Choosing Financial Planner? (Dave Ramsey followers please give input)

brij2006 · September 2015

Okay, so this may get long....

I have worked with the same financial planner for 7 years. He's the one I started my Roth IRA with, and had purchased a whole life insurance policy through (which has since been cancelled). My roth through him is piddly, so it's just been a contribution each year and no conversation as to how my financial plan is coming along or increasing my contributions. I'm sort of the small fish in his pond, and rightfully so. There's only $18k in it after 7 years. However, this guy has been a huge influence on my H and I's life. My H worked for him for a short period of time, and taught us both a lot in that short time frame. He had so much influence on our lives that him and his wife attended our wedding, and his name was on our short list of boy names. So we have a lot of respect for him, and trust him fully with our money.
However, he does not share the same Dave Ramsey principals as us. We met with him a little over a month ago to chat about what to do with the $200,000 we have left to do something with. He wanted us to just put it into a very low risk mutual fund, and pull from it to fund other retirement investments. We weren't understanding his financial "plan" for us entirely, so we requested that we set up another meeting to have him teach us his principals and what he would want to do with our money if we were to work with him.
We met with him last night, and it ended badly. At one point I was in tears, and wanted to get up and walk out of his office. It was all going well for the first hour, and we learned a lot on how he manages his accounts, how he makes his money, and what he would recommend we do with our money. Then the whole life insurance topic came up..... We explained to him that we would not take out another whole life policy ever again. He then ripped into Dave Ramsey and how he does not have a full understanding of whole life insurance, and turned it into ripping into us about following his plan fully. I felt backed into a corner and shut down. My H is great with words, so they discussed it more, and he did teach us the different options with whole life insurance. Which I understand, and it is a good tool for estate planning purposes, but not for your average Joe.
So yeah, now we're torn. We know that if we were to put our money with him, he would not do wrong with our money. We would no longer be as small of a fish in his pond, so we would receive better/more service, meetings, and phone calls about moving money. However, we pretty well guarantee that at some point the whole life insurance thing will come up again.

We respect this man a lot, and he was hurt when we started questioning his investing strategies and what I had started with him 7 years ago when I was less hands on and had a lot of student loan debt.

On the other hand, he also never asked us about continuing to add to that $200k. He stated that it was "enough" for us to be able to put aside and retire on later. Um, we still want to contribute to retirement and life a retirement that is beyond what we have ever imagined. So I had to tell him that we also want to add another 15-20% of our incomes to that amount each year, and set up an education account for our daughter outside of all of this.
*He has been in business 28 years, my grandparents, parents, MIL, and BIL all use him for their investing. His portfolios average about 8%.*

Other side, we met with one of Dave Ramseys' ELP's (endorsed local providers) a month ago as well. He, of course, speaks our verbiage. He really dug down deep and discussed our future and what we want. We discussed how to find a happy medium between spending, giving, and saving the $200,000. We also discussed us putting another 20% toward retirement, on top of whatever we choose to invest initially, and saving for DD's college. He touched every aspect of our lives in order to get a full picture of what would be best for us to do to plan for our future. We did not feel like we were a small fish in his pond and would be put aside and not taken care of. He was not shy to tell us how often he calls to discuss things, how often he will sit down and meet with us to see if anything has changed and what we want to do differently.

However, downfalls: We feel like he can easily make this same with us because he speaks the DR language right along with us. We do not know him from Joe Schmoe on the street. We trust him and he's been in the business for 11 years. His portfolios average 11% returns, based on the investing principals DR teaches.

Whichever one we choose, we will be with them for the long haul. Option 1 has a long track record, multiple advisers out of his office that we could work with whenever he retires (he's 54), and we have a very good personal relationship with him.
Option 2 speaks the DR language and is on baby step #6 himself. He really dug down deep with both of us to discuss what it is we want to do with our careers since we both feel stuck, and what our family life looks like for us and how to make that happen.

Help! At this point I just want to let the money sit in our savings account and not touch it at all.

vlagrl29 · September 2015

Go with your gut and personally I would go with the DR guy because you relate so well with him and he is like you guys when you talk about financials.

Personally I don't have a financial planner because I know that I can handle my money better than someone else handling it for me. I inherited a good amount of money several years back and was overwhelmed with how to invest it in my IRA so I gave half of it to the management team with Fidelity which they have done a good job with, but now that I'm more comfortable with how this investing thing works, I'm slowly taking small chunks away from the advisor team and back into my own control.

