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A couple of year after retiring from a career in translation and the organization of international conferences, I enrolled in a graduate program for Financial Planners at Rice University and subsequently passed the CFP exam. I didn’t intend to go back to work, and I haven’t. What motivated me was an interest in learning how to manage my own finances better. In the process, I gained an appreciation for financial planning as a profession and would consider it seriously if I were starting out again. Alas, I’m 76 years old.
I have the impression that many Humble Dollar readers take pride in managing their own finances and investments – that’s kind of the premise of Humble Dollar, isn’t it? That it’s not rocket science. Financial literacy comes down to a few basic principles, and financial success to clear goals and discipline.
Nevertheless, it seems to me that that simple message – and the good outcomes it leads to – isn’t reaching the people who would benefit most, if one is to judge by the average person’s readiness for retirement.
So, I have two questions for you: First, have you personally benefitted from access to financial planning, and if so, how? And second, why aren’t financial planners reaching those who need it most?
I have other questions, as well, but I’ll start with those. I welcome any comments on financial planning, financial planners and how they could be of value to the average household.
Just seeing this now, after reading you’re third article about this today.
I’d like to share my brief thoughts on the second question you posed here, “why aren’t financial planners reaching those who need it most?”
To me it’s pretty simple: lack of financial literacy among their clients; and incentives for planners are mis-aligned with the desired outcomes of their clients.
This is particularly acute for retirees who are in the decumulation stage. AUM planners make their money by keeping asset levels high (and growing). This works great during the accumulation stage, as working people are focused on their jobs, careers and families. They don’t have the time or inclination to learn about personal financial management, so here a planner can help them at least put in place a plan that will lead to the right balance of saving while allowing enough spending to enjoy the journey.
Retirees, though, pose a much more challenging problem. They’re faced with 30 years or more of decumulating their portfolios and navigating around the myriad pitfalls that could derail them along the way.
As near as I can tell, planners as a group and planning as a profession are doing a lousy job of offering real help here. Of course there are exceptions, but in my opinion their profession is not set up to address this extraordinarily difficult challenge.
Always a good Idea to educate, I did that in 1985 and I learned a lot. I am self financed since childhood. Parents encouraged a bank account at 10 years old, ah, they paid me money for saving mine, one of the most important financial axioms, Compounding interest! The other major one, inflation. So it seemed to me someone with little money did not have or want to pay a fee, at my brokerage, Fidelity. I actually gave them $100,000 to invest about 1990, and guess what, they never beat the S&P 500, but most of all they traded so often, your head would spin, and I had to pay them if they made money or not. I stopped that after 6 months and started reading all I could to learn about Bogle, Peter Lynch, and many others. So, First, have you personally benefitted from access to financial planning, and if so, how? Yes, saved thousands of dollars and at 65 realized indexing was by far the best bet for me, no financial planner needed. And second, why aren’t financial planners reaching those who need it most? Not sure but it costs money and it is hard to trust others with your very hard earned cash, maybe young people no interest, you have to get them on social media. At 80, I am at 85% equites, so I can beat inflation, and 15% cash to tide me over when the market is in a tizzy or downtrend for a year of 5 years, generally not more. I decide no need for bonds but if you like them, OK, 55, 35, 10, equites, bonds, cash. This is working for me. Humble Dollar is a godsend, we should all find a way with a new name that attracts young 25 to 45 year olds somehow on social media. They need this info the most.
Do you spend exclusively out of your equities until a downtrend? And if so, how do you define a downtrend/tizzy to make the switch from spending from equity allocation to begin spending from cash allocation?
Javier –
I’m self-taught when it comes to financial knowledge, and that alone has benefited me greatly. The more I learned, the more I realized good planning is not about finding magic investments. It is about clarity: cash flow, taxes, risk, Social Security, survivor needs, insurance, estate documents, and whether your retirement income is dependable.
As for why planners aren’t reaching the people who need them most, I think it comes down to access, trust, and timing. Many people assume planners are only for the wealthy, or they fear being sold products instead of receiving real advice. Others do not realize they need help until debt, poor savings, or retirement panic has already set in.
I also wish financial literacy was required in high school. Every young adult should understand budgeting, credit cards, loans, taxes, insurance, investing, and compound interest before the world starts handing them debt.
