Alright, welcome to the Gut Check Project. This is episode number 23. You’re here with your host, Kenneth Brown, MD. And I’m Eric Rieger. Let’s, uh, let’s talk a little about what we got going on Ken.
Well, we’re, like always we’re trying to push some boundaries. And one of the things that I see as a doctor is that I want to make sure that my patients are very healthy, both mind and body. And when ever my patients come up, and they’re going through a stressful situation, they manifest it in their guts. And one of the most common things I see that I can’t help them, which is why we brought our guests on today is that when people go through financial trouble or when they’re stressed out about their money, they can manifest in their guts. They show up with all kinds of stuff so they end up at a gastroenterologist office, and I can’t give them any real advice on their finances and how to help them with that. So like we always do with the Gut Check Project. Let’s bring him in. Let’s check our egos at the door and let’s learn a little bit.
We got some experts here with us today and that is Mr. Patrick Brewer and Mr. Tim power both from Surepath Wealth.
Thank you guys for coming up all the way 35 to Dallas from Austin. How y’all doing today?
It was a joy. Well, we didn’t die. Yeah, that’s the first step.
We made good time on a rainy Thursday morning.
Now, that being said, I know that you said we didn’t die. But Tim said, but if you would have your family would have been covered.
They would have been covered. Yeah, least 3 million. Maybe more than that.
So Surepath Wealth Management. It’s far more than just taking care of someone’s finances. Correct?
Yeah, I mean, the way we think about it, it’s similar to being a doctor, right? And you have a holistic approach and you want to solve the person’s problem. And sometimes they present with one issue that they think is really important, you know, they may have some issues with their their stomach or I’m not going to pretend to know exactly all the things that people could present with. I’m sure there’s some, some strange ones out there, but they present with a particular problem. And they you know, that’s what the that’s the problem that thye think they need to have solved but in reality it’s it’s more than that there’s other things that are contributing to the initial problem and making it worse. So our role similar to a physician, I think, is to lay all the pieces of the puzzle on the table and then start to assemble them and really get to know what’s driving our clients and or people in general, and just figuring out what their motivations are and what they’re trying to accomplish. And then, once we have a good sense of that, just putting it all together and hopefully solving the problem.
Absolutely. I mean, there’s a lot of similarities. I mean, people come to you people come to me with very intimate problems. People come to you guys with similar issues.
When people somebody shows up to your office, they’re saying, I’m going to give you my world, the world that much like the great prophet Kanye West said, money isn’t everything but not having it is. And so when you get to the point where they’re like, look, I’ve got this What can I do to grow it? What can I do to not lose it? That is one of the most vulnerable things just slightly less vulnerable than somebody taking their pants down and letting me stick a finger in their butt.
I don’t know. I mean, I think it’s about equal.
For some people that can be really stressful, there’s some there’s a lot of shame around money. There’s it’s a very intimate discussion, because you don’t know the beginning of the conversation, what their experiences have been. Maybe they’ve made some poor decisions in the past, and they’re reluctant to admit those, maybe there’s some controversy with them and their spouse, they could view money differently the way they were raised, and the way that they think about money in general about how they could use it in their life or even their preferences for what they’re going to do with it and retirement or when they pass away and they want to leave a legacy, do they not? So there’s all these embedded psychological and emotional factors that go into how people interact and make decisions about their money. And the first step, similar to being a physician, I think is to peel back the onion a little bit and see what are what are the driving forces here that are actually contributing?
I want to get into all that Eric, can you explain actually that it isn’t exactly like we just bumped into you guys on the street. Can you give a little history as to why we have these two super smart guys here on the show?
Sure. So we are a part of a mastermind group and Tim and Patrick both happen to be a part of it. The reason why we joined that entrepreneur group is we’re all aligned from the same orientation that we want to be able to serve our fellow man the best way possible for us through healthcare. It’s how do we reduce stress and increase health for y’all? It really is, just as you said, Patrick, it’s a holistic approach to managing your own wealth and finances. And the great thing that I’ve seen and learned from both of you all over the course of the last year is you treat your clients like family, because this isn’t an opportunity to shame someone with their previous financial troubles, etc. The thing I found really interesting though, is you and I have talked over the last several episodes and over the last several years about how can you help someone reduce their external stressors, right? Because by having that you lead insomnia, you lead to catecholamine circulation from high stress situations. So we’ve talked about people that regularly see a doctor usually end up decreasing chance of disease they, they come in to see a gastroenterologist, they’re usually not going to have a polyp that turns into a cancer because it’ll be detected. So what I found kind of interesting is someone who turns to someone for wealth management actually has less potential to gamble. They actually are better prepared for their financial future, obviously reducing stress so they reduce stress, they reduce their risk of bankruptcy, regardless of their income level. And then obviously, their family conflict is reduced. I don’t remember what the crazy stat is, but it’s well over 70% of marital strife comes in originates from some element of financial problems or disagreements in the first place, simply by having someone that I didn’t have someone tell me when I was younger simply by having someone help you forecast and help you put your money where it would serve you better will ultimately reduce your stress and work out better for you and your family. So that’s how we met Surepath.
I think we just met on the side of the highway.
When no one knows because you muted your mic.
I didn’t mute my mic. I said, I think we met on the side of a highway. But I guess maybe we met…
Well, I mean it. And Eric said I was stupid for standing on the side of a highway with a sign that said, I’m looking for better than 8% yield. And you stopped. Let’s talk. Because, and I said also, I’m looking to diversify my risk by hiring 20 advisors. And you’re like, yeah, let’s have a little talk. Yeah. So one of the things that I was really impressed with is you gave a lecture at the conference we’re at , and I wrote down a few notes, which was really very interesting to me because everyone tries to outsmart the market. Everyone tries to do this stuff. We want to invest in America, America.
You said several different things which were really interesting, like how percentage of stocks in the stock market that is outside of America. Can you get into some of the stuff you talked about in the lecture?
Yeah, for sure. So I mean, with investing, there’s so much that you can do. And what I found is that investments that they’re kind of like a bar of soap, the more you handle them, the less you’re going to have the highest level. A lot of physicians, they, they overcomplicate things. So the biggest thing that I’ve seen is the desire to have passive income, which I think is great, you should pursue passive income, you work really hard and you should have investments that are working on your behalf when you’re asleep, and you’re not having to trade your time for dollars or scale up really complicated like multi specialty surgery centers. There’s, there’s ways to generate passive income that put you in a position later on where you don’t have to work as hard. But what I’ve what I’ve seen is in our industry, when you start to take things that are really complex, different investment processes that could be really complex and you start to layer them into your portfolio, you start to drive up expenses, you start to drive up something called turnover, which increases your taxes, and you start to drive up your tax and your legal bills, because then people have to figure out what the heck is going on in order to give you advice. So what I’ve found is that most people, physicians or otherwise would be best served by starting with owning every single company in the entire world. You know, a lot of people just focus on the companies in the United States. And they’re like, well, I own a couple stocks or I own, you know, the s&p 500. And when we think about the markets, we always ask like, well, how’s the s&p doing? How’s the Dow doing? Well, the Dow is only 30 companies, and yes, and s&p only 500. But there’s over 12,000 stocks all around the world. And what most people don’t realize is that only 44% of the global market cap is in the US. There’s actually more stocks available outside of the United States and there’s a lot of benefits to holding securities that move differently during different periods of time. So we generally talk to people about international and even emerging markets investments as a way to increase the returns potentially diversify and expose themselves to different areas of the world that might move in different directions in the US.
I just want to make sure that we get Tim in the picture here. He keeps leaning back further and further.
Relaxing back there. Listening.
It’s Yeah, this is actually really good stuff.
Well, let’s talk about that real quick. So what do you think about this tea that we’ve had here?
Think I burped three times.
Yea it’s really good.
I quit drinking beer three years ago, and I love the taste of this because it tastes like a beer. Yeah.
Yeah, there’s not a drop of alcohol in it whatsoever. It’s tea with with some hops in there. Thanks to Lovich.
Boulders finest too.
Yea. Straight out of Boulder, Colorado.
