Preet Banerjee, renowned speaker and personal finance expert, discusses the value of financial advice. He shares his intriguing findings on the current state of financial planning, and explores the need for regulatory changes. The episode also includes insights on retirement savings plans and a book review on wisdom and advice for living.
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Quick takeaways
Having a financial plan significantly impacts all outcome measures positively, including higher investable assets, broader advice, and increased financial confidence.
Income, pre-existing assets, responsibility index, childhood communication about finances, and wealthier households are key factors that explain differences in investable assets.
Money coaches, independent financial advisors, and social media as a secondary channel have the highest impact on increasing the breadth of advice and the holistic wealth score.
DIY investors generally have the highest level of confidence, while the length of the relationship with an advisor, being retired, having fewer people in the household, owning real estate, and avoiding a global advisor as a secondary channel all contribute to higher comprehensive financial confidence.
Deep dives
The Value of Financial Advice: Key Findings
Traditional financial advisors show a positive association with higher levels of investable assets, but only for wealthier households. Traditional financial advisors in the mass market do not show significant differences compared to utilizing a bank teller. However, having a financial plan significantly impacts all outcome measures positively, including higher investable assets, broader advice, and increased financial confidence.
Factors Influencing Investable Assets
Income, pre-existing assets, responsibility index (determining who is more responsible for financial decisions), childhood communication about finances, and wealthier households are key factors that explain differences in investable assets.
Factors Influencing Holistic Wealth Score
Money coaches, as well as independent financial advisors and social media as a secondary channel, have the highest impact on increasing the breadth of advice and the holistic wealth score.
DIY investors generally have the highest level of confidence, while the length of the relationship with an advisor, being retired, having fewer people in the household, owning real estate, and avoiding a global advisor as a secondary channel all contribute to higher comprehensive financial confidence.
Colonel Chris Hadfield: Lessons on Setting Goals and Overcoming Fear
Colonel Chris Hadfield joins the podcast to share insights on setting goals, making deliberate decisions, and overcoming fear. He emphasizes the importance of enjoying the process and celebrating small successes along the way. Hadfield also highlights the role of competence in overcoming fear and the value of constantly improving one's skills. He shares that being an astronaut is not just about being in space, but the years of preparation and deliberate decision-making leading up to it. Overall, Hadfield's advice provides valuable life lessons applicable to everyone.
Book Review: 'Excellent Advice for Living' by Kevin Kelly
Kevin Kelly's book, 'Excellent Advice for Living: Wisdom I Wish I'd Known Earlier,' is a collection of his personal insights and reflections. With over 450 pieces of wisdom, this book offers valuable guidance on various life topics. Kelly's advice encourages readers to continuously improve their competence, be open to change, and focus on the process of achieving goals. He also emphasizes the importance of thoughtful decision-making and measuring wealth by intangible experiences. 'Excellent Advice for Living' is a concise and valuable read that provides practical wisdom for personal growth and self-reflection.
IFP Conference and Hot Wings Contest
The upcoming IFP Conference in Edmonton will feature a hot wings contest, targeting the ongoing hot sauce debate. Ben will be present at the conference and is expected to participate in the contest. Advisors attending the conference are invited to join the competition and share their thoughts on the hot sauce debate. Details about the event will be announced closer to the conference date.
Importance of Feedback and Interaction
The hosts of the podcast express their appreciation for feedback and interaction from listeners. They emphasize the value of hearing from the audience to understand their thoughts and opinions on the episodes. Feedback helps to shape future content and allows for a more interactive experience between the hosts and the audience. Listeners are encouraged to provide feedback, suggestions, and comments through various platforms, such as Apple Podcasts, Spotify, LinkedIn, and the Rational Reminder Community.
This week we welcome back return guest Preet Banerjee, a renowned speaker, personal finance expert, consultant, and author of Stop Overthinking Your Money. Listeners may remember Preet from his previous appearance on the show back in 2019 when he was first embarking on his doctoral journey. Several years and one pandemic later, Preet has finally made it through the monumental task of completing his dissertation! We spend today’s conversation with Preet getting into the fascinating details of his research which interrogates the value of financial advice within households and explores the pressing question of whether it’s worth getting it. Preet provides a comprehensive overview of the current state of financial planning and shares his most intriguing findings before unpacking the policy and regulatory recommendations that emerge from his research. The latter part of the show includes our Mark to Market segment with Mark McGrath, where this week, he delivers key insights on retirement savings plans (RSPs) and why he believes RSPs are actually tax-free. You’ll also hear our reflection on our past conversation with Colonel Chris Hadfield, paired with a book review of Kevin Kelly’s Excellent Advice for Living: Wisdom I Wish I'd Known Earlier. Join us for an expansive episode on the value of financial advice along with timely insights on what truly matters in life!
Key Points From This Episode:
(0:03:34) Background on today’s guest, Preet Banerjee, and the focus of his research: the value of financial advice to households and whether it’s worth getting it.
(0:06:29) Key problems with past research attempting to demonstrate the value of financial advice (including the portfolio-centric advice model).
(0:10:47) A review of the existing literature on the value of financial advice; the gap in the literature that his research is addressing.
(0:16:27) How Preet measured holistic wealth scores and comprehensive financial confidence in his research and the dataset he based his research on.
(0:21:26) What Preet took into account to determine who were DIY investors within his sample and which advice channels they use.
(0:28:27) The study of financial planning, shortcomings within the field, and some of the positive developments in recent years.
(0:30:00) Informative takeaways regarding advice channels, investable assets, and having a financial plan.
(0:36:30) How Preet approached his data, the progressive regression model he developed, and what it demonstrates about key topics in his research.
(0:47:36) How wealth allows you to access better financial advice versus the options available to you if you’re in the mass market.
(0:49:48) Learn about the policy and regulatory recommendations that emerge from Preet’s research.
(0:56:04) Preet’s advice to listeners and DIY investors and what’s next for his research.
(01:05:17) Our Mark to Market segment with Mark McGrath and his insights of everything you need to know about retirement savings plans (RSPs).
(01:18:02) A recap and review of Episode 266 where we talk with Colonel Chris Hadfield and why it’s worth the listen.
(01:20:39) Hear our review of the book, Excellent Advice for Living: Wisdom I Wish I'd Known Earlier by Kevin Kelly.
(01:25:34) Our after-show section; Find out what we have coming up and how to attend our upcoming meet and greet.
Join our live event “Finding and Funding a Good Life”: https://us06web.zoom.us/webinar/register/8516942588679/WN_gv6EVyCCRpaXCrnWAZUrLA
