The Wealthy Barber Podcast - Rob Carrick: How Personal Finance in Canada Has Changed Over the Last Three Decades | The Wealthy Barber Podcast #3

Episode Date: October 22, 2024

Our guest this episode is Rob Carrick—one of the most well-known personal-finance experts in the country through his 30+ years as a financial writer and columnist for The Globe and Mail.  In this episode Dave and Rob discuss how personal finance in Canada has changed over the last 35 years including how more parents are helping their adult-age children financially, how social media is increasing the pressure to spend, why FHSAs are the ultimate no-brainer and much, much more. You'll enjoy this discussion with Rob Carrick. ------- The Wealthy Barber Podcast is Canada’s go-to source for approachable, entertaining, and free financial education. Hosted by none other than David Chilton—former Dragon on CBC’s ”Dragons’ Den” and the best-selling author of ”The Wealthy Barber” and ”The Wealthy Barber Returns”—this podcast is here to help Canadians manage their money better. Much better. Find all episodes and more Canadian personal finance content at https://thewealthybarber.com. ------- Show Notes: (00:00:00) – Introduction (00:03:30) – It's More Expensive to Have Kids Today (00:06:01) – Pressure to Spend (00:07:24) – Crazy What People Spend on Cars (00:09:24) – Spending & Lines of Credit (00:12:27) – What Dave is Seeing From People's Spending Summaries (00:13:47) – It’s Financially Difficult to be Single (00:15:12) – Costs Are Rising for Seniors (00:19:06) – More Parents Are Helping Their Kids Financially (00:22:09) – People Need Help with Retirement Planning (00:27:05) – Fee-Only Financial Planning (00:31:19) – Divorce Rates Going Down (00:32:18) – People Are Having Fewer Kids (00:33:13) – Boomers Had It Easier (00:36:18) – Pensions Are Making a Comeback (00:38:18) – Counting on Inheritances (00:39:05) – Some Young People Are Giving Up (00:40:16) – Anyone Can Manage Their Money Well (00:41:24)  – Is Personal Finance Harder Today? (00:42:17) – Pets Are More Expensive Than You Expect (00:44:30) – You Have to Make Spending Tradeoffs (00:46:16) – You Feel Better When You’re On Top of Your Finances (00:48:44) – Debit vs. Credit Cards (00:50:54) – Should Couples Manage Their Money Together? (00:54:01) – FHSAs (00:55:08) – TFSAs (00:58:11) – The Problem with the Bank-Branch System in Canada (01:00:23) – FHSAs Are a No-Brainer (01:03:39)  – Why Hasn’t Canada Embraced Passive Investing Like the US? (01:05:38) – The Wrong Way to Use ETFs (01:08:26) – Men vs. Women Investing (01:12:19) – Why Don’t Canadians Use Mortgage Brokers? (01:14:08) – RRSPs are Still Great (01:16:48) – Conclusion

Hey, it's Dave Chilton, The Wealthy Barber and former Dragon on Dragon's Den. Welcome to The Wealthy Barber Podcast, where 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. Hi, everybody. Welcome to episode number three of the Wealthy Barber podcast. Pretty excited today. I've got one of the most well-known experts in the country on the personal finance front, Rob Carrick, Globe and Mail columnist. Rob and I have known each other forever. We'll talk more about that in a few moments. He's very old, like me. He's been around a long time. He has wide-ranging knowledge.

He really does. I think Rob is one of the best personal finance writers in North America, not just in Canada, but in North America. Why do I say that? Am I just buttering him up because he's about to be a guest? No, I say that because Rob was ahead of the curve on a couple of things. Number one, he started talking about psychology, human nature, and a lot of those types of things before behavioral finance even was a formal thing. He was definitely ahead on that front. But the thing I think that

differentiates Rob from so many of the writers out there, so many of the really good writers, even the experts, is that he has this tremendous pipeline to the reading public. They give him questions all the time. They respond to his articles. They respond to his podcasts. He can see what people are actually going through. What do they understand? What don't they understand? Where are they going wrong? Where do they need the help? He's not just talking theory from textbooks. He's on the front line dealing with these people. That's what makes his articles so, so good. So this is a great guy to have in the podcast. Outstanding communicator, Rob, welcome. Thanks, Dave. And it's really good. You and I have known each other forever. You interviewed me in the mid-90s when you were with Canadian Press. Yeah.

And I was in Ottawa. I was actually in Toronto. I was working in the Canadian Press Business Department. And I don't think the ink or the wealthy barber was even dry yet when I interviewed you. You were a boy and I was too. And we had a great chat. And when I talked to you, I thought, wait a second a boy and I was too. And, um, we had a great chat and I, you know, when I, when I talked to you, I thought, wait a second, I can understand this now. Like I was, we had a stack of these dusty old personal finance books for like the eighties in our office.

And they were like, they were all written for like, you know, rich people who had their mortgages paid off. And, you know, like, what should I, you know, top up my RSP or buy a second property? It was all for rich people. And you were the first person who came and sort of punched through all that and said, personal finance is for everybody. And let me show you. And it resonated with me and I knew what it would resonate with readers. And so it did. Well, thank you. No, those are good. Great meeting. I remember it well. And it's amazing how little you and I have aged over the last 30 years. It's incredible. I mean, I think you look basically identical. Yeah, we look the exact same. Now, a funny first

question to start, but have you noticed when you get to know intimately the personal finance writers out there, the true experts, we almost all have two or fewer kids. We figured that part of this out. Do not have three, four and five kids. Yes. Yes. That's so true. And you know what, Dave, are you, when you look around at what people are spending on their kids now, are you not grateful that your kids are, are, are older? I mean, when I see what parents are laying out for their kids now, in terms of activities and sports, even the sports are like, you, you, you know, it's just like, you can't just have your kid in a sport. The kid has to travel around the continent for tournaments and stuff. And, you know, activities are a bit ramped up. It is a full other parenting ballgame, cost-wise.

And I haven't yet done a video on what some of these families are spending on their kids' extracurricular activities. But it is shocking by any measure. There's no way when I start giving these figures, people are going to say, yes, that makes sense. It's nuts what people are willing to do on the sports front. Oh, I know. I know. And, you know, and then there's just plain old things like summer camp, like you're two working parents and you need to sort of slot in the summer. Where are my kids going to be once both of them in camp? Well, camps are massively expensive. They all become so specialized, you know, robotics camp. They've got to have like technology there. And so your camp costs are big. Your sports costs are big. A lot of this stuff

existed when our boys, they're now 27 and 30 when they were younger, but they were all scaled down. You didn't, it just didn't seem to be so overwhelming. Absolutely true. I mean, I'm not kidding when I say when we were young kids, seven, eight, nine, my father, mother, they would just not send you to camp. They'd say, just go play with your friends all day and we'll see at six o'clock for dinner. Yeah. And tutoring, forget about it. Summer camp was just like, go out of the house and play on the street. It's very true. It was simpler times, right? It was.

No, the cost of raising kids is nutty. Now, grandparents seem to be a little bit more involved in sharing some of the costs and being generous. My challenge with grandparents is the gifting is insane. I don't know if you saw that article a couple of years in one of the major U.S. newspapers, but they had a picture of the standard Christmas tree and the gifts surrounding it 30 years ago. And then a picture today of the standard Christmas tree and the gifts surrounding it. And it was hilarious. Like when you and I were young, we used to get one big gift.

In fact, you'd phone your friend and say, what was your big one? Now kids are getting all these electronics. It's nutty. Yeah. It just seems like every aspect of spending has been revved up and amplified. And there's so many different reasons for it. But the expectations on people are so high. We talk about why are people doing this?

Well, they feel they have to. And that's what scares me in personal finance right now is this force working on people to get them to spend. And, you know, we tell them you should do this and you should do that. But we don't understand the force they're under, the influence they're feeling to spend. And, you know, it just it seems like every couple of years there's a new social media channel that's adding to the signal. And it's just it's people cannot resist it. Well, you just, it's, people cannot resist it. Well, you know, it's interesting. I pointed out in the Wealthy Barber Returns,

everybody out there wants you to spend. The government wants you to spend because they want the economy to be strong. It helps them get reelected. Obviously, all the retailers, all the people marketing new things want you to spend. Your kids want you to spend. Your reptile brain wants you to spend.

There's very few people who don't want you to spend. Your futureile brain wants you to spend. There's very few people who don't want you to spend. Your future self, Rob Carrick and Dave Chilton, may be the only three people who don't want you to spend. We're up against an army of people feeling the other way. And with social media, to your point, able to market all of these things so effectively and build the FOMO, it is really difficult. You know, the area of spending that baffles me the most is cars.

