Suze School: Revisiting Recognizing Financial Advisor Abuse

And again, Suze knows that you are equipped with the actions to take and not take right now, and uh she is giving some advice on what's happening in the economy on the Women and Money community app when she can, you can get that app, by the way, for free by going to Apple Apps or Google Play. Now for those of you who are brand new to the podcast, when Suze and KT take time off, we sometimes revisit an older episode that you may not have heard or we feel it's worth bringing to the top

of your feed again, and today is no exception. We're going to play part of an episode from last spring, all about knowing the signs of financial advisor abuse. Enjoy.

I got her phone number. She gave it to me. I called her, and the first thing she essentially said was, well, how do I know that this is really you? And she was right.

And I said, listen, I need to prove to you that it is me because with artificial intelligence and all these things that are going on, you never really know if you are really you or if what you're seeing is really who you think you're seeing or what they're saying is really who you think is saying it, so you have to be really, really clear. So I said to her, I know on this podcast, which I did, which was gonna be that Sunday. Don't be partners with Uncle Sam. It's a great podcast.

You better all listen to it, by the way. I said, listen to it, and I'll say your name and everything on the podcast, and then you'll really know that it's me. All right, I did that. And then after that I spent a long time on the phone with her. Really telling her exactly what I wanted her to do and what I did not want her to do. 57 year old woman has 4 children ages about 21, 18, I think 16 and 12 somewhere in there.

And her husband 3 months prior to the first time of us talking unexpectedly just died. And here she is 3 months later and she was left a significant amount of money through life insurance policies, term insurance, and she was left to the tune of $7 million. Now this woman has never dealt with $7 million in her life. And that is a lot of money. And what I essentially told her.

And I want to tell all of you the exact same thing, so you are to take out your Susy notebooks, and you are to write this down, and you are to never forget. That I have said this to you. Because when it happens to you, if it ever happens to you, and I can only pray that it never happens to you. You want to do what I'm about to say to you. So what I essentially said to her. Is that listen you are to do nothing other than keep this money safe and sound.

Except obviously pay off debts and things like that, but nothing besides that. For at least 6 months, 1 year or 2 years after suffering the loss of a loved one. And then I went on to talk to her about this and said, you know, chances are it's going to be at least 2 years, maybe 3 years for you to feel like yourself again. And you may feel like you are making the right decisions and that you know what you're doing when it comes to money that you've never handled before, but I'm here to tell you.

You are not in your body. You will get taken advantage of possibly, but you will not be doing that which you should be doing with this money. So she had it in a few places already which I was not happy about, but anyway, I had her contact those banks where the money was. And put it in a major brokerage discount firm in their money market account, all $7 million of it in a treasury money market account, OK. And I said to her, You are to do nothing. Do not touch this money. You are just going to

let it sit there. You are going to make between 4 and 5% on it. Don't worry, interest rates aren't going to go down so quickly right now. Just I care more about you and keeping the money safe rather than what you should invest it in. So she did that and I was so happy and that was that I wasn't thinking about it and then just the other day I get an email from her and she tells me that at this brokerage firm.

And it's one that all of you know, by the way, that I mentioned many times on the Women and Money podcast at this brokerage firm, somebody contacted her. And he had her put $2.4 million in two annuities, $1.5 million in 1 $900,000 in another. He left $1.5 million in the money market account. So that when she wanted to buy a house, it would be there for her, but that's what I had already instructed her to do.

And the rest of the money he was going to put it in stocks and bonds, and that's what he did. And I said to this woman, I need to talk to you. Are you up for a talk with me again? And she said, Sure. So the other day on Friday I spent 2 hours on the phone with this woman. Cause I felt like she deserves that she lost her husband. He was good enough to make sure that she would be taken care of by having term life insurance in place and all of those things, and she deserved that

in my opinion. We all deserve that in my opinion. We all deserve to know what to do with money, to be taken care of, to not have some financial adviser. Do things with people's money when they're not ready to do it just cause this person may make more money or his firm may make more money. Nothing upsets me more than that. Back to the story. So I get on the phone with her.

