How to avoid money management companies that want to sucker you

My conservative SWAG is that ~95% of the financial ‘services’ being provided to your average investor are legalized theft, and actively doing harm to consumers as opposed to helping them retire, send their kids to college, live within their means, etc. As an (independent, commission-free) person in the financial services industry, let me be the first to tell you that you should be extremely skeptical and selective about whom you go to for investment advice, insurance, and investment services & products.

Trust no one. Except me; I’m one of the few good guys (but test me anyway just to show you’re paying attention!)

You can guess which kind are Good and which are Bad or Ugly… (For spaghetti Western nerds: you want to invest in the grave next to Arch Stanton’s, not his.)

There is really only one investment firm I recommend to keep your investments at, and that’s Vanguard, because of the unique way the company is structured.

However, there are TONS of firms I hate, and I’m happy to tell you by name whom they are. I already talked about sh***y banks, so let’s turn to financial ‘services’ firms aka money managers. The MO of all of these firms is straightforward and, in my opinion, should be criminalized because of the billions in harm they do to consumers each year:

They spend a lot on salespeople and advertising and get you to invest with them in the guise of looking out for your interests, and then…

… they sell you high-commission-generating or otherwise high-fee products that secretly steal your money without you really being aware of it. This can happen through commissions that they get but you don’t directly pay, through high expense ratio mutual funds that you pay straight from your account balance without noticing, or in other similar ways. They compound the evil by getting all their money up front through high ‘sales loads’ or commissions at the time of sale (vs annually in an expense ratio or annual fee, although they do that too, the bastards.) Commonly, even after you’ve figured out that you’ve been hoodwinked, getting out of the product doesn’t help much because most of the damage has already been done to you.

You end up MUCH MUCH poorer because of all the fees being siphoned off, and these guys laugh all the way to the bank, with the lower-level grunts maybe not even realizing what an evil they’re perpetrating. Read the anecdote about “the customers yachts“.

The evil firms in the money management space that I see most frequently taking advantage of average investors are:

Ameriprise: they sell you expensive, illiquid products like cash value life insurance and non-tradable REITs and get exorbitant kick-backs– politely called ‘revenue sharing’ or just ‘commissions’– from the folks who’s high-fee products they sell you (or they cut out the middleman and sell you their own high-fee products.) When you try to get out of these products, you find you’ve already paid a huge upfront commission, might have MORE fees to pay for the privilege of taking your own money back, and/or would have to sell at a big loss in a secondary market (*cough* time shares and non-traded REITs!)

Ameriprise has paid up at least twice in multimillion-dollar class-action lawsuits, which is amazing considering how much leeway they already have to legally steal from people. But hey, when you’re greedy and shady and have investors to please, why stop at just the legal ways of separating investors from their hard-earned money?

Edward Jones: same thing as Ameriprise, but often with high-fee mutual funds that they get their kick-backs from.

Raymond James: same business model as the other two scoundrels.

I don’t see UBS, Merril Lynch, Bank of America, Wells Fargo and the other big ‘wealth management’ guys picking on the small investors as much, but avoid them too. I think they tend to fleece wealthier folks through high investment management fees, but I suspect they also use commissions too to juice their egregious takings.

Instead, manage your own money with the only two investments you need instead. If you need help, read this blog and DIY if you have the time, acumen and energy, or reach out to a fee-only (= no commissions!) financial advisor like me, or these guys. I recommend paying only for one-time financial planning or incidental on-going advice, but NOT for as advisor to manage your assets via Assets Under Management (AUM) fees.

If you really think you need ongoing investment management services AND the fee is well under 1%, you could consider it. Vanguard charges 0.3% AUM for this service, which is reasonable, but I still think you’re better off keeping that 0.3% and doing it yourself.

Instead, ask your fee-only advisor for their investment recommendations and implement them yourself, or better yet, 98% of you can probably go with my ‘two investments’ guidance and be done with it (and the other 2% would still do fine if they took the same advice.)

