Ep 19: Do I Need a Financial Advisor?

Jess: You're listening to Market MakeHer, the self-directed investing education podcast that demystifies the stock market from her perspective.

Jessie: We're your hosts.

Jess: I'm Jessie Denouy, here to ask all the questions, removing the financial jargon and learning alongside with you.

Jessie: But today we are mixing it up and introducing our newest segment where we will be answering your questions.

Jess: And I'm Jessin Skip, here to apply my 15 years of industry experience to answer those burning questions.

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Jess: Put it into the universe and the universe, a.k.a.

Jessie: Jess shall answer.

Jess: Or you.

Jessie: You'll answer.

Jess: I mean, I'm trying to answer, but I'm still not fully confident in myself, or I'll check with you first and make sure I'm not leading anyone astray.

Jessie: So today's question comes from Christina Brown, 86.

Jess: And the question is, do I need an investment advisor? I know they take a percentage of earnings, so I have been hesitant and I'm trying to learn on my own.

Jessie: Am I the only mid-30s single woman without one? I'm guessing the answer is no, because I know many people who don't have one.

Jess: I think there's a lot of myths to debunk with this one, too.

Jessie: But I always have an answer for do I need an investment advisor, but maybe we should break down exactly what that means.

Jess: So first of all, no, you're not the only one without one.

Jessie: Not everybody has one.

Jess: Yeah, everyone has access to one.

Jessie: And it's great that you're learning on your own.

Jess: And common misconception, because I actually used to work with self-directed clients that had to have a minimum of one million or more at one of my previous jobs.

Jessie: And my job was to teach them self-directed investing.

Jess: And many of those very, very, very wealthy people also had wealth management, too.

Jessie: So you can actually have a combination.

Jess: You can have a self-directed account.

Jessie: These people who are extremely privileged, it was their play account and they had people manage their much bigger assets.

Jess: But even if you're not on that level, you can have a combination.

Jessie: And I think that's very, very important to do.

Jess: And you probably do when you have a 401k, because that's normally when you enter into the market.

Jessie: And that is a type of wealth management plan, because you have a set amount of criteria that you can choose from.

Jess: And there is a fee normally paid by your employer in order to be a part of that plan.

Jessie: That's true.

Jess: And that's true.

Jessie: Those fees.

Jess: Didn't think about that.

Jessie: Yeah.

Jess: But you've got these routes whenever you invest.

Jessie: So you have do-it-yourself, which is normally what we cover in this podcast, mostly, I'd say 95% of the time.

Jess: The other 1% is Taylor Swift analogies, and then the other 4% is other things.

Jessie: Or robo-advising, like that's the hybrid.

Jess: And those tend to have less fees, because it's automatic, and it's rebalancing for you.

Jessie: I've been very curious about robo-advising.

Jess: When I first signed up for one of the brokerage accounts I have, I was getting spammed about robo-advising, because I was not sure if it was, I don't know, legit.

Jessie: This was before AI got crazy like it is now.

Jess: So I was kind of just like, ooh, do I trust a robo-advisor? I don't know.

Jessie: They used to be the future.

Jess: Yeah.

Jessie: Brokerage firms are so crazy over that.

Jess: And hook us up, work at them.

Jessie: Well, but how do we feel about them now? I think there's a time and place for all of it, for every single one of these.

Jess: There is a solution.

Jessie: No matter where you are or how you want to invest, there is a solution for you.

Jess: I think robo's fine.

Jessie: It just depends on you.

Jess: You could have a robo-advisor in one type of account and not in others, right? Absolutely.

Jessie: And then there's wealth management.

Jess: That's where your investment advisor comes in.

Jessie: But you could have a team of investment advisors that you could access, generally has a lower fee.

Jess: But you also could have a very dedicated, specific investment advisor that would manage your wealth.

Jessie: It's in the name.

Jess: But this is always my answer when somebody says, do I need an investment advisor? Do you have the skill, the will, and the time? Because money is not only your asset, time is too.

Jessie: Skill, do you know what you need to do to do it yourself? And if you don't, do you have the will to do that, to invest your time in understanding? That's the three right there.

Jess: It's literally like a stool, and you can't do anything without all of it.

Jessie: There's just so much regulation.

Jess: I think that's what's so important to know.

Jessie: Some of them start at just 0.5%, but they have minimum requirements.

Jess: I'm not going to call the brokerage firms names out.

Jessie: I don't even want to say their names.

Jess: The bigger ones.

Jessie: The bigger ones.

Jess: Yeah.

Jessie: So you need to have self-directed investing and a wealth management option.

Jess: Okay.

Jessie: So when we say wealth management, that's like a bigger portfolio with you have to have a minimum of a large amount of money to have a wealth manager.

Jess: Right.

Jessie: Normally you do, but it's not a million dollars.

Jess: It's like $25,000.

Jessie: It's skill, will, and time.

Jess: If you're just starting out growing your wealth and you don't have the skill, will, and time, there are other passive ways to grow your wealth instead of picking stock.

Jessie: If you add complexity, you're also adding a layer of time that's required.

Jess: Okay.

Jessie: So we do something passive like S&P 500 funds or a mutual fund or a combination of that, even a target date fund, because that's the intent of them.

Jess: But once you reach that $25,000 mark and you say, okay, I'm going to continuously grow my wealth, but I don't want to do it myself.

Jessie: Go ahead and go into wealth management if you don't have the skill, will, and time.

Jess: So say that's like the rate for wealth management is 0.5%.