Maybe planning needs to become less about portfolio management and more about education, coaching, and helping ordinary people make one better decision at a time. Good advice only matters if it reaches people early enough to change the outcome.
~ Jeff
One reason financial planners aren’t reaching those who need it most may be that those who need it most don’t have enough money to interest the financial planning firms. If you look at the average net worth of individuals or families, it is not worth it financially for the planners.
Part of Habitat for Humanity’s process for helping people become homeowners is setting them up for success with 500 hours of “sweat equity” in the home they are building.
Included in those hours are classes on the obvious things like how to do home repairs, but the whole process begins with working with an instructor/coach on the prerequisite skills of planning and goal setting.
The question my local affiliate uses to illustrate this need:
Q. What item can be found in every wealthy and middle class home but is much less likely to be found among those in poverty? It is not a costly item, in fact many business give them away for free.
A. A calendar.
The first step for many folk in breaking generational poverty is learning to set a goal, develop steps to achieve it and be willing to accept coaching and accountability to achieve it.
One of the homeowners whose house I worked on related that one of her first steps towards owning that home was finally losing the 10 pounds she’d always talked about losing.
John, your comment has stayed with me since I first read it. The calendar question is one of those simple framings that reveals a structural truth — that the discipline of setting a goal and accepting accountability is itself an inheritance that some households have and others don’t. The 10-pound illustration is exactly right: the work isn’t financial, it’s something prior to financial. I’d be interested to hear more about how Habitat’s coaching component works in practice, and whether you’ve seen the financial-planning conversation become possible once the goal-setting foundation is in place. The sequencing matters, and I think you may have named something most planning conversations skip over entirely.
Hi Javier, great post to jumpstart FP conversations!
In the late 1990s while my children were toddlers I took and passed the 5 CFP classes at DePaul University. My career as a CPA led me down various paths–audit, a bit of tax, and a lot of bookkeeping/accounting manager work. Unfortunately I felt I never had the “right” hours of work experience to take the exam to earn the CFP trademark after my name.
My love of FP has to be genetic, I’ve been wired this way since childhood, maybe because my folks had some money issues. In hindsight, they had impulse control issues, but I digress.
I’ve always been a good saver, thrifty, and ready to play the long game. Fortunately, my spendthrift husband has been trainable. 😀
So I view my educational background, as well as his finance/MBA credentials as a “get out of paying a planner” card. I’m well-read on the subject and my husband at least dips his toes into it with Kiplingers.
As far as Q2, folks are not thinking of their 60, 70, 80 year old selves. Now more than ever they are concerned about making it to the next payday. So thinking of having wiggle room for saving might seem impossible.
Stacey, thank you for adding your voice. Your “not thinking of their 60, 70, 80 year old selves” observation is one of the deeper diagnoses in this thread — it’s not only about money or access, it’s about the imaginative reach across decades that long-horizon planning requires. People who are focused on the next paycheck don’t have the bandwidth to picture themselves at 75, and the financial planning conversation assumes that picture is already there. Your CFP study without certification mirrors my own thinking on the value of the knowledge itself, independent of the credential. The genetics of financial literacy — that’s a real thing too, even if no one names it that way.
Javier,
I tried a planner for a couple of years in my twenties(now 75 YO) to test the waters. Fee plus commissioned product based. Two purchased limited partnerships from him was the best money I ever lost in that it taught me to never invest in things that I didn’t understand fully. If a high commission is needed to sell the product, the product probably ain’t such a good thing! So I became self taught reading, which was accelerated at age 50 when I retired. Now I manage my adult sons money and a few other relatives. I volunteer with AARP Taxaide which helps keep up my knowledge there. Tax planning IMHO is more complex and impactful than investing.
Regarding your second question, for me the fees are too high for what I would like done. Estate plan is all set, insurance plan is all set and my belief that a small number of low cost total market index funds is superior than the overly complicated portfolios that I see people having with many planners. I have seen AUM planners recommend plans that keep more money under management than would be good practice, e.g. start SS early so funds aren’t withdrawn from saving accounts in early years and reduce their AUM. Subtle confilict of interest motivation?
However I am aware of a potential cognitive decline and am starting to look for a flat fee planner to look over my shoulder and to help my sons manage their IRA inhertitance onboarding when I pass.
