Speaker 1: Welcome to How the Money. I'm Joel and I and Matt,
Speaker 1: and today we're discussing why financial advisors aren't all bad. Still,
Speaker 1: they're not all bad, but most of them are bad.
Speaker 1: Right Well now, I wouldn't even say that most of
Speaker 1: them aren't bad, but it's just kind of funny because
Speaker 1: we've talked about this before and often we talk about
Speaker 1: how we necessarily a lot of times don't need financial advisors,
Speaker 1: right for for a lot of folks, it may not
Speaker 1: be necessary, but there are some instances when having a
Speaker 1: financial advisor in your corner where that's important, and so
Speaker 1: because of that, it's important to know what those instances are,
Speaker 1: as well as some of the different things that you
Speaker 1: need to keep an eye out for when you are
Speaker 1: looking at financial advisors. So that's why we're talking about
Speaker 1: this today. And the role of financial advice has expanded,
Speaker 1: the services are offering have grown, and I think it's
Speaker 1: important to talk about the nature of what a financial
Speaker 1: advisor is, what they can do for you, and whether
Speaker 1: or not you should even be considering one. And so, yeah, man,
Speaker 1: I think we've got a lot to share on this
Speaker 1: one today. Yeah, man, But first I've got a frugal
Speaker 1: or cheap for you, we're bringing it back Kate. My wife.
Speaker 1: My wife, she was wanting her hair done. I guess
Speaker 1: it's been a couple of months now at this point,
Speaker 1: but she was wanting color and cut and dude, in Atlanta,
Speaker 1: you get something like that going on, and it's going
Speaker 1: to cost you a lot of money, like like overs
Speaker 1: get your hair done and not cheap. Yeah, definitely not cheap,
Speaker 1: especially living in the city, right, And she was specifically
Speaker 1: wanting this this thing done called I don't exactly not
Speaker 1: how to pronounced. I think it's ballyage or ballyage something
Speaker 1: like that. Sounds like something fancy that would be expensive.
Speaker 1: It's it's a French technique. Evidently she was telling me
Speaker 1: about it, but she was wanting that specifically, which is
Speaker 1: a little bit more expensive. And so she was kind
Speaker 1: of stuck with the conundrum of like, is this something
Speaker 1: I are we gonna d I why this? Or do
Speaker 1: I go in and pay top dollar to have it done.
Speaker 1: And the reason we're talking about it is obviously because
Speaker 1: she took the risk. You know, she was risking being
Speaker 1: cheap in order to be frugal and save a few bucks.
Speaker 1: That's because she made you do it for her, right,
Speaker 1: she made me do it. But she pulled up some
Speaker 1: great tutorials online. I think she spent a lot of time, yeah,
Speaker 1: finding the right one. Maybe maybe too much time, but
Speaker 1: she found the best tutorial for me to watch, and
Speaker 1: she bought like the really good chemicals, Like you can
Speaker 1: buy the actual chemicals, the actual bleach and toner, all
Speaker 1: that kind of stuff that the salons used. And it
Speaker 1: costs way more, but when you're looking at you know,
Speaker 1: more than ten times that to have this done in
Speaker 1: a salon, it's well worth it to get the real stuff, right,
Speaker 1: to get the good stuff. So yeah, man, we did that.
Speaker 1: I watched it tutorial and I was like, are you
Speaker 1: sure you want to go through with this? Because here's
Speaker 1: the thing, Like, I've never done this before. Aught your
Speaker 1: marriage to a new level. We did. We seriously, Like
Speaker 1: I've cut her hair before, you know, I cut my
Speaker 1: We we've talked about this before, one of the things
Speaker 1: we do, Like I've I've cut my own hair since
Speaker 1: I think like middle school, but I have never done
Speaker 1: anything with chemicals before. I was super insure about that
Speaker 1: kind of freaked me up, but Kate was down with it.
Speaker 1: She's like, watch this. She's like, I trust you. And
Speaker 1: we went for it, dude, and the results results were in.
Speaker 1: It turned out pretty good. She was happy with it,
Speaker 1: especially considering that it was the first time we'd ever
Speaker 1: done it, you know, and so we did it and
Speaker 1: I was you know, I asked her after the fact.
Speaker 1: I was like, is this something we're gonna do in
Speaker 1: the future, And she was like totally. She was on
Speaker 1: board with it. She was happy with the results. We're
Speaker 1: not going to post a picture of it. I didn't
Speaker 1: take anything. It was it was a while ago. But
Speaker 1: but yeah, man, is that I feel like this is
Speaker 1: a good example of, you know, one of these areas
Speaker 1: in our life where we can save some money. But
Speaker 1: make sure you do the research, make sure you have
Speaker 1: the proper tools on hand. Like I went out to
Speaker 1: the Sally beauty salon and make sure I had like
Speaker 1: the right gloves and everything, because I don't want like
Speaker 1: that bleaching my fingers, So I had those black gloves
Speaker 1: that they use in the beauty salon. I like, legit. Well,
Speaker 1: now that the word of your skills is getting out,
Speaker 1: you're gonna have people right and left lining up to
Speaker 1: have their hair done by you. Yeah, I don't think
Speaker 1: it's not that good, but I think over time it
Speaker 1: really will get to that level. I feel like we
Speaker 1: were able to get Kate's hair like of the way there.
Speaker 1: We were lacking ten per and like the quality, but seriously,
Speaker 1: like beyond that, I feel like the next time we
Speaker 1: might get it up to like the way there. And
Speaker 1: it did take some time though, so like it took
Speaker 1: about maybe an hour of my time, but it was
Speaker 1: on the weekend. We're just kind of hanging out, hanging
Speaker 1: out with the kids, cleaning the house some and the
Speaker 1: girls were wanting to watch a movie and they wanted
Speaker 1: to watch Lion King. Uh, like the real version, you know,
Speaker 1: not the cartoon version. Have you seen the new like
Speaker 1: the real version I have. Yeah, it was good. It's
Speaker 1: freaking amazing. Dude. We've watched to play too many Disney
Speaker 1: movies now Disney Plus. That's why like's like we've we've
Speaker 1: got Disney Plus now we're watching all the good movies.
Speaker 1: But so we had that on we knocked it out
Speaker 1: of the park man nice man. Well, yeah, I love
Speaker 1: that decision to to give it a go at least,
Speaker 1: and it reminds me of doing your own pest control
Speaker 1: Matt we which we talked about a long time ago.
