How Being Anti-Fragile Can Help You Persevere In The Markets | Cashflow Hacking Ep #3 Mark Willis
Mark Willis, founder of Lakeshore Financial Services, joins us on the podcast to discuss creating wealth through unconventional assets. As an entrepreneur and Certified Financial Planner, Mark shares his secrets with Casey to building a blueprint for achieving long-term financial independence, and shares how Lakeshore Financial services is helping investors to achieve their goals with some of the lowest fees in the industry to date.
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For more information, and to claim a free copy of Mark’s best-selling book courtesy of the Cashflow Hacking Podcast, visit Mark at www.lakegrowth.com/schedule and mention Finance & Markets when booking your free 15-minute consultation.
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This is the Finance and Markets cash flow hacking podcasts, streaming to you live, exposing the methods behind unlocking colossal wealth. You’re host, Casey Subs.
Casey Stubbs: 00:24
Today’s guest is Mark Willis, the owner of Lake Growth Financial Services. His education is at Abilene Christian University. He has a Masters in Divinity. He’s a certified financial planner from the American College and he lives in Chicago, Illinois. He is the founder of Late Growth Financial Services and the host of not your average financial podcast. And we’re looking forward to our interview with Mark Willis today.
Mark Willis: 00:57
Yeah, glad to be here. Thanks Casey.
Casey Stubbs: 01:01
Uh, so, uh, you’re based out of Chicago, is that correct?
Mark Willis: 01:04
Yeah, that’s right. We live in downtown Chicago. So you and I both know what it means to have a real winter.
Casey Stubbs: 01:09
Yeah, well you probably have it a lot worse than we do. We’re in the Pittsburgh area, but a right off that lake can be pretty brutal, I think. You Bet. So did you guys get snow the other day? We just, I just had like five inches yesterday.
Mark Willis: 01:25
Well, we, we didn’t, we had a nice cold Easter. We thought we were going to do, we’re recording this right after Easter and we thought we were gonna get to do some outside a egg hunting, but our daughter had to, we had to give her eggs indoors this time and uh, she didn’t mind. She’s a toddler, so regardless.
Casey Stubbs: 01:41
Yeah. So tell me a little bit about yourself, about your background and how you got started with your financial planning services.
Mark Willis: 01:49 Sure. Yeah. So, um, you know, I grew up working in a sort of the mainstream financial planning world and I spent some time you know listening in fact, quite a bit of time, every single day on the radio I’d listen to Dave Ramsey, I don’t know if you’re familiar with him or not. He does a major radio show every day and I really didn’t think critically about what he was saying. You know, that, that skill that you’re really talking to college to learn how to think critically, take people’s advice and really put it to your own mind. And Ah, so I did get through Undergrad and then Grad school. Uh, and never once did I really ever get taught about money. My, my degrees were not in the world of finance or economics, um, but, you know, a lot of it was in leadership. I was, I actually went through a seminary degree and uh, ended up like never being taught how to manage balance a checkbook from my own family or a church or ministry or whatever else.
Mark Willis: 02:45
So, you know, my wife and I left school with six figures in student loan debt and like literally no plan on how we were going to pay for it. So then we, right after that, moved to the big expensive city Chicago, right. And I started working like as many jobs as I could, trying to keep the bills paid. Uh, and then we moved here right at the beginning of what turned out to be the greatest correction or recession since the Great Depression. So the beginning of 2008. And so at that point I started really paying attention to our own finances, uh, and really saw it as a personal passion of mine. Uh, so, you know, I started working for a CPA for um, uh, so that’s a little bit about sort of what got me into finance. Um, all my training, everything I went through, all my licensing and everything really taught me kind of the mainstream financial world of, you know, buying term and investing the rest, uh, you know, get everything into mutual funds that you possibly can. Um, and of course that’s what Dave Ramsey, taught me, right? So, you know, how could I dare go against what the ultimate, a financial guru, a financial entertainer would say on the radio everyday, right? He wouldn’t say it unless it was true. Right. Casey?