Me too. I'm a car guy. I've owned a car since I was 16. I love them. My dad was a sports car fanatic. And I've always owned a car. And I never won't own a car until they pry the keys out of my cold hands. But when I see people driving, I don't get it.

Like, you know, I remember when a German car was like strictly for like the wealthy and now everybody has one. And it's like, I just look at them and I know cars and I know what they cost. And I just don't get it. What about you? Rob, to be honest with you, I struggle with it so mightily in the last six months as I look through these spending summaries that I just shake my head. I've got a lot of young people who are saying to me, and they are a hundred percent right, that homeownership is pinching

them to the nth degree. And they're a hundred percent right. They're having trouble saving the 10 to 15% that I advocate, that you advocate for, yet they still drive very expensive cars and often drive too expensive cars in the family unit. It doesn't make any sense. Something has to give. It's unfair to the people that are 20s and 30s, but because they have to spend more in rent and more on home ownership, something has to give

if you want to do the proper amount of saving. It's got to be in the car area to some extent, and yet it isn't. In fact, I think spending on cars in that area have ramped up over the last five to 10 years. I don't get it either.

Yeah, I mean, I hear stories about young men buying pickup trucks, you know, that is, that's where the auto industry makes its big bucks. For sure. And if you're, if you've got a job where you're, you're hauling stuff, sure. Buy a pickup truck. But to buy a new fully decked out one, you're probably talking what about $70,000 more. Yeah.

And your monthly payments are probably darn close to a thousand dollars more. Yeah. And your monthly payments are probably darn close to a thousand dollars. And I just do not know why you would want to put yourself under that financial load. It's brutal. It is. And again, it's a problem that's worsening. It's not getting better. So I don't know what to say about that. I was pretty hard hitting on one of our earlier videos. And I think a lot of people want great point and then went and bought a car. Like it's just something that's so difficult to fight through. Does it tie back to your other point about how we see now on social media, what our friends own and all of this type of thing picks up its own momentum. And it's almost a self-fulfilling prophecy. We see it, we want it, we buy it, the next person sees it and you just get caught up

in all of this and can't seem to break free from it. I think there's a lot to it. I think there's something in our society where we feel like we have to have this to feel complete. It's not just matching up to our friends, but it's internal. We need to spend. The act of spending makes us feel alive. I don't really know what it is. The phrase retail therapy is casually tossed

off, but there's a lot of depth to it. And I think there is something about consuming that makes that actualizes and makes us feel good. And the essence of personal finance is living within your means, like live a little below what you can afford to spend and then save that. But it is so hard. And, you know, in fact, if you look at since the wealthy barber came out, like how much headway do you think we're making on this? You know, you look at debt levels, you look at house prices, you look at people are spending on cars.

The average car payment is like about $800. I mean, I just, I'm thinking, how can you save if you have a mortgage and you're paying that on one or two vehicles, how can you possibly save? You know what? It's a pitched battle between the common sense of personal finance and spending habits right now. It really is. And I mean, again, looking at these spending summaries, you see those exact figures you're

talking about with the car costs, the high home ownership costs. And so what I'm finding for the first time, the last 10 years, I'm seeing people who are using forced saving, save 10%, save 15% into a group RRSP, into a TFSA, whatever. But on the liability side, they're offsetting it by constantly bumping up their line of credit amount. And so their net worth statement is not changing a whole lot. And they keep thinking, I'll get at it later, or we'll address this problem six months down the road, but we really needed this in the short term, but they aren't going to get at it later. These lines of credit just keep growing in value. I mean, lines of credit, it's unbelievable. How many of the people I crossed paths with who are in trouble, it's because of their line of

credit. Yeah. I mean, the line of credit is like how you diagnose someone's ability to live within their means. If it's more than like a couple thousand incurred for a surprise expense, and that's very manageable, they'll pay it off pretty soon. And that has just become a, you know, they're, they are chronically living above, uh, beyond their means. And how do you get them back on side? It's difficult, especially we went through this five to 10 years ago and it's still happening, but I really saw it then renovations.

Ashley, we went through this five to 10 years ago and it's still happening, but I really saw it then, renovations. And so many people got a big line of credit available to themselves, major renovation, justifying and say, I'll get it back when I sell the house down the road, et cetera. But of course, as rates went up from two and 3% of the line of credit to six and 7%, their carrying costs were flying through, sometimes tripling, often doubling. And it's really pinched them and again, made it impossible to save money. Dave, I'm curious about those spending summaries you're talking about. Share one with us, because I'm curious, you know, professionally, like just one that really sums things up for you. Well, unfortunately, I can summarize it by giving you not just one example, but dozens that are looking at the same types of math.

And it's the complaint that's justified. Our homeownership costs are killing us. But then beyond that, we've got food inflation that's way past where the government says it is. There's no way it's 20% over the last three years. Anybody in his grocery store can testify to that. You've got the car issues. You've talked about the kids and the expenses of raising kids. People are renovating more than they probably should based on their income. You add all these things together, and a lot of people, instead of saving 10% to 15%, are overspending by 5% to 10%. And how are they doing it? Because they're creating more and more debt. I mean, you've

seen the debt to GDP figures, the highest in the G7, and it scares me. It really does. It's one of the reasons why, by the way, I don't think rates could have gone much higher and almost had to start heading back down. Government debt too, is that we were going to overwhelm society and overwhelm the individual in Canada. We were going to have to de-link from the States. Even if the Fed hadn't started going down just after we did, I think we were going to have to keep cutting rates to some extent because so many people are pinched right now. It would have wiped out the economy. So just the overall debt I see in this, but there's other observations. One I think that's really jumped at me is how difficult it is to be single in today's society because these housing costs we're talking about when you aren't dividing by two are wacky. And

yes, some single people are very young, get roommates, et cetera. But when you're in your thirties, et cetera, and don't necessarily want that lifestyle, you want to live on your own in your apartment that you're renting or try to buy a small home, you better be making a ton of money or this is really, really tough. I hear a lot of single seniors complaining. Yes, because the tax breaks do not favor them. It's like, it's so preferential from a tax point of view to be in a couple when you're retired. And so you've got the housing issues cost-wise when you're a single,

and then you multiply that by the government doesn't favor you with all these tax breaks. And it's interesting. I have persistently heard from single women because they tend to live longer in retirement. And they're making this cogent case that they're discriminated against the tax case and they cannot get extraction in Ottawa. You know, this goes on like this. It's, it's, it's many governments. There's just,

I think there's a story that is no one has any interest in. So they, you know, you live your life as a single and you're penalized and then you get to retirement and it's even worse. And no one's, there's no interest in equalizing that. I agree with all of that. I mean, it's always favored the couple later in life. And I think it is a challenge. There are a lot of seniors really pinched right now. I mean, I was talking to a couple other financial experts lately and saying to them,

we've got to be so much more careful about saying, hey, you stop spending money. In your 80s, you don't travel as much. You're not doing as much in the lifestyle front. Home assistance, or if you go into assisted living, is so expensive now that it's almost quite the opposite of it was that we taught 10 and 20 and 30 years ago that your spending was going to decline at 78, 79, 81, whatever. It's actually going up for a lot of people. Yeah, I'm starting to hear a lot more worrying about that on the part of retirees. Like retirees are like, it's hard to financially be in retirement. You know, there's this whole turn my savings into income thing. And like a lot of people are really struggling with that and how to do it sustainably and what accounts do I take it out of and how do I not pay tax?

The whole tax thing, we could talk about that another later on, but the long-term care thing and the home care thing are starting to trickle in because, you know, boomers have themselves in some cases, very old parents. Yes. And so they're getting a firsthand education. Like you could be retired and have aged parents now. And the costs are starting to scare people. I just had an email from a guy who had a friend whose couple, the husband naturally is the one who's ill and the wife is looking after him.

