3 Reasons You Should Choose A Flat Fee Financial Advisor

Devin

Hey, everyone. Welcome to the Big Picture Retirement Show. I'm your host Devin joined today by my co host, John K. Ross. Let's get the year started off John. John K. Ross, Esquire.

John

Howdy.

Devin

You know, it's funny. People in the reviews that they leave us on Apple podcast, or maybe directly on the website. They've taken to referring to you as John K Ross, Esquire.

John 

Yes. Just because you have made such a ridiculous deal about. Well, I like it. Well, you didn't. You didn't add the suffix?

Devin 

Oh, no. The fourth. I'm sorry. Yeah. So I mean, the fourth Esquire,

John 

So if you want to be just completely pretentious about it, don't forget the suffix?

Devin 

Well, there's a way that we could even be more pretentious. You could go by a first initial. So J. Kelsey Ross, the fourth, esq? Oh, that's even more arrogant. Right. You know, John, not long ago, at some point in 2023, we did an episode titled is your advisor worth 1%?

John 

So speaking of arrogance, yes.

Devin 

And the answer that we get out of that is in most cases, No, probably not. Because what we've seen is the industry has shifted over the years. It used to be this commission based industry, right? Where, you know, I want to get paid when I make a trade as they used to say.

John 

That's what, that's what it was when I started when I started in the legal world, and I'm interacting with financial advisors, it was all it was all commission base.

Devin 

And our industry was the same way. And then, you know, we saw the internet come about, and all of a sudden access to the stock market didn't need to be brokered. So all of a sudden, you didn't need that stock jockey to go buy Microsoft stock, you could do it on your own now. And then you didn't need that stockbroker to buy a mutual fund, you could do it on your own. And then the data started coming out that showed that maybe these mutual funds weren't even the best way to go, that maybe a low cost index tracking mutual fund, which later turned into ETFs might actually be the best way to go. So the advisory industry had to pivot and say, Wait a minute, we're not getting these Commission's now what can we do now? So they decided that, you know, what, how about an advisory fee. And that advisory fee needs to be based on a percentage of the assets under our care.

John 

Well, and of course, that was part of that back then was there was that this was during the Obama administration, they passed a law that ended up getting kicked, right. But when the law originally passed, or it was a regulation, maybe that originally passed, it was going to impose a fiduciary duty on all financial advisors, right. Period. And here they end of story that all financial advisors are going to have to act in their client’s best interests, which that alone kill would have killed the commission based business. And so yeah, the all the big brokerage houses and everything. We're like, Oh, crap, we got to go to a percentage. Yes. And then that regulation actually ends up getting pulled or I don't even remember exactly what happened to it.

Devin 

In the midst of that, though, a lot of these firms realized, good grief, this is pretty profitable. Yeah, we're making money, even if our agents or advisers or whatever they call them aren't making trades,

John 

Right? Yeah. Now we have to do we get we get we get money, and we don't have to do any work.

Devin 

So, I think that's probably the way some of them approached it, but not all of them. But you know, I do remember the firm that I was at, back when I started in 2002. I clearly remember them saying, We will not ever at this firm offer an advisory account. And it wasn't just a few years later, that's the vast majority of what that firm is now holding. Because again, they started realizing, Hey, this is pretty profitable. We can do this. And now these advisors can have this consistent stream of income which translates into a consistent stream of income for the firm. We can count on this amount and all we have to do is increase feels assets and our fee goes up. Makes perfect sense. Well, that went along for a few years and full disclosure here. That's exactly the way I approached my practice to what I was doing the fee base management, that's just the way the industry is what everybody was doing what was done. Yeah. But then investors started to ask a few questions, those consumers, you know, those pesky consumers with their their inquiries, saying things like, you know, does it?

Devin 

Does it really mean three times the work just because I have three times the assets? You know, so for example, John, let's say that you have a million dollars, you're paying your advisor $10,000 A year 1%. Right. That's one customary customer 1%. Some firms charge more, but that's about normal.

Devin 

Now, let's say that I have $3 million dollars. Now we're both at the same firm.

