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- [00:00]
A
What if losing everything was actually the best thing that ever happened to you today's guest went through a divorce that could have destroyed his retirement dreams instead he cracked the code to coast fi and is now living proof that it's never too late to take control of your money today aubry is going to share the exact steps he took to go from rock bottom to financial independence and why starting over in your forties is absolutely hello hello hello and welcome to the biggerpockets money podcast my name is mindy jensen and with me as always is my free only financial advice co host scott trench dang it i.
- [00:42]
B
Came up with that free only financial advice co host scott trench intro line and i did i forgot to give myself a pun to respond to it with we are so excited to be joined by aubrey williams today i won't go too much into his background because we'll be talking about both his personal financial independence story and then on friday's episode we're going to have him back on the podcast to discuss how to build draw down guardrails for early retirement.
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C
Aubrey welcome to the show thank you scott thank you mindy it's a real honor and a pleasure to be here i'm first and always a member of the fi community i started out desperate in twenty eleven i think it was reading early retirement extreme and then pretty soon after mister money mustache came on the scene and he was a little bit funnier it might be a slight exaggeration but i told this to pete aden a mister money mustache when i first met him in person that he's saving lives out there and my life is forever changed by the contributions of people like him and him in particular and so what i'm here for what i'm doing is trying to do that in my way for anyone absolutely anyone i can to help with what we're doing here which is financial independence well.
- [01:55]
A
Aubrey i had several friends who attended campfire rocky mountain week one and a half and and when they came back they told me about this awesome presentation from aubrey williams about setting guardrails on your spending and i said you know i need that i need to hear that episode and if i need to hear it i know there's a lot of people in my audience who needs to hear it but before we get into the presentation i want to introduce you to the audience and give a little bit of your backstory so you said twenty eleven you started in the fi community first with early retirement extreme and then moving on to mister money mustache what brought you to the fi.
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C
Community yeah what brought me to the fi community was a combination of heading towards and eventually going through a divorce and i always joke say oh very difficult divorce i haven't met the person yet who didn't put that qualifier in front of it but mine i have to say it was in the end a very good thing it was fair but it had very significant consequences for my finances i ended up with all the debt because i was the one who had the steady paycheck and my savings were cut in half i had to buy out my ex wife of my pension i had an old school pension at the time so i went from earning well saving well living in a three bedroom house in santa barbara with two little kids to living in a one bedroom apartment with the kids bunk bed in the bedroom and me in the same room and things were difficult and this was unfamiliar and different i was looking for help because i hadn't had to navigate anything like this before and i went to financial advisors i actually went to three of them and i picked one to work with and she was an amazing person she was a marine in case you know any marines you never say retired marine because they're never retired she was very interested in choosing investments and looking back i might not pick the exact same investment she did but that was what she was interested in but i didn't need help with that i needed help with budgeting and cash flow and paying down debt obviously and she wasn't that interested in that and even though i asked directly the best advice i got sort of jokingly best was well if you need more money then you can reduce your four hundred one k contributions so following that advice i gave up three years of the company match it didn't really help things because the underlying spending patterns and behaviors didn't change in.
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A
What year did those underlying patterns change was that when you found the financial independence community i think i found the.
- [04:41]
C
First part of it like i said in twenty eleven but when i put it all to work was in twenty fourteen that's when i was in that situation and and i had gone to professionals paid them money i didn't understand at the time how i was paying my financial advisor i think it's shocking how many people are in that same boat i was paying one percent assets under management and as soon as i understood that i built the spreadsheet that many of us have that shows the impact of one percent assets under management over ten years over twenty years over thirty years i legitimately asked the question is this person providing value that justifies me having twenty thirty forty percent less depending on the assumptions you make and i came to the conclusion heck no and so i was very nervous called her up and said i'm firing you you know in nicer words and then it was managing my own investments controlling my spending food cars housing all of the big rocks and then i really am someone who believes in small changes many of them add up to big effects also so for example today i wrote a blog post about how using an old school double edged razor for which the blades are seven point nine one cents each compared to a gillette sensor or a gillette venus for women can save you about one thousand two hundred and eighty four dollars over ten years per person so in my household i have four shavers two teenagers myself and my partner and that's real money and it's not just that thing by itself but it's a couple dozen or even a hundred changes like that that also affect the trajectory okay i love.
