The Hidden Cost of Free Advice – Episode 609

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, today’s topic is the hidden cost of free advice. I think it’s pretty catchy and I’m interested to hear what free advice do you lump into that category and what is it that you see that I don’t? Well, it’s interesting. I think the largest space where free advice occurs is money. And it’s probably with a super close second to health. So here you have two arenas where there is massive licensure, I think is the right word, like a doctor, let’s use the health thing as an example, has to go through medical school, get residency, then he gets his regular doctor and then he gets his specialist doctor or whatever. And the monetary world has similar things, except it has an extra hidden element, which

[01:08] is the sales aspect of it. Now frankly, I think doctors sometimes have to sell too, right? They have to sell us on doing the things that we need to do to keep our health good or make it better. But in the financial world, literally every person starts at some point doing sales work. Their practice may build to a degree that they don’t have to anymore. But because of this, I guess, I’m not really sure why there’s so much free advice out there, but there is massive amounts of free advice in the monetary space and it often comes from family and well-meaning friends. I said to somebody the other day, stop asking so many people about your finances. You are thoroughly confusing yourself because they were not only seeking out

[01:59] three or four opinions in the quote professional realm, you know, licensed or not or whatever. I mean, frankly, let’s admit it. A license just means you can take a test and pass it. But there’s also experience that makes a difference. But even that, you know, sometimes people have a year to 30 years of experience, but the 30th year is the same as the first year. And so that’s not helpful either. So it is difficult. And, you know, thankfully we have the referral space that lets somebody find somebody that they can trust with the advice. But this person was going to a whole bunch of different professionals and then they were also asking friends and family members about the same issue. Just where do I put this X dollars amount of money?

[02:45] And they were getting the gamut of information and becoming thoroughly confused. And the more they talk to other humans, the more confused they became. So, you know, what would you do in that situation? Like, how do we not do that? Yeah, I mean, I think that one, we have to have some filters and I’d be really interested to hear the filters. For me, the filters that I run are, I’m first, if I’m asking advice from someone, I want to know their character and know the wisdom that they have. And yes, I’m going to use my judgment in comparison of that because I have to. And when I’m looking at it, if I was to ask someone in the finance world, I’m going to say, are they personally good with finances or do they have a way

[03:44] of operating and understanding the financial world? And I say that because in the comparison, we’ve got people that are great athletes and then there’s people that are great coaches. And a great coach doesn’t mean he’s a great athlete. And a great athlete doesn’t mean he’s a great coach. They’re two different people. Yep. And you’ve probably seen that happen a lot. Yes. And it is really interesting in the money world that there are so many opinions around a space that there has literally been a lack of what you would call financial education. It’s starting to become a little bit more prevalent and everybody talks about how needed it is. And yet I believe that you cannot homework money. So you can homework items, you can homework action steps,

[04:38] but money has to be experienced. And so at whatever level of the game, and this is why I love our prosperity parents material, because we can literally help that one-year-old, that two-year-old, that 10-year-old learn about money in a way that is experience-oriented. And what’s been fun is the parents of those young children are telling me that they’re learning as much about the money arena from the material that’s designed to be for their kids as their kids are, which is awesome. I mean, that’s a huge compliment and I’m very grateful for it. And that’s prosperity parents’ job is to help that 30- to 40-year-old parent be really happy with the decisions that they made when they hit age 70. And just like health, that is one of the toughest things for human beings to

[05:36] do, is to take actions today that we know we’ll be happy with in our 70s. You know, it comes back to, well, do I eat this piece of chocolate cake or this ice cream scoop or do I only have half of it, for example? And, you know, one individual time, not a big deal, but back to those habits that we talk about so often, where’s your habit in this space? Well, on the monetary side, is it, well, do I constantly focus, I hear this a lot, on am I constantly deferring income so that I get a tax benefit today, but what is that going to make me feel like when I’m in my 70s? And I know the answer to that because I have clients in their 70s that say, oh, my gosh, I wish I had not deferred so much income.

[06:30] I have now nice assets, but I have massive tax issues. And so it’s the most difficult thing for a human being to do is to look ahead 20, 30 years and think about what their life is going to be like down there and yet make decisions today that will benefit their life down there or up there, however you want to word that, later. And yet, if we do nothing else but help that, then I know we’re doing good in the community. And then the same is true for these young children. And again, that’s why I love prosperity parents so much, is that we’re helping young do things when they’re five and 10 and maybe 15 year old that they’re 25 and 30 and then on a year old will be grateful for. Yeah, that’s long term thinking. That’s wisdom. Very valuable.

[07:23] But there’s another element that I often think about when I’m getting advice from others, which is the alignment of incentives. And that’s hard at times to figure out, but understanding what the incentives of the person that’s giving the advice or the person I’m working with is really important. So as I was doing my homework and preparing for this and I was thinking of the alignment of incentives for the prosperity podcast that we have, the alignment of incentive is to create, which something you did years ago, you created content through your books and you’ve done it through the podcast and other things. But then it created a community and the community then has created offspring, meaning you’re not just helping that first generation.

[08:22] You’re now helping the second generation, sometimes the third generation. Absolutely. So it’s incredibly valuable. Now there is an alignment of incentives. If a person decides to dive deep and purchase the book, you’re incentivized. You get a royalty from the book or whatever else is done. But that’s very clear to see the alignment of incentives. It’s not clear when you get it from other people. So yours again, long term play. Well, it’s one of the reasons that I’ve developed the prosperity pledge. So this is our membership space that is $97 a month and it’s designed to be utilized for somebody’s lifetime. Of course, they can opt out any time. Nevertheless, it is clear where the incentives are. Somebody’s

[09:17] paying $97 a month to get access to my specific guidance three times a year and have the video and PDF download course along with two pieces of technology to help them simplify their savings and automate their assets. And those are the two things that everybody is trying to do. It’s a cashflow thing and then it’s an asset thing. Simplify savings, automate assets. Does have a little third benefit that we call install faith in your finances. But taking a look at pledge, I would love people’s opinion as to if I have aligned properly the incentive, because I think a lot of people have maybe bought whole life insurance either from us or from somebody else. And now they’re not really sure what they’re doing with it. Maybe their

[10:09] agents not in the business anymore or maybe they are, but they’re too busy to deal with them. This is where pledge comes in to help. I think a lot of people want to learn about a different way of handling their money than is typically spoken about out on the internet. Well, that’s what prosperity economics is and does. And that’s all taught inside the pledge membership platform. So I would love our podcast listeners to give me opinions on what they see as it relates to the pledge. So they can just go to prosperity thinkers.com and the pledge information is right there. And I would love emails at hello at prosperity thinkers.com of I don’t understand or that looks fabulous, but the time’s not right for me or I’m in sign

[10:56] up. Let’s get involved. Because as you said, that’s where our community is. Oh, that’s good. Good. I’m going to state something that’s totally obvious, but it’s really hopeful. And I’ll try and loop it in, which is this. We talked about the long-term thinking, we talked about the community, we talked about that hidden cost of free information. But what you just did is you asked for the community to contribute. And you’re getting their feedback and information from there. And yes, it’s quote unquote, you’re not paying for their information, but that’s what a community does. And it’s because we’ve already aligned ourselves with the same values, the same principles and the same pieces. So we get to shortcut a lot.

[11:51] And this community allows that shortcut. Very cool. I know I’m oversimplifying it, but I saw it come full circle. Well, and clarity and simplicity in today’s world is valuable. Absolutely. Thank you for sharing, Kim. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.