Speaker 1: It's been a long time, but it saves you so
Speaker 1: much money and you can buy the exact same stuff
Speaker 1: that the pros use. There's an article about that on
Speaker 1: our website at how the Money dot com. But it's
Speaker 1: one of those things that people might be like, oh no,
Speaker 1: there must be some sort of proprietary data that I
Speaker 1: don't have, But now really know, the Internet exists and
Speaker 1: the data is there for all of us to look at.
Speaker 1: When it comes to you know, doing whatever this Bai
Speaker 1: baile age or whatever. I think it's bollyash, you know,
Speaker 1: it's worth mentioning to that. Maybe I kind of have
Speaker 1: the artist touch a little bit, like I was able
Speaker 1: to get it to that level, I would probably have
Speaker 1: bungled it completely. Are you gonna do Emilies here? Now?
Speaker 1: I'm gonna let you do her hair now? I don't
Speaker 1: have time for that, Okay, all right, although Kate has
Speaker 1: cut her cut Emily's hair before, that's right, right for sure? Yeah,
Speaker 1: And it's saved us a good bit of money. So obviously,
Speaker 1: professional stylists exists for a reason, just like professional pest
Speaker 1: control companies exist for a reason. But I think for
Speaker 1: most of us, if we're willing to accept inferior results,
Speaker 1: we can save a whole lot of money. Yeah. And
Speaker 1: the degree of inferiorness depends per person, right, yeah, exactly.
Speaker 1: That might be very inferior or it might be pretty good.
Speaker 1: So it's up to you and what you think you
Speaker 1: can tackle, no doubt. All right, Matt, let's mention the
Speaker 1: beer that we're having on the show today. We're in
Speaker 1: Catharsis by Treehouse Brewing Company and Brian and Caitlin listeners
Speaker 1: from Massachusetts and this one our way much thanks, because
Speaker 1: Treehouse is a brewery that has lines out the door
Speaker 1: for their beer seriously super high demand. So I'm really
Speaker 1: excited to try this porter from Treehouse today on the
Speaker 1: show with you today, my friend. Yeah, they these are
Speaker 1: one of these breweries that's like a beacon. All these
Speaker 1: other small berries have been popping up the past few years.
Speaker 1: You know, they're they're looking to the Treehouse that's sort
Speaker 1: of like this beacon as as like this lighthouse as
Speaker 1: they're navigating the foggy waters of of how to run
Speaker 1: a brewery. Man, you're so good at analogies. That's good
Speaker 1: to think. I feel inspired by this beer Treehouse Lighthouse.
Speaker 1: I can see how you made that. Is that what
Speaker 1: I was thinking? I think, so get out of my head. Yeah,
Speaker 1: but always excited to have a treehouse beer. It's very
Speaker 1: rare and always a pleasure. And we'll talk about our
Speaker 1: thoughts on this one at the end of the episode.
Speaker 1: All right, onto the subject at hand. We're talking about
Speaker 1: financial advisers and how they're not all bad. There are
Speaker 1: professionals who can help us in almost every aspect of
Speaker 1: our lives. Right, in some cases we can go it alone, Matt,
Speaker 1: I think you and I we we tend towards going
Speaker 1: it alone, as we just talked about, right, we we
Speaker 1: like I like the d I Y approach saves this money. Yeah,
Speaker 1: we don't mind experimenting a little bit here and there
Speaker 1: to see if we can save more money. Specifically on
Speaker 1: our wives. Yeah, we like to use them as test subjects.
Speaker 1: In some cases it's a slam dunk, easy decision. However,
Speaker 1: I'm not gonna watch a YouTube video on how to
Speaker 1: perform surgery through my kids tonsils. Right, that's like probably
Speaker 1: a little a little too far fetch for me to undertake,
Speaker 1: just barely, just one step too far and one step
Speaker 1: too far. Of course, I'm gonna let a doctor handle that.
Speaker 1: On the other hand, if my water bills shot up
Speaker 1: and I think my toilet is leaking water, well, it's
Speaker 1: really easy to go and buy a new toilet flapper
Speaker 1: valve and install it. There's no need to call a
Speaker 1: plumber for this basic thing that can go wrong. And so, yeah,
Speaker 1: where do financial advisors fit into that picture of d
Speaker 1: I Y versus hiring the expert. We're gonna cover that today. Yeah, man,
Speaker 1: that's the biggest problem, right, like knowing when to to
Speaker 1: call in the pros or when to do it yourself. Like,
Speaker 1: there are a lot of aspects of our personal finances
Speaker 1: that don't require professional help. You don't need a financial advisor.
Speaker 1: You don't need a professional to tell you that you
Speaker 1: need to start paying down your debts and to go
Speaker 1: ahead and make sure that you get that employer match
Speaker 1: in your four O one K. That's that slam Dunkey's decision, right, Like,
Speaker 1: that's something that you can do yourself. But there are
Speaker 1: some more complicated issues that might arise when it would
Speaker 1: make sense to hire pro and and like you said,
Speaker 1: all that's what we're going to dive into today. Yeah,
Speaker 1: first man, I think we kind of need to discuss
Speaker 1: what a financial advisor does because knowing what they do
Speaker 1: can help us decide what direction we need to go in.
Speaker 1: And and first off, the term financial advisors kind of
Speaker 1: this catch all term. A lot of people call themselves
Speaker 1: a financial advisor. And also the credentials and services that
Speaker 1: a financial advisor performs for a client. They vary from
Speaker 1: firm to firm and from advisor to advisor. And at
Speaker 1: the same time, the job of a financial advisor has
Speaker 1: changed in recent years. The industry is evolving in what
Speaker 1: individuals require when it comes to money help and advice
Speaker 1: is different than it was twenty years ago, and advisors
Speaker 1: are responding accordingly. In particular, younger advisors are are tending
Speaker 1: to meet these market demands for a comprehensive service as
Speaker 1: opposed to just investing advice. Some of these advisors are
Speaker 1: even offering beer advice, like beer recommendations. Those guys, come on,
Speaker 1: go ahead, and for the record, it's going to go
Speaker 1: out there in state that we are not financial advisors,
Speaker 1: Like this is something you and I enjoy, we have
Speaker 1: a passion for it, but yeah, we are not you know,
Speaker 1: professional financial advisors, So we don't really have skin in
Speaker 1: this game at all. Yeah, although, like I said, almost
Speaker 1: anybody can call themselves financial advisors is to catch all
Speaker 1: term and so we could say that we were, but
Speaker 1: we don't have any technical training exactly that has led
Speaker 1: us to to be able to call ourselves that. So
Speaker 1: and so for c OA reasons, I like to just
Speaker 1: stay away from that completely. Yeah, completely. And advisor is
Speaker 1: typically they used to specialize in discussing like those long
Speaker 1: term goals. Like right, I'm thinking of like the old
Speaker 1: kind of traditional advisors. You know, you kind of go
Speaker 1: into the office, you sit down at their desk, and
Speaker 1: they they're like, let's talk about your money, like old
Speaker 1: giant oak desk. Yeah, that kind of approach. But you
Speaker 1: know that's where they would manage your investments and also
Speaker 1: help you to think through some different life insurance necessities.
