December 3, 2019 • 28 mins
James Brewer, CDFA, AIF, CFSLA, CFP® is the founder of Envision Wealth Planning and is regularly featured in the media for his financial expertise and support of socially responsible investing. In this episode he explores the ways he engages his clients, giving helpful examples and a glimpse into how he uses RetireReady Solutions to educate and prepare people to retie ready.
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Episode Transcript
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Edward Dressel (00:04):
Welcome everyone to another podcast by
RetireReady Solutions.
We are pleased to have JamesBrewer here today with us.
He's out of the Chicago area.
And James, thanks for joining ustoday.
James Brewer (00:16):
Well, thanks for having me.
Edward Dressel (00:18):
Tell everybody a little bit about your business.
James Brewer (00:20):
Well, let's see.
I've been an advisor since, oh,I think 2006 or so.
I've been through the brokerdealer world and decided last
year to start my own RIA.
I am a certified financialplanner.
(00:42):
I've actually taught someclasses for the College for
Financial Planning, blessed tobe a contributor to Forbes.com
and I look forward to showingpeople why subscription-based
financial advice should bring inmore people than the industry
(01:03):
has been able to cater to in thepast.
Edward Dressel (01:06):
So there's a lot there.
You're an active person.
I've seen some of your Forbesarticles.
Congratulations on that.
Tell me a little bit about yourcompany.
Are you a solo or do you have ateam you work with?
James Brewer (01:18):
Today I have one other advisor.
I'm looking to bring on otheradvisors.
My intent has always been topartner with other advisors, yet
I also met a lot of people whowould rather work for someone
than necessarily be a partner.
My mentality is that we aretrying to help educate people
(01:41):
and advise them on sometimeseveryday things from emergency
funds and how are we going tofind the money for that?
How are we going to retirecomfortably and find funds to
actually be able to fund that?
Which is one of the reasons thatI had been interested in, sought
out, and became a customer ofRetireReady Solutions.
Edward Dressel (02:04):
Why did you choose financial planning.
James Brewer (02:06):
Financial planning is typically something that
really isn't taught.
When I first came into thebusiness, many so-called
financial advisors really usethat term for what they really
wanted to do, which was helppeople invest their money.
And your listeners probably knowthat there are a couple of
(02:27):
schools of thought there.
One that tends to look more atstocks and bonds, mutual funds,
and then the world that tends tolook more at portfolios.
The challenge with the majorityof Americans is that they've
really never had any holistic,comprehensive financial planning
and they tend to perceive thingsas kind of next problem up.
(02:51):
But often in solving for oneproblem, they create other
problems.
They don't understand thingslike compounding.
So, to me, rather than just tryto help people with their
investments--where I stillbelieve that there's a limited
number of those people in theworld--there are to me more
people who actually need help toget themselves situated on the
(03:15):
right path with college planningand retirement planning and the
smart way to buy a house.
And how do they pay out theircollege student loan debts and
how do they help their childrennot actually get in to student
loan debt?
So all those problems to me arelarger than simply helping
people invest.
Edward Dressel (03:36):
How do you engage your clients in the
financial planning conversation?
How do you get them?
I mean, most people go,"I reallydon't want to talk about
financial planning." There's abunch of cartoons in the
industry that make negativecomments about what we do,
including those made by theindustry that they kind of laugh
at ourselves.
What do you do to help peopleget ready to say,"Hey, this is
(03:58):
going to be a meaningfulconversation."
James Brewer (04:01):
Maybe it's because I've become blind to some of
those cartoons.
I tend to really hear somethings someone might be talking
about--buying a house orcomplaining about student loan
debt or something that they'rediscussing--and find ways to
enter that conversation withpeople who haven't necessarily
(04:22):
knocked on my door to come andbecome a client.
Thanks to Google and myunderstanding of search engine
optimization.
I, prior to this Forbes.comopportunity, had been writing a
lot of blog articles in aneffort to have people who might
(04:43):
be searching out what I do toactually, you know, knock on my
door and try to learn more.
I get a decent number of people,let's say per month, who want to
learn more about what it is thatI've said on a particular topic.
Some of the people actually dobelieve that somehow financial
planning is supposed to be freebecause in a way we've taught
(05:06):
people quote unquote,"we giveaway planning" but then you
productize the advice, meaningwe sell you a product and that's
how we get compensated.
I know some people who sellinsurance so they'll do social
security seminars in an effortto sell an insurance product.
To me rather than say, if I canmake the client what they need
(05:28):
in terms of social security,then why do I necessarily need
to convince them that a path tothat is buying an insurance
policy?
What if you find someone whoreally doesn't need an insurance
policy?
So I just find different waysto, you know, when I'm having
conversation with people to findlittle ways to explain things
(05:52):
like student loan debt.
So knowing that so many peopleare touched by that or they know
someone, it's not so challengingto bring that up.
I've also had the opportunity tospeak to a couple of colleges
here in the Chicago area totheir students.
And to help them begin tounderstand that there is
(06:13):
something more besides,"I pickedmy healthcare benefits and I'm
getting the match or I should besaving to get the match."
There's just much largerconversations.
But I use those as opportunitiesto expand the conversation.
