How to Prepare for the Financial Shocks of Widowhood
And why a fresh look at money management is a must
Ric Edelman: It's Friday, March 17th. Happy Saint Patrick's Day. Aren't you glad I reminded you so you can be sure to wear green? All this week, we've been focusing on how the future is changing, particularly the future of society.
On Monday, I told you how the institution of marriage is expanding to include polyamorous partnerships. Tuesday, we talked about people who have a disability and how they're going to be welcomed in society of the future, much more so than today. On Wednesday, we talked about the surge in the number of grandparents. Yesterday we talked about human composting as a new option for burials. If you missed any of these shows, go listen to them.
Today, this is our last segment of this series. I want to again focus on the topic of death. But this one, frankly, more seriously. It's more a current topic than what we've covered so far this week. Yesterday I talked about burial. Today, I want to talk about the survivor, particularly widows and widowers. We'll refer to both of them under the word just widows. A couple of months ago, I featured Amy Florian on the show. She's a grief counselor. She told us how to talk to widows. Like don't ask how they're doing - that's a stupid, insensitive question. Instead, Amy told us how to talk to widows. Go listen to that episode of this podcast. Today I want to talk about the future of widowhood, because it's a trend that is growing.
There are 20 million widows and widowers in the US today. Every year, 1.4 million people lose their spouse. 15% of white women are widows, 24% of black women and all widows are far more likely to be poor than married women. The average wife becomes a widow at age 59, according to the Census Bureau. So, yeah, widows can be young or old, newly married or married for decades, rich or poor, a mom or grandmom or child free. 67% of widows suffer a loss in income. Half lose half their income when their spouses die. People who become widows in retirement lose a third of their incomes, according to the GAO. No wonder that 26% found that they had to move to lower cost housing as a result of their spouse's death. And by the way, less than a third remarry within 10 years.
When you're faced with widowhood, don't make any major financial decisions. Everything can wait. Insurance, taxes, investments, your home. Let it all sit for months. Be aware that some people try to exploit widows and their emotional vulnerability. This is why you need to rely on a professional advisor or lawyer, not a family member or a friend or a friend of a friend. Some people will give you advice. Family and friends are always well-meaning. They're going to offer you lots of advice whether you ask for it or not. But they're not qualified. They don't know your financial situation. Just tell everybody, thanks for your suggestions, I'll take your ideas into consideration. And then change the subject.
Other people are going to come to you asking for money. After all, you're a widow. That means you're an heir, right? Say no to everyone about everything. There are going to be a lot of changes coming in society, thanks to technological innovation. But one thing will never change. If you're a spouse one day, you may well become a widow. Plan for it now by being actively involved in your family finances. Where's the money? What banks? What brokerage firms? Get to know your tax preparer, financial planner, estate attorney. Verify that losing your spouse won't cause you to lose your financial security as well. Talk openly with your spouse and your kids about money so that you and they won't face any financial surprises when that day comes. Don't let finances make the trauma of losing a spouse any worse than it already is. That's this week's series, Marriage, Disability, Grandparents, Burials and Widowhood.
On Monday, I'll look for something more fun for you. How's this? Young people piling into debt. Uh oh.
Just launched: New crypto certificate programs
8 new offerings including a track for investors and consumers like you
Let me change gears now for a moment.
Are you confused about crypto? I think you know about my sister company, DACFP, the Digital Assets Council of Financial Professionals. I created DACFP back in 2016 to teach financial advisors about blockchain and digital assets, and in fact, created the certificate in blockchain and digital assets, a course specifically for financial advisors so they can get the education they need so they can help their clients dealing with this brand new and innovative asset class.
Well I'm really excited to tell you that we have just now completely revised and expanded the certificate program and have just launched a brand-new certificate program for investors, consumers and students, The certificate in blockchain and digital assets will take you into the future. You'll learn all about digital assets, Bitcoin, Ethereum, NFTs and the Metaverse. All of this and more is becoming a part of our daily lives, and over the coming years it's going to truly represent the future of commerce, art and technology. So I want you to be the first to know about this new online crypto course for investors and consumers like you. Our certificate course is the oldest and most popular program for financial professionals. Thousands have already enrolled in the program, and now I've created a version for consumers and investors.
