WEBVTT - Ric Edelman on Translating Financial Language for Consumers 0:00:02.240 --> 0:00:06.800 This is Master's in Business with Barry Ridholts on Bloomberg Radio. 0:00:09.840 --> 0:00:12.319 This week on the podcast, I have a special guest. 0:00:12.400 --> 0:00:16.880 His name is Rick Edelman. And if you are an advisor, 0:00:16.920 --> 0:00:20.360 if you are somebody who is interested in the financial 0:00:20.440 --> 0:00:26.000 services industry or a consumer who is looking for financial advice, UH, 0:00:26.200 --> 0:00:30.720 you're gonna want to hear this conversation. Rick has built 0:00:30.840 --> 0:00:34.400 a powerhouse firm over the past thirty years. They now 0:00:34.479 --> 0:00:40.240 manage twenty one billion dollars. And he did it really 0:00:41.040 --> 0:00:44.120 in a in a way that is fairly unique. When 0:00:44.159 --> 0:00:48.520 when he launched Anentileman financial services, there weren't very many, 0:00:48.640 --> 0:00:52.360 if any other similar firms. He he was a pioneer. 0:00:52.400 --> 0:00:55.760 He was doing things before there was a script or 0:00:55.840 --> 0:00:59.840 a roadmap or any sort of guidance. And he and 0:01:00.040 --> 0:01:03.600 his wife we're kind of making it up along the way. 0:01:03.400 --> 0:01:05.679 They knew what they didn't want to do. They saw 0:01:05.760 --> 0:01:09.039 what was taking place at the big brokerage firms, and 0:01:09.120 --> 0:01:12.600 they kind of became the anti broker. Uh. Not only 0:01:12.760 --> 0:01:18.040 are they um a traditional r i A as we 0:01:18.120 --> 0:01:20.840 think of them, meaning their fee based, not commission or 0:01:20.880 --> 0:01:25.479 transactional based. Uh, but they effectively have no minimums If 0:01:25.480 --> 0:01:29.120 you're a five thousand dollar account, they'll take it. If 0:01:29.160 --> 0:01:31.920 you're less than five thousand hours UH, they'll take your 0:01:31.959 --> 0:01:35.080 money and wave their fee on a pro bono basis. 0:01:35.600 --> 0:01:40.160 I can't think of any other firm that approaches asset 0:01:40.200 --> 0:01:44.120 management that way. It's fairly unique and and Edelman says, 0:01:44.480 --> 0:01:46.640 shame on people who don't do that. If you're in 0:01:46.640 --> 0:01:50.880 the services industry, like a doctor, you have an obligation 0:01:51.320 --> 0:01:54.040 to your clients. If it's If it's not quite a 0:01:54.080 --> 0:02:00.600 hippocratic oath, certainly the fiduciary standard requires not only putting 0:02:00.600 --> 0:02:04.080 the client first, but putting people who might not be 0:02:04.200 --> 0:02:07.600 clients first. And I think that's both a a unique 0:02:07.600 --> 0:02:10.760 and refreshing perspective that we don't hear a lot of 0:02:11.200 --> 0:02:14.200 UH in the world of finance. So I expect you'll 0:02:14.240 --> 0:02:17.960 find this conversation fascinating. So, with no further ado, my 0:02:18.120 --> 0:02:27.400 conversation with Edelman Financials Ric Edelman. My special guest today 0:02:27.720 --> 0:02:31.160 is Rick Edelman. He is chairman and co founder of 0:02:31.240 --> 0:02:35.680 Edelman Financial Services, affirm that manages well over twenty billion 0:02:35.680 --> 0:02:39.880 dollars in assets for thirty four thousand families via forty 0:02:39.919 --> 0:02:44.520 three offices across the USA. Rick is the author of 0:02:44.560 --> 0:02:49.239 no less than nine books on financing, perhaps most notably 0:02:49.720 --> 0:02:52.519 The Truth about Money, which is now in its fourth edition. 0:02:52.600 --> 0:02:55.360 Is that right correct? Fourth edition? It is the winner 0:02:55.520 --> 0:03:01.360 of several prizes and awards on financial liter racy and education. 