Relationship with Money
A blog that knows money is more than numbers
123 | Thoughts on Our Pricing
Of course there is a fee for our services.
There are two primary reasons that we charge a fee - credit to Carl Richards for saying them so concisely.
The first is that clients who pay for advice actually pay attention to advice.
Paying is an expression of enrollment in the process. And enrollment in the process is the leading indicator of future success.
The second is that making a profit gives us "permission" to continue doing this high impact work indefinitely.
Without some profit, the work would be a hobby, which is only sustained by outside resources. That is no way to run a business or even a household.
Our fee is a simple, flat fee that everyone can understand.
That is rare in the industry.
It's scaled loosely based on complexity and ability to pay, so that we can serve a diverse group of clients forever.
That is rare in the industry too.
You will not find many people who have thought more intentionally about client-centered pricing than we have - just ask them.
122 | But How Do I Actually Do It?
Detailed projections love to summarize financial well-being in a single metric, which is often a probability of success.
The trouble is that all of the context is lost the moment this happens.
Imagine if midway through the third quarter, one of the data analysts informed Patrick Mahomes that the Chiefs had an 82% chance of winning the game.
For a fleeting moment, he might have some peace of mind about progress, but immediately thereafter he's going to have questions about how to actually win the game.
He doesn’t need someone to tell him the likelihood that he’ll win.
He needs someone to help him brainstorm the specific plays that they need to run on each of the remaining drives.
He needs someone to help him decide what players need to be around him on the field.
He needs to be reminded of the work they did in practice to prepare for the last 15 minutes of the game.
He needs someone who can have a conversation in real football terms, not math terms that ignore the game that is still being played on the field.
Whether it's football or finances, you still have to play the game regardless of what the analytics say.
121 | Reality Eats Speculation for Breakfast
I don't have a clue how investment returns or cost of living will change over the next few decades.
Even if we trick ourselves into using historical figures, the reality is that assumptions are a nice urban walking trail while reality is a strenuous hike with boulders to climb and weather to endure.
The way you generate income and set money aside isn't any more certain either.
Gutting out a miserable career in the name of modest raises and bonuses each year is not a win in my book.
Nor is pretending that our savings rate will remain steady year after year when life has a tendency of surprising us on the good and bad side all the time.
At best, these kinds of speculation put us on the hook for knowing more about the future than it is possible to know.
At worst, they lead us down the rabbit hole of debating speculative assumptions or trick us into projecting a hypothetical future that will torment us year after year.
A detailed projection slyly turns assumptions into gospel and turns a calculator into a "plan".
On the other hand, it's hard to argue what has happened in the past.
People who like their work will find that their income is more sustainable.
People who are intentional with spending will find that they experience more contentment.
People who have saved before will find it easier to save the next time.
People who have navigated seasons of investment loss will find it easier to be patient in the next downturn.
Reality is hard to argue, easy to access, and practical to reflect upon - and establishing a common understanding of it is the only way to move forward into an uncertain future.
120 | Flickering Questions
Most of us have questions about money and purpose deep within us that flicker like a candle.
Why does what I feel in my gut always feel so different from what we discuss in a finance conversation?
Why does it feel like we can't "catch up"?
There are so many things competing for our resources. How do we decide what should come first?
Why do I always get overwhelmed by money conversations?
Why does this career lack the purpose that I expected to experience?
Is this really all there is to being "good with money"?
Some of these questions are difficult to say out loud because, at best, it's hard to find the words or, at worst, it seems like a silly question with an obvious answer that you should know.
But these questions are the essence of our relationship with money - a flickering candle that only reveals itself if we allow it to shine.
The problem is that detailed plans and projections are the ultimate candle snuffer.
Instead of creating an environment for the candle to burn brighter with a vulnerable, but honest reflection, a detailed projection quickly snuffs out the real questions allowing "inflation", "market risk", "Social Security", and "life expectancy" to rush in and suck all the oxygen out of the room.
Too many numbers and assumptions inevitably confuse even the most financially-savvy Muggles to a point that it's hard to ask the first question.
Snuffing out the real questions and restricting the conversation to clarifying assumptions is no way to talk about money, but that’s what we’ve settled on as an industry.
119 | A "Financial Plan" is a Feeling
We’ve tricked ourselves into thinking that a "financial plan" is a document.
