Bogleheads® on Investing Podcast 016 – Sheryl Garrett, host Rick Ferri (audio only)

00:00:00.000 | [music]

00:00:08.000 | Welcome to Bogleheads on Investing, podcast number 16.

00:00:14.000 | Today, my special guest is Cheryl Garrett.

00:00:17.000 | Cheryl is an author and a financial planner

00:00:21.000 | and is the founder of the Garrett Planning Network,

00:00:24.000 | a network of over 230 hourly financial planners.

00:00:29.000 | [music]

00:00:38.000 | My name is Rick Ferry and I'm the host of Bogleheads on Investing.

00:00:43.000 | This episode, as with all episodes,

00:00:46.000 | is brought to you by the John C. Bogle Center for Financial Literacy,

00:00:50.000 | a 501(c)(3) corporation.

00:00:53.000 | Today, my special guest is Cheryl Garrett,

00:00:56.000 | the founder of the Garrett Planning Network,

00:00:59.000 | a nationwide network of over 230 hourly-based financial advisors

00:01:04.000 | whose mission is to make competent, objective financial advice

00:01:08.000 | accessible to all people.

00:01:10.000 | I have known Cheryl for many years,

00:01:13.000 | and I'm very happy to have her on the show today.

00:01:15.000 | So with no further ado,

00:01:17.000 | let me introduce my good friend, Cheryl Garrett.

00:01:21.000 | Thank you for being on the show, Cheryl.

00:01:23.000 | Delighted to be here, Rick. Thank you.

00:01:26.000 | I'm really excited to have you on the show.

00:01:28.000 | We've known each other for 20 years,

00:01:30.000 | and you're just doing wonderful things out there

00:01:32.000 | for investors in your organization.

00:01:34.000 | The Garrett Planning Network is just a fantastic organization

00:01:37.000 | that I have personally been involved with for many years,

00:01:41.000 | almost since the beginning, I believe.

00:01:43.000 | I'm really excited to talk with you today about the Garrett Network,

00:01:46.000 | but before we get into that,

00:01:48.000 | tell us a little bit about who is Cheryl Garrett.

00:01:52.000 | I am a gal who grew up in the middle of the country,

00:01:57.000 | Kansas, to be precise,

00:01:59.000 | and I went to college not knowing really what I wanted to do for a living,

00:02:04.000 | but I found that I loved reading Money Magazine cover to cover,

00:02:09.000 | and I was really into this concept of learning

00:02:13.000 | about knowing how to manage my financial affairs.

00:02:18.000 | I didn't know what it was called or anything,

00:02:20.000 | but I wanted to know about personal finance,

00:02:22.000 | and I didn't want to have to have a husband or a father

00:02:26.000 | or somebody doing that for me.

00:02:28.000 | I wanted to know that stuff,

00:02:30.000 | and I kind of was born an entrepreneur,

00:02:32.000 | or my father raised one, that's for sure.

00:02:34.000 | He was an entrepreneur as well,

00:02:37.000 | and I had my first job when I was eight,

00:02:41.000 | working at a flower shop,

00:02:43.000 | a couple of backyards behind our house,

00:02:46.000 | and so I got a good lesson of the value of money and work

00:02:50.000 | and fair dealings,

00:02:52.000 | and my father grew up really, really poor

00:02:55.000 | and married a woman who had a car in high school,

00:02:58.000 | which was great.

00:03:02.000 | So my father and his mother,

00:03:05.000 | both were just extraordinary role models,

00:03:10.000 | and I live by a mantra,

00:03:13.000 | what would grandma do? My dad's mom.

00:03:16.000 | She raised nine kids,

00:03:18.000 | six of which were born living during the Depression in Kansas

00:03:23.000 | with the Dust Bowl.

00:03:24.000 | She could make a meal for their whole family.

00:03:28.000 | Literally, I think the rock soup story

00:03:31.000 | began with my grandmother,

00:03:33.000 | and I just carried this forward.

00:03:35.000 | I wanted to do something that mattered in my work life

00:03:40.000 | that made a difference,

00:03:42.000 | but I didn't have the interest to be a medical doctor.

00:03:46.000 | I kept coming back to this love for learning

00:03:50.000 | about personal finance,

00:03:52.000 | and while I was still in college and working full time,

00:03:56.000 | I actually met a woman who was a registered representative

00:04:00.000 | for IDF, now Ameriprise Financial Advisors.

00:04:03.000 | - Of course, yes.

00:04:04.000 | - But I wanted to be able to control my own destiny

00:04:08.000 | as much as reasonably possible,

00:04:10.000 | and having the knowledge of personal finance

00:04:13.000 | goes a long way to doing that,

00:04:15.000 | and so I looked around.

00:04:17.000 | I started noticing company names

00:04:20.000 | and hearing about different financial advisors

00:04:25.000 | or financial planners or investment advisors,

00:04:28.000 | and I didn't know the difference between any of them,

00:04:30.000 | and I was applying for jobs

00:04:32.000 | at companies that said they were wanting to hire one,

00:04:36.000 | and so I interviewed with a bunch of places.

00:04:40.000 | Most of them were insurance companies

00:04:42.000 | talking about financial planning

00:04:45.000 | or investment advisor or financial advisor,

00:04:49.000 | and I was offered a position in IDF, Ameriprise now.

00:04:54.000 | It was a lot narrower then

00:04:56.000 | as far as their spectrum of offering and so forth.

00:05:00.000 | Actually, a lot of financial planners

00:05:02.000 | and advisors started at IDF.

00:05:04.000 | It's amazing.

00:05:06.000 | The only decent way into the industry

00:05:09.000 | when you had nothing but maybe a semester of accounting

00:05:13.000 | or a semester of economics or something.

00:05:17.000 | Heck, there weren't investment classes in college.

00:05:21.000 | You know, isn't that crazy?

00:05:23.000 | - But Cheryl, I mean,

00:05:24.000 | isn't that the way the industry still is?

00:05:26.000 | I mean, you don't need to have a degree in finance

00:05:28.000 | or you don't need to have any kind of special training

00:05:30.000 | in order to take a Series 7 exam

00:05:33.000 | and become a registered rep at a brokerage firm, correct?

00:05:37.000 | - Oh, sure.

00:05:38.000 | Anybody can be a salesperson

00:05:40.000 | by passing the sales licenses.

00:05:42.000 | It's a transaction-based thing,

00:05:44.000 | and there is a very low bar of entry.

00:05:47.000 | Unfortunately, there's also a very low bar of entry

00:05:50.000 | to give fiduciary advice,

00:05:52.000 | the type of advice that could really harm

00:05:56.000 | or make or break somebody's financial future.

00:06:01.000 | - What I always say is it's harder for your 16-year-old

00:06:04.000 | to get a driver's license

00:06:06.000 | than for someone to become a financial advisor

00:06:09.000 | in the United States.

00:06:11.000 | And let me explain.

00:06:12.000 | That 16-year-old who wants to get a driver's license

00:06:16.000 | has to go through a series of classes.