How to identify the other bad guys

The above wasn’t an exhaustive list of the bad guys– like bacteria, they are too numerous to count,– so here’s a few helpful tips for deciding whether the financial person you’re dealing with is going to rip you off. (I don’t care how neatly pressed his suit is, how well it fits, or how shiny his shoes are!) If the answer is ‘yes’ to any of these questions, grip your wallet tighly and run the other way:

  1. Are they recommending cash value/whole/universal/variable life insurance to you? If you ever hear the word life insurance in a sales context, unless it’s immediately preceded by the word ‘term’, you know the person is a scoundrel.
  2. Are they recommending an annuity? Annuities, like cash value life insurance, are notoriously high-fee and inflexible. AVOID!
  3. Do the mutual funds they recommend take any ‘front loads’ (upfront fees)? If so, RUN! Good mutual funds generally have no loads, back or front, and very low annual expense ratios (under 0.5%; Vanguard’s core index funds average around 0.1%.)
  4. Are they recommending any mutual funds with expense ratios > 0.5%? Don’t pay a guy in a suit to underperform the market. Get the market return using a low-fee index fund and leave those other suckers investors in the dust.
  5. Are they offering to ‘manage’ your money by buying and selling individual stocks? Very few people can beat the market, and no one that can is going to spend much time tracking you down, because they’ll be too busy making money hand-over-fist to let you in on their secrets.
  6. Are they selling any product that sounds sexy or complicated like REITs, private equity, oil and gas partnerships, some hot new industry/sector of the market, stock or IPO that you should get in on? You don’t need any of that complicating garbage. It’ll only hurt you on average with fees, taxes, and illiquidity.
  7. Are they selling timeshares, or real estate as an ‘investment’? Real estate, and timeshares specifically, have super high fees and liquidity problems. Let your personal residence be the extent of your real estate ‘portfolio’, and leave the rest of the real estate game to the pros. Real estate brokers get paid to sell you real estate, so ignore them when they tell you how wonderful it is (“it’s ALWAYS a good time to buy!”), and read my skepticism instead.

There you go. Avoid these guys selling these products and you will make me very happy and make yourself much richer. I hate seeing people who should have so much more money than they currently do because they’ve fallen victim to the folks above. And, sadly, many people I see have, including many of my clients, friends, and family members. That puts the personal in personal finance, let me tell you!

Don’t be one of the bad guys’ victims, and if you have been, fix the situation by getting your money away from them and out of whatever bad product it’s been put into as carefully and costlessly as you can. I can help if you need it.

To financial service professionals employed by one of these firms

I should note too that this isn’t a dig at any particular person working at these companies. If you’re one of them, I’m sure you believe and try to do right by your customers, but you’re ‘paid not to understand’ how bad the incentives are at your employer and how self-serving the products you’re encouraged to sell are.

Good people + bad incentive systems = bad behavior by otherwise good people, often with the perpetrators not even realizing that they are doing something bad for their clients, or rationalizing it away. “Well, they’d just go to some other big firm that’ll rip them off in the same way!” “But I need these commissions to live. My family’s gotta eat too!”

All of these are lies you tell yourself to feel better about hurting people because it’s good for your bottom line.

To you I make this plea: If you’re a financial services provider working at one these companies, get out of a corrupt system and make money in a more honorable way if you can. I’m happy to chat about how I decided to run my business the way I do in case you’re interested in leaving the Dark Side of personal finance.

Why aren’t you auto-paying all of your bills?

Quick read bullets:

  • Set up autopay AND paperless billing for all of your recurring bills, directing them to be paid in full by your credit card. Do this from the website of each individual company, and not your bank account’s bill pay software (unless that’s the only way you can do it.)
  • Pro tip: as you go, save the logins & passwords from each company’s site to Google Chrome or LastPass to avoid having to remember them, saving you time & avoiding frustration.
  • Next, set your credit card to autopay (and paperless billing) on the due date for the full balance. (Bonus points if you also change your credit card due date to the 4th or 5th of the month so that you can pay it right after your rent/mortgage. See my easy no-budget budgeting system for why this is a good idea.) If you are carrying a credit card balance and can’t pay it off in full yet, set your autopay to the minimum balance instead, and make extra payments on an ad hoc basis to pay down your balance ASAP.
  • You’ll still receive your bills via email (or paper, if you prefer) so you have plenty of time to check them and make sure they’re correct before the payments get made in case this worries you. You can cancel the autopay at any time, so there’s no risk of paying something you shouldn’t so long as you’re still checking your statements. (I don’t think I’ve ever once found an incorrect charge on my credit card, except once when my account info was stolen, but it doesn’t hurt to be vigilant!)

Why autopay everything?

