March 3, 2025 • 29 mins
A clear understanding of how to select the right financial advisor can simplify your journey toward financial success. We discuss five essential questions that are key to uncovering an advisor's capabilities and compatibility with your needs, ensuring that you are well-informed before making a decision.
• Importance of asking if the advisor is a CFP
• Assessing whether the advisor works with clients like you
• Understanding their tax planning role and approach
• Evaluating the advisor's commitment to accountability through holistic planning
• Clarifying how the advisor is compensated and structure of fees
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Ari Taublieb, CFP ®, MBA is the Chief Growth Officer of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.
“Early Retirement – Financial Freedom” is a podcast produced by Root Financial Partners, an SEC-registered investment adviser. The content provided is for informational and educational purposes only. It should not be interpreted as investment, legal, or tax advice. I may reference planning situations based on real client experiences, but they’ve been simplified for clarity. Always consult your own financial advisor before making decisions.
Listening to this podcast does not create or imply an advisory relationship with Root Financial. Investing involves risk, including the potential loss of principal. Past performance does not guarantee future results. Testimonials and endorsements do not reflect all client experiences and are not compensated. Learn more at our website or by reviewing our Form ADV at https://adviserinfo.sec.gov.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
These are five questions that I would ask.
If you are interviewing afinancial advisor, I'm going to
tell you the questions and I'mgoing to give you my answer, and
if you're interviewing multipleadvisors, you can even compare
my answers to those other peopleyou're talking to.
Now, many of you who watchthese podcasts on YouTube, as
well as listen on the podcastapp, you know I'm all about
(00:21):
transparency here at Root.
That is one of our foundationalbeliefs.
So, with that being said, we'regoing to hop right in.
These are the five questions.
So, number one are you a CFP,which stands for Certified
Financial Planner?
And I would go to your advisorand this is the first thing I
would do or potential advisorthat you're considering to hire
(00:43):
and see what they say?
So, part of these questions,I'm going to need you to be like
an investigator and readbetween the lines.
I am a very skeptical personreasonably, in my opinion,
because my parents were burnedby four advisors.
They started at one firm wherethey really liked it it was a
household name but they foundtheir service was lacking.
They only talked once a year.
They didn't feel they reallycared about them.
They felt like a number.
So they went to this other firm.
(01:03):
I'm not going to say the namesand get them in trouble, but
they went to this other firm andmy parents have a million
dollars and they allow me totalk about that.
They live in Malibu in abeautiful home, but they're
working largely because theylike spending a good amount of
money and there were some poorfinancial decisions along the
way, although they gave mybrothers and I a great life.
I promise I'm going to get backto the questions, but the point
(01:24):
as to why I'm telling you thisis that was their second
advisory firm, where my parentslive on a street with a lot of
wealthy people.
They're less wealthy than them,and so this one couple my
parents make movies for a living.
They made the Vow.
If you've ever heard of thatmovie Rachel McAdams, channing
Tatum, rom-com go check it out.
(01:45):
And so they also dodocumentaries which aren't as
financially savvy.
Should I say financiallyrewarding?
That's the word I was lookingfor there.
And so my parents have a friendthat has $20 million, and so
they said hey, you know, talBleebs, I think I can get you in
to work with our advisor.
And they're like that soundsgreat.
And you know, then we're withthe big shots, you know.
And what happened is they goteven worse service because they
(02:06):
were such a small client there,they were barely looked at.
And then they're like okay,we're going to go to this other
company Many of you are going toknow this by just the way I
talk about it Super low cost,well known, yeah, maybe we could
do better elsewhere.
But look, we don't know, wedon't know, and so we're just
going to start here.
And we're just going to starthere, and then they're like
(02:27):
that's still, I need tax help, Ineed a state help, and there's
no organization here.
And so then they're like Istill need help.
What do I do?
That's in large part why I'm anadvisor today.
But to answer the question, Ihope you connect the dots here.
My first question is are you aCFP?
Cfp stands for certifiedfinancial planner.
If someone goes and says, yeah,oh yeah, I'm a CFP, certified
financial planner, how cool am I?
(02:48):
When do we start workingtogether?
Sign right here.
I mean, I know you worked hardto get this $2 million, but
trust me, I'm going to takebetter care of it.
You don't really know what youwere doing.
Let's put it in my.
I'm just joking here, but theidea here is just because
someone's certified, do not hirethem.
How many MDs would you neverlet touch your body?
I would not allow 99% ofcertified financial planners to
(03:16):
manage a dime of my money.
Now, that sounds bad and I betother people would have a
different number.
Maybe it's 90% or 70% orhopefully 10%.
But there are a lot of peoplethat I studied with for my
certified financial planningdesignation that I spoke to and
in three seconds immediatelywould never let them order for
me at Chipotle which I take myChipotle order very seriously
for those who do not know Extrawhite rice guac every single
(03:39):
time, double chicken, dependingon how it looks.
So anyways, obviously I getsome other toppings, but too
much for today.
So, number one I'll kind of cutthe stories and jokes because I
want to get through all these.
But are you a CFP?
Cfp is the minimum.
That's to even talk.
That is maybe we should talk.
That's all that means I'm a CFP.
You should not work with mebecause I'm a CFP.
All of that work for me here atRoot are CFPs.
(04:02):
You should not work with themjust because they are CFPs.
Number two do you work withpeople like me?
So a lot of this is ask thequestion and then just shut the
heck up and hear what they say,because you're gonna be able to
get their tone.
It's really not only about whatthey say.
So, if you say so, do you workwith people like me?
And they go, of course, youknow I help people retire.
I love helping people retire.
Okay, awesome.
(04:24):
Well, what if you want to retireearly?
Oh, of course, yeah, I helppeople retire early too.
And yeah, yeah, yeah, okay,well, I have a lot of equity
comp and so how does that getbrought into this?
Oh, don't worry, we havespecialists that can talk about
that.
Oh, is that a different personI'll talk to for that?
No, no, I can do that, don'tworry.
(04:49):
Okay, what about my spouse?
Because they're not going to beinterested in this.
I'm the one kind of running thefinancial show.
Don't worry that they won't beinvolved.
What if I require them to beinvolved?
Oh, then they'll definitely bethere.
Yeah, it's important they'rethere.
So what I find is people justchange their answers left and
right, both from an advisor'sperspective to try to get new
business and from a client'sperspective to try to become a
client.
That does not lead to a goodlong-term relationship.
So you need to be clear on whatyour goals are in your advisor
and they need to be clear, in myopinion, about who their dream
(05:10):
client is, because if you're nottheir dream client, they're not
going to love working with youand it's not their specialty.
For example, we help people atroot retire early with
confidence, but they don'tactually always retire early,
which means they go.
Well.
It's good to know I don't needto keep working.
I'm going to keep workingbecause I want to, not because I
(05:31):
have to, and if I don't want towork anymore, I don't have to.
It's the early retirementaspect, in addition to the tax
strategy.
That's why most people arecoming to us.
I tell this story often, butI'll tell it real quick, and
this is number three.
Most people are coming to us.
I tell this story often, butI'll tell it real quick, and
this is number three.
Number three who will do my taxplanning?
That is the question that youshould ask.
Who will do my tax planning Ifthey go like this?
(05:55):
This happened to my parents.
So you know, advisor, I'mreally interested in working
with your firm because you guysare just so awesome and you put
these videos out, you're so cooland you think you're cool, but
I just, I don't think you'rethat cool, but anyway, I need
someone, so maybe you'll managemy money.
Who's going to do the taxplanning, the tax strategy?
And if they say, don't worry,I'm going to connect you to an
awesome CPA, they're going tohelp out.
That is a red flag, and thereason that's a red flag is for
(06:17):
the story I'm going to tell youright now.