00:06:19.000 | Then they have to take a written exam and pass it,

00:06:23.000 | and then they have to get a learner's permit

00:06:26.000 | where they're on this learner's permit

00:06:28.000 | for, I don't know, six months or whatever it is

00:06:30.000 | until they learn how to drive.

00:06:32.000 | And then they have to take another practical driving test

00:06:36.000 | to actually show that they are proficient

00:06:38.000 | driving a vehicle.

00:06:40.000 | A financial advisor in the United States,

00:06:43.000 | they just have to pass an exam,

00:06:45.000 | and that's it, one exam.

00:06:47.000 | - Yeah, and it's not all that difficult.

00:06:51.000 | - No, where I used to work in the brokerage industry

00:06:55.000 | back 25 years ago,

00:06:57.000 | all of the people who were doing sales assistance,

00:07:01.000 | they weren't even brokers or advisors.

00:07:03.000 | They were the sales assistants to them

00:07:06.000 | who were doing a lot of the administrative work.

00:07:08.000 | All of the sales assistants all had to take the exam

00:07:12.000 | and pass the exam.

00:07:13.000 | So it was not a difficult exam.

00:07:17.000 | Again, you maybe studied for a couple of months,

00:07:19.000 | and then you go in and you take the exam in the morning,

00:07:21.000 | and you're done in the afternoon.

00:07:23.000 | And now you are a full-fledged expert

00:07:27.000 | as far as the public is concerned.

00:07:29.000 | - You could be vice president of something.

00:07:31.000 | - Oh, yeah, you could be vice president.

00:07:32.000 | That was another thing, too.

00:07:33.000 | Everybody was a vice president.

00:07:34.000 | It didn't matter.

00:07:35.000 | Everybody was a vice president, yeah.

00:07:36.000 | So in other words, the industry hasn't really changed at all

00:07:39.000 | as far as getting into it.

00:07:41.000 | But what you found when you got into that

00:07:44.000 | was that it wasn't for you.

00:07:46.000 | - That's for sure.

00:07:48.000 | - And actually, I bounced around for 11 years

00:07:51.000 | trying to find what was the right fit for me.

00:07:54.000 | I worked at IDS, definitely not the right fit.

00:07:59.000 | Then I went to work for a fee-only financial planner.

00:08:03.000 | It was more of a family office.

00:08:05.000 | We took care of 24 households.

00:08:08.000 | I learned a lot, but that's not what made my heart sing.

00:08:14.000 | My next major role, I had a couple of similar types

00:08:18.000 | of engagements with independent financial planning firms

00:08:23.000 | to really learn holistic financial planning,

00:08:25.000 | complete my CFP education designation,

00:08:29.000 | and start working with and looking at the issues

00:08:33.000 | that clients face.

00:08:34.000 | But all through this, at first I was dealing with

00:08:39.000 | basically being a transaction salesperson

00:08:41.000 | that I am not and can't be.

00:08:43.000 | I miserably failed at it, but I wasn't going to give up hope

00:08:46.000 | that there wasn't a better option out there

00:08:49.000 | because I was in love with the concept.

00:08:52.000 | And I bounced around three or four different positions

00:08:57.000 | over the next 11 years trying to find a better fit,

00:09:01.000 | more client-focused, more appropriate

00:09:05.000 | for what clients need, and more right fit.

00:09:09.000 | - What exactly was the right fit for you?

00:09:14.000 | I mean, what were you looking for?

00:09:17.000 | - We don't need a full-time money manager

00:09:20.000 | or a full-time advisor, but every once in a while

00:09:22.000 | we need somebody we can trust to turn to.

00:09:25.000 | And I wanted to be that outlet,

00:09:28.000 | to provide that same high quality of advice

00:09:31.000 | that people who wanted to delegate

00:09:33.000 | and spend thousands of dollars a year

00:09:36.000 | to financial firm, financial advisory firms.

00:09:40.000 | What about the rest of the people?

00:09:42.000 | The other, you know, 80% of the population?

00:09:46.000 | Nobody other than the sales community

00:09:49.000 | was even available to the middle market and the beginners.

00:09:53.000 | And then nobody wants to deal with the do-it-yourselfers

00:09:57.000 | because there's no long-term revenue.

00:10:00.000 | So I built my firm to charge by the hour

00:10:03.000 | to do what people needed.

00:10:05.000 | - Well, let's get back to that concept

00:10:08.000 | of making the jump from working for other companies

00:10:13.000 | to this aha moment or this epiphany

00:10:17.000 | where you decided that I need to go out

00:10:19.000 | and create a network that does this.

00:10:23.000 | This is needed out there, it doesn't exist,

00:10:27.000 | and you decided you were the person to do it.

00:10:31.000 | - I decided to become the outlet

00:10:33.000 | to provide financial advice

00:10:35.000 | to these people who didn't have access before

00:10:38.000 | because of minimums or asset under-management requirements.

00:10:44.000 | And I started out my practice

00:10:47.000 | 11 years into financial planning,

00:10:49.000 | and I said, "How would I want financial advice

00:10:52.000 | if I were the consumer?"

00:10:55.000 | I would want to walk in and say,

00:10:57.000 | "Rick, this is what I've got going on.

00:10:59.000 | What should I do?"

00:11:00.000 | And then you give me your advice,

00:11:02.000 | and I'd take it, and I'd run with it.

00:11:04.000 | I felt that that was how I would want

00:11:06.000 | to receive financial advice if I were the consumer,

00:11:09.000 | and so I built my financial planning firm that way.

00:11:13.000 | - And how did that come in, get your advice,

00:11:18.000 | go out and do it yourself, pay by the hour?

00:11:22.000 | How did that model go?

00:11:23.000 | How was it taken by the public?

00:11:26.000 | - Within a few months,

00:11:28.000 | I started receiving a lot of traction.

00:11:32.000 | - So you're out there on your own now,

00:11:36.000 | and you're getting a lot of business

00:11:39.000 | because there are very few financial planners.

00:11:43.000 | - None.

00:11:44.000 | - Right, none at the time,

00:11:45.000 | who are actually willing to get paid a fair wage

00:11:48.000 | for actually doing financial planning

00:11:50.000 | and just doing financial planning

00:11:52.000 | and not deciding to sell you insurance

00:11:54.000 | or manage your money.

00:11:55.000 | - Right, yeah.

00:11:56.000 | - I'm just doing financial planning.

00:11:58.000 | - Yeah, I set my rate based on the time

00:12:01.000 | I put into working with or on behalf of a client

00:12:06.000 | instead of how big's your portfolio

00:12:08.000 | or how tall are you or what's your BMI.

00:12:11.000 | You know, formulas never fit everybody every time,

00:12:16.000 | and I haven't found AUM to fit most people

00:12:19.000 | most of the time, and I can't do that.

00:12:21.000 | So for me, the most fair way to charge,

00:12:26.000 | although it does put more onus on the advisor,

00:12:29.000 | is to charge for my time.

00:12:31.000 | And also, one thing that I noticed

00:12:34.000 | is nearly everyone that I worked with,

00:12:38.000 | my firm worked with probably about 1,000 households

00:12:42.000 | when I was involved in the hourly practice,

00:12:46.000 | and within one year, 15 months exactly,

00:12:53.000 | I started getting a whole lot of industry press

00:12:56.000 | about my hourly novelty or oddity or insanity.

