Human Financial Advisor Horror Stories

I feel like we may be getting shafted by our financial advisor and unsure what to do next.

Some background info: My brother and I inherited a $1 million that was put in a trust in 2018. Since my brother and I were young and dumb, my mom was appointed as the caretaker of the trust and she gave it to here trusted financial advisor to invest/manage until we wanted it transferred. He manages other family funds as well (529s), including her retirement. So we thought it was fine. This amount basically makes up all of our assets.

Cut to now, I’m in mid 20s, my brother is slightly younger, and it’s time to transfer and split the trust. We go to meet this financial advisor, and we were thinking, hey he probably didn’t preform as well as the market, but there should be some gains here. We both thought we were going to stay with him and maybe just tweak our portfolio. Then the meeting happened, and I feel like we’re getting f*cked. I’m not financially literate though, and so I would really appreciate others perspectives to see if I am being crazy.

Reasons why I think we may be getting reamed:

• Over 6 years our total gains on our $1 million principal is $100,000One of the main reasons it’s that low is because, for the last 6 years, the portfolio has consistently been 70 % CDs and 30 % no cost basis at & t stock my grandparents bought in the 80s.
• He has our money invested this way because he swears the market is going to crash. Yeah, he has been timing the market INCORRECTLY for 6 YEARS. I asked if he would do anything differently at this point and he said no b/c it’s going to crash this year. I asked him what would his investment strategy be if it doesn’t crash this year, and he said it will crash and did not give me a straightforward answer.
• When I asked him what commission he was getting off a portfolio like this, he tried to tell me none since it’s not a fund like ETFs(which he gets 1%). After some persistence he finally told me he gets commission from the bank for every CD he buys/sells. Idk if that’s normal so any insight here is great. My mom’s portfolio that he manages is diverse and is mainly stocks and index funds. She is about to retire, yet he puts her in a riskier portfolio than us. And for us, with longer outlooks, he puts all our funds in cds because he swears the market will crash. If he really thought the market will crash, why didn’t he push for my mom to reinvest more of her funds in cds as well? This really bothers me and maybe there is something I am missing here, as I know little about investing. So please let me know.
• He spent the whole meeting talking about how the market will crash, showing as data and graphs as proof. This data is all public info, and I understand where he could be drawing conclusions like this, but if you’re wrong for 6 years, you’re wrong for 6 years. He went on for 40 minutes before I had to push the conversation towards our actual portfolio. Idk why but this really rubbed me the wrong way.

There is maybe more, but this is what I have for now. I asked him to call me once the first cd is up so we can discuss what to do with it, and he called today. I honestly feel like I should just ask him to transfer the funds to me and I’ll put it in an index fund. But this puts us in a situation where every time a cd is up I’m slowly transferring. Idk what to do.

I understand I was an idiot for not taking agency in this situation earlier. But all I can do at this point is focus on the now. My brother is more financially illiterate than me and my mom gets defensive when I start asking questions. So, what do you make of this? Am I reading this wrong or is he screwing us? If he is screwing us, from a range of incompetent to malicious, how bad?

I had just met with some folks who had recently moved in-state from the East Coast. They were referred to me because they were unhappy with the advisor that they’d been with. The advisor had worked for one of those big insurance companies that also have their own proprietary mutual funds.

The advisor had always made the claim to them that he could use any type of investment that he wanted. What I found funny about that statement was when you actually looked at their account holdings, over 80% of all their investments were with that company’s mutual funds; their own proprietary product.

What was even more a bunch of crap, was the actual funds themselves were horrible.

Their track records were bad, their fees were high, and their performance resembled that of a 16-year-old trying to make it in the NFL; it just wasn’t cutting it. Lesson learned: If you’re using an advisor who works for a big company, be on the lookout if they always recommend their own company’s funds.

One man I knew inherited from his parents their entire and sizable estate, which was put in trust; and there was a trustee named by the last surviving parent to settle the debts of the estate, sell some real property, and pay a set amount of money per month for life to the trust beneficiary.

Zero. ($0). No monthly payments happened. A month, three, six, a year passed. My friend was ultimately told the decedent’s debts exceeded the trust assets, and there were no funds left in the trust. Debts included substantial fees for financial advisors, the trustee, and lien(s?) on property my friend had no way of knowing even existed.

I said, “get a lawyer. Now!”

Nobody would take the case. My faith was totally ruined and I now do not have the belief that it is a good idea to appoint anyone as a financial advisor, least of all anyone working in banks as financial advisors or as trustees. Even with a scrupulous outside and unaffiliated CPA accountant, and regular financial reports by that objective third party CPA, there is no way to understand if a financial advisor or trustee is or will be faithful, because most heirs and beneficiaries don’t even know how to understand even simple financial reports. It seems to me that trusts as a means of conveying property after death just make trustees and lawyers wealthy at the expense of bereaved people who are the rightful heirs.

The sizeable estate my friend was to inherit was somehow mysteriously bled dry. I figure the best thing to do if you are wealthy is to give your money away while you are alive to those you wish would have it after your death. There is too much opportunity for uncheckeable theft, otherwise. Heirs and beneficiaries are not as financially savvy as financial advisors, and are vulnerable prey.

I had lots of commission fuelled bad advice from so called ‘financial advisors’.However one piece of advice really sticks out as the worst and also the turning point in my investment life.

The first part of the scam was my crooked accountant recommending an Executive Pension Plan at around age 34.

A pension planner was wheeled into my office and I was signed up and within a few days was then paying 250 GBP/Mth into this wizard investment that would give me a pension at age 60 totalling a zillion GBP p.a. OK first two rip offs, crooked accountant got a nice lump sum and commission for the next 10 years and pension planner got a lifetime rake off of everything I paid into the plan. In fact for the first two years all of the contributions I was making went into their pockets.

Fast forward a few years and the pension planner is back and well guess what my plan is underperforming so I need to increase the payments to 1,000 GBP per month. Holy shit ! I sign the papers and away we go. Now being curious, I do some investigation about how much commission I was paying. For the next two years half of my extra payment goes straight to the pension guy.

That was 9,000 GBP so I could see where my pension was going, exactly nowhere except into the advisors trouser pocket. Well that was it payments stopped and I realised I was being ripped off on everything, pension, investment plans, insurance the whole nine yards. Roll on 6 months I had my own pension fund and I was the trustee, I also had an insurance broker business with a very important client, me.

I never looked back and educated myself and will never ever in a million years take any shit from so called financial advisors. Look after your own money because if these guys were any good they would not need money from a loser like you. Remember Bernie Madhoff, there are plenty more out there.