I was struck by your earning a CFP, being a similar age to myself. What is the cost for? Does one need to take the courses or can you test out for?
Bob
Bob, thank you for sharing this — your trajectory mirrors what several others have described, and the cognitive-decline motivation is one I think more of us should be talking about openly. Recognizing it before it becomes urgent is itself a form of planning. Your insight about AUM advisors potentially recommending strategies that conveniently keep more assets under management is something most clients never see, even when it’s happening to them.
On your question about the CFP: I took the program at Rice University in 2013–2014, a graduate certificate program that prepared me to sit for the CFP exam. My college roommate, Greg, a retired clinical psychologist, recently signed up to audit the CFP program at NYU. As I remember, the cost at Rice was around $6,000. Auditing is probably less expensive. But for me, all the fun was being in class with young finance professionals 30 or more years younger than me; being able to contribute to discussions with a vastly different perspective and experience; and the laser focus on purposeful learning that hormones and tear gas may have interfered with when I was in college in the early 1970s.
As a Rice grad I’m always interested in things including the words “Rice U” so I’ve noticed that a number of courses related to finance offered at Rice are also available via Coursera–they may even be free if you don’t need a certificate, I haven’t explored further.
I thoroughly enjoyed Robert Schiller’s “Financial Markets” which I found on Coursera a while back. It sounded like one of those courses that becomes famous on a given campus, inviting many diverse majors to find room for it in their schedules.
I do have a classmate (chemical engineer in his case) who did a CFP in his 40s. He ended up contenting himself with managing the family funds without taking on the everpressing and complex client relationships which are the heart of any service profession.
Congratulations, Javier, in not only educating yourself but also completing the demands of both a graduate education and a certification process!
As a highly skilled investment/tax nerd, I know all the stuff the CFP guys are likely to say, and some people have in fact consulted me.
You’re right, they won’t listen. I told one 65-year-old retired woman that she was headed for trouble – she was taking 5% withdrawals and paying 1% AUM to a financial management firm. An unfavorable stock market could wipe her out, and I told her that. She needs the money to live in our retirement community, and doesn’t want to move out.
Javier,
Great job of stimulating discussion! I’m interested in responding to question 2, but first..
a. Men in particular, at times can behave very self-sufficient, unwilling to get help, and unwilling to admit that they made mistakes or bad decisions. Why would I want to present my most intimate financial details to someone who would belittle what I’ve done? I’m fine, I don’t need any help.
b. Trust issues. There are countless stories of those (usually famous people like Billy Joel) who have been used and abused financially. If I give you access to my money why should I believe you’ll do the best thing for me and not steal from me?
John, many thanks for your post. I’m getting the impression that Humble Dollar readers pretty much break down the middle as to whether they find value in working with (and paying) financial advisers, and that experiences are unavoidably mixed. Either way, it’s always a learning experience!
I’d be interested in knowing whether the topic of emotional feelings about money, which you referenced, has been discussed in this Forum. I agree that a sense of pride or a lack of trust can dissuade people from looking for or accepting good advice. Best wishes for your forthcoming retirement!
Javier:
Question 1. Have I personally benefited from access to financial planning, and if so, how?
Yes, but not in a manner you might expect.
In 1986, after earning my MBA a year earlier, I realized that I was more educated than most Americans, yet, although I had been in finance since age 20, I was not significantly better off financially. This prompted me to explore why this was the case and led me to discover the CFP education program. I enrolled in 1986 and earned my CFP in 1991. Because of that education, I took financial matters seriously, began maxing out my 401 (k) (and later 403 (b), and, when Roth accounts became available, funded them annually.
In 1998, I left corporate America and started my second career in self-employment when I opened an insurance and financial services agency. The experience gained in this career was to become invaluable when I entered my third career.
In 2009, I sold my agency and entered my third career, academia. I was a college professor from 2009 to 2024, teaching thousands of students the CFP, CLU, ChFC, and finally the RICP curricula as a faculty member at The American College for Financial Services.
Today, I am retired, and I have a Personal Financial Services advisor at Vanguard. I have had a PFS advisor since moving my money to Vanguard in 2013. My students used to ask me all the time, “Dr. Lynch, you have more degrees than a thermometer. You are writing texts on these subjects. Why do you need a financial advisor?”
