I just watched a new show on Netflix - a documentary about personal finance called Get Smart With Money - in which four hapless US punters are taken under the wing of a money guru.
My expectations weren’t high, but I was pleasantly surprised. Here are a few takeaways…
The show features four financial coaches such as Mr. Money Mustache who was a thirtysomething retiree who now writes about how we can all lead a ‘frugal yet Badass life of leisure’, and Ro$$ Mac who bills himself as The First Wall Street Rapper.
It matches them with families struggling to make sense of money. To be clear though - some of the problems involved an NFL football player who was paid $1.6m and lady who spends $700pm on takeout food.
My first thought is that money and emotion are two sides of the same coin. For some, spending money is about emotion and a quick dopamine hit. The Amazon ‘Buy now’ button is too easy and just feels good to click. And click. And click.
It’s also evident that the stress caused by money issues can completely paralyse people. They’ve never had formal education about money, have no-one to turn to and generally feel overwhelmed. This is equally true for the wealthy as for the less affluent.
Secondly: high interest credit card debt is a cancer. It creates a never-ending spiral of overwhelm and worry and is so difficult to climb out of. There will be people that you know who have credit card debt, and are scared and confused right now. This is only going to escalate as the economic situation worsens.
Thirdly: even experienced financial coaches use jargon that the average person doesn’t understand. At one point one coach says to the client: “Invest in the S&P.” The client replies: “Uh, what’s the Essen what?. What is that?”
Fourthly: Every coach recommended low-cost index funds. There’s a whole generation of people who wouldn’t ever consider buying actively traded investment funds. This mirrors my own experience with younger clients. The future’s looking grim for active fund managers.
Fifth: Use language that your client understands and relates to in order to make a point about investing. In talking to the NFL player about investing in stocks, the coach says: “When you own it, you’re in the game." He replies: “Right!! now I get it – I’m in the game!”
Some advice was plain weird. A budding artist was told to find people walking their dog in the park, sketch their dog and offer to walk it for money. Hardly scalable! She would be better off creating and selling her artwork online.
Finally, automation is a superpower and makes investing seems like magic. Take this example: “I put $1,000 in and it’s now more than $1,000 but I didn’t have to do anything!” Genius when put like that.
In summary then, the real value in any financial adviser relationship is in coaching, education and mentoring. People just want to have someone that they can trust and who can help them navigate the complexities of money, emotions and life.
The best quote for me was: “The ultimate goal of money is never having to think about money.” And that’s why I’d give this a solid 3 stars. Fans of Martin Lewis won’t learn much, but there’ll be some useful pointers for newbies.