A Frustrating Lunch Encounter

by Kevin on April 17, 2009

Yesterday I had lunch with an acquiantence of mine. We had your typical chit-chat about what’s up at work, yea the economy sucks, no one is hiring, glad to have a job, etc. Your typical lunch table conversation you would overhear at a restaurant.

Then he mentioned he was getting ready to buy a house.

My personal finance ears perked up.

He started to explain the deal and as he went on I become more uneasy as he went on. I wasn’t completely alarmed (probably due to lack of detail).

I tried to get information out of him without being nosy or putting myself into his business if he didn’t want me in it.

Buying a New Construction Home

He said he and his wife had just signed a contract to purchase a new home under construction. Yet he mentioned he didn’t really read the details of the contract until the following night. (Forehead smack here.)

There were some points of concern, namely:

  • the contract stated that by the time the  house had finished interest rates can fluctuate up 2% from his good faith estimate of 5% (so he could end up at 7%!)
  • the mortgage was through the builder’s mortgage company — not necessarily a bad thing (it’s what we did), but just something to be aware of
  • it is a 0% down, roll 100% of closing costs and pre-paid items into the mortgage (literally no money involved in the deal except his $500 earnest money)
  • it was a 30-year fixed, which is fine, but he wasn’t sure if it had a prepayment penalty

Again, this guy wasn’t paying me for my advice. He mentioned the contract, I mentioned personal finance was my hobby and tried to offer advice without seeming pushy.

The Life of a Certified Financial Planner

As I got back in my car to drive back to work I began to wonder. Is this what working as a Certified Financial Planner is like? People come to you for advice and then completely ignore it? (Yes, again, I realize he didn’t specifically come to talk about the house with me.)

Or they come to you for advice, but have made a long list of mistakes that will take years to recover from?

This is what I’m thinking my life is pointing toward eventually whether it be through blogging or having an actual office as a CFP.

Yesterday was a nice reminder that it isn’t all rose colored glasses when you meet with people.

Then again, maybe it is different when they are coming to you advice and paying for that advice.

What do you think?

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April 22, 2009 at 12:33 pm


Trevor @ Financial Nut April 17, 2009 at 10:24 am

“He said he and his wife had just signed a contract to purchase a new home under construction. Yet he mentioned he didn’t really read the details of the contract until the following night.”

HOLY CRAP! Is this guy crazy?!

Christina @ Northern Cheapskate April 17, 2009 at 12:51 pm

I used to be an academic adviser at a community college… you learn fast that you can lead a horse to water, but you can’t make them drink. All you can do is share what you know with people and give them all the tools you can. It’s up to the other person to take some personal responsibility.

It also made me realize how much doctors are also like advisers… they have a lot of education and training and they can diagnose and treat things, but so much of what they do is advising: quit smoking, diet, exercise, reduce stress, etc. I’m sure they get frustrated, too!

As for your friend’s situation… hearing these stories always makes me hyperventilate! Didn’t read the contract till after he signed it. ACCCK!

Matt SF April 17, 2009 at 3:57 pm

It’s one thing to be a good friend and try to indirectly offer the correct advice, but it’s also hard to hold back the “I Told You So” after they stick their finger in the proverbial electrical outlet.

However, such a jolt is exactly the lesson they need to prevent such screw ups in the future.

Corporate Barbarian April 19, 2009 at 7:53 am

I wonder why people ask for advice AFTER they’ve already committed to something. I wonder if they’re asking for forgiveness rather than advice.

Kevin April 19, 2009 at 11:36 am

@Trevor: I wouldn’t say crazy. I would say average American. Unfortunate.

@Christina: Great perspective. I never thought about being a college adviser, but I can see how it would be similar. Watching people make life changing mistakes is hard.

@Matt: Yea you’ve got to watch the “I told you so!”… tough.

@Corporate Barbarian: He didn’t necessarily ask, I sort of offered. Was trying not to be too forward/pushy.

Golfing Girl April 20, 2009 at 7:33 am

You’re in the boat as all of us who receive money for professional advice. (I give golf lessons so it applies to me too.) Basically, some will listen, some won’t, and all you can do is keep giving the best advice you can and enjoy the fruits of your labor when someone really listens and appreciates your help.

I put up with the students who’ve played for 20 years and have reinforced those bad habits so long it’s almost impossible to break them. It’s all worth it when the next student listens, tries to apply what I’ve shared, and is then able to hit the best shot they’ve ever hit. You take the good with the bad and remember you can lead a horse to water, but you can’t make them drink the knowledge you’re providing. 🙂

LoraPapineau April 21, 2009 at 8:33 am

Yup…people are weird. They never listen to other people’s advice or past experience. Yet I still give out free advice, in hopes someone else over hears it 😉

Roger April 21, 2009 at 11:28 pm

That’s… disturbing, to say the least. What advice did you end up giving him?

Kevin April 22, 2009 at 8:38 pm

@Golfing Girl: Well said. I guess I’m still waiting for my next best student to come along.

@Lora: Good thinking… you never know, maybe someone else did hear…

@Roger: Essentially that he needed to carefully check all of the details of the deal, I offered to help if he was interested, and that giving up the $500 in earnest money would be nothing next to the thousands lost on the mortgage.

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