I squirelled away cash for a rainy day, but with inflation pouring down, it feels more like a leaky bucket. Saving for retirement seems impossible if my money keeps losing value faster than I can earn it.

What annoys me, is that ours (about to drop them) and many others, DESPITE being there to help with RETIREMENT... and getting a fee, they don't provide guidance on navigating a key, critical element of retirement.. MEDICARE!!!! The advisor we have has steered us to a third-party Medicare advisor, who, indirectly gets paid if you fall for their Medicare supplement program. They all ramble on about "Oh... I got into Medicare advising as I helped my parents deal with it." A load of crap- partially true if put to the test- but they are actually high-powered sales people that prey on emotion. Anyhow, I think it's pathetic 'retirement age financial advisors' are clueless about the massively critical Medicare impacts on your FINANCIAL PLANNING. I'm going Dave Ramsey and just getting a few good funds with the proper management and decent track record. The financial advisory field btw seems to be filling-up with ex-real estate agents who are losing their jobs due to new disclosure regulations. I knew they'd have to surface somewhere- people who want an easy job with work that most middle-schoolers can figure out. Sorry- but time to drain the swamp.

We went with an AUM advisor in 2008. At the time, I don't even think flat-fee advisors existed (all the financial media was screaming about fee-only AUM). 10 years later, when he raised his rate to 1.8%, we realized we were paying this guy thousands of dollars an hour to do very little. It still burns me all the money we lost, and then it took another 5 years to get out of all the expensive funds we were in (We only finished last year). But you hit the nail on the head, it is hard to write a check for 5 grand.

Honestly I feel sorry for the financial advisor working with Rob… prepare to be schooled

What I’ll never understand about the AUM model: the time and effort required to manage a $2M account is no greater than that for a $1M account, so how do these advisors justify charging Client A twice as much as Client B? (And don’t tell me they’re providing twice the value to Client A!)

Just look at Wall Street compensation- huge salaries, bonuses, stock options, etc. All those "rewards" come from someone. I use a fee based advisor- pay $8/month. I don't need my hand to be held- there is a huge price to pay for that..

Watching your channel gave me the confidence to ditch my big firm AUM adviser at the beginning of this year. The portfolio was not only overly complicated but was not tailored to my financial needs. It was just the cookie cutter portfolio used for everyone in my level of service. But the worst thing was the advisor seemed like he was meeting me for the first time every time we met. There was no long term plan at all, they just plug everyones information (compiled and provided by the Client) into the same monte carlo simulation and that is their “plan”. I remember wondering why every advisor at the firm has a VP title. It’s just a ploy to impress the Clients and has no bearing on the service you receive. Thank you Rob

These are all great actionable steps. From what I've learned from others, I would not suggesting using NordVPN and Norton.

Investment advisors fees are ridiculous! For their ridiculous fee, they better make more than that fee than I can make on my own. So far, I haven’t found any that could. So I don’t use financial advisors. You’re better off buying a couple books on investing and invest in highly rated stocks and bonds. “Dividend Aristocrat” stocks, for example, are great to start with. Find the best ones. Also, invest in companies that are leaders in their field, like Nvidia, Apple, Home Depot, etc. Go Buckeyes!

Hi. I have a question, being a newbie to the whole 4% concept. Considering we have nowadays all these marvelous simulators and historical market data and so on, I think any person would benefit from a dynamic calculator that can give a reasonable range within a specific maximum risk (e.g. it might give 4%-6% for a 30 years period, for a probability of success of 90%-75% (I wonder though if the portfolio risk itself is taken into account as well)). However, the dynamic part I am thinking of here is where it will adjust it every year (or 3 years), rather than using some rule of thumb taking into account only the CPI or some other inflation metric. If someone has enough money in retirement to be able to only use 4% a year, that is great, and if they only need 1% then maybe these videos are not for such affluent people in any case. For "ordinary" people, though, the difference between being able to utilise 4% vs. even 6% could be significant (this is with regards to my first point of this question). Moreover, if all goes well, and within say the first 5 years the portfolio is actually growing nicely, it would perhaps mean that the inflation-adjusted "base line" (the 4% from the first year one started) could be set safely to a much higher value. In essence, I am suggesting adjusting the base line (up or down) in a more dynamic manner, using some algorithm which is taking into account the actual returns of the portfolio. Also, imagine someone got some extra money (after starting the 4% rule plan) from inheritance, or maybe the reverse, had an unaccountable expanse. This too would suggest resetting the base line, this time more conservatively. I have to confess I have not read the original paper, so it is quite possible all these topics were discussed already at length in literature and elsewhere. Thanks!

Thank you, Rob. Great points. I will attempt to post a link in the NR group.

