The Wealthy Barber Podcast - #29 — Jason Pereira: The Evolution of Financial Advice in Canada

Episode Date: October 28, 2025

Our guest this episode is Jason Pereira — Senior Partner & Financial Planner at Woodgate Financial and one of Canada’s most prolific voices in the financial planning industry. Jason has spent over two decades immersed in the world of financial planning — earning nine professional designations, contributing to hundreds of articles and podcasts and becoming a trusted expert on everything from practice management to fintech to insurance strategy. In this wide-ranging conversation, Dave and Jason explore the evolution of financial advice in Canada including how it compares globally, why many Canadians still have blind trust in big institutions and what younger advisors are doing differently. They also dig into some of the thorniest financial planning topics: over- and under-insurance, capital gains at death, intergenerational wealth transfers, life insurance for children, rental real estate in 2025 and much, much more. Jason doesn’t hold back — sharing candid insights on the gaps in Canada’s advisory landscape and how consumers can better navigate the system. Whether you’re a new investor or just someone trying to make smart decisions with your money, this episode is packed with thought-provoking ideas and practical takeaways.   Show Notes (00:00:00) Intro & Disclaimer (00:00:55) Intro to Jason Pereira (00:02:13) The Different Ways to Pay for Financial Advice (00:05:26) How Does Canada’s Financial Advisory Industry Compare to Other Parts of the World? (00:10:52) Young Advisors Want To Do More Financial Planning (00:12:57) Canadians Have Misguided Trust in Large Financial Institutions (00:16:17) Jason Thinks People Are Being Sold Too Much Insurance They Don’t Need (00:19:06) Term vs. Cash Value Insurance (00:21:27) Using Insurance to Cover Large Capital Gains Taxes (00:25:25) Passing On Cottages Can Cause Much Family Friction (00:26:45) Corporate Executors (00:29:37) Many Young Canadians Don’t Have Enough Life Insurance (00:34:50) How Much Life Insurance Do You Need? (00:41:20) Buying Life Insurance on Young Children (00:44:54) It’s So Hard to Max Out All of Your Registered Accounts (00:46:23) AI and Financial Planning (00:52:59) Rental Real Estate in 2025 (00:55:32) Any Risks with the Rise of Passive Investing? (00:58:13) Parents Are Gifting More Money (01:00:39) When Financial Advisor Fees Are Worth It (01:04:10) Conclusion

Hey, it's Dave Chilton, The Wealthy Barber and former Dragon on Dragon's Dent. Welcome to the Wealthy Barber podcast. Well, we'll be hosting some of the top minds in the world of personal finance. Yes, that's to balance me out. The podcast is about making the subject not just easy to understand, but dare I say, even fun, honest. Whether you're trying to fund your retirement, figure out how to build a down payment, save for your kids' education, manage debts, whatever. we'll be here to help you do it.

Before we jump in, a quick but important note, nothing we discuss here should be taken as investment advice. We don't know you and your personal financial situation, so we're not here to tell you we're specifically to put your investment dollars. We're here to educate, get you thinking, and we hope entertain. But please do your own research and or consult with your financial advisor before taking any action. Hey, it's Dave Chilton, the Wealthy Barber with the Wealthy Barber podcast. I am not exaggerating in the slightest when I say I am so pumped about today's podcast and the guest we have.

I'm going to embarrass him a little bit off the top and accidentally put quite a bit of pressure on him too. It's Jason Pereira, Woodgate Financial. Jason is a legend in the Canadian financial planning industry. He really is. He won't agree to that. I saw his facial reaction, but he is. what I would call him is the expert's expert. So a lot of the people in our industry, when they have complex questions,

it can be about industry trends, it can be about financial planning itself, it can be about any number of topics, they will turn to him and get his opinion. I'm one of them, by the way. We were looking at some AI financial planning ideas, and the first person I called was Jason. He's on top of industry trends. He has his RFP in both Canada and the states. Very few people can say that. He's an outstanding communicator.

We really are lucky to have him on the show. So after that intro, are you a little worried about all this? Way there ways to bar to disappoint everybody, Dave. I mean, honestly. No, not true. I've heard you interviewed before and you really do know what you're talking about. And I'm thrilled to have you. I'm going to start a little bit differently.

Can you walk through our listeners? And we have a wide range of listeners. Some are quite well informed, but many are in their 20s and 30s and just starting out. and talk to them about the different business models that people in the financial industry who offer advice have taken on. So what are the different ways they create their own revenue? Yeah. So, you know, it's funny. I think sometimes consumers wish there was just one way.

And I'm actually, or industry will argue about which ways better. I'm a fan that we have multiple forms. And I think, frankly, we need more of them and we need more innovation around them in order to give people better optionality and service different markets. So traditionally, in what you had, let me give me back a bit of a history. So back in the day, all we have was commission-based advisors, right? You have the sale now is the end of it. And we still had a large part of that up until more recently were certain mutual funds and mutual funds and second funds now you can't get a commission for them for the sale.

What you do instead is the most common methodology we see is what's known as the AUM model. So it's the asset center management. The advisor collects a fee either directly from your account or indirectly through the provider of an investment product, they get a trailing commission. So effectively, they're getting a fee. It's a percentage of your assets under management for as long as they manage the relationship. So that's the most common model. What you also have on a different end of the spectrum is the advice only route, which is essentially one where you basically cut a check directly for advice, no products involved. Okay. Right. You still have commission based sales in the insurance market.

And then you have hybrids. You have other models where like for our business, what we'll do is we'll charge and upfront fee to give you a financial plan and an investment policy statement before you ever transfer over your net worth to us because frankly you should have those two things in place first and then once you choose to work with us you paid for by assets under management but I've also seen other models subscription based modeling in the US more commonly a little bit in Canada where effectively you know you basically instead of have you don't have the assets to get the advice from a certain advisor or a certain level of advisor what you'll do is you'll agree to a monthly amount that you would pay like a Netflix model effectively. And you again

in exchange for that certain number of meetings, the ability to contact that person when necessary. But we are seeing a little bit more engineering of a model. But traditionally, mostly advised you could see out there are AUM based or a smaller cohort or fee only. Now, you also in Canada, we see some who in essence are salary based. Let's say you're working for a financial institution and you're drawing a salary. And then the revenue flows back to the company, the people paying you through the AUM model. That's very common in Canada as well. Correct.

Most common through the banking channel, where the first two tiers, the branch, the next level above will do that, whereas the brokerages, the areas won't. You do have a salary model. You do have some independents who do that with their staff, like our friends over at PWL. I know you've, you've met them as well, where they, but they, but the reality is, is that the client in the end is still charged an assets under management fee, right? So that methodology of billing is no different than an advisor directly having that you know, an advisor is working directly with you who's collecting that AUM themselves,

it's still the same kind of model to the end consumer. Yes, absolutely agree. What differences do you see in Canada relative, say, the U.S., UK, I personally think we see more middle income, middle wealth, and up going to the more of the PWL model you talked about the asset under administration model than you do in Canada where you still see a fair number using the other models, true? Look, the AUM model is the dominant model across the world, full stop. Like it is very sticky.

It's also very easy, right? Because at the end of the day, I already have your money. Taking the fee I'm supposed to take every month from your account is something we can facilitate very quickly. It's not that difficult, right? And it's one that people can understand. What I see out of the U.S. is more innovation, right? I saw the first subscription-based financial planning done, or a subscription- or retainer-based financial plan done through there. I see, I've seen group-based financial planning where really small clients, you know, who basically only have $5,000 to invest.

Like, hey, you need to say. for your kids' education? Well, we're not going to spend time one-on-one because that economic model is not going to work. But we have sessions on different topics every Thursday night. The next education was coming up in three weeks. That's where the people want to learn about that, go and do that. Or have even seen that done through video models where basically video programs are developed. So you think of something like we have with like robo advisors where they have a, they have a model where they charge, you know, a single dollar while Simple gets you in. You can get something like that, but also get education in a one-to-many model.

