This was a conversation I overheard at the Chiropractors office today. I am not the most knowledgeable about financial planning, but I have read Dave Ramsey and I have attended a financial planning seminar through work. For me, the advice I heard coming from a financial planner just didnt sound right. Maybe its spot on, but it just sounds like the opposite of everything Ive ever heard. Im curious to hear what you guys think. 
The recipient of this advice was a {probably not very well paid} part-time employee of the Chiropractor office. She just finished school, married, no children. Has a 15-year mortgage at 4.2%; their monthly payment is $800. Shes eleven years into the mortgage, just four years away from being mortgage free. She admitted that while she was in school she paid her mortgage late several times, so her credit may or may not be good.
So the financial planner told her that their decision to do a 15-year mortgage was a big mistake, and that she should refinance right now for a 30-year mortgage, take out the maximum amount of equity they are allowed, and bring it straight to him to invest.
He claims that on his own mortgage he refinanced a total of four times in recent years, and went from a $25k mortgage to a $400k mortgage, which has now given him $700k in investment returns. (refinance four times? Thats a lot of closing costs!)
Like I said, everything I heard goes against everything Ive learned. I asked my husband about it and he said he also thought it was at best, very poor advice. After the guy left, I asked her who he was this is a link to his website: http://www.tebergfund.com/cgi-bin/client_product.cgi?member=1&product_id=2
I told her I was unsure about his advice, that I thought it seemed like a better idea to be mortgage free in four years and then maybe, depending on their overall financial situation, think about investing at that point. But she really likes his idea and is planning to try to talk her husband into it.
Is he just trying to get another client, no matter what the long-term cost to the client, or is there something Im missing where this really is their best choice?
The recipient of this advice was a {probably not very well paid} part-time employee of the Chiropractor office. She just finished school, married, no children. Has a 15-year mortgage at 4.2%; their monthly payment is $800. Shes eleven years into the mortgage, just four years away from being mortgage free. She admitted that while she was in school she paid her mortgage late several times, so her credit may or may not be good.
So the financial planner told her that their decision to do a 15-year mortgage was a big mistake, and that she should refinance right now for a 30-year mortgage, take out the maximum amount of equity they are allowed, and bring it straight to him to invest.
He claims that on his own mortgage he refinanced a total of four times in recent years, and went from a $25k mortgage to a $400k mortgage, which has now given him $700k in investment returns. (refinance four times? Thats a lot of closing costs!)
Like I said, everything I heard goes against everything Ive learned. I asked my husband about it and he said he also thought it was at best, very poor advice. After the guy left, I asked her who he was this is a link to his website: http://www.tebergfund.com/cgi-bin/client_product.cgi?member=1&product_id=2
I told her I was unsure about his advice, that I thought it seemed like a better idea to be mortgage free in four years and then maybe, depending on their overall financial situation, think about investing at that point. But she really likes his idea and is planning to try to talk her husband into it.
Is he just trying to get another client, no matter what the long-term cost to the client, or is there something Im missing where this really is their best choice?
Umm...no, I'm not handing my money over to some guy who just claims to be a financial advisor. Jeez, I hope her husband sets her straight and she doesn't fall for this.
