Raymond James "financial advisor"

**disneysteve** · 05-19-2021, 02:25 PM

It is criminal that these “advisors” are allowed to do this to people. Like the Wells Fargo guy my cousin was with putting him in 22 different funds. He could have had tens or even hundreds of thousands of dollars more with a simple self-managed 3-fund portfolio.

**LivingAlmostLarge** · 05-19-2021, 02:39 PM

Over the past nine years my parents have paid around $60k in fees. I have a statement showing returns gross and net of fees. I also can see from 2012-2021 they made around 100% returns. In a bull market where a simple 50 VTI / BND 50% portfolio probably would have done better

**TexasHusker** · 05-19-2021, 06:45 PM

I came really close to filing a suit against Merrill lynch for bilking my stepfather by absconding several $ million by selling him annuities, which was precisely the investment vehicle he didn’t need.

I took over management of he and my mother’s estate at that time. We rode the commodities bull market in the late 90s through around 2005, and I then slowly transitioned them to 100% real estate, which has performed very well.

When my stepdad died, we invested $640K in three vacation rentals that pay around $110K gross, $88K net, per year. With no debt and a $1400-ish SS check, mom is in good shape.

No one cares about your nest egg more than you.

**srblanco7** · 05-20-2021, 01:52 AM

Originally posted by TexasHusker View Post

No one cares about your nest egg more than you.

Well said!

**LivingAlmostLarge** · 05-20-2021, 08:52 AM

Originally posted by TexasHusker View Post

I came really close to filing a suit against Merrill lynch for bilking my stepfather by absconding several $ million by selling him annuities, which was precisely the investment vehicle he didn’t need.

I took over management of he and my mother’s estate at that time. We rode the commodities bull market in the late 90s through around 2005, and I then slowly transitioned them to 100% real estate, which has performed very well.

When my stepdad died, we invested $640K in three vacation rentals that pay around $110K gross, $88K net, per year. With no debt and a $1400-ish SS check, mom is in good shape.

No one cares about your nest egg more than you.

So my dad is in an annuities for his IRA as well. There is nothing to be done when you consider this was done in 2003. But that same "FA" was censured and sued by SEC. But my parents still thought it was a good idea to be with the company and a new FA. My mom was like "oh some friends couldn't get in because they didn't have enough assets. I wanted to say well they probably turned out better.

I agree no one cares about your nest egg but you.

**TexasHusker** · 05-20-2021, 09:04 AM

There is almost never a good reason to have an annuity inside an IRA.

**LivingAlmostLarge** · 05-20-2021, 09:09 AM

Originally posted by TexasHusker View Post

There is almost never a good reason to have an annuity inside an IRA.

Um never but it's too late to do anything about it. 18 years well it's too late.

**TexasHusker** · 05-20-2021, 09:21 AM

Originally posted by LivingAlmostLarge View Post

Um never but it's too late to do anything about it. 18 years well it's too late.

Depends. If the annuities have been annuitized, then yes. The soul has been sold.

**james.hendrickson** · 05-20-2021, 11:16 AM

I'd like to clarify for everyone on the board who isn't familiar with this issue - as well as for any lurkers out there.

Per Barron's an annuity is defined as " A form of contract sold by a life insurance companies that guarantees a fixed or variable payment to the annuitant at some future time, usually retirement. In a FIXED ANNUNITY, the amount will ultimately be paid out in regular installments varying only with the payout method elected. In a VIARABLE ANNUITY, the payout is based on a guaranteed number of units, unit values and payments depend on the value of the underlying investments. All capital in the annuity grows tax deferred. Key considerations when buying an annuity are the financial soundness of the insurance company, the returns it has paid in the past, and the level of fees and commissions paid to salespersons".

Source: Downes & Goodman "Dictionary of Finance and Investment Terms" 3rd edition. 1991.

I believe the major objections are 1) the high fee structures and 2) general industry sleaze associated these types of products.

**TexasHusker** · 05-20-2021, 12:08 PM

Originally posted by james.hendrickson View Post

I'd like to clarify for everyone on the board who isn't familiar with this issue - as well as for any lurkers out there.

