Friday_QA-Inherited_Real_Estate_Taxes_Placeholder_Annuities_Teaching_Children_about_Money

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00:00:30.620 | Today on Radical Personal Finance is live Q&A.

00:00:33.160 | ♪

00:00:49.340 | Welcome to Radical Personal Finance,

00:00:50.840 | a show dedicated to providing you with the knowledge,

00:00:52.420 | skills, insight, and encouragement you need

00:00:54.380 | to live a rich and meaningful life now

00:00:56.420 | while building a plan for financial freedom

00:00:57.760 | in 10 years or less.

00:00:59.020 | My name is Joshua. I am your host.

00:01:00.760 | Today on the show we do a live Q&A show.

00:01:02.760 | Works just like Call & Talk Radio.

00:01:04.760 | You call in. We talk about any questions,

00:01:06.560 | comments that you have on your mind.

00:01:08.160 | These shows are open to patrons of the show.

00:01:09.800 | You can find out more at patreon.com/radicalpersonalfinance

00:01:13.600 | if you are interested in becoming a patron of the show.

00:01:15.600 | ♪

00:01:21.840 | Frequently get questions from people saying,

00:01:23.380 | "Joshua, what's the best way to get a hold of you?"

00:01:25.680 | or "What's the best way to talk to you?" and whatnot.

00:01:28.220 | I actually recently just started doing again.

00:01:31.380 | I'll mention it at the end of the show,

00:01:32.580 | but I started doing again a little bit

00:01:34.220 | of private consulting for the first time in about six months.

00:01:37.560 | But if you're interested in talking to me

00:01:39.760 | and probably having the best deal possible,

00:01:41.860 | frankly, these Patreon shows are the best shot

00:01:46.000 | that you're going to get.

00:01:47.140 | I do them every week that I can arrange the technology.

00:01:49.100 | Every week I can arrange an internet connection

00:01:50.680 | to be able to record them.

00:01:52.800 | And sometimes we have 10, 15 callers.

00:01:55.880 | Sometimes we have two or three.

00:01:57.480 | At the moment we've got three on the line.

00:01:58.740 | So we'll see who else shows up in the coming minutes.

00:02:01.080 | But we begin today.

00:02:02.280 | Let's go to Parker in Washington.

00:02:04.480 | Parker, welcome to Radical Personal Finance.

00:02:06.260 | How can I serve you today?

00:02:09.120 | - Hey, Josh.

00:02:10.120 | Can you hear me all right?

00:02:11.120 | - Sounds good. Go ahead, sir.

00:02:12.960 | - Can you hear me?

00:02:14.160 | There you go. Hey.

00:02:15.800 | Thanks for having me today.

00:02:16.800 | Just had a couple, two questions about my parents,

00:02:19.540 | if you have the time for both of them.

00:02:21.300 | - Okay.

00:02:23.100 | - First, I'll give you a quick background.

00:02:24.940 | They're both 65 and they've owned a furniture business

00:02:28.400 | for about 15 years or so.

00:02:30.940 | They've been basically neutral for them

00:02:33.040 | as far as financial success goes.

00:02:34.680 | They've just paid themselves about 60 grand annually

00:02:38.820 | and are planning on going out of business sale next year.

00:02:42.020 | - Okay.

00:02:43.020 | - So they have to use the proceeds of that sale

00:02:45.020 | to pay off some debt the store carries.

00:02:46.920 | And so they're just right about ready to retire.

00:02:49.600 | And the only thing that's been a saving grace for them

00:02:52.560 | is two inheritances.

00:02:54.740 | So the first question is in regards to the most recent one.

00:02:59.440 | My grandma passed this year, my dad's mom.

00:03:02.440 | And so they inherited one property that she owned

00:03:07.440 | when she died.

00:03:08.680 | And then they also,

00:03:10.680 | she had another home that she gifted to them

00:03:12.820 | about seven years ago.

00:03:14.620 | So they netted about 26K each on the inherited one

00:03:19.620 | and 59K on the gifted property.

00:03:22.360 | Just wondering what their tax implications are

00:03:24.700 | on these two situations.

00:03:27.860 | - The inherited property,

00:03:30.160 | assuming that your grandmother owned that

00:03:33.080 | at the date of her death,

00:03:34.540 | the inherited property will have a step up in tax basis,

00:03:38.360 | which means that if she paid $50,000 for it,

00:03:42.500 | when she died it was worth $150,000.

00:03:45.620 | Your parents inherited the property

00:03:48.060 | with a tax basis of $150,000.

00:03:50.860 | So if they sell the property for $150,000,

00:03:53.780 | there will be no taxes due.

00:03:55.660 | If they sell the property for more than $150,000,

00:03:58.980 | they will inherit,

00:04:00.860 | they'll pay the taxes on whatever gain there may be

00:04:05.100 | from the valuation at the date of death

00:04:07.220 | versus at the date of sale.

00:04:09.580 | So if they sell the property for $170,000,

00:04:12.780 | then they'll pay taxes on $20,000 of gain.

00:04:15.860 | Now the property that was gifted to them by their parents

00:04:19.340 | has an inherited tax basis in it.

00:04:22.260 | So whatever your grandparents' tax basis

00:04:26.020 | in the property was,

00:04:27.500 | that's what your parents will have as their tax basis.

00:04:31.220 | 'Cause when you gift property like that,

00:04:33.620 | it keeps the tax basis that it had originally.

00:04:36.960 | So if your grandparents had a tax basis of $50,000,

00:04:41.180 | they gave it to your parents when it was worth $100,000,

00:04:44.460 | your parents sell it for $150,000,

00:04:47.360 | they will pay taxes on $100,000 worth of gain.

00:04:50.740 | The difference between your grandparents' tax basis

00:04:53.460 | and the current value at the date of sale.

00:04:55.840 | - Okay, so it's a little bit complicated in that one.

00:05:00.380 | And I kind of knew the first answer,

00:05:02.300 | but just wanted to clarify.

00:05:03.860 | So the second part,

00:05:05.400 | when the property was gifted to them,

00:05:08.460 | it was a brand new built cabin

00:05:10.060 | on some lake front that they had.

00:05:12.380 | And the tax assessment went way up

00:05:16.260 | 'cause they just had this old junky cabin on it before.

00:05:18.460 | And now they built a cabin that the taxes were

00:05:22.060 | about a $400,000 property,

00:05:24.060 | but it was way overvalued.

00:05:26.420 | And they sold it for about 260.

00:05:29.140 | So with the loss,

00:05:31.660 | does that mean that they're gonna get out

00:05:33.780 | away from taxes on that?

00:05:35.940 | - Depends not on what the assessed value is,

00:05:39.540 | but rather what the adjusted basis is

00:05:42.540 | of the original property owner.

00:05:44.540 | So what you would need to do is find out

00:05:47.020 | how much did my grandparents pay for the land?

00:05:49.660 | That would be the first bit.

00:05:52.300 | How much did they pay for any improvements to the property?

00:05:55.380 | Capital improvements, such as building a new house on it.

00:05:58.700 | And then whatever those total costs are,

00:06:01.100 | that's called the adjusted basis.

00:06:03.100 | And that's the basis that your parents

00:06:05.900 | will have in the property.

00:06:07.260 | That's what they'll pay taxes on.

00:06:08.900 | - Okay, so they bought this whole lake

00:06:13.300 | back in the '40s for 4,800 bucks.

00:06:16.720 | It's about a 50 acre lake with all the property around it.

00:06:20.600 | They sold it,

00:06:21.640 | my grandma and her two brothers sold it

00:06:26.000 | in about 2005 for about 4 million.

00:06:29.640 | And they each got to keep their parcel on the land

00:06:32.680 | with old beat up cabins that were probably worth

00:06:35.760 | next to nothing at the time.

00:06:37.360 | So they each took their proceeds and built a new cabin.

00:06:41.720 | So it's a little bit muddy.

00:06:43.080 | I'm just trying to figure out

00:06:45.320 | that, is that giving you any other direction?

00:06:48.120 | - You will have to sit down and make something up

00:06:50.520 | that you can defend with a straight face

00:06:53.120 | in front of a tax auditor for some way.

00:06:56.200 | Clearly, it's not going to be an easy thing,

00:06:58.760 | but the gift of this property

00:07:01.520 | is a major financial planning mistake.

00:07:03.480 | It should not have been gifted.

00:07:05.240 | It should have been kept in the estate

00:07:07.040 | until the death of your grandparents.

00:07:09.360 | So giving it was a major financial planning mistake

00:07:13.440 | from a tax perspective.

00:07:15.400 | So at this point in time,

00:07:17.400 | what you have to do is you have to sit down

00:07:19.680 | and you have to do your very best to come up with

00:07:22.720 | what is the inherited basis of the property?

00:07:25.440 | What actually do we owe on the property

00:07:28.960 | because of what was its actual tax basis?

00:07:31.760 | And there are rules that would be followed

00:07:35.120 | if you have the records,

00:07:36.520 | but it sounds like you're basically going to be sitting down

00:07:39.160 | and making something up that's plausible.

00:07:41.640 | And there's going to be a little bit of wiggle room there

00:07:43.400 | on what's plausible,

00:07:44.440 | but I'd recommend that you sit down first.

00:07:47.000 | I mean, it's fairly straightforward

00:07:48.240 | if you're competent to do it,

00:07:49.640 | if you have the records,

00:07:50.960 | but you basically have to sit down and say,

00:07:52.520 | what was this property worth at the time?

00:07:54.800 | How much money did they have invested in it?

00:07:56.560 | Did they have any records on it?

00:07:57.960 | Et cetera.

00:07:58.840 | If not, you'll have to make something up

00:08:00.840 | and you'll just want to make something up

00:08:03.640 | that is appropriate.

00:08:06.520 | So that if the return gets audited,

00:08:09.640 | that the auditor will at least be able to say,

00:08:12.360 | oh yes, I can see that what you were trying to do

00:08:14.840 | was to do the right thing.

00:08:16.440 | You were trying to find the best solution

00:08:19.120 | and I can see how you got to that solution

00:08:21.200 | based upon the data that you had.

00:08:23.320 | So one thought, is this a livable property?

00:08:28.320 | Do you think it has, first of all,

00:08:31.040 | how much gain would you guess does this property have in it

00:08:34.600 | as far as what it's worth to sell

00:08:36.240 | versus what you would guess would be the adjusted basis?

00:08:40.040 | - I think it's pretty close to a wash.

00:08:43.040 | I mean, it's a pretty,

00:08:44.320 | they probably put 250 into building the property

00:08:49.320 | and the brothers did all the work throughout the summers.

00:08:52.520 | - Okay, so if it's pretty close to a wash, then that's fine.

00:08:55.440 | Then you just want to demonstrate that

00:08:57.040 | and you won't have much of a tax bill due on it.

00:08:59.440 | If they spent $250,000 on materials

00:09:02.680 | and building the property,

00:09:04.720 | then the property will have a basis of $250,000

00:09:07.280 | if it was sold for 250.

00:09:09.080 | So I think that's all you need.

00:09:11.480 | All I was going to recommend is that in a situation like this

00:09:15.080 | the best out would be either for,

00:09:18.760 | would be two things.

00:09:21.520 | The direct path would be for your parents

00:09:24.440 | to move into the property for two years

00:09:26.440 | to take advantage of the capital gain exclusion

00:09:29.360 | for the sale of a personal property.

00:09:31.280 | If the property were the kind of property

00:09:32.920 | where they could live in it for two years,

00:09:34.840 | then that might be an appropriate solution

00:09:38.080 | for them to get rid of the gain.

00:09:39.600 | And of course this would apply to perhaps

00:09:41.200 | some other listener not in this particular situation

00:09:43.920 | because it doesn't sound like you have a tax problem here

00:09:46.640 | because of the low sale price compared to the adjusted basis.

00:09:49.880 | The second solution would be that your parents

00:09:53.120 | could convert the property into a rental property

00:09:55.040 | if it's not already.

00:09:56.360 | And then as a rental property,

00:09:57.840 | they could list it on the marketplace

00:09:59.560 | and they could do a 1031 exchange

00:10:01.480 | for another rental property that they could use

00:10:04.600 | or another property that they would own.

00:10:06.000 | And then that would not eliminate the gain,

00:10:09.760 | that particular step wouldn't eliminate the gain,

00:10:11.680 | but it would defer the gain.

00:10:13.360 | And so if they could defer the gain to another property,

00:10:16.260 | then that would buy them a little bit more time

00:10:17.960 | to solve the tax problem.

00:10:19.200 | And then potentially if they bought another property

00:10:23.040 | as a rental property that they later decided to move into

00:10:26.260 | after renting it out or after attempting to rent it out,

00:10:28.760 | if they later moved into that property,

00:10:30.980 | that rental property and lived there for two years,

00:10:33.760 | then they could potentially shelter that gain

00:10:35.520 | and again, take advantage of the exclusion on capital gains

00:10:38.880 | from the sale of a personal residence.

00:10:40.760 | But in your situation, it sounds like those are unnecessary.

00:10:43.640 | I would just caution in the future,

00:10:45.980 | if anyone is ever giving appreciated property,

00:10:49.680 | any kind of appreciated long-term capital gains property,

00:10:52.800 | so this includes real estate, family home,

00:10:55.180 | vacation cabin on the lake, this includes stocks,

00:10:58.080 | this includes any kind of long-term capital gain property,

00:11:02.640 | appreciated long-term capital gain property

00:11:05.360 | is ideally held by the original owner

00:11:08.360 | until the date of death in order for the original owner,

00:11:11.880 | in order for there to be a step up in tax basis.

00:11:14.240 | And even if you use other assets to make the gift instead,

00:11:17.600 | or you use other sources of financing,

00:11:20.280 | the person who's the receiver of the gift

00:11:24.080 | takes out a loan or something to cover a cash shortfall.

00:11:28.020 | If you have substantially appreciated

00:11:30.640 | long-term capital gains property,

00:11:32.480 | getting that step up in tax basis

00:11:33.960 | is a big deal from a tax perspective.

00:11:35.840 | - Yeah, okay.

00:11:38.760 | You got time for one more quick one?

00:11:41.120 | - Yep, go ahead quickly.

00:11:43.040 | - It may not be quick.

00:11:44.520 | So I'm trying to set them up

00:11:46.800 | to have the safest possible retirement

00:11:49.600 | with their current situation.

00:11:50.560 | They haven't really accumulated any savings.

00:11:52.520 | They've got about 21,000 in IRAs,

00:11:55.040 | but because of the inheritances,

00:11:57.400 | they have 114,000 in savings.

00:12:00.720 | Their house is paid for and their vehicles are paid for.

00:12:03.680 | The only debt they have is a $28,000 student loan

00:12:07.960 | that's at 8%.

00:12:10.400 | And their social security is gonna be about 2,800 a month

00:12:13.320 | with their expenses being 2,200 a month.

00:12:16.560 | Just trying to figure out,

00:12:17.620 | I'm assuming they should pay off the student loan at 8%

00:12:20.960 | and max out their IRAs for this year and next year.

00:12:24.480 | And I'm not sure how many years they should do that

00:12:27.200 | or what the best use of their savings would be

00:12:30.480 | and any other ideas you might have

00:12:34.040 | to help give them safety.

00:12:35.520 | And real estate, I know that's something

00:12:37.640 | that my wife and I are into

00:12:38.720 | and we love listening to your talks about that,

00:12:40.440 | but they are just definitely not interested

00:12:43.440 | in doing anything with real estate.

00:12:45.320 | - So the first piece of advice that I have

00:12:50.680 | is not a numbers advice,

00:12:52.280 | but it's very much a matter of

00:12:53.760 | what are you going to do with your life?

00:12:56.060 | And I know that's beyond the scope of this conversation,

00:13:01.060 | but it's the fundamentally most important thing

00:13:04.320 | that I can possibly think of to say.

00:13:06.660 | Because if you take people who've been active,

00:13:08.400 | who've owned a family business,

00:13:09.880 | and they're 65 years old, or 66 years old,

00:13:12.840 | and they're in good health,

00:13:14.400 | and you all of a sudden substitute

00:13:16.120 | that basic structure of life that came with work

00:13:20.720 | that related to the meaning of going to work every day

00:13:23.560 | and contributing to your local community,

00:13:25.920 | and you substitute that with sitting around

00:13:27.840 | and doing nothing,

00:13:29.280 | that's what makes people get old and die very, very quickly,

00:13:32.480 | is the loss of meaning in life.

00:13:34.600 | And it's a very difficult transition to make.

00:13:37.900 | And I think in general, a very unwise transition to make.

00:13:41.680 | To put it into a few memorable statements,

00:13:44.120 | I'm convinced that you should always retire to something

00:13:48.080 | if you're going to retire.

00:13:49.560 | The goal is not to be inactive.

00:13:51.160 | The goal is to retire to something,

00:13:53.660 | to something that you do.

00:13:55.440 | Now, in many cases,

00:13:56.340 | I think that that's something that you do, should,

00:13:58.960 | and probably in many cases will, involve some form of work.

00:14:03.280 | That work might be paid, or it might be unpaid.

00:14:06.520 | That work can be going and helping in the furniture store,

00:14:10.080 | working as a salesman,

00:14:12.520 | after the store is sold to somebody else.

00:14:14.480 | Or in this case, you said it was going out of business sale,

00:14:16.260 | but you get the idea.

00:14:18.200 | Going and working in a furniture store

00:14:19.720 | could be a great thing.

00:14:20.880 | It might be unpaid work.

00:14:22.200 | It might mean that your mom has always had a passion

00:14:25.480 | for helping young women.

00:14:27.640 | And so she goes and works in a crisis pregnancy center

00:14:30.120 | 50 hours a week.

00:14:31.320 | Or your dad has always had a passion for saving raccoons.

00:14:36.320 | And so he volunteers his time out to go and trap raccoons

00:14:39.720 | and transport them to the forest.

00:14:41.560 | It can be anything,

00:14:42.400 | but it should be some things clear and specific.

00:14:45.000 | Some people will have goals of things

00:14:48.440 | that they're retiring to that involve hobbies.

00:14:51.400 | For example, their hobby might be climbing

00:14:53.320 | all the 14,000 foot peaks in Colorado.

00:14:55.920 | Their hobby might be picking up antiques

00:14:59.100 | and shopping from coast to coast of the United States

00:15:01.680 | at little out of the way antique stores

00:15:03.920 | and putting them on eBay.

00:15:05.560 | Their hobby might be any number of things.

00:15:07.800 | There's no limit to what they can do.

00:15:09.880 | But the most important thing that they need to do

00:15:12.620 | is to clarify what are they going to spend their time doing?

00:15:16.560 | And it must not involve the idea of sitting at home.

00:15:21.040 | It must not involve the idea of watching TV.

00:15:23.860 | It must not involve these things,

00:15:25.360 | because if they do that,

00:15:26.520 | they will get sick and die very, very quickly.

00:15:29.680 | So once you know the answers to that,

00:15:32.640 | then the financial outcome will be more apparent.

