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You Might be Losing $100k in Fees

You Might be Losing $100k in Fees

A listener asks: “I was reviewing my Individual Retirement Account with my advisor and he said that there was a .25% maintenance fee, which is the lowest around. I was confused about what this meant since you have talked about expense ratios in the past. Can you explain?”

Matt and I discuss what this fee is, but more importantly what does this mean for you? You might be losing out of tens of thousands or even hundreds of thousands of dollars that could be in your pocket. I’m certainly not saying that financial advisors shouldn’t be paid or don’t provide value – I’m one! But I do want you to understand what you are paying because so many times the fees are completely hidden. 

An account maintenance fee is an amount that you pay based on multiplying a small percentage times your account balance. That could add up quickly depending on the balance! And what’s more, that small percentage could mean many thousands of dollars lost from compounding in your favor. But worse, the investments inside your account could be costing you even more on top of that fee!

Find out more about Mike at and connect at


Matt: 00:00:00

Welcome to real financial planning, broadcast on WK Excel, and

Matt: 00:00:04

available wherever you get your podcasts.

Matt: 00:00:06

I’m met Robeson and I’m joined once again by financial planner, Mike Morton of

Matt: 00:00:11

Morton financial advice, and also the host of financial planning for entrepreneurs.

Matt: 00:00:16

A great podcast.

Matt: 00:00:18

I don’t want people to get too attached to that title because

Matt: 00:00:20

Mike and I, right before we got on the air, we’re talking about,

Matt: 00:00:23

Are you going to, are you going to change that title?

Mike: 00:00:25

we might change the title.

Mike: 00:00:26

I dunno those that have it in their feed.

Mike: 00:00:28

Thank you so much for subscribing.

Mike: 00:00:30

And you may have noticed a new podcast art.

Mike: 00:00:33

So the art for the podcast has changed a little bit with a little new branding

Mike: 00:00:37

coming from my website and other places.

Mike: 00:00:40

So we may also change the name of the podcast, but for now it’s

Mike: 00:00:43

still same great name, same great

Mike: 00:00:45


Matt: 00:00:45

Financial planning for entrepreneurs.

Matt: 00:00:46

Mike, I’ve got to ask you, before we dive in today’s topic, the new

Matt: 00:00:49

cover art for your podcast, did you intend the symbolism that is in there?

Matt: 00:00:55


Matt: 00:00:56

Sitting on stairs that are leading up, it’s an upward climb.

Matt: 00:01:00

Is that what you were going for?

Matt: 00:01:02

Or am I like doing one of those film criticism things where it’s like have

Matt: 00:01:05

you noticed that Snoopy and the, in the peanuts movie is actually I mean is is

Mike: 00:01:10


Mike: 00:01:10

Yeah, no, I spent at least a week or so really contemplating

Mike: 00:01:14

exactly what symbolism I needed and where I would make that happen.

Mike: 00:01:19

The background, everything, or you could say during the photo shoot for

Mike: 00:01:23

my website, I happened to be sitting on the stairs and my photographer

Mike: 00:01:26

snapped a couple of pictures and that turned out to be the best one of the

Matt: 00:01:29


Matt: 00:01:30

It’s always when you’re not paying attention.

Matt: 00:01:31


Matt: 00:01:32


Matt: 00:01:32

You’ve got resting irritated face.

Matt: 00:01:35

All right thank you to all our listeners on WK Excel and on Mike’s podcast.

Matt: 00:01:40

And we’re also putting this in the capital close-up podcast feed for all

Matt: 00:01:44

of our New Hampshire podcast listeners.

Matt: 00:01:46

Thank you for subscribing to that.

Matt: 00:01:48


Matt: 00:01:49

We do listen to questions on this show, this has been something we’ve been

Matt: 00:01:52

doing in the last four or five episodes.

Matt: 00:01:54

And it’s really turned into some great conversations.

Matt: 00:01:57

I want to get to today’s listeners question before I do my canoes, remind

Matt: 00:02:00

people If people want to submit a question, there are two ways to do that.

Matt: 00:02:03

They can email you directly.

Mike: 00:02:05


Mike: 00:02:05

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Matt: 00:02:09

document.getElementById(“eeb-572529-507010”).innerHTML = eval(decodeURIComponent(“%27%66%69%6e%61%6e%63%69%61%6c%70%6c%61%6e%6e%69%6e%67%70%6f%64%40%67%6d%61%69%6c%2e%63%6f%6d%27”))*protected email*.

Matt: 00:02:11

You can also go to the beyond politics with Paul Hodes and

Matt: 00:02:13

Matt Robeson, Facebook page.

Matt: 00:02:15

And just submit a question on Facebook and we will check that out.

Matt: 00:02:19

All right.

Matt: 00:02:19

The question that came in today, I’m going to read this here.

Matt: 00:02:22

I was reviewing my IRA, my individual retirement account with my advisor,

Matt: 00:02:26

and he said that there was a 0.2, 5%.

Matt: 00:02:30

That’s a quarter of a percent maintenance.

Matt: 00:02:33

Which is the lowest around I was confused what this meant since you’ve

Matt: 00:02:37

talked about expense ratios in the past.

Matt: 00:02:40

Can you please explain?

Matt: 00:02:42

All right.

Matt: 00:02:43

Let’s talk about that.

Matt: 00:02:43

First of all, do you want to just give the top level answer?

Mike: 00:02:46


Mike: 00:02:47

Let me go ahead and give you the answer to the question.

