How to Tell Which Financial Professional You Are Working With... And How They Are Paid

There are many financial professionals out there, and it gets hard differentiating which one you need, how they are paid, and which have conflicting incentives with your hard earned money.
Zacc Call, President of Capita Financial Network, goes through the different financial professionals, what services they can offer, how they are paid, and how to know which you should be working with.
Download the Financial Professional Reference Sheet here:
theretirementnerds.com/financ...
Hear more from Zacc on his podcast - The Financial Call
www.thefinancialcall.com/
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⏰ TIME CODES ⏰
0:00 The 3 Licenses
5:30 Which do you need?
6:57 Insurance Agents
25:48 Broker/Dealers
52:30 Investment Advisors
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#medicare #theretirementnerds #socialsecurity #retirementnerds #finance #financialadvisor
Federal Disclaimer:
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all your options.
Disclosure:
This podcast is intended for informational purposes only, and is not a substitute for personal advice from Capita. This is not a recommendation, offer, or solicitation to buy or sell any security. Past performance is not indicative of future results. There can be no assurance that investment objectives will be achieved.

[@stemikger]

This was so refreshing. Not since the late John "Jack" Bogle were financial professionals so honest!! Great service!

[@DevinCarroll]

I don't know these guys and have never heard of this channel before today. But holy moly, this video is one that everyone should watch. When I started in the business 20 years ago, a veteran financial advisor told me, "Devin, you have to keep three people happy: the home office, you, and the client. But you know...two out of three ain't bad." Thankfully, that sentiment has started to die, but a lot of it still lingers in this industry.

[@Theretirementnerds]

Hi Devin, so glad you found us. You may not know us, but we admire you. Thank you for taking the time to tune in and share your thoughts!

[@DevinCarroll]

@@Theretirementnerds Also...your lighting, audio, and video quality is stellar!

[@Theretirementnerds]

Thank you 🙂 Takes a lot of tweaking. The angle on Zacc is solid. Still tweaking the other angle.

[@zacccall9897]

Thanks Devin! Erik has a knack for hitting the topics people care about!

[@themorales6]

Wow! Zacc’s comment about consumers asking financial professionals whether they are a fiduciary FLOORED me. It really changed my perspective. I’ve been trying to use that question as a litmus test but have really not been getting a warm fuzzy feeling about the ones who’ve given me a “yes” answer (ie, I wouldn’t trust them to get me a Diet Coke). Thank you.

[@Theretirementnerds]

Isn't Zacc the best? So smart and so practical. Lucky to have him on. Thank you for spending time with us!

[@christinelawver1317]

7 minutes in and I've already learned so much! I am a newly licensed agent and my main focus is to educate and truly help people; im almost embarrassed to admit this, but commissions are a beautiful thing, but not my main motivator whatsoever. (I have a W2 career as well, so I will live) I just want to steer folks in the right direction for them, and be able to KNOW I did right by people regardless of my commissions. Very informative and helpful video, guys!

[@Theretirementnerds]

Thank you for watching!

[@mspadorchard1]

"Licensed"... does not elucidate your qualifications. So... what license do you have?

[@cabragooncabulous4082]

As a past securities license holder this interview was right on. I’ve stopped pursuing the industry. Went another way. But It was good to hear some honesty.

[@tadrenaline]

I work at a B/D and he really hit the nail on the head when it came to conflicts of interest when it comes to investment advice and the term fiduciary. No advice is truly conflict free and his example of the cabin was perfect. The goal should be to try and reduce conflicts as much as possible and honestly the big hurdle is always inaction and behavioral mistakes. This is honestly a fantastic reference video that people NEED TO SEE. Will definitely be sharing it.

[@Theretirementnerds]

Thank you so much for watching and sharing!

[@steveking8548]

What's the most expensive item for a household who uses a fincial advisor? The advisor who charges 1% PER YEAR. That's right - PER YEAR. Can you imagine paying your dentist, doctor, banker and insurance agent all 1% PER YEAR? How about 1% PER YEAR for your television service and telephone service providers?

[@glennet9613]

If you are retired and drawing down a typical 4% a year from your assets that 1% is 25%, a quarter, of what you are living on.

[@Sinisterdaze]

Love when Zacc is on. I watch the videos a couple times to make sure I didn’t miss anything 😊

[@Theretirementnerds]

He does such a good job. Love having the chance to speak with him about these topics. Recorded another one that we'll release here in a week or two :)

[@beaglebrigade]

Great discussion. Very informative. I wish I would have heard this 15 years ago before I was sold an annuity and a variable universal life policy which I still do not understand to this day!

[@Theretirementnerds]

Wish we would've found each other then as well! Thank you for tuning in!

[@chuckfoster1945]

15 yrs ago you may have bought the best option for the known informatiin at the time. We don't know when to have cash in a mason jar.

[@markbernhardt6281]

My mom bought an annuity when she retired in 2011 with only 100,000 saved. That annuity just won't die no matter what the markets do it's still hanging in there paying 500 a month. It's given her a lot of peace of mind. Can't speak to life insurance.

