Why I Fired My Mom’s Financial Planner

I recently accompanied Grammy to her annual financial planning visit. Her planner is ‘a really lovely guy’ she says;  ‘and he always asked me about my dogs’. My mom trusts this gentleman and his firm because someone she trusts recommended him. Unfortunately, this nice gentleman who is overly concerned with my mom’s pups, is charging my mom an exorbitant amount of money – for incredibly low returns. Since she moved all of her retirement savings to be held by his financial group in 2014, he has charged her more in fees than her money has made in his ‘hand-picked investments’. While the stock market averaged returns of over 10% annually for the past four years, her total return has been has been 1.3%. In addition to charging her 3% on the total value of her investments, he is also charging her commissions to buy and sell different assets, which also have expenses build into them. 

When my mom showed me her most recent statement in preparation for this meeting I couldn’t believe how outrageous these fees were. During the meeting I asked the nice gentleman if he was a fiduciary – to which he replied that he wasn’t but that he always had my mom‘s best interest at heart. Needless to say, the meeting did not go well and I spent the rest of the afternoon helping my mom transfer her retirement funds into Vanguard. But it made me realize that even really smart people like my mom, and has a PhD and has always been careful with her money, can get snowballed. 

Not all financial advisors charge unreasonable fees or give bad advice of course – but when you know a little about how to invest, it makes it a lot easier to catch the ones who don’t have your best interests at heart!

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