You're listening to Financial Advisor Marketing. The best show on the planet for financial advisors who want to get more clients without all the stress. You're about to get the real scoop on everything from lead generation to closing the deal. James is the founder of TheAdvisorCoach.com where you can find an entire suite of products designed to help financial advisors grow their businesses more rapidly than ever before. Now here is your host, James Pollard.
James: Welcome to the Financial Advisor Marketing podcast, my financial advisor marketers, my little family. Today's episode is called "Three Things All Financial Advisors Should Teach Their Children." I was partially inspired to do this episode by producer Jonathan, who has a podcast called Daddy's Working. So you are my inspiration for this one.
Jonathan: Thank you.
James: I encourage you to check out that podcast, especially if you're a working parent. Jonathan somehow manages to run The Podcast Factory and put up with my shenanigans and be a great husband and be a great father all at the same time. So if you want to learn from someone about this stuff, learn from this guy. [0:01:09.7]
Jonathan: Incredibly kind of you, James. Thank you.
James: That is your shameless plug. Now, is there anything that you want to teach your child about money?
Jonathan: Yeah - how to make it and lots of it. In fact, we're working on that right now and everything is earned. How are you going to earn that and things don’t just come for free.
James: Yeah. I mean, that is like - it's so foundational and so fundamental and I wish more parents did that, where they're like, you have to earn this because in this society, your rewards come from the degree to which you earn them. Now I know there are exceptions and things - there are like percentages, changes, and all that stuff, but for the most part, that tends to be true. If you earn it and you become a better person and you provide value to society and you work the value exchange system that we have, you get better. Now are you going … are you homeschooling or are you going to homeschool? [0:02:02.7]
Jonathan: Bro - you're going to take my whole thing here. I really … I'm not happy with the school system. I was a straight D student. I barely graduated high school. I'm sure you know that. So I don’t believe in the school system because I think it's made to crush your spirit and we're having a battle at home about what the best move is. I'm really, really, really saying to Cupcake, "We just need to make more money and hire a personal private tutor and get all the support this kid needs," but then, you got to worry about them being social as well. So we're figuring that out.
James: True, yeah. It's a battleground that you have to navigate and if you want to go back, do the personality test thing, find out what your kid is good at and maybe put this… this is just my non-parent opinion, so it doesn’t really mean much. But I'm curious to see like what would happen to someone if you…if the parents found out what the kid was good at at an early age and then instead of like putting money into a wide variety of subjects, they just put their resources into what the kid was already good at and they just amplified that and throughout life, just to see that compounded, it'd be pretty neat to see and ..
Jonathan: Or it could be pretty scary. [0:03:15.6]
James: … something I've been thinking about quite a bit. So for people who don’t know - the lady of my house is very involved in education and the school systems and all that stuff and she's trying to fix a lot of the things that Jonathan does not like and it breaks my heart. I'm trying to figure out where we're going to be in like 10 or 20 years because you've got kids who are like rich private schools, who they're starting Shopify stores and e-commerce and all this at like 13 years old and they're making enough money to pay for college two or three times over. Then you've got kids on the other side of town who don’t have internet and can't get their homework done and they've got family problems and they've got to pick their siblings up from school because the parents are having problems or maybe they're working a second job. It's just…it's crazy to me to see that discrepancy like between kids who don’t have internet and kids who are like just building Shopify stores and taking courses and integrating themselves in all this technology, like the gap is ….bro, the gap is getting wider than ever before. [0:04:15.0]
Jonathan: Indeed.