Speaker 1: But now, like you said, you like they offer such
Speaker 1: a wide gamut of services. They can offer budgeting help,
Speaker 1: they can help create some debt payoff plans, offer college
Speaker 1: admissions advice, someone even proof read resumes. As individual investor
Speaker 1: has gotten easier in the costs have plummeted, advisors are
Speaker 1: offering more services to justify the value, to justify the
Speaker 1: fee that they charge, and the value is tied up
Speaker 1: more in the advice about tricky money decisions, and it's
Speaker 1: not just about trying to beat the stock market average.
Speaker 1: So is a financial advisor worth it? That's really the
Speaker 1: question that a lot of people have on their minds,
Speaker 1: and we're gonna get into some specifics to help people
Speaker 1: figure that out. But but part of what makes this
Speaker 1: decision to hire a financial advisor or not so difficult
Speaker 1: is that it's hard to measure the value that they
Speaker 1: can potentially bring to you with these services that they offer.
Speaker 1: How do you quantify budget help and college admissions advice
Speaker 1: over what you can do on your own without any help.
Speaker 1: So to answer to that question, some researchers at morning
Speaker 1: Star did a study that measured the value that financial
Speaker 1: advisors can provide, and Matt I think there were like
Speaker 1: kind of three studies that did something similarly. Vanguard did
Speaker 1: another one, and basically, these studies have found that a
Speaker 1: good planner can increase retirement income well over making even
Speaker 1: a one percent annual fee well worth the cost. But
Speaker 1: the methodology for some of these studies, Matt, when when
Speaker 1: you dig into it. There's some off putting stuff in
Speaker 1: the methodology. They're assuming sometimes that individual investors are invested
Speaker 1: in high cost funds and that an advisor is going
Speaker 1: to help you get into lower cost funds. But you
Speaker 1: know what, you might have been listening to the How
Speaker 1: the Money podcast and you're already investing in low cost funds,
Speaker 1: So that's not a benefit that a financial advisor is
Speaker 1: going to bring you. But the problem continues because a
Speaker 1: lot of the financial planning services they measured aren't necessarily
Speaker 1: for younger folks and individuals in the wealth growing phase
Speaker 1: of investing, and so it's not just a yes or
Speaker 1: no answer. You have to dive into your own particulars
Speaker 1: as an investor as well as the specifics that a
Speaker 1: financial advisor can bring the table in order to help
Speaker 1: you in your financial situation. Yeah. Man, that's right. So
Speaker 1: that's what we're going to cover today, the things that
Speaker 1: you need to know about advisors as well as what
Speaker 1: you need to consider about your specific situation, and hopefully
Speaker 1: by the end of this episode you should know exactly
Speaker 1: what your next step should be. So basically, we've got
Speaker 1: two prongs here. We've got you as the investor, and
Speaker 1: we've got the advisor, and we're gonna talk about some
Speaker 1: of the things that you should be looking for in
Speaker 1: a financial visor. But first let's take a quick break,
Speaker 1: all right. That we're gonna dig to the heart of
Speaker 1: this question as to whether people should hire a financial
Speaker 1: advisor or not, and then how to find a good
Speaker 1: advisor if if it's appropriate for them a little bit
Speaker 1: later on, but first let's get to the characteristics of
Speaker 1: a good advisor. If you do find yourself wanting some
Speaker 1: expert help, what do you need to look for when
Speaker 1: you're shopping for the services that a financial advisor offers,
Speaker 1: And so, Matt, let's break it down. A good financial
Speaker 1: advisor will first and foremost be a fiduciary, and they
Speaker 1: will be willing to provide a written guarantee of that.
Speaker 1: So if an advisor is a fiduciary, basically it's a
Speaker 1: fancy term that means that they prioritize your best interest
Speaker 1: over their own, and it eliminates the potential for a
Speaker 1: conflict of interest. I think if people take nothing else
Speaker 1: away from this, if they do shop for a financial advisor,
Speaker 1: the biggest thing they need to prioritize is that that
Speaker 1: financial advisor is a fiduciary. That's the number one thing
Speaker 1: you have to make sure of before you sign on
Speaker 1: the dotted line to have them manage your money. Oh, totally,
Speaker 1: man and so like an example of you know, not
Speaker 1: being a fiduciary, they can tell you more expensive insurance
Speaker 1: or investments because they get a better cut on those products.
Speaker 1: That's a clear conflict of interest. You know, after this
Speaker 1: federal rule was not past, some states are actually forcing
Speaker 1: the issues, like Massachusetts, which is by the way, that's
Speaker 1: where Treehouse is from and where Caitlin and Brian live.
Speaker 1: So Massachusetts has a lot going right for them. Yeah, right,
Speaker 1: But until this rule is widely implemented, then this is
Speaker 1: the first question that you need to ask of your
Speaker 1: current um or a potential financial advisor. Yeah, for sure,
Speaker 1: and a good financial advisor in addition to being a fiduciary,
Speaker 1: they'll also be easy to communicate with. That that's why
Speaker 1: you want to interview a few advisors before deciding on
Speaker 1: the one that you want to go with. We don't
Speaker 1: necessarily click with everyone, Matt and I would suggest prioritizing
Speaker 1: finding an advisor that you can have a good conversation with.
