Skip to Content

Carl Richards: It Should Be OK to Relax Out Loud

The financial advisor and 'Sketch Guy' discusses what constitutes 'real' financial advice, why traditional retirement is a faulty concept, and how to break the culture of 'I'm busy.'

Listen Now: Listen and subscribe to Morningstar's The Long View from your mobile device: Apple Podcasts | Spotify | Google Play | Stitcher

Our guest on the podcast this week is Carl Richards. Carl is a Certified Financial Planner and a Financial Advisor Communication Expert. His new venture is called The Society of Advice, which he describes as a global gathering of real financial advisors. Carl created the Sketch Guy column in The New York Times. And he is also author of two books: The One-Page Financial Plan: A Simple Way to Be Smart About Your Money and The Behavior Gap: Simple Ways to Stop Doing Dumb Things With Money. In addition, he hosts the Behavior Gap Radio podcast and also cohosts a podcast with financial planning guru Michael Kitces, called Kitces & Carl.


"Carl Richards: 'Let's Focus on Being a Little Less Wrong Tomorrow'," The Long View podcast,, May 13, 2020.

The Behavior Gap: Simple Ways to Stop Doing Dumb Things With Money by Carl Richards

The One-Page Financial Plan: A Simple Way to Be Smart About Your Money by Carl Richards

How I Invest My Money: Finance Experts Reveal How They Save, Spend, and Invest, edited by Joshua Brown and Brian Portnoy and illustrated by Carl Richards.

Real Financial Planning

"Learning to Deal With the Imposter Syndrome," by Carl Richards,, Oct. 26, 2015.

"Jason Zweig: Temperament Is Everything for Most Investors," The Long View Podcast,, June 29, 2021.

"Should You Buy Bitcoin? Ask a Different Question First," by Carl Richards,, Jan. 5, 2018.

"The Single Most Valuable Asset Is Trust," by Carl Richards,

"The Value of an Advisor," by Carl Richards,

Financial Planning Process

Start With Why: How Great Leaders Inspire Everyone to Take Action, by Simon Sinek.

"Carl Richards on How to Simplify Your Appointment Process and Build Trust by Asking Better Questions," Podcast with Brad Johnson, Aug. 19, 2019.

The Private Client Lawyer Now and in the Future, by Russ Alan Prince.

Money Decisions

"How Do You Define Enough?" by Carl Richards,

"How Much Is Enough?" by Carl Richards,

"Time Off Is a Prerequisite for Good Work (Not a Reward for It): An Interview With New York Times Columnist Carl Richards," by Jory MacKay,, June 7, 2018.

"Sure… #CrushIt. Then Get Some Rest," by Carl Richards,


Christine Benz: Hi, and welcome to The Long View. I'm Christine Benz, director of personal finance for Morningstar.

Jeff Ptak: And I'm Jeff Ptak, chief ratings officer for Morningstar Research Services.

Benz: Our guest on the podcast this week is Carl Richards. Carl is a Certified Financial Planner and a Financial Advisor Communication Expert. His new venture is called The Society of Advice, which he describes as a global gathering of real financial advisors.

Carl created the Sketch Guy column in The New York Times. And he is also author of two books: The One-Page Financial Plan: A Simple Way to Be Smart About Your Money; and The Behavior Gap: Simple Ways to Stop Doing Dumb Things With Money. In addition, he hosts the Behavior Gap Radio podcast and also cohosts the podcast with financial planning guru Michael Kitces, called Kitces & Carl.

Carl, welcome to The Long View.

Carl Richards: Christine and Jeff, it's super good to be back chatting with you again.

Benz: Well, we're really grateful that you're here today. We have a lot to discuss. We last talked to you a little more than a year ago--that was at the very height of the pandemic. What are your main takeaways, when you reflect on the past year for your work as well as for the rest of your life?

Richards: That's such a good question. The main takeaway I have really is that old saying that people make plans and God laughs, is true. And a more somber way of saying that is like uncertainty is reality. It's so fascinating to me to look back on my plans and see how few of them happened and how OK that is. So, then other things show up and doors close, and doors open. But what I've really learned is that I need to be OK with that, because it's reality.

So, that and the other lesson that was really hard for me to learn was--and we're still trying to get our heads around this--is just stay put. It seemed like there was a message of: maybe you don't need to be rushing around, running all over the world, doing all these things--just maybe stay put for little while. And I don't know if that's an enduring lesson or if that's just periods of our time we need to be reminded that maybe this pace was unsustainable. So, those were the lessons I took away.

Ptak: It does appear that the experience of the pandemic prompted some people to consider or make major life changes, especially relocating. You, in the past have applauded that sort of willingness to upend the status quo, especially for people who might otherwise be feeling kind of stuck. How can people hang on to some of those impulses to shake things up, even as the pandemic recedes? Or maybe building on your previous answer, should they rethink that even and stay put, as you suggest?

