If you’ve spent years successfully managing your own investments, do you really need a financial advisor? That’s the question one of our listeners sent in after years of handling his portfolio solo. So, is working with an advisor just an extra expense, or could it actually add real value? In this episode, we break down when and why even experienced investors might benefit from professional guidance and when they’re probably fine on their own.

While DIY investors may excel at picking stocks or funds, they often overlook critical aspects such as tax implications, risk management, and estate planning. These elements are essential for a comprehensive financial strategy that ensures long-term success and security. Join us to find out why having an advisor can provide more than just investment advice, including insights on tax planning, retirement strategies, and the emotional support needed during major life changes.

Here’s what we discuss in this episode:

0:00 – Intro

1:45 – DIY investors

4:13 – Much more than investment advice

6:11 – Two client stories

7:56 – Relationships

10:06 – Life changes

13:08 – Showing our value

 

Resources for today’s show

Tax management journey document

https://drive.google.com/file/d/1SlEkVuxijRceUcTnkzdqggs2_ATNrBrZ/view?usp=sharing

The Tax Bomb website

https://thetaxbomb.com/

Subscribe & Follow On Your Favorite App:

Apple Podcasts

Spotify

Amazon Music

TuneIn Radio

iHeart Radio

 

Schedule your complimentary review with Jude: https://calendly.com/centruscalendar-/30min

Episode Transcript

Marc Killian  00:00

This week on the podcast, we’re going to talk about, if you’re a smart investor and doing a really good job as a DIY portfolio builder for yourself, do you actually need an advisor? So let’s get into it here on the Roth guy flying

 

Walter Storholt  00:11

high above the metropolis. It’s the Roth guy with holistic wealth advisor. Jude Wilson, what’s

 

Marc Killian  00:22

going on. Everybody. Welcome into the podcast. Thanks for hanging out with Jude and I as we talk investing, finance and retirement and June, my friend, interesting conversation this week. You actually you had a client prospect earlier this this month. I’ll just call it this month. And the person was kind of challenging you a little bit on Hey, do I really need a financial advisor, and we get email questions into the show, and you guys get them into the to the website, and it’s a valid question. It’s a good question as and it’s one you should certainly ask when you go in to talk with somebody. So I want to break that down a little bit this week and kind of maybe highlight why, even if you’re doing a great job as a DIY investor for yourself, why you still might need an advisor. So let’s talk about how you

 

Jude Wilson  01:03

doing. I am doing excellent. I feel good. I’m well rested, nice and I worked out this morning, so I’m top of my game. Well, there

 

Marc Killian  01:13

you go, all right. Well, then let’s check let’s test it out. So let’s talk a little bit about that scenario, right? So somebody came in, they were talking with you about using your services, and they kind of challenged you a little bit on, you know, do I really need an advisor? What do you bring to the table? And I kind of paired that up when you mentioned that to me with an email that we had seen a couple of weeks ago, and it’s basically just saying, hey, look, I’m a smart person. I’ve got a an MBA. I’ve invested well, you know, I’m doing pretty good, right? Do I really need to spend the money on an advisor. It’s like, well, that’s just kind of one component, though, right? Of the portfolio building. And so the last number of years, Jude, it’s been, it’s pretty easy, the technology, the different kind of resources we have out there. If you’re decent saver, and you know, you pick the you know, you’re in the s and p, the market’s done well, I mean, it’s not hard to grow the money, right, right? The question becomes, is, how do you preserve it and make a paycheck when you no longer have a paycheck? That’s the challenge. Absolutely.

