Stop Worrying About Your Financial Advisor and Start Finding the Right One

Summary

---

NerdWallet’s Smart Money Podcast

Episode: Stop Worrying About Your Financial Advisor and Start Finding the Right One

Date: June 25, 2026
Hosts: Sean Pyles, CFP®, Elizabeth Ayoola
Guest Expert: Ryan Sterling (Wealth Advisor, NerdWallet Wealth Partners)

Episode Overview

This episode of the Smart Money Podcast tackles consumer skepticism toward financial advisors, addressing the perennial question: Are all financial advisors evil? Using a listener’s detailed and candid question as its launchpad, the episode explores the financial advisory landscape—discussing fee structures, incentives, conflicts of interest, and how to identify a trustworthy advisor. The episode also features a segment on the rise of identity theft and scams, but its core is a wide-ranging, nuanced conversation on financial advisory ethics, fees, and the practical value advisors bring to individuals and families.

---

Key Discussion Points & Insights

1. Identity Theft Trends and Prevention

[03:36–13:23]

Latest Trends in ID Theft

• Simultaneous Incidents: Increasingly, victims are dealing with multiple identity compromises at once.

  “No longer someone coming to us with kind of a one and done... now I’m starting to realize there’s lots of other issues.”
  — Mona Terry (04:24)

• Device Access: Reports of hacked devices are up 78% year over year; criminals exploit always-logged-in apps and stored info.
• Cascading Impacts: A single data breach often gives access to a web of accounts.

What To Do If You Suspect a Compromise

• Immediate Measures: Disconnect from the internet, log out of accounts, and begin damage assessment.

  “Disconnect from the Internet is the very first thing.”
  — Mona Terry (05:51)

Red Flags for Scams

• Urgency & Secrecy: Scammers push urgency and insist you not consult anyone else.

  “Anyone who says you have to do something right now and you can’t talk to anyone else about it is another red flag.”
  — Mona Terry (08:18)

• AI’s Role: AI is making fraud attempts more realistic, allowing less-skilled scammers to scale up sophistication.

Emotional & Financial Fallout

• Emotional toll can include anger, frustration, and self-blame.
• Protective Actions:
  • Freeze your credit
  • Set up account alerts and monitoring
  • Use unique passwords and multi-factor authentication

  “Unfortunately, a lot of it is on the individual. But staying on top of those, setting up alerts to help automate that, freezing your credit, using unique passwords...”
  — Mona Terry (12:27)

---

2. Are Financial Advisors Evil? (Main Segment)

[16:55–42:15]

Listener’s Concern (Read at 16:55–18:54)

• Skepticism toward advisors due to conflicts of interest
• Worries about asset-based fees, being sold unnecessary products, lack of objective advice, high costs
• Asking: “Can’t someone just offer reasonably priced, unbiased, tailored financial advice?”

Are All Advisors Evil?

“Are all financial advisors evil? The answer is no, not all financial advisors are evil.”
“Are there some questionable financial advisors? Yes... there are people who, when they walk in, I get to the other side as quickly as possible.”
— Ryan Sterling (19:34–19:41)

When Advisors Add Value (and When They Don’t)

• Simple But Not Easy: The mechanics of financial management are simple, but emotional and behavioral hurdles make execution hard for most people.

  “It’s very different when you’re trying to execute it at a very personal level.”
  — Ryan Sterling (21:12)

• Even seasoned professionals (including advisors themselves) often use another advisor for an objective view.

Fee Structures: Types, Pros & Cons

Explained at length: [23:15–29:18]

• AUM (Assets Under Management):

  • A percentage (usually 0.5%–2%) of assets managed (examples: $900/year for $100k, $5,000/year at $500k+).
  • PRO: Scales with client wealth; incentives align (somewhat) with client performance.
  • CON: Potential for “asset grabbing”—advisors may be incentivized to discourage removing assets (e.g., paying off mortgage).

  “We make more money as we manage more money... it just becomes an asset grab...”
  — Ryan Sterling (21:12)

• Hourly/Per-Plan Fees:

  • PRO: Transparent; clear cost for one-time advice.
  • CON: Advice quickly becomes outdated; follow-through/execution is often lacking.

  “People paid $5,000 for something that just sat in a drawer...”
  — Ryan Sterling (25:30–26:25)

• Monthly Retainer:

  • PRO: Consistent access.
  • CON: Clients may pause during quiet periods and not re-engage when life changes, leading to out-of-date plans.

• Commission/Fee-Based:

  • High conflict potential; compensation tied to selling products.

  “That is where... the most conflicts do exist.”
  — Ryan Sterling (30:48)

Advice for Consumers: Finding a Good Advisor

Tips at [32:49–39:15]

• Look for:

  • Fiduciary standard (legally obligated to put clients’ interests first)
  • Professional credentials (CFP® especially)
  • Experience and specialty relevant to your needs
  • Personal recommendations and interviews

• Be wary if:

  • They push specific products (especially insurance, annuities)
  • They obfuscate compensation or resist direct questions about fees/incentives

  “If they are pushing products on you, specific products, I think that’s number one... If there are questions they’re not able or willing to answer, that’s a red flag.”
  — Ryan Sterling (41:28)

• “Financial advisor” is not a regulated title—anyone can use it, so verifying credentials is crucial.

The Real Value of Advisors

• Execution, accountability, and behavioral coaching often matter more than technical advice.
• Not everyone needs an advisor—financially savvy, disciplined folks may be fine with occasional check-ins.
• For many, long-term partnership with an advisor can prevent costly mistakes and provide peace of mind.