Mike: 00:02:49

And then of course talk all about this.

Mike: 00:02:51

The questions around a 0.2 for 5%, quarter percent maintenance fee on the

Mike: 00:02:56

account and what . This is you are paying your advisor to help you make decisions

Mike: 00:03:02

and implement and manage your account.

Mike: 00:03:05

And so that advisor’s getting paid one quarter of a percent

Mike: 00:03:09

of whatever is in that.

Mike: 00:03:11

So if that’s a hundred thousand dollars, that’s 250 bucks

Mike: 00:03:17

that they’re getting paid.

Mike: 00:03:18


Mike: 00:03:19

So that’s the maintenance fee.

Mike: 00:03:21

On the account itself.

Mike: 00:03:24

All right.

Mike: 00:03:25

And there’s the answer to that question?

Mike: 00:03:26

What is this fee?

Mike: 00:03:27

How does it work now?

Mike: 00:03:28

We’ve talked about expense ratios as well, and that’s within, with whatever

Mike: 00:03:33

you hold inside that account, whether it’s a mutual fund or an ETF, those

Mike: 00:03:37

also have fees So we’ll talk about that.

Mike: 00:03:39

But maintenance fees, advisory fees, these are paid on typically a

Mike: 00:03:45

percentage Of the account value that you are paying to your advisor because

Mike: 00:03:49

they’re doing some work for you.

Matt: 00:03:51

get it and it’s hard if you’re driving and listening to

Matt: 00:03:53

this or you’re in your kitchen, cooking and et cetera, you’re doing

Matt: 00:03:56

a bit of the math, like 0.2, 5%.

Matt: 00:03:58

I’m visualizing that, but just take this up a level for me.

Matt: 00:04:02

Why is this important?

Matt: 00:04:03

Like, why should I be paying attention to a number that comes

Matt: 00:04:06

after a decimal that has a percent side after it does this make it.

Mike: 00:04:11


Mike: 00:04:11

Matt, let me tell you a story because this is very typical.

Mike: 00:04:16

All right.

Mike: 00:04:16

So say you’ve worked with an advisor to help set up an account for you,

Mike: 00:04:20

and you’ve saved up a little bit.

Mike: 00:04:21

So you know you’ve got $200,000.

Mike: 00:04:24

In that account.

Mike: 00:04:25

And you’ve got this maintenance fee, on that account because the advisor’s

Mike: 00:04:28

helping you do stuff, pick those funds.

Mike: 00:04:30

Now, the other thing I want you to realize is many times what also happens

Mike: 00:04:35

is that the funds, the advisor picks are not necessarily the best for you.

Mike: 00:04:41

They might not be the lowest cost.

Mike: 00:04:43

I’ve seen this over and over that when you work with an advisor in

Mike: 00:04:46

this way, because at that $200,000.

Mike: 00:04:51

There at that 0.2, 5%, they’re getting $500 a year, right.

Mike: 00:04:55

That’s not a ton of money you for helping you out.

Mike: 00:04:58

So they get paid in other ways as well.

Mike: 00:05:00


Mike: 00:05:01


Mike: 00:05:01

So when I look at these accounts inside of those accounts, the mutual funds and

Mike: 00:05:05

ETFs are also, maybe at that 1% level.

Mike: 00:05:09

So now you’re at 0.2, 5% to the advisor for helping you out 1%.

Mike: 00:05:15

Across the investments that you’re in.

Mike: 00:05:17

So you’re at one and a quarter percent and none of this, do you

Mike: 00:05:20

really see on your statement?

Mike: 00:05:22

All right.

Mike: 00:05:22

When you’re getting statements in the mail or you’re checking online,

Mike: 00:05:24

you don’t really see these fees,

Mike: 00:05:26


Mike: 00:05:26

let me tell you how it

Mike: 00:05:27

adds up for you

Matt: 00:05:28

when you were saying a second ago, in this example, 200,000.

Matt: 00:05:32

So, sorry, I’m doing math for people who are listening on audio, but 200,000, you.

Matt: 00:05:36

said it’s 250 bucks for that 0.2, 5% maintenance fee.

Mike: 00:05:42

Well 200,000 would

Mike: 00:05:43

be 500

Matt: 00:05:44

It’s two 50 per a hundred thousand.

Matt: 00:05:46

So 500 bucks.

Matt: 00:05:47


Matt: 00:05:48

bucks is a lot, but it’s I could see how that would make sense as a fee.

Matt: 00:05:52

If I’ve got to, if I’ve got someone doing all this for me

Matt: 00:05:55

that doesn’t feel that bad.

Mike: 00:05:57

No, that’s right.

Mike: 00:05:58

That’s right.

Mike: 00:05:59

It could be a perfectly reasonable amount for paying someone for helping you out.

Mike: 00:06:02

Get that account set up, helping you pick those funds.

Mike: 00:06:05

But, again, the 0.2, 5%, the funds inside of there also really important.

Mike: 00:06:09

And again, what I’ve seen typically, okay.

Mike: 00:06:12

Is that they’re pretty high cost funds inside.

Mike: 00:06:15

And I was just reviewing this with a client the other day.

Mike: 00:06:18

And 0.2, 5% was the maintenance fee and across the funds inside, it was

Mike: 00:06:23

about 1%, 1% annual fee on those funds.

Mike: 00:06:26

So now we’re at one and a quarter percent still, and we’ll

Mike: 00:06:29

look, we’re using percentages.

Mike: 00:06:30

There’s a reason why my industry uses percentages.

