PODCAST EPISODE 177: Speed Dating With Sound Financial Group

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Paul 0:00

Hey everyone, we’re going to do a little bit of a different episode today are countries in the midst of the COVID-19 crisis. The economy’s up and down, and we’ve done plenty of content on how that affects your finances and your future. That having been said, we’re going to have a bit of a fun episode today, we call speed dating with sound Financial Group. Hello, and thank you for joining your business your wealth. My name is Paul Adams. I am CEO and founder of sound Financial Group, I’m joined by my business partner, and one of the best guys in the world to have as a friend and his business partner, Corey shepherd. So glad you could be here, especially to supervise this episode.

Cory 0:40

And I’m excited to be here. I’m excited to be your personal suvi consultant. You know your wife was sending some texts last night looks like you had a really good steak dinner. And she is just enough butter and that in that bag to get by. I would have probably gone with two sticks. Oh one is just enough but Yeah.

Paul 1:01

And, and for those of you that don’t know, Cory is one of the most incredible, non professional chefs I’ve ever been around and he could probably go pro. He just loves helping all of you too much to do that. So today what we’re going to be covering is speed dating with sound Financial Group. Cory, do you want to kind of set up? What Yeah, caused us to have this episode today?

Cory 1:22

So we recently were in was in touch with someone who reached out as a part of some of our marketing efforts. And he emailed me a list of questions and an interviewing us about who we are and and what we do. Now. It’s a pretty long list, it would be fairly boring email to write and send back but we thought we could have a little fun with this and turn it into a speed dating session because him sending that email means that some other folks are having those same questions. It’ll probably happen again. And so we’re going to answer a whole bunch of questions that you might have been wondering about or hadn’t even thought to ask about sound Financial Group. who we are and how we run our business. And and then we’ll be able to send it to our our new friend who sent us the email. But you all get to have access to this info as well and share it with some folks. So

Paul 2:11

and so for all of you think about this, this gentleman sent in 30 questions now he’s gathered these from, you know, maybe all over the web, consolidating a bunch of the different lists that you see about questions to ask a financial advisor. And so we’re going to do is go through each of them, try to give everyone the most concise answer we can, helping all of you learn something new about money, and more importantly about financial decision making while also answering all of this gentleman’s questions without Corey having to write a six page long email. So with that, we’re going to jump right into it Corey, why don’t we start off his first question is what agency or agencies oversee your business and I’ll take this first one, which is right now, we are supervised by the states in which we do business or what’s called a state chartered registered investment advisor located with primary headquarters in Washington State. Now later this year, we think we’re going to reach the level of securities exchange commission registration, which is a national registration and prevents us from having to do all the individual states. Now, Cory, Question two is, and I think I’ve got something to say about it after what professional designations are you holding now.

Cory 3:24

So, I have a CFP and a CH FC. And we kind of have a divide and conquer strategy in this firm. So for a lot of reasons, I went and got a bunch of these designations now, just for the sake of my partner, I want you to know, Paul Adams has read more about practically anything than practically anyone. So that’s part of why I just went and got some of those letters after my name. Plus, I wanted to catch up to my wife who’s an MD, but Paul, I like your perspective on some of these designations. So go for it.

Paul 3:57

Well, one of my favorites about the designations is That it comes from this societal want to appeal and make evidence by authority. You see, what you don’t want to do is take any planners opinion about any strategy you would use, you want to see indisputable math and independent scholarship for any decision you’d make by saying somebody has a certain level of education or letters behind their name, it could put you in the position to simply trust rather than making sure you’re making good solid assessments. Now, that was a close 101. So like. So one of the things we’re doing is Jordan are video engineers running a clock behind us on all of these. As a result, if we go over one minute, the buzzer sounds, and we have to be done with that one. So, Cory, I’m going to ask you this next one, let you answer. May I contact your current clients and have their phone numbers,

Cory 4:52

which is really a question asking for references and the answer’s no and part of it is Client confidentiality and and we’ve we have done this in the past gone to the trouble of asking some of our clients, Could someone contact you do you have permission to do this, but we really haven’t ever had anyone get followed up on and part of the problem is, we’d be dummies to give you the names and numbers of anyone who’d say anything but wonderful things about us. That’s the problem with professional references across the board. We just don’t think it’s helpful. That’s why we do what we do here, this podcast, all of our our content so that you can get a sense of who we are and get a sense of the community that we’re a part of.

