For investors who want some professional assistance without handing over control of their assets, the “advice only” model is gaining traction.
Jeremy Zuke is a financial planner with Abundo Wealth, and he joins Michael to discuss the appeal of the advice only model and the ongoing democratization of the advisory industry.
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Episode Highlights
- Overview of advice only financial planning, compared to the traditional model.
- Demographics who may benefit from an advice only financial planner.
- Importance of professional advice during the “de-accumulation” phase.
- Progress in the “democratization” of financial advice.
- Value of making sound financial decisions at an early age.
- Why the advice only model is gaining traction.
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Transcript
Jeremy: There’s a large group of people out there who want financial advice, but are not necessarily interested in or looking for giving up control of the assets that they have. So.
Michael: Welcome to the show I’m Michael Johnston. Joining me today is Jeremy Zuke. Jeremy is a financial planner with Abundo Wealth, an advice only RIA. They oversee about $600 million in assets under advisement. Jeremy, thanks for joining me.
Jeremy: My pleasure. Michael.
Michael: So let’s start. I introduced Abundo as 600 million in assets under advisement, not management. Because Abundo is a advice only RIA, can you explain what that means?
Jeremy: Of course. So what we’ve learned over the course of time doing this is that there’s a large group of people out there who want financial advice, but are not necessarily interested in or looking for giving up control of the assets that they have. Right? So in a lot of different professions, I think we’re very accustomed to this. You pay someone who’s an expert to look at your situation, provide you their thoughts from their their background and their knowledge. And we’re just taking that and applying it to financial advice. So you want somebody to look over your situation, be that your investments or your insurance or your budget or whatever it is, and give you the advice that they would want to give in order to help you achieve your goals. And so all of that is done without the need to transfer any accounts or anything like that. So we don’t we don’t take control of investments, we don’t sell products for commission. We just are very strictly paid to look at someone’s situation and provide the guidance that helps them get where they want to go.
Michael: Got it. And then it’s up to them to go out and implement it. Is that right?
Jeremy: Exactly. I would say that there are levels of hand-holding out there. It all depends on where someone is in their personal journey. So some people are extremely competent DIY investors. They’ve been on Vanguard or Fidelity forever. They know how to how to do all of this stuff, buying and selling. So in that case, it’s just really looking at the situation and providing a recommendation. But other people are very new to investing. They may not have even done it before, for example. And so we do screen sharing sessions. We have guides, step by step guides for how to do something at Vanguard or Fidelity, or one of the major brokerages that that we often use. So it’s really just trying to help somebody get to that point where they feel confident and competent enough to to do that stuff on their own. But we’re happy to go, however, wherever the wind takes us in terms of where somebody starts when they come and first join as a client. Yeah.
Michael: So. So who is your who’s the target audience? Who is this type of service? Who’s it. Who is it a great fit for? And maybe I guess I’ll ask to who is it. Not a great fit for? It’s kind of the inverse of that, right.
Jeremy: Yeah. Of course. Everybody. Right. It’s a great fit, you know. So the if I were to say that there are really two major groups of people that we see, a lot of the first are younger people who are in this zone where I’ll say, like, life is starting to get a little bit more complex. So that would be earning a little bit more at work. You maybe have a kid or two or a house that you’re about to buy. You know, you’re, you’re starting to have to make decisions around health insurance and 401 K and just realizing that that life is sort of coming at you in a lot of different ways. So we hear words like, you know, I’m feeling overwhelmed. I’m feeling like there’s disorganized. There’s a lot of decisions that I have to make, and it can even just be like little stuff, you know, every year it comes around like, what do I do with this big open enrollment packet that I’m now getting at work, and what kind of things do I pick? So really, it’s that that group of people who are in their 30s, maybe early 40s in their their life has just reached a point where, like a little bit of advice to help get them on a good track and get a relationship going with a financial planner makes a lot of sense.
