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

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

Monday, January 30, 2023

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.