Welcome to Bogleheads on Investing, podcast number 16. Today, my special guest is Cheryl Garrett. Cheryl is an author and a financial planner and is the founder of the Garrett Planning Network, a network of over 230 hourly financial planners. My name is Rick Ferry and I'm the host of Bogleheads on Investing.

This episode, as with all episodes, is brought to you by the John C. Bogle Center for Financial Literacy, a 501(c)(3) corporation. Today, my special guest is Cheryl Garrett, the founder of the Garrett Planning Network, a nationwide network of over 230 hourly-based financial advisors whose mission is to make competent, objective financial advice accessible to all people.

I have known Cheryl for many years, and I'm very happy to have her on the show today. So with no further ado, let me introduce my good friend, Cheryl Garrett. Thank you for being on the show, Cheryl. Delighted to be here, Rick. Thank you. I'm really excited to have you on the show.

We've known each other for 20 years, and you're just doing wonderful things out there for investors in your organization. The Garrett Planning Network is just a fantastic organization that I have personally been involved with for many years, almost since the beginning, I believe. I'm really excited to talk with you today about the Garrett Network, but before we get into that, tell us a little bit about who is Cheryl Garrett.

I am a gal who grew up in the middle of the country, Kansas, to be precise, and I went to college not knowing really what I wanted to do for a living, but I found that I loved reading Money Magazine cover to cover, and I was really into this concept of learning about knowing how to manage my financial affairs.

I didn't know what it was called or anything, but I wanted to know about personal finance, and I didn't want to have to have a husband or a father or somebody doing that for me. I wanted to know that stuff, and I kind of was born an entrepreneur, or my father raised one, that's for sure.

He was an entrepreneur as well, and I had my first job when I was eight, working at a flower shop, a couple of backyards behind our house, and so I got a good lesson of the value of money and work and fair dealings, and my father grew up really, really poor and married a woman who had a car in high school, which was great.

So my father and his mother, both were just extraordinary role models, and I live by a mantra, what would grandma do? My dad's mom. She raised nine kids, six of which were born living during the Depression in Kansas with the Dust Bowl. She could make a meal for their whole family.

Literally, I think the rock soup story began with my grandmother, and I just carried this forward. I wanted to do something that mattered in my work life that made a difference, but I didn't have the interest to be a medical doctor. I kept coming back to this love for learning about personal finance, and while I was still in college and working full time, I actually met a woman who was a registered representative for IDF, now Ameriprise Financial Advisors.

- Of course, yes. - But I wanted to be able to control my own destiny as much as reasonably possible, and having the knowledge of personal finance goes a long way to doing that, and so I looked around. I started noticing company names and hearing about different financial advisors or financial planners or investment advisors, and I didn't know the difference between any of them, and I was applying for jobs at companies that said they were wanting to hire one, and so I interviewed with a bunch of places.

Most of them were insurance companies talking about financial planning or investment advisor or financial advisor, and I was offered a position in IDF, Ameriprise now. It was a lot narrower then as far as their spectrum of offering and so forth. Actually, a lot of financial planners and advisors started at IDF.

It's amazing. The only decent way into the industry when you had nothing but maybe a semester of accounting or a semester of economics or something. Heck, there weren't investment classes in college. You know, isn't that crazy? - But Cheryl, I mean, isn't that the way the industry still is?

I mean, you don't need to have a degree in finance or you don't need to have any kind of special training in order to take a Series 7 exam and become a registered rep at a brokerage firm, correct? - Oh, sure. Anybody can be a salesperson by passing the sales licenses.

It's a transaction-based thing, and there is a very low bar of entry. Unfortunately, there's also a very low bar of entry to give fiduciary advice, the type of advice that could really harm or make or break somebody's financial future. - What I always say is it's harder for your 16-year-old to get a driver's license than for someone to become a financial advisor in the United States.