So this is about eight monthsago.
I'm recording this in February.
This will be launched in March,most likely maybe April, but
2025.
So there's a true story.
Someone came to me.
They said Ari, my CPA sucks.
I said that's a weird word.
Why do they suck?
They said well, they didn'ttell me tax brackets are
(06:38):
changing soon and that'simportant because that impacts
my plan.
I said what else they're like?
Well, they didn't really tellme that if I keep my income low,
I can pay way less in thesehealthcare premiums.
I learned that from you, noteven my CPA.
I said what else?
They kept going on and on.
I said don't worry, I found theproblem.
They're like thank God, youagree, we caught them.
They suck, omg.
(06:58):
I said they don't suck andyou're beating up a waiter.
They're like I don't understandthe analogy.
You and your dang analogies.
I said your CPA's job is tofile your taxes.
They have the competency to dotax planning.
They do not have the time.
They have the worst schedule inthe world from the IRS.
They are already burdened.
(07:19):
Their job is to bring food toyour table and 500 other tables.
They are not going to come toyou with the ambience of the
restaurant and seasonal menu.
An advisor is supposed to do taxplanning and what I find is
most of the time, if you'reworking with an advisor, I'd say
about 70% of people that cometo work at Root are coming from
(07:41):
a different advisor.
They go yeah, every time I askmy advisor a tax question,
they'd tell me to talk to my CPA.
My CPA says talk to my advisor.
Now I feel like I'm justcoordinating all of this all the
time and I said, yeah, that'scrazy.
They're like what do you mean?
Isn't that how this works?
No, that's the job of anadvisor.
We do all the tax planning.
We do all the harvesting, rothconversions, rebalancing, equity
(08:04):
comp.
We do all the tax strategy.
We just tell your CPA what toput so that they file the return
properly.
So CPAs love us, and that'swhat planning is supposed to
look like.
So, if they go, yeah, you know,we have an outside team that
you'll talk to.
Okay, there's probably gonna bea lot of different outside
teams for a lot of differentthings, and then you're going to
be a coordinator.
And so number three really isthat tax piece.
(08:26):
So if an advisor doesn't askfor a tax return, that is the
red flag.
If someone cannot see your taxreturn as an advisor, I do not
know how they could give anyguidance at all, ever.
That is just the truth.
Number four is accountabilityDo you do holistic planning?
So, for example, if you were toask, do you do holistic planning
, they might go yeah, we doholistic planning.
Whatever it is you need, we'lltake care of it.
(08:48):
Okay, what does that reallymean?
For example, I would tell aclient we do holistic planning.
What that means is we're goingto manage your portfolio, we're
going to be giving you taxguidance, we're going to be
actually making the estateplanning documents, meaning
creating those wealth, whetherit be trust wills, medical
directive, power of attorneys.
You're gonna be filling out ourpurpose finder, which is
something that we take veryseriously, so that when you do
(09:09):
retire, you go oh my gosh, Iknow exactly what I want to do.
I'm excited.
It also gets your spouse moreinvolved and interested in
finances, who traditionally isless so.
In addition, we're going toevaluate all insurance but we
don't sell anything becausethat's a conflict of interest.
And, by the way, we're alsogoing to have a dynamic
withdrawal strategy.
But that's not the reason youshould hire us.
You should hire us so you don'thave a new job, so that we can
(09:31):
be proactive and act as apartnership, because we talk way
more often than twice per yearAt first.
When someone works with Root,the first one to two months, we
talk every single week, biweeklyif your schedule prefers it,
because there's a lot we need togo over, build the blueprint On
an ongoing basis.
We're speaking a minimum ofthree times per year because
when we meet with clients, wewant to meet with you.
(09:53):
That's what keeps our job fun.
So when we do holistic planning, I'm excited for the meetings
because there's a lot we need totalk about.
That's how I would answer that.
But some people will say, yeah,we do.
You know investments, insurance, taxes.
But what they're saying isinsurance question yeah, go talk
to an agent, I'll send yousomeone tax planning.
Yeah, I'll send you to a CPA,they'll answer your tax
questions.
(10:13):
So this happened to someonerecently.
Someone reached out and saidAri, I'm retired.
And I said I don't believe you.
They said, well, you're nutsbecause you don't sleep next to
me.
So how the heck would you know?
I go, yeah, I just don't thinkso.
They're like well, you're crazy.
I go, I already know that.
But my point here is I said,look, I'm not saying I don't
really believe you.
What I'm saying is I think youalso have a new job.
(10:34):
So, yeah, you're retired fromyour traditional W-2 job, but I
now think you're coordinatingyour retirement between a
long-term care specialist,between a CPA, between an estate
planner, between your financialadvisor.
And they're like yeah, yeah,yeah, isn't that how this works?
I said, no, that's what afinancial advisor is supposed to
do.
The tough thing about ourindustry is we're all called
financial advisors and we all dovery different things.
(10:55):
So, knowing that holisticplanning, the next one number
five I have here is how are youcompensated?
So this is very important.
The next one number five I havehere is how are you compensated
?
So this is very important.
Most advisors are compensatedbased off new dollars that join
the firm because that's morerevenue for the firm.
That's how most advisors work.
That's not how we work.
The way we work with clients isbased off two things.
(11:16):
Number one is net promoterscore.
For those of you familiar withnet promoter scores or NPS
scores, our net promoter scoreis a 90.
With net promoter scores or NPSscores, our net promoter score
is a 90.
The traditional, actually theaverage in our industry, in the
financial industry, is a 44,which is not very good.
And so net promoter score isbasically how likely are you to
promote or recommend thoseservices?
(11:38):
That's taking one aspect of thecompensation.
The other aspect is our clientstaying is their retention.
So my advisors, their incentiveis to not take a client who
they don't think is a good fit,because if they don't think
they're going to stay long-termbecause they don't think it's
going to be a good fit, well,that won't compensate them well
over time, as opposed to certainadvisors and I know this
(12:00):
happened to my parents myparents spoke to an advisor.
That advisor sold them acertain product.
Once they had bought theproduct, that advisor had no
incentive to come and beproactive with my parents.
They had already made theirmoney.
So understand how your advisoris paid and understand if there
are any other hidden fees.
For example, the only fee isthe one fee that people pay us
and that is based on assetswe're managing, so that's a
(12:22):
tiered structure.
So let's assume we're managing$2 million.
The first million is billed at1% $10,000.
The next million is billed at0.75%, that's $7,500.
So $17,500, that's the annualfee working with an advisor.
The thing is that many peopledon't know is where are those
funds coming from?
(12:42):
Now stick with me because thisis an important analogy.
If you already know what I'mgoing to say, I'm going to be
incredibly impressed because Ibet 2% of you are going to know
what I'm going to tell you rightnow.
But for those of you who doknow, you work at Root, so
you're aware of this like workwith Root.
And for those of you who don'tknow, this is probably already
happening and it's just a nicebenefit that you may have never
been explained.
So let's imagine you went tothe grocery store and you went
(13:06):
to go buy some eggs and you saidI want to check out at the
grocery store, I'm going to buyeggs, I want to do with my 401k.
You know what happened.
The person checking you outwould probably laugh at you.
Now they might go hey, you're abig baller, you got a million
bucks in your 401k.
Can I be you one day?
Oh my God, did you get thisfrom OnlyFans?
No, they wouldn't say that.
Okay, I'm just messing aroundhere.
But they would probably go.
Okay, like, excuse me, sir,ma'am, you can't check out with
(13:30):
the 401k.
You put money into that.
You got a tax deduction.
It grows tax deferred, so youdon't pay taxes along the way.
But then eventually, when youtake the money out, you have to
pay taxes.
So if you want to buy theseeggs, you got to go sell
something in your 401k.
And I don't care how old youare.
