How to avoid the hidden costs of investing with Cashing Out authors Julien and Kiersten Saunders

 

Episode Description:

My guests today are Julien and Kiersten Saunders. Their new book is called Cashing Out: Win the Wealth Game by Walking Away. When I first met them Julien had recently left his job as a chef to build what has become this multimedia platform- but Kiersten was still in her 9-5. Fast forward Now their Rich and Regular blog is also a podcast, and they have a fantastic YouTube series Money on the Table. 

The book Cashing Out has a LOT of money tips for financial grownups but the reason I wanted to hone in on the not-so-obvious costs of investing was because the mistakes that they each share in the book are things I 100 percent could have done myself - and as you listen you may see yourself in their stories as well. On the other side of the interview I’m going to share more about WHY- but first I want you to hear from them.

And by the way at the top of our interview I also get some very real candor about what it’s like to work from home, together, on a family business- and as parents. 

A little sneak peek into Julien and Kiersten Saunders’s episode!

Timestamps & Main Points:

  • 01:16 - Introduction

  • 02:18 - Introducing Julien and Kiersten Saunders

  • 04:57 - Working together to make business and finance decisions.

  • 07:03 - Julien shares a story of how he became aware of the hidden costs of investing

  • 12:24 - Kiersten shares a story of how she became aware of the hidden costs of investing

  • 14:18 - How much is an educated guess worth?

  • 16:04 - Kiersten’s favorite money-saving tip

  • 16:53 - Julien’s favorite money-saving tip


Julien Saunder’s Bio:

His professional career has spanned over twenty years from preparing fine dining meals, training waitstaff, project management, distribution, and brand marketing. And when he wasn't doing that, he was building a humble real estate investment portfolio. Today, he is the co-author of Cashing Out: Win the Wealth Game by Walking Away. He also manages a blog with Kiersten and together they have created the rich & REGULAR brand.

Kiersten Saunder’s Bio:

Kiersten spent her 20s climbing the corporate ladder and working hard to earn good money. It wasn’t until Julien told her about the Financial Independence movement that everything changed. At 35, she was able to quit her full-time job and makes money in a different way now. Today, she is the co-author of Cashing Out: Win the Wealth Game by Walking Away. She also manages a blog with Julien and together they have created the rich & REGULAR brand.

 
 

Follow Julien and Kiersten Saunders!

Follow Bobbi!

Did you enjoy the show? We would love your support!

Leave a review on Apple Podcasts or wherever you listen to podcasts. We love reading what our listeners think of the show!

  1. Subscribe to the podcast, so you never miss an episode.

  2. Subscribe to the newsletter.

  3. Share the podcast with your family, friends, and co-workers.

Full Transcript:


Bobbi Rebell:

Big thanks to everyone who has written to me with frankly a lot of empathy for all of the computer issues that I used to have. Yes, past tense, used to have. And also, yes, to answer your question, CleanMyMac really did work to clean out the junk on my computer.

So, if you're frustrated with a slow-moving computer, there's a good chance CleanMyMac can help you too. If you want to check it out and also get 10% off and also support this podcast while you're at it, please go to bobbirebell.com/cleanmymac, and I promise, you're going to love it. It will make you feel so much less stressed when you turn on that computer because it's going to work so much better. That is bobbirebell.com/cleanmymac. And be in touch, let me know how it goes. You deserve to lower the stress of data overload. It was totally worth it. I hope you like it, too.

Julien Saunders:

He was very honest. He was like, "Yeah, I was conflicted too, because I completely understand why you would want to do that. I agree with you, but I didn't have that available. And so, it wasn't an apology because he didn't do anything wrong, but he certainly understood where I was coming from and it was one of the best financial decisions we ever made.

Bobbi Rebell:

You're listening to Money Tips for Financial Grownups, with me, certified financial planner, Bobbi Rebell, author of Launching Financial Grownups, because you know what? Grownup life is really hard, but together we got this.

Putting a trusted friend or family member in charge of your investing actually sounds like a simple, accessible way to get your act together and really be a financial grownup when it comes to investing, because you're getting it done. So is signing up for your company's 401(k) plan and choosing investments that your employer picked out. You would assume they're going to offer ones that are in your best interest, just like that friend or family member who is managing your money would always put you first, right? Not so fast, and not so good for getting the best bottom line returns. So, we're going to talk about that and hear some stories that will shock you.

