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Let's Be Real About What Advisors Actually Do

Brad Bobb CFP® | April 10, 2018

I receive emails weekly asking what I do and how I get paid for writing these blog posts. Others contact me under the belief that I am a federal employee who is paid to answer questions about finance. I thought now would be a good time for me to answer those questions.

Am I a Federal Employee?

No, I am not a federal employee. I am an independent fee-only financial advisor.

Originally I began to do the blog posts for two primary reasons.

  • I believe federal employees need the financial education
  • It’s good marketing for my business

Over ten years ago I was fortunate enough to get my first federal employee as a client and began to get referred to other federal employees. The reason most of them reached out is that they wanted help with their retirement planning. Their Human Resources department was so busy that they couldn’t get the simplest questions answered unless they were within three months of retirement.

So, I started writing blogs in response to the need for this information. There was so much demand for advice in this area that I developed quite an audience and to this day the majority of my clients are federal employees.

Somewhere along the line I discovered that there aren’t many fiduciaries that serve federal employees. A fiduciary is someone who is required to act in a client’s best interest at all times. And no, not all advisors are, in fact I would say most financial advisors are not required to act as fiduciaries.

Having a financial advisor who is a fiduciary is important because you know that their only responsibility is helping you make good decisions, not the best decisions to line their pockets.

This article discusses what can happen when you work with a product salesman instead of a fiduciary.

What is Financial Planning?

Here is a link that shows some elements of the financial planning process. I am a CERTIFIED FINANCIAL PLANNER™ professional that does financial planning for a living.

The first thing most people think of when they hear “financial planning” is investment management and yes, I do manage money for people, but there is a lot of more that goes along with that.

Financial planning can include cash flow, budgeting, tax planning, rendering guidance on big decisions like buying a home, debt reduction, college planning, Medicaid planning for loved ones, and so on. Basically, financial planning includes anything and everything that involves money. Life is not a linear line of events which is why financial planning is constantly changing.

I get paid for financial planning in one of two ways: I either earn a flat fee for creating a financial plan or a fee based on the percentage of assets that I manage. The latter is typically deducted from the investment account automatically.

The fee for planning can be anywhere from the minimum of $300 and up.

The fee for investment management is anywhere from 1.25% of assets to 0.7% of the asset balance.

Why would someone Pay a Fee for Financial Advice?

In my opinion there are two benefits that come from creating a financial plan. The first is very simple, your advisor may be able to show you ways to save money or make more money.

The second isn’t as easily quantifiable but is just as important. A good advisor that can develop a financial plan for someone can give them assurance that they are making the right decisions. The ability to exercise control over how and when you retire can be priceless.

To better explain the benefits of financial planning I have put together three case scenarios from federal employees.

Federal Employee Case #1: Joe and Jill – Pre Retirees

This is a very common scenario among federal employees that are close to retirement.

Joe and Jill, ages 65 and 62, are married and Jill wants to retire. They have had unexpected financial issues that required them to take on some debt over the past year. Jill wants to retire but Joe is fine working for a few more years.

This is also a second marriage for each of them and they are concerned about providing for each other in retirement but would eventually like their assets to be left to their respective kids. Here are some questions they had.

  • Can Jill retire and live comfortably?
  • Should they stop saving and pay off debt?
  • How much can they spend and not run out money in retirement?
  • Do they need long term care and can they afford it?
  • Should Jill keep FEGLI or not?
  • Should Jill take Social Security at 62?
  • How should they invest in retirement?
  • Jill has a TSP loan, what happens to that if she retires?

Joe and Jill decided they wanted to put a retirement plan together, and in that plan we did the following:

  • Developed a debt payoff plan
  • Figured out a way to get Jill’s TSP loan paid back within six months of retirement without any penalties
  • Developed a retirement timeline for Jill
  • Addressed maximum and optimal retirement cash flow
  • Developed an investment plan to fit their needs
  • Discussed retirement distribution options
  • Addressed risk and insurance analysis of long term care and FEGLI
  • Discussed and initiated an estate plan to guarantee that assets are left to the kids, all while providing for the surviving spouse

Joe and Jill committed an upfront fee for doing a financial plan. Upon completion of the plan they decided they weren’t comfortable managing their retirement assets and decided to hire me ongoing to help with ongoing financial decisions and investment management.

Federal Employee Case #2: Bill and Brenda – Mid career

Bill and Brenda are both federal employees in their late 40s that contacted me after coming to the realization that they would like to retire one day. Neither were real familiar with their benefits.

They both had 5 times their salary in FEGLI and Brenda had 100% of her TSP in the G fund because that was the default when she started employment. They were also in the process of sending their only child off to college.

They weren’t sure exactly what they needed, but knew they wanted help figuring out how to get to a retirement date and get their son through college.

The first step was to gather information and then we spent time discussing college planning and their retirement benefits.

As part of their plan we:

  • Defined their priorities when it came to college funding versus retirement savings
  • Developed a college funding plan and discussed ways to save tax dollars in the process
  • Put together a savings plan with funds going to an emergency fund, TSP, and Roth IRAs
  • Composed an investment allocation aligned with the level of risk that was suitable for them
  • Changed their life insurance to lock rates in for 20 years and save money
  • Discussed some simple estate planning steps to take

Bill and Brenda did a flat fee engagement only.

Case #3: Plain Jane

Jane had a couple of issues that were bothering her about her upcoming retirement. She was concerned about how the FERS supplement works until she turns 62, how to interpret the earnings test on her supplement, and if her husband’s self-employment income would affect her FERS annuity or supplement.

Jane didn’t want someone to manage her money, but wanted to get a few questions answered before she headed into retirement. Jane chose to do an hourly engagement where we were able to address and answer all of her questions in under an hour and a half.


I have many clients that have unique circumstances, but these are a few common scenarios. The bottom line and point I would really like to get across is this:

Don’t go through your working career hoping you are doing the right thing.

If you have questions, or don’t have a plan, pay a qualified professional to help you get a plan and then implement it! If you would like my help you are welcome to schedule an introductory call with me.

Brad Bobb, CFP® is the owner of Bobb Financial Inc, and an expert in retirement planning for federal employees.

The examples above are for illustrative purposes only and not specific planning advice.