The LA Kings Holiday Pack is back! The perfect gift for the hockey fan in your life. A three-game pack starts at just $159 and includes a holiday blanket. Buy today and you'll receive an additional game for free. Don't miss out. Visit lakings.com/holiday today. What's it like to be a certified financial planner?

Why would a successful CFP quit his job to start a podcast? And what do the initials CFP, CLU, CHFC, CASL, CAP, RHY, and good grief, REBC mean after a person's name? We'll answer these questions and more on this the 123rd episode of the Doughroller Podcast. Welcome to the Doughroller Podcast, where the best thing money can buy is financial freedom.

We help you make more, spend less, and invest the rest. And now your host, Rob Berger. Whether you're just starting out buried under a mountain of debt or well on your way to financial freedom, this is the podcast to help you take your finances to the next level. Hey everybody, hope you're having a great day.

Today on the show we have a friend of mine who I recently met at a conference, his name is Joshua Sheets, and after speaking with him for even just a couple of minutes, I knew I wanted to have him on the show. He is, among other things, you heard all those initials in that last question, we'll try to figure those out in the interview, but he is a certified financial planner.

And what makes him interesting, among other things, is that after having a successful career as a CFP, spending a number of years in that business, as you'll hear, he quit and he started a podcast. The podcast is called Radical Personal Finance, you'll hear more about it. And so I just thought it would be a great opportunity to hear what it's like to be a certified financial planner.

What do they really do? How do they help people? What's that business like? Why did he quit? How's the podcast? And what are all those initials after his name? I kid you not, when you look at his about page and he signs his name at the end, there's just a string of initials.

I just have JD after my name, I mean, I'm happy with that one, but this guy's got a ton of credentials. And so we're going to hear from Joshua in just a minute and hopefully enjoy the podcast. I think this interview does win the award for the longest interview on this show, I believe so.

So pretty detailed interview. Real quick before we get to that, I just wanted to mention, I've got a number of shows planned in the near future that I hope you'll enjoy. Many of them are again, as I've mentioned in the past, topics that you have suggested or that I've mentioned.

I have this long and growing list and every now and again, someone will email me and remind me, "Hey, remember you promised to do a show about this." And so I haven't forgotten, but we're going to be talking about things like real estate investing and the taxes, the tax implications for investing in real estate.

That's one thing that I had mentioned, that's coming up in just a few shows. I'm going to cover and compare the different robo advisors out there. I really don't like that term, but I use it because that's just what they've come to be known as. You think of Betterment, and I don't even consider personal capital a robo advisor, but it kind of gets lumped in there, and Wealthfront and Future Advisors and other others.

I've mentioned Acorn, it's kind of similar. How do you make sense of all this? Do they all do the same thing or are there differences? And what are the fees? Are there differences in the investment philosophies of these different investing tools, which is really what they are? So I'm going to cover that.

So I have a lot of good things coming up. Really, the point was, feel free to remind me that I promised a topic that you haven't heard yet. I love the reminders, but I haven't forgotten the list. I mean, literally, the list is probably 50 shows long. So it just takes me time, and it grows every week.

I get email, and I think, "Oh, that's a great topic. Yes, I should record a podcast about that." I add it to the list. So please keep those emails coming in, drdorilder.net. But I haven't forgotten. Feel free to remind me, but I haven't forgotten. It's just a long list, and we're getting to them as quickly as we can.

So with that, let's welcome Joshua to the show. Joshua, welcome to the show. Rob, thank you for having me. Hey, so we met at FinCon for the first time and had some very interesting conversations about financial planning, about your podcast, which we'll get to. And so I'm grateful for you taking the time to come on the show.

And so for those listening, why don't we just start off? Why don't you tell us who you are and what you do? Well, I've always been a personal finance junkie, which is probably the most, I guess, germane information to start with. I've always been a junkie. I was the nerd when at 13 years old, I should have been out playing football.

I was reading books on investing and personal finance and securities analysis and all of that. But I always was very much involved in the personal finance side of it and always enjoyed running my own stuff. I like to tell my 18th birthday, I vividly remember sitting at my parents' dining room table and opening my first Roth IRA and opening my first credit card.

I was very much kind of trying to be on the ball with all of my financial. Man, you are a money geek. I'm telling you, I was a total nerd. So where did you open up? At 18, where did you open up your Roth IRA? USAA, actually. They were offering a deal at the time.

I started banking with USAA when I was in my early teens, mid-teens. And they were offering a deal on one of their funds that had a low minimum purchase of like 25 bucks. And so I opened it up with like 25 bucks a month, auto-debited right into their mutual fund.

Kept that account for years. How does someone in their teens get so interested in this? I mean, did your parents sort of guide you into this or did you do this on your own? How does that happen? My parents are not... They do fine, but they're not really connected to all the details of it.

I just read a lot and I was educated at Holmes for the first half of my educational career. So with that, you get the opportunity to read a lot. And so I read about everything I could possibly find and I just found that personal finance books made it click to me because I wanted to be rich.

And it seemed so simple if I just did A, B, C, D, E, all the charts in the book say, "Joshua, you'll wind up rich." And so I just found that I really enjoyed learning about it and I was good at it. So I was that annoying kid who was telling people what to do with their money when they really had no business doing so.

Okay. So you started into this in your teens. You opened up your first Roth IRA at 18, made a contribution. So you got that five-year rule starting to tick away. So you're past that, I'm sure, by now. So then what happened? And then I started building my credit score and then I started putting my way through college.

And I had purchased a book on how to build your credit score and my philosophy, and I'll tell you how crazy it went. My philosophy was that I wanted to invest in real estate at the time. That was what I saw as my path to riches. And so my plan was to build my credit score so I could easily access credit for the purpose of buying real estate.

So systematically through college, I systematically raised the limits on my credit cards to the point when I was a junior in college, this would have been 2006, junior in college, I had $100,000 of credit line available to me on four credit cards. Now, can I just stop? I just got to stop right there for a second.

Isn't it absurd that a junior in college can get 100 grand in credit? A junior in college earning just a few thousand bucks a year. I mean, honestly, that is just insane. Of course, this was 2006, you said? Right. You probably couldn't, you wouldn't have been able to do that in 2009, I'm going to guess.

Right. It's very different now. But I was very systematic about it. I just had a particular file and every three months I'd call each of the cards and I'd request a credit increase and they give me a credit increase and I've never been late on a payment of any kind for any reason.

And so systematically, they kept expanding it. Now I shudder in horror at how stupid I could have been. But I wanted to be able to buy a house on a credit card if I needed to. But sure, of course, why not a house on a credit card? Think of the reward points you'd get.

Think of how rich, after all, I was reading all these "Get Rich Quick with Money" real estate books and they were telling me how rich I could be. I'm curious, what book did you read to understand credit scores, if you remember? I don't remember. It was something I bought online.

It was one of these PDF things. So I got sucked in, when I was a teenager, I got sucked into the world of real estate investing, the no money down world. And attended a couple of seminars and found a lot of information. And the key thing they always said was, "Build your credit score." That was what the scammers and the shysters at that time were focusing on.

So I just said, "Okay, I'll build my credit score." So it was just some book. I printed it off the internet and followed it. Did you ever invest in real estate? I didn't. I didn't. The first piece of real estate that I ever bought was the house that my wife and I now live in and that was two and a half years ago.

And I'm so thankful I didn't. It was a miracle that I didn't wind up going bankrupt. I had several friends of mine from college who did get heavily into real estate investing here in Florida. But in the stupid way, before the crash, and lost everything, went bankrupt, a couple of them have recovered, a couple of them haven't.

But I started going to the seminars, you know, the free hotel seminars. And you go for the one hour thing and then you go to the three day thing. And at the three day thing, I vividly remember when I was in college, I don't remember which year, but I think it may have been my sophomore year, I'm not sure.

I came home from a three day real estate seminar with a buddy of mine. And I was all fired up and ready to put down the $20,000 for the private mentoring program with the real estate guru. And I'm ready to do it. And my dad just basically said, Joshua, stop, don't be stupid, do not do it.

And thankfully, I listened to him. And that decision saved me because I was a pretty aggressive guy. I was a pretty hardcore. I would have gone out and bought five properties just following the Get Rich in Real Estate books and without any actual foundation before it. And I would have been destroyed in the resulting correction because I wouldn't have known what I was doing.

Well, good for your father. I have thanked him many times for that. And I'm also thankful that he put a respect for parents into me at a young age that I listened to him. The older I get, the smarter my dad gets. It's kind of crazy. I hope the same thing applies to my kids.

We'll see. Okay. So you didn't go into real estate. What did you do after college? So after college, when I started college, I studied business and I thought I was going to be kind of the big corporate Fortune 500 CEO. I liked business. So my degree is in international business.

And after college, I went and I worked at a marketing and brand management consulting company. And this was kind of the fancy after college job that I could make sound impressive to anybody if I tried. And I had a little bit of travel and working on all these big accounts with big Fortune 500 companies as kind of a junior analyst and making pretty decent money.

But then I got laid off. And thankfully, I had at the time, I had been following Dave Ramsey's baby steps as kind of my plan. My brother gave me a copy of Total Money Makeover when I was in college. And I thought it was very interesting. And I read it once and didn't make any sense to me.

And then I read it again. I was like, "Wow, this guy actually makes sense." And I read it the third time and decided to get out of debt. So I worked like a maniac my senior year in college and paid off. I paid off some credit card debt that I'd accrued because I'd put my way.

I paid my way through college at a private university here in West Palm Beach. And so I was able to pay off some credit card debt and then pay for my senior year. And then actually two weeks before I graduated, due primarily to the influence of Dave Ramsey and his get out of debt message, two weeks before I graduated, I wrote a check to Sally Mae and paid off all my student loans and graduated from college debt free.

Wow. Good for you. It was awesome. I worked hard. I tell you. I vividly remember it because I worked harder that year than I'd ever worked. I took 19 hours of senior business classes. I worked 40 hours a week. And I actually learned more that year than I had learned in any of the previous years, including a year where I didn't work at all during school.

And I just put all my school bills on student loans. And my teachers were far smarter than they were in any of the other years. And I got better grades. I actually got straight A's my senior year. And I had not gotten straight A's in my undergraduate years when I had more time to study.

And I learned the power of focus and the power of time budgeting from that experience fundamentally shaped a lot of, but it shaped me and who I am. Well, that's good. Okay. So you got, but you got laid off your first job. Right. So I, I worked for a year at this marketing company and thankfully I was, I was, well, I didn't like it and I just hated the corporate world.

And I want, I wanted to have the ability for, what's the word that means when a geometric growth, I wanted, I didn't want to be, you know, just a step by step growth. I wanted to have the opportunity to have compound growth, real massive geometric growth in my income and in my business.

But I got laid off. Now I got laid off about six months before I was planning to leave. This was in 2008. I graduated from college in 2007. And in January of 2009, I had planned to leave the company I was with and go do something else. And I wasn't sure what I wanted to do.

But in June of 2008, I was laid off. And on looking back on at this point, I'm so thankful that I was because I'm not sure I would have had the courage to actually leave in January of 2009 when quote unquote the world was falling apart. And so, so I look back on that now and I'm thankful for it.

But it was a total surprise to me. I thought that people got laid off just because they were bad workers and they, you know, were slackers. I had just gotten an 8% pay raise at my job. I was, I was highly commended and they just, the company eliminated my job position.

And thankfully I, I had, was out of debt. I had a six month emergency fund. I had, you know, savings. So I was, I was in pretty good shape. And a couple weeks after I got laid off, I was talking with, I was friends with my bosses and the CEO of the company and all that.

And we were having lunch and he said, "I'll help you in any way I can." So we were having lunch a couple weeks after I got laid off and I laid out for him the five things that I was looking for in a business. And I knew what they were, but I didn't know how to do them.

And he said, "You ought to go look at financial services. That it might be a good fit for you." And I said, "No, I don't want to go into financial services. Brokers are out to make you broker. Insurance is a scam and a waste of money. I can do better on my own.

