How I Lost $50,000 by Relying on My Financial "Advisor": Physician Money Mistakes part 2

Learn from a physician's costly mistake with financial advisors. Get tips to avoid similar pitfalls and protect your investments.

By: Rikki Racela, MD

Published: Jan 30, 2023

📂 Physician Perspectives

Written for:

✅ Residents and Fellows

✅ Early Career Physicians

✅ Mid Career Physicians

I thought I could trust him. We grew up together in the same hometown throughout my childhood and I had played high school football with my financial “advisor.” We even made it to the Central Jersey Group 4 state championship our sophomore year and got to Giants Stadium!  However, this misplaced trust cost me (at least) $50,000, and it could have been much worse! By trusting my financial advisor, I was taken advantage of by predatory financial products such as whole life insurance and variable annuities. This mistake was incredibly costly, and I learned a tough lesson about trusting financial advisors.

I was familiar with Northwestern Mutual, the company he worked for, and thought I had seen 5 star reviews on Google. Because of our shared history, I assumed he would only do what was in my best interest, and I was wrong.

I was taken advantage of by the unethical tactics many companies use. They will exploit relationships and call their financial services “advisors,” instead of salespeople, to give the illusion of trustworthiness. Many of these products also tout the CFP (Certified Financial Planner) designation, which is supposed to mean the advisor upholds the “fiduciary” standard, or the belief that the advisor is only doing what is in the best interest of the clients.

Unfortunately, the CFP does not come with a board like the State Medical Board, so when advisors betray the trust of their clients, they still keep their CFP and go on to sell other products.

Did I really lose $50,000?

Yes, I absolutely did. To prove it, the in-force illustrations from my wife and my whole life policies show the exact amount of money we lost:

The circled higher numbers indicate the premiums we paid over 7 years, while the other circled lesser values indicate the actual “cash values” of our policies after 7 years. When you calculate (92K - 67K) + (78K - 53K) it shows the exact amount we lost: $50,000.

My story is certainly not an isolated incident. All too often, people trust their advisors even when they should not. It is sad that even with all the hard work and sacrifice we put into becoming physicians, we can still be taken advantage of. This is why I believe it is important for everyone to be aware of the risks and to act accordingly

The best way to protect yourself is to only work with advisors who are true “fiduciaries all the time” and can prove it in writing. Regardless of the company (Edward Jones, New York Life, State Farm, Prudential, Wells Fargo, etc.), you need to make sure that you ask questions about commissions and fees. You should also be on the lookout for hidden fees.

In conclusion, it is important that people take control of their own financial decisions and be aware of the potential pitfalls associated with trusting financial advisors. My mistake cost me (and my family) dearly, but I am determined to help others learn from my experience and protect themselves from similar mistakes.

Rikki Racela, MD
Rikki Racela, MD
Rikki Racela, MD

Rikki Racela, MD ⇨

Member, Andwise Medical Advisory Board

Dr. Rikki Racela, MD, is a neurologist based in Englewood, NJ, with a broad range of specialties and a deep commitment to patient care. He graduated from Princeton University in 2003 with a major in Molecular Biology and a minor in Neuroscience, before completing his medical degree at Rutgers-Robert Wood Johnson Medical School in 2007. Dr. Racela further honed his expertise in neurology at NYU School of Medicine, where he notably served as chief resident, and completed a fellowship in clinical neurophysiology. His professional journey has been distinguished by a return to New Jersey, where he joined Bergen Neurology Consultants and contributed significantly to Englewood Hospital as the stroke director from 2014 to 2015.

Dr. Racela's practice at Bergen Neurology Consultants involves a comprehensive array of diagnostic and therapeutic services, including cognitive testing, EEG, EMG, evoked potential studies, and sleep studies, among others. He treats a wide range of neurological conditions such as ALS, Alzheimer's Disease, epilepsy, headaches, multiple sclerosis, neuropathy, and stroke, to mention just a few. His dedication to neurology is further underscored by his board certifications in neurology and electrodiagnostic medicine, alongside his recognition within the medical community, including being named a Top Doctor by Bergen Magazine in 2019.

Beyond his clinical roles, Dr. Racela is passionate about financial literacy for physicians, contributing columns to The White Coat Investor, highlighting the importance of financial knowledge in the medical profession. His diverse interests and accolades, including leadership roles and advocacy for physician education, make him a prominent figure in his field

Ready to take the next step? Financial Education Consultation

With Tanya Frias, CFP®, ChSNC 🟢

1. Schedule a time that works for you

2. Address any burning financial questions with clarity

3. Experience a clearer, brighter financial future

Choose a Time 🚀

Physicians face unique financial challenges, from managing student loans to planning for retirement. At Andwise, we understand these challenges and are committed to guiding you through every financial milestone with the help of Tanya Frias, CFP®, ChSNC®, our Director of Financial Education and Empowerment.

Tanya Frias brings over twenty years of financial services experience to Andwise. With her extensive background as a Certified Financial Planner and her dedication to making financial planning accessible, especially in underserved communities, Tanya is a key asset to our team. Her qualifications include a B.S. from the City University of New York, CFP certification from NYU, ChSNC certification from the American College, and she is currently advancing her knowledge with an Executive MBA from Kellogg-Northwestern.

Stay In The Loop

Join 1300+ physicians who receive our monthly newsletter and stay up to date on our community events, resources, and tools.