TRAP: The Real Adviser Podcast

82 - (Less) Lonely Money

• Alan Smith; Andy Hart; Carl Widger; Nick Lincoln • Episode 82

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In this latest pile of TRAP, the Trap Pack discuss

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Unknown:

You Welcome to The Real advisor podcast, T, R, A, P, trap. Please follow us and join in the conversation on Twitter at advisor podcast, where you can suggest ideas and themes you'd like the trap team to discuss. Also, remember to like and subscribe to our YouTube channel and leave a six out of five star review on iTunes. Doing all this really, really helps us, which means we can do more to help you. Now, let's head over to the studio for the latest pile of trap.

Nick Lincoln:

Yes, indeed, dear trappers, welcome back to what many people are calling episode 82 of the real advisor podcast, T, R, A, P trap. My name is Nick Lincoln, and joining me as ever in the digital studio of doom are the three other horsemen of the apocalypse still together and the ultra heart Carl della voci the voice widger and Hello Alan the storyteller. Smith, Now gentlemen, we have a show packed full about absolutely nothing, so let's start unpacking it straight away with another high energy review, read out by my very good friend, the right honorable Mr. Andrew ursine Hart,

Andy Hart:

I've got two this week because they're coming in thick and fast, but please do keep them coming. The first one is from gym underscore membership entitled five stars, or, sorry, five stars entitled, A beer fueled intergalactic spectacular. Here we go. A long time ago in a galaxy far, far away, the four horsemen of the apocalypse decided to boldly go forth where no financial advisor had been before a podcast quite true in creating trap every fortnight, they refresh the parts other podcasts cannot reach. So I bet Alan Andy Carl and Nick all drink Carling Black Label. If I didn't know better, I would also say they are also my father's. But what I can say is that if Carlsberg did podcast, it would indeed be trapped, probably the best podcast in the world. Final review from msrkq, five stars entitled essential listening for advisors, this show deserves way more ratings and traction. It probably has to do with Apple's review rating system, which almost made me throw my laptop out of the window. Anyway, the show was always packed with engaging and useful content, and the links and further resources are gold. Thank you to the Track Pack. I've discovered gems such as Nick Murray a week in charts all in and much, much more. If you ever run out of content ideas. As a former UK advisor, now advising in Europe, I would be happy to defend the admittedly sometimes fair negative view of offshore advisors and practices. Keep up the good work, chaps. Mark Quinn, back to you.

Nick Lincoln:

Boss, superb. Thanks, Andrew, thanks for those reviews, gentlemen. Keep them coming in. They're brilliant. That's fake. And yeah the apple. Yeah, the apple. Review leaving system, I think is a bit, is a bit is a bit tricky, but you can leave, you can still leave reviews on some Android apps as well. I know Pocket Casts, you can leave reviews. I don't know whether it feeds through the algorithm somewhere, but if you, if you use non Pocket Cast, please leave a review for us there. Okay, let's crack on. Let's leave a timestamp on episode 82 of the real advisor podcast, T, R, A, P, trap with some topical tidbits. The four of us have just had an off site management meeting, executive debrief, boot camp start up work through something or other in the beautiful city of Lisbon in Portugal, where we were blessed once again with just amazing weather, about 28 degrees in blue skies flew back into Luton. It was like arriving in the Soviet Union 30 years ago, not just because it's Luton, but the weather was bad. So we had a great time. Who wants to start off on the debrief?

Carl Widger:

I'll go. So the debrief went as follows. Let's We'll all meet on morning one for breakfast, and we'll do the trap stuff. So that's what we did. We met up, we talked about trap. We could agree on absolutely nothing, so we agreed that we would park that and move on with the rest of our few days. But we have decided that on the next episode, what we're going to do is we're going to talk to our audience about it, and we're going to talk about, well, what should the future of trap look like? So we would really, really love massive engagement with that, because it is fair to say there are so there's loads of things we could do. We could also do just nothing and just keep going as we're going. So look the input from the people who matter most, our listeners and our viewers. That's what really matters. So please do engage with the next episode on exactly that.

Andy Hart:

Yeah, I think it was a successful trip. The track pack are still together. I think. At various parts during the trip, each of us said to each of us, I love you. Maybe after a few pints, and each of us said to each of us, I'm going to kill you. Probably also after a few pints, I shared a room with Alan, aka the non stop talking room. Lucky, lucky boy. I actually shared a bed with Alan, but we'll move on from that. Your sleeping habits will stay. Stay in Lisbon. Nick and Carl shared a room, aka the no speaking once you're over the threshold room. So yeah, it was perfect.

Carl Widger:

It worked really well, actually, that so lots of noise from one room and total silence.

Nick Lincoln:

It was a Trappist, yeah, retreat in the other room totally was.

Carl Widger:

I knew I could talk each morning when Nick went, good morning, yeah, we don't need to be mute anymore. That's good.

Alan Smith:

I'd never been there before. I thought it was fantastic. Yes, the weather locked and we went on a trip. We went out of town. What place called kashkai, didn't we? That was a highlight for me. Just about 40 minutes on a train, which cost all of five euros, return fair distance outside of the city. We had incredible lunch overlooking the beach. I mean, I know they did say was unseasonably warm, but there's literally people sunbathing on the beach in mid October, but the city of Lisbon itself, I thought I was very impressed, having been to a few of these other cities, Spanish cities, and what have you that I wasn't overly impressed by. I just thought Lisbon was fantastic. Just really good everything you want for like, a few days break in the in the autumn. So thumbs up from me. Andy, yeah,

Andy Hart:

it was, it was a 40 minute train drive or train ride, and then an hour and 40 minute walk to try and find the restaurant, but we got there in the end.

Nick Lincoln:

So much about a little stroll.

Alan Smith:

You then claim it was a hiking holiday. Yeah,

Nick Lincoln:

moving on. But okay, it was so no harm done, no harm done, no harm done, moving on. Just Okay, so moving on, so straight back into the into the into the weeds of this thing of ours. I saw an article. I don't know how we missed it, but we missed it. We did. It came out in August, and I think, as Carl will highlight in a minute, Blackrock had a similar thing at the same time, but back in August, Vanguard, the US, the parents side of Vanguard, came out with a media piece saying that for them, the ideal portfolio going forward for the next decade is 70% bonds and 30% equities. And these things, they tend to come up, and then they just get forgotten, don't they? No one's ever held to account. I think these things were coming out about 10 years ago saying not a dissimilar thing that, you know, it's expect lower future returns from from equities going forward. And of course, we know, we know what's happened over the last decade or so, indeed, since March, 2009 really, so really straight, I don't know. I mean the ideal portfolio for whom somebody wants to run out of money before they run out of life, 70% bonds and 30% equities. Obviously, bonds are cheaper now than they have been for a long, long time, but that still doesn't mean that you necessarily want to hold them for 10 years, plus in any significant amount. I would have thought so. I've stored that away in trust or whatever, note with a reminder in august 2035 it'll pop up if I'm still alive, and remind me just investigate how the 70 bond, 30 equity portfolio fared over the last decade. But Carl, you, you? We have talked about the Blackrock prognosis that came

Carl Widger:

out. Yeah, I think, I think, yeah. We were just chatting about this before we come on air. I think the Black Rock idea was 60% equities, 20% bonds, and then 20% in alternatives, which would include perhaps crypto, if I'm remembering this right, but definitely private equity. It was their kind of private equity play, right? It was private markets should be in all portfolios. So look, they're interesting studies. I, as you know, I'm sticking to my guns on this. I have no problem with a chunk of bonds in portfolios. Yes, they have underperformed the last few years, but it's, I think we're always saying that we should invest in what has always worked. And for me, I think our average client would be in 7030 so I have obviously not going to diss that. I think it's a, it's a really strong position to be in. And I think long term, you know, I'm very comfortable with that kind of an asset split.

Nick Lincoln:

Yeah, interesting. And I see your hands raised, guys, I will come with you just doing, setting up a new client portfolio this morning, going into going into taking retirement benefits from his pot via the pension cake slices, or uncrystallized fund pension lump sum, to give it its terrible name, putting three years worth of plan withdrawals into a short, dated Global Bond Fund for to whether that emergency pot, and it always typically works out at about 20% of the portfolio. 2015, 25% the portfolio. So they're ending up with 7030s, 8020s, by default, in retirement, if not so much in the accumulation

Carl Widger:

stage. Yeah. And fair look, fair play for raising that, because that's, that's, you know, by default ends you're. Your clients are probably in, I don't know, 8515 or something like that. So it's not that you're not in bonds. It's just, it's, it's for a portion of someone's bespoke portfolio. And that's the important part, correct?