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A
That point you just said it's a couple of changes it's multiple changes like this that affect your trajectory there are so many people who will hear you one thousand two hundred dollars over ten years that's nothing i'm not even going to bother well that's just one thing if you can then you can have like significant real savings and it isn't about the razor it's about the thought process that goes into it is it easier to buy those gillette razors you bet your bottom dollar it's easier to buy those razors i've actually never installed a new razor into those razor the reusable ones that you're talking about but my grandfather had one i remember seeing them they seem a little scary to me so it can be done i mean you haven't cut off all your fingers yet have you changing out those.
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B
Razors not at all i think what you're trying to say is that all those little shavings add up oh my goodness i couldn't resist sorry guys what's.
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A
Your shavings rate scott has gone back on his shavings rate if you can.
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B
See oh yeah i use up like what a fraction of a fewer razors than that now that i'm not shaving this part of my face anymore the.
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C
Other angle is not everyone's purely financially oriented but that razor blade the one from gillette is not recyclable there's metal in it there's plastic in it they can't be easily separated so it's landfill whereas the steel one hundred percent steel razor blade steel is recycled at the highest rate of any material so from an environmental perspective it also works so i like to look for things like that and this really is an homage to mister money mustache because this is his combination which is make your life better spend less money and do something good for the planet if you could put those together consistently then things tend.
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B
To go well you mentioned earlier mister money mustache was a little bit funnier than some of the other financial bloggers there one post that sticks in my head that this conversation reminds me of is his diatribe i guess i'll refer to it as a diatribe about the universal men's grooming device which is an electric razor that he discusses for dollar twelve and its effectiveness in cutting costs in a variety of areas at one's life so what are your top ten this like this example with a razor that you'd use i'll tell you one.
- [08:40]
C
That didn't work out because that's probably funnier i love a certain trader joe's trail mix and at one time i was buying a lot of it and it's organic and it's seven dollars ninety nine cents a bag and it's not a pound you know it's like twelve ounces instead of sixteen ounces and i thought okay for sure the financial independence aficionado and me can do better and so out of that whole bag of trail mix i weighed and counted every single piece every single pumpkin seed every dried cranberry every pistachio and then i went to costco and i price shopped all the ingredients and i thought okay for sure for sure for sure i'm going to win and you know what trader joe's was cheaper but that's the length that i'll go to and i actually liked that result even more because who would think that trader joe's would be cheaper even with me going to the trouble of buying every single ingredient but maybe with volume so now i buy that trail mix one hundred percent confident i'm getting a good deal aubrey.
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A
Was able to build back a strong financial runway after his divorce how'd he do it we'll be talking about that right after the break when it's cold.
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D
In the new york area we always want to go somewhere warm last time we stayed at an incredible airbnb in florida we walked to restaurants and the beach it was great while on this trip i thought maybe someone can enjoy our home while we're away too have you thought about hosting on airbnb like i have now it's easier than ever with the co host network you can hire a high quality local co host to take care of your guests and do the work for you co hosts can manage reservations message guests and more while you could earn a little extra cash find a co host at airbnb dot com host hey guys it's christian.
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Mccaffrey pro running back i'm partnering with abercrombie this season to tell you about their viral denim all you need to know is denim should fit like this abercrombie's athletic fit is a game changer they're designed for guys with an athlete's build like mine just enough room and the perfect stretch when a jean fits that well i'm wearing it on repeat shop abercrombie denim in the app online and in store.
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You'Re about to make a trade which u do you listen to is it get optioning those options or let's do a little research learn more at finra dot org tradesmart.
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C
All.
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Right let's jump back in i love.
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A
That you went to that level of research because i'm never going to do that i'm just going to be honest right there but i love that you did because now you know where you're spending and you're spending it on what you want i can hear people listening and be like oh i would never do that well you know what i wouldn't either but that doesn't mean that he's wrong for doing it that just means that's not our personality and that doesn't mean that that's the only item or you have to have that level research to see where you're spending your money personal finances personal i say that all the time and if you want to spend your time making sure that you are getting the absolute best trader joe's level trail mix price then you can do that but if you choose not to there are lots of other ways that you can look at your spending without going down the rabbit hole and i hope you don't feel like i'm being mean aubry i'm not i'm trying to introduce an article from j money over at budgets are sexy called challenge everything and this is an article he wrote a really long time ago but it goes into kind of detail about how he decided he wanted to make sure that he wasn't overspending on things so he came up with this idea i'm going to challenge everything i'm going to look and see the example that comes to mind is his insurance i have heard and i have said multiple times your insurance company is not going to be loyal to you so you don't need to be loyal to them your car insurance your home insurance that kind of insurance i'm not talking about health insurance that's usually you get to work or the aca and that's a different conversation altogether but your car insurance you notice that your car insurance just went up even though you didn't have an accident last year or even had an accident for a while sit down and call up all of the big names call up the little names and see who's got the best price on your insurance what do you do for auto insurance what do you do for home insurance what do you do.