Casey Stubbs: 03:59
Well, you know, that goes back to what you were talking about with critical thinking, which is one of the things that I, it’s interesting to know that they taught that in college I didn’t get that class, but that’s really seems to be missing from, from our society. And it’s kind of like you just take whatever someone saying, you evaluate it and then you study and you apply it and you try to determine what is true and what is false and you make your own decision based on the information that you can collect.
Mark Willis: 04:26
Sure. Yeah. I mean that’s kind of just becoming an adult, right? Right. People as a kid, you’re taking whatever mom and dad say at face value, but at some point, at some point, hopefully you’re figuring out that hey, this is not ahh.. I got to come up with my own reasons for believing what I believe. So that’s kind of what this transition was like for me. And I think one of the biggest was hearing the CPA that I worked for, at the time she was very well renowned. I mean nationally recognized, you know, one of the best in the business. And in my opinion, she was making calls to clients in the midst of the great recession saying, I’m sorry, Mr. Client, Mrs Client. I know you’re 62 years old. I just lost you half of your life savings. And that freaked me out to be honest, as a young financial planner in the business, I didn’t want to spend my entire career helping people build a life of a, you know financial insecurity and all their money in a house of cards. So for me, that was a big wake-up call. I mean, that cracked open my mind to what else is out there, you know, if, if Wall Street doesn’t have every answer that we’re looking for, what does and we’re possibly could I research to put my own cash versus, you know, um, and not to mention my clients wealth as well.
Casey Stubbs: 05:39
So when you’re looking based on, on what I’m hearing here, that you’re very focused on risk because the downturn was a pretty scary thing. And so based on that, you’ve really got to think about what is gonna happen if there’s another recession or depression or great crash.
Mark Willis: 06:00
Well, you know, if you think about it, it all comes down to longevity risk. That’s one of the biggest unspoken risks that folks have to face. And that’s the big question of how long are we gonna live? So you know, at the end of the day nobody has the answer to that question. So, and the longer you live, the more you’re exposed to every other risks out there. So I’m a big believer in risk. I love taking necessary risks because it’s in the risk that you can find reward. You know, I just, have you read the book anti-fragile? great book, funny book, silly, but also really deep. He’s an options trader in New York and he wrote the Black Swan, if you know that book or know that concept, the Black Swan. But one of the things he says is, it’s the people who are anti-fragile that actually get stronger in the midst of calamity.
Mark Willis: 06:51
So what’s the opposite of fragile? It’s not being strong. It’s actually being anti-fragile. That’s the Antonym of fragile. It’s the idea of, hey, if you work your body out, you’ll, your body kind of gets torn down under the pressure of the workout and then it gets stronger as a result. So that’s the idea that we use with our clients, not just being strong or resilient in the face of calamity or the next recession or the next bear market whenever that comes and it’s coming, you know, it’s just a matter of time, right? Two major collapses since the year 2000. So what do we do in the face of that, that makes us better as investors, better as financial, a financial individuals in the world. And so that’s really what we focus on. And I believe that’s a big reason why traditional financial planning is broken.
Casey Stubbs: 07:41
OK. So just expound on that a little bit. It’s broken because they’re not anti-fragile or they’re just focusing on reward, not focusing on risk. What W, what do you mean by being broken?
Mark Willis: 07:54
Yeah, I mean, you think about some of what has happened in the last 20 years. You know, I hate using this analogy, I wish there was a better one, but I really see Wall Street and traditional index funds, passive investing as kinda like the abusive boyfriend on Wall Street. So investors keep going back to the abusive boyfriend on Wall Street, uh, their index funds, you know, buy and hold, you know, it’s gonna just weather-the-storm, you know, you know, we’ve, we’ve lost your money twice since the year 2,000. You beat me up pretty bad. But no, uh, just keep coming back, you know, because this is the only place you can ever save for your future. I just patently disagree. I think there’s incredible non-correlated assets that have nothing to do with passive index funds that you can have tremendous upside with a lot less downside risk. That to me seems like at least a part of your portfolio should be anti-fragile. Ah, and again, that’s the idea where you’re not being riddled with fees and government taxes, but you’re able to get some real growth when markets crash. I mean, that’s how the most wealthy in our country took advantage in the great depression. Folks like JC Penney and the Carnegie’s and those folks made it through the great depression stronger because of that.
