YFP 177: New Book: Baker’s Dirty Dozen: Principles for Financial Independence


New Book: Baker’s Dirty Dozen: Principles for Financial Independence

Joe Baker, author of the newly released book Baker’s Dirty Dozen: Principles for Financial Independence, joins Tim Ulbrich on the show. Joe talks about several of the principles outlined in the book, why he wrote the book and what he hopes the reader will glean from applying its principles.

About Today’s Guest

Joe Baker is an Adjunct Assistant Professor at the University of Arkansas for Medical Sciences College of Pharmacy where he has taught personal finance for over twenty years, as well as an adjunct instructor at Harding University College of Pharmacy. He holds a Bachelor of Business Administration from Southern Arkansas University and a Masters of Business Administration from the University of Central Arkansas. Joe retired early in 2019 from Pharmacists Mutual Company where he provided insurance and financial services to Arkansas pharmacists for twenty-eight years. Joe has spoken to both academic and corporate groups across the country promoting financial literacy.

In an effort to give back to his community, he has endowed a scholarship fund for students graduating from his hometown of Emerson, Arkansas.

Joe and his wife, Brenda, live in Little Rock, Arkansas.

Summary

Joe Baker has been teaching personal finance to pharmacists for over 20 years as an Adjunct Assistant Professor at the University of Arkansas for Medical Sciences College of Pharmacy as well as an adjunct instructor at Harding University College of Pharmacy. Tim Ulbrich approached Joe and asked if he’d be interested in writing a book and Joe realized there were a lot of lessons in personal finance he could share. With the help of his daughter Lindsey, Joe wrote over 250 pages of the key principles he teaches and has learned along his journey of personal finances. This book is composed of practical experience and contributions and stories from over 40 people.

In this episode, Joe walks through several of the principles he has written about like finding a path that will fulfill you, getting and staying out of debt, setting up a 401(k) and Roth IRA, finding the right house and picking the right mortgage, protecting your assets and making a difference in your community.

Through November 7th, you can use the coupon code BAKER at www.bakersdirtydozen.com for 15% off your order of the book.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Joe, welcome back to the show.

Joe Baker: Well, thank you, Tim, for the invite.

Tim Ulbrich: Excited to have you. Huge accomplishment as you release your new book, and we’re going to dig in and talk about several aspects of that book, really a comprehensive guide not only for pharmacy professionals but really just a guide overall about how to live a financially well life and how to do it with intention. And we had you on the show back on Episode 082 with Blake Johnson as he shared his debt-free journey. And during that show, Blake articulated how important your guidance was, your mentorship and your role as a teacher in terms of how important that was in the journey for he and his wife to becoming debt-free. And so now we get to talk about how you have compiled all of that wisdom that Blake and other students who have been blessed with your guidance and teachings often speak of as you release your new book, “Baker’s Dirty Dozen: Principles for Financial Independence.” So Joe, first of all, congratulations. I know a lot of sweat, a lot of time went into putting together this book. And here we are, finally getting ready to release it. So congrats.

Joe Baker: Yes, well thank you for talking me into it. I guess I say thank you.

Tim Ulbrich: So I have to ask, now that you’re on the back end of this and we finally get this into the hands of folks and many, many months of writing and editing went into this, and I told you very early on, I said, “Hey, Joe, at some point, this is going to become fun.” And you kept saying, “When is that? When is that?” So as you look now backwards, tell us about the process. What was it like? What type of time was involved? And would you do it again?

Joe Baker: Would I do it again? Yes, I would do it again. But I’d have open eyes this time. I had been thinking about writing a book for years. Former students and current students would say, “Why don’t you put this down on paper and let us have it in a book?” And I didn’t really think much about it until you mentioned — I think it was in May of last year, 2019 — you mentioned and said, “Hey, why don’t you write a book and we will help you promote it?” Then that got the bug started and I started thinking about it and said, you know, I think I can come up with some things. And on August the 15, I started the book. And coincidentally, I started writing the book for something to do in the hospital room. My wife was having some surgeries. And quite frankly, I wrote most of the book in the hospital room. Now, she’s fine today and everything went well. But you know, it was pretty tough having to write a book when someone’s over there moaning in pain. I’d have to call a nurse and say, “Hey, give us some pain pills in here. I’m trying to write my first book.” They weren’t too sympathetic, nor was my wife. But most of it was written, I mean, during the hospital stay. And what’s interesting — I tell people this story — is I thought I was pretty much finished at Christmas. And my daughter, who is just very astute on editing and all that sort of thing, she said, “Well, Dad, why don’t you let me read it and edit it?” I said, “OK. Go ahead.” Well, she started into editing the book, and lo and behold, she would say, “Dad, I don’t understand.” I said, “Lindsey, you’ve got to understand, I wrote this for millennials.” And she said, “Well, I don’t understand it.” So we went almost paragraph by paragraph throughout the book and rewrote it to where she could understand it as a liberal arts major and put in some stories. It was so much involved, involvement for her that I just felt obliged to name her a coauthor because she did, she made it sound so much better. I shouldn’t say this, but one day I was reading through it for the thousandth time, and I said, “You know, I know I’m getting old. But I don’t remember writing this part.” And she said, “Oh yeah, you did not. I put all that in.” I said, “OK.” There is a lot of her in this book, and I’m very proud of what she’s done.

Tim Ulbrich: And shoutout to Lindsey. I appreciated her input along the way. She did a fantastic job. I feel like it’s — as you know, Joe, as I know, especially as you’ve taught on this much longer than I have, it’s very different teaching on this and then putting that into writing in a way that is engaging, that is accessible, that is action-oriented. And I think it takes more effort, but one of the exciting things is this will live on, and it’s going to have an impact on many, many people. And just so folks understand the effort, when you talked about going paragraph by paragraph, we’re talking about paragraph by paragraph of over 250 pages that are in this book. And I think you did an awesome job. One of the first things I said to you after I read it was, “Wow, this is incredibly engaging because of the stories that you’ve included, because of the tone of writing, because of how action-oriented it is.” And you had over 40 people that helped contribute to the book. And I say that as we get ready to jump into talking about some of the key principles because I think this is a topic where multiple perspectives can be helpful to reinforce various points. And I love how you brought in those perspectives and obviously Lindsey put her own stamp on the book as well. So just overall, incredible job. And we’ve got — I think you have photo evidence of some of that hard work writing. I remember you sent me a text at one point with a photo when you were in the hospital writing. And so we’ve got photo evidence of that. So again, congratulations.

Joe Baker: Well thank you. Can I add another story to this? And it kind of goes to one of the reasons I was writing the book is we were playing cards this summer — and by the way, I had my other daughter, Brooke, and her husband, Gabe Crooks, to edit the book. And they did a good job. They weren’t as in depth as Lindsey, but they did do that. We were playing cards, and Gabe and my daughter happened to be there, and we had a big group there playing cards at the table, and one of the card members, one of our friends who is an attorney, says, “Well I couldn’t tell you the difference between an IRA and a Roth IRA.” And all of a sudden, to my right, Gabe, my son-in-law, another liberal arts major, he started explaining the difference, how it’s the taxation, you know, you tax up front and all of that, went into great detail. And I turned to him and I said, “How’d you know that?” He said, “By editing your book.”

Tim Ulbrich: There you go.

Joe Baker: And he’s even starting investing more and more from that. So it seems to have worked.