[@user-tb2ep9xe3f]

@@markbernhardt6281 Not really, 500 a month - inflation is correct formula.

[@dawightg9787]

I have watched many financial podcasts in my time, and in this one video is the most Honest and straightforward look into the different financial categories that I have ever watched.

[@Theretirementnerds]

Appreciate you spending time with us and the kind words!

[@eslau14]

This is one of the most honest and real conversations I’ve heard on the financial advising industry I’ve ever heard. And from an industry insider, none the less. Although the guest was visibly conflicted, I could see him giving this same advice to his own children and loved ones. Bravo!

[@Theretirementnerds]

Thank you for tuning in! Zacc is the best!

[@user-hc6so5ul6o]

Super helpful, super informative! Thank you for the thorough compare and contrast walk through of these different financial roles.

[@Theretirementnerds]

Thank you for tuning in!!

[@michaelsatinu1199]

Love these guys!! Very honest and informative!!!

[@Theretirementnerds]

Thank you so much!!

[@sheenayaj1700]

Wow! Eye opening! Very informative! Great video!

[@thomasmoshier3920]

You two might just be the most honest two guys on KZbin.

[@Theretirementnerds]

Thank you so much! Zacc is amazing an love his transparency!

[@Pete-ql2pk]

Honest and very knowledgeable professionals

[@Stinadupreetattoo]

😅 my anxiety goes down with each episode thank you both for taking the time and explaining the difference between all of this!! Everyone has an opinion but as a consumer I need non bias information I can digest!

[@Theretirementnerds]

Thank you for spending time with us! Zacc does such a great job!

[@brentshields8475]

Thank you for projecting this information. It’s such a struggle for too many of us.

[@Theretirementnerds]

Appreciate you tuning in!

[@professlch6347]

Thank you for this. Going to rewatching to let the details sink in.

[@joem6832]

WOW, Probably "The" most informative video I've watched on the subject so far!!! Thanks so much for putting this one out!

[@Theretirementnerds]

Thank you so much for watching! Glad to hear it was helpful 🙂

[@Ubiquitous_1]

This is useful information! I need to listen to this again! And then maybe again after that! Thank you for this!

[@Theretirementnerds]

Thank you for watching!

[@greggis3691]

This is the second video I've watched on your channel with Zacc, and both were extremely helpful. I'm retiring at the end of this year, and I'm suffering from paralysis by analysis. The goal is to move all of my assets under one roof. Now I feel I have some clarity about the different type of FAs, and pros and cons.

[@Theretirementnerds]

Thank you for tuning in! Zacc does a great job. Appreciate you watching!

[@kmng3207]

@@Theretirementnerds all the information you present is greatly greatly appreciated!!

[@Theretirementnerds]

@@kmng3207 thank you so much!!

[@joeysocks5718]

This was so informative and helpful. Thanks! 👍🏼👍🏼

[@Theretirementnerds]

Thank you for spending time with us!

[@jamesbenge1159]

What an amazingly informative podcast. Learning so much! Thank you!

[@Theretirementnerds]

Thank you for watching!

[@ABab-jf2jb]

Very informative. Thank you to both of you.

[@Theretirementnerds]

Thank you for watching!

[@lfrost6718]

Loved the highway analogy! Thanks for all the great information!

[@Theretirementnerds]

Thank you for watching! 🛣

[@RichG-zf9cw]

Thanks guys. Great show. Love you both together. Oh, individually too.

[@Theretirementnerds]

Thank you so much!!

[@TheLiberty1999]

Thank you Zacc, for going where few others have dared to tread. Very helpful. I now have more faith in, as well as understanding of, my advisor.

[@Theretirementnerds]

Zacc is the best! Thank you for watching!

[@jeffreyholt9624]

Great video and info - really helpful discussion with some of my longtime advisor questions answered. Thanks!

[@Theretirementnerds]

Thank you so much Jeff!! Another one is in the works...

[@janetkenny4861]

Wow, great conversation, I feel like you both pulled the curtain back on this very confusing and convoluted industry. I work with a certified CFP and, I truly feel that I am getting that extra value discussed. I don’t want to worry about my investing and fear the stock market moving up and day, so it is very well worth paying for the portfolio management. 8 Years in, and recently retired and feeling very confident with my money and its growth and sustainability.

[@Theretirementnerds]

Thank you so much for watching! So glad you are pleased with your relationship!

[@joyblevins8712]

Remember 1% of 1million dollars is $10k per year. Financial advisor always talks you into putting your money on a fully loaded funds! Financial advisors always have the habit of wining and dining you and you are the main course.

[@Theretirementnerds]

Hi Joy, were you able to make it to the Part where he talks about loaded funds?

[@joyblevins8712]

@@Theretirementnerds yes.

[@DianaGarcia-hn8te]

Love the info

[@Theretirementnerds]

Thank you so much!!

[@deba.2175]

So good I'd watch again.

