Ready For Retirement
Ready For Retirement
Here's the Most Unethical Thing Advisors Do
Some of the most damaging financial advice doesn’t look shady at all. It looks responsible. It looks optimized. And it looks great on a spreadsheet. This episode breaks down one of the most unethical practices James sees in financial planning, not selling high-fee products, but using projections and tax strategies to justify an advisor’s fee while ignoring the life those numbers are supposed to support.
The problem starts when advisors lead with “value creation” instead of purpose. Tax savings, Roth strategies, and optimized projections can be manipulated to look impressive, especially when spending is kept artificially low and retirement is delayed by default. The math may be correct, but the outcome can quietly cost years of freedom, experiences, and time.
Using a real case study, James shows how the same tax strategy looks wildly different once spending actually reflects the life someone wants to live. When travel, generosity, and earlier retirement enter the plan, the projected tax “value” shrinks, not because the strategy is bad, but because the goal changed. That’s the point most people miss.
This episode reframes what good advice should look like. Financial planning should start with how you want to spend your time, who you want to be with, and what matters most in your life. The tax strategy, investment strategy, and cash-flow plan exist to support that, not replace it.
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Advisory services are offered through Root Financial Partners, LLC, an SEC-registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. Viewing this content does not create an advisory relationship. We do not provide tax preparation or legal services. Always consult an investment, tax or legal professional regarding your specific situation.
The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.
Comments reflect the views of individual users and do not necessarily represent the views of Root Financial. They are not verified, may not be accurate, and should not be considered testimonials or endorsements
Participation in the Retirement Planning Academy or Early Retirement Academy does not create an advisory relationship with Root Financial. These programs are educational in nature and are not a substitute for personalized financial advice. Advisory services are offered only under a written agreement with Root Financial.
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I'm going to show you the most unethical thing I commonly see financial advisors do. And I'm not talking about selling high-fee products. We already know to look out for that. I'm talking about delivering advice that sounds good when you first hear it, but ends up costing you more than you might imagine on the back end. It's advice that looks responsible in a spreadsheet, but can quietly cost you years of freedom. So by the end of this video, you're going to understand how advisors can manipulate software to justify their fee. And finally, when working with an advisor might actually make sense compared to when it doesn't. So let's start with that question. I get that question a lot. When does it make sense to work with an advisor? Now I'm an advisor. I don't actually think it makes sense for a lot of people to work with an advisor. And I'll get to that in a little bit. Here's where I do want to start. Oftentimes, if you're exploring work with an advisor, the question at the top of your head is how do you justify your fee? When does it make sense to work with you? Essentially asking, is the price I'm going to pay for you going to be offset by the value I'm going to receive by you and your services? So the question that commonly comes up is, hey, can you show me the value I'm going to get that will justify me planning your fee? And here's what I say I say that is actually quite a dangerous question. Now I get it, I understand it, and I'm going to answer what I think you're asking, but let me show you why this is actually a very dangerous question. I don't want to just tell you this. I want to actually show you what you might see for an advisor to justify their fee. So here's an overview of Jim and Sally's situation. 61 years old, a couple million dollars split between different accounts. And the typical advisor plan is going to be pretty basic. Jim, Sally, let me show you working until 65. Let me show you spending 5,000 per month. You can see that in the goals here. Not really going much further beyond that. They're saying, let me show you what you'd be on track for, and then let me show you how my fee might be justified. Then let me show you the value I might be able to create for you. So you can see here, here's the goals, retirement 5,000 per month. And when they look at this, a couple things are going to stick out. Number one, Jim and Sally, you're in a good spot. So so far, so good. Why do you need an advisor? Well, let me show you why you might need a advisor. I'm going to this tax tab and I'm going to show you what a good tax strategy can actually do for you. So Jim and Sally talking to clients here, showing them why I'm going to justify their fee. Here's your taxable income here in this green bar. You can see here's where it is when you're working. It's going to drop off when you retire. Then it's going to pick up again down the road. Let me show you. And they go through some projections, they toggle some of these here, talking about the equity allocation, where to hold it, talking about with withdrawal sequence, talking about Roth conversions. And they'll say, if we do all this, let me just refresh the screen here. Jim and Sally, look, if you work with me, I can add$900,000, in fact, more than$900,000 just with one simple tax projection