November 11, 2025 • 33 mins
Introduction
In this episode, we sit down with Dan Kain, Senior Wealth Manager from S.E.E.D. Planning Group, to tackle one of the most misunderstood aspects of financial planning: how advisors get paid and what real value looks like at every stage of wealth. We break down the myths around fees, commissions, and the true cost of financial advice, especially for smaller investors. This episode is all about empowering you to make informed decisions about your money and your life by exposing industry practices and clarifying what you should expect from a transparent, fiduciary advisor.
Key Topics Covered
1. Misconceptions About Advisor Compensation
- Many people believe the size of their portfolio should dictate how much they pay an advisor. For example, someone with $5,000 may think they should pay far less than someone with $1 million, but the reality is that smaller accounts can require just as much, if not more, work.
- There’s a common misunderstanding about what services are provided and how much work comprehensive planning actually takes, regardless of account size.
2. The Challenge for Small Investors
- Small investors often face unique challenges. It can be hard for them to work with fee-only advisors, and they are more vulnerable to practices like “churning,” where advisors repeatedly sell products just to earn commissions, often at the client’s expense.
- This cycle can keep small investors from growing their wealth, as excessive fees and poor investment performance from structured products eat away at their returns.
3. The Value of Fiduciary Advice
- Paying a fiduciary advisor, even if it seems like a higher upfront cost, can be crucial for long-term growth. Fiduciaries are legally obligated to act in your best interest, and their guidance is based on experience and a deep understanding of your unique situation.
- The value you receive isn’t just about the time spent; it’s about the expertise and the hundreds of similar situations your advisor has navigated before. Implementing their advice can lead to significant improvements in your financial situation, sometimes by six or seven figures.
4. Comprehensive Planning Goes Beyond Account Size
- The amount of money you have doesn’t always correlate with the complexity of your planning needs. Someone with less money might have more complicated estate or tax planning issues than a wealthier client whose finances are on autopilot.
- An effective process involves digging into the details of each client’s life to determine the real scope of work required, not just basing it on the size of their portfolio.
5. The Emotional and Practical Value of Professional Advice
- Many clients are frustrated by the cost of planning, especially if it’s their first time working with a professional. But the real value comes from the advisor’s experience, ability to see the big picture, and the potential to improve your financial outcomes.
- If you’re only looking for free advice or don’t see the value in paying for expertise, you may miss out on opportunities to significantly improve your financial future.
Conclusion
This episode is an educational look at the realities of financial advisor compensation and the true value of fiduciary advice. Whether you’re just starting out or have significant assets, understanding how advisors are...
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:11):
Welcome back to Digital Suits, wherewe are wrapping up our mini series with
Dan Kane, senior Wealth Manager fromSeed Planning Group, and today we are
tackling one of the most misunderstoodaspects of financial planning.
That is how advisors get paid andwhat real value actually looks like
at every stage of wealth for clients.
So in this episode, we will breakdown the myths between or around fees
(00:33):
commissions in the true cost of financialadvice while sharing insights on why
smaller investors often face uniquechallenges, how industry terminology
can be confusing and why working with atransparent fee only advisor can make all
the difference in your financial journey.
I'm Travis Moss, the CEO of Seed PlanningGroup, and this podcast is all about
sharing professional knowledge andexperience with you so that you can
(00:55):
get more out of your money and life.
Travis (01:00):
Seems like there are a lot of misconceptions about.
How will a financial planneror wealth manager get paid?
And we talked a little bit about thisin the last two episodes, but somehow
people also think that the size ofthe portfolio indicates the amount
of work that somebody has to do.
And we've had a lot of talks about thisinternally, um, because we've never
(01:21):
had a minimum account size, but we'regetting to the point where we kind of
need to, because somebody with $5,000literally might take as much work or
more work than somebody with a milliondollars, but they don't understand it.
They just say, well, I only have $5,000.
Why should I have to pay you?
You know, if I pay you 1%, that's $50.
Why should I have to pay you $10,000?
(01:43):
Like that person with a million dollars
Dan Kain (01:45):
Mm-hmm.
Travis (01:45):
not understanding, you know, what the services are, how they work, how
people get paid, those types of things.
So.
Um, there's a lot of misconceptions aboutplanners, how they're paid, whether or
not the size of the portfolio shoulddictate how much somebody gets paid.
This is one of the biggest challengesthat that small investors have.
(02:06):
So, a small investor, somebodymaybe starting out five, 10,
$15,000 is very hard for 'em to workwith somebody who is fee only or
somebody who is not gonna churn 'em.
Churning as a term, when I sell youa product to make a commission, and
as soon as the, let's just say timeperiod where it's inappropriate to
sell you something new, to make anothercommission, as soon as that's over,
(02:30):
basically they, the, the advisor flipsthe product and makes another commission
Dan Kain (02:34):
Mm-hmm.
Travis (02:35):
no investment purpose, just simply to make more money.
And you see it a lot with annuitiesand, and you know, different
types of UITs and stuff likethat where people are just like.
Essentially churning products, they're,they're selling them over and over
and over again just to make morecommissions, always at the detriment.
And so what happens a lot of times asmall investor who has 10, 15, $20,000,
(02:57):
they stay small forever becausethey're giving up so much money in fees
Dan Kain (03:01):
Yep.
Travis (03:01):
bad investment performance because of structured products.
'cause that's where a lotof the commissions are.
Um, so I don't think peopleunderstand that either.
You know, sometimes even though you haveless money, maybe you need to pay a little
bit more to a fiduciary to make sure thatyou have a chance to grow your money.
Because if you're dealing with a financialadvisor and you don't have a lot.
(03:25):
They gotta make money somehow for thetime that they're spending with you,
whether, whether it's productive timeor not, that's a different discussion.
But they're looking at you like,okay, you know, I, if I gotta
spend time with you, I gotta eat.
So what can I take outta youraccount legally, basically.
Um, but they, so they think thatlike the size dicta dictates it.
Um, uh, they, I don't thinkpeople understand how much work is
(03:48):
required for comprehensive planning.
Um, and, and kinda what it's worth.
And so I just wanted to know alittle bit more on your thoughts
on, on that kind of experience.
'cause you're coming from a place whenpeople first engaged you prior to seed, it
was part of the cost of being in the plan.
So you were basically freeto them as far as they know,
Dan Kain (04:08):
Yep,
Travis (04:09):
right?
So then you get into comprehensivewealth management, and now in order
to work with you, I have to pay you,
Dan Kain (04:15):
yep.
Travis (04:16):
which is a part of your discussion with every client that you
work with, is what are we chargingand, and what are you getting for this?
How has that experience been andand what are your thoughts on that?
Dan Kain (04:27):
Yeah, and I think you, you actually just said it, you
know, it doesn't necessarily matterlike the size of the accounts that
they have or, you know what I mean?
Because you can have somebody thathas $5 million, but there's not, just
not a ton of work for them to do.
I mean, they're prettymuch on auto autopilot.
Right?
And then
Travis (04:45):
Right?
Dan Kain (04:45):
somebody with a lot less money that has of these other issues.
When we do comprehensive planning,you're looking at estate planning.
They may have some bigestate planning issues or
Travis (04:55):
Yep.
Dan Kain (04:55):
you know, a lot of tax planning issues.
So.
Yeah, that dollar amount doesn'tnecessarily mean that there's
gonna be more planning if youhave more money, um, that's gonna
be dictated by life situations.
Right.
And I know
Travis (05:08):
Yep.
Dan Kain (05:09):
in, in our kind of opening meetings with, with clients, we really
try to dig into like those details withthem and, and try to figure out, okay,
what type of client is this going to be?
Um, you know, how much work are we gonnahave around, um, all the different areas
of planning, not just, know, they have afew thousand dollars, so they're probably
just a small client, no need to worry
Travis (05:30):
Yeah.
Dan Kain (05:30):
Um, so, you know, that takes, that takes some skill and
some investigative skills, I guess,to kind of determine, all right,
what is this gonna look like?
Um, you know, the, what's the wholepicture gonna look like for these clients?
Um, it doesn't necessarilymean that money is less work.
I mean, it could be the complete opposite.
Travis (05:50):
Well, so sometimes people, um, they don't understand.
They, they have, you know, some kindof question that they have financially
and whether or not you can answerthe question in just an hour or two
is a question in the first place.
'cause somebody asks you, kinda like adeep question, you might need a lot of
background and it might take a lot ofworkup and projections to be able to
(06:11):
give 'em an answer as a fiduciary, right?
If you're just selling product, it's easy.
I can give it to, youhave to sit on my desk.
Dan Kain (06:17):
Yep.
Travis (06:17):
But if, if we're talking about from a fiduciary relationship,
I might have to do a workup for it.
But the other thing that people don'tunderstand is there's times where somebody
comes in and, and we're doing planningand they're frustrated over what they
have to pay for the cost of planning.
Dan Kain (06:29):
Mm-hmm.
Travis (06:29):
Let's say it's maybe the first time they've ever worked with
a professional and you know, they're,you're not paying just for time.