00:15:36.880 | So if, for example, your dad gets a job

00:15:39.520 | as a furniture salesman

00:15:41.200 | for his buddy's furniture store across town,

00:15:43.920 | and he's making 2,500 bucks a month doing that,

00:15:47.520 | but basically he hangs out and drinks coffee with the guys

00:15:50.000 | and shows furniture to a salesman when interested,

00:15:52.440 | well, now all of a sudden they have no financial problem,

00:15:55.000 | and you have an extra 2,500 bucks

00:15:57.200 | more than what they're currently spending.

00:15:59.240 | That's very different than if they say,

00:16:01.120 | "Okay, we're gonna live at home

00:16:02.560 | "and stay at home in our house,

00:16:04.360 | "and in that situation, we're only spending $2,200 a month.

00:16:07.700 | "We got a $600 surplus,

00:16:09.320 | "and your dad's gonna go and volunteer

00:16:11.200 | "with the local boys club or something like that

00:16:14.800 | "to help disadvantaged youth."

00:16:17.360 | That's very different than if they say,

00:16:18.880 | "Well, what we actually wanna do is we wanna go travel,

00:16:21.080 | "and so we wanna travel six months of the year

00:16:23.680 | "and set ourselves up for that."

00:16:27.160 | And so the answer to what they're going to do,

00:16:29.040 | in my opinion, is going to lead them in the direction

00:16:32.760 | of what they should do with their money.

00:16:34.880 | If they're gonna earn income,

00:16:36.680 | then you can invest the money.

00:16:38.360 | If they don't wanna own real estate,

00:16:39.440 | I think it would be fine to invest it into mutual funds.

00:16:42.160 | Would be totally reasonable.

00:16:44.000 | Or they could invest it into real estate with you.

00:16:46.600 | If you have a track record of some kind

00:16:48.560 | where you can demonstrate that,

00:16:51.120 | "Hey, I could use the money,

00:16:52.280 | "and we can invest it profitably,

00:16:53.560 | "and I'll do the management work for you,

00:16:55.160 | "and I'll charge a management fee,

00:16:56.800 | "but this will be a property that you own,"

00:16:58.160 | I think that's a reasonable thing to do.

00:17:00.360 | If they don't need the money,

00:17:02.480 | then you have to ask yourselves,

00:17:04.480 | how much money do they need just in savings?

00:17:06.760 | $100,000 in, let's see, 115 minus 30 would be $75,000.

00:17:13.480 | In my opinion, $75,000 in savings is not an awful lot.

00:17:18.360 | I would feel very happy

00:17:19.480 | if they just kept the money in savings.

00:17:21.000 | I don't see any need for them.

00:17:22.960 | I don't know what benefit they get necessarily

00:17:25.360 | for going and putting small amounts of money like that

00:17:30.240 | into most investments.

00:17:32.600 | I would feel comfortable with that

00:17:34.240 | just being the cash cushion that they have

00:17:36.120 | as their personal emergency savings.

00:17:39.440 | They don't need the income from investments

00:17:42.240 | because of their social security,

00:17:43.760 | and so that savings could be something

00:17:45.200 | that could be very useful for them.

00:17:46.920 | And I would think that there may be some spending things

00:17:49.480 | that they might wanna do in the future

00:17:51.640 | where they would want that savings

00:17:52.880 | to be available for spending.

00:17:53.880 | So back to the traveling across the country thing,

00:17:56.280 | that's the kind of money that they would use

00:17:58.840 | for buying an RV or fixing up an RV

00:18:00.960 | or buying a truck camper or something like that.

00:18:04.240 | Then I would probably think with that amount of money

00:18:07.520 | and the fact that they can live

00:18:08.560 | on their social security income,

00:18:10.120 | I would probably think the best thing

00:18:11.480 | is to keep it in savings and use it for emergency funds

00:18:14.880 | and big ticket items.

00:18:16.760 | - Okay, yeah, they've got a truck and a trailer,

00:18:20.640 | and that's basically their biggest ambition in retirement

00:18:24.080 | is seeing all the national parks

00:18:26.360 | and then also getting involved in raising the grandbabies

00:18:30.360 | as my wife and I start to build a family here.

00:18:32.560 | So I think that that kinda makes sense

00:18:36.040 | to keep some cash around then.

00:18:37.440 | And do you think that they should definitely pay

00:18:38.840 | that student loan off at 8% with the savings they have?

00:18:42.720 | - Who is liable for the student loan?

00:18:44.920 | - They are, it's a parent loan

00:18:48.240 | that they got from me and my sister

00:18:50.720 | when we were in college.

00:18:51.640 | - They're jointly liable?

00:18:52.960 | - Yeah.

00:18:54.880 | - Okay, yeah, I think they should pay off the student loan.

00:18:58.500 | 8% is a steep interest rate,

00:19:02.320 | a very nice guaranteed return for them on paying that off.

00:19:06.120 | The reason I asked about the liability was,

00:19:08.320 | well, if one of them is liable,

00:19:10.140 | could the student loan die with one of them

00:19:11.940 | if one of them were in poor health?

00:19:13.040 | But if they're jointly liable and they're in good health,

00:19:14.800 | I don't think that's a good strategy.

00:19:16.000 | So yeah, I think paying off the student loan would work.

00:19:19.200 | And it doesn't sound like they've been

00:19:22.040 | financially irresponsible,

00:19:25.800 | but one of the things that I would do very strongly

00:19:28.560 | in that situation is I would have a serious talk

00:19:31.080 | about not going into debt.

00:19:32.800 | Because you can live very well on social security income

00:19:36.760 | with a little bit of savings and have everything paid off.

00:19:39.160 | You can live very well in that situation.

00:19:41.760 | But you can't live very well in that situation

00:19:44.060 | if you start overspending by going into debt.

00:19:46.440 | And so I would strongly encourage them

00:19:48.600 | to absolutely refuse in any way, shape or form

00:19:52.380 | to go into debt so that they can always live well

00:19:55.040 | on their social security income.

00:19:56.800 | - Okay, that sounds great.

00:20:00.440 | Yeah, that student loan,

00:20:01.520 | I'll give them an extra 300 a month too,

00:20:03.220 | so that'll give them more cushion.

00:20:05.560 | - Perfect, cool.

00:20:06.680 | Well, thanks for the question, Parker.

00:20:07.880 | We go now to John in Pennsylvania.

00:20:10.040 | John, welcome back, how can I serve you today, sir?

00:20:12.320 | - Hey Joshua, thanks for taking the call.

00:20:16.480 | I've got a list of open-ended, more fun questions,

00:20:19.960 | but I gotta get this kind of technical,

00:20:23.360 | hopefully quick question out of the way

00:20:25.520 | 'cause it's been bugging me.

00:20:27.640 | I was talking to an insurance salesman

00:20:30.600 | and the topic of annuities had come up briefly.

00:20:34.360 | And there were some reasons from your old shows

00:20:37.680 | that I was considering some of them in the future,

00:20:41.320 | but the topic came up of doing a placeholder

00:20:45.280 | annuity strategy, meaning taking,

00:20:47.760 | I think they referenced something along the lines

00:20:50.160 | of about $10,000 and doing a placeholder

00:20:54.240 | to lock in mortality rates,

00:20:56.880 | and then being able to put more money into annuity later

00:20:59.680 | with those locked in rates.

00:21:02.800 | Is there, I guess I really wasn't sure of

00:21:07.240 | when that's appropriate or what you would do that for

00:21:10.080 | and if it's worth it overall.

00:21:12.600 | I'm sure the answer is it depends,

00:21:15.040 | but I'm just curious to get your take on that.

00:21:17.600 | - Yeah, I would rate this particular comment

00:21:22.120 | as it's true, first of all,

00:21:25.440 | but it seems, it's true, it's true.

00:21:30.440 | I think I have probably, when I sold annuities,

00:21:33.960 | I probably have referenced it.

00:21:37.240 | Because it's not factually incorrect,

00:21:39.520 | and I'll explain the facts in just a moment.

00:21:41.080 | It's not factually incorrect,

00:21:43.200 | but I'm not sure that it's particularly relevant

00:21:45.800 | to most situations.

00:21:47.400 | I think it's a very thin reason for,

00:21:50.360 | a thin reason for a buyer to buy an annuity

00:21:53.880 | exclusively for that.

00:21:55.680 | Now, there can be other compelling reasons

00:21:57.920 | which when that one's added in to buy a placeholder annuity,

00:22:02.040 | but if that were the only reason to buy it,

00:22:05.240 | that's one of those things where it's not wrong,

00:22:07.680 | but it is a little bit thin.

00:22:09.160 | And so let me explain.

00:22:11.480 | Annuities are insurance contracts,

00:22:14.800 | and as such, they work based upon mortality tables.

00:22:19.080 | The mortality tables used to be calculated to age 100,

00:22:24.080 | but a couple decades ago,

00:22:26.040 | insurance companies realized

00:22:29.200 | that people were living longer,

00:22:30.320 | and this was actually causing major problems

00:22:33.000 | in the insurance price

00:22:34.120 | because people's life insurance contracts

00:22:36.320 | were endowing at the age of 100.

00:22:38.760 | My grandmother is 106 years old.

00:22:41.120 | If she had purchased a whole life insurance contract

00:22:43.720 | when she was young

00:22:44.560 | and still owned that life insurance contract,

00:22:47.600 | then six years ago,

00:22:49.160 | her life insurance contract would have paid her

00:22:52.120 | the face amount of the policy

00:22:53.840 | regardless of the fact that she was actually alive

00:22:56.520 | because that's how the contract language works.

00:22:58.680 | It says this contract, it goes out to age 100,

00:23:02.240 | and so she would have received

00:23:03.560 | from her life insurance contract

00:23:05.040 | a big check on her 100th birthday.

00:23:08.160 | Now, that's not ideal.

00:23:09.880 | You think, "Oh, it's great.

00:23:11.000 | I outlived my life insurance."

00:23:12.160 | It's fun for a joke,

00:23:13.340 | but from a financial planning perspective,

00:23:14.840 | that's not ideal.

00:23:15.760 | You don't want to do that

00:23:17.600 | because now the life insurance

00:23:20.400 | is not doing what it was supposed to do.

00:23:22.560 | It's not going until somebody's death.

00:23:25.040 | It messes up the taxation of it.

00:23:27.440 | It messes up the estate transfer.

00:23:29.840 | It messes up the reason for buying the life insurance,

00:23:32.600 | and so it's not ideal.

00:23:33.680 | Now, is it the worst thing in the world?

00:23:35.840 | I don't want to overstate the problem,

00:23:37.320 | but it's not ideal.

00:23:38.160 | It's not why you're buying a life insurance contract.

00:23:40.400 | So a couple decades ago,

00:23:41.920 | the commissioner, they call him the CSO,

00:23:44.360 | the Commissioner Standard,

00:23:45.880 | oh, I'm forgetting the acronyms,

00:23:47.960 | the standard mortality tables

00:23:49.600 | that are used by all insurance companies

00:23:51.320 | were updated to go out to age 120.

00:23:54.960 | So now in today's world,

00:23:56.280 | if you buy an ordinary whole life insurance contract,

00:23:59.480 | that ordinary whole life insurance contract

00:24:01.560 | is calculated from your current age up to age 120,

00:24:05.440 | and if you outlive it to 121,

00:24:07.560 | it will endow at 120.

00:24:09.920 | So annuity tables also use these particular,

00:24:13.920 | these tables to calculate their payouts.

00:24:17.240 | So the argument as to why you should

00:24:19.640 | buy a placeholder annuity would go like this.

00:24:22.480 | Listen, if you buy this annuity today,

00:24:24.920 | its rates only go out to 120,

00:24:26.960 | which means a higher payout for you

00:24:29.000 | when you're young versus later.

00:24:32.360 | But it's possible that given increasing lifespans,

00:24:35.620 | it's possible that they'll recalculate these rates

00:24:37.900 | in the coming decades and go out to age 140.

00:24:41.280 | And so in this situation,

00:24:42.680 | you could win because you,

00:24:44.480 | when you were 40 years old,

00:24:45.600 | you bought this $10,000 placeholder annuity,

00:24:48.320 | which was under these old rates,

00:24:51.200 | and now you have this old annuity

00:24:52.960 | that you can put $300,000 into

00:24:56.000 | and get a better deal on your payment

00:24:58.160 | than you will with one of the newer annuities

00:25:00.080 | that's based on going to age 140.

00:25:02.960 | So do I rate it as true?

00:25:05.480 | I rate it as technically true.

00:25:06.960 | It is possible,

00:25:08.480 | but there's a lot of assumptions baked in there.

00:25:12.760 | Number one, that rates will get readjusted.

00:25:15.920 | I think there's a good chance that they might,

00:25:19.080 | but it's not likely in the coming years.

00:25:23.240 | Famously, just about two years ago,

00:25:25.360 | life expectancy has actually decreased

00:25:27.400 | for a couple of years,

00:25:28.320 | which changed a very significant trend.

00:25:31.280 | And while I think that there are exciting things happening

00:25:35.160 | in human longevity and human aging space,

00:25:37.800 | some really exciting scientific stuff happening,

00:25:40.720 | I don't think that those expansions in life expectancy

00:25:45.720 | are likely to trade over to the population at large

00:25:49.520 | anytime soon.

00:25:50.780 | The population at large in most countries is so sick

00:25:55.040 | with degenerative diseases, mainly lifestyle diseases,

00:25:59.480 | that I wouldn't expect there to be a significant change

00:26:03.080 | in life expectancy across the population at large.

00:26:05.860 | I do think wealthy people who are health nuts,

00:26:08.180 | who can afford all the best treatments

00:26:09.640 | and can take all of the latest treatments

00:26:13.000 | and medically advised things to extend lifespan,

00:26:18.000 | there's some compelling evidence that it can work.

00:26:23.560 | But this is mainly, at this point, a billionaire's play space

00:26:26.880 | where the wealthiest of the wealthy

00:26:28.980 | are engaging in this kind of work,

00:26:30.740 | but I don't think it's gonna translate over

00:26:32.840 | in the next decade or two to the population at large.

00:26:35.560 | And then finally, if annuities make sense

00:26:39.200 | in somebody's plan,

00:26:40.560 | and I think that in many retirement plans,

00:26:42.720 | they do make sense,

00:26:44.060 | I think they'll make sense regardless

00:26:46.640 | of what the mortality tables are.

00:26:49.600 | And so I never went back and calculated

00:26:51.920 | what the payout would be on an annuity

00:26:54.160 | that was priced out to age 100

00:26:57.720 | versus one that's priced out to age 120.

00:26:59.760 | I never did that.

00:27:00.600 | So I can't say that I've done the analysis,

00:27:02.720 | but I think that it's unlikely

00:27:05.600 | that the basic usefulness of annuities

00:27:07.680 | would change all that much

00:27:08.880 | if the underlying mortality tables changed.

00:27:10.960 | And then finally, what I would say is,

00:27:13.040 | if you have an insurance policy with a company

00:27:18.040 | and that insurance agent hears threats

00:27:21.680 | about them changing the mortality tables,

00:27:24.880 | then that's when I would buy one.

00:27:26.560 | And I think that this is one reason

00:27:28.160 | to have an insurance agent that you talk to

00:27:30.200 | and that speaks with.

00:27:31.240 | If I were an insurance agent and this were happening,

00:27:33.800 | I would sell 500 annuities in two weeks

00:27:36.840 | because that is a very compelling argument.

00:27:39.280 | I did this when long-term care insurance policies

00:27:42.120 | were changing.

00:27:42.940 | I was an insurance agent

00:27:43.960 | and they were changing the long-term care insurance policies

00:27:46.440 | and they were eliminating the lifetime benefits

00:27:48.680 | of long-term care policies.

00:27:50.800 | It used to be you could buy a policy that was unlimited

00:27:53.160 | with the amount of money it would pay out

00:27:54.500 | for long-term care.

00:27:56.160 | But the insurance companies were overexposed to that risk.

00:28:00.020 | And so what they did was they decided to discontinue that

00:28:03.580 | and cap all long-term care insurance contracts

00:28:06.400 | where instead of them being an open-ended commitment,

00:28:08.480 | they would be committed to a maximum cap of benefits

00:28:12.400 | based on the daily rate and the period of time.

00:28:15.960 | So we had like a three-week warning bell,

00:28:19.520 | something like that, that our company was going

00:28:22.240 | to be discontinuing the lifetime benefits.

00:28:24.600 | I picked up the phone and I lived on the phone

00:28:27.160 | for the next two weeks

00:28:28.160 | and I called every single client of mine

00:28:30.320 | who had ever expressed an interest

00:28:31.960 | in long-term care insurance.

00:28:33.720 | And I sold, I don't wanna exaggerate, but I sold a lot.

00:28:38.720 | It was something like 60 to 70 long-term care insurance

00:28:42.880 | policies in a week and a half.

00:28:44.160 | It may have been more, it was a lot.

00:28:46.260 | And because I picked up the phone and I said,

00:28:49.140 | listen, here's the facts.

00:28:51.060 | This policy is going away.

00:28:52.780 | If you're interested in this policy,

00:28:54.840 | you have to get something.

00:28:56.040 | And I was working from early morning to late at night

00:28:58.980 | and I sold them like crazy.

00:29:00.660 | And so what I would say is just tell your insurance agent,

00:29:03.380 | listen, if you ever hear that they're actually

00:29:06.060 | changing the mortality tables, call me

00:29:07.780 | and then I'll buy the annuity,

00:29:08.860 | but I'm not gonna buy a $10,000 annuity today.

00:29:11.160 | - Yeah, no, that sounds reasonable.

00:29:14.700 | I'm actually more glad I asked that question.

00:29:17.000 | I had assumed that locking in mortality rates

00:29:21.140 | had more to do with my current age

00:29:22.660 | versus an age when I might buy it,

00:29:24.380 | say 10 years from now, rather than the ending age.

00:29:29.100 | And that's what's in reference to the mortality table.

00:29:31.500 | So I'm really glad I got that clarification.

00:29:34.100 | I don't think the source of the money matters,

00:29:35.740 | but the only other thing he mentioned was

00:29:37.860 | that he was thinking about it for my qualified IRA money

00:29:41.300 | to be used for that.

00:29:42.380 | But I don't think the source really matters that much.

00:29:45.300 | But thanks for that clarification.

00:29:47.140 | That's really good to know.

00:29:48.140 | - Yeah, you can make some other thin arguments

00:29:51.300 | as a certain policy feature.

00:29:54.060 | That's the big one in the annuity marketplace.

00:29:56.680 | There have been some exotic annuities sold over the years

00:29:59.260 | that were substantially mispriced.

00:30:01.660 | And I think it's important to recognize

00:30:03.540 | that insurance companies don't always get it right.

00:30:06.100 | And so there have been annuities over the years,

00:30:09.020 | especially in the fixed indexed annuity space,

00:30:12.120 | where the guarantees that the insurance company

00:30:14.580 | put into the contract were so rich

00:30:17.600 | that if you had bought one of those annuities,

00:30:20.100 | you made off like a bandit.

00:30:21.400 | I reviewed policies back when I was an insurance agent.

00:30:23.460 | I reviewed policies that were sold in the 1990s.