Devin 

Do you really think the level of work that advisor is doing on my behalf? Yeah. Are you getting $20,000 worth of benefit? Overnight? Is it three times the work to take care of my accounts? Yeah, that's short answer is no, no, absolutely not. So investors started ask that question. Then they started say, wait a minute, you know, I get it that. Now I don't have to worry when you call me to place a trade that, you know, you may just be placing this trade to generate a commission. So there's that conflict, it's out of the picture. But you know, last time I called and asked you about buying that condo? You told me absolutely not. I needed to finance it. You know, or maybe you told me I was I'm taking up too much income. Despite the fact that my portfolio has grown. It seems like you never want me to spend much of this money right now.

John

But I mean, that was always the problem with the Commission. Right? You didn't know as the consumer, you didn't know if the advisor was saying, we need to dump this and buy this, because that was the right choice or because they wanted the cruise. Yep. Right. Yep. Right. I mean, they were gonna get a cruise if they got one more trade at the end of the month. Well, and then of course, now it's like, okay, well, you know, I want to pull out $200,000 and buy, you know, a condo in Destin. Yeah.

Devin 

And they're telling me, I should finance it. And I'm thinking, Why? Why? I mean, you know, show me the numbers show

Devin 

So so you're, you're still left with this, there's, there's still a lingering question about the loyalty. Yep. And then, you know, one of the final questions that investors were asking is, why the heck am I paying my advisor? In many cases, more than I'm paying my attorney and CPA combined? You know, I've got this $2 million, I'm paying them $20,000 And I paid my CPA six. That doesn't make sense, you know, and then my attorney who had to re update all of my stuff this year, that was another six. So all total, I paid them 12. And yet, I paid this guy 20. And as far as I can tell, he bought me some index funds. So I think all of those are fair questions that consumers have started asking. And because of those questions, I think now we're seeing a new model emerge. Now we'll talk about this briefly in the episode that we did is your advisor worth 1%. It's the flat fee, financial advisor model, where the fee that you are charged and the fee that you pay is not contingent on the amount of savings that you have. It's just a fixed flat fee. So whether you have a million or 8 million, your fees, the same? What?

John 

Welcome to the club, Devin. Yes, I've been doing flat fees, two decades. So but you know, you know on on this and we'll get into it. But I worked at a law firm, my first law firm that I worked for, and we had a schedule in the back. Now, not the clients didn't get to see the schedule, right. Yep, there was a schedule. And it had it had net worths. Yes, on column A. And then column B was the fee that went up based on the client's net worth for the same planning. Right. So if I was going to do a basic say revocable trust, with some pour over wills and some powers of attorney, right, and you had a net worth of 500,000 You got one fee of 1 million was another fee. 2 million was a higher fee, and, and so on. And then and then there were breaking points where you'd have to add more stuff. But But I remember asking the question, you know, why, why, why are we charging more? For the same work? I'm doing the same work for this person has it for this person? In very simple in some cases, you know, I mean, if it's if you got to, you know, Ward and June Cleaver and their two kids wildly in the beat, right? The estate planning is probably very similar from one to the other, right? I leave everything to you, you leave everything to me, we split it between the two kids when we're both dead. Okay, so, person a person B, not exceptionally different. One's got more money. One pays a higher fake. That didn't, I didn't sit with me. Yeah. Now, the response I got from my boss was well, the more money they have, the more risk we're taking. And so our higher fee justifies the risk that, you know, something we do in the planning goes awry. Yeah. Of course, my, my response to that was, well, if we're doing it, right, why are we worried? Right?

John 

But when I because I, you know, I only practice with another firm for a year and a half, and then started my own firm. And we've been doing it for 20 years now. And I've done flat fees from day one, because my, my philosophy was always, if what I'm doing for you, is similar to what I'm doing for the next person, which is similar to what I'm doing for the next person. Those fees should all be the same. Yeah. Yeah, you might have a few little changes here or there. And sure, I'm going to incorporate those and, and maybe it takes me a little longer on some and a little less time on others, but it all kind of works out. And then those fees increase when the complications increase, right? If we have to do a state tax planning, okay, we're gonna bump that up now to the next flat fee level, you know, and so on. So yeah, welcome to the flat fee.