“Building wealth is like anything in life that it can take you decades to build and a couple bad decisions to erode it.”
— Ryan Sterling (37:21)

---

Notable Quotes & Memorable Moments

• On Fee Models:
  “I’ve tried everything and I can tell you why we’ve settled on the AUM model. Even though it’s not perfect, I find it to be the best, especially for people who are in the growing wealth stage of their life.”
  — Ryan Sterling (19:34)

• On Emotional Complexity:
  “So much of this business is simple, but not easy.”
  — Ryan Sterling (21:12)

• On Commissions and Conflicts:
  “That is where I think the most conflicts do exist...if there is a conflict, that's probably where the biggest conflict.”
  — Ryan Sterling (30:48)

• On What Makes an Advisor Good:
  “The clients that we work with are those who, they know themselves and they know that life is going to get busy and life is going to evolve. So they want somebody in their corner for the next decade plus.”
  — Ryan Sterling (37:02)

---

Key Segment Timestamps

• 03:36 — ID Theft trends: multi-account attacks, advice from ITRC's Mona Terry
• 08:18 — Scam/red flag warning signs
• 12:27 — How to protect yourself from ID theft
• 16:55 — Listener question: “Are all financial advisors evil?”
• 19:34 — Ryan Sterling: “No, not all financial advisors are evil.”
• 21:12 — Emotional side of finance and execution
• 23:42 — Fee model breakdowns
• 29:32 — “It's less about whether a financial advisor is evil or not and more about how the fee structure fits their values...”
• 33:11 — How to vet an advisor and spot red flags
• 37:02 — When do you truly need an advisor?
• 41:28 — Top red flags that an advisor doesn’t have your best interests in mind

---

Summary Verdict & Practical Takeaways

Are financial advisors evil?
No, but approach the industry with informed skepticism and diligence. Advisors, like professionals in any field, range from outstanding fiduciaries to commission-driven salespeople. Your job as a consumer is to:

• Seek out fiduciaries with CFP designation and verifiable experience
• Understand compensation models and their related incentives
• Expect ongoing dialogue and a relationship, not one-off advice
• Beware of product-pushers and evasive answers
• Interview multiple advisors before making a decision
• Remember: the right advisor is a partner, not a salesperson

For those comfortable managing alone: Don’t feel compelled to hire professional help, but consider check-ins every few years to catch blind spots. For others, a good advisor offers lasting value through insight, accountability, and peace of mind.

---

Next episode preview: Managing finances after a life-changing medical event.

---

Transcript

[A]

The following is a paid sponsorship, not an endorsement by NerdWallet's editorial team. Today's episode is sponsored by Bilt.

[B]

You've heard me talk about Bilt as the loyalty program that lets you earn points on rent wherever you live, and they just leveled up even more. As of 2026, renters and homeowners can also earn up to 1.25x points on their housing payments.

[A]

This is thanks to Bilt's three new credit cards, the Palladium Card, Obsidian Card and Blue Card. All three can turn your housing payments, rent or mortgage into flexible rewards so you can choose the card that fits your lifestyle without missing out on points and exclusive benefits.

[B]

Built Points can be redeemed at top airlines and hotels, Amazon.com purchases, future rent payments, and so much more. Built Points have also been ranked by top publications as the industry's most valuable point currency.

[A]

Your housing payment is most likely your biggest expense. Make it your most rewarding. Find the card that fits your lifestyle and Apply today at joinbilt.com smartmoney that's J-O-I N B I L T.com smartmoney make sure to use our URL so they know we sent you. Terms and limitations apply subject to approval and eligibility.

[B]

BILT cards are issued by column NA member FDIC pursuant to license for MasterCard International Incorporated. Today's episode is sponsored by Spectrum Business. What happens when your Internet drops during business hours and you're the one running the business? Say goodbye to your to do list unless that list involves panicking and having trouble getting any actual work done.

[A]

For business owners, being connected isn't a perk. It's how you take payments, talk to clients and keep things moving. Not to mention pretty much everything else. Spectrum Business keeps businesses connected seamlessly with fast, reliable Internet and advanced WI fi plus phone, TV and mobile services if you need them.

[B]

And Spectrum Business offers 100% US based customer support 24. 7 to help you stay up and running. That means you get actual help, not submit a ticket and hope for the best.

[A]

Our colleague Kerry on the social media team is a Spectrum customer and she told us that she chose Spectrum because people online kept recommending it as a reliable and affordable option for Internet and phone service.

[B]

She told us she was actually a little hesitant to switch at first since she'd been using a different service for a while, but after a year with Spectrum, she's actually had a really good experience. Her phone gets strong, reliable service and it automatically connects to Spectrum WI Fi everywhere.

[A]

Join the millions who rely on Spectrum Business. Visit spectrum.combusiness to learn more one more time. That's spectrum.com business restrictions apply.

[B]

Services not available in all areas.

[A]

Psychopaths, narcissists, Machiavellis. You could fairly describe these types of people as evil, along with scammers, pedophiles, and, let's say, murderers. Should we add financial advisors to the list? That's a question that came across our transom and one that we'll tackle head on. Welcome to NerdWallet's Smart Money podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Pyles. Later this episode, we'll be asking a really big question. Are financial advisors evil? Shoot. I mean, I certainly hope not, since I am a financial advisor. But first, our weekly Money news roundup, where we break down the latest in the world of finance to help you be smarter with your money. Our news colleague Rick Vanderknife is back, and he's talking with a guest about something truly evil. Identity theft and scams. Hey, Rick.

[C]

Hey. Sean is great to be here. And yes, we're here to talk about scams and ID theft. The Identity Theft Resource center released its 2026 Trends in Identity Report. And it's got some new ways in which people are getting scammed and we all need to know what to watch out for. So last week, I spoke with Mona Terry. She's the ITRC's chief operating and Programs officer. And here's our conversation. Mona Terry, welcome to Smart Money.