And let me explain. That 16-year-old who wants to get a driver's license has to go through a series of classes. Then they have to take a written exam and pass it, and then they have to get a learner's permit where they're on this learner's permit for, I don't know, six months or whatever it is until they learn how to drive.

And then they have to take another practical driving test to actually show that they are proficient driving a vehicle. A financial advisor in the United States, they just have to pass an exam, and that's it, one exam. - Yeah, and it's not all that difficult. - No, where I used to work in the brokerage industry back 25 years ago, all of the people who were doing sales assistance, they weren't even brokers or advisors.

They were the sales assistants to them who were doing a lot of the administrative work. All of the sales assistants all had to take the exam and pass the exam. So it was not a difficult exam. Again, you maybe studied for a couple of months, and then you go in and you take the exam in the morning, and you're done in the afternoon.

And now you are a full-fledged expert as far as the public is concerned. - You could be vice president of something. - Oh, yeah, you could be vice president. That was another thing, too. Everybody was a vice president. It didn't matter. Everybody was a vice president, yeah. So in other words, the industry hasn't really changed at all as far as getting into it.

But what you found when you got into that was that it wasn't for you. - That's for sure. - And actually, I bounced around for 11 years trying to find what was the right fit for me. I worked at IDS, definitely not the right fit. Then I went to work for a fee-only financial planner.

It was more of a family office. We took care of 24 households. I learned a lot, but that's not what made my heart sing. My next major role, I had a couple of similar types of engagements with independent financial planning firms to really learn holistic financial planning, complete my CFP education designation, and start working with and looking at the issues that clients face.

But all through this, at first I was dealing with basically being a transaction salesperson that I am not and can't be. I miserably failed at it, but I wasn't going to give up hope that there wasn't a better option out there because I was in love with the concept.

And I bounced around three or four different positions over the next 11 years trying to find a better fit, more client-focused, more appropriate for what clients need, and more right fit. - What exactly was the right fit for you? I mean, what were you looking for? - We don't need a full-time money manager or a full-time advisor, but every once in a while we need somebody we can trust to turn to.

And I wanted to be that outlet, to provide that same high quality of advice that people who wanted to delegate and spend thousands of dollars a year to financial firm, financial advisory firms. What about the rest of the people? The other, you know, 80% of the population? Nobody other than the sales community was even available to the middle market and the beginners.

And then nobody wants to deal with the do-it-yourselfers because there's no long-term revenue. So I built my firm to charge by the hour to do what people needed. - Well, let's get back to that concept of making the jump from working for other companies to this aha moment or this epiphany where you decided that I need to go out and create a network that does this.

This is needed out there, it doesn't exist, and you decided you were the person to do it. - I decided to become the outlet to provide financial advice to these people who didn't have access before because of minimums or asset under-management requirements. And I started out my practice 11 years into financial planning, and I said, "How would I want financial advice if I were the consumer?" I would want to walk in and say, "Rick, this is what I've got going on.

What should I do?" And then you give me your advice, and I'd take it, and I'd run with it. I felt that that was how I would want to receive financial advice if I were the consumer, and so I built my financial planning firm that way. - And how did that come in, get your advice, go out and do it yourself, pay by the hour?

How did that model go? How was it taken by the public? - Within a few months, I started receiving a lot of traction. - So you're out there on your own now, and you're getting a lot of business because there are very few financial planners. - None. - Right, none at the time, who are actually willing to get paid a fair wage for actually doing financial planning and just doing financial planning and not deciding to sell you insurance or manage your money.

- Right, yeah. - I'm just doing financial planning. - Yeah, I set my rate based on the time I put into working with or on behalf of a client instead of how big's your portfolio or how tall are you or what's your BMI. You know, formulas never fit everybody every time, and I haven't found AUM to fit most people most of the time, and I can't do that.

So for me, the most fair way to charge, although it does put more onus on the advisor, is to charge for my time. And also, one thing that I noticed is nearly everyone that I worked with, my firm worked with probably about 1,000 households when I was involved in the hourly practice, and within one year, 15 months exactly, I started getting a whole lot of industry press about my hourly novelty or oddity or insanity.