0:03:02.080 --> 0:03:06.360 Edelman Financial Services has been ranked either one or two, uh, 0:03:06.440 --> 0:03:08.960 the number one or two independent financial advisor in the 0:03:09.040 --> 0:03:12.440 US by Barons for the years two thousand and nine 0:03:12.760 --> 0:03:15.440 to two thousand and twelves. And then they kicked me 0:03:15.480 --> 0:03:17.120 off the list. They kicked you off the list. We'll 0:03:17.120 --> 0:03:20.680 get into that, Rick Edelman, Welcome to Bloomberg. Thank you, 0:03:20.760 --> 0:03:23.040 very great to be with you. Uh. You know, I've 0:03:23.040 --> 0:03:25.400 been looking forward to this since we bumped into each 0:03:25.440 --> 0:03:30.360 other at a conference way back when in um the spring, 0:03:30.680 --> 0:03:34.359 and you just sort of derailed me. Why did they 0:03:34.400 --> 0:03:37.600 Why did they kick you off the Barons list? How 0:03:37.600 --> 0:03:39.560 do you go from number one to off the list? Well, 0:03:39.600 --> 0:03:43.200 because they wanted to shake up the list and create 0:03:43.240 --> 0:03:46.960 an opportunity for others to get accolades. Is number one, 0:03:47.440 --> 0:03:50.720 and I was number one three times, and that one 0:03:50.720 --> 0:03:53.520 in between it was number two. And so we agreed 0:03:53.640 --> 0:03:58.080 that I was evolving personally. I was spending as our 0:03:58.120 --> 0:04:01.920 firm grew, we we were much bigger than the typical 0:04:02.000 --> 0:04:04.800 advisory firm, of course, with twenty one billion in assets 0:04:05.400 --> 0:04:09.720 and with forty three offices, a hundred sixty advisors, six 0:04:09.840 --> 0:04:13.760 hundred employees. These days, I was spending as much of 0:04:13.800 --> 0:04:18.240 my time as CEO running the business as as an advisor, 0:04:18.279 --> 0:04:23.320 working with individual clients and the folks at Barons, and 0:04:23.360 --> 0:04:28.080 I recognize that we were creating the next generation in 0:04:28.120 --> 0:04:32.120 the advisory marketplace. You know when when we started, way 0:04:32.160 --> 0:04:34.280 back when I got licensed in eighty six, how about you, 0:04:35.240 --> 0:04:39.680 uh ninety something? Yeah, I mean back then everyone was 0:04:39.720 --> 0:04:42.240 the seven. I didn't get the six, I didn't get 0:04:42.360 --> 0:04:46.839 sixty five, and he gave up the seven. So when 0:04:46.880 --> 0:04:51.560 we began back in the eighties, there was no financial 0:04:51.600 --> 0:04:53.919 planning firm you could go join, so we had no 0:04:54.040 --> 0:04:56.279 choice but to start our own because the industry was 0:04:56.320 --> 0:04:58.840 brand new, and I was that first generation among the 0:04:58.920 --> 0:05:01.919 pioneers who create did this into you an early CFP? 0:05:02.360 --> 0:05:04.520 I never obtained my CFP. I didn't have the time, 0:05:05.160 --> 0:05:08.680 and I ended up teaching classes of CFPS and um 0:05:08.680 --> 0:05:11.120 A continuous certified Continuing at Instructor, and I taught at 0:05:11.120 --> 0:05:15.080 Georgetown University for nine years. I hold six professional designations, 0:05:15.080 --> 0:05:17.200 but never bothered to get that one. So so wait, 0:05:17.279 --> 0:05:19.640 let me interrupt you here because this is really fascinating. 0:05:20.120 --> 0:05:23.680 You began more or less as a financial journalist, and 0:05:23.880 --> 0:05:26.280 is that? Isn't that the background? Yes? And where did 0:05:26.360 --> 0:05:29.760 where did Georgetown fit in in the chronology? So my 0:05:29.880 --> 0:05:32.599 background as is as a journalist. That was my degree. 0:05:32.640 --> 0:05:34.960 I have a communications degree, not a business degree. And 0:05:34.920 --> 0:05:37.400 I'd like to brag that I graduated college without ever 0:05:37.440 --> 0:05:40.400 having taken a business class, which means I wasn't brainwashed. 0:05:40.720 --> 0:05:44.400 In journalism school, they teach you two things. One how 0:05:44.440 --> 0:05:47.600 to ask questions and to how to explain the answers 0:05:47.600 --> 0:05:51.440 in plain English. And my very good skills very important 0:05:51.440 --> 0:05:55.480 when dealing with individual consumers who aren't expert in this subject. 0:05:56.000 --> 0:05:58.080 And so I was writing in the financial trade press 0:05:58.080 --> 0:06:01.840 out of college, and that was my entree to personal finance. 