Yeah. So let me ask you a question. So as somebody who tried So I have my own company Atrantil Atrantil go to lovemytummy.com/spoony still are we doing? We are all right, lovemytummy.com/spoony or go to KBMD for your CBD. So as somebody who is a physician that has tried to raise money for a startup, yeah, I was a little bit shocked. And then when you and I talked a little bit where you said, Yeah, well, physicians tend to do some of the most esoteric investments and not be not actually tend to be patient and do exactly what you’re saying, just invest in every company in the entire world. And eventually you will win. Yeah, in the long run. So when I was over there out there trying to raise money and like, this is an opportunity. Yes, it’s a startup. But it’s in a field, you know, it’s a you know, we can sit there and do this and we can grow it. I was absolutely shocked at the conversation that I had most of the time was, I would love to, but I lost 50 grand and an emu farm. I tried to do you know, I lost money in three restaurants and I’m like, What are you doing in the restaurant? By the The time doctors get asked to do investments and stuff like that. I pretty much think the good money is already out.
Yeah,yeah. I mean, unless you’re like an early mover you have controlling most private investments, the people making the money or the the managers of the private investment i mean if you think about it, right, they’ve put together a deal. And on average, just take private real estate as an example, you have private real estate investments. There’s actually huge public real estate funds and the public real estate funds have way better liquidity. They have the same types of properties. On average, they’re better diversified because they have properties across different geographies and different scopes, buying power and they’re mark to market so they trade every single day. So you have full liquidity on that. But if you take a private real estate investment, it sounds a lot sexier, like I buy private real estate, and I get 8 to 10% rate of return. But what you don’t realize is it’s not repriced every single day. It’s not liquid, and the people that are managing it are charging you a pretty significant management fee for finding and sourcing these properties and managing them and yes you may get a good rate of return, but why would you expect a different rate of return in a private investment versus a public investment in real estate? It doesn’t make any sense to me. So what I found is that our industry, this is not the physicians fault. Our industry has done a good job of manufacturing products that sound really good, that are actually available in a much lower cost more liquid environment, but it’s not as sexy. So if you don’t really understand exactly how the markets work and how returns are created, and what a fair return is, you can get sucked into these schemes. And these schemes are what keep you locked in your seat having to trade your time for money. So I love entrepreneurialism. I love what you guys are doing here. It’s a fantastic product. I take it myself. I think the key is figuring out what lane you want to be in right and how much money is enough like at what point can you say, I can if I produce this amount of income, I can relax and maybe relax to you or any other position or person listening is I want to go out and build more companies. Well, that’s great. Well at least now you have a passive income stream that’s coming into allow you to do that where you don’t feel like you have to put your foot on the gas if you’re not really feeling up to it. So I love entrepreneurialism, I think if you’re a physician and you’re called to continue to build companies and to continue to create jobs and do those things, that’s absolutely where you should put your time, your energy and your money, you just want to make sure that you don’t get pulled into some type of a scheme that isn’t really designed to enrich you. It’s designed to enrich someone else.
I think, during your lecture, the way you described, that is first achieve stability, then go for growth.
Yep. Yeah, you want to you want to figure out a baseline, you want to know, you want to make sure that you’re protected. You have a sufficient asset protection in place could be insurance, it could be estate planning, trust, things of those nature. And then it’s really like what what’s the baseline living expenses for you to be able to be okay, and then after that, you can take, you know, strategic investments and growth and that might be in yourself. It might be in your business, it might be in the markets, it might be in real estate, a lot of it just depends on your preferences as far as how hands on you want to be?
Yeah. Let me throw this to Tim. So we, at that same meeting several questions. So the thing I like, let’s get back to why I think doctors don’t do this, which is the same reason why people come to me. And at times, I’m like, why didn’t you come to me sooner? And it’s the same thing. It’s, I’m, I’m embarrassed. I’m whatever. Like, it’s embarrassing to sit down with people. And I’m, I’m technically a highly educated person went to school a long time doesn’t mean I’m highly educated.
No, it doesn’t.
I didn’t go to i didn’t i didn’t go to Texas Tech. So I’m already starting lower than everybody else.
Yeah, it’s not your fault.
You were born in Lubbock, but you ran away.
I know. So you know, had I had I been gifted to be able to go to Texas Tech. Things would be different. I wouldn’t be on the podcast right now.
Yeah, you can be the sidekick like me.
Tell us toto.
So, but it is it is really interesting because what I would I’m embarrassed that I have this, you know, whatever, however many years of education and I I’m gonna say, should I get whole life? What the heck is my wife? Simple things like that, that to you is like no big deal.
Well, it is. I mean, it took me years to figure out what was behind the curtain of some of these products that Patrick was talking about earlier. I mean, they there’s this incredible sales training to get folks into these products that seem very good for your family, you’re protecting your family, you’re doing all these great things, but there’s all sorts of underlying fees and costs and limitations to access in that money. And so I think a lot of times we we get products pitched at us they sound like they solve a number of problems with one deal so it’s great you know, cuz I don’t have the time to deal with 15 different things so perfect. This one thing does it all and and then you don’t even know really what you’re in or why you’re in it. 10 years later, you like what happened to this thing? You know, and it’s yeah, so it just it’s not part of a plan always. It’s got to you know, planning has to be part of a plan just like diet does. So yeah. Whether or not you should have whole life term life or universal life. I mean, it really just comes down to what your needs are, how much money do you want to put away, if you’ve already maxed out all these other areas, maybe you can use some. But it’s also a great tool for like estate planning or tax preservation and things like that. Because insurance offers immediate leverage, it kind of buys you time to build up $10 million in assets, you can just buy a policy for $10 million, and you’re immediately worth that.
Explain that a little bit.
Yeah, so insurance offers an incredible benefit. I mean, if if, if you are your life right now, as a physician, you have what I would call a massive human capital. So if we were to look at a pie chart,
Look dude, I’m trying to lose some weight. I don’t really consider myslef…I’m working on it.
I mean, stressed I got several companies.
You can can barely fit at the table.
You know, I got I got a great solution, but so no, the so your life is part of your investments. And you’re a big part of that because you have a human capital, you have a big investment in you and so that’s a risk right there. So the rest of your portfolio should be weighted appropriately. Because you don’t need to take on a ton of risk because you have a risky profession. And you could have all sorts of liabilities in there. So we look at the whole picture. And if you needed to protect that risk of your human capital, what it’s worth call it $10,$20, $30. And you pass away young and you leave your wife and children on the lurch, and they don’t have all that future income coming in. You could have solved that problem by buying a life insurance policy and just immediately having a you know, $3 million policy sitting outside or $10 million.
The problem is like when you’re first coming out of school, and you’re really busy, and you’re trying to do a million different things, and you get approached by someone who tries to use a product in order as Tim said, to solve your problems and then you get a bad taste in your mouth because you’re like, wow, I bought this product that didn’t work for me and it’s just it’s it’s not really the physicians fault and it’s not really the financial services person’s fault. It’s the system. The system manufacturers this because you have someone who’s really busy a lack of attention, and they believe that everyone else is about is out to help, which is the physician because that’s their out to help generally, right. So they project that image on to other industries. And then you have the financial services industry, which is originally created to monetize people’s lack of attention, right? So they find people that…
Monetize people’s lack of attention
They put a lot of time into these things, like oh, yeah,
It’s like, I’m busy, you know, give me a product and you’re like, okay, yeah, we’ll manufacture something for someone who’s busy, who doesn’t want to do the due diligence and doesn’t want to do the hard things, right. The way I think about it is, you know, going to the gym and lifting weights consistently and eating healthy versus getting the steroids shot. To me, products are kind of like the steroids shot. In most cases. It’s like, I don’t want to do the hard things like have conversations with my wife, I don’t want to think about where I’m going to be in 15 or 20 years. I don’t really want to think about you know, saving for my kids college just like give me the steroids shot and I’ll be on my way and then 10 years later, you didn’t step foot in the gym and you’re like, man, I’m all kind of chunky and I don’t look good. Like, yeah, man, you just took steroids and you didn’t go to the gym like, of course, you’re going to look bad. But it’s it’s kind of like, it’s an unfortunate situation that that is really transpired between, you know, the medical field and then financial services. But I think we’re starting to come full circle. And the reason why is there’s a lot of really great financial advisors and wealth managers, and a lot of them are in kind of hiding in secret because there’s so many advisors out there that say their financial advisors, but there’s a collective group, I would call it about 40,000 around the country that are CFP, use fancy words like fiduciary, you know, and they really take into account everything that’s going on in someone’s situation. So if you’re lucky enough to meet one of those folks, it’s usually a little bit later in life after you’ve kind of had one of those situations where somebody kind of burned you with the product. But at that point, you know, you’re able to slow down and create enough space and both of the parties at that point are in a position where they can really help each other.