- I like the word insanity because since I've been doing hourly, a lot of people think that I've gone insane too. - Yeah, and welcome to the club. - But it is hard. I mean, it's not easy money like doing assets under management is relatively easy money. You get paid whether the market goes up or down, whether the client calls, whether the client doesn't call.

I mean, you get your cut every single quarter. So hourly is not easy. - As we're thinking about it, if you can't make a living at whatever dollar an hour rate, you know, people will complain about a service provider that charges $85 an hour or $185 or $400 an hour, whatever.

But if they fix your problem for a price you're willing to pay, you're thrilled. - So you're doing hourly, the phone is ringing, you're getting busy, but then also the media takes notice of what you're doing, and boom, so the world kind of explodes on you. - When some journalists heard about what I was doing, I started getting calls, and I started talking to journalists about what I did, and it was pretty remarkable 'cause the first major journalist I recall tracking me down was Liz Pulliam-Weston while she was at the LA Times, and she was working on an article called "Middle Income Advisor," and so she contacted her stable of go-to resources, and all of them said, "You know, that really wouldn't, you know, middle America really wouldn't be me," and I'm not talking geographically, I'm talking financially.

Liz said, "I contacted a number of my resources," and they kept mentioning, "Have you talked to Cheryl in Kansas?" And to me, that's a punchline already. When somebody has to go 1,500 miles to find one girl in Kansas that works by the hour, I mean, there has got to be a joke in here somewhere.

- No, that's true, though. I mean, the whole industry, and most of it still is this way, is geared towards how can I make money off of your money? I mean, both-- - Exactly. - The brokers who are selling-- - Oh, shit, you figured it out? - It's not about how to make money for you, it's how to make money from you.

That's the way that the brokerage firms were. I mean, when I was in the brokerage world, and I was there for 10 years at two different companies, one of them was Kidder Peabody, and the other one was Smith Barney, so these were not small companies. Both of them are no longer in existence, but, you know, when I went in every year for my annual meeting with my office manager, where we were setting goals to determine what my goals would be, it wasn't how many clients are you gonna help reach their financial goal this year?

How are you going to help the clients send their children to college? It wasn't anything like that. It was how much commission revenue are you gonna generate, and how are you gonna do it? And they didn't really care how you did it. They really didn't. If you hit these goals that they had for you, then you got your corner office, or you got your free trip, or whatever it is you're gonna get.

But it was all based on how much revenue are you gonna extract from the client? And then when I actually left that industry and I started a money management company where we charged AUM, and I charged a very low AUM. As you know, I was only charging a quarter of a percent management fee, and I wasn't doing financial planning, so it was truly just, "We will manage your portfolio and index funds "and work with your financial planner, "but we're gonna charge you a low 0.25% fee." But a lot of the advisors around me, in fact, most of the advisors around me, were, "You can never make it.

"You have to charge one percent." - Right, yep. - It was all about, "You deserve the right to get the most, "have a certain standard of living, "and you should charge what the market will bear." - Exactly. - I was trying to charge what was fair, not what the market will bear.

So it was all about, "How much money can you make from the clients?" rather than, "What can you do for the clients?" Now that I'm doing the hourly thing, I can see it even better, 'cause even though I was charging a low fee when I was managing money, now that I'm not doing that anymore, I see the hourly fee or something like that where it's more aligned with actually helping the clients rather than trying to get into their wallets and get a piece of the action, is really the most fair way to do it.

- Exactly. There are situations where somebody does need to delegate and have somebody babysitting their financial lives for them, like a conservatorship or possibly a widower, or someone with diminished capacity, or someone that's a busy professional or busy living life in another way or out of the country, and they want to delegate it.

