Financial Planners & the Death of the “Fiduciary Rule”

This topic really fires me up! Here is a little humorous video to lighten the mood. Warning its going to be 20 minutes so better put the sign on your desk saying you are “away at the toilet” or “away at lunch.”

I’m not a fan of Suze Orman/Dave Ramsey because of their scarcity/fugal money saving ideas but for some people who can’t seem to save two pennies to save their life, I guess it is better than nothing. 

Suze’s WTF face @4:41 when the caller says their financial planner recommended buying an annuity. (that would net a 5% commission!)

@4:00 – Financial advisors make commissions and often put you in investments that are best for them.

Obama tried to do a good thing and pass a law where all financial professionals (like brokers and insurance agents) had to adhere to the “fiduciary” standards—meaning they’d have to work in your best interest if they were advising you on your retirement investments. But this died recently and there is no more fiduciary rule –

Federal Department of Licencing discussion on conflicts of interest or kickbacks to the tune of $17 billion –

I don’t recommend any financial planner because I don’t take financial advice who is still working for a paycheck and not out of the rat race (lives in their parent’s basement) but if you must go with one of my friends or a flat-fee one –

I have heard of these guys/gals do their sales pitch and use fear-based words like “diversity”, “security” and “risk” where the 25-year-old kid is trying to sell random investments to me. And don’t get me started when I tried to tell them about the being your own bank concept. #FacePalm They just tried to sell a higher return (6% whoop-ti-doo) with no liquidity. Totally not what I was going for. Not saying these guys are bad people, they just don’t know and products of the Wall Street institutions.

“It’s like a lawyer who only sets you up with only a will (and not a living trust) because they know you will come to them for probate which will cost on average 10-30k for most people. Talk about BS!”

Note: When I call out financial planners I am also calling out brokers and insurance salespeople. Repeat never listen to a broker!

Share this with your co-workers & friends/family that still believe in the Easter Bunny (happy pre-Easter!) and have a false sense of security in what this financial planner says.

Who took all my money?!? We are living in the best time to be alive with all this information at our fingertips.

Why do people still choose to follow the advice from financial planners working for a commission or so-called low-cost index funds that have about a million middlemen taking the majority of your returns? Who knows, probably why 10% of people in this test are still using the “pull out method” as their form of birth control?

A little off topic but just making sure you are still awake there because financial education is very important.

Check out this podcast with a CFP telling us of the insider secrets in the industry. Link

Speaking of less know tricks… Last year I learned this cool financial hack utilized by the smart money. By being your own bank and using the “Infinite Banking Concept” you can create a dividend-paying whole life insurance. Its called life insurance but its just a tax code loophole to make a tax free yield in an account that is sheltered from lawsuits and creditors. I can assure you this is another thing you financial advisor or life insurance sales guys just does not get… likely because they are still working for a paycheck and it actually decreases their commissions.

Go to for more info.

And for you high net-worth professions still dabbling in paper assets you won’t want to miss this other trick that I will reveal on there too.

Financial advisers and portfolio managers get paid no matter what.

They make money by taking a percentage of your portfolio called an asset management fee. They have skin in the game.

Here’s how it works when things are good and the tide is floating all boats:

  • Your manager creates your portfolio but doesn’t really out preform the index funds
  • You have a gain and your manager takes 1% of that sum.
But in a bear market this is how it works:
  • Your manager cannot save you from a market downturn because they don’t put you in hard assets (cause they can’t get paid off of it)
  • You lose 20% of your nest eff and yet your manager takes 1% of the sum.
  • They still invite your to the customer appreciation party 😉

In bad times these managers rarely take any blame. Conventional conversation says nobody could see a downturn and we were dollar-cost averaging anyway.

If the market is good, they can take full credit for their supposed management skills.

They try to make things confusing with their complex trading systems which no one can explain in order to glorify their position and allow you to just let them drive.

No one really gets rich with Wall Street investing other than the insiders. Not retail, mainstream investors. As real estate investors, we do not buy retail (turnkey is sort of retail) but syndications and private placements are not retail.

I only invest in things that make sense. Where the income has to exceed the expenses. And where there is a forced appreciation (not market appreciation componet) where you have control over your destiny.

In the end, you want to buy direct as possible. Buying REITS is the same thing as buying mutual funds with a bunch of middlemen. Crowdfunding sites remove a few layers but as a syndication working with a Crowdfunding site is very expensive way of acquiring capital. Sometimes I wonder who are the people using this high cost of private equity… Perhaps they are “desperate syndicators?”

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