Some of the blame can be placed on our need to control the future - a document makes this seem more possible.
Some of the blame can be placed on an advisor’s need to prove that they’ve done something - a document provides a nice façade.
But time and time again, the word “plan” means something wildly different for everybody.
For some, it’s that feeling of seeing all of your accounts in one place instead of anxiously wondering if you've lost track of a couple.
For others, it’s moving from blind accumulation to a clearer feeling of purpose accompanying each dollar that is saved.
And for others, it's just talking about finances in a safe space, because it's helpful to get jumbled thoughts out of your head every so often.
It’s seeing that large bill and not skipping a heartbeat because you knew it was coming and was a normal cost of doing life.
It’s that bit of financial news or that stock tip from a friend that you can immediately dismiss as a waste of time.
It's knowing that even when finances feel chaotic, that you have a habit of reviewing and reflecting on your money life that will eventually put everything back into proper context.
“It feels so good to have a plan” is a universal experience of most everyone, but only because it’s a universal feeling.
118 | You Get What You Pay For
Some people want investment management and nothing else...and that's OK.
When this is the case, it might make sense to pay an AUM fee.
But when it comes to money, so many people have a feeling in their gut that investments won't and can't address, and that’s where the narrative starts to break down.
The disconnect between this feeling and the solutions that financial advisors have been offering for a couple of decades is a primary reason we've grown so skeptical of financial advice.
Investments don't address the Sunday Scaries. Investments don’t address a disappointing spending decision. Investments don’t address the stress of running life without an emergency fund or having your wings clipped by debt. Investments don’t help you get on the same page with your spouse or give you the courage to make a change.
But the fee and the way advice has been marketed - comprehensive, holistic, personalized - implies that they should.
Deep down we desire so much more in our relationship with money, but we’ve been trained to pay for investment advice and then hope everything else takes care of itself.
It’s time to start paying for the things we want, and trust that the investment advice will take care of itself.
Our fee is a simple, flat fee that is loosely based on complexity and ability to pay, but is never based on a percentage of assets under management.
117 | Are We Going to Beat "The Market"?
Honestly, I don’t know.
And honestly, I don’t care - even though sometimes I’m tempted to care.
But the moment you tack a fee onto assets under management is the moment you’re putting yourself on the hook to make it happen - or at least begging someone to ask the question.
Of course I want the best investment returns just like every other competitive, Type A, perfectionist-leaning achiever out there, but money is about so much more than investment returns.
I’m interested in helping people engage with how much is enough, use their money for things that actually contribute to building their life, and avoid getting stuck on the perpetual pendulum of hoarding and consuming.
Beating the market is an abstract and confusing metric that doesn’t get me closer to any of those goals.
But when you’re paying for returns, it’s hard to acknowledge that reality.
Our fee is a simple, flat fee that is loosely based on complexity and ability to pay, but is never based on a percentage of assets under management.
116 | Hiring a Plumber to Build a House
I'm elaborating on a good friend's riff that I read here.
Even if a plumber was the best contractor in the city, it would be weird if they said, “I’ll do the plumbing for $400,000 and, while I’m at it, I’ll build you a house for free.“
But that’s what happens every time we pay a fee for assets under management, but receive help on everything else related to money.
If it were just math, it wouldn’t matter.
But it’s not just math.
As Carl Richards would say, the way we bill tells a story.
And the plumber giving away free houses tells a story that makes the plumbing seem more important than the rest of the house.
If you want a house, you pay for the house and sub out the detailed work.
If you want help with your "money life", it probably makes the most sense to hire a contractor instead of a plumber.
Our fee is a simple, flat fee that is loosely based on complexity and ability to pay, but is never based on a percentage of assets under management.
115 | All Roads Lead to the Biggest Rollover
Everyone is susceptible to the siren call of “more”, and there aren’t many things that call an advisor louder than a big rollover check, the sale of a business, or a substantial inheritance when they’re charging a fee for assets under management.
It’s why financial advice has become so tethered to the highest net worths and the most assets.
It’s easy to say the advice is the same but behind the scenes, the highest net worths are either getting all the attention or they're overpaying.
And the lowest net worths find the attention is waning or the offering is becoming less and less relevant over time.
Once an advisor's fee is tied to assets managed, it’s hard to measure success without tallying up assets gathered, and it’s hard to look at potential clients without seeing different-sized dollar signs floating above their head.