If you've got that desire and the money to do it, by all means, there are providers to do that, and you will pay a lot for that service. Unfortunately, for the middle market and the do-it-yourselfers of the world, that's pretty much all there was, and still to this day, almost all there is.

But the tide is moving away from definitely commissions, away from transaction costs. - And you're speaking about the fact that ETF trading at Charles Schwab and so forth is now all zero commission, and then the funds themselves are a smidgen above zero. So, I mean, the actual costs to manage a portfolio literally have been driven down to next to nothing, and the only last bastion of gluttony, if there is one out there, is the 1% AUM fee, which is the average fee that a advisor charges to manage, say, a $1 million portfolio.

- And that's the average. - Well, that's true. It's unfortunate that's the average. - Unfortunately, there are higher ones, but yeah, that is an average. - So you had this philosophy, and you were out on your own doing hourly, and nobody else was doing it. I mean, how did it all come about where you decided to create a whole network of how many hourly advisors?

- Currently, 235. - You have this network of 235 advisors that are following this philosophy, and of course, this is not a new network now. It's almost 20 years old. So how did that come about? - My financial planning practice grew really fast, and I was having so much fun and really feeling great and having happy clients and happy me, and I told that story around the industry, and I started getting picked up from some of the trade journals.

What is this Yahoo doing? Doing hourly financial planning and investment advice. Well, when people read those kind of articles, Bob Veres, a long-time journalist and industry kind of visionary or futurist person inside the financial services industry, tackled me about this and talked about my practice and then wrote a piece about what I'm doing and compared it to kind of like a dentist's office where you pay for services as you need them, and you don't need a full-time financial planner or a full-time dentist, but you do need to go to your dentist periodically, probably twice a year as they coach us, some people more often, some people less often, but we need to look at our financial advice that way.

I started getting as many inquiries or calls and contacts from financial advisors, financial planners, wanting to do what I was doing, charging by the hour. So I had lunch with a local person in Kansas City, and at lunch, he pulls out his checkbook and said, "What can I pay you to teach me how to do what you're doing?" I'm just like, "This is crazy, insane." At 15 months into my hourly practice, I spoke at an Institute of Certified Financial Planners conference for new certified financial planners or students of the program about what we did all day long as a financial planner, and my message and who I worked with and how I worked resonated with the audience extremely well, about 135 people in attendance, and when we broke instead of a panel discussion with five people, we could go to one of five sections and spend the afternoon.

Almost the entire audience came to my section because they could see themselves doing work that mattered, that made a difference, and that wasn't all tied to implementing a product, selling a product, a transaction, or investment management. It was about financial planning. So the interest of fellow financial advisors and then Bob Verri's doing an interview, he said, "Cheryl, you are obviously willing to share what you have been doing, and I know you're a capitalist, so why don't you bottle it and sell it?" A year almost to that date, we had our first training class.

We launched in February of 2000, so just shy of 20 years right now, and had our first training class in July of 2000 with 11 advisors. So it just kind of continued to grow, about 50 new members a year, based on they had the shared philosophy of doing the right thing for the client regardless.

You are asking these planners to put aside the traditional sales culture and money management culture that they grew up in and to actually get down to the business of doing financial planning and getting paid for it. I really am very challenged to understand as a financial planner, which as you know, we've discussed this numerous times, money management and financial planning are distinctly different activities.

- And they deserve a completely different fee model, no doubt. - Yes, exactly. I agree wholeheartedly. We don't attract financial advisors to this way of working with clients if they're in it for the, "How can I get rich off my clients' money without working?" That's a pretty significant funnel to go through because you're self-selecting a philosophy of how you're working and basing your charges on the time that you invest working on behalf and with a client.

- You started out with a class of 11. Are any of the original 11 still in business? - Yes. One of them is on our member advisory board. - Okay. - And we have several from the next classes in September of 2000 and October of 2000. We have members from all those classes still with us.