Tim Ulbrich: That’s great. And I think you know from teaching this for over 20 years as we’ve had several of your former students on this podcast, you know, some people will read this book and go line-by-line and take away multiple things that they’ll apply. Others may take one thing or they’ll jump in and out as their financial life and plan progresses. But I am confident, I know I took many things away, and I’m confident the readers will do the same. Joe, remind our listeners — maybe they didn’t hear you on Episode 082 way back when — a little bit of your career path and then also some of the work that you’ve done over the past 20 years in teaching personal finance. I think it’s a good segway into why you even wrote this book in the first place.

Joe Baker: Well, in my adult life, I’ve worked for 28 years with Pharmacists Mutual companies, so I’m very familiar with pharmacists and pharmacy students. And I spent a lot of time in the college of pharmacy. And in the late ‘90s, I was talking to the assistant dean and the dean about a personal finance course. And one thing led to another, and we started in the fall of ‘99 at the University of Arkansas College of Pharmacy, a two-hour elective for P3s. And I’m going to brag not because of me but because of the content, it is the most popular elective at the university. So it’s been going on for over 21 years. And it’s just — it’s been great. I look forward to it. Pharmacy students are like sponges, they just absorb it all. And we just — we have a good time. We tell a lot of stories. And I learn from them as well. So it’s a two-way street.

Tim Ulbrich: Absolutely. And I have been teaching a personal finance elective for I think 4 or 5 years, not 20+ years. But one of the things I often think of is, I wish I would have had this. And I know I hear that from others as well. So lucky to have the students that have been able to take your course, that they have access to that information. And Joe, I wanted to ask, you know, we throw around the term, “financial independence,” “financial freedom,” all the time. And since it’s in the subtitle of your book, “Principles for financial independence,” I want our listeners to hear from you, what does that term mean to you? And why is that concept of financial independence so important?

Joe Baker: Well financial independence to me means that if I want to pick up roots, move to another place, I can. I’m not obliged to stay at the same job that I’m in. It just frees you up to do so many things. And I know that money can’t buy happiness, but I have been without money, and that has made it very unhappy. It’s nice to know that if the refrigerator breaks down, the wash machine, or if you want to go on a trip, that you don’t really have to think that much about the monetary. I know I always try to get a good deal, but having the financial independence to do those things and to buy things that you need, it really makes a big difference. It takes the stress out of marriage and life.

Tim Ulbrich: One of the things too, Joe, that really resonates with me as I’ve gotten to know you over the past couple years and obviously got to be alongside of you in this journey, I often tell people as I’m describing this book, is it really is just spewing out with wisdom. And I mean that genuinely.

Joe Baker: Thank you.

Tim Ulbrich: Because I feel like your life experience really comes through in addition to what you have found as effective ways to teach these principles such that they’re easy to understand and they’re action-oriented. So you mention in the beginning of the book, you chronicle your timeline, 30 years old, you got married having nothing but some debt. I think that’s a story that I can resonate, our listeners can resonate. And then if we fast forward, 59 years old, your liquid net worth percentile increases from the top 8% to the top 4% in the U.S. And you mention it took 52 years to get to 8%, the top 8%, and only seven more years to get to the top 4%. And one of the things you mention there is that the significance here was the result of having no debt. So what else as you look back on this journey going from really a net worth of $0 or negative to obviously being in such a good financial position and being financially independent in addition to no debt and having that philosophy around debt. What else has been the secrets to your success?

Joe Baker: Well, I’ll go back even further. You know, it’s a really remarkable journey considering I grew up in a small rural area in south Arkansas near the Louisiana state line. We did not have an indoor toilet until I was 9 years old. And I always, when I’m mentoring students, I say, “Listen. If I can achieve what I have coming from not having an indoor toilet, you can achieve as well.” But fast forward to age 30, you’re right. I had debt. I did have a TV and a VCR and a bed without a headboard. So I did have some assets. But the fortunate turn in my life was I married a high school math teacher. And even though I had a business background, she came in and showed me time value of money and all of the other numbers. And I said, “Wow.” So she whipped me up in financial shape, and I knew she was the one when we were having a get-together at her condo. I think this was the second town we were together. And we had some people over, and someone picked up a paper towel roll, used the second to last paper towel and proceeded to throw it away. And from a distance, I saw my wife — or future wife — go over to the trash, pull that cylinder out and pull off that last piece that was glued to it. And I said, “Wow. I’m going to marry her,” because I knew that she was tight with money. And of course, she makes me frugal today — or excuse me, she makes me look like a spendthrift. But anyway, that helped transform me. And we instilled those — a lot of the money principles with our children. Those stories and more are in the book.

Tim Ulbrich: And a shoutout to Brenna Baker for allowing you to write this book but also for giving you the foundation, I feel like, for what allowed you to learn this topic and of course in turn, teach others. And I love that line that you say in the book, “My biggest financial accomplishment came from marrying a high school math teacher.” So one of the lessons, which I couldn’t agree more with, is making sure there’s alignment with your partner, your significant other, your spouse, when you’re talking about personal finance. And the earlier you can get to that alignment, the better. And you do a great job of discussing that in the book and how important it is. Let’s jump into different areas of the book. And we’re just going to scratch the surface on these. But principle No. 1, so Baker’s Dirty Dozen Principle No. 1, is find a path that will fulfill you. And I think many may pick up the book and not expect that it would start here. So tell us about why you started here and why this concept of finding a fulfilling path is so important and relevant to the financial plan.

Joe Baker: Well, the book did not start off this way. The book was evolved that I had in mind was don’t do this, don’t do that. And then we had a epiphany — excuse me, I’m under the weather today, so you’ll have to forgive me a little bit — when you and I went to Washington, D.C., last year, it was September of 2019, last year, and we both attended a conference with a speaker. And he changed my whole focus on the book. You know, by not telling people what they need to buy or whatever, so I said, “Everyone needs to find their own path, financially, career-wise,” but the purpose of my book is to show you the opportunity cost of every economic decision you make and let you make that decision. I can’t pick a path for you. This is the path that you have to come up, and with the help of the book, maybe we’ll find a way to finance that path. And you can tell a little bit about the speaker who that was. We’ll give him credit.

Tim Ulbrich: Yeah, so I remember that. FinCon 2019, we were in D.C. You actually, Joe, if you remember, we had I think lunch or dinner, and you handed me in a manila envelope the first copy of the book. And we could go back and pull that out, and to your point, there was not this part included. We sat through this keynote, which was delivered by Ramit Sethi, which should sound familiar to our listeners, author of “I Will Teach You to be Rich.” Fantastic book. And that keynote, Joe, I remember it was one of those moments for me as well that I talk about often when I am speaking on this topic. He was talking about the concept of money dials and really identifying the things that matter most to you and finding a way to prioritize and fund those in the financial plan. And he had a great example, he called on the audience to do a couple of these, and then finding the areas that don’t mean a whole lot to you and to stop spending money on those things. And he connected that to the concept that we talk a lot about on the show about finding your financial why, having a purpose, having a vision for your financial plan, and by the way, as you mentioned and alluded to in the book, this path can and will look different for probably everyone reading and many of our listeners as well. And so finding that path, articulating that path, defining that path is so important because the financial plan should be a mechanism to help achieve that and make it reality. And for some, that means a very ‘traditional’ path of I’m going to work full-time and I’m going to do that for 30-40 years and I’m going to make a good income. Others may say, you know what? It’s early retirement, it’s staying home with the kids, it’s doing this or that, it’s working part-time, it’s having options, it’s having flexibility. And I think we’re seeing this more than ever of the importance of this. And I know it’s something that I feel personally as well. So I think it’s a great concept and I think it’s a great way to start off the book before you then get into the x’s and o’s of the financial plan. I remember we looked at each other and we’re like, alright, this is something different.