Jeremy: That’s a large block of the people that we work with. And then the second one, I don’t know if this is surprising or not, but it’s really more, I would say, pre-retirees or people very early in the retirement journey who are looking for both a second set of eyes and then also really someone to stay with them throughout the course of that retirement journey because they know that there are decisions, some of them even irreversible ones, around Social Security, right, that you really need somebody there by your side. And we often even hear that I want somebody who we’re familiar with now, because I know that I might not always be here. My spouse might need financial planning, but oftentimes these people, they’ll either tell us that they’re big Vanguard fans or they’re Bogleheads or, you know, some phrase like that, that kind of indicates like, I know I’m not really supposed to be paying a lot for this, or I don’t want to pay a lot for this, but I want a financial. And I think advice only really shines for that type of person because they realize, hey, I don’t have to pay a lot, but I can get the comprehensive financial planning that I need going.
Michael: I mean, that makes perfect sense to me. Jeremy, I think kind of an overlooked part of your financial life is like what I call the de accumulation process, right? Like a lot of people spend a lot of time thinking about how do I get as much money as possible into my 401K, into my, my IRA and all these advantages? Ounce. But getting money out of there is kind of complicated, right? Because you’re dealing with different tax brackets. You’re dealing with different tax treatment of a Roth versus a versus a traditional. You might have social. Well, you’re going to have Social Security, you might have a pension. You’ve got RMDs to deal with. Like, I don’t think people fully appreciate how complicated that that d accumulation phase of life can be. And by complicated, I guess what I’m saying is, is how much of an impact a good strategy can have on kind of what you keep. And a big part of that is, is the taxes you pay. And a tax efficient strategy, of course, means you keep more. So that actually doesn’t, doesn’t surprise me that that the Pre-retirees are kind of looking at this and saying, Holy cow, I got to make decisions about Social Security and Medicare and you know, I got I’m facing these RMDs and kind of all this stuff. And how do I do this? So makes my head spin a little bit. And I have a finance degree and a CFA, so I get it.
Jeremy: And I’ll say that I think it’s gotten even a layer more complicated where you have a large number of people who are now getting into whether you call it the fire movement or financial independence, where they want to retire sometime earlier than a traditional age, and that introduces even a whole new set of those same conditions or circumstances, right. Where you have to think, how am I going to manage my ACA health care premiums? What accounts do I draw from? You know, is it the right time to start those Roth conversions? I’ve heard about them. Is it right for me? So there’s a lot of people who are reading blogs and watching YouTube videos or podcasts like yours. And, you know, they come and they say, like, now I’ve heard like 30 different people’s perspectives on this, but I just need somebody to look at my situation. So what it is that I personally should do.
Michael: It’s a great point. There’s kind of a gap. And I mean, retiring early is great, but you got to get to age 59.5, right until you can get into some of those retirement accounts. So just yeah, I mean, purely technically, there’s a whole nother big wrinkle there of complexity.
Jeremy: And Michael, you also asked about who is the service not for. And I think that it is probably, in all honesty, a pretty small number of people who it’s not going to be for. But the couple groups that come to mind, I mean, if you just have an extremely complex situation, you know, you’ve got mega millions of dollars and trusts and, you know, like a business that you own that you need to pass to the next generation. Like there does become just a point where I think, like your situation is complex enough that a more comprehensive, you know, full full source team that includes tax advice and an attorney and and financial planning like that might be more for you. And then obviously, like for people starting out, like we’re still trying to think of like, how can we really get people even earlier in that process? Because the reality is still like even at $189 a month, which is probably the most affordable financial planning that we’ve seen, like, that still can be a lot for someone who’s 23, 24, 25, like, right, like just building their career could be a large percentage of their income. So we’d love to think about new ways in the future, how we bring those people in. But right now we don’t see quite as many of them coming to them.
Michael: Yeah, that makes a lot of sense. So I guess Warren Buffett and Bill Gates, you probably need to go somewhere else for your financial advice, right? You got it. Yeah, yeah, probably have a more complicated, complicated financial picture.