 

Jude Wilson  02:13

I think for our listeners, one of the things that we can include in the show notes, we have a diagram called the financial planning pyramid that basically shows all of the areas that you should be considering when you’re building your entire financial life. And just like any pyramid, there is the base of the pyramid, which holds everything up. But for today’s discussion, I really want our listeners to understand that this is a valid question, and you should feel very confident if you’re going to choose a financial advisor, that you’re going to get value out of that relationship. And I think one of the two reasons why this question comes up so often is even though I love my industry, just like any industries, there’s some places that we could do better. And one of the the models that that is often used by financial advisor is what’s called an AUM, Aum model, assets under advice, under under management. And so typically, a financial advisor may charge somewhere between one to almost 2% to manage assets and and usually in that relationship, you’re getting also some financial advice. But what I see, and what causes frustration, and this question a lot of times is people either one say, well, heck, I’m doing a great job. Look at what I’ve done over the last eight years, true, particularly in this environment. It’s been easier than some because we’ve been in a very aggressive stock market. And then secondly, what I see is some people say, Well, I want to manage my own assets outside of getting advice from you, you know, is that possible? And because of the way the industry is structured, a lot of lot of advisors aren’t able to offer that. So let’s address the investment question that was written in guys an MBA, he’s been doing well in his portfolio, and he says, Well, why do I need to pay somebody 1% for investment advice? Well, if all, if the only thing you’re getting is investment advice, then I would probably agree with you, if you believe that you’ve done a good job and you have the the knowledge, the time and the capability of doing that. Now, there’s a lot of areas that he’s not considering, maybe taxation on that portfolio. How’s that portfolio level of risk with what with his time frame? But all the other areas of financial planning, risk management, insurance, estate planning. All of those areas should be combined in a holistic way.

 

Marc Killian  05:02

Yeah, well, and, you know, thinking about that, when you were kind of bringing that up there, you’re doing a great job, you know. And the term advisor, I think, is what popped out at me, right? So it’s like, I’m doing a great job. Do I need an advisor? Well, sounds like a broker, right? It’s like, you know, like, Okay, do you need somebody? Because a lot of people feel like an advisor, because everybody can call themselves a financial themselves a financial advisor now, right? Exactly. So it’s like, if you’re talking about somebody who’s just helping you pick stocks and pick investments for your portfolio, yeah, you probably don’t need them if you’re doing a good job with it. But I think there’s a difference between talking about that and then talking about retirement planning, right? So absolutely, at some point, when you go to shift that, that accumulation phase, Jude into the preservation and distribution phase. There’s all these other animals, like our last episode, Roth conversions and and what it does to Social Security and Irma taxation, you know, if this person’s not, probably not even thinking about that, why would they? They’ve never dealt with it, you know, yeah, like, there’s all these other little animals that I think can really that’s when it starts to kind of bite you. I say often, you pull one lever in retirement from an income standpoint, and it dominoes to nine other things that you weren’t expecting. Well,

 

Jude Wilson  06:09

let me give you two examples of recent people who have sought advice or consultation, and one gentleman who was actually did have an advisor, but it was more like what you were saying when we looked at his portfolio, over $3 million that he had been working with this gentleman on for years, nice, but he’s getting ready to retire now, within the next year. And he had attended one of our seminars on taxes in retirement, and he he said to us, man, I learned so much in your seminar, things that I’ve never talked to to my advisor about at the end of the day, what we were able to show him was that he was getting investment advice, but he wasn’t getting financial planning,

 

Marc Killian  06:55

and he was a guy who was doing a bad job, right? Sounds like he was a great job, but he was talking about great job. Never talked to him about taxation, probably next time, never talked to him about Social Security, probably never talked to him about legacy planning, right here.

 

Jude Wilson  07:07

And here’s the kicker, everything you said was correct. The fee that this other advisor was charging was exactly the same fee that we charged. Okay, but I said it. I said to the prospective client, it’s like getting a McDonald’s Happy Meal and you only got the bun. That’s all you got,

 

Marc Killian  07:29

although, for the money now, Jude, you could go to McDonald’s and get and get a cheeseburger meal deal of some kind, or go to like Applebee’s, and it’s almost the same thing. And at least you get to sit down and you have a nice drink, you know, or something like that. So, yeah, it’s the value. That’s a great point. So talking about di wires, right? Vanguard, I believe, does a study, right? They put a study out every so often. Yeah, they talk about the value that advisors bring, possibly, you know, if you put numbers on, I think it’s around 3% something like that. But it’s also the piece that I thought was interesting in there was the behavioral analysis, right? Yes, it’s working with somebody who I can call you up and go Jude, my daughter now decided she wants to have her wedding in Aruba. We weren’t planning for that. How do we make that work? You’re not going to get that from your investment guy, exactly.