I heard that Congress changed that lately and yes they can hand over your shares to another entity. Gotta protect the big guy.

Great topic! Looking forward to more on the subject. Thanks for sharing!

Great channel. Highly appreciated. I have a question : do you mean keeping 3-5 years of living in cash and than 4% yearly from your portfolio or living out from the cash in bad market?

Bottom line: If you charge an AUM, you’re not a fiduciary.

Basically, the financial advisor’s service must outperform the general market by whatever fee they charge plus the additional higher expense ratios of the investments they select, just in order to get an equal result in the end. 60% VOO, 35% BND, 5% cash is pretty easy, and works well for the vast majority of us.

I don't agree with him, however enjoy the content

what about people who have no desire nor ability to manage their investments? are there scenarios where the advisors earn their fees each year?

But wait. Rob was an attorney so did he maybe take a much larger cut than 1%? Everyone talks about how index investing is cheap and easy but no one seams to talk about how individual investors do on their own. Most studies show they only realize 20 to 30% of the indexes. Maybe 1% is cheap if that is the case.

I dont really feel like fee only should mean a percentage of anything. It should just be an hourly rate fee. ..

My concern with Monte Carlo analysis is that it assumes that the inputs vary independently. I do not believe that it assumes/allows for correlated inputs, as far as I know. Does anybody know if correlation factors are included?

You are spot on and so appreciated. Had to learn this the hard way with losing untold money over the years. Invested in real estate against his advice (definitely a conflict of interest) and it was the best decision ever that can now support me alone in retirement. I sold all his expensive mutual funds, yes dozens of them, bought an index plus a few stocks and have seen much better growth! Watch Wolf of Wall Street

Great video, although it makes me a little ill given that I'm paying my advisor a % of my assets. A few years ago I went to Clark Howard's website to find references to advisors that you pay up front for advice, rather than a % of assets. In my city I think there was one listed. We met with him to feel each other out. Nice guy but I didn't get the feeling that I was going to get a lot of help navigating my own situation. I didn't feel like I was going to be able to ask a lot of questions through these bumpy years (just before retirement and Medicare). So I opted to go another way. I rationalized this by telling myself I was paying for a "financial trainer" (like a personal trainer) to help me get my financial life in order and help me navigate my 60's. Maybe someday I won't need a coach any longer?

I'm a huge fan of your videos, Rob. Thanks for your no-nonsense style. I just started watching a week or so ago and I've been binging them. Well done. I'm curious why you recommend an int'l index fund as well as a the total US stack market index. I'm a fan of what J L Collins has to say about this in his book The Simple Path to Wealth, where he points out that VTSAX contains many int'l companies, since many US companies are int'l companies.

Im retired now at 60 and wife retired. I have been using a FA specialized in clients from the oil and gas industry in Houston. i was worried they would push back on when i wanted to pay off the mortgage but they agreed and the also prefer us to take our SS at 67 vs i was thinking 65. So overall maybe im using a good FA group! BTW my yearly fee is less than 1% but im also considered high NW. They also i think they have saved me money in the long term!!

My biggest issue with the fees was they take one percent of the portfolio. Instead they should take one percent of the annual gains they made for you. That would be a better judge of what they have done for you rather than taking a percentage of the principal you invested initially, that they did nothing to "create".

*You own nothing and are happy!*

Great video, just put your money in low cost ETFs, do a 60/40 split if you are not sure what to do. 70/30 if you are under 50 years old. You'll be fine.

I have a question: I am over 50. If I put $30,000/yr into a traditional 401k and then use the tax benefit (say $6,000 in tax savings) and put that into an after-tax brokerage fund, would I be better off than investing $30,000/yr in an Roth 401k? I would only be paying tax on long term gains in the brokerage fund (15%). I have never heard this strategy, but it seems like it would be better than a Roth 401k.

I’m have a unique question, how do you know when it’s time to sale a stock?

I discontinued my relationship with my financial advisor last year for all of the reasons Rob has mentioned in this video. I started to notice a pattern over the years. Every time I suggested any kind of investment that would not have included AUM, my advisor steered me away from it. Case and point. About a year ago I told him that I found a CD offering a 6% APY, and that I was going to pull about $200,000 and make the investment. It was an obvious no brainer that this was a great opportunity, but he tried to steer me away. I stayed my course and closed my accounts with him altogether. I self-manage now and follow smart guys like Rob. Things are going very well and I'm not paying an advisor over the top fees.

I don’t use a planner, but one reason some pay for a manager is to guide and prevent them selling equities at the bottom of a down market. Unfortunately, I watched my father in law force his highly paid manager to liquidate just at the wrong time in the Great Recession downturn. The manager continued to charge the high fee.

