WEBVTT - Financial Advisors Aren't All Bad #206 0:00:00.080 --> 0:00:03.000 Welcome to How the Money. I'm Joel and I and Matt, 0:00:03.120 --> 0:00:26.960 and today we're discussing why financial advisors aren't all bad. Still, 0:00:27.160 --> 0:00:29.400 they're not all bad, but most of them are bad. 0:00:29.560 --> 0:00:33.839 Right Well now, I wouldn't even say that most of 0:00:33.880 --> 0:00:35.920 them aren't bad, but it's just kind of funny because 0:00:35.920 --> 0:00:37.760 we've talked about this before and often we talk about 0:00:37.760 --> 0:00:41.080 how we necessarily a lot of times don't need financial advisors, 0:00:41.159 --> 0:00:42.559 right for for a lot of folks, it may not 0:00:42.640 --> 0:00:45.680 be necessary, but there are some instances when having a 0:00:45.720 --> 0:00:48.959 financial advisor in your corner where that's important, and so 0:00:49.040 --> 0:00:52.000 because of that, it's important to know what those instances are, 0:00:52.120 --> 0:00:53.640 as well as some of the different things that you 0:00:53.640 --> 0:00:55.560 need to keep an eye out for when you are 0:00:55.760 --> 0:00:58.120 looking at financial advisors. So that's why we're talking about 0:00:58.160 --> 0:01:01.200 this today. And the role of financial advice has expanded, 0:01:01.440 --> 0:01:04.160 the services are offering have grown, and I think it's 0:01:04.160 --> 0:01:07.360 important to talk about the nature of what a financial 0:01:07.400 --> 0:01:10.319 advisor is, what they can do for you, and whether 0:01:10.400 --> 0:01:12.640 or not you should even be considering one. And so, yeah, man, 0:01:12.640 --> 0:01:13.920 I think we've got a lot to share on this 0:01:13.959 --> 0:01:16.560 one today. Yeah, man, But first I've got a frugal 0:01:16.640 --> 0:01:20.880 or cheap for you, we're bringing it back Kate. My wife. 0:01:21.480 --> 0:01:25.520 My wife, she was wanting her hair done. I guess 0:01:25.520 --> 0:01:27.040 it's been a couple of months now at this point, 0:01:27.280 --> 0:01:30.880 but she was wanting color and cut and dude, in Atlanta, 0:01:30.959 --> 0:01:32.760 you get something like that going on, and it's going 0:01:32.840 --> 0:01:36.200 to cost you a lot of money, like like overs 0:01:36.200 --> 0:01:38.800 get your hair done and not cheap. Yeah, definitely not cheap, 0:01:38.920 --> 0:01:42.120 especially living in the city, right, And she was specifically 0:01:42.120 --> 0:01:44.840 wanting this this thing done called I don't exactly not 0:01:44.840 --> 0:01:48.000 how to pronounced. I think it's ballyage or ballyage something 0:01:48.000 --> 0:01:49.840 like that. Sounds like something fancy that would be expensive. 0:01:49.880 --> 0:01:51.840 It's it's a French technique. Evidently she was telling me 0:01:51.840 --> 0:01:54.160 about it, but she was wanting that specifically, which is 0:01:54.200 --> 0:01:56.720 a little bit more expensive. And so she was kind 0:01:56.720 --> 0:01:59.360 of stuck with the conundrum of like, is this something 0:01:59.400 --> 0:02:01.480 I are we gonna d I why this? Or do 0:02:01.520 --> 0:02:04.280 I go in and pay top dollar to have it done. 0:02:04.840 --> 0:02:07.400 And the reason we're talking about it is obviously because 0:02:07.440 --> 0:02:10.119 she took the risk. You know, she was risking being 0:02:10.200 --> 0:02:12.840 cheap in order to be frugal and save a few bucks. 0:02:12.919 --> 0:02:14.960 That's because she made you do it for her, right, 0:02:15.720 --> 0:02:18.400 she made me do it. But she pulled up some 0:02:18.480 --> 0:02:22.000 great tutorials online. I think she spent a lot of time, yeah, 0:02:22.480 --> 0:02:24.520 finding the right one. Maybe maybe too much time, but 0:02:24.560 --> 0:02:27.240 she found the best tutorial for me to watch, and 0:02:27.360 --> 0:02:29.359 she bought like the really good chemicals, Like you can 0:02:29.360 --> 0:02:32.760 buy the actual chemicals, the actual bleach and toner, all 0:02:32.760 --> 0:02:35.920 that kind of stuff that the salons used. And it 0:02:36.000 --> 0:02:38.280 costs way more, but when you're looking at