Flipping through the local paper, I noticed a standard advertisement from a “financial planning” firm. We are seeing increasingly of these adverts that are designed and written to appear as an actual editorial of the publication.
The advertisement titled “How to Get up to a 10% Return on Your Funds Without the Risk!” tells us the story of Denny Dolan, who drives a automobile dealer courtesy truck two times a week because they got bored after a year of fishing, golfing, and skiing. Denny says “I haven’t lost $0.01. In fact over the past years I have made 6% (per year). You can also visit http://www.finlit.com/tools to get more info.
Definitely, the advertiser was selling equity-indexed annuities. First, as somebody who has read my weblog before knows, I am of the opinion that these people require to cease referring to themselves as “financial advisors” and call themselves what they are: salesmen. After all, are these people ever paid for providing advice? No. They are only paid when they sell a product. Second, I am not a fan of equity-indexed annuities because they pay salesmen such a hefty commission and they put a debilitating cap on annual earnings. However, that is not the point. The actual query is why these “financial planners” are so secretive about the products they recommend. You can also get info about Individual retirement account.
The remainder of the article/ad continues to speak about achieved returns and a horror story about Denny’s neighbor, who used a traditional financial planner and had their nest egg cut in half. Suddenly, the advertisement ends. Notice anything missing? The huge 4″ x 11″ advertisement failed to tell us how the advertiser produced such impressive returns without the risk.
To make my point, I called the 800 number at the finish of the advertisement and had them send me their free document. Not surprisingly, the document was as secretive as the newspaper advertisement. The 15 page document didn’t raise the product they were recommending (equity-indexed annuities) until page 11. More alarming, the document seldom discussed what an equity index annuity actually is! It only reproduced quotes that had been posted on a general discussion forum online about how great these products are, but not WHY they were pretty. Not of the people quoted were even credentialed. (It is a tragic fact that the annuity industry hires people to do nothing but surf the world wide web all day and write quotes that look like they are from a satisfied annuity customer explaining how happy they are with their purchase.)
My point is that a lack of disclosure and transparency in an advertisement ought to be a red flag when it comes to financial products and advisors consumers ought to think about. If the product being recommended is not of high quality to mention in the advertisement, is it worth purchasing?