James: But, we'll save that for another time. I wanted to do an episode about children because I personally like to support charities which help children, and the two in particular that I support the most are First Book and Donors Choose. Right now, I've been giving more attention to Donors Choose because it allows you to choose the exact project you want to support, along with any other criteria you want. You get to send your money directly to the classroom. You have the teachers be transparent about what they're getting. So you know your money is going to a good cause, and my personal criteria, if you must know, if that more than half the students have to be from low income households and it must be, it must be a match offer and a match offer basically means that someone else is matching whatever I donate. So if I donate $100, then some company or foundation or some rich person out there will match me, making the total donation $200. [0:05:05.5]
An Inner Circle member actually encouraged me to start talking more about my charitable work on the podcast and producer Jonathan encouraged it a little bit more. I only mentioned them for the first time a couple of episodes ago, but if you've been an Inner Circle member for a long time, then you've already seen me talk about these charities and encourage you to donate to them as well. I really want to use this podcast as a platform for not only getting my message out and helping financial advisors, but helping children as well. I know a lot of financial advisors can't stand me for some reason. You read the negative reviews. I don’t hide from them. I don’t run from them. There are negative reviews out there, but hopefully we can all come together to help the children. So, I encourage you to take a look at those charities and support in any way you can. Now, on to the show. We're talking about what advisors should teach their children. I wish, I wish personal finance was taught in school. I mean I got out of school and I didn't know anything about banking or opening a checking account or investing or any of that. [0:06:02.6]
I knew a bunch about geometry and I knew that the mitochondria is the power house of the cell, but … that's helped me a lot. You know, actually last night I was trying to replace one of my blinds and I was having trouble with it and then I remembered, you know what - mitochondria, the power house of the cell and I fixed that blind. But I knew nothing about money and it wasn’t until I got to college, where I really started reading about personal finance. I mean, I read The Millionaire Next Door, The Automatic Millionaire, Rich Dad Poor Dad, The Intelligent Investor - all those books. I started getting an education about money, but keep in mind, it didn't come from school. It came from me getting off my lazy butt, going to the library, reading the books and figuring it out. But I wish I had learned it earlier and I wish I had a parental figure like a mom or dad, and I had great parents, but I wish that, for example - like my mom had sat me down and told me a little bit more about money. She was a great mother, wonderful person, but just never sat me down and talked about this stuff. If you're a financial advisor with children, you can give them a huge leg up by teaching them about some of the things that we're going to talk about in this episode. [0:07:08.8]
So here we go. The number one thing I wish that financial advisors would teach their children or that all children should know, for that, is to show them the impact opportunity cost. This is a big one because opportunity cost effects us in a lot of different ways. One of the best skills you can possibly learn as a child or an adult is the ability to weigh decisions and understand the possible outcomes. With a young child, you can basically say, hey, if we buy you this bike, we can't buy you the video game. We have only got $200, so either we get the console or we get the bike, and help them make that decision. I'm amazed at how many financial advisors don’t fully comprehend opportunity cost. They're not children. They're full-fledged adults and they don’t understand it, especially when it comes to marketing. Because some advisors will insist - they will stomp their feet and cry and beg and insist on doing the same old stuff instead of maximizing their time, energy and money into doing what will work best for them. [0:08:13.5]
Case in point - email marketing. With email marketing, you can literally build a list and follow up with that list automatically with an autoresponder. You can just Google it - autoresponder - how to set one up - whatever. If you want my help, I've got a product called "Appointments On Autopilot" and it just … it helps you. Right? You can also go back, once you've got your autoresponder set up, you can see which emails got the highest open rates. You can see which ones have the highest click through rates and you can do more of those. It's literally telling you - hey, this emails has got a high open rates. Maybe you want to do more of that. Or this email has high number of appointments set. Maybe you want to send more of me. Every single day that goes by where an advisor isn't using email marketing is a day where money is left on the table. So there's a huge opportunity cost of not doing the stuff. Just like there's a huge opportunity cost with not prospecting. If you decide to procrastinate and not prospect for a day or maybe a week or a month, then you will feel the opportunity cost when it comes back to bite you in that big gluteus maximus. So. You're teaching your kid about opportunity cost? I don’t want to pry into your business. [0:09:21.9]
Jonathan: It's funny that you mentioned this because Cupcake was talking about this the other day and I don't know - she must have gotten it on IG or something but she wanted to give Huddy like a set amount of fake money and let him pick his meals - like this meal costs more - that meal costs less - treats cost money just to let him know how he was kind of spending. It seems like it's on a smaller level, kind of similar to what you're saying here so he sees what he spends on cookies, he doesn’t have much left for candy or something like that.
James: Yeah. It's just the opportunity cost. If you have the cookies today, you can't have the candy also. Just like in business, if you have one strategy and it works well, you can't do another one - provided it takes the same time and resources. [0:10:07.4]
Hey financial advisors, are you ready to take your business to the next level and get more clients with less stress? I invite you to join the James Pollard Inner Circle, a paper and ink newsletter that gets delivered directly to your door every month. When you join now you'll also get a 90-minute instant download called, "Five Keys to Success for Financial Advisors", a $97 value for absolutely free. All you have to do is head over to TheAdvisorCoach.com/newsletter and join today.