Like I don't want to go into financial services." And he said, "You ought to at least consider it because everything you just described sounds like financial services." And his son had interned with a company called Northwestern Mutual. They have a large college internship program and his son had had a good experience.

I don't think he'd, he had not continued with the company after the internship, but he had a good experience. And so he had a contact there and he sent me to his contact there for an interview. And I went in and I was really impressed with the person that I interviewed with.

And basically based upon that, it kind of opened my eyes to the financial services business, which I had never considered. And then I went around the industry, kind of interviewed at a few different places, did a bunch of research. And then some, I don't know, a month or two later, I wound up after a bunch of interviews joining Northwestern Mutual in the fall of 2008.

And I worked with Northwestern Mutual from the fall of 2008 until June of 2014. Okay. And that's when you quit there and started a podcast. Exactly right. Which we'll talk all about that decision. So when you joined Northwestern, was it as a financial planner? Well, that's a, that's a, that's a, let's go, so let's get into some industry terms.

I think I know from our conversations you can handle that. The term financial planner. We'll see. (laughs) From the term financial planner and the term financial advisor is a very nebulous term. It doesn't actually mean anything. So a financial planner is simply one who plans their finances. And a financial advisor is simply one who advises from, on the perspective of finances.

And in financial services, there are many terms that people use and they probably shouldn't. There's a long history of all these words in the industry and many people are upset about it. So yes, I was working as a financial planner. I was not a certified financial planner, which is most, what most people are thinking about in the same way that they call an accountant, a CPA.

A CPA is not an, you know, a CPA actually means certified public accountant, but that's a licensing agreement. You can be an accountant and not be a CPA. And so I was a financial planner, but I was not at that time yet a certified financial planner, a CFP designee.

Well, that's a good point. Cause I'm looking at your LinkedIn profile and I'll just read it for everyone. Joshua sheets, CFP, CLU, CHFC, CASL, CAP, REBC. So what exactly are you? It's even worse than that. There's a couple that don't fit. If you can't fit them all, well, maybe we can, we can, we'll email Mr.

LinkedIn and see if he can expand the name field. It's a little bit obnoxious. There's actually, there's an RHU and an MSFS as well that I just, I've just finished. It's a little obnoxious. All that stuff means is each of those is a unique specific industry designation and they, each of them has a meaning and, but the meaning is different.

And unless you're actually in the financial services business, it's pretty hard to actually understand what all these designations are. And if you're interested, I can go through them and kind of explain what they are, but the more general question that you're, that you're asking, let me answer that first.

All of those things just simply mean I've spent a lot of time studying and taking tests. That's basically what it means. It's hard for an outside person to know, just because somebody has a bunch of letters after their name doesn't mean they've actually taken any hard tests. In our business, we are famous for, you can go and there are some designations that basically eight hours in a hotel conference room and a 20 minute, 20, 20 question test and you can get some letters after your name.

So you kind of have to do some due diligence to understand which designations matter, which ones actually signify a lot of work. And I'd be happy to, to, to tell if you'd like, maybe it'd be valuable if I actually give you the ones that, that actually mean are the most meaningful.

Would that be helpful? Sure. Why not? Okay. So in the financial, in the financial advisory business, the two most prominent designations will be a CFP designation, which CFP stands for Certified Financial Planner, and a CFA designation, which stands for Chartered Financial Analyst. And they're kind of different. The Chartered Financial Analyst, in my opinion, is probably one of the most difficult exams.

There are three exams that you have to pass for that one and it is extremely technical, it's extremely intense, and it's very appropriate for people who are involved in the day-to-day management of portfolios. It's very, very theoretical though, and it's very much about portfolio management and investment management. The CFP is, they bill themselves as the most, the highest, I don't know what their, what their, their lingo is, but they bill themselves as kind of the highest financial planning standard or, or something like that.

What that one is, is you have to take six, I think it's six or eight classes, something like that, and then you have to pass a comprehensive exam, which when I did it was a two-day, 10-hour exam. And that covers all aspects of financial planning. And so financial planning and portfolio management are two very different disciplines.

So those are the two common ones. Some of the, then the other ones that are very common would be CHFC. So CHFC stands for Chartered Financial Consultant. That is a designation that's awarded by the American College in, of Financial Services up in Pennsylvania. That one is a financial planning designation as well.

A few more classes in the CFP, but it doesn't have a comprehensive exam. It's a little more in-depth in some areas than the CFP. And then there's also a CLU. And CLU is the, probably the initial, it's a very old designation, primarily focused on the insurance business. So it stands for Chartered Life Underwriter.

And so somebody who has that has done some detailed education on the topics of insurance. There are dozens more, but that's probably the main ones that people could, would benefit from. - What's interesting to me and something that I've learned more recently is that, as you pointed out, you don't have to be a CFP to be a financial planner.

- Right. - And for that matter, you don't have to be a CFA to manage someone's portfolio. - Right. - And on that score, it's as simple as taking the Series 65 exam and then getting, putting the paperwork together to get licensed. And voila, you can manage $100 million in assets if you can get the clients.

And the truth of the matter is I just took the Series 65. And I suppose if you have no background, it would be a challenging exam. But the truth is, it's not that difficult. And it surprised me how easy it is to be licensed to manage someone else's investments.

Anyway, I don't know. - No, I agree. It's really not that tough. And so, you know, when you start a new financial advisor, well, generally, if you were a newly minted financial advisor and you join a large firm, then you need to, to be able to sell any kind of securities of any kind, you need either a Series 6 or a Series 7.

And then also usually a Series 63 or a Series, let's just stick with a Series 63. To be a registered investment advisor, you need a Series 65, and the, which is what you've just done. And I took the 6, 63, and 65. So I did those three industry examinations as well.

But it's very difficult for an outside person to actually penetrate and understand what these things are. And it, no, and it doesn't take that much, yeah, it doesn't take that much actual, becoming a financial advisor, it doesn't take much. Now, being a good financial advisor is a very different proposition, but it doesn't take much to be able to print a business card that says financial advisor on it.

- And that's kind of what I want to touch on. So that folks that are listening that, you know, maybe be, are thinking about hiring a financial planner, you know, because it's not that hard to become one, then the challenge for consumers is kind of, you alluded to, is figuring out how you find a good one.

And so maybe we could start, since you worked as a financial planner, you know, at Northwestern for a number of years, you know, behind the scenes, what goes on, the stuff that your clients don't see, you know, you get a new client that you come in, that you meet with them, whatever, but what's going on?

What are financial planners doing behind the scenes to, you know, advise their clients? What's, how does it work? - Depends hugely on the firm. And one of the biggest challenges with even a conversation like this, and I'll do my best to give you specific details on the answers to your questions, but one of the biggest challenges to a conversation like this is that the accuracy of the answer is going to depend on the education of the listener.

And so if you are, if you are well educated on financial topics and you are, you have a high degree of, you have a high financial IQ, you're highly financially literate, then the answers will make sense. But if you're not familiar with some of the terms, it's really hard to be able to figure out what makes a good advisor, what makes a non-good advisor.

There is a dramatic need for specialization in the financial planning business. So a good financial planner, you can't be good to all people in all places. So you're going to have some area that you specialize in. And that specialization may be something like the difference between specializing in financial planning or specializing in portfolio management as an investment manager.

So that would be one scenario. And this is my opinion. Some advisors would disagree with me vehemently, but I have always more enjoyed working as a financial planner rather than as an investment manager or a portfolio manager. And the reason is because the job descriptions are very different. As a financial planner, the primary job that you are doing with a client is helping the client to understand and clarify specifically and clearly what their financial goals are, analyzing where they are and figuring out what path is going to help them achieve the goals.

That's in essence what a financial planner does. And so a financial planner is going to spend a lot of time trying to figure out what's going to work for the client. And that may come on a basic level of cash flow management, budgeting, something like that. It may come from a product perspective, applying appropriate insurances, making sure that certain life insurance is taken care of, making sure that disability income insurance is taken care of, doing a review of somebody's property and casualty insurance coverage to make sure that that's adequate.

It may be some on a portfolio perspective to make sure that the investments that somebody has is appropriate, making sure the tax strategy is on track. That's different than an investment manager or portfolio manager. In that person's job, they're tasked with guiding the performance of the portfolio. The problem is the financial planning occupation requires a lot of time with clients and not a lot of time spent at a computer looking at the ticker for whatever stocks you're tracking.

The portfolio manager needs to not be with clients, needs to be in an office where they are able to actually spend time looking at and managing the portfolio. So that's one of the primary distinctions I think you'll see in most firms that's fairly well recognized, that it's difficult to do both things.

You'll usually have a team approach depending on how the firm is structured. You'll have a team approach where you have a portfolio manager and a financial planner working together and they have a different duties. But frankly, a lot of it is going to depend on the firm. And then it also depends on the compensation of the structure.

That's where you get into these very confusing words like fee only, fee based, commission and fee, commission based, sales based, all of these types of words that are very confusing to people as well. You also get into specialties within the practice. So for example, there are financial planning firms that are boutique estate planning firms and the only service they provide is comprehensive, in-depth, detailed estate planning services.

And so this would be for people with $150 million net worth and all they do is estate planning. That's very different than maybe a new representative at one of the large wire houses who's out kind of beating the streets, bringing in new accounts, rolling over 401ks into IRAs, things like that.

Well, when you were at Northwestern, I mean, were there times when you were working with clients and sitting down with them and trying to come up with a budget? Yes, there were. Huh. And then so that would be sort of the sort of cash flow management. Right. Okay. Would you help them try to figure out a strategy to get out of debt and which debts to pay first and how to find more money to put towards those debts?

I would, but it's really tough. And here's why. That's actually one of the reasons why I started the podcast. I would spend a lot of time on those types of things, trying to help somebody plan a budget, trying to help somebody figure out a debt management plan. But unless there's a compensation arrangement where the planner can actually be paid for the work, then it's very difficult to spend a lot of time doing those types of things.

So at most, maybe if I, let's say I come across a client and I meet with a prospective client and this person, they really need to get out of debt, but they don't have a lot of other needs other than that, that I can help them with. It's very difficult for me to sit down for several hours over a period of meetings and help them for free.

Now I've done it, but what I resorted to more than that is actually trying to, I would, you know, for the first few years I would carry around copies of Dave Ramsey's Total Money Makeover book in my trunk. And I would be like, listen, I can't, I can't come back and help you every week and do a budget review with you and show you how to do that.

So here, read this book and follow this book. Or I would send them some articles or I would send them to a website or to a podcast, something like that. So there has to be a compensation function where the planner can actually get paid. And the problem is that the people in our country who oftentimes need the most help, who need the help with getting out of debt, who need help with setting up a budget, something like that, they also aren't, they're not in the position to be able to afford the best, the best advice because they just simply either can't or won't pay for it.

So you have this very strange dichotomy that the wealthy are willing to pay massive amounts of money for excellent financial advice. This is what, and every time Congress passes new tax laws, I do not understand why they do it the way they do. And I just, I tell my friends, you know, if we're sitting down having a cold drink, I say, do you not understand that there are, does Congress not understand that there are armies and armies and armies of us, we financial planners, attorneys, CPAs, accountants, things like that, who are going to sit around and we're going to dissect this law and we're going to figure out a way around it.

And we're well paid to do it because if we can save a client 2 million bucks in a year and that client will happily pay us 50, 100,000 bucks for the advice. So what happens is, is if you have money already, you can get world-class financial advice. If you don't have money already, it's kind of tough because you can't really afford to pay for it.

And those of us who are world-class aren't really going to be able to effectively serve you. So the only way that I can figure out how to actually serve people who are in those needs is doing things like what Dave Ramsey does, where you're giving away great information to kind of a beginning level, to a beginning level audience, or what guys like you and me are doing with our podcasts of giving away the information, writing books.

