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14 years ago, I began investing.  It led me early on to think I should become a financial advisor when I grew up.  But as I went through college, interned at a top-tier brokerage firm, met with tons of current advisors, studied for the exams, and had job offers come in, I forgot to ask myself one basic question: Who even needs a traditional financial advisor?

Its funny how we can be so wrapped up in completing a goal that we forget to ask if the goal is even worthwhile.  Its like that line in Jurassic Park where Ian Malcolm is referring to the creation of dinosaurs on the island, Yeah. Yeah, but your scientists were so preoccupied with whether they could that they didnt stop to think if they should.

The semester before I graduated college, I rejected every stupid job offer I received to join a financial advising firm.  Why?  I didnt feel like encouraging people to pay me for such a silly service.

Why I Dont Believe We Need Traditional Advisors

With the power of the internet (blogs etc.) people simply dont need local advisors.  Ive networked with a lot of these talented salespeople and the game is all about getting ignorant people to buy into your products.  I however, could never charge people money to offer them a service they could get farrrrr cheaper and ultimately better from Vanguard or a similar online brokerage firm.  These online firms cut out the middleman and get the average investor amazing no load funds with insanely low E/Rs.  I do all my investing through Vanguard.  I would feel bad accepting any client because theres a smarter option for them out there.

The Cost Savings

By using Vanguard or a similar company, not only are you getting great funds, all associated costs are cheap!  Moving my money out of American Funds and into Vanguard Index Funds will save over $450,000 over my lifetime in FEES ALONE.  Watch advisors squirm in this NPR documentary (52 entertaining minutes) about advisors answering what use they are to investors.  The high fees American Funds and other silly traditional mutual fund companies charge is where advisors get their commissions.  We dont need to pay these.  They are simply kickbacks for hocking a product.

I dont know if this still goes on but I know Edward Jones has notified its advisors each week on what products to push clients.  This is regardless of what the client needs:

EJ District Rep: Hey, Jim I want you to sell annuities this week.  Who cares about the clients needs, we need to get this product moving!

EJ Financial Advisor: Sure thing if it makes me more money!

Thats about as disgusting as it gets if you ask me

The Touchy-Feely Defense

Dave Ramsey and others love this defense: You need a financial advisor someone who will keep your finances on track.  When youre scared and want to sell, you can sit down with your advisor and hell calm you down.  What a load of nonsense.

I love how Dave gets paid for each financial advisor he recommends.  One night I met with a member of his advisor army.  That guy was conducting practices Dave Ramsey has spoken very strongly against (a fixed percent management commission, for one).  And Ramsey also ran a radio ad singing the praises of this advisor.  After talking in a relaxed setting with the advisor, he told me he had never even spoken to Dave Ramsey before.

So Dave is getting paid to endorse a financial advisor hes never met and conducts practices against his beliefs.  Cute, isnt it?

Okay, so Ive had 3 advisors and they are all gone now.  The first one strongly encouraged me to get into a terrible mutual fund when I was young (my fault too but theres a big story here) so I left him mainly for that reason.  The second one told my parents to buy an annuity for me when I was ONE YEAR OLD  and also to buy a whole life policy while they were at it!  Read here why those 2 recommendations were garbage.  So I fired him out of resentment for those acts of complete douchery towards me and my parents.  Also, one time he couldnt answer a simple question I asked and he said, You should be doing my job lol.

Finally, the last advisor I left when I was probably 20.  He was with Edward Jones.  Heres how I fired him in 3 seconds.  I asked him 1 question: What can you do for me?  It took about 3 seconds to get out of my mouth.

What can you do for me?

At first he was silent and then he rambled a bit about the great late Edward Jones.  Blah, blah, blah. he basically said he couldnt do anything for me I couldnt easily do for myself.  BOOM.  Fired.  Later that week he flew to Florida for a Diversity workshop apparently.  Glad my front-end load fees paid for him to go on another silly trip Skype could have replaced.

Ask your advisor, What can you do for me?  This way, they essentially get to fire themselves.

1) Fire your advisor and invest through Vanguard

2) Keep investing without an advisor and give yourself a huge self-high-five for bein awesome!

3) Start investing if you havent already because YOU NEED TO START YOUNG

Human Contact Is Still Awesome!

Humans are awesome, no doubt.  I love a comforting human voice to assure me my money is safe.  I have worked with Vanguard, Fidelity, and TD Ameritrade extensively and their non-commissioned modern day advisors are fantastic.  When I first started working with them, I asked a few questions I knew the answers to as to build a rapport and trust.  Then I would stick them with the tough questions I didnt know.  Everyone has been so great.  But in all reality, I really dont need to talk with them often.

Also, the internet is more knowledgeable than any person can ever be.  Seriously.  Heck, I only use my doctor now to have him double-check my results from Web-MD so far Web-MD and I have been right every time!  So, if you ever get lazy *raises hand while simultaneously reaching for a donut * and want to ask a real human a question instead of searching online, the online brokerage firms have people to help.

And remember, this blog is targeted at young people.  When a persons net worth grows to astronomical levels with complicated intricacies that come with age, professional accountants and attorneys should become involved in ones finances.  But NOT typically in the first quarter of life.

Good luck!  Have fun with it.  Ya gotta love the modern world.  Cheap as heck and better than ever.

Do you have an advisor?   Do you like he/she?  If so, let us know why.  FQF isnt a place for groupthink!

If you dont have an advisor, have I forgotten to mention any of the awesomeness??