Paul 5:36

And it does leave them pretty low. Anytime you’re asking for references. It puts you in a position that you’ve just cleared the lower intelligence bar of that. I’m not dumb enough to give you people that would say bad things about me.

Cory 5:50

And anybody who’s been around for more than a day can find them in their mom.

Paul 6:00

doubt. Since you’ve

Cory 6:02

done, your mom will give you a good review or your your cousin. Hi. So, Paul, number four, what would you suggest me or other people do in this financial crisis that we’re facing now?

Paul 6:15

Well, it’s very simple. It depends on your aims. It depends on what you want to achieve in your financial life because not all recommendations are the same. Nearly every client is entirely unique. Someone may have a highly concentrated equity portfolio. And given some of their objectives, perhaps they need to be academically allocated globally diversified. Or maybe somebody has $2 million, and they have no volatility buffer in their financial life. And so maybe they need to take some of that money off to live on for the next year or two is the market rebounds, leaving the rest of their money positioned in equities? The answer is it will depend upon your unique situation or what your aims are. It’s not just a math formula. Okay, Corey I’m going to give you the next question. What type of financial advisor are you?

Cory 7:06

Now, this question could be going in a lot of different directions. And they were really, really nice for what, but two, we are widescale strategy level holistic financial advisors, we don’t hone in on one specific product over another. And I would add that we’re very aware that money isn’t math. It’s math plus human behavior. So we have the numbers equations, and we have the human equations. And the human equations have to get solved first, because the numbers by themselves are relatively simple math, but the human element is what makes it complex, and we pay a great deal of attention. Take good care with that. Paul, do you receive any bonuses or incentive for investments recommended? That’s a

Paul 7:50

great question. As a firm, we’ve done two things. One is we’ve moved every advisor to a salary and bonus structure and one thing What happens is even certain products that have to have commissions associated with them. I’ll talk about that in a second. That falls to sound Financial Group, the corporation, the first year commissions do not change any of the salary compensation of any of our advisors so as to remove some of that. What could be a perverse incentive, but second, is that we only use commission based tools, financial tools in those areas where we can’t get away from being commissioned based things like life insurance, disability insurance, but we’re fully disclosed to our clients on the fact that those do drive revenue for us or would have to drive revenue for somebody else, even if we refer it out. So the clients that choose to implement those products with us, Cory number seven, how are you paid?

Cory 8:49

So really extending what Paul was just talking about? We both have the capacity to charge a consulting fee on the front end for clients that want to just engage us like they would any other Professional they might hire on a contract. We also can operate Investment Management accounts where we have an annual asset management fee as a percentage. And then if there’s a product that you can’t get away from commission because like life insurance or disability insurance that’s just built into how the product works that we do get paid a commission on that, but none of our advisors receive an incentive for recommending one investment over another. That’s very levelled out. Paul, question eight. What type of services do you provide?

Paul 9:35

So I think probably one of the easiest ways to look at this is if you look at, say the person who’s with big box, financial retail, picture, any of the major names that you see on the sides of buildings, or you see commercials for those advisors have an incredible amount of compliance locked down on the things that they can advise on or recommend to their clients and that seems to be very closely associated, the things that they can advise on or recommend Clients are all things that those financial institutions that they work for sell. As an independent registered investment advisor. We give our advisors great latitude and being able to advise you on those things that are concerns to you. It might be your 401k, which we may not be able to directly manage if you’re working for a large employer whose plan we don’t manage. It may be real estate holdings. It might be a state planning strategy that we then get you in front of an attorney to be able to implement that strategy. All those things considered. It depends on your aims and what you want from your future. Cory. Do you have number nine any disclosable events? That’s where a complaint has risen to the level of the security Exchange Commission or the state governing authorities and what were the results?

