Intro & Rebrand to Return on Reason – Why Greenstream became Return on Reason and what is not changing.
Marcus Schafer
This is episode 28 of Greenstream, now known as Return on Reason. So Pat, we are switching up the name and this episode is going to be a little bit about the future of personal finance. So last episode, episode 27, we were talking about what innovations are coming for investments. And now we’re going to talk about all the other components of your financial picture. What are those innovations?
and how are they coming about that people should be thinking about and considering. Before we jump into that, Pat, you want to make any comments on the quick rebrand?
Pat Collins (00:55)
28 episodes ago, when we first sat down and started talking about the podcast, ⁓ we were trying to figure out a name and neither of us being as super creative, we just landed on Greenstream and went with it. over the last year or so as we’ve kind of developed this, I think we wanted a name that was more indicative of what we’re talking about, what we’re talking about each episode and what we think it relates to. So the whole return on reason, it’s a…
It’s a play on return on investments because we are talking about investing and finance a lot. But hopefully throughout the last year or so, you’ve also got this sense that we’re talking about logic and reason and making good decisions to be able to get better outcomes with your money. And so I think it’s just a play on both of those. We’re excited. Our marketing team’s done some, some nice rebranding and some nice pictures of us on the, that’ll be on the podcast links and whatnot. ⁓
⁓ Happy to ⁓ make the change and I’m also looking forward to this episode. think the last one was well received, I know. I’ve heard from a few people and this one’s gonna be a little bit more of the same. It’s just we’re gonna get into personal finance and some of all the other aspects and what’s going on in the industry right now as it relates to innovation.
Marcus Schafer (02:12)
naming convention, I think a lot about these decisions that we make. as you mentioned, it’s kind of a play on return on investment, but it’s also meant to illuminate that these decisions we make, they’re not just investment decisions, right? Expected return is not the only thing that we are trying to optimize. We’re trying to optimize for what we can actually do with that money. And there’s a difference between a good decision
and a bad decision. And there is an expected return difference between those two outcomes, whether or not that’s as measured by dollar sign or the number of smiles you get or some other metric, but there are certainly a difference between ⁓ a good decision and bad decision. As we think about this episode, Pat, the future of personal finance, let’s kind of like not bury the lead. There’s a lot of discussion around AI.
And what we think that might mean for personal finance. I’d just love to get your take.
AI in Personal Finance1,2 – Where AI helps with analysis and aggregation, and where judgment still matters.
Pat Collins (03:20)
I think it’s evolving so quickly, but it’s clearly, you when I think about AI, what people are using it for right now, I think it’s, you know, helping people with data, helping, you know, people with like research, figuring stuff out. And in a lot of cases, AI, think it’s going to be very helpful for financial advice. People are going to be able to go to chat GPT or copilot or whatever it may be, ask their question.
and probably get a reasonable answer in most cases. It’s not perfect, so you have to be careful. ⁓ But I do think AI is gonna be embedded in websites with custodians like Fidelity and Schwab over time. They’re gonna have chat bots and firms like ours are already using it ⁓ behind the scenes. And I would call it more of like, ⁓ we’ve used it more for helping our advisors and our team become more efficient.
Um, clients don’t necessarily see that, but there’s certain things that we can do to help with efficiency, whether it be note taking or summarizing different things for us and whatnot. But I think it’s going to be, um, you know, transformative in a lot of ways. And, uh, I don’t think personal finance is going to be, um, you know, uh, immune from, from that. one last thing I would say that I still haven’t really seen, maybe it will come at some point with AI, but I haven’t seen it yet. The human element.
of the advisor client relationship is going to be hard to kind of replace because the reality is, is that money is emotional. Uh, finances can be emotional and having someone that can understand your emotions, be able to speak through that. Um, I know AI kind of claims to be able to do that, or maybe claims that they will be able to do that in the future, but I haven’t seen it quite yet. So I would just say that that is a,
I still think a distinction that people want to have a conversation with someone when the stakes are as high as they are. When, if I make a mistake on this, I could really derail my own retirement, my inheritance for my children, the taxes that I pay. think having somebody who’s been through it over and over and over again, there’s some comfort and AI doesn’t quite do that yet, at least.
Marcus Schafer (05:35)
It’s great at analysis, the more constrained your analysis, I’ve found it to be more helpful. ⁓ There’s a lot of research out there that says things like this is the behavioral aspect, right? If you’re presented with more choices, it actually makes it harder to make one decision. That is a path forward. There’s more, they call it status quo bias, right? So you’re kind of staying in the status quo and you’re not
able to make a decision that helps move you forward. ⁓ Maybe AI is going to get better at that. And then the other thing, we kind of talked about this in our last episode and you just hit on it, which is the more wealth you have, the more is at stake at each individual level. And some of the things we’re seeing from the investment side is democratization of unique products that are coming
downstream, hopefully there’s different aspects of financial advice that can be democratized downstream, but it’s not going to solve the fact that there’s a lot of singular use cases for different things. And it is really tough to stay on top of each thing and see how it all adds back up to the total picture.
