Creating Confidence with Heather Monahan - #141: The 5 Things You Need To Know To Invest Like a Money Master with Peter Mallouk

Episode Date: August 24, 2021

Are you ready to accelerate your journey towards financial freedom? I know I am! Today I have the brilliant Peter Mallouk, President and CEO of Creative Planning, with me to show us how to start making SMART money decisions. This is advice from the top financial advisor in the game! He will share when and when not to invest, how to manage risk, and how to align investing with your personal goals. For all the tips and tricks on how to grow your confidence in money mastery, click play!  About The Guest: Peter Mallouk, JD, MBA, is the president and CEO of Creative Planning, LLC, a nationally recognized independent wealth advisory firm with $90 billion in assets under management and clients in all 50 states and abroad. Creative Planning provides comprehensive wealth management services to its clients, including investment management, financial planning, tax planning, retirement plan consulting, estate planning services, and charitable planning.   In addition to leading Creative Planning, Peter is passionate about providing financial education and resources to individuals, families and business owners who have typically been underserved by the financial services industry. He and his wife Veronica are the recipients of the Giving the Basics Human Dignity Award for their contributions towards helping those less fortunate meet basic needs, and recipients of the Variety Presidential Citation Award for their work supporting those with special needs. Peter has served on the boards of Pathway to Hope, American Stroke Foundation, St. Michael’s Finance Council, Kansas City Hospice and KCCAN!   Finding Peter Mallouk: Website: https://creativeplanning.com/  Twitter: @PeterMallouk Read The Path Review this podcast on Apple Podcast using this LINK and when you DM me the screen shot, I buy you my $299 video course as a thank you!    To pre-order Overcome Your Villains NOW and get the bonus bundle click here: https://overcomeyourvillains.com     See acast.com/privacy for privacy and opt-out information. See acast.com/privacy for privacy and opt-out information.

If you really brings you a huge about a pleasure to have a cup of Starbucks every day, well, have the cup of Starbucks every day. I mean, we don't want to live in misery now in exchange for a future that may or may not happen. So really trying to make sure that you remember that most of us fall into it starts when we're kids. We just blow everything we have or we can't spend anything. We save everything we have. And really, that's not really healthy. We want to find a way to maximize our happiness.

We all become happy in different ways, but a lot of them tie back to money and what it does for us. I'm on this journey with me. Each week, when you join me, we are going to. to chase down our goals. We'll overcome adversity and set you up for a better tomorrow. I'm ready for my close-up. Hi, welcome back. We are here this week with Peter Malook. Get ready for it. President and CEO of Creative Planning, a registered investment advisory firm that manages over 50B billion dollars in assets and serves clients in all 50 states. Peter has been featured in Worth Magazine's Power 100, received the Ernst and Young entrepreneur of the year in 2017

and regularly appears on CNBC, but it doesn't stop there. Away from his day job, Peter is chairman of Casey Can, an organization of volunteers dedicated to improving the quality of life of children in Kansas City, but has also served on the boards of Pathway to Hope, American Stroke Foundation, St. Michael's Finance Council, Kansas City Hospice. Thank you for being here, Peter. Thanks for having me, Heather. Well, I'm so excited to figure out how,

an estate lawyer ended up partnering with Tony Robbins. What is that all about? It's got a long and widening road and I'll abbreviate it for your listeners. But basically, I went from being an estate attorney for other advisors, learned a lot about the industry, got onto the wealth management side. And my idea was not just to manage money, but to manage money and do tax and legal and planning and all of those things in one place to really be a family office for all. Our favorite headline in the history of creative planning was when Barron's did an article on us and said,

creative planning is a family office for all. That's how we see ourselves as a place where client can make sure all those pieces are talking to each other. We were really ahead of the industry that's in doing all those things. Tony Robbins had written Money Master the Game, which I think to this day is still the top-selling book of this century so far on finance. And he had written it because he had a 401k plan. Somebody had come in named Tom Zagainer and met with him and showed him that he was

paying three times as much as he needed to in his 401k plan. They wound up moving their 401k plan to this guy, Tom, who now works at Creative Planning. And it really opened Tony's eyes up. So he called some of his clients. And some of his clients are like Ray Dalio and Tudor Jones, some of the biggest hedge fund managers in the world. And he started to learn from them how the industry works. And from there, he went and talked to Jack Bogle, who was the founder of Vanguard. And he went and talked to Charles Schwab and Alan Greenspan.