And then there are some people who are trying to work in that area as far as like being budget coaches, things like that. I haven't seen it really working effectively yet. My hope is that it will. And then because the needs are fairly simple, the solutions are fairly simple.

And there's not a lot that somebody making $40,000 a year with a family needs to know. I'll build that up, pay off your debt, fund an IRA, get some appropriate term life insurance. That's about it. Now, if I get a client walk in with $400,000 a year, what I can do?

And I can work some tax magic on their situation. I can save them tens of thousands of dollars with the right planning technique. So it's kind of a catch-22, and I haven't figured out how to solve that problem. Okay. And I think we just, we lost a little bit of that last answer.

So if someone comes in with making $400,000, let me ask you that. If someone's making $400,000 a year, should they have a financial planner? Absolutely. And what's the financial planner going to do for them? Depends on how good they are. Well, okay. Let's say a very good financial planner, maybe one named Joshua Sheets.

I don't know. But what would a good financial planner do for someone that, you know, they're making $400,000 a year. They got, you know, whatever, a couple million dollars in the bank, family of four. You know, what kinds of things would that person need? You're going to be frustrated by this answer because there's not one answer to it.

And this is one of the – and let me kind of expand on it because this is one of the problems actually with selling financial planning services is that people are often looking for one thing and there isn't one thing. So for example, on my show, I've been working through trying to teach through some tax planning strategies.

And I rely on a statistic from a book. What's it called? How to Pay Zero Taxes I think is what it is or something like that. And in that book, there is a statistic that's quoted. The author, he's a tax attorney up in the northeast somewhere. And he quotes and he goes through each year the various levels of income and the amount of income tax paid by various households and various families.

The only year that I remember which is the latest year that I have read in his book, in 2009, he quotes the statistic that in the United States of America, based on publicly available tax return data, there were over 20,000 – there were 19,000 something, so about 20,000 people who made a household income in excess of $100,000 and who paid $0 of federal income tax.

Okay. Let me just stop you right there. First of all, is this the book by Jeff Schnepper? How to Pay Zero Taxes 2014? Big, thick book goes through – I don't know. I'm looking at it on Amazon right now. Yeah. How to Pay Zero Taxes. Yeah. Jeff Schnepper's book.

Exactly. So here's my question. I know every situation is different, but just give me a rough idea of how it's possible for someone to make $100,000 and pay no taxes. All right. So it's a bunch of things. And so it may be, for example, how is their income structured?

So is their income structured where it's not structured in the form of wages? So you can remove some of your employment taxes if your income is not structured in the terms of wages. What kind of deductions do you have? And Schnepper's book is the best place because he goes through each and every one of those things.

So as I actually can't answer the question because there are so many little things that you can do. So it's everything from doing – so for example, I love the early retirement community. And one of the things – let's say if you don't need any money, if you may have $100,000 for you and your wife, let's say total household income, $100,000.

And if you don't need that income, all you need to do if you're self-employed is set up some 401(k)s and defer 50 grand into one and 50 grand into the other. And you've cut out your taxable income. But let me follow up on that though because you're talking about someone who's self-employed, right?

Right. So that would be an individual 401(k). Right. Okay. And you can only put in there though – you've got your employee contribution, right, 17.5. And then for the employer contribution, it's 25 percent, right, of your income. Right. So I'm being a little bit loosey-goosey with the numbers. Okay.

I'm sorry. You just got me excited. I'm thinking, "Okay, how do I do this?" All right. Right. So buy Schnapper's book because from our conversation, you're detailed enough that you would enjoy it. Buy his book. That's a really good one. And then there's another really good one by a guy – I don't remember the author's name.

I have it as well. It's called How to Really Lower Your Taxes Big Time. And it's also good. Schnapper's book is very academic and it lays it out in scope. And he goes through – hang on one second. Hit pause and I'm going to grab it. I'm going to give you the answer.

That's okay. We'll come back to it. Okay. So because if you – By the way, I hate hitting pause. I'm going to keep all this in. That's okay. It's the real life of interviews. People who listen to it understand that. But by the way, I will link to both of those books in the show notes for people listening.

Awesome. And I've also got a tax series. If people are interested in this subject, in my attempt to actually teach what I could never find in the personal finance space, so I had to kind of read through all the really boring academic books. I started kind of teaching through a tax series.

Well, if you send me links of those, I'll include those too. I'd be happy to do that. I'll make sure to do that. So the answer is there's not just one thing. There's a number of – there are a number of different techniques that in the right situation could be – and it would be very unusual to be able to wipe out all taxes.

I'm not sure. Those returns that can do that, there may be – I don't want to get too deep into the weeds. I've studied some, but I still can't even figure out exactly how it would work to do exactly that. But it's a lot of things. And so somebody with $400,000 of income, you figure – let's just use round numbers.

Let's figure 25, 30 percent of taxes. You got $100,000 of income tax. There are some easy ways to lower that, and it would usually be higher than that depending on the state, depending on the situation. But you can do a lot as a financial planner, and if you can cut that bill in half, you can do a lot to earn some pretty substantial fees and have a happy client and a happy planner.

So here's my concern about hiring a financial planner for me personally. This is my personal concern, is that – in my situation, I grant it's a little different because I spend my days studying this, but I still recognize that there's no way you can know it all, and I certainly don't know it all.

But my concern is I'll spend a fair amount of money with getting some kind of financial plan, and in the end, I'll conclude I didn't really learn anything new. I spent this money, and he or she didn't really tell me anything new or save me a substantial amount in taxes.

Maybe that's a silly concern. I don't know. Did you ever have people come in, and you went through a whole financial plan, and at the end of the day, they were already doing things right, and you really weren't much help to them? I had one guy in my career in six years with meeting over 1,000 people.

I actually had one guy that fit that mold. Okay, one out of 1,000. All right. And I'll tell you, actually, it's an important story. He was also one of the few people to actually ask me proactively for an appointment without my having to approach him with an appointment. And this was very young in my career where I was still just completely scared silly anytime I would talk to people and ask them to talk about their money, just the emotions of the business, learning how to talk with people.

And so I went to this networking event here in Palm Beach. It was a lunchtime meeting. I can't remember the name of the club, but it's a bunch of old Palm Beach guys, retired guys that get together. And I thought, "Oh, this would be great, a bunch of rich Palm Beach guys." So I go there, and I sit down.

I'm the youngest guy in the room by about 40 years. And the guys are asking me what I do, and I say, "I'm a financial planner." Well, at the end of the luncheon, one of the gentlemen leans over to me and he says, "Listen, hey, I'd like to have you take a look over my stuff if you could and if you would." And I said, "Yeah, I'd be happy to." And inside I'm falling off my chair because this is the first time someone has said, "Joshua, can you look at my stuff?" All up until now I've been out prospecting and basically jumping out of bushes at people and asking them to talk about their money.

And you've got to deal with a certain amount of rejection. Well, he comes into my office, and he walks in, and he's in his early mid-60s, and he slides a piece of paper down. And on the piece of paper, it has a complete balance sheet, all of his assets, all of his liabilities.

It has an income statement, very simple, just an income statement showing what his sources of income is. It shows what his expenses are, shows what his concerns is, and on one sheet of paper, he basically has his complete financial plan. And I sit down, and this is the first time anyone's actually put that in front of me, and I was like, "Wow, this is great.

Why doesn't every client have this?" I was still learning how to do it for clients. And I go through it, and I ask him some questions. And about 15 minutes later, I tell him, I was like, "Listen, I think you've got everything squared away. The only thing I can think of is maybe this one area, but even that, frankly, I don't think you need to worry too much about it.

So, I think you're pretty well squared away." And I learned something from that experience. So, I couldn't actually make a recommendation that helped him, and I learned something from that experience. When I started working as a financial planner, I thought that the easiest people to meet with would be the poor people, would be the broke people, because they would need the most help.

And the most difficult people to meet with would be the rich people, because they would have all the money, and they'd have everything taken care of. Well, I've made a lot of phone calls in my career. You've got to, as a financial planner, you have to learn how to make some phone calls to get some appointments.

The easiest people, in some ways, I found to reach were actually the rich people. And the hardest people were the broke people, because the broke people were so concerned about their situation, and they were so embarrassed, basically, about their situation, that they would not want to talk about it.

They would not want to tell you anything. They would not want to reveal themselves naked, basically. But the rich people, now, I might only get five minutes, but he'd give me five minutes, because he'd figure, "Well, maybe this guy's got something I need to know about. Maybe he's got an idea.

Maybe he's got something." And I learned I had to be very quick on my feet when working with wealthy clients, but that they were more likely to give me time than poor people. And I thought, "Hmm, is it the fact that they're that way because they're rich, or did they get rich by seeking out and taking good advice?" And I'm inclined to think, maybe just to make myself feel good, I'm inclined to think it's the latter, but I can't prove it.

Well, it's interesting. And maybe I need to reach out to a certified or a financial planner at some point. One of the mistakes that I made was assuming that my tax accountant was also a financial planner. Right. Because, and not even on the insurance side, I wouldn't expect him to evaluate my insurance, but even on tax issues.

So, I had an accountant for a number of years that did my taxes, and not once did he mention to me, "Hey, you really ought to consider a backdoor Roth." Not once did he mention to me, "You ought to consider for your business a defined benefit plan." Right. Not once did he...

And the other thing he did is that he made the mistake of advising me that my 401(k) contributions at my employer limited the amount I could contribute to a completely unrelated SEP IRA with my business. So, he's perfectly fine at preparing tax returns, but wasn't great at tax planning, which, as I think about it, frankly, he should have been.

But, as I sit here and think, "Should I go talk to a financial planner?" Maybe it's an obvious answer, yes. So, for folks that are considering that, how do they find a good one? Yeah. I don't know an answer to that question. Okay. Well, listen, it was great to have you on the show.

Thanks. So, I think a lot about that question, and I do not know how to answer it. And let me answer connected to your accountant question. I have struggled with this as well. I have worked with a number of accountants here in my area, and it's very difficult to find an accountant who has a proactive planning practice.

And the key is that you've got to look at the structure of incentives. And this is a problem, in my opinion, in the financial planning business and in the accounting business. In general, most accountants are being paid for the production of a return. That may be very simple as far as, "Hey, I need my 1040 simply for my personal taxes." It may be more returns.

So, we're doing a couple of corporate returns. We're doing some individual returns as well. But basically, the incentive structure and the payment is being made usually for the returns. Now, I've heard that there are some very high-end accountants who are providing advice on the basis of an hourly fee or something like that.

But most clients are so slow to actually walk into their office and plunk down 500 bucks for an hour of time that most accountants are going to recognize that the more returns they can do, the more money they're going to make. And that is the fact because that's what they recognize.

And so, the structure that many accounting offices are going to is there may be one CPA or a couple of CPAs, and then there are an army of return preparers. And those preparers may be there in the office or they may be outsourced. They may be in India. Who knows?

And the CPA is just taking a quick look at it. And they can produce a much higher hourly wage by focusing on that than they can by meeting with you and doing some proactive planning. So, I've found that most of the accountants are very willing as long as I'm not calling during tax season to sit down with me.

But they're not accustomed to thinking that way. And it's the same thing with financial planners. So, as a financial planner, you have to look at how your planner is being paid. So, let's say that you are paying an advisor and you're paying a management fee. So, let's say that you're paying a 1% fee on your portfolio and you're paying that for management.

Now, if you've got enough assets and you're a big enough fish in a planner's portfolio, they can afford to spend time with you throughout the year. But even in that situation, which is probably the better of most of the situations, they're less incentivized to actually spend a lot of time doing that proactive planning with you because they're getting paid based upon keeping the assets.

All they got to do is keep the assets. Same thing with commissions. If you're earning your income off of commissions, whether that's the sale of investment products or insurance products, then you're going to be spending your time focused on what makes you more money. So, let's say that I'm selling you a life insurance policy and you're buying the life insurance policy from me.

Then, once you buy life insurance, you probably don't need any more. So, it's more in my interest to go and find another person who needs life insurance and call you in a year than it is for me to come back next month and sit down and go over your budget with you and sit down and go over some of those things with you.

