Are fiduciary's actually trustworthy?

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k8n
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Are fiduciary's actually trustworthy?

Post by k8n »

The other day I was contacted on LinkedIn by a guy who was offering to improve my investment strategy. We setup a call, and during that call he told me that he was a fiduciary, meaning that he had to act in my best interest and couldn't suggest anything that would be bad for me. He made many different suggestions, but one of the suggestions he made was to invest in whole life insurance. It's a complicated contract, and we had several followup calls where I asked for a better explanation, but I still don't understand how it actually works. Can I just trust that this guy will actually do what's right for me, even if I don't understand why, since he's a fiduciary? He didn't charge me at all, and I presume he makes money by selling his company's (Northwestern Mutual) life insurances to people, which seems like a conflict of interest, so I'm a bit skeptical. If this guy isn't trustworthy, are there ways to get trustworthy advice?
minimalistmarc
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Re: Are fiduciary's actually trustworthy?

Post by minimalistmarc »

There are some trustworthy advisors but this guy clearly ain’t one of them. Do not have any further contact.
pedalman701
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Re: Are fiduciary's actually trustworthy?

Post by pedalman701 »

I would treat LinkedIn the same as I would Facebook, when it comes to investment "advice".
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Re: Are fiduciary's actually trustworthy?

Post by JoeRetire »

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arcticpineapplecorp.
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Re: Are fiduciary's actually trustworthy?

Post by arcticpineapplecorp. »

if he's pushing whole life he's not a fiduciary, he's an insurance salesman. The insurance industry is not subject to any such fiduciary standard.

I'd consider reporting him to your state's insurance commission considering he's falsely promoting himself as something he's not (a fiduciary).

problem is it's your word against his and you know how things go...get in writing that he's a fiduciary.

you know what will happen, he won't give you that in writing.

tell him to pound sand.

and tell him term insurance is better than whole life, but no he can't sell you one of those policies either.

so in summation, to answer your question: Are fiduciaries actually trustworthy?

Yes they are, but this guy's neither a fiduciary nor trustworthy.
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retiredjg
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Re: Are fiduciary's actually trustworthy?

Post by retiredjg »

I don't understand this fully, but an advisor can be a fiduciary in one role and not a fiduciary in another roll.

As for insurance sales, I'm not at all sure there is a fiduciary standard for selling insurance.

Whole life is not usually considered the best type of insurance to buy. I think I'd just say no.
Northern Flicker
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Re: Are fiduciary's actually trustworthy?

Post by Northern Flicker »

Whole life combines an insurance product with an investment product. This results in a product so opaque that it is hard to know what is going on. I suspect that Mr. Fiduciary didn't inform you that he would skim a sizable commission off of the sale, 3-5% most likely.

I would run the other way from this guy.
student
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Re: Are fiduciary's actually trustworthy?

Post by student »

k8n wrote: Fri Jul 23, 2021 4:20 pm He made many different suggestions, but one of the suggestions he made was to invest in whole life insurance.
That's a signal that he doesn't have your best interest.
senex
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Re: Are fiduciary's actually trustworthy?

Post by senex »

OP, as you see with the early replies, insurance salesmen are unpopular around here. Most life insurance (besides term) is expensive, opaque, and pays huge commissions to the salesman.

A professional title or certification (even if legit/valid) does not guarantee good advice.
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Doom&Gloom
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Re: Are fiduciary's actually trustworthy?

Post by Doom&Gloom »

student wrote: Fri Jul 23, 2021 4:52 pm
k8n wrote: Fri Jul 23, 2021 4:20 pm He made many different suggestions, but one of the suggestions he made was to invest in whole life insurance.
That's a signal that he doesn't have your best interest.
and we had several followup calls where I asked for a better explanation, but I still don't understand how it actually works.

And that was another.
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k8n
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Re: Are fiduciary's actually trustworthy?

Post by k8n »

Thanks for all the information. I just looked him up on adviser info. [personally identifiable link removed by admin LadyGeek]
It seems he is indeed an Investment Adviser, which seems to imply that he is indeed a fiduciary. https://en.wikipedia.org/wiki/Financial ... y_standard
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Re: Are fiduciary's actually trustworthy?

