Can a Financial Adviser also be your friend?
NO! This is no surprise–Jordan’s story shows just how complicated and disastrous to your retirement nest egg having your financial adviser as a friend.
When he learned I write this blog, Jordon was eager to tell his incredible and lengthy financial story so that other teachers (and all investors) will learn how to protect their money. As a retired Los Angeles Unified School District English and theater arts teacher, he knows how difficult our colleagues experience with people we trust to provide objective financial information.
He goes into excoriating detail. At times it seems complex and uninteresting. But it reflects our retirement planning system—the 403(b) is a mess by itself but having a financial adviser as a friend makes the deplorable situation worse. In addition to Jordan being sold horrible 403(b) annuities, he and his friend/financial adviser got caught up in the real estate mania just before 2008. It is possible for an ordinary investor to get caught up in investment manias, but the crucial lessons are that Jordan’s financial adviser got caught up in the mania too. YES! Professional financial advisers make huge mistakes too! When people trust a financial adviser, people are blinded to the risks as Jordon’s story will show.
Jordan’s story covers two crises, one is the 2008 stock market crash and Jordon’s serious heart attack. Jordon made a lot of serious mistakes, buying too much real estate with borrowed money (because his financial adviser friend invested in the same real estate complex in Florida!) just before one of the most serious real estate and stock market collapses in history, 2008. But read this story about Jordon’s adviser’s additional recommendations! Learned how Jordan finally said NO.
I am adding on a third tale and the purpose of this blog post: Financial advisers are astute, interesting and social, but never, NEVER, have as a friend. Like other professionals you hire, keep the relationship professional. Better yet, learn to manage your money without an adviser. Jordan manages his money without an adviser.