馃攳
SHOULD YOU HIRE A FINANCIAL ADVISOR? And The Difference Between Financial Coach, Advisor, & Planner - YouTube
Channel: Tim Wolffe
[0]
Do you actually need a financial advisor?聽
Well there's statistics to back up both聽聽
[4]
arguments. Yes you should have聽
one and no you don't need one.聽聽
[7]
But before we jump into the video please hit the聽
SUBSCRIBE button if you haven't done so already!
[15]
So when we're talking about investing in financial聽
advisors, for example, let's use $50,000.聽聽
[20]
If you kept that just in a bank account and never聽
invested it by yourself or with someone else the聽聽
[25]
average savings account gives you 0.05% interest聽
every year. Well at the end of 30 years you would聽聽
[30]
be left with $50,775. But if you took the same聽
$50,000 and invested it right away, never added聽聽
[37]
to it, never touched it, over the same 30 years in聽
a simple s&p 500 index fund or a mutual fund you'd聽聽
[44]
finish with over $991,000. So if you're looking at聽
the difference between investing and not investing聽聽
[50]
let's go ahead and invest the money. But聽
the question is should you do it yourself or聽聽
[54]
should you do it with a financial advisor. Warren聽
buffett one of the richest guys of all time and a聽聽
[58]
legendary investor made a famous 1 million dollar聽
bet against a hedge fund called protege partners聽聽
[66]
llc. Warren buffett said, I bet I could put money聽
into an s&p 500 index fund and not touch it for聽聽
[73]
over 10 years and make more money than if you聽
gather together your best financial advisors from聽聽
[79]
this hedge fund- I bet you would not make as much聽
money as if you just invested in the s&p 500. Well聽聽
[86]
protege partners took warren buffett up on this聽
million dollar bet. After 10 years of competing聽聽
[91]
against a major hedge fund warren buffett won the聽
bet by landslide just investing in the s&p 500. So聽聽
[98]
the financial advisors had to give warren buffet聽
a million dollars which he put back into charity.聽
[102]
But warren's point is this- take a hands-off聽
approach to investing. Leave emotions out聽聽
[107]
of it. Like man I really need to jump on tesla聽
stock or gamestop or something like that. Then聽聽
[112]
you probably shouldn't be the only one managing聽
your money because you're going to trade off of聽聽
[115]
emotion and you're going to lose. A financial聽
advisor would be good for you if you need that聽聽
[120]
accountability. If you need someone who's going聽
to force you to invest. Who you know you're paying聽聽
[124]
him money every single month or every quarter聽
or yearly. You're going to be forced to invest聽聽
[129]
and you're going to have someone to balance聽
out the emotions that you bring to investing.聽
[133]
Studies show that 44% of people that have a聽
financial advisor have over a hundred thousand聽聽
[138]
dollars invested where only 9% of people who聽
don't have a financial advisor have a hundred聽聽
[144]
thousand dollars or more. So we're seeing that聽
wealthier people are using financial advisors聽聽
[148]
so it can be something that you use. But yet you聽
have to take into the fact that 92% of the time聽聽
[154]
all financial advisors will lose to the s&p 500.聽
So where do you find this middle ground of is it聽聽
[161]
worth it or is it not worth it? Statistically聽
it could go both ways, you know yourself,聽聽
[165]
you have to make the decision yourself. If you're聽
someone who is not interested at all in numbers,聽聽
[171]
finances, you hate it, you hate looking at it, you聽
hate doing anything related to money and investing聽聽
[177]
then yes you should have some sort of financial聽
coach. As you start to get more assets- maybe you聽聽
[182]
have not only your own 401k but you have multiple聽
IRA's, 401k's, and other brokerage accounts. As聽聽
[189]
your investment portfolio starts to grow yes you聽
should probably have a financial advisor. We're聽聽
[193]
talking about at least $100,000 or more. Get聽
a financial advisor if you want someone that's聽聽
[197]
going to keep you accountable. Get a financial聽
advisor if you just want to save the time! You're聽聽
[202]
kind of interested in finances but you don't want聽
to listen to podcasts, you don't want to read the聽聽
[206]
news, you don't want to look on cnbc.. Sure time聽
is money... get a financial advisor to help you聽聽
[210]
but keep in mind that 92% percent of financial聽
advisors lose to the s&p 500. So on the other聽聽
[216]
hand can you just dump all your money into the s&p聽
