Stop Worrying About Your Financial Advisor and Start Finding the Right One

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1:13Visit spectrum.com slash business to learn more. One more time, that's spectrum.com slash business. Restrictions apply. Service is not available in all areas. I see you. Avatar Fire and Ash is now streaming on Disney+. It's the film critics are calling the best Avatar yet. A true epic and completely jaw-dropping. This is the only purest thing in this world. Return to Pandora on Disney+. It will be an adventure for the whole family. And watch the Oscar-winning phenomenon at home. This is sick! Avatar Fire and Ash, now streaming on Disney +, rated PG-13. Psychopaths, narcissists, Machiavellis. you could fairly describe these types of people as evil, along with scammers, pedophiles, and let's say murderers.

2:02Should we add financial advisors to the list? That's a question that came across our transom and one that we'll tackle head on. 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 Piles. Later this episode, we'll be asking a really big question. Are financial advisors evil? Shoot, I mean, I certainly hope not since I am a financial advisor. But first, our weekly money news roundup where we break down the latest in the world of finance to help you be smarter with your money. Our news colleague, Rick VanderKneif, is back and he's talking with a guest about something truly evil, identity theft and scams.

2:43Hey, Rick. Hey, Sean. It's great to be here. And yes, We're here to talk about scams and ID theft. The Identity Theft Resource Center released its 2026 Trends in Identity Report, and it's got some new ways in which people are getting scammed, and we all need to know what to watch out for. So last week, I spoke with Mona Terry. She's the ITRC's Chief Operating and Programs Officer, and here's our conversation. Mona Terry, welcome to Smart Money. Thanks so much, Rick. Glad to be here. I'd love to start by touching on some of the trends that you're seeing in your latest report. For instance, more than one in four victims who contacted the ITRC were now dealing with two or more simultaneous incidents.

3:26Can you walk listeners through how one compromised account can cascade into a full identity crisis? One of the things that's jumped up is people saying that their devices have been hacked and then they're finding out that their email account was taken over or their social media account was taken over. They were in a data breach and it was their username and password. And now they're finding other accounts that with that username and password have been impacted. So it's no longer someone coming to us with kind of a one and done type scenario. It's really, hey, this one thing happened and now I'm starting to realize there's lots of other issues.

3:57Okay, yeah, that touches on another thing that the report spells out, unauthorized device access up something like 78 % year over year. Can you describe what this looks like and what the impacts could be? Yeah, I think what's hard for us is when people come to the ITRC, they're like, my device has been hacked. My phone's been hacked. My computer's been hacked. But they don't know how. They don't know what's happening. So the biggest concern for us when people say their device has been accessed is what's available, right? So what pictures do you have stored? We know that there's certain apps that don't close automatically.

4:31So emails, right? Email accounts typically don't close automatically. Social media accounts don't close automatically. So it's really understanding what apps are downloaded on that phone, what victims have kind of open already they don't log out of, and then what is protected. And then we kind of walk through what are all those apps, what's open, and what might happen, and walking through kind of all of those steps. Is there something particular that someone should do the moment they suspect their phone or laptop has been accessed without their permission? Yeah, disconnect from the Internet is the very first thing.

5:01Disconnect, especially if someone's installed malware, if you really don't know what's happening on your device, and then logging out of anything that's logged in. Here's a stat that caught my attention. Among victims who reported three or more financial impacts, the report says 0 % reached resolution. What's broken in the system and who bears responsibility for fixing it? I think what's hard with the financial impact is if it's something simple, like there's a credit card charge you don't recognize or kind of a single charge. A lot of times those are easy to fix and quick to resolve. It's easy to detect that type of fraud.

5:36But when it's more complex types, especially when it's new accounts being established in someone's name, that type of financial account is a lot harder to recover from. We know that the more accounts that have been accessed, right, so people need that immediate access to their money. So when those accounts are compromised and they're having to wait the 30 days, right, to go through that fraud process, they maybe didn't provide the right information up front or they aren't able to successfully show that it was a thief that was in their account, not themselves. I think that's where it starts to get a lot harder.

6:05So it's that burden of proof is really on the victim. So I think that especially when you're dealing with something like your finances, that's something that's impacting your everyday life. And so I think that, right, your emotions get involved. Everyday life is getting involved, especially if the accounts are with different institutions. Every institution has their own resolution process. So, right, you see one account with one institution, and that's going to take a certain amount of time. But as that goes across other institutions, it takes that much longer. Let's talk about scams a little bit.

