Money Alignment Academy

Our office recently spent some time discussing a Reddit thread where an individual was looking for complex tax advice regarding RSUs and other executive compensation. Some of us were shocked (though, given how weird the internet can be, we probably shouldn’t have been) that someone would ask for such complicated, life-altering advice from total strangers with unverifiable credentials.

On the Aligned Money Show, George and I delved into the reasons people are turning to message boards and social media for financial insight and how advisors can prove their worth to skeptics by providing… value (who knew?).

Episode Transcript

George Grombacher 0:01
Ben to get us started. Give me two truths and a lie, please.

Ben Hockema 0:06
Kay George. I have 11 toes Believe it or not. I have been to China twice. And my daughter has the same name as a princess.

George Grombacher 0:22
Those are excellent. Oh my goodness. 11 trying

Ben Hockema 0:26
to stump you over here

George Grombacher 0:29
to China twice, and your daughter has the same name as a princess. I’m going to guess that you’ve had not been to China twice.

Ben Hockema 0:36
As incorrect. I have a love it like you don’t have 11 toes. You would lie about that? Come on, right.

George Grombacher 0:43
Yeah, yeah, man. All right. So so you have been to China twice. You don’t have 11 toes. How many toes Do you have?

Ben Hockema 0:49
I have the normal amount. 10. Regular. Regular tend to so we’re good there. Yes, we’re good. But I actually have a brother and sister her both adopted from China. So went twice each time that we adopted as a family. So that was that was great.

George Grombacher 1:03
Night. Okay, well, very cool. And what is your daughter’s name? Charlotte?

Ben Hockema 1:07
We named her before the what? The queen or soon to be queen named her daughter Charlotte. But yes, sure. Got it.

George Grombacher 1:17
You got there first.

Ben Hockema 1:18
We got there first. And I have to tell my my daughter. I’ve been on a few podcasts. And every time I talk about her, she gets so excited that she’s famous. So she’s famous again.

George Grombacher 1:28
Well, there you go. Well, she listens. What What’s up, Charlotte, you have a beautiful name. So all right, you got me. You stopped me. Well done. Let’s move on from that Ben, lick my wounds. What is? What is top of mind for you right now? Sir.

Ben Hockema 1:46
You know, it’s it’s interesting. I think there’s two things that that jumped out right away. And they’re both related to Reddit. So I don’t spend a lot of time on Reddit, but I actually had somebody talking to my office she sent sent a forum over and she said, can you believe that? People are asking these types of personal questions on personal finance, tax blogs, and things like that. And it’s, it’s so interesting how Reddit has changed over time. And now it’s a place a lot of people are going for stuff that used to only go to people like me as kind of a whether tax expert or finance expert. And I think it’s really interesting. It’s also maybe a little dangerous, because you never know the sources that are where, where that comes from. And then, of course, Reddit just IP owed recently, and we work with a lot of clients that have stock options and are trying to deal with that sudden wealth in some way now, right? It’s a slightly different situation, I think. But that’s just in the news a lot that’s on top of my mind is,

George Grombacher 2:47
yeah, I appreciate that. I read a or a skim through an article, you know, within the past couple of months talking about how younger generations aren’t really necessarily interested in going and sitting in a financial advisors office. They are getting advice from their friends and from strangers on the internet.

Ben Hockema 3:04
Oh, yeah. Yeah, lots on. Tick tock, I hear people all the time. You know, I saw this on YouTube, they send me the video or send me the TIC tock. And should I be doing this? And, you know, everyone kind of wants to get rich quick scheme. It be so nice and easy, right? If we could just do that and snap our fingers. But it’ll be interesting to see where that goes over time.

George Grombacher 3:28
What do you make of that? Why? Why do you think that people are going down that path? Why do people are they more interested in talking to their friends versus professional?

Ben Hockema 3:36
I honestly think it’s because the industry has failed them. If you look at the history of the financial services industry, it was basically sell you an insurance product, or take all your money and sell you a high commission mutual fund or something. And a lot of the financial advisors, I think, over 50% or 60, or older. And so if you’re in your 20s, and you’re trying to figure it out, you hear someone say, well, all you got to do is you know, don’t go to Starbucks, and you’ll be fine. And well, I don’t know why you complain about not being I don’t know why you complain about having to go into the office, or any of those things is just an out of touch. And in people I think a lot of young people feel taken advantage of and that they don’t get understood at all.

George Grombacher 4:22
Half advisors are over the age of 60. I guess that doesn’t surprise me. And there’s nothing wrong with people that are over the age of 60. God willing, one day I will be too. But if I’m 20 Perhaps I want somebody who is maybe closer in age, who knows.