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For umbrella policy pet insurance that's one i've noticed a lot of people don't talk about pet insurance right pet insurance.
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I actually don't have pets so that's never going to come up in my.
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B
Spending i want to chime in here and say your example here of analyzing the cost of razors and trail mix is perfect fuel for the anti financial independence retire early influencer who says they're all a bunch of frugal weirdos over here in the fire community and i want to chime in here and say this is absolutely necessary analysis for for most people who are not these big shot business owner influencers on the internet who have big incomes right if you're making two hundred fifty thousand dollars a year some big income like that then you'd be absolutely silly to spend any time really doing some of the analysis aubry that you did on these types of cost savings because it's almost certain that you're going to be able to get a you got a one percent annual improvement in your income which will totally amplify your financial position or if you have millions of dollars getting your investment portfolio in shape and really crystallized is going to be more important than this analysis but what these people forget is that almost everybody starts out at a median income or with very little in the way of assets and there is nothing to optimize on those fronts we are already working a job that is the maximum that takes us to the maximum of our abilities at that particular moment in time and investments in our career are long term we may not have investments to optimize from a portfolio perspective so it's go down a very short checklist of investment portfolios and from there the thing we can control is our expenses and these analyses make an enormous difference at that stage in the journey and get the snowball going and that's why most people can never get the snowball going is because they're not intentionally treating their costs with this level of analysis and that's the part that people miss in the context of a fire journey people see the extreme frugality that people do and the lengths they'll go to get the snowball going they forget about how that in just in a few years translates to exploding wealth and optionality and the option to spend big on the basis of a much larger portfolio so i wanted to call that out because because i can see people being like i don't want to analyze the cost of the ingredients in my trail mix all to just keep buying it from trader joe's and do these analysis thirty to one hundred times on big cost of my life but no that's the answer that's what you should do in that context one push i'd give you is it would never have occurred to me to analyze the inputs to trail mix or the cost of razor blades when i was starting my financial journey instead i looked at like housing i'm going to house hack that's my biggest expense and if i can make a delay there how would you encourage somebody to take the first couple of steps here keeping in mind the prioritized order or the size of the benefit if they feel that they're in the space where yes i do have to analyze my costs because that is my lever right now in my financial journey how would you start this analysis so it's not so deep down perhaps the stack of expenses as a razor blade analysis yeah absolutely the.
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C
Way i looked at it was what's the proportion of expenses and for me the big four were taxes housing food and transportation and so taxes i made contributions as much as i was able to every tax advantaged account which at the time was four hundred one k pre tax hsa flexible spending account which was a special purpose flexible spending account just for dental and vision and dependent care spending account so right there drastically reduced taxes i went from a three thousand five hundred dollars a month rent to fifteen ninety five that was that one bedroom with food i was spending eight hundred dollars a month on restaurants and fifteen hundred dollars a month on groceries and i took that down to four hundred dollars or less of groceries and one twenty five dollars a month in restaurants and then finally with my car as my first car after i got my first job i really wanted a bmw now i did it in a smart way i bought one that was three years old it was still under warranty knew it would have cost fifty five k i got it for twenty five k and it was an amazing car a two thousand one three hundred thirty i with a performance package and i did track days and autocross i enjoyed the heck out of it but i was stuck with a dollar four hundred a month payment for five years that definitely slowed everything way down and so i sold that car and i bought a prius and this was a big identity shift you know i was the corporate guy in the bmw and it almost helped that i had had that identity it made it easier to let it go and so i've seen that repeat itself over and over we're going to catch up on my story i'm now a financial advisor i've left the corporate world behind and i'm helping people from the fi community and from the neurodiverse community with financial planning i'm advice only i don't manage anyone's assets i'm hourly so my intention there is for it to be very accessible and scalable but often it takes having the thing at least a little bit before someone is ready to let it go so go out for the big fancy dinner with oysters and crab have the experience and then you can make it a once a year or twice a year thing instead of always feeling like i can't that's a mental model or a framework that i have found helpful to people when they're feeling deprivation a little bit but yet they need to control their spending at least temporarily.