you know, 0:02:38.400 --> 0:02:40.440 more than ten times that to have this done in 0:02:40.440 --> 0:02:43.520 a salon, it's well worth it to get the real stuff, right, 0:02:43.560 --> 0:02:45.440 to get the good stuff. So yeah, man, we did that. 0:02:45.680 --> 0:02:47.400 I watched it tutorial and I was like, are you 0:02:47.440 --> 0:02:50.160 sure you want to go through with this? Because here's 0:02:50.160 --> 0:02:52.080 the thing, Like, I've never done this before. Aught your 0:02:52.080 --> 0:02:54.240 marriage to a new level. We did. We seriously, Like 0:02:54.320 --> 0:02:56.320 I've cut her hair before, you know, I cut my 0:02:56.360 --> 0:02:57.919 We we've talked about this before, one of the things 0:02:57.960 --> 0:02:59.880 we do, Like I've I've cut my own hair since 0:02:59.880 --> 0:03:02.880 I think like middle school, but I have never done 0:03:02.919 --> 0:03:05.679 anything with chemicals before. I was super insure about that 0:03:05.760 --> 0:03:07.320 kind of freaked me up, but Kate was down with it. 0:03:07.360 --> 0:03:09.919 She's like, watch this. She's like, I trust you. And 0:03:10.000 --> 0:03:13.480 we went for it, dude, and the results results were in. 0:03:13.919 --> 0:03:16.440 It turned out pretty good. She was happy with it, 0:03:16.840 --> 0:03:19.079 especially considering that it was the first time we'd ever 0:03:19.080 --> 0:03:21.919 done it, you know, and so we did it and 0:03:21.960 --> 0:03:23.400 I was you know, I asked her after the fact. 0:03:23.400 --> 0:03:25.000 I was like, is this something we're gonna do in 0:03:25.040 --> 0:03:27.440 the future, And she was like totally. She was on 0:03:27.480 --> 0:03:30.440 board with it. She was happy with the results. We're 0:03:30.480 --> 0:03:32.280 not going to post a picture of it. I didn't 0:03:32.320 --> 0:03:34.520 take anything. It was it was a while ago. But 0:03:34.520 --> 0:03:36.040 but yeah, man, is that I feel like this is 0:03:36.080 --> 0:03:38.480 a good example of, you know, one of these areas 0:03:38.480 --> 0:03:41.400 in our life where we can save some money. But 0:03:41.600 --> 0:03:43.160 make sure you do the research, make sure you have 0:03:43.240 --> 0:03:45.360 the proper tools on hand. Like I went out to 0:03:45.400 --> 0:03:47.000 the Sally beauty salon and make sure I had like 0:03:47.040 --> 0:03:48.600 the right gloves and everything, because I don't want like 0:03:48.600 --> 0:03:50.800 that bleaching my fingers, So I had those black gloves 0:03:50.800 --> 0:03:54.440 that they use in the beauty salon. I like, legit. Well, 0:03:54.480 --> 0:03:56.520 now that the word of your skills is getting out, 0:03:56.600 --> 0:03:58.480 you're gonna have people right and left lining up to 0:03:58.560 --> 0:03:59.960 have their hair done by you. Yeah, I don't think 0:04:00.560 --> 0:04:03.720 it's not that good, but I think over time it 0:04:03.800 --> 0:04:05.560 really will get to that level. I feel like we 0:04:05.560 --> 0:04:08.080 were able to get Kate's hair like of the way there. 0:04:08.280 --> 0:04:11.600 We were lacking ten per and like the quality, but seriously, 0:04:11.640 --> 0:04:12.920 like beyond that, I feel like the next time we 0:04:13.000 --> 0:04:16.160 might get it up to like the way there. And 0:04:16.600 --> 0:04:18.400 it did take some time though, so like it took 0:04:18.400 --> 0:04:20.919 about maybe an hour of my time, but it was 0:04:20.920 --> 0:04:22.800 on the weekend. We're just kind of hanging out, hanging 0:04:22.800 --> 0:04:24.839 out with the kids, cleaning the house some and the 0:04:24.880 --> 0:04:26.240 girls were wanting to watch a movie and they wanted 0:04:26.279 --> 0:04:29.039 to watch Lion King. Uh, like the real version, you know, 0:04:29.160 --> 0:04:31.240 not the cartoon version. Have you seen the new like 0:04:31.240 --> 0:04:32.840 the real version I have. Yeah, it was good. It's 0:04:32.880 --> 0:04:34.920 freaking amazing. Dude. We've watched to play too many Disney 0:04:34.920 --> 0:04:38.320 movies now Disney Plus. That's why like's like we've we've 0:04:38.320 --> 0:04:40.159 got Disney Plus now we're watching all the good movies. 