Ep. 1994: The $31,000 Advice Bill

Don McDonald (0:40)

Well, there we go. Down there in the swamp, they're charging way too much money, and they got the hand in the pocket and all that stuff.

Well, gee, Willikers folks, welcome here to Talking Real Money, the Cajun edition. I'm Don, that's Tommy Boy. We're just sitting out on the back porch, dropping a line in the water, hoping to pick us up a catfish.

Tom Cock (0:59)

That's a big day for me. Usually, it's sitting on the back of my pickup, watching my dog. So this is major happening.

Don McDonald (1:06)

That is a very Cajun thing to do. Exactly.

Tom Cock (1:09)

Look at Duck Dynasty. Exactly.

Don McDonald (1:12)

Hi, everybody. Welcome. Good to have you along with us.

Today's topic comes to us from one of our loyal listeners. We took a listener note that Tom got and printed to a piece of paper and actually turned it into a topic.

Tom Cock (1:28)

It's a great one. And by the way, we want to thank Greg from Lake Mary, Florida. Do you know Lake Mary?

Don McDonald (1:33)

Yes, I know Lake Mary.

Tom Cock (1:35)

Do you know Lake Margaret?

Don McDonald (1:37)

It's up at the other end of Orlando. We're at the southern end of Orlando. Lake Mary is about as far north in the Orlando Metro as you can get, really.

Tom Cock (1:47)

And by the way, speaking of you, there was a piece I was watching on Netflix the other day where one of the cocaine kingpings was arrested in your neighborhood a few years ago. Okay, that's a surprise. Kissimmee, Florida isn't that your...

SPEAKER_3 (2:01)

Yeah, yeah. Bailey Wick.

Don McDonald (2:02)

Yeah, I know. That's what my mailing address actually is.

SPEAKER_3 (2:05)

I know.

Tom Cock (2:06)

I was like, Don's like right there. Yeah. You weren't part of that, I take it then? I'm just checking.

Don McDonald (2:11)

No, no, but it is a corrupt county. Our sheriff from a couple of years back, actually a little over a year ago, our sheriff, our elected sheriff of Osceola County was arrested for running an illegal gambling operation.

Tom Cock (2:29)

Out of his house?

Don McDonald (2:30)

No, out of a piece of property he had on US 192, right there. It was in plain sight. It was a...

Tom Cock (2:40)

And what happened to him?

Don McDonald (2:42)

He's in jail.

SPEAKER_3 (2:42)

Nothing. Oh, I was gonna say nothing.

Don McDonald (2:44)

Oh no, he's in jail. Yeah, no.

Tom Cock (2:45)

2026

Don McDonald (2:47)

He's in jail. You know, I never did check and see what happened.

Tom Cock (2:50)

You do that, I'll do this, because this is a fascinating topic. And it doesn't come up very often in my world. Very few people come in and say, hey, I wanna hire you, how much is this going to cost? We make it clear how much it's going to cost.

SPEAKER_3 (3:07)

Yeah, we don't hide it.

Tom Cock (3:09)

We don't hide it, but a lot of other people do, because sadly, they're overcharging. Well, thanks again for this article. This came from, I think, Yahoo Finance. It says, a retired couple, both 63, recently sat down and realized they were paying their financial advisor $31,000 a year based on a 1.5% advisory fee on their $2.1 million retirement portfolio. Now, that is a lot. That's 50% more than I think you should pay. But that doesn't include something else, by the way, that I don't even think they mentioned in this article.

How much of the funds that they're in as well. So these people, they don't, there's another fee.

Don McDonald (3:50)

Today's topic is, one, how do you pay for your financial advice? And two, what should you pay for your financial advice? Now, let's start at the simplest end of that, or the more traditional end of that spectrum. Back in the day, back in my day when I was a young man working in the brokerage industry, there really was only one way to get into investments. There were a few no-load funds, but they were rare. You went to your neighborhood Dean Witter office, or Merrill Lynch office, or whatever it might have been, and you put in a trade with a broker to buy your mutual funds, or stocks, or bonds, or whatever you were buying through them, and you paid them a commission. Now, this commission was disclosed in the commission documents early on.

Everybody knew, you paid a commission. You knew what it was. It was a lot. It was pretty high. The original commissions on mutual funds were 8.5%.

Wow. 8.5%.