What about for someone who isn’t trying to bridge the gap between a high income level such as medical and still knows that they need to seek wealth management or financial management or they happen to be coming right out of school and they haven’t even put together anything. How do they find someone to turn to?
That’s a challenge.
Yeah, it’s a really great question. There’s a couple organizations that I’d recommend people check out. There’s one it’s called NAPFA. NAPFA.org I believe it’s National Association of Financial something. But they’re all advisors had been vetted out they’re generally fee only they tend to do what is in the best interest of the client. So I’d say that’s a really good starting point. But choosing an advisor is kind of like choosing a doctor, right, you know, your bedside manner. That’s really important. It’s hard to evaluate that through a website, you know, or through credentialing. You know, I feel like trust is a fairly simple equation. You know, I’ve read it in a book it was a couple years ago, but it’s stuck with me. And I think this holds true for any service based profession, but trust is really credibility, plus reliability plus intimacy, divided by self orientation. And if you’re a physician and you’re only prescribing one, one drug, let’s say, you know, you have a very high level of self orientation, because let’s say that you get kickbacks for that drug. I know you guys, and this doesn’t have it’s not common practice and practice at all in your industry. But in our industry, like maybe somebody is maybe somebody only has one or two products, right? So they have a very high level of self orientation, which makes it a lot harder for them to build trust or to sustain trust. So I think it’s really taking into account based on your interactions with with that advisor or that doctor, like, are you picking up signs of credibility? Are you picking up signs that these people are going to be reliable? And then also, are they doing a good job of asking you good questions and understanding what drives you and like, you know, how you think and what you want, right and creating that intimate relationship?
Well, you bring this up, but it’s always like, like everything. It’s a two way street. So describe to me, both of you, your ideal client.
Yeah, I mean, I think it’s…
Your ideal partner. Because it’s really because at that point, it’s no longer a client. We should be partners in this situation.
Yeah. And and Tim, you can answer this as well. But I would say from from me and Tim, Tim and I, I think every person is a little bit different in our industry, I really like significance driven people that want to do something be bigger than just provide for themselves. So whether that’s their family, where they want to build a business to help others, where they have charitable endeavors, or legacy goals that they want to nurture over time, those type of people light me up because there’s more opportunities for advanced planning, there’s more opportunities to have discussions about things that are really going to help them and frankly, it’s just better for the world, right? There’s more humans that we can help if we have bigger vision, so I’m kind of a big vision guy, and then I use financial services as as my vehicle to be able to help folks. So that for me, that’s kind of my ideal client, but I know you know, I consult with hundreds of advisors around the country and want to have a similar podcast to this focused on the financial services industry, but every advisors a little bit different, you know, some I talked to and they’re like, Hey man, I’m feel really called to serve widows and others are like, you know, I really like people, that are getting close to retirement because I feel like I’m great at retirement income and I can counsel those people, as you know, the markets go up and down. So I think a lot of it just comes down to like, what’s your frequency? Like, what what type of people really light you up? And for me, it’s kind of that significance driven person.
Yeah, I would say very similar in a lot of ways, but it’s almost like the law of attraction. If that’s such a thing, but where you feel like you’re finding other people that are in a similar spot in life, but you can add a lot of value to them just through your knowledge. So I’ve always kind of looked at the relationship side of things and just going deep with people and kind of hanging in there. And I feel like similar to Pat, like I do this as a mechanism to be able to stay in touch with so many different people and then continue to stay relevant and help them and just win that trust. And it’s like the the financial aspects of it and what we make off it, it’s, of course, it’s there. Of course, you’re always thinking like, hey, we have some things we’d like to pay off debt, get a bigger office, all these different things are of course we’re human, help the children, you know all those things, but it’s very much more about the relationship and seeing those, the trust, build and then helping them and then making a big difference and seeing their accounts doing what they’re supposed to do. And there’s tax savings in line with what they want to do. And it’s just I don’t know, it’s kind of a anyone that’s willing to be open to advice and values that but also sees it as deeper than that. Those are the people I like working with.
That’s actually how Eric and I started working together. I mean, one of the things one of the bonds that we have is that we’re both, well, dude, I mean, we’re both really into being dads. And I knew that Eric was really into his children. When I went to his house one time and his son gage was on a unicycle and Mac was juggling. Like these these flame things, they weren’t lit yet. And I was like, What are you doing? He’s like, in case since he is in the same boat as me, where there’s lots of risk and if he dies, the family’s dependent on it. He’s like, I’m not going to leave my family destitute these kids will learn a circus skill before I get out of here. And that’s when I realized we’re on the same boat. We’re going to take care of our families.
We were in the middle of building the spinning knife throwing wheels.
It is amazing. Thanks, Tim. Because what we do our side hustle as a family is circus acts. And it is awesome thanks. So anyway.
But that just shows it’s similar things. So now this is why I thought we could have you guys on you don’t have to do that anymore. You can actually get insurance.
To help with that.
And we lost we lost a couple…
And now you have to admit to being psychotic.
You have to but and we got a cousin that lost a few digits last week. But other than that, it’s okay.
Well, go ahead.
Well, the other really thing, the thing that you talked about in your lecture, the other really thing that’s good, that’s good English.
Solid grammar. Solid
The other thing that really impressed me with your lecture was the fact that you when you with clients a lot of times the spouse is not involved. And you know we already discussed that financial issues can be a real stressor on on spouses and and I was thinking about that this morning I went to an article on investapedia where spouses don’t just the six things that are not discussed that you should discuss with your wealth manager mine yours ours Have you actually discuss what is what actual debt didn’t even dawn on me that like people hide debt and then get married. And it’s like, surprise, there it is. Yeah. personality type saver versus spender power play children. Do you know that it costs $233,610 to raise a child right now to the age of 18? That’s a bargain.
Yeah, that doesn’t sound anywhere close.
I was like, I think I spent 233,000 on tennis trips last year. No, I did not. That’s been sarcastic.
They start making bad decisions and it can get even worse.
Oh, my gosh.
It doesn’t say after 18 what that cost is.
Well alright. Alright. You caught me Patrick. I bet on my kid and I lose a lot. So yeah, you’re right. Yeah. But it’s funny. And then the thing that really hit me on this is the extended family. So at my age, I’m in this sort of sandwich situation where I’ve got my mother and my father’s passed away. My father in law passed away. I’ve got my mother in law, and I’ve got my kids and you start looking at this and you’re like, Oh, this is you starting to feel a little bit.
Yeah, for sure.
And this is gets thrown into your guys’s laps. And so I was very impressed when you said now you got to sit down and just wow, talking about being vulnerable.
Yeah. Saying look, this is everything I have going on right now.
Yeah, it’s crazy. I mean, Tim, do you want to take that? I mean, I feel like you’ve done a great job with a lot of that.
It’s huge. I mean, I think pulling we really don’t move forward in a planning relationship unless the wife is on board or the significant other and that matter, so we just make sure of that because even when you got the hard charging entrepreneur type that we’re working with, and there’s they think in their mind like no, no, my spouse doesn’t want anything to do with this and, and guys and girls, I mean, it’s sometimes the women driving it, sometimes the guy driving it and their spouse is either taken to hear the kids hanging out, doing other things. They just don’t want to be involved. But then you get the spouse talking, and you start finding out all sorts of stuff. They just help their mom who went through hospice, she had Alzheimer’s, she was alive 17 years with Alzheimer’s, it was this long drawn out, you know, event that they had to take care of. So she’s got a whole different set of priorities and fears and thoughts about money. And the other person, the other spouse might not even be thinking that. They’re just so focused on on doing what they’re supposed to be doing that they lose, you know, they forget to pull them in. And so it’s important to make sure everyone’s on the same page. And then it’s a real holistic plan. And then that way, you’re making sure that everything’s covered and that they have legacy they have charities they want to give to and you’re making sure that the spouse is pulled in on that. So good piece.