Joe Baker: Yes. I turned to you if you remember, I said, “I’ve just changed the direction of my book.”

Tim Ulbrich: Chapter One, here we go.

Joe Baker: Right.

Tim Ulbrich: I think you do a nice job too in this first principle that I know will resonate with our listeners, many of which in the field of pharmacy while this book goes beyond just one for pharmacists that I know many are struggling with what do I do if I’m in a position where I’m thinking about a career change or I want to do something different or “more meaningful,” how do I consider that? How do I weigh that? And how does that, again, connect back with the financial plan? And you do a nice job of covering that in principle No. 1. Now, you also talk about in the book this concept of avoiding financial minefields. And I think this gets into a little bit of the defensive side of the financial plan. My question here for you is in your experience teaching on this topic and working with many students, what are some of the common financial minefields that you see people stepping into?

Joe Baker: The biggest one right now are weddings. Weddings, I think the national average cost is $33,000, excluding the honeymoon. And that is just a big, big financial minefield. Now, obviously if the person reading the book is not paying for the wedding, that’s a different story. But even for parents paying for the wedding or grandparents or whoever, that should be looked at in the light of opportunity cost. And that’s what I break down in the book, showing if you use less money for a wedding and quite frankly, the stress of a wedding, wow. My daughter, well, Lindsey, she’s one that really wrote a lot about financial minefields of weddings. And she was just in a wedding, and she was — it was very similar to the movie “Bridesmaids” where everything was costing so much, spending so much time. So people have to be aware of that. And that chapter also includes on making the decision on whether you do that or not and plus other decisions, and it’s very similar to another chapter I have, principle No. 4 about understanding the concept of opportunity cost. Every decision we make there’s an opportunity cost whether it’s economic or non-economic. And I try to focus mostly on the economic choices. So weddings, one of the biggest minefields in a list I think a couple more. And I think that’s the same area where I go into budgeting to find out where you’re spending all your money. And you might be surprised at all the smaller minefields.

Tim Ulbrich: Yeah, you do. You do a good job of that, a stepwise approach for budgeting and trying to identify where those minefields may be. And obviously, you build upon that by talking extensively about student loans, a topic that is near and dear to us. And you also do a nice job in another chapter building on this concept of what I view as some of the defensive parts of the financial plan of the importance of protecting your assets. So of course, details about emergency funds, life insurance, disability insurance, liability insurance, insurance insurance. The list goes on and on, right?

Joe Baker: Right.

Tim Ulbrich: We all know how important insurance is. And what you need, what you don’t need. And I think really being able to navigate that, understand it, and as you can tell already listening to this interview, this book covers a wide array of topics. Now, one of the areas you spent the most time in the book on — and I think you did a great job — is on the investing side, the long-term savings and really breaking this down, I would say this is probably the biggest section of the book and I’m guessing the area that you’ve had through experience, identified where there’s the most questions or confusion. And so my question to you as you talk about the principle around investing and establishing an investing plan, you know, we talk about these terms all the time: stocks, bonds, mutual funds, 401k’s, 403b, Roth versions of those, IRAs, traditional and the Roth, HSA, REITs, alternative investments, cryptocurrency — you know, the opportunities and the options go on and on. And I think this can be very, very overwhelming. I know it’s overwhelming from personal experience in talking with many of our listeners. So how do you walk the reader through understanding and applying this information on the very important topic of investing in long-term savings?

Joe Baker: Well, first of all, the way I wrote the book is the way I teach class. I make a promise to the students. At the beginning of each semester, I say, “My goal is for you to never say while you’re sitting in my class, you will never say, ‘When am I ever going to use this?’” To me, that’s very important because you and I, we’ve all been there where we’re sitting and say, ‘When will I ever use that?’ So I keep that in mind, and I try to keep it as simple and really what it boils down to — you know, the three-asset class is cash, bonds and stocks. And if you’re only relegated to participating in an employer-sponsored plan, you’ll have 25-35 funds to choose from. So it’s not like the thousands of decisions you’ll have to make. And I place a couple recommendations. I like stock index funds as well as Warren Buffet, as you know, Berkshire Hathaway, that’s one of his favorites. Target date funds are good too. And I try to make it as simple as possible. And I also include several stories in there from contributors and where they have messed up. And you know, I talk a lot about individual stocks. You know, people at parties, they’ll talk about buying an individual company stock. And it is a good conversational piece, but frankly, might as well just do that for fun because your investments and your retirement should come from your employer-sponsored plan. But I do have a section in the book about picking individual stocks and how to do that. So if you want to do it for fun, that’s fine. But the bottom line is I try to keep it as simple as possible. And I do cover all the areas, and hopefully the reader will have the same experience as the students in my class and say, ‘Oh, yeah, I’ll use this one day.’

Tim Ulbrich: And I think you did a nice job, in my opinion, of keeping it simple, what you need to know, what you don’t need to know. And then through the appendices, also providing additional information for those that want to dig a little bit deeper on some of the topics or where there’s a stepwise approach to things like understanding some of the retirement accounts or opening up an IRA but that there’s a core foundation that you provide. And I think it reads, in my opinion, such that you can go cover-to-cover but then it should stay nearby because you’re going to come back to many of these decisions or need a refresher.

Joe Baker: For example, when you leave an employer, which you will. On average, I forgot the millennials, I think they have 7-9 jobs by the time they’re out. So what do you do with your 401k or 403b? I point that. You have four options. And that is in the book. So there’s some things there that are practical that you can look at and a step-by-step process for that.

Tim Ulbrich: And again, we’re just scratching the surface on topics that are also included that we haven’t discussed yet: how to make sure you and your significant other are on the same page, where to look for things that can appreciate and avoid things that depreciate, how to get out of debt, best practices for home buying, for the financial plan. Now Joe, when we package the book and said, ‘OK, is it the book? Are we going to offer some other resources?’ We ultimately landed on that we thought there would be value in essentially an investing mini-course series, videos, 6-7 videos that would take people more in depth into investing. Tell us about what folks can expect to get out of those investing videos — I know you’ve invested a lot of time and effort into doing those — and why we felt like that was an important supplement to the book.

Joe Baker: Well, a shoutout to P3 pharmacy student Jason Lam, he’s helped me with the audio and video portions. And he has pushed me pretty hard. We have done several videos that we’re — I think we’re pretty proud of. The blooper reel should be very interesting, by the way. But I just filmed it, most of the videos are out back by the pool. I’ve got a big whiteboard. I’m old school, I like to show it on the board. And quite frankly, it’s kind of a mini version of what I taught to the students in class. We’ll see how it turns out. We’ve also filmed a little skit for Halloween day, so hopefully people will check that out.

