Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

5 Ways An Advisor Can Change Your Retirement

September 09, 2024 • Ari Taublieb, CFP®, MBA • Episode 196

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Hiring an advisor should be based on the experience you are looking for. 

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Ari Taublieb, CFP ®, MBA is the Vice President of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.

Speaker 1:

I will be the first person to say please do not hire an advisor, because we can't add value to your life. And other advisors don't like when I say that. I will say that at the end, oftentimes, of my YouTube videos and I know everyone doesn't get to the very end of the YouTube video or the very end of the podcast. I only know that because I watch YouTube videos and I don't always go to the end. And I will say if you're looking for an advisor who's going to tell you to rebalance and you should buy this ETF instead of that mutual fund, and here's when you should collect Social Security don't hire us and maybe don't hire any advisor. Now the reason the other advisors get mad at me and send me emails like hey, ari, would you stop saying that? Because you're hurting my business. Some of my clients listen to your podcast and the videos and I have to say, nicely, I'm sorry, that's not my problem. My job is to add significant value in excess of the fee. So I put out a video on YouTube saying am I crazy to pay $30,000 a year to an advisor? And sometimes the answer is yes, you do not need to do that. Other times the answer is no, in the way that we have clients that pay us $70,000 a year and they're over the moon to do it. So it's all about experience, timing, what you're looking for out of an advisor. What I'm going to do today and yes, this is biased, I'm an advisor but what I'm going to do today is actually give you five reasons to consider hiring an advisor in terms of how it can change your retirement. Not do you need them. Look, here's the reality. The reality is most of you guys do not need an advisor. An advisor is not about need. An advisor is about quality of life and helping you optimize what you've worked so hard for.

Speaker 1:

Now, what I'm going to tell you today this is not my traditional episode of hey. I'm taking this from five clients that I recently discussed this with. I was on Reddit and I saw someone post this and I liked the way he described it, so I'm going to go through each of this person's points. Now, I don't know this person. I just read this and it resonated with me, so I'm going to share it with you guys. Now, whenever I'm doing any of this type of content, I want you guys to know. You can, of course, see it on YouTube. If you want to actually see me explain it, I am going to share my screen with what I'm looking at. If you're like, no, I'm just listening in the car doing my workout, all good. I'm always going to continue and put this on the podcast app. Some of you sent me an email going hey, I see you're doing more YouTube videos. Is there no more podcasts? Nope, podcasts will always be here, so don't worry about that.

Speaker 1:

So a few fun announcements before we get to the fun stuff today. Number one I'm going to be going live. If you're listening to this right now, I probably would have gone live one, two or three times already. I'm going live on Wednesdays at 4 pm Pacific time. These are recorded. But the reason I want to go live? I just believe in the most authentic content possible. So I'm having guests on, I'm doing case studies, I'm answering your guys questions, so if that's the content you're looking for, you can go to YouTube. There's a tab where you can click live and you can go ahead and watch those. That's number one.

Speaker 1:

Number two I want to go over a recent comment, and the reason I want to go over this comment is because it's hilarious and as much as possible. You know this. I will say I'm the meanest financial advisor not actually mean but I just don't want you to run the risk of running out and I also don't want you mad at me when you have 10 million bucks and you're 80, going, hey, why didn't you tell me I could have spent more if I was in a fine spot to do so? So this is just a hilarious comment before we get to the real fun. So this is a comment that was left on a recent video by Daryl Q6954. You can see it if you're watching on YouTube and I'm going to explain it if you're not. This says and this is I did not pay anyone to do this. Okay, before some of you guys going hey, did you coerce this? I did. I could not have thought of that if I tried.

Speaker 1:

So this person they have quite the profile photo. If you're looking at it right now, it's like a turtle of some sort and it says can you get James to flex his biceps when you hit 20,000 subs? He is so modest with his strength. I saw that and I immediately sent that to James because it was hilarious. So if you guys don't know James, james is my partner.

Speaker 1:

James is the host of the Ready for Retirement podcast. He is the founder of Root. I joined him after, and the reason I joined Root was I went, hey, this guy is different. There's something about this guy that really really just immediately makes you feel like there's trust and that he's going to do the right things financially, not just what's going to bring him the most value and revenue and so what I really care about is James as my partner, because he's the best person you'll ever meet, if any of you guys have met him.

Speaker 1:

But the important thing to know here is this was a hilarious comment I'm at about like 19,000 subscribers on YouTube and once I hit 20, I asked James. I said, james, I need you to do this. So pretty funny. Now the reason I'm doing this today and, once again, I mentioned it before, but my parents were burned by four financial advisors, so I will be the first person to say, please do not hire an advisor, and I'll be the next person to say here's what it makes sense to hire an advisor. So this is someone that there's a few things I disagree with, by the way, on what I'm going to share today, but there's a few things that I really like. So I'm just going to read each to you, then I'm going to go through them in more detail.

Speaker 1:

So this is someone that went on Reddit and the reason I went to Reddit is because someone sent me a note. They said hey, ari, you and James are being posted about often in these retirement communities on Reddit. So just FYI. And I was like, okay, what are they talking about? So I went and looked around. People were just posting our videos about Social Security and stuff like that.

