I ended my relationship with my financial advisor yesterday. I wanted to share my story as this this whole thing was a real sobering experience for me. And needless to say, I learned a lot of things! If you're thinking about getting yourself one for the first time, I hope you take a couple pages out of my playbook. These are things I wish I knew then... and it'll save you a whole lot of time and wasted money.
A little over a year ago I had some cash to play with and I thought I would try to capitalize a bit on it.. and see if having an advisor would help me A) Save money and B) Boost passive income via sound investment advice.
Let me tell you right now, 98% (yeah I just made that number up) of financial advisors are master slowlaners and I learned this the hard way. In my very last session with him, he spent 20 minutes trying to convince me that a mortgage was not worth it for a young guy like me... and I also learned he (at the age of fifty something) he rents his house.
Yes... I had a lot of heartburn after that.
1. Just because you trust the person referring the advisor to you doesn't mean he's a good fit for you.
The advisor was referred to me by a former co-worker (he's retired since)... Now, this co-worker was a mentor to me and I trust the guy with my life. I was ready to shell out the fee as soon as I sat down with said Advisor... lets call him Bob. What I didn't piece together at the time, was that what worked for my co-worker (a retired slowlaner) would never have worked for me. First red flag. Missed.
2. When you hear "You're going to have your first million by the time you're forty", run.
FORTY?! WTF? It was our second session and Bob sat there looking at my retirement plan... and he looked so happy for me. My heart sank as I sat there watching him beam in pride for me as if I was awarded the lottery of the universe. Yeah sure, I'm a 20-something with a solid portfolio but still...
"Bob, that seems a bit slow for me, what can I do to speed that up?" He looked over the numbers... and he regurgitated exactly what you'd expect. "Well you do have a pretty aggressive investment mix, we could always look at investment opportunities."
Second flag. If a Financial Advisor is going to tell you something you already know... you're not getting what you're paying for. Talk to me about real estate, teach me about dividends, teach me the money system... ANYTHING!
He didn't.
3. You pay them to know more than you do.
It's a given that there are a lot of financial advisors out there, and there are a lot of different belief systems around how money should be managed. Not every financial advisor knows everything - in our second session I was baffled to learn that Bob had no idea who Dave Ramsey was. (Red Flag 3) I went on to explain that I was eager to free myself from the bonds of debt and live the debt free life.
To delve a bit more into my personals, I learned everything I know about building up your net worth by plowing through dozens of books. I'm not a financial whiz, I still get totally lost in stock market jargon and mumbo jumbo... but I at least try. I read almost everything starting with Dave, RK, Tim Ferriss, MJ - I was rolling my sleeves up and really stepping up to be the master of my finances. At the time, I put everything into eradicating my debt and wanted to at least understand how to build up capital through the Stock Market.
When I learned of the money system from MJ I went into Bob's office and said "Hey Bob, what do you think of X dividend stock and the performance of company X right now?" Bob's response was nearly always something along the lines of 'well it depends on how much risk you're willing to take. You're young so you could probably handle a hit or two. I might advise you to do exactly what you're thinking'
No sh*t, Bob.
When you first meet a prospective Financial Advisor, do take a few minutes to go over the concepts of role models that you're looking to replicate. See how much the prospective Advisor knows about them... Do their eyes light up? Do they add to the content you share? Do they mention other clients taking similar approaches? Do they baffle you with some new concepts you didn't already know of?
4. Make sure he/she believes in your style.
If by now you're wondering why the heck I held on to Bob for so long, I actually didn't. I just spent a lot of time nagging him in the short time we had. I had already forked over the fee, I might as well eat my mediocre cake. I bothered him for as long as I could have though. I shared with Bob that I planned to start buying out properties I could rent out to tenants and was looking to boost my income in other ways.
As I mentioned earlier, he is a classic risk reduction guy... and probably is solid for slowlaners looking to minimize their risk. He did help me plan for some pretty big tax hits but he spent a fair amount of time discussing the cons of owning a mortgage - it was something along the lines of "most people don't realize how much more is really behind the mortgage, you've got the expenses of the house, maintenance, paint, etc"
Long story short, he was trying to convince me to consider renting for the rest of my life. We proceeded to argue about the long-term benefits of equity in one's life. This was probably the point in our relationship where I realize this was simply not going to work out. I needed a Financial Advisor who has the same 'invest in opportunities' mindset as I do.
5. They have to add value to you. (But you have to add value to them!)
Why do most people opt to walk on people movers in the airports? Because you walk further faster! This is exactly the way I look at the experts I pay. You count on these experts to help you get further in life. They're intended to possess the skillsets that compliment you.
I didn't realize it up front but I do now. YOU are your own expert... you have to read... you have to watch the news... you have to understand why your money is working the way it is - but if your financial advisor can somehow compliment your expertise, you're going to have a great relationship. Would you walk on people movers if they only moved backwards? (And I don't mean because you're five years old and it's fun to do).
