Speaker 1 00:00:08 What's up everyone. Welcome to the finance for physicians podcast. I'm your host, Daniel Rin. Join me as we dig into what it looks like for physicians to begin using their finances as a tool to live better lives. You can learn more about our
[email protected] let's. Jump into today's episode.
Speaker 1 00:00:26 What's up, everyone. Hope you're enjoying your day. I am excited to talk again about, uh, I think a pretty, pretty big topic. We're gonna be talking about, uh, how to spot if you're working with a insurance person posing as an advisor, um, it's, it's more common than you might realize. And, um, I actually know it firsthand. Um, that's, that's how I used to, uh, do my business. So, uh, we'll talk about that a little bit as well. Before I jump into that, just quick, quick little announcement, I'm gonna be doing some, uh, guest hosting for another podcast called financial residency. And so it's similar sort of, uh, content as, as we do here. Definitely go and check that out and, um, look forward to doing that and, um, providing more content for you guys. Also, if you have topics we're always looking for ideas. I have all kinds of ideas, uh, in my head really we're most of our content comes from our one-on-one interactions with our clients, but we also love when you all bring up, if even if we're not working with you one on one, if you're, if you have topics you're interested in, I'd love to cover 'em.
Speaker 1 00:01:43 Um, so please reach out, uh, with any, anything like that. And, uh, we can definitely put it on the docket. Okay. So, so today we're gonna, we're gonna be talking about, uh, I'm gonna go through five of the big signs you might be working with an insurance agent. That's just posing as a, as an advisor. And I think, like I said, I used to do this in, uh, in my, at the beginning of my career. It's really the main reason I started our planning firm, uh, in 2014 was to get away from a lot of these conflicts of interest. And I kind of like realized I was acting in this role of like the poser kind of. And so it's, you know, I know it firsthand. I, I acted in it. And so it's pretty common. I, you know, I think probably, I don't know the percentages, but I would have to guess like maybe even the majority of advisor client relationships are in this capacity.
Speaker 1 00:02:46 And so it's, it's definitely a common thing. And I think a lot of people, uh, the part that's concerning is a lot of people don't realize that they're actually working with a salesperson. And so I'll talk about that. Hopefully you can, you can come away with this, um, you know, with better awareness. I think that's the key is just having awareness. And that was my issue with that role, as you started to feel like you were kinda like hiding posing and, you know, it's, it doesn't, you don't sleep as well at night. I think it's better to have, you know, transparency and awareness and that kind of thing. And, and that's my goal today is just to kind of pull back the curtain a little bit and, and just share some of that, uh, what that looks like and, and give you a little bit more awareness.
Speaker 1 00:03:29 Okay. So number one thing to look out for is they seek you out. So maybe they emailed you in training cold, or maybe even better. They were referred, uh, by a colleague of yours in, in training, and maybe they got your cell phone from them and they called you and they said something along the lines of like, you know, your buddy says, you're awesome and says we should meet and that, and they say that you might benefit from all this value I'm adding for them. And so if you trust, so, and so, buddy, you know, you're probably more likely to take that meeting and see what they have to offer, but what's interesting about that, uh, whole interaction, a lot of times the, this so, and so advisor has been super aggressive with, so your buddy in, you know, basically not exactly tricking them, but like really strong arming them into getting some referrals or, uh, contacts.
Speaker 1 00:04:42 And so it's hard to say no to people. And so these guys really take advantage of that and can, you know, I've, I've done that my, myself, I've been in meetings where, you know, I'm being aggressive about, uh, getting people's names and then, you know, reaching out to, to them and saying, you know, Hey, so, and so said, you're awesome. And you know, it's not a lie. It's just, you know, very aggressive. So, or maybe they, uh, maybe they were referred by, uh, another professional and that that's probably even a higher trust level. And, you know, they reach out to you and are calling you, I think the key though, with all this or the, I guess the flag, the red flag with all of this is they're, they're like seeking you out and that's not, that's a sign of like sales role type behaviors.
Speaker 1 00:05:29 Like they're aggressively pursuing business. This is not 100% the case, but it's probably like 95 plus percent of the case. It's like when people are aggressively seeking you out, that's a good sign that they're more likely to be this, you know, in this sales capacity. Uh they're cuz they're trying to transact business and um, you know, get, get those, get the quota of that kind of thing. Um, so that's the first, first big thing to look out for is they're seeking you out as opposed to your, you know, seeking them out or may, you know, maybe your colleague referred them. Um, and then you reached out to them and, and or maybe you found them through some source and have reached out to them. That's completely different. Um, I think that's a more professional way to go about it. You are in control of more of the situation and you've, you allows you to do your homework.