Cory 10:49

So the answer is is no. And you can look up Paul and I both on websites like FINRA broker check or the SEC advisor website and We actually a surprising amount of our personal life and history is public online. And what you won’t find is any open or closed events with those governing governing bodies. So are we perfect if we had to say to a client Sorry, I, you know, I emailed you a little bit late on this or, you know, we need to circle back around and get another signature because we missed this on this form. Well, no, we’re not perfect, but we’ve never had a complaint open in a formal, formal governing body. Paul, number 10. Are you a fiduciary? Or do you operate under a suitability standard?

Paul 11:33

It’s a great question, and one that nearly every advisor needs to answer. And unfortunately, I think most advisors who hold out their shield of I’m a fiduciary are not necessarily doing the things that you as a consumer would say, is to the fiduciary standard, give you a quick for instance, how many asset management firms that when you reach out to them and say, Hey, I need full scale financial advising and planning etc. If you were to ask like, Well, are you guys able to advise me on my real estate, you’re probably going to get a No. Well, you guys able to take care of my life for disability insurance? The answer’s no. And it’s because they’re literally saying that those things that they don’t directly handle as an investment, fiduciary, they are not a fiduciary for in our case, what we not only do we operate on the fiduciary standard, but we encourage our clients to be their own fiduciary, you can actually find that podcast episode from us in the past, where we covered that in detail and how you as the consumer want to be the most responsible party in the conversation with your advisor and hold them and you to the fiduciary standard. Okay, Cory number 11, who is your typical client?

Cory 12:41

So, sound financial group works with a wide variety of folks so that we do have some, some focuses. So, physicians, tech executives and the entrepreneur, business owner are the three areas that we have a major focus in where many of our clients sit, and then on a broader scale. Many of our clients are in the 300,000 to two and a half million of annual household income range. Notice I didn’t say investable assets, I said income because doctors being a great example, they can come out of their training with a high level of income and no assets yet. And we want to be able to help them get to the point that they can build those assets. So income being one of our most valuable assets. We want to help folks, even if that’s all that they have currently,

Paul 13:30

polygon add that one. One point is that as an alignment conversation is the first conversation we have with a client. And I invite you to hear that conversation and apply. If you’re a fit. We will let you know who that was close one second to spare.

Cory 13:45

Yeah, all right. Paul, what licenses do you carry? Okay, so

Paul 13:49

I have licenses that I no longer carry like a series 24 series seven because they don’t apply to us working on an independent registered investment advisory model. That being the case we have series 65 life insurance licensed health insurance licensed and inappropriate states Korea’s Long Term Care Insurance endorsed so that when those products are important for our clients, we’re able to secure those Corey, right. How do you ensure your clients are protected from?

Cory 14:20

This is what I call the Bernie Madoff question. And since, since that’s an event in our financial history, we have what’s called a custodian as the third party money holder between all of our transactions. So there’s the client, there’s the financial advisor, sound Financial Group, and there’s whatever investments The money is in, and then in the middle of those three is the custodian. That’s a third party hired to send everybody statements to know what’s going on behind the scenes and make sure what we think is happening is in fact, happening.

Paul 14:56

And then one other that just occurs internal to us. Financial Group is when clients ask for transfers we require if anything looks less than normal. We require a phone call to be able to finish those transfers as well as we have all kinds of fun with these poor spearfishing expeditions that go on in our email accounts Corey i’d one second left don’t ring the buzzer Oh yeah,

Cory 15:21

no, no, you’re good. You’re good

Paul 15:24

to see you go ahead.

Cory 15:26

Yeah. Paul, do you contact your clients before making changes in their portfolio?

