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YFP 405: Navigating Retirement Income: How to Turn Assets into a Paycheck

Posted on by Caitlin Boyle

How do you turn your retirement savings into a reliable paycheck? In this episode, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, and YFP Co-Founder & COO, Tim Baker, CFP®, RLP®, RICP®, break down three common strategies for building a retirement paycheck — including how each works, who they’re best for, and the pros and cons to consider.

Episode Summary

How do you turn your retirement savings into a reliable paycheck? In this episode, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, is joined by YFP Co-Founder & COO, Tim Baker, CFP®, RLP®, RICP®, to explore three common retirement income strategies: the flooring strategy, bucket strategy, and systematic withdrawal strategy.

Together, they break down how each approach works, who they’re best suited for, and the pros and cons you should consider. You’ll also hear insights on the emotional and psychological shifts that come with leaving behind a steady paycheck and the importance of building flexibility into your retirement plan.

Whether you’re approaching retirement or just starting to think about your long-term goals, this episode will help you better understand how to create an income stream from your hard-earned assets.

📅 Ready to work one-on-one with a fee-only financial planner? Schedule a free discovery call at yourfinancialpharmacist.com to learn how our team can help.

Key Points from the Episode

00:00 Introduction and Episode Overview
00:39 The Importance of Withdrawal Strategies
02:18 Building a Retirement Paycheck
04:29 Emotional and Behavioral Aspects of Retirement
05:02 The FIRE Movement and Balance in Retirement
06:32 The Role of Financial Planning Credentials
09:52 Three Key Withdrawal Strategies
11:03 Understanding the Flooring Strategy
24:56 Understanding Risk Tolerance Over Time
27:10 The Bucket Strategy Explained
29:55 Advantages and Disadvantages of the Bucket Strategy
34:45 The Systematic Withdrawal Strategy
45:27 Flexibility in Retirement Planning
46:23 The Importance of Professional Financial Advice

Episode Highlights

“It is a shift because for 30, 40, maybe 50 years, if you’re an overachiever and you’ve saved very, very early in your career, you’ve been socking money away for future you. And now future you is here and it’s like, okay, what do we do? ” – Tim Baker [6:28]

“ One of the cardinal beliefs in retirement, and this can sometimes be hard to swallow, is be flexible. The more flexible that you can be when you retire – how much you spend in retirement, all that stuff – the odds increase of a successful retirement. And I define a successful retirement, at least at a baseline state of you don’t run outta money.” – Tim Baker [39:54]

“ Will we work part-time? Will we not? What’s the market doing? What are the goals that we have in retirement? All these things are a good reminder that whether it’s in the accumulation stage or in the withdrawal stage, this is not a set it and forget it, right? This isn’t the strategic plan that we forget about for five years of the organization. We’ve gotta set this plan intentionally. Then we want to be revisiting this because there’s going to be internal and external things that are going to be moving and changing over time.” – Tim Ulbrich [45:54]

“ Your balance sheet and your goals are going to be unique to you and what you’re trying to accomplish. So, I think it takes a tailored approach to get you to where you want to go.” – Tim Baker [48:01]

Mentioned in Today’s Episode

Episode Transcript

Tim Ulbrich: Tim Baker, back to back. Good to have you on the show.

Tim Baker: Good to be back, Tim. What’s good?

Tim Ulbrich: You know this, this episode is, is one I’ve been looking forward to because over the past seven plus years of the podcast, we’ve talked at length about the accumulation side of the equation, right? When it comes to

Tim Ulbrich: saving for retirement, we’ve talked about things like how do you determine how much is enough and what are some strategies. For investing when it comes to traditional retirement accounts. Think 401k, 4 0 3 B IRAs. We’ve talked about options for investing when you’ve already maxed out these accounts and, and we’re gonna link to those episodes in the show notes for folks that want to learn more about the accumulation stage.

Tim Ulbrich: But this episode is really about the other side of the equation, which is one that I don’t think we give e enough attention to, which is the withdrawal strategy. [00:01:00] Hey, we finally get to. This point in the future of retirement and whatever that may look like. And we’ve gotta be able to produce an income for ourselves in retirement that otherwise was provided to us by our employer throughout our career.

Tim Ulbrich: And as obvious as that sounds, I think it’s something we don’t think enough about. And I love how you frame this as a concept of, of building a retirement paycheck. So paint a picture for us of, of what you mean by that.

Tim Baker: Yeah. And, and I think even before I get into that, Tim, like I, I, I don’t think that we’re alone in kind of our ignoring the, you know, kind of the withdrawal phase. I, you know, one of the, one of the things in the CFP curriculum, I. Certified financial planning curriculum is, they don’t really talk about this too much.

Tim Baker: And I think there’s a gap. You know, it’s, it’s all about, hey, amass wealth as much as you can and you know, we’ll get these buckets of money and then when, when we retire, then what? Right. And I even remember the first firm that I ever worked with, it was almost like our clients were driving those decisions, which is not [00:02:00] a bad thing, but we would basically say like, how much do you need this year?

Tim Baker: And then we would, you know. Basically send that to them, distribute those assets in the most efficient way possible. But it wasn’t really us doing analysis of like, okay, what do we need to, you know, what can we spend? Or, you know, how, how do we make this, um, nest egg last us for time? Unknown, right? So. To me, the, there’s, there’s a gap there and I think it’s really important for us to understand that.

Tim Baker: So when, when I think about this, like re like building a retirement paycheck, you know, I, I really think of this as like a multifaceted thing. There’s so many things, you know, just think about it from the accumulation side. You know, we all the different things that go on, like obviously we get a paycheck, but we also have.

Tim Baker: Benefits from our employer, like health insurance. You know, we’re saving for retirement, which is not something we typically do in retirement, but it’s, it’s, you know, it’s the paycheck itself and how do we access these [00:03:00] buckets of money and spend them down in an efficient, a tax efficient way possible, but also like efficient in terms of like your life.

Tim Baker: I finally started reading the book, um, die With Zero, Tim, so I’m, I’m in the beginning parts of that and it’s such a different. Thought process of like, Hey, you get dividends to go on a tangent here. You get dividends from life experiences. So like if you, you know, one of the things I did after I got in the Army is I backpack Europe for, I.

Tim Baker: Four months, right? Just kind of went to the wind and like, this is awesome. You know, kind of a YOLO experience. And what he says in those types of things is like those dividends have paid you back in terms of memories over decades of your life. If you wait to do that when you’re in six, your sixties or seventies, and then you pass away at 90, you have a couple decades but not a lifetime.

Tim Baker: So it’s also spending down. The portfolio in a way that maximizes those types of things. So, you [00:04:00] know, it’s, it’s housing decisions, it’s long-term care planning. All all of those, it’s estate planning. All of these things are, are really important as we transition from accumulation to decumulation. But just in a different way.

Tim Baker: Everything’s still happening very similarly. It’s just, you know, instead of the employer giving you a check, you have to kind of figure that out yourself.

Tim Ulbrich: I am so glad you mentioned Die With Zero. We, we should probably do a whole, a whole separate episode on that. You know, I, I often tell people like, if you read Die With Zero, don’t only read Die With Zero ’cause you’re gonna like drain all your bank accounts.

Tim Ulbrich: Right. But it’s such, it’s such a different concept.

Tim Ulbrich: It’s, it’s so refreshing. Um, and to your point. There’s that dividend component, but it’s also a learned behavior. You know, we start to talk about the tactical side of withdrawals. We have to remember there’s a big emotional piece here. So we can talk about, you know, what’s the best tax efficient way and is it this strategy?

Tim Ulbrich: Is it that strategy and actually getting money outta your account? But that is a mental shift when for [00:05:00] decades. You’ve been putting money in, seeing those accounts grow outside of the, some of the volatility of the market, and all of a sudden we’re making a conscious choice to take money out and see those accounts go down. That’s a piece that gets left out so often as well.

Tim Baker: And, and I don’t, I don’t know why Tim, but for whatever reason, I feel like on my YouTube feed I’m getting a lot of like videos about like the fire movement and people abandoning the fire movement. And, and, and part of the, the struggle with the fire movement, and again, no hate on the fire movement, but is exactly what you’re talking about, but like two extremes.

Tim Baker: Where, you know, I am, I’m saving and saving and saving, and then I get to my freedom number or whatever, and then I’m like expected to be, behave, you know, the shift, be the behavior and spend down. And it’s like, uh, I, I don’t want to, so just like everything in life, it’s about balance, right? And you can’t, you know, we kind of talk about.

Tim Baker: You can’t, you know, do this your whole life. So, you know, listeners can’t see this, but I have an open [00:06:00] hand where you’re, where you spend, spend, spend, and you can’t do this necessarily your whole life where it’s a closed hand and you save, save, save. Because what’s the point, right? So to me, it’s really about finding the balance.

Tim Baker: And this again goes back to the idea, not necessarily of a plan, but planning. With the g on the end planning Corey, uh, Jenks out there. So to, to me, that’s, that’s what this is all about. And again, it is a, you know, it is a shift because for 30, 40, maybe 50 years, if you’re an overachiever and you’ve saved, you know, very, very early in your career, you’ve been, you know, socking money away for, for the, for for future You.

Tim Baker: And now Future You is here and it’s like, okay, what do we do?

Tim Ulbrich: Tim, I remember it’s probably maybe two, three years ago we, we did a retirement series and part of that, and again, we’ll link to some of those episodes in the show notes, but part of the motivation for that was you going through the RICP training. I. And, you know, we talk about [00:07:00] the alphabet soup of credentials behind

Tim Ulbrich: pharmacists.

Tim Ulbrich: I think you’re starting to compete with some pharmacists out there,

Tim Ulbrich: right? With the, the CFP, the RICP and the, the life planning.

Tim Ulbrich: Um, but I remember you going through that certification and despite the experience that you had, obviously the CFP credential, which we feel like has a ton of weight and value in how comprehensive it is in both the education and the experience. It really felt like the RICP for you unlocked. Some other resources, information that perhaps weren’t covered in the same level of detail with the CFP te. Tell us about that.

Tim Baker: Yeah. And, and to go to the CFP, like, like there is a retirement section in the CFP, but a lot of that I think is geared more towards, um, like retirement plans. Like what’s an IRA? What’s a Roth? IRA? What’s a simple, when do you use a defined benefit, you know, for like self-employed people defined benefit or defined contribution plan.

Tim Baker: So it’s, it’s very plan driven. So almost like product driven versus like. [00:08:00] What do we do when we get to the end here? And it’s like I, you know, and for me it was like, I want to be able to answer that question of, Hey, I’m 65, I wanna retire next year. Like, what does that look like? So the R-I-R-I-C-P really focuses on the transition from the accumulation to the de de accumulation phase in retirement and.

Tim Baker: It, it’s really trying to figure how to turn your savings into a retirement income for stream, for time, unknown, right? And the things that’s covered is obviously like rebuilding the retirement paycheck, retirement income planning, but it’s social security and Medicare. It’s tax efficient withdrawal strategies, um, annuities and guaranteed income, long-term care planning, estate and legacy planning and housing decisions, which is gonna be one of the biggest expenses for retirees.

Tim Baker: Um. You know, especially early, early on. So to, to me, it’s really, really important for, it was really important for me to do a deep dive in those things because again, I, I [00:09:00] think the CFP, which is great, and they can’t be, you can’t do a deep dive in everything. It’s almost like, um, you know, a PGY one is what, like a general residency to like a PGY two where you’re, you’re, you’re more specialization.

Tim Baker: I think this is more of the, the PGY two. So my, my belief is, is that if you’re working with a financial planner. They darn well, sure better be a CFP, but I think if you’re in that retirement, you know, close to retirement or in retirement, I, I would say RICP is, is something that they absolutely need to do.

Tim Baker: And some of the strategies that we’ll talk about really cover a lot of the things that I listed that, you know, the RICP goes through.

Tim Ulbrich: Yeah. And retirement income certified professionals. So that’s what the RICP stands for. For folks that are, are curious about that and, and it’s a timely discussion, Tim, because last week on episode 4 0 4, when we were talking about questions to consider when you’re evaluating hiring a financial planner, one of those big questions was, you know, what’s included in the plan and the planning process, and is there alignment with your.

Tim Ulbrich: Planning needs and the experiences [00:10:00] and credentials and education of the people that are leading those services. So before we jump into the three strategies, two important disclaimers. All right. First and foremost. When we talk about withdrawal strategies and approaches, of course there’s some foundational work that has to be done that will be critical to knowing which of these approaches may make the most sense, right?

Tim Ulbrich: So obviously, how much do we have saved? What buckets are those funds in? What are the retirement goals? What are the potential risks? How might social security fit in? So lots of work to be done before implementing a withdrawal strategy. The second thing that. Of course has to be said is, is every one situation is different.

Tim Ulbrich: Of course, there’s more than three strategies, and this is not intended to be advice. You know, we really feel like the work that we do, our team does one-on-one when we’re doing financial planning with clients. That’s where the application and the implementation of these strategies would come. Again, curious to learn more about their services, go to your financial pharmacist.com.

Tim Ulbrich: Book a discovery call. We’d love to have a conversation. [00:11:00] So, Tim, let’s jump into these three strategies, and with each one you’ll provide a, a high level overview of, of exactly what is the strategy, and then some of the advantages, disadvantages, considerations, and who it may be best for. So let, let’s start with the flooring strategy, which our first of the three strategies tell us about what the flooring strategy is.

Tim Baker: Yeah, so the flooring strategy is probably the most conservative, and it’s probably the most. Neglected is probably not the you use, but I would say one that’s, it’s probably more on the shelf collecting dust for a lot of people. And I, and, and we’ll go through why that is, but it’s a conservative approach, um, that involves creating a layer of guaranteed income, which we call the floor, to cover the essentials that the essential expenses.

Tim Baker: So we’re talking about housing, food, utilities. Healthcare, the things that are gonna go out the door regardless of, of anything. Right? And usually what, what we [00:12:00] use to build the floor are things that provide guarantee, hopefully lifetime income. So that’s typically social security, a pension, if you still have those from your employer or an annuity that you purchase on the market.

Tim Baker: So. This is the best solution to, to mitigate the risk of running out of money. Um, so you essentially, and it, and it, and it’s essentially using like obviously social security and a pension, you know, is something, a benefit, you know, that you, you basically bought into during your career and it’s provided by the US government and or a company.

Tim Baker: An annuity is typically where you’re working with an insurance company to say, Hey, here’s a chunk of money. I want this over my life, you know, over the extent of my lifetime. They don’t know how long you’re gonna live, but they use, you know, tables to kind of figure that out. How much do I get for this chunk of money?

Tim Baker: Um. So the discretionary expenses are then, so once we, once we, once we figure out, okay, these [00:13:00] are the essentials for me to live, then anything above that, the discretionary expenses typically are funded from your remaining investments. So it would be, okay, I still have some money in my 401k or my Roth IRA or a brokerage account.

Tim Baker: Um. So, you know, converting these assets, um, to an income stream, IE like an annuity, eliminates the possibility of like, you withdrawing too much, right? So one might be saying, Hey, this sounds great, what you know, so let’s talk about advantages, but we’ll talk about disadvantages. So the advantages here is that if you can create this floor, it guarantees basic living expenses for life.

Tim Baker: So if you think about that like that. To me, when I hear that is super like peace of mind,

Tim Ulbrich: Warm blanket.

Tim Baker: yeah. It’s the, it’s the warm blanket, right? It reduces the, the anxiety about market volatility. So right now, like if you had a floor in place and you know [00:14:00] that a check was coming from an annuity, a pension, and a social security, I.

Tim Baker: To pay the, pay the mortgage if you still have it or you know, all the buy food like you’re, you are inoculated from the craziness that is the market. Right. And that’s the psychological thing, I think is the biggest advantage because I always make this joke. I. You know, I think sometimes my dad thinks I like day trade.

Tim Baker: He is like, oh, what about the market? Every time I see him and I’m like, I don’t know. I don’t, I haven’t even looked at it. You know? And I think he’s kind of preoccupied by that. Right? And, and if you are retired, you’re like, you wanna live, right? You don’t wanna have to worry about the market and, and like where the next paycheck, you know, you know, figuratively speaking is

Tim Ulbrich: yeah. There can become an obsession with, with

Tim Ulbrich: tracking the market. Yeah, for

Tim Baker: Yes. Um, I think the other thing is that it reduce, it, it simplifies cashflow management. Um. And it actually, it, it actually also reduces the. The, um, risk for like elder care abuse. So sometimes, you know, if you’ve ever, it’s like, Hey, Mrs. [00:15:00] Jones, why are you getting, you know, why are you redoing your kitchen?

Tim Baker: Or, you know, why are you having solar panels, panels put on your house? Sometimes older people, I. Um, can be at risk for people to defraud them or to, or to sell them things that you don’t need. So if, if, if there’s less money available and, and your money’s coming from a, it’s just less to take, so to speak.

Tim Baker: So one of the things that we, we train on as financial planners is to kind of be aware of some of these things. So if I have a million dollars versus I have 200,000, because I, I, I put a, a large chunk into an annuity, that’s harder for someone to get to. Um. And then, you know, it’s, it’s the custom flexibility.

Tim Baker: You can com, you can pair this with, typically you pair the, you still pair this with a bucket strategy or systemic withdrawal strategy, which we’ll talk about. Um, so those are the big advantages and for a lot of people, you know, that peace of mind and not having to worry about the market. Is why they do this.

Tim Baker: Um, from a disadvantaged [00:16:00] perspective, Tim, it’s redu. It’s, it’s, it can severely reduce your liquidity. So once you purchase that annuity, you’ve taken a chunk out of your IRA or your 401k and given them that to an insurance company. Now what they give back to you is a steady stream of checks for the rest of your life.

Tim Baker: But in the event of emergency or things like that, like that money is not accessible.

Tim Ulbrich: So, uh, uh, a quick, for instance, Tim,

Tim Ulbrich: I, I might have say a million dollars round numbers, a million dollars in my IRA. And depending on, and we’ve talked about annuities on the show so people can, can check that out and lots of different things to think about there. But I might take or peel off, say, $300,000 of that IRA or 400 or 200, whatever the number is, and convert that to a guaranteed monthly paycheck essentially.

Tim Ulbrich: And we would know what that dollar amount is. And, and then you’re, you’re kind of looking at, uh, you know, what’s the opportunity cost there is what you’re referring to that. Hey, if I don’t have these dollars now, kind of investing and growing, because we’re not just gonna stop [00:17:00] investing our money when we get to retirement, we’re still gonna have some of those dollars

Tim Ulbrich: that hopefully are in a growth phase as well.

Tim Ulbrich: But we’re taking those dollars off the table and saying, Hey, instead, we wanna have this, this guaranteed in income stream.

Tim Baker: Yeah, so it’s really twofold. It’s, it’s the opportunity cost, um, and potentially lower returns. So, you know, what else, you know, how else could that money have grown outside of it just kind of coming to me in the form of a check, but it’s also like, hey, we have a flood or something goes out on the house and I don’t have enough liquid set aside to account for that.

Tim Baker: So now I’m dipping into. Maybe some of my more riskier, volatile investments to cover that. So it’s, it’s both the opportunity cost and then, you know, kind of the, the risk that you need liquidity to. Now again, I would, I would make sure that we have an emergency, you know, the emergency fund never goes away, but sometimes you know, that, you know, you’re an emergency can kind of outpace you know, what, um, what you have liquid.

Tim Baker: The other is inflation risk. So I would say. I don’t know [00:18:00] if it’s all, but I would say most annuities that you’re gonna purchase don’t include a cola, a cost of living adjustment. So if out, if inflation outpaces the growth of the grant, guaranteed income, um, purchase and power may erode. And this is why social security is so powerful.

Tim Baker: And one of the biggest decisions that you make is because every year it kind of keeps pace with inflation. Retirees would argue maybe not as much as it should, but. You know, the, the one of the biggest expense or riders that you could have in an annuity purchase is like some type of in, in adjustment that the, the, or the rate goes up and it’s typically not pegged to cola.

Tim Baker: It’s typically like, Hey, I want a 1% or a 2%, um, kind of arbitrary adjustment every year. And, and that’s expensive. So, you know, this, that’s a big thing is in inflation risk. The other big thing is loss of control. You know, it can feel restrictive. It’s like, hey, I was looking at a million dollars, now I’m looking at half a million dollars, or whatever the case is.

Tim Baker: Um, complexity and cost. So, [00:19:00] um, there’s lots of different flavors of annuities. I kind of believe if you buy an annuity, keep it simple. Um, so there are ones that are more, but you know, you’re gonna have complexity. You’re gonna have costs associated with that, just like you have in investments. Um. And probably the last thing is just kind of dependence on the insurance company and, and their solvency.

Tim Baker: So, and you know, social security backed by the full faith and credit of the US government. So you can argue how, how stable that is. But you know, the insurance company, you know, they’re typically a for-profit. You know, they’re, they’re not the federal government. And while most, um, you know, insurance companies have, you know, state guarantee associations and protections there, there’s limits there.

Tim Baker: So those are the big disadvantages.

Tim Ulbrich: So, Tim, if we just zoom out for a moment. I’m, I’m oversimplifying to kind of make the point here with the flooring strategy, and I thought you said something real important is to not think about these as necessarily three discreet strategies. Often we may have more than one approach, right? So as we talk about these, these three individually, but let’s say I evaluate my monthly [00:20:00] expenses and you know, I determine, hey, it’s gonna be $10,000 for Jess and I in retirement and of that.

Tim Ulbrich: Let’s say $5,000 are essential expenses, the ones you talked about, uh, housing, utilities, food, healthcare, et cetera. And the other five is discretionary things that we wanna be able to do. Grandkids, travel, whatever, right? Eating out, those kinds of things. So with the flooring strategy, the idea would be either between social security, a pension, which maybe some of our listeners might have, but many, many not, and or an annuity. I would try to replace that 5,000. Um, and then as you mentioned, through other assets we would account for, for the other 5,000.

Tim Baker: Yeah, so to kind of take that example, let’s say the, let’s say the floor that we have to set is five grand. So those are for the essential expenses, housing, food, gas, utilities, medical stuff, insurance, all that stuff. So let’s say it’s five. Let’s say social security covers three of that. Then we have a gap in the floor of $2,000.[00:21:00]

Tim Baker: Now. And this, I ran this example a while ago, so I don’t know if this holds true, but let’s say you’re a 65-year-old male in Ohio and you purchase a SPI a, which is a single premium income annuity. So basically that money, um, gets sent to the, that chunk of money gets sent to the insurance company, and then within a year, you, you can direct how this is, but at least within the, the years, um, you know, you start getting a check back.

Tim Baker: So if we were to, if we were to say, Hey, we, we need $2,000. Um, now this would just be for, if we use you as an example, this would just be for your life. We would probably want to set this up for, you know, basically second to die. So if you were to pass away, Jess would still get this. But for the purposes of this, let’s just say we want $2,000, uh, a month for the rest of your life, um, that would cost you about three, $310,000.

Tim Baker: So that means that we, out of your traditional, or Roth or whatever, your, um, your 401k, we would peel those dollars [00:22:00] off. Um, basically give that to the insurance company. 3000 would come from, your per month would come from your, you know, social security. So you’d get a check for that, and then the, and then the insurance company would send you a $2,000 check for the rest of your life, and then the other 5,000, um, per month or $60,000 a year.

Tim Baker: Would come from what’s left of your traditional portfolio or, you know, if you had other, you know, uh, real estate or things like that. So in that, in that case, those discretionary expenses, you might use some, some version of the bucket strategy and or the systemic withdrawal strategy.

Tim Ulbrich: I’m tracking, and since we’ve talked about annuities now a few times, uh, this was episode 3 0 5, we talked about understanding annuities, a primer for pharmacists. Check that out. Lots of good information in that show. So, Tim, as we, we put a bow on the flooring strategy, we started with the most conservative approach.

Tim Ulbrich: You mentioned that you talked through the the concept of, of essentially being able to replace, create a floor of those fixed [00:23:00] expenses. You mentioned the advantages, disadvantages. And clearly it feels like this would be best for those individuals that are on the more risk averse side of things. And there’s a prioritization over of security potentially over growth.

Tim Baker: Security overgrowth. Yeah. So if you’re, if you’re somebody that’s like, give me all the insurances. You’re probab. This might be more in your camp if you’re like, uh, I want to self-insure, or, I don’t want that much life insurance. Or, you know, I’m, I’m kind of using, you know, an analogy here, but like, this might not be best for you because you, you want more, you know, you’re, you’re more, you know, risk, uh, tolerant.

Tim Baker: So this is someone that doesn’t necessarily worry about, wanna worry about the market and just wants that steady check coming in, you know, for the rest of their life. And, um, you know, yeah.

Tim Ulbrich: Great. So, and I think, you know, I’m, I’m projecting a little bit, but I could see that a lot of pharmacists may, may like that concept or at least a portion of it. Um, I.

