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#6114 - 11/26/09 11:21 AM Financial surveys: a rant
Bensheim Offline


Registered: 08/16/09
Loc: UK
This has nothing to do with computers! I am treating you to this topic because you're all so intelligent and I have not seen a nasty person here yet.

My OH recently had a meeting with a financial advisor about his pension. That was the only topic on the table. This financial advising firm has been in our lives for some years now, regarding his pension - I mention this to clarify that he didn't pick some financial advisor at random. (He did not meet the usual guy, he met the usual-guy's assistant.)

The response to that meeting which I did not attend - it has nothing to do with me - it is his pension not mine, is a raft of financial questionnaires which we are supposed to jointly fill in.

One of these questionnaires runs to 20 pages and covers both of us, since we live together. Remember the reason he went there? To discuss his pension.

One page wants a detailed list of household outgoing expenditure: utility bills, recreational expenses, school fees etc. THIS is the kind of thing which Mortgage companies ask about, to see if you're good for a loan. He was not asking for a loan.

Another page wants detailed information about income: both of us. My income, reserves, assets have nothing whatsoever to do with his pension.

Another page wants to know about Wills and Estate Planning. This has no bearing whatsoever on his pension. Yet another page wants to know all about Insurance Policies: building, contents, life, travel, mortgage protection, Key-Man etc. This also has no bearing on his pension.

There are also two separate 8-page questionnaires about attitude to financial risk. My attitude to financial risk is irrelevant in this context, it is not my pension.

Since all paperwork matters in this household devolve to me, otherwise nothing would get done, it has taken me some time to respond without sounding witheringly sarcastic. The 20-pager, I have left most pages completely blank because I regard the questions as totally irrelevant to the Topic On The Table: His Pension! The 8-pager, I have completed with written remarks (i.e., not ticked their boxes) or, left questions blank such as my own income which is none of their goddammed business.

I've written a letter to go with the uncompleted forms and shown my OH, explaining how difficult I found it to achieve the right balance between "Don't treat us like children", "Mind your own business and stick to the topic" and "I'm not a nasty person but for heavens' sakes!"

That was a tricky one. I write business letters all the time but I must admit that that one took a while.

Any opinions? Other than "Yeah that's bureaucracy for you these days"

Thanks


Edited by Bensheim (11/26/09 11:23 AM)

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#6116 - 11/26/09 06:18 PM Re: Financial surveys: a rant [Re: Bensheim]
joemikeb Offline
Moderator

Registered: 08/04/09
Loc: Fort Worth, Texas
I am not a financial manager nor a certified financial planner and have no pretensions of being either, but I do know this. Unless you and your OH finances are kept scrupulously separate and there is no legal entanglement between the two of you, regardless of whose pension it is, it will effect both of you at some point. Someone I know took early retirement a few years ago from a comfortable Florida civil service job and wisely sought the advice of a financial planner regarding how to handle his pension. Unfortunately his financial planner was apparently not as thorough as the one your OH consulted and failed to get some crucial details before offering advice.

My friend was advised to invest in a condo on Florida's Treasure Coast which at the time was really hot property and people were getting rich buying and flipping condos. Three weeks after closing on the condo the Florida housing bubble burst and purchasers were walking away from $80,000 earnest money deposits on properties that were suddenly no longer worth the value of the deposit. Okay, that could have happened to anyone and did happen to tens of thousands of others, but that is the least of the problems.

Because the financial planner had failed to do due diligence in gathering all the pertinent information he overlooked the fact this was an early withdrawal of the pension benefit subject to a 10% tax penalty for early withdrawal, plus an additional 6% income tax penalty, plus 3% interest on the outstanding balance until the IRS (Internal Revenue Service) is paid.

My friend has returned to work but because the job market in Florida collapsed along with the housing market and the general economy, plus civil service regulations, he has to start all over again at the bottom of the employment ladder and he still owes the IRS tens of thousands of dollars which he has little or no hope of repaying in his lifetime unless he can reach a settlement with the IRS. He has moved into his un-merchantable investment condo and drives two hours each way to work at the closest job he can find. His BH is caring for their child during the days and working for minimum wage at night to cover the installments on the tax attorney's fees. All because the financial advisor failed to do due diligence.