You touched on something very important there. I don't think it's enough attention is that when people don't have a lot of money yet, people love to criticize the industry for putting them into high-cost mutual funds. But it's a tricky situation. If you put them in low-cost index funds and you don't charge them an onboarding fee or a fee-only advice, how do you make any money as the advisor? It's a tough one. So the problem is, is that both sides are wrong.

Okay. So the problem is, is historically the industry tries to basically sell the steak to people looking for hamburger, right? The end of the day, the person who's got $5,000 probably does not have, starting out, does not have the same complex situation as some of the million dollars, right? But we try to, like we say, oh, no, there's an advice gap because we can't give the white glove service to people of $5,000. That's ridiculous, right? But then the opposite side says, well, this is ridiculous. You're charging 2.5% or 2.25% to this person with $5,000. that's not fair. They could be paying less. But when you actually look at what that actually is in terms of dollars and you look at how much money the advisor is getting paid, you're like, wait a sec, this isn't even fair to the advisor. Right. So the reality is, is that in Canada, particularly, we, because we allowed, we had deferred sales charges in mutual funds. This is one

of the, this is the type of mutual fund you could sell. Client would pay nothing up front, but the advisor would give $5,000 of, sorry, 5% of that amount. It allowed small clients to become a little bit more profitable to advisors, and that created what I referred to as atrophy. Like there was no innovation around how can we service small clients in a way that is both profitable, but not, you know, selling them the hamburger they need, not the steak they don't need, right? So that only got banned a couple of years ago, right? I still think what we're going to see is younger advisors, come into the industry, start

challenges, be a little bit more entrepreneurial, and basically try to figure out new models that work for one to many or work for work down here and provide the right service. that hamburger service that people need at that level there. So we don't have answers for that because frankly, we haven't been working on it for decades. And when people would. Well, and I love your line one to many because I think that's what we're going to see more and more of.

I also think you're going to see a lot of the people in their 20s and 30s take this on themselves because as you know, and as you mentioned, it's not that complicated when you're first starting out. A book like the wealthy barber works fine for most of the people starting out. The retiring barber that people always preach about me writing, it would be a top right. everybody's situation is so different, so complicated at that time, that kind of prescriptive approach the wealthy barber takes probably won't be effective. In fact, it can steer people in the wrong direction in many cases. Totally. And we, you know, we deal with all of our clients' kids. We make a point

of that. We make sure that we offer that. And they don't always take us up on it. But, you know, I've got meetings coming up with kids in high school who are just turned 18 and want to start investing. Great. Well, I'm going to teach them about this much long-term investing, this much sheltering money in a safe vehicle because they're going to need it soon, right? And, you know, we, I don't, I don't burdened them by giving them by trying to sell them a full financial plan. That's insane, right? What I tell them is here's what you do before school. Once you're done school and get the first job and they give you this compensation package that you don't understand with group RSPs and with health benefits, give me a call, right? That's when we start having the real relationship.

And we're going to talk to them once a year. And then when they get to the, and they're going to start staying for that first home. And then as their life evolves, we're going to start to layer on more and more services. But guess what? Their wealth has started to accumulate. But the industry traditionally has always said, well, they should get that service now. And it's And then they argue that, you know, they can't do it without deferred sales charge. And I was, I was argue, like, what else did he tried? And the answer was nothing. So what I really am excited to see, I'm hopeful to see is that people start to think more

entrepreneurly. Advisors start to think more entrepreneur outside of the norms that we see. And we start to see some more of these innovative models I see out of the U.S. Like there's one company that came across, I can't remember if they're still around or not. It's called a financial gym. And it was literally a physical location like a gym. It was all about group education.

You could come in and get guidance any time you wanted, drop. been for 20 minutes on your lunch, right, to your financial industry worked out and move on, right? Like, let's change the model. That sounds like the barbershop. That's it. So I like it. That's very, very similar. What are you worried about right now? When you look at industry trends, we'll get more to a specific financial planning talk in a second, but when you look at the industry, what what delights you, what trends do you think are positive? What worries you? You know, what delights me is when I talk to young advisors who have been sold the myth that is becoming the reality. So what I say about this industry is funny is that we, when trying to recruit people,

we'll say, like, hey, you can do really impactful work and you can do all this stuff to better people's lives and everything else. And what they find is it's a bait and switch for the most part. It's, hey, you can do all this wonderful work. And this is how great planning is. But by the way, here you are, go sell all your friends and family and survive. Otherwise, you're on the street and pretty much. That's the usual, that's the usual thing, right? And, you know, we, but, but what happens is that we also market the clients that this is what the reality is, right? So the thing is, is that young people are coming into the industry, being marketed that this is what it is, seeing that this is what it is, saying that's what they want to do, and then they're putting

in a system where it doesn't allow them to do that. More and more of them get unhappy, dissatisfied, reach out to people like me, ask me, how do I leave the bank, how leave this institution? How do I set myself up? And a fortune is not a lot of great places to start. But what I'll tell them is you've got to do what you can now to set yourself up to leave. And I see more and more young advisors come to me all the time who believe in the best version of this industry. And the best version of this industry is someone who sits across from you and says, how to make your life better? How do I make your life better today? What other profession proactively sits across from you and tries to better your life?

Doctors you go to when you're sick. Lawyers you go to, if you have to, you hope never to. And accounts you go to because you're really, you basically want to file your taxes. But no one else sits across from you and says, how do I proactively help you take steps to better the rest of your life? Right. That is deep and meaningful work. So I am encouraged by the fact that the. Unfortunately, the institutions that don't provide this market, this is what they do.

They're creating consumer expectation around it. They're creating people coming into the industry who believe it's real. But they get their real as it's not real. But it's making them dissatisfied and want to leave. So every time I have a young, you know, a conversation with a dissatisfied young advisor who wants something better, I'm energized because I see that future building. Now, what worries me? What worries me the most? Good question.

I mean, I think we're in an interesting, worrying time around the concept of Gen. AI get to do to displaces. We're in this big transformational mode. I don't think it's going to replace as much as we think it is, my general belief, we'll see. But overall, I think more so in Canada, what always worries me is basically our reliance on major financial institutions and the misguided trust consumers have in them. The reality is, is that, you know, we have some of, we have some really, really misguided loyalty to major banks in this country. Everybody thinks that they're, you know, they're safer there, whatever else there is there. And I tell you, I have, as someone who basically not only falls regulation and actually does expert witness work

and has done work against some of these people, some of the most horrific examples of consumer abuse I've ever seen happen from some of the most trusted logos in this country. And everybody thinks that they're safe. Well, they'll be made bright by these institutions. Well, these institutions didn't get big by cutting checks when people did wrong things, right? Right. So even when they're dead to rights wrong, they will still fight you on it. And it is, and they will fight you to get pennies on the dollar. So what worries me is that, you know, Canadian consumers are not breaking this trend of effectively moving away

from large financial institutions and giving competition a shot. I do see some competition, some discussion about better competition, about better competition at the federal level now from the, from the feds. But until we actually see it, I don't know that we're actually going to start to see, you know, basically these institutions are getting challenged. An accountant just sent me a plan the other day. It was an RFP, but it was very interesting, and I'm not going to name the institution, but a woman had gone in, married woman, sat down, ended up going into a TFSA with their monies, that was fine, ended up going to fairly high cost mutual funds. We'll leave that alone for now. But the interesting thing is the person never asked her, never, do you have any credit card debt? And never asked her, do either you or your husband have any chance to do a matching program with your employer? They did have credit. credit card debt. They did have a potential matching program. So the accountant gets in touch

with me up in arm saying, how could those two questions not be asked by someone who has all that educational background? So I'll give you a couple of spins on this. First off, the everybody says they do financial planning. Yet I'll tell you right now, the number of clients who come to me with a financial plan having worked somewhere else, you know, that percentage rounds up to the low single digits. Okay. Great. It is, it is, you know, so they say they do it. If they do it, nine out of ten times, It is spaghetti against the wall. Just get it done because this is not the thing we're selling. This is the thing we're giving them to shut them up, right?