My guests today are Julien and Kiersten Saunders. Their new book is called Cashing Out: Win the Wealth Game by Walking Away. Now, when I first met them, Julien had just recently left his job as a chef to build what has become a multimedia platform, generally under the name rich & REGULAR. Kiersten was still in her nine to five. She has now left that because there's so much going on. Now their rich & REGULAR blog is also a podcast. They have a fantastic YouTube series called Money on the Table. And of course, the book, Cashing Out. And by the way, more to come, but we'll get to that.

So, the book Cashing Out has a lot of money tips for Financial Grownups. I encourage everyone to pick up a copy. One thing I wanted to hone in on in the book and really focus on for the purposes of this podcast and have them expand on, things you're not going to read in the book, are the not so obvious costs of investing. And the reason is, as I read through Cashing Out, I couldn't believe the mistakes that they made, because they were things that trust me, we all could and many of us have done, because they're not really mistakes, they're just not knowing what to look for, right? Because nobody is going to tell you, "Don't trust the family friend." And in fact, by the way, a little spoiler alert, the family friend wasn't necessarily doing anything wrong. In fact ... Well, I'm just going to leave it there. We'll call that the teaser, okay?

On the other side of the interview, I'm going to share more about why these stories hit me so hard. I'll share a little bit of my own experiences, but first I want you to hear from them. And by the way, at the top of the interview, I also get some very real candor about what it's like to work from home together, on a family business, and as parents. And one key bit of advice that they gave, that I think will help all of us, that even if it's not all the time, that sometimes have to work from home with family members and those members do include children. Here are Julien and Kiersten Saunders. Julien and Kiersten Saunders, you are financial grownups. Welcome to the podcast.

Kiersten Saunders:

Thank you for having us. We're excited to be here.

Bobbi Rebell:

Congratulations, you guys are officially authors and bestsellers. You are the brains behind Cashing Out: Win the Wealth Game by Walking Away. You're also obviously the creators of the rich & REGULAR brand, which is a blog and a podcast, and you also have a YouTube series that's very successful. Your business is the two of you together. I mean, how has that impacted your finances when you have to make business decisions?

Kiersten Saunders:

We've learned over the years through trial and error, and we actually started with projects that weren't monetizable to begin with, to learn each other's work together style. So, we started with home renovations and planning for a baby, and arranging the marriage, not arranging the marriage, but planning the marriage and then planning the honeymoon.

So, there were all these smaller projects that happened before we decided to create this family-owned business. But I think my advice would be just to approach every project, every conflict, with curiosity and not so much judgment. It's very easy to tie in the conflict you experience and business decisions to be this indictment on your relationship or your love for each other, when really it's a separate thing.

Julien Saunders:

In the book, we talk about how much larger homes have gotten over the years and while it's still not enough because people are using external storage. Well, the reality is, we bought a larger home with this dynamic in mind. So, she works upstairs, I work downstairs, we meet in the middle for lunch, right? So, we technically-

Kiersten Saunders:

And dinner.

Julien Saunders:

Yeah, dinner, but we technically don't see each other. So, it's not as if we are in the same room, on top of each other, every single day. So, space, without question, helps.

Bobbi Rebell:

Let's get into Cashing Out. So, one area of the book that I really was drawn to was your reminder ... And a lot of the book, by the way, I should say, is things that we should know but we don't really know, is your reminder that investing is not just about the returns that you see on the surface. There's a lot more that goes into it, a lot of hidden costs that are right in front of you, but we aren't necessarily aware of in a cognizant way.

So, I'd love for each of you to share a story in the book and I want you to give us a quick version of it, of your experience, how you became aware of these hidden costs of investing, and then we'll talk about what people can do about it. So, Julien, you had a family friend, a trusted person, who is a good person, we want to point out, who was managing your money and helping you with investments as you were coming up as a young adult, becoming a financial grownup. Tell us about that relationship and the revelation that changed it.

Julien Saunders:

Yeah, I mean, he is a big brother, he's still a dear friend, family friend of mine, his wife, we know each other very well. But as I started to learn more about investing and I became a little bit more empowered, we would have these, it almost felt like a bi-annual meeting or something like that, where I'd go to his office, he'd have all his fancy screens. And in previous years, I would be totally intimidated. He would talk circles around me and I just had no idea. But I accepted that challenge and said, "You know what? The next year or the next time I go in there, I want to know what I'm talking about." And I did my research and I was drawn to index fund investing.