0:06:01.880 --> 0:06:04.680 The publisher I started in the financial in the medical field, 0:06:04.960 --> 0:06:08.120 but my publisher owned a variety of financial publications, and 0:06:08.480 --> 0:06:10.640 there were twenty three of us on the editorial staff, 0:06:10.640 --> 0:06:12.320 and we ended up writing for a whole bunch of 0:06:12.320 --> 0:06:16.000 different things. And I wrote for some financial publications and 0:06:16.040 --> 0:06:19.000 that was my entree. And my wife and I in 0:06:19.040 --> 0:06:22.719 our early twenties, recognizing with my experience now as a 0:06:22.720 --> 0:06:24.440 writer in the financial press, Hey, we ought to pay 0:06:24.440 --> 0:06:26.120 attention to this and we decided to go to a 0:06:26.120 --> 0:06:28.480 financial planner. Like most young couples, we wanted to buy 0:06:28.520 --> 0:06:30.800 a house, and we went to a financial planner for 0:06:30.800 --> 0:06:33.760 advice on how to do that. He ended up telling 0:06:33.839 --> 0:06:36.760 us to lie on our mortgage application, told us to 0:06:36.760 --> 0:06:40.360 commit a felony qualify for the mortgage. Um. The guy 0:06:40.440 --> 0:06:42.159 was a jerk. He We could not believe that this 0:06:42.200 --> 0:06:44.719 crook was telling us to do this. It really made 0:06:44.800 --> 0:06:47.160 us mad. And that was the impetus for us saying, 0:06:47.160 --> 0:06:49.159 you know what, why don't we learn how to do 0:06:49.200 --> 0:06:51.400 this ourselves and then teach others what we've learned. And 0:06:51.440 --> 0:06:54.160 that was the basis and thes and not lying. To 0:06:54.320 --> 0:06:57.839 give people good advice, not bad advice. And so Jean 0:06:57.960 --> 0:06:59.600 quit her job, went to work for pain Web and 0:06:59.640 --> 0:07:01.760 they're back of office to learn the back end operational 0:07:01.760 --> 0:07:05.200 side of the business. I got securities licensed, joined an 0:07:05.200 --> 0:07:09.960 independent firm, became an independent advisor immediately on the broker 0:07:10.000 --> 0:07:12.760 dealer side or on the broker dealer side, like there 0:07:12.760 --> 0:07:15.800 really wasn't There wasn't scenario side back then, it really 0:07:15.840 --> 0:07:18.680 didn't exist. I mean it technically did, but nobody. Why 0:07:18.680 --> 0:07:20.960 are you explained to listeners the difference between commission and 0:07:21.000 --> 0:07:24.160 fees just the nickel version. Well, back in the old days, 0:07:24.240 --> 0:07:30.400 you had the brokerage licenses where you made money commissions 0:07:30.440 --> 0:07:33.480 selling mutual funds um and every time you sold a 0:07:33.560 --> 0:07:35.760 mutual fund you're in a commission for doing so. The 0:07:35.800 --> 0:07:38.960 notion of a fee based advisor being licensed by the 0:07:39.120 --> 0:07:43.160 SEC came about much later, and we made that jump 0:07:43.360 --> 0:07:48.240 in the early two thousand's, And so we began our 0:07:48.320 --> 0:07:52.480 firm in the nineteen eighties and focused on financial education, 0:07:52.520 --> 0:07:55.360 teaching consumers how money works and how to make it 0:07:55.400 --> 0:07:58.960 work for them. And we did it by seminars, teaching 0:07:59.080 --> 0:08:01.560 elementary school e t A S. How to say for college, 0:08:02.120 --> 0:08:05.160 and the word spread and we ended up being invited 0:08:05.200 --> 0:08:08.360 on the radio and eventually being offered my own radio show, 0:08:08.400 --> 0:08:11.680 and now twenty seven twenty eight years later, it's the 0:08:11.720 --> 0:08:14.760 longest running national personal finance radio show in the country. 0:08:14.960 --> 0:08:20.280 That's fantastic. You launched the firm in eight six as 0:08:20.320 --> 0:08:24.040 a broker dealer I was affiliated with a broker dealer 0:08:24.080 --> 0:08:26.360 for licensing and then the r I A part wasn't 0:08:26.440 --> 0:08:29.679 until the two came in oh three and we launched 0:08:29.680 --> 0:08:35.600 our fee based money management program, the Edleman Managed Asset Program. 0:08:35.600 --> 0:08:38.160 We launched that in two thousand five. Today it's one 0:08:38.160 --> 0:08:41.400 of the largest turnkey asset management programs in the industry 0:08:41.400 --> 0:08:44.800 with twenty one billion in assets. That that that's quite amazing. 0:08:44.920 --> 0:08:49.079 So the real question that's on my mind after hearing 0:08:49.080 --> 0:08:52.160 this is you've been doing this for twenty seven years. 