Motley Fool Hidden Gems Investing - NAR Settlement: Real Estate’s Potential Winners And Losers

Episode Date: March 26, 2024

The National Association of Realtors settled a lawsuit that could dramatically change the way homes are sold. (00:21) Nick Sciple and Ricky Mulvey discuss: - How the settlement could impact realtors and traditional brokerages. - The potential effect on Redfin’s growth story. - Why CoStar may be a winner in the shake-up. Plus, (16:50) Robert Brokamp and Alison Southwick discuss a critical piece of financial planning that can help any family. Link to receive the “3 Dividend Stocks” report: www.fool.com/2024dividends Companies discussed: RDFN, Z, ZG, COMP, RMAX, CSGP Host: Ricky Mulvey Guests: Nick Sciple, Robert Brokamp, Alison Southwick Producer: Mary Long Engineers: Dan Boyd, Rick Engdahl Learn more about your ad choices. Visit megaphone.fm/adchoices

From morning hockey with a cup of coffee to Timbits and road trips, Tim's and Canadian Tire have always gone together. Now it's official. You can now earn Canadian Tire money at Tim's. Link your Triangle Rewards and Tim's Rewards accounts to earn twice with every Tim's run. Terms and conditions apply. Visit timhordens.ca slash triangle for details. Why am I paying that other agent?

You're listening to Motley Fool Money. I'm Ricky Mulvey, joined today by Nick Seipel. Nick, thanks for being here. Great to be here with you, Ricky. So, this is a big story. So, it's going to be the most of today's A segment. the National Association of Realtors is paying a $418 million settlement, essentially over the way that it baked fees into homes listing prices. Now, Dylan and Mattie A hit this a couple of Fridays ago when it was just announced, but you were on a heater about this on our members-only live stream, full live on the morning show, and I wanted to bring it on Motley Fool money.

So, the implications are becoming a little bit clearer. But Nick, to set the table, how did real estate commissions work before this settlement was agreed to or happened? Sure. Yeah. Prior to the settlement, which again goes back to a federal antitrust case that the National Association of Realtors and a number of other realtors lost back in the fall, listing agents who are the agents that work for the seller in a home transaction would include their listing on the multiple listing service where you put homes for sale and what have you, an offer to split their commission with buyer's agents whose job is, as it sounds like, to guide buyers through the buying transaction. Although commissions have always been negotiable in theory,

the real crux of this antitrust case is that they were inflated by rules by the National Association of Realtors, which required listings on the multiple listing service to include offers of buyer's agent's transactions. Traditionally, overall commissions would be set at 6%, and those would be split evenly between the buyer and the seller's agent. The seller, the home seller, the person who owns the home, would be the one who pays that 6% commission out of the selling price, such that the buyer, the person buying the home, really didn't see a direct payment from themselves over to their agent. Yeah. I was reading a statement from the National Association of Realtors, and one of their main points was, hey, these fees have

always been negotiable, but in practice, that wasn't usually the case. Before this, sellers were paying the buyer's agent fee, which is a little unusual. How could these commissions now change because of this payout, because of this settlement? Yeah. Likely going to introduce more competition among realtors for what those commissions end up being. A couple of things in the settlement. First, settlement forbids listing agents from including an offer of compensations to buyer's agents as part of the MLS listing, different from the rules you'd seen previously. There's no longer going to be a blanket offer of compensation to buyer's agents from seller's agents as part of the listing. As a result, buyer's agents are going to need to negotiate

with sellers on an individual basis in order to determine their fee. Also, another condition of the settlement, it's going to require buyer's agents to have a signed agreement in place with potential buyers before that buyer even tours a home. That includes a clear description of the fees that the buyer will owe to their agent on the closing of a transaction. The prior model really didn't require any discussion of price when you secured a buyer's agent's services. Those prices, as I mentioned earlier, would be ultimately borne by the seller. Now, buyer's agents are going to be required to have these pricing discussions up front, and potentially homebuyers will have to bear the risk of having to come up with the cash needed to pay their agent

if sellers don't offer or agree to a commission split. So before you even get in a home to look at it, you're going to get a document, and you're also going to probably start seeing realtors maybe differentiate the types of services they provide between maybe your low-cost, quick-transaction kind of realtor, and then your more white-glove, higher-cost, old-fee model. I think there are a few shakeups to watch and potential implications to know about. The first one is just going to be the effect on realtors in that industry. The National Association of Realtors represents a million and a half members. Last year, about four million existing homes sold in the United States. This is already a very, I would say, tight industry where you have a per capita small labor force for every home that's sold. What could this settlement do to that industry for the job of being a realtor?

