Aggressive Financial Advisors

[OddGuy]

Just had my first run in with a true salesman of an FA. Kind of amusing, kind of annoying, and it makes me wonder who their customers are.

Bit of background, I’ve worked in a very competitive creative career that outsiders consider glamorous. Not surprisingly, the attrition rate is quite high. People leave the industry and go into anything and everything, from real estate to baking to delivery. I’m unusual in that I’ve remained within, and have been on a FIRE course, though my ideal retirement would have me continuing to pick and choose projects I find fulfilling.

I’d heard a colleague left the business and went into financial services. When my phone rang the other day and I saw his name, I immediately thought, “Oh boy, he made his way through his contacts and got to me.” Sure enough, I was correct.

He started the call with “Hey, been a long time, how are things with you?” and actually seemed to be listening for a bit, then switched into a monologue of what led him to become a Northwestern Mutual wealth advisor in his mid 50’s, with no prior finance background. “It’s all about talking to people, and helping them tell a new story.”

I diplomatically let him know I was fine with the current management of my finances, and he keep pushing. And selling. And informing and touting his company. “Jeff Bezos could walk in here tomorrow and we’d be able to find new ways of protecting his money that he hasn’t even thought of!”

It took quite a while to get him off the phone, as I was saying “No” firmly but politely. I think my cordiality fed his sales instincts, so he started talking rapid fire, trying to get in every bit of praise and pitch he could, even dropping sales lingo like “we can overcome that objection by…”

To cap it off, he followed up two hours later with a lengthy “thank you” email filled with even more sales pitch.

Now I understand the horror movie legend that once a vampire is invited into your house, they need to be destroyed or they’ll keep coming back.

 

[Dtail]

You could have just asked him some financial questions that he wouldn't be able to answer.
Example - How do I manage MAGI for the ACA?
Or you could have just clicked him off whenever.

 

[OddGuy]

You could have just asked him some financial questions that he wouldn't be able to answer.
Example - How do I manage MAGI for the ACA?
Or you could have just clicked him off whenever.

Of course. I have no issue with the conscious decisions I made. They resulted in a good anecdote, which opens the discussion to why this type of FA exists, and who their customers are. My gut says he won’t last long, but we’ll see.

 

[Midpack]

No surprise, I’ve often read being a good FA is more about sales/people skills than financial. The technical work takes place in the background, and the FA just presents to the customer. I know two people very well who are EJ advisors, neither had any financial background whatsoever, they’re doing fine because they have people skills and persistence. There are plenty of potential customers with no interest or ability to manage their own finances/investments - we all know many people like that. Most of my contemporaries who had successful careers, are financially clueless. They’re relying almost entirely on pensions.

 

[OddGuy]

There are plenty of potential customers with no interest or ability to manage their own finances/investments - we all know many people like that. Most of my contemporaries who had successful careers, are financially clueless. They’re relying almost entirely on pensions.

Yes! The organization where I originally met this guy was filled with people who went to the benefits department for help filling out dental insurance claim forms, etc.

And he acknowledged he's been working the ranks of those folks to get them to switch their retirement accounts to his control.

 

[Koolau]

Yes! The organization where I originally met this guy was filled with people who went to the benefits department for help filling out dental insurance claim forms, etc.

And he acknowledged he's been working the ranks of those folks to get them to switch their retirement accounts to his control.

Time to use the "block" feature on your phone.

 

[OddGuy]

“I’ve mismanaged my finances so now I need to survive on commissions from YOUR finances! Let’s do lunch!”

 

[Jerry1]

I liked everything about my FA except the expense. I would never have spent a moment of time with an FA if they 1) Were not a fiduciary and 2) Didn't have overall financial expertise. My FA was very able to model out scenarios and take all the things we talk about here (Roth conversions, IRMMA, RMD's . . .) into account. Coming from being a director, it felt like having a very good employee that was able to give me a spreadsheet and an answer to just about anything I requested. However, after a few years, my life was basically on autopilot and I reluctantly let him go.