You are paying for the fact that thatperson or that person's team has looked
at that type of situation hundreds oftimes and understands nuance and all
kinds of other things that we've talkedabout over the last two, uh, episodes.
You're paying for all of that.
(06:50):
And so if they look at this situation,they say, look, we're going to give
you a, um, um, some guidance that ifyou implement the guidance, we think
it's going to improve your situationby high six or even seven figures.
And, and that's, that'sa pretty common outcome.
Um, what is that worth?
(07:11):
Is that worth you bickering over, youknow, a couple thousand dollars in fees?
Well, you know, I need to see it first.
Well, how do you see thefuture before it happens?
Or is there a chance that I've workedon hundreds of financial plans and
I could sit in front of you andsay, by implementing this, this, and
this, these are the expected results.
(07:31):
Here's the range of outputthat has now been improved.
That's worth something, you know?
And so if you're going to someplace going,I don't see why I need to pay these people
for it, or I don't pay them, it's free.
None of it's free.
Dan Kain (07:44):
Nothing's
Travis (07:44):
It's coming outta something, right?
You're buying proprietaryproducts, you're buying something.
So not, there is not a nonprofit inthis industry, and even like, oh,
I went to Fidelity, or I went toSchwab, and they're working for free.
They're not working for free.
They're making money off of you.
You better believe they'remaking money off of you.
Dan Kain (08:01):
yep.
Travis (08:01):
you may not understand how the product are designed, or like, even if
you're sitting in cash in one of theiraccounts, they're making money off your
cash, they're making a spread off of it.
There's no free lunch.
So you have to understand that there's,you are always paying something.
So the question is, is what is thevalue that you're getting out of that?
And if you're like, well, I don'twanna pay anything for that, then,
(08:23):
then, and, and you're not even opento the idea of, geez, you know.
I spend a little bit of money.
I make a little bit of money.
Then, you know, as, as aclient, nobody's gonna help you.
But that also gets you to the differencein advisors and the difference in
who you're working with and, and howthey're able to articulate the value.
Because they're, like, we've talkedabout, there's a dramatic difference
(08:44):
between the different types of planners.
And can they actually show you?
Can they articulate?
Well, we do.
Roth conversions are a great example.
So if I showed you a Roth conversionand I showed you, okay, I'm taking money
outta your IRA, we're converting overto the Roth, we're paying the taxes.
Look at the difference long term.
And you might say, well, you know,yeah, that makes, that's, I look at,
(09:09):
look at how much more money I have.
But if, what if, what ifin doing that, you've also
manipulated the rate of return.
So what if on the IRA you had a lower rateof return and on a Roth IRA you have a
higher rate of return 'cause you're using,you know, some kind of historic analysis
based on a, an estimated allocation.
So was the, was the increase in assetsbecause you have a higher rate of return,
(09:32):
or was the increase in assets becauseof the differential in the tax planning?
You don't know unless yourvariables are consistent.
That's what you're hiring.
You're hiring people whounderstand those things.
It can actually articulate,no, this is where the value is.
This is where you find those valuesso that you're not paying for people
just to move you around their products.
Dan Kain (09:51):
Yep.
Travis (09:51):
the industry terminology, making it look like they're making you money.
But in the end, it's kinda like, youknow, if every time you go to the doctor,
they just give you a new drug, you know,eventually you're gonna start scratching
your head and going, why am I just gettingnew drugs every time I go to the doctors?
Dan Kain (10:05):
Right.
Travis (10:06):
It's, it's like that with a lot of financial shops.
Every time you go in, there's,they're prescribing you something
different or they're justignoring you completely, you know?
And it's like, okay, what'sthis gotta actually do with me?
So I, um.
I do think that, that it's hard sometimesfor people just to understand what the
value is, um, that they're paying for.
And that's the sign of, I thinka good planner is somebody who
(10:27):
can help them understand, look atthe difference in the two paths.
This is the path thatyou're taking currently.
This is the path thatwe think you could take.
Dan Kain (10:35):
Yep.
Travis (10:36):
By the way, it's net of our fees telling me that's not worth it.
Like I've had literally, peoplecome in, look at the difference.
Yeah.
I, I know that, and I know you can doa, a, make a big difference, but I kind
of like, I, I don't care about money.
I literally had people say, Idon't care about, about having
(10:57):
better returns on my investments.
Dan Kain (10:59):
Yep.
Travis (10:59):
And I'm like, I, I don't understand that.
You know what I mean?
Like what's the, so if you don'tcare about having better returns,
why don't, why don't you pay to havebetter returns and then donate the
returns to charity or something?
Right.
Like, like, why are we haggling over afee if you don't care about the returns?
Dan Kain (11:18):
Yep.
Travis (11:19):
It's a, it's a, it is just this weird challenge, but I, I think it is
very, very difficult sometimes for,for clients or prospects to understand,
what am I paying for in this space?
Dan Kain (11:29):
It's tough.
And I think, you know, one of thethings I think that we do really well
is, you know, we not only look at theirsituation, but then we say, okay, we
did these Roth conversions for you,for example, but then also look at.
For your kids down the road, right?
Like, this
Travis (11:43):
Yeah.
Dan Kain (11:44):
is what's gonna happen for them as well.
So not
Travis (11:46):
Yeah.
Dan Kain (11:47):
what they have going on, but also is what is gonna
happen for your family too.
Sometimes that, you know,strikes a chord with them, right?
'cause they're thinking,
Travis (11:56):
Mm-hmm.
Dan Kain (11:56):
now my kids get the money tax free.
Like, you know, in that example, right?
So, um,
Travis (12:02):
Which is also kind of always a little bit of a oxymoron to me.
It's like, I, I really care howmuch money I have and how the market
does, but I don't care about thetaxes and I don't care about how much
taxes my kids are gonna have to pay.
Dan Kain (12:13):
right.
Travis (12:14):
Well, that's because the problem that you have is when you
look at your account, you see dollars.
When I look at your account, I seedollars that belong to you, and I
see dollars that belong to the IRS.
Dan Kain (12:23):
Yep.
Travis (12:24):
And so when I look at the account, I'm always trying to figure
out how do I reduce how much ofthose dollars go to the IRS for you?
Dan Kain (12:30):
Mm-hmm.
Travis (12:33):
But 99% of people are the other way around.
They're looking, I've got$3 million in my account.
Okay?
And 3 million of that's taxable.
And so either you're going to paythe taxes or kids are gonna pay
the taxes, but nobody's getting$3 million out of this thing.
Dan Kain (12:46):
right.
Travis (12:48):
So how do we chip away at the, at the chunk of money, are they
gonna get 700 grand outta you or arethey gonna get 500 grand outta you?
How do we chip away at that?
Dan Kain (12:57):
yep,
Travis (12:59):
So one of the compounding factors I think for this issue is
also the non-standardized terminologythat the industry is using.
And for instance, there's feeonly and then there's fee-based.
Dan Kain (13:14):
yep.
Travis (13:15):
And I always love when I talk to somebody who has done just a tiny
bit of homework and they'll be like,ah, so I see that you're fee-based.
I really like that.
And I'm thinking, youmean fee only, right?
Dan Kain (13:27):
Right, right.
Travis (13:28):
I don't know anybody who goes, ah.
So I see that.
I have to have a PhD to knowwhen you're making a commission
from me versus when you're not.
I really like that.
Like nobody, nobody'sthinking that, right?
They're, what they're really thinkingis, is I see that you're transparent and
I pay you a flat fee for whatever you'redoing for me, and that's how it works.
I don't have to worry about you selling,you know, me proprietary products and
(13:52):
making extra cuts on things and you knowwhat's in there for you versus what, like,
imagine, again, go back to the doctors.
You go to the doctors, they giveyou a prescription, then you find
out that that doctor, you were their1000000th prescription and they got,
you know, a villa in Italy for it.
You know, like that wouldreally piss you off.
You would not be happy about that.
Dan Kain (14:11):
Yep.
Travis (14:12):
That's what's happening.
Like imagine if you found out, oh,I bought this insurance product, or
this annuity, this index annuity.
'cause they said, well, youknow, everybody needs it and
this is why I should get it.
And so I got it and I, and then,oh, I, I just saw this announcement
that so and so won a trip throughthe annuity company to, you know,
Punana to the Hard Rock Hotel on me.
Dan Kain (14:33):
Yep.
Travis (14:34):
know, it's like, yep.
Congratulations.
You fell into that one.
Dan Kain (14:37):
and that does happen with pretty much firms out there.
Right?
Those types of trips happen.
Travis (14:44):
They're not supposed to do it anymore.
That was, that They took, thatthey, yes, they passed a law that,
or rule regulations said you'renot supposed to do this anymore.
But, um, you know, everythingcan be signed away with the right
disclosures and the right paperwork.
I think for most places it's like we'renot really doing a sales quota thing,
but if you sell enough, you get to goto the leadership council retreat now.
(15:08):
You know, so that's forpeople up in this threshold.