Tim Baker: Yeah. And I, I would say I have a pretty, pretty big appetite for risk, but part of me is like, man, if [00:24:00] I give up three 10 and I get 2000 for the rest of my life, just clockwork, and I know that combined with my social security is gonna pay the essentials. I’m not mad at that. You know, I know there’s some people that are like, well, what happens if like, I give three 10 and then I die the next day?

Tim Baker: You know, there, there are cer there, there are certain things where you can get like return of premium or, or different riders. Now everything, all these riders cost money. So, you know, if you add every rider that 2000 might be 1200. So, but there’s, there’s more protection there. But that’s, that’s the kind of the, the push and pull of this.

Tim Baker: So, um. I mean, I, I can see that and, and I’m trying to like project my, like my older self here, you know? ’cause right now I’m just like running gun and, you know, I’m, I’m, I’m more like risk, you know, Hey, all the risk and things like that, I have more appetite for it. But again, in our job is not to project our own risk tolerance on clients, right?

Tim Baker: We need to, you know,

Tim Ulbrich: Yeah, that’s, right.

Tim Baker: that’s best suited for them. But I, [00:25:00] part of me can kind of see the appeal of this now while I. You know, push that button to move hundreds of thousand dollars of over for that. I don’t know. I don’t know if I would do that.

Tim Ulbrich: I’m, I’m glad you said projecting your older self though. Right? Because this is important that I know. My tendency and I suspect maybe for others is, is we tend to think that our current. Risk tolerance, risk capacity is what we’re going to do also in the future. And may not, or in some cases should not always be the case.

Tim Ulbrich: Right. I’m thinking about, you know, as we’re working on our own individual financial plans and we’re taking a more aggressive investing approach, and perhaps there’s, you know, as we think about our, our plans, there’s some investment in real estate, there’s building to the business. If those things continue to, to grow and there’s fruit from the risks that we took, at some point you wanna really lock in. To some degree lock in the, the gains that have had. Uh, and there’s a different level of risk that I probably should be, will be thinking about at 60, 65 than we are at this phase of life in, in [00:26:00] early forties.

Tim Baker: Yeah, and I kind of think about it like. I used to be able to like, drive, take a road trip and drive for 12 hours and like not blink. And now I’m like, nah, nah, I’m good. Or even like playing basketball with Liam, like, I’m not, I’m not dunking on his head or anything like that. I’m like, I, I’ll shoot the j You know what I mean?

Tim Baker: Like, I like I, because I, I don’t wanna. Get hurt or do something dumb, which I got, I sound so old right now, but like, like I’m just projecting that out, you know, when I’m in my fifties, sixties, seventies, and you know, from a, you know, there might become a time where I’m just like, man, like let’s keep it simple.

Tim Baker: Gimme my check and I can like, you know, just chill and not have to worry about the market or things. I don’t have to worry about the hustle, you know? But I could also see on the other side of that, like we talk about identity and role like. You know, so much of, so some people get in trouble with during retirement because so much of their identity is, is wrapped up in the, in the role that they play.

Tim Baker: And, and, you know, professionally, whether that’s a pharmacist, uh, a financial planner. [00:27:00] So, you know, maybe part of that is still being plugged into the markets or the economy or things like that. But I think that, that, that, that’s a razor’s edge, right? ’cause you can become obsessive about it. Um, so, but obviously I work in this, that I might get to the point where I’m like, I just want to like.

Tim Baker: Flip burgers and like, not have to worry about that stuff. So, um, yeah.

Tim Ulbrich: Good stuff. Let’s shift to the second, uh, withdrawal strategy, which is the bucket strategy. Tell, tell us more about this one.

Tim Baker: Yeah. So, so the bucket strategy is essentially where you divide up your assets into buckets. Um, so the, your funds are segmented into time-based buckets, each with its own investment profile. So. If you look at bucket one, this might be for, you know, your next zero to five years worth of expenses. So these, this is the, the lowest risks.

Tim Baker: It’s basically cash and cash like investments, so might be cash, I bonds, [00:28:00] um, bonds in general money market. Um, think things like that, right? So if the market does what it it’s doing now, it’s not gonna affect, you know, what, what’s going on the second bucket. Bucket two is typically, you know, maybe six to 15 years out.

Tim Baker: So this is more moderate risk. You have more of a, a balanced, uh, um, asset allocation. So maybe like a 60 40, 50 50, um, uh, equity to, to fixed income. Maybe some dividend paying stocks where there’s, it’s, you know, the portfolio’s producing some income. So more volatility. A little bit more return though, um, but not.

Tim Baker: You know, not those huge swings that you’re gonna see, which you typ. They’ll typically get in bucket three, which is typically, you know, 15 plus years out. So this is where you put your higher risk, um, you know, equities, uh, stocks, that type of thing. So I. For, for a lot of people. Um, from an understanding, the big advantages here is that [00:29:00] it helps retirees mentally separate funds.

Tim Baker: So you’re kind of matching investments to the time horizons, time horizon, and this is, this is, I look at this, it’s like purpose-based investing. So we talk about purpose-based savings, like, Hey, what’s that money for? Like tie a purpose to it. Same with investing. Mo, it’s a little bit easier with investing because most of the time it’s in a 401k or an IRA.

Tim Baker: We know that purpose is for retirement. Like if we have a brokerage account that has $50,000 in it, I’m like, Tim, what’s that money for? And a lot of people are like, I don’t know, sometimes. And that could be for early retirement, it could be for the down payment on a, you know, a property in the, in the, in the future.

Tim Baker: So it allows people to kind of, it, it enhances their understanding, um, and increases their peace of mind. So as an example, um. Like if the market goes down, like it’s been going down lately and I have three years of expenses of cash for expenses, like in my mind, you know what the market is already is typically done, is that it, it bounces back [00:30:00] right in, in, in 2, 3, 4 years.

Tim Baker: So I’m inoculated to that, right? So I’m not, I’m not necessarily worried about it. Um, this, the, another advantage of this, it kind of encourages discipline withdrawals and. One of the disadvantages is kind of how you refill the buckets, which I’ll talk about here in a second. But it has, there’s a system for which you follow, um, the withdrawal, uh, uh, phase.

Tim Baker: Um, it reduces the need to sell volatile inve investments, uh, or volatile assets during market downturns, which mitigates sequence of return risk, which we’ve talked about in previous episodes. Um. Some say it supports higher equity, Al Al allocation. I don’t know if I necessarily agree with that, um, but potentially.

Tim Baker: That 15 year bucket should be pretty, you know, pretty, um, you know, uh, risk, you know, risk heavy for, for larger returns and, you know, it can kind of provide a built-in rebalances system. The, the, the disadvantage I would say to this is that it’s complex. It can be complex to [00:31:00] manage, so the rules for refill in your buckets can get confusing.

Tim Baker: And there’s the delayed, there’s the delayed approach, which, you know, basically nothing happens until the first bucket. Um, that that liquid bucket is completely depleted. The problem with that, Tim, is like, if that is now, like you’re, you have market risks, um, and sequence of return risk, like the timing of that can be tough.

Tim Baker: Another approach to refill in the buckets is the, um, automatic approach. So you refill the buckets, re regard, you know, each year regardless of what’s happening in the market. So again, it’s pretty rigid, so you’re just like, this is what I do. Right. Even if I’m going off a cliff. Um. The other, the other approach is the market-based approach, which the bucket is refilled based on what the market does.

Tim Baker: So you have a set of rules that says, if this happens, I do this. If that happens, I do that.

Tim Ulbrich: Mm-hmm.

Tim Baker: And then the last one that you typically follow or could follow is the capital needs approach, which you need to determine kind of what your critical path or how much wealth should remain in each year of [00:32:00] retirement to meet lifetime financial goals based on the the portfolio return.

Tim Baker: So it’s kind of like a plan backwards approach. So some of this, you know, you could be in a trough right now, which is kind of where we’re at, and you’re like. What do I do like this? This doesn’t seem like I should be selling, you know, some of my equities or even moderate, um, base, you know, I’m selling low.

Tim Baker: Um, so that can be, that can be tough. The, the, another disadvantage I would say is the potential cash drag. So if you’re, if you have, if you amass. One to three, one to five years of cash that could be harmful during inflationary periods because, um, that money, you know, inflation is, is eaten away at that. Um, and, and it can reduce the overall, um, portfolio efficiency.

Tim Baker: Um, another and others argue, argue that the time se segmentation is straight up arbitrary. So, um, if there’s a poor market or spending increase, the buckets may not hold up. There’s no guaranteed income in this. So you [00:33:00] have social security, obviously, but you don’t have a floor. So gu you know, your, your social security might cover.

Tim Baker: You know, a portion of your essential expenses, but it’s not gonna cover everything. So that’s a problem. And then I would say the sequence of return risk still exists and it can be challenging to rebalance just in volatile market. So it’s, you know, you could be doing things that you know you shouldn’t be doing, but it’s like, Hey, I gotta fill the buckets.

Tim Baker: I gotta make sure that the, the, the, the, the money cascades throughout the bucket system.

Tim Ulbrich: Tim, as you were talking about this, I sense that my, my feelings, and I suspect maybe others listening are is, is you describe the three buckets. It’s like, okay, I get it. That all makes sense. And then you start to think about some of the management of it and the different ways that you could do it. And, and it could be, as you mentioned.

Tim Ulbrich: More administratively complex, you know, especially if somebody’s trying to DIY it, or even if they’re working with an advisor, you know, there need to be some communication. Are we establishing rules? You know, what exactly are we doing? How are we doing it? Um, and for some there may be a comfort level of, of that, that may not be for others, which [00:34:00] is why this lives in the middle, not as conservative as, as the first, not as, uh, more dynamic as we’ll talk about with the third. But the example you gave is a good one when, when you said, Hey. I’m in a trough, like we’re we’re now, what should I do? What came up for me there is when you said that is how important it is to think through those things in advance of actually being in the trough and asking the question, what should I do? Right. So actually stress testing some of this of, hey, when the down market comes, not if, but when the down market comes. What are we gonna do? How are we gonna react to that? Are we gonna hold true to these real? And, and this is both numbers and feelings. Um, but I think a lot of the, the literature in our experience would tell us that it’s not in the moments of the market kind of falling out in the situations we’re having now where we wanna really put the test, what are we actually gonna be doing?

Tim Ulbrich: But can we work through that in advance or at least do the best that we can? Of course, reality, you know, may, may present itself to be a little bit different. All right. Let’s move on to the third strategy, which is the systemic [00:35:00] withdrawal strategy. Tell us more about this one, Tim.

Tim Baker: Yeah, so I would say this is probably the most popular, um. Strategy for, at least for financial planners. I think probably even for, for people that do it themselves, um, I would say the bucket strategy is probably the second most popular. Um, this was kind of made, um, popular, I guess, or or known by the, the 4% role.

Tim Baker: So. Um, it’s often associated with a 4% rule. And, and this method really involves withdrawn, uh, a fixed percentage from the portfolio annually adjusted for, potentially adjusted for inflation and market performance. So the, the 4% rule kind of came, um, from a study. It was, it, it was based on. 30 year, 30 year time period.

Tim Baker: So kind of rolling 30 year periods in the market’s history, determine, you know, in the worst 30 year, you know, rolling period. What was the safe withdrawal rate for, [00:36:00] um, an, an investor to withdraw so the money wouldn’t run out at the, you know, basically at the end. So from, from someone who was age 65 to say 95.

Tim Baker: In the study, the worst 30 years, and I think the study goes back to 1926, Tim, but in the study, basically the worst 30 year period was 1966 to 1995, which I guess at the end of that, I don’t know if that was like the, the.com bubble on 95. Yeah. So that was the worst Roland 30 year period. And what the study said was that the The safe, the safe maximum withdrawal rate.

Tim Baker: Of that portfolio, the worst one was 4.15%, and this, they used a

Tim Ulbrich: Adjusted for inflation,

Tim Baker: Correct. And, and they use, they use the, um, the 50 50 kind of stocks to bonds allocation, which I think most people would agree now that that’s not necessarily a great allocation over the course of your, of your retirement. [00:37:00] So what people, people saw that number and they’re like, great.

Tim Baker: 4%. So if I have a million dollars, I can withdraw 40 grand, um, for the rest of my life, you know, typically 30, 20, 30 years. And I, and I’m not gonna run outta money. Um. The, the problem with that is typically the, so the problem with the 4% rule is it’s, it’s rigid. Um, the allocation with 50 50 between stocks and bonds, I don’t think is, is great.

Tim Baker: Um, the, it’s, it’s very much focused on US stocks and a lot of people don’t think that US talks will perform as well as they did, you know, um, in the future, as they did in the past. Um, the, the longevity is a problem because, um. You know, he, the study says that retirement will last 30 years. And I think there’s gonna be a lot of people that follow this are gonna live a lot longer.

Tim Baker: Um, because, you know, life expectancies have risen and it didn’t really, um, the, the, the inflation [00:38:00] averaged a modest 2% in the study. So we saw it in 2022 as 8.3, and that can throw a major wrench. Um, the other thing that’s, that that’s problematic is that spending is not linear. Often we talk about spending in retirement as like a smile.

Tim Baker: So in your early retirement you’re like, okay, you know, yolo, I don’t have to punch the clock anymore. I’m traveling, I’m doing all the things. And then. Spending typically dips as you’re kind of more, you know, Hey, I don’t want to travel as much, I wanna be home. And then it typically goes up when, you know, medical expenses start to start to rise.

Tim Baker: So spending is not linear. So you, you should adjust like what, what, what a lot of, um, people that would say against the 4% rule is like, you should probably be spending a lot more in the beginning. Um, because, you know, spending’s gonna come down and then make sure we have enough, you know, and, and be, you know, more aggressive outside of a 50 50 allocation for, for later life.

Tim Baker: So, um, spending fluctuates, it’s not a straight line and [00:39:00] doesn’t account for taxes, doesn’t account for fees and things like that, which can also be, you know, uh, a major part of this. So. Proponents of the withdrawal, uh, systemic withdrawal strategy would say, Hey, the 4%, that’s cute. That’s a good place to start, but it, it actually needs to benu more nuanced to that.

Tim Baker: So guiding Clinger, um, two gentlemen basically did a study that, that, that, that, that established kind of more, um. Responsive withdrawal rules. So the, the one withdrawal rule, they, they basically said is like, Hey, we’ll start with four or 5%, whatever, wherever it is. And then each subsequent year, the withdrawal amount is increased by the prior year inflation rate.

Tim Baker: Unless the prior year investment return was negative and the New Year’s withdrawal rate would be above the initial withdrawal rate. So it’s, that’s a lot to kind of unpack. But the idea is that you, in this withdrawal rule, you are kind of, um, [00:40:00] flexible to what’s going on in the market, not just from an, not just market returns, but also inflation and probably one of the cardinal, um, beliefs.

Tim Baker: In retirement, and this is, can, can sometimes be hard to swallow, is be flexible. The more flexible that you can be with when you retire, how much you spend in retirement, all that, you know, all that stuff. The more success that the, the odds increase of a successful retirement, and I define a successful retirement, at least at a, at a baseline state of you don’t run outta money.

Tim Baker: You know, I don’t, obviously we want to thrive, not survive, but that to me is like, you don’t, we don’t run outta money. I. So flexibility here is key. The other one that they looked at was the capital preservation rule. So you kind of start at 4%. And then if the current year withdrawal amount is more than 20% above the initial withdrawal rate, you reduce the withdrawal, the withdrawal rate by 10%.

Tim Baker: So it kind of, so this reduces spending when the market returns are [00:41:00] poor. And typically once you get to a certain age, IE 80 or 85, like the, the role no longer applies. ’cause there’s, they’re, they’re assuming that. There’s such a, there’s a shorter window of time that you’re fine. And then the last one that they talk about is kind of the prosperity rule.

Tim Baker: So if the current year withdrawal amount is less than 80% of the initial withdrawal rate, um, so basically what happens then is that the increases, we increase the withdrawal rate, calculate it, um, by about like 10%. So this allows an increase in spending when the markets have done well. So, so you might listen to this and be like, Tim, what are you talking about?

Tim Baker: But what we’re doing, and it’s similar to the bucket rule, but what we’re doing is essentially we’re not, we’re not on a conveyor belt with a 4% rule, which is kind of like, okay, $1 million, 40 grand, you know, adjusted for inflation crate. But if the market is, you know, if the market tanks for three, four years in a row, that that could break.

Tim Baker: Right. [00:42:00] What we’re doing is that

Tim Ulbrich: Or you start working part-time or like all the things, right?

Tim Baker: So, so we’re looking at. We’re looking at the market returns or we’re looking at it inflation, and we’re making tweaks and adjusting your, your paycheck accordingly, right? So again, like it for, so I’ll, I’ll talk about advantages. So the advantages here, um, it, it can be somewhat straightforward to implement once you get your system down, right?

Tim Baker: So every, everyone is easy for us to understand. I have a million dollars, it’s 4%, or maybe I start at 5%. That’s kind of my baseline. And again, 40 or 50 grand, you might be thinking, Hey Tim, that’s not, that’s not a ton. But we’re also gonna make sure that, you know, social, like we, we make a really good decision from a social security, uh, claiming strategy.

Tim Baker: Um, you know, we’re looking at other streams of income, whether that’s part-time work or in, um, you know, income from an, an investment like a business or a real estate. All that stuff kind of plays into this, but. You know, we’re gonna take that 40, 50, 60, [00:43:00] 80 grand, whatever it is from the portfolio, and then in subsequent years, make decisions on, on how that, how that, um, fluctuates.

Tim Baker: Um, probably the biggest reason that people do this, because it does maximize flexibility in asset growth. So here. You’re, you’re looking, you’re really looking at, like to total portfolio return, right? You get a similar result in the bucket strategy, but you’re kind of looking at it in tranches, whereas this is, I have a million dollars, I’m trying to get the most return as I possibly can.

Tim Baker: Um, so you’re not an annuitizing assets, so that keep, that allows you to keep control. And there’s not that, um, irrevocable commitment of like, once I send that check to the insurance company, I don’t necessarily get it back out outside of the, the check that I get from them, um, from an income stream. So there’s potential for higher returns.

Tim Baker: Probably the biggest thing is tax efficiency. So if it’s managed well, um. You know, the, the, the location of [00:44:00] assets, how you pull from them, how you fill up tax brackets, capital gains, harvesting, Roth conversions, all of these things that can extend your portfolio. Um, that is part of this whole strategy. Um, it’s, it’s, you retain full estate value.

Tim Baker: So, you know, if I cut a check for $500,000 and that to an annuity company and that. Check turns off when I die, my kids don’t get that money unless I put that rider in that, um, and I get a reduced check. So this basically, I pass away, that money goes to Shea, she passes away, that money goes to my kids or whoever my beneficiaries are.

Tim Baker: Um, and it, and it’s really designed to kind of tailor to your risk. So advantages, the disadvantages, no guaranteed income outside of Social Security. Um, you still have market and sequence risk, so you’re still kind of playing that game, although the decisions you make. Kind of, kind of mitigate that a bit.

Tim Baker: It does require active monitor monitoring. I would say at least once a [00:45:00] year to kind of figure out, okay, what are we doing for this year? Um, there’s some psychology here. Again, you can be over, over. Um, uh. Attentive to the market because again, that that’s where the next paychecks come in. You still have inflation risks, although I think that’s mitigated if you’re, if you’re looking for total return.

Tim Baker: Um, and there’s potential tax complexity if you, you know, if you don’t do it. Uh, right. So, so this one I, I think, is the most popular. But, and there’s lots of advantages, but there’s also lots of disadvantages and I think the potential pitfalls for inefficiency and lack of optimization with regard to how best to build the, the paycheck.

Tim Ulbrich: Great summary, Tim. And then the thing that jumped off the page to me, which applies across the retirement planning and, and regardless of withdrawal strategy, although more important here as you mentioned, is the flexibility piece. Flexibility, flexibility, flexibility. And this is in part what makes, makes the planning a little bit difficult is we may in our mind say, Hey, I’m gonna retire at the age of 65 and we’re gonna stop working all together. Who [00:46:00] knows, right? What, what will happen in terms of, of health. And obviously as we get closer, things become a little bit more known. But will we work part-time? Will we not? What’s the market doing? What are the goals, you know, that we have in retirement? All these things are a good reminder that whether it’s in the accumulation stage, stage or in the withdrawal stage, this is not a set it and forget it, right?

Tim Ulbrich: This isn’t the strategic plan that we forget about for five years of the organization. We, we’ve gotta set this plan attentionally. Then we wanna be revisiting this because there’s gonna be internal and external things that are going to be moving and changing over time.

Tim Baker: Yeah, and I think, I think what I said last episode, um, about questions to ask your, your financial planner. You know, I, I, I believe that, you know, if you are a seven figure pharmacist like this requires I think professional attention. There’s just so many moving pieces with regard to, you know, how do [00:47:00] I spend down the seventh figure sum of money in a way that meets my goals and what do I’m trying to achieve, not just from a money perspective, but from a, from a life perspective, from a legacy perspective.

Tim Baker: Um, you know, there’s so many different things to kind of be aware of and, you know, I think, again, having that outside. Third party opinion that has your best interest in mind is critical. Now, again, I am biased, Tim. This is what we do. Um, but you know, I always make the joke, like when I first lived in Ohio, I file my own taxes and I lived in like a, like a Rita area.

Tim Baker: And for those that are outside of Ohio, they’re like, Tim, what are you talking about? I’m like, there’s no freaking way I did that correctly, Tim. There’s no way. There is no way

Tim Ulbrich: well re Rita will become, come knocking in like 2030 ’cause

Tim Ulbrich: they’re like three years behind

Tim Baker: Yeah, but like, this is kind of the same thing, right? Like, like hire a professional to [00:48:00] do these things because there’s just so much nuance and you know, I, I often hear like, uh, like, you know, my colleague’s doing this, or my uncle’s doing this, or my brother’s doing this, you are a unique snowflake.

Tim Baker: Your, your, your balance sheet and your goals are gonna be unique to you and what you’re trying to accomplish. So. I think it takes a tailored approach to get you to where you want to go. Right? And, and that would just be my, my soapbox, uh, for the, for this episode.

Tim Ulbrich: Tim, I, I couldn’t agree more. And, and I’m not shy about saying we’re biased because we, we see the benefit that this has in, in clients that are intentionally planning over a long period of time. You know, we know it in our own plans. I, I work with the team at, at YFP planning. Like there is real value there in a long term engagement.

Tim Ulbrich: And, and to your point, everyone’s situation plan different and we often wanna apply. General advice, and you know, here we’re talking again, withdrawal strategies. It’s not a one size fit. Fit fits all, and there’s so many conversations, as I mentioned at the beginning of [00:49:00] the episode. There’s so many conversations, yes, financially, but also about goals and emotions and all types of that need to happen. That inform the strategy

Tim Ulbrich: and why we’re gonna be doing what we’re gonna be doing from a strategy standpoint. So, you know, whether you’re hearing this and you, you lean towards the security of the flooring strategy or maybe some of the structure of the bucketing strategy or some of the flexibility of the systemic withdrawal strategy. The key again, is finding a strategy that lines with your goals and risk tolerance. And we believe working alongside a third party can be incredibly helpful. In doing that, we’d love to have an opportunity to talk with you more about your individual financial plan and your retirement plan. Uh, to learn more about our one-on-one fee only virtual financial planning services and our team of certified financial planners. Go to your financial pharmacist.com, you can book a free discovery call, that’s a 45 to 60 minute meeting, uh, with Tim Baker. We can learn more about your situation. Uh, you can learn more about our services and, and together we can determine whether or not it’s the right fit. And you know, for [00:50:00] some of you, if you’re currently working with an advisor and having that feeling of, Hey, I’m not sure it’s the best fit, we’d love to have an opportunity to talk with you as well, uh, to do a second opinion analysis and, and see whether or not the current situation is the right fit.

Tim Ulbrich: Or perhaps a move does make sense. Again, you’re financial pharmacist.com. Book a discovery call. Tim, great stuff. Thanks so much for joining today.

[END]

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YFP 395: What to Look for in a Real Estate Agent (And Why It’s More Important Than Ever)

Posted on by YFP Media

Tim Ulbrich & Nate Hedrick break down 2025 housing trends, agent tips & the new buyer’s agreement.

This is brought to you by Real Estate RPH.

Episode Summary

Tim Ulbrich, YFP Co-Founder talks with Nate Hedrick, PharmD and Founder of Real Estate RPh as they break down the key trends shaping the 2025 housing market, from declining home sales to soaring interest rates. Nate shares what to look for in a real estate agent, why local market expertise matters, and how the new buyer’s agent agreement affects you.