In this case, I would have heard this guy out for a bit, but unless he was interested in meeting for breakfast to talk about life or set up a tee time, I don't think I would have given him much of my time. I have a few friends that I connect with from the company I retired from, but if I could sense that their sole purpose of calling me was to sell me something, I wouldn't have any patience for that and would have politely ended the call. This one has the feel of a multi level marketing pitch I've received from a few employee friends while working. No thanks.

 

[FREE866]

God that sounds awful lol

I'm a believer that unless you have a massive estate that requires complex tax planning there is zero need to pay any financial advisor a penny. If you have a question about specific strategies ie Roth IRA throw the question out to this board and you'll probably get solid advice that you can cross reference.

 

[Car-Guy]

I liked everything about my FA except the expense. I would never have spent a moment of time with an FA if they 1) Were not a fiduciary

How do you know if they are "really" a fiduciary? Credentials, they say so, reputation, etc?

 

[FREE866]

There are plenty of potential customers with no interest or ability to manage their own finances/investments - we all know many people like that. Most of my contemporaries who had successful careers, are financially clueless. They’re relying almost entirely on pensions.

Yep. This probably deserves its own thread, but in the last few years I've been astounded by some of the conversations I've had with people about their investments. People that have done very well financially in their careers, yet when it comes to investing they really have no plan, direction, and just react to the news headlines in a frightening manner.

 

[OddGuy]

This one has the feel of a multi level marketing pitch I've received from a few employee friends while working. No thanks.

Funny you make that analogy, as I've since heard that Northwestern Mutual is "the Amway of wealth management." Anyone have any insight on that morsel?

 

[MarieIG]

I had my first "run ins" with financial advisors maybe 15 years ago . . .

 

[Car-Guy]

Every time the questions about FA's comes up I think of one of my first encounters with one. The DW and I were shopping for a new refrigerator at a local big box store. The salesman was a young guy (mid 20's) and as we were looking around and talking he mentioned this was just his part time job from his main job as a FA. I immediately thought, if he's any good at being a FA, what is he doing selling appliances here and my second thought was how can a ~25 year old know anything about being a FA.

 

[BizzyC]

Funny you make that analogy, as I've since heard that Northwestern Mutual is "the Amway of wealth management." Anyone have any insight on that morsel?

No particular insight on Northwestern Mutual, but I did have a friend who worked for a financial services company who told me that they would specifically target and recruit new college grads who had very wealthy relatives. They figured the kid would be able to pull the emotional strings of the wealthy grandma/grandpa and get a nice chunk of cash for the company. Sooooooo wrong.

 

[OddGuy]

I dug a bit online and found the training model Northwestern Mutual uses. New financial advisors take a three week course, in which they're asked to create a list of 200 friends, family and acquaintances. They're instructed to work through the list and pitch each name, with the ultimate goal of selling 40 whole life insurance policies in the first 6 months.

 

[FREE866]

I dug a bit online and found the training model Northwestern Mutual uses. New financial advisors take a three week course, in which they're asked to create a list of 200 friends, family and acquaintances. They're instructed to work through the list and pitch each name, with the ultimate goal of selling 40 whole life insurance policies in the first 6 months.

ugh
and the advisors receive yearly "trailer" fees on those policies. Such a scam.

 

[Rianne]

OP, that might be my BIL calling you. His finances are a disaster. So much debt he can't keep up. I wonder how many people ask or investigate the health of the FA's personal finances. They have no problem delving into yours.

 

[OldShooter]

In a way I'm jealous. None of these guys have ever called me. I think it would kind of be kind of fun to joust with a few. But I guess we've been too successful staying below the radar. There's something to be said for that too, I think.

 

[jimbee]

Northwestern Mutual has to pay for their new headquarters somehow (completed in 2017).

 

[Jerry1]

How do you know if they are "really" a fiduciary? Credentials, they say so, reputation, etc?