And he wound up with all these interviews. And his advisor said, you should really turn these interviews into a book. And that's how Money Matches for the game formed. all of the sudden, all these people want to know who Tony's advisor were, and they kept going to his advisor. His advisor and I connected, and his advisor started sending those clients to creative. Tony eventually came over to creative himself, met everybody, got to know the firm. His advisor joined creative, Tom Zegener joined creative, and then we wrote two books together. One was unshakable, which did really well.

Another one just came out the path. And so it was a really crazy adventure. We hadn't known each other when each written our first books. And so to get to this point has been really fascinating. It's so bizarre because it's not something I'm sure you ever thought when you were getting started that you would end up writing, co-authoring books with Tony Robbins. No. I'm also writing one with this Jonathan Clements who used to write in the Wall Street Journal, who I read growing up.

And so it's just fascinating to be writing books with these two, who I had no personal connection with until just a few years ago. Wait, do you actually write? Because to me, thinking of a person that's more into number, and finance, in my mind, and correct me if I'm wrong, I don't see that typically as the creative person that dives into writing. How does that work for you? I think you've got a pretty figured out. Normally, the numbers people aren't writers. And I think I'm more of a writer than a numbers person, believe it or not. So I do actually write all my newsletters and I write content in my books and all of

those things. I don't use a ghost writer. And I think that ultimately you want to have your voice. Now I have a lot of editing. I have a lot of people proof it and have people help me with research. but we really do, and I know Tony really does write his parts too. Wow. Do you think that what you just described as leaning more towards the creative side, is that what separates you? Is that what makes you unique in this business? Well, I think the business is a little bit messy.

And so I think that, you know, if you look at the world of advisors, there's like 350 to 400,000 advisors. And about 90% of them work in the brokerage world. And the brokerage world has a lot of products. They get paid different ways. And so you might go to a JP Morgan, which is a good company, but they have their own mutual funds. They have their own all kinds of products. And so you can pay an advisor and then wind up paying again to get those products, which I view that as going to a doctor who owns the

medicine, right? You're going to get that medicine prescribed to you, even if maybe it's not the best medicine for you. So we're in this very small group, this very small group of about 10% of those advisors that are totally independent. We don't have our own products. We don't sell an investment in collective commission. And in that world, we're also holistic. We're doing planning. We're customizing portfolios. That's very unique in our industry saying, what do you need? When do you need it? How do we build it? And then giving legal and tax and so on. All of those things together, I think, are what make creative planning stand out in the industry. Yeah, I love the transparency. And I can't imagine those other companies are able to lead with any level of transparency.

Well, I mean, it's amazing. And it's something that just basically the end consumer doesn't understand, so they haven't demanded anything differently. You know, and I think that they know when they go to an accountant, that the accountant's going to act in their best interest. They know when they go to a lawyer, that's going to be the case. So they assume that the advisor that they're paying doesn't own products. The industry is confusing because the products often don't have the same names. You can be going to like ABC company and they won't sell you ABC product. They'll sell you XYZ product that's owned by ABC.

And so you feel like you're getting these independent vehicles and really they're just products of the parent company. That's very frustrating as an end user and consumer that isn't aware of this stuff without you bringing this knowledge to light. Yeah, and I think that's what, we address that in all of the books. You know, in the path, we talk a little bit about that. And we really focus more on, okay, now that you know that, get to the right advisor, then that advisor, what other traits should they have to make sure that they're advising you well? So we're really trying to walk people step by step through everything they need to know

to make smarter decisions with their money. Peter, let's back it up to the elephant in the room right now. So many people, including myself, are so concerned with the uncertainty with the, economic environment, with the coronavirus, with who knows what's going to happen with everything else in our world, how do people take that leap of faith to say I should be investing right now instead I want to hold onto my money to make sure I can pay my bills? I would divide it into two parts. One is if people have job uncertainty, job insecurity, they're not sure how they're going to keep a roof over their heads month a month. They should not be investing. They should have the money

set aside in an account, cash, just ready to go to help them get through things. If someone already has a secure job, or even if it's not secure, they're very marketable, and then they can pick up a job somewhere else, or they already have emergency reserves. Then that group should not be waiting for things to settle down. Things never settle down. We just trade one crisis for another. Someone who has been investing for 20 years has been through the tech bubble, 9-11, the 0809 crisis, the great debt crisis, coronavirus, elections, social unrest, all of that.

