My Updated Thoughts & Opinions On Professional Financial Advice

From the very start of my financial journey I’ve been a DIYer when it comes to both learning about personal finance & investing and actually managing my money. I think most of us in the FI community are the exact same way, which is probably one of the main reasons we all relate to each other so well.

For most of my adult life I’ve had a pretty negative view of the entire professional financial advice industry. I always perceived this as a world full of ruthless, unknowledgeable salespeople whose only goal was to make a profit from their innocent & even less-educated clientele. Regrettably this bleak perception was reinforced over the years again & again as I was constantly bombarded with the message (via FI podcasts & blogs) that financial advisors were essentially “evil” and should be avoided like the plague.

So with that background in mind, it may be surprising to learn that my views on professional financial advice have changed over time. In fact, and this may seem like sacrilege to everyone in the FI community, my wife & I recently worked with a professional ourselves!

Before anyone breaks out their (virtual) pitchforks and comes looking for me, take a moment to hear me out on how & why my views have evolved…

Financial Knowledge Through Self-Education

Like most kids, I grew up without really knowing much about money and I had absolutely no idea what investing was (except that it sounded very complicated). Early in my working career I started to learn about personal finance & investing, beginning with the book “Rich Dad Poor Dad”, which some of my co-workers mentioned. This was followed by “Personal Finance for Dummies” and “Investing for Dummies” which were basics, but further piqued my interest in this topic.

In short order I started to consume every resource I could about personal finance & investing, which consisted primarily of books & magazines at that time back in 2006. I spent most of my free time reading about various topics ranging from day-trading to real estate to value investing to entrepreneurship to active vs. passive funds and even “learned” how to pick individual stocks using “secret formulas” (such as the now infamous “Dogs of the Dow”).

For reference, I actually tried numerous strategies (mostly involving individual stocks) before ultimately settling on long-term, buy & hold investing with index funds. Also, although I had an investing strategy in mind, I didn’t have a clear goal or purpose for my money except for the vague notion that I just wanted to “retire early” (which at the time to me meant ~5-10 years before traditional retirement age). By default I chose to simply save as much as I could while trying to take advantage of all available tax benefits in order to increase my net worth as much as possible.

To say the least, figuring out both my preferred investment strategy and my financial path forward took numerous years, but the one constant throughout it all was my ongoing self-education. Albeit no expert by any means, it felt like I had obtained so much financial knowledge on my own by continuing to read books while also staying up-to-date with any current trends & news via magazines.

Fine On My Own

In the ensuing years I kept following this path and saw my net worth grow. While I’ll admit that I probably wasn’t making perfect decisions, it felt like I was doing good enough. So whenever someone mentioned working with a professional I would always balk at the idea, thinking that investing wasn’t actually as complicated as it had seemed when I was growing up.

In parallel with feeling like I had enough financial knowledge of my own (perhaps even more than many professionals), the other issue that irked me was fees. Although fee-only advice (hourly or flat-rate) is way more common nowadays, at the time I had only heard of advisors selling products based on commissions or using an Assets Under Management (AUM) model, where a recurring fee is charged based on a percentage of total assets managed.

Because I could do everything myself, there was absolutely no way I would ever pay for someone to help me. Perhaps more than narcissism, I’m also extremely frugal, so this totally makes sense, right? Plus, I knew that even seemingly small fees of any kind can erode investment returns over time, so my goal was to minimize all types of fees or expenses across my entire portfolio.

On a related sidenote, my parents gave me a copy of the book “The Truth About Money” by Ric Edelman a couple years after I had started learning about money. I really enjoyed it and thought it may be the perfect book for introducing people to personal finance EXCEPT for the fact that the book seemed to heavily promote the use of financial advisors. (Of course this makes complete sense since the author owned his own advisory firm). For many years after, although I believed Ric provided good, common-sense financial guidance, I always held a slight bias towards him because he continually promoted professional financial advice.

