When I hear the term bully, I often think of a school kid bully that forces other kids to give up their lunch or makes other kids do silly demeaning things. The last think I think about is when it comes to financial advisors.
Yesterday I posted an article on my site suggesting that not all financial advisors are equal. I know a lot of great financial advisors but every now and then I run into the story of the bad apple that gives other financial advisors a bad name. In this case, he was the financial advisor bully.
Patricia was 75 years old and still very sharp. She attended one of my investment workshops through the University of Alberta and we started to dialogue. Early on, she asked if I would take over her portfolio and manage it for her because her current advisor was really pushy . . . we’ll will call him Buddy! Buddy was from the insurance channel but had a mutual funds license. Buddy was really persistent and wanted Patricia to move all her money into the Manulife Guaranteed Income Plus Product for more security. Naturally, Patricia asked me if this was a good idea.
I told Patricia that I was somewhat familiar with the product but I was far from an expert. I gave her some references to some opinions from independent sources:
- Manulife Income plus hard sell from Micheal James on Money
- More on Manulife Income Plus from Micheal James on Money
- The High Cost of Peace of Mind from Canadian Capitalist
- Manulife’s new Guraranteed minimum withdrawal product by Morningstar
- GMWB Case Study and a suitability nightmare by Tax Resource
- The retirement risk zone with Guaranteed Income products from Retire Happy Blog
I also suggested that the best way to make any decisions is to get some different opinions from other advisors. My suggestion was to shop around for a new advisor. I gave her the name of a couple of advisors and she got a couple of referrals from close friends. After interviewing them she decided to go with one of the advisors I recommended.
When Buddy found out that Patricia was going to move her money, he not only was livid but he started the attack on the new advisor, the company she worked with and the investment recommendations. In the end, Patricia stayed with the bully which really baffles me and saddens me.
Here we have a high pressure salesman who was selling a high fee and high commission products. I could point to a lot of problems with his approach like a lack of a financial plan, retirement plan or estate plan. There was no investment policy statement. He originally put Patricia into back end loaded mutual funds and used this against her if she moved the money to the new advisor even though the transfer of funds was an ‘in kind’ transfer. Yet he was willing to trigger those DSC fees to move her to the Manulife Guaranteed Income Plus.
It’s stories like this that gives the financial industry a bad name. The good good news is not all advisors are like this. I personally know some great advisors. How good is your advisor? It got me thinking that maybe what we need is an advisor rating system that allows the public to post their advisors up on a site and then rate their work, experience and services. There’s rating systems for everything else, why not for financial advisors too?
Even if there was a rating site, I’m not convinced it would help 75 year old Patricia because I’m not sure she would post Mr. Bully up and rate him. But maybe it would help others. Do you know anyone bullied by their advisor? Just remember it’s your money and a relationship with you advisor should be productive, pleasant and constructive.
Does anyone have any stories they want to share about high pressure financial advisors who act like bullies?