Advice Badly Needed---Meeting with Financial Advisor

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TrademarkTer
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Advice Badly Needed---Meeting with Financial Advisor

Post by TrademarkTer » Thu Sep 14, 2017 8:42 pm

Sorry if this is long....

I am a teacher in my late 20s. Over the past 5 years I have been putting a decent amount of money into a 403(b) with my school--around 6000 or so per year. To be honest, I don't have a great deal of financial knowledge.

My friend asked me if I ever met with a financial planner, and set me up to meet with his friend, who I found works for Northwestern Mutual. I spoke with the advisor, who was of course very friendly and seemed trustworthy, who asked me about my goals, budget, etc. etc. I told him that my first major goal would be to save towards a down payment for a house hopefully within the next 5-6 years and that I was wondering if it would be wise to lower my 403(b) contribution a bit and to open a Roth IRA. I have no children, and I am currently single.

The plan that this gentlemen came back with involved disability insurance, whole life insurance, and an IRA. Of course he had very convincing reasons for why I should have all of these things. I told him, being that I have no dependents or spouse, and that I'm relatively healthy, I didn't really think I was interested in disability insurance or whole life insurance just yet. Naturally, he had all of his figures and charts to show why I should get these things young and how "cheap" they were. I'm sure the information he was providing was not "wrong", but when I resisted, he basically just said "ok, how about you still do the insurance, but we'll lower how much you contribute monthly so you can save more?" When I asked him about fees and commissions, he basically said to me that I don't pay anything unless I take money out early. That seemed like not a full answer.

Not the most relevant perhaps, but at the end of the meeting, he pressured me to give him names and numbers for at least 2 or 3 friends or family members who are in similar situations as me who he might be able to talk to. He said it was a way to "pay it forward" for the financial advice and presentation he provided me free of charge. When I told him I didn't know of anyone, he pressured me to look through my phone if anyone came to mind. I found this a little tacky given I haven't even really done any business with the man yet and it would be weird of me to recommend someone if I am not entirely sure yet. I now see my friend was probably pressured to hook this guy up with me.

I told him I would look the information over further, and I have a meeting scheduled with him for next week. I'm thinking of emailing him to cancel the meeting, and telling him it just isn't right for me yet. Then I'm thinking of just lowering my 403(b) contribution and opening a Roth IRA on my own through Vanguard (I've heard good things about them, but again, I'm relatively new to all of this), and forgetting about any of the insurance offers until I am a bit older.

Advice? Thank you!

RudyS
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by RudyS » Thu Sep 14, 2017 9:00 pm

Run as fast as you can! Your radar picked up on many of the issues. Others here will give you good comments and advice on the 403(b) and Roth IRA question, but don't sign up with that guy.

Alchemist
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Alchemist » Thu Sep 14, 2017 9:06 pm

Rudy is absolutely right, RUN DO NOT WALK away from this guy. He is not a financial advisor, he is an insurance salesman. He does not care about what investments are appropriate or beneficial for you, he just wants to earn sales commissions from selling you terrible products.

Vanguard, among a few others, is a fine place to open your Roth IRA. I would recommend checking out the Bogleheads wiki and feel free to ask questions here regarding the investments you should put your money into based on your need, ability, and willingness for taking risk.

DTSC
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by DTSC » Thu Sep 14, 2017 9:09 pm

TrademarkTer wrote:
Thu Sep 14, 2017 8:42 pm


The plan that this gentlemen came back with involved disability insurance, whole life insurance, and an IRA. Of course he had very convincing reasons for why I should have all of these things. I told him, being that I have no dependents or spouse, and that I'm relatively healthy, I didn't really think I was interested in disability insurance or whole life insurance just yet. Naturally, he had all of his figures and charts to show why I should get these things young and how "cheap" they were. I'm sure the information he was providing was not "wrong", but when I resisted, he basically just said "ok, how about you still do the insurance, but we'll lower how much you contribute monthly so you can save more?" When I asked him about fees and commissions, he basically said to me that I don't pay anything unless I take money out early. That seemed like not a full answer.

