Smart Money Podcast: International Budget Travel, and Firing Financial Advisors

Liz Weston, CFP®
Sean Pyles
By Sean Pyles and  Liz Weston, CFP® 
Edited by Sheri Gordon

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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:

Learn how to travel abroad on a budget, and how to part ways with a financial advisor whose services are unsatisfactory.

This Week in Your Money: It’s possible to travel abroad on a budget, according to NerdWallet Travel editor Meghan Coyle. She joins hosts Sean Pyles and Liz Weston to discuss the pros and cons of using budget airlines for international travel. She discusses the overall change in flight prices over the last few years, how reliable budget airlines really are when compared with other larger airlines, and what to look for in terms of hidden fees and terms so you’re not surprised by unexpected costs. She also offers tips for a better budget airline experience, including in-flight food and entertainment — and investing in a good neck pillow.

Today’s Money Question: A listener named Melissa joins Sean and Liz to ask for help deciding whether she should fire her financial advisor. Melissa expresses concerns about the performance of her investments and questions the fees she is paying her advisor. She also shares her struggles with balancing debt repayment, enjoying life in the present, and planning for the future. The hosts discuss what to look for in a financial advisor before working with them, then help Melissa understand what it takes to become a financial advisor after she expresses interest in becoming a certified financial planner herself.

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Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Episode transcript

Liz Weston: Hey, Sean, what would it take for you to fire your financial advisor?

Sean Pyles: Hmm, that is a good question. I would probably think about firing an advisor if I got some advice that was contrary to my values and how I like to manage my money, or if they just did a lousy job managing my investments.

Liz Weston: OK, that's fair. Well, for this episode, we'll talk with the listener about whether they should fire their financial advisor.

Sean Pyles: Welcome to NerdWallet's Smart Money podcast, where you send us your money questions and we answer them with the help of our genius Nerds. I'm Sean Pyles.

Liz Weston: And I'm Liz Weston. Listener, as we head into fall, what money questions are on your mind? Maybe you're wondering how to plan for your holiday travel or how much to budget for gifts this year.

Sean Pyles: Whatever your money question, send it our way. You can email a voice memo to [email protected], or leave a voicemail on the Nerd hotline at (901) 730-6373. That's (901) 730-NERD. Or if you want to write things out, you can text your money questions to the Nerd hotline or email us at [email protected].

Liz Weston: In this episode, Sean and I talk with the listener about dismissing their financial advisor and whether they might want to make a big career change.

Sean Pyles: But first, we are talking about international travel, specifically international budget travel. And joining us in this conversation is NerdWallet travel editor Meghan Coyle. Meghan, welcome to Smart Money.

Meghan Coyle: Thanks for having me.

Sean Pyles: Meghan, I am going to be blunt here. I'm not a fan of budget travel. I've been burned by budget airlines in the past and have sworn off ever flying them again. And flying a budget airline internationally sounds like a nightmare. So, I’ve got to ask you, why should I or any of our devoted Smart Money listeners risk flying on a budget airline when going abroad?

Meghan Coyle: Well, I mean the first thing is price. It is so much cheaper to fly a budget airline these days, and it's honestly not that much different than flying basic economy on a legacy airline. Gone are the days when you could get checked bags if you were flying across an ocean and maybe even a meal. If you're not going to get that with a big airline that you already know, I say if it's a lot cheaper, maybe try out a budget airline.

Sean Pyles: Yeah, and my concern with budget airlines is that they are, shall we say, a little unreliable, maybe prone to canceling flights with almost no notice. And I'm wondering if it's that most other airlines have also taken up that practice due to the instability of the world. So, maybe budget airlines aren't as unreliable as maybe they used to be. What are your thoughts on that?

Meghan Coyle: Honestly, a lot of airlines are dealing with these larger forces at play, like the shortage of air traffic controllers, and that's not specific to a budget airline. So, I think there are some things you can do that'll help make your budget airline booking a little bit more reliable. So, we can talk about that later on.

Sean Pyles: OK.

Liz Weston: So, Meghan, which budget airlines are we talking about?

Meghan Coyle: So, there's been a ton of new budget airlines in the past, I would say, five years that have started flying between the U.S. and international destinations. Norse Atlantic is a budget airline out of Norway, and they've begun rapidly expanding. They now fly to eight U.S. cities, including New York, Los Angeles, San Francisco, Washington D.C., basically all over. Zipair is another new budget airline that flies between the West Coast and Tokyo. There are also airlines like French bee, PLAY, which is from Iceland. Not to mention there's some existing ones already, like Icelandair. And all of these budget airlines are kind of ramping up their route schedule as there's more flight demand, and we're now kind of exiting the pandemic era of travel.

