Financial Advice Q&A

Occasional Visitor
Posts: 1
Is my financial advisor ripping me off?
[ Edited ]

I am retired Mil, a current fed employee and looking to retire in 2.5 yrs. I have several retirement sources, one is with "another" financial advisor who I am not so pleased with. Annual fee of $600. My account also includes a VUL IV Life with cash value of approx $20K. With the rest of my investment with them, total is about $100K. I do not believe it is worth $600 a year to have them "Manage" my funds, nor am I all that happy with the life insurance premiums every month. How can I move this without paying a penalty or tax if I cash in the life insurance and move to another source for investment? Also, instead of taking out a "New" life insurance policy, would it be better to just use the cashout to re-invest? ADDITIONAL INFO: I have a daughter finishing 2nd year of college, Debt is approx $30K if I close account with this advisor, should I use any of it to pay off the student loans?

Posted: 2014-03-12 07:47 AM
Other Answers: 1
Community Manager
Posts: 1,009

Uh-oh, it sounds like your financial advisor might have a problem brewing.


Win-Win Must Exist
While I no longer work directly with clients I spent many years doing it.  During that time I would frame up the conversation about how I got paid like this: Obviously this has to be a win-win situation.  If I’m the only one winning, you won’t be my client for long.  And if you’re the only one winning, I won’t be in business for long.  There has to be a balance.


Unfortunately for your advisor, it sounds like from your perspective that the scales are tipped too far in his or her favor. What’s interesting to me about this is that $600 per year isn’t really that expensive in the fee-based financial advice world. However, if you don’t feel like you’re getting $600 worth of value from the relationship then it’s definitely too much.


So then, what do you do?


Plan B?
Before you jump ship, I think your first step should be to talk to your advisor about your concerns and see how they respond.  Maybe there’s something they could do to bring balance back to the relationship.


If that doesn’t work, if that approach doesn’t appeal to you, or if you’d just like to get another perspective, then it’s time for you to see what else is out there that might be able to better satisfy your needs at a cost you feel is more reasonable. As you do this you should keep in mind that even though you’re currently not pleased with your existing advisor, that doesn’t mean you should just dump the products they sold you. It’s quite possible that what you have still works for your situation even if the advisor doesn’t.  Overlooking this could result in you paying additional fees and charges just to work with someone else even if your current financial products still make sense for you.


Finally, if you’d like to have a more in-depth conversation specific to your situation, I encourage you to contact our team of Financial Advisors here at USAA.  They can be reached at 800-771-9960 and will be able to help you assess your options and see if we might be able to help.


Thanks so much for your question and best of luck to you!



Posted: 2014-03-12 09:57 AM


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