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Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, healthcare, and more. This show is an extension of the book How to Retire on Time, which you can grab today on Amazon or by going to www.howtoretireontime.com.
This show is intended for those within 10 years of their target retirement date or for those are are currently retired and are concerned about their ability to stay retired.
Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, How to Retire On Time, which you can grab today on Amazon or by going to www.howtoretireontime.com. My name is Mike Decker. I'm the author of the book, How to Retire On Time, but I'm also a licensed financial adviser, insurance agent, and tax professional, which means when it comes to discussing financial topics, we can cover it all. Now that said, please remember this is just a show.
Mike:Everything you hear should be considered informational, as in not financial advice. If you want personalized financial advice, then request your wealth analysis today from my team by going to www.yourwealthanalysis.com. With me in the studio today is David Transon. David, thanks for being here. Yes.
Mike:Glad to be here. David's job is gonna be reading your questions, and I'm going to do my best to answer them. You can submit your questions in by either texting them to (913) 363-1234. That's (913) 363-1234, or you can email them to heyMike@howtoretireontime.com. Let's begin.
David:Hey, Mike. Are flat fee advisors more trustworthy than advisors who take a commission?
Mike:No. Okay. Slightly manipulative in the comment because it does an overarching question that overgeneralizes the ethics and integrity of an entire industry.
David:Okay.
Mike:I'll use the cliche, people hate, or seem to hate used car salespeople. Oh, yeah. That bugs me. Not that I'm trying to defend used car salespeople, it's just I've never personally had a bad experience at a car lot.
Mike:Just never have. I've purchased used cars, I've purchased new cars. Yeah. And maybe I've been lucky, but I just I walked up and I said, these are my terms of how I wanna do business with you. Are you okay with it?
Mike:And they said, yes. So even like the high pressure used cars people, I said, this is what I'm looking for, this is how I wanna communicate with you, are you okay with that? And they said, yes. And they just followed my terms of doing business. Okay.
Mike:So I think what the used car salespeople, where they get a bad rep, is people are so guarded, they're so like, I don't wanna be pushed into something I don't wanna do, that they don't understand that they have all the power. Whether you're buying a car, whether you're, you know, talking to a doctor, whatever it is, the customer, the client, the consumer has all of the power. And once they understand that, and that they understand, they can always say no, now you're not trying to shop for, you know, how to manipulate or whatever ideal, it's just here's what I want, here's the price I'm willing to pay, does that work for you or not? That makes sense? Yeah.
Mike:It's like, I don't want to offend you by saying no, but it's like, well hold on, it's your money. What is it that you want? Yeah. And a big part of why I want to get away from this tribalism of the question is a flat fee advisor, which is someone that you charge, or basically you pay x amount of dollars per year for a subscription membership model for full service planning, which is growing in popularity, or someone that charges you, let's say, one or 2% or whatever the rate is, versus like robo investing, where you're paying like one tenth of a percent. Right?
Mike:There's all these different ways that you can pay someone for a service. The idea behind it is, let's say, you know, how much does it cost to do the job? And let's pay a flat fee for that. That's a wonderful model for those who are kind of doing the same thing over and over again. So for us, like we have a flat fee model that if you've got less than $5,000,000, and you know exactly what you want, and it's very scalable, it's very systematic, you could hire us at a flat fee, and that makes sense.
Mike:It's very structured, you know exactly what you're getting, but at some point, that breaks down. And it breaks down because if you have too few of assets, the fee might not make sense from an affordability standpoint, or if you have more assets, you want more attention. Sure. So if you have 10 or $20,000,000, and you want someone to treat you like a private office. Uh-huh.
Mike:Private office means basically, you're paying for full time staff to pay attention to you. Uh-huh. You're gonna have to pay for that. You're gonna have to pay 2%. And so when you have $20.30, $40,000,000, and you want that kind of relationship, that might make sense.
Mike:Now in contrast, I'm kind of, you know, meandering through a bunch of situations here, but I wanna explain it. Mhmm. There was a guy I chatted with years ago. He had $20,000,000. Most of it was in nonqualified assets.
Mike:He really needed a membership model, not for the active trading of of his portfolio, but just to help navigate the taxes. It was a very fixed kind of relationship. So a flat fee model based on what would make sense for him would make more sense. Now if all of his assets were in different type of tax accounts, maybe it was all in qualified accounts, you could more actively trade it, maybe he wanted to be more aggressive with certain things, then maybe the 1% would make more sense because he wanted a different type of relationship. Do you see how it's like, you gotta ask first, what is it that you want?
Mike:Yes. What's the relationship you're looking for? And then based on that relationship, what is the right fit? I think we're all preconditioned to figuring out how do we hack this system, how do we cheat this system? Right.