Yeah, I mean, the biggest thing is making sure that your accounting for both sides of that that sandwich, right? You know, it’s easy to not think about the future and just live in the present and not realize what’s eventually going to happen. And it’s like, we’ve had a lot of issues where, you know, we’ve encountered people too late in the cycle, and they’re like, Oh, my parents are moving in with me. And we’re like, Okay, well, I mean, based on the projections, I don’t think there’s a whole lot you’re going to be able to do if you want to actually provide care for them, it’s going to have to be you because they didn’t make the decision early enough on in their life to get something and protect them
Is that a really common thing that you’re seeing?
It’s starting to become a little more and more.
Yeah cuz people are just living longer at this point. And part of the challenge is long term care is not a product that people want to buy, you know, it’s not like, again, it’s not a sexy product.
You don’t think about someone’s like pulling you out of bed.
I could never lose one of my five you know, core abilities right.
We hear guys say it all the time. Oh, my long term care plan is a boat without an anchor or something. And I’m like, what? And you know, it’s just a very bad idea of what it is.
Well it just sounds dangerous and silly.
It does sound dangerous for anyone.
That’s not to go off on a tangent but that is something that I’m very interested in because when we discuss lifespan versus health span
Mortality verse morbidity.
Yeah, so when you’re sitting there talking about these kind of things so as a as a physician what we’re trying to do right now is for myself, I’m like when I think about me working out and stuff I think about my my personal trainer is my 80 year old self saying don’t do that. That that that looks stupid. Don’t do that.
No more no more back squats. You’re done. No, yeah,
Well, I pretty much tell my trainer to you know, beat it. I’m gonna try it anyways. This guy next to me just did and I’m sure I can do it.
Load it up, six plates.
So but it is interesting because right now I’m viewing everything as well. I need to be healthy when I don’t want to be in a situation. My my whole our whole message is brain gut. You have to I believe that health begins and ends in the gut and I believe that it affects the brain and we have an epidemic of dementia and Alzheimer’s happening. So we’re having this situation where a lot of people are losing their capabilities. So even if you wanted to have a long boat ride without an anchor, you forgot it.
Yeah, yeah, it’s no longer in the boat and you don’t even probably own the boat. Someone stole it, because you left the keys out, ya know, like, it’s, yeah, we’re seeing that a lot more frequently, as you guys probably have noticed an uptick in a lot of what’s called inflammation related diseases, and those come into your brain. And then before you know, it’s an epidemic, and that epidemic is going to work its way into the financial side. And we’re starting to see the outcomes of that now.
There’s the link. That is fascinating. That is exactly because if I can help prevent some of that it can help some of your clients down the road.
Oh, absolutely. Yeah. I mean, we used to do, part of our company was helping people with Medicare and it was crazy like the people that would come in that lived in more, let’s call them like rural areas where they didn’t have good access to food they didn’t have good access to you know, good information around diet, their reaction time and their ability to process information and just how they could retain information, even in their mid 60s blew me away compared to other areas that were a little bit more affluent where, you know, they had access to food and that type of information. I mean, those people were, you know, whip smart, and they were able to, you know, have dialogues and remember what we talked about I was I think it’s going to be a really big problem and it is now I think it’s gonna get worse.
An article just came out today, Bill and Melinda Gates are investing in a company to do micro encapsulation of nutrients they can actually get through in a be absorbed, so they can just sprinkle it as a powder in third world countries to try and help with these sort of micronutrient deficiencies. That when I see when I see stuff like that, when you guys are dealing with people, when you say, you know what would be really cool is to work with clients that can leave a legacy. That’s pretty cool.
Yeah. Being Bill Gates is probably pretty cool, too.
Yeah. It’s his…
Bill, if you’re listening we’re open for business.
Yeah. Like or subscribe or both.
Yeah, yeah, it is a big epidemic that’s coming I think…
Melinda, I’m gonna give them a thumbs up. Are we cool with this? Yeah,
It’s tough too with the one last thing on care the care part of the plan most financial plans don’t even think about that, you know, they’re thinking so much about right now they’re thinking about paying off debt and they’re not looking at your family’s your mom and dad or your mom down the road and how you’re…
The interesting thing is like, you would think our industry would be proactive in solving their own financial challenges, right? You think if you’re a financial advisor, I’m sure you have your estate planning done. I’m sure you have all of your insurances in line, I’m sure you do proper tax planning, you know, got your investment portfolio property allocated for my, you know, work and
You didn’t say Elvis collector plates, which is what 70% of my portfolios and
Well, I mean, you’re a great investor. So, you know, we can discuss that later. But you think that financial advisors would be the probably the first one on the list to get their financial house in order, but it’s interesting how many Don’t Oh, I’ve been on the consulting side, prior to starting my own firm and just having conversations with these folks and kind of looking through some of the, you know, the numbers and things in their own practice, it’s, it’s alarming how many people really don’t do their own proactive financial planning, even if they’re a financial planner, wealth manager. So I think it’s, you know, if you’re feeling any apprehension to like coming in and having those discussions, I mean, you’re really not the only person. Like, it’s pretty common.
I just realized that we share a common spot here, which isbuy health insurance, or prepare for the future. A lot of people have to make this choice.
Yeah. Now it’s a good point.
And I didn’t even I didn’t even think about that, that my parents generation did not really prepare for the future. And it’s not their fault. They were post World War or my dad was post Korean War. And I don’t know it was just they didn’t really plan and so
yeah, Yeah, I mean, Social Security’s. I mean, a lot of folks are just retiring. And all they have is Social Security and Medicare. And I mean, it’s medical expenses are through the roof, I don’t need to tell you guys this, so I’m curious to see how we were able to address this problem, I think there needs to be a big change and, you know, outcomes for folks on the health side, because the health really drives your ability to either create or preserve wealth. And the worse off the average American is from a health standpoint, the more they’re going to take from the system. And I just see that number keep going up and up and up. So hopefully, you guys can do good work and solve some problems.
That’s fascinating. I think that doctors and wealth managers need to be teaming up more and figuring out how, and be much more much more transparent about every
Absolutely. Because even the way billing and all those things, there’s so many things we can do now that are much more better outcomes and better for the client. The one other last thing about our parents generation, it’s really tough about it all is that they were also conditioned to be very closed. Not every one of them but man. It’s really really hard to talk to like, a dad or a mom sometimes and they don’t always tell the children what they what they’re doing with the money and you try to help them or different things. It’s a, they’re not super transparent. I don’t know what it is, but it’s a little tough.
I think each generation has their own challenges. I think, you know, the silent generation is just like very close to the vest, you’re not getting any information from that generation, the baby boomers, it’s kind of hit or miss, you know, some of them done a great job with planning and others, you know, not so much. I think our generation like the Gen X, Y, I would say Gen X is the type that is reluctant to ask for advice, because they want to seem, you know, like they’re an expert. You know?
Gen X is?
Gen X is, I don’t know the exact age cuts, but I would say probably like 37 to 50. So early 50s. You know, and and this is really just kind of a heuristic. And this isn’t like actual science or anything but just my observation interacting with folks. And then I would say Gen Y is done a terrible job of just saving in general. You know, like, it’s more about living in the moment and travel and those types of…
Gen Y is?
20…late to mid twenties.
So this is, so it’s Gen Y millennial…
Millennial. Yeah, Gen X is I think, a Gen X. But I think each generation presents with their own set of challenges that need to be worked through. And that’s what I’ve learned over time as, as people walk in, and we have conversations with them, probably similar to you guys, when you meet with patients, you kind of know, generally what to expect and how to open up the dialogue and how to have questions to help them understand kind of the value of, you know, either good eating habits or good, you know, saving habits, depending on kind of the context that you’re meeting them.