Sure. I think the short answer to that, the industry likely to get a lot more competitive than it's been previously. Buyer's agents are going to have to compete on price for the first time when they're engaging with buyers and convince buyers why their services are valuable upfront. You compare that to the previous regime, where this is a service that was free to the buyer, was hidden into the home price. With competition, likely to see some compression on fees, particularly on the buyer's agent side of things. I think the listing agent, Their value is pretty clear here. Still going to need them to get these products sold. But buyer's agent likely to see meaningful fee compression estimates out there. You can see

anywhere from a 30% to 50% overall fee compression. A 50%, that's kind of what would take out the buyer's agent's half of the transaction. You're also likely going to see a bunch of agents drop out of the business. About half of agents sold zero or one homes last year. And that's simply just not going to be sustainable in this new regime if you see fee compression. Also, with fewer agents paying dues, probably would expect membership in the National Association of Realtors to decline along with the organization's influence. This is a group that is one of the biggest lobbying spenders in the U.S. and with less cash to spend on those efforts, likely going to have less influence. Yeah. On the buyer's side, I have to imagine

if you're going to an open house and you have a buyer's agent with you and they want you to sign something before you even walk in, you know, hey, we haven't entered a purchase agreement yet. Why am I signing this? Maybe I'll call you a little bit later. With that, you have the traditional brokerages. There's some of the big brokerages people know, like REMAX and Compass. How do you think this settlement is going to affect those companies? Yeah, not great for those businesses either, really for the same reason that I talked about, about the individual realtors. Many of these companies also had, previously, prior to the National Association of Realtors settling their part of the case, REMAX and others had settled their chunk of the case and are going to pay

tens of millions of dollars as part of their settlement. But these businesses make money by getting a split off of the fees, the commissions that their agents produce. If those commissions fall, they'll, of course, get less money. Also, agents pulling out of the market together shrinks the overall pool of folks that potentially are going to be working for these brokerages. So, again, increased competition, likely putting pressure on revenue, and that hurts the traditional brokerage businesses. Now, you're about to hear my bias as a Redfin shareholder, but I'm murkier about how this could hit the online brokerages. A company like Redfin had already been doing lower-fee real estate transactions. It wanted to be an alternative

to the multiple listing service system. How do you think this hits Redfin, which is already doing the thing that this settlement is implementing? Sure. I think Redfin intensifying competition is going to affect them in similar ways that intensifying competition across the industry puts pressure on the business. However, as you mentioned, Redfin has been set up really from the start with lower fees in mind. So you could argue they're in a better position to be prepared for this shift than others. But still, Redfin isn't coming into this from a position of strength. This is a business that burns cash. If you look back at their cash flow statement from last year, you might see a positive operating cash flow line, but you have to back out a lot

of this cash that was generated from exiting the iBuying business. If you just look at the core operating business that still sticks around today. This is a cash-burning business, and there's really some pressure on the business. They had to take on some high-yield debt from Apollo in October to extend their maturity. So, perhaps the market is coming more towards Redfin's model, but Redfin isn't exactly coming into this from a position of strength, and we have intensifying competition from other brokerages. So, it's not the cleanest story in the world, but perhaps Redfin is in a better position to compete than the other brokerages. This is a company where it needs that growth story. It needs explosive sales growth and a

really differentiated product. Now that it doesn't have maybe such a differentiated product, that hurts the story for a company that was acting like a 2019-2020 growth stock. Yeah. I just think increased competition is going to put pressure on everybody in the space, Redfin included. Could this be a tailwind for them to push more folks to their model that kind of offers lower commission, sure. But I don't think they're just an unambiguous winner here in this settlement. Well, I think there might be a more clear loser from what I've heard you talk about on Fool Live. And that's the big real estate platforms like Zillow and Realtor.com. So, why is that? Yeah, I think Zillow in particular is in a tough spot here. I'm not the only person that's

talked about this. Spruce Point has put out a short report on this company pretty recently, laying out a similar thesis here. But Zillow's revenue model largely depends on selling leads to buyers' agents. Their premier agent service is really their primary revenue-generating business. As we've discussed earlier, buyers' agents are now going to have much less certainty about what those leads that Zillow is selling to them are worth. They're going to have to negotiate with homebuyers up front on price and likely to see fee compression over the longer term. If your leads are worth less money, then probably, and the folks that are spending that money on advertising have pressure on their earnings, likely to see less willingness to