Richards: I don't know. I wish I had the answers to those sorts of questions in terms of it feels to me like all I've got is my personal experience and I don't know where the boundary conditions are for that experience. But I still feel like I got asked this the other day: "what's next for you?" And for me, the moment I sense, at least professionally, that I'm comfortable-- and here is the way I gauge this: I've personified. I've got imposter syndrome and it's become a friend and I've turned imposter syndrome into a person and the person for me is Mr. Burns, which is Homer Simpson's boss, that's what imposter syndrome looks like.

When imposter syndrome shows up in my life, that's who shows up. And so, for me, if I go a period of time--and it's a couple of weeks for me--if I go couple of weeks without Mr. Burns showing up, it's time to burn the boat. So, like it's time to shake things up again. So, that's the way I think about it is, if I ever get really comfortable, if I feel like I'm in a routine, at least professionally, then it's time for a new project, for something different, to make a change. And I don't think that applies to very many people. And one of the things I'm trying to do is give the people who that resonates with, I'm trying to give them permission to lean into that a bit. And the people who that doesn't resonate with, that's fine, too. So, I don't know where the boundary conditions are for these personal observations. I just know what my experience has been--the pandemic gave me a chance to remember a sense of place, particularly a sense of family and community, a reminder of what was important, that maybe I didn't have to change that. But it also reinforced for me this idea of do work that matters to you, whatever that definition is. Sometimes I refer to it, Jeff, as dancing with dragons. This idea of if something kind of bubbles, I have always wanted to do that. And you felt that during the pandemic. It doesn't mean you have to make some life-altering change; you don't have to move to New Zealand, you don't have to quit your job, but at least consider what that voice is saying to you. Could you just write it down on a piece of paper? Could you just dance with it a bit? And I think that's another important, Christine, to your question earlier--the lessons of the pandemic to me are, where is that passion? Where is that sense of, “I've got a thing that I really want to do, and I've been putting it off for a very long time.” Well, can I just dance with it a little bit? Can I just gently allow myself to explore it? I don't know if it's helpful, but maybe it's a little insightful into how I think about it.

Benz: It's very helpful. And we definitely want to spend some time talking about your new project, The Society of Advice. But first, one other thing that has been going on in this environment is that there is this speculator mentality that has taken hold with some of the meme stocks and assets like cryptocurrency. Jason Zweig pointed out that it's another manifestation of people being skeptical of experts. They think they know better than people who are telling them to buy index funds, for example. What's your take on why this is happening? And why right now?

Richards: That's fascinating. I think I'm trying to be really careful about not being dismissive of something that might have some cultural implications that are different than the past times we've seen this because our tendency in our industry is to be pretty dismissive. And we even have some famous words that we use when we want to be dismissive. And we just say, the last, whoever said this, I can't remember who said it. The last four words of any great investor are: This time it's different. And we tend to evoke that saying in our industry, when we want to avoid thinking, or when we want to be relatively dismissive of something, and guess what, most of the time that saying has been exactly right. But that doesn't mean it will always be. So, I don't know what to make of this. Part of me wants to be as forceful as I can and just say, "This is absolutely nuts, and crazy, and ridiculous. And please, it's cute that you thought that was fun. But go watch a movie instead and put your $50 a month into the index fund." Part of me wants to do that.

So, my 16-year-old daughter wanted to start investing. She knows that we use passive low-cost asset-allocation funds, typically leaning into small value, the whole story, because she has heard me talk about it. So, we were trying to set that up, and it was going to take, with our financial planner, the answer was, “I'll send you a form, fill out the form, send it back. It will take couple of days to get approved, then we'll link it to your daughter's bank account, then we'll save $50 a month and it will cost this.” And I was on the phone having that conversation. I was like, “Really, it's going to take a week to get?” And in the time that I was on the phone, my 12-year-old nephew was like, “Hey, come here,” to my daughter. And they opened a Robinhood account in my name and purchased the same ETFs we were going to be using, linked it to my bank account. My wife helped them, obviously, because they needed some information that they didn't have. But in the time I was on the phone, they had this set up. And I don't know what to make of that. I just know that there is something going on.

And here is the one thing I could point out that I've noticed a lot, because I've been asking my 12-year-old nephew and his friends when they come over. And they all know about the latest DeFi project in the crypto land. They all know about it. I'm like, “How do you know about it?” They're like, “We talk about it at school.” And I know that's probably not normal for 12-year-olds, but this group of 12-year-olds talk about it. My daughter's friends, she is 16, they come around and they bring up Robinhood. And how do I buy stock? And they ask me don't you write about this?

So, there is something going on. And I believe the one piece I'm seeing is this sense that the system was broken, and I don't even know what that means. But the sense that the system wasn't working for people. My older kids point to this idea that this system is so broken, that even people who win, lose because they're unhappy. We look at all the people with all the money, they all seem unhappy. So, even the people who win in the system, it doesn't work for.