CuriousKiddosMama · September 2015

I would go with the DR guy as well. The other guy sounds like he doesn't understand what you want, and hasn't given you the best service. I don't really care if my account has 10k in it or 1,000,000,000, I should be treated like a valued client. That 10k maybe almost all I have to my name and so very valuable to me. The returns are better with the Dave guy and you know he follows your principles so he won't try to steer you against them. Plus your original guy wanting you to put your chunk of $ into a low interest account to 'fund' your retirement contributions makes no sense whatsoever ever. If you did that you will be losing out on good returns for years (if he was thinking fully max your 401k for instance and draw from there to live on, that will take you about 10 years to invest that $, way too long to be getting shitty interest).
But a big one for me, is your financial planner should never bring you to tears. Yes it's semi personal because you have known him so long, but that's not ok. Unless they are tears of joy, like finding out you can retire tomorrow or something, that is not ok.

dragonstarjk · September 2015

Honestly, I would let it set in savings until you are able to really step back and look at both angles without emotion; right now it sounds you are pretty worked up, which is never the best time to make a decision.

I know you guys are huge DR followers and I respect that; however, I don't think that means you should never look outside of his plan to see if there are options that have not been considered. Perhaps this is what your trusted financial planner was trying to say. The fact that he dissed DR when he knows how much that plan means to you is pretty rude; however, I suspect based on your relationship with him that he certainly wasn't trying to come across that way.

I don't think you should ever follow along with a plan just because 'that's the plan' without considering all options. Try to take a few days to take the emotion out of it before you make a decision; I think you will feel better about whatever decision you make if you make it solely based on your financial goals and remove the emotion. Just figure out which of these most closely aligns with your goals, not the goals DR tells you to have.

This is in no way meant to bash DR--just like all in things in life, you just need to make sure not to have blinders on. That doesn't mean the first guy is the best choice--if he is not able to see your vision for your financial picture, it's probably time to cut ties and go with somebody who can envision the future you want and help you get there.

brij2006 · September 2015

@dragonstarjk That's exactly what he brought up last night, and I really do see his point. It made us get out of the shell a bit more and get a better view and perspective on the financial decisions we are making. We want to do right with this money, and we want to make sure we're fully understanding all of our options before deciding what to do with it.
I respect him a lot for the discussion he had with us, because it did open our eyes about needing to take the blinders off a bit.

simplyelise · September 2015

I'm not 100% with DR on the investing side of things. It's actually really ironic because DH never expected to be able to do more than IRB or maybe a 10 year repayment on his 54k in SL debt. So during the engagement, when I told him we could do it in less than 2 years, he did not at all believe me. I slowly got him all the way convinced, but now he's completely tied to the baby steps. Because of when we will be out of debt (July 16) I'd like to fund 3 months of the efund aggressively then figure out how to fully fund both our Roths for 2016 while more slowly building up to 6 months efund. But DH just cannot wrap his mind around deviating from the plan.

The thing about DR is that he really can't have flexibility in his plan. As soon as he gives a caveat to a caller, the whole iron-clad babysteps to financial peace thing could go off the rails. But is it really a requirement to only take our a 15 year mortgage? What if I take out a 30 year with mortgage+taxes+insurance that only equals 10% of my takehome? Couldn't that be a smart plan for us to invest in a slowly appreciating asset which frees up more money for us to contribute to retirement and college funds?

This is already long and I haven't even touched the actual question. All the above said, in the situation you described, I'd still go with the ELP. The first guy seems just as much tied to his own ideas and beliefs as anyone who follows DR, so he's not going to be flexible AND he doesn't value your decisions. I think I'd probably write a warm letter to your current FP and express your gratitude for his guidance over the years and explain that going forward your investment priorities are different than what he provides. I just thing it's a huge red flag that he only knows one way to do things.

bmo88 · September 2015

Here's the way I see it. You need someone who is going to support your general goals and life style, however, they also need to challenge you and provide alternative perspectives. If someone is only going to agree with you, then what's the point of having someone handle your money? You might as well do it yourself.

DH and I are not DR followers. We are doing the snowball method of debt repayment, but we have 5 months emergency savings and are still paying off debt. We weren't comfortable only having $1,000 given we both work at a start-up, own a home and want to feel more financially secure. We have actually followed DR advice on life insurance and found our term policy through the Xander system. We have not looked at his advice regarding investing though.

Regardless, I agree with others that you shouldn't stick to a plan for the sake of sticking to a plan. You should customize it to fit your needs and special circumstances. Plans like DR should provide guidance, but shouldn't be absolutes. After all, he proposes the idea to millions of people, it's not customized for any one person.