[@Theretirementnerds]

Thank you! 🙂

[@tomm7505]

Great video, Erik. Lots a great information. I worked for 18 years for Delaware Investments and 13 years for Fidelity Investments in the 401(k) retirement plan field. I was Series 6 and 63 certified. So, I'm very familiar with everything that you two talked about in the video. When I first started working in the financial services industry (in 1986) it wasn't uncommon for a mutual to have an 8.5% front end load -- which today would be insane. Today I'm just a DIY investor with most of my assets at Vanguard. Thanks again.

[@Theretirementnerds]

Thank you, Tom! 8.5% 😬

[@tomm7505]

@@Theretirementnerds Yes, not all of them had such a high load. The one fund that stands out to me was Decatur Fund which when I started at Delaware Investments had the 8.5% load. Delaware was bought by Lincoln Financial in 1995 and then Lincoln sold all of Delaware to Macquarie Group (an Australian company) in 2010. You can still buy "Delaware Funds by Macquarie" but I think the high loads are all long gone -- thankfully. Delaware was a great place to work (I was there from 1987 - 2005) and it gave me the best start to investing and saving for my retirement.

[@frankb1]

Annuities come in various forms. One form is the deferred variable annuity, which is essentially a tax deferred mutual fund investment account with a limited selection of mutual funds. The one I'm familiar with is Fidelity's. It has an S&P 500 index fund that mirrors FXAIX but with a fee that is 7 bp higher. In addition, you have to pay a 10 or 25 bp administration fee (10 bp if balance >$1 million, otherwise 25 bp). But the benefit is tax deferral and exemption from creditors (in the state where I live). So basically the trade-off is 17 to 32 bp higher fees for asset protection and tax deferral. That's pretty reasonable trade.

[@PS5820-wv7kk]

Your content is very informative! Keep up the good work! It's awesome you guys had this conversation!

[@Theretirementnerds]

Thank you so much!!

[@CaedenV]

You guys are so amazing! So level headed and able to bring clarity to things that so many people overcomplicate. What is evil about whole life insurance is that it is often pedaled to people and situations where it isn't appropriate... And that they are hound dogs worse than car salesmen. Nothing wrong with the product, it's just a niche specialty product. And perhaps the worse part is that the agents are sold on their paycheck for these products, and they spend a lot of money on training to sell these products, so it is just as much a trap for them as it is for the people they sell to.

[@Theretirementnerds]

Thank you for watching!!

[@albertsly8026]

Thanks Zac and Eric for putting together this informative honest video highlighting the good, the bad and the ugly of investment brokers. Great video for both beginners and experienced investors!! Thanks again for sharing your honest thoughts about your profession!

[@Theretirementnerds]

Thank you so much!!

[@vinnyg2619]

Thanks for both Zacc and you for posting this video! It was very informative. As a DIYer in investing and soon to be retired I would love the opportunity to speak to a qualified financial advisor to pick his/her brain. My wife and I discussed going to an hourly advisor but around here they are scarce, getting Zacc's take on it makes me understand why. At this point in my life I don't need a financial advisor taking care of my finances as I have a plan, have run the projections and it seems like all should be OK. But I do realize someone who is experienced in this will be able to offer something that I don't know. I watch a lot of KZbin retirement channels and try to gain knowledge from what they are saying and I've picked up quite a lot of bits of information and trying to cram them together. Hopefully Zacc and you continue to put out more great info!!!

[@Theretirementnerds]

We have another video that will be released in the next 2 weeks :) It's been interesting because I have been searching for a flat fee or hourly advisor to partner with for people like yourself. It has been very difficult finding one who is experienced and willing to take on new clients.

[@vinnyg2619]

@@Theretirementnerds I spoke to an advisor who would charge me a flat fee and "write up a plan". He sounded OK but I realize that a plan may need to be tweaked and a one time plan may not be in our best interest. Thanks again for all the great content you provide

[@Theretirementnerds]

@@vinnyg2619 that's what Zacc has noticed. A plan is put together to execute, and then a month later, something changes that throws off the plan.

[@robjennings106]

Good stuff, particularly for consumers with little knowledge of the industry. As a client of 7 years of a flat fee advisor, I would have like to hear more about the small independent flat fee advisors I feel like these folks are delivering some of the best value and are a small, but growing part of the industry. My guy developed his own financial planning software but other folks do have subscriptions I believe and are making a go of it limiting the number of clients.

[@leslieschultz5616]

I was able to pick out a couple of tidbits and I thank you for that but a great deal of this went over my head and I am a college educated person - registered nurse. I am nearing retirement and my husband is already retired, we have a great financial guy (we think, but do we really know?). I wish there was a place to listen to this type of info in a BEGINNER format.

[@nicolemoest9467]

Sunflower yellow! Fantastic video. Thank you for your straightforward approach and well organized discussion. It helps to clarify a lot and including a visual matrix is helpful to us visual learners. I’m still a bit hazy on how / if a “certified financial planner” or CPA overlap the 3 categories. Any hints? Thanks much!😊

[@Theretirementnerds]

So glad it was helpful! CFP and CPA are quite different. One person can get both, but they are quite different. A CPA is a certified public accountant... more around accounting than financial planning, but again, a CPA can also become a CFA and vice versa. Does that help at all?