Now, I'm not saying that's true. I'm just saying it's interesting hearing all these conversations that I don't know what to make of it. And so, I'm really careful. Maybe there is something about culture. I mean, Dogecoin. Like, that's literally a joke. But is there some thing to do with culture that we're not understanding, I don't know. But I do know, mixing entertainment and investing in the past has been a bad idea. And I wouldn't want to bet any of my money on the idea that there is something to something that literally started as a joke. So, I don't know what to make of it. I just know, I don't want to be dismissive. And I want to learn from the youngs because they've got something to say.

Ptak: I wanted to shift gears and talk about a bet you have been making, so to speak, which is the work that you've been doing on The Society of Advice. You've been working on that for the past year. For the benefit of our listeners, how would you summarize the project? Is it mainly a training and teaching effort for financial advisors or is it a community for like-minded advisors? Or maybe it's a little bit of both?

Richards: One of the reasons it's got this sort of air of--I don't know, secrecy is not necessarily the right word--is because I don't really know how to talk about it. It started out as a training program for financial advisors, and it was called the real financial advisor program, RFA for short. That was a couple of years ago. And we took a bunch of people through that program, which is really about how to communicate more effectively with clients and took a bunch of people through that program, and then people started saying, what's next.

And the other thing that started happening was people were continually pushing for tactical, like teach me the exact words to say, tell me the exact pencil to use. And I'm always a little skeptical of tactical hacks and tricks and tips and tricks, because they seem to be a place for people to hide. If I don't have the exact same pencil that Stephen King uses to write then I don't have to be a writer. So, I’m always a little bit skeptical, and I'm trying to get to the principles or the concepts. And so, we built all these tactical programs. And I was like, I'm not sure it's changing anything. So, we tore the whole thing up the old RFA--real financial advisor--program, and we built this thing called the fellowship, which was just my effort to forcibly insert into the world what I think it means to be a real financial advisor--it was 21 declarations.

People went through that. And then they said, well, what do we do after that? Where can we gather? And I had joked, years ago, like 15 years ago, that there was a secret society. And you'll both understand this--when I talk to journalist friends about the work that a real financial advisor does, and I use that word in air quotes, like “real.” When I talk to journalist friends about it, they look at me like I'm talking about the butcher, the baker, the candlestick maker, like it's a cute fairy tale. But I've seen the work that real financial advisors do, and the difference that they make. And so, I was always just frustrated by the public perception and the work I was seeing. And by the way, the public perception is well earned, that our industry is not very well trusted, in general. And that's for good reason. But there is a subset of people who are doing real work. And so, I joke, it's like there is this secret society of real financial advisors. And people caught on to that--secret society, real, where are these people? And so 15 years later, we've tried to create a place for people like that to gather--people who do real work, people who are making an impact in people's lives. So, that's about as good as I am at describing what The Society of Advice is.

Benz: Let's talk about what constitutes real financial advice or real financial advisor in your view. You referenced a set of declarations. Can you give us an example of what some of those are?

Richards: How about just this idea--that generally, when the people out there go to meet with a financial advisor or a… Christine, we start there. I don't even know what to use. What term do we use? Financial advisor or financial planner, or wealth manager? We don't even know internally what to call ourselves. So, let's just say when somebody out there goes to meet with a financial advisor, what they typically expect--and they've been trained to expect this by not only our industry, but the financial pornography network and whole media circus that goes on around our industry--what they expect is somebody to chuck, to throw prescriptions at them. Basically product. And the softer version of that is we think it's the job of an investor and/or an advisor to give specific advice about products and to deliver performance. That's what we think. And that's reinforced by, again, the financial pornography network and our industry.

So, a real financial advisor and one of the declarations is: we diagnose, before we prescribe. And so many of these things sound self-obvious, but in most instances in our industry, you walk in and meet with a financial advisor, and you're expecting, and often they will just throw, product pitches at you. And sometimes the more sophisticated ones are detailed asset-allocation models that go along with strategic asset allocation and feedback from our New York and London office--all of those things, but nowhere, and this sounds crazy. And I've had thousands of conversations about this, almost nowhere do you get the experience of somebody actually asking you good questions, trying to uncover not only what you want to do, but why you want to do it, thoroughly diagnosing before they write any prescription. So, that's one of the declarations is we diagnose before we prescribe.

Ptak: You talk a lot about the importance of articulating a purpose when embarking on a financial plan. You think it's a mistake to move straight to specific financial goals without doing that first. Can you talk about why that's so important? And maybe give us a couple of examples of these sorts of statements of purpose?

Richards: Jeff, one of the opinions I have--and I forgot to say at the beginning of this, I reserve the right to be wrong about everything I'm going to say today--but one of the opinions I have is that we should help clients develop a statement of financial purpose before we even get to goals, but certainly before we get to product. It's a little bit like what goes on around this diagnosis. And the question you're asking is, it's a little bit like we love to argue about whether we should take a plane, a train, or an automobile on a trip. And we will argue the merits of each mode of transportation and that down to like 10 basis points or even less, and 0.3% allocations that will argue plane, train, or automobile before we've even decided where we're going to go.