Pat Collins (06:55)
Couldn’t agree more. think that ⁓ there are times where you’ll use AI and it’ll give you the right answer. But there’s context a lot of times that needs to be involved with relationships and with clients and with money. And so I do think that’s an element that you have to be careful of is, it understand all of the context? Does it understand your emotional state? Does it understand how you’ve made decisions in the past? And all those things kind of.
mold into hopefully a really good recommendation or a good decision that’s being made. you know, what I’ve read is AI is going to get there at some point in that. But, you know, until it does, we’re still big believers that, you know, industries like financial planning, like ⁓ medical, like your relationship with your doctor, those things will be really important to continue to have that personal relationship.
Marcus Schafer (07:46)
The latest round of market news that brought this, I think, a little bit to the forefront, at least in our industry, was a company, a fintech financial technology startup, Altruist, which is where you would say, hold your money. They developed an AI tax planning tool and it caused a sell-off in a lot of wealth management adjacent stocks. We were sitting there looking at it a little bit and
It’s a new tool that essentially does things that we’ve been doing for our clients. Well, how long have you been doing tax planning?
Pat Collins (08:23)
I mean, basically at least 15 or 20 years probably. So yeah, this is something that ⁓ was interesting to read because I kind of got to chuckle and like, yeah, we’ve been doing this for a long time. But I understand where the hype is, which is that now a computer is doing it. Although I looked at the output, it’s not quite the same, but it is, ⁓ there’s elements of kind of summarizing your tax return, saying, hey, you missed this,
you miss this thing on your tax return, something like that. That’s all that’s all going to be here. If you know with this, this product is called Hazel. ⁓ That’s going to that’s going be here with Hazel, but it’s it’s it was coming any either way. ⁓ So I think this is just going to be we’re going to see more and more things come out on this. But at the same time, Altruist, which is this very small startup, very interesting company that’s doing some great stuff. But
The Charles Schwab’s, the Fidelity’s, the Merrill Lynch’s, the Morgan Stanley’s of the world, they’re not dumb. They can build these things just as quickly and probably just as easily. They probably have some legacy compliance issues that they have to deal with, but this is all going to be coming down the pike. And I think most companies will offer it.
Tax Planning and Trade-Offs – Why identifying opportunities is easier than making coordinated decisions.
Marcus Schafer (09:35)
For consumers, think this is a great ⁓ win. We haven’t really seen tax planning go retail yet. So hopefully this is a trend where some of this data and some of this intelligence ⁓ can accelerate. Go back to one of our earlier statements, the more you know, ⁓ it doesn’t really help you all the time. There’s this one of my favorite quotes is, ⁓
of the shores of our knowledge grows, so does the sea of ignorance. And essentially what it means is the more we know, the more we don’t know. Right? So like one of the challenges is you’re thinking about these tax planning situations, but are you really comfortable with some of these trade-offs that you might actually be making and it’s less, hey, you missed this opportunity and more. Here’s the trade-off. Do you want to pay?
extra taxes today and maybe get less taxes in the future. That’s a really, really tough thing because you could try to mathematically model it, but there’s also this, you have to factor in so many other things about your personal life.
Pat Collins (10:49)
When I looked at the output of what this product’s doing, like I said, it was really good to kind of point out things to you like, hey, you missed this credit or you missed this deduction or you might be eligible for this deduction. What I found where the real value for most clients kind of situations are is to know what you should be recommending, being able to model that and then project that out for a client. so everybody’s going to be unique. You can’t just say, we’ll just model this.
Well, you have to know the client circumstances. Are they taking money out this year to buy a new home? Did they plan on retiring in one year or five years from now? What’s their, you know, income situation going to look like in retirement? There’s just so many variables that, ⁓ obviously, yes, if you fed the AI tool, all this data, but the program doesn’t do this at this point in the future, maybe it will. But what you need to be able to do is take all of that, understand the client, be able to model it.
project it and determine what’s going to be the best outcome for the client. So I still think there’s some runway for AI to really get to be mainstream for retail. obviously retail investors, one of the things that’s also a challenge is you have to kind of know what to model and what to put into the AI tool. It’s, I have a bunch of friends that own firms like ours, but also in different industries. And as I talk to them, one of the things that they’re really focused on when they’re hiring people,
as it relates to AI is prompt engineering, which is basically the AI is only going to be as good as what you put into it. And so you have to understand how to prompt it. And so, you know, if you don’t, as an investor know how to prompt your AI tool, it may not create the results that you’re looking for. So that’s just another thing to think about. Again, maybe we’re going to get there. And I think AI is going to be transformative in our, in our industry. But right now you just have to be careful because I don’t.
think you wanted to do all the work for you, have to understand how to prompt it and know what to be putting in and what not to put in. And that’s gonna really impact the output.