00:13:03.000 | - I like the word insanity because

00:13:05.000 | since I've been doing hourly,

00:13:06.000 | a lot of people think that I've gone insane too.

00:13:09.000 | - Yeah, and welcome to the club.

00:13:12.000 | - But it is hard.

00:13:13.000 | I mean, it's not easy money

00:13:15.000 | like doing assets under management

00:13:17.000 | is relatively easy money.

00:13:19.000 | You get paid whether the market goes up or down,

00:13:21.000 | whether the client calls, whether the client doesn't call.

00:13:24.000 | I mean, you get your cut every single quarter.

00:13:27.000 | So hourly is not easy.

00:13:30.000 | - As we're thinking about it,

00:13:31.000 | if you can't make a living

00:13:33.000 | at whatever dollar an hour rate,

00:13:36.000 | you know, people will complain about

00:13:39.000 | a service provider that charges $85 an hour

00:13:43.000 | or $185 or $400 an hour, whatever.

00:13:47.000 | But if they fix your problem

00:13:50.000 | for a price you're willing to pay, you're thrilled.

00:13:53.000 | - So you're doing hourly, the phone is ringing,

00:13:56.000 | you're getting busy,

00:13:58.000 | but then also the media

00:14:01.000 | takes notice of what you're doing,

00:14:03.000 | and boom, so the world kind of explodes on you.

00:14:08.000 | - When some journalists heard about what I was doing,

00:14:14.000 | I started getting calls,

00:14:15.000 | and I started talking to journalists about what I did,

00:14:19.000 | and it was pretty remarkable

00:14:20.000 | 'cause the first major journalist I recall tracking me down

00:14:25.000 | was Liz Pulliam-Weston while she was at the LA Times,

00:14:30.000 | and she was working on an article

00:14:33.000 | called "Middle Income Advisor,"

00:14:38.000 | and so she contacted her stable of go-to resources,

00:14:45.000 | and all of them said, "You know, that really wouldn't,

00:14:48.000 | you know, middle America really wouldn't be me,"

00:14:50.000 | and I'm not talking geographically,

00:14:52.000 | I'm talking financially.

00:14:54.000 | Liz said, "I contacted a number of my resources,"

00:14:59.000 | and they kept mentioning,

00:15:00.000 | "Have you talked to Cheryl in Kansas?"

00:15:03.000 | And to me, that's a punchline already.

00:15:06.000 | When somebody has to go 1,500 miles

00:15:09.000 | to find one girl in Kansas that works by the hour,

00:15:14.000 | I mean, there has got to be a joke in here somewhere.

00:15:18.000 | - No, that's true, though.

00:15:19.000 | I mean, the whole industry,

00:15:21.000 | and most of it still is this way,

00:15:22.000 | is geared towards how can I make money off of your money?

00:15:26.000 | I mean, both-- - Exactly.

00:15:27.000 | - The brokers who are selling-- - Oh, shit, you figured it out?

00:15:32.000 | - It's not about how to make money for you,

00:15:35.000 | it's how to make money from you.

00:15:36.000 | That's the way that the brokerage firms were.

00:15:38.000 | I mean, when I was in the brokerage world,

00:15:41.000 | and I was there for 10 years at two different companies,

00:15:43.000 | one of them was Kidder Peabody,

00:15:44.000 | and the other one was Smith Barney,

00:15:46.000 | so these were not small companies.

00:15:48.000 | Both of them are no longer in existence,

00:15:50.000 | but, you know, when I went in every year

00:15:53.000 | for my annual meeting with my office manager,

00:15:56.000 | where we were setting goals

00:15:58.000 | to determine what my goals would be,

00:16:00.000 | it wasn't how many clients are you gonna help

00:16:04.000 | reach their financial goal this year?

00:16:06.000 | How are you going to help the clients

00:16:10.000 | send their children to college?

00:16:11.000 | It wasn't anything like that.

00:16:12.000 | It was how much commission revenue

00:16:14.000 | are you gonna generate, and how are you gonna do it?

00:16:16.000 | And they didn't really care how you did it.

00:16:19.000 | They really didn't.

00:16:21.000 | If you hit these goals that they had for you,

00:16:24.000 | then you got your corner office,

00:16:27.000 | or you got your free trip,

00:16:29.000 | or whatever it is you're gonna get.

00:16:31.000 | But it was all based on how much revenue

00:16:34.000 | are you gonna extract from the client?

00:16:36.000 | And then when I actually left that industry

00:16:38.000 | and I started a money management company

00:16:41.000 | where we charged AUM,

00:16:43.000 | and I charged a very low AUM.

00:16:45.000 | As you know, I was only charging

00:16:46.000 | a quarter of a percent management fee,

00:16:48.000 | and I wasn't doing financial planning,

00:16:50.000 | so it was truly just,

00:16:51.000 | "We will manage your portfolio and index funds

00:16:54.000 | "and work with your financial planner,

00:16:56.000 | "but we're gonna charge you a low 0.25% fee."

00:17:00.000 | But a lot of the advisors around me,

00:17:02.000 | in fact, most of the advisors around me,

00:17:04.000 | were, "You can never make it.

00:17:06.000 | "You have to charge one percent."

00:17:08.000 | - Right, yep.

00:17:09.000 | - It was all about,

00:17:10.000 | "You deserve the right to get the most,

00:17:13.000 | "have a certain standard of living,

00:17:15.000 | "and you should charge what the market will bear."

00:17:18.000 | - Exactly.

00:17:19.000 | - I was trying to charge what was fair,

00:17:22.000 | not what the market will bear.

00:17:24.000 | So it was all about,

00:17:26.000 | "How much money can you make from the clients?"

00:17:29.000 | rather than, "What can you do for the clients?"

00:17:32.000 | Now that I'm doing the hourly thing,

00:17:33.000 | I can see it even better,

00:17:35.000 | 'cause even though I was charging a low fee

00:17:37.000 | when I was managing money,

00:17:38.000 | now that I'm not doing that anymore,

00:17:39.000 | I see the hourly fee or something like that

00:17:43.000 | where it's more aligned

00:17:44.000 | with actually helping the clients

00:17:46.000 | rather than trying to get into their wallets

00:17:48.000 | and get a piece of the action,

00:17:50.000 | is really the most fair way to do it.

00:17:53.000 | - Exactly.

00:17:54.000 | There are situations

00:17:56.000 | where somebody does need to delegate

00:17:59.000 | and have somebody babysitting

00:18:02.000 | their financial lives for them,

00:18:05.000 | like a conservatorship

00:18:07.000 | or possibly a widower,

00:18:10.000 | or someone with diminished capacity,

00:18:13.000 | or someone that's a busy professional

00:18:15.000 | or busy living life in another way

00:18:18.000 | or out of the country,

00:18:19.000 | and they want to delegate it.

00:18:21.000 | If you've got that desire and the money to do it,

00:18:25.000 | by all means, there are providers to do that,

00:18:28.000 | and you will pay a lot for that service.

