Saving for retirement was a consistent activity of mine since shortly after college. I went to work for three different non-profits after college. The last one didn't match our contribution but we brought in a financial advisor around 1997 who allocated my savings in Putnam funds.
He was recommended by another person that myself and another staff member respected.
He promised to update us once a year and he did have me meet at his office to get started.
By 2003, I hadn't heard from him for about 2 years. Although I was receiving my Putnam statements so I wasn't concerned. Then he called and mentioned he'd like to take my wife and out for lunch and discuss an Allstate Advisor Variable Annuity. He asked me on the phone would I like a guaranteed retirement income. Of course my answer was yes.
But I knew annuities were a conservative vehicle for people much closer to retirement age, not those in their early 40s. And, I figured if it was coming from an insurance company like Allstate then growth was not a goal; protection from loss would be the objective.
The selling point was you would never drop below a 5% return. But you would never get above 8%, either.
We went to lunch and I hadn't any time to do research on the topic, but I did ask him about his commission. He mentioned, yes, he would get a nice commission from the transfer of funds. He was personable but I felt uneasy. We signed documents. I moved my Putnam funds (I can't remember how much but it was a significant percentage) into the Allstate Advisor annuity. I was just starting a business with two other people, but he didn't ask about that and the best retirement vehicle.
Ironically, right after we signed, I felt it was time to look for another financial advisor. He didn't do anything wrong and my finances were in okay shape, but I felt he was looking out for his interests, primarily. I felt like we had been taken to lunch in order to make a sale.
Ah, a customer experience lesson: if you lose touch with your clients or customers then you call them when you want something from them, they may feel used.
I was a member of our local chamber of commerce. I heard another financial advisor introduce himself by saying he started investing when he was age 17 and he enjoyed helping others build wealth. He was about my age, but I did become intrigued by his "elevator speech."
He dressed low key in a frumpy open collar shirt and during chamber breakfasts and lunches, I learned about his investments in real estate and stocks.
Eventually, I asked to meet with him. He carefully critiqued my Allstate Advisor investment and I asked "what would you do?"
He's with Edward Jones and I felt comfortable with the firm. We talked about annuities and commissions, stocks and mutual funds.
During our 3 years with him, he has his assistant call us annually to set up a regular review. Our family is complicated with two boys who came to us as guardians in their teens and he helped us set up funds for them.
Perhaps I'll write another post on how he looks at allocating our money. For example, I have 300 shares of Intel stocks but he advised us a year ago, or slightly more, not to invest in any more shares. And he gave the reason why we would be better with mutual funds - mostly American Funds.
I believe it is important to have a financial advisor. But you do have to choose someone whom you believe is working well on your behalf.
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