Marcus Schafer (12:55)
Yeah, yeah. It’s also a question of are we talking about what can the tools do today or what do we think the tools can do in one, two, three, five, and 10 years? And this is always one of the things we think about as investors, right? A lot of your future expectations are far out into the future. There’s a lot more uncertainty with whether or not those will be realized.
and just understanding the trade-off between it’s not certain that that’s going, that the technology will advance on the timeline that people expected to advance on. Value stocks have outperformed growth stocks, historically speaking. One of the reasons I think is based upon this exact thing, which is we get excited and we set our expectations really high and technology does improve.
every single year, but it doesn’t match the expectations at the pace that we wanted it to. ⁓ So there’s just a little bit missed. I would say one evolution for personal finance that I think has been awesome to see over the past five or 10 years, and there’s some really cool new technology coming out now, is just the ability for individuals and consumers
to have all of their financial data in one kind of secure place. Like one of the things you were talking about is AI is only good. Your advice is only as good as your ability to look at one singular picture with a lot of competing priorities. And there’s a lot of tools that are available now that could just, hey, what is my spending? What’s…
across all my different investment accounts. What are my investments? What are my assets that are tougher to value? How should I think about those? And just not having to do that into a spreadsheet once a year is incredibly life-changing for some people.
“Free” Financial Tools and Incentives3 – If the tool is free, how is it making money?
Pat Collins (15:02)
totally agree is way more people than not when we talk to them, don’t have any idea what they’re spending, don’t have a budget. ⁓ And part of that is just, don’t want to deal with the time it takes to have to go track every single expense that they have. But if you have a tool that is basically behind the scenes, just gathering that data and putting it together in a summarized format to you, there’s a lot of value to that. Honestly, there’s a lot of value for us as advisors to get that data from our clients. ⁓
The one thing I would just say that I’ve found to be a wrinkle of it in this kind of this idea of like a singular spot to see all your data, which is such a goal to have that. And we kind of create some of this stuff with our clients. But one of the challenges is that the companies themselves are getting more more tough, tougher on sharing data. Probably, partly, I think it’s security. That’s what they’ll tell you is.
We don’t want some tool to come in and start pulling data from us because there’s a major cyber risk to that, which is true. I think the other part is a little bit less, ⁓ or, more self-serving, guess I would say, which is fidelity doesn’t want people coming in or another company coming in, taking that data and potentially using that data to sell against fidelity by saying, Hey, your investments are not optimized here or.
you, ⁓ you know, you shouldn’t be in this fund or that fund or whatnot. So that’s one thing that I think might continue that we’re seeing is the kind of the lockdown of security features on companies. So I still think there, you know, a lot of things that are just more data only, I think there’s going to be an opportunity to grab that data, credit card information. ⁓ but we have found that really over the past like three years, we’ve started to see these.
companies start to crack down on data sharing. And I think that’s a trend that’ll continue to given all of the risks that are around cyber and cybersecurity.
Marcus Schafer (17:07)
Yeah, I think it was JP Morgan Chase also instituted a fee to do the for the APIs and they were giving that out. So that’s a way to get that data. So that leads you to this question that you should have any time you’re evaluating a financial product that claims to be free, which is if it’s free and it costs money to run a business, how are you making money off of me?
A lot of these account aggregation tools, these personal finance tools, the way that they make money off of you is a little suspicious. Either they’re going to try and sell you something in the future or ⁓ like advice, or they’re selling you things that are the opposite. And in our mind about what you should, what the tool is designed to do. So is it a budgeting app that sells you a credit card?
That feels like it is the exact opposite of what the app is to do. And one of the things that we are, we’re fee only, which means the only money we make is the money people directly pay us. And I think people should have that mindset towards a lot of these tools as well, which is, if there’s a budgeting app, I want to pay a fee.
that covers their costs, incentivizes them to innovate and continue to deliver something that I value. And I would rather pay money than have somebody go out and sell my data or sell me products I don’t want. This could potentially be a conflict with a lot of the AI tools that are talking about incorporating ads as they think through their monetization strategy, the trillion dollars of CapEx expenditures has to be repaid somehow.
Ads have historically been the way that people have tried to monetize internet-based solutions.
