A few years back, I met a prospective client — let's call him Peter.
He came to me through a referral, seeking financial advice. Peter wasn't unique in his situation: early 40s, married with a couple of kids, working hard to secure a future. We had a great conversation. He told me about his upbringing, his entrepreneurial ventures, and his efforts to grow a real estate portfolio. It was clear he'd worked his way up from nothing to owning assets and managing some high-end properties.
But the reason Peter's story stuck with me is that our conversation, though positive, went nowhere. He already had an advisor, so I left the door open. I did what I usually do: sent him a copy of Dancing With The Analysts to introduce him to our investment philosophy, then moved on. Time passed, and I didn't hear from him.
Fast forward two years. Out of the blue, Peter calls me. His first words were, "I'm ready. Tell me what to do."
When I got on the phone, I asked him to backtrack and tell me what had changed in the past two years. He told me things had been tough. He'd left his job, his new business was struggling, and his real estate investments were underperforming. He'd poured a lot of his own money into properties that weren’t panning out, and he wasn't sure if that had been the right move. Peter felt like he was running out of options.
Interestingly, since that first call, his previous advisor had retired or moved on, and his accounts had been transferred to another group within the firm. He had a few conversations with them, expressing his need for guidance, but he felt that they didn't exactly click.
Before this second call, Peter sent me his investment statements. When I opened them, I was shocked. His entire portfolio was locked into illiquid investments — a variable annuity and hedge fund shares. For someone like Peter — in his early 40s, running a business and needing liquidity — this was a disastrous setup.
Let's talk about variable annuities for a moment.
They're often marketed as the perfect blend of investment growth and insurance protection. Brokers pitch them as a way to invest in the market while guaranteeing income for life.
Sounds enticing, right? That's exactly what the companies want you to think.
But here's the harsh reality: variable annuities are expensive, complex, and often unsuitable for most investors. They come laden with layers of fees — mortality and expense charges, administrative fees, underlying fund expenses, and let's not forget the hefty surrender charges that can lock up your money for years. These costs can easily eat up 3% to 4% of your investment annually, drastically eroding your returns over time.
They're marketed under the guise of providing safety and guarantees. Salespeople highlight the potential for tax-deferred growth and lifetime income, playing on the fear of market volatility and outliving your money.
But what they don't emphasize are the significant downsides: high fees, lack of liquidity, and complex terms that are often difficult to understand.
I couldn't believe what I was seeing in Peter's portfolio.
Here was a guy with a family, building a future, and his advisor had funneled his assets into products that weren't remotely suitable for him. It's infuriating.
Here’s the truth: variable annuities are a profit machine for the companies that sell them and a drain on the investors who buy them.
They're designed to be sold, not bought. The advisors pushing these products are often more motivated by the generous commissions they receive than by what's in your best interest.
Most investors have no idea how much they're giving away for this illusion of safety. They're not told about the long surrender periods (sometimes up to 10 years) during which accessing your own money can cost you dearly. They're not fully informed about the fees that relentlessly chip away at their returns. All they hear is "guaranteed income" and "protection," without understanding the trade-offs.
When I asked Peter what prompted him to reach out again after all this time, he told me he'd been talking with a friend about his portfolio. His friend had recoiled when Peter mentioned the variable annuity, and that reaction got him thinking.
"Why didn't my advisor warn me about this?" he asked.
The answer was painfully clear: because his advisor was more interested in earning commissions than in doing what was right for Peter. It's a sad reality, but one that happens far too often in our industry.
This experience wasn't an anomaly, either.
I regularly get updates from compliance groups highlighting bad actors in our field. The newsletters detail ongoing investigations and legal actions the Securities and Exchange Commission (SEC) takes against firms that fail to act in their clients' best interests. You might think of big headlines like Bernie Madoff when you hear about fraud, but most of these cases fly under the radar.
It's astonishing how much malpractice happens in the financial world, and it's not always at some no-name firm in a small town. It's happening in the largest, most well-known firms in the industry.
Many investors assume that because an advisor works for a big-name firm, they must be trustworthy and competent. They believe their advisor has the expertise to manage their money and that the firm's brand guarantees their interests will come first.
That assumption is dangerous.
Credentials and years of experience don't always equate to acting in the client's best interest.
I try to put myself in the shoes of my clients, imagining the trust they place in us when they hand over their financial futures. Peter's situation hit home. I thought about how many people unknowingly trust advisors who may not always have their best interests at heart. These clients think they're getting expert advice, but they might be walking into a situation where their money is used to serve the firm's interests — not their own.
If you’re reading this because you’re looking for a financial advisor, the best guidance I can give you is, “Ask the right questions.”
What are the right questions, you may ask?
The questions need to go beyond credentials or firm reputation. Ask how the advisor manages their own money. If they can’t explain it in clear, concise terms — or if they dodge the question — that should raise a red flag.
Complex explanations often mask underlying issues. The advisor should be able to explain what they’re doing with your money in a way that’s easy to understand, and if they can’t, you should reconsider the relationship.
After our conversation, Peter moved his investments over to Beck Bode, and we started working together to build a plan that made sense for him and his family.
It’s a reminder of why I do what I do — helping people like Peter get the financial clarity and peace of mind they deserve.
Whether you're starting out or have been investing for years, make sure you're working with someone who genuinely prioritizes you. Even if you get glowing reviews about an advisor, don’t be afraid to ask tough questions, and never assume that a big name or long resume gives anyone the right to take liberties with your money that you don’t understand.
Don’t fool yourself — bad actors are out there, and people are being taken to the cleaners because they’re led to believe that whatever they’re being placed in is “in their best interest.”
Peter's story is just one example, but it represents a larger issue: people are trusting firms and professionals who may not always act in their best interest.
By asking the right questions and listening carefully to the answers, you can protect yourself from ending up in a situation like Peter's. It's your money, your future — don't settle for anything less than the best for yourself and your family.
Ben Beck is Managing Partner & Chief Investment Officer at Beck Bode, a deliberately different wealth management firm with a unique view on investing, business and life.