And in fact, wait, there's more? Yeah. Given the impact that crypto is having on society, I want to make sure everybody has the chance to learn about this. So we've broadened the course, not just for financial advisors now and for investors and consumers, we now have four separate tracks in the certificate in Blockchain and digital assets program. For financial advisors, we still have that track. This course, fully updated and revised and expanded, is designed for advisors who are directly serving clients. Advisors learn how you can use crypto to attract new clients and how to increase your assets under management.
The course teaches you about crypto technology, crypto practice management, regulation, operations, compliance and risk so you can talk confidently with clients about crypto while fulfilling your fiduciary obligations. But what we've also discovered is that of the thousands of people who have taken the course, a lot of them are not financial advisors serving clients. They're financial professionals, they're in the financial services industry, but not client facing. So we've created an entirely new separate track specifically for financial professionals. It will help you develop new competencies so you can gain a competitive advantage in your industry, giving you the knowledge and skills you need to build your career. And by attaining this information, you'll be able to contribute to your firm's efforts in creating and implementing its crypto strategy.
We also have created a new third track for crypto professionals. One of the things we've discovered over the past couple of years is that the crypto business is growing so rapidly that many crypto companies for the very first time are hiring people who didn't grow up in crypto. Crypto is now 14 years old, but a lot of people are now entering the field coming from other industries. So yeah, great. You're now working for a crypto company, but you don't know anything about crypto. So we've created a separate track for crypto professionals. It will allow you to get trained quickly so you can become productive faster. And if you want to be employed in the crypto field, this program will give you the knowledge you need to pass even the toughest air interviews.
And by holding the certificate in blockchain and digital assets, you'll be able to show a prospective employer that you're serious about your career. And like I said, we now have a track specifically for investors, consumers and students. Whether you're a beginner, an enthusiast or merely crypto curious, this is your opportunity to learn about crypto. You'll discover what all this is all about, including the investment and career opportunities that are available in this new innovative technology. So I encourage you to go to DACFP.com. The link is in our show notes today so you can learn about the certificate and blockchain and digital assets. The course is remarkably affordable, as little as $249 for the complete online course. It's self-study and self-paced. Take it at your leisure. And it has a world class faculty. For example, Scott Stornetta, the co-inventor of blockchain technology, is on our faculty. So is Anders Brownworth with the Boston Fed. So you'll be amazed and fascinated by the quality of the faculty and how dynamic the video lessons are. It's an awful lot of fun and if you're in the financial industry, you'll get up to 18 credits. Go to DACFP.com and enroll and get your certificate in blockchain and digital assets.
Exclusive interview: Lacey Shrum, CEO of Smart Kx
The right way for advisors to track and bill their fees
Ric Edelman: I bet you have an advisor. Two thirds of all investors do. So it's an easy bet to win. And I bet your advisor is a fiduciary. Or at least I should say I hope your advisor is a fiduciary. Because if your advisor isn't a fiduciary, that means they're not required to serve your best interests. So if your advisor is not a fiduciary, you need to replace your advisor with somebody who is a fiduciary. And that means that you need to dump commission-based stockbrokers. You need to not buy investments from insurance agents. But let's say that you do have a fiduciary financial advisor. They're not charging you commissions, most likely because commissions can create a conflict of interest. So your advisor, if they're a fiduciary, they're probably charging you a fee instead of commissions. By avoiding commissions and fees, you pay simply a single annual fee. You pay a quarterly in most cases, based on the size of your account. Clients love this fee-based approach because it eliminates that conflict of interest. You don't have to worry if your advisor is telling you to buy something simply so they can earn a commission.
So think about this. You're a client of a fiduciary advisor. Your advisor charges a fee. You get a statement every quarter showing you the fee that your advisor is debiting out of your account. Simple, easy, automated. But is it all that simple and easy? How did your advisor calculate that fee? What if you added money or withdrew money during the quarter? What if some of the money was in cash during the quarter not invested? Should you be paying the same fee on the cash as you are on the money you have invested? And what software is the advisor using to figure out all those calculations? In fact, are they even using software? The bottom line is this: your advisor might be miscalculating the fee without them even knowing it. You could be getting overcharged as a result.