They're not taking the crap of financial planning seriously. And this is the thing that's crazy about that to me is that the markets are things we can't control. We can control our exposure to them. But everything that we touch in financial planning is something we can control. And the fact that these are the ways that these small little changes in your life now, just change your trajectory in such a positive way that can have outmoded influential impacts in your life. And, I mean, like, you wrote a book around this, right? Like these small changes, little things that you basically just get right,

and it's going to put you in the right trajectory. And the industry spends its time because it's not compensated for financial planning. It spends its time, basically, just using it as an excuse to try to get people's a hook to get them into the product. Now, the bigger problem in this space is if that person had gone to, it was dealing with the big brokerage level, I can tell you right now what the outcome would have been. Guaranteed, 100% an insurance recommendation. Right.

The big brokerages, their financial planning teams for years were nothing but loss leaders, right? They were there to basically just keep people happy, give them reports, and then they turn over the plan to the advisor who doesn't know what he's doing with financial planning and then I'm just going to draw and disappear forever. So it was a cost center. Well, they found out to make it a profit center. The every last plan I see come out of those divisions basically comes with some large insurance proposition. There was one I saw recently, which was borderline ridiculous, where the client was already too concerned that they were leaving too big in a mistake to their kids. They were concerned about giving their kids too much money while they were alive,

yet somehow an insurance policy got recommended to make the estate bigger because it was a tax. I'm sitting there going like, please square that circle for me. Square of this circle. Yeah, exactly. That's a tough one. Yeah, exactly. Like, oh, yeah, but this way they'll save on tax and leave a, they have more money than they'll ever need. They're afraid that's too big.

And instead of basically saying, this is how we give it away to cherries and everything else, you're saying, how do we make it bigger? Right. Yeah. Now, do you see that when younger people are going in? they're not yet in a position where they built up a big net worth, they're still getting some insurance product recommendations, or is that more for the well-heeled group you're talking about? That is, so when we look at the distribution, depends on the distribution channel.

On the banks, those people are not going into the big brokerages because those guys have cut off million. They don't get set on. So they're not, they're not getting sold that. The low levels of the banks, they're not doing as much insurance referring as they want to be doing. Some of the banks don't even touch it. So the answer is they're not getting it.

if they unfortunately go and get referred to an advisor who is specifically an insurance company 100% of the time they'll be sold they will be pitched insurance 100% right and look here's the thing I'm not trying to be negative about insurance there is absolutely insurance is a wonderful wonderful tool wonderful product incredible product it's the thing that will save you and your family from absolute ruin it is so dynamic in the way we can plan with it but unfortunately it's sold in some of the worst possible ways because the incentives are so skewed I mean like literally you go in and you buy a policy that's going to basically pay you know you're to pay let's call a small one a thousand dollars a year okay in premium that is going to pay the advisor more than a thousand

or the institution that receives it more than a thousand dollars in commission so you can see how there's a there's a conflict there right or it can quickly arise when the numbers get big so overall look you need it you should get it the right form you should have it properly you should properly protect yourself but when you know the industry spends all his time basically trying to you know sell you three quarter inch drill bits without trying to define if you need a three quarter inch hole, you got a problem. Well, and this is the old Charlie Munger. Show me the incentives and I'll show you the outcome. And of course, we never see a better example than there. I mean, I've taken a lot of criticism over the years for advocating for term insurance for 90-something percent of the cases

that I come across. But I can tell you, nobody studied the math more carefully on the sprint that I have. I've dealt with University of Waterloo, multiple actuaries. I mean, the math is fairly straightforward. It's basically the way to go. But here's the thing. What's the criticism? This is what I would love to know, Dave. What are they telling you your run? I think, again, nobody ever gets back to me with specific math or examples of what I'm doing wrong. They're just annoyed that I'm saying it because again, it's not the way. Now, I think the industry has improved greatly, by the way. So I ran into this issue much more 25, 35 and 40 years ago. Now I think you see a lot of the people in that industry who do sell term insurance and they have their own money products, TFSAs, RSPs, whatever they're using to invest within those containers. So I don't see it as much, but you certainly still see it a lot. Now, there are some. some usages. I mean, you are also among your many, many skills, you're an expert in corporate financial planning. And in some instances there, used in cash value insurance can make some

sense. But I think for the average person, the kind of person I deal with, I almost never see an example where I would go with that. I almost always think term insurance is a better match to their needs. 100% it is. And when you think about why you need life insurance in the first place, right? Like there's three purposes it needs. One is indemnity, making sure that when you die, the people we look behind are going to be taken care of. If you get sold insurance without needing that, without having that already is a question mark as to why. And that need diminishes over time, right?

Yes. Now, the second one is estate. If you have an immutable object, like a cottage that you want to leave behind to the family and there's a large tax bill on that or family business, someone's got to pay that bill, right? So yes, absolutely, there's a need for permanent insurance in that case. Then as for the cash value piece, the reality is, and this is where I'm going to basically say the problem is, is more often than not, that gets sold. without other financial considerations being taken care of.

Like, I see this stuff gets sold without RSPs being maxed out and TFSA is being maxed out or, you know, basically not even enough of a slush fund in the corporation to deal with a weathered storm. Like, it's just, again, it's the incentives, because again, these not, especially when it comes to these cash value ones, the numbers on the premiums are significantly higher. And guess what? This is the other one. Of course, the base rate on commission is significantly higher too. So dollar for dollar, for every dollar premium going in, you make more money, an advisor or

Insurance agent makes more money from a permanent insurance policy than to do a term. So no surprise. Charlie was right. You know, you made a great point about if you have a cottage. And of course, in Canada, we've seen some of these cottages go up 20 and 30 and 40 times in value over the last 50 years. It's crazy. Some of these were bought as little shacks and now there were millions and millions of dollars

have been added to. But if people want to keep them in the family, that can cause a major tax problem where they need some permanent insurance. I agree. But I'm now seeing that move over a lot to where people just have pent up capital. gains, but it's on very liquid securities. Yeah. They don't necessarily need to cover that off with insurance.

What are your thoughts there? Well, I think it comes down to going back to the why. Let's forget about the tax implication, right? Like, what is it you're trying to accomplish, right? So I'm going to touch on the cottage, right? People will say, I want to leave the cottage behind the family. And it's like, well, first off, do the kids want it? Secondly, do you have more than one?

They're going to be able to deal with the conflict. There's all kinds of other family dynamics issues to deal with before that, right? The tax bill is secondary. We can figure out to deal with that afterwards. You know, you do have a lot of these. It's a large pent-up capital gains. Let's just use NVIDIA as a topic of the day, where you have a lot of NVIDIA, you know, you take a flyer on that or even Bitcoin if you were someone in that space. The reality is that, yeah, there is a massive tax bill if you get out of a large capital gain. Now, massive tax bill. It's 26% roughly depending on the province you're in. So it's actually not that bad first and foremost. I think the bigger concern is that people are concerned about the tax bill and not concerned about the volatility or it all going wrong. And we've seen this happen countless times where people were like, I don't want to give that I don't want to pay that much tax. Well, the problem is, if you don't, and this thing gets cut in half, you just lost

a big chunk of your wealth. So, look, what can we do about that? One of a couple of things. They can, you know, we have a client who did really well in Bitcoin and wants to continue to hold it. And we've talked him into taking enough off the table to sustain his lifestyle at the current level it's at, and then the rest of it is gravy. Yeah, that's wise.

