Michael Haubrich, is a certified financial planner with more than 20 years experience. He is the owner of Financial Service Group a fee-only firm in Racine, Wisconsin, with some 100 million dollars in assets under management.He tells a tale that recently he met with a new client who experienced “free financial planning.” According to Michael, the client’s free planning started with a free dinner meeting, followed by a free financial consultation, and then a free financial plan that ultimately ended with an annuity sale resulting in $9,000 in commission to that financial “consultant.”

To most people, it may look as though there is no big issue here but in this case Michael explains that the client’s money was locked into this annuity for 15 years with a penalty cost of up to 18 percent if he cashed it in early. “Since he is now 75, he will be 90 years old before he can withdraw his principal without penalty. It is this surrender charge over the 15 years that provides commissions in excess of 10 percent to the ‘advisor’ who definitely would have a self-serving interest in striking these kinds of deals.”

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