If you want to do it before 59and a half and pay a penalty, be
(13:53):
my guest Depends how bad youwant the eggs.
I mean, I know they are pastureraised, so if you want you can
get them.
But there's also something youprobably don't know about
anything I just told you, whichis what?
If you could go to the grocerystore and check out with your
401k, I mean how cool would thatbe right?
Well, that's how it works withan advisor, in a way, let me
explain the way we work withclients, the way we can bill.
(14:14):
This is legal.
This is not Ozark style.
If you've seen that Netflixshow, it's based proportionately
on the assets we manage.
So someone's probably not goingto try to explain this to you
because they probably just thinkyou're not smart enough in
reality, or they're.
It sounds harsh saying it thatway, but I know if, like,
imagine, you go to the doctorand they're explaining here's
why you need to take the pill,because of blah, blah, blah,
(14:34):
blah, blah, like I know even memight be like hey, I trust you,
you're my guy, I'm taking thepill, but I know people that
wouldn't, so maybe I take thatstatement back.
Regardless, my point here isthey probably don't want to
spend the time and energy toexplain it, even though they
should, and I see this all thetime.
So here's the point.
Let's imagine you have $1million, okay, and you're going
(14:57):
to go to an advisor and 1% isthe fee.
That's $10,000.
Well, let's assume that's all.
In a 401k, $10,000 is the annualfee, right?
I don't care how I get paid, Ijust need to get paid.
If I send you an invoice that'snot really tax efficient for
you.
You have to go pay me withafter-tax dollars.
How cool would it be if youcould pay me from your 401k?
You can.
(15:18):
That's what's cool aboutworking with an advisor.
It's not the reason to workwith an advisor.
But what if you're inCalifornia, like me, between
federal and state?
What if your tax bracket is 40%because you're a big baller?
Okay, if you're a big baller,well, you put money into this
401k.
You got a tax deduction.
It grows tax deferred.
I don't know if you can hearthe sirens through my microphone
(15:39):
right now, but they're freakingout about this concept too
right now.
So you can see you put moneyinto a 401k grows tax deferred.
You take the money out.
You don't pay taxes on thatwhen you pay the advisor.
So it's essentially like you'resaving $4,000 a year because
you can pay me directly fromyour 401k.
I can debit that account.
Why is that so powerful?
(16:01):
Well, the reason it's sopowerful is, if $10,000 is the
annual fee, it's still the fee Ineed to get paid 10,000, but I
don't care how I get paid it.
I can go to your tax preferredaccounts, your tax advantageous,
tax preferred, whatever youwant to call it 401k rollover
IRAs, and I can debit thoseaccounts directly.
(16:22):
Now, who does this not apply to?
Well, let's assume that all ofyour money is in what I call a
superhero account or a brokerageaccount.
I'm talking you have $5 millionin there.
Well, you're still the annualfee on $5 million.
I'm pulling up with my fancydancy spreadsheet here and I'm
going to share this with myscreen so all of you guys can
(16:43):
see this.
If you're listening, awesome,keep listening.
If you're watching, I'm goingto have this pulled up so that
you can watch it along with me.
But $5 million, the annual feebe $40,000 a year, which is a
lot of money I'm the firstperson to recognize to go.
Here's what it makes sense to dothis and when.
(17:04):
It definitely does not.
And the annual fee is 0.8%.
But let's assume their taxbracket this person was in the
40% tax bracket Okay, well,that'd be a 16,000 a year annual
savings If all this money wasin a 401k.
So their true fee would be$24,000 a year or 0.48% on a
tiered structure.
What does that mean and why am Igoing through this?
What I'm saying here is, if youhave a brokerage account and
(17:26):
that's all you have, there's notan additional tax benefit.
You might still want to workwith an advisor, but you don't
get like extra points for it.
You can't buy eggs with yourbrokerage account and get a
special benefit If you're at thegrocery store and you wanted to
buy eggs with your 401k, youcan't do that unless that person
is an advisor.
So the point as to why I'mgoing through this is someone
(17:46):
left a comment on a video that Iput out, and the video I put
out said the following.
It said is it crazy paying30,000 a year to an advisor?
That was the title of the video.
I asked my marketing team I go,are you sure you want that as
the title?
They go yep, I go.
Okay.
So here's what they said.
Ari, thank you for sayingsomething to me that was an
epiphany in the financialrationale for working with an
advisor.
(18:06):
22 minutes into the video, youbroached a fee payment mechanism
that focused on paying for themost tax efficient location in
one's portfolio IRAs undermanagement.
I only learned this recently,but it's a no-brainer for any
penny-pinching prospectiveclients On tax-deferred accounts
.
It means paying 22, 24, 32%less on management fees than if
(18:27):
you paid those same fees aftertaxes.
Why other financial managers,rias, registered investment
advisors don't trumpet.
This is beyond me.
This is the first I've seen.
On breaking this down.
As my journalism teacher inhigh school would have said
don't trumpet, this is beyond me.
This is the first I've seen.
On breaking this down.
As my journalism teacher inhigh school would have said,
don't bury the lead.
Thank you for an insightful andwell organized video on the
value of advisors, includingfinancial.
So all of this, if you said,ari, I don't understand the eggs
(18:48):
and the 401k and none of that,it's just over my head I
wouldn't blame you because it'snot a perfect analogy I'm trying
to find a better one but theidea is you get a big discount
working with an advisor if youhave a pre-tax balance, which
most of you have, which is whyI'm referencing that Now.
Finally, the question the sixthbonus question to ask an advisor
(19:08):
is why are you an advisor?
An advisor is built off oftrust and if they go like this
which I've heard, by the way,because I interview advisors if
they go, you know I love thework-life balance and I just
love that I can help people Okay, great, that's kind of any job,
and that does not tell me thatyou love your job.
For example, why do I lovebeing an advisor.
Well, as of today, obviously,I'm making lots of videos and
(19:31):
doing podcasts and running thebusiness and training.
Advisors do a lot of differentthings.
But I'm gonna ask one of myadvisors this and I'm gonna
steal their answer because theiranswer is great for this.
I said why do you like being anadvisor?
And I have one advisor here,his name is Jeff, and he gave me
the answer where he saidbecause I gave great advice to
clients and they wouldn't takeit.
And I said that's not a greatanswer.
Why don't you just tell me thathe?
(19:53):
I've been working at Schwab for11 years and I would give these
clients great advice.
I'd show them these graphs andnumbers and I'd realize that, no
matter what I told them, theywouldn't take the advice.
And so the reason I love beingan advisor is I'm just talking
to people, and Jeff has a degreein behavioral finance, which is
basically why is it that, nomatter what I see on a graph or
(20:13):
what numbers, I still don't feelconfidence to retire?
I still don't feel I knowexactly how much I can spend.
I feel somehow like I'm behindsometimes.
Well, that's because you're ahuman, you're not a robot, and
most of my advisors love beingan advisor because they want to
advise in a way that a friend orfamily member did not receive
advice, in a way that they feltwas ethical.
(20:34):
That's most people.
My advisory story started when Iwas at a gas station and I need
my car to get fixed and someonegave me a quote to get my car
fixed.
That was totally unethical andthey were taking advantage of me
and I could feel it because Iwas a young kid and they went
this kid's from Malibu, so we'regonna just make sure we get as
much money on him and he doesn'tunderstand his privilege and
(20:55):
it's like, hey, I know a ton ofpeople that I felt that way
about in high school andotherwise.
But, like, my point here is, Idid not like the feeling of
being taken advantage of.
I want life isn't fair, but asmuch as possible I want it to
think I'm in a fair world.
And the point here is I wantyou to know that the person
you're working with has a driveand a fire to do awesome work
(21:17):
for you, and that's verydifferent to have a job than a
career of.