And the costs of home care are eating up like 60% of their income. Oh, I'm going through it, my father's 92 almost, and he's running into some health challenges and again, moving to assisted living now and looking at the cost, then you've got to get extra help in on occasion for certain things. It really does jump up. In fact, we're thinking of putting them down. My mom's 96. Your mom's 96? My mom's 96 and she's living, she's living in a retirement home and there's some extra help is needed. And, uh, you know, you know, I think it will be affordable for people, you know, as long as they don't have grandiose plans about where they want to live and that

sort of thing. But, you know, there's all this talk during the pandemic of, oh, I would never go into this kind of home. Well, a lot of people are going into those kind of homes because living at home just is not practical. You don't want to have all these strangers going around in your house. Retirement homes and long-term care homes exist because they serve a definite need. But if you do want to stay at home, the costs are staggering. Staggering. To get someone to be assisting you for eight hours a day or even a couple of hours a day, I think people are going to be quite shocked at what the hourly and weekly and monthly and yearly commitments are. And you can't just say, well, you know, you'll come a couple of times if a senior needs the help, they need it all the time.

And I think, you know, longer lifespans mean we're going to be living longer, sicker. And that I don't think is fully understood. I couldn't agree more. I'm living it. I think longer lifespans mean we're going to be living longer, sicker. And that I don't think is fully understood. I couldn't agree more. I'm living it. We're seeing it with a lot of my parents, friends who are still alive. It's so challenging. And you made a great point. When somebody's trying to stay in their home and they need help, they don't need it once

or twice a week. That's a very infrequently seen situation. They need it on a daily basis, sometimes twice a day, sometimes eight hours a day, occasionally 16 to 24. You look at the total cost, it's overwhelming. It's a big challenge. I joked earlier, we should put my father down. Well, he's made that joke many times. In fact, he has said, would it not be better if we all just passed away at 82? That's him saying that, you know exactly how long you're going to live and you can plan with your finances on that front. I don't think we're going to go that route. I don't think we should go that route, but I get his point, which is that you can make your numbers work.

It's very difficult when you might live to be 96, like your mom or 102. I won't, by the way, give out your mother's number because when my dad listens to this podcast, he would definitely call her for a date and I will spare her that. I really will. She might pick up. I don't know. She might pick up. Yeah.

All of this really concerns me. And I'm seeing a lot of parents, of course, now giving a tremendous amount of money to their kids to help them with a home purchase. And they're thinking we're going to be okay, but they aren't really fully aware of what their costs are going to be like later in life for all the matters we're discussing. Yeah. You know what the concern parents have about their kids financially is almost at a frantic level. And I find when you get together with people who have a millennial

and Gen Z age kids, conversation will always get around to, do they have a house? What are you doing to help them get a house? What other financial assistance are you providing them? You know, we, you were at a somewhere and talking to another group of people who all had kids that are, uh, you know, millennial age kids. And it was, it was during the pandemic and everybody was talking, oh, we gave them money for this, gave them money for that. You know, like to help us get better quality groceries, even that sort of thing, you know, paying cell phone bills still like going back from when they were kids living at home, covering, you know, car insurance, helping with groceries, helping with rent top-ups. And then of course there's the, you know, the big one, the house down payment.

And you probably saw that CBC, CBC study a couple of years ago about how much parents were actually giving. And it was about an average of $80,000. And the aggregate amount was multiple billions of dollars. I saw that study and I like a lot of the personal finance related things CIBC books out. I mean, Ben Tal is a very sharp guy. They've got other really very competent people. I think they understated the situation there. At one point they were saying 21 to 31% of first-time buyers are getting help from parents, but you talk to real estate agents and they say, that's crazy. It's 75%, not 21 to 31. And my experience matches up with the real estate agents argument, not with the CIBC study.

Yeah, no, I think the real estate agents in Toronto are certainly doing that. I mean, the ones in Timmins and North Bay, I'm not sure. But anyway, point to me was that, you know, the cost of, we were talking about the cost of parenting for little kids. And that's certainly worse. But the cost of parenting adult kids,

like that's a whole new chapter in the personal finance book. And I'm, you know, I'm learning it firsthand. And I'm thinking, know, I'm, I'm learning it firsthand and I'm thinking, I never thought that, you know, that I would have any financial obligations, you know, past university and they're in the workforce. Cause that's when I was graduating. That was it.

You know, you basically checked out, you know, and you were done with your parents and financial ties. But, um, you know, our boys are, I have two sons, they're both working. They both live on their own. They're both renting. And we don't see a clear path for them to own houses. We live in Ottawa and the housing market here is expensive,

but not Toronto quality expensive. And we're thinking, what might we be able to do? We have a financial plan or we've looked at it. No, it's difficult. I mean, again, we're all going through that same thing, worrying about the kids buying homes. I want to take a step back. You mentioned earlier, you hear from a lot of people looking for advice on how best to optimize their after-tax income in retirement. Where do they draw the money first, etc.

My argument is that's an industry weakness right now. There are some outstanding advisors doing a really good job of that. They've got advanced software. They know the questions to ask. They're putting the time into it. I mean, I've seen some of these plans and they're outstanding. But there's a lot of advisors not helping their clients at all in that particular area. The client never hears from him or her.

Yeah. You know what? The whole financial industry, I don't understand them sometimes because we all know it's an aging population. We all know boomers are the most financially successful generation. This is a money-making opportunity. They should be all over it. And yet I wrote a call the other day looking at some financial products for helping people turn their retirement savings into retirement income. There are very few of them and they have no assets in them.

Yes. Or minimal assets in them. And I actually like could not believe like how little interest investors are showing in them. I agree. I mean, it wasn't a purpose that came out with the one unique product and, you know,

they have great marketers of purpose and they got no traction initially. Maybe it's yep and so sun life's got a new product out and vanguard has like the vanguard uh retired the riff uh etf on which and they have multiple um asset allocation etfs designed to give you that's a fully diversified portfolio in a single package they're fabulously successful one of my favorite products out there and they're doing well. But the one designed for retirees to be like to make regular payments to a retiree, it's the smallest by far of all of them. So that's one side of things. The other side is, as you say, the advice side of things. Why are there not advisors saying, I am a retirement income specialist? That's what I do. You know what, retiring boomers, you come to me and I will map you out a plan. You'll pay the minimum of taxes. You'll get the maximum of income. I got you. We are going to snap this on top of the CPP and the

OAS and you are going to never worry about incomes, you know, ever. Do I hear that? No, they all want to be, I don't, I don't really know what they want to be. Like there's the segmentation and they're, they're savvy in marketing is so low level. I agree. Now I will say there are exceptions. There are some people out there who are doing a wonderful job on this. Cause I happen to have seen a few of them lately, but for the most part, you're a hundred percent bang on.

How do I find, how do I find those people? I'm, I'm Joe retiree and I'm thinking, I want that kind of advice where you just said, how can I get it? And like, where do I find it? Well, interestingly, I came across a few of them on YouTube. They were putting a lot of educational videos and I think having enough passion to put out strong educational videos and specialize in that area. So you can find them online a little bit, but you're right. For the most part, the average person can't track them down. It has to almost come through word of mouth. My argument, very much like yours, is somebody should be coming out with a business and saying, for $1,200, I'm making up the number, we will do your retirement income planning and we sell no products. We have no horse in the race whatsoever. We're not trying to make money from you commission-wise, but this will pay for itself many times over because we'll optimize your after-tax situation. I think that business would flourish because so many Canadians would say, sure, $1,200. Are you kidding now to have my whole retirement plan from an unbiased source? I'm in. You know what? You're onto something here because if you talk to people who do

that fee-for-service financial planning where I pay a flat fee i pay an hourly fee a lot of them have waiting lists right now people are so eager to pay money for advice and when you take the sales side out of it they relax you can see them relaxing um i've done i've done uh speaking engagements where in the course of the the talk i said and i have this spreadsheet is put together by a blogger of all these fee for service financial planners across the country. And if you email me after the show presentation, whatever you want to call it, I will email it to you. And I, when I get back and I look at my phone, people are emailing me during the presentation and there's dozens. I'm like, it's a very high

response rate tells me this idea of selling advice is really, really catching on. And you know what? I think, you know, people pay for interior decorators. They pay for personal trainers. The idea of having an advisor, it's, it's, people are very, very, it's comfortable with it. They're getting more comfortable with it.