Mike: 00:06:34

They sound very small.

Mike: 00:06:36

All right.

Mike: 00:06:36

But let me tell you how it adds up

Mike: 00:06:37

so one and a quarter percent doesn’t sound like a whole lot, but let’s

Mike: 00:06:40

make an assumption over 20 years.

Mike: 00:06:42

If you’re getting say a 7% return on those investments.

Mike: 00:06:46

Average kind of stock market return So if you take that 7% and subtract one in

Mike: 00:06:50

a quarter, you’re getting five and three.

Mike: 00:06:52

Percent versus a 0.1% you can get low cost index funds at 0.1%.

Mike: 00:06:58


Mike: 00:06:59

So instead of 7% you get a 6.9%.

Mike: 00:07:02

All right, now I’ve thrown around a lot of percentages, but here’s how it works out.

Mike: 00:07:05


Mike: 00:07:07

Over 20 years in the former, you’re working with your advisor

Mike: 00:07:12

in these higher cost funds.

Mike: 00:07:13

You end up with $650,000.

Mike: 00:07:16

If you’re working with low cost funds without that weight and

Mike: 00:07:19

that drag, you make over $800,000.

Mike: 00:07:23

That’s a difference of $150,000 over 20 years.

Mike: 00:07:28

So your original $200,000 investment over 20 years by having low cost index

Mike: 00:07:35

funds and less fees makes you $150,000.

Matt: 00:07:41


Matt: 00:07:41

First of all, there’s so much to unpack in what you just said.

Matt: 00:07:44

The first thing that really resonates with me is what you

Matt: 00:07:48

actually, it was a throwaway thing.

Matt: 00:07:50

You said that it’s, that’s why the industry works in percentages because

Matt: 00:07:55

we just went through that and it was hard to track the, you subtract

Matt: 00:07:59

1.25 from the seven and you get, and like you get lost in all that.

Matt: 00:08:03

There’s actually a democratic political consultant.

Matt: 00:08:07

Who goes by mud cat, Saunders.

Matt: 00:08:10


Matt: 00:08:11

And one of the pieces of wisdom from mud cat Saunders is in politics.

Matt: 00:08:16

Politicians get this wrong all the time because they talk in rates, they

Matt: 00:08:22

talk about inflation rates And people don’t understand or care about it.

Matt: 00:08:27

I’m not calling people dumb I’m saying people don’t think that way . You might

Matt: 00:08:31

as well speak in Latin because that’s just not the way people think about it.

Matt: 00:08:37

People think in bills, not rates bills how much do they have to pay?

Matt: 00:08:42

How much they have to pay for groceries, how much they have

Matt: 00:08:44

to pay for rent, et cetera.

Matt: 00:08:46

And even making it more concrete by saying, okay, I’ve got $200,000.

Matt: 00:08:52

Invested here.

Matt: 00:08:53

So that 0.2, 5% is only $500 on that.

Matt: 00:09:00

Even that doesn’t sound that bad, but it’s when you do that full conversion

Matt: 00:09:05

from rates into dollars over 20 years, that it really hits home $150,000

Matt: 00:09:12

is a big difference That’s if you’re looking to retire, that could be

Matt: 00:09:15

a couple of years of retirement.

Mike: 00:09:17

Yeah, under and $50,000 is a lot of money.

Mike: 00:09:21

And that’s why these small changes going from 1% of a fund.

Mike: 00:09:27

We talked about expense ratios 1% fund to a 0.1%.

Mike: 00:09:32

Makes a massive difference.

Mike: 00:09:33

I just told you adds up to over a hundred thousand dollars in your pocket.

Mike: 00:09:38

Now I’m not minimizing the work that advisors do and the help they

Mike: 00:09:41

give and the support and confidence and portfolios and all that stuff.

Mike: 00:09:45

I’m just saying my industry high.

Mike: 00:09:48

The fees that you’re paying for that service.

Mike: 00:09:51

And I’d rather be upfront and say, look, I’m paying $500 a year

Mike: 00:09:54

for my advisor to help me out.

Mike: 00:09:56

Yeah, that sounds reasonable to me.

Mike: 00:09:58

I really appreciate what he or she does for me.

Mike: 00:10:01

But recognize over decades that high fees can really eat into the

Mike: 00:10:06

money that’s in

Mike: 00:10:06

your pocket

Matt: 00:10:07

And and that’s another point that I wanted to pick up on, we are

Matt: 00:10:10

not between the two of us in this conversation in any way, dunking

Matt: 00:10:15

on financial advisors, some of your best friends are financial advisors.

Matt: 00:10:19

And if, especially if you’re starting out, you want to work with

Matt: 00:10:24

someone who has this kind of a fee.

Matt: 00:10:26

This is what.

Matt: 00:10:27

Have done in my life.

Matt: 00:10:29

I worked with someone, look, this person, I’m not going to call them out.

Matt: 00:10:33

This person might be listening to this broadcast right now.

Matt: 00:10:36

I really like this person.

Matt: 00:10:38

I really value this person and they have done and continue to do a lot for

Matt: 00:10:43

me in my family, in terms of helping me out with all kinds of services, in

Matt: 00:10:49

terms of planning and understanding how to invest and giving me that comfort,

Matt: 00:10:55

especially as I was starting out.

Matt: 00:10:56

In this process.

Matt: 00:10:58

And that was really worthwhile as I went along in my own personal investing,

Matt: 00:11:03

my personal financial journey.

