This transcript has been automatically generated.

Speaker 1: Gonna give you a magic wand. You can wave the magic wand, and you can fix one aspect of the financial advice industry in all of Canada. What do you think would be the most impactful thing that you could change?

Speaker 2: Requiring everybody who provides financial advice to work to a fiduciary standard. Clients first.

Speaker 3: Welcome to the next episode of Barenaked Money. Today we have a guest who I would say needs no introduction, but we’ll give him one anyway. Rob Carrick is joining us today. He wrote for the Globe and Mail for over twenty five years for their personal finance column. And now he’s a self described personal finance expert.

We’re super happy to have him today because I don’t think that there’s anybody that’s wrote or spoken more about the personal finance issues that affect Canadians than Rob. Nobody that I know that’s for sure. And he spent a lot of years pushing back on conventional wisdom or challenging some of the norms. He’s the perfect guest for us today. So Rob, thanks so much for joining us.

Speaker 2: Glad to do it.

Speaker 3: So I’ll just start here with hopefully a question that is well received by you, but it seems like there’s a lot of things that you’ve written over the year that maybe have become a little bit polarizing. So I guess the first question for you is the way that you kind of set out in your career. Did you kind of design your career to be polarizing or was it kind of happenstance or an accident?

Speaker 2: Well, I mean, when you say polarizing, are you talking about from the adviser’s point of view or just general at all the entire audience? Do define that a little more for me.

Speaker 1: Well, you know, that, you know, people have opinions and some people love you. Now that people are less of a fan. So I think that that spans

Speaker 2: Yeah.

Speaker 1: You don’t find it. Side and the adviser side. And it’s it was all also interestingly, it was also by topic because you again, it would flow back and forth. There were there were people who would have different opinions, but you always tend to be able to write something that elicited a response both on the adviser and on the individual side.

Speaker 2: I think if you’re gonna be a columnist, you have to have something fresh and interesting and useful to say and to back it up. And what you know what? My views should never align completely with anybody’s views out there. And if they did, what a boring read that would be. I do see things sometimes a little bit differently from many people or even the majority in some particular subject areas, and some I’m in complete alignment.

But I think being predictable and going along with the flow is a recipe for a very short career as a personal finance columnist.

Speaker 1: That was the most genuine answer we could expect to that question. I think we’re going to have some fun over the rest of this podcast.

Speaker 3: So Rob, thinking back on the topics that were maybe a little bit more controversial, we’ll call them. Are there any topics that really stand out in your mind as ones that kind of push people’s buttons maybe more than anything else? Were you surprised or not surprised about those responses?

Speaker 2: One area where I was a contrarian for a long while was on housing. You know, everybody was abased at how great housing was working out as an investment, as a place to live. And it just seemed like, how could anybody question that? And I did. I questioned how much people were paying for homes, I mean, how much of their income they were devoting to homes, and how home ownership was restricting their financial flexibility, and how homes were affordable only by sort of an elite slice of the population.

And I had a lot of give and take with readers about that. And I sort of put out the idea that renting isn’t the worst thing if you can’t afford a house. It’s like a practical solution to an unaffordable homeownership experience. And I’ll have to say the people who fought me on that, the numbers have dwindled considerably because the housing market has sort of done what I always expected it to do. But man, did it take a long time to act like a cyclical asset does and have a little downspout?

And it hasn’t been tremendously bad, this downspout, but it has sort of completely undermined the narrative of real estate as the be all and end all investment. And I think that’s healthy. So that’s that I think is the most dramatic example I have where I think what I was saying wasn’t in tune with a lot of readers.

Speaker 1: You can count us as fans. We’ve been saying the same thing and having the same outcome that you described. You know, it’s it’s taken a long time for this to come home. And, you know, just in case you haven’t gotten there yet, I find I told you so. It’s not as satisfying as you hoped it would be maybe.

Speaker 2: I told you so it was kinda pointless because it’s after the fact and, you know, what’s you know, what’s people get enough enough criticism. There’s enough shame out there. I’m trying to sort of bridge build a bridge to something better for the future. You know? If you made this mistake, here’s how not to make it in in the future.

Here’s how to pivot to a better a better tomorrow.

Speaker 1: Yeah. We actually did a podcast. How long ago was that now, Josh? We did a podcast when I was selling my house and you were buying your house and we had a long conversation about this. That’s what, two years ago now?

