DR_123-Joshua_Sheats-Radical_Personal

00:00:00.000 | The LA Kings Holiday Pack is back! The perfect gift for the hockey fan in your life. A three-game

00:00:05.040 | pack starts at just $159 and includes a holiday blanket. Buy today and you'll receive an additional

00:00:10.720 | game for free. Don't miss out. Visit lakings.com/holiday today. What's it like to be a certified

00:00:17.200 | financial planner? Why would a successful CFP quit his job to start a podcast? And what do the

00:00:24.080 | initials CFP, CLU, CHFC, CASL, CAP, RHY, and good grief, REBC mean after a person's name?

00:00:34.960 | We'll answer these questions and more on this the 123rd episode of the Doughroller Podcast.

00:00:40.720 | Welcome to the Doughroller Podcast, where the best thing money can buy is financial freedom.

00:00:47.600 | We help you make more, spend less, and invest the rest. And now your host, Rob Berger. Whether

00:00:55.920 | you're just starting out buried under a mountain of debt or well on your way to financial freedom,

00:01:00.640 | this is the podcast to help you take your finances to the next level. Hey everybody, hope you're

00:01:05.680 | having a great day. Today on the show we have a friend of mine who I recently met at a conference,

00:01:12.160 | his name is Joshua Sheets, and after speaking with him for even just a couple of minutes,

00:01:17.360 | I knew I wanted to have him on the show. He is, among other things, you heard all those initials

00:01:22.240 | in that last question, we'll try to figure those out in the interview, but he is a certified

00:01:26.560 | financial planner. And what makes him interesting, among other things, is that after having a

00:01:30.560 | successful career as a CFP, spending a number of years in that business, as you'll hear, he quit

00:01:37.680 | and he started a podcast. The podcast is called Radical Personal Finance, you'll hear more about

00:01:43.520 | it. And so I just thought it would be a great opportunity to hear what it's like to be a

00:01:47.360 | certified financial planner. What do they really do? How do they help people? What's that business

00:01:52.080 | like? Why did he quit? How's the podcast? And what are all those initials after his name? I kid you

00:01:58.720 | not, when you look at his about page and he signs his name at the end, there's just a string of

00:02:03.200 | initials. I just have JD after my name, I mean, I'm happy with that one, but this guy's got a ton

00:02:08.800 | of credentials. And so we're going to hear from Joshua in just a minute and hopefully enjoy the

00:02:15.440 | podcast. I think this interview does win the award for the longest interview on this show, I believe

00:02:22.240 | so. So pretty detailed interview. Real quick before we get to that, I just wanted to mention,

00:02:28.880 | I've got a number of shows planned in the near future that I hope you'll enjoy. Many of them are

00:02:35.680 | again, as I've mentioned in the past, topics that you have suggested or that I've mentioned. I have

00:02:40.240 | this long and growing list and every now and again, someone will email me and remind me, "Hey,

00:02:46.160 | remember you promised to do a show about this." And so I haven't forgotten, but we're going to be

00:02:51.520 | talking about things like real estate investing and the taxes, the tax implications for investing

00:02:58.240 | in real estate. That's one thing that I had mentioned, that's coming up in just a few shows.

00:03:02.560 | I'm going to cover and compare the different robo advisors out there. I really don't like that term,

00:03:07.440 | but I use it because that's just what they've come to be known as. You think of Betterment,

00:03:12.960 | and I don't even consider personal capital a robo advisor, but it kind of gets lumped in there,

00:03:17.600 | and Wealthfront and Future Advisors and other others. I've mentioned Acorn, it's kind of

00:03:22.720 | similar. How do you make sense of all this? Do they all do the same thing or are there differences?

00:03:30.000 | And what are the fees? Are there differences in the investment philosophies of these different

00:03:36.560 | investing tools, which is really what they are? So I'm going to cover that.

00:03:40.960 | So I have a lot of good things coming up. Really, the point was, feel free to remind me

00:03:49.360 | that I promised a topic that you haven't heard yet. I love the reminders, but I haven't forgotten

00:03:56.640 | the list. I mean, literally, the list is probably 50 shows long. So it just takes me time, and it

00:04:01.920 | grows every week. I get email, and I think, "Oh, that's a great topic. Yes, I should record a

00:04:06.800 | podcast about that." I add it to the list. So please keep those emails coming in, drdorilder.net.

00:04:12.480 | But I haven't forgotten. Feel free to remind me, but I haven't forgotten. It's just a long list,

00:04:17.360 | and we're getting to them as quickly as we can. So with that, let's welcome Joshua to the show.

00:04:26.000 | Joshua, welcome to the show.

00:04:28.240 | Rob, thank you for having me.

00:04:29.440 | Hey, so we met at FinCon for the first time and had some very interesting conversations

00:04:35.440 | about financial planning, about your podcast, which we'll get to. And so I'm grateful for

00:04:41.360 | you taking the time to come on the show. And so for those listening, why don't we just start off?

00:04:47.120 | Why don't you tell us who you are and what you do?

00:04:51.200 | Well, I've always been a personal finance junkie, which is probably the most,

00:04:56.160 | I guess, germane information to start with. I've always been a junkie. I was the nerd when at 13

00:05:02.400 | years old, I should have been out playing football. I was reading books on investing

00:05:06.640 | and personal finance and securities analysis and all of that. But I always was very much

00:05:11.440 | involved in the personal finance side of it and always enjoyed running my own stuff. I like to

00:05:16.000 | tell my 18th birthday, I vividly remember sitting at my parents' dining room table and opening my

00:05:21.520 | first Roth IRA and opening my first credit card. I was very much kind of trying to be on the ball

00:05:28.560 | with all of my financial.

00:05:30.720 | Man, you are a money geek.

00:05:32.160 | I'm telling you, I was a total nerd.

00:05:35.120 | So where did you open up? At 18, where did you open up your Roth IRA?

00:05:38.400 | USAA, actually. They were offering a deal at the time. I started banking with USAA when I was in

00:05:43.920 | my early teens, mid-teens. And they were offering a deal on one of their funds that had a low

00:05:48.640 | minimum purchase of like 25 bucks. And so I opened it up with like 25 bucks a month, auto-debited

00:05:54.640 | right into their mutual fund. Kept that account for years.

00:05:57.920 | How does someone in their teens get so interested in this? I mean, did your parents sort of guide

00:06:01.760 | you into this or did you do this on your own? How does that happen?

00:06:04.080 | My parents are not... They do fine, but they're not really connected to all the details of it.

00:06:10.080 | I just read a lot and I was educated at Holmes for the first half of my educational career.

00:06:16.080 | So with that, you get the opportunity to read a lot. And so I read about everything I could

00:06:20.800 | possibly find and I just found that personal finance books made it click to me because I

00:06:24.240 | wanted to be rich. And it seemed so simple if I just did A, B, C, D, E, all the charts in the

00:06:29.600 | book say, "Joshua, you'll wind up rich." And so I just found that I really enjoyed learning about

00:06:34.720 | it and I was good at it. So I was that annoying kid who was telling people what to do with their

00:06:38.640 | money when they really had no business doing so. Okay. So you started into this in your teens.

00:06:44.560 | You opened up your first Roth IRA at 18, made a contribution. So you got that five-year rule

00:06:50.640 | starting to tick away. So you're past that, I'm sure, by now. So then what happened?

00:06:54.800 | And then I started building my credit score and then I started putting my way through college.

00:06:59.040 | And I had purchased a book on how to build your credit score and my philosophy, and I'll tell you

00:07:03.840 | how crazy it went. My philosophy was that I wanted to invest in real estate at the time. That was

00:07:09.120 | what I saw as my path to riches. And so my plan was to build my credit score so I could easily

00:07:16.640 | access credit for the purpose of buying real estate. So systematically through college, I

00:07:22.320 | systematically raised the limits on my credit cards to the point when I was a junior in college,

00:07:27.600 | this would have been 2006, junior in college, I had $100,000 of credit line available to me on

00:07:34.240 | four credit cards. Now, can I just stop? I just got to stop right there for a second. Isn't it

00:07:38.240 | absurd that a junior in college can get 100 grand in credit? A junior in college earning just a few

00:07:44.400 | thousand bucks a year. I mean, honestly, that is just insane. Of course, this was 2006, you said?

00:07:49.120 | Right. You probably couldn't, you wouldn't have been able to do that in 2009, I'm going to guess.

00:07:53.040 | Right. It's very different now. But I was very systematic about it. I just had a particular

00:07:57.600 | file and every three months I'd call each of the cards and I'd request a credit increase and they

00:08:01.040 | give me a credit increase and I've never been late on a payment of any kind for any reason.

00:08:05.040 | And so systematically, they kept expanding it. Now I shudder in horror at how stupid I could

00:08:10.640 | have been. But I wanted to be able to buy a house on a credit card if I needed to.

00:08:14.560 | But sure, of course, why not a house on a credit card? Think of the reward points you'd get.

00:08:18.400 | Think of how rich, after all, I was reading all these "Get Rich Quick with Money" real estate

00:08:21.840 | books and they were telling me how rich I could be.

00:08:24.080 | I'm curious, what book did you read to understand credit scores, if you remember?

00:08:28.720 | I don't remember. It was something I bought online. It was one of these PDF things.

00:08:31.680 | So I got sucked in, when I was a teenager, I got sucked into the world of real estate investing,

00:08:37.360 | the no money down world. And attended a couple of seminars and found a lot of information. And

00:08:42.480 | the key thing they always said was, "Build your credit score." That was what the scammers and

00:08:47.360 | the shysters at that time were focusing on. So I just said, "Okay, I'll build my credit score."

00:08:51.680 | So it was just some book. I printed it off the internet and followed it.

00:08:55.200 | Did you ever invest in real estate?

00:08:56.880 | I didn't. I didn't. The first piece of real estate that I ever bought was the house that my wife and

00:09:03.120 | I now live in and that was two and a half years ago. And I'm so thankful I didn't. It was a

00:09:06.800 | miracle that I didn't wind up going bankrupt. I had several friends of mine from college

00:09:11.920 | who did get heavily into real estate investing here in Florida. But in the stupid way, before

00:09:16.640 | the crash, and lost everything, went bankrupt, a couple of them have recovered, a couple of them

00:09:21.440 | haven't. But I started going to the seminars, you know, the free hotel seminars. And you go for the

00:09:26.880 | one hour thing and then you go to the three day thing. And at the three day thing, I vividly

00:09:30.480 | remember when I was in college, I don't remember which year, but I think it may have been my

00:09:33.680 | sophomore year, I'm not sure. I came home from a three day real estate seminar with a buddy of

00:09:38.560 | mine. And I was all fired up and ready to put down the $20,000 for the private mentoring

00:09:46.080 | program with the real estate guru. And I'm ready to do it. And my dad just basically said,

00:09:50.880 | Joshua, stop, don't be stupid, do not do it. And thankfully, I listened to him. And that decision

00:09:57.920 | saved me because I was a pretty aggressive guy. I was a pretty hardcore. I would have gone out and

00:10:02.080 | bought five properties just following the Get Rich in Real Estate books and without any actual

00:10:07.840 | foundation before it. And I would have been destroyed in the resulting correction because

00:10:12.560 | I wouldn't have known what I was doing. Well, good for your father. I have thanked him many

00:10:17.120 | times for that. And I'm also thankful that he put a respect for parents into me at a young age that

00:10:23.520 | I listened to him. The older I get, the smarter my dad gets. It's kind of crazy. I hope the same

00:10:28.720 | thing applies to my kids. We'll see. Okay. So you didn't go into real estate. What did you do after

00:10:33.840 | college? So after college, when I started college, I studied business and I thought I was going to be

00:10:38.320 | kind of the big corporate Fortune 500 CEO. I liked business. So my degree is in international

00:10:44.160 | business. And after college, I went and I worked at a marketing and brand management consulting

00:10:50.640 | company. And this was kind of the fancy after college job that I could make sound impressive

00:10:54.720 | to anybody if I tried. And I had a little bit of travel and working on all these big accounts with

00:10:58.560 | big Fortune 500 companies as kind of a junior analyst and making pretty decent money. But then

00:11:04.960 | I got laid off. And thankfully, I had at the time, I had been following Dave Ramsey's baby steps as

00:11:10.960 | kind of my plan. My brother gave me a copy of Total Money Makeover when I was in college. And

00:11:15.680 | I thought it was very interesting. And I read it once and didn't make any sense to me. And then I

00:11:20.400 | read it again. I was like, "Wow, this guy actually makes sense." And I read it the third time and

00:11:23.920 | decided to get out of debt. So I worked like a maniac my senior year in college and paid off.

00:11:29.280 | I paid off some credit card debt that I'd accrued because I'd put my way. I paid my way through

00:11:33.120 | college at a private university here in West Palm Beach. And so I was able to pay off some credit

00:11:38.640 | card debt and then pay for my senior year. And then actually two weeks before I graduated,

00:11:43.440 | due primarily to the influence of Dave Ramsey and his get out of debt message, two weeks before I

00:11:49.200 | graduated, I wrote a check to Sally Mae and paid off all my student loans and graduated from college

00:11:53.600 | debt free. Wow. Good for you. It was awesome. I worked hard. I tell you. I vividly remember it

00:11:59.440 | because I worked harder that year than I'd ever worked. I took 19 hours of senior business classes.

00:12:04.800 | I worked 40 hours a week. And I actually learned more that year than I had learned in any of the

00:12:10.640 | previous years, including a year where I didn't work at all during school. And I just put all my

00:12:15.600 | school bills on student loans. And my teachers were far smarter than they were in any of the

00:12:20.000 | other years. And I got better grades. I actually got straight A's my senior year. And I had not

00:12:24.720 | gotten straight A's in my undergraduate years when I had more time to study. And I learned the power

00:12:29.280 | of focus and the power of time budgeting from that experience fundamentally shaped a lot of,

00:12:33.840 | but it shaped me and who I am. Well, that's good. Okay. So you got, but you got laid off your first

00:12:40.720 | job. Right. So I, I worked for a year at this marketing company and thankfully I was, I was,

00:12:45.600 | well, I didn't like it and I just hated the corporate world. And I want, I wanted to have

00:12:50.400 | the ability for, what's the word that means when a geometric growth, I wanted, I didn't want to be,

00:12:57.280 | you know, just a step by step growth. I wanted to have the opportunity to have compound growth,

00:13:02.400 | real massive geometric growth in my income and in my business. But I got laid off. Now I got laid

00:13:08.480 | off about six months before I was planning to leave. This was in 2008. I graduated from college

00:13:12.480 | in 2007. And in January of 2009, I had planned to leave the company I was with and go do something

00:13:18.400 | else. And I wasn't sure what I wanted to do. But in June of 2008, I was laid off. And on looking

00:13:25.360 | back on at this point, I'm so thankful that I was because I'm not sure I would have had the courage

00:13:29.680 | to actually leave in January of 2009 when quote unquote the world was falling apart. And so,

00:13:35.600 | so I look back on that now and I'm thankful for it. But it was a total surprise to me. I thought

00:13:39.840 | that people got laid off just because they were bad workers and they, you know, were slackers.

00:13:44.000 | I had just gotten an 8% pay raise at my job. I was, I was highly commended and they just,

00:13:48.320 | the company eliminated my job position. And thankfully I, I had, was out of debt. I had

00:13:54.400 | a six month emergency fund. I had, you know, savings. So I was, I was in pretty good shape.

00:13:58.240 | And a couple weeks after I got laid off, I was talking with, I was friends with my bosses and

00:14:03.360 | the CEO of the company and all that. And we were having lunch and he said, "I'll help you in any

00:14:07.360 | way I can." So we were having lunch a couple weeks after I got laid off and I laid out for him

00:14:12.400 | the five things that I was looking for in a business. And I knew what they were, but I

00:14:16.880 | didn't know how to do them. And he said, "You ought to go look at financial services. That it

00:14:20.720 | might be a good fit for you." And I said, "No, I don't want to go into financial services.