Fully agree with your views Rob , I can think of 2 exceptions. 1. If you do not have the stomach for the stock market and sells every time the market drops. 2. If you get older and lose your cognitive abilities, especially if your spouse is not close to the details. In these cases, AUM may make sense.

Your insight about conflict of interest hits home. My wife financial advisor told her to take social security at 62. On top of that he bought her a variable annuity with a 7% sales commission, held it for 7 years and bought a new one for the same commission. I finally convinced my wife to change to fee only. Thanks for your content!

Is the fee for a flat fee advisory tax deductible? Where a AUM advisory the fees are automatically deducted from your account quarterly and not seen as a deductible expense?

Perfect. Thank you Rob. I wish I could send this to my girlfriend without her biting my head off. Unfortunately, she assess her financial advisors based on how “nice” they are and how quickly they send her own money to her when she requests some.

Flat Fee in my opinion is the way to go. I have had both and the service is way better in my case from my flat fee advisor. After two AUM and not getting the service I though I should be getting. I looked at the total picture and all the fees and that didn't sit well with me. Looked at Sara Grillo list and had interviews with 4 different advisors. Very happy with my choice who does it all. You need to educate yourself and yes , I could do it , but I'm retired and rather have someone else keep track of all the changes, the market, the tax laws, etc. .

If you look the advisor fee 1% and compound the cost over the years the fee become gigantic. However if you look your car expenses your light your phone bill using the same method everything is super expensive. Why the advisor fee is looked at this point of view and all other expenses that a person has is not?

When I determined that I had paid over $70K to Fidelity's Managed Portfolio folks over six years, I decided, enough is enough. I converted my complicated list of investments in my retirement accounts to a small handful of index funds. Over a few years, I unwound the 30+ investments in my taxable account, selling all the more minor positions until I was left with the four largest holdings with significant gains. I will sell those slowly when my taxable income from other sources drops to minimize my taxes. I now track my expense ratios in an investment allocation, location, and monitoring spreadsheet based on one Rob developed.

Another excellent video

If my portfolio is 60% stocks and 40% fixed, why would I pay 1% on the 40% that just sits there?

Excellent common sense financial advice. I wish they would teach this stuff in school.

Hi Rob, thanks for your videos! Can I ask a question? Did I hear you mentioned that a planner could put you into over complex portfolios and it could have tax consequences? I thought if all the money was in an IRA, then no taxes are due ( unless you take a distribution)

Nice video Rob. I really want an objective unbiased review of my tax planning approach (timing and size of Roth conversions in particular) based on analysis with New Retirement. I use the Roth conversion explorer extensively. However, with limited scope and low potential payoff to a fee only advisor, I don't think I am a very attractive client. I am sure there are some good advisors, and they could help me a lot, but I am very leery of the up-sale potential they would see with our sizeable portfolio. Our investment portfolio is laughably simple (60/40). Going to get killed by IRMA the next 3-4 years, but the payback with SS taxes, RMDs, Income Taxes (fed and state), and estate benefits seem far more important (valuable). Self-study seems to be the most likely outcome for me ... blind spots and all. BTW thanks for your weekly newsletter, it is always interesting.

One of the issues seems to be a lack of good financial planning software available for everyday folks. Most of it’s aimed at CFP firms and is costly and not intuitive. Would welcome recommends if I’m ignorant of the options.

Do both sites show the same backtesting results?

Hi Rob, Maybe a good topic would be how to interview a financial planner? (assuming you haven't discussed this before)

Great video Rob. And timely. We have been tryin to figure out who to use after just having an investment firm managing our money for AUM. We don't get any advice on retirement and tax planning which is why we have been trying to figure it out.I like the flat fee advisor idea. Thanks.

Keeping in mind, of course, who is assuming 100% of the risk, no matter what: you are. There's no guarantees of performance of any kind, but they'll take their money from whatever you have left. Nice work if you can get it.

What I did was pay 1500 for a plan from a CFP that worked at a company that also offers portfolio management/advice for 1%. I would always recommend getting a plan first as it will open your eyes to a lot things mentioned on this channel. You will then have ammo to ask your prospective portfolio manager before you hand over your hard earned cash. I never did use their portfolio management service because I still cant understand why you would give someone a % when the work they do is not likely proportional to the amount of assets under management (almost but not quite as bad as real-estate agents). I would also argue it gets easier for them when you have more money. I could almost go along with a nominal flat fee + a percentage of "gains". Also can't say I like hourly rates either until you REALLY know what you want and have good questions. One more thought. Nothing says you have to give all of your money to one advisor. Give them a little and see how well they do first.