Afford Anything - Q&A: Should My Teen Go to College?

Episode Date: February 17, 2026

#690: Blanca (01:28): Blanca, an immigrant mother raising a 14-year-old, wants her son to think critically about college—not just as an experience, but as a financial decision. With the rising cost of higher education, she’s wondering how families can assess whether an undergraduate or graduate program is likely to pay off over time. Brandon (30:05): Brandon in his forties, recently left full-time work to pursue per diem work and a side project. Planning to draw down his taxable brokerage account for supplemental income over the next 20 years, he’s wondering whether to continue reinvesting dividends or take them as cash for flexibility. Anon (40:15): Anon has been following Paula’s advice on financial advisors. They’ve heard her recommend fiduciaries and caution against the assets-under-management (AUM) model. They’re eager to understand the reasoning and want guidance on finding trustworthy advisors. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Joe, you have an English degree, right? I do. Me, be good at English. Have you used it? Have you ever been to England? I have been to England. I could converse with the natives. Wonderful. Well, that must have been very useful when you went to England. Incredibly useful. We've got this question, which is, is a college degree worth it? We're going to tackle that right at the top of the show.

After that, we're going to talk about how to pick a financial advice. and specifically the assets under management model versus the flat fee per hour model. And we're also going to discuss whether or not you should take dividends as cash while you're drawing down from a brokerage account. Wow. I know it's wide ranging today. That's cool. I can't wait.

Welcome to the Afford Anything podcast, the show that knows you can afford anything, not everything. The show covers five pillars, financial psychology, increasing your income, investing, real estate and entrepreneurship. It's double eye fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia. Every other episode-ish, I answer questions from you, and I do so with my buddy, the former financial planner, Joe Sal C-Hi. What's up, Joe?

I am super excited to be here with you today, Paula. Oh, thank you. Thank you. Any reason that you're so excited today? It is a sunny day in Texarkana, and I get to hang out with my buddy Paula, answering questions from the community. What could be better? Aw, well, let's start with our first question, which comes from Blanca.

I'm an immigrant mother of a 14-year-old boy. I understand that in today's environment, going to college is not always the best financial decision. I want to help my child learn how to evaluate strictly from my financial perspective, whether an undergraduate or graduate program is a good investment. How can families assess if a college program is financially worthwhile? What factors should be considered to determine whether a degree is likely to be profitable? over time. As someone who did not study in the U.S. education system, I'd appreciate guidance on how to approach this conversation and analysis, as well as resources that I can look into. Thank you

very much. Blanca, thank you for the question. It is an important one because we're going through a cultural paradigm shift right now. I'm a millennial. When I was a child, the dominant thinking was that college degrees are necessary. They were almost sacrosan. They were almost sacrosan. I wouldn't even question your use of the word necessary because I think what you're trying to say, Paula, is that it isn't so much that they were necessary that it was a given. Maybe it wasn't necessary, but it's like people didn't ask if you're going to college or not. It was which college are you going to? So it was just, yeah, of course you're going to college. And it was only later, I feel like people started to go, why?

Why are we taking this for granted? Right. Exactly. It's like deeper than necessary. So I get what you're saying would necessary, but I think it's, it was a little more systemic than that. Yeah, it was assumed. It was the default. Well, and you would hear all of the statistics.

Again, going back to the dominant thinking when millennials were kids, you would hear all of these stats about how the average, quote unquote, the average college grad makes a million dollars in their lifetime more than a non-college graduate. Yeah. in the musical Avenue Q, that famous song that starts with the lyrics, what do you do with a BA in English? Hey, easy. Well, and sociology.

I mean, I've got a BA in sociology. What do you do with that? Yeah. And so I think that particularly as the millennial generation paid a lot of money and went into a lot of debt to get liberal arts undergraduate degrees from state schools, which is what I have, and then came out the other side of the other side of that song from Avenue Q, the lyric, it begins with what you do, the BA in English, but then a little later in the song there's a lyric, I can't pay the bills yet because I have

no skills yet. And once an entire generation experienced that, I think the benefit that Gen Z and Gen Alpha have now, you learn from our mistakes, think critically about a college degree. I mean, college is ostensibly a place. to develop critical thinking, and yet, ironically, the one thing that people did not previously think critically about is the value of college itself. I do think we get into this later, just looking at it purely from an economic perspective, I think is narrow. Cheryl and I did this with our twins. On the economic front, I was worried with my kids about the ROI of school. Now, for both of them, they were headed toward college. My,

son was looking at an in-state public school versus an out-of-state private school, specifically Carnegie Mellon University and the University of Texas at Austin. So he's looking at both of these schools. These are big, big, big numbers. So heck, they're both huge numbers. So what's the difference? And the way I looked at these two different schools was this. And this might not be fair, but from an economic perspective, we're looking at two by someone to go. to engineering. So we looked at two engineering schools, both rated in the top 10% of engineering schools in the nation. So my question was, if I'm getting a similar education with a similar outcome, with similar job prospects for both, because also looking at the number of people

that graduated, which all the schools keep these statistics, how many of our graduates end up with jobs. How long does it take them to get a job? Like, they're good at this. These schools mine, all this information. So they were very, very similar. But Carnegie Mellon was going to cost three X our in-state public university at the University of Texas at Austin. So my question, the Nick was, if you can explain to me what is going to at least make this double, not even from an economic perspective, just from a quality of life perspective, from a, this ends up being so much better than me, if you can articulate that, we should consider it. We should definitely put it on the table and we should consider it. It was funny because my son will tell you today

that it was that conversation where he couldn't articulate the difference that helped him decide to go to the University of Texas at Austin and he absolutely loved it. Now, my daughter, my daughter had a different situation, which is closer to Blancas, which is she was looking at two different degrees. Now, she wasn't looking at college versus not college, but I think this is going to be a parallel deal. She was looking at journalism and being a neurosurgeon. Wow. Yes. So the first thing that we did. So obviously, being a neurosurgeon, there's going to be a ton of education. For journalism, you could do four years.

