“Plans are nothing; planning is everything.” - Dwight D. Eisenhower ​

Big news in financial planning this week! Michael Kitces, industry thought leader and the guy who probably reads more about this stuff than anyone, just released a well-researched piece that backs up something I’ve always suspected (despite never actually conducting a scientific study myself). Turns out, the debate between fee-only advisors versus those charging assets under management (AUM) fees isn’t as black-and-white as some "gurus" would have you believe. In fact, they really rip into Ramit Sethi's trashing of AUM advisors. Kitces’ research shows there’s no clear winner here – it all depends on what you need. Here's the link if you wish to nerd out with me on it.

If you’re someone who wants an advisor to “walk life with you” (thanks for the line, Roger Whitney!), an AUM advisor might actually be the better fit. But like with any goal, the key is to start with the end in mind. You wouldn’t hire the world’s best swimming coach to teach you to be a top chef, right?

That’s why we’re diving into strategy in this edition of The 201. Why do we hire advisors? To help us set a solid direction and stay on course. Marketing and business genius Seth Godin recently joined us on the podcast to share his own thoughts on this – that all the work you’re doing should actually include strategy and focus.

Ready to dig into your goals? Let’s get started. - joe

The 411 On Strategies (or lack thereof):

• 39: Percentage of Americans who would struggle to cover an unexpected $1,000 expense.
• 22: Percentage more effective the "debt avalache" method of debt downpayment than the "debt snowball" method, if you don't include behavior.
• 8.7: Average annual return of a 60/40 stock/bond portfolio since 1926.
• 95: Percentage of times that the 4% Rule has successfully provided 30 years of sustainable retirement income.

Latest Stacking Benjamins Podcast Episodes:

Seth Godin’s Blueprint for Financial and Life Strategy (SB1590) ​Listen here →​

Has Anyone Ever Gone Broke From Bad Tax Planning? (SB1589) ​Listen here →​

Seth Godin’s Blueprint for Financial and Life Strategy

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Seth Godin, a best-selling author and marketing expert, recently joined us in mom's basement! He's spent decades helping individuals and businesses stand out in a noisy world. In this interview, you'll learn how to embrace challenges, set yourself apart from competitors, and leverage the power of tension to create value—essential strategies for achieving success in both your finances and entrepreneurial journey. His latest book, This Is Strategy: Make Better Plans, is a must-read for anyone serious about creating the right strategies in their finances and life.

It starts with mindset

• Focus on creating tension and embracing challenges: Seth highlights that growth happens when you face and overcome obstacles. This is often the most memorable part of life's adventure, as he learned on an early European trip. “What I remember about that trip were the apparent hardships, not everything being perfect," he says, illustrating how the right mindset turns challenges into memorable, rewarding experiences. Learn how to adopt a growth mindset and embrace challenges as opportunities for improvement by grabbing your copy of Carol Dweck's book, Mindset: The New Psychology of Success (link).
• Shift your thinking from fear to possibility: Instead of letting fear dictate your actions, Seth encourages forming groups with others to openly share fears and goals. He believes collaboration and peer accountability help you change your mindset, saying, “Surprisingly quickly, you’ll notice you’re shifting your strategy." Learn about the 7 skills necessary to overcome fear by reading this piece from Psychology Today (link).

What's your strategy?

So many people float through life without a sense of where they're going or why they do what they do.

• Begin with the end in mind. Seth tells us to start with the question, "What do I want?" and build our strategy around that. Read this piece from FranklinCovey (link) to learn how to develop the habit of personal vision.
• Whether you're in business or purchasing, focus on value, not price. Seth Godin explains that when it comes to money strategy, it's crucial to avoid competing on price unless you can be the absolute lowest-cost provider, like Walmart. Also, if you're looking for low cost, realize the experience will often suffer. Instead, he suggests offering more value for a higher price, or looking for more value: "You’ll pay a lot, but you get more than you pay for." If you're in business, learn how to get customers to focus on the value you/your business provides, not just the price, by reading this piece from Inc. (link).
• Don't think you need strategy? Here's a few Seth says you may need:
  • A strategy to get into the college of your choice. Check out this piece from US News & World Report to learn 9 strategies to get into college (link).
  • ...to find a new job. Learn how to develop a strategic plan for your job search by reading this piece from Indeed (link).
  • ...to increase sales for your new product. Learn 14 simple but effective strategies to increase sales by reading this piece from Forbes (link).
  • ...to decide where to live. Learn about the importance of having a strategy when deciding where to live by reading this piece (link).
  • ...to get your neighbors to come to the local block party. Call Neighbor Doug. He has all the answers.
  • ...to get married without spending more than you should. Learn 10 ways to avoid going over budget on your wedding by reading this piece (link).
  • ...to have enough savings to retire. Learn about 8 strategies to save for retirement by reading this piece from Motley Fool (link).

