Aggressive Financial Advisors

[Koolau]

It's pretty disgusting how some FAs and their companies target the uninformed and especially the elderly.

I had it set up so that my mom had to have me co-sign all of her checks - no matter the amount. I sat with her and a FA who sold her a LTC policy (which I guessed, correctly she would need.) So I co-signed the check to go along with the application.

It turned out that the company rejected her application BUT the salesperson (who claimed to be a FA) without my knowledge got my mom to take out a different insurance product - I don't recall what - and made it come out to the penny what her check had been written for. The effect was he didn't need me to sign the check. I didn't find out about this until months later. When I did, I called the company and they fell all over themselves to return the money as I told them how their sales guy had hoodwinked my mom and circumvented my signature requirement.

Calling them "bottom feeders" is insulting to carp!

 

[Gotadimple]

There is a difference between a financial advisor and a financial planner. The first has a brief education about products and how to sell them. The second has education and certification and is there to solve problems for clients that can include managing their money for them. I usually stop acquaintances who say they're a Financial Advisor now. If they don't have credentials and experience, I'm not interested.

 

[jazz4cash]

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.

+1. The folks on this forum forget how much more comfortable we are with personal finance compared to most folks, even the successful ones. In my mind that makes them a good candidate for the right FA but also a good target for a lousy FA.
I savor matching personal finance chops with former colleagues and FAs on the prowl. I can learn from anyone but the FAs usually disengage when they realize I am not chum. The really bad ones are the most persistent.

 

[TheWizard]

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.

Pretty much the same with me.
All I get is fancy postcards every few weeks inviting me to free dinners and financial presentations...

 

[Willers]

We were actually happy to have been invited to one of those dog and pony dinners this winter. It was put on by a guy who retired recently (zero financial management experience) and took a new job peddling "equity-indexed annuities." We went because it was at one o our favorite restaurants and we got a delicious prime rib dinner. The only cost was sitting though graphs that showed the EI annuity beating the S&P 500 over the last 10 years with "no risk of loss." I could only shake my head.

To the earlier points made about many not understanding finances, his success rate for individual follow-up meetings was about 70%. I was very surprised by that but I should not have been. The couple we were sitting with thought it was a great product. I didn't want to get in the middle of a debate, but did suggest that they read the contract very carefully before signing. We politely declined to sign up.

 

[jazz4cash]

The only cost was sitting though graphs that showed the EI annuity beating the S&P 500 over the last 10 years with "no risk of loss." I could only shake my head.

Jazz4 cash said
I went to a few back in the day. When they show the chart with product X besting the S&P 500 I used to enjoy asking if the S&P plot included dividends. Of course it does not. The reactions ranged from anger and confusion to embarrassment but most of the audience had no clue. I did that a few times but I started feeling like a heckler so I stopped. I would not mind going again if invited but DW would not enjoy at all.

 

[jazz4cash]

The quote/reply is wonky to me. I’m not doing it right

 

[TheWizard]

The quote/reply is wonky to me. I’m not doing it right

Just reply...

 

[Dtail]

Pretty much the same with me.
All I get is fancy postcards every few weeks inviting me to free dinners and financial presentations...

Hey I had my FA drop me, as I never used him specifically, although did ask questions to other FA's. They all had CFA's+ and were reasonably knowledgeable for specific questions. However no WR or portfolio compilation questions.
I am fine being "FA less".

 

[Midpack]

DW was the exec assistant to the GM for an Ameriprise office outside Chicago. She sat in on most meetings to take notes, and heard the FAs talking about clients outside meetings all the time. In meetings the most common topic was new ways to get customers to trade more and generate more commissions (churn). They often shared how naive their clients were, often referred to clients as “pigeons”, “patsies” and other disrespectful names. Her boss the GM was a self absorbed pig, very highly paid, had front row mid court season tickets at Chicago Bulls games (I know because we used them once). Turned her stomach to see how they actually operated. They pressured her to move our assets, but there was no way I’d have given them a penny. Though well paid with perks, she found another job in less than 18 months.