0:04:40.200 --> 0:04:42.560 But so we had that on we knocked it out 0:04:42.600 --> 0:04:44.440 of the park man nice man. Well, yeah, I love 0:04:44.560 --> 0:04:46.560 that decision to to give it a go at least, 0:04:46.640 --> 0:04:49.320 and it reminds me of doing your own pest control 0:04:49.360 --> 0:04:50.800 Matt we which we talked about a long time ago. 0:04:50.800 --> 0:04:53.440 It's been a long time, but it saves you so 0:04:53.520 --> 0:04:55.839 much money and you can buy the exact same stuff 0:04:55.880 --> 0:04:58.320 that the pros use. There's an article about that on 0:04:58.320 --> 0:05:00.480 our website at how the Money dot com. But it's 0:05:00.480 --> 0:05:02.200 one of those things that people might be like, oh no, 0:05:02.400 --> 0:05:04.599 there must be some sort of proprietary data that I 0:05:04.640 --> 0:05:08.760 don't have, But now really know, the Internet exists and 0:05:08.839 --> 0:05:10.680 the data is there for all of us to look at. 0:05:10.839 --> 0:05:13.520 When it comes to you know, doing whatever this Bai 0:05:13.960 --> 0:05:16.920 baile age or whatever. I think it's bollyash, you know, 0:05:16.960 --> 0:05:19.279 it's worth mentioning to that. Maybe I kind of have 0:05:19.320 --> 0:05:20.840 the artist touch a little bit, like I was able 0:05:20.880 --> 0:05:22.840 to get it to that level, I would probably have 0:05:22.920 --> 0:05:25.400 bungled it completely. Are you gonna do Emilies here? Now? 0:05:25.960 --> 0:05:27.839 I'm gonna let you do her hair now? I don't 0:05:27.880 --> 0:05:30.280 have time for that, Okay, all right, although Kate has 0:05:30.279 --> 0:05:33.560 cut her cut Emily's hair before, that's right, right for sure? Yeah, 0:05:33.600 --> 0:05:36.200 And it's saved us a good bit of money. So obviously, 0:05:36.320 --> 0:05:39.240 professional stylists exists for a reason, just like professional pest 0:05:39.240 --> 0:05:41.760 control companies exist for a reason. But I think for 0:05:41.920 --> 0:05:45.400 most of us, if we're willing to accept inferior results, 0:05:45.440 --> 0:05:47.080 we can save a whole lot of money. Yeah. And 0:05:47.120 --> 0:05:51.600 the degree of inferiorness depends per person, right, yeah, exactly. 0:05:51.640 --> 0:05:54.039 That might be very inferior or it might be pretty good. 0:05:54.120 --> 0:05:55.800 So it's up to you and what you think you 0:05:55.839 --> 0:05:58.000 can tackle, no doubt. All right, Matt, let's mention the 0:05:58.000 --> 0:06:00.080 beer that we're having on the show today. We're in 0:06:00.160 --> 0:06:04.359 Catharsis by Treehouse Brewing Company and Brian and Caitlin listeners 0:06:04.360 --> 0:06:07.719 from Massachusetts and this one our way much thanks, because 0:06:07.720 --> 0:06:10.440 Treehouse is a brewery that has lines out the door 0:06:10.520 --> 0:06:13.280 for their beer seriously super high demand. So I'm really 0:06:13.279 --> 0:06:15.760 excited to try this porter from Treehouse today on the 0:06:15.760 --> 0:06:17.800 show with you today, my friend. Yeah, they these are 0:06:17.839 --> 0:06:19.720 one of these breweries that's like a beacon. All these 0:06:19.760 --> 0:06:21.760 other small berries have been popping up the past few years. 0:06:21.760 --> 0:06:24.480 You know, they're they're looking to the Treehouse that's sort 0:06:24.520 --> 0:06:26.800 of like this beacon as as like this lighthouse as 0:06:26.800 --> 0:06:29.240 they're navigating the foggy waters of of how to run 0:06:29.400 --> 0:06:32.640 a brewery. Man, you're so good at analogies. That's good 0:06:32.640 --> 0:06:35.640 to think. I feel inspired by this beer Treehouse Lighthouse. 0:06:35.640 --> 0:06:37.839 I can see how you made that. Is that what 0:06:37.880 --> 0:06:40.360 I was thinking? I think, so get out of my head. Yeah, 0:06:40.400 --> 0:06:42.480 but always excited to have a treehouse beer. It's very 0:06:42.560 --> 0:06:44.640 rare and always a pleasure. And we'll talk about our 0:06:44.680 --> 0:06:46.400 thoughts on this one at the end of the episode. 