00:18:32.000 | Unfortunately, for the middle market

00:18:36.000 | and the do-it-yourselfers of the world,

00:18:38.000 | that's pretty much all there was,

00:18:40.000 | and still to this day, almost all there is.

00:18:44.000 | But the tide is moving

00:18:47.000 | away from definitely commissions,

00:18:50.000 | away from transaction costs.

00:18:53.000 | - And you're speaking about the fact

00:18:55.000 | that ETF trading at Charles Schwab

00:18:57.000 | and so forth is now all zero commission,

00:19:01.000 | and then the funds themselves

00:19:02.000 | are a smidgen above zero.

00:19:04.000 | So, I mean, the actual costs

00:19:05.000 | to manage a portfolio

00:19:08.000 | literally have been driven down

00:19:10.000 | to next to nothing,

00:19:11.000 | and the only last bastion of gluttony,

00:19:14.000 | if there is one out there,

00:19:15.000 | is the 1% AUM fee,

00:19:17.000 | which is the average fee

00:19:19.000 | that a advisor charges

00:19:21.000 | to manage, say, a $1 million portfolio.

00:19:26.000 | - And that's the average.

00:19:29.000 | - Well, that's true.

00:19:30.000 | It's unfortunate that's the average.

00:19:31.000 | - Unfortunately, there are higher ones,

00:19:34.000 | but yeah, that is an average.

00:19:38.000 | - So you had this philosophy,

00:19:40.000 | and you were out on your own

00:19:41.000 | doing hourly,

00:19:43.000 | and nobody else was doing it.

00:19:44.000 | I mean, how did it all come about

00:19:46.000 | where you decided to create

00:19:47.000 | a whole network of how many

00:19:50.000 | hourly advisors?

00:19:52.000 | - Currently, 235.

00:19:56.000 | - You have this network of 235 advisors

00:19:59.000 | that are following this philosophy,

00:20:00.000 | and of course, this is not a new network now.

00:20:03.000 | It's almost 20 years old.

00:20:04.000 | So how did that come about?

00:20:06.000 | - My financial planning practice

00:20:09.000 | grew really fast,

00:20:11.000 | and I was having so much fun

00:20:14.000 | and really feeling great

00:20:16.000 | and having happy clients and happy me,

00:20:19.000 | and I told that story around the industry,

00:20:23.000 | and I started getting picked up

00:20:25.000 | from some of the trade journals.

00:20:27.000 | What is this Yahoo doing?

00:20:29.000 | Doing hourly financial planning

00:20:33.000 | and investment advice.

00:20:35.000 | Well, when people read those kind of articles,

00:20:38.000 | Bob Veres,

00:20:41.000 | a long-time journalist and industry

00:20:45.000 | kind of visionary or futurist person

00:20:50.000 | inside the financial services industry,

00:20:53.000 | tackled me about this

00:20:55.000 | and talked about my practice

00:20:57.000 | and then wrote a piece about what I'm doing

00:21:00.000 | and compared it to kind of like a dentist's office

00:21:04.000 | where you pay for services as you need them,

00:21:08.000 | and you don't need a full-time financial planner

00:21:11.000 | or a full-time dentist,

00:21:13.000 | but you do need to go to your dentist periodically,

00:21:16.000 | probably twice a year as they coach us,

00:21:19.000 | some people more often,

00:21:21.000 | some people less often,

00:21:22.000 | but we need to look at our financial advice that way.

00:21:26.000 | I started getting as many inquiries

00:21:28.000 | or calls and contacts from financial advisors,

00:21:32.000 | financial planners,

00:21:34.000 | wanting to do what I was doing,

00:21:37.000 | charging by the hour.

00:21:39.000 | So I had lunch with a local person in Kansas City,

00:21:43.000 | and at lunch, he pulls out his checkbook and said,

00:21:46.000 | "What can I pay you to teach me

00:21:49.000 | how to do what you're doing?"

00:21:51.000 | I'm just like, "This is crazy, insane."

00:21:55.000 | At 15 months into my hourly practice,

00:21:59.000 | I spoke at an Institute of Certified Financial Planners

00:22:03.000 | conference for new certified financial planners

00:22:08.000 | or students of the program

00:22:10.000 | about what we did all day long as a financial planner,

00:22:14.000 | and my message and who I worked with and how I worked

00:22:18.000 | resonated with the audience extremely well,

00:22:21.000 | about 135 people in attendance,

00:22:24.000 | and when we broke instead of a panel discussion

00:22:27.000 | with five people,

00:22:29.000 | we could go to one of five sections and spend the afternoon.

00:22:32.000 | Almost the entire audience came to my section

00:22:36.000 | because they could see themselves doing work

00:22:40.000 | that mattered, that made a difference,

00:22:43.000 | and that wasn't all tied to implementing a product,

00:22:47.000 | selling a product, a transaction,

00:22:50.000 | or investment management.

00:22:52.000 | It was about financial planning.

00:22:54.000 | So the interest of fellow financial advisors

00:22:59.000 | and then Bob Verri's doing an interview,

00:23:02.000 | he said, "Cheryl, you are obviously willing to share

00:23:06.000 | what you have been doing,

00:23:09.000 | and I know you're a capitalist,

00:23:11.000 | so why don't you bottle it and sell it?"

00:23:14.000 | A year almost to that date,

00:23:16.000 | we had our first training class.

00:23:18.000 | We launched in February of 2000,

00:23:21.000 | so just shy of 20 years right now,

00:23:24.000 | and had our first training class in July of 2000

00:23:28.000 | with 11 advisors.

00:23:30.000 | So it just kind of continued to grow,

00:23:33.000 | about 50 new members a year,

00:23:35.000 | based on they had the shared philosophy

00:23:39.000 | of doing the right thing for the client regardless.

00:23:43.000 | You are asking these planners

00:23:46.000 | to put aside the traditional sales culture

00:23:51.000 | and money management culture that they grew up in

00:23:56.000 | and to actually get down to the business

00:23:58.000 | of doing financial planning and getting paid for it.

00:24:01.000 | I really am very challenged to understand

00:24:05.000 | as a financial planner,

00:24:07.000 | which as you know,

00:24:09.000 | we've discussed this numerous times,

00:24:11.000 | money management and financial planning

00:24:14.000 | are distinctly different activities.

00:24:16.000 | - And they deserve a completely different fee model,

00:24:19.000 | no doubt.

00:24:20.000 | - Yes, exactly.

00:24:22.000 | I agree wholeheartedly.

00:24:24.000 | We don't attract financial advisors

00:24:28.000 | to this way of working with clients

00:24:31.000 | if they're in it for the,

00:24:33.000 | "How can I get rich off my clients' money

00:24:36.000 | without working?"

00:24:38.000 | That's a pretty significant funnel to go through

00:24:42.000 | because you're self-selecting a philosophy

00:24:46.000 | of how you're working

00:24:48.000 | and basing your charges on the time

00:24:52.000 | that you invest working on behalf and with a client.

00:24:57.000 | - You started out with a class of 11.

00:25:00.000 | Are any of the original 11 still in business?

00:25:05.000 | - Yes.

00:25:06.000 | One of them is on our member advisory board.