- [18:45]
A
I like that you can afford anything you can't afford everything from paula pant and that's i think a lot of people in this community me included i'm not excluding myself at all here really feel like i can't spend anything on anything ever i have to be so frugal and it's really not so much fun when you are constantly saying no to yourself i like that advice so i have a question you mentioned you were living in santa barbara but then you also mentioned that there were two kiddos involved did you ever consider moving to a lower cost of living area or was that just not an option.
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C
With the kids it was an option if anyone has been in a divorce situation mine was i'd say high conflict and so it is theoretically possible to convince an ex spouse to relocate and it was difficult it is a high cost of living area i think the median single home price now is around one point four million and that's median the average is higher i really really really love this area the fact that it's not overdeveloped it's bikeable there's the mountains on one side and ocean on the other and i grew up in washington dc in new york city and different parts of central and south america and i felt so good the moment i landed here and i made friends right away so there was a lot of things keeping me here and i think that it speaks to what's possible if one is willing to hold something like location fixed even in one of the most expensive places in the world if you're willing to be flexible with other elements it can work and i did it and within four years that debt that i was talking about was paid off i had more than doubled my net worth and my savings rate net of taxes was sixty two percent and that was from a negative savings rate four years before and that's using the tools of this community was that.
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B
Including how you allocated if you had to allocate for child support or alimony.
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C
Yeah and at one point i did have both child support and spousal support which is what they call alimony in california and it was half of my take home pay that was going to that so as jl collins says learn to live on half some of us don't have a choice and then once some of those elements stopped and were adjusted spousal support continued for five years i could keep living the way i was and just pile that money into investments which is exactly what i did and putting more power and control on my side of the table scott earlier you were talking about jobs and careers and at least at the moment for most people wherever they are is fixed something in your book really stuck with me and it was that you very intentionally went from a career and a job where outperformance might only be rewarded by the difference between a three and a five percent raise to a role where you were selling and outperformance could mean one point five x two x or even ten x i think that's a really important message and the way i deliver that is there is no such thing as fixed expenses and there's no such thing as fixed income and it fits in with mindy what you were referencing with j money challenge everything including your income i would say that.
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B
I'M putting myself in the shoes of that person because i get in linkedin fights with these people from time to time about the fire movement but there's a little bit of this hey the fire community all they do is just worry about expenses and there's almost a little bit of a truth to it on that front which is what i was getting at earlier right is that analysis on the frugality side makes sense to a point but if you're in a job that's paying a median income and the career is going to do that and your journey is twenty years frugaling your way to fire does not make sense like that effort is wasted or could be much better applied to to becoming a more sophisticated investor to house hacking to taking some job in sales or starting a business eventually right it of course doesn't make sense to do that if you already are a very high earning corporate executive or whatever right or your field is already producing an income that is so high that becomes there but i think there's a valid criticism there at some point of hey your plan is to work this median income job for twenty years and fire is a top priority why aren't we beginning to set aside some liquidity to take a risk or to begin developing our skill set there and this comes up on a lot of challenges i see is hey i feel like i'm doing everything right i'm kind of stuck like this is going to take me fifteen more years well nothing in your plan can work there's nothing that could get you lucky there's no business or career shift in there it's just this formula on a spreadsheet and the formula is great but you also got to i think layer in a few bets and that's what it sounds like where you arrived at and where you went into your business for yourself is that is that what i'm hearing well.
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C
It took quite a while i'll catch up to that but i was that person who wasn't willing to change anything when i when i first came to the community mindy as i said i discovered it in twenty eleven i took in the information but i said well three bedroom house i have two kids can't change that i have the car payment and i like my bmw and it's part of my identity can't change that and so i posted my whole situation on the mister money mustache forums and they said right away it was lightning quick change out the house get a different car work on your food budget you know they just ran down and i wrote back in great detail well i can't change that because can't change that because and the response was okay come back when you're ready i.
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B
Think that that's it right there's a lot of people like hey well i'm not going to do that i'm just not going to do that and it's totally fine there's more important things than fire you're just not going to fire.
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C
Yeah and when i was ready you know it was like it was my idea maybe i suffer from that one where oh yeah i did it i did it yeah i was doing exactly what the members of that forum told me to do four years ago that i wasn't willing to do but it absolutely worked once i was ready so that's another concept that we can use is just because you hear something right away you don't have to decide yes or no forever you can plant a seed and see how it might apply to your life you don't necessarily have to make huge changes all at once.