00:30:28.460 | And the contractual minimums,

00:30:31.580 | people would get letters from the insurance company saying,

00:30:34.620 | dear client, we are hereby offering to buy out your annuity

00:30:39.620 | and substitute it for this other contract

00:30:41.900 | with a bonus.

00:30:43.020 | If you ever get a letter like that

00:30:44.400 | from your insurance company,

00:30:45.900 | no matter what, don't accept the offer.

00:30:47.980 | Take it straight, run straight to the insurance agent

00:30:50.420 | and figure out why they wanna buy you out.

00:30:52.660 | Because they did this.

00:30:54.060 | They promised, they put guarantees

00:30:56.720 | in some of these contracts in the 90s

00:30:58.720 | that were so rich that there was no way

00:31:01.780 | that the investment returns were going to pay out.

00:31:05.660 | And now what most insurance companies will do

00:31:07.740 | is in the situation,

00:31:09.060 | if they realize they've mispriced the product,

00:31:10.940 | number one, they stop selling the product.

00:31:13.300 | Number two, if the product is mispriced,

00:31:16.180 | they may go ahead and segregate those products

00:31:19.440 | over into a separate pool.

00:31:21.420 | And so they put all the risk and they say,

00:31:23.140 | hey, this is a really risky bunch of insurance contracts

00:31:25.740 | that we're gonna lose money on

00:31:27.140 | 'cause we didn't get the pricing scheme right.

00:31:29.180 | And so they put them over into a pool

00:31:30.820 | where they can service them separately.

00:31:32.460 | And they try to de-risk that portfolio as they can

00:31:35.060 | by sending out letters and whatnot

00:31:36.660 | and offering to buy people out.

00:31:37.700 | So they try to de-risk that pool.

00:31:39.460 | Now, in most situations, the insurance company,

00:31:41.460 | a big insurance company that's financially healthy,

00:31:43.840 | they're gonna stand by their contracts.

00:31:45.380 | They don't wanna be sued and they're not gonna be sued

00:31:47.460 | because they're gonna stand by the contracts.

00:31:49.560 | But they very much are hoping

00:31:51.100 | that people will drop the contracts.

00:31:54.060 | They very much are hoping that you'll look down and say,

00:31:56.180 | oh, I put $10,000 in this silly annuity

00:31:58.260 | and I'll take it out and I'll just spend the 10,000 bucks

00:32:00.780 | 'cause that helps them to de-risk

00:32:02.300 | and de-leverage the portfolio.

00:32:04.460 | So there can be reasons like that to buy a contract.

00:32:08.780 | But in general, those are the same kinds of contracts

00:32:12.540 | that the personal finance space

00:32:13.940 | and the consumer finance space will say,

00:32:16.220 | oh, these contracts are terrible.

00:32:17.740 | And in many cases they are, I'm not denying that.

00:32:20.260 | But when you sit and read the contract,

00:32:22.520 | sometimes you look and you say,

00:32:24.740 | this contract is stinking amazing.

00:32:26.460 | They're gonna guarantee me this?

00:32:28.660 | Well, man, if they're gonna guarantee me this,

00:32:30.260 | I'm gonna take it.

00:32:31.340 | And it may be that they were just caught up

00:32:33.820 | in a competitive environment and they over-promised.

00:32:36.020 | Now, with an annuity, you always have to recognize

00:32:38.460 | you're always dealing with an insurance company here

00:32:41.220 | and that insurance company

00:32:43.340 | has to stand good for the products,

00:32:45.080 | which means it's theoretically possible

00:32:47.860 | that the insurance company may default on its promise.

00:32:50.540 | And if a product is so substantially mispriced

00:32:53.540 | that that could be the thing

00:32:55.260 | that drives the insurance company into bankruptcy,

00:32:57.660 | and then you get whatever the bankruptcy trustee decides

00:33:01.420 | you get through the court process.

00:33:03.380 | But it's very unusual for that to happen.

00:33:06.100 | But things like that can be good reasons

00:33:07.940 | to buy a certain product.

00:33:09.180 | But if you're dealing with a traditional annuity,

00:33:11.180 | which is what most people say,

00:33:12.500 | stay away from the exotic stuff.

00:33:14.020 | Good advice, I think, generally speaking,

00:33:15.860 | but there may be exceptions for the sophisticated consumer.

00:33:20.560 | A traditional annuity, there's just not much reason.

00:33:26.900 | There aren't any contractual provisions that,

00:33:30.700 | man, if I just don't get this,

00:33:32.420 | then I'm not gonna get anything.

00:33:33.660 | So think about that, but you're right in your point

00:33:36.460 | that the mortality tables have nothing to do

00:33:39.500 | with the age at which you buy the annuity.

00:33:41.180 | It has everything to do with the mortality table

00:33:43.420 | that's printed and whether it goes to age 120 or 130.

00:33:47.560 | - Gotcha, gotcha, understood.

00:33:50.940 | I know you have another caller.

00:33:52.340 | I don't know if you wanna take that one.

00:33:53.660 | - We'll go with one quick one.

00:33:55.020 | Yep, just pick one.

00:33:56.020 | - Okay, let's see.

00:33:58.520 | So I've been listening to your back catalog

00:34:02.620 | or re-listening to it a lot

00:34:03.860 | and gone through a lot of the talking

00:34:07.540 | that you've done before about your kids at different ages

00:34:10.740 | and what you are hoping to instill in them

00:34:14.060 | as far as values and work ethic and how to handle money

00:34:17.540 | and doing meaningful work and all that stuff.

00:34:21.780 | I'm just curious if you have any update on that

00:34:24.220 | now that your kids are a little bit older

00:34:26.180 | and what you're implementing to give them,

00:34:30.300 | even things around the house, chores, allowances,

00:34:34.100 | how they, I heard one of your things

00:34:36.460 | when you were saying about always keep an investment fund

00:34:39.740 | and tell them never to let that go down.

00:34:41.940 | Just curious to get a little update

00:34:43.420 | on where you're at on that now that your kids

00:34:45.340 | are a little bit older 'cause I'm getting to the age

00:34:46.620 | where I'm starting to try to implement

00:34:47.900 | some of this stuff myself

00:34:49.060 | and I think our kids have similar age ranges.

00:34:52.020 | - Totally fair.

00:34:52.980 | So I'll give some updates.

00:34:54.420 | In general, I haven't changed many of my previous opinions.

00:34:59.940 | So in general, the things that I've said previously

00:35:02.660 | about what I was doing and why I was doing it,

00:35:05.460 | I haven't yet changed many of those.

00:35:07.500 | The biggest change that I have made

00:35:09.500 | in the history of, over the course

00:35:11.540 | of radical personal finance is I have stopped

00:35:14.780 | being interested excessively in early child education.

00:35:18.500 | I think that it is probably a good thing

00:35:22.000 | for those who can do it,

00:35:23.580 | but it's hard to do it with multiple children.

00:35:26.740 | And so while I think that it can pay off

00:35:29.360 | the Domen method and early reading and all of that stuff,

00:35:31.900 | I think it can pay off.

00:35:33.340 | I'm not convinced that it's all a fraud.

00:35:35.700 | We just found that we were unable

00:35:37.100 | to stick with it effectively ourselves

00:35:41.420 | given our overall family dynamics

00:35:45.380 | and the number of children we have

00:35:46.380 | and their spacing, et cetera.

00:35:48.060 | And I don't think that we are particularly,

00:35:50.620 | I don't think that we're mistreating our children

00:35:53.340 | in that kind of situation.

00:35:54.860 | I think that I've grown more confident

00:35:58.540 | in the fact that children,

00:36:01.300 | if given the right environment, can learn quickly.

00:36:03.820 | So I have changed my opinion on early childhood education.

00:36:07.480 | I've become convinced, increasingly convinced

00:36:14.100 | that unschooling and just a total

00:36:18.200 | child-directed education is not for me.

00:36:20.620 | I never really thought it was,

00:36:22.160 | but I think that the unschoolers

00:36:23.600 | make some compelling arguments.

00:36:25.480 | But at the moment, I've become convinced

00:36:27.480 | that that's, I continue to believe

00:36:29.220 | that there's value in facing the discipline

00:36:32.020 | of generating academic structure and academic skills.

00:36:35.900 | And so that's something where I continue to,

00:36:37.880 | I haven't changed much on that.

00:36:40.000 | With regard to the financial side,

00:36:41.620 | I continue to give my children an allowance.

00:36:46.620 | I teach them to divide the money into three categories.

00:36:51.840 | I teach them to have an investing bag.

00:36:54.040 | What has been very difficult though,

00:36:55.620 | and I've actually extended,

00:36:56.680 | I had planned that at seven,

00:36:59.500 | my previous plan was I was gonna give an allowance

00:37:01.460 | from three to seven.

00:37:02.740 | And then my previous number was, okay,

00:37:05.260 | around seven, I think there's enough productive work

00:37:08.200 | that a child can do that I'll stop

00:37:10.600 | doing the allowance system.

00:37:12.140 | I don't want to continue welfare in my family.

00:37:14.660 | And so I figured, okay, I'll stop this with seven.

00:37:17.440 | Our travels have gotten in the way of that.

00:37:19.420 | So the constant movement, the travels,

00:37:21.760 | and then being in a foreign context

00:37:23.420 | has gotten in the way of that.

00:37:25.440 | My wife and I have been talking about moving back

00:37:27.200 | to the United States,

00:37:28.080 | and there are many good reasons to do that.

00:37:30.800 | If we did move back to the United States,

00:37:32.780 | one of the things that I would be happy for, again,

00:37:35.520 | is to be back in a context where I know

00:37:38.540 | the dozens and dozens of things

00:37:40.440 | that my children can do to invest money.

00:37:42.720 | I can, the dozens of things that they can do to earn money

00:37:45.500 | and to help them in some of those situations.

00:37:48.240 | Whereas right now, in an international context,

00:37:51.240 | it's much more, those things are much more difficult.

00:37:54.340 | So I continue to believe that teaching children

00:37:58.000 | to have savings, giving, saving money for spending,

00:38:03.000 | investing money for growth,

00:38:05.040 | and giving money really, really works.

00:38:07.200 | I have increased an appreciation

00:38:11.680 | of how important academics are,

00:38:14.360 | just for the long-term future of children.

00:38:18.080 | My seven-year-old is quite precocious,

00:38:20.380 | and he's often asking me, he's like,

00:38:22.440 | "Dad, I could just get a job,

00:38:23.600 | "and if I could do this and that,"

00:38:24.880 | and I continually find myself saying things

00:38:27.260 | that I would have been surprised a few years ago

00:38:29.400 | that I would have to say as much.

00:38:31.040 | No, son, right now, I make plenty of money.

00:38:34.280 | You don't need you to get a job.

00:38:35.500 | What I need you to do is to focus on your schoolwork,

00:38:37.720 | because academic achievement is gonna pay off far more

00:38:40.880 | in the long run for you than is just getting a job

00:38:45.460 | and having money.

00:38:46.560 | That's a short-sighted, to run out and get a job

00:38:50.140 | and not focus on your academic skills

00:38:52.720 | is a short-sighted approach to life,

00:38:54.400 | and so that would have surprised me a number of years ago

00:38:56.480 | how much I needed to encourage that.

00:39:00.340 | I continue to believe that,

00:39:02.640 | now, this is one that's gonna be tested in the coming years,

00:39:05.860 | but I continue to believe that I'm on the right track

00:39:07.920 | with the college planning

00:39:10.220 | and the way that I invest money in my children now,

00:39:12.720 | rather than focusing on college savings.

00:39:15.600 | I'm open.

00:39:16.880 | One thing I have changed on is I'm open,

00:39:20.840 | I'm more open to my paying for my children's

00:39:24.080 | college education and their academics

00:39:26.640 | than I previously was.

00:39:28.600 | When I was in college, I was raised by parents

00:39:33.360 | who put themselves through college.

00:39:34.680 | Well, my dad did, I'm not sure if my mom did.

00:39:36.120 | My dad put himself through high school

00:39:37.400 | and he put himself through college.

00:39:39.600 | I don't remember what the finances were

00:39:41.960 | for my mother's parents.

00:39:43.440 | They were better off than my father's parents were,

00:39:46.280 | so they may have paid for her school expense.

00:39:47.960 | In fact, I expect they probably did.

00:39:50.240 | But my father was an independent man

00:39:54.600 | and again, worked his way through high school,

00:39:57.000 | went basically to a boarding high school

00:39:59.040 | and worked his way supporting his physical,

00:40:01.880 | his own needs through starting in the age of high school.

00:40:05.440 | And they raised me with that mindset

00:40:08.720 | of contributing to the family and providing for that.

00:40:13.240 | When I started to go to a private school in seventh grade,

00:40:17.960 | my father had me contribute $100 a month

00:40:21.520 | from my own earnings to the cost of that school.

00:40:24.520 | Now, I actually need to go back and ask him why he did that.

00:40:27.200 | I don't think it was because he needed the money,

00:40:29.240 | although finances were tight at the time

00:40:31.080 | because he was paying for, I think,

00:40:32.920 | four private school tuitions simultaneously.

00:40:35.640 | But so maybe he needed the money.

00:40:36.960 | I don't think it was because he needed the money.

00:40:38.520 | I think it was more because he wanted me

00:40:40.800 | to have skin in the game.

00:40:41.840 | 'Cause I know he did the same thing with my siblings.

00:40:44.160 | He wanted me to have skin in the game.

00:40:45.560 | And I valued that.

00:40:46.720 | I couldn't make those payments all the way through

00:40:48.840 | because of some stupid ways that I handled my money

00:40:50.760 | when I was in high school.

00:40:51.960 | But I do value that I had skin in the game.

00:40:54.080 | And then I put myself through college.

00:40:56.080 | What I have since come to realize is

00:40:59.240 | that there's a whole set of experiences

00:41:02.900 | that I never pursued when I was in college

00:41:05.840 | because I was so limited

00:41:07.400 | in needing to make money to pay for classes.

00:41:09.560 | And at the time, I used to depreciate the value

00:41:13.520 | of those experiences and draw pride from my own personal,

00:41:16.480 | like, "Hey, I take care of myself

00:41:18.040 | "and I provide for myself."

00:41:19.840 | But in hindsight, I'm not sure that was the best move.

00:41:23.740 | In hindsight, I realized that if I had done

00:41:27.320 | more interesting internships,

00:41:29.480 | that could have led me in some very different directions

00:41:32.200 | in my career opportunities.

00:41:33.960 | I never could understand why anybody would work for free.

00:41:36.520 | I always needed to work and I needed to work for money.

00:41:38.500 | And how could I afford to dedicate time to working for free?

00:41:41.360 | But at this point in time,

00:41:42.580 | I now see how those internships

00:41:45.640 | could have opened up to me very different experiences.

00:41:49.420 | I also now see how I didn't follow a lot

00:41:52.800 | of my personal interests in college

00:41:54.800 | that could have led to new

00:41:55.880 | and interesting career opportunities

00:41:58.060 | because I was so focused on earning money

00:41:59.860 | to pay for classes, pay for school,

00:42:02.440 | and pay for my living expenses.

00:42:04.360 | And I now look at that and I wonder

00:42:06.720 | what it would have been like if I had had more free time.

00:42:11.560 | Now, I'm not convinced one way or the other

00:42:14.080 | because the reality is I squandered a lot of the free time

00:42:17.080 | that I did have.

00:42:18.240 | I remember very distinctly the difference

00:42:19.920 | between my freshman year and my sophomore year.

00:42:22.360 | My freshman year, I worked three jobs,

00:42:24.740 | I took a full load of classes,

00:42:26.520 | and I didn't borrow any money.

00:42:28.240 | My sophomore year in college,

00:42:29.520 | I decided I was working too much,

00:42:30.860 | I stopped all my jobs,

00:42:32.320 | I took out a bunch of student loans,

00:42:34.160 | and I dropped my class load down to the bare minimum.

00:42:37.160 | I did terribly in school, I got terrible grades,

00:42:39.740 | and I don't really know what happened to that year.

00:42:42.680 | I would imagine I had a lot of fun,

00:42:44.200 | but I don't actually know.

00:42:46.320 | And I wasn't a drinker, so it's not that I can't remember,

00:42:48.840 | I just can't remember.

00:42:50.300 | And so I look back at that and I was like,

00:42:53.440 | it could go both ways, right?

00:42:54.720 | You can have somebody whose parents

00:42:57.240 | provide everything for them,

00:42:58.680 | and they appreciate the benefits of that,

00:43:02.040 | and they are driven to make use of that

00:43:05.560 | very special time in their lives.

00:43:08.560 | On the other hand, you can have somebody

00:43:10.360 | whose parents give them everything,

00:43:11.960 | and they're just totally entitled,

00:43:13.480 | and they waste their time.

00:43:15.040 | And so I'm not convinced that it's strictly a matter

00:43:17.760 | of paying for the child's expenses versus not.

00:43:21.760 | I'm convinced that it's probably more a matter of character

00:43:24.120 | and the vision, et cetera.

00:43:25.680 | So I'm more open today than I was five years ago

00:43:29.160 | on the idea of paying for children's education,

00:43:31.840 | and I haven't, and for extracurricular activities and such,

00:43:35.520 | and I haven't yet figured out kind of how would you know,

00:43:39.240 | how would you be able to assess the character of your child

00:43:41.640 | and figure out if what you're doing is good for him

00:43:44.360 | or bad for him.

00:43:45.960 | A couple other things that are changing for me

00:43:47.480 | as my children get older,

00:43:48.840 | I'm appreciating more things like safety.

00:43:52.200 | A number of years ago,

00:43:54.840 | I bought an old Toyota Corolla for $500,

00:43:58.840 | and I was super happy when I found it.

00:44:00.720 | I bought it from a little old lady

00:44:01.760 | that just wanted to sell it and buy something different.

00:44:03.880 | It had a manual transmission,

00:44:04.960 | and I bought it immediately 'cause I just loved it.

00:44:06.640 | I was so excited about having this old car,

00:44:09.120 | because it was just dirt simple,

00:44:10.520 | and I figured I could always keep this around.

00:44:11.840 | That way I have an extra car if I ever need one.

00:44:13.400 | I can lend it to people, et cetera.

00:44:15.280 | But then I was driving it down the highway one time,

00:44:17.320 | and I realized, wait a second, why am I driving this car?

00:44:21.760 | If I get in a wreck in this car, that's a problem.

00:44:26.200 | That's a major problem for me.

00:44:28.320 | And I find the older I get,

00:44:30.040 | the more I realize my own physical frailty.

00:44:33.480 | I used to, I've put so many roofs on houses,

00:44:38.840 | but these days I would be hard-pressed

00:44:40.760 | to go and spend a ton of time up on the roof

00:44:42.400 | just out of the physical danger of it.

00:44:43.240 | It's like, it's not worth it to me.

00:44:44.720 | And so the same thing with the old car.

00:44:46.280 | I kind of quit driving it and eventually sold it,

00:44:48.660 | 'cause I thought no matter what this old car has,

00:44:51.840 | it doesn't have any of the modern safety features

00:44:54.560 | that I find valuable.