Tim Ulbrich: I’m looking forward to seeing the bloopers. So yeah, I mean, that investing video series is meant to I think present the information in a different way. Obviously they’ll have the text to read but also more of a stepwise approach. And for those that want to dig deeper on the investing topic, I think you’re going to find that video series to be helpful. And that comes with either the premium or premium pro package of the book, which is again available at BakersDirtyDozen.com. Joe, I want to read a couple of the testimonials. We’ve got a lot of people that had great things to say about this book. You know, one here that I want to read comes from Nicki Hilliard, UAMS College of Pharmacy professor, past president of the American Pharmacists Association. And she says, “Joe Baker is a good-natured, all around nice guy that is passionate about helping others. He has graciously taught personal finance at the College of Pharmacy for many years, and it is always the most requested elective course, not just because of the good information but how these lessons are delivered with great stories and insight into the big picture of what is important in life. He has put to paper his life experiences, stories and wisdom to help others lead a happier, less stressful and more fulfilling life through financial management. I highly suggest you put Joe Baker’s Dirty Dozen lessons to work in your own life.” This is just one, and as I read through others in preparation for this episode, there was a theme that I kept seeing over and over again of the influence that your teachings have had on people and how they have been able to directly apply that information to their personal financial plan. You know, one that stuck out to me, Blair Thielemeier mentioned how important the financial principles that you taught were for her in her journey of being able to start her business and the work that she has done and being able to have her own personal financial plan in order, several students commented specifically on actions they took in terms of budgeting, opening up retirement accounts, other things that they did directly as an account of your teaching. So as you hear that out loud, and I know you’re a humble person by nature, but what does that mean to you in terms of the impact this work has had on people over the past 20 years? And what do you hope is the legacy of this book going forward?

Joe Baker: First of all, Nicki was very generous in her review. And I appreciate that. Well, it just gives validation, you know, when I hear students come back and they’ll repeat a story and say what they’re doing, if they paid off $200-something thousand dollars in student loan debt in four years, which one has, and when they tell me that those stories, that just validates why I did this. Financial illiteracy is — you know, you could be a pharmacist, doctor, lawyer, and still be financially illiterate. Just because you’re smart doesn’t mean — or high IQ — doesn’t mean that you know how to control your finances. So it makes me feel good, it’s the reason I do it. It’s a selfish reason because I know that I’m getting feedback and kind of confirmation of what I’m doing is the right path. So that’s what keeps me going at this. This was all — the first I think it was 10 years that I did this, I didn’t even get any pay, so it was — they came to me, the school came to me and says, ‘Hey, we want you to do this both semesters.’ I said, ‘Well, I was thinking I might not do it at all.’ They said, ‘Well, how about if we paid you?’ which wasn’t much. I said, ‘OK, I’ll do it both semesters.’ So anyway — and the way I look at it is it’s an unlimited attendance in my class. It’s tough, but if I can reach one or two people that would have not been in there if we had had a maximum size, then it’s worth it. So that’s almost like an evangelical feel to it, reaching more and more people.

Tim Ulbrich: Yeah, absolutely. And I know in talking with several of your pupils, you know, and speaking from personal experience, it’s not even just them. Obviously there’s the impact that you will have on them but also the folks that they interact with, that they rub shoulders with, the kids that they’re raising. I mean, this is one of the things we always talk about, hopefully a generational impact you can have in helping people shore up their financial plan to be able to do and achieve the things that they want to do. And ultimately, as you talk about in Baker’s Dirty Dozen Principle No. 13, to be able to have an impact on their communities, on their places of worship, on others, and to be philanthropic as they can do so once they have their own financial house in order. So I know your work has had a great influence on me. I mean that genuinely. I’m confident it’s going to do the same, it has done the same, will continue to do the same, with others. And I’m so glad that you ended up writing this because one of the beauties of a book is that this resource will live on. And it will have an impact, and people will be able to build upon this work, they’ll be able to give feedback on it, and ultimately hopefully be a conversation-starter for many in their own financial plan. So Joe, again, congratulations on the book.

Joe Baker: Thank you.

Tim Ulbrich: Excited to be a small part of this alongside of you in this journey. And again, to our listeners, head on over to BakersDirtyDozen.com. Through November 7, you can use the coupon code BAKER for 15% off. And as always, we appreciate you joining us on this week’s episode of the Your Financial Pharmacist podcast. Have a great rest of your day.

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YFP 088: Introducing YFP Planning!


Introducing YFP Planning!

On this episode of the Your Financial Pharmacist Podcast, YFP Co-founders Tim Ulbrich and Tim Baker announce some exciting news as it relates to the launch of YFP Planning, talk through the benefits of financial planning for pharmacists and reminisce on the origins of Your Financial Pharmacist.

Summary

On this episode, Tim and Tim dive right into an exciting announcement regarding the launch of YFP Planning. YFP Planning provides comprehensive fee only financial planning services now as part of Your Financial Pharmacist. Formerly Script Financial, YFP Planning covers anything that has to do with your financial situation including cash flow, budgeting, insurance, retirement, tax preparation, and estate planning.

Tim Baker, CFP and head of YFP Planning, shares that financial success and wealth were based off of an old equation that is now a myth. The old method of thinking focused on being income statement affluent where a high income is made, however you have no savings to show for it. Conversely, balance sheet affluence is where money flows in and actually sticks so you can save for a purpose.

Comprehensive financial planning forces you to look at your current financial state and make moves to better it. This can be especially helpful for pharmacists who typically have higher incomes and a lot of student loan and credit card debt. YFP Planning doesn’t just provide you with information on how to pay off your loans, save money, or create a budget, but instead also offers accountability and coaching. Having someone offering an objective approach to your financial situation helps you to see the whole picture and pushes you to take the steps you need to reach your goals.

The YFP Planning process starts of with a free discovery meeting where the YFP Planning team learns more about you. If you decide to move ahead with YFP Planning, the first meeting focuses on getting organized. Then, another meeting is scheduled to discuss your goals and dig deeper into some questions you may have not asked yourself about your financial situation or goals.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to Episode 088 of the Your Financial Pharmacist podcast. Excited to be here with Tim Baker after we’ve had a series of side hustles represented by the one and only Tim Church. He’s doing a great job with that series, the side hustle series, so if you haven’t listened to those, check those out. Tim Baker, welcome back to the show. It’s been awhile since we recorded. I think — what? The New Year Game Plan back in Episode 081.

Tim Baker: I know. It’s actually crazy, like I think — not to be a broken record, but it’s actually nice to be like a listener and to hear all of these inspiring people come on and just the work that you’re doing and Church is doing on the podcast, like it’s really cool to see. Yeah, things have been good, been super, super busy, lots of things going on. But yeah, excited to be back on the podcast today.

Tim Ulbrich: I’m with you on that one. I kind of like the surprise of like an episode going online and get to see it as a listener and hearing the past couple weeks and being inspired by some of the pharmacists out there doing some awesome side hustle stuff. So we’ve got more of that coming also in the new year. So lots going on in your world and the tax prep, right? So we just did a webinar recently. And tell us more about what’s going on in that arena.

Tim Baker: Yeah, so one of the things that I really was thinking about in terms of like Script Financial and really providing great service to our clients is what are some things that really, we have to work through and really deal with every year? And it’s really tax. So before, you know, obviously, I’m a CFP, and a major component of that is tax, but I really wanted to learn more and look at ways to almost start a tax business as part of this Script Financial. And when the things with the Tims all kind of took off, I kind of set that aside. But I was lucky enough to have Paul Eichenberg, who’s a member of my team, who has experience with tax, become part of the team and really offer that as a service to our clients. So last night, we did our first webinar, our first YFP webinar. And it was great. We had great attendance and just kind of a learning experience for us on the webinar side. But yeah, we’re super excited to roll that out for clients. So when clients work with me, comprehensive is just kind of included in their fees, so every year, we’re doing a little bit of tax prep, which is kind of what we’re going through right now, this time of year. And really, kind of the planning that I’m a big believer in that, hey, halfway through the year, let’s take a look and do a projection and make sure that we’re not paying Uncle Sam too much or getting a refund back or whatever that looks like. So yeah, big changes, but very exciting. And just excited to roll that out.