Casey Stubbs: 09:08
Right? And it’s really good to be focusing on how to recover when, when those things happen. But the truth is, if you’re not prepared and it like a budget planner, it takes you out or you get fearful and you pull out, I’m sure you have a lot of story. You got started maybe right at the crash, you might not have a lot of stories, but I know people that they found out that they lost all this money in 2008. So they were like, forget this, I’m done. And then they basically got out at the worst possible time. They never recovered because they didn’t weather it out. If they would’ve just continued going the course, they would have done much better and they would be doing, actually not just much better, but they’d be doing fantastic today.
Mark Willis: 09:53
It, that’s the, that’s the trouble, the trouble of the sequence of returns. There was another risk than a lot of people haven’t heard of it before. I mean, before I got into my CFP designations I’ve never even stumbled across this idea of the sequence of returns. Are you familiar with that or has it?
Casey Stubbs: 10:11
I def..that terminology, I’m not familiar with it.
Mark Willis: 10:12
It’s. It was new to me too. So I’ll kind of explain it so I can give you an average rate of return of 25 percent and you still have no more money in your pocket at the end of let’s say four years, you know, so the market has been doing great. It’s been on a tear since 2011. Uh, and we’ve had a couple of corrections since, but really it’s been nothing but up. So. All right, so let’s say I give you, you give me $10,000 to invest and in that first year, Casey, I give you a hundred percent rate of return. That means I Doubled your money in the first year, right? So you gave me 10 grand at the end of that first year, how much money do you have? if I doubled your money. A thousand. $20,000.
Casey Stubbs: 10:54
At the end of first year. Yeah, exactly. Getting me on the math.
Mark Willis: 11:00 Sorry bro, uh, so at the end of that first year, you’re loving life, you’re loving what’s going on. Second year, 20 grand is what you started at, right? And that year I lose half your life savings. So from 20,000 down to 10,000, you’re right back where you started, right back where you started. What was the average rate of return on that money? Zero. Twenty. Well it was 25 percent.
Casey Stubbs: 11:22
I was 25 percent because you, because you doubled it. It was a 100 percent the first year.
Mark Willis: 11:27
Hmm. Yeah. You took a hundred plus
Casey Stubbs: 11:31
So 25 percent equals zero in this case. So the numbers doesn’t really mean anything.
Mark Willis: 11:34
Right? Well that’s what I. that’s kind of what I walked through with some folks as average rates of return mean nothing. I mean if you know, if folks are really concerned about the rate of return in the market, I tell him to go to try to walk through a river like wading through a river where the average depth is four feet deep and just sort of see what they say there. Because the truth is that doesn’t matter what the average return is, I could drown in an average four foot deep pool. Right? The pool is 200 feet deep and the other is two inches deep. The average might be four, but it doesn’t matter what the average return is. OK, I got another pop quiz for you. Right up here. Uh so, okay, so according to third party researcher Dalbar, are you familiar with Dalbar?
Mark Willis: 12:19
They’re an independent research firm that does like an, it researches the actual investor returns, so not, not the average mutual fund. Uh Huh. But actual investors, average investors return in mutual funds, let’s say asset allocation, mutual funds, these are, these are your typical index funds, passively managed or mutual funds that are spreading your money out across a variety of classes, growth, you know, value, anything that really blends the portfolio among lots of different types of money. Right. Lots of different kinds of companies and so forth. All right, so the question is over the last 30 years, so three decades, what was the average investor’s real return?
Casey Stubbs: 13:08
So to get the actual answer here, you have to have a definition of who the average investor is. Right? Are you talking about like who does that exclude? Exactly?
Mark Willis: 13:20
These are people who could be any American. So we’re looking at America here because Dalbar research the American population and these are average investors with all of their money inside asset allocation, mutual funds. So it don’t matter if I’m 60 years old or 25 years old, if my money is in the same thing, it should perform the same. Right? OK. So over the last three decades, asset allocation, which is a spread between stocks and bonds. What was their real return?