The answer was simple. Knowing how to manage money and managing money are not the same thing, just as knowing how to lose weight and losing weight are not the same thing.
I have an advisor because when managing my own money, I have an emotional attachment to my decisions. My Vanguard advisor, a licensed CFP, doesn’t. When we discuss an issue, his answers are totally unbiased, because he is a salaried employee. His recommendations are based on his knowledge of my finances and what makes sense not only for me but also for my wife after I am gone. He is 35. I am 75. He will be here long after I am gone, hopefully. And even if he leaves Vanguard, I will get another PFS just as qualified, because I know who Vanguard hires.
Another advantage is age-related. Just as I have wills, trusts, and an estate plan “just in case,” I have an advisor to help my wife with her finances after I am gone. A recent health scare made that need even more important to me, because over our 52-year marriage, my bride has steadfastly resisted any attempt to learn about money management. My PFS advisor knows what I want and what I would do if I were here, and I trust him to follow through and help my wife manage what will then be her money. Having an advisor is also a guard against your own possibly unrecognized deterioration in mental acuity.
Question 2. Why aren’t financial planners reaching those who need it the most?
This question isn’t really hard to answer. Money. Compensation. ‘A good use of my time.”
The vast majority of financial advisors are not, in fact, advisors. They are products or services, salespersons. They are paid by commissions or by Assets Under Management. Regardless of their levels of personal integrity, their standards of living are predicated on getting you to give them your money to “manage” or to buy their products, whether those products are what you really need or not.
Financial Advisors are not compensated for educating you. Period. So the majority of them don’t. There are a few exceptions, usually found in the arena of “flat fee advisors.” These advisors truly are advisors, as they neither sell products nor manage money. As you would suspect, they are in the minority of planners existing today, but they are out there.
There is also another group of advisors, and they are even fewer in number. These are advisors who work with people on a pro bono basis because, like me, they are retired, financially secure, and are engaged in the business of serving others as a form of ministry. Their purpose is to help people learn to handle their finances from a biblical perspective. One example is Dave Ramsey’s Financial Peace University. Another is Catholic Compass: Faith and Money Matters. These programs are offered primarily through church groups, but can be offered as community service opportunities as well.
After 54 years in financial services, I retired at age 74 and 3 months. After a year of travel and doing whatever we pleased, I decided in 2025 that I had too much left to give, so I matriculated into a seminary and began a Doctor of Ministry degree program. I graduated in March 2026. My dissertation was based on the idea that marriages could be saved and divorces reduced by educating engaged couples in financial matters from a biblical perspective. Subsequently, I became a licensed Chaplain and completed the PREPARE/ENRICH premarriage program. I am now involved in Christian marriage preparation and in civic affairs, serving on two county commission boards that serve seniors. I am also active in a local VFW Post, serving fellow veterans in an elected leadership position.
Your CFP studies can be used to help yourself manage your own finances or to help others learn to manage theirs. The only difference is your Focus.
Good Luck to you in your retirement and continued success with your finances.
Vanguard advisors are totally unbiased because they are on salary? Interesting thought, but highly unlikely. I’ll bet that their compensation includes a sizable bonus structured off AUM or similar metrics. And given that they work for Vanguard, what’s the likelihood that they consider a non-Vanguard fund or ETF? (Hint – not likely)
I was in the financial services industry starting in the 1980’s and was compensated from product sales. Then I became manager of one of the world’s largest financial firms in a wealthy retirement city in florida. Compensation came from selling investments. I read a lot and studied the CFP materials but did not go for the title. I didn’t need it, but the knowledge was helpful. I retired in 2015. Now at age 75 I manage our investments at Vanguard, and they are set up so that my wife doesn’t have to do anything if I am not around. My wife is not involved and does not want to be. I don’t see the value of using Vanguard managers because of the way the portfolio is set up. Income needs are taken care of and market ups and downs can be ridden out. CurrentlyI am bored and about to sign up for the RICP program just to keep busy and to stay abreast of any new things that come up. Maybe I’ll volunteer to help retires with their income strategies.