Sean Pyles: Well, speaking of flight prices, Meghan, I feel like flight prices have actually gotten a little bit better. They've come down recently. Is that the case?

Meghan Coyle: Yeah, that's true for a couple of reasons. One, inflation is slowing down finally, and flight prices are down almost 20% from where they were last summer. They're even lower than they were before the pandemic at this point. So, it is becoming much cheaper to fly. And honestly, some of that has to do with the entrance of all these budget airlines coming into play. There's more competition, so the flight prices are getting lower. And then, in addition to that, shoulder season is a great time to travel. So, if anyone is looking to get a really cheap flight, whether it's on an international budget airline or not, flying in September, October, November, before all of the holiday flights start is really a great time to fly because a lot of kids are going back to school, and there's just less people flying around this time of year.

Sean Pyles: All right. So, when you book a flight on a budget airline for flying abroad, what are you getting exactly? I would hope at least a seat to sit in.

Meghan Coyle: Yes, you'll definitely get a seat, but honestly, I can't promise any more than that. They'll give you the bare minimum. And you might have to pay extra for things that you might normally expect with an international ticket. So, things like even a carry-on bag that goes in the overhead bins, you might have to pay for that. You might have to pay for food. Even choosing your seat, if you don't want to sit in a middle seat for eight hours, you might have to pay extra for that. The other thing I wanted to mention is that these airplanes are safe. I think what I heard over and over again when I was reporting this out was people were worried that these flights were so cheap that maybe they were skimping on safety, but that's absolutely not the case. Your seat will have a seatbelt. It'll get you there.

Sean Pyles: But you might not be getting that nightcap that you would get from an airline like Lufthansa or something.

Meghan Coyle: Exactly. Exactly. And another thing is that a lot of these budget airlines are new. They've just started or they just started flying more after the pandemic. And so, one of the experts I spoke to pointed out that a lot of them have even bought newer planes. And so, in terms of safety and a more comfortable seat, these new airlines are buying newer models. And it actually might be more comfortable than you would expect for something so affordable.

Liz Weston: Well, Meghan, have you flown any of these new airlines?

Meghan Coyle: I personally haven't yet, but I am eyeing a very cheap flight right now to London in the fall. But I have flown budget airlines in the past. I went to Iceland on WOW air, if you guys remember that one. They had these hot pink airplanes. And I flew from LA to Iceland. It was a pretty long flight, but I remember it being totally fine. I was comfortable. There was no entertainment, so I brought two books or something, and my hot tip for that is also bring your own food. If you want a hot meal, I'd recommend bringing a cup of ramen noodles and you just ask for hot water, and the hot water is free. So, I had hot noodles while everyone else was eating a sandwich.

Liz Weston: Nice.

Sean Pyles: Nice. OK. I’ve got to ask you, how much is that flight to London that you've been looking at?

Meghan Coyle: Oh, man. The flight to London has been $400 round trip from LA, so I feel like that's pretty good.

Sean Pyles: No way.

Meghan Coyle: Yeah.

Sean Pyles: That is really incredible. OK.

Meghan Coyle: I mean that's the difference with these budget airlines. They can be sometimes half or even a third of the price of other airlines. Even when you include all those extra fees for things you might want, like another bag or something, so-

Sean Pyles: Yeah, which you have to add into the total cost. Sure, the ticket is $400, but what are you paying for that carry-on bag too, right?

Meghan Coyle: Yeah, usually it's, I would say, around $50 to $75 each way, but I mean compare that to-

Sean Pyles: Still, $500 for a round trip to LA to London is pretty good.

Meghan Coyle: Yeah, absolutely. I also spoke to a traveler who had flown French bee for the story I wrote about this, and he made some really good points about taking budget airlines. One of them is that they might use different airports just because some of the major airports are kind of booked up by the existing full-service carriers. So, French bee, for example, flies out of a smaller airport a little bit outside of Paris, but this traveler actually liked that because it was less busy, and it was actually easier to get to than the main Paris airport.

Sean Pyles: Yeah, Charles de Gaulle is a nightmare, at least in my experience.

Meghan Coyle: Yeah, totally.

Liz Weston: It is.