Devin 

Well, yeah, it took me a while to get there. You know, I went through 20 years of doing business, the old school way. But around the end of 2022, or really started paying attention to the flat fee model, and it just clicked with me it made sense. And, you know, I still remember the story of the CEO of Nokia. Now, if you remember, John, back in the day, Nokia was the cell phone to hell. Oh, yeah. So that was before the Motorola Razor? You know, certainly before the BlackBerry Oh, no,

John 

The indestructible Nokia brick, yes.

Devin 

That was the phone at one point. In the mobile phone industry, they had a 70% market share. 70%! And I still remember I didn't I didn't see the speech. But I've read about the speech, the CEO of Nokia was addressing the board and shareholders of Nokia. And he made the statement, we did nothing wrong, and we still lost. Well, what they did wrong, was just not keeping up, someone else had better technology, someone else listened to the consumer, a little better about consumers would like to have this ability, consumers would like to be able to check their emails easier, they would like to be able to text they would like to be able to do all of this stuff in a much simpler format. And then as Motorola came out with theirs as Blackberry, it started to erode into the Nokia market share. And then when Apple came out with the first iPhone seven, died, it was finished. And as I started looking at the flat fee model, I realized this, this has legs here, and it makes more sense for the consumer. And so I decided to make the switch and it was a painful switch. In 2023. I had to go back to my clients who were paying me more than what I'm now charging in a flat fee and have this conversation with them that hey, I know this sounds odd. Here we are. Everyone around us is talking about record inflation. We're seeing inflation at levels that hasn't been since the 80s. I'm actually going a different direction. I'm about to drop your fees by 50, 60, 70%. And some of them looked at me like I was growing a second head out of my shoulders.

Devin 

Right, as well, they should because that's a pretty unusual move. Yeah.

Devin 

And some of them, quite frankly, thought there was a catch, I think, even though they've been clients of mine for years, they were like, and what's changing? Are you still gonna be here? Is this? Are you getting ready to transition out of the business? What's going on, and I had to convince them that nothing's changing. That, in fact, our service model is improving, because of these extra employees that we've added in because of these extra steps that we're taking. It's just the way we're gonna approach it, because I couldn't go out and start talking to people about flat fee. For example, I couldn't have this podcast, right? Where I'm telling everybody, Hey, Carroll Advisory is now a flat fee firm. While I still had clients who weren't paying a flat fee, right, absolutely, that would get someone pretty upset. And you know, the, the revenue cut to my firm was a six figure revenue cut. But number one, I knew it was the right thing to do. The second thing is I knew it was the direction that the industry is going to move. There's a lot of people out there that absolutely hate the flat fee movement. And I'm probably going to get some grief over this episode. I've got a lot of friends who are still doing that1 to 1.5%, and many of them had the increases last year, where they were able to justify that, hey, we now offer more value. We're going up by 20 basis points on your advisory fees. So they just don't understand what I'm doing. Some of them think that I'm torpedoing my business.

John 

Oh, I guarantee the people in the industry are not cool with that. Yeah, not at all.

Devin 

I mean, I I know lots and lots of financial advisors. It's the nature of my business. I worked with a bunch of them. And there's none of them. None of them are calling me up touting their new flat fee schedule.

Devin 

No. In my opinion, though, John, they're still selling buggy whips. And they're wondering why these people are making such a big deal out of this horseless carriage.