Automation frees up your time and more importantly, your mental energy. You never have to worry about missing a bill or getting a late fee again. It keeps your financial system humming along, even while you’re on vacation or off the grid.

Does this look like your finances?

Why doesn’t everyone do this?

Some people are resistant to embracing autopay, so there’s definitely some psychology to overcome if you’re one of them. The resistance I get is usually something like: “I want to be in control/I don’t trust the autopay!”

My answer? You are still in control, and even more so since you’ll never miss a payment or get charged a late fee again now! You’ll see every bill show up in your email well before it gets paid, so you can still go through everything line by line to make sure the charges are legit if you want to. (I still do with my credit card statements.)

In the same amount of time it would have taken to pay the bill, you can easily login and cancel the autopay one time or permanently if you ever needed to. Autopay isn’t set in stone: it just changes your default behavior to paying all your bills in full and on time, and that is very good default behavior to have!

The most impactful financial advice I give is about setting up systems to make good financial things happen by default. Take advantage of this powerful technique wherever you can, and make life easier on yourself in the process.

How to set up autopay on everything

I start by putting all of my recurring bills like internet, phone, utilities, digital subscriptions, gym membership, car payment, auto insurance etc on my credit card using the autopay on the billing company’s site.

I use the company sites instead of my bank’s bill pay because

1) I want to use my credit card and

2) I think it’s more direct to pay straight to the billing company (no middle man to screw things up) and

3) it forces me to make sure I have online access and a remembered password to all of my financial sites, which is very important.

Once I’m done with setting everything to autopay with my credit card, I only have one bill per month hitting my checking account, which simplifies things when I glance at my checking account statements to see what I’m spending on a monthly basis.

If there are any bills that don’t let me, or would charge me extra to, use a credit card (public utilities, for example), I set up automatic ACH checking account withdrawals instead.

Setting up autopay on my internet bill

I log in to Comcast/Xfinity, then navigate to the billing area, and click the autopay link at the bottom left of the screenshot. For your bills, try googling ‘[company name] set up autopay’.

Then I add my credit card info (this is all perfectly safe; don’t worry!), and just follow the prompts to turn it on:

All set up! Now all I do is double-check the bill notification emails (which I set to paperless) to make sure I’m only paying my $35 and no more.

I do the same thing for all my other bills. Then I set up autopay on my credit card to pay the full bill each month on the due date.

If you have a balance you can’t pay off in full yet, set up autopay for the minimum balance to avoid any late fees on missed payments, and then make manual payments to pay down the balance ASAP.

From this screen I click ‘I want to’ and then look for the word ‘autopay’ to set it up

Once you’re done, you’ll have autopay set up looking something like this:

If my landlord or mortgage company offers electronic autopay, I set that up too, which will usually come straight from your checking account instead of your credit card. Every one I’ve dealt with over the past 5 or 6 years has had an autopay option, so yours probably does too.

If you use Capital One 360, you can even schedule a physical check to be mailed to any landlords that force you to use paper checks. Just log into your bank’s bill pay service to see what your options are. Zelle is another popular option for electronic bill pay that many banks use, including Capital One.

Your turn!

Take 30 minutes to do this yourself for all your bills, credit card, and then rent/mortgage. Afterward, you’ll have just a few monthly bills hitting your checking: 1) rent/mortgage, 2) credit card(s), maybe 3) a utility bill that you couldn’t use your credit card to pay, and 4) any cash or debit card transactions you have.

This makes it a lot easier to see your monthly spending.

*Boom!* You just saved yourself a ton of repetitive work logging into sites and making bill payments each month. You can check your emailed statements monthly to keep any eye on things, and then kick back and have a coffee or a whiskey (or a homebrewed cider!) while the machines do all the work!

Welcome to the 21st century! 🙂

Hear the great Charlie Munger speak at the 2021 Daily Journal Corp shareholder’s meeting

Munger and the Daily Journal Corp CEO hold forth of Gamestop and Robinhood, bankers, Wells Fargo, Costco vs Amazon, and much more! Munger is Warren Buffett’s right hand man at Berkshire Hathaway, and a wise old man!

Watch the full meeting here on Yahoo Finance: https://www.yahoo.com/now/charlie-munger-speaks-daily-journal-162005167.html

How to buy life insurance without getting ripped off

Quick life insurance takeaways up front

1) AVOID buying ‘cash value’ life insurance policies (whole, universal, variable).

