Dave Ramsey says find an ELP, can I skip this step?

Dave Ramsey says to contact an ELP after finishing baby step 3 to start working on investments.

If I’ve been following PFC and listening to all of its advice and the advice of other non Dave Ramsey people, could I just skip finding an ELP and go straight to index funds? I tried shopping around for some and most wouldn’t take someone with under 500k-1m in investments anyway.

I’m conflicted.

Are ELPs best for people with lots of money only?

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Welcome @vmfrontone!

So for those who may be reading, an ELP is Dave Ramsey’s “Endorsed Local Providers”. These financial advisors (realtors, whatever) pay Dave to be on his list, so that when he refers people on his radio show to go check out the list of ELP’s on his website, those financial advisors will show up. I think it’s good to be aware of the conflict of interest that Dave has to suggest you use these providers.

That said, there are really two types of financial advisors. There are “fee only” financial advisors who are fiduciaries (they are legally bound to operate in your best interest). And yeah, these guys generally won’t work with you unless you’re well into the six figures. Because they charge 1% per year or less of assets under management. So if you have $20,000 to invest, that’s $200/year to them. That’s not enough to pay rent and stuff.

Then, there’s everyone else, which can run the gamut from commission based financial advisors who will hit you for way more than 1% to straight up insurance salesmen who call themselves financial advisors. Both of these are definitely to be avoided.

And when I get asked “how do I pick a good financial advisor” my answer is “I don’t know except to learn enough about investing to tell them apart, at which point you don’t need one anyway.”

I like Dave. I don’t know of a better way to get out of debt. But I heard a wise man say “get out of debt with Dave Ramsey, invest with Jack Bogle” Bogle is the founder of Vanguard and the creator of the first index fund.

So TL;DR: Don’t get a financial advisor. Learn a bit about investing in index funds, then open an account with Vanguard, Fidelity, Schwab, Betterment, Acorns, etc. Then do it yourself. You’ll be richer for having done it that way :slight_smile:

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I was in the same boat a few years ago. I met with 3 advisors: one with Merrill Edge (Since I have a Bank of America account) and then two that I found through the Dave Ramsey network. I was just so skeptical about other people managing my money because I’m so cheap that even having someone take a small percentage of a small investment was annoying to me. Like, when groceries started charging for paper bags again mid COVID (after banning reusable bags) I was upset no one told me about the 20 cents added to my bill lol! I’m glad I found PFC and other Instagram handles where I was able to learn A LOT and do it myself. I feel more informed and it’s very empowering to have control of your money! You got it!

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This is super helpful! We recently “broke up” with our financial advisor and switched our investments into a self-managed Vanguard account. However, now i’m at a loss about what to do about just having a “second opinion” on things–specifically in our road to FI/RE I’m wanting someone who is knowledgeable on tax efficiency. I reached out to a tax accountant via email to see if that was something they could help with and he referred me right back to a financial advisor. Any thoughts/advice? I’m ALL for learning things on my own, but my husband has zero interest in learning about it–just says he trusts me which is great, but I also feel a little vulnerable handling all of this on my own, just not wanting something to slip through the cracks on us that we’ll kick ourselves for later!!

Hey @Kirsten_LaRoche!

I hear you on the uncertainty. But I would primarily encourage you that you basically have got it. No financial advisor is going to be as interested in maximizing your wealth as you are. And investing early and often, buying and holding, minimizing fees. That’s nearly optimal investing. Even concepts like tax efficiency are such nuanced “fine tuning” issues, it likely isn’t worth paying someone for their thoughts on it. (other than the big things like max out tax advantaged accounts first). That said, a couple thoughts:

  • I’m a little disappointed in your CPA. Tax stuff SHOULD BE their business. Basically all the rich people I know have a great CPA and skip the financial advisor. It might be worth taking another look at that if your income/net worth ever merits it.
  • Vanguard has really low cost advisors (0.3%). It might be a good transition from your traditional advisor until you’re fully comfortable. Here’s a look: https://investor.vanguard.com/financial-advisor/financial-advice