Speaker 1: Welcome to How to Money. I'm Joel and I'm not
Speaker 1: and today we're answering the question do you need a
Speaker 1: financial advisor? All right, man, that's right coming up on
Speaker 1: the show, we're gonna answer that question. There's certainly a
Speaker 1: lot of nuance to it. But we're going to refer
Speaker 1: back to our episode nine, retirement investing is simpler than
Speaker 1: you think. We're gonna talk about how expensive a financial
Speaker 1: advisor can be, and the different types that there are
Speaker 1: out there, so what to look for if you are
Speaker 1: shopping for one, and ultimately whether or not we think
Speaker 1: that people should be paying money to someone every year
Speaker 1: to get financial advice. But before we get too far
Speaker 1: into this, we definitely want people to know that the
Speaker 1: two dudes drinking beer on a podcast are not financial professionals,
Speaker 1: and we probably shouldn't be shouldn't be looked upon as such. Man,
Speaker 1: that's a nice little disclaimory to put out there, a
Speaker 1: little c O A U. In case that being said, Man,
Speaker 1: we've been doing this now for over four months. You know,
Speaker 1: we kind of hit the four month mark, so I
Speaker 1: feel like for professionals, oh totally, but ready to go
Speaker 1: full time yet? I mean, I think Anybody listening to
Speaker 1: this knows those guys have raw talent. They're probably really
Speaker 1: impressed at this point that we've even made it four
Speaker 1: months together uh doing this, and I think, I think
Speaker 1: we're crushing it though. I'm having a blast. It's fun
Speaker 1: to get together and drink beers and talk about the
Speaker 1: stuff we care about, and I think it's really fun
Speaker 1: to interact with the people that are listening that care
Speaker 1: about the stuff we care about. That's that's been the
Speaker 1: best part to me. Yeah, it's definitely been a lot
Speaker 1: of fun. I guess the reason I said four months too.
Speaker 1: That's how long I had considered starting my own business
Speaker 1: back when I had first started uh doing photography, So
Speaker 1: I kind of kicked it around a little bit on
Speaker 1: the side. But after four months is when I was like, Okay,
Speaker 1: now I'm doing this for real full time and went
Speaker 1: after it. So we're supposed to quit our day jobs now.
Speaker 1: I'm just saying, we did just sitting the bar kind
Speaker 1: of high there. Back then when I had zero kids,
Speaker 1: zero responsibility basically except for the Kate, and you like,
Speaker 1: literally could he raman every night to cover for your
Speaker 1: lack of income? And we did, man, we did cool man.
Speaker 1: So before we get talking about financial advisors, let's let's
Speaker 1: talk about our beer. Yeah, al Gash was kind enough
Speaker 1: to send us a couple of different varieties of beer,
Speaker 1: one of which will be partaking in tonight Ala Gash Curio.
Speaker 1: Let me pop it Curio. Man, it has been years
Speaker 1: since I've had his beer. Yeah, so ale Gash has
Speaker 1: apparently been around since. So they were one of the
Speaker 1: old school players in the craft beer world here in
Speaker 1: the United States throughout of Portland, Maine, which, by the way,
Speaker 1: we're just having a good discussion on our Facebook group
Speaker 1: this week about how amazing Portland Maine is. Uh. And
Speaker 1: Ala Gash is a must see, a must visit. They
Speaker 1: make some really really amazing beers. Yeah. I feel like
Speaker 1: Alagash in general is kind of like world class like
Speaker 1: all around, like their beers, like they're sort of approach
Speaker 1: to the industry. The marketing is pretty awesome too. Um.
Speaker 1: But specifically what's awesome about this beer uh and again,
Speaker 1: thank you guys for sending this down is that these
Speaker 1: are twelve ounce bottles of Curio, which you can't get
Speaker 1: that in Georgia yet, so that's pretty sweet. Were like
Speaker 1: maybe the first guys, I don't know, probably not the
Speaker 1: first guys in the entire state, but we'll say we're
Speaker 1: the first guys, first guys in the state to be
Speaker 1: drinking Curio out of twelve ounce bottles. Uh, Normally they're
Speaker 1: in a large format, So the seven fifty bottles, the
Speaker 1: Bombers and man being able to drink delicious beers like
Speaker 1: this out of its twelve ounce is just so much better.
Speaker 1: You don't have to team up with the buddy you
Speaker 1: know to to go in together and drink one of
Speaker 1: these beers. You can just crack one open on a
Speaker 1: on a weekday night like we normally drink. I think
Speaker 1: the main reason I love the move from like larger
Speaker 1: formats to four packs is especially if it's a beer
Speaker 1: the age as well. I love to crack one like
Speaker 1: when I first get it, and then age one or
Speaker 1: two and see what it tastes like in a year
Speaker 1: or two. So it's like, in particular fits a bourbon
Speaker 1: barrel aged stout or a sour beer or something that
Speaker 1: does just hang out well in my cellar. I love
Speaker 1: to to let those hang and see what they tastes
Speaker 1: like years down the road and just kind of look
Speaker 1: at them every now again and give a little smile
Speaker 1: and and just think about that beer again. You smiling
Speaker 1: at your beers. I know it's weird, but Sibody walks
Speaker 1: into the kitchen, You're just standing there in front of
Speaker 1: the pantry just smiling. Hey, there are worse things I
Speaker 1: could be doing, that's for sure. But uh so, my
Speaker 1: only here's my only problem with that is do you remember,
Speaker 1: like exactly what it tastes like? Like, certainly you can
Speaker 1: have a general feel for the beer, like right when
Speaker 1: you cracked it versus how it is a year later.
Speaker 1: But I'm just so technically, I guess minded and oriented.