To help us explore all of this, I'm happy to bring on to the program Lacey Shrum. Lacey is an attorney and founder and CEO of Smart Kx. I'm impressed with both Lacey and her company. In fact, I've invested in the company, and Lacey is a member of our faculty at DACFP, the Digital Assets Council of Financial Professionals, where she is a presenter in our course, the certificate on blockchain and digital assets. So, Lacey, I'm really glad to have you here on the show talking about the subject that nobody ever bothers talking about - investment advisory fees.
Lacey Shrum: Thanks so much for having me. You're right. No one except for me and a select few are talking about it. And it's definitely a problem.
Ric Edelman: So let's begin at the beginning. What do clients of advisors need to know about their advisory fees?
Lacey Shrum: The most important thing that they know right now, and the SEC has confirmed it, that their fees are not being calculated correctly. I saw it when I was an attorney. I supported RIAs. I was inside of an RIA and the SEC confirmed their fees last year. They did a risk alert and said that most firms are indeed calculating the fee different from what they're telling the client, how they're calculating the fee.
Ric Edelman: You use the word 'most'. Really, it's the majority of advisors are not calculating the fee the way that they claim to be?
Lacey Shrum: Correct.
Ric Edelman: That's a little scary. I mean, these are fiduciaries, and I don't think that means that these advisors are crooks, that they're deliberately ripping off their clients. At least I hope not. I hope what you're inferring is they're just getting the math wrong.
Lacey Shrum: Exactly. So there's two parts to the fee. One is, of course, the math, which although it is objective, it can be done in many different ways. And even some like a tiered rate can be interpreted by different people, different ways and the math done different ways. So the math is one piece. The other piece is that when a client signs a contract with an advisor, of course the contract says what the advisor will do and also what the client will do - which is pay a fee, and how that fee is documented, which accounts are being managed, what fees being charged. And then the math that goes into that, that's the piece that differs from, in practice, what they're actually charging. I've not come across any fraud or purposefully charging a fee that's different, but because there was no technology before we came along to connect the fee and the contract together - clients add or remove accounts, advisors and clients come to other agreements, documenting that. Disclosing it to the client is very manual, tedious, difficult, and so the fees don't match what the contract says should be.
Ric Edelman: So give us an example of what a contract might say versus what the practice is.
Lacey Shrum: Yeah. So one example is a lot of advisors will be very vague in the contract as to what they're charging. So they may have a standard fee schedule that they're expecting to use. As an attorney, I will tell you there are times in contracts to be vague, but we generally don’t want to be vague. There might be conversations between the advisor and the client about when we add cash, or when we take out cash, I went rogue and bought a bunch of Tesla stock that I don't want you charging me for - things like that that are discussed but aren't necessarily written down, always cause problems when anything is looked at by the client or the regulator.
Ric Edelman: You might charge the fee quarterly at the beginning of the quarter versus the end of the quarter. Or what about paying the fee based on the average value of the account throughout the quarter where you've got to adjust for the cash flows, deposits and withdrawals that the client may make during the quarter? And you mentioned tiers. What does tiers mean?
Lacey Shrum: Yeah. So the traditional approach to fee billing is a tiered approach. As the amount of your assets increases, the amount charged to those assets decreases. That can be interpreted two ways. One, once I get over a million, everything's at 80 bps or once I get over a million, we get a blended rate that applies to all.
Ric Edelman: In other words, only the assets above a million get the lower fee. The assets below a million are still charged the higher fee. So if the contract is vague, you could end up paying more than you thought. How is it that most advisors are doing the calculation? Isn't it automated? Aren't they just simply saying, I'm opening the account, I'm embedding it into my program and it's going to produce the math for me every three months?
Lacey Shrum: If only life were so simple.
Ric Edelman: Well, what's happening then instead?