Paul 15:31

Yes. Number 15. Cory what will happen if your clients what will happen to your clients if something happens to you? And let’s just say for the record, after corgis clients finished the appropriate seven days of mourning, where they stay home with you know, some sort of covering to their face, where their friends visit them. The Jordan, you

Cory 15:55

can start the clock on this question. That’s fine. Yeah. So this is a reason why we have a team. There are many financial advisors that look for the freedom of going it alone. They want to be on their own, do what they want when they want. And Paul and I both gave up some autonomy by partnering together. And additional autonomy was given up by adding folks to our team that depended on us being in a certain place at a certain time for certain meetings. But what that means is that we have the freedom to not always be the one person answering every question. So if it’s not me, it’s Paul, or Miranda, or Jeff, or Jackie, or Beth answering your question. And that’s really the answer. Someone happens. Something happens to me or to Paul to your primary advisor. We’ve got several team members right behind them to pick up that slack and keep running like nothing ever happened, at least as far as your financial future is concerned. You still going to be going through mourning, but that’s a different question.

Unknown Speaker 16:55

Paul, it’s job number 16 left.

Cory 16:57

Thank you. Can you describe yourself Investing philosophy, you bet. Simply put

Paul 17:03

in the general markets and most advice that’s offered to clients comes in the form of actively managed mutual funds. Now, we’ve talked about this a lot on the show, but simply put, active managers tend not to outperform the indexes they’re being compared to, and they do so with higher trading costs, and higher management fees than are necessarily necessary for those clients. As a result, we embrace what we refer to as a passive structured investing model, where we help clients make sure they’re academically allocated and globally diversified. And for those of you that are super interested in our philosophy there, you can get that in detail in what is a six part series called the illusions of investing starting at Episode 163. Cory what is the best and worst financial decision you’ve ever made? Oh,

Cory 18:00

So the best financial decision I’ve ever made, I’m going to try not to get choked up here is partnering with this guy that you also see on the on the screen. And if you’ve ever heard us speak in an event if I’ve ever introduced him, you know that when we first met, I was already a financial advisor working somewhere else. And I discovered some things through our conversations that I wasn’t doing for my own family’s future that were important that Paul helped me realize, well, I’m probably not doing it for your clients either. And so became a moral imperative for us to partner up. And that just led to a whole cascading series of events and habits and practices on being a more financially responsible human. worst financial decision ever made as the second that I had success in this business. I bought way too much car than I should have. And I was in an environment that no one ever asked me like, Is that an appropriate amount of your income to spend? It was just like, Hey, nice car, you must be doing well. The answer is no. Number 18. Paul, what are my all in costs?

Paul 19:03

You know, I love this question. I think, frankly, most of the American public is not cost conscious enough with their investing. But I encourage you to do is that what people do all too often is say, what are my all and costs and working with you? And they’re not thinking about what are the all in costs of me doing what I’m doing right now. Now, in that I don’t just mean the investment management fees. But one thing we do and why we have an alignment meeting with clients, if they find our philosophy of interest, and that we may be able to be of significant help to them, they apply to become a client. We assess that application. Based upon well we be of significant enough help to have somebody commit the financial and time resources necessary to go through our process. In doing that, we’re constantly looking at what are the costs and impacts of their current decision. So maybe you’re paying less than and asset management fees but missing out on your ability to do Roth IRA, or you’re paying less than asset management fees but you’re not carrying basis from old in Effective products to your future that would diminish your taxes over time. Cory? What are your qualifications? Cory? I have this has been my question. I slipped this one and I have been wondering this for years. Cory number 19. What are your qualifications?

Cory 20:18

So, you know, we’ve already talked about some of the designations that we’ve got in the training that we’ve we’ve done and Paul and I both have, you know, a lot of years there’s a lot of years of total experience in our in our firm, but I’m gonna throw out that that really doesn’t matter. Meaning, what matters more as a qualification is how we can show you that we’ve brought independent research and independent math maybe irrefutable math, if you want to believe in the numbers that strongly to the table to say, here is the background and the research on why this matters. And if it wouldn’t matter if we had 30 years in the business or one month, the math has not been changed in thousands of years. So we’re bringing that math to the table correctly, to help you understand what’s happening, that you can get it in a way you never have before, then that’s the only qualification that really matters. Well, that 20 what asset allocation will you use?