Do they want to be an advisor?
And so we have some episodes,if this is of interest, on our
Root Financial YouTube channelwhere we go deep into culture
behind the scenes how I selectadvisors, what advisor
requirements are to work here atRoot, how we go to these kind
of next level depth to find thebest talent.
(21:39):
Some of you are mad at me.
You're like why is there such along waiting list to work with
Root?
Well, I don't just hire anyone.
I wait for people who areproactive to get this job
because that tells me they'll beproactive working with clients.
So these are some questions tothink about.
There's way more.
I mean, honestly, I'll just dooff the top of my head because I
didn't put this agenda in fortoday, but I love getting to do
(21:59):
this, as you know.
Other questions I would ask ishey, what's your investment
philosophy?
For example, ours Generallylow-cost ETFs, but we don't just
sit there and do nothing,because there are times where we
need to be advantageous.
But we also don't believe inmarket timing.
So we believe in a dynamicapproach built with the
foundation of what we call rootreserves, so that you always
have enough safe money whereyou're never worrying about if
(22:21):
markets don't do well.
Do I not get to take the trip Iwant to take.
So it's built in thisfoundation of we believe in low
fees.
We don't believe in activemanagement.
We believe that's like going toWhole Foods and buying paper
plates you don't need to do that.
But we also don't believe injust only index funds, because
that's like the dollar storeYou're going to eat.
It's better than 80, 90 percentof what's out there in the
(22:44):
industry.
But we also don't believe inactive management.
So there's almost like a middleground of Trader Joe's, if you
will, and I use that analogywith clients.
And so investment philosophy isimportant.
But wait, do you do alternativeinvestments and rate real
estate and equity comp?
And yeah, we give guidance oneverything.
But our investment philosophyis we want to keep it simple and
we don't believe in ROH returnon hassle.
(23:05):
Look, we could get supercomplex and fancy and all these
amazing reports and that thatwhat we find doesn't give
confidence.
What we find is clientsunderstanding how much they can
spend comfortably givesconfidence.
I would ask questions hey,what's turnover for advisors?
How often are advisors quittingat your firm?
I'd ask them why are theyworking at their firm?
They might go well, it's a bighousehold name and we've got
(23:26):
lots of technology and assetsbehind us, they might go.
No, it turns out we're actually.
I'm here because I started mycareer here and I've built
friends and family, and you knowyou'll be surprised the answers
you get.
I would say, hey, what's yoursuccession plan Like?
What happens if you retire?
What if you win the lottery?
What happens if, by the way,after a month, I don't like your
(23:48):
guys' services?
Like what then?
Well, those are the questionsthat I would want you to go deep
into when hiring an advisor.
The reason that we do specificholistic planning at Root in our
process is the first step isyou reach out to get all these
questions answered for you andyour situation.
So by the time you do startworking with Root, you're like
I'm over the moon, peace of mind, this is my team, let's get
(24:11):
into it.
But everything is done monthly,all billing is done monthly,
and the reason for that is whenmy parents were with one of
their advisors, they wanted toleave after a year and they
couldn't, and that doesn't makeany sense.
Now, the reality is they could,but there were some things that
were going to create issues ifthey did, from a banking and
annuity and other perspective.
And so it's just I don'tbelieve in that.
I believe we need to add valueevery month or you shouldn't pay
(24:33):
us, and there's value from tax,investment, estate, healthcare,
withdrawal and then, of course,partner trust that there are
things that you can't quantify.
So good planning, a goodrelationship with an advisor I
don't think everyone needs anadvisor.
I'm the weird guy that says thatIf someone comes to me and
they're 50, with a million bucksand a 401k and they want to
retire in five years, I don'tthink they need necessarily an
(24:55):
advisor.
Maybe they need some advice andthat's where I'll recommend my
academy as an option for that.
But they don't need to pay us10,000 bucks a year.
There's not a ton we can do,because the reality is their
money's in a 401k.
They need to go, pick the fiveright investments, max out their
brokerage account or 401k andthen put money to a brokerage
account, make sure they're ontrack, like that's what they
(25:15):
need to do.
But that's very different tosomeone who's generally one to
five years out from retirementwith enough assets to go.
Hey, there's a level ofcomplexity where an advisor
could really help, becausethere's things I otherwise just
couldn't know.
So hiring an advisor is allabout timing and for some people
it's hey, they need an advisorright now and they could get
help.
For some people it makes sensein a year.
(25:37):
For some people it makes sensein 10 years.
It has to be custom.
That's what planning looks like.
So these are the five questions.
I know I went even longer, buthopefully this was helpful.
If you're interviewing otheradvisors, we certainly recommend
everyone, before they evenreach out, to work with Ruth.
They've either had an advisorin the past or they've
interviewed two.
And then the final thing.
I'm going to share my screenhere for this part.
(25:58):
Once again, I'm going toexplain it so in case you are
just listening all good there,and many of you are just
listening In the Root Collective, which is our community, there
are clients in there.
There are listeners, just likeyou.
There are viewers you mightalready be in here.
There's a section here thatsays clients like why did you
join Root?
If you're a current client,please share these four things.
(26:18):
How'd you find us?
Were we your first advisor?
Do you come from another firm?
Which advisor do you work withand why did you ultimately join
Root?
Bonus, what's one word todescribe your experience.
And there are hundreds ofpeople putting their answers in
here and some of them are reallyinteresting, and so some of
them are hey, it's.
I share the same values as rootand I just you know there's a
(26:44):
comfort there.
Some people are saying you knowthe truth is, is it felt weird
Like I was hiring an advisor Iwas listening to on Spotify and
then I went to their YouTubevideos and so now I just I'm
working with one of my you knowadvisors here at root and it
just feels different.
There's one answer I'm going toshare here that I just like
because of how transparent itwas, and so this is someone.
They said let me pull it upright here.
(27:05):
Okay, they said we found Rootwhile watching many YouTube
retirement income shows.
Root is the first advisor we'veever hired.
We joined Root to get help toimplement our successful journey
from switching from a saving tospending mindset.
I had a major health issue fouryears ago and it is comforting
to us to have some place andhelp in case my wife is gone.
(27:25):
And I said thank you,appreciate it.
And they replied saying JJ andBen, the couple that they work
with here, the team.
They've been instrumental ingetting my wife to relax and to
dream about what's possible inretirement.
In a way, I couldn't haveLooking forward to next steps.
We just booked a trip to Kona,flying first class, and another
to Jamaica.
Lots of discussions about whatis possible and the changes we
may be able to make in the waywe approach vacations as well as
(27:48):
daily life.
The reason I'm mentioning thatis many people think talking to
an advisor is here we go.
More numbers and graphs.
Hit me with it.
That is not most of ourrelationships, like, yeah, we're
going through the deep planning, but it's rooted with, hey,
what is the goal?
What is it?
Is it to retire early?
Is it to spend more time withfamily or friends?
Like, why are we really doingthis?
So definitely, at a minimum.
(28:09):
I encourage all of you guys goin this community, go join, see
what people say in here.
And that's all I got for youtoday.
I'll see you guys next time.
If you like this, please doleave a review on Apple podcast
or Spotify or drop a comment onYouTube.
That helps more people find theshow.
I love getting to do this.
Hopefully you guys resonatewith my little wacky style.
I try to keep it entertainingfor you, but if there's any
(28:33):
other comments or feedback.
I'm super open and transparent,so just send me a note.
Thanks, guys.
Thank you all, as always, forlistening to the Early
Retirement Podcast.
I love getting to host theseshows and make different content
for you guys every single week.
I've not missed a single weekin years and that is because I
love getting to do this.
Now, please be smart about this.
(28:53):
Before you actually execute anystrategy that you see me talk
about or hear me talk about,should I say please talk to your
financial advisor, your taxpreparer, your estate attorney.
