Are All Financial Advisors Crooks?

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I can only speak for me, of course, but I don’t think so. Google “Fiduciary financial advisor” and stick to those who are fiduciaries, putting your interest before their own. Also, a good financial advisor is also a FINANCIAL PLANNER, and THAT is what you should be paying them for. If your advisor is not giving you advice on how much life insurance you need; which health plan to choose; what estate planning documents you need; how to pay for college; what beneficiaries to name on ALL your financial accounts; social security claiming strategies; best tax strategies; ways to save more tax efficiently; real estate advice; rebalancing efficiently; proactively suggesting you make your annual Roth contributions or back-door Roths; asking to see your tax returns every year before they are filed; then find another one.

You should not be getting your financial planning advice from the internet. That is a very dangerous thing to do. Everyone’s personal situation is different. Their goals are different. Their risk tolerance is different. It doesn’t help someone to put all their money in VTSAX, as many FIRE adherents suggest, if they can’t tolerate the stomach-turning ups and downs over the many, many (70+?) years they will need to remain invested. There is something to be said for having someone to diversify your investments so the swings aren’t so bad, and be there to talk you out of selling everything when you just cannot take one more day of bad financial news on TV.

What matters is what assets you are left over with, after tax at the end of the day. Not everyone can be a do-it-yourselfer, and that’s OK. That is where fee-only financial advisors come in to help you.

Before I hear complaints about how fee-only advisors, who are often paid based on a percentage of assets under management, have a conflict of interest to talk you out of paying off your mortgage, for example, because it will reduce their fee – usually, the amount of money you need to do that is a blip on their radar. Certainly not enough to (risk their careers) justify giving you inappropriate advice for your situation and risk tolerance. I have recommended the paydown of mortgages many times, as well as giving money to children to payoff student loan debt and other scenarios where it is appropriate for the client fact pattern, goals and risk tolerance to do so.

Look HERE to lookup your financial advisor. That can give you some piece of mind.

Find out more HERE

2 comments

  1. We had a financial advisor at one time. She was recommended by a family member but we never clicked with her. I felt she was more into selling me on things than advising us on how to meet our long term goals. I ultimately decided to move on and manage everything my self.

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    1. It is very important to “click” with your financial advisor. Also, fee-only financial advisors don’t sell products (by definition). I’m guessing this person was a broker? A good financial advisor will council you on much more than just investments: estate planning; college planning; evaluating health insurance options; tax strategies; when/how to collect Social Security (in the distant future!); and, most importantly, timely expertise when an emergency arises (divorce, death, disability).

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