Not the most relevant perhaps, but at the end of the meeting, he pressured meto give him names and numbers for at least 2 or 3 friends or family members who are in similar situations as me who he might be able to talk to. He said it was a way to "pay it forward" for the financial advice and presentation he provided me free of charge. When I told him I didn't know of anyone, he pressured me to look through my phone if anyone came to mind. I found this a little tacky given I haven't even really done any business with the man yet and it would be weird of me to recommend someone if I am not entirely sure yet. I now see my friend was probably pressured to hook this guy up with me.

I told him I would look the information over further, and I have a meeting scheduled with him for next week. I'm thinking of emailing him to cancel the meeting, and telling him it just isn't right for me yet. Then I'm thinking of just lowering my 403(b) contribution and opening a Roth IRA on my own through Vanguard (I've heard good things about them, but again, I'm relatively new to all of this), and forgetting about any of the insurance offers until I am a bit older.

Advice? Thank you!
Trust your gut!

All your instincts about this "financial advisor" (who is actually an insurance salesman) are correct.

Cancel the meeting and block his number from your phone. Resist talking to him again. He is not giving you any "free" advice as he'll get a healthycommission from the products he's trying to sell you.

You are lucky to have found Bogleheads.org at this moment and before you bought anything from this salesman. Read the 2 Bogleheads books and follow the advice.

Investing really isn't that hard. Certainly anyone who can finish college and teach others can learn to invest. Just tune out the noise and sales pitches.

J G Bankerton
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by J G Bankerton » Thu Sep 14, 2017 9:09 pm

The agent will use your name to get a foot in the door, warn those whose names you gave him. Insurance is not an investment.

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Pajamas
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Pajamas » Thu Sep 14, 2017 9:10 pm

He's not a financial advisor, he's a salesman for overpriced financial products that you don't need or want. It is a good idea to email to let him know you're not interested and certainly don't let him keep trying to pressure or guilt you into doing anything like giving him any any leads.

Salesmen learn not to take "no" for an answer, to have a response for any objections, etc., to do anything to close that sale and earn a commission and maybe even make enough sales to earn a bonus like a trip to Hawaii or a new widescreen television.

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Clark & Addison
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Clark & Addison » Thu Sep 14, 2017 9:12 pm

Definitely cancel the meeting. Read the wiki here on getting started. Many 403b's are poor products (I'm a teacher and mine is bad). Post your list of 403b provider options and others on here can let you know what your best option is. It's usually worth using the 403b at least up to any match you may receive. An IRA at Vanguard is a good idea too.

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bottlecap
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by bottlecap » Thu Sep 14, 2017 9:12 pm

This is the typical NW Mutual tactics. They love to prey on the young.

Drop him, get the Bogleheads guide to investing, read the wiki here, and decide whether you even need a planner.

You have a little bit of time and don't need the high pressure tactics.

This is the perfect time and impetus to start learning.

Good luck,

JT

livesoft
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by livesoft » Thu Sep 14, 2017 9:12 pm

What advice do you badly need? It seems to got this figured out already.
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fundseeker
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by fundseeker » Thu Sep 14, 2017 9:19 pm

Unbelievable! I hate to think how many victims of his are out there. You should tell your "friend" who set this up that the guy is just on the edge of being a criminal and he (your "friend") should not refer anyone else to him! And then you should look at all of the contacts on your phone, and then call and warn them about this crook! You are fortunate to have gotten away! You could even complain to his employer about how pushy he was, but then again, that may actually get him a promotion.

TrademarkTer
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by TrademarkTer » Thu Sep 14, 2017 9:31 pm

Thank you all for confirming what I was thinking in the back of my head during the meeting! This guy had an answer for everything, but I'm sure that's part of the training.

I think I'm going to spend the next month or so doing some reading and studying up on my own to make sure I am fully informed before making any big decisions (and those decisions will not involve NWM). I am sure I will be back with questions!

delamer
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by delamer » Thu Sep 14, 2017 9:43 pm

In regards to your finance-related questions, do you get a match from your employer for the 403(b) and will you be getting a traditional pension?

If you get a match, then you want to be sure you contribute enough to receive it. If you are going to receive a pension and can contribute enough to receive the match, then I'd go ahead and reduce your contributions in order to save for a downpayment.