 

Jude Wilson  08:14

I’ll give you the second scenario. And we talked about this guy in the last episode, the gentleman that wanted that had $2 million okay, in his 401 K, getting ready to retire, wanted to do half a million dollars in Roth conversions. Well, if you listen to the last episode, we actually saved him 1000s of dollars by paring down that Roth conversion and showing him where he could hurt himself, not only in in stepping up to the next bracket, but also hurt himself with the Medicare premiums, but the end of at the end of the date, I think what, what he told me was one of the biggest reasons why he decided to hire us was two things. One, he has a lot of great ideas with nobody to bounce it off of, right? And so he’s his best and worst enemy, and being able to talk to us and have a holistic plan. One, he had a direction. But two, when he came up with ideas, he could talk to us about it and make sure to flush that out. But the second biggest thing for him was that over he’s been married for over 40 years, and his wife just had a pretty much stand off responsibility with with the financial planning. She just trusted in him, because this is his thing. He loves doing it, sure. And he said to me, Jude, one of the things that I haven’t told you is that I’m a survivor of cancer, and there’s a possibility that it may come back. I don’t want my wife looking for a financial advisor at the worst possible time and trying to find someone that I I know I can trust. Yeah? For him, that was the other value that was really important, yeah. So there’s a bunch of reasons why you mean, oh yeah,

 

Marc Killian  09:59

financially. And that’s a great one, right? So let’s say, you know, the person sent this in, you know, and there’s lots of people out there, you’re doing a kick butt job. You’re awesome, you’re, you know, just, just nailing it, right? But you get closer to retirement, a does your spouse want you to spend all your time doing it, or do they want you to be retired with them so you can do things, right? Do you want to spend time with the grandkids? Do you want to be your own advisor in retirement? Do you have a succession plan in the event that you did pass away first, so that your loved one is taken care of? Do they have any interest in doing it? Most of the time? The answer is no, right? So it’s kind of like you need someone you can turn to. So outside of just the X’s and O’s Jude, there’s and there’s a lot of reasons why. Again, you could be doing a great job building the wealth, but how to deal with it in retirement is a different animal. You could take all the X’s and O’s out and just go to the emotional side and say that alone, to me, is a lot of value, because it’s somebody I know that the my wife can call up and say, or vice versa, if she was the past first, I can call up and say, Hey, what do we do next? Where do we go? Now? You know that kind of thing. And

 

Jude Wilson  11:05

the last point I would bring up is that things are always changing. You talked about, how much is your time worth you as the prospective client, you know, particularly if you’re switching phases of life into retirement, or if you’re working, if you’re working a ton of hours, and now how many more hours you want to spend on doing the research on holistic financial planning? Because just in the last five years, well more than five years, we’ve gotten the tax cut and Jobs Act, which changed so many things in the tax code, and then we got the secure act 1.0 and then the secure act 2.0 those are 1000s of pages for someone to to read, digest and understand how it could affect them, and the right strategies that coincide with that. And that’s that’s our job. That’s what we do.

 

Marc Killian  11:59

Yeah, my RMD changed to, oh, wait, now it changed again. Oh, wait, what? Yeah, you know, yeah. So it’s always a little bit of something there. So again, nothing wrong with doing it yourself. You know, we’ve, over the last number of years, I think a lot of people have embraced the DIY movement for probably maybe the last decade, not just even finance, right? In lots of different arenas of life. You know, I’m out in the boonies, so I’m forever saying I gotta just do it myself. I might as well just learn how to do this, because I try to hire somebody, and it doesn’t go the way you want it to, and I get all that, but you have to look at the whole big picture, especially when it comes to finance and the tax codes and the law changes. And there’s just so much stuff that, you know, constantly changes there. And then, of course, that’s before we even throw in the new, you know, the new you know, the changes we may be experiencing come 25 and 26 as President Trump continues to do more things, we’ll see how all that plays out. So at the end of the day, I think it’s worthwhile, right? Like you had these people come in and they wanted to talk with you. They were like, Hey, let’s show me why. You know you’re a good value, right? Show me where the value is. And I think that’s the thing that people are looking for. I don’t have a problem paying for a fee for something. Jude, if I’m getting value for it,