 

[Texas Proud]

A couple of comments that are not related...

Most people they talk to have even less financial acumen than they do... so almost anything they can say that they learned in their 20 or 40 hours of training makes them sound smarter then them... so easy pickings there...

Most of them IMO have canned plans given to them by corporate and they just have to try and figure out what you will be happy with and sell it to you...

From the little I have seen they really want to sell you life insurance or some other high cost product...

MY DW had a friend who claimed to be a FA and had his clients... talked to me once and saw I was not interested so he never did try again... good... but, he had no money... had filed for BK at least once and was about to again is my guess... his wife divorced him after 2 or so years as they never did have anything and he was a jerk... and had adult kids who would get arrested and he would let them stay in the house... she did not feel safe...

 

[FREE866]

In reading all these replies I just have to say I’m so damn grateful I grasped the concept of basically no cost equity ETFs almost 20 years ago. Simple, tax efficient, and I’ve avoided tens of thousands of dollars in fees/commissions over the years.

 

[OldShooter]

... Most people they talk to have even less financial acumen than they do... so almost anything they can say that they learned in their 20 or 40 hours of training makes them sound smarter then them... so easy pickings there ....

Funny story. I had an old HELOC with USBank that I reactivated for use while we were building our new lake house. The financials that I gave them got them excited enough that they transferred me to their "Wealth Management" group even though I had no other business with them.

Fairly soon, along comes the inevitable call from the investment rep. Just as you say, she wanted to show off her expertise. So she said something like "I'm really worried about what Janet Yellen is going to do with interest rates." This was a month or two after Yellen had moved to Treasury. So I let a small pause elapse and said "I don't think she's going to do much. She is at Treasury now." Long silence, thanked me for my time, and goodbye. No calls since.

 

[athena53]

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.

When DS was an auto claims adjuster he had a plaintiff whose Escalade had gone up in smoke when the shop where it was being detailed burned down. DS' employer insured the shop. The claimant insisted that it was worth at least $75K because that was how much he'd borrowed on it. He was upside-down on the loan based on the evaluations the insurance company used. Several times the claimant reminded DS, "I am a Certified Financial Planner". DS' observation to me: "I'd never let someone who was upside down on a loan for an Escalade to manage my finances".

I feel sorry for people trying to build up business via cold calls, but not sorry enough to buy from them.

 

[Souschef]

I think I copied this from a post on ER, but I think it is apropos here.
RUN FORREST!! RUN!!
Years ago I worked with a guy who left our company and got a job as a financial advisor with what was then Shearson-American Express and has since moved to Ameriprise Financial. Nice enough guy although we weren't close, I always thought him to be above-board and basically ethical and honest.
So some time had passed and I bump into him at a business after hours social gathering hosted by the local chamber of commerce. He hands me his card and invites me to get a "free consultation" for retirement planning. I was in my late 30's and thought it couldn't hurt so why not? Now I had started IRA investing in the mid-1980's with the typical 65/35 mix of stock & bond mutual funds with low fees. Not setting the world on fire but they were pretty much matching the decent market performers. I was slowly getting good returns.
THREE-CARD MONTY WITH LUNCH PROVIDED
We meet at his nice offices and he brings in coffee and lunch...does a Q&A about my current investments, future retirement goals, horizon, visualize what I expect at what age, etc. Then he tells me he'll take my current account info and compare it with his products and tells me his market resources will find "better options" to help me get to FIRE sooner and safer.

A couple of weeks go by and he calls to set up lunch and presents me with this custom 3-ring binder with my name on the front and it has tabbed sections with my goals and wants and needs. Then shows the amount I'll need for FIRE and outlines how to get there with Shearson-AE investment products ONLY. I get a tiny notation disclosing annual administrative and management fees along with a total balance fee based on a percentage of my total accounts and then other "possible fees" for update consultations, etc.
A quick add-up showed me I was looking at paying 3 to 4%+ before paying upfront loads on Shearson-American Express products, no mention of any other product outside their fold.