Speaker 1: You don't want to avoid calling them because you hate
Speaker 1: their communication style. Are they easy to reach, do they
Speaker 1: respond in a timely manner? And are they willing to
Speaker 1: use your methods of communication? Matt, I prefer email, Uh,
Speaker 1: maybe text message on occasion. But if I was working
Speaker 1: with an advisor that wanted to call me on the
Speaker 1: phone all the time even though I was trying to
Speaker 1: email them, I'd be so annoyed because I just don't
Speaker 1: want to talk like that. Like I'm a classic millennial
Speaker 1: who avoids using the phone for its actual purpose, which
Speaker 1: is to talk to someone. When your phone rings, do
Speaker 1: you like freak out and like hide under the couch? Yeah,
Speaker 1: exactly what's the emergency? Do I need to respond right now? No,
Speaker 1: I'm totally with you, Like, focus on the channels of communication.
Speaker 1: That makes sense, right, Like, don't hit me up on
Speaker 1: Slack because I'm not on there, but send me an
Speaker 1: email and like, yeah, if it's an emergency, you can
Speaker 1: call or text, but there's rarely an emergency when it
Speaker 1: comes to financial advising. Also, do not communicate via smoke signal,
Speaker 1: so don't try that either. Yeah, I'm not looking at
Speaker 1: this guy waiting to see what you got to say, uh,
Speaker 1: and your your financial advisor should also be pretty nosy.
Speaker 1: Are they digging in with lots of questions? If not,
Speaker 1: you might want to find another advisor to to be
Speaker 1: able to handle your money. Well, they'll need to know
Speaker 1: a lot about you and your pacific goals, you know,
Speaker 1: going back to being a fiduciary, Like, it's hard to
Speaker 1: have your best interests in mind if they don't even
Speaker 1: know what your best interests are. Another thing that you're
Speaker 1: gonna want to prioritize when looking for a financial advisor
Speaker 1: is are they willing to teach and educate you? Because
Speaker 1: if they want you to leave things to the pros
Speaker 1: and they're not willing to explain their reasoning or methodology,
Speaker 1: I think that's a big red flag, Matt, because part
Speaker 1: of the benefit of having a financial advisor should be
Speaker 1: these open ended conversations where you're also learning more about
Speaker 1: how the markets work and how they're investing your money.
Speaker 1: You want to more fully understand your plan. You don't
Speaker 1: want them just to kind of handle it right. You
Speaker 1: want to be involved and have a say in the process. Yeah,
Speaker 1: different folks are going to be more prone to want
Speaker 1: to learn and to not learn, But you don't want
Speaker 1: to just have like a money guy or a money
Speaker 1: girl who just like takes care of all your money
Speaker 1: for you. It's important to learn. This is really important
Speaker 1: for someone like me who just really loves to understand
Speaker 1: the why behind things. Like that's just a question I asked,
Speaker 1: I want to know how it works. Yeah, man, I've
Speaker 1: just read too many stories about oftentimes, you know, uber
Speaker 1: wealthy basketball players, NFL players, and the quote unquote financial
Speaker 1: advisor runs off with a lot of their money. And
Speaker 1: if it's more of a two way conversation about where
Speaker 1: your money is going, that's just kind of a harder
Speaker 1: relationship to get in. Exactly. Well, there's more accountability there
Speaker 1: when you're talking about it and where they're when they're
Speaker 1: teaching you, because you yourself are providing that accountability. Um.
Speaker 1: I think one of the one of the biggest benefits
Speaker 1: that a financial advisory can provide is behavior modification and
Speaker 1: coaching as well. Like, if you make all of your
Speaker 1: money decisions so by yourself, it could be easy to
Speaker 1: sell assets in a moment of panic. A good financial
Speaker 1: advisor will help you avoid becoming your own worst enemy
Speaker 1: and will become a coach to push you towards saving
Speaker 1: more and making even better money decisions in the future. Yeah. Man.
Speaker 1: A couple of weeks ago, we talked about the behavioral
Speaker 1: money decisions that wreck us and a financial advisor can
Speaker 1: walk alongside you and kind of help you avoid making
Speaker 1: some of those treacherous mistakes that you might make with
Speaker 1: with your investing or your savings. And I think another
Speaker 1: thing to mention, by the way, is the bogus credentials
Speaker 1: that are out there for financial advisors. I mean, we
Speaker 1: we talked about that for a minute at the beginning
Speaker 1: of the show. How almost anybody can call themselves a
Speaker 1: financial advisor. There's not necessarily anything technical that needs to
Speaker 1: happen in order for you to do that. I'm a
Speaker 1: financial planner right right exactly? Or is that a money
Speaker 1: coach or whatever it is. I mean, there's all sorts
Speaker 1: of different terms that people are using for how they
Speaker 1: help you with money now, and so to tell people
Speaker 1: out the thing that you want to make sure of
Speaker 1: when you are interviewing financial advisors is that the person
Speaker 1: that you're hiring is a CFP. That's the credential you
Speaker 1: most want your financial advisor to have. It's essentially the
Speaker 1: most rigorous credential and it requires years of schooling, a
Speaker 1: grueling test, and then years in the field to even
Speaker 1: achieve that status. So you know that a person that
Speaker 1: is a Certified Financial Planner a CFP is going to
Speaker 1: have the time spent in the field and also the
Speaker 1: education necessary to be able to guide you appropriately in
Speaker 1: your money decisions. Another aspect that is important to know
Speaker 1: about a financial advisor that you're considering is that like
Speaker 1: how they're paid, Essentially, like you want to make sure
Speaker 1: that they have a transparent fee structure and that you
Speaker 1: understand how they will be compensated. There are typically two
Speaker 1: ways that a planner makes a living um. One way
Speaker 1: is that they charge a fee, right like That fee
Speaker 1: can either be a flat fee for their services, an
Speaker 1: hourly rates based on how long or how often you
Speaker 1: meet with them, or their fee is based on a
Speaker 1: percentage of assets managed. And all three of these examples
Speaker 1: of these are all called fee only advisors. And obviously
Speaker 1: there are different ways that these fee only advisors get paid,
Speaker 1: but that's our favorite kind of advisor for people to
Speaker 1: generally speaking, fee only advisors are good, yeah, for sure.
Speaker 1: The other way that advisors get paid is by commissions
Speaker 1: on the products they sell. It's harder to see how
Speaker 1: they get paid in this model, right, and different annuity
Speaker 1: and whole life insurance products often have higher commissions and
Speaker 1: that's often why they're pitched by these financial advisors. These
Speaker 1: folks are called commission based brokers, but even fee based
Speaker 1: advisors can make money depending on the products they sell you.
