Table of Contents

• Introduction
• Interactions with Clients
• Maintaining Client Relationships
• Client Demographics
• Why People Don’t Work with Advisors
• Staying Up to Date with Industry Changes
• Crypto and Unforeseen Risks
• Blockfi and FTX Case
• Short-Term Savings Goal Recommendations
• Conclusion

Introduction

Madison: Hello, everyone, and welcome to the third episode of Not Just Numbers, Honest Conversations with a Financial Advisor and Lawyer. I’m Madison Demora, and I am here with Mike Garry. Mike is the founder and CEO of Yardley Wealth Management, a firm he founded in 2006. We are located right outside of Philadelphia in Yardley, Pennsylvania, which is in Bucks County. Mike, in the previous episode, we spoke a little bit about your firm, and I was wondering if we could speak a little more so listeners can understand a bit more about us.

Mike: Of course. It’s your firm, too, Maddie. I think it’s a great idea.

Interactions with Clients

Madison: Awesome. So how do your interactions with your clients work? How often do you meet with them? Can they reach out to you?

Mike: Sure. Well, in the beginning, there’s a lot of interaction, right. There’s a lot of calls and emails. There will be at least two, three, four appointments in the first couple of months till everything gets squared away. That’s where we do the initial planning, and we work with the process of getting accounts set up and transferred, make sure everything’s good. We’ll do a check in meeting, like, maybe 45 days after everything’s set up. Make sure everybody’s getting their statements. They can log in, everything’s going the way they want it. And then we think it really depends on the client, what the client wants and what the client situation is. And so if you are getting ready to retire or sell your business or something, we might need to speak a little bit more often. If there’s rolling along and no changes, we should check in at least annually, maybe semi annually, just to make sure everything is going okay. Make sure we review what your goals and situation is. Really make sure that we know who you are. Because once people are clients for a while, we have pretty good relationships with them. We know a lot about their families, their interests, their goals. And so that when they call at any time, which they can, it’s not like, oh, who is this client number 34651? It’s like, no, we know them. It’s John and Mary. And we’ve known them for a long time. And, yeah, they’re part of our extended family. And, yes, so we ask for those. And I joke, right? Like, some people we call or meet quarterly because they really need that. And other people we can’t subpoena to get them in here on annual meetings. Right. And so it really is up to the client in a situation. And what I’d say is for the client to figure out what’s comfortable for them if they want to hear more from us, let us know. We’ll make sure that happens. If they don’t really like me and they don’t want to talk to me, like, we can handle that, too. Really, it’s whatever the client needs. We could take care of that and we could get to the level that they want. We have all kinds of different contact with our different clients, and hopefully we could find out what’s right for you, too.

Maintaining Client Relationships

Madison: So that leads me into my next question. So what are the most important aspects of maintaining a good relationship with a client?

Mike: Yeah, I think it’s open dialogue and extended conversations. So, you know, a lot of meetings, hopefully in person. And for people who aren’t local, we could use video or even old school phone calls. Really, the important thing is to make sure we really know what’s going on in their lives that impacts their financial planning and their investments so that we can make sure that, you know, their planning investments accurately reflect what they need. And so, yeah, I think the big part is that ongoing conversations, you know, if something’s bothering you as a client, don’t be afraid to say it. You know, if you’re not sure how something is, don’t be afraid to ask. You know, we’ve had all kinds of different questions, comments, concerns, and, you know, like, a lot of times people think, oh, this doesn’t make any sense. I don’t want to ask this, I’ll feel dumb. And that’s really, nothing could be further from the truth. You know, most people don’t spend a lot of time on their finances, and that’s why they hire us. So we don’t expect that you’re going to know everything. And in the beginning, we’re not going to expect that, you know, anything, you know, we’ll figure out how much, you know, over time and adjust our conversations that way. It’s a good question.

Client Demographics

Madison: Yeah. So there’s, there’s no dumb questions.

Mike: No dumb questions.

Madison: There you go. So what kind of people do you normally work with?