Edward Dressel (06:30):
How do you move them towards retirement
readiness?
James Brewer (06:33):
Well, there are a few avenues there.
So you know, it's just commonfor let's say maybe I'll take
two sets of people.
You've got the older sets andyou've got the younger set.
So you know, I used to be theyoung 20 something, 30 something
and thought that retirement wassomething that you think down
(06:55):
the road.
But when you can try to helppeople understand that the drips
of smaller amounts compounded.
So I remembered somewhere ineither eighth grade or ninth
grade that there was an extraassignment that you could do and
the extra questions at the endof the math book that actually
(07:17):
was a practical application ofcompounding.
Yet that's not how most peopleactually view that.
Most people see,"Well, I saved adollar and I don't expect the
dollar to compound or become twoor four dollars down the road."
So trying to help peopleunderstand that aspect, when
often their mind is morethinking about buying a house or
(07:41):
"How do I overcome student loandebt?" It's interesting that
people believe in"I need to goto college to make more money,"
but in their calculation, fewpeople are saying,"What's the
return on investment of thisdebt that I'm going to have when
it's over?" So, showing peoplethat you can plan for multiple
things, especially when they'reyoung and that even a smaller
(08:02):
amount compounded can be a lotbigger deal.
Usually as people age, theynaturally start to think about
their retirement-- some of thepeople are overwhelmed because
they've gotten themselvesencumbered with car payments,
private school, collegeeducation, or a mortgage or a
(08:25):
house that they kind of went allin on.
So, you know, there I am able totypically have a conversation
and just say,"You know, let'snot be overwhelmed by this." In
some cases you may have a lotmore coming from social security
than you realized to at leastbegin to calm them down and then
(08:48):
start to talk about some of theother fundamentals and creating
a plan that says, when are yougonna pay off the mortgage?
When are you gonna pay off this?
And potentially there's someother things that they could do.
But, you know, for a lot ofpeople it becomes so emotionally
charged as they age.
It's less emotionally chargedwhen they're younger that you
(09:09):
just have to feel people outwhere they are in terms of their
emotion and then, you know,provide I believe both a caring
voice and some numbers that showthem that we can find a path,
that they can find a comfortableretirement.
It may not be the one of theirdreams, but at least it's
(09:30):
something that's comfortable.
Edward Dressel (09:33):
And I get what you're saying, but there's a
world of difference between theacademic side and the practical
side, the implementation.
And a lot of the tools, thesolutions out there, kind of
scare people away.
It's intimidating by all of theanalysis that's provided to
them.
What do you do to engage thoseindividuals?
James Brewer (09:50):
I guess this to me is where we are psychologists
and artists or craftspeople.
So in any given situation, Ithink that some of the people
who have been financial plannersand sometimes I have
conversation even with myadvisor who happens to be a PhD
(10:13):
in finance, that I have to say,well, you know, we need language
that the everyday person canrelate to.
We need analogies that they canunderstand.
I stumbled upon using theanalogy of architecture and home
building that you know,typically you don't have a group
(10:33):
of your friends go out into ablank field and somebody dumps a
bunch of stuff from Home Depotand you try to build a house.
Typically there's going to besome thinking as we go through
that process, a sketch of somesort in architecture design and
then we bring the rightcraftsmen to go and build that.
That works with a lot of peopleto help them understand kind of
(10:55):
the elements of what planningmight look like.
I've also find that sometimes,like a doctor, the person's
really emotional and they wantan immediate fix to something.
And I'm like,"Well even if yougo to the doctor, it would be
considered malpractice if theyimmediately gave you a pill or
opened your body and starteddoing surgery if you complained
(11:19):
of a headache.
Typically they're going to askyou some questions.
They're going to do some tests.
You're not going to expect thatthere won't be a bill that they
say,"There's nothing I can dofor you" or"You're just really
stressed out" and we need to go,"Well, geez, I'm not going to
pay you for that." Well no, youactually know you're going to
pay the doctor for that, but atleast you know that it's not
(11:39):
something that is physicalinside of your body.
So, finding analogies before youjust bring out the sometimes 170
page financial planning reportsor actually understanding what
are the key elements that youare needing to get across to the
client or prospect.
(12:00):
I spend probably more time inpreparation for my own meeting
than I actually spend time withthe client in the meeting.
I've learned over time, theydon't want me to I guess spit
out all the information that myacademic side wants to tell them
all about.
They want to say or hear,"Hey, Ican help you." I remember I
(12:25):
actually had some medicalprocedures many years ago and
ended up needing to seek a thirdopinion.
And I remember during one of theprocedures, the doctor saying,
Mr.
Brewer, I think I can help you.
And I remembered how thatchanged my mentality and gave me
peace to hearing that"I couldhelp you." I'm never going to be
(12:49):
that specialist doctor.
But knowing that I found someonewho understood that I needed
some calming words.
So too often we forget thecalming words in trying to
actually dump the plan.
So I think we have to just bewiser in helping people feel
(13:10):
calm and setting their mindstraight so they can hear what
the answer is.
Edward Dressel (13:16):
So James, I like this.
Tell me what a meeting lookslike.
How do you implement this withyour clients when you're meeting
with them?