And I said you do realize that insurance companies do not operate like credit unions or certificates of deposits or even treasury bills, bonds or notes in a CD, if you put $1 million in a CD. While it is true that that bank most likely will have FDIC insurance, you will have $250,000 of that money insured. You probably will name a beneficiary so that in case you die, the money goes to that person. But you therefore would have $750,000 of that million dollars. If the bank went down.

Uninsured However, with a CD, whether it's at a bank or Alliant Credit Union or wherever, for every beneficiary that you have up to a maximum of 5 beneficiaries, now in this case this woman has 4 kids. So if she put 4 kids as the beneficiaries. Of this million dollar CD, she would have a million dollars of FDIC insurance. So in an annuity in the state that this woman lives in. The coverage provided by the state's Life and Health Insurance Guarantee Association.

Does not increase based on the number of beneficiaries, so the protection limit in most cases for annuities is $250,000 per contract holder regardless of the number of beneficiaries named. Therefore, with multiple beneficiaries, she puts a million dollars into this with multiple beneficiaries. Still, the total protection of the million dollar annuity would still be capped in this particular state at $250,000 but she didn't put a million dollars in an annuity. She put $1.5 million in one annuity.

And 900,000 in another annuity contract. And when asked if it was insured, is it safe, the agent said, Yes, we're insured this major brokerage firm is insured SIPIC and everything, but never explained to this woman. That if the insurance company was to go belly up, it has nothing to do with the brokerage firm. If the brokerage firm goes under, that's when their insurance comes into place. However, when you buy a stock and the company of that stock goes bankrupt, the major brokerage firm's

insurance isn't going to help you. If you buy an annuity at a company and that company goes under. The major brokerage firm's insurance isn't going to help you. It's the insurance company, the Life and Health Insurance Guarantee Association of the state. That you live in where you bought the annuity. Am I making sense? So I'm like on the phone and I said, do you understand to this woman? That you put $2.4 million in this annuity.

And chances are only $500,000 of it if it were two different companies, and I'm not even sure it was $500,000 of it. It is protected if this company goes under but nothing else. And she didn't know that. She didn't know that. Then I said, Well, why did you do this? And she says to me, I didn't want to do it. But he was pushing me, Suze. I kept saying, I think I need to wait, and he kept saying, no, no, let's do this, let's do that, and before I knew it, it was done.

Now I have to tell you I think about that as financial abuse, believe it or not, and why do I say that. When you are a financial adviser. You are not a salesperson. But you have to be a financial adviser and manage the advice that you are giving somebody, and the only way that you can do that is to understand who the person is, what have they gone through. And when she walked in, she told him that she just needed everything safe and sound. She told him the loss that she had.

And then she didn't want to do anything really. And so first they put all the money in a money market account. All right. And the next meeting, it was this and that and all of a sudden she started to feel OK with this person, and before you know it, the money's invested. But he never once asked her about anything to do with her personal financial situation. I asked her, did he ask you if you had a trust or a will? No. Did he ask you

if you were sick? No. Did he ask you if you have parents and in-laws that you need to take care of with this money? No. Did he ask you what your mortgage payments were and the interest rate on your house was, so that maybe you were better off paying off the mortgage on your home that might be at 7% than putting it in a money market account? No. Did he ask you about anything like that? No, she says. I said, So what happened? You walked in, you sat down.

He knows you have $7 million and what does he say to you? He tells me what he wants me to invest it in, just that simple, Suzy. And I say to her that is not a wealth manager. Cause $7 million everybody is wealth for a woman with a family of four who just lost her husband and doesn't have a clue. Where she should go, what she should do, and how she should be. And so a salesperson, you write this down. A salesperson

is exactly what this gentleman was. A woman walks in, has a lot of money, doesn't ask you anything about your situation, and simply tells you what you should invest in, and then says to you. Let's do it. And you say, no, no, I don't think I want to do it right now, and he pushes you and pushes you and you're so vulnerable because you don't know what to do and you just give up your power and say, OK. That is. Again, in my opinion, financial abuse.