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CAsage
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by CAsage » Thu Sep 14, 2017 9:45 pm

There is a gem that comes up now and then on this blog - treat every financial adviser as a hardened criminal. Ok, so that's a bit harsh... but it behooves you to get self educated before you let anyone sway your goals or touch your money! At your age, it depends a lot on your tax bracket what the right place (pretax, IRA, Roth) to save is, and saving for a house is a big goal as well. Suggest you at least designate beneficiaries for your savings, and look into a super simple will. You don't need insurance if you have no dependents, and you probably have some disability through your employer.
One bit of advice it took me decades to learn - just because someone asks you a question, you don't need to answer - either at all, or truthfully. If you are not interested in this adviser, either don't take his calls, or make up something to make him go away - like, I've hired someone else, or I've been laid off and lost all my money in Vegas, or I put it up my nose..... Have fun! You owe him nothing. And, for sure, read some good books and the Wiki here.

Best Wishes to you!
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

Katietsu
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Katietsu » Thu Sep 14, 2017 9:50 pm

Everyone has given you the same advice about the Northwestern Mutual salesman. Your plan to lower your workplace contribution and open a Vanguard IRA is reasonable. And you will likely never need whole life insurance. It is reasonable to postpone term life until you have someone depending on you as long as you realize there is a small chance of becoming uninsurable. I do think you should look into disability insurance now. Disability insurance is for you not just others. Some places to look include a good independent insurance agent, your employer, your union, and other professional organizations.

Nate79
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Nate79 » Thu Sep 14, 2017 9:53 pm

NWM is one of the worst expensive insurance companies. Good you ran from the salesman.

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badbreath
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by badbreath » Thu Sep 14, 2017 10:15 pm

I would also ask him if he know about the up and coming fiduciary rules and if he thinks this would fit into that type of investment (which it will not). I would also tell exactly what you posted to your 403b administrator exactly what you told us and show this thread to get him fired.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

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Sandtrap
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Sandtrap » Thu Sep 14, 2017 10:19 pm

Pajamas wrote:
Thu Sep 14, 2017 9:10 pm
He's not a financial advisor, he's a salesman for overpriced financial products that you don't need or want. It is a good idea to email to let him know you're not interested and certainly don't let him keep trying to pressure or guilt you into doing anything like giving him any any leads.

Salesmen learn not to take "no" for an answer, to have a response for any objections, etc., to do anything to close that sale and earn a commission and maybe even make enough sales to earn a bonus like a trip to Hawaii or a new widescreen television.
Used car salesman.
Time share (fractional ownership) salesman.
etc, etc, etc.

You are not obligated to contact this fellow or "follow up".
Like water under the bridge.
Move on.

Get a free education at the Bogleheads forum before going any further.
Read up on the "Wiki" reading list.
Read up on the archived threads on "how to find a financial advisor" (this is a rich discussion).
You've come to the right place.
Good luck.

mhalley
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by mhalley » Thu Sep 14, 2017 10:49 pm

He did give one good piece of advice: you should get disability insurance. You are 3time as likely to be diasbled as die. Since you are single, how will you pay your bills if you are unable to work? Your employer probably offers it at a reasonable price.
Do you get a match? At least conrtibute enough for the match.

File this under the broken clock being right twice a day.

http://clark.com/insurance/three-simple ... al-future/
Last edited by mhalley on Thu Sep 14, 2017 10:54 pm, edited 1 time in total.

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celia
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by celia » Fri Sep 15, 2017 1:17 am

mhalley wrote:
Thu Sep 14, 2017 10:49 pm
You are 3time as likely to be diasbled as die./
How do you figure this? I heard that everyone will die! :D

OP, I suggest you talk to your employer's benefits department and ask if they cover any disability or life insurance for you. While you are at it, see if they have a list of all your benefits, besides a paycheck. Read and then store away what they give you. It will help you speak up for what you are entitled to should you ever have to file a claim.

ccieemeritus
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by ccieemeritus » Fri Sep 15, 2017 1:24 am

+1 to cancelling the meeting with this salesman. If you gave out any names please warn them.

If you teach at a high school there might be a personal finance teacher onsite. Buy them lunch. They may or may not be useful, but at least they won't try to sell you insurance for a commission.

retiredjg
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by retiredjg » Fri Sep 15, 2017 6:29 am

Your gut is right. Cancel the meeting. Your time is more valuable than that.

