every week from a different dillhole offering me his financial services and I find it so annoying and violating bc I know what’s happening is that these back office bungoles are looking at my accounts and holdings, which is targeting me as a good call for their prospecting.
It’s like I’m paying them to upsell me on their services, which they have never actually are able to explain why I need
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