Updated: Feb 22, 2020
I’ll be honest. Out of the 8 pillars of wellness, financial wellness is the one I’ve had to struggle the least with. I’ve been blessed to have parents that started an IRA for me when I was young. It wasn’t until the past couple years that I actually started adding to it, though. With the help of my own coach, I’ve been learning more and more about finance (and how I can help others, too).
One thing that I’ve taken from the book, “Unshakeable” by Tony Robbins, is that financial advisers usually aren’t doing you a proper service. Although they may seem like they have your best interest in mind, they usually don’t. 90% of financial advisers are just brokers in disguise. This means that they are paid a commission for selling certain products. There are no laws saying that they have to keep your best interests in mind. All they have to do is make sure whatever they are suggesting for you is considered “suitable”. Think about it: if a broker can earn more for convincing you to invest in an actively managed fund with high expenses, they will. Why would they suggest a low-cost index fund for you if they’ll only make a fraction of the profit?
There is another type of adviser that is required to keep your best interest in mind. These sort of advisers are called Registered Investment Advisers. The only problem with working alongside an RIA is the fact that they are rare birds. Only about 10% of financial advisers in the United States are considered RIAs. Why aren't there more? RIAs make significantly less than brokers. So much so, that most RIAs are also registered brokers. Robbins book says that only 5,000 of the nation's 310,000 financial advisers are pure fiduciaries (Robbins, 82). This means only 1.6% of financial advisers are actually looking out for you. Yikes.
For more information on how to handle your finances, contact me. Or--read Robbins' book!