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A
Absolutely correct when you are ready i love what you just said it absolutely worked once i was ready and not everybody's going to be ready the first time they hear it or the second time they hear it and that's okay that's why we keep talking about it we want people to identify with a story and i think there's going to be a lot of people listening who are like yeah i also didn't listen the first time i heard it that's okay there's been lots of things i didn't listen to the first time i.
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C
Heard it be there yeah so scott you're asking about my business so i grew up a little bit of an unusual childhood home base was washington dc but my dad was an anthropologist and my mom was a modern dancer so i was living in rural mexico in eight different countries in south america where he was doing field work and then my mom was traveling back and forth to new york city to perform i would go from place to place and for example in mexico where i lived my job was to take cows out to pasture at four years old two years later i was in chevy chase maryland which is a very posh suburb of washington dc kids were throwing fits because they didn't get the nintendo entertainment system that they wanted in nineteen eighty six i didn't really question it you know it just all seemed normal to me it was only later that i looked back i said okay the money that was flowing through people's lives was vastly different did the money fix everything no did it help with some things like health care being able to go to the hospital shelter housing you bet it did but it didn't fix everything and so i brought that into my life my career and the way it showed up the most was i went to work for engineering companies and instead of only caring about the bottom line i really cared more about the people that i was leading and so i became a director of research and development associate director of research and development at raytheon in radar technology and i was a program manager at lockheed martin in infrared technology my goal and i would say this out loud was for the engineers who were working for me to routinely not just once but routinely do the best work of their lives and often they maybe had had that experience once or twice and so i saw that as my role that career which was once my dream job i stayed way too long as i was making my own changes in my life with financial independence friends and family said what are you doing how are you doing this can you help me and so i started helping them and then the friends of the friends were asking and i wanted to help them and eventually it was taking up a lot of time although i enjoyed the heck out of it so i started doing paid financial coaching in twenty nineteen and i continued that until i got tired of saying this is not financial advice i wanted people to be able to take what i said as seriously as any other financial advisor and so i became a financial advisor even though that was the thing i was most critical of a lot of the time i said well instead of criticizing it how about be one that does things differently and i was doing that for several years alongside my fifty to seventy hour a week corporate job i was working thirty to forty hours on the financial planning business and at campfi my very first one i made the commitment to the people there that i was going to leave the corporate job in march of twenty twenty four and i was ready to i had the date picked and a layoff was offered right at the beginning of march and i accepted it so it took a real commitment because i was giving up a very healthy salary two hundred forty k a year in this corporate job for a business that was growing exponentially but if anyone's looked at an exponential curve the first parts of it are very little one to two two to four exactly exactly in the first quarter i think i made seven k which was a huge achievement you know but compared to two hundred forty k you know showing up in a paycheck every two weeks that's a huge change and i had the savings but even the savings and using tools like projection lab which is amazing it showed that even if the income from my business stayed relatively low or grew very slowly i was going to be fine but the emotional charge and fear and anxiety was still huge i think that's a big part of the transition from working to is confronting that anxiety and a huge change in your life and part of it's financial but definitely not all of it we have.
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To take our final ad break we'll be right back after this i recently.
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Traveled to breckenridge colorado for some goal setting and hiking time just for me i went during shoulder season and stayed in a great airbnb and i had such a relaxing and wonderful time and.
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B
You know that got me thinking about.
- [30:07]
F
Hosting on airbnb the next time we're away on a trip and then guys i found out about airbnb's co host network if you've ever thought about hosting it may have seemed a bit overwhelming but now it's easier than ever because a co host can do the hosting for you with the co host network you can hire a high quality local co host to help take care of your guests when you're gone so that you can travel stress free and earn a little extra income co hosts can help create your listing manage reservations message guests and even provide on site support it really is a win win find a co host at airbnb dot com.
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See store online for details this episode.
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C
There.
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I
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B
All right thanks for sticking with us and thank you so much again to our sponsors for enabling this free only not financial advice of course on the financial component two questions one is it sounds like several years have gone by where you'd been really racking up savings and there was no more large outlay of expenses on the child support and spousal support as it's called in california would this have been possible for you would this have been even something you could have considered while that was being paid.
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C
Out in hindsight absolutely yes i had layered conservatism over conservatism however financially it would have been possible but psychologically emotionally and the confidence needed to make it work i don't think it would be because a big part of launching any business is putting in consistent effort even and especially when there isn't a lot of feedback and that takes confidence and if a person is sort of in desperation mode it comes across it's just like if you're trying to meet someone whether it's at a speed dating event or at a bar desperate doesn't work but if you're confident relaxed and glad to be there whether you meet someone or not that's when a lot of people want to talk to you because you're not trying to get something from them so that's where i say yes financially it would have been possible much sooner but psychologically i hadn't built the confidence yet that i needed to make the leap tell us a little bit.