0:08:52.360 --> 0:08:57.240 Who who is your competitors in that same space. Is 0:08:57.280 --> 0:08:59.920 it the big Merrill Lynches, is it the lpls, is 0:09:00.040 --> 0:09:02.880 it uh Dynasty or high Tower? How do you look 0:09:02.920 --> 0:09:05.200 at the world out there and say, oh, we're competing 0:09:05.200 --> 0:09:07.760 head to head with these guys. It's everybody and nobody. 0:09:09.720 --> 0:09:12.880 It's a I'm a big fan of astronomy and Gene 0:09:12.920 --> 0:09:16.439 and I have done some phone throughout activities in astronomy 0:09:16.480 --> 0:09:17.720 of a big interest there. So let me give you 0:09:17.760 --> 0:09:21.040 one analogy. We know how big galaxies galaxies are, and 0:09:21.080 --> 0:09:25.600 we know that a couple of galaxies are colliding, including ours, 0:09:25.880 --> 0:09:28.800 including ours, and when you look at the nasive photographs 0:09:29.360 --> 0:09:33.440 of these colliding galaxies, there's an assumption when you first 0:09:33.440 --> 0:09:36.160 look at them, that all of the stars within the 0:09:36.160 --> 0:09:38.480 galaxies and all the planets within the galaxies will collide 0:09:38.480 --> 0:09:40.840 and be big explosions and all that kind of good stuff, 0:09:40.960 --> 0:09:44.640 except for the vast spaces between the stars exactly. And 0:09:44.760 --> 0:09:49.080 the galaxies are so huge that they will so called collide, 0:09:49.120 --> 0:09:51.520 but they will pass through each other and nothing will 0:09:51.559 --> 0:09:54.200 ever touch anything else because the spaces are so vast. 0:09:54.920 --> 0:09:58.040 By the same notion, in the financial services industry, our 0:09:58.080 --> 0:10:02.000 industry is so big. It's an nineties seven trillion dollar economy. 0:10:02.080 --> 0:10:04.880 That's how much money is invested. That's the net worth, 0:10:05.040 --> 0:10:09.080 the market value of all things in this country that 0:10:09.160 --> 0:10:14.000 have assets and market values, stocks, bonds, real estate, business assets. 0:10:15.280 --> 0:10:19.679 Ninety seven trillion dollars. No one in our industry has 0:10:19.720 --> 0:10:22.400 market share. Merrill Lynch, one of the biggest in the industry, 0:10:22.559 --> 0:10:26.400 has about three trillion dollars three out of ninety seven. 0:10:26.480 --> 0:10:29.720 They have coming up on five, Black Rock on six, 0:10:29.920 --> 0:10:32.400 and there's no market share anywhere. If you look at 0:10:32.440 --> 0:10:35.719 the soft drink industry, there's coke and Pepsi and everyone else. 0:10:35.720 --> 0:10:38.560 Look at the airline industries, Delta United and everyone else. 0:10:38.920 --> 0:10:42.079 In most businesses, there are three or four major competitors 0:10:42.120 --> 0:10:45.720 who have market share. They're competing all the time in 0:10:45.760 --> 0:10:48.760 our industry, Barry, you're a competitor of mine. Have you 0:10:48.840 --> 0:10:53.240 ever encountered one of my clients ever anywhere? And I've 0:10:53.280 --> 0:10:56.000 never encountered one of yours? Because this industry is huge. 0:10:56.040 --> 0:11:00.160 We're talking about three hundred million Americans dealing with three 0:11:00.240 --> 0:11:03.880 hundred thousand advisers, most of whom have a couple of 0:11:03.960 --> 0:11:07.280 hundred clients, and dealing with a couple of tens of 0:11:07.320 --> 0:11:10.200 millions of assets, and so On the one hand, this 0:11:10.280 --> 0:11:13.160 industry is so huge, this economy is so vast, our 0:11:13.200 --> 0:11:17.880 country so broad. We will never encounter competition anywhere. We're 0:11:17.920 --> 0:11:19.960 all on the frontier and there are a bunch of 0:11:19.960 --> 0:11:23.240 guys in the wilderness trying to shoot game. But we'll 0:11:23.240 --> 0:11:25.240 never account each other on the mountains because the mountains 0:11:25.240 --> 0:11:27.400 are too big. That's one answer. Here's the other answer. 