But I do have a solution. The best idea that I've come up with is the idea of basically billing your fees. In my opinion, and you see a lot of advisors testing this, but instead of billing a fee that's based upon asset management, instead of billing a fee based upon the sale of financial products, billing a fee that's a pure retainer for advice.

So, this is often done on an annual basis or it can be done on a monthly basis. And so, the best thing that I've come up with is I would love to have a stable of clients who are paying me a monthly fee and it'd have to be a fairly high monthly fee in order for me to do this, but who are paying me a monthly fee and who could fire me at any time.

And in exchange, what I expect them to do is I expect them to talk to me every month. And then what can happen is in the context of a deep conversation and in the context of a relationship, we can continually look at tweaking things because there's no way that if you meet with your accountant every February, there's no way in the world that in February of 2013, excuse me, in February of 2015, he's going to remember in February of 2014 that you've got these things going on and that he needs to research this right in the middle of tax season.

So, if you can create a much closer relationship between planner and client and where that relationship is based upon the delivery of ongoing coaching advice and it's a much closer relationship, then I think you can get better advice. But only a few people are trying this and I don't know if it'll work.

So, I think it should, but I don't know if it will. - I've seen and I've talked to several financial planners that do, I guess, something similar to what you're describing. They will charge usually an upfront fee for the initial financial plan, although I've seen it reasonably low, 1,000 to 2,000.

Although again, if you're trying to climb out of debt, that's a lot of money, but $1,000 to $2,000 and then an ongoing fee of say $1,000 to $200 a month for that continued support to execute the plan. I just don't know how, I mean, do you have any sense as to whether that kind of arrangement is appealing to the consumers of financial planning services?

- We're finding out. And the problem with this is basically that people at a certain income level often have an aversion to paying for advice based upon what it's worth. I was at a master's, I was just last, two weeks ago, I was up in Pennsylvania and I was finishing the final class for my master's degree in financial planning.

And I'm in a room with 15 other advisors and these are all seasoned, experienced advisors. The oldest guy in the room was 75 years old and he had been practicing for 45 years. And his minimum planning fee is 10,000 bucks. I think it was 9,500 bucks. That's where it starts.

So the average person, I mean, you're coming from the legal background. How often did you find an attorney friend of yours who's making a couple hundred thousand bucks is ready to say, "I'm going to go plop down 10,000 bucks to get some really great financial advice." Pretty rare, right?

- Yeah, not too many. Lawyers think they know it all anyway. - That is often true as well. I had a few attorney clients, but I generally found that I had better, I enjoyed working with business owners, entrepreneurs more than attorneys. - Yeah, lawyers are a pain. Anyway, I'm sorry.

Go ahead. - Okay. You said it, not me. - Yeah, yeah. - But so there are, the good thing about it is this. If you actually look at how the financial planning business has developed over the last a hundred years, this business and this profession is very much in its infancy.

It was just 25 years ago, basically, 2025 years ago, that it would have been normal that very few people actually had a financial planner. Most people would have had a stock broker and an insurance agent. Prior to 1999, with the Financial Services Modernization Act, you could not sell insurance and sell stocks.

You could not do both of those things. You had to either sell stocks or sell insurance. So you had this incredible siloing effect where either you had an insurance agent or you had a stock broker, and then the insurance agent and the stock broker would always be picking at each other, which is why you had these stupid debates going on where your stock broker is saying, "Oh, insurance is a scam," and your insurance guy is saying, "Stocks are a scam.

You got to buy my life, buy my whole life insurance or buy my annuities because they're a better investment because that's what I can do." And the stock broker is saying, "Oh, that stuff sucks. Buy my stocks." So A, you had the mutual fund industry develop, which revolutionized stock investing.

Then you had the low-cost brokerage world come, which revolutionized stock brokering. Then you had the Financial Services Modernization Act in '99 come, which has revolutionized the business. And so basically, it's only been about 15 years that in many ways, the comprehensive nature of a comprehensive financial planner has really developed as its own profession.

Now, there were people prior to that time who always did comprehensive planning. I've known some guys in my firm who were in their 80s and 90s, and they were really good. And you would have been lucky to have them as your advisor. But as a business, the structure, they had to go above and beyond what many people would do at the time in order to make it work.

So we're still at the infancy. And what I'm excited about is that over the last basically 10 years, if you look at the last decade, actually, the financial planning degree at the undergraduate level now exists. The American College and then there's another college also that's producing PhDs in financial planning.

So that is adding a lot to the research, and that's adding to the ability of once you have some professors with PhDs who are able to go out and teach financial planning at the college level. That means that instead of me, like when I started, I was 23 years old.

And I went out and got a Series 6 and a 63 and a Life and Health and Annuity license, and I get started. Now you're having people that are coming in with four years of undergraduate education in financial planning. They're coming in basically having, just like many CPAs do, having where they come out of college and they immediately sit for the CPA exam.

People are immediately sitting for the CFP exam. And so the whole tenor of the industry is coming up. And then because of the incredible pressure, market pressure on fees, because of indexing on mutual funds, because of the incredible openness of information, that's put this massive pressure on fees. And planners are having to turn around and say, "What am I actually delivering for my fee?" And that is awesome because it's bringing a great market forces, and it's really raising the caliber of the industry.

Yeah, it's interesting the whole fee arrangement and this idea of the monthly fee. By the way, have you started taking clients under this approach yet? No. Do you plan to? Have you figured out a time when you may launch this? It was supposed to be a couple months ago.

Are you going to get a few more letters behind your name first? What are we waiting for here? Okay. Frankly, when I left my firm, I left because I wanted to start the show. I loved my firm. I had an awesome experience. I had an awesome stable client base.

And the most difficult decision that I've had to make was actually leaving that because I walked away from a lot of very happy clients. I walked away from a phenomenal situation. I didn't have any reason to leave except that I was looking around the financial media space. And I'm looking and I'm saying, "Look, there are a lot of well-intentioned people, but there's a lot of really bad information that's getting put out there." And I couldn't find a year ago, I couldn't find many people that were producing audio.

There are some good blogs, really good blogs. I think you were blogging more than a year ago, but I couldn't find people that were producing great audio or video content to actually teach people financial planning. Everybody had an agenda. They were either selling their book or they're selling their firm on Saturday morning on AM radio, which is nothing wrong with that.

But nobody was giving the nitty gritty and the details. And so I said, "Somebody's got to do this." And I decided that I was going to do that. But with my show, the challenge has been just simply, my show is a daily show and it's in depth. So to be prepared for that show, how many shows, Rob, are you putting out per week at this point?

Well, I tend to put out two to three. I'd like to put out one every weekday, but I just don't have the systems in place yet to do that and still have time to sleep. Yeah. It takes a tremendous amount of time to produce content, especially if that content is teaching content.

So an interview is relatively easy. All you got to do is ask some good questions. And if you can find some engaging guests, things like that. But I mean, I listened to your show on, what was it? You did one on, it's like Roth five-year rule or something like that.

Right. And I guarantee you, it took you several hours at a minimum to prepare for that show, right? I hate that rule. Those rules drive me crazy. It's awful. It's awful. But you've got to be so detailed and so careful, but yet you can actually present the information. But the time it takes to prepare for that is tremendous.

So I produce a show every weekday. And so that probably takes, I would say four to six hours a day to produce it. Plus, I don't have a clue. You were ahead of me when it comes to actually knowing how to run a website and all that stuff. I'm a total ignoramus when it comes to techie stuff.

So my learning curve is huge and I just haven't been able to make the time to produce a great show and also to get the firm going. So I'm still working on it, but that's why I haven't launched it. Well, I want to ask you some questions about your show and your site in just a second, but I want to circle back to one question that you ducked, I think, kind of.

All right. So you've got to give the listeners some idea of where, I mean, in terms of trying to find a financial planner, where should they start? I mean, should they go to the fee-only, you know, focus on fee-only financial planners and the association for, you know, or like, you know, asking friends for referrals?

How do they, give them something to begin the process. What should they do? You know, something. Yeah. Okay. So I'll give something, but you can caveat it all you want. Well, here's what, here, here's the problem is that there are some things that people will say and I'll give some ideas, but the reality is this.

It is a rare person who goes out and seeks financial advice. Very, very unusual. Most of the time, the reason when people actually start working with an advisor or working with a planner, the reason they actually did that is because the advisor called them. And how I worked in my business with Northwestern is I worked on a hundred percent on a referral.

It was friend to friend to friend. So if I were working with your friend, Tom, I would say, "Tom, listen, I'd love for you to introduce me to some people that you think highly of." And he'd say, "I got my friend, Rob. He's awesome. He's an attorney. He's a really good guy.

And I'd call you and then you might give me an appointment. And then at that appointment, you got to kind of test me out and see if I know what I'm talking about." And so that is how most people in my experience come up with financial advice. Number two is that even if that's not how it happens and you're taking advice based upon the recommendation of somebody else.

So let's say that you and I are friends and Rob says, "You have an advisor named Jack," we'll throw in a different name, "and you come to me," and Rob calls Joshua and says, "Joshua, hey, listen, my friend Jack, he's having a client appreciation event. I think you would really enjoy going to see him.

He's been great for me. Let me tell you, my portfolio has gone through the roof. It's just been great. He's done a good job. And I go to the client appreciation event with you." The problem is that chances are you as an attorney, not you as Mr. Finance Guru, but you as an attorney, you probably don't know enough about what you don't know to actually judge Jack's performance.

So even when people are recommended, it's really hard to actually understand is this person technically competent or not. So my answer to it is the number one thing I think that somebody needs in a planner is to have a confidence and a trust in that person's character. The problem with that is that that is the most difficult thing to manage and to measure and I don't know how to do that other than the fact that I always just said I'm a person of character and a man of integrity and I'll always tell the truth and I found that over time clients could figure that out.

And so test your planner in some way to figure out their integrity and their character. If you have a planner who is a person of integrity, that planner will know what they know and know what they don't know. And not everybody needs a high-priced tax consultant. If you need a life insurance policy, you need a life insurance policy.

And frankly, somebody who's been through whatever your state's licensing requirements, a 40-hour class is what it is in the state of Florida, that person can competently and accurately advise you on how to calculate an appropriate amount of life insurance, on the different types of life insurance that are available to you, and they can educate you on their firm and on other firms so that you can make an informed decision.

You don't need somebody with a bunch of letters behind their name necessarily to do that kind of insurance planning. Now if you've got a hundred million bucks and you're trying to set up a second-of-life insurance policy inside an irrevocable life insurance trust, and you're trying to figure out, "Should I pick a guaranteed universal life policy or should I go with a traditional whole life policy?" You probably are going to want to talk to somebody who's been doing this a little while.

So it's a very nuanced answer. But to start with, I would say, "What do you actually need and want?" If somebody came to me and they're saying, "Joshua, I want you to manage my portfolio and produce a hundred basis points of alpha," I would say, "Sorry, I don't do that.

That's not my deal. I don't know how to do it. Not interested. Can't even promise it to you." No one produces a hundred basis points of alpha. And most of the listeners right now are wondering, "What the heck is a hundred basis points of alpha?" It means an extra one percent of return that's not based upon the general market return.

And basically investment prowess is what that means. And so I would say, "Sorry." Warren Buffett. Okay, keep going. Go ahead. No, I was going to say, "That's your alpha. Follow Warren Buffett." Right. And so I actually, I'm a weirdo. I actually, I believe much of the academic research, but I don't believe it to its extent as far as actually all the way.

But I mean, it's a long conversation, another time. But the point is, that's not what I do. I'm not a stock picker. So you can't come to me and say, "Joshua, can you do this?" But that doesn't mean that the advisors who carefully craft a portfolio of blue chip stocks, even individual stocks, and they carefully craft a portfolio to specifically fund the needs of the client's account, they can't do that.

