2023-04-21_Friday_QA
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00:00:59.760 | Welcome to Radical Personal Finance,
00:01:01.100 | a show dedicated to providing you with the knowledge,
00:01:02.700 | skills, insight, and encouragement you need
00:01:04.540 | to live a rich and meaningful life now
00:01:06.240 | while building a plan for financial freedom
00:01:07.700 | in 10 years or less.
00:01:08.940 | My name is Joshua.
00:01:10.140 | Today is Friday, April 21, 2023.
00:01:14.140 | And on this Friday, as we do any Friday,
00:01:16.880 | in which I can arrange the recording setup,
00:01:19.420 | we have a live Q&A show.
00:01:21.380 | Works just like talk radio.
00:01:22.620 | You call in, talk about anything that you want,
00:01:24.420 | ask any questions, make any comments.
00:01:26.300 | It is open to you.
00:01:28.160 | You are the one who drives the show and the show topics.
00:01:30.860 | If you would like to join me on a Friday Q&A show,
00:01:32.600 | you can do that by becoming a patron of the show.
00:01:34.140 | Go to patreon.com/radicalpersonalfinance.
00:01:36.800 | Patreon.com/radicalpersonalfinance.
00:01:38.940 | Sign up to support the show there,
00:01:40.140 | and that will gain access for you to a Friday Q&A show.
00:01:43.640 | We begin with Nick in New York.
00:01:45.220 | Nick, welcome to the show.
00:01:46.040 | How can I serve you today?
00:01:47.820 | - Thank you, Joshua.
00:01:49.080 | For the last four or five years,
00:01:50.720 | I have been using Wealthfront as a robotic advisor
00:01:54.620 | for my non-tax-advantaged account.
00:01:58.160 | And I started it because I like the lower,
00:02:01.960 | let's say, overhead that they charge, which is 0.25%.
00:02:06.700 | And I don't really know how to invest myself,
00:02:10.240 | so I just thought I would just give it my risk profile
00:02:12.400 | and then it would invest.
00:02:13.400 | And I feel like it has done well.
00:02:15.580 | But after five years and after the account
00:02:18.780 | has become more sizable than it used to be,
00:02:22.280 | I was wondering if you advise people
00:02:26.760 | for or against these robot advisors.
00:02:30.060 | - I usually avoid taking a position on that
00:02:36.320 | in some ways similar to the position
00:02:38.640 | that I avoid taking on DIY investing
00:02:41.200 | versus working with a traditional personal advisor.
00:02:46.080 | It's not that I couldn't make arguments
00:02:48.720 | one way or the other, but as I look at it,
00:02:51.840 | in order to decide what's right for one person
00:02:55.920 | and what's right for another,
00:02:57.400 | you have to gain quite a lot of details
00:03:00.080 | about the person's financial situation.
00:03:03.000 | You have to ask for quite a lot of details
00:03:04.760 | about what's going on, what their interests are,
00:03:09.760 | what their plans are, et cetera, and then get a good idea.
00:03:13.320 | Think of it like this.
00:03:15.080 | Do you, Nick, change your own oil on your car?
00:03:17.920 | - I don't. - Why don't you?
00:03:21.160 | Why do you pay for that to be done?
00:03:22.920 | - For multiple reasons.
00:03:27.120 | I think if I ever want to sell the car,
00:03:28.840 | I want there to be a record that I've done,
00:03:30.920 | you know, regular oil changes,
00:03:32.400 | and I guess there's no record when you do them yourself.
00:03:35.440 | And also because I guess of the,
00:03:37.520 | part of this is, of course, the hassle.
00:03:38.880 | Like, I understand how to do it.
00:03:40.160 | I can watch YouTube videos that will tell me how to do it,
00:03:42.200 | but sometimes it's just easier to bring it to someone.
00:03:44.440 | - Right, right.
00:03:45.920 | So it's an imperfect example
00:03:47.640 | because we're talking about a huge difference in money
00:03:51.360 | if you've got a million dollars under management
00:03:53.400 | and you're gonna be paying, you know,
00:03:55.240 | 50 basis points or 100 basis points
00:03:57.160 | or whatever you're paying in terms of fees
00:03:59.400 | to whomever is helping you with that
00:04:01.120 | versus the cost of an oil change.
00:04:02.600 | So let's acknowledge that up front.
00:04:04.560 | But the reason I indicate that is it's a decent metaphor.
00:04:08.600 | Most of us have cars.
00:04:09.640 | Our cars need their oil changed, generally speaking,
00:04:12.800 | but not all of them.
00:04:13.840 | And so we can learn from this metaphor for a moment
00:04:17.000 | and apply some of these things to the decision
00:04:18.800 | of whether we should work with a financial advisor.
00:04:22.440 | The process of changing your oil
00:04:24.400 | is actually eminently simple.
00:04:26.400 | Anybody can do it.
00:04:27.740 | You just simply go buy an oil filter, buy oil.
00:04:30.360 | You put a pan under the car.
00:04:32.120 | You drop the oil filter out.
00:04:33.300 | You drain the oil from the engine.
00:04:34.900 | You put a new filter on.
00:04:36.160 | You fill it up with oil and you're done.
00:04:38.240 | And it's very, very simple and straightforward to do.
00:04:41.800 | But just because it's simple and straightforward to do
00:04:44.440 | doesn't necessarily mean that it's right
00:04:46.620 | for everyone to do for himself.
00:04:49.560 | First, you have to have appropriate equipment.
00:04:51.680 | And so what is that equipment?
00:04:53.200 | Well, it can be simple.
00:04:54.640 | It can just be a bucket, literally almost any bucket.
00:04:57.920 | But then you have to figure out,
00:05:00.000 | what do I do with the oil?