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B
About how your business grew in the last what is it eighteen months since.
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C
You started it yeah so april of twenty twenty four was when i received the business received the designation of registered investment advisor so as you said it's been about eighteen months i've worked with now just over eighty clients with traditional financial advisors who are assets under management or sometimes flat fee or retainer eighty clients means you have eighty ongoing clients and as an hourly advisor that's not necessarily the case if someone comes in and they have a question should i contribute to my roth or my pre tax four hundred one k if the question can legitimately and confidently be answered in zero point four hours then the next monday that's the bill i send them and i've gotten questions from folks about advice from your show for example about frank vasquez portfolio recommendations and people want to ask how does that apply to my situation so i can do that doesn't necessarily mean that i have to work with that person forever i do it that way because that's what i would want as an advisor let.
- [34:54]
B
Me take it aside here was that show helpful for these folks or did it create problems for them or nuance for you as a planner i don't.
- [35:02]
C
Think anything creates problems it was helpful because it challenged their current investments it challenged their current asset allocation and help them look at am i invested appropriately for the stage of life i am in for the risks i'm taking and what i'm comfortable with they did not end up adopting any changes to their portfolio but they could do that confidently that happened a lot this spring for example i introduced a new way of working with people called a one day financial plan and i got the idea from rick ferry who is the head of the boglehead international foundation he does a portfolio second look he spends an hour looking over people's financial portfolio two hours talking to them and one hour writing up a report and i wasn't getting calls from my clients but friends of clients who were freaking out in february march and april they wanted to know should i sell should i stay put and i didn't have the bandwidth to do a full financial plan which takes anywhere from ten to forty hours between meeting time and work time for all these people but i said can i one in the morning one in the afternoon do a super focused session where we dive deep into what they're doing build models in projection lab or other tools and then get them an answer about what needs to happen or most often not happen that's been really transformative because people can come in get the answers they need at least for the time being then if they choose to you know we check in every quarter twice a year once a year but there's no lock in that's one of the things that bugged me was like i had to pick a dance partner with a financial advisor never be able to do anything else except pay them so every aspect of the financial planning industry when i was choosing to go into it i questioned so i'm not assets under management i don't manage assets i'm hourly it's flat fee if i give you an estimate i won't exceed it and you can leave at any time and i will hand over all data all analysis to you or whoever you want to work with it's what i would want and i didn't see it out there now i'm glad to see folks like cody garrett he built the measure twice planners community now i see that there are other people doing exactly what i'm doing and i form mastermind groups with them a couple of years ago twenty nineteen i felt like i was the only one and i felt like i needed to do something because otherwise folks who were looking for those answers were going to end up talking to the same advisors that didn't help me i feel like a.
- [37:37]
B
Few years ago this concept of the fee only financial advisor started coming out that became all the rage and rightly so there was there were some really bad practices especially in the commission space for life insurance but it didn't go far enough frankly fee only includes assets under management fees which are a problem from an incentive perspective the incentive for someone with aum is to keep the assets under management and keep that annuity going for them and rack up as much as possible and that encourages an asset allocation that is stable and continuous rather than one that maximizes long term gains or that maximizes withdrawals or maybe achieves another client objective in there and it's very hard to break it's very hard to get somebody to understand something if their salary depends on them not understanding that right like i'm butchering that quote but that's the concept i know.
- [38:25]
C
That quote it's very true and this.
- [38:27]
B
Fee only concept has now been i think replaced or is being replaced with advice only which is what you're talking about here that's the bandwagon i'm jumping on here i would love to see a continuation of the shift away from asset under management style incentive structures to diyer advice only management philosophy so love it it's way cheaper right yeah a million bucks under management and fifty fifty basis points it's five grand a year.