Ben Hockema 4:37
I’ve seen a lot of studies that say if you want to hire a financial advisor, you’re looking for someone about plus or minus 10 years of your age. And so it makes sense that half advisors are 60 Because the average age of someone who has a financial advisor is probably also around 60. But if you’re 25 you want someone who’s 3035 not 60 Because it’s just a different stage of life, and in different things that you understand. One

George Grombacher 5:06
of my favorite quotes from Daniel Kahneman, the gentleman who wrote Thinking Fast and Slow, he did this deep dive into why people make decisions the way they make them about money. But he also, he said that the financial industry is based on an illusion of skill. And I was like, Oh, that is that cuts deep right there, that is taking the gloves off and hitting you right in the mouth. And it’s kind of what you’re talking about, right? It’s, it’s, I sold an insurance product or just I, that they’re out of touch a little bit, or they’re just not there, they’re not successfully delivering value.

Ben Hockema 5:42
Right? In, it’s all definition of value, right? When technology changes, and it’s a lot easier to learn on the internet, how to invest in a, in a low cost diversified way. That’s not where your advisors providing value, I tell my team, probably 80% or more of our job is psychological and emotional, it’s the soft skills has nothing to do with what the spreadsheet says, and spreadsheet, you can get online spreadsheet you can get with your friends, if you’ve if they’ve learned it’s the guiding people through and, and helping, you know, protect you from yourself and and understand what’s important. That’s, I think the value now, but a lot of kind of, I’ll call old school advisors. They’re still in well, what does the spreadsheet say that so I’m gonna tell you.

George Grombacher 6:28
Yeah, I appreciate that. So I also have a desire to get rich quick, I just that it’s not a possible thing to do that. And I’ve certainly lost money in the past, buying and selling individual stocks. So protecting me from myself, I probably would have benefited from working with a financial advisor when I was in my 20s. Just because I just I lacked life experience. So having somebody to have that connection or conversation with say, Hey, I’m thinking about doing this. What do you think about that?

Ben Hockema 7:06
Yeah, it’s having someone to bounce ideas off of I think is huge, especially someone who doesn’t have a vested interest, I can talk to my wife all day, about what I think we should do, we still have a financial planner we meet with occasionally, not because they don’t know what I’m doing. But because it’s helpful to have a third party who’s unbiased, who can say, point out the blind spots what you’re doing wrong. At the same time. The nice thing about being in your 20s is as long as you’re not getting so much debt that you have to go bankrupt or something like that. Your mistakes, although feels really big in the moment, are great learning experiences that when you’re in your 30s 40s 50s, you now have learned from you don’t do it when the dollars are a lot thicker. And the impact is a lot. A lot larger.

George Grombacher 7:49
Yeah. So when somebody says, Hey, I’ve been I really want to get in on this Reddit IPO. I’m interested in buying Reddit, I don’t it’s not necessarily important that it’s an IPO. I’m just interested in buying and selling individual stocks. Right. How do you how do you coach people through that?

Ben Hockema 8:05
So I think it’s so I think there’s a couple different things, the people that have stock through your company, whether you’re ready employee, and then you’ve got you have a liquidity event, you can go do something, or you say, Hey, I heard this, I’ve been on Reddit, I really like it, let’s buy this stock. Understanding what that means for your entire life. entire net worth, I think is important. A lot of people want to say, I’m going to bet a lot more than I really should on an individual stock. I’m sure Tesla’s gonna go up. So I’m going to put a bunch of money in there. That is fine. If it’s a small percentage, and it’s not going to impact you, if it doesn’t work out. The problem a lot of people have is if you don’t have the filter, you don’t have the guardrails, you put too much in. And I will admit, I have most of my money in low cost, diversified portfolio, all the things that that are the textbook right answers, and I have a small amount of money in what I would call speculative gambling stocks. And it’s not because I think I’m gonna make a bunch of money. It’s because it’s fun for me, I like watching it. But I know it’s a small enough percentage of my personal net worth, that if it all goes to zero, my life is not impacted. My kids aren’t impacted, I can still do the things that they need to do, because I’ve built in the system. So that’s the most important thing is no matter how brilliant you think you are on investing, or have this inside tip have some idea. Making sure the stakes are low enough, is probably the most important. Yeah,

George Grombacher 9:39
I think that that makes a lot of sense. I’ve heard sort of describing it as, you know, sort of writing yourself a permission slip by making sure that that a lot of what you’re doing is for lack of a better term sort of boring and it is just using indexes. So so long as I am on track to meet my financial goals, the boring way, then let it rip, give yourself permission. Absolutely.