00:05:01.200 | Do I get a bucket that's big enough if I mess things up?
00:05:04.420 | You have to go and make sure you have an oil wrench
00:05:06.320 | for your car.
00:05:07.160 | You have to stockpile the stuff.
00:05:08.360 | You might wanna get some jack stands
00:05:09.840 | or some ramps to make it a little easier.
00:05:11.760 | Where are you gonna get the oil from?
00:05:13.120 | How much are you gonna actually save, et cetera.
00:05:15.680 | And then as you said, well, maybe there's value
00:05:17.580 | of having someone else looking at my stuff.
00:05:19.420 | A lot of people take their car to the dealership
00:05:21.460 | and what they wanna do is have the oil changed
00:05:23.880 | so they have a record of it being changed regularly
00:05:26.660 | at the dealership.
00:05:27.500 | But they also wanna make sure
00:05:30.680 | that there's other mechanics around
00:05:32.100 | and they can have other things fixed while they're there.
00:05:33.740 | They can have other questions answered, et cetera.
00:05:36.180 | And so a similar thing happens with financial advice.
00:05:41.180 | Anybody can manage his or her own money.
00:05:44.420 | You don't need a financial advisor of any sort.
00:05:47.780 | Anybody can do it.
00:05:49.240 | But whether you should or should not manage your money
00:05:52.220 | becomes an intensely personal thing
00:05:54.480 | based upon what you like doing with your time.
00:05:57.000 | Do you enjoy going out there and working on the car
00:05:59.720 | or do you not enjoy that?
00:06:00.760 | Is that a leisure activity for you or is it a chore?
00:06:03.920 | It matters whether how much it's gonna cost you,
00:06:06.680 | how much the oil is.
00:06:07.660 | If an oil change is $300 versus $65,
00:06:11.840 | a lot more people would change their oil.
00:06:14.400 | And I'm not gonna go on and on with examples,
00:06:17.400 | but if you think about the example of changing your own oil,
00:06:19.500 | you recognize anybody can change their own oil,
00:06:22.120 | so why doesn't everybody do that?
00:06:24.300 | So what I would look at is I would say,
00:06:26.200 | start with an overview of your situation.
00:06:28.640 | You look down and you say, how am I doing financially?
00:06:31.680 | Where are my biggest opportunities?
00:06:34.560 | How am I doing?
00:06:35.920 | And then how did I come
00:06:37.980 | to my current financial investing strategy?
00:06:41.560 | What is best for me based upon where I'm at right now?
00:06:46.560 | Am I willing to go and learn more?
00:06:49.000 | Am I happy with the strategy of having this done
00:06:52.000 | automatically by a rebel advisor?
00:06:54.160 | What is the impact to me of saving the money?
00:06:56.120 | How much money can I actually save?
00:06:58.320 | Am I willing to go out and learn from it?
00:07:00.240 | Do I want and need a higher service model
00:07:03.960 | where I pay even more money to get higher service?
00:07:06.860 | Or do I wanna switch to a different model
00:07:08.720 | where I pay less money to get something simpler
00:07:11.680 | and more straightforward?
00:07:13.320 | And if you think about the answers to those questions
00:07:16.800 | and you calculate the costs
00:07:18.320 | and you review the latest performance data,
00:07:20.700 | you review the promotional literature from Wealthfront,
00:07:24.760 | from the other competitors, et cetera,
00:07:27.840 | then you'll feel well to make an informed decision.
00:07:31.640 | I don't think there's a wrong decision in it.
00:07:33.880 | If you come to me and you say, hey, I'm really enjoying
00:07:36.040 | and appreciating the use of this robo advisor,
00:07:38.400 | great, fine, wonderful, it's the right decision.
00:07:40.560 | I'm not saying it's wrong.
00:07:41.680 | If you say, I wanna get rid of this robo advisor
00:07:44.080 | and go to something even cheaper
00:07:45.680 | because I wanna save these few basis points
00:07:48.080 | that they're charging me, great, okay, that's fine.
00:07:50.640 | If you say, I wanna go to a financial advisor, great.
00:07:52.640 | And so it may sound a little wishy-washy,
00:07:56.200 | but I see it as important to look at
00:08:00.320 | what's the actual cost to me, who am I as a person,
00:08:03.360 | what services do I want and need and value,
00:08:06.080 | and then how do I take that to the marketplace
00:08:08.000 | and make an informed decision?
00:08:09.520 | - Right, yeah, that's fair.
00:08:11.880 | I mean, I think that I had called you a few months ago
00:08:15.480 | and I asked you about how does one break into investing,
00:08:18.120 | you know, what book should I read?
00:08:19.840 | And I in fact did buy a book,
00:08:21.320 | but I quit after chapter three or four
00:08:23.360 | because I thought I had kind of better uses of my time.
00:08:27.640 | So I feel like I understand the benefits
00:08:31.760 | of this robo advisor because I've been using it
00:08:33.560 | for four or five years.
00:08:34.880 | I guess I was just asking whether there are
00:08:36.720 | any obvious downsides that you knew about
00:08:39.520 | since this is your area of expertise,
00:08:41.400 | the more general, personal finance and investment.
00:08:44.520 | - The downside with all investment solutions
00:08:48.840 | is that you pay for them.
00:08:51.680 | And the performance of an investment solution
00:08:54.520 | depends largely on the time period under which you hold it.
00:08:59.440 | So if we, I have not reviewed
00:09:01.800 | the Wealthfront promotional literature in years,
00:09:04.160 | nor have I tried to keep tabs on what they're doing
00:09:07.080 | or what they're charging.
00:09:08.240 | Do you know how much they're charging you on your account?