Mike, great post. And I fully agree that a Vanguard advisor provides one of the least biased cheap approaches to financial planning. But as a young widow and someone helping aging and passing parents well into their 80s I have worked with many institutions and professionals and family members over the past several years. The things I’ve heard, seen and experienced? Yuck! Bias is everywhere and entirely, 100% unavoidable! Bias is everywhere and is entirely 100% unavoidable! My most recent bias was from a Vanguard Advisor on my dad’s accounts. Their “model” does not consider my dad’s unmanaged cash bucket for his wife’s now late stage Alzheimer’s care. By not considering that bucket he wanted to create a taxable transaction to sell equity. Only about 35% of my dad’s total portfolio is left in equity when you include the unmanaged cash bucket but was reaching 55% in the managed portion of his portfolio. A tax event is not necessary or desirable at this time. An unbiased institution would recognize this but I still have to sit down with my dad today to help him approve a portfolio over-ride so that the tax event does not occur. I’m grateful for sufficient financial literacy to understand how the game is played and to know losing is unavoidable but hopefully everyone can keep enough to live well?
Sweet, Mike. I love hearing your story and find points of resonance with my own journey. As a Doctor of Ministry in Marriage and Family and LMFT, I have thought about providing more financial coaching to people in ministry. I agree with a recurring theme in this discussion–it’s only fun coaching people who have ears to hear! But as I approach 70, that’s okay because I don’t need the money and I like to do a lot of other things, like “coach” grandkids about whatever they have ears to hear at the moment.
Mike, thank you for such a substantive reply. You named two passions we share that I haven’t pursued in a focused way — financial matters and teaching — though I’ve found indirect outlets for both. What I valued most about studying for the CFP was the broad perspective on the financial world. It lets me engage meaningfully with financial professionals, and have something of value to offer to people in my circle.
Several responders, like you, named “leaving a less-prepared spouse” as a reason to engage a financial planner. My view aligns with yours: a fiduciary who sees the role as educating and guiding clients toward the right specialists — in insurance, investment, tax, and law — is the most valuable kind of adviser. Your pro bono ministry work is inspiring, and it overlaps with my own interest in finding ways to reach what I think of as “the 90%.”
To your first question, we haven’t used a financial planner other than a couple of preliminary meetings over the years (both free), and I’ve just done my own reading, including here. When I retired last year and rolled my workplace retirement accounts in to my Schwab IRA, I become eligible for some free consulting, and I’m sure I’ll take advantage of those as time goes on.
As for the second question, if you’re living paycheck to paycheck (been there, too), you’re not thinking about “planning.” You’re just surviving.
DrLefty, thank you. The “just surviving” point hit me — it’s a real explanation for why some people never reach the planning conversation, even when they’d most benefit from it. That gap between surviving and planning is exactly what I’m trying to understand better.
Thank you for your post Javier, I have also thought about pursuing the CFP certification but like you am retired and for my own background. I have had experience with a several financial planners – most through work benefits and I have to say the ROI was not good – but the activity was around portfolio review while I was working and generating a healthy income & staying loyal to Vanguard savings. However I did retain a fee-based CFP after my husband died and I needed to settle his estate and understand the best way to draw money off of my portfolio. In this situation she was invaluable. She found a large DSUE error in the estate tax form our CPA prepared, recommended converting my mutual funds to ETFs for significant savings in fees, discussed a Roth conversion plan with quarterly tax planning, advised on updating my estate plan, when to take SS, insurance coverage, Medicare enrollment this year, financial projections and tax preparation. I also think just having a financial professional on board for support as a widow is very helpful for peace of mind. The administrative tasks after a death are brutal.
Marion, thank you for sharing this. Your story illustrates exactly what I value most about financial planning when it’s done well: the breadth of the work and the ability to advise across many dimensions — estate, taxes, investments, insurance, Medicare, all of it. The widowhood moment you describe must be one of the most consequential financial transitions anyone faces, and the fact that a good planner made it bearable is meaningful. I’m sorry for your loss, and grateful you shared this.
Javier, thanks for an interesting post. A few years before I stopped working full-time I took a CFP course and passed the test. I then took the Retirement Income Certified Professional (RICP) course. I took the courses for my own education, in large part after being put in a position of managing my parents and in-laws finances as they aged and became infirm. That experience was a crash course in all things retirement, and shaped a lot of my thinking. I also considered switching to a second act career in financial planning, but chose not to.