0:06:46.400 --> 0:06:48.400 All right, onto the subject at hand. We're talking about 0:06:48.480 --> 0:06:51.760 financial advisers and how they're not all bad. There are 0:06:51.839 --> 0:06:54.479 professionals who can help us in almost every aspect of 0:06:54.480 --> 0:06:56.880 our lives. Right, in some cases we can go it alone, Matt, 0:06:56.920 --> 0:06:59.320 I think you and I we we tend towards going 0:06:59.320 --> 0:07:00.920 it alone, as we just talked about, right, we we 0:07:01.080 --> 0:07:03.920 like I like the d I Y approach saves this money. Yeah, 0:07:03.920 --> 0:07:05.640 we don't mind experimenting a little bit here and there 0:07:05.680 --> 0:07:07.400 to see if we can save more money. Specifically on 0:07:07.400 --> 0:07:10.920 our wives. Yeah, we like to use them as test subjects. 0:07:11.080 --> 0:07:13.920 In some cases it's a slam dunk, easy decision. However, 0:07:13.960 --> 0:07:15.960 I'm not gonna watch a YouTube video on how to 0:07:16.000 --> 0:07:19.040 perform surgery through my kids tonsils. Right, that's like probably 0:07:19.040 --> 0:07:21.360 a little a little too far fetch for me to undertake, 0:07:21.480 --> 0:07:23.080 just barely, just one step too far and one step 0:07:23.160 --> 0:07:25.120 too far. Of course, I'm gonna let a doctor handle that. 0:07:25.320 --> 0:07:27.040 On the other hand, if my water bills shot up 0:07:27.040 --> 0:07:29.440 and I think my toilet is leaking water, well, it's 0:07:29.520 --> 0:07:31.960 really easy to go and buy a new toilet flapper 0:07:32.040 --> 0:07:33.720 valve and install it. There's no need to call a 0:07:33.760 --> 0:07:36.720 plumber for this basic thing that can go wrong. And so, yeah, 0:07:36.720 --> 0:07:38.880 where do financial advisors fit into that picture of d 0:07:39.000 --> 0:07:42.200 I Y versus hiring the expert. We're gonna cover that today. Yeah, man, 0:07:42.200 --> 0:07:44.640 that's the biggest problem, right, like knowing when to to 0:07:44.760 --> 0:07:46.640 call in the pros or when to do it yourself. Like, 0:07:46.680 --> 0:07:49.520 there are a lot of aspects of our personal finances 0:07:49.720 --> 0:07:53.360 that don't require professional help. You don't need a financial advisor. 0:07:53.560 --> 0:07:55.360 You don't need a professional to tell you that you 0:07:55.360 --> 0:07:57.200 need to start paying down your debts and to go 0:07:57.240 --> 0:07:58.840 ahead and make sure that you get that employer match 0:07:58.880 --> 0:08:01.640 in your four O one K. That's that slam Dunkey's decision, right, Like, 0:08:01.640 --> 0:08:03.760 that's something that you can do yourself. But there are 0:08:03.960 --> 0:08:07.760 some more complicated issues that might arise when it would 0:08:07.960 --> 0:08:09.800 make sense to hire pro and and like you said, 0:08:09.880 --> 0:08:12.360 all that's what we're going to dive into today. Yeah, 0:08:12.600 --> 0:08:14.560 first man, I think we kind of need to discuss 0:08:14.640 --> 0:08:17.640 what a financial advisor does because knowing what they do 0:08:18.080 --> 0:08:20.600 can help us decide what direction we need to go in. 0:08:20.880 --> 0:08:23.440 And and first off, the term financial advisors kind of 0:08:23.440 --> 0:08:25.960 this catch all term. A lot of people call themselves 0:08:26.080 --> 0:08:29.480 a financial advisor. And also the credentials and services that 0:08:29.480 --> 0:08:32.559 a financial advisor performs for a client. They vary from 0:08:32.559 --> 0:08:35.280 firm to firm and from advisor to advisor. And at 0:08:35.280 --> 0:08:37.800 the same time, the job of a financial advisor has 0:08:37.880 --> 0:08:40.679 changed in recent years. The industry is evolving in what 0:08:40.760 --> 0:08:43.440 individuals require when it comes to money help and advice 0:08:43.520 --> 0:08:46.280 is different than it was twenty years ago, and advisors 0:08:46.280 --> 0:08:50.240 are responding accordingly. In particular, younger advisors are are tending 0:08:50.240 --> 0:08:53.760 to meet these market demands for a comprehensive service as 0:08:53.800 --> 0:08:56.600 opposed to just investing advice. Some of these