00:09:11.520 | - Yeah, it's a flat 0.25.
00:09:13.600 | - Okay, so obviously a flat 0.25% expense ratio
00:09:18.600 | is a lot cheaper than what you would pay
00:09:22.400 | with an individual personal financial advisor.
00:09:25.560 | But it's more expensive than what you would pay
00:09:27.440 | with just simply buying the mutual funds themselves.
00:09:31.040 | And even buying a mutual fund is more expensive
00:09:34.600 | than what you would pay for just buying the stocks themselves.
00:09:37.440 | So it's, I really want to give you an answer,
00:09:41.880 | but I have to be honest.
00:09:42.960 | And that honest answer is, I don't really care.
00:09:46.080 | All I care about is that you like what you're doing
00:09:48.760 | and that you're comfortable with sticking with it.
00:09:51.260 | And in terms of the overall performance,
00:09:56.080 | a company like Wealthfront has to do a better job
00:09:59.080 | of justifying its fees to you than for example,
00:10:02.720 | many individual financial advisors.
00:10:04.800 | And that's a good thing.
00:10:06.080 | It's good to have the pressure on them
00:10:07.800 | that they have to justify their fees.
00:10:10.280 | But the relative performance or over performance
00:10:15.280 | or under performance and trying to figure out
00:10:18.800 | is the performance nexus of the fees
00:10:20.760 | depends on long-term market cycles
00:10:24.800 | more than it does on what has happened
00:10:26.640 | over the last say five years
00:10:28.200 | that you may have been in it.
00:10:31.320 | So the future very clearly involves
00:10:33.940 | this kind of automated trading.
00:10:37.240 | This is, I think, I've been out of the financial,
00:10:41.600 | the inside business for a while,
00:10:43.360 | but I would be pretty confident saying
00:10:45.140 | that this technology is now basically standard issue broadly
00:10:49.320 | across at least large financial planning firms.
00:10:52.480 | This is now, like this is standard.
00:10:55.720 | So it's not that there's a problem with it.
00:10:58.160 | I'm not upset about paying it,
00:10:59.520 | but you should take a look at your own account
00:11:01.720 | and then compare it to what your hypothetical alternative is
00:11:05.160 | and see, hey, what I save, how much would I have performed
00:11:09.160 | if I weren't paying this 0.25% expense ratio?
00:11:13.220 | Do I feel happy with the fact that this is being done
00:11:16.400 | and automatically rebalanced for me?
00:11:18.420 | I don't have an opinion on what you should do.
00:11:20.260 | I would just encourage you to make an informed decision
00:11:22.760 | as you're doing.
00:11:23.860 | The fact that you bought a book on investing
00:11:25.920 | and didn't love it and weren't that interested in it
00:11:28.240 | is a good sign to you that some form
00:11:30.440 | of simple automated approach
00:11:33.240 | is probably a very good fit for you.
00:11:37.040 | And you probably should continue with that in mind,
00:11:40.600 | recognizing this is a standardized automated approach
00:11:43.680 | of some kind and thus it's probably the best for me.
00:11:46.380 | - Right.
00:11:48.320 | Yeah, that's fair enough.
00:11:49.360 | Yeah, I think that I would probably,
00:11:51.720 | if I were to move,
00:11:53.520 | you know,
00:11:54.360 | I would be hesitant to take more responsibility on myself.
00:12:01.320 | So I would move towards something else.
00:12:02.900 | And like you said,
00:12:04.280 | unless I just move horizontally to another robot advisor,
00:12:09.280 | then I would be moving to a person
00:12:10.820 | and then the rate, the overhead would increase substantially.
00:12:14.120 | That's my understanding.
00:12:15.120 | - Yeah, and there's a good chance that your portfolio
00:12:17.120 | is not at the range yet of which a person
00:12:20.220 | would even particularly be helpful to you.
00:12:22.760 | So that's what I love.
00:12:24.440 | I mean, the great thing,
00:12:25.920 | let me just speak positively about Wealthfront
00:12:29.480 | and about this industry in general.
00:12:32.880 | In the United States,
00:12:33.880 | we are so blessed to have such a range of great options
00:12:37.440 | that serve small and medium-sized investors.
00:12:40.920 | And this is the market at work
00:12:42.880 | and it has provided these solutions
00:12:45.280 | in a really strong and powerful way.
00:12:47.000 | And so we are all better off that these solutions exist
00:12:50.520 | because they help people who are coming up,
00:12:52.440 | financially, to get great world-class investment products
00:12:56.360 | at a very low cost.
00:12:57.880 | And automated software-based solutions,
00:13:00.880 | like Wealthfront and other robo advisors,
00:13:04.000 | allow you to have a high quality product
00:13:07.720 | when your account values are not high enough
00:13:10.120 | to attract the attention of a personal financial advisor.
00:13:15.120 | And so I think it's a wonderful thing
00:13:17.760 | and I'm glad they exist.
00:13:19.000 | It has helped immensely to bring value
00:13:21.920 | to the investment marketplace.
00:13:23.840 | - Great, great.
00:13:26.080 | - Anything else, Mike?
00:13:26.920 | - I have one more question.
00:13:27.760 | - Yeah, go ahead. - I have one more question
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00:14:01.040 | - I have heard that in previous shows,
00:14:04.320 | people have asked the questions about umbrella insurance.
00:14:07.120 | And I'm an outsider to the general field of insurances.
00:14:12.720 | So I have a term life insurance and that's about it.
00:14:16.040 | - Good.
00:14:16.880 | - I was wondering if you could give me like,
00:14:18.280 | the elevator pitch of what is an umbrella insurance
00:14:21.600 | and who should look for one.