Speaker 3: Well, yeah, it was 2022. Yeah. So as you can probably imagine, Rob, we were both transacting in real estate right around the peak of this most recent cycle. And Colin and I were having interesting experiences because Colin was selling his house and moving into rental. So Colin was like, Hey, I’m doing pretty good.

And I was trying to buy a house in Southern Ontario and having a hell of a time with it. And also when shortly after I bought the house, I pretty much picked the perfect peak of the market. So maybe I’m a contrarian indicator somehow. Like basically months after we closed on the property the market started correcting pretty aggressively.

Speaker 2: Yeah, that was a time though. I remember writing almost non stop about real estate for months and everything that I put online on the Globe website was just massively clicked. People were just so starving for anything, any intel on what’s happening. And I remember like tallying up all the towns and cities across the country, many of them in Southern Ontario that had average million dollar prices and then thinking that can’t be, but it was. And I actually remember looking at The US markets and how many of them had average million dollar prices.

And there was like two. And then there’s like a dozen in Canada, clearly like Barrie, Ontario and all these, I was glad I was around to see it because it was a ride.

Speaker 1: Here comes the best follow-up question, Rod. So what is not getting enough traction today? What foreshadowing, are you finding today that you think is an inevitable outcome that people maybe aren’t getting in real time right now?

Speaker 2: I, was looking at a chart from one of the big bank economics departments this morning, and it sort of compared Canada’s household debt level against The US and Europe. And man, were we ever higher than everybody else. Europe is kind of modestly debt averse, so they never really had a big debt bubble. The US did, but they kind of took care of it after the global financial crisis, and we never did. And it just made me realize how we’re handcuffing ourselves financially when we have so much debt and how it restricts our ability to invest, how it restricts our ability to prepare for emergencies and how it sort of forces us to basically run our lives according to what we’re consuming as opposed to what we want to save for the future.

And I wonder if that’s going to be something if the economy runs into more and greater difficulties next year, where that’s really going to come home to roost. They’re renegotiating the North American free trade deal next year. What happens if it gets torn up or at least gets torn up for a while? What’s that going to do to business confidence and employment and consumer confidence and the stock market? So I think the debt thing, that’s been simmering away for a long time in Canada, we’ve never paid the price.

Americans did it after the financial crisis, but we never did. And I just wonder if there could be some kind of reckoning.

Speaker 1: You can count me as a fan who would like to see more conversation about that because I think you you hit one of the nails on the head. That’s one of the things that’s kinda lurking out there that’s not visible enough. And therefore, to your point, trying to inform, you know, the the the average consumer that, you know, this is something that’s lurking out there. Don’t be don’t get caught up in trying to keep up with everybody right now more so than maybe in the past because, you know, debt levels are at that. You know, if you’re comparing yourself to your neighbor, that’s not a way to know you’re okay right now for sure.

Speaker 2: It’s a tough message to get people to absorb because there’s so much stimulus to buy and consume now. You know, social media is just saturating people in messages of what a great lifestyle looks up like, whether your friends are going on vacation, what they’re doing on the weekend, and you feel like I have to keep my end up. It’s one thing to tell people that you don’t compare yourself to the neighbors and your friends, but it’s another thing to actually live a life where you’re constantly saying, no, no, no. I mean, think we need to say no a lot more than we do to expenses, but how we get people to actually do that, that is something I’m not really seeing a clear path to right now.

Speaker 3: Yeah, can count me as someone that’s been surprised that there hasn’t been a bit more of a reckoning, especially over the past few years with the real estate prices coming down the way that they have, and the interest rates going up now that they’re back down again now. But despite that we saw an interest rates a few years ago, I was thinking like this, this debt binge has to come to an end based off of this, like this is going to be it. Finally, we’re here. And sure enough, here we are. And unemployment’s coming down again and things seem to be on a relatively even keel at the moment.

Speaker 2: You raise a good point there about these V shaped recoveries we keep having. Remember the pandemic, the stock market crash, boom, it’s back up again. Trade war, stock market crashes, boom, it’s back up again. I wonder if we do get a more of a U shaped situation, and that may give us the longer pain period that gets people to rethink things.

Speaker 1: I’m waiting for the great recession of twenty twenty three. You know? So we we seem to have skipped over that altogether. We kinda had a no landing. Instead of soft

Speaker 2: planning It’s true, you know?