While your current financial planner did seem to come across as rude, is it possible that he was pushing you outside your comfort zone with good intention and forcing you to "grow" in your understanding and options? Given you trust him and have worked with him for so long, my thoughts would be this is possible.

I am not sure who you should go with, but I would suggest that you continue the conversation with your current advisor on some level. Just be honest and assertive when saying you respect his opinion of whole life insurance, but that it's not something you would like to discuss going forward.

lbonga1 · September 2015

It sounds like you already know what you want to do. The ELP seems like a much better fit for you. It's hard when you have a strong personal attachment to something or someone, and I'm sure you're current financial advisor isn't trying to do you any harm, but I think you'll continue to butt heads if he doesn't agree with any of your ideals. To me it seems like he is only comfortable going the safe route with money, but you and YH are willing to go with some riskier investments. It's important for a financial advisor to take your goals into consideration.

brij2006 · September 2015

@bmo88 That is what we told him last night about the whole life insurance. He flat out said that if we are going to give him resistance on things, then it may be best off that we do not work together.

We do not want to resist him on everything, but understand it all. "Some of the questions we asked him last night were, "why use the profits from the initial investment to fund Roth IRA's and a regular IRA?" "How much do we need to invest out of our regular incomes in order to meet our goal of retiring at 50?"

His response was that our initial investment is enough to retire on. So there is no need to add to it. Why? What is wrong with building wealth and having a good chunk of money to retire on?
It's hard, because I don't think he fully understands that we don't want to be mediocre. Yes, we could put this money into a mutual fund, let it build for the next 30 years, and be just fine to retire. But is that the retirement life we want? Is that amount of money the amount we want to leave for our children? No.

Then that's where we differed greatly, because to us we would rather leave our children a good chunk of money in an investment rather than a whole life insurance policy we overpaid for 50 years.

hoffse · September 2015

I think Dragonstark brings up a good point about making an emotional decision. Regardless of what you decide to do, $200K is way too much money to be managing when you are emotional. The market is still going haywire anyway, so take a couple of days before you decide anything.

You know I'm not a DR follower, and it's because his plan is one-size-fits all. I'm not a Suzy Orman follower for the same reason (though I really enjoy listening to her). There is no single financial plan that is going to be the best framework for everybody regardless of your risk tolerance, earning potential, current assets, etc. So any financial guru that is married to their plan rubs me the wrong way. I mean, I get it. If they don't sell their plan 100%, then their advice is always "well it depends." For a lot of people that's not going to be enough, and you aren't going to be a national personality if you can't give average people something concrete to follow.

DR's target audience is going to be people with serious consumer debt. Eliminating consumer debt is low on the list of baby steps, and many people who have it feel like they can't escape. So DR helps you get out of consumer debt. It's an amazing feeling, and suddenly you are married to the baby steps. It's pretty brilliant business model when you think about it.

The thing is, you are not in his target audience. In fact, your net worth probably places you in the top 5-10% of Americans for your age. On a global level, you're probably in the top 1-3%. For that reason, I think you need to consider alternatives to the one-size-fits-all approach. I would encourage you to let DR inform your principles, but also be willing to consider alternative viewpoints.

If it were me, I would probably use neither financial planner going forward. The guy you know should never have made you cry - it's incredibly inappropriate. The whole life insurance thing is also nonsense, IMO. Life insurance is a key part of estate planning, and a lot of estate planners do use whole life policies. But there are a lot of angles you have to look at first, and he shouldn't be trying to shove whole life down your throat. Your financial planner is NOT an estate planner. Your estate planner should be a lawyer who cannot - by law - give you financial advice.

As for the DR guy, I'm concerned he's too married to the DR plan. It sounds like he's emotionally invested in it, and he may not be willing to consider alternative viewpoints.

brij2006 · September 2015

The part where I fully agree with what DR does, is he has another book and plan called "The Legacy Journey." When we read that, it gives amazing advice on how to be, act, and plan a wealthy life. It really is wonderful advice, and is the "beyond" portion of Total Money Makeover. That one gets you to have a plan with your money, but once you're done with that then there's something more. Which his legacy journey really gets you thinking about those key points in investing and what you want to leave.

I really don't feel like we're out of the "norm" of what DR teaches and helps. We have just been quickly pushed from baby step #2 to step #7 and are trying to figure out the best way to handle this gift (or burden at this point) and do right with it. DR wants the average person to become very wealthy by building wealth, and we would like to do that as well. So I feel like his plan has helped to mold us into what we should do with our money, and give us a plan. But now that we're done with the TMM part of the plan, we feel stuck. Where do we go from here? Which is why we want someone to help us figure that out and talk that out.