So I'm going to ask a question, and I think this is valuable information. I've never heard actually this discussed on a podcast. I haven't even talked about this on my show. But the next thing that people go is they say, "Well, maybe if you weed out compensation models that you can then figure out how to get people to be honest." And so you get into the world of fee only versus fee based versus commission based.

And what fee only means is that you're taking your compensation purely as a fee off of the account and not based upon any special sale of any specific products. And the idea behind this model of compensation is that this is theoretically supposed to eliminate the conflict of interest between choosing to sell investment company A's products because they pay you a higher commission rate than investment companies B's.

And B's products are actually better, but because they pay a lower commission rate, then it's supposed to be better than A. I don't buy it. I think there's a lot of crooks that probably that can figure out how to make a lot of money in a fee only world.

And I've never been in the past a fee only planner. In the future, I will be a fee only planner. But I don't think that that necessarily is gonna affect me personally and as far as how I would deliver advice. So, the advice that's probably the safest if I had to give advice is call a fee only planner.

And so that would be either you could call somebody with an hourly fee. Two options for that is one is the most well-known option is something called the Garrett Financial Planning Network. And they only do hourly fee planning. Number two would be an organization that I'm involved with which is called the XY Planning Network.

And that's a group of advisors who are primarily targeting Gen X and Gen Y, younger people. And they're trying to, we're trying to build out this monthly model. Or if you have some assets, you can go and contact an organization called NAPFA, which stands for National Association of I think Personal Financial Advisors, something like that.

Those are all fee only advisors. But the reality, Rob, is this. My wife, if I die, she does not have instructions to go online and call a fee only planner. She has instructions to call a friend of mine at Northwestern Mutual, who I trust. And some of my friends and former colleagues at Northwestern Mutual, none of them are fee only planners.

But they were men of integrity who did a great job. But man, there are some people within even that company who were not, who I would never trust with my money. And so it's very much a buyer beware world. And the only actual answer that I have found with this is to say, let me educate the consumer, not with a bias towards this is what we always do, or this is what I believe in.

I believe in indexing, or I believe in active investment, or I believe in term insurance, or I believe in whole life insurance. Let me just educate on how they work. And then what you should do is press your planner and press your advisor and ask the difficult questions. And I loved it when clients would ask me the difficult questions because it showed they cared about what I was doing.

And it showed that they had done enough research to allow me to actually educate them on why in their situation I was making the recommendation. And I don't have a better answer than that. That's the best I've come up with, but I'm still working on it. So maybe call me back in a year and maybe we'll have a better answer.

Well, let me give you my two cents and I promise it'll be worth every penny. My two cents is this, and you've alluded to this, financial planning and investment advice are two different things. I mean, they're obviously related, but there really are two very different services. And like you've pointed out, what you enjoy most is the financial planning side.

I've talked to, I've got one guy in mind who manages over a billion dollars in assets. And the last thing he wants to do is financial planning. He wants to manage investments. And what I was thinking about, and I took the series 65 and going through all of this, one of the things he said to me was, he said two things.

He said, one, forget the financial planning, get the assets under management. That's what he knows. That's what he does. The second thing he said was, you really need to think twice before you do both. Because even if you're a fee only advisor, there's almost an inherent conflict of interest because a lot of folks that do both, yes, they pull people in with maybe an inexpensive financial plan.

But their real objective is to get assets under management through that introduction. I'll give you a financial plan for a few hundred bucks. - Right. - And it may be a perfectly fine financial plan, maybe not. But my real goal is to get your $500,000 a million bucks and manage it for 1% a year.

And so I see this sort of inherent conflict even with a fee only planner. And I think if I were going to get financial, if I were going to reach out to a financial planner, I would want to find someone that charged by the hour or some fixed fee and that had upfront no interest in managing my investments.

Don't even talk to me about managing my investments. Now, that doesn't make them a good financial planner. I've still got to figure out if this is someone that I think is competent and has the experience and all that sort of thing. That's not to say that you won't find someone that does both and does it well.

I mean, certainly that's true. But there is that conflict. And so if I were looking for a financial planner, I would stick with someone who's just going to be a financial planner, even if I wanted someone to manage my investments. Here's the thing, and I'm a big index fund believer, although I do own actively managed funds and I own individual stocks.

But it is insane to pay an advisor a hundred basis points to manage an index portfolio. Even if you want an advisor, I mean, Vanguard will do it for 30 basis points. Rick Ferry at Portfolio Solutions will do it for 37 basis points. That market is shrinking. There's a lot of pressure on fees.

I think the days of charging one and a half percent to manage a portfolio of mutual funds, I hope, is coming to an end. I mean, it's not going to end tomorrow. But those kind of fees just are ridiculous. Anyway, one of the things I've thought about, and then we'll get back to your story, but you mentioned maybe charging a monthly fee to work with people on financial planning.

I've thought about the same thing to help do-it-yourself investors. So no, I'm not going to manage your investments for 1%, but I will help you manage your investments for a much, much smaller fee. Maybe it's an upfront fee for a complete asset allocation plan, and then a relatively small monthly fee so that you have someone you can reach out to, not unlike the financial planning side of things, but this focused on investing to make sure you're on track, make sure you're not making any mistakes, someone to talk to when the market's gone down by 10% and you're scared.

But a fee that would be far less than paying an advisor 1% or more to stick your money in mutual funds. Anyway, that's my perspective. Well, I think you make good points, but for a friendly debate among gentlemen that I think will benefit the audience, I'm going to respond to all three of them.

Because with another- I made three points? I don't even remember making three. Okay, good. Actually, excuse me. You made two, and then I made a note of a third point on the last thing you were going to say. So here is the problem with the approach of trying to find a good financial planner on the basis of a low fixed hourly fee or on the basis of a fixed hourly fee.

If I am a good financial planner, I am probably a skillful person. And by the way, I'm a very good financial planner. I'm not good at some other things, and that's just- I don't want to be- I consider myself an excellent, competent financial planner, but I'm also good at some other things.

And so because these- usually people who are capable at learning the skills of financial planning and are adept at working with clients, then that means that you're probably capable of other things. So let's compare these two things. And the primary- the most- like the ideal business model that I was working at prior to starting at the financial planner is the investment advisory business, and it's very simple.

If I have $100 million under management, and I just assume that I have a fee of 1%, that $100 million of money under management gives me a million bucks gross into my practice. That million bucks gross after expenses and after tax, I'm going to be left with a very nice lifestyle.

All I need to have $100 million under management is somewhere between- maybe I need 100 families with a million bucks, maybe I need 200 families with half a million bucks, maybe I need, I don't know, 400 families, although that would be a very challenging practice to keep an eye on.

Somewhere between 100 and 200 families. I can create that realistically over a- if I'm a skillful person with some experience, I can build that kind of practice over the course of- let's call it 10 years. Now, it could be done less. I know people- you have a friend that has a billion.

I know some people here in town that have a billion under management. But those are some massive fees that are coming off of that. Even when the fees are substantially reduced, and I'm just using the 1% number purely because it's simple to do the math. It is very motivating to people who are capable to have the prospect of making half a million dollars of net income, net of business expenses and net of fees, half a million dollars of net income with- just by working with 100 families, all of whom love me and who care about me and I care about them.

That's a really ideal business to have. Now, let's say that I need to make $500,000 of income net. So, that means I need to actually- I still got to bill a million bucks. So, if I'm going to bill a million bucks of income as to go into the hourly model, and this is the problem that people don't talk about very much.

If I'm going to get a million dollars of gross fees or gross revenue into my practice, then let's just divide that by 50 and let's divide that by 40. That means that my hourly rate is 500 bucks an hour. But here's the problem. Nobody can fill a financial- that I'm aware of, can fill a financial planning practice 40 hours a week where you're billing 40 hours.

You've come from the attorney world. You know how difficult it is to bill at those rates for that many hours. So, what's the maximum number of hours I could bill? Maybe 10, 15, 20, something like that. So, now I'm at a thousand bucks an hour. And do you know how challenging it is from a marketing perspective to actually reach the thousands of people who you would need to reach to fill that seat across the table from you at a thousand bucks an hour to make the same amount of money that you make with a hundred million under management and a 1% fee?

And so, it's unlikely. I think there are some very good planners working on an hourly basis. And if you are a middle America person, that's probably great. And you're probably going to do fine. But I'm telling you, I'm a pretty capable person and I would view it as- the idea of making an income based upon hourly fees as a financial planner is very unappealing because I can't figure out any way to structure the practice in a way that works and that's a good business.

It would drive me out of the business. So, I think it's tough to find a world-class planner in that. Now, I know some guys and I want to meet more because I haven't met a lot. And maybe I'll change that opinion in a year. But just from the sheer financial reality of the business, it's tough to find.

So, yeah. Maybe you could consult an hourly planner and they could do that. But that person may just have- they may have passed the CFP curriculum and they may not know any of the tricky advanced stuff. So, that's my response to thing one. That's pretty depressing because basically what you're saying is, "Look, it's going to be hard to find a really comp- a super financial planner who is willing to work on just an hourly basis or at least an hourly basis that costs some kind of reasonable fee, whatever that is." And you're right.

It is tough because they're wanting to do one of two things. They're wanting to sell you something, right? I mean, and I talked to- I've got a good friend who just passed- became a CFA and he worked for a number of advisors and they pushed two things. Expensive annuities.

And I understand that annuities sometimes can be a good solution. But I think in a lot of cases they're not. But they push clients into expensive annuities and expensive non-traded REITs. And they did that because it funded their practice. That's how they afforded private school for their kids in the country club.

And the flip side is a lot of those advisors, instead of doing that, are, "Hey, I'm a fee only and pay me one, one and a half percent to manage your investments." That's how they do it. I think- but I think on that score that is going to be harder and harder and harder for advisors to do.

It won't be impossible. I mean, there are still plenty of people out there that just do not understand the significance of fees when it comes to investing. And to them, one percent, one and a half percent, they don't know any better and they pay it. And they, you know, they don't even see it come out.

They don't, you know, they don't understand what that does to their retirement over, you know, 20, 30, 40 years. So, you know, I guess to your point, though, it may be hard to find a financial planner who's good to work on an hourly basis. Although, I don't know, Joshua, I think they're out there, aren't they?

I'm sure they're out there. I just don't, like I haven't spent enough time with enough of them to do it. And because the problem with an hourly practice, you have a marketing problem. And so, the only way to do it is if you have incredible marketing behind you, you have a world-class podcast of some kind and you're reaching tens of thousands of people, you have a major marketing problem.

And that's the issue that comes up. Well, anyway, to point one, I absolutely agree with you from the advisor's perspective. A hundred million under management or perhaps selling a lot of commissioned products would be much more appealing as a business model than the drudgery of hourly work. No question.

No question. Agreed. And I spent a lot of time with attorneys here in town and it's like, I don't know an attorney who likes the hourly model. All the attorneys are trying to get away from that as well. Now, it's more problematic because that's the standard. But I mean, were you billing hourly still in your law practice?

Always. And the fees are unbelievable. I mean, I can't tell you how many lawyers in my firm charge more than a thousand bucks an hour. Right. You have to. There's no way because to be a competent, you always got to look at the market. People wonder, let's not go down that.

Okay. That was point one. You had two more points. Two more points. Okay. So, here's the flip side. And here's the problem with the analysis as I see it. Generally, when people assume that a financial advisor is not worth their fee, their 100 basis points on a portfolio of index funds, they're assuming that the client is going to perform identically well without the services of the portfolio.

Excuse me, without the services of the planner. So, what they're assuming is that they're saying, is that this assumption, and this is the problem, and this is also the solution. The assumption is that, well, the client can do it themselves. And so, the client is able to go and simply choose some good Vanguard index funds, and that client is going to put the money in there, and they're going to be in as good a situation as if they had billed the financial advisor 1%.

If that is true, then all financial advisors should immediately be fired. But I do not believe it to be true, at least not for me and with my clients. It is inconceivable to me that if I have a good relationship with a client who is productive, who is motivated, and who I'm able to encourage, it's inconceivable to me that I can't return to that person untold multiples of the fee that I receive.