Please be smart about this.
None of this should beconstrued as financial advice.
This is for fun, educational,informational purposes only.
Once again, just quickdisclaimer here.
(29:14):
Guys, please be smart aboutthis.
Appreciate you listening, asalways, and you can, of course,
submit a question on my website,earlyretirementpodcastcom, if
you, of course, want me toaddress a specific case study or
topic.
I will not promise I can get toit, but I respond to every
single person and if I find itwill be helpful for a lot of
people, I will absolutely makean episode on it.
(29:36):
At the very least, give yousome insight.
That's it.
These are five questions that I would ask.
If you are interviewing afinancial advisor, I'm going to
tell you the questions and I'mgoing to give you my answer, and
if you're interviewing multipleadvisors, you can even compare
my answers to those other peopleyou're talking to.
Now, many of you who watchthese podcasts on YouTube, as
well as listen on the podcastapp, you know I'm all about
(00:21):
transparency here at Root.
That is one of our foundationalbeliefs.
So, with that being said, we'regoing to hop right in.
These are the five questions.
So, number one are you a CFP,which stands for Certified
Financial Planner?
And I would go to your advisorand this is the first thing I
would do or potential advisorthat you're considering to hire
(00:43):
and see what they say?
So, part of these questions,I'm going to need you to be like
an investigator and readbetween the lines.
I am a very skeptical personreasonably, in my opinion,
because my parents were burnedby four advisors.
They started at one firm wherethey really liked it it was a
household name but they foundtheir service was lacking.
They only talked once a year.
They didn't feel they reallycared about them.
They felt like a number.
So they went to this other firm.
(01:03):
I'm not going to say the namesand get them in trouble, but
they went to this other firm andmy parents have a million
dollars and they allow me totalk about that.
They live in Malibu in abeautiful home, but they're
working largely because theylike spending a good amount of
money and there were some poorfinancial decisions along the
way, although they gave mybrothers and I a great life.
I promise I'm going to get backto the questions, but the point
(01:24):
as to why I'm telling you thisis that was their second
advisory firm, where my parentslive on a street with a lot of
wealthy people.
They're less wealthy than them,and so this one couple my
parents make movies for a living.
They made the Vow.
If you've ever heard of thatmovie Rachel McAdams, channing
Tatum, rom-com go check it out.
(01:45):
And so they also dodocumentaries which aren't as
financially savvy.
Should I say financiallyrewarding?
That's the word I was lookingfor there.
And so my parents have a friendthat has $20 million, and so
they said hey, you know, talBleebs, I think I can get you in
to work with our advisor.
And they're like that soundsgreat.
And you know, then we're withthe big shots, you know.
And what happened is they goteven worse service because they
(02:06):
were such a small client there,they were barely looked at.
And then they're like okay,we're going to go to this other
company Many of you are going toknow this by just the way I
talk about it Super low cost,well known, yeah, maybe we could
do better elsewhere.
But look, we don't know, wedon't know, and so we're just
going to start here.
And we're just going to starthere, and then they're like
(02:27):
that's still, I need tax help, Ineed a state help, and there's
no organization here.
And so then they're like Istill need help.
What do I do?
That's in large part why I'm anadvisor today.
But to answer the question, Ihope you connect the dots here.
My first question is are you aCFP?
Cfp stands for certifiedfinancial planner.
If someone goes and says, yeah,oh yeah, I'm a CFP, certified
financial planner, how cool am I?
(02:48):
When do we start workingtogether?
Sign right here.
I mean, I know you worked hardto get this $2 million, but
trust me, I'm going to takebetter care of it.
You don't really know what youwere doing.
Let's put it in my.
I'm just joking here, but theidea here is just because
someone's certified, do not hirethem.
How many MDs would you neverlet touch your body?
I would not allow 99% ofcertified financial planners to
(03:16):
manage a dime of my money.
Now, that sounds bad and I betother people would have a
different number.
Maybe it's 90% or 70% orhopefully 10%.
But there are a lot of peoplethat I studied with for my
certified financial planningdesignation that I spoke to and
in three seconds immediatelywould never let them order for
me at Chipotle which I take myChipotle order very seriously
for those who do not know Extrawhite rice guac every single
(03:39):
time, double chicken, dependingon how it looks.
So anyways, obviously I getsome other toppings, but too
much for today.
So, number one I'll kind of cutthe stories and jokes because I
want to get through all these.
But are you a CFP?
Cfp is the minimum.
That's to even talk.
That is maybe we should talk.
That's all that means I'm a CFP.
You should not work with mebecause I'm a CFP.
All of that work for me here atRoot are CFPs.
(04:02):
You should not work with themjust because they are CFPs.
Number two do you work withpeople like me?
So a lot of this is ask thequestion and then just shut the
heck up and hear what they say,because you're gonna be able to
get their tone.
It's really not only about whatthey say.
So, if you say so, do you workwith people like me?
And they go, of course, youknow I help people retire.
I love helping people retire.
Okay, awesome.
(04:24):
Well, what if you want to retireearly?
Oh, of course, yeah, I helppeople retire early too.
And yeah, yeah, yeah, okay,well, I have a lot of equity
comp and so how does that getbrought into this?
Oh, don't worry, we havespecialists that can talk about
that.
Oh, is that a different personI'll talk to for that?
No, no, I can do that, don'tworry.
(04:49):
Okay, what about my spouse?
Because they're not going to beinterested in this.
I'm the one kind of running thefinancial show.
Don't worry that they won't beinvolved.
What if I require them to beinvolved?
Oh, then they'll definitely bethere.
Yeah, it's important they'rethere.
So what I find is people justchange their answers left and
right, both from an advisor'sperspective to try to get new
business and from a client'sperspective to try to become a
client.
That does not lead to a goodlong-term relationship.
So you need to be clear on whatyour goals are in your advisor
and they need to be clear, in myopinion, about who their dream
(05:10):
client is, because if you're nottheir dream client, they're not
going to love working with youand it's not their specialty.
For example, we help people atroot retire early with
confidence, but they don'tactually always retire early,
which means they go.
Well.
It's good to know I don't needto keep working.
I'm going to keep workingbecause I want to, not because I
(05:31):
have to, and if I don't want towork anymore, I don't have to.
It's the early retirementaspect, in addition to the tax
strategy.
That's why most people arecoming to us.
I tell this story often, butI'll tell it real quick, and
this is number three.
Most people are coming to us.
I tell this story often, butI'll tell it real quick, and
this is number three.
Number three who will do my taxplanning?
That is the question that youshould ask.
Who will do my tax planning Ifthey go like this?
(05:55):
This happened to my parents.
So you know, advisor, I'mreally interested in working
with your firm because you guysare just so awesome and you put
these videos out, you're so cooland you think you're cool, but
I just, I don't think you'rethat cool, but anyway, I need
someone, so maybe you'll managemy money.
Who's going to do the taxplanning, the tax strategy?
And if they say, don't worry,I'm going to connect you to an
awesome CPA, they're going tohelp out.
That is a red flag, and thereason that's a red flag is for
(06:17):
the story I'm going to tell youright now.
So this is about eight monthsago.
I'm recording this in February.
This will be launched in March,most likely maybe April, but
2025.
So there's a true story.
Someone came to me.
They said Ari, my CPA sucks.
I said that's a weird word.
Why do they suck?
They said well, they didn'ttell me tax brackets are
(06:38):
changing soon and that'simportant because that impacts
my plan.
I said what else they're like?
Well, they didn't really tellme that if I keep my income low,
I can pay way less in thesehealthcare premiums.
I learned that from you, noteven my CPA.
I said what else?
They kept going on and on.
I said don't worry, I found theproblem.
They're like thank God, youagree, we caught them.