But we looked at this. And what we did, Blanca, was we went to the Bureau of Labor Statistics. This is where I went. The Bureau of Labor Statistics. My daughter loves to write. And in fact, in what she does now, she gets to use her love of linguistics and the stuff that she does currently. But she also really likes science. And so we looked at the difference, Paula, in these jobs. And I would 100% do this, Blanca, with your son. Look at the job that you get. And the education you need to achieve that job. What does it pay? And what she saw was that, you know, Paula, the differences you can believe is not. Right. It's astronomical. It's an order of magnitude. Yes. And I said, listen. And by the way, I don't want to assign judgment to a job.

The world needs phenomenal journalists and the world needs phenomenal neurosurgeons. So there is nothing. And I said, but working with a guy who's in an adjacent field to journalism, I don't call myself a journalist. I think I'm in financial media. As a guy who's adjacent to journalist, let me tell you what that entails. You're going to work your ass off. You're going to do these 70-hour weeks. You're going to get paid maybe $55,000, I think was a medium income for somebody in journalism. And you're going to hustle, hustle, not to get ahead, but just to stay afloat.

Well, I would state journalism has a fat-tail distribution in which the most successful journalists are incredibly highly compensated and everybody else makes peanuts. It's similar to being a stand-up comedian, similar to being a singer, similar to being an actor. There's nothing wrong with going into a fat-tail distribution industry as long as you realize that that's the distribution of income outcomes. Yeah. Income outcomes. Wow. I guess income outcomes. Yeah, that's a phrase. Yeah. And so I think what we're solving for in that regard is variance.

You know, you know that if you are a dermatologist, there's going to be a relatively predictable band of incomes that you are likely to get. And there's going to be some variation depending on geographic location, you know, a dermatologist. Yeah, exactly. Neurosurgeon. It's going to be the same. Same thing, right? So you know that there is low variance in the expected income. of a neurosurgeon or a dermatologist or anesthesiologist, you know, there will be some geographic

difference, some difference based on level of experience, but for the most part, it's very predictable versus if you're a stand-up comedian or a singer or an actor or a journalist, the rewards disproportionately accrue to the top 2% and then the other 98% don't make very much. that doesn't mean that you shouldn't go for it because someone's got to be in that top 2%. And I guarantee you, the people right now who are the most successful singers, actors, comedians, journalists are not necessarily the most talented. They're not necessarily the most skilled. They're two out of every hundred people who went for it.

I saw that when I moved from financial planning into financial media. There were some surveys that had come out about how much the average blogger podcast or whatever makes versus the top 10%. Right. And I saw the difference and it's the same here. And I remember appreciating that because it told me what I was in for workwise. But I also then told myself, I can be in the top 10% of this. I can do it.

And I dared myself to try to be in the top 10%. But I love that because then you know what you're up against, right? Right. You know how hard you're going to have to work. So Autumn and I had a great conversation about how that business works. then she looks at the time neurosurgery, and I remember at the Bureau Labor Statistics, sure, there's going to be eight to ten years of training ahead of time. You're going to pay a bunch of money to get that training. But then out of the gate, I think the median income was about

$280,000 right away, immediately, $280,000. And her mom works in the medical field. So Cheryl had her talk to some people in the medical field. And so she decided, here's what I was going to do. This was Autumn's plan initially. I'm going to pursue neurosurgery. I'm going to also undergrad minor in journalism or writing so that I can do this on the side because it's my passion. It's what I like to do. I'm interested in both of these. And it also, she felt like was going to make her a more well-rounded person.

But she went for the one that had the higher ROI, which was great until organic chemistry came along. And anybody who's in science knows that organic chemistry is the great weed or outer of these fields. Like there's nobody I've ever told the story to that doubts this. They're like, oh yeah, organic chemistry is the thing that wipes people out of the field. Autumn got wiped out of the field. But let me tell you what was cool. So then she focused on journalism.

But immediately, Paula, I saw my daughter be very laser focused because she was like, okay, my income prospects just went from sky high to much more brutal. And I know I really got to buckle down. And I saw her go from a really good student to a phenomenal student because she knew what was at risk. So Blanca, what I would do is not just start with Bureau Labor Statistics, which is a great place to start, shows you all this stuff. Then I would also talk to people in the field. So you can see, because I know people in journalism, Cheryl knows people in medicine. So we were able to help her get interviews with these people that are already in the field to see more really from the inside what the dirty underbelly kind of looks like and get a feeling that way. Blanca, when it comes to what your son should do, because you mentioned your son is 14, and he might have a variety of ideas about what he wants to do.

and those ideas are subject to change, which is common. Here are a few things that I would think about. Number one, is he interested in a career that requires a college degree, such as being a physician, being a dentist, being an engineer? I mean, these are careers where a college degree is non-optional. It is a prerequisite. Is he interested in a field like that? Or, like me, when I went to undergrad, I had no real.

real sense I thought maybe I might want to go to law school, maybe I might want to be a professor, I don't know, you know, but I didn't really have a clear sense of what I wanted to do. If he is in a position, particularly at the age of 18, where he does not have a clear sense of what he wants to do, I believe that it is a mistake to go to college to quote unquote find yourself because that is an incredibly expensive way to do that. I think it is a much more valuable use of time and money, if you don't know what you want to do at the age of 18, to work for a few years while you're figuring out what you might want to do. And that way, when you do go to college, you can do so in a much more focused way.