Key Points from the Episode

[00:00] Welcome Back, Nate Hedrick, PharmD!
[00:44] Current Housing Market Trends
[02:37] Home Improvement Decisions
[03:49] Hiring a Real Estate Agent
[04:07] Understanding Buyer’s Agent Agreements
[06:36] Key Qualities in a Real Estate Agent
[07:49] Researching and Interviewing Agents
[11:03] Local Market Knowledge
[15:17] Communication Expectations
[16:51] Buyer’s Agent Agreement Details
[18:57] Changes in Buyer’s Agent Compensation
[19:37] Negotiating Buyer’s Agent Fees
[20:17] Impact on First-Time Homebuyers
[20:52] New Agreement Structures
[22:02] Alternative Fee Models
[27:25] Important Contract Details
[31:42] When to Start Looking for an Agent
[33:14] Real Estate Concierge Service

Episode Highlights

“And let’s not forget..it’s a low bar of entry right into the field. And because of that, not all agents are created equal.” – Tim Ulbrich [05:41]

“ I would recommend knowing what your goal is and what your specific kind of target is. If I am an investor buying an investment property, that’s a very different agent. If I am looking for a farm with a hundred acres and a 10 horse horse stall, like that’s a different agent. If I’m looking for an apartment in New York city, like that’s a different type of agent.” – Nate Hedrick [06:50:]

“ Typically I recommend three to six months before you think you’re sort of ready to buy a house. If your lease is running out in June, then January or February is your time to start talking with agents and start that process.” – Nate Hedrick [31:58:]

“A good real estate agent can be an important, not just team member, but the quarterback of the team.” -Nate Hedrick [33:00]

Links Mentioned in Today’s Episode

Episode Transcript

Tim Ulbrich: Nate, welcome back to the show.

Nate Hedrick: Hey, Tim, always good to be here.

Tim Ulbrich: Well, we had you and David on REI real estate investing episode one 32, we talked about rent versus buy. Not a new conversation, but one that is relevant in today’s market and how today’s market might ship that conversation a little bit.

We’ll link to that episode in the show notes in case folks miss that. But today we’re talking about what to look for when hiring a real estate agent. And similar to our last episode, while we’ve touched on this periodically, there are some new things in the market related to, uh, buyers agreements and other things that we need to talk about that really are shifting this conversation a bit.

So we’re going to do that, but first let’s get your take Nate on kind of what’s happening in [00:01:00] the housing market in 2025. You know, if anyone’s been watching the news on this existing home sales. You know, fell again last year to lowest level since 1995, interest rates continuing to stay pretty high where they’ve been.

And people like you and I are saying, Hey, there ain’t no way we’re moving. And we’re not giving up the interest rate. We’ve had all of that contributing to what appears to be an ongoing challenging market for first time homebuyers. Right.

Nate Hedrick: Yeah, I, a lot going on just in the last 12 months and even in the short term, just in the last couple of weeks. Um, I’ll say all of this with the caveat that all real estate is local, right? So I might give a global trend or a local insight into. Cleveland, Ohio market that doesn’t apply to you, right?

Because it’s all going to be specific to your locale. Um, so that’s, that’s important to keep in mind that none of this stuff applies globally everywhere. It’s just sort of what we’re seeing in terms of trended data. So as you mentioned, we did see a new sales, new existing home sales, rather existing home sales.

[00:02:00] Um, and a lot of that analysts feel like was because of the rising interest rates, it reduced the amount of affordability that was out there. Um, if your interest rate goes up, that means your monthly payment goes up, which means you can’t afford as much house, which means, Hey, if I need a four bedroom because my family size is X and how I’m priced out of a four bedroom, like, My only choice might be to rent now.

Right. Um, so we saw a lot of that. The other thing, like you said, so astutely is just, we’re not moving, right? If you’ve got a sub 4 percent rate and you go to sell that property, your only option is to then go buy something that is. Either cash or above seven and a half percent. Right. Depending on the time that you were buying.

So a lot of people felt like, Whoa, I’m just going to put the brakes on, on moving and I’m just going to stay where I’m at. And so those existing homes kind of just sat there and didn’t move as much.

Tim Ulbrich: And I think what you’re seeing, Nate, which both you and I can attest to in our own situations and the pandemic really spurred this, but it’s continued as people saying, Hey, I’m not going to move. Maybe I was considering, I’m not going to move, [00:03:00] but I’m going to make improvements and updates to our house.

You know, we finished our basement this past year. We had talked about moving a year or so ago and decided, you know, what. Interest rates are what they are. And, and we had a much lower rate, mathematically doesn’t make sense. Let’s kind of focus on some improvements on the house. And just before we hit record, I heard the hammer in the background, right on your house.

So you’re, you’re doing something similar.

Nate Hedrick: Yeah. We, we, we basically have been talking about this for years and kind of this past. Within the last year, my wife and I sat down and said, look, I, I think this is it. I don’t think we’re moving. We’re pretty locked into this house. We love our location. We love where the kids are at. We love access. We have all the amenities we have here in our particular spot.

And so we said, let’s, let’s put on the sunroom. We’ve always talked about doing like, let’s just, let’s be here. And so, like you said, it just, if we wanted this exact property somewhere else, it’d be one, it’d be really hard to find and to pay an absolute ton for it somewhere else. So just make the improvements you want here and enjoy it while we’re here.

Tim Ulbrich: Yeah. Great [00:04:00] stuff. Well, today’s topic, what to look for when hiring an agent, again, not a new topic, but is. Updated information that we have to talk about. We’re going to get more in the weeds on this, but really the piece here that’s new is the implementation of a buyer’s agent agreement. So Nate, at a high level, kind of tell us why this new wrinkle has thrown a new factor into the equation for people to think about when they’re looking at hiring an agent.

Nate Hedrick: Yeah, I don’t want to get too deep yet. Let’s dive in as we kind of get through the pieces. But to, to, to set the 10, 000 foot stage, there was a settlement last year. We had an episode on this. Actually, um, the NAR settled on a lawsuit that was, that was pending. Um, they basically said we want it. Buyer representation to be very transparent, uh, by that extension or because of that ruling, um, the national association of realtors said, okay, before you work with a buyer’s agent, you have to have a contract in place that says what that buyer’s agent is going to be paid.[00:05:00]

And that compensation is going to be provided in a very clear laid out fashion. Um, again, we’ll go through some of the specifics, but in most cases, what those terms of those agreements say is that the buyer is agreeing to pay. Their agent, typically they’re going to try to get that amount from the seller as a, as a contingency of, of purchasing the home.

But technically the buyer is on the hook and they’ve sort of always been on the hook, but this is really laying it out to say, look, before we start working together, this is the contract. You have the sign that says how much I’m going to get paid. And that’s a very big difference from where it was years and years ago.

Tim Ulbrich: Yeah. And as you and I were planning for this episode, we said, Hey, Hey, these pieces now. Really raise the bar for this decision of hiring an agent. I mean, it’s always been important, but now we’re talking about signed agreements need to be in place, potentially financial implications on the buy side, if we can’t get the seller to take care of it.

And let’s not forget no offense to, uh, the real estate agents that are out there. Uh, but Nate, it’s a low bar of entry right into the [00:06:00] field. And because of that, not all agents are created equal. And we’re talking about what that means, but all the more reason that. On the buy side, we’ve got to be doing our homework and first time homebuyers.

Inevitably you’re excited about the home you’re looking. And this is where it’s like, Hey, aunt Susie’s third cousin’s neighbor is a good agent. You should work with them. And, and, you know, I remember being a first time homebuyer. We kind of run in that direction. That’s how I got connected to our agent, which thankfully worked out, but it wasn’t the best homework that we did in that process.

So. All the reasons we’ll, we’ll get into it during the episode of, Hey, as the buyer, what responsibilities do you have and looking for an agent? What are some of those things that you should be looking for to make sure you got someone in your corner, that’s really going to help you through this process.

So let, let’s start there. Nate, as I, as I mentioned, not all agents are created equal. So if that’s the case, what are some of the key qualities or traits that home buyers should be looking for when hiring an agent?

Nate Hedrick: Yeah, I think you could go down a bunch of different paths here. Um, I think [00:07:00] to start where I would recommend is know what your goal is and know what your specific kind of target is, right? So let me explain. If I am an investor buying an investment property, that’s a very different agent. If I am looking for a farm with a hundred acres and a 10 horse horse stall, like that’s a different agent.

If I’m looking for an apartment in New York city, like that’s a different type of agent. Right? So first start with what your goals are. Like if it’s just single family home in the suburbs, you have a bunch broader pool of people to be looking at. If you are looking for a specialized target, like. That that’s narrows your pool of options as kind of a first step.

Tim Ulbrich: Yeah. And I think that to your point, right. If someone’s looking at. A commercial property versus a residential. Is this an investment property that they’re thinking about doing Airbnb? And, and does that agent understand some of the local rules and regulations? Right? So start with the vision, start with the goal.

And then from there, what else are we thinking about on more of a micro level?

Nate Hedrick: [00:08:00] Yeah. So that’s where I would recommend you go out and you do kind of a background Google search, right? Or you’ve got great access to online information about these agents. You can get a good feel for something like transaction volume. You can figure out if they’re on a team. Um, if you look up their Zillow profile, their realtor.

com profile, you can see like, is it just Nate working as an agent by himself or does Nate have a team of people that I might be working with? And there, there are pros and cons to that. But if you set aside and you’re like, no, I want my guy or gal and I only want to work with that person. And that’s the way I want to operate.

Like you can do that background research without ever having to interview an agent that’s on a team or vice versa, right? You want someone that’s available all the time. Great. If you have a team of people, then you’re always guaranteeing somebody’s around. So you can do a lot of that background research to see things like that.

I also encourage people to look at agents, Facebook posts, their Instagram. Uh, I personally am and kind of terrible about being on social media, but you can get a pretty good feel for an agent’s style, their personality, their, how [00:09:00] they list a property. Um, a lot of agents will have walkthrough videos of their listings and you can feel out that person without ever having to interact with them, which is, which is nice, right?

You can just kind of start that book from. The very beginning without having to, to make a bunch of extra phone calls, interview a bunch of extra agents. You can, you can weed people right out over the internet.

Tim Ulbrich: Yeah. And I was joking, half joking about the referral, right? I mean, referrals matter and if people have a good experience, that’s great. But I, what I’m encouraging people to do is not stop there. Right. And what other information can we gather about that agent to understand, you know, whether or not they’re a good fit in our industry, in the financial planning industry for a firm like ours, that’s regulated by the sec, you know, a lot of this information is publicly available that people can look up.

You know, if they, if they want to read pages and pages of documents, they can read up forms that we have to publish in terms of services that we offer and fees that we have. And if there’s things like marks against or complaints against a firm or an advisor, you know, you can get to that information as well.

[00:10:00] Is there something similar that’s out there or what are these sources look like in terms of checking an agent’s experience in history?

Nate Hedrick: Yes. And no, um, a good agent will have a good review system somewhere, right? They’ll have either on their website or on Google reviews, realtor. com, Zillow reviews. One of those, hopefully if they’re a seasoned agent is going to have some sort of review system, um, where you can look at their actual reviews of their service.

Right. And if they’ve got. 20 people in the last year that have bought and sold a home and went on and left a glowing recommendation on Google. Like that’s a better indicator, uh, than, than if you don’t have anything out there. Right. Um, so that’s sort of one, you could also go to the national association of realtors website.

Um, you can actually dial down by your state. So like we have the Ohio realtors board and you can see if there’s been a complaint lodged against that particular agent or whatever. Um, it’s pretty rare to have that and have that agent be actively practicing, but. It might be worth looking up, um, and then ultimately you can just Google that individual, see if something’s come up, especially in [00:11:00] like the higher profile cases, you might see something where there’s an article published about somebody that, that maybe it’s, you know, good or bad, and you can kind of get a good feel for that.

So while there’s no national database that you can easily reference, there’s a lot of source material out there for you to go after.

Tim Ulbrich: One thing you said a little bit earlier to Nate, which is worth going back here is, is the importance of understanding the local market. And, you know, as we talked about on the real estate investing one 32 show, it’s not just the city or even the suburb or the area it’s, it’s, it’s the markets within the market, right?

It’s the school district, it’s the neighborhood. So what advice would you have for. Buyers that are out there to find an agent that really understands their market. Especially like I think about Jess and I, like, we’re not from Columbus and we’re looking for a home. Like I’m really leaning on that agent to help us out

Nate Hedrick: This is where the actual like agent interview might come into play. So again, you’ve done this sort of background research, you’ve narrowed it down. You can see that I have sold a bunch of homes in, you know, this particular city or this particular suburb. So now you’re going to add me to your [00:12:00] list of potential interview targets.

And, and I think a lot of people get like, Either overwhelmed or just turned off by this part of like, I have to set up like three interviews with three agents. Like that sounds like a lot of work. It can absolutely be worthwhile, right? This is a step that is a bit of a pain, but doing it now, we’ll make sure that you have a good process throughout.

And this is a huge purchase. Like you don’t want to get it wrong. So When you get that list, right, you’ve narrowed it down to two or three or four agents, whatever it might be, actually interview them, ask them questions about the local market. If they’re like, Oh, uh, yeah, there’s a, uh, I think there’s an apartment going in somewhere or like, you know, if they’re pretty unknowledgeable about the area, it’s going to come out pretty quickly.

Uh, if they understand it inside and out, you’re going to be able to hear and understand that right over the phone. So it’s something I recommend doing. Um, ask them questions about the local market, ask them about their experience. You can ask them for references, say, Hey, would you be if, and if your clients are willing, would you be willing to send me, you know, three people you’ve worked with and, and their contact info.

So I can just ask them how you were, um, [00:13:00] agents should be willing to give you this kind of stuff if their clients will allow it, of course, but, but they should be willing to give you this kind of stuff to support the fact that they are someone that’s good to work with.

Tim Ulbrich: Yeah. And they, just as you were talking, I was thinking about and jotting out some notes of things that just since living here. You know, we’ve come to understand that I probably could ask better questions about upfront, you know, school districts probably is the obvious one, but like in our neighborhood, we have this notorious issue with, we’re a smaller community.

And so where we draw water from, like, it’s really hard water and it just beats on your appliances. You better be ready for like costs associated with, uh, you know, appliances and soft water tanks and things like that. And everyone in the neighborhood knows it, but the buyer doesn’t know it. Right. Coming into the neighborhood.

I think about some of the HOA. Types of rules and specifics. And every HOA is different in terms of like, do they actually uphold the rules? Do they not? What does that look like? What are the fees? And that stuff, easy to find, you know, property taxes. Like we’re on the line of Franklin County, which is where [00:14:00] Columbus is and Pickaway County.

Well, if you throw a stone, like, and you’re in Pickaway County, property taxes are a whole lot different than they are in Franklin County. Right? So these are the things, what’s the economic development going on in the area? What’s the growth and population look like? I mean, so many things that a good agent.

Proactively hope is getting out in front and supporting you in that way.

Nate Hedrick: you can even ask them. Uh, I kind of like this question. I’ve, I’ve done this before with clients where you ask, you can ask the agent, um, you know, anything going on with city council, I should be aware of. And if they look at you like with deer in the headlights, right, that, that might be a bad sign. They should be involved in the community in some fashion.

Now, again, can I be involved in every single community around all of Cleveland where I start? No, but if you’re really specifically looking at like, Hey, I want to be in Brecksville, Ohio, or, you know, pick a spot, like Then you better know the nuances of that specific location. Uh, and what’s coming, right? If there’s a new trail going in, if they’re going to be rebuilding the bridge that you’re accessing your house from, right.

And you’ve got to go around an extra five miles for the next two years. Like those are the kinds of things you really want to have [00:15:00] an insight to.

Tim Ulbrich: Yeah. Nate is a first time homebuyer. Maybe you can relate to this. If somebody would have told me those things, I’ve been like, yeah, yeah, whatever. It’ll be fine. Right. But those are the things like, I think about the Metro parks and how we use the Metro park, like these things matter day to day in terms of quality of life and, and how you’re interacting with your community.

Nate, one other thing I want to ask you about here with this idea of interviewing agents, love this idea. Um, and I think we should have a similar conversation when it comes to like lenders, interviewing lenders and getting a feel. For what’s a good fit there, but how about communication? You know, what, what conversation, what questions can people ask?

I know first time home buyers, right. They’re eager. They want responsiveness. What’s reasonable. What’s not reasonable. How, how can you guide our listeners as an agent of maybe what buyers should be thinking about or think about asking an agent around communication?

Nate Hedrick: Yeah. I think setting a stage of like, what is realistic? So what are you looking for? Right? If someone came to me and said, look, I expect you to be answering a text message within five minutes from 7 a. m. to 10 p. m. I’m like, [00:16:00] I might not be the agent for you. Like I’m going to be with other clients. I have responsibilities.

I have kids like I’m going to get back to you in a reasonable amount of time, but, but this is what it looks like. So I think asking questions, knowing what your expectations are and just. Delivering that to the Asian and saying, Hey, here’s what I would like. I prefer to communicate via text or I prefer an email.

I really like a weekly phone call to understand where we are. If you can set that up with the Asian and they say, yeah, that’s absolutely reasonable. That works well with me. Or you know what? Like. That’s not how I operate. That’s how you’re going to get good communication. I don’t think it’s just coming at them and saying, do you have good communication skills?

And they’re like, yes, I do. Uh, because everyone’s going to say that you have to kind of make it a two way street of like, here’s how I expect to communicate. How’s that going to work?

Tim Ulbrich: Yeah, especially in this market, right? Timely communication, really important. So clear expectations upfront, what specific communication modalities, expectations around hours and timeline of responsiveness, all really important. All right, let’s talk about that buyer’s agent [00:17:00] agreement in more detail, because this is the new rankle.

As we talked about the beginning, really heightens the pressure on the buyer to make sure they have an agent that’s the right fit. As you mentioned the, the backstory for this, and we’ll link to it, it was episode one 18 of the Real Estate Investing podcast that you and David talked about the settlement from the National Association of Realtors.

We don’t have to get into the whole weeds of, of that all again. Uh, but that really led to this implementation of a buyer’s agreement that if anyone’s listening and bought a home, let’s say what? Eight months ago or yeah, since August. So anytime before that, you’re like, what buyers agreement, right? This wasn’t a thing.

So tell us a little bit more about what that looks like practically right now. So if I’m a first time home buyer or perspective, first time home buyer listening, and I’m starting to search, what should I expect in terms of these agreements and what the intent is of those agreements?

Nate Hedrick: Yeah. And it’s funny. I actually just went through this conversation earlier this morning. So like this is super relevant to what we go through every single [00:18:00] day. Um, but essentially what has changed is that before you can look at homes with a particular agent, they are supposed to have supposed to have a buyer’s agency agreement in place.

They basically says, I am going to be representing you. Here are the terms of that representation. Here are all the things that I’m going to do for you. Here is how I’m going to represent you when I’m talking to other agents. Here’s how I’m going to represent you to potential sellers. So on and so forth, right?

It lays that all out for my efforts. My compensation is X. And for the point of this conversation, let’s just say it’s 3%. Okay. I’m going to make 3 percent on the, as a percentage of the home sale. So if the house sells for 500, 000, I’m making 3 percent of that. If it sells for 200, 000, I’m making 3 percent of that, whatever it is.

And we’re going to establish that that is the, that is the amount that I’m going to be compensated. Now, where we get that from is up for negotiation. And that’s the big, the big nuance, the big difference from what it used to be. It used to be that the sellers would just offer whatever they were going to offer.

When you got a listing agreement in [00:19:00] place, you negotiated right then and there with the seller. Hey, it’s going to be two and a half for me, two and a half for a buyer’s agent. And when I would go show a listing, I would know it would actually display it. It would say, Nate, if you help a buyer by this house, you’re going to get two and a half percent, right?

It was listed right there. That is gone. There is no buyers. Uh, agreement that’s listed or advertised by a seller. Now, when I go to make an offer, and again, I just did this today with a client, uh, actually last night. And we said, look, here’s the offer. It’s 250, 000 in a 3 percent buyer’s agency.

Compensation agreement, right? And so that, that 3%, we pre established that that’s what I was going to work with the buyer for. And now we’re trying to get it from the seller. Interestingly enough, again, since this is, this is happening right, right here now with this client that I’m working with, they came back and they said, okay, we’re going to counter and we’re countering at this, this slightly higher number than what you’ve, what you’ve come up with.

And we’re only willing to pay two and a half percent of your buyer’s agency contract. And we said, okay, let’s talk about that. And so I went back to the [00:20:00] buyer and, uh, Ultimately, what we decided was that that’s fine. We’re going to take two and a half from the seller and that 0. 5 percent is actually going to come from my buyer.

And they’re going to, they’re going to pay that out of their closing costs. Um, but all of it is very transparent. All of it is very negotiated. Um, and that’s just how the agreements work now. So you’ve got to establish that before you ever look at houses, which is just way different than it ever used to be.

Tim Ulbrich: So different, right? I mean, days gone by quick recap, days gone by seller’s going to pay all the fees. So you were expecting as a seller, it’s going to cost me five or 6%. Right. And I’m paying for both the listing agent and I’m paying for the home buyer’s fee. It’s going to come out of that. So first time for the home, any home buyer, but first time home buyers, especially where we think about money available for things like a down payment, closing costs, things like this, they weren’t thinking about this fee.

Okay. On the front end. And so now we have this new piece, which is, Hey, we have to have an agreement upfront. It’s going to clearly outline what the buyer’s agent fee is that can no longer be on the listing. And the hope is we can negotiate [00:21:00] that from the seller, but I’m guessing you can tell us more here in a moment that, Hey, there’s going to be variances of this.

And depending on the market, there may or may not be more pushback. Right from the, the seller on this. So is this what you’re seeing? Like, are you expecting more of this? Like what you just had yesterday where, Hey, the seller is still going to kind of like days gone by pay for most of it, but we’re going to negotiate a little bit of that and now we got to put that on the buyer.

Nate Hedrick: Yeah. I think, I think this will be kind of the norm. I think you’ll see just more nuance to it of like, you know, let’s push back a little bit. Let’s adjust this number here. I’ve had some competitive bids where, uh, you know, there’s a lot of bids going into a house and the buyer’s compensation that the seller, that that was being.

Requested kept dropping, right? It’s, Oh, it’s only 1 percent for this offer. And ultimately it’s all money. Like if we take a step back, right, this was all baked in, even in the old way, it was all baked into the purchase agreement, right? If you were paying a 6 percent commission on a listing, like that was baked into the price.

Now it’s just very out in the open and it’s part of the negotiation. So it’s not [00:22:00] like it’s actually changed. It’s not actually more dollars out of the buyer’s pocket necessarily. It’s just out in the open and it’s a fully negotiated point.

Tim Ulbrich: Yeah. So if we just put some numbers to this, Nate, if we think about a 300, 000 home. Let’s say a typical buyer agent, I know some might be a little bit lower, but let’s say a typical buyer agent says, Hey, my fee is going to be 3 percent to you. First time home buyer. So if we get the home for 300, 000, that 3 percent would be 9, 000.

Now, if we can get that all from the seller, great. Nothing out of pocket, but if we can’t, let’s say the seller extreme circumstances, not nothing it’s on you. The buyer’s got to come up with 9, 000, or if it’s a variation. Like the one you just gave two and a half percent. Most of it would come from the seller.

And then a little bit is going to have to come out a pocket from the buyer. Do you, do you think most, I guess we’re assuming all agents are following the rules. Let’s start there,

Nate Hedrick: I hope so. God.

Tim Ulbrich: Yeah. But do you think a lot of agents in the instance you just gave where the seller says, Hey, we’ll do two and a half percent.

Um, that’s, that’s what [00:23:00] we’re going to negotiate. Do you think most agents are going to hold the line on their 3 percent fee and put that remaining point on the buyer? Or do you think people will start to discount? Their fees to not have the buyer. Can they do that

Nate Hedrick: So yeah, I think, so it’s, it’s, well, the, the, can you do it is very broker specific. So, so if you, if you kind of take one step back right behind me, like ultimately I’m representing my broker, right? So they’re actually the one that’s being paid when we close and then they give me a chunk of that payment.

So that 9, 000 or whatever we get, that actually, it goes to my brokerage office, first title office sends it to them. And then I have a contract with my broker for what my compensation from them is. I can only do so much in terms of like, well, just make it 1%. Like the broker is actually establishing these negotiated fees so that they can run a business, right?

It’s just part of, part of how that works. So that’s kind of part one. Um, there is, there is some adjustment that can take place. You could absolutely go back and say, you know what? Let’s renegotiate this. Everybody’s drawn a hard line in the sand that says that 0. 5 percent is going to be a deal breaker.

Like, okay, maybe we can work this out and waive some of the [00:24:00] compensation. Um, I think the risk for agents out there that is, is you could just start to dilute. You know, your work down so far that it’s not worth doing

Tim Ulbrich: the bottom. Yep.

