Latest / The Chiro Money Show / 038 | The Compound Effect of Real Financial Planning
Transcript
- Chrus: Nice. 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 Scheele and Scott Campbell, financial planners with Align Wealth. Scott: How are we doing today, Chris? Yeah. Chrus: Doing good, man. Doing good. Hard to complain. Sun is out. We got together for a nice big run this morning. Scott: The sun is out. Got out for a nice run this morning. It was hot. Chris and I are ⁓ participating in a sweat test this evening to find out how much we sweat and salt during our activities. So we had to go for a run this morning to make sure that our our sweat glands were working properly for this upcoming sweat test, right? Functioning on we're functioning. Chrus: Still working, yep. Yeah. Yep. Yep. That's right. Mm-hmm. Scott: We were glistening. Yeah, it felt felt good to be out in the sun, for sure. What else is new, Chris? Where are we at? Chrus: Yeah. Otherwise, looking forward to summer. We just wrapped up five weeks ⁓ spring meetings with all our clients. So that was ⁓ that was fun, busy time, but ⁓ yeah, looking forward to to summer now. Scott: Yep. It's always a bit of a marathon to get through a lot of meetings in a short window, but we like it that way. We do it intentionally, but it's it's a lot. It's a lot for a short period. But then it's like, all right, clients are gonna enjoy their summer, we're gonna enjoy our summer. Lots of ⁓ camping activities planned. Should be good. Yep. Chrus: Yeah. Yeah. Yeah, we chose we chose the structure. Surge meetings. Yep. So sometimes we gotta remind ourselves, right? Yeah. All right, what are we talking about today, Scott? Scott: That's right. That's right. Yeah. Today I give kudos and and all the credit for the topic today from good friend of the show, client of ours, Doctor Claire out ⁓ out in Spruce Grove, Rise Chiropractic. She had such a great post on her Instagram yesterday. She just was preaching and I'm like, You preach, you preach. ⁓ basically her message was she s she just got started with a personal trainer. So I think she's seen this personal trainer maybe three or four times and she's really loving that she is committed to a personal trainer. She's found someone that's gonna benefit her and show up and she's committing to herself and her health and getting stronger and seeing what she's capable of, which is all awesome. But she was just relating it back to how it ties so closely to chiropractic care. Like if You only go to see the chiropractor three or four times and say, hey, this is not for me, like this isn't doing what I thought it would do in a short period of time. You're not giving it a fair chance to see what the the ongoing benefit, the compounding impact of chiropractic care can do for you long term. Just like how the compounding impact and benefits of seeing a personal trainer on a regular basis long term can have such a profound effect on your life and your health, right? Chrus: It's it's something that, you know, can touch all parts of our life. Like can be ph physical fitness, it could be other other things well as well, right? But yeah, I I totally hear it and feel it personally. Like back when we first met, like a f four years ago, I was hardly a runner, Scott, and you took me on on a run and I was like, holy And four years later I finally feel like a runner and it's all just based on consistency, showing up, getting them getting time on the feet. Scott: And some and now I'm having a hard time keeping up to you. ⁓ Look that. Yeah. Trained you too well. The com the ⁓ compound the compounding effect of your running is is working too well for you. Yeah. Chrus: That's right, that's how should be. ⁓ Yeah, that's right. Yep. So what does this all mean for financial planning? Scott: Well, I think when it comes down to like when it comes down to Dr. Claire's point, like if you find the right expert and the right guide that can communicate, first of all, like w what Everyone has a preconceived idea, like if we go back to chiropractic care for a moment, like some people have a preconceived idea idea of what chiropractic is and what that looks like, what treatment should look like, how fast it should work for someone. Like people have preconceived ideas of what chiropractic care is before you get into a room with someone like Dr. Claire who can explain what chiropractic care is and what this journey is going to look like if you fully commit to it, right? Just like how people would have a preconceived idea if they've never experienced working with a real financial planner, like we put that in quotes, real financial planners doing like ongoing, regular meetings, like diving into all the different areas of your financial life, everyone's gonna have a preconceived idea of what a financial advisor slash planner is, right? So if you first and foremost are open to the idea of understanding that there's different forms of of financial advice and planning, just like there's different forms