I guess you don’t know they’re a fiduciary but their credentials matter if it were to come to a lawsuit. If you’re suing someone that claims to be a fiduciary, you can frame it around whether or not they acted in your best interest. You wouldn’t have that argument were fiduciary not in their title. In the end, it probably doesn’t matter but my belief is that companies claiming to be a fiduciary are more likely to have processes that capture and react to their clients particular situation.

 

[Yipper]

Back in my college days, there were fliers up in our building advertising "business internship" opportunities for that summer break. The flier was kind of vague if I remember correctly but it did mention the internship was appropriate for finance majors, marketing majors, operations, etc. etc.

Well, I bit on it... and wound up sitting through a couple of hours of a very hard sales pitch at a local Northwestern Mutual sales office. Essentially the "internship" was a life insurance sales role and as someone above noticed, it started with each of us making a list of family and friends that we could pitch to.

I had zero interest in a life insurance sales career so I decided to cut things short at that point and get out of there. It wasn't that easy as the senior partners just started hurling verbal abuse at me. I was apparently a quitter and loser and didn't have what it took to stick with it.

Years later in my early 50's with a retirement target date only a few years away, I was approached by the parents of my daughter's close friend at the time. Yup - Northwestern Mutual guy running the local office. I politely declined to meet with him telling him "I'm good with self managing my finances" but he wouldn't take that answer and because I didn't want to cause issues between friends, I finally sat with him and detailed my finances, portfolio and plans. He came back a week later and gives me a very detailed presentation with projections, etc. like what Firecalc and other retirement calculators spit out and told me I was on the right trajectory and he didn't have any significant advice on what I might change - other than some kind of whole life policy that acted like an annuity, etc. etc.

I didn't buy anything from him. Years later I still get calls from HIS daughter trying to lure me back in the office for another review. I don't answer these calls.

 

[OldShooter]

How do you know if they are "really" a fiduciary? Credentials, they say so, reputation, etc?

It’s a bit of a swamp. To be safe, simply ask the rep for a letter, signed also by his Compliance Officer, confirming that he and his firm have a fiduciary responsibility to you. Make this letter a nonnegotiable condition for continuing a relationship.

SEC rules govern a lot of it. "Registered Investment Advisors" are legally fiduciaries. Reps will probably have passed a "Series 65" or "Series 66" examination. "Registered Representatives" are not fiduciaries and will probably only show a "Series 7" examination, which is the basic entry ticket to the securities business. See also here: IAPD - Investment Adviser Public Disclosure - Homepage

Insurance salespeople who have only insurance credentials should be avoided out of general principles as they cannot sell securities. That is why you see securities-looking products wrapped in insurance robes. Like "indexed annuities." Run, don't walk.

One major caution: Holding a CFP does not make an individual a fiduciary, no matter what they might tell you, though they might be fiduciaries by virtue of being employed by an RIA or similar. CFPs are granted by a private company based on their own criteria and the CFP code of conduct is written by that company. A few years ago, the code was rewritten with a lot of fiduciary-looking words but in the end it has no teeth. The CFP company can theoretically cancel a CFP if the code is violated, but the company is funded by CFP membership fees and the president makes well north of $1M/year. So how aggressive will they be in kicking CFPs out?

 

[Mr._Graybeard]

The shop where I w*rked was kitty-corner from the Bradley Center in Milwaukee, where NML would hold its periodic pep talk gathering for its agents. I was often amused by the profusion of hookers who would show up in the area on NML days.

BTW, NML announced a $500 million upgrade to its lovely corporate headquarters building last year. I'd say it's easily the most successful business in the city at this time.

 

[OddGuy]

OP, that might be my BIL calling you. His finances are a disaster. So much debt he can't keep up. I wonder how many people ask or investigate the health of the FA's personal finances. They have no problem delving into yours.

Did your BIL recently start with NM? In which state?