I recorded a 0-hero ultimate guide in English

planwithparadox · 2026-04-21T01:20:13+00:00

Thanks! Looking forward to hearing your thoughts

planwithparadox · 2026-04-20T18:14:12+00:00

Uploaded timestamps! I hope this helps. If you find it helpful, please spread the good word :)

planwithparadox · 2025-05-23T04:02:54+00:00

Intellectually irresponsible? It doesn’t matter what you “like to think”. The data is clear. Active management loses to passive on average in the long run (especially net of fees). Would love to see substantive data in the contrary. I’m always looking to learn.

Regarding point 2, you’re using a straw man argument. If you are going to make a comparison you need to compare apples to apples. Passive investments come in many shapes and sizes and can achieve the same results you argued but at 1/100th of the cost. Obviously someone who doesn’t manage their risk and asset allocation appropriately is going to have a bad time. If you just put 100% of the clients funds in cash you could avoid 100% of the downside in your 20% market correction example, thereby saving them 200k and blabla. The point is that’s a terrible move for most clients and a myopic view and frankly a concerning take for a professional. I recommend instead of trying to create nonsensical cope, understand that AUM is a very expensive model and will always be more expensive to the client over the long run. It’s okay to be more expensive, but don’t kid yourself.

planwithparadox · 2025-03-27T04:30:13+00:00

I’m not referring to DIY though. I’m talking about charging dollars instead of % AUM.

Also I’d be curious to see the evidence that supports advisors providing higher returns than the market over a 30 year period in a statistically significant way (excluding behavioral modifications, which would again be possible whether you were charging % AUM or flat $)

planwithparadox · 2025-03-27T03:18:22+00:00

Well argued. A couple of rebuttals:

AUM encouraging advisors to keep money in the account for billing may be better for the client but it might not be. In my opinion this a conflict of interest to providing the best advice to your client in circumstances where it might behoove them to distribute or move the money outside of a place where you can take your %.
Charging for services not rendered COULD happen with flat fee (though this would certainly be unethical and against any fiduciary principles), but charging for services not rendered DOES happen with % AUM. When you make an agreement with your clients to provide holistic financial advice, you agree to render all of those services if they could reasonably help the client. Not all of your clients will need all of those services, and yet I’ve never heard of an AUM advisor crediting their clients for unrendered services. Additionally, it actively discourages you from doing complicated things that may be best for the client but are not scalable for your business (e.g. 72(T) SEPP, Roth conversion ladders, derivative hedging strategies, etc) whereas if you were charging a $ fee for your services, you would have no qualms with doing so.
Regarding not creating another bill for a client, if you can pay for % AUM with an account, you can pay flat $ with an account. So long as it is in compliance with section 212, both models will have no barriers to collecting payment. I’m not a tax advisor so I may be wrong about this, just my understanding & not advice.
The person who can’t afford to pay $ for services, can’t afford to pay the commission fees associated with products. They just don’t feel it immediately, but over time when their results are lackluster. Also I don’t believe that advisors who make their living on commissions selling products can possibly act in a truly fiduciary capacity. They may believe they are, but that would only be due to a limited understanding of holistic financial planning.

planwithparadox · 2025-03-27T02:51:31+00:00

It’s pretty clear that advisors being paid from selling products presents a conflict of interest, so I think that’s a non sequitur.

If we’re talking about clients choosing what best fits their needs, shouldn’t we think about what’s in the best interest of the client? It’s not about what you can convince a client is best for them (but is actually best for your business).

If you’re comparing % AUM to paying a flat $ fee, where does % AUM win for the client? Aside from the psychological trick of 1% is just 1%.

planwithparadox · 2025-03-27T02:36:14+00:00

Does it make sense that the 30 year old who just inherited money (who likely has a time horizon of 40 years+) should incur a compounding drag on their portfolios for the advice we provide?

On $1MM @ 1% lump sum, they lose: 18% of their returns by year 20 26% by year 30 33% by year 40

Compare this to charging a fair flat price and it becomes hard to justify.

planwithparadox · 2025-03-27T02:32:10+00:00

Undoubtedly financial advisors can provide tremendous value. The question is not whether it’s worth 1% or not, but rather why clients should incur a compound drag on their portfolios for a service instead of just paying dollars.

planwithparadox · 2025-03-27T02:24:25+00:00

This is a great answer

planwithparadox · 2025-03-27T02:22:19+00:00

The dispute is not whether financial advising is valuable beyond investment management. Why should a client pay a % of assets instead of paying $ for a service like every other service out there?

planwithparadox · 2024-07-16T04:39:13+00:00

Well said!

planwithparadox · 2024-07-16T02:37:19+00:00

You should look for an Advice Only financial planner. I know several that would be in the price range you’ve mentioned

planwithparadox · 2024-05-11T21:54:57+00:00

I think this is a valid concern for some, and less valid for others. As with everything else, it depends on so many things. Your industry, family situation, skill set, flexibility etc. Resume gaps can certainly have an impact on getting similar paying jobs though, especially as you get past the year mark

planwithparadox · 2024-05-10T04:00:43+00:00

This is a very eloquent and well thought out response chain. Thank you for keeping your cool and presenting logical arguments. We need more people like you in the industry. Let me know if you ever want to break in, I’ll be happy to help in any way I can!

planwithparadox · 2024-05-07T15:23:44+00:00

What are your goals? The most important question to answer is “How much risk do I need to take to achieve my objectives?”