We're going to have 10 more in the next 10 years. It's just how things work. But as an investor, just understand that the market is going to find a way. I know if we buy a Hershey's bar today, we expect to pay less than if we buy it 10 years from now. We know that a can of Coke is going to cost more 10 years from now. A meal and McDonald's will cost more 10 years from now. But we're worried if we buy those stocks in McDonald's and Hershey's and Coke, that somehow they're not going to be higher 10 years from now.

Anything could happen with one company, but the market tends to do what, prices do. It tends to have this bias upwards to the right. So there's this myth the market goes up and down. It really goes up with just breaks on the way up. So we take a terrible investor, so unlucky. And they invested the day before the 0-8-09 crisis. Well, I mean, their money has doubled or tripled or quadrupled already. I mean, it's that hard to lose money the longer that you go. So make sure you're secure. You don't go investing money that you need to get by for the next six months. But if you've got a secure job or you're marketable or you've got cash in the bank, then you should quit trying to figure out when entering the market and just start entering,

start putting a little bit in every month, be disciplined, and start making progress towards your goals. So you didn't have any type of a knee-jerk reaction when you saw Disney lay off thousands of people? No, I mean, I think an investor really should be buying something. Remember that a stock is part of a company. So you're not really, you know, people think it's like a roulette wheel and it's all made, made up, but it's really part of a company. company just has to be public, it happens to be public where you can buy shares. Do I think Disney streaming is going to do better 10 years from now than today? Probably. Do I think people are going to be going to Disney World 10 years from now more than they were today? Probably. And you can go through

this with all of Disney's various revenue streams and I'm buying it like I'm a business owner. I think 10 years from now I'm going to be rewarded for owning it. Now, I could be wrong about one company, which is why it makes sense to own a big, broad, diversified group of companies. Most of them will wind up doing better over the long run. And you really don't look at the month, quarter to quarter or the year to year, really look at the very long run. I mean, you really have to go out of your way and be a really negative thinker to think that Disney World's going to close their parks for good, right? I mean, one way or another, we're going to go back to complaining about how long the lines are. I'm already seeing clips where their lines are back already. You're

seeing people are already visiting the parks. It's shocking. Yeah, I think that no matter what happens with coronavirus or anything else. One way or another, we're going to get through all of this. I think people already know that. There's a lot of different paths out of it from it just going on for another year, the absolute worst, longest case scenario, to it weakening, to a vaccine, whatever, you know, pick whatever it is. No one thinks this is going on for five years. And so I think if we start to accept that, as an investor, we're looking at five, 10-year increments. You should be looking at it that way and find your bargains. So what you're describing me is, finding some certainty and knowing that the long game is there, which to me really takes me back

to confidence. What role does confidence play in investing? When you want more, start your business with Northwest Registered Agent and get access to thousands of free guides, tools, and legal forms to help you launch and protect your business. All in one place. Build your complete business identity with Northwest today. Northwest Registered Agents has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They are the largest registered agent and LLC service in the U.S. with over 1,500 corporate guides, real people who know your local laws and can help you in your business every step of the way. Build your business identity fast with Northwest

registered agent and get access to thousands of free resources, forms, and step-by-step guides without even creating an account. Sign up for a free account to begin managing your business hub with lawyer drafted operating agreements, bylaws, resolutions, membership certificates, bills a sale, and more, all at no cost. Northwest is your one-stop business resource. Learn how to build a professional website, what annual filings your business needs to stay in good standing, and simple explanations of complicated business laws. With Northwest privacy is automatic.