Uh, but we're not gonna tellyou what you have to sell.
But some of these things pay you8%, some pay you 2%, you figure
out which one you wanna sell.
Dan Kain (15:17):
Exactly.
Travis (15:18):
Um, or they all, they all are the same, but some of 'em equate
to double the points, you know?
So it's like, yeah, okay.
Whatever,
Dan Kain (15:25):
Yep.
Travis (15:25):
know.
Um, so, uh, but what is it, how wouldyou explain the difference between
Yeah, I can joke about it and ourlisteners probably get tired of
me saying it over and over again.
So how would you describe the differencebetween fee based and fee only?
I.
Dan Kain (15:40):
Yeah, I mean your, your fee, your fee uh, advisors or planners like
us, the only way we make money is througheither an hourly or, yeah, an hourly
rate, I guess you would call it, um,a flat fee or assets under management.
So there's no commissionsinvolved whatsoever.
(16:01):
Um, we have no incentive, you're justtalking about, to sell somebody an
annuity and make a huge commission offof it or sell somebody life insurance.
Um, so, you know, all ofour planners are salaried.
Um, we don't have that incentive.
So, and, and honestly, that tiesin with all of our, like the whole.
(16:23):
Part of our business where we even talkedabout before, like with teaming, right?
It's not my client versus yourclient and I'm selling them a whole
bunch of products and you're sellyour clients a bunch of products.
It's, work as a team and theseare our clients together.
They're
Travis (16:35):
Yep.
Dan Kain (16:36):
Um, so yeah, so there's no conflict of interest really.
That's, that's the main thing is to avoidthat conflict of interest where we don't,
you know, we're not selling you something,um, just to make a commission off of it
and then never talk to you again, right?
Travis (16:52):
Yeah.
Yep.
Dan Kain (16:54):
that's not our business model at all.
But that is, you know, thereis some business models that
are out there like that.
Um, the fee based is more of ahybrid model, so you have that, they
may potentially pay assets undermanagement plus a commission, right?
They may manage some moneyfor you, but then also sell
you some financial products.
So I guess it's more ofa, of a hybrid model.
(17:14):
Um.
You know, and, and when you hear feebased, I think people, like you said
earlier, confuse the terms fee based and
Travis (17:20):
Yeah.
Dan Kain (17:21):
So they think, oh, fee based is, I'm not paying them a commission.
Well, you very well could be.
So, um, it's,
Travis (17:27):
and people throw the terms around too, though I'm a fee-based advisor, but
I don't sell anything where I can make acommission, but I work with other advisor.
'cause like to call yourselffee-based or fee only is
actually a dictation of the firm.
You can't be fee only ifthe firm has anything where
they're receiving commission.
So that's why you see the biggerfirms, and none of them are
(17:48):
fee only because it can't be.
But then you can have advisorswithin the firm who operate kind
of like a fee only, even thoughthey're licensed, where they work at
a firm to sell commission products.
They don't, but a lot of them partnerwith another person at the firm who does.
So they're like, I don't sell anythingthat makes commissions, but the
guy down the hall, he sells lifeinsurances and I send people down
(18:10):
to him and he sends people to me.
Dan Kain (18:11):
Right.
Travis (18:12):
Well, guess what that is?
You know that that's a nice way of sayinglike, I've got an incentive that like,
I need to send you over to that guyso he'll send me some of his clients.
Dan Kain (18:21):
right.
Travis (18:21):
Right?
So, and that's why it's at the firmlevel, that designation is important.
So when somebody says, I'm fee onlyor I'm fee based, you really wanna
understand how they operate and.
Are there situations wherethey're kind of getting kickbacks?
You know, because it is, I like, I'vebeen in there, I've been in in the
industry before where I literally watchedadvisors give other advisors envelopes
(18:43):
of money for sending them clients,
Dan Kain (18:45):
Yep.
Travis (18:46):
you know, um, because they couldn't.
Split a product fee with them, but theywanted to make sure that they were,
you know, rewarded for, for sendingthem somebody, you know, so they might
throw them some dollars on the sideand it's like, okay, well you know, you
as the, as a client don't know that.
You don't know that, okay, they saidthat they only do, you know, only
(19:10):
charge assets under management, butyet they refer you somebody within the
firm who does something commissionsand that somehow matriculates back
to them in, in most situations.
Most situations.
I don't wanna say all, 'cause Idon't know, you know, I'm sure that
there's some places out there thatare, that keep the lines fairly clean.
But I would say that in the industry it'sprobably, um, a minority of places that.
(19:37):
Have a, you know, a firewall therewhere they say, look, if, if our
advisor tells you they only get paid onassets under management, that's truly
the only way anybody here gets paid.
You know, if, if you have an advisor ata big firm and they're getting paid only
in assets under management, that firmthough, and they say something like,
well, it's not on our approved list.
(19:57):
You know, Morgan Stanley, Merrill Lynch,any of the big wirehouses and stuff, a lot
of companies pay them a fee to have theirinvestment products on the shelf at that
investment firm or at that broker dealer.
Um, there's a lot of othermoney to be made behind the
scenes you don't understand.
So a lot of times it's like, well, youknow that I actually heard somebody.
(20:17):
Well, how do you pickinvestments for clients?
Well, I use the firm's approved list.
Okay.
So that's everybody that's payingthe firm to have an investment
on a list to make it look likethe firm has somehow vetted them.
Dan Kain (20:30):
Yep.
Travis (20:31):
What's your vetting process of the firm's approved list then, you
know, so if maybe I wanna work withyou, maybe you're great and maybe you
have to sell off this list of 8,000investments, but how do you filter that
8,000 then that's what I wanna know.
And so that's, again, it's, it'snuanced, but it's, it's the type of
advisor that you might be working with.
And you need to understand thesethings when you're, I think when
(20:52):
you're engaging with 'em, because youknow, nobody wants to pay more fees.
Nobody says, well, geez, I'dlike to pay you an extra 1%
of investment management fees.
And in fact, a lot of people,I'll go index investing so
I don't have to pay a fee.
Okay, but do you understandall the hidden fees?
Do you understand all the ways thatthey're making money off of you?
(21:12):
Because those are coming outtayour bottom line someplace.
Dan Kain (21:16):
Yep.
Travis (21:18):
Um, all right.
So a recent, uh, uh, in a recentmeeting, let me stumble over myself.
In a recent meeting, it came up,um, so we were having a group
meeting and we were talking aboutclients that have less assets that.
There was a perception that maybe theydon't need fee only advisor helping them.
(21:41):
Maybe they, they should just go to,you know, just go, should go buy an
investment, get a in a fund someplace, getin an index fund, get in a American funds,
just buy a fund, get your money there.
You don't have a lot, youjust need to grow your assets.
Um, and I think that therecould be an argument.
I, I do believe that there is an argument.
Get your, when you don't have a lot ofmoney and you're trying to accumulate,
(22:03):
it's more important to get as much asyou can working in a diversified way
Dan Kain (22:08):
Yeah.
Travis (22:08):
at as low a fee as possible to kind of build that portfolio up.
Because your, your options at thesmall end of things is you're either
going to get a lower quality advisor,um, because lower quality advisors
will work with lower paying clients.
That's the reality of that.
Um, or you're going to be gettingsold things that are very expensive.
Dan Kain (22:32):
Yep.
Travis (22:33):
Um, and where you're gonna be dealing with like pro, pro proprietary,
proprietary, let's go over that.
You're gonna be dealing withproprietary type of en en
engagements where I call it Vanguard.
And they tell me what fund to buy, right?
Or, or what's, what's, they won'teven tell me what's funds available.
They'll say, these are all thefunds that are available based
(22:54):
on how much money you have.
These are the funds that you can get into.
Um, but they won't necessarily tell youthe difference between the funds, right?
You've gotta figure that out yourself.
So that means you now haveto become investment expert.
Um, so people with less assets, I think door would benefit from a fee only advisor
(23:17):
because they would avoid the commissions,the proprietary stuff, getting in higher
quality investments right from the get go.
Um.
There's just a ton ofissues that plague 'em.
So let's focus on this a littlebit 'cause I do know we have a
lot of listeners that are in that.
I'm just getting started phase.
We would call 'em like Sproutor Ignite Clients here.
Dan Kain (23:38):
Yep.
Travis (23:38):
Um, what are some of the challenges that are facing
that group of clients that arejust trying to get started out?
They've got 5, 10, 15, $20,000that they should be aware of.
Dan Kain (23:50):
Yeah, I think, and you kind of mentioned it, right, like getting started
and not getting frustrated when things,um, don't quickly ramp up in that space.
Right?
So it's getting started andbeing consistent with, you
know, putting money away.
I think having.
You know, a planner or somebody who,who can be by your side to actually
(24:13):
show you, all right, this is, thisis what you will have someday.
Right?
Like, don't get frustrated that thisis gonna take a while because it
Travis (24:21):
Yeah.
Dan Kain (24:21):
It's, it's, it's a slow build.
Right.
