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Why You Still Cannot Trust Your Financial Advisor

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#1 tony

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Posted 08 June 2017 - 09:48 AM

Your new financial adviser has a well-decorated office, a firm handshake, and a bright smile. After an hourlong meeting, you leave with what you think is a state-of-the-art investment portfolio. You feel financially secure, taken care of.

It’s also possible you’ve made a huge mistake. The White House under President Barack Obama estimated that Americans lose $17 billion a year to conflicts of interest among financial advisers. Wall Street lobbying groups dispute that math—and they’re right to do so. The actual dollar amount is probably much higher.

 

 

 

 

https://www.bloomber...visers-multiply



#2 EdLaFave

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Posted 08 June 2017 - 01:02 PM

What we need more than anything is to spread knowledge. It is tempting to hope for government/organizations to swoop in and fix things for everybody because it would be an instantaneous, universal, clean solution. But I just don't think that is realistic. I think we need a massive push from ordinary people, which is where the real power for change exists.

 

As discouraging as it can be to see the Fiduciary rule being butchered, I think we're still winning. The decades of work Vanguard has put in has fundamentally changed the landscape and things are only accelerating. Teachers may be behind the curve and face bigger challenges because they don't have access to all vendors but education can change that too.


Navigate and reform OCPS' 403b and 457b.

#3 tony

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Posted 08 June 2017 - 01:38 PM

Good points

 

 The problem lies  IMHO in the fact that for many Americans-Ignorance is bliss. The weak shall not inherit the financial earth!  It is up to us but so many people don't care.  They even resent being told the truth. I experienced this myself as an activist in my working days. I was told by the very people I was trying to help to that I was rocking the boat and should leave well enough alone.

 

 

Tony



#4 jebjebitz

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Posted 09 June 2017 - 07:54 PM

I recently spoke at a faculty meeting about My experience leaving AXA. The teachers seemed so shocked that our AXA rep that everyone used and trusted had us all in Equivest contracts in funds with expense ratios above 2%. I followed up with an email with links to 403b compare and 403 bwise. I also included a link to a fee calculator on nerd wallet.
I work in two schools so I shared this information with close to 100 people. Many people thanked me but very few people seemed interested in taking steps to find better options. A lot of the people that did talk to me seemed to favor the out of sight out of mind attitude or they just thought that it was something they didn't want to be bothered with.
Only one teacher approached me about how I switched because her father-in-law kept telling her she needed to get out of AXA. But overall, I got the impression that people felt helpless and were content sticking with the devil they know.

#5 tony

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Posted 09 June 2017 - 09:16 PM

Jebjebitz

 

I feel your pain. I have become so cynical about so called experts regardless of the field they are in. I have known folks who stuck with bad doctors, bad lawyers, bad banks,bad teachers, and yes bad financial advisors and companies despite dire consequences. I think you are right on that people feel comfortable with the devil they know. I am not like that. If someone disappoints me especially if I am paying them I move on. I was frustrated at times trying to spread the truth about the horrible 403b options and those sleazy salesmen in my school system.As I mentioned earlier becoming an activist is not easy. You will be criticized. You will be second guessed. But if you are armed with facts and truth you should still push forward regardless of the response. Keep up the good work.

 

Tony



#6 EdLaFave

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Posted 09 June 2017 - 09:22 PM

I don't expect as many people to respond to simply being shown the problem and the general resources to look for a solution. I expect them to want an easy solution to be presented to them...and somebody to guide them through it.

I think you'll get a better response if you identify the best plan and exactly how to enroll (down to how to fill out the forms and select the investments). At least that's what I've tried to do, who knows?

...still I'm surprised you got such a small response. Disappointing.


Navigate and reform OCPS' 403b and 457b.

#7 jebjebitz

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Posted 10 June 2017 - 07:18 AM

I am not like that. If someone disappoints me especially if I am paying them I move on. 

That's how I felt after meeting with my rep from AXA.  A lot of teachers in my wife's district were leaving and when she mentioned this I suggested we talk to our guy first.  I sent him an email asking for information on our fees and expense ratios.  He replied by saying I can be out to meet you at your house tomorrow.  I wasn't going to leave.  I thought the fact that this guy was willing to meet with us on a moments notice was pretty good.  This guy sat at our kitchen table and threw every line in the book at us, "Just like you try to become a better teacher every year, I'm working hard to be a better adviser,", "knowing that I'm helping teachers and good people like you is what gets me up in the morning," etc.  What was missing from this conversation was the numbers I had asked for in my email that got him to shoot out to our house.  He made no mention of expense ratios or fees and when I asked him about my investments he said he hadn't looked at my contract.  The guy I initially signed up with had left four years ago and this guy was added to my account.  In that four years, the first time this guy looked at my investments was right there, on his iPad, at my kitchen table.  Things got interesting when my wife asked him if he invests in the products that we were invested in.  He couldn't directly answer and at one point got defensive.  He said, "Look, you can go with a company like Vanguard or Fidelity and pay lower fees but, there not going to come here and meet with you on a moments notice like this."  But that meeting literally resulted in zero answers.  The most amazing part of the whole meeting was that by the end he was giving us a pitch on why we should be contributing more from each paycheck.  This meeting helped me realize that we were dealing with a salesman and not someone who was interested in our financial future.  I felt stupid for investing with them for ten years, then angry and then motivated to tell others to be careful.