Post by GuyInFL »

k8n wrote: Fri Jul 23, 2021 4:20 pm The other day I was contacted on LinkedIn by a guy who was offering to improve my investment strategy.
I'd be hesitant to take any unsolicited financial advice, especially if I didn't understand it.
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Re: Are fiduciary's actually trustworthy?

Post by hnd »

just an FYI i believe all lawyers are "Fiduciaries" so take that for what its worth.
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arcticpineapplecorp.
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Re: Are fiduciary's actually trustworthy?

Post by arcticpineapplecorp. »

hnd wrote: Fri Jul 23, 2021 5:32 pm just an FYI i believe all lawyers are "Fiduciaries" so take that for what its worth.
so fiduciary tells you nothing about competence.
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retired@50
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Re: Are fiduciary's actually trustworthy?

Post by retired@50 »

k8n wrote: Fri Jul 23, 2021 5:28 pm Thanks for all the information. I just looked him up on adviser info. [personally identifiable link removed by admin LadyGeek]
It seems he is indeed an Investment Adviser, which seems to imply that he is indeed a fiduciary. https://en.wikipedia.org/wiki/Financial ... y_standard
The adviser info page also refers to him as a broker. So, I'm still not certain he's a fiduciary.

In any event, let's approach this from a different angle.
He wants to sell you life insurance.
Do you need any?
Are you even a decent candidate for life insurance?
Do you already own a term life policy?
Do you have a wife and children or other dependents who would face a financial hardship if you were to die unexpectedly?

Post back with answers to these questions.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
exodusNH
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Re: Are fiduciary's actually trustworthy?

Post by exodusNH »

k8n wrote: Fri Jul 23, 2021 4:20 pm The other day I was contacted on LinkedIn by a guy who was offering to improve my investment strategy. We setup a call, and during that call he told me that he was a fiduciary, meaning that he had to act in my best interest and couldn't suggest anything that would be bad for me. He made many different suggestions, but one of the suggestions he made was to invest in whole life insurance. It's a complicated contract, and we had several followup calls where I asked for a better explanation, but I still don't understand how it actually works. Can I just trust that this guy will actually do what's right for me, even if I don't understand why, since he's a fiduciary? He didn't charge me at all, and I presume he makes money by selling his company's (Northwestern Mutual) life insurances to people, which seems like a conflict of interest, so I'm a bit skeptical. If this guy isn't trustworthy, are there ways to get trustworthy advice?
Do not buy whole life insurance. Search "whole life" on this forum.

Your "investment" will earn 1-3% per year. If you cash it in, the gains are taxable as income, not capital gains. The sales person will get a commission of about the first year's premium and your "investment" will have a zero dollar value for at least the first year.

Unless you plan on dying right after signing the contract, it's a terrible deal.
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arcticpineapplecorp.
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Re: Are fiduciary's actually trustworthy?

Post by arcticpineapplecorp. »

k8n wrote: Fri Jul 23, 2021 5:28 pm Thanks for all the information. I just looked him up on adviser info. [personally identifiable link removed by admin LadyGeek]
It seems he is indeed an Investment Adviser, which seems to imply that he is indeed a fiduciary. https://en.wikipedia.org/wiki/Financial ... y_standard
don't assume anything. the first red flag is this guy is trying to sell you whole life instead of cheaper term life. That's MOST Definitely NOT in your best interest. It may be merely suitable but very few people benefit from whole life insurance.

Could he be Dually Registered:
In industry parlance, they are known either as dually registered or hybrid advisors, depending on whom you ask.

Regardless of what you call them, their business model is this: They are affiliated with a broker-dealer for commission-based securities trades while meeting separate standards for the fee-based, advice side of their business through an independent registered investment advisor.

source: https://www.cnbc.com/2015/03/16/booming ... model.html
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Re: Are fiduciary's actually trustworthy?

Post by z3r0c00l »

If you can't trust the chairman of the NASDAQ, why would you trust a random person on the Internet?
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hnd
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Re: Are fiduciary's actually trustworthy?

Post by hnd »

arcticpineapplecorp. wrote: Fri Jul 23, 2021 5:33 pm
hnd wrote: Fri Jul 23, 2021 5:32 pm just an FYI i believe all lawyers are "Fiduciaries" so take that for what its worth.
so fiduciary tells you nothing about competence.
that was what i was implying.

someone who files to be a fiduciary and then does not act in that way is very difficult to prove. because as long as they adhere to their definition of "whats the best interest of my client" they are likely ok. even if to most everyone else, its not.

basically being a fiduciary is a watered down phrase that should mean something to someone but likely doesn't to many.
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k8n
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Re: Are fiduciary's actually trustworthy?