00:25:09.000 | - Okay.

00:25:10.000 | - And we have several from the next classes

00:25:15.000 | in September of 2000 and October of 2000.

00:25:18.000 | We have members from all those classes still with us.

00:25:21.000 | - So you could put to rest the idea

00:25:23.000 | that hourly advising as a profession

00:25:26.000 | doesn't work for the advisor.

00:25:28.000 | I think that after 20 years

00:25:30.000 | of people being in the Garrett Planning Network,

00:25:33.000 | charging hourly, being successful at it,

00:25:35.000 | pretty much puts a nail in the coffin

00:25:37.000 | that for the people who are the pundits who say,

00:25:40.000 | "No, you can't make it that way.

00:25:43.000 | You have to charge AUM.

00:25:45.000 | You have to charge higher fees."

00:25:46.000 | It's just simply not true.

00:25:48.000 | - Yeah.

00:25:49.000 | - So you've got now about 235 advisors

00:25:53.000 | at the Garrett Planning Network.

00:25:54.000 | All of them have the same philosophy,

00:25:56.000 | but some of the bogleheads who I asked

00:26:00.000 | on the forum, bogleheads.org,

00:26:02.000 | because I told them in the forum

00:26:04.000 | that I was interviewing you

00:26:05.000 | so they could write in questions,

00:26:08.000 | and they did.

00:26:09.000 | A couple of the questions,

00:26:10.000 | I'd say three people were asking,

00:26:12.000 | "How do you screen the planners

00:26:16.000 | who come into your network?"

00:26:19.000 | - That's an excellent question.

00:26:21.000 | And it's also a topic

00:26:24.000 | that I've probably spent talking to journalists

00:26:27.000 | over the last two or four years,

00:26:29.000 | most of anything,

00:26:30.000 | is how do you find a financial planner

00:26:34.000 | that's right for you?

00:26:35.000 | And what do you need to look at

00:26:37.000 | and that kind of thing?

00:26:38.000 | I'll tell you what we do

00:26:40.000 | at the Garrett Planning Network.

00:26:42.000 | No level of screening can be exhaustive,

00:26:45.000 | but I want everyone to be really crystal clear

00:26:48.000 | on what we do do,

00:26:49.000 | and then also what I would encourage individuals to do

00:26:53.000 | when they want to take it to the next step.

00:26:56.000 | So what we do at the Garrett Planning Network

00:26:59.000 | is we receive an application.

00:27:01.000 | We also require their ADV documents,

00:27:04.000 | the annual filing for registered investment advisors.

00:27:08.000 | There is a zero testing or requirement

00:27:13.000 | to call yourself a financial planner in this country.

00:27:17.000 | - That's a really good point.

00:27:18.000 | I mean, there are regulations or laws that say

00:27:22.000 | if you're going to call yourself

00:27:23.000 | a registered investment advisor,

00:27:25.000 | you, in fact, have to be registered

00:27:27.000 | with either states,

00:27:29.000 | or you have to be registered with the federal government

00:27:31.000 | through the Security and Exchange Commission.

00:27:34.000 | - Or if you call yourself an investment advisor,

00:27:36.000 | you better do it.

00:27:37.000 | - Right.

00:27:38.000 | I know I live in Texas here,

00:27:39.000 | and if you say you give one iota of investment advice

00:27:43.000 | for any kind of compensation at all,

00:27:45.000 | you have to register.

00:27:46.000 | No discussion about it.

00:27:48.000 | But financial planner, different.

00:27:51.000 | - Yeah.

00:27:52.000 | Anybody can call themselves a financial planner.

00:27:55.000 | I guess it's as easy as guru and such.

00:27:58.000 | You know, you see the commercials

00:28:00.000 | about guru, teacher, coach, whatever.

00:28:03.000 | Financial planner is the type of work that we do,

00:28:08.000 | might be the job title, but there's no curriculum.

00:28:13.000 | Other than we embrace or recognize

00:28:17.000 | two primary designations,

00:28:19.000 | and one being the CFP, Certified Financial Planner,

00:28:23.000 | and the second being the designation

00:28:26.000 | that a CPA would have,

00:28:28.000 | if they've also had a financial planning training

00:28:31.000 | equivalent to the CFP,

00:28:33.000 | which is Personal Financial Specialist.

00:28:36.000 | So they'd be a CPA/PFS.

00:28:39.000 | Other exclusions above and beyond the CFP designation

00:28:44.000 | would be like a person who has a PhD in financial planning.

00:28:49.000 | I think I would say they would qualify.

00:28:51.000 | A person who has a master's,

00:28:53.000 | and we have had these folks as members.

00:28:56.000 | They're teaching educational programs,

00:28:58.000 | the financial planning program around the country.

00:29:02.000 | So that is our educational criteria.

00:29:05.000 | And then we want to look at their application

00:29:09.000 | and tell me why.

00:29:12.000 | I want to hear a lot of their philosophical approaches

00:29:15.000 | and how they expect to build their businesses

00:29:18.000 | and are they prepared for a certain amount of time

00:29:24.000 | to get their businesses up and running,

00:29:26.000 | because I don't want people to join our group

00:29:29.000 | and not be successful.

00:29:31.000 | So they need to be prepared for what it takes

00:29:35.000 | to start a practice and get it to a point

00:29:38.000 | where it can sustain itself,

00:29:40.000 | and they can focus on taking care of their clients.

00:29:45.000 | So one of the Bogleheads has asked a really good question

00:29:49.000 | about how often you need to do a financial plan.

00:29:54.000 | And his comment is,

00:29:57.000 | "Do investors modify financial plans more or less frequently

00:30:03.000 | "when using assets under management

00:30:07.000 | "as a form of compensation to their advisor

00:30:10.000 | "or some sort of a fee-based model like hourly?"

00:30:14.000 | I have zero statistics on that question,

00:30:18.000 | and it's quite interesting, but I'll give you my guess.

00:30:22.000 | I would tend to think that if people are acting as a fiduciary,

00:30:28.000 | there shouldn't be much difference.

00:30:30.000 | Now, what happens in between visits to an episodic advisor,

00:30:36.000 | such as the services I provided on an hourly basis,

00:30:40.000 | is if I don't know about it, I don't know about it,

00:30:45.000 | versus the AUM advisor who better know about it

00:30:49.000 | because they're getting paid to watch.

00:30:53.000 | Let me talk about that for a second

00:30:55.000 | because "We'll watch it for you" was always something

00:30:58.000 | that the brokerage industry was...

00:31:00.000 | It's a great sales line.

00:31:02.000 | Don't worry, we'll watch it for you.

00:31:04.000 | But in fact, look, I was an AUM advisor for 20 years.

00:31:07.000 | All I'm watching is the revenue come in from your portfolio.

00:31:12.000 | You know, when are you adding money, when are you not adding?

00:31:15.000 | Or the portfolio react to the market.

00:31:17.000 | Right, that's what I'm watching.

00:31:19.000 | In other words, to talk with you on a regular basis...

00:31:22.000 | It's a good sales line, though.

00:31:24.000 | Yeah, yeah, "I'll watch it for you" is a big deal.