00:14:23.760 | - The primary reason you buy
00:14:25.320 | an umbrella liability insurance policy
00:14:28.960 | is that it protects you from large claims
00:14:32.440 | of liability and lawsuits.
00:14:35.160 | This is the first,
00:14:36.960 | one of, this is one of the first forms of defense
00:14:40.640 | against people who want to sue you and take your money.
00:14:44.880 | And so this is some of the upfront,
00:14:47.360 | extremely effective, very low cost protection
00:14:51.120 | in the asset protection world.
00:14:53.560 | As your assets grow and you become wealthier,
00:14:57.200 | you become more of a target for somebody to want to sue you
00:15:00.520 | for something that you have done wrong.
00:15:02.480 | This is largely, but not entirely, an American issue
00:15:07.480 | where in the United States, we have far more lawsuits,
00:15:11.720 | we have a much more litigious culture.
00:15:13.680 | Attorneys are incentivized to go out and solicit people
00:15:17.200 | to sue other people, et cetera.
00:15:19.120 | So this brings a significant legal risk
00:15:20.920 | to protecting your wealth.
00:15:22.440 | And so when you go through the approach
00:15:24.680 | of how do you protect your wealth,
00:15:26.080 | there are a few basic things
00:15:27.920 | that everybody can and should do.
00:15:30.400 | If you've never listened to my series
00:15:32.960 | on asset protection planning for mere mortals,
00:15:35.440 | I would encourage you to go back and listen to that series.
00:15:37.520 | I can't remember, 10 to 15 episodes, something like that,
00:15:40.320 | that I did on the subject where I went through it.
00:15:42.160 | And I covered insurance fairly extensively in that show.
00:15:47.160 | But when you are protecting
00:15:49.660 | against your potential liability,
00:15:51.680 | there are a few basic things that everybody does.
00:15:55.120 | So the first thing you do
00:15:56.160 | is you try to reduce your liability.
00:15:58.800 | You try to eliminate things that you do
00:16:01.680 | that could give rise to potential liability.
00:16:04.560 | So if you're currently in the habit
00:16:06.400 | of drinking and driving, stop it.
00:16:08.920 | Use an Uber or a taxi because that lowers your liability.
00:16:13.320 | If you're currently in the habit
00:16:14.680 | of driving your fancy speedboat
00:16:17.040 | around the tiny lake in back of your house
00:16:19.080 | where children are swimming
00:16:20.300 | and you drive it around at 75 miles an hour
00:16:22.620 | endangering the children, stop it
00:16:24.500 | 'cause that's giving rise to liability.
00:16:26.940 | If you're currently in the habit
00:16:28.580 | of pinching the bottoms of your attractive coworkers,
00:16:31.060 | stop it because that's gonna give rise
00:16:33.400 | to some sort of lawsuit.
00:16:34.900 | So you eliminate activities
00:16:37.220 | that could give rise to liability as best you can
00:16:41.100 | in order to protect yourself from the risk.
00:16:43.860 | The next thing you do is you insure
00:16:46.580 | against those risks that still exist.
00:16:49.160 | And so when you're driving an automobile,
00:16:51.280 | you are inherently doing a risky thing.
00:16:54.080 | You could drive over somebody and kill them.
00:16:56.840 | You could bang into somebody's car and damage it.
00:16:59.960 | You could drive over somebody's mailbox and destroy it.
00:17:02.700 | All of these things are potentially sources of liability.
00:17:07.700 | And so you insure against those.
00:17:10.300 | Yes, you try to drive carefully.
00:17:11.640 | You try to make sure that you don't drive fast
00:17:14.040 | where you run over somebody.
00:17:14.880 | You try to make sure you drive defensively
00:17:16.360 | so you don't bang into somebody.
00:17:18.480 | You put a dash cam on your car
00:17:19.720 | so you have good evidence of your careful driving
00:17:22.160 | so that when the mailbox is damaged,
00:17:23.820 | you can prove that it wasn't your fault.
00:17:25.780 | So you do the things that minimize the liability,
00:17:28.400 | but you also protect yourself with insurance.
00:17:30.880 | So you generally, in the US system,
00:17:33.360 | you insure your car and you insure your house.
00:17:35.920 | So before you add umbrella liability,
00:17:38.060 | you increase the liability coverage
00:17:40.080 | of your insurance policies on your vehicles
00:17:43.280 | and on your homeowner's policy.
00:17:45.480 | Now, as your assets continue to grow beyond that,
00:17:48.560 | you will then look at what forms of protection are there.
00:17:51.520 | So for example, you'll maximize your exemptions.
00:17:54.660 | Any exempt assets that you can invest into,
00:17:57.440 | such as a 401(k) or an IRA or a life insurance policy
00:18:02.440 | or home equity, these assets, depending on your state laws,
00:18:05.960 | may be exempt from the claims of creditors.
00:18:07.800 | And so this is a primary focus for you to,
00:18:11.340 | this is a primary place for you to begin
00:18:13.660 | with your actual plan of setting money into those buckets.
00:18:18.660 | As your assets grow though,
00:18:20.080 | you'll start to accumulate assets
00:18:21.520 | that are not protected by those buckets.
00:18:23.400 | And you'll want more and more protection
00:18:25.400 | because as your wealth grows,
00:18:26.800 | you become a bigger target for lawsuits.
00:18:29.960 | A lawyer is not gonna sue you if he thinks you're broke.
00:18:33.000 | So, but if it's obvious that you're not broke,
00:18:35.000 | then the lawyer is more likely to go ahead
00:18:36.800 | and help somebody to sue you.
00:18:38.280 | And so that's where umbrella liability insurance comes in
00:18:41.280 | because it's very, very inexpensive
00:18:44.300 | in terms of the actual cost, the premiums,
00:18:47.500 | but it's the first line of defense
00:18:49.200 | against the vast majority of liability that you might face.
