Advisors learned the world of finance and investing by taking courses and reading as much material as they could. The average person can also learn this stuff with some effort. Unfortunately, so many people don’t have an interest in how to effectively manage their own money, while also succumbing to the fear that some advisors instill in their clients. Fear works. To me, finance and investing is a personal thing that I take great pride in learning and applying what I’ve learned. Ari, you make some great points in your video, and I appreciate your transparency in dealing with your clients, as well as how you handle feedback from other advisors. There aren’t enough honest advisors out there.
Yes. There’s no way they are putting in the work to justify $30k year. What is the hourly rate at $30k a year? You can try to justify it to make yourself sleep better, but in the end you’re still ripping people off.
It’s the person getting the guidance that’s actually doing the hard work. Saving/discipline for life is wayyyy harder than staying on top of basic finance analysis work. Not like this is rocket science/engineering. Just good info for us to while we stay busy with our real jobs.
After many hours of research as well as interviewing two different AUM managers, we decided the best approach was to hire fee only advisor who can provide us all the help and advice we need at a much much lower cost. And I believe the data that a few simple low cost total market index funds will out perform most managed portfolios. But of course we all want to sleep well at night so everyone should make their own informed decision.
Ari-thank you for saying something that-to me-was an epiphany in the financial rationale for working with an AUM model advisor. At 22:00 in the video you broached a fee payment mechanism that focused on paying from the most tax efficient location in one's portfolio: IRAs under management. I only learned this recently, but it's a no-brainer for penny-pinching prospective clients. On tax deferred accounts, it means paying 22%/24%/32% (whatever marginal tax bracket du jour) "less" on management fees than if you paid those same fees *after taxes*. Why other financial managers / RIAs don't trumpet this is beyond me, but this is the first I've seen on breaking this down. As my journalism teacher in High School would have said, "Don't bury the lead!" Thank you for an insightful and well-organized video on the value of advisors, including the financial.
I think it is typical for advisors to pay themselves this way, although if done right I think the advisor has to take post-tax money for post-tax accounts under management. The flip side of this arrangement is that the client rarely cares if the total balance increases. They cannot easily separate out what fraction of the increase is due to superior management (if any)
Ari, this was a great video and I can tell you my personal experience working with an advisor has not reduced the stress in my life as I had hopped. They are all there on day one selling you on why you should invest with them and all the services they will provide you but disappear after that. I recently had what I will call my annual check the box check in from my current advisor, told me how great my investments are doing. Which I agree but what was missed was how are we tracking to the plan we laid out, are we hitting the goals laid out, what should I be thinking about over the next year. We have five kids with one off to college this year and more going in the next few years which adds in more opportunities for plannings. I have been utilizing the Academy over the past two months and have gotten more value out of it compared to the last year in fees from my current advisor. Keep up the good work and all the content, the changes you are bringing to the industry are needed!
Personally i wish that the per hour or per plan advisor was easier to come by. So many want to charge so much to manage your money, but that's the easy part that I don't even want someone to do for me.
The RightCapital software lets the user input an AUM fee under profile:expenses I find it tricky to use because the screen that Ari likes to show of taxes:distribution:comparison is future dollars but I'm sure with some more experience I'll have a better handle on AUM fees Vs value added
I got a limited Right Capital account from another advisor. I compared my screens to other channels and noticed it is missing many, many features/menus. Is the Academy account you offer have a full blown version or rephrased... what is missing from the full blown version that you use? Is it the same version your clients with AUM would also be able to access? When you do AUM for a client do I get to pick the brokerage accounts used (Schwab/Vanguard/Fidelity/ETrade/etc)? I would probably do my own AUM for awhile then after I die my spouse (not interested in Financial tasks) would need someone to be her financial advisor. Thanks for the videos!
We add features that your current one doesn’t. It’s the same version our clients with AUM have, and yes you choose brokerage between Schwab or Altruist.
My biggest problem with Advisors is that 95% of them don't even know where to begin analyzing a portfolio with rental properties in them. With stocks for instance Advisors can advise which asset types to be in based on income, appreciation, risk, fees, taxes etc. They don't have a similar model based on which they can advise how much of the loan should be paid down for the right balance of cash flow vs appreciation but optimized for taxes based on age, or how much of the portfolio should be in say long term rentals vs short term rentals, or which real estate markets are most resilient and so I should 1031 exchange into. Even those who can answer many of those questions, don't know how to analyze when you have _both_ RE and stocks in your portfolio. You can't simply analyze them in isolation. The most basic example is that you might have an aggressive stock portfolio in retirement, but it might be ok if it's a small portion compared to your conservative rental portfolio. To be honest, even if I find someone who can do this for me, I would hesitate to pay them 30K/year especially now that I learned how to analyze it myself.
@@poonekar Yes. We have two advisors that specialize in ensuring rental properties are optimized in alignment with their financial strategy. You’re correct - not every advisor is well versed (or even “somewhat versed”) in real estate as I interview many advisors.
Advisors learned the world of finance and investing by taking courses and reading as much material as they could. The average person can also learn this stuff with some effort. Unfortunately, so many people don’t have an interest in how to effectively manage their own money, while also succumbing to the fear that some advisors instill in their clients. Fear works. To me, finance and investing is a personal thing that I take great pride in learning and applying what I’ve learned. Ari, you make some great points in your video, and I appreciate your transparency in dealing with your clients, as well as how you handle feedback from other advisors. There aren’t enough honest advisors out there.