Matt: 00:11:05

Boy that’s throw up word, but whatever, I eventually asked, Hey, could we start

Matt: 00:11:11

to get into some low cost index funds?

Matt: 00:11:13

And, I started doing some more of this on my own.

Matt: 00:11:17

The point is it may be entirely appropriate.

Matt: 00:11:20

What you’re saying is you just want people to be upfront about

Matt: 00:11:23

that because it’s real money,

Mike: 00:11:25

Yeah, it’s real money.

Mike: 00:11:26

And here’s the sort of problem with it.

Mike: 00:11:28

Matt is that advisor that you work with originally gets that

Mike: 00:11:32

500 bucks for that first year.

Mike: 00:11:33

It’s not a lot for that advisor necessarily.

Mike: 00:11:36

But they’re like I told you, they’re getting paid other ways and that’s

Mike: 00:11:40

really bothersome to me because.

Mike: 00:11:43

You’re not, it’s not upfront like what you’re paying them.

Mike: 00:11:46

It doesn’t sound very much, but they’re getting paid other ways.

Mike: 00:11:49

And then that just trails forever.

Mike: 00:11:51

Because then you’re just in there and it’s just yearly and you

Mike: 00:11:54

never really check in and stuff.

Mike: 00:11:56

And so that’s why I say go ahead and check in and make sure you’re getting

Mike: 00:11:59

value for whatever you think you’re paying, or just check in and understand

Mike: 00:12:03

what’s going on there So it’s just really important to build awareness

Matt: 00:12:07

let me ask you one other question about that, because you

Matt: 00:12:09

mentioned a moment ago that it may be.

Matt: 00:12:13

That you end up invested in mutual funds or ETFs that are not totally

Matt: 00:12:20

the best for you that may not be in your total best interest We’ve talked

Matt: 00:12:24

on the show about the concept of being a fiduciary and having a legal

Matt: 00:12:28

obligation to act in your client’s best

Mike: 00:12:31


Matt: 00:12:32

are all the people that our listeners out there might

Matt: 00:12:35

be working with fiduciaries.

Matt: 00:12:37

Is that an important thing to understand when you enter into any

Matt: 00:12:40

kind of a financial advising really

Mike: 00:12:41

Yeah, it’s a tough one.

Mike: 00:12:42

It’s super important.

Mike: 00:12:44

I’m glad you mentioned it.

Mike: 00:12:45

The words best interest that you just said, there’s different regulations

Mike: 00:12:50

for different members of my industry.

Mike: 00:12:53

Some have to follow the best.

Mike: 00:12:56

Is this in your best interest and others have to follow the fiduciary.

Mike: 00:13:00

Here’s what I would do if I was in your shoes and they’re two different

Mike: 00:13:04

standards and there’s so much confusion.

Mike: 00:13:06

Listen, Matt, even I’m completely confused and I’m in this industry.

Mike: 00:13:10

So I don’t expect any listeners to really understand this,

Mike: 00:13:13

but here’s, what’s important.

Mike: 00:13:14

I said that, here’s, what’s important to the listeners

Mike: 00:13:17

check what’s in your account.

Mike: 00:13:19

We had this expense ratio discussion, and I just want to

Mike: 00:13:22

break it down here for a sec.

Mike: 00:13:23

There’s two different fees we’re talking about today.

Mike: 00:13:25

One is this account maintenance.

Mike: 00:13:27

And so we’ve highlighted what that is.

Mike: 00:13:28

You’re working with an advisor.

Mike: 00:13:29

Maybe you’ve found that advisor your life insurance, maybe through your

Mike: 00:13:33

local bank and they said, Hey, could help you out with this extra $50,000.

Mike: 00:13:37

And you went in for that free meeting.

Mike: 00:13:39

So you’re not really paying them out of.

Mike: 00:13:41


Mike: 00:13:41

So they’re getting paid somehow and it’s this advisory maintenance fee,

Mike: 00:13:45

advisory fee, something like that.

Mike: 00:13:46

It’s fun.

Mike: 00:13:48

Then there’s another fee, whatever you hold inside those accounts,

Mike: 00:13:52

say I own the fidelity S and P 500.

Mike: 00:13:56

All right.

Mike: 00:13:56

Well someone at fidelity has helped managing that.

Mike: 00:13:58

There’s probably a small team of people, and they have to get paid

Mike: 00:14:01

to there, get paid from that fund.

Mike: 00:14:03

So I have $10,000 in the fund.

Mike: 00:14:06

They’re going to get paid, just, small pennies on my $10,000 to help

Mike: 00:14:10

manage that money within the fund.

Mike: 00:14:12

Those are called your expense ratios and you pay those as well.

Mike: 00:14:15

You will never see that on your state.

Mike: 00:14:19

It’s not Hey Mike, you pent to spent 5 cents, out of this 10,000, they

Mike: 00:14:23

just take it out of your return.

Mike: 00:14:25

So understand there’s two different fees that we’re talking about today.

Mike: 00:14:28

Both extremely important fees now, best interest versus fiduciary.

Mike: 00:14:34

And all of that.

Mike: 00:14:35

What I want the listeners to understand is look inside your accounts and find

Mike: 00:14:40

the expense ratios for those funds.

Mike: 00:14:44

Because many times they’re close to that 1% And you can find alternatives.

Mike: 00:14:50

That should be closer to that 0.1%.

Mike: 00:14:54

And that again, I hate to use the percentages.