So that's one thing. It's like, let's take the hit on the amount we need to take the hit on, right? Now, that's if you're lucky enough that you have one. way more than you ever spend at this point, right? You're not there and you're concerned about that. One of the things we do for clients is we will basically look to buy protective puts or choler it so we can limit the downside. We're going to ensure the downside using options.

But overall, the goal has to be to get you out of there. It has to be to get you out of that deep concentration and there's something more diversified to be more protective of what you're doing. And then as for the estate issues, like if you're, you know, the reality is, is that you could have a large estate, if you're someone who's in that situation with large capital gains and a potential in your advanced age, right? Then the question becomes first and foremost is you can have to tax bill. How much money you leave me behind? Is that enough? Are you good with that? Here's the thing. I literally talk to every client about what their aftertax estate

bill looks like and the fact that we can cover that with insurance that they want to. It is probably sub five percent of clients who ever take this up on doing anything about it. Because you know what happens? They look at that and say, that's probably too much already. Right. If you're in that situation where you have this, you have such a tax bill problem that the tax bill is so big that you're talking about hundreds of thousands of not millions of dollars in tax bills, that means that the top number, the actual net worth is talking about is huge, right? So oftentimes you say, okay, so here's the estate, here's as much as going to taxes. Well, that sucks of going to taxes. Well, I cover this in insurance. But like, yeah, but I'm still leaving the kids this much money. That might be too much, right? Like, if that's the case, then who cares? If it's not, if it's not, then probably, you know, quite honestly. you're in a situation where you have dependents who need your support and you had a need for insurance beyond just that tax bill in the first place. So I think it's, we're letting tax conversation basically kind of mask the bigger need question. What's the need for the estate? What are the need for the dependents? What are those? Regardless of what your tax bill is over here

on your assets, we have to address this first. Can that be addressed through the assets you currently have? Yes, no. Is the tax bill going to make it too hard to basically meet that need? If yes, fine, then we have an insurance need. If you don't have the assets, then we need the insurance. Yeah, you said that very well. And I 100% agree with all of that. I also loved the point you made when cottages came into the conversation about how hard it is to pass the cottage on. Wow, have I seen a lot of that in my life. You know, you get two and three kids inheriting it. It's crazy how difficult it is to make all of that work. They're at different economic levels. Someone to expand it, someone to let it go. When do you want it in the summer? When do I get it? It's just on and on family

friction. Maintenance, you know, spouses getting involved, weekends of preference. The best quote I ever heard on this was from the state lawyer who on stage at the Society of Trust and State Planners once said, as far as I'm concerned, there's only two ways to deal with cottages. A, sell them to disperse the proceeds, B, burn them to the ground and disperse the insurance proceeds. I think selling would disperse in the proceeds, by the way, based on my empirical evidence, makes a lot of sense. But funny story along that line, say true estate expert was saying you have to encourage people to have conversations before death about how the cottage is going to be handled. So I went out and did that in the video.

I had a buddy of mine and Sarnet come up and say, Dave, that was the worst advice ever. We had the conversation before we died. Now they're fighting already about the cottage, but I have to listen to it. At least if they fought after I was dead, I wouldn't have to put up with it. So there's no easy answer. Cottages are tricky. Look, and if they're fighting, you already have your answer. Sell it.

Yeah, good point. You have your answer. No, very, very good point. You know, I don't think many people want to die and leave their kids not talking to each other, right? Yeah, that's why I like the corporate executives. a lot of cases, too, because I find that when you use the siblings, their kids as executors so often it leads to tremendous friction, especially with all the complicated estates. I mean, you've been in this business for 20, 25 years now. We've got hold coes. We've got foreign real

estate. We've got blended families. I can go on and on and private company holdings. It's much more challenging than it was two and three and four decades ago. It's very tough for the average person to step in as an executor and manage all of those things. Yeah. And look, they're not cheap. They're not cheap for a reason because it's hard. It's a lot of work. It is. It is a A lot of, anyone's ever, you know, ever had to be an executive for an estate knows that this is a thankless, hard, pedantic job to go through everything from canceling driver's licenses to transferring corporate shares. It is, you know, when someone passes away and I'm dealing with this fast, I'm like, okay, look, we got the financial plan, we get the state plan, we get all this in place. You got to understand, this is going to take a while. There is no quick.

There's no quickness here because of the complexity of your life, there's not going to be quick, but I'm going to guide you through it all. And it takes, it takes time. So, yeah, I'm a fan of corporate executives. I think often there, you know, the cost makes people stop and say this is an issue. But I'll also say there's another dynamic here. And that's, you may agree at a certain point in time. But towards ending, you know, everybody in the family may agree at a certain point in time, which should happen. But towards the end of a life, weird things start to happen, right?

There's, there's greater need for the parents to be cared for. And no, for sure, one child is going to have to step up and be the one is the point person on that, right? agree, they may even move in. And then the senses of entitlement for the longer it goes start to happen. They may be valid. That person may have done, you know, may have to sacrifice financially. There might be something where they should be entitled to more in a lot of people's opinion. But that sense of entitlements often at odds with the other people's sense of fairness, right? So you have those issues. And then you have issues where only one kid his name is an executor because they're the responsible one. Well, that executor's got the right to charge the fees at a corporate executor.

Absolutely. Right. Right. Same numbers. Exactly. Right. And, you know, I've seen it happen. out of spite where it's like, you know what? I wasn't going to charge anything, but you've been such jerks about this. Like, I'm going to charge my full five points, right? And, you know, it is, it is just harmony, family harmony is something that can go so sideways after someone passes away if you're not careful. And, you know, money is absolutely at the core. It's not just money that's the core of it. I mean, there's other family heirlooms, effects, cottages, you name it. Deal with these things while you're alive if you want your kids speaking to each other after you're gone. That's all I can say.

Well, I love all your points. And you mentioned family heirlooms. I have found that it's the non-valual family heirlooms, just the ones that have the sentimental value that create the second most friction after cottages. There's constant arguing about those. And that is something you need to take care of well alive. Do a lottery system, whatever you want to do, make it more luck-based and so nobody is offended. No, your points are all great.

Let's go back to insurance for a second because both you and I are very pro-life insurance, just as long as it's needed and it's the right type, et cetera. I find a lot of young Canadians with kids, they have an absolute need for insurance, are quite careless in terms of figuring out the amount. In fact, I find the majority in that group have too little life insurance, not too much. So group life insurance is a good and bad thing. It's a good thing because it gives some people some insurance. But it's bad because it makes people think the mentally the box is checked, right?

Right. There is never, the insurance company at no point ever calls you up and says, okay, let's do an analysis of how much life insurance you need in your group insurance policy. So that's the problem, right? The same problem exists with disability insurance, which I argue is more important than life insurance because that's the single worst financial thing that can happen to you when you're young. Critical illness to a lesser degree, but like really life and D.I. The big ones, right? So there is no fact check on how much you need. It is simply a system based on how much you make. And it is for the most bar, grossly deficient in most cases, especially if your high income earning, it can be really grossly deficient. So the

reality is, is that yes, unfortunately, most younger, most younger Canadians tend to be underinsured, especially when they have families. They often think that they, you know, they already have it through work. But the bigger thing is, is that, you know, I find that the trigger often ends up being someone else dying or them having, you know, exactly scared them for their mortality. Like they were driving home in a rainy storm and something happens. Like, yeah, I was thinking something could happen to me. I should look at my insurance. That is the worst time to look at things. You need to basically, you really need to look at things. I would say every couple years, take a step back, get a proper insurance analysis done.

What I mean by that is someone is actually going to either, A, do a complete comprehensive financial plan and shows you what happens when one person dies. That happens. What's the number? How do we not only just preserve the family's net worth, or sorry, the family's lifestyle, but what about how that lifestyle could change, right? What about how, you know, frankly, maybe that spouse isn't going to be ready to go back to work the next day?