Ben Hockema 10:04
Yeah, it’s, I’ve heard it described as it should be, investing should be as exciting as watching paint dry. Right. And there’s a lot of different ways to talk about that. But if you’re really talking about long term investing, and when I say long term investing, we’re talking decades, not months, decades, not hours. That is, should be boring, you shouldn’t be changing all that often. It should be something you set it and forget it in some ways, and and let it do its thing. Because compounding is way more powerful than picking the right stock today or the right area to invest today and switch it up tomorrow.

George Grombacher 10:47
So it’s, it’s greed is a motivator that makes people want to get rich, quickly, that makes them want to listen to people on the internet, be it in a Reddit forum or somebody on Tik Tok or whatever, who’s giving advice out of or selling a program or something like that? And maybe a fear of missing out to that, well, I geez, these are smart people look it up people, people are paying attention to them, maybe this is something that I should do. And that’s more interesting than telling people that you’re investing should be boring, but the reality is that your investing ought to be more boring.

Ben Hockema 11:23
Yes, and what sells in anything? Well, it sells is shame. You know, you shouldn’t be disappointed in yourself that you’re not involved in this, you’re not getting something here, you’re gonna miss out on something, you have to create some sort of urgency well, okay, what sells from both products, but sells on social media is the exciting piece that is not there to make you rich, right? If it’s free to be on social media, you’re the product. So I think it’s important to know that you know, what people are paying or to advertise to you, not? For you to get rich. There’s a book, it’s been around forever for decades. But it’s called something like where are all the customers yachts? And the whole idea is that, you know, the people that have the yachts are the financial advisors that sold you big products, not the customers themselves that actually made the money. And that’s a lot of the financial services industry. It’s a lot of most industries, unfortunately, and but there will always sell and there will always be opportunity to market to people. Because we know what makes you tick, right? We know that we want you to be excited, it gets you to do something. And the whole point of marketing is to get you to do something. So it’s a long winded answer to just say, there will never be an end to how exciting things could look. And just the next thing around the corner is going to look so nice on paper. And then you go and do it. It’s never going to meet your expectations. Once you get that in your head, and you give yourself permission to say, You know what, I don’t need that. I’ll get excited in other areas of my life. I don’t need to go gamble with finances. That’s going to be giving yourself permission to let it be boring. Yeah,

George Grombacher 13:11
yeah, I, I like that a lot. So many emotions. I mean, the reason I do anything is because the way that I feel about it, right. But on the clothes that I put on, I felt certain way, right, like eat what I want to eat, it’s it makes me feel a certain way. And so when I’m investing, there is feelings and that idea of making sure that I’m not protecting myself from myself, I’m not making critical errors.

Ben Hockema 13:37
Yeah, it’s I I’m a big proponent of doing things like automation, you know, automate your savings, have your paycheck, go to five different places, so that you don’t have to make any decisions. So it doesn’t matter how you feel, when you look at your bank account. And it doesn’t matter how you feel when you wake up. Do I feel like I’m going to do the things I said, I’m gonna do? Let’s just make it so you don’t make a decision, the more the less decisions you make in the moment, the better.

George Grombacher 14:04
I like that a lot fewer decisions. And I think who wouldn’t want that? You know? I mean, imagine, imagine how many bills you would be laid on or miss if you actually had to write checks out and put a stamp on it and actually mail it these days.

Ben Hockema 14:19
I might spend less money though. It’s you know, it’s so it’s so easy to spend money now. Without thinking about it, right? I’ve got an iPhone and I do Apple Pay and I don’t you have to bring my wallet with me if I don’t want to. And it’s easy to spend money. That’s goes back to what I said before the industry is built to get you to part you with your money. So it’s going to only get easier and if you don’t build the structure yourself. You’re gonna fall into the traps that are laid for you. Yeah.

George Grombacher 14:52
When you are when you are taking on a new client relationship Is there a Do you have a frequency that you say, Hey, here’s, here’s what our relationships going to look like moving forward. How much of that? Do you put in their court? Like, how often do you want to talk to me? A little bit about that?