Mike: So that’s a good question, too. We get that asked a lot because most people have never worked with an advisor when they hire us. You know, most people in the country don’t work with an advisor. And so it’s kind of a normal thing. You know, beyond the fact that most people who work with us are unusually smart and good looking and successful, I don’t know if they share a lot of other common traits. I guess they tend to be above average in age and income and net worth. So people who are retired or thinking about retiring are usually people that reach out to us. And so that’s where most of our clients are. Some of them have been wildly successful. Others have had good jobs and saved and gotten past whatever difficulties and obstacles, and they’re still plugging along. I think one of the things that they have in common is that they want to take charge of their retirement. They want to make sure that they’re not, like, hoping things will go well, they actually want to take control of it and plan, make sure that things go well. So that whether retirement’s next year or ten or 20 years from now, when the time comes, they’ll be prepared because they’ve thought about it, planned about it, and hired someone good to take care of it. So I think that’s the answer for that.

Why People Don’t Work with Advisors

Madison: So why do you think people don’t work with financial advisors?

Mike: A couple of reasons. Many people think that they can’t afford it, and a lot of people don’t trust financial advisors. And, you know, there’s a lot to be said for that. There’s a lot of financial advisors out there who are really, really good salespeople and not necessarily good financial advisors. And I think a lot of people get burned by financial advisors. So I think there’s reasons why people don’t work with advisors. We hear stories from people all the time. They come in and tell us what happened. I had a conversation earlier this week with a couple who had had a great interaction with an advisor when they were in their twenties, and the advisor told them to do the right thing. And it did not include, like, an ongoing relationship with that advisor. And in my opinion, it was the right thing. And I was, I don’t know, I was surprised and happy, and I’m glad that it happened. And, like, they’re in, you know, they’re in their fifties now, and they’re in great shape, and a lot of it has to do with that interaction with the advisor in the twenties who did the right thing. For every story like that, I hear ten stories where they sold them an annuity product and they were 25 year olds that had come into some money, and the annuity product would have been absolutely wrong, but that annuity product would have gotten that advisor a 6% commission. And that’s why usually those stories don’t end that well. I think those are the main reasons. Mistrust and not thinking they have enough money. You know, our company is Yardley Wealth Management. Right. And so that that name is basically, this is the area we’re in, and this is the industry that we’re in. And it makes sense for SEO and for the website and all that. And it’s also kind of plain, but, you know, it’s also loaded, like, well, what does wealth management mean? Most people that are mildly successful or even pretty successful don’t think of themselves as wealthy, and we don’t cater to just wealthy people. Yeah, there’s a lot, lot that goes into it, Maddie, and a lot of the country, quite frankly, just doesn’t have any money, so they wouldn’t have the need for service. Now there are people, though, even if they don’t have a lot of money, who could stand to use some financial advice. And there are advisors out there who will work for an hourly fee or a project fee or somebody has something very specific they want to ask. It doesn’t mean they’re necessarily clients for us, but there are advisors now that they could talk to, which is a great thing.

Staying Up to Date with Industry Changes

Madison: That is a great thing. So, steering a little away from this, how do you stay up to date on the changes in the financial industry?

Mike: Funny you should ask. Remember we had that conversation just yesterday because I had to do some CLE for my law license. Well, we had the conversation Wednesday. I had to take some CLE classes yesterday. So as you know, I get four daily newspapers and I generally go through them every morning with a cup of tea and the puppies, and my wife. So I’m a lawyer in Pennsylvania and New Jersey, I have a continuing ed requirement for each of those. PA is every year. New Jerseys every other year. They overlap. So I don’t have to take like multiples of those. As a CFP, I need to take hours every year or every other year. As a NAPFA member, I have to take hours every other year. And as a credit investment fiduciary, I have to take hours every year. Altogether, it winds up being several weeks worth of continuing education courses every year. And so that’s a good part of it. And I also subscribed to a couple services. There’s a guy in our industry, Bob Veres, who reviews the six main industry magazines and a couple of main educational websites. And then he will write a little synopsis. And so I don’t need to comb the Internet trying to find out what’s important. Now that I’m pretty experienced, I know from the synopsis whether it’s something that I know and it’s okay and I don’t need to explore further or if it’s an idea that I’m like, oh, you know what, I need a refresher, or it’s a totally new idea, and I need to look into that. And so, yes, it takes a lot of time. Like this long winded answer. It takes a lot of time, but it’s good. And fortunately, I am intellectually curious. And so, you know, I like learning about this industry, and I like learning about different things that help people and, and make me be a better advisor. So It’s easy, you know, it’s time consuming, but it’s stuff that I love.

Crypto and Unforeseen Risks

Madison: Yeah. So are we ready to get into today’s topic for discussion?

Mike: I think we are.