Nick Lincoln:

And it's very, very strategic. There's a reason. There's a real reason for ultra then, then storytelling. Sorry,

Andy Hart:

god, did I miss here? You said the your typical client ends up in a 7030 70% being equities, yeah, yeah. This, this article saying 30% bonds. Sorry, 30% equity, 70% bonds. Is that clear?

Alan Smith:

Sorry, yes, oh no. Saying 70% bonds, it says this,

Andy Hart:

saying 70% in bonds, 30% in equity. So I'm glad you guys have read the topical tidbits and reading it, yeah, so I think that's,

Nick Lincoln:

that's why I wouldn't talk about if it was 70 equities, 30, because I think, okay, that's, I've got no issue with that, really, that's better than 6040, no, they're saying 7070, bonds, 30 equity for the next decade is

Andy Hart:

the best. So yeah, my two points were, it's very dangerous to make predictions, and it's even more dangerous to bet against productive companies, as in owning companies rather than loaning to companies.

Alan Smith:

Alan, I do, I do remember, Nick, you alluded to that Vanguard had, I don't know if they still have, but they had a chief economist in the UK, at least anyway, Peter, something or other. And I do remember his prognosis, maybe a decade ago, was not, not quite as bearish as this, but it was pretty down on, you know, anticipated returns from equities are going to be extraordinarily modest at that time. And it was a big thing. They produced papers about it at the time. And clearly his his guesswork at the time has proven not to be correct. And it's a natural thing to say. When you've been in the back of a long Bull Run. It seems natural. There is a thing called reversion to mean. You know, returns long term, will be a bit lower if they've had an above average decade. You would expect that reasonably, maybe if things will be so I take it with a pinch of salt. Fair enough there. Everyone is entitled to their view and their opinion, but, I mean, I haven't, hadn't read the paper, but for them to say that across the board, because there's somebody who's a 25 year old accumulator saving like hell for their future, as someone who's a 75 year old in spending phase who's gifting money to grandchildren and blah, blah, blah. So it's a bit, you know, it's overly, overly general to my mind. And however, the in summing all this up, as has been mentioned before, to give, to quote, to quote, a phrase, the best portfolio is the one that you'll stick to through thick and thin, and also enables you to meet your lifestyle goals and objectives. You know, end of that's it. You know, as long as you can stick to it through thick and thin, then you know, and it meets your goals, you're good to go. So it's a bit too generic and general for me, these sort of statements, well, well said,

Unknown:

well said,

Nick Lincoln:

yeah, yeah. And I think one of these predictions, always, I'll always ignore, is human ingenuity. Nobody knew 10 years ago that AI would, AI would happen, right and change the whole landscape of pretty much everything. And we won't know what's gonna happen in the next 10 years that'll drive earnings in a different sector. This. This is just seem to think it's the status quo, and they project the status quo going forward.

Alan Smith:

Yeah. But if you spend any time understanding what the kind of, the the what do they call them, the mega scalers in the US, these, these, mag seven, mag five, mag 10, whatever the trillions that they're pouring into this. They're not doing that for fun. The expectation that the entire world is going to be dramatically changed over the next decade, it just yeah. See, it seems a very bearish Outlook to just get it you have vast majority of your life savings in what are generically defensive assets in maybe that you know, the greatest time in human history that we're about to experience.

Nick Lincoln:

Hey ho, yep, okay, thank you. We're dag with thrashing. So I think we can move on to, well, the next section. Prsa corner, honor.

Carl Widger:

I missed it, so I said, I'm finding a PRs, a art

Nick Lincoln:

of watching. We

Carl Widger:

had the budget here recently, as I mentioned, and this kind of seemed to slip under the radar, but it was in the Sunday Times. So the pensions authority are in charge of looking after prsas And what prsas can invest in. And I have mentioned before about the gazillions that have gone into prsas Over the last few years. And one of the things with PSA is you can do a standard prsa or non standard prsa and in the non standard prsas, you basically can invest in whatever you want, right? So it's like it's now, look the standard PSAs are probably too restricted, right, in terms of their investment choices, but you can invest in unregulated investments, property, property. Uh, loan notes, that this kind of stuff, but the pensions authority have come out to say that they're going to tighten up those rules. Now, I am familiar with some clients who have transferred to prsas and invested in loan notes because they could do it right now. Or there used to be a rule in the old executive pensions that you couldn't have more than 50% in any one asset, so that precluded you from owning all property in your executive pension. But no such rule exists in the prsas, but it seems that they're going to tighten these rules up now there are people who are having to transfer out of executive pensions and into either prsas or Master Trusts. They technical stuff doesn't really matter, and don't ask me, because I won't know all of the rules, but they are. Some people are transferring, and they're putting all of their fund in PSA into either low notes or unregulated investments and our property. And are they going to make these rules retrospective, or are they going to do what they did with the executive pensions, is say, in four years time, you need to have all this cleared out, and you need to be following the rules. So it's interesting. I hope people are advisors are paying heed. Certainly, my experience on the ground right now is that advisors have not seen this article, and they are definitely not taking heed of these, this, this stuff that's coming from the pensions authority because they're making the rules. So I'd like to know what's coming down the line so that you can advise your clients appropriately. So just interesting, I thought, well,

Unknown:

interesting.

Nick Lincoln:

Yeah, I think it's interesting. Yeah, I do. It's for niche. It's definitely for the Irish listeners, but it's interesting. Okay, data make this interesting and interesting data? Yeah,

Alan Smith:

this, I think, is interesting. This is a an article I wrote. I wrote, I wish I did write. It was read recently from Schroeder's interesting I don't know if you might know him, Andy Duncan Lamont at Schroders. He does. He's he sounds like a Scott so he must be good. He does push out some very interesting pieces which are very sort of data backed and data driven. So this is about that we've seen things like this before. I particularly like this one because of the facts and the data. He quotes the idea of, should you invest when markets are at an all time high? And markets have recently had all time highs, and they came back a bit, and they've gone back again, but markets are generally higher than they've ever been in global equity markets around the world. And don't know about you, but we do get clients saying, Well, I've got a good chunk of money now to allocate and to invest. Maybe I should wait till there's a bit of a pullback. Maybe that's a natural, natural thing. And I kind of get the sentiment. And there's also been a number of newspaper articles have been saying similar things. So you should diversify. You should buy gold. You should buy whatever's just gone up, because markets an all time high. But this is, this is I put a link to this article in the show notes, because I think it's very helpful for people if they are speaking to clients who are a bit nervous currently with the recent highs. Data driven. So the of this is tracks data back to January 1926 of the 1776 months since then, the market was at an old time high in 354 of them, so 30% of the time, and on average, 12 months return. 12 month returns following an all time high being hit have been better than other times, 10.3% ahead of inflation, compared with 8.6 when market wasn't at a high, similar results for two and the three year horizon. But get this is a particular, I think, very interesting stat, $100 invested in the US. We don't be the judge of those to this. $100 invested in us. Stock Market in January 1926 be worth $85,008 by the end of 2023 inflation adjusted terms, growth is 7.1% in contrast, a strategy which switched out of the market and into cash for the next month, whenever the market hit an all time high and went back again whenever it wasn't at one would be worth $8,790 and 90% lower. It's not just a small 90% lower. So if you had invested at an all time high, this is what you'd have got. If you'd invested an all time high and then moved out of the markets into cash just for a month after an all time high, you'd have 90% obviously, it's a very long time. It's 100 years, basically, of data, but that and a number of other points of reference and data points that he's put in the article, I just think are quite helpful to clients. We know the facts that you should invest all the time, because markets go up more than they go down. But and again, some people can be worried and concerned sometimes, but sometimes it is useful to just back it up with some facts and some. Data. So good article. I'll put a link to in the show notes. Della voce, okay, I

Nick Lincoln:

think it's Alan. You've got, you've got your hand raised, on your own, on your own. Point that's even by your standards, is loquacious. Just take it to the next level. Watch

Carl Widger:

two quick comments. Number one, I would advise against showing any clients 100 year old data, because the clients are like, here, that's just horse shit, and you're picking numbers now to suit yourself. And I've got that direct feedback from a couple of clients, so I would just warn against that. Charlie bello did a great, great podcast on exactly this Alan, and I think I shared it before. And you know, it's about, you know, timing the market and trying to get into the perfect time, versus someone who had a mediocre outcome and someone who actually invested in the worst days. So look, it's, it's definitely relevant. But one thing that we all can't account for the maths. Can say the maths human nature is human nature. And if you just landed on a big shed load of money, which is your life savings, and going to market highs. I suppose it's more about, obviously, if we believe in equities, you're going to have market highs all the time. That's the nature of it. So it's about, it's about kind of an education piece.

