The Financial Planning Pitch From Our Bank

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Have you ever gone into the bank or received a loan from the bank and had them try to introduce you to their investment division? We got a loan last year and I went ahead and let them pitch a “complimentary financial plan”. What did the plan look like?  What were the results?   What was omitted based on the plan really being a sales pitch?  How did it compare to the free information I’ve learned from the FIRE movement?  What was our opinion about taking the next step with their paid advisory service?


We put a small line of credit in place with our bank in late 2018 to have access to funds with our upcoming move.  The Bank was running a promotion on an unsecured line of credit and I thought we might need it if we bought one house while selling our existing home. During the process, we went through the application process and were routed through their “Wealth Management” group because of our financial position. We got connected with a licensed adviser working in a call center and he helped us through the loan process (which was easy). Once the loan was completed, the advisor asked to provide their “short version” of a financial plan with the hopes of moving some investment assets to his firm and/or having us pay a fee for more detailed financial planning.

What Was In The Financial Plan?

The company sent me a so-called short version of the plan, which was 33 pages with the intention of a back and forth discussion with the goal of me paying a fee to get a more complicated plan.  This “plan” may have appealed to someone financially nerdy like myself, but at first take I thought it would overwhelm the average investor.  Lets look at the components of the plan.

Page 1-4 are the Fancy Intro Pages.   This section outlines the basic concerns of retirement:  Not having a paycheck anymore, running out of money, suffering investment losses, and cost of healthcare.  There are two fancy graphs, one morbid graph with a life expectancy table and a net worth summary, which restates a document I sent into them for the loan. 

This section also projects my spending at retirement at $100,000/year, which might be appropriate for someone with my former income, but will inflate the amount I supposedly need in retirement.  

Pages 5-7 Outline Financial Resources They Were Aware:   The company took the values I gave them on a personal financial statement and reformatted them.   My opinion was the advisor was a little sloppy because it was missing easy inputs they could have added, like my projected pension payment.   I gave them a pass on this point, mainly because I wasn’t paying a fee and this was a “benefit” of doing a line of credit with the company.

Page 8-9:  Current Portfolio Allocation.  I pulled out this page and saw 25 different asset classes and a fancy pie chart.  My immediate reaction was this part of the presentation was presented far too complicated.     

Each of these asset allocations had a projected rate of return applied to them and the report shows a weighted average projected return.

That’s a lot of total asset classes, more than I’ve ever considered calling different classes.  The projected returns also came across to me as really low.   I think there’s one of three reasons the returns could have appeared this low:

  • The institution is taking a cautionary stance on inflation and trying to use a real dollar representation.  I didn’t think this was the case based on other information contained.
  • The institution sells managed portfolio products at a cost of 1% to 1.5%, which would reduce the total return down to these numbers. 
  • The lower projected returns encourage someone to work longer, thus creating a higher dollar amount of assets under management for the firm.   

I inquired about the projected returns and I couldn’t get a good answer on where the data came from, other than “our software”.  At some point I brought up that my spending is no where near the $100,000 required and pointed out if I worked until 65, it looks like the only thing it’ll accomplish is making us “one of the richer couples in the graveyard”.

Pages 10-12:  Projected Returns & Confidence   This presentations starts with showing me a confidence zone retiring at 60:  95-96% confident!   Of course I have to start digging and wonder “How in the heck am I already financially independent but they’re saying if I work until 60 its *only* 95% confident”?   My only guess is if the “free plan” showed 100% confidence, it would go against the sales pitch of hiring them.  Here’s an outline of their assumptions:

Additional dollars saved were reduce dramatically from prior years, the firm has zero going into regular brokerage accounts even though we built a significant balance in the first fifteen years of working.   They also lowered the expected return of an 88% equities portfolio down to 6.47%, representing a significant fee drag and included an inflation estimate of 3% annually.  Considering the market returned almost 25% one year after this plan was put together, it would take a number of 0% or negative return years to come anywhere close to their projection.  

Pages 13-20:  Simulation Calculator:    The next seven pages produced results that were similar to what can be provided for free through cFIREsim.    The biggest thing that jumped out was the high spending estimate and high inflation rate showing a much lower return and ending portfolio balance than what I figured through cFIREsim.   

Pages 21-29:  Disclosures, Disclosures, Disclosures!   I attempted to read through these eight pages of small print disclosures and about passed out asleep multiple times.   The summary:  Nothing is anyone’s fault ever so trial lawyers go away!  What a relief. 

Pages 30-33:  Glossary.   I was going to bash them having a Glossary of terms, but if you’re going to intentionally make financial planning more difficult than it should be, then at least  they went through the effort to provide four pages of definitions.  That’s better than some other presentations that I’ve seen, so credit given where credit is due!