advisors are 0:08:56.640 --> 0:09:00.439 even offering beer advice, like beer recommendations. Those guys, come on, 0:09:01.720 --> 0:09:03.280 go ahead, and for the record, it's going to go 0:09:03.320 --> 0:09:05.360 out there in state that we are not financial advisors, 0:09:05.480 --> 0:09:07.040 Like this is something you and I enjoy, we have 0:09:07.080 --> 0:09:08.960 a passion for it, but yeah, we are not you know, 0:09:08.960 --> 0:09:11.079 professional financial advisors, So we don't really have skin in 0:09:11.120 --> 0:09:13.320 this game at all. Yeah, although, like I said, almost 0:09:13.320 --> 0:09:15.920 anybody can call themselves financial advisors is to catch all 0:09:16.040 --> 0:09:19.200 term and so we could say that we were, but 0:09:19.240 --> 0:09:22.240 we don't have any technical training exactly that has led 0:09:22.320 --> 0:09:23.840 us to to be able to call ourselves that. So 0:09:23.920 --> 0:09:25.560 and so for c OA reasons, I like to just 0:09:25.559 --> 0:09:28.959 stay away from that completely. Yeah, completely. And advisor is 0:09:29.000 --> 0:09:31.960 typically they used to specialize in discussing like those long 0:09:32.080 --> 0:09:33.960 term goals. Like right, I'm thinking of like the old 0:09:34.000 --> 0:09:36.320 kind of traditional advisors. You know, you kind of go 0:09:36.360 --> 0:09:38.120 into the office, you sit down at their desk, and 0:09:38.080 --> 0:09:40.080 they they're like, let's talk about your money, like old 0:09:40.120 --> 0:09:42.839 giant oak desk. Yeah, that kind of approach. But you 0:09:42.880 --> 0:09:45.200 know that's where they would manage your investments and also 0:09:45.280 --> 0:09:47.840 help you to think through some different life insurance necessities. 0:09:47.960 --> 0:09:49.840 But now, like you said, you like they offer such 0:09:50.080 --> 0:09:52.760 a wide gamut of services. They can offer budgeting help, 0:09:52.800 --> 0:09:55.760 they can help create some debt payoff plans, offer college 0:09:55.760 --> 0:09:59.959 admissions advice, someone even proof read resumes. As individual investor 0:10:00.120 --> 0:10:03.959 has gotten easier in the costs have plummeted, advisors are 0:10:04.160 --> 0:10:07.840 offering more services to justify the value, to justify the 0:10:07.880 --> 0:10:10.280 fee that they charge, and the value is tied up 0:10:10.360 --> 0:10:13.679 more in the advice about tricky money decisions, and it's 0:10:13.720 --> 0:10:16.360 not just about trying to beat the stock market average. 0:10:16.600 --> 0:10:18.559 So is a financial advisor worth it? That's really the 0:10:18.640 --> 0:10:20.400 question that a lot of people have on their minds, 0:10:20.600 --> 0:10:22.560 and we're gonna get into some specifics to help people 0:10:22.559 --> 0:10:24.120 figure that out. But but part of what makes this 0:10:24.240 --> 0:10:27.600 decision to hire a financial advisor or not so difficult 0:10:27.840 --> 0:10:30.480 is that it's hard to measure the value that they 0:10:30.520 --> 0:10:33.360 can potentially bring to you with these services that they offer. 0:10:33.640 --> 0:10:36.320 How do you quantify budget help and college admissions advice 0:10:36.400 --> 0:10:38.320 over what you can do on your own without any help. 0:10:38.520 --> 0:10:41.360 So to answer to that question, some researchers at morning 0:10:41.400 --> 0:10:43.960 Star did a study that measured the value that financial 0:10:43.960 --> 0:10:46.040 advisors can provide, and Matt I think there were like 0:10:46.120 --> 0:10:49.079 kind of three studies that did something similarly. Vanguard did 0:10:49.120 --> 0:10:51.840 another one, and basically, these studies have found that a 0:10:51.840 --> 0:10:56.320 good planner can increase retirement income well over making even 0:10:56.360 --> 0:10:58.960 a one percent annual fee well worth the cost. But 0:10:59.040 --> 0:11:01.200 the methodology for some of these studies, Matt, when when 0:11:01.240 --> 0:11:03.680 you dig into it. There's some off putting stuff in 0:11:03.720 --> 0:11:08.080 the methodology. They're assuming sometimes that