00:14:25.680 | Brokers are out to make you broker. Insurance is a scam and a waste of money. I can do better on my

00:14:31.040 | own. Like I don't want to go into financial services." And he said, "You ought to at least

00:14:33.760 | consider it because everything you just described sounds like financial services." And his son had

00:14:39.200 | interned with a company called Northwestern Mutual. They have a large college internship

00:14:44.320 | program and his son had had a good experience. I don't think he'd, he had not continued with

00:14:47.760 | the company after the internship, but he had a good experience. And so he had a contact there

00:14:51.520 | and he sent me to his contact there for an interview. And I went in and I was really

00:14:59.040 | impressed with the person that I interviewed with. And basically based upon that, it kind of opened

00:15:04.480 | my eyes to the financial services business, which I had never considered. And then I went around the

00:15:09.360 | industry, kind of interviewed at a few different places, did a bunch of research. And then some,

00:15:13.920 | I don't know, a month or two later, I wound up after a bunch of interviews joining Northwestern

00:15:17.600 | Mutual in the fall of 2008. And I worked with Northwestern Mutual from the fall of 2008 until

00:15:23.680 | June of 2014. Okay. And that's when you quit there and started a podcast. Exactly right.

00:15:30.960 | Which we'll talk all about that decision. So when you joined Northwestern, was it as a financial

00:15:37.360 | planner? Well, that's a, that's a, that's a, let's go, so let's get into some industry terms. I think

00:15:42.880 | I know from our conversations you can handle that. The term financial planner. We'll see.

00:15:47.280 | (laughs)

00:15:48.400 | From the term financial planner and the term financial advisor is a very nebulous term.

00:15:53.440 | It doesn't actually mean anything. So a financial planner is simply one who plans their finances.

00:16:01.040 | And a financial advisor is simply one who advises from, on the perspective of finances. And in

00:16:07.280 | financial services, there are many terms that people use and they probably shouldn't. There's

00:16:11.280 | a long history of all these words in the industry and many people are upset about it. So yes,

00:16:16.160 | I was working as a financial planner. I was not a certified financial planner, which is most,

00:16:20.480 | what most people are thinking about in the same way that they call an accountant, a CPA. A CPA

00:16:26.400 | is not an, you know, a CPA actually means certified public accountant, but that's a licensing

00:16:30.480 | agreement. You can be an accountant and not be a CPA. And so I was a financial planner,

00:16:35.120 | but I was not at that time yet a certified financial planner, a CFP designee.

00:16:40.240 | Well, that's a good point. Cause I'm looking at your LinkedIn profile and I'll just read it for

00:16:44.080 | everyone. Joshua sheets, CFP, CLU, CHFC, CASL, CAP, REBC. So what exactly are you?

00:16:54.480 | It's even worse than that. There's a couple that don't fit.

00:16:58.320 | If you can't fit them all, well, maybe we can, we can, we'll email Mr. LinkedIn and see if he can

00:17:02.560 | expand the name field. It's a little bit obnoxious. There's actually, there's an RHU and an MSFS as

00:17:09.840 | well that I just, I've just finished. It's a little obnoxious. All that stuff means is each of those

00:17:15.040 | is a unique specific industry designation and they, each of them has a meaning and, but the meaning

00:17:22.320 | is different. And unless you're actually in the financial services business, it's pretty hard to

00:17:27.920 | actually understand what all these designations are. And if you're interested, I can go through

00:17:32.480 | them and kind of explain what they are, but the more general question that you're, that you're

00:17:36.400 | asking, let me answer that first. All of those things just simply mean I've spent a lot of time

00:17:40.800 | studying and taking tests. That's basically what it means. It's hard for an outside person to know,

00:17:46.880 | just because somebody has a bunch of letters after their name doesn't mean they've actually

00:17:50.480 | taken any hard tests. In our business, we are famous for, you can go and there are some

00:17:56.080 | designations that basically eight hours in a hotel conference room and a 20 minute, 20, 20

00:18:01.680 | question test and you can get some letters after your name. So you kind of have to do some due

00:18:06.320 | diligence to understand which designations matter, which ones actually signify a lot of work.

00:18:12.080 | And I'd be happy to, to, to tell if you'd like, maybe it'd be valuable if I actually give you

00:18:17.360 | the ones that, that actually mean are the most meaningful. Would that be helpful? Sure. Why not?

00:18:21.360 | Okay. So in the financial, in the financial advisory business, the two most prominent

00:18:26.480 | designations will be a CFP designation, which CFP stands for Certified Financial Planner,

00:18:33.680 | and a CFA designation, which stands for Chartered Financial Analyst. And they're kind of different.

00:18:40.720 | The Chartered Financial Analyst, in my opinion, is probably one of the most difficult exams.

00:18:45.920 | There are three exams that you have to pass for that one and it is extremely technical,

00:18:50.800 | it's extremely intense, and it's very appropriate for people who are involved in the day-to-day

00:18:55.280 | management of portfolios. It's very, very theoretical though, and it's very much about

00:18:59.440 | portfolio management and investment management. The CFP is, they bill themselves as the most,

00:19:06.960 | the highest, I don't know what their, what their, their lingo is, but they bill themselves as kind

00:19:11.200 | of the highest financial planning standard or, or something like that. What that one is, is you have

00:19:16.160 | to take six, I think it's six or eight classes, something like that, and then you have to pass

00:19:20.000 | a comprehensive exam, which when I did it was a two-day, 10-hour exam. And that covers all aspects

00:19:27.200 | of financial planning. And so financial planning and portfolio management are two very different

00:19:31.280 | disciplines. So those are the two common ones. Some of the, then the other ones that are very

00:19:36.960 | common would be CHFC. So CHFC stands for Chartered Financial Consultant. That is a

00:19:43.600 | designation that's awarded by the American College in, of Financial Services up in Pennsylvania.

00:19:50.160 | That one is a financial planning designation as well. A few more classes in the CFP, but it doesn't

00:19:55.920 | have a comprehensive exam. It's a little more in-depth in some areas than the CFP. And then

00:20:00.240 | there's also a CLU. And CLU is the, probably the initial, it's a very old designation, primarily

00:20:09.040 | focused on the insurance business. So it stands for Chartered Life Underwriter. And so somebody

00:20:14.080 | who has that has done some detailed education on the topics of insurance. There are dozens more,

00:20:20.080 | but that's probably the main ones that people could, would benefit from.

00:20:22.640 | - What's interesting to me and something that I've learned more recently is that,

00:20:25.680 | as you pointed out, you don't have to be a CFP to be a financial planner.

00:20:30.240 | - Right.

00:20:31.120 | - And for that matter, you don't have to be a CFA to manage someone's portfolio.

00:20:35.120 | - Right.

00:20:35.680 | - And on that score, it's as simple as taking the Series 65 exam and then getting,

00:20:41.920 | putting the paperwork together to get licensed. And voila, you can manage $100 million in assets

00:20:48.800 | if you can get the clients. And the truth of the matter is I just took the Series 65.

00:20:53.840 | And I suppose if you have no background, it would be a challenging exam. But the truth is,

00:20:59.760 | it's not that difficult. And it surprised me how easy it is to be licensed to manage

00:21:06.160 | someone else's investments. Anyway, I don't know.

00:21:10.320 | - No, I agree. It's really not that tough. And so, you know, when you start a new financial

00:21:16.160 | advisor, well, generally, if you were a newly minted financial advisor and you join a large

00:21:22.000 | firm, then you need to, to be able to sell any kind of securities of any kind, you need either

00:21:28.400 | a Series 6 or a Series 7. And then also usually a Series 63 or a Series, let's just stick with

00:21:36.560 | a Series 63. To be a registered investment advisor, you need a Series 65, and the, which

00:21:43.200 | is what you've just done. And I took the 6, 63, and 65. So I did those three industry examinations

00:21:51.040 | as well. But it's very difficult for an outside person to actually penetrate and understand what

00:21:56.640 | these things are. And it, no, and it doesn't take that much, yeah, it doesn't take that much

00:22:02.480 | actual, becoming a financial advisor, it doesn't take much. Now, being a good financial advisor is

00:22:10.080 | a very different proposition, but it doesn't take much to be able to print a business card that

00:22:15.200 | says financial advisor on it. - And that's kind of what I want to touch on. So that folks that

00:22:18.480 | are listening that, you know, maybe be, are thinking about hiring a financial planner,

00:22:22.160 | you know, because it's not that hard to become one, then the challenge for consumers is kind of,

00:22:29.520 | you alluded to, is figuring out how you find a good one. And so maybe we could start, since you

00:22:36.080 | worked as a financial planner, you know, at Northwestern for a number of years, you know,

00:22:40.240 | behind the scenes, what goes on, the stuff that your clients don't see, you know, you get a new

00:22:45.040 | client that you come in, that you meet with them, whatever, but what's going on? What are financial

00:22:48.880 | planners doing behind the scenes to, you know, advise their clients? What's, how does it work?

00:22:54.160 | - Depends hugely on the firm. And one of the biggest challenges with even a conversation

00:23:02.080 | like this, and I'll do my best to give you specific details on the answers to your questions,

00:23:06.640 | but one of the biggest challenges to a conversation like this is that the accuracy of the answer is

00:23:12.160 | going to depend on the education of the listener. And so if you are, if you are well educated on

00:23:19.760 | financial topics and you are, you have a high degree of, you have a high financial IQ, you're

00:23:27.120 | highly financially literate, then the answers will make sense. But if you're not familiar with some

00:23:33.120 | of the terms, it's really hard to be able to figure out what makes a good advisor, what makes

00:23:37.840 | a non-good advisor. There is a dramatic need for specialization in the financial planning business.

00:23:44.160 | So a good financial planner, you can't be good to all people in all places. So you're going to have

00:23:50.400 | some area that you specialize in. And that specialization may be something like the

00:23:54.880 | difference between specializing in financial planning or specializing in portfolio management

00:24:00.560 | as an investment manager. So that would be one scenario. And this is my opinion. Some advisors

00:24:07.840 | would disagree with me vehemently, but I have always more enjoyed working as a financial planner

00:24:14.880 | rather than as an investment manager or a portfolio manager. And the reason is because

00:24:19.120 | the job descriptions are very different. As a financial planner, the primary job that you are

00:24:24.960 | doing with a client is helping the client to understand and clarify specifically and clearly

00:24:30.560 | what their financial goals are, analyzing where they are and figuring out what path is going to

00:24:37.200 | help them achieve the goals. That's in essence what a financial planner does. And so a financial

00:24:41.920 | planner is going to spend a lot of time trying to figure out what's going to work for the client.

00:24:45.680 | And that may come on a basic level of cash flow management, budgeting, something like that.

00:24:50.320 | It may come from a product perspective, applying appropriate insurances, making sure that certain

00:24:55.200 | life insurance is taken care of, making sure that disability income insurance is taken care of,

00:24:59.520 | doing a review of somebody's property and casualty insurance coverage to make sure that that's

00:25:04.880 | adequate. It may be some on a portfolio perspective to make sure that the investments that somebody

00:25:09.920 | has is appropriate, making sure the tax strategy is on track. That's different than an investment

00:25:16.000 | manager or portfolio manager. In that person's job, they're tasked with guiding the performance

00:25:23.360 | of the portfolio. The problem is the financial planning occupation requires a lot of time with

00:25:27.920 | clients and not a lot of time spent at a computer looking at the ticker for whatever stocks you're

00:25:32.800 | tracking. The portfolio manager needs to not be with clients, needs to be in an office where they

00:25:38.320 | are able to actually spend time looking at and managing the portfolio. So that's one of the

00:25:44.480 | primary distinctions I think you'll see in most firms that's fairly well recognized, that it's

00:25:48.800 | difficult to do both things. You'll usually have a team approach depending on how the firm is

00:25:53.360 | structured. You'll have a team approach where you have a portfolio manager and a financial planner

00:25:58.720 | working together and they have a different duties. But frankly, a lot of it is going to depend on the

00:26:04.720 | firm. And then it also depends on the compensation of the structure. That's where you get into these

00:26:09.200 | very confusing words like fee only, fee based, commission and fee, commission based, sales based,

00:26:16.400 | all of these types of words that are very confusing to people as well. You also get into

00:26:21.920 | specialties within the practice. So for example, there are financial planning firms that are

00:26:27.840 | boutique estate planning firms and the only service they provide is comprehensive, in-depth,

00:26:33.440 | detailed estate planning services. And so this would be for people with $150 million net worth

00:26:39.840 | and all they do is estate planning. That's very different than maybe a new representative at one

00:26:45.200 | of the large wire houses who's out kind of beating the streets, bringing in new accounts, rolling

00:26:50.000 | over 401ks into IRAs, things like that. Well, when you were at Northwestern, I mean, were there times

00:26:55.120 | when you were working with clients and sitting down with them and trying to come up with a budget?

00:26:58.160 | Yes, there were. Huh. And then so that would be sort of the sort of cash flow management.

00:27:05.520 | Right. Okay. Would you help them try to figure out a strategy to get out of debt and which debts

00:27:09.840 | to pay first and how to find more money to put towards those debts? I would, but it's really

00:27:15.280 | tough. And here's why. That's actually one of the reasons why I started the podcast. I would spend a

00:27:19.840 | lot of time on those types of things, trying to help somebody plan a budget, trying to help somebody

00:27:26.080 | figure out a debt management plan. But unless there's a compensation

00:27:32.560 | arrangement where the planner can actually be paid for the work,

00:27:36.480 | then it's very difficult to spend a lot of time doing those types of things. So at most, maybe if

00:27:43.200 | I, let's say I come across a client and I meet with a prospective client and this person, they

00:27:48.080 | really need to get out of debt, but they don't have a lot of other needs other than that, that

00:27:52.800 | I can help them with. It's very difficult for me to sit down for several hours over a period of

00:27:57.920 | meetings and help them for free. Now I've done it, but what I resorted to more than that is actually

00:28:03.520 | trying to, I would, you know, for the first few years I would carry around copies of Dave Ramsey's

00:28:07.680 | Total Money Makeover book in my trunk. And I would be like, listen, I can't, I can't come back and

00:28:12.800 | help you every week and do a budget review with you and show you how to do that. So here, read

00:28:18.640 | this book and follow this book. Or I would send them some articles or I would send them to a

00:28:22.640 | website or to a podcast, something like that. So there has to be a compensation function where the

00:28:27.040 | planner can actually get paid. And the problem is that the people in our country who oftentimes

00:28:32.080 | need the most help, who need the help with getting out of debt, who need help with setting up a

00:28:36.800 | budget, something like that, they also aren't, they're not in the position to be able to afford

00:28:41.920 | the best, the best advice because they just simply either can't or won't pay for it. So you have this

00:28:47.040 | very strange dichotomy that the wealthy are willing to pay massive amounts of money for excellent

00:28:53.280 | financial advice. This is what, and every time Congress passes new tax laws, I do not understand

00:28:57.360 | why they do it the way they do. And I just, I tell my friends, you know, if we're sitting down

00:29:01.200 | having a cold drink, I say, do you not understand that there are, does Congress not understand that

00:29:06.800 | there are armies and armies and armies of us, we financial planners, attorneys, CPAs, accountants,

00:29:14.640 | things like that, who are going to sit around and we're going to dissect this law and we're going to

00:29:18.240 | figure out a way around it. And we're well paid to do it because if we can save a client 2 million

00:29:24.240 | bucks in a year and that client will happily pay us 50, 100,000 bucks for the advice. So what happens

00:29:30.480 | is, is if you have money already, you can get world-class financial advice. If you don't have

00:29:34.960 | money already, it's kind of tough because you can't really afford to pay for it. And those of

00:29:39.520 | us who are world-class aren't really going to be able to effectively serve you. So the only way that

00:29:44.720 | I can figure out how to actually serve people who are in those needs is doing things like what Dave

00:29:49.120 | Ramsey does, where you're giving away great information to kind of a beginning level,

00:29:54.000 | to a beginning level audience, or what guys like you and me are doing with our podcasts of giving

00:29:59.280 | away the information, writing books. And then there are some people who are trying to work in

00:30:03.680 | that area as far as like being budget coaches, things like that. I haven't seen it really working

00:30:08.400 | effectively yet. My hope is that it will. And then because the needs are fairly simple, the solutions

00:30:14.240 | are fairly simple. And there's not a lot that somebody making $40,000 a year with a family

00:30:20.640 | needs to know. I'll build that up, pay off your debt, fund an IRA, get some appropriate term life

00:30:28.000 | insurance. That's about it. Now, if I get a client walk in with $400,000 a year, what I can do? And I

00:30:35.440 | can work some tax magic on their situation. I can save them tens of thousands of dollars with the

00:30:39.440 | right planning technique. So it's kind of a catch-22, and I haven't figured out how to solve

00:30:43.840 | that problem. Okay. And I think we just, we lost a little bit of that last answer. So if someone

00:30:48.320 | comes in with making $400,000, let me ask you that. If someone's making $400,000 a year, should they

00:30:53.200 | have a financial planner? Absolutely. And what's the financial planner going to do for them?