I would agree, however, that looking into disability insurance might be a good idea. Illness/injury could keep you from being able to work and disability insurance would provide an income.

You are correct that you do not need life insurance, especially whole life.

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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Grt2bOutdoors » Fri Sep 15, 2017 6:39 am

When you go on a bad date and you know you don't want another bad experience, guess what? You don't go. Since rejection is part and parcel of being a salesperson, i would not spend a second more thinking about this. Drop this creep with an email, tell him you realize your time is valuable and there is no sense in wasting it on products that are unsuitable for you at this time. "You could tell him that you have the Bogleheads seal of approval". :wink:

Stick around,ask your questions here, lots of experience here with no pressure sales tactics.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

cherijoh
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by cherijoh » Fri Sep 15, 2017 7:21 am

TrademarkTer wrote:
Thu Sep 14, 2017 9:31 pm
Thank you all for confirming what I was thinking in the back of my head during the meeting! This guy had an answer for everything, but I'm sure that's part of the training.

I think I'm going to spend the next month or so doing some reading and studying up on my own to make sure I am fully informed before making any big decisions (and those decisions will not involve NWM). I am sure I will be back with questions!
Please check out this link and look for "If You Can". This is an excellent primer for someone your age. Dr. Bernstein offers a free download from this webpage or you can purchase a paperback version through Amazon. It is really a booklet rather than a book though, so I'd suggest going the free pdf route.

alex_686
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by alex_686 » Fri Sep 15, 2017 7:52 am

celia wrote:
Fri Sep 15, 2017 1:17 am
mhalley wrote:
Thu Sep 14, 2017 10:49 pm
You are 3time as likely to be diasbled as die./
How do you figure this? I heard that everyone will die! :D
I have heard similar numbers. Normally the context is prior to your retirement and if one should get term or disability insurance. People tend to put too much attention on death, not enough on disability. Now, this is a general comment. I don't know the accurital tables for death and disability for teachers. Do your students run with scissors?

Swansea
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Swansea » Fri Sep 15, 2017 7:57 am

My insurance agent (auto and home) only called me once in 20 years. He brought up life insurance. I told him I was single. He responded "You don't need it." I appreciated his candor.

RudyS
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by RudyS » Fri Sep 15, 2017 8:12 am

Swansea wrote:
Fri Sep 15, 2017 7:57 am
My insurance agent (auto and home) only called me once in 20 years. He brought up life insurance. I told him I was single. He responded "You don't need it." I appreciated his candor.
Generally true. But always there are exceptions, however far-fetched. IF you happen to be the support for your parents, then the question is what happens if you die soon. Just had to bring this up.

Grt2bOutdoors
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Grt2bOutdoors » Fri Sep 15, 2017 8:15 am

RudyS wrote:
Fri Sep 15, 2017 8:12 am
Swansea wrote:
Fri Sep 15, 2017 7:57 am
My insurance agent (auto and home) only called me once in 20 years. He brought up life insurance. I told him I was single. He responded "You don't need it." I appreciated his candor.
Generally true. But always there are exceptions, however far-fetched. IF you happen to be the support for your parents, then the question is what happens if you die soon. Just had to bring this up.
My agent mails me a happy birthday card with the soft sell of owning $250K in life insurance for only $59/month. :oops: To put that in perspective, a term life policy from term4sale is about 50 percent cheaper. Guess who profits off the 50%? :annoyed
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

BlackStrat
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by BlackStrat » Fri Sep 15, 2017 8:19 am

What luck that had you find the Bogleheads!

From what I've seen, most of these 'advisors' are either insurance salesmen (like this one) or bloodsucking leeches preying on vulnerable people who haven't done a little bit of research on a subject that really doesn't have to be very complicated.

Studies have shown that most managed mutual funds beat a simple index (such as the S&P 500 or Total Stock) only 15% of the time in a given year. The lucky few who do beat the index also have fees related to how many transactions were processed, capital gains taxes due to many stock sales during the year, and a management fee for the fund. So a fund manager may boast beating the index, but in reality the gains an investor actually realizes could be less. You should also realize that you'd be (impossibly) lucky to be able to find that manager or fund who repeatedly beats an index year after year.