Tim Ulbrich: Awesome. Yeah, you guys have been doing great work there. Shoutout to Paul, I think he’s doing an awesome job leading that. And for those that are listening that aren’t yet clients, if you want to learn more about that service, YourFinancialPharmacist.com/tax. And as Tim mentioned, that’s both inclusive of the filing part but also the strategy part of looking ahead to say, what can we be doing to maximize the tax situation heading into 2019? So Tim, we’ve got some exciting news to share on today’s episode alongside a discussion we’re going to have on the decision to hire a financial planner. One of the most common questions that we get — and we’re also going to be reminiscing along the way about our journey as we both individually reflect back on all of the things that have happened really leading up to this moment. And I think it’s — to be frank, I’ve been kind of giddy about this because, you know, when you and I met just a few years ago, I feel like really, the culmination of that vision is coming together. And it’s been a really, really fun ride. So before we start getting too sentimental, Tim Baker, let’s cut to the chase. Give us the good news. What’s the announcement?

Tim Baker: Yeah. So the big change is that Script Financial, which I just talked about, which I launched way back when in 2016 is now YFP Planning. So this has kind of been kind of in the works, so Script Financial is now part of the Your Financial Pharmacist brand. It’s just super exciting. I know Tim, like when I think back when we met, you know, via Twitter way back when, I never imagined that it would kind of lead our paths to this, but it just made sense in terms of kind of our beliefs and I think what we’re really trying to do in terms of empowering pharmacists and pharmacy students to really take control of their finances. So whether it is the blog or the podcast or a course or doing your taxes or comprehensive financial planning, which is kind of my bread and butter, you know, we felt like basically having that under one brand and one mantle made the most sense, so I’m giddy as well. I’m super excited about I think where we can really take this and I think with good feedback from our listenership and readers and all that basically YFP subscribers to kind of listen to what is needed and adapt. And I think one of the things that really was a catalyst for me to leave kind of the traditional financial planning firm was, you know, there wasn’t really a lot of planning out there for young professionals or individuals that were dealing with student debt or just cash flow and budgeting. So I think in that same breath, we always want to make sure that we’re adapting to the needs of the community and what’s out there and what pharmacists are dealing with. So I’m just super excited to really get going on this and kind of do this relaunch of the brand.

Tim Ulbrich: Yeah, I’m with you on that. And one of the most common questions we get is, hey, do you guys offer comprehensive financial planning? And for our listeners, here’s the answer. Yes, yes we do. So YFPPlanning.com is the launch of the site. So if you’ve been hearing us talk about Script Financial, Tim’s brand and company, we all are now one entity. So YourFinancialPharmacist.com, you can get there as well or directly at YFPPlanning.com. And I think this really, for me, as I mentioned before, is a culmination of the vision that we had when we sat down at Bob Edmund’s on I-71 in Mansfield, Ohio, and I was actually there with Jess and the boys recently, and I was kind of — I mean, she probably was looking at me like, why are you staring off into the distance?

Tim Baker: Get a little teary-eyed.

Tim Ulbrich: Got a little teary-eyed, I was looking at the booth where we sat and had my boys there, and it was just kind of a cool moment. But just sharing that vision of like, you know, we are so passionate about helping pharmacists in this area, and I think our vision at the time was, hey, everything A to Z. Everything from debt to budgeting to investing to estate planning in all forms and fashions, we want to be involved with pharmacy and helping people along that journey toward financial freedom, which for everyone means something different. And we had this vision that whether you want to come to YourFinancialPharmacist.com and check out our free resources and calculators, which we have a ton out there, or you feel like financial planning’s a great fit for you, we’ve got that all now in one place. So let me ask you the obvious question because I think it’s worth digging in a little bit deeper is, what does comprehensive financial planning mean? Because I think we throw that out there, and the industry, as we’ve talked about before in Episodes 015, 016 and 017, you know, is very different in terms of what you’ll get for that service. So for you and for us, what does that term mean?

Tim Baker: Yeah, I think I look at it as if it has a dollar sign, we’ll work through it. To me, if I’m hiring a professional to help me with my finances, I want someone — I want there to be someone in my corner that has my back, that has my best interests in mind, which unfortunately, the way the industry is set up, that’s not always the case. So I think we’re touching on all of the things that are related to the financial plan, more specifically, things like debt management and kind of your fundamentals and cash flow and insurance and retirement and estate. But there are going to be things that are beyond that, those life events that come up, and I think it’s just really important to have someone that understands what your goals are and kind of understands really the technical piece of the financial plan and point you in the right direction. You know, so much of kind of the old equation or the old guard of financial planning was to push product. Hey, you’re a pharmacist or a doctor, here’s a life insurance policy that, you know, is probably going to pay me a lot of commission or a disability policy or an investment. And I’ll talk to you once a year. That’s not necessarily, you know, the model that we employ. So I think that the idea that a lot of things in life, even in the financial services, is becoming more and more of a commodity. So you know, really what we’re focused on is kind of bringing that life plan that fits the view of what your view of a wealthy life is and have the finances really support that. Typically, most people don’t — they don’t accumulate wealth for the sake of accumulating wealth. It’s for, you know, the fact that they want to retire at age 50 or they want to have this vacation home in the woods somewhere. So that’s really the idea is to connect the dots with, OK, what is a wealthy life? And then how do we get there? And that’s, to me, that’s what fires me up.

Tim Ulbrich: Awesome. Love it. You know, Tim, one of the things that stands out to me is over the Facebook YFP Book Club right now, we’re working through the book, “The Next Millionaire Next Door,” by — we’ve talked about it on this podcast — Dr. Tom Stanley, Dr. Sarah Fallaw, which reminds me of our journey and our beliefs to buck the status quo and complacency that’s out there when it comes to achieving financial freedom and building wealth. And the one takeaway that I remember from this book and the first one that was published back in the ‘90s is that this old equation of high income=success is a myth. It’s a false reality. But so many pharmacists, myself included at one point, really subscribe to this false reality. So tell us more about this old equation and how you see pharmacists kind of falling into this trap.

Tim Baker: Yeah, it’s kind of what they talk about when we talk about income statement affluent versus balance sheet affluent. So essentially, income statement affluent — and I see this a lot where, you know, you have a household that makes $200,000, $300,000, $400,000 or whatever that looks like and have nothing to show for it: have no savings, have credit card debt, and essentially, the money, the household’s like a siv, the money comes right in and goes right out. Balance sheet affluent — and I’ve seen this even with residents who make $40,000 or $50,000 or incomes of less than $100,000 — balance sheet affluent are those people that when the money flows in, it actually sticks. And you’re saving for the purpose of retirement or a kid’s education or whatever it is. So the reality is that you’re spending, you know, for a lot of people, a lot of people will say, “Hey, I wish I could make a little bit more. I wish I could get a 10% raise, and then all of my concerns could be put at ease.” But the reality is and the psychology shows us that most people, their spending rises with really their income. So you know, if I double your salary tomorrow, a lot of people will double their spending. So the old equation is, you know, basically is when you follow traditional advice, you should really enjoy your income and really live for today, and we see that in society as being — we very much live on credit and we spend, spend, spend, you know, car payments, a big mortgage, that type of thing where what we really want to do — and it often leads to things that give us stress, so I’m thinking back to Jessica Louie about clutter and things like that. A lot of it is very near-term, like satisfaction of like, oh, this is awesome. But then we just surround ourselves — and I’ve been this way in my life in the past where I’m like, I just have all this stuff that I really don’t like or want that just causes more stress. So I think, you know, the idea is we want to make sure that we are being intentional. We talk about being intentional with our spending. And develop a savings plan that allows you to allocate dollars for the things that mean the most, whether that is a vacation to the Pacific Northwest, whether that is a vacation home in the woods or a trip to Paris, France. Those are really the things that I think are what I talk about life plan that are more important.