Keep in mind I had been using no-load / low cost mutual funds performing at decent levels. I then asked for the page that compares my current holdings with Shearson-AE products he was recommending. He sort of froze and said "Well I didn't really find anything that stood out worth mentioning here OR there was very little information on my holdings out there." HUH? What happened to all his "vast data resources on all financial products available" pitch?

I didn't really react but took all this as a well-scripted sales pitch and told him I'd think about it. A week later he called and I told him that I decided to go a different route but thanks for the lunches and binder.

SUMMATION:
Now I don't begrudge someone getting paid for a service but the built-in fees and charges just to have an account were beyond reasonable IMHO. Besides I had enough knowledge to know I could do OK on my own if I do a little reading and listen to enough people who know more than I do on certain things. And considering the fate of Shearson-American Express, I think I did the right thing by declining their portfolio.

 

[jazz4cash]

Just reply...

Ok, Thanks

 

[athena53]

Most of them IMO have canned plans given to them by corporate and they just have to try and figure out what you will be happy with and sell it to you...

I once heard the standard Ameriprise formula (whole life, LTC coverage, mutual funds) as their "Happy Meal",

 

[Dtail]

"Old Shooter" has his many well expressed anecdotes.
My example I use for folks that I meet and discuss investments/advisors is the following:
If one studied for 40 hours on how to take out your appendix, you wouldn't let him. The same concept is applied by them to Financial Advisors. Based on their background/learning, they must know more than anyone not in the field and thus one can't risk their financial retirement in being a DIY investor.
However this is just not true with modern technology, information available, availability of low cost investments, etc.
Still the thought is how can one keep up with a professional's performance returns?
A simple example is one guy told me that his advisor has earned him 6% avg annual returns from Mar 2009 to 2017 with heavy equity exposure. I told him a monkey could do that and showed him otherwise. He still stayed with the FA.

 

[Koolau]

+1. The folks on this forum forget how much more comfortable we are with personal finance compared to most folks, even the successful ones. In my mind that makes them a good candidate for the right FA but also a good target for a lousy FA.
I savor matching personal finance chops with former colleagues and FAs on the prowl. I can learn from anyone but the FAs usually disengage when they realize I am not chum. The really bad ones are the most persistent.

I still recall my first encounter with a "Financial Professional." I got a call from an old HS acquaintance shortly after I graduated from University and after I'd been hired at Megacorp. We'd never been close, but were always cordial.

This guy had won a full Navy scholarship when in HS but then blew out his knee playing a pick up game of football. I had seen him a time or two at University since we were both "towneys."

So when he called out of the blue and asked if he could stop by and say "Hi," I of coursed said "Yes." Upon his visit, he asked me what I was doing these days and I told him about (what I considered) my prestigious j*b at Megacorp. When I asked what he was doing, he then explained he was w*rking for XYZ insurance company. My blood ran cold. I knew I'd been had by and "old friend."

Heh, heh, that's not my worst "Financial Professional" story. Not by a long shot, but YMMV.

 

[Route246]

I tell them I have an MBA and specialized in applied math econometrics (the truth) along with MSEE and BSCS. I handle all of my own finances and investments and I feel I don't have any deficiencies in my current portfolio.

Northwestern Mutual screener has been calling me and I finally agreed to a 10 minute call next week with a sales team to hear them out. She insisted that they will not waste my time and are merely inquiring to see if there are any opportunities. I'm "taking one for the team" in this case as they are bothering a lot of my colleagues but nobody has taken the time to talk to them (in our internal Slack forums is where this is discussed) so I volunteered. I plan to record the call and inform them it is being recorded. If they terminate the call at that point, then so be it. If they agree I plan to scribe a transcript and put it on the internal forum for others' amusement. I have some things I want to ask them that I am very curious about, specifically what their commissions, loads, fees, rates and penalties are and make it very clear that this is required to initiate any further conversations. If we get past that I want to ask them about the specific structure of what they are proposing if I were to give them a million to manage, including time commitment, guaranteed yields as a function of overall market performance, maximum portfolio churn etc. If they persist I will ask them straight up if they can beat the S&P 500 and if so what are the assurances they can give me that they can do this?