One way of looking at it which really convinced me about 'commission' advisors is the fact that many of them will charge clients a 1% fee on any assets under their care. This means that if you're lucky enough to amass a $1 million portfolio, they'll get $10k a year for managing your portfolio. This will be most likely for a portfolio they've designed which is usually beaten by a simple index fund (see above), and which also includes the baggage of other fees and negative tax ramifications.

With that in mind, even though you're young it would be illustrative for you to learn about SWR (Safe Withdrawal Rate). This is a method, based on something called the 'Trinity Study' which attempts to give you a starting point in determining how much you'll be able to safely withdraw from your portfolio at retirement in order to have it last a specific number of years (based on remaining life span). For a 65-year old, 4% appears to be the SWR for a 30-year retirement.

So, you have your $1M saved over your lifetime and you're able to safely withdraw $40k a year, BUT WAIT! You need to give 1/4 of that ($10k) to your 'advisor' every year just to see him NOT repeatedly match a market index.

As it's already been said, take a look at some of the resources already mentioned (you can't go wrong with "The Boglehead Guide to Investing") and take the time to educate yourself.

This site is a gem where you'll get good (and possibly bad) advice which is constantly vetted by fellow forum members.

And none of us will ask you for a dime!

Good luck!

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goingup
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by goingup » Fri Sep 15, 2017 8:28 am

The things you're trying to do---save a downpayment, contribute to 403B, and fund a Roth IRA--do not require the assistance of an insurance salesman.

Save your downpayment in cash at somewhere like ALLY bank. Use low-cost funds in your 403B and be sure to get your match. Open a Roth with Vanguard and use the Target Retirement Funds, which can be opened with $1,000 minimum. Make a plan, keep it simple, and you'll do great! :beer

deltaneutral83
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by deltaneutral83 » Fri Sep 15, 2017 8:34 am

There are three things in life I know to be certain, death, taxes, and NWM agents pushing whole life. Life insurance in general for someone who is single with no dependents is a stretch. I can see disability insurance as you are much more likely to need that than life ins. Nonetheless, read all the intro books and the "If You Can" and get started with the Vanguard Total Stock Market in a mutual fund or ETF if you have a discount brokerage for the Roth.

barnaclebob
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by barnaclebob » Fri Sep 15, 2017 8:39 am

Wow, hitting you up for contacts on your phone to "pay it forward" for his complementary sales pitch. Thats a new level of slimy sales right there.

Chuck
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Chuck » Fri Sep 15, 2017 9:52 am

Good advice here. I escaped from NML 10 years ago, about $50K poorer than I would be following Boglehead strategies. No telling what the loss would be if I stayed with them all this time. If you ever think you need an adviser, just post your question here and you'll have 20 advisers.

JBTX
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by JBTX » Fri Sep 15, 2017 10:10 am

Bravo for running from the insurance salesman! The fact that he pushed so hard and just wanted to get into your friends pockets also shows he is in it just for the commission.

Years ago there was a NWML salesman who was so familiar with many in our dept at work he just seemed to come and go into our office as he pleased. It was rather bizarre. I met with him for breakfast (he drove there in his expensive Mercedes) , and the only thing that seemed applicable to me was disability insurance, but I ended up just going with what my employer offered.

While owning a home is a goal most of us aspire to, if you can put that off as long as possible and max out your 403b and roth IRA's, you will be happy you did in the long run. As a young teacher, my guess is you aren't in a high tax bracket, and if so that is a good time to put money into a Roth. Also, if you are eligible for an HSA, look into that too.

While there is social pressure to have a house, there really is no need to until you are married and are planning to have children. Hell I rented until I was in my mid 30's, and most of those years split the rent with a roomate. If you do get married, you may find the house you bought isn't the right fit for you.

For working people disability insurance actually does make sense. But take the time to find out what your employer may offer, and what other's offer. Don't rush in to anything.

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Mel Lindauer
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Mel Lindauer » Fri Sep 15, 2017 11:32 am

You've come to the right place for unbiased help in your journey to financial independence. You've just barely avoided the jaws of the NWL shark.