[D]

Thanks so much, Rick. Glad to be here.

[C]

I'd love to start by touching on some of the trends that you're seeing in your latest report. For instance, more than one in four victims who contacted the ITRC were now dealing with two or more simultaneous incidents. Can you walk listeners through how one compromised account can cascade into a full identity crisis?

[D]

One of the things that's jumped up is people saying that their devices have been hacked, and then they're finding out that their email account was taken over or their social media account was taken over. They were in a data breach and it was their username and password. And now they're finding other accounts that, with that username and password have been impacted. So it's no. No longer someone coming to us with kind of a one and done type scenario. It's really, hey, this one thing happened, and now I'm starting to realize there's lots of other issues.

[C]

Okay. Yeah. That touches on another thing that the report spells out. Unauthorized device access up something like 78% year over year. Can you describe what this looks like and what the impacts could be?

[D]

Yeah, I think what's hard for us is when people come to the itrc, they're like, my device has been hacked, my phone's been hacked, my computer's been hacked. But they don't know how. They don't know what's happening. So the biggest concern for us when people say their device has been accessed, is what's available. Right. So what pictures do you have stored? We know that there are certain apps that don' close automatically. So emails. Right. Email accounts typically don't close automatically. Social media accounts don't close automatically. So it's really understanding what apps are downloaded on that phone, what victims have kind of open already, they don't log out of. And then what is protected. And then we kind of walk through what are all those apps, what's open and what might happen. And walking through kind of all of those steps.

[C]

Is there something particular that someone should do the moment they suspect their phone or laptop has been accessed without their permission? Yeah.

[D]

Disconnect from the Internet is the very first thing. Disconnect. Especially if someone's installed malware, if you really don't know what's happening on your device, and then logging out of anything that's logged in.

[C]

Here's a stat that caught my attention. Among victims who reported three or more financial impacts, the report says 0% reached resolution. What's broken in the system, and who bears responsibility for fixing it.

[D]

I think what's hard with the financial impact is if it's something simple, like there's a credit card charge you don't recognize, or kind of a single charge, a lot of times those are easy to fix and quick to resolve. It's easy to detect that type of fraud. But when it's more complex types, especially when it's new accounts being established in someone's name, that type of financial account is a lot harder to recover from. We know that the more accounts that have been accessed, Right. So people need that immediate access to their money. So when those accounts are compromised and they're having to wait the 30 days, right, to go through that fraud process, they maybe didn't provide the right information upfront, or they aren't able to successfully show that it was a thief that was in their account, not themselves, I think that's where it starts to get a lot harder. So it's that burden of proof is really on the victim. So I think that especially when you're dealing with something like your finances that's something that's, that's impacting your everyday life. And so I think that, right, your emotions get involved. Everyday life is getting involved. Especially if the accounts are with different institutions. Every institution has their own resolution process. So, right, you see one account with one institution and that's going to take a certain amount of time. But as that goes across other institutions, it takes that much longer.

[C]

Let's talk about scams a little bit. The report says that in 74% of what are called account problem scams reported to you, the victims shared high value PII or personally identifiable information. What, what kind of information are we talking about?

[D]

It really depends on the scam. So when we know with job employment scams, they're sharing the most sensitive information. So they're selling, sharing Social Security numbers, driver's licenses, those really super sensitive pieces of information that thieves can then mis in so many different ways. A lot of times it's, it's account information. So login information for certain accounts. Sometimes it's just financial information just up front. So it's just a lot of different types of information, but almost always involves some type of personal information. So driver's license, something to identify that person as themselves.

[C]

How do we know when we're being scammed? What are some of these scams look like?

[D]

The biggest red flags are that sense of urgency. So kind of, they start in kind of really hard and fast and hey, there's a problem. And before you have a chance to start thinking through what's happening, they have you emotionally reacting to what's happening. Right. You're going to be thrown in jail and kind of all of these big things that get you to think, really not think and use your kind of react with your emotions. They're getting really good at that. And so I think that's the piece that is a big red flag is anything that says you have to take action right in that moment. You can't pause, you can't stop, you can't take a moment, call them back. Anyone who says you have to do something right now and you can't take a moment for yourself, that's the biggest red flag we see. That's where kind of the scammers have moved. They want to try and keep you engaged and just kind of throwing things at you at rapid fire for as long as possible to keep you on the phone as long as possible. So I'd say that's kind of the biggest red flag that you're dealing with. A scam is, is you have to do Something right this moment and that you can't talk to anyone else about it is another red flag. I'd say those are the two biggest red flags we see.

[C]

Is it too early to know if AI is changing the ID theft landscape?

[D]

I think it is. I think what we are seeing is that AI is making a lot of those attempts to reach people more realistic. So if it's messages, whether it's text messages or email, they look like they're from a. Either an existing institution or company, or it looks like a legitimate company. Right. If you're applying for a job with a company you're not familiar with, they have a website that looks real, they have people that look real, everything looks legitimate. And I think that's where AI is really helping. I also think that where thieves may not have had the technical skills or the skills to really kind of enact their things at scale, AI is enabling that. So I think it's too soon to tell to what degree, but we absolutely know we're starting to see more of it.

[C]

Are ID crimes in general getting more sophisticated, and are there more of them? I. I feel like the number of scam texts and phone calls I get is increasing pretty steadily as the thieves

[D]

become more successful, they are getting kind of braver, and so they are reaching out more. I do think that also because we are seeing, like we talked about multiple types of identity theft, so it is becoming more sophisticated. I know the types of identity theft that we're hearing about at itrc, we're just hearing more about people's information actually being misused than just hearing about compromises of information.