Pat Collins (19:06)
There’s no better place to be able to sell you something when somebody has all of your data. You know, they see that you have $250,000 sitting in cash. Well, I bet you’re going to start seeing some CD ads at some point or investment ads, or they know that you’re this age with this many kids. All the sudden you start seeing life insurance ads, ⁓ ads for buying a house, the mortgage, you know, a mortgage, kind of thing. just be wary. You know, I think it’s a great point.
that these things are not free. What you’re paying with is your data, essentially, and you have to be careful about that. So we talked a little bit about budgeting, and I think it kind of is a nice transition into some of the things we’re seeing in the banking and lending space. New kind of products, new ways of thinking about things.
Banking Innovation and Cash Management4 – Yield, liquidity, and evolving deposit platforms.
What are some of the big ones that you’re seeing kind of in banking and lending as far as innovation and for people to kind of understand what’s going on there?
Marcus Schafer (20:06)
big things is just addressing certain challenges. Historically, the way that banks have made money is they offer convenience. You hold your money at a bank. They don’t really pay too much in interest. Then they take that money and they loan it out. Well, as the world has gotten more competitive, some of the innovations have been things like, hey, there’s these
high yield savings accounts that offer very close to the same levels of convenience. And instead of brick and mortar, they moved to online, saved money, are able to pass back more of that savings back to consumers. So it creates this opportunity to think about how can you get more interest on the cash that you’re holding? So that’s certainly one area that’s been innovative.
And then the second thing is there are these anchor points of insurance where you have to have a certain amount of dollars of insurance, but anything over that might not be insured. And so a lot of these newer solutions out there are helping to solve that because essentially it’s one platform. And then they will deposit your money across underlying banks. So you can get way more insurance than you could at one particular bank.
And since they’re the ones always shopping the rate as rates move or different people offer ⁓ competing interest rates, they’re able to reallocate the funds to maintain a higher level of interest. So I think that’s one thing that’s super exciting for people that might need to hold a lot of cash on hand.
Pat Collins (21:50)
This is a fascinating one. We’ve been using a product like this for many years now. But the idea that you can ⁓ earn very high rates of interest and get FDIC insurance, which is the coverage that the government gives you to encase the bank were to fail. Most people, it’s a very low probability if you’re with ⁓ Bank of America or JP Morgan that they’re ever going to fail. But you can look up every year. There’s banks that fail every year, local banks, small banks.
And if you have your money in one of those, I think you have to kind of take a look and say, especially if you have more than the FDIC limit, which is $250,000, you have to be very careful about ⁓ having all of your money because if that bank fails, you’ve essentially lost that money. So these products that are basically increasing the amount of ⁓ insurance that you can have on your deposits into the millions, for those, a lot of businesses…
high net worth individuals that just hold a lot of cash. These things are really interesting. ⁓ We kind of talk about the banking side, that’s kind of cash management, I guess I’d call it, is kind some of the interesting things happen. Obviously, we don’t have to get into too much there, but on the banking side, just paying bills has gotten to be easier. Whether it be, you could just go online, you no longer have to write a check and send it back into Verizon or AT &T or your power company or whatnot to pay your bill.
just set up online payments, paying each other. If I owe you $100 before I’d either have to write you a check or I have to bring cash in. Now we’ve got Venmo and Zelle and all these other products. So I do think just the exchange of cash, the way of just managing your overall cash management and your bills, bill paying has gotten better. And I would expect that we could just continue. You recently bought a house last ⁓ year or two. ⁓
What was your experience on the lending side of things? Has there been any innovation? Because I only hear kind of nightmare stories from most clients when buying a house of how unpleasant it is to go through the underwriting and the loan process of, you know, of lending and bar and buying a house.
Marcus Schafer (24:01)
Yes, I’ve bought a house. I’m also undergoing my second refinance because rates have dropped. So I get to relive this joyful experience again and again. You know, one of the things you mentioned on kind of talking about, hey, you might need, what’s that likelihood of chase going underwater? It’s pretty low. And then the natural question is, well, why would somebody go with
a riskier bank as opposed to Chase. And we found ourselves really gravitating towards credit unions because we think that they have very similar values to us, right? They’re involved in the local community. They tend to offer lower rates than maybe something that’s going to be securitized out. So typically what happens, you go and you get a mortgage and then they package it up and securitize it and they sell it to somebody else. And then you have to go figure out who are you paying?
And some credit unions are just saying, well, you’re going to pay us, right? And you’re going to establish this relationship and there’s give and takes between each two. ⁓ But I think this is what you’re talking about. Where’s the innovation? It does make me wonder about some of this AI stuff around when do we see the benefits, right? Because the real estate, there was a lot of laws that were passed that were supposed to cap real estate.
transaction fees and I didn’t see any difference when I sold Orbot my house after those laws went out. So I’m kind of waiting. I guess I’m waiting for some of that innovation to come to light.