A hundred percent. And when we talk about the types of jobs that you can get as an 18-year-old with a high school diploma, so you can, for example, become a phlebotomist for not a whole lot of money. That was a point that Alex Hormozzi made on Joe on your interview with him. Right? You can become a phlebotomist. And I'm looking at those jobs right now. I just pulled it up online.

In Atlanta, phlebotomist jobs pay around $20 to $26 per hour. And that's something at the age of 18, straight out of high school with a little bit of training you can do. You could become a veterinary assistant or a vet tech. and work that for a handful of years, while you're figuring out, do I want to become a veterinarian? And maybe the answer is yes, maybe the answer is no. Maybe you want to stay in generally in the medical profession. Maybe you want to leave it and do something else entirely. But with a two-year associate degree in veterinary technology, you can become a vet tech. And that doesn't, so it doesn't require the four-year bachelor degree. It requires only a two-year degree. So at the age of 20, that's

something that you can do, and you can do that for a handful of years, and then make decisions down the road. And the other benefit to doing this is that when you are 24 years old, the FAFSA considers you independent. So if you turn, the year that you turn 24, as long as you are 24 by December 31st, the FAFSA for the purposes of financial aid, college financial aid, considers you independent. When it comes to paying for college, the time that you're solving for is the time between the age of 18 to the age of 24. That's a six-year window in which your parents' income is going to determine your financial aid, not your own income. Once you're 24, the game changes. A lot of people get into enormous student debt because of those six years, because they are going to

college at 18 rather than at 24. And if you can saw for that six-year window, I think that does two things. Number one, it gives you time to develop an alternate skill set, maybe one that requires an associate degree, maybe one that requires a certification. You can become a real estate agent, for example. And there is no college degree requirement to become a real estate agent. You simply need to go through state-approved real estate licensing education. I did that in the state of Georgia, and it was a 100-hour program, which means if you're doing it full-time, you can get that done in three weeks or a month. So one month of training, you take the test, you get a license to be a real estate agent. All right, do that at the age of 18. Do that from the age of 18 to 24. And then at 24,

go to college with your own income qualifying you for FAFSA financial aid? There are so many studies that show that people waste a lot of money in college because they don't know what they want to do. So they change their major three times. They change courses a ton. And other studies show people who go to college later who do exactly what you say, Paula, they're much more laser focused. And I went back to school later. You, went back to school later after some time in the working world. And I'll tell you 100% of what these studies show is true. When I went back to school, I noticed I had so much more, so much more knowledge about the world that I was able to parse what the important pieces of what

I was learning were and which pieces were kind of background. And I noticed some of my younger counterparts in these classes, Paul, are really struggling with. How does this apply? What is really important here? I think it's that time in the working world where you go, yeah, that's not a big deal. Ooh, this is huge. Knowing the utility of what you're learning and being able to focus on that because of your experience in the working world goes so far. And, you know, for me, the A wasn't that important. I'm very proud of it, which is why I just bragged about. it. But truly, it wasn't the A. It was that that time back in school as an adult was time well spent. Right. Because I knew what I was there for. I knew what I was trying to get.

I knew exactly what the professor wanted me to get. There was a much better understanding of me, the world, and my place in it. Yeah, I agree. I'm a big, big proponent of going to college at a slightly later age. As an undergrad, I saw a lot of people who didn't know, to your point, Joe, didn't know what they wanted to do, changed majors again and again and again, went to college to, quote, unquote, find themselves or quote unquote figure it out. College is a very expensive place to not have a focus. I believe it is much better to go into the working world, try different jobs, acquire a few skill sets that don't require a college degree. We've already discussed three. We've talked about phlebotomy. We've talked about, and by the way, phlebotomy, I just looked it up. It requires a high school diploma or GED, plus the completion of an accredited, short-term phlebotomy training program that is typically between four to 12 weeks.

Be a phlebotomist. Try that. Be a real estate agent. Get a two-year degree, become a vet tech. Go to makeup school and become a makeup artist. Go to HVAC school and become an HVAC technician. Go apprentice under an electrician. Try all of these different things. Get a sense for what you enjoy, what you don't. Get a sense for the adult working world. Learn how to pay bills. And then once you have a very clear idea of what you want to do, then go to college. And if you're lucky, that clear idea will come when you're 24.

You know, Joe, I was in a similar boat to you. So when I went back for my master's degree, I was in my 30s. Because I had so much work experience, they gave me a full ride. not only was it zero dollars out of pocket, they actually paid me a living stipend while I was there. So they covered full tuition, full fees, everything. They covered every expense. And they paid me $6,000 a month as a living stipend to cover the cost of food and rent in New York City. And you wouldn't have that, you wouldn't even have a candidate for that program if you didn't have the work experience that you have.

