Author Topic: Would you ever use a FIRE financial advisor?  (Read 3407 times)

turtlefire

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Would you ever use a FIRE financial advisor?
« on: December 05, 2018, 12:22:16 PM »
Hello All,

I am pursuing a career as a financial advisor, specifically to the FIRE movement, and want to know if it would be a good group of people to help out. A little background on me, I am 29, pursuing a grad degree in financial planning.  I am passionate about living frugally, investing wisely, and learning how to help people out of the consumerist lifestyle and into a more FIRE like lifestyle through educating and helping them as an advisor.

This is something I will be doing part-time as well as creating a website where I write about how one can create their own financial plan and as well have my contact info as a means of communicating if my readers ever need one-on-one counseling or help. Do you think this is something that would take well in the community? I am having doubts that this would take well, seeing as a lot of those who are interested in this lifestyle are DIY'ers.

Let me know what you think!

« Last Edit: December 05, 2018, 12:35:11 PM by cduncan14 »

BiggerFishToFI

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Re: Would you ever use a FIRE financial advisor?
« Reply #1 on: December 05, 2018, 01:32:40 PM »
A lot of people on this forum nerd out on their finances and don't have a need for a financial planner.

However, I think there is a definite market though for a fee-based, early retirement financial planner. Figuring out how to market to people to pay you a fee upfront when there are other financial planners out there doing to for "free" (minus 1% of your assets every year for life) would be the tricky part

wageslave23

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Re: Would you ever use a FIRE financial advisor?
« Reply #2 on: December 05, 2018, 01:34:32 PM »
I've considered something similar, the problem is like you said most FIRE people are DIYers.  And what would be your financial advice?  Invest in an index fund?  That bit of wisdom is good for a one time charge of $100.  No ongoing fees are likely to be merited.  So basically you could justify having a couple of budgeting/counseling sessions at the beginning to help them set up a budget and a savings plan but I don't how you will be able to make much more than $500 on any single client.  Its pretty hard to make a living without recurring business.  In my 9-5 job I do investment advising and we charge about 1% of assets annually to "diversify" their portfolio and rebalance it.  Outside of my job I tell people to invest in VTSAX for free.

FIRE@50

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Re: Would you ever use a FIRE financial advisor?
« Reply #3 on: December 05, 2018, 01:39:15 PM »
I agree that there is a market for it, but also difficult to make into a sustainable business. Once you tell people to be more frugal and throw all their money in an index fund, I'm not sure where the business goes from there. I guess people would occasionally come back to you when they are ready to transition to retirement. Maybe there is a niche in Roth conversion and RMD calculations?

Sometimes I wish I was more creative...

turtlefire

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Re: Would you ever use a FIRE financial advisor?
« Reply #4 on: December 05, 2018, 01:39:57 PM »
I've considered something similar, the problem is like you said most FIRE people are DIYers.  And what would be your financial advice?  Invest in an index fund?  That bit of wisdom is good for a one time charge of $100.  No ongoing fees are likely to be merited.  So basically you could justify having a couple of budgeting/counseling sessions at the beginning to help them set up a budget and a savings plan but I don't how you will be able to make much more than $500 on any single client.  Its pretty hard to make a living without recurring business.  In my 9-5 job I do investment advising and we charge about 1% of assets annually to "diversify" their portfolio and rebalance it.  Outside of my job I tell people to invest in VTSAX for free.

My initial thoughts are to start a blog where I teach the individual to make their own financial plan. In the event that this individual needs advice, help, or coaching, I will offer hourly services at whatever reasonable price I set it at. My main point is to teach people to plan, understand themselves better, and figure out life through a financial lense.

Money isn't really an issue for me, so charging clients and all that is not much of a concern. The biggest concern is if the way I want to help is the most efficient use of my time.

slow hand slow plan

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Re: Would you ever use a FIRE financial advisor?
« Reply #5 on: December 05, 2018, 01:41:37 PM »
There might be  a need but i think it would be a small pool. You would also be competing against other people who do the same thing who already run successful blogs and offer  1 on 1 consulting. You would have to offer something special I think for it to draw anyone in. Plus most of the clients would not need much follow up i would imagine so you would not have a steady recurring customer base. You can look at other people who are doing it now like Rootofgood but i think most of them are retired and do it more as a easy side gig.