00:44:56.560 | So I think that by the time my children are of driving age,

00:45:00.080 | every car will have significant safety features.

00:45:03.220 | But I now realize what I didn't realize when I was younger,

00:45:06.960 | the importance of things like,

00:45:08.440 | if your child is gonna drive,

00:45:09.680 | them having a car that has modern safety features.

00:45:12.520 | And if I were putting a 16-year-old on the road today,

00:45:15.480 | five years ago I would have said,

00:45:16.520 | oh, give them a little bit of money

00:45:18.560 | and let them pay for whatever they can find.

00:45:20.120 | Well, I've changed that.

00:45:21.680 | I think I didn't appreciate at the time

00:45:24.200 | how important things like safety are.

00:45:27.560 | And if I had to put up the money or match the money,

00:45:30.920 | however we decided to do it when the time comes,

00:45:33.640 | I want my child driving a car with excellent crash ratings,

00:45:37.640 | not a car that doesn't have any safety features.

00:45:41.000 | So that would just be off the top of my head,

00:45:42.600 | some things that I have changed.

00:45:44.320 | So for the most part, not a lot of changes,

00:45:46.500 | but I'm very sensitive and I'm watching very carefully

00:45:48.700 | to see, okay, are my opinions right or wrong

00:45:51.320 | and what kind of feedback am I getting

00:45:52.780 | from my children, et cetera.

00:45:54.020 | So I'll keep you in the loop as the years go by.

00:45:56.280 | - I appreciate that, thanks.

00:45:59.040 | Yeah, I think one of the more impactful things

00:46:01.720 | I've gotten from you over the years

00:46:03.360 | is just the idea of investing in the kids.

00:46:05.700 | I tend to be a frugal person,

00:46:08.480 | but the whole idea of being okay with swiping a check

00:46:13.480 | or spending all this money on education,

00:46:16.040 | but not paying for certain experiences

00:46:20.480 | or whatever along the way just seems ridiculous.

00:46:23.000 | So I've appreciated that mindset

00:46:25.920 | and just to get an update on the other stuff as well,

00:46:28.080 | it's been really helpful.

00:46:30.840 | And we'll go to the back catalog,

00:46:32.680 | it's still a great resource,

00:46:34.240 | so I keep going through it.

00:46:35.800 | - Thank you, appreciate that.

00:46:37.520 | Yeah, it is, and that's definitely,

00:46:40.720 | I didn't do, when I was younger,

00:46:42.080 | I didn't do a lot of the summer camps

00:46:43.960 | and all those things that many other children did,

00:46:48.080 | and I think it was due to the fact that we weren't wealthy.

00:46:50.400 | And I don't regret it, we all have our own gain.

00:46:53.720 | But now I look at it and I realize

00:46:55.960 | that how much of a benefit it can be

00:46:57.800 | for a child to be enrolled in a specific summer camp

00:47:01.320 | that's related to something that they're interested in,

00:47:03.640 | and for them to have a budget to explore

00:47:06.520 | the things that they're interested in.

00:47:08.280 | And I see how that knowledge and those interests

00:47:13.280 | when they're cultivated at young ages,

00:47:16.160 | I'm convinced it's really powerful.

00:47:18.440 | So I think that most of us don't have to choose,

00:47:21.840 | most of us don't have to choose

00:47:23.240 | between doing one or the other.

00:47:26.000 | Most of us can do, we can do both.

00:47:28.720 | But if you have to choose between one or the other,

00:47:31.360 | I'm convinced that the biggest payoff

00:47:33.720 | comes of investing in the children when they are young.

00:47:36.840 | We're going out to Anchorage, Alaska.

00:47:37.920 | Welcome to the show, I'm gonna serve you today.

00:47:39.920 | - Hey Joshua, this is Ben.

00:47:43.160 | - Ben, welcome.

00:47:44.000 | - Thanks, I hope you and your family are well.

00:47:47.760 | The question I have is, I've been thinking about,

00:47:51.020 | from your discussions and others

00:47:53.520 | about starting businesses and so on,

00:47:55.840 | but mulling over different ideas

00:47:57.360 | and I haven't really settled on anything.

00:47:59.040 | But lately I've been thinking about

00:48:00.440 | the possibility of becoming a financial coach.

00:48:03.640 | I was maybe wondering if your insights into that,

00:48:06.000 | it's not really officially a credentialed,

00:48:08.640 | there are some quasi credentials out there,

00:48:11.280 | mostly by people that are running courses

00:48:13.520 | on how to become one and start a business

00:48:15.280 | associated with it.

00:48:16.320 | There's no official licensing involved or whatever.

00:48:22.200 | You're just giving some generic advice to folks

00:48:25.480 | to help them get to the point where they could go

00:48:27.680 | to somebody that could help them,

00:48:29.760 | that would require licensing,

00:48:31.120 | like a financial advisor or so on.

00:48:33.480 | So I kinda just wanted to get your general overview

00:48:35.360 | of what you think about financial coaching

00:48:38.040 | if you know much about it,

00:48:39.180 | and the process of starting a business

00:48:42.000 | and possibly a side business doing this.

00:48:44.500 | - Let's start with this.

00:48:49.820 | I work in some ways as a financial coach.

00:48:53.540 | And the business that I have with Radical Personal Finance

00:48:56.760 | is in many ways an ideal coaching business.

00:49:00.740 | I have multiple lines of revenue.

00:49:03.360 | I don't maximize all of them,

00:49:04.920 | but I could sell advertising, right?

00:49:06.800 | I have patrons of the show, which I'm very grateful for.

00:49:10.400 | I have people that sign up and support the show

00:49:12.200 | voluntarily with patronage.

00:49:13.780 | I've previously sold advertising.

00:49:16.040 | I sell digital courses that coach people

00:49:18.840 | on particular problems.

00:49:21.160 | I have a number of long-term clients

00:49:23.700 | that I've worked with, exclusively entrepreneurs,

00:49:27.480 | because I enjoy working with entrepreneurs

00:49:29.500 | because I can make them a lot of money.

00:49:31.820 | And I offer a little bit of hourly consulting.

00:49:36.820 | I recently, this last week, I recently redid that.

00:49:40.400 | I haven't done any consulting in the last six months

00:49:42.660 | other than with my long-term clients,

00:49:44.500 | because it's a fairly low-profit margin business for me,

00:49:51.140 | compared to other things like selling courses and classes.

00:49:54.760 | But I've decided to go ahead and start doing that again.

00:49:57.580 | And so I recently revamped the coaching system,

00:49:59.600 | and it's available, I think, on the website now,

00:50:01.940 | where anybody who wants to can just go

00:50:03.780 | and book a consulting call with me,

00:50:07.480 | and I can make a lot of money doing that.

00:50:10.020 | I charge $400 an hour for consulting,

00:50:13.120 | and it's not hard for me to fill my schedule

00:50:16.140 | at this point in time.

00:50:16.960 | I do it one day a week.

00:50:18.280 | And so you can do the math.

00:50:20.020 | If I do consulting for, usually I do 10 hours a day,

00:50:25.020 | I do one day of 10 hours.

00:50:27.980 | So if I do $400 an hour for 10 hours,

00:50:32.500 | that's $4,000 of revenue in one day.

00:50:35.500 | If I do that 50 weeks a year,

00:50:37.180 | then there's $200,000 a year of revenue

00:50:39.820 | just simply from consulting.

00:50:42.380 | And so you can run the math,

00:50:44.360 | that that is obviously a doable business.

00:50:47.460 | And what I do is exclusively consulting and coaching.

00:50:50.700 | By the way, I just double-checked,

00:50:52.900 | my assistant had done this, I just double-checked.

00:50:55.100 | The page is now up at radicalpersonalfinance.com/consult.

00:50:58.780 | So if you'd like a consultation with me,

00:51:00.920 | go to radicalpersonalfinance.com/consult.

00:51:03.340 | You can purchase, you can book right there,

00:51:05.240 | you can pay right there,

00:51:06.100 | you can choose your times, et cetera.

00:51:08.240 | And so you can see from there that certainly,

00:51:11.780 | with that perspective, coaching can be a viable business.

00:51:17.500 | I can make exclusively from consulting, one day a week,

00:51:20.940 | I can do, I can make $200,000 of gross revenue,

00:51:25.580 | and it's basically, it's almost all profit

00:51:28.700 | based upon my business model.

00:51:30.200 | And I'm a coach, I hold no licenses,

00:51:34.140 | I hold no, I don't have an insurance license,

00:51:36.980 | I don't have an investment license.

00:51:38.340 | I'm exclusively an outside person

00:51:40.780 | who exclusively makes a living based upon my knowledge.

00:51:44.660 | So on that, from that perspective,

00:51:48.100 | it's rather obvious that this is a business

00:51:50.820 | that can be done, that this is a very doable business,

00:51:53.880 | and you could make more, right?

00:51:55.220 | If you can bill at $400 an hour,

00:51:57.660 | and you can approach people,

00:52:01.340 | and you can, if you wanna fill 20 hours a week,

00:52:03.460 | you can do the math, right?

00:52:05.100 | Now, what is often missing from that is,

00:52:09.780 | well, how long did that take?

00:52:12.300 | Right, as we record this, it's October 23, 2020.

00:52:16.020 | I have been a financial advisor since 2008,

00:52:20.620 | so that's 12 years of finance.

00:52:24.460 | When I became a financial advisor,

00:52:26.180 | I had been interested in and thinking about

00:52:28.620 | personal finance and financial planning

00:52:30.240 | for a very long time.

00:52:31.680 | I read a huge amount on financial planning

00:52:36.940 | and the various theories and strategies and whatnot,

00:52:39.700 | and I have since I was a kid.

00:52:42.700 | I have, what, eight or nine professional-level

00:52:47.700 | industry credentials.

00:52:50.100 | I'm a certified financial planner.

00:52:52.340 | I'm a chartered life underwriter,

00:52:53.660 | a chartered financial consultant.

00:52:55.020 | I'm a chartered advisor for senior living.

00:52:57.580 | I have a registered health underwriter,

00:52:59.420 | which is about health insurance,

00:53:00.440 | a registered employee benefits consultant,

00:53:02.540 | and I have a master's degree,

00:53:05.740 | a legit actual master's degree in financial planning.

00:53:10.080 | In addition to that, I've recorded, what,

00:53:13.080 | coming on 800 episodes of Radical Personal Finance,

00:53:15.980 | and so those 800 episodes of Radical Personal Finance,

00:53:18.660 | that's a huge, a huge investment,

00:53:23.600 | and Radical Personal Finance is one of the largest

00:53:26.380 | personal finance podcasts in the marketplace.

00:53:29.700 | I don't know, it's certainly not the largest.

00:53:32.520 | That would probably be Dave Ramsey,

00:53:33.840 | but there are many good ones and many big ones,

00:53:36.560 | but it's one of the largest,

00:53:37.760 | and in the top 1% of podcasts.

00:53:41.080 | Is that easy to create?

00:53:42.540 | It is not easy to create.

00:53:43.900 | I don't know if I could do it today.

00:53:45.200 | I'd like to think I could,

00:53:46.640 | but I don't know if I could do it today,

00:53:48.640 | and so, and when you build that catalog of content,

00:53:55.280 | you know, you just heard John saying

00:53:58.160 | that he's going back and listening through.

00:53:59.660 | John's listened to every episode I've done.

00:54:01.280 | He's going back and listening through it again,

00:54:03.140 | and so when you build that back catalog of content,

00:54:05.580 | that's a really powerful thing to do,

00:54:07.720 | but it's not a get-rich-quick scheme, right?

00:54:09.960 | It's great to say, "Hey, I can make 4,000 bucks in a day,"

00:54:12.840 | and it's awesome.

00:54:13.680 | I love it.

00:54:14.500 | It's great, and I enjoy the work.

00:54:15.440 | It's so fun to me.

00:54:16.640 | I enjoy it, and it's a very valuable resource

00:54:19.160 | in the marketplace.

00:54:20.240 | There is, I know of no other financial advisor

00:54:23.660 | with the knowledge and credentials that I have

00:54:27.480 | who gives any kind of hourly planning option

00:54:30.680 | in the way that I do, where I don't sell anything,

00:54:33.440 | and that's a tremendous resource for people

00:54:35.800 | because it gives people the opportunity to say,

00:54:37.880 | "I wanna get a second opinion.

00:54:39.720 | "You know, I'm gonna go meet with my financial advisor.

00:54:41.600 | "I'm paying him $15,000 a year to manage my portfolio,

00:54:45.680 | "but I wanna get a second opinion,"

00:54:47.200 | and the things that I consult with people on

00:54:49.320 | are so wide-ranging that I frequently find myself saying,

00:54:53.360 | "Without any fear of error,

00:54:55.900 | "I think I'm the only person in the world

00:54:58.020 | "who actually can give you the answers

00:54:59.760 | "on this particular thing," and it covers the gamut.

00:55:03.180 | It goes from how to maximize the profitability of a business

00:55:07.140 | to how to flee the country,

00:55:10.980 | and I'm not exaggerating with that,

00:55:13.780 | and so I don't know of anybody else in the business.

00:55:17.300 | Maybe they're out there.

00:55:18.120 | I know of many people who are better than I am

00:55:22.480 | with specific technical consultations.

00:55:25.600 | For example, if it comes to estate planning,

00:55:27.940 | I just tell people, I'll give someone an overview

00:55:30.780 | to say, "Let's talk about the big picture,"

00:55:32.700 | but I send 'em to an estate planning attorney

00:55:34.220 | because your average, everyday, run-of-the-mill

00:55:35.940 | estate planning attorney knows more about estate planning

00:55:37.980 | in your state than I do, but I'm fully qualified.

00:55:41.900 | I don't have the credential, but I'm fully qualified

00:55:43.880 | for the accredited estate planner credential,

00:55:46.660 | and so the point is that it cannot be built.

00:55:50.140 | Without question, it can be built.

00:55:53.020 | Can I tell you that you can build it?

00:55:55.660 | I'm not so confident in that

00:55:57.780 | because I know what has gone into my being able to do this,

00:56:02.780 | and I'm not convinced that most other people

00:56:07.180 | want to do or could do what I do

00:56:11.300 | because it's the output of a very long time.

00:56:13.580 | Now, if you say, "I've got a five-year plan

00:56:15.740 | "or a 10-year plan, and I wanna be knowledgeable in that,"

00:56:18.460 | yes, absolutely, it can do that,

00:56:20.480 | but if you say, "I've got a six-month plan

00:56:21.860 | "or a one-year plan," I'm not so sure.

00:56:24.340 | You can become a world-class expert in anything

00:56:28.260 | in a year or two, right, a year or two of reading,

00:56:31.620 | but most people don't do it.

00:56:32.820 | They're not willing to do that, and so it's hard,

00:56:36.180 | and then to make yourself stand out,

00:56:38.220 | and the media space is very full,

00:56:39.900 | to make yourself stand out, it's very difficult,

00:56:42.060 | so what I don't think works generally

00:56:44.800 | with financial coaching, I don't think

00:56:47.420 | that financial coaching works at the low end.

00:56:50.920 | My average consulting client, I have a number of,

00:56:54.180 | I do have a number of clients who,

00:56:57.420 | I've consulted with some people who don't make six figures,

00:57:00.580 | and I applaud them, and I actually encourage them,

00:57:02.520 | and I work my tail off so that when they leave

00:57:04.820 | a consulting call with me, with 60 Minutes of Me,

00:57:07.020 | they've got way more than they could ever have dreamed of,

00:57:10.020 | because I feel a huge responsibility

00:57:12.740 | when people who don't earn six figures sit down and say,

00:57:15.200 | "I'm gonna invest money into myself in this particular way,"

00:57:18.620 | but my average client makes several hundred thousand dollars

00:57:22.420 | per year, it's not uncommon for me to speak on the phone

00:57:26.980 | with, if I do a 10-hour day, it's not uncommon to me

00:57:31.980 | that at least five of the 10 will be multi-millionaires,

00:57:35.740 | because that's the audience that I have

00:57:37.340 | at Radical Personal Finance, and so that's

00:57:40.140 | a very different audience, that's a very different

00:57:43.700 | marketplace than the marketplace for somebody

00:57:46.680 | who says, "I'm gonna do budget coaching,"

00:57:48.700 | or, "I'm gonna help you get out of debt," or something,

00:57:50.660 | which is what I think most people think of

00:57:52.660 | when they think of coaching, and the reason I'm specifying

00:57:55.820 | this is what has been frustrating to me over the years,

00:57:58.620 | is I have learned through hard-won experience

00:58:02.100 | that most people who are poor don't care

00:58:05.740 | very much about money.

00:58:06.960 | Most people who are rich care a lot about money,

00:58:12.940 | and it's maddening to me, because I look at that

00:58:16.660 | and I say, "You're poor, you're broke,

00:58:18.580 | why do you not care about your money?

00:58:21.220 | Why are you not willing to do anything?

00:58:23.540 | Why are you not willing to read a book, go to a seminar,

00:58:27.060 | sit with a financial advisor?

00:58:28.460 | Why, why, why, why are you so pig-headed

00:58:31.820 | to not realize that you're broke and poor

00:58:34.260 | because you're uninterested in money?"

00:58:37.300 | And yet I have, I don't wanna say without exception,

00:58:41.240 | but I have found it ineffably difficult

00:58:45.580 | to actually change somebody's mind and opinion around that.

00:58:50.580 | And when I was a baby-faced financial advisor,

00:58:55.460 | I remember so many times I'd wind up in this,

00:58:57.780 | I'd get referred to some guy who was a nice guy,

00:58:59.540 | and I'd wind up in this single wide trailer,

00:59:01.540 | or this little room somewhere,

00:59:06.540 | and I would take people with me,

00:59:09.620 | more experienced financial advisors and joint work people,

00:59:12.060 | and they would sit there and they would stare at me.

00:59:13.780 | And I would sit there for an hour with somebody

00:59:15.580 | who was broke and poor,

00:59:17.220 | and my poor joint work people would come along

00:59:19.980 | and they would just sit there.

00:59:21.460 | And we would leave the appointment and they would say,

00:59:24.180 | "Joshua, why on earth did you not get up

00:59:26.020 | and leave after five minutes?"

00:59:27.300 | And I was like, "But they need me, they're broke,

00:59:29.300 | they're poor."

00:59:30.120 | And they would say, "They're broke and they're poor,

00:59:31.440 | they're obviously not gonna do anything,

00:59:32.940 | why did you waste an hour of your time?

00:59:34.620 | Go and do something that you enjoy doing with."

00:59:36.820 | And I thought it was cold-hearted and wrong,

00:59:40.200 | and I used to think, "But I can do it, right?

00:59:43.020 | I can change somebody, I can make somebody want it,

00:59:45.580 | this person's living in a single wide trailer

00:59:48.260 | on the bad side of town,

00:59:49.260 | and I know that I can make a difference in their life."

00:59:52.380 | And speaking today,

00:59:57.380 | I couldn't give you a list of five people

01:00:01.160 | that I ever made a difference in their life that way,

01:00:03.100 | even though I wanted to and I tried to.