Nate Hedrick: exactly. Um, so I think, I think it’s, there’s a lot of, of nuance to it. Um, but I do think we’ll see this continue where you’ll get this kind of negotiation on that, on that one to 0.

5 percent piece, uh, every single time.

Tim Ulbrich: One of the other things we hypothesized when we discussed this back in the summer was would this, or would this not disrupt the traditional. Right? So you, you gave the example of it’s a, it’s a percentage, right? Whether it’s a 300, 000, our home or 500, 000, our home, let’s say it’s 3%. Obviously that that’s very different dollars, right?

We’re talking about 9, 000 versus 15, 000 in that instance. Um, so we, we, we wondered, would we see a transformation to alternative fee structures, flat fee models, some hybrid things that might be out there. Are we seeing that or not yet?

Nate Hedrick: Absolutely. Yeah. They’re out there for sure. And, and we’ll even [00:25:00] 3 percent up to a certain cap or, you know, there’s ways to get around it, um, and, and make it more flexible because you’re right there, there. even in the old days, right? So, so higher end listings and higher end for Ohio, right? Like in like the 800, 900 million range that that’s higher end for Ohio.

Um, you would see that, that fee get diluted where, okay, it’s 3 percent up to 500, 000. Then it’s 2 percent of the next 200, 000 and 1 percent after that. So that you would see that fee come down as, as price points got higher anyway. Um, so yeah, I’m seeing people that are putting caps out there. I’m seeing people that are dropping their percentage based on it.

Purchase price. Um, I’m seeing, um, I’ve only seen a few of these and they’re not really taking off, which I think is interesting where people will do like a flat fee where it’s like, Hey, look, I am 1, 500 to negotiate a contract and I’m a thousand dollars per 10 showings or whatever the number is. Right.

And you can just agree to that upfront. And every time we hit 10 showings, you get, you’re going to pay me 2, 000 or a thousand dollars cash. And we’ll, you know, and it goes to my [00:26:00] broker. We figure all that out. So like there’s ways people are getting creative. I think that’s Not taking off yet, but I could see a world in which like someone looks at that and goes, that for me is what I want.

I want this a la carte option. I’m going to go with this person.

Tim Ulbrich: here’s my theory for why that’s not taking off Nate. And you can tell me if I’m wrong, cause you’ve got a lot more experience than I do is because so many first time homebuyers in today’s market may go searching and actually not find something. I don’t know if they’re willing to incur the costs to be empty handed at the end of it.

Right. Because the way the agreements are structured it with, with a 3 percent model, we got to get to the finish line before a fee is paid. Yeah. And now I would argue if I’m an agent, I’m doing work. I could show somebody 10 homes. And if they come up empty handed, like that’s unfortunate, but I just spent a lot of time showing them 10 homes and hopefully we’re doing it well.

And it takes an investment of time. So I can see both sides of the coin and the story, but I, I would guess in a different market than we’re in, that might take off a little bit more. But, uh, I, I [00:27:00] suspect many people might think about, Hey, I could spend a thousand dollars going to see homes. And then actually, actually don’t ever end up getting one for whatever reason.

Maybe there isn’t, isn’t enough inventory or they just change your mind. Right.

Nate Hedrick: no, I think you’re right. I think that’s probably, that’s probably right. I think that that may start to shift if, if people change their mind or if inventory changes, like you said, or if it becomes more of a buyer’s market, um, that may start to change, but you’re right. You could go to 10 showings, put in 10 offers and still get nothing because you know, the housing market’s crazy and you’re getting beat out on offers.

Right. So yeah, I, I totally see that.

Tim Ulbrich: We’ve talked a little bit about this, but I want to pick your brain some more. This, this to me adds a new layer of attention to detail that’s needed that I’m not sure if I think back to my first time home by herself and in 2009, come out of residency, like. Give me the documents. I’m signing the papers.

We’re buying the home, right? I don’t know how much I’m reading the details of it, but what’s in this agreement now, I think is really important information, right? So what should people be looking for in [00:28:00] terms of, of course, read it, but are there specific parts of these agreements or things that may vary from one agent, one broker to another, that, that might help them determine what’s a good fit?

Nate Hedrick: There are a few. Yeah. So the first one is to look for, uh, the actual compensation and how that’s delivered. Right. So, um, is it delivered at closing? Like, is it delivered, uh, you know, even if you don’t close on the house, like, so I’ve, I’ve seen agreements out there and we don’t do this, but I’ve seen agreements out there where if you bring a willing and able buyer and you.

They back out for a non contract reason. Maybe we get to five days before closing and you get cold feet and you’re just like, look, Nate, I can’t like I can’t. It’s too much. I’m done. They can have my earnest money. I don’t care. There are contracts that are built. I’ve seen these out there where the agent still gets paid legally.

They should get a compensation of 3 percent or whatever. for that deal because they brought a willing and able buyer. They were ready to close on house. The seller was ready to close and you screwed it up, right? So watch for language like that, that says how that payment is made and when, right? [00:29:00] Super important.

Um, also look for how you can get out of these agreements, right? So it’s a lot of stress to say, Hey, I want to agree to work with Nate or whoever, um, for six months, let’s say under a, an agency agreement, right? Whoa, I’m not sure I’m ready to commit. How do I get out of that? So our contract, our standard language in our contract is that if you notify me within 72 hours, like we’re done, only the houses that I showed you, are we, are we responsible for?

So I can’t like show you one, two, three main street. You write me a letter, say, Nate, we’re done. And then you go to the seller directly. Right? If I’ve showed you the house, we’re, we’re together on that. But if you were like, Nate, it’s not working out like this is how you can walk away. So look for what that walk away language looks like and make sure that you’re comfortable with it.

So those are the big ones that I, that I think can, can try to trip people up. Um, and then also look for the last pieces where that compensation is coming from. So again, the goal is to get it from the seller. Um, but it should be listed pretty explicitly in the contract that that is the goal. The way our, our contract is written, uh, it basically says [00:30:00] like we are trying to get this from the, the goal is to make this a piece of the commission or the piece of the compensation from the seller.

Uh, the goal is not to make the buyer just pay for it out of pocket. So I think that language is important to have in there just so you can be, make sure that the goals are aligned with, with what your goals are.

Tim Ulbrich: The time piece is really interesting, Nate, and I’m connecting some dots. Now I had a conversation with a connection through one of my boys baseball last summer that was bemoaning a, uh, by this must’ve been actually right after the implementation, probably late summer, early fall, uh, was bemoaning this relationship he was in.

I think he said a year. Um, and it’s just a really good example of the 72 hours, right? Makes sense. Whatever you showed them. There should be a, an agreement and understanding for it, but there also should be an opportunity to change relationship, change. Maybe it’s not a good fit. We thought it was a good fit, whatever might be the case.

And man, you don’t want to be tied up long term if you don’t have to. So I don’t know, maybe there will be some rules and stuff that come around that a while, but that to me [00:31:00] seems really a long, a year.

Nate Hedrick: Yeah. I think that typically what I’ll see is, and you’ll see this, you have like listing agreements, right? So it’s the same idea. Uh, and this has always been the case. This has been the case for years. If I list a home and I have 25 people that see it in a six month period, well, you can’t. And the listing agreement on January 1st and then on January 3rd, except an offer from one of the people that, that saw the house.

I get like six months after that. Anybody that saw the house, if I can prove that they saw the house when I was the one that’s trying to show it, then I’m, I’m due compensation. That’s always been there. And so I think that’s pretty similar. Hopefully that person wasn’t actually locked up to that agent for a year.

They were just locked to the listings they saw, but perhaps, I mean, that could be out there.

Tim Ulbrich: Oh yeah, that’s true. That might’ve been it. Hopefully, uh, he was not happy. I remember that.

Nate Hedrick: I can, I can imagine. That sounds awful.

Tim Ulbrich: So Nate, I’m a prospective homebuyer listening, um, you know, um, I want to be in this crazy market at some point, maybe in the spring or summer, when is a good time to be thinking about looking for an [00:32:00] agent to begin that, that home buying search, that home buying journey.

Nate Hedrick: Typically I recommend three to six months before you think you’re sort of ready to buy a house. Like if you can see yourself, if your lease is running out in June, January or February is your time to start talking with agents and start that process. Um, just to kind of work backward, right? Like if you have a goal of like, Hey, we want to be moved in by.

The fall for the school district. Typically, you’re going to have a 30 to 40 day closing, right? So you got to work backward from that. And then you could have anywhere from a week to five months of looking for a house, right? It depends on your market and what the kind of averages are. So building in that.

three to six month window, make sure that you have a pretty good chance at getting everything done in time. Um, longer than that, if you’re, if you’re a year away, you’re probably looking too early. Interest rates are going to change. The market’s going to change. Um, you’re just going to be wasting you and your agent’s time if you’re looking at that stage, but that three to six month window tends to be kind of the sweet spot.

If I, if I, [00:33:00] based on my experience.

Tim Ulbrich: Yeah, Nate, as we’ve talked about before on this podcast and in other webinars, like the, the, a good real estate agent can, can be an important, not just team member, but the quarterback of the team, right? There’s a lot of questions that can come, uh, in the home buying process and that individual, especially with good experience can help you navigate a lot of those.

So we really believe this is one of the first puzzle pieces of the puzzle, not the first piece of the puzzle that we have to put in place, which is a good segue in to talking about the real estate RPH concierge service. Many of our listeners, if they’ve, if they’ve heard the show before, know that we’ve had the opportunity to partner with you now, five years, six years, seven years, and, uh, we, we love what you have done to help pharmacists, home buyers all across the country.

And you’ve actually had on a couple of previous buyers that have worked with you on the show, and we’ll link to those episodes in the show notes. If people want to get a feel for what that is all about, whether someone lives in Cleveland, in your backyard, in my backyard, in Columbus. Tulsa, Oklahoma, you name it across [00:34:00] the country.

The goal of the concierge service is to get them connected with a local agent that is a good fit, not only a good fit in that agent relationship with that buyer, but that also then has you in their corner and with them along the process, uh, throughout the home buying journey to help hold their hands.

So tell us more about that concierge service, whether it’s a first time home buyer, second time home buyer. Investor. It applies across the board.

Nate Hedrick: Yeah, I mean, you nailed it. The goal is really take the guesswork out of this process, right? We’re talking about all these interviews. We’re talking about it. It’s a lot of steps and a lot of things to figure out. And when I first did it, especially, uh, as a first time homebuyer, I had no idea what I was doing.

Like, and I don’t know if a 30 minute podcast is enough to like make me an expert on interviewing real estate agents. Right? So, so we said, why don’t we develop this service? It’s completely free. It starts with a 30 minute phone call with me. We’re going to go through and answer any questions you have.

Okay. figure out your goals, look at your budget, figure out where you want to buy, like what kind of property you want to buy, all those important questions. So we can narrow in on [00:35:00] what is going to be the right agent fit for you. Then we’ll go out and either connect you with one of our network agents, people we’ve worked with in the past that we’ve vetted, that we know have really good backgrounds and are working with clients right now.

Um, and either connect you with one of them or we’ll interview agents on your behalf until we can narrow down to somebody we think is a good fit. You move on, you work with that agent, you can either, Stick with them like we’d recommend, or if it’s not a good fit, come back and we can, you know, redo the process, right?

That only happens a fraction of the time, but we’re, you know, you’re not locked into anything. The goal here is to make this a great process. And so that’s, that’s kind of how we, how we build it. So completely free service. Uh, the idea being that it just takes the guesswork out for everybody.

Tim Ulbrich: So you can find more information on that real estate, rph. com. Uh, you can get to Nate’s website, get connected with him. You can also send us an email at any time info at your financial pharmacist. com. And just say, connect me with Nate and we’ll help make that introduction. Uh, as well, and, you know, Nate, I, I’m thinking about the [00:36:00] small percentage of people that are listening in Northeast Ohio, which obviously have you in their backyard.

That that’s an easy win, but to clarify again, it’s really the intent is no matter where you live in the country, uh, that, that Nate can be alongside of you to help you, uh, engage and find that agent, which is we’ve outlined in this episode today. All the more important in evaluating agents, making sure that’s a good fit in the context of the new, uh, buyer agreement.

So again, real estate, rph. com. You can get more information or send us an email info at your financial pharmacist. com. Nate, as always really appreciate your experience and, uh, the perspective you give. Thanks so much for coming on.

Nate Hedrick: Tim, thanks for having me on the show.

[END]

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YFP 393: Ask YFP: Growing Your Income & Saving for Kids College Savings

Posted on by YFP Media

YFP Co-Founders, Tim Ulbrich and Tim Baker answer two listener submitted questions about growing income and saving for your child’s college education.

Episode Summary

In this episode, Tim Ulbrich, PharmD and Tim Baker, CFP tackle two listener submitted questions. Cory from Arizona seeks advice on how pharmacists, in addition to cutting expenses, can increase their income to achieve their financial goals. Amanda from Minnesota, inquires about 529 college savings plans and balancing it with other financial priorities.

Key Points from the Episode

[00:00] Introduction and First Question
[00:40] Strategies for Pharmacists to Increase Income
[04:40] Diversifying Income Streams
[06:03] Entrepreneurial Ventures and Non-Traditional Income
[07:31] Importance of Salary Negotiation
[11:51] Investing for Passive Income
[13:48] Next Question: Saving for Child’s Education
[14:47] Understanding 529 College Savings Plans
[19:56] Balancing Education Savings with Other Financial Goals
[26:30] Conclusion and Resources

Episode Highlights

“ The more specialized or niche that you are, the more attractive or the more you can, you know, kind of demand, from, like, a salary perspective.” – Tim Baker [1:19]

“I love the idea of, like, growing top line income. Right? That excites me because. If you can figure a model out you could potentially uncap your income. That’s exciting.” – Tim Baker [10:43]

“ If we can have a North star of what’s the desired output, we can then backtrack into what do we need to be saving today based on a set of assumptions. ” – Tim Ulbrich [19:39]

Links Mentioned in Today’s Episode

Episode Transcript

Tim Ulbrich: Let’s jump into our first question, which comes from Cory in Tucson, Arizona.

Hey YFP crew, how can a pharmacist grow their income? With a high floor, low ceiling profession like ours, finding ways to increase money coming in may be of interest given there is only so much frugaling you can do. And if I frugal anymore, my wife and kids just might revolt. Thanks, and no pressure, you just might save this household.

Tim Ulbrich: Corey, thanks so much for taking time to submit your question. Tim Baker, what are your thoughts?

Tim Baker: Yeah, so I was thinking about this from the pharmacist angle. Versus like, how can I make additional money where you could sell things, recycle, donate plasma? Anybody can do that. But I’m really thinking about this from the pharmacist angle.

I kind of think about it. in really two parts, the first part being where my feet [00:01:00] are and what I’m currently doing. And then what is outside of what I’m currently doing? You know, if we talk about diversifying your income streams or exploring entrepreneurial ventures. So I think the first part is, if you’re a pharmacist and XYZ organization, you know, and again, this is going to be dependent.

And I realized that. The more specialized or niche that you are, the more attractive or the more you can, you know, kind of demand, from, like, a salary perspective, we know this through, like, board certification and things like that, Tim. So it could be that right.

And, you know, our niche is working with pharmacists on their financial plan. If I go back in time and, you know, I commented on your posts on LinkedIn about you, shifting away from academia to go to YFP. And I was thinking about my own journey. And like, when I was launching script financial, which is now YFP, you know, I could have said, Hey, it’s Baker financial advisors, but I don’t think that would really speak to anybody except for myself.

I think being niched, in [00:02:00] any type of profession can be really helpful, for your career. And I think about this, and we’ll talk about a little bit in the 2nd part of this question of, building, a brand when I think of, oncology and pharmacist, I think of, a particular person.

Kelly Carlstrom, if I think of, geriatrics, I think of a particular person functional medicine. I think of a particular person. If you can distinguish yourself, as the, thought leader in that particular niche. That can lead to other, opportunities to make income.

So it could be specialization. It could be pursuing leadership positions or additional opportunities within your organization, to make additional income. And I think the other probably more obvious thing, Tim, that a lot of pharmacists, maybe aren’t great at is just negotiation.

Right? So If you kind of look at a traditional financial plan, it’s kind of where you’re at. What’s the balance sheet? Where are we going goal set in it’s fundamentals like a savings plan, cashflow and budget and [00:03:00] debt. It’s investment retirement, looking for more of the longterm stuff.

It’s wealth protection, insurance planning, and a state planning. That’s essentially a financial plan. But one of the things early on, in my career at script and then YFP was. Really talking about sour negotiation. And I think what I was seeing that there was a lot of meat left on the bone with regard to this transaction, so to speak.

So, you know, I would talk to a pharmacist and then say, Hey, good news, Tim. I just got a new job or. Whatever it is, and I would say, great, like, what did you counter and it would be like crickets, right? And I think the response that I would typically get is like, I didn’t, I didn’t count.

I was just happy to have a job. And I’m like, I totally get that. I totally get that, but I think having some tools to be able to advocate for yourself in those moments. And it’s not just when you change jobs, I would argue that you should have those conversations.

Really, at a minimum, [00:04:00] anytime that you’re talking about your review, if you get reviewed, twice a year, once a year, that type of thing. I think if you can develop some of those tools to advocate for yourself, you put yourself. In a better situation to grow your income as per the question, and it’s often a missed opportunity where it’s kind of uncomfortable.

Maybe it’s a little yuck that we feel greedy that we don’t necessarily. Put ourselves in a position to make the most that we can. So from the, where are we at perspective, you know, pursuing leadership positions, potentially specialize in, and negotiating your salary. Those are 3 things that if I’m a pharmacist, I’m saying, hey, those things I should do.

I think the other. Two things, diversifying income stream, entrepreneurial stuff there. I kind of lump those together. So it could be, you know, part time or per diem work. I know I talked to some pharmacists. They’re like, I want to earn income. But then when I’m like, well, why don’t you pick up an extra shift?

They’re like, they want to strangle me. And I understand that. But I also would say here, Tim, I [00:05:00] think some of the trap that pharmacists fall into is. Any additional income has to be on par with what I make as a pharmacist, and I would push back on that. So as an example, if you make 70 an hour as a pharmacist, like any additional money that you make has to kind of be, on par with that.

And I think that doesn’t necessarily play right. So I would put that as and again, it’s a trade off, right?

So I think you got to have to figure that out and what’s a good number there. So it could be part time or per diem work. It could be consultant. It could be MTM. It could be, you know, just working with long term care facilities or clinics, medical writing.

We’ve had clients that have been really successful at that could be teaching or precept in freelance work that kind of falls into the medical writing or drug information resources, that type of thing. So I do think that there’s lots of opportunities out there. It’s just matter of, like, [00:06:00] finding them and kind of getting into a rhythm of, okay, this is worth my time or it’s not,

other things that could be something like, hey, you take a bold move and you open your own pharmacy. I think there’s a lot of innovation to be had there. I know there’s a lot of pharmacies that are open and they’re kind of operating outside of insurance. It could be to start a consultant business.

It could be to develop a product or service. I know we’ve talked to some of these fellowship programs across the country, and we’ve seen pharmacists that in fellowship, are developing a product, that is really exciting. And it could be, something that’s more non traditional whether it’s building a personal brand, content creation, trying to, start a blog, monetize it, a YouTube channel.

Public speaking, which I know can be somewhat tough. Sometimes, we give that away for free. And that’s, the system in which we’re in, or writing a book. Obviously, you have some experience with that creating courses. I think there’s a lot of things out there. To potentially do, and try and I think the goal here is to figure out what is the goal for this additional income is to pay down a debt. Is [00:07:00] it to retire early?

Is it fire? Those types of things. And if you can kind of align again the things that you’re passionate about, and monetize it, that’s great. But that doesn’t always like work out, right? We know that sometimes we just got to pay the bills and that’s the focus. So, again, thinking about this from a pharmacy perspective, that’s kind of where I took it.

But there’s a million other ways. I think you know that you could potentially earn additional income. That’s kind of more or less non pharmacy related.

Tim Ulbrich: And I’m glad you took that approach to him, right? Because, you know, if we open up the doors beyond pharmacy, of course, we get into things like real estate, right. And other types of opportunities, which are certainly possibilities, but I also love that you asked a really important question at the end of your answer there, which is like, what are we trying to achieve?

What are we trying to accomplish? Because I think as Corey alluded to in his question, there can be a frugality fatigue that can happen. You know, over time, we often talk about cutting expenses, cutting expenses, cutting expenses, and certainly that can help us as we’re trying to achieve any goal, whether that [00:08:00] be putting extra towards savings, whether that be paying down debt.

But there’s also the income side of the equation, which is what we’re talking about here. And of course you put both those together and really good things, you know, start to happen, but what is the goal? What are we trying to accomplish? And I think in this discussion. Because you bring up a really interesting point that, you know, when you talk to pharmacists that are looking for extra income, it’s like, Hey, how many professions are there where you’re making 70 bucks an hour, you can just go pick up extra shifts and they’re like, Tim, I don’t want to go pick up extra shifts.

And it’s interesting because then it’s like, all right, tell me more. And they’re spending

hours upon hours upon hours and not earning nearly what they could in picking up extra shifts. And, and I say that not out of judgment out of that, but out of, you know, What that tells me is, well, maybe there’s something here just beyond the dollars and cents, like, is there an interest or a passion, or, you know, I really just want to kind of tap into a different creative side of this work that maybe I’m not getting or feeling in my everyday work.

And, and all of [00:09:00] a sudden the conversation changes a little bit of like, sure, there’s a financial aspect, but maybe there’s also some type of, you know, purpose or creativity outlet or something of what are we trying to accomplish? What are we trying to do? Through earning additional income and diversifying these streams.

Tim Baker: Yeah. I, I, I think, uh, another, you know, point to that. Cause if people talk about, oh, you can get paid to do your passion. That’s a great thing. One of my first entrepreneurial endeavors was like, I was second grade and I got really big into like drawing different Garfield and things like that.

And I started a shop and I had all these orders. And then I got behind track, you know, I was charging like a quarter for every drawing. And then it became like a job. I’m under this deadline to get these drawings out. And I’m like, man, I hate Garfield. I don’t like Bart Simpson anymore.

I kind of became like a passion of mine kind of became a job. And that was like, you know, a kind of a core memory of mine of like, man, I don’t want to do something like that again. So that it can have negative consequences, but [00:10:00] yeah, I mean, like. I think a lot of people are like, yeah, but what about, you know, what about my student loans?

You know, I have to make additional money to get through that. But I’m like, well, maybe there’s a different path, you know, maybe, looking at, you know, where you work and you can do something similar from a for profit to a nonprofit that kind of allows you to work smarter, not harder.

That plays. So, you know, there’s probably a question. We probably need to go a question or 2 or 3 deeper on Corey’s question again. If we were in kind of a client planner type of environment to kind of get to the core of that, but as an entrepreneur, I love the idea. You know, everyone talks about, oh, we have to cut expenses.

I love the idea of, like, growing top line income. Right? That excites me because. If you can figure a model out you could potentially uncap your income. That’s exciting. But often takes a lot of work in iteration to figure out what that is. If we’re talking about it from a business perspective.

Tim Ulbrich: a few resources to that we have in this area that we’ll link to in the show notes. I want to [00:11:00] make sure folks are aware and they can dig deeper. We’ve got a blog post that goes back a while now. 19 ways that pharmacists can make some extra money just to get the ideas going. On episode three 88 recently, I interviewed four pharmacist entrepreneurs.

That are doing very different things and a couple of them, still working, full time in their pharmacy jobs while they pursue their businesses, wide array of different types of experiences and how they have monetized their clinical expertise. So check out that interview. I think it can stimulate some ideas.

And then finally, we’ve talked about salary negotiation before on this show. We’ll link to that. I think that’s an incredible resource and you articulated well. It’s a skill that often we don’t have, maybe aren’t comfortable with, but that might move the needle more than anything we’re talking about here.

Especially when we think about the compound effect of that.

Tim Baker: yeah, and probably something to also interject him, you know, obviously, I’m a financial planner. So maybe someone’s like sitting here listening and thinking, like, why isn’t him talking about like, invest in for like passive [00:12:00] income?

But sometimes I talk to prospective clients that are like, hey, I want to invest for passive income. And I need it like next year and what I would say is, is that typically when you’re investing for income, you’re typically doing that over a lifetime of investing where you’re, you know, we will take the 4 percent role.

Right? If you manage to accumulate a million dollars in an investment account from a retirement planning perspective, the rule of thumb is, if you take 4 percent of that or 40, 000, that, portfolio can. Last for 20, 30 years or longer. In that case, it’s less about appreciation of stock mutual fund ETF prices and more about safety in principle. So you’re not taking as much risk. The income, the dividends, the interest payments are creating that 4 percent of that 40, 000 for you to live off of.