Speaker 1:

So this person brought it down into five points, saying what do I get for the money I spend? Now he mentioned this person. He mentioned he was spending. I think his portfolio was like 6.5 million. So I don't know what he his fee is, but I'm just going to assume it's 1%, so that'd be 65,000 a year. So here's someone with six and a half million dollars that is choosing to spend 65,000 a year. That's a significant fee. I'm the first person to tell someone hey, if I could save you the cost, don't work with an advisor. And here's when it makes a ton of sense to do it. So the five points I'm going to walk through right now and then I'm going to give you my insight on them. So number one he says I get a coach we talk about monthly, mostly about how I'm doing and what my near-term financial needs might be. This keeps me grounded. I would never buy anything major without discussing it with him. This is healthy tension. So let's go back to the need point. Does he need that? No, he doesn't need that.

Speaker 1:

But my parents made one really poor financial decision. Now they're smart people but finances are not their thing, and so they purchased a hefty long-term care policy. It was within an annuity. It was really tricky. There was a big sales commission. If they didn't do that and instead just kept investing in the S&P 500, they'd have about $350,000 more than they have right now and their policy just isn't great. So because of that, sometimes it's worth talking to an advisor to save you on one big mistake.

Speaker 1:

Now, not saying all of you guys need that. The reason I have my early retirement Academy is because some of you go look, I don't need to have an advisor on an ongoing basis, I don't want to talk to them, I don't want them to manage my money, I just want to make sure that I'm not missing anything, and so you can go in there and for a few hundred bucks get everything that you need. From just a software perspective, there's no one-on-one guidance. So, number one this guy's paying an advisor I assume 65,000 a year because of the coach. Number two, he says he selects the wealth management company we use and sets our investment strategy. This comprehensive, this comprehends our retirement income needs. All of our investments are parked in a Schwab account, so I have complete visibility and control.

Speaker 1:

Should I desire to do something, we do the same thing. Everything's at Schwab. Schwab is the main custodian we use. Think about Schwab like your house. Schwab is locked. An advisor is an interior designer that is not moving things in and out of Schwab. They are saying do we need a window? Should we buy a couch?

Speaker 1:

So when this person says he selects the wealth management company we use, I imagine he's simply saying, hey, is that Fidelity or Vanguard? So you can have your money at Charles Schwab and invest in whatever you want. That's what we do. I don't want to work for Charles Schwab because Schwab would then pay me more money to incentivize me to use one product over another. So I'd go talk to you and say, look, I'm a nice guy. You just got to believe me and buy this product and you'd go. Well, you sound like a nice guy, so sure I'll do it. But what you don't know is it is paying me a commission and a kickback. You don't see that's putting me in some leaderboard in some conference room somewhere, and that's just the reality of the world. So because of that, we are an independent advisor. I don't know if this person is, but that's number two.

Speaker 1:

Number three this person has made sure our estate is in order, based on our wishes. He's pointed us to the necessary experts. So we have the needed trust, power of attorney and wills. Our oldest daughter will be our executor and she's fully up to speed with everything and our kids know exactly what to expect after we're gone. Good luck quantifying that. I like that one a lot Estate planning.

Speaker 1:

To me this didn't go deep enough. This was just saying do we have a trust? Do we have a will? Do kids know where to go to log in for that stuff? That stuff's important and in the same way, people hire a personal trainer to keep them accountable. If this person never had an advisor, maybe they never would have got to the estate planning stuff. So sometimes you just need someone to help get you over the line. So I like this, but I'm not seeing him make comments regarding hey, he's telling me how much money I can give to my children. If this person has six and a half million dollars, he should be doing some significant giving while he's alive to minimize his tax burden. So because of this, good but not deep enough.

Speaker 1:

Number four this person says cognitive decline is in inevitable inevitability. Preparing for that eventually needs to be done well before it actually happens. At some point, the complexities of our lives needs to be on autopilot. All of that is already in place. I don't know if this person has a partner or a spouse, but that's a big reason. People come to us where they really like doing this, but if something were to happen, they want Like this point here. And then number five this is the biggest one he says peace of mind. It's hard to put a price on this. We don't worry about watching the markets and they don't impact our lifestyle.

Speaker 1:

I'll often go months without looking at the status of our portfolio, because I'm comfortable with both the people and the strategy. At the same time, I have an app on my phone that allows me full access and control, should I want it. So these are five quick points To me. If I read this, I wouldn't hire an advisor. I'm just being honest, these are good, I get this, but I just I'm a natural skeptic. It's just who I am. So I'd read this and go okay, got it. Yep Coaching, I see how he sleeps better at night, get the estate in order. But I know me and I would go, I'll get my estate in order. And yeah, cognitive decline yeah, it's inevitable. But like, I've got 20, 30 years, so like, why would I pay someone? Now? Peace of mind, yeah, I want to make sure everything's okay, but right now I don't have children, so I'm not worrying about that. So that's just me right now, just giving you my honest thoughts.