 

I don't expect as many people to respond to simply being shown the problem and the general resources to look for a solution. I expect them to want an easy solution to be presented to them...and somebody to guide them through it.

I think you'll get a better response if you identify the best plan and exactly how to enroll (down to how to fill out the forms and select the investments). At least that's what I've tried to do, who knows?

 

So, this is where I was trying to avoid giving people financial advice.  I felt comfortable taking all of my money out of AXA, taking a hit on the transfer, and getting my money into the Lincoln PDP to gain access to Vanguard.  After just 3 or 4 nights of reading info on this site, 403b compare and bogleheads, I had more information on my 403b than I had ever received from a rep that was willing to meet me at my kitchen table.  However, I understood that for a lot of teachers, most of them maybe, that idea of a person who will come to their house and tell them their investments are safe is worth the fees and high expense ratios.  They need that piece of mind.   The difference for me was I saw first hand how that person was selling me something and not giving me financial advice.  That's a tough pill to swallow and some people need to still think of that person as an adviser that's there to help them.  The alternative is realizing you're on your own and need to take control of your own investments.   I think it's important to help people understand that it's not as hard as they think and they are capable of making decisions about how their money is being invested.  For people who need that piece of mind, it's important that they know there are other options, even within AXA.  They only pitch the Equivest contract and never mention their Mutual Fund program that has lower fees, lower expense ratios and better investment options.



#8 sschullo

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Posted 10 June 2017 - 07:22 AM

I don't expect as many people to respond to simply being shown the problem and the general resources to look for a solution. I expect them to want an easy solution to be presented to them...and somebody to guide them through it.

I think you'll get a better response if you identify the best plan and exactly how to enroll (down to how to fill out the forms and select the investments). At least that's what I've tried to do, who knows?

...still I'm surprised you got such a small response. Disappointing.

 

I have a lot to say here about feeling "disappointed."

 

To everybody who is new: get used to the "disappointing" feeling. I am only involved because I found like-minded educators, spouses of educators like you, and a few genuine fiduciary FA around the country, and friends at my school district who CARE about our colleagues who continue to this day to be sold those terrible expensive products. I learned to get support and encouragement through the comradery, not from any kind of response from teachers.

 

I have some name recognition at LAUSD, but very few ever email me to ask a question. I also learned that I am doing the right thing and that all of us here are living in the future. Sooner or later, the situation where by the 4 million public educators are not getting any protection from ERISA, while 401k participants are will develope into a public discussion. But we are very far from that now. Only the newspapers talk about this because the few of us are talking to them. If it wasn't for the few of us, those NY Times articles would not come to fruition. It took Tara, the reporter, almost a year to put all of the complicated pieces together because our colleagues don't like the media, and are afraid to talk because some feel that their agent will get fired. I KID YOU NOT! I don't know about the unions in Florida, but here in California, the unions NEVER PUBLICALLy TALK about the 403(b). 

 

I had paperback copies of my book "Fighting Powerful Interests" at the last investment workshop, and none of the 8 teachers took one! No one was interested, and my book was written for them, LAUSD employees. While at other workshops, folks were interested and took a paperback copy. I just give it away because very few educators will read a personal finance book, let alone buy it. 

 

About ten years ago, one CalSTRS board member who liked what I was doing said to me that what I was doing will happen in the next decade. Well, it has been a decade, so it looks like it will take a little longer. 

 

Ed, and anybody else, be patient and relentless. Never give up because of the response you are not getting. The insurance industry and their agents want us to give up and just talk about how wonderful our portfolios are here (I am very happy the few of us here do have wonderful portfolios, but our colleagues are not responding enough. They need face to face direction and even then it may not work).

 

The insurance industry or the mutual fund advisory firms do not want us to take on the unions, or to keep talking with the press, or organize in some manner to keep the discussion going outside of what we are doing here.

 

Steve 


Steve Schullo

Author and Co-Author of two books:

1. Late Bloomer Millionaires: A Financial Story and Investment Guide for the Late Starter (2013)

2. Fighting Powerful Interests: Educators Challenge Tax-sheltered Annuities and WIN! (2015)


#9 EdLaFave

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Posted 10 June 2017 - 09:58 AM

"Just like you try to become a better teacher every year, I'm working hard to be a better adviser,"

 
I love to hate that quote! I guess us commoners will never appreciate the endless labor that goes into a single "Fund of Funds" or the "3 Fund Portfolio". Of course their definition of "better adviser" doesn't include the client's best interest.
 