Casey Stubbs: 13:50
I’m going to keep it pretty low and I’m gonna say a point five percent
Mark Willis: 13:55
Point five zero. So for the sake of example, you’re saying that the, that Wall Street for all the ups and downs, and in the last three decades, including the 90’S, including since 2009 when we started to see an upswing in the market, you’re saying that investors only got half a percent.
Casey Stubbs: 14:12
That’s what I would guess because for one average investors usually don’t do as well as as the professionals. Right? Right. But the industry, the market is based off of the best performing know the top guys are the ones that get included in the numbers usually,
Mark Willis: 14:31
Right? Yeah. Uh, well you’re actually not far off the real return of real investors, mom and pop with their 401k in brokerage accounts only earn one point eight, five percent per year for the last three decades.
Casey Stubbs: 14:44
And so you think that that is unacceptable. Am I correct?
Mark Willis: 14:49
I don’t know anybody who does from the roller rollercoaster rides and sleepless nights we’ve had in the last three decades. I can’t imagine that doesn’t even beat inflation. Right? So how was that possible? Right? How can, how can mutual funds advertise eight percent a year, uh, or 10 percent a year or whatever, if we’re only getting one point eight.
Casey Stubbs: 15:09
Yeah, it’s, there’s some, something broken in the, uh, in the metrics. And also it kind of goes back to, like you said, the industry is broken because they’re teaching an average rate of return, which is really doesn’t mean anything. So people are looking for something that doesn’t help them or it actually could hurt them. So they’re really, it’s like a lack of critical thinking because they don’t understand what they’re getting into and um, they’re really just investing and not seeing any return at all.
Mark Willis: 15:45
Right? Yup. Well, truth is the, the, the stock market is infinite, right? It never has to retire it, you know, and so you could at some point, our finite human bodies have to get off the rollercoaster. So we’re buying and selling at wrong times. We’re saying, all right, I’m 62, I can’t run this race anymore. I can’t get in at the bottom of 2009, run it all the way up to today cause you know, nobody knows where the bottom is until we’re looking in the rear view mirror. But, you know, the, the, the trouble with I’m trying to time the market is even the professionals aren’t doing any better than, than average Americans at least as far as statistics. I can find folks like me, you know, we can’t, we don’t have a crystal ball either, a, even as a certified financial planner, they didn’t mail me my crystal ball when I, when I got the CFP.
Mark Willis: 16:36
Uh, so it’s just the trouble of knowing what the right timing is. And so they have the average investor simply buys and holds and then retires and uh, you know, they’re doing all the, they’re, they’re being told to do a lot of these things from folks that, you know, uh, just kinda got passed down the same wisdom that they received. It’s sort, sorta like, um, you know, why does grandma always cut off both sides of the ham? Well, you know, we don’t know until we asked her, well, her mom always did it that way. And finally we realized that was because of the oven was too small. That’s why we do it.
Casey Stubbs: 17:10
Yeah. I actually have some pretty funny stories about like, my wife’s cooking and I’ll say, well why do you do that? And she cannot tell me that it’s her mother. And then I tell her that that’s wrong. And then it’s, this whole big thing happens. It’s not usually.
Mark Willis: 17:24
So we’re back to thinking skills again. Yeah. So part of what we try to do with our financial firm as we really look at ways to, you know, OK, we are gonna continue to put some of our money into equities and bonds. I mean, it’s a well balanced portfolio. You still want to diversify, but you don’t want all your eggs in the asset class of equities and bonds, you know if all your money is in stocks and bonds, that’s sort of like, but, but maybe they’re diversified among a number of mutual funds. I tell folks it’s sorta like Kevin, all your eggs in 12 different baskets, which is good, but if all of those baskets are on the same truck and the truck goes over the cliff, right? How, what good did that do you? Right? So you need, I tell folks that you really need to have non-correlated assets, assets, asset allocation, risk. So we’ve talked about, um, longevity risk, how long are we gonna, keep breathing, what’s our sequence of return risk? And the order in which we get those returns really matters. That’s another risk. And then the third risk is asset allocation risk, you know. What if, you know, what if a stock’s don’t perform well, we’ll maybe we have some other assets like bonds to help you.
