Posts Tagged ‘fee-only’
What Can Happen When You Have a Life Insurance Salesman as Financial Advisor
Posted on: January 19, 2012
Financial Salesman
In an online forum, a doctor’s wife shared with me her story that should serve as a cautionary tale for all doctors.
Her husband had a solo medical practice. They had a “financial advisor” who advised them to put their saving into a $5mm cash value life insurance policy. They believed the product not only provided protection in the event of the doctor’s death but also was a great savings vehicle.
Last July, her husband was struck by an uninsured drunk driver. He suffered brain damage. Though he recovered from the coma, he was unable to practice medicine any more.
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“Avoid the fee-ing frenzy,” says David Swensen. 
Marion banks at Wachovia. When she needs to rollover her 401(k) into an IRA account, she naturally asks a Wachovia financial advisor for help. He helps her open an account and recommends she buy the Evergreen Asset Allocation Fund (EAAFX). Is there anything wrong with this picture? Plenty!
First, the fund has a sales charge (front-end load) of 5.75%. Her 401(k) balance is $100,000. This means, the advisor takes $5,750 just for the act of opening the account for her.
The Investment Scientist 