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Rant Before you pick a Financial Advisor....

Discussion in 'Asset Protection/Taxes/Legal' started by Greg P., Feb 10, 2018.

  1. CareCPA
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    CareCPA Silver Contributor FASTLANE INSIDER Speedway Pass

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    Looks like I missed this the first time through. I'm probably reiterating points that were made already, but this thread is one giant wall of text....

    First issue - most FA's are actually salesmen. They make commissions on mutual funds, insurance policies, etc. If you ever wonder why a FA is pushing an insurance policy, it's because their commission for one policy can be in the five figures. They get their stock-of-the-month or fund-of-the-month from the head office, and will push everyone into it to meet their quota.

    Second issue - most FA's work on an "assets under management" fee. Because of this, they often make trades that are not in your best interest, just to seem like they are actively managing your funds. They have to justify that 1-2% they are skimming off your investments.
    It can also lead to a conflict of interest. Why would they tell you to pay off that debt quickly if it means fewer assets under their management?

    Third issue - they're all geared towards their clients retiring at 70, and have trouble understanding anything beyond that. Ask them what a Roth ladder is, or an LLC inside a self-directed 401k. They will just look at you confused.

    Financial advisers exist for every style, it's just a matter of interviewing people until their style aligns with your goals and values.
     
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  2. NaPal
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    NaPal Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    I've read this once before, and it went something like this.........If a financial advisor knows so much about money, why is he a financial advisor?
     
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  3. Philip Marlowe
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    Philip Marlowe Every Day On, No Days Off Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Your comment above was actually one of my first red flags about you. It sounds like you're pulling yourself in a dozen directions and one of them was the pleasant thought that "Bob" could work miracles for you with your money and make you a millionaire.

    Perhaps the above quote from you was a bit hyperbolic so I don't want to read too much into it, but I have enough trouble finding the time and energy for ONE thing, much less buying-up multiple rental properties and "a couple side gigs". Maybe that's just me.

    I'm guessing you didn't really have the money in the first place to make the math work with Bob, even if he was some killer hedge fund manager. Instead "hiring a financial adviser" was part of a grand strategy to multiply your money. Many of us have had that same thought.

    But your post doesn't add up. You want an adviser to make you millions, you apparently have free cash to buy rental properties, but you're also focused on multiples "side gigs". All as a young 20-something. Impressive.

    I could be wrong about all of the above, but my suggestion is that you focus on one or two goals.

    If you are truly flush with cash right now, I'd actually tell you to sit tight in this market. If you really want those rental properties, focus on acquiring them, vetting tenants closely, and keeping them rented. If you really want those side gigs, I'd suggest you decide which ones specifically. The term "side gig" is too casual and makes me think you're mowing lawns.

    Anyway, I'm just a guy on the Internet but it sounds like you're in a hurry to get your Lambo and are trying to torture the math and short circuit the process and this particular route got your burned.

    Valuable lessons in your experience. You're already ahead of the curve at your age. Best of luck!

    -PM
     
  4. Philip Marlowe
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    Philip Marlowe Every Day On, No Days Off Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    I forgot to add this...

    Again, you're looking for the shortcut. You were hoping some sage financial guru would school you in the ways of the world. You could arrive for your session and like Neo he'd upload his knowledge on everything from rental homes to blue-chips. Instead of Kung-Fu you'd suddenly know how to trade Venezuelan Junk Bonds for massive gains.

    You're going to have to go DO.

    Want to learn about dividends - open a trading account (Fidelity, eTrade, etc.), deposit $1,000, and buy some dividend paying stocks. Check your account in the morning and before the markets close.

    Want to know about real estate - buy a rental property!

    I hope you don't take this personally. You're aware of what you need to do, but eventually you'll realize that all the blogs, and books, and even in-person meetings can't replace you doing these things yourself and taking the risk.

    -PM
     
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  5. Greg P.
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    Greg P. Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    Hey Philip,

    Thanks for sharing your perspective, I have to admit - when I first read it.. I needed to go back and read my post to see if perhaps the post gave a different impression than intended but hopefully this response can clarify a few things.