Maybe at this point we should meet with a 3rd person, I have no idea.

simplyelise · September 2015

Meeting with a third person sounds like a really good idea. You want to end up with a decision you feel comfortable with and you don't have that yet.

KatieCutie05 · September 2015

Definitely the DR guy. With the amount of lump sum money you two are working with especially - you want it to be under someone who shares the same values as you so you know that you aren't getting "sold to" and it really is the best thing for you and your future.

We are going to be meeting with one of dave's ELP's in the next few months as well - i really hope it goes well. I'm so nervous about it becuase we don't have a large clump of money - actually we have next to nothing compared to most so i really will feel like a tiny fish.

As for the other guy - I am sure theres some way to end the business relationship without destroying the personal one. If your husband is better with words then i'd let him do it. I wouldn't be able to continue using that guy either after what happened.

vlagrl29 · September 2015

yes meet with a 3rd guy - one not like the other 2 you have met with. I"m wondering if your current financial advisor is set in old schools ways of finance? I know my mom (not an advisor) told me when I got my inheritance that I don't need to contribute any more the rest of my life - I think not as I'm currently contributing.

Xstatic3333 · September 2015

I'm not speaking to the DR follower perspective, but from a strictly customer service perspective, the first advisor would not be someone I wanted to consider working with. Many of the things you said about him did not sit well with me, but the fact that he does not want to work with you if you won't consider whole life insurance is strictly ridiculous. Yes, it may have a place in estate planning but it is certainly not the only way and he should respect that it is not something YOU are comfortable with. It's no different from someone saying they're just not comfortable with aggressive growth funds or sector funds. That should be respected by the advisor.

The ELP sounds like a potentially good fit, but I think@hoffse and other PPs have a point that as much as you have found DR's plan to be a great fit for you, it wouldn't be the worst thing to have someone who respects the plan but is willing to consider other options relative to investing.

ETA-I don't want to minimize that it could be hard to cut ties with your first advisor. Hopefully you will be able to keep your personal relationship sound if you decide to do so. I just think that it's important that he be willing to answer your questions in a non-judgemental, non-defensive manner.

als1982 · September 2015

hoffse said:
I think Dragonstark brings up a good point about making an emotional decision. Regardless of what you decide to do, $200K is way too much money to be managing when you are emotional. The market is still going haywire anyway, so take a couple of days before you decide anything.

You know I'm not a DR follower, and it's because his plan is one-size-fits all. I'm not a Suzy Orman follower for the same reason (though I really enjoy listening to her). There is no single financial plan that is going to be the best framework for everybody regardless of your risk tolerance, earning potential, current assets, etc. So any financial guru that is married to their plan rubs me the wrong way. I mean, I get it. If they don't sell their plan 100%, then their advice is always "well it depends." For a lot of people that's not going to be enough, and you aren't going to be a national personality if you can't give average people something concrete to follow.

DR's target audience is going to be people with serious consumer debt. Eliminating consumer debt is low on the list of baby steps, and many people who have it feel like they can't escape. So DR helps you get out of consumer debt. It's an amazing feeling, and suddenly you are married to the baby steps. It's pretty brilliant business model when you think about it.

The thing is, you are not in his target audience. In fact, your net worth probably places you in the top 5-10% of Americans for your age. On a global level, you're probably in the top 1-3%. For that reason, I think you need to consider alternatives to the one-size-fits-all approach. I would encourage you to let DR inform your principles, but also be willing to consider alternative viewpoints.

If it were me, I would probably use neither financial planner going forward. The guy you know should never have made you cry - it's incredibly inappropriate. The whole life insurance thing is also nonsense, IMO. Life insurance is a key part of estate planning, and a lot of estate planners do use whole life policies. But there are a lot of angles you have to look at first, and he shouldn't be trying to shove whole life down your throat. Your financial planner is NOT an estate planner. Your estate planner should be a lawyer who cannot - by law - give you financial advice.

As for the DR guy, I'm concerned he's too married to the DR plan. It sounds like he's emotionally invested in it, and he may not be willing to consider alternative viewpoints.

