F'ING FEES - THE TRUTH ABOUT HOW ADVISORS GET PAID | Let's Get Real Ep. 9

WARNING: THIS EPISODE WILL PISS OFF THE ENTIRE FINANCIAL INDUSTRY

Tired of the bullshit? So is Stoy. In this no-holds-barred episode, he rips the mask off the THREE ways financial advisors make their money—and why two of them are probably screwing you over right now.

From the dying breed of Assets Under Management (AUM) that quietly drains your portfolio to the commission-based scams that serve advisors, not you—Stoy holds nothing back.

If you've ever wondered why your advisor gets nervous when you want to use your own damn money, this is why.

Discover the flat fee subscription model revolution that's transforming the industry and why transparency should be non-negotiable with YOUR money.

THE INDUSTRY HATES THIS EPISODE. YOUR WALLET WILL THANK YOU.

Whether you've got $10K or $10M, you deserve to know exactly what you're paying for. Period.

Get real financial advice at nobswealth.com Watch the full episode: https://youtu.be/2NI4DDxfkSE

LET'S GET REAL.

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Episode Transcript

Stoy (00:00):
We're back another episode of Let's Get Real, I'm gonna
piss off my industry that is thefinancial advising industry
because guess what?
We fight all the timespecifically on this topic and
that topic is fees and how thehell we get paid.
So today you're gonna learn thetop three ways.
You're also gonna learn how Iget paid and why I think it's
most important to kind of followmy route.
Not necessarily saying you haveto, we're not all one of the

(00:21):
same, but I believe this will bethe less route.
So let's get into it.
So your top three ways financialadvisors get paid.
A UM, which is the mostpredominant, which is assets
under management.
For those that don't know.
Two, you got your commissionbased, which are product driven.
Uh, and then three, you're gonnado your flat fee or subscription
model, depending on what youwant to talk about in regards to
those.
Quick caveat, full disclosure,right?

(00:41):
Um, I've done all three, so Iknow how they operate.
I know how they work.
I, I have figured out what Ibelieve.
It's best for clients.
Not saying it's best for you andyour situation, I'm just saying
it's best for the clientele thatI work with or those that wanna
work with me.
So let's get into the first one,A UN.
Assets under management.
This one's been around for eonssince the beginning of time with
financial advising, specificallydriven by.

(01:02):
Your investment investibleassets in your investment
account per se, and all of thepeople charges, like everyone
charges some type of a UM.
It has went from as high as liketwo point a half, 3%, and now we
fall in with half a percent toone point a half percent.
I've seen a couple two still inregards to that.
So that is what's being chargedon your assets annually,

(01:22):
annualized, I should say, andthen probably paid out quarterly
on average.
Now, what are some pros to that?
One, if you make more money,they make more money.
If you make less money becausethe market decided to go down,
they make less money.
It's easy, it's simple, doesn'tcome out of your pocket, just
comes outta your investments.
And third, you're really gettinga lot of investment advice for
that.

(01:42):
Cons, it's gonna add up and besuper expensive.
For example, if you have amillion dollar portfolio, which.
You guys, let's be real.
We don't have a million dollars,but it's easier math at 1%.
Now you're at$10,000 for yourinvestment fee.
Now a lot of advisors say, well,it's worth it.
I have this other thing.
Value add that, no, it's$10,000for investment advice.

(02:03):
Okay.
And some for those that areoutside and doing alternative
investments, that's cool.
For those that are just.
In some type of fund, ETF, etcetera, and it's just sitting
there for 30 years.
Are you getting your true value?
Another con would be conflict ofinterest, right?
For example, if I have yourmillion dollar portfolio and
you're like, sto, I really wantto invest in this, or I wanna go
buy this home, but I need$200,000 from an account, which

(02:25):
should I do?
I'm not incentivized to dowhat's in your best interest.
Because if I take that 200,000out now I'm making only eight on
money on 800,000.
So you tell me if there's aconflict there.
And the third con for me ispurely just the transparency and
the fact that typically you'renot getting full financial
planning within just a financialadvising agreement.

(02:45):
I.
But there are still rules outthere, regulations out there.
The SEC still loves it.
I just think that's a dyingbreed and the statistics will
show it.
Right now, 61%, uh, of peopleare being charged.
Some type of a UM and majorityof advisors are charging that
way.
We will be seeing a shift and wecurrently are to a different
model.
Second, the worst one of themall.

(03:06):
Trust me, I was in it.
This one I believe has nothing.
No advantage to the consumer atthe end of the day.
And was purely driven by someonetrying to sell some type of
product down the road.
So as some of you know that Iwasn't the insurance game, which
is a broker dealer, we, we soldinsurance products, but also
then we were taught, Hey, let'sget an investment game, get your
series six.
You can talk about mutual funds.

