Skip to site content
The Show

What Financial Pros Aren’t Telling You

This week we analyze the Truths Financial Pro’s Won’t Tell article from the October issue of Consumer Reports and share our thoughts and perspectives with you about working with financial advisors. We also cover the humble story of NFL running back Alfred Morris and his first car.

Form ADV Part II

The SEC requires advisors to file form ADV Part II and provide it to current and prospective clients. It contains an array of advisor information from what they charge and how they receive compensation to how many clients they have and how much money they manage. Here is our checklist of things to keep in mind when hiring a financial advisor.

Fees and Taxes

These are the two things that are most likely to diminish returns faster than anything else. We agree with the majority of this section of the article. If you are just looking for hourly advice or someone to put together an allocation, you should find the best quality at the best price. If you are looking for someone to cover the entire realm of your financial life, you need to understand the value you receive for the price you pay.

  • Make sure that you know what you are getting for your money. The article quotes Vanguard’s investment management rates are as low as .70% of assets under management. While that is affordable, you need to ask, “what am I getting?” Most likely, a model allocation and a recommended list of Vanguard funds that fit your model. We’re not knocking Vanguard, we use a number of their funds, and we think they do a great job with investment products.
  • Be careful when trying to buy cheap indexes, especially in inefficient markets or asset classes. We love index funds for well-developed efficient markets, like U.S. Large Cap.

We like comprehensive planners that work in all aspects of their client’s lives, bringing value to everything from buying cars to structuring your estate plan for generations to come.

Your Best Interests

  • Ensure that your advisor is working in your best interest. Make sure your advisor holds themselves to the Fiduciary standard, instead of the suitability standard which is a term that is loosely thrown around. It basically means that if you can afford an investment it could probably work for you somehow and therefor it is a suitable investment.
  • The CERTIFIED FINANCIAL PLANNER™ designation alone is not enough. The CFP® board holds planners to high ethical standards but does not require advisors to be Fiduciaries.

Understand your investment objectives

  • Bring Simple Back – know what your invested in and why. Your advisor should be able to explain, in an easy to understand way, what the objective of the investments they place you in are and how each effects the overall direction of your portfolio.
  • If your advisor is a broker-dealer, make sure you know why you are in certain investments and try to limit your exposure to proprietary products.
  • Be careful not to let the tax tail wag the investment dog, but make sure to keep an eye on your “asset location.”

Alfred Morris’ and “The Bentley”

This is an awesome story of how an NFL star, who could probably afford to buy any car he wants, still choses to drive his 1991 Mazda 626 he bought from his preacher when he was in college for $2. Alfred exemplifies the characteristics we love to see, and this would definitely grant him membership into the Tightwad Nation!

Enjoy the Show?

Where You Can Watch and Listen:

Subscribe on these platforms or wherever you listen to podcasts for new episodes every Friday, live streams every Tuesday at 10am CT, and new highlight clips throughout the week.

Related Content

Free Resources

Financial Order of Operations®: Maximize Your Army of Dollar Bills!

Here are the 9 steps you’ve been waiting for Building wealth is simple when you know what to do and…

View Resource

Wealth Multiplier By Age

How much to save every month to become a millionaire.

View Resource

How Much Should You Save?

How much of your income can you replace in retirement? You can replace different portions of your income in retirement…

View Resource

Articles

Exclusive Sneak Peek of Millionaire Mission by Brian Preston

, ,

Read More

Does It Ever Make Sense To Break the Money Guy Rules?

, ,

Read More

What Should I Count Towards My 25% Investing Rate?

, ,

Read More

Financial FAQs

Courses & Tools

How about more sense and more money?

Check for blindspots and shift into the financial fast-lane. Join a community of like minded Financial Mutants as we accelerate our wealth building process and have fun while doing it.

https://moneyguy.com/wp-content/uploads/2023/10/accent-icon-book.png

Millionaire Mission (Brian’s Book)

Buy Now
https://moneyguy.com/wp-content/uploads/2023/10/accent-icon-math.png

Know Your Number Course

Buy Now
https://moneyguy.com/wp-content/uploads/2023/10/accent-icon-pencil.png

The Money Guy Net Worth Tool

Buy Now

Recent Episodes

It's like finding some change in the couch cushions.

Watch or listen every week to learn and apply financial strategies to grow your wealth and live your best life.

maxresdefault 3 1

5 Financial Decisions That Changed Our Lives (And Can Change Yours, Too!)

Watch Now
maxresdefault 3

Is Retiring Early Really Worth It?

Watch Now
maxresdefault 1

Why Everything You Know About the Rich Is WRONG!

Watch Now