My first article for HumbleDollar was about looking at financial planning as more than just investment management. I know planners who provide holistic planning – investments, insurance, estate, taxes, cash flow, … I also have friends who pay a significant AUM fee for wealth management – with all other services either not provided, or at additional cost. I would only work with a planner who does holistic planning.
I don’t have an answer to your second question. Like many others on HD, I do volunteer tax preparation. I am certain that many of the lower and middle income clients we serve would benefit from some basic financial planning. I’ve looked for organizations or programs that provide pro-bono planning but haven’t found one similar to the tax preparation program. Far too often we have clients who could have made small choices that would improve their finances, but it’s too late when they get to us.
Rick,
Thank you for volunteering as a tax preparer. I do the same myself.
There is a non-profit that provides free financial literacy. The program includes mentors who meet online with students to give feedback.
You can volunteer to become a mentor, which requires no formal certification or experience. The program trains volunteers on what to know and what to expect.
For each student, you meet with them three times over the course of a year. Each meeting is 90 – 120 minutes on date that is mutually chosen by both parties.
For more information, the program is 3rd Decade. https://3rddecade.org/
Rick, I couldn’t agree more. Many people fail to recognize the true scope of financial planning, mistaking it for investment advice or wealth management. Your word “holistic” captures it well — a planner integrates many dimensions of financial life in service of goals that often go beyond net worth.
Given your background and the volunteer tax work, I’d love to hear more about what you’d consider the essential elements of “basic financial planning” for the lower- and middle-income households you serve. For me, financial literacy and better organization of personal financial information would be near the top. What would you add?
Rick:
I began the AARP Tax Assistance training this year, but unfortunately, I was unable to serve because I fell ill during the training classes. I am looking forward to doing it next tax season. In the meantime, I am looking into becoming a SHIP volunteer.
If seniors need assistance with something as important as taxes, understanding Social Security, and Medicare/Medicaid, is a strong number 2!
Javier, I retired about 2 years ago. Until recently I managed all our family investments etc largely focused on simple index ETF’s. I immensely enjoyed reading about investments, legal tax strategies, etc. and managing our portfolio’s.
About 5 months ago, we outsourced all our assets to a money management / planning firm. We did this simply to protect my spouse in the event something happened to me. She has very little interest in managing money. From this perspective (which was our key motivator) it has so far been a very good and useful experience. In terms of actually presenting interesting ideas – there hasn’t been much. I’m not pointing at the manager as I’m still quite hands on and insists on keeping 90% of our portfolio simple and boring. Having said all this, the primary objective has been achieved and in our case there is value in these services outside day to day management!
Akhil, the spouse-protection motivation is one I share. I’m in a similar position — wanting to make sure my wife and children can navigate the family’s finances should something happen to me, ideally with a trusted advisor to lean on. It’s striking how many of us, even those most comfortable managing our own money, recognize this as the moment to engage a planner.
During my working years my “ financial planner” was reading John Bogle and writers on Vanguard’s website. After reading about the effect of AUM fees I decided that a financial advisor could not add value exceeding what I could gain from indexing myself without the added fee. The first time I saw a true financial advisor was when I needed to have confirmation that I had sufficient assets to retire. I visited the financial advisor one other time when I was considering a plan to claim Social Security early. He did not push back, and I held off because of what reading on the concept and then eventually decided to postpone until 70. I did not return after that. In the next year I will plan of performing an in-depth review of our finances with our maximum Social Security income and set up our finances with a true bucket approach.
David, you’ve clearly figured out the investment side and trust the proven methods, which is no small thing. The places where I see planners adding the most value — beyond the investment piece — are insurance, tax, retirement income, and estate work, especially as life events compound. Your forthcoming review with the bucket approach sounds like exactly the kind of moment when a holistic conversation pays for itself, if you ever decide to test the waters again.
Javier, I was fortunate to attend a session with a financial planner at my first employer when I signed up for the 401(k) there. Years later, Vanguard still offered a free financial plan to account holders who had a certain balance or more. Lots of reading (including HumbleDollar) supplemented those two financial planning tent poles and gave me the fortitude to stay the course when the markets looked bad.