over the course of your lifetime. So sure, you might be paying me$15,$20,000 per year, but that seems quite justified if I can add almost a million dollars to the value of your plan. Now, so far, the math isn't wrong. There's nothing incorrect about these variables. This is a good thing to do, but here's why I say this is unethical. This is being shown as a thing that should pull you in or that should lure you in and say, okay, I should work with this advisor, when they've completely missed the bigger picture. Not once do they actually ask Jim and Sally, what do you want your life to look like? What do you actually want to do? My guess is when you think of a life well lived, it's not just about implementing the perfect track strategy. What trips do you want to take? What's meaningful to you? Who do you want to spend your time with? What do you want to spend your days doing? And if you don't go there, all of a sudden you start to trigger this part of the mind that says, look at this value, look at this thing that I can do to justify my fee, but it misses the bigger picture. And you're probably thinking, so what? If they're adding value, I can figure the rest of the stuff out. But let me show you why this actually matters. By the way, as I'm going through this, if you want access to the same software to run projections, you can get access in the Retirement Planning Academy. Link is in the notes below. But take a look at this. What should have been done? What a good advisor should be doing with Jim and Sally is yes, doing tax strategies, but not starting there. They should be starting with what do you actually want retirement to look like? And here's what I mean by that. We haven't traveled at all so far. This is zero.$5,000 for basic expenses, maybe that's enough. But if I see a 100% probability of success, my mind's not going straight to, oh, that's awesome, you're in a good spot. My mind's going to you're probably being too conservative with your spending here. What else might you want to do? So as we start exploring that and start talking not just about numbers, but start talking about what those numbers represent. More time doing cool things with friends, more time doing meaningful things with family, more money that you can gift to charities or to people you care about, more time traveling. We can start to fill this out and we can start to look at what might this look like if you were to spend more than you originally thought you might want to. And by the way, this is just one thing that we can do here. We haven't even explored yet, Jim and Sally, do you want to retire earlier? You know, I'm shown you work until 65 because I'm your financial advisor. That's what I think you should do. Set that aside. If that's what the financial advisor is saying, that's probably not advice that's perfectly aligned with what you want. When do you want to retire? What does life look like for you? What are the things that bring you the most amount of meaning and value and purpose in your life? So as we start having those conversations, we start connecting these dollar amounts to what you actually want your life to look like, which is the only reason you should be doing financial planning. And as we start to explore this, what we can see is Jim and Sally, you're still in a really good spot. But here's the thing you're in a worse spot than you initially were. If we're just looking at your final portfolio balance when you die as a singular factor that we're focused on. Unfortunately, that's where most people's attention goes. That's how they quantify success, but it's completely disconnected from what actually is successful, from what actually brings value to what you should be doing. But here's the other thing. If I go back to this tax analysis, you know, this advisor, they just said we can save you$900,000 plus dollars just with this one simple strategy. And again, the math is accurate. There's nothing about this that's incorrect. But now look what happens if I run the same exact analysis, not on the base plan, where they retired at 65, only spent 5,000 per month, never did anything beyond that. When I do that, look at this number. That number goes down by half a million dollars. So what's the unethical thing I see advisors doing? I show advisors not reflecting what life should look like because in doing so, it doesn't allow them to fully quote unquote justify their fee. Now my tax strategy is only saving you$400,000. Well, I could get a lot more clients. I could do a lot better job of pitching people if I showed that number to full$900,000. So this is where I want you to be careful. This is where I want you to understand that tax strategies are good. Investment strategies are good. All these strategies are good, but these strategies should be secondary to the life that you want to live. First, optimize for what you want to do, who you want to spend time with, what you want your life to look like. Then within the confines of that or within the guardrails of that, then how can we optimize our tax strategy to be the best it can be? Then how do we optimize our investments, our cash flow plan, our insurances, our estate documents, all those different things should support, not be the driving factor behind what we're doing. So the core insight here is the tax strategy did not change. The life did. But by life changing, it made the tax strategy look less appealing, look like less of a thing that an advisor could use to say, I'm gonna now justify my fee. So that's why I want to go back to that initial thing. Why is it dangerous to ask an advisor to justify their fee? And of course, by the way, I'm saying this somewhat tongue in cheek. You should be asking the advisor that. You should be making sure that if you are paying money to anybody, not