And I agree with you. Someone who said, look, we'll,, look, we're the pros at this. And we have a system just give us, come in with a giant briefcase full of all your slips and your account statements, and we're going to punch this out for you. It's there for the taking. It is. And you use the expression retirement income specialist. If someone did that on a fee-only basis, they would have to lock the doors. They'd have so many people coming in. Look at your example about the people emailing you during the course of your speech. It's interesting because yesterday we had two women just in one day call looking for the best

fee-only financial planner. And they're just a little concerned they're not getting unbiased advice. They're not hearing from their advisor enough. They want to have a comprehensive plan that takes into account estate planning, tax planning, insurance needs, and so on and so forth. But they want it from someone with no vested interest. And that's been a tough business to run over the last 30 years. And Canada has not much traction. I'm on your side. I think in the last two or three or four, you've suddenly seen the demand for it increase dramatically. Yeah, we've hit an inflection point. I remember there were fee-for-service planners way back in the day, but they were for very, very high net worth individuals. And then a few people

tried to broaden it out. And I remember everybody saying, they'll never make a living doing that. And a lot actually didn't, but things have absolutely changed. People like the idea of getting answers to their questions. And that's what financial planning is. And my email in basket tells me that people are swimming around in information and cannot grab a load to something they can trust. Very well said. I mean, one of the things that happened in the old days, especially in the States, I would see this as someone would go into fee-only financial planning and they were doing relatively well, but they would look at how much more they would be making if they were actually managing the money and they couldn't turn down that temptation and they'd switch over to the other side, which by the way, there's lots of good people on too, but they wouldn't stick with

the fee-only financial planning. But now because you've got chat GPT and you've got all of this AI coming, the generative AI, I think their efficiency is going to be much stronger. They're selling time in essence. They're selling their expertise mixed with their time. And now that they can automate a lot of this and have generative AI help them out, I think the efficiency will grow enough to make this a very lucrative area. And I think you're going to see it explode in the next five years. And I think the rest of the industry better watch out because I think this can steal away a lot of the clients.

Now, I'm sure you've heard this too, that everybody who is an advisor is getting into financial planning. They all have the software, they all do this. But I wonder how much of it is actually happening in an effective way that is changing habits and deriving better outcomes. I mean, I think that's where they're falling down. And I think that's where the opportunity is for the pure planning people is to say, look, you know, the investing side is actually not that hard. We can get you to a robo advisor.

We can get you some asset allocation ETS. We can, we can do a few things or I can refer you to someone. But the planning is where is, is what's crucial. And that is what's going to make you feel better. Absolutely. And by the way, that's why you're seeing a lot of the advisors get into the financial planning because they are going more and more to index funds, et cetera. So they have to add value and the planning is an opportunity for them to do so. And if you're going to charge people 80 to 120 beeps, basis points, 1%, 1.2%, you've got to

justify it. You have to add value and financial planning gives them that opportunity, but only if they do a good job on the financial planning. You know what? If you have anxiety about your money, it's the planning that will make you feel better. The investing is tangential to that because all you need to know is, you'll need to know, how much did I make? Am I on plan? That's all. That's all that matters. Am I I am I am I progressing to where I want to be and if whether I'm making six or seven percent doesn't matter as long as I'm progressing you and I sound exactly the same in a lot of what we're saying right now because I couldn't agree with that more when I've helped people in the past it's when you give them that plan that you

can see their peace of mind come into play they're more likely to stick with it because anxiety is gone. They've got certain steps in place. I find them happier. I know that sounds corny, but I really do. When I've given people comprehensive financial plans, they are less stressed in their life and money stress is the worst stress. As I've said in other episodes,

it compounds all the other stresses in your life and they just start moving forward. And it's not the annual return rate, again, that dictates their happiness. It's the fact they know they're headed in the right direction. That is precisely what people want. They want to know, am I okay? And will I be okay? And if the answers to those are like all indications are yes, then that's something you can tick off your list of worries. You know, it's funny that it fits in well here. I said in a video a few months ago that the divorce rate is starting to edge down slightly. And I think you may see it edge down even further over the next 10 to 20 years because getting divorced is almost unaffordable now.

situation, that people are thinking, let's figure out a way to work through this somehow, some way, or even stay together, even though the love is gone in a cooperative fashion, maybe better for the kids and not in all cases, but that's what you're hearing more and more. Are you seeing that at all from readers? Yeah. I don't have any window on the divorce rate, but I do know that what divorce is like one of the great wealth destroyers, not like a gambling habit. I was like, I think people find out what they're going to have to sacrifice and you know how canadians love their houses that's usually going to be a casualty for somebody in the couple and you're right i think i think you know what the flip side of this is people having fewer kids you know our economics are are like dictating you know like families staying together

families are like families being created and families being destroyed on both sides it's like you know can't afford to do either talk about the kids i mean look at the data right now we're already sliding down in terms of number of kids per family and now it's going more like this like my kids are in their 30s many of friends are saying, we're only going to have one more than I've ever seen are going to say we're have zero and almost none of them, unless they're very affluent are planning on having more than two. Yeah. So major, major shift here.

I find there's a lot there, you know, there's, there's a lot of people who are saying, we're not going to have kids. And it's, I think maybe they might've trended that way, or they sort of had thoughts. Do I want to have kids? I don't really know. And then the economics come in and that cinches it. No, we're not. You know, my wife and I had our boys, you know, 27, 30 years ago.

It was like buying a house. What do you think? We're ready to have kids. Okay, let's have kids. You know, when we decided to buy our first house in Toronto was should we buy a house? Well, and I, I didn't really want to, but my wife said we should, and everybody in the family said we should.

So we did, we took six months and saved it out of payment. And then we bought a house, you know, a simple life of the, of the early nineties. And I think that, you know, kids are, you know, those two things are real indicators of just this higher cost of living and how dollars and cents are dictating what we do and when we do it and like how our trajectory of our lives. And I think a lot of boomers do not understand this unless they have kids of that age. And so there's like this intergenerational tension, which is, you know, it's given me lots to write about. Well, it's crazy. First off, when you said we took six months and saved for the down payment, there's a

lot of people who now want to come through our screen and punch both of us in the head because it takes years to save a property down payment. We hit it easier. We did. I have no problem admitting that. Way easier. Yeah, interest rates were really high, but they spent 30 years coming down after that. My wife and I never renewed a mortgage for a higher interest rate. Couldn't agree with you more. interest rates were really high, but they spent 30 years coming down after that. You know what?

My wife and I never renewed a mortgage for a higher interest rate. Couldn't agree with you more. How about the people out there, often baby boomers, people our age, who say, oh, it's always been difficult. It was hard when we started out too, and kids are traveling so much. Just look at the cost of a home relative to income or the percentage of your income that has to be spent on the home, including, by the way, rising property taxes, rising insurance, greater than inflation rate paces. I don't know how people can make the argument that it's easier now or the same now. It's not.

Well, it is categorically harder today. I would call them about 10 years ago saying that it was harder. Kids today have it harder than I did. And I sort of document all these costs and I've got all these A&B boomers. No, no, no. And they base everything on the high interest rates of the early 1980s. Right. Everything's that, but I could show them, but you were paying like 12,000 for your house though. So your principal wasn't that much. Anyway. But all those, that comparison I did now was way to date and it's far worse now because as you say, the divergence between incomes and

house prices is just widened and widened and widened. Making a house purchase now sort of crowds out everything. Like remember you used to say, it's so helpful when you get a start on retirement savings in your twenties and and 30s. Well, forget about that if you want a house. It's all hands on deck to get a house down payment. And then it's going to take a while to get settled in the house to try and find somebody to do your retirement savings. And I think people aren't going to get to it until they're 40s in a lot of cases. I know I'm writing The Wealthy Barber over right now. And that's my biggest challenge is I'm teaching a lot of the same things. But realistically, a lot of cases. I know I'm writing the wealthy barber over right now and that's my biggest challenge is I'm teaching

a lot of the same things but realistically a lot of single people and leave a lot of couples can't do it because the housing cost is absorbing so much of their income

that saving the 10 to 15% I advocate for is so challenging. You can see why people with defined benefit pension plans where they've got the forced savings and the government match because that's the employer

in most cases are so far ahead of the game now more than they've ever been because they're going to come out with a retirement income that's going to be very difficult for private sector employees to duplicate. Very difficult. Yeah. We've been talking a lot of negatives. Here's one small piece of good news. The number of the employers with pensions and the availability of pensions is actually on the rise. You know, what there's, there is a, um, a scalable defined benefit pension plan that is, it's a multi-employer plan. It's called CAT, C-A-T, that's for colleges of applied arts and technology. And they're, they're running around rounding up employers at all different professions,

all different sectors. They're diversifying their risk and they're creating a defined benefit pension plan or what is essentially a defined benefit plan. But Globe and Mail is a member. A few other media companies are a member. I think there's private sector companies that are members. There's public sector agencies. And they are enlisting employers and they're adding people to their roster with defined benefits. We've never had one before.