Casey Stubbs: 18:40
OK, well, I have a question for you. So let’s say that we’ve got our portfolio together and we have an asset allocated properly. You know, different, several different categories and after you take a look at it, five years, one of your categories has outperformed the rest and I’m sure you probably see this a lot and that category has done really well. At that point is it your recommendation to pull some of the profit back from that specific category that’s performing well and put it in re re diversify again at that point?
Mark Willis: 19:18
Well, we’d want to look at the underlying fundamentals of what that asset is doing? Maybe it has further to run, uh before it has a correction, you know, you know, so you’d look at the underlying structure of whatever the asset is, if it’s gonna continue to go up and maybe take some of it off the table, but if you’re pretty certain that it’s going to continue to rise, you want to keep running that, that
Casey Stubbs: 19:40
Even though we can’t, we know we can’t time the market because you did just say that though. So it might make sense to pull some of it out.
Mark Willis: 19:47
What I like to say is, you know, you want to be a nice disciplined investor and by being anti-fragile you always want to say, all right, it’s better to be a year early than a day late with bubbles, you know, so if it’s a bubble, you want to get out as soon as you can, if it’s still, the fundamentals are still strong, you know you continue to ride that upswing as much as you can. And the key here is, is most of your money, is money you can afford to lose in that investment? or is it money you cannot afford to lose in that investment? Um, we, we kind of talk about the barbell strategy with our firm where, you know,I don’t know let’s just pick a number, let’s say 90 percent of your portfolio is in cash and cash equivalence and then the money you can afford to lose is in, you know, wild goose chases and start ups and crypto and other things that might go to zero or might go sky high. And in that case, if it’s just a little bit of your portfolio, have fun, you know, right. Run up, run up that mountain as high as it’ll go ’cause you got, you know, the bulk of your strategy. This barbell strategy, uh, is money you cannot afford to lose, you know, and it’s in something that won’t go down.
Casey Stubbs: 20:57
Do you recommend that? And obviously this would be different for everybody, but do you recommend if people have a little bit of extra money that they could just go ahead and find some stuff to have fun with? Not like gambling, but stuff that is maybe a little more high risk that you could see a greater return like a startup. Like a start up you could get just incredible return if you find the right one.
Mark Willis: 21:18
Yeah. If you want to be an angel investor, it’s all about, you know, do I have the money that I cannot afford to lose in things that I am certain, aren’t taking unnecessary risks? And that’s a personal question that you ask after we’ve had several different, um, you know, blueprint conversation. So know we’ll sit down one on one and in advisory role and conduct a thorough analysis of where people are right now. And then we’ll say, all right, you know, where are you in terms of having the assets you need to have for your retirement? And we’ll look at that, we’ll run some numbers on that and if they’ve got plenty to set aside for their future, their kids college, you know, uh, all the other goals that they have, then absolutely. Yeah. Have some fun throwing some money into things that might be the next facebook or might be the next Enron. You know, you just never know.
Casey Stubbs: 22:07
Yeah, exactly. That’s right. OK, well Mark I wanna asked you a couple questions specifically about Lake Growth Ginancial. So you’re based in the Chicago area. Do you work with people just a locally or is it from all over the place?
Mark Willis: 22:23
You know, I say that, you know, it really, it’s anybody who is interested in looking at working with their finances in a fresh and non a non mainstream way. We say not your average way. Uh, so, you know, when we, I guess if I was to kind of break it down, maybe half of our clients are in the Chicago land area, the other half are spread around the rest of the country. Uh, so we currently only work with clients in the US, but we’ve got ties to for financial firms and advisors in other countries as well. If folks want a recommendation.
Casey Stubbs: 22:55
So then if you’re not local you would just have a phone meeting and if you need to send, send them some financial information, you just send it via email and things like that.