individual investors are invested 0:11:08.120 --> 0:11:10.760 in high cost funds and that an advisor is going 0:11:10.800 --> 0:11:13.480 to help you get into lower cost funds. But you 0:11:13.480 --> 0:11:14.760 know what, you might have been listening to the How 0:11:14.800 --> 0:11:17.000 the Money podcast and you're already investing in low cost funds, 0:11:17.040 --> 0:11:19.360 So that's not a benefit that a financial advisor is 0:11:19.400 --> 0:11:22.000 going to bring you. But the problem continues because a 0:11:22.080 --> 0:11:25.400 lot of the financial planning services they measured aren't necessarily 0:11:25.440 --> 0:11:27.920 for younger folks and individuals in the wealth growing phase 0:11:27.960 --> 0:11:29.839 of investing, and so it's not just a yes or 0:11:29.880 --> 0:11:32.119 no answer. You have to dive into your own particulars 0:11:32.160 --> 0:11:34.080 as an investor as well as the specifics that a 0:11:34.160 --> 0:11:36.640 financial advisor can bring the table in order to help 0:11:36.679 --> 0:11:39.320 you in your financial situation. Yeah. Man, that's right. So 0:11:39.360 --> 0:11:41.360 that's what we're going to cover today, the things that 0:11:41.400 --> 0:11:43.800 you need to know about advisors as well as what 0:11:43.840 --> 0:11:47.800 you need to consider about your specific situation, and hopefully 0:11:47.840 --> 0:11:50.080 by the end of this episode you should know exactly 0:11:50.120 --> 0:11:52.440 what your next step should be. So basically, we've got 0:11:52.480 --> 0:11:54.640 two prongs here. We've got you as the investor, and 0:11:54.679 --> 0:11:57.320 we've got the advisor, and we're gonna talk about some 0:11:57.400 --> 0:11:59.280 of the things that you should be looking for in 0:11:59.360 --> 0:12:01.760 a financial visor. But first let's take a quick break, 0:12:11.280 --> 0:12:12.840 all right. That we're gonna dig to the heart of 0:12:12.840 --> 0:12:15.880 this question as to whether people should hire a financial 0:12:15.880 --> 0:12:17.520 advisor or not, and then how to find a good 0:12:17.520 --> 0:12:20.080 advisor if if it's appropriate for them a little bit 0:12:20.120 --> 0:12:22.280 later on, but first let's get to the characteristics of 0:12:22.280 --> 0:12:24.400 a good advisor. If you do find yourself wanting some 0:12:24.400 --> 0:12:26.280 expert help, what do you need to look for when 0:12:26.280 --> 0:12:28.840 you're shopping for the services that a financial advisor offers, 0:12:29.120 --> 0:12:31.079 And so, Matt, let's break it down. A good financial 0:12:31.080 --> 0:12:34.880 advisor will first and foremost be a fiduciary, and they 0:12:34.880 --> 0:12:37.360 will be willing to provide a written guarantee of that. 0:12:37.720 --> 0:12:40.440 So if an advisor is a fiduciary, basically it's a 0:12:40.440 --> 0:12:43.280 fancy term that means that they prioritize your best interest 0:12:43.320 --> 0:12:46.040 over their own, and it eliminates the potential for a 0:12:46.080 --> 0:12:48.760 conflict of interest. I think if people take nothing else 0:12:48.800 --> 0:12:51.199 away from this, if they do shop for a financial advisor, 0:12:51.600 --> 0:12:53.960 the biggest thing they need to prioritize is that that 0:12:54.080 --> 0:12:56.839 financial advisor is a fiduciary. That's the number one thing 0:12:56.920 --> 0:12:58.439 you have to make sure of before you sign on 0:12:58.480 --> 0:13:01.440 the dotted line to have them manage your money. Oh, totally, 0:13:01.480 --> 0:13:04.080 man and so like an example of you know, not 0:13:04.120 --> 0:13:06.640 being a fiduciary, they can tell you more expensive insurance 0:13:06.760 --> 0:13:09.920 or investments because they get a better cut on those products. 