3 Misleading Claims Made by Predatory Financial Advisers


It’s no secret that physicians are targets of aggressive and often unscrupulous sales practices. In no industry is this more true than in the financial services area, particularly investment and retirement plan services.

Recently, because of its success (now nearly $208 million in aggregate assets under administration), more and more UPAL members and their medical practices are becoming “targets.” Targets of sales pitches which have been crafted to sound irresistibly enticing…but, which do not hold up once critically analyzed.

The good news: UPAL works exclusively for our doctor members and no one else. As such, our primary responsibility is to help our doctor members make informed decisions. Here are 3 inflated claims to beware of and avoid when – not if – you are approached by an unscrupulous financial adviser:

1. “We will provide your retirement plan ‘free’ of charge.”

No one is in business to provide their services “free” of charge. In the financial industry, this claim has historically meant that you will not be able to determine the fees you paid, because the fees you pay are not disclosed to you. Instead the fees are collected by “netting” them through returns of the investment funds offered. Ask yourself if a company that doesn’t clearly show you what something costs is a company you want to do business with. For example, in the case of mutual funds, one has to look at the class of shares and the expense ratio of the offered funds to determine fees. Many mutual funds today have expense ratios between 1.50% – 2.00%, which are collected through a reduction in your investment returns. Under a mandate from its Financial Management Committee and Board (both comprised of doctor members), UPAL utilizes institutional and other funds with the lowest expense ratios achievable and no 12B-1 marketing fees, front- or back-end load, etc. as we believe this is in the best interest of our member clients. The average expense ratio for UPAL funds is 0.21% or just 21 basis points – a clear, meaningful and compelling benefit of pooling and leveraging assets for the benefit of its owner doctors. When compared to other investment models, UPAL funds consistently cost less. And the fees you are charged appear on your statement every month.

2. “You can be the trustee of your Plan, Doctor. Better yet, your office manager can be the trustee of your Plan.”

Being a trustee of a retirement plan makes one a fiduciary with the accompanying risks and individual financial liability for operation of the Plan. In addition, a plan trustee has duties and obligations that take time and expertise. This is one reason many service providers want to contractually exempt themselves from the role of fiduciary – its myriad legal risks and responsibilities. Ask yourself if a company that wants to manage your retirement but without taking responsibility is a company you want to do business with. UPAL believes doctors already assume sufficient risks professionally without compounding their risks and liabilities. This is the reason UPAL (collectively for all of its Plans) has hired Bank of Oklahoma, a $4.8 billion trust company, to serve as the trustee of its participating retirement plans. Another benefit of being part of a much larger group.

3. “I always get better returns.”

One competitor promised a physician member 100% annual returns. Needless to say, this did not happen, and the physician returned his Plan to UPAL after two years. Anyone promising consistently better or excessive investment performance is simply not being truthful. Ask yourself if a company that makes misleading claims to get your business is a company you want to do business with. Most managers do not consistently exceed their relevant performance benchmarks. UPAL has structured its core investment options to perform consistent with the market, for the investment objective of that particular fund at the lowest possible cost. Plus, if at any time a plan participant wants to make his or her own investment decisions, the Self-Directed Option (SDO), offers the participant the opportunity to purchase any stock, bond or mutual fund, without additional cost.

Caveat Emptor: Let the buyer beware. If you or your practice is approached by a company with an investment proposal, please know that you can always call on UPAL for a no-cost, critical due diligence analysis of the claims being made by other service providers and a fair and transparent comparison of our program to theirs at no cost to you. After all, we work for our doctor members and no one else. Of course, we want to keep your business. But, because we work for our doctor members, we also want to help you make informed decisions about retirement planning. For you, your family and your employees, these can be some of the biggest decisions you make. Let us help. It’s what we’re here for.