How to Find a Fiduciary (Hilo, Hawaii)

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SurferLife
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How to Find a Fiduciary (Hilo, Hawaii)

Post by SurferLife »

I have a older neighbor couple, close to their 70s, and they were telling me they met with a fiduciary who recommended a reverse mortgage for their financial situation. I should say that they were telling me about this because they wanted my advice. They went on to tell me that he also sells other products like insurance and annuities and he only gets paid based on what he sells so meeting with him was free. All my red flags went up at the sound of this, mainly because it seems like a conflict of interest trying to advise people on the best path to take when you make a commission off of the products you sell. I recommended they meet with a fee-only advisor to get a second opinion, but I don't know how to help them find one locally. So, how does one find someone like this locally? We are in Hilo, Hawaii as stated in the title.
aristotelian
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Re: How to Find a Fiduciary (Hilo, Hawaii)

Post by aristotelian »

If he was in fact a fiduciary, he would not be receiving any commission for his recommendation.

I would consider reverse mortgage an option of last resort. They may have no other choice if they are running short of funds and have most of their wealth tied up in their house, as often happens in Hawaii.
Topic Author
SurferLife
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Re: How to Find a Fiduciary (Hilo, Hawaii)

Post by SurferLife »

aristotelian wrote: Tue May 14, 2024 8:11 pm If he was in fact a fiduciary, he would not be receiving any commission for his recommendation.
Exactly my thought.
aristotelian wrote: Tue May 14, 2024 8:11 pm I would consider reverse mortgage an option of last resort. They may have no other choice if they are running short of funds and have most of their wealth tied up in their house, as often happens in Hawaii.
Yes, I think this is their situation. They may have to go that route, but they'd do better to speak with someone who doesn't get a commission off of it.
miket29
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Re: How to Find a Fiduciary (Hilo, Hawaii)

Post by miket29 »

SurferLife wrote: Tue May 14, 2024 8:06 pm They went on to tell me that he also sells other products like insurance and annuities and he only gets paid based on what he sells so meeting with him was free. <snip>I recommended they meet with a fee-only advisor to get a second opinion, but I don't know how to help them find one locally.
Why did they think they were meeting with a fiduciary? They were meeting with a salesman working on commission.

The big problem seems to be their lack of financial knowledge. And while it's great that you're trying to help, don't think the salesman is going to take this lying down, and since you're the one who may be responsible for him losing some easy pickings it wouldn't be surprising if he casts aspersions on you and your motivations.

If a reverse mortgage is their only realistic option then they might talk to a Reverse mortgage counselor. See the National Counselor on Aging page at https://www.ncoa.org/article/reverse-mo ... counseling as well as https://www.investopedia.com/find-trust ... or-5225639

I have to say, though, these people sound like they're about to be taken to the cleaners. The salesman will get them the reverse mortgage and already seems to be lining them up to plunk the last money they'll see in their lives into life insurance and annuities, both of which just happen to pay juicy commissions.
Last edited by miket29 on Tue May 14, 2024 8:36 pm, edited 2 times in total.
Topic Author
SurferLife
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Re: How to Find a Fiduciary (Hilo, Hawaii)

Post by SurferLife »

miket29 wrote: Tue May 14, 2024 8:26 pm
SurferLife wrote: Tue May 14, 2024 8:06 pm They went on to tell me that he also sells other products like insurance and annuities and he only gets paid based on what he sells so meeting with him was free. <snip>I recommended they meet with a fee-only advisor to get a second opinion, but I don't know how to help them find one locally.
Why did they think they were meeting with a fiduciary? They were meeting with a salesman working on commission.

The big problem seems to be their lack of financial knowledge. And while it's great that you're trying to help, don't think the salesman is going to take this lying down, and since you're the one who may be responsible for him losing some easy pickings it wouldn't be surprising if he casts aspersions on you and your motivations.

If a reverse mortgage is their only realistic option then they might talk to a Reverse mortgage counselor first. See the National Counselor on Aging page at https://www.ncoa.org/article/reverse-mo ... counseling as well as https://www.investopedia.com/facts-abou ... ng-5224981
They said he stated emphatically that he was a fiduciary.

I’ll give them that resource, thank you.
miket29
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Re: How to Find a Fiduciary (Hilo, Hawaii)

Post by miket29 »

SurferLife wrote: Tue May 14, 2024 8:32 pm They said he stated emphatically that he was a fiduciary.
Maybe he really is, but there's a reason fee-only advisors exist even though they could provide their services "free" if they relied on commissions. There's a pretty strong conflict of interest. And I wonder if what your friends heard were the actual words "I act as a fiduciary". Perhaps they asked and he answered by puffing out his chest and saying "I would never suggest an investment that isn't suitable for you! In fact I'd be violating the law if I did". Suitability, of course, is the broker standard and there's just about nothing that isn't "suitable".

I do hope you can find a fee-only advisor in your area they can afford to get advice. And actually an annuity may make sense for them after the reverse mortgage, just not the expensive one sold on commission. A joint and survivor annuity (not a jointly owned annuity) would ensure they never run out of money although the payment after the first person passes away is usually reduced. If you buy an annuity and die early you didn't get a fair payout, but you're dead and don't care. On the other hand if you live an exceptionally long time you get more than expected, funded by those who died early. Annuities are not risk-free, a big risk being the eroding power of inflation.
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