- [38:55]
C
Yeah and good luck finding someone who will do it for fifty basis points around here i've had clients come to me who've talked to three advisors who told them since you don't have a million dollars i won't work with you or if you have less than a million dollars then you need to be on this dollar four hundred a month subscription plan as a pushback some people have asked well why wouldn't you want to make more money and there are very highly profitable hourly firms the largest is a shop called timothy financial and their revenue is five million a year they serve more than seven hundred clients with seventeen employees and when i started to understand that it's about one hundred twenty five clients per employee i thought well what's going on there it's because they're not spending time guessing what their ongoing clients want and sending emails with generic advice or in the worst cases organizing steak dinners to show their appreciation for their clients at timothy financial because they're hourly every hour that they spend is actively helping someone and so once they're done helping person a they go on to helping person b and so suddenly seventeen employees they could maybe serve fifty clients each instead they're serving one hundred twenty five and so the math of that told me by being hourly i can magnify my impact and that's more important to me than making money yes i want to provide for my family yes i'm determined to live in santa barbara because i love it so much and i will do that and i am doing that but before that comes impact and that's helping more people helping people better and not wasting my time trying to guess what people need.
- [40:44]
B
What'S the hourly rate one should expect for a good advice only financial planner.
- [40:48]
C
It varies quite a bit the lowest i've seen is around like the two hundred fifty three hundred range there are some services which are larger scale and nectarine and a bundo are two examples of that where i believe the rates are lower around one hundred and fifty but for an independent shop the rates that i've seen are between three hundred and five hundred an hour and that can be shocking to people at first there aren't a lot of businesses that i engage in personally where i'm prying dollar three hundred to dollar five hundred out of my wallet i can think of family law attorneys that's one it's well worth it but still hurt and i actually embrace that instead of the assets under management model where the money just disappears from your investment accounts i want people to have to pry that money out of their wallet because it makes them question am i getting value from what aubry or what any advisor is doing for me and if not then go somewhere else or do it yourself that feedback of i know i'm delivering value because people continue to work with me that's really important to me and so i consider that a strength of the hourly model not a not a weakness i want the transaction to be visceral and visible so what does.
- [42:11]
B
Revenue look like right now well it's.
- [42:13]
C
Been increasing like i said in the first quarter business it was seven k a month most recent month it was twenty two k in a month and so my goal for the month was ten k so i more than two x exceeded the goal and i'm now at a point where operations efficiency systems are becoming very important just because of getting people's data organized being prepared for meetings and so forth and so i'm actually turning down the client intake lever so that i can focus on building those systems and efficiencies in the background working on the business instead of in the business but in terms of revenue it's been very positive over the last couple of months so what's next for.
- [43:00]
B
You on your financial journey we have a divorce we've got intense focus on savings sounds like career progression to this executive role did you achieve fire or were you close when you went out into the into business for yourself and.
- [43:14]
C
What'S the goal now if i lived anywhere else i would be fire but since i live in santa barbara i'm coast fire i'm having more fun than i've ever had in my life that's one element that i try to bring into everything which is play a lot of times this business of saving of investing it can feel very serious and it is but it can also be fun and enjoyable the reason i told the ridiculous story of the trail mix is because it's ridiculous i'm not prescribing that for anyone i want them to laugh at me and the razors too but it's not as if i'm saying do exactly what i do it's consider things the way i consider them how can you play in your life to make your life better and save money and increase your progress towards five all at the same time while having fun getting to go to in person events getting to meet people that's what i want to be doing i love that.
- [44:18]
A
I love that you have found your place it sounds like you are the embodiment of if you love what you do you'll never work a day in your life like it's it's something that brings you joy because you know you're helping people you mentioned that you are coastfi what does your portfolio look like.
- [44:36]
C
I am just about one hundred percent equities with cash position so you call that a barbell but the end of the barbell that's equities is much much bigger than the end that's cash the thinking behind that was that my salary job was very much like fixed income although not as secure as something like a tips ladder so i could afford to take the risk and the savings that i built up in cash allowed me the runway to build this business into a reliable revenue source again it's not fixed income i don't believe there's any fixed expenses or fixed income but it's stable enough that i'm prepared to take the risk of full exposure to.
- [45:20]
A
The equity markets in terms of monthly or annual spending what amount are you.
- [45:26]
C
Keeping in cash i am keeping nine months of cash at this point okay.
- [45:32]
A
And how does that feel you're a business owner and you've got the equities so you're coast fi it seems to me that the cash doesn't need to be so overwhelmingly heavy because you're coast fi is that how you feel about it too because we've spoken with business owners who are eighteen months twenty four months of cash because they're business owners but i can't now remember if they were fi or coast phi or just.