So What Was The Next Step?

Overall I thought some of the information was interesting, but it wasn’t anything new or I haven’t seen myself.   The plan certainly wasn’t motivating to engage in fee based financial planning, but this gentlemen did just get some business from the line of credit with him.   I posted this on Twitter shortly after getting the plan:

I gave the employee an opportunity to update the plan and see just how interested he was in the numbers (The former sales manager in me liked to test hustle).   I sent him a few questions back after including snappy one liners about dying with too much money.   I asked him to update some of the obvious misses during the input phase like savings rate, spending rate, and pension income and run some hypothetical retirement scenarios at 55, 45, and 37.    I’m almost expecting 37 to break their model, but that’s part of the fun.

That email back and forth ended up being the last communication we had.  I received a response that said they should be able to make some changes and will get back with me, but he never did.  Either the advisor realized there was no chance of me hiring his services or their software could not compute the concept of someone retiring at such a young age.   

Takeaways From This Experience

Simplicity of the FIRE Movement:  One of the appeals of the Financial Independence movement is how easy the the planning formula is.   One of the podcasts I listen to asks “what is your favorite blog post of all time?”.   Mr. Money Mustache’s Shockingly Simple Math of Early Retirement is constantly mentioned.   The simplicity it brings to retirement planning makes it a landmark article of financial independence:   Save money, invest it in the total stock market index, and financial independence equals 25x annual expenses.  

The traditional high-fee investment and planning industry might see the simplicity of the FIRE movement as a risk to their business.  These are the major banks, investment houses, and insurance companies who pay salesmen to carry “advisor” titles and convince the average person that investments and financial planning are just too complicated to manage yourself.

Software Is Limited by Inputs:  Software can certainly support an investment advisor, but it does not replace experience and critical thinking.  I found the low savings rate to be a clear miss, either of questions that could have been asked of us or information that could be deduced.  Since most of the software available is statistics and simulations, they are entirely controlled by inputs. 

Call Center Financial Planning Has Severe Limitations: The fees companies can earn on investments continue to go down and firms are attempting to tackle this by using fewer people and more technology. This was my experience, instead of having an in-person advisor I was routed to a centralized “solutions center”. Would an in-person advisor pitching services have a more robust presentation and customize a few more inputs? My guess is they would. If we had met in person, I believe both sides would have been more invested in continuing and/or following through on the process.

Their Sales Pitch Missed the Highest Value Of an Investment Advisor:  Despite the fact I don’t use an advisor, I am not dogmatically against Investment Advisors.  In fact, I recommend people either interview advisors or start reading when their net worth gets a second comma.  The technical aspects of investing can be made easy through index funds and following The Simple Path to Wealth.   The more challenging part of being a do-it-yourself investor is tolerating market cycles.  The best advisors talked their clients out of selling everything in the depths of 2009 and talked their clients away from the FOMO created by the technology bubble of the late 1990s.   (I watched a relative experience the “bad” advisor at a major firm who refused to have the adult conversation when this relative risked his retirement in a single stock concentration on unprofitable chip manufacturer in 2000. It wrecked his retirement).  

I’ve heard the comment that goes something along the lines of “the market goes up more than it goes down, but it goes down faster than it goes up.”  The best advisors developed skills similar to a professional counselor and act as a financial therapist when times get tough.   These advisors have the ability to have adult conversations about risk when a client wants to chase returns irrespective of risk and Earn their Stripes when the market is falling.  No where in this pitch did the advisor bring up this reason to consider going with him or his firm.

Wrapping Up:

We may not have been an ideal candidate for this advisor once he saw our low cost investing strategy, but it was an interesting experience to go through. I credit him and the firm for not trying to sell overly optimistic returns to attract money, but the follow through was disappointing. He did not focus on the risk management benefits that could come from someone with a seven figure portfolio paying for professional advice. This may have been a limitation of the specific advisor, but it was probably also a limitation of a centralized “service center” delivery model. I can’t see how someone with over a million dollars in invested assets would be comfortable paying either a flat fee or assets under management fee to someone they can’t meet in person.

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An earlier version of post was originally published in November 2018 and was updated in December of 2019.  

2 Replies to “The Financial Planning Pitch From Our Bank”

  1. I’ve heard recommendations that we need to “diversify” more and hold something like seven different asset classes, including things I wouldn’t consider a separate asset class (like Healthcare and Energy, which are already included in VTSAX). Other than our primary residence, we basically hold two asset classes: stocks and bonds. I’m not trying to overcomplicate things.

    1. Correct, and if you still have other income coming in, then near 100% VTSAX is fine. I do a bit more, but it’s based on the understanding I’m accepting a lower return for lower risk. I don’t want to have to throw a suit back on, iron some shirts, and go into an office ever again

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