They never sell your data, and all services are handled in-house. Because privacy by default is their pledge to all customers. Don't wait. Protect your privacy. Build your brand and get your complete business. identity in just 10 clicks and 10 minutes. Visit northwest registered agent.com slash confidence-free and start building something amazing. Get more with Northwest Registered Agent at www. northwest registered agent.com slash confidence-free. Starting the year with a

wardrobe refresh, Quince has you covered with lux essentials that feel effortless and look polished. They're perfect for layering, mixing, and building a war. wardrobe that lasts. Their versatile styles make it easy to reach for them day after day. Quince has all the staples covered, from soft Mongolian cashmere sweaters that feel like designer pieces without the markup to 100% silk tops and skirts for easy dressing up to perfectly cut denim for everyday wear. Their wardrobe essentials are crafted to last season after season. Their Italian wool coats are real standouts. They're beautifully tailored, soft to the touch, and built to carry you through years of wear, not just one season. The quality shows in every detail,

the stitching, the fit, the fabrics. Every piece is thoughtfully designed to be your new wardrobe essential. And like everything from quince, each piece is made from premium materials and ethical trusted factories that are priced far below what other luxury brands charge. I can't tell you how much I am loving my new cashmere sweater. It's a staple for sure, and I can't wait to give one to my best friend for her birthday this year. It is timeless, gorgeous, and the softest thing I've ever touched. Which quince pieces are you interested in that? I mean, from the bags to the denim, to the sweaters, to the jackets, they're all

incredible luxury high-end products without the high-end price. Refresh your wardrobe with quince. Don't wait. Go to quince.com slash confidence for free shipping on your order and 365-day returns. now available in Canada, too. That's Q-U-I-N-C-E.com slash confidence to get free shipping and 365-day returns. Quince.com slash confidence. Confidence is everything from a positive perspective and a negative perspective.

So from a positive perspective, what you have is you have people watch the news, and they get so freaked out watching the financial media that they lack the confidence to invest. Like, oh, I'm going to get burned here. and you've got to recognize that the media is not an investor's friend. So no matter what your political or financial views are, most of these media outlets are owned by public entities, ABC, NBC, CBS, Fox, MSNBC, CNN, all publicly traded company divisions, right? So a publicly traded company has a fiduciary duty to maximize profits to their shareholders.

So how do they do that? They all make money the same way. They sell advertising. How do you sell advertising? You need eyeballs, right? How do you get eyeballs? Not by calming people down, not by giving the confidence to invest, but by feeding on anxiety, negativity, and insecurity. And that's what gets people to continue to watch is they're scared. And now they feel like someone needs to help them through it. And so it paralyzed people for making the right decision. The more people watch those things, actually the worst they do. It's the opposite of what you would expect. So what you want to do is you want to push out all that noise, focus on the facts of how the market works over the long run, know. that a diversify portfolio will work in the long run, start to invest every month, and have the confidence not to be shaken. You need to be unshakable through that next correction, through that next bear market, know that, hey, there's been 100 corrections, dozens of bear markets. They've all ended the same way.

The economy recovers. Every recession is led to an expansion. Every contraction is led to an expansion. Every correction is given way to a bull market. And every bear market's given way to a bull market. Every time, have that confidence. Don't let anybody shake you from that. On the other end of the spectrum, you have people that are overconfident.

There's a lot of research that shows that women are better investors than men. And the reason is that men, if they place a trade and it works out well, they seem to think it was due to their brilliance. And then they go start trading more. And the more activity you do, the more results in underperformance, whereas women as a group, and everyone's different, but as a group, they tend to be more deliberate about each investment. And so because of that, they don't get overconfident based on a past success. And so confidence is such a big part of being a good investor. Understanding what to pay attention to and what not to pay attention to really gives you that confidence to get through what you need to get through without getting shaken off course. It's interesting when you were describing that overconfident investor in my mind I was thinking about an article I read about day trading and how day trading is taking off and people think that they have the insights to know what stocks to pick.

Are you seeing a lot of that? Yeah, whenever you see one sector of the market really take off, you see day traders come in. And we see that now with big U.S. tech companies. So Google, Amazon, Apple, Tesla, you know, no one's gone wrong there, right? You buy it, you sell it, you go buy something else. You sell it. You buy something else.