(03:27):
To me, there's, I.
No place on this earth for amutual fund to charge 5.75% on a
front load type situation, plusthe backend 50 to uh, 1.25% as
well.
I don't think that those shouldbe aligned ever, because that
means for every dollar that youput in 5.75% of it is gone
immediately, and about 5% comesthe advisor.

(03:49):
Or the advisor's team, we'll getin that, in a, in a different
episode.
Commission base is all about thecommission.
You're incentivized to sell theproduct, make it fit, what makes
it fit, right?
If it fits the client, kind of,yeah, let's get'em into it.
Um, a third, you're not in, youstill have the conflicts of
interest, right?
So if I want to take out that10,000, a hundred thousand
dollars, well.

(04:09):
You're incentivized not to, andthen the longevity of the
expenses are just extremelyhigh, right?
I don't really have a pro forit.
Everything I listed as cons, andthat's for a reason.
Again, caveat, I used to dothat, so I understand now.
Third, my favorite and I, andwhere the whole industry is
shifting to, in my opinion, weare seeing uptick from about 33%

(04:29):
think investment news, uh, toabout, uh, 43% of where.
Assets will be going to in termsof this, and that is the flat
fee subscription model.
Now, there's a lot of people whoargue between them both and who
does what and what whatnot.
But I'll get into them.
It's very simple.
It is a very transparent scopeof service saying you are going
to.
Charge and, uh, pay for this,this, this, and this.

(04:53):
It's gonna cost you$500 a month.
That's what you get.
Now, some of them do overlaps ina UM because they're still doing
investment management and theygotta pay that.
I believe later down the roadwe're gonna see a lot of flat
fee onlys, which basically cantake into that investment
practice inside of that withoutcharging a OM.
But I don't think we're quitethere yet.
I'm working at my own practice.
We are a subscription basedmodel.

(05:14):
We will lay out all the servicesfor you specifically in our
modern family office.
And let you know, Hey, we'regoing to do your insurance,
we're going to do your planning,we're gonna do your investments,
estate planning, taxes, etcetera.
Line item those out.
It's gonna be$500,$3,000,$9,000,or we do'em as a project.
It's gonna be$6,000, 12,000,1500, et cetera.
You are going to have that flatfee and know exactly what it is.

(05:37):
Business owners listen up.
We also can be a little taxdeduction for you too.
Ha.
So that's a benefit.
I am a huge proponent of that.
Now, the drawback to that orthe, I guess the con to that is
more on our side than it is theconsumer side.
But I can see how it works bothways, and that is, as a
consumer.
You see that fee every month,right?
You're looking at it everymonth, and you're always trying

(05:58):
to add or compare the value ofwhat you're getting and who
you're speaking to from yourplanner every month.
Now, to me, that's a hugecalling for both parties.
One, because you're alwaystrying to figure out what the
value is, and if you're notgetting it, that's a big issue.
The other side of for us is wehave that feeling transparently
every month.
I do it with my clients now, andmy clients love me, I love my
clients, and I know that they'renot going anywhere, but I still

(06:20):
feel like I'm not doing enough.
And that's where that, um,specific type of fee arrangement
kind of gets a little, little,little kish, a little, little
dirty for me because I don'twanna feel that way and I don't
want you.
To feel that way.
But if that's the only con thereis, we can, we can work through
that, right?
And ultimately that comes downto, because of the relationship,
meet with my clients every monthwe have slack and we message

(06:42):
every single day.
If something pops up, we cancommunicate about it.
You have to have that type ofrelationship, in my opinion, if
you're going to do thesubscription, subscription based
model, um, as well.
So what's next?
What's coming?
Where are you at if you are outthere and you don't feel like
you're getting your value?
Truly looking to see if you'recommission based, that means
clientele, right?

(07:02):
Ask yourself, go ask youradvisor how they are getting
paid and what their actual totaltransparent fee is, right?
And if you're in the commissionor a UM, you gotta look at, um,
operating expenses plus theircommission or their, or their a
UM percentage as well.
And add all of that up and askyourself if you're getting the
full package.
Are you getting financialplanning, insurance planning,

(07:23):
estate planning, tax fund, allof these things that come into
you?
Are you getting all of that forwhat you're paid?
If you are and you'recomfortable with that, cool.
Awesome.
Love it.
Uh, if not, you need to find oneof my colleagues, me that do the
subscription, um, side of thingsthat are really financial
planning focused and take intoaccount everything.
'cause then you're gonna alignwith who, who you really want to
be with.

(07:44):
So, like I said earlier.
This is really probably gonnacause a shit storm in my
industry and I'm cool for it.
I'm down, right?
Let, let's ride, let's have thatchat.
But for you as clients, itreally brings into a real
conversation, transparency inthe financial advising industry.
Are you getting it?
And if you are not, come talk toone of us.
I do it for free.

(08:04):
I'll look at everything you gotand ask and just continuously
ask those questions.
So, hey.
Let's keep it real.