Speaker 1: We had a no landing and know that we we need a certain amount of pain as motivation in our world to live our lives properly and I think that maybe we’re missing that now for maybe, I don’t know, you could argue going on a decade we haven’t really seen, you know, that reminder of, you know, which would hopefully have people gravitate to a more sustainable level of spending. But hey, those who are tracking GDP love when people overspend. That’s wonderful to keep the economy moving.

Speaker 2: I just bet, know, our economy is based too much on household consumption and up until recently was too much on the housing sector and not enough on investing and building and that sort of thing. You know what? I mean, I think the government recognizes that finally and I think measures have been taken to try and turn things around. We’ll see if it

Speaker 3: So you mentioned a V shape, the V shaped recoveries we seem to be having now. And I think it’s, we could probably debate all day about whether this is something that’s going to be consistent going forward or if it’s just a bit of an anomaly and we’ll look back and say, yeah, sometimes recoveries do take a little bit longer, but I’m interested. So you’ve been writing about personal finance for almost thirty years now. What trends have you seen change dramatically over that period of time, either related to the markets or personal finance in general?

Speaker 2: Investing has been much more democratized. When I started, you know, investing was something you did likely through mutual funds, often through your bank, sometimes through a mutual fund salesperson, and stocks were more of an elite kind of thing. And now, you know, through exchange traded funds and through, you know, the evolution of the brokerage business, the digital brokerage business, formerly discount brokers. Many, many more people are going direct into the stock market. Mutual funds sort of hit this peak and they’ve been coming down the other side for ages.

I mean, they’re still quite large and significant, but not what they once were and in terms of influence at least. And so I find there’s more use of stocks and ETFs, more direct involvement in the market. And there’s also an understanding that we need to be investing. I mean, maybe there’s too much emphasis on it. Younger people are sort of out there investing, looking for home runs and investing very speculatively.

They’ve been rewarded a lot in the past five years. That will end. But I do think people are around, there’s a much, much finer level of understanding about what investing is, how to do it and the need to do it.

Speaker 3: It’s interesting because the democratization of it, as you say, has kind of led people in two different directions. It’s almost like a kind of a fork in the road where you end up at the fork and you say, you can either go this direction and buy options on GameStop or you can go this direction and invest in an index ETF, which one do you choose? And depending on how aggressive you want to be, you can make either a good decision or a bad decision.

Speaker 2: Josh, I’ll follow-up on what you just said there. We are definitely at that fork in the road, but that’s a bull market fork. And the GameStop thing has really been that kind of speculative micro themed investing has been well rewarded for the most part lately. And that’s fair. We always have periods where everything works, but soon we’re gonna get back to sort of core principles and the index investors who are extremely diversified and haven’t, you know, focused on any one sector too much and they don’t just hold the S and P 500, they hold some some EFI and some Canada as well and some bonds and maybe some cash.

They’re gonna find that that actually works and that you do need to be diversified and, you know, the speculative fork in the road was a great ride while it happened, but now we’re on to a different reality. You know, every generation of investors has that happen to them.

Speaker 1: It’s unfortunate perhaps because I too have got a thirty plus year career started giving financial advice before there was an Internet. You know? So, yeah, there’s there’s been a lot of changes over the year and democratization is a great word, but some of the disappointment is on how, you know, some industry players have leaned into it where, you know, hey. Here’s a twenty minute video on how to train forward exchange and open up your own account. And, you know, that that allure of doing very sexy seemingly complicated things being oversimplified and allowing people to take bets that they maybe don’t understand.

And I I I still think that there’s a learning curve going on there.

Speaker 2: The investment industry, exploits bull markets in many ways. And one of them is to throw products out there to take advantage of excitement and to take advantage of naivete about how investing works and to ride those customers as far as they can until that bubble pops. We’ll see if any of these platforms are still around and, you know, after the next the next downturn. Some won’t be. But that’s just how the investing industry works.

You know what, I remember mutual fund industry coming up in 1999, 2000 as the tech boom was increasing, all the science and technology funds were out there, the biotech funds were out there. Like five years later, half of it were gone and probably like ten years later, even more were gone. You know, took ten years for the Nasdaq to come back to where it was at that time. There’s the good and bad of of of bull markets, you know, like clients and investors, DIY investors have done really, really well. I hope they have.

Gains are there for the taking. But on the other hand, there’s excesses and unrealistic expectations have been reinforced.

Speaker 1: Marcia, that remains a good business model to lean into the trends rather than try to be the one that’s trying to educate people. I did a cross Canada tour when marijuana got legalized making fun of investing in marijuana and you can build your reputation that way but it’s I would have made more money if I went across Canada promoting investing in marijuana and cash the check. Right? So the business model kinda gets in the way of of giving maybe the the whole story of some of these speculations that have come along.