Mark Willis: 23:06 We’re very comfortable with the virtual process. In fact we’ve been using, join me and zoom and some of these tools like we’re using today.
Casey Stubbs: 23:14
OK. And what type of person should be looking for your services? Do I have to have a certain amount of money to talk to you? Uh, do I have to have a retirement account? Like how does, how does that work? How would I know when the right time to come looking for a company like Late Growth Financial.
Mark Willis: 23:35
So, you know, we do have a very unique way of looking at the financial life, uh, you know, so we work with individuals, we work with business owners are interested in creating wealth in ways that are predictable, safe. And one of the things we specialize in, Casey is helping our clients become their own source of financing. So that’s a very unique approach that we’ve given folks over the years where they actually can become their own banker. So this might be anyone who’s looking at saving money for college, you know, why use another bank when you can use your own, right? Um, so, you know, from real estate investors to business owners, even pre retirees, really it’s anybody who’s looking for finding ways to develop strategies that make sure their money doesn’t run out before they do.
Casey Stubbs: 24:23
OK. So I just want to hit that real quick. How do you become your own banker? Like what does that mean? Like you save enough money so you don’t need to get a loan. Is that is that.
Mark Willis: 24:34
Well, you know, think about what we’re, what we’re doing, every time we buy something, just, just for sake of example, when you think about it, most financial plans are really designed to, designed to keep you from spending any of your money, um, and so you can have a big pile of it over here so that on the day you retire, you’ll have enough to monetize your assets until you pass away. That’s kind of the general, you know. So if life is a big circle, we start here on our current age, whatever age you are, the typical financial plan will really ask you to set aside as much as you can so that you’ll have that magic number on the day, on that day you plan to retire so you can go from retired to dead before you run out of money. That’s the, that’s the typical way financial planning is done and what we’re really taught as financial planners by the way.
Mark Willis: 25:23
Uh, so by the way, this is also super great news for financial planners that, uh, build their business model on assets under management, right? I mean, think about it, a bunch of clients who are being told to stockpile huge amounts of money, uh, this big mountain of income to the investment advisor gets paid out to him or her every year. Unfortunately, there’s, you know, really no one who has any sort of special designation to help folks know how to spend that income once they retire. They only recently, has there been any kind of like effort to think about how do you take, how do you take 2,000,000 bucks and turn it into an income that you cannot live? It’s a really hard thing to do. So anyway, what we do in our firm is we prepare folks for that day. Um, so not only will they have enough for that day when they truly retire, but also take care of all the stuff of life, the cars, the vacation’s, home repairs, big ticket items, Casey you think about it.
Mark Willis: 26:27
If you think of all of the cars will buy, the kids college expenses, the home downpayments you know, it’s going to add up to millions of dollars over the typical life of you and me and our clients. Right? So it’s a tough choice, you know, we need that cash for the stuff of life, but we also need this big pile of money over here so we can spend it in retirement. So really most financial planners have no plan for how to pay for that stuff in life. Uh, give you a quick story and then I’ll answer your question about this band drum banker thing. So if you, if you just bought your cars, right? So let’s say you buy eight more cars over your lifetime. Let’s say each of those cars is 25,000 bucks, OK? Now let’s say you also go on a couple of vacations because you know, well we need a couple of vacations. Let’s say you go on 12 vacations over the rest of your lifetime and let’s say that’s 5,000 bucks piece. All right? So that’s just the raw cost of that would be $260,000 over a quarter million dollars just for cars and vacations. That’d be if you were saying to do that, you’d have to save a $360 a month to pay for your cars. Vacations over a 60 year period. Is that making sense? So far?
Casey Stubbs: 26:27
Mark Willis: 27:50
It feels real right? because that’s, we already have car payments even if we’re paying cash for things, right? So if you financed the vehicles, if you financed your vacations on credit cards or whatever, let’s say the average interest was 10 percent on those cars and vacations on average, you’re gonna be spending an extra hundred grand. Your total cost is 365,000 bucks just for your cars and vacations.