Speaker 1: I would want another fresh one that's recently been bottled,
Speaker 1: and then one that's been aged, and then one that's
Speaker 1: been aged for a year and so on, you know,
Speaker 1: like the vertical, like having multiple years. I love verticals
Speaker 1: because then you can have all the different beers all
Speaker 1: at once that have been aged differently and having that
Speaker 1: side by side comparison. For me at least, I really
Speaker 1: like that. Yeah. I don't think my memory is good
Speaker 1: enough to say, oh, man, that beer had exactly these
Speaker 1: notes or was better in this way or that way.
Speaker 1: But more than anything, it's it's like a nostalgia to
Speaker 1: bring that beer back and say I remember really enjoying
Speaker 1: this and then enjoying it again a year later or something.
Speaker 1: I find that really fun and in a great reason
Speaker 1: to package beers and four packs. And so I'm glad
Speaker 1: that a standout beer like Curio is now available in
Speaker 1: four packs where we live. So it is a Belgian
Speaker 1: style golden nail aged in bourbon barrels, and that's not
Speaker 1: typically what you see. Most bourbon barrel aged beers are
Speaker 1: like stouts and porters. And so it's been forever, forever
Speaker 1: since I've had this beer. I'm really excited to have
Speaker 1: it again. Yeah, I just don't have just Belgian beers
Speaker 1: all that often. It pours a nice golden color. You
Speaker 1: can see through it got a nice little white bubbly head.
Speaker 1: You can smell those bourbon vanilla notes. Man oh man,
Speaker 1: something else I remember too. I think this is the
Speaker 1: barrel aged beer I think I ever had, really, Yeah,
Speaker 1: like I'm gonna gets six years ago, six seven years ago.
Speaker 1: And because of that, I fell in love with it,
Speaker 1: because I had never had a beer that had been
Speaker 1: aged in bourbon barrels before, and for the longest time.
Speaker 1: This was real high up on my list of of
Speaker 1: favorite beer. So I'm really excited to go back to it. Man,
Speaker 1: that is not a style that anybody else makes that
Speaker 1: I know of, like golden ale aged and bourbon barrels,
Speaker 1: and it's not a style that in my mind I'm like, yes,
Speaker 1: please give me one of those. But holy mackerel, that
Speaker 1: is absolutely delicious. That is really good. I feel like
Speaker 1: the bourbon only kind of accentuates some of those flavors
Speaker 1: going on in the base beer. It's refreshing, It's got
Speaker 1: a lightmouth feel, but with that bourbon undertone that just
Speaker 1: kind of ties it all together. And this reminds me too, man,
Speaker 1: how many great old school beers there are, Like this
Speaker 1: is one of the sort of first craft beers that
Speaker 1: made us way around the country. You know. I think
Speaker 1: it was al Ash's first barrel aged beer as well,
Speaker 1: and since then there have been ton is amazing not
Speaker 1: only beers, but just entire genres like styles of beer.
Speaker 1: And so to kind of go back to this, it's
Speaker 1: kind of refreshing to take something that you haven't had
Speaker 1: forever and not just sort of embarred yourself with sort
Speaker 1: of these new styles that guys are you know, throwing milk,
Speaker 1: sugars and fruit and all this other stuff into their beers,
Speaker 1: you know, trying to push the envelope. It's kind of
Speaker 1: good to go back to something that's tried and trude.
Speaker 1: That's just really I mean world class is like the
Speaker 1: best way to describe it, you know. Yeah, kind of
Speaker 1: more of a staple. Yeah. I was talking talking to Emily,
Speaker 1: telling her that we were going to drink you know,
Speaker 1: an ale Gash beer on the on the podcast tonight,
Speaker 1: and she said, Man, I think ale Gash White was
Speaker 1: literally the first craft beer. I oh, yeah, And I
Speaker 1: think that's probably the case for a lot of people.
Speaker 1: They were drinking you know, crumby beers like Blue Moon
Speaker 1: or what it's something else made by you know, we
Speaker 1: have blue Moon at our wedding. I think I had
Speaker 1: maybe high life at my wedding. So it was all
Speaker 1: about each other place. Yeah, it was all about the
Speaker 1: low expense ratio on that one. But yeah, al Gash
Speaker 1: White was probably for a lot of people that first
Speaker 1: real craft beer that they got into because they were
Speaker 1: drinking some of those like lighter hef style easier to
Speaker 1: drink beers where you put an orange on top and
Speaker 1: then al gash whites is perfect transition. But it's like,
Speaker 1: but it's such a better version of it, Yeah, so
Speaker 1: much better. It's like this is what you were drinking,
Speaker 1: but like done right, exactly exactly, and people, oh, okay,
Speaker 1: all right, I get that people in it. Yeah, that's
Speaker 1: so funny. Man. One of the earliest experiences I have
Speaker 1: at a local bar, at a local brew pub indicator
Speaker 1: at brick Store was going in there with Kate and
Speaker 1: I think her parents, my in laws, and specifically I
Speaker 1: remember somebody ordering and al ash white because it's sort
Speaker 1: of kind of high on the list, you know, it's
Speaker 1: something that they always have, so it's like, all right,
Speaker 1: this is gonna be something good. And yeah, it's just,
Speaker 1: like you said, one of those originals, kind of like
Speaker 1: one of those gateway craft beers, if you will. So, yeah,
Speaker 1: if you were to make a list of like five
Speaker 1: Gateway craft beers that would easily be on there, it
Speaker 1: would be like that here and about pale Ale. It'd
Speaker 1: be fun to kind of come up with a list
Speaker 1: at some point of those, but like, those are the
Speaker 1: two that immediately come to my mind. Those would be
Speaker 1: two of the of the top five on my list
Speaker 1: that that's how people broke into craft beer. All right, Matt,
Speaker 1: onto the topic of the day. Do you need a
Speaker 1: financial advisor? So generally speaking, no, I mean there's certain
Speaker 1: situations like a divorce or a complicated inheritance sort of
Speaker 1: situation that might call for it, um, But for the
Speaker 1: vast majority of folks, and definitely for the most folks
Speaker 1: that are listening to this, I would say absolutely not. Yeah,
Speaker 1: what a financial advisors purport to help you with? I mean,
Speaker 1: I think there are a wide range of things that
Speaker 1: many financial advisors would say they offer, and that can
Speaker 1: be from financial goal setting to managing your cash flow,
Speaker 1: to think through what happens if someone dies or someone
Speaker 1: in your family becomes disabled. They can help you think about,
Speaker 1: you know, life insurance, creating a will. Most of those
Speaker 1: topics are important to think about. Think the question comes
Speaker 1: down to should you be paying a profession nal to
Speaker 1: help you plan those areas of your life out? Yeah, Juell,
Speaker 1: I mean I think that's the absolute question that you
Speaker 1: need to be asking yourself. Most of the time, some
Speaker 1: of these scenes can be figured out just by thinking
Speaker 1: about it, right. I think about the the episode we
Speaker 1: did like the why behind money, like talk about goal
Speaker 1: setting as far as like what to do with your money.