[C]

So your organization works with real people facing real problems. Can you share any anecdotes about identity theft victims and what this looks like to them in real life?

[D]

Yeah, it runs the gamut. I mean, I think it's people's everyday life. So their checking accounts, our social media accounts, kind of things that they interact with every day, we know that people are getting into those things, like Venmo, right, where they're sending money to people. They're kind of buy now, pay later accounts. So they're getting into the accounts that people use every single day. And so it kind of goes from simple transactions to things that are a lot more complex, like someone committing a crime in their name. We had a parent, for example, who was renewing their. Their benefits, and they weren't able to because it showed that their child was working. Someone had to use their child's Social Security number for work, and so they were denied those benefits. Because it showed that the child was applying even though the child is a minor.

[C]

So talk us through what the emotional impact can be in addition to over and above the financial impact.

[D]

Yeah, people are talking about they feel angry, they feel frustrated. I think the one that's hardest for us to hear is scam victims feeling like it was their fault. They felt like they were to blame for what happened. Like you said, it's not just the financial impact, but it's really, really that serious emotional impact. We know the more serious the identity crime is, the more serious the emotional impact is. So we know that people who are facing like criminal identity theft, for example, face higher rates of depression. That definitely has a serious emotional impact.

[C]

So it sounds like one general takeaway is that being vigilant and taking maybe some of the right protection measures can help prevent a financially devastating mess. What's your main advice for people to try to avoid what can be a truly awful experience?

[D]

The biggest things are freeze your credit so no one can open new financial accounts in your name. Set up any type of protective kind of monitoring that you can on your accounts. You know, you can set an alert for a dollar limit over a certain dollar limit, kind of anything that you could do to regularly review your statements. Unfortunately, a lot of it is on the individual. But staying on top of those, setting up alerts to help automate that, freezing your credit, using unique passwords, setting up multi factor authentication where you get that text code right to your phone, or using an authenticator app, setting up passkeys, making sure those are unique for each account and really taking the time to do that with all your accounts. I think that we had a victim who had set up multi factor authentication for all of their new accounts, but they had an older account that they had not even thought about doing that for and the thief was able to get into that account and they were locked out. So really just making sure that everything you're doing for all of your new accounts, you're going back and looking at all your old accounts as well.

[C]

We'll post a link to your annual report along with NerdWallet articles on identity theft in the show. Notes Mona Terry, thanks so much.

[D]

Thanks, Mike.

[A]

Up next, even though we just profiled some real evil, Elizabeth joins us. And we'll answer a question that came to us asking if financial advisors are evil. But before we get into that, a reminder to send us your money questions, whatever's on your mind, hit us up on the Nerd hotline at 901-730-6373. That's 901-730-Nerd. You can text us or leave us a voicemail there. You can also email your questions to podcasterdwallet.com or drop us a comment on Spotify or YouTube. We'll be right back.

[B]

Today's episode is sponsored by Quince.

[A]

Summer always makes me rethink what I'm reaching for every day. Lighter fabrics, better materials. Pieces that just feel good the moment you put them on and look effortless. That's why I keep coming back to Quint's. They focus on high quality essentials. Think breathable linen, soft organic cotton, washable silk without the luxury markup. It's that rare balance where everything feels elevated but still easy.

[B]

Quint has beautiful everyday pieces like 100% European linen pants, dresses and tops with style starting at $32.

[A]

Their denim is soft and easy to wear and their organic cotton sweaters are perfect for layering on cool summer nights.

[B]

Everything at Quint's is priced 50 to 80% less than similar brands.

[A]

I recently picked up a pair of European linen sheets for my bed because I'm such a warm sleeper and I don't want to be sweating through my sheets all summer long. And let me tell you, I am sleeping so nice and cozy and cool and I just love these sheets and

[B]

I'm super excited because the pool is back open and I recently rocked my blue one piece bathing suit and it is a hit. I must say.

[A]

Elevate your summer wardrobe. Go to quint.com smartmoney for free shipping on your order and 365 day returns. Now available in Canada too. That's Q-U-I-N c e.com smartmoney for free shipping and 365 day returns. Quint.com smartmoney the following is a paid sponsorship, not an endorsement by Nerdwald's editorial team. Today's episode is sponsored by Bilt.

[B]

You've heard me talk about Bilt as the loyalty program that lets you earn points on rent wherever you live and and they just leveled up even more. As of 2026, renters and homeowners can also earn up to 1.25x points on their housing payments.

[A]

This is thanks to Bilt's three new credit cards, the Palladium Card, Obsidian Card and Blue Card. All three can turn your housing payments, rent or mortgage into flexible rewards so you can choose the card that fits your lifestyle without missing out on points and exclusive benefits.

[B]

Built points can be redeemed at top airlines and hotels. Amazon.com purchases, future rent payments, and so much more. Built points have also been ranked by top publications as the industry's most valuable point currency.

[A]

Your housing payment is most likely your biggest expense. Make it your most rewarding. Find the card that fits your lifestyle and Apply today at joinbuilt.com smartmoney that's J O I N B I L T.com smartmoney make sure to use our URL so they know we sent you. Terms and limitations apply, subject to approval and eligibility.

[B]

BILT cards are issued by column NA member FDIC pursuant to license for MasterCard International Incorporated.

[A]

Is it really possible to get unbiased financial advice without getting ripped off? And can you actually trust any financial advisor to have your best interests at heart? Today's question gets to these issues and more. The question is pretty long, so Elizabeth and I are going to trade off reading it. Here we go. Hey Sean and Elizabeth, I would love your perspective on a debate I've been having in my head for years. Are all financial advisors evil? There's a little hyperbole there. But seriously, I have wrestled for years with how and or whether to enlist the services of an advisor. I've long been persuaded by books like the Index Card, which advises caution with advisors. And more recently I've been reading Ramit Sethi, who is much bolder. He says never allow an advisor to manage your assets and run away as fast as you can if they also sell products like insurance and annuities, Part of me feels like I benefit from another set of eyes on our finances, even just to tell us we're good. And I know there might be some tax and other blind spots where an expert might be helpful, but but but. I just can't get over my suspicion that the entire profession is built on one massive conflict of interest.

