Hi, Everyone. Welcome to the Wiser Financial Advisor with Josh Nelson, where we get real, we get honest, and we get clear about the financial world and your money.
This is Josh Nelson, Certified Financial Planner and founder and CEO of Keystone Financial Services. We love feedback and we’d love it if you would pass it on to me directly at firstname.lastname@example.org . Also, please stay plugged in with us and get updates on episodes and help us promote the podcast. You can subscribe to us at Apple podcasts, Google, Spotify, or your favorite podcast service. Let the financial fun begin!
Recently I had the opportunity to sit down and talk with Matt Reiner about the financial industry. Matt is a fellow Certified Financial Planner and also an author and industry speaker. He has his own podcast called Bridging the Gap and he is the author of Ready to Be Rich and also Doctor Cold Cash Will See You Now, which is coming out late in the summer. The conversation goes a few different directions, but it’s a lot of fun. We talk about why it is that so many people tend to struggle financially and what to do about that. We talk about relationships with financial advisors, the financial industry in general, and about careers and advice for people that are just getting started and trying to figure out where they’re going with their career and their financial life.
Josh: Welcome, Matt.
Matt: Thanks for having me.
Josh: You’ve been in this industry for how long now?
Matt: Nearly 15 years practicing, but I grew up in the industry. My dad was in it forever. As a kid, instead of watching cartoons I was watching CNBC and ETFs. Closed end funds or CES were in my vocabulary before a lot of other words.
Josh: So it’s kind of in your DNA.
Matt: Yes, although my dad never told me that I had to get into it. When I was growing up, it was either I was going to be in this industry or going to be a professional baseball player. And early in life, I realized that the professional baseball player wasn’t going to happen, so I only knew one route, which made me naïve, to be honest. Then as I started getting into the real world, I realized there are a lot of other options, but this is one I’m most passionate about. What I love about this space is the ability to actually impact people and see them get to retirement, right? That’s what I love about wealth management.
It’s a constant evolution of learning. One of my core values is constant learning and thirst for knowledge. In this industry you never know everything and you’re always learning something new. There’s always something new being thrown at you that you have to figure out. I’m a big puzzle guy. I love putting puzzles together. Every financial plan to me is a puzzle. I think that that’s what drives me. And when you’re able to see people go from working years to retirement and then they send you postcards, there’s nothing better than that—to be able to show that you actually had a tangible impact on someone else’s life. I think we all strive to have impact on our own life and on others. In this industry, you have that tangible impact. I want to go now and inspire other wealth managers and advisors to get on the same train. How can they do that for more people? Because if we can get more financial advisors out there doing more services and delivering more value for more people, then that is the root of doing good.
I want to continue to help families, but also see if I can make an even greater impact. That’s why I work now with financial advisors. We built a technology company for financial advisors and I’m writing books for financial advisors. Because the more that we can all learn, the better we can be and the more people we can serve.
Josh: I got in the industry in ‘99. That was kind of at the height of the dot com bubble, and I remember people telling me at the time, “Are you sure you want to get into that business? Because we’ve got all these dot coms and Yahoo finance and e-trade and all these things. Why do we need financial advisors anymore?” And after the bubble crashed, it became evident very quickly why we still need financial planners and advisors. Basically, people could do it themselves for free. So, where is that value? What would you tell somebody if they were self-directing or maybe just starting now? If someone is trying to figure out, “Hey, do I want to work with somebody or not?” What really would be that biggest value, would you say?
Matt: Today there is all this other technology. And you still have advisors and you still have people with a thirst for finding a human connection. The reason is that we as humans are irrational. That’s everybody. We’re emotional when it comes to money. So where do we add value? Well, what has been commoditized in our space? In my opinion, it’s the traditional, straightforward investment management. You can go and get that anywhere you want, for inexpensive, for free basically, now, with many firms. But that is not what financial advice is.