6:35The report says that in 74 percent of what are called account problem scams reported to you, the victims shared high value PII or personally identifiable information. What kind of information are we talking about? It really depends on the scam. So when we know with job employment scams, they're sharing the most sensitive information. So they're sharing social security numbers, driver's licenses, those really super sensitive pieces of information that thieves can then misuse in so many different ways. A lot of times it's account information. So login information for certain accounts. Sometimes it's just financial information just up front.

7:15So it's just a lot of different types of information, but almost always involves some type of personal information. So a driver's license, something to identify that person as themselves. How do we know when we're being scammed? What are some of these scams look like? The biggest red flags are that sense of urgency. So kind of they start in kind of really hard and fast and, hey, there's a problem. And before you have a chance to start thinking through what's happening, they have you emotionally reacting to what's happening, right? You're going to be thrown in jail and kind of all of these big things that gets you to think, really not think and use your kind of react with your emotions.

7:46They're getting really good at that. And so I think that's the piece that is a big red flag is anything that says you have to take action right in that moment. You can't pause. You can't stop. You can't take a moment, call them back. Anyone who says you have to do something right now and you can't take a moment for yourself, that's the biggest red flag. We see that's where kind of the scammers have moved. They want to try and keep you engaged and just kind of throwing things at you at rapid fire for as long as possible to keep you on the phone as long as possible. So I'd say that's kind of the biggest red flag that you're dealing with.

8:17A scam is you have to do something right this moment and that you can't talk to anyone else about it is another red flag. I'd say those are the two biggest red flags we see. Is it too early to know if AI is changing the ID theft landscape? I think it is. I think what we are seeing is that AI is making a lot of those attempts to reach people more realistic. So if it's messages, whether it's text messages or email, they look like they're from a either an existing institution or company or it looks like a legitimate company. Right. If you're applying for a job with a company you're not familiar with, they have a website that looks real.

8:54They have people that look real. Everything looks legitimate. And I think that's where A.I. is really helping. I also think that where thieves may not have had the technical skills or the skills to really kind of enact their things at scale, AI is enabling that. So I think it's too soon to tell to what degree, but we absolutely know we're starting to see more of it. Are ID crimes in general getting more sophisticated? And are there more of them? I feel like the number of scam texts and phone calls I get is increasing pretty steadily. As the thieves become more successful, they are getting kind of braver.

9:30And so they are reaching out more. I do think that also because we are seeing, like we talked about, multiple types of identity theft. So it is becoming more sophisticated. I know the types of identity theft that we're hearing about at ITRC, we're just hearing more about people's information actually being misused than just hearing about compromises of information. So your organization works with real people facing real problems. Can you share any anecdotes about identity theft victims and what this looks like to them in real life? Yeah, it runs the gamut. I mean, I think it's people's everyday life.

10:05So their checking accounts, their social media accounts, kind of things that they interact with every day. We know that people are getting into those things like Venmo, right, where they're sending money to people. They're kind of buy now, pay later accounts. So they're getting into the accounts that people use every single day. And so it kind of goes from simple transactions to things that are a lot more complex, like someone committing a crime in their name. We had a parent, for example, who was renewing their benefits and they weren't able to because it showed that their child was working. Someone had used their child's Social Security number for work.

10:38And so they were denied those benefits because it showed that the child was applying, even though the child is a minor. So talk us through what the emotional impact can be in addition to over and above the financial impact. Yeah, people are talking about they feel angry. They feel frustrated. I think the one that's hardest for us to hear is scam victims feeling like it was their fault. They felt like they were to blame for what happened. Like you said, it's not just the financial impact, but it's really that serious emotional impact. We know the more serious the identity crime is, the more serious the emotional impact is.

11:10So we know that people who are facing criminal identity theft, for example, face higher rates of depression. It definitely has a serious emotional impact. So it sounds like one general takeaway is that being vigilant and taking maybe some of the right protection measures can help prevent a financially devastating mess. What's your main advice for people to try to avoid what can be a truly awful experience? The biggest things are freeze your credit so no one can open new financial accounts in your name. Set up any type of protective kind of monitoring that you can on your accounts. You know, you can set an alert for a dollar limit over a certain dollar limit.