0:13:09.960 --> 0:13:13.040 That's a clear conflict of interest. You know, after this 0:13:13.120 --> 0:13:17.120 federal rule was not past, some states are actually forcing 0:13:17.280 --> 0:13:19.880 the issues, like Massachusetts, which is by the way, that's 0:13:19.880 --> 0:13:22.720 where Treehouse is from and where Caitlin and Brian live. 0:13:22.840 --> 0:13:26.400 So Massachusetts has a lot going right for them. Yeah, right, 0:13:27.080 --> 0:13:30.600 But until this rule is widely implemented, then this is 0:13:30.640 --> 0:13:32.400 the first question that you need to ask of your 0:13:32.440 --> 0:13:35.720 current um or a potential financial advisor. Yeah, for sure, 0:13:35.880 --> 0:13:38.880 and a good financial advisor in addition to being a fiduciary, 0:13:39.040 --> 0:13:41.439 they'll also be easy to communicate with. That that's why 0:13:41.440 --> 0:13:44.720 you want to interview a few advisors before deciding on 0:13:44.760 --> 0:13:46.360 the one that you want to go with. We don't 0:13:46.400 --> 0:13:49.559 necessarily click with everyone, Matt and I would suggest prioritizing 0:13:49.640 --> 0:13:52.120 finding an advisor that you can have a good conversation with. 0:13:52.360 --> 0:13:54.160 You don't want to avoid calling them because you hate 0:13:54.160 --> 0:13:56.720 their communication style. Are they easy to reach, do they 0:13:56.760 --> 0:13:59.200 respond in a timely manner? And are they willing to 0:13:59.320 --> 0:14:03.760 use your methods of communication? Matt, I prefer email, Uh, 0:14:03.960 --> 0:14:07.360 maybe text message on occasion. But if I was working 0:14:07.360 --> 0:14:09.240 with an advisor that wanted to call me on the 0:14:09.240 --> 0:14:10.920 phone all the time even though I was trying to 0:14:10.960 --> 0:14:14.160 email them, I'd be so annoyed because I just don't 0:14:14.200 --> 0:14:16.880 want to talk like that. Like I'm a classic millennial 0:14:16.880 --> 0:14:19.480 who avoids using the phone for its actual purpose, which 0:14:19.520 --> 0:14:21.360 is to talk to someone. When your phone rings, do 0:14:21.400 --> 0:14:23.480 you like freak out and like hide under the couch? Yeah, 0:14:23.480 --> 0:14:26.280 exactly what's the emergency? Do I need to respond right now? No, 0:14:26.440 --> 0:14:29.280 I'm totally with you, Like, focus on the channels of communication. 0:14:29.320 --> 0:14:31.240 That makes sense, right, Like, don't hit me up on 0:14:31.400 --> 0:14:34.440 Slack because I'm not on there, but send me an 0:14:34.440 --> 0:14:36.760 email and like, yeah, if it's an emergency, you can 0:14:36.880 --> 0:14:39.440 call or text, but there's rarely an emergency when it 0:14:39.480 --> 0:14:43.000 comes to financial advising. Also, do not communicate via smoke signal, 0:14:43.040 --> 0:14:44.960 so don't try that either. Yeah, I'm not looking at 0:14:44.960 --> 0:14:47.160 this guy waiting to see what you got to say, uh, 0:14:47.160 --> 0:14:49.920 and your your financial advisor should also be pretty nosy. 0:14:49.960 --> 0:14:52.840 Are they digging in with lots of questions? If not, 0:14:53.280 --> 0:14:56.040 you might want to find another advisor to to be 0:14:56.080 --> 0:14:58.520 able to handle your money. Well, they'll need to know 0:14:58.640 --> 0:15:00.920 a lot about you and your pacific goals, you know, 0:15:00.960 --> 0:15:03.120 going back to being a fiduciary, Like, it's hard to 0:15:03.160 --> 0:15:05.360 have your best interests in mind if they don't even 0:15:05.400 --> 0:15:07.840 know what your best interests are. Another thing that you're 0:15:07.880 --> 0:15:10.360 gonna want to prioritize when looking for a financial advisor 0:15:10.480 --> 0:15:13.520 is are they willing to teach and educate you? Because 0:15:13.560 --> 0:15:16.160 if they want you to leave things to the pros 0:15:16.440 --> 0:15:19.040 and they're not willing to explain their reasoning or methodology, 0:15:19.080 --> 0:15:21.360 I think that's a big red flag, Matt, because part 0:15:21.400 --> 0:15:24.200 of the benefit of having a financial advisor should be 0:15:24.240 --> 0:15:27.600 these open ended conversations where you're also learning more about 0:15:27.840 --> 0:15:30.400 how the markets work and how they're investing your money. 