So there is a bit of hope that more people will have pensions, not just government workers, but private sector employees will have them as well. So it's not going to blanket the nation with pensions, but there is a little bit of positive traction there. I agree. And also on the defined contribution front, the matching is quite generous in many instances. And I think a lot of employers have wisely realized it's a great retention tool. And so they've gotten more generous on that front.

And people are taking advantage of that at a fairly good clip, even though they're pinched because of homeownership, et cetera. Most people think that's the one thing I can't turn down. Some people unfortunately still do, but the vast majority of people I run into are taking good advantage of that. And that's good news as well. Yeah. But we have to accept that, you know what? At max, what, 4 in 10 have pensions?

Maybe it's more like 36%, something like that. And you're right, the other 40%. You know, how do you see all this playing out, you know, 20 years from now? Very worried. Because, again, I'm seeing these spending summaries and I'm seeing how little is being saved. In fact, lots of people going backward because I count the line of credit as a liability, obviously. And so I'm very concerned. I think a lot of people in the back of their minds are counting on inheritances to make a fairly big difference for them. And that's a tough thing to do because people keep living to be so

old. They have to have a fairly good amount of capital to cover all their costs, assist the living, all of those types of things. There's multiple numbers of kids involved. You can't be sure an inheritance tax won't come into play. You don't know what investment returns are going to be. People's withdrawal rate can, of course, take their own monies down. So it's tough to count on that, but I can tell a lot of people in the back of their mind are thinking that's going to be a part of their solution.

And then there's the idea among some young people today that, oh, I'll never retire. So I'll just worry too much about spending. I'll never own a house, so I worry too much about spending. That sort of worries me too. I know it's sort of a young person's view. And then as you get a little older and you have a little more success in life you'll realize that everything still can theoretically be attainable but um you know there does seem to be a tendency uh an open-mindedness to just sort of capitulating to all these practice pressures and all this negativity and thinking i'm not gonna really i don't really need to develop good

financial habits because i'll never own i'll never I'll never be able to retire and all that stuff. And I think it's really important to try to give people encouragement, to try to build some good habits. Not all the good habits. And you don't have to be like a personal finance rock star, but do a few good things and just stay on the track and wait for that day when you get that promotion, you get that first job that exceeds your expectations or when you meet someone and you can team up and you've doubled down on your finances and things look a little bit more optimistic. I'll give you some good news that I find fascinating. I get to see all these spending summaries and financial plans. I mean, people are constantly reaching out and sending them in.

And despite everything we've said, and we've made a lot of negative points, I absolutely see people of even relatively modest family income getting most of this done quite well. And they're living lives in some cases of austerity. I wouldn't say extreme austerity, but austerity. But I also find them to be some of the happier people that I'm dealing with in this process. They don't have the financial stress. They've got their financial futures looking a little brighter. And at almost every income level, they're able to do it. Now,

again, that means they don't have fancy cars. It means they're doing less traveling, but they become very good at saving. And again, on a positive note, I'm meeting some young people in their 20s and 30s who are really good at finding bargains, using Facebook marketplace, using online coupons. They've almost gamified that whole process to the point they love going out and searching for these deals. I have a female friend who's just a master at it. So there are some positive stories out there, but in general, people are very tight. No question. Do you think personal finance is harder today than it was when you first wrote the wealthy barber? Like, I mean, I think it is,

I think, I think like, you know, you have like these little points in the, in the financial continuum where things just really get disrupted a lot. And the pandemic was just like, to me, it was like a whole career's worth of disruption packed into about three years. But it strikes me that it's a lot harder to stick handle your way through life in a personal finances. Do you think so? Yeah, I mean, it's more complex because there's more products for sure. But also you have the housing crisis. That alone makes it more challenging. Social media, of course, exposing you to the best parts of everybody else's

life and drawing you in. All the things we've mentioned have kind of come together to make it more difficult for the most part. And that's what's leading to some of these people, again, having fewer kids or trying to stay together. One of the funny things I brought up in a video that I looked at in the spending summaries, I think a lot of these young people have to be careful about getting a dog because they're bringing pets in and pets are way more expensive than people imagine. And of course, with all these unexpected debt bills and they seem to be much more dramatic

and much more frequently seen than they were when we were young with dogs, people have to be very careful. They're paying $6,000, $8,000, $10,000 in some instances out of the blue. That's another recent change. A lot of people who never owned pets before have them now. And the ones who had a pet got another one.

And I think you're right. I think that is a staggering cost. And we tend to think that the pet industry is our friend and that they just want the best for our little furry friends. And no, actually they want to sell lots of stuff to us and they will guilt you and encourage you to spend money on your pet that, you know, I mean, we owned our family owned, like we had a dog for 16 years. We had a cat for 13 years.

I know pets, I grew up with them. And I can feel the pressure is so much more intense today to spend and provide the best food and the best toy. Like there's, there are subscriptions for dogs to send them, send them a box of toys every month. I can't say anything here. I'm guilty as charged on all counts. I spend way too much and treat my pet

so, so well. And so I, I mean, I'd be a hypocrite to criticize others for doing that, but you can afford it. Yeah, exactly. People are doing it on a restricted income, but especially with this new era of vet bills. And again, I'm not saying the vets are doing anything wrong, but the diagnostic equipment is so much better. We're finding more things. And then of course, with the guilt, with the I love the pet, we tend to spend the money no matter what, including by the way, when the pet often only has six months to a year to live,

people are still writing checks for eight to $10,000 and the pet may not live in that much comfort. So it's a very delicate area. I don't want to tell people not to get pets because I've received so much joy from mine over the years. But as we look to cut back costs somewhere to make up for these housing costs, that's one area I think people have to consider a little bit more carefully. Yeah. You know what, one thing I am so tired of is telling people to not do things, you know, I mean, like don't buy a nice car. I think everybody

should have a nice car. Like, you don't want to have a dog i had dog growing up we had a dog we had a dog for many years they're great i love dogs i mean we'd have one now if it fit into our lifestyle and this this whole deny deny deny thing it's part of personal finance and it's i guess a necessary part but it is i sometimes i just i feel like i just can't say anymore you know what as much as it needs to be said. I agree. But my, my approach with that is I'm not in general out there saying denied, but I do say to people, if you are going to have the nice car, recognize you have to make cutbacks elsewhere.

You can't have it all. So I'm not saying don't have a pet. I'm not saying don't have a nice car, but if you do those things, then there has to be cutbacks elsewhere. You can't also travel a lot. You can't also put in a pool. It's trade-offs. Like all of us have to face trade-offs in life for time, for money, and whatever else.

And that's the message I tried to drive home. In the old days, by the way, I didn't say a thing about how people spent their money. I said, just save 10% to 15% off the top of your income. But now with credit being ubiquitously available, as I mentioned earlier, they can save 10% to 15%, but then they spend more than they make out the back door by running up all their credit vehicles.

Yeah, clearly it's all about prioritizing and picking your priorities and all that stuff. But I feel like today, it's like we live in a gotta have it all world. That's where the trick is. You really have to push hard on live your best life, but you've got to pick what's worth spending money on and what's not. And I wish we could get people to consider moderating their spending a little bit

because you feel better, actually, if you are not incurring debt. If you feel you've got a good chunk of savings in the bank, if you can see your retirement investments like click, click, click, they're going up every year or every few years on average, there's a lot of mental satisfaction in that. And I think it really competes well with the satisfactions you get from spending, but it's a hard message to get out there in today's world. To me, that's the single most important message in personal finance is that when you get on top of your finances, you are happier. And I don't say that without proof. I've helped a lot of people over the years get on top of their finances and they will testify they've been much happier.

They haven't missed the things they were spending on. They've enjoyed, to your point, seeing their investment account rise. They've enjoyed being less debt heavy, etc., etc. It's made them happier people. It's getting that mental shift over to, let's cut back a little bit. Let's look for opportunities to save money. Let's start using automated forced savings techniques, etc., etc. But it's tough to get them out of this spending habit. And I really do believe social media has played a role in making it even more difficult to push people toward that approach. You know, social media is an interesting phenomenon. I mean, I'm not a massive user of it.

I use it more for work purposes to push out content and also do like the interface with people and get comments and ideas and such. But I think that we barely understand it. And like long-term impacts in terms of emotional health, psychological health, and really financial health have really not yet been documented. And I do wonder if we're going to develop sort of ways of controlling it. And so that we can sort of put it at arm's length a little bit because I think some people are too wrapped up in it. And it reaches into your brains in ways we just don't understand.