00:30:58.480 | Depends on how good they are. Well, okay. Let's say a very good financial planner, maybe one named

00:31:03.040 | Joshua Sheets. I don't know. But what would a good financial planner do for someone that, you know,

00:31:08.240 | they're making $400,000 a year. They got, you know, whatever, a couple million dollars in the

00:31:11.360 | bank, family of four. You know, what kinds of things would that person need?

00:31:16.320 | You're going to be frustrated by this answer because there's not one answer to it. And this

00:31:22.880 | is one of the – and let me kind of expand on it because this is one of the problems actually with

00:31:28.640 | selling financial planning services is that people are often looking for one thing and there isn't

00:31:34.560 | one thing. So for example, on my show, I've been working through trying to teach through some tax

00:31:39.680 | planning strategies. And I rely on a statistic from a book. What's it called? How to Pay Zero

00:31:46.000 | Taxes I think is what it is or something like that. And in that book, there is a statistic

00:31:52.080 | that's quoted. The author, he's a tax attorney up in the northeast somewhere. And he quotes and he

00:31:57.040 | goes through each year the various levels of income and the amount of income tax paid by various

00:32:03.280 | households and various families. The only year that I remember which is the latest year that I

00:32:08.080 | have read in his book, in 2009, he quotes the statistic that in the United States of America,

00:32:13.920 | based on publicly available tax return data, there were over 20,000 – there were 19,000 something,

00:32:20.640 | so about 20,000 people who made a household income in excess of $100,000 and who paid $0

00:32:27.440 | of federal income tax. Okay. Let me just stop you right there. First of all, is this the book by

00:32:31.840 | Jeff Schnepper? How to Pay Zero Taxes 2014? Big, thick book goes through –

00:32:39.280 | I don't know. I'm looking at it on Amazon right now. Yeah. How to Pay Zero Taxes. Yeah. Jeff

00:32:44.800 | Schnepper's book. Exactly. So here's my question. I know every situation is different, but just give

00:32:49.440 | me a rough idea of how it's possible for someone to make $100,000 and pay no taxes. All right. So

00:32:55.920 | it's a bunch of things. And so it may be, for example, how is their income structured? So is

00:33:02.000 | their income structured where it's not structured in the form of wages? So you can remove some of

00:33:11.280 | your employment taxes if your income is not structured in the terms of wages. What kind of

00:33:15.360 | deductions do you have? And Schnepper's book is the best place because he goes through each and

00:33:19.280 | every one of those things. So as I actually can't answer the question because there are so many

00:33:25.200 | little things that you can do. So it's everything from doing – so for example, I love the early

00:33:31.120 | retirement community. And one of the things – let's say if you don't need any money,

00:33:34.400 | if you may have $100,000 for you and your wife, let's say total household income, $100,000. And

00:33:40.640 | if you don't need that income, all you need to do if you're self-employed is set up some 401(k)s

00:33:45.680 | and defer 50 grand into one and 50 grand into the other. And you've cut out your taxable income.

00:33:53.120 | But let me follow up on that though because you're talking about someone who's self-employed, right?

00:33:58.960 | Right.

00:33:59.280 | So that would be an individual 401(k).

00:34:01.680 | Right.

00:34:02.080 | Okay. And you can only put in there though – you've got your employee contribution,

00:34:07.120 | right, 17.5. And then for the employer contribution, it's 25 percent, right, of your income.

00:34:12.320 | Right. So I'm being a little bit loosey-goosey with the numbers.

00:34:17.200 | Okay. I'm sorry. You just got me excited. I'm thinking, "Okay, how do I do this?" All right.

00:34:20.880 | Right. So buy Schnapper's book because from our conversation, you're detailed enough that you

00:34:25.680 | would enjoy it. Buy his book. That's a really good one. And then there's another really good one

00:34:30.480 | by a guy – I don't remember the author's name. I have it as well. It's called How to Really Lower

00:34:35.600 | Your Taxes Big Time. And it's also good. Schnapper's book is very academic and it lays it

00:34:41.120 | out in scope. And he goes through – hang on one second. Hit pause and I'm going to grab it. I'm

00:34:46.560 | going to give you the answer.

00:34:47.680 | That's okay. We'll come back to it.

00:34:48.960 | Okay. So because if you –

00:34:51.600 | By the way, I hate hitting pause.

00:34:52.880 | I'm going to keep all this in. That's okay. It's the real life of interviews. People who

00:34:57.840 | listen to it understand that. But by the way, I will link to both of those books in the show

00:35:01.760 | notes for people listening.

00:35:03.120 | Awesome. And I've also got a tax series. If people are interested in this subject,

00:35:07.120 | in my attempt to actually teach what I could never find in the personal finance space,

00:35:14.000 | so I had to kind of read through all the really boring academic books.

00:35:16.720 | I started kind of teaching through a tax series.

00:35:21.440 | Well, if you send me links of those, I'll include those too.

00:35:24.400 | I'd be happy to do that. I'll make sure to do that. So the answer is there's not just one thing.

00:35:28.560 | There's a number of – there are a number of different techniques that in the right situation

00:35:33.680 | could be – and it would be very unusual to be able to wipe out all taxes. I'm not sure.

00:35:39.440 | Those returns that can do that, there may be – I don't want to get too deep into the weeds.

00:35:47.040 | I've studied some, but I still can't even figure out exactly how it would work to do exactly that.

00:35:51.440 | But it's a lot of things. And so somebody with $400,000 of income, you figure – let's just

00:35:58.480 | use round numbers. Let's figure 25, 30 percent of taxes. You got $100,000 of income tax.

00:36:06.000 | There are some easy ways to lower that, and it would usually be higher than that depending on

00:36:09.520 | the state, depending on the situation. But you can do a lot as a financial planner,

00:36:13.840 | and if you can cut that bill in half, you can do a lot to earn some pretty substantial fees

00:36:18.160 | and have a happy client and a happy planner. So here's my concern about hiring a financial

00:36:22.400 | planner for me personally. This is my personal concern, is that – in my situation, I grant it's

00:36:28.560 | a little different because I spend my days studying this, but I still recognize that

00:36:32.320 | there's no way you can know it all, and I certainly don't know it all.

00:36:35.680 | But my concern is I'll spend a fair amount of money with getting some kind of financial plan,

00:36:42.160 | and in the end, I'll conclude I didn't really learn anything new.

00:36:47.200 | I spent this money, and he or she didn't really tell me anything new or save me a substantial

00:36:54.800 | amount in taxes. Maybe that's a silly concern. I don't know. Did you ever have people come in,

00:37:00.000 | and you went through a whole financial plan, and at the end of the day,

00:37:02.720 | they were already doing things right, and you really weren't much help to them?

00:37:07.040 | I had one guy in my career in six years with meeting over 1,000 people. I actually had one

00:37:11.040 | guy that fit that mold. Okay, one out of 1,000. All right.

00:37:14.240 | And I'll tell you, actually, it's an important story. He was also one of the few people to

00:37:19.760 | actually ask me proactively for an appointment without my having to approach him with an

00:37:25.120 | appointment. And this was very young in my career where I was still just completely scared silly

00:37:30.960 | anytime I would talk to people and ask them to talk about their money, just the emotions of the

00:37:35.920 | business, learning how to talk with people. And so I went to this networking event here in Palm

00:37:41.600 | Beach. It was a lunchtime meeting. I can't remember the name of the club, but it's a bunch

00:37:47.200 | of old Palm Beach guys, retired guys that get together. And I thought, "Oh, this would be great,

00:37:50.400 | a bunch of rich Palm Beach guys." So I go there, and I sit down. I'm the youngest guy in the room

00:37:55.360 | by about 40 years. And the guys are asking me what I do, and I say, "I'm a financial planner."

00:37:59.920 | Well, at the end of the luncheon, one of the gentlemen leans over to me and he says, "Listen,

00:38:03.280 | hey, I'd like to have you take a look over my stuff if you could and if you would." And I said,

00:38:10.240 | "Yeah, I'd be happy to." And inside I'm falling off my chair because this is the first time

00:38:14.160 | someone has said, "Joshua, can you look at my stuff?" All up until now I've been out prospecting

00:38:19.040 | and basically jumping out of bushes at people and asking them to talk about their money. And

00:38:23.280 | you've got to deal with a certain amount of rejection. Well, he comes into my office,

00:38:26.880 | and he walks in, and he's in his early mid-60s, and he slides a piece of paper down. And on the

00:38:33.440 | piece of paper, it has a complete balance sheet, all of his assets, all of his liabilities. It has

00:38:38.400 | an income statement, very simple, just an income statement showing what his sources of income is.

00:38:42.800 | It shows what his expenses are, shows what his concerns is, and on one sheet of paper,

00:38:47.120 | he basically has his complete financial plan. And I sit down, and this is the first time anyone's

00:38:51.600 | actually put that in front of me, and I was like, "Wow, this is great. Why doesn't every client have

00:38:55.920 | this?" I was still learning how to do it for clients. And I go through it, and I ask him some

00:39:01.280 | questions. And about 15 minutes later, I tell him, I was like, "Listen, I think you've got everything

00:39:06.560 | squared away. The only thing I can think of is maybe this one area, but even that, frankly,

00:39:12.320 | I don't think you need to worry too much about it. So, I think you're pretty well squared away."

00:39:16.640 | And I learned something from that experience. So, I couldn't actually make a recommendation

00:39:21.440 | that helped him, and I learned something from that experience. When I started working as a

00:39:25.440 | financial planner, I thought that the easiest people to meet with would be the poor people,

00:39:29.920 | would be the broke people, because they would need the most help. And the most difficult people to

00:39:33.920 | meet with would be the rich people, because they would have all the money, and they'd have everything

00:39:37.840 | taken care of. Well, I've made a lot of phone calls in my career. You've got to, as a financial

00:39:41.680 | planner, you have to learn how to make some phone calls to get some appointments. The easiest people,

00:39:46.720 | in some ways, I found to reach were actually the rich people. And the hardest people were the broke

00:39:51.840 | people, because the broke people were so concerned about their situation, and they were so embarrassed,

00:39:56.720 | basically, about their situation, that they would not want to talk about it. They would not want to

00:40:01.040 | tell you anything. They would not want to reveal themselves naked, basically. But the rich people,

00:40:05.520 | now, I might only get five minutes, but he'd give me five minutes, because he'd figure, "Well, maybe

00:40:09.840 | this guy's got something I need to know about. Maybe he's got an idea. Maybe he's got something."

00:40:13.680 | And I learned I had to be very quick on my feet when working with wealthy clients, but that they

00:40:18.640 | were more likely to give me time than poor people. And I thought, "Hmm, is it the fact that they're

00:40:24.960 | that way because they're rich, or did they get rich by seeking out and taking good advice?" And

00:40:31.440 | I'm inclined to think, maybe just to make myself feel good, I'm inclined to think it's the latter,

00:40:35.520 | but I can't prove it. Well, it's interesting. And maybe I need to reach out to a certified

00:40:39.360 | or a financial planner at some point. One of the mistakes that I made was assuming that my

00:40:46.800 | tax accountant was also a financial planner. Right. Because, and not even on the insurance

00:40:54.480 | side, I wouldn't expect him to evaluate my insurance, but even on tax issues. So, I had

00:41:01.040 | an accountant for a number of years that did my taxes, and not once did he mention to me, "Hey,

00:41:05.920 | you really ought to consider a backdoor Roth." Not once did he mention to me, "You ought to

00:41:10.640 | consider for your business a defined benefit plan." Right. Not once did he... And the other thing he

00:41:16.240 | did is that he made the mistake of advising me that my 401(k) contributions at my employer

00:41:23.120 | limited the amount I could contribute to a completely unrelated SEP IRA with my business.

00:41:30.320 | So, he's perfectly fine at preparing tax returns, but wasn't great at tax planning, which,

00:41:40.880 | as I think about it, frankly, he should have been. But, as I sit here and think, "Should I go talk

00:41:48.160 | to a financial planner?" Maybe it's an obvious answer, yes. So, for folks that are considering

00:41:54.480 | that, how do they find a good one? Yeah. I don't know an answer to that question.

00:41:58.640 | Okay. Well, listen, it was great to have you on the show. Thanks.

00:42:00.800 | So, I think a lot about that question, and I do not know how to answer it. And let me answer

00:42:08.720 | connected to your accountant question. I have struggled with this as well. I have worked with

00:42:14.480 | a number of accountants here in my area, and it's very difficult to find an accountant who has a

00:42:19.680 | proactive planning practice. And the key is that you've got to look at the structure of incentives.

00:42:25.520 | And this is a problem, in my opinion, in the financial planning business and in the accounting

00:42:29.520 | business. In general, most accountants are being paid for the production of a return. That may be

00:42:35.280 | very simple as far as, "Hey, I need my 1040 simply for my personal taxes." It may be more returns. So,

00:42:41.360 | we're doing a couple of corporate returns. We're doing some individual returns as well.

00:42:45.360 | But basically, the incentive structure and the payment is being made usually for the returns.

00:42:50.800 | Now, I've heard that there are some very high-end accountants who are providing advice on the basis

00:42:56.640 | of an hourly fee or something like that. But most clients are so slow to actually walk into

00:43:03.600 | their office and plunk down 500 bucks for an hour of time that most accountants are going to

00:43:08.560 | recognize that the more returns they can do, the more money they're going to make. And that is the

00:43:14.560 | fact because that's what they recognize. And so, the structure that many accounting offices are

00:43:20.320 | going to is there may be one CPA or a couple of CPAs, and then there are an army of return

00:43:26.800 | preparers. And those preparers may be there in the office or they may be outsourced. They may be in

00:43:31.120 | India. Who knows? And the CPA is just taking a quick look at it. And they can produce a much

00:43:37.680 | higher hourly wage by focusing on that than they can by meeting with you and doing some

00:43:42.480 | proactive planning. So, I've found that most of the accountants are very willing as long as I'm

00:43:50.480 | not calling during tax season to sit down with me. But they're not accustomed to thinking that way.

00:43:55.280 | And it's the same thing with financial planners. So, as a financial planner, you have to look at

00:43:59.680 | how your planner is being paid. So, let's say that you are paying an advisor and you're paying a

00:44:05.440 | management fee. So, let's say that you're paying a 1% fee on your portfolio and you're paying that

00:44:10.000 | for management. Now, if you've got enough assets and you're a big enough fish in a planner's

00:44:15.600 | portfolio, they can afford to spend time with you throughout the year. But even in that situation,

00:44:21.280 | which is probably the better of most of the situations, they're less incentivized to actually

00:44:28.480 | spend a lot of time doing that proactive planning with you because they're getting paid based upon

00:44:32.320 | keeping the assets. All they got to do is keep the assets. Same thing with commissions. If you're

00:44:36.800 | earning your income off of commissions, whether that's the sale of investment products or insurance

00:44:41.120 | products, then you're going to be spending your time focused on what makes you more money.

00:44:45.120 | So, let's say that I'm selling you a life insurance policy and you're buying the life

00:44:48.880 | insurance policy from me. Then, once you buy life insurance, you probably don't need any more.