Per Barron's an annuity is defined as " A form of contract sold by a life insurance companies that guarantees a fixed or variable payment to the annuitant at some future time, usually retirement. In a FIXED ANNUNITY, the amount will ultimately be paid out in regular installments varying only with the payout method elected. In a VIARABLE ANNUITY, the payout is based on a guaranteed number of units, unit values and payments depend on the value of the underlying investments. All capital in the annuity grows tax deferred. Key considerations when buying an annuity are the financial soundness of the insurance company, the returns it has paid in the past, and the level of fees and commissions paid to salespersons".

Source: Downes & Goodman "Dictionary of Finance and Investment Terms" 3rd edition. 1991.

I believe the major objections are 1) the high fee structures and 2) general industry sleaze associated these types of products.

The biggest objection is when you annuitize the annuity. When they start paying you. At that point most or all of your soul has been sold. You’ve traded your chunk of money for payments. The money now belongs to not you, but the insurance company. You are now permanently on their nipple. If they go bankrupt, which can happen, you’re screwed. There is no FDIC for this situation. No withdrawing your money to help a sick grandchild. Or buy a new car or house. That’s because you just get payments now - your principal is gone.

If you have $2 million and are terrified to try to find income producing investments, then you trade your $2 million for payments. And that’s always the sales pitch. It’s almost always an awful proposition. Not quite in the realm of time shares, but not too far off.

**TexasHusker** · 05-20-2021, 12:13 PM

“All but simple immediate fixed annuities should be outlawed because buyers almost always misunderstand what they’re buying. It’s one step from fraud.”

https://www.usatoday.com/story/money...us/3447557002/

**corn18** · 05-20-2021, 12:39 PM

Originally posted by TexasHusker View Post

“All but simple immediate fixed annuities should be outlawed because buyers almost always misunderstand what they’re buying. It’s one step from fraud.”

https://www.usatoday.com/story/money...us/3447557002/

Absolutely! The only annuity I would ever consider would be a SPIA. All the rest are ripoffs. Period. Dot. End of story. And even a SPIA right now makes no sense for anyone. They are paying 0.8% APR. Although they will tell you they are paying 6%. Another deception because that includes your money that they are giving back to you. And good luck finding one indexed to inflation. Inflation will destroy the value of an annuity over a lifetime.

But I can see why people consider them. I sure do enjoy getting a $4,000 deposit in my checking account each month from my pension. I can see why people would annuatize a portion of their savings to establish a floor of income. That's a mental/emotional strategy not completely without merit.

**LivingAlmostLarge** · 05-20-2021, 01:41 PM

Originally posted by corn18 View Post

Absolutely! The only annuity I would ever consider would be a SPIA. All the rest are ripoffs. Period. Dot. End of story. And even a SPIA right now makes no sense for anyone. They are paying 0.8% APR. Although they will tell you they are paying 6%. Another deception because that includes your money that they are giving back to you. And good luck finding one indexed to inflation. Inflation will destroy the value of an annuity over a lifetime.

But I can see why people consider them. I sure do enjoy getting a $4,000 deposit in my checking account each month from my pension. I can see why people would annuatize a portion of their savings to establish a floor of income. That's a mental/emotional strategy not completely without merit.

this i totally get. It's very fortunate my parents had SS and pension. The pension is the saving grace of not having needed to save much. If they did they'd be broke. No way would they have invested or saved enough. But the pension made a world of difference.

**scfr** · 05-20-2021, 05:09 PM

Can you put the advisor on notice that you are keeping an eye on things?
And although it does appear that the financial advisor did not act entirely in their best interest, and I wonder how they sleep at night, I want to play devil's advocate a little.

Do your parents think the fees were money well spent? Comparison: According to a Groupon poll, the average American woman spends almost $3800 per year (so about the same your parents spend each on their FA fees) on their appearance. I wouldn't dream of spending even close to that much. When I need my hair cut, I grab the Ginghers and my husband and we head outside to the porch. But I have friends who love fancy hair and makeup and all that jazz, and who am I to judge?

Do your parents have a non-financial reason for going with that advisor? Social or religious group contact, etc?

Also, a Silver Lining Alert: It appears that your parents have been diligent savers. Be grateful for that. I'm a bit jealous, frankly.

Raymond James "financial advisor"