Jeremy: Exactly. Warren hasn’t signed up yet, but maybe we’ll get him soon.
Michael: So I want to talk about background a little bit. I want to talk about your background personally, because you kind of took an interesting route here. And the background of, of Abundo Wealth. Let’s start with your background, because you, you had not a financial financial planner by, by training. So how did you come into this?
Jeremy: Yeah. I was one of the rare people who I think for about the last ten years of my corporate career actually could answer that question of what would I do if I were doing something different? I love this topic. So a big listener of of podcasts, I started getting into things like the Bogleheads forum and debating people on their learning about indexing and different financial planning related stuff, and then got into the fire blogs and all of that. So like, I love this stuff. It was my passion. It was what I did after after work, all of that. But I was having a pretty good successful run in a corporate career. So I was doing good work in corporate strategy and marketing roles. I worked for big companies like Walgreens, and then left there to go to to the telehealth world to lead a marketing team for a company called Mdlive. And just throughout all that, my wife and I had been successful and good savers and just reached a point where we felt like we were we could reasonably call ourselves financially independent. And the choice, the choices that we made in work could just be, you know, I want to work where I want to be. So that was, to me, one of the biggest enablers of kind of a mindset shift of like, fire doesn’t have to just be about the money part of it, right? Like if you can just get that feeling, that sense that like you’re you’ve got a good savings base under you and then you don’t have to chase the highest salary.
Jeremy: You can really chase more, the highest impact that you can make. And so I did that. I took a year off, did the CFP education course with Kaplan and then ended up through a few friends of a friend reaching out to people and started a chain where I ended up. Getting connected to Eric Simonson, who’s the CEO and founder of Abundo Wealth. And I told him, hey, you know, I’ve done all this stuff. I was thinking about starting my own thing, but that looks pretty daunting, actually. You know, there’s a lot that goes into that from a legal and compliance and sales perspectives. And I said, it looks like you’re doing something awesome. Like everything that I put on my business plan, like, looks like what Abundo already does. So, so maybe it’s better to just join forces here and see if I can join the team. And we met. And very quickly thereafter I was off and running as a financial planner.
Michael: It’s a great story, I love it. So let’s let’s talk about Eric’s, Eric’s vision. And when he founded Abundo. I think part of part of his vision was to provide financial planning services to folks who traditionally have, have not had access to it, you know. Can you explain that a little bit, what some of those barriers traditionally have been and what the solution is for, for breaking those down and kind of, I guess, democratizing, I don’t know if that’s the right word or if that’s how you all think about it, but for for democratizing the financial advice and financial planning.
Jeremy: I think democratizing is is exactly the right, the right word. And I mean, some of them are just very these barriers are systemic in a way where the traditional assets under management approach to financial planning, sometimes just what you’ll see is a lot of you have to have at least as much, right? Like you have to have at least 250 grand or half a million. And it’s understandable when that’s the business model. Like, I understand why people look for people who have larger asset bases that they they want to to bring in, but it just leaves out a very large swath of the population, because it’s actually not that many people that have at least a half $1 million. When you take a much broader lens to to the country, and there are other things that that go along with that demographically, just like who ends up getting served by that type of model. And so we figured there’s a whole bunch of people out there who they don’t qualify for this. And then they’re they’re kind of next best alternatives aren’t really that great necessarily, because it may be a whole life insurance salesman coming as a financial advisor, which isn’t really the way that we want anybody to go.
Jeremy: Like my, my kind of some of the fire that drives me to do this is like seeing a lot of those type of stories and wanting to make sure that people didn’t end up in those kind of traps. So I think those like when you have people who are then like they’re turning to social media or some other type of thing for the advice, like that’s that’s not good either. So we figured there’s this big gap zone where people, okay, they don’t qualify for the bigger AUM stuff. They’re not really being served very well by the other alternatives that they have available to them. So Abundo really fits nicely into that niche to give them low cost access to a planner who’s not going to be intimidating. You know, we’re all very we we try to make sure that we teach as well as plan. A lot of people are coming to this, so that’s really how we’re trying to do it.