00:31:27.000 | It provides a lot of comfort to people.

00:31:30.000 | If you do a really good financial plan for somebody,

00:31:33.000 | how often do you have to redo it?

00:31:38.000 | Well, it depends on age and circumstance.

00:31:42.000 | Really, circumstance.

00:31:44.000 | If I were working with young people,

00:31:47.000 | we're making projections about stuff

00:31:49.000 | that's going to happen decades from now.

00:31:52.000 | We can't even come close.

00:31:54.000 | I mean, what we're going is from...

00:31:57.000 | Imagine my arms are straight out to my sides, 180 degrees.

00:32:02.000 | And we take a look at the current trajectory you're on

00:32:07.000 | and plot that out.

00:32:09.000 | Precision projected over time is not precision.

00:32:14.000 | And it's an illusion of precision and it's insanity.

00:32:18.000 | But having targets and knowing that you're heading

00:32:22.000 | in the right direction is really helpful.

00:32:25.000 | For young people, if you put a plan together and say,

00:32:29.000 | "By this time next year, I should have X amount

00:32:33.000 | in my net worth.

00:32:35.000 | I'm going to pay down debt by this and build up assets

00:32:38.000 | or cash reserves or whatever.

00:32:40.000 | Those are my goals."

00:32:42.000 | And if you meet those goals and nothing else really changes

00:32:45.000 | in your life, you don't even update.

00:32:48.000 | But sometimes things happen, like regulations change.

00:32:52.000 | When the Roth IRA became available,

00:32:55.000 | if a 529 plan might make sense,

00:32:58.000 | some of these boglehead folks would likely be aware of them.

00:33:03.000 | But the average client that I worked with wasn't necessarily

00:33:07.000 | a dyed-in-the-wool reader of all things personal finance

00:33:11.000 | and fiduciary.

00:33:13.000 | Great kind of advice.

00:33:15.000 | Cheryl, when you're paying an AUM fee for not only

00:33:20.000 | portfolio management but financial planning,

00:33:24.000 | you do the financial plan the first year.

00:33:27.000 | How much extra work is it year 2, year 3, year 4, year 5?

00:33:32.000 | Do you think that advisors who charge for financial planning

00:33:38.000 | and asset management, say using 1%, are maybe overcharging

00:33:43.000 | for the financial planning side?

00:33:46.000 | Probably not in year 1, but, you know, I don't know what the--

00:33:50.000 | I need dollars rather than percentages.

00:33:53.000 | Okay, so let's talk about somebody who has $1 million.

00:33:56.000 | I have $1 million, and I'm going to--

00:33:58.000 | $10,000, yeah, you're probably overpaying,

00:34:02.000 | unless you got a--

00:34:03.000 | But that's the average fee.

00:34:04.000 | I mean, that's the average fee for an advisor.

00:34:07.000 | If you look at the statistics, it's $1 million.

00:34:09.000 | They charge 1%.

00:34:10.000 | They get $10,000 a year.

00:34:12.000 | And then when you question them about it, they say, well--

00:34:14.000 | Just because it's average doesn't make it right.

00:34:16.000 | Well, but they say, when I argue with them on Twitter,

00:34:19.000 | they say, well, we add a lot of value.

00:34:21.000 | We are--our clients rely on us, and, you know, we are--

00:34:26.000 | Yeah, that's true.

00:34:27.000 | We are a coach to them, and we are a--

00:34:30.000 | I don't disagree.

00:34:31.000 | --circuit breaker to them when the markets go down,

00:34:33.000 | because they're--we're a behavioral coach,

00:34:35.000 | and we're going to keep them in the market

00:34:37.000 | when they want to get out.

00:34:38.000 | Now, I don't believe a lot of that, by the way,

00:34:40.000 | because, again, when I was managing money,

00:34:42.000 | people didn't just, when the market went down,

00:34:44.000 | all of a sudden panic and sell.

00:34:45.000 | I mean, there might have been a few that did that,

00:34:48.000 | but very, very few of the clients do that.

00:34:51.000 | Yeah.

00:34:52.000 | So, you know, the question is, to you,

00:34:54.000 | is how often, you know, do you need to redo

00:34:57.000 | the whole financial plan where you're paying

00:34:59.000 | 1% per year fee for asset management,

00:35:03.000 | which you can get very low cost these days,

00:35:05.000 | and then the rest of it is all of these other services

00:35:09.000 | that have really nothing to do with managing the money,

00:35:11.000 | but it does have to do with personal finance.

00:35:14.000 | But you're paying an awful lot of money for that,

00:35:16.000 | and I can see this, the year one,

00:35:18.000 | where you're doing the big financial plan,

00:35:20.000 | but how often do you need to do a big financial plan?

00:35:24.000 | Probably only once,

00:35:26.000 | and perhaps if we've done a plan together,

00:35:30.000 | updating it is easy.

00:35:32.000 | Yeah, it doesn't take nearly as much time.

00:35:35.000 | Oh, no, no.

00:35:36.000 | Subsequent years, just maintaining,

00:35:38.000 | you know, if you're in good stead,

00:35:40.000 | if we get you all lined up and maintaining that,

00:35:43.000 | that's when the formulas melt down,

00:35:46.000 | because they don't go down

00:35:48.000 | with the amount of time expended.

00:35:50.000 | Right, exactly.

00:35:51.000 | So this is what I might point about,

00:35:53.000 | let's say, assets under management.

00:35:55.000 | So you have a financial planner/money manager

00:35:58.000 | who is going to manage your portfolio

00:36:01.000 | and do a big financial plan for you,

00:36:04.000 | and the first year, if they charge some fee,

00:36:08.000 | let's call it 1%,

00:36:09.000 | okay, you know, $10,000 on $1 million,

00:36:12.000 | but the second year,

00:36:14.000 | why wouldn't the fee drop to .5%?

00:36:17.000 | Because they're not spending nearly as much time.

00:36:20.000 | Right, good question,

00:36:22.000 | and that's one that I would want answered

00:36:26.000 | before I would even consider working with that advisor.

00:36:29.000 | I also would do another thing,

00:36:32.000 | is you mentioned this scenario as a financial planner

00:36:36.000 | who also provides money management services

00:36:40.000 | and charges this as one consolidated fee.

00:36:44.000 | That is most common.

00:36:46.000 | Also, I don't like it.

00:36:48.000 | I do allow AUM charging by Garrett members,

00:36:53.000 | but hourly has to be primary,

00:36:56.000 | and it has to be provided for the accessibility,

00:37:00.000 | and our members are well informed

00:37:02.000 | that I personally do not like AUM for financial planners.

00:37:06.000 | For money managers, if the price is fair,

00:37:10.000 | I don't have an issue with it

00:37:11.000 | because managing a portfolio like you used to do

00:37:15.000 | at 25 basis points

00:37:17.000 | can be a really appropriate service for certain clients,

00:37:21.000 | and I say for certain clients

00:37:23.000 | because I don't think everybody needs their portfolio managed.

00:37:26.000 | They might be able to buy a handful of funds

00:37:31.000 | and have it checked up on annually

00:37:35.000 | or something along those lines

00:37:37.000 | and just pay for the time for that checkup.

