Author Topic: Bad advice you've received from a financial advisor  (Read 5729 times)

Le Poisson

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Bad advice you've received from a financial advisor
« on: May 25, 2015, 10:02:29 AM »
Our savings have been with Investor's Group for almost forever. Looking back now I see so many red flags that should have spelled out RUN a long time ago. But I've always (and still do) felt intimidated by the world of investing, so I left things to her judgement. Being able to blame her for my losses gives me little comfort now as I look on our lost potential. So some golden nuggets...

  • You can't invest in stocks! Stocks are where rich people take risks when they can afford to lose their fortunes. you need to stay with the IG mutual funds where your money is safe.
  • Don't worry about tracking your savings, that's why you have me. Its not like you can decipher all these charts!
  • Read the prospectus, but don't lose sleep over it, its not like you can do anything about it anyways.
  • Invest in these funds (shows a chart) they are doing well, and you want to be part of the strongest market sectors! (All high MER funds)
  • Well I deserve that - I make poor people like you rich! - (After I complimented her car, at the time we were coming in to challenge our miserable portfolio)

I'm sure others have more...

forummm

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Re: Bad advice you've received from a financial advisor
« Reply #1 on: May 25, 2015, 10:21:21 AM »
Ouch. I'm crying for you.

Hopefully you've fixed this situation.
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Indexer

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Re: Bad advice you've received from a financial advisor
« Reply #2 on: May 25, 2015, 11:03:22 AM »
A financial advisor said that?  Wow. 

Many of them just sound out of touch, like pompous %$^# who thinks they are better than everyone else out of touch.  I'll actually agree you should probably stick to mutual(index) funds rather than individual stocks, but that statement can be said so much better.  Focus on the diversification and cost savings.... not saying you can't do it because you aren't rich enough...

Quote
Invest in these funds (shows a chart) they are doing well, and you want to be part of the strongest market sectors! (All high MER funds)

That is just scary.  The WHOLE point of a FA is to tell you NOT to do that!


There are good advisors(normally fee only), and she is most certainly not one of them.

forummm

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Re: Bad advice you've received from a financial advisor
« Reply #3 on: May 25, 2015, 11:11:27 AM »
A retirement-aged relative got talked into a particular advisor because he said he could do active management and "smooth out the downturns". Strangely the 2% annual fee wasn't mentioned.

I tried to show the relative how investing in the Vanguard Target Retirement Income Fund would have made 2008 just a minor blip, all while literally doubling his available funds to spend each year. But I'm not as good at sales apparently.

jodelino

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Re: Bad advice you've received from a financial advisor
« Reply #4 on: May 25, 2015, 11:19:07 AM »
When I was in my early thirties, in the first job I had after grad school with a 401K and an employer match, I met with a financial advisor whom a friend recommended for a "free consultation"--aka sales pitch. I was maxing out my 401K contributions, past the employer match, and she told me that wasn't necessary; that "we" could work on taking some of that money & putting it mutual funds instead (funds that she got a commission from, although she didn't mention that). She didn't offer a rationale for this. I said thanks and never spoke to her again!

Heckler

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Re: Bad advice you've received from a financial advisor
« Reply #5 on: May 25, 2015, 11:10:35 PM »
Ours recommended Manulife One, which she happily uses to dig herself out of a huge debt hole, swapping credit debt with mortgage debt, thinking she was earning money.

http://manulifebankmortgages.ca/manulife-one/how-it-works/

That was the day she got her pink slip from me.

powersuitrecall

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Re: Bad advice you've received from a financial advisor
« Reply #6 on: May 26, 2015, 08:22:13 AM »
Even after seeing that our portfolio was high fee, heavy in Canadian Equity, and not even that diverse, it still took me a while to fire our FA's ass.  I didn't have the guts to call him.  I just opened up TD Waterhouse accounts and had everything moved over in-kind.  I did send him a courtesy break-up email (It's not you, its me), but only because I didn't want them to stall the transfers.

Congrats on seeing through the BS.  You are now in control of your destiny :)

ontario74

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Re: Bad advice you've received from a financial advisor
« Reply #7 on: May 26, 2015, 10:07:26 AM »
I'm fortunate to have a great FA; she has helped me achieve my goals and my net worth improved dramatically (not just because of her, however).

The worst advice I received was from RBC. It was *no* advice. I had non-performing RRSPs and RESP with them for about 7 years and got fed up. They just didn't care.

After reading Flash Boys I know why RBC's products were performing so badly, even before the crisis. RBC actually bought an HFT company to fix the issues with poor performance.

James

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Re: Bad advice you've received from a financial advisor
« Reply #8 on: May 26, 2015, 10:16:46 AM »
Even after seeing that our portfolio was high fee, heavy in Canadian Equity, and not even that diverse, it still took me a while to fire our FA's ass.  I didn't have the guts to call him.  I just opened up TD Waterhouse accounts and had everything moved over in-kind.  I did send him a courtesy break-up email (It's not you, its me), but only because I didn't want them to stall the transfers.

Congrats on seeing through the BS.  You are now in control of your destiny :)

I did the same, just moved all the funds myself since I didn't want to mess with hearing all his bullshit anymore. When I did talk to him, he was so sad that he wasn't able to help move the funds, since he could could have come and "talked over the new plans and how to best implement them". By which he of course meant talk me out of moving the funds in the first place. I didn't begrudge his fees all that much, they weren't absolutely terrible, but all the "jump on the great performers" crap and his high pressure sell of whole life annoyed the hell out of me.