Speaker 1 00:06:21 It doesn't catch you off guard. Um, so that's, that's the first thing is, uh, to look out for second big thing is they're offering advice. I'm doing air quotes <laugh> you probably can't see 'em cuz we're on audio only, but air quotes they're offering free advice or low cost advice, um, in some cases, but they're offering this advice at a very low or no cost to you. And I say air quotes advice, because it's really not. I mean, it's, they call it advice, but it's, you know, it's not, so that's a warning sign because you know, people have to make a living. And if this is especially common, I think, I don't know. I guess it's common all across the board, but a lot of people in training, uh, these advisors like go and do like steak dinners. That's another thing. If they're buying your meal that's or they're doing a steak dinner, <laugh>, that's, that's always a bad starting point that kind of goes into that first category.
Speaker 1 00:07:20 But um, when, when they're offering this, you know, free service, they're like free advice. And a lot of times they'll say, well it's cuz you're in training, but like, no, that's not true. Like they're making, they, they need to make money. They can't just work for free. Like nobody works for free. So, and if they do then there's something eventually there's gonna be a catch or, or they're running a nonprofit. So if they're really passionate about that, they need to start a nonprofit. But uh, most cases there's a catch. And so the catch is they're, they're making money on the products or whatever they're getting you to do as a result of that. So there's free advice is a red flag. That's not a good deal. Um, and so, you know, when they're offering this free advice, that's a clear like warning sign. Like if that's, if you said that was your situation, I would say there's like a 99.9% chance that if you really understand this person's role, they are a salesperson.
Speaker 1 00:08:16 And so that's number two thing to look out for is, is the free or, you know, discounted or whatever you wanna low, low cost advice, number three, big reason, uh, or big thing to look out for. They don't refer to them themselves as a salesperson and instead position themselves as a trusted advisor. And, and if they're really good or they're really rehearsed, maybe they even act like this trusted advisor, even though they're technically a salesperson. So basically, uh, they are posing as a trusted advisor and really good at acting the part and have probably convinced themselves that they're that. But if you do your homework, you will quickly realize that they have a license to sell products. You know, they're, they're in the business of product sales. And so the longer people are in this, like, like I said, I did it for many years.
Speaker 1 00:09:17 I think I did it. I did it for seven or eight years when I eventually stopped. But you know, towards the end of that, you get really, really good at that process. And even you, you know, I'm talking from the standpoint and the advisor myself, I convince myself that I'm the trusted advisor as well. And that's when it's like, you know, sentenced. I mean, you, you can't really convince somebody otherwise at that point. So they're gonna be very good at, uh, acting the part, finding your pain points and using their solutions to solve those pain points. Um, which you know, is how a good trusted advisor works. Uh, the, the problem is so they're polished. They're fine tuned. They act the part. The problem is they're not that. So you might be thinking, well, how the heck do I know that? So it's not, that's the issue with how our industry works.
Speaker 1 00:10:12 It's not as easy as it should be because you look at their title that doesn't help. They're gonna be the same title either way. So you can't just look at their card, their business card, uh, you have to look at, uh, you know, you have to do a little bit of diggin. So you can, there's two main ways to find out if they're in the product sales business, number one is, are they, are they licensed as a broker? So you can do like a broker check. I think it's called. Yeah. So like you can go on broker check and uh, look someone up. And for, for instance, like you look me up, I just did it. <laugh> uh, I used to be a broker or work for a broker. And so it says, when you look up my last name, which is Ren, w R E N N E, you can look me up.
Speaker 1 00:10:58 It says that I was previously registered to a broker. Whereas in my search, it came up with four different people. The second person, I guess, I don't know, maybe this is a cousin I didn't know about is registered to as is registered as a broker with Morgan Stanley. So that person is a broker, which in other words, they're selling investment products. And, uh, whereas me, you can see if somebody ever has been registered as a broker. What you ideally see though, is that they're, they're active as an investment advisor. So that's, so there's two things you're gonna see. They're either gonna be a broker or an investment advisor. And then for people that were prior brokers, it's gonna say previously a broker. So ideally it says investment advisor, and maybe it says previously registered as a broker, cuz most people, you know, kind of start out in that side of the industry.
