Peter Lazaroff is the Chief Investment Office at a $4 billion wealth management firm, a contributing author in Forbes and the WSJ, and recently released his first book Making Money Simple.

“In school, you are given a lesson then a test. In life, you are given a test and then you learn a lesson – and money lessons can be expensive.”

– Peter Lazaroff

This conversation, including a discussion of the biology of fear in investors, is super timely. Peter also talks about the science of happiness from spending and giving – in experiences, memories, and relationships. As we all take this COVID-19 lockdown opportunity to reflect and reprioritize, listen to this one and check in with yourself on the spending and earning and lifestyle needs that will best serve you now and after your peak earning years.

“As someone who helps people make smart money decisions, it’s not all about tax minimization and wealth maximization. Some of it should be – how do I make sure your life is better as a result of working with me?

– Peter Lazaroff

PETER LAZAROFF

Peter Lazaroff is a Chartered Financial Analyst and Certified Financial Planner and works as the Co-Chief Investment Officer at Plancorp, which manages over $4 billion of client assets as of December 31, 2018. He’s also the Co-Chief Investment Officer of a digital advisor called BrightPlan that emphasizes financial planning and is the first digital advisor to be a certified fiduciary by the Centre For Fiduciary Excellence (CEFEX).

SHOW HIGHLIGHTS

  • The most important insurance many of us are missing
  • Money as a tool for control over life, goals, objectives
  • How to best spend our money for happiness
  • Irrationality in home purchases 
  • How to stay calm and what to do in a volatile market
  • Biology of fear as the enemy of investing
  • Investing in a coach and advisor

RESOURCES MENTIONED IN THIS EPISODE

IMPORTANT DISCLOSURE: PLEASE READ BEFORE PROCEEDING

This article may contain product/service recommendations based on my own trial, error, and what I’ve found works well for me. Again, these are my own opinions from my personal experience. Your mileage will vary. For your convenience, I’ve provided links – mostly to Amazon because I’m a fan of the shopping and shipping ease. These are affiliate links, meaning that if you choose to make a purchase then I will earn a small commission – at no additional cost to you. Please spend your hard-earned dollars wisely and only consider those products that are right for you. If you choose to purchase any of these items, I’d be honored if you do so through the affiliate link as the commissions will help to further the mission here at Man of Mastery. For more about affiliate links please see this page on our website.

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EPISODE TRANSCRIPT

Peter [00:00:00] In our human instinct, it's to run. No. If we're cavemen and we hear a rustle in the bushes and we stand there to calculate the probability of it being a lion, we got eaten. Those species of humans did not survive. We just ran and an investing. It's that same tendency that while from an evolutionary standpoint was super helpful is the exact opposite of what you want to be doing with your investment.

Michael [00:00:38] Hey, what's up guys? Welcome back to the man of mastery podcast where we are putting purpose and passion into action pursuing self-mastery in service to others. This is episode 47 with fund manager Peter Lazaroff. Look guys, it's been definitely a crazy, crazy week at crazy world for a couple of weeks now, but there is so much to be thankful and grateful for.

Michael [00:01:03] I think this is a great time to really stop and reflect on all that we do have the time we could spend with family. Friends uses time to reconnect to others, reconnect to our lives and our routines and what really matters. And in that spirit, I want to say again, as always, I really appreciate you guys. I appreciate you being here listening and spending some time with me and with my guests each week.

Michael [00:01:28] Today's episode, as I mentioned, 47 so you'll find show notes and Peter Lazaroff contact information website is financial quiz. We'll talk about Instagram, Facebook, all that good stuff@manofmastery.com slash zero 47 now, another thing I want to talk about before we jump in is something new.

Michael [00:01:49] I'm launching a course, a training course and interactive set of of uh, sessions called performance kickstart, performance, kickstart. This thing is kicking off here later in, in April and it is, uh, seven weeks, seven modules, seven sets of topics, tools, techniques around the best practices really in, in performance, in human development and really elite level life.

Michael [00:02:19] Performance. In fact, it's going to be probably eight weeks. I'm going to throw in an eighth week to really make sure that people head off with their own personalized plan doctrine, whatever you want to call it and carry that momentum and that consistency forward. So it's going to be live sessions, you'll have assignments, you'll have challenges and I think uh, will really walk away from that with with some huge momentum, some huge differences and some things to carry forward.

Michael [00:02:48] If you want to see more about that, you can, you can go to the website man of mastery.com/kickstart so just type in man of mastery.com/kickstart and more about what that contains and what that's all about. Like I said, April, April 24th is a Friday. We're going to kick it off, do weekly sessions and I think I'm going to take max of maybe eight guys into this.