But, um, know, and even, you know, awayfrom the investments and, and not even
necessarily younger people, but evenpeople with, uh, that are approaching
retirement that may have smaller accountbalances that are like, you know what,
why am I paying for this planning?
(24:41):
I don't have much money put away,but there's other factors that go
into all of these other things that,that you can be helped with, right?
Like even like social security planning
Travis (24:51):
Yeah.
Dan Kain (24:51):
pension selection, those types of things.
So, um, I think it kind of falls in likethe younger crowd, just kind of having
somebody by your side to help guideyou, but also, you know, even the crowd
that's getting closer to retirement.
If you may not have a ton of moneysaved, but there's a whole bunch of other
factors that advisor, a good advisor,
Travis (25:12):
Yeah.
Dan Kain (25:12):
can help you save long term of making the right decisions, right,
the make, making smart decisions.
So,
Travis (25:19):
I think that that's a good point though too.
That age group that you were talkingabout, like, I'm getting new retirement.
I've got three or $400,000 that I thinkis where most of the retail abuse is.
So what I mean by that is if youwanna know where the most sharks
are looking to make a buck off ofsomebody, it's in that dollar amount.
Because when you have three, $400,000.
(25:42):
Um, you can see how youcould run outta money.
You can see how you could spendthat much quicker than, say, if
you have a couple million dollars,
Dan Kain (25:50):
Right.
Travis (25:50):
um, and maybe bigger pension and bigger social security.
So what happens is you've got everyinsurance agent, every broker, every small
advisor kind of competing for that threeor $400,000 trying to sell their thing.
That can make a commission.
And a lot of times you end up withproducts like indexed annuities,
Dan Kain (26:10):
Yep.
Travis (26:10):
variable annuities, fixed annuities, CDs, stuff like that there
where they prey on your fear of losing it.
On the fear of running out.
Dan Kain (26:20):
I was just gonna say, it's a lot of fear-based selling right
Travis (26:22):
Yep.
Dan Kain (26:23):
Yep.
Travis (26:23):
And they make massive commit commissions.
But your upside gets inebriatedand, and your access to
principle can be taken away.
And, and my experience withclients in that size is.
Yes, there is a, a potentialthat you could run out of money.
There's a potential, anybody could runoutta money, but the bigger risk is
(26:48):
not that pot pool of money not growingat all because you, you ended up in
a product where it's the top side iscut off where losing access to your
principal and now life happens and youneed some of that principle and you
can't get it without blowing up Allthese quote guarantees that you've paid
for that will never come to fruition.
(27:10):
Um, because you know what?
When you only have three or $400,000and something happens to one of the
kids, you don't think of yourself,you think of the kids and you cash
out part of that three or $400,000.
And a lot of times that's blowingup some of the products that the
smaller advisors are gonna be selling.
Most likely, if you're dealing in thethree to $400,000 range and you're not
(27:32):
dealing with a fee advisor, you're gonnabe dealing with commission heavy products.
You know, or proprietary products.
'cause you're gonna be dealing withsmaller advisors, you know, people who
are newer in their learning or in theircareer, or you're gonna be dealing with
people who are more seasoned in theircareer, um, but not as successful.
(27:53):
Lemme put that way.
Right.
And that's why they're stillselling commissions or, or higher
cost products, trying to, youknow, get their next paycheck.
And that's a lot of times wherewe see churn and stuff like that.
So I think that that's really, I thinkthat that's really, really good advice is
because it isn't just about young people.
This is also about, you know, Ihave a lower assets for maybe my
age and, and, and retirement goals.
(28:16):
And it allows me to be preyedupon based on, oh, aren't you
afraid you're gonna run out?
Let us show you how you won't run out.
Dan Kain (28:23):
Yep.
Travis (28:24):
Um.
So I, I also think that it'slike, it's like habits, right?
Like you need to have,you need to be prepared.
And having, um, a coach and havingyou establish certain disciplines
early is really important.
It's harder to change whenyou're midlife, right?
I'm in my forties, I can say it's a lotharder to get up and join a gym than it
(28:48):
was when I was in my twenties or thirties.
Um, you know, so it'sjust harder to change.
So you build the habits early,um, and get yourself set up.
You can accumulate faster, then youhave a lot more options, uh, and
a lot more flexibility as you age.
Um, and then you havethat compounding interest.
You know, you're, you're, you mentionedit, you know, it sound, it feels like it.
(29:11):
It's very slow.
Your first $10,000, when you make 10%,it's gonna go to 11,000, and that's
not gonna feel like it did anything.
You're gonna be like, so what?
What's a thousand dollars?
Dan Kain (29:23):
Yep,
Travis (29:24):
Your first a hundred thousand, when it goes up 10%,
same 10% that it did when you had10,000, it's gonna go up to 110,000.
Dan Kain (29:31):
yep.
Travis (29:31):
Now you're gonna say, Hey, that's cool, but it's still only $110,000.
But when you have a million,it goes up to 1,000,001.
Dan Kain (29:38):
Yep.
Travis (29:38):
Now you're gonna say, well, that's a, that's a fancy
car I could buy right there.
And when you get to 3 million,it's gonna go up $300,000.
Then you're gonna say, okay, Icould that, that's a vacation house.
You know what I mean?
So you're, you're, you have to understandthat it's not sexy and it's boring, but
in order to get to the bigger number, youhave to go through the smaller numbers.
(30:00):
The way that compounding math works, youwanna get all those thousands as you can.
So if you have an opportunity tokeep more money in your pocket or
give yourself upside on investments.
You, you need to seriously consider howare you appropriately doing that, even
if it means you have to pay for a coach,
Dan Kain (30:18):
Yep,
Travis (30:18):
because what you need to do is avoid the pariahs coming and
basically keeping you small becausethey're, they're living off of you
because they're not successful andthey bent your ear and they got you
kind of ensnared in kind of whateverkind of business that they're doing.
Dan Kain (30:33):
yep.
And that, and like you said, that first,uh, that first a hundred thousand dollars,
that feels like it takes a while, right?
It feels
Travis (30:41):
Yeah.
Dan Kain (30:41):
when is this gonna happen?
And then all of a sudden the compoundinterest starts to accumulate and
it's like, whoa, okay, here we go.
And you get some momentum, and youget some momentum and momentum.
And all of a sudden, you know, like yousaid, on a million dollars, a hundred
thousand dollars, that's a lot of money.
but it, it, it is a slow process,for people who are just starting out.
(31:02):
But, you know, if you have somebody byyour side to tell you this is gonna look
like and show you what this is gonnalook like in 10, 20, 30, 40 years, um,
I think it makes it a little bit easier.
Travis (31:14):
And I don't think you have to have a million dollars
by the time you're 40 either.
Like I can think of a handful ofclients that we have that their goal
by retirement and retirement waslike, I think late fifties, early
sixties for them was to have a milliondollars and now they're at $2 million.
Dan Kain (31:32):
Right,
Travis (31:32):
And, and that was five or six years ago.
They retired, you know, just before COVID.
And so you can see how quickly ittook 'em 30 years to get to a million.
It took 'em six years to get to2 million or something like that.
You know, it was a pretty, it was a prettyexplosive pop from a million to 2 million.
I, I can't tell you exactly how muchtime period, but it's a short amount
(31:53):
of time when you think about it.
It took their entire adultlife to get to a million
Dan Kain (31:58):
Yep.
Travis (31:58):
and then.
It took the, essentially we'rea couple years into retirement
and now they're at 2 million.
And they're like, well, Inever thought I'd be here.
And you know, you get that sheepy littlegrin like, okay, now what do I do next?
You know?
'cause it's like I neverthought I'd be here.
You know, when I was a kid,everybody talked about maybe
someday you get to a million.
And I did it.
And then, wow, now I'm at 2 million now.
(32:19):
And then, and this is why when, whenyou re, when you retire, a lot of times
your, your goals and things change.
As you get into like your seventies, thatcompounding math just starts to get wild.
Dan Kain (32:31):
Right.
Travis (32:32):
here you are, you've been disciplined your whole life.
You've accumulated a couple milliondollars, you get to retirement and
you, and you don't need a lot of it.
Right, and that's part of how youaccumulated it because you've been pretty
disciplined living within your means.
So you get to retirement, now youhave this big pot of money and
you're like, okay, well I'm stillnervous 'cause I'm retiring, I'm
not getting a paycheck anymore.
Dan Kain (32:50):
Yep.
Travis (32:50):
so I'm, I'm not really thinking about philanthropy
or giving to the kids at all.
Then you get into your seventies andyou start looking at what the RMDs
are gonna be and you go, holy cow.
I never thought I'd havethree and a half, $4 million.
I don't know how I got here.
Dan Kain (33:02):
Yep,
Travis (33:02):
Um.
But I'm looking at the tax bill that'scoming my way in the next couple of years.
What can I do about this thing?
And that then all of a sudden,philanthropy comes in and the kids,
you know, giving to the kids or settingmoney aside for the grandkids come in.
And that's when that conversationactually starts to get fun because
you're subconscious or you're mentallydealing with the fact that you also
never thought you'd have that much money.