Speaker 1 00:11:52 But what you, if you, if you see that it says broker reg regulated by FINRA. That means they are in the business of selling investment products. In other words, they have a license to sell those products and, and, you know, will the other big way to look. That's just one of the most common, uh, areas. The second, most common is insurance licenses. So you can search, um, like, uh, the hard part about this one is it's like a state by state thing. So you can search, um, I'm in Kentucky, you can search for like Kentucky life and health insurance license. I'm doing it as I'm, I'm talking, you can search it for like the Kentucky life and health insurance license search, we'll say. And basically, so for this, so Kentucky life and health insurance license search is what I Googled. And so the first result is licensee, uh, search.
Speaker 1 00:12:50 So basically, um, you can search. So this, I click on the link, it pops up to the department of insurance for Kentucky and you can search by individual or business in the, in this example, if you're, you're gonna be wanting to search by an individual and you can search by li you know, last name is probably the one you're gonna use. So let's search for me there I am. So I, so I had, uh, in that prior role I was talking about, I also had those insurance licenses and the most common ones for financial advisors to have are life and health. And so I pop up on this search, but the key is I show is inactive. And so basically if someone you're working with or considering working with you can search their last name in the given state, you can just search your state that you're in, that's probably the way to do it.
Speaker 1 00:13:43 And then if they have that active insurance license, you can look at it and it's gonna show details like which companies and, and which states and see. So if they have that active, that means they're in the business of, uh, you know, selling insurances. And so that's, that's the other big area to, to look out for. So that's the second or the third big sign is they are, you know, they're acting like an advisor. It's hard to, you know, it feels like you're working with a trusted advisor, but when you do that homework on 'em, you realize they're, they're actually registered to be sales people. And so in this, in that situation, they're gonna be walking a trope. It's very difficult to balance it. I would say it's impossible to balance those two roles. That's why I left. Um, I didn't feel it did not feel achievable in it's a very difficult conflict to, to navigate.
Speaker 1 00:14:40 So number four reason or, uh, sign to look out for would be that their advice tends to be very similar across clients. And it tends to involve like the same sort of things like the same sort of products, mostly, um, like their solutions, like their solution list is very similar across their clientele. Now this is difficult, or I guess this could be difficult because you, it's hard to tell which what their clients are doing, unless you have good friends that work with them. And you're on that level to where you can ask the questions. Um, and that's great to do because you can quickly ask, like, what did you, in, what, what did you end up doing with them? Like, what was the, what was your follow up to the process? Or what did, what did you end up buying or changing or doing or investing in or whatever, and look at that and then compare it to what like you did.
Speaker 1 00:15:37 And a lot of times in these roles, like it's very similar, unless you proactively push it a different direction. They tend to have a process that's very systematic. And it tends to, even though they're working as the trusted advisor and, you know, acting just like a trust advisor, would that end step where they're giving you the recommendations, it's gonna be basically their products that they tend to sell are gonna be like the end all be all solutions or, you know, most likely fill in solutions and they're gonna apply them for whatever given problem they identify that you have. And so these products are gonna be very similar across the board. So, you know, you can, there's, this might be a little harder to find out. I guess you could ask them. I don't know. It's hard to tell if that they're gonna give you good info, but like you could ask them what their prior recommendations have been, or you could, if you can find other people they work with, that would be a good question for them.
Speaker 1 00:16:35 Um, but these, the, the, and I can, I'll tell you some of the, the most common products that you'll see. So like maybe they're using the same insurance company and life insurance is always coming up and disability insurance is, is coming up always. And it's, like I said, tends to be the same company. And then maybe they're using one company for investments. So like American funds is probably the most common solution that this category of people, of advisors use. There's others that are less common that, that they can use. But American funds is probably the biggest. So maybe they're selling their company's disability insurance, their company's life insurance or their go-to company. And then they're selling American funds, uh, investment vehicles, or maybe they're using an annuity to help you invest. So those are, I'm just throwing out buzzwords. Those are very common, like in solutions of like insurances and investments that you'll often see.
Speaker 1 00:17:31 So that's, that's the number four thing to, uh, look out for. And the last thing, the fifth thing, and I think this is probably for a lot of people, the hardest thing is thi this, this, uh, advisor, they make it really, really hard to leave them, especially the more of their stuff you buy or own. And especially like early on after purchasing some of these products, they make it incredibly difficult to leave. So a lot of people, all these, the first four reasons, some of you maybe have been like, yep, yep. Yeah, that's kind of, that's kind of my setup. A lot of people know that they're completely working with someone that is really a salesperson that's kind of like acting the advisor part. Uh, but they just, don't, it's a, it's painful to leave, uh, or at least they're making it out to be like super painful to leave or they're harassing you or whatever, if you ever show signs of leaving.