Maybe they, you know, are not getting, you know, maybe we want to give them the option. to stay home and continue to raise the kids, if that's the case. What about the, what about those things you aspire for the kids that were in the financial plan that maybe you want to leave a legacy for now, right? Maybe you want to be a legacy to be helping them out in the first purchase of their home, right? So there's things that go beyond just, there's a needs analysis and then there's a wants analysis, right? What's the need to maintain the lifestyle? And then what are the wants for how you can enrich your family's life and make sure that they're truly going to be secure? And that's something that needs to be looked at, like I said, either in a financial plan or can be done in a

classic insurance analysis where people will ask you these questions, do the math and whatever else it is. What you don't want is someone to basically either look at how much money you have available to tell you how much insurance you can buy or to turn around and say, oh, you earn $100,000. Therefore, you need five times your income and earn it. Like, where's that never even come from, right? Like, I agree, especially with the size of mortgages that so many of the younger people are carrying. That's why I keep saying when I go in and look at friends' kids, insurance, the vast majority you don't have nearly enough. And your point about group is bang on, great to have.

You get it for free, it's benefit, but it's usually not enough. And I would argue group disability policies are often not great. I mean, I'm trying to be diplomatic, but a lot of higher income earning younger people certainly should be looking at an individual disability policy. Yeah, higher skill as well, right? Yes, higher skilled as well. And I would also say that the other, so mortgage insurance is a perfect example of another reason why people feel like this box has been ticked.

Oh, I have mortgage insurance through the bank, okay. So that's fine. I said, yes, it was the, do you want fries with that offer that came with it? But here's a couple of problems with that. A, it's a decreasing amount of insurance. So it pays, and it pays the bank. It pays the bank on what you owe. That's it, right?

So you don't get discretion. So if your family needs money, they're going to have to borrow it in order to basically, if you don't have the other insurance elsewhere. The other problem is, and this is one that people are not aware of, it's ex post insurance, right? So basically, they don't medically test you to see if you're qualified. There's a couple of medical questions that are vaguely asked, like, three or four of them. And sometimes they're not even properly asked because the person who's doing this is not licensed to sell insurance. So the reality is what happens is that you die and then they

check to make sure that you were insurable in the first place. And guess what? The terms on the terms on how they can get out of this are pretty loose and they can get out of it. They will and they'll just return your premiums and that's it. Versus a fully underwritten policy where you basically get, they do them out of the health history and they confirm that you're insurable and they say, here you go. And the way those ones work is that after two years, they can't even contest it unless there's evidence of like absolute fraud, like you didn't declare smoking, whatever else it was. But in the first two years, it's the contestability period. They do have the right to investigate because it is unlikely you would die within 24 months. But as long as you were

truthful, you're fine, right? So the reality is that that is what you want. You want fully underwritten because frankly, I don't want to know if I qualify after I die. That's bonkers. Does it scare you that you and I agree on everything? Does that, where did you go so wrong in your career that you've ended up on the same page as the wealthy bar? Well, I mean, after issue after issue. I can find your books sitting there. Maybe you're the reason.

No, yeah, no, you're very well spoken in all of this too. And, you know, I loved a line you had earlier that seems incredibly basic, but it's important to drive home to our listeners. When you go to look at your insurance needs, you literally just start by pretending that the one person dies. That's the best way to do it. Don't start getting involved in formulas, pretend they're dead.

And then, okay, what happens to our income? What happens to our cost? My argument is that people are really careless on thinking about the cost because their biggest cost is their home and most of the people aren't going to move. The last thing they want to do to young kids is to uproot them right after they've lost a young parent. So they're going to stay there. That cost doesn't therefore go down at all, which is one of the reasons why they need

so much insurance. Yeah. And if you do a proper, like if you do get into the formulas and do the need, so if you're doing that mental exercise, people say, well, I only need half, right? like, oh, we both make $100,000, we're speaking random numbers here. So if I'm gone, you know, I can need that. It's only you wouldn't even about kids. Well, no, hold on.

You were both, I think the stat was something like the average, the average couple spends about the equivalent of 1.6 times the, or, yeah, the spending for individual for a couple is 1.6 times the individual spending, right? Right. So there is a, there is a joint sharing of expenses that brings down the total need, but it's not 50-50, right? And to get rid of that, now suddenly that person, you know, those benefits, that income's gone. you're now carrying their share of it all.

So there's a problem there. But if you do a proper needs analysis, whether it's through life insurance or through a financial planning software or through an actual classification of that, you would separate out the expenses, right? You would separate out and say, okay, these are things that are going to continue on

when this person dies. And these are things that are not going to continue on when this person's gone as well. But overall, I mean, frankly, you know, we agree on these things, Dave, because I think we both agree on logic and math and frankly, in making sure we're secure. So I'm with you.

I'm with you. The simple thinking, oh, one last piece. One line that I despise, I've heard many times as well, you know, at least they'll have a house paid off and that's their insurance policy. I don't know about you, but I don't think losing my spouse, I'd want to be in a position where I'm forced to sell the home in order to be financially solvent. Agree. Ridiculous, actually.

Like when you think about that doesn't make any sense. So I'm hoping we're really getting through to people out there, younger people who listen, make sure you've got proper insurance. and I'd rather have a little too much than a little too little. And especially since term insurance for young people, especially non-smokers, healthy people, is very, very inexpensive. Well, I'll also say that your life's going to change. So let's just imagine, and I've had this happen with a young doctor who was just getting

married shortly. And it's like, look, some people keep telling me any more insurance. Like you don't have any life insurance memory now, but you know what? If you want to do it, it's not a bad idea, right? But here's the thing. Your life is going to change. If I did a needs analysis for you right now, the needs analysis is pretty much zero. you have no dependence, right?

But realistically, you're probably going to buy a house in this range. That's going to be X. You want to have two kids, right? That's going to add on this much. So the reality is that I can lock in like a 20-year term now for your need is zero. We ended up going this person as a high-income earner. We ended up going like about $3 million because they're adopted or whatever else. Said by the time you get to the point where that second kid is born, which is like your peak insurance need, that might be enough at that point.

Right. So the reality is, is that overbuying when you're young, especially if you lock in that price for, say, 20 years, which is not the cheapest form, but it's the second cheapest form, is probably a smart move because you will grow into the need and you will do it at a lower cost. Now, sometimes the needs diminish over the years. The kids are getting older. You can draw down on principle. Do you ever layer insurance policies? Yes. Yes. I love that you went there. So I believe in asset liability matching. Right. So what that means is, is that if I have a liability, it's going to. last X number of years, I need to have the money to basically fund it for those number of years and not necessarily beyond that. So when we look at life insurance and we're typically not starting with a young person with no obligations, we look at basically the family and say, okay, so if you're in a situation where you died tomorrow, the lifestyle would not be sustainable. You're still in this indemnity stage. We're not worried about the estate stage. We're worried about the indemnity stage. And we'll say, okay, well, your mortgage is scheduled to last another 15 years. We're going to extend

out a little bit beyond that. We'll get a 20-year term for roughly the amount of the mortgage. And then we'll basically get, or not the full amount, but part of the mortgage. Then we'll also have kids who are going to be graduated school in the next call it eight to 10 years. We'll do a layer on terms. So what we'll do is we'll layer on terms, you know, a 20 year, a 10 year, and maybe a five-year, and we'll basically what will happen is every time we do a review. Once that five-year period is up, we'll let it go. We won't renew it. And then, but we'll also reassess. Like, do you have too much at this point? Have you done a great job of accumulating? If so, great, we can lower the amount.

I had an interesting case not that long ago where it was a divorce case where, as part of the divorce, he had to carry insurance to pay the support if he died. But he was only on the hook for the support. So I said, this is, you know, I looked at said, this is great. I said, you're on the hook for 20 years, but here's what I can do. I can have, to make this cost effective. I'm going to buy a 10 to 15, a 10, a 20 to 15 to 10 and a 5. And I'm going to make him match the obligations. And at every five years, your cost is going down.