Lacey Shrum: Yeah. So I think to take a step back, when you look at a lot of people, unless you're an advisor in this world, it's hard to understand the power that these advisors have in paying themselves. So it is truly the easiest way to get paid for a service ever. They calculate their own fee. So they say, my client, John, owes me $235.16. They send what's called a fee file. It's just an Excel document to the custodian and says, John owes me this much money, move it from John's account to my account. And that's all they have to do to get paid. And so it seems very easy, right? Like just make this fee file, get paid. The client doesn't need to agree to it. They don't even need to tell the client how they're calculating that amount or send them a statement from their firm that says, This is how we're calculating the amount. The custodian does it as a service.
Ric Edelman: And so I want to make sure people understand the parties that are involved in this. Because you've referenced the custodian a couple of times, and some investors may not be familiar with this. When you're dealing with an independent advisor, your relationship is with the advisor. That's who you're signing a contract with. That's who's delivering services for you. But the advisor isn't actually holding on to your money because this is a way we protect the consumer's assets. The advisor will hook you up with a custodian, somebody like Charles Schwab or Fidelity or some other major company like that, and you'll open an account at Schwab or Fidelity, and the advisor will facilitate that. They'll help with the paperwork. But your money is held at Schwab. This protects you because Schwab is custodian. They are serving as the depository for your account. And at Schwab, that is buying and selling the securities for you. The advisor is only telling Schwab what to do. Buy this security sell that security. But the advisor doesn't have access or control over your money. This is a very important safeguard built in for your protection. But when it comes to the fee, the advisor sends Fidelity this Excel file you're talking about, this fee file, and says to the custodian, It's time for me to get paid. So debit the client's account my fee and send the fee to me. This is automated. The client is not involved because when you set up the account, you're authorizing Schwab or Fidelity to do this on your behalf. So Schwab and Fidelity, they're just following orders. It's not their responsibility, right? It's not their fault. It's not their liability. They're doing what the advisor tells them to do because you authorize them to do it, to agree to that. So you've got three players: the client, the advisor and the custodian, and they're all simply acting rather casually about the whole thing.
Lacey Shrum: Yeah, and I love your description, especially talking about the safeguards that the custodian provides, that the money remains in your name at the custodian. The advisor just has discretion to trade and pull his or her fees out. Now, where this gets into problems for advisors, as you said, most collect their fees quarterly, in advance, on January 1st. I'm going to look at December 31st value, whatever the value is, and I'm going to pay myself for January, February, March. They take the money out of the account. They put it in the advisor's account. Life goes on. The client stays, gets to the second quarter. That's great. But what happens when the client fires you? Mid-quarter. That's a problem because you have already paid yourself and absorbed their money that you now owe them into your own books. So it's a liability until every day when you earn it, technically speaking. Now, if there's any attorneys listening, you know, the one way to get immediately disbarred with your state bar is to co-mingle assets of a client's with yours before you've earned those fees. So, Ric, if you're my client, I collect a $5,000 retainer. I put it in a special state-required account that says this is Ric's money, and I'm going to charge him hourly before I can take that money out and put it in my own account. I'm going to send Ric an invoice that says, This is what I did for you, this is how much you owe me, and I'm going to take it out of that $5,000, put it in my firm account and now I can go do whatever with it. So it's very striking when you see that in comparison to what firms are doing. And in fact, the SEC said in their risk alert, lost clients are not being processed. They're not being processed correctly. It's taking days, months, if at all, that they're returning this amount that they've collected, that they're paid but haven't earned yet.
Ric Edelman: So the moral of the story is that if your advisor is debiting your account in advance, which most advisors are doing, when you ultimately fire that advisor, they owe you a refund?
Lacey Shrum: Absolutely.