And so when I went into the next meeting, I offered my recommendations and said, "Actually, here's what I'm thinking. It's my money, and so here's what I would like to do with at least half of it, so that we can see what happens, right? Let's see what the return looks like." And it was very awkward because in that moment I realized that what I had also learned was really true and it was staring me in the face, which was that as a financial advisor, as someone who earns his income through commissions, it really was not in his interest or in his company's interests to make those kinds of decisions. In fact, they didn't even offer those types of funds, and that was very eyeopening for me.And so, I had come to a really interesting point where I had to decide if I believe the evidence that it put before me, which is the importance of keeping your costs low and the impact that that would have on our investment portfolio. That was what I understood to be true, but then it was also the nature of this relationship. And obviously, part of the reason why I invested with him is because I knew him, he was a family friend. I went to his wedding, he was at my wedding. And so there was a relationship there, but it was also at conflict with our financial interests and our strategy.

And so, we decided to self-manage. We decided to step away from that. And years later, we finally had a conversation about it and he was very honest. He was like, "Yeah, I was conflicted too, because I completely understand why you would want to do that. I agree with you, but I didn't have that available." And so, it wasn't an apology, because he didn't do anything wrong, but he certainly understood where I was coming from and it was one of the best financial decisions we ever made.

Bobbi Rebell:

Let me ask you though, during that time, did you ever ask him ... And maybe you were coming up because as a family friend it could be very awkward. Did you ever ask him, "Wait, how do you get paid?" Was that ever part of the conversation and were you paying him anything? Was he making money from you and from commissions? What awareness did you have at the time? Because you also realized he was a financial advisor, not a fiduciary. Can you talk a little bit about that?

Julien Saunders:

Yeah, so we never got into that conversation, but as someone-

Bobbi Rebell:

I'm sorry, you never asked him how he was paid?

Julien Saunders:

Yeah.

Bobbi Rebell:

Okay.

Julien Saunders:

So, we never got into the conversation about how he earned money, and that to me still felt a little awkward. I was safe with my assumptions, because again, part of what I'd learned was that he was paid through commission and he had a base salary and all of those things. I also started to learn that in certain cases, if he was able to offload certain funds into my portfolio or any of his other clients, he might get a premium.

And so, the combination of what I was experiencing plus where I was in my personal career, and as someone who was getting really heavily involved with real estate investing, and so I know what it feels like to cut a 10,000 or a $20,000 check with someone, you start paying attention to the cost of things. And what was odd to me was that I'm in this relationship with a financial advisor who has a lot of control and influence over my financial destiny, and I have, I mean, practically zero insight into how he gets paid. It's not like I get an itemized report like I get from my management company for real estate, or anything else in life.

And so, it just felt odd to me and dare I say, suspicious, but also legal. And the whole thing just felt very odd to me, which is what led me to learning about the differences between a financial advisor and a fiduciary. And so, he was right, and again, in line with following the standards that he is supposed to follow, which is the suitability standard. He made financial recommendations that were suitable. I wanted to make more money, these are a set of options that presumably can grow, and yes, you will have more money, but that doesn't mean that that's the only way or the best way, or certainly, the most cost efficient way. And that's what I was particularly interested in, because I started to learn the impact that costs have on our long-term investments.

So, a fiduciary is different in the sense that they follow a fiduciary standard, meaning they are legally required to make recommendations that are in your best interest. And I think that goes back to the sense of conflict that my financial advisor felt and also what I felt at the time. And so, I felt very comfortable that if I were to use a financial advisor, I 100% would have a preference for using one who followed what I felt to be a better or a stronger standard.

Bobbi Rebell:

Right. And Kiersten, you had a similar ending with a very different experience, where you also realized after the fact, but never too late, that there were costs you weren't necessarily as aware of as you should be. Even though they weren't proactively hidden from you, you weren't necessarily presented those costs in a way that you took action immediately. It took a while to come around.