You addressed a little bit Patrick and Tim, what it’s like to have someone who now has a parent whose outliving or outliving the coverage that they thought they were going to live. So we’re talking about the health span versus lifespan situation and whether or not as you referenced they’re going to move back home. What about the way that things have changed in terms of inflation specific to people as they plan for college now, probably over the last 15 years, and we’ve seen reports probably over the Last 10 where more and more people at the age of 18 don’t tend to move out of the home. So, in other words, how do people retro actively kind of back plan by coming and talking to you on how they can readjust finances, because oftentimes the pride kind of plays into it. They’re like, I don’t want to look like I didn’t plan for this. But the truth is, it’s okay to say, I didn’t plan for this. Help me get out of this. How do you approach someone like that?
So just so I’m clear and clarifying. It’s someone who hasn’t adequately planned for some of these expenses, and then they’re coming in and how do we kind of help them get through?
Yeah, the environment changed to where whereas when, whenever I graduated was, whether you’re going to go to college or service or just going to go and start your own business at 18. You’re leaving, and over the last 15 years, more and more people graduate. They they stay at home. It’s very expensive. The rate of inflation both for collegiate education is completely changed. I mean, my most expensive year or semester was 1500 dollars.
And that’s obviously not going to happen anymore.
I mean, I think it starts with just an acknowledgement that it’s a trade off, right. So you there’s only so much money to go around. And you need to rank your priorities. And if you have people living in your home, and that’s taking away money that you could be putting towards your retirement. I mean, basically, what you’re saying is that right now supporting your kids and making sure that those types of expenses are met outranks the priority of saving for retirement and other goals that you may have in the future. But it starts with an honest conversation about what are your priorities, and it is someone else, whether you love them or not, are they hijacking the vision that you have for your life? And are you okay with that? And I think that’s really the first step. It’s not really like, did you make good decisions or could you make better decisions, it’s more, you know, here’s where we’re at, and it’s not for good or for bad. This is a situation that we’re in. Let’s figure out what we want. If we can figure out what we want, then we can figure out the best path forward. And I think to add on to that, for people that are starting to have kids or maybe have young kids and you know, at some point they may be sending their kids off to college, should they put money in a savings plan for that, should they not? I think a lot of it just comes down to, you know, just being intentional about what you’re you want. And then also, you know, what your, your kids may want too because I think that college will eventually decrease in cost. I think there’s going to be, you know, opportunities for people to learn skills, and the workplace is rapidly changing. It’s getting more competitive, in general to do business. So I think people are just going to be expected to have more skill sets in college right now the structure of it doesn’t really lend itself to that. So I think we’re going to see more dynamic learning environment, which should cut costs and be on average better for folks around the country.
It’s funny when you said to be saving that my I joked about tennis, but I do have a really big tennis family and I remember my son was 8 years old, and they brought in this consultant from England to talk about growth and adolescence. And somebody actually asked of the kids that you coach, how many of them went on to get a full ride scholarship? These are eight year olds. She lost it. She goes, here’s a great idea. All the money you’re doing spending on traveling all the money you’re doing spending on private lessons, everything. Why don’t you just put it into a college fund? There you go. And I just went, oh my god. Yeah, that’s right their eight and they’re asking you about college scholarships. Holy cow. We are. I mean, completely misguided here. So..
Especially with the college system today in a lot of ways it’s pretty broken. I mean, you definitely don’t learn anything about real finance. You don’t learn how to balance your budget. You don’t learn about the tax code. You know?
What if you happen to make it all the way through be a star athlete in football and get paid tons of money if you don’t have a financial plan? Someone straight out of Austin, not that long ago, was a national champion quarterback has nothing to show for it and netted over 20 something million dollars?
Yeah, I would say most athletes are just the deck is stacked because they have such a short career span, and you get that rapid rise. And they don’t get good advice because the people giving them advice are the agents and it’s a very kind of…
It’s an industry loan, you’re loaning it for 5,7,10 year contract.
Just the way that it’s structured.
And then it pays it back to the contract owner.
It goes back to exactly what Patrick said, you have to be intentional. You have to be intentional with what you want to do. So if you want your kids to go to school, do something intentional and save for it. If you’re going to make it all the way up, be intentional with this nice, this nice cash sum that you have it because it’s not going to last forever. And there’s no guarantee that even if your kids good enough that they’re even going to want to play that sport when they get to school.
Yeah, totally. You know, being intentional because we’re talking we jumped right in and just started talking about all the stuff that we want to be excited about which is health and finances and stuff. But the reality is, how in the world did you guys meet? How did you form Surepath. Let’s let’s get into the stories now. I mean, clearly you guys, clearly you guys know what you’re doing clearly you have the best intention of your of your partners, your clients. Now I want to know how this thing even came about how you built this.
I mean, I I’m from Boston, Pat’s from Philly area, and I moved down to Texas in 2013 2014. And so I had had a practice up in Boston and my family was that ended up down here in Austin. And so I was going back and forth just to service those clients. And there was an incredible time I was able to stay with some great families, and Finny Kuruvilla and a bunch of people like that who I only bring up because he’s disrupting education right now with Sattler College. Their tuitions five grand a year and it’s a fully accredited college Finny’s a doctor and everything went to Harvard and MIT. But anyway, so I got to meet a lot of amazing people build some incredible community and things. But during that time, when I would come back to Austin for a few weeks, had a lot of downtime. I was going through a lot of family transition and things like that. So I started volunteering at a prison. And every Tuesday morning for about two years, I would go down there. And, and it was like towards about 18 months in. One of the lead guys in the prison ministries wife was a big financial advisor in town, and she wanted to talk about working together. And I’m like, that’d be great kind of having my practice here. And so let’s talk. So, another new volunteer overheard us talking in prison, and they were walking into the actual prison to meet the men in there that we would meet with every week. And the new guys like, Hey, I heard you talking in the lobby, like what do you do? And I’m like, I don’t really network at prison, but I will tell you, I do a little finance and things
And then I walked up in a jumpsuit.
That makes total sense why you guys felt comfortable stopping with me while I was holding the sign.
If we can get this guy 10%.
But anyway, long story short, he said, you ought to meet my partner. We do some Medicare things and he’s a great guy. He’s a CFA and a CPA and I’m like, Medicare CFA CPA. Interesting. So yeah, I’ll meet I’ll absolutely meet with him. So the next day I went and got a haircut and met with Pat and we just really hit it off. We were at Whole Foods in Austin it’s about a coming up on February’s of 2016 is when we did that.
Did they give you a release?
A temporary release, I had to wear one of those weird anklets. And I have like a guy following me.
But yeah, so we met there. And then I think really just Pat was unwinding some other companies. He just moved back to Austin. He was doing some stuff back and forth in California another wealth management firm. And where I was at in life where he was at, like we started sharing some clients and ideas and before you know it, he’s like, hey, man, here, the new business cards, website, everything like whoa, man, okay, this is awesome. And I didn’t realize that he was as hard charging and together as he was, I mean, I knew he was but it was pretty impressive to see what he had already built out. So I left my other practice and full time we started Surepath. That was July 1 of 2016. And so that’s how we met just a lot of good similarities in life. He’s a bit nine years younger than me or so but about 20 years smarter than me. So it’s a really good partnership.
But that didn’t prevent y’all from sharing some toilet wines. So that’s pretty sweet.
So that’s, that’s my side. You might have a couple of little details in there. But I think that’s…
Yeah, I mean, I think that’s a great summary. I would say that, you know, what attracted us together I think, was just the the different skill sets. So Tim is like, great at meeting like if you’re, if if you’re a physician, and you go and meet someone, and if let’s say Tim was a physician, and he would walk into the room, he would, every person would like him, like, in like two seconds, they go, Oh my god, I love my doctor. He’s great. So Tim is great at building trust very quickly. On the relational side. I am more strategic and analytical. So I like to focus more on the practice and making sure that we’re, you know, structuring everything correctly with like taxes and investments and financial planning and just better controlling the outcomes for folks and doing everything we can to deliver on our promise which is to help them reach the goals. So it’s just a great combination where you know, I would, I get drained if I have to be in front of people like 10 hours a day, but Tim will be in front of people for 12 hours a day and then he’ll go talk to a fence post for another 6.
I’m sorry! I’m aware of that but it’s just a…
Alright seven seven hours.