[B]

If personal finance is simple and if most people can manage things on their own, and if no one can beat low cost index funds, how will it ever make sense to pay someone a boatload of money for them to, in quotes, manage our assets? I know about the fiduciary standard, but I'm sorry, I can't believe that someone won't try to sell me stuff I don't need if it's their living. Sati says that if you must work with an advisor, then pay by the hour or for a piece plan. Maybe that is the answer, although that adds up fast too. One advisor I just checked asks $6,500 for a financial plan which feels excessive. How many hours of work will that take them? I'm intrigued by subscription financial services where you pay a monthly or yearly fee for access and there's supposedly no selling. Although I guess I wonder about the quality of advice and my suspicion of being upsold roommates.

[A]

Can't someone just offer some reasonably priced, unbiased, tailored financial advice? It's also frustrating that it feels like there are no objective voices in this debate as everyone speaking has something to gain. Sign Suspicious in Spokane.

[B]

Suspicious in Spokane has some good questions. And to help us answer them, we are joined again by Ryan Sterling, wealth advisor with NerdWallet Wealth Partners and affiliate of NerdWallet, Inc. Welcome, Ryan. Welcome back.

[E]

Thanks for having me back. Good to be here.

[A]

Hey, Ryan, you know, I think we should really get to the big question first, which is, are all financial advisors evil? And Ryan, are you evil?

[E]

Okay, so are all financial advisors evil? Let's start there. The answer is no, not all financial advisors are evil.

[D]

Shocking.

[E]

Are there some questionable financial advisors? Yes, there are some questionable financial advisors, just like any industry. Am I. Are we evil? No. But I do appreciate the question and I think it's an important question. I've been in the wealth management business for two decades now, and I've seen it done really well and I've seen it done poorly. There are a number of advisors that I trust that I would refer my family to, and there are people who, when they walk into a room, I get to the other side as quickly as possible. So how can you tell? It's hard to tell. And we could start with the fee arrangements because of course, that does drive incentives. It's not as clear in black and white as if someone charges on the AUM model and someone charges on the flat fee model, that the flat fee is better. I have a unique perspective here in the sense that I've tried everything and I can tell you why we've settled on the AUM model. Even though it's not perfect, I find it to be the best, especially for people who are in the growing wealth stage of their life.

[A]

Well, I want us to get into the. The different fee structures in a minute and we'll talk more about assets under management, which our listener referred to here. But I want to get to their concerns, starting with conflicts of interest in financial planning. So can you address some of these, starting with when it makes sense for someone to have their assets managed by an advisor versus doing it themselves, when it's actually quite difficult for an advisor to, quote, unquote, beat the market.

[E]

So one of the things that she said I thought was really Interesting is she goes, if it's so simple. And I always like to say, like a lot of things in life, well, they're simple but not easy because they're two different things. So I think number one is like, we say this all the time, that so much of this business is simple, but again, not easy. The distinction there is that everything in and of itself is very doable for people to read books, for people to watch YouTube, so on and so forth. But actually executing it is a completely different story. And the reason it's hard as it relates to wealth is because we're emotional. And I always say that so long as human beings remain emotional, it's gonna be really hard for AI to replace financial advisors. I can say, like, I've been in this business for two decades, I have an advisor. And the reason being is because when it comes to my own wealth, I'm prone to emotional decision making. And I think that's where having an independent advisor, it's almost kind of like, why do therapists have a therapist? And why do therapists exist where you can read books and listen to podcasts and go to seminars? And the reason being is like, yes, you can understand all of this at a very intellectual, but it's very different when you're trying to execute it at a very personal level. And that's where we come into play. But so where do some of the conflicts of interest arise? Let's talk about the AUM model. First. It really comes down to we make more money as we manage more money. Now some firms will say that we are aligned with our clients best interests and that we make more if our clients make more over time. So on the one hand, some people would say, well, it actually kind of solves that conflict because we're aligned with our client's success. Other people would say, well, it just becomes an asset grab where if someone comes to us and says, hey, I'm thinking about paying down my mortgage, you know, should I? And it requires, you know, $200,000 to leave the portfolio, we're going to make less money if the person pays off their mortgage. So are we incentivized to say, no, no, no, no, keep it in the account because we want more money to manage. So that's where the skeptic would come in and say, like, that's where our incentives are.

[A]

Ryan, you've mentioned aum. That's assets under management. It's a fee structure that's pretty comm planning space. And the general idea is that you have, you know, maybe a million dollars and they're being managed by a financial advisor and they're taking a small percentage of that. And this is where it seems like our listener is pretty skeptical of how this whole thing works. Can you talk about how AUM is really structured and what the range might be and whether it's actually as bad as they maybe think it is?

[E]

Yeah, so, so it's basically everything you just said in terms of it's a percentage of the assets that are being managed. Now that range can be anything from as, call it half percent on the low end up to, I've seen two or two and a half percent on the, on the high end. It also depends on how much money you have being managed. So typically smaller balances come with higher percentages and it scales down over time. So that's how we're structured. So again we're, we're based on assets under management. The highest fee starts at 0.9% and that's where balances under 500,000. Once values get above 500,000, it goes down to 0.8% and then it scales down from there. But it's important to note that, and this gets a little technical, a lot of firms, what they'll do is they'll charge, you know, 0.9% in the first 500,000 or so and then 0.8% in the next 500,000. We actually have cliffs. So once someone gets above a certain asset point, everything gets charged the new lower percentage. And the reason we put those cliffs in place is to actually avoid some of these conflicts of interest. So there have actually been times where clients have taken money out of their account and we've been completely neutral because they've gone from one fee to a higher one because their assets are lower. But on a revenue standpoint or a fee standpoint, it's actually stayed the same. So that's part of the reason we put those cliffs in place was to at least try to mitigate some of this conflict of interest.