Kiersten Saunders:

Yeah. I, to put this in context, was a late bloomer. I worked for 10 years before I contributed to a 401(k). And so, when I finally did, after paying down all of this debt and being intentional about learning more about investing and financial literacy, when I finally did, I logged into my company's 401(k), and this was over a decade ago, so I don't know if they're still set up like this, but I was met with all of these prompts and calculators about how I wanted to invest. And they were all lifestyle questions, they weren't really mathematical. It was like, "Do you want to go aggressive? What kind of retirement do you want? How much do you want to spend when you're no longer working?"

And so of course, I put in the biggest, most aspirational numbers ever. It's like, "Yeah, I want a yacht, get me on the aggressive path." But what I didn't know was that I was opting into a bunch of actively managed mutual funds that came with fees, which we now refer to as the four letter F word, but they were these fees that I did not know to look for. I didn't know what real returns were. I was just looking at the promised returns of 20%, 18%, or the average returns historically. And that's what I was sold on.

I never did any additional research, until as Julien and I were talking and as he was showing me all of these boring, candidly, documentaries on retirement and index funds, I realized, "Oh, okay, that makes sense to me. That must be what I'm invested in." And when I went to go look, I was like, "Actually, that's not what I'm invested in at all. I'm paying four to 10 times as much as what I could be paying if I just opted into this simpler form." And so yeah, I changed it. Thankfully, I knew how, and it was hard to convince myself that I knew how, but I did. And then, I've been an index fund investor ever since.

Bobbi Rebell:

One of the favorite lines that I read in your book was, "How much is an educated guess worth?" Tell us about that line. Worth to you, I should say.

Julien Saunders:

Yeah. Yeah. Yeah. Well, we wrote that line with that relationship dynamic in mind. And so going back to our financial advisor, the reality is, fees aside, right? We learned and understood how these hidden fees, which I think of as the high fructose corn syrup that's sort of in our 401(k)s, but we were very clear on the fee part.

What also made it worse or even more despicable, if you will, was that they got that commission, they got paid regardless of the outcome. It didn't really matter if they did well or if the market did well or underperformed. And when we started doing some research, we found that the vast majority of actively managed funds with the primary objective of beating the market, actually failed to do so. And so, the notion that I would be willing to part ways with arguably a third of my earnings over a 30 or 40 year period, and it would still fail to achieve its stated objective, versus having the option to simply invest using index funds, have really clear understanding of how much it's going to cost me, which is literally pennies compared to actively managed funds. It just felt like a no-brainer to me.

Bobbi Rebell:

I can't let you go before I ask you for what is really my favorite part of the book, at the end, you have an index of these incredible, quick, and I want to say easy to understand. Nothing's really easy, let's be honest, when it comes to money, but easy savings tips everyone can do. Kiersten, you're up first.

Kiersten Saunders:

All right. My favorite savings tip is to make sure that you don't forget about income. Focus as much on growing your income as you are on savings. And typically, when I say income, people hear wages or salary, so they think, "Okay, I got to get a second job, or I got to get promoted at this job. I just got to get more out of my job." But what I'm saying is income, which is a more broad and endless opportunity.

And regardless of what you do for a living, many of us get additional income throughout the year, whether it's a birthday gift, or a tax refund, or a rebate from a purchase that you made, that counts as income. So, apply the same aggressive savings goals, apply the same discipline towards that income, towards that money, as you would your paycheck.

Bobbi Rebell:

I love that. All right, Julien?

Julien Saunders:

Yeah. My favorite tip would have to be courage. Just the importance of courage, and especially the importance of having the courage to pay yourself first. I think as entrepreneurs, that's especially important, because you're always wondering when the next deal or big thing is going to come, but you have to remember to pay yourself and you have to trust that you've done all the right things and that more business is coming in.

But even for W2 employees, I think it's important, and even now, especially after learning that the IRS has increased 401(k) contributions, and you owe it to yourself to invest a little bit more and to trust that you'll figure out other ways ... If it leads to a little less net income, you'll figure out a way to make those adjustments.

Bobbi Rebell:

I know that your book Cashing Out is available everywhere. What else can people be doing to be in touch with you? Your YouTube channel? Plug away guys.

Kiersten Saunders:

Yeah, so you can find us at richandregular.com. And then we are also active on all of the social medias. Instagram, I almost said TikTok. Instagram, Twitter, YouTube, all under rich & REGULAR. Oh, and Facebook.