The worst advice I got from him about financial planning was the whole life insurance, but the other advice he gave me about buying a new house because it was a good investment also really sucked and helped keep me going on the biggest financial mistake of my life.
« Last Edit: May 26, 2015, 10:18:20 AM by James »

MountainManMustache

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Re: Bad advice you've received from a financial advisor
« Reply #9 on: May 26, 2015, 10:30:39 AM »
Not so much what they have said but what I have observed:

-two of the Financial Advisors I know have entered the foreclosure process on their primary homes.  One of them lost the home to the bank and I bought as a REO and that is where I now live.  The other advisor frequently appears in the pre-forclosure process.
-one Financial advisor I know has declared bankruptcy at least once
-The Financial advisor I know who declared bankruptcy used to have a Porsche, Land Rover and Ducatti motorcycle in his garage…not any more
-one Financial Advisor I know has a maid and hires a personal life coach and when anything in his house breaks he hires someone to fix it

I advise anyone trusting someone else with their hard earned wealth take a look at how the advisor lives him/herself and then decide whether you believe them to be more skilled that you.

Not all Financial Advisors of course fit the high burn rate lifestyle but many do and that has never meshed with my financial goals so have stayed away from their advice and done just fine.

forummm

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Re: Bad advice you've received from a financial advisor
« Reply #10 on: May 26, 2015, 12:47:03 PM »
Not so much what they have said but what I have observed:

-two of the Financial Advisors I know have entered the foreclosure process on their primary homes.  One of them lost the home to the bank and I bought as a REO and that is where I now live.  The other advisor frequently appears in the pre-forclosure process.
-one Financial advisor I know has declared bankruptcy at least once
-The Financial advisor I know who declared bankruptcy used to have a Porsche, Land Rover and Ducatti motorcycle in his garage…not any more
-one Financial Advisor I know has a maid and hires a personal life coach and when anything in his house breaks he hires someone to fix it

I advise anyone trusting someone else with their hard earned wealth take a look at how the advisor lives him/herself and then decide whether you believe them to be more skilled that you.

Not all Financial Advisors of course fit the high burn rate lifestyle but many do and that has never meshed with my financial goals so have stayed away from their advice and done just fine.


That's tragically hysterical. It's like that riddle about the town with only 2 barbers in it, and how you choose which one to go to. <I know on this forum the answer is neither, but it's an analogy>

frugledoc

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Re: Bad advice you've received from a financial advisor
« Reply #11 on: May 26, 2015, 01:18:38 PM »
I think that having to declare bankruptcy or lose your home should probably result in banning from being a financial adviser.


Travis

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Re: Bad advice you've received from a financial advisor
« Reply #12 on: May 26, 2015, 01:50:49 PM »
"Bad advice from a financial advisor."  Pretty much anything they've ever told me. 

My first experience was with one who had an office within my credit union.  At age 18 she had me in a front-loaded mutual fund with an ER of around .5%.  Another I worked with another a few years later who had me churning through 20 different funds to where my net for the year was almost zero.  I found you guys and the Bogleheads a few months after that episode.

NorCal

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Re: Bad advice you've received from a financial advisor
« Reply #13 on: May 26, 2015, 03:50:02 PM »
Having a bad financial advisor was actually the best financial move I ever made.

When I was a young LT in the military, I got set up with First Command Bank, which caters to the military.  They were well regarded by my peers and superiors and had plenty of pretty presentations.  They ended up selling me a whole life policy and some mutual funds with a 50% (!!!) front load.

You know why this was the best financial move I ever made?  Because it taught me that I MUST learn to manage my own money, and no one else can do it for me.  This was the seed that eventually led me to an MBA in Finance, which has been a good investment. 

If it wasn't for this exceptionally shady company, I'd probably still be trusting someone else to manage my money.

forummm

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Re: Bad advice you've received from a financial advisor
« Reply #14 on: May 26, 2015, 04:05:00 PM »
They ended up selling me a whole life policy and some mutual funds with a 50% (!!!) front load.

50%!!! I knew there were a lot of companies that preyed on servicemembers and vets. But that's just awful.

ozbeach

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Re: Bad advice you've received from a financial advisor
« Reply #15 on: May 26, 2015, 04:12:05 PM »
first post for me!

In my 30s I found myself separated from my partner, stuck with an underwater mortgage and not real happy in my job. I went to a financial planner for help. I stated that I wanted to be able to leave my job and be able to take a sabbatical or study at 40 (basically, reach FI) and that by that time I would also like to be in a bigger/better house (I know, I know...) I paid $2k for his advice, which essentially was to borrow $100k and leverage into shares. I wasn't overly comfortable with this, but figured I had paid all this money to get professional advice and why did I do that if I wasn't going to listen to it, so agreed to the plan. I did state that I wanted to take a value-investing approach, and that I did not want to leverage to the point that I would ever be lying awake at night worrying about a margin call and losing the house. Fast-forward to 40 and I had been paying interest only on the mortgage all this time (in order to service the margin loan) so hadn't dented that, the portfolio was basically where I had started except now the market was heading south and I was lying awake at night worrying about a margin call. I finally listened to the advice of an accountant friend who told me to ditch all these "investments", aggressively pay off the mortgage and take it from there. I fired the planner, was $25k in the hole, but started sleeping properly again. Ten years later I'm about to reach FI without the help of a financial planner.

Bob W

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Re: Bad advice you've received from a financial advisor
« Reply #16 on: May 27, 2015, 09:02:23 AM »
I'm sure everyone here realizes that "financial advisor"  is code word for salesperson.

They are in the business of selling highly expensive paper at very nice commissions.

If you truly need an advisor go with a "fiduciary"  advisor and pay a set annual fee or negotiated rate. 

a1smith

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Re: Bad advice you've received from a financial advisor
« Reply #17 on: May 27, 2015, 09:09:07 PM »
I think that having to declare bankruptcy or lose your home should probably result in banning from being a financial adviser.

I agree, kind of like getting a big fat F for your CFP!