Michael: I love that the idea of of teachers as teachers as well as as well as plan, and I’ve always thought that this is there’s kind of a gap here. Right. Because for for younger folks who are just starting out, who maybe haven’t accumulated that level of assets, those are like the highest leverage, like investing is a big part of it is just time, right? And the longer time you have in the market and there’s huge leverage on those financial decisions you make in your in your early 20s, even if they’re not huge dollar amounts. Just when you’re talking about 30, 40 plus years of compounding if you can do the right things, then it’s going to turn out, it’s going to turn out pretty well for you, I think. And yeah, I look back, honestly, I look back. I’m not embarrassed to say, like, I made some pretty dumb money mistakes in my 20s. And I have a I have a finance degree, I’m a CFA charterholder like, I if I didn’t know better. I’m not sure how folks who you know, I can understand how folks who don’t have that that background wouldn’t know better. And like, it’s costly, right? Because I can’t go back to 2008 and make my max out. My Roth IRA, like, the paint is dried on all that and it kind of it’s kind of painful if you start calculating how much money it costs you. Some of these dumb things you do in your 20s. Right?
Jeremy: Yeah. No. Exactly. And I mean, eventually, I suppose all we can do is just look forward from from the now. But you hit it exactly on the head where the every, every dollar that goes in for those 25, 30, 35 year olds is magnified in terms of its, its overall importance. And we also have on our website a fee calculator that we love to show people. Also, just the big difference of what that pot of money is going to look like with and without the the drag of a one or a 1.5% all in fee from mutual funds and asset asset under management fees and all of that. It’s dramatic. It can be seven figures in the right situation.
Michael: Yeah. So let’s let’s talk about fees. I want to hear how Abundo does how you make money, how you what your fee model is like. And kind of compare that for what’s normal, what’s traditional in the industry.
Jeremy: Sure. I think the biggest way that it’s a little more unusual is it’s it comes across to the client much more like a phone bill, like any other bill that you would pay. Right? It’s a it’s just a flat monthly fee. And that flat monthly fee also to us, like one of the important things is it does not scale based on your income or your wealth. So to us, it’s like we want to provide the same level of service to everybody. And it doesn’t it doesn’t make our jobs harder. If you have 100,000 or 500,000 or 1 million, you know, we’re doing really the same effective work for you. So our fees are just a flat monthly fee, $189 a month as of right now. So and that’s that’s true whether it’s, you know, you’re an individual or a couple, which is a household signs up and that’s the the fee they pay and it comes out credit or debit card. So we don’t take it out of IRAs or, you know, anything like that because we want that money to grow for the client. Yeah.
Michael: Very it’s very unique, I think, from, from what a lot of folks are, are used to or kind of the traditional traditional model in the industry. So, so this approach, this advice only approach, it kind of reduces the focus on, on investment management. So can you talk a little bit about that, about how if that’s kind of less of the focus. What is what is more of the focus or how is the model kind of different from a client service perspective?
Jeremy: Yeah, absolutely. So and you know, I came into this like I said, I was a big indexer. Bogleheads. Right. Like that. The whole point is get a buy and hold portfolio that matches your risk tolerance and, you know, periodically monitor it over time. But really, like, you’re you kind of know what you’re, you’re going to be doing when you’re just pumping, pumping money into the 401 K and the IRA and the the brokerage account if that’s available to you. But because of that, like, there’s really not that much to talk about. You know, I think people struggle with this sometimes, even if they’re if they’re journalists who are writing about the topic of indexing, it’s like, what do I keep saying? Like, well, you know, by by the Vanguard Total Market Index. And that’s, that’s your strategy, right? So because of that, we really and we don’t, you know, because we’re not managing assets, we don’t feel that pressure of, well, there’s this big fee I’m paying you. So you have to make it look more complex or you have to like, do strategies that are kind of what’s the market looking like today or which sectors or how like we just don’t do that. We as a company, we get very simple buy and hold portfolios. And so what you find is that, okay, after we’ve done that we do a lot of initial cleanup. You know we merge accounts together. Old 401 K’s merging into the new one or whatever it is. We do that cleanup, we get an asset allocation set up, we get an automated investing plan set up. And that’s kind of it. Like in terms of talking about investments, there’s not really much else to do.
