A while back I met with a Dave Ramsey Endorsed Local Provider (ELP), because I did not know who I could trust with my money. Dave seemed trustworthy so I gave his ELP a shot.
Searching For Personal Finance Answers
When I started my financial journey, I knew nothing about money or investments. Luckily, I didn’t have too big of a debt problem of my own, but I had a lack of financial investment knowledge and proper money management. I was able to save money, but I didn’t know what to do with it. I listened to Dave Ramsey on the radio for investment advice, but all he ever recommended was to call one of his ELPs, or “Endorsed Local Providers.”
The idea of meeting with a financial adviser didn’t sit well with me because I knew most advisers work off commissions. However, I found Dave Ramsey sounded trustworthy, and I subscribed to much of what he taught. Due to this, I logged onto his website and put my zip code in to find a local ELP that I could visit.
With a quick search, I was referred to a local investment firm who quickly called me to set up a consultation. I set up the consultation for a later date and did some research of my own on Dave’s ELPs’. I found that in order to be a Dave Ramsey, “ELP” you have to pay several hundred dollars to Ramsey Solutions and you have to agree to “have the heart of a teacher.” In addition, you are required to subscribe to his methodology in order to receive the endorsement. The more I researched ELPs, the more I found they were a money generator for Dave Ramsey. This isn’t to say that they were not trustworthy, but it made me skeptical.
Meeting With Dave Ramsey’s Endorsed Local Provider
When my wife and I walked into the office, I scanned the ELP’s personal pictures sitting on her desk and I looked at the disorganization of strewn papers everywhere. First impressions are important to me, and it didn’t seem like this ELP was squared away or on top of it.
We sat down and chatted to get to know each other. This lady was in her 50s’ and was talking about how she is doing her best to put her daughter through college. As we made small talk, I was judging this lady during the conversation. I couldn’t help it. If I’m going to be receiving financial advice from someone, I want to make sure they have their own financial life in order. The more I talked to her, it was clear she was knowledgeable about investments, but she didn’t necessarily know how to handle her own daily finances.
Needless to say, we spoke at length about my finances and my goals and dreams, and I told her I would consider working with her in the future. We parted ways and the truth is, I had no intention of returning. She only solidified my fears that I started out with. She was not the expert I was looking for in order to educate and direct me with my finances. It was apparent I was in a better financial position that this “expert” who was endorsed by Dave Ramsey. The ELP called me several times after that, obviously desperate for my business which only pushed me further away.
My Own Journey
Since I was in the same position and still didn’t trust any financial professionals I had met, I decided I would educate myself on personal finance. I started out by reading every one of Dave Ramsey’s books (even with the bad ELP experience). After that, I branched out to Tony Robbin’s finance books, and then started checking out every investment and finance book I could find at the library. With each book I read, I learned a little more. I learned who I could trust and who I could not. I learned who was selling books for profit, and who was selling books to actually help people.
What is a Fiduciary?
Several times I came across the term “fiduciary.” I had never of it and I was curious as to what it meant. I learned that in the financial world, there is a ton of misinformation and deceptive people – but there are also those who genuinely want to help others succeed.
A fiduciary, in the financial industry, is someone who is legally required to offer the best financial advice and direction to their client – even if it’s not in the best interest of the fiduciary’s business. For instance, if someone is truly a registered fiduciary and acting as one, he must recommend the investment portfolio or fund that is best suited for you personally, and not the one that will offer him the biggest commission. Due to this, many fiduciary’s charge a flat fee to their clients because they don’t work off commissions like regular brokers do.
The more I learned about fiduciary’s, the more I liked the idea. They charge around 1% to manage your investments and generally don’t work off commission. Commissioned sales are terrible for the consumer because the consumer is at a disadvantage. If you have ever been to a car dealer – you know what I mean.
As I delved more into the world of finance, I came across a shocking fact. Dave Ramsey’s ELPs’ are NOT fiduciaries! Dave Ramsey, who touts his commitment to helping people, does not require his endorsed financial advisers to work in the best interest of their clients! This hurt my impression of Dave Ramsey because it was apparent he was not willing to restrict his endorsements at the risk of hurting his income…
As I talk about fiduciaries, do not be fooled into thinking that they are the end all, be all of finance. There are people who are fiduciaries, who are also brokers that work off commission. They can wear their fiduciary hat one minute, and take it off and put their standard broker hat on the next minute.
Brokers Are NOT All Bad
I have been giving the standard broker a hard time in this article but I want to defend those honest brokers who are out there. There are many brokers who are not fiduciaries, that do put the interest of their client before their own. Many brokers give excellent financial advice and are the right choice for people. Some commission-based brokers act as fiduciaries without the official title. The fiduciary label is just an extra layer of protection that you can use towards your choice in a financial adviser.
Who Can You Trust?
So how does anyone win? If there are genuine people out there in between those who are trying to swindle you, how do you find them? I would strongly recommend educating yourself as much as you can. All of this financial information may be extremely boring to you and I don’t expect you to be an expert. For your own sake, at least educate yourself in the basics of finance (by reading more of my blog) 🙂 By educating yourself, you will be able to recognize bad advice when you hear it. If someone recommends putting all your money in Amazon, you can quickly identify that putting all your eggs in one basket is a terrible idea. For more about investing in mutual funds, check out my related article, Exposing The Mutual Fund Industry.
As far as a financial adviser, look for someone who will teach you without pressuring you to make a purchase. Ask them if they are a registered fiduciary and if they are not, ask why? Look for people who add value to your life and educate you before you give them your business. Find an adviser who has his or her financial life in order. Dave’s saying of, “don’t take advice from broke people” rings true even in the financial advisor world. The fact that you are on this blog reading my articles shows that you are headed in the right direction.
It’s about establishing trust and credibility. Taking financial advice from broke people is not a good game plan. I hope with the more articles I write, the more you can see that I have a genuine interest in helping you succeed in your financial life. Trust is earned and should not be given freely – especially in regards to your money.
As I continue on my own financial journey, I want to write about things you are interested in. What money questions do you have? Let me know, I will search out the answers and get back to you. I may also create an additional post about your topic if it’s something that can help others. Please comment below and subscribe to my blog via email if you have not already. I look forward to reading your comments and please let me know if there is anything I can do to help! Keep at it my friends – you work too hard to be this broke!