You know, you're one of the few people I've spoken to doing that. I've always felt that layering the insurance policies, and you gave such a good example there, I made up one for the book as well, should be seen more often. But you do not see it in the real world very often. No, I think you're absolutely right. And, I mean, I think there's a bunch of reasons for it. I think first off, there is, of course, a small incentive. I think the term is affordable.

The incentive is not that big between it five and 20. But there is one there. to call that, but it does involve more work and more thinking, more plotting out, right? And I think that it's also, also I think in general, people will default to the cheapest thing, right? So term 10 gets sold the most because it's kind of the sweet spot for what cheap is. And then sometimes people look at the term 20 and say, that's too expensive. I'll just like deal with the renewal when it comes up, right? And that's fair. You can, right? Sure. But the renewal is going to be probably it's going to be more expensive. Yeah, it's going to be higher. It's going to be like three times,

whatever we're more. But it's also going to be more expensive. But it's also going to be more expensive. than if you got a new term 10 at that time. And the reason is because the insurance companies know that you're going to go around and shop. And if it's cheaper, if you're healthies, you could go out and get the cheaper policy. They're stuck with a disproportion number of unhealthy people who can't keep it in a new. Absolutely. So overall, to me, layering makes so much sense. But it does require planning, thinking, and mapping out the actual liabilities.

Now, last question on insurance. Do you ever think it makes sense to buy insurance on young children? two to answers to that um i've heard a couple we've had this discussion with a couple clients where they basically said like look i know you said that i need to be insured because if i go like then frankly the kids will like if the kids pass away it's not it's a tragedy but it's not a financial tragedy realistic let's be realistic but the spouse basically one of the spouses said well there's no way i'm going to be in any kind of mental state to work if that happens i'm like a fair statement okay let's let's let's consider for that um we're a can't

makes sense with cash value policies. And I'm going to preface this in a second, is that insurance is unique in Canada in that is an asset that can have a deferred taxable gain that can be passed down between generations without triggering tax. And what I mean by that is if a grandparent buys a cash value whole life policy on a grandchild, and then in the will leaves it to the, leaves it to the son. It can basically pass down to the sun, no taxation. And if the son passes on to the kid, you can pass on no taxation. So that's an interesting twist, right, in that it's an asset that can be left without disposition. So the, I will look at that, but I will look at that only in rare cases. And I mean that when we

look at helping out or basically what we're going to do with planning around children in terms of giving them wealth, we always look at the RESP first. Let's make sure we get the education savings plan. God forbid they're disabled. If they are, we're going to get the disability, RDSP in place. Beyond that, clients will often say, hey, I would like to get like a, I'd like to set up a trust account, right? I'm not a big thing. fan of interest forecasts simply because the kids get control of them at age 18. That's right. You don't want to make, you know, if you're going to do something, don't put anything meaningful in their God, you don't want to put a big amount of money in an 18

year old's hands. Again, you and I totally agree. And we've seen it come back and bite people. Yeah. So then we look at formal trust, right? If you can do a formal trust, it's, it better be like half a million. Like, it better be big numbers, right? We did a bunch of stuff around formal trust and kids when the prescribed rate was down at 1%. We were able to loan money to a trust at 1%. and then basically we can take that money back, but now we're able to income split there as a completely legal strategy. We did that.

So frankly, I don't do a lot of, I don't do a lot of big trust planning with kids, right? Right. So when you look at, when the parents finally say, like, but I want to do something else. I'm like, okay, you want to do something else? Here's the option. We can do something like that.

And the numbers don't look bad, especially if we're going to give it, if we're going to do it before like a kid who was like two or three and we hand it over to them at 25, 26, it's not bad. Now people will say it gives them a head started insurance. That's not what it's about. What you want to do is you want to design these policies to be as cash rich as possible

because they will grow deferred. Now, that also depends on the risk tolerance of the parent or grandparent wants to do it because if they're really risk averse, this can look pretty good. If they're not risk averse and they're, you know, 100% equity, whatever else it is, they're probably better off just growing the money and leaving them in inheritance. So that's where I fall, by the way. Yeah. I think in a lot of cases, that's your better bet.

But I think all of your points are a good one. You're, again, to give you a lot of credit, you're one of the first people. I've asked this question of who came up with that first answer because I agree. If you think the parents are going to be so overwhelmed emotionally, it's going to affect their ability to earn an income, then that has to be factored into play. That's the one time I go, okay, I can see a bit of an exception because most of the other arguments made for ensuring kids don't hold water. But that one maybe does.

And so I get that. But, you know, the points you're making about the trust, remember the, and you know this, but the vast majority of the people I do with the vast majority of people out there, They can't maximize their TFSA. So they're not getting to the point of thinking about these things. I mean, think about trying to max your TFSA, your RSP, and your, our ESP now. I mean, with real estate prices where they are and incomes not having kept up, almost nobody can do that stuff anymore. No.

I mean, we're talking about, so do the math, right? I mean, what's the maximum of the RSP now? I always forget it was every year. Over 30,000. Yeah, 30,000 plus another seven plus for the TFS. Like, we're talking $40,000 in savings per person in addition to more. mortgage payments. So these are luxuries we don't have in general as people. Like that's, well, you'll laugh at this. I got a call maybe a month ago and a guy said to

he's young. He's 30. He said a maximum ARSP, a maximum ITFSA. We bought a home, but we were maxing for a year, the FHSAs. We're maxing the RISP. What would you do next? And I said, if I were you, I'd write a book. Because if you're maxing all those things age 30, you're doing a lot of things right. You need to teach other people. Obviously, he must have had or she must have had together, the family, a huge income because 99% of people can't do that. I'd also step back and say, I have one question for you. Are the things in life you're not doing that you wish you were? Right. Right. What balances he is striking. That's it exactly, right? Although he did seem pretty happy, I must say, in the phone. It's possible. I meant people

were happy with very simple things and more power to them, but like at the same time. I'm kind of like that, to be honest. Yeah. Like, I'm a pretty simple guy. Oh, I know from my time alone. Yeah. Like, I really do like to spend a, I don't spend very little because I care about money. I I tend to give a lot of my money away. I just like things like reading books and watching the Detroit Tigers and playing with my dog. I'm enjoying this immensely, but I want to move the subject to a little bit off financial planning. So to the reason I first called you all those months ago, you also know a tremendous amount about fintech. You're staying up in that.

You go to all the conferences. What are you seeing in AI? Let me just preface it by saying that when I ask the chat GPTs of the world and the other financial questions and get specific. So I give them, they're not very good. if I ask them general questions, they actually can give me quite reasonable answers. But anything where I say, this is the scenario, what would you do? They're weak. Do you agree?

Agreed. I would say that it is a tool like any other. In the hands of a skilled craftsman, it can make beautiful things. In the hands of an unskilled craftsman, it can make something terrible. The difference is the problem is that it always seems like it's the right answer, right? Right. So honestly, I catch, I use AI on a daily basis in countless ways. I fact check everything.

And the number of errors I find it coming up with enormous, let alone basic mathematical errors. I agree with you. Basic math, horrible. The other day I said, who led the American League of Triples? And it gave me the proper name and said with 212. I think they had 12. And you see this kind of thing all the time.

I don't know why, but I'm telling our listeners, do not ask chat, GBT, R-E-S-P questions. It has spit out so many bad answers in that particular area for us. So you're right. you've got to be very careful. The problem is you and I have the expertise to be able to fact check and go, no, that saved me time, but it's off there. The average person doesn't.