I nodded along to this entire response. I 100% agree with @Hoffse, I wouldn't go with either advisor. There are a lot of emotions tied to this money, first because of your brothers passing and now because of its association with your becoming debt free. I'd park it somewhere for a few months and reevaluate.

hoffse · September 2015

brij2006 said:

The part where I fully agree with what DR does, is he has another book and plan called "The Legacy Journey." When we read that, it gives amazing advice on how to be, act, and plan a wealthy life. It really is wonderful advice, and is the "beyond" portion of Total Money Makeover. That one gets you to have a plan with your money, but once you're done with that then there's something more. Which his legacy journey really gets you thinking about those key points in investing and what you want to leave.

I really don't feel like we're out of the "norm" of what DR teaches and helps. We have just been quickly pushed from baby step #2 to step #7 and are trying to figure out the best way to handle this gift (or burden at this point) and do right with it. DR wants the average person to become very wealthy by building wealth, and we would like to do that as well. So I feel like his plan has helped to mold us into what we should do with our money, and give us a plan. But now that we're done with the TMM part of the plan, we feel stuck. Where do we go from here? Which is why we want someone to help us figure that out and talk that out.

Maybe at this point we should meet with a 3rd person, I have no idea.

******************STUCK IN BOX***************************

I haven't read that one, but from what you described, that's what I mean by allowing him to inform your principles without adhering you to a firm plan that allows for no deviation.

One thing I personally really like about DR is his emphasis on charitable giving. In my job I see a lot of huge donors, but many of them are doing it for the tax breaks. While the tax breaks are great (and I think they should be even higher than they are now), I also think that people with wealth have a moral obligation to help their communities by giving some of it away, regardless of what they get out of it. That is one of DR's major principles that I can get on board with. Now the question of who I am donating to and what kind of property I'm giving away - that's when I will look at multiple viewpoints and options before making a decision.

Let him guide your big principles if you agree with them, and then seek out multiple viewpoints when it comes to the details.

I think you are out of the norm with respect to DR's average listener because you guys have savings and assets in a serious way at a very young age. You have years left to make a difference, and you're in a situation that most people don't get to ever, and certainly not before they are much older.

I read recently that the average retiree has less than 6-figures to retire on. The savings rate for millenials is actually negative. That's terrifying. I think DR and the other financial gurus see this problem, and they're trying to help the average person triage their finances. But you guys aren't average.

Actually, most of us on this board are probably not average.

short+sassy · September 2015

brij2006 said:

@bmo88 That is what we told him last night about the whole life insurance. He flat out said that if we are going to give him resistance on things, then it may be best off that we do not work together.

We do not want to resist him on everything, but understand it all. "Some of the questions we asked him last night were, "why use the profits from the initial investment to fund Roth IRA's and a regular IRA?" "How much do we need to invest out of our regular incomes in order to meet our goal of retiring at 50?"

His response was that our initial investment is enough to retire on. So there is no need to add to it. Why? What is wrong with building wealth and having a good chunk of money to retire on?
It's hard, because I don't think he fully understands that we don't want to be mediocre. Yes, we could put this money into a mutual fund, let it build for the next 30 years, and be just fine to retire. But is that the retirement life we want? Is that amount of money the amount we want to leave for our children? No.
Then that's where we differed greatly, because to us we would rather leave our children a good chunk of money in an investment rather than a whole life insurance policy we overpaid for 50 years.

Definitely take a few days (or longer) to get the emotion out of things.

Whatever you decide to do, I strongly feel your current financial planner/family friend is no longer the right person for you all. It sounds like he has been a great asset in getting you all to where you are today, but your goals for yourself no longer align with his plans for your family. And that's fine. That happens.

The bolded really struck me. Nobody cares more about your (general you) money than you do. So your opinion about your finances needs to be respected, even it does not coincide with his opinion. No way would I do business with an advisor who feels their strategy is more valid than mine when discussing MY money. Sure, they are the expert and their opinions would carry weight with me, but I need to be able to make my own decisions without dreading a confrontation.

abrewer5 · September 2015

I think PPs have given great advice, so I just want to add that I'm sorry you're going thru this. You came into this money from a tragic situation and while it has afforded you a lot of blessings and being able to be debt free I can see how this would be really upsetting and hard to deal with.

I agree with others that you should let the money sit for a while until you can make a decision you're 100% comfortable and confident in. It seems to me that your current financial advisor wouldn't be the best fit going forward because of his drastically different views, but that doesn't necessarily mean the ELP is the best fit either. I would meet with a third person when you're ready and take you time making a decision. There is no need to rush to put this money somewhere and make a set plan for it. Give it a few months and think on it.

Again, I'm sorry you're having to deal with this whole situation. I can't imagine what you're going thru.

Choosing Financial Planner? (Dave Ramsey followers please give input)

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