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April 21, 2008

Comments

Mark T

The profession of financial adviser, like that of insurance salesman (excuse me: estate planner)is basically a confidence game. A financial adviser has got to convince his clients that they are doing better with than without his advice. Since the world of stocks and bonds is unpredictable, people have to be convinced that when their portfolios take a nose dive, it's a smaller one than that they would have taken without the advice. And when the market goes up, and all advisers are smart, he has got to convince his clients that they are doing better than they would have done without the advice. He's selling himself. That is the product.

Dave told me he placed one of his clients in a long term annuity - those are low-return high commission vehicles. I look at them as instruments for fleecing people, but who knows - maybe in Dave's case, he's not.

Dave Budge

Mark, I seem to recall it was your financial adviser who told you that annuities are bad investments. Are you being scammed or were you being dishonest with me?

Secondly, it's risky business to make assumptions about financial products out of context. I have never, not once, sold a client an annuity de novo. For the handful I have sold (maybe 6 in my entire career), they have all been to make the best of a bad investment in life insurance (from a previous salesperson) using a 1035 exchange. Seems to me you shouldn't think in such absolutes - and maybe you should fire your financial adviser.


Mark T

I depend on our financial adviser about as much as our insurance salesman. He was the one who told me that his clientèle suffer less in down markets - they don't lost as badly as they woudl have without him. It's the perfect deer whistle - the product we have to take on faith.

Anyway, shit - I was hoping I could be sued too. I don't want to be left out. I know my ass from my elbow, know what an annuity is, and know that financial advisers push them becuase they carry a high sales commission. They have an odd way of making what is best for them into what is best for the client. Life insurance people play the same game.

In my case we were dealing with an existing annuity that was sold to a person now deceased, and all we could do was sigh and admit that the guy got away with it.

Life insurance is quite a scam, no? Or are you allowed to say that without libeling someone?

Cece

*fleeces Wulgar*

Dave Budge

Mark, as I said above, it depends. I have used variable life only twice in my career as part of large and complicated estate plans designed in consort with an estate tax lawyer. For the most part I have found life insurance sales people to usually be uneducated and only sales oriented. That's also true for many financial advisers (and wire house stock brokers are just as bad.) But one must not confuse the products with the salespeople.

My business, however, is much different from all of those mentioned above. I am first and foremost a financial analyst. I do my own research, trade primarily in individual stocks and only serve clients with large portfolios. I almost never trade in mutual funds (they are usually a bad investment due to expense ratios and sales loads) and have little respect for the industry in general.

But if you want me to sue you for libel write something that inclines the reader to believe that I rip people off. I'll put your name on the complaint a well.

Mark T

There is a place for life insurance - having an ex-wife, I have a need for it. Over the years I have tried to steer people away from life insurance products, but that's not my line, and I usually get them after the damage is done.

I don't feel like being sued today.

GeeGuy

By attacking all financial planners or advisors or whatever ones you want to talk about, one simply diminishes his or her own credibility.

There are many legitimate reasons to use such a professional, that do not necessarily involve being told what financial investments to make.

Wulfgar

Thin skinned bunch, aren't you? Would you like to hear my lawyer jokes?

I didn't "attack" anything. I simply have an opinion, which seems too much for the delicate Mr. Budge to handle. Yes, there are reasons to have and utilize "asset managers", insurance salesmen, lawyers, politicians and many other unsavory characters. Suggesting that any have to 'like' them, or that dislike is an "attack" does your own credibility no good service.

GeeGuy

Maybe I misspoke, but I think calling one's profession a "low form of labor hustle for profit," could certainly be construed as an attack, as could referring to someone as "unsavory!"

Mark T

GeeGuy - ideally, a financial adviser will be independent of the products he promotes. But as the industry is usually run, agents are paid handsome commissions for steering clients to certain products. That is a conflict of interest, in the same way that a life insurance salesperson cannot make a living off of pure life insurance, and therefore has to steer his clients towards more commission-laden products.

So it's about conflicts of interest structurally built into these professions, and it is fair to speak of them in general and unfavorable terms.

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