James Brewer (13:24):
Well, depending upon the client, they may say
something like,"How do I goabout implementing this?" Or"Is
this going to affect my currentlifestyle?" That's one place
where I like to use the PaycheckCalculator.
It actually helps peopleunderstand that for most people,
(13:48):
especially those who are W2,their world comes out of what
they do and their workplace.
So sometimes they don'tunderstand, well the 3% match,
if you do it from a traditionalperspective, isn't going to cost
you dollar for dollar?
It may be 3% doesn't mean muchto them.
(14:09):
But you know, if it's let's say$3,000 divided by 24 paychecks,
then they can go,"Oh, now I seehow it works." And I said,"Yeah,
then look, you get the employermatch that now kicks in." For
some people they still mightsay,"Well, you know, I see that
I need to really save six or 10%but I can't do that right now
(14:32):
even, you know, I just, I justcan't see doing it." So then you
could also discuss,"Well, Iunderstand that.
In fact it probably makes a lotof sense to actually save or pay
off your student loan debt orwhatever the encumbrances are,
but you know, in three to fiveyears when that's done, the
(14:55):
savings number will change.
It won't be the same thingtoday." We know a lot of people
will anchor on a certain numberthey'll be stuck.
So then to give them some ideaof, well, what is it gonna look
like in the future?
And, then I usually give themsome comfort and say,"But don't
be so alarmed because ideally inthe future, your income based
(15:18):
upon getting some raises willhave increased and now you
would've freed the cashflow fromthat encumbrance, but just know
that when the money comes, itwon't be free cash to go and do
other things because we want youto be on track for retirement,
then we need to use those fundsfor that period of time."
Edward Dressel (15:39):
Now, the paychecks are a very uncommon
tool in the industry.
Most financial planners don'twork with it.
What difference do you see usinga paycheck versus a much more
complex tool?
James Brewer (15:51):
Again, I try to take the approach of meet the
clients where they're at.
So earlier this year, I had anopportunity to speak to an
industry group later and Ilearned from them that one of
the most enlightening things Igave them was the Paycheck
Calculator.
It just kind of seems to blowpeople away.
(16:13):
Most people don't evenunderstand how they're taxed.
So when you start to help themrelate to something that they
either look at their pay stub orthey're looking at something
that they can relate to.
Once we get really into some ofthe planning tools, those aren't
something that most peoplerelate to on an ongoing basis.
(16:35):
So I think for a lot of peoplethat blurs things.
Some people just want you totell them,"Hey, tell me the
savings number and I'll figureout how to make it happen." But
when you actually know thatthere are some people who, for
example, get a$2,400 refund andto show them, well instead of
(16:56):
the$2,400 refund, we could takethe entire thing that 2,400 ends
up getting you 2,400.
if they're not saving.
So rather than going to Best Buyor whatever it is you're going
to do with the$2,400 or have inthe past.
You could actually, you know,double that number for your
retirement and what a differenceis that going to make for your
(17:19):
future.
So sometimes out of thequestions and me understanding
what the client's personalchallenges are, then I try to
look for the appropriate toolthat actually highlights what
their opportunity to correcttheir trajectory is.
And just some other people thatI met that were kind of
(17:41):
graduating pharmacists from thisone class, many of which had
really worked, a"real job".
And others just saw what theirnet was.
They all said that I taught themmore about taxes in like 10
minutes than they had everunderstood in the past.
(18:03):
So I was hoping that they wouldbe able to make some better
decisions once they got intotheir workplace plan and they
all said, wow, I didn'tunderstand this is how it works.
Edward Dressel (18:15):
And I find what you say a little bit stunning in
that you're working with somesophisticated, intelligent
people, but you're keeping iteasy to understand with the
paycheck tool.
It's not like it's just bluecollar people who haven't gone
to college.
You're finding some success withthe paycheck tool across the
spectrum.
Is that, is that what I hear yousaying?
James Brewer (18:33):
Yes.
Well I think what's interestingis that we tend to have had in
this industry an assumption ofeducation and sophistication.
So while someone might be apediatrician or pharmacist, I
even had a conversation with anengineer who actually teaches at
(18:53):
a college and most of thosepeople, they spend their waking
hours thinking and gettingbetter at their craft.
What we do, is a craft.
If we can find analogies thathelp them relate to the topic,
that's great, but morespecifically we are, at least I
(19:17):
believe, should be craftspeoplein our own so they should never
have our level of sophisticationin what we do.
I just think that we've got toforget the assumption and that
often they actually appreciatethe fact that we are educating
them and in some ways, againkeeping it somewhat high level,
(19:41):
but they do appreciate workingwith someone who does spend the
time being a craftsperson andsomething that's gonna really
make a difference in their life.
Edward Dressel (19:51):
You use the paycheck tool and there's not a
whole lot of software out therethat has that.
And we love that.
I hear great stories just likeyou told us about that.
What other solutions do you findin our tool set that you go,
"This is a good solution forengaging my clients"?
James Brewer (20:07):
Well, what drew me to the software in the first
place was the Gap Analysis.
I find I'm using, the Quick GapAnalysis tool.
So you know, for a client--toactually show them here are the
dynamics of your life.