Speaker 1: That's when you're gonna come up with your plan. You
Speaker 1: just have to give it some time and some intention,
Speaker 1: some thought, and also do some Google searching. There's a
Speaker 1: lot of information out there that a lot of folks
Speaker 1: have already put out there and have given real life examples,
Speaker 1: and a ton of that is very very easy to
Speaker 1: implement in your own life. Yeah, I think probably a
Speaker 1: couple of the main reasons that's that people decide to
Speaker 1: go see a quote unquote financial advisor is because either one,
Speaker 1: they're a little bit lazy, they haven't done the research,
Speaker 1: and they don't really know what to do with their money,
Speaker 1: and they just they decide, you know, maybe they're thirty
Speaker 1: five and something happens in their family, or maybe they're
Speaker 1: fifty and something happened with their job. But some sort
Speaker 1: of life event usually comes upon somebody and they decide,
Speaker 1: you know what, now is the time for me to
Speaker 1: take action and get involved in my finances and and
Speaker 1: start saving for the future. I guess the right thing
Speaker 1: to do is to go see a financial advisor. And
Speaker 1: so it's usually out of a life event that people
Speaker 1: launched into this and decided to pick somebody out of
Speaker 1: the Yellow Pages and go sit down and talk to
Speaker 1: somebody yellow Pages. Man, you're like taking it back to
Speaker 1: the nineties or yellow pages dot com. I don't know. Yeah,
Speaker 1: I think the reason people feel that way too is
Speaker 1: that it can be overwhelming. You know, if you haven't
Speaker 1: given any thoughts to your money basically at all, and
Speaker 1: then all of a sudden you're sort of faced with
Speaker 1: with these decisions that need to be made and you
Speaker 1: start thinking through it. Well, yeah, it can kind of
Speaker 1: be crippling, but you know if you start thinking through it.
Speaker 1: I mean again, like almost all the things you already mentioned,
Speaker 1: like these are things that we've even already talked about.
Speaker 1: We've only been doing this podcast for like a few months,
Speaker 1: but we've already covered cash flow, Right, what is that
Speaker 1: you know, managing your You're you're spending and you're saving. Well,
Speaker 1: that's a budget, like the goal seting. Well, that's the
Speaker 1: why behind money, you know, Like, yeah, we haven't done
Speaker 1: one yet on disability insurance or life insurance things like that.
Speaker 1: That might be a sad episode, right, if you died,
Speaker 1: is your family gonna be Okay, but it's an important
Speaker 1: thing to Yeah, it's definitely true. And maybe because it
Speaker 1: is kind of a bummer, we we've kind of avoided it.
Speaker 1: Maybe that's one that will end up on the short
Speaker 1: list and we'll get to that sooner than later. But
Speaker 1: these are things that can be done incrementally and that
Speaker 1: shouldn't be overwhelming because they're complicated. They're fairly simple things
Speaker 1: that if you just tackle it one step at a time.
Speaker 1: So we just talked through some of the things right
Speaker 1: that a financial advisor can help you sort of think
Speaker 1: through and plan and navigate the waters of personal finance.
Speaker 1: A lot of the questions that we see out there
Speaker 1: have mainly to do with investing, and so that's what
Speaker 1: we're gonna spend the rest of the podcast talking about. Specifically,
Speaker 1: is a financial advisor necessary when it comes to retirement investing? Yeah? Man,
Speaker 1: So the financial services industry tries to overcomplicate things. There
Speaker 1: are a billion products that are offered with a variety
Speaker 1: of different claims and ulto only most of those things
Speaker 1: are crap. You don't need to know about them, and
Speaker 1: so learning how to invest your money so that it's
Speaker 1: working for you and not making someone else rich is
Speaker 1: really an empowering thing, Jill. Another reason to consider not
Speaker 1: having a financial advisor is if you have just you know,
Speaker 1: a lower income and if your assets are simpler when
Speaker 1: you make less, these fees really cut into your income.