Speaker 1: So it's always important to ask do you make commissions
Speaker 1: on any of the products you might sell me? And
Speaker 1: the response you get from a potential financial advisor is
Speaker 1: going to be telling. And am at a fine point
Speaker 1: that I think we have to draw. Here is a
Speaker 1: fee based financial planner versus a fee only financial planner
Speaker 1: based versus only Just in case folks didn't hear it,
Speaker 1: I just wanted to say it again. Yes, So the
Speaker 1: fee only advisor essentially is one that is going to
Speaker 1: get a flat fee from you in one of the
Speaker 1: three ways that you mentioned. A fee based advisor might
Speaker 1: have a similar arrangement with you, but if their fee based,
Speaker 1: that means that they have the option to make money
Speaker 1: from you in other ways, to like selling you high
Speaker 1: commission products. So a fee only advisor is the kind
Speaker 1: of advisor you want to look for because the payment
Speaker 1: arrangement that you have with them is just much more
Speaker 1: easier to understand. Yeah, man, that's a great question to
Speaker 1: ask a potential financial advisor. And another thing to ask
Speaker 1: as well that I think a lot of folks might
Speaker 1: be hesitant to ask, is like just say, hey, like
Speaker 1: other ways for me to work with you where it
Speaker 1: could just cost less money? Do you offer any discounts?
Speaker 1: And an even bigger question is if you were to
Speaker 1: ask that person like, do you do you think I
Speaker 1: even need your services? Right? If you were to ask
Speaker 1: that question and they were to get back to you
Speaker 1: and say, to be honest with you, I don't think so.
Speaker 1: How great is that they are turning down work, you know,
Speaker 1: like they're turning down the ability for them to a
Speaker 1: living and earn money because they know that this isn't
Speaker 1: what they would tell a friend to do, right man.
Speaker 1: I know, for me, if I was in a situation
Speaker 1: like that, and and that's the advice that someone were
Speaker 1: to give me, like they've got a customer for life
Speaker 1: essentially right down the road when when it does come
Speaker 1: time for me to to hire a financial advisor, or
Speaker 1: if I have a friend who's a high earner, or
Speaker 1: they're in a tricky situation where they need some serious advice.
Speaker 1: I would totally tell them to go to that person,
Speaker 1: not based on personal experience, but like the interactions we've
Speaker 1: had so far, you know, have been pretty good. Yeah,
Speaker 1: that sort of honesty goes a long way. Seriously, And
Speaker 1: so yeah, if a financial advisor says, you know what,
Speaker 1: you're not quite there yet, come back to me in
Speaker 1: a few years when you're earning more, when you have
Speaker 1: more complex financial decisions at hand, then I think I
Speaker 1: can be a big help. But right now, do the
Speaker 1: basic things and just start investing more of your money
Speaker 1: in that work for a one k but really there's
Speaker 1: not a whole lot for me to contribute at this point,
Speaker 1: so you know what, keep doing it solo for the
Speaker 1: time being. Or maybe that's the way you can try
Speaker 1: to get a discount to be like, hey, man, if
Speaker 1: you cut me a break now, you know, like down
Speaker 1: the road, I'll be making a lot more money and
Speaker 1: I want to make you rich. I'll stick you for
Speaker 1: the long haul. So I mean, yeah, I'm joking, but seriously, like,
Speaker 1: I think it's worth just having that conversation. Don't be
Speaker 1: afraid to talk about money, not just your money, but
Speaker 1: the fees that they would charge as well. It's I
Speaker 1: think it's a conversation that's worth having. Yeah, man, I agree,
Speaker 1: it's important as those questions up front before you enter
Speaker 1: into this long term relationship that's gonna have a major
Speaker 1: impact on so much of what happens with your money, right,
Speaker 1: and so let's dig into the heart of this. Let's
Speaker 1: get into when people should hire a financial advisor, and
Speaker 1: we'll get into the things you need to consider before
Speaker 1: pulling the trigger right after the break. Al Right, best buddy,
Speaker 1: we're back from the break. We're talking about why not
Speaker 1: all financial advisors are bad, and let's go ahead and
Speaker 1: answer the question of when you should hire a financial
Speaker 1: advisor specifically, let's cover some of the behavioral reasons. One
Speaker 1: of the best arguments for having an advisor has nothing
Speaker 1: to do with advanced knowledge of the markets and instead
Speaker 1: focuses purely on behavior. We kind of touched on this
Speaker 1: before the break. But if you know that your own
Speaker 1: tendencies towards making emotional moves with your investments can cost
Speaker 1: you a lot and potential returns over the years, well,
Speaker 1: then a financial advisor can help you to stay the course,
Speaker 1: you know, Like I said, like we talked about the
Speaker 1: aspect of a good financial advisor and how they can
Speaker 1: be a coach. If you have someone there in your
Speaker 1: corner that is, you know, going to keep you from
Speaker 1: clicking cell, you know, as the market dips because you're
Speaker 1: freaking out. Well, they're gonna be well worth the money
Speaker 1: that you pay. Yeah, man, I completely agree. If you
Speaker 1: know that you're susceptible to making rash money decisions, and
Speaker 1: a financial advisor can really help you focus and stay
Speaker 1: the course, that's huge. Also, if you just aren't interested
Speaker 1: in investing or finance really in general at all, i'd
Speaker 1: be surprised if you're listening to this podcast and that's
Speaker 1: the case. But if you are one of those people,
Speaker 1: or if you know one of those people as well, right,
Speaker 1: yeah for sure. But but for those people who know
Speaker 1: they need to save for the future, but they just
Speaker 1: can't bring themselves to do it because their interest level
Speaker 1: just isn't piqued by this stuff and they have the
Speaker 1: money to do so, I think a financial advisor can
Speaker 1: make a meaningful difference and be the nudge that those
Speaker 1: people need to get started. If you see the necessity
Speaker 1: behind it. But you're just unwilling to take action or
Speaker 1: learn the basic things in order to get started. A
Speaker 1: financial advisor can be the impetus to actually help you
Speaker 1: start saving for your future when you otherwise wouldn't. It's
Speaker 1: sort of like having a personal trainer. It's like if
Speaker 1: you know you're not going to go to the gym
Speaker 1: because I'm lazy, Like like, I'm not gonna get the
Speaker 1: gym because I just I would go to the gym.