pay for advertisements on Zillow. So could, I would argue should, lead to revenue declines for Zillow if things go as we'd expect. While Zillow currently is the dominant online real estate platform, this is still a business that is loss-making and is going to need to remake its business model to succeed in the new regime. There's a bit of an innovator's dilemma problem for Zillow. As they evolve, trying to go after the new market, they're going to undercut some of their existing revenue models. And certainly, as a company that's not coming in this from a position of strength, I think this weakens Zillow significantly. So, I think we've got two losers in a split draw, or a split decision, if you will. But you've got one winner for this settlement

that you think. And this is one that's a little less clear to me because they seem to do something similar. So, CoStar does commercial real estate data, and it also operates websites like homes.com and apartments.com, which those websites seem to be a little bit similar to what Redfin is doing. But why do you think, under the surface, why this company could be a winner from this settlement? Yeah. As you mentioned, I think CoStar is the big winner here. They're the company coming into this from a position of strength. So, CoStar, as you mentioned, really dominant in commercial real estate data. More recently, the past decade-plus has run a playbook of acquiring online real estate websites, building them, and turning them into subscription-based businesses.

Their biggest online real estate portal right now is Apartments.com, which they bought in 2015 and have built into the No. 1 apartments website in the U.S. CoStar really running the same playbook in residential real estate, which is a significantly bigger addressable market than where they've played in previously. They bought Home.com in 2021 for $152 million, and since then has invested over $1 billion into the platform. Anybody who tuned into the Super Bowl about a month ago, you would have seen ads for Home.com literally every quarter of the Super Bowl. And those ads have led to increased traffic on the platform. As of February, Home.com has become the second most trafficked real estate portal, has double Realtor.com's traffic and triple Redfin's traffic.

Also, a big differentiator here is Homes.com's revenue model is focused on the listing agent as opposed to Zillow's model, which inserts the buyer's agent in between the home buyer and the listing agent. Their revenue model, they call it the Your Listing, Your Lead model, can connect homebuyers directly to the listing agent, again, rather than inserting the buyer's agent as a middleman in that process. Homes.com also uses a subscription model rather than the advertising model you see from these other portals. Even with the subscription pricing, a little bit lower price for the realtor than you'd see from some of these other platforms. Really just began monetizing in February, right after the Super Bowl, and expects to hit $100

million in revenue run rate by the end of the year. Also, unlike Zillow and Redfin, and this goes to coming into this from a position of strength, CoStar is a profitable and cash-flowing business with net cash on the balance sheet. If you just look at interest income that CoStar generates, it's more than Zillow and Redfin's entire business do. Management, as I mentioned earlier, has a track record of acquiring and building these real estate portals into dominant businesses. They've done it with Apartments.com. They've done it with commercial real estate platforms like LoopNet and others. And they're entering this space at a time when, as we've just discussed, their competitors are in a weakened position. So I think all this sets up

nicely for CoStar to come in, out-compete the incumbents, have a more attractive revenue model to these realtors that are seeing a more competitive environment. I think it sets them up to become the dominant online real estate portal if things go as I expect. As I said, they've already got to No. 2. They've only got one more to take down, and that's Zillow. That's something I didn't know until we were recording, which is that they make more in interest income than the entire businesses of Zillow and Redfin. I appreciate you saying that as I am recording this segment and rethinking my position in Redfin the more we talk, Nick. We've talked about the implications we kind of know and what to watch play out, but there's still a lot of murkiness. I read a quote

in a Fortune article from Ken Johnson. He's a former broker and current associate dean at Florida Atlantic University's College of Business. His point is that there might be a little shakeup, But in the end, there's going to be a workaround in that we're just going to keep doing business in a very similar way that we are today. And that's with regard to the realtors. So, what are the implications that we're still waiting to see shake out from this settlement? Sure. I mean, first and foremost, the court hasn't yet approved the final settlement.