(20:27):
So if you're actually using thetool versus the printout--often
it's difficult to explain topeople what are the differences
in the levers that you cancontrol.
It's common that people like theidea of,"Well, can't I just get
more return?" Well, you know, Isaid 10% return on a dollar is a
(20:50):
dollar 10, but 10% return on$1,000 is$1,100.
So, you know, showing themdynamically, you can use the
levers to show them,"Look at thedifference that savings makes."
In comparison to what thedifference in getting more
(21:11):
return and"Oh yeah--by the way,as you try to go up the return
ladder, you have more volatilityin terms of what your account
balance looks like--" which fewpeople like to see an accounts
balance that's going up anddown.
If you're saving, the savings,as long as you continue to work
shouldn't be volatile,especially again if you're a W2
(21:33):
worker, so I find that in a lotof people's case, we need to
educate them.
I still feel that some of theeducation is in helping to deal
with their behaviors andemotions around money.
You could also show them,"Hey,by the way, we could decrease
(21:55):
the distribution percentages,but I don't really think you
want to live on less money.""Ohno, no, I don't want to live on
less money!" And I think that,you know, any time you go, okay,
I see where I need to go, but Ican't get there today because
often some of their emotion andnot wanting to believe what
you're showing them is because Ican't snap my finger and
(22:17):
potentially go from a 3% savingsrate to a 10% savings rate.
So I think showing cost ofwaiting, the cost of waiting not
as in you're necessarily nottaking action, it's just giving
us an idea of well down theroad, once we tackle these other
issues, then we're just kind ofhave to save a bit more.
(22:39):
But don't be panicked, I'm justtelling you up front.
So we're planning for that forthe future.
I found that using it thatway--as both kind of an
education tool and then a futureplanning tool--tends to get
people to be more on my side ofthe understanding of the change
(23:01):
that they need to make and becommitted to that change.
Edward Dressel (23:06):
Our Quick Gap Tool tends to be a little bit
lighter than other financialplanning software, especially
some of the higher end stuff.
What advantage do you see inthat when you're working in
sitting down with a client?
James Brewer (23:15):
Coming from a long time ago when we would love to
put in these big thick binders,all the pages that we could
generate and people would betotally confused.
When you generate all that paperyou tend to want to show them
all the things.
Being able to really isolate thekeys to someone and their
(23:38):
change.
I think that, you know, you'renot losing with the less full
featured quick gap analysis.
Just a lot of people, especiallythose who are somewhat early in
their career, maybe evenmid-career people and just
giving them an idea of,"How'sthis all supposed to work?" I
(24:02):
recently wrote an article evenon IRAs and Roth IRAs.
Most people don't reallyunderstand the Roth versus the
traditional IRA.
Few people actually understandtaxes.
We like to sometimes make itreally complex and wonder why
(24:24):
people typically don't implementthose things that come out of
the big binders.
I am a fan of people coming upwith what I use the phrase"money
action plan".
Feel free to use that--"moneyaction plan".
The acronym comes out to map.
So if we can move people toaction, then we as practitioners
(24:44):
are doing the real job to methat that planning should be all
about in the first place.
Edward Dressel (24:50):
And I've heard those thick binders, they stick
on the shelf versus gettingpeople to implement.
Do you find having something alittle bit simpler and easier to
understand creates betteraction?
James Brewer (25:01):
Yes, I have people tell me this is the first time
I've ever understood this.
I feel sorry for the poor personwho, you know, most of what they
get is either what friends andfamily says or if they had been
fortunate enough to be at theenrollment meeting for the
retirement plan.
(25:22):
But typically it's,"Hey, savemoney." Savings is good.
Save as much as you want.
You know, rather than actuallysaying, well how does this all
work?
You mean that small amount ofmoney?
I think some of the reports thatyou can again, breakdown if you
choose to use that report andshow them,"Well this is how
(25:44):
compounding works and it givesyou like the year by year
growth." Some people are indisbelief when you say,"Well,
there's no way that that amountof that small amount of money
per paycheck is ever going toamount to a difference in my
life." For that person, there'sa report that goes and shows
that.
So, you know, as I say, oftenpushback is either behavioral or
(26:08):
something that's kind of afundamental education.
When you can show them it's thefundamental education,"Oh, I
really never did or understoodthat problem." Again, it was
eighth or ninth grade math thatsaid for extra credit, do this
compounding thing then now youactually show them how it works.
Then if they don't want toimplement, then you know, it's
(26:30):
more of a behavioral.
So now you get to go treat thebehavior--what's really going on
with you.
But if it was simply one ofeducation, now you have a simple
report to actually show them theparts that they really have more
control over, which is typicallyhow much they're going to save
versus how they're going to getbetter investment returns.
Edward Dressel (26:51):
Well, James, I appreciate you taking the time
today.
I appreciate your commitment tobehavioral finance and your
education there and keeping itsimple.
Seems to have helped yourclients.
Any closing comments from you?
James Brewer (27:04):
No.
I just encourage people toconsider how effective you have
been or want to be regardinghelping your clients actually,
you know, be on track and not asa pun to be on TRAK, but to
actually implement the advice.
(27:24):
And I think that the tools thatRetireReady offers goes a long
way for the majority of peopleand helping them understand the
actions that they can control,that they should be taking so
they can retire ready.