Pat Collins (25:41)
I think we’ve heard about the innovation happening on the lender side. They’ve been able to become more efficient by really understanding the data behind when someone’s delinquent or their business is struggling that the bank knows very quickly what’s going on there, can step in, but we just haven’t seen it trickle down to the retail side of, does that mean lower rates? Does that mean lower costs associated with lending? I think some of the things that we’re seeing more on our side is some interesting innovation on
alternative lending sources, I would say, than just going to a bank. So lending off of your portfolio, there’s definitely some new products that are coming out that are, been interesting there. If you’re a business and you need to borrow money, we’re seeing a whole kind of explosion of the lending market outside of banks. So kind of third party lenders.
Lending and Liquidity Decisions5 – When borrowing adds flexibility and when it adds risk.
that’s happening. You might be paying more, but there’s different kind of terms and conditions on that. So you see a lot more companies borrowing from non-traditional banks. So I think there is things happening, but for the regular kind of average person, know, we probably haven’t seen, other than the things that we mentioned around cash management, we probably haven’t seen as much on the lending side.
Marcus Schafer (26:59)
That is a pretty fair statement, but yeah, a lot of this stuff is, ⁓ it’s very simple. This is an idea that stands the test of time, which is can you get money from people who have too much to people that need it to grow their business? That’s private credit, you were talking about that helps facilitate that speed of which people with ideas and innovative opportunities can get.
funding for their business. That’s a good thing for us as ⁓ an economy. ⁓ So there’s kind of the banking, the lending side, right? And I think here we think about it more in terms of what’s the opportunity to ⁓ not get leverage, but loans is probably the fair thing. ⁓ What about insurance? What are we seeing in terms of how the insurance market is
evolving.
Pat Collins (27:59)
don’t see much to be honest with you. still see it, if I wanted to go by life insurance, for example, or disability insurance, the same process has been in place, at least since I’ve been in the business for 20 years, is I go to an agent. ⁓ Maybe it’s a direct product, but I still gotta go get a quote, go through underwriting, get medical tests. I’m not sure if there’s a way around that. Maybe there will be innovation in the future that really allows companies
Insurance and Commission Structures – Risk management versus product complexity.
to figure out the underwriting process in a much more streamlined way where you don’t have to go see a doctor and they can kind of do it in some other form. But it’s still a product that’s heavily sold, I would say. It’s not, you know, that’s the old adage is that insurance is never bought, it’s sold. People don’t wake up in the morning and say, to buy life insurance. Usually it’s an agent that you know reaches out and gives you a pitch on why you need to have protection. And a lot of times people will follow that.
So I haven’t seen a ton in like the life and disability ⁓ where you start to see it as some of the products are being, you know, changed in some way. You have products that used to be life insurance now can also offer long-term care benefits and they’ve innovated inside these kind of insurance wrappers. You also see ⁓ at the ultra high net worth, a very high net worth type people, private placement life insurance.
which is the idea that you’re basically creating your own insurance policy. And most people do that for tax reasons, less insurance. ⁓ So there are definitely things happening. ⁓ I’ve seen most of the innovation in my mind in insurance has not been great for consumers. creates a lot of complexity, whether it be in the insurance or the annuity kind of space. And I think that complexity brings cost. And I think in a lot of cases, it’s not sold well to consumers. So
Well, I don’t want to say they’re all bad products, but they’re oftentimes very unique cases for them. But they’re kind of getting jammed to people in all sorts of different circumstances. And I think a lot of times that’s not the case. But we are seeing some innovation on that space. The last thing I’ll just mention on innovation in the insurance space is I do think like banking.
AI is doing things at the vendor level or the of the industry level that is kind of interesting and is innovating and maybe eventually will trickle down to the consumers in the form of lower prices, more efficiency, but things like homeowners insurance. ⁓ If you talk to Allstate or State Farm or Travelers, they have this, they have just.
amazing modeling that they’re doing with data where they know if a category four storm hits on this side of Miami, we have all the data, we understand the roof types on all these, and we can model out to kind of very fairly specific numbers what the damages are going to be extremely quickly. And so that helps with underwriting, that helps with determining if you need reinsurance. So all that stuff’s really interesting happening behind the scenes in insurance. I just,
have not really seen it translate. Anybody that has a homeowners policy in Florida knows it has not translated into lower rates, ⁓ but hopefully at some point the efficiency will help and will kind of trickle down to the masses.
Marcus Schafer (31:25)
Yeah, this is a this kind of feels like a little bit of a cop-out on insurance but I would say the most innovative thing that has happened is People are becoming more aware of a few a few things number one insurance is commission-based and Therefore you should be really Skeptical I’m not saying ignore it but be skeptical of how much people are trying to sell you
We just anecdotally hear that a lot from people that come to us. Hey, ⁓ my investment person was actually at Northwest Mutual and they were kind of an insurance person. And you just hear this terminology. The second innovation is more of these platforms where you can shop your rate because a lot of times what these insurance companies are counting on is this status quo.
bias, they’re going to give you a great rate one time, and then they’re going to hike up the fees on you. So we’re seeing just a little bit more awareness of that as well.