So obviously it takes time to do that. Now there are certain [00:13:00] examples. Where it doesn’t take that long, you know, it could be closely held stock or something like that. And those are, certain situations where people have access to buying into a privately held company or a small company, things like that.

But typically, you know, a, hey, I want to invest for passive income is a long term play. It’s, you know, I’m trying to grow these dollars as much as possible to then eventually turn that faucet on and live off of that. And I’m not saying people can’t do that in a shorter time frame, but typically, you’re doing this in conjunction with putting money into your 401k, your IRAs, other things, and then also, looking at a passive play.

That’s typically, decades , in the making

Tim Ulbrich: Good stuff. Alright, let’s move on to our next question, which comes from Amanda from Brainerd,

Minnesota.

Amanda: Hi, YFP. My name is Amanda and I’m from Brainerd, Minnesota. My husband and I welcomed our first child this year, and we are wondering what we need to know about 529 [00:14:00] college savings plans, and if there are good strategies for saving for our child’s education while still meeting our other financial goals, like saving for retirement and paying off our mortgage.

Tim Baker: I kind of would start with the question is like, what’s the goal? Right? So, you know, oftentimes when I ask this question, it’s like, I don’t really know, or we don’t really have a goal. So, is it hey, I want to get my kid through 2 years of school, 4 years of school, you know, is it masters doctorate is a public private in state out of state.

I think probably kicking the tires on, what that looks like is important. And, I think there are a lot of people that are apprehensive of 529 plan. So, just to kind of define what a 529 plan, it’s a tax advantage savings plan design to encourage savings for education costs.

There’s typically 2 types. You have a college savings plan, which is an investment account that grows tax deferred with withdrawals that are tax [00:15:00] free for qualified expenses. And there’s a slew of qualified expenses that were more narrow when they first came out that are become more broad, as years go on.

And I think it’s going to continue to do that. You also have, a prepaid tuition plan, which is typically a lot less popular, but this allows you to prepay tuition at today’s rates for, participating schools for the future. And, you know, there’s pros and cons, of each, but I think typically people go into, the college savings and they’re more familiar and comfortable with, okay, I’m saving for education,

retirement in my 401k. So the big draw here is the tax advantages. So at the federal level, earnings grow tax deferred and withdrawals are tax free for qualified education expenses at the state level. Many states offered tax deductions or credits for contributions if you use your state’s plans.

And there is a slew of, you know, states that offer tax benefits for, you know, using their own plans, their states [00:16:00] that doesn’t matter. You can use any plan and then there’s states that don’t have income tax. So you don’t really get a benefit. And then there’s states that are kind of more, um, we don’t care if you.

Put money in a 529, you don’t get any benefit looking at you, California, Delaware, Hawaii, Kentucky, North Carolina. So the thing about this is like, you get the benefit at the state level, kind of on the front end and then on the back end, you typically get the benefit at the state and the federal level.

I think what often happens is that people let the tax advantages kind of drive their contribution amounts. And it’s not necessarily a terrible thing, but it can be, especially like, if you’re over saving, or potentially under saving. So I think, again, looking at. What is the goal? We’ve talked about previously, Tim, the one third role and that’s kind of what my family does.

What Shane I do for our 3 kids. I think that’s important to know. We talked, qualified education expenses, tuition fees, room, board, books, supplies, equipment, you can use it for student loan repayments, apprenticeship costs. I think the other thing that I would say is not all 529s are [00:17:00] created equal.

Thank you. So research and plans, we did this with Ohio one where we’re like, Hey, it’s, rated at one of the better plans in the country. But if I compare that to like, are like how we manage money at YFP, it’s more expensive, right? Um, so you want to compare plans from different States, depending on where you’re resident, what plan to use.

You want to look for plans that have low administrative and investment fees. Um, you know, that have a kind of a diverse investment, options, understand what the contribution limits and when you get the benefit, you know, being able to understand who owns the account. So like I have three accounts for my three kids.

I am the account owner and they, the three of them are beneficiaries. You can change beneficiaries. So if Olivia decides not to go to college, I can use that money for Liam. or Zoe. In the future, you know, I don’t, I think sometimes people get worried that like, if there isn’t an out, what do I use that for?

So like, I don’t have a problem with, you know, given that to a relative, a grandkid, that type of thing. So, but at the minute, at the end of the day, like if you decide to get the money out, it’s a penalty and you pay tax, right. So it’s not the end of the world, I think for the most part, if you think your child is going to go through [00:18:00] some type of training post high school, it’s a good vehicle to use.

Um, You know, obviously there’s risks, you know, when, when, anytime you invest any money, you know, there’s no guarantee that you’re going to get a return, understanding, when you get penalized for pulling out, early and what that looks like. So those would be the highlights Tim, in terms of a 529, maybe a coin flip is maybe a little too much, but it’s typically 50 50 where people are like, yeah, I’m all in on a 529 and there’s probably another 50 percent that are apprehensive. So again, I think asking those questions of, like, what’s the goal? You know, like, what do how do you view this money?

And going from there is really important, but there’s a lot going on here, right? In terms of, the type of plan, how you invest it. How does that what’s the glide path of those investments over time? What are the fees? Multiple kids, you know, there’s a lot of new rules with, you being able to transfer it over to a Roth in the future and all those things.

So there’s quite a bit at play here with regard to this decision, but I think it is a valuable bucket to use. If you [00:19:00] have, a solid belief that your child is going to do some type of, training or education post high school.

Tim Ulbrich: Yeah, let me throw out a couple of resources, Tim, for those listening that want to dig deeper. And then I’ve got a couple other thoughts I want to get your input on. So we have a blog post, seven things to consider before starting a five to nine plan, that goes in a little bit more depth along what Tim was saying, and then not too long ago, we did an episode three 68, how much is enough when it comes to kids college.

Right. So we think about that question often in terms of retirement. I don’t know if we think about that same question when we think about kids college and to your point about what’s the goal? You know, you mentioned the third, a third, a third rule. We talk about that in that episode, but if we can have a North star of what’s the desired output, we can then backtrack into what do we need to be saving today based on a set of assumptions.

And that’s helpful if we back up though, just a minute, you know, to my experience and there’s no judgment, out there because I felt this myself is. When people go through their own journey of incurring a lot of student loan debt and the pain that can come with that, I think that leads [00:20:00] to a tendency to want to maybe either over save or not prioritize these in the way that maybe objectively you would, right?

And so I think intent is good, but, you know, if I went through my own journeys, I did a paying off a couple hundred thousand dollars of debt, naturally, I’m like, I don’t want my kids to ever have to go through that good intent.

Tim Baker: The other way, too, where it’s like, hey, I

Tim Ulbrich: No, you’re going to go,

Tim Baker: Yeah, I’ve seen that. And that might be a

Tim Ulbrich: that’s a

Tim Baker: pretty even split as well. You know, it’s like, hey, it’s just it’s kind of the rite of passage. But yeah, I’ve seen it both ways where it’s like, hey, I don’t want my child ever have to experience that.

But then also, like, I had to so.

Tim Ulbrich: Yeah. And I think where this can come into context with planning is we can try to more objectively look at this. So for example, if someone’s listening and then they fall onto the side of, Hey, I went through this. I don’t want my kid to go through this. You know, we might then have a tendency to put some of these steps out of order.

We think about some of the baby steps of the financial plan, getting the emergency fund set up, making sure we eliminate any high interest rate, credit card debt. Making sure we’ve got the base of [00:21:00] our own debt repayment plan. Not to say we have to be debt free, but at least have the plan of where we’re going, making sure we’ve got a base of our own investing strategy and thinking about the future.

And so does the 529, if it fits in, depending on your goals and vision for your own kids, then the question is where, right? Where does it fit in with other things?

Tim Baker: Yeah, and I think what you’re alluded to is this need for some people, you know, I’ve gone through that debt journey to overcorrect, in the face of their own plan. Right? And, you know, what a financial planner will say, eloquently will be like, hey, Tim, you can take a student loan or your child can take a student loan.

You can’t take a retirement loan. So there could be a world where you. Forego your own retirement and you’re really working on the 5 29 and then when they go to college or you’re using that and kind of the income that you’re earning at that time and then you’re impoverished in retirement and your kids have to take care of you on [00:22:00] the back end instead.

So again, that’s kind of an extreme example, but yeah, I think again, we always talk about intention here, right? And I think sometimes, you know, we talk about this with invest, invest in, sometimes emotions can really, wreak habit in a well laid plan. And, you know, I think emotions are important.

You know, hey, I would sleep a lot better at night if our emergency fund was X instead of Y do it. Right? I think though that, education is 1 of those gray areas where it’s like, I know I should be doing something here, but I don’t really know what it is and dependent on my own experience, I’m going to overcorrect or not address it at all.

And you have the opportunity to do so and do it in a meaningful way. Again, I think it’s one of those parts of your financial plan that is important. And maybe, you know, it goes along the, hey, put your mask on first before you put on your child’s mask, the airplane example. But it’s [00:23:00] worthy of examination.

Tim Ulbrich: Yeah. In my experience, Tim tells me that the emotions in the math, which I firmly agree are both important. They’re not independent variables, right? So, you know, when, when you took, me through the kids college savings calculator, answering the question, how much is enough when you can get to the granularity, sure.

It’s based on a set of assumptions and those assumptions can change, will change potentially, just like we talked about with retirement, but when I can look at it and say, okay, I’ve got a five year old, A nine year old, a 12 year old, a 13 year old. Here’s what we have for each of them saved today based on let’s assume, you know, four year in state public tuition.

We’ve got a great university in our backyard here. Go Buckeyes. Um, so we’ll, we’ll use that for assumptions and, and we’ll look at certain, savings rate of returns and other things like, and we’d start to distill it down to, okay, we want to pay a third. Are we ahead? Are we behind? Are we on track?

And then what would it mean monthly? To get on track with where we want to be like that type of analysis [00:24:00] can inform the emotions. Meaning that, you know, I can be looking at this thinking kids college. I don’t know. We’re just kind of throwing money at it. I know we need to be saving.

Are we there? Are we not there? Like that’s unsettling. And I think the math can help inform that

Tim Baker: yeah, it’s the same kind of analysis that we go through with, you know, um, retirement, you know, this is a little bit more of a tighter schedule because you’re typically looking at 18 ish years versus like a 30 year career. But yeah, it’s the same thing. And what I always kind of. You know, I, I, I go back to my first job and, you know, in financial planning, you know, we would say, Hey, client, Hey, Tim, you need 2.

65 million for retirement. And then we kind of go on to the next thing and you could literally see, their eyes gloss over because if you’re 10 plus years from retirement. It doesn’t connect, so going through that analysis, whether it’s retirement or education planning, it could be incremental things like, Hey, save 75 more for this kid and you should be fine.

Put this lump sum that you have. And then [00:25:00] save 50 more and you’d be okay. Right. Or, let’s tweak some things here. You’re really conservatively, invested right now and you still have. 12 years until they go to like, let’s modify that. So it’s taken those, and this is just financial planning and, it’s taken those large problems and then basically, breaking it down to what can I be doing today, this month to affect change.

And again, like, it’s not always going to be perfect, but I think with education planning in particular, like. If I, you know, if I can get to, like, if my full, solution is to pay a third to do the 33 percent role and I’m at, you know, 29%, maybe I have to reach into my pocket a little bit more in, like, when, when my kid goes to college, or they have to take a little bit of a more of a student loan.

But like, it’s, it’s we’re right there. Right? And I think a lot of people, they throw up their hands are like, ah, this is too big of a problem. And they just. Yeah. Keep on keeping on and they don’t really, again, they don’t analyze where they’re at and, you know, where they need to go.

Tim Ulbrich: Yeah, I think as we talk about all the time, it’s taking these unanswered questions that are constantly swirling in our mind, right? These unclosed loops [00:26:00] that are causing some of the stress anxiety, getting them written down on paper and then developing a plan. And sometimes that plan means to what you said earlier, we only have so much money in a given month, right?

So it might be that, Hey, we wish we could do more than we can do in the moment. But that clarity can come from. All right. We’ve thought about these things. We’ve written them down. We prioritize them. And now we’re beginning to work towards them. A lot of momentum can really come from that.

Tim Baker: Right.

Tim Ulbrich: Great stuff. Again, thank you to Corey and Amanda for taking time to submit your questions. And if you have a question, we’d love to hear from you. We can address it on an upcoming show. You can send us an email info at yourfinancialpharmacist. com. You can also. Submit and record your question by going to yourfinancialpharmacist.

com forward slash ask YFP. And if you’re thinking about strategies, whether it’s to grow your income or save for kids colleges, we talked about on this episode, perhaps you’re thinking about, are you on track for retirement, maybe getting your estate planning documents buttoned up as I just heard from someone this week, or building a more tax efficient financial plan at YFP, we have a team of the only certified financial planners that work with pharmacist households all across the country.

We would love to have a conversation. With you where you can learn more about our services. We can learn more about your situation and determine if there’s a good fit to do that. You can book [00:27:00] a discovery call by going to yourfinancialpharmacist. com. And you’ll see on our homepage and option to schedule that call.

An important reminder that this podcast is provided for informational purposes only. And is not intended to provide and should not be relied on for investment or any other advice, information to the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial product.

For more information on this, you can visit yourfinancialpharmacist.com/disclaimer. Thanks so much for listening. Have a great rest of your week.

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YFP 391: 7 Books That Shaped My Money Mindset

Posted on by YFP Media

Tim Ulbrich shares insights from seven financial books that shaped his journey, offering key lessons on saving, spending, mindset, and building wealth.

Episode Summary

In this episode, Tim Ulbrich highlights seven impactful financial books that shaped his journey, including I Will Teach You to Be Rich by Ramit Sethi, Die with Zero by Bill Perkins, and Rich Dad, Poor Dad by Robert Kiyosaki. He shares key takeaways on topics like balancing saving and spending, adopting a wealth-building mindset, and spending for happiness.

Key Points from the Episode

[00:00] Introduction and Financial Moves Recap
[00:41] Book 1: I Will Teach You to Be Rich by Ramit Sethi
[03:25] Book 2: Die With Zero by Bill Perkins
[06:14] Book 3: Rich Dad Poor Dad by Robert Kiyosaki
[08:12] Book 4: The Millionaire Next Door by Dr. Tom Stanley
[10:12] Book 5: The Compound Effect by Darren Hardy
[14:09] Book 6: Total Money Makeover by Dave Ramsey
[15:33] Book 7: Happy Money by Elizabeth Dunn and Michael Norton
[17:47] Conclusion and Call to Action

Episode Highlights

“ It’s about intentional allocation of the dollars that we have and spending them in areas that we drive the most significance.” -Tim Ulbrich [1:35]

“The plan that got them there to work hard and to save, save, save…that mindset was going to require a shift in order to live a rich life. New behaviors need to be learned. And ideally we can build these spending muscles throughout our careers and not just wait until some day off in the future.” – Tim Ulbrich [5:54]

“I can’t think of anyone. I know. Who got rich off of buying whole life insurance policies, buying random alt coins or buying NFTs.”- Tim Ulbrich [10:59]

“Learning is one thing, but learning and taking action with accountability is really where we start to see things happen.” -Tim Ulbrich [18:21]

Links Mentioned in Today’s Episode

Episode Transcript

Tim Ulbrich: Welcome to this week’s episode, Tim Ulbrich here we kicked off the new year where I covered five financial moves to make, and we’ll link to that episode in the show notes.

One of those moves was to set your learning plan. So here are seven financial books that have had a profound impact on my journey, such that I often recommend these books to others, gift them, and I’ve implemented at least one, often more than one of the teachings in my own financial plan. All right. In no particular order, let’s jump in with book number one.

[00:02:00] Which is, I will teach you to be rich by Ramit Sethi.

Now I had the chance to hear Ramit speak in 2019 at the FinCon event, the FinCon conference in Washington, DC, and it was fire. He’s a fantastic speaker, a fantastic teacher. And at the time, the theme of his talk, which he talks about in the book, I will teach you to be rich is money dials, money dials, a key concept in that book.

And. Really, the concept of money dials is identifying what areas of spending have the most significance, meaning or impact for you and dialing those up and on the flip side, finding those areas of spending that perhaps are somewhat automatic and we may not even be thinking a whole lot about it. And they have the least significance or meaning or impact and dialing those down, right?

It’s about intentional allocation of the dollars that we have and spending them in areas that we drive the most significance. Now it sounds obvious, but it’s easy to fall into the [00:03:00] trap of spending money on things that you don’t really care that much about at the expense of not having money. To spend on things that mean the most to you.

And I love that he starts off the book with this, right? Because before we implement the X’s and O’s of the financial plan, as you’ve heard me say on this podcast, many times, we have to be clear on what does it mean to live a rich life? Now he’s, he uses the terminology money dials. We talk about living a rich life.

We’re talking about the same. thing, right? Now, this is not about me saying what should or shouldn’t be meaningful, right?

Everyone has different significance and meaning. It’s about getting clear. What are those things that you derive the greatest significance and meaning from? And is your financial plan, is your spending in alignment with those areas? Now, in addition to the concept of money, Dows in this book, his teachings on automation have stayed with me and are ones I’ve applied to my own plan and teach often to other pharmacists.

Now, he says in the book that automating your money will be the single most profitable system that [00:04:00] you’ll ever build. And I would whole heartedly agree with that. It takes time, a little bit of time to set up, maybe perhaps not as much as you think, but once you have a system in place where you’ve thought about and identified your goals.

We’ve accounted for them inside of the monthly spending plan. And then we are automatically funding those goals. And we see that process happening. Boom, right? That’s when we’re really humming with the financial plan in general. This book is a great personal finance one on one read. It’s an easy read.

Again, he’s a fantastic teacher. And I love the principles in this book and our principles that I often apply in my own financial plan. The second book on my list is die with zero by Bill Perkins, die with zero.

By bill Perkins. This book is going to challenge you to think differently about the value of spending and finding that balance with saving or, as we say at Y. F. P. Finding the balance between living a rich life [00:05:00] today and planning and taking care of our future selves.

Now, if you’re an aggressive saver, Guilty as charged. And you find yourself challenged to enjoy spending money today, right? To let go of the reins a little bit. This is a must read for you. Bill Perkins in the book challenges traditionally held beliefs about retirement planning and passing down generational wealth.

One of my favorite quotes from the book is when he says, quote, people who save tend to save too much for too late in their lives. They’re depriving themselves now, just to care for a much, much older future self, a future self that may never live long enough to enjoy the money.

I’ve come to appreciate and still need a lot of help guidance and reminders from my financial planner, from Jess and our own plan that spending just like saving. Is a learned habit. I was recently reminded of this after listening to an interview on Ramit Sethi’s podcast, where he was talking with a couple [00:06:00] nearing retirement age that had over 6 million in net worth.

It was quite sad to hear the husband rationalized with Ramit for almost two hours, all the reasons why he couldn’t spend and enjoy because he had to quote first, save it up. Or quote work harder to make up for what he was going to spend again, net worth of 6 million. So for all intents and purposes, they achieved their savings goals.

Plus some, right? The plan had worked. They had gotten to that point that they were planning for all along, but despite what the numbers showed, he couldn’t shift his mindset. He was stuck in the grind and the hustle of working and saving. Working and saving. And this is something we don’t talk about often enough with the financial plan that when we work hard for 30 or 40 years to save, that is a big transition.

When we get to the withdrawal phase, right? We need to be planning for that. We need to be preparing for that. And we need training wheels along the way to help us with this learned behavior of spending. And the point that was remit was trying to make and trying to get this husband to see is that in order to live a rich life, the plan that got them there can’t be the same.

As the plan going forward. The plan that got them there to work hard to save, save, save, work hard, save, save, save. That mindset was going to require a shift in order to live a rich life. New behaviors need to be learned. And ideally we can build these spending muscles throughout our careers and not just wait until some day off in the future.

That may or may not come and may or may not be what we have in mind.

Number three on the book is rich dad, poor dad by Robert Kiyosaki, rich dad, poor dad by Robert Kiyosaki. Now, Robert Kiyosaki has recently come into the spotlight and many different controversial ways. So personality aside, his teachings in this book, in my opinion, remain a classic. This book is all about mindset, not X’s and O’s like some of the other books that are on the list today.

And if you think of the financial plan as a series of decisions that need to be made, I think of this book as being [00:08:00] a philosophy that guides those decisions. It’s the thread behind the decisions that we make. And a few of the things that have stayed with me is that, you know, what we might think is an asset versus a liability. I think he challenges that mindset. Why leverage is an important tool to build wealth.

And of course there’s risk with leverage and we have to balance that. Also, what has stayed with me is why traditional W 2 income limits wealth building. And finally, why business ownership and real estate investing are key legs. Of the wealth building school.

Now this book in particular, along with tax free wealth by Tom Wheelwright, and we’ll link to all of these books in the show notes, tax free wealth by Tom Wheelwright really opened my eyes to the importance of tax as a part of the financial plan. One that is kind of always behind the scenes that probably many of us are not thinking about, and more specifically the strategies.

That can be employed to optimize our tax situation, right? We want to pay our [00:09:00] fair share, but we want to pay no more. And I think through these teachings and really digging into the form 10 40 and understanding how the different components of that form work and what are the levers that we can pull to make our, uh, tax rate as efficient as possible.

These two resources, rich dad, poor dad, and tax free wealth have really been instrumental in opening my eyes to the significance and importance of tax as a part of the financial plan. All right. Number four on my list is the millionaire next door. By Dr. Tom Stanley, the millionaire next door by Dr. Tom Stanley and the updated version, the next millionaire next door featuring Tom’s daughter, Dr.

Sarah Stanley flaw, which we had the pleasure of having on the podcast on episode number 200. This book examines the key behavioral traits. Of millionaires. One of my favorite quotes from the book is when he says, quote, one of the reasons that millionaires are economically successful is that they think differently.

They think differently. What he’s talking about is one of [00:10:00] my key takeaways from that book is that net worth, not income net worth, which is your assets, what you own minus your liabilities, that really. Is a true indicator of your overall financial health, right? Net worth, not income as the financial vitals check is really going to help us as we think about this mindset of, is our income being translated into building our assets and paying down our debt, some of my other key takeaways from this book is that, you know, we often wouldn’t know who the people are that are millionaires or multimillionaires.

When you look at the research that’s presented in the millionaire next door, as well as the updated version and the next millionaire next door, the spending behaviors and patterns would say that they probably aren’t the people that we think are millionaires that more or portray. To be millionaires, they often have a frugal mindset.

Doesn’t mean that they’re cheap. Doesn’t mean that they don’t like investing in good experiences. Doesn’t mean that they’re not a philanthropic or givers, but they often have a frugal [00:11:00] mindset. They’re they’re typically not trapped. Millionaires are not trapped by what I think of as the big rocks, right?

They’re not house poor. They’re not car poor. They do take calculated risk often in business or real estate. And most millionaires, as the research suggests in that book are self made. It’s not typically inherited money, fascinating research and concepts. I would highly recommend that the millionaire next door, the updated version.

If you haven’t already read it. Alright, number five on my list is The Compound Effect by Darren Hardy it was one of those books I, I, I remember exactly where I was when I read it, uh, at our old house up in northeast Ohio during the summer.

I read it outside and, and a couple hours I couldn’t put it down. And one of those books, you’re just constantly highlighting, taking notes. You’re like, yes, yes, yes. And this is not exclusively a personal finance book, but I love the applications here. And I was recently reflecting on those in my life that have been financially successful, because I think it’s helpful to learn and grow [00:12:00] from those who have actually done it right.

And as people came to mind that I thought of, okay, who has been a long term financially successful in building wealth, not short term success, long term financially successful. And as I thought more about that, I was like, I can’t think of anyone. I know. Who got rich off of buying whole life insurance policies, buying random alt coins or buying NFTs.

And I’m not saying that people don’t exist that have built wealth in those ways. Rather, what I’m saying is that I don’t know anyone that took this path, and I feel confident in saying the perception is much greater than the reality when it comes to these types of vehicles being a viable path to building wealth, right?

Often these are short term solutions that are band aids when we really need to look at long term consistent behaviors. Rather, when I think of those people that have built long term wealth, it was a long methodical, patient journey. One intentional step after another [00:13:00] where those decisions and good decisions, not to say there weren’t mistakes along the way, but those good decisions compounded over a long period of time.

And I think, unfortunately, we’re hearing less of these journeys, right? Because these aren’t great clickbait. These aren’t great. In terms of social media algorithms are often boring stories in the, in the literature really supports that. And the book, the millionaire next door, which I just mentioned previously, Yeah.

And several, when I thought more about who are these people, several, not all have multiple pathways of building wealth. Typically it’s traditional investments. It might be equity in a business. It might be real estate, and those aren’t always in balance, but I’ve noticed that as a theme and those that have been really long term, uh, Successful in building wealth and often being philanthropic is a part of that wealth building.

These individuals that come to mind are taking calculated risks on opportunities where they see that the upside dramatically outweighs the downside, and they have a strong financial [00:14:00] foundation in place such that if that calculated risk doesn’t work, They’re not going to be impacted in a significant or catastrophic way, right?

They’re able to take that calculated risk because they have that strong base and foundation in place. As I think of these people that come to mind, I would describe them as overall fairly conservative yet willing again, to take some level of risk if an opportunity presents itself. So they’re not risk averse, but they’re also not flashing.

In fact, they’re quite humble and they’re often very philanthropic. And they really do embody some of the teachings that have stayed with me from this book, the compound effect by Darren Hardy. He has a formula in this book that I often reference back to. And that formula is small, smart choices. Plus consistency, plus time equals radical difference, small, smart choices, plus consistency, plus time equals radical difference, right?

That is the definition of compound interest when we think about saving over a long period of time. So this is the [00:15:00] path I will follow. This is the one that I have seen work a path defined by working hard, taking calculated risk. Investing in tax efficient, appreciating assets, building equity that can be converted to other assets.

Developing a habit and priority for giving and doing this over and over over a long period of time to allow those results to compound. All right. Number six on my list is total money makeover by Dave Ramsey, the total money makeover by Dave Ramsey. Now I’m not an avid follower of Dave Ramsey and his principles and the baby steps, but I have to give credit Where credit is due, reading the total money makeover, going through financial peace university, listening to Dave Ramsey’s podcast was really like a wake up call over a decade ago that inspired the journey that Jess and I took to ultimately pay off our 200, 000 of student loan debt and really led to is the really beginning steps of the place that we are today.

And the journey that we would take to get there, that [00:16:00] book. The total money makeover, listening to the podcast really lit a fire under me to want to learn more, right? As I mentioned, it was kind of a wake up call to create our own path, our own plan. Even if we didn’t follow the path in plan that he prescribes to so many through the baby step formula.

The baby steps I will admit early in our journey, it was a grounding framework, a grounding framework for us that we needed at the time. As we were trying to balance many things, we weren’t doing any of them particularly well, and we didn’t have an intentional plan in place. And that really was the footing that we needed to get started.

That would ultimately allow us to build momentum, to build our emergency savings, to get out of debt, and then to have a prioritized approach. To achieving our goals. So that’s number six, a total money makeover by Dave Ramsey. Number seven last on my list is happy money. The science of happier spending by Elizabeth Dunn and Michael Norton.

Now I would assume many of you have heard of. All [00:17:00] perhaps the first six books that I mentioned, but maybe not the case with this one. I ran across this, uh, several years ago and I intentionally book ended my list of seven here with this one per particular, because I think that it’s an important reminder that money is a tool, right?

I mentioned that when I talked about die was zero by bill Perkins. Money is something that affords us the opportunity to pay for our basic needs. And if we’re able to live our rich life and to give to others. And next time you hold a bill of any value in your hand, remind yourself that it’s a piece of paper.

In fact, it’s a piece of paper that I recently learned is 25 percent Linden, 75 percent cotton, but this is a piece of paper that has value because number one, we all agree that it has value. Number two, it’s backed by the faith and credit. Of the U. S. Government. So what’s my point? My point is that it’s finite, right?

And if we’re not careful, we can miss the boat on a crewing while losing sight of the so what? [00:18:00] And that reminder comes, I think, strongly in the book. Happy money. The science of happier spending. By Elizabeth Dunn and Michael Norton. This book provides what the research has to say on the science of spending and the connection between money and happiness.

Now, happiness, how you define that, right? That’s an important component to consider. But my takeaways from this book were that the literature supports to no surprise, but an important reminder, the link between happiness and Monday. Typically lies in two main areas. Number one, spending money on experiences and memories that will come for those.

And number two on giving, when you look at the connection between happy and moneyness, it strongly points to giving and experiences as an important part of the financial plan. And I think if you talk to anyone who’s been at this for a while, You start to see this come out again, especially as they short up some of the basis of their financial plan.

These are the areas that you typically see people light up when they talk [00:19:00] about their financial plan. All right. So there you have it. Short and sweet. Seven personal finance books. That have had a profound impact on my journey and our books that I would recommend you read or reread . We’ll link to all of these books in the show note.

And if you have a book that you often recommend or that has had a profound impact on your journey, I want to hear about it. Shoot me an email at info at your financial pharmacist. com. Let me know what I left off the list. I’d love to read it and perhaps share it with our community. In the future. Again, you can reach us at info at your financial pharmacist.

com. Now we all know that learning, right? Reading books, listening to podcasts, learning is one thing, but learning and taking action with accountability is really where we start to see things happen. And that’s why we’re so excited about the work that our team at YFP planning is doing through our fee only certified.

Financial planning service. If you want to learn more about what it looks like to work one on one with a fee only certified financial planner from your financial pharmacist, yes, to learn and grow in your financial IQ [00:20:00] and knowledge, but also to take steps and implement those in your financial plan and be held accountable to achieve those results, you can book a free discovery call at YFP planning.com again. That’s YFP planning. com. Thanks so much for joining me on this week’s episode, and we’ll be back next week. Have a great rest of your day.

[END]

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Note: Referral fees from affiliate links in this table are sent to the non-profit YFP Gives. Read the full advertising disclosure here.	Bonus	Starting Rates	About	YFP Gives accepts advertising compensation from companies that appear on this site, which impacts the location and order in which brands (and/or their products) are presented, and also impacts the score that is assigned to it. Company lists on this page DO NOT imply endorsement. We do not feature all providers on the market.
	$750* Loans â‰¥150K = $750* â‰¥50K-150k = $300	Fixed: 4.89%+ APR (with autopay)	A marketplace that compares multiple lenders that are credit unions and local banks	Check Rate
	$500* Loans â‰¥50K = $500	Variable: 4.99%+ (with autopay)* Fixed: 4.96%+ (with autopay)** Read rates and terms at SplashFinancial.com	Splash is a marketplace with loans available from an exclusive network of credit unions and banks as well as U-Fi, Laurenl Road, and PenFed	Check Rate

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YFP 389: 2024 in Review: Milestones, Highlights, & Giveaway!

Posted on by YFP Media

Tim Ulbrich, YFP CEO, celebrates over 2 million downloads of the YFP Podcast by sharing some of his favorite episodes and listener stories. He also previews exciting projects ahead in 2025 for YFP.

Episode Summary

In this special year-end episode, host Tim Ulbrich reflects on a milestone year, celebrating over 2 million downloads of the YFP Podcast. He shares powerful listener stories, recaps his top three episodes of 2024—featuring topics like achieving financial success, landing scholarships, and entrepreneurial journeys in pharmacy—and offers a glimpse into what’s ahead for 2025.

Plus, don’t miss your chance to win a $100 Amazon gift card by submitting your show ideas to [email protected] by January 1st, 2025.

Celebrate with us, and gear up for an inspiring year of growth and success!

Key Points from the Episode

[00:00] Welcome and Year-End Reflections
[00:19] Listener Appreciation and Milestones
[01:09] Inspiring Listener Stories
[02:20] Favorite Episodes of 2024
[06:44] Looking Ahead to 2025
[08:28] Exciting Giveaway Announcement
[09:36] Closing Remarks and New Year Wishes

Episode Highlights

“ It’s about designing and living that rich life today while we take care of ourselves and the future.” – Tim Ulbrich [2:01]

”Am I going to sacrifice weekends with my family and nights in order to have one or two extra million dollars?” – Tim Ulbrich [4:02]

“The financial plan has to focus on taking care of ourselves in the future while also living and prioritizing a rich life today.” – Tim Ulbrich [7:25]

Links Mentioned in Today’s Episode

Episode Transcript

Tim Ulbrich: [00:00:00] Hey everybody, Tim Ulbrich here. And thank you for listening to the YFP podcast, where each week we strive to inspire and encourage you. On your path towards achieving financial freedom this week. I’m flying solo as we wrap up and celebrate another year of the YFP podcast. It’s a busy time of year. So let’s keep this one short and sweet.

First and foremost, thank you to you, our listeners that tune into the show. Some of you that tune in a loyally every week, since we started the show back in 2017, thank you so much. And some of you that maybe check in periodically as you’re able to, I get it. Time’s limited. You have a lot of options. So whether you listen while you’re working out, whether you listen while you’re driving to work, whatever it may be.

Thank you so much for the support of the show, the energy that you all provide, the encouragement that you provide helps keep us going each and every week. And I mean that sincerely. And today marks a really cool milestone for us. As we wrap up 2024, we recently passed [00:01:00] 2 million downloads of the show. Wow. Wow. Wow. And that number is really cool. 2 million downloads. But to be honest. It’s the impact and hearing from you guys that gets me fired up each and every week. I heard from Jordan this year who said, Hey, great news, officially net worth positive catching up on budgeting and realize that I just cross the threshold.Appreciate your tips and insight thus far. How cool is that? Getting to net worth positive and beginning to build wealth.

I also heard from a Kayla who said your podcast on how pharmacists utilize creative entrepreneur opportunities are truly inspiring. And personally inspired me to create my own clinical pharmacist, consulting firm and Taylor said, your content really helped us buckle down and pay off our loans. It’s allowing us to be more flexible in considering a career transition within pharmacy. That gets me fired up, right? We often talk about money is a tool. Money is a tool. It’s about designing and living that rich life today while we take care of ourselves and the future. And when I hear comments like that from Taylor that says, Hey, we got focused on our student loans so that we could be more flexible so that we could pursue this other thing that was really important to us.

That’s what it’s all about. . Some of the highlights in my favorite moments from 2024, we’ve had a lot of great episodes throughout the year. I just pulled three of my favorites. The first one is episode 365, and we’ll link to all of these in the show notes, you know how to find them.

This episode featuring pharmacist, Mike Byers was titled millionaire theme hour from 0 to 1.

And his story was so inspiring of how he essentially started at a net worth of zero and was pretty quickly able to get to a net worth North of 1 million and has continued to build wealth since then, such [00:03:00] that in his early forties, He was able to step away from his full time work in community pharmacy to spend more time with his young family and to pursue other opportunities, most notably those that he’s been building in real estate.

Mike’s story reminded us, reminded me that building wealth, that defining and living the rich life legacy that we talk about, it has ups and downs. It requires perseverance and it requires hard work. And that’s one of the things I loved about Mike story is it wasn’t just all rainbows and butterflies, right?

He had highs and lows. He had a divorce that he struggled through. He had a real estate investment deal or two that didn’t go as planned. He made his fair share of financial mistakes along the way, but he kept a long term picture in mind. He learned from those mistakes and he persevered. One of my favorite quotes from that episode is when he said, quote, what I’m looking at.

Is that I have this money saved because I was diligent in being able to save. [00:04:00] What does the next 10 years look like? Am I going to sacrifice weekends with my family and nights in order to have one or two extra million dollars? That’s a great episode from this year. And I hope no matter what stage of the career that you’re in, I hope you’ll check out episode three 65 with Mike.

of my other favorite episodes of the year was episode 372 titled rising stars. Meet the YFP give scholarship winners. And when I had the opportunity to interview these young pharmacists, it just gave me so much energy. There’s a lot of skepticism out there in our profession right now. And, and much of that for good reason.

But when I thought about these individuals as the future of the Innovators and leaders within our profession, man, did this episode energize me? We had the opportunity to start or nonprofit this year called YFB gives. And as a part of that, we gave out five scholarships in our first year.

And I interviewed all five of these individuals and hearing their stories, hearing the impact that this scholarship was going to have, hearing [00:05:00] the ideas that they had for the future, for their careers, the energy and the motivation that they had. Was so inspiring. I hope you’ll check that out. One of my favorite moments from that show is when I had chance to interview Ruth, one of the winners, when she said, quote, the scholarship really lessened a burden that I’ve been carrying for months.

And we look forward to giving more scholarships here in the spring of 2025. So stay tuned. You can learn more at yfpgives. org. My third episode of the year that I want to highlight was one that we recently published episode three 88. In fact, we just. Released this episode last week. And, and this episode titled entrepreneur journeys in pharmacy lessons on growth and success.

I had the pleasure of serving as a moderator for a panel of four pharmacists, entrepreneurs that I very much admire the work that they’re doing. Dr. Jimmy Pruitt, Dr. Natalie Park, , Dr. Brooke Griffin and Dr. Kelley Carlstrom, all of them working in different ways and finding creative ways. To monetize their various areas of expertise and to do so in a way that it’s contributing value and not only adding value to the individual and solving a problem in which they’re growing the business, but also a way that they are creatively growing and expanding and their own financial plan as well. And in this discussion, we talked about. How did they go from idea to getting started? What are some of the challenges that they have faced along the way in both building the business, as well as developing themselves as an individual.

This episode, I think you’re going to want to watch it on YouTube. So you have a chance to see all of these individuals and the passion in which they show and demonstrate. That’s just three of the episodes that we published this last year.

As always, you can find these on our website, yourfinancialpharmacist.com.

So what can you expect from us in 2025?

Well, more stories. To inspire, motivate, and educate

that include not only the success stories, but also some of the challenges that people had to overcome. So these will [00:07:00] feature stories of pharmacists that are working through paying off debt, through building wealth, through making big life planning decisions and family decisions through giving as well.

So more stories as we continue to build a community where we learn from one another and are inspired and motivated by one another. We’re going to focus more and more on a theme that you have heard me talking about. Which I believe in so deeply, which is that the financial plan has to focus on taking care of ourselves in the future while also living and prioritizing a rich life today, right?

If we squirrel all this money away for the future, at the expense of living this life today, I think we have missed the point and there is a balance here and this is hard, but we have to find that balance and make sure that our financial plan is supporting. The vision that we have for our life. So we’ll talk more about that and we’ll continue to share more stories on that.

And finally, what to expect in 2025 is we are [00:08:00] making a heavy shift towards more video content. We’ve done this periodically, but we recognize this topic really comes to life when you can engage, see, and interact with. The guests that we have on the show, whether that’s our own team, such as my partner, Tim Baker at YFP, or one of our certified financial planners, or it’s a guest that we’re featuring and sharing the story.

You’re going to see that content published on YouTube. And of course you can find the podcast just like you always have on whatever channel you’re listening to. One last thing I want to mention before we wrap up for this week is that we have an exciting giveaway as we wrap up this year and head into 2025.

And I want to really use this as an opportunity to hear more from you, whether it’s a question that you have that you’d like to have answered. And that can be anonymous. That’s okay. Just let us know, or maybe you have an idea. For a show that you would like us a topic that you would like us to talk about, or a guest that you would like us to consider or an author that you would like us to interview.

And by the way, that guest could be you, if you have [00:09:00] a really cool story that you want to share as well, don’t be shy. So we’re going to give away a hundred dollar Amazon gift card, and here’s how you can be eligible for that giveaway. Simply send us an email at info at your financial pharmacist. com again, info at your financial pharmacist.

com by January 1st. And just let us know an idea that you have for the show in 2025. Again, that could be a question that you want, I want answered, or it could be an idea that you have for an episode in the new year. So send us an email info at your financial pharmacist. com. And that email will make you eligible.

As we wrap up this episode, I want to wish you and your family and your loved ones, a happy new year. Again, thank you so much for taking the time to listen to the show for your support and encouragement along the way. It means so much to myself and the team at your financial pharmacist, cheers to a great end of 2024 and looking forward to being alongside you as we look towards 2025, have a great rest of your day.

[END]

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Advertising Disclosure

Note: Referral fees from affiliate links in this table are sent to the non-profit YFP Gives. Read the full advertising disclosure here.	Bonus	Starting Rates	About	YFP Gives accepts advertising compensation from companies that appear on this site, which impacts the location and order in which brands (and/or their products) are presented, and also impacts the score that is assigned to it. Company lists on this page DO NOT imply endorsement. We do not feature all providers on the market.
	$750* Loans â‰¥150K = $750* â‰¥50K-150k = $300	Fixed: 4.89%+ APR (with autopay)	A marketplace that compares multiple lenders that are credit unions and local banks	Check Rate
	$500* Loans â‰¥50K = $500	Variable: 4.99%+ (with autopay)* Fixed: 4.96%+ (with autopay)** Read rates and terms at SplashFinancial.com	Splash is a marketplace with loans available from an exclusive network of credit unions and banks as well as U-Fi, Laurenl Road, and PenFed	Check Rate

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YFP 388: Entrepreneurial Journeys in Pharmacy: Lessons on Growth and Success

Posted on by YFP Media

Four pharmacist entrepreneurs share their journeys from pharmacy to thriving businesses, offering tips, actionable advice and inspiration. This episode is brought to you by APhA.

Episode Summary

In this engaging panel discussion, four pharmacist entrepreneurs—Brooke Griffin, Jimmy Pruitt III, Kelley Carlstrom, and Natalie Park—share their unique paths from pharmacy to thriving businesses. Discover how they built their ventures, made strategic decisions, and overcame challenges along the way. Gain practical insights into audience building, pricing strategies, navigating sales, and balancing personal and professional growth.

Whether you’re dreaming up a new idea or ready to expand your business, this episode is packed with actionable advice and inspiration to help you take the next step in your entrepreneurial journey.

About Today’s Guests

Kelley Carlstrom is the CEO and founder of KelleyCPharmD, an education company that fills the considerable gap in clinical oncology training. She is passionate about democratizing oncology pharmacy education and increasing accessibility and inclusion through her unique L.E.A.R.N Oncology Method.

Brooke Griffin is a pharmacist, professor, keynote speaker, and professional coach. She offers group and 1:1 coaching for pharmacists who are feeling stuck and want clarity on their next steps. She hosts a motivational 5-minute podcast, Today’s Bold Idea, and is on this self-discovery journey alongside all of you. She believes everyone deserves a coach!

Dr. Natalie Park is a co-founder and CEO of Pharmesol, an AI pharmacy assistant that automates inbound/outbound calls, messages, and associated workflows such as documentation to save the pharmacy teams time, streamlines operations, and gives 24/7 concierge-like experience for their customers. She is a pharmacist with a passion for leveraging technology and innovation in the pharmacy industry.

Jimmy Pruitt III, PharmD, BCPS, BCCCP, BCEMP, a pharmacist and entrepreneur, earned his Doctor of Pharmacy degree from Presbyterian College and completed residencies at Florida Hospital Orlando and Grady Health System. He founded EMPowerRX Conference and Pharmacy & Acute Care University (PACU) to innovate healthcare education and inspire pharmacists to pursue entrepreneurship. In 2021, he received the Excellence in Diversity award and was named Alumni of the Year at Presbyterian College. Dr. Pruitt is also an Emergency Medicine Clinical Pharmacy Specialist at Atrium Health and hosts the “Pharm So Hard” podcast, aiming to educate and elevate the pharmacy profession.

Key Points from the Episode

[00:00] Introduction and Speaker Backgrounds
[00:51] Brooke Griffin’s Journey and Business
[01:30] Jimmy Pruitt’s Career and Ventures
[01:59] Kelley Carlstrom’s Oncology Path
[02:48] Natalie Park and Pharmesol’s Mission
[03:28] Monetizing Expertise and Career Transitions
[04:27] Balancing Full-Time Work and Entrepreneurship
[08:24] Taking the Leap: Full-Time Entrepreneurship
[13:40] Starting a Business: From Idea to Action
[23:24] Building an Audience and Validating the Market
[26:31] Choosing the Right Platform for Your Audience
[27:28] Building Value and Consistency in Content
[28:20] Converting Social Following to Owned Traffic
[30:25] The Journey of Starting a Podcast
[32:13] Overcoming Pricing Challenges
[39:15] Sales Strategies and Processes
[45:12] Learning and Growing as an Entrepreneur
[49:50] Personal Growth Through Entrepreneurship

Episode Highlights

“ I actually got laid off. So that was the impetus of pushing me out of the nest, if you will. And I remember the day I got laid off, I called a coach I was working with at the time and her immediate response was, “Congratulations!” -Kelley Carlstrom, PharmD

”You have to just start and take the first step. It’s going to be messy. You’re going to fall down periodically. You’re going to learn from that.” -Tim Ulbrich, PharmD

“ Being myself is the boldest thing I could ever do. I’m the greatest project I could work on, and I don’t ever want to be done.” -Brooke Griffin, PharmD

“ Entrepreneurship has taught me the most about myself and has exposed every limitation I wasn’t aware of that I had.” -Tim Ulbrich, PharmD

Links Mentioned in Today’s Episode

Episode Transcript

The transcript will be included following the release the episode.

Current Student Loan Refinance Offers

Advertising Disclosure

Note: Referral fees from affiliate links in this table are sent to the non-profit YFP Gives. Read the full advertising disclosure here.	Bonus	Starting Rates	About	YFP Gives accepts advertising compensation from companies that appear on this site, which impacts the location and order in which brands (and/or their products) are presented, and also impacts the score that is assigned to it. Company lists on this page DO NOT imply endorsement. We do not feature all providers on the market.
	$750* Loans â‰¥150K = $750* â‰¥50K-150k = $300	Fixed: 4.89%+ APR (with autopay)	A marketplace that compares multiple lenders that are credit unions and local banks	Check Rate
	$500* Loans â‰¥50K = $500	Variable: 4.99%+ (with autopay)* Fixed: 4.96%+ (with autopay)** Read rates and terms at SplashFinancial.com	Splash is a marketplace with loans available from an exclusive network of credit unions and banks as well as U-Fi, Laurenl Road, and PenFed	Check Rate

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YFP 387: Cryptocurrency & Digital Assets: Investment Considerations and Tax Implications

Posted on by YFP Media

In part two of their cryptocurrency series, YFP Co-Founders Tim Baker and Tim Ulbrich discuss spot Bitcoin ETFs, the IRS’s stance on cryptocurrency, and strategies for incorporating digital assets into long-term portfolios.

This episode is brought to you by First Horizon.

Episode Summary

This week in part two of the series on cryptocurrency and digital assets, YFP Co-Founders Tim Baker, CFP and Tim Ulbrich, PharmD explore the recent introduction of spot Bitcoin ETFs and how they differ from investing directly in Bitcoin. Tim and Tim also discuss the IRS’s perspective on cryptocurrency and key considerations for including digital assets in your portfolio as part of a long-term investment strategy.

Key Points from the Episode

Introduction to Cryptocurrency and Digital Assets Series [0:00]
Role of Digital Assets in Portfolio Diversification [3:12]
Investing in Bitcoin vs. Bitcoin Spot ETFs [8:52]
Tax Considerations for Digital Assets [13:43]
Use Cases and Future of Digital Assets [23:13]
Fee Considerations for Digital Assets [24:50]
Conclusion and Next Steps [30:41]

Episode Highlights

“There’s a lot of things that digital assets can solve. If you’re in countries where you have hyperinflation, where the price of bread is double or triple in the morning than what it is in the afternoon, something like a stable currency is really attractive to you.” – Tim Baker [12:18]

“Digital assets are taxed as property, so the IRS looks at it as property. So, and that’s kind of one of the rubs here when Bitcoin was kind of introduced. It was supposed to replace the dollar, or that was the idea. And again, I do think that a digital asset will replace the dollar. It’s just not going to – it won’t be Bitcoin.” – Tim Baker [13:45]

Links Mentioned in Today’s Episode

Episode Transcript

The transcript will be included following the release the episode.

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YFP 386: Cryptocurrency & Digital Assets: Definitions, Origins, and Risks

Posted on by Tim U

Tim Ulbrich and Tim Baker discuss cryptocurrency, examining its advantages like decentralization and transparency and risks such as volatility and regulatory uncertainty.

Episode Summary

In this first episode of a two-part series on cryptocurrency and digital assets, YFP Co-Founders Tim Ulbrich and Tim Baker explore the world of digital finance and its relevance in today’s financial landscape. Tim and Tim unpack essential terms and explore how the 2008 financial crisis served as a catalyst for the rise of cryptocurrency, with Bitcoin leading the charge.

The discussion highlights the unique advantages of digital assets, such as decentralization, transparency, and their fixed supply, contrasting these features with traditional currencies. Tim and Tim also address critical risks, including market volatility, security concerns, and regulatory uncertainties.