You sell it. It goes up, up, up. Now, of course, the person who just bought all of them and held it probably did better. But nonetheless, the day traders feel brilliant. The problem is 100% of the time this party ends. And no one rings a bell before the party ends. ends. It ends, and usually everyone's caught with their pants down because it happens very, very fast. The top performing stocks in the previous decade are not the same top five from this decade,

and that's the same story over and over. No matter how invincible a company seems, it eventually gives way to capitalism. Capitalism basically says competitors are going to figure you out, and they're going to take you out, one way or another over time. And so the last time we really saw massive day trading activity was with the tech bubble, which a lot of your listeners will be too young for because it was 20 years ago. And there were actually centers opening up all over the country for day trading and almost all of them went out of business when tech stocks crashed back then. I think we're going to see a pretty negative ending to this day trading bubble too. I don't know when it will be, but it'll eventually happen. It just surprises me that somebody would

roll the dice on themselves having zero experience or expertise knowing there's people out there that can advise them. And I wonder for the people that actually do have financial advisors, when they're hearing this conversation and the education that you're sharing with people into what's really happening, how do they know if they're with the right advisor? How do they know how to pick the right advisor? Yes, it's incredibly difficult. A lot of people just kind of go with somebody that they know. And I think that what people really want to look for is they want somebody who's competent, right? So try to find somebody who's gotten a little bit educated in the field that you're in. So most financial companies are not run by financial advisors, and most of the people

that give financial advice don't have any credentials or education related to financial planning or financial advice. So I'd say first, look for a company that it's kind of in their DNA to give advice, one where you're dealing with a team that has a certified financial planner giving you planning advice. If they're giving you investment advice, it'd be nice if they have CFA designation, legal. There's a lot of grade tax. There's a CPA. To man that your advisor have some credentials and education that that team has those credentials and education. So you can separate out a lot just by asking for a little bit of competence in education from your advisor. The second big part is what we talked about earlier, Heather, which is conflicts. Just try to get advice from somebody that

isn't conflicted. I don't walk into like a Hershey, Pennsylvania and walk into the chocolate factory and ask what chocolate's the best. They're going to give me five different kinds of Hershey bars, right? So you really want to be paying somebody who doesn't own. the investment products, their company doesn't own the same investment products, or you're going to find out you're going to be paying a fee to get those products. So try to avoid that conflict. If you can get those two things nailed down, you've eliminated 95% of advisors and you've really worked your way towards somebody that the next step, which is important, you can connect with. Make sure that there's a relationship, that they're used to dealing with people like you.

If you're worth 120,000, you don't want to be an outwired of that advisor. If you're worth $10 million dollars, you want to make sure that advisor is used to dealing with $10 million people too. That makes a lot of sense. So the financial considerations of being your own boss versus working for a company right now, a lot of people listening are wondering, hey, you know, maybe I should take this time to go to work for myself. How do you advise people that are trying to make a decision? Do I stay in the nine to five corporate America or do I take this side hustle and just go for it?

People have very different views here. So I think what's interesting is millennials have really done both in record numbers. So I see a lot of clients that are closer to the booth. boomer generation, which is above me and the millennials are below me, the boomers, like there were a lot of them that were business owners and they wanted to be business owners and do all of those things. And then there were many that worked for the same company for, you know, 30 years. When I look at millennials, I think they're inspiring in a couple ways, but one of them is they demand that the company that they work for is a good corporate citizen. They're the first generation to really say it's not enough just to have a nice place to work. I really want to know that I work for a company that does the right thing. My peers do the the right thing. I'm surrounded with my people that share my values and beliefs. I think the millennials have really done a great job with that.

But what I've observed with our millennial clients is a lot of them don't want to be business owners because they don't want the hassle. So I just even take the medical profession. It used to be all the doctors wanted to work on their own. Now a lot of doctors can't sell their practices because millennials don't want to buy them. They're like, look, I want to enjoy my quality of life. When I'm

off, I want to be off. If something happens flood at the office or nurse quits or there's a patient that's an issue at 2 in the morning and there's no I don't want to deal with it. You know, I want my vacation. I want to enjoy myself. I'm going to come in.