Madison: So what would you like to talk about today?

Mike: So I’d like to talk about crypto and unforeseen risks. Let’s talk about risk, Maddie.

Madison: All right, so what do you mean unforeseen? Everyone knows how risky crypto is, right?

Mike: Everybody knows how risky crypto is now, this time last year, people couldn’t get enough of it. We went to a conference in Miami last February, and every topic, every presentation was like, somehow brought crypto into it. And I was like, wait, isn’t this an ETF conference? It’s not a crypto conference. So, yeah, crypto hasn’t had a great year, so now people see how risky that is, and I don’t know whether it will come back or if a couple coins will stay in the mainstream. I don’t know. But there’s a story that was kind of related to crypto in the paper, and I wanted to talk about that.

Blockfi and FTX Case

Madison: All right, so that’s about crypto?

Mike: Yeah. So there’s an article about a guy who took money from, he sold his house, and he needed to put money somewhere safe because they were going to build another house. So they sold their house, put their money in an account with Blockfi, and it said it was going to pay 6.5% interest, and then they were going to save it for a short amount of time. They moved in with their in laws, and they were going to start to build their house. And then we found out how Blockfi was tied up with FTX, and now there’s a problem with that. And so what he thought was going to be a safe investment, it’s not actually insured, and right now, things don’t look too good.

Madison: So why do you think people are so into crypto nowadays? Like what caused the spark?

Mike: Yeah. So if you had bought bitcoin ten years ago, it would be worth thousands of times how much. And so anytime any kind of asset goes up, a lot people want to go in. Unfortunately, it’s always after the fact. Right? So, like, oh, bitcoin’s going up so much, let’s go in now. Or this real estate has gotten so expensive around here, must be a time to buy. And when you’re not the first one in and you’re just piling in later, it adds to the risk. The risk about the crypto related thing. This guy took that $600,000. It was not invested in crypto. If he had put $600,000 into crypto, thinking, hey, maybe this will go up 1000 times or ten times or five times. That’s understandable. But he thought he was getting like a safe investment, right? He thought, you know, the people at Blockfi told him it was safe. He knew it wasn’t insured. But, you know, people buy uninsured stuff all the time and it works most of the time, but it’s not looking good for him. And it’s a cautionary tale. Right. So here’s the thing. So say you take $600,000 and you put it in crypto and you know, based on like the fact that it went down 70% last year, you’re making a big bet. But there’s a big potential payoff, right? If like it goes up ten times, which we’ve seen it happen in the last couple of years, it could be huge. Here’s the difference. This guy took that risk and all his reward, maybe it was like ten or $20,000, right? So if he was promised 6.5% at the time he did that. He could have gotten a CD for 2.5%. Right? So you’re looking at six months at 4% on $600,000. Thats $12,000. So he took that giant risk and probably lost that money or most of that money for an extra $12,000. That’s 2%. That risk does not make any sense to take. And my guess is he had no idea how risky that was, but I wish that he understood that risk. It’s sad. It’s a sad story.

Short-Term Savings Goal Recommendations

Madison: Absolutely. Blockfi was closely associated with FTX, and FTX went under. So did Blockfi. So, was he able to get his money back?

Mike: Well, they didn’t say in the story, but it seemed, you know, pretty unlikely at this point. So, like, look, I would say, like, he clearly didn’t appreciate the risk he was taking for so little reward. So I think it’s important to separate, like your savings and your investing, right? If you need money for something in the short term and it has to be at a certain amount, you need to put that in like a CD or a government bond that is liquid at the time that you want. And yes, your returns from that are going to be small. Youre not going to double your money in a CD or a government bond, but you need to make sure that that money is there when you need it because that guy now cant buy that house. And I hope he gets along well with his in laws because he might be living there for a long time. Thats such a sad story. So this, you know, back when I was very new in this industry, I had stopped being a lawyer full time, but I was working at that big bank that has a bull as its symbol. And my manager went through this story and he told me that at the time, he bought like these hospital bonds that were double a rated. And he did that to get like an extra 10th of a percent more than the aaa rated bonds that were available in the marketplace that were insured. So if a bond is insured, it means that if the issuer defaults, then there’s insurance that will pay it. So its a great extra layer of protection. And to me, its worth it. And so this guy sold these bonds to a lot of his clients that ultimately went bankrupt. And so for a couple of months they were trading at 100 and then all of a sudden they were trading at 60 and then for a couple of months and then they were out. So people lost their money in these bonds. And he did that for an extra 10th of a percent. So he took that giant amount of risk for a trivial amount of extra return. That is a big, big, big mistake in my book. So we invest in stocks and bonds or we invest in funds that have stocks and bonds. We take risks in the stock funds because stocks return a lot more than bonds over time. And that’s where we’re hoping to make money in the stock market. The bond funds that we buy, yes, they go up and down because interest rates change and they go up and down. But we buy investment grade bond funds. So they’re going to be funds that have hundreds or thousands of bonds in them that are all investment grade. So if one or two of them go belly up, it’s going to have a minimal or even an immaterial impact on your overall return, because we don’t like taking risk in the bond market. It doesn’t make sense. Like, that’s the safe part of your portfolio. If you get a couple extra percent return, but then maybe the bond doesn’t pay back, that is not worth the extra risk. Your stock can go up that extra couple percent in one afternoon or an hour. So I think that the big thing here about risk, Maddie, is know what you’re getting into, know what risks you’re taking, and make sure that they are appropriate for what you’re trying to do. Does that make sense?