Most People Need Help With Money

With my background of financial self-education and aversion to fees, perhaps it’s easy to see why I derided professional financial advice for so long. In my mind, because I had done it myself, I incorrectly believed that personal finance & investing was something that anyone could easily do on their own. I also still had such a negative outlook on the entire industry, viewing all advisors as bad actors or snake oil salesmen trying to scam innocent clients by charging high fees in exchange for unwanted services or inferior advice.

Unfortunately these views continued to be strengthened by much of the repeated messaging I received from within the FI community itself – AVOID FEES AT ALL COSTS and DIY IS KING.

Over time my views started to slowly change as I not only observed others outside the FI bubble, but also gave myself leeway to be more open-minded. I soon came to realize that most of us in the FI community, myself included, are outliers in that we’re highly self-motivated and have a strong interest in money. Therefore, most of us CAN and actually DO manage our own finances.

However, >99% of the remaining people in the world are ignorant of money, so they actually need someone to hold their hand. Not only do people need help with complex topics like investing or retirement planning, but I’ve noticed that the majority could also use assistance with much more rudimentary matters such as budgeting, saving, or managing debt.

For those who have enough self-awareness to admit they need help and who do work with a professional, I can see how it may end up being a net positive. While I assume that many of these people are unknowingly being taken advantage of (due to high-fees or inadequate advice), at least they have some organization in their financial lives and are trending in the right direction. Perhaps it’s still better for people to work with a terrible financial advisor or planner and get some sort of help, whereas the alternative would be doing absolutely nothing at all or even something foolish like sitting in cash & not properly saving for retirement.

I personally know many people who are in the situation that I just described, working with a broker-dealer like Edward Jones, or perhaps even worse, a wirehouse like Merrill Lynch or Morgan Stanley. Although I absolutely HATE to see this and know it’s far from ideal, everyone seems to be content, so I just let them be without trying to interfere. (Don’t get me wrong, on occasion we will still have conversations regarding why this may not be the best scenario, but I also want to respect boundaries and don’t want to get too preachy).

Seeking Professional Help

Now knowing that my opinions have changed over the years, the big question everyone must be wondering is… have I dared to work with a professional myself? The answer is yes and it was actually fairly recently.

From the very beginning of my financial journey when I first learned about personal finance & investing and all the way through when I left my full-time career, I managed my family’s money on my own. I’ll be the first to admit that I probably didn’t execute everything optimally, but I was on the right track more often than not and the proof to myself was in my continually increasing net worth.

While accumulation seemed “easy” in my mind (i.e. dump as much money into investments as possible & let it compound), decumulation is much more of a challenge. There are so many ways to systematically withdraw money and so many opinions that it made my head spin. Plus, the entire field of retirement planning & decumulation is relatively new (because people are only recently living longer & longer), so there isn’t enough data to support one theory definitively over others.

I entered into early retirement in mid-2023 not having a conclusive decumulation strategy in mind, but instead more of a high-level roadmap using the 4% rule as my guiding principle. For one, I still wasn’t convinced of any particular withdrawal strategy and my intention was to further explore the options. Being so young I felt like I had fallback strategies in case things fell apart, such as reduced spending, geoarbitrage, selling the house, or in extremely dire circumstances… GASP… even going back to work. I also wanted to spend a little time “getting into the flow” of early retirement to see how my financial life might change day-to-day.

Well, for long-time readers some of you may remember that in both my 1st year & 2nd year early retirement musings I mentioned that I actually think about money & worry about money way more now than I ever did when I was working. From a purely logical & numbers-based perspective I know that my wife & I should be fine, but psychology & emotions are a strong force that are often hard to control. I’m not sure what has a bigger impact on me – the fear of running out of money or the fear of an unknown & partly uncontrollable future.

After a couple years of “winging it” in regards to withdrawing from my portfolio, I also wanted to finally establish a solid plan for the future. With my personality & background as an engineer, I knew that having a strategic system for drawdown would help take away any emotion from the process.

Setting my pride aside, I decided that in order to achieve the best potential outcome and to do what was best for myself & my family, I should probably do the one thing that was once almost unthinkable… seek professional help!

