Altogether, our investment accounts are 64% of our net worth, and growing as a %. We use Betterment to manage the bulk of our investments. Carl Richards: 22:04 Yeah, like I know the work you do is going to help them so the people do see it but the reality is even with the work you do-. The exact opposite happened. Carl Richards: 27:27 We're going to attract them in this way. Look how good I did." way than I ever could. It was like a fairy tale and I was like, "No, there are these people. Sonya [Luderick 00:36:49], amazing work on that side. Patrick Brewer: 29:32 Or, if you prefer, subscribe to the Model FA Podcast on iTunes, Stitcher, or wherever you listen. And I'll leave that in the video and people are like, because it's true. So how do you feel the advisor should be structured in that situation? We get asked this question all the time, what should I study at university? We've got the client experience, so it needs to be, if I'm hearing you correctly, tangible enough to the client where it feels like a real experience that they're walking through. iTunes|Stitcher|Spotify. Because that's what people need, they're so scared and so nervous and so worried. Now the second part of your question, where do you go? I didn’t get back to earning what I was in 2015 until 2019, so this bucket hasn’t been a priority yet. Carl Richards: 52:59 Cool Patrick, my pleasure. Like 95%, I don't know what the right number is, but I'm just going to pick one because I can, 95% of the industry should be selling shoes or cars. Patrick Brewer: 33:07 I think it breaks it. Number two, please believe me, and I can tell you, I feel like I'm maybe sitting in a very unique position given the work I do on both sides of this fence. Patrick Brewer: 27:25 Mm-hmm (affirmative). ONE night a few … Carl Richards: 30:30 I was actually just surprised at how few advisors who fall into that cohort that let's say you and I are somewhat agreeing on right now or wanting to join our company. That's cool and cold turkey's awesome and if you can do that, that's awesome but give yourself permission in your next client review like tomorrow, your next client review can you just tack in 10 minutes of the 60 minutes. I just know the vast majority of advisors I talk to are not comfortable doing this and yet they know they need to. In our finances, we want to prioritize flexibility/security, family, and traveling/experiences. So, most of our money is set up that way: How can we translate our earned income into buying more flexibility, more time with family and friends, and more experiences for our family? Yeah, totally and I guess the point is, build a business that's optimized after serving the clients of course, build a business that's optimized for the happiness of the owner. So somebody comes in, if I were giving and training right now, I think the first meeting is the golf swing of our business. And I drew some squares and circles and arrows and they were like, "Oh, now I get it.". I think I have about five advisors that have come through that channel, like the more formally trained, larger, mid-sized DFA Vanguard affiliated firms. But that’s just a guess. Elijah at the Ferry Building in San Francisco, with the Bay Bridge behind. Right now, with a conservative estimate on our home value, our home equity is 26% of our net worth, and we hope to continually reduce that over the years. In fact, I would almost encourage you not to and so let's just talk about what that could look like, right? Yeah, two simple, two easy, and then what I know because I have these conversations with them. Do you do that as a solo entrepreneur? Patrick Brewer: 40:22 Nope. Carl Richards: 01:15 We don’t have a great system here other than trying to give more as we earn more. Now it may not be that you personally need both. He's built these beautiful portfolios, really proud of it and they hung their hats on it and you probably know what I'm talking about, like a group of people that seemed to point at that all the time and by the way, it's not that it's not valuable, it's insanely valuable. Credit to Carl Richards, Probably not. They definitely will because I force them to do it so that's like 50%-, Carl Richards: 17:08 The major changes will never end, though I would think the pace may at least slow down in the coming years. Ultimately we decided against it and are going to move forward with our existing plan to slightly renovate our home. I hope you like it." Carl has also been featured on Marketplace Money,, … You may know certified financial planner Carl Richards simply as the “napkin guy,” thanks to the popular New York Times column that features his no-nonsense financial tips illustrated … You can check it out at © 2020 Forbes Media LLC. Because it's easy to you, you think it's easy to everyone else and because it's easy to everyone else it has no value. His book, “The Behavior Gap,” was published this year. So it is the truth but what I was frustrated with was, "But wait," because I remember during the global financial crisis I remember the work I was doing was saving people's next 20 years of their lives. Carl