James: Number two. This is a big one too. I really wish that parents taught their children. It's what you were talking about, is to tell the kids to focus on income first and then saving.
Jonathan: Huge.
James: And what I'm about to say may get me crucified, especially among the financial advisor crowd, but oh here we go - I don't know if I should say this.
Jonathan: Do it.
James: I don’t use a budget. [0:11:02.8]
Jonathan: Wooooo!
James: I do not use a budget. Oh, I'm so ashamed.
Jonathan: It's a scarcity mindset, isn't it?
James: Kind of. Well, yeah. I think it is. But I've never used a budget. Never have and probably never will and it's not that I don’t think that they're helpful. It's just that you can only be so frugal. You can only cut so much and one of the popular examples involves a daily latte habit and one of the books I mentioned, The Automatic Millionaire, the author talks about this, the latte factor, and I'm sure that's copy righted, so it's copy righted to the guy. At $5 a day, when you spend your latte, 30 years from now, it's going to be $10 or $15 a day, it can add up to a king's ransom, over a lifetime. Well, yeah, I guess it could. But why not just figure out a way to make an extra $10 a day because then you can have your latte and you can save the $5 because budgeting and cost cutting, that's not where the opportunity lies. Opportunity comes from increasing your income. [0:12:06.6]
Jonathan: Right. It's finite. I love that.
James: Yeah. A mind-blowing concept here. You make an extra $10 a day, not only can you have that latte, but you can save the $5 that you wanted to save. You can do both. Some people spend so much time trying to save money that they forget about increasing their income. Let me give another example with dollars and cents. Finding a way to save $200 a month is okay, but increasing your income a certain percentage, like 30%, that could be much better because if you make $100,000 right now, increasing your income 30% means another $30,000 a year, and that beats the heck out of saving $200/month or even $1000/month. You just increase your income. So really think about that. According to Go Banking rates - this is scary - this is a very scary statistic - 58% of Americans have less than $1000 in savings. [0:13:03.6]
Jonathan: Wow.
James: Isn't that crazy? Like, I …
Jonathan: Sick.
James: I don’t … I don’t want to sound like out of touch or whatever, but like, that's just … that's horrifying.
Jonathan: I see it all the time, bro, with the apartments. It's like if somebody misses a day or three, then they're back on their rent and then their lights getting shut off. It just compounds. I feel really bad for them. It's a struggle every single day.
James: Oh, totally. Yeah. I'm not dismissing this. And if you're out there and you have less than $1000 in savings, I'm not knocking you whatsoever. I'm trying to help you. I'm trying to help you to understand that you have to start looking for opportunities to increase your income. Ways to leverage what you have. Like this podcast is essentially free. I mean, you've got to have a cell phone or you've got to have a computer and internet connection, but like, you're listening to my voice without giving me any money, or at least you could. I'm giving you information that could help you. I'm trying to help you because I know that if I help financial advisors with this, if I help a financial advisor go out and make an extra $1000 next month with this free "free information," then my hope is that they'll come back and break me off a little piece of that bread and say hey, you know, let me throw James a hundred here and there. I mean that's really what it is…[ 0:14:12.3]
Jonathan: Make it rain.
James: And that's the way our world works. I'm trying to help you make the extra $1000/month. That way, you come back and you say, you know what - he talks about that Inner Circle all the time and I can't … he just gets on my nerves talking about it. I'm just going to join because he's helped me in so many different ways. I'm just going to join. I mean, maybe you don’t even read it. Maybe you do. But that's really what it's all about and as a financial advisor, you have this incredible gift of being able to increase your income pretty much on demand. It's something other people would kill for. The person at the gas station who's working or the cashier and they're not making ends meet and they're renting an apartment from Jonathan, who's a slum lord and comes by the door with a shotgun every month. They wish.. they wish they could do what you do and it breaks my heart to see financial advisors staying stagnant because they should be making more money year after year and they should be big increases too, not little increases, big increases. [0:15:06.5]
I wish my mom talked to me about increasing my income. I wish she did and like most parents out there, she didn't teach me that much about money but she did - I will give her credit - she did open a savings account for me and she did teach me that saving money was important. So I give her props there, but as far as learning skills and increasing my income and increasing my value to society, there was virtually nothing. I found that my experiences, pretty similar to almost everyone out there. They're never told, "Hey, go out there and increase your income." So, if you have children, make sure you stress the importance of generating income as well as saving. You want to have both. A lot of people just teach their kids how to save or maybe they don’t teach anything at all, but they almost never teach them the income thing because it's a lot easier to accumulate significant savings when you double or triple your income.