 

Jude Wilson  13:06

absolutely. And I think where this question comes is a lot of people don’t believe that they’re getting the value for what they’re paying. And what we try to do is show them holistically how we can bring the value in multiple areas of their fine, of their financial situation, yeah, and also, sometimes we want to quantify that value by showing you how we’re saving you, like in the example of the other gentleman doing wealth conversions, where we saving you 1000s of dollars above and beyond the fees that you’re paying.

 

Marc Killian  13:39

I’ll end it with this dude. Technology is great, right? There’s a lot of tools and apps out there now that can make this easier, for di wires, for sure, robo advisors, all that kind of stuff. But I maybe I’m old school, I don’t know, but there’s certain industries where I still kind of feel like I want to be able to, like, talk to somebody and kind of get to know them and kind of have that relationship, right? Be able to kind of walk in to the office, or even do a zoom and be like, dude, Ah, man, you won’t believe what happened. You know, here’s what’s going on. You know, what do we do? Right? What’s the best way, or we really want to get an RV and travel the country now, what’s the best way to go about doing that? Where’s the best way? You know, a pile of money for us to access that kind of stuff. I still feel like the human connection is a piece that, you know, and the great debate about AI, the human connection is still a very valuable and I think in certain arenas,

 

Jude Wilson  14:29

110% you know, there’s got to be a connection. You’ve people do business with people they know, like and trust, and we try to create that environment with our clients, if we call our clients our client family and our team members, our team family. So you can’t, you can’t subtract the human component. Yeah.

 

Marc Killian  14:50

I mean, every time we get on before we start recording, we just jaw Jack about, just silly, right? So, you know, and that’s the same kind of thing that you know, a lot of times people will do with their clients. They just come in, hey. How you doing, what’s been going on. Tell me what’s new, you know, and then you kind of get into the nitty gritty. And I know that that’s not for everybody, but I think there is still a component of that as well that you do miss out on, if you’re just doing everything yourself on your desk, and little DIY components. So great question. Thank you so much for listening to the podcast. Thanks so much for dropping the question in. We certainly appreciate it, and I’m glad that it kind of paired out well with a conversation you had with a prospective client earlier this week as well. So good stuff as always. If you guys need some help, reach out to Jude. Get onto the calendar. We got links in the show descriptions below for you so you can get some time onto the calendar with he and his team. And don’t forget to subscribe to us on Apple Spotify, and, of course, YouTube here on the Roth guide. A little Like button, a little thumbs up and notifications there so you catch new episodes when they come out. We’ll see you next time here on the Roth guy with Jude Wilson, thank you, my friend. Thank you, brother. Always good to see you. We’ll see you next time.

 

Walter Storholt  15:54

Financial Planning and advisory services are offered through prosperity Capital Advisors, PCA, an SEC, registered investment advisor with its principal place of business in the state of Ohio, centrist financial strategies and PCA are separate non affiliated entities. PCA does not provide tax or legal advice. Insurance and tax services offered through centrist financial strategies are not affiliated with PCA. Information received from this podcast should not be viewed as individual investment advice. Product discussions and illustrations are hypothetical in nature and will vary based on many factors, including, but not limited to age, health product insurance carrier and product design. You should consult the insurance carrier website and policy for detailed information, for information pertaining to the registration status of PCA, please contact the firm or refer to the Investment Advisor public disclosure website, www.advisorinfo.sec.gov for additional information about PCA, including fees and services send for our disclosure statement as set forth on Form ADV from PCA using the Contact Information herein, please read the disclosure statement carefully before you invest or send money you.