0:15:30.600 --> 0:15:33.000 You want to more fully understand your plan. You don't 0:15:33.040 --> 0:15:35.520 want them just to kind of handle it right. You 0:15:35.560 --> 0:15:38.560 want to be involved and have a say in the process. Yeah, 0:15:38.560 --> 0:15:40.280 different folks are going to be more prone to want 0:15:40.280 --> 0:15:42.360 to learn and to not learn, But you don't want 0:15:42.360 --> 0:15:44.120 to just have like a money guy or a money 0:15:44.120 --> 0:15:45.640 girl who just like takes care of all your money 0:15:45.680 --> 0:15:48.040 for you. It's important to learn. This is really important 0:15:48.040 --> 0:15:50.520 for someone like me who just really loves to understand 0:15:50.520 --> 0:15:52.800 the why behind things. Like that's just a question I asked, 0:15:52.800 --> 0:15:54.920 I want to know how it works. Yeah, man, I've 0:15:54.960 --> 0:15:57.800 just read too many stories about oftentimes, you know, uber 0:15:57.880 --> 0:16:01.400 wealthy basketball players, NFL players, and the quote unquote financial 0:16:01.400 --> 0:16:03.560 advisor runs off with a lot of their money. And 0:16:03.560 --> 0:16:05.360 if it's more of a two way conversation about where 0:16:05.360 --> 0:16:07.080 your money is going, that's just kind of a harder 0:16:07.200 --> 0:16:09.920 relationship to get in. Exactly. Well, there's more accountability there 0:16:09.920 --> 0:16:11.600 when you're talking about it and where they're when they're 0:16:11.600 --> 0:16:15.160 teaching you, because you yourself are providing that accountability. Um. 0:16:15.480 --> 0:16:17.160 I think one of the one of the biggest benefits 0:16:17.200 --> 0:16:20.520 that a financial advisory can provide is behavior modification and 0:16:20.560 --> 0:16:23.160 coaching as well. Like, if you make all of your 0:16:23.200 --> 0:16:26.320 money decisions so by yourself, it could be easy to 0:16:26.360 --> 0:16:29.560 sell assets in a moment of panic. A good financial 0:16:29.560 --> 0:16:32.800 advisor will help you avoid becoming your own worst enemy 0:16:33.080 --> 0:16:35.480 and will become a coach to push you towards saving 0:16:35.520 --> 0:16:39.400 more and making even better money decisions in the future. Yeah. Man. 0:16:39.440 --> 0:16:41.720 A couple of weeks ago, we talked about the behavioral 0:16:41.920 --> 0:16:45.280 money decisions that wreck us and a financial advisor can 0:16:45.320 --> 0:16:47.960 walk alongside you and kind of help you avoid making 0:16:48.000 --> 0:16:50.360 some of those treacherous mistakes that you might make with 0:16:50.360 --> 0:16:52.520 with your investing or your savings. And I think another 0:16:52.560 --> 0:16:55.520 thing to mention, by the way, is the bogus credentials 0:16:55.520 --> 0:16:57.200 that are out there for financial advisors. I mean, we 0:16:57.200 --> 0:16:59.080 we talked about that for a minute at the beginning 0:16:59.080 --> 0:17:01.640 of the show. How almost anybody can call themselves a 0:17:01.680 --> 0:17:04.679 financial advisor. There's not necessarily anything technical that needs to 0:17:04.680 --> 0:17:06.639 happen in order for you to do that. I'm a 0:17:06.640 --> 0:17:09.359 financial planner right right exactly? Or is that a money 0:17:09.359 --> 0:17:10.760 coach or whatever it is. I mean, there's all sorts 0:17:10.760 --> 0:17:13.120 of different terms that people are using for how they 0:17:13.119 --> 0:17:15.120 help you with money now, and so to tell people 0:17:15.160 --> 0:17:16.959 out the thing that you want to make sure of 0:17:17.320 --> 0:17:20.560 when you are interviewing financial advisors is that the person 0:17:20.600 --> 0:17:23.720 that you're hiring is a CFP. That's the credential you 0:17:23.800 --> 0:17:26.439 most want your financial advisor to have. It's essentially the 0:17:26.440 --> 0:17:30.159 most rigorous credential and it requires years of schooling, a 0:17:30.240 --> 0:17:32.440 grueling test, and then years in the field to even 0:17:32.440 --> 0:17:34.960 achieve that status. So you know that a person that 0:17:35.080 --> 0:17:37.800 is a Certified Financial Planner a CFP is going to 0:17:37.880 --> 0:17:40.199 have the time spent in the field and also the 0:17:40.320 --> 0:17:43.040 education necessary to be able to guide you appropriately in 0:17:43.080 --> 0:17:46.080