just an advisor, but any service professional, is their value that you're receiving? I just want you to be aware of some of the things you might see to justify a fee when that shouldn't be the thing, that shouldn't be the reason you're actually working with an advisor. So that being said, why should you work with an advisor? We already saw it's not just to show you a tax strategy that can be manipulated. It's also not to give you the right investment portfolio. If all you need is investments, you could build a great investment portfolio with two, three, four very low-cost ETFs. Could you do better? Probably, but that's a good, solid starting point depending on your situation. But the true, real reasons why it makes sense to hire an advisor, why the people who are happy they hired an advisor did so has nothing to do with those things. It is about tax planning, but only when that's integrated with spending that aligns with your life. It's helping you understand social security planning and optimization. It's helping you understand Medicare, healthcare options, what you should choose, why and when. There's estate planning, there's behavioral planning, there's making sure that you have someone set up to help your spouse if they're not the financially inclined partner in the relationship. But more than all of that, the number one reason you should be working with an advisor is because time is your only non-renewable currency. The more time you spend obsessing over this and obsessing over the tax strategy and obsessing over running a projection and then rerunning it and rerunning it and rerunning it, all of that is time that you could be using to spend on things that you actually care about. That's time that you could be using to spend with your spouse, to spend with your family, to spend doing things that will bring true and lasting joy. That's why at Root Financial, when we're working with clients, they remain the CEO of their life. We are the CFO, making sure the financial operations are fully supporting what they want that life to look like. So going back to that advice advisors give. Advisors will say, pay me 20,000 per year and I'll more than offset it in taxes. Yes, the math is true, but that should not be the reason that you hire someone. The real reason is a good advisor will show you when you can retire, how much can you spend, how can you align all the things you're doing from a financial standpoint with what a life well lived looks like. And the warning here is if the advisor only spends time trying to quantify how the value they're gonna provide is going to offset their fee, it probably means there's some projections happening that are optimizing for the financial at the cost of the personal, at the cost of what your life could be. Now, before we wrap, I want to tell one quick story. I had a client and she would tell the story of her brother. And her brother would save and save and save and work and work and work and optimize and optimize and optimize. And he had all the spreadsheets and everything was prepared. So much of his time he spent obsessing over the financial plan. He knew he could retire, he knew he had enough, but he always felt like doing this for one more year and giving just a little bit more attention would give him the peace of mind that he could finally do so. And then one day he passed away unexpectedly. And as he was telling me this, I could tell he didn't have a plan. He just had a spreadsheet. And the unfortunate reality was because he spent so much time obsessing over this, it pulled him away from actually being able to enjoy any of this. Even worse, not only did he pass away, but when he passed, his wife was left without any idea of what was actually going on. All she inherited was a mountain of spreadsheets and a whole bunch of different accounts, but she had no idea what the strategy was. She had no idea what her life could look like. She had no idea what she should do next because she didn't have a plan. She just had spreadsheets. And it was the spreadsheet that he had been optimizing, not the life that they could live together that he had been optimizing along the way. So don't optimize for spreadsheets when you could be optimizing for time with people you love. My hope for you is that you don't turn 90 years old one day and look back on your life and say, I missed all the things that I really wanted to do, but at least I had a perfectly optimized tax plan along the way. That is not a fulfilling life. That is a life you're gonna look back on with regret. So look at what matters most and then make sure the financial pieces are in order to fully support that. Now, this video isn't a video of me telling you you need a financial advisor. As I mentioned before, many people don't. But if you're looking at this and you've been in the situation, you're saying, I really do need someone to help me make some of these decisions. This is exactly what we do at Root Financial. Click on the link below. You can go to our website and see the services we offer, the types of people that we serve, or scan this QR code right here. That QR code will take you right to a page where you can schedule time to talk with an advisor here to see if this might be a good fit. Because yes, you want the financial details covered. Those are crucial. Those are the things that are going to be additive to what you can do in retirement, but it will never replace the life that you should be living. So get the financial plan dialed so that you can focus on what actually matters. And if an advisor can help with that, that's a wonderful thing to have. The takeaway I want for you is to understand that retirement planning is not about dying with the biggest balance, it's about getting the most out of life with the money you have.