Speaker 2: It’s true. And it’s very hard to talk against the wind when everything is flying around and and make posting great gains. And, you know, you sound like you are just out of touch. When in real reality, what you’re talking about are the long term truths of investing that diversification matters and that riding trends is a way to hit a brick wall eventually. But the only way you prove right is after the brick wall has provided impact.

You know? It’s like it’s it’s their people don’t pull back before they find out what the negative consequences are.

Speaker 1: Love the brick wall analogy. Josh, that’s our new thing. We’re gonna try to build the brick wall for people to run into to bring the realization to them sooner than they would otherwise naturally find it.

Speaker 3: All right, we’re gonna borrow that one from you Rob, if you don’t mind.

Speaker 2: It’s all yours.

Speaker 3: Well, another thing I’m interested in, again, something that over the years, I think what we look at today, when you look at sentiment indicators or household surveys and things like that, people are generally pretty pessimistic. And this is despite everything that you’ve been talking about where we’ve been in a bull market, the economy has been pretty strong for a while. So I think I know the answer to this question, but I’m going to ask you anyway, the people that you’ve talked to over the years, do you think they’re generally more optimistic or less optimistic today than they have been in the past?

Speaker 2: Less, everybody’s less optimistic. And it’s not just the markets and your finances. There’s just so much happening in the world. I think the pandemic kind of rattled things loose and we never really recovered from that. And then you got the trade war.

The trade war really rattled people. That was my perception when I was at the globe and getting emails from readers when the market was tanking in February and March. Extreme levels of worry. Even more than maybe in some previous real longer term crises. And I think we’re all just there’s a lot of anxiety in the world today, and it’s just a collection of things, international events, national events, market events, all layered on top of each other.

You know, I think inflation was one of the worst things to happen to our economy and the global economy in my whole career. I think inflation has just completely undermined people’s confidence in their own prosperity, in the country’s prosperity. It’s not a Canada thing. It’s a global capitalism thing. And I think that has really caused a lot of dissatisfaction.

No matter where you are on the income spectrum, there’s some financial transaction or purchase that you’re making, you think that’s disgusting how much that costs. That’s crazy. You know, I feel like I can’t afford my life. And, you know, might be your weekly grocery bill, might be the family vacation you wanted to take, might be the car you wanna buy, you think would be right for your family. But I just think that that has really, that has really got people on edge, and it affects everything else, and it combines with so many other things.

And people are very pessimistic. I could say that there’s a few things going reasonably well or very well in the stock market, but they don’t resonate with people. They can’t offset the negativity. And I I don’t think we should stop talking about the good things, and I don’t think we should stop trying to offer some perspective, like your net worth is up, that sort of thing. But there’s just don’t try and convince people that things are great because they will not believe you.

Speaker 1: The whole pandemic thing, and there was a shutdown and stuff. And we had a large group of people that came of age, graduated from school, started their career in at that point in time. And it’s a little interesting to watch them, you know, be out in the world now and and and be having jobs and being consumers and and making the decisions. But they they came of of age during a time that was unique and, you know, trying to watch them readjust to a world where we’re still talking about back to work and, you know, the the the echoes of that time are still playing out. Do you have any sense as to, you know, how that group is contributing to that pessimism, whether that, you know, that they are more pessimistic because of that, you know, when they became of age?

I mean, I always made the joke. Was really fun right after the pandemic watching all the people who had turned 19 during the pandemic who hadn’t been able to go make all the bad decisions. And there was a period of time where a whole bunch of bad decisions had to happen in a real short period of time, so it’s quite entertaining. But, you know, that’s a bit of a cohort that’s working its way through the system.

Speaker 2: I think there is a buildup of negativity among Gen Zs, you know, adults who are just transitioning into the workforce today. Kinda reminds me of the mindset of millennials back in 02/2010. You know, was after the global financial crisis, and it was get it was very hard to find full time jobs back then, career jobs, know, was not anybody who was asked to do unpaid internships or there was temporary contracts. And I think young people today are feeling extreme levels of frustration about things, and I think they are maybe catastrophizing a little bit. Know, I’ll never afford a home and I’ll never be able to afford to retire, so why would I bother saving?