0:11:28.200 --> 0:11:33.439 Everybody is my competition everywhere. Money magazine and kiplingers to 0:11:33.720 --> 0:11:38.640 publications that are constantly giving financial advice for five a 0:11:38.679 --> 0:11:43.480 month are competition in may because I'm in the business 0:11:43.480 --> 0:11:46.360 of trying to get consumers to listen to my advice, 0:11:46.800 --> 0:11:49.440 and they're being distracted by the advice for Money magazine 0:11:49.480 --> 0:11:51.760 and Kiplingers. They're being distracted by the Motley Full. They're 0:11:51.760 --> 0:11:54.920 being distracted by Dave Ramsey and Susie Orman and Jim 0:11:55.000 --> 0:11:58.880 Kramer and CNBC. And they're being distracted by the brokerage, 0:11:58.880 --> 0:12:01.600 the big box brokerage firm Merrill Lynch and Well's, far 0:12:01.640 --> 0:12:04.480 Ago and Ubs and all the majors. They're being distracted 0:12:04.520 --> 0:12:07.199 by the mutual fund company's Fidelity in Vanguard and t 0:12:07.400 --> 0:12:09.920 ro Price and t I A A. They're being distracted 0:12:09.920 --> 0:12:14.280 by the banks, um Us Trust and Bank of America 0:12:14.520 --> 0:12:17.559 and on and on and on. So in one sense, everybody, 0:12:17.640 --> 0:12:20.800 everywhere is my competition. So it depends on how you 0:12:20.840 --> 0:12:23.520 look at it. I have to mention, you have a 0:12:23.559 --> 0:12:28.720 weekly radio show, you hold regular seminars, You've written nine books. 0:12:29.559 --> 0:12:34.840 What does that footprint do to distinguish you Rick Edelman 0:12:35.440 --> 0:12:39.600 from your everyone in No One competition. Well, it provides 0:12:39.679 --> 0:12:43.320 name recognition. On the one hand, it also very importantly 0:12:43.440 --> 0:12:49.160 helps consumers understand our philosophical view on financial planning and 0:12:49.200 --> 0:12:52.160 investment management, allows them to kick the tire, so to speak. 0:12:52.400 --> 0:12:54.840 It allows them to get a lot of freer, low 0:12:54.920 --> 0:12:58.040 cost advice um that can be applicable to their own 0:12:58.040 --> 0:13:01.720 personal situation in a non threatening way. They can digest 0:13:01.760 --> 0:13:04.640 it as they wish, whether it's listening to the radio 0:13:04.800 --> 0:13:09.160 or watching our videos or my television series on Public 0:13:09.200 --> 0:13:12.680 Tape TV, or going to our seminars, or reading our 0:13:12.720 --> 0:13:16.000 newsletter or going to our website. We we make financial 0:13:16.160 --> 0:13:19.880 education accessible, we make it easy, we make it non threatening, 0:13:20.080 --> 0:13:23.360 and I try really hard to make it fun. So 0:13:24.559 --> 0:13:27.640 Scott Galloway is a professor and while you stern and 0:13:27.760 --> 0:13:31.199 he covers a lot of technology companies like Amazon and 0:13:31.920 --> 0:13:38.000 Facebook and Google, and he constantly says Amazon is where 0:13:38.000 --> 0:13:42.679 they are today because their narrative is so clear, so 0:13:42.760 --> 0:13:47.120 well defined, so well told by Jeff Bezos. How it 0:13:47.240 --> 0:13:51.600 sounds like you're describing a somewhat similar approach that the 0:13:51.679 --> 0:13:55.360 Rick Edelman story or Edelman Financial Services story is the 0:13:55.400 --> 0:13:57.760 business you're in, and everything else is just running the 0:13:57.880 --> 0:14:00.920 nuts and bolts of it. That's correct. Um. Most of 0:14:01.360 --> 0:14:05.679 the advisers in this industry, in my experience, come from 0:14:05.720 --> 0:14:10.880 a business background. They came from the brokerage industry of 0:14:10.880 --> 0:14:13.959 the insurance industry. They spend most of their time talking 0:14:13.960 --> 0:14:17.560 to each other, which means they're talking shop and filled 0:14:17.559 --> 0:14:21.200 with jargon, and they don't know how to talk to 0:14:21.320 --> 0:14:25.280 ordinary consumers in plain English, in language people understand that 0:14:25.440 --> 0:14:31.920 is understandable and actionable. And my background and communications helps 0:14:32.040 --> 0:14:35.760 me talk in plain English to folks in in clear, 0:14:36.280 --> 0:14:39.960 easy language, and it's I've learned. It's a big advantage 0:14:40.000 --> 0:14:44.680 because consumers are intimidated by this subject. They don't have 0:14:44.720 --> 0:14:47.600 any background in it. Most people go through their entire 0:14:48.560 --> 0:14:51.840 K to sixteen education without ever taking a personal finance class. 