I met another Advisor a couple months ago and was talked to him about the challenges I was having with Bob. And as we delved further into our discussion on Advisors, I learned a useful tidbit from him on how to build a better relationship with your advisors today.
Financial Advisors manage a number of clients and more often than not, you're a statistic to them until you prove to them that you're able to help them help you. Tip a waiter more and they're gonna pay extra attention to you - that's how a lot of Advisors work too. I don't mean just financially, but professionally. I had a boss once who was a pilot on the side and whenever he took us up in the air, we'd sit in the cockpit and he'd always say "If you see a plane, don't assume I see it. Call it out."
I find that the same sort of rule applies here. If you see a fascinating article or some headline that hints towards turbulence... pass it along. Make sure they know it - see what they think. The best advisors appreciate this, and they're more likely to return the favor. So help them help you.
5. The Camel's Back: Knowing when to fire them.
What really broke the camel's back for me was the fact that my advisor had access to all my records, all my investments, my bank accounts, transactions... Hell, he could see I was investing thousands of dollars in various companies I felt would boost my bottom line. Not once did he call me to suggest better moves.
Most financial advisors don't care about your money as much as you do. To them, it's just fodder... If you watch the 'Big Short' you see a guy who's like 'oh... the market for mortgages is about to suck - I better save everyone!' 999,999 other wealth managers told him to STFU and sit down.
This is exactly what people who manage your money look like - so trying to find that one guy who cares about every dime you've got as if it were his own is like trying to find Elon Musk's car in outer space without a telescope. Keep in mind, they don't have to be passionate about it, they just need to be alert. They need to call you when they feel something is off... or an opportunity comes up. They have to show that they are actively delivering value to you worth more than your fee.
If your money goes down, it's not always their fault - but if the market or a company takes a pretty bad hit and you've got stakes on it... wouldn't you like that phone call?
My gears were pretty much ground at that point. The last time I met with Bob, I sat down and I said "Bob, I've got some pretty big decisions to make this year - I'm buying up rental properties and starting a couple side gigs. I need an advisor that's going to be actively invested in my decisions and can help me navigate the financial challenges that may come my way."
He did insist that he felt that he could help me out - but I needed someone with experience in the field I'm getting into, so I thanked him for his work to date and wished him the best in the future.
----
Do I feel like the whole thing was a waste of time and money? Yeah, I do. Could I have prevented the headache? Yeah, I probably could have. I got burned a bit for it... but now I know what kind of questions I should be asking before starting new relationships and I get to pass it on. If you're considering your first financial advisor, I hope this helps... Plenty more Bob stories if you need em.
Anybody else with Financial Advisor nightmares to share?
A little over a year ago I had some cash to play with and I thought I would try to capitalize a bit on it.. and see if having an advisor would help me A) Save money and B) Boost passive income via sound investment advice.
Let me tell you right now, 98% (yeah I just made that number up) of financial advisors are master slowlaners and I learned this the hard way. In my very last session with him, he spent 20 minutes trying to convince me that a mortgage was not worth it for a young guy like me... and I also learned he (at the age of fifty something) he rents his house.
Yes... I had a lot of heartburn after that.
1. Just because you trust the person referring the advisor to you doesn't mean he's a good fit for you.
The advisor was referred to me by a former co-worker (he's retired since)... Now, this co-worker was a mentor to me and I trust the guy with my life. I was ready to shell out the fee as soon as I sat down with said Advisor... lets call him Bob. What I didn't piece together at the time, was that what worked for my co-worker (a retired slowlaner) would never have worked for me. First red flag. Missed.
2. When you hear "You're going to have your first million by the time you're forty", run.
FORTY?! WTF? It was our second session and Bob sat there looking at my retirement plan... and he looked so happy for me. My heart sank as I sat there watching him beam in pride for me as if I was awarded the lottery of the universe. Yeah sure, I'm a 20-something with a solid portfolio but still...
"Bob, that seems a bit slow for me, what can I do to speed that up?" He looked over the numbers... and he regurgitated exactly what you'd expect. "Well you do have a pretty aggressive investment mix, we could always look at investment opportunities."
Second flag. If a Financial Advisor is going to tell you something you already know... you're not getting what you're paying for. Talk to me about real estate, teach me about dividends, teach me the money system... ANYTHING!
He didn't.
3. You pay them to know more than you do.
It's a given that there are a lot of financial advisors out there, and there are a lot of different belief systems around how money should be managed. Not every financial advisor knows everything - in our second session I was baffled to learn that Bob had no idea who Dave Ramsey was. (Red Flag 3) I went on to explain that I was eager to free myself from the bonds of debt and live the debt free life.
To delve a bit more into my personals, I learned everything I know about building up your net worth by plowing through dozens of books. I'm not a financial whiz, I still get totally lost in stock market jargon and mumbo jumbo... but I at least try. I read almost everything starting with Dave, RK, Tim Ferriss, MJ - I was rolling my sleeves up and really stepping up to be the master of my finances. At the time, I put everything into eradicating my debt and wanted to at least understand how to build up capital through the Stock Market.