Jeremy: So from that point forward, it’s more the questions that you have throughout the course of your life, you know everyone. I’m sure that everyone could think of 5 or 10 moments throughout the course of a year where they’re like, I would have liked somebody’s opinion on this. You know, I was I had to go to a think, is it the right time to buy a house? What kind of mortgage should I get? Should I be on that health insurance plan with the HSA or not? Or, like, what is an HSA? Oh, I didn’t know. You could also have, you know, the limited purpose FSA. That’s news to me. There’s just so many little things that come up throughout the course of that. And, you know, ones that we also notice are maybe 8 or 9 out of ten people we talk to will say, no, I don’t have a will set up yet, but I know I should or oh, I do have life insurance, but it’s just a little bit it’s like maybe $50,000 through work. Or you know, no, I haven’t had anybody do like a review of my home and auto. I’ve been with the same company for 6 or 7 years. Right. Like there’s just all these little things that come up throughout the course of a year, and that’s even forgetting budgeting and paying back student loans and like, what is the new savings plan and should I be on that? Is that for me? Like it’s all of those little things. That’s what we work on for 90, 80, 90% of the time after we get the investments just in that kind of autopilot buy and hold mode into the index funds.
Michael: Yeah, I mean, I could add a bunch to that list, right? Like a Roth conversions backdoor Roth do like, you know, refinance kind of the the list goes on and on. And I guess it’s you know, we were just talking about how a big part of investing is just time in the market and letting letting the market do its thing and this gradual, slow compounding. But there’s also like these, these high leverage moments right where you can, you know, the right decision can, can make, make or destroy a meaningful amount of wealth. If you do your Roth conversions at the right time, if you refinance your house at the right time and they’re often difficult or I guess even like impossible, like you can’t undo a Roth conversion, like, that’s that’s irreversible, right? So, so getting I mean, how do you think of yourself? Do you think of are you kind of like you’re I mean, you’re an advisor, but it’s almost kind of like being a CFO to your clients, too, a little bit. Right? And helping them run these numbers and run these analyses, it is.
Jeremy: And the way that I will even sometimes explain it to clients is that imagine that, like you just always wanted, you’re going through your life and you think, oh, I wish I could call someone like, I wish I could ask someone this question. And instead of turning to friends and family or social media, you have someone who knows your situation. And so we make it very clear that we love to talk those high leverage moments, you know, buying the right house, getting the right investment profile, set up all of that stuff. Absolutely. But we’re very explicit that we’re happy to talk about the low leverage moments, too. So we’d love to have a conversation about what credit card should I be buying to maximize the amount of points that I get in order to redeem them for travel? You know, one thing that we see budgets all the time that have many, many thousands of dollars in them for travel. And so if you can show somebody how credit card points work in order to redeem them appropriately, you might shave a travel budget from 10 to 7, $1,000 a year, and then that’s $3,000 left to do something else. So we think the little things matter, too. And it’s just if you always I think a lot of people wish they had that in their life. And that’s what we try to be as a person, that you can always ask, no matter how big or small, the.
Michael: I was laughing as you were saying that because, you know, I mentioned that I have a finance background. So of course I get all these calls and emails from from friends and family kind of asking these questions about what is what is this? I heard about this. I saw this on TikTok and say, all right, hold on. Let’s.