500 and probably win based on decades upon decades聽聽
[221]
of data that will show you that is one of the聽
best investments you could ever make. If you're聽聽
[224]
someone who's really really cheap, you would never聽
hire a personal trainer, you'd never hire a coach,聽聽
[228]
you would never hire a tax person to do your聽
taxes, you never hire a lawyer or anything like聽聽
[233]
that... then yeah don't hire financial advisor聽
if you really think you can do it yourself. Which聽聽
[237]
you can, but you just have to put in the time聽
to learn about what you're investing in. You聽聽
[241]
could also hold off on hiring a financial聽
advisor if you have a really really small聽聽
[245]
portfolio- less than a thousand dollars, less than聽
ten thousand dollars. You're just starting off.聽聽
[250]
It's good for you to learn, it's good for聽
you to make small mistakes so you don't make聽聽
[254]
bigger mistakes later when your investment聽
portfolio is bigger. There's something to be said聽聽
[258]
for learning it yourself, for studying it聽
yourself and managing your own money. Because聽聽
[262]
you never want to be invested in something you聽
don't understand and if from the beginning you聽聽
[266]
just pass it off to someone and you're just like聽
hey here's money just invest it for me... I don't聽聽
[271]
care. Just make me money as long as you're making聽
me money we're good. That's not a good approach.聽聽
[275]
You need to know what's going on, at least have聽
a basic understanding of how your money is being聽聽
[280]
invested right now. I don't have a financial聽
advisor because I think my investment portfolio is聽聽
[284]
pretty easy to understand and I consume a lot of聽
financial content so I have a good understanding聽聽
[289]
of what iIm investing in and I'm enjoying the聽
process. But you may think well yeah you make聽聽
[294]
finance videos of course you know you don't need聽
somebody. I do my own financial coaching but I聽聽
[299]
actually know a lot of financial advisors, CEO's,聽
guys who are super successful with money who still聽聽
[304]
have their own financial advisors because it's聽
good sometimes just to have someone else to bounce聽聽
[308]
ideas off of and definitely in the future I will聽
100% have my own financial advisor that can save聽聽
[314]
me time and someone that could be accountable聽
to me and give me different perspectives on聽聽
[319]
investing. But I'm willing to hold off until I get聽
a bigger or more complicated investment portfolio.
[327]
Not sure whether to hire a financial coach聽
financial advisor or financial planner?聽聽
[332]
What's the difference between all three of聽
these? Financial coaches can be the most basic,聽聽
[336]
usually the cheapest most affordable person聽
to hire. There's no regulation on who can be聽聽
[341]
a financial coach. Anyone can just say hey I'm a聽
financial coach. There's no real certifications,聽聽
[346]
there are private companies that are now聽
starting to do financial coach certifications聽聽
[350]
but it's not something that you're licensed聽
with the government to be a financial coach聽聽
[354]
like you are when you're a certified financial聽
planner or sometimes a financial advisor.聽聽
[359]
Those are guys who actually have a license with聽
the government/certifications to deal with money聽聽
[364]
and to manage money. But they're also going to聽
cost a little bit more. I usually see financial聽聽
[368]
coaches helping people out in the very beginning聽
like coaching them out of debt, teaching them how聽聽
[373]
to start a budget, teaching them the basics of聽
investments. Which is what I do and you can sign聽聽
[377]
up for free 45-minute sessions of financial聽
coaching on timwolffe.com I'll put the link聽聽
[383]
in the description down below. I see financial聽
advisors and CFP's [certified financial planners]聽聽
[389]
usually working with people with bigger聽
portfolios who are already invested and聽聽
[393]
have a good understanding. If you're just starting聽
out financial coach will work for you it'll help聽聽
[397]
save you money. If your portfolio is well over a聽
hundred thousand dollars then you may want to look聽聽
[401]
into someone who is a little bit more certified聽
which brings me to my last point of how do you聽聽
[405]
know who to actually hire. Do you hire the family聽
member that's the certified financial person,聽聽
[410]
do you hire your co-workers financial advisor聽
because he said he's awesome and he invested in聽聽
[415]