Post by k8n »

retired@50 wrote: Fri Jul 23, 2021 5:34 pm In any event, let's approach this from a different angle.
He wants to sell you life insurance.
Do you need any?
Are you even a decent candidate for life insurance?
Do you already own a term life policy?
Do you have a wife and children or other dependents who would face a financial hardship if you were to die unexpectedly?

Post back with answers to these questions.

Regards,
A bit of background on me. When I talked to this guy, I was working at Google, making a pretty decent salary. I'm pretty frugal, so I do expect to die with a bit of money, and I want to basically just pass my money down to my kids (I have 3 kids, aged 1,2,4) in the most efficient manner possible.

He suggested that whole life insurance isn't really about protecting you in the case of death, but that it is a good way to get around inheritance taxes, etc. I asked him many times to elaborate these claims, but I didn't really get the info I needed to make an informed decision.
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Re: Are fiduciary's actually trustworthy?

Post by Lee_WSP »

k8n wrote: Fri Jul 23, 2021 6:22 pm
retired@50 wrote: Fri Jul 23, 2021 5:34 pm In any event, let's approach this from a different angle.
He wants to sell you life insurance.
Do you need any?
Are you even a decent candidate for life insurance?
Do you already own a term life policy?
Do you have a wife and children or other dependents who would face a financial hardship if you were to die unexpectedly?

Post back with answers to these questions.

Regards,
A bit of background on me. When I talked to this guy, I was working at Google, making a pretty decent salary. I'm pretty frugal, so I do expect to die with a bit of money, and I want to basically just pass my money down to my kids (I have 3 kids, aged 1,2,4) in the most efficient manner possible.

He suggested that whole life insurance isn't really about protecting you in the case of death, but that it is a good way to get around inheritance taxes, etc. I asked him many times to elaborate these claims, but I didn't really get the info I needed to make an informed decision.
Leaving aside the above digs on lawyers as a whole, any particular reason you don’t want to pose these questions to an actual expert?
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retired@50
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Re: Are fiduciary's actually trustworthy?

Post by retired@50 »

k8n wrote: Fri Jul 23, 2021 6:22 pm
retired@50 wrote: Fri Jul 23, 2021 5:34 pm In any event, let's approach this from a different angle.
He wants to sell you life insurance.
Do you need any?
Are you even a decent candidate for life insurance?
Do you already own a term life policy?
Do you have a wife and children or other dependents who would face a financial hardship if you were to die unexpectedly?

Post back with answers to these questions.

Regards,
A bit of background on me. When I talked to this guy, I was working at Google, making a pretty decent salary. I'm pretty frugal, so I do expect to die with a bit of money, and I want to basically just pass my money down to my kids (I have 3 kids, aged 1,2,4) in the most efficient manner possible.

He suggested that whole life insurance isn't really about protecting you in the case of death, but that it is a good way to get around inheritance taxes, etc. I asked him many times to elaborate these claims, but I didn't really get the info I needed to make an informed decision.
So, from what you've described it sounds like a way around potential estate taxes. However, I'd imagine there are a variety of ways to do this. Perhaps speaking to an estate attorney could cover the same ground. Maybe using one or more trusts for the kids. Anyone who works at NML will always see insurance as the solution to every "problem".

If I were you I'd make sure my term life insurance policy is appropriately sized and if you're under 8 figures net worth, then the advanced tax schemes may not even be worth worrying about as the current exemption is over $20 million for a married couple.

I just finished reading a book by Ed Slott that touches on some of these issues so you could also consider contacting him for assistance. He's got some creative ideas for tax planning. Link: https://www.irahelp.com/

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Re: Are fiduciary's actually trustworthy?

Post by heyyou »

There is a fiduciary in my community who wanted to put my assets with a brokerage that charges a percentage based AUM (assets under management) fee. My current brokerage charges a flat fee that is even less than VG's percentage based fee, on my tightwad, blue collar asset amount. Consider how easy it would be for me to just add the fiduciary to my current account, but then he would not ever be rewarded by my broker.