So, we don't know if the court is going to approve things as they are. But let's assume that it goes through as reported. And I think that's likely. The big question is how the competitive landscape changes. How aggressive will agents be in competing on price versus kind of trying to circle the wagons and protect their own, as you mentioned, find a way to work around the rules in order to preserve the existing fee regime? Second is, how quickly those competitive changes are going to hit the market? Is this right away, as soon as the settlement goes into place, this summer becomes

active in the summer? Is this immediately going to be a dog-eat-dog market, or is it going to take longer for competition to intensify? You've got lots of realtors coming out there saying, this doesn't mean that much. For me, I don't know, it's the Shakespeare quote, methinks the lady doth protest too much. I think there's a little bit of denial out there. I think all it takes is a few folks to defect and start gaining market share, and you're going to see competitive intensity intensify, for lack of a better word. I think in the long term, we're going to see fee compression. I think there's going to be a lot of bluster from agents as they try to protect their business model. But sooner or later,

I think competitive pressure is going to take over and we're going to see big compression. It's hard to stand still when the tide is changing. But Nick Seipel, I appreciate your time, insight, and thanks for breaking this down with me. Absolutely. You just found out that your sales team is at risk of missing quota. Don't panic. Just ask Rippling AI. Since it's built on your real-time people and business data, Rippling AI can pull metrics

from Rippling and Salesforce into a meeting-ready dashboard showing quota attainment, headcount plan and monthly revenue to quota by region. In seconds, you'll see exactly what's behind your quota risk and fix it before it's missed. Question answered, action taken, crisis averted. When you have critical business questions that need answers, don't just file a ticket and wait weeks for an outdated report. Describe what you need and have Rippling AI build it instantly from your live people and business data. Whether it's a dashboard with detailed charts or automated workflows with the right triggers, conditions, and approvals. Ready to rule your business? Head to rippling.ai slash fool to get the only AI built to give you full visibility and take complex actions across

your entire organization. That's r-i-p-p-l-i-n-g dot a-i slash f-o-o-l. Sign up for exclusive access today, rippling.ai slash fool. All right, before the next segment, I'm going to do a quick ad. Growth stocks steal the spotlight in the financial media, but something way more boring is behind a whole lot of wealth creation. Dividends, the regular payments that companies send shareholders. Dividends can make companies a little more disciplined on capital allocation and provide investors long-term streams of income. Some of the Motley Fool analysts behind Stock Advisor, our flagship investing service, put together a list of three dividend stocks to buy this year. We're sending this report to Motley Fool money listeners for free,

just as a thank you for checking out the show with no purchase necessary. Just go to full.com slash 2024dividends and we'll email it directly to your inbox. I will also include a link in the show notes. All right. One of the best financial things that you can provide for your family, it's not a stock, it's not a piece of property, it's not even an investment. Allison Southwick and Robert Brokamp have more. this week i was approached by essentially two kids in a trench coat pretending to be an adult my daughter was the legs while the other kid shook my hand and did her best adult impression with small talk like how is your mortgage the stock market am i right so even kids know that

being an adult means keeping track of many tedious financial details and apparently talking about it with each other. So this also includes so many different accounts, insurance policies, legal documents, but also the professionals you hire, important passwords and combinations, and just all your stuff. So have you ever taken the time to create a single document that has all the information about everything you own? No, because that's only the kind of thing two kids pretending to be an adult would do. But don't fret. We're here to help with a comprehensive checklist for your full-sized, totally real adult life. Yeah. And the inspiration for this idea comes from a fellow by the name of Bob Hassmiller, who was a longtime Motley Fool member.

And way back in 2006, he wrote on our discussion boards that his father, who actually was a lawyer, died without a will or any other estate planning. And Bob believed that this created such difficulties for his mom that it contributed to her dying less than a year later. So in his board post, Bob, who handled most of the finances for the family, explained that every year he updated what he called a letter from your dead husband. And it was a document that his wife, Sue, could read if something happened to him. And it would tell Sue everything she needed to know to carry on without him financially. Who to contact, where to find the legal documents, how to access all the accounts, and plenty of other details. And we thought it was such a good idea that we asked Bob

to write a series of articles about his process and his letter. And to this day, Fools still bring those articles and ask where to find them. Now, this is where our story takes a really sad turn. Tragically, when Bob was out riding his bike back in 2016, he was struck by a car and he passed away 10 days later. He'd only recently retired. To me, it was just such a supreme injustice that this guy who did so much to prepare so well for his and his wife's retirement would actually get to enjoy so little of it. But the consolation is that I know Bob's wife knew exactly what to do to settle his estate and how to manage her finances without him. Okay, so that's the start of the story. But when my wife and I created our own letter,

and we did it jointly because we manage our finances together, we really created the document for our kids and our executors. As we did it, we discovered that creating something like a personal financial inventory actually has all kinds of other benefits, such as all your important financial information is just in one place instead of scattered all over the place. in the process of creating it you may rediscover accounts or other aspects of your finances that frankly you've just forgotten about or at least you or your spouse have forgotten about going through the process could lead to potentially fruitful discussions and questions such as you know as you look at all your accounts you think well maybe we should consolidate all our accounts