Speaker 1 00:18:29 And so that's the, the reason that's happening is because they are financially penalized when you leave. Um, especially on some of these products, like the most aggressive example or most extreme example is like you buy life insurance, especially permanent life insurance, you're paying a lot for it. Uh, and if you leave within the first 12 months, and a lot of cases, this insurance agent slash advisor has, uh, been paid all their commissions on it on day one. And so, and these commissions are big. So maybe it's like 50% of your annual costs. So let's say you're paying a thousand a month for the product. So 12,000 a year insurance agent maybe gets a check for 6,000 day one. And then if you leave in seven months, they have to pay back up, you know, sometimes all $6,000 to the company, the insurance company. So, and it can get more extreme, like, but basically like it financially penalizes the, uh, insurance agents or, uh, investment brokers when they lose business.
Speaker 1 00:19:35 There's also other penalties that are involved if you have a hard time retaining business. Um, so basically it's all designed to like retain, retain, and they're gonna be aggressive trying to not allow that to happen, especially the more these products you have now, just so you know, it's not nearly, it's, it's not nearly as difficult as it might is. They will make it out to be, especially if you can find somebody else to help you through it, like they're gonna kind of take the brunt of that effort. And so just know that's the case. Um, now if you're doing, if you're gonna go, you know, can them and go do yourself. Um, you know, you just have to make sure and do a little bit of homework to know like what the alternatives are or how to make adjustments or whatever, but it's not, it's usually way over, they've over hyped that whole transition, uh, and made it out to be worse.
Speaker 1 00:20:27 But it, it's not something you just wanna do blindly. You still need to go, you know, understand what the new plan is basically gonna be on the other hand, if you aren't a good customer, I guess so, like I, the, I was saying like, especially the more products you own of theirs, they're gonna make it very difficult to leave. But on the flip side, like if you aren't buying as many of their products, or in other words, if you're not as good of a customer for them over time, they're gonna stop giving you love. I mean, there's a very big incentive or a disincentive, I guess, uh, to, uh, continue working with those people that don't buy their products, cuz that's how they make a living. And so either way, you know, it's gonna be, uh, either very difficult to leave or, you know, hopefully that situation or the situation is that you're, uh, it's, it's easy to leave cuz you don't have a lot of their junk that they're selling.
Speaker 1 00:21:25 Now the problem with that is they're maybe you thought that they were a trusted advisor and you've kind of like realized that they're not. So, you know, hopefully, you know, you can kind of nip this in the butt on the front end, the sooner, the better on this kind of thing. Unfortunately, like I said, this is, this is kind of like an, an industry issue. Um, it's not, I'm not a fan of the, of doing it this way. It's the reason I left that uh, area of the industry. My, uh, preference by far is to separate the advice. I mean, that's what we do with most other things. Like, you know, when you're working with a salesperson, when you start talking to them. So like I would be an advocate of like making it more clear or providing more consumer awareness. Like this person is a financial advisor, which means they actually are just advice provider.
Speaker 1 00:22:21 And then this person is a salesperson and therefore they are, uh, able to be selling you products. So, but that's currently, unfortunately that's not the way our, uh, industry and regulations work. Uh, it's kind of more of just a very, very gray, difficult to find out. So you, at this point in the world, we're in, you have to do your homework, if you are, I'm happy to, um, I do this myself. So, you know, I know not, I'm not expecting everybody to work with us, even if you're talking to like somebody else, you can send us, uh, the name of a firm for instance, or a person in the industry. And we can tell you in like a couple of seconds, like if they are licensed to sell products, so, you know, or you can look it up in five minutes yourself, it's, it's very, it doesn't take a ton of homework.
Speaker 1 00:23:10 I ju I would just say, you know, for all of you at minimum, the key is that awareness understanding where you're at and who you're working with and what their conflicts are. I think that's what I would advocate for. And hopefully, you know, some of these, uh, issues to look out for are helpful in, uh, your experience, uh, going through all this stuff. All right, guys, uh, as always good, good, uh, catching up and we will look forward to talking again next time as always, thank you so much for joining us today. If you found this valuable, please give us a review on iTunes and share with a friend. Also check out our website at finance, for physicians.co for all sorts of additional content. See you next time. Finance for physicians is not an investment tax legal or financial advisor. All content included in this podcast is for informational purposes only and should not be considered financial tax or legal advice. Material presented as believed to be from reliable sources and no representations are made by finance for physicians as to another party's informational accuracy or completeness, all information or ideas provided should be discussed in detail with an advisor accountant or legal counsel prior to implementation. You don't have an advisor or like a second opinion. Feel free to check out our website for recommended advisors.