wageslave23

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Re: Would you ever use a FIRE financial advisor?
« Reply #6 on: December 05, 2018, 01:48:41 PM »
I've considered something similar, the problem is like you said most FIRE people are DIYers.  And what would be your financial advice?  Invest in an index fund?  That bit of wisdom is good for a one time charge of $100.  No ongoing fees are likely to be merited.  So basically you could justify having a couple of budgeting/counseling sessions at the beginning to help them set up a budget and a savings plan but I don't how you will be able to make much more than $500 on any single client.  Its pretty hard to make a living without recurring business.  In my 9-5 job I do investment advising and we charge about 1% of assets annually to "diversify" their portfolio and rebalance it.  Outside of my job I tell people to invest in VTSAX for free.

My initial thoughts are to start a blog where I teach the individual to make their own financial plan. In the event that this individual needs advice, help, or coaching, I will offer hourly services at whatever reasonable price I set it at. My main point is to teach people to plan, understand themselves better, and figure out life through a financial lense.

Money isn't really an issue for me, so charging clients and all that is not much of a concern. The biggest concern is if the way I want to help is the most efficient use of my time.

If money isn't an issue, then yes I bet you would have some clients/readers and you would have fun doing it.  I would expand to also include people who aren't necessarily shooting for FIRE but have trouble managing their finances.  I think this is a much larger pool and you would have many more family and friends that would fit this profile. 

the_fixer

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Re: Would you ever use a FIRE financial advisor?
« Reply #7 on: December 05, 2018, 03:06:52 PM »
There are a bunch of little areas where I could see someone paying a one time fee.

Getting started - look over their budget and identify low hanging fruit that can be cut / optimized with tips on where to start.

Early withdrawal planning - look at where they have their money and options for withdrawal for early retirement.

Tax efficiency - Roth ladders, mega backdoor and planning for taxes in retirement including how to stay within ACA guidelines

Investing - help with investment strategy and getting their allocation setup properly


FIRE double check - as they are nearing FIRE look over their plans and make sure everything is in order




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turtlefire

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Re: Would you ever use a FIRE financial advisor?
« Reply #8 on: December 05, 2018, 10:03:46 PM »
I'm wondering if creating a blog for the mass audience that needs financial help and sprinkling some FIRE logic into my advising sessions would be a better way of doing it.

Syonyk

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Re: Would you ever use a FIRE financial advisor?
« Reply #9 on: December 05, 2018, 10:20:07 PM »
This is something I will be doing part-time as well as creating a website where I write about how one can create their own financial plan and as well have my contact info as a means of communicating if my readers ever need one-on-one counseling or help. Do you think this is something that would take well in the community? I am having doubts that this would take well, seeing as a lot of those who are interested in this lifestyle are DIY'ers.

DIY is quite common, at least partly because of the results of trying to have the conversation with financial planners.  I've been told, politely, by Chase Private Client (I could have it because my parents have it, they've... not really won me over) that they couldn't give me a mortgage for a trailer house (I much prefer the term "manufactured home," and think it's just as well built as site-built homes), and I've had some entertaining conversations with the occasional free financial planner about my early retirement plans and my path to them (which, mostly, involves being significantly energy and food independent, because that's got an awful lot less risk of market shock, plus is fun), and I just recently got something in the mail about how my estimated retirement account earnings (if I worked to 65) were only $130k... yellow light, I would probably need more in retirement, call them so I can optimize my retirement plans.  I don't expect to spend radically more in retirement... nor do I actually expect to ever "retire" fully - by normal definitions.  It just means I can do other interesting work without worrying about earning a living from it.

But, really, I'm not sure there's a market for it.  Anyone on the FIRE path is almost certainly "well advanced" in their financial understandings, and likely wouldn't pay for generic-ish advice they can find themselves.

You'd need some way to really stand out, and I've no idea what that would be.

I'm wondering if creating a blog for the mass audience that needs financial help and sprinkling some FIRE logic into my advising sessions would be a better way of doing it.

The internet has no shortage of personal finance bloggers.  One more isn't likely to stand out among the noise.