01:00:05.580 | And so what I think a lot of people think of

01:00:08.620 | when they think of financial coaching is,

01:00:10.700 | I'm gonna help people do budget coaching,

01:00:12.460 | I'm gonna charge them 50 bucks an hour.

01:00:15.060 | And I don't think that business works.

01:00:17.340 | Maybe there's somebody out there who's doing it,

01:00:19.460 | but I just don't think it works,

01:00:20.620 | I couldn't make a living that way.

01:00:22.320 | I think that maybe there's somebody out there

01:00:24.900 | who's doing coaching and they say,

01:00:26.900 | "Well, I'm gonna help people get out of debt."

01:00:29.700 | You're not gonna do it, right?

01:00:31.460 | They need Dave Ramsey's radio show and book, right?

01:00:34.980 | They don't need a coach in general.

01:00:37.140 | Now, I'm sure there are people out there who would say,

01:00:39.340 | "But I've done it."

01:00:40.380 | And I would encourage you to listen to their stories

01:00:42.300 | and see, but the most profitable thing

01:00:45.020 | that most financial coaches are gonna do

01:00:47.820 | is sell a course on how to become a financial coach.

01:00:50.780 | That's the most profitable thing that most people do.

01:00:53.540 | And so I wanna give you though,

01:00:55.260 | a couple of business models that I do think work.

01:00:57.940 | Number one, if you can work at the high end,

01:01:01.500 | I think it's possible to do high end coaching.

01:01:04.380 | If you have the credentials and the knowledge and the skill,

01:01:08.540 | and you can figure out how to attract wealthy people,

01:01:11.380 | I think it's absolutely possible.

01:01:13.620 | But that's gonna need some skill and some knowledge

01:01:15.900 | and some experience and some marketing savvy.

01:01:20.220 | What I think is very sellable,

01:01:23.180 | if radical personal finance collapsed,

01:01:27.020 | and I just needed to make money,

01:01:28.420 | and I needed to make money with my skillset,

01:01:30.700 | and I needed to make money in an area that I thought

01:01:34.300 | I could leverage the niche opportunity,

01:01:37.860 | I would build a social security consulting business.

01:01:41.540 | And I would build people,

01:01:43.500 | I would become an expert on social security,

01:01:46.020 | and I would build people for an hourly rate

01:01:49.380 | or a package deal to tell them when

01:01:52.340 | and how they should take advantage of social security,

01:01:55.020 | and answer all their social security problems.

01:01:58.180 | And I use that as a model,

01:01:59.660 | whereas I would say that this is, I think,

01:02:02.100 | a good kind of model to pursue.

01:02:04.700 | Why?

01:02:05.540 | What does it require?

01:02:06.360 | Well, first of all, social security planning

01:02:08.500 | requires specialized knowledge,

01:02:11.020 | but it's not that difficult to acquire.

01:02:14.020 | I think that three, four months,

01:02:16.580 | you could become a leading expert on social security.

01:02:20.180 | There are many good books written,

01:02:21.460 | you could read the legislation,

01:02:23.040 | you could read all of the

01:02:24.340 | social security administration documents,

01:02:26.500 | and in about three to four months,

01:02:27.760 | you could be an expert on social security planning.

01:02:30.540 | But it's an area that's very dense to most people.

01:02:33.740 | And so that subject matter expertise

01:02:36.720 | is, I think, a really good way to differentiate yourself.

01:02:40.440 | Number two, the people that you're dealing with,

01:02:42.800 | you're dealing with people who have big financial assets.

01:02:47.800 | And here I'm talking about social security.

01:02:50.840 | Social security is a huge asset for an ordinary worker.

01:02:55.600 | It's, for most people,

01:02:56.840 | the single most valuable asset they have.

01:02:59.120 | And teaching them how to optimize it

01:03:01.760 | and how to approach it is, in my opinion,

01:03:04.140 | one of the best things that you can do,

01:03:05.700 | because if they get it right,

01:03:08.020 | you can add tens of thousands of dollars to their life.

01:03:12.220 | If you get it wrong,

01:03:13.300 | they could potentially be walking away

01:03:14.840 | from tens of thousands of dollars.

01:03:16.700 | And so you wanna deal with areas

01:03:18.760 | where you can make a big impact.

01:03:20.660 | If you're gonna charge big dollars,

01:03:22.400 | you need to be able to make a big impact,

01:03:24.760 | which is why helping somebody with budget coaching

01:03:27.860 | is not it.

01:03:28.860 | If you help somebody with budget coaching,

01:03:31.620 | you say, "Listen, I'm gonna help you save money

01:03:33.880 | "on your cell phone bill by switching from Verizon wireless

01:03:36.760 | "to this MVNO over here."

01:03:41.760 | Does that help them?

01:03:42.940 | Yeah, but they're gonna save a little bit of money

01:03:45.720 | and they're gonna have a hard time justifying it.

01:03:47.780 | But if you wanna go after big dollars for you,

01:03:51.420 | you need to be able to make big dollar changes

01:03:54.660 | in the lives of your clients,

01:03:56.660 | which is why for my long-term consulting clients,

01:03:59.020 | I only work with entrepreneurs,

01:04:00.700 | because I can't make that much of a difference

01:04:03.020 | in an employee's life.

01:04:04.740 | I can make a little difference,

01:04:06.140 | but the changes generally come more slowly.

01:04:09.220 | And a lot of the changes are gonna be disruptive, right?

01:04:12.700 | The way that the average employee can make more money

01:04:14.980 | is go and get a better job.

01:04:16.300 | Well, that's disruptive.

01:04:17.140 | And a lot of people, that's not something they're doing.

01:04:19.240 | But an entrepreneur,

01:04:20.580 | I can come into an entrepreneur's life

01:04:22.200 | and every year we can double the business.

01:04:23.980 | Every year we can triple the business.

01:04:25.420 | And so now my consulting fees, which are hefty,

01:04:29.620 | are always, I'm always painting them.

01:04:31.540 | And I'm saying, look, we added $600,000 of revenue

01:04:33.780 | to your business last year.

01:04:34.960 | Do you feel so bad now about my fees, right?

01:04:37.060 | And you always need to parallel and foil and contrast

01:04:40.460 | your fees and the cost of your work

01:04:42.660 | as compared to the benefit and the upside.

01:04:44.800 | And you can't do that with budget coaching.

01:04:46.540 | You can't do that with get out of debt coaching.

01:04:49.020 | You can do that with social security coaching.

01:04:51.540 | And then in addition to that,

01:04:53.700 | you're dealing when you're dealing with social security,

01:04:56.020 | you're more, and the kind of person

01:04:58.740 | who's likely to book a consultation,

01:05:00.620 | you're dealing at the upper end of the wealth market.

01:05:02.780 | You're serving the wealthy, not the poor.

01:05:04.560 | The poor are not gonna come and buy a consultation

01:05:07.900 | on how they can maximize their social security.

01:05:09.540 | A number of years ago, I had a friend of mine

01:05:12.140 | who had never made more than just a little bit of money,

01:05:16.340 | very basic work, had spent years being unemployed,

01:05:20.060 | had declared bankruptcy and had gotten a job,

01:05:23.900 | but then had gotten laid off from his job.

01:05:25.980 | He was in his early 60s

01:05:27.620 | and he just didn't know what to do.

01:05:29.180 | And so he decided he was gonna go

01:05:31.300 | and file for social security.

01:05:33.540 | And I begged with him, I pleaded with him.

01:05:36.180 | I said, "Listen, let me explain to you."

01:05:39.140 | And I showed him, I tried every way I could.

01:05:41.340 | I said, "If you file for social security early

01:05:43.780 | "versus if you file at 70,

01:05:45.880 | "this is the single biggest thing that you can do

01:05:48.760 | "is work for the next seven years.

01:05:51.000 | "I cannot overemphasize how important it is

01:05:55.560 | "for you to wait until at least full retirement age,

01:05:58.700 | "if not 70, in order to file for social security."

01:06:03.700 | I tried, I tried, I tried.

01:06:05.800 | I gave the guy $400 an hour advice for nothing.

01:06:08.940 | I broke all my rules

01:06:10.340 | about giving people financial advice for free,

01:06:12.300 | and I did it, and it did nothing.

01:06:15.020 | He filed for social security and I told him,

01:06:16.860 | I said, "You are going to be broke

01:06:19.540 | "because you've got this tiny social security payment

01:06:21.680 | "because you're taking it so early.

01:06:23.380 | "And what's happening is you're doing it

01:06:25.200 | "in a time of stress.

01:06:26.340 | "You're doing it because you got laid off from a job

01:06:28.660 | "and you don't have the desire or the energy

01:06:30.780 | "or the wherewithal to go and get another job.

01:06:33.720 | "And so this is never gonna get better.

01:06:36.240 | "For the rest of your life,

01:06:37.760 | "you are going to be living like a miser

01:06:40.300 | "and completely stuck.

01:06:42.260 | "Because if you think your self-confidence is bad now,

01:06:45.340 | "just wait four years."

01:06:47.380 | Well, fast forward about four or five years.

01:06:49.760 | That guy, my friend, and I want to be clear,

01:06:53.000 | he's still my friend, but that guy,

01:06:54.920 | he sits at home, he watches Netflix all day long,

01:06:58.700 | and to this day, he is completely stuck

01:07:02.000 | in his living situation.

01:07:03.420 | He can't get another car,

01:07:04.900 | he's not willing to change anything,

01:07:06.140 | he's got everything is breaking down in his life,

01:07:07.900 | he's stuck in a place that he hates living

01:07:09.680 | 'cause it's the only place he can find that's cheap enough,

01:07:12.380 | and it's just a nightmare.

01:07:13.940 | He's got no opportunity, no future,

01:07:16.180 | and it's all because of social security.

01:07:18.300 | He chose social security early

01:07:19.780 | and has no confidence enough to get a job,

01:07:21.420 | nothing that he knows that he could do,

01:07:22.940 | nothing that he's qualified to do,

01:07:24.080 | and at this point in time,

01:07:25.320 | after sitting and watching Netflix nonstop for years,

01:07:29.200 | he doesn't have the personal motivation to do anything.

01:07:31.880 | So these kinds of things matter,

01:07:34.000 | but yet, my point in that little tangent

01:07:36.600 | was simply to say that poor people,

01:07:38.440 | they won't pay you for advice,

01:07:40.020 | and they won't take your advice when you give it to them.

01:07:42.400 | So you need to be working with people who are wealthy,

01:07:44.560 | and something like social security consultations,

01:07:48.240 | the people who are gonna buy that

01:07:49.400 | are gonna be people who are wealthy,

01:07:50.520 | who understand that, hey, if I just pay an expert,

01:07:52.920 | you know, 400 bucks or 250 bucks

01:07:54.900 | or whatever your price is that you wind up in,

01:07:56.540 | if I pay an expert for a couple hours of their time,

01:07:58.980 | they'll answer all my questions for me,

01:08:01.060 | and they'll help me maximize things,

01:08:02.900 | and then I'll sleep well at night

01:08:04.140 | knowing that I have maximized

01:08:05.460 | my social security contributions.

01:08:07.060 | And then finally, the thing about something

01:08:09.220 | like a social security consultation business

01:08:11.860 | is that that's the kind of business

01:08:12.980 | that's easily marketable.

01:08:14.700 | It'll be attractive in marketing, right?

01:08:19.100 | If you put a newspaper ad for social security seminar,

01:08:22.260 | you'll get people to show up.

01:08:23.280 | If you put a newspaper ad for get out of debt seminar,

01:08:26.480 | if you get people to show up,

01:08:27.560 | they'll be the wrong people to show up,

01:08:28.720 | they won't have any money.

01:08:30.320 | But if you advertise for social security seminar,

01:08:32.460 | they'll have the money and they'll show up.

01:08:34.260 | In addition to that, it's the kind of business

01:08:37.260 | that works really well as being compatible

01:08:40.120 | with other kinds of businesses.

01:08:41.880 | So how would I market it

01:08:43.300 | if I became a social security consultant?

01:08:46.720 | What would I do?

01:08:47.600 | Well, I'll go to every financial advisor in town,

01:08:49.920 | and I would say, listen, let's put on a seminar

01:08:52.080 | for your clients or your prospective clients

01:08:54.380 | on social security planning.

01:08:56.540 | And I'll present to your clients

01:08:58.140 | and to your prospective clients,

01:08:59.240 | I'll present to them the latest and the greatest

01:09:02.500 | and the very best social security strategies

01:09:05.280 | as to how they can maximize their social security benefits.

01:09:08.860 | And the advisors will pay you for it

01:09:11.540 | or they'll do it with them as a joint operation.

01:09:14.820 | They'll cover the costs of the seminar.

01:09:16.920 | Their clients will be happy to come,

01:09:18.620 | happy to bring their friends.

01:09:19.640 | The advisors will win because they'll have exposure

01:09:24.640 | to new prospective clients,

01:09:28.480 | and you'll win because you'll have exposure

01:09:30.280 | to new prospective clients.

01:09:31.340 | And something like that, it's perfect

01:09:33.740 | because you can give away all of the latest and greatest

01:09:36.960 | and best cutting edge strategies.

01:09:38.900 | You can give them all away at the seminar

01:09:41.060 | without any fear of that limiting your exposure.

01:09:45.580 | Because will there be one in a hundred

01:09:47.340 | who's that guy who says, wow, okay,

01:09:48.760 | now I'm gonna go and read all the books

01:09:50.200 | that Ben told me I should read?

01:09:52.180 | Yeah, there's one in a hundred.

01:09:53.480 | But the other 99 recognize that,

01:09:55.840 | ah, if there's this many great strategies

01:09:58.400 | that he's giving away for free,

01:10:00.120 | there must be even more better strategies

01:10:02.260 | that if he were looking at my situation,

01:10:04.280 | he could tell me what I qualify for.

01:10:06.260 | And they'll sign up and you'll fill your calendar with that.

01:10:08.360 | So it's easily marketable.

01:10:09.560 | So something like that is the way to go,

01:10:11.120 | not with, okay, I'm a financial consultant

01:10:13.200 | and budget consulting, but rather something like,

01:10:15.600 | I am a social security consultant

01:10:18.040 | and then I'll make one last point.

01:10:19.700 | Given all of that, if I were starting over again

01:10:24.720 | and I were interested in finances,

01:10:26.640 | I don't think, I'm not sure that I would go

01:10:29.000 | with the consultant route,

01:10:31.060 | unless it offered you some specific things that you wanted.

01:10:34.480 | So why do I like consulting?

01:10:35.880 | Well, number one, I don't like consulting.

01:10:38.080 | I like selling digital courses

01:10:39.720 | because they're infinitely scalable.

01:10:41.660 | I can create something one time

01:10:43.840 | and then I can sell it to thousands.

01:10:46.800 | And it doesn't matter whether there's thousands of people

01:10:49.320 | who buy it or one person that buys it,

01:10:52.640 | I have the same time invested.

01:10:54.420 | So it's infinitely scalable.

01:10:56.520 | In addition, I love it because that kind of work

01:11:00.320 | has a high payoff.

01:11:01.840 | That kind of work, if I provide the right value,

01:11:04.120 | it's a very, very profitable business.

01:11:06.600 | That's one of the reasons why I don't like doing consulting

01:11:08.620 | because when I do consulting,

01:11:10.240 | I can make $400 an hour, which is wonderful.

01:11:12.520 | I love it.

01:11:13.360 | I'm thrilled.

01:11:14.180 | It's great.

01:11:15.020 | I'm very blessed to be able to do that.

01:11:16.920 | But I can make $4,000 an hour with my other work.

01:11:21.060 | And so there's always this trade-off

01:11:22.520 | is that why should I do consulting

01:11:23.920 | when I can do this other work?

01:11:25.460 | And so consulting fundamentally,

01:11:27.960 | especially hourly consulting,

01:11:29.620 | fundamentally has the problem

01:11:31.180 | of it being a one-to-one sale of time.

01:11:33.580 | And you're always stuck in this linear model.

01:11:36.100 | Now, that can give you certain benefits.

01:11:38.620 | So for example,

01:11:39.620 | if you want the ability to travel the world,

01:11:42.480 | well, consulting can offer that.

01:11:44.720 | If you want the ability to live anywhere you want,

01:11:47.580 | if you want the ability to work on your own time schedule,

01:11:49.440 | consulting can offer that.

01:11:51.120 | If you want the ability to do all your work virtually,

01:11:53.500 | consulting can offer that.

01:11:54.540 | So there are a lot of benefits

01:11:55.500 | of building a consulting business.

01:11:57.180 | But a lot of benefits that you would get

01:11:58.960 | from building a consulting business,

01:12:00.880 | I think are better achieved

01:12:02.480 | in the traditional financial services model.

01:12:05.400 | If I went broke today

01:12:06.840 | and I couldn't do radical personal finance,

01:12:09.460 | would I start the social security consulting business?

01:12:12.360 | Maybe if I had something else exciting as well.

01:12:15.480 | But if I were gonna live in one place,

01:12:18.880 | I would go get a life insurance license

01:12:20.600 | and I would sell life insurance.

01:12:22.580 | I used to be embarrassed about selling life insurance.

01:12:24.820 | When I was a new life insurance agent,

01:12:26.100 | I was like, I wanna do financial planning.

01:12:27.380 | I wanna manage money.

01:12:28.320 | 'Cause I thought selling life insurance was unglamorous.

01:12:30.380 | Today, I could happily do nothing but sell life insurance.

01:12:33.540 | And I think I would make infinitely more money

01:12:36.340 | selling life insurance

01:12:37.760 | than I would doing social security consulting.

01:12:40.380 | And the life insurance business model

01:12:43.000 | is in so many ways a superior business model.

01:12:46.700 | Because now you have much higher commission rates.

01:12:50.240 | You sell $1,000 a year life insurance policy

01:12:52.980 | to an average, not exactly a well,

01:12:55.600 | $1,000 a year term life insurance policy.

01:12:58.840 | That's $1,000 commission.

01:13:00.340 | In other words, $900, $1,100,

01:13:02.440 | depending on what company you're dealing with.

01:13:04.160 | Right, it's a significant commission.

01:13:06.240 | Maybe some companies have lower first year commission rates,

01:13:09.640 | but you're dealing with $600 to $1,200

01:13:12.480 | of first year commission

01:13:13.480 | for selling a $1,000 term life insurance policy.

01:13:16.080 | You could sell $1,000 term life insurance policies easily

01:13:20.280 | because they're just so necessary.

01:13:22.200 | They're so valuable.

01:13:23.560 | And there's so many people

01:13:24.520 | who don't have the proper term insurance that they need.

01:13:27.120 | Disability insurance, health insurance,

01:13:29.240 | long-term care insurance.

01:13:30.600 | All of these create significant upfront commissions

01:13:34.440 | that you can sell to more people.

01:13:36.360 | And all of them create renewal income.

01:13:39.200 | And renewal income is one of the most valuable things

01:13:42.840 | you can possibly cultivate.

01:13:44.440 | Because in the social security seminar world or that world,

01:13:47.320 | you're always one-to-one,

01:13:48.360 | you're always selling your time for dollars,

01:13:49.920 | time for dollars, time for dollars.