as you look in your insurance you question well do we need this much insurance or maybe we need more or you know is it time to now update our estate plan or you know get one in the first place. Related to that, once you've gone through this process, you'll have created a handy document that you can use when you meet with pros, such as an estate planning attorney, a financial planner, an accountant, because they're going to want to know everything about your finances. By the way, this also serves as a handy checklist during tax time, because you can go through the list of your accounts and make sure you have all the tax documents you need. Then, of course, as with Bob's letter from

your dead husband, this will be a crucial document for a trusted relative or two to have if and when you become incapacitated or you pass away. Because otherwise, how else will they know about everything you own, how to locate it, and what to do with it? Now, this can be a pretty big undertaking depending on how complicated your financial life is or how organized you already are. But this is one of those things that future you will really, really thank you. Not just future you, but future loved ones are going to look back on this and say, oh, thank you for making this easy on me. So here are six steps for you to pull together your financial inventory and be kind to your future self. So first piece of advice is don't go it alone. Get as many people in that

trench coat as you need to make sure that you're aligned. Yeah. When I tell the story of Bob writing his letter from your dead husband, I think it can create the impression that Bob did all the work and his wife Sue would only know what was going on if and when Bob passed away. But they actually regularly reviewed it together. One of his articles that Bob wrote for us, he wrote that Sue would, quote, hound him to update the letter if he's late. They revisit the letter once a year, usually around the beginning of the year. If you have older kids, you might also consider reviewing it with them or at least parts of it, especially if you're getting on in years. After all, your kids are going to be the ones who eventually will be reading the document and

inheriting all your assets after you're gone. It'll be helpful for them to be able to ask you any questions while you're still able to answer them. All right. So, next piece of advice is to decide on your format because your document should be easy for you and your loved ones to use and to regularly update. Yeah. And this could be a Word document. It could be a spreadsheet. It could be both. That's what my wife and I do. But really, whatever works for you. And if you're looking for templates to follow, many financial services firms like Schwab, TIAA, T. Rowe Price offer free PDFs that you can download. Other firms probably offer them as well, but those are just some that I came across to do an online search for terms like personal asset inventory template, and you'll

likely find some examples. And if you Google checklist for writing your own letter from your dead husband, you should find a free PDF that Bob, some other fools, and I created several years ago. All right, here comes the tough part. You have to actually sit down and write down your full financial inventory and instructions on how others can access the various accounts. This includes key people who can help in the event that you are gone. Yeah. This really is the meat of the document. Here's what to consider including. Obviously, your accounts, bank accounts, investment accounts, retirement accounts, and who they'll go to. We've talked in a previous episode about the importance of beneficiary designations for retirement

accounts. For bank accounts and brokerage accounts, you could do payable on death or transfer on death designations. Some people include copies of those forms just so it's clear who should get what. And it allows you to review those once a year. Your insurance policies, your policy numbers, contact information, and the length of the terms. In other words, when the policy is going to expire. And then again, you decide whether you have enough or maybe you could get rid of some of those policies. Contact info of trusted professionals. So these people you work with or people you think your family should work with if something were to happen to you. Again, financial planner, tax accountant, attorney. This also could include

HR folks for benefits at work. You might have a flexible spending account, you might have an HSA account, you might have life insurance provided by the company, and you want to be able to have someone at the company to be contacted if something were to happen to you. Then, of course, the location of important legal documents. Some people choose to include this personal inventory or this letter, whatever you want to call it, with their will and trust documents, durable power of attorney, living will, healthcare directive. Some people keep it separate, but basically the bottom line is an estate plan is useless if no one can find it. You have to let people know where to find it.

