How to Fire Your Financial Advisor Fairly Painlessly: Step-by-Step Guide

Ask your financial advisor: “What can you do for me?” As he/she flounders to come with a response, you’ll both know it’s time to cut the cord.

Fourteen years ago, I began investing. Because of this, I considered becoming a financial advisor when I grew up. But, as I went through college, interned at a top-tier brokerage firm, met with countless current advisors, studied for the exams, and watched job offers come in, I forgot to ask myself one basic question: Who needs a traditional financial advisor?

It’s funny how we can become so wrapped up in completing a goal that we forget to ask if the goal is even worthwhile. It’s like that line in the movie “Jurassic Park” where Ian Malcolm refers to the creation of dinosaurs on the island and says: “Yeah. Yeah. But your scientists were so preoccupied with whether they could that they didn’t stop to think if they should.”

The semester before I graduated college, I rejected every job offer I received to join a financial advising firm. Why? Because I didn’t feel like encouraging people to pay me for such a silly service.

Why I Don’t Believe We Need Traditional Advisors

With the power of the internet, people simply don’t need local advisors. I’ve networked with a lot of these talented salespeople and the game is all about getting people to buy into their products. I, however, could never charge people for a service they could get far cheaper — and ultimately better — from Vanguard or a similar online brokerage firm. These online firms cut out the middleman and get the average investor amazing no-load funds with insanely low expense ratios. I do all my investing through Vanguard. And I would feel bad accepting any client simply because there’s a smarter option for them out there.

The Cost Savings

By using Vanguard or a similar company, not only are you getting great funds, but all associated costs are cheap. Moving my money out of American Funds and into Vanguard Index Funds will save more than $450,000 over my lifetime in fees alone. Watch advisors squirm in this NPR documentary (52 entertaining minutes) as advisors answer what use they are to investors. The high fees American Funds and other traditional mutual fund companies charge is where advisors get their commissions. You don’t need to pay these.

I don’t know if this still goes on, but Edward Jones would notify its advisors each week on what products to push to clients. This would be regardless of what the client actually needs. I imagine a sample Monday morning call going something like this:

Edward Jones District Rep: Hey Jim! I want you to sell annuities this week. Who cares about the clients’ needs; we need to get this product moving!

Edward Jones Financial Advisor: Sure thing, if it makes me more money!

That’s about as disgusting as it gets, if you ask me.

The Touchy-Feely Defense

Dave Ramsey and others love to use the touchy-feely defense: “You need a financial advisor — someone who will keep your finances on track. When you’re scared and want to sell, you can sit down with your advisor and he’ll calm you down.” What a load of nonsense.

I love how Ramsey gets paid for each financial advisor he recommends. One night, I met with a member of his advisor army. The guy was conducting practices Ramsey has spoken very strongly against (a fixed-percent management commission, for one). Meanwhile, Ramsey had run a radio ad singing the praises of this particular advisor. After talking with the advisor for a while, he told me he had never even spoken to Ramsey before.

So, Ramsey is getting paid to endorse a financial advisor he’s never met and conducts practices against his beliefs. Cute, isn’t it?

How to Fire Your Financial Advisor

Okay, so I’ve had three financial advisors and they are all gone now. The first one strongly encouraged me to get into a terrible mutual fund when I was young (my fault too but there’s a bigger story there), so I left him mainly for that reason. The second one told my parents to buy an annuity for me when I was one year old and also advised them to buy a whole life insurance policy while they were at it! So I fired him out of resentment for those acts. Also, one time he couldn’t answer a simple question I asked and instead replied: “You should be doing my job.”

My last advisor, I left when I was about 20. He was with Edward Jones. Here’s how I fired him in under three seconds. I asked him one question: “What can you do for me?”

At first, he was silent and then he rambled a bit about the great, late Edward Jones. Then, he basically said he couldn’t do anything for me I couldn’t easily do for myself. BOOM. Fired.

Ask your advisor: “What can you do for me?” This way, they essentially fire themselves.

What You Should Do Next

1) Fire your advisor and invest through Vanguard. Related Article: My Lazy Investment Portfolio: Where and How Much I Invest

2) Keep investing without an advisor and give yourself a huge self-high-five for bein’ awesome!

3) Start investing if you haven’t already because you need to start as young as possible. Related Article: Become a Multimillionaire by Fully Funding Your Roth IRA

Human Contact Is Still Awesome

Humans are awesome, no doubt. I love a comforting human voice to assure me my money is safe. I have worked with Vanguard, Fidelity, and TD Ameritrade extensively and their non-commissioned, modern-day advisors are fantastic! When I first started working with them, I asked a few questions I knew the answers to — as to build a rapport and trust. Then, I asked them some tough questions I didn’t know about. Everyone has been so great. But, in all reality, I really don’t need to talk with them often.

Also, the internet is more knowledgeable than any person can ever be. Seriously. Heck, I only go see my doctor now to have him confirm my results from WebMD — so far WebMD and I have been right every time! But if you ever get lazy and want to ask a real human a question instead of searching online, the online brokerage firms have people to help.

