Before the Advice, Check Out the Adviser

[Certified Financial Group]

WHEN Elaine and Merlin Toffel, a retired couple in their 70s, needed help with their investments, they went to their local U.S. Bank branch. The tellers knew them by their first names. They were comfortable there.

Read the rest of the story. (http://www.nytimes.com/2014/10/12/business/mutfund/before-the-advice-check-out-the-adviser.html?_r=4)

Questions? We are here to help. (http://www.financialgroup.com)

[jjretire]

Thanks for posting.

This is the #1 problem with investing in TV. Many people go to a free lunch seminar (sales meeting) or see a full page add in the Daily Sun and say.... "this guy seems nice". They then invest their life savings and end up paying huge commissions. Most of the time they don't even know it. If you are working with a broker, bank or insurance rep, schedule a review with a fee-only advisor..... you will be shocked.

If you work with a broker or insurance rep, they only have to do what is "suitable for you". This means they can sell you high fee and commission products if they choose. To protect yourself, you should only work with a fee-only advisor (not fee based) who is a fiduciary for you.

This is a great example that if you buy insurance products (annuities), or have a broker that sells you A, B or C shares.... you are paying too much.

Read the article. I bet this happens all the time in TV and people don't even know it. 4% annual fees ($26,000 each year) and $45,000 in surrender charges! Run away if your advisor is not a fee-only fiduciary! Get it in writing! Many advisors confuse the issue and say they are a fiduciary for you some of the time and a broker for you some of the time... again run away.

WHEN Elaine and Merlin Toffel, a retired couple in their 70s, needed help with their investments, they went to their local U.S. Bank branch. The tellers knew them by their first names. They were comfortable there.

So when a teller suggested that they meet with the bank’s investment brokers, the Toffels made an appointment. After discussions and an evaluation, the bank sold them variable annuities, in which they invested more than $650,000. The annuities promised to generate lifetime income payments.

“We wanted to make the most amount of interest we could so if we needed it to live on, we could use it,” said Ms. Toffel, 74, of Lindenhurst, Ill.

What she says they didn’t fully understand was that the variable annuities came with a hefty annual charge: about 4 percent of the amount invested. That’s more than $26,000, annually — enough to buy a new Honda sedan every year. What’s more, if they needed to tap the money right away, there would be a 7 percent surrender charge, or more than $45,000.

Michael Walsh, a spokesman for U.S. Bank, said that the investments were appropriate for the Toffels, that fees were disclosed and that the sale was completed after months of consultations. But the Toffels now question whether they were given financial advice that was truly in their best interests. Like many consumers, they say they didn’t realize that their broker wasn’t required to follow the most stringent requirement for financial professionals, known as the fiduciary standard. It amounts to this: providing advice that is always 100 percent in the consumer’s interest.

Many people think that they are getting that kind of advice when they are not, said Arthur Laby, a professor at the Rutgers School of Law and a former assistant general counsel at the Securities and Exchange Commission. “Brokerage customers are, in a certain sense, deceived,” he said. “If brokers continue to call themselves advisers and advertise advisory services, customers believe they are receiving objective advice that is in their best interest. In many cases, however, they are not.”

[rjm1cc]

WHEN Elaine and Merlin Toffel, a retired couple in their 70s, needed help with their investments, they went to their local U.S. Bank branch. The tellers knew them by their first names. They were comfortable there.

Read the rest of the story. (http://www.nytimes.com/2014/10/12/business/mutfund/before-the-advice-check-out-the-adviser.html?_r=4)

Questions? We are here to help. (http://www.financialgroup.com)
This looks like a major problem. Probably only use a fee based ad visor who does not get paid on what you buy but gets paid for hours worked.

[manaboutown]

This is why I refer to stockbrokers as stockbookies.

[tommy steam]

There is no free lunch .

[pbkmaine]

No free lunch, but there is an inexpensive one. Use Vanguard. Its online tools and education are excellent and its telephone advisers first rate. Vanguard's prices are the lowest in the industry. I spent yesterday evaluating Vanguard funds ( it's part of my job) and IMHO no fund family has better performance across the board. And no, I do not get paid to say this. Vanguard is where many investment professionals put their own money. It is where Warren Buffett has stipulated his wife's money will go when he dies.

[rubicon]

The kicker to all of this is that the FED's policies resulted in investment brokers walking away with 75% return while its policies have hurt seniors badly according to Stephen Forbes.

If you are not getting an equal amount thereof then you can ascertain exactly how much leverage investment companies gain by using your money. Its a dirty business but that is the life they have chosen (my take on it)

[tcxr750]

Are saying if you give your money to a broker that's how you'll end up?