And so, if the example is, well, if you invest and you get a 10% return without fees and you get a 9% return with fees, yes, 30, 40 years from now, there's a massive difference in that. But I think, if I were, you put me with an 18-year-old, or you put me with a 15-year-old, and you have that person meet with me and talk with me on a regular basis throughout the course of their working lifetime in a very close consultative way, I guarantee you that my client would be double, triple, I don't even know because I'm making these numbers up, would be way more wealthy than the other.

And here's how and why. Number one is that the problem with most investors' portfolios is the behavior of the individual investor. And there is a massive amount of research being done and more needs to be done about how to help people address and affect their behavior. The average person is not emotionally equipped, they're not equipped intellectually, with knowledge, with experience, with perspective, to be able to handle the emotion of successful investing.

The do-it-yourselfers are. So you, Rob, you are because you've been studying this stuff. But the average person at your firm is simply not because they have no background, no education, and they don't know how to handle the emotion of it. And the studies prove this. You can go and go look up the Dal Bar and the Lipper studies and you'll see that basically every year, the average investor underperforms their own investment by greater than 50%.

It's astounding when you look at it. But the reality is that there are a series of very predictable behaviors that that client is going to make that are going to cause them to make bad decisions and is going to cause them to get out at the wrong time when they should be getting in and get in when they should be getting out.

And this can be on a micro scale as far as whatever the latest technology is that we're going to, you know, the next bubble is going to pop or this can be whatever the greatest next depression is going to come and we're going to get destroyed out. The number one thing that an effective financial advisor has to be able to do is to be able to help the client manage their emotions and manage their behavior.

And that is what I told every single one of my clients, that they should, they need to hold me accountable for and I expect from them because that's the only thing I can promise. I can't promise that I can outperform. In fact, I actually don't care if I were running a business, a portfolio of actively managed funds or index funds.

I could do well in either because I can make arguments for either. So to me, that's not the most important horse in the race. The most important is did I help the client understand their plan and stay with their plan? Number two, there are a whole host of behavioral modifications that a good financial advisor can make in a client's life that have nothing to do with their portfolio, whether it's the type of account that they hold the portfolio in, whether it's the amount of money that they put in the portfolio, or even whether it's where they invest their money completely disconnected with mutual funds.

What's going to make a bigger difference? The person getting an extra 1%, cutting out a 1% fee and funding their account at the same amount, or me as their financial advisor coming alongside and saying, "Listen, Rob, you're doing well, but you need to really enhance your career right now." And so I've heard about the...

What field of law were you in, Rob, when you were practicing? Rob Gagner I still am practicing. Peter Bell: Okay. Is it corporate or litigation? Rob Gagner I do. It's funny. I don't know that I've ever really discussed this on the show. I defend auditors of publicly traded companies in proceedings brought by regulators such as the SEC and the PCAOB.

I know, very exciting stuff. Peter Bell I like that. I'd actually love to talk to you about some time. I'm reading through the history of the financial crisis, and I just read a case study on country... Rob Gagner Countrywide? Peter Bell No, not countrywide. It was the other subprime mortgage company, and it doesn't matter.

Anyway, the point is that in your career, the number one most valuable asset that you have and the best investment you can make is in your income. So the difference between coming out of law school and getting your first associate job and making 70 grand, grinding out paperwork in the back office versus becoming partner of a big firm that gets contacted when we're being sued by the SEC or the FTC or whoever it is that you're defending your auditors and having the potential, and I'm not saying you make or don't make.

I don't have any knowledge, but then going to become a partner and making $3 million a year, that's all career development, and that all has to do with good financial planning and good financial advice as far as me coaching you to build your career, me coaching you on having the appropriate coverages in place, me coaching you and forcing you to get out of the office and go take a vacation.

And so what I learned is that a good financial planner is much more than a numbers guy. It's much more about the coaching relationship and kind of almost like this life coach role, and if I can build that, there's no doubt in my mind that you give me my client and you go take your client and you toss your client into low-fee investments and know a financial advisor and you give me my client and you let me coach that client through all of their major life decisions and work with them and I'm their trusted advisor, their most trusted advisor they turn to, there's not a doubt in my mind that my client would be worlds ahead.

And so that's what's missing in this whole conversation. Now, not all planners can deliver that, but all planners can learn to deliver that. And then the final thing, and then I'll shut up because you've been very gracious to allow me to go on my rant, but the final thing is this.

People forget sometimes that it's worth it to pay for convenience and it's worth it to pay for skill. At the end of the day, the only reason anybody should ever hire a financial planner is if the financial planner can apply a measure of skill to their situation. And I polled my clients when I was leaving Northwestern.

I sat down with my clients, as many as I could get with, and I said, "Listen, I have a question for you. Why did you pay me the fees? Because you know very much, you see it every quarter reflected on your statement, you know the fees I was getting.

Why did you pay me that?" What I learned is that the clients valued me doing things for them and they valued me applying the skill. They valued partly me just simply doing the work. They valued partly me helping them through their decisions. They valued all the other ancillary services.

They valued me helping them on their estate plan. They valued me helping them on their tax plan. They valued me consulting with them and with their accountant. They valued me talking with their son or with their daughter and helping those things. And they valued that enough to pay me the fees.

The fees are not undisclosed, or if they are undisclosed, they should be. My preference, I would love it if every single dollar of commission, every dollar of a fee were very clearly displayed so that it was all out on the table. And then let me earn that money. And as long as the client is happy paying me that money, and then I can earn it and I can deliver that value.

The problem is that the people who are often guys like you, there's nothing wrong with guys like you who are do-it-yourselfers. I was a do-it-yourselfer. But that's not everybody. And so I would recognize that there is a large number of people who are capable of being do-it-yourselfers and who want to be do-it-yourselfers.

But these are the people that populate online personal finance forums and online websites and start blogs because then they're going to teach that. And I think that's awesome. We should do more. But there's also a large percentage of the population that doesn't want to do it yourself or that can't do it themselves.

And that's the people that financial planners work with. And so I very rarely see that kind of differentiated in that. And I am very much a consumer advocate. And I want to continue to be a stronger consumer advocate. And let the consumer choose with their dollars where they put value.

And I think the best thing that's happening is all these new options that are coming online. The robo-advisors, just the massive growth of some of the robo-advisors is phenomenal because it's smoking all the really crappy financial planners out of the business. And 10 years from now, there will be a lot of people who are completely dead and gone because they didn't provide any value that justified the money they were earning.

And there's going to be a whole team, a whole raft of people who are delivering far in excess of the cost of their fees. Rant over it. You were very gracious. Rant over. Well, it's funny because I don't actually think you and I disagree so much. I mean, for example, there's no question that you're right that there are some people that for one or more reasons need or want a financial advisor, to be clear, someone to manage their investments.

Either because they just don't want to spend the time to do it, or maybe because they don't feel like they have the skills or the knowledge or both. So there's no question that there's a large group of people that fit within that category. Where I think things are starting to change, though, is that that kind of advice is in some ways being commoditized.

Right. Exactly. And I don't think that's a bad thing. Now, it's interesting, you mentioned robo-advisors. And I've talked a lot about betterment, wealth front, personal capital, although personal capital is a little different. But the thing that'll be interesting to me there is these things make investing very, very simple.

So if the person's need is, I want something that makes it easier to do, and then I'm comfortable doing it myself, the robo-advisor may be a good fit. But if you're talking about someone who says, I'm afraid that when the market's down, I'm going to do something stupid, the robo-advisors aren't a whole lot of help.

Right. Exactly. But here's the thing. If someone needs that kind of help, and there are plenty of people that do, I'm not so sure that the days of paying 1% to 2% of fees under management to get that kind of help, if those days aren't numbered. Because there's already plenty of options for folks that can help you do just that, help you stay in the market during difficult times, that have the ability to charge far less.

Now, obviously, if you're working with someone and you trust them, and you've worked with your family for years, you're going to stick with them. And that's fine. That's the decision. But particularly as the younger generation enters the market, I think it's going to be harder and harder to justify paying those kind of fees.

Now, in your case, see, what you're describing for your potential future practice isn't a percentage of-- isn't a percent of assets under management. You're talking about a monthly fee to provide the kind of services that you've described. And like you said, that formula is still a bit untested at the moment.

But that's a formula that I think, it seems to me, is viable and would result in a practice for folks like you, and maybe me, that would work, but that also results in lower fees for the client. But I guess time will tell. One question on this subject, though, before we move on.

People say that if you have an advisor, you're less likely to do dumb things with your money. I know that's Dave Ramsey's big thing. He says, go use one of my ELPs, commission broker, pay five and three quarters commissioned fee, but you'll have an advisor, and they'll keep you from doing dumb things when the market's down.

Are you aware of any actual studies that demonstrate that, in fact, if you have an advisor, you're whatever, x percent more likely to stick to your plan? I'm not aware of any. In fact, I keep asking this question because I know a lot of advisors, and in '08, '09, you know what they told me?

I lost all my clients. They pulled out of the market. And a part of me thinks, well, maybe you weren't doing your job, but that's probably way too judgmental because at the end of the day, the client makes the decision. I can't find a study that actually says, yes, we've surveyed 10,000 people, and those with advisors, whatever, stick with it.

Yeah, I would really doubt, I would actually doubt if you surveyed 10,000 people that you would find that those with advisors did better because I think there's a lot of really sucky advisors out there. And the best thing that happened in 2008 was a lot of people, you know, a lot of advisors got a wake-up call of, hey, I've got a problem, and there was not much good that came out of it, but I'm trying to figure that out.

But I don't know of any academically rigorous studies that would demonstrate that. I don't know if they've been attempted or not or if the results are I'm ignorant on their existence. It is difficult for me to conceive, and I could be deluding myself. I very well could be, but it's difficult for me to believe that given how carefully I coached my clients and how carefully I tried to teach them, here's what you can expect, here's the emotions that you're going to feel, here's what's going to happen, hey, guess what?

This is going to happen, this is what's going to happen, this is what's going to happen, that I couldn't do better. But I can't prove it. And this comes back to actually the other point I was going to make, is that proving who does better and what does better.

Alpha is not everything. Alpha being the amount that you've beat the market, that is not everything. And people forget this a lot of times when they're actually working with clients, is that the client doesn't really care most of the time whether or not they beat the standard and poor's 500 index.

They care about, do I have enough money to put my kid in college? Do I have enough money to retire? And this is the major disconnect between most of the formal academic financial literature and the actual experience of actual advisors. Because it doesn't, you know, I've had clients, I've talked with clients and it's like, listen, if you tell me that I can hit my goals and these goals are excellent goals and we can hit the goals with a 4% return, do I really need to deal with the rest of it to shoot for the 9%?

It's very often and frequent that a client will say, I don't care about the 9%, I want to know my 4% is actually there. So there are a ton of intelligent ways to manage a portfolio where the portfolio will always underperform the S&P 500 because it's designed to do that.

Building an immunized bond portfolio for a client's, you know, college educational expenses is a tremendous value and probably every single time that will underperform the S&P 500. So there's a big difference between the academic side of analyzing mutual fund performance versus other performance and actually working with a client's financial goals.

But I will give you one piece of data that you may enjoy and your audience may benefit from. You think that, and I don't know if I agree or disagree with you, I've taken the disagreement tact, but I could argue it too. You know? You sound like a lawyer.

Now, I actually do disagree on this basis about the indexing is not going to destroy fees. I can, so right now I think I will do the monthly fee approach because that seems the most straightforward way. But frankly, the reason I started the podcast and the reason I do this is because I want to create the media and I want to create a much bigger depth of media.

And if I didn't feel that over time that if I can serve my audience and my audience can choose to pay me for the service that I provided, if I didn't feel that I could do well financially with that in the long run, I would never have left the business that I left just to start this new firm idea.