Alan Smith:

But yeah, I get, I get that just, just to qualify that comment, I get 100 year data is arguably, it's questionable. The article does cite 1020, 3050, year and 100 years. So 10 years we can look at, but the story is exactly the same.

Carl Widger:

Yeah, I like, I like causing kind of 2025, year data, because you have, you know, you and also you do have the financial crisis in there. So it's like, right? What's the worst case scenario here? Well, let's look at what happened then, just

Alan Smith:

for example, 2020, years had you done this and switched to cash after all? Time highs the portfolio was, let was 33% less than the one when you just invested and let it let it ride. So, yeah, yeah, interesting. I'm

Andy Hart:

not aware of the guy, but I'll be following his his articles, yeah, the interesting description they're using there, Alan, is wealth destroyed by switching. This is definitely an advisor for professionals. You know, this is vitamin C for us, just to remind us. I mean, a lot of this we inherently know, but the way he's gone into a great amount of detail is useful. Yeah, you'd rarely share something like this with the client. This is the whole logic over emotion that Carl touched upon. You know, you coming in there with spreadsheets, data, it's pure logic. The client sitting there is full of emotion, and there's always going to be a massive disconnect. Yeah, that's it. Over to the next point I think,

Nick Lincoln:

Okay, and next point, my friend, is you. Okay?

Andy Hart:

Let me just refresh what's going on here. Okay, sound like Carl, it's been a long week, long weekend. Liz, weekend with the kids along this morning. Okay, so this is an article. I think I shared this with Alan, but we'll briefly talk about

Unknown:

it now. You did

Nick Lincoln:

a restaurant at the bar on the walk the restaurant's

Andy Hart:

making coffee for everyone. Pill or dog, he didn't make me coffee in our two bed palace at the top of that tower. So this is a start up called clove, and they're looking to basically offer advice to lower value clients. It's co founder, CEO Christian Owen, told professional adviser, the company's goal is to lower the threshold for traditional human led advice from the current range. He's quoting as 100,000 to 250,000 closer to 10 to 20,000 there's more to this story before we start discussing it initially, they're going to hire five to 10 advisors and then build out but this firm has raised 14 million pre seed funding, 14 million USD, so 10 million UK pounds before they've even opened up the shutters, and they're going to try and go after a lot of low value clients. The final piece of the story is the co founders are ex nut Meg. That's why it's very likely that some serious investors. The funding round has been led by Axel, which are a pretty famous VC, and there's a couple of other notable investors in this early round so this so see how this plays out.

Alan Smith:

JP, Morgan will be writing a check in about seven years.

Andy Hart:

Exactly, exactly, maybe, can they really? Can they rinse in the repeat? That's all they're doing. That's all they're doing. Success Story

Alan Smith:

There was some, yeah, they're gonna throw a lot of money at it. Somebody sent me a link to another robot. But this is now the so the new game in town is an

Andy Hart:

AI AI power

Alan Smith:

says, one called chip, but get chip.com

Andy Hart:

or.co.uk OH. Oh, chips been

Alan Smith:

out a while. Yeah, somebody said, because, whether they've just started to say, because, you know, it's like, we'll create, it's like back in the day when, if you put.com after you your name, your business name, you sort of get a bigger multiple and your value. So if you put, if you say, We're AI, we're an AI powered Robo advice thing that you probably consider to be more valuable. I had a quick look in their website. And by the way, I'm a big fan of innovation. I just but track

Andy Hart:

record,

Alan Smith:

but, yeah, if you look at their website, I can't remember. It looked like they had someone like 250 employees. I'm thinking, Man, that's, you know, that's a lot of mouths to feed, a lot of salaries to pay a lot of

Andy Hart:

chips now, Alan, not clove,

Alan Smith:

yeah, Chip, get chip.com or.co.uk I mean, good, good luck to them all. But the track record isn't good. Of the got

Nick Lincoln:

to be, got to be food related names, are they not make chip and clove? I think is the Yeah, right. I mean that. Sorry, I don't follow this guy because I'm not particularly interested. But 14, 10 million sterling is piss all. Why is that impressive? Pre seed for an idea, not maybe losing that, but every other nanosecond. That's true.

Alan Smith:

This is not just a decent amount of money to raise 10 million impressive idea.

Nick Lincoln:

They'll blow through that in a week. Impressive. It's just a rinse and repeat. I'm sure good luck. We'll see. We know this. Okay, then in five years time, we'll come back and see how Clover's wound wound up with

Andy Hart:

losses of XYZ. I may be reporting back on the success or not, see how they can, but I wish them all the best.

Nick Lincoln:

I mean advice threshold of 10k. Jesus. Okay.

Unknown:

Watch. Is this the visual capitalist?

Nick Lincoln:

See, yeah. Okay, China, yeah. So

Carl Widger:

I think Andy Hart introduced me to the visual capitalist. Do you follow them? And yeah,

Andy Hart:

yeah, amazing every day.

Unknown:

Yeah, they're really good, as if

Andy Hart:

you did 100% did. But go on. Got them all the new now. Go you're

Nick Lincoln:

not in your bedroom

Carl Widger:

in Lisbon, I used to have to put my hand

Andy Hart:

up to ask just you had the talking cap. I had

Carl Widger:

to talk so I had to put my hand anyway. Visual capitalist, right? Probably the reason I put this down was follow them number one, but number two, this is really good. It's about the global central bank reserves. And when you look at this and you I suppose I'm getting just, I'm just so tired of the noise from the United States and them thinking that they're ruling the world and all that China actually have all the China financial clout, and there's there have been some articles written recently which I'm sure people who are interested in investing have read about China buying up a lot of the gold reserves via their central bank and via this massive, massive reserve that they have. And that's what is driving the gold price, and maybe they're doing that to destabilize the US dollar. Who knows if that's true? It's just a very interesting slide that maybe we're looking in the wrong place for the people who are going to, I don't know, lead the world in the next decade, two decades, three decades, certainly not to be dismissed and certainly to be taken very, very seriously. I would say

Andy Hart:

a couple of points. I liked your prediction. Then Carl, in the next one, decade two, decade three, we just don't know when things are going to change but, but there is this switching of the of the world order. I don't know exactly the percentage Nick might know, but out of that 3.5 trillion, I think 75 80% is US Treasuries. So I wonder how aggressively they're going to continue to buy them. So yeah, it's a, it's a huge switch of the world order, but, yeah,

Carl Widger:

but isn't that? Isn't that that's, that's part of the strategy to buy the gold. They haven't ditched any of the US. They haven't ditched any of the US. Treasuries, us, yeah, but

Alan Smith:

they're not buying much more.

Carl Widger:

See, the way, without opening my mouth, that's the point. And and could they then, if they built enough for the gold reserve, could they then destabilize the US dollar by ditching a load of the treasuries? And that's the big point here. So they haven't, they've stopped buying at the level that they were in terms of the US Treasuries, but they, they, they're not buying them at the level that they were. So look, it's just an interesting one. It could be just, you know, a whole lot of BS news, but it's, it's, they are super, super, super powerful. And if you, if you look at, you know, some of the stuff they're doing, getting all of the Asian countries together, and they're having their own g8 and they're going here, let's all gather here, and let's show these guys what it's really all about. So anyway,

Nick Lincoln:

well, interesting. Yeah,

Andy Hart:

they could pivot a bit like the Norwegian, Norwegian sovereign wealth fund, who has. Similar assets to what they're looking after. So, yeah, be interesting to see where else they deploy their capital. Alan, is

Nick Lincoln:

your hand actually raised, or we're just talking ignoring it?

Alan Smith:

Well, let's say I would say yes, yes,

Nick Lincoln:

no, no. If it's not raised, we'll move on, because we got, we got a guest waiting, and so something to contribute. All right, I'll leave it. Thank you. I will quickly tie a bow on this. The biggest mistake we made in 2001 was letting China with the World Trade Organization. And for the last two and a half decades, they pilloried IP from other successful capitalist economies, and it will come round to bite them in the ass. Okay. Smith Clos. And first brand

Alan Smith:

you guys been following this, this first brand in the US and their private credit and the money they've been lent not follow at all.