Remember, as a person’s net worth grows and investments become more complicated, professional accountants and attorneys might be beneficial to have involved in one’s finances.

Want to learn more about Edward Jones and Vanguard? See our article, Edward Jones vs Vanguard.

Leave a Comment

19 comments

  • Thanks for giving me the motivation to do this, Will! I fired my advisor earlier today and I feel great!!!!!!!!!!!!! Helllllo Vanguard!

  • Great article man. I share many of your same thoughts. I find it disgusting how so called financial advisers take advantage of the common guy. You cant trust anyone these days.

    • What’s disgusting is when their personal portfolios don’t match what the recommend for you. Or worse, when they don’t invest at all!

      Ahhhadfhasklfkldjfklajkldjfklajdklfakl makes me so mad! Good thing you’re helping make people aware of their less-than-admirable tactics as well!

  • Hey Will… I’m gearing up to track my portfolio myself so I can fire my advisor. He’s done well for me but I don’t like the fees. It’s just a bit nerve wracking with over 0.7m in investments.

    • Debs, I can’t relate to your .7M! But asset allocation remains the same no matter how much money you invest. Think of it in percentages instead of dollars.

      Sorry for the late reply! I hope you subscribed to comments!!! 😀

  • I think I like the idea of having an as-needed advisor as opposed to a regular one. Someone that I just pay when I specifically need an hour of their time to clear up a few questions or something.

    • I call Vanguard probably a few times a month. They have always been great!!! TDAmeritrade is stellar as well!

  • The internet has made a lot obsolete. With my limited income, there’s not much more to managing my money than throwing what I can into savings and maxing out my retirement funds. I think if I had major wealth though, I’d probably hire an advisor to help me manage it.

    • I’d say getting into the habit of investing is harder to get into than the right investments.

    • I think there’s probably a point/$ amount at which it makes sense to pay someone to help you figure out longterm strategies, tax consequences, etc. Not necessarily a financial advisor in the way you normally think of it, but someone who can help you preserve/grow as much income as possible while you are still controlling/choosing your investments.

      • I agree. I think there’s a tipping point where it’s no longer in your best interest to go it alone. A financial adviser won’t help much but an accountant, attorney can do wonders. But to get to that point requires a lot of assets – more than most obtain in the first quarter of life.

  • I don’t use an adviser, so I’ve made several rookie mistakes for sure. But I understand my finances and risks a little bit more by handling things myself. My dividend portfolio at Tradeking and my Roth IRA at Vanguard are both killing it based only on strategies I learned through financial bloggers.

    What still baffles me is how to improve my 401(k) investments. My company has us at Merrill Lynch and if I decide to start choosing my own stocks (vs. playing around with the target date fund percentages), they’ll charge me a small annual fee each year. I keep second guessing if I will come out ahead should I take things into my own hands or if I should just stick with the target date fund.

    • I like the ‘rookie mistakes’ because losing money hurts. I bet you never make the same mistakes again!

      I’m not a fan of target date funds so I would steer you away from those. But I’m also not a fan of management fees so I would steer you away from those.

      Hmm. 401(k) options suck sometimes. They do a little bit for me, too.

      You could see what an index mutual fund is likely to fetch over the next 40 years (7-8% based on what you use to calculate) vs. a mix of stocks/bonds/etc. (5%ish?) that a target dates fund makes up. If 100% equities gain you 3% more per year and the management fee is 1%…

      Either way, you’ll still make money. But that ‘either way’ mentality leads to a lot of opportunity lost so try not to think like that. Let me know how the math works out!

  • First of all – great title! I laughed 🙂 And second, I do not have a financial advisor / planner because I believe that no one will ever care about my money more than I will. So, why would I have someone who doesn’t care about my money as much as me manage it? It doesn’t make sense for me!

    • Thanks, Natalie! I watched the second hands on my clock to see how long it takes to say, “What can you do for me?”

      I like your money management philosophy. It’s true – not even our moms care more about our money than we do.

  • “The second financial advisor told my parents to buy an annuity for me when I was ONE YEAR OLD and also to buy a whole life policy while they were at it! . . . So I fired him out of resentment for those acts of complete douchery towards me and my parents.”

    Will, are you outing yourself as one of those E*Trade babies???

    Another solid post, BTW!

    • HA, I didn’t know about those ‘investments’ until I was in my teens! I was all sorts of pis5ed off when I made the discoveries!!

  • Great advice, Will!

    The key to doing it yourself is picking up a book or two and using awesome information that is freely available online. If you don’t want to spend time on that, however, a financial advisor is often your only option.

    Whenever I meet a new financial advisor or someone from a bank who is eager to help me, I always ask questions I know the answer to already, just like you. It’s a great way to check out if someone is full of bs or he’s actually trying to help you.

    Thanks for sharing,
    NMW

    • Thanks!

      I hope the hundreds of thousands of dollars people could save by educating themselves is motivation enough. It’s like tens of thousands of dollars per hour of reading! Woot!