DebtFreeinPhilly

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Re: Would you ever use a FIRE financial advisor?
« Reply #10 on: December 06, 2018, 09:35:35 AM »
I have started this exact thing with a friend of mine who reached out after reading about my success with paying off debt. I have been coaching him along over the past 6 months. He is not into the FIRE movement but was very interested in that he could possibly stop working before 62. He will be debt free next month, and we have started talking about retirement planning, college education for his daughter, and other financial topics. From the get go, I did tell him he could read about this all online and I have introduced him to several forums/FB Groups. 

I believe that there is a market for financial advisers. The market is not within the FIRE community though. For a fee structure, I am spit-balling the idea of an upfront cost to cover a year's worth of coaching. With that the client would get a customized plan geared towards their wants, needs, and future goals. I would help them create budgets, monthly reviews of their accounts and goals, and hold them accountable throughout the year. This is just the idea I had in my head.

slappy

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Re: Would you ever use a FIRE financial advisor?
« Reply #11 on: December 06, 2018, 11:09:24 AM »
Mitcheal Kitces just had someone on his podcast who does something like this. She specializes in low/moderate income families and she charges them 1% of their gross income, paid monthly. She does planning/coaching/budgeting help/helps them find local resources applicable to their situation. It was a recent episode of his podcast I believe.

slappy

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Re: Would you ever use a FIRE financial advisor?
« Reply #12 on: December 06, 2018, 11:10:22 AM »
Also the guy from Root of Good does something like this I believe.

HeadedWest2029

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Re: Would you ever use a FIRE financial advisor?
« Reply #13 on: December 06, 2018, 11:18:16 AM »
Not a financial planner, but I've considered a side gig post-FIRE as a financial coach.  I doubt you make much coaching people already on the FIRE track, but rather helping medium to upper income people who are clueless and use FIRE concepts as part of the coaching.  More of a mental shift from saving as punitive to saving to gain some financial freedom / reduction in stress.

https://www.kitces.com/blog/financial-coaching-what-it-is-and-how-to-become-one/

CrazyIT

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Re: Would you ever use a FIRE financial advisor?
« Reply #14 on: December 06, 2018, 01:10:00 PM »
There are a bunch of little areas where I could see someone paying a one time fee.

Getting started - look over their budget and identify low hanging fruit that can be cut / optimized with tips on where to start.

Early withdrawal planning - look at where they have their money and options for withdrawal for early retirement.

Tax efficiency - Roth ladders, mega backdoor and planning for taxes in retirement including how to stay within ACA guidelines

Investing - help with investment strategy and getting their allocation setup properly


FIRE double check - as they are nearing FIRE look over their plans and make sure everything is in order



I think this is very good stuff.

I would add:

Real estate - Knowing how that plays a part in FIRE.  Tax/Depreciation/rental etc

All the other age dependent things.  ROTH rollover, 55 401k rule, 72 rules, tax and social security rules

I have had financial planers in the past.  None of them ever could look at the big picture.  Advice was always the same.....invest in some fund just because?

Good Luck

HBFIRE

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Re: Would you ever use a FIRE financial advisor?
« Reply #15 on: December 06, 2018, 07:59:01 PM »
I've considered paying someone I respect within the FIRE community a one time "consultant fee" to do an in depth look at all my finances.  The hard part is finding someone you can A) Trust, and B) has the expertise you need for your goals and specific situation.  Good financial advice requires in depth personalized analysis.  There are a couple bloggers within the community that seem a good fit for what I'd need.  Ideally you find someone who is an expert on personal finance and taxes, this is not common.  I would insist on paying a high enough fee so that I get a very thorough analysis.   I'm sure there are things I've overlooked, some strategies I'm missing, or simply areas I'm not educated enough on and could use a second set of eyes and input.  I like to think I have ~90% right but could use help on the last 10%.  There is probably enough value there to easily cover the fee many times over.  I'll likely do this sometime next year.
« Last Edit: December 06, 2018, 08:10:10 PM by dustinst22 »

Habilis

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Re: Would you ever use a FIRE financial advisor?
« Reply #16 on: December 06, 2018, 08:37:48 PM »
Best use of revocable and irrevocable trusts for children, grandchildren, inheritance strategies, family office type stuff, creating foundations/non-profits/endowments. I imagine these will be major issues when many in this community have $5-500M to dispose of in a couple of decades.