Mike: 00:14:56

It’s a hundred thousand dollars over a hundred thousand dollars

Mike: 00:14:58

difference between going with something that’s 1% or a 0.1%.

Matt: 00:15:03

And so let’s say you go through that process.

Matt: 00:15:08

How do you.

Matt: 00:15:09

And, or let me back this up, even because there are two situations that

Matt: 00:15:13

our listeners may find themselves in they may already have kind of

Matt: 00:15:18

an existing relationship and this may feel awkward or they may be

Matt: 00:15:23

entering into a New relationship.

Matt: 00:15:25

And boy that’s that sounds but it is . Yeah It’s like yeah You know

Matt: 00:15:29

like you’re going to change your status on Facebook.

Matt: 00:15:31

So either way, you’re talking about , a difficult, but an important upfront

Matt: 00:15:37

professional conversation, how do you, how should they navigate this

Matt: 00:15:42

w either situation, what should they do at this point to try and figure

Matt: 00:15:46

out where they’re at and to make sure that they’re comfortable with the

Matt: 00:15:52

level of fees they’re paying the value they’re getting, know and the, kind

Matt: 00:15:55

of the relationship that they’re in.

Mike: 00:15:57


Mike: 00:15:57

It’s just like anything else, man It’s funny because I think about this a lot.

Mike: 00:16:00


Mike: 00:16:00

How often do you go out there and spend money on something and not know the

Mike: 00:16:07

value of what you’re getting or what you’re spending It’s like nothing.

Mike: 00:16:10

There’s nothing else.

Mike: 00:16:11

You know what I’m going to get this car or this car, this one’s,

Mike: 00:16:14

50% more, this one’s $15,000.

Mike: 00:16:16

This one’s $25,000.

Mike: 00:16:18

You can weigh the trade-offs, but that one is nicer.

Mike: 00:16:21

I really like the way it makes me feel whatever, or TVs or couches

Mike: 00:16:25

or whatever you’re going to buy.

Mike: 00:16:27

You understand the trade-offs and how much things cost and

Mike: 00:16:30

how important that is to you.

Mike: 00:16:31

The financial industry, you have basically no idea what things cost or even the

Mike: 00:16:37

value of what they’re bringing to you.

Mike: 00:16:38

So I would start there just first, ask yourself, what am I paying and

Mike: 00:16:44

how much value is it bringing to And whatever in there, you can’t

Mike: 00:16:49

answer, go to your advisor and ask them, okay Hey, just curious, how

Mike: 00:16:54

are you paid What am I paying?

Mike: 00:16:56

Just ask them just very simple questions that they should be able to answer for

Mike: 00:17:00

you because that’s what they do, they should be able to answer, oh yeah, this

Mike: 00:17:02

is what you’re paying for these things.

Mike: 00:17:05

And here’s the value.

Mike: 00:17:06

And then also you could decide as a.

Mike: 00:17:09

let the advisor tell you, here’s what you’re paying, here’s what

Mike: 00:17:12

we’re doing for you, or here’s what the fund is doing for you.

Mike: 00:17:15

And what do you think about that?

Mike: 00:17:17

And you should be able to answer like oh, it’s great.

Mike: 00:17:19

I don’t have to think about it.

Mike: 00:17:19

We check in once a year, I feel really confident.

Mike: 00:17:22

Hey, there’s a ton of value, that.

Mike: 00:17:25

But first, just understand that.

Mike: 00:17:26

So I recommend, once you ask yourself, what am I paying?

Mike: 00:17:29

What’s the value, then go to your advisor and say, Hey, I’m just curious.

Mike: 00:17:34

What am I paying?

Mike: 00:17:34

Can you tell me what I’m paying for these things And do you know,

Mike: 00:17:37

what are you guys providing?

Mike: 00:17:38

Just checking in, making sure everything’s going smoothly.

Mike: 00:17:41

Can go in with an open mind, it’s not, we’re not being antagonistic.

Mike: 00:17:44

We’re just understanding what we’re getting for, what we’re

Mike: 00:17:47


Mike: 00:17:48


Matt: 00:17:48

big in part, because of the confusion, the difficulty of the

Matt: 00:17:52

different standards that financial advisors may have to follow best interest

Matt: 00:17:58

versus fiduciary, what would you do?

Matt: 00:18:00

And that can be confusing to anyone you don’t want to get caught in legal ease.

Matt: 00:18:05

It sounds to me, first of all, like it’s not sufficient to just hear, oh I

Matt: 00:18:10

have to act in your best interest You have to understand what that really

Matt: 00:18:15

looks like in terms of your investments.

Matt: 00:18:17

And the second thing I’m guessing, tell me if I’m wrong about this is that maybe

Matt: 00:18:22

a good rule of thumb is if your advice.

Matt: 00:18:24

I can tell you in plain English and not in percentages, but an

Matt: 00:18:29

actual dollars over 20 years over time, here’s how much you will pay.

Matt: 00:18:35

Here’s how much you would pay with this kind of an approach

Matt: 00:18:40

versus this kind of an approach.

Matt: 00:18:42

And here’s why I’m selecting this kind of an approach.

Matt: 00:18:45

And here’s how much more money you should have if they can give you a

Matt: 00:18:49

plain English real dollar explanation.

Matt: 00:18:51

Yeah, Then that’s a good sign.

Matt: 00:18:54

That’s the way it feels to me.

Matt: 00:18:55

Am I off on that?

Mike: 00:18:56

Yeah no, actually I really liked the way you said that Matt, if they can

Mike: 00:18:59

just explain in dollars, why we’re in these investments in this portfolio and.