Meghan Coyle: And then, the other thing he mentioned was that French bee had super strict timing requirements, which is just something you might not expect with any airline. So, it's good to point out that if you are flying a budget airline, they could have requirements around literally anything from the specific dimensions of your carry-on bag, to even what time you need to check in. So, I've seen a lot of complaints about French bee where people, quote, unquote, missed their flights because they weren't at the airport early enough because check-in actually closes an hour and 30 minutes before departure. If you miss that window, if you're just running a little bit late, if you check in an hour and 29 minutes before your flight, you will literally be marked as a no-show and you might not be allowed to fly. So, you really have to read all the fine print when you're flying a budget airline.

Sean Pyles: Yes. And probably some reviews as well.

Liz Weston: Yes. Meghan, you mentioned the check-in requirements and that's what we ran into one time when we took a budget airline. That, for one thing, the customer service was awful. And the other part was as people were lining up to get in the plane, they were pulling people out and weighing their check-ins, and then shaking them down for extra fees and not insignificant extra fees. So, definitely read those reviews, kind of go deep and make sure that you understand what you are paying for and what you are and aren't getting.

Meghan Coyle: Definitely. Definitely.

Sean Pyles: So, Meghan, who do you think would be a good candidate for booking on a budget airline? Because it seems like it might not be Liz and me.

Meghan Coyle: Actually, Liz, I'm so glad you mentioned the customer service because I would suggest people who think they're fairly certain they're going to take the flight and probably don't need a lot of customer service to fly, I would suggest they book budget airlines. The price point is so good sometimes that you should definitely consider it over legacy airlines, but you need to be almost 100% sure that you'll take the flight because canceling these flights is so difficult. I mean, you would have to buy the most expensive fare, which at that point is getting closer and closer to a legacy airline price point, to be able to get a refund. And even then, it is such a hassle to deal with customer service at these budget airlines because a lot of them have smaller customer service teams, and they're dealing with a lot of customer inquiries. So, if you can avoid that, you should.

Sean Pyles: One thing that comes to mind for me is that if you are booking a flight on a budget airline, you might want to look into getting cancel for any reason travel insurance because that could help you maybe get a refund if you do need to cancel, because these airlines aren't really going to be much help there.

Meghan Coyle: Totally.

Liz Weston: So, it seems like taking a budget airline for a trip abroad isn't going to be the most comfortable way to travel. So, what are some things you can do to make your budget airline trip better?

Meghan Coyle: Well, one example is maybe splurging for the seat that you want, whether that is not a middle seat, getting the window seat if you're going to fly for a long time on a budget airline. Another thing is maybe checking out the economy plus or business seats on a budget airline. Those might still be affordable. And then, my other piece of advice, again, bring your own food and your own entertainment. You probably won't have seat-back screens and all the snacks that will keep you occupied for 8, 10, 12 hours. But most importantly, my favorite thing to do on a flight is just to sleep, and so a super good neck pillow will probably go a long way.

Sean Pyles: Nice. Great advice. Well, thank you for talking with us, Meghan.

Meghan Coyle: Thanks for having me.

Sean Pyles: All right. Well, before we move on, a quick reminder, listener, to connect with me on social media. I have new accounts on TikTok and Instagram, where I'll be posting some of my favorite money tips and behind-the-scenes content from Smart Money. You can find me @SeanPyles_NerdWallet on both TikTok and Instagram. That's S-E-A-N-P-Y-L-E-S underscore NerdWallet. My goal is to make these channels a place where we can get deeper into our money conversations, but I need you all to make it work. So, one last time, you can follow me @SeanPyles_NerdWallet on TikTok and Instagram. And that is it for our This Week in Your Money segment. This episode's Money Question is up next, stay with us.

This episode we are talking with Melissa, a listener who is 32 years old and lives in Denver, Colorado. Melissa has a lot of questions about money, including whether to fire her financial advisor and maybe become a financial planner herself.

Liz Weston: All right. Welcome to the podcast, Melissa.

Melissa: Thanks for having me.

Sean Pyles: Melissa, I'm so excited to talk with you. And before we get into all of these money questions that you have, I'd love to hear a little bit about your current financial situation, some of your goals, concerns, all of that.

Melissa: Yeah, of course. So, my husband and I have a combined income of $250,000 before tax.

Liz Weston: Nice.

Melissa: Yes, it's lovely. We've worked hard to get there, for sure. We have 25K in savings, which is about five months of living expenses for us. And of course, it's in a high-yield savings account-

Sean Pyles: Love to hear that.

Melissa: ... giving us 4.5% interest-

Liz Weston: Good.