tesla stock and made a ton of money. Do you invest聽
in your friend who does finances? I mean you can,聽聽
[420]
I'm not saying there's anything wrong with it.聽
I wouldn't do that just because you know the聽聽
[424]
person or you have a connection, you should still聽
evaluate that person make sure it's a good fit for聽聽
[428]
you. Things I would look for in a financial聽
advisor is someone who teaches you actually聽聽
[433]
what they're investing and what they're doing with聽
their money. You're not going to fully understand聽聽
[437]
it like they do, they have the certification聽
and the degrees but you at least need to have a聽聽
[442]
basic understanding of what they're doing with聽
your money. If they take your money and they聽聽
[446]
invest it and they just give you a statement聽
every quarter and you have absolutely no idea聽聽
[450]
what's going on or you don't feel comfortable聽
asking any questions that's not someone I would聽聽
[455]
want to have as a financial planner. I'd want聽
to have someone that's a lot more approachable.聽聽
[458]
Avoid people who are salesmen. A lot of financial聽
advisors and not really to any fault of their own聽聽
[463]
but they do make a lot of their money a lot聽
of their income off of commissions for selling聽聽
[468]
things like life insurance and different types of聽
insurances. If someone's going to start selling聽聽
[472]
me stuff so they can make more commissions and聽
I already feel kind of slightly uncomfortable...聽聽
[477]
like it's a no. They have to be someone I trust聽
and I know who's not just in it for them but聽聽
[481]
for is in it to help me grow my money and myself.
Well you may be wondering how do financial聽聽
[487]
advisors even get paid? When you do go to hire聽
one there are different ways they can get paid.聽聽
[493]
Some of them may be "commission based" so if聽
they make a certain amount of money they may聽聽
[497]
take a percentage of whatever the profit is...聽
two percent... three percent. They may take a聽聽
[502]
commission off of what you initially invest. So聽
if you invest a hundred thousand dollars they may聽聽
[506]
take two percent or five percent or whatever it is聽
and then invest the rest. Or you may hire someone聽聽
[510]
who charges "fees" where you may get charged per聽
the hour.So you get one session every quarter and聽聽
[518]
it may be three hundred dollars for that hour long聽
session. If it's a coach it may only be a hundred聽聽
[523]
to a hundred and fifty dollars for an hour session聽
and they're not actually taking your investments聽聽
[527]
and investing it for you but during those聽
sessions they're teaching you and telling you聽聽
[531]
what to invest in and checking up on you. Neither聽
one's better than the other just whatever you want聽聽
[536]
to do. If you want to rather pay up front you聽
know exactly the fees you're going to be paying聽聽
[540]
maybe you just work on someone who's more fee聽
based. If you want to pay nothing up front or聽聽
[545]
if you'd rather pay a commission based... like hey聽
I want to see you make money I think working off聽聽
[550]
commissions will drive this person more. Than go聽
for the commission based. Either way they're going聽聽
[554]
to have to get paid. They're going to make some聽
sort of money but they may make you a lot more聽聽
[558]
money than you would have ever made yourself. So聽
hopefully you can take some of the statistics and聽聽
[562]
the benefits of having a financial advisor and聽
maybe not having a financial advisor and make a聽聽
[568]
decision on your own. If you're still not really聽
sure again just go to timwolffe.com you can sign聽聽
[572]
up for a session for a limited time it's free!聽
And I can kind of steer you to maybe yeah your聽聽
[576]
stuff is complicated enough or you're going to聽
need someone other than yourself or maybe hey聽聽
[580]
your stuff isn't that complicated you got your聽
401k going, you got a little IRA opened up...聽聽
[585]
we just need to tighten up this and that and聽
hey you're off on your own. You're running聽聽
[589]
check back in in a year. That may work for you.
That's all I got for this week's video guys,聽聽
[593]
I will see you next monday at noon. Be sure聽
to hit the LIKE button. It's great for the聽聽
[598]
Youtube algorithm, it pushes this video聽
out to other people so I can keep doing聽聽
[602]
these videos and putting them out there for聽
you guys for free! I'll see you next week!
Most Recent Videos:
You can go back to the homepage right here: Homepage