00:18:52.140 | And so it can put in place a buffer of a million dollars,
00:18:54.740 | two million dollars, five million dollars of insurance
00:18:58.260 | that would be paid out if somebody sued you
00:19:01.080 | and won their case against you
00:19:02.940 | before your personal assets would ever be approached.
00:19:05.460 | So as your wealth grows,
00:19:07.860 | I just commit to you the rule that was given to me
00:19:10.620 | by Ken Zahn when I was preparing for my CFP exam.
00:19:15.020 | He said, "If you see on the CFP exam
00:19:17.100 | liability insurance as a possible answer,
00:19:20.340 | then tick that answer because no matter what,
00:19:23.860 | more liability insurance,"
00:19:25.260 | I'm sorry, umbrella liability insurance.
00:19:26.860 | Let me rephrase that.
00:19:27.900 | "If you see umbrella liability insurance
00:19:29.540 | as a possible answer, tick that box
00:19:31.460 | because more umbrella liability insurance
00:19:33.400 | is always the right solution."
00:19:34.980 | So I submit that to you as a useful heuristic.
00:19:39.740 | - So if I understand correctly,
00:19:41.260 | effectively the umbrella liability kicks in
00:19:45.380 | after your regular, like in the context of a car accident,
00:19:49.100 | in the context of something going wrong at your property.
00:19:52.980 | - Yes.
00:19:53.820 | - The first wave is absorbed by that insurance
00:19:55.500 | and then whatever is left
00:19:59.220 | will be covered through the liability one.
00:20:00.700 | - Correct.
00:20:01.540 | Your insurance agent will help you
00:20:02.500 | to harmonize your insurance policies
00:20:04.540 | so that where the umbrella, excuse me,
00:20:06.620 | where the liability coverage on your home ends,
00:20:08.960 | that's where your umbrella policy kicks in.
00:20:11.500 | It's the umbrella that goes over your other policies.
00:20:14.500 | And so you wanna, you could have a donut hole in the middle,
00:20:17.660 | but generally speaking,
00:20:18.660 | you'll want to harmonize your liability limit
00:20:21.500 | so they work beautifully between
00:20:23.460 | your other liability coverages
00:20:25.420 | and your umbrella liability policy.
00:20:27.340 | - Okay.
00:20:29.060 | And so how would you, just quickly,
00:20:30.740 | how would you advise me to go about,
00:20:32.620 | let's say I wanna get one,
00:20:35.140 | how do I actually go about that?
00:20:36.620 | Because you talked about an agent
00:20:37.740 | that I'm used to online things still with,
00:20:40.320 | you know, DICO and other general online things.
00:20:45.160 | - Start with the existing relationships that you have.
00:20:47.960 | Even if you are used to online things,
00:20:50.740 | then most of these companies with whom you interact
00:20:53.780 | will want to sell you umbrella liability coverage.
00:20:56.360 | And it's not possible, recognize,
00:20:59.760 | it's not possible to buy insurance without an agent.
00:21:03.000 | Even if you're interacting with an online website,
00:21:05.100 | there's still licensed insurance agents
00:21:06.860 | who are selling you those policies.
00:21:09.360 | What you should always consider,
00:21:10.520 | I give the same advice that I give generally to anybody,
00:21:14.480 | is interacting with in-person insurance agents
00:21:19.080 | is often an excellent idea
00:21:21.640 | because the market pressures of the online-only brokerages
00:21:25.760 | keep prices down largely across the board,
00:21:28.640 | but the agents, their job is still to serve you.
00:21:31.600 | And so the offer you, the choice you have is,
00:21:35.920 | do I want the commission that's being paid
00:21:38.200 | on this insurance policy to go directly to a company,
00:21:42.600 | or do I want the commission that's being paid
00:21:44.520 | to go to an individual who actually speaks to me?
00:21:47.720 | There are exceptions to this.
00:21:49.640 | And so if we moved into the property and casualty world,
00:21:53.500 | you'll have sometimes a company that only sells direct.
00:21:58.500 | So for example, USAA or Amica Mutual
00:22:02.200 | or some of these companies that are high-quality companies,
00:22:05.040 | and the only way you can work with them,
00:22:07.040 | they don't broker their business out,
00:22:08.480 | the only way you can work with them
00:22:10.000 | is to work directly with the company.
00:22:12.400 | And so this exists at the high end of the market
00:22:14.260 | and also at the low end of the market.
00:22:15.880 | So if you have existing relationships,
00:22:18.180 | just start by calling the company
00:22:19.720 | that you already work with and talking to them.
00:22:22.520 | And even if you're not used to working with an individual,
00:22:24.860 | they will put an insurance agent on the phone with you
00:22:27.960 | who can go through these options with you,
00:22:30.440 | and there may be some price breaks
00:22:32.520 | where you bundle your insurance policies together.
00:22:35.920 | That's where you start.
00:22:37.000 | Then absent that, just look around your area
00:22:40.120 | and call or talk to some liability insurance,
00:22:43.540 | property and casualty and liability insurance office
00:22:47.120 | or broker of some kind.
00:22:48.720 | And if you look around, you'll find people in your area
00:22:51.960 | and in your neighborhood that do that work
00:22:53.720 | and you can talk to them.
00:22:54.640 | And they'll broker their business
00:22:55.680 | with a variety of different companies,
00:22:57.160 | and you can review their quotes
00:22:58.400 | and compare that to what you have
00:23:00.180 | and see what is best for your situation.
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00:23:33.320 | - All right.
00:23:35.360 | Okay, that was very helpful.
00:23:36.500 | Thank you, Joshua.