Melissa: ... which we love. And then, we have about 10K in checking, which really just includes a few thousand dollars as a buffer for planned expenses. I've got multiple checking accounts, our mortgage payoff accounts, our car loan accounts, so I can make sure money goes into each of those and I don't have to worry about those auto debits each month. We have about $26,000 left on a car loan. We got the car in December for $52,000 and have paid off half of it since December, but have significantly slowed down for a few reasons I'll mention. And we do about 10% each into our 401(k)s, max out our Roth IRAs each year, max out our high-yield savings account, and really try not to use it as much as possible. And then, do $200 a month into a 529 for our 2-year-old daughter.

Liz Weston: Aw.

Melissa: Yes, getting her ready for college well in advance.

Sean Pyles: I love to hear all of that.

Melissa: Yep. And my biggest debt payoff success was in 2021, we paid off $63,000 of my graduate student loans in nine months.

Liz Weston: Whoa.

Sean Pyles: Wow.

Liz Weston: That's impressive.

Melissa: So, very, very, very thrilled about that. And which makes the car loan even harder on my mental thoughts with, "Oh, we got rid of this debt and now I've got this car loan."

Sean Pyles: You mentioned that you've been pulling back on how aggressively you've been paying that off. Can you talk with us about why?

Melissa: Yeah, so I think it's been this overall mental struggle of what I kind of also call myself as a recovering Dave Ramsey addict. We really appreciated his teachings and principles to pay off the student loan, and go gazelle intense, as he calls it. But it's kind of made me develop this frustrating relationship with debt, in that I think about, "Oh, that $5 latte, that could have been going toward debt." And that's where we got the car loan paid off as much as possible until this point, but there's a lot of other things we want to be able to fund with that money.

And it's at a 4.25% interest, so about $78 a month goes toward interest to the car loan, which is really not that much. So, trying to balance... Even though my Dave Ramsey subconscious says, "Put all the money toward debt," I'm really trying to step back from that and get the car loan paid off faster than the five years it would be. But also, we want to be able to cash-flow some fancier annual vacations, and we want to be able to make sure we put enough toward the 529 for our daughter. The door handle broke on our front door the other day, so we want to be able to pay for that without feeling like if it's not going toward debt, it's not good enough in that sense.

Sean Pyles: One thing I think about a lot is that debt isn't inherently good or bad. It is a tool. It really isn't inherently a moral thing. It is something that you use to achieve the life that you want, whether that's student loans, or a mortgage, or a car. And going super hardcore into eradicating debt can feel great at the time, but it seems like you've come around to realizing that maybe you were neglecting other aspects of your finances, and just generally living your life.

Liz Weston: Sounds like you have really got your bases covered and what you're really striving for is more balance in your life. Does that sound about right?

Melissa: Yes, exactly. Why not enjoy some of life now while still thinking of the future? And I don't want to be so frugal now that future me has, I don't know, $20 million and not enough time to spend it.

Sean Pyles: And I think that balancing act that you're describing is something that people will have a continual evolution with. I really like to find my own personal balance between living for today, while planning and saving for tomorrow. Sometimes that means that I'm paying off some debt a little bit more aggressively, like I'm considering throwing a bunch of money at my higher-interest student loans right now just to get them off of my shoulders. But I do know that, hey, I have some trips coming up going into the fall and starting next year, so I want to make sure that I'm continuing to save money in my fun money account for all of those trips. And if I put a bunch of money into my student loans, that wouldn't be as easy for me. So, it's a continual balance.

Melissa: Exactly.

Liz Weston: And Melissa, you had mentioned, I think when you first reached out to us that your concerns about overdoing frugality kind of turned you off the financially independent retire early movement.

Melissa: Yes, I'd love to be a FIRE person, but the couple of Instagram pages that I follow, this person, I don't know, invests 80+% of their paycheck and their rent is $500 a month, and they have all these side hustles. And I'm like, "That's so great for you, but that's not doable unless I really pull things back," which I already have mentioned, I'm stressed out enough about. So, I don't want to totally get rid of the now to be able to do that. But at the same time, I like the idea of, someone else had put it, work optional, which I know is similar to the FIRE movement. But that still leaves it in my mind as, "OK, I may still be working." And I enjoy work for the most part, but that we would be able to scale back in hours potentially, or I could get a job with a pay cut and be able to enjoy the work and work less, but not have to feel chained to corporate America or whatever it is until the age of retirement, which just sounds terrible to me.

Liz Weston: Yeah, but you've also got that little reminder in your house that time flies, and you really need to pay attention, enjoy life in the moment, as well as working for a future that may or may not happen. It probably will get here, yes, but you don't want to miss that time with your daughter.

Melissa: Exactly.