01:13:51.280 | And if you stop selling your time, the dollars stop.

01:13:53.760 | But if you do something like build an insurance portfolio

01:13:56.160 | of life insurance sold,

01:13:57.860 | then you can always know what your renewal commissions are.

01:14:02.080 | So you get into it a few years,

01:14:03.600 | and now you know I've got $50,000 of income

01:14:06.320 | coming in this year for my renewal commissions.

01:14:08.520 | And I don't have to do much for that.

01:14:10.120 | And the business gets easier,

01:14:11.640 | because now you do repeat sales,

01:14:13.080 | and it expands out,

01:14:14.760 | and you add other lines of product, et cetera.

01:14:16.680 | And so I think that there's often this jump from people,

01:14:20.760 | I watched this happen last week

01:14:21.960 | in a personal finance group online,

01:14:24.320 | where somebody's looking at the,

01:14:26.280 | somebody's thinking about going

01:14:27.400 | into the financial services business.

01:14:29.480 | And they say, "Well, should I go

01:14:30.480 | "into the financial services business?"

01:14:31.720 | And everybody says, "Well, no, you're gonna sell your soul,

01:14:34.240 | "and you're just doing it for commission, et cetera."

01:14:36.060 | There are major ethical questions

01:14:37.880 | that you have to deal with in financial services.

01:14:40.840 | No question.

01:14:42.240 | I think they're major ethical questions in any business.

01:14:44.640 | And I think that if the majority of people

01:14:47.580 | who wanna be consultants would just simply go

01:14:49.580 | into the traditional financial services business,

01:14:52.920 | I think the opportunities there are much, much bigger,

01:14:56.000 | and the business model is proven.

01:14:57.960 | And as best I can see,

01:14:59.480 | there's not a lot that's changed

01:15:01.320 | or is changing in the model.

01:15:03.440 | So can you sell seminars online?

01:15:05.720 | You can.

01:15:07.500 | But you can also sell a lot more life insurance

01:15:09.800 | than seminars, and it's just a much more stable business.

01:15:13.360 | Because people can get coaching anywhere,

01:15:15.840 | but if they're gonna get insurance,

01:15:16.880 | they gotta go to an insurance agent.

01:15:18.520 | And why shouldn't that insurance agent be you?

01:15:21.200 | So long answer to your question, Ben,

01:15:23.800 | but that's how I would think through the problem,

01:15:25.480 | and those are my responses.

01:15:27.960 | Helpful thoughts, comments?

01:15:29.320 | - Yeah, no, I appreciate it.

01:15:32.280 | Certainly an in-depth look at things.

01:15:34.800 | And yeah, to me, initial thoughts about it

01:15:37.540 | are just to be a coach and maybe help

01:15:40.340 | local community stuff.

01:15:41.740 | I don't need to do this as a career or a job.

01:15:44.160 | My current one is pretty good,

01:15:47.140 | and it's not gonna change, hopefully.

01:15:49.540 | It'd be maybe church stuff, help folks in church and so on.

01:15:52.780 | But you've certainly given me some more things

01:15:54.700 | to think about, and I appreciate your in-depth answer.

01:15:57.500 | - Yeah, if I were gonna do that,

01:15:58.700 | I don't think I would charge for the time.

01:16:00.780 | If you're gonna give it away as a service,

01:16:02.460 | then I would just say give it away as a service.

01:16:04.880 | And I think that people, there's no question

01:16:07.320 | that people who are in need,

01:16:09.240 | people who are in a difficult situation

01:16:11.200 | can benefit from having somebody that comes along

01:16:15.360 | and that says, "Hey, will you help me?"

01:16:17.800 | And they sit down and help.

01:16:19.400 | There's so many people who,

01:16:20.880 | in a church group where somebody says,

01:16:25.020 | "Listen, why don't you come over to my house

01:16:26.300 | "and I'll help you make a budget?"

01:16:28.120 | That's super, super valuable.

01:16:30.160 | And I don't wanna discount or depreciate

01:16:32.420 | the value of that work.

01:16:33.660 | That's what we should do is help people

01:16:35.700 | when they're asking for help.

01:16:37.060 | Although there may be many poor people who won't do anything,

01:16:39.620 | there are lots of poor people, there are poor people

01:16:42.100 | who will say, "Hey, I wanna change my life

01:16:43.900 | "and I need some help."

01:16:45.860 | My comments are mostly in the line of

01:16:48.080 | how do you build a business on it?

01:16:49.700 | And so if you wanna build a business on it,

01:16:52.980 | those are my comments.

01:16:54.860 | All right, we had four callers jump on here,

01:16:56.740 | so I guess I'm gonna have to go quick.

01:16:57.660 | If I'm gonna get everyone, I may not get everyone.

01:16:59.100 | So we go now to Kentucky.

01:17:00.120 | Welcome to Radical Personal Finance.

01:17:01.040 | How can I serve you today?

01:17:02.340 | Kentucky.

01:17:07.200 | All right, we'll come back to Kentucky.

01:17:11.840 | We'll go to Denver, Colorado.

01:17:13.060 | Denver, welcome to the show.

01:17:13.900 | How can I serve you today?

01:17:15.920 | - Hi, Joshua.

01:17:17.460 | I'm actually in Texas now.

01:17:19.280 | - All right, welcome to Texas then.

01:17:21.520 | - Thank you.

01:17:22.600 | So my question touches the last one in some ways,

01:17:26.480 | but I'm kind of already headed down the path

01:17:28.600 | of traditional financial services.

01:17:31.340 | So I really wanna know, and I appreciate your wisdom

01:17:34.160 | and your experience in that industry,

01:17:36.320 | but I really wanna try to get some guidance

01:17:38.960 | on what is the best next step for me.

01:17:42.080 | So I'm currently involved in a career transition.

01:17:45.920 | Been a paraplaner for a financial advisor

01:17:48.400 | for the last several months.

01:17:50.240 | Prior to that, I was an engineer for 12 years.

01:17:53.140 | I wanna take the next step to be an advisor.

01:17:57.720 | Financial planning, I think that's the way

01:17:59.960 | that I wanna go into financial services.

01:18:03.760 | And I've been looking for opportunities

01:18:06.720 | that could get me closer to that.

01:18:09.400 | I've called a lot of RIAs.

01:18:11.280 | I'm just looking for a junior advisor,

01:18:13.760 | service advisor type role.

01:18:15.880 | I get a few bites there.

01:18:17.760 | Those typically are the kind of role

01:18:20.960 | where I would be working under someone more experienced

01:18:25.040 | and then splitting fees and commissions with the RIA.

01:18:30.040 | I'm also in some early conversations

01:18:34.560 | with a very huge investment company

01:18:39.560 | who everybody knows because usually their 401(k)

01:18:43.720 | is with them.

01:18:45.240 | And I see that as a potential option

01:18:47.880 | because great training there, a lot of volume,

01:18:51.320 | people just walk in the door.

01:18:52.920 | And so I could learn a lot fast.

01:18:55.320 | But my concern is that if I get to the point

01:18:57.720 | where I wanna have my own business,

01:18:59.800 | I'll have to leave and start all over when the time comes.

01:19:04.700 | Do you have any thoughts for me there

01:19:07.360 | just as far as what the right path could be?

01:19:11.240 | - How old are you?

01:19:14.160 | - 33.

01:19:16.480 | - So at 33 years old, you should have more self-awareness

01:19:21.360 | than younger men about kind of what you like to do,

01:19:24.920 | what you don't like to do, where you would be good,

01:19:26.880 | where you wouldn't be good, et cetera.

01:19:28.480 | And I think that's important to notice that

01:19:31.000 | because your perspective, I'm convinced

01:19:34.080 | that there is a place in the financial services industry

01:19:36.640 | for almost any kind of personality type,

01:19:39.440 | for almost any kind of person.

01:19:41.120 | But it often takes a little while to find it

01:19:44.020 | because different firms are structured

01:19:45.920 | in different directions.

01:19:46.960 | And some firms work well with one personality type

01:19:50.520 | and some firms don't work well.

01:19:52.560 | And so the first thing I would encourage you

01:19:54.720 | is don't see it as a bad thing

01:19:57.040 | if you'd wind up bouncing around the business a little bit.

01:19:59.980 | Bouncing around a little bit is common.

01:20:02.080 | And I think it's common for this reason

01:20:03.760 | is you have to find what kind of scenario do I like.

01:20:07.220 | If you're very technical and you enjoy the knowledge

01:20:11.920 | of financial planning, you enjoyed working

01:20:13.960 | as a paraplanner, you can find room for that.

01:20:18.880 | It's often, in my opinion,

01:20:21.920 | it's a much lower compensated skillset

01:20:24.560 | than the skillset of being a rainmaker,

01:20:26.640 | of being able to go out and find clients and bring them in.

01:20:30.060 | But it's a very important skillset

01:20:32.320 | and it can work really, really well

01:20:36.160 | to buttress somebody's firm,

01:20:38.520 | but you've got to find the right solution.

01:20:40.120 | And I don't know how to tell you how to do that.

01:20:43.280 | Taking a job with a large firm

01:20:45.440 | where it's more of a salary type job,

01:20:49.520 | more of an employment type job can be wonderful.

01:20:52.840 | And I think for many people, it's a much better fit

01:20:55.920 | than being out in the field making sales.

01:20:58.000 | It gives you the opportunity

01:20:59.320 | to earn more income in the beginning.

01:21:03.760 | It gives you an opportunity to not have to worry

01:21:05.500 | about chasing down leads,

01:21:06.960 | not have to worry about figuring out

01:21:08.480 | where am I gonna get new clients?

01:21:10.040 | How am I gonna advertise my services?

01:21:12.200 | Do I have to talk to my friends about investments, et cetera?

01:21:15.160 | It's a good situation for the right personality type.

01:21:20.160 | I personally, there've been many days where I'm like,

01:21:25.400 | hey, that would be really good.

01:21:26.760 | Get to talk about money, get paid a salary for it.

01:21:29.220 | But most days I would be frustrated

01:21:32.800 | because I would say I could be making quadruple the money

01:21:36.600 | if I would just build myself in a different skillset.

01:21:39.600 | And so I think it's important to look at that.

01:21:41.720 | Now, as I see it,

01:21:42.920 | there are a couple different things to look at.

01:21:45.480 | There is, I used to divide this

01:21:47.640 | into basically three categories.

01:21:49.080 | I used to divide this into number one, the salesman,

01:21:53.240 | the guy who's going out, building relationships,

01:21:55.480 | prospecting, bringing people in to talk about money.

01:21:58.760 | The technical planner, usually a back office,

01:22:02.120 | maybe what you were doing before.

01:22:03.480 | Most firms at this point in time

01:22:05.480 | will try to hire somebody who's very technically competent

01:22:08.200 | and they'll keep that guy busy with a sales team

01:22:12.120 | of people out there bringing in clients.

01:22:14.760 | And he's the guy who sits in the office.

01:22:16.620 | He comes to the client meetings,

01:22:17.680 | explains the details of the financial plan,

01:22:19.540 | but he's not the relationship guy.

01:22:21.120 | And then there's various

01:22:21.960 | administrative support functions as well.

01:22:24.320 | That's how I used to do it.

01:22:25.440 | I'm not sure if that still holds true.

01:22:28.180 | There've been a lot of changes in the financial business

01:22:31.160 | since I left it in 2014.

01:22:33.640 | And so I wanna caution you to look around

01:22:36.040 | and talk to people.

01:22:37.680 | But I am convinced that if you're as young as you are,

01:22:41.560 | at 33, and if you really want to do it,

01:22:44.280 | you owe it to yourself to try to be

01:22:47.920 | a front end relationship builder, a front end salesman.

01:22:52.920 | Because if you do that, and if you have that skill,

01:22:56.920 | and that's married with your technical

01:22:59.440 | financial planning knowledge, if you have that skill,

01:23:02.240 | that's where you're gonna make the most money

01:23:03.760 | and have the most freedom.

01:23:04.840 | And you can have control over yourself and over your life.

01:23:09.320 | To me, that's always been worth it.

01:23:13.000 | Especially now, if I started today,

01:23:15.280 | when I started at 23, I was very insecure.

01:23:18.640 | I was nervous, I was nervous to pick up the phone.

01:23:21.040 | If I went back today into that business model,

01:23:24.100 | I could rebuild in two years what I did,

01:23:26.320 | what I previously, took me six years to build.

01:23:29.540 | I could do it more in two years,

01:23:31.320 | just by being more mature and more confident in who I am,

01:23:35.080 | and in what I know, et cetera.

01:23:36.920 | And I think that that's the case for many people.

01:23:39.520 | Now, at the end of the day, you have to ask yourself,

01:23:41.760 | do I like, could I learn to pick up the phone?

01:23:44.280 | Could I learn to go and be someone

01:23:48.560 | who's building relationships and bringing in

01:23:50.760 | prospective clients and doing their financial plans

01:23:53.100 | for them?

01:23:53.940 | I love the-- - I think so.

01:23:58.280 | - Yeah, so if so, then what I would say is that

01:24:00.560 | I would interview around with some firms

01:24:03.100 | where you're going to have an opportunity

01:24:04.800 | to be on a front-end scenario.

01:24:06.960 | Now, I wanna be careful 'cause I try to keep the show

01:24:09.800 | fairly clean of companies and whatnot,

01:24:11.440 | 'cause I'm just not involved in that.

01:24:13.360 | But you owe it to yourself to interview around the business

01:24:16.760 | and look at some of the different models.

01:24:18.900 | There are benefits and drawbacks to almost any model.

01:24:23.000 | You could start your own RIA today, right?

01:24:25.500 | You could file the paperwork, you could write your ADV.

01:24:30.120 | I've done it, you could do it,

01:24:31.540 | and you could start your firm.

01:24:32.920 | You could start your firm and ally with a certain model.

01:24:36.680 | Years ago, I had Alan Moore on the show

01:24:41.520 | and we talked about X, Y, P, and advisors.

01:24:43.680 | That was right when Radical Personal Finance

01:24:45.280 | was when they were started.

01:24:46.120 | They've grown massively, kind of supporting young,

01:24:49.080 | primarily young, which you would still qualify,

01:24:50.920 | but young financial advisors who wanna set up

01:24:53.280 | their own independent fee-only financial planning firm.

01:24:56.220 | I think that's fine.

01:24:58.240 | I think that's fair.

01:25:01.460 | There are the big kind of traditional wire house names

01:25:05.260 | and you can get a start with many of them.

01:25:07.620 | That will depend on your marketplace, right?

01:25:11.340 | If you start with one of the big wire house names,

01:25:13.780 | you're gonna have a certain number of AUM

01:25:16.820 | that you're expected to bring in.

01:25:17.940 | And if you don't hit it, you're gonna have trouble.

01:25:19.420 | But if you can bring in that AUM,

01:25:21.300 | then you're gonna be in good shape.

01:25:23.180 | I'm still in favor of the model that I started with,

01:25:27.700 | which was insurance.

01:25:29.840 | If I might, if I shut down Radical Personal Finance today,

01:25:34.840 | that's just how I always think, what would I do?

01:25:38.240 | Well, I would be frustrated with the idea

01:25:41.240 | that I couldn't create media.

01:25:42.560 | I've seen the power of being able to create media.

01:25:45.160 | And I would think very, very carefully

01:25:46.920 | about going ahead and starting my own independent RIA

01:25:50.440 | so that I could have control over media

01:25:52.600 | and I could take advantage of what I'm doing right now.

01:25:56.000 | And I would probably go in that direction

01:25:58.600 | because I'm good at creating media.

01:26:02.320 | But if I weren't 100% convinced

01:26:04.440 | that I was good in that direction,

01:26:06.040 | I would start a hybrid practice

01:26:07.920 | where I focused on selling insurance in the beginning

01:26:10.820 | and then investments and investment management

01:26:13.880 | on the backside and financial planning on the backside.

01:26:16.840 | The reason is, here are the reasons why I would do that.

01:26:19.520 | Number one, there are far more people out there

01:26:23.000 | who need more insurance than there are

01:26:25.720 | who want you to manage their money.

01:26:28.480 | The vast majority of people are underinsured

01:26:31.440 | compared to what you would sit down as a planner

01:26:33.120 | and say that they should do.

01:26:34.760 | And they need insurance.

01:26:36.680 | And you can make a very viable business

01:26:39.640 | doing nothing more than selling term life insurance.

01:26:42.960 | If you are a good financial planner

01:26:45.300 | and you're able to articulate the case

01:26:47.100 | for term life insurance, for disability insurance,

01:26:50.720 | and then a little bit of long-term care insurance

01:26:52.880 | here and there, that opens up a world to you

01:26:56.580 | where you can make plenty of money there

01:26:59.280 | with good insurance protection

01:27:00.800 | that's every bit iron tough, it just works.

01:27:04.680 | If you add on whole life insurance

01:27:07.880 | or universal life insurance

01:27:09.360 | in the situations where it's appropriate,

01:27:11.840 | you can add a substantial amount of money

01:27:14.320 | to your annual commission revenue.

01:27:16.520 | And the nice thing about life insurance revenue

01:27:19.220 | is that it all comes in up front, right?

01:27:22.000 | You have your first year commissions

01:27:23.160 | that are paid many times

01:27:24.280 | while the case is still in underwriting.

01:27:25.520 | If it's been conditionally approved.

01:27:27.260 | So you can make it in the beginning.

01:27:29.820 | There's no reason why you can't make with nothing,

01:27:32.560 | starting with no salary, with nothing,

01:27:34.340 | if you understand the business,

01:27:35.720 | no reason why you can't make $100,000

01:27:38.160 | in your first year selling life insurance.

01:27:40.560 | Now, that'll be 30,000 in the first six months

01:27:43.040 | and 70,000 in the second six months,

01:27:45.420 | but you can do $100,000

01:27:47.000 | in your first year selling life insurance.

01:27:49.180 | It's really hard to do $100,000 of fees

01:27:53.480 | that are actually gonna be paid out to you

01:27:55.240 | across the grid with an RAA in the first year.

01:27:57.960 | They may pay you a salary.

01:27:59.200 | They may give you a $75,000 salary in the first year,

01:28:02.060 | but you can't get $100,000 across the grid

01:28:05.000 | in your first year with an RAA starting with no experience.

01:28:07.960 | But you can do that in life insurance.

01:28:10.440 | And the thing that's so awesome

01:28:11.840 | about a life insurance business is,

01:28:14.640 | and when I say life insurance,

01:28:15.920 | I mean, again, life and health.

01:28:17.920 | So life, disability, long-term care,

01:28:19.760 | maybe health insurance, although in this marketplace,

01:28:22.640 | I wouldn't do that.

01:28:23.860 | But just life, disability, long-term care,

01:28:25.660 | the traditional life insurance,

01:28:27.080 | the products that life insurance companies sell.

01:28:29.600 | You can build a broad base of clients.

01:28:33.800 | And the sales process of selling life insurance

01:28:37.800 | is no different than the sales process

01:28:39.700 | of selling managed accounts.