All of the forms and paperwork may seem immaterial to you now, but IMO better the advisor have complete information and analyze it all very carefully than something you did not anticipate reaching out to bite you when you least expect it and probably when you can least afford it. If you are going to use the services of the advisor it is better to tell all than let him flail around in the dark. If you don't want to give him the information, you are probably better off firing the advisor and saving his fee. But that is just my opinion.
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#6118 - 11/26/09 08:01 PM Re: Financial surveys: a rant [Re: Bensheim]
ryck Offline


Registered: 08/04/09
Loc: Okanagan Valley
I'm with joemike on this one. You mentioned that you've been with this firm for years so I'm surprised that all this information wasn't requested a long time ago. It is a positive thing that this advisor wants as complete a picture as possible. It is the only way that he can develop a comprehensive plan.

While a lot of the things he asked are similar to questions that might be asked for other things, like getting a loan, they are all inter-connected and would have a bearing on the right plan for your OH - up to and including estate planning.

I don't know what the inheritance laws are in the UK concerning couples but there must be a reason the advisor wants information from both of you. My advice would be: Ask him.

ryck


Edited by ryck (11/26/09 08:03 PM)
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#6123 - 11/27/09 10:02 AM Re: Financial surveys: a rant [Re: joemikeb]
Bensheim Offline


Registered: 08/16/09
Loc: UK
Joe, thanks for the long reply but that situation does not apply to us; indeed the opposite.

He is going to work past the predicted retirement age. Why? Because he wants to for a start. What else would he do all day long? Secondly because he enjoys his work - it's his own company. He's often said that even if he won the lottery (which would be a miracle, since he doesn't do it) he would keep the business going.

I've read your reply three times and still don't understand how your friend could have ended up owing tens of thousands of dollars to the tax man. I also don't understand how it can be the financial planner's fault that your friend took early retirement and suffered those penalties - why didn't he ask his own employers too? I presume you mean the civil service pension not a private one. Why take only one person's advice and then blame that person for everything? Especially regarding the civil service regulations, starting all over again at the bottom of the ladder - why didn't he ASK someone at work before committing? Wouldn't you? I would have done. confused

There is no fee to our financial advisor and never has been down all these years. Not a penny has changed hands. There's another 12-page document here (as required by financial regulations) about their charging protocols and they seem to be a complicated recipe of commission and/or fees but you'd have to be a financial advisor to understand it. Commission is charged on products sold, but might not be at the discretion of the advisor. The last product sold was Key Man insurance and no commission was charged on that.

Regarding "something you did not anticipate reaching out to bite you when you least expect it and probably when you can least afford it" that's precisely what Insurance is for, isn't it? We've got insurance policies for everything but won't bore you with the long list. And if something not on the list happens which requires a spend, that's what reserves are for, aren't they? Additionally, we live on a large plot, the end of which would be snapped up for ££££££s by a developer the way they're building round here. Every time someone comes here for the first time they say "That's your pension!"

Anyway, sorry about your friend's plight and I don't want to sound too harsh, but IMHO he should have asked for a second opinion, especially from the very people with the power to exert all those penalties.

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#6124 - 11/27/09 10:24 AM Re: Financial surveys: a rant [Re: ryck]
Bensheim Offline


Registered: 08/16/09
Loc: UK
Ryck, thanks for replying.

I'm surprised they don't already have much of this information too. It has already been established, however, that my files are better than theirs.

I don't agree about the "complete picture", especially with regard to household expenses. It would take me literally hours to go through all the amounts for gas, electricity, water, telephone, council tax, TV license, car costs, multiple insurance policies, dentist, prescriptions, accountant, travel, FOOD AND DRINK...........just to be told, like a child, "You can afford to save some money every month."

I already know that. I'm not prepared to analyse all this for hours for someone else, to be told something I already know.

Regarding inheritance laws in the UK, it is already sorted in our Wills. They are very tax efficient! They way we've done them, there will be zero inheritance tax - even our solicitor (that's lawyer in the US) was impressed. There is therefore no need to reiterate all that to the financial person/firm, either.

It would have been better if the person sending all these questionnaires had said in the covering letter something like: "Most of these questions are irrelevant to you, especially the last four pages on Mortage Requirement (there is none), but I didn't write the questionnaire, I am merely obliged by Financial Regulations to send it to you." As she did not, I became irritated enough to post about it here. I've sent a 3-page letter back. I wonder what will happen next.

My money's on she does not read my 3-page letter properly and sends the blank pages back. <where's the rolling-eyes gif when you need it?>

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#6131 - 11/27/09 05:14 PM Re: Financial surveys: a rant [Re: joemikeb]
artie505 Online


Registered: 08/04/09
Has your friend consulted with an attorney?