00:37:40.000 | Am I still in the right place?

00:37:43.000 | Is there any reason I should change?

00:37:46.000 | And those kind of questions is what I'd like to see.

00:37:48.000 | So what I would love to see in financial planning

00:37:52.000 | is separate out the fee for financial planning.

00:37:56.000 | Absolutely. 100% agree with that.

00:37:59.000 | Yeah, so if people are looking for a financial planner

00:38:04.000 | and they also offer investment management services,

00:38:07.000 | have them break it out.

00:38:08.000 | If they say, "We don't," just leave.

00:38:12.000 | Well, let's talk a bit about your network

00:38:16.000 | and that you just said

00:38:18.000 | that you do allow assets under management.

00:38:22.000 | You do allow your planners to charge,

00:38:25.000 | and if there's one criticism I have heard

00:38:27.000 | of the Garrett Planning Network,

00:38:30.000 | and it's a fair criticism

00:38:32.000 | because I experienced it myself

00:38:34.000 | when I'm trying to find financial planners

00:38:36.000 | because I'm not a financial planner.

00:38:37.000 | I just do the investing.

00:38:39.000 | So when I'm trying to find

00:38:40.000 | a hourly financial planner for somebody,

00:38:42.000 | I go to the Garrett Planning Network website.

00:38:46.000 | I look up who the advisors are

00:38:48.000 | in a particular area where a client is.

00:38:51.000 | The first thing I look at is are they managing money?

00:38:55.000 | And if the answer is yes, they manage money,

00:38:58.000 | I wouldn't typically send them to that planner.

00:39:03.000 | I would try to find a planner who does not manage money.

00:39:06.000 | And the reason for this is because--

00:39:08.000 | and this is what I've heard, and I know it's true--

00:39:12.000 | that a lot of the bogleheads

00:39:14.000 | who have contacted Garrett planners

00:39:17.000 | were a little bit disenchanted by what happened.

00:39:21.000 | They go there to talk with them about financial planning,

00:39:24.000 | and then they get pitched money management.

00:39:27.000 | And it is a criticism I hear quite often

00:39:31.000 | from the bogleheads.

00:39:32.000 | How would you answer that criticism?

00:39:36.000 | - Let me know. [laughs]

00:39:39.000 | I don't want it either.

00:39:41.000 | And we have removed a couple of advisors for that.

00:39:46.000 | Now, I want to clarify.

00:39:50.000 | We have removed a couple advisors

00:39:52.000 | for pitching AUM services

00:39:56.000 | and the client specifically needed, in my opinion,

00:40:01.000 | and the client's opinion and desires.

00:40:04.000 | They wanted to pay on an hourly basis for their time

00:40:07.000 | and not based on their assets,

00:40:09.000 | and that should have been made available as an option,

00:40:12.000 | and it wasn't, and that individual is no longer with us.

00:40:16.000 | And so, you know, we've had two types of complaints

00:40:20.000 | in our 20 years.

00:40:22.000 | Luckily, they haven't been all that often.

00:40:24.000 | And yes, I very much am aware that the bogleheads community--

00:40:29.000 | you know, it's kind of like

00:40:30.000 | the fee-only financial planners community.

00:40:32.000 | We're really tight.

00:40:33.000 | We talk to each other.

00:40:34.000 | I know you all do, too.

00:40:36.000 | Most, if not all, of our members

00:40:39.000 | would be very familiar with bogleheads--

00:40:41.000 | the love of low-cost indexing, being frugal,

00:40:45.000 | that kind of thing.

00:40:46.000 | You just go in and say,

00:40:47.000 | "I listened to a podcast with Cheryl Garrett on it,

00:40:51.000 | and she said you all offer hourly,

00:40:54.000 | and if you don't get what you're looking for,

00:40:57.000 | feel free to contact me."

00:41:00.000 | Okay, fair enough.

00:41:01.000 | Another question.

00:41:02.000 | So, Cheryl, you have had planners

00:41:05.000 | come into your organization,

00:41:07.000 | and then there have been some who have left the organization,

00:41:10.000 | as you mentioned a minute ago.

00:41:13.000 | What is your retention rate for planners every year?

00:41:17.000 | Yeah, I wish it was 99%,

00:41:19.000 | but it's right at 89% to 90%.

00:41:22.000 | And the ones who leave, why--

00:41:24.000 | besides the fact that they get out of the business

00:41:26.000 | or pass away or retire,

00:41:27.000 | I mean, are they just not making it as hourly planners?

00:41:33.000 | Well, yes, and there could be reasons why.

00:41:36.000 | One of them that I run into

00:41:38.000 | is some people are not designed to be entrepreneurs.

00:41:43.000 | Being the person who is in charge of everything

00:41:46.000 | and you're alone,

00:41:48.000 | and that's one of the reasons for our network

00:41:51.000 | is we are all self-employed,

00:41:54.000 | and it does get quite lonely out there,

00:41:57.000 | and the subject matter that we deal with is so broad.

00:42:00.000 | It's really amazingly powerful

00:42:04.000 | to be able to tap into a network of peers,

00:42:07.000 | and so that's the reason we exist

00:42:10.000 | is to help leverage our time, talents, and energies

00:42:13.000 | to better serve our clients and keep our sanity.

00:42:17.000 | Cheryl, the hourly model,

00:42:19.000 | is it better suited toward younger people?

00:42:24.000 | Is it better suited towards people who are in midlife?

00:42:29.000 | Or is it better suited towards people who are nearing retirement?

00:42:33.000 | I mean, who would you say it's best suited for?

00:42:36.000 | Or maybe it's not suited for anybody better than anybody else.

00:42:41.000 | That's an interesting question.

00:42:43.000 | As I can see,

00:42:45.000 | very rewarding outcomes for all of those groups.

00:42:50.000 | Best suited for a validator

00:42:54.000 | and the do-it-yourselfers of the world,

00:42:57.000 | the people that we can't serve best is the delegator.

00:43:01.000 | Could you explain what a delegator is

00:43:04.000 | rather than a do-it-yourselfer?

00:43:07.000 | Someone who comes in and shares,

00:43:09.000 | "Here's what I want to do, and here's what I've got going on.

00:43:12.000 | "You deal with it. I'll pay you."

00:43:14.000 | And they leave and dump it all on you.

00:43:17.000 | An hourly advisor is not a good fit for that.

00:43:21.000 | Yeah, I could see that.

00:43:23.000 | I mean, I see it in my own practice

00:43:25.000 | where I can help people to a point,

00:43:28.000 | but if they want somebody to implement

00:43:32.000 | and someone to oversee on an ongoing basis, it's not me.

00:43:37.000 | Right, precisely.

00:43:39.000 | That sums it up.

00:43:41.000 | When the client can do the implementation,

00:43:45.000 | I found that that is often about half of a financial plan's cost,

00:43:51.000 | the legwork to implement.

00:43:53.000 | And we, as financial advisors, can't implement everything anyway,

00:43:58.000 | so the client's doing a good amount of it themselves.

00:44:01.000 | So why not empower them to fix it for themselves?

00:44:04.000 | I completely agree with that.