Tim Ulbrich: Amen. Preach it, Tim Baker.

Tim Baker: Yeah.

Tim Ulbrich: Preach. You know, it’s interesting because we just finished up “Rich Dad, Poor Dad,” in the book club, and now we’re reading “The Next Millionaire Next Door,” and that wasn’t intentional, but two very — I don’t know if different is the right word — but just very philosophically — you know, “Rich Dad, Poor Dad,” to me is all about growing the asset line and thinking about real estate and those types of things.

Tim Baker: Yeah.

Tim Ulbrich: And I think that “The Millionaire Next Door” focuses much more on frugality and cutting expenses, both of which are very important. And Jess and I were having a conversation the other night is you put the two of those concepts together, and boom. It’s like, game on, right?

refinance student loans

Tim Baker: Yep.

Tim Ulbrich: And I was even thinking back to this old equation, thinking back to 2009, you know, Jess and I had over $200,000 of student loan debt, we had a house with almost no equity, we soon had a growing family to support with the loss of one of our incomes because she was going to be staying home. And we realized that despite all of the amazing opportunities that have been afforded to us, there’s really little discussed truth among practitioners, ourselves included, in this field about how to manage this. And I think many pharmacists listening find themselves in exactly the same boat. And so as you meet with pharmacists or residents or fellows or students, what are some of the most common frustrations and things that you’re hearing from them?
Tim Baker: Yeah, it’s a great question. And typically, when I meet with a prospective client, I’ll lay out essentially three things. And I’ll say, “Hey, Tim,” — you know, typically, when a pharmacist such as yourself comes to speak with me about their finances, they share one of a few things. It could be “I’m overwhelmed with student debt,” or even credit card debt, I’m seeing that more and more, this credit card debt. “I am confused how to properly budget, save and invest in my future.” And that’s kind of a broad, that’s a broader one. But it typically hits for most people. And the last one is, you know, “I’m frustrated by the fact that I make a good income, but I’m not progressing financially.” And kind of this idea of living paycheck-to-paycheck and maybe not enjoying kind of their work because they could be stuck in that work because they need that income, that type of thing. So there’s a lot — and typically, when I kind of go through those pain points, a lot of pharmacists look at me and then they say, “You just described me. Like you’re three-for-three.” So I think it hits on a point a lot of kind of what we’re talking about with empowering pharmacists to really get going on this because you can meander in life and wake up when you’re 45, 55, and really have nothing to show for it. It’s really that easy to do. So I think like part of what we do at YFP Planning now is really, we kind of force you to look at it. We meet quite often, so we almost like force you to really look at that, look at the kind of your current state and make moves to better it. And really examine — we often don’t do enough self-reflection, not just about finances but about life in general. You know, so when I say, “Hey, Tim, what does success look like in five years?” what I often see is, “Wow, that’s a really good question. I never really thought about that.” And then the other things I see, particularly between spouses is kind of like that rubberneck, like I can’t believe that these are the things that you want in five years or that type of thing. And again, it’s hard for us to imagine our five-year-older self, and essentially what I do with clients that if you’re 30 right now, you’re 35, I’m like, imagine when you’re 35 or 40, and put yourself in that place. So I think like the pain points are definitely real, and it’s easy to put your head in the sand and kind of not look at it and just live with it, but I think the sooner that we can kind of get a plan in place, the better. And hopefully, we can do that for you.

Tim Ulbrich: And I think just to build on that, Tim, one of the things I see, I’m sure you see it more often that people often come up to me after a talk or ask a question, and they’ll describe that “I really want to pay off my $200,000 student loans,” or “I really want to save $4 million for retirement.” But when I ask that next-level question of why or what’s motivating you or what’s going to keep you going, there really isn’t much thought there, right? And I think that goes to the point of visualization and thinking about not only your why but where you see yourself in five or 10 or 15 years. And what would be the negative impact if you didn’t do this? Or what are you hoping to achieve by doing this? And I think that gets to the point of accountability and coaching. And one of the things that excites me as we think about YFP Planning is that for the past few years on YFP at YourFinancialPharmacist.com, we’ve been providing a ton of information — and a shoutout here to Tim Church, who has done an unbelievable job.

Tim Baker: Yes.

Tim Ulbrich: The guides, the checklists, the calculators, the blogs, the podcasts. But what I’m getting to here is it’s not just about information. I’ve seen this firsthand with Jess and I working with you that I read on this topic all the time, but at the end of the day, if I don’t have an accountability partner or a coach, things may not get done. And you know, there’s a quote out there. It says, “If information was the answer, then we’d all be millionaires with perfect abs,” right? So you know, talk to me about accountability and coaching. And I think often, there’s this misperception that hey, my financial planner’s going to help me get x return on my investments when really, maybe the accountability and the coaching is the more important piece.

Tim Baker: Yeah, I think like when I look at it, you know, I kind of go through like when I more or less explain to a client what we do, a lot of it is kind of touching on the different parts of the financial plan, but I almost say like at the end of it, like crumble all that up and throw it away because really, I think the value that we provide is kind of the ongoing coaching and accountability. The technical side of it is important, but you think about even like in pharmacy, like it’s important that you know your stuff, but a lot of it is adherence, right? You want to make sure that your patients are taking their medication and all that kind of stuff. So like it’s the same thing as like I could give — what I tell clients often is just because life is so busy, I could give you the most well thought out, awesome financial plan. Most people will read it, say, “Hey, that’s nice.” And they’ll throw it on the shelf, and nothing ever gets done. So I think what we try to do is provide some, you know, where we have a client portal and we try to put those tasks back into the client portal, that pings them and reminds them. And really, again, the fact that we meet frequently, we’re trying to always push the ball forward and cross those things off the list, whether it’s getting your will done or insurance in place or setting up this Ally account for the purposes of Paris, France, which I want them to label it as “Paris, France,” even if it sits empty for two years. I don’t care. I want that there, ready to receive money when that happens. So I think that — I think that the accountability is important. But I also put a heavy premium on the objectivity. So you know, if we take you and Jess as an example, you guys view money differently. So sometimes, it’s good to have someone that has an objective opinion that says, “Hey, these are what my thoughts are, and this is my advice.” So I think if you couple the objectivity and kind of the objective approach to the financial plan with the kind of the ongoing coaching and accountability, it’s a deadly combination. And that’s what I think that often falls short with a lot of other advisors, so sometimes I’ll ask a prospective client, “Hey, who ultimately is going to make the decision? Is it you? Is it you and your spouse? Is it you and a Yoda in your life? What does that look like?” And a lot of times, you know, people will say, “Well, I really respect my dad’s opinion.” They have an advisor, and that’s an objection I kind of have to overcome because most of the time, dad’s advisor is not going to understand or really value what we do because dad’s advisor will typically — you’ll pay based on the assets that are invested and then maybe — and if they don’t have minimums like $250,000 or $100,000 minimums, and they will work with a younger professional, then they talk to you once or twice a year. That’s not our model. We’re very different. So it’s not an apples-to-apples approach. So again, I think the coaching and the accountability part is such a big part of that that I think it’s a differentiating factor between us and other financial planners.