11:48Kind of anything that you could do to regularly review your statements. Unfortunately, a lot of it is on the individual, but staying on top of those, setting up alerts to help automate that, freezing your credit, using unique passwords, setting up multi-factor authentication where you get that text code right to your phone, or using an authenticator app, setting up pass keys, making sure those are unique for each account. And really taking the time to do that with all your accounts. I think that we had a victim who had set up multi-factor authentication for all of their new accounts, but they had an older account that they had not even thought about doing that for.

12:22And the thief was able to get into that account and they were locked out. So really just making sure that everything you're doing for all of your new accounts, you're going back and looking at all your old accounts as well. We'll post a link to your annual report, along with NerdWallet articles on identity theft in the show notes. Mona Terry, thanks so much. Thanks, Rick. up next even though we just profiled some real evil elizabeth joins us and we'll answer a question that came to us asking if financial advisors are evil but before we get into that a reminder to send us your money questions whatever's on your mind hit us up on the nerd hotline at 901-730-6373 that's 901-730-NERD you can text us or leave us a voicemail there you can also email your questions to podcast at nervala.com or drop us a comment on Spotify or YouTube.

13:09We'll be right back.

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14:30That's quince.com slash smartmoney for free shipping and 365 day returns. Quince.com slash smartmoney. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the Unreal College Deal. Everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox Game Pass Ultimate with a custom color Xbox wireless controller. Learn more at windows.com slash student offer. While supplies last, ends June 30th. Terms at aka.ms slash college PC. Is it really possible to get unbiased financial advice without getting ripped off?

15:15And can you actually trust any financial advisor to have your best interest at heart? Today's question gets to these issues and more. The question is pretty long, so Elizabeth and I are going to trade off reading it. Here we go. Hey, Sean and Elizabeth, I would love your perspective on a debate I've been having in my head for years. Are all financial advisors evil? There's a little hyperbole there, but seriously, I've wrestled for years with how and or whether to enlist the services of an advisor. I've long been persuaded by books like The Index Card, which advises caution with advisors. And more recently, I've been reading Ramit Sethi, who is much bolder.

15:50He says never allow an advisor to manage your assets and run away as fast as you can if they also sell products like insurance and annuities. Part of me feels like I benefit from another set of eyes on our finances, even just to tell us we're good. And I know there might be some tax and other blind spots where an expert might be helpful. But, but, but I just can't get over my suspicion that the entire profession is built on one massive conflict of interest. If personal finance is simple and if most people can manage things on their own and if no one can beat low cost index funds, how will it ever make sense to pay someone a boatload of money for them to, in quotes, manage our assets?

16:31I know about the fiduciary standard, but I'm sorry. I can't believe that someone won't try to sell me stuff I don't need if it's their living. Sati says that if you must work with an advisor, then pay by the hour or for a plan. Maybe that is the answer, although that adds up fast too. One advisor I just checked asked$6 ,500 for a financial plan, which feels excessive. How many hours of work will that take them? I'm intrigued by subscription financial services where you pay a monthly or yearly fee for access, and there's supposedly no selling. Although I guess I wonder about the quality of advice and my suspicion of being upsold remains.

17:10Can't someone just offer some reasonably priced, unbiased, tailored financial advice? It's also frustrating that it feels like there are no objective voices in this debate, as everyone speaking has something to gain. Signed, Suspicious in Spokane. Suspicious in Spokane has some good questions. And to help us answer them, we are joined again by Ryan Sterling, wealth advisor with NerdWallet Wealth Partners and affiliate of NerdWallet, Inc. Welcome, Ryan. Welcome back. Thanks for having me back. Good to be here. Hey, Ryan. I think we should really get to the big question first, which is, are all financial advisors evil?

17:45And Ryan, are you evil? Okay, so are all financial advisors evil? Let's start there. The answer is no. Not all financial advisors are evil. Shocking. Are there some questionable financial advisors? Yes, there are some questionable financial advisors, just like any industry. Am I? Are we evil? No. But I do appreciate the question. I think it's an important question. I've been in the wealth management business for two decades now, and I've seen it done really well, and I've seen it done poorly. There are a number of advisors that I trust that I would refer my family to, and there are people who I, when they walk into a room, I get to the other side as quickly as possible.