Speaker 1:

To me, someone hires an advisor because they go. I'm not going to have to do this anymore. That's the number one reason, in my opinion, people hire us Now. That's not the real answer. The real answer is people hire us to go. I want you to save me on taxes. I don't want to get crushed by required distributions. I don't know. Should I add to my Roth? Should I go pre-tax? What should I do in terms of like? Tell me, can I stop working truly, or am I going to run the risk of running out. So there's a lot of big questions that people have and so people come generally going look, it's the tax, it's the withdrawal, it's the estate, it's the healthcare. That's why I'm reaching out. And then a year goes by and I go hey, why are you guys still working with us? And they go well, I didn't know what I didn't know, and there's a next level to this. So the point here is I do believe you all need something. I'm not saying you need to work with us on an ongoing basis. I actually recommend not.

Speaker 1:

Oftentimes, where someone comes on and they go, yeah, I'm ready to work with you guys, I go I don't think you should. They're like why not? I go. Well, I can just tell you're going to be more stressed paying us our fee. If you're paying us $2,000 a month even if we're making you $5,000, I can tell you're just a naturally frugal person and you're not going to want to pay it or it's going to stress you out even more. So I will tell that to people. Other times I'll say look, you have the pieces to make it where we can optimize.

Speaker 1:

So the big reason that I have my academy once again is because if you came to me any of you let's assume you're 53, you have a million dollars in a 401k. Some advisors would go, yeah, we'll work with you, but I don't think it's right to say that because they can't actually manage your money. It's all in a 401k. They give you a few investment options, but they can't actually manage your money. So it only makes sense to really work with us when we're actually able to begin doing the work we talk about. So the Roth conversions, the taxing and harvesting, the healthcare optimization, the estate planning, the giving, all of the tax strategy that stuff is super helpful. We add a lot of value to clients or we're saving them two $300,000 a year, but it's only when we can actually do work for them.

Speaker 1:

So don't work with an advisor just because you think your neighbor has one and you should have one. Work with an advisor when you go oh no, I believe this is going to add value to my life. So that's where I want to go over just a few real quick points on five ways advisors can change your retirement, sometimes for the better, sometimes for the worse. I've seen both sides. I've seen people hire an advisor and realize, hey, they don't need that. I've had people hire an advisor and then go oh my gosh, I just could never imagine my life without this person. So the biggest thing to know about Roots and what we're doing is we don't have a hiring policy Now.

Speaker 1:

People go well, you do, because you know people work for you. I go well, we do. It's just not the traditional one you think of, where I wait for advisors to reach out to my partner, james and I, and go look, I watch your guys' videos, I watch the podcast. I want to work for you guys. But the problem is I work at Schwab right now, or Fidelity right now, or Merrill right now, and they make me work with you know 800, not 800, but you know 300 people. I'm working until 8pm.

Speaker 1:

I tell them to go have work life balance, but I don't and all of a sudden like so that advisor is going to quit, whether it's the advisor just told you or just your advisor right now. If their company doesn't give them a healthy place to leave, they're going to leave. And then you're going to be playing interviewer in retirement, where now you're constantly interviewing when you're passed to the next person At the same time. And this is the big issue. I see, let's assume you like your advisor, you get passed to the next person. Great, the biggest thing I'll see is people go. Well, my advisor tells me to talk to my CPA. My CPA says talk to my advisor. So I feel like I'm constantly playing middleman.

Speaker 1:

Now the reality is your advisor should be doing all of that work. They should be helping coordinate all the health insurance, all of the withdrawal, all of the tax. They should be doing all of that. So if they're not doing that and you're going, look, I just don't know if I'm getting enough value or is it worth it. That's where you start to consider okay, does it make sense to change advisors? Should I hire an advisor so I don't have to be essentially a coordinator in retirement, which is the joke? I'll tell people when they come and say I'm retired, I'm like I don't think you are. They go. Well, you're wrong because I am. I go, I believe you're retired, but I believe you have a new job where you're a coordinator and you're trying to coordinate everything between a planner and a CPA and an attorney, and now all of a sudden it's just a new job in retirement. So, because of that summary, you don't need an advisor. You're at it. You're hiring an advisor because it's going to financially add a lot more value and your life's going to be a lot better.

Speaker 1:

So I saw these points on Reddit, wanted to address it on a podcast.

Speaker 1:

I'm going to be back to my traditional episodes next week of hey, do a conversion, fill up Roth, do pre-tax. What about brokerage? How do you think through more of the technical side? But I want to do a quick break just to discuss when does it make sense to hire an advisor and how could you think about it regarding your plan, if you go, yeah, this is all helpful, I get it. It's kind of nice hearing how you think through this, but I just don't feel I need one Great. That's why the Academy exists A few hundred bucks, go in there, get the guidance you want and hopefully that's helpful for you guys. So you can see everything I just discussed inretirementpodcastcom and you can go ahead and submit a question that I'll look to answer in a future episode. Thank you all for listening. Please do rate it, review it and share it with someone who you think would benefit from this information. If there's anyone out there that you know, I certainly appreciate it and I will see you all each week.