Bobbi Rebell:

And Facebook, everything. Thank you so much. And everyone, check out Cashing Out.

Julien Saunders:

Thank you, Bobbi.

Kiersten Saunders:

Thank you.

Bobbi Rebell:

It is holiday time, my friends, and finding just the right gift can be hard and expensive. Consider giving the gift of getting better with money. My latest book, Launching Financial Grownups, makes a great present for parents of almost adults, grandparents of almost adults, and frankly, any adult that cares about the young people in their life. And also, it's a simple and easy gift for clients. If you're looking for something a little more creative, check out the merch at grownupgear.com. Use the code Grownup for 15% off your first purchase, and thank you for supporting this podcast.

After I hit stop record on our interview, my mind was racing, and I wonder if you had the same thoughts. So, for example, with Julien, the dear friend who was his financial advisor, so interesting, he was able to maintain that friendship because the man was honest. He never hid anything. He just didn't tell Julien until it was asked, that he could only sell products that were in the best interest of his firm and were also suitable for Julien. He wasn't a fiduciary. The truth is, if Julien's goal was simply to make money, even putting money in something as simple as a money market account would've been suitable.

So, my money tip on that, besides making sure to ask how your advisor gets paid and to really prioritize working with a fiduciary, is to be specific about your goals. Yes, you can think that when it comes to money, more is more, true, but there are levels of more and risks involved.

As for Kiersten, this is a big heads up by the way, for parents whose almost adult children are early in their careers and hopefully not waiting a decade to choose investments for a 401(k). For the most part, human resources departments, at best, are going to be pointing new employees to where they can sign up for a 401(k) plan, and by the way, other things like health insurance. We can't expect them to, number one, nudge those new employees to actually put money into it. Kiersten waited a very precious decade.

And two, the HR department is not probably giving any insights as to the costs of different funds or investing options that the new employees are choosing in their 401(k). In my case, for example, my oldest, Ashley, opened her 401(k), and in this case, she almost put her money in a bond fund, just because of a misleading name. It's really confusing. So, be vigilant and ideally get a second pair of eyes on your investing choices, just to make sure they are what you want them to be. We're all going to make mistakes, but let's at least purposefully choose the investments we want.

You listen to this on audio, but we are experimenting with video, and I'm starting to put out clips on social media. So please, I need your feedback, guys. Follow me. Give me some thoughts on how it's going, what you think is working, what maybe is not so good. On Instagram, I'm @bobbirebell1, that's the number 1. On TikTok, just Bobbi Rebell. Same thing on Twitter, @bobbirebell. I am also making some changes to my newsletter, and I want to make it even more value-add for Financial Grownups. So, if you are not already signed up, we'll have a link in the show notes and also on the bobbirebell.com website. I share articles and videos for Financial Grownups, upcoming appearances, new merchandise from Grownup Gear, and highlights from this podcast. I would love to hear from you about how I can give you the best financial grownup money tips and really add value to your lives. On that note, big thanks to Julien and Kiersten Saunders for helping us all be Financial Grownups.

Money Tips for Financial Grownups is a production of BRK Media LLC. Editing and production by Steve Stewart. Guest coordination, content creation, social media support, and show notes by Ashley Wall. You can find the podcast show notes, which include links to resources mentioned in the show, as well as show transcripts, by going to my website, bobbirebell.com. You can also find an incredible library of hundreds of previous episodes to help you on your journey as a Financial Grownup.

The podcast and tons of complimentary resources associated with the podcast is brought to you for free, but I need to have your support in return. Here's how you can do that. First, connect with me on social media @bobbirebell1 one on Instagram, and Bobbi Rebell on both Twitter and on Clubhouse, where you can join my Money Tips for Grownups Club. Second, share this podcast on social media and tag me so I can thank you. You can also leave a review on Apple Podcasts. Reading each one means the world to me, and you know what? It really motivates others to subscribe.

You can also support our merch shop, grownupgear.com, by picking up fun gifts for your grownup friends and treating yourself as well. And most of all, help your friends on their journey to being Financial Grownups by encouraging them to subscribe to the podcast. Together, we got this. Thank you for your time and for the kind words so many of you send my way. See you next time. And thank you for supporting Money Tips for Financial Grownups.

 

 
Bobbi Rebell Kaufman