Exactly. The only reason that I qualified for that. that is because I had 10 years of work experience under my belt. And I should state, Joe, you mentioned Carnegie Mellon versus UT Austin. At the graduate level, one of the advantages of top tier schools is that top tier schools are very well funded and have large endowments. The hard part is getting in, but once you're in, there's a lot of funding. In that regard, there is a strong argument to go to a top tier school. If you can find the funding for undergrad, great. I mean, you might as well apply and then if you get in, see what kind of funding you can get because

the top schools really do have a lot. But if you can't get that funding for undergrad and you're thinking about a graduate school program, target the schools with the biggest endowments. This leads to the broader argument, I think we alluded to though at the beginning, Paula, which is life isn't about so much what happens. It's what you do with. it. You know, what we've spent time talking about is a college education can be this generic, find myself, waste a bunch of money, not have any ROI, or when I go in with a focused reason why I'm there, or life changes, and I'm able to adapt and change with it, I'm able to change. And I see these people, even at 18 that go into college that clearly know why they're there, I'm going to network. I'm going

to meet my professors. I'm going to join clubs. I'm going to become a more well-rounded individual. But you got to take advantage of that. Like you have to get out there. Nobody's going to push your son and go, hey, it's Tuesday night. There's a meeting for X. No, I'm in my room playing video games. You know, you have to do what we're talking about, even with the non-R-O-I stuff, which I think we truly, I don't want to overlook that because there's so much stuff that I learned at my time at the Citadel and at Michigan State University that had nothing to do initially with ROI, but were a huge part of who I am today. And Joe, since you mentioned the Citadel, we of course should mention the GI Bill. If you are concerned about college costs, I think that is a wonderful way to serve your country, develop skills, get incredible work experience, get the camaraderie and community of these incredible people around you, and then be able to go to college, graduate without any debt, and then buy a home with a VA loan. There's so much there. I have three nephews, one who's active in the Navy, one who just finished his time with the Navy and parlayed that and do a fantastic job in plumbing, which is amazing.

I mean, nothing speaks louder in the plumbing industry than the fact that I did plumbing on a nuclear submarine. Yeah. That is a, that's a big win. Yeah. And plumbing pays really, really, really well, very well. very well. And Colin is a fantastic plumber. Yeah, nuclear submarine is not where you want to leak. No. Yeah. Not at all. Yeah. He's a little bit of a perfectionist. And then I have another nephew who is in the National Guard, spends some time on the weekends doing that. And that helps him with his college cost. Yeah. Yeah. I think that is a wonderful opportunity to both serve your country and improve your own life in the process.

I do like where you're headed, Blanca. I think widening your scope is a great place to start because getting rid of this, what college are you going to question and widening it to what I want to do is a much better question. Yeah. Thank you, Blanca, for the question. Thank you for inspiring that discussion. We're going to take a moment to hear from the sponsors who make the show possible.

When we return, we will hear a question about whether or not to reinvest dividends. if you're drawing down from a brokerage account. And then after that, we're going to tackle a question about choosing a financial planner. Welcome back. Our next question comes from Brandon. Hi, Paula. First off, thank you for your advice when I called in October regarding bonds and a brokerage account. And in my case, it does make sense.

So I'm happy to report that I took the plunge. I quit my job. I work per diem now. And I started a version of KOSFI. I'm in my 40s. I'm planning to draw down. my taxable brokerage account to supplement my new part-time income for the next 20 years, my 401k IRAs that will all continue to grow during this time. So up to now, in my brokerage account,

I've always reinvested the dividends automatically, and of course, each year this causes a taxable event. I'm wondering if it's beneficial to now begin taking dividends as cash. I'm taxed on those dividends either way, so taking the payout would give me more. flexibility. I could use the dividends as supplemental income or reinvest them into whichever funds help maintain my target allocation or simply reinvest them if I don't need the cash that year. Thanks for all you do. Brandon, thank you for calling. I love hearing from previous callers. You called in October. We gave you a advice. You implemented it. Hey. Amazing. So thank you for the update. and congratulations on this new direction in life, Coast Fai.

It's so cool. He took the leap. Joe and I have not discussed our answers beforehand, so I am curious to see whether or not we're going to be in agreement. But Joe, my position is I am pro not reinvesting dividends and taking the dividend income out of the taxable brokerage account because he's harvesting that account. Dividend income in a taxable brokerage account is taxable, anyway, whether he harvests it or not. So there's no tax implication to him taking out that money

versus if he were to sell holdings, then he'd be selling off gains. So he'd have to pay capital gains tax on that. Those dividends are taxable anyway, which means there's no tax implication. And by virtue of not selling off his holdings, he can maintain the asset allocation that he's got and assuming that the asset allocation he's got is the one that he wants, then he doesn't have to worry about it. The only exception is, Brandon, if you want to rebalance some of your holdings by virtue of selling off some of those winners, okay, that would be a case for doing it. But for the most part, harvesting dividends, I think is the way to go. I question dividend strategies whenever you don't need the money today. That doesn't mean that I think that it's wrong, Paula.

It just means I question it because it's not the only way to make money. And often capital gain strategy where you're going to just be in stuff that's meant to grow is historically a way to get there over long periods of time that can work much better. but if you're in a spot where you're taking the money, there is no downside to this. I can't think of a single downside. But assuming that, assuming that everything is lined up the way that it should be, and he just either reinvest the dividend or he takes it and uses it or uses it to fill in more appropriately because of the fact that he needs to lower his, you know, in my brain,

I use the million dollar word, standard deviation. He needs to lower the volatility his portfolio. so it's easier for him to grab money when he needs it. He gets freedom from worry because of that, then hell yeah. And with regard to rebalancing a taxable brokerage account, and Brandon, I'm saying this not just for you, but for everyone listening,

the way that I like to approach that, because we want to minimize selling off assets in a taxable brokerage account, particularly for the people who are listening to this who are not trying to harvest some of their taxable brokerage money, who want to keep it in that account, and let it grow. In order to minimize selling off assets in a taxable brokerage, what I like to do is not reinvest dividends. So those dividends flow to cash, and then that cash gets used to buy

underperforming asset classes that you want to shore up. My rebalancing strategy inside of a taxable brokerage account is no reinvestment of dividends, and then that money gets used to buy whatever asset class I want to build. And in your case, you're also doing the no reinvestment of dividends, but rather than use that money to build a shrinking asset class, you're just harvesting the money. So asset allocation, if you need to do that, is the only thing to manage around. Wonderful. Absolutely love it. Great work. Wow, that was the opposite of Blanca's question. We spent like 40 minutes on Blanca's question and like four. minutes on Brandon's.