Our fee is a simple, flat fee that is loosely based on complexity and ability to pay, but is never based on a percentage of assets under management.
114 | The Ultimate Conflict of Interest
If you're a good saver, I will encourage you to keep it up or maybe even help you slow it down.
If you need to save, I will help simplify the logistics of saving and inspire you to actually make it happen.
I don't want you to save out of fear, save to create a war chest for doomsday, save because you don't have anything better to do, or save so I can get paid more.
I want you to save because your savings rate reveals so many over critical things - your ability to live within your means, your ability to control lifestyle creep, your ability to say yes to unexpected things, your ability to pivot to something different, your ability to manage expectations, and your ability to keep living the life that you desire to live.
I want you to save...
Because that is how you experience financial well-being.
Saving is hard enough on its own.
If you saving increases my fee, are we actually pulling the rope in the same direction?
Our fee is a simple, flat fee that is loosely based on complexity and ability to pay, but is never based on a percentage of assets under management.
113 | On the Hook for The Wrong Thing
Once we’ve cared for some basic principles of investing, the amount of control that we have over investment outcomes is alarmingly less than any of us probably care to imagine.
Managing investments creates an implied assumption that we are impacting results by pulling special levers that don’t actually exist.
If we’re looking to attribute wins and losses to the correct people, then good and bad investment performance has no business being assigned to an advisor, when the overwhelming majority of investment outcomes are driven by...
Clear expectations.
Having sufficient cash on hand.
Behavior.
And patience.
We review investment options, we review investment performance, we give investment advice, and even help adjust your investment allocation if needed, but we do not manage investments.
112 | Your Plate Isn't Getting Any Bigger
Personal preferences, social responsibility, environmental concerns, and convictions of faith are some of the endless list of things influencing investment decisions in 2023.
Managing investments creates the unfortunate dynamic of having to sell something and disclose all the risks.
The trouble is that there are too many things to sell and too many risks to disclose.
Seth Godin would say, "The buffet line is far too long and the plates aren’t getting any bigger."
Our world is quickly changing to one where people have already been sold on their approach and just need help identifying the biggest risks.
I can’t keep tabs on all the options on the buffet line, but I can help you decide what to put on your plate.
There is no need to limit the buffet line or try to restrict everyone to Italian food when all you really need to do is help people fill their own plate with what they want while giving them a couple nutrition tips along the way.
We review investment options, we review investment performance, we give investment advice, and even help adjust your investment allocation if needed, but we do not manage investments.
111 | Titleist or Taylormade?
The specific investments that you use are like the brand of golf ball that someone might play.
Golf purists might appreciate the nuance of different brands or have eclectic personal preferences.
Non-golfers couldn’t be less interested or equipped to even have an opinion or distinguish between two different brands.
Either way, time spent discussing golf ball brands is either wasted or better done when shooting the breeze over a beer or coffee.
To actually be good at golf you have to be able to hit fairways, hit greens, and make putts - the brand of ball enhances these skills about as much as a couple of phone books would improve a toddler’s ability to drive a car.
Over time, the majority of investments start to feel a lot more similar than different, but for some reason once we’re managing them we can’t help but start acting like they will turn us into the financial equivalent of Tiger Woods circa 2000-2001.
We review investment options, we review investment performance, we give investment advice, and even help adjust your investment allocation if needed, but we do not manage investments.
110 | All You Need is a Fob
There are more than 20,000 mutual funds and ETFs in existence right now.
Anyone who thinks that someone can evaluate them all to discover the best ones is kidding themselves - we crossed that threshold a couple of decades ago.
As a result of this boom in options, we are now more overwhelmed with decision fatigue and confusion about what matters than ever before.
But there is a silver lining.
The redundancy and accessibility of options is greater than ever before. If we can’t get a specific investment, then we can easily find it’s twin brother, sister, cousin, or best friend with the click of a button.
Managing investments used to provide critical access, but now it’s an overpaid front desk clerk who’s watching everyone use a fob to get in the door.
We review investment options, we review investment performance, we give investment advice, and even help adjust your investment allocation if needed, but we do not manage investments.
109 | Wasting Time That We Don't Have
We can’t help it, but managing investments means that we would have to dedicate a lot of resources to investments: talking about them, reporting on them, disclosing them, administering them, and having our eyes glaze over them.