John 

Well, and it's funny, because I knew we were, you know, I knew we were going to be recording today. But the irony was, I was having a conversation yesterday with one of my clients, and he's, he's quite wealthy. And, and he asked me, he said, he said, Just and this was just totally out of the blue. He's, but he said, he said, John, do you ever give anybody financial advice? And, and I said, I said, No, I mean, this is no short answer. No. I said, but what I do often talk about is low cost investing, you know, how, how controlling both the underlying costs of your investments, and what you're paying your financial advisor. You know, I mean, those things can can have a greater impact over the long term than just about anything. Right, right. Because, you know, you're I mean, your market returns, okay. So when one person gets you up, 6% return the other person gets you a six and a half percent return. Right? Well, okay, that's all fine and dandy, except, but if the person getting a six and a half charging one and a half, right, yeah, we're getting four percent. You know, you're getting four. And that's, and that's just all there is to it. And so I actually, I was talking to him about it. And he was saying, Well, Matt, you know, my guy, he, he charged there. In fact, he said, This guy's charging one and a half percent. And I said, Yeah, I mean, I said, that's, you know, so that's, that's pretty, it's a little high, you know, one to one and a half, you know, it's a little but one and a half a little high. I said, But you know, you've got four or $5 million, that's that's being invested it at one and a half percent. You know, imagine you had a financial advisor that just charged you a flat fee of $10,000 a year. Yeah. How much? How much investment? How much would you make banking right now? Yeah. All factors the same? Yeah. Yeah. And he was like, wow.

Devin 

Well, for reasons like that. It's going to gain momentum, right? When people finally figure out that wait a minute, one and a half percent means dollars at some point. And now let me calculate, alright, I've got $3 million times 1%. That's 30 grand, right? When you start doing the math, it's very easy. And then you realize, wait a minute, those are dollars I could be keeping, then all of a sudden, it looks incredibly expensive to do it on an AUM basis.

Devin 

I mean, like you said, with your $3 million example that's, that's 20,000 bucks. Yeah. And I mean, just, and I would, I would, I would take anybody that's listening. If you had $3 million dollars, and you got to the end of the year, and you had to write a $20,000 check.

Devin 

Yes, whole our industry we change overnight.

John 

Right? If you had to write a $20,000 check at the end of the year. Yeah. Or you could write a $10,000. Yes. I mean, all of a sudden, that would that would change everything.

Devin  

Oh, for sure. It's just that it's because it's so it's so hidden in it, you're taken out a little bit along the way. Yep. And it's not, it's not exactly easy to decipher how much you're paying either because it's usually based on an average daily basis. Or sometimes it's based on, you know, what the value is at the end of the quarter, and then that that annual fee is divided by four, and whatever that value is multiplied by that quarterly fee. And you just, sometimes it doesn't even show up on your statement. You know, we get statements in here all the time that we look at, and you ask the people, so how much are you paying? I don't know, I think maybe, I think maybe 1%. And then you look at the statement, and it's not even clear to me what they're paying. Yeah. So it's, it's really difficult. But this model is gaining momentum. And I didn't want to do this podcast to sell my services. I just wanted to give some of the some of the thought, well,

Devin 

it's not like you're the author that's doing right. And it's just that you are the minority, and but it's growing. There's a lot of momentum behind this, you know, we've had Andy Panko on the show a couple of times. This is an area that he's really helped to pioneer. And it's been in a lot of conversations with Andy, that changed some of my thinking some of his arguments, which have been very clear, very rational, made me figure out that okay, you know, you'd better make this move, or it's going to get made for you. But I think there's three reasons that that someone should consider using a flat fee advisor, especially if their accounts exceed a million dollars, which is a lot of our listeners. Sure. The first is I do think that it reduces some of those conflicts of interest. You know, as financial advisors, attorneys, whatever it is, we're supposed to make decisions for our clients that the decision is in their best interest, right, without regard for our compensation, how it affects us. It's purely in their best interest. So think about this from it.

John 

You just defined fiduciary duty, yes,

Devin 

I had a client call me and he said, Hey, David, look, I know I've got my house here. But I'm thinking about when I retire, I want to live on this certain lake up in Northwest Arkansas. beautiful lake, don't blame him. And he said, I found a house. And I want to make an offer on this house. It's I think it was 1.1 million for the house. But it was a nice house sitting on a lake. It's everything you want. He's worked hard, his entire career. That's where all of his kids are settling down up in the northwest Arkansas area. And he found his house. And so he says, I, I don't really want to finance it. But I'm open to your ideas. So let's let's contrast this real quick. Now, let's just assume that this client was paying me 1%. He's asking me about taking a million dollars out. So a million dollars at 1% is 10 grand in annual revenue for me. Whether or not I want to admit it working subconsciously in the background is a bias towards keeping every dollar in my office I can sure

John 

it's the natural human human instinct for sure. It's there. You can find it. And do but but it's there's the bias. Yes.

