Episode 74: Is It Ok To “Go With Your Gut” When Choosing A Financial Advisor?

Nov 30, 2020

This Episode

Solo Episode

You Will Learn

– How my experience on Black Friday reminded me of my time picking a financial advisor

– What “going with your gut” look like when picking a financial advisor

– Trust is important, but there is much more to it

Resources & Links

Check out the YouTube channel: https://apmsuccess.com/74v

This week, I’m solo, talking about how to choose a financial advisor. There are many annoyances that come with choosing a financial advisor but there are simple steps that you can take to make that process easier and less frustrating.

<br></br><mark>Justin (00:03):</mark>
What’s up everybody. Welcome to episode 74 of APM success. It’s Justin, I’m looking forward to speaking to you this week. I had

<br></br><mark>Justin (00:34):</mark>
Really annoying experience this morning on today, which is black Friday that I wanted to share because I thought it mapped on pretty nicely to the annoyance often involved in picking a financial advisor. And here’s a little bit of background. I like to make decisions with my gut primarily, is that something you do? Sometimes it just takes a moment and you kind of know what you want. I recently made a connection on LinkedIn with a, another professional. We set up a quick intro call and I could tell immediately when I was talking to this person that they were someone that I wanted to be aligned with. I didn’t know anything about them, but in the first 30 seconds of this phone call, it was a combination of them asking great questions, sharing their vision for their company, the way they were positioned as an advocate for physicians and their own specific expertise, similar to, to me.

<br></br><mark>Justin (01:25):</mark>
And I thought, wow, this is a kindred spirit. Someone with whom I want to do business. Subsequently I found out more about this person. And thankfully I found out that that gut instinct was really validated. So I’m a big believer in this, go with your gut. And I want to talk to how that relates to finding financial advice. And one big asterisk. I want to sort of point out here is that it works going with your gut works as long as there’s some calibration that happens first. So I want to tell you a quick story about a time in the very recent past when I was a consumer. The time of the recording of this episode is the evening of black Friday. And the time I’m referring to is actually just this morning when I’m cruising around online, I remembered, Oh, today’s black Friday. In a very weird, in different way.

<br></br><mark>Justin (02:14):</mark>
Obviously during a pandemic, I was casually interested in getting a new cell phone. I was a consumer trying to buy a product. In this instance, I had difficulty understanding the relationship between this product that I was looking at the phone itself, the ongoing service contract associated with the phone. So I saw an ad that said, get a new pixel for a, for $189 with a little asterisk. I should have known when I saw that asterisk, that this was going to be a painful experience, but I do have a Google pixel right now and I want to upgrade it. So I came to realize not only was this an annoying experience, but it actually has a lot of similarities with some physician’s experience and trying to find a financial advisor. So I was going through this process. I saw the ad, I clicked on the ad.

<br></br><mark>Justin (03:02):</mark>
I answered a few questions that Google sort of takes you down this path. Do you have a phone currently? Yes or no. Do you willing, are you willing to trade it in yes or no? Which model do you have? How much memory does it have? Is it in good condition? Does the screen turn on, et cetera? So I was, I was answering all these questions, sort of moving down the path of buying a new phone, but I didn’t really understand the sales process. I found myself answering all these questions, but I wasn’t sure what are the costs like? Is this a one-time cost? Are there ongoing costs as their service fees associated or even the point at which the sale actually happened? Like I’m going through all these screen after screen, after screen, I’m answering these questions, they get more and more serious. I’m like, do you want to, you know, replace this on your existing contract?

<br></br><mark>Justin (03:47):</mark>
And, and I, I found myself hoping that each one was not the final prompt where they say, thanks for your purchase. We’ve got you. We’ve sold you this phone. And I hoped that each one subsequently I kept hoping it was going to give me more information on the pricing for my specific situation, because I came to realize, after I clicked on the link that I wasn’t going to get that $189 deal with the asterisk. So I was going through the Google website then kicked me over to Verizon, which is my carrier midway through the process. And then back to Google. And maybe you can see where I’m going with this. I didn’t understand who’s making this money on me. How much are they making? How much is this going to cost me to Google? And Verizon have some kind of fee sharing arrangement to have to pay both of them.

<br></br><mark>Justin (04:32):</mark>
If I paid Google, am I paying more at Verizon too? When I switched, what is the final sale price? I couldn’t even tell you how much is this phone going to cost me? I did a little bit of, you know, when I, when they flipped me over to Verizon, I saw there’s a few fees. There’s an upgrade fee, which, why am I paying an upgrade fee when I’m paying cash to Google for a new phone? I had no idea. Am I asking the important questions? I’m not even sure. What are the important questions? I don’t even, I have no idea. The whole process, needless to say really sucked. I got to one of the last screens in this process. I couldn’t tell if it was the last screen, because again, the actual decision point was not clear. I got a progressively more and more terrible, annoying feeling at the gut level.