00:44:55.920 | So, it's more in my interest to go and find another person who needs life insurance and

00:45:01.280 | call you in a year than it is for me to come back next month and sit down and go over your

00:45:05.280 | budget with you and sit down and go over some of those things with you. But I do have a solution.

00:45:10.720 | The best idea that I've come up with is the idea of basically billing your fees.

00:45:17.120 | In my opinion, and you see a lot of advisors testing this, but instead of billing a fee

00:45:22.480 | that's based upon asset management, instead of billing a fee based upon the sale of

00:45:26.400 | financial products, billing a fee that's a pure retainer for advice. So, this is often done on

00:45:32.400 | an annual basis or it can be done on a monthly basis. And so, the best thing that I've come up

00:45:37.520 | with is I would love to have a stable of clients who are paying me a monthly fee and it'd have to

00:45:42.480 | be a fairly high monthly fee in order for me to do this, but who are paying me a monthly fee

00:45:47.920 | and who could fire me at any time. And in exchange, what I expect them to do is I expect

00:45:52.880 | them to talk to me every month. And then what can happen is in the context of a deep conversation

00:45:58.560 | and in the context of a relationship, we can continually look at tweaking things because

00:46:04.000 | there's no way that if you meet with your accountant every February, there's no way in

00:46:07.920 | the world that in February of 2013, excuse me, in February of 2015, he's going to remember in

00:46:14.000 | February of 2014 that you've got these things going on and that he needs to research this right

00:46:19.040 | in the middle of tax season. So, if you can create a much closer relationship between planner and

00:46:24.960 | client and where that relationship is based upon the delivery of ongoing coaching advice and it's

00:46:30.800 | a much closer relationship, then I think you can get better advice. But only a few people are

00:46:35.520 | trying this and I don't know if it'll work. So, I think it should, but I don't know if it will.

00:46:39.200 | - I've seen and I've talked to several financial planners that do, I guess, something similar to

00:46:44.320 | what you're describing. They will charge usually an upfront fee for the initial financial plan,

00:46:49.920 | although I've seen it reasonably low, 1,000 to 2,000. Although again, if you're trying to climb

00:46:55.280 | out of debt, that's a lot of money, but $1,000 to $2,000 and then an ongoing fee of say $1,000

00:47:00.720 | to $200 a month for that continued support to execute the plan. I just don't know how, I mean,

00:47:10.240 | do you have any sense as to whether that kind of arrangement is appealing to the consumers of

00:47:16.240 | financial planning services? - We're finding out. And the problem with this is basically that people

00:47:21.760 | at a certain income level often have an aversion to paying for advice based upon what it's worth.

00:47:27.040 | I was at a master's, I was just last, two weeks ago, I was up in Pennsylvania and I was finishing

00:47:31.920 | the final class for my master's degree in financial planning. And I'm in a room with 15 other

00:47:37.680 | advisors and these are all seasoned, experienced advisors. The oldest guy in the room was 75 years

00:47:46.000 | old and he had been practicing for 45 years. And his minimum planning fee is 10,000 bucks. I think

00:47:52.320 | it was 9,500 bucks. That's where it starts. So the average person, I mean, you're coming from

00:47:57.440 | the legal background. How often did you find an attorney friend of yours who's making a couple

00:48:02.800 | hundred thousand bucks is ready to say, "I'm going to go plop down 10,000 bucks to get some really

00:48:06.880 | great financial advice." Pretty rare, right? - Yeah, not too many. Lawyers think they know

00:48:11.840 | it all anyway. - That is often true as well. I had a few attorney clients, but I generally found that

00:48:18.560 | I had better, I enjoyed working with business owners, entrepreneurs more than attorneys.

00:48:23.360 | - Yeah, lawyers are a pain. Anyway, I'm sorry. Go ahead. - Okay. You said it, not me.

00:48:27.120 | - Yeah, yeah. - But so there are,

00:48:31.520 | the good thing about it is this. If you actually look at how the financial planning business has

00:48:35.680 | developed over the last a hundred years, this business and this profession is very much in

00:48:40.880 | its infancy. It was just 25 years ago, basically, 2025 years ago, that it would have been normal

00:48:47.680 | that very few people actually had a financial planner. Most people would have had a stock

00:48:50.880 | broker and an insurance agent. Prior to 1999, with the Financial Services Modernization Act,

00:48:56.880 | you could not sell insurance and sell stocks. You could not do both of those things. You had

00:49:02.720 | to either sell stocks or sell insurance. So you had this incredible siloing effect where either

00:49:09.760 | you had an insurance agent or you had a stock broker, and then the insurance agent and the

00:49:13.680 | stock broker would always be picking at each other, which is why you had these stupid debates going on

00:49:18.480 | where your stock broker is saying, "Oh, insurance is a scam," and your insurance guy is saying,

00:49:22.080 | "Stocks are a scam. You got to buy my life, buy my whole life insurance or buy my annuities

00:49:25.680 | because they're a better investment because that's what I can do." And the stock broker is saying,

00:49:28.480 | "Oh, that stuff sucks. Buy my stocks." So A, you had the mutual fund industry develop,

00:49:33.520 | which revolutionized stock investing. Then you had the low-cost brokerage world come,

00:49:37.840 | which revolutionized stock brokering. Then you had the Financial Services Modernization Act in '99

00:49:44.320 | come, which has revolutionized the business. And so basically, it's only been about 15 years

00:49:49.760 | that in many ways, the comprehensive nature of a comprehensive financial planner has really

00:49:56.080 | developed as its own profession. Now, there were people prior to that time who always did

00:50:02.400 | comprehensive planning. I've known some guys in my firm who were in their 80s and 90s, and they were

00:50:07.760 | really good. And you would have been lucky to have them as your advisor. But as a business,

00:50:13.280 | the structure, they had to go above and beyond what many people would do at the time

00:50:17.920 | in order to make it work. So we're still at the infancy. And what I'm excited about is that over

00:50:23.280 | the last basically 10 years, if you look at the last decade, actually, the financial planning

00:50:31.040 | degree at the undergraduate level now exists. The American College and then there's another

00:50:36.720 | college also that's producing PhDs in financial planning. So that is adding a lot to the research,

00:50:44.320 | and that's adding to the ability of once you have some professors with PhDs who are able to go out

00:50:50.560 | and teach financial planning at the college level. That means that instead of me, like when I

00:50:55.120 | started, I was 23 years old. And I went out and got a Series 6 and a 63 and a Life and Health and

00:51:00.720 | Annuity license, and I get started. Now you're having people that are coming in with four years

00:51:05.680 | of undergraduate education in financial planning. They're coming in basically having, just like many

00:51:11.440 | CPAs do, having where they come out of college and they immediately sit for the CPA exam. People are

00:51:16.560 | immediately sitting for the CFP exam. And so the whole tenor of the industry is coming up. And then

00:51:21.680 | because of the incredible pressure, market pressure on fees, because of indexing on mutual funds,

00:51:28.320 | because of the incredible openness of information, that's put this massive pressure on fees.

00:51:33.200 | And planners are having to turn around and say, "What am I actually delivering for my fee?"

00:51:37.680 | And that is awesome because it's bringing a great market forces, and it's really raising

00:51:42.480 | the caliber of the industry. Yeah, it's interesting the whole fee arrangement and

00:51:46.800 | this idea of the monthly fee. By the way, have you started taking clients under this approach yet?

00:51:51.440 | No. Do you plan to? Have you figured out a time when you may launch this?

00:51:55.520 | It was supposed to be a couple months ago. Are you going to get a few more letters behind

00:52:00.560 | your name first? What are we waiting for here? Okay.

00:52:04.320 | Frankly, when I left my firm, I left because I wanted to start the show. I loved my firm.

00:52:09.280 | I had an awesome experience. I had an awesome stable client base. And the most difficult

00:52:14.560 | decision that I've had to make was actually leaving that because I walked away from a lot

00:52:18.880 | of very happy clients. I walked away from a phenomenal situation. I didn't have any reason

00:52:24.080 | to leave except that I was looking around the financial media space. And I'm looking and I'm

00:52:28.560 | saying, "Look, there are a lot of well-intentioned people, but there's a lot of really bad information

00:52:34.320 | that's getting put out there." And I couldn't find a year ago, I couldn't find many people

00:52:39.840 | that were producing audio. There are some good blogs, really good blogs. I think you were blogging

00:52:45.280 | more than a year ago, but I couldn't find people that were producing great audio or video content

00:52:50.960 | to actually teach people financial planning. Everybody had an agenda. They were either

00:52:55.200 | selling their book or they're selling their firm on Saturday morning on AM radio, which

00:53:00.800 | is nothing wrong with that. But nobody was giving the nitty gritty and the details. And so I said,

00:53:05.440 | "Somebody's got to do this." And I decided that I was going to do that. But with my show,

00:53:10.320 | the challenge has been just simply, my show is a daily show and it's in depth. So to be

00:53:16.480 | prepared for that show, how many shows, Rob, are you putting out per week at this point?

00:53:20.240 | Well, I tend to put out two to three. I'd like to put out one every weekday,

00:53:25.280 | but I just don't have the systems in place yet to do that and still have time to sleep.

00:53:33.680 | Yeah. It takes a tremendous amount of time to produce content, especially if that content is

00:53:41.040 | teaching content. So an interview is relatively easy. All you got to do is ask some good questions.

00:53:46.480 | And if you can find some engaging guests, things like that. But I mean, I listened to your show on,

00:53:51.040 | what was it? You did one on, it's like Roth five-year rule or something like that.

00:53:55.200 | Right.

00:53:55.760 | And I guarantee you, it took you several hours at a minimum to prepare for that show, right?

00:53:59.760 | I hate that rule. Those rules drive me crazy.

00:54:02.000 | It's awful. It's awful. But you've got to be so detailed and so careful, but yet you can actually

00:54:06.800 | present the information. But the time it takes to prepare for that is tremendous. So I produce a

00:54:11.520 | show every weekday. And so that probably takes, I would say four to six hours a day to produce it.

00:54:18.160 | Plus, I don't have a clue. You were ahead of me when it comes to actually knowing how to run a

00:54:23.920 | website and all that stuff. I'm a total ignoramus when it comes to techie stuff. So my learning

00:54:28.960 | curve is huge and I just haven't been able to make the time to produce a great show and also to get

00:54:34.400 | the firm going. So I'm still working on it, but that's why I haven't launched it.

00:54:38.000 | Well, I want to ask you some questions about your show and your site in just a second,

00:54:41.040 | but I want to circle back to one question that you ducked, I think, kind of. All right. So you've

00:54:47.040 | got to give the listeners some idea of where, I mean, in terms of trying to find a financial

00:54:52.000 | planner, where should they start? I mean, should they go to the fee-only, you know,

00:54:56.720 | focus on fee-only financial planners and the association for, you know, or like,

00:55:01.440 | you know, asking friends for referrals? How do they, give them something to begin the process.

00:55:07.280 | What should they do? You know, something. Yeah. Okay. So I'll give something, but

00:55:11.360 | you can caveat it all you want. Well, here's what, here, here's the problem is that there

00:55:17.760 | are some things that people will say and I'll give some ideas, but the reality is this.

00:55:22.640 | It is a rare person who goes out and seeks financial advice. Very, very unusual. Most of

00:55:30.160 | the time, the reason when people actually start working with an advisor or working with a planner,

00:55:35.360 | the reason they actually did that is because the advisor called them. And how I worked in my

00:55:41.200 | business with Northwestern is I worked on a hundred percent on a referral. It was friend

00:55:44.800 | to friend to friend. So if I were working with your friend, Tom, I would say, "Tom, listen,

00:55:49.280 | I'd love for you to introduce me to some people that you think highly of." And he'd say, "I got

00:55:53.120 | my friend, Rob. He's awesome. He's an attorney. He's a really good guy. And I'd call you and then

00:55:57.520 | you might give me an appointment. And then at that appointment, you got to kind of test me out and see

00:56:01.200 | if I know what I'm talking about." And so that is how most people in my experience come up with

00:56:08.000 | financial advice. Number two is that even if that's not how it happens and you're taking advice based

00:56:14.160 | upon the recommendation of somebody else. So let's say that you and I are friends and Rob says,

00:56:20.000 | "You have an advisor named Jack," we'll throw in a different name, "and you come to me," and Rob

00:56:25.600 | calls Joshua and says, "Joshua, hey, listen, my friend Jack, he's having a client appreciation

00:56:29.680 | event. I think you would really enjoy going to see him. He's been great for me. Let me tell you,

00:56:34.000 | my portfolio has gone through the roof. It's just been great. He's done a good job. And I go to the

00:56:40.000 | client appreciation event with you." The problem is that chances are you as an attorney, not you as

00:56:45.600 | Mr. Finance Guru, but you as an attorney, you probably don't know enough about what you don't

00:56:50.320 | know to actually judge Jack's performance. So even when people are recommended, it's really hard to

00:56:57.600 | actually understand is this person technically competent or not. So my answer to it is the number

00:57:03.040 | one thing I think that somebody needs in a planner is to have a confidence and a trust in that

00:57:09.520 | person's character. The problem with that is that that is the most difficult thing to manage and to

00:57:15.680 | measure and I don't know how to do that other than the fact that I always just said I'm a person of

00:57:20.800 | character and a man of integrity and I'll always tell the truth and I found that over time clients

00:57:25.280 | could figure that out. And so test your planner in some way to figure out their integrity and

00:57:29.520 | their character. If you have a planner who is a person of integrity, that planner will know what

00:57:35.440 | they know and know what they don't know. And not everybody needs a high-priced tax consultant.

00:57:41.920 | If you need a life insurance policy, you need a life insurance policy. And frankly, somebody who's

00:57:46.800 | been through whatever your state's licensing requirements, a 40-hour class is what it is in

00:57:51.280 | the state of Florida, that person can competently and accurately advise you on how to calculate an

00:58:00.640 | appropriate amount of life insurance, on the different types of life insurance that are

00:58:04.640 | available to you, and they can educate you on their firm and on other firms so that you can

00:58:09.760 | make an informed decision. You don't need somebody with a bunch of letters behind their name

00:58:14.000 | necessarily to do that kind of insurance planning. Now if you've got a hundred million bucks and

00:58:18.640 | you're trying to set up a second-of-life insurance policy inside an irrevocable life insurance trust,

00:58:23.680 | and you're trying to figure out, "Should I pick a guaranteed universal life policy or should I

00:58:29.680 | go with a traditional whole life policy?" You probably are going to want to talk to somebody

00:58:34.800 | who's been doing this a little while. So it's a very nuanced answer. But to start with, I would

00:58:39.680 | say, "What do you actually need and want?" If somebody came to me and they're saying, "Joshua,

00:58:43.760 | I want you to manage my portfolio and produce a hundred basis points of alpha," I would say,

00:58:47.840 | "Sorry, I don't do that. That's not my deal. I don't know how to do it. Not interested.

00:58:51.760 | Can't even promise it to you."

00:58:53.040 | No one produces a hundred basis points of alpha.

00:58:55.200 | And most of the listeners right now are wondering, "What the heck is a hundred basis points of alpha?"

00:58:59.920 | It means an extra one percent of return that's not based upon the general market return.

00:59:07.600 | And basically investment prowess is what that means. And so I would say, "Sorry."

00:59:15.040 | Warren Buffett. Okay, keep going.

00:59:16.960 | Go ahead.

00:59:17.520 | No, I was going to say, "That's your alpha. Follow Warren Buffett."

00:59:20.640 | Right. And so I actually, I'm a weirdo. I actually, I believe much of the academic research,

00:59:27.360 | but I don't believe it to its extent as far as actually all the way. But I mean,

00:59:34.240 | it's a long conversation, another time. But the point is, that's not what I do. I'm not a stock

00:59:39.760 | picker. So you can't come to me and say, "Joshua, can you do this?" But that doesn't mean that the

00:59:45.680 | advisors who carefully craft a portfolio of blue chip stocks, even individual stocks, and they

00:59:51.840 | carefully craft a portfolio to specifically fund the needs of the client's account, they can't do

00:59:58.080 | that. So I'm going to ask a question, and I think this is valuable information. I've never heard

01:00:05.280 | actually this discussed on a podcast. I haven't even talked about this on my show. But the next

01:00:09.200 | thing that people go is they say, "Well, maybe if you weed out compensation models that you can then

01:00:15.440 | figure out how to get people to be honest." And so you get into the world of fee only versus fee

01:00:20.960 | based versus commission based. And what fee only means is that you're taking your compensation

01:00:29.920 | purely as a fee off of the account and not based upon any special sale of any specific products.