Devin 

And I think that's one of the conflicts, right is in making inappropriate recommendations that result in keeping more billable assets. I've had people come to me before and they said, Look, not my advisor told me I only need to spend 2% in you know, annual distributions to fund my retirement income. I can wait you're gonna die rich. You know, that's not the point of this game. Right to Die with a whole bunch of money. Unless that is your point. Right? Right. Right. And a few people who are it is the point but for most people, they've saved they want to spend their money in retirement and do it in a way that safe. It's, it's not to hoard it. But if you hoard that money, guess what? It's gonna benefit me better if I'm charging you an asset under management fee.

Devin 

Well, you know, I, of course, I guess this this kind of goes along with it, but I would think so. Of course, one of the counter arguments to your flat fee would be well, but if I'm going to make more money as the advisor, if if you make me more money, or if I'm, if I'm the client, right? If you're making me more money, you're making more money. So the incentive is to make me more money. So you make more money. Right? Yeah. Right. Well, so So maybe the maybe the 1%. Is that what's your counter argument to that?

Devin 

So it's a good argument. And I think there's a, there's a large firm that I think they're predominantly online that has this slogan. And it's “when we do better, you do better?

John 

Oh yeah, I've seen that. I've been seeing the commercial.

Devin 

And so they've done a really good job of putting that idea in people's minds, that now, our advisors have a vested interest in making you do better. There's two problems with that. Number one, what about the fiduciary obligation that we all have? Right? I mean, that just completely ignores that. John, let me give you let me give you an example. That's gonna hit close to home here. All right. All right, hit me, this is about you. Okay. How much do you pay me in fees for your account?

John

Nothing.

Devin

My fiduciary obligation to you is the same as it is to the client who's paying me $10,000 A year, right? The theory I receive off of that does not change that obligation. And it's the same with an AUM fee versus the flat fee. It's not like I can say, Well, I'm not going to put you in investments that make less now. Right? Because, you know, that doesn't happen. But the second problem with that is by having that conversation with people and saying that, somehow now my interest in making isn't making you more money, I think it puts the emphasis on the wrong spot. And that's the old investment management piece. Now, I certainly think that's an important piece of the puzzle. I mean, that's the that's the fuel, that that, you know, builds the fire that eventually turns the wheel of your plan. And you've got to have those investments carrying their load. But the best way to do that is in those, as you mentioned a moment ago, those low calls broad based mostly index tracking ETFs. And if I'm trying to show you some wizardry, right, or act as if I've got this secret sauce, that's giving you a higher return than the market, or the other advisors may and that's why I'm, you know, I should get my 1% fee. That's nonsense. But the main thing there is the fiduciary obligation.

John

I think there's a there's even a scarier side to it. Because we're talking to people who are planning for and living in retirement, right. We weep say that every episode. But let's go forward into that. Retirement, right. So let's take Mabel at 80. And she's got money with her financial advisor who's getting paid on a percentage? What's Mable’s biggest concern? What do you think?

Devin 

Well, I mean, who knows? Right? But if Maple is at, it's probably

John 

its financial security. Yeah. All day long. Not running out of money every day. Yeah. She's scared to death. She's gonna run out of money.

John 

I talked to people many times a day. Particularly elderly women terrified of and, and their, their stomach for risk. Yeah. Is zero.

Devin 

Yeah. In many cases, you're right now

John 

To your what was the what was the what was the catchphrase? Yeah. We make more money if you make more money. That's right. Yes. Right. So what's the incentive? When you do better? We do better? Right. So what's the incentive to invest Mabels funds? For sure. Yeah. Is it is it the safest investment investments that that maybe do not generate growth? Yeah. Or is it put it in higher risk to grow that account, so that you get a greater piece of the pie? I think that's one of the other conflicts and so, so I think, you know, it sounds nice to say yeah, if you make money, we make money or however that that slogan goes, if your goal is to take risks and grow your account as fast and as big as you can. But that's not every retiree’s concern.