And I was thinking, the message that needs to be spread is don’t judge your whole life by this moment in time. There will be many opportunities for you to to make more money, to build your career, to get promotions and bonuses and other jobs and that sort of thing. You’ll be able to buy a house in your thirties. You don’t have to have one in your twenties. You You know, you’re probably gonna be working later.

You’ve got a long, long runway for getting your stuff together. Don’t give up. But I just think that they are there is sort of this this simmering feeling that the system isn’t gonna let me in. And so I’m just gonna opt out. I’m just gonna be I’m gonna enjoy the moment and that sort of thing.

And that’s sort of a rebellion against, you know, what seems to be a very withholding economy. But I I think just as it did for millennials, they were they were angry, and they felt shut out. And then things opened up, and they found their way in. I think that will happen for for Gen Zan too.

Speaker 1: We saw the story about how I did a lot of coaching. You know? So, you know, the very first time a kid does anything, they think it’s end of the world. Like, I’ve been with a lot of kids who had the wind knocked out of them for the first time and they can’t breathe. So they think they’re dying.

You’re holding their hand, looking them in the eye saying, just wait a second. You’re gonna be okay. They’re going, no. I’m dying. No.

You’re not dying. You’re gonna be okay. And, you know, this is a bit more of a protracted, you know, for that, which I think maybe feeding into the whole screw it. I’m not gonna plan for tomorrow because tomorrow’s gonna be no better. I might as well spend my money now and driving some of the other trends that we’re seeing.

Speaker 2: I think there’s definitely that feeling. I don’t think it’s gonna be a long standing thing, and I don’t I don’t think Gen Zeds are impairing their whole financial lives by this attitude, but they are setting themselves back. I mean, you know what? You know, nothing nothing builds your savings like an early start, and it’s also a habitual thing with savings. I mean, even if you spend it, you know, you’re in the habit of saving and saving means you’re living below your your potential lifestyle.

So that’s a good thing. I think we’re just in a very negative space. Everybody, about almost everything right now, and it’s it’s a global thing. And I’m not sure where the path out of this comes, but it’s going to happen. There’s going to be a real People just need to relax and stop clenching up a little bit.

And like I said, we need leadership from somewhere to help make this happen. But for younger people though, just time. Time will fix this. And I know they’re not impatient and I respect that, but I do think that in a year or two or three, they may be surprised how much they’re earning and how housing suddenly seems possible and how retirement, maybe they’ve got a pension at work or a group RSP and they think, okay, I’m saving for retirement. I realize I’m in the CPP as well.

All of sudden you get a little more optimistic or at least a little more perspective.

Speaker 3: We’re glad to have you here trying to spread that message with us because that relaxed message, I think is a good one. But the one that you emphasize there, inflation, I think, and I’ve been thinking about this more because inflation is the one thing that it’s not really cyclical in the sense that it spikes, but it doesn’t. You don’t actually get prices return to normal or to what they were before. You don’t actually have deflation to bring your $10 chicken breast back to $10. It goes up to 15 and then all of a sudden just starts gradually increasing by less of a rate.

So I think it’s unlike the stock market and then it falls and then it recovers back to its previous point. That doesn’t happen with prices. And I think that’s why it’s such a palpable example for people and driving that dissatisfaction so strongly.

Speaker 2: I think that’s exactly right. We basically raised the floor of everything. And now instead of increasing like by four or 8% like it was a few years ago, it’s only going up by two. But another problem is that groceries are sort of like the epicentre of inflation and everybody buys groceries and everybody has this experience when they go to the grocery store and they think that cannot be, That product cannot be that much. And once you’re you’re almost putting things in your cart and then taking them out.

It’s the peak food inflation’s gone, but the food inflation level is still higher than the overall inflation rate. And it’s kind of relentless. I think that’s what undermines everybody because it’s sort of like one to several times a week, I am gonna come face to face with things being too expensive for me.

Speaker 1: It’s another really good point earlier, Rob, that, you know, at different times, there’s been different challenges. Like, the unemployment rate remains very under control right now. And I I know I’ve got kids who have all kinds of job opportunities. Like, you know, there’s there’s all kinds of jobs out there. And, you know, I don’t think they’re thankful enough.

Because when I was a kid, unemployment was in the double digits and it was just, oh my god, I hope I get a job. Yeah. Other things were easier and housing may have been more affordable once you got the job and everything. But, you know, I think that there there are some things right now that, you know, because it’s been that way for a while, everybody assumes that’s the way it always is.