On the trustworthiness topic, yes, the fiduciary will not directly steal from your account, but that does not prevent him from steering you to a higher cost/higher commission investment business where his buddy works. Note the difference between the legal and the philosophical definition of "fiduciary."
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Re: Are fiduciary's actually trustworthy?

Post by Jack FFR1846 »

I don't care if he's a fiduciary. I don't care if he's the Pope. He's a scam artist and a clown. Northwestern? Come on. Who doesn't know these crooks?
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Re: Are fiduciary's actually trustworthy?

Post by laughlinlvr »

The plural of fiduciary is fiduciaries.
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Re: Are fiduciary's actually trustworthy?

Post by Wiggums »

Whole life insurance is not the best way to pass inheritance to your children. Depending on the size of your estate, you should consider a comprehensive estate plan before you make a decisions.

In my opinion, insurance and investment in one product is a horrible idea.
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Re: Are fiduciary's actually trustworthy?

Post by shess »

A surprising thing to many is that someone who presents themselves as an "investment advisor" often isn't actually very good at providing investment advice. Just like the average real-estate agent isn't all that expert in real-estate transactions. In both cases, it's because the average person in such a position got there because they are a good salesperson, not because they are talented in the field itself. In fact, AFAICT, if someone really is talented in the field itself, they can probably do better in other positions, and not have to deal with trying to sell things to people.

Which is not to say that it's impossible for a person to be a talented investment advisor AND work as such. It happens! Just that those amazing people are exceptional, nowhere near the averages, and it's hard to find them amongst the chaff (they certainly aren't cold-calling you on LinkedIn).

Anyhow, in many cases what ends up happening is that the candidate who isn't really very good at things like math and statistics and logical reasoning IS good at sales, and then whoever they work for puts them into a series of training sessions which describe how truly awesome and ground-breaking the stuff they are selling is. They aren't out there comparing their company's offerings to other alternatives and evaluating them objectively, they're being provided motivated "research" materials, which they assume are correct, and off they go to bring the good word to their prospective customers. Having the salespeople actually believe they are doing the right thing by customers is a very important part of the entire charade!

Anyhow, if I wanted an advisor, I'd want one with a fiduciary duty. It's not perfect, but at least it gives you the ability to sue them and take all their assets if they actively and knowingly cheat you (which is why most financial advisors lobby against requiring fiduciary duty). Of course, that only comes up if they screwed you and you have enough left over to sue them and they can't weasel out of the suit because people (including judges and juries) assume whole-life insurance is a really good investment option.
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Re: Are fiduciary's actually trustworthy?

Post by BitTooAggressive »

k8n wrote: Fri Jul 23, 2021 4:20 pm The other day I was contacted on LinkedIn by a guy who was offering to improve my investment strategy. We setup a call, and during that call he told me that he was a fiduciary, meaning that he had to act in my best interest and couldn't suggest anything that would be bad for me. He made many different suggestions, but one of the suggestions he made was to invest in whole life insurance. It's a complicated contract, and we had several followup calls where I asked for a better explanation, but I still don't understand how it actually works. Can I just trust that this guy will actually do what's right for me, even if I don't understand why, since he's a fiduciary? He didn't charge me at all, and I presume he makes money by selling his company's (Northwestern Mutual) life insurances to people, which seems like a conflict of interest, so I'm a bit skeptical. If this guy isn't trustworthy, are there ways to get trustworthy advice?
Well I am sure he will get a big commission if you do it. So if he gets 4 percent up front or more how are you making money?

Don’t have any dealings with that guy.
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Re: Are fiduciary's actually trustworthy?

Post by Nate79 »

k8n wrote: Fri Jul 23, 2021 6:22 pm
retired@50 wrote: Fri Jul 23, 2021 5:34 pm In any event, let's approach this from a different angle.
He wants to sell you life insurance.
Do you need any?
Are you even a decent candidate for life insurance?
Do you already own a term life policy?
Do you have a wife and children or other dependents who would face a financial hardship if you were to die unexpectedly?

Post back with answers to these questions.

Regards,
A bit of background on me. When I talked to this guy, I was working at Google, making a pretty decent salary. I'm pretty frugal, so I do expect to die with a bit of money, and I want to basically just pass my money down to my kids (I have 3 kids, aged 1,2,4) in the most efficient manner possible.