Jessie: Are you locked into a specific amount of time or can you like stop wealth management or a financial advisor at any point and say, I don't want to do this anymore? I don't think you're like worth the time or worth the extra fee.

Jess: You can absolutely do that.

Jessie: Normally there's not a contractual obligation of time with that wealth management.

Jess: Now that also goes into the investments that you have in your portfolio and the level of wealth management that you have.

Jessie: You may only be permitted to be in certain investments when you are within that wealth management umbrella.

Jess: And then they have to sell you out of all of your assets and then get you into a do-it-yourself portfolio.

Jessie: And those assets could include things with expiration dates, like fixed income securities, which you'd want to be careful.

Jess: Maybe they can transfer them around.

Jessie: That's where you get a layer of complexity.

Jess: But this is what I think is missing.

Jessie: We told this to Mary.

Jess: You can call any of the big ones today.

Jessie: So Schwab, Fidelity, Merrill, E-Trade, wherever, you can say, hey, I want to have a conversation.

Jess: You can do that.

Jessie: They'll show you the tools and resources or they'll lay it out and say, okay, if you want to do it yourself, check out this tool.

Jess: If you want to work with a financial advisor, have this conversation and they'll say, are you retirement ready? They'll take you through your income.

Jessie: You'll go through your expenses.

Jess: You'll go through your expected social security even and figure out how much money you need for retirement and then help you with a plan from there.

Jessie: That's all free.

Jess: That's why if any investment guru is charging you one-on-one coaching, that is definitely a whole other conversation.

Jessie: You can get that for free from a licensed professional.

Jess: The fees are going to come in due to the assets that you choose.

Jessie: But because of technology, those fees are coming down.

Jess: Now what are some things to keep in mind when, let's say you do want to choose a financial advisor? Are there certain questions you should ask or certain things you should know before having a financial advisor? Whenever you're having those types of conversations in your wealth planning, the whole goal is for you to retire.

Jessie: So you need to understand, am I on track to retire? But they'll help you.

Jess: They'll even help you choosing mutual funds.

Jessie: Literally, I thought I was going to be a financial advisor at one point in my career.

Jess: Sharing a little story I didn't know I was going to share today.

Jessie: I am very glad I did not take that route, but I started the training process.

Jess: I had the licenses for it.

Jessie: If they don't qualify for those heavier expense type of models, because it doesn't make sense because you don't want to have a bunch of fees eat away their wealth, you end up just showing them a mutual fund plan, which is what you would do do-it-yourself anyways.

Jess: So literally, those financial advisors and wealth management relationships will also help you with your do-it-yourself plans, is the point of the story.

Jessie: And can you tell me what a fiduciary is? Oh, fiduciary responsibility.

Jess: Your brokerage firm has a fiduciary responsibility to always act in your best interest.

Jessie: New regulation that came out, REGBI, regulation best interest, where the question of suitability comes in.

Jess: So fiduciary isn't a person, it's like a standard? It could be a person.

Jessie: In this case, it's an entity.

Jess: Okay.

Jessie: Literally, you can tell what I do as a day job because what I just spit out was not written anywhere.

Jess: Yes.

Jessie: I remember hearing that before, though, in the past, where it's like, if you're looking for a financial advisor, you hear all these things, and this is from whatever self-proclaimed gurus on the internet, or that write books or whatever, probably not licensed or never been licensed.

Jess: And they'll say things like, people should never be taking 1%, or you need to make sure it's a fiduciary, or you need to-all these things.

Jessie: So almost, it seems like, scare you out of financial advising or getting a financial advisor or wealth management.

Jess: And I don't know why, maybe those people have something in their own best interest to sell you instead.

Jessie: But that was the-I feel like I've always been scared away from getting a financial advisor because I don't have a ton of money.

Jess: If I did, if I was making millions, and 1% of that is a ton of money that that person's getting, so I guess they better be making me a ton of money on top of that for it to be worthwhile.

Jessie: They'll go through that with you, though.

Jess: You want to know where the fees are coming from, they will go through that.

Jessie: But it's a free conversation.

Jess: You can say, am I ready? Am I on the right path? And then they'll show you the tools.

Jessie: I think people get worried about getting sold onto something or getting forced into a decision or things like that, but what you're saying is the bigger- They're not even allowed to get paid that way.

Jess: That's what I think people need to understand.

Jessie: Literally, they cannot get paid for selling you the product with the highest fees associated with it.

Jess: Okay.

Jessie: Well, that was good to know.

Jess: There you have it.

Jessie: Conversations are free.

Jess: And if you have any questions, let us know.

Jessie: We are happy to keep this segment going, but only if you want us to, which, of course, you do.

Jess: That's right.

Jessie: We accept challenges.

Jess: It could be Taylor Swift related.

Jessie: That would be great.

Jess: But mainly those self-directed investing questions.

Jessie: I'll just sit out on that one.

Jess: Just kidding.

Jessie: I really think I could explain the entire stock market using Taylor Swift.

Jess: Oh, I'm sure you could.

Jessie: I think I could do it.

Jess: Thank you, Christina, for your question.

Jessie: This is great.

Jess: Please keep them coming.

Jessie: And remember, when you build knowledge, you break barriers.

Jess: Remember, investing involves risk.

Jessie: There is always potential to lose money when investing in securities.

Jess: Market MakeHer provides educational content and resources for informational purposes only.

Jessie: We are not registered financial advisors and do not provide personalized investment advice.

Jess: Any information provided by Market MakeHer on our website or podcast is not intended to be a substitute for professional financial advice.

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