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do you need a financial advisor

Do You Need A Financial Advisor? Advice To The Players.

Nearly a year into my blogging adventure, there’s one topic we haven’t touched on yet, and it’s definitely worth mentioning.  This blog has hopefully been immensely helpful to my readers, but it’s possible there is still a fear holding you back from going out and activating your financial pathway.  That’s OK.  The question we’re asking today is, do you need a financial advisor?  Or rather, do you want one?

I truly believe that anyone can develop the tools to chart their own financial stars.  But it’s possible you may want to start by working with an advisor to get you on the right path.  And full disclosure: I’m not a financial advisor.  I don’t purport to be, and if anything, I’ll tell you time and time again I cannot offer you specific investment advice.  Even after I complete my MBA, which is pretty chock full of financial theory, I wouldn’t be accredited to give you that specific financial advice such as, “You should invest specifically in X”.  There are additional certificates and qualifications for that kind of thing.

But what I’ve made clear here at Creative Finance over the last year, is you don’t really need all of that.  Investing can be pretty darn simple.  You could open a Roth IRA, invest in index funds, and there’s a pretty rainbow high possibility you’re going to end up in a perfectly fine place when retirement comes around. (Given other factors too, but you get it).

So do you need a financial advisor?  I wouldn’t think so.  But might you want one, and could you benefit from that partnership?  Quite possibly.  But you really ought to understand the full picture in that kind of relationship.

Is Advice What You Wish?  Are You Certain That Advice Is What You Want?

I actually had a financial advisor once upon a time.  

He was a very nice gentleman, and I’m sure he still is a nice guy to this day.  He knows I write a blog on personal finance, and even sent a sweet note when I started Creative Finance last year.  My decision to stop working with him had nothing to do with the kind of person he was- but once I realized I didn’t need a financial advisor, there was no need to keep paying the fees I was paying.

We’re going to refer to this gent as Callahan, because this blog is nearly almost one, and there really haven’t been enough Legally Blonde references in the last year.

I met Callahan in early 2018- a few years before I feel like I developed some real financial literacy.  Callahan was my first “professor” in investing and personal finance.

We sat down together and made a financial plan of my life, a relatively short term one.  I was single at the time, still a young business owner, and the goal was pretty simple: let’s put some real numbers and goals on paper and see if Broadway Joe can stick to those numbers.

I’m not afraid to admit that things didn’t quite go according to plan.

This was way before I was tracking my income and expenses, and I was hanging out with “the feels like temperature” on a weekly basis.

Callahan and I had our occasional check-ins, and he’d say, “Ok let’s look at these numbers again?  How much do you think you need to spend on dining out every week?”

And I’d say, “Oh I don’t know, it feels like this much?”

And maybe it was close, but it was definitely wrong.  And when you don’t understand the truly magnificent power of compound interest (and how it works for and against you), “maybe close” feels good enough for the moment.

And “good enough for the moment” inevitably becomes: this small pile of credit card debt is “ok for the moment”.  And “ok for the moment” eventually becomes “sufferable for the moment”.  And “sufferable for the moment” eventually becomes “There’s gotta be something better than this”.  

And that dear reader, was my breaking point.

I’m in a glass case of emotion!

I’ve written before about how debt can start to be emotionally debilitating.  That’s why it’s so important to pay down credit card debt.  That’s why it’s so important to keep a solid emergency fund on hand.  

And I got to the point where I couldn’t live like that anymore.  There’s gotta be something better than this.  Not to mention the fees.

Huh?  Yeah.  The years I spent paying someone to watch me lose my own money in debt interest.

It’s A Maze This Garden, It’s A Maze Of Fees!

You see, Callahan wasn’t just sitting down with me and doing all of this out of the goodness of his heart.  Nor would I expect that.

I was paying Callahan for this time.

Paying him in a number of different ways.  I paid Callahan’s office a monthly fee, just to have Callahan’s services.  And then Callahan’s office was also taking a percentage of the small amount of money I did have invested with him.  There was a bit of blood in the water going on.