Speaker 2: The unemployment rate is by historical standards not too bad. I mean, I think it just went below 7%. When I started when I was covering the Department of Finance, I remember going to the finance minister at the time and asking when is unemployment going to go below 10%? And he said it could take a while and it did. But yeah, anyway, we did get well below that.

As I was saying earlier, there are some things that are going reasonably well. I was just looking at average wage increases and I was surprised to see them around 3.5%, which compares to around 2% for inflation. That’s a good real pay hype there, an after inflation pay act. But you can tell people that, but that doesn’t erase the feeling that they’re getting ripped off at the grocery store or maybe when they had to buy a new car and they couldn’t believe the price of new vehicles or something. You know?

It’s just I think people just feel like certain aspects of their life has been rendered unaffordable, and they’re resentful.

Speaker 1: Bringing math to an emotional fight. You need a lot of math to overcome emotion. I’m not I’m not even sure what the ratio is.

Speaker 2: There’s enough math in the world to make that happen.

Speaker 3: So, Rob, you’ve been part of the financial media for a long time. I think you’ve you’ve moved the education needle quite significantly from where it was probably when your career started. But what do you think the media industry in general needs to do better to help educate our masses, educate our consumers, and help them make better financial decisions today?

Speaker 2: Well, I think we need to stop talking in the same old ways about, you know what, you need to cut back and be more frugal and you are spending too much. And basically, it’s all your fault. I mean, at the heart of things, we all have personal responsibility for our finances, but I think we need to provide incentives. We need to find more ways to get people to save automatically. We need to recognize the challenges that people are under and give them simple solutions and better access to advice.

And I think those are all all things that the media can talk about. I think the media has actually improved its game quite a lot, like the mainstream media, even influencers and such, and and how they talk to you. They’re they’re going much more to where people live and addressing them there rather than just issuing these edicts about debt is bad and save 10% and that sort of thing. Those rules, people don’t really relate to them. They seem arbitrary, they seem unattainable, and people’s response is to just say forget about it.

And I think we need to sort of start to say, if you’re in debt with a credit card, obviously that should be your number one priority to get that paid off. That’s kind of a forest fire in personal finance. But if it’s an emergency, that’s how you’re paying for groceries and that’s how you’re living, we can’t criticize it. You need to get through that crisis to do better. Think I then we have to recognize that not everybody is in a position to do all these great things like save 10%.

How can we bridge you? How can we get you to save 1%? You know, that would be a good start. You know, how can we get you to like chip away at your debt and that sort of thing and positive, measurable, achievable steps people can take. I think we need to focus more on that rather than just sort of talking about the big picture goals we should all have on savings and how much you should have in your RSP by age, such and such.

You know, you can’t think about retiring unless you have a million dollars, that sort of stuff. That is that is a big turn off to people.

Speaker 1: It’s easier to get attention by saying, hey. There’s a shortcut. You know? Here’s the secret. Here’s what they don’t want you to know, and then you can fill whatever detail in after that and that that’s drawing a lot of attention.

And as long as Billy does win the race, and I completely applaud your approach and that’s absolutely how I try to approach things just in general. It’s like meet meet whoever you’re talking to where they are and then try to build them a bridge to somewhere better and be nonjudgy the whole time you’re doing it. Like, that’s how progress happens.

Speaker 2: There’s a lot of judginess built into personal finance. You know? Like, here’s what you should be doing. And if you’re not doing it, you think, what’s wrong with me? I I I’m just gonna I’m just gonna, like, disengage.

I’m really cognizant of that. I try to write around that and to sort of say there’s room for everybody here. And I think the more you do that, the more you open the way to communicate with people who were previously wouldn’t would resist you because they thought I’m not I’m not personal finance material. I don’t have my finances in good enough shape and you know, I I try to try to work on the principle that find one good thing you can do right now with your money and do that and then, I think you’ll enjoy doing it. You’ll feel the results of it.

You’ll feel better. You’re going look, what’s the next thing I can do? Or can I double down on that one good thing I did? Like let’s let’s let’s build for small steps and and and build go from there.

Speaker 1: Actually maybe onto something. Let me run this past you because this is a brand new thought just occurring because you’ve made a couple of very good points, Rob. And, you know, the current generation, that’s what they’re trying to get themselves established by, you know, historical standards may not have had to go through some of the the the more formative learning experience previous generations went through, like going through high unemployment times when you were just thankful to have a job and, you know, that you know, you really got backed into a corner over different points in time where you really had to be resourceful and get knocked down and and stand back up again. But where, you know, jobs have been relatively easy to come by and the economy has been relatively good for an extended period of time that maybe people are a little less likely to be able to pick themselves up by their bootstraps because, you know, the environment’s been a little more gentle in some ways. And, you know, that’s made them a little bit tougher to find that way to push forward.