- So you could put to rest the idea that hourly advising as a profession doesn't work for the advisor. I think that after 20 years of people being in the Garrett Planning Network, charging hourly, being successful at it, pretty much puts a nail in the coffin that for the people who are the pundits who say, "No, you can't make it that way.

You have to charge AUM. You have to charge higher fees." It's just simply not true. - Yeah. - So you've got now about 235 advisors at the Garrett Planning Network. All of them have the same philosophy, but some of the bogleheads who I asked on the forum, bogleheads.org, because I told them in the forum that I was interviewing you so they could write in questions, and they did.

A couple of the questions, I'd say three people were asking, "How do you screen the planners who come into your network?" - That's an excellent question. And it's also a topic that I've probably spent talking to journalists over the last two or four years, most of anything, is how do you find a financial planner that's right for you?

And what do you need to look at and that kind of thing? I'll tell you what we do at the Garrett Planning Network. No level of screening can be exhaustive, but I want everyone to be really crystal clear on what we do do, and then also what I would encourage individuals to do when they want to take it to the next step.

So what we do at the Garrett Planning Network is we receive an application. We also require their ADV documents, the annual filing for registered investment advisors. There is a zero testing or requirement to call yourself a financial planner in this country. - That's a really good point. I mean, there are regulations or laws that say if you're going to call yourself a registered investment advisor, you, in fact, have to be registered with either states, or you have to be registered with the federal government through the Security and Exchange Commission.

- Or if you call yourself an investment advisor, you better do it. - Right. I know I live in Texas here, and if you say you give one iota of investment advice for any kind of compensation at all, you have to register. No discussion about it. But financial planner, different.

- Yeah. Anybody can call themselves a financial planner. I guess it's as easy as guru and such. You know, you see the commercials about guru, teacher, coach, whatever. Financial planner is the type of work that we do, might be the job title, but there's no curriculum. Other than we embrace or recognize two primary designations, and one being the CFP, Certified Financial Planner, and the second being the designation that a CPA would have, if they've also had a financial planning training equivalent to the CFP, which is Personal Financial Specialist.

So they'd be a CPA/PFS. Other exclusions above and beyond the CFP designation would be like a person who has a PhD in financial planning. I think I would say they would qualify. A person who has a master's, and we have had these folks as members. They're teaching educational programs, the financial planning program around the country.

So that is our educational criteria. And then we want to look at their application and tell me why. I want to hear a lot of their philosophical approaches and how they expect to build their businesses and are they prepared for a certain amount of time to get their businesses up and running, because I don't want people to join our group and not be successful.

So they need to be prepared for what it takes to start a practice and get it to a point where it can sustain itself, and they can focus on taking care of their clients. So one of the Bogleheads has asked a really good question about how often you need to do a financial plan.

And his comment is, "Do investors modify financial plans more or less frequently "when using assets under management "as a form of compensation to their advisor "or some sort of a fee-based model like hourly?" I have zero statistics on that question, and it's quite interesting, but I'll give you my guess.

I would tend to think that if people are acting as a fiduciary, there shouldn't be much difference. Now, what happens in between visits to an episodic advisor, such as the services I provided on an hourly basis, is if I don't know about it, I don't know about it, versus the AUM advisor who better know about it because they're getting paid to watch.

Let me talk about that for a second because "We'll watch it for you" was always something that the brokerage industry was... It's a great sales line. Don't worry, we'll watch it for you. But in fact, look, I was an AUM advisor for 20 years. All I'm watching is the revenue come in from your portfolio.

You know, when are you adding money, when are you not adding? Or the portfolio react to the market. Right, that's what I'm watching. In other words, to talk with you on a regular basis... It's a good sales line, though. Yeah, yeah, "I'll watch it for you" is a big deal.

It provides a lot of comfort to people. If you do a really good financial plan for somebody, how often do you have to redo it? Well, it depends on age and circumstance. Really, circumstance. If I were working with young people, we're making projections about stuff that's going to happen decades from now.