No, no. And, you know, that's the reality. When I first, when I first opened up chat GPT and play it with it, and I was wow for a second and started thinking about the ramifications. And I realized that people thought that this is going to replace the expert. I think it actually makes the value of the expert infinitely greater simply because in a world where answers are that easy, only the person who can call BS or say, no, that's wrong, actually has value, right? And in all honesty, I mean, in terms of the direction of this,

we hear a lot of animosity about where this is going to go, and I always hear the technologists talk about, oh, this is going to replace financial advisors for the record. I've been hearing technologists talking about replacing financial advisors with every innovation for the last 20 years. And what they're fundamentally missing is that this is not a numbers industry. This is a human industry. Right. And that, yes, the industry is far too often focused on the numbers and the product. But if you look at the evolution of the industry, for the last, well, forever, right? They started with access to markets.

Then it became, okay, access became commoditized. Great, I can make you a portfolio. Okay, great. Then portfolio management became commoditized. Then became, hey, I can make you a financial plan. Well, I will argue that that is still not fully commoditized because people don't do it. But it's becoming more at least commoditized

in concept of access to it. Then it's becoming, they started becoming more about really deep, comprehensive financial planning, or comprehensive financial planning. And if you look in the U.S., it's becoming more around niche financial planning. How do I learn everything about a certain type of person to be the expert for those people so that I can provide value in many other ways? The reality is, is that all the AI is going to do. And what empowered all that commoditization was technology and innovation, right, that made it more easy to get things done.

And an advisor managing $100 million today would probably 20 years ago needed five times the amount of staff they have now, 10 years ago needed twice the staff, now there at this point. But the reality is that the AI is going to enable us to be faster, better, and more efficient at what it is we're doing and allow us to basically have less overhead. But the direction we've been hitting for years is not towards products, it's been towards people. It's been closer and closer to the human experience. And that's to me, you know, basically one of the companies I advise is a company called Shaping Wealth, which is about application of behavioral finance within our industry.

That's the final frontier. It's how do we actually help the individual self-actualized by helping them get over their behavioral issues, not their money. issues. And you think in essence, AI could play a big role down the road there because it could be an ongoing coach. You know, you develop a bit of a relationship. Like, where is this five years from now? So you and I agree where it is now, where it'll be maybe in 12 and 20, but five and 10 years from now, does it continue to evolve in such a way that it can do some of that personal stuff, that coaching? So it can, but here's the thing. And I, again, because my experience with

shaping wealth and the people there, look, there is no model for human transformation in psychology that doesn't involve another human being, right? Right. I am sure that there are some people who will benefit from a artificial intelligence therapist making their lives better and great. I want to see that. But more often than not, like, it seems that technology keeps on pushing us more apart, but making us more sad, right? Like, we have, we have infinite levels of or super high levels of people in depression as we move more and more into our little digital silos. Do we really think that not relying on humans more is going to fix this problem. I don't think so, right? And as for being a coach,

absolutely can be a coach. Absolutely can do all kinds of things. But the reality is, is that like, look, I have to say if technology could solve all our problems, then I would have a six-pack because I could download any number of apps right now that could tell me how to get a six-pack. But I am not, I don't have a six-pack. Mark McGrath says you do have a six-pack. That's what he tells everybody that. He just randomly walks up to people and says it. It's quite odd. Mark also denies knowing me all the time. It's weird. Anyway, so So the reality is, is that human to human transformation and coaching, I think, is something it's not going to go away, right? And I think if anything, you know, it's really the future of this

industry, which will be empowered by AI. And yes, even AI coaches on behavioral finance for the advisors, which are companies I'm working with right now, to make us better at basically being able to understand the person on the other side of us. It's all going to be about what is preventing Dave from succeeding the way he wants to be succeeding, right? How do I, then like that framing. I like that. And we're not like, look, if it's something that's beyond the realm of financial, the financial world, something I can't deal with. I'm not going to deal with it. That's where I'm going to steer someone towards a psychologist, someone else's help. But if it is, you know, you can't live and get to the life that you want because of this

behavior. Well, what was it? Is it a financial trauma in your past? Is it something you feel you're sacrificing? How do I understand what it is that's preventing you from taking the advice? Because all advisors say something, well, the clients don't take my advice. Well, have you tried changing the advice, right? So how do I, how do I modify the advice to find something? something that is mathematically viable, but also behaviorally viable and sits in that Venn diagram where I understand you as a human so deeply that I'm able to modify my advice to make you successful. That's well said.

No, I think that's interesting. And you're right. These will all be empowering tools for people, especially the good craft people out there who know what they're doing. Okay, we'll let you go, but two more quick things. You have an affluent client base for the most part, I would think. Are you seeing them less interested in rental real estate right now that some of the challenges in dealing with the tenant review board and the math isn't as compelling, et cetera.

What are your thoughts there? So I'd say I've been seeing a downward interest for a couple of years. And now it's like no one's asking me about rental at all for a while. But for years, I was, of course, during the hype cycle, getting a lot of questions about this. And I would say, listen, I'm not going to judge. Here's a whiteboard. Here's my iPad. Let's do the math.

And we do the math on the place they were thinking of buying and showing them they'd be cash flow and negative. And they say, how's this possible? I'm like, you tell me the math is right. right here. Well, how are these people making money off real estate? And like, everybody's just hoping that this keeps ongoing, but can't go for, and I give them all the reasons why I couldn't go forever. And the vast majority of it ended up listening. And, you know, luckily, you know, so much about financial planning, David, I think you'll appreciate this is just not putting

yourself in a bad position, right? Like, I agree. So, so these people were not put in a bad position. We do have a couple clients who did put themselves in a bad position with real estate. And, you know, they're paying the price for it right now. But yeah, we're not getting a lot of inquiries about that right now. No one's, no one's, it's interesting, because, is what's the old saying about how to make money? It's buy low, sell high. Well, you and I both know the human behavior wants to do the opposite, right?

I think, yeah, I think we're all wired that way. I mean, we really are. I remember back in March of 2009, literally the bottom of the downturn with the credit crisis, so many friends were saying, I got to sell it all. The pain was so extreme. They wanted to stop the bleeding,

get out literally at the bottom of the market. And it's one of the reasons why I think people shouldn't pay much attention to the markets. If you're in there for the long term, then be in there for the long term. Don't watch. I talk all the time of the podcast about my father. He is oblivious. He pays no attention to any of this.

And that's served him very well. You don't get emotionally engaged and make bad decisions when you don't know what's going on. So he's, yeah, he's clueless. Yeah, it's the old myth of the old myth of the, uh, fidelity study that never actually happened or fidelity. Yeah. So everybody says this thing exists, but no one's ever seen it. Um, but it was the, the myth says that, uh, they did a study on the advisors, investors who

did the best. And it was those who either lost their past. password forgot they had money there or died because they never bothered logging and just let it ride. But you know the funny thing is had they done that study, I think it would have turned out that way. I, so if for real, I actually think it would have turned out that way. We keep talking about it because it resonates because we have seen the opposite and we believe inherently that it's true. And I agree with you. I wouldn't be surprised if it was true. I wouldn't be surprised if it existed and they buried it. No one's ever seen it. Okay. Let me ask you one last question. Obviously,

the age-old argument, passive versus active, you're seeing more and more people realize that it's just so tough for active funds to keep up to the broad market averages, especially in Canada, battling 150, 200, 225 basis point, drag of the fees. Are you worried at all that so much money is going into passive, especially south of the border,

that you've got indiscriminate buying, not based on price, not based on valuations, and we're back to Mike Green's point about we're putting the market up and giving it such big momentum that it could come back to haunt us, especially when we get more sellers than buyers as the baby boomers eventually retire en masse. Okay, there's multiple questions there.

The last piece, I think, is an inherent title way that will hit us. Let's be frank, right? I mean, it's no mystery, no surprise, no secret that every month, especially when she's the U.S., for example, what's happening down there, is that millions of people contribute to their 401Ks and buy S&P 500 indexes, all right? And that that index is concentrated in 500 companies, not the broad market in general. So it has created more disproportional growth, gains in large companies over time. So that's a phenomenon that we are seeing.

