Latest / The Chiro Money Show / 047 | Can Chiropractors DIY Their Financial Plan?
Transcript
- Chris Scheele: Welcome back to the Chiro Money Show, where we're helping chiropractors make better financial decisions so they can build stability in their finances and a lifestyle that they love. We're your hosts Chris Scheel and Scott Campbell, financial planners with Align Wealth. Scott Campbell: Chris, I just can't stop giving you a hard time about the lack of a blue wall, Chris Scheele: Yeah. Yeah, it's still not blue. Gotta Scott Campbell: Yeah. Chris Scheele: we'll get we'll get to it one day, but it's summertime here, Scott. We're gonna gotta take advantage of the summer days. Scott Campbell: You're just telling me before we hit record that apparently summer is eight months of the year there in Vernon, BC. Chris Scheele: It it could be. I don't know. It it's it feels like that right now. Scott Campbell: But correct me if I'm wrong. You you I know you moved out there for for the night for you know, part of the reason is the nice summers, but isn't it more so the winter months that you're looking forward to? Yeah, being close to the mountains. Chris Scheele: Yeah, definitely. We are twenty minutes from downhill skiing or cross country skiing at like pretty great mountains, like world class for the Nordic skiing for sure. So Scott Campbell: Pretty cool. Chris Scheele: yeah, we will be looking forward for to the to the snow coming and getting up there. But in the meantime, there's lots of summer activities to do around here. Scott Campbell: Alright, for now since we won't we won't keep bugging you about it on on the podcast. Our listeners have heard enough about the blue wall. we'll just let them know and we'll we'll just wait. We'll wait and see when it happens. Yeah. Okay. One day there'll be an update. Chris Scheele: Yeah. It'll there'll be an update. One day. One day it'll be blue. It'll be blue. Yeah. Scott Campbell: Alright, what's what's on the horizon for us, Chris? Any updates? Chris Scheele: Yeah, we're I mean, kinda coming into conference season. September September and October are pretty busy for us. quite a bit of time on the road and the few the first one that that I'm really excited for is future proof. Getting getting back to that conference after missing it last year. And Scott Campbell: Tell tell us about future proof. What I know that's not a chiropractic conference. What tell tell our audience what no, what's future proof? Chris Scheele: No, our listeners won't know about future proof. FutureProof is a conference for financial planners, advisors in the US and Canada mostly, I would say. And yeah, just a collective you know gathering of of some of the greats in the industry and and some good learning opportunities and also a lot of networking, a lot of yeah, peer-to-peer opportunities to connect and learn and and grow. And best of all it's held at Huntingdon Beach. California and the whole the whole conference is outside. So Scott Campbell: Yeah. That's the that's the best part. Like when I when I typically think of a financial conference, I think of typically like a ballroom or something like that at a hotel with like those circular tables and just very dry and boring. But future proof is like anything but that. Yeah. Chris Scheele: No. Yeah, not not this one. We got there's even a there's even a concert. Right? Tell who's Scott Campbell: Yeah. Chris Scheele: who's performing. Scott Campbell: Yeah, there's a concert on the final night. Wiz Khalifa is the headliner. So Chris Scheele: Yeah, it's Scott Campbell: yeah. I think our audience might be a little bit jealous. Is there any chiropractic conferences up there? You let us know if anyone has a chiropractic Chris Scheele: Yeah. Scott Campbell: conference where they have someone like Wiz Khalifa headlining a concert at the end of the conference for them. And if that's not happening Chris Scheele: Yeah. I don't think it exists. Scott Campbell: right now, maybe we need to be the be the orchestrators of this in the future, some sort of like Cairo success financial conference of some kind and get, you know get something going. A summit. Okay. Okay. Chris Scheele: Yeah, a summit. I I see a summit in the future, Scott. Scott Campbell: With a c with with a with a concert at the end. Okay. Chris Scheele: The concert at the end and also summiting some mountains for those that are interested in between. Yeah. Yeah. Scott Campbell: Sounds good. I like it. And in addition to Future Proof, we got four conferences out on the road seeing seeing the good people across Canada, the chiropractors. We're going off to Calgary, which is right after Future Proof. So we're going from LA to Calgary for the Alberta commitment for care. Through that's put on by the Alberta Chiro Association. Then we're off back to Toronto for the AFC fall event. Chris Scheele: Plus of course Scott Campbell: Couple Chris Scheele: a little foray into HYROX see if we still got it. Scott Campbell: since we're there, we'll do a HYROX why not? And then couple weeks after that, we split off. I'm off to California for my Ironman but you're taking the lead at Lux Talks in Vancouver. And then one more following after that. I'll be heading back to Vancouver for the BCCA event, their general annual conference. So we got a lot on the go. Chris Scheele: Lots of fun to be had. Scott Campbell: And on top of all that we've we'd be kicking off fall meetings with clients and getting right into the thick of it for planning for the year ahead, so it's gonna be a busy time. Yeah. Chris Scheele: Mm-hmm. Mm-hmm. Yep. Very busy. Alright. Scott Campbell: Let's jump in. Chris Scheele: Let's jump in. Got a fun topic today. I Scott Campbell: Mm. Chris Scheele: I like this one. So today we are talking about DIY. Do it yourself. And Scott Campbell: Mm-hmm. Chris Scheele: Pretty compelling evidence that you can find on YouTube on online, even you know, if you ask AI, I'm sure there'd be a lot of compelling evidence to say that you can do your own investments. Right? Would you agree? Yeah. Yeah. Scott Campbell: yeah. You can absolutely do your own investments, for sure. Chris Scheele: It's pretty simple, right? Index fund, balanced diversified portfolio. You're you're saving the typical fees that that the industry is unfortunately known for charging Scott Campbell: Mm-hmm. Chris Scheele: and yeah, there's there's not much else you need really. Investing's a problem that that's been solved and you know that's something we've said many times and a balanced index fund approach takes care of of most of it. Scott Campbell: Yeah. I think at the a at the end of the day, like one of the big reasons why DIY investing And we're gonna talk about maybe the difference here between DIY investing and DIY financial planning, if there is a difference between those two things. But DIY investing in particular has probably in large part been driven by the financial services industry in a lot of ways over the decades previous, kind of just letting us letting a lot of Canadians down in terms of what the end result is with their experience as an investor. we have to keep in mind that still in Canada, the big five banks, some the large kind of providers out there, they have they had the lion's share of of The investable assets assets of Canadians, right? There was a report by Morningstar back in 2011 where Canada got an F minus in terms of the total fees and expenses that most of the funds in Canada were being charged. we talked about this on previous episodes where a lot of these mutual funds that are charging these higher fees, they're typically an actively managed fund, you're underperforming the benchmarks. So I think a lot of Canadians woke up and realized this to say, hey, like if if I'm gonna. to pay these high fees and you're not gonna outperform the benchmark, why like why not just do this myself? You know, I've been told that low-cost index funds is the way to go. I'll just I'll just handle it, right? And there's a lot of truth behind that. There's a good reason to make that shift. But when it comes to transitioning to then DIY financial planning and then kind of separating those two things. I think that's an area that we want to kind of talk about today in terms of there's more to DIY investing, or if you want to call it DIY financial planning, than just your investments. Chris Scheele: Yeah. Th these are two distinct distinctly separate things and DIY investing or investing in general is just one component of your financial plan. Right? And Scott Campbell: That's right. Chris Scheele: if you we yeah, we'll get into it but You know, DIY financial planning could be accomplished depending on your situation and your financial aptitude, your interest in finance, your interest to learn and and your experience level with what you've done in your life. But for a lot of our clients are or you know, chiropractors that are listening, right, you've got a professional corporation, you've got a lot of complexities compared to the average Canadian that has a T4 income. And so that is a clear distinction that we need to make that like when when you s see things on Reddit or YouTube talking about, you know, you can do your own investments and you can do your own financial you don't you don't need an advisor in twenty twenty six. I think there we have to take that with a grain of salt and and interpret that in a in our own lens. And as chiropractors, I think it's just across the board need to understand that you are you have more complexity than the average person. So you can't just rely on the average advice of you should do it yourself. You don't need a a team. And you know going back to previous episodes we've talked about this. We believe that every chiropractor, especially practice owners, should have a financial team on their side, Scott Campbell: Mm-hmm. Chris Scheele: right? Their CPA, their bookkeeper, their financial planner, right? Those are the people that are gonna s support your success over the long term and you have enough complexity in your financial life to to warrant that and to get great results from having a team like that. Scott Campbell: I think the thing that we need to keep in mind here is that the the thing that we don't disagree with is that from an investment perspective only, you know, a globally diversified low cost index fund or mutual fund that's low in cost is a very sensible way to invest, but that does not negate the need for good financial advice and a plan and then executing that plan and implementing it, correct? Chris Scheele: Yeah. Hundred percent. Absolutely. And you know, there's guys there's a lot of people out there that that talk about DIY investing and you know, one in that I want to point out specifically is Dan Borlotti, He is the Canadian couch potato, you know, guy. He started this whole thing. Like he's one Scott Campbell: Yeah. Yeah, yeah. Chris Scheele: of the probably the founders, like you could say, of DIY investing. He now works Scott Campbell: Yep, he wrote the playbook. Chris Scheele: He wrote the playbook. He wrote the whole thing back when you had back Scott Campbell: Yeah. Here's what you're gonna do. Chris Scheele: when you the index funds weren't a thing and you had to pick individual ETFs to build a balanced diversified portfolio. Right? Now there's all these all-in-one ETFs where you can get your you know 80% equity, 20% fixed income, and one ticker, buy that, you're done. Right. Anyway, Dan Borlotti. You know, he has clearly said like the hard part is is not investing. It's providing a plan and then implementing it. And successful business owners typically have more money than they have time. And when when we look at resources, resources like our time and energy and and finances, we have to to understand how we utilize those and as a business owner, as a chiropractic practice practice owner, Our time is limited. We need in a lot of cases to outsource many activities so that we can spend our time doing the high value activities. Scott Campbell: Yeah. Think it'd be a good idea, Chris, to like step back and like when we're thinking about DIY investing and DY DIY financial planning, let's take a step back. Like you tell us, like when it comes to financial planning, can we boil this down? Like what at the end of the day is financial planning? I know we've harped on kind of some concepts of what what a financial plan is, but let's break this down. Chris Scheele: Yeah. Yeah, I think the the best answer to this is what FP Canada describes as the six areas of financial planning. Okay, so this is financial management. This would include things like cash flow, investment planning, insurance and risk, retirement planning, and then tax and estate. Each of these categories is is you know part of your financial plan. And so again, to go back to DIY investing, not against it, but that's one-sixth of the financial plan. Right? Scott Campbell: So there's also there's also an opportunity out there, I think, and it's a growing opportunity for some DIY investors to potentially be in a position where they want to continue DIY investing, but then they've come to a point where they realize that they do need some further advice. Right? They need a financial plan, they need some guidance. What would then be the next step for them in terms of like I guess where I want to go with this, Chris, is we can start moving towards our options for getting that financial advice, but then there's also still some pros and cons that may come with continuing with DIY investing. Do you wanna talk about that, like what some of those pros and cons might be from your perspective? Chris Scheele: Yeah, I mean The thing to keep in mind when I think of this this whole topic, this whole area is that real financial planning in our eyes, yes, it's all these six categories, but it's also, you know, it's also a bigger thing. It's it's just having these ongoing conversations and course correcting along the way. So life happens, life unfolds in unexpected ways, and we can't be prepared for every way that life is gonna turn out. And when the unexpected happens, we have to make adjustments, There's no difference here than going in for our chiropractic adjustments, How our body responds and you know and and how it reacts to the things we put it under, the stress, the load, the training, you know, the family stuff, and then adjusting that so it's aligned. Your financial plan is no different, right? It's a series of ongoing conversations where we Scott Campbell: Mm-hmm. Chris Scheele: can course correct, we can optimize depending on how life happens. So want to point that out first. For a DIY investor, you typically don't have anyone on your team to help you with that piece. And if you recognize the need for a more comprehensive financial plan, there is the option to look at hiring what we would call an advice-only planner. Someone that's going to look at your whole financial picture and give you some plan give you a plan, give you some projections, give you some recommendations on everything, including your investments, but all the other areas of your financial life as well. the the great thing here is that these advice-only planners are not going to, you know, they're not incentivized to take over your investment portfolio. They're not gonna try to, you know, you know, bait and switch you and be like, yeah, here's your financial plan, now move your investments over. So you are getting pretty unbiased advice, right? There's still a lot of biases in every financial plan, and no matter how People are compensated, but you're removing a pretty big one when you remove this conflict of like comp around the compensation model. The challenge here is a lot of advice-only planners do one-time plans and they don't have regular follow-up. Some do, but but I'd say most don't still, from my experience and knowledge of the f the air the industry. So You're getting a one-time plan at this current point in time. Here's the advice we have, here's the recommendations we have based on this one snapshot in time. A year from now, that advice may not be relevant because of how your life has changed. If that's the case, you could then pay for another one-time financial plan, get another snapshot in time advice, and continue that cycle. Right? So That's kind of the the pros and cons there are unbiased, pay a direct fee, f full transparency on like the fee you pay for the service you get in in all those cases with advice only planners. downside is you're you're maybe not getting the follow-up and the implementation help that you might need. Scott Campbell: I I read this, I read this kind of quote from I think it was another advisor's website, and I had to copy it down because I think it's a great way to essentially kind of encapsulate what financial planning is over the long run. And that's this basically. It said financial outcomes are determined not by isolated decisions, but by the quality sequencing and coordination of those decisions over time. So from my perspective, what I what when I think it when I read that, I think it it it's more than a one-time event. It's more than just a series of of of recommendations of here's the plan, go and implement it. It's collaboration with someone who understands you, your business, your life, your goals, aspirations, what you fear, what you want out of life, all that, right? It's a series of ongoing conversations. the sequencing of those of of the decisions that we're making, the quality of the decisions that we're making on a regular basis. And when I think then isolating DIY investing from that, the thing that I think you that you kind of lose, and I th there's been a lot of studies on this and I don't have any key I don't have any key stats up in front of me, but there's a lot of of of kind of findings there that when it comes to the value of an advisor, a lot of that value that a br advisor can bring of you know, aside from like the tactical things that we do in terms of like the spreadsheets and the analysis and the running of projections is the behavioral side of kind of more or less having someone between you and making a very big behavioral mistake. And when you are DIY investing, you have to take on that behavioral side, you know, you to put that in your own shoulders. I think there's just something that to be said about having someone between you and that I call it like the sell the sell button essentially when markets get scary. That's like I'm I'm the one in control of this portfolio. At the end of the day, when we're managing our clients' investment accounts for them, at the end of the day it's their choice. They have full discretion on you know what what portfolio they want want to be in, when they want to put more in or or sell and get out or whatever the case might be. But they have to have someone they have someone that's c that's kind of guiding them, right? And just one one poor decision at the wrong time could potentially negate the idea of saving, say, a bunch of fees on your investment management or financial planning, you know, even broader by going that DIY route. Chris Scheele: it's like incomprehensible sometimes the the effect of one one decision can make. Scott Campbell: And I think like if we if I really were to like if you think about what I see online in terms of DIY investing, a lot of it really kind of pushes towards this idea of paying fees to a financial advisor or planner is bad because you're not going to derive any value from that. And they take that kind of percentage that you're going to be paying an advisor and they compound that out over 20 or 30 years and say, hey, look at all these, look at all this essentially fees that you would avoid paying and that's going to stay in your pocket. And some of that might be true, but that's assuming, you know, they usually project that out of saying, you know, an average growth rate of eight percent or whatever over 30 years. I guess this is perfect smooth ride up. That's not life though, Along that way, there's going to be major things that happen in life, in business, with family. Markets are good, markets are bad. And that's where that's where a good advisor that's doing real financial planning could make a world of difference in terms of tactical tax decisions, income decisions from your corporation that we're gonna get in here. Like there's a whole bunch of different areas aside from just managing a portfolio that a real financial plan can deliver that adds way more value than just the fee that you might be saving on going completely DIY. Chris Scheele: Yeah. Yeah. If I were to sum it up just as like concisely as I could, DIY investing is possible. The value you get from an advisor is not on the portfolio. All of our clients are in a low-cost, balanced, diversified portfolio, similar to what all DIY advocates are suggesting. There's no value in that. The value is in keeping our clients invested in that when it drops 40%. Okay, that's the value on the investment side. The value in those other five categories of real financial planning, that is very hard to put a price tag on. But when we can look at, you know, say a compensation Analysis and say, like, hey, you know, you've been paying yourself dividends for the last 10 years, you haven't been contributing to CPP, you haven't been growing any RSP contribution room, all your eggs are in the corporate basket. If we can diversify, switch you to a salary, top you up with dividend bonuses, here's the entitlement you're gonna have to CPP, here's the RSP room you're gonna have. look, this this decision, one decision compounded over 20 years, has a $350,000 impact on your net worth. Scott Campbell: Mm-hmm. Chris Scheele: Okay, so is it worth it to pay for advice? If we can improve your outcome by, you know, X number of dollars? For sure. No. Scott Campbell: For sure. And then it doesn't stop there, right? Like that's just a that that might be a point in time of like this is what we're recommending because this is the potential outcome that we see over the long term by making that decision. But then it's something that we need to cons consistently reevaluate, you know, with with whatever's changing in your life or new tax laws or whatever the reason is. Like we're constantly ebbing ebbing and flowing in terms of making sound financial decisions as we move throughout the years. Chris Scheele: So we're definitely not arguing against DIY investing, because that is like that concept, that idea, low cost, balanced diversified investing is our exact philosophy on investing. I'd say what we are arguing against is that you can't and you shouldn't try to DIY your financial planning. Scott Campbell: Yep. Especially if you are in a lot of the case cases for our listeners, if you are an incorporated chiropractor, like we're gonna To finish off this conversation, we're going to talk about where DIY works and like where it can work well for a certain profile type. But for most of you listening, you're likely in a situation where you're an incorporated chiropractor, you're running a business, you probably are managing cash flow employees, you have payroll decisions to make for yourself and for your staff. Do you pay yourself salary or a dividend? You're trying to plan taxes with your CPA, not to mention that you're wearing on a market. Marketing hat in your business, you're wearing the business hat in your business, you're trying to be a great practitioner, you're trying to be a great partner to your spouse at home, maybe a great parent. There's a lot of hats that these chiropractors need to wear. It's a lot to take on. Would you agree? Like there's a lot of decisions that you need to make on a regular basis that go beyond just what we're what we may feel like is appropriate for some very simple households to take the DIY approach. That's not the case for a lot of our our our listeners. Would you agree? Yep. Chris Scheele: percent. But what about AI, Scott? Scott Campbell: Yeah, we we had to we had to weave in AI into this conversation. Chris Scheele: Can can it close the gap for for like DIY financial planning? Scott Campbell: You know, I think I think it's going to I don't think the statements that we'll make be making here today will will be the same that we might make in a year from now because AI is just advancing so fast, who knows where it's going to go. I won't mention any names, but a a certain a certain tool came up recently in my in my algorithms that had this idea of implementing AI and and developing a financial plan. You just kind of had to put in your basically your balance sheet of your assets and liabilities and some of some basic goals and and I I wanted to Test it out. signed up for it just to kind of experience what this kind of AI approach to financial planning looked like. And I would say the the results that I got from that experience were a little bit like they were just lackluster. it came down to like the to the implementation piece, and I'm like, I don't know if this process really evaluated who I am as a person, like what my goals and objectives were. Like it gave me some projections of where we could go, but there was a lot to be desired in terms of what I got from that output. But even from that, like my take right now when it comes to to can like say AI, whether it be one of these large language models, so your Claude, your Chat GPT, whatever Gemini, you name it At the end of the day, these platforms are only they're only as good as the user's as the user. Like what what you put into it is is going to be and what you get out of it is gonna be different depending on the user of it, right? Chris Scheele: Yeah. Scott Campbell: In addition to that, where I often see right now, anyways, for where where it kind of breaks down from an AI standpoint is that oftentimes we get a lot of confirmation bias back from the AI AI model that we're using. It tends to agree with you quite quickly in terms of what you're looking to get out of it. So your output can be just very manipulated by the inputs that you have at that point in time. and as often if you again, if you're not if you're not a professional. If g if if if financial planning and giving advice and understanding taxes and dividends and salary and CPP and all all the different areas that we talk about on a daily basis with our clients, you're also not gonna be able to point out the errors that AI may be making when it's developing you said financial plan. Chris Scheele: Yeah. Scott Campbell: But the last point that I'll make on AI, and I'll let you chime in with your thoughts, Chris, is that even if AI developed this perfect financial plan, whatever that looks like, in terms of truly understanding you, it asked you all the right questions, and it gave you this output of all the recommendations and things you should consider doing from a financial planning perspective, The implementation portion of that. is where I think AI will fall the fall quickly in terms of like, all right, here's the financial plan. Now are you actually gonna go take those recommendations and go do it? Because I know you probably agree with this, Chris, when we develop a financial plan and we have all the recommendations and we have the things that we want to implement, even for us, being the guide and the one holding a client's hand through that process and getting things done, that there's still friction in that process. Like there's a lot of time you know, y y we we both know the experience of taking a client through the implement implementation process. There's a lot of work there, a lot of hand holding and a lot of work to get that actually done. Chris Scheele: Yep, for sure. Yeah, I think it's you know, AI's come a long way, Like I think there is a case for it. You know, it kinda what what you can get now was not available just a couple of years ago for the average person, So sure it's a it's a tool and it's a and it's an improving tool, but there's always gonna be some shortfalls. I believe and especially because the other part is like there's no empathy, there's no emotional understanding and you know we always say that financial planning is not just math, right? Like the math part is actually the easy part, Crunching numbers, spreadsheets, like looking at projections, that's the easy part. But understanding our clients, who they are as people and you know, what is important to them, what they value, and then making recommendations that marry those things with the math, like that's the hard part. Right? So AI, are they Scott Campbell: Yep. Yeah. Chris Scheele: is it gonna be able to do that? I don't know. Maybe one day, but right now, no. Scott Campbell: Yeah. Last note on AI though, because we have to we have to recognize the fact that AI is also going to allow us to do a lot of good things, a lot of things that will enhance, at least from our perspective, working with clients, is doing so much for us to enhance our planning experience, giving us better giving us the resources and tools to give better advice, better recommendations, Chris Scheele: For sure. Scott Campbell: So there's a lot of the good that comes with AI right now, but just there's a difference between whether what regardless of the profession that you're in, in terms of utilizing AI and to enhance how you're delivering a product or service to a client. There's no difference there in in the world of financial planning right now. But purely from the fact of DIYing and doing it that way on your own, very different. Yep. So Chris, like to wrap to wrap things up, Chris, why don't why don't you quick quickly tell us here, because I think at the end of the day, we're not against DIY investing or even to some degree, maybe some simple DIY financial planning. Where d where do you see it fitting? Like what what type of individual or household would you say, all right, I think you'd actually be you'd be okay, at least for now, going this path? Chris Scheele: sure. I think, you know, if you're a very simple situation, like, you know, one source of income, all T four income, no corporation, no complexity with dependence or disabilities, things like that, a long time horizon, you know, and having that situation, pretty straightforward, yeah. Scott Campbell: The only thing that I'd add to that, Chris, is also just having a high level of financial literacy. you have to really love personal finance, you know You're the one who's who's picking up personal finance books and doing your research, doing your reading. You have a good, you know, you understand the behavioral side of investing really well, that you could you feel like you have some level of confidence that you could ride the ups and downs if you're gonna manage your own portfolio and and do the research to to make sound financial decisions. And then recognizing when you might get to that point in life, and maybe that never will come, but you get to a point where it's like, all right, I I have incorporated, I I do have these other complexities. that are growing. I now have a spouse and children and a in a business. there is a point in time where it's like I maybe need to transition from DIY over to some sort of advice model where you're having having someone help you support you through the through those through those decisions. Chris Scheele: For sure. So to wrap it up here, DIY investing is possible. It is, you know, it's a it's a r it's an option, right? DIY financial planning? Probably not. Okay. The real value here is in that ongoing relationship where we can continue to make corrections, make adjustments over time to our financial plan, right? Having that relationship where you know you have that trusted person that you can rely on that knows you, knows your life, knows what's important to you, and you can have those honest conversations and you know make great financial decisions. over time the compounding effect of that is is huge. So yeah, hopefully our listeners enjoyed the conversation, got something out of it, and we'll leave it there for today. Scott Campbell: Sounds good, Chris. Thanks for the time and we'll see you all next week for another episode.