And the spending side of it is just huge. So I do feel what you're saying. And I don't think people say, they sort of have this rough understanding of I'm on my phone and I'm seeing this stuff and I feel like I have to buy stuff to make a spontaneous purchase, but they can't get mastery of it. And I think the social media is meant to keep you, it's meant to just keep giving you these

little dog biscuits of satisfaction and just keep going along and you don't stop to think, hey, wait a second. And so we'll have to up our game, I think, to help people get through it. Now, you've become a real expert in the last 10 years on debit cards, credit cards, best deals, how to find the best deals. I mean, you've done a lot of that frontline day-to-day stuff. I mean, you've expanded beyond the basics of personal finance. And I think you've really helped a lot of people because, again, you're a trusted source in that area. Yeah. You know what? To me, the great thing about personal finance is it's, it's

the everything. And you know, it's going to the grocery store. It's I'm traveling, it's my car, it's my house, it's my insurance. It's how do I raise my kids to understand money? It's, it's everything. I can connect everything to it. And so I like to just sort of push the boundaries a bit and talk about the products and the product providers and the people and stuff. And, uh, you know, I've been doing this for a long time and that's what

keeps me interested. Just the variety. Do you use your debit card mostly or your credit card for the points? You know what? I, it's all how I feel at the moment when I'm, when I'm paying for something, you know, it's like, what do I think I want to do today? I use a mix. I use a mix. I use certain purchases. I've got a credit card with a certain rewards profile. And if I can maximize those, I do that.

And sometimes debit's nice and clean. It's all gone from your account. And every so often, cash. So it's a real mix of things. So Rob Carrick, literally the most famous financial writer in the country, please tell our listeners you never carry a credit card balance. Never in my entire life, even for five minutes, have I ever carried a credit card balance. And the one lesson I have hammered into our sons is like,

because dad's in the personal finance business, their interest in hearing me talk about it is not high. I can relate. I can relate. But I have said to them, not on my watch, are you carrying a credit card balance? And I said, look, if you get yourself into a job, you talk to me. You're not going to carry this concrete block on your back for indefinite periods. So no, I never have. And the ones I love don't either. Do you and your wife handle your finances together? If you don't mind me asking, that may be too personal a question. No, I've done most of it for years, but lately we've been merging more and, um, like we've had a joint account since, you know, the day we moved in together. And, uh, we, uh, we've always done that.

Like both our paychecks go into it or, you know, our, our, that sort of thing. Uh, but I paid most of the bills and handled most of the investing and made most of the decisions, but we're, we're, uh. But you keep your, but you're doing it jointly. You're making the decisions, but you're doing it jointly you're making the decisions but you're managing the money as one unit one unit one unit i don't know i know a lot of people swear by the separate accounts and i know a lot of young people are doing that too and i'm more sympathetic to doing that having heard them explain why they do it in today's world uh but it really really

really works so nicely when you just have everything merged together. And yeah, so we do that. And we're trying to make more decisions mutually. And I'm thinking actuarial tables being what they are, that she'll be around a fair bit longer than I will. And I want her to be able to just basically take the steering wheel and drive this car without any trouble at all. So I'm thinking about that. Yeah, that all makes sense. It's interesting. I'm pretty strongly opinionated against people, husband-wife teams, wife-wife teams, whatever, managing their money separately, because you don't optimize. You really don't. And again, having seen so many of these plans,

I can tell you, it costs people a lot of money doing it that way. You'll see one spouse with money in the bank account earning 2% and the other one has a credit card balance paying 21. And somebody's not taking advantage of a TFSA when they could have easily had the other person help them to fund it. I just don't think it makes sense. Yeah. I hear I, I hear people say that I'm keeping my separate, you know, my partner's really bad with debt and I need to keep my things separate. And you know, there's, it's the world's a little different. I understand that, but I, I, I, I frankly don't understand how, how hard, like, why would you, it sounds so hard to do that. And so, uh, so potentially ineffective, but anyway, like I said, you, it sounds so hard to do that. And so, so potentially ineffective.

But anyway, like I said, yeah, I have to be sympathetic to some of the arguments, but I'm totally, you know, merged up and operate, operate as one unit where you can. What a lot of the younger people I see are doing, and I think it's very clever as they're managing their money together, but they're each allocated so much of mine that they do whatever they want with and don't report into the other person. That makes a lot of sense. Then you've still got some autonomy and you still control your own fate to some extent, but you're getting the best situation. You have to do that. Like my wife and I, we each have our own like separate savings, savings accounts. Not everybody has to know every penny that everybody spends. And so I think that's where you need to have, you need to have some

financial autonomy. I mean, but that said, you don't want to have a secret slash fund where you, uh, where you, uh, you know, a lot of wealth that should have gone to the couple has gone to one person, that sort of thing. Those are, of course, that's, I've heard rumors. Your wife has a secret slash fund. Well, you know what, can you just tell me where it is? I'll go check on it this afternoon and see what's what. FHSAs. I beat my head against the wall I'm meeting so many young people haven't bought a home yet want to buy a home don't even know what an FHSA is

much less have opened the account have you ever seen a more poorly publicized opportunity than this one? You know what's really dropped the ball and this is the financial industry I've got to say that one of the big six banks still at this moment does not have a self-directed FHSA.

That's right. And that to me is pathetic. Come on, guys. You know what? You want to build customers for the future. Here's a way to rope them into your investment channels, but they just cannot get there and they cannot get their acts together. And I don't understand why they didn't, all of the products were ready to go and they didn't have giant marketing campaigns. Hey, young people who are just building your financial wealth, come and set up at our bank or our investment company and build a relationship with us. But it was just crickets. Absolutely agree. In fact, it's bizarre to me because what a great marketing tool for your mortgage. If they have their FHSA with you and you're a lending institution,

there's a very good chance they're going to put their mortgage with you. Absolutely. Yeah. The FHSA needs a lot of attention and encouragement right now. But in personal finance, it takes ages for things to get into wide use and acceptance. One exception was the TFSA just just like it was like everybody got that instantly i mean i remember being in the federal budget lockup and reading like in the budget documents and thinking this is going to be big and uh it was it was just you could just tell people that tax-free that's the best branding you could ever give anything right i laugh still to this day I meet the odd person who says to me,

I don't really like TFSAs. And I go, then you're a weirdo. You have a fundamental misunderstanding of basic arithmetic. I have never really come across anyone who has said, I don't like TFSAs. Oh yeah, I've heard it a few times. Well, I mean, I think there are a couple.

Number one is that people have made the point that if you have that ability to take it out, you probably will. And you'll sabotage your long-term savings efforts. But that's not a weakness of the actual product. That's a weakness of you if you do that. My big criticism, by the way, of TFSA is, and it's actually stronger than it's ever been

because I'm seeing so many plans, the number of people who are using them, not for emergency funds, not for a down payment fund, but for long-term savings, like an RRSP, who have 50, 60, 80% of the money sitting in cash still. They've been putting money in for years and they've literally never invested it. Yeah.

That's, that is every, if you talk to people in the investment industry, that is, that is like a big issue. People open accounts, they dump money in and they never do anything with it. And so if you're a broker that, you know you're a broker, you want them to transact. And it's how do we get people to do stuff with their money? And I bet you a lot of those accounts, even when interest rates were going up, they were probably in accounts where the interest rate wasn't going up by any great degree. Exactly. degree. And so exactly. They missed out on the risk of the stock market, but they also missed out on guaranteed safe gains that were like way in excess of inflation. That's a bad, they missed opportunities. And the opportunity cost, because some of these people have been

doing this for 10 years, is absolutely enormous. And of course it compounds over time and you can't make it up. Even if you invest the money now, you've lost those years of growth. The markets have been quite strong. So it's, it's uncomfortable to even look at some of these, but you see it so often, this is not something you see one out of 10 times. You're seeing this three out of 10 times type thing. Yeah. I think, um, you know what I always think the one positive we can say here is it's better that you have, even if you've wasted opportunities to make money, you have at least put money away in the TFSA. And so your capital is there. And so that's a positive.