2) Instead, buy TERM life insurance with guaranteed level-premiums for you and anyone else in your family who’s income your family depends on (e.g.: your spouse. Never buy life insurance for your child unless they’re a movie star who’s income you depend on.)

3) Buy a term of 20 – 30 years. The term you choose should be long enough to make sure all of your dependents will be financially independent when the term expires and you are no longer covered. This means your kids should be out of college & gainfully employed, your house paid off, and your spouse & yourself should have plenty of retirement money socked away by the end.  Err on the side of a longer term than you think you’ll need: it’s usually not much more costly than a shorter term. Policies are cheap when you’re young and healthy (so quit smoking/don’t smoke.) If you are a good saver and estimate that you’ll have a lot more in savings in, say, 15 – 20 years, you could go shorter on the term to save a few bucks, but it’s a riskier strategy if your savings goals don’t proceed as planned.

4) Get a death benefit of $1,000,000. The ‘death benefit’ should be large enough to pay off your family’s debts and provide at least 5 – 10 years’-worth (or more, especially if your spouse doesn’t work/earn much) of living expenses. Make sure to factor in any outstanding mortgage + HELOC debt, college costs for your children, your spouse’s student loans (yours would be forgiven on death; not much consolation if you ask me), any home help your spouse might have to pay for to make it as a single parent. Subtract from this need any investments your family would inherit + any life insurance you already have from, say, your employer.

If you make a lot and live life relatively high on the hog, you might want $2,000,000. If you’re strapped for cash and used to living on less/have few debts, $500,000 might do it.

5) Go get a quote now at Quotacy. Quickquote is also fine, but I like the speed and interface and lack of entering an email address at Quotacy. Check also with your employer to see what coverage they offer and compare rates.  Many employers offer a little coverage for free (say, 1-2x your base salary), and give you the option to buy more. Their rates might be better or worse than what you can find on your own, so check around.

6) Make a decision and buy coverage from a company with an AM Best or Moody’s financial strength rating of at least A or A- to protect your family!

Feel free to stop here and get a quote. I’ve already covered the main factors to consider above, but if you want more background, keep reading.

Why I hate insurance, even though I need it & buy it

If there’s one thing I hate, it’s high-fee financial products.  Insurance products are often some of the worst offenders.  The main perpetrators are ‘cash value’ life insurance and annuities (although there are plenty of other useless types of insurance to avoid.)

Anyone with dependents (those that depend on your income) needs life insurance.  That being said, Ward’s rule #1 when buying insurance is ‘DON’T!’  I only buy insurance for things that can’t be planned & paid for by my own savings.  If you were relatively wealthy/lived cheaply and had already saved, say, 25 times your family’s annual spending needs, then you probably don’t need any life insurance at all, because your family can just use your assets to live on at the time of your death.

Alternately, even if you aren’t rich: if you don’t have any significant debt, have no dependents, your spouse makes enough money to live off by themselves, and you have other savings, you may not need any life insurance either (or at least no more than the paltry amount offered by your employer as part of your standard benefits package.)

For most of us, especially when we’re young, starting a family, and relatively low on the net worth totem pole, we need life insurance to protect our families in the unlikely-but-possible event of our early demise.

The only life insurance you’ll ever need

Most insurance companies will try to sell you some type of ‘cash value’ life insurance policy.  These include ‘whole life’, ‘universal life’, and ‘variable life’ policies.  Cash value policies all have an investment component to them as well as a ‘death benefit’ (a lump sum paid out to your beneficiaries when you die, regardless of your investment amount in the policy.)  The catch is that these policies are awful because they hit you with high fees (often in the form of the terrible investment choices with high expense ratios that come with your cash value life insurance policy.)

My general rule of thumb (and by ‘general’, I mean you should nearly always do this!) is to keep your insurance and investments strictly separate! Therefore, say it with me, “I will NEVER buy cash value life insurance no matter what an insurance agent or financial salesperson (sometimes disguised as an ‘advisor’) tells me!”*

Okay, so what life insurance SHOULD you buy?  Term life!  Term provides one thing, a death benefit, and that’s it.  Fortunately, that’s exactly what you need.

How term life insurance works

When you buy a term life policy, you pay an annual premium.  The older or more unhealthy you are, the higher the cost (since there’s a greater probability that you’ll die, forcing the insurance company to cough up the dough to your heirs.)  If you die within a certain period of time (the ‘term’, often 20 or 30 years), the insurance company pays the beneficiaries listed in your policy a ‘death benefit’ of some fixed amount of money that you’ve specified when you buy the policy (typically in $100 K increments, the most common amounts being $500 K or $1 million.)