And deciding where we want to go… Really the statement of financial purpose to me is like the why--if we point to Simon Sinek's work, the why underneath the decisions we're making. Now, I know that no client walks in saying “Can I cry on your couch?” Or “Could you please help me clarify my purpose?” Nobody does that. They come because they've got an acute problem, typically to do with underperforming investment options, or a lump sum of money, or some acute problem. So, I know nobody is asking for a statement of financial purpose, but I don't know how we do our work if we don't understand it. And so, to me, the way that happens, is just in a conversation, typically, early on in a new relationship. I like to think of it as the first meeting where we just try to uncover why are people making the decisions they're making; what's really important to them? Bill Bachrach's work on “what's important about money to you?” George Kinder has done some groundbreaking work on this, and even the work of somebody like Dan Sullivan, at The Strategic Coach, where he asked a question, “Jeff, if we were meeting 3 years from today, what would need to happen in order for you to feel like this relationship has been a success?” Those types of questions help us get at this sort of sense of purpose underneath the decisions we're making. And I'll give you two quick examples. One is my own, the top of my One-Page Financial Plan, a little paragraph or two sentences that makes up my statement of financial purpose. It simply says, and this has been this way for 15 years now. It says, “Time with my family, mainly outside, and serving in my community and church.” That hasn't changed for 15 years. Now, because I know that and somebody took the time to help me understand that, and I've articulated it on a piece of paper, there is a whole bunch of things I don't do anymore. I don't analyze every single pitch I get for investing in some venture-back startup around FinTech--not because I don't think they're great; that sounds fine. But it doesn't help me with time with my family, mainly outside, or serving in my community and my church. And so that's one example.

An example of a client of mine, his name was Jerry. And Jerry was of Tom Brokaw's greatest generation. Like he is not going to cry on your couch. What I asked him, I said, “Jerry, why is money important to you?” Jerry said, “Carl, I just don't want to be a burden to the kids. I never want there to be a time when I'm a burden to the kids.” I said, “Tell me, is there anything else more important?” Jerry said, “If I got to the point where I wasn’t a burden to kids, I'd love to continue to be able to be actively involved in my community. And if there was something left, I could leave something to the kids.” It wasn't going to go any deeper than that. It wasn't about self-actualization; but that was what mattered to Jerry--nobody had ever had that conversation. Jerry was in his 60s when I had that conversation with him. Nobody ever asked him that before.

And then the last one, my friend Jeff, who retired as an investment banker, had a big pot of money, had met with five different firms, including the bank that he retired from, which you would recognize the name of. He comes to me after five meetings, five different wealth management firms, and says, “Carl, you know what the problem is with your industry?” This was just a couple years ago. “You know what the problem is with your industry?” I was like, “No, what, Jeff?” And Jeff says--his name was actually Jeff--he says, “Nobody--I've met with five firms, they're all the best--nobody has taken the time to connect how they want to invest the money with my own personal goals and how I feel about them.” And I, of course, jaw-dropped. He was like, “No, all they want to do is talk about their asset allocation, their market commentary, their super important strategic folks in London and New York.” So, that's why I think this statement of financial purpose is so important.

Benz: How would an advisor help the clients work on their statements of financial purpose, especially clients like Jerry, who hasn't spent a lot of time thinking on this level? What kinds of questions could get the client's creative juices flowing about the purpose of all the planning that's going to take place?

Richards: Christine, it's a good question. Let's just clarify real quickly. This is, I think, a layer beneath goals. And so, we may want to talk about this. But I think asking people what their goals are is something we need to outlaw in our industry, especially like an intake form in the lobby. Like what are your goals? And the reason I think this is important to understand is because people don't know. They don't know. Think of if I asked you right now, like what are your goals? The first thing that happens is your neck--the muscles behind your neck start to tense up, you feel like a burden on your shoulders, like I'm supposed to have these things called goals. Everybody tells me I have these things; I don't know what my goals are. Most people don't know. And we can use the word "goals" after we teach them what they are. And the way to do that, like Jerry, is just develop a set of questions. I've already pointed you to a couple: Bill Bachrach's work on "what's important about money to you." Dan Sullivan, The Strategic Coach wrote a book called The Dan Sullivan Question, which will outline that question. And, of course, George Kinder's work, you can spend a lifetime exploring that because it's groundbreaking. So, all of this work around. And it doesn't have to be, excuse the phrase, but like California woo-woo. And I found the more successful people were in their careers, the more value they found out of these conversations.