Michael [00:03:11] I'm just looking for a small group of high quality motivated individuals who are really looking to, to step up their game, make use of the time that we probably have on our hands right now during the lockdown and just do whatever they can do to tweak or kickstart or take it to the next level on how they're showing up every day for themselves, for their families, for the tribes, for the people around them.

Michael [00:03:36] So this thing is, it's, it's kicking off at a ridiculously deep discount to what I think I'll charge down the road. But, uh, I'm doing that for a couple of reasons. One, we've all got some time on our hands. I think this is a great way to, to serve each other too. I'm looking for the kind of guys that are willing to pioneer this thing along with me.

Michael [00:03:57] All right. And uh, and three, it's really not just about the money. It's the effort you've got to put into it as well. And you get in, you get out what you put in. So it's not just about the financial cost of it is investing in yourself with effort. With time with focus and really taking things seriously. Two to pay yourself back in the end.

Michael [00:04:18] All right. All right now. Great. So today, Peter Lazaroff as I mentioned, we're going to talk about his book, but his book really in context to what he does as a, as a fund manager and how timely, right with the craziness and the volatility in the financial markets. We recorded this thing in early March, so this is, this was an interview we did probably the week before coronavirus covid 19 became declared a pandemic.

Michael [00:04:47] So even then things were really starting to ramp up, uh, but had not really hit the, the level of craziness of, of hitting the markets that we've seen just over the last couple of weeks. But nonetheless, we do get into talking about fear and our, our biological response to fear and how it is really tough to reconcile that with the best things that we should do as an investor.

Michael [00:05:11] And as we look at markets that are swinging around like they are right now, we also talk about, about our kids, about financial educations, about the, the fact that kids are not going to get educated about money in high school or college. So Peter talks to us about how we should talk to our kids about money, what they should see in us as we, how we treat money and how we spend money and the kind of leadership that we should exemplify around money and finances.

Michael [00:05:41] And then, uh, another topic that we touched on, which I thought was super interesting is not only about how Peter thinks about saving and accumulating and investing and growing money for later, like retirement, but we talk about the best ways to spend money. And you know, with this podcast we talk about things like fulfillment and happiness.

Michael [00:06:01] Peter gets into some of the ways, and these are scientifically studied around spending money to maximize happiness. All right, so great gas, great conversation. Let's jump right in with Peter. Lazaroff

Michael [00:06:17] all right. Hey, welcome guys. Today I have the pleasure of a guest named Peter Lazaroff. Peter knew from a young age that he had a future in investing. And today he is the chief investment officer at plan core with over 4 billion under management. So one of the things that makes Peter really unique is his ability to simplify complex issues and explain them to just about anybody.

Michael [00:06:37] So Peter is here today to talk to us in particular about his newest book making money simple and overall has experience in the financial industry. So Peter, welcome. Hey, thanks for having me. Yeah, my pleasure. I really like your, your sort of mission and vision as I understand it, that you have a passion to really help people learn practical tips to grow wealth.

Michael [00:06:58] Uh, you say life is complex, but finances shouldn't be. And in this podcast, you know, we're really all about growth. So this is a, this is a great topic, you know, finance, career, wealth management. So really looking forward to talking about this. Yeah, let's do it. Can you, uh, making money. Simple let's start with your, your book. Give us a high level overview of what that's about.

Peter [00:07:19] Well, when I was approached about writing a book, there were a handful of topics to tackle and I've never written a book before. And admittedly I wasn't sure that I could write one. I write all the time or right for wall street journal, I write for Forbes, I have a personal blog, but each articles anywhere from 600 to a thousand words, and this was being proposed to being 50 to 60,000 words and it's just just a different animal.

Peter [00:07:41] And I was worried about saying yes and then not being able to finish. And so I had a couple of different concepts, uh, one of which was investment heavy and one of which was like, Hey, how do I become financially successful? I've certainly experienced some career success myself and I felt like truthfully it would be easier to write a book about how I turned my career success into financial success and how I guide people who've obviously made a good living.

Peter [00:08:09] And how do you set yourself up to make all that pay off in your bank account? And so for me, making money simple is more of a introductory level sort of goal setting piece in the first third of the book. The second third of the book really I think speaks to anybody in terms of investment of theory and practice. Like why would you invest this way and what is investing all about and how would you apply it in a reasonable manner.

Peter [00:08:33] And that last third of a section is kind of getting into some of those more complex issues that you don't face routinely. So we only buy so many houses in our lives or have decided to have children. So many different times. Our lives are decided to get married so many times or estate planning, insurance and they're really big decisions and like a lot of things in life when you can make a decision a number

Michael [00:08:56] of times and get feedback, you get better over time with these. If you mess it up, you mess it up and that's pretty permanent. So, um, you know, high level, I, I, that's how I think of the book divided into those three sections. And I think if you have had a lot of career success and you've done a good job of accumulating money, perhaps the first section, which is more about how to build systems for putting away money, not necessarily where to put it, but just to make sure you don't spend it all.

Michael [00:09:20] That's really the first third is about the others kind of tackle the more complex topics. Nice. Yeah, I got a pre-read on it and I really appreciate that. And, and when I first went through it, I sort of sought that thought, the same, you know, does the first third really apply to me? And then, you know, for, for somebody who's had some career success and maybe already got past figuring out those systems to routinely make investments and squirrel it away, um, at the same time, you know, one, we can always learn, you know, there's always something to learn and no matter how new or experienced we are, I'm sure there's something to take away.

Michael [00:09:51] But the other thing is, is, um, if you think about transitioning maybe from a wealth building phase into more of a retirement, however active, um, you know, work-wise that might be or not, I think a lot of people struggle with, you know, what's the number and how big does the number need to be so that I'm certain that I ride it out, I leave something, whatever legacy I might want to have.

Michael [00:10:13] And you've got all these uncertainties with health care costs and things like that. So it's almost like managing lifestyle creep and costs and things like that in the later years of our lives are not unlike the early years where we still need the same discipline.

Peter [00:10:28] Well, and I think if you're 65, you're retirement's basically set. So as long as you have a decade, you can still make a very noticeable, noticeable impact on what retirement looks like for you. And of course, retirement as a whole is changing. It's not just a two decade long vacation for some people. It's really getting to that point where it's financial freedom, the ability to walk away from whatever you're doing because you're tired of doing it or doing something you're passionate about, even though it doesn't come with the same dollars as it used to or different time commitments.

Peter [00:11:01] It's really just using money as a tool to have control over your life and your goals and objectives. And I think one of the things that I tried to accomplish in the book, and it is really resonates in all of my writing and all the content that I produce over time, is there's a lot of science in there. There was a lot of research, a lot of data.

Peter [00:11:21] This is not a cookie cutter type deal. It is, you know, a process. Um, I would say then it's not magic. Your financial success isn't magic. It's engineering. It's truly creating something intentionally with evidence that acknowledges both some of our human behavioral flaws, but then also acknowledges financial theory.

Peter [00:11:41] Because financial theory is really hard to ignore in the long run. It worked so well. But in the short term, which feels like an eternity in the moment, you know, you sort of let financial theories slip by slip to the wayside.

Michael [00:11:55] Yeah. Well, so I mean I think a lot of the people that are my peer group or that I speak to are in that or nearing that career shift, uh, or, or phase of life, season of life shift where you start to have more of the feeling of, of freedom, flexibility to choose whatever. That might be. Kind of switch gears if you will, to, to what's next in the adventure. But at the same time you've still got a responsibility to, to manage through that.

Michael [00:12:19] Um, so it sounds like it, it does speak to that as well. Does it, does it also cover, I think we've talked a little bit offline about risk management and you did mention those costly mistakes, uh, these speak to kind of what those might be and managing downside risk of those big mistakes in later years.

Peter [00:12:36] Sure. So let's imagine you've accumulated a nice amount of savings. You got a good job or maybe you just sold a business or maybe you have a business that if you wanted to sell it would bring in a bunch of money. You got to cover the basics so you have to protect yourself and everybody needs insurance. But the type of insurance that a lot of people end up with is overly expensive and not as efficient at maximizing your wealth.

Peter [00:12:59] As it could be, we're generating as much flexibility as you could have and so understanding the ins and outs of those basic insurance coverages, disability insurance, which is my least favorite bill I pay every year. However, statistically speaking I'm far more likely to become disabled during my working career than I am to die.

Peter [00:13:19] And yet everybody has life insurance. Disability insurance is, it is the most frustrating check I write every year. Well I guess I do it electronically but you know what I mean. It's, it's really frustrating cause it's expensive. The kind of doing the ins and outs there again to make you understand what sort of protections you need. Uh, estate planning is a really important thing, particularly for those who are successful.

Peter [00:13:40] They tend to like to control things. Successful people are good delegators but they do like to have a say. And so a state planning really takes care of a lot of those control issues that we all suffer from. I suffer from them myself as a business owner, but kind of going through those core pieces of the protection aspect I think are really overlooked.

Peter [00:13:59] And often in this type of book ignored issue, you know this most financial books they tell you to invest in, they tell you to save. I think the big differences here as I focus on some of those more technical aspects of investing, some of them bigger one-time decisions that are more complex and that's a reflection of sort of the work that my firm does. And then finally I actually do spend a little bit of time on how you should spend your money because there is a lot of science behind what will give you the greatest happiness with your spending.