of chiropractic care and different forms of personal trainers out there, if you can first get to that point of understanding that there's different different ways people do things. And then committing to a process, ⁓ what we want to kind of dive in and talk about today is what does the compounding effect of ongoing financial advice and planning, what can that do for you? What's the like there's one thing about one-time advice, right? But the compounding where we do this over ye like year over year over year, what ⁓ what are the benefits to the client long term? And we want to talk about some of those key points today. Chrus: Yeah. Just like you know, we know and believe in in chiropractic care. It's not a reactionary thing where it's like, ⁓ my back went out, I need to go to the chiropractor and get it fixed, and then I'm good until it goes out again. We're not here for you when you have a tax bill that was a surprise and then you don't have to talk to us again. Like that's not how we look at financial planning at all. Scott: Or one or a once a even a once a year call call it an adjustment. Like you you don't wanna see a financial advisor for a one hour appointment per year and and have the expectation that everything in your financial life is gonna come together and work out beautifully with a one one time of year conversation, right? Right. It's committing to a process. Chrus: Well, we're on track. Why not Scott? Maybe if everything's humming along. But but yeah, no, I I I agree with your point completely. And that's quite common in the financial industry, right? Like where, you know, traditional advisors that are are mostly focused on just investment management are gonna call their clients once a year, review the portfolio and carry on with life, right? Yeah. Scott: Yeah. Chrus: So we've I mean, if anyone's listened to the show, you've heard us preach and and share, you know, our beliefs and and opinion on real financial planning. You probably have a pretty good idea that you know we go into a lot of detail and depth with with our clients and all different areas of their business and personal finances. ⁓ It's not just investment management, it's not just insurance. Those are products that come into play if there's a planning need for them. Okay. So let's now that we've established we're talking real financial planning, brackets, real financial planning. What is the compounding effect of real planning, Scott? Scott: So I want to touch on a few different areas, because I think the compounding effect of good advice and planning over a couple of decades is gonna show up in a few different areas of your life. First area I think is the actual quantifiable kind of aspect of your financial life. How may how much further ahead will you be essentially financially in terms of net worth, how much you've saved and invested, how much you've accumulated. Chrus: Mm-hmm. Scott: There's that aspect of it. That's something that we can actually measure. And and we usually often look at that in the form of reviewing, say, your balance sheet or net worth statement, at least on an annual basis, kind of seeing the progress that you're making from that aspect, right? Should we d go into this stat here? Okay. Chrus: Yeah. Yeah. Yeah. I mean we can we can see it on our cli with our clients, right? We can see how their w net worth is growing, how their cash flow is evolving, you know, we can see all those moving parts. But broad more broadly speaking, there are actually some pretty good surveys that happen every year where ⁓ households are surveyed across Canada and We're basically looking at those that are working with an advisor and those that are not. Now, to go back to an earlier point, we when we're talking about we mean real financial planning. This survey, it's not quite that detailed. It doesn't differentiate between like traditional or maybe like bank advisor that is not really doing the level of planning that we are doing. ⁓ so I would say this is probably even not reflective of the true value of working with a real financial planner. Scott: Yeah. But it star it starts to paint the picture of what what potentially the compound effects are of having someone in your corner helping you make at least some better and more like smarter financial decisions as you move through your career, right? Chrus: Yep, for sure. All right, so who what is this study, Scott? Scott: So the first Yeah, so we're ⁓ gonna incorporate some visuals here. So if you're on YouTube, have a bit of a slide deck that will that will touch on a few of these key stats that I think were were interesting and worthwhile to bring up in the conversation. This first one w was ⁓ put together by a group called Serrano, which is a which is a independent Canadian research institute out of Quebec. This is peer-reviewed, so this is not ⁓ like an industry based ⁓ We have to think we have think about conflicts of interest here in terms of who's producing this study. But this this study from Serrano said