Jonathan: Yeah, but they didn't know that. We got to give them, you know, if your parents were working folks that could only work so many hours, they really didn't know that. [0:16:05.6]
James: Sure. It, the … one of the biggest things I've ever done as far as personal development is that I understand that a lot of people in my past, where maybe I've held grudges against them or maybe I viewed them as not being perfect, I realized that they did the best they could with what they had and if you're someone out there who is listening to me, maybe you've got daddy issues. I don’t mean to make light of this stuff. Maybe you've got mommy issues or daddy issues - I'm not trying to make fun of this but it is what it is. If you've got parental issues or maybe there's somebody in your family or a teacher who doubted you, you've got to forgive these people and you've got to be like, well, they just did the best they had or they did the best they could with what they had. I'm going to move on because forgiveness is for you, not them. You're not forgiving these people for them. You're forgiving them for you. So, move on with that. [0:16:57.8]
Number three. The third thing I wish all financial advisors taught their children, and I wish all parents taught their kids, not just financial advisors - I wish everyone taught their children this is to avoid making impulse decisions. It seems like you're on the right path with the candy and cookie thing because once kids understand opportunity cost and once everyone understands opportunity cost, then the impulse decisions tend to drop, at least a little bit because they're like hey, I can't do this other thing. They start to think more carefully about what they're doing. So it's really important and if you haven’t heard of something called The Marshmallow Test, I encourage you to Google it. It's officially called something like The Stanford Marshmallow Experiment. I think that's the real name for it, but it's called The Marshmallow Test. If you just Google it, you'll find it. It basically found that kids who couldn’t delay gratification had worse outcomes in life and in many ways teaching your kids delayed gratification is one of the most important things you can teach them. I mean, the findings of this study, they were incredible. [0:18:04.6]
The children who were willing to delay gratification ended up having, they had higher SAT scores, lower levels of substance abuse, lower likelihood of obesity, better response to stress, a whole bunch of other things. So if your children want to get this new gadget or the hottest new toy, make them wait a little bit. Help them save for it. Teach them that good things come to those who wait and I see a lot of financial advisors doing what I call impulse marketing. They want fast results in the short term, often at the expense of results in the long term and that's something that if you didn't catch that, I'll repeat it: Impulse marketing is when people want results, fast results, in the short term, often at the expense of results in the long term. In last week's episode, I talked about copycat marketers and this definitely applies because some financial advisors will see another advisor doing a certain marketing strategy and be like, oh yeah - I got to do that and then switch the whole game up rather than just focusing on one thing and make it pay whatever you want. You get this little burst, but then nothing. They're like microwave marketers, hot for a second and then they stop. So, don’t be an impulse marketer. [0:19:16.2]
Jonathan: Microwave marketers - listen to you - alliteration and everything.
James: Like "Appointments On Autopilot" - alliteration there. So don’t be an impulse marketer. Like really don’t. They just … stop copycatting and I know I talked a lot about that in the past couple of episodes, but it's something I'm seeing more and more and more, people just copycatting. Stop. But those are the three things financial advisors should teach their children. You want to show them the impact of opportunity cost. You want to tell them to focus on income and then saving. Then you want to help them avoid making impulse decisions and there's a lot of things you can teach your kids, but those are just three that I think are very important and if you do it, let me know and let me know how it goes. I'm really interested in this stuff. [0:20:01.2]
Jonathan: Super cool, James. Super cool. What do you have coming up for us next time?
James: I don't want to give anything away. I will say this - if you have any ideas for a future episode, send me an email at james@theadvisorcoach.com and I can't promise I'll get back to you, but I do read every single email and I love hearing from financial advisors. So if you have an idea, send it over. Either way, I'll catch you next week, or it's going to be…let's just say it's going to be a strong episode.
Jonathan: Strong, virile episode. Alright. Well, that is another Financial Advisor Marketing all up in your ear buds. Thank you for tuning in, fam. We'll be back next time.
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