Avoid this salesperson, and any others like him, like the plague. Cancel the meeting and don't look back.
Best Regards - Mel | | Semper Fi

Dottie57
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Dottie57 » Fri Sep 15, 2017 11:40 am

Take disabiliy insurance through your employer if they offer it. Make sure you pay tax on the money that pays for the insurance insurance if the premium is paid by your employer. This allows the disability benefit to be tax free for if you need to collect on it.

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sunny_socal
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by sunny_socal » Fri Sep 15, 2017 11:47 am

This should be a sticky! An example of what kind of thieves to avoid :wink:

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FelixTheCat
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by FelixTheCat » Fri Sep 15, 2017 11:55 am

RudyS wrote:
Thu Sep 14, 2017 9:00 pm
Run as fast as you can!
Run Forrest Run! Whole life? The fees will kill you.

Educate yourself on finances. You have your best interest in mind. Start here https://www.bogleheads.org/wiki/Getting_started

Ask anything this board. There are a lot of people that will point you in the right direction.
Felix is a wonderful, wonderful cat.

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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Tamalak » Fri Sep 15, 2017 12:15 pm

OP, I'm impressed by how you managed to stand your ground against this scum, even though you were totally unprepared for the meeting and unsure of yourself. You're a rare breed.

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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Fallible » Fri Sep 15, 2017 12:41 pm

Tamalak wrote:
Fri Sep 15, 2017 12:15 pm
OP, I'm impressed by how you managed to stand your ground against this scum, even though you were totally unprepared for the meeting and unsure of yourself. You're a rare breed.
Yes, I thought that, too, and add my congrats to the OP for a healthy skepticism, which will be needed for all things throughout life.
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staythecourse
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by staythecourse » Fri Sep 15, 2017 12:54 pm

No surprise a teacher give an articulate synopsis of her foray into the world of salesmen in route to trying to learn about personal finance. Your instincts are good which can't be taught so kudos to that. Knowledge can be learned so plenty of time for that.

The ONLY part that the salesman said that was reasonable was disability insurance. If your single and you become disabled how do you expect to pay for the mortgage if you buy a house without insurance? Check your workplace and see if you are or can be covered under your work for long term disability. Otherwise, start thinking about it. Maybe not at the top of the list, but should be up there.

As for savings for down payment the plan is reasonable, but may not be the best. Giving a better overall financial snapshot will get you the best answer. There is a sticky on how to ask for a review. That will give you the best response.

Good luck.

p.s. You don't need an financial adviser as you have bogleheads to bounce questions off who have NO SKIN in the game.
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Chuck
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Chuck » Fri Sep 15, 2017 1:06 pm

Incidentally, the way I found this forum was when I had second thoughts about some insurance products I was involved with. At the time, a google search for something like "is whole life insurance worth it" went right to the Bogleheads forum. It changed my life.

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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Wakefield1 » Fri Sep 15, 2017 2:02 pm

barnaclebob wrote:
Fri Sep 15, 2017 8:39 am
Wow, hitting you up for contacts on your phone to "pay it forward" for his complementary sales pitch. Thats a new level of slimy sales right there.
Bad Date! :twisted:

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rmelvey
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by rmelvey » Fri Sep 15, 2017 2:05 pm

Northwestern Mutual is one of the worst in my eyes. Friend's don't let friends...

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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by Meg77 » Fri Sep 15, 2017 2:22 pm

Do your own reading by all means, but here is what you should do according to pretty much any financial expert/blogger/author/advisor who is not trying to sell you something:

1. Make sure you have a basic will and level premium term life insurance in place IF you need it - which you don't until you have kids in most cases. These are very cheap. Nobody actively sells them they are so cheap. Also make sure you have adequate health and disability insurance. You probably have that through your job already (and social security disability may replace a decent portion of your current income anyway).

2. Contribute enough to your workplace retirement plan to get any match. Not sure you have this as a teacher, but if you do a match is a great thing to have. Don't contribute any more than that at this point though.

3. Pay off any high interest rate debt (over 10% for sure but maybe even anything over 5%).

4. Contribute to a Roth IRA until 10-15% of your gross income in total going to retirement (15%-20% is ideal but less is OK if you have extenuating circumstances like large student loan payments or dependents with special needs or make less than $30K a year). Roth is better than Traditional particularly if you're young and in a low tax bracket. Funds contributed to a Roth IRA can be withdrawn tax and penalty free any time, so many will argue that maxing out a Roth IRA should come even before establishing an emergency fund. The funds at Vanguard or Fidelity or pretty much anywhere will be much cheaper and better than what most school systems offer their teachers by the way.