So, the way you do this, in a new relationship, I think of it as the first 15 minutes of the first meeting, instead of all that stuff we used to do around rapport-building: look at all my designations up on my wall; let me show you how big our computers are; and we've got research staff in 17 different countries. Instead of all that, what if we just stopped and said “Christine, thanks for coming in today. It shows how committed you are to making good decisions about money. Before we dive in, because I know you had a really pressing matter with how the portfolio has done over it, whatever, whatever place. Before we dive in, though, I'd just love to understand why all this is important to you.” And then dive into your question. My favorite question was a mix of Simon Sinek's work and Bill Bachrach's work. I just said instead of what's important about money to you--which is great and please do that if it works for you--I would just say, Christine, let me ask you, why is money important to you?

Benz: Freedom, mainly, to feel that I have the freedom to pursue what I want to do with my days and years.

Richards: OK, so let's just pause. If this were a real client meeting, I would write down "freedom." And that's all I would write down and I would be listening. And by the way, freedom and security are two of the most "get me out of jail free" answers. Most people just want out of this uncomfortable conversation. By the way, this conversation can be uncomfortable on purpose, because people have never been asked these questions. So, don't confuse uncomfortable with something you shouldn't be doing. So, if I say, Christine, tell me a little bit more about that. Like, why is freedom important to you?

Benz: Freedom is important to me, because I would like to be in control of my time and spend my time doing things that bring me joy, whether that's working or doing something other than working for money.

Richards: Amazing. I would love to take the next 45 minutes and just talk to you, and then we'll go to Jeff. But this idea of freedom, and then you used the word "control." Like how cool is to me all we're doing is looking for, I call them the crunchy bits. The things that have emotional resonance, because I can say control. And then you said "time to do the things that would bring me joy, whether that's spending time working with my family, or anything else I want to do."

Well, so if we took another five minutes, we could develop that a little bit. We'd have just a couple of things. If I heard you correctly, Christine, freedom is really important to you, having the control over your time. And then I can say something like, let's pretend like you have control over your time, Christine, what would you do? What would you do?

Benz: Well, I might work in some fashion. I might continue to do some version of the financial education that I do now. But I may do it in a purely voluntary form, where I'm not necessarily committed to being there every day, and I'm not tied to earning an income from it.

Richards: See, amazing. And I would not let you off the hook there. I would continue to say, "Tell me a little bit more about that." So, we would dig a little bit there. And then think of all the words we have now. Because next thing we want to do is talk about goals. So, now we've got all these words that Christine said: "spend the time I want to; the financial education efforts that I'm involved in; volunteer." So, now I could say, "Tell me more about that. Christine, what if we put a little framework around this goal of volunteering more? What would have to happen in order for you to do that?" And then you would say something like, "Well, we'd have this much saved." And I would say to you, "Let's put a little framework around it. And when we're done, let's call that a goal." That's so much different than, "Christine, what are your goals?"

If we back them into the idea of, we've moved from values, it’s what Bill Bachrach calls it. I like the term “purpose” a lot, too. Values, and now we've taken those values and used them as the foundation to frame up something that we can then teach them is called the goal. Jerry would have said, “I don't want to be a burden to the kids.” And I could say, “Jerry, that sounds really important to you.” So, we could breadcrumb. “In a minute I'd like to talk about that.” We'll put a little framework, like “What would have to happen for you not to be a burden on the kids? In a minute, we'll talk about that. And we'll call it a goal. Is that OK?” What else? And he’d say “Service in the community.” And I'd say, OK. And then I'll give you one last example.

Julie, a client of mine, said the same thing that Christine said. “Julie, why is money important to you?” She said freedom. Just sort of like get me out. And now they came in when I worked at a big brokerage firm that was known for investments. So, they came in with that look on their face like, “What have you got for me kid? I want the best-performing investment.” And I immediately was like, “OK, tell me, why is money important?” She said, “Freedom.” I said, “OK, Julie, got that written down: freedom. That could mean different things to different people. Why would freedom be important to you?” She said, “Well, I just want some flexibility.”

OK, things started to slow down a bit. “Flexibility--tell me little bit more about that. Why would flexibility be important to you?” And, longer pause and she said, “Time.” I said, “OK, let's pretend like you have all the time in the world, which we'll define in a minute. If it's OK, we'll call that a goal in a minute. But if you had all the time in the world, why would that be important to you?” Longer pause. She says, “Carl, I just want to have a family.” So, this is a busy emergency room physician, managing partner at the largest emergency room in our in our city--busy, busy. And if you know emergency room docs are like on it, Type A, go-go-go. Longer pause, and she says, “Carl, I just want to have a family and I haven't even had time to think about it.”

Now, here is my question. When would that have come up on your client intake form? If you just said, “Julie, what are your goals?” You think that would have come up from the look on her face? And particularly from the look on her husband's face, Steve. I don't think they had been prepared to talk about that in this meeting. But the follow-up is how could I have built a financial plan if I didn't have that information? I don't remember, Jeff, who asked the question, but that's how we “diagnose before we prescribe” process occurs.

Ptak: We have quite a few listeners who don't work with financial advisors. They don't have a guide, so to speak. And so, is the process that you've described something they could do on their own? Or is it essential that they have some type of guide to help them through it and act almost as a foil in some respects, and constructively challenging them to maybe elaborate further on what their purpose is, and, let alone, how those might resolve into actionable goals?

Richards: That's a good question. I'm a big fan of real financial advisors. But I know two things: number one, they're really hard to find; and number two, not everybody needs one. And so, given those two circumstances, my hope is that this kind of work will help everybody, whether you can find a real advisor, whether you work with one or not. I can reinforce the idea that they do exist. And so, take the time to find one. But if you can't, of course, you can take yourself through this type of thinking--why am I doing this? Go read Simon Sinek's book, Start With Why and just apply it to your financial decisions.

Now, it's really helpful to have a third party involved. And that third party could be a friend, you could have this conversation with a spouse or partner. I have a financial planner because I've got huge blind spots. This is really important to understand. If you think about a Venn diagram, like we're going to draw a Venn diagram right now, but right now it has no overlap. So, really, all it is, is two circles on a page with a gap between them. And in one circle, on the left side of the paper, just write “values.” The long-form version could be like, what's really important to me: values. And then on the other half of the paper, on the other side with a gap between them, write “actions,” like what I'm actually doing. And the reason there is a gap is because that's called being human. There is almost always this gap between what we say is important to us. And the process of real financial planning to me is closing that gap.

So, in other words, it's aligning your use of capital, and capital has always got an asterisk next to it. And the asterisk says money, time, energy, and attention. So, aligning your use of capital--that's that action circle--aligning your use of capital, with what's really important to me, that's that value circle. Now that gap exists for all of us. I say, time with my family mainly outside. Well, I happen to track my time on a little program called RescueTime, and I can tell you that I often spend way more time doing stupid stuff like Twitter or ESPN-- nothing wrong with either one of those if they serve a purpose--and then I go home and say I don't have time for a trail run with my 21-year-old daughter. “Wait, dad, you spent two hours on ESPN today. How come you don't…?” Well, that's because there is a gap between what is truly important to me and what I actually do. And the definition of real financial planning to me is closing that gap.

Well, who has permission to enter that gap with us? That's the way I'd answer your question, Jeff, is who has permission to enter that gap? My favorite phrase is, “You might fire me for what I'm about to say, but you should definitely fire me if I don't.” And I think you can do that same thing as a friend: “You may never talk to me again, when I point out to you that you always say time with your family, mainly outside, is so important to you. But I noticed the other day, you told me you spent two hours on ESPN or whatever. You might never talk to me again for what I'm about to say, but you should never talk to me if I don't point this out. Brother, when are you going to close that gap?”

So, having a third party that has permission, because most of us have a strong disincentive to enter that conversation. Have you ever tried that with your spouse? It doesn't always go so well. So, finding somebody who you can grant permission to enter that space and challenge you based on what you said, remember, they're your values. That's another one of the declarations is we keep our values off our clients plans. It's not about our value, it's theirs. “Hey, wait, this is what you told me, you wanted. Christine, you told me you wanted control over your time. And yet you're doing this? Has something changed? Help me understand.” Like that kind of the discussion. And yeah, it can happen with somebody other than a financial advisor.

Benz: You said that it's really difficult to tell people what they should be looking for if they're seeking a real financial planner. What are some clues that someone is on the right track with finding that type of financial planner? And also, I want to ask if real financial planning, real financial advice is the same thing as financial life planning, which is a term that we're hearing more of lately?

Richards: That's a good question. So, some clues first. Are they listening more than they are talking? Are you getting a sense that you're being heard? There was this crazy survey done. I can't remember who did it, but I first read about it in Russ Alan Prince's book, he wrote a book called The Private Client Attorney, I think was the name of it. They were high-net-worth families that valued and were willing to pay for advice. They hired an estate attorney, and they paid for an estate plan to be done. And then they didn't do anything with it. That was the population. And those of us who have given financial advice for living, this isn't uncommon. You see people: "Do you have your trust?" They answer, "Yeah, everything is done." But nothing has been titled in the name of the trust. So, this population, high-net-worth families, value that we're willing to pay for professional advice, had paid for an estate plan, but then didn't implement it. And the question they asked was, "Why? Why didn't you implement it?" And I can't remember the exact number, but I know it was over 90% of the people said, "The plan didn't reflect what I wanted." And I'm like, how does that happen? Well, the way it happens is attorneys were too busy crafting monuments to themselves, instead of listening to the client. And the way it happens in our industry, is we're too busy pitching product, too busy talking about how smart we are, too busy talking about how big our firms are, how many assets we manage, as if it mattered.