They suck, omg.
(06:58):
I said they don't suck andyou're beating up a waiter.
They're like I don't understandthe analogy.
You and your dang analogies.
I said your CPA's job is tofile your taxes.
They have the competency to dotax planning.
They do not have the time.
They have the worst schedule inthe world from the IRS.
They are already burdened.
(07:19):
Their job is to bring food toyour table and 500 other tables.
They are not going to come toyou with the ambience of the
restaurant and seasonal menu.
An advisor is supposed to do taxplanning and what I find is
most of the time, if you'reworking with an advisor, I'd say
about 70% of people that cometo work at Root are coming from
(07:41):
a different advisor.
They go yeah, every time I askmy advisor a tax question,
they'd tell me to talk to my CPA.
My CPA says talk to my advisor.
Now I feel like I'm justcoordinating all of this all the
time and I said, yeah, that'scrazy.
They're like what do you mean?
Isn't that how this works?
No, that's the job of anadvisor.
We do all the tax planning.
We do all the harvesting, rothconversions, rebalancing, equity
(08:04):
comp.
We do all the tax strategy.
We just tell your CPA what toput so that they file the return
properly.
So CPAs love us, and that'swhat planning is supposed to
look like.
So, if they go, yeah, you know,we have an outside team that
you'll talk to.
Okay, there's probably gonna bea lot of different outside
teams for a lot of differentthings, and then you're going to
be a coordinator.
And so number three really isthat tax piece.
(08:26):
So if an advisor doesn't askfor a tax return, that is the
red flag.
If someone cannot see your taxreturn as an advisor, I do not
know how they could give anyguidance at all, ever.
That is just the truth.
Number four is accountabilityDo you do holistic planning?
So, for example, if you were toask, do you do holistic planning
, they might go yeah, we doholistic planning.
Whatever it is you need, we'lltake care of it.
(08:48):
Okay, what does that reallymean?
For example, I would tell aclient we do holistic planning.
What that means is we're goingto manage your portfolio, we're
going to be giving you taxguidance, we're going to be
actually making the estateplanning documents, meaning
creating those wealth, whetherit be trust wills, medical
directive, power of attorneys.
You're gonna be filling out ourpurpose finder, which is
something that we take veryseriously, so that when you do
(09:09):
retire, you go oh my gosh, Iknow exactly what I want to do.
I'm excited.
It also gets your spouse moreinvolved and interested in
finances, who traditionally isless so.
In addition, we're going toevaluate all insurance but we
don't sell anything becausethat's a conflict of interest.
And, by the way, we're alsogoing to have a dynamic
withdrawal strategy.
But that's not the reason youshould hire us.
You should hire us so you don'thave a new job, so that we can
(09:31):
be proactive and act as apartnership, because we talk way
more often than twice per yearAt first.
When someone works with Root,the first one to two months, we
talk every single week, biweeklyif your schedule prefers it,
because there's a lot we need togo over, build the blueprint On
an ongoing basis.
We're speaking a minimum ofthree times per year because
when we meet with clients, wewant to meet with you.
(09:53):
That's what keeps our job fun.
So when we do holistic planning, I'm excited for the meetings
because there's a lot we need totalk about.
That's how I would answer that.
But some people will say, yeah,we do.
You know investments, insurance, taxes.
But what they're saying isinsurance question yeah, go talk
to an agent, I'll send yousomeone tax planning.
Yeah, I'll send you to a CPA,they'll answer your tax
questions.
(10:13):
So this happened to someonerecently.
Someone reached out and saidAri, I'm retired.
And I said I don't believe you.
They said, well, you're nutsbecause you don't sleep next to
me.
So how the heck would you know?
I go, yeah, I just don't thinkso.
They're like well, you're crazy.
I go, I already know that.
But my point here is I said,look, I'm not saying I don't
really believe you.
What I'm saying is I think youalso have a new job.
(10:34):
So, yeah, you're retired fromyour traditional W-2 job, but I
now think you're coordinatingyour retirement between a
long-term care specialist,between a CPA, between an estate
planner, between your financialadvisor.
And they're like yeah, yeah,yeah, isn't that how this works?
I said, no, that's what afinancial advisor is supposed to
do.
The tough thing about ourindustry is we're all called
financial advisors and we all dovery different things.
(10:55):
So, knowing that holisticplanning, the next one number
five I have here is how are youcompensated?
So this is very important.
The next one number five I havehere is how are you compensated
?
So this is very important.
Most advisors are compensatedbased off new dollars that join
the firm because that's morerevenue for the firm.
That's how most advisors work.
That's not how we work.
The way we work with clients isbased off two things.
(11:16):
Number one is net promoterscore.
For those of you familiar withnet promoter scores or NPS
scores, our net promoter scoreis a 90.
With net promoter scores or NPSscores, our net promoter score
is a 90.
The traditional, actually theaverage in our industry, in the
financial industry, is a 44,which is not very good.
And so net promoter score isbasically how likely are you to
promote or recommend thoseservices?
(11:38):
That's taking one aspect of thecompensation.
The other aspect is our clientstaying is their retention.
So my advisors, their incentiveis to not take a client who
they don't think is a good fit,because if they don't think
they're going to stay long-termbecause they don't think it's
going to be a good fit, well,that won't compensate them well
over time, as opposed to certainadvisors and I know this
(12:00):
happened to my parents myparents spoke to an advisor.
That advisor sold them acertain product.
Once they had bought theproduct, that advisor had no
incentive to come and beproactive with my parents.
They had already made theirmoney.
So understand how your advisoris paid and understand if there
are any other hidden fees.
For example, the only fee isthe one fee that people pay us
and that is based on assetswe're managing, so that's a
(12:22):
tiered structure.
So let's assume we're managing$2 million.
The first million is billed at1% $10,000.
The next million is billed at0.75%, that's $7,500.
So $17,500, that's the annualfee working with an advisor.
The thing is that many peopledon't know is where are those
funds coming from?
(12:42):
Now stick with me because thisis an important analogy.
If you already know what I'mgoing to say, I'm going to be
incredibly impressed because Ibet 2% of you are going to know
what I'm going to tell you rightnow.
But for those of you who doknow, you work at Root, so
you're aware of this like workwith Root.
And for those of you who don'tknow, this is probably already
happening and it's just a nicebenefit that you may have never
been explained.
So let's imagine you went tothe grocery store and you went
(13:06):
to go buy some eggs and you saidI want to check out at the
grocery store, I'm going to buyeggs, I want to do with my 401k.
You know what happened.
The person checking you outwould probably laugh at you.
Now they might go hey, you're abig baller, you got a million
bucks in your 401k.
Can I be you one day?
Oh my God, did you get thisfrom OnlyFans?
No, they wouldn't say that.
Okay, I'm just messing aroundhere.
But they would probably go.
Okay, like, excuse me, sir,ma'am, you can't check out with
(13:30):
the 401k.
You put money into that.
You got a tax deduction.
It grows tax deferred, so youdon't pay taxes along the way.
But then eventually, when youtake the money out, you have to
pay taxes.
So if you want to buy theseeggs, you got to go sell
something in your 401k.
And I don't care how old youare.
If you want to do it before 59and a half and pay a penalty, be
(13:53):
my guest Depends how bad youwant the eggs.
I mean, I know they are pastureraised, so if you want you can
get them.
But there's also something youprobably don't know about
anything I just told you, whichis what?
If you could go to the grocerystore and check out with your
401k, I mean how cool would thatbe right?
Well, that's how it works withan advisor, in a way, let me
explain the way we work withclients, the way we can bill.
(14:14):
This is legal.
This is not Ozark style.
If you've seen that Netflixshow, it's based proportionately
on the assets we manage.