Mike: 00:19:05

As a consumer, don’t get caught up in the talk from the advisor.

Mike: 00:19:10

You are the buyer.

Mike: 00:19:13

Of that service.

Mike: 00:19:15

And so you should understand what you’re buying and they should

Mike: 00:19:18

be able to explain it to you.

Mike: 00:19:19

So because so many consumers and, walk in, they feel unprepared.

Mike: 00:19:25

They don’t know, the markets and the environments and the investing.

Mike: 00:19:27

And so the advisor talks a lot about we’re positioned this way because

Mike: 00:19:30

of market environments and the macro economics blah, blah, blah.

Mike: 00:19:34

blah And so you get overwhelmed, don’t get overwhelmed, just simple dollar amounts.

Mike: 00:19:39

What, why are we doing this?

Mike: 00:19:40


Mike: 00:19:41

Just, here are the answers.

Mike: 00:19:42

So I think it’s a really, I think it’s a really good place to start

Matt: 00:19:46

are there, there other options here?

Matt: 00:19:48

I You don’t have to work with a financial advisor.

Matt: 00:19:51

I’ve in my own.

Matt: 00:19:53

Life, as I alluded to before I worked with kind of a hands-on person who

Matt: 00:19:59

had me in mutual funds and et cetera, eventually I changed what I did.

Matt: 00:20:04

In part, because I ended up again, this is a conversation for another show.

Matt: 00:20:08

I ended up with like many people these days I had a job and then I

Matt: 00:20:13

had a different job and there was a different 401k that went with that job.

Matt: 00:20:15

My wife had a job that she had a different job.

Matt: 00:20:18

And so before long, like there are all these accounts and they

Matt: 00:20:20

all have different fees and different this and different that.

Matt: 00:20:23

And it’s I was trying to keep track of all the was a nightmare,

Matt: 00:20:26

so over time I I, ended up working with a different person just as a

Matt: 00:20:30

reset, what are the options here?

Matt: 00:20:31

should you do it all yourself?

Matt: 00:20:33

Should you occasionally check in with someone?

Matt: 00:20:35

Should you work with someone intensively and just understand what you’re paying?

Mike: 00:20:38

Yeah, there are different options Okay.

Mike: 00:20:40

So definitely want to answer that, but let me also advise the listeners

Mike: 00:20:44

out there that might find themselves in a situation again, with the way

Mike: 00:20:47

financial advisors get into relationships is because they find people that

Mike: 00:20:50

have some money sitting around.

Mike: 00:20:53


Mike: 00:20:53

And so you might be, if you find yourself working with an advisor,

Mike: 00:20:56

because Hey, you got some life insurance through them, they were.

Mike: 00:21:00

and then they said, Hey, we can open up you some IROs or some other accounts,

Mike: 00:21:03

if you were contacted by your local bank and they noticed, oh, there’s

Mike: 00:21:08

an extra $50,000 in this account.

Mike: 00:21:10

Do you want to come in and talk with our financial advisor about

Mike: 00:21:13

what we can do with that for you?

Mike: 00:21:14

Which is very helpful, cause it’s just sitting in there in cash and

Mike: 00:21:17

maybe there’s something better to do.

Mike: 00:21:19

But again, got that free advice and they help you set up a portfolio,

Mike: 00:21:23

but then you geez, I didn’t just actually pay this person.

Mike: 00:21:26

I’m like, how am I getting charged?

Mike: 00:21:27

That’s the important question.

Mike: 00:21:28

That’s what we’re highlighting How am I getting charged?

Mike: 00:21:30

What is this costing me?

Mike: 00:21:31

So just ask that question.

Mike: 00:21:32

What is this costing me?

Mike: 00:21:33

So are there options?

Mike: 00:21:35

There’s definitely options first.

Mike: 00:21:37

Understand where you are.

Mike: 00:21:38

We just talked about that.

Mike: 00:21:39

Talk to your advisor.

Mike: 00:21:40

What am I paying?

Mike: 00:21:40

What am I getting?

Mike: 00:21:41


Mike: 00:21:41

That sounds great.

Mike: 00:21:42

Really appreciate it.

Mike: 00:21:43


Mike: 00:21:43

This is perfect, but there are other options as well.

Mike: 00:21:46

You could do it.

Mike: 00:21:48

Right now that’s not a real viable option for many people.

Mike: 00:21:51

It’s not that it’s hard.

Mike: 00:21:53

It just takes extra effort and we’re all busy.

Mike: 00:21:56

And so just like anything else, do you want to mow your own lawn?

Mike: 00:21:59

Or you want to outsource that same thing here.

Mike: 00:22:02

Do you want to handle your investments and do some research and understand some

Mike: 00:22:05

things it’s not particularly tricky, there’s work involved and there’s

Mike: 00:22:09

also the overhead of managing it.

Mike: 00:22:11

Maybe you’ve got a partner and the partner is looking at

Mike: 00:22:14

you you doing all this stuff?

Mike: 00:22:15

So maybe that’s not the best situation

Matt: 00:22:18

My answer to that is always yes.

Matt: 00:22:19

And then I just cross my fingers heck that I’m doing a decent job, on that note.

Matt: 00:22:23

Great advice.

Matt: 00:22:24

That all sounds good.

Matt: 00:22:26

Any other options approaches to consider?

Mike: 00:22:29

Yeah, for sure.