We can't even come close. I mean, what we're going is from... Imagine my arms are straight out to my sides, 180 degrees. And we take a look at the current trajectory you're on and plot that out. Precision projected over time is not precision. And it's an illusion of precision and it's insanity.

But having targets and knowing that you're heading in the right direction is really helpful. For young people, if you put a plan together and say, "By this time next year, I should have X amount in my net worth. I'm going to pay down debt by this and build up assets or cash reserves or whatever.

Those are my goals." And if you meet those goals and nothing else really changes in your life, you don't even update. But sometimes things happen, like regulations change. When the Roth IRA became available, if a 529 plan might make sense, some of these boglehead folks would likely be aware of them.

But the average client that I worked with wasn't necessarily a dyed-in-the-wool reader of all things personal finance and fiduciary. Great kind of advice. Cheryl, when you're paying an AUM fee for not only portfolio management but financial planning, you do the financial plan the first year. How much extra work is it year 2, year 3, year 4, year 5?

Do you think that advisors who charge for financial planning and asset management, say using 1%, are maybe overcharging for the financial planning side? Probably not in year 1, but, you know, I don't know what the-- I need dollars rather than percentages. Okay, so let's talk about somebody who has $1 million.

I have $1 million, and I'm going to-- $10,000, yeah, you're probably overpaying, unless you got a-- But that's the average fee. I mean, that's the average fee for an advisor. If you look at the statistics, it's $1 million. They charge 1%. They get $10,000 a year. And then when you question them about it, they say, well-- Just because it's average doesn't make it right.

Well, but they say, when I argue with them on Twitter, they say, well, we add a lot of value. We are--our clients rely on us, and, you know, we are-- Yeah, that's true. We are a coach to them, and we are a-- I don't disagree. --circuit breaker to them when the markets go down, because they're--we're a behavioral coach, and we're going to keep them in the market when they want to get out.

Now, I don't believe a lot of that, by the way, because, again, when I was managing money, people didn't just, when the market went down, all of a sudden panic and sell. I mean, there might have been a few that did that, but very, very few of the clients do that.

Yeah. So, you know, the question is, to you, is how often, you know, do you need to redo the whole financial plan where you're paying 1% per year fee for asset management, which you can get very low cost these days, and then the rest of it is all of these other services that have really nothing to do with managing the money, but it does have to do with personal finance.

But you're paying an awful lot of money for that, and I can see this, the year one, where you're doing the big financial plan, but how often do you need to do a big financial plan? Probably only once, and perhaps if we've done a plan together, updating it is easy.

Yeah, it doesn't take nearly as much time. Oh, no, no. Subsequent years, just maintaining, you know, if you're in good stead, if we get you all lined up and maintaining that, that's when the formulas melt down, because they don't go down with the amount of time expended. Right, exactly.

So this is what I might point about, let's say, assets under management. So you have a financial planner/money manager who is going to manage your portfolio and do a big financial plan for you, and the first year, if they charge some fee, let's call it 1%, okay, you know, $10,000 on $1 million, but the second year, why wouldn't the fee drop to .5%?

Because they're not spending nearly as much time. Right, good question, and that's one that I would want answered before I would even consider working with that advisor. I also would do another thing, is you mentioned this scenario as a financial planner who also provides money management services and charges this as one consolidated fee.

That is most common. Also, I don't like it. I do allow AUM charging by Garrett members, but hourly has to be primary, and it has to be provided for the accessibility, and our members are well informed that I personally do not like AUM for financial planners. For money managers, if the price is fair, I don't have an issue with it because managing a portfolio like you used to do at 25 basis points can be a really appropriate service for certain clients, and I say for certain clients because I don't think everybody needs their portfolio managed.

They might be able to buy a handful of funds and have it checked up on annually or something along those lines and just pay for the time for that checkup. Am I still in the right place? Is there any reason I should change? And those kind of questions is what I'd like to see.