Devin 

It absolutely isn't. And even if it's not for an 80 year old Mabel, it may be for a 65 year old, Joe Smith, who has $6 million and only want $6,000 A month in net retirement income, what they're not going to, they're not going to need a lot of growth. Now, whether or not I think they need it is really another topic. And that's maybe not even essential to the conversation. It's all about their tolerance for risk. Right. Some people will come in here, and they will quote what Will Rogers said, and that was, it's not the return on my money. It's the return of my money that I'm worried about. And, and we see that sometimes, especially with these people that have saved, they're like, Hey, I've won the game, why am I still playing? Right? You know, I was in stocks, I took the risk. Now it's time for me to step out of the game, Devin, let's use, let's use some treasuries, let's use some CDs, something that's going to give, you know, a fixed, steady, consistent interest rate, which is exactly what my wife would do, if I left it up to her right now, in our late 40s. But it then it loses its potential for growth. Not only that, but it's probably going to gradually decline once interest rates get back down. Well, that means my pay is going down. Yeah. And I guess that was kind of my thing and say, you know, that that whole idea of of, well, the incentive with the 1%, or whatever it is, is they're gonna grow your account. And so that will make more money. And that's, that's true, except Is that what's in your best interests? Yeah, at any given stage of your life? Maybe it is, maybe it isn't. Yeah. So once again, we have another conflict there.

Devin 

So I think, you know, the first reason that you should at least consider a flat fee advisor is that I think it does reduce those conflicts of interest. The second thing is, I think that flat fee advisors generally have a greater focus on planning. Now, this isn't something that I can quantify directly as to say, This is why except to say that, if I've told you that your flat fee is $10,300, a year, which is what our fee is, in 2024, I'd better bring more to the table than some index funds. Right. Most of the flat fee advisors, I know, tend to de emphasize those investment discussions, because the investments are going to do what investments do, right? They just our markets gonna go up markets gonna go down. They're not too concerned about that. And they tend to spend more time talking about the planning piece of it, right, answering those questions on the sequence of distributions on Social Security, on tax efficiency, on doing as the call I just got off of with a guy from California, who is making well under the first capital gains threshold, and literally has an Apple stock position with 900,000 in capital gains, has never heard of a capital gains threshold where you can pay 0%, things like that. Right? Where it's not? Well, you know, if we talk about the macro economic view for a moment, it's data data, and you do the old quarterly portfolio review? No, that's not what I'm seeing most of these flat fee advisors do, and they're taking a greater emphasis and focus on planning. And I think that's because there is the need, maybe it's the type of clients they're serving, number one, but I think it's that a lot of those clients will expect that higher level of expertise. Well,

John 

and I think this is there's some psychology going on here. Just some consumer psychology, that you would, you know, whether you recognize it or not, but and I'll go back to my own type of practice. So again, going back to the firm that I worked for, did a lot of wills, wheel base planning as opposed to trust based planning, I do a lot more trust based planning. But they did a lot of wheelbase planning. And you would get, you know, you'd get Windows and mobile, and they would come in and, and they thought they needed Wales. And, and here, I am ready to offer them to do some Wales. And it was going to be you know, by leave everything to you, you leave everything in May was split equally between the two kids. And, and then we'll charge $300 Of course that you know, 20 years ago, but you know, $300 and they would gasp gasp $300 I mean, can I just do that myself and, and get a pen out on a piece of paper and, and just say I leave everything to my wife, but you know that so then I go out on my own. And, and, and one of the again one of the many ways As I went out on my own was, I just wanted to be able to offer more services. I didn't want to do what the client thought they wanted, I wanted to do what the client needed. Yeah. And that often involves some relatively complex planning, which required me to explain it to them. And so all of a sudden, that client conversation where they came in wanting to do some simple wills became, what if your surviving spouse has Alzheimer's and needs nursing home care, we need to build in contingent supplemental needs trust planning for her and that way we can protect those assets. And when we get to the kids, they're going to have divorce issues, and bankruptcies and lawsuits, and all kinds of things. And we're going to have to do all of those sorts of things and plan for all of these, and you're not going to want to have to spend money on me to probate all of this. So why don't we put all of this stuff in a trust? And, and we would go through all of that, and then I would get to the end? And I would say, okay, and we're gonna charge 3500 for $4,500 for this, and they would be like, Wow, that's actually much more reasonable than I thought it would be.