Speaker 1: Even though a lot of these different companies work off
Speaker 1: of a percentage, there's still sort of a minimum, right,
Speaker 1: like sort of a threshold, a bar to entry that
Speaker 1: you need to have before they'll even kind of take
Speaker 1: you in, before they'll even consider you. So, yeah, it's
Speaker 1: definitely something else to consider. Most people in America make
Speaker 1: less than a hundred and most people in America make
Speaker 1: less than a hundred thousand dollars a year. And so
Speaker 1: let's say you're getting that four oh one k match
Speaker 1: and you're trying to figure out where to go next
Speaker 1: to put a little bit of extra retirement money. There's
Speaker 1: a lot of people like that that are trying to
Speaker 1: go see a financial advisor. There's a lot of people
Speaker 1: that have just a small amount of assets that are
Speaker 1: trying to invest and they want to pay a premium
Speaker 1: to talk to somebody to make sure they're doing the
Speaker 1: right thing. I think, more than anything, that's what I
Speaker 1: want to warn people against in this episode. If you're
Speaker 1: in that category of normal American income, you don't want
Speaker 1: to be paying a huge portion of your investable assets
Speaker 1: to someone to tell you how to invest that money,
Speaker 1: or just to like maybe tell you to just get
Speaker 1: out of debt. You know, like that money could bet,
Speaker 1: you know, be better spent towards paying off debt or
Speaker 1: paying off credit cards or something like that that maybe
Speaker 1: should be obvious, but you know, this is just not
Speaker 1: something that you you might be thinking of at the time.
Speaker 1: You think there's something more complicated or fancy that needs
Speaker 1: to take place, when in reality it's like, well, maybe
Speaker 1: you should just put that towards paying off debt. So
Speaker 1: here was the way I thought about it. Let's say
Speaker 1: give a normal sized American lawn that needs to be
Speaker 1: mowed every week and a half, and you go out
Speaker 1: and you hire the guy that is the groundskeeper for
Speaker 1: your local major league ballpark, say, can you come mode
Speaker 1: my lawn and make it look pristine? He says, sure,
Speaker 1: But I normal work on these these major ballparks. You know,
Speaker 1: my time's worth a lot. Okay, I like where you're going.
Speaker 1: I can make your lawn look pretty amazing, but it's
Speaker 1: gonna cost a lot of money because I'm a baller,
Speaker 1: and so obviously you wouldn't jump into that relationship. You
Speaker 1: wouldn't pay a guy a premium that is well above
Speaker 1: what anybody else would charge the layer law. Instead of
Speaker 1: doing that, the much better decision would be to buy
Speaker 1: your own lawnmower and start cutting your own grass and
Speaker 1: maybe buy an edge or on top and right and
Speaker 1: a blower and you can make it look semi professional.
Speaker 1: But I think a lot of people in America are
Speaker 1: in that situation where they have a normal lawn that's
Speaker 1: easily maintained on their own, and they decided to do
Speaker 1: something crazy like hire somebody to give them input on
Speaker 1: their small amount of assets and their small amount of
Speaker 1: money that they have to invest every month, and ultimately
Speaker 1: it eats into their growth and it does great damage
Speaker 1: to their ability to retire early. Yeah, man, I like
Speaker 1: that analogy. So another reason why you should consider are
Speaker 1: not having a financial advisor is like you said, I mean,
Speaker 1: they can be expensive. And when you have a small
Speaker 1: a smaller portfolio you know of assets or you know,
Speaker 1: like you're saying, a smaller lawn, you go to an
Speaker 1: advisor and they're going to take a decent percentage of
Speaker 1: what you're gonna earn is going to go towards paying them.
Speaker 1: And there's different ways that they can be paid. Um,
Speaker 1: you've got fee only or feed based, and then you've
Speaker 1: got commission based, and they are not all created equal.
Speaker 1: Best case scenario, you found somebody that is fee only
Speaker 1: where they either have a flat rate or they build hourly. Yeah,
Speaker 1: and if you are going to hire a financial advisor,
Speaker 1: that's the best way to go because that's the best
Speaker 1: case scenario. There are a lot of hidden fees with
Speaker 1: most of the other ways that an advisor can be compensated. So,
Speaker 1: for instance, there are also fee based planners, and so
Speaker 1: they charge a fee, but then they also might make
Speaker 1: commissions off of products that they sell you on top
Speaker 1: of that. So at least you know if you visit
Speaker 1: a fee only advisor, you've worked out hopefully an hourly
Speaker 1: rate that they're getting paid, and you know exactly what
Speaker 1: they're getting compensated for, and that whatever they recommend to
Speaker 1: you they believe is in your best interest as a fiduciary.
Speaker 1: They're not trying to sell you things, they are going
Speaker 1: to make them additional money. Edel you mentioned fiduciaries, So
Speaker 1: you want to define exactly what that is. Yeah, Man,
Speaker 1: a fiduciary has a legal standard and a moral standard
Speaker 1: to do what is in your best interest with your money. So,
Speaker 1: for instance, they wouldn't recommend to you an annuity that
Speaker 1: earns them high commissions or isn't best for your scenario
Speaker 1: just because it made them more dollars higher percentI rate
Speaker 1: that they're making commission on. Right. Ultimately, if you're considering
Speaker 1: hiring somebody to help you with their investments, that is
Speaker 1: the first question you want to ask them. Are you
Speaker 1: a fiduciary? If they're not a fiduciary, you want to
Speaker 1: walk out the door right then and there, because that
Speaker 1: fiduciary standard is crucial to knowing that you're going to
Speaker 1: get the unbiased advice that you need. Yeah, not all
Speaker 1: financial planners are fiduciaries. And I mean, like, how much
Speaker 1: sense does it make to go to somebody and like
Speaker 1: ask them for advice on something that you should do
Speaker 1: with your money that is going to make them money?
Speaker 1: You know, it's just like, well, of course you're gonna
Speaker 1: probably mentioned the products that make them twice as much
Speaker 1: in commission than the basic sort of product that's just
Speaker 1: gonna be great for you, but certainly not the best
Speaker 1: for them. It's kind of surprising that there's not a
Speaker 1: more sort of rigorous standard. I guess, like, I know
Speaker 1: this exists, but it's just crazy that not everyone is
Speaker 1: required to go by that. You know, Like, anybody can
Speaker 1: call themselves a financial advisor and that doesn't really mean anything.