- [45:58]
C
Somewhere on the path to some extent it's a hangover from my anxiety and fear before leaving the corporate job i recognize that it's a cash drag that is potentially unnecessary and i've been bleeding it down over time it's basically the advice that i would give someone if if they've got it locked in their head i need twelve months i might give them my assessment i think you really need to be at six months but if it takes you two years to go from twelve months of cash and build your confidence to be at six months that's fine it's not going to derail your path to fire or anything like that so i'm sort of the recipient of my own advice there it may not be one hundred percent optimal but for me psychologically it's serving.
- [46:45]
B
Me tell us about your entrepreneurial journey did it start with this financial planning business or did it start somewhere else.
- [46:51]
C
Yeah my entrepreneurial journey started very young i was in mexico i would go around town and gather bricks and sell them to construction workers i would gather oranges and lemons from trees so in chevy chase maryland which i mentioned i made potholders and sold them door to door and i sold greeting cards i think it's part of me that's just got to be contrary my dad an anthropologist and my mom a modern dancer they were not into money they wanted it to be there so that they could go where they wanted to go but it was not of interest to them but i took great interest in it so that when i was ten years old they were sometimes borrowing money from me when i was in my corporate job i still had that entrepreneurial spirit and i really credit tim ferriss and the four hour work week for igniting it and i didn't do a dropship business or make a supplement company like him but i saw a need in my own life my daughter who was a toddler at the time loved going in the ocean but if you've been in the ocean in santa barbara it's cold it's between fifty five and sixty five degrees and that didn't stop her one bit but the scientist in me i measured her temperature and it went within ten minutes to mild hypothermia when she was in the water again she didn't seem phased at all and i saw the wetsuits that were out there for infants and toddlers and they were really just clothing or bathing suits made out of neoprene they weren't effective so i found a pattern maker in hollywood who is actually a pattern maker for rock and roll stars leather outfits because they have to be form fitting and also durable he did the pattern design for me and i made really high quality wetsuits for kids that were comparable to those that the surfers in washington state oregon northern california where to surf in those even colder waters the thing that held me back was i starved the business for my attention because i was still working in the corporate job it had possibility but working as hard as i was during the day i couldn't take a trip to china which is what i really needed to do to get production started and so it just sort of stalled and then i started a business teaching fitness in a system called movena natural movement fitness where i took people out into the forest and taught them how to climb trees and crawl and lift rocks and logs and lift each other again it was right on that tipping point where i had fifteen people coming to classes but i didn't really have the time to market the business or to launch it and i didn't have the confidence to do so so i see that sometimes certainly in myself where the foundations of a successful business are there but if you're not willing to commit and you don't have the confidence to commit it won't happen i had this idea like oh every business i'm going to start is going to be a failure i knew it wasn't true but i still had that thought a lot when it came to the financial planning business but what got me through was change something which is if you're going to do it commit so you're leaving behind the corporate job you're going to the conferences you're going to the events building your tool set treating it like a real business this is your career now that's what made the difference was commitment and belief and putting the effort more into the business and less into the.
- [50:23]
B
Corporate job and low expenses and a.
- [50:25]
C
Big cash position yeah low expenses is something i'm all about even in the financial planning space here's an example most advisors as their payment processor use advice pay they charge three point five percent so when you're sending out bills that are three thousand six thousand eight thousand dollars three and a half percent is significant i was able to put together a payment processor by using costco and their provider elevon combined with authorize dot net as the gateway and i'm paying two to two point one percent and i made a spreadsheet about it i sent it out to all my financial advisor friends and mostly the reaction i got was that looks hard i give that advice to myself and i give that advice to my clients yeah something might look hard at first but if you step through it step by step nothing needs to be hard especially if you have someone who's done it to.
- [51:20]
B
Guide you aubry this has been fantastic thank you so much for joining us here today on biggerpockets money where can people find out more about you my.
- [51:27]
C
Website is openpath financial and i'm also on facebook instagram linkedin look for my name aubrey williams open path financial and i've got talks on youtube from various campfire events i also speak about neurodiversity adhd and autism spectrum as it concerns clients as it concerns advisors because i'm a proud member of those as well as other neurodiversities and so thank you so much mindy thank you so much scott for the opportunity to share today and hopefully to help and thank you for what you do well thank you.
- [52:06]
B
For coming on and thank you for the changes you're making to the wave that you're a part of and the changes to the financial planning space you're.
- [52:12]
A
Very welcome yes aubrey thank you so much and next episode we are going to talk to aubry about his presentation that he gave at campfi about setting guardrails around your spending when you are drawing down that wraps up this episode of the bigger pockets money podcast he is scott trench i am mindy jensen saying peace geese.