The Cost of a “Quick Fix”

It’s a story you hear all too often. A consumer gets into a financial pinch, seeks out an attractive, “quick fix,” then finally consults with a professional to assess the situation. In hindsight, these stories may appear to be obvious scams, but grace must be given to financially constrained consumers trying their best to achieve their financial goals.

I recently met with a pro bono client to help him budget for an upcoming vehicle purchase. Like most, he wanted us to review his credit report to make sure he was on solid footing. Before we started, he painted a less than rosy picture about his past debt history with one debt notably set to drop off his report in the coming months.

As we reviewed his report, he chimed in with excitement about a program he recently joined that was going to repair his credit score and create a forced savings mechanism. As he went on to elaborate, alarm bells immediately went off.

1. The program’s structure did not directly address his situation.
   Apart from the one debt, his report showed consistent payments across the board and no outstanding debts. The client needed an effective debt reduction program, not a reporting and savings mechanism.
    
2. He heard about the program on TV but could not clearly explain the brand nor strategy.
    
3. He was unaware of the cost structure.

Further research on the program led him to believe that he may have fallen victim to a predatory program. For one, we uncovered that he was paying an estimated 16% annual fee for credit reporting services that were already available to him for free.

Secondly, he could end the program for a small fee, but he wouldn’t have access to his savings for a couple of months.

Luckily, there was a silver lining. Weeks before our meeting, he received a settlement offer from the debt collector for 50% off the debt! This allowed us to create a plan to satisfy the debt with a lump sum payment that would surely improve his credit profile.

Was it an obvious scam? That is up for interpretation. The most important takeaway from our meeting was the framework we created to address financial issues as they arise.

1. Lean on your community. 
   Building a network of close friends, family, and advisors can help consumers properly vet financial products, access financial aid, and manage emotional stress before making decisions.
    
2. Verify credentials and read the fine print.
   When it comes to personal finance, there is often no one-size-fits-all solution. Consumers can protect themselves by asking questions specific to their situation and by working with professionals who have a fiduciary obligation.
    
3. Sleep on it.

Financial bumps on the road can be hard to stomach, but they don’t always require a drastic course correction. Patience and education are often catalysts for getting back on track.

SSB Wealth Management, Inc., d/b/a Rembert Pendleton Jackson (“RPJ”) offers investment advisory services and is registered with the U.S. Securities and Exchange Commission (“SEC”). SEC registration does not constitute an endorsement of the firm by the SEC nor does it indicate that the firm has attained a particular level of skill or ability. You should carefully read and review all information provided by RPJ, including Form ADV Part 1A, Part 2A brochure and all supplements, and Form CRS.

This information is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. You should not treat these materials as advice in relation to legal, taxation, or investment matters.