[@stevenjames14]

Great content.

[@Theretirementnerds]

Thank you so much!!

[@buyerclub2]

First, with me, you did not make an enemy, you made a friend with your very well done video. In fact Zacc, explained some scenarios that I had not considered for why whole life could be smart for a few people. In fact for a few moments, I though of contacting his firm to discuss scenarios where his firms financial planning might make sense for me. But, my portfolio is just too large to consider an AUM model. Also, one reason why I have been able to go from zero to close to 8 figures portfolio is my ingrain "value meter".. I just can not spend money where I don't see the return. So while I could take input, on things like tax reduction and legacy planning. Spending over $100,00 a year is just too much. But again, his video and explanations seemed complete and fair. So much so, I am forwarding it to someone who has an AUM "advisor" that I would describe as just a "stock picker". And not a good one at that. peace.,

[@Theretirementnerds]

Appreciate you tuning in and sharing these thoughts! Zacc does a great job and love having him on.

[@markbernhardt6281]

As assets grow the fees become less and less. I don't know about Capita Financial's fees but he said the percent goes down as assets under management goes up. Other KZbinrs like Root Financial is 1% for first 1 mil, .75 between 1 and 3 then .5 between 3 and 10 and .25 on amounts above 10 million. Safeguard Wealth Management is .60 percent no matter the asset value and they only invest your money into .05 expense ETFs. So all in .65. I'm sure Capita has some sliding scale and all of these firms have ranges where they are the cheapest. But with a 9 mil portfolio you're not going to be paying 1 percent.

[@HB-yq8gy]

The guy was very honest. I like his approach the interview was spot on.

[@Theretirementnerds]

Thank you for tuning in!

[@christinewallace9251]

Good video. Nice summary

[@Theretirementnerds]

Thank you!!

[@Summerdee223]

I love it when you have this guest on. He is one of the best.

[@Theretirementnerds]

Zacc is amazing!

[@karymillet8884]

Another great video. Everyone is selling something in this world. It’s extremely difficult to know who to trust. People need to research products themselves and some of us have to learn the hard way. I got taken on a whole life policy with a rider where the policy would pay for itself when I turn 55. Every year I would ask and every year the payoff would slip a year. After 10 years of the payoff slipping I sold it down to 40k of coverage and used the cash to pay off my home. That money would have done much better in the market for those 10 years. And term life would have cost way less for the same benefit over those 10 years. Live and learn.

[@Theretirementnerds]

Thank you for watching and sharing your experience!

[@stevecaldwell6169]

The financial industry is intentionally set up to obfuscate the client and sound high falutin. Additionally financial literacy is sorely lacking. This has been baked into the "system" since man began to walk upright. Thank you for providing this information in a most presentable way.

[@Theretirementnerds]

Appreciate you tuning in Steve! We agree with you!

[@seth1208]

Great content. Very fair.

[@Theretirementnerds]

Thank you!

[@youdqtube]

Good stuff. Thanks.

[@Theretirementnerds]

Thank you!

[@lesthompson608]

Is there a way to set a cap on the fee for assets under management? I don’t believe that the amount of value added scales with the assets under management so why do the fees?

[@kmng3207]

I’m so glad you’re having him back on! Talk about financial advisors who suggested people they take out HELOC to build their retirement funds most absurd thing I’ve ever heard however I was advised to do that

[@johnb1567]

Actually wouldnt be bad to do if the interest rate on the HELOC was low because the return on investment would be more if invested. Example : HELOC rate at 4% while getting 9% or more from investments.

[@kmng3207]

@@johnb1567 something like that was explained to me the other day. Interest rates are extremely high doesn’t make sense.Additionally, I have a mortgage ( my only debt) llnot personally comfortable with more debt. I worked hard to get rid of ridiculous credit card and consumer debt. I appreciate the feedback.

[@cjgray9352]

@@johnb1567 unfortunately right now rates are at 8-10 percent and that is highly risky but overall one thing I am not playing with is my house under any circumstances

[@brianadams6204]

@@johnb1567 Actually it wouldn't be bad it would be stupid the risk is not worth it why would you want to take out a second mortgage on your home just to invest.

[@johnb1567]

@@brianadams6204 , ahhh..so you dont know how to do math... got it...

[@kinggeek1960]

Would like to see a future episode dedicated to annuities (pros and cons), SPIAs, MYGAs, FIAs, QLACs and Variable Annuities including RILA's - vs bond ladders, or tips ladders

[@kylezundel7124]

Zacc is awesome!

[@Theretirementnerds]

He really is!

[@zacccall9897]

Hey Kyle!! Cool to see you in here watching. Been a long time. Hope the family is well!