0:14:51.880 --> 0:14:54.200 Their parents taught them nothing about money, their employers teach 0:14:54.240 --> 0:14:56.360 them nothing about money, and they're a litter. We have 0:14:56.360 --> 0:14:59.360 a nation of financial literance. Every study tells us this 0:14:59.560 --> 0:15:02.960 that more arey Americans can't pass a basic personal literacy 0:15:03.160 --> 0:15:08.480 financial literacy class or test, and so we are the 0:15:08.480 --> 0:15:10.960 oasis for these folks. We help them understand that this 0:15:11.000 --> 0:15:14.840 stuff is not complicated. It's incredibly simple and easy to understand. 0:15:15.120 --> 0:15:17.760 It's Wall Street that tries to make it intimidating, to 0:15:17.840 --> 0:15:19.760 make you their slave, to make you think that you're 0:15:19.800 --> 0:15:23.040 dependent on them to buy their high priced, high commission, 0:15:23.120 --> 0:15:26.400 high risk, low liquidity products that are designed to benefit 0:15:26.440 --> 0:15:29.920 themselves first and the consumer second. Actually the consumer third, 0:15:30.000 --> 0:15:35.120 they benefit themselves first, the broker, yeah, so right, the 0:15:35.440 --> 0:15:39.320 consumers fourth. And so we've always taken a different attitude, 0:15:39.360 --> 0:15:41.160 My wife and I we we took this from a 0:15:41.200 --> 0:15:44.200 consumer perspective and said, we want to understand how this 0:15:44.240 --> 0:15:46.080 works as consumers, and we're somebody going to share what 0:15:46.080 --> 0:15:48.480 we've learned with others. And that's the basis of our books. 0:15:48.480 --> 0:15:51.840 The tag onto my first book is that uh Personal 0:15:51.840 --> 0:15:55.240 Finances fund uh And you know we we wrote it 0:15:55.400 --> 0:15:57.320 and I'll do all the other financial education we do 0:15:57.400 --> 0:16:04.000 because very simply, uh, money doesn't come with instructions. You know. 0:16:04.120 --> 0:16:09.120 You you reference the complexity and the complications of finance 0:16:09.280 --> 0:16:13.080 on Wall Street that has been described as a feature 0:16:13.360 --> 0:16:17.520 not a bug. You obviously agree with that, meaning if 0:16:17.560 --> 0:16:21.640 we make this really sophisticated and complex and convoluted, people 0:16:21.800 --> 0:16:23.560 just pay us a fee to manage it. And made 0:16:23.680 --> 0:16:28.600 camp people in Wall Street made its money by intimidating people, 0:16:28.720 --> 0:16:35.480 obfuskating by being opaque and not being upfront and transparent. 0:16:35.560 --> 0:16:37.880 Our attitude is I don't have to have a bias. 0:16:38.320 --> 0:16:40.360 I don't have to try to sell you a product. 0:16:40.640 --> 0:16:43.040 Instead I'll just teach you how money works. I'll explain 0:16:43.080 --> 0:16:44.840 to you the difference between a stock and a bond, 0:16:45.240 --> 0:16:47.560 and once you understand the difference, which is really easy, 0:16:47.760 --> 0:16:50.560 you can then make an informed decision. And as long 0:16:50.600 --> 0:16:53.040 as you retain me to assist you with this, then 0:16:53.080 --> 0:16:55.400 I can make a living and we both win. So 0:16:55.480 --> 0:16:58.440 I don't have to be a champion of any particular product, 0:16:58.640 --> 0:17:02.920 or any particular company, or any particular strategy. We're free 0:17:03.000 --> 0:17:05.600 to do whatever is in the client's best interest, and 0:17:05.680 --> 0:17:09.399 that is uncommon in our industry, so we didn't really 0:17:09.480 --> 0:17:13.320 talk about this previously. What about things like alternative investments, 0:17:13.640 --> 0:17:17.760 hedge funds, vetric capital, private equity? Is that something that 0:17:17.840 --> 0:17:19.639 you guys look at or do you? Is that just 0:17:19.680 --> 0:17:22.400 too complicated and too expensive for for your client base. 0:17:23.359 --> 0:17:26.960 We have available to us, as you do, virtually every 0:17:27.000 --> 0:17:29.800 product available in the industry, so we can give our 0:17:29.800 --> 0:17:33.439 clients anything. We choose not to give them any of 0:17:33.480 --> 0:17:36.679 the stuff you've just described because they are not in 0:17:36.680 --> 0:17:40.520 the client's best interests. These products are too complicated, they're 0:17:40.520 --> 0:17:44.800 too expensive, they have a terrible history of underperformance, they're 0:17:44.960 --> 0:17:49.000 very high risk, and they're ill liquid. Aside from those, Well, 0:17:49.040 --> 0:17:52.040 I'm awesome, very often very adverse tax consequences rather than that, 0:17:52.119 --> 0:17:54.600 you know, how was the how was the playing right? 