Reddit Has No Monopoly on Horrific Financial Advice

Public school teachers have a better chance at winning the lottery than finding a real financial advisor.

This Reddit post sums up what teachers face daily from insurance salespeople  Many who saw this were shocked and outraged; we’re not.

Nationwide, expensive insurance products are the solution for every financial need in public schools.

In his KNOWN.BLOG, Seth Nichols writes about teachers taking a stand against poor working conditions.

It’s about boundaries crossed and people used.”

It’s about all of the ways an entire sector of the country’s most selfless givers have been complicit to a system that has evolved to bilk them every way it can: of their time, their money, their energy, and their emotions.”

Seth could’ve been speaking about the organized system of mass financial exploitation: Public School Teachers’ Non-Erisa 403(b) plans.

Teachers frequently pay 3-4% annually for inferior and complex investments sold by conflicted salespeople posing as financial advisors.

Recently, I received an email from a former salesperson who left the dark side. He is now an enthusiastic member of our growing reform movement.

Unqualified financial salespeople, deceitful practices, and conflicted corporate cultures are the root causes of this financial dysfunction.  His email to me about his experiences outlines all three:

Lack of qualifications –Another factor I noticed frequently attributed to the mindset amongst the agents was the ‘man with a hammer’ syndrome. Every agent I met was convinced that getting a securities license was unimaginably hard to achieve, so they continued selling the only products they could (life insurance and  fixed annuities).”

Most of these salespeople have no business giving financial advice. In spite the meaningless certification acronyms that appear on their business cards, their lack of qualifications is frightening.  Finding a qualified fee-only CFP in the teachers’ cafeteria is like looking for a needle in a haystack.

Deceit –One malicious event I witnessed was a particular agent would show prospects how much their investment would be worth if compounding at a 12-15% annual rate. Of course, the retirement balance using those assumptions would look great. Once they were interested he would sell them an Indexed Universal Life (IUL) and conveniently forget to mention that the life insurance was capped at an 8% annual rate, so it was literally impossible to compound at the 12-15% rates. These life insurance policies were riddled with fees and would pay a commission of 80-120% of the first year premiums.”

Outright lies are commonplace. Many salespeople tell teachers they are paying NOTHING for their services. This makes their promises of 15% returns seem honest, in comparison.

Conflicted Cultures –  “One other event I heard secondhand was an agent vs. agent issue. My former business partner had four teachers that were interested in purchasing annuities, so she left the application with them to discuss with their spouses and fill out in their spare time. A few days later another agent (who had a contract with the same insurance company) stopped by the teachers’ lounge and claimed he was picking up the applications for the original agent. He then doctored up the contracts to remove the original agent’s information and replaced it with his. He submitted the contracts with the insurance company and collected the commissions.”

This takes “bait and switch” to another galaxy. Imagine how badly clients are treated if co-workers think nothing of doing things like this to one another!

Reddit and insurance peddlers are poor choices to find sound financial advice.

There is another way.  Let us know if you would like to explore it.

 

Source: “Why Teachers Are Walking Out” by Seth Nichols, KNOWN.BLOG.

 

 

 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.