As for your second question, I’m no expert but I have a few ideas why financial planning may not reach a lot of folks: There is a cost involved and many employers don’t pay for the sort of session I mentioned above. Planners often earn more on larger portfolios so there is little incentive to market to those starting out with small balances. Some people associate financial planners with the wealthy and don’t recognize how they might benefit from such advice. Another barrier is probably lack of confidence and trust: You almost have to know a thing or two about finances to ensure you can properly vet the advisor you hire. Lack of urgency might be another factor: Rather than use an advisor proactively and strategically, folks might not seek advice until they have a pressing need.
D.J., thank you — this is the most comprehensive answer in the thread on why so many hesitate to consult a planner. The “lack of confidence, trust, and urgency” framing is exactly right. So is the related point that people feel uncomfortable about money precisely when they haven’t managed it well — which is, of course, when they would stand the most to gain. And the longer they put it off, the harder the conversation feels. That avoidance loop is one of the things I’m thinking about most.
Way back when, my employer paid for an annual session with a “financial planner”. Fortunately, a few years later, I discovered Vanguard, and realized that these planners had steered me to expensive, managed funds. I did visit them a few more times, telling them upfront that I was not buying from them, I simply wanted to know what the numbers looked like. Since I retired, I have visited a couple of fee-for-service planners, again, just to check that the numbers looked good. In a few years I might look for a “daily money manager”, but I have no interest in paying AUM fees.
The people who need financial help the most are unlikely to be able to afford it – or to have enough money to be of interest to most planners.
mytimetotravel, agreed entirely on AUM fees. The deeper point in your reply — that people who most need financial help are unlikely to be of interest to most planners — is the structural problem this thread keeps surfacing in different forms. The financial planning model is calibrated to the wealthy; the people priced out of it are the ones who would gain the most.
Javier: I enjoyed reading your post and you shared some good questions. The “benefit” I will share regarding our personal finances is about 99% from reading Humble Dollar and Bogleheads forums. Great information in those sites and FREE! As for your second question, my opinion is that financial planners are looking too much at those with heftier asset amounts, thus missing a lot of potential clients. Some do their learning on these sites, so are DIY. Other potential clients may not be disposed to read Humble Dollar and/or Bogleheads, so they may not be inclined to seek out financial planners. Again, just my opinion, certainly not based on any validated statistics.
Dave, you’ve identified exactly the people I’m concerned about — those who aren’t wealthy enough to interest financial planners, and aren’t yet well-informed enough to look for help themselves. There’s a real gap there, and the free resources you mention (HumbleDollar, Bogleheads) only reach the people who are already inclined to read them. The harder population to reach is the one that doesn’t yet know what they don’t know.
Javier, my relationship with a financial advisor is indirect — through my wife. Left to my own devices, I’d never use one. My background is in business and finance (albeit a somewhat dated degree), and having run my own business, I’ve always been comfortable managing my money and investments myself.
As for your second question, I may have a particular perspective worth sharing. I grew up in economic deprivation and still have close ties to many people in similar circumstances. The answer is straightforward: it comes down to lack of money and the very real barrier that the costs of engaging with the financial services industry pose for people with limited means.
Mark, your perspective is one this thread needed. You’re right about the cost barrier — and you’ve named it with the credibility of someone who knows the ground. I’d like to ask you two things, if you’re willing. First, when you imagine what your wife would need if she were navigating finances without you, what would you look for in an advisor for her? Second — and this is where I’d most value your view — what alternatives do people in the circumstances you describe currently have? Not because I have answers, but because that’s the population I keep returning to.
Javier, apologies for the length, you asked two questions and I’m apparently incapable of brevity.
My wife spent over twenty years in banking and came to her advisor through her professional network rather than any formal search. Given the complexity of her portfolio and our country’s tax rules, where every individual is personally responsible for their own position, she probably needs one, and I suspect she has about as good as she’s going to find. We’ve had some friction around fees and the scope of his advice, but that’s largely settled.