Paul 21:17

Depends on your aims, depends on how much volatility is appropriate for you. And it depends on other assets. I’m going to give a very quick example. If you’re somebody that has a government pension that’s delivering you $80,000 a year and you have 2 million of investments, the appropriate portfolio for you will be very different than somebody else of the same age with the exact same $2 million of investments with no pension like that. Those are very, very different scenarios and to think that it comes down to a formula and by the way, it’s not anybody’s fault if it feels like that should be formulaic as to what SL occasion based on somebody’s age. That is what the financial media has taught us in soundbite financial advice that is floating around the marketplace all the time hence why we bring you this long form content to be able to increase your financial literacy. Corey, number 21 How will our relationship work?

Cory 22:12

So our first step with every new potential relationship is what we call our alignment conversation where we get together to learn about each other and our background of philosophy on money. And so first and foremost in that meeting, we want to learn about you, not your money. So it’s not a meeting where we’re going to ask you to open the financial kimono to show us your balance sheet or statements. We under understand more about you, your family, your life in Ames, and tell you a little bit more about our process and how it works. If we have some meeting of the minds on that conversation, then you can apply to become a client which is filling out a 20 minute assessment form to give us some high level numbers at this point, come back in a second meeting so that we can assess if we have an offer to make you and we think that an offer is ethical Make if we can assess that it would cost you more not to work with us this year than to work with us meaning can we demonstrate real dollars that we can put back on your balance sheet to offset any the cost that it would take for us to engage?

Paul 23:13

Wow, that was down to the why I’m

Cory 23:16

a 10th of a second. I’m not sure how I pulled out. Paul. Number 22. What investment benchmarks to use?

Paul 23:24

That’s a great question. It’s a very simple benchmark that matches to the portfolio’s that we utilize that are also academically allocated globally diversified. Typical benchmarks that we use do not have the value, small cap or profitability tilt as deeply as we use those tilts, which if you want more information on that you can listen to the illusions of investing six part series. We’re not hiding the ball. We just tell you exactly what we think about this stuff. And now we have well over 170 episodes to continue to demonstrate that. Corey number 23 What tax hit do I face if I invest with you?

Cory 24:04

So, with every client, we’re Of course, looking to minimize taxes, but it’s not just making it the best version of the worst news you’ll get this year, and saying, How can we make sure that taxes are as minimal of an impact as possible over the rest of your life and the outcomes that you want? So the answer is, it’s not about if you invest with us, it’s maybe if you don’t mess with us, every account has different tax implications. So that’s another thing that we need to learn a little bit more about you to answer specifically, Paul, number 24, who’s your custodian?

Paul 24:39

So it depends on the situation, the client, the two custodians we use now or TD Ameritrade and fidelity. Corey. actual question guys, we did not make these up. These were emailed to us, can you? And I, by the way, I also understand why somebody is asking this because everybody’s future is And does feel life or death to them? Can you guarantee success?

Cory 25:07

So, no advisor can guarantee success. And, at best, some products can guarantee a certain financial outcome or a certain rate of return over time. But whether that or not that leads to the success of your financial plan in your life is a much more complicated question. And there’s there’s too many variables to be able to guarantee that. item two is that again, what’s important question is what does success mean to you? And we would need to find out more about that to have a question about how to point you in the right direction of success. Paul 26 what happens if we terminate the contract?