0:17:54.800 --> 0:17:57.240 I'm fond of saying, come for the high fees, stay 0:17:57.320 --> 0:18:00.399 for the underperformance. Is it works out really well? And 0:18:00.600 --> 0:18:04.919 you mentioned earlier, uh, the Dave Ramsey's and Susie Orman's 0:18:04.920 --> 0:18:07.919 of the world, and how do you contrast what the 0:18:08.000 --> 0:18:11.560 Rick Edelman's of the world do versus that group? Well, 0:18:11.400 --> 0:18:13.320 we would you put yourself in that ground? You know, 0:18:13.359 --> 0:18:16.080 if I were trying to be provocative, you know, I 0:18:16.119 --> 0:18:18.119 would do something funny by saying the difference between me 0:18:18.200 --> 0:18:20.520 and them is that I'm not an idiot. Um, but 0:18:20.520 --> 0:18:22.680 but you're not gonna be provocaive. I'm not. I'm not 0:18:22.720 --> 0:18:25.119 gonna be provocative and say that more seriously. I mean, 0:18:25.160 --> 0:18:29.480 both of them are very talented and proven um successes, 0:18:29.520 --> 0:18:32.760 and what they do there's a very big difference and 0:18:32.800 --> 0:18:36.680 what they do versus what I do, and um, it's 0:18:36.680 --> 0:18:40.280 twofold number one. I'm an actual practicing financial planner dealing 0:18:40.280 --> 0:18:44.080 with actual clients, sitting across the coffee table, giving advice 0:18:44.119 --> 0:18:46.679 to people on a long term, years and decades basis, 0:18:46.680 --> 0:18:49.000 getting to know them, and their families in very intimate ways. 0:18:49.840 --> 0:18:52.719 That is a very different perspective than when you're just 0:18:52.880 --> 0:18:55.760 talking into a microphone on the radio to the masses, 0:18:56.160 --> 0:18:58.200 where even if you're doing a call in show, as 0:18:58.200 --> 0:19:01.080 Susie does and Dave does and I do, you really 0:19:01.280 --> 0:19:03.440 can't do all that much for someone in a three 0:19:03.440 --> 0:19:08.400 minute radio telephone conversation. And so when you are only 0:19:08.440 --> 0:19:11.800 doing mass media activity, you're limited in your ability to 0:19:11.840 --> 0:19:14.200 truly serve the client well, which is why we always 0:19:14.200 --> 0:19:16.320 say on my show, don't act on anything you ever 0:19:16.359 --> 0:19:18.200 here on the show uses as the basis for learning 0:19:18.200 --> 0:19:20.600 more and talking to an individual advisor about your own 0:19:20.600 --> 0:19:24.920 personal circumstances. There's one other very fundamental difference between Susie 0:19:24.960 --> 0:19:29.480 and Dave and myself. They're talking to a different audience, 0:19:29.800 --> 0:19:32.320 and that is why their advice is different than mine. 0:19:32.359 --> 0:19:34.800 So who is your audience and who is their audience? 0:19:34.880 --> 0:19:36.959 Their audience i'd like to refer to as the young 0:19:37.000 --> 0:19:39.280 and the stupid um and again I'm not going to 0:19:39.359 --> 0:19:43.760 be particularly provided um. They're talking predominantly to people who 0:19:43.880 --> 0:19:46.600 are young, uh. Demographically if you look at their data 0:19:46.640 --> 0:19:51.840 that there is more as a gray year audience, not 0:19:51.880 --> 0:19:53.800 at all eighteen to thirty four year old single females 0:19:53.840 --> 0:19:57.560 predominantly as our audience. Uh, and these folks don't have 0:19:57.640 --> 0:20:01.800 much money, they don't have much knowledge, and they are 0:20:01.960 --> 0:20:04.440 often in many cases, the vast majority of both of 0:20:04.480 --> 0:20:09.000 their audiences are immature and irresponsible with personal finance. Dave's 0:20:09.040 --> 0:20:11.320 big thing is helping people get out of debt. People 0:20:11.359 --> 0:20:13.320 have too much credit card debt, they're over their heads 0:20:13.320 --> 0:20:17.520 with mortgage debt, stream owned debt, and his advice, which 0:20:17.560 --> 0:20:20.040 is a huge focus on getting rid of that debt, 0:20:20.480 --> 0:20:24.000 is absolutely right, absolutely perfect for his audience. Susie very similar. 