As an industry, and in the general public, we’ve got to separate the idea of financial advice and investment management. Because financial advice is so much more than investment. That is a part of the process, but you have the planning and then most importantly you have the behavioral aspect of things to help handle the emotions. Having someone else look at your financial situation in an unemotional way—unemotional because they’re not connected to the world that you are—is powerful. It helps ensure that we don’t make silly decisions. In hundreds of years, one thing that hasn’t changed is that we get in our own way when reaching for our financial goals. And now with the access of information and the ability to go down tunnels with social media, we find ourselves making more irrational decisions than ever before. Because we’re following headlines. But financial advisors are meant to be that life coach to help people see their irrationality and keep them away from it.
You have to negotiate with emotions. Just telling people, “You’re being irrational and this isn’t the right thing,” is never going to work. You’ve got to negotiate with emotions. I always tell my clients that 90% of my job is being in psychology. Just 10% is the easier part of managing money. That’s not what you pay me for. You pay me to keep you on track and help you reach your financial goals. You pay me for the ability to see how thousands of other people have done it and be able to relate that to you. Because you’re in your own world, rightfully so. That’s the value of an advisor, and that’s what led me to write my next book, called Doctor Cold Cash Will See You Now. It’s all about advisors finding their true worth. As a community, advisors have been pushed by the general public to say, “You aren’t valuable. I have all this.” And we start saying, “Well, how do I explain my value?” You explain it by saying, “I keep you from being silly with your money.”
Josh: It’s funny how many new clients that join us say that very thing: “Hey, you know, I’ve gotten to the point where I built up this wealth or I got sudden wealth and I just don’t want to screw it up.” That’s why they end up coming to us.
Matt: I always say there are three reasons. One, the person that knows nothing about investing who says, “I need someone.” Two, is the person that knows a lot about investing but is tired of managing on their own. They understand everything, but they just don’t want to do it on their own anymore. Three, is the person that was doing it, but now because they came into some money, they don’t want to take the risk of putting all the onus on them. They want to have that other person they can blame as opposed to having to look at themselves and think, “Oh, shoot, I messed up.”
That’s what our value usually is, and we have to think about how, as an industry, we can continue to evolve and deliver more value and services—rather than the mindset of asking, “How do I get more alpha or less beta in my portfolio?” That’s a mindset shift that we need to do as an industry for the betterment of the clients.
Josh: Yeah, that’s a whole conversation. You know, I spoke with somebody who called in kind of randomly. I think they found us online but they were asking those questions: “Can you beat the S&P 500?” That sort of thing.
Matt: Those are telling signs of who’s not your ideal client, right? And advisors that say they can beat the S&P and tout that—that’s phenomenal, but I bet you there are years they didn’t beat it, because there is this thing called reversion to the mean that tends to happen.
Josh: Yes, for sure. So, your new book is coming out this summer and you’re targeting advisors as the main audience, but you and I talked separately and you said this would actually be great for the general public to read as well?
Matt: The title of the book is Doctor Cold Cash Will See You Now, volume one: It’s how he helps advisors see their true worth. It’s a fable series, so it’s a series of four fables that I’m writing, all tailored to advisors and helping them continue to grow their business, but one of them is valuable for both the advisor community and the general public—because it shows the behavioral aspect of how people are irrational and also how people are talking about technology today, thinking it’s going to replace the human advisor. And it addresses why that’s not the case. The “why” always hinges on the behavioral aspect of it, the emotional side.
There are many studies that we use, but it’s a fun, short fable book. If you’ve ever read Who Moved My Cheese or The Highest Functions of a Team, the style is very similar. Doctor Cash is this southern gentleman that you know does things the right way, but helps financial advisors see their worth and see their value. It’s just a fun book. The reason I think clients can read it is because you can see some of the ways that advisors should be helping you.