Cryptocurrency as Innovation? – Maybe but not clear if it’s investment innovation.
Pat Collins (32:36)
Not to go way back, but it kind of weaves into a lot of this. I just want to preempt the potential discussion that we’re going to hear from listeners and certain listeners that we didn’t talk about, maybe the biggest innovation happening in finance, which is cryptocurrency and that blockchain and crypto is going to change the world as it relates to
how the reserve currency, how things are purchased in the future, ⁓ that we will no longer have dollars anymore. We’re going to just pay with Bitcoin or some other crypto ⁓ currency. And the reason we haven’t brought it up is we just are not fully, kind of we don’t think it’s been fully vetted yet as a solution to a problem. It is a very great ⁓ tool for speculation.
I mean, it’s an amazing tool if you want to speculate. Other than that, we haven’t seen the use cases yet for crypto changing the banking industry right now. So I still think, you know, if I’m going to go buy a car and, you know, obviously Bitcoin has lost about 50 % of its value over the last few months.
The last thing I want to do if I’m going to buy a car is to have my money sitting in Bitcoin that I’m going to go buy my car with because in any given day, all of a sudden I can lose 10 % of the value and I can’t buy that car anymore. Dollars are just much more stable at this point. I’m not saying that we may get to a point where there’s some sort of cryptocurrency that has the stability of dollars or some other currency, but we haven’t seen it yet. So we have not advocated for clients.
to use crypto as an idea, as a vehicle to as currency basically. If they want to use it for, you some of our clients, we don’t recommend it, but some of our clients do buy Bitcoin and other cryptocurrencies and, you know, from a speculative standpoint, not for any real use case other than that.
Marcus Schafer (34:46)
It’s not clear to me that even when you’re right, you can realize the investment returns of that decision. So if we’re saying, hey, we think this is going to happen to the US currency, and therefore the answer is to do X with cryptocurrency, to me, that might not even be the right way that you would factor in that trade. If you were saying, hey, I think the US dollar is overvalued.
Well, what’s the right way to bet on that trade is probably not to buy something that may or may not be fully correlated to it. It might be to say, well, let’s short the US dollar. And I think that there’s sometimes just, there’s so many arguments. call them the if-then statements that as investors, we just want to be as incredibly careful that we’re not doing too many of those. Cause every time you do one, it’s increasing the odds that
Even if you’re right, you’re going to end up being wrong to some degree. So this is why it’s just really, really tough to see the full term implications. And then you juxtapose that with, what is the best way maybe to hedge against the US dollar being overrouted? Maybe it’s to own a portfolio of globally diversified companies that if the US dollar doesn’t do as well.
there might be some additional benefits to them. So sometimes the, this gets back to why we wanted to call it return on reason because sometimes the easy decision, right, might be the best decision.
Pat Collins (36:31)
Absolutely. And sorry to get us off topic because I knew if we went two episodes talking about innovation and didn’t bring up Bitcoin and crypto, I’m certain we would have gotten some angry mail from our listeners. So hopefully you know where we’re coming from. You may disagree with it, but that’s kind of our that was our stance there. But the last part of personal finance that I think is worth bringing up, because it’s been a kind of
I think a stodgy area of personal finance for a long time, which is state planning. so getting your will, your trust, your power of attorneys, your healthcare directives, all of those things, getting them in place. The reason I say it has historically been stodgy is you’ve had to go to an attorney. ⁓ You meet with them, you talk about it, they draft this document for you and you sign it and probably put it in your safe or your safety deposit box or leave a copy for the attorney and never look at it again.
There is all sorts of innovation happening in this space with regards to technology and getting people at least the base minimum level of estate planning so that they’re not, you know, kind of flying blind, if you will, without, you know, so many people just even very wealthy people we’ve come across have nothing in place. It’s just one of those things where it’s just easy to, to kind of put that, put it off for tomorrow.
and it’s not a pleasant thing to think about or in demise. So there are these different products, technology solutions. You can just type into Google, probably create a will, and you’re gonna find LegalZoom and Trust and Will, and there’s several others that will kind of walk you through. It’s almost like TurboTax for your estate planning. And we’re not saying, just like TurboTax is not the right thing for everybody for their tax return when there’s some complexity.
Estate Planning6 – When digital estate planning works and when complexity requires more.