You want me to pull the splinters out or what? I gotta go talk to this dandelion.
You’re really going out with that guy? yeah, yeah he’s a good dude.
Okay, so great story about Tim is when the last time we were all together we’re listening to live music. Remember, Tim took off to go to a friend’s wedding up in Boston.
Which shows which which in itself just shows total loyalty. which is…
Total loyalty to your friends because you left that morning to go yeah, what’s up Matthew don’t know you. But I know this guy loves you. Because he left early in the morning from Salt Lake and then suddenly, he appears late night while we’re listening to Christian Mills bands, right?
They’re doing a Stones cover I think yea,
Yea Tim rolls up with his with his beanie on and then…
It was cold that night. It was snowing.
Well wait, let’s let’s go ahead and paint the picture a little bit better. It’s on the top of a mountain.
Very top of the mountain.
I could barely breathe.
Yeah, high altitude sickness potential
And much like Ron Burgundy here comes.
But it was also kind of set up in a way that the top of the mountain had like different camps so if you want to be down at the campfire if you want to be at the live music, so I was kind of hanging out at the live music for most of the night. And then I just heard it as I was walking by it was loud. I mean, you can hear the on top of the mountain but it was yes. And then I’ll stop talking.
You know what, I’m gonna disagree with that because basically I saw your Uber barely make it up to the top mountain. Then you jumped out you’re like I told you to wait till I got here.
You pulled your your harmonica out of your sleeve and…
You did jam though.
Do you have your harmonica on you?
You know I left it in the car.
Can you go get it?
While we’re sitting here talking a little bit. Just keep the mic on you’re good.
Even if it’s turned on?
Don’t go pee or anything and pull a Naked Gun move.
I got you muted until you get back.
All right, while we’re sitting here waiting, let’s talk personal stuff like, what’s what’s going on like the wife married?
Yep, married. My wife is Brazilian. So we met about 10 years ago. She is a you know, she she was a crazy story. I wish she was here to tell it. But she, she started as a babysitter. She flew over from Brazil was going to school here. So she’s an Au Pair program. And I grew up in Philadelphia, you know, we all look the same and Philly, like, you know, and then I’m out for my 23rd birthday. And I’m like, well, I had a couple drinks. So you know, a little bit stronger than hop tea. I look arond and go, you look a lot different than everybody else. So I walk up to her and you know, 23 years old and I’m like, Hey, how’s it going? And she’s like, couldn’t speak English at that time. So, you know, I’m trying to talk to her and she’s like, I can’t speak English. And I’m like, that’s okay.
Did you ask her can you not speak English? Or am I just really drunk?
Yeah, I think it was a combination.
But no she really couldn’t speak at that point. And I was like, Hey, can I get your number? Like, can I get you a drink? And she’s like, No, she totally shut me down. I’m like, all right, well, I’m going to go then. So I accidentally, coincidentally rather ran into her three months later, at another place like 45 minutes away, and she recognized me at that point. And she could speak so that’s that was the beginning of our relationships. So and she went from that to being like the head of sales for a tech startup in in Austin. So she covers like all of Latin America and is always like kind of in the air and manages a team of sales professionals and blows me out of the water.
Next time she goes to Cabo man, that’d be a great trip for you guys but…
Every time she posts on LinkedIn, like I do a lot of social media stuff like of a podcast and videos or I may post something I get like 12 likes, my wife posts one thing 274 likes, like what, how do I how do I capture some of this start.
She’s a great woman.
Awesome. Awesome person.
No she’s she’s fantastic. No kids yet so we’re planning on that soon. And I live in Austin, Texas. So I’ve been there for ever since I moved from Philadelphia really sitting there for about 10 years.
How do you guys like Austin?
We love it. Yeah, not probably not going to move, honestly. I mean, it’s one of the one of the things like we’re in an industry and wealth management, wealth management industry where I feel like it’s important to be part of the community and like, have a physical presence so that we can actually meet with folks. So I do believe that being in Austin is important for our business, but I also really just like it, you know, it’s a great, great city.
I saw the other show are you guys actually in Georgetown. Is that where your physical office is?
We have a Roundrock location we’re actually getting hopefully a new office here. Like this week or next week.
We’re potentially moving spaces down towards downtown so we have a couple satellite offices and you know, but we’re getting the main hub which will be fun.
Yea it’s a nice place. You’ll have to come down. We’re hoping to have a nice little setup like this.
That’s awesome. Hey, what was the song that you played?
Oh, it was a was a Rolling Stone song and truth be told I don’t play harmonica regularly. I just happened to have it in that bag because when we were in Croatia, the acoustic guy in Croatia was playing a lot of really pretty songs and I was like, man, I wish I brought my harmonica because I know I didn’t bring mine too so I said I’ll bring mine to the next event. So I had it with me and I didn’t know if he was gonna be playing it was Christian Mills and it was the other guy with the longer hair… You weren’t there you were in Croatia so that’s why I brought it so I just had it on me for that reason.
Where did you get the tombstone style hidden gun thing where do like a little spring loaded thing?
Did I do that you know when I pulled it out?
Yeah. You know, well, I was talking to Christian you know, as musician speak you just kind of ,I’m not really a big musician, but I was looking at him I was like, I held up my harmonica and I just pulled it out and then when I went up there…
you know if you play that we can’t, we won’t be able to layer it on YouTube.
Oh, that’s right. You can’t just play other people’s I was gonna I was gonna play the same song. And let you kind of rock on with it.
It was the Stones? What was what song was it? It was a I forget the name of it…
It wasn’t give me shelter.
No, it was.
Are you able to do that?
Yeah, inverted yield curve? That will probably be you.
Well, I was just gonna say what I want to do is hear a little I want to hear a little harmonica. And one of the neat things that we have here in the studio is we’ve got a whiteboard and I want to ask, I just want to draw out something that is typically kind of hard for somebody some, I’m just a simple country, butt Dr. from Texas. And so I if I could see it on a whiteboard. And one of the things one of the things you were talking about during your lecture was this inverted yield thing and I was like, I don’t know what that is but…
I’ll give a little intro for the inverted yeild curve.
So let me go ahead and set that up.
This things kind of a little old so…
Some set up music here by Mr. Tim Power.
Oh there’s no reason to stop we’re just now pulling the curtain back.
There was nothing wrong with that at all.
If the music’s playing I can jump in I play a lot better just on my own it’s a little harmonica is a little insolated.
That harmonica means the whiteboard is coming out.
Maybe it was a little higher up than i thought. The air was a little thin and all of us were like…
Well with the band like the Christian Mills it was it was just a no brainer so I knew I could get up there and just play anything and it would sound okay.
Well I’m gonna throw it to either guy but it’s kind of interesting because inverted yield. I was trying to talk to.
Pretty weird right?
It is super weird. So we got some markers here. I’m going to bring you a camera.
Tim you can narrate while you draw and then Pat, wait I’m sorry, Pat, you can narrate Patrick.
So Tim if you want to narrate or who’s gonna draw?
You just move your chair.
I get the cordless mic. Sure. The director’s chair.
The director’s chair.
And I might move that a little too.
First time we’re trying to move. There we go.
You get that okay? Good enough?
We’re gonna do a whole little lecture on inverted yield and why this is important to understand that so that as we’re looking at investments,
You can just draw kind of a vertical horizontal guy. And so you’re going to do Time, time over here, interest over there.
Yeah. So time.
Time is going to be on his x axis, and the interest is going to be on the Y the vertical.
So generally, just to kind of set the stage here, because this is actually a fairly complicated topic these guys gave us absolutely no heads up on the inverted yeild card. But usually what you would expect as you go out over time that you would be compensated by increased rates. So for example, let’s say a bank was going to lend you money and they were going to lend you for, you know, 15 years, right versus a year. Imagine, actually, let me back up. So imagine you were gonna to lend someone money and and you could lend them an amount of let’s call it $100,000 for a year, or you could lend them $100,000 for 15 years. Imagine why would so why would you ever lend them $100,000 for 15 years, if you got a lower rate of interest, then if you could lend for one year, right? So the weird thing about an inverted yield curve is it’s exactly that. You can lend in the short term for higher rates than you can lend in the long term. So if you think about it, from an investor’s perspective, there’s really no reason to take any risk. There’s no reason to go out and lend for 10,15,20,30 years out on the x axis, because you’re not compensated for doing that risk and return are generally related. So what you would expect is if you’re going to lock up your capital, and you’re going to land for 5,10,15,20 years, and you’re not going to see that back for 5,10,15,20 years, you’re going to want a higher interest rate. Well what happens with an inverted yield curve is you actually get a lower interest rate, which is counterintuitive. So it’s the market generally signaling that interest rates are expected to fall in the future.