Andy Hart:

No collateralized loan obligation.

Alan Smith:

Collateralized loan obligations, private credit. There's a bit of a precedent to this. So right now there's, you know, private companies who lend other companies, or banks who lend to companies, or just borrowing money of others. And it's all kind of contagious, and various people are borrowing of each others. And I've read a massive article thinking the FT recently, and it's just with in video, people like that, Alan and No, no, nothing to do with the video. There are just, you know, 1000s and 1000s and 1000s of, you know, still large, big companies, but they're borrowing money, and they're doing various kind of creative things with it, shall we say to you know, eke more money out of the system. And what's what has happened over the last, you know, quietly, over the last, probably decade, is, though, is that investment banks, smart people, you imagine, who always looking for a new product to sell. Have packaged up a load of these loan obligations. Have gone to credit rating agencies and got, you know, a

Unknown:

sounds very familiar, joining I made a movie called The Big Short.

Alan Smith:

Yeah, right. So joining a few dots here. You know we've talked in the past, absolute shambles, private market investments, private equity, private credit. I remember speaking to an advisor, Andy, you and I know a while ago about one of his big, high net worth clients that was just saying, I've really, I'm just, I love private credit. My someone else has told me this thing private credit. So effectively lending your money, your investments, to companies who themselves are kind of borrowing off of each other. So the billions and billions which have moved into private credit markets over the last year, well, this stuff is, if you read some of these articles, they are all kind of interlinked. And the first kind of canary in the coal mine, if you will, is this company called first brand. It was some sort of automated parts business in like the US Midwest, but and they were lent money by a bank called Jefferies, Jeffries investment bank. And I get a big player, a big mirror, big investment player, and it's basically gone, tits up, to give you a technical expression, and Jeffries are sitting holding you like holding the plate as it, you know, pass the parcel as it's gone round. I understand first brand have gone under. They've gone bust. Jeffreys are saying you misled us and lied to us. But of course, Jeffreys have packaged it up and sold a lot of this stuff on to other people, and right now, I mean, I don't know. Hopefully it'll be nothing like the CDs collateralized, collateralized debt obligations that all went tits up. But I'm just flagging it up as being something to keep your eye on. Is this, if it, if it is contagious, and one thing leads to another, and other banks are affected by it, by the same token, well, it ultimately will affect all of us. So look out for that. And I would sort of keep yourself up to date and abreast of it, because you might get some clients who've been reading about this saying, Should I be concerned? But at least being informed is to be well armed.

Nick Lincoln:

Okay, good stuff. We're 34 minutes in. We've got a couple more topical tidbits before we move on to the meat of potatoes. This is the quickie. Just amazingly somehow the CIS I CI, the Chartered Institute of Securities and Investments, have a syllabus for their advanced financial planning exam, and they have a learning resources at the back of this syllabus. And somehow, on page 12, admittedly, on the last page of this PDF, under podcast, there we are. We're now. We're now a recommended resource from, well, the, I guess, the largest chartered financial advice organization in the world, which is amazing. Hat tip to a devoted TRAPPIST and financial advisor, Joshua Carr, for bringing that to my attention. Yeah, well, it's a good thing is I still can't believe it. Okay.

Andy Hart:

No, no, sorry, Nick, this is something to explore on this. If the CISI are very pro us, and it sounds like like they are, we could get this podcast CPD accredited via them, because they are, they are the biggest CPD provider, I think, in the UK, and I'm working on a project with them at the moment on that. So we'll take that offline, okay, but that could be something that would be very helpful for advisors. Yeah,

Carl Widger:

added to the to do list. Well,

Nick Lincoln:

given all the hours that we spend on doing this every year, that's our CPD, done just, just putting the show together, podcast, that's your structured. CPD, no, I'm telling you, it's gonna have to be unstructured. It's got to be everything, unfiltered, unstructured, unplanned, unrehearsed, unmanageable. Okay, moving on ultra financial advisor and wealth manager sentiment towards ESG, yeah. I

Andy Hart:

mean, we touch upon this. This has been a flavor du jour. Comes in and out. Mostly it's coming out. But yeah, the headline is, financial advisors and wealth managers sentiment towards ESG worsens. It's a little bit like Alan's link to show does there's a shed load of data, shed load of graphs, but it's, I mean, yeah, the three metrics that they've measured are performance charges and risk. And it's the declines are insane. They've gone from sort of plus 30% to minus 40% Yeah. Anyway, it's just, it's just saying that financial advisors and wealth managers are, you know, their love, if they've ever had love for this marketing segment, is just absolutely cratering.

Nick Lincoln:

It all started. It all started with my speech three, four years ago at Clive Wallace retreat in Surrey,

Andy Hart:

before then nick the fact, thankfully, we've seen this movie. We've seen this movie before, so we obviously didn't pile in, but some people have, and apparently clients are now not even asking for it. It's not even a thing. I think

Unknown:

that's it's it will be a lot of this sentiment driven by by clients. There was a time when clients were I mean, don't forget on the front foot. Don't forget that. As we mentioned before, you still have to arrest that requirement. What are your feelings toward Yeah, but Nick, he just meetings are not recorded. Nick, so what do you think of that rubbish? Nick will say, what'd you get? All that rubbish, that ESG, nonsense. And then it's impossible

Nick Lincoln:

to ask the question without it being leading. As I treat your customers fairly, I will not ask leading questions. That's my response, right? Last, final point of the topical tidbits, Episode 82 wodge, a retirement survey with insights. God help us,

Carl Widger:

that's really good Goldman Sachs. It's, it's kind of it's 38 pages long, but it's not really 38 pages long because there's lots of nice graphics, but, and now it's US based. So take it with a pinch of salt, but there's a couple of things that came out of it, and we have discussed it before, and one of the things was that some people now are overly optimistic about the amount of money that they already have or that are going to accumulate to look after their retirement. And the optimism is coming from, obviously, bull markets over a long time, but also an underestimation of the impact of inflation, because, and Alan made this point before, and I've used it loads of times. Alan, the inflation rate is not necessarily your personal inflation rate, and I'm certainly seeing that with my kids going to college and stuff, is just mental like, if I was inflating my my expenses by 4% I'd be I'd be bloody broke, right? So, so look, I it's a really interesting survey. They're literally putting this on light saying, Hmm, we might be overly optimistic everybody. So everybody needs to maybe take a step back here, because we foresee a problem coming. And then there was a term in it that I've never heard before, and you're all of course, going to say, of course, we heard of that before. Financial grit. Yeah, hey. So financial grit is the your discipline to stick to your financial plan, to stick to your savings rate, to stick to, you know, what you've set out are my goals, dreams and ambitions, and I'm going to stick to it, and that's what it is, and that if you have a high degree of financial grit, you have a high likelihood of succeeding into your retirement. So I thought it was really, really good. And I thought they also kind of set out like competing priorities for like the Gen the baby boomers versus the Gen Z and the all the all the people in between, and forget all the other terms. But it's a really good report, really well set out, and it will be something that I'm a little bit concerned about myself, like we are. Nick always alludes to this, like, since 2009 it's been like, way, right? Okay, blips along the way and all that. But what happens if we have a prolonged period of a corrective market, and what does that do for everybody's portfolios? And if you're just about on there and you've been living the high life because your plan told you that, hey, you're going to be absolutely fine in 1015, 20 years, then you know, maybe it's time for a little bit of a reassess. Done that, so I would recommend it highly. Goldman Sachs retirement, something survey,

Andy Hart:

New Economics, New Economics of retirement. Yeah, okay,

Carl Widger:

economics of retirement. It's really good, really good.

Nick Lincoln:

Yeah, right. Who raised that quickly, guys, you broke up your hands raised first.

