I’ve written a lot about my financial journey from clueless to doubling my net worth within 6 months. It has been a lot of hard work on the part of myself and my wife, Selenid. But it’s hard work that we have been super excited to undertake. Especially as we realized that improving our financial well-being had a major positive impact on our overall well-being. But there has also been an, up-to-this-point, unrecognized hero in our journey! A financial planner.
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You read that right!
We really just gotta dive right into this one…
A financial planner sparked our success
This may seem a bit surprising. Especially since you likely know that we now manage all aspects of our finances without a financial planner.
And I am a huge advocate that pretty much all doctors can and should manage their own finances. By the time you learn enough to tell good from bad advice, you know enough to do it yourself. So why pay hundreds of thousands of dollars in AUM fees over your investing career for something you can do yourself?
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But, this is what I know now, not what I necessarily knew back then
And as we began our financial education, we had a financial planner named Brian Z who managed my wife’s rollover IRA and my meager taxable account from basically a lifetime of birthday checks. It all totaled less than $25,000.
To be honest, I didn’t know how he was compensated. But it was with a 1% AUM fee. So, it’s safe to say that he wasn’t making a lot of money from us.
I also had no idea whether he managed our investments passively or actively. Eventually I understood that he managed them passively. I learned both of these facts after we had stopped using his services. But more on that later.
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Anyway, Selenid and I were just starting out financial journey and education
One of the first tasks that we set out to do was create a budget for our current situations (as trainees in NYC) as well as for our future lives once I graduated and became an attending in a few months.
This required forecasting some variable and figuring out things like how to estimate taxes, figure out how much of a mortgage we could afford, and so on.
Being 100% transparent, one of the main things we felt we needed to figure out was how much house we could afford to buy. We had heard the arguments of renting vs. buying a house. We each favored buying but only if it fit our financial plan and we found the perfect house. Otherwise we would plan to rent as I have mentioned before.
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However, we couldn’t know if a mortgage price range fit within our financial plan unless we knew what our budget and plan actually were. And we had just been told by our bank that we could be pre-approved for a house over $1.5 million. This really didn’t seem right. So we were confused.
We ended up reaching out to our financial planner
We did this to see if he could help review our financial plan with us as we created it. Also, we wanted help figuring out how mortgages worked and what was a reasonable mortgage for our situation.
He spent a total of probably 4-5 hours on the phone with us during evening hours going over our plan, our budget, and other estimates. He helped us figure out our debt-to-income ratio.And he even sent us the spreadsheet that became the basis of our simple budgeting plan that I shared with all of you!
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Beyond that, he shared good, solid financial advice. Like keeping our house less than 2x our income. Like keeping our debt to income ratio less than 28%. How about setting a savings rate of at least 20%? Like creating an emergency fund first.
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At this stage of my education, I knew some financial basics but had not really reinforced enough to necessarily tell good from bad advice with 100% accuracy. We were very fortunate to have someone giving us very good advice.
But Brian was not the first financial planner that we reached out to
Before reaching out to Brian, Selenid and I had called the financial planner that my mom and stepdad used (and still use).
They told us he was a magician. He did stuff that other financial planners just did not know how to do.
So, we wanted to talk to him. Maybe he could help us.
We called him. He hurriedly told us about his philosophy which included puts and options. I asked for guidance with some general financial planning strategies. I was told this was something we could discuss once we had some investments with him.
Remember, this was right at the beginning of our financial education. The difference between right and wrong advice was still blurry for us.
Even so, we ran far, far away!
(I’ve warned my mom and step dad but so far, no lucking inducing a change.)
A few days after our meetings, we broke up with our financial planner
It was really hard to do and quite honestly, uncomfortable.
Brian had gone above and beyond his professional responsibilities and spent non-work hours answering our questions and helping us.
Yet, a few days after this, I did have to let him know that we would not be using his services and would be transferring our investments to a self-run account. Ultimately, we used this money to buy our first investment property which now is cash-flowing over 22%.
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Obviously, we let him know our goal of managing our own finances and why we were pursuing this. He handled it very graciously.
But, to this day, the truth is that Brian Z., the financial planner, helped to spark our financial and wealth-building journey
And we were lucky. As the story illustrates, we just as easily could have been steered in a very wrong direction.
So, this story is less an illustration of how I think others should go about their financial planning. More so, it is an illustration of how important it is to be able to tell good from bad advice. We were right at that line and very well could have missed it if we had not read the books and blogs that we had to self-educate ourselves.
So, make sure you start and continue your financial education to make sure you reach your financial freedom!
These posts can help!
- 7 Financial Habits of Highly Successful Physicians
- 5 Easy Steps for Physicians Who Hate Personal Finance
- Important Money Lessons That I Learned From My Wife
- What Do You Need to Include in Your Savings Rate?
What do you think? Have you used a financial planner? What was your experience like? How did you financial education begin? Let us know in the comments below!
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2 thoughts on “How A Financial Planner Sparked Our Wealth Building”
Excellent post! I had never seen the budgeting spreadsheet before and just downloaded it from your old post. I’m going to use it as my new budgeting template. This is great! Thanks Jordan and Brian!