I know. Brandon, the answer is yes. Next question. I feel bad going to another ad break right after this. Man, we're really stacking them together there. I know. I hope you forgive us if we really stack these two close. But Brandon, I think we've just answered your second question.

Congratulations. So don't reinvest those dividends unless you need to buy an asset class. And if you do need to buy that asset class, then sell off the asset class outperformer. Okay, I guess we're going to another ad break, Joe. Oh, boy. Well, this will be the last one of the show. So thank you for supporting our sponsors.

When we return, we're going to hear from a caller who is wondering how to choose a financial planner and specifically has some questions about the assets under management model versus the flat fee model or hourly model. Welcome back. And thank you for listening to two breaks that were so close together. But we've got something great on the other side. We have a question, and it comes from Anonymous. In some of your past podcasts, I've heard you say for a financial advisor that you recommend a fiduciary. I've also heard you say that you do not like the AUM or Assets Under Management Model.

Can you elaborate on this? Are there certain companies that you know of that the rest of us can check out without advertising for them. Love to hear your thoughts. Thank you. Anonymous. I love the question. Before we answer, we've got to give you a name. We do. What's a good name, Paula? Are there any movies that feature financial advisors? Oh, he's trying to avoid crooked financial advisors. So I think the biggest movie about financial crooks that comes to mind immediately is, of

course, Wolf of Wall Street. Leonardo DiCaprio plays Jordan Belfort. We could call him Leonardo. All right. Anonymous. Your name is Leonardo. Wow, you're like a teenage mutant ninja turtle. I mean, sorry, Leonardo. The first thing that I'd like to dive into is why I recommend that a financial advisor be a fiduciary, what it means if they're not, and then why I'm not a huge fan of the Assets Under Management Model, and after that, we'll go into where to find some. There are two different types of standards that a financial advisor might have to reach. One is something that's called the suitability standard. A person who is only required to reach the suitability standard, that means that they have

to give you advice that's, meh, it's suitable, it's fine, but it's not necessarily in your best interest. and they might steer you towards things that will lead to bigger commissions for themselves, even if those things lead to much worse outcomes for you. A person who only has to meet what's called the suitability standard, they can't completely steer you off course in a way that is just wildly inappropriate. But as long as something is minimum viable, suitable, it doesn't have to be any better. That's the suitability standard.

Now, by contrast, there's a different standard that's called the fiduciary standard. And if a person has to meet the fiduciary standard, they are legally and ethically required, but more importantly, legally required, to give you advice that is in your best interest. Even if, especially if that advice doesn't result in any payout for themselves, that's a requirement for them to maintain their status as a fiduciary. fiduciary. And that is critical to making sure that you're getting advice from someone who, by law, must give you the best possible advice. So should we talk about fiduciary a little bit? Should we dig in there before we move to the asset center management model, Paula? Sure. Here's the frustrating thing, Leonardo. And we talk about this on stacking Benjamins quite a bit because the one thing that, oh, gee, my partner on that show and I have in common is that

he is a current CFP and I worked in the industry for a long time. Talking about being a fiduciary is super important and I'm glad you brought it up. I'm glad Paula that you explained it. Making that happen and making sure that you're working with a fiduciary is super, super hard because of the fact, and this is the part that's going to make everybody grown, the enforcement agencies do not enforce at all talking about whether you're a fiduciary or not. So there are a lot of people out there and colloquially, we'll just call them liars who will look you in the eye and will say, I'm a fiduciary. When even based on what they do, they can't be a fiduciary. They're accepting commissions from you.

They're clearly working off of the suitability standard, which Polly did a great job of talking about. So it is very frustrating to ask somebody their fiduciary because when they answer you, when it comes to financial, quote, professionals, I see it all the time on social media platforms where people who are not fiduciaries are calling themselves fiduciaries. are calling themselves fiduciaries. It is systemic. It's frustrating as I'll get out. There's no enforcement. So because of that, beware. So I think you have to look more through breadcrumbs. The first question has to be around commissions. It just has to be around commissions. The better question, I think, than are you fiduciary to start with is, if I buy stuff from you, will you get a commission? if the answer is yes, the fiduciary standard goes right out the window. Now, somebody can be a fiduciary and have assets under management,

which people that think the fiduciary standard needs to be stronger, will still argue, are they a fiduciary? If they're going to bend you towards stuff where they get assets under management, we can debate that for a long time. But directly having assets under management is not the same definitionally as getting a commission. The person knows exactly what you're talking about. When I buy a product from you, do I get a commission? How do you make money specifically?