Alan Smith:

That sounds really interesting. Thanks for sharing. Carl, there is, I mean, I like that term financial grit. There's a very good book. I forgot the name of the author, but I read it quite a few years ago. It's and it's called Grit, and it just shows you a lot of Duckworth, yeah. So just the research those people who have got grit, who can grind their way through certain things, or just kind of hold the feet to the fire and deal with stuff. They just as you might imagine, they just their successes are exponentially better than those who kind of fall out of the first hurdle. What's also interesting, though, is you link that survey to the aforementioned one about Vanguard saying you should have 70% of your assets long term in defensive which by and large, you know, using history is our guides tend to barely outperform inflation over the long term and again, which is why Nicholas, this is an art as much as a science. Take all these correct, come on, mix Correct. Blend them all together and deliver your own individual version of financial planning to your own individual range of clients. But yeah, sounds like a good

Nick Lincoln:

article. Yeah. No, definitely. I think over the last over the last century, the figures say that bonds have beaten inflation by maybe, you know, 100 basis points or something per annum. But our clients inflation, no chance. Yeah, no chance. I don't think bonds are a store of value in any sense or shape. Okay, we are at 41 minutes in. So I think it's time we moved on to the meat and potatoes of episode 82 and we have a guest. We have a guest. This was a lady who, I think, spoke at Abraham ockensania's timeline conference. Was very well received, friend of the show, Abraham triple n, and she is now going to be let into the room. If I can work this out without the whole thing collapsing, let's let her in. I'll be there. Has it worked? There she is. Yeah, let me play the silly tune, just to know everybody, yes.

Unknown:

Hey, there's somebody at the door.

Nick Lincoln:

Megan, thank you for waiting in the lobby of the trap studio. You've made it through somehow. Thank you for being here. Thank you for your time. Alan, maybe you'd like to give an introduction to Megan.

Alan Smith:

Well, yeah, Megan, thank you for joining us. First thing to ask you, Megan, is, whereabouts in the world? Are you speaking to us from?

Meghaan Lurtz:

I'm in Italy. Italy, that's where I spend most of my time these days.

Alan Smith:

Yeah, excellent. Because, yeah, I know that you spend a lot of time in Europe, and you're traveling around a lot. And when you were Nick mentioned just before you came on the show, now that you were a speaker at the advisor 3.0 conference in London back in November, I think it was. And what happened? I didn't manage to see your talk, but, but a number of my colleagues and my team went along, and they were frankly raving about it. Said it's just amazing, so impressive, so impactful. Spoke to, you know, told the rest of our team about it, and then so that led me down a bit of a rabbit hole to some of the work that you do. And hence. Thank you very much for joining us on the show today. What would be great as we start off this conversation? Megan is for you just to share a bit about your background, what it is you do and what sort of brought you to where you are today, such that our audience, of you know, quite a few 1000 financial planners in the UK, can learn more about you.

Meghaan Lurtz:

Yeah, so my background is in in financial psychology, or the psychology of financial planning. I have a PhD in personal financial planning from Kansas State, and I also teach at Kansas State, Columbia, Rutgers, few other places, the new CFP textbook that you guys have through FPSB, I'm the editor of that textbook that's on financial psychology, if anybody's picked that up, worked with, if you guys know, Paul Grimes and Emer Kirk over in Ireland, Ireland, yeah, worked with them on that, yeah. And so I teach advisors. I work with advisors. I consult with advisors, but all in the name of financial psychology and the psychology of financial planning and so, like, what? What is that? In many ways, like, when I, when I, like, talk about it with students. You know, this whole idea, I think, kind of began with behavioral Well, began with, began with neoclassical economics. Like, what do we do with this money? And, you know, we have lives. Hypothesis and, you know, cool things like that. And then along came the behavioral economists, and they said, Well, okay, that's what people should do. But like, what do people actually do, you know? So that's what the behavioral economists, like, brought to the table. And then now along came my group, you know, the financial psychology people, and we asked, you know, okay, we know what they're supposed to do. We know what they are doing. So like, how do we help them to, like, do the right thing? Or, you know, whatever that sort of deal is. And so I think it's, you know, it's, it's an applied version of behavioral economics, and less about the macro and more thinking about the micro, which is why I work a lot with financial advisors. You know, we're not necessarily financial advisors, not necessarily trying to solve things that like a policy level. You know, how to keep people in their pensions and get get pensions and things like that to begin. But, but how do I help this person? You know? How do I get them to spend, or how do I get them to save, or what? You know, how do I help them to sell the family house, or, you know, whatever it is that they are struggling with and thinking about and and, you know, the how we communicate those things. You know, what we consider in terms of just people's psychology and decision making ability, you know, all of this kind of feeds financial psychology.

Alan Smith:

Interesting. Who wants to go next?

Carl Widger:

Yeah, I have a question. Megan, I didn't realize that you're working with Emer and Paul. That's, that's very, very interesting, and that that's I'm always talking to the guys about, you know, raising the standards in Ireland. So this is extremely encouraging. Absolutely thrilled to hear it, to hear that you're working with, the folks. I've read your I've I've read your sub stack, and I'd say it's how I described to the guys when I heard that you were coming on air saying, this is, this is real thought leadership, the fact that it's, it's aimed at financial planners. Is there, is there one particular theme or topic that that the financial planners kind of lean towards? And then that will bring me to my second question. So like, what are the financial planners who are eager to learn the the psychology of money? Should we say? What are they? What are they being brought towards, that maybe that they they need a bit of help with, and that that they're kind of guided towards in your sub stack, if you can, you know, share, share some of the articles.

Meghaan Lurtz:

Yeah, well, I mean, financial advisors kind of come to it in a lot of different ways. You know, sometimes it's because their clients are stressed out. Like, in fact, you guys were kind of talking about this last week that you were last time you guys were talking about, like, I think it was, like, the first world problems or something, you were, you were talking about how, you know, we don't, we don't want a market crash, you know. But in a market crash, you know, we feel like we're really doing our jobs. And, you know, clients are calling us and we're talking to him about things. Okay, so there's that piece of, like, what do I do? You know, when my clients kind of freaking out, or when, when my client is really stressed about what's happening? There's that sometimes financial advisors want to know, you know, like, there is a sales aspect to it. I don't, I don't teach sales, but certainly, there's a way to be empathetic and connected. And, you know, this, this is also related. And I think that there can be bigger things, you know, as we, as we move from this sort of like, you know, I certainly financial planning has grown up. We have all these weird artifacts of, like, product sales and things like that, and that people need products like I'm not saying that that's a bad thing, per se. People need insurance and stuff like that. But because of that, there's, like, a lot of behaviors and like things that advisors do that are really kind of artifacts of the way financial planning used to be. You know, it used to be products, and then it was fancy investments. And then it became about the plan, and, and, and the plan, technically, is a product, if you want to think of it like that. And now I think we're moving more and more into this relational space where we're thinking about financial planning as an experience. And, you know, helping, helping people to think in a really broad way and maybe in a different way, you know, then perhaps they had thought about their money before. So, you know, not just like having enough and not running out, you know, certainly we need to still do that calculation. But then also, like, when people get to retirement, like, what do we do when they're too scared to spend or, you know, what do we do when, like, they need to sell the family house, or want to consider selling the family house, but damn, you know, there's so many memories there. I can't do it. You know? Like, these are questions of financial psychology. These are questions of connection and communication, not just, not just the numbers.

Carl Widger:

Yeah, brilliant. I. Just, yeah, I like, I love the way you describe that, that, you know, the evolution has been from product selling and then it was about the plan, but now it's more. It's about the goals, the dreams, the aspirations, and how we help people, you know, hold their hand through that, and, you know, help them through some maybe potentially difficult decisions to get them to there, but I do, before I bring the other guys in, I do have one other question. So like, you're, you're doing all this coaching to advisors, and you are trying to bring them on this journey. So let's assume that we're all we're all in it, that we love the plan, right? But we're trying to make it more about this experience that you described. What's the one blind spot you see what's, what's the one thing that you'd like to get all of the financial planners in the world and give them a good shake and go, no, no, no. This is, this is what you need. This is what you need to really, really be focused in on. This is the bit that you're missing in that transition from the plan to this experience. Is there. Is there something that we we we need to, we need to fine tune. We need to hone in on a little bit more.