He suggested that whole life insurance isn't really about protecting you in the case of death, but that it is a good way to get around inheritance taxes, etc. I asked him many times to elaborate these claims, but I didn't really get the info I needed to make an informed decision.
He was lying. Or stupid. Probably both.
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Re: Are fiduciary's actually trustworthy?

Post by Doctor Rhythm »

k8n wrote: Fri Jul 23, 2021 4:20 pm He didn't charge me at all, and I presume he makes money by selling his company's (Northwestern Mutual) life insurances to people, which seems like a conflict of interest, so I'm a bit skeptical.
I think this is the red flag that should have been noted at the start. A fiduciary should be charging you for their advice - it’s the quid pro quo that buys their loyalty and commitment to your interest (except when it doesn’t). If you’re not paying them, then someone else is, and that’s where their loyalty will lie.
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Re: Are fiduciary's actually trustworthy?

Post by exodusNH »

Mobile duplicate
Last edited by exodusNH on Sat Jul 24, 2021 1:41 am, edited 1 time in total.
exodusNH
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Re: Are fiduciary's actually trustworthy?

Post by exodusNH »

k8n wrote: Fri Jul 23, 2021 4:20 pm The other day I was contacted on LinkedIn by a guy who was offering to improve my investment strategy. We setup a call, and during that call he told me that he was a fiduciary, meaning that he had to act in my best interest and couldn't suggest anything that would be bad for me. He made many different suggestions, but one of the suggestions he made was to invest in whole life insurance. It's a complicated contract, and we had several followup calls where I asked for a better explanation, but I still don't understand how it actually works. Can I just trust that this guy will actually do what's right for me, even if I don't understand why, since he's a fiduciary? He didn't charge me at all, and I presume he makes money by selling his company's (Northwestern Mutual) life insurances to people, which seems like a conflict of interest, so I'm a bit skeptical. If this guy isn't trustworthy, are there ways to get trustworthy advice?
I missed the Northwest Mutual on the first read.

I have one of their whole life plans.

I have been paying $3,132 per year for 17 years. The current cash value of the plan is about $64500, which is about $11,000 more than I've paid in.

If you run the numbers on an 80/20 allocation, it comes out to about $180,000. So, this whole life "investment" has resulted in me being $120,000 poorer than I would have otherwise been.

I have not yet surrendered this plan, because after 17 years, it is returning about what a bond fund does. So I count the cash value as part of my bond allocation, and invest new money into my 401k, IRA, and taxable with that math in mind.

But I'm still $120K less wealthy for it.
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Re: Are fiduciary's actually trustworthy?

Post by Northern Flicker »

If you need or needed life insurance, you are not $120K poorer. Had you bought term life insurance, some of that contribution would have been directed to the premiums for it. Not all of it would have gone into an investment portfolio.

But it is true that you would have been better off with standalone life insurance and a separate investment.
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Re: Are fiduciary's actually trustworthy?

Post by carolinaman »

minimalistmarc wrote: Fri Jul 23, 2021 4:21 pm There are some trustworthy advisors but this guy clearly ain’t one of them. Do not have any further contact.
+1. I agree. A fundamental investment rule is never invest in anything you do not understand. There are a wide variety of people calling themselves fiduciary's. IMO, very few are really trustworthy.

In your quest for a trustworthy financial advisor, you need to understand how they are compensated. An hourly rate is best. Most will be compensated by what products they sell or by AUM although they may tell you something different. Also, get at least 3 references and check them out. You need to thoroughly vet advisors and monitor their activity to be sure they are doing a good job. One fundamental rule for investing is to have a benchmark to track your performance. Depending upon you AA, this could be a blend of difference market indices like the S&P 500, Russell 3000, and bond indices. You should have a straightforward benchmark whether you do your own investing or have an advisor do it for you.

A better approach is to educate yourself on investing and DIY. It is not hard if you choose a simple portfolio of low cost index funds. The reality is you need a certain understanding of investing even to have an advisor invest for you. Otherwise, you are vulnerable to be taken advantage of.

This is a great forum to learn about investing and many experienced investors are willing to help you. I recommend the book "How To Make Your Money Last" by Jane Bryant Quinn as a starting point. She has a great writing style and explains things in simple terms. Too many investing books are a long read for a short message. Hers is very informative and worth the read.

Best wishes!
Rex66
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Re: Are fiduciary's actually trustworthy?