People doing null and optimum things with their money. But I always think, okay, you didn't make a great choice of what to do with this year, but you have won and you have put money in it. So you've missed out on compounding, but you at least have put some money away. You know what I mean? A lot of people aren't even doing that. I agree. And I think a lot of this is just the way it's worked out. They've walked into their local financial institution, opened the TFSA and put the money in, but there's not been an advisor involved. They're not dealing with the broker you just mentioned. They're not dealing with a

financial planner. They're just opening the account and putting it in. And on their own, they don't tend to think to invest it or know how to invest it. So it's almost a flaw with the way this whole system lays out. Yeah. It's the bank branch system where you go in and people think I'm getting advised interactions. And what you are is you walked into a store that sells financial products and they call them advisors they're more like clerks it's like the clerk at the retail store and was a little bit about the product and was happy to chat you up but they're not gonna they want to make the sale that's what they want that's what bank branches are they're uh you know the word advice is thrown

around so much in the banking business and they even like they even strongly lead you to believe that their people are advisors and they're salespeople. And so that's how people end up with bank accounts, bank account TFSAs and market-linked GICs and all kinds of other junk products that are lucrative to sell but don't do anything but make money for the bank. anything but they've funded for the bank. Well, you know me, I'm such a math geek. I've looked at all these structure products over the last 25, 30 years. I've never seen one that I would buy. I completely support that view. And I feel really comfortable in telling readers, just don't. You know what? They're engineered to be moneymakers for the banks in all market conditions. And that's why they sell them. People think it's a present to me from the banking business to help me invest in stocks without risk. That's what it is.

It's this answer to my yearning for stock market returns without the risk of losing money. And I have to do this. And you've got to just tell them, no, there's a lot of buttons and dials in the back that the bank has tuned to make money for them. And you're the pigeon who bought it. And you are actually, they're actually the ones who are investing. You're the ones basically supplying their money that they can go to work on.

And, uh, but you know what, there's, there is just this hunger to be in the stock market without the risk of losing money. And that all these, these products are just based on that idea. Let's go back for one second to the FHSA. I just want to make sure the listeners, again, get it. This is the best of the RSP with the best of the TFSA mixed together to help the first-time homebuyer. I don't think people are grasping that if you put $8,000 into this and you're in a 30% marginal tax bracket, it's $2,400 you get back from the government. Let's say both spouses are doing it.

It's $2,400 you get back from the government. Let's say both spouses are doing it. It's 4,800. But when you pull it out, you don't pay tax on it. Meaning that's 4,800 free dollars. And you could theoretically do that every year until you hit the max over five years. That's 4,800 times five. Are you kidding me? That's $24,000 for free. And if you don't buy a house, it just goes into your RRSP. That's right. There's no downside and it doesn't even affect your contribution limit. Like this is truly the ultimate no brainer we've ever had is the FHSA. Yeah, no, I think it is too. And, you know, the one criticism that's made of it, and I don't think it's entirely fair

is that, you know, maxing it out isn't going to get you a house down payment in Toronto, but it's a good head start. And there's all this, there's all this, you know, the tax breaks and the tax-free withdrawals are just two massive, massive attractions for using this. But I look at that criticism because I hear it all the time too. It's not enough. It doesn't get me to my down payment level. And I said, so what, you're going to turn down the $2,400 free because you're not getting down. Don't be a weirdo. Like at least put this in and then do the rest of your saving outside of this. But that doesn't make any sense, that argument. For sure. You know what? It's, um, I, um, I think when people understand it,

they like it. Um, but the thing is you've got, there's a lot of sort of missionary work explaining this to people and, and, and getting them comfortable with the idea of who sells it and all that sort of thing. You know, there's no, there's no marketing done for them. You ever see any like marketing campaigns online or anywhere saying, we've got the, if actually says, if you're a young man looking at a house, you got to have this. No, I think the institutions look at it and say it's short-term capital. People are going to bring it in. They're going to take it out within two, three, four years.

It's a hassle to set it up. It's not a primary focus for us, But I would argue what you did earlier, it's a great relationship builder and it can tie directly into them being more likely to get their mortgage from you. So I would go the opposite route. If I ran one of the banks, I'd actually be pushing the FHSA very hard. You're helping your client base and you're deepening your relationship. You know, the traditional financial industry is going to have its handful trying to reach out and retain young people as customers. They're wide open to all the apps out there and all the challenger banks and all that

stuff. And this is a way of connecting with them. And I think they're missing an opportunity because if they don't forge these relationships, these alternative banking and investing operations are going to gradually eat their lunch. I think young people are, you know, I know the boomers where all the wealth is right now, they're comfortable with the old school,

but the new school is going to acquire wealth and it's going to challenge them the next little while. And I don't think, you know, young people aren't going to bank at one of the big banks just because they grew up on a corner where one of their branches was. Couldn't agree with you more. Absolutely. And I think AI is going to accelerate the move to all of these different types of products by helping people to do the research and everything else. So I couldn't agree with you more. I'm going to go a little different route here. I want to ask you a couple of questions about major differences I'd see between Canada and the US, two of them. The US has embraced to the nth degree passive money management,

index funds. More than 50% of the money that's going into pooled capital now goes into index funds for good reason. It just continually outperforms active money management 96, 98, 99% of the time. In Canada, we've been laggards on that front and we're paying very high fees. So what are your thoughts on that one to start? I think that's a bank issue. I mean, bank mutual funds are ginormous. You just walk into a branch, you can get sold. And I think we have a tight relationship with our banks in Canada, much tighter in the States because they have the standard banking system. And I think the banks are a marketing engine for mutual funds.

I mean, I took a look at one of the, there's a big bank balanced type product and it had $55 billion. Stunning. I just about like fell right out of my chair. I mean, like that's like the GDP of a small country. And they, they, and they just pull money into that through their branch network. And that is why there's a lot of, of, of actively managed money in Canada, I think, compared to ETFs. But you know what we are, Canada was a test bed for ETFs, like the first bond ETF, the first regular ETF were here.

And I'm not particularly proud of it, but there's cannabis and crypto ETFs were in the Canadian market. So I think we don't have to be ashamed of how we've adopted ETFs. And I think, look at the growth trajectory. The mutual fund industry is very static and the ETF is very dynamic. And it used to be, oh, it was big growth, but off such a tiny base, you could scoff. But the base is bigger now. And I think that US is way ahead of us, but I think we're catching up. You know what I worry about though? And again, when I'm seeing these plans, a lot of the younger people, let's say 40 and under,

they're using ETS, but I don 40 and under, they're using ETFs, but I don't like the way they're using them. They're not buying broad-based ETFs and taking the low-fee approach to grabbing the market. They're trading in and out of ETFs and they're buying industry-specific ETFs. And I'm going to be perfectly honest with you.

They are horrible at it. When I punch in their numbers, look at their performance, it alarms me how bad it is. Yeah. You know what? This is the ETF industry emulating the mutual fund industry. Absolutely. Remember, there was the biotech funds and the science and technology funds, and there was never a trend that they couldn't get a fund

out on. But the funds usually emerge around about the time the trend was peaking. And the ETF industry has done the exact same thing. You know what? They must acquire assets, right? They have to just grow and grow and grow. And the boring index tracking stuff that's basically free to own, it's big. But the growth rates on that are so small, they've got to have this really hot stuff. And you know what? They're poisoning their own brand and they're complicating this idea of the pureness of ETFs. Like you can't say that anymore because of what you just said about all these industries, these sector ETFs. And that's what people want to do. They want to bet on AI. That AI, the AI investing thing is big. A lot of people are asking about that, you know, more than cannabis ever was. And, you know, I think that, I think a lot of money is going to be lost buying and selling these things at any opportunity

moments. And, you know, my God, do you own an S&P 500 ETF? Cause there's tons of AI in there. I mean, I still think the S&P 500 has to be a big part of the portfolio you put together of the ETFs. It's inexpensive. It covers the world because these are American companies, but they're doing international business. They're acquiring international businesses. There's just so many advantages to it. But going back to sector ETFs, I would say in all the years I've been analyzing performance of the things people have sent me, that is the most stunningly bad. And people tend to buy them at the peak almost every time. Did you read that article years ago about the fellow in California who watched the U.S. banks and when they came out with a sector fund, it wasn't an ETF at this point, it was just a fund. He would go to the market and short the ETF in that sector and go long at the standard and poor's knowing that the divergence would make a money leveraged up in both cases. The guy was posting crazy performance numbers year after year, knowing the banks were going to get into these trends as they were peaking. Yeah. I don't doubt it. I mean, to me, when I see a new sector ETF and you, you

know, like Stomino's one company, one goes and all the rest go, you think, okay, that has officially peaked because that's how long it takes to get the fund to work and through, uh, you know, through, through regulators and yeah, exactly. So yeah, no, I think that's the story. But, you know, people, like I noticed this with young people, especially they're so open now and eager to find the home run investment. It's, you know, they don't want,

oh, you know, S&P 500, that only made 20% last year, but I'm looking at biotech stocks or AI stocks. They've tripled. And look what NVIDIA has done. That's what they want. They feel like that they don't see prosperity ahead, you know, unfolding in a normal way. And they want this turtle-charged addition

onto their finances and the open-mindedness to that stuff. And I think that's probably feeding some of those investments in sector stock. Do you know what the research is showing? That you're 100% right about male young investors and female young investors are fine with just going with the standard and poor and everything else. There's a huge gender divide on that particular issue. Yeah, this is a small sample, but I go by the questions that male and female readers ask and you know, the, the, the men are very performance oriented, you know, they want the best and women want the good and they, they,

they want to know how it works and why it will work for them. And just know, want to know how much they can make, you know, it's a very, they're very, very performance oriented. You know, like product A has slightly less performance, but much less volatility. Go with product B, which just has higher potential returns. They really, they really, it's like a Marshall competitive thing.