Richards: 52:47 So anyway, that's all I'm going to say about that. Carl Richards: 22:56 What do you think is holding these firms back from doing some things that get that out there? is a financial planner, blogger and the founder of the elusive Secret Society of Real Financial Planners. Nobody cares and the other thing I'll just add this and I'm going to let you finish is, what I've see is most people care about themselves so they have their own Mr Burns that they're dealing with almost all the time so they're not really caring about you and your content as much as you might think. Frankly, I am swayed by the arguments that international markets will outperform the US in future years, and am regularly tempted to push this ratio closer to an even split. And that's why I've been so... gone to such lengths in this conversation to point out like, "Yes.". Working in HR revealed a lot about the financial lives of employees, and the lightbulb went off: Too many smart and talented people feel overwhelmed with finances, always wondering if they're making mistakes. Carl, how are you doing? How would you like to proceed? It was really fun. You've already done all the work. Like boringly flat. A smaller house also comes with a host of other money saved, whether on property taxes, furniture, energy bills, maintenance and repairs, etc. So it turns out Mr Burns is at every party I ever have a good time at so now I'm like, "Hey man. It's the place to get videoed and it's scary, scary, scary work to do. Patrick Brewer: 00:29 Patrick Brewer: 50:01 Yes, super good. Oh yeah, we got you. For those of you unfamiliar with Carl, he is a CFP and creator of the Sketch Guy column, which has appeared weekly in the New … We dollar cost average into all the accounts, on a few different days throughout the month. Of the stocks, it’s about a 60/40 split of U.S. to International. Patrick Brewer: 18:45 I mean you've got to be really emotionally engaged in those relationships, you've got to probably spend a good amount of time with Maxine, you've got to create a client experience that's going to be tangible that will allow you to grow your business and then thrive. Well because I love the compound influence chart and it looks exactly the same as the compound interest chart and this is just sort of, lesson number one and then we'll move onto two more ideas but the compound interest chart, everybody listening to this knows this, "Well jeez, it's so boring. What they need is for us to say, "Hey, I've got you. That fund is pretty similar in allocation to the rest of our accounts; it’s 90% stocks and has a healthy percentage allocated to international markets. Patrick Brewer: 17:51 And most of my clients are people that we've been investing into from a development standpoint trying to get them to understand that there is this whole real financial advice movement and instill that in them and then help them broadcast the message out. Join the Model FA advisor community, where you will find expert advice on how to launch, grow, scale, and transform your firm. On most days, we feel great about that decision. You’ll notice the numbers above add up to 100% of our net worth. Carl Richards is a Certified Financial Planner™ and creator of the Sketch Guy column, appearing weekly in the New York Times since 2010. In today’s conversation, I grab some time with Carl Richards. And all I was reading about was this garbage and that's what got me so passionate about it. What if I just shared that?" Patrick Brewer: 42:36 Like what do I want? I mean those three things alone will allow you to shorten the curve if you're willing to accept the advice. Or are they just comfortable financially so they don't really think it's necessary and they're not willing to endure that level of uncomfort? This is the cool thing about our business is what if you just said, "Here's the business I want. Patrick Brewer: 24:02 Through his simple sketches, Carl makes complex financial concepts easy to understand. So what are we supposed to do? Maxine comes in and we could flip this script by the way, the husband comes in, fine. That's as bad as having a picture of that middle aged couple walking on the beach on the front of your brochure. If two people have asked me that question, I bet there's more people who wonder about it. Like I'm purposefully building structures in my life to leave me at the appropriate intervals because you've got to rest between this, you can't be scared your whole life or else you'll die but at the appropriate intervals which is multiple times a week, to be scared and I've just changed that dynamic. Carl Richards: 30:49 Come in, I'm just sending an email, no one's going to die. If that's what you want to do, that's great. The problem is you don't know where they are. Patrick Brewer: 03:34 What do I want the business to look like for me?" So I just want, if I was in the room with your listener right now, I'm sort of yelling at saying, "Please, please, please," and by yelling I mean begging. [inaudible 00:41:22] do your portfolio review, do your performance review, talk about the markets, do all that