But I do think the firm idea is going to work. But there's a mutual fund company called Dimensional Fund Advisors, DFA. And DFA is, I think, the number two biggest indexing fund company in the world. All they do is passive investing. It's all indexing. But you cannot buy their funds on the retail market.

I know. I hate that fact. Right. I hate that fact. But here's what, and here there's a whole level of sophistication here that is often not discussed, but I'll mention why. The reason why you cannot buy their funds on the retail market is because they need advisors to control their clients.

And in the mutual fund business, this is called hot money. So if you're managing a portfolio and you're a portfolio manager of a mutual fund, the worst thing that can possibly happen is if all of a sudden your investors call up and they're saying, "Hey, I need my money and you've got to sell out." This is why in hedge funds, hedge fund management, you've got a lockout period where you put the money in and you cannot get it out for whatever the lockout period is.

So in the mutual fund business, though, the mutual fund portfolio manager doesn't have this option. So I think, I can't prove this, and I haven't read it, and maybe the academic literature addresses this, this is just my opinion. But I think one of the big challenges that why many times actively managed funds underperform indexes, net of fees, is because oftentimes the active fund manager has to deal with maybe more flows.

And when you're comparing that to the index, now the index fund maybe has the same thing, so my point may not make sense. But if you're managing a billion dollar fund and all of a sudden market's going down, your fund has been reduced in price to 700 million, now because there's a 30% general market decline, now all of a sudden your investors start panicking and you've got a hundred million dollars of outflows.

That means you've got to sell a hundred million dollars of investments when they're all down, and that destroys your performance numbers. So what DFA does is by only selling through advisors, and you have to go through the gauntlet to actually become an advisor with DFA, you have to go through extensive training, you have to go through behavior management training, and you have to teach your clients very carefully what to expect.

But the key is DFA, because they only sell through advisors, they avoid hot money. And so that means that the client who is likely to sell our portfolio when the market declines by 15%, you will not find a DFA advisor willing to work with you, because it would destroy DFA's business model.

But what they can do is they can take the approach of passive investing, of indexing, and they can use some of these swings. And because they don't have the outflows of their fund that some of the other investment companies have, they're able to produce much better numbers. And so what's happening in the investment business is that people often think it's cut or dry.

They often think it's either Vanguard or else. It's either passive investing or else. Well, when you actually start studying it a little bit, that's not the case. There are a lot of people, and most of the guys that have produced several, I don't remember who's on DFA's board, but many of the guys who, the academics, who actually developed the information that led to the resurgent, the growth, the massive growth of passive investing, they're the guys on the board advising.

And DFA has been able to, on a basis of indexing, bring in some of these other portfolio tweaks that have really helped their performance. And so I think that's a good example. And they are a force to be reckoned with in the mutual fund world. So you're going to be paying 1% for an index fund, and they're doing very, very well.

Yeah, they're on their board of directors. Fama and French are both on their board, as is Roger Ibbotson. He's on there too. So one thing I will say, there are studies that show the outflows from index funds were lower than the outflows of actively managed funds in the '08, '09 time period.

I don't disagree with you that it's a mistake to say that all actively managed funds are bad. I think it depends on the cost of the fund, its investment objectives, also its market. I do think it's harder for an actively managed large cap US-based fund. Absolutely. But you get into things like emerging markets and foreign markets and other things, it's a different story.

But OK, well, you got the last word on that. I'm going to leave it there. But I know I've had you on the line here for a long time, but I did want to move over quickly. So why did you quit your cushy job and leap into the world of podcasting, number one?

What were you thinking, Joshua? And did you consult a financial planner before you made that decision? And since you've made that jump, two-part question, since you've made that jump, how are you and your family eating? Good questions. So for me, I am not heavily motivated by money in the sense of equating net worth with self-worth type of thing.

It's easy for people to say, I'm not motivated by money. Baloney. We're all motivated by money, otherwise, to some degree. But to me, I'm a young man. I'm almost 29 years old. And I've lived a phenomenally blessed life. And I have found that I've been happiest in some of the times where I've never spent any money.

And I've been privileged in some ways that are just amazing. I've had dinner with the former richest person in the world, not Gates or Buffett, and had dinner with his house before he died. And who gets an opportunity like that? I was in college. I drove a $2,000 Honda Accord to his house and parked it there and got to sit next to him for an evening of dinner, things like that.

So I've learned that very little of the things that I value in life are connected with money. What I do value is time. And I value having meaning and joy from time. So when I started my show, it was purely just for fun as an experiment. And I just got sick and tired of...

I got tired of Dave Ramsey, Rick Edelman, Susie Orman, and Clark Howard speaking for the financial business. And I like... No, wait a minute. Dave Ramsey helped you get out of debt. What happened? Go listen to my show that I recorded with Steve Stewart from MoneyPlanet SOS about do financial broadcasters like Dave Ramsey do more harm than good?

And what's the episode number? I'll look it up here. Shoot me an email. I'll include it in the show notes. That'll tell us your current views on Dave Ramsey? Yes. And Dave has been a huge benefit to me, but it's also some stuff about his advice that's extremely dangerous.

And so I was very careful in that show to kind of lay those things out. But I just got sick and tired of it. And here's the problem with the financial business is that those who are great at financial planning are usually working in the business. By the way, it's episode 66.

So it's RadicalPersonalFinance.com/66. Do financial broadcasters like Dave Ramsey do more harm than good? A frank conversation between two fans. So the people that are in the financial planning business, they can't speak to the public because everything they speak to the public is marketing. So I sat down one day and I just like, "You know what?

I can't do this, but let me just sit down." And I sat down with a digital voice recorder in the middle of my bed and I just said, "I wonder if I could create some audio content." I just started talking and I was nervous as anything at first. But then I found I really liked it.

And so I did it anonymously and I tossed some files up on the internet. I didn't tell anybody who I was or what I did. I just said, "Let me try this." And I did it for two weeks. And what I found was I found that people talk about do what you're passionate about and that's fraught with problems and it's also wonderful advice.

But the problem is that I've always been working at getting closer and closer to the things I love. And I love doing financial planning. But what I found when I was teaching that I really enjoyed it and I loved the teaching of it. And so I found myself getting up.

I don't like to get up early. And I found myself getting up at 5am, 4am, working in the morning for four or five hours trying to figure out like, "How could I create some really useful media content to teach people about financial planning?" And then I go to the office and I'd work my nine or ten hour day and I'd come home and I'd be excited to think about what I was going to do the next morning.

And I said, "Wow, this is amazing." And then I saw people starting to create content online and see people building very healthy businesses with their online content. I said, "I wonder if I could do that." So I had to take the show down because I was doing it unauthorized and I was licensed and everything.

But I recognized and I said, "Wow, I loved doing that." When I sit down and I develop an outline around some information, I sit down in front of a microphone and I speak to the audience. I enjoy doing that. And when I sat down and I said, "What would I do if I had 10 million bucks in the bank?" For the last 18 years, probably 17, 18 years, I've been obsessed with finance and obsessed with kind of finding the angles and the tricks and the little things.

And I said, "I would do that if I had 10 million bucks in the bank. I don't have 10 million yet, but I would do that if I did. And I can do it now and I think I could ultimately find a way to earn an income on it." And so I said, "Okay, I will do that." So I made plans, but the problem was that I made a couple of dumb moves in my own personal finances.

My wife and I, this was an extra challenge as far as me figuring out a business transition because the world of podcasting and blogging is very much like the world of writing books. Everyone wants to write a book and the people that actually do are few. And those who do, the vast majority make no money.

A tiny, tiny small percentage make a lot of money and maybe a slightly bigger but still really small percentage make some money. So you can't exactly say, "Oh, I'm going to go start a podcast and have that be a great financial plan." That's kind of a dumb move if you're doing it for the money.

I will second that, by the way. Keep going. Right. So I knew that I wasn't willing to do that. But the problem was I have always been a good saver. But my wife and I, after a lot of time and whatnot, we bought a house. But when we were shopping for a house, we bought a house in 2013, January 2013.

When we bought a house, we bought very carefully. We bought a house that was in the neighborhood exactly what we wanted. It was three tenths of a mile from my office so I could save a lot of money, didn't have to commute. It was exactly what we wanted, but it was twice the price range that we wanted to spend on the house.

But when we had shopped with the price range we wanted to spend on the house, then we weren't able to find a house in that range that was going to work. So we went ahead and increased our price range. So I bought the house up at $50,000 down on the house and that wiped out a lot of my savings.

So instead of being able to have this nice cushy position where, "Oh, okay. I'll close my practice down," and I walked away from a lot of money to leave and start a podcast. But instead of being able to walk away and say, "Oh, I'll shut this practice down and this is going to be great.

I've got a couple of years of income in the bank so it's no big deal. I don't need to worry about it." All of a sudden, I found myself strapped for cash because all my money was locked in a house and home equity and locked in retirement accounts where I couldn't get it out.

So I stressed about this for a while and I didn't see a way out. And I figured, "Well, I just got to keep doing financial planning." But the problem with financial planning, if you're planning to get out of financial planning, you're going to be a really bad planner. Because every time I would look a new client in the eye and create a new plan, they're giving me their trust that I'm going to be there to care for them.

And then now if I know, "Hey, I like this podcast thing. I'm going to leave in two years. I just need to save a bunch of money so I can do it," that wasn't working. So finally, I sat down with my wife one day and we decided, "I'm going to do it.

I'm going to figure it out." And what helped us is that we're pretty frugal. We don't need much money to live on. We need about $3,000 a month to live on at our current lifestyle. So that means I figured out. I said, "Listen, I can go and get another job.

And if I just get a job that's outside of the financial business, then that will allow me to create the show. And I'll just work eight hours on the job, eight hours on the show, and I'll sleep eight. It'll be good. Everything will work." So I don't mind working a couple...

Basically, I don't mind working two full-time jobs for a while, not forever, but that worked. So I started pursuing options and I looked for a few different things. I looked for some dead-end stuff. I went and delivered pizzas for a week because I heard you can make a bunch of money doing that.

Not true. But I figured if I could go deliver pizzas for five nights a week and make $3,000 a month, work five hours a night for five, six nights a week, that'd be great. It'd be perfect. Unfortunately, I couldn't. It was not worth any time. So I went and then the whole time trying to figure out, "Okay, do I start the new firm?

How do I structure it?" All that kind of stuff. So the show at this point, it's three or four months old. I'm on episode 77, I think I just posted today, or 78. And I love doing it. And the response from the audience has been wonderful. It's been humbling and awesome.

And I feel like they're starting to coalesce a group of people who are really benefiting from it and who are doing that. And my hope is that I think I can bring other services and other products to them with time that will allow me to actually earn some money from the show.

And in the meantime, I wound up working out a consulting contract in the financial planning business. So I have a consulting contract that pays my bills and that frees me up while I start the new firm. And then I expect the new firm, if I can ever wind up actually getting it going, I expect that to fund my life.

And then thankfully, I've still got a pretty decent cushion of cash in the bank, which is also kind of my... I don't like to spend money. I don't like to spend reserves. I know many people will start business off of that, but I prefer just earning income as I go and keeping the cash and reserves in case something goes wrong.

But that's my story. So that's how I started the show. - Wow. Okay. You're enjoying it so far, I take it. - I love it. I love it. - You're happy with your decision? - Thrilled. - Your wife's happy with your decision? - She likes seeing me happy and having the ability to...

- That's a good wife to have. - Right. You know what's refreshing is I'm a pretty crazy guy. You could probably pick that up. - I had not noticed that, Joshua. Also, you don't have very strong opinions about things. You're kind of wishy-washy. You really are. I don't know.

You might want to look into that. - Build a backbone and find out about opinions, right? So, the cool thing is that I love to... My show is called Radical Personal Finance, but the problem is that what I learned for the first time and I never recognized it because I've been self-employed for the last six years.

I never got a paycheck. Everything was based upon if you work and you produce, then you make money. That's how my life has been for six years. So, I'm very comfortable with the topic of entrepreneurship. But when you're behind a larger corporate umbrella, I never... You have responsibilities to the brand of the umbrella.