But it's also one that even before we had the 401K issues going on or before this dynamic happened, we saw the industry concentration at high levels previously throughout history. So that's not, I don't think we're uncharted territory on that point. I think the entire reversal of this, like, let's face it, this entire industry has been built off the, you know, the entire market's been built off the boomer generation. right it was you guys started making money you started saving now you're like at peak earnings or early retirement and you have more money in the market than ever, and you've got to flip that switch turn or later,

and that money is going to start to come out, right? Right. But that money is going to start to come out for consumption. And basically it's going to come out. The question is, what's the degree to which the people who are earning that money now, what degree are they going to be saving it? I don't know what that looks like. I don't, right?

Yeah, no, that's a good point, though. It is going to be coming up for consumption. I think it's also going to come out more slowly than was originally forecasted 10 to 20 years ago because people are keeping a bigger equity component later in life than they were 20 and 30 years ago. And RMDs and RIF minimums keep on getting pushed down and further back. There's talk about getting rid of them all together. So a lot of us can be based around people when people die. And then in addition to that, we have basically the fact that if it's not just consumption.

Some of these, this is the, you know, the boomers are the most financially solvent generation ever. And that money, I get, got a note, like many of my clients, some of us could come straight out of the RSP. money's going to go to taxes. The rest of it's going to go right back in savings. Right? Like so, yeah, so I don't think it's a full drawdown.

I think that there's a friction there. The, so you must see some gifting right now. I mean, I'm seeing more and more of that people 55, 60 up, giving money to kids now to see them enjoy it, to help them with their down payment. I mean,

this has become the big Canadian move. Yeah, I think, I think there's two stories there. There's one is the, is the first, getting them and getting them money to buy a house. Like that has been unfortunately a feudalistic trend

that is not good for Canadians in general. Like if the only reason you can get a house early on is because your parents give you money, we got a serious problem. We've got to fix that. Hopefully that reverses over time without too, too much pain. But the other one is like, look, it is actually quite rewarding in my job, quite honestly, to give money away. I got to say, but some of business foul on my face. Clients often sometimes question me about this. But the reality is that we get to a point where they're in their 70s and it's just like, look, you got more money you ever going to need and his size of the estate.

Like, if you thought about like, you know, what's going on with the kids? What's going on the grandkids? If you thought about like, you know, taking over the RESP? for the kids so make sure the grant is taking them you thought about family vacations while you can still travel i mean i had one one of my favorite clients who's now is 90s years ago came to me and said like i want to you know i don't think it can be traveled that much longer think about this big alaskan cruise for the family like how many people he's like 24 i'm like do it he's like what like you're telling me this is going to cost i'm like you can afford it i don't have to look

twice do it he's like but you're telling me to take money away from you and pay you less i'm like yes you are and i'm telling you to do it that's how much i want you to do it and it's like it's so rewarding to see them share that because then I talked to the entire family and they got back and everybody was just blown away by the experience and like that's what this is about like that's what being a financial plan is about is giving them that right so so the reality I do see that I'm going to see more and more of that I think the parts were but I also think it's also a responsible conversation about not making these people dependence right that's the problem absolutely balance exactly so it's an interesting balance is to gift but not make

them dependent upon the gifting and that is a delicate balance But, and then I want to go back to your ETF question one last, one last time there. Look, I'm going to go back to what I've seen on the academic research. Like, we still have price discovery, right? We still have price discovery. I do think that the ETF flows do kind of distort prices. But at the end of the day, back to the efficient market hypothesis, who am I to basically say that it's wrong?

And who am I going to take the, I'm going to make the bet that I'm right? And the market can stay irrational longer than that can stay solvent. So what is your option other than to basically either go, long for the ride and shake your fist at the sky or take that bed and produce negative alpha. Don't you, don't you wish that you and I, uh, like we both must wish that you could pick ahead of time the top performing, actively managed funds because we're both geeky research people. We would be throwing ourselves into that task to the end degree. The problem is I've tried it. Everybody I know has tried it and nobody can do it. Nobody can pick the future winners. It's that

simple. I wish they could, but they can. But also I've made the point over and over again that when you have a 2% fee, it's much bigger than it sounds. When you say 2%, it's 25% of the expected return. Yeah. And so trying to overcome that is just near impossible. Let me, let me give you the counterpoint, right. So the counterpoint, you're absolutely right from a, from a, can I provide, and this is where I get frustrated when I get prospects who have been trained to like look for the top performing advisor or how much you get to do. Like, I don't mind paying a high price as long as I get a good return. It's like, no one can promise you that. No one. You're buying into a crock. Like, Do not believe this.

Yeah. My counterpoint is always simply like, listen, like the reality is, look, forget the pay, forget the 2% fee. Let's just say you're doing a, we're going to use, I'm going to use Vanguard, the single ticket solutions, like 25 basis points. I guess you'll mark your portfolio, whatever allocation you want. You're great. Then you're paying the advisor, let's call them one point, right? There are a lot of ways advisor can provide value to make up that one point differential, right? I mean, like, the simplest thing is just even nagging you to making sure you're doing the same as you're supposed to get that money exposed the way it should be. Right. Like, that's just a simple thing.

But the number of things we can do that can basically help avoid crisis to help basically you preventing from doing the wrong thing. Never mind the outside the money decision stuff, the stuff around your family dynamics in life and how you basically and how wealth relates to all that. Like all of that, like it's really difficult to measure. And I get really, really frustrated by these ridiculous studies that try to peg advisor value at a certain percentage point per year because all of those things are trying to do is rationalize an MER. And it drives me insane. Right. It's so there's no way to do it. It's too idiosyncratic, right? Clients will say, like, what am I going to get on my experience with you? I'm like, I can tell you, like, what I'm going to do is a process. I can't tell you what the outcome is. I need to know everything about you first before I can actually start pulling these levers and figure out how to make your life better. And then that's today. What about the crisis that happens in three months? What about the decision that you basically need to make in six months? Like, your life is changing so readily that if I can just help you steer that direction, that make the right decision in those points, I will make that up. many, many times over. Now, there's some years where I won't make it up, right? Some years we're not. No, but I honestly, I agree with you. In fact, I get upset sometimes when people say,

well, Dave, you seem to be against advisors charging, let's say, 100 basis points. I said, I'm not at all. Like a lot of the Canadians have very complicated financial situations. The advisor can do so many good things in terms of we talked about insurance needs analysis, estate planning, dealing with the kids. If they have a corporate ownership, all of the things that come with that cross-border issues, there's lots of ways. Now, I would argue for a lot of normal income Canadians just starting out in their 20s and 30s, again, we can more or less do the following four, five, six things. You don't need a tremendous amount of advice in many cases.

But I agree with you, Camero and back. And I think you stated all of that eloquently. But to wrap up, two key points. I need you to phone my father because he agrees with you that we should be going on family trips. He's quite well to do at age 93, but he thinks I should be paying for them all. He hasn't paid for a single thing in years. I heard you've heard about his money, dinners.

Yeah, yeah, like he is. He is the worst. And then, of course, you know that my daughter is going to replay everything you said there to me. She's going to be sending me clips from my own podcast about how parents should be spending more money and taking more trips. So thanks for that. You're welcome. You did a great job. Like you really are.

I meant what I said earlier. You are viewed in this industry with tremendous respect. You know, when you have the Ben Felix's of the world and the Jason Heath's of the world, everybody knows you, respects you. You are the experts expert. Next time you come on, I want to. to talk a little bit about the expert witness aspect of your life that you mentioned, because I find all of that fascinating, no time today, but he's a wonderful job. We'd love to have you back on any time.

Thank you again. My pleasure. Happy to come back.