(33:23):
Uh, but it happens.
And, and, and it just, it just goes toshow, you know, it's, it is that last
10 or 20 years, not the first 20 years,
Dan Kain (33:30):
Mm-hmm.
Travis (33:31):
you need to save in the first 20 years so that you
have something to grow off of.
Dan Kain (33:35):
Yep.
Travis (33:35):
But the big growth is gonna come in the last 10 and 20 years.
Welcome back to Digital Suits, wherewe are wrapping up our mini series with
Dan Kane, senior Wealth Manager fromSeed Planning Group, and today we are
tackling one of the most misunderstoodaspects of financial planning.
That is how advisors get paid andwhat real value actually looks like
at every stage of wealth for clients.
So in this episode, we will breakdown the myths between or around fees
(00:33):
commissions in the true cost of financialadvice while sharing insights on why
smaller investors often face uniquechallenges, how industry terminology
can be confusing and why working with atransparent fee only advisor can make all
the difference in your financial journey.
I'm Travis Moss, the CEO of Seed PlanningGroup, and this podcast is all about
sharing professional knowledge andexperience with you so that you can
(00:55):
get more out of your money and life.
Travis (01:00):
Seems like there are a lot of misconceptions about.
How will a financial planneror wealth manager get paid?
And we talked a little bit about thisin the last two episodes, but somehow
people also think that the size ofthe portfolio indicates the amount
of work that somebody has to do.
And we've had a lot of talks about thisinternally, um, because we've never
(01:21):
had a minimum account size, but we'regetting to the point where we kind of
need to, because somebody with $5,000literally might take as much work or
more work than somebody with a milliondollars, but they don't understand it.
They just say, well, I only have $5,000.
Why should I have to pay you?
You know, if I pay you 1%, that's $50.
Why should I have to pay you $10,000?
(01:43):
Like that person with a million dollars
Dan Kain (01:45):
Mm-hmm.
Travis (01:45):
not understanding, you know, what the services are, how they work, how
people get paid, those types of things.
So.
Um, there's a lot of misconceptions aboutplanners, how they're paid, whether or
not the size of the portfolio shoulddictate how much somebody gets paid.
This is one of the biggest challengesthat that small investors have.
(02:06):
So, a small investor, somebodymaybe starting out five, 10,
$15,000 is very hard for 'em to workwith somebody who is fee only or
somebody who is not gonna churn 'em.
Churning as a term, when I sell youa product to make a commission, and
as soon as the, let's just say timeperiod where it's inappropriate to
sell you something new, to make anothercommission, as soon as that's over,
(02:30):
basically they, the, the advisor flipsthe product and makes another commission
Dan Kain (02:34):
Mm-hmm.
Travis (02:35):
no investment purpose, just simply to make more money.
And you see it a lot with annuitiesand, and you know, different
types of UITs and stuff likethat where people are just like.
Essentially churning products, they're,they're selling them over and over
and over again just to make morecommissions, always at the detriment.
And so what happens a lot of times asmall investor who has 10, 15, $20,000,
(02:57):
they stay small forever becausethey're giving up so much money in fees
Dan Kain (03:01):
Yep.
Travis (03:01):
bad investment performance because of structured products.
'cause that's where a lotof the commissions are.
Um, so I don't think peopleunderstand that either.
You know, sometimes even though you haveless money, maybe you need to pay a little
bit more to a fiduciary to make sure thatyou have a chance to grow your money.
Because if you're dealing with a financialadvisor and you don't have a lot.
(03:25):
They gotta make money somehow for thetime that they're spending with you,
whether, whether it's productive timeor not, that's a different discussion.
But they're looking at you like,okay, you know, I, if I gotta
spend time with you, I gotta eat.
So what can I take outta youraccount legally, basically.
Um, but they, so they think thatlike the size dicta dictates it.
Um, uh, they, I don't thinkpeople understand how much work is
(03:48):
required for comprehensive planning.
Um, and, and kinda what it's worth.
And so I just wanted to know alittle bit more on your thoughts
on, on that kind of experience.
'cause you're coming from a place whenpeople first engaged you prior to seed, it
was part of the cost of being in the plan.
So you were basically freeto them as far as they know,
Dan Kain (04:08):
Yep,
Travis (04:09):
right?
So then you get into comprehensivewealth management, and now in order
to work with you, I have to pay you,
Dan Kain (04:15):
yep.
Travis (04:16):
which is a part of your discussion with every client that you
work with, is what are we chargingand, and what are you getting for this?
How has that experience been andand what are your thoughts on that?
Dan Kain (04:27):
Yeah, and I think you, you actually just said it, you
know, it doesn't necessarily matterlike the size of the accounts that
they have or, you know what I mean?
Because you can have somebody thathas $5 million, but there's not, just
not a ton of work for them to do.
I mean, they're prettymuch on auto autopilot.
Right?
And then
Travis (04:45):
Right?
Dan Kain (04:45):
somebody with a lot less money that has of these other issues.
When we do comprehensive planning,you're looking at estate planning.
They may have some bigestate planning issues or
Travis (04:55):
Yep.
Dan Kain (04:55):
you know, a lot of tax planning issues.
So.
Yeah, that dollar amount doesn'tnecessarily mean that there's
gonna be more planning if youhave more money, um, that's gonna
be dictated by life situations.
Right.
And I know
Travis (05:08):
Yep.
Dan Kain (05:09):
in, in our kind of opening meetings with, with clients, we really
try to dig into like those details withthem and, and try to figure out, okay,
what type of client is this going to be?
Um, you know, how much work are we gonnahave around, um, all the different areas
of planning, not just, know, they have afew thousand dollars, so they're probably
just a small client, no need to worry
Travis (05:30):
Yeah.
Dan Kain (05:30):
Um, so, you know, that takes, that takes some skill and
some investigative skills, I guess,to kind of determine, all right,
what is this gonna look like?
Um, you know, the, what's the wholepicture gonna look like for these clients?
Um, it doesn't necessarilymean that money is less work.
I mean, it could be the complete opposite.
Travis (05:50):
Well, so sometimes people, um, they don't understand.
They, they have, you know, some kindof question that they have financially
and whether or not you can answerthe question in just an hour or two
is a question in the first place.
'cause somebody asks you, kinda like adeep question, you might need a lot of
background and it might take a lot ofworkup and projections to be able to
(06:11):
give 'em an answer as a fiduciary, right?
If you're just selling product, it's easy.
I can give it to, youhave to sit on my desk.
Dan Kain (06:17):
Yep.
Travis (06:17):
But if, if we're talking about from a fiduciary relationship,
I might have to do a workup for it.
But the other thing that people don'tunderstand is there's times where somebody
comes in and, and we're doing planningand they're frustrated over what they
have to pay for the cost of planning.
Dan Kain (06:29):
Mm-hmm.
Travis (06:29):
Let's say it's maybe the first time they've ever worked with
a professional and you know, they're,you're not paying just for time.
You are paying for the fact that thatperson or that person's team has looked
at that type of situation hundreds oftimes and understands nuance and all
kinds of other things that we've talkedabout over the last two, uh, episodes.
You're paying for all of that.
(06:50):
And so if they look at this situation,they say, look, we're going to give
you a, um, um, some guidance that ifyou implement the guidance, we think
it's going to improve your situationby high six or even seven figures.
And, and that's, that'sa pretty common outcome.
Um, what is that worth?
(07:11):
Is that worth you bickering over, youknow, a couple thousand dollars in fees?
Well, you know, I need to see it first.
Well, how do you see thefuture before it happens?
Or is there a chance that I've workedon hundreds of financial plans and
I could sit in front of you andsay, by implementing this, this, and
this, these are the expected results.
(07:31):
Here's the range of outputthat has now been improved.
That's worth something, you know?
And so if you're going to someplace going,I don't see why I need to pay these people
for it, or I don't pay them, it's free.
None of it's free.
Dan Kain (07:44):
Nothing's
Travis (07:44):
It's coming outta something, right?
You're buying proprietaryproducts, you're buying something.
So not, there is not a nonprofit inthis industry, and even like, oh,
I went to Fidelity, or I went toSchwab, and they're working for free.
They're not working for free.
They're making money off of you.
You better believe they'remaking money off of you.
Dan Kain (08:01):
yep.
Travis (08:01):
you may not understand how the product are designed, or like, even if
you're sitting in cash in one of theiraccounts, they're making money off your
cash, they're making a spread off of it.
There's no free lunch.
So you have to understand that there's,you are always paying something.
So the question is, is what is thevalue that you're getting out of that?
And if you're like, well, I don'twanna pay anything for that, then,
(08:23):
then, and, and you're not even opento the idea of, geez, you know.
I spend a little bit of money.
I make a little bit of money.
Then, you know, as, as aclient, nobody's gonna help you.
But that also gets you to the differencein advisors and the difference in
who you're working with and, and howthey're able to articulate the value.
Because they're, like, we've talkedabout, there's a dramatic difference
(08:44):
between the different types of planners.
