Podcast Summary: "Stacking Benjamins Part Two" – Jill on Money with Jill Schlesinger
Episode Details:
- Title: Stacking Benjamins Part Two
- Host: Jill Schlesinger, CFP®
- Guest: Joe Saul Sehi, Podcaster and Author of Stacking Benjamins
- Release Date: December 29, 2024
- Platform: Audacy
Introduction
In the second installment of "Stacking Benjamins," host Jill Schlesinger engages in an insightful discussion with Joe Saul Sehi, the creative mind behind the popular podcast Stacking Benjamins. This episode delves into the intricacies of financial planning services offered by major financial firms and explores alternative advisory models that cater to a broader range of clients.
Big Financial Firms and Their Advisory Services
Timestamp: 02:31 – 04:24
Jill initiates the conversation by questioning the efficacy of advisory services provided by industry giants such as Vanguard, Fidelity, and Schwab. She asks Joe about his perspective on these services, especially concerning their high fees and substantial minimum investment requirements.
Notable Quote:
Jill Schlesinger (02:31): "What do you think of those advisory services offered through the big guns? Like 30 bips, 30 basis points from Vanguard or the Fidelity whatever they do for their Fidelity Advisor or the Schwab one. You're not into it?"
Joe responds by acknowledging that while these services can be a good starting point, they often fall short in providing personalized and meaningful financial advice for clients who don't meet their high asset thresholds.
Notable Quote:
Joe Saul Sehi (02:32): "I like it. I think... it's a place to start. But let me tell you what I'm looking for."
The Challenges for Mid-Size Clients
Timestamp: 04:24 – 07:36
The discussion highlights a significant gap in the financial advisory market: clients with substantial, yet not exorbitant, assets (e.g., $150,000 in a brokerage account and $500,000 in a 401(k)) often find themselves overlooked by major firms. Jill shares an anecdote about a high-earning individual struggling to find an advisor willing to manage their portfolio due to inability to meet hefty minimums.
Notable Quote:
Jill Schlesinger (04:00): "We have a gap in the people who really would like advice that's affordable and that kind of customized fiduciary relationship advice that people want."
The Rise of Fee-Only Hourly Advisors
Timestamp: 07:36 – 11:02
Joe introduces the concept of fee-only hourly advisors as a viable alternative for mid-size clients. Unlike traditional advisors who charge high percentages or require large minimum investments, these advisors offer services on an hourly basis, typically ranging from $250 to $500 per hour. This model provides flexibility and affordability, allowing clients to pay for financial advice as needed without committing to long-term, expensive contracts.
Notable Quote:
Joe Saul Sehi (04:43): "I think that is where those people need to be. Pay me a set fee x amount per hour. I can come back and see you a couple years from now, you know, or if six months from now, something comes up, like, I can just pay you by the hour."
Role-Playing: Client-Advisor Interaction
Timestamp: 05:58 – 11:02
To illustrate the benefits of a personalized advisory approach, Jill and Joe engage in a role-play scenario. Jill portrays a client overwhelmed by financial responsibilities, including managing a sizeable 401(k), a brokerage account, post-divorce financial concerns, and planning for her children's education. Joe demonstrates how a fee-only advisor would approach her situation by focusing on her unique financial goals and building a tailored plan without immediately pushing products or services.
Notable Quote:
Joe Saul Sehi (07:13): "Another cool thing I started doing with clients is putting out their goals visually... putting them on a timeline and seeing where they intersect."
This exercise underscores the importance of process over product, emphasizing relationship-building and customized planning over generic financial solutions.
The Role of Technology and AI in Financial Planning
Timestamp: 12:35 – 15:23
The conversation shifts to the integration of technology and artificial intelligence (AI) in financial planning. Jill expresses optimism about AI's potential to streamline data processing and plan creation. However, both hosts concede that AI currently falls short in replicating the nuanced understanding and personal connection that human advisors provide.
Notable Quote:
Jill Schlesinger (12:35): "Maybe AI can help us take in client information, create the plan. But then what we're paying for is this relationship, this understanding of who I am."
Joe echoes this sentiment, highlighting that while AI efficiently handles mundane tasks, it struggles with tasks requiring emotional intelligence and personalized interaction.
Notable Quote:
Joe Saul Sehi (13:06): "AI does something really well... but when I ask it for the exact title of my show, it's horrible."
They caution listeners about the current limitations of AI, especially in areas requiring critical thinking and personalized service, such as financial advising.
Addressing AI's Shortcomings
Timestamp: 15:03 – 16:36
The discussion touches on recent challenges with AI, such as misinformation stemming from untrained models. Joe references an incident where AI provided outdated IRS rules, emphasizing the need for human oversight in financial advising.
Notable Quote:
Joe Saul Sehi (15:02): "We're not in the profession, but the profession can do a better job kind of getting some of the granular information out without the actual hourly firepower you need."
Jill concurs, reinforcing the idea that while AI can assist, it cannot replace the intrinsic value of human relationships in financial planning.
Conclusion and Key Takeaways
Timestamp: 16:36 – End
In closing, Jill encourages listeners to reach out for personalized financial advice tailored to their unique situations. She emphasizes the evolving landscape of financial planning, where flexible, fee-only advisory models are becoming increasingly relevant for clients who seek affordable and customized support.
Notable Quote:
Jill Schlesinger (16:27): "Change your work. Change your wealth. Change your life."
Key Takeaways:
- Major Financial Firms' Limitations: High fees and large minimums make personalized advice inaccessible for many mid-size clients.
- Fee-Only Hourly Advisors: Offer a flexible and affordable alternative, focusing on personalized service without long-term commitments.
- Process Over Product: Effective financial advising prioritizes understanding client goals and building tailored plans rather than selling predefined products.
- Technology as a Tool, Not a Replacement: While AI can enhance efficiency, it cannot substitute the essential human element in financial planning.
- Evolving Advisory Landscape: The financial advisory industry is moving towards more inclusive models that cater to a broader range of clients’ needs.
This episode of "Jill on Money" provides a comprehensive exploration of the current challenges and emerging solutions in the financial advisory space. By highlighting the importance of personalized relationships and the potential of alternative advisory models, Jill and Joe offer valuable insights for listeners seeking to optimize their financial planning strategies.