So, you can't be as crazy as I often am. After I left and I was kind of just on my own, I recognized the awesome responsibility of that, but also the total freedom. So, now on my show, I interviewed a guy who's a war tax protester, hasn't paid taxes since we invaded Iraq.

So, it's 13, 14, 12 or 13 years by now. I did a show on what we can learn from dumpster divers and vagabonds and hobos. And I do shows on in-depth complicated tax planning. I'm planning some shows on how to do multi-billion dollar trusts for estate planning. And so, to me, I enjoy those crazy, far out, wacky subjects.

But that's tough to find a firm who's got to be conservative. Put it this way. There's not a chance in the world that Vanguard or American Funds or Fidelity would ever sponsor my show. And that's okay. I don't need them to because they've got to protect their brand image.

But I enjoy being able to look at these subjects that many people don't look at. - Right. Well, that's terrific. And I've started listening to your show and have enjoyed it very much. And I haven't listened to the tax strategy episode yet. So, I'm going to focus on that myself.

One question about your show, and then I'm going to have some rapid fire questions for you at the end, okay? Which I suspect you'll be brilliant at. Here we go. The first question about your show. I noticed you use SpeakPipe, which allows people to leave you a voice message.

- Right. - I toyed with that for about a day and a half. It's not on my site at the moment, but I have a SpeakPipe account. So, a listener could, rather than emailing you a question, they could leave you a voicemail and then it would give you something to play on your show.

So, the other listeners could hear the person asking the question. Are your listeners embracing that? - They are. I think I've received... It took me forever. I am not a techie guy. I can't stand the techie stuff. So, it took me... I've threatened to do it for like four or five weeks.

And I finally installed it about three or four weeks ago. And I think I've received something like six or seven voicemails now. - Okay. - Which has been great. And I cleared them all out on last Friday's show. And I forgot... Thanks for reminding, by the way. I forgot to tell the audience, "Listen, if you guys want to answer questions, call them in again." So, I got to remind the audience about that.

- All right. I'm going to put that back up. I get a ton of email, which is great. But I think it'd be kind of fun to hear people's voices and play that. So, I'm going to give that a try. Okay. - I think it adds a lot. - Rapid fire questions.

You ready? - Ready. - Okay. Best personal finance book. What do people read? - Richest Man in Babylon. No question. - How about for investing? Same one? - Just a minute. - Tick tock. Tick tock. - The investing one is hard because I don't like how most people just...

When they hear investing... - This is a rapid fire Q&A. - There is no one book on investing. - Okay. Fine. You don't have one on that. - But I'll give you one actually. Here's what it is. If somebody has passed just the novice level of investing, read a book called The Fund Industry by Robert Pozen and Teresa Hamaker, something like that.

And you will gain insights into the managed money business that you've never known. And you will not find any of this stuff in the personal finance world. So, read a book called The Fund Industry. - All right. Do you use a tool for your budgeting? - I keep an Excel spreadsheet and I don't budget.

- Excel spreadsheet, you don't budget. - I don't... Meaning I don't budget proactively in a forward-looking manner. I do it in a month by month. I take a look at the previous month. - Okay. Do you use tools to track your investments? - No. - No? Okay. Your investments, what are you invested in?

Let me ask you this. What's your asset allocation? - 100% stocks. - Wow. 100% stocks. Crazy guy. - I don't get bonds. This is purely for me, not client advice. But I think it's very simple. Owners get richer than lenders. And I have a stomach of steel when it comes to volatility.

And you will always have the highest total average return from 100% stock portfolio versus in my opinion, and I think there's good academic research for this, but you'll always have the highest total average return from stocks versus bonds simply because of the inherent volatility. If you can handle the volatility, you're going to get richer with stocks.

But the vast majority people can't handle the volatility. I have a stomach of steel, so I'm 100% stocks all the time. - Stomach of steel. That's the title to your next book, man. Right there it is. Okay. All mutual funds or ETFs? - Presently, but I'm struggling with actually...

I'm having a major... Over the last year, I've had a major ethical crisis actually of trying to figure out... I am not comfortable with many of the companies that I own in my mutual funds, and I'm having a major ethical crisis from profiting over them. So I am headed down a road actually, and we'll see, but it is possible that in the future I will be selling all of my mutual funds and taking over the management of my portfolio myself so that I can control the companies that I'm profiting from.

- So in other words, individual stocks. - Right. - Because there are mutual funds that avoid the sin industry, so to speak. - Right. But the problem is the things that I have issues with, almost nobody else does. So for example, I don't care a bit about tobacco companies or alcohol companies, but I'm uncomfortable owning some of the major banks.

And there's a lot of examples. So the social screens for the social mutual funds, I haven't found one that actually matters to me. - They probably don't exclude banks, I'm guessing. - Right. Things like that. But I don't like the banking cartel that we have in this country right now, and I don't want to profit from them.

And so this is a major personal ethical crisis for me. I never experienced this in the past. I would always tell clients, "Don't worry about that, just earn the money." But now that I'm going through it, it's causing me to rethink everything, and I'm probably going to be going in a different direction with my investing in the future.

- That's interesting, because from my perspective as an investor, I love monopolies and cartels because they make a lot of money. Okay. Your mutual funds, we're almost there, almost done. Your mutual funds, are they primarily index or active or a complete mix? - Primarily active. I have a few index funds, but primarily active.

- What mutual fund companies? - American Funds. - Ah, American Funds. So you pay the commission or do you not? Can you bypass that, given your background? - I just paid the commission, but I paid it to myself. It was a little bit funky when I bought it. - Ah, there you go.

So you're an insider. So you're one of the people we talk about. - Exactly. - Okay. Because it just flows through to me anyway. And the commission, by the way, is an interesting discussion. The commissions have been destroyed over the last number of years, but we'll be back into that conversation.

But here's the thing. If I were working with a client, I would almost 100% of the time rather have fees than commissions, because commissions are one time. If you're just talking about self-interest, people that accuse commission-based sales of investments to be wrong as compared to that fee is somehow better, selfishly speaking, I would rather have fees because I have larger stable revenue over time as compared to commissions.

So I've never bought that argument. So I have some actively traded funds with American Funds and I have some Vanguard funds as well on one of my retirement accounts. - It's funny because I bought that argument for a while, but I agree with you, particularly if you're paying a fee-only advisor 1% or more.

Long-term, if you stick to a plan, you would be better off paying the commission. - Right. - And American Funds, they're good funds. I think most of them that I've looked at are probably in the 60 to 70 basis points, certainly higher than an index fund, but also significantly lower than the average actively managed fund.

Kind of reminds me of Dodge and Cox that doesn't have a commission, but their expense ratio is about the same and I own a Dodge and Cox fund and I think they're pretty good. Of course, a lot of the folks, and I know we're getting off this rapid fire question round that I had, but a lot of folks say, "Well, commissions versus 1% fees, commissions win." That's true, I think it can win.

Although my response to that would be, "But you haven't listed all of the options because those aren't your only two options." - Right. And I would say also you have to look at the service. So, for example, if I sell somebody a commission product and I earn a commission on that, do I have as high of an incentive to come back and service them year after year after year?

Most of the people, you just buy a small account, I don't have much of an incentive to respond. But here's the flip side. Somebody has $70,000, you can't charge a fee on that. That is way too small to deal with that. - Right. - So, what happens- - That's why they have minimums.

- Right, exactly. And so, that's what happens is people get into these discussions and they've never figured, and you get into these academic discussions, and you've never sat with a client that says, "Joshua, I need help with my investments." We'll call Vanguard because you've got $22,000. "Joshua, no, I want you to do it." - Right.

- What happens is if you cut out commissions, you close out the ability to work with middle and lower middle America. - Oh, interesting. - And I think that is one of the neglected things that I've heard. Now, the other problem is that low and middle America has been screwed time and time and time again by stockbrokers selling crap.

So, how do you deal with that? I don't know, other than to say, find an ethical advisor, a person of integrity, train them well, make them knowledgeable, and give them what they need to work with tools in each client's portfolio. And I do want to comment on one other thing on your rapid fire round.

- Good, and then I've got one last question. - Cool. Just because I misspoke, because you said, I think a moment ago, you said active or passive, and I said all active. That's not right. So, I have some actively managed funds and I have some funds at Vanguard, but one's in a retirement account and the other.

I think people have to look at the actual asset class. And you made this point earlier, but to me, this makes sense to me. If you're going to own an actively managed fund, it needs to do something that an index fund can't. But not all indexes are created equal.

So, that's my current opinion. We'll see if it changes. I'm going to try to get William Sharp and some of these other guys on my show as time goes on. And I think, who knows, maybe they'll change my mind. I don't know. - Okay, one last question. Any favorite online resources, blogs, websites, whatever that you regularly follow in the personal finance and investing space?

- Radicalpersonalfinance.com. - No, good. That's a good one. - Yes and no. So, these days, I don't read many blogs. And I think blogs are really causing problems with people's ability to comprehensively grasp a subject. Meaning that more books, fewer blogs. Because blogs, we try to produce something, but we can't produce a coherent story.

So, as long as you have a foundation in books and you're going back to books for knowledge, augmenting them with blogs is great. But if you're not actually starting with books and you're just trying to build an education from blogs, it's really tough. Because no matter how well-intentioned or no matter how knowledge the writer is, when you're writing 1,000, 2,000, 3,000 word essays, you can't convey a comprehensive thought and comprehensively teach.

So, I enjoy Pete's blog, Money Mustache. I enjoy that because he's produced the most motivated group of people. I enjoy Jacob's book, Jacob Lundfisker's book, Early Retirement Extreme. I don't look to the blogging community for much on financial planning advice. I read, in the financial planning world, Michael Kitsis' blog a lot.

So, K-I-T-C-E-S.com. - That's good. He's great. - That's what I read for financial planning blogging. And I like, for wealth building, I like Todd Tressiter's work at financialmentor.com. I think he's done a really good job there talking about the wealth building side, which is something that is never talked about in financial planning, by the way.

- Yeah, he was at FinCon too. - Right. - Yeah, we had a good time. - All right. Well, great. Well, you've given us a ton of resources. I'll link to all of them in the show notes as well as to your show. And shoot me an email with any podcasts that you think really stand out.

I've got the one, episode 66 on Dave Ramsey. But if you have any others, shoot me an email. I'll include those in the show notes as well. All right, Joshua. Well, listen, I appreciate your time and your views. It was very enlightening for me. Great having you on the show.

- Thank you, Rob. I appreciate it. - Well, as I promised at the beginning of this show, that has to be the longest interview I've recorded in this podcast. I hope you enjoyed it. A lot of detail. One of the things, Joshua, as you know, very strong opinions about the world of personal finance and investing.

And I kind of, I love that. And questioning him and learning about the business of the CFP and what all those pesky initials are behind his name. If you haven't already, I encourage you to check out his podcast, Radical Personal Finance. A very detailed show. A lot of great stuff.

And I think you'll enjoy it a lot. I've listened to a number of his shows. Obviously a very knowledgeable person. And my hunch is you've got some questions. So, you know, you can obviously reach out to him through Radical Personal Finance, and I'm sure he would love to get your emails and questions.

Also, though, feel free to shoot me an email, drdorler.net, if you have any questions about this episode. Happy to address them myself or pass them on to Joshua, if that makes sense. So feel free to reach out to him either way. And, of course, you can always reach out to me with any questions or topic suggestions for the show.

I would love to hear from you. And happy to get those emails. Hey, hope you have a great day. And remember, until next time, you know what it is. The best thing money can buy, financial freedom. If you're looking for an exciting role in customer service, food service, or retail, connect with a job at the airport.

Get started in a role that offers competitive wages, consistent schedules, and fast-tracked management while you work in a vibrant, exciting environment where security is a priority. The airport has it all. You can have it all, too. Visit cmhserviceindustry.com to learn more.