Sean Pyles: Yeah, I struggle with the FIRE movement in some ways because it's such an impressive goal, and really, an even more impressive accomplishment if you can do it. But the idea of saving 50% plus of my income is just not something I'm prepared to do, because to your point, I want to go on vacations, I want to have nice dinners, I want to have really meaningful moments with my family that will cost money to do. And I'm not willing to live in a shoebox and only buy thrift store clothes to do that, but that's just my personal preference. So, again, it's right for some people, and I’ve talked with folks who have really made it work and it's impressive for them, but they also struggle with something that you've been talking about, which is going almost too far in the direction of frugality and making their lives more difficult for themselves, to the point where they feel guilty if they do want to go out for a pretty affordable dinner or something like that.

Melissa: Yeah, I mean that's where I'm at right now is I'll pick a menu item that's $10 cheaper, even if I really wanted something a little bit more expensive, and I might leave dinner a little less satisfied and should have just spent the 10 bucks. Do I need $20 million to retire? Maybe with inflation these days, maybe, but-

Sean Pyles: I mean, one thing I would love for you to maybe do is think about all of those times throughout the month where you are getting that menu item that's $10 less or you aren't getting that $5 coffee. How much is that over the course of an entire month? And then, how much is that throughout the entire year? Is that going to make a tremendous difference in your retirement savings over the course of your life? Those smaller ticket items probably won't as much as something like not having a car payment would, for example.

Melissa: Yeah, I mean, that's a good point. Frankly, I also got rid of monthly massages, which I loved, and that was probably 80 or 90 bucks a month.

Sean Pyles: Oh, that's a hard one.

Melissa: Yeah, every time I regret it.

Sean Pyles: But that's like a medium ticket item, so that one makes sense, I think.

Melissa: Right. Maybe I don't have the latte Tuesdays and Thursdays, and that helps offset the massage without making such a huge dent at the end of the month or the end of the year. Also, self-care, hashtag self-care is important, and I find myself sometimes really skimping on that in order to save a few bucks.

Sean Pyles: Right. And then, you'll end up paying for it later on if your body is not happy with you. All right. Well, you also wrote to us asking for help navigating a relationship with your financial advisor. Can you talk with us about that?

Melissa: Yes. So, I have had the same financial advisor for almost 10 years now, and he's also worked with my mom. So, well over a decade that he's been in the family. And I hadn't really thought anything about it until I listened to a couple podcast episodes or maybe read a book or something, just talking about the fees that you pay to work with a human instead of a robot. And since I'm at least moderately versed in a few things for investments and I know which stocks and ETFs and mutual funds I'm comfortable using, I said, "Well, what's the point of paying this person, whatever the fee is..." Which I didn't even know. I didn't even know what kind of fee that they're taking from my investment accounts. "Is it really worth it?" But at the same time, I also know that financial advisors do more than just pick stocks. I have worked a couple of times with my advisor to put together a long-term financial plan and talk about how to get there, which is a really, really important piece that even me as a... What's it called? An armchair financial planner.

Liz Weston: Armchair investor, yes.

Melissa: Yeah. And certainly, I'm not an expert, I'm not a professional, and he is, and he's been doing it forever. So, there is value in that. But is that value worth the mysterious fee that I have, which I assume is your 2% or so?

Liz Weston: Oh, do you know how much you're being charged? Did you find out?

Melissa: So, I am still waiting for the fee sheet from them. Disclosure of fees.

Liz Weston: Do you know how he gets paid? Is it a wrap fee? Is it commissions? Do you have any idea?

Melissa: I know there's very, very small trade fees. It's $6 per trade, but I think that was just for buying the stock. No, but I also know it's not the sketchy, maybe the commission, or whichever it is that I know that you're supposed to stay away from for someone doing something to their advantage instead of yours.

Liz Weston: Well, let me do my little wrap on this because it's really important to know that anyone can call themselves a financial advisor. There are literally no experience, education, ethic requirements, nothing. So, many advisors, as you know, collect commissions or fees for managing investments. Sometimes they collect those and they collect fees, so they collect both the commission and a fee, but that's all they do is manage investments, and they may not do that as well as a robot. A computer's running it 24-7. There's no human being that can keep up with that. Where the human beings bring the value is with comprehensive financial planning.

So, what we suggest is that people look at how their advisors are being paid, and NerdWallet likes fee-only financial advisors who are fiduciary. So, lots of F words. But fiduciary is the condition where they have to put your interest first. And most advisors are not fiduciary. Most advisors are held to a lower standard. It's so important for a lot of people to have a financial advisor, but they need one that's actually working in their best interests. So, let me ask you, Melissa, have you been happy with how well your investments are doing?