Paul 25:46

So it depends on what type of engagement we have. If we’ve engaged you in our wealth design build process, we may have charged between five and $15,000 upfront for that first year of our work together are what we call building the design phase. Now, we are the first firm ever to be approved by the state of Washington to be able to refund that fee entirely in the first six months for any subjective reason, a client could come up with, there’s just a federal statute, it cannot be for investment performance reasons. So that’s not our fault. That’s a federal thing. But literally, you could say, I’ve decided that I don’t like that Paul has a beard, and that Corey doesn’t and so either one of you needs to shave or both of you need to grow a beard. And for that reason, I want a full refund. That’s totally fine. And if we terminate the contract, we hold all of your assets in an account that those could easily be transferred to another custodian or fiduciary without taxes. Corey number 27 What is your payment structure?

Cory 26:51

So I think we’ve answered pieces of this and different questions, including Paul and just this his last answer about we can do a consulting fee up front we can can also have asset under management accounts or specific products for clients. So, any other questions on that? Please, please follow up with us. And we’d be happy to talk more. Paul 28. Why should I hire you over other consultants?

Paul 27:15

Well, I would start with and this is I meant, I mean this to come across as kindly as I can. But we’ve not made you an offer yet. We don’t know enough about you to know if it’s ethical to make you an offer yet. But I would also say this shine some light on just some decision making that a lot of people make with their finances. And part of the concern is, and we’ve gotten a little bit of pushback, even from say, certain centers of influence, we initially tell them that clients have to apply to become a client. I said, Well, it really seems like you’re putting a lot of risk on the client or, or that why would you put that hurdle between you and a piece of new business and all that and we just simply answer, shouldn’t you worry If it does not feel like that advisor is interviewing you and trying to screen you out, because that means your advisor doesn’t have those systems or processes in there. And that may or may not be the reason you want to be the person you want to be coupled to for decades if they didn’t intentionally select you. I, I can’t believe that the buzzer hit. I went slightly over.

Cory 28:22

I was just so into it. I was just so into the question. Like, I didn’t even care about the buzzer. I didn’t even hear it.

Paul 28:32

Number 29. Cory, will you pick up your phone when called?

Cory 28:38

So if the first answer is I don’t know, and it’s a very good chance that I won’t be able to answer the phone. The second it rings every every time and if you did have an advisor that could make that claim every time then maybe they don’t have a lot going on and they’re not someone that you want to work with. But here’s what I can say is that any call any email, it’s very fair to us. Assume that you’ll get a response from our team same day, helping to answer your your concern, which I think will take care of you just the same.

Paul 29:08

And I would add one to that, yeah, is during this time of COVID-19, and the economic volatility that we’re all facing, we’ve actually gone out of our way to be an active communication with every client that we can reach out to, to help them know that we’re not hiding under our desks during all this, but want to be in communication relationship with them to add value to their investing, and some solace with some grounded and accurate thinking.

Cory 29:37

Questions 30? Who should I contact when you’re not available? And can I have their name and phone number?

Paul 29:44

As soon as anybody engages us as a client, they end up with a full list of our team. Anytime anybody’s out of the office, if an email hits their inbox, you get a reply with everybody and the types of things that they can help you with in our firm. So we welcome that. We’d be and you can check out our website, you’ll have everybody’s contact information there as well if you need it for some reason earlier than we would engage. So with that, that ends these 30 questions, we only broke our time limit twice. We hope we kept this a fun and interesting episode for all of you. And don’t hesitate, you could send this to somebody else if you think that they’re in the midst of making a financial advisory decision. And this is the kind of disclosures you’d like to see. We’re gonna also paste all of these questions down in the description. So if you wanted to see what another advisor says, when you ask him this many questions, and how they respond, are they willing to make a video? Are they willing to put all of their answers in ever recorded never going away internet domain? That might be a good question as to whether or not that would be the advisor to work with also because I would venture that many of them would have a difficult time getting that letter past their compliance departments, simply because there’s so many answers we just gave today. That light people up worry about liability and everything. Especially from big box financial retail. Corey, anything else before we wrap this

Cory 31:04

episode? Now this was a lot of fun and as always, we hope that this episode has contributed to you being able to design and build a good life.

Transcribed by https://otter.ai

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