<br></br><mark>Justin (05:17):</mark>
And part of me wanted to just get it over with, to make the stress go away and say, it was just like click. Yes, yes, yes, yes, yes. Accept. And then just be done with it. But another part of me wanted to bail on the whole thing, because it left me feeling so duped, knowing that I was not going to get that $189 deal and probably taken advantage of in the process that I just didn’t want to let them win. I didn’t want it to get taken. Does this sound like an experience that you’ve potentially had with a financial advisor? Have you made micro commitments where you haven’t given over your credit card, but maybe you’ve signed some stuff. You’re not sure. Am I paying you yet? How much are you making on me right now? How do you get paid else was paying you?

<br></br><mark>Justin (05:58):</mark>
Can I just leave at any time or can I do an insurance thing with you and then go somewhere else? Like there’s a lot of ambiguity and then you don’t want to leave. Cause you’re going to make them feel bad. The whole thing just leaves you kind of anxious, feeling a little bit in the dark and you just decide not to think about it. Should you trust this person? I’m not sure if I can tell I have no idea. So if you feel like I do like this is some bizarre parallel universe sort of way of describing an experience you once had picking a financial advisor. Let me tell you you’re not alone. And I wouldn’t have even thought of this example if it hadn’t also been for the fact that only literally two days ago, I had a conversation with a dual physician, couple that mapped on perfectly to my very painful, attempted buying experience.

<br></br><mark>Justin (06:42):</mark>
And that was actually the impetus for them to reach out. The gentleman with whom I spoke had been married a couple of years, his spouse was an internal medicine physician. He’s in pain management. He was coming to me because of this gut level unsettleness that he had with a financial advisor, with whom he was working. He had done some work with, I would call them, you know, an insurance salesperson. They were an agent with an insurance company. They would, the agent would call themselves a financial advisor, of course. And he had bought a disability policy with his agent because he was told in residency by some random people that was the right thing to do, like get disability. So he got disability from this person. It wasn’t because he liked this person. He thought it was the best policy. It was just because this person was persistent in reaching out to them during residency, maybe you can relate.

<br></br><mark>Justin (07:29):</mark>
He also bought some whole life insurance because he liked the idea of having something described as a forced savings mechanism in air quotes. And so he did that. He was throwing more and more money to this agent in terms of insurance premiums, making increased levels of commitment with each new policy. And he wasn’t, wasn’t quite sure how these policies mapped onto his needs. He had no idea how this financial advisor was getting paid or how much, and he had this feeling. He was getting used. This physician also had student loans was interested in starting a practice, felt like these products were getting sold to him and had nothing to do with his actual need or desire for those products. The breaking point for this physician was when the advisor in the last couple of weeks passed him a few new account applications to sign and start funding these accounts.

<br></br><mark>Justin (08:19):</mark>
And there was still no clarity on these big questions about fees, conflicts of interest. Why are these accounts good for me? You haven’t even asked me about my goals, et cetera. This caused the physician to just reach out and talk to me, heard one of these podcasts and wanted to start a conversation. And when I spoke to them, it was an avalanche of these insecurities confusion, some shame and embarrassment, some vulnerability, some frustration, and a genuine, just seeking of context to understand how should I even think about this situation that I’m in. And that’s when I took some time, you know, after asking a few questions I described what fee only advice is. And we’ve talked about this on the show a lot. I’ll just mention again, fee only means that there are no commissions kickbacks, external incentives, et cetera, with a financial advisory relationship.

<br></br><mark>Justin (09:10):</mark>
The entirety of the compensation for that advisor is very clear. It’s you’re only paid by your clients. You’re not getting paid to push a product. I don’t make more with policy a versus policy B or a fee only advisor would not et cetera. You can fit the compensation structure of a fee only advisor on half of an index card. I’m a big fan of simplicity in these things. And if it takes too long to explain compensation, then I think you’re getting into some dangerous territory. And as a physician, you obviously know this there’s very complex physician compensation mechanisms out there that I’ll tell you, they’re not complex to benefit the doctor. I think we all know that, but, but here’s the reality when it comes to compensation and actually before I go there, I I’d have this distinct memory. I, I interviewed with a company like this.

<br></br><mark>Justin (09:59):</mark>
I was just coming out of school was 2009 back in the time when we were in the throws of economic depression at that time, and jobs are hard to come by. And I found myself in this big group interview, and I remember sitting there for 90 minutes and essentially getting a sales pitch on how awesome this company was as a quote unquote financial advisor. And they got through the whole time and they never talked about how much we were going to get paid. And I just thought this was weird, but I was 23. And I was like, Oh, you know, I don’t want to be the guy who’s like, wait, how much, how much are you going to pay us? Thankfully somebody else did. It was like, you know, can we like talk about compensation? Like how do we understand how much we’re going to make?

