The worst thing I did financially was seeing a financial planner
Long story short, recently saw a Financial Planner as I was about to make my first home purchase. It was a stressful time and I was looking to consult a professional to make sure I could afford long-term. I'm not financially illiterate but I'm not an expert, especially with things like forecasting how finances can affect my future long-term. In retrospect, I really should have seemed multiple planners but ended up going with the one due to time restrictions in the property search (pre-approval and the like).
This planner wasn't exactly badly reviewed. The process seemed legit, starting off with an SOA (Statement of Advice) being issued and a good amount of questions and direction from me. I wasn't quite sure what this document would entail but basically, it had some basic general advice (skewed a little bit) followed by switching my super to their fund and buying some life insurance through them. I got the piece of paper with this advice and found out that they would cost 11% of my total super to engage for the entire year which is huge. There was more content of disclaimers than actual advice. Probably only 3 pages of actual numbers.
Basically, after a year of engagement, I'd be worse off financially than if I hadn't engaged them at all. I should have read between the lines but this wasn't clear during the engagement phase.
Anyway, I coughed up the amount for the SOA (a month's salary) because I had signed for it, but I feel like they shouldn't have engaged me if I was going to be financially worse off after their services. The percentages weren't made clear until the advice was issued which was basically a glorified fee proposal.Anyway, let this be a warning to you all to really hone in on what you're getting if you do seek it and decide if it's not something you can figure out yourself. It was a waste of time and money for me and can't help but feel I was tricked as I'm not an expert in this field. I've put it down to a hard lesson learnt.
Related Horror Stories
The “12%” Advisor
A few years ago, I was competing for a client’s business. I was one of two other advisors who were being interviewed, and I gave my traditional spiel. It turns out that one of the guys I was up against had guaranteed to the potential client that he could make 12% in the stock market.
Now, keep in mind that this was not before 2023, and even if it was, it wouldn’t matter. The advisor was using basic mutual funds and still had the audacity to claim to my client that he could net him a guaranteed 12% return.
I was in shock.
Lesson Learned: If you ever come across any type of advisor that guarantees you any rate of return, and isn’t quoting you a fixed annuity, a CD, or some type of insured bond – don’t fall for it. It’s too good to be true. Get out of their office fast.
"Safe investments"
Just filed my taxes and I’m looking more closely at my finances. I’m pretty good with the basics but feel completely out of my depth with investments.
In 2021 I started a Morgan Stanley investment account with the financial advisor who has been managing my parents’ money for many years.
I invested $67,000 in 2021 and let the advisor choose the stocks/bonds/funds/etc, telling them that I’m extremely risk adverse and I needed safe investments. On Jan 1, 2022, the value was $71,950. On Dec 31, 2022, the value was $58,587. In 2022, I paid $1,025 in trade commissions and $984 in service/advising fees. So basically I paid my advisor $2,000 for her to lose me $13,363 over the course of 2022.
Is this normal? Every time I ask my parents or advisor they tell me “the market is down for everyone.” But my parent love their advisor and thinks the sun shines out her butt and my advisor has a financial incentive to keep me.
Churned and burned
Some time in the past, a “financial advisor” convinced me that I could make a lot of money trading commodities. Wrong! I figured out he was just “churning” me (putting me into and out of too many positions, just to earn the commission), and I closed the account, buy not until he lost 80% of my money in less than a year!
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