Tell me how you make money. By the way, if they say that everything I do is free to you, this is the one that kills me. Everything I do is free to you. There's no additional cost to you. When I have products that have commissions built into them, that means I'm paying a lot more for the product than I would pay for a very similar product, very similar product that doesn't have all this commission structure built into it. Another question that you should ask is, and word it exactly like this, do you have a fiduciary duty to me at all times? and the reason that you want to include the words at all times is because, and this will, when you learn this, this will cause your head to explode, it is legally acceptable for a person in the same person in the same meeting to be a fiduciary for a portion of the meeting, be a non-fiduciary for a different portion of the meeting, and then be a fiduciary again. So it is legally permissible for somebody to be a fiduciary sometimes, but not at all times.

See, that doesn't drive me crazy as much because they can lie about it. There's no teeth in the enforcement. I feel like if they're going to lie about the other question, I think the more direct question is, is just do you accept commissions? Because the dual hat registration people, which is the name of what you're talking about, we'll have to answer that. Yes, I get a commission. So you can also ask the question, are you duly registered?

Yeah. Do you have fiduciary duty to me at all times? And then the follow up question, are you duly registered? Well, and there's a paper trail. There is a paper trail, which is legally enforceable. And that is that if you're signing into a financial planning relationship, they're required to give you a document called the ADV. And so when they give you the ADV, it outlines how they're paid.

it outlines in writing in legal terminology how they are paid. And you can take that document and you will see inside the document no matter what they tell you, they will tell you how they are paid. I would want to see that. Yeah. So fiduciary standard, that is number one. And in my view, that is the most important thing. As a second issue that we will discuss next is how they are compensated.

the conversation around the assets under management model comes in. But in my view, and Joe, I don't want to put words in your mouth, but I assume in yours too. The most important thing is that you are a fiduciary, although people lie and say they are. Yes. All right. So do you want to move on to talk about how they're compensated? Oh, God, yes. You know me. This is not my favorite topic, but we cover it a lot. So let's do it. This topic, I think, is secondary to the fiduciary question. question. Joe, I think you and I disagree here. I am personally not a fan of the assets under management model. I believe that it is far better to find somebody who either charges at an hourly rate or charges a flat fee, but whom you pay for their time and their expertise, not for the amount of assets

that they are controlling and investing on your behalf. Because the drag on your performance, by virtue of paying that assets under management fee can be substantial. And the phrase drag on performance makes me laugh. Yeah, this is where Joe and I disagree. And the reason it makes me laugh is as a guy who's done this for 16 years and who had some clients who trusted me with assets under management and some who we just had a fee-only model, there were so many people who nothing, and by nothing, I mean, zero would have gotten done had they not had me be the person who's doing it.

And I think this has a lot more to do with know yourself. It is a lot more to do with know yourself than the common don't hire this type of person. I think you've got to know who you are because I'll tell you, there were so many stories where people would walk into my office and we would design this beautiful financial plan number four meetings together, Paula, just these gorgeous plans. Fantastic. I would send them home to do the stuff because we agreed that I was going to be paid on an hourly rate or on an annual rate depending on the relationship. And then we would get back together about a month later. And the number of times a month later, I had to go get a bunch of paperwork for them to sign it

over to me because during that month, they did zip. They did nothing. And money sat in the wrong place going against everything we had talked about, against all of their dreams, against all of their aspirations. It didn't get done. And instead, they're like, you know what? Yeah, the quote, drag on returns was the only reason they got a return was because they paid that fee. So I think the whole drag on returns thing is overplayed, especially when I have the service that I do now is a non-registered person just called Get Joe's Take. And I have a few people every year that pay me for an hour of my time to look at their stuff.

And I will tell you, it still happens today. People who are, they've heard in the media do not have somebody do it for you. They have so much money that's in the wrong place. And they know it's in the wrong place. And it's been in the wrong place for three, four, five years. And they've done nothing about it because they are avoiding. a one percent fee that would have, looking at the market the past four years, they would have had all this upside.

It drives me crazy. And so what I want to caution against is that we in the financial media push people away from much more predictable, great financial outcomes by saying continue to do nothing because you need to fear this fee. So I'm not pushing people to do the fee. I'm just saying the fee isn't your enemy. Getting nowhere is your enemy. As an example.

I love fired up Joe. This is great. It drives me crazy. No, no, come on. As an example. I go to this gym and I pay, I pay extra to have a trainer and to work out with a couple other people, right? So I have this group of people that I work out with.

pay extra for that. And I look around the gym and 85% of the people, I see the same people there all the time, Paula. I see them there all the time. They don't have a trainer. They're doing the right workout. And I'm like, why the F am I paying this extra fee for this person when I don't need the damn person? I'm looking at all these other people. They're physically fit. They show up at the same time I show up. They're not in my class with the other people. They're doing the thing. I'm like, why not? You know why not, Paula? Because I know me. And I know the only reason I show up at the damn gym is because the trainer's waiting on me and it's going to get me hell. And also the people in my class who I've gotten to know, those people also are going to beat me up when I don't show up.