18:30So how can you tell? It's hard to tell. And, you know, we could start with the fee arrangements because, of course, that does drive incentives. It's not as clear in black and white as if someone charges on the AUM model and someone charges on the flat fee model that the flat fee is better. I have a unique perspective here in the sense that I've tried everything. And I can tell you why we've settled on the AUM model. Even though it's not perfect, I find it to be the best, especially for people who are in the growing wealth stage of their life. Well, I want us to get into the different fee structures in a minute, and we'll talk more about assets intermanagement, which our listener referred to here.

19:12But I want to get to their concerns, starting with conflicts of interest in financial planning. So can you address some of these, starting with when it makes sense for someone to have their assets managed by an advisor versus doing it themselves when it's actually quite difficult for an advisor to, quote unquote, beat the market? So one of the things that she said that I thought was really interesting is she goes, if it's so simple. And I always like to say, is it like a lot of things in life? Well, there's simple, but not easy because they're two different things. So I think number one is like we say this all the time, that so much of this business is simple, but again, not easy.

19:45The distinction there is that everything in and of itself is very doable for people to read books, for people to watch YouTube, so on and so forth. But actually executing it is a completely different story. And the reason it's hard as it relates to wealth is because we're emotional. And I always say that, you know, so long as human beings remain emotional, it's going to be really hard for AI to replace financial advisors. I can say, like, I've been in this business for two decades. I have an advisor. And the reason being is because when it comes to my own wealth, I'm prone to emotional decision making.

20:19And I think that's where having an independent advisor, it's almost kind of like, why do therapists have a therapist? And why do therapists exist where you can read books and listen to podcasts and go to seminars? And the reason being is like, yes, you can understand all of this at a very intellectual level, but it's very different when you're trying to execute it at a very personal level. And that's where we come in to play. But so where do some of the conflicts of interest arise? Let's talk about the AUM model first. It really comes down to, you know, we make more money as we manage more money.

20:52Now, some firms will say that we are aligned with our clients' best interests and that we make more if our clients make more over time. So on the one hand, some people would say, well, it actually kind of solves that conflict because we're aligned with our clients' success. Other people would say, well, it just becomes an asset grab where if someone comes to us and says, hey, I'm thinking about paying down my mortgage. You know, should I? And it requires, you know,$200 ,000 to leave the portfolio. We're going to make less money if the person pays off their mortgage. So are we incentivized to say, no, no, no, no, keep it in the account because we want more money to manage?

21:26So that's where the skeptic would come in and to say, like, that's where incentives are. Ryan, you've mentioned AUM, that's Assets Under Management. It's a fee structure that's pretty common in the financial planning space. And the general idea is that you have, you know, maybe a million dollars and they're being managed by a financial advisor and they're taking a small percentage of that. And this is where it seems like our listeners pretty skeptical of how this whole thing works. Can you talk about how AUM is really structured and what the range might be and whether it's actually as bad as they maybe think it is?

21:58Yeah. So it's basically everything you just said in terms of it's a percentage of the assets that are being managed. Now, that range can be anything from as low as, call it half a percent on the low end, up to I've seen two or two and a half percent on the high end. It also depends on how much money you have being managed. So typically, smaller balances come with higher percentages, and it scales down over time. So that's how we're structured. So again, we're based on assets under management. The highest fee starts at 0.9%, and that's where balance is under$500 ,000. Once values get above$500 ,000, it goes down to 0.8%, and then it scales down from there.

22:39But it's important to note that, and this gets a little technical, a lot of firms, what they'll do is they'll charge, you know, 0.9 % in the first$500 ,000 or so, and then 0.8 % in the next$500 ,000. We actually have cliffs. So once someone gets above a certain asset point, everything gets charged the new lower percentage. And the reason we put those cliffs in place is to actually avoid some of these conflicts of interest. So there have actually been times where clients have taken money out of their account, and we've been completely neutral because they've gone from one fee to a higher one because their assets are lower.

23:14But on a revenue standpoint or a fee standpoint, it's actually stayed the same. So that's part of the reason we put those cliffs in place was to at least try to mitigate some of this conflict of interest. Mm-hmm. And AUM is in contrast to other fee structures like the hourly or per plan rate that they mentioned. That's how I have my financial planning firm structured, or also fee-based or commission-based. Can you talk about how each of those works and how they kind of compare on the spectrum of evil or not evil compared to AUM? Maybe where we can start is I can tell you all of the fee structures that we've experimented with.