Speaker 1: It doesn't speak to their knowledge and what they're capable of.
Speaker 1: It just means that that's just sort of what they do. Yeah,
Speaker 1: I mean, I think there are a couple of problems
Speaker 1: in the industry as a whole. Right, there's first off, Yeah,
Speaker 1: there there isn't really a standard in in the Department
Speaker 1: of Labor tried to kind of come up with a standard,
Speaker 1: and that's kind of been walked back. And so for
Speaker 1: a minute it looked like anybody giving investment advice was
Speaker 1: going to have to be a foduciary. Well that's kind
Speaker 1: of been backtracked, and so that's not really the case anymore.
Speaker 1: So you really have to watch your own back. No
Speaker 1: one else is watching it for you. Yeah, let's talk
Speaker 1: about the fact that financial planner is kind of a
Speaker 1: vague term as well. It Yeah, I'm a financial planner, Joel. Right,
Speaker 1: almost anybody can calmselve that. But but what does it
Speaker 1: mean in actuality? And what is their obligation to you?
Speaker 1: And so those are the questions that you have to
Speaker 1: ask yourself and ask the person that you're potentially going
Speaker 1: to work with. And ultimately it can be kind of
Speaker 1: a shady area because of the fact that there aren't
Speaker 1: many rules regulations in place, and a lot of people
Speaker 1: are billing themselves. Is something that they're not or at
Speaker 1: least overselling themselves, making you think that they have an
Speaker 1: obligation to you that they don't actually have. Yeah. Man,
Speaker 1: another reason to you, a lot of people want to
Speaker 1: go to the financial advisors is they think, uh, and
Speaker 1: that they're told by financial advisors to that their money
Speaker 1: will just do that much better being managed by somebody, right,
Speaker 1: like somebody that does this for a living, that's a professional,
Speaker 1: that's an official financial planner, that they can beat the market.
Speaker 1: You go with me, we're gonna crush the markets. Well,
Speaker 1: guess what if it makes you rich? If you could
Speaker 1: do that, you wouldn't be coming to me as a
Speaker 1: client trying to get my dollars. But yeah, I mean,
Speaker 1: the fact is is that. I mean, it's not impossible
Speaker 1: to beat the market, right, but dang close. It's yeah,
Speaker 1: it's it's virtually impossible. It's it's really really hard. And
Speaker 1: it makes me think of Warm Buffett, the Warm Buffett
Speaker 1: bet or whatever. Yes, that's exactly what it makes me
Speaker 1: think of too. Yeah, so it's been ten years now.
Speaker 1: Back in oh seven, Warm Buffet basically made a like
Speaker 1: a one million dollar wager, which is awesome, one million
Speaker 1: dollar bet with some hedge fund guys. And the whole
Speaker 1: thing was that like, all right, in the next ten years,
Speaker 1: whose money is going to do better? Money that's putting
Speaker 1: these hedge funds that's able to be reallocated and shifted around,
Speaker 1: and these fancy dudes with expensive educations and fancy suits,
Speaker 1: the Wall Street guys things around versus Warm Buffets approach,
Speaker 1: which is low cost SMP index funds. Nothing changes, it's
Speaker 1: just the same thing, no movement at all, which pretty
Speaker 1: much the exact fun that you and I talked about
Speaker 1: in episode nine on our episode, which is which is
Speaker 1: the one that you and I are invested in. Yeah,
Speaker 1: that's what we do. And so we're gonna be just
Speaker 1: like warm Buffett. Man, if we can be just like
Speaker 1: warm Buffett. That's a good thing, right, I mean, I
Speaker 1: think he's a wise example to follow. He's one of
Speaker 1: those few people that over over time, over the long haul,
Speaker 1: has been able to beat the actual stock market returns,
Speaker 1: which is crazy, it is. And even still he still
Speaker 1: recommends to not do that. That's what's awesome. It's like
Speaker 1: he's like, he can do it, but he's just like, no,
Speaker 1: no, no no, don't do that. You just need to focus
Speaker 1: on low fees and sticking with the actual market. Yeah,
Speaker 1: being highly diversified in that. Yeah, I think anybody out
Speaker 1: there who says, you know what, well, you just said
Speaker 1: Warren Buffet can do it, so why can't I do it? Well,
Speaker 1: I think that's like saying I'm gonna play basketball like
Speaker 1: Lebron James. Uh. There are certain people that have been
Speaker 1: given like a genius level of talent and he is
Speaker 1: one of those. And so to hold yourself up to
Speaker 1: that standard. To think that you're gonna invest like Warrm
Speaker 1: Buffett or play basketball like Lebron James, they're just both
Speaker 1: crazy things to think, or to think like your friend
Speaker 1: who knows a guy could do that? Yeah, that's not
Speaker 1: gonna pan out either, right, Yeah not man. My sister's
Speaker 1: college roommate, her husband, he he knows what's up, and
Speaker 1: he's gonna it's not gonna happen. It's gonna make me
Speaker 1: good money in the market, right, It's not gonna pan out.
Speaker 1: So it's cool about that story though, is that it's
Speaker 1: been ten years now. That started in oh seven and
Speaker 1: it wrapped up in seventeen and just earlier this year,
Speaker 1: Warm Buffet basically, you know, release the results of that,
Speaker 1: and the range for the hedge fund guys was between
Speaker 1: point three percent to six and a half percent, so
Speaker 1: all throughout there, I don't know what the actual average was.
Speaker 1: I guess around three some three something right there in
Speaker 1: the middle versus Warm Buffet's rate of return which was
Speaker 1: eight and a half percent over the past ten years.