So where where does that signal come from? This is where I’m confused.
So the way that markets price interest rates are securities, it’s kind of there’s a number of factors, right? So there’s supply and demand. There’s people coming to the market and saying, I want to lend and I’m, I’m willing to lend and other people saying I want to borrow, right. So part of that is going to drive the interest rate. So supply and demand. The other thing is market forces, right? So you got things like quantitative easing, and have happened, you’ve got, you know, just fluctuations in, you know, how how liquid capital is, and how available it is money supply. So there’s a lot of factors that could potentially go into the shapes of the yeild curve. But there’s really no explanation that is 100% accurate to say how the yield curve is going to shift or change. It’s very, very hard to predict changes in the yield curve. So really the only thing that you can do is act based on the information that’s available to you. And what this yield curve that Tim has so beautifully drawn up here tells me as an investment manager is, I’m not going to take turns, it’s called term risk. There’s really no reason for me to go out and take term risk, because I’m not compensated for it. I’m not willing to lend for 10 years for 1%. I’d rather lend for 10 years 1% I’d rather lend for one year and maybe get three to four. Right? There’s, there’s no reason for me to take that bet. And the interesting thing is, yeild curves, if you look at the data, they can also have some predictive power as far as how financial markets are going to go. This is a this is a, a bad sign, generally a inverted yield is a bad sign.
Yeah, so so we have an inverted yield. And I just sold my business. And somebody just gave me a check for $10 million. And I walk up to you and I say Patrick, Tim, I want you guys to help me manage my money. Here’s $10 million. What do we do?
This is I mean, so it starts with figuring out what you want. Right? So this is where that process comes in. Like if anyone gives you an answer that question without first doing a deep dive and saying like, what do you want, you wanna start another business, like where you going to all these this is like a multi meeting process. But let’s say we arrive and we figured out what your willingness to take risk is, and what your ability to take risk is. Those are two different things.
So we decide we come up with a plan, we realize that we have a great, a great basis, I’ve got a great foundation, we’re now ready to build. And I’m like, look, here’s the deal. I’m not ready to start another business. I have this money. I want to put it in the market. Yeah. What do we do with this curve?
With that curve? So you would take virtually no interest rate risk or term risk? So what you would do and there’s another curve that you want to look at and basically the credit spread. So you’d want to see you know, are you being compensated for taking credit risk, because credit risk is different than interest rate risk. So we would look at a couple different factors to determine what your your fixed allocation would be in the credit spreads might say, Well, you know, we’re actually being fairly well compensated for taking credit risk, but we’re not really being compensated for taking interest rate risk, let’s build a portfolio of, you know, medium quality corporate bonds that have really low, you know, duration or term exposure, right, really short term. And, you know, a portion of your portfolio could be allocated that way, right. The other thing is, you know, what’s your income, because you’re, you know, your wife may be earning a huge income, and it makes more sense for you to be maybe in a municipal bond portfolio, right. So, you have to consider that because municipal bonds, they produce tax free income. So, a lot and in addition to that, you have access to lots of other asset classes. So, you know, you you may not have any bond exposure at all in this environment, you know, if you have legacy goals and your income needs are covered, you know, maybe maybe this is allocated to real estate and, you know, public markets in the stock market. So, it could go a number of different ways, but the way I would use this information to build a portfolio, is I would say, Okay, first how much money needs to be in the bond market? Right? So that’s the first decision, like what percentage of your assets should be in the bond market relative to all other asset classes? And then from there, how much should be invested in or where should it be invested based on the available bonds and your your goals and tax preferences? So at a high level with that curve, short term, and then the other considerations will be around credit exposure and also tax preferences.
Now that’s really in depth. And obviously, just to reiterate, you’re saying if somebody comes to you and has an instant answer more than likely, are they not only interested in your future and what is that you want…
I think a good cut on people’s ability to advise you in general is you draw an inverted yield curve and ask him to explain anything about what that is.
I did not. That is that is the naivety of like, like, I’m usually scared when I give lectures. If I give it to med students and below, because they ask the hard questions, they just raise your hand to go. How? Oh how?Yeah.
If there was a way to predict movements in the yeild curve, like it would be, you know, you would start to see a lot more active bond managers outperform. But it’s just it’s interesting because it’s kind of like the stock market, right, you don’t know… it’s very hard to guess what’s the most efficient pricing mechanisms in the world, because it’s taking into account supply and demand factors. It’s taking into account all public information because people make trades on public information and what sets the price is people coming together in an arm’s length transaction and agreeing that this is a fair value, because for every buyer, there’s a seller, so for every person that loans money, there’s somebody who’s borrowing money for every person that buys a stock, there’s somebody else selling the stock. So that’s what ultimately sets the price and creates those curves. And all that is is really just, you know, what are we pricing these bonds at relative to what people are going to pay for them? And that’s what really creates the yield curve and People basically telling the markets that I’m not really willing to take any level of term risk right now it feels very uncertain, uncertain for me to lock my money up. And it could be that there’s a lot of people that have are basically pushing the price of these bonds down. Because they are, they’re worried about what could happen. So this could be a signal, it could be people being, you know, overly scared about, you know, the direction of the markets, and they’ve kind of bid up the price of these bonds and pushed interest rates down. So there could be a lot of different things that are driving this. And you know, there’s hundreds of academic you know, white papers and research papers that address these topics. I think what a lot of people don’t realize with investing is it’s very, very heavily researched and studied. So it’s really not, you know, the beginners game to like start kind of picking and choosing things. That’s why I always when people say I pick stocks, it’s like, oh, man, I feel sorry for you, my friend.
One thing I was thinking while we had this pie chart up there too Ken is is that people undervalue what their business is when it comes in comparison to all their other investments, they they know this is an investment and they’ll say it all the time we meet with them, like oh my business is my retirement plan or my business is my big investment. But they actually don’t have a current valuation. They’ve never done that. So they’re guessing or they’re leaving it up to other advisors to do the guesswork. So we strongly recommend this as a foundation for all our business owners to start with this. And then this can inform their other advisors because like with us, we don’t always control all parts of the relationship, right? They might have another CPA, they love, an attorney, they love a financial guy they love but they still want our guidance. So we don’t want to ruin those other relationships. But if we start with a solid business valuation that immediately wins trust with their CPA, and their a tax attorney. And then it makes they’re like, who are these guys that put that together? And they’re like, that is legit, and we have a master appraiser that is does these so it’s pretty amazing. But then once you know this, that can better inform your decisions on how much you want to tie up other monies into other things. I know you were talking about the sale of a business, but at least this can help you prepare are a little bit better. And a lot of business owners don’t have that. So…
That’s actually incredible information. And I don’t want to put you on the spot before we end up wrapping this podcast up. But there’s a different, there’s another graph too…
I’m just gonna go on record again, I didn’t know enough about that to realize it was a complex question.
He could on a…he can hit like a rain man button.
It’s hard. It’s harder for me to make it simple than to go into all the weird stuff about it so…
Well then the next one should be a little bit more simple, at least I think, but it’s the CCWF value graph. Have you ever done that collectible Civil War figurine graph? We’ve got a lot of civil war figurines around my house that have been passed down from generation to generation. And what I would like to know is, is you know that we’ve got two Stonewall Jackson’s, we’ve got, Ulysses S Grant. I mean, it’s, these are important for us because we thought about trading some of those in just for some grants or whatever, and you don’t know so the graphs like this help us out, and so…
Figure out how to price that amazing figurine.