Just a couple more items here. First of all, anything that you own that is of particular collectibles, jewelry, artwork, heirlooms. First of all, you want to make sure you have enough insurance for those. A lot of homeowners insurance policies won't cover particularly expensive things. But you also want your relatives to know about their value. You might have something that looks just like a regular book and a regular vase, but it's actually worth a lot of money, or it has a lot of sentimental value. It was once owned by your great-great-grandmother or something like that. And then other locations of valuables such as a safe. And then if you have a safe, you need to give someone the combination. Safe deposit boxes, storage units, hidden stashes

of cash. Both my parents do this for some reason. They hide bills of cash around the house. And I was curious how usual this is. And it turns out it's actually pretty usual. A survey from America's Best Fund that 43% of Americans hide cash around the house. So you want to let people know where to find it so that your heirs don't throw away a clock not knowing that that's where you stashed your extra cash. Now that you've written down your inventory of assets, it's time to lay out your liabilities. This is basically the money you owe. It could be your mortgage, credit card, stuff like that. I think that's just good to review every year anyhow, just to make sure you're managing your debts properly. It'll be good for your

executor because that's one of her or his jobs is to pay off your debts before the estate could be settled. But also think about any auto billing you're doing. I think this is crucial to review every year. If you haven't done that in a while, I'm sure that when you look at all the ways that you are being auto billed, you'll find a few ways where you think, eh, I don't want to stop paying for that. Also think about other important bills that must be paid or should be canceled if you're no longer around. I mentioned storage units. If someone doesn't know you have a storage unit and they're not paying that bill, you know what happens. Eventually, all that stuff will get auctioned off. Then finally, not only your liabilities, but maybe someone else's

liabilities in the terms of anyone who owes you money. Maybe you lent money to a friend or relative. Not a formal arrangement, but you should document that so you make sure that your heirs get that money back. Now that you've laid out all of your assets and your liabilities, now it's time to explain your financial roadmap, which is basically your intent behind the financial decisions that you made. How you do this will depend on your situation. If you're married, this could be just a place to write down your goals and your plan for how you'll get there, and then update your progress every year. A great reason to discuss this with your spouse if you're married. If you're writing this document partially for a spouse who's not

very involved in the finances, use this section to explain your strategies, investment philosophies, and recommendations in case you're not allowed to implement them. This also could be helpful if you have young kids and someone unexpectedly has to be in charge of managing the money that you leave to them. I have a friend who, at the beginning of every year, reviews all his investments in a document and talks about his investment philosophy. He sends that to a select number of people, including me, because he wants me to be the person who helps his kids invest their money if something were to happen to him and his wife. If I remember right, another thing to include in this section is people to not take financial advice from. Am I remembering that

correctly. Yes. I mean, the great thing about Bob's letter is it was a real letter and it was very frank. And he was like, if something happens to me, listen to this person. Do not listen to this person, even though that person is going to try to give you advice. It's very funny. All right. Finally, you need to decide on where to store this laundry list of your financial life. Yeah, this one's tricky because this document will have a lot of sensitive information. So you don't want to just leave it lying around on your desk. On the other hand, it has to be a place or two where people you trust can find it. So I'll just tell you what my wife and I did. So we printed out two copies and included them with copies of our estate planning documents,

put them into two separate hiding places, took a picture of those hiding places, and sent those pictures in an explanation, one to one of my sisters and one to one of her sisters. And as our kids have now entered adulthood, we've let them know where to find them as well. Some people keep these documents in a safe, which is fine, but then you've got to make sure that important people have the combination. I'm not a big fan of leaving this type of stuff in a safe deposit box at a bank. It's very difficult for people who aren't the owner to access a safe deposit box. Plus, frankly, bank branches close all the time, banks merge or get bought out. It's just going to be a hassle if you own a safe deposit box. And then finally with this,

you might want to just speak with your attorney. Some law firms will store documents for you, though it's actually becoming less common nowadays. But I'm sure your attorney will have some suggestions. All right, bro. How about you bring us home with your final closing thoughts here? Yeah. After you've created this document, and I know it's going to take a lot of time, it's probably going to take a few days, maybe, maybe over the course of a couple of weeks. But once you've created it, make sure you update it annually or after a major life event like moving, a job change, changes in family composition, things like that. But once you've created it, updating is actually pretty easy. In fact, most years, you'll just make only a few

tweaks, if any at all. Finally, I'd just like to close with some words from Sue Hassmiller, Bob's wife, who has had a successful career as a nurse and a professor. She worked for the Red Cross, the Robert Wood Johnson Foundation, and the National Academy of Medicine. After Bob's death, she published a book entitled Resetting, An Unplanned Journey of Love, Loss, and Living Again. In that book, she wrote about Bob's letter and how it helped her gain a financial footing after his death because instructions were like, quote, a perfect recipe for mom's apple pie. And she also wrote that the letter, quote, was the only way he could safely and lovingly let me know every single detail of every single thing I would ever need to know financially

and much more. And I hope, dear Fool podcast listener, that you will do the same for the people that you love. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow.