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Our guest on the podcast today is Feraud Calixte. Feraud is the founder and lead financial planner of Vantage Pointe Planning, which is a fee-only financial planning firm based in Burlington, North Carolina. He started Vantage Pointe in order to serve clients who weren’t being served by the traditional models for financial advice, especially those who don’t meet an asset minimum and business owners with a lot of their net worth tied up in their firms. Before starting Vantage Pointe, Feraud worked as an advisor for several large wealth management firms. He currently serves as a national board member for the National Association of Personal Financial Advisors, and he also frequently teaches financial literacy courses. Investment News named Feraud to its 40 under 40 list of financial advisors under the age of 40. He earned his undergraduate degree from New York University and his law degree from Southern University Law Center. He is also a CFP certificant.
Investment News 40 Under 40: Feraud Calixte
“Business Spotlight #5—Feraud Calixte,” City of Burlington, Economic Development Department, burlingtonnc.gov.com, Jan. 6, 2022.
Financial Education and Advice
National Organization for the Professional Advancement of Black Chemists and Chemical Engineers (NOBCChE)
“Financial Education to Stoke Wealth Creation for Diverse Groups,” by Bloomberg, investmentnews.com, Sept. 18, 2018.
“Blue Ocean: The Future Is Bright for Financial Planners,” by Feraud Calixte, feraudcalixte.substack.com, Nov. 12, 2021.
“Bonds vs. Bond Funds: What’s the Difference?” by Kent Thune, thebalancemoney.com, April 26, 2022.
“Should You Invest in Individual Bonds or Bond Funds Today?” by Christine Benz and Susan Dziubinski, Morningstar.com, April 20, 2022.
Garrett Planning Network
Christine Benz: Hi, and welcome to The Long View. I’m Christine Benz, director of personal finance and retirement planning for Morningstar.
Jeff Ptak: And I’m Jeff Ptak, chief ratings officer for Morningstar Research Services.
Benz: Our guest on the podcast today is Feraud Calixte. Feraud is the founder and lead financial planner of Vantage Pointe Planning, which is a fee-only financial planning firm based in Burlington, North Carolina. He started Vantage Pointe in order to serve clients who weren’t being served by the traditional models for financial advice, especially those who don’t meet an asset minimum and business owners with a lot of their net worth tied up in their firms. Before starting Vantage Pointe, Feraud worked as an advisor for several large wealth management firms. He currently serves as a national board member for the National Association of Personal Financial Advisors, and he also frequently teaches financial literacy courses. Investment News named Feraud to its 40 under 40 list of financial advisors under the age of 40. He earned his undergraduate degree from New York University and his law degree from Southern University Law Center. He is also a CFP certificant.
Feraud, welcome to The Long View.
Feraud Calixte: Thank you for having me.
Benz: Thanks for being here. We’re excited to chat. We wanted to start by discussing your origin story, your plan to start Vantage Pointe. But before we get into that, we want to talk about your background, which is that you went to law school and you received your law degree, but along the way you became more interested in finance. Can you talk about what the catalysts were for you to begin to think that you should go in that direction versus pursuing a career in law?
Calixte: I think most good stories, the final destination when you get to where you’re supposed to get to, there’s a lot of twists and turns. Family is from Haiti. I always joke and say, there were three options: There was law school, engineering school, or med school for my brothers and I. I happened to choose law school. So, that was always like a default position for me. I’m from New York. A lot of my friends who were interested in finance, they went into investment banking, so on the institutional side. A lot of times, I didn’t think that I really had the interest in institutional finance, but I always had an interest in personal finance—the markets, things of that nature. And then, after law school, I was figuring out what I wanted to do, where I wanted to eventually end up in a career. And then, happenstance, I met an advisor, and we were just talking about the markets. And he said, “Feraud, look, you’re good with people. I’ve had a career. I’ve done this for many years. And there’s this whole other side of the business where you just have conversations with real people and help them achieve their financial goals.” And that resonated with me a lot, just being able to talk to people, being able to give them counsel, advice, and that led me to getting into my first training program with a broker/dealer and the rest is history.
Ptak: You worked for Morgan Stanley, PNC, and TD Ameritrade before starting your own firm, Vantage Pointe. What prompted you to want to strike out on your own versus sticking with one of those bigger players or joining an established RIA?
Calixte: I had the benefit of getting the big industry experience, the big firm experience, but I was always entrepreneurial in nature. I think that was always the end goal. Even though I couldn’t articulate that along the way, but there was always a desire to strike out on my own. I’ve seen successful advisors build something. And it was one of those things that as you went to the different firms and you saw where the industry was going, when I was in the business, the industry was really going toward more of a fiduciary standard, less toward a transactional nature, which then led me to get my CFP. And then, I said that the industry is going toward advice, less toward product sales, and a lot of the broker/dealers still had that component. And then, when I discovered the fee-only space or advisory space, it just resonated with me. And then, I said that this made a lot of sense to do this on my own and serve clients in the way I think is the best way to serve them.
Benz: You’ve talked about how Vantage Pointe was set up to serve people, to serve clients who weren’t being served by those traditional models for financial advice. Can you talk about the types of people who tend to be left out of those traditional advice models and also why you think that the business model you set up, which is hourly based on client needs, why you think that’s a better fit for people like that?
Calixte: It’s interesting, I joke and say, we are obsessed with talking about the way we get paid. There’s constant fee discussion in this industry. But I do think that there’s a value distinction and then there’s also a type of client. One of the ideal scenarios that I could remember in working at one of my previous firms is that we have the person who is nearing retirement, most of their assets we know for most people are in a 401(k) or company plan. And this person called in, and they were a perfect client in my opinion. They had great income. They had all these financial complexities. They literally were seeking advice and big questions—when can I retire? What will retirement look like? And the fact that we could not figure out how to work with that person because they didn’t have transferable assets at the time, I didn’t look at that as a failure on the client. I said, that’s a failure on us, the industry. There’s not a business model designed to serve clients like that, and that’s what I found. I said that I wanted to serve the clients who were looking for financial planning advice that didn’t depend on how many assets they had to manage. It’s one of those kinds of things they say if you build it, they will come. And thankfully, I built it, and they did come. So, that was good. I think I hit onto something there that there’s definitely a market for it.
Ptak: I think another way it sounds like in which you inverted the traditional model that you’ve talked about is you didn’t lead with investments. Instead, you focused squarely on financial planning rather than investments, though you do provide investment guidance, too. What led you to conclude that you wanted to put planning front and center with your firm?
Calixte: I can’t even take credit for that. Ninety-nine percent of wealth management firms, they say that financial planning leads. I think we are correct in understanding that investment management, if that’s solely what you provide, well, that becomes a commodity. So, a lot of the industry was shifting toward leading with financial planning, and I just decided that, not only do I want to lead with financial planning like everybody else, but I want to say that this is where the value really lies and I want to align my business model to reflect that. And I think that it signals to the client that, this is what I’m paying for, this is where the greatest value is, and that’s what I did.
Benz: You wanted to be a fiduciary, you wanted to lead with financial planning versus strictly investment management, you wanted to be hourly so as to serve people without large portfolios. Were there any other principles that you wanted to bring to bear on Vantage Pointe when you started it up?
Calixte: Transparency is something that was really important to me. If you visit my website, all my fees are transparent. You know coming in a ballpark of the fees. I wanted comprehensive. So, I wanted folks to be able to look and see that this is the full suite of services that we help you with. Again, the fee-only, I wanted to focus on there’s no product sales. Our value is the advice that we give. Those are the three big headings I think of when we think about value. And then there’s a tagline that I have on my website also, and it’s: Your self-worth is not your net worth. To me, that resonated personally to me. And then, I thought that for people to realize that look, when somebody comes in and inquiries about working with me, I don’t ask how much they’re worth. I don’t immediately knee-jerk talk about how many assets is available for me to manage, because that’s not really important. This is a person who has some pain points, and they’re coming to me as a professional to help them solve those pain points, and that’s what I think I’ve been able to create.
Ptak: It does seem like these days financial planners are very much focused on targeting specific niches. And you’ve talked about some of the attributes of your firm that make it distinctive in a lot of ways. But with respect to niching, is that an emphasis for you as well, and if so, what are the niches that you’re trying to reach?
Calixte: I’ve read all the studies about focusing on a niche and buckling down. I’m not closed to that idea, but I still think that right now one of the cool things that I see, I’m able to cast really a wide net and serve so many people along the financial spectrum and industry spectrum. I like the fact that I can work with a larger group of people.
Benz: And I would imagine that that keeps things interesting too that you have people who aren’t all…
Calixte: Yeah, it does keep things very interesting.
Benz: …engineers getting ready to retire or something like that. I’m curious, do you find that you bring your legal background to bear upon your practice?
Calixte: To the extent that I think that when people see law degree certified financial planner, they know that, obviously, I spent years educating myself. There’s a certain level of competence, professionalism that comes to bear in my advice model. And when I have conversations with folks, they get it. So, I’m saying that the value that I bring is this expertise and advice, and this is what it looks like to work with me. They’re like, well, it makes sense, right? This guy has a law degree. He’s a certified financial planner. His stock-in-trade is his expertise and advice. So, that’s one thing that I found was pretty interesting.
Secondly, just from if you think about estate planning, as a part of a comprehensive financial plan is having your estate plan in order. That conversation is always a lot easier, even though I always tell clients that I work with estate attorneys to draw up the documents obviously, but I think that’s an easier conversation with the client. I found that when I talk to other COIs, centers of influence, they get it too. They see my background. They see the expertise that I bring. They’re a lot more comfortable in the fact that I’m an expert in this area, you’re an expert in that area, and we can work and collaborate together on this client to make sure they achieve their goals.
Ptak: You started as an hourly only advisor. What appeals to you about the hourly model?
Calixte: For me, when I looked at all the different fee models out there, hourly just made the most sense in terms of really focusing on the advice portion. I wanted to work with folks who value advice and expertise and to me it made the most sense to do it that way. Plus, every other professional industry works that way. Traditionally, we think about lawyers, consultants, accountants. The bottle was already there. And obviously, this is not a new thing that I’m doing as a financial planner. There’s the Garrett Network, there’s other hourly advisors around the country. So, we’re just talking to a few other folks, delving into the model and seeing that there’s a need out there. There’s a certain market that this would resonate with. It just made sense. It was good business, frankly.
Benz: Do you find that prospective clients sometimes push back when they hear about the dollar amounts that the hourly model might entail? Because they’re hesitant to pay out of pocket, or maybe that’s not what they’re used to. They’d rather have that invisible hand reach into their accounts and take out their fees without really knowing it. Do you get that pushback from people who might otherwise want to sign on with you?
Calixte: That pushback has happened, but not as often as you would think. I think there’s a couple reasons for that. I think the website being super transparent in terms of the fees are there front and center for anybody to see—that’s number one. Secondly, by the time I’m having a conversation with someone, if someone is unclear about how the fees work, or why does it cost this much? I always look at that as an opportunity. So, this is an opportunity for me to really demonstrate my value and say that this is the work that we’re going to be doing together. These are the goals that you say are important to you, and this is just the way that we decided to get compensated on that. And at any time, no matter what business model you have, you should be always focused on delivering the value to the client. I would argue that the value should far exceed whatever your fee is to the client so they can continue working with you.
To me, there’s no difference. I think that one of the things that was interesting is that a lot of my clients are actually new—they never had a relationship with a financial advisor before. Because remember, for one reason or another, they didn’t fit traditionally in the majority of the models out there. A lot of times, I spent the initial conversation just educating prospective clients on what it’s like to work with the planner, what’s the value you can receive. So, that that’s been good, too.
Ptak: What do you say to financial planners who look at the hourly model and conclude that it’s just not a great way to make a living?
Calixte: I’d say, it’s tough. There’s no way to get around that. Again, whenever we go back to this fee thing, I get it. I get the business, I get the economics, I get the saliency of fees, I get the way 1%, it’s such a small number in comparison. So, when another advisor pushes back and says, “Feraud, I would never do it that way.” Typically, my response is some version of “Well, great. Advisors don’t work with me. I’m not interested in working with advisors as clients.” But for the public, for the folks that it works for, I think it makes sense. And I have an abundance mentality. There’s no way I can work with everybody out there, so there’s always going to be clients who want to work with my advisor friends who decide other models. And then, fortunately, there’s clients who want to work with me.
Benz: Your business is primarily hourly, but you eventually did add an option for people who want to pay for that day-to-day portfolio oversight. Can you talk about that decision and what prompted it?
Calixte: My firm and what I like about just this process of innovation and just really serving client needs as they come up. It’s the opportunity to really pivot and innovate constantly. The feedback that I was getting from clients is that some of them—some folks, not everybody—but they wanted to me to continue helping them with some of the implementation. I would give them the recommendations. I would do their investment planning and then they said, “Feraud, can’t you just do this for me?” And then, enough people said that. And I decided to offer that option and people decided to take me up on it. And investment is something I’ve always been comfortable with. In every other role I’ve had, I’ve had discretion over assets, I’ve managed assets, I was comfortable in that space anyway. So, when I saw an opportunity to continue to add value, serve clients who wanted that service model, I just decided to add it.
Ptak: Maybe on that note, though you have expanded your services to include helping out with the implementation of the investments as you described. I would imagine most of your clients are self-managing their portfolios subject to your oversight. Is it ever frustrating to watch as maybe they execute strategies that you don’t consider to be well-advised? Or is that not really a problem that you’ve encountered?
Calixte: Initially, it was frustrating to see that they wouldn’t implement the advice that I feel like I worked hard to really develop and was based on goals that they said were important with them. But I got to the point where frankly you have to make peace with that. The reason why they’re coming to you—it’s not an order, it’s advice, it’s counsel. People are allowed to heed your counsel or not, but that doesn’t change the fact that I think, and I stand by all of my recommendations to say this is best for you. But at the end of the day, for those who decide not to heed counsel, that’s their right to do so.
Benz: I had a related question on that front because most of your clients work with you on an hourly basis. They’re in charge of executing these jobs that you might tell them to do, whether you know it’s selling employer’s stock or closing old accounts, or any number of tasks. Is that a frustration for you that people just don’t do the things that you tell them to do? And I will say in the interest of full disclosure, I work with an hourly planner and sometimes she will tell me to do things and I will just be too busy or whatever. I don’t do what she says. Can you talk about how you experience that and how you work with clients to get them to actually enact the changes that you’re telling them to make?
Calixte: I’m going to pick on you a little bit there, Christine. You should listen to your planner.
Benz: I know. I’m paying.
Calixte: Yes, it can get frustrating. And I always let clients know, I will graciously nudge you from time to time—”Don’t forget, we still need to get this done; I need your help in getting this done.” But again, it does come to a point where the client is still in the driver’s seat in a lot of the hourly relationships. It is their prerogative to implement or not implement. At some point, I don’t know if that’s after three calls or five emails—every advisor has a different threshold as to when they’re going to stop nudging the client. But I will say that one of the things that I found for those folks who even started out that way as an hourly and through working together they say that for that reason, that they’re not implementing some of the things, that is one of the value-adds to my other service model is that they can delegate a lot of those tasks to the extent that I can do a lot of the things for you that you otherwise would have let fall by the wayside and you wouldn’t have implemented it.
Ptak: More broadly, financial advisors seem to increasingly mention that managing client behavior is a big part of their value-add. Do you think hourly advisors might be at a disadvantage from that standpoint, I should say, because they don’t typically have trading authority over client accounts and aren’t necessarily paid to execute some of those jobs that we’re talking about?
Calixte: I don’t think hourly advisors are at a disadvantage. The relationship is really the same. If you look at counsel or any other profession, the person is coming to you for your expertise, for your advice. So, they realize, they got to a certain point when they said that I can’t do this on my own. I need guidance. I need help. And let me just say this, too. Every hourly advisor is different. There are folks who help you with implementation and they just charge for their time. That’s not necessarily true that hourly is just after the project and then you’re left to your own devices. It doesn’t have to be that way. Some people will help you with the implementation and just charge for their time. Again, I think that the beauty—this goes back to the last thing—the beauty with the model is that your time, your expertise that’s what you’re bringing to the table, and the client realizes that and they’re willing to pay for that time and expertise. I don’t think that hourly advisors are at a disadvantage from managing the behavioral finance component of it.
Benz: I wanted to switch over to discuss the current market environment. This has been a really challenging year, obviously, for investors and consumers. Stocks and bonds have been falling at the same time. Inflation is way up. Is there anything that has surprised you about the current environment?
Calixte: Bonds are not acting the way people traditionally thought they would act. People are becoming a lot more reactive to the fluctuations in the market. People are less likely to stick or question the long-term plan or advice because they’re seeing in the short-term that their accounts are down and it seems like we’re constantly in a recession, out of recession, whatever. People are still trying to figure out where we are. So, I think there’s a lot of angst and anxiety in our country right now and with the investing public. But again, every time when I reach out to clients and speak to them, that is why you’re working with a professional. Frankly, I feel bad for the folks who don’t have that calming voice that they could work with. I think that the general public, regardless of model, is better off when they work with a professional advisor than not, because we know that when it comes to investing, often than not, we are our own worst enemy in terms of investment success.
Ptak: Elevated markets brought a swell of new retirees in recent years. Do many of your clients fit into that cohort? And if so, what strategies do you use to help them cope with volatility?
Calixte: That is true. The folks in retirement, they’re looking at different things. They’re looking at withdrawal strategies now. We talk about with different withdrawal strategies. We talk about taxes. We talk about how Social Security affects their financial plan. We talk about Medicare, the effects of Medicare premiums on their plan. We talk about things like, we want to get a second vacation home for all the grandkids to come when they visit. We talk about the elevated price of goods and how cash flow is right now. I think that every position you are in your financial life brings on different challenges. And again, the focus is what’s important to you, what are the goals that you say that you want to achieve, and everything is driven by the plan, the financial plan. This is why we take so much time and emphasis. We place that emphasis on the financial plan. Because frankly, the investments or the macro economy, I haven’t figured out how to control it. If you guys do know how to do it, let me know. I haven’t figured out how to control it. So, I tend to shift the focus to control what we can control—that might mean we adjust the volatility in the portfolio, that might mean moving to cash if that’s where your comfort level is. But there’s a lot of different things that we can do, but I always turn it back to the financial plan. What is important to you? A lot of times, people more than they think that they’ll need to achieve the things that are important to them. Again, it’s shifting that focus and educating and really taking the time to explain why you’re still on track to do the things that are important to you.
Benz: Wanted to follow up on your comment about Social Security. It seems like people were really getting the message about the benefits of delaying Social Security with an eye toward enlarging their lifetime benefits. Do you suspect, or are you hearing it from your clients that they may reverse course, that people may see their depressed portfolio balances and say, no, I need to get my Social Security flowing so that I don’t have to take so much out of my portfolio?
Calixte: That’s a good point to bring up. And yes, those questions do come up, but I think that there’s two parts of planning. When I think about it, there’s two sides. There’s the math element, so I can show them what deferred, delaying the Social Security—what that does to the number that you’re going to get. So, that’s the math. And then, there is the human side of it, that you’re right, when they see the account going down, they’re like, hey, there’s this other source of income that we can just tap into that would make me feel better, and those are costs. Those are trade-offs there that again—my role is to counsel, advise you, talk to you about the different trade-offs. But one of the things that I think is a measure of success to me—if my clients can sleep better at night, I know I’m doing a good job. That is driven by competent advice and really helping them arrive at a decision that is best for them. That may look like continuing to delay, that may look like tapping into it. Every situation is unique, but we discuss it all.
Ptak: Are you finding that some of your clients are making a case for beginning to claim Social Security earlier than they otherwise should specifically because of the inflation-hedging benefits that it confers? And then, more generally, how do you suggest clients attempt to address inflation risk with their portfolios Social Security aside? So, it’s a two-part question, maybe starting with Social Security.
Calixte: I can’t say that I’ve seen folks who are at the point now where they want to tap into Social Security. That’s the easy answer to discuss. I haven’t seen that personally in our practice where clients are tapping into that. And in terms of the inflation risk, it’s tough. When we talk about asset allocation, we talk about the equities, the stocks in your portfolio, that’s the growth engine of the portfolio, that’s where you’re going to see the growth over long term. What we don’t want to do, again, in terms of reacting short term and skew heavily in one direction versus another, where it won’t address your goals long term. So, we have those discussions. We always bring it back to, again, what’s your current plan? And I’ll say, I don’t have clients who are in such a position where the situation is dire or where I would say where we need to make big moves in terms of helping them accomplish their goals. For my clients who are working, as long as they’re going to continue to have high incomes, they know that they can weather it. For some of my folks who are in retirement, we always set aside a certain amount of cash that they feel comfortable with, that they can handle some of the short-term volatility. We don’t have clients who are in that situation where they are in a dire situation.
Benz: One question we’ve debated a lot internally over the past year is bond versus bond fund— individual bonds versus bond funds. How do you come down on that question, especially given some of the big losses that even people who have had the core-type bond funds like Pimco Total Return or Vanguard Total Bond Market, or whatever it might be, they’ve had substantial losses in their portfolios so far this year?
Calixte: Most of my clients are in bond funds. Again, yes, bonds are supposed to be the safety portion of your portfolio. We’ve seen more volatility in that than we otherwise would. But I don’t think that the traditional thinking of, well, just because you’re at this age you should have this allocation in bonds. I think that’s been disproven. I have folks who are in retirement who are still heavily invested in equities. And we have those discussions. Again, equities, they’re still the growth engine of the portfolio. You’ll see the volatility, but there’s other ways we can weather that volatility. So, I don’t think that the traditional thinking of, well, we need to have this certain allocation in bonds there, too—I guess I don’t have to deal with that specifically.
Benz: Would you tend to recommend a portfolio of bond funds versus individual bonds? Or how do you approach that?
Calixte: Most of my clients are in bond funds as opposed to individual bonds.
Ptak: We want to shift gears and talk about underserved communities for financial advice. People of color are much less likely to use a financial advisor than white people. What do you think are the key reasons for that and how can the financial advice community do a better job of serving them?
Calixte: What’s the reason for that? That’s a big question. How much time do we have? I think that when it comes to financial advice, or who are financial advisors, I think that it’s a lack of exposure. I know that growing up I didn’t know personally a financial advisor. It’s not from being exposed, being that close to friends who are going to work on Wall Street jobs and a happenstance meeting with an advisor that I discovered the industry. So, I think awareness is one thing. Outreach—some of the university programs are now starting to have financial planning programs, telling students about this wonderful career of personal finance and financial advising and being a CFP. I think the awareness is starting to grow. And then, it’s just going to continue to increase the pipeline just from advisors like myself giving back. I work with a local university here. Any opportunity that I get to speak to students and let them know that there’s this wide-open industry here where you can do well for yourself, and you can do good by serving other people. I think it’s going to take basically a concerted effort to just increase awareness, increase the pipeline of young folks getting into the industry, and I think there’s a lot of different associations, NAPFA, for one that are taking on these initiatives to do just that.
Benz: You mentioned NAPFA, which is the National Association of Personal Financial Advisors. You’re on the national board for NAPFA, and you’ve told me that’s an important community for you. Can you talk about that? How you initially got attracted to NAPFA and also what people should know about the organization?
Calixte: For me, most of my experience was in the broker/dealer space. And when I started looking at moving more toward this fiduciary model, I discovered and heard about this term fee-only. And I had no idea what that was. And then I Googled it and found NAPFA, and I started reading about what NAPFA stands for. And I just visited a local study group. NAPFA is an association just of really committed advisors around the country who are constantly looking at ways to better serve the clients and maintain the highest of ethical standards. And then from the study group locally that I visited, just from being involved on the regional board and planning a fall conference post-COVID, I really got to meet and network with folks around the country, and all of them had one thing in common. They were committed to serving the clients well in a way without product and commission sales. And I think that’s an important thing to stand on because you’re really just committed with, every fee model—there’s inherent conflicts in everything—but any way you can reduce or minimize conflicts, I think it ends up being better for the clients.
Ptak: Wanted to ask you about financial education. One of your passions is teaching financial literacy. Based on your experience there, what things tend to work to improve financial literacy, and conversely, what doesn’t work?
Calixte: That’s a good question. That’s another big one. I’ve done things locally. Most recently, I was invited to speak in Orlando at NOBCChE, which is the largest association of Black chemists and engineers. These are students, graduate students, professors. And the seminar or the talk was just focused on financial education. And kudos to NOBCChE. This is a group of chemists and engineers, and they said that we want to have a session on financial literacy, on financial planning, because we know that people are going to start jobs. There are professors who’ve been in the job who are not taking full advantage of their benefits. I think that there’s a lot of basic knowledge—and I always tell my friends, sometimes we got to step out of industry circles because what is common knowledge to us, there’s a lot of folks out there that would greatly benefit from some of that sage advice that we’ve earned over the years. So, I think, talking to people, relating to them, meeting them where they are. If I have a younger person, they might not be interested in talking about retirement and Social Security right now, because that’s 30 years away from their purview. But they will benefit from 401(k), a match, taking advantage of a match, talking to them about a HSA, talking to them about a Roth account or the different type of accounts. I think meeting them where they are and making it in a format that’s digestible to them, that’s really nonthreatening. Stop using financial jargon. Just really meet people and just talk to people like people, just have a conversation. I think that’s how you start to move that needle.
Benz: I wanted to follow up on something you just said, which is that talking to people in their 20s and 30s about their retirement isn’t usually a way to engage them. Have you found that focusing on shorter or intermediate-term goals is a better way to gain engagement from them? Not just when you’re doing financial education, but when you’re working with actual clients in that age band, do you find that they’re just more excited about the idea of making a home down payment, or whatever it might be, and less so about retirement, so it’s better just to focus on the shorter-term goals?
Calixte: One of the things that I say to clients—I’m getting excited just talking about this—because another beauty of hourly or maybe placing an emphasis on the advice, I tell folks I’m agnostic in terms of the asset class. You can imagine that young people—and I say that because I’m young, but I hate saying that. So, you have folks coming to you, they want to know about bitcoin, they want to know about crypto, they want to know about all of these exotic things that they’re hearing. And that’s another thing too that I think that advisors have to recognize.
One of the things that we’re up against is the whole financial influencer industry. And if we’re not paying attention to what’s going on in that space, to the extent that you need to know what type of information folks are getting from a lot of the, I call them the celebrity influencers, because that really is an opportunity, I think, to make a distinction between expertise and just what you hear out there on the internet. And then, also to really focus and tailor your advice offering on where the clients are. If they’re interested, if you have a young person who is interested in the FIRE movement, well, you can talk about that. But you need to know what that is. If you want to talk to clients who are just starting their job—I have a lot of medical professionals. One of the things that they’re dealing with—they want to know how to buy a practice so they’re going to be levered, and then they also have student loans. They want to talk about all these issues that are pertinent to where they are in their current life stage. And I think that as an advisor you have to be knowledgeable about these things. And frankly, that keeps it interesting for me. That goes back to the discussion about not having a specific niche. You get to have these conversations with a wide range of clients at different life cycles but still at the end of the day trying to solve issues that are relevant to where they are. So, that’s awesome. That’s a privilege.
Ptak: As you think through your many client engagements over the years, are you able to generalize about the areas where you feel like you’ve been able to add the most value? Is it with investments, or taxes, or maybe something else?
Calixte: That’s a good question. Because the financial plan covers a lot of that. Investments—I think that if you pick solid investments, the client should see value from there. If you talk about different withdrawal strategies in retirement, they should see some value there. When you talk about coordinating with outside professionals, CPAs and estate attorneys or insurance brokers or whoever, they should see value there. I think that, again, what I try to do is develop a comprehensive plan and all the things that it covers and make sure that it’s aligned with the goals that are important to them.
One client in particular I remember when we were working on her plan—she’s a business owner, she’s about 10 years away from retirement. One of the things that was really important to her was taking a safari in Africa. And one other thing that was a big lofty goal for her that she said she wanted to do it in two years. When we were able to plan for that initially and put a marker in the financial plan, like this is the safari trip, this is the goal, and what that would look like. And we discussed trade-offs and different things like that. So, after she was able to do that, she was just ecstatic. That was an immediate bucket list item for her that she was able to accomplish that was good. I don’t know how you put a value on that. That was just amazing to me and to her. And I think that there’s several examples of that where clients approach you with the pain point and to the extent that you’re able to solve it, I think you’ve done all you can do you. You’ve done your job and then some.
Benz: I’m curious, are there any areas of conventional wisdom in financial planning that you disagree with or that you find just doesn’t work with real human beings?
Calixte: Some of my clients who are business owners, for example—and depending on where you are, particularly when you’re just starting out your business, there are a lot of things that I think that your net worth, your finances, your debt load just seems so out of whack. Everything is just upside down in this moment of time. I have a lot of folks who, one of the questions that they often ask, and it’s always interesting because they’re always trying to get to this question: How am I doing? Am I where I’m supposed to be at this point in life? And that’s such a big question, and there’s so many different variables. When I have somebody who is younger and they’re making a great income, but then they’re realizing that “Wow, I’m making this great income, but then I have mortgage, a childcare, I’m just starting a business, I have student loan. It just seems like I’m never going to get out, or I’m buried in this debt where I’m not saving as much as I think I should be.”
And then, that’s where I think the behavioral side comes in, where you talk and you peel back the layers and find out where are they getting a lot of this information from, what is the message that they’re getting? A lot of that, like you said, is from some conventional wisdom—you should save 10% or you should look at your savings rate. You should be maxing out your retirement plans. But unfortunately, as we know, life is not often that neat. I have folks on the opposite end who go through a divorce and that can really impact your financial health. We have some of the older clients who have a medical event happen. That impacts your financial life. So, I think that there’s a lot of conventional wisdom—they’re good starting points to discuss. But the reason why you’re working with a human, and I guess that’s the ultimate job security that an algorithm can’t just plug in a formula and say, hey, this is the right course for you, is because life doesn’t happen that neatly. You should work with a person who can empathize and really tailor specifics and apply for your situation.
Benz: Feraud, you mentioned this inclination of people to benchmark themselves, that they want to try to figure out how they are doing. And I think for many people it is like looking around your community, seeing what cars your neighbors are driving, seeing what kind of houses your college friends are buying, or whatever it is. How do you counsel your clients to just get away from that and focus on your own situation and not get caught up in this treadmill of materialism I think that tends to suck a lot of us in?
Calixte: That’s the uphill battle. That’s the keeping up with the Joneses. That’s the FOMO—with social media doesn’t make it any easier with that. But again, I think that, at some point, when someone makes the decision to actually work with someone— because that’s a big step. I always think that people take that for granted. I sure don’t. I’m literally humbled every time somebody says, “Look, this is this ball of “mess” that I have.” And I use “mess” with air quotes because oftentimes these are wealthy folks, but for some reason they don’t realize, or they need some clarity, or there’s something there that they’re not sure about. And you’re able to council them, and give them advice, and reassure some of them. So, practically speaking, it’s silence the noise. Turn off the television. What are the things that before—at least with us, our process—before any money is invested, before any money is moved around or anything, we spend a lot of time just talking about you, what are your goals, what’s important to you? And then, we even go back to that classic—what does money mean to you? It’s a tool. All money is, is a tool to accomplish the things that are important to you.
And then, I’m able to better answer that question, am I where I’m supposed to be? Well, sure. If we look at everything that you said you wanted to do, we’re pretty confident that we’ll be able to accomplish the things in the short-term that you want to do. The intermediate-term and the long-term, we constantly will monitor that. But for right now, we feel pretty good about where you’re currently at and where you’re going. So, to that extent, yeah, you’re exactly where you’re supposed to be, because you could accomplish the things that are important. The number looks different for everybody. The net worth looks different for everybody. It’s a hedonistic treadmill that you stay on if you just constantly feel that you’ll never be able to do the things that you want to do. At some level, you’re talking to folks and saying, “Do I have enough?” So, all of this is just fascinating to me. And this is why I think that the relationships, the value that we provide as practitioners, it’s just awesome. It’s just really a privilege to be able to work with somebody in those vulnerable moments and reassure them and comfort them with something that causes a lot of people anxiety, which is money.
Ptak: As you reflect on your practice, what else do you think is an underdiscussed aspect of financial planning that you routinely deal with when interacting with your clients?
Calixte: The thing that’s great about what we do, we get to work with people and the most challenging part is that we work with people. I think that one of the most challenging things is when you have to have those difficult conversations. And I don’t think I’ve heard other planners say that—but I’ve had conversations to say that “Well, you know what, you won’t be able to accomplish this. Based on everything we’re talking about where you are, this will be really tough or there’s some trade-offs that we’re going to have to discuss and make.” And those are always difficult conversations to have, or you might have to tell someone that, “Maybe you might want to consider working longer than you wanted.” And that’s tough for somebody who is miserable at their job. Or it might be, “Can we help you look for another position, but you really need a few more years of earnings to really push you over the edge.” Or maybe if you’re talking about educating your kids, “Maybe they won’t be able to go to that private school, as it stands right now unless we do some changes that you wanted. There’s a lot of fine state school options there.” So, I think that there’s a lot of those discussions that you have that are somewhat uncomfortable to have. But I certainly see it as my responsibility as your advocate, as somebody working in your best interest to have those conversations with you.
Benz: Well, Feraud, this has been such a fun and illuminating conversation. We very much appreciate you taking time out of your schedule to chat with us today.
Calixte: Well, thank you. This was awesome. I definitely appreciate it.
Ptak: Thank you so much.
Benz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.
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Benz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.
Finally, we’d love to get your feedback. If you have a comment or a guest idea, please email us at TheLongView@Morningstar.com. Until next time, thanks for joining us.
(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis, or opinions, or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)