Edward Dressel (27:38):
Well, I appreciate you taking the time
today.
I wish you the best and thankyou for the interview.
You have a great day.
Welcome everyone to another podcast by
RetireReady Solutions.
We are pleased to have JamesBrewer here today with us.
He's out of the Chicago area.
And James, thanks for joining ustoday.
James Brewer (00:16):
Well, thanks for having me.
Edward Dressel (00:18):
Tell everybody a little bit about your business.
James Brewer (00:20):
Well, let's see.
I've been an advisor since, oh,I think 2006 or so.
I've been through the brokerdealer world and decided last
year to start my own RIA.
I am a certified financialplanner.
(00:42):
I've actually taught someclasses for the College for
Financial Planning, blessed tobe a contributor to Forbes.com
and I look forward to showingpeople why subscription-based
financial advice should bring inmore people than the industry
(01:03):
has been able to cater to in thepast.
Edward Dressel (01:06):
So there's a lot there.
You're an active person.
I've seen some of your Forbesarticles.
Congratulations on that.
Tell me a little bit about yourcompany.
Are you a solo or do you have ateam you work with?
James Brewer (01:18):
Today I have one other advisor.
I'm looking to bring on otheradvisors.
My intent has always been topartner with other advisors, yet
I also met a lot of people whowould rather work for someone
than necessarily be a partner.
My mentality is that we aretrying to help educate people
(01:41):
and advise them on sometimeseveryday things from emergency
funds and how are we going tofind the money for that?
How are we going to retirecomfortably and find funds to
actually be able to fund that?
Which is one of the reasons thatI had been interested in, sought
out, and became a customer ofRetireReady Solutions.
Edward Dressel (02:04):
Why did you choose financial planning.
James Brewer (02:06):
Financial planning is typically something that
really isn't taught.
When I first came into thebusiness, many so-called
financial advisors really usethat term for what they really
wanted to do, which was helppeople invest their money.
And your listeners probably knowthat there are a couple of
(02:27):
schools of thought there.
One that tends to look more atstocks and bonds, mutual funds,
and then the world that tends tolook more at portfolios.
The challenge with the majorityof Americans is that they've
really never had any holistic,comprehensive financial planning
and they tend to perceive thingsas kind of next problem up.
(02:51):
But often in solving for oneproblem, they create other
problems.
They don't understand thingslike compounding.
So, to me, rather than just tryto help people with their
investments--where I stillbelieve that there's a limited
number of those people in theworld--there are to me more
people who actually need help toget themselves situated on the
(03:15):
right path with college planningand retirement planning and the
smart way to buy a house.
And how do they pay out theircollege student loan debts and
how do they help their childrennot actually get in to student
loan debt?
So all those problems to me arelarger than simply helping
people invest.
Edward Dressel (03:36):
How do you engage your clients in the
financial planning conversation?
How do you get them?
I mean, most people go,"I reallydon't want to talk about
financial planning." There's abunch of cartoons in the
industry that make negativecomments about what we do,
including those made by theindustry that they kind of laugh
at ourselves.
What do you do to help peopleget ready to say,"Hey, this is
(03:58):
going to be a meaningfulconversation."
James Brewer (04:01):
Maybe it's because I've become blind to some of
those cartoons.
I tend to really hear somethings someone might be talking
about--buying a house orcomplaining about student loan
debt or something that they'rediscussing--and find ways to
enter that conversation withpeople who haven't necessarily
(04:22):
knocked on my door to come andbecome a client.
Thanks to Google and myunderstanding of search engine
optimization.
I, prior to this Forbes.comopportunity, had been writing a
lot of blog articles in aneffort to have people who might
(04:43):
be searching out what I do toactually, you know, knock on my
door and try to learn more.
I get a decent number of people,let's say per month, who want to
learn more about what it is thatI've said on a particular topic.
Some of the people actually dobelieve that somehow financial
planning is supposed to be freebecause in a way we've taught
(05:06):
people quote unquote,"we giveaway planning" but then you
productize the advice, meaningwe sell you a product and that's
how we get compensated.
I know some people who sellinsurance so they'll do social
security seminars in an effortto sell an insurance product.
To me rather than say, if I canmake the client what they need
(05:28):
in terms of social security,then why do I necessarily need
to convince them that a path tothat is buying an insurance
policy?
What if you find someone whoreally doesn't need an insurance
policy?
So I just find different waysto, you know, when I'm having
conversation with people to findlittle ways to explain things
(05:52):
like student loan debt.
So knowing that so many peopleare touched by that or they know
someone, it's not so challengingto bring that up.
I've also had the opportunity tospeak to a couple of colleges
here in the Chicago area totheir students.
And to help them begin tounderstand that there is
(06:13):
something more besides,"I pickedmy healthcare benefits and I'm
getting the match or I should besaving to get the match."
There's just much largerconversations.
But I use those as opportunitiesto expand the conversation.
Edward Dressel (06:30):
How do you move them towards retirement
readiness?
James Brewer (06:33):
Well, there are a few avenues there.
So you know, it's just commonfor let's say maybe I'll take
two sets of people.
You've got the older sets andyou've got the younger set.
So you know, I used to be theyoung 20 something, 30 something
and thought that retirement wassomething that you think down
(06:55):
the road.
But when you can try to helppeople understand that the drips
of smaller amounts compounded.
So I remembered somewhere ineither eighth grade or ninth
grade that there was an extraassignment that you could do and
the extra questions at the endof the math book that actually
(07:17):
was a practical application ofcompounding.
Yet that's not how most peopleactually view that.
Most people see,"Well, I saved adollar and I don't expect the
dollar to compound or become twoor four dollars down the road."
So trying to help peopleunderstand that aspect, when
often their mind is morethinking about buying a house or
(07:41):
"How do I overcome student loandebt?" It's interesting that
people believe in"I need to goto college to make more money,"
but in their calculation, fewpeople are saying,"What's the
return on investment of thisdebt that I'm going to have when
it's over?" So, showing peoplethat you can plan for multiple
things, especially when they'reyoung and that even a smaller
(08:02):
amount compounded can be a lotbigger deal.
Usually as people age, theynaturally start to think about
their retirement-- some of thepeople are overwhelmed because
they've gotten themselvesencumbered with car payments,
private school, collegeeducation, or a mortgage or a
(08:25):
house that they kind of went allin on.
So, you know, there I am able totypically have a conversation
and just say,"You know, let'snot be overwhelmed by this." In
some cases you may have a lotmore coming from social security
than you realized to at leastbegin to calm them down and then
(08:48):
start to talk about some of theother fundamentals and creating
a plan that says, when are yougonna pay off the mortgage?
When are you gonna pay off this?
And potentially there's someother things that they could do.
But, you know, for a lot ofpeople it becomes so emotionally
charged as they age.
It's less emotionally chargedwhen they're younger that you
(09:09):
just have to feel people outwhere they are in terms of their
emotion and then, you know,provide I believe both a caring
voice and some numbers that showthem that we can find a path,
that they can find a comfortableretirement.
It may not be the one of theirdreams, but at least it's
(09:30):
something that's comfortable.
Edward Dressel (09:33):
And I get what you're saying, but there's a
world of difference between theacademic side and the practical
side, the implementation.
And a lot of the tools, thesolutions out there, kind of
scare people away.
It's intimidating by all of theanalysis that's provided to
them.
What do you do to engage thoseindividuals?
James Brewer (09:50):
I guess this to me is where we are psychologists
and artists or craftspeople.
So in any given situation, Ithink that some of the people
who have been financial plannersand sometimes I have
conversation even with myadvisor who happens to be a PhD
(10:13):
in finance, that I have to say,well, you know, we need language
that the everyday person canrelate to.
We need analogies that they canunderstand.
I stumbled upon using theanalogy of architecture and home
building that you know,typically you don't have a group
(10:33):
of your friends go out into ablank field and somebody dumps a
bunch of stuff from Home Depotand you try to build a house.
Typically there's going to besome thinking as we go through
that process, a sketch of somesort in architecture design and
then we bring the rightcraftsmen to go and build that.
That works with a lot of peopleto help them understand kind of
(10:55):
the elements of what planningmight look like.
I've also find that sometimes,like a doctor, the person's
really emotional and they wantan immediate fix to something.
And I'm like,"Well even if yougo to the doctor, it would be
considered malpractice if theyimmediately gave you a pill or
opened your body and starteddoing surgery if you complained
(11:19):
of a headache.
Typically they're going to askyou some questions.
They're going to do some tests.
You're not going to expect thatthere won't be a bill that they
say,"There's nothing I can dofor you" or"You're just really
stressed out" and we need to go,"Well, geez, I'm not going to
pay you for that." Well no, youactually know you're going to
pay the doctor for that, but atleast you know that it's not
(11:39):
something that is physicalinside of your body.
So, finding analogies before youjust bring out the sometimes 170
page financial planning reportsor actually understanding what
are the key elements that youare needing to get across to the
client or prospect.
(12:00):
I spend probably more time inpreparation for my own meeting
than I actually spend time withthe client in the meeting.
I've learned over time, theydon't want me to I guess spit
out all the information that myacademic side wants to tell them
all about.
They want to say or hear,"Hey, Ican help you." I remember I
(12:25):
actually had some medicalprocedures many years ago and
ended up needing to seek a thirdopinion.
And I remember during one of theprocedures, the doctor saying,
Mr.
Brewer, I think I can help you.
And I remembered how thatchanged my mentality and gave me
peace to hearing that"I couldhelp you." I'm never going to be
(12:49):
that specialist doctor.
But knowing that I found someonewho understood that I needed
some calming words.
So too often we forget thecalming words in trying to
actually dump the plan.
So I think we have to just bewiser in helping people feel
(13:10):
calm and setting their mindstraight so they can hear what
the answer is.
Edward Dressel (13:16):
So James, I like this.
Tell me what a meeting lookslike.
How do you implement this withyour clients when you're meeting
with them?
James Brewer (13:24):
Well, depending upon the client, they may say
something like,"How do I goabout implementing this?" Or"Is
this going to affect my currentlifestyle?" That's one place
where I like to use the PaycheckCalculator.
It actually helps peopleunderstand that for most people,
(13:48):
especially those who are W2,their world comes out of what
they do and their workplace.
So sometimes they don'tunderstand, well the 3% match,
if you do it from a traditionalperspective, isn't going to cost
you dollar for dollar?
It may be 3% doesn't mean muchto them.
(14:09):
But you know, if it's let's say$3,000 divided by 24 paychecks,
then they can go,"Oh, now I seehow it works." And I said,"Yeah,
then look, you get the employermatch that now kicks in." For
some people they still mightsay,"Well, you know, I see that
I need to really save six or 10%but I can't do that right now
(14:32):
even, you know, I just, I justcan't see doing it." So then you
could also discuss,"Well, Iunderstand that.
In fact it probably makes a lotof sense to actually save or pay
off your student loan debt orwhatever the encumbrances are,
but you know, in three to fiveyears when that's done, the
(14:55):
savings number will change.
It won't be the same thingtoday." We know a lot of people
will anchor on a certain numberthey'll be stuck.
So then to give them some ideaof, well, what is it gonna look
like in the future?
And, then I usually give themsome comfort and say,"But don't
be so alarmed because ideally inthe future, your income based
(15:18):
upon getting some raises willhave increased and now you
would've freed the cashflow fromthat encumbrance, but just know
that when the money comes, itwon't be free cash to go and do
other things because we want youto be on track for retirement,
then we need to use those fundsfor that period of time."
Edward Dressel (15:39):
Now, the paychecks are a very uncommon
tool in the industry.
Most financial planners don'twork with it.
What difference do you see usinga paycheck versus a much more
complex tool?
James Brewer (15:51):
Again, I try to take the approach of meet the
clients where they're at.
So earlier this year, I had anopportunity to speak to an
industry group later and Ilearned from them that one of
the most enlightening things Igave them was the Paycheck
Calculator.
It just kind of seems to blowpeople away.
(16:13):
Most people don't evenunderstand how they're taxed.
So when you start to help themrelate to something that they
either look at their pay stub orthey're looking at something
that they can relate to.
Once we get really into some ofthe planning tools, those aren't
something that most peoplerelate to on an ongoing basis.
(16:35):
So I think for a lot of peoplethat blurs things.
Some people just want you totell them,"Hey, tell me the
savings number and I'll figureout how to make it happen." But
when you actually know thatthere are some people who, for
example, get a$2,400 refund andto show them, well instead of
(16:56):
the$2,400 refund, we could takethe entire thing that 2,400 ends
up getting you 2,400.
if they're not saving.
So rather than going to Best Buyor whatever it is you're going
to do with the$2,400 or have inthe past.
You could actually, you know,double that number for your
retirement and what a differenceis that going to make for your
(17:19):
future.
So sometimes out of thequestions and me understanding
what the client's personalchallenges are, then I try to
look for the appropriate toolthat actually highlights what
their opportunity to correcttheir trajectory is.
And just some other people thatI met that were kind of
(17:41):
graduating pharmacists from thisone class, many of which had
really worked, a"real job".
And others just saw what theirnet was.
They all said that I taught themmore about taxes in like 10
minutes than they had everunderstood in the past.
(18:03):
So I was hoping that they wouldbe able to make some better
decisions once they got intotheir workplace plan and they
all said, wow, I didn'tunderstand this is how it works.
Edward Dressel (18:15):
And I find what you say a little bit stunning in
that you're working with somesophisticated, intelligent
people, but you're keeping iteasy to understand with the
paycheck tool.
It's not like it's just bluecollar people who haven't gone
to college.
You're finding some success withthe paycheck tool across the
spectrum.
Is that, is that what I hear yousaying?
James Brewer (18:33):
Yes.
Well I think what's interestingis that we tend to have had in
this industry an assumption ofeducation and sophistication.
So while someone might be apediatrician or pharmacist, I
even had a conversation with anengineer who actually teaches at
(18:53):
a college and most of thosepeople, they spend their waking
hours thinking and gettingbetter at their craft.
What we do, is a craft.
If we can find analogies thathelp them relate to the topic,
that's great, but morespecifically we are, at least I
(19:17):
believe, should be craftspeoplein our own so they should never
have our level of sophisticationin what we do.
I just think that we've got toforget the assumption and that
often they actually appreciatethe fact that we are educating
them and in some ways, againkeeping it somewhat high level,
(19:41):
but they do appreciate workingwith someone who does spend the
time being a craftsperson andsomething that's gonna really
make a difference in their life.
Edward Dressel (19:51):
You use the paycheck tool and there's not a
whole lot of software out therethat has that.
And we love that.
I hear great stories just likeyou told us about that.
What other solutions do you findin our tool set that you go,
"This is a good solution forengaging my clients"?
James Brewer (20:07):
Well, what drew me to the software in the first
place was the Gap Analysis.
I find I'm using, the Quick GapAnalysis tool.
So you know, for a client--toactually show them here are the
dynamics of your life.
(20:27):
So if you're actually using thetool versus the printout--often
it's difficult to explain topeople what are the differences
in the levers that you cancontrol.
It's common that people like theidea of,"Well, can't I just get
more return?" Well, you know, Isaid 10% return on a dollar is a
(20:50):
dollar 10, but 10% return on$1,000 is$1,100.