Compass over map: a better way to reach your destination

• A compass provides direction, not detailed steps: Seth highlights the importance of having a clear sense of direction—your "why" or purpose—over needing every step mapped out. The compass is a metaphor for knowing your ultimate goal, even if the path to get there is uncertain or winding. Dive into the topic of strategic adaptability by reading this piece from Indeed (link).
• Focus on the journey, not shortcuts: Seth emphasizes that relying on a compass means embracing the journey, with all its challenges and unknowns, rather than looking for quick fixes or shortcuts. It’s about understanding that the process, including the hardships, is what ultimately makes success more rewarding. Learn how to think of achievement as a journey, not an end goal by reading this piece from Stanford Business School (link).

Seth on strategy in your finances

Seth says you need to define your money strategy to have a clear compass on where you want to go and the values you follow to get there.

• Simple strategy. Seth says one strategy can be super simple: "Manage money so I can sleep at night." Learn how to live below your means without feeling deprived by reading this piece from NerdWallet (link).
• More complex strategy. If you really want to nerd out about money topics, Seth says that you can make it a hobby and get involved in it. Learn 5 ways to manage your personal finances by reading this piece from Harvard Business Review (link).

The three components of strategy

Seth says three things make up a strategy:

• Time. "Money has value over time," says Seth. Learn how to define your investing time horizon by reading this piece from Forbes (link).
• Empathy. Seth says that your strategy can't be dependent on others obeying you. Learn how to use strategic thinking to create the life you want by reading this piece from Harvard Business Review (link).
• Games. Think of situations where there are a limited number of players, rules, and outcomes as a game, Seth says. Most importantly, learn from your mistakes and improve. Learn how to make mistakes and learn from them by reading this piece from MasterClass (link).

Are YOU ready to create the right strategy for your life and your money?

If you're ready to set the right strategies in your life so you can achieve the life and finances you want, grab your copy of Seth Godin's hit book, This Is Strategy: Make Better Plans.

Mom's takeaway

Listen, kiddo, I’ve always said you’re smarter than you look – and I know you had the best upbringing money didn't buy. Now, it’s up to you to determine the right strategies to get where you want to go. Remember, dreaming big is nice, but getting off the couch and actually doing something? That’s how you make it happen. Mom knows best!

Our Headline:

In today's headline, we dive into the surprising findings of a new study on 401(k) loans and withdrawals, challenging long-held beliefs about their impact on retirement savings. Plus, the study also talks about "leakage," which is a pretty funny term if you think about it. So, what does "leakage" have to do with money? Let's explore the potential risks of SECURE 2.0’s new emergency withdrawal provision, which could have unintended long-term consequences for savers.

401(k) Loans Don't Impact Contributions as Expected: Contrary to popular belief, new research from Harvard, Yale, and Vanguard shows that participants who take 401(k) loans or hardship withdrawals typically continue contributing to their retirement accounts at stable rates.

• Get your budget right. Rather than thinking about your retirement savings as money you can use if you need it, focus on getting your spending in line with your earnings. Learn how to create the right budget in 5 steps by reading this piece from CNBC (link).
• Don't tap your retirement savings to buy a house. Rather than taking money out of your retirement savings plan to afford to make the down payment on a new home, focus on building savings for that purpose. Learn how to save for a house by reading this step-by-step guide from NerdWallet (link).

(Speaking of purchasing a home...also don't send your downpayment to a hacker! It's easier than you may think. Listen to one of the biggest horror stories we've ever been told on the podcast: 2 Banks. 1 Hacker. $50,000 dollars.

Emergency Withdrawal Risks Under SECURE 2.0: A new provision under SECURE 2.0 allows participants to take a $1,000 emergency withdrawal annually without penalties. While this may provide short-term relief, experts worry about long-term "leakage," where participants might make this withdrawal repeatedly, potentially harming their retirement savings over time.

• Avoid the need to take a 401(k) loan for an emergency. Learn how to build an adequate emergency fund by reading this guide from the Consumer Financial Protection Bureau (link).
• Use insurance for protection. You can decrease the risk to your financial plan by carrying adequate insurance coverage according to your needs. Learn about eight different types of insurance policies and coverage you may need by reading this piece from Forbes (link).

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Thanks for checking out this edition of The 201! It's an honor to have Seth Godin visit us and talk strategy. Make sure you apply some of the takeaways to your own life so you can create the right strategy to achieve the goals that are important to you.

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