Mike: 00:22:30

So if the, do it yourself, you know, is not appealing you and

Mike: 00:22:33

want to get some other help.

Mike: 00:22:34

There’s hourly advisors.

Mike: 00:22:36

That’s how I started in this industry.

Mike: 00:22:38

And I offer that service, but there are people that work just by the hour.

Mike: 00:22:41

So again, you want to pay that 500 or a thousand or couple

Mike: 00:22:44

thousand bucks to get organized.

Mike: 00:22:47

Get a portfolio, get it implemented.

Mike: 00:22:50

And then you just work with that advisor whenever you want to.

Mike: 00:22:52

And a lot of this can be set it and forget it, get a portfolio

Mike: 00:22:56

that’s going to run on its own.

Mike: 00:22:57

And that advisor will give you a couple things like, oh, when you add,

Mike: 00:23:00

your 6,000 in your IRA this year, just throw it into these percentages.

Mike: 00:23:04

And if you feel doing on your own perfect, you’re set a few years

Mike: 00:23:08

perhaps, or, you could probably call that advisor back up say, Hey, can

Mike: 00:23:11

you just help me once a year for.

Mike: 00:23:13

two weeks?

Mike: 00:23:14

I love it because you know exactly what you’re paying and

Mike: 00:23:16

you know exactly what getting.

Mike: 00:23:17

You defined what you’re getting and you know what you’re paying

Matt: 00:23:20

I like that too.

Matt: 00:23:21

I’ve used that approach myself a few years ago.

Matt: 00:23:24

Set up a meeting like It was a flat fee type deal where it was like,

Matt: 00:23:28

this is what I’m going to give I’m going to give you, several hours.

Matt: 00:23:31

It wasn’t like a per hour.

Matt: 00:23:33

It was, I’m going to give you several hours.

Matt: 00:23:35

I’m going to run through everything.

Matt: 00:23:36

got, we’ll a one-time kind of checkup.

Matt: 00:23:38


Matt: 00:23:39

It’s like approach of to a doctor every year two and getting a little

Matt: 00:23:42

checkup and getting set course.

Matt: 00:23:44

And then if something major changes I can always check in, I could also

Matt: 00:23:48

call you, but I try not do that.

Matt: 00:23:50

I try not.

Matt: 00:23:51

Actually be like, Hey, give me a whole bunch of free counseling because

Matt: 00:23:55

this goes the other way as well.

Matt: 00:23:56

Like I like to feel like I’m paying for value.

Matt: 00:24:01

I like see what I’m paying on the other side and not take advantage of someone

Matt: 00:24:07

else’s labor that I’m not paying for.

Matt: 00:24:10

I want, a very transparent

Mike: 00:24:12


Mike: 00:24:13


Mike: 00:24:13

And it gives you comfort, knowing what the, what that person does and

Mike: 00:24:16

what they charge for that service.

Mike: 00:24:18

And we should have an episode on mat, so that’s hourly, but what you mentioned

Mike: 00:24:21

there is like flat fee is what we call it.

Mike: 00:24:24

I’m pay $2,500 for kind of a full plan or like that or these services.

Mike: 00:24:29

And so you’re not paying literally by the hour.

Mike: 00:24:31

that’s really great.

Mike: 00:24:32


Mike: 00:24:32

can do that.

Mike: 00:24:33

Th the third option that they’re out there.

Mike: 00:24:34

Some of the big brokers.

Mike: 00:24:36

Vanguard, fidelity TD Schwab, they have some advisory services

Mike: 00:24:42

and some of those are free.

Mike: 00:24:44

So you put your a hundred or $200,000 with fidelity.

Mike: 00:24:47

You could have a call with them and say, Hey, can you help me set up a portfolio?

Mike: 00:24:51

Listen, they’d be happy because year, $200,000 is sitting with.

Mike: 00:24:55

They’re happy to give you an hour a call help you use fidelity funds.

Mike: 00:24:59

Yes, they will use their funds.

Mike: 00:25:00

Another way they get paid, but they’re super low cost funds

Mike: 00:25:03

and ask them that question.

Mike: 00:25:04

Hey, what funds are we using?

Mike: 00:25:05

What’s expense ratios.

Mike: 00:25:06

Oh, cool.

Mike: 00:25:07


Mike: 00:25:07


Mike: 00:25:07

low cost.

Mike: 00:25:08


Mike: 00:25:08

They’ll get you all set up, and that can a really, I’ve heard good

Mike: 00:25:11

things about those services as well.

Mike: 00:25:13

So there’s another option for getting set up with your accounts.

Matt: 00:25:16


Matt: 00:25:16

When I opened five to nine accounts for kids for their college and we covered

Matt: 00:25:20

in our last, episode now I actually know what I actually feel better I,

Matt: 00:25:24

anyway, people should check out that episode about saving college, but

Matt: 00:25:26

That’s exactly what happened to me.

Matt: 00:25:28

I set up those accounts and once they reached a certain.

Matt: 00:25:32

Level I started getting offers from the firm was of these big ones

Matt: 00:25:37

saying, Hey, help advise you here.

Matt: 00:25:40

I’m guessing, based on the of our whole conversation here,

Matt: 00:25:43

that it’s still a good idea.

Matt: 00:25:44

If you avail yourself of that and say, sure I’ll set up meeting still a a

Matt: 00:25:48

good idea to ask, Hey, just upfront.

Matt: 00:25:51

So I understand if you steer me to certain investments, what’s, Fidelity’s end

Matt: 00:25:55

of are you doing this, entirely blind?