00:23:37.340 | - My pleasure.
00:23:38.180 | We go on to Andy in Indiana.
00:23:41.200 | Andy, welcome to the show.
00:23:42.040 | How can I serve you today?
00:23:43.600 | - Hi, Joshua.
00:23:44.440 | Thank you for taking my call.
00:23:45.640 | - My pleasure.
00:23:47.160 | - My general question is,
00:23:49.640 | do you have a good idea or a program
00:23:52.200 | that you'd recommend for determining
00:23:54.640 | what I'm good at and what I like?
00:23:57.560 | I find that generally I am fairly competent
00:24:00.880 | and fairly easygoing,
00:24:02.200 | so most of the jobs I've had have been successful at
00:24:05.180 | and I haven't particularly hated,
00:24:06.960 | even if I don't love them.
00:24:08.260 | I've been looking at moving within my own company
00:24:12.380 | or possibly even to a different company,
00:24:14.600 | and I have a hard time articulating,
00:24:17.840 | well, I'm good at this and I'm bad at that,
00:24:19.640 | or I really like this and I really don't.
00:24:25.760 | - What personality tests have you already taken?
00:24:29.880 | Any at all?
00:24:30.720 | - I've taken Strength Finders.
00:24:33.320 | I've taken Enneagram.
00:24:36.160 | I think I've taken a couple others in the pile up.
00:24:39.820 | True Colors, I think is what that one's called.
00:24:44.500 | - And have they not given you anything that was useful?
00:24:48.620 | - I guess I've had trouble aligning that with actual work.
00:24:55.200 | Strength Finders is a little bit more oriented
00:24:59.040 | towards the work that you do.
00:25:02.120 | And maybe my question should be,
00:25:04.040 | how do I judge characteristics that make a particular job,
00:25:11.840 | make you successful at a particular type of job in specific?
00:25:16.240 | I just have not had much luck in my own head saying,
00:25:24.820 | hey, because I'm good at this, I would be good at that.
00:25:27.520 | - You've listed several personality tests
00:25:31.600 | that I have not taken.
00:25:33.240 | And so you probably have more insight
00:25:35.840 | even than into the test than I could specifically say.
00:25:39.720 | It's been now probably six or eight years
00:25:42.480 | since I have carefully gone out
00:25:44.320 | and researched the marketplace on these things.
00:25:48.880 | I did it in preparation for my career and income course,
00:25:51.200 | which I launched, again, probably six or seven years ago
00:25:53.480 | that hasn't been on the market for a few years.
00:25:55.600 | But when I did that, I went out and I did a careful survey
00:25:59.760 | of all the tests that were then in vogue
00:26:02.400 | and looked into them, but that knowledge is now decaying.
00:26:07.400 | And the one that impressed me the most,
00:26:10.440 | but when I went through and took them all and studied them,
00:26:13.520 | the one that impressed me the most was the DISC profile.
00:26:16.340 | And so if you haven't done that one,
00:26:18.420 | again, this is five years out of date,
00:26:20.140 | but that's the best one.
00:26:20.980 | You have taken that one?
00:26:22.520 | - I have taken that one, I forgot about that one.
00:26:23.880 | - Did it not give you any kind of career categories?
00:26:28.600 | - I did it through another program and it didn't,
00:26:33.300 | I didn't get that, but maybe it would be available
00:26:37.760 | if I went back through their material based on my results.
00:26:41.860 | - The reason that one impressed me is,
00:26:46.780 | I see there are two paths to answering this question.
00:26:50.040 | Path number one is personal introspection
00:26:52.720 | and self-analysis.
00:26:54.300 | Path number two is external testing and advice.
00:26:58.240 | So I, when I was younger,
00:27:00.880 | I didn't know anything about path number two.
00:27:02.880 | Nobody gave me counsel to go and speak to a career counselor
00:27:05.900 | to take a battery of personality tests.
00:27:08.520 | I was kind of making it up as I went along.
00:27:10.560 | And so the way I engaged in introspection
00:27:13.120 | was I kept a running list of every job
00:27:16.400 | that I thought would be interesting to me.
00:27:18.720 | And I tried to take note of why I was interested in it.
00:27:22.120 | And I wouldn't censor myself or choose
00:27:26.040 | based upon any external things.
00:27:28.080 | So for example, I wrote on my list
00:27:30.760 | that I would enjoy being a barista at Starbucks.
00:27:33.580 | Why?
00:27:34.420 | Well, I enjoy the coffee shop atmosphere.
00:27:36.400 | I just enjoyed being in Starbucks.
00:27:38.320 | I enjoyed the coffee shop atmosphere.
00:27:39.800 | I spent a lot of time there.
00:27:41.080 | And I thought how pleasant it would be
00:27:42.920 | to be in just a friendly environment like this
00:27:45.660 | throughout the day.
00:27:47.000 | Similarly, I at one point had on my list
00:27:49.840 | that I would enjoy working at Panera Bread.
00:27:51.760 | Why?
00:27:52.600 | Well, the same basic idea.
00:27:53.840 | I enjoy the atmosphere.
00:27:55.440 | But then I thought, well, I would also enjoy
00:27:57.440 | owning a restaurant or owning my own place.
00:28:00.540 | Why?
00:28:01.380 | Well, because I enjoy the atmosphere.
00:28:02.620 | And I also, if I had my own restaurant
00:28:04.880 | or I had my own coffee shop,
00:28:07.780 | that would give me the opportunity to bring people together
00:28:11.080 | and facilitate fellowship within a community.
00:28:13.600 | And so I would see a great deal of purpose in that.