I'm going to do what you need me to do. But my quality of life is too important. It's also the same reason some millennials leave their jobs. They don't like them. They don't like their peers, their boss, whatever. And so they go off and they do a side gig instead. So I think what's really driving that generation is quality of life. And it's what makes some of them decide to be employed.

It makes some of them decide to go do something different. But it's really unique to that generation. in a way I don't see with the other generations before them. So you pointed out some different pieces that a company can bring into the fold, whether it be charity work or mission work. Are those some of the things that you've done to make your firm such a standout? You know, I think we were doing it from the beginning just because we wanted to do it. And I think what we found over time is people really responded to it.

And that was a nice side effect. But I just think philosophically, I mean, I think that you might read in like business school, like I did, that a business's job is just to create profit. But I think if a business takes from the community, it needs to give to the community. And I also think it's good business. So I've learned over my career isn't just in the beginning. It started out as I feel like this is the right way to do it. And now it's just good business, too.

I think every business should be proactively giving to the community and giving their team away to have an outlet to give to the community as well. You're so right. Not only does it foster employee engagement, employee passion with coming to work, But also the clients, I mean, they love that feel good. Yes, I'm spending money with them, but they're out giving back on my behalf. And that's a beautiful thing. If your anxiety, depression, or ADHD are more than a rough patch, you don't need just another meditation app.

Takiatry makes it easy to see a psychiatrist online using your insurance in days. Takiatry is 100% online psychiatry practice that provides comprehensive evaluations, diagnoses, and ongoing medication management for conditions like ADHD, anxiety. Depression, bipolar disorder, OCD, PTSD, insomnia, and more. Unlike therapy-only apps, tachyotry is psychiatry. That means you're seeing a medical provider who can diagnose mental health conditions and prescribe medication when it's appropriate. All their 600-plus clinicians are in network with major insurers so you can use your existing insurance instead of paying monthly subscriptions or out-of-network fees. You'll meet with an experienced licensed psychiatrist who takes the time.

to understand what's going on, build a personalized treatment plan, and can prescribe medication when it's right for you. Your care stays consistent and evidence-based. Head to tachiatry.com slash confidence and complete the short assessment to get matched with an in-network psychiatrist in just a few minutes. That's tachiatry.com slash confidence to get matched in minutes. Yeah, I think that if you just go, have everyone work for you and have everyone come hire you, and then you don't do anything back. It doesn't work today. If it does, it's not going to work much longer.

And I think that's a great development. I couldn't agree more with that. Because back in the day, I don't remember companies even bringing that concept to light, not when I was early on my career. No, I agree. It's definitely new. I think we've been doing it since our inception,

but you're seeing it become more and more front and center now as people are having to answer to their clients and their employees as to why they're not doing anything. So what are the five biggest mistakes that investors make? Oh, there are so many. That's the title of my first book, The Five Mistakes Investors Make and How to Avoid Them. I cover a couple big ones.

Number one is market timing. So you go to the market and then you take money out of the market, that's market timing. Like, hey, I'm going to cash because I'm worried about an upcoming election or I'm going to cash because I'm worried about what's happening in the Middle East or whatever. But a lot of people don't think they're market timers, but they are market timers because they might get a,

bonus, but they're holding it for the world to settle down. That in and of itself is market timing. It's a big, big mistake. If you meet somebody who says, oh, I lost everything. Usually the way they lost everything is they went to cash at the wrong time. There was a bare market. Market went down. They got scared. They went to cash. They didn't get back in and they missed the upside for good. It's very, very dangerous to exit the market or delay contributions to the market. You're almost always going to be on the losing side of that. My whole career I haven't seen somebody sell out near the top and buy in near the bottom. Not one time. It's just it's impossible thing to do. The second one is we've talked about a little earlier with the day trading is all this active trading.