[A]

And AUM is in contrast to other fee structures like the hourly or per plan rate that they mentioned. That's how I have my a financial planning firm structured or also fee based or commission based? Can you talk about how each of those works and how they kind of compare on the spectrum of evil or not evil compared to aum?

[E]

Maybe where we can start is like I can tell you all of the fee structures that we've experimented with. So the first one was doing a one time planning fee where someone comes to you and they just want a one Time plan. And it's a one time fee. Just like you would go to an attorney for a, a trust or any sort of kind of legal opinion or a legal document, you pay a one time fee. And the reason that works well is because again, there are zero upcharges, there are zero commissions. It's a very straightforward. I'm going to charge you 4,000, 5,000, this listener was quoted six and a half thousand. And we're going to do a one time plan and that's going to be it. Okay, so what are the pros and cons of that? As again I mentioned the pros, it's a very very, it's very easy to know how you're paying the advisor. The cons are, this is why we stopped doing this, is that when you charge a one time plan, at least for people who are in the wealth building stage of their life, life is so dynamic and things change. So I can build the world's best plan for you and charge you $5,000 and then two months from now that plan could be completely obsolete. It then also goes back to this being simple but not easy in that I just noticed when I was working under that fee structure that again we' of a plan that works. And here's the plan, go execute. And then I check in six months later and people get busy. People have lives, they change jobs, they have young families and nothing gets done. And next thing you know, they paid $5,000 for something just that sat in a drawer. And I'm someone where like I'm very outcomes focused and like when I work with my clients, like I want to see the transformation. And it was really hard to see where it's like, oh gosh, like this person paid so much money and we built this the plan for them that, you know, again we felt was the right plan going forward. And then they just didn't execute on it. So that was where it just became kind of like really frustrating working under that model. And I just felt that the clients that were paying us under the flat fee model weren't having the best outcomes. Okay, so then there's the hourly model. And I experimented with that. And the problem with that is that people then get obsessed with hours and then they don't reach out to you because they don't want to be charged. And it just becomes a very difficult kind of stream of communications because again, it's very unclear about, oh, are you charging me or not? And again, it just felt hard to execute on the plan and strategy on the hourly model. Okay, what about kind of the monthly retainer model? We were paying a flat amount per month.

[B]

Okay.

[E]

Like there are some pros with that, similar to the flat fee model. But the issue with that is what happens is there might be three or four months where everything's on cruise control. And then they say, I'm actually going to pause right now. And then they pause and then next thing you know, life changes and they don't reengage you. And then they come back a year and a half later and it's like we have to re underwrite the entire plan. So that's why I was like, gosh, the people that are having the best outcomes are the ones that stick with us for a long time. And for me, the fee model that scaled the best with people over time was the assets under management. I, I will also say too, there's a, there's a bit of also meeting people where they are. So for example, for clients that start with us with a hundred thousand dollars, that fee is $900 a year. So it was hard to charge someone $5,000 a year when they have a hundred thousand in investable assets. So that's where it's like, gosh, like how can we align this over time? And that's where again, the AUM model is. It takes them to get above 500,000 before they're paying us $5,000 a year, but they're better equipped to be able to spend that. So it's kind of like I went back and I was like, I don't want us to get in our clients way of building wealth. So how do we do that? And that's where having that percentage was the one that made the most sense.

[B]

So Ryan, it sounds a lot like from what I'm hearing you say, it's less about whether a financial advisor is evil or not and more about how the fee structure fits their values and also what they want to get out of their business. Is that right? Right?

[E]

Yeah, that's right. And again, like the evil piece, because there are conflicts. Let's just like take a more of a global look at this. Like there's conflicts of interest within every industries. I think about. I've had to change a vet three or four times because there have been certain vets that have wanted to put my dog under the knife faster than others. And like they get paid more for surgeries that they do. I think about dentists, like, I've moved dentists a couple of times. I've been upsold in the chair so many times that it was just getting frustrating. The dentist that I have now, who doesn't upsell me, I've referred like 30 or 40 patients to her. So I think about just across the board in every industry there are conflicts of interest. So like, to me, like, I think just because conflicts exist doesn't mean professionals are evil.

[A]

Yeah, but that said, there are certain fee structures where there may be more conflicts present than others. And I'm thinking here about commission based or fee based. In that case, someone might be getting a commission or they are getting a commission because they're selling you that insurance product or that annuity that our listener mentioned. And that could incentivize pushing products that people simply don't need. Whereas with AUM or with fee only or an hourly rate, there just isn't that same incentive to be directing a client into a specific product because you're not getting any money from it.

[E]

That's exactly Bayan. And that's where, you know, I, I've stayed away from any sort of commission fee structure because once again, like that is where I think the most conflicts do exist. Now I will say, I'm sure there's an advisor out there who's listening, who's saying I operate on that model and like I'm doing what's right for my client. And I'm sure that is the case for a lot of those people. However, I think if there is a conflict that exists, that's probably where the biggest conflict, where I would get paid a commission from putting clients into a certain investment vehicle or annuity structure. And, and that's where again, like we don't have any of those types of conflicts. And again, I think it makes it a lot cleaner.

