My Totally Independent Financial Advisor … Sucks

Barefoot,

My wife are in our early 50s. Adult kids. We earn $180k a year combined, with $200k left on our mortgage, $200k in savings, and $350k (combined) in super. This week my wife and I met with a financial advisory firm who claim they take ZERO commissions and proudly claim their independence from EVERYONE. All good so far, but when we saw their fee pricing … bill shock moment! They want $7,500 up front as a project fee, then $600 per month thereafter. They were admittedly thorough in their fact-finding about our situation, but we just cannot accept their price as a good value proposition. Curious as to your thoughts.

Warren

Hi Warren,

Well done for seeking out an advisor that takes zero commissions. However, let’s be honest: your advisor is not truly independent … he has a vested interest in advising you to write him a $600 cheque each month!

However, it may be worth having them review a simple, set and forget plan: pay off your mortgage. Review your insurance. Build up a three month Mojo fund for emergencies. Then continue working hard, but save harder: salary sacrifice $25,000 each into a low-cost super fund. Invest the rest via a family trust into low-cost index fund that you can distribute tax-effectively to your adult kids.

Think of it this way: if you invest the $600 a month into shares, in 20 years time it could be worth $330,000.

Scott