Melissa: That's another thing that had gotten me thinking about it because my IRA, that I had gotten set up in 2015, it was made up of about six individual stocks, and they've not done well. And even with the recent stuff that's happened over the last couple of years, I know we've gone back up quite a lot, but I'm still net negative $3,500 in my investments, and I don't like single stock. The rest of my portfolio is in the most aggressive fund mix, but it's on the S&P 500, and things like that, but I don't like individual stocks. And I didn't like that he wasn't as concerned about individual stocks, especially in my retirement account than I was. And I felt like, "Hey, I've missed out on multiple years of potential growth that I might've gotten with an index fund than with six stocks."

Liz Weston: Yeah, seriously.

Sean Pyles: This might be putting it in kind of stark terms, but the S&P 500 has more than doubled in value since 2015. And if you had had an index fund that mimicked that benchmark, you would've had an average annual return of nearly 12%. That's between July 2015 and July 2023. And you said that you've had a loss in that time.

Melissa: Yeah, yeah. Thanks, Sean. Appreciate the, uh...

Sean Pyles: Oh, just wanted to lay it all out there.

Melissa: Yes. No, and that was one of the things of, "What are you doing?"

Liz Weston: What's happening is that you have an incredibly concentrated portfolio for a small investor. And not to put too fine a point on it, but you've been paying fees to lose money.

Melissa: Yeah. Yeah.

Sean Pyles: So, I mean, it's hard because you have this social relationship with your financial advisor. So, one thing to think about is what do you want from a financial advisor who's managing your investments, financial gain or a more social relationship?

Melissa: I have a lot of friends. I've joked with my husband when we were making plans with friends and I said, "We have too many friends." I'm very blessed with friends. But no, I know that was a trick question you just asked. I want, obviously, the gains. The best I can relate to it is I have a couple of direct reports, and we're getting into performance reviews and negotiation. And I said, "Do you want to risk losing out on all this money just for avoiding an uncomfortable conversation about asking for a raise?" So, turn that back on myself. Do I want to risk losing additional money or not getting the gains that I want just because of an uncomfortable conversation? However, I think some of the overwhelm in finding a new one is how do you find a new one?

Sean Pyles: Yeah. Well, there are some great resources. One thing I'm thinking about as well with this, and it seems like you're kind of on this journey too, is the sunk costs fallacy. And the opposite of that, really, is cutting your losses. And it seems like you're about at the point of grabbing the scissors. So, if you are in the market for a new financial advisor, there are some fantastic resources that you can use to find one. One is the Garrett Planning Network. Another is XY Planning Network, and there's also the National Association for Personal Financial Advisors. Those are all great places to start to find fiduciary advisors.

Liz Weston: Yeah, and Garrett represents planners who charge by the hour. XY Planning Network is based on a retainer fee, like a monthly fee or a quarterly fee. And NAPFA represents fee-only planners of all stripes. They do tend to be more towards the assets under management, where they charge like 1%. And by the way, Melissa, all in, you really don't want to be paying much more than 1%. And that's if you're getting all kinds of advice and all kinds of help in a comprehensive financial plan. If you really are up to 2%, I would start to sweat, personally.

Melissa: Right. I don't know what the fees are, I hope they're not that high. But that's good to know that even 2 is high, so-

Liz Weston: Yeah, it's a learning process. We all are learning. And I've had friends who inherited their financial advisor from their parents, and they've all gone through this having a moment of going, "Why am I doing this? Why am I not doing as well as I could be doing just sitting in an index fund?" So, it is a process, but personally, if I'm paying somebody fees, and I do, I do have a financial planner, I want a lot of value in return. I don't think any advisor can beat the market consistently. So, what I want is to match the market with my investments, and then get advice on the rest of my financial life.

So, a CFP, a certified financial planner, can offer comprehensive financial planning advice, help you create a retirement plan, check to make sure you've got enough insurance, find you a great tax person, make sure your estate plan is in place and answer ongoing questions, which you're going to have. As your little one grows up, as you guys get closer to retirement, your finances are going to get more complicated, and having somebody in your corner can be really helpful. And again, CFPs are fiduciaries, so they're required to put your interests ahead of their own.

Melissa: Now, I do know that my advisor is a fiduciary, but are you saying that they should have known, quote, unquote, to not do all individual stocks? I know that some people like that, and I know one individual stock's a bad idea. But how do you know that they are acting in your best interest?