[@kinggeek1960]

The point on the "flat fee" is the amount of work to provide planning on a $1m vs $4m isn't 4x most of the time. Paying $10k/yr is $40k/yr. 1% vs 25 bips. I would think a lot more people would want to pay $10/yr on a $4M portfolio /w planning

[@user-gp8ud1gc3d]

As much appreciation I have for both of you I feel this video is a soft sell for your services. As someone who worked with both financial advisors, broker-dealers and investors, the first step of an honest attempt at “helping”individual investors is to openly admit that the Wall Street business is purposely opaque and it is because of this very reason the common investor needs the services, of financial planners, brokers and advisors. It does not require more than average intellect to learn the ropes of investing if the industry was transparent. Wall Street is far from transparent by design to create the need for all the financial gurus. It is because of this deliberate opacity of the business of money in America that the average investor ends up being low hanging fruit for exploitation. The first question to a planner/ advisor should unequivocally be: “are you a fiduciary?” No matter how much it turns off the financial pros. People entrust their money with a stranger and when the time comes to choose between the client’s interest OR yours, it will be yours. We are all humans.

[@sideler7057]

Investing is fairly straightforward if one takes the Boglehead approach of low cost index funds and stay the course. It's the taxes, estate planning etc. that I'd find challenging and may need an FA for a one time flat fee appt to plot a path forward.

[@user-gp8ud1gc3d]

@@sideler7057Ditto! Not easy finding a competent and properly accredited one “fee only” Most want the extra business and they will do ongoing advisory on the side.

[@sideler7057]

Good video with lots of info. I was curious how he was going to handle flat fee vs. AUM since advisors presumably like the AUM. For folks comfortable with investing, the financial advisor would provide advice on taxes, estates, etc. However, once I retire is my financial situation going to change much year to year? Doubtful, so I'd be paying AUM continually for years if not decades for not much useful advice beyond the initial retirement planning. Flat fee for me.

[@Geronimo2Fly]

That's the problem I see as well. They get 1-1.5% per year regardless of whether they're setting up a financial plan in the beginning (worth it), doing a tiny bit of rebalancing (not worth it), or talking you out of selling everything after the stock market tanks (worth it). Over the course of many years however, it's hard to imagine how a continual 1% fee would be worth it, when it seems like once everything is set up, it's pretty easy from that point forward. I'd love to see a video where Zacc describes what he does for his clients on an ongoing basis, even during years where everything is already set up and the stock market is fairly steady. How is he providing 1% of value in those circumstances? I'm not saying he's not, I'm just curious as to how much attention is paid to each client's portfolio on an ongoing basis.

[@momhouser]

I wish you had discussed the CFP designation...how to parse that into which licenses.

[@Theretirementnerds]

We were going to touch on that. Slipped through the cracks. Much like the licenses discussed, the CFP designation can also be held by all 3 professionals.

[@kinggeek1960]

Had a recent equitable FA/RIA pushing a Jackson Variable Annuity and a Kai-Zen plan to "protect cash flows, income" 1/3 of the portfolio

[@josephkeith6954]

you guys are pros and there’s no way i will pay 1-3% on faith especially the relationship is build on “what’s in it for me”. too risky.

[@kw7292]

There’s some good with financial planners, hiring a fee based (by the hour) for their knowledge and ability to provide specific advice (establishing risk tolerance, general investment portfolio strategy, how to take from your nest egg, Roth vs IRA, taxes) is good. Pay them for their time not a percentage of your wealth.

[@flamingjune27]

I want to be a CFP but I’m nervous about job prospects after my military career. I have a degree in management and was thinking about getting my MBA just because the Army will pay for most of it while I’m active. Will that help my chances getting hired with just having a BS and CFP? What can I do besides getting the CFP to be competitive for employment in the financial advisor realm?

[@JustAVariation]

The guys voice is like Deadpool lol. Pretty cool and I love this video

[@Theretirementnerds]

He's had a lot of Ryan Reynolds comparisons... Zacc is great!

[@JoseRodriguez-yr9uv]

Zac attack is from Disney’s ‘Sky High’

[@Theretirementnerds]

Thank you! It's been bugging me for quite some time.

[@philip5899]

Sharks !!!

[@leoburgunder9201]

It all comes down to discounted cash flow analysis and legal options. Trusts, sub-S corps, Estates, tax planning all need a high level of legal planning. Financially, the same folks are clueless doing DCF analysis, investment planning, tax analysis. The answere is to get schooled into one area and hire out pro advice. Ed Scott's books get the average person a long way into asking the right questions without dealing with commission sales people.

[@user-tb2ep9xe3f]

I study all 3 heads and current doing Medicare and regular health plans. But my goal is to be a CFP and running my own financial data center website. In general I don't believe most people in sales world would be honest, like i kept listening to life insurance agents hype sales pitch to the customers. Because if most of life insurance sales people are honest and telling the truth, then the customers would be turn off and ending up not buying the products. People want to hear great things and sales job is to feeding them. It is always conflict of interests going on in the financial sectors. I mean this is not the secret, most people already knew it. But I don't have problem with the oversold pitch as long as you pick a right life insurance or annuity products for the customers, some people don't know how to invest in risky asset like stock, so Annuity and life insurance actually fits them. Because insurance products is not as risky as other products, so if planning well, both ends will mutual benefit from it.