And can they actually show you?
Can they articulate?
Well, we do.
Roth conversions are a great example.
So if I showed you a Roth conversionand I showed you, okay, I'm taking money
outta your IRA, we're converting overto the Roth, we're paying the taxes.
Look at the difference long term.
And you might say, well, you know,yeah, that makes, that's, I look at,
(09:09):
look at how much more money I have.
But if, what if, what ifin doing that, you've also
manipulated the rate of return.
So what if on the IRA you had a lower rateof return and on a Roth IRA you have a
higher rate of return 'cause you're using,you know, some kind of historic analysis
based on a, an estimated allocation.
So was the, was the increase in assetsbecause you have a higher rate of return,
(09:32):
or was the increase in assets becauseof the differential in the tax planning?
You don't know unless yourvariables are consistent.
That's what you're hiring.
You're hiring people whounderstand those things.
It can actually articulate,no, this is where the value is.
This is where you find those valuesso that you're not paying for people
just to move you around their products.
Dan Kain (09:51):
Yep.
Travis (09:51):
the industry terminology, making it look like they're making you money.
But in the end, it's kinda like, youknow, if every time you go to the doctor,
they just give you a new drug, you know,eventually you're gonna start scratching
your head and going, why am I just gettingnew drugs every time I go to the doctors?
Dan Kain (10:05):
Right.
Travis (10:06):
It's, it's like that with a lot of financial shops.
Every time you go in, there's,they're prescribing you something
different or they're justignoring you completely, you know?
And it's like, okay, what'sthis gotta actually do with me?
So I, um.
I do think that, that it's hard sometimesfor people just to understand what the
value is, um, that they're paying for.
And that's the sign of, I thinka good planner is somebody who
(10:27):
can help them understand, look atthe difference in the two paths.
This is the path thatyou're taking currently.
This is the path thatwe think you could take.
Dan Kain (10:35):
Yep.
Travis (10:36):
By the way, it's net of our fees telling me that's not worth it.
Like I've had literally, peoplecome in, look at the difference.
Yeah.
I, I know that, and I know you can doa, a, make a big difference, but I kind
of like, I, I don't care about money.
I literally had people say, Idon't care about, about having
(10:57):
better returns on my investments.
Dan Kain (10:59):
Yep.
Travis (10:59):
And I'm like, I, I don't understand that.
You know what I mean?
Like what's the, so if you don'tcare about having better returns,
why don't, why don't you pay to havebetter returns and then donate the
returns to charity or something?
Right.
Like, like, why are we haggling over afee if you don't care about the returns?
Dan Kain (11:18):
Yep.
Travis (11:19):
It's a, it's a, it is just this weird challenge, but I, I think it is
very, very difficult sometimes for,for clients or prospects to understand,
what am I paying for in this space?
Dan Kain (11:29):
It's tough.
And I think, you know, one of thethings I think that we do really well
is, you know, we not only look at theirsituation, but then we say, okay, we
did these Roth conversions for you,for example, but then also look at.
For your kids down the road, right?
Like, this
Travis (11:43):
Yeah.
Dan Kain (11:44):
is what's gonna happen for them as well.
So not
Travis (11:46):
Yeah.
Dan Kain (11:47):
what they have going on, but also is what is gonna
happen for your family too.
Sometimes that, you know,strikes a chord with them, right?
'cause they're thinking,
Travis (11:56):
Mm-hmm.
Dan Kain (11:56):
now my kids get the money tax free.
Like, you know, in that example, right?
So, um,
Travis (12:02):
Which is also kind of always a little bit of a oxymoron to me.
It's like, I, I really care howmuch money I have and how the market
does, but I don't care about thetaxes and I don't care about how much
taxes my kids are gonna have to pay.
Dan Kain (12:13):
right.
Travis (12:14):
Well, that's because the problem that you have is when you
look at your account, you see dollars.
When I look at your account, I seedollars that belong to you, and I
see dollars that belong to the IRS.
Dan Kain (12:23):
Yep.
Travis (12:24):
And so when I look at the account, I'm always trying to figure
out how do I reduce how much ofthose dollars go to the IRS for you?
Dan Kain (12:30):
Mm-hmm.
Travis (12:33):
But 99% of people are the other way around.
They're looking, I've got$3 million in my account.
Okay?
And 3 million of that's taxable.
And so either you're going to paythe taxes or kids are gonna pay
the taxes, but nobody's getting$3 million out of this thing.
Dan Kain (12:46):
right.
Travis (12:48):
So how do we chip away at the, at the chunk of money, are they
gonna get 700 grand outta you or arethey gonna get 500 grand outta you?
How do we chip away at that?
Dan Kain (12:57):
yep,
Travis (12:59):
So one of the compounding factors I think for this issue is
also the non-standardized terminologythat the industry is using.
And for instance, there's feeonly and then there's fee-based.
Dan Kain (13:14):
yep.
Travis (13:15):
And I always love when I talk to somebody who has done just a tiny
bit of homework and they'll be like,ah, so I see that you're fee-based.
I really like that.
And I'm thinking, youmean fee only, right?
Dan Kain (13:27):
Right, right.
Travis (13:28):
I don't know anybody who goes, ah.
So I see that.
I have to have a PhD to knowwhen you're making a commission
from me versus when you're not.
I really like that.
Like nobody, nobody'sthinking that, right?
They're, what they're really thinkingis, is I see that you're transparent and
I pay you a flat fee for whatever you'redoing for me, and that's how it works.
I don't have to worry about you selling,you know, me proprietary products and
(13:52):
making extra cuts on things and you knowwhat's in there for you versus what, like,
imagine, again, go back to the doctors.
You go to the doctors, they giveyou a prescription, then you find
out that that doctor, you were their1000000th prescription and they got,
you know, a villa in Italy for it.
You know, like that wouldreally piss you off.
You would not be happy about that.
Dan Kain (14:11):
Yep.
Travis (14:12):
That's what's happening.
Like imagine if you found out, oh,I bought this insurance product, or
this annuity, this index annuity.
'cause they said, well, youknow, everybody needs it and
this is why I should get it.
And so I got it and I, and then,oh, I, I just saw this announcement
that so and so won a trip throughthe annuity company to, you know,
Punana to the Hard Rock Hotel on me.
Dan Kain (14:33):
Yep.
Travis (14:34):
know, it's like, yep.
Congratulations.
You fell into that one.
Dan Kain (14:37):
and that does happen with pretty much firms out there.
Right?
Those types of trips happen.
Travis (14:44):
They're not supposed to do it anymore.
That was, that They took, thatthey, yes, they passed a law that,
or rule regulations said you'renot supposed to do this anymore.
But, um, you know, everythingcan be signed away with the right
disclosures and the right paperwork.
I think for most places it's like we'renot really doing a sales quota thing,
but if you sell enough, you get to goto the leadership council retreat now.
(15:08):
You know, so that's forpeople up in this threshold.
Uh, but we're not gonna tellyou what you have to sell.
But some of these things pay you8%, some pay you 2%, you figure
out which one you wanna sell.
Dan Kain (15:17):
Exactly.
Travis (15:18):
Um, or they all, they all are the same, but some of 'em equate
to double the points, you know?
So it's like, yeah, okay.
Whatever,
Dan Kain (15:25):
Yep.
Travis (15:25):
know.
Um, so, uh, but what is it, how wouldyou explain the difference between
Yeah, I can joke about it and ourlisteners probably get tired of
me saying it over and over again.
So how would you describe the differencebetween fee based and fee only?
I.
Dan Kain (15:40):
Yeah, I mean your, your fee, your fee uh, advisors or planners like
us, the only way we make money is througheither an hourly or, yeah, an hourly
rate, I guess you would call it, um,a flat fee or assets under management.
So there's no commissionsinvolved whatsoever.
(16:01):
Um, we have no incentive, you're justtalking about, to sell somebody an
annuity and make a huge commission offof it or sell somebody life insurance.
Um, so, you know, all ofour planners are salaried.
Um, we don't have that incentive.
So, and, and honestly, that tiesin with all of our, like the whole.
(16:23):
Part of our business where we even talkedabout before, like with teaming, right?
It's not my client versus yourclient and I'm selling them a whole
bunch of products and you're sellyour clients a bunch of products.
It's, work as a team and theseare our clients together.
They're
Travis (16:35):
Yep.
Dan Kain (16:36):
Um, so yeah, so there's no conflict of interest really.
That's, that's the main thing is to avoidthat conflict of interest where we don't,
you know, we're not selling you something,um, just to make a commission off of it
and then never talk to you again, right?
Travis (16:52):
Yeah.
Yep.
Dan Kain (16:54):
that's not our business model at all.
But that is, you know, thereis some business models that
are out there like that.
Um, the fee based is more of ahybrid model, so you have that, they
may potentially pay assets undermanagement plus a commission, right?
They may manage some moneyfor you, but then also sell
you some financial products.
So I guess it's more ofa, of a hybrid model.
(17:14):
Um.