Ric Edelman: And you're probably not aware of that fact. The advisor may not be paying much attention to it or volunteering that fact. So there's a clear and obvious way that you can get a rebate, a refund of the undeserved fee you'd already paid. You're right that most advisors are charging the fee in advance. One of the things I was always proud of at Edelman Financial is that we didn't engage in that practice. We charged our fee in arrears partly for that reason, because my attitude was why would I debit the fee in advance? Because the sooner I collect the fee, the sooner it's out of your account and that reduces your ability to grow wealth. We're going to delay. We're going to wait to collect our fee. We're going to give you the extra three months of opportunity for growth before we debit the fee. And we're not going to debit it until after we've earned it. And I later discovered that that was an unusual policy. Most folks did not do that.
Lacey Shrum: Very unusual. And did you do it quarterly or monthly?
Ric Edelman: Quarterly. So we debited the fee quarterly in arrears rather than quarterly in advance, which we felt was in the consumer's best interest.
Lacey Shrum: Absolutely.
How Smart Kx serves financial advisors and boosts transparency for investors
Ric Edelman: So talk about your role in this at Smart Kx. What does your company do in this area?
Lacey Shrum: I'm an attorney. I was inside of an RIA all the way from the Ops team into the Compliance CCO role and I just really saw everyone grumbles about fees. You talk to any RIA; they grumble about fees. They weren't passing the exam coming from the regulator. So I built Smart Kx. We do two things really well. We automate the fee calculations. There's really not a lot of rules around what type of AUM assets under management fee billing you can do, but the rule is whatever you're doing, it needs to be documented the same way that you're doing it. So we help them automate it. Part of that is ensuring that the calculation is correct, that the math calculation is correct and that their fees are really transparent to their clients. So our advisors who use our service, we can help them disclose that fee. So we actually draft what that fee looks like for each individual client, what accounts are paying each fee, any exceptions, and then really what the math is. So if a client wants to have full transparency into what they're paying, they can ask our advisors for that information and our advisors can tell them on a client specific basis and then the math behind it.
Ric Edelman: So it would seem that you're doing two things. One is you're helping everybody - the advisor and the client, confirm that the fee being charged is the fee that is supposed to be charged, that the advisor isn't inadvertently accidentally charging more than the client had agreed to pay or was expecting to pay. But in addition to that, are you also helping the advisor avoid a regulatory problem? I have to assume that if they aren't charging what they promise the client they'd be charging, I have to believe the SEC would be unhappy about that.
Lacey Shrum: Absolutely. It's a breach of fiduciary duty.
Ric Edelman: So is the SEC paying attention to this? When they do examinations, do they look at the fees that the advisor is charging its clients as part of their oversight?
Lacey Shrum: Absolutely. So I've asked multiple attorneys, have you ever seen an exam letter that does not include a question about fees? And attorneys are like it's always included. They select X amount of clients. They look at the contract, they look at the fee charge, they do the calculation they went through and did this. I think it was 170 firms and they said most firms are failing at that seemingly simple exercise.
Ric Edelman: This result in a censure or a deficiency letter, a fine by the SEC against the firm.? Does the SEC require the firms to provide restitution to the clients for overcharging?
Lacey Shrum: Yes. So the simplest thing it results in a mandate where you're going back and you're providing for those lost clients, you're paying them back, plus interest. You are going back and making the client whole. If you've undercharged them, you're kind of out of luck, as you would expect. The other thing it does is it really expands the scope of the exam. So, oh, we caught one lost client where you owed $1,000. Like, I want to see the rest of your lost clients for the last five years. So it really is low hanging fruit. That regulator can just really go in and say like, okay, I want to look here now. Or I want to look there. And so that's very expensive for a firm getting all of those documents, finding those documents, having access to them, proving out the math. That is very, very expensive. Of course, they work through a lawyer. The lawyer charges $1,000 an hour. So it's really a cumbersome exercise for the advisor. Best case scenario, they get a slap on the wrist. Of course, they can also be fined if they're found to be committing fraud. They can be sent to enforcement. It can get very ugly, very quick.
Ric Edelman: You said something in there that I felt was pretty intriguing. We're saying pretty clearly that the advisor's fee calculations in most cases is wrong. We've been assuming that in all cases the fee has been too much. But you said something a moment ago that they might not have charged enough. That again because they've got the math wrong. They are hurting themselves by not charging the client as much as the client had agreed to pay. So an advisor who gets it right might discover not only do I remove this regulatory ability risk of getting in hot water with the SEC, but my revenues might also go up because I'll start charging what I was supposed to be charging in the first place. How often do you discover that advisors were charging too little?
Lacey Shrum: Quite often. But that's not a great way to run a business.
Blockchain technology and its role in tracking advisory fees
Ric Edelman: Yeah, that is a little bit ironic. I think everything that you've been describing is involving your background as an attorney engaged in the financial services industry, dealing with advisors, looking very intently at the fees of services between advisors and their clients. Somehow, though, Lacey, you have figured out a connection between advisory fees and crypto. Explain that.
Lacey Shrum: Yeah, I got really into technology 2015, 2016. So just really interested in learning how technology worked, how the internet worked. It feels like, you know, we're all in a car that we don't really know how it's driving. It's like if something goes wrong, what are we going to do? And so I got really into technology, took some development courses, which are great. If there's, again, any lawyers, if you like writing contracts and being very literal, code is a safe place for you. So I found that really fun. Around this time, the big ICO craze was going on and so it just really piqued my interest and I started talking about crypto and blockchain and then of course got really into bitcoin and all the fun and fascinating, crazy things that come with that, and at the same time still working with advisors, and I see this connection. This is the reason our company is called Smart Kx. If you read the Bitcoin whitepaper, it talks about in order to facilitate commerce on the Internet, you need all these different people daisy-chaining it together just because the dollar is not digitally native. So when the internet came about, we started selling stuff on it. We needed some way to get our dollar onto the internet and all these systems appeared and it talks about obviously if one of those fails, it's a catastrophe. And so that's very similar to the fee situation you have. The advisor tells the client this is what the fee is going to be. It has to be communicated to someone to document it, sent to the client, taken that document and put it into a system, keep any notes if that system can't handle what's on the document, update the system when this conversation changes, update the document. Very manual, very tedious. We're, you know, taking something, forcing it into the system. So that's really the inspiration behind Smart Kx. This one ledger solution, taking all these pieces, putting it into one fee is dependent on the contract, so they should be married together.
Ric Edelman: And so do you see blockchain technology being useful in the future in facilitating the fee conversation between advisors and clients?
Lacey Shrum: Absolutely. I think the impact is going to be across the board. One thing when we talked about the exam, when the regulator comes into an exam, they're on a two-year look back. And so two years in this day and age is a lifetime ago. And you know catching fraud at a two-year look back? Wow. Exciting. But when you have real time autonomous information that you can trust, you can catch the day of or before it happens. And so you can really see a world where we move into a real time regulation, which is really just a thousand times better for the consumer. It forces ethics, it forces advisors and everyone in the industry to just really step up their game. And that's way better for the consumer. So fees are just a sliver of that.
Ric Edelman: Well, there are a lot of folks listening to this podcast and they are falling into one of two categories. They are either advisors or they are investors. What is your advice to each of those groups? Let's talk first about the advisors. What's the message that you would convey to financial advisors about the way that they're handling fees in their practice?
Lacey Shrum: One is that despite what they may think, they're probably doing it wrong and I'd be happy to help them. When we onboard firms, they find that a lot of assumptions they have made, they were doing incorrect. So I've not found one firm that is 100% disciplined to a fee schedule in their practice, and obviously we'd love to be able to help them.
Ric Edelman: If you want to reach out to Lacey, you can do so at Smart Kx. Talk about consumers. Lacey, what should investors do who are working with an advisor where their relationship is that they are paying a fee to that advisor?
Ask how your financial advisor is compensated
Lacey Shrum: They should ask how the advisor is being paid. And that's a very common question in the industry. How are you being paid? We're being paid a percentage of your AUM. Okay. How are you calculating that? Walk me through the last statement we had. What is my specific fee schedule? What accounts am I paying you on? What account is paying that fee and how is that math being done? And the great advisors out there will be very transparent with it with you and have those resources available to say this is how we're doing it and this is how we've done it in the past to really help you get comfortable with that. But it's an expense to you and as you said, it decreases the value of your overall portfolio, which is your wealth and well-being going forward. So not being afraid to ask those questions is really important.