01:00:36.800 | And the idea behind this model of compensation is that this is theoretically supposed to eliminate

01:00:41.680 | the conflict of interest between choosing to sell investment company A's products because they pay

01:00:48.320 | you a higher commission rate than investment companies B's. And B's products are actually

01:00:53.920 | better, but because they pay a lower commission rate, then it's supposed to be better than A.

01:00:58.960 | I don't buy it. I think there's a lot of crooks that probably that can figure out how to make a

01:01:03.040 | lot of money in a fee only world. And I've never been in the past a fee only planner. In the future,

01:01:09.760 | I will be a fee only planner. But I don't think that that necessarily is gonna affect

01:01:15.440 | me personally and as far as how I would deliver advice. So, the advice that's probably the safest

01:01:23.840 | if I had to give advice is call a fee only planner. And so that would be either you could

01:01:29.600 | call somebody with an hourly fee. Two options for that is one is the most well-known option is

01:01:35.680 | something called the Garrett Financial Planning Network. And they only do hourly fee planning.

01:01:41.760 | Number two would be an organization that I'm involved with which is called the XY Planning

01:01:46.320 | Network. And that's a group of advisors who are primarily targeting Gen X and Gen Y, younger

01:01:52.800 | people. And they're trying to, we're trying to build out this monthly model. Or if you have some

01:01:58.880 | assets, you can go and contact an organization called NAPFA, which stands for National Association

01:02:04.480 | of I think Personal Financial Advisors, something like that. Those are all fee only advisors.

01:02:08.800 | But the reality, Rob, is this. My wife, if I die, she does not have instructions to go online and

01:02:16.640 | call a fee only planner. She has instructions to call a friend of mine at Northwestern Mutual,

01:02:21.040 | who I trust. And some of my friends and former colleagues at Northwestern Mutual, none of them

01:02:26.240 | are fee only planners. But they were men of integrity who did a great job. But man, there

01:02:30.800 | are some people within even that company who were not, who I would never trust with my money.

01:02:38.000 | And so it's very much a buyer beware world. And the only actual answer that I have found with this

01:02:46.240 | is to say, let me educate the consumer, not with a bias towards this is what we always do,

01:02:51.920 | or this is what I believe in. I believe in indexing, or I believe in active investment,

01:02:56.160 | or I believe in term insurance, or I believe in whole life insurance. Let me just educate on how

01:03:00.320 | they work. And then what you should do is press your planner and press your advisor and ask the

01:03:07.120 | difficult questions. And I loved it when clients would ask me the difficult questions because it

01:03:11.840 | showed they cared about what I was doing. And it showed that they had done enough research to allow

01:03:16.960 | me to actually educate them on why in their situation I was making the recommendation.

01:03:22.960 | And I don't have a better answer than that. That's the best I've come up with, but I'm still working

01:03:27.360 | on it. So maybe call me back in a year and maybe we'll have a better answer.

01:03:29.520 | Well, let me give you my two cents and I promise it'll be worth every penny.

01:03:32.560 | My two cents is this, and you've alluded to this, financial planning and investment advice are two

01:03:39.760 | different things. I mean, they're obviously related, but there really are two very different

01:03:44.000 | services. And like you've pointed out, what you enjoy most is the financial planning side. I've

01:03:48.800 | talked to, I've got one guy in mind who manages over a billion dollars in assets. And the last

01:03:53.440 | thing he wants to do is financial planning. He wants to manage investments. And what I was thinking

01:03:58.400 | about, and I took the series 65 and going through all of this, one of the things he said to me was,

01:04:02.240 | he said two things. He said, one, forget the financial planning, get the assets under

01:04:05.760 | management. That's what he knows. That's what he does. The second thing he said was, you really

01:04:10.480 | need to think twice before you do both. Because even if you're a fee only advisor, there's almost

01:04:18.800 | an inherent conflict of interest because a lot of folks that do both, yes, they pull people in

01:04:23.680 | with maybe an inexpensive financial plan. But their real objective is to get assets under

01:04:28.240 | management through that introduction. I'll give you a financial plan for a few hundred bucks.

01:04:33.280 | - Right.

01:04:33.760 | - And it may be a perfectly fine financial plan, maybe not. But my real goal is to get

01:04:39.200 | your $500,000 a million bucks and manage it for 1% a year. And so I see this sort of inherent

01:04:48.880 | conflict even with a fee only planner. And I think if I were going to get financial, if I were going

01:04:54.320 | to reach out to a financial planner, I would want to find someone that charged by the hour or some

01:05:00.000 | fixed fee and that had upfront no interest in managing my investments. Don't even talk to me

01:05:05.840 | about managing my investments. Now, that doesn't make them a good financial planner. I've still got

01:05:10.240 | to figure out if this is someone that I think is competent and has the experience and all that sort

01:05:14.640 | of thing. That's not to say that you won't find someone that does both and does it well. I mean,

01:05:20.240 | certainly that's true. But there is that conflict. And so if I were looking for a financial planner,

01:05:28.720 | I would stick with someone who's just going to be a financial planner, even if I wanted someone to

01:05:31.680 | manage my investments. Here's the thing, and I'm a big index fund believer, although I do own

01:05:36.640 | actively managed funds and I own individual stocks. But it is insane to pay an advisor

01:05:43.680 | a hundred basis points to manage an index portfolio. Even if you want an advisor, I mean,

01:05:49.280 | Vanguard will do it for 30 basis points. Rick Ferry at Portfolio Solutions will do it for 37

01:05:54.880 | basis points. That market is shrinking. There's a lot of pressure on fees. I think the days of

01:06:04.000 | charging one and a half percent to manage a portfolio of mutual funds, I hope, is coming

01:06:10.560 | to an end. I mean, it's not going to end tomorrow. But those kind of fees just are ridiculous.

01:06:16.880 | Anyway, one of the things I've thought about, and then we'll get back to your story, but

01:06:20.880 | you mentioned maybe charging a monthly fee to work with people on financial planning.

01:06:25.760 | I've thought about the same thing to help do-it-yourself investors. So no, I'm not going

01:06:32.640 | to manage your investments for 1%, but I will help you manage your investments for a much,

01:06:37.360 | much smaller fee. Maybe it's an upfront fee for a complete asset allocation plan, and then

01:06:43.520 | a relatively small monthly fee so that you have someone you can reach out to,

01:06:48.080 | not unlike the financial planning side of things, but this focused on investing

01:06:53.200 | to make sure you're on track, make sure you're not making any mistakes, someone to talk to when

01:06:57.920 | the market's gone down by 10% and you're scared. But a fee that would be far less than paying an

01:07:06.160 | advisor 1% or more to stick your money in mutual funds. Anyway, that's my perspective.

01:07:12.000 | Well, I think you make good points, but for a friendly debate among gentlemen that I think

01:07:19.200 | will benefit the audience, I'm going to respond to all three of them. Because with another-

01:07:23.120 | I made three points? I don't even remember making three. Okay, good.

01:07:25.600 | Actually, excuse me. You made two, and then I made a note of a third point on the last thing

01:07:29.760 | you were going to say. So here is the problem with the approach of trying to find a good

01:07:35.040 | financial planner on the basis of a low fixed hourly fee or on the basis of a fixed hourly fee.

01:07:40.880 | If I am a good financial planner, I am probably a skillful person. And by the way, I'm a very

01:07:46.640 | good financial planner. I'm not good at some other things, and that's just- I don't want to be- I

01:07:51.440 | consider myself an excellent, competent financial planner, but I'm also good at some other things.

01:07:56.000 | And so because these- usually people who are capable at learning the skills of financial

01:08:02.320 | planning and are adept at working with clients, then that means that you're probably capable

01:08:07.360 | of other things. So let's compare these two things. And the primary- the most- like the

01:08:13.680 | ideal business model that I was working at prior to starting at the financial planner is the

01:08:21.360 | investment advisory business, and it's very simple. If I have $100 million under management,

01:08:27.040 | and I just assume that I have a fee of 1%, that $100 million of money under management gives me

01:08:33.520 | a million bucks gross into my practice. That million bucks gross after expenses and after tax,

01:08:40.880 | I'm going to be left with a very nice lifestyle. All I need to have $100 million under management

01:08:46.480 | is somewhere between- maybe I need 100 families with a million bucks, maybe I need 200 families

01:08:51.680 | with half a million bucks, maybe I need, I don't know, 400 families, although that would be a very

01:08:56.240 | challenging practice to keep an eye on. Somewhere between 100 and 200 families. I can create that

01:09:01.520 | realistically over a- if I'm a skillful person with some experience, I can build that kind of

01:09:06.880 | practice over the course of- let's call it 10 years. Now, it could be done less. I know people-

01:09:15.760 | you have a friend that has a billion. I know some people here in town that have a billion

01:09:19.680 | under management. But those are some massive fees that are coming off of that.

01:09:25.760 | Even when the fees are substantially reduced, and I'm just using the 1% number purely because

01:09:29.520 | it's simple to do the math. It is very motivating to people who are capable to have the prospect of

01:09:36.160 | making half a million dollars of net income, net of business expenses and net of fees, half a million

01:09:42.800 | dollars of net income with- just by working with 100 families, all of whom love me and who care

01:09:50.320 | about me and I care about them. That's a really ideal business to have. Now, let's say that I

01:09:55.760 | need to make $500,000 of income net. So, that means I need to actually- I still got to bill a

01:10:04.080 | million bucks. So, if I'm going to bill a million bucks of income as to go into the hourly model,

01:10:09.600 | and this is the problem that people don't talk about very much. If I'm going to get a million

01:10:14.000 | dollars of gross fees or gross revenue into my practice, then let's just divide that by 50 and

01:10:19.840 | let's divide that by 40. That means that my hourly rate is 500 bucks an hour. But here's the problem.

01:10:26.000 | Nobody can fill a financial- that I'm aware of, can fill a financial planning practice 40 hours

01:10:31.600 | a week where you're billing 40 hours. You've come from the attorney world. You know how difficult

01:10:36.320 | it is to bill at those rates for that many hours. So, what's the maximum number of hours I could

01:10:42.320 | bill? Maybe 10, 15, 20, something like that. So, now I'm at a thousand bucks an hour. And do you

01:10:48.240 | know how challenging it is from a marketing perspective to actually reach the thousands of

01:10:53.600 | people who you would need to reach to fill that seat across the table from you at a thousand bucks

01:10:59.680 | an hour to make the same amount of money that you make with a hundred million under management and

01:11:05.200 | a 1% fee? And so, it's unlikely. I think there are some very good planners working on an hourly

01:11:12.320 | basis. And if you are a middle America person, that's probably great. And you're probably going

01:11:17.680 | to do fine. But I'm telling you, I'm a pretty capable person and I would view it as- the idea

01:11:24.320 | of making an income based upon hourly fees as a financial planner is very unappealing because I

01:11:29.520 | can't figure out any way to structure the practice in a way that works and that's a good business.

01:11:34.080 | It would drive me out of the business. So, I think it's tough to find a world-class planner

01:11:39.200 | in that. Now, I know some guys and I want to meet more because I haven't met a lot. And maybe I'll

01:11:43.360 | change that opinion in a year. But just from the sheer financial reality of the business, it's

01:11:48.400 | tough to find. So, yeah. Maybe you could consult an hourly planner and they could do that. But that

01:11:56.080 | person may just have- they may have passed the CFP curriculum and they may not know any of the

01:11:59.680 | tricky advanced stuff. So, that's my response to thing one. That's pretty depressing because

01:12:05.920 | basically what you're saying is, "Look, it's going to be hard to find a really comp- a super

01:12:11.200 | financial planner who is willing to work on just an hourly basis or at least an hourly basis that

01:12:16.400 | costs some kind of reasonable fee, whatever that is." And you're right. It is tough because

01:12:21.600 | they're wanting to do one of two things. They're wanting to sell you something,

01:12:24.720 | right? I mean, and I talked to- I've got a good friend who just passed- became a CFA and he worked

01:12:30.960 | for a number of advisors and they pushed two things. Expensive annuities. And I understand

01:12:36.480 | that annuities sometimes can be a good solution. But I think in a lot of cases they're not. But

01:12:40.880 | they push clients into expensive annuities and expensive non-traded REITs. And they did that

01:12:46.160 | because it funded their practice. That's how they afforded private school for their kids in the

01:12:51.680 | country club. And the flip side is a lot of those advisors, instead of doing that, are, "Hey, I'm a

01:12:57.600 | fee only and pay me one, one and a half percent to manage your investments." That's how they do it.

01:13:01.360 | I think- but I think on that score that is going to be harder and harder and harder

01:13:08.640 | for advisors to do. It won't be impossible. I mean, there are still plenty of people out there

01:13:13.520 | that just do not understand the significance of fees when it comes to investing.

01:13:18.240 | And to them, one percent, one and a half percent, they don't know any better and they pay it. And

01:13:22.960 | they, you know, they don't even see it come out. They don't, you know, they don't understand

01:13:26.320 | what that does to their retirement over, you know, 20, 30, 40 years. So, you know, I guess to your

01:13:33.520 | point, though, it may be hard to find a financial planner who's good to work on an hourly basis.

01:13:38.800 | Although, I don't know, Joshua, I think they're out there, aren't they?

01:13:42.000 | I'm sure they're out there. I just don't, like I haven't spent enough time with enough of them

01:13:48.080 | to do it. And because the problem with an hourly practice, you have a marketing problem.

01:13:52.080 | And so, the only way to do it is if you have incredible marketing behind you, you have a

01:13:57.280 | world-class podcast of some kind and you're reaching tens of thousands of people, you have a

01:14:01.440 | major marketing problem. And that's the issue that comes up.

01:14:04.960 | Well, anyway, to point one, I absolutely agree with you from the advisor's perspective.

01:14:08.880 | A hundred million under management or perhaps selling a lot of commissioned products would be

01:14:15.440 | much more appealing as a business model than the drudgery of hourly work. No question.

01:14:22.320 | No question.

01:14:22.720 | Agreed. And I spent a lot of time with attorneys here in town and it's like, I don't know an

01:14:27.200 | attorney who likes the hourly model. All the attorneys are trying to get away from that as

01:14:30.240 | well. Now, it's more problematic because that's the standard. But I mean, were you billing hourly

01:14:35.040 | still in your law practice?

01:14:36.960 | Always. And the fees are unbelievable. I mean, I can't tell you how many lawyers in my firm

01:14:40.720 | charge more than a thousand bucks an hour.

01:14:42.480 | Right. You have to. There's no way because to be a competent, you always got to look at the

01:14:47.600 | market. People wonder, let's not go down that.

01:14:50.240 | Okay. That was point one. You had two more points.