We know the more trading there is, the more taxes are created, the more friction, the portfolio is created. The more likely you're going to make a mistake attributable overconfidence and the more likely you are to underperform. So I think that those are two really big dizzies. The third is really like not understanding all the psychological pressures that make us bad investors. We have we have a general negativity bias. If we hear stomping, we think it's a dinosaur. We better get in our cave. We're just wired that way. And so we really feed off negative news. That's the reason you see negative political ads during political seasons is because they're seven times more effective. We just respond to it more. We're wired more that way. And so really being able to filter out the noise,

control your behavior so that you have the confidence to the right things. That's a really big part of it. But I think another big mistake, and I'll stop with them is just not enjoying your money. I mean, you have money is a means to an end. And you should never give up. all happiness today in exchange for happiness in the future, and you can't do everything you want today at the expense of the future, really what we're trying to do is maximize happiness. And so if it makes you feel good to give and you can't afford to do a lot, maybe do a little bit now so that you can do more later. If you really brings you a huge amount of pleasure to have a cup of Starbucks every day, well, have the cup of Starbucks every day. I mean, we don't want to

live in misery now in exchange for a future that may or may not happen. So really trying to make sure that you remember that most of us fall into it starts when we're kids. We just blow everything we have or we can't spend anything, we save everything we have. And really, that's not really healthy, right? We want to find a way to maximize our happiness. We all get, become happy in different ways, but a lot of them tie back to money and what it does for us. How do you help people, because that sounds as a psych major that it's really, you know, fundamentally coming from how people grew up and how do you get them to see things in a more balanced way? You know, it's very, very hard to change thinking of people. A lot of people have this feeling of deprivation. is a lot of people grew up in homes where they heard their parents talk about money all the time or there was a lot of job insecurity. There might not have been food on the table at times or the heat was off. Getting somebody like that to have an abundance mindset that, hey, you're okay, that's hard. And you also have people that have never had a consequence of spending every dollar they have.

And they don't understand when the last dollar spent, life will change completely. There won't be some easing into it. To me, what I found is empowering the client with education, you know, really trying to educate them on the big picture, but then also with specificity on their own picture. Where are you? What do you need? When do you need it? What do the taxes look like? If we keep doing these things that you're doing, what are the probability you'll work out great, in which case quit worrying about it? Or what are the probabilities you're going to run out of money, in which case, hey, you need to have a little bit of anxiety around it. We've got to change your

behavior here, or there's going to be a problem in the future. But I think you have to do it in an understandable way. People have to understand exactly what it means to them and exactly what it's going to look like later if they do certain things. And then you're more likely to get them to do the behaviors and to feel at peace doing those things. And did you just always have this mindset or was it a learned experience for you? I think, I don't know why, but I think one of our advantages of creative is very, very early on. It was always about what does it mean to you. I mean, the very first client that came in and did a plan, it was how, what does this money need to do for you? And what do you need to do to be secure for the rest of your life. That was the very first person I ever saw,

and that's what everybody that comes here to work, every day does. It doesn't matter if they're a lawyer or a CPA. They know, yes, there's laws and yes, there's tax guide rules, and yes, there's money management ideas, but we need to make this relate to what the client is trying to accomplish. That's just always been in our DNA rather than something we learn. I don't know why that is, but it's been a big reason people come to us is they want to know that the way they're invested matches up with what they're trying to do and not just based on their age or their risk tolerance or beating the market or something like that.

Everything you just mentioned right there is every questionnaire someone has, you fill out when you're talking to them about working with them. That's right, yeah. And most people just take that questionnaire and go, oh, you're 58, well, you're going to be this percent in bonds. And that's like the dumbest way you could possibly invest. and it's a rule of thumb in the industry, but it's not a smart way to manage money.

I want to hide under the table right now because that's been every experience I've ever had with any investment person. Gosh, I mean, it's terrible. So as you're working with people right now going through the coronavirus, are you giving them any advice? For example, I was speaking to someone who told me,

well, as soon as a coronavirus hit Heather, I knew Zoom was going to take off. So I did jump right in. I know that you're going for the long game here, but do you sometimes advise? people to look at new habits and trends? I think with individual stocks, it's harder than it sounds. I mean, there's always going to be the people that hop on to these things.