The facts you've presented suggest that hir financial planner's performance may transcend simple failure to exercise due diligence (which, in and of itself, is damning for a (certified ?) financial planner).
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#6132 - 11/27/09 05:45 PM Re: Financial surveys: a rant [Re: Bensheim]
ryck Offline


Registered: 08/04/09
Loc: Okanagan Valley
Originally Posted By: Bensheim
There is no fee to our financial advisor and never has been down all these years.


Are you absolutely sure? I ask because it isn''t logical. Why would a person or company provide a professional service for years for free?

Again. I don't know the rules in the UK (and, like joemike I am not an advisor) but, depending on how you are invested, you may have been paying via hidden fees that are built into certain types of investment products.

This is a topic worth a discussion with your advisor.

ryck
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#6144 - 11/28/09 06:54 AM Re: Financial surveys: a rant [Re: Bensheim]
joemikeb Offline
Moderator

Registered: 08/04/09
Loc: Fort Worth, Texas
Not to argue, but my friends employer, the state prison system, did not offer any financial planning or advice to employees and instead provides a list of private firms/individuals you may contact if you wish and all either charge a fee or take a rake-off from the insurance policies and equities they recommend and sell. So he took advantage of the only service that was available to him and it was inadequate.

I seriously doubt your planner is doing all that work out of the goodness of his heart either. Most likely he is taking a substantial commission from all that insurance you mentioned and probably from investment securities he has been selling you all over the years. That is the way the game is played in all the American and European economies.

Frankly if you have insurance to cover unexpected tax bills, you should become an agent and start selling that in this country. You could make billions of dollars doing that.
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#6154 - 11/28/09 02:37 PM Re: Financial surveys: a rant [Re: Bensheim]
bob82xrp Offline


Registered: 08/04/09
Loc: Tucson
Quote:
Ryck said: "It is a positive thing that this advisor wants as complete a picture as possible. It is the only way that he can develop a comprehensive plan."

Bensheim said: "I don't agree about the 'complete picture' . . . "


I sympathize with your frustration with the bureaucracy of forms, and while it seems as if the financial planner in question should already have much of this information, the concept of a "complete picture" being essential to getting the best financial advice that Ryck (and joemikeb) raised seems sound to me. One doesn't go into a doctor's office with a stomach ache and refuse to allow the gall bladder, liver, pancreas, etc., to be topics of conversation.

What's been left out of this discussion are the details of the particular questions your OH took to the financial planner. Perhaps the nature of their discussion raised issues outside the scope of the pension plan that needed some additional information to address properly?

As with doctors, you are free to either cooperate or not with your financial advisor as you see fit, though they might not want to keep you as a client. I'll be interested to hear the response you get to your letter.
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#6211 - 11/29/09 01:12 PM Re: Financial surveys: a rant [Re: Bensheim]
roger Offline


Registered: 08/04/09
Loc: Vermont
sounds like you should talk with the "usual guy", and find out if it was just his possibly over-zealous assistant that thought this was all necessary?
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#6220 - 11/30/09 09:41 AM Re: Financial surveys: a rant [Re: joemikeb]
Bensheim Offline


Registered: 08/16/09
Loc: UK
Originally Posted By: joemikeb


I seriously doubt your planner is doing all that work out of the goodness of his heart either. Most likely he is taking a substantial commission from all that insurance you mentioned and probably from investment securities he has been selling you all over the years. That is the way the game is played in all the American and European economies.

Frankly if you have insurance to cover unexpected tax bills, you should become an agent and start selling that in this country. You could make billions of dollars doing that.


Hallo Joe

Not to argue, but the financial planner has only sold us one insurance policy, ever. That was Key-Man insurance about 15 years ago. He said at the time that he wouldn't charge commission. All the other insurances I bought myself - and often change provider at renewal time.

Insurance to cover unexpected tax bills? Again, not to argue but that's why we have an Accountant. If there were any unexpected tax bills looming he would have told us - we've been with him for over 10 years too. He charges an annual fee that that's not the issue here.

What investment securities? Do you mean the pension? Is that Joe-speak for pension? I'm not arguing, just seeking clarification.

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#6221 - 11/30/09 09:49 AM Re: Financial surveys: a rant [Re: bob82xrp]
Bensheim Offline


Registered: 08/16/09
Loc: UK
Originally Posted By: bob82xrp


I sympathize with your frustration with the bureaucracy of forms, and while it seems as if the financial planner in question should already have much of this information, the concept of a "complete picture" being essential to getting the best financial advice that Ryck (and joemikeb) raised seems sound to me. One doesn't go into a doctor's office with a stomach ache and refuse to allow the gall bladder, liver, pancreas, etc., to be topics of conversation.