Speaker 1: Man keeping it simple, not doing anything, setting it, and
Speaker 1: forgetting it amazing literally zero costs. And he totally smoked him,
Speaker 1: you know, like I just love that. It's so awesome
Speaker 1: and so on that note, Uh, your financial advisor, your friends,
Speaker 1: dude that knows the dude, they're not going to beat
Speaker 1: the market and they're not going to be able to
Speaker 1: give you the returns that they say they can they
Speaker 1: talk a big game, but go warm buffet style. And
Speaker 1: what is warm Buffett emphasized over everything else? Well, it's
Speaker 1: really two things. It's high diversification and low fees. And
Speaker 1: morning Star came out with the survey just a few
Speaker 1: years back, and ultimately they said that fees were the
Speaker 1: most reliable predictor of being in a good fund or not.
Speaker 1: And so you're going to have more money over time
Speaker 1: if you're invested in a low fee fund then if
Speaker 1: you're invested in a fund with high fees. What's funny
Speaker 1: about that? Though? I feel like a lot of times,
Speaker 1: like immediately when I heard that, I started thinking, oh,
Speaker 1: you want to get like the fancy funds that are
Speaker 1: kind of expensive, because that's where you're gonna see the return.
Speaker 1: But like, no, like that's the difference is that the
Speaker 1: return is basically going to be the same, assuming they're
Speaker 1: invested in the same thing. Uh, the difference is on
Speaker 1: the sort of the bottom end the expenses associated with
Speaker 1: those funds. You want to get a fund with very
Speaker 1: little expenses and it's gonna perform better than an equivalent
Speaker 1: fund because of the expense ratio. And so even that
Speaker 1: one person in which is gonna be typical. That's when
Speaker 1: you look up the stats for how much financial advisors
Speaker 1: charge for their no how it's gonna be one just
Speaker 1: overright percent, right around one percent annually on the assets
Speaker 1: that they're managing, exactly, And so that one percent it
Speaker 1: doesn't really sound like that much because in most areas
Speaker 1: of our lives, one percent is almost nothing, right, uh,
Speaker 1: one percent? Tip? What's wrong with you? Man? Get out
Speaker 1: of here, right? One percent means very little nothing. But
Speaker 1: but when it comes to the magic of compound interest
Speaker 1: and how that money stacks up over time, that one
Speaker 1: percent is actually this amazingly huge number that you have
Speaker 1: to be super concerned about. And so one of the
Speaker 1: main reasons to forego seeing a financial advisor and figuring
Speaker 1: out how to do it yourself is that your returns
Speaker 1: over time are actually crushed by paying that one percent
Speaker 1: to a person, as opposed to taking on this initiative
Speaker 1: yourself and figuring out how to invest your own money.
Speaker 1: All right, Matt, but I guess we have to say,
Speaker 1: if you really really feel like you need a hand holding,
Speaker 1: if you really need some help with your investments and
Speaker 1: you don't feel comfortable going it alone, well, now more
Speaker 1: than ever, we've got access to software, software technology, and basically, yeah,
Speaker 1: they can make a huge difference and help you out
Speaker 1: avoid some of those high fees like we're just talking about,
Speaker 1: but still help you feel comfortable with your choices. Yea man,
Speaker 1: there's a lot of robo advisors now, is what kind
Speaker 1: of what basically what they're called. They're just kind of
Speaker 1: newer companies that have the algorithms and all the formulas
Speaker 1: worked out for you, and they still take a percentage.
Speaker 1: It's just not nearly as high as what you would
Speaker 1: see with a human traditional financial advisor. So, like we
Speaker 1: were saying earlier, typically you're looking at a one per
Speaker 1: cent fee with a traditional human financial advisor. With a
Speaker 1: lot of these robo advisors, you're looking at like around
Speaker 1: point to five, right, Yeah, And so like better Mint
Speaker 1: and wealth Front, So better Mint dot com and wealth
Speaker 1: Front dot com they're kind of two of the major
Speaker 1: players in that space, and they both take that quarter
Speaker 1: of a percentage fee and Betterment has a premium model
Speaker 1: that's point four percent, and that involves getting to talk
Speaker 1: to a human about some of these financial questions that
Speaker 1: come up that you have. Um when it comes to
Speaker 1: planning for the future, or how to structure your investments
Speaker 1: and create an optimal tax strategy. So if you have
Speaker 1: questions like that, you can join betterment premium, But ultimately
Speaker 1: those kind of options are going to be far less
Speaker 1: damaging to your returns. Over time, you'll have a lot
Speaker 1: more wealth in retirement and you feel a little more
Speaker 1: confident about the investing choices that you're making. Going with
Speaker 1: a robo advisor as opposed to paying one percent or
Speaker 1: more of your assets to Joe blow down the block
Speaker 1: to walk you through it. Yeah, and there are actually
Speaker 1: some new lower cost options if you want to have
Speaker 1: somebody h like an actual human being looking over your investments. Yeah,
Speaker 1: and we said that ultimately the best way if you're
Speaker 1: going to have a financial advisor to go about it
Speaker 1: is to pay an hourly rate or an annual fee,
Speaker 1: not a percentage of your assets. It's a much more
Speaker 1: straightforward arrangement, and you know that the advice that you're
Speaker 1: getting is unbiased, as opposed to going into a model
Speaker 1: where that advisor takes a commission or a bounty for
Speaker 1: selling you certain products. And my favorite service that I've
Speaker 1: seen working on this model is a service called Grove
Speaker 1: and you can check it out at the website, Hello
Speaker 1: Grove dot com. It's six hundred dollars for a year.
