7 Reasons You Don't Need an Advisor

Some people wonder if they need a financial advisor or not. But instead of explaining why you might need one, it’s sometimes easier to explain the reasons that you don’t…

1) You’ve mastered internet research.

You’re not at all intimidated by a Google search that yields 3.4 million results on your financial search topic. You know exactly how to tell which of those 3.4 million items are trustworthy and which ones are complete BS. An advisor would make this too simple.

2) You’re self-motivated.

Your diet is flawless, your exercise regime comes naturally to you, and you’ve never once procrastinated a project at home or at work. If you’re that self-motivated in all areas of your life, it’s reasonable to expect that your financial discipline is flawless too and wouldn’t benefit from any coaching.

3) You have nothing but time on your hands.

You have very little happening in your life, so you can devote several hours a week to learning about the financial world and creating a plan for yourself, and plenty of time on an ongoing basis to research investments and make trades to keep yourself on track.

4) You want to work until you die.

You’re planning to work until at least age 90, if not longer. You’ll always have a paycheck coming in, so your retirement savings are largely irrelevant because you won’t ever need them for retirement income.

5) You want to rely on the government for support.

You’ve paid taxes your entire life and now you want some of it back. The best way to do this is to spend through all of your money so that you’re destitute and have to go on Medicaid and food stamps in your later years. A financial advisor would ruin this plan.

6) You hope your kids get nothing.

You hate your kids. They’ve always been ungrateful brats and it would actually make you happy to run out of money a couple of years before you die because you’d have the smug satisfaction of knowing that they wouldn’t inherit anything from you.

7) Paying taxes makes you gleeful.

You embrace your patriotism strongly and it fills you with nationalistic pride to pay more taxes that you have to pay. You believe the government is a paragon of financial stewardship and trust them to handle your wealth better than you could yourself.

If two or more of these describe you perfectly, there’s a good chance that you don’t need a financial advisor. Don’t waste your time or theirs!

The Coal Miner Comparison

There’s an old story about two coal miners who came up out of the mine after finishing work one day. One of them, after a hard day of work, had a face completely that was completely blackened by soot. The other miner, somehow, had managed to avoid the same fate and his face was completely clean.

They bid adieu to one another and turned away to walk in opposite directions to head home for the evening. As he turned away, the miner whose face was clean raised his shirt and thoroughly wiped his face. But the miner whose face was covered in soot continued on his way, evidently unbothered by the black residue covering his countenance.

How can you explain the seemingly nonsensical behavior of these two men?

Well, when the miner with the clean face saw his soot-covered companion, he assumed that he must have a dirty face as well, so he found it prudent to wipe himself off. Meanwhile, the dirty miner saw his colleague with a clean face and assumed that he must look the same, thus finding no reason to wipe his own face.

The lesson? Comparing yourself to other people is ultimately unproductive and often downright harmful.

Whenever I meet with someone for the first time, this is one of the questions that they’re most likely to ask:

“Based on what we have, where do you think we stand relative to other people our age? Are we behind where we should be or are we ok?”

Doesn’t matter. Wrong question.

How you compare to someone else is completely irrelevant because the variables in their life are guaranteed to be completely different from yours.

Consider a married couple, both 63 years old, with $500,000 saved for retirement. They live in a typical middle-class neighborhood in Durham and want to retire in two years. I might tell them that they can do that easily, in fact they could retire now if they want to.

Now compare them to their best friends who live across the street. Their friends are the exact same age, have the exact same $500,000 saved, also want to retire in two years, and (obviously) live in the same neighborhood. But I might tell them that they should consider working another year or two beyond their original goal.

Why the different advice for two seemingly identical couples?

Well, the first couple lives very comfortably on about $5000/mo. They don’t have any debt (including no mortgage), don’t care much for world travel (a couple of camper trips every year will be just fine), and the wife has been a state employee for the last 12 years, so she’ll enjoy a small pension for the rest of her life. Between their two Social Security benefits and her pension, their income needs will essentially be covered. They’ll barely have to touch their retirement savings at all to maintain their regular lifestyle.

The second couple spends closer to $7500/mo. They still owe about $100,000 on their house, and both have car payments (and they’re getting tired of their current vehicles and want to trade-in for a newer model soon). Once they retire, they want to take one big trip every year, probably spending around $10,000 per trip, and they’ll do this for the first 7-8 years of retirement. Neither of them has a pension.

It’s now obvious, after digging a little deeper, that these couples aren’t nearly as financially similar as they might seem on the surface. But since you’re not likely to have a financial conversation with your neighbors or friends that covers anything but surface level matters, you’re unlikely to be able to discern those differences.

So after comparing yourselves to each other, one of you walks away wiping your clean face, while the other whistles all the way home, blissfully unaware of his soot-colored face.

Peanut Butter Hot Dogs

One important aspect of parenting is learning what your kids really mean when they say something.

For instance, Amos often says that he wants a hot dog. But that doesn’t mean the same thing to him that it probably means to you.

When he says he wants a hot dog, what he really means is that he wants a hot dog bun. He has no use for the actual tube steak. And he doesn’t just want a hot dog bun, ideally he’d like you to put peanut butter and jelly on that hot dog bun.