One of the stories shows the irrationality of humans in a very simple example. So if you’re choosing between a pen at a CVS™ or Walmart™ or whatever, and it costs $15.00, an expensive pen. (For the sake of example, let’s just wipe away what we all assume a pen should cost.). It’s $15.00. If you hear about a pen at a Target™ 20 minutes down the road that’s $7.00 cheaper, you’re likely going to get in your car and drive over there. You’re saving $7.00. But then if you’re at maybe a Brooks Brothers™ and the suit is $450 but down the street is Men’s Wearhouse™ and the same exact suit, same color, same brand, is $443.00. It’s 20 minutes away, but you’re likely not going to drive over there to save that money. It’s the same dollar amount, $7.00 for your cost of 20 minutes. But $7.00 is a smaller percentage of the suit, relative to the pen, but it’s still the same amount.
That just shows we are irrational. As humans we are irrational. And for us to think that we can be rational when it comes to investing our money is irrational. We can’t even think rationally when it comes to saving seven dollars. And we have many other studies in the book on how our brains work. There are a lot of lessons that we discuss that are valuable for the advisors to understand so they can better serve their clients. It’s a fun, quick read that you can probably listen to on a car ride or read one section at the beach.
Josh: I’ve got to ask you because a lot of people, myself included, will say, “You know, I’m going to write a book someday.” So, what was it that motivated you to write a book to begin with? For a lot of us, it’s kind of intimidating. We’re not even sure what the first step is, to write a book and actually get it published.
Matt: You’re very innovative, right? With this podcast—and I’ve been doing a podcast for a while as well. I’ve also done a ton of video. We brought on a video production person on our team and she’s been with us for five years now, so well before anybody else was doing video, right? We like to be forward looking in our firm. I have people that challenge me. I have a business partner that does a ton of media who’s been a great mentor and challenged me as well. And I just said, “How do I get my word out there in a fun way and a more mass way so I can start helping to talk to people about this?” The benefit is to spread the word to better the industry. That’s what led me to say, “You know, a book does that.” I saw my business partner have a lot of success with his book. And I knew a book had to be unique, right? It had to be different, not just another success book.
Josh: Right, there are a lot of those out there.
Matt: Yeah, so how do we be different? How do we make it fun? This industry is a little bit tied up. I’ve always been the guy that says, “I don’t know if we need to be wearing coats to the office; I mean, why can’t we wear an Under Armour™ golf shirt, right? We should be able to build relationships.” So, I took a stab at it and started. It was a long process. I started writing a lot of blogs about it. I started ideating. There was an incubation period where it was just always on my mind. I wrote a ton and did research. I sold myself on the idea and then I was able to write the book. That’s kind of how I’ve gone about writing all these four fables in the new book. It just takes time. I think people try to box themselves in and say, “I gotta do it in two weeks.”
I would make notes on my iPhone as I thought of them and then put those together over time and used some life experiences.
Josh: In thinking about the general public, the evidence is out there, I think, that the average person is just not where they want to be or where they need to be financially. Why do you think that is, and what are the things that are getting in people’s way?
Matt: I think that as financial advisors and as a general public, we are very linear in thought. We say, “This is what you need to do to save for retirement.” But from a psychological standpoint, think about a 30-year-old. You tell a 30-year-old to save for retirement. Everybody asks, “Why is the younger generation not saving?” It’s been said by every older generation about the younger generation. It’s not just millennials or Gen Zers. Millennials have their own challenges, don’t get me wrong, but this is not one of them. This is just a general human challenge. You’re told time and time again, “You should start saving young. Compounding makes sense, etcetera etcetera.” Every older person that you run into says, “Gosh, if only I would have started saving when I was 22.” And it always goes in one ear and out the other. The reason is because whem you’re telling a 30-year-old to go start saving today for something that they’re not going to be able to utilize until they’re 59, 60, 62—it’s literally a lifetime away.
They can’t wrap their heads around what happened 30 years ago. How do you expect them to be able to wrap their heads around a goal for something that happens 30 years in the future? That’s why I’ve always felt that individuals 45 to 50 get much more focused on retirement savings—because now retirement is in sight. It’s 10, 12, 15 years away. And now they’re able to say, “I remember what happened 15 years ago. I remember what I was doing, and while that seems like yesterday, this next 15 years is going to fly by. I better do something now.”