So what I would love to see in financial planning is separate out the fee for financial planning. Absolutely. 100% agree with that. Yeah, so if people are looking for a financial planner and they also offer investment management services, have them break it out. If they say, "We don't," just leave.

Well, let's talk a bit about your network and that you just said that you do allow assets under management. You do allow your planners to charge, and if there's one criticism I have heard of the Garrett Planning Network, and it's a fair criticism because I experienced it myself when I'm trying to find financial planners because I'm not a financial planner.

I just do the investing. So when I'm trying to find a hourly financial planner for somebody, I go to the Garrett Planning Network website. I look up who the advisors are in a particular area where a client is. The first thing I look at is are they managing money?

And if the answer is yes, they manage money, I wouldn't typically send them to that planner. I would try to find a planner who does not manage money. And the reason for this is because-- and this is what I've heard, and I know it's true-- that a lot of the bogleheads who have contacted Garrett planners were a little bit disenchanted by what happened.

They go there to talk with them about financial planning, and then they get pitched money management. And it is a criticism I hear quite often from the bogleheads. How would you answer that criticism? - Let me know. I don't want it either. And we have removed a couple of advisors for that.

Now, I want to clarify. We have removed a couple advisors for pitching AUM services and the client specifically needed, in my opinion, and the client's opinion and desires. They wanted to pay on an hourly basis for their time and not based on their assets, and that should have been made available as an option, and it wasn't, and that individual is no longer with us.

And so, you know, we've had two types of complaints in our 20 years. Luckily, they haven't been all that often. And yes, I very much am aware that the bogleheads community-- you know, it's kind of like the fee-only financial planners community. We're really tight. We talk to each other.

I know you all do, too. Most, if not all, of our members would be very familiar with bogleheads-- the love of low-cost indexing, being frugal, that kind of thing. You just go in and say, "I listened to a podcast with Cheryl Garrett on it, and she said you all offer hourly, and if you don't get what you're looking for, feel free to contact me." Okay, fair enough.

Another question. So, Cheryl, you have had planners come into your organization, and then there have been some who have left the organization, as you mentioned a minute ago. What is your retention rate for planners every year? Yeah, I wish it was 99%, but it's right at 89% to 90%.

And the ones who leave, why-- besides the fact that they get out of the business or pass away or retire, I mean, are they just not making it as hourly planners? Well, yes, and there could be reasons why. One of them that I run into is some people are not designed to be entrepreneurs.

Being the person who is in charge of everything and you're alone, and that's one of the reasons for our network is we are all self-employed, and it does get quite lonely out there, and the subject matter that we deal with is so broad. It's really amazingly powerful to be able to tap into a network of peers, and so that's the reason we exist is to help leverage our time, talents, and energies to better serve our clients and keep our sanity.

Cheryl, the hourly model, is it better suited toward younger people? Is it better suited towards people who are in midlife? Or is it better suited towards people who are nearing retirement? I mean, who would you say it's best suited for? Or maybe it's not suited for anybody better than anybody else.

That's an interesting question. As I can see, very rewarding outcomes for all of those groups. Best suited for a validator and the do-it-yourselfers of the world, the people that we can't serve best is the delegator. Could you explain what a delegator is rather than a do-it-yourselfer? Someone who comes in and shares, "Here's what I want to do, and here's what I've got going on.

"You deal with it. I'll pay you." And they leave and dump it all on you. An hourly advisor is not a good fit for that. Yeah, I could see that. I mean, I see it in my own practice where I can help people to a point, but if they want somebody to implement and someone to oversee on an ongoing basis, it's not me.

Right, precisely. That sums it up. When the client can do the implementation, I found that that is often about half of a financial plan's cost, the legwork to implement. And we, as financial advisors, can't implement everything anyway, so the client's doing a good amount of it themselves. So why not empower them to fix it for themselves?