You know, and, and when you hear feebased, I think people, like you said
earlier, confuse the terms fee based and
Travis (17:20):
Yeah.
Dan Kain (17:21):
So they think, oh, fee based is, I'm not paying them a commission.
Well, you very well could be.
So, um, it's,
Travis (17:27):
and people throw the terms around too, though I'm a fee-based advisor, but
I don't sell anything where I can make acommission, but I work with other advisor.
'cause like to call yourselffee-based or fee only is
actually a dictation of the firm.
You can't be fee only ifthe firm has anything where
they're receiving commission.
So that's why you see the biggerfirms, and none of them are
(17:48):
fee only because it can't be.
But then you can have advisorswithin the firm who operate kind
of like a fee only, even thoughthey're licensed, where they work at
a firm to sell commission products.
They don't, but a lot of them partnerwith another person at the firm who does.
So they're like, I don't sell anythingthat makes commissions, but the
guy down the hall, he sells lifeinsurances and I send people down
(18:10):
to him and he sends people to me.
Dan Kain (18:11):
Right.
Travis (18:12):
Well, guess what that is?
You know that that's a nice way of sayinglike, I've got an incentive that like,
I need to send you over to that guyso he'll send me some of his clients.
Dan Kain (18:21):
right.
Travis (18:21):
Right?
So, and that's why it's at the firmlevel, that designation is important.
So when somebody says, I'm fee onlyor I'm fee based, you really wanna
understand how they operate and.
Are there situations wherethey're kind of getting kickbacks?
You know, because it is, I like, I'vebeen in there, I've been in in the
industry before where I literally watchedadvisors give other advisors envelopes
(18:43):
of money for sending them clients,
Dan Kain (18:45):
Yep.
Travis (18:46):
you know, um, because they couldn't.
Split a product fee with them, but theywanted to make sure that they were,
you know, rewarded for, for sendingthem somebody, you know, so they might
throw them some dollars on the sideand it's like, okay, well you know, you
as the, as a client don't know that.
You don't know that, okay, they saidthat they only do, you know, only
(19:10):
charge assets under management, butyet they refer you somebody within the
firm who does something commissionsand that somehow matriculates back
to them in, in most situations.
Most situations.
I don't wanna say all, 'cause Idon't know, you know, I'm sure that
there's some places out there thatare, that keep the lines fairly clean.
But I would say that in the industry it'sprobably, um, a minority of places that.
(19:37):
Have a, you know, a firewall therewhere they say, look, if, if our
advisor tells you they only get paid onassets under management, that's truly
the only way anybody here gets paid.
You know, if, if you have an advisor ata big firm and they're getting paid only
in assets under management, that firmthough, and they say something like,
well, it's not on our approved list.
(19:57):
You know, Morgan Stanley, Merrill Lynch,any of the big wirehouses and stuff, a lot
of companies pay them a fee to have theirinvestment products on the shelf at that
investment firm or at that broker dealer.
Um, there's a lot of othermoney to be made behind the
scenes you don't understand.
So a lot of times it's like, well, youknow that I actually heard somebody.
(20:17):
Well, how do you pickinvestments for clients?
Well, I use the firm's approved list.
Okay.
So that's everybody that's payingthe firm to have an investment
on a list to make it look likethe firm has somehow vetted them.
Dan Kain (20:30):
Yep.
Travis (20:31):
What's your vetting process of the firm's approved list then, you
know, so if maybe I wanna work withyou, maybe you're great and maybe you
have to sell off this list of 8,000investments, but how do you filter that
8,000 then that's what I wanna know.
And so that's, again, it's, it'snuanced, but it's, it's the type of
advisor that you might be working with.
And you need to understand thesethings when you're, I think when
(20:52):
you're engaging with 'em, because youknow, nobody wants to pay more fees.
Nobody says, well, geez, I'dlike to pay you an extra 1%
of investment management fees.
And in fact, a lot of people,I'll go index investing so
I don't have to pay a fee.
Okay, but do you understandall the hidden fees?
Do you understand all the ways thatthey're making money off of you?
(21:12):
Because those are coming outtayour bottom line someplace.
Dan Kain (21:16):
Yep.
Travis (21:18):
Um, all right.
So a recent, uh, uh, in a recentmeeting, let me stumble over myself.
In a recent meeting, it came up,um, so we were having a group
meeting and we were talking aboutclients that have less assets that.
There was a perception that maybe theydon't need fee only advisor helping them.
(21:41):
Maybe they, they should just go to,you know, just go, should go buy an
investment, get a in a fund someplace, getin an index fund, get in a American funds,
just buy a fund, get your money there.
You don't have a lot, youjust need to grow your assets.
Um, and I think that therecould be an argument.
I, I do believe that there is an argument.
Get your, when you don't have a lot ofmoney and you're trying to accumulate,
(22:03):
it's more important to get as much asyou can working in a diversified way
Dan Kain (22:08):
Yeah.
Travis (22:08):
at as low a fee as possible to kind of build that portfolio up.
Because your, your options at thesmall end of things is you're either
going to get a lower quality advisor,um, because lower quality advisors
will work with lower paying clients.
That's the reality of that.
Um, or you're going to be gettingsold things that are very expensive.
Dan Kain (22:32):
Yep.
Travis (22:33):
Um, and where you're gonna be dealing with like pro, pro proprietary,
proprietary, let's go over that.
You're gonna be dealing withproprietary type of en en
engagements where I call it Vanguard.
And they tell me what fund to buy, right?
Or, or what's, what's, they won'teven tell me what's funds available.
They'll say, these are all thefunds that are available based
(22:54):
on how much money you have.
These are the funds that you can get into.
Um, but they won't necessarily tell youthe difference between the funds, right?
You've gotta figure that out yourself.
So that means you now haveto become investment expert.
Um, so people with less assets, I think door would benefit from a fee only advisor
(23:17):
because they would avoid the commissions,the proprietary stuff, getting in higher
quality investments right from the get go.
Um.
There's just a ton ofissues that plague 'em.
So let's focus on this a littlebit 'cause I do know we have a
lot of listeners that are in that.
I'm just getting started phase.
We would call 'em like Sproutor Ignite Clients here.
Dan Kain (23:38):
Yep.
Travis (23:38):
Um, what are some of the challenges that are facing
that group of clients that arejust trying to get started out?
They've got 5, 10, 15, $20,000that they should be aware of.
Dan Kain (23:50):
Yeah, I think, and you kind of mentioned it, right, like getting started
and not getting frustrated when things,um, don't quickly ramp up in that space.
Right?
So it's getting started andbeing consistent with, you
know, putting money away.
I think having.
You know, a planner or somebody who,who can be by your side to actually
(24:13):
show you, all right, this is, thisis what you will have someday.
Right?
Like, don't get frustrated that thisis gonna take a while because it
Travis (24:21):
Yeah.
Dan Kain (24:21):
It's, it's, it's a slow build.
Right.
But, um, know, and even, you know, awayfrom the investments and, and not even
necessarily younger people, but evenpeople with, uh, that are approaching
retirement that may have smaller accountbalances that are like, you know what,
why am I paying for this planning?
(24:41):
I don't have much money put away,but there's other factors that go
into all of these other things that,that you can be helped with, right?
Like even like social security planning
Travis (24:51):
Yeah.
Dan Kain (24:51):
pension selection, those types of things.
So, um, I think it kind of falls in likethe younger crowd, just kind of having
somebody by your side to help guideyou, but also, you know, even the crowd
that's getting closer to retirement.
If you may not have a ton of moneysaved, but there's a whole bunch of other
factors that advisor, a good advisor,
Travis (25:12):
Yeah.
Dan Kain (25:12):
can help you save long term of making the right decisions, right,
the make, making smart decisions.
So,
Travis (25:19):
I think that that's a good point though too.
That age group that you were talkingabout, like, I'm getting new retirement.
I've got three or $400,000 that I thinkis where most of the retail abuse is.
So what I mean by that is if youwanna know where the most sharks
are looking to make a buck off ofsomebody, it's in that dollar amount.
Because when you have three, $400,000.
(25:42):
Um, you can see how youcould run outta money.
You can see how you could spendthat much quicker than, say, if
you have a couple million dollars,
Dan Kain (25:50):
Right.
Travis (25:50):
um, and maybe bigger pension and bigger social security.
So what happens is you've got everyinsurance agent, every broker, every small
advisor kind of competing for that threeor $400,000 trying to sell their thing.
That can make a commission.
And a lot of times you end up withproducts like indexed annuities,
Dan Kain (26:10):
Yep.
Travis (26:10):
variable annuities, fixed annuities, CDs, stuff like that there
where they prey on your fear of losing it.
On the fear of running out.
Dan Kain (26:20):
I was just gonna say, it's a lot of fear-based selling right
Travis (26:22):
Yep.
Dan Kain (26:23):
Yep.
Travis (26:23):
And they make massive commit commissions.
But your upside gets inebriatedand, and your access to
principle can be taken away.
And, and my experience withclients in that size is.