Key Points from the Episode

Overview of Digital Assets and Cryptocurrency [2:26]
Defining Digital Assets and Their Characteristics [4:25]
The Financial Crisis of 2008 and Its Impact on Digital Assets [8:29]
Bitcoin and Blockchain Technology [14:13]
Advantages and Risks of Digital Assets [18:43]
Regulatory Concerns and Security Risks [18:55]
Volatility and Comparison to Traditional Investments [19:12]
Conclusion and Preview of Future Episodes [34:33]

Episode Highlights

“There’s a lot of people that invest in more mutual funds in their 401k that don’t fully understand how mutual funds work. So I think that’s where an advisor or somebody that you trust can be a guide in this. But I do think that something like this, with it being new, doing some research and understanding what that looks like is important.” -Tim Baker [7:59]

“If you look at the US dollar, it used to be backed by the gold standard, but once it moved to a fiat currency, it derives value from the trust and the issue in government. Whereas Bitcoin derives value from the trust in the decentralized system.” – Tim Baker [24:05]

“The US dollar gets value from the widespread acceptance as legal tender in the United States, but even across the world, like dollars are valuable anywhere or in most places. Whereas, you know, Bitcoin, its acceptance is by its users and people that believe that this is the future.” -Tim Baker [24:46]

“I think the biggest risk is the volatility. So, you know, digital assets are highly volatile and can experience dramatic price swings in short periods.” – Tim Baker [30:18]

Links Mentioned in Today’s Episode

Whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System”
Too Big to Fail by Andrew Ross Sorkin
YFP Book a Discovery Call
YFP Disclaimer
Ask a financial question to YFP
Subscribe to the YFP Newsletter
Tim Ulbrich on LinkedIn
Tim Baker on LinkedIn
YFP on Instagram
YFP Facebook Group

Episode Transcript

The transcript will be included following the release the episode.

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YFP 385: Networking Reimagined: Insights from David Burkus

Posted on by YFP Media

Tim Ulbrich revisits his 2019 conversation with David Burkus, author of Friend of a Friend, to explore how we can rethink networking and build relationships that unlock new opportunities. This episode is brought to you by First Horizon.

Episode Summary

In this week’s episode, YFP Co-Founder Tim Ulbrich revisits a 2019 conversation with David Burkus, best-selling author of Friend of a Friend, to explore how we can rethink networking and build relationships that unlock new opportunities. David, an expert in organizational behavior and network science, challenges traditional networking advice and highlights the surprising value of “weak ties”—connections we interact with less often but that can open unexpected doors.

He also explains the power of “dormant ties,” structural holes, super connectors, and the importance of authentic engagement. Tune in for an insightful discussion on leveraging your network to drive success, both professionally and personally.

About Today’s Guest

David Burkus is a best-selling author, a sought after keynote speaker, and Associate Professor of Leadership and Innovation. In 2017, he was named as one of the world’s top business thought leaders by Thinkers50.

His book, Friend of a Friend, offers readers a new perspective on how to grow their networks and build key connections—one based on the science of human behavior, not rote networking advice. He is also the author of Under New Managementand The Myths of Creativity. David is a regular contributor to Harvard Business Review and his work has been featured in Fast Company, the Financial Times, Inc magazine, Bloomberg BusinessWeek, and CBS This Morning.

David’s innovative views on leadership have earned him invitations to speak to leaders from a variety of organizations. He’s delivered keynote speeches and workshops for Fortune 500 companies such as Microsoft, Google, and Stryker and governmental and military leaders at the U.S. Naval Academy and Naval Postgraduate School. His TED talk has been viewed over 2 million times.

Key Points from the Episode

Introduction to the Podcast and Sponsor [0:00]
Sponsor Introduction and First Horizon Home Loan [1:27]
Interview with David Burkus: Background and Motivation [3:09]
The Concept of Strong and Weak Ties [13:39]
Engaging with Dormant Ties [22:05]
Operationalizing Networking: Tools and Systems [26:08]
Addressing Concerns About Systematic Networking [29:21]
The Concept of Structural Holes [31:23]
The Role of Super Connectors [35:42]
Connecting Networking to Personal Finance [40:59]

Episode Highlights

“The goal is to make weak ties like your old friends, those people who you could pick up the phone and call and it just feels like no time has passed since the last time you’ve talked to them.” -David Burkus [17:52]

“The big lesson is, whatever is unique and authentic for you, that is a system where you’re regularly checking back in with these dormant ties that will work. You’ve got to be comfortable doing it, but once you do it, stay consistent with it.” – David Burkus [25:27]

“If you think about Facebook, for example, if you pull up a list of your friends on Facebook, it’s already sorted by how frequently you interact with those people, right? And in a lot of other places, you can ask for it to sort your existing connections that way, right? So scroll all the way down to the bottom, boom, we’ve already found some of your dormant ties.” – David Burkus [22:01]

“What I tell people, if you get all the way to the end of the day and you haven’t thought of something, you can send a three sentence email that will, believe it or not, jump start a conversation, and the three sentences are: “I was thinking about you today. I hope you’re well. No reply needed.” – David Burkus [24:11]

Links Mentioned in Today’s Episode

Episode Transcript

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YFP 384: Beyond Salary: Negotiating Your Value in the Workplace

Posted on by YFP Media

YFP Co-Founders Tim Baker and Tim Ulbrich discuss essential negotiation skills inspired by Chris Voss’s book, Never Split The Difference, covering key strategies to boost your financial plan, mindset, and confidence.

Episode Summary

In this episode, YFP Co-Founders Tim Baker and Tim Ulbrich have a valuable conversation on negotiation—an essential skill that impacts not only finances but also mindset and confidence. Inspired by Chris Voss’s book, Never Split The Difference, Tim and Tim explore negotiation techniques drawn from Voss’s experience as a former FBI hostage negotiator and break down why negotiation is vital for your financial plan, key goals, and practical strategies for navigating each step.

About Today’s Guests

Tim Baker is the Co-Founder and Director of Financial Planning at Your Financial Pharmacist. Founded in 2015, YFP is a fee-only financial planning firm and connects with the YFP community of 12,000+ pharmacy professionals via the Your Financial Pharmacist Podcast podcast, blog, website resources and speaking engagements.

Tim attended the United States Military Academy majoring in International Relations and branching Armor. After his military career, he worked as a logistician with a major retailer and a construction company. After much deliberation, Tim decided to make a pivot in his career and joined a small independent financial planning firm in 2012. In 2016, he launched his own financial planning firm Script Financial and in 2019 merged with Your Financial Pharmacist. Tim now lives in Columbus, Ohio with his wife (Shay), three kids (Olivia, Liam and Zoe), and dog (Benji).

Tim Ulbrich is the Co-Founder and CEO of Your Financial Pharmacist. Founded in 2015, YFP is a fee-only financial planning firm and connects with the YFP community of 15,000+ pharmacy professionals via the Your Financial Pharmacist Podcast podcast, blog, website resources and speaking engagements. To date, YFP has partnered with 75+ organizations to provide personal finance education.

Tim received his Doctor of Pharmacy degree from Ohio Northern University and completed postgraduate residency training at The Ohio State University. He spent 9 years on faculty at Northeast Ohio Medical University prior to joining Ohio State University College of Pharmacy in 2019 as Clinical Professor and Director of the Master’s in Health-System Pharmacy Administration Program.

Tim is the host of the Your Financial Pharmacist Podcast which has more than 1 million downloads. Tim is also the co-author of Seven Figure Pharmacist: How to Maximize Your Income, Eliminate Debt and Create Wealth. Tim has presented to over 200 pharmacy associations, colleges, and groups on various personal finance topics including debt management, investing, retirement planning, and financial well-being.

Key Points from the Episode

Importance of Negotiation in Financial Planning [0:00]
Introduction to Negotiation and Its Role in Financial Planning [1:23]
The Process and Importance of Negotiation [6:45]
Employer Expectations and Employee Responsibilities in Negotiation [13:07]
Strategies for Effective Negotiation [17:09]
Counteroffers and Leveraging Non-Salary Terms [32:18]
Tools and Techniques for Negotiation [37:19]
Applying Negotiation Strategies in Financial Planning [46:54]
Conclusion and Final Thoughts [47:08]

Episode Highlights

“Negotiation is really a process of discovery. It really shouldn’t be viewed as a battle. It’s really a process of discovery.” – Tim Baker [5:58]

“I think there is often a sentiment and I know I’ve felt it myself, where, you know what, I’m glad to have a position. I’m glad to be making a good income. But that can be true, and you still can be a good person, and you still can negotiate and advocate for yourself and the value you bring to the organization.” – Tim Ulbrich [6:20]

Links Mentioned in Today’s Episode

Episode Transcript

Tim Ulbrich 00:00

Hey everybody. Tim Ulbrich here and thank you for listening to the Yfp Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom. Negotiation. That’s what we’re talking about today, an important skill that many of us were not taught, and one that can move the needle significantly, yes, financially, but also in terms of mindset and confidence. One of my favorite resources on this topic is the book never split the difference by Chris Voss. I first heard this book on a podcast interview several years ago where Chris was demonstrating his quote late night DJ voice, which is one of the fun techniques he describes in that book. Now, if you haven’t read the book before. In addition to listening to today’s episode, check it out and make sure to do the audio version. It’s fantastic and really drives home the examples used throughout. Chris is a former FBI international hostage negotiator who took what he learned from high stakes negotiation and brought it to us for everyday use. Now, considering that effective negotiation can have a big impact on your financial plan. This week, we’re hitting replay on an episode that Tim and I recorded back in August of 2020 during the show, we discussed why negotiation is important your financial plan, the goals of negotiation and tips and strategies for different parts of the negotiation process that you can implement in your own negotiation. Make sure to listen all the way through as I’m confident in saying, there will be a positive return on your time investment. One last thing, unlike traditional financial planning firms, our team of certified financial planners at Yfp is experience in helping our clients through negotiations, whether that be negotiating within an organization for a new position or to increase salary or for someone looking for a new job, if we can help with your negotiation, head on over your financial pharmacist.com click on book a discovery call so that we can learn more about your situation and see whether or not our services are the right fit for You. All right, let’s jump into our conversation on effective negotiation. Tim Baker, welcome back to the show.

Tim Baker 02:08

Yeah, happy to be here. How’s it going?

Tim Ulbrich 02:09

Tim, it’s going excited to talk negotiation something we discuss a lot, a lot in presentations, a lot. I know that you discuss with clients as a part of the financial plan, but we haven’t addressed it directly on the show before. So I’m excited that we get a chance to dig into this topic. And we know that negotiation can carry a lot of power, and can be used across the board, really, in life, right? Could be negotiating terms for a new or existing job, position, buying a car, buying a house, negotiating with your kids or spouse, kidding, not not kidding, as we’ll talk about here in a little bit, so we’re going to focus predominantly on salary negotiation, but really, these techniques can be applied to many areas of the financial plan and really life as a whole. So Tim, I know that for you, negotiation is a key piece of the financial plan, and you and our CFPs over at Yfp talk about negotiation in the context of financial planning, which I would say is probably not the norm of the financial planning industry and services. So let’s start with this. Why is negotiation such an important piece of the financial plan?

Tim Baker 03:14

Yeah, so I think you know, if we, if we look at why, if peace mission, you know why? If he’s mission is to empower pharmacists to achieve financial freedom. So I think the building blocks of that really is kind of what we do day in and day out with with clients at Yfp plan. And what I what I typically, or the way that we typically approach a financial plan, is we really want to help the client grow and protect their income, which is the lifeblood of the financial plan. Without income, nothing moves. But we know that probably more importantly than that is grow and protect the balance sheet, the net worth, which means increase in assets efficiently and decrease in liabilities efficiently and ultimately moving the net worth number in the right direction. So those are, you know, both quantitative things, but then qualitatively, we want to make sure that we’re keeping all the goals in mind. So grow and protect income and net worth while keep the goals in mind. So to me, that’s, that’s our jam, you know. So you know when I when I say, you know, when somebody asked me a question, like we do the ask a wife, pcfp, and I’m like, I always say, Well, it depends. A lot of it depends, really, on those, those foundational like, where are we at with the balance sheet, and where do we want to go? Meaning, what? What are our goals? What’s our why? What’s a, what’s the life plan? You know, what’s a wealthy life for you? And how can we support that with the financial plan? So to go back to your question, you know, my belief is that the income is a is a big part of that. And you know, what I found with working with many, many pharmacists is sometimes, and sometimes pharmacists are not just, you know, not great at advocating for themselves. You know, most of the people that I talk to, you know, when we talk about salary negotiation, they’re like, um. You know, I just thankful I have a job, and I’m in agreement with that. But, you know, sometimes a little bit of negotiation and having some of the skills that we’ll talk about today to better advocate for yourself is is important, and it’s in a lot of this stuff is not necessarily just for salary. It can be for a lot of different things. But to me, what I what I saw as a need here. You know, same thing, like most financial planners don’t walk, walk you through kind of home purchase and what that looks like, because most financial planners are working with people in their 50s, 60s and 70s. So a lot that was a need for a lot of our clients were like, Hey, Tim, I’m buying this house. I don’t really know where to start. So we, we, you know, provide some education and some recommendations and advice around that. So same thing with salary. It’s like I kept seeing like, well, maybe, you know, maybe I, you know, I took the job too quickly, or, you know, I didn’t advocate for myself. So that’s really where we want to provide some education and advice, again, to have a better, better position from it, from an income, income perspective, yeah.

Tim Ulbrich 05:58

I think it’s a great tool to have in your tool bag, you know? And I think, as we’ll talk about here, you know, the goal is not to be an expert negotiator. There’s lots of resources that are out there that can help with this and make it tangible and practical, one of which will draw a lot of the information today. I know that you talk with clients, a resource I love, never split the difference by Chris Voss, but I’m glad you mentioned. You know, I think there is often a sentiment. I know I felt it myself, where, you know what, I’m glad to have a position. I’m glad to be making a good income. But that can be true, and you still can be a good person, and you still can negotiate and advocate for yourself and the value you bring to the organization. Yeah, so I hope folks will hear that and not, not necessarily think that negotiation is bad, and as we’ll talk about here in a moment, I think really can have a significant impact when you think about it as it relates to earnings over your career and what those additional earnings could mean. So Tim, break it down for us. What is negotiation? And really thinking further, why is it important?

Tim Baker 06:57

Yeah, so, so negotiation, you know, it’s really a process of discovery. You know, it really shouldn’t be viewed as as a battle. It’s really a process of discovery. It’s kind of that awkward conversation that you’re you should be obligated to have, because, you know, if you, you know, if you don’t want to advocate for yourself professionally, who will, and maybe you have a good mentor or something like that. But to me, the the negotiation again, is really to discover, you know, what, what you want, and kind of what you’re the counterpart you know, which might be a boss or a hiring manager or something like that. And it’s an it’s really important, because, you know, settling for a lower salary can have really major financial consequences, both both immediately and down the road. And you know, you you typically raises that you receive are typically based on a percentage of their salary. So we’re, hey, we’re going to give you a, you know, 3% raises here, a 5% raise if you start off with a salary that you’re not happy with. You know that then obviously, that’s, that’s a problem. Accrue less in retirement savings. So that TSP, that 401, K, 403, B, again, you typically are going to get some type of match in a lot of cases, and then you’re going to put a percent in. So again, that could potentially be lower, but it’s, it is. It’s not just about salary. It can be, you know, I think another mistake that sometimes people make is that they’ll say, oh, wow, I was making, you know, 125 and, you know, I’m taking a job that’s paying me 135 and they take a major step back on some of the non salary, things like benefits and flex scheduling and time off and things like that. But you know, you really want to make sure that the compensation package that you have, you know you’re happy with, because being overpaid, being underpaid, really can make you feel resentful over the long run. So you want to make sure that you’re, you know, again, you know, right now, we’re filming this in the midst of a pandemic, and you know the economy and the job market is tough, but you know, you still want to, you still want to advocate for yourself and make sure you’re getting the, you know, the best compensation package that that you can.

Tim Ulbrich 08:56

As we’ll talk about here in a little bit, I think If we frame this differently than maybe our understanding or preconceived beliefs. You know, you mentioned it’s not a battle, you know. I think the goal is that you’re trying to come to an agreement or an understanding. And as we’ll talk about here, many employers are likely expecting this, and that number, in terms of those that are expecting versus those that are actually engaging in the conversation, from an employee standpoint, is very different. So I think that might help give us confidence to be able to initiate some of those. And we’ll talk about strategies to do that. I do want to give one example, though. Tim, real quick, you mentioned, you know, obviously, if somebody earns less and they receive smaller raises, or they accrue less in retirement savings, that can have a significant impact. And and I went down the rabbit hole, prepping for this episode of just looking at a quick example of this, where you have two folks that, let’s say they both start working at the age of 28 they retire at their 65 so same starting point, same retirement age. Let’s assume they get a 3% cost of living adjustment every year for their career. Just to keep it simple, you. The only difference here is that one starts at 100k and one starts at 105k so because of either you know what, what they asked for negotiations, whatever be the case, one starts $5,000 greater than the other. And if you play this out, same starting age, same ending age, same cost of living adjustments, one starts at a higher point when it’s all said and done, one individual has about $300,000 more of earnings than the other. And this, of course, does not include differences that you’d also have, because a higher salary, if you have a match, that would increase, that would compound, that would grow, if you were to switch jobs, you’re at a better point of now negotiating from a higher salary. All other benefits that aren’t included. But the significance of the starting point, I think, is something to really look at those numbers that often where you start can inform where you’re going, not only from cost of living adjustments, but also future employment, right? So we know that where you start, if you get a 3% raise, it’s of course, gonna be based off that number. You decide to leave that employer and you go to another one, what do they ask you? How much did you make? You’re using that number. So that starting point is so critical, and I hope that new practitioners might even find some confidence in that, to be able to engage in discussions knowing how significant those numbers can be over a career. So in that one example, that starting point is a difference of about $300,000 Crazy, right?

Tim Baker 11:24

When you look at over a long time period, yeah, it’s not, it’s nuts. And I’d pay the devil’s advocate, you know, on the other side of that is that, you know, again, so much, just like everything else with with the financial plan, you can’t look at it, you know, in a vacuum, we’ve had clients, yeah, take a lot less money, and really was because of the the student loans, and how that would affect their strategy in terms of forgiveness and things like that. So, yeah, it is multifactorial. It’s definitely something that it should really be examined. And I think again, when you look at the overall context of the financial plan, but it to your point, Tim, that that start in salary, and really you know how you negotiate throughout the course of your career is going to be utterly important. And you know, again, what we say is, with, you know, we, we kind of downplay the income, because I think, you know, so much of what’s kind of taught us, like, oh, six figure salary, you’re you’ll be okay. And that’s not true. But then, you know it is true that it is the lifeblood of the financial plan. So I think if you have a plan and you’re intentional with what you’re doing, that’s where you can really start, you know, making moves with regard to your financial outlook,

Tim Ulbrich 12:26

yeah, and I’m glad you know you said that about salary shouldn’t be looked at in a silo. I mean, just to further that point, you you’ve alluded to it already, these numbers don’t matter. If there’s other variables that are non monetary that matter more, right? Whether that be time off or satisfaction in the workplace, opportunities that you have feelings that will come. I mean, the whole list of things that you can’t necessarily put a number to. I mean, I would argue if, if those are really important, you’ve got to weigh those against, you know, whatever this number would be, and there’s a certain point where the difference in money is it worth it? You know, if there’s other variables that are involved, which, which, usually there are, hopefully we can get both right salary and and non salary items. Yes. So interesting stats about negotiation. I’ve heard you present before on this topic, but I’d like you to share with our audience in terms of managers that are expecting hires to negotiate, versus those that do talk us through some of those as I think it will help us frame and maybe change our perception on employers expecting it and our willingness to engage in these conversations.

Tim Baker 13:34

Yeah, and I really need to cite, to cite this one. And I believe, I believe this first stat comes from Sherm, which is the Society for Human Resource Management. So I think this is, like the biggest association for, like HR and human resource personnel in the country. And the stat that that I use is that, you know, 99% of hiring managers expect prospective hires to negotiate. So if you think about that, you know, and you know, the overwhelming majority expect, you know, you the perspective hire to negotiate, and they build their initial offers as such. So, you know, the example, you know, I did the clients, is like, hey, you know, we have, you know, we have a position that we could pay, you anywhere from you know, 110,000 to 130,000 knowing that you know, Tim, if I’m offering this job to you, knowing that you’re probably going to negotiate with me, I’m going to offer it to you for 110 knowing that I have a little bit of wiggle room if you kind of come back with a counter offer. But what a lot of a lot of my clients, you know, or people do that I talk with is they’ll just say, Yes, I found a job. Crappy, crappy job market, you know, happy to get started, ready to get started. And there’s and they’re, they’re either, you know, overly enthusiastic to accept a job, or they’re just afraid that a little bit of negotiation would would, you know, hurt their, yeah, you know, hurt their outlook. So. So with that in mind is that you, you know the the offers, I think, are built in a way that you know you should, you should be negotiating and trying to, again, advocate for yourself.

Tim Ulbrich 15:09

Yeah, and so if people are presenting positions often, you know, with with a range and salary, expecting negotiation, I hope that gives folks, you know, some confidence and okay, that’s probably expected, and maybe shift some of the perception away from this whole thing could fall apart, which it could right at any given point in time, especially depending on the way you conduct yourself in that negotiation, which I think is really, really important to consider. But I think what we want to try to avoid, Tim, back to a comment you made earlier, is any resentment, right as well. I mean, if we think about this from a relationship standpoint. We want the employee to feel valued, and we want the employer to have a shot at retaining this individual long term, right? So it’s a two way, two way relationship,

Tim Baker 15:50

And it kind of, it kind of comes up to where, you know, we were talking about, what is, you know, what is the goal of negotiation? And really, the goal of negotiation is, is to come to some type of agreement. Yeah, the problem, the problem with that is, is that people are involved in this, and we as people are emotional beings. So if we feel like that, we’re being, you know, we’re treated unfairly, or we don’t feel safe and secure, or if we’re not in control of the conversation, you know, our emotions can get the best of us. So that’s that’s that’s important. So there again, there’s some techniques that you can, you know, utilize to kind of mitigate that. But you know, to allude to your point about, you know, negotiating the fear to kind of, you know, potentially mess up the deal. You know, there’s a stat that says 32% don’t negotiate because they’re too worried about losing the job offer. Yeah, I know Tim, like we can attest to this, because, you know, with our growth at Yfp, we’ve, we’ve definitely done some, some human resource in use that as a verb, and hiring and things like that of late. And I gotta say that, you know, the I think that some of this can be unfounded, just because there’s, there’s just so much, you know, blood, sweat and tears that goes into fire, you know, to fight finding the right people, to kind of surround, you know, yourself with, and bring into an organization that, to me, a little bit of back and forth is not going to ultimately lose the job. So typically, most, most jobs, there’s, you know, interview, you know, obviously there’s, there’s an application process, there’s interviews, there’s second interviews, there’s maybe on site visits, there’s kind of, you know, looking at all the candidates and then extending offers. If you get to that, that offer stage, you’re, you’re you’re pretty, you know, they’ve identified you as they’re the, you’re the person that they want. So, you know, sometimes a little bit of back and forth is not going to, you know, derail any such deal. So that’s, it’s really, really important to understand that, yeah, and

Tim Ulbrich 17:45

As the employer, I mean, we’ve all heard about the costs and statistics around retention. So as an employer, when I find that person, I want to retain them. That’s my that’s my goal. Right now, I want to find good talent on a retain good talent. So I certainly don’t want somebody being resentful about, you know, the work that they’re doing, the pay that they have. And so I think if we can work some of that out before beginning and come to an agreement, it’s a good fit for us, good fit for them, I think it’s also going to help the benefit of the, hopefully the long term relationship of that engagement. So it’s one thing to say, we should be doing it. It’s another thing to say, Well, how do we actually do this? Well, you know, what are some tips and tricks for negotiation? So I thought it’d be helpful if we could walk through some of the stages of negotiation, and through those stages we can talk as well as beyond that, what are some actual strategies to negotiation? Again, another shout out to never split the difference by Chris Voss. I think he does an awesome job of teaching these strategies in a way that really helped them come alive and are in our memorable Yeah. So, Tim, let’s talk about the the first stage, the interview stage, and what are some strategies that that those listening can take when it comes to negotiation in this stage.