If I don't have that class, I don't go. So I could say, you know what? Let's avoid the fee of the trainer. And you know what happens? Joe is going to be eating donuts five days a week, living it up, being a lard ass because I avoided that fee. But because I paid the fee, I get an outcome that works better for me. And I pay the fee because I know me. So I think the judgment of nobody should pay the fee is overblown. Isn't, is, is a, is, entirely overblown. Joe's position is AUM is valuable for the purposes of accountability and follow through. Yeah. And by the way, the advisors that I know who are good at AUM are that type of advisor. They built their whole practice around working with people like me at the gym. So stop doing the

ROI on them and how much money they're making and think about what you would do in the absence of this person. and their wonderful system and the fact that you're actually getting stuff done. I think that's what you really need to be thinking about. Joe and I disagree, but also Joe is not wrong. Joe, I totally see what you're saying. You're not wrong. I definitely see in many other facets of life. I see the same pattern play out where people get so caught up in not wanting somebody else to make money

that they themselves hold themselves back from making money. So, for example, in entrepreneurship, you see this where somebody doesn't want to hire an assistant, doesn't want to hire a copywriter, doesn't want to hire a website designer. They're like, no, no, I can do this myself. They end up not building a team. And by virtue of not building a team, they end up stagnating or even shrinking because you need people in order to grow. The other place I see this, and I don't hear this as much anymore, but pre-presenting, pandemic, I used to hear this a lot, people would not want to buy a rental property because they

didn't want to pay a property manager. It was bananas. I heard that time and time again, they were like, no, you know, managing a property is too much work. And I'm like, well, yeah, you get a property manager. They'll handle it. Literally, as we've been recording, I got a text message. One of my property managers was like, oh, There's an emergency, we need to do this emergency roof repair. It'll be $1,800. Is it approved? And I just texted back, yes, approved. Literally, this happened while we were recording this episode. This happened during Blanca's question. You know how much work it was for me? I glanced at my phone. I typed in, yes, approved, done. Literally, that's all I had to do. And I was in the middle of

answering Blanco's question at the time that I was doing it. That's the value in having a property manager. They're taking care of it. And I would, I hear all of these people, especially pre-pandemic, who are like, no, no, no, you know, I just, I don't like the idea of paying him 10%. That's so much. I just don't think I'm going to buy a rental property. It's just not for me. You know, and now, fast forward eight years. All the appreciation on that property. Right. Exactly. So Joe, I totally get what you're saying in that regard. I can understand being distrustful. And actually, this goes back to Blanca as well, which is, you know, I do this with my career and you do this. I have a lot of trouble hiring outside help for my company. I have a ton of trouble with that. I'm very distrustful.

Do these people actually know the stuff that they say that they're going to know, right? Do they, and I can see this if I'm going to work with an asset-based manager. Does they really going to do anything? Is there going to be, how do I extricate myself from this? It's almost like signing up for a four year degree from college. And is there really any ROI? Is it truly going to pay? And I actually remember a guest on stacking benjamins who made so much logical sense. And I still fight with myself all the time on this. When I think about paying for coaching. I'm like, no, I should be to read books and listen to podcast and do this myself without an outside coach. He said it's amazing that we will pay 50, 80, 100, 150,000,

to go to a school with questionable ROI and never think about it. But if the right person says it's 10 grand to get in the room, we won't pay it. When the ROI is nearly certain what the difference is going to be if I pay the person the $10,000. So to directly answer Leonardo's question, I don't think it's about the firm. You asked other firms that I should investigate. I think if you go to nectarine and you looked at the different financial advisors, there's some you're going to love and there's some you're going to hate.

I think it's far more individual because of the fact that you're looking for somebody who you truly want to be on your board of directors. me pointing you toward a company might help you narrow the field some, but I don't like it when people say X company is good and X company is bad. From the inside, having worked at a company, I know there's people at the company I was with where I go, I would hire that person. I wouldn't hire that one a million years. I would hire that one.

Maybe that one, maybe not. You know what I mean? There's different levels of people. And often Paula, it depends on who the person was. oh, you're a single woman in her 60s. Here are the people I would hire. You're a person with seven kids all looking to go to college in the next three years. This is the person I would work with who's very good at that.

It was situational as well. So good person and bad person also depended on that. I think there's an interview process that you really have to go through to see how much are they like me. Linking this back to your point, Joe, there is value in spending your time trying to find the best people, the wisest, the sharpest, the most forward thinking to be on your personal board of directors and to give you the type of advice that will accelerate your life with orders of magnitude. Now, does that necessarily mean you're going to find those people? No, again, this goes back to variance.

This goes back to what we were talking about with Blanca's question. There's variance. There's fat-tail distribution in the people that you're around. Most people are not going to have that big of an impact. Finding the right people is a high variance activity. Yeah. By the way, I know this is a frustrating answer because you just feel like you should be able to go, well, just give me the company and, you know.

Yeah, I mean, I'll give you a couple of places to start. looking. So Nectarine, like Joe mentioned, is one. The XY planning network. Yeah, exactly. The XY planning network is another one. And then FACET, they're a former sponsor of mine. They are also a vehicle through which you can find a fiduciary fee-only advisor. And I will say, because Joe, I've acknowledged that you're not wrong, but I will say the reason that I have a take where I don't like the assets under management model is because what we encourage is passive investing in which you're really not making big money moves. You're doing the initial work of setting it up once. And then beyond that, you're rebalancing months a year, but for the most part,

you're forgetting about it. It's hands off. In that regard, in my view, it is not comparable to working out, which you have to do all the time, or using a property management company for a rental property, which is very active and very hands-on and you're dealing with things constantly. Exercise, property management, those are active endeavors, whereas investing is such a passive endeavor, or at least it should be, that I believe if you are really executing a passive strategy, then there's nothing to do. It seems like it should be easy. And, you know, I feel like Moripovich, looking at the relationships that I had in the

past, history will tell me that it's not, that it isn't. And people don't even get themselves on the right path. It blows me away. If people did what they knew was in their best interest and just put the money in the spot to do the thing, then I'd say, there's no reason to pay that fee. But it exists for a reason because people, people don't even do that. I think a great vetting ground for people, You know, we at Stacky Benjamin's don't endorse different advisors. Like we don't say, hey, Paula Pants, a financial planner. You're not. But let's say that you were Paul Pants, financial planner.