So, the first clue is, are they asking you good questions? Are they listening? What the client is doing, the decision of the value of somebody who is going to give you advice is… They don't know this and they don't articulate it, but the research behind it is all they're doing is trying to decide if you can get me to my desired future state. And then they discount your value based on my uncertainty about you getting me there, so its desired future state discounted for uncertainty.

If you have not even taken the time to even ask me about my desired future state, the discount for uncertainty is 100%. So, one of the clues should be, are they asking you really good questions? One of my second favorite clues is when you ask them how they're compensated for their advice, they don't run from that question. And again, these aren't foolproof by any stretch, because the charlatans know this, too, but it's at least a start.

The other clue is, if you ask them about conflicts of interest, they acknowledge that they exist. There is a strong sense in our industry that we can get rid of conflict. We can't get rid of conflicts. Whenever there is money exchanged, there is a conflict. So, what I want to see from financial advisors, and the ones that I love, are the ones that say, “Here are our potential conflicts, and here's how we manage them.”

First of all, are they understanding and listening to you? Second, do you understand how they get compensated? Two questions there: how do you get compensated, and how do I pay you? There sometimes can be different answers, and you want to understand the difference. It's not, then that's a red flag; it's just that you want to understand the difference. And then the last bit is how do you manage conflicts of interest? If you can get a sense of those conversations. Unfortunately, Ron Lieber and I, my editor at The New York Times, we tried a couple of times to write a column, like a checklist column. And every time we worked on it, we would find counter indications in the news, like somebody who met all of our checklists who was stealing money from little old ladies, as that saying goes. And so, I don't think there is an exact checklist, but you're just looking for clues. And to me, the ultimate clue is, are they listening to me? Are they asking me really good questions? Do I feel like the plan matches what I want?

And then to your second question about life planning. George Kinder and the work that he did around life planning, who I consider him sort of the father of life planning. Amazing work. And so, I don't know that getting down to purpose is that much different than life planning. I couldn't call myself a financial life planner, so I don't know that it's much different. Many of the people who I consider real financial planners are steeped in this thing that we call life planning. But not all of them.

Ptak: You've often mentioned the idea of clients who have more than enough money to retire, but for whatever reason keep on working, because they're just not sure how to stop. How can people figure out what's their definition of enough? And how can advisors assist them in that process?

Richards: There is a couple of different versions of that. And I've really been thinking carefully about this lately, because it has come up a bunch for some reason. One is the version where they just can't think of anything else to do. And I think this is a huge problem. And we cause the problem. This whole idea of retirement is largely faulty. I think it was an artifact of like, "I'm going to work till I'm 65, and then I'm going to die at 67." Well, that's not hard to understand. But if it's, "I'm going to work till I'm 65, and I'm going to die when I'm 85." That's a whole different ballgame.

And so, I think, if that's the situation, sometimes it's too late. If I'm 65, and I've got more money than I'll ever need, but I can't figure out anything else to do, I just got to slowly start figuring out something to do. I like to think of it as placing small bets. Like, I think I like golf, well, maybe I'll try golfing a little bit more. And we know from the research that that's probably not going to be the solution. The solution is probably going to be something involving community and relationships and something that feels meaningful, and I'm giving back in some way. So, you may as well start with the research, which is, is there a place I can go volunteer? Can I mentor? I've seen some people doing really cool work that way at community colleges and universities. Can I go be involved in the finance program? Doctors, I've seen a bunch of my emergency room or surgeon friends who go back and teach. And they do it because they can no longer be operating for 80 hours a week or whatever. So just looking for places you can do it. So that's one version.

The other version is maybe the thing you're doing you love. But you're also unable to continue to do it quite at the pace. And maybe you want a little room for other things. Well, how do you do that? I'm thinking of entrepreneur friends. So, I've got a bunch of entrepreneur friends who have been massively successful but are going at it again. And I'm like, what about your family? So that group of people, you can just slowly start thinking about, are there things I can whittle away? I don't ever plan on retiring, ever. I just want to do less of the things I don't like and more of the things that I do like, and so I keep a stop-doing list. I think this is a Dan Sullivan idea that I got from Dan. I try to look at it every 90 days and get rid of one thing that I want to stop doing. Well, hopefully, 10 years from now, that'll have me whittled down to just I'm just doing the stuff I really love, because that's my sense of contribution.

That's two ways to think about this problem. And then the third one just is simply to realize, be patient with yourself. Get a little bit more clear about, what's it all for? Maybe the habits that got you to where you are, are no longer serving you. That frugality--we all have these stories. I have a friend who still collects the soda bottles, because she gets $0.10 back when she takes them into a certain grocery store that's all the way across town. And there is more money there than she'll ever be able to spend ever, ever, ever in like four lifetimes. And she’s still doing that. Well, is that because I enjoy it? And if you do, awesome. If you don't, can we find a substitute. So, there is some ideas on how to do that.