Speaker 2: One of the complexities in the economy today is that there’s this big divide, though. There are the people who’ve sort of sailed through all of this. They’ve houses have gone up in value, made a lot of money in stocks, and they’re fine. And then there’s the people who are really struggling. I mean, at food bank usage.

It’s through the roof. Yeah. I mean, it’s really it’s just it’s staggering. I mean, I was just listening to news report here in Ottawa the other day about what’s happening at the Ottawa Food Bank, and they are just they are like staggered by the demand and so it it you know I think we have to recognize that some people are really really up against it. You know what?

Their incomes are just not covering their lifestyle. Then you know what? After all of these years of inflation and the pandemic and everything, cut back, cut back, buy in bulk, you know, shop for bargains. We’ve taken that as far as we can. Like, there’s no other there’s no more bargains coming and and there’s no more bulk they can buy and so we have to be recognized that there’s different people out there and that blanket advice may not actually work and that some people have have had it really easily, and some people have been extremely, extremely challenging.

We could debate whether or it’s because of their own spending decisions or what, but nevertheless, they’re in trouble and they need help. Yeah,

Speaker 3: I think that’s maybe some of Colin and I’s biggest criticisms of the advice industry is that it’s sort of a one size fits all type of approach. And that’s something that we push back on a lot is like, there’s no, you can’t walk into a meeting and deliver the advice without understanding where the other individual is coming from or that group of individuals is coming from. But it brings me to a question because you’ve again kind of pushed back on some of the the advice industry’s shortcomings. And I think rightfully so. I mean, we’ve been here on this podcast pushing back on the same things over the years.

But is there something that you think is extremely damaging? Like maybe the one thing that is more damaging than than all else that the advice industry tends tends to bring forward either from a marketing perspective or an advice perspective?

Speaker 2: I’ll start my answer by saying I think the advice industry has improved by quantum amount since I started. When I started, basically, it was a mutual fund sales operation. That’s what advice was. And it’s become so much better. But I still think it’s too much investments forward, and everything else trails in the wake there.

And I find what really resonates with people is having a financial plan. And even it’s not an official written document like One Inch Thick or whatever. The idea being that the advisor or the planner has taken time to know me, and this is just referring back to what you just said about asking questions and understanding who you’re dealing with, and then being a source of answers to all their questions. And it could be, can I afford my mortgage renewal? How will I afford my mortgage renewal?

When will I be able to retire? What will my income be? What will I be able to give my kids? Can I help them buy a house? Questions and questions and questions.

I mean, I spent a good amount of my time when I was writing for The Globe on a daily basis answering questions. And I was thinking, if these people had financial plans, they wouldn’t have to be writing a stranger for help with these questions.

Speaker 3: Some of them would though, and that’s kind of the sad part.

Speaker 2: Possibly. Sometimes people do like to get a second opinion, I get that. But I think that being an answer of questions and a guide and a coach and a resource is a huge asset. It really resonates with people. And I think the advisory demographic that’s all about the investments and let me manage your portfolio, I think that’s very early 2000s in your thinking and that we are there’s a huge business opportunity to provide a much more broad based experience where it’s yes.

We have your investments, but that’s driven by all of the other stuff we talk about, like your goals, your fears, your personal challenges in your life, and your ability to save and grow your career and help your kids and all that stuff.

Speaker 1: It’s my job is to give somebody the information they need to make the decisions they need to make. Like, we need to take their situation and turn it into, you know, the information and inform them so that if they’re making a trade off or what is the trade off? Like, if you want to pay for your kid’s education, does that mean you have to work two more years? You know? Because many people, like, they they develop shortcuts, heuristics in their head to accommodate this, this, this.

I was like, oh, wait. You add up all that math. Stop this gonna have to give. Now what’s more important to you? So if I can give them the information to say, here’s a trade off.

Like, what’s more what’s is early retirement more important than owning rental property? Is it more important than educating your kids? What do you want? And give them that information back to empower them to make a choice rather than waking up one day disappointed that they didn’t get where they thought they were gonna get. But knowing you’re gonna wake up without any money is way better than being surprised you woke up without any money.