On your second point, as a citizen of another country I’m not best placed to answer meaningfully, but I can offer some examples of where I think the UK makes things easier for the average worker. On the tax side, most employees with straightforward affairs never have to file a return. Tax is deducted at source from every wage through a system called Pay As You Earn (PAYE), handled entirely by the employer’s payroll department. Drawing down in retirement is similarly managed by your provider — Vanguard and the like — through the same PAYE system. On the savings side, every employee is automatically enrolled in a pension scheme, with contributions taken directly from their payslip into their chosen funds and a mandatory employer match on top. Growth within a pension is free from capital gains tax, and whether it’s a workplace or personal pension the rules are essentially the same, making it straightforward to consolidate and manage across jobs. The government also provides free, impartial retirement guidance through a scheme called Pension Wise, available to anyone approaching retirement age.
The UK system seems designed with the disengaged majority in mind. Tax handled automatically, savings enrolled by default, a consistent framework regardless of employment history, and free guidance when retirement arrives. The US system arguably offers more for those who engage with it actively, but rewards financial literacy and punishes inertia in equal measure. For the average Joe, in the UK anyhow, an advisor is normally not required.
Mark, ’tis I who owe you an apology for my assumption about your motivations for engaging with a financial planner.
From perusing the Forum, I get the impression that you’re a frequent contributor – and one with a different perspective. I’ve lived in Switzerland for 40 years (6 months a year, now that we’re retired), and without going into details here, I would note that the difference in attitudes, assumptions and perspectives on personal finance, investing and retirement between Europe and the US is real. Thanks for introducing me to the notion of the “disengaged majority”. It’s a useful term that carries a lot of meaning.
Javier, good post and valid questions. Here is my take on your post and questions.
First, as a CPA as my professional training and working in finance in the insurance industry for most of my career, I was not engaged in financial planning on a personal level. I was engaged in financial controls for businesses that I worked in (and audited). I had no training in investments nor was this an area that I practiced in for the businesses I worked for. My area of expertise was more in the area of generating cash flow and budgeting, managing expenses, etc. All important factors for business that had application to personal finance, but far from the type of planning that was useful for retirement investment and planning.
I was fortunate to have access to great employee benefits at the companies that I worked for most of my career, including a company provided non-contributory pension plan upon retirement and a generous 401k plan that included a company match of 117% of the employees contribution after x number of years (and for most of my 34 year career at this one employer). The investment options were the usual Vanguard Mutual funds as well as company stock during much of my career. Even without the investment return, I was making over 100% return on my contributions.
As my wife and I were getting closer to retirement (about 7 years ago) we decided to look for and after interviewing several, we engaged with a financial planner who followed the philosophy of the Bucket Plan which made a lot of sense to us. We were both free to transfer portions of our 401k assets to the planner who put these funds into various investment products that fit into the NOW, SOON and LATER buckets leading up to our retirement, 3 years ago. We are very happy with the relationship we have built with our advisor and consult with him as needed. The investments have done very well and we have barely had to touch any of our assets due to our other income sources of Pensions and now Social Security.
As for the 2nd question, many people like to learn about and invest their assets on their own and feel they don’t need (or want to pay) a financial planner. We had no interest in taking on this responsibility of learning about investment options and risking our hard earned assets via Do It Yourself. There are plenty of planners out there (probably not all great) but if individuals aren’t interested in engaging them or doing the work to vet them to find a good one, they will not be assisted. You can lead a horse to water…
Brian, it sounds like you found a planner whose approach (the Bucket Plan) gave you and your wife peace of mind. Can you say more about what you value most in that relationship? Is it primarily the investment work, or does it extend to other areas — tax, estate, insurance? It can be hard to hand over investment decisions to someone else, but you seem to have done it without much hesitation. Were there doubts you had to work through to make that choice?
Javier, we value having a partner that understands our goals and aligns our investments with those goals and needs over appropriate time frames. It was initially for investment advice but has grown into more areas including estate planning, taxes and life insurance for our adult kids to protect them and their kids while providing another source of funds for us to tap into (cash value) if needed.
Once we found the “right” advisor we had no doubts and being comfortable with him and his firm give us great peace of mind leading up to and now in retirement.
Thank you for this. The progression you describe — beginning with investment advice and growing into estate planning, taxes, and life insurance work that now extends to your adult children — is one of the most concrete illustrations of what holistic planning looks like in practice. The protective dimension you mention, building cash value that’s also available to you if needed, is the kind of layered thinking that becomes possible only when a planner understands the whole household across generations. The “right advisor” matters, as you say; finding that fit is often the precondition for everything else.