01:14:52.880 | Two more points. Okay. So, here's the flip side. And here's the problem with the analysis as I

01:14:58.480 | see it. Generally, when people assume that a financial advisor is not worth their fee,

01:15:04.960 | their 100 basis points on a portfolio of index funds, they're assuming that the client is going

01:15:10.640 | to perform identically well without the services of the portfolio. Excuse me, without the services

01:15:16.320 | of the planner. So, what they're assuming is that they're saying, is that this assumption, and

01:15:20.080 | this is the problem, and this is also the solution. The assumption is that, well, the client can do

01:15:24.800 | it themselves. And so, the client is able to go and simply choose some good Vanguard index funds,

01:15:31.120 | and that client is going to put the money in there, and they're going to be in as good a

01:15:34.480 | situation as if they had billed the financial advisor 1%. If that is true, then all financial

01:15:41.840 | advisors should immediately be fired. But I do not believe it to be true, at least not for me

01:15:47.360 | and with my clients. It is inconceivable to me that if I have a good relationship with a client

01:15:54.240 | who is productive, who is motivated, and who I'm able to encourage, it's inconceivable to me that

01:16:01.040 | I can't return to that person untold multiples of the fee that I receive. And so, if the example is,

01:16:09.120 | well, if you invest and you get a 10% return without fees and you get a 9% return with fees,

01:16:14.480 | yes, 30, 40 years from now, there's a massive difference in that. But I think, if I were,

01:16:19.680 | you put me with an 18-year-old, or you put me with a 15-year-old, and you have that person meet with

01:16:25.840 | me and talk with me on a regular basis throughout the course of their working lifetime in a very

01:16:30.560 | close consultative way, I guarantee you that my client would be double, triple, I don't even know

01:16:39.520 | because I'm making these numbers up, would be way more wealthy than the other. And here's how and

01:16:44.480 | why. Number one is that the problem with most investors' portfolios is the behavior of the

01:16:53.360 | individual investor. And there is a massive amount of research being done and more needs to be done

01:16:59.600 | about how to help people address and affect their behavior. The average person is not

01:17:06.480 | emotionally equipped, they're not equipped intellectually, with knowledge, with experience,

01:17:13.120 | with perspective, to be able to handle the emotion of successful investing. The do-it-yourselfers

01:17:19.520 | are. So you, Rob, you are because you've been studying this stuff. But the average person at

01:17:24.080 | your firm is simply not because they have no background, no education, and they don't know

01:17:28.240 | how to handle the emotion of it. And the studies prove this. You can go and go look up the Dal

01:17:32.560 | Bar and the Lipper studies and you'll see that basically every year, the average investor

01:17:38.800 | underperforms their own investment by greater than 50%. It's astounding when you look at it.

01:17:46.160 | But the reality is that there are a series of very predictable behaviors that that client is

01:17:51.680 | going to make that are going to cause them to make bad decisions and is going to cause them to get

01:17:57.600 | out at the wrong time when they should be getting in and get in when they should be getting out.

01:18:01.440 | And this can be on a micro scale as far as whatever the latest technology is that we're

01:18:06.160 | going to, you know, the next bubble is going to pop or this can be whatever the greatest next

01:18:10.160 | depression is going to come and we're going to get destroyed out. The number one thing that an

01:18:14.160 | effective financial advisor has to be able to do is to be able to help the client manage their

01:18:19.840 | emotions and manage their behavior. And that is what I told every single one of my clients,

01:18:24.160 | that they should, they need to hold me accountable for and I expect from them because that's the

01:18:28.640 | only thing I can promise. I can't promise that I can outperform. In fact, I actually don't care

01:18:34.320 | if I were running a business, a portfolio of actively managed funds or index funds. I could

01:18:39.680 | do well in either because I can make arguments for either. So to me, that's not the most important

01:18:44.560 | horse in the race. The most important is did I help the client understand their plan and stay

01:18:50.560 | with their plan? Number two, there are a whole host of behavioral modifications that a good

01:18:57.200 | financial advisor can make in a client's life that have nothing to do with their portfolio,

01:19:03.200 | whether it's the type of account that they hold the portfolio in, whether it's the amount of

01:19:07.280 | money that they put in the portfolio, or even whether it's where they invest their money

01:19:11.440 | completely disconnected with mutual funds. What's going to make a bigger difference? The person

01:19:18.160 | getting an extra 1%, cutting out a 1% fee and funding their account at the same amount,

01:19:26.480 | or me as their financial advisor coming alongside and saying, "Listen, Rob,

01:19:30.720 | you're doing well, but you need to really enhance your career right now."

01:19:34.720 | And so I've heard about the... What field of law were you in, Rob, when you were practicing?

01:19:38.080 | Rob Gagner I still am practicing.

01:19:39.600 | Peter Bell: Okay. Is it corporate or litigation?

01:19:41.840 | Rob Gagner I do. It's funny. I don't know that I've ever

01:19:44.080 | really discussed this on the show. I defend auditors of publicly traded companies in

01:19:49.600 | proceedings brought by regulators such as the SEC and the PCAOB. I know, very exciting stuff.

01:19:55.680 | Peter Bell I like that. I'd actually love to talk to

01:19:58.480 | you about some time. I'm reading through the history of the financial crisis,

01:20:01.600 | and I just read a case study on country... Rob Gagner Countrywide?

01:20:05.040 | Peter Bell No, not countrywide. It was the other

01:20:06.880 | subprime mortgage company, and it doesn't matter. Anyway, the point is that in your career,

01:20:14.320 | the number one most valuable asset that you have and the best investment you can make is in your

01:20:19.280 | income. So the difference between coming out of law school and getting your first associate job

01:20:24.640 | and making 70 grand, grinding out paperwork in the back office versus becoming partner of a big

01:20:31.200 | firm that gets contacted when we're being sued by the SEC or the FTC or whoever it is that you're

01:20:38.320 | defending your auditors and having the potential, and I'm not saying you make or don't make. I don't

01:20:42.160 | have any knowledge, but then going to become a partner and making $3 million a year, that's all

01:20:46.080 | career development, and that all has to do with good financial planning and good financial advice

01:20:55.360 | as far as me coaching you to build your career, me coaching you on having the appropriate coverages

01:21:00.640 | in place, me coaching you and forcing you to get out of the office and go take a vacation.

01:21:04.720 | And so what I learned is that a good financial planner is much more than a numbers guy. It's

01:21:10.160 | much more about the coaching relationship and kind of almost like this life coach role,

01:21:14.800 | and if I can build that, there's no doubt in my mind that you give me my client and you go take

01:21:20.640 | your client and you toss your client into low-fee investments and know a financial advisor and you

01:21:25.440 | give me my client and you let me coach that client through all of their major life decisions and work

01:21:32.560 | with them and I'm their trusted advisor, their most trusted advisor they turn to, there's not

01:21:37.200 | a doubt in my mind that my client would be worlds ahead. And so that's what's missing in this whole

01:21:43.040 | conversation. Now, not all planners can deliver that, but all planners can learn to deliver that.

01:21:47.840 | And then the final thing, and then I'll shut up because you've been very gracious to allow me to

01:21:52.080 | go on my rant, but the final thing is this. People forget sometimes that it's worth it to pay for

01:21:59.680 | convenience and it's worth it to pay for skill. At the end of the day, the only reason anybody

01:22:04.960 | should ever hire a financial planner is if the financial planner can apply a measure of skill

01:22:10.160 | to their situation. And I polled my clients when I was leaving Northwestern. I sat down with my

01:22:14.480 | clients, as many as I could get with, and I said, "Listen, I have a question for you. Why did you

01:22:18.080 | pay me the fees? Because you know very much, you see it every quarter reflected on your statement,

01:22:22.400 | you know the fees I was getting. Why did you pay me that?" What I learned is that the clients

01:22:27.440 | valued me doing things for them and they valued me applying the skill. They valued partly me

01:22:35.120 | just simply doing the work. They valued partly me helping them through their decisions. They

01:22:40.800 | valued all the other ancillary services. They valued me helping them on their estate plan.

01:22:45.280 | They valued me helping them on their tax plan. They valued me consulting with them and with

01:22:49.040 | their accountant. They valued me talking with their son or with their daughter and helping

01:22:53.200 | those things. And they valued that enough to pay me the fees. The fees are not undisclosed,

01:23:00.960 | or if they are undisclosed, they should be. My preference, I would love it if every single

01:23:06.240 | dollar of commission, every dollar of a fee were very clearly displayed so that it was all out on

01:23:13.760 | the table. And then let me earn that money. And as long as the client is happy paying me that money,

01:23:20.000 | and then I can earn it and I can deliver that value. The problem is that the people who are

01:23:25.520 | often guys like you, there's nothing wrong with guys like you who are do-it-yourselfers. I was

01:23:29.280 | a do-it-yourselfer. But that's not everybody. And so I would recognize that there is a large

01:23:35.920 | number of people who are capable of being do-it-yourselfers and who want to be do-it-yourselfers.

01:23:43.040 | But these are the people that populate online personal finance forums and online websites and

01:23:48.080 | start blogs because then they're going to teach that. And I think that's awesome. We should do

01:23:51.360 | more. But there's also a large percentage of the population that doesn't want to do it yourself

01:23:57.280 | or that can't do it themselves. And that's the people that financial planners work with.

01:24:01.280 | And so I very rarely see that kind of differentiated in that. And I am very much

01:24:07.680 | a consumer advocate. And I want to continue to be a stronger consumer advocate.

01:24:13.200 | And let the consumer choose with their dollars where they put value. And I think the best thing

01:24:20.640 | that's happening is all these new options that are coming online. The robo-advisors,

01:24:25.680 | just the massive growth of some of the robo-advisors is phenomenal because it's smoking

01:24:30.080 | all the really crappy financial planners out of the business. And 10 years from now, there will

01:24:34.720 | be a lot of people who are completely dead and gone because they didn't provide any value that

01:24:39.440 | justified the money they were earning. And there's going to be a whole team, a whole raft of people

01:24:44.240 | who are delivering far in excess of the cost of their fees. Rant over it. You were very gracious.

01:24:50.400 | Rant over. Well, it's funny because I don't actually think you and I disagree so much. I mean,

01:24:55.920 | for example, there's no question that you're right that there are some people

01:24:59.600 | that for one or more reasons need or want a financial advisor, to be clear, someone to

01:25:06.000 | manage their investments. Either because they just don't want to spend the time to do it,

01:25:10.640 | or maybe because they don't feel like they have the skills or the knowledge or both.

01:25:16.560 | So there's no question that there's a large group of people that fit within that category. Where I

01:25:21.360 | think things are starting to change, though, is that that kind of advice is in some ways

01:25:27.440 | being commoditized. Right. Exactly. And I don't think that's a bad thing. Now, it's interesting,

01:25:32.480 | you mentioned robo-advisors. And I've talked a lot about betterment, wealth front, personal capital,

01:25:38.240 | although personal capital is a little different. But the thing that'll be interesting to me there

01:25:43.440 | is these things make investing very, very simple. So if the person's need is, I want something that

01:25:51.920 | makes it easier to do, and then I'm comfortable doing it myself, the robo-advisor may be a good

01:25:57.840 | fit. But if you're talking about someone who says, I'm afraid that when the market's down,

01:26:02.320 | I'm going to do something stupid, the robo-advisors aren't a whole lot of help. Right. Exactly.

01:26:09.520 | But here's the thing. If someone needs that kind of help, and there are plenty of people that do,

01:26:14.160 | I'm not so sure that the days of paying 1% to 2% of fees under management to get that kind of help,

01:26:22.320 | if those days aren't numbered. Because there's already plenty of options for folks that can

01:26:27.840 | help you do just that, help you stay in the market during difficult times, that have the ability to

01:26:33.680 | charge far less. Now, obviously, if you're working with someone and you trust them, and you've worked

01:26:39.120 | with your family for years, you're going to stick with them. And that's fine. That's the decision.

01:26:43.840 | But particularly as the younger generation enters the market, I think it's going to be harder and

01:26:49.520 | harder to justify paying those kind of fees. Now, in your case, see, what you're describing for your

01:26:54.480 | potential future practice isn't a percentage of-- isn't a percent of assets under management.

01:27:00.000 | You're talking about a monthly fee to provide the kind of services that you've described. And like

01:27:05.600 | you said, that formula is still a bit untested at the moment. But that's a formula that I think,

01:27:12.480 | it seems to me, is viable and would result in a practice for folks like you, and maybe me,

01:27:19.040 | that would work, but that also results in lower fees for the client. But I guess time will tell.

01:27:24.640 | One question on this subject, though, before we move on. People say that if you have an advisor,

01:27:30.320 | you're less likely to do dumb things with your money. I know that's Dave Ramsey's big thing. He

01:27:35.600 | says, go use one of my ELPs, commission broker, pay five and three quarters commissioned fee,

01:27:42.960 | but you'll have an advisor, and they'll keep you from doing dumb things when the market's down.

01:27:46.720 | Are you aware of any actual studies that demonstrate that, in fact, if you have an

01:27:52.960 | advisor, you're whatever, x percent more likely to stick to your plan? I'm not aware of any. In fact,

01:28:00.480 | I keep asking this question because I know a lot of advisors, and in '08, '09, you know what they

01:28:05.200 | told me? I lost all my clients. They pulled out of the market. And a part of me thinks, well,

01:28:09.600 | maybe you weren't doing your job, but that's probably way too judgmental because at the end

01:28:13.760 | of the day, the client makes the decision. I can't find a study that actually says, yes,

01:28:19.280 | we've surveyed 10,000 people, and those with advisors, whatever, stick with it.

01:28:24.160 | Yeah, I would really doubt, I would actually doubt if you surveyed 10,000 people that you

01:28:28.000 | would find that those with advisors did better because I think there's a lot of really sucky

01:28:31.920 | advisors out there. And the best thing that happened in 2008 was a lot of people, you know,

01:28:38.160 | a lot of advisors got a wake-up call of, hey, I've got a problem, and there was not much good that

01:28:42.800 | came out of it, but I'm trying to figure that out. But I don't know of any academically rigorous

01:28:52.080 | studies that would demonstrate that. I don't know if they've been attempted or not or if the results

01:28:56.000 | are I'm ignorant on their existence. It is difficult for me to conceive, and I could be

01:29:01.920 | deluding myself. I very well could be, but it's difficult for me to believe that given how

01:29:07.200 | carefully I coached my clients and how carefully I tried to teach them, here's what you can expect,

01:29:13.200 | here's the emotions that you're going to feel, here's what's going to happen, hey, guess what?

01:29:16.240 | This is going to happen, this is what's going to happen, this is what's going to happen,

01:29:18.400 | that I couldn't do better. But I can't prove it. And this comes back to actually the other

01:29:24.480 | point I was going to make, is that proving who does better and what does better. Alpha is not

01:29:31.360 | everything. Alpha being the amount that you've beat the market, that is not everything. And

01:29:35.600 | people forget this a lot of times when they're actually working with clients, is that the client

01:29:39.680 | doesn't really care most of the time whether or not they beat the standard and poor's 500 index.

01:29:45.760 | They care about, do I have enough money to put my kid in college? Do I have enough money to retire?

01:29:52.000 | And this is the major disconnect between most of the formal academic financial literature

01:29:57.200 | and the actual experience of actual advisors. Because it doesn't, you know, I've had clients,

01:30:02.400 | I've talked with clients and it's like, listen, if you tell me that I can hit my goals and these

01:30:07.280 | goals are excellent goals and we can hit the goals with a 4% return, do I really need to deal with the

01:30:13.440 | rest of it to shoot for the 9%? It's very often and frequent that a client will say, I don't care

01:30:20.320 | about the 9%, I want to know my 4% is actually there. So there are a ton of intelligent ways

01:30:27.040 | to manage a portfolio where the portfolio will always underperform the S&P 500 because it's

01:30:33.520 | designed to do that. Building an immunized bond portfolio for a client's, you know, college

01:30:38.480 | educational expenses is a tremendous value and probably every single time that will underperform

01:30:43.920 | the S&P 500. So there's a big difference between the academic side of analyzing mutual fund

01:30:49.200 | performance versus other performance and actually working with a client's financial goals. But I

01:30:55.440 | will give you one piece of data that you may enjoy and your audience may benefit from. You think that,

01:31:01.120 | and I don't know if I agree or disagree with you, I've taken the disagreement tact,

01:31:04.320 | but I could argue it too. You know? You sound like a lawyer.

01:31:06.640 | Now, I actually do disagree on this basis about the indexing is not going to destroy fees.

01:31:16.640 | I can, so right now I think I will do the monthly fee approach because that seems the most

01:31:21.360 | straightforward way. But frankly, the reason I started the podcast and the reason I do this is

01:31:25.120 | because I want to create the media and I want to create a much bigger depth of media. And if I

01:31:31.280 | didn't feel that over time that if I can serve my audience and my audience can choose to pay me for

01:31:39.200 | the service that I provided, if I didn't feel that I could do well financially with that in the long

01:31:43.680 | run, I would never have left the business that I left just to start this new firm idea. But I do

01:31:49.760 | think the firm idea is going to work. But there's a mutual fund company called Dimensional Fund

01:31:55.440 | Advisors, DFA. And DFA is, I think, the number two biggest indexing fund company in the world.

