need help with specifics RE: dumping financial advisor

[Snydley]

Hello-
in 2011, My husband and I purchased our first home and decided to "simply" hire a financial advisor because we did not want to think about how to invest our money.

Long story short- our advisor led us to the purchase of two whole life policies where we invested 21K and never suggested putting one dime in a ROTH IRA. We're ready to take the surrender values of our policies (a whopping $6,239 combined) and move on on our own.

My first question is: What do I need to do to ensure my planner rescinds complete control over our other accounts? We also have two IRAs (and my husband's 401K? that he is controlling. Do I need to meet with him?

I just finished reading Suzie Orman's The Money Class and you will likely find me posting on this site again. I'm very excited to be here and I'm feeling empowered about taking control of my family's financial future.

thanks in advance!
Jen

[Wino]

Start rant.

Always remember that financial advisers and stock brokers have no fiduciary duty to work in your interests instead of their own. My wife used a CFP as well, and was also sold a whole life policy. This was almost immediately after we go married, and before we started looking seriously in to finances.

Whole life is a terrible investment ONLY if you don't stick with it. After about 15 to 20 years, it is not a bad investment. Note that it doesn't get any better than "not a bad investment." It will never be a "good investment," except for the CFP who sold it to you and is laughing all the way to the bank.

The vast majority of CFP's are scum, and only a hair's breadth above Life Insurance salesmen... which many of them are as well. They are CFP's only because they're too lazy to become lawyers or politicians where they can steal from lots of folks instead of stealing from one at a time.

End rant.

So, how long have you had the policy and how old are you? What are your payments and how much would equivalent amounts in term life cost? Do you have the discipline to save the difference rather than spending it? From the answers to these questions, we can help you decide what you should do about the whole life policy. It is not always as cut and dried as Dave Ramsey likes to indicate, but he is correct that you shouldn't buy whole life. Once you have already bought it, then you have to examine the details before you dump it.

[MonkeyMama]

I am with wino, mostly. I am a financial professional, and the #1 rule is to never give anyone control over your financial accounts. (Unless maybe you are incapacitated and have no choice). But, beyond the whole sales/commission issue, this is how most financial fraud takes place. For that, I would remove your money ASAP. I have no idea how you would do so. I would start by verbally telling your financial advisor your wishes, and following up in writing. Just as I would generally advise for transacting any business of this sort. You would also want to inform all involved parties, in writing. If it were me, if at all possible I would transfer everything to new accounts or new account numbers so that financial planner did not have any access whatsoever. New logins/passwords and yadda yadda.

Good Luck. You have learned a hard lesson that many people never learn or don't learn until they are much much older. (Or until their money is stolen).

[Snydley]

Thanks Wino and MonkeyMama for your replies.

"So, how long have you had the policy and how old are you? What are your payments and how much would equivalent amounts in term life cost? Do you have the discipline to save the difference rather than spending it?"

DH is 44, I am 38. His policy was $1,000/month, mine was $500. We've had the policies for 14 months. Term life would obviously be much much cheaper; we were using this as an investment as well. Yes we absolutely have the discipline to save the difference. I'm going to post our entire story in another thread (where I'll be asking for advice on what to do next with our money).

" I have no idea how you would do so. I would start by verbally telling your financial advisor your wishes, and following up in writing. Just as I would generally advise for transacting any business of this sort. You would also want to inform all involved parties, in writing. If it were me, if at all possible I would transfer everything to new accounts or new account numbers so that financial planner did not have any access whatsoever. New logins/passwords and yadda yadda.

Good Luck. You have learned a hard lesson that many people never learn or don't learn until they are much much older. (Or until their money is stolen)."

I will follow your advice and yes at this stage I feel mostly relief I caught this before more time passed and we were really in trouble.

-Jen

[Like2Plan]

Snydley,

It would be hard to comment on how to extract yourself from this situation as cleanly as possible without knowing what type of agreement into which you entered. Did you sign a contract? Did you give this person power of attorney to act on your behalf? Did any of the documents that you signed have language which covers cancellations?

[Snydley]

Liketoplan,
We never signed a contract of any kind with him, only signed the documents for our life policies plus two IRAs.

I now plan to meet with him this week and tell him we are ending our relationship. After our meeting I'll contact the IRA companies and tell them we are no longer working with our agent and set up direct contact with them.

Jen

[Gina23]

Congrats!

Out of college I started working for the home office of a large financial investment firm, and let me tell you that most of them are simply salesmen. There are good ones that exist, but a little bit of learning and knowledge goes a long way which will enable you not to have to pay dearly for sound advice. Take your money to an online low-cost brokerage house and don't look back. It will be one of the best financial decisions you've made in your life.

~G

[Snydley]

Thanks everyone-
I spoke with my financial advisor yesterday. I told him that since every other source I checked with (S. Orman, D Ramsey, Money Magazine, every single person on every money/saving forum on the internet) feels using life insurance as an investment tool is a terrible idea, I cannot put one more dime into those policies. I told him "there's everyone else's opinion, and then there's yours." This, coupled with the fact that he never suggested we set up any ROTH IRAs even though we qualified, mean that we must part ways.

He was very nice and actually made it a point to tell me he has whole life policies on his whole family (two kids, wife, and him). Maybe he's just stupid? Or lying? Either way, doesn't matter, I'm free.

I'm in the process of removing his authority over our accounts; it seems pretty straightforward.

-Jen