[@andydsouza507]

I worked for a year after retiring with an advisor. However I have a basic problem with the AUM model. Lets say you are paying the standard 1% ongoing fee. That doesn't sound like a lot. But if you consider 4% SWR, that's 25% of your income, before taxes. Thats huge and higher than your tax bill on the withdrawals. Also, is the advice worth twice as much if I have $2M vs $1M AUM? Most advisors have set baskets of investments they put all their clients into based on age and risk tolerance. Investing 2M is no harder than $1M and the other advice (non investment) is the same in either case. In the end, I just took over the accounts and bought some very low cost index funds and have been sitting pretty on them for the last 5 years. I saved over $100K in fees in that time alone. More if you count the growth of leaving that money invested. With the amount of information available for free and discount brokers I think all 3 models (insurance, full service broker and investment advisor) are on life support. And that's before AI even enters the picture.

[@southernc4919]

If you have a financial advisor, you are getting screwed. High fees and subpar performance is what they do best.

[@schattopadhya]

Great topic! When I Asked My financial adviser about the Mutual fund and ETF Expense Ratio. Then told me that they will eat it or absorb it and I don't have to pay for it. Is that common and how do they do that. How will I know that they are absorbing it. Mutual fund /ETF that I personally own, never show those fees that I can think of, we just assume. It's almost hidden.

[@zacccall9897]

I’ve never seen a way for a company to “absorb” an expense ratio. They can eliminate it by not using funds at all and buying the individual stocks/bonds. The expense ration is built into the share price each day by the fund company. You would literally need to see a credit to your account by your advisor to offset that. In fact the opposite often occurs. Not only do they not absorb the fee, but Some big brokerage companies actually ask the fund companies to share a portion of their expense ratios with the brokerage company. This is why only certain funds are available to purchase without commissions at each brokerage company. (They have revenue sharing agreements)

[@carieyoung1111]

As an insurance broker - I don’t want to get into financial products despite the lucrative benefits- it’s not beneficial to me to put on another hat and take their money and give myself high commissions for products I would not invest in myself…! Sticking with Medicare and Health and registered social security agent is where I’m most effective and needed by my clients- it keeps me busy enough!

[@DaystarHiker]

"your limited to the investment options that the annuity provides". Not all annuities provide investment options, those that do (variable rate), not a good option. FIA's, SPIA's are not investment vehicles however. They are ROC vehicles. They are , as you alluded to, a good choice for the cautious near retiree as a hedge against longevity risk.

[@freedomlife3623]

And cognitive risk, don’t hear lots of advisors talk about that.

[@bryanboissoneault2851]

We have found that AUM advisors develop large confusing plans with 10-20-30 funds. Advisor coats may include a 1% AUM, fund expenses (both net and gross), front or back end loads and possible trailer fees. Sometimes this can add up to 6% and you have to look deeply deeply to understand the total fees. The financial industry is very opaque. I personally believe the AUM advisor will gradually be replaced by AI and consumers will move away from active funds with high expenses ratios to passive index funds with minimal expense ratios. The consumer is slowly becoming educated.

[@Geronimo2Fly]

Many years ago, there was this new company, and my mom decided she really liked their coffee. She asked her broker (or whatever his title was) to invest a bunch of her money in this new place, Starbucks. Some years later, knowing how popular Starbucks had gotten, she went to investigate how her investment was doing. It turns out her broker had sold all her Starbucks stock after only about a year. He told her, "You made a bunch of money on it, so it was a good time to sell." His commission ate up the entirety of her profit, so she gained nothing. If that investment had been left alone, she'd be a millionaire now. Yes, my mom should've been keeping better track of what he was doing and where her money was, but she was not knowledgeable about that stuff and she trusted him to be looking out for her best interests. All she knew was that she really liked Starbucks coffee, and she wanted to invest in it. It sounds like there are more stringent rules in place these days to prevent this kind of thing from happening.

[@glasshalffull2930]

A horrific situation happened to people I know. The father was well off and made great financial decisions. He has an estate in the millions and had moved the majority into a trust that the beneficiaries were his kids and the second wife’s kids. Unfortunately, his married children died early. The big problem is he did NOT set up the estate to pass the assets down to the grandchildren or the widows of his children. The result is almost none of his assets will pass to his biological heirs. It will all go to the step children. The one asset that is not in the trust because it was bought recently is a vacation home and he wants to give that to his biological grandchildren. In a show of TRUE greed, his stepchildren have vowed to sue his estate to keep his biological grandchildren from receiving anything.

[@Theretirementnerds]

Sounds terrible! Hopefully things work out. Estate planning is so important! We have several videos in the works around estate planning specifically. Stay tuned!

[@glasshalffull2930]

It’s not looking good. The man is in his 90s and probably won’t last long and so a solution is unlikely. When the man should be enjoying his final years, instead he is an emotional wreck and the family is torn apart.

[@kmng3207]

❤

[@powderriverfarrier]

Speaking from first hand experience with him if you listen to Erik you are guaranteed to gain useful information and have a better outcome than if you listen to other youtube videos.

[@Theretirementnerds]

You are too kind! Appreciate you so much!!