So, as advisors, we have to change the way we help to create spending and saving habits. We have to balance the conversation as opposed to just saying, “Save for the future.” We have to balance with today. How do we give experiential ability for them to enjoy their money today, but they create these habits of saving for the future?
My first book talks about negotiating emotions. The second book is negotiating emotions as well, but in a different way, as in, how do you negotiate with the younger generation or any generation to help them get what they want? How do you create the habit? So for instance, if they want to go travel the world, maybe it costs $2000. In this hypothetical, you know that it’s only going to cost $2000 because as an advisor you’ve done your research. You tell them, “We’re going to save $4000. We’re gonna start saving $100 a month to get to that point over a three-year span.” So, over three years, we’ve created the habit of adjusting our expenses in order to save that $100 a month to get to that point. That’s an end goal that we can rationalize.
But you know that it costs $2000. They’re gonna come back and say, “Oh my gosh, it’s only $2000 to do this.” Great, you now have $2000 extra saved, which is phenomenal. But you’ve created the savings habit that encourages us to get to retirement. It’s a change in the conversation that needs to happen; it’s a challenge that that we have.
Another aspect is that people want to live in the moment. The pandemic has done that. And compounding is great; we all understand that, but it’s really discouraging for beginners. If you save $1000 in a year, even if you grow it by 20%, you’re getting what $200, right? And people say, “I adjusted my budget. I didn’t do certain things, and all I get is $200.” Not much payoff, or at least it doesn’t seem like it. Even if you got 100% you only get $1000. And as humans we all look at nominal amounts as opposed to percentages. That’s a challenge that has to be overcome by education and by changing the way we talk to people, by leaning in and better understanding them and then relating to them so as to have those conversations.
Josh: Your earlier book, Ready to Be Rich was more directed at the general public. Maybe you can sum it up a little bit for somebody who’s just starting out. Let’s say a young hungry college graduate, maybe graduating in a couple weeks here, or just graduated. What advice would you give them now, as far as establishing those habits? Because you’re right, starting early does make a big difference, and I think we all know that intellectually, but the reality is, most people don’t do it.
Matt: Psychologically, it’s very hard. The biggest challenge is to get out of our own way. Ready to Be Rich was a fun book to write. It was inspired by something that I and my then girlfriend now wife were doing with regards to saving. At that time for some reason, she was on Weight Watchers™ and she was obsessed with this idea of the point system. She was watching everything that she was eating. It was like a game and I thought, “How do we move this over to financial services and into finance savings?” That’s what Ready to Be Rich was inspired by.
We developed something called the daily spend limit, which is like Weight Watchers™ for saving money. What we did in our own relationship was to say, “Here are all of our expenses. This is what we have coming out that are fixed.”—which was rent or utilities and taxes and that sort of thing. And we now have $500 or $1000 left to spend in the month. OK, well, how much can we spend every day? Divide your total by 30 and you get your number, which for us was around $40 a day. We built in savings so that the daily spend limit number was lower. $40 a day was our point system. So, I could go to Starbucks every single day if I wanted to, but that would be eating into my $40 a day. And if I knew I wanted to take my girlfriend to dinner, I had to save up, so I needed to take my lunch for a few days because dinner’s maybe $120.00. I’m able to plan in smaller increments, I’m not thinking about what I’m doing for saving. I’m focusing on this daily spend limit number that’s now allowing me to experience and live life. It was changing the psychology of it.
I think it’s really important to figure out a daily spend limit. If you’re paying off student loan debt, build that in. But you should still have a daily spend limit. Maybe it is only $10 when you’re first starting out. That’s OK. You may have to figure out how to make some sacrifices early on, just like we all do. When we first graduate college, we can’t live the life that we grew up in when our parents were working in their peak earning years. That’s a challenge that you’ve got to get over. You can’t have a house with all the same things. You can’t have the same lifestyle. Your parents didn’t get there just like that. They built it as well, and you have to build it to get there. You can’t just expect to be starting there on day zero.