Post by Rex66 »

As mentioned above people are legally allowed to call themselves a fiduciary and when it comes to recommending insurance products do so without living up to the fiduciary standards.


You’ll find that if you lodge a complaint, that FINRA who whomever will respond with the agent was wearing his insurance hat at that moment which doesn’t have a fiduciary standard
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Re: Are fiduciary's actually trustworthy?

Post by Broken Man 1999 »

Think about it, a title doesn't make a person anything so far as trustworthiness. They might be held to a higher standard, but that doesn't mean they will adhere to that expected standard.

-A law officer can be dirty,
-A judge can be crooked.
-A bank president can be a thief.
-A minister can be a real sinner.

I would say there is just as great a chance of a fiduciary not being trustworthy as other people sporting titles that SHOULD inspire confidence.

After all, fiduciaries are human, which means they are imperfect, flawed. Some a little, some a lot.

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Re: Are fiduciary's actually trustworthy?

Post by neurosphere »

k8n wrote: Fri Jul 23, 2021 4:20 pm We setup a call, and during that call he told me that he was a fiduciary, meaning that he had to act in my best interest and couldn't suggest anything that would be bad for me.
The highlighted words do not accurately reflect the laws regarding fiduciaries. It's a shame, because the public completely misunderstands what being a fiduciary means, and the financial services industry is more than happy to maintain and encourage that misunderstanding.
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Re: Are fiduciary's actually trustworthy?

Post by bighatnohorse »

No, don't trust the guy.
Firstly, "prospecting" for new clients on Linked In would suggest that he's a newbie and may not have experienced product knowledge.
Life insurance / annuities can be very complicated products. Given time and study you can understand a contract.
But do you have the time and inclination to understand it? And you should understand it well enough to teach it. And that's a big hill.
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Re: Are fiduciary's actually trustworthy?

Post by radR investing »

A true fiduciary will hold both a Series 7 and Series 66 license, and will likely carry a certification (like CFP). The Series 66 is the license that allows them to provide investment advice, and to charge for it.

The challenge comes in that those who are governed by FINRA can ONLY use the title Financial Advisor. However, those who are selling products (insurance included) are not held to those standards - but they can call themselves anything they want!. So, two people say they are a financial advisor, one can be a product salesperson and say/do almost anything; the other is governed by FINRA and MUST act in your best interest...and MUST disclose both the pros and cons of any investment. If you act separate from their advice they have you sign an acknowledgement of you doing so, etc.
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Re: Are fiduciary's actually trustworthy?

Post by Rex66 »

Being governed by finra does not stop pushing WL. I know and I know the results if you complain to finra. Finra will say that during that time period the person was operating under their insurance hat and thus suitability and not fiduciary rules apply and that they don’t govern insurance advice/products.
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zincTwo
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Re: Are fiduciary's actually trustworthy?

Post by zincTwo »

Invite any potential advisor to fill out this form, and SIGN it. If they are not willing to disclose & sign; run away. They may not be the person you want.

Advisor Interview Form

source: Vestory & TalkingRealMoney Podcast
exodusNH
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Joined: Wed Jan 06, 2021 7:21 pm

Re: Are fiduciary's actually trustworthy?

Post by exodusNH »

Northern Flicker wrote: Sat Jul 24, 2021 3:11 am If you need or needed life insurance, you are not $120K poorer. Had you bought term life insurance, some of that contribution would have been directed to the premiums for it. Not all of it would have gone into an investment portfolio.

But it is true that you would have been better off with standalone life insurance and a separate investment.
I didn't. I had no dependents. It was purely the "investment" and "tax avoidance" pitch. Over the same period, term insurance would have been maybe $10-20k for 5-10x as much life insurance? Let's call it $20k. Still down $100k from what it could have been.

I don't perseverate on this -- I am putting it here to show real numbers. It's much easier to demonstrate real figures just say "it's a bad idea." The sales people know how to counter typical objections. I'm hoping showing the real numbers help.

As I said, the $64k just gets lumped into by bond allocation. For as much as this is a crappy product, I don't fear NWM going out of business in my lifetime.
FoolStreet
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Re: Are fiduciary's actually trustworthy?