0:20:24.320 --> 0:20:27.040 When they're talking to people who are irresponsible with money, 0:20:27.200 --> 0:20:30.560 who are dealing with the emotional issues of money, who 0:20:30.560 --> 0:20:33.160 are dealing with money as a power tool, and it's 0:20:33.160 --> 0:20:35.720 an impact on their relationships that they have with their 0:20:36.080 --> 0:20:39.840 their partner, their spouse, their families. The advice they're giving 0:20:39.880 --> 0:20:42.680 them is very very good, very very important. But I'm 0:20:42.680 --> 0:20:46.360 not talking to those people. People on talking to are 0:20:46.560 --> 0:20:49.399 fifty years of age plus. They tend to be married, 0:20:49.720 --> 0:20:52.080 they tend to be dual income, they tend to be 0:20:52.080 --> 0:20:55.000 college educated, they tend to have half a million dollars 0:20:55.000 --> 0:20:57.280 of investments, are more. All of this data is shown 0:20:57.320 --> 0:21:00.639 by the survey research of our radio audience and our 0:21:00.680 --> 0:21:04.880 seminar audiences. And we know that these folks don't need 0:21:04.920 --> 0:21:06.480 my advice and whether or not they can afford a 0:21:06.520 --> 0:21:10.840 cafe latte, they don't because they always advice. But there 0:21:10.880 --> 0:21:12.359 you know, if you if a fight at a latte 0:21:12.480 --> 0:21:14.360 is going to make a difference in your ability to retire, 0:21:14.920 --> 0:21:17.119 you're doing something else very well. And that's my point. 0:21:17.200 --> 0:21:19.760 So my audience doesn't need that kind of advice. They 0:21:19.760 --> 0:21:22.440 don't need me to harp on them about the fact 0:21:22.440 --> 0:21:25.360 that they're acting stupid, that they're buying, you know, fancy 0:21:25.840 --> 0:21:29.560 pocket books and lots of jewelry and big costly vacations 0:21:29.560 --> 0:21:31.000 when they're not even joining their four O one k 0:21:31.080 --> 0:21:32.440 at work. I don't have to tell my clients this 0:21:32.480 --> 0:21:35.639 because my clients are mature, intelligent, responsible members of their 0:21:35.680 --> 0:21:39.760 community who simply want to understand the complexities of money, 0:21:39.960 --> 0:21:44.080 of tax law, state planning, insurance, long term care, family 0:21:44.119 --> 0:21:47.400 issues to help them make the best decisions that they're 0:21:47.400 --> 0:21:49.720 already trying to make. So all we do is kind 0:21:49.720 --> 0:21:53.159 of like tweak our clients along, do this instead of that, 0:21:53.200 --> 0:21:55.880 because it's more efficient, more effective, it's lower risk, lower cost, 0:21:55.960 --> 0:21:59.400 lower in tax, and so our audiences are very different. Therefore, 0:21:59.840 --> 0:22:02.880 the advice Dave Ramsey gives is dead wrong for my clients, 0:22:03.640 --> 0:22:05.760 but the advice I give my clients is probably dead 0:22:05.760 --> 0:22:08.200 wrong for his. And so there is a place for 0:22:08.280 --> 0:22:10.639 Dave Ramsey in this world, and for Susie Orman and 0:22:10.760 --> 0:22:14.000 for me, and the audience needs to recognize who is 0:22:14.040 --> 0:22:16.160 that they need to be listening to based on their 0:22:16.200 --> 0:22:20.240 own situations. Let's talk about running a firm as large 0:22:20.240 --> 0:22:24.520 as yours. You have forty three offices in sixteen states, 0:22:25.040 --> 0:22:28.600 You work with thirty four thousand families. How many employees 0:22:28.600 --> 0:22:32.440 do you have working? So that's a really big shop. 0:22:33.200 --> 0:22:38.600 And you earlier, either proudly or cheapestly, admitted you took 0:22:38.920 --> 0:22:43.200 no business classes whatsoever. How do U s chairman oversee 0:22:43.280 --> 0:22:45.520 such an empire? Well, these days I don't have to, 0:22:46.200 --> 0:22:48.280 so that's the good news. A year and a half 0:22:48.320 --> 0:22:50.560 ago we brought in a CEO for the first time 0:22:51.320 --> 0:22:54.160 so that I didn't have to continue running the firm 0:22:54.240 --> 0:22:57.200 on a daily basis. My wife and I started the 0:22:57.200 --> 0:23:00.880 firm thirty one years ago and we ran it ourselves 0:23:01.200 --> 0:23:04.399