Mark Willis: 28:15
Right? Alright, so now let’s think about this. This is the real problem that I find with most financial plans Casey. Let’s say that you’ve been able to somehow avoid paying cash for cars. Let’s say you just took the bus your entire life and let’s say you didn’t go on a single vacation your entire life and let’s say instead of spending that $360 a month on cars and vacations, you just invested it instead. All right, let’s say that investment, whatever it was, are in 5 percent over 60 years, your money that would’ve gone to carson vacations grew to 1.5 million dollars,
Casey Stubbs: 28:52
Right? Which is more way more to cover than covering your vacations, right?
Mark Willis: 28:56
Yeah, totally. Hope you love that nice vacation. Right? So, so the key with being your own banker, Casey, is if you could find a way to recapture all those dollars that you spend throughout your lifetime and get uninterrupted compound growth, and at the same time, have access to that money for buying your cars, going on the vacations, that solved the problem, right? That’s the, that’s the mythical eighth wonder of the world, uninterrupted compound growth.
Casey Stubbs: 29:24
Yeah. And uh, that reminds me of the book I read called the Richest Man in Babylon. I’m not sure if you’re familiar with that, where he talks about saving 10 percent and that’s an old book like 1920’s, right? Saving 10 percent and then investing the tin or not necessarily investing, but putting it somewhere, taking that money. Then take the money that you make off that 10 and then putting it back in and you just keep doing it. And I, I can honestly say that I’ve been doing that also, uh, in my life and it’s been fantastic. It’s been fantastic.
Mark Willis: 30:00
The, the best thing in the world is watching that continue to reinvest and grow. The trouble is most people have to make that choice. Hey, you now Casey, I love the idea of this compound growth stuff, but hey shoot, I need to drive a car to get to work every day where I need to send my kids to college and that my kid needs braces or, you know, it’s those, it’s the stuff of life. And I believe you finance everything you buy, you know, either you pay interest to a bank or credit card company or mortgage company or you pass up interest you could earn on your money had you not spend it.
Casey Stubbs: 30:34
Right and I agree, and as I’m a guy who actually has a lot of expenses, um, mainly because I have nine kids, so when I’m looking at school and vacation and all of those things, it’s a lot more expensive. And so, so because I’ve done a lot of that stuff, uh, that you’re talking about, it’s, we lived pretty free to do some of the cool stuff in life. I’m not retired yet, but, uh, I think I’ll be OK there because I’ve been doing this all along. I just need better financial advice along the way and investments. So I got probably a whole bunch more questions because this has been pretty good, but I want to end with just one more because you touched on something and that was about how traditional advisors will charge you and how they make a lot of money. So are you charging people differently than the way traditional advisors charge?
Mark Willis: 31:36
Right. Yeah. This question is huge because I believe that really belies the fact that financial planners are typically gonna retire, before their clients will, uh, that’s because on average assets under management of even just one percent a year, you’re not right. One percent pretty common. It doesn’t sound like a lot. You know, what’s one percent of my money? Sure. I’ll give that to the investment guy who’s given me some great returns or that even half a percent to a robo. I’m that one percent a year will gobble up a third of someone’s life savings over their lifetime and give it straight to the investment advisor. So the fees are this, unlike. That’s uninterrupted compound growth too, right?
Casey Stubbs: 32:18
Mark Willis: 32:20
You know you wanna really think about the compounding fees that are just gobbling up your nest egg plan fees, rep fees, soft dollar costs, account charges, revenue sharing, expense ratios, redemption fees, deferred sales charges. I’m just reading a short list here there’s like right on average for a one case have like over 17 fees that most people don’t know theyd, they look at maybe the fund analysis and I’ll tell you if, uh, if your listeners are interested, totally check out the Finra Fund Analyzer. Finra Fund Analyzer.
Casey Stubbs: 32:53
I’ll put it in the resources underneath the episode.