Tim Ulbrich: So Tim, hopefully this is a feel-good for you, but as you were talking right then, I just started making a list of all of the things that Jess and I accomplished in the last three months that I’m confident we either would not have done or would not have done as quickly without your accountability and coaching. So I’m sure I’m missing some, but we’re back on track with our zero-based budget, using YNAB, we got the estate planning documents wrapped up, emergency fund is back to full fund after we moved recently, we worked through plussing up our disability and life insurance policies, umbrella insurance policies, we worked through lowering fees on investments, asset allocation of accounts, and setting up our savings sheet with our sinking funds. And even to your point earlier, some of those have a $0 but are a reminder of the goals that we have, right? So we have some real estate goals at $0 right now. That’s not the point. The point is it’s a reminder of the goal that we’re trying to get to and because of that, even at $0, it’s something that Jess and I are talking about. So that’s the power of accountability right there. Would I have done those things did I have the knowledge to do them? Yes. Would I have executed? Maybe yes, maybe no. And that matters.

Tim Baker: Well, it makes my heart happy. And you guys are great clients, so I think that, yeah, I think that it’s good feedback. Now, the 403b that we have in transit, that’s a work in progress. I’ll talk to you about that today. But you know, there’s always things that, you know — and again, it’s kind of like an ebb and flow. So it’s never going to be clean-cut in terms of like, hey, we knocked this out. Things are going to change in life. And imagine like in your life alone, what has changed over this past year, and you’ve accomplished all that, and you’ve been really intentional about that. And I think almost working together has kind of forced us into that. And I think that’s great. And yeah, I think that it’s hard to — so a lot of — it’s hard to quantify that, though. Like how do you quantify? Because at the end of the day, pharmacists are scientists. They’re very analytical, so they want to say, OK, if I’m paying this amount of fee, am I going to get this return? And I put that back on how do you value x or how do you value y? But I understand, like you have to get value from that. But yeah, it’s great feedback. And I think the things that really fire me up are those types of, that type of feedback but also seeing a client — and I have a few clients in mind that come to me with $40,000 in credit card debt, and they pay it off like aggressively, very quickly, so we can move onto the next thing. And we can see the movement in their overall net worth, so where before they were -$200,000, maybe they’re now they’re only -$140,000, which sounds like people laugh at that, but those are real dollars that we’re making moves towards. So I love those cases, and it inspires me to kind of keep going and really be the advisor, be the planner there that is there to back them up and really encourage them and really give them tough love when they need it as well.

Tim Ulbrich: Alright, so Tim, we’ve talked before on this podcast many times about the value of fee-only financial planning. Episodes 015-017, which I referenced earlier, and lots of variability that’s out there in the financial planning industry. So just real brief, fee-only, what is it? And why does it matter?

Tim Baker: Yeah, so I guess in my profession — and I guess I struggle to call it a profession for a lot of reasons, but really, the way that advisors are really identified, so if we have any John Oliver fans out there who does Last Week Tonight, he does a segment on financial advisors and kind of what they are and how they work, and I always reference that because I think it’s actually pretty funny and pretty accurate. You know, essentially, a financial advisor or financial planner, that name really doesn’t mean anything. Unlike a PharmD, an MD, a JD that actually carries weight to it, the CFP has, that’s kind of like an accreditation that you want, a Certified Financial Planner, but essentially, financial advisors, financial planners, are typically categorized in three buckets. You have a commission agent, which in the very extreme example, think of like Wolf of Wall Street. “Hey, Tim, I’m walking in the parking lot, I had this great idea on a stock that I want to sell you or this life insurance plan or this disability policy.” It’s very transactional, and it’s the sale of product. So I’m trying to get my commission and then go. The fee-based world, which this is where I started in the industry before I launched Script Financial was fee-based. Fee-based is basically where you have advice and the sale of product, basically they’re merged together. And anytime that happens, you have a conflict of interest. So in my last firm, I would say, “Hey, client, I could sell you this mutual fund that pays me a 1% commission and a 1% trail or this one that pays me a 5% commission. Or if we talked about term and whole-life, this particular term policy pays me a commission of x and whole-life pays me a lot more,” so anytime that you have — and we see this, Tim, we see this with physicians. So physicians are not supposed to get kickbacks on the medication they’re prescribing because, you know, there’s a conflict there. So it’s the same in our industry, except right now, most of the advisors out there operate in that fee-based world. What fee-only does, and it’s a very, very small subset of financial advisors out there. I’ve heard estimates it’s less than 5%. What fee-only is is basically you separate the advice, the dispensing of advice, from the product. So my compensation comes directly from the client, there’s no kickback or referrals. It’s not through a mutual fund or insurance company. It comes directly from the clients. So I don’t really — I’m not influenced to put a client in Product X or Y. I want to basically — I’m giving them the advice, they’re paying me for the advice, and I’ll put them in products that I think are in their best interest. So the big thing with fee-only is that it follows that fiduciary standard of care, which means that I’m legally bound to act in my client’s best interest versus a suitability care, which the majority of advisors out there where they can actually put their own interests ahead of their clients’. Which is crazy to me that that is actually a thing.

Tim Ulbrich: And I think just to drive that home one step further, if we think about the traditional financial advising model, typically, there’s a compensation based on Assets Under Management, so how much you’ve invested with them or commission from product scales, which often are hidden from view or hourly fees. So in other words, that advisor is incentivized to focus on investing over other options. And sometimes, this means that your goals as the client and their goals as the advisor are not fully aligned. And that is so important for pharmacists to hear that message because as we launch YFP Planning, we talk about fee-only financial planning services, which is what you’ve been doing with Script Financial, that it really bucks that model entirely. And that’s really important for those of you that are looking comprehensively, that I need help with student loans, I need help with credit card debt, I need help with my budget, I need help with home buying, I need help with estate planning and all these other things with investments being one piece of that. But we’re not going to only focus on investments, ignoring the rest of the financial plan. And so I think that holistic model and that pricing incentivizes that comprehensive nature is incredibly important for our clients to be considering, whether it’s us or somebody else, to make sure that they’re looking at a model that’s fee-only, that there’s a right educational credential and that pricing is done so in a way that really incentivizes that advisor to work with you on a comprehensive nature.

Tim Baker: Yeah, and one of the things that frustrates me a bit is, you know, when I’m talking to a prospective client and they’re like, “Well, maybe I’ll go with my parents’ advisor that doesn’t charge them anything,” which is utterly false. It’s so, like, nothing comes free. So you know, typically, what happens there is that they don’t know what they’re being charged, which is a problem. Transparency is a problem in our industry. So that’s a problem. But I think also is the — I think when you work with a professional, there’s almost like a sense that they know what they’re talking about. And I would say by and large, most advisors have no idea what to do with student loans or how to help clients with a budget because it’s just not something, you know, most advisors want minimums of $250,000 in investable assets, so there’s almost this assumption of wealth. So it’s like, “Hey, kid straight out of pharmacy school, good on you. But you don’t need financial planning help,” which is utterly false. It’s just that their model is set in a way that they’re incentivized to go after those that have investable assets. And then really with the student loan piece in particular, I’ve had clients that say, “Hey, I’ve been working with this other advisor, and their advice on the student loans was like, oh, they’ll just take care of themselves. They’ll just amortize over time,” which is like ugh, I just want to scream to the heavens and say, “No, that is terrible advice.” But then they’re also in a whole-life policy or whatever. So it’s just crazy talk.