Meghaan Lurtz:

Yeah, so that, and I always point to this particular research paper, because I thought that it was well a really well done, but was just so interesting, so that there was a paper that was done back in like 20, 22k State where I work. I didn't actually work on this paper, but my colleagues at K State, Allianz, so big financial company, was involved and money quotient, who also do kind of like they're in this financial psychology space, and money quotient is a great program. So what they did was they went out and found like, 1000 advisors, and then they got those advisors to ask their clients, and they asked things like, Do you talk about values? And you know, 90% of the advisor said that they did, what do you want to guess the client said,

Unknown:

very small, much less, much less than 10%

Meghaan Lurtz:

and you know, I thought about this for like, such a long time, because many of those financial planners that were involved were like, K State students. And I was like, No, how can my students, you know, not be getting through to these people? And, you know, are they not doing the work? And I don't think that. I think that financial plan, like the act of having a financial planning relationship, is a really new and very different experience for many people. Most of us grow up in households where we never talk about money, or if we do it's, like, very bad, or like, you know, not good. And then we just grow up, and we sort of think that those things and that you just don't talk about it, or that, like, maybe if you don't talk about it, like, it'll all be okay. And then, and then eventually, maybe some of us start working with a financial planner, and we have no clue how to talk to this person, and so I think that probably many financial planners have had, like, according to them, a values conversation, but the client walked in thinking, like, am I ever going to make it through this tax situation, or what the hell is going on with this pension? And you know, we're asking them questions about their values. And I'm not saying that that's not important, but I'm saying in that moment, they don't remember, and if you don't keep going back to it, and, you know, go back to it from different perspectives, and we know more of that from, like, positive psychology, like we actually know what, what matters to a life well lived, not just a life full of lots of savings. And I think that the opportunity is for advisors to be more more directive, more specific, and like, we're going to have a values meeting, like, the whole hour. We're going to talk about values, and it's going to be great. And here's how we're going to do it. And this, instead of just kind of, like, nonchalantly asking a few things about values, like that's that's a good start, but we need to be more directive. We need to be more clear, because people don't have any context for what it is that you're trying to do. And so if you want to do it and you want to get more out of it with the client, then the power there is to be more explicit, you know, to talk about the relationship and to talk about the expectations and to talk about the way you're going to talk about money in this relationship, because it will be very different than anything that they have experienced before.

Carl Widger:

Yeah, look, I absolutely love it. So if it doesn't work the first time, you got to revisit the old ground and go back, so I'll bring Andy. And now I think,

Meghaan Lurtz:

well, and even if it does, people change,

Unknown:

yeah, yeah, yeah.

Andy Hart:

Hi, Megan, thanks for joining us today. I'm Andy, despite what our ridiculous names say. So sorry about that. Big fan of your work been following you for many years. My question to you is, I suppose, a huge subject, but the subject of couples and money. And how do advisors navigate that, that intersection between our relationship with them individually, our relationship with them as a couple, their relationship as a couple? So, yeah, any any thoughts on couples and financial advisors?

Meghaan Lurtz:

So. So I would say maybe not half, but I would say probably at least a third. You know, of your clients come to you because there's some sort of a disagreement between them, and they think that they can get you to take one of their sides and help them to win, you know, against against the other client or against the other part, and this is not and so like kind of advice number one that comes to working with couples is to establish, from the get go that you that you take care of the couple ship, not necessarily like that your goal is to try to be neutral and serve the couple ship, and that we're not, you know, going to in fancy psychology terms, we're not going to triangulate, we're not going to take sides, you know, we're just going to reinforce that we serve the couple ship. And I can help you come up with ways to have a better conversation so that you can figure out, you know, how you can come together. But, like, my goal is to serve you and your couple ship. So that's rule number one, don't take anybody's sides. Two, you know, there's always this. This is neither here nor there. Lots of times it gets spoken about in terms of gender, you know, but there's always at least one person who's a little bit more like, I want to talk about the money, and the other person is like, yeah, I feel like I could talk less about this money, and maybe only, like every other meeting or something, people are going to do what they're going to do. We can't force them, but I will say there is great opportunity to, just like, again, establishing the ground rules of the relationship that when we talk about money and you're both here, I'm going to ask how you both feel, you know, and I want, I don't want the answer to necessarily be just like what he said or what she said, You know, I would like, I would like for you guys to think ahead of time, you know, maybe on your own, about what you're thinking about, and bring that to the meeting. I would like to hear from everyone you know, more more ideas the better. And so kind of going out of your way, you know, to, you know, purposefully try to speak to both partners. Maybe, if one, you know, is kind of like the more talky partner, maybe ask the quiet partner first, and, you know, kind of get them to speak a little bit. So that can also be quite helpful. And then, you know, I think sometimes it can be worthwhile to ask just, just different in different communication strategy among them. You know, how do you guys make financial decisions together? You know, what was the successful decision in the past? You know, what makes financial decisions difficult? You know, when you think about our work together, you know, how do you see that as an individual opportunity and an individual support? And how do you see that you know in relation to to your relationship, and you know what in your in your life together, that sort of having these discussions, even though people may not know what to say, and they may actually say that I've never done this, I don't know, but this is now an opportunity for you to say, well, you know, some people in one you know they really like me, to email them, and then other People, you know, they want to have a phone call. And so if you're more of the email type and you're more of the phone call type, you know, I just want to know that. And when we come in to have these meetings together, you know, is it helpful if I send things ahead of time? Because one of you likes to read it, you know, just trying to get, you know, some understanding of not just what you're going to do, but how it's going to happen. This can lower anxiety, but also can be a bridge, you know, to really great discussions on the different expectations of the different individuals involved. Couples are hard. It's not easy.

Nick Lincoln:

Great answer. It's a great answer.

Andy Hart:

Yeah, I love, I love the term couple ship. Yeah, I serve the couple ship. I

Nick Lincoln:

think the first Oh, Megan, don't give Andy new phrases to use. He's bad enough as he is okay, right? I've got a question for you, Megan, trust. Trust. So when you've been advising long enough, there seems to be a level of trust between yourself and your clients, and your clients will do what you say, not because they necessarily understand what you're saying, but it's you saying it, but I can't really explain how I've got all of us have got to this stage in our careers, and maybe just longevity for you, what are the what have you learned about how trust is built in a client financial adviser relationship? And are there any not hacks or short Well, are there any hacks or shortcuts? What should advisors be doing to engender trust with their clients as quickly as they can.

Meghaan Lurtz:

So trust is, for sure, one of those things that's built over time. You know, you have to, you have to walk the walk. You can't just talk the walk. And yeah, I think people learn that over time again. We sort of mentioned already that having a financial planning relationship is a really new thing, and so it takes time for people to figure out what that is. And like, you know you're not going to trick them, and you know that you're going to follow through on your word that. So there are ways that a. Um, well, some of those things just take time. I do think that being, you know, having more conversations, almost like we were talking about with the couples, having more conversations about the literal expectations of the relationship. When do you like me to call? Do you like me to email? Is 24 hours. Okay, how about 48 you know, when I work like this, and this is what I'm thinking about when we have a market swing. You know, this is what I typically do. You know, letting, letting the people know ahead of time, you know what to expect from you can be a huge, a huge trust builder. And then obviously, when you come through on that, and even, you know, a very clear demonstration of trust. Fun fact, though, you know in the beginning you can't, you know you can't really just make somebody trust you, but you can make yourself more likable, and I'll tell you, funny enough that this research comes from like speed dating and so people like, lots of research has been done on who gets the second date. And this research has been done at like Harvard, you know, some pretty fancy universities. And the thing that they found with all the speed dating research is that the person who is statistically significantly more likely to get a second date is the person who asks more follow up questions. And so the trick to this is, what's,

Nick Lincoln:

what's a second date?

Alan Smith:

That's a whole other podcast. Funny,

Meghaan Lurtz:

like, we don't mean to worry about trust for you, I don't think so. It's just that likable part.

Unknown:

Oh, we're trying to make you more likable. Come on.