01:32:04.000 | All they do is passive investing. It's all indexing. But you cannot buy their funds on

01:32:09.760 | the retail market. I know. I hate that fact. Right. I hate that fact. But here's what,

01:32:15.120 | and here there's a whole level of sophistication here that is often not discussed, but I'll mention

01:32:19.520 | why. The reason why you cannot buy their funds on the retail market is because they need advisors to

01:32:28.240 | control their clients. And in the mutual fund business, this is called hot money. So if you're

01:32:32.640 | managing a portfolio and you're a portfolio manager of a mutual fund, the worst thing that can

01:32:37.360 | possibly happen is if all of a sudden your investors call up and they're saying, "Hey,

01:32:41.440 | I need my money and you've got to sell out." This is why in hedge funds, hedge fund management,

01:32:45.200 | you've got a lockout period where you put the money in and you cannot get it out for whatever

01:32:49.280 | the lockout period is. So in the mutual fund business, though, the mutual fund portfolio

01:32:54.400 | manager doesn't have this option. So I think, I can't prove this, and I haven't read it,

01:33:00.080 | and maybe the academic literature addresses this, this is just my opinion. But I think one of the

01:33:04.960 | big challenges that why many times actively managed funds underperform indexes, net of fees,

01:33:12.560 | is because oftentimes the active fund manager has to deal with maybe more flows. And when you're

01:33:20.320 | comparing that to the index, now the index fund maybe has the same thing, so my point may not

01:33:24.320 | make sense. But if you're managing a billion dollar fund and all of a sudden market's going down,

01:33:28.880 | your fund has been reduced in price to 700 million, now because there's a 30% general market

01:33:34.000 | decline, now all of a sudden your investors start panicking and you've got a hundred million

01:33:38.560 | dollars of outflows. That means you've got to sell a hundred million dollars of investments

01:33:42.320 | when they're all down, and that destroys your performance numbers. So what DFA does is by only

01:33:48.480 | selling through advisors, and you have to go through the gauntlet to actually become an advisor

01:33:52.800 | with DFA, you have to go through extensive training, you have to go through behavior

01:33:57.920 | management training, and you have to teach your clients very carefully what to expect.

01:34:02.560 | But the key is DFA, because they only sell through advisors, they avoid hot money. And so that means

01:34:09.120 | that the client who is likely to sell our portfolio when the market declines by 15%,

01:34:12.960 | you will not find a DFA advisor willing to work with you, because it would destroy DFA's business

01:34:18.400 | model. But what they can do is they can take the approach of passive investing, of indexing,

01:34:23.760 | and they can use some of these swings. And because they don't have the outflows of their fund

01:34:28.720 | that some of the other investment companies have, they're able to produce much better numbers.

01:34:33.520 | And so what's happening in the investment business is that people often think it's

01:34:37.760 | cut or dry. They often think it's either Vanguard or else. It's either passive investing or else.

01:34:42.880 | Well, when you actually start studying it a little bit, that's not the case. There are a

01:34:46.560 | lot of people, and most of the guys that have produced several, I don't remember who's on DFA's

01:34:50.800 | board, but many of the guys who, the academics, who actually developed the information that led to

01:34:56.640 | the resurgent, the growth, the massive growth of passive investing, they're the guys on the board

01:35:02.160 | advising. And DFA has been able to, on a basis of indexing, bring in some of these other portfolio

01:35:08.400 | tweaks that have really helped their performance. And so I think that's a good example. And they are

01:35:13.040 | a force to be reckoned with in the mutual fund world. So you're going to be paying 1%

01:35:17.920 | for an index fund, and they're doing very, very well.

01:35:21.600 | Yeah, they're on their board of directors. Fama and French are both on their board, as is

01:35:25.760 | Roger Ibbotson. He's on there too. So one thing I will say, there are studies that show the outflows

01:35:35.680 | from index funds were lower than the outflows of actively managed funds in the '08, '09 time

01:35:42.160 | period. I don't disagree with you that it's a mistake to say that all actively managed funds

01:35:49.360 | are bad. I think it depends on the cost of the fund, its investment objectives, also its market.

01:35:56.640 | I do think it's harder for an actively managed large cap US-based fund.

01:36:02.080 | Absolutely.

01:36:02.560 | But you get into things like emerging markets and foreign markets and other things,

01:36:06.880 | it's a different story. But OK, well, you got the last word on that. I'm going to leave it there.

01:36:11.120 | But I know I've had you on the line here for a long time, but I did want to move over quickly.

01:36:18.480 | So why did you quit your cushy job and leap into the world of podcasting, number one?

01:36:25.840 | What were you thinking, Joshua? And did you consult a financial planner before you made

01:36:32.240 | that decision? And since you've made that jump, two-part question, since you've made that jump,

01:36:37.280 | how are you and your family eating?

01:36:40.080 | Good questions. So for me, I am not heavily motivated by money in the sense of equating

01:36:52.400 | net worth with self-worth type of thing. It's easy for people to say, I'm not motivated by money.

01:36:57.840 | Baloney. We're all motivated by money, otherwise, to some degree. But to me, I'm a young man. I'm

01:37:06.080 | almost 29 years old. And I've lived a phenomenally blessed life. And I have found that I've been

01:37:14.000 | happiest in some of the times where I've never spent any money. And I've been privileged in some

01:37:18.960 | ways that are just amazing. I've had dinner with the former richest person in the world, not Gates

01:37:24.400 | or Buffett, and had dinner with his house before he died. And who gets an opportunity like that?

01:37:30.960 | I was in college. I drove a $2,000 Honda Accord to his house and parked it there and got to sit

01:37:36.240 | next to him for an evening of dinner, things like that. So I've learned that very little of the

01:37:40.800 | things that I value in life are connected with money. What I do value is time. And I value having

01:37:46.720 | meaning and joy from time. So when I started my show, it was purely just for fun as an experiment.

01:37:52.720 | And I just got sick and tired of... I got tired of Dave Ramsey, Rick Edelman, Susie Orman, and Clark

01:37:59.520 | Howard speaking for the financial business. And I like... No, wait a minute. Dave Ramsey helped

01:38:05.120 | you get out of debt. What happened? Go listen to my show that I recorded with Steve Stewart from

01:38:11.840 | MoneyPlanet SOS about do financial broadcasters like Dave Ramsey do more harm than good?

01:38:17.360 | And what's the episode number? I'll look it up here. Shoot me an email. I'll include it in the

01:38:23.920 | show notes. That'll tell us your current views on Dave Ramsey? Yes. And Dave has been a huge benefit

01:38:30.400 | to me, but it's also some stuff about his advice that's extremely dangerous. And so I was very

01:38:35.840 | careful in that show to kind of lay those things out. But I just got sick and tired of it. And

01:38:39.520 | here's the problem with the financial business is that those who are great at financial planning

01:38:47.280 | are usually working in the business. By the way, it's episode 66. So it's RadicalPersonalFinance.com/66.

01:38:53.840 | Do financial broadcasters like Dave Ramsey do more harm than good? A frank conversation between

01:38:58.160 | two fans. So the people that are in the financial planning business, they can't speak to the public

01:39:03.440 | because everything they speak to the public is marketing. So I sat down one day and I just like,

01:39:08.320 | "You know what? I can't do this, but let me just sit down." And I sat down with a digital voice

01:39:12.000 | recorder in the middle of my bed and I just said, "I wonder if I could create some audio content."

01:39:17.520 | I just started talking and I was nervous as anything at first. But then I found I really

01:39:21.440 | liked it. And so I did it anonymously and I tossed some files up on the internet. I didn't tell

01:39:26.400 | anybody who I was or what I did. I just said, "Let me try this." And I did it for two weeks.

01:39:31.120 | And what I found was I found that people talk about do what you're passionate about and that's

01:39:37.360 | fraught with problems and it's also wonderful advice. But the problem is that I've always

01:39:41.440 | been working at getting closer and closer to the things I love. And I love doing financial planning.

01:39:45.200 | But what I found when I was teaching that I really enjoyed it and I loved the teaching of it.

01:39:51.040 | And so I found myself getting up. I don't like to get up early. And I found myself getting up

01:39:55.360 | at 5am, 4am, working in the morning for four or five hours trying to figure out like, "How could

01:40:00.080 | I create some really useful media content to teach people about financial planning?" And then I go to

01:40:05.120 | the office and I'd work my nine or ten hour day and I'd come home and I'd be excited to think

01:40:08.640 | about what I was going to do the next morning. And I said, "Wow, this is amazing." And then I saw

01:40:12.960 | people starting to create content online and see people building very healthy businesses with their

01:40:24.800 | online content. I said, "I wonder if I could do that." So I had to take the show down because I

01:40:29.920 | was doing it unauthorized and I was licensed and everything. But I recognized and I said, "Wow,

01:40:35.280 | I loved doing that." When I sit down and I develop an outline around some information,

01:40:42.240 | I sit down in front of a microphone and I speak to the audience. I enjoy doing that.

01:40:47.680 | And when I sat down and I said, "What would I do if I had 10 million bucks in the bank?"

01:40:51.120 | For the last 18 years, probably 17, 18 years, I've been obsessed with finance and obsessed with

01:41:00.320 | kind of finding the angles and the tricks and the little things. And I said, "I would do that if I

01:41:06.000 | had 10 million bucks in the bank. I don't have 10 million yet, but I would do that if I did.

01:41:11.280 | And I can do it now and I think I could ultimately find a way to earn an income on it."

01:41:16.080 | And so I said, "Okay, I will do that." So I made plans, but the problem was that I made a couple

01:41:23.200 | of dumb moves in my own personal finances. My wife and I, this was an extra challenge as far

01:41:29.440 | as me figuring out a business transition because the world of podcasting and blogging is very much

01:41:34.560 | like the world of writing books. Everyone wants to write a book and the people that actually do

01:41:38.880 | are few. And those who do, the vast majority make no money. A tiny, tiny small percentage make a lot

01:41:45.440 | of money and maybe a slightly bigger but still really small percentage make some money. So you

01:41:51.760 | can't exactly say, "Oh, I'm going to go start a podcast and have that be a great financial plan."

01:41:56.640 | That's kind of a dumb move if you're doing it for the money.

01:41:58.640 | I will second that, by the way. Keep going.

01:42:00.880 | Right. So I knew that I wasn't willing to do that. But the problem was I have always been a good

01:42:07.120 | saver. But my wife and I, after a lot of time and whatnot, we bought a house. But when we were

01:42:15.200 | shopping for a house, we bought a house in 2013, January 2013. When we bought a house, we bought

01:42:20.560 | very carefully. We bought a house that was in the neighborhood exactly what we wanted. It was three

01:42:24.720 | tenths of a mile from my office so I could save a lot of money, didn't have to commute. It was

01:42:29.280 | exactly what we wanted, but it was twice the price range that we wanted to spend on the house.

01:42:34.720 | But when we had shopped with the price range we wanted to spend on the house, then we

01:42:38.640 | weren't able to find a house in that range that was going to work. So we went ahead and increased

01:42:49.520 | our price range. So I bought the house up at $50,000 down on the house and that wiped out a lot

01:42:57.600 | of my savings. So instead of being able to have this nice cushy position where, "Oh, okay. I'll

01:43:02.880 | close my practice down," and I walked away from a lot of money to leave and start a podcast. But

01:43:06.960 | instead of being able to walk away and say, "Oh, I'll shut this practice down and this is going to

01:43:10.800 | be great. I've got a couple of years of income in the bank so it's no big deal. I don't need to

01:43:15.120 | worry about it." All of a sudden, I found myself strapped for cash because all my money was locked

01:43:18.800 | in a house and home equity and locked in retirement accounts where I couldn't get it out.

01:43:23.440 | So I stressed about this for a while and I didn't see a way out. And I figured, "Well, I just got

01:43:28.240 | to keep doing financial planning." But the problem with financial planning, if you're planning to

01:43:32.800 | get out of financial planning, you're going to be a really bad planner. Because every time I would

01:43:36.640 | look a new client in the eye and create a new plan, they're giving me their trust that I'm

01:43:42.320 | going to be there to care for them. And then now if I know, "Hey, I like this podcast thing. I'm

01:43:47.120 | going to leave in two years. I just need to save a bunch of money so I can do it," that wasn't

01:43:50.640 | working. So finally, I sat down with my wife one day and we decided, "I'm going to do it. I'm going

01:43:54.800 | to figure it out." And what helped us is that we're pretty frugal. We don't need much money to

01:44:00.160 | live on. We need about $3,000 a month to live on at our current lifestyle. So that means I figured

01:44:06.000 | out. I said, "Listen, I can go and get another job. And if I just get a job that's outside of

01:44:10.480 | the financial business, then that will allow me to create the show. And I'll just work eight hours on

01:44:17.120 | the job, eight hours on the show, and I'll sleep eight. It'll be good. Everything will work."

01:44:21.360 | So I don't mind working a couple... Basically, I don't mind working two full-time jobs for a while,

01:44:26.320 | not forever, but that worked. So I started pursuing options and I looked for a few different

01:44:31.360 | things. I looked for some dead-end stuff. I went and delivered pizzas for a week because I heard

01:44:37.040 | you can make a bunch of money doing that. Not true. But I figured if I could go deliver pizzas

01:44:42.080 | for five nights a week and make $3,000 a month, work five hours a night for five, six nights a

01:44:47.120 | week, that'd be great. It'd be perfect. Unfortunately, I couldn't. It was not worth any

01:44:52.080 | time. So I went and then the whole time trying to figure out, "Okay, do I start the new firm?

01:44:59.280 | How do I structure it?" All that kind of stuff. So the show at this point, it's three or four

01:45:04.880 | months old. I'm on episode 77, I think I just posted today, or 78. And I love doing it. And

01:45:10.880 | the response from the audience has been wonderful. It's been humbling and awesome. And I feel like

01:45:17.600 | they're starting to coalesce a group of people who are really benefiting from it and who are

01:45:22.720 | doing that. And my hope is that I think I can bring other services and other products to them

01:45:27.280 | with time that will allow me to actually earn some money from the show. And in the meantime,

01:45:33.200 | I wound up working out a consulting contract in the financial planning business. So I have a

01:45:37.680 | consulting contract that pays my bills and that frees me up while I start the new firm. And then

01:45:42.240 | I expect the new firm, if I can ever wind up actually getting it going, I expect that to fund

01:45:47.680 | my life. And then thankfully, I've still got a pretty decent cushion of cash in the bank, which

01:45:52.560 | is also kind of my... I don't like to spend money. I don't like to spend reserves. I know many people

01:45:58.560 | will start business off of that, but I prefer just earning income as I go and keeping the cash and

01:46:03.040 | reserves in case something goes wrong. But that's my story. So that's how I started the show.

01:46:07.200 | - Wow. Okay. You're enjoying it so far, I take it.

01:46:11.280 | - I love it. I love it.

01:46:12.640 | - You're happy with your decision?

01:46:14.080 | - Thrilled.

01:46:14.960 | - Your wife's happy with your decision?

01:46:16.480 | - She likes seeing me happy and having the ability to...

01:46:20.960 | - That's a good wife to have.

01:46:22.480 | - Right. You know what's refreshing is I'm a pretty crazy guy. You could probably pick that up.

01:46:30.160 | - I had not noticed that, Joshua. Also, you don't have very strong opinions about things.

01:46:35.760 | You're kind of wishy-washy. You really are. I don't know. You might want to look into that.

01:46:39.680 | - Build a backbone and find out about opinions, right? So, the cool thing is that I love to...

01:46:48.240 | My show is called Radical Personal Finance, but the problem is that what I learned for the first

01:46:54.640 | time and I never recognized it because I've been self-employed for the last six years.