But a lot of these companies that really have taken off, I mean, I work with some of the people that have tens of millions or 100 billion plus. They work in some of these companies and being on the inside still sold sometimes pretty early because they weren't sure. You know, you just never really know. You can pick any company today and you can make a case, like we could take Netflix today and make a case that it's going to triple and it's going to take going to go. over the world and why would it not? You could also make a case that, hey, Universal has their own

coming out and Disney's got one now and there's about seven or eight others coming out. There's going to be fee pressure and how are they going to match that fee? I mean, you can make a case for the demise of any company today and you can make a case for it doubling or tripling. We could do this with Tesla or anything else. In retrospect is the only way it ever seems obvious. Well, that's frustrating. You're not giving me, I'm looking for like the magic bullet. I mean, I feel like there's got to be one. Yeah, I mean, if there was, there'd be a whole bunch of people not working, right? And so I think that what you find is even Warren Buffett over the last 10, 15 years has underperform the market. It's hard to do. And here's a person that's

been doing it his whole life more successfully than anybody else, and he couldn't do it recently, right? And so I think that there's a lot of research that shows the mutual funds that did the best in the last 10 years actually underperforming the next 10th. So even the professionals who get paid hundreds of thousands or millions or dollars, sometimes tens of millions of dollars to beat the market and actually pulled it off for a decade as a group are more likely to underperform in the following decade, which tells us that there's a lot of luck involved in outperforming over a shorter period of time. In your new book that I want to talk about because it's just come out, you're getting real-life examples. What are some of the examples that you want to shine a light on?

Well, I think what the path talks about really is this arc of more than just money management. We talked a lot about today about money management, which is obviously the crux of what people are focused on. But all money is as a component of wealth. Where are you? What are you trying to do? And so the book really talks about identifying your goals, understanding your relationship with money, understanding why you interact with money the way you do, readjusting that in a healthy way, laying out the groundwork of where you are, the groundwork of investing, having the confidence to be a smart, unshakable investor through down markets. But then also how to manage risk, how not to lose everything because someone falls down the stairs in your house and sues you,

or because somebody in the family dies that was making money or you become disabled. And then how to make sure that you pass it to your loved ones, that you can make important decisions like health care decisions for your loved ones, and then how to really enjoy that wealth. It's really that whole journey, all the components of wealth management, the way a very wealthy person looks at it. That's what we really try to touch on in the book. And I try to use real-world examples of how one little thing can change everything.

And so you really have to address each part of the, step to make this path work out. You can be a great money manager and lose everything because you had a legal thing screwed up. You can manage money great, but if you're losing 30% of its taxes, you'd have been better off doing something much easier, right? And so I try to put all the pieces together for the first time for me in a book like this, just everything thrown in there so that somebody can go, you know what, I spend thousands of hours a year working, tens of thousands over my life, I'm going to read a book or listen to a book for a few hours. I've got a few hours of work to do and all that work that I'm doing day and night is going to go towards something that makes sense.

I feel like there's no better time than right now because so many of us didn't anticipate this level of uncertainty, but like you just explained, someone can literally fall down the stairs at your house. You get sued and you have the potential if you're not set up correctly to lose everything. So right now the path can really set people up for that next unknown uncertainty. Yes, I think that we tend to do the part that we're really interested in. You know, the really analytical people are into tax and how it works and the fatalists are into estate planning and someone's always selling insurance and a lot of people are into money, investment management and so on. But you really have to have all these pieces together.

They're all pieces to the same puzzle. They're all part of the same game. You can't just play the part of the game you want to play. All these pieces go together to be successful. And it's a long journey. You know, most of us can be doing this for decades. And so you really have to make sure all your bases are covered. And I think we do a good job of that in the path. And where can everybody find the path? So you can find any major bookstore. They can go to Amazon or any of the online sellers as well.

Follow the path on social. You can follow me on social. I'm on Twitter, LinkedIn, and Facebook. And you can also learn more at creative planning.com. Thank you so much, Peter, for sharing some of your knowledge today and for creating such an amazing book with Tony Robbins, which is just such a cool story. So excited for the work that you continue to do

and all the help that you're doing. giving back. Thank you. Thank you. Thanks for having me, Heather. Okay, hang tight. We're going to be right back on this journey with me.