That’s not something that we want to do.
We can’t spend precious time, talking "shop" about investments when we could be extending the horizon on our income streams, refining our spending in a way that drives contentment, or setting money aside in a more intentional and accessible manner.
The behind the scenes work of administration and remaining compliant to industry regulations is substantial and better outsourced to financial technology companies that have figured out how to streamline this work and charge fees that have been trending towards $0 for decades.
The management of assets is like cutting your grass with scissors when there is a lawn company offering to mow it for free - it takes too much time, requires too many steps, risks missing a couple of blades, and gets to the same outcome.
We review investment options, we review investment performance, we give investment advice, and even help adjust your investment allocation if needed, but we do not manage investments.
Additional Resources
A Primordial Take on Asset Allocation by Christine Benz
107 | A Crumbling Pillar: Detailed Plans and Projections
Borrowing from Carl Richards, "Certainty is a promise that can't be delivered."
Whether we realize it or not, detailed plans and projections are promises of certainty in disguise.
For a time, they answered the question that investment management never could, "What does all of this financial wealth mean to me?”
Over time, they've morphed into an annual exercise of attempting to calculate the uncertainty out of the future.
Inevitably, these “products” fall woefully short of contributing to real financial well being because uncertainty and change are the only guaranteed parts of your financial life.
We can all feel it in our gut, but it's hard to have the courage to say it out loud.
No one can calculate the uncertainty out of the future.
It's tough because we want a shortcut to peace, security, contentment, and freedom, but those things don't come from a spreadsheet.
The moment we begin speculating about the numbers of the future is the moment we abstract what we're actually trying to do with our money and our life.
The pillar of the industry is crumbling and we're building a new one.
We will reflect on the past, we will build habits and tweak mindsets, we will even project a couple of years into the future (as long as it is grounded in a verifiable reality), but we will not rely on a detailed, assumption-laden projection to give us a false sense of security about the future.
106 | A Crumbling Pillar: Assets-Under-Management Fees
Paying for advice based on a percentage of assets is an enormous improvement from paying commissions and sales charges when you buy specific investment products, but it still leaves a lot to be desired.
It doesn't take a PhD to see the incongruence of charging fees for one thing and delivering the value on everything else.
There is still an awkward conflict of interest when it makes sense to save more or consolidate assets.
There is still the reality that some people pay a lot more than others for the same experience.
It takes advantage of the "out-of-sight-out-of-mind" nature of deducting fees from an account that is rarely reviewed in detail.
It leads us to believe that investments must matter more than they do, because no matter how much we try to discuss everything else, the way you’re billed tells a story that is nearly impossible to re-frame.
The pillar of the industry is crumbling and we're building a new one - our fee is a simple, flat fee that is loosely based on complexity and ability to pay, but is never based on a percentage of assets under management.
101 | A Crumbling Pillar: Managing Investments
Investments are a distraction.
For decades, we've tied financial advice to investments in a way that misleads, disorients, and confuses us to what actually matters when it comes to our financial well being.
There are plenty of things to discuss when it comes to investments, but the impact and importance of those things diminishes quickly once you check a few basic boxes.
How we generate sustainable income, find contentment in our spending, and ensure accessibility in our saving drives 95% of the feelings and outcomes that we experience with money, but we've tricked ourselves into believing that income, spending, and saving are stepchildren to a sexy investing strategy.
Just because investments are the easiest thing to market, deliver, and brag about doesn't mean we have to anchor our financial well being to them.
A pillar of the industry is crumbling and we're building a new one - we review investment options, we review investment performance, we give investment advice, and even help adjust your investment allocation if needed, but we do not manage investments.
90 | We Are Probably NOT a Good Fit if You…
The most important thing we can do is ensure that we will work well with one another.
If we're not a good fit, we will both eventually regret it.
This business is different from any other financial planning business you have ever encountered.
It is intentionally designed to achieve different outcomes, but it is not for everyone.
We have found that there are certain desires, characteristics, and feelings that many of our clients have that make them a good fit.
We have also found that there are certain desires, characteristics, and feelings that serve as red flags for starting a relationship.