What was missing from this conversation was the numbers I had asked for in my email

 
It matches my experience with AXA exactly! I wrote about my experiences with OCPS' bad vendors here (AXA included) https://educatorsfig...403b-457b-plans
 
...by far AXA was the most frustrating to talk to. When I first contacted AXA I told them all I wanted was information on fees and to understand the investments we'd be in. They gave me none of that in our first conversation. I spent 10 days fighting and clawing for that data. At least the other exploìtative vendors didn't so blatantly ignore direct questions.
 

Things got interesting when my wife asked him if he invests in the products that we were invested in.

 
Oh, the pride I'd feel if my wife fired off that question. I love it, she did a great job!
 

So, this is where I was trying to avoid giving people financial advice.

 
It is important to stick with what makes you comfortable, 100%.
 
Personally I feel fine laying out facts, data, and logic to demonstrate why AXA, active management, etc are inferior to Vanguard, 3 Fund Portfolio, etc. I've got no problem sharing what vendors I think are the best and why I think that. I share what my wife and I have or would do and exactly how we'd do it. But I never tell people what to do, that is 100% up to them...I just share my understanding and experience with people and I always try to present myself as a fallible human being but one without a conflict of interest.


Navigate and reform OCPS' 403b and 457b.

#10 EdLaFave

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Posted 10 June 2017 - 10:52 AM

I have a lot to say here about feeling "disappointed." To everybody who is new: get used to the "disappointing" feeling.


I'm in this for the long haul, my thoughts on the matter are a strange mixture of zen and cold engineering...

I went down this road because I believe we're all connected and have a responsibility to each other. Before I made the decision to get involved I estimated a near 0% chance of having a large or systemic impact and a near 100% chance of having a big impact on a small number of people (mission already accomplished).

I try my best to fully recognize, without emotional attachment, all of the human characteristics that have led us to where we are today...

1. I don't boil in rage over the greed and ill-intent of financial institutions.
2. I don't become discouraged when educators are resistant to help.
3. I don't become frustrated with whatever is stopping school districts from doing the right thing. Still not entirely sure what is going on there.

I just accept these things as the current reality that may or may not ever change. I clearly prefer for them to change but I recognize that I cannot simply will that end result into being. So becoming emotionally attached to the end result only invites suffering on my end. I can however celebrate small wins and continue playing my small role so if the right circumstances fall into place then we might all enjoy a big win.


Navigate and reform OCPS' 403b and 457b.

#11 jebjebitz

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Posted 10 June 2017 - 01:57 PM

I appreciate the work done by people in California.  Without 403b compare I would have no chance of knowing what my fees and expense ratios were.  I'm not sure if I'm right but I think they made it illegal for the financial advisers from hanging out in teacher workrooms/ cafeterias.  That's a far cry from what still goes on here in NJ.  When I told people that "our guy" had put us in a lousy 403b plan, people were actually mad that I would say that about him.

 

I got my start in all of this by first watching the Jon Oliver episode that talked about how these advisers were not fiduciaries.  From there I read the NY times articles, which are incredible by the way.  Then I saw the Frontline episode on retirement which really got me looking into all of this.  Finally I ended up here and bogleheads.  I have learned more from these websites and forums than I ever expected.  So, I know it may be disappointing but you guys are reaching people like me in NJ.  So thanks.



#12 jebjebitz

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Posted 10 June 2017 - 03:48 PM

 

Oh, the pride I'd feel if my wife fired off that question. I love it, she did a great job!
 

 

 

Haha....she's pretty ruthless.  



#13 DK

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Posted 11 June 2017 - 12:08 PM

 "Look, you can go with a company like Vanguard or Fidelity and pay lower fees but, there not going to come here and meet with you on a moments notice like this."  

 

 

 

 

lol.  This happened to me too.  These guys from AXA came to my school.  They approached me asking about saving in a 403b.  I told them I have Vanguard already and I'm good.  They mentioned that I was probably there for the low fees  but then asked if I was meeting with an adviser who can help me out by giving me advice and all?  I told him I didn't need any adviser to tell me how to invest.  I know exactly what I am doing as I have done my research.  I even mentioned that if I wasn't a teacher, I would be a financial adviser instead since I enjoy the world of investing and helping others.



#14 tony

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Posted 11 June 2017 - 06:18 PM

You've heard of pick up lines? these annuity salesmen spend more time learning one liner sales techniques than learning anything about investing. Whatever they learn about investing comes along the way of doing their jobs..

 

Incidentally and this is the truth. Upon my father's death an old high school friend called me. I had not heard from him in in 40 years. He said he had read my dad's obituary and wanted to extend his sympathies. A minute later he tells me he is a financial advisor with American Express in North Carolina and would love to help me with my investments and my dad's estate. You can't make this stuff up.

 

I don't know he may have been sincere but he should left it alone at that particular time.  

 

Tony







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