Example: You’re a 28-year-old non-smoking person in good health.  You determine that your spouse and child would need $500 K to live on if you were to die.  You figure that in 30 years your kid will have graduated from college and your spouse will be doing fine, so you buy a 30 year term policy with a $500,000 death benefit.  You would likely pay a premium of around $400 – $500 per year, less than the price of a cell phone plan!

Make sure you buy a ‘guaranteed level-premium’ policy.  This means you are essentially renewing the policy each year and paying the same price to do so.  Without this your rates can fluctuate and/or you can be denied coverage if your health changes for the worst.

You can always cancel your policy if, say, you strike it rich and no longer have a need for the insurance.  (Although, it may pay to keep the policy anyway if you’re deep into the term since the premiums are relatively cheap compared to what it would cost you to buy new term life insurance at your decrepit old age.)

How big of a death benefit do you need?


This is a tricky question, but some general rules of thumb are helpful. If you don’t want to go through this exercise and you can afford it, just get $1,000,000 and call it good.

To be more precise, consider your family’s annual expenses, your outstanding debts, and your assets.  Most people want enough so that their spouse can pay off the mortgage, cover the kids’ college, and pay for any funeral expenses and other miscellaneous debts you leave behind, as well as have enough to live on to make up for your loss of income for the next few years, and any necessary single-parent help like childcare for the kids.

For most families, somewhere between $500 K to $1 M should do it.  The more assets you already have, such as your 401k, stock accounts, any social security death benefits accrued, the more money your spouse makes, and the closer your kids are to being financial independent, the less life insurance you need.  If you’re young, term is cheap, so err on the high side for the death benefit.

A sample calculation might go like this: 10 years of annual family expenditures: $60,000/year x 10 years = $600,000 + mortgage and other debt of $300,000 + today’s cost of 4 years of college at Your State University for 1 child ($100,000) = $1,000,000.

How long of a term should you get?

If your spouse works and could support themselves (not including the costs of raising children), then I would recommend getting a term policy to get your kid’s through college.  Estimate when your last child will graduate college and be self-sufficient (the two are not necessarily synonymous) and get a policy that will last at least that long.  Again, err on the safe side, so if you or your wife is pregnant with what you expect to be your last child, round up to a 30 year policy.

Get a quote and buy a policy from an A-rated company


I like Quickquote.com for getting comparable online term life insurance quotes**.  You can play around and get a feel for premium costs when varying term length and death benefit amounts.

Compare these quotes to the prices offered by your employer for life insurance (and check to see what they might already give you as part of your standard benefits package.)

Lastly, make sure that the insurance company you buy a policy from has an AM Best or Moody’s financial strength rating of at least ‘A’ or ‘A-‘, which means ‘excellent’.  This helps insure that the company is stable enough to still be around if and when your family needs the payout. The quotes you get from the above sites will tell you the rating.

Tip: I’ve found that round number periods like 20 and 30 years seem to cost much less than one would think given the relatively expensive 15 or 25 year periods.  Also, the more benefit you buy, the cheaper it is per dollar of premium; another reason to err high on the death benefit.

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* The only situation where you MIGHT consider cash value life insurance is the following: you’re wealthy and in a high tax bracket AND you’ve already maxed out ALL of your tax-advantaged retirement savings (401k, IRAs, HSAs if applicable, college savings plans if you need those for someone.)  Not only that, but you must have AT LEAST 15 – 20 years until retirement in order to offset the fees with the marginal tax benefits from cash value life policies.

SO, if you are within 15 years of retirement, STOP, don’t buy cash value life.  Similarly, even if you ARE 15+ years from retirement, max out all of your (far superior) tax-advantaged retirement savings options before even considering cash value life.  Even if you pass these two criteria, give this some serious thought with a fee-only financial advisor.

** I also used selectquote.com, but I DON’T recommend them because you don’t get instant results online (instead, some insurance agent will call you up to give you your ‘free’ result, which is really just an excuse for them to sell you a policy.  I hate being sold to!) I also struck accuquote.com from the list because they called me (twice! by two different salespeople!) to give me the ‘hard sell’ after I got the online quotes.  This really irritates me.