<br></br><mark>Justin (10:38):</mark>
And the guy doing the presentation laughed. And he said, Oh my gosh, like, I’m glad you brought that up. It’s, you know, we actually have another two meetings dedicated to explaining compensation. And it’s funny milling what I know now working for a financial advising company that has two meetings dedicated to explaining how you’re going to get paid. That’s never, never a good sign. But, but back to the question at hand, here’s the reality, good financial advice is frequently worth many thousands of dollars per year. Sometimes tens of thousands or more and any great advisor who’s dialed in on your needs and asking good questions will tell you stories. I can tell stories of the time you looked at a contract or found self-employment income that had a retirement plan, opportunity or money that was sitting in cash instead of being invested and financial advice, you know, frequently pays for itself in spades buying it though should be a clear process with an understood price and decision point.

<br></br><mark>Justin (11:39):</mark>
So if you find yourself feeling like you’re going through this cell phone purchase process that I just described in your conversation with your financial advisor, financial advisor, again in air quotes, you’re not sure when the deal is going to happen. Are there ongoing fees that I’m not seeing? How much is it going to cost on? The whole thing is done and you just sort of get this like anxious, gross feeling like you want to run in the other direction. Then this is a good opportunity to go with your gut. And let me make one other remark. As we’re thinking about calibrating your gut and being able to trust her instinct one way that people get into trouble when they try to trust their instincts is going with a pre-existing personal relationship. And let me just tell you that this is a bad basis for gut instinct.

<br></br><mark>Justin (12:27):</mark>
I was at ASA last year back when we used to go to conferences in person, you might remember those days. And I had a blazer and a pocket square that I was wearing to talk to actual humans in the same space. And it was being introduced between a couple new acquaintance physicians. And one guy said, Hey, this is Justin. He’s a financial advisor. We can really trust him because his wife is an anesthesia resident and I had to stop him and say, listen, let’s be honest. There’s 55,000 ASA members. And I guarantee you in a group this large, there are probably hundreds of doctors who spouses are financial advisors. And personally, I appreciate the implicit trust, but it’s a bad indicator of whether or not I operate in a conflicted business model. It’s uncorrelated somewhere between one and 3% of advisors in America are fee only.

<br></br><mark>Justin (13:14):</mark>
So the odds are already stacked against any random advisor. Now it just so happens that for me, I am the only, I do have specific expertise and I do really, I do work really hard to come to places like the ASA so I can understand anesthesiologist problems and not just pass out business cards, but don’t trust me because my spouse is a resident. We talked to dr. Jimmy Turner in an earlier episode and his roommate’s cousin or something like that in med school was an insurance agent. There was this implicit trust based on their relationship. This agent tried to sell dr. Turner, the policy as a med student. He wasn’t even a physician yet at that point. And it was for disability coverage. He was declined due to a preexisting medical condition. And by the way, if you’re a med student, you should think very, very carefully about getting disability coverage before you go to residency.

<br></br><mark>Justin (14:09):</mark>
Because if you get declined, then you can potentially never get it again. So you want, you don’t want to apply before residency, unless there’s a good reason, but he had this policy pushed on him by someone with whom he had a personal relationship, got him denied. So literally he can never have disability coverage because he won’t be underwritten by a company who knows that he’s been denied. When if he had just waited another couple of months, then he could have gotten a guaranteed standard issue policy that would have eliminated this whole problem. So that’s the point? It’s the personal relationship. It’s an okay starting point, but there’s still a lot of due diligence that needs to happen. And it’s not don’t mistake. That is like your gut saying, Oh, good trust. That’s that’s wrong. So in summary I love Thanksgiving. I’m really grateful that there are people out there that make time in their busy lives like you to just give me a little bit of it each week.

<br></br><mark>Justin (15:05):</mark>
And there’s a sacred trust there that I work hard to honor. So for me to you, thank you for the work that you do as a physician. Thank you for the sacrifices that you make in training as attendings, missing holidays, dealing with the red tape and the schedule and the grind in order to serve your patients very well. I appreciate how hard that is and the dedication that it takes, and this show APM successes for you and with the goal of making your decisions easier, more clear your finances, hopefully less stressful in your career, more fulfilling an amazing. So if there are any ways that I can do that better or any other topics on the front of your brain that you want me to tackle, drop me a line over@apmsuccess.com until next time, I hope everybody has a very awesome help,

<br></br><mark>Justin (15:57):</mark>
The safe holiday season. Thanks. If you liked what you heard this week, head on over to APM success.com, where you can find more content and free resources to help you build a successful career in anesthesia and pain management. If you want it to leave a review in iTunes, I’d also really appreciate it. Thanks for using some of your valuable time to join me today on APM success.