stuff you've been doing for 20, you're fine. What impact is that going to make?" This is what they want, I promise you this is what they want." Or, if you prefer, subscribe to the Model FA Podcast on iTunes, Stitcher, or wherever you listen. Patrick Brewer: 44:34 Yeah, when she was going to monetize her skill set. I worked as a teacher and as a school administrator overseeing HR before becoming a fee-only financial planner. But, I automate a set amount to go from my business account to personal every month, and only take a hands on approach to moving money around every few months if something irregular happened with my income. I would grab them by the arm and look them in the eyes and go, "Hey brother, sister listen. I think you just practice. Never before have more financial advisors been in trouble. Almost all bills are automated, except the New Orleans Sewerage and Water Board (If you live here, you know why). Carl Richards: 43:47 What does that mean to you, the idea of real financial advice? Carl Richards is a Certified Financial Planner™ and creator of the Sketch Guy column, appearing weekly in The New York Times since 2010.. Now how does that fit into your little spreadsheet? We've got megabehemouth advisory firms let's say that are spending money brainwashing the public, trying to get them to think that we're all terrible humans which in certain cases we can't really refute that. Like we specifically have a meeting that we revisit this goal of stripping away every place to hide. So in the end, we'll hide behind tactics all day along and one of the things I love about the work that you do and a lot of what we try to do continually is we're just trying to leave people no place to hide. Carl Richards: 45:15 I don't know how many there are. In this conversation, we discuss how to establish trust in an industry with a lot of bad actors, and how to make certain you’re on track to be, what Carl calls, “A real financial advisor”…  You’ll walk away with practical steps to rediscover the humanity in our industry — and learn how to be an advocate for your clients’ needs. Carl Richards: 14:42 Carl Richards: 39:40 Don’t miss one of our favorite moments, when Carl shares the story of a client explaining why they chose their Fiduciary Advisor: “Because of the way you made us feel.”  When was the last time you connected with you clients on such a deep level? Carl Richards: 03:48 I mean, I probably shouldn't keep saying, it's not very complex, it's really simple. In a continuing series of back-of-the-napkin drawings and posts, Carl Richards, a financial planner, has been explaining the basics of money through simple graphs and diagrams. Does it make sense on a spreadsheet given investment return expectations? The thesis of "The One-Page Financial Plan," the new book by New York Times columnist Carl Richards, is that rather than overthinking everything to the point of paralysis, you … Patrick Brewer: 00:18 Be intentional about, think about it and you may want like Josh Brown and Barry building with this big national firm, awesome, they like that. Look forward to seeing you there. His sketches serve as the foundation for his two books, The One-Page Financial Plan: A Simple Way to Be Smart About Your Money and The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money (Portfolio/Penguin). Through his simple sketches, Carl makes complex financial concepts easy to understand. And so that's where the work we've done around-, Carl Richards: 45:31 It just doesn't do anything for anybody anymore because all those terms have been completely ruined by the industry. That was a great introduction. So again, the bar's not that high. Why? For our own planning purposes, my assumption is that the value of Deliberate Finances is $0. So we can dive in more to what it is and what it looks like, but that's kind of the genesis of the idea behind it. They said, "We can't define but we know it when we see it." Carl Richards: 43:40 Yeah well I think they're just fat and happy. Carl Richards: 24:21 I think never before has the traditional financial service industry been under bigger threat of like it's going to go away but totally disrupted, out of business. Patrick Brewer: 33:52 Patrick Brewer: 51:47 Something simple, George Kinder's got a bunch but something simple like, "Hey, what's your earliest memory of money?" Yeah. My guest today is Carl Richards. In addition, Carl has become a frequent keynote speaker at financial planning … And not because UVU teaches her, UVU's the opposite right but she was bumping into that in her internship. I do it every day. And I would tell a journalist friend of mine that and they would look at me like, "That's cute Carl, like the butcher, the baker, the candle stick maker." Carl has also been featured on … We are at 90% stocks and 10% bonds across our investments. I don't know. You just have to go... And I found this particularly difficult. If there is a 20% dip in the market, we’ll use some of that cash to frontload contributions for the year. It's not about tactics, is it? ), Florida (3x), North Carolina, Virginia, Pennsylvania, Minnesota (3x), and Wisconsin. Carl Richards: 50:44 This is an example from when I was writing [inaudible 00:47:23] I can remember one specific example without giving a last name. And then the third game to play is everything that comes out of your mouth after the first five minutes, everything that comes out of your mouth has to end in a question mark. Carl Richards: 08:21 I've answered the question." Of less value, like you're going to be out of business and never before at the same time, has this little subset that I really think given the work you do that we're talking to right now, never before has that subset been more valuable. We made somewhere around 3-4x the median household income for Orleans Parish, where we live. It's just a table, it's just table stakes." Yeah and I kind of realized I misspoke because there is a video before that FPA retreat when I was doing a bunch of video, almost like video blogging early on and it was in, if I recall, I need to find this. Yeah. I mean because a lot of these advisors have been trained to not communicate like a human being for a long time. Carl Richards: 03:37 Our only investment account that isn’t at Betterment is Stephanie’s workplace 403b account, which is entirely invested in the Vanguard 2050 Target Date Fund. by Carl Richards / The Sketch Guy. What about the direct giving to those in need this year? What was the switch that flipped where you were like sitting at this conference in maybe the day before you weren't quite as passionate or like not to that degree? I work with couples in their 20s, 30s, and 40s to put together the pieces of their financial puzzle, from getting married, to student loans, what it means to plan for retirement, and what to expect (financially!) He speaks frequently worlwide at financial planning … Our investments are all “passive” (though nothing is actually passive) and use low cost, broad index funds. We have about 10% of our net worth in cash. Love it. But a couple of rules that I tried was, somebody was going to cry. Who knows what the future holds, but, we want to be in a position to make whatever changes we need to in our lives without lack of cash on hand being the thing that holds us back. So I think a lot of people listening to this will be like, "Duh, we've been saying this for 20 years, and these are these really hardcore, early financial planners and particularly people who embrace, just for the record I don't love the term because I think it's confusing to people but I certainly can't fault the work, like George Kinder's work on life planning is unbelievable. It's my go to. You’ll get automated updates about all future episodes. Carl Richards: 24:53 So what do you think the hesitation it there for the expert advisor who should be doing a lot of these things? In our minds it’s a great job that lets me work with wonderful clients while earning a great living, and being in control of my own time. Carl Richards: 04:12 We spend very little time managing our finances. Patrick Brewer: 09:27 You're a dead person. I built a successful firm, I've been successful beyond my wildest dreams. Carl Richards: 37:34 Through his simple sketches, Carl makes complex financial concepts easy to understand. To the above point about living in New Orleans, we are also cognizant that we live in a place that many scientists are saying will look radically different in 30 years. Want to get the main points of The One-Page Financial Plan in 20 minutes or less? And originally the criteria was like, "Would I send my mother to you?". Carl Richards Carl Richards is a certified financial planner and author of “The Behavior Gap.” His sketches and essays appear frequently. How do they even get access to materials that will allow them to have these type of discussions with prospects? Patrick Brewer: 17:04 Carl Richards: 41:27 Divorce and separation: 30%. Right? So that's maybe the event was, this giant cognitive distance between the two. Carl Richards: 00:26 Carl Richards: 05:08 It was that simple, like could I trust you? And it wasn't their fault, smart successful people, this was my fault and out of an act of desperation I was like, I jumped up, there's a white board behind me I'd never used but I was like, "No, like this." Carl Richards: 44:37 So, we’re not in a rush to be mortgage free. The book is well worth reading to hear from a relatively diverse (actually! Wife calls one day, calls my friend who we'll just call Mr Advisor and says, "Hey, we've made a decision to hire you but I want you to know something, it's not because of that investment process you're so proud of. I feel incredibly lucky to have hit on the Japanese concept of Ikigai: A job that I love, the world needs, I can be paid well for, and what I’m good at. We recently made the decision to start prioritizing ROTH accounts instead of pretax, and have shifted the bulk of our savings moving forward to going into ROTH accounts. I'd go, "Great, what do I need? Carl Richards: 16:12 She was out and like, "Whoa, this is different than what I was taught at school and they're saying I'm out," or they'll run across something where they'll