turtlefire

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Re: Would you ever use a FIRE financial advisor?
« Reply #17 on: December 07, 2018, 02:35:52 PM »
I checked out the root of good, I think that's similar to what I would be doing. I will be different of course, I will have a CFP and have extensive knowledge of financial planning and taxes. I also realize that a good portion of financial advisors uses investment planning as their only service. I find that going into a conversation about finances, I look at the bigger picture and understand the person's situation and give really specific advice. I will also dive into every area of personal finance (tax planning, estate, insurance, behavioral, values, etc)

I also agree that real estate can make a large difference in someones plan to retire early. I actually used house hacking as a way to get closer to retirement. So I understand this side as well. I want the "vehicle" to help as many people as I can, not necessarily FIRE, but I find the FIRE movement to be more in line with how we are supposed to live, so I naturally lean towards this ideal.
« Last Edit: December 07, 2018, 02:37:59 PM by turtlefire »

Zikoris

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Re: Would you ever use a FIRE financial advisor?
« Reply #18 on: December 07, 2018, 08:18:44 PM »
I'm not sure what value a person could add versus my current situation, honestly. I use a robo-advisor to deal with the few things I don't like doing myself and keep everything investing-related at zero effort. And I kind of like the lack of personal connection I have now - it's pretty nice. And I'm not really looking at lowering my expenses any more, since they're pretty much right where I want them. At this point, everything's basically on autopilot and has been for years, so I really don't see someone improving that.

I could see it being useful for people who are just starting our and need someone to kind of walk them through all things financial. Like the people who post on reddit - "I'm 20 and suck with money, but want to retire ASAP, HALP!"

UndergroundDaytimeDad

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Re: Would you ever use a FIRE financial advisor?
« Reply #19 on: December 11, 2018, 07:09:31 AM »
MoneySense magazine used to have a listing of advisors that the verified based on a set of criteria.  They key terminology to use is "fee only".  These are people who have no funds to flog to you and will just agree to a set fee for whatever it is you want.  It is going to be costlier than the fee for someone who thinks they can weasel you into buying something you don't want, but the honesty and genuine focus on your goals is likely worth it if someone decides they need specific advice. 

MayDay

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Re: Would you ever use a FIRE financial advisor?
« Reply #20 on: December 11, 2018, 08:13:11 AM »
I would definitely hire a fee based planner when we get closer to actually retiring (we are probably a decade out). 

I understand the basics of saving but not all the optimization of starting to spend down the stash between when I retire and when I can access the 401K without fees.  I could learn it, but I'd rather work an extra month at something I already understand, and hire out that part.  I have also read about Roth conversion ladders a bunch of times and still don't exactly get it.  And I am not sure if we should consider trusts or something for our special needs child at some point. 

So I think there is a market, but it is small.  Hopefully when the time comes I can find someone like that.  Right now the whole thing depends on healthcare availability anyway, so I am not worrying about anything except continuing to save.
« Last Edit: December 11, 2018, 08:18:02 AM by MayDay »

RedmondStash

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Re: Would you ever use a FIRE financial advisor?
« Reply #21 on: December 11, 2018, 07:06:09 PM »
A lot of good points here about a lack of recurring business.

My only suggestion would be to write a book instead of hiring out as a financial FIRE planner, but again, lots of books and blogs exist already.

If it's your goal to help people, maybe you could start by offering to chat with friends & family. I did that and one friend took me up on it; we spent a few hours going over the basics. No fee, but she did provide excellent baked goods.

Or maybe you could teach a class at a local community college?

Dragonswan

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Re: Would you ever use a FIRE financial advisor?
« Reply #22 on: December 12, 2018, 11:06:34 AM »
So most of the folks on here are way above average and into stem so they tend to do the shockingly simple math themselves.  They're well compensated, motivated and confident.  This is not your target client.  You want to market to the brilliant EQ crowd who are well compensated (middle to upper middle class) but don't want to balance the checking account. They like what they do, until they run up against a crazy butthead manager or they realize their social worker tendencies are being run over by the corporate bottom line.    These folks exist, I have two of them for siblings.  These are the folks that want to be able to retire early to their social work activities on their terms, but can't do the math, get headaches researching anything remotely STEM related and think YNAB stands for You Never Acted Before.  These are the people who will only accept advise from professionals because there is no way their financially stable relative could understand any of that.  Yep, these are your target clients.