Can you trust financial advisors?
Are they only looking out for themselves?
Let me preface this by saying it does not only apply to financial advisers if you have a 401 K. This applies to you too because if you did not know some companies will have these Robo advisors who are shifting your money around to help you get some more returns.
Why does a financial adviser?
Financial advisors are sophisticated advisors who will shift your money around and help you come up with a plan for all the years that you're gonna be alive and eventually hopefully when we're 65 old bones cracking you'll get to have a little bit of money to play with.
They do get paid based off of what they make for you which sounds good but there is a way for you to get paid and not pay anybody else.
So how do they get paid?
They get paid based on what they put you in and so most every single advisor that I know will put you in stocks bonds mutual funds index funds things with those hinges which is pretty much all paper assets right nothing physical.
Depending on what stock or what mutual fund they put you in they can get a bonus and it's not a couple hundred dollars we're talking about thousands of dollars of a bonus depending on what they place you in a conflict of interest much.
They generally make about 1% of what you make which might sound like a little bit but if you're doing it over the course of 40 years it adds up.
What's important to know about financial advisors is that they're very educated on the products that they're offering but maybe not so educated on the economy as a whole which is very important.
Because a lot of people might think okay something's going on in Iran or Iraq that ain't on them to do it for me.
But we are such a connected world that something that happens in a different country can affect us here a perfect example in 2008 when we went down a lot of countries went down as well.
Right now is a good time for these financial advisors
Because stocks are just going so high astronomically high I feel like every single day we're reaching and altering on it.
A good question is well why is the economy just doing that well that we're just making all this money should I just be quiet my 401k is looking real healthy in fact maybe if you're the average person.
The Federal Reserve prints money out of control which is kind of why I always say don't save money when they're over here printing it for the free. You want to invest that money because it's gonna be worthless at one point but I digress if you want more information on that click the economy that really breaks down.
When they do this they target certain asset classes to inflate. So right now they're targeting stocks and they're targeting real estate and they're doing the very roundabout creative way which I can make it even more detailed so let me know if you want to see that about how the Federal Reserve prints money and where it goes.
But long story short they play financial musical chairs and boom it lands on stocks so you get that big nice healthy fat 401k and you think you've ought to be retired on a private island somewhere.
A good financial adviser would be able to tell you exactly what's going on in the economy and I'm not saying that you can't invest in stocks personally I think it's a little bit overheated right now but I don't know how long can go on and neither does anybody else in this world but a bit of good advice would be able to say yeah it's heated because of XYZ but here's why I think that we can still stay in here and eke out a couple more percent return.
Is it Possible to Find a Good Financial Adviser?
Perhaps there are a couple of questions that you must ask them and just determine if they are worth your time or not.
Now personally spoiler alert I think you can do this on your own regardless if there's a person who is super knowledgeable and super educated. You shouldn't put all your trust in that price. I mean you work hard for this money
Why would you just give it some random Joe?
Who's making money off of you?
Who doesn't really have your best interests at heart?
You have to be the one who cares enough. You have to understand that you're putting all your free time into this job and you're putting into these assets. You need to be educated and if you're educated you can make these decisions without a financial adviser but if you don't care about that ask these questions so you can know they're the right one for you.
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Are you a fiduciary?
Fiduciary means that they have to work in your best interests which to me is crazy. They even have an option to not work in your best interests.
But basically if their fiduciary they can't invest in things because it means a bigger check for them. They have to invest in things because there's a bigger check for you.
What are the fees?
All the fees there are hidden fees and there are those fees that are right in your face. You want to know what the softly what you're paying because it sneaks something in there and before you know it. You didn't give off a hundred grand of your own line because of their management fees.
They get those fees whether or not you're doing good I mean it's 1% of your portfolio normally.
What other asset classes do you recommend?
I think a true financial adviser would be able to tell you about physical and intangible assets. Stocks and bonds are intangible because you literally don't touch anything it's just a whole bunch of numbers on the screen.
Gold businesses in real estate are physical they are in your possession you can control what you do with them for the most practice of course governments but for the most part, you have full control.
Do they no but the other asset classes are just trying to sell you whatever product makes them the most money? If all they're saying is invest in stocks and bonds run.