I think I'm ready for them. I feel I'm pretty good at putting the knife into predators like this with a smile on my face in a very professional manner. It should be an interesting call. I did inform the screener that I will be asking a lot of very pointed questions and will expect straight answers.

 

[Jerry1]

Northwestern Mutual screener has been calling me and I finally agreed to a 10 minute call next week with a sales team to hear them out.

My guess is that the call won’t last 1 minute. Too bad, because it would be interesting reading.

 

[athena53]

I tell them I have an MBA and specialized in applied math econometrics (the truth) along with MSEE and BSCS. I handle all of my own finances and investments and I feel I don't have any deficiencies in my current portfolio.

Northwestern Mutual screener has been calling me and I finally agreed to a 10 minute call next week with a sales team to hear them out. She insisted that they will not waste my time and are merely inquiring to see if there are any opportunities. <snip>I plan to record the call and inform them it is being recorded. <snip> I want to ask them about the specific structure of what they are proposing if I were to give them a million to manage, including time commitment, guaranteed yields as a function of overall market performance, maximum portfolio churn etc. If they persist I will ask them straight up if they can beat the S&P 500 and if so what are the assurances they can give me that they can do this?

Ooh, I like it! PLEASE post the results even if she cuts it off after you inform her it's being recorded. I bet your hypothetical $1 million will get her breathing heavy.

Your background reminds me of the calls I used to get. I have a BA in Math degree but after I became a member of an actuarial society I was in a directory that a few boiler-room guys (they were all guys) must have obtained. I was also near the beginning of the alphabet. I'd tell them I was a single mother with no child support, which was true, and they'd back down assuming that I was penniless. I was not. I still remember the guy who was pitching a stock called LaserLand- it was early in the time when music was coming out on CDs. I think he even told me his mother owned the stock. I asked him to send me material on the company and all he sent me were news clippings about hoe CDs were the next big thing. well, they were, but I never heard of LaserLand again.

 

[Aerides]

I tell them I have an MBA and specialized in applied math econometrics (the truth) along with MSEE and BSCS. I handle all of my own finances and investments and I feel I don't have any deficiencies in my current portfolio.

Northwestern Mutual screener has been calling me and I finally agreed to a 10 minute call next week with a sales team to hear them out. She insisted that they will not waste my time and are merely inquiring to see if there are any opportunities. I'm "taking one for the team" in this case as they are bothering a lot of my colleagues but nobody has taken the time to talk to them (in our internal Slack forums is where this is discussed) so I volunteered. I plan to record the call and inform them it is being recorded. If they terminate the call at that point, then so be it. If they agree I plan to scribe a transcript and put it on the internal forum for others' amusement. I have some things I want to ask them that I am very curious about, specifically what their commissions, loads, fees, rates and penalties are and make it very clear that this is required to initiate any further conversations. If we get past that I want to ask them about the specific structure of what they are proposing if I were to give them a million to manage, including time commitment, guaranteed yields as a function of overall market performance, maximum portfolio churn etc. If they persist I will ask them straight up if they can beat the S&P 500 and if so what are the assurances they can give me that they can do this?

I think I'm ready for them. I feel I'm pretty good at putting the knife into predators like this with a smile on my face in a very professional manner. It should be an interesting call. I did inform the screener that I will be asking a lot of very pointed questions and will expect straight answers.

Why go to that bother? Most likely she will respond that they are do not permit recordings (bank regulations or something) and that will be that.
Easier to just block a phone number, or say "Put me on your do not call list" and it's done.

 

[Dtail]

Why go to that bother? Most likely she will respond that they are do not permit recordings (bank regulations or something) and that will be that.
Easier to just block a phone number, or say "Put me on your do not call list" and it's done.

Sometimes it can be fun in a weird way of showing them up.

 

[OddGuy]

Sometimes it can be fun in a weird way of showing them up.

Yes! OP here. I took the call, and we've been having a lot of fun discussing it here, since then.