Jeremy: Oh, yeah, that’s that’s sometimes not a good time.
Michael: But I think it’s a great point you make about even the smaller leverage moments, like culture matters, right. It’s kind of if you think about culture at a company or a sports team, a culture of winning kind of matters. And even though small leverage moments kind of build, I guess, within a family or a household, they kind of build a culture of investing and being savvy with money. So it’s in addition to, you know, moving from a ten to a seven, that’s a nice a nice improvement and some bottom line dollars. But kind of building that that culture I think is is really important as well.
Jeremy: Absolutely. And I’ll say, you know for us, part of the interesting thing of seeing people at the entire spectrum of ages and parts of life is, I think, as I have a strong suspicion that as a lot of Abundo clients continue to work with us for a long time, I think we already, you know, referrals and word of mouth is the number one way that people find out about us. I think or hope that that will happen multi-generationally as well. Over time, like we hear a lot of people start to say like, I think my adult children like are going to be ready for this soon. You know, when you when those pre-retirees will think like, oh, this service, this would be great for my 27 year old about to get married. So we hope that we can just keep influencing those good money lessons and building multi-generational habits to.
Michael: Absolutely.
Michael: Get to them early, right where they’ve got those decades of compounding ahead of them. Just a couple more questions for you here. Jeremy, I want to ask you about kind of the trend towards advice only in general. I mean, it seems like Abundo is growing like crazy. So are there I’m assuming there are more and more people who are are seeking out advice only. Are they coming from a kind of other traditional advisors? Are they coming from not having an advisor, or is it, is it both?
Jeremy: It’s definitely both. I think oftentimes when the, the group that comes from the traditional advisors will have there’s just so much information out there in the world and obviously some good, some bad, but that it’s very easy when you’re online enough and reading about personal finance, you’re going to come across something about fees and low costs and, you know, like paying less. And I think as people see that, we often hear that the thing that they’ll say to us first is, I didn’t quite realize how much this was actually costing me or something like this, a little bit hidden. So that group, I think is really very much looking to transition their portfolio from that, you know, that old, more expensive advisor into a self managed one with us. And they kind of seem to have a good idea of where they want to be heading with it. But then there is a large group for whom they would say, no, you’re my first financial advisor. I’ve never done this before. Sometimes the way they’ll phrase it is, I didn’t think this was for me.
Jeremy: Like, I, you know, I like we were talking about like, kind of not feeling there’s a perception that a financial advisor is something that wealthy people have something like that. So we’re we’re trying to change that and people will find out from their like I said, most often it’s friends, family members, client referrals. We’re starting to do a little more like, you know, outward marketing, have a social media presence and all of that. And some other advisors around the country also send us a lot of clients. So those ones who know that we do great work, but they have clients who aren’t going to qualify for their their niche or their minimum, you know, they’ll they’ll send clients our way. But right now it is really just very organic. The way that that we’re growing, we’re hoping to to scale it up big time though. You know, we’re a little over 400 clients. And I think the vision is much more like, could we get to 20,000 clients just knowing that we have such a democratized space that we could serve this?
Michael: My last question for you, Jeremy. Where can folks go if they want to learn more about you and more about Abundo?
Jeremy: Yeah, I guess a little bit of one and the same. So AbundoWealth.om is our the easiest place to go. That’s our our website. But we’re also starting a few different social media. I mentioned my my background is in marketing. So I’m helping to start some of those social media channels. So if you want to see some advice, only content about investments, but also a whole range of other things, you can see us on the Abundo Wealth YouTube channel. Instagram, Twitter. We’re on. We’re on all the usual the usual suspects, usual places.
Michael: Perfect.
Michael: We’ll make sure those links are all in the show notes for this episode. Jeremy, I want to thank you for coming on. This is I learned something today. I always love learning something new. So I want to thank you for sharing your insights here and talking about advice only.
Jeremy: My pleasure. Michael, I appreciate the time.