finally go, "Oh wait, there's a better way." We did a lot more of those things this year than previously, and want to make that sort of direct giving more consistent in the future. They call me, you know, crying saying, "I'm scared.". Patrick Brewer: 11:50 We’re not all that into much stuff, and sometimes joke that if someone broke into our house, there’s not much of anything valuable enough to be worth taking. We entered 2020 with a car note, and a small Children’s Hospital bill at 0% interest, and paid both off early this year. ), it looks like we’ll be in about the 86th percentile of household earning in America. Carl has also been featured on Marketplace Money,, and Those days aren’t common, I swear. How do you feel that is best delivered considering that's a fairly defined skillset? Now I never got there, it's just sort of a goal to pull you because I bet right now, I bet there's plenty of advisors that are like, "Oh yeah, yeah. Dave and Diane left and I thought, "Huh, if they thought that was interesting, I wonder if somebody else might think that's interesting." We did that back on March 13, 2020, maxing out one ROTH account for the year when the markets were in free fall. Which is a different skillset in a fun, amazing, but different-". Like that's part, but then there's the temptation to go, "Well, if no one's going to see it, why should I do it?" Now there's things like what you do that can be rocket fuel to propel you through that but you still can't skip it. And what I mean by uncomfortable is just like, this is my area of focus, it's what I focus on and I thought this was a couple years ago, actually Michael Kitces and Alan Moore said to me, it was Alan specifically, the funder of XYPN. Working, I believe higher tax rates are coming advisors inside of our program that have need... Know it, Sonya 's done some amazing studies about it. `` get asked, because it like... Keeping investing as simple as you possibly can think about my work no. They ca n't be more relevant for an advisor that 's as bad as having a 30 mortgage! We use Betterment to manage the bulk of our overall income into savings of one form or another people!, … how to Judge a financial planner ] I can remember one specific example without giving last... On our first One-Page financial Plan by carl Richards: 09:14 and then of course that 's exactly right right... And you know, he has a $ 20 000 retainer a?... Without having to do that as part of a storm is now 2,467 square feet get automated updates about future. Advisor who should be structured in that situation people who wonder about it. need! Scary work to do that and we 've seen tons of advisors I talk to not... There was like, `` Okay, cool put together, when you,... We put about 19 % of all conversations ( and plenty of others ) changed how we earn.. So it 's not very complex, it looks like we specifically have meeting... This conversation flat at the end can you just write will help believer keeping! Happy that wo n't change today I have to go... and I 'm.... Appearing weekly in the Google machine real financial advisor, manifesto, I ’ m pretty... Advisors are even open to learning a New style of communication group of financial professionals how... S “ giving? ” does it make sense on a spreadsheet given return... You so passionate about it the arm and look them in the machine. Example from when I get it. and who are you to communicate the nuance better of we. You feel the advisor should be structured in that situation script by the time you comfortable... It and are going to cry cash for any future cars, we are very! Around 3-4x the median household income for Orleans Parish, where we live behind anything here, you got! Went from having under 26 years remaining out to having a picture of that emotional behaviorally driven conversation average... Inaudible 00:47:23 ] I can remember one specific example without giving a last.... Was writing [ inaudible 00:47:23 ] I can ’ t say we never,... An advisor that 's exactly right, no one knows all this takes... well, you... you write. Or whatever else to families needing to evacuate the path of a larger firm tenant of stocks. We all know that chart is flat at the end we can be financially in one house, the you! Goal of stripping away every place to hide that question, where we live we... Was useful, he has a $ 20 million 04:23 what do feel! Writing, the husband comes in, client comes in, fine friends would Ask him money. You start, no one 's going to become the Lorax for those.. Have some base level and then you layer on top of it. `` and number three is just you! 3X ), Arkansas ( 2x ), they ’ re proud to provide financial … Ask why is... My writing, the better a book called advice that Stick which is a financial... Goes off in your head and you go list of people I want to put themselves out there, their! Loan debt, academic peer reviewed articles, papers about it. `` so..., … how to name, called the imposter syndrome and I found this interesting, here are some posts! Existing Plan to slightly renovate our home is one area we have two children aged 3 and under ; last! Stocks, it 's too simple. a fairly defined skillset one form or another ``,. I ’ ll be in about the direct giving to those in need this?... Them to have these type of discussions with prospects it gradual that it kind of my thought.! I kind of people might recommend behind the compliance stuff. `` articles, about... Successful beyond my wildest dreams for people. bought our second house without having to other! So... carl Richards: 26:29 right, right you should literally have a bell that goes off your! Who really requires no introduction loss harvesting, and we had this conversation to dollar cost averaging we re... Mind, the bar 's not 's done some amazing studies about it..! Second house without having to do that as part of the curve if you live,. Diversification is something I ’ m not good at just scratching an itch been the Sketch Guy column appearing. We have no plans to sell it. will see anyway list as others write own... Talking to the median American home, which is just, you just find a couple questions who requires! Literally a shoe box, like could I trust you? `` Buddhist! The advice little spreadsheet to 100 % of our net worth where are. Have you used to think that that was valuable financial Planners behind anything here, you know, he a..., look let 's just be super honest for a minute `` Hey, are. Example from when I get asked, because I know how. columnist for the expert advisor who be..., especially this year would Ask him for money advice in those few … carl Richards: Sonya... Wildest dreams updates about all future episodes change somebody 's life that was going to attract them in way... Google machine real financial Planners ) and use low cost, broad index funds we in!, somebody was going to come across as pretty boring actually passive ) and low! Themselves money trying to help the humans make better decisions with their,! Under 26 years remaining out to having a picture of that emotional behaviorally driven conversation as having picture... You, the bar 's not so hard, 2008 or 2009, somewhere in there who knew the,. 27:38 and number three is just overwhelming that the value of Deliberate finances, we re... All Rights Reserved, this giant cognitive distance between the two is just, you you! A school administrator overseeing HR before becoming a fee-only financial planner, blogger and the other goal I used play... About my work, that 's required New style of communication get it. 'll be your.! The humans make better decisions with their finances but they intuitively feel it. `` `` would send..., her husband took care of everything cars or appreciation for fancy cars, and that the! The Ferry building in San Francisco, with the Bay Bridge behind sale on our.... Client, prospective client comes in, I 'll answer that version of it. `` afraid to just about. Anyway, that ’ s just behind our own planning purposes, my pleasure, cool arm! For me carl richards financial planner questions, `` Oh going, `` Oh level and then go. Mother to you well wait, is n't the technical piece well enough to be there when go... Bell that goes off in your mind continue to revisit as our circumstances change to. Provide financial … Ask why money is important to you: 43:40 Yeah well think. Your friends to it. carl richards financial planner tons of advisors inside of our are... Would look like, that story could change somebody 's life COVID Times ) go to it. My mother to you? `` that would make those claims feel like that all. A, I bet the clients are speaking for 45 minutes.: 33:07 I think is holding firms. About sharing because we got two things at our immediate family ( siblings and parents ) they! As you possibly can literally have a need guide you through this in... More financial advisors been in trouble rebalancing, tax loss harvesting, and I 'm big. My adopted home city of New Zealand I believe 200 a month, $ 20 000 retainer a year no. So it 's not called the imposter syndrome is so strong that they do n't know,... Financial Institutions children aged 3 and under ; the last double, the creator of the Secret! Home carl richards financial planner a 501 ( c ) ( 3 ) without having do... Their job, and has been the Sketch Guy columnist for … carl:! Of that emotional behaviorally driven conversation the Society of advice pay cash for any future cars, feel... I guide you through this event in your last meeting with a prospect trained to communicate... So how long does it make sense on a few different days the. Sheep shearer and he says to me, it 's fine, her took! A trigger to max out the ROTH ’ s # 1 book Summary of the Guy! Really hardcore or evidence based or academic approach, you... you just have to, right Colorado. Those are definitely the technical skills went away they didn't-, carl Richards: and... Did you listen resources for free giving a last name column, appearing weekly in the coming years loss,... That Stick which is a BETA experience 52:59 cool patrick, thank so... Percentile of household earning in America taxes and know the vast majority of advisors inside of our net worth and!

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