Breaking Up With My Financial Advisor?

Did you know that financial advisor fees can eat up HALF of your portfolio's value over time? While happy with the good support and great relationship he had with them, Jason was thinking about leaving his financial planners late last year. In this episode, we capture a conversation Eric + Jason had on this topic, as they discussed the merits and downsides of paying assets under management (AUM) fees. Topics covered in this episode include why he stuck with them over the years, the value advisors can bring, more cost-effective options for financial advice, and how Jason is making his decision. Get the facts and make the right choice for yourself!

Timestamps:
00:00 You're so indecisive!
01:14 Why use advisors?
04:21 When is it enough?
06:56 External influences matter
10:08 These are my concerns
13:04 A point of no return?
15:35 Hourly FA support is an option
18:02 Do advisors overcomplicate things?
20:49 Where FAs bring value
22:00 You're ready to break up!
24:51 Is Eric just being cheap?
27:45 Jason gets a wakeup call
31:04 Know how your FA gets paid
33:57 Is Jason a nightmare client?

#twosidesoffi #financialindependence #firemovement

@30X40 Design Workshop

**Note: This content does not constitute investment advice and is being presented for informational and educational purposes only.

[stevemlejnek]

I had been under Vanguard's advisory service. While fees are comparatively modest, it still is a quarterly drag on the account. In down markets, it feels even harder to justify the fees. From my perspective, the initial discussion and adjustments to asset allocation was good, but there was no value after that after paying a few more quarters of fees. I terminated the advisory service a week ago, and will forge ahead as a DIY again.

[justinmanning]

Planners should celebrate when their clients graduate, it's supposed to be clearly outlined in the initial roadmap. I get the impression Jason genuinely enjoys supporting others, he seems like a rare breed that gets fulfillment from supporting others and he's willing to "pay for it".

[jondiaz]

I'm glad you found someone you could use. When we tried to join an advisor back in 2011, the first guy we interviewed missed the deadline, and the second person didn't propose anything. I was so disappointed that we just gave up on trying to find someone and did it all ourselves.

[andreawill]

I really like to discuss estate planning because it's not just about accumulating money if your not willing to protect it from safeguarding from outside influences. Insurance (umbrella, annuities, term life) trusts, estate planning, successions, LTC, emergency funds. Elder care lawyers, taxes. It's step by step. It's a process not a one leap one and done.

[davidgrisco]

There's no one way to skin a cat. Before I had substantial assets, I helped my Mom with her assets prior to retirement with a Banker friend who helped set up mutual funds for her. As time elapsed, I learned more, found FIREcalc, and planned an under 4% SWR escape from work with a severance package/layoff. I never met with an advisor or paid an AUM fee. And I know I've made some less than optimum choices and it still worked out fine without a big 1% anchor pulling on my accounts.

[matthewwood]

Take half and self manage, you have the best of both in advisor and you can duplicate or go your own way with the other half. I self managed and went half the other way recently as I suspected the market downturn and thought advisor would be helpful as I was mainly used to the bull market but investing in downturn is another matter. I appreciate having options. It doesn’t have to be all or nothing.

[Whooshta]

Great discussion. Probably my most favorite to date.

[williamcherry]

Thanks Jason for sharing both your reasons for and against working with a financial advisor. I'm still on the fence on as to if I should work with an hourly advisor; not for the stuff I know but for the stuff that I don't know that I don't know. What were some of the biggest "blind spots" that your financial advisor helped you with?
My biggest concern has always been finding someone that really understands FIRE and that I feel I can trust. I'll check with the list included in the show notes.
Can't wait to hear where you come down on your own situation Jason

[kevinvanderhoof]

I'm considering a hourly fiduciary advisor for monthly or quarterly review. Mostly for second set of eyes to help with tax planning, modeling, reduce "good enough" mindset, etc. So much of my savings/ investing is automated and I'm not selling during downturns... I'm more apt to be lazy and leave things alone.

[Scootir]

Another fantastic discussion. My finacial advisor was really a good deal for me when I was younger man and totally overwhelmed by the notion of investing. Now that I understand it better it’s time for me to go my own way, but it’s still intimidating to pull the trigger. The current level of volitility makes it a little worse. But as you note - we can do math.

[jtrimb]

I have half our money with an advisor and I handle the other half. I keep the advisor because my wife (who is smarter than me) does not want to manage the portfolio. I want a relationship she is comfortable with so if something happens to me, she can move the money there. She is making all the decisions with the advisor, so she is comfortable with the process.

[slimdawgwoof]

I am holding off on the AUM based advisor to avoid the fee drag. However, I have a special needs kid and need to get estate planning correct. Secure Act adds a lot of complexity.

[kevinkanter]

Alright - most important character assessment!!!!
Jason - seems you obviously have the kinks worked out of FI and then a decumulation strategy (2 years post retirement)
Perhaps also you are at the point when volatility and something is ALWAYS 'coming around the corner' that you are pretty chill about working thru things.
.... working through is now a matter of knowing how you plan, rather than having a decision tree set for Plan A > Plan B <> Plan C optimization is less the metric ---
most importantly, it seems that Lorri is genuinely on board with the journey --- maybe ahead of you ? 🙂 emotionally at least but you 2 are very stable
--- did you realize that it is now time to take steps to confirm you can do it on your own -- 23 mile hike vs 10 mile
am i any where close? and if close, was the tipping point more self-confidence in the journey (but with all the metric you have already used/put in place/embodied) ??
You've graduated and yet value being an

too long --- I'm 70 & just left the 2nd of 2 financial advisers with whom I have learned much.... but that is for a subsequent thread --- this is getting too long.
Love the videos. Eric is such a good friend it is Much success and looking forward to the decision.

[bubbaburke]

I liked my advisors and they directed me to 529, disability insurance, life insurance. Once I started reading about investing, I cashed in the whole life policy and stopped paying AUM at 1.65%. Now all my funds are in my Chase investing accounts. Will seek hourly help episodically.

[karlaconnwelch]

24:10 🤣😂🤣😂 Excellent idea! Try it on April Fools. 😂
24:40 I'm dying 🤣🤣

Great video!
Also, yes, the 4% rule is discussed a lot. Umbrella insurance, estate planning; nope, not talked about so much. Thanks for bringing up other important topics. Looking forward to the videos (and laughs) on those topics too.

[AnhNguyen-bivg]

We are about to see a financial advisor next week. One off fee, not on-going. There are multiple reasons why although I feel I know most of the basics: someone to optimise the structure in retirement in and outside of the pension funds. Plus I want to make sure if something happened to me, my partner can seek advice on financial matters.

[shea]

Ah the cliffhanger! Well done
I bet he breaks ties. He's built up enough knowledge to graduate as was said, and then some. Can't wait to find out. Prost guys

[chris_harvey]

Just drop the AUM financial advisor. I'm sure you have done the math and the hourly fees for their time you are paying are probably insane. There are a handful of solid advice Only fee planners that would be perfect.

[FatFIREfamily]

Another great discussion, something that wasn't covered how has the market performance influenced this decision ?

[slimdawgwoof]

CPAs are not so great at building a forward looking tax plan. Conversion strategy and avoiding iirma seem to be the big topics. Make sure you have a ROTH IRA open well in advance if you have a roth 401k. There is a 5 year rule you want to satisfy with the roth ira before you roll roth 401k into it.