I completely agree with that. This brings me into the final question that we had by the Bogleheads, and here it is. "Why should a Boglehead investor with a three-fund portfolio "consider consulting with a fee-only financial planner? "I don't need investment advice." Now, let me explain what a three-fund portfolio is.

You probably already know, but I'll explain it again. It's just simply investing in three broad index funds-- a total U.S. stock market index fund, a total international stock index fund, and then a bond index fund of some sort. But it's just three simple funds, a very simple portfolio. So somebody who follows that strategy and doesn't really need any investment advice, why use a financial advisor?

Definitely may not need an investment advisor. The financial planning is a much broader field. Investment advice is one aspect. Frequently, questions regarding, "When should I start Social Security? "Which employee benefits do I need? "How much should I be saving for this? "Should I take 0% financing "or the $2,000 cash back on buying the car?" Some of these questions may be, like, automatic to the listeners of the podcast.

They are personally educated. But every once in a while, we run into stuff that we need to ask a professional or somebody for a second opinion. A lot of the clients I worked with, they viewed me as more of a second opinion. They called me their advisor. But, you know, a number of them were quite savvy investors.

But they wanted a holistic overview, kind of look at the whole thing. And finally, I can't let you go without talking about this. You're a famous person because President Obama himself called you out, I guess that's the word, while you were in an audience and was telling the world, basically, what a fantastic job that you were doing, trying to push the idea that a financial advisor should be a fiduciary.

Tell me about that whole experience. It's still surreal. It's the first time, to my knowledge, any president has recognized a financial advisor and financial planner particularly, and I'm very, very proud of that. What happened? I had been participating in the fiduciary advocacy work in Washington with a number of other volunteers.

And as I kept repeating horror stories that I had witnessed as an expert witness or litigation consultant over the last few years, these stories resonated and they're about normal people, you know, average Americans getting ripped off by the current system. And I got a call about a week before that mentioned by the president from a person with the White House, and I didn't really think about it.

I was kind of thinking, well, you know, I'm paying attention, actually. Nor did I think, you know, anything I said would actually go anywhere other than to help the rule, the fiduciary rule. I was going to listen to the president's upcoming speeches because they interviewed me for the potential of, it was the speech writer, and she was potentially going to put some of my comments or thoughts into the president's speech.

So that's how it came about. I got a call just before the speech was to occur, the Friday before that Monday speech, asking me if I could be in attendance. And I got to Washington, D.C., and sat in the audience and listened to the various presentations or announcements, and then in comes President Obama, and he lends his support to the DOL fiduciary rule, and then he starts talking about gunslingers in the Wild Wild West have no regulations over certain parts of their activities.

And I'm like, oh my gosh, those are my words, or maybe. And then he said my name, and I don't remember anything. I got home the next day. Seriously, I got home the next day and watched it on YouTube, and I had, of course, hordes of emails from people.

Of course. How many times did he say your name? Eight. I never, never in my wildest imagination would have expected to be quoted. I mean, that's--it still, in my mind, did not happen. But I'm really proud of the person it did happen to. Well, it did happen, and it couldn't have happened to a more wonderful person who has done so much for the average person out there with their finances and start-- We're not average.

We're stupendous. Okay, we're stupendous. We're normal. We're normal. Everybody's above average. That's right. Well, I'm so glad you came on the show today, Cheryl, and told us your story and told us a lot of good stories, I should say. And I think that--I wish the Garrett Network continued success.

I think that--I think alternative models are the-- alternative ways in which you pay an advisor are finally in the forefront out there and are getting more publicity. And, of course, you've been one of the big advocates for 20 years, and I wish you continued luck. And thank you so much for being on the show.

Thank you. Oh, thank you, and my sincere pleasure. This concludes the 16th episode of Bogle Hits on Investing. I'm your host, Rick Ferry. Join us each month to hear a new special guest. In the meantime, visit BogleHeads.org and the BogleHeads Wiki. Participate in the forum and help others find the forum.

Thanks for listening. you