When I learned of the money system from MJ I went into Bob's office and said "Hey Bob, what do you think of X dividend stock and the performance of company X right now?" Bob's response was nearly always something along the lines of 'well it depends on how much risk you're willing to take. You're young so you could probably handle a hit or two. I might advise you to do exactly what you're thinking'
No sh*t, Bob.
When you first meet a prospective Financial Advisor, do take a few minutes to go over the concepts of role models that you're looking to replicate. See how much the prospective Advisor knows about them... Do their eyes light up? Do they add to the content you share? Do they mention other clients taking similar approaches? Do they baffle you with some new concepts you didn't already know of?
4. Make sure he/she believes in your style.
If by now you're wondering why the heck I held on to Bob for so long, I actually didn't. I just spent a lot of time nagging him in the short time we had. I had already forked over the fee, I might as well eat my mediocre cake. I bothered him for as long as I could have though. I shared with Bob that I planned to start buying out properties I could rent out to tenants and was looking to boost my income in other ways.
As I mentioned earlier, he is a classic risk reduction guy... and probably is solid for slowlaners looking to minimize their risk. He did help me plan for some pretty big tax hits but he spent a fair amount of time discussing the cons of owning a mortgage - it was something along the lines of "most people don't realize how much more is really behind the mortgage, you've got the expenses of the house, maintenance, paint, etc"
Long story short, he was trying to convince me to consider renting for the rest of my life. We proceeded to argue about the long-term benefits of equity in one's life. This was probably the point in our relationship where I realize this was simply not going to work out. I needed a Financial Advisor who has the same 'invest in opportunities' mindset as I do.
5. They have to add value to you. (But you have to add value to them!)
Why do most people opt to walk on people movers in the airports? Because you walk further faster! This is exactly the way I look at the experts I pay. You count on these experts to help you get further in life. They're intended to possess the skillsets that compliment you.
I didn't realize it up front but I do now. YOU are your own expert... you have to read... you have to watch the news... you have to understand why your money is working the way it is - but if your financial advisor can somehow compliment your expertise, you're going to have a great relationship. Would you walk on people movers if they only moved backwards? (And I don't mean because you're five years old and it's fun to do).
I met another Advisor a couple months ago and was talked to him about the challenges I was having with Bob. And as we delved further into our discussion on Advisors, I learned a useful tidbit from him on how to build a better relationship with your advisors today.
Financial Advisors manage a number of clients and more often than not, you're a statistic to them until you prove to them that you're able to help them help you. Tip a waiter more and they're gonna pay extra attention to you - that's how a lot of Advisors work too. I don't mean just financially, but professionally. I had a boss once who was a pilot on the side and whenever he took us up in the air, we'd sit in the cockpit and he'd always say "If you see a plane, don't assume I see it. Call it out."
I find that the same sort of rule applies here. If you see a fascinating article or some headline that hints towards turbulence... pass it along. Make sure they know it - see what they think. The best advisors appreciate this, and they're more likely to return the favor. So help them help you.
5. The Camel's Back: Knowing when to fire them.
What really broke the camel's back for me was the fact that my advisor had access to all my records, all my investments, my bank accounts, transactions... Hell, he could see I was investing thousands of dollars in various companies I felt would boost my bottom line. Not once did he call me to suggest better moves.
Most financial advisors don't care about your money as much as you do. To them, it's just fodder... If you watch the 'Big Short' you see a guy who's like 'oh... the market for mortgages is about to suck - I better save everyone!' 999,999 other wealth managers told him to STFU and sit down.
This is exactly what people who manage your money look like - so trying to find that one guy who cares about every dime you've got as if it were his own is like trying to find Elon Musk's car in outer space without a telescope. Keep in mind, they don't have to be passionate about it, they just need to be alert. They need to call you when they feel something is off... or an opportunity comes up. They have to show that they are actively delivering value to you worth more than your fee.
If your money goes down, it's not always their fault - but if the market or a company takes a pretty bad hit and you've got stakes on it... wouldn't you like that phone call?
My gears were pretty much ground at that point. The last time I met with Bob, I sat down and I said "Bob, I've got some pretty big decisions to make this year - I'm buying up rental properties and starting a couple side gigs. I need an advisor that's going to be actively invested in my decisions and can help me navigate the financial challenges that may come my way."
He did insist that he felt that he could help me out - but I needed someone with experience in the field I'm getting into, so I thanked him for his work to date and wished him the best in the future.
----
Do I feel like the whole thing was a waste of time and money? Yeah, I do. Could I have prevented the headache? Yeah, I probably could have. I got burned a bit for it... but now I know what kind of questions I should be asking before starting new relationships and I get to pass it on. If you're considering your first financial advisor, I hope this helps... Plenty more Bob stories if you need em.
Anybody else with Financial Advisor nightmares to share?
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