Yes, there is a, a potentialthat you could run out of money.
There's a potential, anybody could runoutta money, but the bigger risk is
(26:48):
not that pot pool of money not growingat all because you, you ended up in
a product where it's the top side iscut off where losing access to your
principal and now life happens and youneed some of that principle and you
can't get it without blowing up Allthese quote guarantees that you've paid
for that will never come to fruition.
(27:10):
Um, because you know what?
When you only have three or $400,000and something happens to one of the
kids, you don't think of yourself,you think of the kids and you cash
out part of that three or $400,000.
And a lot of times that's blowingup some of the products that the
smaller advisors are gonna be selling.
Most likely, if you're dealing in thethree to $400,000 range and you're not
(27:32):
dealing with a fee advisor, you're gonnabe dealing with commission heavy products.
You know, or proprietary products.
'cause you're gonna be dealing withsmaller advisors, you know, people who
are newer in their learning or in theircareer, or you're gonna be dealing with
people who are more seasoned in theircareer, um, but not as successful.
(27:53):
Lemme put that way.
Right.
And that's why they're stillselling commissions or, or higher
cost products, trying to, youknow, get their next paycheck.
And that's a lot of times wherewe see churn and stuff like that.
So I think that that's really, I thinkthat that's really, really good advice is
because it isn't just about young people.
This is also about, you know, Ihave a lower assets for maybe my
age and, and, and retirement goals.
(28:16):
And it allows me to be preyedupon based on, oh, aren't you
afraid you're gonna run out?
Let us show you how you won't run out.
Dan Kain (28:23):
Yep.
Travis (28:24):
Um.
So I, I also think that it'slike, it's like habits, right?
Like you need to have,you need to be prepared.
And having, um, a coach and havingyou establish certain disciplines
early is really important.
It's harder to change whenyou're midlife, right?
I'm in my forties, I can say it's a lotharder to get up and join a gym than it
(28:48):
was when I was in my twenties or thirties.
Um, you know, so it'sjust harder to change.
So you build the habits early,um, and get yourself set up.
You can accumulate faster, then youhave a lot more options, uh, and
a lot more flexibility as you age.
Um, and then you havethat compounding interest.
You know, you're, you're, you mentionedit, you know, it sound, it feels like it.
(29:11):
It's very slow.
Your first $10,000, when you make 10%,it's gonna go to 11,000, and that's
not gonna feel like it did anything.
You're gonna be like, so what?
What's a thousand dollars?
Dan Kain (29:23):
Yep,
Travis (29:24):
Your first a hundred thousand, when it goes up 10%,
same 10% that it did when you had10,000, it's gonna go up to 110,000.
Dan Kain (29:31):
yep.
Travis (29:31):
Now you're gonna say, Hey, that's cool, but it's still only $110,000.
But when you have a million,it goes up to 1,000,001.
Dan Kain (29:38):
Yep.
Travis (29:38):
Now you're gonna say, well, that's a, that's a fancy
car I could buy right there.
And when you get to 3 million,it's gonna go up $300,000.
Then you're gonna say, okay, Icould that, that's a vacation house.
You know what I mean?
So you're, you're, you have to understandthat it's not sexy and it's boring, but
in order to get to the bigger number, youhave to go through the smaller numbers.
(30:00):
The way that compounding math works, youwanna get all those thousands as you can.
So if you have an opportunity tokeep more money in your pocket or
give yourself upside on investments.
You, you need to seriously consider howare you appropriately doing that, even
if it means you have to pay for a coach,
Dan Kain (30:18):
Yep,
Travis (30:18):
because what you need to do is avoid the pariahs coming and
basically keeping you small becausethey're, they're living off of you
because they're not successful andthey bent your ear and they got you
kind of ensnared in kind of whateverkind of business that they're doing.
Dan Kain (30:33):
yep.
And that, and like you said, that first,uh, that first a hundred thousand dollars,
that feels like it takes a while, right?
It feels
Travis (30:41):
Yeah.
Dan Kain (30:41):
when is this gonna happen?
And then all of a sudden the compoundinterest starts to accumulate and
it's like, whoa, okay, here we go.
And you get some momentum, and youget some momentum and momentum.
And all of a sudden, you know, like yousaid, on a million dollars, a hundred
thousand dollars, that's a lot of money.
but it, it, it is a slow process,for people who are just starting out.
(31:02):
But, you know, if you have somebody byyour side to tell you this is gonna look
like and show you what this is gonnalook like in 10, 20, 30, 40 years, um,
I think it makes it a little bit easier.
Travis (31:14):
And I don't think you have to have a million dollars
by the time you're 40 either.
Like I can think of a handful ofclients that we have that their goal
by retirement and retirement waslike, I think late fifties, early
sixties for them was to have a milliondollars and now they're at $2 million.
Dan Kain (31:32):
Right,
Travis (31:32):
And, and that was five or six years ago.
They retired, you know, just before COVID.
And so you can see how quickly ittook 'em 30 years to get to a million.
It took 'em six years to get to2 million or something like that.
You know, it was a pretty, it was a prettyexplosive pop from a million to 2 million.
I, I can't tell you exactly how muchtime period, but it's a short amount
(31:53):
of time when you think about it.
It took their entire adultlife to get to a million
Dan Kain (31:58):
Yep.
Travis (31:58):
and then.
It took the, essentially we'rea couple years into retirement
and now they're at 2 million.
And they're like, well, Inever thought I'd be here.
And you know, you get that sheepy littlegrin like, okay, now what do I do next?
You know?
'cause it's like I neverthought I'd be here.
You know, when I was a kid,everybody talked about maybe
someday you get to a million.
And I did it.
And then, wow, now I'm at 2 million now.
(32:19):
And then, and this is why when, whenyou re, when you retire, a lot of times
your, your goals and things change.
As you get into like your seventies, thatcompounding math just starts to get wild.
Dan Kain (32:31):
Right.
Travis (32:32):
here you are, you've been disciplined your whole life.
You've accumulated a couple milliondollars, you get to retirement and
you, and you don't need a lot of it.
Right, and that's part of how youaccumulated it because you've been pretty
disciplined living within your means.
So you get to retirement, now youhave this big pot of money and
you're like, okay, well I'm stillnervous 'cause I'm retiring, I'm
not getting a paycheck anymore.
Dan Kain (32:50):
Yep.
Travis (32:50):
so I'm, I'm not really thinking about philanthropy
or giving to the kids at all.
Then you get into your seventies andyou start looking at what the RMDs
are gonna be and you go, holy cow.
I never thought I'd havethree and a half, $4 million.
I don't know how I got here.
Dan Kain (33:02):
Yep,
Travis (33:02):
Um.
But I'm looking at the tax bill that'scoming my way in the next couple of years.
What can I do about this thing?
And that then all of a sudden,philanthropy comes in and the kids,
you know, giving to the kids or settingmoney aside for the grandkids come in.
And that's when that conversationactually starts to get fun because
you're subconscious or you're mentallydealing with the fact that you also
never thought you'd have that much money.
(33:23):
Uh, but it happens.
And, and, and it just, it just goes toshow, you know, it's, it is that last
10 or 20 years, not the first 20 years,
Dan Kain (33:30):
Mm-hmm.
Travis (33:31):
you need to save in the first 20 years so that you
have something to grow off of.
Dan Kain (33:35):
Yep.
Travis (33:35):
But the big growth is gonna come in the last 10 and 20 years.
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I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Ruthie's Table 4
For more than 30 years The River Cafe in London, has been the home-from-home of artists, architects, designers, actors, collectors, writers, activists, and politicians. Michael Caine, Glenn Close, JJ Abrams, Steve McQueen, Victoria and David Beckham, and Lily Allen, are just some of the people who love to call The River Cafe home. On River Cafe Table 4, Rogers sits down with her customers—who have become friends—to talk about food memories. Table 4 explores how food impacts every aspect of our lives. “Foods is politics, food is cultural, food is how you express love, food is about your heritage, it defines who you and who you want to be,” says Rogers. Each week, Rogers invites her guest to reminisce about family suppers and first dates, what they cook, how they eat when performing, the restaurants they choose, and what food they seek when they need comfort. And to punctuate each episode of Table 4, guests such as Ralph Fiennes, Emily Blunt, and Alfonso Cuarón, read their favourite recipe from one of the best-selling River Cafe cookbooks. Table 4 itself, is situated near The River Cafe’s open kitchen, close to the bright pink wood-fired oven and next to the glossy yellow pass, where Ruthie oversees the restaurant. You are invited to take a seat at this intimate table and join the conversation. For more information, recipes, and ingredients, go to https://shoptherivercafe.co.uk/ Web: https://rivercafe.co.uk/ Instagram: www.instagram.com/therivercafelondon/ Facebook: https://en-gb.facebook.com/therivercafelondon/ For more podcasts from iHeartRadio, visit the iheartradio app, apple podcasts, or wherever you listen to your favorite shows. Learn more about your ad-choices at https://www.iheartpodcastnetwork.com
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.