Josh: Right. What about further on? What about people who wish they would have started earlier? You and I hear this all the time from people saying, “I wish I would have talked to you 10 years ago.” So, what advice would you have for somebody who feels like that? I’ve heard that same thing from people at different ages too—in their 30s, 40s, 50s, 60s, 70s. What advice would you give the person who feels like they need to play catch up now?
Matt: Yeah, sometimes to my own detriment, I’m too forthright with them and I say, “The past is the past. Let’s not harp on it.” We can’t go back to the past. We have to take a reality check of where we are and what we need. Because people have this perception of what we think we need. I remember the ING commercials I think it was, with the number over your head and everybody asks, “What’s your number?” And for some reason a million dollars has gotten to be the ”number” you’re supposed to have. You’re a millionaire. Great, sounds rich. But what does that even mean? I don’t even know.
The Millionaire Next Door is a great book because it shows you don’t have to be a millionaire. You don’t need a million dollars. I always say, “Let’s break down what you actually need. You need to look at what income streams you’re going to have in retirement and how those can help what you actually need.” Because if you need $10,000 a month to live on in retirement, well, you may not need $10,000 a month in your investments, because maybe you have a pension or maybe you have real estate. Or maybe you have Social Security coming in. What is your gap? Maybe you need a little bit less than you thought. What is your real number, and how can we make sacrifices today to help make up for it. You have three things that you can leverage and change. You can do the return on your investments, take more risk, and the amount that you save over time.
We can’t change the present value of our assets; we’re only trying to go to the future value of our assets, which is a very simple equation. We all know what that equation is. I always give the option to all of our clients. Which ones do you want to change? Then we can adjust.
And really, having those conversations about what is it that we really need, then lwork backwards and ask how do we get there starting today? And what sacrifices can we make in our life today?
Josh: What do you think are some of the biggest misconceptions out there with regard to financial planning in general, not just as a profession, but the process of financial planning and making smart money decisions. What do you think are some of the biggest misconceptions out there that trip people up?
Matt: That my decisions today do not impact my future. Every decision we make in life determines who we are as a person. The idea that “I’ll catch up in the future,” is something that is not true, right? It’s very hard. You have some limits. You have two currencies: money and time, and it’s really hard to do. Also, it’s great to have belief in yourself, and you should, 100%. But I think that people sometimes are blindly believing in themselves regarding their future. They put too much weight on the idea of “I’ll be there in the future. It’ll be fine. I’m making $50,000 now, but in five years I may be making $600,000 and I’ll just be able to do it then.” That’s just not the case. Your life evolves, your life is going to change, and you may not even get to that point.
Josh: Shifting gears to technology, you’re very interested in technology both at the advisor level and also for consumers, and leveraging technology, not saying this is a threat, but actually saying this is something we can leverage. What got you interested in that angle of things with technology, and what are some of the tools out there? How are you seeing things evolve right now as far as some of the most helpful technology tools?
Matt: Personal Capital™ is an amazing one. Mint™ is a great longstanding one. And I do think that Betterment™ and Wealthfront™ are great tools to use. But my focus has shifted to helping advisors. What I’ve realized as I was building technology for direct-to-consumer is that I never felt that the “it” factor was there. It was missing the human element and I needed to get back to that because that is what is integral to financial success in my mind.
Now I focus on how to help advisors deliver their financial services to more individuals to keep the white glove service, to keep them on track, to help them toward their financial goals. I see that this industry is going to become bionic, where technology is going to help the advisor be more efficient and scalable and personalized and proactive with their clients. It’s beneficial for clients, the more advisors invest in and try out new tools. It’s going to make the value that they provide higher.