Post by FoolStreet »

k8n wrote: Fri Jul 23, 2021 6:22 pm
retired@50 wrote: Fri Jul 23, 2021 5:34 pm In any event, let's approach this from a different angle.
He wants to sell you life insurance.
Do you need any?
Are you even a decent candidate for life insurance?
Do you already own a term life policy?
Do you have a wife and children or other dependents who would face a financial hardship if you were to die unexpectedly?

Post back with answers to these questions.

Regards,
A bit of background on me. When I talked to this guy, I was working at Google, making a pretty decent salary. I'm pretty frugal, so I do expect to die with a bit of money, and I want to basically just pass my money down to my kids (I have 3 kids, aged 1,2,4) in the most efficient manner possible.

He suggested that whole life insurance isn't really about protecting you in the case of death, but that it is a good way to get around inheritance taxes, etc. I asked him many times to elaborate these claims, but I didn't really get the info I needed to make an informed decision.
I guess just tell everyone you know not to use this person.
shess
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Re: Are fiduciary's actually trustworthy?

Post by shess »

Rex66 wrote: Sat Jul 24, 2021 7:31 am As mentioned above people are legally allowed to call themselves a fiduciary and when it comes to recommending insurance products do so without living up to the fiduciary standards.


You’ll find that if you lodge a complaint, that FINRA who whomever will respond with the agent was wearing his insurance hat at that moment which doesn’t have a fiduciary standard
I would certainly ask why he was able to represent himself as a fiduciary if he was at the time not working as a fiduciary.
Fractalleaf
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Re: Are fiduciary's actually trustworthy?

Post by Fractalleaf »

shess wrote: Fri Jul 23, 2021 9:11 pm A surprising thing to many is that someone who presents themselves as an "investment advisor" often isn't actually very good at providing investment advice. Just like the average real-estate agent isn't all that expert in real-estate transactions. In both cases, it's because the average person in such a position got there because they are a good salesperson, not because they are talented in the field itself. In fact, AFAICT, if someone really is talented in the field itself, they can probably do better in other positions, and not have to deal with trying to sell things to people.

Which is not to say that it's impossible for a person to be a talented investment advisor AND work as such. It happens! Just that those amazing people are exceptional, nowhere near the averages, and it's hard to find them amongst the chaff (they certainly aren't cold-calling you on LinkedIn).

Anyhow, in many cases what ends up happening is that the candidate who isn't really very good at things like math and statistics and logical reasoning IS good at sales, and then whoever they work for puts them into a series of training sessions which describe how truly awesome and ground-breaking the stuff they are selling is. They aren't out there comparing their company's offerings to other alternatives and evaluating them objectively, they're being provided motivated "research" materials, which they assume are correct, and off they go to bring the good word to their prospective customers. Having the salespeople actually believe they are doing the right thing by customers is a very important part of the entire charade!

Anyhow, if I wanted an advisor, I'd want one with a fiduciary duty. It's not perfect, but at least it gives you the ability to sue them and take all their assets if they actively and knowingly cheat you (which is why most financial advisors lobby against requiring fiduciary duty). Of course, that only comes up if they screwed you and you have enough left over to sue them and they can't weasel out of the suit because people (including judges and juries) assume whole-life insurance is a really good investment option.
This is the paradox that explains why it is so difficult to find a truly helpful financial advisor. Why aren’t they independently wealthy after years in the field? Many advisors have undergraduate degrees in liberal arts majors such as sociology, English, history and communications. Maybe some of them develop keen math and analytical skills during their CFP coursework, but others just learn the jargon and the sales pitch. In my searches for advisors over the years I try to find people who majored in economics, business or math. I think undergraduate major is a good proxy for someone’s underlying skill set.
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cchrissyy
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Re: Are fiduciary's actually trustworthy?

Post by cchrissyy »

i wouldn't take a phone call from a salesman who found me on linked in for any product whatsoever!
if you need something, choose a provider yourself. don't wait for some rando to make you their target.
60-20-20 us-intl-bond
Northern Flicker
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Re: Are fiduciary's actually trustworthy?

Post by Northern Flicker »

k8n wrote: If this guy isn't trustworthy, are there ways to get trustworthy advice?
There are several areas you may want to consider addressing. Since you are considering a life insurance product, and have children under 5, I will assume that a significant part of your concern is ensuring that the needs of the children will be met if something unexpectedly happened to Mom and Dad.