So someone's probably not goingto try to explain this to you
because they probably just thinkyou're not smart enough in
reality, or they're.
It sounds harsh saying it thatway, but I know if, like,
imagine, you go to the doctorand they're explaining here's
why you need to take the pill,because of blah, blah, blah,
(14:34):
blah, blah, like I know even memight be like hey, I trust you,
you're my guy, I'm taking thepill, but I know people that
wouldn't, so maybe I take thatstatement back.
Regardless, my point here isthey probably don't want to
spend the time and energy toexplain it, even though they
should, and I see this all thetime.
So here's the point.
Let's imagine you have $1million, okay, and you're going
(14:57):
to go to an advisor and 1% isthe fee.
That's $10,000.
Well, let's assume that's all.
In a 401k, $10,000 is the annualfee, right?
I don't care how I get paid, Ijust need to get paid.
If I send you an invoice that'snot really tax efficient for
you.
You have to go pay me withafter-tax dollars.
How cool would it be if youcould pay me from your 401k?
You can.
(15:18):
That's what's cool aboutworking with an advisor.
It's not the reason to workwith an advisor.
But what if you're inCalifornia, like me, between
federal and state?
What if your tax bracket is 40%because you're a big baller?
Okay, if you're a big baller,well, you put money into this
401k.
You got a tax deduction.
It grows tax deferred.
I don't know if you can hearthe sirens through my microphone
(15:39):
right now, but they're freakingout about this concept too
right now.
So you can see you put moneyinto a 401k grows tax deferred.
You take the money out.
You don't pay taxes on thatwhen you pay the advisor.
So it's essentially like you'resaving $4,000 a year because
you can pay me directly fromyour 401k.
I can debit that account.
Why is that so powerful?
(16:01):
Well, the reason it's sopowerful is, if $10,000 is the
annual fee, it's still the fee Ineed to get paid 10,000, but I
don't care how I get paid it.
I can go to your tax preferredaccounts, your tax advantageous,
tax preferred, whatever youwant to call it 401k rollover
IRAs, and I can debit thoseaccounts directly.
(16:22):
Now, who does this not apply to?
Well, let's assume that all ofyour money is in what I call a
superhero account or a brokerageaccount.
I'm talking you have $5 millionin there.
Well, you're still the annualfee on $5 million.
I'm pulling up with my fancydancy spreadsheet here and I'm
going to share this with myscreen so all of you guys can
(16:43):
see this.
If you're listening, awesome,keep listening.
If you're watching, I'm goingto have this pulled up so that
you can watch it along with me.
But $5 million, the annual feebe $40,000 a year, which is a
lot of money I'm the firstperson to recognize to go.
Here's what it makes sense to dothis and when.
(17:04):
It definitely does not.
And the annual fee is 0.8%.
But let's assume their taxbracket this person was in the
40% tax bracket Okay, well,that'd be a 16,000 a year annual
savings If all this money wasin a 401k.
So their true fee would be$24,000 a year or 0.48% on a
tiered structure.
What does that mean and why am Igoing through this?
What I'm saying here is, if youhave a brokerage account and
(17:26):
that's all you have, there's notan additional tax benefit.
You might still want to workwith an advisor, but you don't
get like extra points for it.
You can't buy eggs with yourbrokerage account and get a
special benefit If you're at thegrocery store and you wanted to
buy eggs with your 401k, youcan't do that unless that person
is an advisor.
So the point as to why I'mgoing through this is someone
(17:46):
left a comment on a video that Iput out, and the video I put
out said the following.
It said is it crazy paying30,000 a year to an advisor?
That was the title of the video.
I asked my marketing team I go,are you sure you want that as
the title?
They go yep, I go.
Okay.
So here's what they said.
Ari, thank you for sayingsomething to me that was an
epiphany in the financialrationale for working with an
advisor.
(18:06):
22 minutes into the video, youbroached a fee payment mechanism
that focused on paying for themost tax efficient location in
one's portfolio IRAs undermanagement.
I only learned this recently,but it's a no-brainer for any
penny-pinching prospectiveclients On tax-deferred accounts
.
It means paying 22, 24, 32%less on management fees than if
(18:27):
you paid those same fees aftertaxes.
Why other financial managers,rias, registered investment
advisors don't trumpet.
This is beyond me.
This is the first I've seen.
On breaking this down.
As my journalism teacher inhigh school would have said
don't trumpet, this is beyond me.
This is the first I've seen.
On breaking this down.
As my journalism teacher inhigh school would have said,
don't bury the lead.
Thank you for an insightful andwell organized video on the
value of advisors, includingfinancial.
So all of this, if you said,ari, I don't understand the eggs
(18:48):
and the 401k and none of that,it's just over my head I
wouldn't blame you because it'snot a perfect analogy I'm trying
to find a better one but theidea is you get a big discount
working with an advisor if youhave a pre-tax balance, which
most of you have, which is whyI'm referencing that Now.
Finally, the question the sixthbonus question to ask an advisor
(19:08):
is why are you an advisor?
An advisor is built off oftrust and if they go like this
which I've heard, by the way,because I interview advisors if
they go, you know I love thework-life balance and I just
love that I can help people Okay, great, that's kind of any job,
and that does not tell me thatyou love your job.
For example, why do I lovebeing an advisor.
Well, as of today, obviously,I'm making lots of videos and
(19:31):
doing podcasts and running thebusiness and training.
Advisors do a lot of differentthings.
But I'm gonna ask one of myadvisors this and I'm gonna
steal their answer because theiranswer is great for this.
I said why do you like being anadvisor?
And I have one advisor here,his name is Jeff, and he gave me
the answer where he saidbecause I gave great advice to
clients and they wouldn't takeit.
And I said that's not a greatanswer.
Why don't you just tell me thathe?
(19:53):
I've been working at Schwab for11 years and I would give these
clients great advice.
I'd show them these graphs andnumbers and I'd realize that, no
matter what I told them, theywouldn't take the advice.
And so the reason I love beingan advisor is I'm just talking
to people, and Jeff has a degreein behavioral finance, which is
basically why is it that, nomatter what I see on a graph or
(20:13):
what numbers, I still don't feelconfidence to retire?
I still don't feel I knowexactly how much I can spend.
I feel somehow like I'm behindsometimes.
Well, that's because you're ahuman, you're not a robot, and
most of my advisors love beingan advisor because they want to
advise in a way that a friend orfamily member did not receive
advice, in a way that they feltwas ethical.
(20:34):
That's most people.
My advisory story started when Iwas at a gas station and I need
my car to get fixed and someonegave me a quote to get my car
fixed.
That was totally unethical andthey were taking advantage of me
and I could feel it because Iwas a young kid and they went
this kid's from Malibu, so we'regonna just make sure we get as
much money on him and he doesn'tunderstand his privilege and
(20:55):
it's like, hey, I know a ton ofpeople that I felt that way
about in high school andotherwise.
But, like, my point here is, Idid not like the feeling of
being taken advantage of.
I want life isn't fair, but asmuch as possible I want it to
think I'm in a fair world.
And the point here is I wantyou to know that the person
you're working with has a driveand a fire to do awesome work
(21:17):
for you, and that's verydifferent to have a job than a
career of.
Do they want to be an advisor?
And so we have some episodes,if this is of interest, on our
Root Financial YouTube channelwhere we go deep into culture
behind the scenes how I selectadvisors, what advisor
requirements are to work here atRoot, how we go to these kind
of next level depth to find thebest talent.
(21:39):
Some of you are mad at me.
You're like why is there such along waiting list to work with
Root?
Well, I don't just hire anyone.
I wait for people who areproactive to get this job
because that tells me they'll beproactive working with clients.
So these are some questions tothink about.
There's way more.
I mean, honestly, I'll just dooff the top of my head because I
didn't put this agenda in fortoday, but I love getting to do
(21:59):
this, as you know.