So, you know, showing themdynamically, you can use the
levers to show them,"Look at thedifference that savings makes."
In comparison to what thedifference in getting more
(21:11):
return and"Oh yeah--by the way,as you try to go up the return
ladder, you have more volatilityin terms of what your account
balance looks like--" which fewpeople like to see an accounts
balance that's going up anddown.
If you're saving, the savings,as long as you continue to work
shouldn't be volatile,especially again if you're a W2
(21:33):
worker, so I find that in a lotof people's case, we need to
educate them.
I still feel that some of theeducation is in helping to deal
with their behaviors andemotions around money.
You could also show them,"Hey,by the way, we could decrease
(21:55):
the distribution percentages,but I don't really think you
want to live on less money.""Ohno, no, I don't want to live on
less money!" And I think that,you know, any time you go, okay,
I see where I need to go, but Ican't get there today because
often some of their emotion andnot wanting to believe what
you're showing them is because Ican't snap my finger and
(22:17):
potentially go from a 3% savingsrate to a 10% savings rate.
So I think showing cost ofwaiting, the cost of waiting not
as in you're necessarily nottaking action, it's just giving
us an idea of well down theroad, once we tackle these other
issues, then we're just kind ofhave to save a bit more.
(22:39):
But don't be panicked, I'm justtelling you up front.
So we're planning for that forthe future.
I found that using it thatway--as both kind of an
education tool and then a futureplanning tool--tends to get
people to be more on my side ofthe understanding of the change
(23:01):
that they need to make and becommitted to that change.
Edward Dressel (23:06):
Our Quick Gap Tool tends to be a little bit
lighter than other financialplanning software, especially
some of the higher end stuff.
What advantage do you see inthat when you're working in
sitting down with a client?
James Brewer (23:15):
Coming from a long time ago when we would love to
put in these big thick binders,all the pages that we could
generate and people would betotally confused.
When you generate all that paperyou tend to want to show them
all the things.
Being able to really isolate thekeys to someone and their
(23:38):
change.
I think that, you know, you'renot losing with the less full
featured quick gap analysis.
Just a lot of people, especiallythose who are somewhat early in
their career, maybe evenmid-career people and just
giving them an idea of,"How'sthis all supposed to work?" I
(24:02):
recently wrote an article evenon IRAs and Roth IRAs.
Most people don't reallyunderstand the Roth versus the
traditional IRA.
Few people actually understandtaxes.
We like to sometimes make itreally complex and wonder why
(24:24):
people typically don't implementthose things that come out of
the big binders.
I am a fan of people coming upwith what I use the phrase"money
action plan".
Feel free to use that--"moneyaction plan".
The acronym comes out to map.
So if we can move people toaction, then we as practitioners
(24:44):
are doing the real job to methat that planning should be all
about in the first place.
Edward Dressel (24:50):
And I've heard those thick binders, they stick
on the shelf versus gettingpeople to implement.
Do you find having something alittle bit simpler and easier to
understand creates betteraction?
James Brewer (25:01):
Yes, I have people tell me this is the first time
I've ever understood this.
I feel sorry for the poor personwho, you know, most of what they
get is either what friends andfamily says or if they had been
fortunate enough to be at theenrollment meeting for the
retirement plan.
(25:22):
But typically it's,"Hey, savemoney." Savings is good.
Save as much as you want.
You know, rather than actuallysaying, well how does this all
work?
You mean that small amount ofmoney?
I think some of the reports thatyou can again, breakdown if you
choose to use that report andshow them,"Well this is how
(25:44):
compounding works and it givesyou like the year by year
growth." Some people are indisbelief when you say,"Well,
there's no way that that amountof that small amount of money
per paycheck is ever going toamount to a difference in my
life." For that person, there'sa report that goes and shows
that.
So, you know, as I say, oftenpushback is either behavioral or
(26:08):
something that's kind of afundamental education.
When you can show them it's thefundamental education,"Oh, I
really never did or understoodthat problem." Again, it was
eighth or ninth grade math thatsaid for extra credit, do this
compounding thing then now youactually show them how it works.
Then if they don't want toimplement, then you know, it's
(26:30):
more of a behavioral.
So now you get to go treat thebehavior--what's really going on
with you.
But if it was simply one ofeducation, now you have a simple
report to actually show them theparts that they really have more
control over, which is typicallyhow much they're going to save
versus how they're going to getbetter investment returns.
Edward Dressel (26:51):
Well, James, I appreciate you taking the time
today.
I appreciate your commitment tobehavioral finance and your
education there and keeping itsimple.
Seems to have helped yourclients.
Any closing comments from you?
James Brewer (27:04):
No.
I just encourage people toconsider how effective you have
been or want to be regardinghelping your clients actually,
you know, be on track and not asa pun to be on TRAK, but to
actually implement the advice.
(27:24):
And I think that the tools thatRetireReady offers goes a long
way for the majority of peopleand helping them understand the
actions that they can control,that they should be taking so
they can retire ready.
Edward Dressel (27:38):
Well, I appreciate you taking the time
today.
I wish you the best and thankyou for the interview.
You have a great day.
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