We endorse her. But there are people that we have been around that we trust a ton. And so if you listen to some of your favorite podcasts like Afford Anything and you hear people that are financial planners who make the cut, right, to be on Paula's show. or you listen to our Friday Roundtable, which often has people that I have known for a long time and I've trusted. And I know that there, even though there isn't an explicit endorsement, them actually getting to a microphone where I'm letting them speak to our audience is an implicit endorsement. And I have to be okay with that. I think you can also begin not only whittling down toward people who are.

we think people who are very close to this think are trustworthy. But I think you can also hear them on the microphone to see if the important part for me then is are they still a fit for you? They might be completely trustworthy, completely competent, and you just don't get along with them. You just, it's going to be this horrible, horrible relationship. If you listen to them on different podcast. You can also get a feel for. Is this somebody that I, that I would work well with? Or at the very least that I could write to and say, hey, I don't think you and I are a fit, but who do you, this is me, who do you think I should talk to? And they might be a great referral source. One thing I learned through strategic coach, Paula, was ask who, not how. Don't ask how to do things.

ask who is the person who I should talk to about this, who knows where I should go to look for the help that I really need. I think that's a great way to begin finding your who, who can solve your how. So in summary, nectarine, XY planning network, facet, or listen to your favorite podcasts and take note of who's on there. Yeah, yeah. And listen to how they talk about money. Might be a fit, might not be a fit, but you can learn a lot about people through those experiences. All right. Well, Leonardo, you got a classic Joe and Paula disagree on this issue. And as always, why I love it when we disagree, Joe, is we present the arguments. You decide. Yes. And I think it's more to do with your point of view and who you are. All right. Well, than whether I'm right, which I truly am. You're not wrong. And you're not wrong. Okay. Somebody left a review on this show.

once where they said that one of the things they enjoyed about it, it's not just the finance piece. It's hearing two people who disagree who do it well. That's something that we don't really hear that much in today's society. So we are a model of how to disagree with one another, Joe. We can disagree without wanting to choke each other. Yeah, exactly. Without the mud slinging. Well, thank you to everyone who is part of the Afford Anything community. Joe, we've done it again, where can the afforders find you if they want to know more? Well, how about they find you and me on a really fun episode of Stacking Benjamin's that is February 13th episode?

And that episode, we are playing a game. And Paula, you know how much I love on a roundtable episodes playing our games. We actually played a game a week earlier with our mutual friend, Sarah Catherine Gutierrez and Jesse Kramer, where you try to guess. horrible advice that's on this list. And oh my God, this advice was so bad. It was so bad. But this is a different game. This is a Valentine's Day weekend game that even is great for non-valentine's day weekend, which is love it or leave it. I will make a salacious, salacious financial statement. And you have to tell me on Valentine's Day weekend if Paula Pan, you love it or if you want to

leave it, this salacious financial statement. You want to hear one as a warm up that I'm going to ask? Yeah. Yeah. Yeah. Yeah. Yeah. I'll give you a little preview. Love it or leave it. Paying off a low interest mortgage early is just an emotional decision pretending to be a financial one. Oh. Do you love it or do you leave it? Ooh, ho ho ho ho ho ho ho ho ho ho. Loaded question. Tune in for the answer. Yes. And not only the answer is, you know, if you've ever heard any of these games we play, the suggestions that you give that Jesse gives that OG gives, the way they talk about their feelings about whether they'll love it or leave it is the whole battle. Like we played the game with the dumb financial things people say and people do. Like, who cares if it's on the list or not? The stuff you guys brought to the table was truly the fun. And a surprise to even me as the host, which makes it really fun. So you can do one or two things, by the way. You can hang out with us on Monday afternoons and watch us make it live with Paula on Mondays or tune in to the episode on Friday.

I love the game episodes. Those are the most fun. I think this will be our best game ever. Love it or leave it. And especially for Valentine's Day. Yeah. It's a nice one. Well, thank you, Joe.

And thanks to all of you for being part of the Afford Anything community. If you enjoy today's episode, please do three things. First, subscribe to our newsletter. Afford-anything.com slash newsletter. We send updates there every now and again, every sometimes. We will send out things. But what we do send out is stuff that you won't find anywhere else. It's not on social media.

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All right. So that's number one. Number two, please share this with your friends, your family, your neighbors, your colleagues. Share it with your phlebotomist, your real estate agent, your vet tech, your HVAC guy, your makeup artist, your electrician. Your plumber. Your nuclear submarine plumber. Right. your Navy recruiter.

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when Joe and I disagree because we're a model of how to disagree without mud slinging. That was wonderful to hear. Tell us what you enjoy about the show and say it in your favorite podcast playing app while you're there. Please leave us up to a five-star review. I thought you were going to say, say it in your favorite podcast playing voice. You could do that too. Hey! Thank you so much for being part of the Afford Anything community. I'm Paula Pan. I'm Joe Solci. Hi.

And we'll meet you in the next episode. Welcome back. And thank you for listening to two breaks that were so close together. I thought that was off. I was turning it up for the thing. That was the box tops. Everybody? All right. I got a call from potential spam.

Who is spam? Oh, the can't meet company. Yum. Delicious. Hello, spam. I've been waiting my whole life for this call. Wow. Are you calling from Hawaii?

I was calling out to you in my dreams last night.