Because as an adviser you should recognize when a client is ready to do something and when they are not and even if they want to do something. A good financial adviser, knowing that somebody has just lost their husband unexpectedly, wasn't even sick a day unexpectedly. Should say, you know what, we're not going to do anything cause you're not ready to yet. Just let's keep it safe and sound, or rather than 2.4 million in annuities. They had a 7% surrender charge the first year and

the second year and so forth. All right. Rather than that, so you want to put it in treasuries, put $400,000 in 6 different maturity of treasuries, OK, you could do that too. And probably if interest rates go down a little bit, you could probably get out more than you put in if you needed it. And she didn't even understand what an annuity was. She's only 57. I said, you do realize that you can't take a whole lot of money out of annuity before 59.5% without a 10% penalty.

She didn't know any of that. She couldn't answer any of the questions that I had for her. If you ever everybody find yourself in a situation. That it doesn't feel right. You don't understand what the person, the salesperson is telling you to do. If you just start to feel like, oh, I just better do it and then get out of here, then I don't have to deal with this anymore. Please, I am begging you not to do it. The good side of this story, because the last thing

this woman should be invested in is two annuities. Last thing, she doesn't need that on any level. Is that the contract an annuity contract usually has a 10 to 30 day out clause so that she has till June 30th to totally Get rid of this annuity and get all her money back. Oh, and did I tell you? She didn't even know she had purchased annuities until she got a package from the insurance company that the broker put the money in, and that's when she realized, oh my God, he went ahead and did it.

So after I talked to her and everything, she wrote the financial adviser who always wrote her right back. And she didn't hear from him from his email nothing. She calls him and all of a sudden his voice box is totally full. She wants all the money put back in the money market account, and she is just going to leave it there until she is ready to do something with it and in the meantime it can just sit making 4.5 or 5% right there.

So the question I then asked her is, you just gave $7 million to this person, so to speak, to take charge of for you. What happens when you can't get him? Who else can you call? What else can you do? Does he have a team? All these questions, and she didn't really know. And I said, I tell you what you're going to do. It's still Friday.

It's still early cause you're central time. I want you to march yourself down into this brokerage firm into their office, and if he's not there, I want you to ask to speak to the manager of that office, and I want you to absolutely liquidate at no charge to you everything that he did against your really wanting to do it. So I hope she did that on Friday. Haven't heard back yet, but we'll see. But the reason that I wanted to talk about this is it still seriously upsets me, ladies.

How many of you have not gotten involved with your finances. You haven't gotten involved with what your spouse is doing with the both of your money. You haven't played the what if if one of you were to die and you've got a lump sum of money, would you know what to do with it? I still am involved with friends and meeting people. Who have a lot of money. But the woman doesn't know anything about it. And she one day may find herself.

In the same situation that this woman is in, not knowing what to do and getting involved with a salesperson who would have probably made a whole lot of money on this. But the point of all of this really is There is a big difference, everybody, between a firm that just simply holds money in a money market account. And a wealth management firm. And when you inherit large sums of money and $7 million is a large sum of money.

You want to make sure that you are dealing with a wealth management firm, a firm that has lawyers just to talk to you and not charge you. Maybe one person who only manages dividend paying stocks, another person that only manages bonds, and one person that maybe oversees a lot of the other things.

She has enough money to have a bond specialist, to have a dividend stock specialist, to have a specialist that can tell her if all of a sudden estate taxes go down to a maximum of $5 million how to plan for her kids so they don't have to pay estate tax. And that's somebody that oversees the entire team, it's a wealth management team. You owe it to yourself to do these things, and a lot of you think you don't have enough money

to do it. And what you're not realizing is that so many of you have over a million dollars now in your 401ks that you've been working so long and you have 1 million $2 million.03 million dollars plus the equity in your house. That's the type of investment advice I want you to be not only looking for. But I want you to make sure. That your family is absolutely protected if something were to happen to any of you.

There's only one thing that I want you to remember when it comes to your money, and it is this people first, meaning you better know about your own money. You better know about everything financially going on in your household. Cause you need to be present to know about your money, so you know the things that you should buy with the money or not buy. So that you really no matter what happens can remain unstoppable.