So when he says he wants a hot dog, he’s actually trying to tell you that he wants a peanut butter and jelly sandwich.

You can see how you might end up with an unhappy five-year-old if you just took his “I want a hot dog” statement at face value.

My conversations with folks sometimes require a similar nuanced understanding of certain phrases. More often than not, people don’t really say what they mean. One example would be this phrase that I hear a lot:

“I’m not ready to retire.”

That can mean different things to different people and if I don’t push for a deeper explanation, I could make some bad assumptions about what they’re really trying to convey. Here’s a few possible translations:

“I love my career.”

Sometimes people really just like their job and have no desire to stop going to work every day. They might be in a financial position that they could have retired years ago, but they just love what they do.

“I need to wrap up some loose ends at work.”

Maybe they like the idea of being retired, but they first have a work project they want to see through to completion. Or maybe they want to be sure that their replacement has been hired so that they can train them for a few months.

“I’d be bored if I was retired.”

Some people are genuinely worried about what they’ll do with their time once they retire. They might not exactly be passionate about their job, but it seems better than just sitting around the house with nothing to do and nobody to talk to.

“I don’t have enough money to retire.”

Maybe they have an intimate understanding of their finances and know that the money they’ll need for the retirement they want just isn’t there and they need to keep going for a while in order to retire and live the way they want to live.

“I have no idea where I stand financially so I might as well just keep working as long as I can.”

This one is probably the most common. Until they’ve gotten professional help, most people just have no idea where they really stand. And so it seems like the easiest solution is to just keep plugging along indefinitely in hopes that one day they’ll feel confident enough to walk away from a paycheck.

Each of these translations requires a different conversation. For the “I love my career” guy, we need to talk about plans for how things will look if he’s suddenly unable to work because of health reasons (or because his employer decides it’s time for him to go). For the “I don’t have enough money” lady, we need to look closely at the numbers and see if she’s operating on some bad assumptions and she’s actually in better shape than she thinks.

Of course, these principles are true in everything—not just parenting and financial planning. If you’re the one talking, try to be as precise as possible with your language. And if you’re the one listening, ask the right questions to get to the heart of what someone is actually trying to say.

And whatever you do, don’t put peanut butter on a hot dog.

So I Went to the Dentist

So I went to the dentist.

I realize that probably wouldn’t be a shocking statement for most people to make. But I hadn’t been since 2007. George W. Bush was president, we’d never heard of ISIS, and Britney Spears hadn’t even shaved her head yet.

In other words, it had been a while.

In fairness, I’d been meaning to “get around to it” for years. But the longer I waited, the more daunting the task became. It’s one thing if you haven’t been in a year or two. But after a while you start thinking, “Well, I’m probably going to have a cavity, if not a few, so I’ll actually need to make two appointments…one for a cleaning and one to get the cavities filled, and now this is just more expensive and time consuming than I can afford it to be.”

But after a while, my teeth hurt. Not all the time, but almost anytime I had something cold or sweet, several of them hurt. I ignored it for a while, until I inspected my teeth more closely and found that two of them (the two that hurt most often) had discolored areas near the gum. This seemed to me that it was a sign of severe decay. On Monday morning I started checking out dentists. I found one that could see me on Wednesday and made an appointment.

On the drive there, I started making bets with myself about how many cavities I might have. It was going to be a minimum of three but probably no more than eight.  I knew I’d need at least one root canal. I might even have one tooth that needs to be pulled and I’d have to get an implant. What an irresponsible adult I’ve been for the last 14 years.
 

As soon as I walked in the office, I started setting their expectations. “Look, I haven’t been to the dentist in more than a decade. I know that It’s going to be bad, so just prepare yourself.”

First up, the X-rays. “I’m not supposed to make a diagnosis myself, but I don’t see any problems at all,” said the hygienist. Perplexing, but good news…I’ll take it!

Then she started cleaning my teeth. She couldn’t stop raving about how good they looked. I probably could have charged her instead of vice versa based on how much of a pleasure it seemed to be for her.

The dentist confirmed. All is well. My teeth are perfect. The pain and the discoloration is from some receding gumlines, which is apparently common. Just change to a different toothpaste and that should fix it. “You don’t need to come back in six months, but could we make an appointment for you for next year at this time?”

I’m told that most of this is genetic. Some people just don’t produce much plaque, and I’m apparently one of those lucky folks. So in addition to being white, male, born to a Baptist family of Carolina fans in the South in the 20th century, you can add “doesn’t produce much plaque” to my list of hereditary lottery winnings that have set me up for an easy life.

On the way home, it occurred to me that most people treat their financial life the same way that I treated my dental care from 2007 to 2021.

“I don’t want to go see a financial advisor. It’s probably going to be painful and expensive and he’ll give me a lot of bad news and then I’ll be embarrassed because I’ve done a bad job of handling my money and it might be too late to even fix the problem.”

But for most people, they get much better news than they expected. A lot of people go from “I’ll have to work forever” to “Oh really? I can retire next year?”

And the best part is that it isn’t genetic. If you do have issues to fix, you can do it just by changing your behavior. Or maybe just your mindset. Your DNA doesn’t matter.

So take it from me, the guy who procrastinated for more than a decade about going to the dentist. It’s probably not nearly as bad as you think.