Author Topic: Financial Planner Frustration  (Read 5139 times)

cbr shadow

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Financial Planner Frustration
« on: December 18, 2012, 10:22:34 AM »
Last year the taxes for my wife and I were very complicated.  She worked in several states, and on top of that her company made some big errors where they said she worked in several other states that she never actually worked in.  They said they'd pay for the problem if we got an invoice from a tax person.  Normally we do our own taxes but this made it worth it to go to someone.

Our tax lady (also a financial planner) did all of our taxes and charged what I thought was a LOT - $640.  Wife's company paid for $400 of that though.  She was very helpful though, and answered a ton of questions I wondered about previously.  Also our return was much higher than we had expected.  Since she was so helpful I decided I would probably go through her more in the future.  At the end of our meeting with her she mentioned that we could start a Roth IRA.  This was before I knew about Roth IRA's so I wrote myself a note to look into them.  It sounded like she offered them through her, so I kept that in the back of my mind too.  She ended our conversation by saying "I also do financial planning, so if you guys have any questions feel free to call me about anything - work benefits, financial advice, etc.  If it's just a phone call I wont charge you, but if I have to do research on my own time and get back to you later I'd charge for that".  Wow that's a nice thing to have - I'll keep that in mind......

So about a month later I looked into Roth IRA's on my own and decided my wife and I should open them.  Found MMM, looked into starting with Vanguard, etc.  Then I remembered that our tax lady made it sound like she has one through her.. I decided to email her with questions about what she personally offers.  A week later she called me and said it would be easier to answer those questions over the phone instead of through email.  I agreed.

We had a 20 minute phone call where she went through what a Roth IRA is and answered the questions I had asked previously.  She even went off on a tangent at one point where I had to finally cut her off and say "Dont worry, I'm not planning on investing in real estate through the Roth IRA right now".  Anyways, after the conversation we hung up and I thought "That's a nice benefit of going through her for our taxes.. Sure, it was $600 to do the taxes through her, but in the future it will be less because they will be less complicated AND we get the benefit of asking her other quesitons over the phone".

Then 2 weeks later I get a bill for $100. 

I call her about this and reference our conversation about how we can call her with questions but she got very defensive immediately and said that any business person would charge me for a 25 minute conversation.  She said that originally she meant a 2-3 minute conversation would be free, not 25 minutes.  My issue is that #1 She said to call with questions and that I wouldn't be charged if she didn't have to do research and get back to me later about it.  #2 She never made me aware of an hourly price I'd be paying for the conversation

After another 10 minute conversation I finally said "There's obviously been a miscommunication here.. I thought you were giving me advice on Roth IRA's because you offered them through you, and I wanted to see what you personally offer.  Our previous conversation led my wife and I to believe this conversation would not be charged for.  Also you never even told me I was going to be charged or how much per hour."

I ended up explaining that my wife and I are young (28 yr old) and have a long working career ahead of us where we'll need our taxes done.  I dont feel right about paying the $100.  She didn't budge so I said I'll pay the $100 and never do business with her again.

Do I have a point here?  Anyone I tell in person is very surprised at her stance on this. 
I paid the $100 and am following through about never doing business with her again.

eyePod

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Re: Financial Planner Frustration
« Reply #1 on: December 18, 2012, 10:39:00 AM »
I figure that she would have to let you know before hand that she was going to charge you unless you had signed a contract previously.

DoubleDown

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Re: Financial Planner Frustration
« Reply #2 on: December 18, 2012, 10:45:41 AM »
That is frustrating, and you definitely have a point. She should not have charged you without specifying up front her expectations, and she had no legitimate claim to charge you after the fact. I applaud you for paying her, you showed yourself to be a bigger person than her. I realize it's little consolation, but at least for that $100 you received the useful knowledge not to do business with her again.

tooqk4u22

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Re: Financial Planner Frustration
« Reply #3 on: December 18, 2012, 10:45:56 AM »
Penny wise and pound foolish on her part.  I agree that professionals would normally charge for conversations like that it should have been disclosed better along with the rate.  The other side is that if she is offering IRAs (i.e. selling) then she will likely get a commission or fee of some kind on that and in that case your coversation wouldn't be professional advice, it would be marketing expense. 

