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Don’t Get Sold a Product

by | Oct 19, 2017 | The Ship's Wheel

Can you tell the difference between someone who is trying to sell you something and someone who is trying to provide a service? Financial Advisors are there to provide a service. They should not be selling you on the next best product. This is my opinion obviously and has been for a long time now. It is something I pride myself on.

Many financial products are not built to benefit the client. They are built to benefit the financial firm that built the product. If you have read my previous articles, you would know that I am not a fan of annuities. The reason is simple. Many annuities come with a cost associated to owning them that makes them a poor investment choice. If you own a variable annuity, you should do some due diligence on your own or call me and I will gladly assist you in understanding all the costs associated with owning these types of products. Financial products that pay a commission usually come with significant fees that are hidden inside the product. These fees are taken directly from your principal and will negatively affect the performance of the investment. It’s often difficult for the investor to understand the costs associated with these types of investments.

In the 20 plus years of helping guide people toward retirement as well as helping people to stay retired, I have seen this scenario all too often. There are new rules that will help investors by limiting the amount of fees that can be charged, but as of now this is only applies to retirement plans. I can see this expanding across all types of investment plans in the future, but as of today these rules do not affect the cost of the products that can be sold in non-qualified accounts.

I have seen variable annuities and other financial products that can have internal fees upwards of 4% annually. Look, it’s difficult to outperform the stock market without any fees, but If you add in the internal expense at a rate of 4% it’s borderline impossible to generate a long-term rate of return that will even come close to the stock market return.

As a fiduciary, I work on a fee only schedule. I do not sell products. I provide solutions to my clients’ long-term goals and objectives. I have always said that investing is simple, but sometimes financial firms and advisors’ complicate things by trying to sell products that they don’t even understand. If the advisor doesn’t understand the product, there is no way an investor can understand it.

If you own a product similar to the one described in this article, please contact me for a complimentary portfolio review.

Jay Chapman| CFP®

Jay Chapman| CFP®


Jay Chapman, CFP®, is founder of Chapman Capital Advisors, as a member of the advisory team. He has over 20 years of experience in the Financial Services industry.

Will Thompson | CFA®, CFP®, AIF®

Will Thompson | CFA®, CFP®, AIF®


Will provides the in-house expertise of CFP®, CFA®, and AIF® that is uncommon for boutique firms.

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