Benz: One thing that gets repeated a lot is that spending on experiences delivers a higher return on investment in the big picture sense than spending on stuff. The data seem to support that really clearly. But aren't time allocations even harder for many of us? It can be really hard to figure out how to balance work and making money with other activities that give us joy. So, do you have thoughts on how people can strike that balance better?

Richards: I don't know what they're worth, but I've got thoughts on it for sure. And I think, to me, one of the most enlightening and painful experiences I've ever gone through was monitoring how I use my time with just this simple tool. My favorite one is RescueTime. I just installed it on my computer. And I did a little experiment. So, I guess my first point would be become aware of this problem in the first place. What happened to me was I had a friend who said--literally said these words: "Carl, it's really cute that you think you're so busy." I was like, "What? What are you talking about? He's like, "Well, let's try a little experiment." And so here is what we did: We installed RescueTime on my computer, and I made predictions; I made a bet. I said, look, here is how I spend my time. I made claims. They were claims, like I never check email after 5; and I certainly don't check social media on the weekends; and I am not interested in politics at all, so I spend no time on political websites; and I don't care about sports, so I never check ESPN. I made some claims like that, that I thought matched my behavior. And then I just let the thing run for 30 days, and you don't have to do it that long, but that's what I did. So, I let it run for 30 days. And I pulled out that piece of paper of the claims I made, and I compared it to reality. And it was insanely painful because I was so wrong about how I was actually spending my time. And we could insert money here easily, right? But I think time, money, energy, and attention--all of these things. What we tend to do is, we think we're so busy, we ignore it. And if somebody gives us a tool to actually find out, we hide from that tool, because it's really painful to find out.

So step number one would just be, how are you? If you care about this thing called time, what if we just found out how you're actually spending it first? And treat that as: no shame, no blame. At this point, it's just going to be something where we go, “Interesting. That's really interesting.” Awareness--I'm convinced this is true with money, too. I think you can get 80% of the benefit of budgeting by simply becoming aware of all your spending. I call it for 30 days, take three seconds. Just take three seconds every time you spend. And when you walk out of Jimmy John's say, “I just spent $7.87 in Jimmy John's, isn't that interesting?” No shame, no blame. Same thing with time--just awareness of how you're actually spending your time will drive behavior change, without you beating yourself up. You're going to naturally feel bad when you find out you spent two hours today on ESPN, and you didn't have time to go on a bike ride with your daughter. But that's not the goal. The goal is just awareness of it. So, that's how I would start, it's just with a sense of awareness. Because most of us have no clue. And like my friend said to me, it's really cute that we think we're also busy.

Ptak: You're a proponent of what you call relaxing out loud, being public about taking breaks from work. Why and how should people do that?

Richards: Well, Jeff, I realize there is boundary conditions to this, for sure. Some of us may not have the flexibility to do this. But for those of us who do, I'm just begging us to do it out loud. You guys have really done your homework again this time. But that statement I made about relaxing out loud, was I had a friend, his name is Jeremy--he has given me permission to call him out on this, and I'll just use his first name. I was trying to get a hold of him on a Friday. And I didn't know this. I didn't know that he was taking Fridays off. He replied to me on Monday. He was like, "Sorry, I've been secretly taking Fridays off for the last year." And I was like "What? Secretly?" I said, "I think you should do that out loud." Because he writes publicly. I said, "Why don't you share that?" He said, "I don't want people to think I'm a slacker." And I was like, "Well, I'm sorry, brother, because I'm about to tell everybody, because we need more people…" And the reason we do is we've got to break this, "I'm busy" culture. We have a rule internally here that we don't even use--we try, we're not perfect--but we try not to even use "busy" language. When we reply to somebody, if it's been a couple of days, we try not to say "I'm so sorry, things are so busy around here." We're just trying to get rid of all that language, because I'm so frustrated with myself for 15 years walking around and anybody asks, "How are you?" My reply was "Oh, busy, so busy." And then what do we say: "Better than the alternative"? No, no, actually, it's not better than the alternative.

And by the way, this has nothing to do with working hard. It's just if you've got the flexibility, I've realized that taking time off--resting, relaxing--is a prerequisite for doing good work; it's not a reward for it. And I'm not talking about working less necessarily. And I'm certainly not talking about being less productive. I'm 10 times more productive when I take Fridays off. I get way more done than I do when I work Fridays, for example. Can we just have a few examples where it's OK that that guy is taking a nap. I heard some study that at a big company they had nap rooms. And nobody would use them because they are like, it might as well be labeled public shame room. So, I just wish we could change a little bit of that. That's all.

Benz: Well, Carl, as always, this has been such an illuminating conversation. We so appreciate you taking the time to be here with us. And I appreciated my free financial therapy session, too. So, thank you.

Richards: Christine, my pleasure. And Jeff, thank you so much. It's always clear. I do a lot of these, and it's always clear when you're talking to pros and when you're not. So, thank you for doing your homework and making this so much fun.

Ptak: Well, thanks again for being with 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.)

More on this Topic