Conclusion

Madison: Absolutely.

Mike: Am I just going like blah, blah, blah, blah? Does any of that get through?

Madison: Absolutely. It totally makes sense. So basically, separate your savings and your investments and understand the risks you’re taking with your money and know where your money’s going.

Mike: So you are a young lady. You’re saving, hopefully buy a house one day. So where would you put your house savings in crypto or an insured bank account or a cutting edge stock?

Madison: Let me think. Crypto? No, I’m kidding. So definitely probably something insured, maybe like some type of insured cd, insured bond. Am I on the right track?

Mike: You are on the right track, yeah. So at your bank, you can have up to $250,000 in insurance on a savings account. And then you could have different cds from different issuers. Or if you have, for people who have a lot of money and they need it to be insured. Just earlier this week for a client or last week we bought treasury bonds, and so they are going to pay them back. Maybe the value will be hit a little bit by inflation, but, you know, you buy a million dollars in that treasury note and that matures on June 1, you’re going to get that million dollars back. That’s going to happen. You put it in an uninsured account and it’ll probably get back. And then the question is, like, it’s probably good enough in that circumstance, and I’d say, no, that’s where I’m going to stand.

Madison: Okay. So going back to the guy trying to reach his savings goal in the short term, what would you recommend people do if they have a short term savings goal?

Mike: Yep. So in that instance where he had like six month goal and he had $600,000, what I think the best thing probably, if he didn’t have a specific date in mind, you can get a high yield insured savings account online. And he was a younger guy, so I don’t think the online would be a hard thing. You could go to NerdWallet or Bankrate. They’ll list like the top ten rates. In their view, they’ll all be insured. And you could open an account with a few clicks in a few minutes. And you could transfer money electronically. And since it’s a $250,000 limit on the insurance, he’d have to open up three of them, right? So maybe if his regular checking, whether his regular bank has like a high yield account, he could put $200,000, $250,000 in that. And then the other $350K, he would just split up among two other banks. Right. Cause you don’t wanna go. You like the insurance, but it’s only insured up to that certain amount, so you don’t wanna have more than that in the account. Again, it’s really highly unlikely that something would go, especially in a bank that has insured product. But why take the risk? Take two more minutes with a few more clicks and open up another account. That’s a good segue into our next episode because we’re going to talk about all the money people are leaving on the table by keeping money in their regular banks.

Madison: Oh, that’s exciting, though. I’m excited for the next episode. That should be good.

Mike: It’s free money, Maddie. Free money.

Madison: Yeah. So you don’t want to leave your money just sitting in your bank account, checking out. Yeah, we’ll get into that next episode.

Mike: We will get into that. This is great, Maddie. Thank you.

Madison: Absolutely. Thank you. So this was awesome. Thank you, Mike, for the useful information, and I hope this really reaches the right people so we can help people stay on track and be aware of what they should be doing with their money, or at least suggest it. So, do you have anything else you wanted to cover in today’s episode?

Mike: Not today.

Madison: All right, sounds good. So, for more information on Yardley Wealth Management, you could visit our website at yardleywealth.net. You can also follow us on socials at Yardley Wealth Management. This podcast has been produced by Madison Demora and Mike Garry with technical and artistic help from Poe Productions.