Mark Willis: 32:57
Yeah, you can find out the fees charged and what it would cost over 10 years in 30 years. But that’s just one of the 14 fees that most 401(k’s) IRAs have. So yeah, you know, according to the Department of Labor, just a one percent per year fee, we’ll slash the value of someone’s savings by 28 percent over 35 years. So if you’ve got more, more fees, you know, the average 401(k) at a small employer is like one point nine percent. All right. So based on independent analysis of the strategies that we designed for our clients, our clients are tip. Our clients at Lake Growth are typically going to pay us about one tenth as much as the investment advisors that charge one percent and you win that means 10 times Casey. 10 times more money in their pocket. So in over 30 years maybe we get paid 30 grand, but our client got to save $300,000 they would’ve sent, sent to an investment advisor, you know, you know, ABC investment house or brokerage fee.
Mark Willis: 33:58
So, you know, definitely check out our website. We’d be happy to show you how we do all that. But you know, even the, the Yale Law Journal, recently said like the recent updates and the enhanced disclosures that are being forced on 401k plans and the fiduciary duties of most, uh, investment advisors don’t help with these excessive fees. They’re just you know sorta like, you know, slalom zoning scheme, right? If, if a regulator puts up a bunch of new polls, they’re just, their design is to just avoid those polls and get to their goal. Regardless, they’re going to charge the clients whatever fee they choose and they take no risk. Right? What risks does the investment advisor have, you know?
Casey Stubbs: 34:47
Well, it’s not his money. Right?
Mark Willis: 34:48
Right. Yeah. So we, In general, we typically see on, we run a calculation for each one of our clients. Here’s what you’d have with traditional financial planning, putting your money in, you know, broadly based index funds, charging you one percent on average over the course of 30 years. And here’s exactly how much you’d pay your investment advisor. Here’s what we would charge you. And we showed the exact fee before they put any money into it, exactly what the cost would be. And typically it’s about one 10th as expensive to work with us, which we’re proud to say we keep the lights on around here, but we don’t have like a Bengal tigers and champagne glasses, no bathtub full of cash, so.
Casey Stubbs: 35:30
Well you have happy, some happy customers and people that can retire and have a free, free lifestyle, which is one of the best things that you can do. Right?
Mark Willis: 35:37
Yeah. Well, and it helps us all sleep better at night if we’re not at all riding. If all of our money was tied to the Dao, what are we doing today? It’s a little risky. Yesterday looked, looked like we were going up and down sideways. Like I’m reading stocks plunge again here today. So who knows, maybe it will be at the end of the day.
Casey Stubbs: 35:57
When you have a crash your customers get nervous, your clients. What do you guys do? What’s your, what’s your strategy to survive a downmarket?
Mark Willis: 36:07
I’m actually looking forward to it again. anti-fragile, Casey, you know, so our clients have huge boatloads of cash and cash equivalence ready to deploy when markets are gonna correct. And the question is when. So we’ve got money in all you know, up, down and sideways, the different investments so you can put your money into, but the vast majority of your wealth is in a big warehouse of cash that you can throw into something as soon as you see an opportunity, real estate investing or whatever.
Casey Stubbs: 36:36
So the anti-fragile people at Lake Growth are ready for anything?
Mark Willis: 36:43
Oh yeah, ready for anything. I like it.
Casey Stubbs: 36:46
Ok, well. Yeah. Thanks again for stopping by and, uh, check out Mark’s website, Late Growth Financial. Check out his podcast. We’ll link to all of that underneath this episode. Thank you so much for coming.
Mark Willis: 37:03
Let me give a quick shout out to your audience. I believe that you know, you know, you guys are awesome. Continuing to learn. If you go, if you’d like. I’ve been able to work out a deal with my staff here that anyone who wants to work with our firm, if you want to have a 10 to 15 minute phone introduction meeting where we can get to know you and answer some questions, you might have a go to lakegrowth.com, forward slash schedule and book an introductory phone appointment with us and we’ll send you a free copy of my bestselling book compliments of Casey.
Casey Stubbs: 37:44
Awesome. Thanks. Alright, good stuff. I really appreciate that. Excellent.
Mark Willis: 37:47
Have a great one.
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