Financial Regret: Not knowing is Not an excuse

Financial Regret: Not knowing is Not an excuse

I used to think I was pretty cool. I had a financial advisor. It seemed weird to say because I thought only rich people had them. I would ask him about advice for where to put my money in my 401k. He would direct me where my private Roth IRA allocations were. Eventually, when I rolled my 401k into an IRA he managed that too. When our son was born he created a 529 for him and set up that plan’s allocation. It just made sense.

The problem is “you don’t know what you don’t know.” I didn’t know how much he was screwing me over.

After getting our personal finances, PF, in order (paying off consumer debt and having an emergency fund) we started taking aim at retirement. I started focusing on that part of PF by reading about index funds, a great low-cost option for people. I listened to the Scott Alan Turner Show, and he helped me realize that my advisor was not acting in my best interest. I was in funds that had high fees up to 2.5%. My advisor was not a fiduciary.


The challenge

I was hesitant at first. I had known this guy since high school, 11 years! I decided to test the waters. I asked him about life insurance.

Life insurance isn’t a complicated topic. The average person needs a 20 year term policy for whatever would cover their family in the event of passing. The catch is whole life. This is a despicable product.

Basically, whole life is 10 times more expense per year, runs for the same amount of time BUT at the end if you are still living you get some of that money back. The insurer essentially creates a side savings account with terrible returns. The even bigger slap in the face is if you do die during that 20 years your family only gets the face value of the policy and not that extra you were paying in.

Naturally, he tried to sell me a whole life policy.

I was upset. I didn’t know what to do. I tried to convince him to move my assets from the high cost brokerage to Vanguard. He was ok with this but he started talking about ETFs I wasn’t comfortable with instead of what I wanted which were index funds.

Parting ways

I ended up breaking ties with him and going to Vanguard on my own. I feel much better about my finances. Everything was falling into place.

Just as I was celebrating he gave me two last gifts. I found out that of the two Wisconsin 529s my son could be in, he was in the most expensive one. On top of that he sold my parents two whole life policies.

Ultimately, I can’t blame him, he was doing exactly what his company wanted him to do and makes him the most money. I should have been a better consumer by knowing what was going on with my money instead of blind trust.

I hope this helps wake you up to go take a deep dive into what others are doing on your behalf.

Ignorance is not bliss.

Have you been screwed over by someone you thought was acting in your best interest? Do you have a financial advisor? Are they a fiduciary?

23 thoughts on “Financial Regret: Not knowing is Not an excuse

  1. It makes me sad to hear stories like this. It’s even worse to hear it from the financial advisors perspective because most of the time they are adamant they’ve done everything right. Glad to hear you’re on the right track now 🙂 Those 2.5% fees would have been a real drag.

  2. I can’t see ever turning over our assets to allow someone else to manage them at this point. I was talking with my parents the other day and my mom was telling me about a whole life policy she has had for 10+ years; she said “I keep calling to try and cancel it and cash out the value but the guy gets very aggressive and won’t do it.” There’s a reason these ‘financial adviser’ positions have such high turnover. If you can’t keep selling the junk, they’ll show you the door. Thanks for sharing your story!

    1. I guess it made sense to me. You hire a lawyer to manage your legal stuff, a doctor to make sure that spot isn’t bad, etc.

      She sure she wasn’t talking to a cable company?! That’s crazy! Although I was pressured by someone going door to door to buy a pbs membership… Sales pressure is every where now adays

  3. My father in law had someone that I didn’t think was managing his money correctly. I wouldn’t say that he wasn’t acting with fiduciary responsibilities as much as his goals and my father in law’s weren’t aligned. So we moved on and he’s much happier with the passive index funds that he has 🙂

  4. This is so frustrating but I’m glad to hear you’re on the right path now. I doubt you will ever get burned again.

    I have some hard and fast rules. I will not mix business with friendship or family. Period. No insurance policies from Uncle Joe, no hiring Mr. Groovy’s architect cousin (who would not design a home for his sister the way SHE wanted it because HE is so stubborn!) and no investing with friends or in their businesses.

    And if you invite me to some party where you are going to share a “wonderful opportunity” and I find out it’s Amway or some other MLM company, as Mr. Wonderful on Shark Tank says, “You’re dead to me.”

    1. Definitely makes me rethink some of the other people we do business with.

      When I invite people to parties it usually only involves food, drink, and games (yard, board, or video) 😀

  5. Man that sucks but unfortunately while I was an advisor I saw this story over and over again. So frustrating.

    I am glad you at least starting questioning and looking out for yourself. I write about this extensively and hope that people at least understand what is going on with their money.

    Thanks for sharing your story!

  6. Working in the financial industry, the last thing I would want is a financial advisor. Most advisors simply give generic advice that you’re better off without. A few years of economics in school doesn’t make you a good investor. It makes you mediocre.

    1. Perhaps they should make econ majors take more math. Then maybe they would understand the statistics of trying to beat the market and the amazing returns of being the market.

  7. Working in financial services for 15 years, I bought the Koolaid that my higher ups were selling me and sold it to others (and lived by it) as well. When I finally started doing my own financial education, I got a serious slap in the face. Turns out “Better Living Through Plastic”, among the other lies my former employer told me, only leads for financial ruin. Great post.

  8. We had a brief stint with a financial advisor who was also a friend of the family. Outside of a few nice reports, that any site today could generate for you, were certainly weren’t getting a good ROI.

    As Mrs. Groovy suggests, we’ve learned the hard way that it’s best to not mix business with friends or family.

  9. One time we took a family suggestion to get life insurance from a known agent. The guy was really smooth and sold us a variable life insurance policy. But years later I realized that it was a complete waste of money, and that it would take decades before the break-even point between my term and variable policy ever occurred – if ever. As you said – ignorance is certainly not bliss!

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