If you’re just starting out, it may not be a bad solution to go through that. it’s a fraction of the cost. Oftentimes you might be able to call, you know, talk to an attorney if you kind of buy an elevated service. So wanted to bring that up because I do think that’s an interesting topic that more people probably have access to a state plan that maybe have in the past.
Marcus Schafer (38:42)
Yeah, I looked at a stat ⁓ and the average age that people start estate planning is 42 years old, which is after a lot of significant life events where people say like, hey, actually, think I need this service and there is a big disconnect. And I think one of the causes of the disconnect, it’s not pleasant to think about. It’s also not that pleasant to do.
Right? Do you want to go to an attorney’s office and have to schedule time with an attorney that’s paid very well because they draft these incredibly detailed documents that can withstand courts, which are incredibly complex. But it’s just a massive time suck relative to something that you hope you don’t benefit from. And you can go and you can get some of these, some of these
tools that provide a decent amount of coverage for your family and certainty and can help definitely more than they can without. Pat, at what point do you think, and I guess apologies to all the estate planning attorneys, at what point do you think it really makes sense to go and have somebody help you draft documents that are much more customized?
Pat Collins (40:06)
I think it’s probably. It’s a really good question. It’s really hard to say with any specific specificity as far as when to go. But I would say if there’s anything out of the ordinary related to your family situation, second marriage, child with special needs, ⁓ things like that, ⁓ you know, potentially maybe some issues with inheritances from parents or things like that.
I just think there’s a lot of value having an expert to talk through this stuff with you. ⁓ So there’s elements of that. also think there are, unless there’s a clear, I knew who the guardian of this will be, of our child will be here. I do think there’s a lot of value in speaking with an attorney who’s been through countless state administrations, been through all these issues, because when you say, I wanna list my
my brother-in-law is the guardian here, or the trustee or whatnot. And then they ask a few questions and they go, ⁓ you may want to think about that. Let me give you a few reasons why. The document kind of generators that are online are not going to be able to do those things. They’re just not going to have the experience, obviously. You’re just basically putting in data and they’re going to spit it out. So if you think you have anything, and that’s probably a lot of people have family dynamic issues that need to be discussed.
But if you have anything that you think’s out of the ordinary, I would definitely go see an attorney. And then the other one would be as your wealth grows, ⁓ have not just ⁓ the kind of family dynamics, but now you have issues of should it be in trust? Should it not be in trust? Is there going to be taxes due when I pass away, either state or federal? And what should I do to minimize that? ⁓
You get into, are all the assets set up to go to who I want them to go to? And do I have like a flow chart to kind of map this out for me? All those things kind of, I think, probably steer you towards having an estate planning attorney draft the documents. It’s not something you have to do every year. ⁓ It’s something you probably do once and then maybe every five years or so you’re going back to review it unless your circumstances change a lot. I would also say if you,
own property in different states. It’d be another time to probably be talking to a state planning attorney. So you may hear all that and say, there any circumstances where I would go online? it seems that, and so like I said, I think if you’re just starting out, have very basic kind of situ, you have a very, very basic situation. You don’t have a lot of assets. These are very, very good tools. You just get something in place. Something is probably better than nothing. had friends of ours who,
passed away unexpectedly with minor children recently and did not have had drafted the estate documents, but did not sign them. And so they had everything. They just didn’t sign them or they didn’t hear that or they didn’t have a witness. can’t recall. you know, dying, it’s called intestate in the state of Maryland is most likely not what you want to have, where you want your assets to go. You probably would not have said, oh,
If I passed away without a will, it’s basically, it’s gonna go to the same people I would have had anyways. In Maryland, it’s kind of strange. Half your assets go to your surviving spouse, the other half go to your kids. That may not be what you want. You may want it all go to your spouse and let them take care of the kids. there’s a lot of reasons why just getting something done is gonna be really important. ⁓ And again, as your complexity grows a bit, go talk to an attorney.
Marcus Schafer (43:51)
Hmm, man, that’s, that’s terrible. The, one of the other things you were talking about with family governance was, that I think it’s just really, really difficult, but a of the survey trends, there’s a cultural shift in America and which is people are relying less on family to help administer these plans. And you see this in the younger generations. I don’t know if people have witnessed
parents trying to go and deal with this, know, the parents, ⁓ I’m thinking my parents have had to deal with it with their parents. And then they say, I don’t want Marcus to have to go through the mess of dealing with probate and all this stuff. And I want somebody there to guide this process. I don’t want it to go to the burden to fall on my kids. So there might be some of that, that I think is also coming around.
that necessitates this, which is you really just don’t want the burden to fall on somebody else and how to minimize that burden. Sometimes it can be easy steps, sometimes more complicated steps, but you start with the easy steps and then you work your way further.