If I could find a little bit more about the valuation we have on on Tron, teal and KBMD, the maybe I would know where to put a little bit more…
Yeah. And it also informs the decision once you have a valuation that numbers, it sets in a little differently than just grinding every single day. So I mean, if you’re a physician, you’re building your practice, maybe you have a couple other investment interests, and you’re like, aw man, I need to really work hard. And it’s like, well, what if all your companies were worth $40 million? And you could find a buyer that was vertically integrated that would buy it in like three months? Would that change your your appetite for risk? Would that change your your perspective on kind of what you’re doing every single day? So I think the valuation what we’ve seen is it just provides a more specific kind of number for them to make those decisions.
I think that’s awesome. But let’s just I just got instant message.
yeah?Eric has a Stonewall Jackson?
Yeah, I do. And I it’s it was purchased, I think for 28.95 back in 1988. I know we were really excited.
You’re like the coolest guy on this podcast.
Now we’re almost up to $34.
I do not, I was just gonna say it’s almost It was $33.98 you just got offered, you made you made a profit. eBay is awesome.
One of the things that during the valuation too is like you might meet with a business owner and they’re still in an S-Corp because it was more convenient for them to do that more tax efficient when they were younger. Now they’re blown up to a multimillion dollar company and they want to sell it, and then the buyer is like whao whoa whoa whoa you’re an s-corp, like we have to unwind a lot of stuff here to do that sale. So you want to make sure that you’re preparing for an exit if that’s your strategy early on. So a lot of what we do is a lot of that kind of stuff, too.
So you guys have it’s under one under one roof, some legal consultants that you work with you have tax…
Tax investments, insurance, we can’t legally give investment advice as a as a registered investment advisor but we have an attorney that is moving into our office to be able to provide that as a service to our clients. They said we have to bill separately for it.
We can guide a little bit we can’t actually give legal…
It’s more just the structure of it less on the actual drafting the documents. We have people that help with budgeting, we have people that help with, you know, if you’re getting older Social Security, Medicare, pretty much any transition that someone would go through financially or would require a level of expertise. You know, we’ve tried to insource that as much as possible because it’s hard to control the outcomes with outsourcing because you know, our business, you think about it, helping someone reach their financial goals is really just an exercise in good project management and kind of prodding them along right like once you have the expertise, it’s making sure that they’re doing the things that they’re supposed to be doing as in the same similar to your profession. Somebody shows up and you’re like, Hey, man, you gotta cut out the pizza. You got like, you got an allergy to dairy and they’re like, Man, I’m just gonna keep eating pizza. All right well…
Well then you gotta I have to make sure that we put plastic covers and all our waiting room chairs, everytime you come to the office.
So what is the best way for people to connect with Surepath.
I would say visit our website. It’s www.surepathwealth.com SUREpathwealthcom. You can also Facebook and LinkedIn. But I would say the website is probably a good first step.
And Patrick, you also
I’m gonna say the same thing you are so go ahead.
You also host your own podcast and the name of it?
I do. It’s called the model FA, it’s a little bit more industry focused, because I also do industry consulting, we’re actually launching our own, you know, consumer focused podcast in about two weeks. So that’s going to be for business owners. Can be some physicians on there
We’d love to have you guys on that. That would be great
But yeah, so the podcast that I host is called The Model FA
Well, that’s awesome, Tim?
Yeah. Yeah. Oh to get in touch with me?
Yeah. Yeah. Do you have anything special that you do? I mean, if I mean, if anybody wants to book you as a harmonica player at their barmitsfa or wedding or anything like that?
I’d say that’s probably the best use.
No I mean, honestly. My role mainly in the firm is just staying in touch with folks and getting them aligned with the right people. I understand enough of it all to hold my hold my own, but I don’t get as much into the weeds, the planters and things. So it’s like we have folks that help out a lot with the…
I may have misinterpreted the story earlier, but you do some fence work as well. Is that true?
He just talks the fence posts?
No, I do a little painting on the side, you know, like late landscape stuff and things.
Tim’s just being humble. He’s, uh, he’s got a 15 year background in estate planning and insurance and structuring like complex tax deals. And yeah, so I’ll speak on Tim’s behalf because he’s being humble right now.
Well, this is fantastic for ya’ll to drive all the way up and hang out with us all day.
Aw man, we loved it man. Thank you so much for the invite.
I mean, clearly, this is now I feel a little bit better because what you were just getting into and everything we talked about. I don’t have to be embarrassed. I don’t know that because we all only have so much bandwidth. There’s no way I can learn my profession and pretend like I know that.
Yeah, for sure.
I mean, everybody’s you guys are experts in your field. Clearly.
Yeah, if we suck, we wouldn’t have known the answer to that one at all.
I almost for fun want to have set up another episode. And have another advisor you gotta come on this podcast.
Yeild curve we’re just gonna draw one up there and talk about…
Except next time we have you back we’re gonna have to dumb it down you’re gonna be on that side with sock puppets describing the inverted yield.
Yeah yeah I should.
There we are.
Oh it’s because I don’t have my phone anymore right?
Oh nice so Tim said goodbye to the smart phone and it is a flip phone.
Oh yeah! Where is it?
If you guys if you guys listen to Episode 21?
Yes 21 with Jeremy Kinder.
Yes epsiode 21 with Jeremy Kendra we did CBD Takeout and we opened the show talking about this guy how much of a boss he was because he had his phone stolen when he was visiting and he switched and has stuck to it for what good month?
Seven weeks. Yeah, maybe six weeks now. It’s like yeah.
A flip phone and he’s loving it. Explain to everybody why you’re digging the whole flip phone thing.
Yeah, so it’s I definitely didn’t start out to make any kind of statement. Georgia? Sorry, my daughter just called by accident I answered the phone because that’s one of the things the features on the smartphone on the flip phone is when somebody calls no matter what if you open it, your on. So that’s what I just did to my daughter and I just hung up on her at the same time. But yeah, I was just waiting for you guys to go out to dinner…
A little therapy will take care of that in a few years. It’s all good.
I put my, put my phone down at a happy hour real quick at the hotel right in Frisco and turned around to get some more iced tea came back and my phone was missing. So I was about to go out to dinner with you and your wife in about 20 minutes. So I knew I had to just keep it cool and things and the next morning I just got a flip phone and then the 30 hours I went without my smartphone. I started to taste flavors again and see colors that I hadn’t seen in about 10 years when I first got my smartphone so I was like I actually liked this I wonder if there’s a way to just use my flip phone and then I’ll get an iPad to do all my like, like, you know stuff that I need to keep count on and things and do FaceTime with my kids and what have you. So the next day the reason why I waited one day is because the next day after got stolen was the iPhone 11 was coming out. So I’m like I’m not going to get a new phone. If the next day I’ll just go use the insurance money and get that I did insurance you always want to do that an $8 insurance policy on it and it paid me back the cost of this iPhone x. So I bought a smart a tablet or an iPad the next day and for about six seven weeks now I’ve been on that system so I love it but everyone trying in touch with me hates it so it’s been know it’s it’s got some limitations for sure. But I think the amount of energy, space creativity, focus in the moment that I’ve gotten back far outweighs the extra second I might have to put the navigation into my GPS and things.
“Daddy hung up on me!”
I described the story much differently so tune into Episode 21 where I give my third party interpretation of it.
Yeah, it’s good.
Well a shout out to CBD Takeout you can still use KBMD 10 for 10% off at CBD TakeOut for any of their products that they have there. Of course go to lovemytummy.com/spoony and use code spoony to save some money of course go to KBMDhealth.com for your own CBD.
One of the things we were talking about. I was thinking you know, we do have our
Oh yeah. The box.
We have the KBMD health subscription box where we deliver vetted supplements, which actually make a difference in your life. And we were talking before we started the show, like you guys can write a little copy and put it in here. We can send it out to all of our subscribers. So not only are we taking care of their gut, but we’re going to start doing some cool stuff like this. Like maybe a little synopsis on insurance or
How to use your HSA better.
How to use your HSA better anything like that. Yeah. So this is what this is what we love about like minded people getting together you guys making the effort to come up do the podcast. Love it. Thank you so much.
Thank you to the listeners for tuning in. We hope it was valuable.
Right on. Well, that’s Episode 23. Thanks for checking into the Gut Check Project. Check us out. We’ll talk to y’all soon.