Ben Hockema 15:11
Yeah, so we, we work with a lot of clients on an ongoing basis, we have some that we do a limited scope project where it’s, here’s a specific problem, you’re reading an employee and, and you’re having an IPO. And we just need to decide what to do with your stock, you know, those sort of things. But for the core of our business, it’s an ongoing relationship. And I could do a whole lot by myself behind the scenes, but I need the client interaction. So we try to balance the two. So every month, we’re doing things with clients. So we pick a topic, it’s cash flow, or it’s taxes, or it’s insurance planning or something, and we tackle it in a month, and then just do as much as we can without them. Just because we know, you can get bogged down in the weeds, you don’t want to spend your time, I can geek out on finances all I want. But the reason that people are hiring me is because they don’t want to worry about it. And so we meet, we communicate at least monthly with all of our clients, but we only require them to show up, you know, after the initial stage maybe three or four times a year, just because life gets in the way. And you don’t want to take your free time and talk to me if you don’t want to. Yeah,

George Grombacher 16:21
it’s an interesting thing, right? Some people are really interested and fascinated by money in the markets. But I think that a lot of people are more interested in just knowing that what they’re doing is going to get them where they want to go.

Ben Hockema 16:31
Well, I have a lot of clients that used to be the do it yourself all the time, loved it did all the research are on the forums and reading the books. And then they get married, have kids careers get busy. And they say I still want someone who’s going to care as much about my money, or as close as I can to what I’m doing. But I just don’t have the time to do that. And everything else. I’ll give you a quick example. Actually, my parents are not clients, but because I told them, that’s conflict of interest. I don’t, I don’t want to cross that bridge. But I remember my the first time that my parents gotten advisor, it was because my mom told my dad, you are spending too much time trying to optimize, you’re spending too much time on this, and not spending time with your family. And he would admit it. He loved it. He was a nerd about it, which is part of what got me interested in it as well. But even though he could do it, he decided it’s worth it for his kind of life to delegate that. And I think it was great for you know, our family and, and, and everything else. But there’s a lot of clients that I think fall into that category. Yeah.

George Grombacher 17:43
So it’s, uh, if you’re going to be a happy consumer of financial advice, be honest with yourself, say, how much of this do I am I interested in dealing with? How much do I want to hand off?

Ben Hockema 17:54
Right? Yeah, all that stuff, I, there’s a lot of self awareness that you need in everything. And it’s the emotions, as we talked about, right, and it’s how much time we’re gonna spend on this. And, and really just the self reflection, or, you know, in my case, my spouse is really good at telling me when I’m wrong. So talk, also talking to somebody who can, you know, lovingly puts you in your place, I think is valuable for all of us. For

George Grombacher 18:22
sure, for sure. You know, I feel like in a lot of ways, that is what the role of a financial advisor is going to be. It probably always has been moving forward when technology continues to advance and we moved from stockbrokers, to indexing to robo advisors and everything else. And I don’t think that, that the business of investing is is is going to move away from technology anytime soon. So to be available to do the things you’ve been talking about makes a lot of sense.

Ben Hockema 18:54
Yeah, it’s, it’s not going the other direction? Well, there’ll be continued to be things that are automated, that used to be a really good value added a financial advisor did that won’t be anymore, because it’ll be easy and free. And so the value is not, how do you invest optimally in this stock versus this mutual fund and this bond? The value is helping people change behavior and stick with their plan. And that’s not going away anytime soon.

George Grombacher 19:24
No, love it. Well, Ben, people are ready for that difference making tip, what do you have for us?

Ben Hockema 19:32
So, you know, this is about money. But my tip, actually is it’s not about the money. And what I mean by that we kind of touched on but money is just a tool to help you reach your goals. It’s not, it’s not the goal. And the happiest people that I work with are those that take their money, their paper net worth, and turn it into the life that they wanted, and so So my tip is remember that money is just a tool. It’s not the end all be all. And I think everyone will be a lot happier if you get put it in the right perspective.

George Grombacher 20:09
I think that that is great stuff that definitely gets cut off. Perspective is so incredibly valuable, it’s hard to get harder to keep. But if you can take that perspective, you just share it. I think that that is a great starting point for being becoming financially successful and happy so well thanks so much for coming on man. Where can people learn more about you? How can they engage with you? So

Ben Hockema 20:33
you can go to our website illuminate wm.com If you want to book a free 20 minute call with me. Easiest way to do that is actually go to the website talking with ben.com. And like I said, it’s free, happy to talk to people and let you know what we can do for you. Nice.

George Grombacher 20:51
Well, if you enjoyed this as much as I did you have any appreciation share today share with a friend who also appreciates good ideas or that friend who is constantly on Reddit trying to find financial advice or somebody that was working at Reddit and got some stock options, go to illuminate w m.com and then go to talking with ben.com take them up on that opportunity to chat for 20 minutes. Thanks again, Ben. Thank you. Till next time remember a friendly reminder it’s never going to be anybody more interested in your financial success than you are. So act accordingly.