that essentially looking at assets that you've grown over time from a from a perspective of whether or not you're working with an advisor or not. And essentially what this study is showing that over a four to six year period of time, someone who's working with an advisor is accumulating about 1.6 times more assets. Over that short window of four to six years. And then you move out further, seven to fourteen years, almost two times more assets that they've grown over that period of time than working with a than a household that's not under any sort of advice or planning work. And then if you stretch out to 15 plus years. This is this is pretty this is a pretty interesting stat. ⁓ two point seven three times more assets that have been accumulated over that period of time than a household that doesn't have any advice associated with it. What are your thoughts on that, Chris? Is that surprising to you? Chrus: Yeah, it it is and it isn't. Yeah. Again, i it's hard to get Just gonna pause a second. Honestly, no, it's not not really surprising to me. ⁓ yeah. Those that are getting advice, have accountability, have a person in their corner that knows their life and is supporting them on an ongoing journey. Absolutely. I a hundred percent believe that's gonna add value. Scott: in in this same study by Serrano over it doesn't s doesn't specifically say the time period, but on average households that are working with an advisor on average are saving about ten point seven five percent of their household earnings comparative to households that are not working in advisor where their average is closer to six point seven percent. So that's obviously a c the compounding effect of that if you're working with an advisor and you're on average saving four to five percent more of your of your earnings into long-term investment accounts and whatnot, that's obviously gonna play a big role into why over ⁓ four to six or fifteen plus period of time or more that you've accumulated that much more wealth, right? Chrus: Yeah. Totally. And this last stat, pretty powerful too. Across advised households, they're versus a non advised household, they have on average about three times the net worth and four times the investable assets across all ages and income ranges. So just kind of average of all investors in the study. Scott: Powerful. Yep. Chrus: Yeah. Wild. And what Scott: Here's the next area that I think the compounding effect of ongoing planning I think is this is what I think is most important, in my opinion. Like I think it's great to build wealth and be on track to reach your goals and that's all that's all great. But to like going back to Dr. Claire's point, like if you commit to chiropractic care, like it you're not just going and showing up for for an adjustment because you have an acute pain at that. Usually like it I get obviously we want to solve the pain, but at some point it's like we want to help you support your nervous system and help you function your best and like live a great life, right? That's the goal. Like in in from our our perspective, right? As an as a non-chiropractic or a non-chiropractor I should say. But money Chrus: Yeah. Scott: And the stress of money can impact people, right? Like it's a big it has it plays a big impact in terms of our of our health and our stress, right? We've seen that we've seen that a lot, Chris, right? Over the years. Chrus: Yeah. ⁓ for sure. It's yeah, I mean I think we have to just I ⁓ dri ⁓ directly acknowledge that like our job as financial planners is not just ac helping our clients accumulate wealth and have more assets. Like if if this was just about money and you know, our jobs would be pretty easy. But it's it's about so much more than that. It's about all the things that that money is going to to do for you. Scott: For sure. Chrus: And there's so much emotion connected to our money. And that is why it can have such an impact on us as individuals, as human beings. Our money can impact us. And the number one way that it shows up is is usually in our in our health. And yeah, really it comes down to stress. Like the next point of, yeah. Scott: Yep, for sure. Chrus: S money is the number one stressor in Canadian households. Scott: Yep. Yep. We have a couple couple key stats here ⁓ that were produced by Financial Planning Canada, FP Canada, their their stat. This was a study done back in twenty twenty four, it's their stress index ⁓ study that they do every year. Forty four percent of Canadians in twenty twenty four indicated that money is their top stressor. No surprise there. That's right. Yep. Chrus: And that was the top rated that was the top rated stressor. Yeah. So money was money was more stressful than relationships, family, whatever, work. Money was more stressful than everything else. Scott: For sure. Chrus: And that resulted in about half of the people studied losing sleep over money. And we all know how important sleep is and how much sleep can impact the quality of our of our day, of our life. In so many different ways. Scott: Yeah. Mm-hmm. Yep. Yeah, and last one here, thirty-eight percent in the same study five by FP Canada report anxiety or depression tied directly to their financial stress. Right? We don't love to see these numbers, right? What the impact that I think we're looking to make and what we believe can be the outcome again of real financial planning is that this is eliminated, right? That You have a plan, you have the systems and structures, you have someone in your corner who understands you and helping you make good decisions. It's I I think it's hard to say. Like we wouldn't we'd be naive to say that we're eliminating complete financial stress from our from our clients' lives. But if we can drastically reduce that, man, like what an impact that can have on your health and your stress and having maybe a better relationship with money, a better relationship with your spouse. Chrus: Mm-hmm. Scott: in combination with money, that can go a long way over your lifetime. Right. Chrus: Yeah. Huge. Yeah, even like some incremental improvements across these these things can can have such meaningful impacts. And it's just like a personal trainer, just like starting to run. You're not gonna go out and run a marathon on your first day and all of a sudden be a marathon runner. Like you're gonna run a kilometer or two, or you're maybe gonna walk and you're gonna incrementally improve as time goes. Same thing. I would say that the the length of time that that clients work with an advisor, like these things are reduced every year that that relationship continues, assuming that relationship continues to be positive and and you know rewarding for for the client. Scott: Let's move on to our last kind of key area that we strongly feel that the compounding impact of ongoing advice and planning can make a big impact in someone's life. And that's just the peace of mind that comes with it. Right? If we're less stressed about money, we're feeling confident about the plan that we have in place. Where we wh what does that lead to, Chris? Chrus: Yeah, I think we're, you know, less likely to call money our top stressor, right? Like if we're feeling better about it, it's you know, we have some some peace of mind, reduced stress around it, it's likely that we've removed that from the top of the list of that what's causing stress in our life. So FP Canada again in their stress index ⁓ said that yeah, there's a thirty-four percent ⁓ Scott: Yep. Yep. Chrus: So a reduction from forty eight percent down to thirty-four percent ⁓ for those that are working with an advisor. Scott: Yep. Big drop for sure. Chrus: Yeah, huge drop. And then yeah, yeah, exactly. Same thing on that side, going from fifty three percent down to forty two percent. So less likely to lose sleep over money by eleven percent less likely when working with a a planner. Scott: Same thing on losing sleep. Right? This last stat that we'll throw out on the podcast today, I we've we've hit on a lot, but this one I think is the most powerful when it comes to kind of the peace of mind that it comes with with working with a great financial planner, having a plan. This study was done by KPMG, their professional services firm. Eighty percent feel more confident that they've run they can retire on time when they have a plan that's been prepared. Right? They have that confidence that they are on track, they have a plan, they have a strategy, right? Versus thirty-six percent of the people who are not working with a financial planner say that they have no confidence that they're on track to retire on time and reach their f long-term financial goals, right? Chrus: Mm-hmm. Scott: And that's just big picture, right? That's you know, we obviously work with a lot of clients in their thirties and forties and retirement is retirement or financial independence is a ways down, right? They still wanna know that they're on track at some point to make work optional. But what's not added in here is like also the confidence that they're gonna be able to to reach their short term goals and most importantly live the best life that they can today while setting themselves up. for eventual financial independence and making work ideally optional for them, right? Chrus: Sure. There's so many steps and and other things that we could add in between now and financial independence or retirement. You know, I think I wish we had like one day we'll have our own stats, Scott, right? Like one day we'll get there, but ⁓ don't have don't have those yet, but just like From our experience, the the stress that we've seen eliminated from solving the tax trap that so many chiropractors are in, where they're pulling dividends from their corp, not remitting taxes or their tax installments on the personal side aren't sufficient and they don't have a clear plan as to like how much tax they're gonna owe come come their year-end. and they haven't set us they don't know how much they've set aside to pay that. That is the by far, just anecdotally, the biggest stressor that I've noticed working with chiropractors. And when we when we've solved that problem for the clients that have decided to work with us, and we always solve it, it's not a problem we let we let linger. It's not it's it's a it there's a clear solution here. It does that does not have to be you if you're listening and you're in that in that situation right now. We can change that. The stress that's removed from their life is like tangible. Like you can see it. You can you can see it in the client when we remove that. And sometimes it takes a while. Like I'm thinking of a client where we had to go through a full full year of like personal and corporate tax filings for them to to actually believe that This was changed and and to have like the peace of mind. And now the peace of mind is growing and it's compounding. And then next year they're gonna go through their their tax filings again, and they're gonna be like, ⁓ okay, yeah, the plan still worked. Plan still worked. I don't have any surprises. That's just gonna grow. Yeah. Scott: Yep. I've been saving and investing way more than I was. We're still living a great life day to day and month to month. We're doing the vacations that we want to vacation and the kids are doing what they want to do and we have all the right insurance and risk stuff taken care of. We have the right estate plan in place, like all the peace of mind that comes with all those things. Yeah. It's yeah, it's so huge. But I agree with you, Chris. The the the tax side, man, there's a lot of ta there's a lot of stress rolled up into ⁓ taxes when you are an incorporated chiropractor, for sure. Yeah. Chrus: Yep. Undue stress. Scott: Well, those are kind of the three points that we wanted to touch on in terms of like, yeah, just some some porting some supporting statistics on what we kind of truly see and we agree with in terms of the long the long term compounding effect of good advice and or good not even just advice, having a relationship with a another human being, an expert who can be your guide, right? At the end of the day, it's a journey, right? Like I I love the analogy that ⁓ that ⁓ Carl Richards used uses the sketch guy in terms of, you know, if we're if we're making a flight from Vancouver way out to the east coast to Nova Scotia, for example, a great pilot is going to have a flight plan, even though they've made the maybe made that flight hundreds and hundreds of time across across Canada, right? But they're always making minor adjustments because every single time they go across Canada, there's different turbulence, things come up, they need to make course corrections, they need to make adjustments, right? That's what a good guide can do for someone. Like, let's take you on this journey, right? It's not going to look the same for everyone. We're going to make some course adjustments along the way, but we're going to continuously check in, see what conditions are. New information means new adjustments, right? And we'll continue down that process. Chrus: Sure, yep. Alright, I'm gonna hit hit our listeners with some with our four key takeaways here. So first, consistency compounds. Just like in investing, the wins show up over the long term, over years, not just in the first few visits. Same it's the same with chiropractic or going to the gym. It takes time. Consistency is what matters. Second, it's behavior. There's no special tricks. There's no magic in investing or or what we do as financial planners. There's no magic. The real value is just consistency and staying steady, staying invested through all the noise, through all the ups and downs, and having a guide that keeps you on track. Third, your money affects your health. Or can significantly affect your health. Financial stress is the number one stressor for Canadians and it costs you sleep. Getting it under control is getting your money, getting more confident with your money is is almost like taking control of your health. It's a health move. And lastly, a plan buys peace of mind. The payoff isn't only a bigger balance sheet, it isn't only like accumulating more money and having more resources, but it's also lower stress and more confidence about the future. Scott: I love all those points. Hopefully this has been been a helpful conversation. Thanks again to ⁓ Dr. Claire for for preaching to the choir. I know she was preaching. Here's the here's the translation from going to the gym on a regular basis and seeing a personal trainer and how that ⁓ how that translates to ongoing chiropractic care, which we're both under, right? Like we believe in that too. But it was too closely tied to like what's the compounding effect of like keeping Keep showing up. Keep coming to these meetings for ⁓ our our our our clients that are seeing us on a regular basis. What's the compounding effect of that? So been a fun conversation. Yep. Cool. All right, we'll leave it there. We'll see you all next week. Thanks again. Chrus: Good. Yep. Thanks, Scott.