Meghaan Lurtz:

The follow up thing really works. And so, like, again, I mentioned I lived in Italy, so maybe Alan would have said, Oh, you know Italy, Megan, that's so interesting. What do you like to eat? You know, pasta or pizza? And I say, Well, you know, I really like the Neapolitan pizza here. And then he would say, Oh, actually, you know, my favorite thing is this other pizza. Okay, Alan, just like, took over my narrative, you know, like he was only asking me a question, just get

Andy Hart:

a second date, because he asked two

Alan Smith:

minutes. You can ask too many. There's a there's a limit,

Meghaan Lurtz:

but, but if we do ask, yeah, lots of follow on questions, like two or three, then, I mean, at I can tell you at a brain level what that does. It's like the pleasure center of the brain. So if you're asking someone follow up questions about themselves, being interested in this other person. You know, it is as though you are feeding them chocolate. No, that's that's how that feels, that like the brain level. And so when you are meeting somebody for the first time, you are early, you know, in these financial planning relationships and establishing these financial planning relationships. I was reading some research the other day that was talking about, after about eight minutes on the phone with someone asking you kind of question after question, this begins to change your brain chemistry that like, you release more oxytocin, you release more serotonin, you which are like all the good feeling, no more dopamine. You know, we release all the good feeling hormones. And so if you spent eight minutes in the beginning of your call just asking questions, well, that's so great that you came in and what's going on, and this is the blah, blah, blah, and then you spent, like, maybe the last 10 minutes, you know, again, kind of doing the same thing, like, go down a tangent with them. You will walk away so likable, you will you will get that second meeting. Even if they're like, I don't know about this financial planning crap, but like, you know, maybe they'll think, I just really like that person, you know, I really like that player, and they will come back because we, we like, you know, as humans, we're just built for that, and so we can use it to our advantage and be more likable just by

Nick Lincoln:

asking questions. It's the Dale Carnegie thing, isn't it? To become, to become listened, you know, become interested, to become interesting, become interested. And it's so true, and it holds so true in so many facets of our life. Smithy, you've got your hand raised for Megan, yeah,

Alan Smith:

Megan, I'm just want to kind of pull a few strands together. Here, you said earlier on the conversation that the financial advice, the financial planning profession, has moved on, and we know, and we've all participated in it, and it's there's a lot of artifacts that we've come from a product focused industry to maybe a planning led profession, and we've lived it, and we've enjoyed it over the over the years. But a, not everyone has done and B, I think you alluded to this, our clients haven't necessarily got that. And the media and the industry, you know, the television and the media still talk about products and investment funds. And what have you. Yeah, and I'm just kind of joining a few dots here in your sub start stack. I was reading a few of the articles over the weekend. There's, there's one that really struck a chord with me, and I'd like to ask you about it. It sort of, it talks to all this stuff. It's quite, if I remember correctly, right question, wrong time. If you remember that one, and it's, and it just, I just, I saw myself in this because when all this stuff became a bit more mainstream, you know, a decade ago, a bit longer ago, you know, I read the book, Spot the ticket, everyone that, everything that was available then, and went on programs and courses, and I just went out and met prospects and went straight in with these, like, personal questions, you know, the classics, what does money mean to you? What was money like in your family when you were growing up? And honestly, I mean, it eventually kind of worked. But I was sitting there with people saying, literally, what the hell are you talking about? Because I've come here for some pension advice, because that's what I'm expecting. That's what the media and everyone tells me I should do, and you're being like a freaking psychologist to me. So if you can I think that still exists. I think there are some financial planners out there thinking, Yeah, I need to get into this stuff. I need to get into this. But can you share your thoughts or your advice for people and how you position it if you're asking good questions, when is the right time to introduce them?

Meghaan Lurtz:

Yeah, so it relates to this idea of trust. I mean, we're braiding together some strings here, as you said that. But okay, so there's no need in my mind. There's no need to ask one of these, like really intense questions. You've only known this person, or they've only known you, really, for, like, an hour, maybe two. And I don't know that this is the best way to begin in conversation, because it freaks people out, you know, and they don't really get it. And, you know, we talked about the research in the beginning about how they like, don't even remember, yeah, because they were worried about their pension. You know, they had, they had an arrow in their arm when they walked into the hospital. And then you said, Well, you know, I think we should get a full body scan. You're like, no, no, there's an arrow here. Let's do that first. And so it's just this financial planning is the same. Talk about pensions or taxes and you're like, but tell me about your values and like, I'm with you, man, like, values are important, but if we don't, this kind of goes back to why it's so important to set expectations. If you want to talk about values and like, you want to get there sooner than, than than not, then I think it's important to say how I do financial planning is a little bit different. You know, we are going to address like the arrow in your arm. And I think for us to do that in the best way possible, one of the most important conversations that we have is about values, and I recognize that like that might be a little bit of a different place to start, but here's why it's important. And so in our next meeting, you know, I'm going to start there, we're going to be talking about this, this and this, these are the types of questions that I'm going to ask you. You know, is that okay with you? Like, let's start that expectation. Let's, let's begin that conversation, instead of just slipping it in there and being like, well, you know, values and you know how what, like, what was life growing up when you were a kid? You know, these things can be really a lot for people, and when they have no context for why you're even asking them, that it gets even weirder. And so you'll get great, like, strange answers. You'll get kind of half assed answers that, you know you're gonna have to go back and, like, dig deeper on anyway. And so, you know, I'm, believe me, I'm the psychologist type. I have a degree in it, but I, I think that when we you know, the first time you go to a therapist's office, I'm sure all of you guys have done this, you go to a therapist's office for the first time, and the first conversation that they have, you know, they don't begin talking to you Mom, just like, the minute you walk in they say, Hey, this is the type of therapy I practice. This is that, like, this is how we work together. These are the types of things we're going to do. And, like, I think that financial planning can happen in the same way, you know, like, this is how we work together. This is what we do. Here are some examples of, like, different conversations I want to have. You know, Bada bing, bada boom. Now, when they come in and actually have that values meeting conversation, they know why you're doing it. They know that it's coming, you know, they can sort of prepare and think, I, I think that these are great questions, and I definitely think this matters to where financial planning is going and helping people live fuller lives, you know, connected to the things that really matter most. But I also know that nobody knows how to do that, and if we don't take a little bit of time and structure that provide some scaffolding and some some safety around like, what's about to happen, then people don't, they don't really know. They just think, well, that's a weird question. And, you know. I guess, I guess, you know, he's the only one that asked me that. So that's maybe good, like, so that's how I feel about those. I think they're good, but they need context, or you need to wait a little bit.

Alan Smith:

Great, great advice. Thank you. How are we doing? Nick on, you got

Nick Lincoln:

your hand raised, Smithy, so you still that was the last one that was, I think, Megan, we've, we've, we've, that's been brilliant, by the way. Thank you very much for that. And enjoyed that. That was a, yeah, it's such a massive, massive field.

Alan Smith:

And I want to ask you, Megan, I know you've got some things, huge plans. Yes, it says you've got, we mentioned, and we put a link to your sub stack in the show notes. You've also, you were telling me you got some big plans and products and rollouts coming next year. Can you share a little bit about that?

Meghaan Lurtz:

So I mentioned that I train and work with advisors, and so I work at a place called shaping wealth. Maybe you guys know Neil beige. Neil and I have been friends for a long time, partners, yeah. So shaping wealth. Brian Portnoy, Neil page, joy, joy. Leary, so there I have, you know, there'll be different courses and things that are coming. So that's pretty exciting. So check out, check out shaping wealth if you haven't before. And then I also do some more, like individual firm consulting with advisors through a company called Beyond the plan with Ashley Kwame. Ashley is a licensed marriage and family therapist. She does financial therapy as do I, and we work with advisors on more of like, a one on one basis to like, it's one thing to be on a podcast, and you guys are gonna hear me in your ears and think like, Oh yeah, that question lady. She's got some good ideas, but, you know, and I'm gonna ask more follow up questions, like, because she told me that make me more likable. But these are things that you like really have to practice. Like, that's what's hard about this communication piece, different from, like, a fancy tax strategy that, you know, we talk about it. We update our financial planning software, you know, we do the strategy well. For communication, you have to, you have to, it's like a sport, you know, like, you don't just start playing, you know, for Manchester because you watched a few videos and like, a blog on soccer, you know, or football, whatever you guys want to call it, and like. But you don't do that. You have to play with other people real time for years and years. You know to be that good communication is the same. And so this means two things. One, nobody is born a great communicator. People become a great communicator. So if you don't think, well, I just don't have that much EQ or whatever, you can get better. Everybody can get better. And then even if you think you're really good, I have a lot of data that says you're not, so you should still practice too. And then I also believe that that practice piece, that it really does have to be something that you commit to and get feedback on. And so because of that, you know, some of the work that we have that beyond the plan, you know, gives me an opportunity to do that, to work with, you know, individual advisors on a one on one level, and give them a little bit more feedback so that they can actually become better communicators. Fantastic.

Nick Lincoln:

Great stuff. Fantastic, great stuff. Megan, we've taken a good chunk of your time. Thank you so much for coming on the real advisor Podcast, episode 82 we're out on Thursday, Thursday morning. So it'll be 2am Italian time, so I want you downloading it then, Megan, okay, that's the deal. But thank you for your time. We'll put a link to your less lonely money sub stack in the so called show notes. And the beyond the plan, the consultative service that you offer with your partner, brilliant stuff. And thank you very much, Megan,

Unknown:

Thank you, Megan, that was amazing. Thank you. Cool. Cool, right?