Other questions I would ask ishey, what's your investment
philosophy?
For example, ours Generallylow-cost ETFs, but we don't just
sit there and do nothing,because there are times where we
need to be advantageous.
But we also don't believe inmarket timing.
So we believe in a dynamicapproach built with the
foundation of what we call rootreserves, so that you always
have enough safe money whereyou're never worrying about if
(22:21):
markets don't do well.
Do I not get to take the trip Iwant to take.
So it's built in thisfoundation of we believe in low
fees.
We don't believe in activemanagement.
We believe that's like going toWhole Foods and buying paper
plates you don't need to do that.
But we also don't believe injust only index funds, because
that's like the dollar storeYou're going to eat.
It's better than 80, 90 percentof what's out there in the
(22:44):
industry.
But we also don't believe inactive management.
So there's almost like a middleground of Trader Joe's, if you
will, and I use that analogywith clients.
And so investment philosophy isimportant.
But wait, do you do alternativeinvestments and rate real
estate and equity comp?
And yeah, we give guidance oneverything.
But our investment philosophyis we want to keep it simple and
we don't believe in ROH returnon hassle.
(23:05):
Look, we could get supercomplex and fancy and all these
amazing reports and that thatwhat we find doesn't give
confidence.
What we find is clientsunderstanding how much they can
spend comfortably givesconfidence.
I would ask questions hey,what's turnover for advisors?
How often are advisors quittingat your firm?
I'd ask them why are theyworking at their firm?
They might go well, it's a bighousehold name and we've got
(23:26):
lots of technology and assetsbehind us, they might go.
No, it turns out we're actually.
I'm here because I started mycareer here and I've built
friends and family, and you knowyou'll be surprised the answers
you get.
I would say, hey, what's yoursuccession plan Like?
What happens if you retire?
What if you win the lottery?
What happens if, by the way,after a month, I don't like your
(23:48):
guys' services?
Like what then?
Well, those are the questionsthat I would want you to go deep
into when hiring an advisor.
The reason that we do specificholistic planning at Root in our
process is the first step isyou reach out to get all these
questions answered for you andyour situation.
So by the time you do startworking with Root, you're like
I'm over the moon, peace of mind, this is my team, let's get
(24:11):
into it.
But everything is done monthly,all billing is done monthly,
and the reason for that is whenmy parents were with one of
their advisors, they wanted toleave after a year and they
couldn't, and that doesn't makeany sense.
Now, the reality is they could,but there were some things that
were going to create issues ifthey did, from a banking and
annuity and other perspective.
And so it's just I don'tbelieve in that.
I believe we need to add valueevery month or you shouldn't pay
(24:33):
us, and there's value from tax,investment, estate, healthcare,
withdrawal and then, of course,partner trust that there are
things that you can't quantify.
So good planning, a goodrelationship with an advisor I
don't think everyone needs anadvisor.
I'm the weird guy that says thatIf someone comes to me and
they're 50, with a million bucksand a 401k and they want to
retire in five years, I don'tthink they need necessarily an
(24:55):
advisor.
Maybe they need some advice andthat's where I'll recommend my
academy as an option for that.
But they don't need to pay us10,000 bucks a year.
There's not a ton we can do,because the reality is their
money's in a 401k.
They need to go, pick the fiveright investments, max out their
brokerage account or 401k andthen put money to a brokerage
account, make sure they're ontrack, like that's what they
(25:15):
need to do.
But that's very different tosomeone who's generally one to
five years out from retirementwith enough assets to go.
Hey, there's a level ofcomplexity where an advisor
could really help, becausethere's things I otherwise just
couldn't know.
So hiring an advisor is allabout timing and for some people
it's hey, they need an advisorright now and they could get
help.
For some people it makes sensein a year.
(25:37):
For some people it makes sensein 10 years.
It has to be custom.
That's what planning looks like.
So these are the five questions.
I know I went even longer, buthopefully this was helpful.
If you're interviewing otheradvisors, we certainly recommend
everyone, before they evenreach out, to work with Ruth.
They've either had an advisorin the past or they've
interviewed two.
And then the final thing.
I'm going to share my screenhere for this part.
(25:58):
Once again, I'm going toexplain it so in case you are
just listening all good there,and many of you are just
listening In the Root Collective, which is our community, there
are clients in there.
There are listeners, just likeyou.
There are viewers you mightalready be in here.
There's a section here thatsays clients like why did you
join Root?
If you're a current client,please share these four things.
(26:18):
How'd you find us?
Were we your first advisor?
Do you come from another firm?
Which advisor do you work withand why did you ultimately join
Root?
Bonus, what's one word todescribe your experience.
And there are hundreds ofpeople putting their answers in
here and some of them are reallyinteresting, and so some of
them are hey, it's.
I share the same values as rootand I just you know there's a
(26:44):
comfort there.
Some people are saying you knowthe truth is, is it felt weird
Like I was hiring an advisor Iwas listening to on Spotify and
then I went to their YouTubevideos and so now I just I'm
working with one of my you knowadvisors here at root and it
just feels different.
There's one answer I'm going toshare here that I just like
because of how transparent itwas, and so this is someone.
They said let me pull it upright here.
(27:05):
Okay, they said we found Rootwhile watching many YouTube
retirement income shows.
Root is the first advisor we'veever hired.
We joined Root to get help toimplement our successful journey
from switching from a saving tospending mindset.
I had a major health issue fouryears ago and it is comforting
to us to have some place andhelp in case my wife is gone.
(27:25):
And I said thank you,appreciate it.
And they replied saying JJ andBen, the couple that they work
with here, the team.
They've been instrumental ingetting my wife to relax and to
dream about what's possible inretirement.
In a way, I couldn't haveLooking forward to next steps.
We just booked a trip to Kona,flying first class, and another
to Jamaica.
Lots of discussions about whatis possible and the changes we
may be able to make in the waywe approach vacations as well as
(27:48):
daily life.
The reason I'm mentioning thatis many people think talking to
an advisor is here we go.
More numbers and graphs.
Hit me with it.
That is not most of ourrelationships, like, yeah, we're
going through the deep planning, but it's rooted with, hey,
what is the goal?
What is it?
Is it to retire early?
Is it to spend more time withfamily or friends?
Like, why are we really doingthis?
So definitely, at a minimum.
(28:09):
I encourage all of you guys goin this community, go join, see
what people say in here.
And that's all I got for youtoday.
I'll see you guys next time.
If you like this, please doleave a review on Apple podcast
or Spotify or drop a comment onYouTube.
That helps more people find theshow.
I love getting to do this.
Hopefully you guys resonatewith my little wacky style.
I try to keep it entertainingfor you, but if there's any
(28:33):
other comments or feedback.
I'm super open and transparent,so just send me a note.
Thanks, guys.
Thank you all, as always, forlistening to the Early
Retirement Podcast.
I love getting to host theseshows and make different content
for you guys every single week.
I've not missed a single weekin years and that is because I
love getting to do this.
Now, please be smart about this.
(28:53):
Before you actually execute anystrategy that you see me talk
about or hear me talk about,should I say please talk to your
financial advisor, your taxpreparer, your estate attorney.
Please be smart about this.
None of this should beconstrued as financial advice.
This is for fun, educational,informational purposes only.
Once again, just quickdisclaimer here.
(29:14):
Guys, please be smart aboutthis.
Appreciate you listening, asalways, and you can, of course,
submit a question on my website,earlyretirementpodcastcom, if
you, of course, want me toaddress a specific case study or
topic.
I will not promise I can get toit, but I respond to every
single person and if I find itwill be helpful for a lot of
people, I will absolutely makean episode on it.
(29:36):
At the very least, give yousome insight.
That's it.
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