Tim Ulbrich: Follow the dollar. Follow the dollar.

Tim Baker: Yeah, exactly.

Tim Ulbrich: So talk us through the process at YFP Planning. Where do people begin? And then once they go through that process of trying to figure out is it a good fit for them or not? What does that look like from there?

Tim Baker: Yeah, so it’s a great question, Tim. So I think the best, you know, if you’re listening to this podcast and you’re like, man, I think this works for me, probably the best thing would be to go YFPPlanning.com, and you can actually schedule like a free discovery meeting with myself. And really, this allows me to kind of learn a little bit about you and potentially your spouse, what are the big issues that we’re dealing with and kind of talk through the process and what we do and kind of get a sense of each other to see if we would be a good fit. So you know, if we decide that, we kind of go through a step to kind of get you onboarded. So it could be really the first meeting that we have is get organized. So in the get organized meeting, we essentially look at your client portal. So once you become a client, you get a welcome email that says, “Hey, start linking all of your things to the client portal: your checking, your savings, your student loans, all that.” And what I’m doing is I’m building the first lens in which I’m going to look through to give you advice. So I’m looking at a snapshot of your income and your net worth, and then we also do kind of a 90-day retroactive budget exercise just to see how money is flowing through the household. So that’s really the first meeting. And then from there, we essentially schedule the second meeting, which is the second lens in which I’m looking through is it’s all about the goals and kind of hearkens back to the three questions that we went through with you and Jess. And really, it’s where I learn the most about my clients and really how the client views what a wealthy life is. So we’re going to ask you thought-provoking questions that you probably have not asked yourself. But the idea is to really, based on those two meetings, build a plan in a way that I am helping you grow and protect income and grow and protect your net worth while keeping your goals in mind. To me, that’s the name of the game.

Tim Ulbrich: So Tim, I’m guessing some are thinking, can I just do all of this myself? So what is your answer to that? Because I know for you, fit is very important in terms of the right fit for you, the right fit for the client. So what is your response to that?

Tim Baker: Yeah, I think, you know, I think the answer is that you can. You absolutely can. And there are a lot of people that kind of more of a DIY approach. And Tim, I would probably put you as a more DIY, especially before we first met, but I think once you start working with someone and you can kind of see the power of kind of the ongoing coaching and accountability, it almost kicks that into second gear. So I think you can. I think my view on that is, you know, I’m a financial planner, and I need a financial planner because, again, I need someone to objectively look at Shea and I’s situation and say, hey, we come from very different places in terms of money. These are our goals, how do we get there? So I get it. Pharmacists are very smart. They’re very analytical. But you know, even if you’re going to play a sport, you’re going to workout, typically, you have a trainer or you have a coach that kind of looks at your situation and looks at it from that third-party viewpoint and say, “Hey, brass tax, these are things that I think you’re doing well at. These are things that I think we need to improve upon.” So I think that you can. I would argue that what we do across the board with tax — so the slide that I put up last night was the average pharmacist will make $9 million, and $6 million will flow through your accounts. What’s at stake is really the $3 million that typically is eaten up by tax. How do we be as efficient with that as possible? You know, I’m analyzing an individual’s 401k now, and their expense ratios are like 2.67%, which is crazy. Like it’s crazy. So with a little bit of adjustment, we can really lower that substantially. And over the course of their lifetime, we’ll save probably hundreds of thousands of dollars, not an exaggeration.

Tim Ulbrich: Maybe more.

Tim Baker: Maybe more. And again, that’s not a guarantee or anything, so nothing like that. But like, it’s those types of things that either you — the audience, you guys are trained as pharmacists, you’re not really trained to look at some of these things that I do every day with clients. So it’s just that other, maybe more technical piece of it to really look at. And again, I think kind of the high-touch that we are with offering the tax and the cash flow and budgeting piece is I think a really differentiator between us and maybe the other guy.

Tim Ulbrich: So to our listeners, regardless of whether you choose to explore YFP Planning, I want to offer up a challenge to you that is two questions. No. 1, what are you going to do in the next 30 days to change your financial situation? And No. 2, what’s the first step that you’re going to take towards your wealthy life? Because everyone we’ve talked to, myself included, constantly says, “I wish I would have started earlier,” right? And when I go talk with students and residents and I talk with faculty and pharmacists and preceptors, the one thing they say is, “I wish I would have started earlier,” or “I wish I would have learned this information sooner.” So Tim, let’s wrap up here. Just give us a little bit of background on the YFP Planning team — I know it’s a team that’s growing — and what our listeners can expect as they engage with us as a group.

Tim Baker: Yeah, so I’m super fortunate enough to have a good team that surrounds me. Like I mentioned, Paul who was on our webinar last night, he is essentially my go-to. He’s basically Director of Operations and Tax. So he handles all of the tax returns internally. Frankie, who’s my assistant, she does all the behind-the-scenes work that sets me up for meetings and follow-up and all the things that are crucial to kind of push the financial plan forward and helps me with that. And Tom, who’s my assistant advisor. And all Tom does is work on cash flow and budget. He’s a super nerd, he likes that stuff.

Tim Ulbrich: Super nerd.

Tim Baker: Super nerd, yeah. So I’m so happy to have them as part of my team. And of course, you guys in terms of helping the firm grow and Caitlyn, who does an excellent job with the podcast, all integral parts of the team. But I think like as we — and Tim, I was thinking about this, like you know, the other day, I’m like maybe we should have like a career section on our website. Because I think that we are growing, and I would love to be able to have maybe jobs out there that maybe would be interesting to the YFP community. But I’m excited. We’re looking at bringing on a paraplanner in the coming weeks and just to add additional backup. And I think as we grow, one of the things that we’re really — and we talk about this a lot, kind of the three Tims — is making sure that our brand is — we want to make sure that what we represent and what we believe in is kind of is shown amongst all of our team members. So I’m just excited about, you know, really the rebrand and I think where we’re going to take this going into 2019 and beyond.

Tim Ulbrich: Absolutely. And to the point you made about the careers piece, we’ve got some exciting announcements coming out, looking for some writers that are passionate about this topic.

Tim Baker: Yes.

Tim Ulbrich: We welcome and value other perspectives. And then also, we’ve been floating around the idea of a student internship. So if there’s any students out there listening that are nerds on this topic, we’d love to hear from you. [email protected]. And we’re hoping to make that a reality here in 2019. So to the YFP community, as always, we appreciate you joining us each and every week. And we’re excited to be on this journey alongside of you. And if you’re not yet a part of the community over at the Your Financial Pharmacist Facebook group, check it out. That group every day inspires me as they’re challenging, helping one another, motivating one another, sharing success stories, looking for encouragement. So again, that’s the Your Financial Pharmacist Facebook group. Tim, it’s been a lot of fun, as always, with this episode and the journey, and looking forward to an awesome 2019.

Tim Baker: Same here.

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