Speaker 1: Because Grove is actually more of a tech company than
Speaker 1: they are just a financial service company. But they've really
Speaker 1: figured out a way to make this model gel perfectly,
Speaker 1: and so they put all of your information kind of
Speaker 1: into a back end computer, but there's a financial advisor
Speaker 1: that works with you to lay out a financial plan
Speaker 1: and help you figure out where best to allocate your
Speaker 1: money for only six dollars a year. It's really incredible.
Speaker 1: I love what they're doing, and I think anybody that
Speaker 1: feels pretty uncertain and really wants the advice of a
Speaker 1: of a professional, something like Grove is this perfect happy
Speaker 1: medium for folks that wants some of that personal interaction
Speaker 1: but don't want to pay the price tag that normally
Speaker 1: comes associated with that. And you also avoid some of
Speaker 1: the pitfalls that come with meeting with a financial advisor
Speaker 1: that's recommended to you by a friend of a friend
Speaker 1: who might not be looking out for your best interest. Yeah,
Speaker 1: and I also saw too that Vanguard now has this
Speaker 1: thing called Vanguard Personal Advisors, and they actually take point
Speaker 1: three percent annually of assets manage. And again that kind
Speaker 1: of goes back to the percentage of your total portfolio,
Speaker 1: which it kind of doesn't feel great because it's like,
Speaker 1: I don't want to pay more more money if I
Speaker 1: actually have more money. But even still when you're looking
Speaker 1: at it, that's still way way more affordable than a
Speaker 1: traditional financial advisor. Yea. And so if you have questions,
Speaker 1: if you want to talk to a human, if you're
Speaker 1: nervous about the state of your portfolio or where your
Speaker 1: what your money is invested in, you know, a service
Speaker 1: like Grove or Vanguard's personal advisors might be worth it
Speaker 1: to you because they're far lower cost than what the
Speaker 1: industry averages. But you're still talking to a fiduciary, which
Speaker 1: means that the person that you're speaking to has your
Speaker 1: best interest in mind. Yeah, man, And I think another
Speaker 1: approach to this, uh, you know, like if you think
Speaker 1: that you need that sort of extract boost of confidence,
Speaker 1: like you you're going to agree to go ahead and
Speaker 1: pay h do go with some of the lower cost services,
Speaker 1: but go into it too with the mindset of knowing
Speaker 1: that you're gonna learn, Like, don't go into this thinking, Okay,
Speaker 1: I'm gonna go in now, and this is just something
Speaker 1: I'm now going to pay every single year forever. Go
Speaker 1: into it, maybe just for a year or even less
Speaker 1: than that. Man, just like for a couple of months,
Speaker 1: even if you can get in a FaceTime with somebody
Speaker 1: to where you can learn, to where you can figure
Speaker 1: out why it is that they're doing what they're doing
Speaker 1: and learn sort of the reason and the why behind
Speaker 1: what it is that that they're doing. Then you gain
Speaker 1: all that knowledge yourself, and then you can basically do
Speaker 1: that forever without having to pay that fee. I mean,
Speaker 1: the goal is to learn, and regardless of where your
Speaker 1: money is being invested, you want to be able to
Speaker 1: have an understanding of where your money is. And if
Speaker 1: you can't explain where your money is and how it's
Speaker 1: being invested, that's just not a great position to be in. Yeah,
Speaker 1: I agree, if you're going to visit a financial advisor,
Speaker 1: you need to go into it with a mindset like that,
Speaker 1: because ultimately, a financial advisor is not going to magically
Speaker 1: find more money in your budget every month. They don't
Speaker 1: have a magic pill to help fund your kids college
Speaker 1: and also ensure that you're able to retire exactly when
Speaker 1: you want to. A lot of these things come down
Speaker 1: to saving more, spending less, allocating more of your money
Speaker 1: every month towards your retirement accounts, and continuing to do
Speaker 1: that year after year. And these are the kind of
Speaker 1: things that you can learn yourself. And like we said earlier,
Speaker 1: the financial services industry wants to make it sound like
Speaker 1: it's this really difficult thing that only people with fancy
Speaker 1: educations and suits know how to do, right, But it's
Speaker 1: just not. But that's just not the case. It's not
Speaker 1: that complicated, and especially in this day and age, there's
Speaker 1: so many great people teaching these things for free on
Speaker 1: the internet or podcasts. That's us. When it comes down
Speaker 1: to it, managing your finances is not as difficult as
Speaker 1: the financial services industry wants you to think it is.
Speaker 1: Do these three things, invest more of your money, invest
Speaker 1: your money in low cost mutual funds, and be well diversified.
Speaker 1: If you do those three things, you've empowered yourself to
Speaker 1: take control of your own money, and you can skip
Speaker 1: hiring a financial advisor. You'll be golden right, You'll be
Speaker 1: able to save more, and in fact, you'll do better
Speaker 1: than you would have had you hired an expensive financial
Speaker 1: advisor because you'll be saving that money and sticking that
Speaker 1: money into the investments as well. You'll be set and
Speaker 1: ultimately that's one of the two greatest pitfalls that you
Speaker 1: face in hiring a financial planner. It's either putting money
Speaker 1: towards the service and therefore not towards your investments, which
Speaker 1: will compound over time, or there's danger in putting money
Speaker 1: with someone who has their own best interests in mind.
Speaker 1: Is putting your money in things that are high fee,
Speaker 1: high commission, and terrible for you. All right, Maddie, back
Speaker 1: to the beer buddy. I mean, I'm just reminded of
Speaker 1: how delicious this beer is and why I liked it
Speaker 1: so much the very first time I had it. You know,
Speaker 1: it's just so so solid, that clear golden ale. This
Speaker 1: is like the kind of beer I want to have
Speaker 1: when I'm like eating pizza, like a good pizza, you know,
Speaker 1: like I would say, it's it's simple and elegant, like
Speaker 1: your mom. I had to go there. Oh, I think
Speaker 1: my mom is a lot more complicated than you realize. Man,
Speaker 1: you need to get to know the real mama. Poor
Speaker 1: not poor, but yeah, thanks again to al Gash for
Speaker 1: sending this beer over. Absolutely delicious, really fun to revisit
Speaker 1: something you haven't we haven't had in a really long time. Yeah.