5. Pay off any other consumer debt.

6. Save 3-6 months of expenses in cash. (This can be moved ahead of #5 if you have tons of debt to pay off, but it doesn't make sense to have a lot in cash earning little when you're paying interest on debt - especially if you have good credit and can borrow cheaply in a true emergency).

7. Keep saving toward a home down payment or car or other short term goal such as a wedding or new furniture. Contribute to 529 accounts for kids' college. Buy rental property if you're into that. Upgrade your housing situation.

8. Go back and increase retirement contributions until you're maxing out all options. Some would put this ahead of some #7 items, but it depends on your income.

9. Retire! Once investments equal 25x your expenses you can do so (less rental income, pensions, and social security of course).
Last edited by Meg77 on Fri Sep 15, 2017 3:25 pm, edited 1 time in total.
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TrademarkTer
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by TrademarkTer » Fri Sep 15, 2017 2:48 pm

Thanks again!

This is all very helpful.

I am going to look into my district's disability insurance again to see what is offered. Unfortunately they do not match for 403(b). I will be sure to put all the resources you have all shared on my reading list.

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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by nimo956 » Fri Sep 15, 2017 3:02 pm

TrademarkTer wrote:
Fri Sep 15, 2017 2:48 pm
Thanks again!

This is all very helpful.

I am going to look into my district's disability insurance again to see what is offered. Unfortunately they do not match for 403(b). I will be sure to put all the resources you have all shared on my reading list.
You should look into getting a private policy instead of paying for a group policy. It's often the case that group policies have weaker definitions of disability than you can get on your own. Also, having your own policy means that it stays with you if you switch employers.
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by nedsaid » Fri Sep 15, 2017 3:44 pm

TrademarkTer wrote:
Thu Sep 14, 2017 8:42 pm
Sorry if this is long....

I am a teacher in my late 20s. Over the past 5 years I have been putting a decent amount of money into a 403(b) with my school--around 6000 or so per year. To be honest, I don't have a great deal of financial knowledge.

Nedsaid: Don't feel bad, most of us didn't know a lot when we started either. The key from here is to be willing to learn.


My friend asked me if I ever met with a financial planner, and set me up to meet with his friend, who I found works for Northwestern Mutual.

Nedsaid: This is the first red flag. You will get pitched very expensive Whole Life insurance, which is not recommended here. Don't mix insurance with investments which is what you do with such products as Whole Life, Variable Universal Life, expensive Variable Annuities, Indexed Annuities and the like. The best products to buy from a life insurance agent are plain vanilla term insurance, and when you retire, Single Premium Immediate Annuities (if you want to pensionize a portion of your nest egg).

I spoke with the advisor, who was of course very friendly and seemed trustworthy, who asked me about my goals, budget, etc. etc. I told him that my first major goal would be to save towards a down payment for a house hopefully within the next 5-6 years and that I was wondering if it would be wise to lower my 403(b) contribution a bit and to open a Roth IRA. I have no children, and I am currently single.

The plan that this gentlemen came back with involved disability insurance, whole life insurance, and an IRA.

Nedsaid: Am I psychic or what? How did I know he would pitch Whole Life? Well, because these are high commission products. Disability insurance? Maybe. If you have a benefits package at work, Disability Insurance is often offered. IRA? Probably. Depends on whether or not you have a good workplace savings plan like a 401(k), 403(b), 457, and the like. The amount of your income figures into this as it affects the deductibility of Traditional IRA contributions and whether you can contribute to a Roth IRA or not.

Of course he had very convincing reasons for why I should have all of these things. I told him, being that I have no dependents or spouse, and that I'm relatively healthy, I didn't really think I was interested in disability insurance or whole life insurance just yet. Naturally, he had all of his figures and charts to show why I should get these things young and how "cheap" they were. I'm sure the information he was providing was not "wrong", but when I resisted, he basically just said "ok, how about you still do the insurance, but we'll lower how much you contribute monthly so you can save more?" When I asked him about fees and commissions, he basically said to me that I don't pay anything unless I take money out early. That seemed like not a full answer.