01:28:41.420 | But a lot more people will find it easier to say yes

01:28:44.600 | to life insurance than to say yes

01:28:47.340 | to moving a million dollars over to you.

01:28:49.820 | Because it's just a simpler situation.

01:28:52.000 | They're contracted with the insurance company,

01:28:53.760 | not with you.

01:28:54.680 | If you disappear, if you go up and pull up at night,

01:28:56.520 | they're gonna be annoyed if you do that.

01:28:57.720 | And now they gotta figure out

01:28:58.560 | where they're gonna move their money.

01:28:59.900 | But if you've got that in the beginning

01:29:02.300 | with life insurance,

01:29:03.540 | then it's not that big of a deal if you disappear,

01:29:07.280 | if you go out of the business.

01:29:08.440 | And so you wanna build, so it works really well.

01:29:11.580 | Now, the other thing that works really well

01:29:13.120 | being 33 years old is the life cycle.

01:29:15.560 | So if you were to go out to most 33-year-old friends,

01:29:18.720 | and like it or not, most of your clients

01:29:21.520 | will match your age within a range.

01:29:25.220 | So most of your 33-year-old friends,

01:29:27.800 | if they're married, what do they need?

01:29:29.640 | They need life insurance, disability insurance.

01:29:31.840 | Do they need investments?

01:29:33.280 | Yeah, but what should they be doing?

01:29:35.160 | Put money in their 401(k), put money in their Roth IRA.

01:29:38.000 | Could you custodian their Roth IRA for them?

01:29:40.800 | Maybe, but it's really, it makes you no money.

01:29:45.040 | It's not worth it,

01:29:46.280 | other than as just a relationship thing.

01:29:48.400 | And so in the 33 years old,

01:29:50.680 | the life stage that many of your prospective clients are in

01:29:53.840 | is an insurance-heavy stage.

01:29:55.840 | But what happens is as you build a broad client base,

01:29:59.060 | then those insurance clients

01:30:00.600 | naturally become investment clients.

01:30:02.920 | So the insurance client who has

01:30:05.560 | four or five insurance policies with you

01:30:07.640 | naturally leaves one job and goes into another job.

01:30:10.320 | And they're saying, "Hey, listen, man,

01:30:12.800 | "what should I do with my 401(k)?"

01:30:15.440 | And you explain, "Well, what should you do?"

01:30:16.600 | "Well, if you want, you could bring it over to me."

01:30:18.640 | And that's a natural thing in the life cycle

01:30:20.720 | where somebody brings over $200,000,

01:30:22.880 | somebody brings over $400,000, et cetera.

01:30:25.120 | And so you can build the investment business

01:30:27.680 | and the life insurance business simultaneously.

01:30:30.320 | And the thing that would frustrate me,

01:30:32.400 | I would not go into a fee-only model at this point in time.

01:30:36.680 | That's big in the marketing speak.

01:30:39.000 | Kitsis is a big fan of it,

01:30:40.360 | and he's like, "This has to be,

01:30:41.400 | "everyone's gotta be fee-only."

01:30:42.800 | I would not want to not sell life insurance

01:30:45.960 | and not earn commissions on life insurance.

01:30:48.160 | Because I feel like with that as a tool,

01:30:51.240 | you can solve so many more people's problems.

01:30:53.560 | And so if you're a competent financial planner,

01:30:56.000 | if you're a good planner, and you understand tax,

01:30:58.640 | you understand estate, you understand insurance,

01:31:01.000 | you understand investments,

01:31:02.520 | then you can walk confidently into almost anybody's office

01:31:05.560 | knowing that 95% of the time,

01:31:08.120 | you'll be able to help them with something.

01:31:10.600 | And most of the time, you'll be able to help them

01:31:12.800 | with something that also pays you.

01:31:15.000 | And so it's really, really valuable.

01:31:16.400 | So if you add to that the ability to do

01:31:18.520 | one-time financial plans or upfront financial plans

01:31:20.600 | for a package deal,

01:31:21.440 | if you add to that the ability to do hourly planning

01:31:23.720 | in some capacity as well,

01:31:25.560 | then you put this whole package together,

01:31:27.840 | in my opinion, that's a really compelling business model.

01:31:30.720 | And when you go in that business model

01:31:32.840 | where you're willing to be the guy who's going out

01:31:35.200 | and prospecting for clients,

01:31:38.800 | you gain all the freedom in the world

01:31:40.640 | over your time, over your schedule,

01:31:43.200 | over when you work, over when you don't work.

01:31:45.200 | You gain massive levels of financial opportunity

01:31:49.440 | where it's not unreasonable for you

01:31:52.080 | to have a target of $300,000 five years in,

01:31:55.680 | not in any way unreasonable for that to be your goal.

01:31:58.080 | You could surpass it.

01:31:59.880 | But if your targets are,

01:32:01.160 | hey, I'm gonna make 80,000 bucks my first year,

01:32:03.640 | 300,000 bucks my fifth year, 750 by my 10th year,

01:32:07.640 | a million plus by my 15th,

01:32:11.600 | you try to, you strap those numbers into your life,

01:32:15.040 | your age, and all of a sudden now,

01:32:17.400 | the upfront work that's required,

01:32:19.280 | the massive infusion of effort that's required

01:32:21.640 | to build that kind of business is worth it now

01:32:24.600 | as compared to, yeah, I could go and get a salary

01:32:27.000 | working with a big retirement plan company for 100 grand,

01:32:30.600 | but this has a lot more opportunity

01:32:32.160 | and gives me total freedom of lifestyle.

01:32:34.280 | So I love the business.

01:32:36.160 | I think that it's a wonderful business.

01:32:38.520 | I think that it's, I like it.

01:32:43.800 | The only things I didn't like about it were,

01:32:46.320 | number one, I was stuck in one city, right?

01:32:48.920 | You gotta commit to a city.

01:32:50.360 | You can't be bouncing all over the place.

01:32:52.360 | You just kill yourself.

01:32:54.820 | So you gotta like where you live

01:32:56.260 | and choose the market that you work in.

01:32:58.440 | The other thing that I didn't like

01:32:59.520 | was the repetitive nature of the conversations.

01:33:02.520 | I got annoyed by having the same conversation

01:33:05.120 | and explaining, hey, here's how the term

01:33:06.640 | life insurance policy works again and again and again.

01:33:08.920 | Here's how a whole life insurance policy works.

01:33:10.520 | Here's why you need disability insurance.

01:33:12.160 | And so for me, with my personality type,

01:33:14.720 | I craved new markets and new things to work in.

01:33:19.720 | And you can do that, right?

01:33:20.880 | You can adjust your practice over time, and most people do.

01:33:23.560 | But those were really the things that I didn't like.

01:33:27.640 | And then the final thing that I struggled with

01:33:29.560 | in the beginning that I wouldn't struggle with now

01:33:31.820 | is I struggled with the fact that I was working

01:33:33.520 | with too many kind of just getting started people.

01:33:37.080 | And it wasn't as exciting as working on big cases,

01:33:41.000 | big estates, big portfolios.

01:33:44.160 | And so that was primarily a function of my age

01:33:47.440 | and the fact that I didn't really know

01:33:48.600 | how to circulate in wealthy circles.

01:33:51.880 | Today I would do better.

01:33:52.840 | But those were really the only things

01:33:54.880 | I didn't like about it.

01:33:56.200 | I think it's a wonderful business.

01:33:57.960 | - That's good, that really helps a lot.

01:34:01.880 | One of the RIAs that I'm ongoing conversations with

01:34:05.640 | is they've introduced the same idea of

01:34:08.640 | be prepared to sell life insurance

01:34:10.160 | along with your financial planning work

01:34:12.560 | just as part of it and good supplemental income as well.

01:34:15.700 | I didn't mention, but I've been a listener

01:34:19.000 | of yours for a while.

01:34:20.920 | We do have a good cash cushion.

01:34:22.640 | We have close to $200,000 in cash.

01:34:24.920 | For the reason, if we needed a runway

01:34:28.560 | to be able to survive while building a business.

01:34:32.000 | I just think that being so new to the industry

01:34:38.480 | that I would struggle doing my very own business

01:34:43.480 | from the start, which is why I've tried to partner

01:34:45.960 | with some of these other RIAs.

01:34:48.400 | - Maybe you will struggle.

01:34:51.520 | The majority of people do.

01:34:53.680 | I don't know what any of the current statistics are,

01:34:55.880 | but when I used to be in the business,

01:34:59.160 | our numbers were that 80% of the people

01:35:01.320 | who started in the business

01:35:02.600 | wouldn't be there five years later.

01:35:04.360 | A lot of people struggle.

01:35:06.880 | A lot of people struggle.

01:35:08.760 | So that struggle isn't necessarily a problem.

01:35:12.440 | I have a very good friend of mine

01:35:14.080 | who I recruited to the business.

01:35:18.000 | He was working in a sales job.

01:35:20.360 | He was a recruiter for a college

01:35:23.560 | and I recruited him to the financial services business.

01:35:27.120 | He came to my company.

01:35:29.240 | He started at my company.

01:35:30.680 | He worked for a while.

01:35:32.520 | He was very hardworking,

01:35:34.120 | but English was not his first language

01:35:36.040 | and he didn't have a wealthy natural market

01:35:38.240 | and he worked and worked and worked and failed

01:35:40.200 | and eventually he couldn't pass his securities exams.

01:35:42.760 | He moved from my company to a wire house,

01:35:45.520 | worked there for six months, couldn't make it there.

01:35:49.120 | Moved to, I think another,

01:35:51.960 | there was, I think, two companies in the interim.

01:35:54.360 | The fourth company went to another insurance company,

01:35:59.120 | joined there as just a starting guy.

01:36:01.720 | They saw his potential.

01:36:03.200 | They coached him through

01:36:04.280 | and he was eventually able to pass his securities exams

01:36:06.920 | and then after he passed his securities exams,

01:36:09.160 | he wound up becoming a managing partner

01:36:11.880 | in that particular company

01:36:13.440 | and then he got recruited away to another company

01:36:16.960 | and now he is a managing director

01:36:20.080 | of his own office with this other company

01:36:23.560 | and it's an inspiring story

01:36:26.040 | because what I saw in that scenario

01:36:27.680 | was I saw a guy who had talent

01:36:30.040 | and a great personality, wonderful, very honest,

01:36:32.800 | very, just a great people guy, et cetera.

01:36:35.640 | I helped recruit him but he failed at all the details

01:36:38.800 | but he didn't stop and he kept on going

01:36:40.960 | and at this point in time, he is in,

01:36:43.840 | he's what, 38 now, 37, 38 now, I think,

01:36:47.760 | something like that, and at this point in time,

01:36:50.520 | he is a managing director with a very large company,

01:36:53.800 | has tremendous support, has a tremendous income potential

01:36:57.880 | where within the next couple of years,

01:36:59.960 | he should be making seven figures every year

01:37:02.040 | for the rest of his life and he fought through it.

01:37:07.040 | Now, I've also watched so many people come in

01:37:09.360 | and just simply not fight.

01:37:11.200 | They don't, and they go out

01:37:13.080 | and sometimes they go out and they say,

01:37:14.240 | okay, this is just not for me

01:37:15.160 | and they wind up finding a situation

01:37:17.200 | where something else is.

01:37:18.920 | A lot of people go into the business thinking,

01:37:20.940 | well, the core of this business

01:37:23.160 | is technically doing financial plans.

01:37:25.360 | It's not, right, it's just not.

01:37:28.280 | The financial planning that you do is very, very simple

01:37:30.320 | and so those people say,

01:37:31.680 | well, they wind up somewhere else, right?

01:37:33.200 | They wind up being an attorney

01:37:34.320 | and working in some advanced planning department

01:37:35.920 | or being a paraplanner supporting somebody, who is it?

01:37:39.240 | But if you've got the right expectations,

01:37:41.200 | it's a simple business

01:37:42.880 | and the thing I love about the business

01:37:44.660 | is that you don't have to maintain the products.

01:37:47.520 | You can sell, you're selling insurance companies, right?

01:37:50.920 | Insurance policies at the beginning

01:37:52.520 | and so you'll be licensed with 15, 20,

01:37:55.400 | depending on 25 different insurance companies

01:37:57.720 | and so you've got all the insurance companies

01:37:59.680 | that are taking care of their business.

01:38:00.960 | All you gotta do is take care of the clients

01:38:02.900 | and all of the companies that you'll go with,

01:38:05.720 | as long as they're not just a one-man shop,

01:38:07.200 | which I'm not saying you should ignore that, right?

01:38:09.120 | There are benefits of starting

01:38:11.000 | with a small, local, independent agency

01:38:13.760 | but they all have training, they all train you on it

01:38:16.120 | and so if you've got the cash cushion,

01:38:17.940 | the way I look at it is you would know a lot.

01:38:21.180 | In any company that you join,

01:38:22.400 | you'll know a lot in six months

01:38:24.080 | and so at 33 years old,

01:38:25.620 | with a cash cushion to fall back on if you need it,

01:38:30.140 | I would go out and the first thing I would do

01:38:31.860 | is I would interview widely as you're doing.

01:38:33.860 | Talk to an RIA, talk to an independent insurance agency,

01:38:37.060 | talk to a property and casualty company,

01:38:39.060 | go meet with the local, independent,

01:38:42.380 | Jones Brothers insurance agency,

01:38:44.740 | then go meet with the Allstate, the state farm,

01:38:48.460 | meet with them, talk to their recruiters.

01:38:50.620 | Go and talk around the wire houses,

01:38:53.420 | meet with the wire houses,

01:38:54.820 | talk to the Edward Jones guy and find out,

01:38:56.940 | okay, if I built a practice with Edward Jones,

01:38:58.820 | what would that mean?

01:39:00.300 | What would it mean if I joined Merrill Lynch

01:39:02.780 | or what would it mean?

01:39:03.860 | Talk to the insurance companies, right?

01:39:05.280 | Talk to Northwestern Mutual, New York Life,

01:39:07.380 | talk to the local life insurance guy,

01:39:09.780 | talk to the guy who does this

01:39:11.180 | and if you go around, they're all wanting to recruit you.

01:39:15.700 | That's the benefit of the insurance business

01:39:17.060 | is that they're making their living on recruitment

01:39:19.100 | so they all wanna hear from you

01:39:20.640 | so go and interview with them

01:39:22.220 | and then find out what the opportunities are

01:39:26.100 | and then if one of them clicks with you,

01:39:29.060 | then try it for six months.

01:39:30.780 | And in the financial business,

01:39:32.660 | trying something for six months won't,

01:39:35.100 | it's not such a black mark

01:39:39.240 | of being in the financial business.

01:39:40.500 | Rather, it actually gives you

01:39:41.980 | a tremendous amount of experience in the different options.

01:39:45.860 | So I think at 33, money behind you so that you can make it,

01:39:50.300 | I think it's a wonderful thing for you to consider

01:39:51.980 | and could be very, very profitable.

01:39:53.740 | It's what I would do if I were in your shoes.

01:39:58.240 | - That's really good stuff.

01:40:00.780 | Thanks a lot, Joshua.

01:40:01.600 | - My pleasure.

01:40:02.520 | All right, we had several callers drop off

01:40:04.100 | so it looks like today we'll finish in Louisville, Kentucky.

01:40:06.140 | Welcome to the show.

01:40:06.980 | How can I serve you today?

01:40:07.900 | - Hey, Joshua, my name is Adam.

01:40:10.000 | How are you?

01:40:10.840 | - I'm doing well, Adam.

01:40:11.660 | Thank you for being here.

01:40:12.500 | - Thank you.

01:40:14.580 | So my question is about what I call

01:40:17.380 | kind of the middle of financial planning,

01:40:21.060 | meaning we're doing pretty well with,

01:40:23.140 | we've been aggressive with saving for retirement

01:40:25.020 | since the early age.

01:40:25.980 | And then secondly, we kind of were aggressive

01:40:29.540 | with keeping our expenses low

01:40:30.980 | and putting away some cash such that we have

01:40:34.020 | what we're comfortable with, with emergency funds.

01:40:37.980 | And then we both have jobs such that we can live off

01:40:41.180 | of one salary or the other.

01:40:42.820 | Now looking up at age 40 and 41

01:40:46.660 | and seeing that it's possible that we could consider

01:40:49.560 | some sort of financial independence

01:40:51.380 | early retirement situation, maybe at,

01:40:53.420 | as early as 50, as late as 59 and a half.

01:40:58.660 | So the two questions are,

01:41:00.340 | how do we approach health insurance

01:41:03.300 | if that were to be an option?

01:41:04.500 | And then the second question being,

01:41:06.300 | I sort of view each year of early retirement

01:41:10.060 | as a chunk of about $50,000 in today's dollars

01:41:13.500 | and trying to navigate whether the approach for that

01:41:16.020 | is funding a brokerage account with taxable income now

01:41:21.020 | or some sort of real estate or something like that.

01:41:24.480 | Those are my kind of my two questions.

01:41:25.640 | How do you fund each year of early retirement

01:41:28.200 | and sort of target that?

01:41:29.280 | And then how do you plan around health insurance?

01:41:32.160 | - How old are you?

01:41:33.120 | And what would be your target year for retirement?

01:41:36.780 | - We're 40 and 41 now.

01:41:40.640 | Our youngest is 10 years old.

01:41:42.480 | So in our minds, we sort of look at some point

01:41:45.080 | after he might be out of the college sphere.

01:41:47.460 | So it's probably the very earliest, 52, 53, maybe 55.

01:41:52.460 | - And at the moment,

01:41:53.400 | your assets are primarily structured in mutual funds?

01:41:55.860 | - That's correct.

01:41:58.060 | Yes, 401ks, Roth IRAs, some brokerage accounts, 529s,

01:42:02.140 | and then the rest would be in cash

01:42:03.940 | and some equity in the house.

01:42:05.380 | - Okay.

01:42:06.380 | I answered this question on investment assets in detail

01:42:10.420 | on a recent Q&A show about two or three weeks back.

01:42:13.140 | So if you go back and look at the notes,

01:42:14.540 | you'll find that answer there

01:42:16.060 | when I had a similar caller who asked,

01:42:18.660 | how will I structure my income?

01:42:23.620 | And what you'll hear me say in that answer is it depends.

01:42:27.300 | It's gonna depend on what you're doing

01:42:29.140 | and on what your interests are.

01:42:31.340 | And I laid out for him several different scenarios.

01:42:34.280 | And so what I would say is at the moment,

01:42:36.280 | you're too far away from retirement

01:42:39.600 | to be focused too much on that question.

01:42:43.180 | There's a lot that could change in the next eight years.

01:42:46.300 | So while you're not so far away,

01:42:49.080 | I would go back and listen to the question.

01:42:51.180 | I'm not running from the details,

01:42:53.120 | but the details are in that previous Q&A.

01:42:55.480 | And I go through it in very great detail.

01:42:58.720 | But in short, it's gonna depend upon

01:43:02.040 | what your vision is of retirement.

01:43:05.180 | The short answer is you could just simply live

01:43:08.380 | on your portfolio.