Speaker 1: But if I hired a personal trainer, man, there's there's
Speaker 1: a level of accountability there. Anytime you can introduce some accountability,
Speaker 1: regardless of what you want to call them. It just
Speaker 1: so happens that you call this accountability a financial advisor
Speaker 1: and you pay the money, but they're going to help
Speaker 1: keep you on track. I completely agree you. If a
Speaker 1: muscle bound person is gonna be barking in my face,
Speaker 1: I mean, that's gonna that's gonna give me the lift
Speaker 1: weights at at a different level than I probably would otherwise.
Speaker 1: It's also worth considering hiring a financial advisor if you
Speaker 1: are a high earner, or maybe if you're self employed,
Speaker 1: if you're getting past the point of maximizing your traditional
Speaker 1: retirement accounts, maybe you want to invest more you could
Speaker 1: benefit from a financial advisor, or if you are in
Speaker 1: a particularly tough situation where there's a lot of money
Speaker 1: on the line. Maybe this is after a divorce or
Speaker 1: after receiving a huge inheritance. Pretty much anytime there is
Speaker 1: a large quantity of money on the line where a
Speaker 1: slight misstep could cost you, I mean thousands or tens
Speaker 1: of thousands of dollars you know in interest or fees,
Speaker 1: Like that's a situation you want to avoid, or if
Speaker 1: it might just get put into the same these account
Speaker 1: and you might start using it slowly as opposed to
Speaker 1: investing it for the future. I think a financial advisor
Speaker 1: can be a level head in a situation like that
Speaker 1: where there there's a lot of emotions that can prevail,
Speaker 1: especially in a divorce or an inheritance, Matt, there are
Speaker 1: a lot of other things going on, and so to
Speaker 1: have kind of a cooler head a financial advisor working
Speaker 1: to help you in the situation that can make a
Speaker 1: major difference in helping you make smart moves for the
Speaker 1: long haul in a trying time. Yeah, it's also worth
Speaker 1: mentioning to that this might be a situation where not
Speaker 1: only does it call for a financial advisor, but maybe
Speaker 1: a tax attorney or a c P, A somebody who
Speaker 1: knows the ins and outs of the law who understands
Speaker 1: that you know the tax code and that the kind
Speaker 1: of specificity situation that you're finding yourself in, it's not
Speaker 1: just about investing the money. This is something that can
Speaker 1: span large aspects of our lives. So if that's you specifically,
Speaker 1: make sure that you are are looking beyond the financial advisor. Yeah, man,
Speaker 1: I think we've covered some good reasons when financial advisors
Speaker 1: actually makes sense for people. And so if you are
Speaker 1: one of these people, well, how do you go about
Speaker 1: finding a good advisor? Obviously, like we mentioned earlier, you
Speaker 1: want to find an advisor who's going to be a
Speaker 1: fiduciary and they're gonna do with your money what's in
Speaker 1: your best interest, not what's in their best interest. One
Speaker 1: of our favorite places for people to turn is x
Speaker 1: Y Planning Network, and that's because they only have relationships
Speaker 1: with advisors who meet the strict criteria that we've outlined.
Speaker 1: You're going to find an advisor who's fee only, who's
Speaker 1: a fiduciary, who cares about helping you no matter where
Speaker 1: you are in the process of building your wealth. Garrett
Speaker 1: Planning Network is another solid network out there, and we'll
Speaker 1: put links to these in the show notes. Also, getting
Speaker 1: a referral from a friend who has had great experience
Speaker 1: with a financial advisor can be good, but you just
Speaker 1: need to make sure that you interview that financial advisor first,
Speaker 1: because maybe they really like them, but they don't see
Speaker 1: the fees or the negative things associated with the advisor
Speaker 1: that they're currently in a relationship with, and so you
Speaker 1: need to ask those questions still, even if it's a
Speaker 1: recommendation from a friend. Yeah, if there's anything that we've
Speaker 1: learned from watching Parasite, it's don't only just don't only
Speaker 1: take the recommendation of a friend. Make sure that you
Speaker 1: dig in a little bit and do some research. Did
Speaker 1: you did you you watch Parasite? Right? Yeah, Finally we're
Speaker 1: talking about grown up movies. So that one was crazy.
Speaker 1: By the way, if you haven't watched it, I mean,
Speaker 1: would you recommend it? I would totally recommend Okay, Yeah,
Speaker 1: it's pretty out there, but it's also really fascinating. I
Speaker 1: like weird movies like that. That was great. Okay, So
Speaker 1: let's talk about how often into what extent should people
Speaker 1: hire an advisor? Matt, I think this is something that
Speaker 1: people don't necessarily normally consider. You might not need an
Speaker 1: ongoing relationship with an advisor. Maybe you just want to
Speaker 1: check up every five years or so, or when you're
Speaker 1: closing in on big life and money questions. And so
Speaker 1: for folks that don't necessarily want to pay one percent
Speaker 1: of their assets every single year to an advisor to
Speaker 1: manage their money, well, you can develop it is an
Speaker 1: ongoing relationship where you pay a flat fee every two
Speaker 1: or four or five years to that advisor to have
Speaker 1: a sit down chat and to be able to reassess
Speaker 1: the situation that you currently find yourself. And I think
Speaker 1: that sometimes is a better way where you're not paying
Speaker 1: them nearly as much, but you are getting that expert
Speaker 1: help when you do feel like you need it. Great point, Man,
Speaker 1: So we've talked about how to find a good advisor.
Speaker 1: We've talked about maybe how often it's worth going in
Speaker 1: and checking in with one. But the question is now
Speaker 1: like should you hire a financial advisor? And Man, for
Speaker 1: most people, we're looking at you Pete and Pittsburgh. Who's
Speaker 1: Pete in Pittsburgh. We've had like multiple questions. I think
Speaker 1: from Pete and Pittsburgh's right, So we're just gonna assume
Speaker 1: that there's a bunch of them there. Yeah, I think
Speaker 1: there's a lot, but no for real though, like for
Speaker 1: most people, we probably would not recommend hiring a financial advisor.
Speaker 1: If you're listening to this podcast and you're just getting started,
Speaker 1: there are some very basic steps that you can take
Speaker 1: in order to get your investing on the right track.