Devin 

It's the same client. Yeah.

John 

That gasp at the $300 wheel that thinks the $4,500 estate plan is, is is a good deal. Yeah. Right. And I don't disagree with it, by the way. I think that is perfectly reasonable, right? For what all they're getting. But the fact is, I had to justify it. Yeah. Right. If they just walked in, and I said, here's what we're gonna do for you. And it's gonna be 4500 bucks, they would turn around and walk you right back out. Yeah. I have to justify my feet. Because it's a big number. Yes. And my number is a lot smaller than your number. Yeah, right. Yep. And so I, again, I can just, I can only imagine the average person who walked into two different financial advisors offices. They walked into yours, and they walked into Joe Blow at big box, firm. And both of you offered, here's what we will do for you. And at the end, you said, I charge $10,000 for all of these things, and they said, we charge 1%, which, in your situation, equals 40 grand? If they worded it that way, right,

John 

right. Walk the hell out. Yes. Without quest, you would walk the hell out? Yeah.

John 

And because they're and the fact is, they're not? You have to justify it. Yes. When you say $10,000? You damn sure better back that up? Here's what I'm going to do for you. I'm gonna presume that yeah, whereas if I say, Well, you come over to here, and we just charge a 1% fee? Yeah, well, I don't have to justify 1%. Right. It's such a tiny little. Since it's, it's miniscule. Yes. In the greater scheme of things. And in with all of the investments and all of the growth you're gonna get, yeah. A mere 1%. Right. And, you know, it's anyway, I think you're absolutely right. But you're right, you you have to justify the the fee, because it's a big number. Yep. There

Devin 

has to be a greater level of demonstrated expertise with a flat fee advisor area.

Devin 

And the irony is, even though it's less than the other one, yeah, no, it's crazy. That's that's the psychological problem with it. Right. But anyway, I think that's interesting.

Devin 

So reason, number one is, we, you know, it's going to reduce some of those conflicts of interest. Number two, there's generally a greater focus on planning. And then three, we've already talked about this. But let's use an actual example here. That is that just the fee is generally much lower. So let's imagine for a minute, let's say that you have a portfolio that's $2 million dollars. And you're going to take a 4% annual distribution for your living expense, right, let's just keep this simple. And we're going to increase that amount every year by 2%, just to keep up with what inflation should be. Now, over a typical 25 year period, that 1% fee is going to cost you 650, almost $651,000. That's a lot of money. Remember, you started with 2 million, and you're gonna give up 650 in fees, just from that advisory fee. Now, that's a that's a huge number. But if you compare that with a flat fee advisor, and let's just use let's use my fee schedule, it's $10,000 a year roughly it in 2024. It's 10,300. And if we adjust that every year by 3%, for inflation, so next year, it's 10,600. And whatever comes up, right over that same time period, where you would have paid 651,000 isn't in a flat fee arrangement that comes up to 364,000. Now, that's still a big number, right? But we're talking at this point about a savings of $286,000. Yeah, just in comparing the 1% to the flat fee. Now, what that doesn't look at though is the time value of money. So what if the annual savings, you know, the difference between what you were paying 1% on 2 million versus the flat fee? If that remained in your account? Which it probably would, right, it would remain there, and stay invested. And let's just use a conservative number, let's say 7%. Now look at the difference. The the total in the savings now, between 1% and flat fee? means that your ending account balance would be 707,000 707,000. There we go. $707,000. More? With the flat fee. In higher balance. Yeah. So so so effectively, it would have cost you that much less. So