The_Dude

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Re: Financial Planner Frustration
« Reply #4 on: December 18, 2012, 10:52:08 AM »
I think you are in the right here and agree with the penny wise pound foolish comment.

This is why online review aggregation sites like Yelp are awesome...

jpo

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Re: Financial Planner Frustration
« Reply #5 on: December 18, 2012, 10:55:44 AM »
I would have not paid AND not used her in the future. Worst case she sues you in small claims court.

SlackerSS23

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Re: Financial Planner Frustration
« Reply #6 on: December 18, 2012, 11:14:44 AM »
As a former financial advisor, I've never known any colleagues to charge by the hour for a consultation.  We would get paid by getting clients to invest, and consultations were just part of the marketing process.  It may be different since she's primarily a tax that typically charges by the hour, but it's rare for actual financial planners/advisors. 

My guess is that she would not have charged you if the conversation resulted in opening a Roth IRA, but it's still ridiculous that she essentially charged $200/hr for the phone call. 

Dicey

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Re: Financial Planner Frustration
« Reply #7 on: December 18, 2012, 12:38:19 PM »
Agree that you did the right thing to pay and move on. My bigger concern is that you were looking to open a Roth IRA "through her". That's not really how they work. Please keep reading MMM and other PF info to learn more about Roth IRAs and fees. Basically, they are just a bucket to hold your money. You choose which well to dip the bucket into. Find something you understand that is low in fees. That alone could easily allow you to recoup your $100.
Also, can't agree more that using a CPA is an excellent strategy. Since your net cost was only $340 (all in) and you say you got a larger than expected return, I'd call it a win, a lesson learned and move on. Learn about Roth IRAs and start seeking recommendations for a new CPA now, before the 2012 deadlines start looming.

cbr shadow

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Re: Financial Planner Frustration
« Reply #8 on: December 18, 2012, 01:17:43 PM »
Thanks for confirming I'm not crazy!  I wouldn't have had a problem with her charging if I was aware of it upfront.

I didn't know a lot about Roth IRA's at the time, but since then opened one on my vanguard account (alreayd have a 401k through vanguard) and put $5000 in mine and did the same for my wife.

She gets all of her business through word of mouth, and several of my friends use/have used her.  In my last phone call with her I explained that she's losing my business for life, and that I plan on telling my friends about my experience with her.  She seemed unphased and kept telling me about the expenses of her line of work.  My line of work has expenses too, but I dont list them out for my customers.  Just weird..

Also about opening it "through her" I wasn't familiar with Roth IRA's or how they worked, so I guess it worked out for the best that I opened it with Vanguard.  Now if I get a bill for the conversation I had with her about the first bill I'll be REALLY shocked hahaha

James

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Re: Financial Planner Frustration
« Reply #9 on: December 19, 2012, 11:45:56 AM »
I would have not paid AND not used her in the future. Worst case she sues you in small claims court.

I agree this would be a right response.  I don't think you had any obligation to pay.  However, given the connections with work and friends you may have made the best decision for your situation.

totoro

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Re: Financial Planner Frustration
« Reply #10 on: December 19, 2012, 11:56:06 AM »
I too would not have paid her bill and would not continue to use her services.

I am a professional and relationships are really important.  I want to help my clients.  My primary focus is not making the max I can.  I routinely turn down work and make a good living.  This way of doing business really works if you are offering something of value and life is, imo, too short to be focussed on monetary rewards instead of whole person rewards (money, relationship, ethics...). 

I have little patience for people who operate in the manner you have described.

Crash87

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Re: Financial Planner Frustration
« Reply #11 on: December 19, 2012, 06:49:30 PM »
I would have not paid AND not used her in the future. Worst case she sues you in small claims court.

I agree this would be a right response.  I don't think you had any obligation to pay.  However, given the connections with work and friends you may have made the best decision for your situation.

Agreed. I would also recommend reading a book or two on investing in lieu of an investment advisor.

arebelspy

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Re: Financial Planner Frustration
« Reply #12 on: December 19, 2012, 09:51:39 PM »
$100 to learn the lesson that financial planners are bad news?

Cheap tuition.  :)
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