Speaker 1: Read some some basic personal finance books. Some great investing
Speaker 1: books are out there, and then just keep listening how
Speaker 1: the money when When less money is on the line,
Speaker 1: you can afford to make some of these small mistakes
Speaker 1: as long as you learn from those mistakes, right, Like,
Speaker 1: hopefully you don't make any mistakes. Uh, you're taking a
Speaker 1: slow you're learning. Once you learn, you implement what you've learned.
Speaker 1: You know, you can be methodical about it. You know,
Speaker 1: we're humans though, so unlikely they we're not gonna make
Speaker 1: any right now, That's right. We make some mistakes here
Speaker 1: and there. But what's so important, though, is that we
Speaker 1: learn from those mistakes. If you learn from those mistakes,
Speaker 1: like and I think there's no better way for us
Speaker 1: to learn than life experience, especially when the stakes are low. Yeah,
Speaker 1: and when we're talking about the amount of money that
Speaker 1: we're gonna have in retirement, the stakes are kind of
Speaker 1: high when it comes to hiring a financial advisor. That's
Speaker 1: one of the things that we we haven't talked a
Speaker 1: whole lot about in this episode, but that's one of
Speaker 1: the reasons you would want to go it alone, is
Speaker 1: because the typical fees associated with hiring an advisor. Most
Speaker 1: advisors are going to charge you a minimum of one
Speaker 1: percent of the assets that you have under management every
Speaker 1: year in order to manage your money and give you
Speaker 1: that advice. And so that's a high price to pay.
Speaker 1: One percent sounds really low, but when you think about
Speaker 1: the compounding effect of that one percent fee that you're
Speaker 1: paying every year to that advisor, it can have a
Speaker 1: massive impact on what you're actually going to have in retirement.
Speaker 1: And so if you can go it alone, if you
Speaker 1: can develop confidence by listening to a podcast like this,
Speaker 1: by reading some good personal finance books Matt like you mentioned,
Speaker 1: that can save you those fees and help you to
Speaker 1: build greater wealth uh in your own life as you
Speaker 1: go the d I Y route. Instead of hiring an advisor, Yeah, Joel.
Speaker 1: And one of the solutions to these high fees is
Speaker 1: if you're able to find a happy medium. Robo advisors
Speaker 1: they have completely changed the financial advisor space, but as
Speaker 1: much as they're able to offer, a lot of people
Speaker 1: still want a human to be able to talk to,
Speaker 1: no matter how good the betterment platform is right and
Speaker 1: how they can help you pay attention to your potential
Speaker 1: behavioral misc use. Going with UH, you know, more of
Speaker 1: a full service like Vanguards Advisor Services might be a
Speaker 1: good solution for you, and they charge point three percent
Speaker 1: on assets under management. Another great solution might be Schwab
Speaker 1: Intelligent Portfolios and the way they're pricing structure works. They
Speaker 1: have a one time fee of three d bucks and
Speaker 1: then after that they charge thirty dollars a month, and
Speaker 1: that will likely make the most sense for folks considering
Speaker 1: a human financial advisor because you get unlimited access to
Speaker 1: a CFP, an actual certified financial planner from Schwab. Yeah,
Speaker 1: Schwab and Vanguard both offer c FPS, which is the
Speaker 1: highest and best designation for a financial advisor, and that's
Speaker 1: who we suggest you go with. And so if you
Speaker 1: do sign up through Vanguard or through Schwab for their
Speaker 1: expanded advisor services or intelligent portfolios. You're kind of getting
Speaker 1: the best of both worlds. You're getting the lower fees,
Speaker 1: but you're also getting access to humans who have gone
Speaker 1: through a lot of training to be able to help
Speaker 1: you with your finances in those questions that you have
Speaker 1: over time. Man, I think a couple of years ago
Speaker 1: we talked about financial advisors a little bit and we
Speaker 1: mentioned this company called Grove, and they did a great
Speaker 1: job of charging people six hundred bucks a year and
Speaker 1: giving them access to a financial advisor that since I
Speaker 1: think has been sold, but I don't remember to who.
Speaker 1: It was sold to, a big financial services company, But
Speaker 1: I really think Grove a massive impact on how these
Speaker 1: bigger companies charge for financial advice, and it's become a
Speaker 1: little more democratized, and these low cost investment companies like
Speaker 1: Vanguard and Schwab have done a really good job at
Speaker 1: offering you access to a human who's well informed. It
Speaker 1: can offer you good advice at just at a much
Speaker 1: lower rate than we would typically find or you've been
Speaker 1: able to find over the past two years. Maybe Grove
Speaker 1: was purchased by Schwab and then they cut their prices
Speaker 1: in half. I don't remember if it was Swab. I
Speaker 1: gotta look that up somebody about Grove. Uh. I love
Speaker 1: what they were doing, but I also love what Schwab's doing,
Speaker 1: what Vanguard's doing now. And man, I think ultimately, when
Speaker 1: it comes down to the financial advisor decision, you know,
Speaker 1: we we wanted to talk about how financial advisors aren't
Speaker 1: all bad. I mean, there's some great services they offer,
Speaker 1: and for some types of people it makes a whole
Speaker 1: lot of sense. But ultimately, uh, there's something that Adam
Speaker 1: Smith wrote two hundred years ago. I love reading old
Speaker 1: school authors every once in a while, and he said,
Speaker 1: managers of other people's money rarely watch over it with
Speaker 1: the same anxious vigilance with which they watch over their own.
Speaker 1: So I would say, ultimately, be careful with who you
Speaker 1: and trust to watch over your money. Uh, that you
Speaker 1: have worked hard to earn. This is your money, and
Speaker 1: so who are you putting in charge of it? And
Speaker 1: we believe truly that those cheaper robo alternatives or one
Speaker 1: time or occasional guidance from a paid pro is likely
Speaker 1: all you'll need. Considering the wealth of information and the
Speaker 1: amount of tools that are at our disposal. Now, even
Speaker 1: for novice investors, there are amazing podcasts and incredible books.
Speaker 1: Just go to the library and check out a few
Speaker 1: of them. The ability that we have now to be
Speaker 1: informed on what's happening with our money and how we
Speaker 1: can d I yat is unprecedented, and so I think
Speaker 1: for most people that's still the best way to go.