[A]

Like just the perception of a conflict can make people feel uncomfortable because like suspicious and Spokane mentioned, you know, you can still be a fiduciary and have a conflict. But at the end of the day, as a fiduciary, you do have to put your clients interest ahead of your own. And just because you're making a bit of money off of providing an insurance product for them doesn't mean that you are a bad advisor.

[E]

When I think about what our greatest incentive is, it's to keep clients for a long period of time. We want to have multi decade relationships with our clients. The only way that can exist is if trust exists and if we're consistently telling clients to take action that benefit us only at some point in time, there's a certain level of skepticism that's going to seep through and that trust is going to be eroded. So I think about this. There's been plenty of times that I've recommended a client take money out of their portfolio to pay down a mortgage or to pay cash for a car or whatever it may be where yes, technically speaking, there's less money for us to manage. So we're not making as much. But it was the right thing to do for the clients. And again, it builds trust with those clients because they know, even though we're making less now because of that move, that we recommended it because it was the right thing for the client. So again, like I look at like my biggest incentive and everyone here on the team at Wealth Partners, our number one incentive is to keep clients for a long period of time.

[B]

Well, what can people like Suspicious and Spokane who are skeptical but maybe want to work with a financial advisor, what are some things that they can look out for? Because as a client you don't know what you don't know. Right. So they are coming to you because they have blind spots in their financial lives or portfolio. So what are some things that they can do, maybe some research on their end to maybe look out for some evil red flags?

[E]

Yeah, well, I mean, I think, you know, again, this isn't going to be perfect, but I think, you know, as Sean referenced, like working with firms that are on the fiduciary standard, like again, yes, it's not going to be perfect, but that's a good first step. Looking at, you know, is the advisor you're working with, do they have a credential like the cfp? Because the CFP has really high standards. So if they're a fiduciary and they had their cfp, again, they are obligated to, to operate at a very high standard and there's a duty of care to the clients that those professionals take very seriously. Now is that a hundred percent of the time? No, but again, you're inching towards the goal of finding someone that's going to have your best interest at heart. And then I think it's interviewing advisors and just getting a good sense of like, do they understand you? Are they listening to you? Do they know what your long term goals and incentives are? Do they work with people who are similar to you? And ultimately again, like, what do you pay for? Like you're paying somebody to build the plan for a lot of people. They need help then executing on that plan and then they need help staying accountable to that plan going forward. Is this someone that you're going to be able to work with who's going to be able to see the entire plan out in its entirety.

[A]

And one thing I always want to highlight when we talk about finding a good financial advisor is that the term financial advisor isn't regulated. Any Joe Schmo on the Internet can call themselves a financial advisor. It really is, is having someone who is credentialed, like being a certified financial planner professional, a cfp, someone who has that designation is held to a certain code of conduct, which includes a fiduciary standard. So really look for those credentials as well.

[E]

They referenced something about how much time does it take an advisor to do something? And I would also say, I don't know that's the right way to look at it. I'll just give one very quick example. So there's someone that I know who is looking for an advisor, and they had a very specific issue in that they were. They wanted to know how many options they should exercise at the company that they work at. And they were. They met with an advisor who charges an hourly fee, and that person quoted them 20 hours because it was going to take a lot of time to research and execute this. And I told them, like, I can figure this out for you in 10 minutes. And I was able to pull up the spreadsheet because we have a lot of clients who have options, and I was able to do it in 10 minutes. The reason I give this example is because is executing the right way could translate into thousands of dollars saved over time. So should you just want to pay somebody, you know, $25 for 10 minutes of their time to do it? Or again, are you paying for the expertise that even if it takes someone 10 minutes to do, they have decades of experience to be able to provide that advice to you very quickly, which saves you time and energy. But then also this person was saying, well, I'm going to have a lot of these questions over time that I don't want to be charged 20 hours every single time have one of these questions. So I would say, like, the time to answer isn't necessarily the right metric. Like, if I go to the doctor and I need a surgery and the surgery takes 10 minutes to do or 15 minutes to do, and it's super easy. I don't want to skimp on that. Right. Like, I'm fine with the doctor paying what they have to pay. Like, I don't need to elongate it to three or four hours and have a much longer recovery to make the hourly rate go down, if that makes sense.

[A]

Yeah, there could be almost an incentive to make things take longer at that hourly rate. Right.

[E]

That's exactly what I'm getting at here. So like, I don't know that that's necessarily the measure to judge an advisor on Ryan.

[B]

Also, I think the underlying question for Suspicious in Spokane here is, is a financial advisor valuable to me now based on people that you've worked with. Ryan, in your almost two decades of doing this, have you met people like Suspicious in Spokane who maybe have their stuff together, are not so emotional about investing, have done their research and what other value do you add aside from helping them make money?

[E]

Money? Yeah, I mean I, I tell people all the time that like you might not need us. Right. Like if you're someone who, you know, you're financially savvy, that you know you aren't prone to emotional decision making, that you're a good executor and that someone can give you a written out plan and you can execute it.

[B]

Yeah.

[E]

Depending on where you are, like, yeah, maybe spending a couple thousand dollars for a one time plan is, is the right thing for you. We've directed plenty of people in, in that, in that direction. I would say the clients that we work with are those who, they know themselves and they know that life is going to get busy and life is going to evolve. So they want somebody in their corner for the next decade. Plus for me, I would say that building wealth is like anything in life that it can take you decades to build and a couple bad decisions to erode it. And that's where I think having somebody in your corner, I think having a professional that's along with you on the journey, that adds an enormous amount of value over time. And I think our clients, especially our clients who are long term clients with us, they see that value. But again, if someone's comfortable doing it on their own and they trust themselves and they're not going to be prone to those emotional decisions and they're going to be able to execute on it. You might not need an advisor or you might just need the kind of a one time check in every, every five years or so.