00:28:16.580 | But then I also quickly wrote that I don't have
00:28:18.480 | any interest in owning a restaurant
00:28:19.740 | 'cause I don't like to work at nights and on weekends.
00:28:22.120 | So it would have to be a breakfast and lunch cafe
00:28:24.240 | if I did it, or I would have to find a solution.
00:28:26.560 | And so I would go around the world observing things.
00:28:29.180 | At one point, I had on my list that I should go
00:28:31.480 | and work for a large international hotel chain.
00:28:33.840 | Why?
00:28:34.680 | Well, I enjoy traveling and it's really fun.
00:28:37.500 | And I'm studying international business at the time.
00:28:40.960 | And so this would be a pretty good application
00:28:43.280 | of international business.
00:28:44.120 | So if I go work for Hilton Hotels or Marriott Hotels,
00:28:47.280 | et cetera, then I have the opportunity
00:28:49.780 | to go among their hotels and work my way up
00:28:52.020 | through a corporation.
00:28:53.040 | And since I enjoy the travel industry
00:28:54.860 | based upon my personal experiences,
00:28:56.460 | this might be something that I would enjoy.
00:28:58.900 | Now, these are just a few of the silly entry,
00:29:01.980 | not silly, but these are just a few
00:29:03.460 | of the entry-level indications that I said,
00:29:07.020 | but I kept a lot of these.
00:29:08.500 | So another example, I read Tom Stanley's books,
00:29:11.420 | all of his books.
00:29:12.240 | And he repeatedly talked about the value
00:29:15.220 | of how a large blue-collar business owner
00:29:18.180 | can often be the wealthiest guy out there.
00:29:20.220 | And so one of his businesses that he talked about
00:29:23.460 | was the scrap metal business.
00:29:25.260 | Generally, a guy who runs a scrap metal business
00:29:27.460 | can be exceedingly wealthy.
00:29:29.380 | People have no idea how much money
00:29:30.680 | he can make scrapping stuff.
00:29:32.180 | And yet he winds up having low expenses
00:29:37.180 | 'cause he just, he shows up to work
00:29:41.100 | in an old beat-up F-150 and a pair of blue jeans,
00:29:43.240 | and he makes a million dollars a year.
00:29:44.940 | And so I wrote that down.
00:29:46.960 | Hey, there's a cool idea that could make a lot of money,
00:29:48.960 | low competition, et cetera.
00:29:52.120 | So I just would keep these lists of any job
00:29:54.680 | or business that sounded interesting to me.
00:29:56.960 | I knew growing up, I loved listening to talk radio.
00:30:00.260 | And so I listened to a local talk radio station
00:30:03.540 | in my town that was just a kind of a statewide
00:30:06.760 | or region within a few county area,
00:30:09.240 | but it was very successful.
00:30:10.140 | I would listen to them all day long,
00:30:11.340 | and they were a little bit vulgar,
00:30:13.400 | but I really enjoyed the talk radio experience.
00:30:15.640 | I would listen to Rush Limbaugh and Glenn Beck,
00:30:17.600 | and those were my two favorites when I was in high school.
00:30:20.300 | So I'm driving a tractor across a field
00:30:21.940 | listening to talk radio, and I thought I could do that.
00:30:24.720 | Like, I would enjoy that.
00:30:26.540 | And I liked to write, I loved reading Tom Clancy books
00:30:30.760 | since I always imagined, here's Tom Clancy
00:30:32.960 | sitting out with his computer
00:30:34.200 | creating this masterpiece of a novel.
00:30:36.060 | I would love that.
00:30:36.900 | I would enjoy being a writer.
00:30:38.560 | So those are just six examples that won't surprise anybody
00:30:42.520 | who's ever listened to my podcast
00:30:43.600 | because these are qualities that come through.
00:30:46.060 | What impressed me about the DISC assessment
00:30:48.580 | is that when I went through and took it,
00:30:50.720 | every single job that they suggested for me
00:30:53.620 | was either something that I had done
00:30:56.300 | or that I had on my list of things I would enjoy doing.
00:31:00.400 | And so that was what biased me to say, that's great,
00:31:04.800 | because I could have saved myself years of introspection
00:31:07.200 | if I had done that.
00:31:08.640 | So my first recommendation would be
00:31:11.760 | just engage in introspection
00:31:14.080 | and write down any job that you have heard of
00:31:18.880 | someone else doing, or that you've read in a novel
00:31:21.880 | or something that sounds something
00:31:23.280 | that's remotely interesting to you.
00:31:25.280 | And to the extent that it's possible,
00:31:27.400 | make a note of why it's attractive to you personally.
00:31:31.640 | You know, I always thought it'd be fun to be a sheepherder.
00:31:34.120 | I saw the sheep wagons that the sheepherders live in
00:31:38.840 | way out in the boonies,
00:31:40.320 | and I thought I'd love to live in a little tiny wagon,
00:31:42.640 | be an old guy sitting out there,
00:31:45.040 | reading books and watching the sheep, that appeals to me.
00:31:48.280 | Well, I'm not gonna go and be a sheepherder
00:31:50.200 | at this stage of my life,
00:31:51.620 | but it's still interesting to have made note of that
00:31:53.760 | so that maybe at a different phase of my life and career,
00:31:56.560 | I might incorporate more of that lonely hermit lifestyle
00:32:00.400 | into my approach.
00:32:03.080 | So if you're not getting any help with the external stuff,
00:32:06.880 | then engage in introspection.
00:32:09.220 | On the other hand, flip to the external stuff.
00:32:11.480 | If you have done your best in the DIY environment
00:32:16.480 | and you have not been able to discover a successful path,
00:32:21.480 | then it's the time to hire a professional
00:32:25.680 | to help you discover what things you might be skilled at.
00:32:30.200 | And I'm not that professional.