Liz Weston: That's a very good question, and sometimes you need to get a second opinion. What we learn in CFP school, because I'm also a CFP, is that it's very hard to get enough diversification with individual stocks. You simply can't own enough. You have to have a quarter million dollars or more to invest in the thousands and thousands of stocks that you would need to have a truly diversified stock portfolio. Now, if a planner is dealing with somebody who is gung-ho and wants to put all his eggs or her eggs in one basket, I guess the CFP just has to go along, but most of us are oriented towards making sure there's enough diversification. So, I don't know what's in your 401(k), I don't know what other investments you might have. I'm just saying if this is your retirement portfolio or any chunk of it, it really, really feels concentrated to me.

Melissa: Yes. Yeah. And that's why my 401(k) is in S&P 500 and the total stock market index as well.

Liz Weston: I could see a situation where somebody would come to their advisor and say, "Hey, I really want to roll the dice and I want to try these stocks." If these were just sort of given to you as, "Here is your option," and you didn't discuss it, I would have a problem with that if that were my portfolio.

Melissa: Yeah, they were. But it was me who came with the 401(k) information that I did on my own regard. So, hence the existential crisis.

Liz Weston: But did your advisor talk to you about what you wanted out of this account, what your goal was?

Melissa: I truly remember, "Hey, let's get you a Roth IRA set up," and that was it. We put five grand in it, and I didn't touch it until I knew about adding more to it about three years ago. And there's also the fine line of I know that stocks come and go in terms of some years are great, some years are not great, but it really opened my eyes when... My husband's IRA, for example, is in a fund that has done well or at least better. So, I said, "OK, something's wrong here if everything else is going well." And I also learned about the risk of individual stocks.

Liz Weston: So, it was a learning opportunity?

Melissa: Yes.

Sean Pyles: Well, speaking-

Melissa: I love learning. Love it.

Sean Pyles: Speaking of learning opportunities, Melissa, you are interested in becoming a certified financial planner and really mixing up your career. Can you talk with us about that?

Melissa: Yes. Speaking of existential crises, I have really loved personal finance and the personal finance space and world, and would love to help other people manage their personal finance. But specifically, I really like the idea and have a huge belief in people's thoughts around money. If you're always saying, "Hey, I'm bad with money. I'll never be financially secure," it ends up being this self-fulfilling prophecy. Or if you've had bad money memories, that's what you know and that's what you point your energy towards. So, I would love to be able to be a financial coach that I could work one-on-one with people to help them get over their negative thoughts around money, which really happened with me.

I hated budgeting. And my husband tried to push me toward it and I said, "Ugh, I don't want to." And then, I end up being the one obsessed about budgeting and paying off the loans. So, in fact, I'm staring right now at a poster I have in my office that said, "Money is always coming to me." So, I'm trying to think that at all possible all times. And I mean, you can't prove anything, right? But I was saying that for a long time and we got a refund from our mortgage company since we had overpaid in our escrow.

Liz Weston: Ah, and there it came.

Melissa: There it came. But it's like I found a penny. Well, that's ridiculous. That's not worth anything.

Sean Pyles: Still technically money.

Melissa: I found a dollar. Money's always coming to me. Yeah, still coming to you. But just finding all those ways that money is flowing toward you and helping other people feel the same. But also, Liz, back to your point of wanting to be legit, I don't want to steer people the wrong way, and I'd love to get that CFP certification to do that, but I've never changed careers. And I know people do it all the time, but I also know people don't do it all the time, and it's a risk and it's scary to think about totally swapping what I've known for my whole working life.

Liz Weston: Well, the good news is you don't have to do it overnight. I mean, getting your CFP is going to take a while. There's quite a bit of studying that has to go on, and then the test is an absolute bear. But I did it while working full time as a journalist. We've got some Nerds here at NerdWallet that are doing it after hours. It is challenging with a kid, no question about that. But you'll learn that over time. And then, typically, you can work as sort of a paraplanner for a financial planning firm to get the three years of experience that you need to get the CFP. You could become a certified financial coach. You actually mentioned the word financial coach when you were talking, and that's another designation you can get that doesn't have quite as much intensive education involved. So, there's lots of different ways to do this.

Sean Pyles: Another place you might want to look, Melissa, is the Financial Therapy Association because they have a great focus on financial education while also exploring the emotional side of money and our money histories, and how you can use a tactical approach to improving your finances while also understanding why you're doing what you do. And it seems like that's also an area that you're interested in.

Melissa: Yeah, absolutely. I think mindset shifts really lead you to be set up for success. And I'm a really big believer too, in the reason why for something and the rationale. And, "Oh, it makes sense that I am having a hard time cutting out the lattes because my parents always got me a snack when I went to the pool." I don't know what it is, but just helping explain and not judge yourself for these purchases, so you can move forward and acknowledge them, but say, "OK, but I'm not going to do that." I mean, it allowed me to pay off my student loans that quickly. I wouldn't have been able to do it without the mindset shift, so I think there's a lot of power in that. And also life is too short. And if I don't want to keep doing what I'm doing now, then I don't want to be miserable for the next 30 years in a job that I don't really like.