Speaker 1: And now that they're yeah, getting released in these and
Speaker 1: twelve ounce bottles, this is something I'm gonna be way
Speaker 1: more prone to just pick up sort of casually versus
Speaker 1: going in and getting a huge bottle feeling like you
Speaker 1: gotta go for it. So let's go ahead and do
Speaker 1: a quickly recapsule. Do you need a financial advisor the
Speaker 1: quick cancer No, Yeah, because ultimately retirement investing is simpler
Speaker 1: than you think. And check out episode nine of our
Speaker 1: podcast where we go through the basics of how to
Speaker 1: intelligently invest your money and you another reason you want
Speaker 1: to avoid going with the financial visor is because they
Speaker 1: can be crazy expensive. They can take a huge chunk
Speaker 1: out of your potential earnings and what could be going
Speaker 1: back into your portfolio to reinvest where you would see
Speaker 1: that compound growth year after year. Yeah, and that makes
Speaker 1: such a huge difference over time. Like we mentioned briefly,
Speaker 1: short term not that big of a deal. Long term
Speaker 1: huge deal, one percent seems like nothing, but in reality
Speaker 1: when when it plays out over the long term, one
Speaker 1: percent is massive. And then ultimately financial advisors don't always
Speaker 1: point you in the right direction, so it can be
Speaker 1: even more costly than that percentage fee that you think
Speaker 1: you're paying to them. They might be steering you into
Speaker 1: funds that aren't right for you, or selling you financial
Speaker 1: services that ultimately pad their own pockets and don't serve
Speaker 1: you well, which is why if you are going to
Speaker 1: go with a financial advisor, you need to make sure
Speaker 1: to find out that they are a fiduciary, which means
Speaker 1: that they have to and they are obligated to put
Speaker 1: your financial interests ahead of their own. They have to
Speaker 1: do what's best for you, Okay, Joe, So then you
Speaker 1: know what's next. Like we've basically gone through all the
Speaker 1: different reasons why you shouldn't have a financial advisor, we
Speaker 1: just listed them. So instead a few things on what
Speaker 1: you do need to do now, the first being invest more.
Speaker 1: At the very least, you need to be getting a
Speaker 1: match if you're offered a match three or four O
Speaker 1: one k at work, but it's definitely worth looking at
Speaker 1: to see how much you're investing, and what we're talking
Speaker 1: about is basically your savings rate. How much of your
Speaker 1: actual paycheck are you putting towards investments. Yea. So consider
Speaker 1: opening a rath I array on top of that, or
Speaker 1: at minimum up your savings rate in your four oh
Speaker 1: one K through work one per cent every six months.
Speaker 1: That will ensure that you're investing more. So, instead of
Speaker 1: paying money to a financial advisor, just up the rate
Speaker 1: at which you are investing your money, Yeah, Joel. The
Speaker 1: other aspect of that is to invest make sure you're
Speaker 1: investing in low cost, well diversified funds, and the best
Speaker 1: way to get there is to consider opening a retirement
Speaker 1: account with a company like Vanguard, which is our personal favorite,
Speaker 1: or a company like Schwab or Fidelity, who also have
Speaker 1: awesome low cost index funds. Yeah. Mat So, Ultimately, the
Speaker 1: financial services industry wants to make you think that this
Speaker 1: is rocket science and it's way more difficult than it is,
Speaker 1: and that if you even want to retire someday, you
Speaker 1: have to have a financial advisor on your side. And
Speaker 1: we're here to say, no, that's crazy. You're smart, you
Speaker 1: can figure out this investing thing. And certainly there are
Speaker 1: a lot more things that financial advisors offer, and we'll
Speaker 1: get into more of those in upcoming episodes, but specifically
Speaker 1: in regards to investing, which is the main reason that
Speaker 1: people seek out a financial advisor because they don't think
Speaker 1: they know how to handle their investments. And so we're
Speaker 1: saying no, no, no, no, scrap the financial advisor. You
Speaker 1: don't need them, because investing for your retirement, which is
Speaker 1: the main reason that people go seek a financial advisor
Speaker 1: in the first place, is actually really simple. Yeah. Man, gosh,
Speaker 1: there's just so much fear and that that every financial
Speaker 1: planner kind of takes this approach right where they're like, oh,
Speaker 1: you know, you need to be fearful of your future
Speaker 1: and what the future is going to hold for you
Speaker 1: and how that's going to affect your family. But it
Speaker 1: seems like that's sort of that can be an underlying
Speaker 1: sort of tone. Yeah, that's a tactic that gets used
Speaker 1: to cause worry in your life, and we're here to
Speaker 1: say no, no, no no, no, be confident. But I hope
Speaker 1: at the end of this episode you feel empowered to
Speaker 1: take on this responsibility yourself and hopefully you've realized that
Speaker 1: it's actually a lot easier than you thought it was.
Speaker 1: Thanks everyone for listening. Our home on the web is
Speaker 1: how to Money dot Com. We'll have shown us up
Speaker 1: there for this episode, and be sure to review and
Speaker 1: subscribe to us if you could, on Apple Podcasts or
Speaker 1: wherever it is that you get your podcasts. So until
Speaker 1: next time, thanks for listening. Guys, best Friends Out, Best
Speaker 1: Friends Out,