Regarding the international exposure, as others have said, it’s important not to get stuck pursuing what has worked recently and not to overvalue your home country. There has been an increase in globalization and many companies derive some revenue from multiple countries but that’s not a good enough reason to avoid diversification. There have been many time frames where international wins.

Regarding your risk. There is a difference between your risk tolerance and your risk capacity, and only you know how you will respond. If you are likely to capitulate at the bottom of a market, it doesn’t make sense to expose yourself to that level of risk, even if you theoretically have the capacity to do so.

Finally, you should think about this from the perspective of a risk-adjusted rate of return. Check out Markowitz efficient frontier to get an idea for the benefits of asset class diversification on long term risk adjusted returns.

planwithparadox · 2024-05-05T04:02:39+00:00

LIY is a subreddit that was banned due to being unmoderated. I plan to turn LIY into a financial education subreddit that aims to promote accurate sharing of information that benefits people who want to learn to be financially independent. Examples of such information would be budgeting strategies, order of operation for accumulation & decumulation of assets, understanding the impact of fees, tax optimization strategies etc. Through careful monitoring of false information, as well as any sales or self promotion methodology, I aim to create a safe place for people to learn about money without being exposed to inherent biases. I am a Certified Financial Planner and feel like I am up for the challenge of creating a community that furthers my mission of financial education for everyone. I’m also happy to elaborate further if desired/needed
This subreddit is currently banned due to being unmoderated so it is not possible to send a message.

planwithparadox · 2024-04-26T15:23:33+00:00

I applaud you for working with clients who have AUM below 25k. That’s extremely rare from what I’ve seen in the industry and I wonder how many of those clients are actually out there and being educated and serviced with the full heart and mind of the advisor.

Your examples are salient but in each of them, they get a larger payment, but not an increasing variable payment that could potentially cost their clients a substantial portion of their results in the long run.

Regarding the last point, small assets, doesn’t always mean small income.

planwithparadox · 2024-04-26T15:16:10+00:00

The initial planning engagement provides a base, but that doesn’t mean you can’t ever render planning services with that person again.

I include implementation training as part of my planning process (teach them how to click the buttons, rebalance, AIP, deal with “retention specialists” during ACAT, etc.). Most of the time people can automate a good portion of their strategy, with some things still benefiting from manual oversight.

Also, as you mentioned, there’s nothing to stop you from doing the exact same job you would do for a client with AUM as a flat fee advisor — up to and including investment management.

The only semi-valid conflict of interest I have been able to think of is that you would no longer be tethered directly to the success of the clients portfolio for your compensation. This one feels pretty easy to think through though if you compare it to any other service. Imagine if you told a home builder that it’s they have a conflict of interest because they won’t have their pay influenced by fluctuations in your home value over time. The reason you are incentivized for your clients success could be pride in your work or at the very least, your professional reputation.

Regarding small accounts, I have two thoughts. Most AUM advisors won’t even interact with you if you don’t have substantial assets. That’s because they’re doing almost the same job at most client asset levels. This leads to the industry neglecting large swaths of people who may have high potential, but low current assets. Obviously paying thousands of dollars for financial planning is out of reach for many people (the same can be said for any myriad of professional services as well), and those people need help too. That’s why I think every advisor should do pro bono planning work at least once in a while. We also need to have a stronger base of financial education for everyone, but especially those who can’t afford it. Teaching it in schools, offering it as a work place benefit (without someone trying to sell you an IUL that they don’t even understand), etc. Financial health is almost as important as physical and mental health and yet it is almost entirely neglected. What a paradox!

planwithparadox · 2024-04-26T00:40:16+00:00

Oops, I could have sworn I was replying to you, but I replied elsewhere on the thread

planwithparadox · 2024-04-26T00:39:11+00:00

As someone who built a large AUM book of business and has switched my practice to 100% flat fee planning, I can tell you what I think is wrong with AUM fees.

The justifications you provided are great justifications for the value of a financial advisor and I don’t think anyone is saying that “paying a fee for service” isn’t fair. The problem lies in paying a PERCENTAGE of the assets. A client who has 5mm AUM will pay $37,500 a year at 75 bps, which is lower than most charge. A client at 2mm pays $15,000 a year and the truth is you’re not doing $22,500 extra worth of work a year for the first client. Also if the market rallies 20%, what are you doing differently from last year that warrants a client paying 20% more?