Most people at a life stage with young children buy life insurance because they do not have enough assets to provide for the children without their incomes. As the children age, the total sum needed will decrease, and the savings of the parents hopefully will increase. There will be a crossover point where life insurance no longer is needed. Even if the parents savings were fully consumed by medical expenses, the children would be expected to support themselves as young adults. (Children with special needs require a different calculus).

Term life insurance is designed to meet such a fixed term of insurance need. It is strictly an insurance product-- it is not entangled with an investment product. A whole life policy not only entangles insurance and investment into an opaque mess, but the insurance component probably is not aligned with your term of need. You likely will be paying for life insurance beyond your need for it. The insurance company doesn't have the age of your children when you start the policy when they design the product.

Employment-based life insurance can meet this need, but also can be less effective. The most common scenario of working adults dying while at a working age is a medical issue that leads to disability, and no longer being able to work. Employment-based life insurance for an employee only works well if it can be converted to an individual policy at job termination with guaranteed issue, i.e. without having to clear medical underwriting standards. Otherwise, the insurance will go away if the employee has to leave a job because of a medical disability. Some employment-based insurance converts, some doesn't.

At least as important as life insurance is disability insurance to protect income on which parent and children depend. Social security death and disability benefits provide some protection as well.

None of the above has even touched on how to invest your assets. But providing for children in the unexpected death of the parents is more than just funding the cost of their needs. Decisions about who will be their care custodian need to be made, and provisions for a trust to hold the assets should be made. Appointing who will serve as financial trustee is another decision, maybe the same or different from the custodian.

If you have not already, work with an attorney to draw up wills that make these provisions.

Then a 3rd task is figuring out how much you can save from your paycheck, and how to invest it. You could look at the Bogleheads wiki to decide if you can manage it yourself. If you do want input from an advisor, one approach is a fee-for-service financial planner. You probably can find one in your area by finding one who is a member of the Garrett Planning Network. Either a certified financial planner (CFP) or a CPA who has the PFS designation will have some semblance of fiduciary obligation.

The problem with an assets-under-management fee is that it does not take that much work to manage the types of assets most of us would recommend. An advisor who needs to charge a 1% AUM fee to make a living as an advisor will have some motivation to create a complex portfolio that may still achieve reasonable objectives, but at higher portfolio cost on top of the AUM fee.

If you do want an advisor with AUM fee to feel like the portfolio is being managed with regularity, there are some lower cost options, such as Vanguard Personal Advisor Services, that charges 0.3% per year.

Some people post their personal portfolios on Bogleheads anonymously for feedback. There is a template for that purpose.

I hope the above was helpful.
Last edited by Northern Flicker on Sat Jan 29, 2022 5:04 pm, edited 3 times in total.
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Lee_WSP
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Re: Are fiduciary's actually trustworthy?

Post by Lee_WSP »

k8n wrote: Fri Jul 23, 2021 4:20 pm If this guy isn't trustworthy, are there ways to get trustworthy advice?
Other than complex legal questions where the answer is get an attorney ASAP, posting questions on this board are more or less guaranteed to net a far better answer than any run of the mill advisor. Better advisors will just spend more time running simulations and calculations based on your particular situation. Sometimes the board members are bored and do that too.
softwaregeek
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Re: Are fiduciary's actually trustworthy?

Post by softwaregeek »

Lee_WSP wrote: Sat Jul 24, 2021 3:19 pm
k8n wrote: Fri Jul 23, 2021 4:20 pm If this guy isn't trustworthy, are there ways to get trustworthy advice?
Other than complex legal questions where the answer is get an attorney ASAP, posting questions on this board are more or less guaranteed to net a far better answer than any run of the mill advisor. Better advisors will just spend more time running simulations and calculations based on your particular situation. Sometimes the board members are bored and do that too.
You are the only advisor who will have all your best interests at heart. This board will give you what you need since nobody gets paid out of your fund directly or indirectly. Follow the general advice on this board and you will do better than most.

Rely on yourself, it isn’t hard
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k8n
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Re: Are fiduciary's actually trustworthy?

Post by k8n »

Thanks everyone for your feedback! I really appreciate you taking the time. Here's what I think I'll do:
1) stop talking to the adviser
2) continue to keep all my money invested in Vanguard Total World Stock
3) later in life, figure out a comprehensive estate plan
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