[A]

And for someone who does want a financial advisor who isn't evil, who is competent and trustworthy, where do you think they can begin to look for that individual? Because it's not easy. There are so many advisors and you never know if they're going to be quite the right fit for you.

[D]

You.

[E]

Yeah, I mean, I think number one is, you know, getting personal recommendations, I think is, is a great place to start, especially for people who are like you and share the same level of skepticism or in the same place in life. If you have someone that's worked with someone who's been very helpful, that's probably a good place to start. Again, I think looking for people who are CFPs, looking for people who have years of experience, it's like anything. It's like, you know, when I've had to hire an attorney or hire a doctor, again, you look for credentials, you look for referrals. It's the exact same thing.

[A]

And similarly, I would add that you can have some informational interviews with different advisors and really just get a feel for how they are in person. You might find through the conversation that they have a specialty that really suits your needs, or maybe they're lacking that specialty. And then you can carry on and talk with someone else. But take your time with this decision, too.

[E]

I will say too, that when we meet with prospective clients who say, hey, like, by the way, just like full transparency, I'm interviewing like four or five different advisors. I'd love hearing that, like, yeah, you should. As people are interviewing advisors, like, we also want to interview our clients and we want people that, again, that, like, we're going to want to work with over time. So I feel like when someone hires us after speaking with four or five other advisors, that usually is a good sign that this is going to be a good relationship over time.

[A]

And what you're saying highlights how working with a financial advisor is really a professional partnership. It's not something where you're just going in, dumping all of your info and hoping for the best. Almost like when you work with the CPA for your taxes, right? I think people assume you can just drop off all of your information and they do it all for you. The same thing isn't necessarily the case with a financial advisor. It's more of an ongoing dialogue if you're doing it in its best form.

[E]

And it's. It's funny. I mean, for, for listeners who've heard me before, I think I use this example almost every single interview I do. I have a personal trainer. And again, I can go on YouTube, I can listen to health and wellness podcast, I can read books on it, I can watch instructional videos. But, like, why do I pay a trainer a couple times a week? It's because they get me to show up and they get me to just do a little bit more than I would do if left on my own devices. And I can tell you, like, I'm the type where if I don't feel like it, I'm probably not going to go. However, if I'm paying the trainer, I'm going to go. And I know people like one of my colleagues here who's incredibly fit. He doesn't need a personal trainer. He knows what to do. And like maybe he'll go in and just kind of do a session every now and then, but he doesn't need to pay one on a regular basis.

[B]

I so what is the verdict? Are financial advisors evil as the non financial advisor?

[E]

No, they're not evil, but there are some financial advisors that I would stay away from just like any industry.

[B]

And I think that's just the ethics and morals and values thing versus the industry itself. Right.

[A]

This also opens up a conversation around what does it even mean to be evil? We can go make this a philosophy podcast if we really care to too. But just a quick wrap up question in case people are still wondering what might be one to three signs that an advisor you're working with doesn't actually have your best interest in mind.

[E]

I would say if they are pushing products on you, specific products, I think that's number one. I think it's also important to understand that if they are recommending something for you, like how are they being compensated for it? If there are questions that they're not able or willing to answer, I think that's also a red flag. So again, I would say the biggest conflicts here are what you highlighted before, Sean, are like again, the people who are pushing products. So again, if you're getting that feeling that they're pushing something on you versus listening to you, understanding your situation and then again delivering that roadmap of what the plan's going to be and how you're going to solve this financial pain point, I would say away from it if again, the main objective is to just push product on you.

[A]

Got it. Okay. Well, Ryan Sterling, thank you so much for joining us again on Smart Money.

[E]

Yeah, thanks for having me.

[B]

Once again, Ryan is a wealth advisor with NerdWallet Wealth Partners. If you're considering working with a financial planner like Ryan, then you can visit nerdwalletwealthpartners.com smart we're going to include a link to that site in today's episode

[A]

description and that's all we have for this episode. Remember that we are here to answer your money questions. So send them our way. You can turn to the nerds and call us or text us your questions at 901-730-6373 free. That's 901730, nerd. You can also email [e-mail] or drop us a comment on Spotify or YouTube.

[B]

Come and hang out with us next time to hear about how to manage your finances after a life changing medical event. Until then, you can follow Smart Money on your favorite podcast app that includes Spotify, Apple Podcasts and iHeartRadio to automatically download new episodes.

[A]

And here's our brief disclaimer. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes, may not apply to your specific circumstances.

[B]

This episode was produced by Tess Figland. Hilary Georgi help with editing. Eve Krogman edits our audio and our video. And a big thank you to NerdWallet's editors for their help.

[A]

And with that said, until next time, turn to the nerds. Hey smart Money listeners. We have a brand new email newsletter and it's completely worth signing up for, especially since it's free.

[B]

Every issue has clips from recent episodes, links to stories you might have missed, and also behind the scenes commentary from me, Sean and our producer.

[A]

Some of it is stuff that doesn't make it into the episodes, the context, the moments, the takes we didn't plan on sharing.

[B]

You can think of it as the group chat for smart money fans. I'm gonna be sharing inside details about parenting and money. Yes, I'll be sharing all the juicy

[A]

stuff and I'll have loads of tips about what I'm doing in my garden. So if you wanna putz around your garden like I do, sign up for the newsletter. And also, you know, we have money, tips and all that kind of stuff. So head to NerdWallet.com podcast to sign up. Sign up again, it's free.

[B]

That's NerdWallet.com podcast. We'll see you in your inbox. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block. Or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it, ready to make anything online make sense. There's no place like like Chrome. Check responses Setup required compatibility and availability various 18.