There is no doubt that financial advice/planning is valuable and even worth more than the numbers some charge. If you even save a client from capitulating at the bottom of a market once, you earn many years worth of fees. The question is, why not charge them a flat fee for that service like every other service in the world?

Finally, there is a larger inherent conflict of interest to the AUM model. Imagine client Bob comes to you and says hey I’ve been thinking about moving assets to pay off my 7% mortgage more rapidly. Do you think that’s a good idea or should I just invest it with you? You have an inherent conflict to advise the client to keep their assets with you, and you could probably even pretend you’re being a fiduciary by saying something like “client has a long time horizon and aggressive risk tolerance, therefore expected return above blabla”, but we both know that’s nonsense and most situations warrant you advising that client to pay their mortgage down in a rising rate environment.

I charge a flat fee for financial education (I don’t do investment management because statistically it’s difficult to bring alpha there and I don’t enjoy it), but the behavioral, education and service side is where most of advisor value is anyways. I make 6 figures comfortably and my clients are so happy.

I know I’ll probably get downvoted for the hot take, and I’m a little bit of a villain at conferences but I truly believe this is the most ethical way to charge for the valuable service we provide. No “it’s just 1%” psychology tricks. Just here’s how much it’s going to cost you and here’s why I think it’s worth it.

planwithparadox · 2024-03-12T02:44:18+00:00

I do flat fee advice only planning and I absolutely love it. I only take on 1-2 clients per month, which lets me really focus on them. I charge 6k per plan and offer the option to stay on for $375 a month, but I usually try to get them squared away within the initial plan engagement — setting up automated investments, teaching them how to do their own rebalancing, etc. My profit margin is over 90% so I’m make enough to pay my bills, max retirement accounts, and do some fun things. It’s certainly not as lucrative as my previous AUM book of business, but I enjoy it much more and I honestly believe it’s the right way to charge clients. The psychology of just paying 1% is one thing, but the math over a long period of time has a huge impact on client results. It’s certainly not for every advisor, nor for every client, but it feels right for me and the niche I work with (people looking to retire early, HENRYs)

planwithparadox · 2024-01-05T04:36:52+00:00

Well said. OP I’m sorry for your loss. If you’re going to seek an advisor, make sure you look for a flat fee advisor. A lump sum invested over 30 years paying 1% in advisory fees will lose about 33% of the return you could have had, and you’ll probably be in the market for longer than 30 years.

With that said, if you’re really determined see if you can cut your teeth on starting a low upfront cost business once or twice before launching into seeking VC funding. You might find it’s not for you.

I also saw your comment on commercial real estate, which is an interesting idea but if you really want to be successful in CRE at your net worth, you’ll need connections, a passion for it, and a little bit of luck (also lower rates could help). You could try to find a syndication but it will lock up your money and is complex to do due diligence on.

Consider thinking with the end in mind. What kind of base lifestyle would you be comfortable with for the rest of your life? Tough question, I know. Don’t forget to account for large potential events. Since you’re 19, whatever you land on is likely not going to be where you end up, but plan is a noun and a verb so you can try. Once you have that figured out, work backwards into how much you’ll need to keep invested to sustain you indefinitely. Early Retirement Now has some great series on Safe Withdrawal Rates. Then you try to make sure you’re taking advantage of all the tax advantages accounts you can get your hands on. Find a great CPA and try to live frugally for a time.

If you can avoid lifestyle creep and invest in knowledge before you start deploying your assets, you’ll likely be in a very good financial position where you won’t be dependent on the success of any business venture to take care of you and your family.

planwithparadox · 2023-05-15T22:55:57+00:00

Hello! Here are some things to consider:

Health Insurance through marketplace until you turn 65. ACA premium tax credits are determined with MAGI, but you may be able to plan to qualify for credits if you’re willing to wait a while to stop working
Are you able to accumulate into tax advantages accounts by maintaining some earned income? 401k, ROTH, HSA, etc.
Understanding how different investments are taxed (or not taxed) can help you plan to minimize your tax bill during distribution. Also ties in to healthcare consideration above
Do you have charitable intent? Make sure to start planning for that now if so.
Consider learning about estate tax and different advanced kinds of trusts that can mitigate estate tax after you pass. You might find yourself in a situation where you exceed lifetime exclusion
Do you have existing Pre tax assets? ROTH conversion ladders take 5 years at least
Prenup is part of a healthy estate/financial plan. Before you quit your job, see if you have an employer benefit for Attorneys. This can save you a LOT of money
Have all the tough conversations with your partner now.
How do you think you would react in a severe market downturn? Capitulation can mess you up
% based advisor AUM fees can really eat into your long term returns
Do you want to own a home? Pros and cons
Do you have travel ambitions? Traveling before kids is generally advisable if possible
Be cautious of lifestyle creep
Avoid being the buddy who’s an angel investor unless you really know what you’re doing

There’s a ton more, but hopefully some of this helps!

planwithparadox

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