Mike:And we're so scared to death of being taken advantage of Yeah. That we hold our cards so close to the chest. Yeah. I get that. And the reality is the more vulnerable you are, the more clear that you speak, the more open you can just get down to brass tacks.
Mike:What is it? How does it work? And does it work for you or not? It's so refreshing. And point of fact, I can answer the question honestly because we offer both options.
Mike:Oh, yeah. So for someone that has less money that just wants it to grow, we have a program, we just charge 1% up to a certain point. We're just gonna help you grow, but it's gonna be a limited scope relationship. But we're gonna help you grow your assets in a way that makes sense. It's very competitive.
Mike:At a certain point, if you have 500,000 to 5,000,000, and you want a very structured CPA like relationship where you're paying for time and certain services, we can offer that too. But if you wanna be very aggressive, more proactive, then we might charge the 1%, but you've got the options. And the reason why I wanna point that out is when people schedule that thirty minute call with us, here's how it works. I say, almost word for word, thank you for scheduling the call. The purpose of this call is to understand your lifestyle and legacy goals, so that we determine how it makes sense to proceed.
Mike:Are you okay with that? And they'll say yes. They say no, I say, okay, why are you calling? Let's just talk about that then. Yeah.
Mike:And then I say we have thirty minutes of time scheduled to chat, does that time frame still work for you? If they don't, I'm not gonna talk with anyone that's distracted. If I'm gonna give you a % of my time and my focus, I expect the same in return. Mhmm. So we set our conditions of this is the objective, here's how long we're gonna talk, now let's let's figure out what to do.
Mike:And then I ask, what do you want? Like, what is your lifestyle goals? What are your legacy goals? And then I ask, why is that? Because I need to understand why that exists.
Mike:Mhmm. I ask, do you need that, or is that a want? And then I just keep asking that same question over and over again until I understand the lifestyle and legacy goals. Mhmm. And then this is the one that throws people off.
Mike:I then ask, what is it you want from a financial professional like me? They weren't expecting that question? So vulnerable Uh-huh. That they're almost caught off guard, and then they start thinking, well, I I guess a plan. Okay.
Mike:Why do you want a plan? What does your plan currently look like right now? Why is it that that plan is not enough for you? Uh-huh. My job as a fiduciary is to provide people the services that they want and not to sell them some crap that they don't need.
Mike:Yeah. So in those two questions, we can clearly define what their relation should be, and define, does it make sense to do a flat fee model, or does it make sense to do with the percentage model and have a more proactive relationship, whatever that might be. The vulnerability catches people off guard to the extent of it's kind of fun. Mhmm. Because once they realize they have a voice, that they can say I don't want that, and I go, okay, and then we just move on.
Mike:We can really get down to what is it that people want, and then we can go to that standpoint. And the reason why I say all this is for one important fact. People chase titles, people chase experience, people chase credentials, thinking that that's the thing that's gonna solve their problems. It's not. Is the relationship able to be built on mutual trust and respect, and do you agree with the strategy that's being implemented?
Mike:If you can answer yes to both of those things, then it might make sense to proceed, and then you just define your conditions of doing business. And if it works out for both parties, then you can proceed. And if it doesn't work out for both parties, that's fine. Move on. This is a professional relationship.
Mike:No one's feelings should be hurt. I get that. If anyone ever says in this business, trust me, I'll take care of you, run run as fast as you can. That's not how you do business. And there's nothing that anyone can honestly say in the first meeting, or the first couple of meetings that's gonna immediately build trust.
Mike:Trust comes from time, and a series of experiences that validate integrity. And whether you need to do a toe dip, whether you need to do part of the portfolio and just see how things work, whatever that is, define it on your terms. You're the one that's in power, the consumer is the one that's in power, and they're just looking for the right match. You don't go on a first date expecting that you're gonna determine if you're gonna marry that person in that time or not, at least I hope not. Right.
Mike:Right? You go on the first date to determine if you want to go on to the second date. Yeah. And you go on the second date to determine if you wanna go to the third date. And at some point, whether it's many, many years, or a couple of months, or whatever the time is, you realize if you want to get married, or you break up.
Mike:In finance, it's pretty similar in most professional relationships. I think the average person has six financial professionals in their life. Oh, wow. And really about retirement, you're looking for who's the person that's gonna stick with you for the next twenty to thirty years. Yeah.
Mike:Because it sucks when you have to change your relationship mid retirement. Right. So this relationship is a big relationship. Take your time, Do your due diligence. Date around.
Mike:Those are very good things. You don't need to pin people against each other. You just need to say, these are my terms. This is what I'm looking for. Can you satisfy my conditions in doing business or not?
Mike:That's it. That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcasts. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles if you're missing tax minimization opportunities that you may not even know exist.
Mike:Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility. This is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date. Go to www.yourwealthanalysis.com today to learn more and get started.