00:32:31.400 | I wish I were, but I'm not.
00:32:32.760 | And so you should take whatever you're paying me
00:32:35.800 | and you should save it up and go and hire
00:32:38.280 | some form of career counselor
00:32:41.400 | and go through that career counselor's battery of tests
00:32:44.720 | because somebody who is a professional in that field
00:32:47.240 | will have the insight into what can work
00:32:49.600 | and can provide you with more useful data.
00:32:53.720 | So I think both approaches can work well,
00:32:56.400 | but you've probably engaged in a lot of introspection
00:32:59.040 | 'cause nothing that I've just said
00:33:00.680 | is anything you haven't heard before.
00:33:02.280 | You've done a good battery of tests
00:33:04.320 | and you're still wondering this question.
00:33:05.960 | So then that's the time when you need to go and hire
00:33:08.200 | a professional career counselor
00:33:09.960 | and see what they might have to say
00:33:11.440 | and how they might guide you.
00:33:12.880 | - Thanks.
00:33:16.100 | Any advice on how to find that sort of person
00:33:19.640 | or where to look for them or that sort of thing?
00:33:22.360 | - Have you ever heard anybody,
00:33:24.040 | I mean, have you ever tried career counseling
00:33:26.280 | or career-oriented YouTube channels or podcasts
00:33:30.280 | or heard anybody advertising services
00:33:32.280 | through that for that venue?
00:33:34.020 | - I don't think so.
00:33:36.840 | I mean, not more so than what you do.
00:33:39.800 | - I would begin with a search of the podcast directories
00:33:44.680 | and I would just look around and see
00:33:46.480 | what career-related podcasts are out there
00:33:50.680 | on a broad general basis.
00:33:52.120 | I'm sure that some career coach somewhere
00:33:54.520 | has a great podcast and I don't know what it is.
00:33:57.280 | I haven't looked for it, but I'm sure someone has it.
00:33:59.480 | I would also then go to YouTube,
00:34:01.240 | which I think is in many cases more fruitful
00:34:03.720 | and I would search for maybe set up a new account
00:34:07.040 | so that you can tweak the algorithm,
00:34:09.160 | set up a standalone account,
00:34:11.280 | go and start searching for career-oriented YouTube channels
00:34:16.280 | or career counselors,
00:34:19.600 | and then let the algorithm feed you some results
00:34:22.960 | over the course of a few weeks
00:34:24.200 | so that you can kind of train it to give you the channels
00:34:27.480 | that you don't know how to search for.
00:34:29.360 | I would go and look for an association
00:34:31.720 | or organization of career counselors,
00:34:33.960 | a professional association of some kind.
00:34:36.480 | Undoubtedly, there is some form of industry
00:34:39.000 | devoted to that with some form of certification.
00:34:42.480 | It may be something related to guidance counselors.
00:34:45.280 | So for example, you think of guidance counselors at schools
00:34:47.960 | who are expected to have some exposure
00:34:50.560 | to the college environment
00:34:51.880 | as well as various career options.
00:34:54.040 | It may be something on a professional level
00:34:56.000 | or it may be some form of executive coaching.
00:34:59.400 | And so I would look for an organization
00:35:02.480 | that had some form of certification
00:35:04.480 | and then look for a listed directory of people
00:35:07.440 | and try to see if there's a directory of people.
00:35:10.920 | And in something like this,
00:35:11.760 | I don't think it needs to be a local or regional person.
00:35:15.400 | It could be a national, anywhere in the nation.
00:35:18.880 | But there must be some form of organization
00:35:22.000 | devoted to that.
00:35:23.400 | And that's where I would start my searches.
00:35:26.120 | - Okay, makes sense.
00:35:27.160 | Thank you.
00:35:28.000 | - My pleasure.
00:35:28.840 | That concludes our Friday Q&A show.
00:35:30.120 | And thank you so much for listening.
00:35:32.720 | If you'd like to join me,
00:35:33.560 | we only have two callers to call in the day,
00:35:34.720 | so we have plenty of time.
00:35:35.560 | So if you'd like to join me on next week's show,
00:35:37.120 | which will undoubtedly be much longer
00:35:38.840 | than this particular episode,
00:35:41.800 | please go to patreon.com/radicalpersonalfinance,
00:35:44.840 | patreon.com/radicalpersonalfinance.
00:35:46.840 | Sign up to support the show there
00:35:48.240 | and I will be able to speak with you next week.
00:35:50.960 | Remember that this week is the last week
00:35:53.360 | that I have personal consulting calls available for a time.
00:35:56.680 | And so if you are interested in that,
00:35:58.280 | I think I have three or four appointment slots left
00:36:00.280 | for this next week,
00:36:01.280 | go to radicalpersonalfinance.com/consult.
00:36:03.920 | Sign up for a personal consulting call,
00:36:05.480 | 20% off this week, radicalpersonalfinance.com/consult.
00:36:09.200 | - The holidays start here at Ralph's
00:36:12.080 | with a variety of options
00:36:13.400 | to celebrate traditions old and new.
00:36:15.760 | Whether you're making a traditional roasted turkey
00:36:18.320 | or spicy turkey tacos,
00:36:20.120 | your go-to shrimp cocktail,
00:36:21.920 | or your first Cajun risotto,
00:36:23.800 | Ralph's has all the freshest ingredients
00:36:26.280 | to embrace your traditions.
00:36:27.880 | Ralph's, fresh for everyone.
00:36:30.120 | - Choose from a great selection of digital coupons
00:36:32.400 | and use them up to five times in one transaction.
00:36:35.000 | Check our app for details.
00:36:36.560 | Ralph's, fresh for everyone.
00:36:38.760 | You