[@bknapp9728]

This was a very informative, simplistic, and objective discussion for investment management alternatives. Years ago, I used financial advisor services. These firms, using Edward Jones and A.G. Edwards as examples, appear to charge assets under management 1.35-2.25% for AUM for smaller account investors as well as stock trading commissions. Additionally, Edward Jones charges a strategy portfolio planning fee. As explained in the video, if your advisor places your investments in index or mutual funds; then you pay fund management fees as well. Considering the example fee structures, would I not be better off in brokered CDs paying 5-5.4% interest for multi-year CDs?

[@zacccall9897]

Such a good question. I think the answer is to do one of two things: 1. invest by yourself in index funds which will wipe away most all of those fees. 2. Invest with an advisor that is careful about fees and seek an all in cost below 1.25-1.50% (below 1.0-1.25% if you have higher assets). Make sure that advisor does extra work to make those fees back. Proper rebalancing, allocation help, maybe tax loss harvesting, and more. They should make 1.5-2.0 back above what you would do on your own if they are doing it right. The stock market has averaged closer to 10% long term so you have more opportunity than those CDs if it is done right. My thought is: “don’t give up on higher growth investments because there is a chance of higher fees”. Just find a way to do it at lower cost and/or better services.

[@unclesam7212]

"Fidelity Tax Managed US Equity Index Stratagy" management service. Worth it?

[@zacccall9897]

One of their best products. Yet other firms have found ways to implement the tax management overlay on top of any strategy. This is a tax overlay on just one strategy. (A S&P 500 custom Index)

[@unclesam7212]

@@zacccall9897 Thank you.

[@erniekeller1093]

My father bought stocks on his own and I inherited some of them. Before he died he gave me some stocks in an account he opened for me. I learned what to do by selling some and buying others. When I inherited I already knew what to do and quickly figured that paying someone to help me was unnecessary. From that standpoint of practical knowledge my take on the advisor manager industry was skeptical to hostile. I have never had a reason to change my mind. Part of my hostility comes from the simple fact that doomerism is so clearly a sales pitch, and I mean right out in the open. Most of it is like "The sky is falling so buy gold, or somethingcoin, or let me convince you to be a trader with my help" Here's my free worthless advice: Buy and hold stocks and funds for the long haul. The notion of paying someone to veer you away from this sound basic strategy is disgusting.

[@kinggeek1960]

misquoted mary oliver fyi - it's actually "Tell me, what is it you plan to do with your one wild and precious life?" which is actually better since your discussing "planning"

[@zacccall9897]

Thank you!! Yeah I’m sure I didn’t get it just right. Hopefully people still understand the discussion.

[@danbragg]

I manage a t bill and option income strategy for my clients that’s doing over 15% a year and the worst drawdown has been .58% in a month. The goal is income with very little volatility. While it’s kept pace with the SP500 the reason I created it was to give my clients confidence to move away from other cash equivalent like investments that might only yield 5%

[@colemant6845]

The comment "a 1% Advisory Fee actually costs a client 28% in Return"... I would like to see the Math supporting this. Thx

[@Theretirementnerds]

We have a video recorded on this. Releasing soon!

[@billmoyer3254]

Every financial advisor I have ever met with seemed to have a fiduciary with their wallet and nothing else. Management fees combined with a strategy to just keep me in the game is blatantly self serving. I always suspect young advisors have done little to nothing to prove their worth or provide me with information I cannot access myself The minute I lose money on my advisor's advice, and he gets paid for it, our interests are opposed.

[@BunE22]

Are the insurance plans for elder care worth it? My guy is trying to sell me on a plan that would pay roughly eight grand a month toward home care or nursing home care. I'm on the fence.

[@Triumph60Gem]

Be cautious, as many limit the length of time they cover, talk with family about care options. The care facilities financial surrender clauses are scary!

[@Theretirementnerds]

It's a tough one. Your age and premium cost are an important factor. If it's later in life, people who can afford the premiums often can afford to self-insure. People who can't afford to self-insure, often can't afford the premiums. So you want to make sure the timing and costs are right. There are some who like the idea of setting something up to check the box and not worry. There are other hybrid options that offer long term care if you need it and a death benefit if you don't. That way, it isn't a use it ot lose it. That can be a way to dedicate a chunk of money to it, but know that it will likely pass onto kids with tax advantages. Great question!

[@BunE22]

Based on your reply, it's a hybrid plan. If I put in the money up front, it was either 200k or 250k, I'd get the monthly payments until death, and my kids would inherit the initial deposit plus a very small interest payment. It just sounds too good to be true, that's why I'm wary. I understand that they are investing that money and making the interest on the investments, not me or my heirs, it's just that the payouts in the event of needing care sound so high as to be unbelievable. Now, if I never need care, that was a poor investment. I'm 65.

[@Theretirementnerds]

@BunE22 definitely look into the hybrid. Have seen long term care policies work really well. Have also seen people get more than they need.