We are probably NOT a good fit if you:
Desire…
- Stock tips and speculative shop talk or someone you can call your "investment guy"
- Detailed calculations predicting the future or a promise that you'll be able to retire in a certain month in 22 years
- Complex solutions and products that you don't understand
- Control more than curiosity
- To see invested dollars only go up in value without any seasons of down along the way
- To continue paying fees to your advisor out of your account because even if they're exorbitant at least they are out of sight and out of mind
Don't know...
- How it's possible to have success with money without being in tune with where the market has been, where it is, and where it's going next year
- How you could have a real conversation about finances outside of a conference room setting
- How behavior could possibly have a greater impact on our well being than the newest tips, tricks, and tactics
- If you can trust seven colored bars to tell your financial story more completely than any other tool you've ever used
Are hesitant to...
- To block out the noise of financial social media or your most financially vocal family member or friend or CNBC
- Entertain the idea that "more" might not be the only solution
- To share all of your finances with a single person or log into an account online and share your screen in order to gather the most useful information
Feel...
- Like it's possible to game the system
- Like you should be able to figure out money on your own because, if you can't, you're not doing your job
- Like paying someone to help you make financial decisions is an expense instead of an investment
- Like a political administration is the biggest threat to your future financial well being
- Like a "one time" plan or conversation is all you need to get the ship headed in the right direction
- Like it is a waste of time to talk about the non-numbers side of your relationship with money
Appreciate...
- Getting assigned homework to do on your own instead of putting heads together to knock out tasks as a team
- Being able to talk about money once per year (or never!) in hopes that it will fix itself with time
- The personal nature of phone tag and back and forth emails over the ease of of a scheduling software that allows you to pick your best time
- Making tactical moves with your investments at the top and bottom of market cycles
89 | We Are Probably a Good Fit if You…
The most important thing we can do is ensure that we will work well with one another.
If we're not a good fit, we will both eventually regret it.
This business is different from any other financial planning business you have ever encountered.
It is intentionally designed to achieve different outcomes, but it is not for everyone.
We have found that there are certain desires, characteristics, and feelings that many of our clients have that make them a good fit.
All of them may not resonate, but if a few do then maybe it's time for us to connect.
We are probably a good fit if you:
Desire…
- To think of money as a tool to drive purpose and meaning instead of a permanently scarce resource on an imaginary scoreboard
- To pursue work that is more than a paycheck that leaves you counting down to your retirement date
- To talk about more than just investments, insurance, and/or certainty-promising retirement projections
- To buck the 9a to 5p work culture, live in a new place, switch careers, start a new business, or navigate a life transition
- To stop paying 1+% on your managed assets and still wonder what to do with the rest of your finances (even the most altruistic advisors can feel like asset gatherers!)
- To fundamentally change your relationship with money (easiest with folks in their 30s and 40s or the most nimble-minded in their 50s and 60s)
Don't know...
- The first question to ask
- Where exactly you want to go (we'll help you figure it out...over time)
- Where the goalposts are (few people do)
- How to keep the goalposts from constantly moving (you are not alone)
- Anything about investing or "the market"
- Why the dollar amount of your assets impacts how much you have to pay for advice from most other financial advisors
Are tired of...
- Trying to categorize your spending or set budgets only to be discouraged when you run out of energy to keep it up
- Feeling like the questions in your head are not appropriate to ask out loud
- Financial jargon and fearmongers
- "Comprehensive" and "holistic" planning only speaking to your investments
- Long lists of complicated recommendations that you can't get done
- DIY'ing your finances because the endless research inevitably goes in circles (and that second guessing though!)
- That feeling of leaving a meeting with an advisor and feeling like you should understand what was discussed better than you do
Feel...
- Like your income keeps growing and you keep saving, but your feelings about the future aren't changing
- Like conversations about money, particularly with people you love the most, are hard to have
- Like you’re getting a lot of conflicting advice from a lot of different parties
- Overwhelmed by the options and decisions that you have to make about money
- Inspired to change the money stories and scripts that play on repeat in your head
- Coachable and open-minded
Appreciate...
- That investments aren't the secret to financial well being
- Numbers taking a back seat to real life
- Conversations and questions more than analysis and projections
- Rolling up sleeves instead of shooting the breeze
- That simple things can still be hard to do
- That neither you or I can predict the future
- That you'll have to want it for yourself more than I want it for you (keep reading the blog if you need to appreciate how much I want it for you!)