We need to ask how this technology gives more time to spend with clients and be more insightful into what their needs and demands are in a timely way. The more we try those things out, the better we’re going to be as advisors. And technology needs to bring together all the technologies that we use today as a financial advisor. It’s a problem, that we all live in disparate tech stacks. We all have different technologies. Nothing talks to each other. We spend 41 percent of our time doing menial, mundane tasks. If we had the ability to connect all the technologies together, we could start eliminating those. Just think what you could do with five or ten or 20 percent more time. That’s why we created a company called Benjamin, which is a business support system. You know, for any listener out there, we all remember the Intel commercials where it said the Intel chip inside it powers all these things. That’s what Benjamin is; it’s the chip inside the advisory firm that helps to supercharge the operations of the advisor from behind the scenes. Sometimes you interact with it via communication, but it’s meant to supercharge the advisor by eliminating and executing on those menial, mundane tasks by bringing all the technology together. It’s not just a portal or an ability for you to see your accounts. It’s an ability to provide more holistic and insightful information that’s relevant to you.
Josh: From the point of view of the consumer, if we’re spending a lot of time on stuff behind the scenes, they’re not seeing it. And I think you know there are a lot of industries that are scared of technology—in the medical field and so forth. Some people are thinking, “This could make my job extinct,” but what you’re saying is that’s not a concern; it’s actually going to help you, not hurt you.
Matt: Yeah. I call it the Facebook™ effect. If you look at our clientele, the average age is 55 and over. And back in 2009 everybody was saying Facebook is going to change the world, and advisers pooh-poohed that, and rightfully so, right? Because only 9% of our core clientele used Facebook. Fast forward to 2019, 2020 and now over 50% of our clientele are using Facebook. Why is that important? Because if you put aside anything that you don’t like about Facebook, what they’re really good at is getting engagement and personalizing their feeds. They’re giving you information that you want to see that’s relevant to your friends, the topics you enjoy. It’s very personalized and relevant. That’s what advisors need to continue to get to. Because sometimes we send out newsletters to everybody and the content isn’t relevant to half of our clients. So, we can learn from Facebook proactive recommendations based on history. There’s an ability now with technology to do that.
The clients won’t see it. What they’ll see is you delivering them more value. They don’t care how the sausage was made and you don’t need to tell them. They just care that they’re getting more value and they’re seeing more of you, and the relationship is strengthening. If technology can help you do that, then technology is valuable. It’s never going to automate your job. It’s going to automate parts of your job, but it’s not going to automate you and replace you.
Josh: What advice would you have for a financial planning student, someone preparing for their career? What advice would you give them as far as not only getting into this industry but really getting fired up and being successful?
Matt: This is the best industry to be joining right now and I’m biased, I get it, but there is no better industry to be joining right now because of the opportunity that presents itself. This industry is on the precipice of change. There’s a massive change going on to where you can have an impact on it, right? You have an ability to actually change and shape the way that firms look and interact and serve people into the future. The industry now is starting to become more comfortable with technology tools so you can blend this idea of using technology and innovation to have an impact on people. We’re kind of molding the future of advisory business today. The older generation of advisors need to embrace that, and the ones that do are going to be able to attract some amazing and intelligent younger people that are going to shape your firm for the future and make the impact live well beyond you. Also, if you get in the right firm, it may be easy to get new business. You may not have to be doing the cold calling that we had to do back in the day, right, knocking on doors and selling yourself. You can inherit some business from the older generation so you have a path to change an industry, have a path to change a firm and have a path to access a lot of clients right out of the gate.
Josh: Thank you so much for your time, Matt, and thank you for your service to our industry, not only to clients we deal with on a day-to-day basis but also to the industry as a whole. Clearly. you’re passionate and I’m passionate. There are a lot of people out there like us that want to leave the industry a better place for that younger generation. We’ve been told over and over that they’re not necessarily just looking for the money. They’re working to have an impact and make the world a better place. So this is certainly an industry that we can do that in, and I certainly appreciate your time today.
Matt: Thanks for having me. This is a lot of fun and looking forward to future.
Josh: When does the book come out?
Matt: We haven’t put a launch date on it, but it will probably be toward the end of the summer to get everybody ready for fall reading.
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The opinions voiced in this episode of the Wiser Financial Advisor with host Josh Nelson are for general information only and not intended to provide specific advice or recommendations for any individual. Investment advisory services offered through Keystone Financial Services, an SEC Registered Investment Advisor.