Speaker 2: You know, I think talking through things like that is exactly what the advice professional needs to do. What’s what’s going on in your financial life? Let’s talk it through. Here’s what’s possible. Here’s what’s not possible based on your current track.

Here’s what we could do to fix that. Here’s what the trade offs are. That’s the kind of conversations people really want to have. Some think they have an idea that they want to have those conversations. Some don’t know yet, but they definitely have the questions.

And I think that, you know, there’s a bright future for the planners and the advisers out there who can be aggressive in being that kind of a that kind of a problem solver.

Speaker 1: We’re gonna give you a magic wand. You can wave the magic wand, and you can fix one aspect of the financial advice industry world people in all of Canada. You get to fix one problem with this magic wand. What do you think would be the most impactful thing that you could change?

Speaker 2: I think requiring everybody who provides financial advice to work to a fiduciary standard, clients first. There are certain, like, narrow niches of the industry that are doing that, and there’s other advisers who just operate that way naturally. But to put that out there and have everybody work to that standard, I know regulators flirting with the idea many years back, it was blown away. They ended up retreating. But I think that would make a huge statement to people, that the planner’s my ally, you know, my, my my collaborator, that would take away a lot of the concerns about someone just trying to sell me stuff, and I think there’d be a lot more and a lot better relationships if that happened.

Speaker 1: Yeah. It was so it’s funny because, you know, we would agree, you know, as a as a portfolio management firm that does operate to a fiduciary standard. But I think there’s two levels to it. One, you know, having the industry adopt it, but two, having it actually be real because, you know, fiduciary is a big word and there’s different interpretations of it. And Absolutely.

You know, it’s it’s very I think one of the issues industry has is it’s very difficult to police that. It’s very difficult to have a work workable definition of that. But I’m in favor. I I’m in favor if I solve. If I get a magic wand, I will give it to you.

If you can wave it and make that happen, I will just throw it upon you.

Speaker 2: It wouldn’t be easy, but I think the challenges of implementing it shouldn’t prevent us from from moving forward on it because, you know, although the sales culture has really been reined in, you can see it flaring up here and there and, you know, certain products getting popular. You know, you’re talking to people in the investment industry and they talk, oh, I was in to see a bunch of advisors talking about our product, but I’m thinking your product’s garbage. I hope those advisors all told you to hit the road. That sort of thing. And a proper fiduciary would never let a wholesaler for that company in the door Because my clients forget.

I wouldn’t let them touch that. But you know what? Anyway, it’s I think that would be helpful. I don’t think it’s realistic. I think there an attempt was made, but I do think I think it would really resonate with the clientele, the idea that my adviser works for me.

Speaker 1: Rob, be careful. You’re you’re talking too good here. So pretty soon, I wanna vote for you to do something. We’re gonna put you in charge and try to put you in a position where you can enact this. I hope you’re ready for that.

Speaker 2: Brightermise and me made an attempt at it, and, the industry was pretty strongly opposed to it, the fiduciary standard, and I haven’t heard any murmurings about it since then. And I don’t think we will anytime soon. It’s a great idea, but I think that the industry just doesn’t want it. And as inconsistent, it may be not thorough as the oversight of fiduciary said it would be, don’t want it regardless.

Speaker 3: I’ll use my magic wand to kill the lobby against the fiduciary push because I think that’s what’s required to get it over the hump. I think the unfortunate thing is the way that the industry is set up in Canada is just not, it’s not democratized enough to use the words that we were looking at earlier to allow that to happen. Unfortunately, as always, we really appreciate the guests that we have on this podcast. And Rob, like I said at the outset, the way that you’ve been able to push back and an informed and educational way on some of the industry norms and conventional thought over the years, hugely welcomed by us and that type of transparent push. That’s why we call ourselves bare naked money.

We’re trying to be transparent. We’re trying to pull back the shower curtain on some of these things that we see in the industry. And you’ve been the perfect guest to help us do that. So thanks so much for joining us today.

Speaker 2: My pleasure, guys. Enjoyed our enjoyed our conversation.

Speaker 4: If your current financial adviser cannot explain how they and their firm are compensated, that’s a problem. They really should be able to answer that question before you accept their advice. And if their answers leave you with more questions than confidence, it might be time to seek advice that aligns with your best interests. Contact us. No strings attached.

You can find us at annoyingthecompetition.com. For more information on the subject of today’s podcast or any other financial topic, please visit us online at verecan.com. That’s verecan.com. There’s plenty of information there, or you can reach out to someone on the team. Thanks for listening.

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