[@mehawinct]

Great topic, great guest, great discussion -- BUT the mis-matched voice levels are killing me!!! The askew books behind Zacc aren't helping either... ;-)

[@Beadgcfb]

They're all a type of pimp. You got stock pimps, real estate pimps, insurance pimps, advice pimps...

[@southernc4919]

If you have a financial advisor, you’re getting screwed in so many ways you don’t even know it

[@chuckfoster1945]

We all have a dump-truck looking for a place to unload.

[@robjennings106]

Adding another comment FWIW...I posted this in our Retirement Planning Education FB group as something that I was worthwhile viewing and the first couple of comments were from folks who were put off by the title. If the title had been A Look behind the curtain of the Financial Advisor Industry like the sub title posted here in the comments section, I don't think it would have gotten that reaction. I ended up deleting the post.

[@Theretirementnerds]

The original thumbnail was working well, but we just updated it. Let me know if it is better received by your group.

[@robjennings106]

@@Theretirementnerds The part they objected to is still visible when posting "We are about to make enemies of every financial professional" but thanks anyway.

[@Theretirementnerds]

@@robjennings106 hmm... maybe it takes some time for it to update? The new one says "The Truth Behind The Financial Advisor Industry"

[@robjennings106]

@@Theretirementnerds Il check back later. Thanks

[@paulturner4419]

2% fee over 36 years and you’ve lost 50%(rule of 72), then if you continue with 2% fee through retirement and follow the 4% rule for spending then that’s another 50% gone in fees. So 75% lost to fees over a full career and retirement.

[@dmnd1328]

lol this math is just completely incorrect

[@Theretirementnerds]

Why is someone paying 2%?

[@dmnd1328]

@@Theretirementnerds no idea why they would be. Regardless, his math doesn’t make sense anyway.

[@paulturner4419]

@@dmnd1328 50% x 50% = 25%

[@paulturner4419]

@@Theretirementnerds very common outside US. Anyway a 1% fee over 70 years of work and retirement costs you 50% if you spend down at 4% safe withdrawal.

[@dwight_klaus2981]

Good luck finding a financial advisor that will do anything for a flat fee. They all want either a percentage of AUM, or a retainer. Ask them what their hourly rate is for financial planning. See how it compares to your hourly income. How many hours do you get before they have consumed 1% of AUM? And they are rarely working exclusively for you - they feed the same analysis to all of their clients... Its not as complicated as these FAs make it sound.

[@momhouser]

Very helpful discussion. Thank you. STILL...I was left unhappy that there isn't a reasonable alternative for people who don't know if an advisor is going to be worth it until they've committed to the $10K for the year. That's a lot of money to pay only to find out that the advisor has nothing much to offer for a simple saving for retirement situation. i predict that AI and the robo-modeling software is going to start pulling these "low-lying" customers away from financial advisors.

[@KyleO2721]

Thought this was 90 days from retirement🙁

[@Theretirementnerds]

We recently changed our channel name 🙂

[@-GrimEngineer-1337]

Rule #1 is to never get your financial advice from those who do your investing or control your portfolio. The two should always be separate. This avoids conflicts of interest where an advisor will steer your funds to those most beneficial to them. YOU should control your portfolio and act on the advice of an independent advisor, if needed.

[@lvega5606]

Honestly, just dump everything in a total market index ETF and call it a day.

[@dmnd1328]

@@lvega5606 and you think that makes sense for someone’s entire life? When someone is 80 years old and retired that’s what you recommend?

[@horanz]

@@dmnd1328 at least for the equities

[@glasshalffull2930]

@@lvega5606 And ignore tax implications of when to draw and how much and 401K or Roth, etc. Could easily cost you tens if not a hundred thousand if you have a portfolio in the millions.

[@Fr1nc3sc41]

A registered adviser associate cannot steer a client to the more profitable products because he/she would be risking very large fines, possibly jail time, and loss of licenses. Advisors registered must work EXCLUSIVELY as FIDUCIARIES. No conflict of interests with the clients.

[@MsTubbytube]

Let's remember not everyone has the choice to retire - they can also get laid off or become disabled.

[@moneymoments8307]

First

[@Theretirementnerds]

Well done!

[@Fr1nc3sc41]

All your assumptions are based on an insured knowing his date of death. Commission is a percentage of the premiums paid. It's earned for providing professional assistance to families. The average individual will buy 8 life insurance policies. The better professionals will have client loyalty. A Roth investment of $500 will pay the widow $500 if untimely death strikes. A $500 life insurance premium from a fairly young insured will provide upon his death to that widow in excess of $250,000. Stop assuming all insureds live long lives. Real fiduciaries are well versed on financial tools to assist the young dying and the older families.

[@bryanboissoneault2851]

A flat fee CFP can be hired for $150/hour.

[@sideler7057]

I did find the amounts they were quoting for advice high. Even at 200 or 300 an hour, a couple of hours occasionally doesn't amount to multiple thousands as they were saying.

[@TruthSeekerxyz2]

I contacted an advisor for a one time consult, he wanted to charge $1500.

[@WallaceRoseVincent]

AMEX doesn't exist anymore. They were purchased in 2008.