What I Was Looking For

I possess enough financial knowledge to have a fairly good idea about how I want to create a retirement/drawdown strategy at a high-level, but I wanted help working through the minuscule details of exactly how to execute the plan stuck in my head (i.e. how do ACA healthcare subsidies fit with Roth Conversions, which specific accounts to withdraw from and when, asset allocation & location, tax optimization, etc… you know, all the fun & nerdy, yet complicated stuff).

In addition to focusing on a withdrawal plan for the future, I also wanted another set of eyes to double-check that I wasn’t overlooking anything (potentially obvious) that my wife & I were currently doing. However, I wasn’t looking to just sit back & have someone tell me exactly what to do like a mindless robot. Instead, I wanted to find someone who I could actively collaborate with and have some back & forth. I wanted a teacher, not a drill sergeant. (Note: Credit Joe Saul-Sehy from Stacking Benjamins with this idea – he often states that the best financial planners are the ones who can challenge their clients with opposing ideas and teach vs. preach).

With these two requirements in mind, along with the fact that we exclusively wanted fee-only advice (hourly or a single flat-rate), it obviously narrowed the list of potential candidates. My wife & I actually decided to work with a friend we had met years ago in our local ChooseFI group. Not only had we seen this person demonstrate financial acuity over a long period of time, but he also had a plethora of related degrees & certificates to back him up.

The Experience

Overall our experience has been great. Our planner took an in-depth look at our financial lives to not only analyze how we were doing at the current moment, but also projected how our lives might turn out in the future under multiple scenarios. Aside from looking strictly at numbers, we also had many discussions about life goals and what sort of things were important to us. In the end we came away with our two initial objectives satisfied – a detailed plan for the future and renewed confidence from having a neutral third-party person review our situation.

While it’s been an overwhelmingly positive experience, there are still a couple minor downsides that I wanted to bring up for transparency:

It’s hard to pay for advice. The hourly fee for working with our planner was $300 (which is not outrageous and is actually inline with most others in the industry). Although this fee is a relative drop-in-the-bucket compared to our overall net worth and much less than if we were under an AUM structure, it’s still hard for a frugal person like me to stomach. I found myself always watching the clock and subconsciously tried to always push forward and move the conversation along to make sure we weren’t wasting time and that we could get our full “money’s worth”. On a positive note, the specific tips & tricks we’ve been given, along with the emotional support, have more than paid for these hourly fees already.
Relationship lines were blurred. This probably won’t apply to most people, but because we chose to work with a friend from our local ChooseFI group I wasn’t sure how our relationship would be impacted. For those that know me, I’m an open book when it comes to money and talking specific numbers (in fact, way more so in-person than on this blog). I wasn’t necessarily worried about sharing numbers with my friend, but instead I wondered if we’d still be able to continue having casual money conversations or if this would be restricted to only times when he was “on the clock”. So far it’s been fine and we’ve been able to jump back & forth seamlessly between professional vs. friend relationships, but it has been slightly confusing at times.

Give It A Whirl

Although my wife & I just finished working with our planner (literally in the past few weeks), I already feel much better and more at ease about our financial future. Not only do I have more confidence in what we’re already doing, but also knowing that we have a well-crafted plan & strategy in place for future withdrawals has helped ease some of my emotions around money. It’ll definitely be interesting to see if these same thoughts hold up as we continue to work with a professional or if things may change in the future.

So what does my experience mean for everyone else out there?

Based on my tale you may have already seen this coming, but I recommend that others give consideration to working with a financial professional. Before anyone in the FI community labels me a turncoat, I still believe that most people who are willing & have an interest can handle the majority of money management on their own. But I also don’t think it’s necessarily the worst thing in the world if working with someone may provide benefits, whether tactical/technical or purely emotional.

Whatever you decide, try to keep an open mind and don’t let others sway you one way or another – while professional financial advice may work for some, it may not work for others.

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Reader Questions

What is your opinion about professional financial advice? Are your thoughts based on your own experiences or have they been shaped by others?
Have you ever worked with a financial professional? If so, what was your experience like?

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