Interesting analogy but that wouldn't happen. I know far more about our personal finances than I do about human physiology.

Quote:
What's been left out of this discussion are the details of the particular questions your OH took to the financial planner. Perhaps the nature of their discussion raised issues outside the scope of the pension plan that needed some additional information to address properly?


I've dealt with the other issues raised in their discussion, in my letter, and explained why no intervention on the part of the financial planner is necessary at this point in time.

Quote:
As with doctors, you are free to either cooperate or not with your financial advisor as you see fit, though they might not want to keep you as a client. I'll be interested to hear the response you get to your letter.


They might not want to keep us as clients? That's ok too. The world is full of financial advisors and there is one right here in town which would be considerably more convenient that one retained for historical reasons 200 miles away.

In fact, it would suit me much better. I'd get the guy round here and show him all the files. Good Idea, thanks! smile

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#6224 - 11/30/09 10:56 AM Re: Financial surveys: a rant [Re: Bensheim]
joemikeb Offline
Moderator

Registered: 08/04/09
Loc: Fort Worth, Texas
Quote:
Insurance to cover unexpected tax bills? Again, not to argue but that's why we have an Accountant. If there were any unexpected tax bills looming he would have told us - we've been with him for over 10 years too. He charges an annual fee that that's not the issue here.
Another friend of mine said that he had an accountant to take care of all his tax liabilities and had been doing so for over ten years. That was about three weeks before the tax accountant was led out the door in handcuffs on a variety of federal charges involving taxes. My friend then discovered he owed the IRS the equivalent of the gross revenue from his business for at least three years because the tax accountant had been incorrectly reporting his income and expenses.
Quote:
What investment securities? Do you mean the pension? Is that Joe-speak for pension? I'm not arguing, just seeking clarification.
By investment securities, I am referring to whatever financial investment instruments the monies that will be used to pay the pension are invested in. In this country that could be anything from a bank savings account, government bonds, money market accounts, mutual funds, stocks, etc. If those pension funds are not invested an earning money, then you are being systematically robbed.
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#6225 - 11/30/09 12:32 PM Re: Financial surveys: a rant [Re: joemikeb]
Bensheim Offline


Registered: 08/16/09
Loc: UK
Originally Posted By: joemikeb
Another friend of mine said that he had an accountant to take care of all his tax liabilities and had been doing so for over ten years. That was about three weeks before the tax accountant was led out the door in handcuffs on a variety of federal charges involving taxes. My friend then discovered he owed the IRS the equivalent of the gross revenue from his business for at least three years because the tax accountant had been incorrectly reporting his income and expenses.


For every insurance horror story, Joe, there is an equivalent-other. The entire insurance industry is predicated on fear. They make people afraid of what-ifs.

My fatherinlaw did not buy into this fear, took out no insurance policies and died age 90, never having had to make any claims for anything. His widow, my motherinlaw, regarded that as a triumph against the climate of fear which the industry promotes.

I'm not saying he's a good example, just a real example. I'm not saying that insurance is a scam, I'm saying that they prey on peoples' fear of the unknown and possible bad times.

The whole world runs on two motives: Fear and Greed. The insurance boys make millions out of it. Of course they do! Millions of policy-buyers never claim. Their instalments are used to pay out to the few who do claim. Easy money for them - usually. Actuarial-tables-usually.



Quote:
By investment securities, I am referring to whatever financial investment instruments the monies that will be used to pay the pension are invested in. In this country that could be anything from a bank savings account, government bonds, money market accounts, mutual funds, stocks, etc. If those pension funds are not invested an earning money, then you are being systematically robbed.


Are you unaware of zero-interest which pertains nowadays? How can you be? There is nowhere for savers to put their spare funds. No where pays interest beyond a microscopic amount. This has a good-side: credit cards don't charge interest on debts either. Mortgage payments have been halved, in our case.

Thanks for reminding me about corporate taxes BTW, I then remembered a Corporate Tax bill for ~£700 which must be paid before tne end of the year. I'll sort that out tomorrow. Honest, I am glad you reminded me.

I don't need to tell you (all) this, but to explain my current mien, my little brother died a month ago. I have been struggling with my grief ever since, because he died so young and needlessly too. It didn't help to find out that he cashed in his own life insurance about a month before he went, thus leaving his own widow with no funds as she had expected. She couldn't have insured against that happening, could she?

frown

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