You see financial advisors can make their money in a number of different ways- here are the usual terms you might encounter:

1) Client Fees – Commonly many financial advisors will make client fees by charging you a percentage of the assets they’re managing on your behalf.  For example, an advisor might charge you 1.5% of your assets for the service of them investing your money into the “right places” for you.  1.5% might not seem like a whole lot, but like everything in finance, it’s going to mean a lot eventually.

You might have $100,000 under management in your portfolio with your advisor, which means at the end of the year, they’re taking $1,500 from that pile. However, regardless of what they’ve got you invested in let’s hope you’re at least getting an average annual return on your investments somewhere near 8%.  You make $8,000 on your investments, they take $1,500.  

OK, maybe that’s worth it to you.  You could invest in index funds yourself and get the same return, but I digress.  (Although it’s a rather important digression).

2) Commissions – Another way that financial advisors might make money is from commissions.  They might sell you a specific product like insurance or annuities, and get a decent % commission from that sale of the product.

3) Fee Structures – Now this is worth getting its own category because some advisors might make money from both of the above also!  They might charge you a percentage fee for managing your assets, and they might take a commission from putting you into certain products.  Not to mention they can charge flat fees for putting a plan together, or recurring fees to manage your plan.

As I mentioned previously, Callahan was charging me a monthly fee to manage my assets and charging a percentage of my assets.  Truth be told, it felt like a lot of money to me at the time.

What I didn’t even realize then was how much money it actually was.  Let’s focus on the monthly fees alone which totaled nearly $1,000 per year.  That $1,000 per year invested in index funds, with an average return of 8%, could become over $100,000 in 30 years!

At the end of the day, I just wasn’t growing my wealth with Callahan.  I was watching it twist, shrink, and get smaller month by month.  The opposite of what you want to see happen.

Finale Thoughts

So obviously my financial advisor wasn’t helping me very much.  But the thing is, it really wasn’t Callahan’s fault.

He did sit me down and try to show me the way.  But Harvard Law wasn’t a language I was comprehending yet.

And eventually I found my way to something a lot more palatable.

I found my personal favorite financial blog- a site that created the inspiration for Creative Finance With Broadway Joe.

The Financial Panther.

The Financial Panther is a cool dude from Minnesota (at least I find his writing to be pretty cool).  He’s an ex-lawyer who blogs on personal finance, side hustling, and all kinds of financial know-how.  The late nights spent consuming his blog taught me the foundation of my own financial literacy.

It was a combination of many different things that led me to take my own personal finance very seriously.  I’m sure it had a lot to do with my age- when 30 is around the corner, you start thinking about that next decade, and the following, and the one after that…

Not to mention, I make my career as a theatrical producer and general manager.  I spend my days trying to make shows come to life by “making the numbers work”.

And when I took a good look in the mirror at my own life spending, I realized the numbers just weren’t working.

So I decided to take things into my own hands.  And the power of that decision made me realize that only I could do it, and paying Callahan every month wasn’t really helping me.

And once I really knew how to handle my own finances- the nearly $1,000 in annual fees PLUS the fee commission on my assets he was collecting really did turn my stomach.  It was quite literally costing me hundreds of thousands of dollars in the long run.

And I like hundreds of thousands of dollars in my pocket.  Well, future me will like that a lot.

The moral of the story dear reader- do you need a financial advisor?  You might.  It’s a personal decision.  

But if you’re looking for one only because you’re afraid that you don’t have the power to do it on your own…don’t let that be the reason. 

I’d encourage you instead to look for your lightbulb moment / your aha! / your Financial Panther.  And maybe it’s Creative Finance with Broadway Joe.  

The prospect that it might be, for even one person out there in the world, keeps me coming back to the keyboard every week.  It’s my advice to the players, you the reader.  But the advice is only what you do with it.

Suit the action to the word, the word to the action.


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