Nick Lincoln:

Okay, we're gonna move on to the next part of the show, which is the what do we do next? We do culture corner, don't we? Here we go. Now we've got to kick you out, Megan, or are you questions? Okay, fine with

Andy Hart:

this from Lisbon. Oh yeah, for those of you watching on

Nick Lincoln:

TRAPPIST questions, sorry, TRAPPIST question, the trap is from this question this week from a guy caught. And I noticed a guy because I looked him up. Connor Callahan. Connor says it's captured. Hi. How do you all model for later life care and care home costs? Do you use any products like Lifetime Care annuities, or do you just set aside some capital? And if so, how much Thanks, Andy. You can ask

Unknown:

that. I don't

Alan Smith:

think anyone heard the question, because Andy talked across the entire Well,

Nick Lincoln:

it's on the I'm not reading out again. If you want to scroll down, it's

Alan Smith:

on the weekends. We know it, but the audience and the listeners may have missed a question. Maybe, maybe in your answer, Andy, you can sort of paraphrase the question,

Andy Hart:

no, it basically says, Are we keeping the music on? Nick, okay, the question is from Connor. Carolyn, i. Um, hi, how do you all model for later life care and care home costs? Do you use any products like Lifetime Care annuities? Or do you just set aside some capital? And if so, how much I will answer this. I could answer this. It took me a long time to answer this one way. Just answer it one way. I'm just gonna answer it one way. Sure you do. Sweet, it's it's a it's a deep subject, Alan. It's a shallow question with a deep answer. Look it up. So for most of most clients who are in their 30s, 40s, 50s and even 60s. I don't add any additional extra care costs in the final, let's say, five or six years of their life. If they're older with health issues, I do factor in and create what ifs for various scenarios playing out if they're the surviving spouse and they've got to leave the home and pay high care costs. I can factor that in. You know, it depends. It's client specific. Yes, I do use Lifetime Care annuities. I do quite a lot of work in that space, but that's different. To make it a projection for care costs for younger clients, that's actually someone in a care home that has a known cost, that has known financial asset. So it's a deep question to answer. I don't know if anyone else wants to give it a stab. I'm assuming not. No, you've answered it

Nick Lincoln:

eventually. Okay. If you've got questions to put to the Track Pack, please do so in the link in the in the pinned tweet, and also in the so called show notes, there's a link there. And we are actually getting close to we've got about 10 more questions to get through. So as with the reviews, if we could refresh them, refresh the hop over some new questions so we don't run out. Otherwise, we'll just make some up, because that's kind of people we are deep on the integrity side of things, right? Moving on quickly. Culture corner.

Alan Smith:

You he always does this tease. You're supposed to tease up. I believe I'm first having having come back from a few days in Lisbon with with you guys. I didn't do too much at the weekend, to be fair, but one thing I did was watch, I don't know if any of you seen it, the Netflix mini series called match room, which is about that company that sports promotion company, Eddie Hearn is kind of the face of it, although it used to be his dad, Barry Hearn, but Barry, who's 76 is still around. I just thought, it's fascinating. It's a six part I watched what binge watched, all of them, six part series, mini series, or whatever, just their whole and it was sort of filmed towards end of last year, early part of this year. So if you are into sport, and you knew all the big boxing matches which were going on, and the darts and various, various various other things. So their main three sports are darts, snooker and boxing. Guess which of those three is the biggest money generator? By the way,

Andy Hart:

I've seen it, so I won't answer the question, yeah, boys go for it.

Alan Smith:

Darts, snooker or boxing. What generates the last money for their company?

Andy Hart:

Well done, Nick, you wouldn't think so,

Unknown:

though, would you? But dance, yeah, by some by some margin. Anyway, I just, I like these things, which are a kind of blend of business. It's sport. There's a business. There's a family dynamic going on. Eddie Hearns, a character quite like him. But it's very entertaining, well worth watching. I recommend it. It's called match room. It's on Netflix.

Andy Hart:

It is decent. And the the presence of Saudi and obviously the amount of money that they're thrown at sport was, was a theme of it, and they're just getting started.

Alan Smith:

So, I mean, wow, watch this space. All global sports. What's what's going to happen

Andy Hart:

every single type of sport? Yeah, very interesting. Over to you, Carlos,

Carl Widger:

yeah, before I jump in, can I just say because it descended into chaos there as Megan was leaving, but we just got a master class and how to sell real financial planning. It was absolutely amazing. And that was good. That was people should definitely follow good point. And, yeah, I just thought it was absolutely amazing. Like, how do you do this, you know? And she just did step by step there. Anyway. This is hilarious, Allen, because we were in Lisbon last week. I didn't read or listen, so I didn't know that you put up a Netflix thing. So I put up the Netflix the house of Guinness. It's absolutely brilliant, really well made great story. Apparently, there's a good deal more fiction than fact in it, in terms of the kind of storyline that it ends up with. Didn't happen however, Ireland back in the 1800s and. Is heavily featured, and you'll all see how far we've come. It's been an amazing journey, but it's a great story, really, really well filmed, really well made, and some great acting in it. I think you'll love it. I think there's eight parts to it. It's brilliant. I loved it anyway.

Andy Hart:

It's next on my list.

Nick Lincoln:

Good stuff. I listened to a rival podcast. We could call it a rival podcast, the FT advisor podcast, which, yeah, given how shambolic we are, this very poor sound quality, the sound levels between the two people are terrible. That's by the by this was on private markets, and the old thing about somebody will believe anything when their salary is dependent on it. Jonathan Moyes from wealth Club, which is a decent online platform, execution only platform, if you want to ever dabble in things, got a bit like VCTs or EISs. It's very slick. I think it's set up by ex Hargreaves Lansdowne people. Anyway, Jonathan Moyes from wealth Club was saying how advisors have got to get their clients more interested in private markets. And if you're not doing it, you're missing out on a trick, and it's just another this pincer attack that's that's coming from all angles on this private markets. Thing is, is getting tighter and tighter around us. And I would say, still repel. Hold your hand up and say you do not enter. You're not into this house with that filth. Get out. That's me.

Carl Widger:

Just before you finish up like, I can't believe you just called out another podcast for this poor sound quality shit that goes on with our body

Nick Lincoln:

now, the sound quality of ours is fine. It's just that what they didn't do, they weren't talking over each other or holding up pictures or stuff like that, which I admit, is not the greatest of things to do.

Andy Hart:

Last one you can you should mention your famous saying, Carl cat and the dogs.

Carl Widger:

Yeah, so there's a phrase in Ireland. Well, I don't know if it's an Ireland or whether I use a Irish version. It's the Irish version is the dog calling the cat hairy hole. I think that's what Nick just did there. Now, anyway, moving along.

Andy Hart:

Okay, this is quite a short episode for us. People can be enjoying this.

Nick Lincoln:

No, if you keep on talking about stuff that's not

Alan Smith:

relevant, imagine there's three, three days of this. It was incessant. He

Andy Hart:

still hung over people, right? My final topical culture corner. Sorry, it's a book. It's a book by a speaker who I saw speak at the CISI conference called Lee Warren. It's entitled The Busy Person's Guide to great presenting. Become a compelling, confident presenter every time. It's a really decent book, quite a short read if you do presenting to Team people talking. It's a must have book that's a good mix, two Netflix shows, a podcast and a book that's it over to you to close it up.

Nick Lincoln:

Nicholas done. Okay? Great stuff. Well, what are we done? One hour, 2383, minutes. It's just, it's pretty much there. Okay, dear trap business. Episode 82 comes to a close. Another pile of traps slides down the U bend of Father Time. It's time it's time for us to say goodbye, please do leave reviews on iTunes or whatever app you can leave reviews on. Please subscribe to our YouTube channel like click on that bell thing, and you'll get notified when another pile of trap lands on your screen. But until the next time, dear TRAPPIST from the trap pack, it's adios. Take care out there, and we will see you on the other side. Goodbye. Goodbye. You right.

Unknown:

There we Megan was brilliant. She was brilliant. Yeah, yeah, it's good. You.

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Nick Lincoln

Host
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Alan Smith

Co-host
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Andy Hart

Co-host
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Carl Widger

Co-host

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