00:44:07.000 | This brings me into the final question

00:44:10.000 | that we had by the Bogleheads, and here it is.

00:44:14.000 | "Why should a Boglehead investor with a three-fund portfolio

00:44:20.000 | "consider consulting with a fee-only financial planner?

00:44:24.000 | "I don't need investment advice."

00:44:28.000 | Now, let me explain what a three-fund portfolio is.

00:44:30.000 | You probably already know, but I'll explain it again.

00:44:32.000 | It's just simply investing in three broad index funds--

00:44:37.000 | a total U.S. stock market index fund,

00:44:40.000 | a total international stock index fund,

00:44:43.000 | and then a bond index fund of some sort.

00:44:46.000 | But it's just three simple funds, a very simple portfolio.

00:44:50.000 | So somebody who follows that strategy

00:44:53.000 | and doesn't really need any investment advice,

00:44:55.000 | why use a financial advisor?

00:44:58.000 | Definitely may not need an investment advisor.

00:45:02.000 | The financial planning is a much broader field.

00:45:05.000 | Investment advice is one aspect.

00:45:07.000 | Frequently, questions regarding,

00:45:10.000 | "When should I start Social Security?

00:45:12.000 | "Which employee benefits do I need?

00:45:15.000 | "How much should I be saving for this?

00:45:18.000 | "Should I take 0% financing

00:45:21.000 | "or the $2,000 cash back on buying the car?"

00:45:25.000 | Some of these questions may be, like, automatic

00:45:28.000 | to the listeners of the podcast.

00:45:31.000 | They are personally educated.

00:45:33.000 | But every once in a while, we run into stuff

00:45:35.000 | that we need to ask a professional

00:45:37.000 | or somebody for a second opinion.

00:45:39.000 | A lot of the clients I worked with,

00:45:41.000 | they viewed me as more of a second opinion.

00:45:44.000 | They called me their advisor.

00:45:46.000 | But, you know, a number of them were quite savvy investors.

00:45:51.000 | But they wanted a holistic overview,

00:45:55.000 | kind of look at the whole thing.

00:45:58.000 | And finally, I can't let you go without talking about this.

00:46:03.000 | You're a famous person because President Obama himself

00:46:06.000 | called you out, I guess that's the word,

00:46:09.000 | while you were in an audience

00:46:11.000 | and was telling the world, basically,

00:46:14.000 | what a fantastic job that you were doing,

00:46:16.000 | trying to push the idea

00:46:19.000 | that a financial advisor should be a fiduciary.

00:46:21.000 | Tell me about that whole experience.

00:46:24.000 | It's still surreal.

00:46:28.000 | It's the first time, to my knowledge,

00:46:30.000 | any president has recognized a financial advisor

00:46:33.000 | and financial planner particularly,

00:46:35.000 | and I'm very, very proud of that.

00:46:39.000 | What happened?

00:46:40.000 | I had been participating in the fiduciary advocacy work

00:46:46.000 | in Washington with a number of other volunteers.

00:46:50.000 | And as I kept repeating horror stories

00:46:53.000 | that I had witnessed as an expert witness

00:46:57.000 | or litigation consultant over the last few years,

00:47:00.000 | these stories resonated and they're about normal people,

00:47:05.000 | you know, average Americans getting ripped off

00:47:07.000 | by the current system.

00:47:09.000 | And I got a call about a week before that

00:47:13.000 | mentioned by the president from a person

00:47:16.000 | with the White House, and I didn't really think about it.

00:47:19.000 | I was kind of thinking, well, you know,

00:47:21.000 | I'm paying attention, actually.

00:47:23.000 | Nor did I think, you know, anything I said

00:47:25.000 | would actually go anywhere other than to help the rule,

00:47:28.000 | the fiduciary rule.

00:47:30.000 | I was going to listen to the president's upcoming speeches

00:47:35.000 | because they interviewed me for the potential of,

00:47:40.000 | it was the speech writer, and she was potentially going

00:47:44.000 | to put some of my comments or thoughts

00:47:48.000 | into the president's speech.

00:47:50.000 | So that's how it came about.

00:47:53.000 | I got a call just before the speech was to occur,

00:47:58.000 | the Friday before that Monday speech,

00:48:02.000 | asking me if I could be in attendance.

00:48:05.000 | And I got to Washington, D.C., and sat in the audience

00:48:11.000 | and listened to the various presentations

00:48:16.000 | or announcements, and then in comes President Obama,

00:48:20.000 | and he lends his support to the DOL fiduciary rule,

00:48:25.000 | and then he starts talking about gunslingers

00:48:28.000 | in the Wild Wild West have no regulations

00:48:31.000 | over certain parts of their activities.

00:48:34.000 | And I'm like, oh my gosh, those are my words, or maybe.

00:48:39.000 | And then he said my name, and I don't remember anything.

00:48:44.000 | I got home the next day.

00:48:46.000 | Seriously, I got home the next day and watched it on YouTube,

00:48:51.000 | and I had, of course, hordes of emails from people.

00:48:55.000 | Of course.

00:48:57.000 | How many times did he say your name?

00:48:59.000 | Eight.

00:49:01.000 | I never, never in my wildest imagination

00:49:04.000 | would have expected to be quoted.

00:49:06.000 | I mean, that's--it still, in my mind, did not happen.

00:49:11.000 | But I'm really proud of the person it did happen to.

00:49:15.000 | Well, it did happen, and it couldn't have happened

00:49:18.000 | to a more wonderful person who has done so much

00:49:21.000 | for the average person out there with their finances and start--

00:49:27.000 | We're not average.

00:49:28.000 | We're stupendous.

00:49:29.000 | Okay, we're stupendous.

00:49:30.000 | We're normal.

00:49:31.000 | We're normal.

00:49:32.000 | Everybody's above average.

00:49:34.000 | That's right.

00:49:35.000 | Well, I'm so glad you came on the show today, Cheryl,

00:49:38.000 | and told us your story and told us a lot of good stories,

00:49:42.000 | I should say.

00:49:43.000 | And I think that--I wish the Garrett Network continued success.

00:49:47.000 | I think that--I think alternative models are the--

00:49:52.000 | alternative ways in which you pay an advisor

00:49:54.000 | are finally in the forefront out there and are getting more publicity.

00:50:00.000 | And, of course, you've been one of the big advocates for 20 years,

00:50:03.000 | and I wish you continued luck.

00:50:06.000 | And thank you so much for being on the show.

00:50:08.000 | Thank you.

00:50:09.000 | Oh, thank you, and my sincere pleasure.

00:50:12.000 | This concludes the 16th episode of Bogle Hits on Investing.

00:50:17.000 | I'm your host, Rick Ferry.

00:50:19.000 | Join us each month to hear a new special guest.

00:50:22.000 | In the meantime, visit BogleHeads.org and the BogleHeads Wiki.

00:50:27.000 | Participate in the forum and help others find the forum.

00:50:32.000 | Thanks for listening.

00:50:34.000 | [music playing]

00:50:42.000 | you

Bogleheads® on Investing Podcast 016 – Sheryl Garrett, host Rick Ferri (audio only)

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