Matt: 00:25:58

Totally in in my best interest or how do I understand the differences

Matt: 00:26:02

that may be happening here.

Matt: 00:26:03

I assume you still want to do that

Mike: 00:26:05

yeah, you definitely want to do that.

Mike: 00:26:06

And it’s simple.

Mike: 00:26:07

Just say, how are you getting paid?

Matt: 00:26:09


Mike: 00:26:10

I appreciate, I super appreciate your service, just so I understand, just

Mike: 00:26:13

want to make how are you getting paid for the value you’re bringing to me today?

Mike: 00:26:16

And then just get a good answer.

Matt: 00:26:18

and I, and maybe is there any incentive for your company to play.

Matt: 00:26:23

Me in one kind of fund or another, as a possible that, one

Matt: 00:26:27

would have a higher fee for you.

Matt: 00:26:29

Should we just know that and talk about it upfront because that’s fine.

Matt: 00:26:33

may be that is the best thing for me, but I just want understand what it is and make

Matt: 00:26:37

sure I understand the value proposition.

Matt: 00:26:39

That’s not like dissing anybody.

Matt: 00:26:41

That’s that’s the same thing you would do if were going to buy a

Matt: 00:26:44

car, any other major transaction.

Mike: 00:26:47


Mike: 00:26:47

No, absolutely.

Mike: 00:26:48

And the good news is in terms of these larger brokerages, from what I’ve seen,

Mike: 00:26:52

they’re usually very low cost funds because they now have all those funds.

Mike: 00:26:56

So they definitely weren’t gonna use their own branded funds,

Mike: 00:26:59

but they tend to be low cost.

Mike: 00:27:00

But the question is really important to ask.

Mike: 00:27:02

So yeah, definitely agreed on that.

Mike: 00:27:03


Matt: 00:27:04

Am I crazy here to say that there’s a little bit like you’re

Matt: 00:27:06

in Vegas and you play long enough at the casino, they’re like, we’re

Matt: 00:27:09

going to comp some drinks because.

Matt: 00:27:11

To them, Hey, look, you’re in the casino.

Matt: 00:27:14

And so a good business proposition.

Matt: 00:27:15

I’m saying that tongue cheek, but actually from the standpoint of fidelity

Matt: 00:27:18

or one of these bigger investment companies, it’s like, yeah, if you’ve

Matt: 00:27:22

got a couple hundred thousand dollars with they are more than happy to

Mike: 00:27:24


Mike: 00:27:25

No, that the analogy is really good.

Mike: 00:27:27

And I’ll take one step further, Matt, a couple of hundred thousand.

Mike: 00:27:30

They give you a couple drinks.

Mike: 00:27:31

If it’s a couple million, they a copy, a room.

Mike: 00:27:33

So as you have more money, actually get, a lot more services from these

Mike: 00:27:37

guys because they want to keep you a happy customer, within their sphere

Mike: 00:27:42

which good, take advantage as a country.

Mike: 00:27:44

Take advantage of that stuff.

Mike: 00:27:46

And know what you’re paying, that’s the episode’s about, but also take advantage

Mike: 00:27:49

of what’s out there for you that you can, that is, makes sense and is good.

Matt: 00:27:53

it’s if you have a credit card and you get bumped up because you have

Matt: 00:27:56

been moving a lot of money through your credit card, it’s probably the

Matt: 00:27:59

greatest idea, but you pay your bills on time and they’re like, all right.

Matt: 00:28:02

look, your credit limit up.

Matt: 00:28:03

And we’re going to give you platinum card that has these advantages.

Matt: 00:28:06

And it means that you get let into the VV VIP when you’re

Matt: 00:28:11

at the club or whatever it is.

Matt: 00:28:12


Matt: 00:28:13

That’s a good thing.

Matt: 00:28:13

And the way, in all seriousness, we did an episode about this.

Matt: 00:28:17

That was really eyeopening for me about this was one of those like tricks type

Matt: 00:28:21

things, but it’s actually like a really beneficial, weird trick that at a

Matt: 00:28:25

certain level, you may get an offer to borrow money at a very low rate where

Matt: 00:28:31

the interest rate that pay is below what you’re going to earn in the market.

Matt: 00:28:35

It’s the kind of deal that was only open to the ultra wealthy, but could.

Matt: 00:28:39

Available to folks like you and me.

Matt: 00:28:41

So anyway, that, that makes entire sense to

Mike: 00:28:44


Mike: 00:28:45


Matt: 00:28:46

All right?

Matt: 00:28:46

And people should check out that episode and thank you for listening to episode.

Matt: 00:28:50

All right.

Matt: 00:28:50

Let’s sign off before we go off

Matt: 00:28:52


Matt: 00:28:53

any more tangents on this.

Matt: 00:28:54

I met Robinson for Mike Borden.

Matt: 00:28:56

Thanks for joining the show.

Matt: 00:28:57

We’ll see you next

Mike: 00:28:58

Thanks Matt.

Mike: 00:28:59

Thanks for joining us on financial planning for entrepreneurs.

Mike: 00:29:03

If you like, what you heard, please subscribe to and rate the podcast on

Mike: 00:29:06

Apple iTunes, Google play Spotify, or wherever you get your podcasts.

Mike: 00:29:11

You can connect with me on linkedin or

Mike: 00:29:16

I’d love to get your feedback.

Mike: 00:29:18

If you have a comment or question, please email me at

Mike: 00:29:21


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