Nedsaid: On Whole Life Insurance, your entire first year's premium can go to commission. Yes, you do pay. Compare the rates on Whole Life vs. Term Insurance for the same dollar amount of coverage and you will see what I mean.

Not the most relevant perhaps, but at the end of the meeting, he pressured me to give him names and numbers for at least 2 or 3 friends or family members who are in similar situations as me who he might be able to talk to. He said it was a way to "pay it forward" for the financial advice and presentation he provided me free of charge. When I told him I didn't know of anyone, he pressured me to look through my phone if anyone came to mind. I found this a little tacky given I haven't even really done any business with the man yet and it would be weird of me to recommend someone if I am not entirely sure yet. I now see my friend was probably pressured to hook this guy up with me.

Nedsaid: Utter horse hockey. Not your job to provide a salesperson with sales leads. Just tell him no.

I told him I would look the information over further, and I have a meeting scheduled with him for next week. I'm thinking of emailing him to cancel the meeting, and telling him it just isn't right for me yet. Then I'm thinking of just lowering my 403(b) contribution and opening a Roth IRA on my own through Vanguard (I've heard good things about them, but again, I'm relatively new to all of this), and forgetting about any of the insurance offers until I am a bit older.

Nedsaid: Two things to check is your benefits package at work. I am nearly 100% certain that you have disability coverage offered through your work. Second, check into the fees you are paying in your 403(b) plan. I have read about the poor choices that teachers often have with 403(b) plans through insurance companies, which tend to be rather expensive savings vehicles. I worked for a Healthcare system whose 403(b) provider was Fidelity, the costs were low and the investment choices fantastic. School districts often have the expensive plans through insurance companies. If you would, report back on your 403(b). Thank you.

Advice? Thank you!
Last edited by nedsaid on Sat Sep 16, 2017 12:58 pm, edited 1 time in total.
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F150HD
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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by F150HD » Fri Sep 15, 2017 3:48 pm

TrademarkTer wrote:
Thu Sep 14, 2017 8:42 pm
he pressured me to give him names and numbers for at least 2 or 3 friends or family members who are in similar situations as me who he might be able to talk to. He said it was a way to "pay it forward" for the financial advice and presentation he provided me free of charge. When I told him I didn't know of anyone, he pressured me to look through my phone if anyone came to mind.
does this guy have a supervisor? if so, I'd give her/him a call and tell them exactly what you told us. in fact, I'd ask the guy pressuring you for the supervisors name and number (make him uncomfortable), then tell him you'll get back to him (which of course you wont). Then call the supervisor. Sounds like this guy crossed some lines he shouldn't have, very unethical.

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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by helloeveryone » Fri Sep 15, 2017 4:26 pm

I had an identical experience. Friend from work gave his NW guy my info. I went, listened to the pitch. Was shown a disability policy that was more affordable than my existing one. I read it in detail and it seemed identical and this bought it with a plan to cancel the other one.

When I received the policy and read the entire policy in detail, I saw that the payments started cheaper but then year after year went up, and after a few years were ridiculously more expensive. Fortunately also embedded in there was a clause that if I wanted to get out of the policy I could do so within a very limited time frame.

I promptly call NW and said I'm out, dropped off a formal letter in person and a formal email in person. I got my first two payments back and that lesson and waste of time was a tremendous lesson for me.

He also did the thing about give me 2-3 names at the beginning which I did but after finding out the details I told both those folks to ignore the guy. I also told my buddy who referred him that his disability policy would balloon like crazy but unfortunately he is not the kind of person that self educates on financial issues and he is sticking w the NW guy.

Very nice job being leary of the guy and listening to your gut feeling.

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Re: Advice Badly Needed---Meeting with Financial Advisor

Post by jalbert » Fri Sep 15, 2017 4:36 pm

I have no dependents or spouse, and that I'm relatively healthy, I didn't really think I was interested in disability insurance
Disability insurance is just as much for you as for any dependents. You would do well to have it. It should be a benefit with your teaching job, although if you didn't take it when you started employment, you might have to go through medical underwriting to get it now.

Don't wait until you can't get it do to a minor medical issue. Just do it.
Index fund investor since 1987.

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