Tim Baker 18:56

Yeah? So, so I kind of, when I, when I present, you know, these concepts to a client. I kind of said that the, you know, the four stages of the of negotiation are fairly, are fairly vanilla, you know. And the first one is the, you know, that interview. So when you get that interview, you know, what I say is, you know, typically you want to talk, talk less, listen more and learn more. Typically, the person that is talking the most is, is, is not in control. The conversation, the one that’s listening and answering, asking good questions, is in control. And I kind of, I kind of think back to, you know, some of our recent hires, and, you know, the people that we identify as, like, top candidates, I’m like, Man, their interviews went really well. And when I actually think, think back and slow down, it’s, it’s really, I think that they went really well, because there’s, it’s really that person asking good questions, and then, and then me just talking, and and, and that’s, and that’s like the perception, so in that, in that case, like the, you know, the candidate was asking us good questions, and we’re like, yeah, these, this was a great interview, because I’d like to hear myself talk, or I just get really excited. About, you know, what we’re doing at Yfp. So I think if you can really, you know, focus on your counterpart, focus on the organization, you know, whether it’s the hospital or whatever, whatever it is, and learn, and then the, you know, and then really pivot to the value that you bring. I think that’s going to be important, you know, most important. So, you know, understanding, you know, what, what some of their maybe pain points are, whether it’s retention or, you know, maybe some type of, you know, care issue, or whatever that may be, you know, you can kind of use that to your advantage as you’re as you’re kind of going through the different, you know, stages of negotiation, but the more that the other person talks, you know, the better. I would say, you know, in the interview stage, you know, one of the things that often comes up, you know, that can come off fairly soon, is the question about salary. And, you know, sometimes that is, you know, it’s kind of like a time saving. So it’s a Hey, Tim, you know, what are you looking for in salary? If you throw out a number that’s way too high, like, I’m not even gonna, you know, waste my time. And what I tell clients is, like you typically, you want to, and we’ll talk about anchoring. You really want to, do? You really want to avoid, you know, throwing, throwing a number out and for a variety of reasons. So one of the deflections you could use is, hey, I appreciate the question, but I’m really trying to figure out if I’d be a good fit for your organization. You know, we let’s talk about, you know, negotiate, or let’s talk about salary when the time comes. Or the other, the other piece of it is, it’s just, you are not, you’re not in the business of offering yourself a job. And what I mean by that is it’s, it’s their job to basically provide an offer. So, you know, hey, my current employer, you know, doesn’t really allow me to kind of reveal that kind of information. What did you have in mind? Or we know that pharmacy is a small business, and I’m sure your budget is, you know, is reasonable. What did you have in mind? So at the end of the day, it’s, it’s their job to extend the offer, not you, to kind of negotiate your against yourself, which can happen, you know, I had a, I had a, we signed on a client here at Yfp planning yesterday, and we were talking about negotiation. I think it was kind of had to do with that tax issue. And, you know, he he basically said this is what he was looking for. And then when he got into the organization, I think he saw the number that was budgeted for, and it was a lot more so. Again, if you can deflect that, and I tell a story, when I first got out of the army, I kind of knew this. But when I first got out of the army, I was interviewing for jobs, you know, I was in an interview, and I deflect it. And I think the guy asked me again, and I deflect it. I think he asked me for, like, maybe that asked me for like, four times, and I just wound up giving him a range that was, like, obnoxious, 100 to 200,000 or something like that. But to me, you know, that in the interview didn’t go, go well after that. But to me, it was, like, it was more about, you know, clearing the slate instead of actually learning more about me and seeing if I was a good fit. So you never want to lie about your current style. If they ask about your current style, you never want to lie, but you definitely want to deflect and move to things of like, okay, can I potentially be a good fit for your organization? And then go from there? Yeah. And

Tim Ulbrich 22:55

I think deflection takes practice, right? I don’t think that comes down to many of us. Totally, yeah. Yeah, this, this reminds me. So, you know, talk less, listen more for for any Hamilton folks we have out there, which is playing 24/7 in my house these days, the soundtrack, I’m not gonna, I’m not gonna sing right now, but talk less. Smile, smile more. Don’t let them know what you’re against or what you’re for. So I think that’s a good, good connection there to the interview stage. So next, hopefully comes the good news. Company wants to hire you makes an offer. So Tim, talk us through this stage. What? What should we be remembering when we actually have an offer on the table? Yeah, so

Tim Baker 23:30

I think you definitely want to be appreciative and thankful again when, when a company gets to a point where they’re extending you an offer, that’s, that’s, that’s huge. I remember when I got, again, my first offer out of out of the Army, because, again, you don’t really have a choice when you’re in the army. Well, I guess you do have a choice, but you know, they’re not like, here’s a here’s a written offer for your employment in this platoon somewhere in Iraq. But I remember getting the first offer. I’m like, Man, this is awesome. Shows your salary and the benefits and things like that. So you want to be appreciable and thankful you don’t appreciative and thankful. You don’t want to be you want to be excited, but not too over excited. So you don’t want to appear to be desperate. What I tell clients, I think the biggest piece here is make sure you get it in, write in, yes, and I have a, you know, a story that I tell him, because if it’s not in writing and what essentially says it didn’t, didn’t happen. So again, using some personal experience here, you know, first job out of the army, I had negotiated, you know, basically an extra week of vacation because I didn’t want to take a step back in that regard. And I got the offer, and the extra week wasn’t there. So I talked to my, my, you know, my future boss, about it, and he said, You know what, I don’t want to go back to headquarters and, you know, in ruffle some feathers. So why don’t we just take care of that on site here, and this was the job I had in Columbus, Ohio. And I said, Yeah, okay, I don’t really want to, you know, ruffle feathers either. The problem with that was when he got replaced, when he was terminated, eight months later, that currency burned up fairly quickly. Be so I didn’t have that, you know, that that extra week of vacation. So, you know, if it’s not written down, it never happens. So you want to make sure that, you know, you get it in, right in, and really go over that written offer extensively. So some employers, they’ll, they’ll extend an offer, and they want to, you know, a decision right away. I would walk away from that, you know, to me, a job change, or, you know, something of that magnitude, you know, I think warrants a 24 if not a 48 probably a minimum of 48 hour, you know, time frame for for you to kind of mold over and this is typically where I kind of, I come in and help clients, because they’ll say, Hey, Tim, I got this offer. What do you think? And we go through it, and we look at benefits, and we look at, you know, the total compensation package and things like that. But, you know, you want to, you know, ask for, you know, ask for a time, you know, some time to review everything and then agreed, you know, definitely adhere to the agree, agreed upon deadline to basically provide, you know, an answer or counteroffer, or, you know, whatever, whatever the next step is for you.

Tim Ulbrich 26:01

Yeah, and I think too, the advice to get it in writing helps buy you time. You know, I think you asked for it anyways. And I think the way you approach this conversation, you’re setting up the counter offer, right? So the tone that you’re using, it’s not about being arrogant here. It’s not about, you know, acting like you’re not excited at all. I think you can strike that balance between you’re appreciative, you’re thankful. You know, you’re continuing to assess if it’s a good fit for you and the organization you want. Some time you want it in writing, and you’re beginning to set the stage. And I think human behavior, right? Says if, if, if something is either on the table or pulled away slightly, the other party wants it a little bit more, right? So yes, if I’m the employer, and I really want someone, and I’m all excited about the offer, and I’m hoping they’re gonna say yes, and they say, Hey, I’m really, really thankful for the offer. I’m excited about what you guys are doing. I need some time to think about X, Y and Z, or, you know, I’m really thinking through X, Y or Z, like, all of a sudden, that makes me want them more, you know. So I think there’s, there’s value in in setting up, what is that, that counter offer? So talk to us about the counteroffer. Tim, break it down in some strategies to think about in this portion. Yeah.

Tim Baker 27:10

So, you know, the the counter offer is, I would say, you know, the majority of the time you should counter in some way. I think you’re expected to make a counter. And again, we kind of back that up with some stats. But you also, you need to know when, you know when not to kind of continue to go back to negotiating table, or when, when you’re asking or over asking. So, you know, I think research is going to be a good, you know, part of that, and I, what I tell clients is like, I can give them a very nice, non scientific I’ve worked with so many pharmacists that I can kind of say, oh, that sounds low, you know, in this for community pharmacy or industry, or whatever, you know, hospital in this area. So, you know, it’s, it’s, it’s your network, which could be someone like me, it could be a call, you know, colleagues. But it could also be things like Glassdoor, indeed, salary.com, so you want to make sure that your, you know, your offer, your counter offer, it is backed up in some type of, you know, fact, and really, you know knowing how to maximize your leverage. So if you are you know if you do receive more than one substantial offer, you know, you know from multiple employers, negotiating may be appropriate if the two positions are comparable and then, or if you have tangible evidence that the salary is too low, you know you have a strong position to negotiate. So I had a client that knew that new, newly hired pharmacists were being paid more than than she was, and she, you know, she had the evidence to show that. And basically they went back and did a nice adjustment. So, but again, I think as you go through the way that we kind of do this, you know, with clients, is we kind of go through the the entire letter, and, you know, the benefits and and I basically just highlight things and have questions about, you know, match or vacation time or salary and things like that. And then we start constructing it from there. So if you look at again, the thing where most people will start a salary is, you know, you really want to give. When you counter, you really want to give a salary range, rather than, like a number. So what I say is, if, a if, if, if, if you say, Hey, Tim, I really want to make $100,000 I kind of said it’s almost like the big bad wolf that blows the house down like all those zeros is, it’s not, it’s there’s no substance to that. But if you said, Hey, I really want to make $105,985 the the Journal of experimental social psychology says that using a precise number instead of a rounded number gives it a more potent anchor. So your homework, right? Yeah, you know, you know what you what, you know, what you’re worth, you know, what the positions worth? It’s given the appearance of research. So I kind of like, you know, it’s kind of like the gap the Zach Galifianakis, me, that has all the equations that are flowing. It’s kind of like that. But the the $100,000 you can just blow that house over. So, and I think so. So once you figure out that number, then you kind of want to. Change it so, you know, they say, if you give a range of, you know, you know, of a salary, then it opens up room for discussion, and shows the employer that you have flexibility, and it gives you some cushion. In case, you know, you think that you’re asking for a little bit too high so that’s, that’s going to be, that’s going to be really, really important is, is that to provide kind of precise numbers in in a range, and, oh, by the way, I want to be kind of paid at the upper, upper echelon of that. So

Tim Ulbrich 30:28

real quick on that you mentioned before, the concept of anchoring. I want to spend some time here as you’re talking about a range. So dig into that further. What that means in terms of, if I’m given a range, how does anchoring fit into that. Yeah.

Tim Baker 30:41

So, you know, we kind of talk about this more more when we kind of talk some about the tools and the behavior of negotiation, but the rain. So when we talk about, like anchoring, so anchoring is actually it’s a bias. So anchor and bias describes the common tendency to give too much weight to the first number. So again, if we’re, if we if we can, if I can, if can, have invite the listener to imagine an equation, and the equation is five times four times three times two times one, and that’s in your mind’s eye. And then you clear the slate, and now you imagine this equation one times two times three times four times five. Now, if I show the average person, and I just flash that number up, the first number that start, you know the first equation that starts with five and the second equation that starts with one, we know that those things equal, the same thing, but in the first equation, we see the five first. So it creates this anchor, creates this belief in us that that number is actually higher. Yeah. So, so the the idea of anchoring is typically that that number that we see really is a has a major influence. That first number is a major influence of where the negotiation goes. So you can kind of get into the whole idea of you know, factor in your knowledge of the zone of possible agreement, which is often called Zopa. So that’s the range of options that should be acceptable for both sides, and then kind of assessing, you know, your side of that, and then your your other parties anchor on that. So there’s, there’s lots of things that kind of going into anchoring, but you know, we, you know, we did this recently with a with a client, where I think they were offered somewhere in like the 110 112 area. And she’s like, you know, I really want to get paid closer to, like 117 118 so we, we basically in the counter offer. We said, hey, you know that, thanks for the offer. And we did something called an accusation on it, which we can talk about in a second. But thanks for the counter offer. But, you know, I’m really looking to make between, you know, I think we said something like 116 five, you know, 98 to, you know, all the way up into the 120s and it actually brought her up to, I think she was just 117 change actually brought her up closer to that 18. So using that range and kind of that, that range as an as a good anchoring position to help, help the negotiation. So there’s lots of different things that kind of go into anchor, in terms of extreme anchoring, and a lot of that stuff that they talk about in the book. But again, that’s kind of goes back to that first number being thrown out there can be really, really integral. And again, when you couple that on top of, hey, it’s, it’s their job to make you an offer, not the, not the other way around. You have to really learn how to deflect that and and know you know how to position, you know, position yourself in those negotiations. But that’s really the counteroffer. And what I would say to kind of just wrap up the counter offer is embrace the silence. Yeah, so Tim, there’s silence there. And I’m like, I want to, I want to feel the voice. And I do this with with clients, when we talk about, like mirroring and things like that, like people are uncomfortable with silence. And you know what he talks about in the book, which I would 100% this is really kind of a tip of the cat to Chris Voss in his book, which I love, I read probably at least once a year, where he talks about embracing the silence. We as people are conditioned to feel silences. So you know, he talks about sometimes people will, you know, negotiate against themselves. If you just sit there and you say, Uh huh, that’s interesting. And then in the in the counters, just be pleasantly persistent on the non salary terms, which can be both subjective and objective in terms of what you’re looking for in that position, yeah. And I

Tim Ulbrich 34:19

want to make sure we don’t lose that. You know, we’re talking a lot about salary. But again, as we mentioned at the beginning, really try to not only understand but but fit what’s the value of those non salary terms. So this could be everything from, you know, paid time off to, obviously, other benefits, whether that be health or retirement. This, of course, could be called culture of the organization, whether it’s that specific site, the broader organization, opportunities for mentorship.

Tim Baker 34:48

Yep, mentorship, yes, yes, all that.

Tim Ulbrich 34:51

I think what you hear from folks, I know I felt in my own personal career, with each year that goes on, I value salary, but salary means less than those other. Things mean more. And so as you’re looking at, let’s just say two offers is one example. Let’s say they’re 5000 apart. Like, I’m not saying you give on salary, but how do you factor in these other variables?

Tim Baker 35:10

Yeah, well, and I think too, and I’ll this is kind of, you know, kind of next level with this. And I’ll give you some examples to cite it. I think another, thing to potentially do when you when you are countering and when you’re shifting to some of the maybe the non salary stuff is really took a hard look at your potential employer, or even your current employer, if this is a you know, if you’re an incumbent and you’re and you’re being reviewed and you’re just advocated for a better compensation package, is look at the company’s mission and values. Yeah. So the example I give is like, when we, when we, when Shay and I got pregnant with Liam, you know, she didn’t, she didn’t have a, you know, a maternity leave benefit, and when she was being reviewed, we kind of, you know, invoked the company. And I think it’s like work life balance and things like that. And we’re like, Well, how can you say that and not back that up? And again, we do it. We did it tactfully. And because you’re almost like, you’re almost like, negotiating against yourself, right? So I present this to clients like the Spider Man meme, whether you know, two spider mans are pointing at each other, and she was able to negotiate a better you know, I’m attorney, and it actually, and you we look at us, you know? And I, you know, I give these, one of our values is encourage growth and development, you know. So if an employee says, Hey, and they make a case that I really want to do this, and, you know, it’s almost like we’re negotiating against ourselves. So I think, if you can one, I think it shows, again, the the research and that you’re really interested and plugged into what the organization is doing. But then I think you, you’re, you’re leveraging the the company against itself in some ways, because you’re almost, you know, negotiating against, well, yeah, we put these on the wall as something that we believe in, but we’re not going to support it. Or, you know, so or, you know, at the very least, it plants a seed, right? And that’s what I that’s what I say sometimes with clients, you know, we do strike out. We don’t, you know, it’s like, it’s, it is hard to move the needle and sometimes, but at least one, we’ve got an iteration under our belts where we are negotiation. And two, we’ve planted a seed with that employer, you know, assuming that they took the job anyway, that says, Okay, these are things that are kind of important to me that we’re going to talk about again when we get and things like that. So I think that’s huge.

Tim Ulbrich 37:18

Good stuff. So let’s talk about some tools that we can use for negotiation, and again, many of these are covered in more detail in the book and other resources, which we’ll link to in the show notes. I just want to hit on a few of these. Let’s talk about mirroring accusation audits and the importance of getting a that’s right while you’re in these conversations. And we’ll leave our listeners to dig deeper in some of the other areas. So talk to us about mirroring. What is it? And kind of give us the example and strategies of mirroring.

Tim Baker 37:49

Yeah. And I would actually, Tim, what I would do is I would actually back up, because I think one of the, I think probably one of the most important tools that that are there, I think, is, is the calibrated questions. That’s one of the first things that he talked Yeah. And the reason so, what is a calibrated question? So a calibrated question is a question with really no fixed answer that gives the illusion of control. So the answer, however, is kind of constrained by that question, and you, the person that’s asking the question, has control of the conversation. So I give the example. You know, when we, when we moved into our our house after we renovated it. So brand new house, I walk into my daughter’s room. I think it was four. She was four at the time, and she’s coloring on the the wall in red, red, red crown. And I’m from, I’m from Jersey. So I say crown, not crayon. So she’s, and I, and I look at her, and I say, Olivia, why are, why are you doing that? And she sees how, like, upset I am and mad, or, you know, and she just starts crying. And there’s no there’s no negotiation from there. There’s negotiation over if, there’s no exchange of information. So in an alternate reality, in an alternate reality, what I should have done instead. Olivia, what? What caused you to do that? So you’re basically blasting instead of why is, why is very accusatory. You’re like, you know, the how and the what questions are good so, and of course, she would say, well, Daddy, I ran out of paper, so the walls the next best thing. So the use of, the use of, and having these calibrated questions in your back pocket, I think, again, buys you some time. And really, I think, frames the conversation with your counterpart well. So using words like how and what, and avoiding things like why, when, who, so you know, what about this works. Doesn’t work for you. How can we make this better for us? How you know? How do you want to proceed? How can we solve this problem? What’s the biggest challenge you face? These are all how does this look to you? These are all calibrated questions that again, as you’re kind of going back and forth, you can kind of lean on so have good how and what questions to kind of answer the question about mirroring. As you’re asking these questions, you’re mirroring. Counterpart. So what mirror in the scientific term is called ISO praxism, but he defines this as the Real Life Jedi mind trick. This causes vomiting of information, is what he says. So you know, these are not the droids you’re looking for. So what, what you essentially do is you, you repeat back the last one to three words, or the critical words of your counterpart sentence, your counterpart sentence. So this is me mirroring myself. Yeah. Well, you want to repeat back because you want to, you want them to reveal more information, and you want to build rapport and have that curiosity of kind of what is, what is the other person thinking? So you can again, come to come to an agreement, come to an agreement. Yeah. So you at the end of the day, the purpose. So this is mirror, and so I’ll show you a funny story. The you know, I do. I practice this on my wife, sometimes who does not have a problem speaking, but sometimes with counterpoint listening, by the way. Yeah, yeah, exactly. So I’ll probably be in trouble. But so I basically just, you know, for the you know, for conversation, just just mirror back exactly what she’s saying. And you can do this physically. You can cross your legs or your arms, or, you know, whatever that looks like, but, but when he talks about more is with words, and, you know, I’ll basically just mirror back my wife and she, at the end of the conversation, she’ll say something like, Man, I feel like you really, like, listen to me. And I laugh about that, because I’m just really repeating back. But if you think about it, I did, because for you to be able to do that, you really do have to listen so, so mirroring again, if you’re just repeating back, you really start to uncover more of what your counterpart is thinking. Because often, like, what comes out of our mouth, you know, the first or even second time is just smoke, you know, so really uncovering that one of the things he talks about is, you know, is labeling where, you know, this is kind of described as the method of validating one’s emotion by acknowledging it. So it’s, it seems like you’re really concerned about patient care. It seems like you’re really concerned about the organization’s retention of talent. So what you’re doing is that you’re using neutral statements that don’t involve the use of I or we, so it’s not necessarily accusatory, and then you are, you know, same with the same with the mirror. You really want to not step on your mirror. You want to not step on your label and really invite the other person to say, Yeah, I’m just really frustrated by this or that. So labeling is really important to basically diffuse the power then the negative emotion and really allow you to remain neutral and kind of find out more about that. So that’s super important, yeah.

Tim Ulbrich 42:39

And I think with both of those, Tim, as you’re talking, it connects well back to what we, we mentioned earlier, of of talk less, listen more like you’re Yeah, you’re really getting more information out, right from from a situation that can be guarded. You know, people are trying to be guarded. And I think more information could lead, hopefully, to a more fruitful negotiation. What about the accusation audit?

Tim Baker 42:59

Yeah. So the accusation audit is, um, is it’s one of my favorites. Kind of same, same with calibrated questions. I typically will tell clients, I’m like, Hey, if you don’t, you know, if you don’t learn anything from this, I would say, have some calibrated questions in your back pocket and have a good accusation audit at the Reddit at the ready. And we typically would, typically will use the accusation audit to kind of frame up a counter offer. So, you know, it kind of, it kind of, so, so what? Before I give you the example, the accusation audit is a technique that’s used to identify and labor label, probably like, the worst thing that your counterpart could say about it. So these, this is all the, like, the head trash that’s kind of going on, yes, what of why? I don’t want, don’t want to negotiate. It’s like, Ah, they’re gonna think that, you know, I’m over asking, or I’m greedy, like all those things are that you’re, you’re thinking, so you’re really, you’re really just pointing to the elephant in the room, and you’re just trying to take this thing out and really let the air out of the room, you know, where a lot of people just get so nervous about this. So a good accusation audit is, Hey, Tim, I really appreciate the offer of, you know, $100,000 you know, to work, you know to work with your you know, with your organization. You’re probably gonna think that I’m the greediest person on planet Earth, but I was really looking for this to that, or great line, great. Or you’re, or you’re probably thinking that I’m gonna, I’m asking way too much, or you’re probably thinking that I’m way under qualified for this position, but here’s what I’m thinking. So you’re so again, like, no. Tim, right, right? So when someone says that to me, I’m like, No, I don’t think that. And what often happens, and again, this, this, clients have told me this, what often happens is that the person you know, the counterpart that they’re working with, like, they’re they, they’re recruited as, like, you know, one person said one client was like, Oh, we’re gonna find you more money. We’re gonna figure it out. So they like, you know. So when someone says that to you, you know, just think about how you would feel, you know, I don’t think that at all. And then it just kind of lets the the air out of the room. So you basically preface your counter offer with like, the. The worst things that they could say about about you, and then they typically say that’s not, that’s not true at all. So I love the accusation on it’s so simple, it’s kind of easy to remember. And I think it’s just, it just lays, I think, the groundwork for just great conversation and hopefully resolution.

Tim Ulbrich 45:16

That’s awesome. And then let’s wrap up with a goal of getting to a, that’s right. I remember when I was listening to interview with Chris Voss, this is a part that I heard, and I thought, Wow, that’s so powerful. If you can get in the midst of this negotiation, if we can get to a, yeah, that’s right, the impact that that could happen in the outcome.

Tim Baker 45:33

So, so he kind of talks about it like, you know, kind of put in all of these different tools together, so it’s, um, you know, mirroring and labeling and kind of, you know, using, I think, what he calls minimal encouragements of, uh huh, I see, kind of paraphrasing back what you hear from your from your counterpart, and then really wait for it’s like, Hey, did I get that? Did I get that right? Or am I tracking and what you’re really looking for is that that’s right. And he said, that’s even better than than a yes. So, like, one of the examples I give is, you know, when, when I speak with prospective clients, you know, we’re talking about, like my student loans and my investment portfolio and my, you know, I’m not doing real budgeting, and, you know, I got sold a life insurance policy that I think isn’t great for me. And so we go through all these different parts of the financial plan, and I basically am summarizing back what, you know, what they’re saying, and I say, you know, at the end of it. So I’m summarizing, you know, 30 minutes of conversation, and, you know, I’m saying that, did I? Did I get that right? And they’re like, Yeah, that’s right. You’re, you know, a great listener, which I have to record for my wife sometimes because she doesn’t agree with me. So that’s what you what you what you’re looking for is, is, yeah, that’s right. This person has heard, you know, message sent, heard, understands me. He says, if you get a, if you if you get a, you’re right. So sometimes, again, I keep talking about my wife. I’m like, Hey, Shay, we have to do a better job of saving for retirement. She’s like, you’re right. That’s really code for Shut up and go away. So it’s a, it’s a That’s right, is what, what really what we’re what we’re looking for. So that’s, that’s, yeah, very powerful.

Tim Ulbrich 47:08

That’s great stuff. And really just a great overall summary of some tips within the negotiation process, the steps of the negotiation process, how it fits into the financial plan. We hope folks walk away with that and just a good reminder of our comprehensive financial planning services that we do at yp planning. This is a great example of when we say comprehensive, we mean it so it’s not just investments, it’s not just student loans, it’s really every part of the financial plan, anything that has $1 sign on it. We want our clients to be in conversation and working with our financial planners to make sure we’re optimizing that and looking at all parts of one’s financial planning here, negotiation is a good example of that. So we reference lots of resources. Main one we talked about here today was never split the difference by Chris Voss. We will link to that in our show notes, and as a reminder to access the show notes, you can go to yourfinancialpharmacist.com/podcast, find this week’s episode. Click on that, you’ll be able to access a transcription of the episode as well as as the show notes and the resources. And last but not least, if you like what you heard on this week’s episode of the podcast, please leave us a rating and review on Apple podcasts, wherever you listen to the show. Each and every week, have a great rest of your day.

[DISCLAIMER]

As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products, we urge listeners to consult with a financial advisor with respect to any investment. Furthermore, the information contained in our archive, newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyzes expressed herein are solely those of your financial pharmacists, unless otherwise noted, and constitute judgments as of the dates published such information may contain forward looking statements which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward looking statements. For more information, please visit your financial pharmacist.com/disclaimer. Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

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