Speaker 1: But this was definitely worth talking about because there are
Speaker 1: some situations where people will want a financial advisor financial
Speaker 1: planner in their corner. It just kind of depends on
Speaker 1: their specifics and where they're at. Yeah, man, that's a
Speaker 1: good word. And here's the thing too, For a lot
Speaker 1: of folks that might be new to personal finance, you
Speaker 1: may not feel like you have any interest at all,
Speaker 1: Like you have no attraction to money or personal finance.
Speaker 1: And so those folks, I think we would both encourage
Speaker 1: you to just really dig into it a little bit
Speaker 1: more like read some great books will start, you know,
Speaker 1: continue to listen to the podcast, read articles online because
Speaker 1: I know, for me, I have found myself drawn to
Speaker 1: subjects and topics that I didn't find very interesting just
Speaker 1: from the actual process of digging into it. Right, Like,
Speaker 1: the more I learned about something, the more I'm kind
Speaker 1: of sucked into it and the more interesting it becomes.
Speaker 1: It's kind of like when they made you read the
Speaker 1: classics in high school and you're like why, and yeah,
Speaker 1: now I love them. I can't get enough exactly. I
Speaker 1: think the same thing is true with our money, and
Speaker 1: and the payoff is there as well, because this is
Speaker 1: our own money. Like, we're not reading this to learn
Speaker 1: how to manage someone else's money. This isn't a job.
Speaker 1: This is your own life. This is something that very
Speaker 1: much affects you, you know, Like we we don't necessarily
Speaker 1: call our podcast like a self help podcast, but that's
Speaker 1: sort of what we're talking about here. This is personal finance.
Speaker 1: And if you can find ways to manage this yourself
Speaker 1: and to just dominate your own personal finances, then you're
Speaker 1: gonna be in a fantastic spot, you know, years and
Speaker 1: decades down the road. Man totally agree. All right, let's
Speaker 1: get back to the beer that we had on this episode.
Speaker 1: Today on the show, we drank a beer called Catharsis
Speaker 1: by Treehouse Brewing Company, one of the best breweries in
Speaker 1: the nation. Easily and listeners Brian and Haitlyn sent this
Speaker 1: one to us from Massachusetts, so big thanks to y'all
Speaker 1: and Matt. What are your thoughts on this beer? Well, dude,
Speaker 1: this is a really good one. And Brian and Caitlin
Speaker 1: are crazy lucky because they said that this is like
Speaker 1: their local brewery essentially, like it's it's like thirty minutes away,
Speaker 1: and so for them just to be able to Waltzon
Speaker 1: whenever they want and pick up some beers, so jealous. Yeah,
Speaker 1: so incredibly jealous. But what's amazing about this beer, dude,
Speaker 1: is that you and I porters aren't necessarily one of
Speaker 1: our go to styles. I think we've both stated that before.
Speaker 1: And what's amazing about this one, though, is that you
Speaker 1: can get that rich, that robust chocolate flavor without it
Speaker 1: filling you up. One of the reasons we do like
Speaker 1: stous is because the body is typically there, and that
Speaker 1: body kind of adds to the flavor. But somehow this
Speaker 1: beer doesn't need that additional body, it doesn't need that feeling,
Speaker 1: like that additional sense in order to complement this beer like,
Speaker 1: it's got enough flavor going on to be able to
Speaker 1: kind of stand up on its own. And so because
Speaker 1: of that, this is one of the best porters I
Speaker 1: think I've ever had. It's just so well balanced and
Speaker 1: kind of has all the right flavors. Yeah. Man, if
Speaker 1: all porters takes it like this one, I'd be a
Speaker 1: convert immediately. This one is so good. I thought it
Speaker 1: had massive chocolate fudge notes in it and so yeah,
Speaker 1: the flavor profile was just incredibly rich and well developed,
Speaker 1: and that's just not something you find in a whole
Speaker 1: lot of porters. Often times, I feel like they're a
Speaker 1: little bland, there's a little bit thinner. Yeah yeah, and
Speaker 1: this one just had a ton of flavor going on.
Speaker 1: It was delicious. A big fan of everything I've ever
Speaker 1: had from Treehouse and whatever. Beard of style. I think
Speaker 1: they set their minds to make they crush it. They
Speaker 1: can do it. Yeah. It's it's almost like this is
Speaker 1: like a porter concentrate. It's like, oh, maybe they forgot
Speaker 1: to to do this step where they're they're supposed to
Speaker 1: deluted with water. Yeah yeah, yeah, because that's how most
Speaker 1: porter spaces is heavily deluded. Yeah, that's it's like a
Speaker 1: deluded style, whereas this kind of like, yeah, it just
Speaker 1: holds its own tastes so good. I'm incredibly thankful for
Speaker 1: Caitlin and Bryan for for sending this one our way.
Speaker 1: And have you ever even never been a tree House? Right? No? Never? Yeah,
Speaker 1: I haven't either. I think it's it's a good ways
Speaker 1: outside of Boston. I've been to Boston and I visited Trillium,
Speaker 1: which is so good, another great brewery in Boston. But
Speaker 1: but yeah, Treehouse is just harder, like out of the country, right. Yeah,
Speaker 1: So if it's your neighborhood brewery, lucky for you, Brian
Speaker 1: and Caitlin. Yeah, so definitely pump them. We get to
Speaker 1: try this one on the show today. Man, Yeah, man,
Speaker 1: that's right. So that's gonna be it for this episode.
Speaker 1: For listeners who are looking for show notes, we'll have
Speaker 1: some of those links up there with some of those
Speaker 1: different financial planning networks that we mentioned, as well as
Speaker 1: our full show notes up at how to money dot com.
Speaker 1: And if you're looking for some advice some help on
Speaker 1: how to find the right credit card for you, you
Speaker 1: don't need to hire a financial advisor, just go to
Speaker 1: how the money dot com slash credit cards. Matt and
Speaker 1: I have listed the best credit cards for how you
Speaker 1: spend your money, how you can get the most rewards
Speaker 1: back based on the way that you typically spend in
Speaker 1: an average month, and so if you're looking for a
Speaker 1: new card, check that out. And if you sign up
Speaker 1: her card, it does help the podcast at the same time.
Speaker 1: All Right, Matt, that's gonna be it for this episode
Speaker 1: until next time, Joel, best Friends Out, Best Friends Out,