01:43:09.860 | What I think is the most likely answer for most people

01:43:12.740 | is you would generate some income

01:43:14.420 | from some of your activities,

01:43:16.840 | sideline consulting income,

01:43:19.820 | little bit of part-time work or something like that.

01:43:22.860 | And then also you have to be clear on your lifestyle

01:43:25.540 | before you figure out what kind of investments

01:43:27.780 | are appropriate for you.

01:43:29.300 | So go and listen to that Q&A.

01:43:31.140 | And then if you have additional questions,

01:43:33.500 | call in next week and we'll cover it in detail

01:43:35.740 | for your situation.

01:43:37.140 | But I think that it's important for you

01:43:39.140 | to be thinking about,

01:43:39.980 | but I think that I wonder if,

01:43:41.860 | since you're already focusing heavily on mutual funds,

01:43:44.460 | then it's probably a little early for you to figure out,

01:43:48.140 | well, how do I deploy these mutual funds?

01:43:49.980 | Let's talk about health insurance though.

01:43:51.880 | I think that, first of all,

01:43:53.140 | you're a US citizen living in the United States

01:43:55.160 | and planning to live in the United States, is that right?

01:43:58.060 | - That is correct.

01:43:58.900 | - Okay, so I think that it's more likely than not

01:44:03.820 | that eight years from now,

01:44:05.820 | there will be some kind of socialized

01:44:08.900 | single-payer health program available in the United States.

01:44:13.140 | And that that is probably what you will roll into.

01:44:16.100 | I can't predict that,

01:44:18.740 | but I can't be sure of that, obviously,

01:44:21.540 | but I think that's probably the most likely outcome.

01:44:24.900 | There is substantial, I don't see at this point in time,

01:44:28.820 | when the Republican Congress was elected in 2016,

01:44:34.780 | there was a Republican Congress

01:44:36.340 | and the Republican Congress was elected

01:44:39.660 | with the mandate from voters

01:44:41.820 | to repeal the Affordable Care Act,

01:44:44.740 | to overturn the Affordable Care Act, Obamacare.

01:44:50.260 | And when John McCain famously gave his thumbs down

01:44:53.820 | on the repeal of the Affordable Care Act,

01:44:56.200 | as far as I can tell, that was probably the death knell

01:45:00.060 | on any major return to a private party health insurance

01:45:03.880 | system in the United States.

01:45:06.320 | Now, the Affordable Care Act has been in many ways,

01:45:10.840 | a nightmare for many people.

01:45:12.580 | Years ago, I thought that people would say,

01:45:17.080 | I had people say, man, this thing is not gonna work.

01:45:19.800 | This must just be designed to fail

01:45:21.880 | so that we can usher in,

01:45:25.360 | pass the Affordable Care Act,

01:45:26.760 | then it'll usher in a path to single-payer healthcare.

01:45:29.360 | And at the time I thought, that's crazy,

01:45:31.520 | that's a crazy conspiracy theory.

01:45:33.800 | Right now, I'm not so sure.

01:45:36.120 | I'm not so sure it was a crazy conspiracy theory

01:45:38.360 | because that certainly seems to be what's happening,

01:45:40.480 | is that we had the Affordable Care Act

01:45:42.680 | and then here we are however many years later,

01:45:45.720 | and now, former Vice President Joe Biden,

01:45:49.400 | the Democratic presidential candidate is running

01:45:51.360 | based upon, well, look, we're gonna have

01:45:52.440 | the Biden healthcare plan.

01:45:53.760 | I thought we already had that.

01:45:54.760 | I thought we had the Obama-Biden healthcare plan,

01:45:57.440 | but evidently things have changed.

01:45:59.200 | And so at this point in time,

01:46:01.080 | I don't see or sense any significant will

01:46:04.440 | on behalf of Republican voters

01:46:07.160 | to repeal the Affordable Care Act,

01:46:10.240 | but there is a very strong press

01:46:12.720 | towards more and more government intervention in healthcare.

01:46:16.880 | And right now, I don't know if anyone

01:46:19.440 | is happy with the system.

01:46:21.000 | And so when you have an awful system

01:46:23.000 | where no one is happy,

01:46:24.720 | that means that some change is going to happen.

01:46:26.760 | And I think that change is going to be in the direction

01:46:29.120 | of more and more government-run healthcare.

01:46:32.400 | The models have been worked out in other countries.

01:46:36.520 | That's the constant thing you hear is that,

01:46:38.200 | well, look, Canada has this

01:46:39.360 | and the United Kingdom has this, et cetera.

01:46:41.720 | And so it's not like it's unheard of.

01:46:43.920 | The United States is a little bit behind

01:46:46.240 | some of those countries in terms of social trends,

01:46:48.280 | but not very far behind.

01:46:49.880 | And I don't think there's any philosophical argument

01:46:52.640 | against that kind of government-paid healthcare

01:46:56.720 | that is, I don't hear anybody making it.

01:47:00.280 | The principled argument would be

01:47:02.200 | government shouldn't be involved in health insurance,

01:47:04.640 | but nobody's making that.

01:47:06.120 | If they did make it,

01:47:07.080 | they would have to argue against Medicare.

01:47:10.080 | But since Medicare has been in place for many decades

01:47:13.040 | and no politician will touch Medicare,

01:47:15.440 | at this point in time,

01:47:16.320 | I think it's very likely that within eight years

01:47:19.680 | that there would be a form of government health insurance

01:47:23.280 | available to you.

01:47:24.440 | So if I were in your shoes, I wouldn't worry about it.

01:47:26.680 | I would just watch it

01:47:27.520 | and I would say that that's probably what's gonna happen.

01:47:29.720 | And then again, there are other options.

01:47:31.200 | If you were two years away,

01:47:32.360 | I would give you a bunch of other options

01:47:33.720 | of things that could be discussed.

01:47:34.760 | But since you're eight years away,

01:47:37.040 | I think that by then you can just simply enroll,

01:47:39.080 | you'll be able to simply enroll

01:47:40.000 | in some kind of government option

01:47:41.600 | and that will cover your health insurance needs

01:47:44.040 | without regard to your employment status.

01:47:46.240 | - Okay, that makes sense.

01:47:49.640 | I appreciate that.

01:47:50.960 | - Cool, my pleasure.

01:47:52.160 | All right, anything else?

01:47:53.200 | I got one more caller, but listen to that Q&A.

01:47:54.960 | And then if you don't understand something

01:47:56.120 | about that, call in next week

01:47:57.240 | and we'll discuss more details of that.

01:47:59.040 | - Sounds good, take care.

01:48:00.760 | - Very good.

01:48:01.720 | All right, Mark in California.

01:48:03.080 | Mark, you made it back just in time.

01:48:04.920 | I was about to finish up, but you snuck in.

01:48:06.800 | So welcome to the show, sir.

01:48:08.200 | - Thank you, Josh.

01:48:10.360 | Thank you for taking my call.

01:48:12.160 | I have a credit card question for you.

01:48:15.280 | My wife and I, this year,

01:48:17.800 | we both applied for the same credit card

01:48:22.120 | and we were both denied.

01:48:24.120 | And our letters were pretty similar

01:48:26.200 | in that they said, essentially,

01:48:29.880 | I think we have too many bank cards

01:48:32.400 | or we also have, maybe they're underutilized,

01:48:37.400 | like they're not being used enough.

01:48:40.640 | So they're wondering why we need more credit.

01:48:42.960 | And so we're just wondering what's the best approach

01:48:48.600 | to deal with, I guess, being able to be approved

01:48:52.760 | in the future.

01:48:54.240 | - Good question.

01:48:55.080 | Okay, so the first--

01:48:55.920 | - Our credit scores are pretty good.

01:48:58.200 | - Okay.

01:48:59.040 | - Like 800.

01:49:00.080 | - The first thing that you need to do

01:49:01.320 | is search that specific credit card

01:49:04.040 | that you got denied for

01:49:05.400 | and search in the credit card forums online

01:49:08.480 | and find out if other people are being denied

01:49:10.840 | for similar reasons.

01:49:12.800 | Now, depending on the card and depending on the issuer,

01:49:15.680 | there may be some clear and obvious reasons

01:49:18.680 | or there may not be, right?

01:49:20.880 | A number of years ago,

01:49:22.200 | people were getting declined all over the place

01:49:24.240 | for Chase cards.

01:49:25.160 | And then finally, Chase confirmed

01:49:27.560 | that they had their 5/24 rule,

01:49:29.560 | which is just a flat rule that they were applying

01:49:32.200 | that said, hey, if you've opened five or more credit cards

01:49:35.680 | within the past 24 months, we're not giving you a card.

01:49:38.040 | And so it wasn't, and this made a big deal

01:49:41.360 | in the credit card space

01:49:42.440 | because many people would routinely open five or more

01:49:44.680 | in the last 24 months.

01:49:45.520 | Well, Chase decided they were gonna cap that.

01:49:47.400 | And so first thing is search that specific card

01:49:50.120 | and see if there is an actual,

01:49:55.120 | see if there's something specific to that card

01:50:01.240 | or to that company that may relate to your case.

01:50:04.440 | The second thing is definitely utilization is important.

01:50:07.200 | And if you don't have proper utilization,

01:50:11.040 | then it's gonna matter.

01:50:13.720 | And so one of the things that is very important

01:50:16.120 | is you should have on all of your cards,

01:50:19.240 | you should have something going to that card

01:50:21.920 | every month if possible.

01:50:23.740 | Now this can be difficult and you can't always do this,

01:50:26.360 | but you could of course use the cards at a personal,

01:50:29.980 | use the cards at a personal expense,

01:50:34.000 | swipe it for gas or groceries or whatever you've got

01:50:36.000 | and use all the cards.

01:50:37.500 | But if you have cards that you're not using regularly,

01:50:39.600 | you should have some kind of bill payment billed to that.

01:50:43.280 | Over the last couple of years,

01:50:44.460 | I've lost several credit cards

01:50:46.240 | because I didn't do that properly.

01:50:48.360 | And because I didn't use it, I didn't use the card,

01:50:51.640 | it was just sitting there as part of my portfolio.

01:50:53.840 | The company sent me notices,

01:50:55.280 | I didn't get those notices because I was traveling

01:50:57.480 | and I didn't bother to check the mail.

01:50:59.400 | And so I go back and all of a sudden I try to use a card

01:51:02.360 | and find out, hey, this card is not active anymore.

01:51:04.460 | And I had I think three cards canceled

01:51:06.640 | over the last year and a half

01:51:07.960 | because I didn't have them all set up.

01:51:09.420 | So going forward, my new plan is that

01:51:12.800 | every one of my credit cards needs some monthly payment,

01:51:15.920 | some monthly expense charged to it.

01:51:19.280 | So I take any kind of personal expense,

01:51:24.280 | a bill of some kind that's gonna be automatically billed

01:51:28.120 | and bill it to each of my cards.

01:51:29.960 | And then I still have the automatic payment system set up

01:51:33.160 | so that there is going to be properly a,

01:51:37.600 | so that it's gonna get paid off.

01:51:40.320 | So that'll show some activity being reported

01:51:42.620 | on every card every month.

01:51:44.160 | And then if your letter led you to indicate

01:51:46.680 | that they wanna see you using more of your credit,

01:51:49.080 | then I think you need to use more of your credit

01:51:50.920 | and use it across the cards.

01:51:52.600 | So if your normal monthly spend is $3,000 a month,

01:51:57.600 | then don't just always do that on one card.

01:51:59.980 | You obviously need to balance the card

01:52:01.800 | that you're putting your spending on for a bonus

01:52:03.840 | and a signup bonus or whatever you're doing,

01:52:06.020 | but you should move that spend around

01:52:07.760 | so that your credit card portfolio looks more active.

01:52:11.480 | And then if they, there's benefits

01:52:13.840 | to holding a balance from time to time.

01:52:15.380 | So if you're gonna buy something big ticket,

01:52:17.360 | then put it on a 0% card so that your credit profile

01:52:20.360 | shows that you're holding a balance from time to time

01:52:23.840 | with a 0% card so you're not incurring

01:52:27.020 | a bunch of interest charges.

01:52:28.100 | But you gotta remember, the credit card company

01:52:30.840 | doesn't make any money if you don't hold any balances,

01:52:33.560 | if you don't use your cards and they just sit there.

01:52:36.400 | So your 800 credit score isn't gonna say to them

01:52:38.560 | that this is a good customer for them

01:52:40.760 | if you don't hold any money.

01:52:41.960 | They're in the business of lending money,

01:52:43.480 | so they wanna see you borrowing money.

01:52:44.920 | So if that's what your letter indicates,

01:52:47.080 | then change the way that your credit profile looks

01:52:49.640 | so that it looks like you're an active user

01:52:51.600 | of the credit cards and an active borrower of money.

01:52:54.200 | - Okay, thank you, appreciate that.

01:52:59.040 | - Yeah, my pleasure.

01:53:01.120 | And it's definitely something where you'll learn.

01:53:03.880 | Here's the thing, the credit card business

01:53:05.760 | is always changing.

01:53:07.000 | And so if you find that, hey, what I was doing before

01:53:12.000 | isn't working anymore, then you have to change

01:53:14.320 | what you're doing, and we're all in that space.

01:53:16.920 | So don't be scared to just simply admit it and move on.

01:53:19.600 | All right, Marcus, you snuck in.

01:53:21.040 | I had already said it was gonna be the last call,

01:53:22.560 | but you snuck in, so let's go fast.

01:53:23.760 | What's your question, sir?

01:53:25.320 | Oh, Marcus disappeared right when I was needed.

01:53:27.960 | And with that, that brings us to the end of the show.

01:53:30.760 | Thank you very much for being here.

01:53:32.480 | A couple of closing comments as we go.

01:53:34.960 | First of all, I hope you enjoy these Q&A shows.

01:53:36.640 | I always love recording them for you.

01:53:39.360 | And if you'd like to join me next week,

01:53:41.960 | go to patreon.com/radicalpersonalfinance.

01:53:44.880 | Patreon.com/radicalpersonalfinance

01:53:46.400 | or just search radical personal finance at Patreon,

01:53:48.120 | and you'll gain access to next week's call.

01:53:50.600 | I mentioned this earlier, so I'll just quickly plug it

01:53:52.880 | that this last week, we went ahead and got set back up

01:53:55.480 | for more of a consulting business.

01:53:59.920 | So I'm able to offer to you individual consulting before.

01:54:02.480 | I haven't done any consulting work for the last six months,

01:54:04.840 | but here in the fourth quarter, I will be doing it.

01:54:07.320 | I'm not sure how long I'm gonna do it.

01:54:09.080 | I'm not sure if I'm gonna do it in the 2021,

01:54:10.800 | but here in Q4, for the remainder of the year,

01:54:14.300 | you can go ahead and book it.

01:54:15.340 | So if you would like to book a consultation with me,

01:54:17.440 | no need to email me now,

01:54:18.740 | which was previously the old system.

01:54:21.020 | Now, just go to radicalpersonalfinance.com/consult,

01:54:24.440 | radicalpersonalfinance.com/consult,

01:54:26.920 | and you can book a consulting call with me.

01:54:29.080 | I didn't put a disclaimer on there,

01:54:33.600 | but I actually need to go and update those notes.

01:54:36.240 | I have never had, I've had one call

01:54:39.840 | in all of the consulting calls that I've ever done

01:54:42.360 | where I told the guy, "Don't send me any money,"

01:54:44.240 | and where the guy didn't wanna send me any money

01:54:45.800 | 'cause we got into a conflict.

01:54:47.360 | Other than that, I have consulted with a lot of people,

01:54:50.000 | and I've never had somebody who said

01:54:52.040 | that they didn't get all the use of their money

01:54:54.400 | and from that call, and I stand behind what I do.

01:54:58.560 | I have had tremendous outcomes

01:55:00.920 | from individual consulting calls with many, many people.

01:55:04.800 | And so what I would recommend to you

01:55:06.760 | is if you have ever thought about talking

01:55:08.740 | to a financial advisor,

01:55:10.160 | I can't think of a better way that you can do it.

01:55:13.280 | You can talk, of course, here on a Friday Q&A show.

01:55:15.720 | That's obviously an option,

01:55:16.780 | but if you'd like to talk about something private,

01:55:18.640 | then I don't know of any solution

01:55:20.340 | that would be better for you than to book a consulting call.

01:55:23.640 | I don't sell anything.

01:55:25.220 | I don't have any products for sale.

01:55:26.760 | I don't have any, I don't sell insurance.

01:55:29.120 | I don't sell investments.

01:55:30.280 | I don't sell anything except my advice.

01:55:33.920 | And it's hard, trust me,

01:55:36.080 | it was hard to create that independence,

01:55:38.680 | but a lot of people do want that independence,

01:55:40.200 | and I think rightly so.

01:55:41.360 | So if you wanna use me as a second opinion, that's great.

01:55:45.360 | And then I would say this is that

01:55:46.920 | it's probably not the thing

01:55:48.080 | that's most commonly advertised

01:55:50.600 | when you talk about consulting work and whatnot,

01:55:53.400 | but it does matter,

01:55:54.520 | is that I don't know of a more private financial advisor

01:55:59.720 | than me.

01:56:01.000 | We've talked a lot about financial privacy,

01:56:02.640 | and I've talked about how

01:56:03.460 | when you talk to financial advisors,

01:56:04.600 | you're giving up access to your information.

01:56:07.160 | For the vast majority of situations, that's fine.

01:56:09.840 | But if you'd like to talk to probably

01:56:11.040 | the world's most private financial advisor, I'm your guy.

01:56:14.680 | You can register with any name that you want.

01:56:16.420 | You can pay with any payment method that you want.

01:56:18.680 | I don't care.

01:56:20.080 | I don't need to see anything

01:56:21.900 | about what your legally given name is,

01:56:24.180 | and I don't care at all.

01:56:25.520 | That's number one.

01:56:26.340 | Number two is I don't keep any notes.

01:56:27.680 | I write on a light yellow legal pad.

01:56:30.160 | I show up to a meeting with a financial calculate

01:56:32.040 | and a yellow legal pad.

01:56:33.200 | At the end of the day, my legal pages go into a shredder,

01:56:36.520 | and I don't keep any client notes.

01:56:38.200 | I don't keep any client files.

01:56:39.580 | It's just simply that.

01:56:40.580 | So if you'd like to talk to a financial advisor

01:56:42.720 | and get a second opinion about something that you're doing

01:56:45.160 | or thinking about doing

01:56:46.200 | or talk about something that you're doing,

01:56:48.360 | there's no limit to the things that we've talked about.

01:56:50.200 | I talk about offshore planning.

01:56:51.480 | I talk about business creation.

01:56:53.160 | I talk about marketing.

01:56:54.000 | I talk about all the technical aspects

01:56:55.400 | of financial planning.

01:56:56.220 | You can do that at radicalpersonalfinance.com/consult,

01:56:59.520 | radicalpersonalfinance.com/consult

01:57:01.960 | if you would like to book a consulting call with me.

01:57:04.480 | Have a great weekend.

01:57:05.320 | I'll be back with you very soon.

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Friday_QA-Inherited_Real_Estate_Taxes_Placeholder_Annuities_Teaching_Children_about_Money_etc