Pat Collins (45:04)
I want to call this innovation. has been happening for a while, I think it was just the kind of increase in wealth we found from across the board with a lot of clients. One of the things that we’re starting to hear more of is just the question, how do I kind of to your point, how do I talk to my kids about this? Do I just put them in the will and kind of call it a day? there’s this kind of juxtaposition of I
don’t want to tell my kids that they’re going to inherit all this money because on one hand, I don’t want them to be enabled and not go get it, you know, earn a living and really fulfill kind of a job and career and whatnot. But on the other side of it, I kind of wanted them to enjoy what they’re going to get at some point. But I also think they probably should know about it so it doesn’t just spread on them and they do something stupid with the money, that there should be some education that goes along. So there’s more and more people that are kind of
actually specializing in doing this, which is kind of family governance, figuring out how to approach this with the kids. And it tends to happen in the wealthier families. But I think it’s an interesting conversation to be having with your advisor, because I think advisors have been through this before. You’re a state planning attorney. And if you have a lot of wealth, obviously you can bring some people that just specialize in this in. But this is kind of a…
interesting thing that probably these conversations weren’t happening 50 years ago and now it seems like they are starting to and involving the next generation in some of these things.
Marcus Schafer (46:38)
Yeah, all sorts of, you just think inheritance decisions, right? Like how to make sure kids are still productive members of society. So can you write that into documents, whether that’s different triggers around education or workforce? How do you help protect your kids from difficult conversations they might have with future spouses like prenups? Or is there a way to structure assets? So
your kids if you want to leave a legacy to them. ⁓ You’re not inadvertently leaving a legacy to somebody else that may or may not be long-term. So there’s all these ⁓ different strategies. And that’s, think, what’s helpful to go and talk to some of these experts is they’ve seen a bunch of different strategies and they could just tell you, and walk through your situations where people have found this helpful. ⁓
Pat Collins (47:33)
Yeah,
it’s great. So, yeah, I think we’ve covered a bunch of ground with regards to different areas of personal finance, whether it be tax, banking, lending, estate planning, ⁓ know, insurance, risk management. So how would you wrap all this up? What would you tell the average person who’s listening to this about innovation, how they should think about it?
Marcus Schafer (47:57)
I would say that this innovation is a lot like innovation that we’ve seen from investments, which is we saw indexing become a really big move. pushed costs down. It applied a lot of different pressure. We’re seeing that happen across other aspects of your financial life. And now it’s on us to ⁓ keep the trend moving. One of the ironic things about indexing
⁓ The average fee hit an all-time low and it’s bounced back up a little bit, right? There’s some things that you also want to make sure you’re not unlearning. So how do we take all the lessons that we’ve learned and have got the innovation and just make sure that’s still working for us?
Coordination and Long-Term Outcomes – Innovation expands tools. Coordination still determines results.
Pat Collins (48:46)
Yeah, the only other thing I would add, I love that, I think is that ⁓ not all innovation is good innovation necessarily for you as the consumer. ⁓ Innovation is happening a lot of times at the product level. A lot of things we’ve talked about have been products. ⁓ Not all products are good for every single person. There is use cases for each one of them. So even though there is innovation happening, I think it’s important as a consumer, as a buyer of financial products.
is to either yourself or you with an advisor who’s unbiased to be able to kind of put it all through the lens of your personal circumstances and decide is this innovation something that’s gonna help me and something I should add or something that I should avoid. And in all cases, probably, know, things apply. It shouldn’t be across the board, ⁓ new thing came out, we should go do it.
it always should be back to kind of your overall circumstances, your financial plan, what you’re trying to accomplish. So just keep that in mind as you’re listening to all this stuff, you might’ve heard some things and you thought, that sounds cool. Just make sure you’re making the decision eyes wide open with all the information that you have and make sure it’s relevant to you.
Marcus Schafer (49:55)
Yeah, make sure you’re getting the best return on reason, which brings us back. ⁓ I just want to say thanks for everybody. I feel like I just got down how to say green stream because it’s so similar to green spring, but it’s streaming whatever it was cute and it didn’t work. And now we’re going to throw a new name in there. So I just want to say thank you.
Pat Collins (50:17)
Absolutely. Thanks to all the listeners. Thanks for our team behind the scenes. We don’t really talk about them much, but we have a whole marketing team behind the scenes that’s been very involved in the production of this. So Erin McCabe, Lori Van’t Zelfden, thank you guys for all the work that you do.
Marcus Schafer (50:32)
Thanks.
Sources:
1Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving (Thaler & Benartzi, 2004)
2Wealth Management Stocks Fall on New AI Fears (WSJ, 2026)
3https://www.monarch.com/partner/greenspring
4https://www.flourish.com/clients/cash
5Box Spreads Explained (Kitces, 2026)
6Trust and Will and 2025 Estate Planning Report
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