Yes. There’s no way they are putting in the work to justify $30k year. What is the hourly rate at $30k a year? You can try to justify it to make yourself sleep better, but in the end you’re still ripping people off.
So if an advisor saves someone $2M in taxes over their lifetime, it’s unfair to pay them 30k/year for 20 years?
@@Bobventksay something thats not made up.
It’s the person getting the guidance that’s actually doing the hard work. Saving/discipline for life is wayyyy harder than staying on top of basic finance analysis work. Not like this is rocket science/engineering. Just good info for us to while we stay busy with our real jobs.
@@Bobventk30k per year for 20 years invested in the s&p would make you over 2 mil.
@@Bobventk yes. Somebody else that charges more fairly would probably find the same methods to save them that much.
After many hours of research as well as interviewing two different AUM managers, we decided the best approach was to hire fee only advisor who can provide us all the help and advice we need at a much much lower cost. And I believe the data that a few simple low cost total market index funds will out perform most managed portfolios. But of course we all want to sleep well at night so everyone should make their own informed decision.
There’s something out there for everyone. Glad you’re feeling good with your decision
Ari-thank you for saying something that-to me-was an epiphany in the financial rationale for working with an AUM model advisor. At 22:00 in the video you broached a fee payment mechanism that focused on paying from the most tax efficient location in one's portfolio: IRAs under management. I only learned this recently, but it's a no-brainer for penny-pinching prospective clients. On tax deferred accounts, it means paying 22%/24%/32% (whatever marginal tax bracket du jour) "less" on management fees than if you paid those same fees *after taxes*. Why other financial managers / RIAs don't trumpet this is beyond me, but this is the first I've seen on breaking this down. As my journalism teacher in High School would have said, "Don't bury the lead!" Thank you for an insightful and well-organized video on the value of advisors, including the financial.
I think it is typical for advisors to pay themselves this way, although if done right I think the advisor has to take post-tax money for post-tax accounts under management. The flip side of this arrangement is that the client rarely cares if the total balance increases. They cannot easily separate out what fraction of the increase is due to superior management (if any)
Ari, this was a great video and I can tell you my personal experience working with an advisor has not reduced the stress in my life as I had hopped. They are all there on day one selling you on why you should invest with them and all the services they will provide you but disappear after that. I recently had what I will call my annual check the box check in from my current advisor, told me how great my investments are doing. Which I agree but what was missed was how are we tracking to the plan we laid out, are we hitting the goals laid out, what should I be thinking about over the next year. We have five kids with one off to college this year and more going in the next few years which adds in more opportunities for plannings. I have been utilizing the Academy over the past two months and have gotten more value out of it compared to the last year in fees from my current advisor. Keep up the good work and all the content, the changes you are bringing to the industry are needed!
Thank you very much Ryan!
Great video!
Thanks!
Personally i wish that the per hour or per plan advisor was easier to come by. So many want to charge so much to manage your money, but that's the easy part that I don't even want someone to do for me.
The RightCapital software lets the user input an AUM fee under profile:expenses
I find it tricky to use because the screen that Ari likes to show of taxes:distribution:comparison is future dollars but I'm sure with some more experience I'll have a better handle on AUM fees Vs value added
I got a limited Right Capital account from another advisor. I compared my screens to other channels and noticed it is missing many, many features/menus. Is the Academy account you offer have a full blown version or rephrased... what is missing from the full blown version that you use? Is it the same version your clients with AUM would also be able to access? When you do AUM for a client do I get to pick the brokerage accounts used (Schwab/Vanguard/Fidelity/ETrade/etc)? I would probably do my own AUM for awhile then after I die my spouse (not interested in Financial tasks) would need someone to be her financial advisor. Thanks for the videos!
We add features that your current one doesn’t. It’s the same version our clients with AUM have, and yes you choose brokerage between Schwab or Altruist.
Off topic here, but can you please please please do an entire episode on umbrella insurance. Thank you!
Yes! My partner did a great one here also: m.th-cam.com/video/OEJ2zl_hTMA/w-d-xo.html
@@earlyretirementari Just listened to it. Thank you!!!
Thanks Ari for another very informative video!
My pleasure!
I would never let anyone else control my money even if they paid me $30k per year to do it.
Sounds like you don’t need an advisor!
if you spending $30k on fees, you've got too much money.
My biggest problem with Advisors is that 95% of them don't even know where to begin analyzing a portfolio with rental properties in them. With stocks for instance Advisors can advise which asset types to be in based on income, appreciation, risk, fees, taxes etc. They don't have a similar model based on which they can advise how much of the loan should be paid down for the right balance of cash flow vs appreciation but optimized for taxes based on age, or how much of the portfolio should be in say long term rentals vs short term rentals, or which real estate markets are most resilient and so I should 1031 exchange into. Even those who can answer many of those questions, don't know how to analyze when you have _both_ RE and stocks in your portfolio. You can't simply analyze them in isolation. The most basic example is that you might have an aggressive stock portfolio in retirement, but it might be ok if it's a small portion compared to your conservative rental portfolio.
To be honest, even if I find someone who can do this for me, I would hesitate to pay them 30K/year especially now that I learned how to analyze it myself.
Sounds like you’re all set!
@@earlyretirementari I am, but my friends aren't. Can you provide this type of guidance to them?
@@poonekar Yes. We have two advisors that specialize in ensuring rental properties are optimized in alignment with their financial strategy. You’re correct - not every advisor is well versed (or even “somewhat versed”) in real estate as I interview many advisors.
@@earlyretirementari sounds good. I’ll refer you to them.
@@poonekar thank you!