01:46:57.920 | I never got a paycheck. Everything was based upon if you work and you produce,

01:47:04.000 | then you make money. That's how my life has been for six years. So, I'm very comfortable

01:47:07.200 | with the topic of entrepreneurship. But when you're behind a larger corporate umbrella,

01:47:12.240 | I never... You have responsibilities to the brand of the umbrella. So, you can't be as crazy as I

01:47:20.560 | often am. After I left and I was kind of just on my own, I recognized the awesome responsibility of

01:47:28.080 | that, but also the total freedom. So, now on my show, I interviewed a guy who's a war tax protester,

01:47:34.320 | hasn't paid taxes since we invaded Iraq. So, it's 13, 14, 12 or 13 years by now. I did a show on

01:47:42.640 | what we can learn from dumpster divers and vagabonds and hobos. And I do shows on in-depth

01:47:48.800 | complicated tax planning. I'm planning some shows on how to do multi-billion dollar trusts for estate

01:47:56.560 | planning. And so, to me, I enjoy those crazy, far out, wacky subjects. But that's tough to find a

01:48:06.000 | firm who's got to be conservative. Put it this way. There's not a chance in the world that Vanguard or

01:48:12.640 | American Funds or Fidelity would ever sponsor my show. And that's okay. I don't need them to

01:48:17.840 | because they've got to protect their brand image. But I enjoy being able to

01:48:23.840 | look at these subjects that many people don't look at.

01:48:26.080 | - Right. Well, that's terrific. And I've started listening to your show and have enjoyed it very

01:48:31.840 | much. And I haven't listened to the tax strategy episode yet. So, I'm going to focus on that

01:48:36.000 | myself. One question about your show, and then I'm going to have some rapid fire questions for

01:48:41.200 | you at the end, okay? Which I suspect you'll be brilliant at. Here we go. The first question

01:48:44.800 | about your show. I noticed you use SpeakPipe, which allows people to leave you a voice message.

01:48:49.680 | - Right.

01:48:50.800 | - I toyed with that for about a day and a half. It's not on my site at the moment,

01:48:56.080 | but I have a SpeakPipe account. So, a listener could, rather than emailing you a question,

01:48:59.840 | they could leave you a voicemail and then it would give you something to play on your show. So,

01:49:03.600 | the other listeners could hear the person asking the question. Are your listeners embracing that?

01:49:08.400 | - They are. I think I've received... It took me forever. I am not a techie guy. I can't stand the

01:49:14.400 | techie stuff. So, it took me... I've threatened to do it for like four or five weeks. And I

01:49:17.920 | finally installed it about three or four weeks ago. And I think I've received something like

01:49:22.160 | six or seven voicemails now.

01:49:23.920 | - Okay.

01:49:24.400 | - Which has been great. And I cleared them all out on last Friday's show. And I forgot... Thanks

01:49:29.120 | for reminding, by the way. I forgot to tell the audience, "Listen, if you guys want to answer

01:49:32.240 | questions, call them in again." So, I got to remind the audience about that.

01:49:34.560 | - All right. I'm going to put that back up. I get a ton of email, which is great. But I think

01:49:38.800 | it'd be kind of fun to hear people's voices and play that. So, I'm going to give that a try. Okay.

01:49:42.080 | - I think it adds a lot.

01:49:42.960 | - Rapid fire questions. You ready?

01:49:44.320 | - Ready.

01:49:45.120 | - Okay. Best personal finance book. What do people read?

01:49:48.400 | - Richest Man in Babylon. No question.

01:49:50.560 | - How about for investing? Same one?

01:49:53.920 | - Just a minute.

01:49:58.880 | - Tick tock. Tick tock.

01:50:00.240 | - The investing one is hard because I don't like how most people just... When they hear

01:50:07.360 | investing...

01:50:07.680 | - This is a rapid fire Q&A.

01:50:09.920 | - There is no one book on investing.

01:50:12.160 | - Okay. Fine. You don't have one on that.

01:50:13.520 | - But I'll give you one actually. Here's what it is. If somebody has passed just the novice

01:50:19.120 | level of investing, read a book called The Fund Industry by Robert Pozen and Teresa Hamaker,

01:50:26.800 | something like that. And you will gain insights into the managed money business that you've

01:50:31.760 | never known. And you will not find any of this stuff in the personal finance world. So,

01:50:35.680 | read a book called The Fund Industry.

01:50:37.360 | - All right. Do you use a tool for your budgeting?

01:50:39.120 | - I keep an Excel spreadsheet and I don't budget.

01:50:43.200 | - Excel spreadsheet, you don't budget.

01:50:44.960 | - I don't... Meaning I don't budget proactively in a forward-looking manner. I do it in a

01:50:49.680 | month by month. I take a look at the previous month.

01:50:51.840 | - Okay. Do you use tools to track your investments?

01:50:54.000 | - No.

01:50:55.200 | - No? Okay. Your investments, what are you invested in? Let me ask you this. What's your

01:51:00.320 | asset allocation?

01:51:01.120 | - 100% stocks.

01:51:02.800 | - Wow. 100% stocks. Crazy guy.

01:51:05.680 | - I don't get bonds. This is purely for me, not client advice. But I think it's very simple.

01:51:11.760 | Owners get richer than lenders. And I have a stomach of steel when it comes to volatility.

01:51:17.520 | And you will always have the highest total average return from 100% stock portfolio versus

01:51:26.480 | in my opinion, and I think there's good academic research for this, but you'll always have the

01:51:31.360 | highest total average return from stocks versus bonds simply because of the inherent volatility.

01:51:37.360 | If you can handle the volatility, you're going to get richer with stocks. But the vast majority

01:51:42.560 | people can't handle the volatility. I have a stomach of steel, so I'm 100% stocks all the time.

01:51:47.040 | - Stomach of steel. That's the title to your next book, man. Right there it is. Okay.

01:51:50.320 | All mutual funds or ETFs?

01:51:52.800 | - Presently, but I'm struggling with actually... I'm having a major... Over the last year,

01:51:58.560 | I've had a major ethical crisis actually of trying to figure out... I am not comfortable

01:52:04.560 | with many of the companies that I own in my mutual funds, and I'm having a major ethical

01:52:08.880 | crisis from profiting over them. So I am headed down a road actually, and we'll see,

01:52:15.200 | but it is possible that in the future I will be selling all of my mutual funds

01:52:20.640 | and taking over the management of my portfolio myself so that I can control the companies that

01:52:26.000 | I'm profiting from. - So in other words, individual stocks.

01:52:28.400 | - Right. - Because there are mutual funds

01:52:30.800 | that avoid the sin industry, so to speak. - Right. But the problem is the things that I have issues

01:52:36.240 | with, almost nobody else does. So for example, I don't care a bit about tobacco companies or

01:52:41.600 | alcohol companies, but I'm uncomfortable owning some of the major banks.

01:52:46.160 | And there's a lot of examples. So the social screens for the social mutual funds, I haven't

01:52:54.880 | found one that actually matters to me. - They probably don't exclude banks,

01:52:57.600 | I'm guessing. - Right. Things like that. But I don't like

01:53:00.240 | the banking cartel that we have in this country right now, and I don't want to profit from them.

01:53:03.760 | And so this is a major personal ethical crisis for me. I never experienced this in the past.

01:53:08.400 | I would always tell clients, "Don't worry about that, just earn the money." But now that I'm

01:53:12.400 | going through it, it's causing me to rethink everything, and I'm probably going to be going

01:53:16.640 | in a different direction with my investing in the future. - That's interesting, because from

01:53:20.080 | my perspective as an investor, I love monopolies and cartels because they make a lot of money.

01:53:23.840 | Okay. Your mutual funds, we're almost there, almost done. Your mutual funds, are they primarily

01:53:28.000 | index or active or a complete mix? - Primarily active. I have a few index

01:53:32.240 | funds, but primarily active. - What mutual fund companies?

01:53:35.120 | - American Funds. - Ah, American Funds. So you pay the

01:53:37.280 | commission or do you not? Can you bypass that, given your background?

01:53:40.080 | - I just paid the commission, but I paid it to myself. It was a little bit funky when I bought it.

01:53:45.760 | - Ah, there you go. So you're an insider. So you're one of the people we talk about.

01:53:48.560 | - Exactly. - Okay.

01:53:50.160 | Because it just flows through to me anyway. And the commission, by the way, is an interesting

01:53:55.920 | discussion. The commissions have been destroyed over the last number of years, but we'll be back

01:54:04.560 | into that conversation. But here's the thing. If I were working with a client, I would almost 100%

01:54:10.800 | of the time rather have fees than commissions, because commissions are one time. If you're just

01:54:15.200 | talking about self-interest, people that accuse commission-based sales of investments to be

01:54:21.040 | wrong as compared to that fee is somehow better, selfishly speaking, I would rather have fees

01:54:32.800 | because I have larger stable revenue over time as compared to commissions. So I've never bought that

01:54:37.600 | argument. So I have some actively traded funds with American Funds and I have some Vanguard funds

01:54:42.800 | as well on one of my retirement accounts. - It's funny because I bought that argument

01:54:46.160 | for a while, but I agree with you, particularly if you're paying a fee-only advisor 1% or more.

01:54:50.480 | Long-term, if you stick to a plan, you would be better off paying the commission.

01:54:55.520 | - Right. - And American Funds,

01:55:00.080 | they're good funds. I think most of them that I've looked at are probably in the 60 to 70 basis

01:55:05.680 | points, certainly higher than an index fund, but also significantly lower than the average actively

01:55:10.160 | managed fund. Kind of reminds me of Dodge and Cox that doesn't have a commission, but

01:55:13.760 | their expense ratio is about the same and I own a Dodge and Cox fund and I think they're pretty

01:55:18.240 | good. Of course, a lot of the folks, and I know we're getting off this rapid fire question round

01:55:22.320 | that I had, but a lot of folks say, "Well, commissions versus 1% fees, commissions win."

01:55:28.080 | That's true, I think it can win. Although my response to that would be, "But you haven't

01:55:33.360 | listed all of the options because those aren't your only two options." - Right. And I would say

01:55:37.440 | also you have to look at the service. So, for example, if I sell somebody a commission product

01:55:42.960 | and I earn a commission on that, do I have as high of an incentive to come back and service

01:55:47.760 | them year after year after year? Most of the people, you just buy a small account, I don't

01:55:53.680 | have much of an incentive to respond. But here's the flip side. Somebody has $70,000, you can't

01:56:02.400 | charge a fee on that. That is way too small to deal with that. - Right. - So, what happens-

01:56:06.880 | - That's why they have minimums. - Right, exactly. And so, that's what happens is people get into

01:56:11.280 | these discussions and they've never figured, and you get into these academic discussions,

01:56:17.040 | and you've never sat with a client that says, "Joshua, I need help with my investments." We'll

01:56:20.720 | call Vanguard because you've got $22,000. "Joshua, no, I want you to do it." - Right. - What happens

01:56:27.120 | is if you cut out commissions, you close out the ability to work with middle and lower middle

01:56:33.040 | America. - Oh, interesting. - And I think that is one of the neglected things that I've heard.

01:56:39.840 | Now, the other problem is that low and middle America has been screwed time and time and time

01:56:43.760 | again by stockbrokers selling crap. So, how do you deal with that? I don't know, other than to say,

01:56:49.680 | find an ethical advisor, a person of integrity, train them well, make them knowledgeable,

01:56:55.600 | and give them what they need to work with tools in each client's portfolio. And I do want to comment

01:57:02.240 | on one other thing on your rapid fire round. - Good, and then I've got one last question. - Cool.

01:57:06.080 | Just because I misspoke, because you said, I think a moment ago, you said active or passive,

01:57:11.360 | and I said all active. That's not right. So, I have some actively managed funds and I have some

01:57:16.720 | funds at Vanguard, but one's in a retirement account and the other. I think people have to

01:57:23.040 | look at the actual asset class. And you made this point earlier, but to me, this makes sense to me.

01:57:28.160 | If you're going to own an actively managed fund, it needs to do something that an index fund can't.

01:57:32.560 | But not all indexes are created equal. So, that's my current opinion. We'll see if it changes. I'm

01:57:37.680 | going to try to get William Sharp and some of these other guys on my show as time goes on. And I think,

01:57:43.120 | who knows, maybe they'll change my mind. I don't know. - Okay, one last question. Any favorite

01:57:46.480 | online resources, blogs, websites, whatever that you regularly follow in the personal finance and

01:57:51.600 | investing space? - Radicalpersonalfinance.com. - No, good. That's a good one. - Yes and no. So,

01:57:58.960 | these days, I don't read many blogs. And I think blogs are really causing problems with people's

01:58:06.000 | ability to comprehensively grasp a subject. Meaning that more books, fewer blogs. Because

01:58:12.000 | blogs, we try to produce something, but we can't produce a coherent story. So, as long as you have

01:58:18.400 | a foundation in books and you're going back to books for knowledge, augmenting them with blogs

01:58:23.120 | is great. But if you're not actually starting with books and you're just trying to build an

01:58:29.040 | education from blogs, it's really tough. Because no matter how well-intentioned or no matter how

01:58:33.200 | knowledge the writer is, when you're writing 1,000, 2,000, 3,000 word essays, you can't convey a

01:58:39.360 | comprehensive thought and comprehensively teach. So, I enjoy Pete's blog, Money Mustache.

01:58:47.920 | I enjoy that because he's produced the most motivated group of people. I enjoy Jacob's book,

01:58:53.760 | Jacob Lundfisker's book, Early Retirement Extreme. I don't look to the blogging community for much on

01:58:59.520 | financial planning advice. I read, in the financial planning world, Michael Kitsis' blog a lot. So,

01:59:06.480 | K-I-T-C-E-S.com. - That's good. He's great. - That's what I read for financial planning blogging.

01:59:12.240 | And I like, for wealth building, I like Todd Tressiter's work at financialmentor.com. I think

01:59:18.240 | he's done a really good job there talking about the wealth building side, which is something that

01:59:22.640 | is never talked about in financial planning, by the way. - Yeah, he was at FinCon too. - Right.

01:59:26.880 | - Yeah, we had a good time. - All right. Well, great. Well, you've given us a ton of resources.

01:59:29.840 | I'll link to all of them in the show notes as well as to your show. And shoot me an email with any

01:59:34.320 | podcasts that you think really stand out. I've got the one, episode 66 on Dave Ramsey. But if you

01:59:39.600 | have any others, shoot me an email. I'll include those in the show notes as well. All right,

01:59:42.640 | Joshua. Well, listen, I appreciate your time and your views. It was very enlightening for me.

01:59:47.200 | Great having you on the show. - Thank you, Rob. I appreciate it. - Well, as I promised at the

01:59:52.480 | beginning of this show, that has to be the longest interview I've recorded in this podcast. I hope

01:59:59.200 | you enjoyed it. A lot of detail. One of the things, Joshua, as you know, very strong opinions

02:00:06.080 | about the world of personal finance and investing. And I kind of, I love that. And questioning him

02:00:12.400 | and learning about the business of the CFP and what all those pesky initials are behind his name.

02:00:17.600 | If you haven't already, I encourage you to check out his podcast, Radical Personal Finance. A very

02:00:24.400 | detailed show. A lot of great stuff. And I think you'll enjoy it a lot. I've listened to a number

02:00:31.840 | of his shows. Obviously a very knowledgeable person. And my hunch is you've got some questions.

02:00:37.840 | So, you know, you can obviously reach out to him through Radical Personal Finance, and I'm sure he

02:00:42.560 | would love to get your emails and questions. Also, though, feel free to shoot me an email,

02:00:47.360 | drdorler.net, if you have any questions about this episode. Happy to address them myself or

02:00:51.680 | pass them on to Joshua, if that makes sense. So feel free to reach out to him either way. And,

02:00:56.880 | of course, you can always reach out to me with any questions or topic suggestions for the show.

02:01:00.960 | I would love to hear from you. And happy to get those emails. Hey, hope you have a great day.

02:01:06.560 | And remember, until next time, you know what it is. The best thing money can buy, financial freedom.

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