Sean Pyles: So much of financial regulation comes down to emotional regulation and yourself, and knowing how to be in the right head space to make a rational decision, even if you are feeling stressed or tired or scared, being able to recognize all of that and then be able to make that right decision for you in the moment. That's not, "OK, I'm going to buy all this stuff because it makes me feel good temporarily," when in a week, maybe you won't feel so good about that decision. So, I always love digging into the why as well because there's so much there that can help inform the decisions that you're making on a day-to-day basis.

Well, Melissa, we've talked about a lot during this conversation, but I do want to return to the issue of your financial advisor. And I'm wondering what you think your decision might be. Do you think you're going to stick it out with your current advisor and maybe have a hard conversation about how to course correct? Or do you think you might find a new advisor?

Melissa: Great question. I definitely think A, I need to find out how much I'm paying in fees. That's key. And maybe if it is more reasonable than I thought, that's definitely something to take into consideration. However, the larger issue being, am I getting what I need out of this relationship beyond what I'm paying for it? So, I will definitely talk with my advisor and understand what all is offered to me as well in addition to the annual financial planning. And then, it doesn't hurt to look. I've been told it's good to get three bids for things.

Liz Weston: Yes.

Melissa: So, I like the idea now that I know where to find a database of other folks that I can interview people and see if someone else might be a better fit. And then, be ready if I do have to have that hard conversation. And also, work on not talking myself out of said hard conversation if that's what it needs to come to.

Sean Pyles: Yeah.

Liz Weston: Good for you, Melissa.

Sean Pyles: Well, thank you so much for sharing this part of your life with us, and helping us talk with you about this big decision.

Melissa: Yes, of course. Thanks for having me on the show.

Liz Weston: Well, Sean, what'd you think about Melissa's situation?

Sean Pyles: I am so impressed with her. We just have the best listeners, can I say that?

Liz Weston: We do. Oh, my gosh.

Sean Pyles: They're all so smart and doing the hard work it takes to improve their finances. But I really sympathize with the difficult situation that Melissa is in, trying to navigate potentially finding a new financial advisor. And one thing that I'm left thinking about is that there are a lot of fish in the sea, so it might be worth taking some time to explore the different options. And another thing I'm thinking about is that a decision around a financial advisor is not permanent. If Melissa finds that they actually prefer working with that original advisor after maybe swimming around a bit and seeing what else is out there, that's fine too. Just being sure that they're doing their due diligence is maybe the most important thing here.

Liz Weston: Yeah, I think it's really important to know what you're paying your advisor, and she's getting into that. And also, to benchmark your performance to see how you're doing compared to similar investments elsewhere in the market. And it's really easy to just let it ride and think, "Well, I've hired somebody to take care of this for you," but nobody cares as much about your money as you do, so that's something you have to deal with.

Sean Pyles: Absolutely.

Liz Weston: And what do you think about her becoming a CFP?

Sean Pyles: I think it's great. I love that we would have someone who's so compassionate helping others manage their money. The only thing that I think about is what you went through. It's just how much time it takes and how you have to be really dedicated to getting the certification, because it's not an easy process. You're not going to do it overnight. But it can be well worth it if that's what you want to do with your life.

Liz Weston: Oh, I think just taking a few courses can be worth it, just to uplevel your understanding of how this all works.

Sean Pyles: Oh, yeah. Right. I mean, I took the first class a few years back, and I am still applying the information that I gleaned from that class all these years later.

Liz Weston: Exactly. So, it's not something you have to do overnight or you have to do the whole hog thing. It is a big investment of time and can be a big investment of money. But I think for a lot of people, it really pays off, not just financially, but in a life that they can really enjoy, helping other people.

Sean Pyles: Yeah. And that is all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at (901)730-6373. That's (901)730-NERD. You can also email us at [email protected]. Visit for more info on this episode. And remember to follow, rate and review us wherever you're getting this podcast.

Liz Weston: This episode was produced by Sean Pyles, Meghan Coyle, and myself. Kevin Tidmarsh and Kaely Monahan mix our audio. And a big thank you to NerdWallet's editors for all their help. And here's our brief disclaimer. We are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes, and may not apply to your specific circumstances.

Sean Pyles: And with that said, until next time, turn to the Nerds.