And I think the sector ETFs sort of feed into that because you're going to get like ideal. You're going to get like a 50% gain one year because this thing's really taking off. It's the same with the meme stock sports gambling. It's almost 95% male driven.

And they're saying now it's testosterone, which of course leads to more openness to risk-taking and including imprudent risk-taking, frankly. And I worry about this. Patrick O'Shaughnessy has talked about this in the States and how a lot of the younger generation is too risk oriented and they're taking excessive risk, not doing well. Their overall performance is very poor. In fact, if you've seen some of

the Robin Hood statistics about what their accounts did during all the meme craziness and et cetera, it was shockingly bad. Same with option trading. The cumulative data on option trading is that people are just getting wiped out by it. But it's hard for us to convince people that's not going to be your path to riches. You've got to do it slowly. It's going to be volatility oriented, but we need you to buy the low cost index funds and be patient. It's a boring message.

It is a boring message. And, but I think, you know, everybody, not everybody, a lot of people need to make a mistake in their investing to get on the right track. You need to go down the wrong road, have a little collision and then back up and find the right route. And then you're, then you're a, you're a true believer. And you know, there's people made, you know, people did this with penny mining stocks and they did it with tech stocks in the, in the early two thousands. And now there's, now there's, you know, whatever sectors are today, what amplifies the problem to me is these trading apps where you can just buy stuff,

What amplifies the problem to me is these trading apps where you can just buy stuff. You can buy and sell at no cost. And I can construct an investing plan where you use these trading apps to buy asset allocation ETS or S&P 500 ETS. And you do it when you have $100. You can do it when you have $500. And you can just dollar cost average your way into long-term investing success with no friction, real friction. But that's not how people like to use them. Right. I just saw this.

I just read something online. I pick up my phone and I bought 10 shares of it. And then I'm going to buy some more and some more. And so, yeah, I think basically you've given people the technology to harm themselves. Right. Exactly. To harm themselves every day. No, you know, to, uh, to harm themselves, right? Exactly. To harm themselves every day. No, I mean, it's crazy.

Again, when the data gets released from some of these trading platforms, for the most part, they don't like releasing it because it's so negative, but when it has come out publicly, people's performance has been absolutely abysmal. Okay. Next question on us. Canada difference is one I'm really intrigued to get your answer for my buddies in the States, male, female, they almost all use mortgage brokers. Mortgage brokers are a huge part of the culture down there when people go. But in Canada, a much smaller percentage of us use mortgage brokers.

Again, I think you're going to say it ties to the power of our banking system. But are you surprised that hasn't changed a little bit more over the years? Very, very. I'm very surprised. You know, right at this, just at this moment in time, I have heard even mortgage brokers say they're amazed at the bank, the way the banks are dealing on mortgages right now. There is just some weird little hyper-competitive phase going on right now. But generally and historically, you go to a mortgage broker, you'll save money, you'll

get better terms, less odorous penalties if you need to pay out your mortgage early. You're getting a survey of the market. It's like, why would you not? I agree. And I mean, we're going to sound like we're a commercial for mortgage brokers, but I couldn't agree with you more. And I say to my friends all the time, use a mortgage broker. Worst case scenario, they don't match the rate that your bank is offering you. So then just stay with your bank.

You're not under legal obligation to stay with the mortgage broker. You know, when I, I can remember like 30 years ago, uh, writing something on mortgage brokers and there had been some scandal or something. I forget what it was, but it's immaterial now, but everyone's got a little mortgage broker. So I don't, I don't know, you know, like, you know, like be very cautious. It was like, and I think, you know, you know, conservatives, you know, like be very cautious. It was like, and I think, you know, you know, conservatives Canadians are about money and change and that

sort of thing. And I think that might've influenced people for the longest period of time. And now I just think it's just an awareness. It's a get off your butt and get some extra quotes kind of thing. You know what I mean? There's mortgage brokers in every strip mall now. I don't understand why people aren't using. They're almost as ubiquitous as bank branches. So, okay, we've taken a long time. You've got so much great information. We're going to get you back on because we can talk for hours and hours.

I haven't even gotten to a lot of the subjects I want to cover. So we'll get back to a couple months, but I have one last one. I'm amazed in the last few years, and Mark McGraw has talked about this, how some people have turned on RSPs, almost have convinced themselves RSPs are bad things. They don't have a good understanding of the underlying math there. For most people, RSPs are still a wonderful way to go. Imperfect, but wonderful. I am bowled over by the RSP hatred of retirees. And it's all about, I had to pay tax on my RSPSP withdrawal. Well, no kidding. Cause don't you remember they gave you the tax back when you made the contribution and quite possibly you're in a lower tax bracket now. So it's a win. They don't get that. You know, the, the,

I don't understand how can you, how can you, this be a surprise that you're paying tax on your RRSP withdrawal? Like, why is that? Like, why surprise that you're paying tax on your RSP withdrawal? Like, why is that? Like, why is that news? Why is that even an issue? It's why isn't just, you take that in stride, but they don't. And like, I cannot tell you how many emails I've had for people. I rule the day I contributed to RSPs, but you have all this wealth.

I hear it all the time. I don't think otherwise. No, they don't understand the basic math. I'm actually putting a lot of effort into explaining it in the revised version of The Wealthy Barber in a way that people finally go, I get it. But it drives me nuts how many people are saying exactly what you're quoting them as saying. And for most of them, it's been a wonderful thing.

In essence, they've had tax-free gains on their part of the contribution. That's really the way it's worked. But if they're pulling it out into a lower tax bracket, it's even better still. And so I don't get it, but I think the TFSA, funnily enough, has led to some of this because it's tax-free literally upon withdrawal. And people are doing this comparison without thinking about the deduction they got up front and they're becoming very angry. Yeah. I think RSPs, it's almost like they need better marketing. Like they just, like maybe, maybe you could help on that count, but I, I feel like they just need, like they need a, need an ad campaign, like something like that. I hope people understand.

It's true. They've been around a while and, the tax free savings account is just because it's, you know, people don't really remember the, the early process with these, like, like withSA after-tax money, they don't remember that. And so when I take the money out, that's all they obsess on is everything that's happening in here. All this money is mine, mine, mine, mine. And with the RRSP, some is the government's, but you know what? Especially our retirees, you are going to be using some healthcare, I do believe. So maybe this money going back into the tax system will be helpful to you. Look at the big picture. Yeah, that's interesting. So maybe this money going back into the tax system will be helpful to you. You know, look at the big picture.

Yeah, that's interesting. Interesting angle. Well, listen, you've been a joy. I'm a huge fan. It's nice to have somebody on. I have so much respect for you. Writing over the years influenced all of us. I mean, there's very few Canadians

who haven't read some of your pieces and it hasn't helped them along the way. My whole team reads your pieces before I even put the team together. So wonderful job. Thanks from all of us. And we'd love to have you back on. Thanks, Dave. And back at you, I get people quoting their wealthy barber to me and it happened even yesterday. I had written something about asking people about what a finance club at a high school, what the kids should talk about. A parent asked me that

question. And of course, one person said, I think the wealthy barber would be just the right thing. And you know what? These are your fans going back 30 years, still, uh, still citing you as the source. So, uh, keep up the good work yourself. Thanks. I met a guy in a parking lot yesterday. He was 50 years old. And he said to me, Dave, I read your book when I was in grade 10. And I'm like, that's not possible. And then I worked through the math. It was possible. I did not feel good about that. I'm old.

Yes, we have to accept that as well. Anyway, great seeing you. We'll get back to you in a couple months, but thanks so much for your help.