    First and foremost, nothing about this post is "Fastlane". I titled this thread "Before you choose a financial advisor" specifically to share this story. If there was any indication that I presented this as a Fastlane strategy... then consider this my disclaimer.

    To me, a financial advisor is just that. An advisor. When I started my relationship with Bob, I knew nothing about investing. I also knew at the time that I was going to be expanding my tax needs beyond that of conventional income tax so I was looking for someone who'd be able to help me navigate this... and even mitigate risks.

    At the time, I thought I sought to pay someone smarter than me to look over my shoulder to help me manage my funds. I was wrong.


    Don't read too much into it, I don't have an exact recollection of events or quotes as they occurred. The 'side gigs' are pretty much irrelevant to the purpose of the post. I see that you're a Fastlane Insider, if you're interested in learning more about the 'side gig', you're more than welcome to do so. My colleague, Jason (jpanarra), has a thread in there on sales generation - I'm not an Insider yet myself, I'd like to be by the end of this month but it's all there and we'd love your feedback if you've got it.

    So, I have a pretty legit venture going on... not mowing lawns, I assure you. :p Just didn't feel the content was relevant to the origin of the post so I refrained from the details.


    I think for me more than anything, it was more about what I could learn from Bob - I aimed to surround myself with people who were smarter than me. Bob would have been a guy I could go to for answers to any stupid questions I might have along the way. Sure, the killer hedge fund and money multiplication stuff woulda been a bonus but that wasn't really my motivation going into this.

    Believe me, I did this fully aware of MJ's position on this as a Slowlane strategy and that's why I didn't bet my entire future on this. I just put a small sum of money in to see what I get out of it in experience. Like you said... learn by doing.


    I gotta run, will flesh this out later and, no. Again, maybe it was my language that gave this impression but nothing in my OP was intended to be taken as a Fastlane play... I was looking to build passive income, yeah (who isn't?) but the OP wasn't about me building passive income so I didn't dive into this. Will respond to your 2nd post in a little bit.

    Again, I appreciate your perspective and it's important to share - if I appear to come across as defensive, it's totally unintended. This gives me a chance to clarify my position and I'm glad I'm able to. I posted this to share some of the mistakes I made, I learned from them and hope that others do too. An added bonus of me posting this is that I get a chance to learn the mistakes I didn't learn from. More later.
     
  6. windchaser
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    windchaser Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    Good question. In my opinion, hiring and advisor is worth it when you have so much money that managing it is a job by itself. Or maybe earlier if you are a total disaster with your finances or have very little knowledge about financial products (although I would recommend anyone tonleran the basics and not rely blindly on any FA).

    In any case, the value I see in financial advisors is not creating wealth for you, is preserving it and grow it to obtain some return consistent with the risk your are willing to take. As I see it, you get wealthy by concentrating your wealth in your business and taking risks you know well. And then, once you are wealthy, you can use financial instruments to preserve it and have passive income that help sustain it your lifestyle without running out of money. You can use a part to make crazy investments that will give you a lot of money, but I personally do not think that is the main value or rationale to hire a FA.

    Sent from my SM-G920T using Tapatalk
     
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  7. Philip Marlowe
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    Philip Marlowe Every Day On, No Days Off Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    @Greg P. Hey Greg - no need to dive back in if I read this too literally. (Don't waste you time - haha) It's definitely not for me to judge so if you're headed in the right direction, that's great. Just saw a few things I thought I'd comment on - many from my own experience.

    I wouldn't want you to think I don't appreciate you opening-up or giving a warning to others.

    -PM
     
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  8. Greg P.
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    Greg P. Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    No worries bud! I thought maybe it was how I presented myself in my OP - it's admittedly a learning experience for me as well. But that's what these forums are for. Please do weigh in anytime if you feel you've got something to offer!
     
  9. Greg P.
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    Greg P. Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    That helps a lot, thanks for that. As I mentioned to @Philip Marlowe earlier this was really all about learning for me. I went in with the mindset that maybe I could learn a thing or two from having an FA (or someone who's smarter than me) on the subject... but as you pointed out - I learned the basics and started to feel like I could do the whole thing myself. So I feel even better about the decision I made!