John 

yeah, it cost you three quarters of a million dollars. Yeah. The difference between those two

Devin 

in why is that important, right? It's not just so you can have more money when you die. But all of those savings along that time are extra trips, that you got to take an extra experiences that you could have had extra gifts you could have given to your children or, or some other important calls. Absolutely. So certainly need to save on those fees where you can. And, you know, we mentioned also about just keeping track of those expenses. Other firms have different methodologies for charging some do quarterly, we charge it monthly, right. So every month, you see the exact same fee come out of your account, that is so much easier to keep track of and much more visible to then a percentage fee, that's going to vary every time based on you know, your account value, so it's much more trackable. So if your details kind of person, you want to know what you're paying for something, that flat fee is certainly going to give you that information. So I don't think though that flat fee is right for everybody. I think that, you know, if if your portfolio value is under 100,000, I just don't think are under a million rather. Yeah, you know, you could probably get it

Devin 

cheaper, right? My kids rocks are not right, would

Devin 

wipe them out pretty quick, probably the first year. So that does not need to have a flat fee. But once you cross over that million, you really need to start thinking about it this way. There's no question about and and furthermore, I'll also say that, if you're an individual that you don't need a financial advisor, you know, so let's say that, let's say that you have $2 million in your IRA and a pension. There's not a lot of strategy there. Right, you're gonna get your pension, and you're gonna start taking distributions from your IRA, possibly when you hit the required beginning date, and you have to, but there's not a whole lot of strategy. You may have some questions that come up along the way. But it's not as if you're trying to organize this for maximum tax efficiency, you make the right decisions. So there's going to be some other things. But if you just need someone on an as needed basis, there are hourly financial planners that you can hire. So for example, if it's just investment management, you can hire someone for a couple of hours to help you design a portfolio, and then just check back in with them. But if you're wanting that comprehensive service, that someone that walks that retirement journey with you, and you have over a million, that's absolutely where you need to start thinking about the flat fee. And there's a couple of places that that you can find that there's, there's a few people who have built directories out there. Andy panko site has a directory that gets in the top menu 10 and financial, you can find a list of financial advisors there. I don't know anything about almost any of them. I just know that he's has a directory there. I don't think Andy has vetted them personally, or anything like that. So there's a there's a list there. Obviously, there's my firm, you know, and we're open to people that have between one and $12 million. We do that for the flat fee. And then I think I'm trying to remember there's an organization out there now. That's a flat fee advisor organization still pretty small, but it's it's growing as well.

John

It's the new it's the new wave. It absolutely is.

Devin 

It's coming along so if you haven't looked at flat fee yet, it's time. Perfect. All right, John. We've been getting some fantastic reviews on the podcast here lately. Awesome. We are up to, as of the date of this recording, 360 reviews cool. That's just on Apple podcast, by the way, which is really what helps us when someone will leave a review there. Especially then when they subscribe to the show. That's telling apple that hey, these people are doing some stuff that's that's  pretty awesome. And they suggest the show to other people. We've had 2023 Was I don't know exactly what the number of downloads that we had was, but Good grief. It was a lot. So the show is growing. I don't have enough statistics to say it's the fastest growing retirement show out there. But I suspect it probably is. So, you know, ultimately, there's not a lot of analytics that we can get on, on podcast to be able to tell that because I don't have access to anyone else's analytics. But just looking at our growth numbers, and knowing some of the other people that are out there, we are growing rapidly. And that's all because of our fantastic listeners. Absolutely. And I want to remind them, they, they really ought to go out to the Facebook group as well. They picked a retirement, you can find it on Facebook. I hang out there. My team hangs out there. John hangs out there when I tag him, and then send them a text in Facebook group, somebody needs to ask you a question. But we're all there. Right? You can access us ask your question, and we'll give you some answers. Very good. Oh, well, John, until next time, we'll be right here bringing you to n through your very own big picture retirement. Thanks for listening. We got a base