Ric Edelman: And I would think that advisors who go through your service at Smart Kx should be able to brag about the fact that they've done so. That they can use that as a testimonial to their clients saying, We care about this issue so much, we want to make sure we're protecting you by not overcharging you. We have had this outside firm do this audit for us and automate our systems to verify that what we're charging you is what we promised to charge you and nothing more. And that should be a marketing strategy. Frankly, that should be something that people could brag about, that we're doing it as we're promising and as you would expect, since there are so many firms that aren't apparently doing it right. I would think that this is something almost like a Good Housekeeping seal of approval - that a client can go to their advisor and say, Hey, are you verified by Smart Kx? Because that would give us all confidence. So it would seem to be a natural thing for people to do.
Lacey Shrum: Of course, and their fee disclosure is readily available. So we have some advisors that are putting a link from their ADV [yearly disclosure form] directly to the math that's being calculated so that anyone can see, oh, this is what they mean by what they say and how the fee is actually being calculated. It's very transparent, which is the whole point of a fiduciary.
Ric Edelman: And it's easy to see how things can get complicated. I can envision clients who have multiple accounts. One of them might have $5 million in it. Another one only has $50,000. Does the $50,000 account get charged the same fee as the $5 million account? Are you aggregating accounts or not? It can get pretty complicated pretty quickly.
Lacey Shrum: Or if you have an adult child who has her own accounts that aren't at $50 million but at $1 million, can you blend it so she gets the benefit of your $50 million in getting a lower rate?
Ric Edelman: The questions seem to be endless. And this is something I don't find anybody anywhere talking about. I think clients don't realize that it's an issue, and I think advisors, well, they're frankly spending their time on other stuff.
Lacey Shrum: Yes. I mean, I talk about it all the time. I love it. I love to talk about AUM and just the different nuances back to lawyers loving to write and be literal and like to write code and be literal - the nuances of it, how it affects the math. I do think for advisors the SEC is turning up that heat. Definitely the risk alert was a warning.
Ric Edelman: So I think as a result of this podcast, advisors are going to start talking about fees a little more with their back office and they're going to find themselves having conversations with clients that they may not have had before. I think a lot of clients are going to start asking their advisors about their quarterly fees. Lacey, everything you've described about your business at Smart Kx is how you serve the advisory community. You help firms verify that they are accurately charging all of their clients the fee correctly on a client-by-client basis. You help them document. You help them handle all of that at the firm level. But what if an investor were to contact you and say, Lacey, I would like you to help me verify that my advisor is charging me correctly? Is that a service that Smart Kx currently offers?
Lacey Shrum: No. We right now are focused just on helping advisors do exactly what you said.
Ric Edelman: So that raises an idea. I'm going to throw this out at you. Here we are without a whole lot of prep on this. Now, sure, I can go to my advisor and ask them, but I would love an investor to go to you, Lacey, and ask you to independently verify that my fee is accurate and correct. Could you do that for an individual client? Would you be willing to do that? Let's say for 10 people who are listening to this podcast, would you be willing to, as an experiment, do this as a one-off basis for them individually?
Lacey Shrum: Are you asking me if I would do a fee audit the same as we do for a firm, but for an individual? Yeah, I'd be willing to do that. I think that's a great idea.
Ric Edelman: Is there a fee or charge you would have?
Lacey Shrum: I'll do it for the first 10 investors; clients who work with independent RIAs. I'll look at their last fee and the fee disclosed, and I would not charge a fee for it for the first 10. I'll do it.
Ric Edelman: So that'll help you kind of figure out if this is something that you can be helpful with.
Lacey Shrum: Absolutely.
Ric Edelman: So there's the gauntlet. Here's the deal. If you're an investor and you work with a financial advisor who is an independent RIA, who charges you a fee based on AUM, the assets under management, and you would like Lacey to verify whether or not your fee is being correctly debited from your account every three months, shoot me an email, just send it to AskRic@TheTruthAYF.com and the first 10 who make that request, I'll forward your contact info over to Lacey so that you and she can take it from there. And Lacey, I would be fascinated to hear the results of your research.
Lacey Shrum: I can't wait to discuss.
Ric Edelman: And I will bring you back on the show so that we can talk about the results, because I think everybody will be curious to see what you discover. Are these fees being correctly debited or not? And are they in the consumer's favor or the advisor's favor? So that's fascinating. Lacey, thank you so much for that offer of making that available to my audience. And I look forward to having you back on to talk about the results.
Lacey Shrum: Thanks so much for having me as well.
Ric Edelman: That's Lacey Shrum, the founder and CEO of Smart Kx. And if you want to reach out to Lacey directly, if you're an advisor, for example, just go to our show notes. Lacey's contact info is there. Coming up next on The Truth About Your Future, a visit by my wife, Jean Edelman, with her Word of the Week. And remember, if you miss any of our weekday podcasts, you can listen anytime you like, wherever you get your podcasts and at TheTruthAYF.com.
How Our Emotions and Organs Are Connected
And why emotional health is so important to our vitality
Jean Edelman: Great to be with you this week. This week, I want to talk about our organs, our emotions, and the time of day. My recent visit to the hospital in early January made me very aware of my lungs. The threat of not being able to breathe was very real and a very big learning moment for me. But once I knew I was okay, I started to think about - I know I'm weird, I started to think about my traditional Chinese medicine and the miracle of our body and how it works.
Did you know that our body has its own clock? That clock never falters. There's a chart that we're going to put up. It's a traditional Chinese medicine body clock. It's pretty cool. And these systems, when we're in good health, they keep us alive. But with the onset of a health event they are asking us to pay attention.
Did you know that our emotions also play a role in our health, and the effect of emotions on our organs? There's another chart of how emotions affect our body. Our health and wellness is about having an awareness. And this awareness might be a major key for change and could be our moment to understand change. I want you to take a moment to look at these charts and just think about the miracle of our body.
And we don't have to think about it. During the day, it's doing its thing. During the night, it's doing its thing. And we're walking and talking and having a grand old time.
So that's our action item for the week. Don't take our good health for granted. Don't take our mobility for granted. And the moment that our body is sending us a message, we need to listen. We need to pay attention also to our emotions. I encourage you to read the other chart about our emotions because our emotions over a long time can absolutely affect our health.
For example, if we're an angry person, that's going to weaken our liver. If we have tremendous grief that can affect our lungs. If we're constantly worrying, that weakens our stomach. And if we're always under stress, that affects our heart and our brain. And if we're very fearful, that affects our kidneys. And so our body is reacting to our emotions. Let's be aware, movement is life and breath is life.
And so I encourage you also to help us deal with our emotions and find qigong or Tai Chi or a yoga class where the practice is slow, with purposeful movement and breath and tune into this amazing miracle that helps us walk around and be who we are each day. Our body is wise, and if we can help it, we are helping ourselves.
And so my word of the week is ORGAN.
The O is for Oasis, a place of calm in the midst of chaos. And this is what we want to find when life is whirling around us. So close our eyes and focus on our breath. Calm ourselves so we can step forward with clarity and calm.
The R is for Refresh; to make like new. Our organs are constantly restoring and replenishing themselves. Look at the clock. And so each day we can rebuild and restore our health and we can move in a positive direction. Having that awareness, having that learning is very powerful.
The G is for Grow; to progress. Naturally. Each day we get to change and grow and learn and become better versions of ourselves inside and out. When we give ourselves good water and food, we're changing our health. We're changing our organs; we're changing the cells in our body.
The A is for Aware. Having awareness that our body is working every second and every day for our greater health, it makes a world of difference. We just need to help it along with good food and good life choices.
And the N is for Nourish. We are special. We are needed. We need to nourish our body, our minds, and our soul. This is not a race to see who can be the busiest and the craziest. This is a race to find our inner selves. This is a race to nourish our soul in a positive, mindful, quiet way. In this way, we are nourishing our body. Pay attention, have awareness of how our body is working for us every day.
Have a great week, everyone.