Peter [00:14:27] And I think that that's a really important piece. If we're only focusing on the saving side, we have missed at least half of the equation.

Michael [00:14:36] That's interesting. So say more about that. What, what sort of spending have you seen leads to happiness and fulfillment? Uh, I think a lot of times there's this, especially in our consumerism economy and culture, it's, it's like, you know, you get that endorphin rush of hitting by getting, you know, that purchase and then

Peter [00:14:52] it's gone. Yeah. What are the, what are the retailers have so much science built into their buying process to make, to trigger all the right things. But let me give you a few examples. I think the one that is most pertinent and important, particularly as you're planning out your financial future, is understanding how much happier and experience will make you over a material purchase.

Peter [00:15:12] And a material purchase could be a car or a piece of jewelry or shoes or a house. Oh my gosh, there's so much relation. There's so much research on houses, so I'll try not to go too far down that tangent, but there's a lot of research that shows that even something like an elaborate date night, we'll bring you more lasting happiness than the new iPhone. Because when you think about it, if we're sitting in, you know, in our bed and were age 19, we're thinking back on our lives, we're gonna think about the memories and memories are usually created by relationships.

Peter [00:15:43] Uh, and yeah, experiences tend to do better with that. And so I remember for example, during the last recession going on a ski trip with friends during president's day weekend, 2009. So the market bottomed in March, 2009. I was out in February, 2009 and my wife knew I didn't want to go and spend the money because I just wanted to invest it. And she said, you are really gonna regret that.

Peter [00:16:04] And you know what? This group of friends has only gotten together twice since that trip. And it was unbelievably fun. I have no idea what it costs anymore, but it's one of the most memorable experiences I've ever had. An I will truly always remember that. And there are lots of things tied there. So experiential purchases as you're prioritizing where to spend your money, know that the science is heavy in st Albert and greater happiness.

Peter [00:16:27] Again, I could spend an hour talking about that other quick bullet items. Purchases that create time, um, tend to bring happiness so that can be something like a cleaning service or mowing the lawn. Um, the key is that you have to use that time on something that makes you happy. So if you just use it to work more, uh, which definitely happens to a lot of as not necessarily going to pay off.

Peter [00:16:47] Um, even though this isn't quite spending, but obviously helping others is a way where the science is heavy, you know, being charitable, giving back. That is something where there is an overwhelming amount of research that shows, uh, you know, it's a, it's not a consumption, but as a way of parting ways with your money that that does make you happy. And so those are the three I focus the most on.

Peter [00:17:09] And with stuff with your house, I mean you're going to get way more happiness out of a shorter commute, then you are out of a really nice kitchen or a bigger house. And so the housing one is bonkers. How much w how crazy, how your rational we are when we come to our home purchase decisions. Uh, but really tried to acknowledge that, Hey, there's been a lot of research on this stuff.

Peter [00:17:29] Why ignore it? And I think as someone who for a living is helping people make smart money decisions, it isn't all about tax minimization and wealth minimums maximization. Some of it should be how do I make sure that your life is better as a result of working with me? Uh, that's awesome. Those are great reminders too. I, I really liked the tie back

Michael [00:17:50] when I talk about this concept of self-mastery via this podcast and the things we talk about, it's really about trying to be the best possible versions of ourselves. But it's more than just about ourselves. It's about ultimately being in service to something bigger, greater, someone else, you know, whether it's, uh, fathering, parenting our children, whether that, you know, your interest is in serving the community or, or some other endeavor.

Michael [00:18:13] So I love the, the tie back there to, to helping others. I was talking to somebody recently about, you know, there's always that really foundational investment advice of pay yourself first, you know, financially. But we also forget sometimes, oftentimes I think to pay ourselves first with our time, right? And really, really prioritize that.

Michael [00:18:35] But I really love the experiential emphasis. Uh, I can look back on so many of those things and, you know, as our wealth and our, our financial success grows, there's always something bigger, costly or more expensive and you know, shiny that you could, you could buy. But buying, you know, buying those memories where you're spending time with people you care about.

Michael [00:18:56] Uh, I was recently talking to a buddy who had, uh, had great, uh, from building success, exited a business around 40 years old and has the luxury of, of a lot of free time to enjoy with his four children. His wife in, in retirement, and you know, even that it's crept up on him. And he was having a conversation with his daughter, uh, going, you know, there are only sort of five more summers before, you know, before you're potentially off the university.

Michael [00:19:23] So let's not slip the slip that away. Let's, let's plan out the next five summer vacations we're going to do.

Peter [00:19:29] Sounds like he read the family board meeting. That's a book. It talks about you and you only have 18 summers to connect with your children. And you know, I think it's a good point, you know, uh, my, my kids are still in elementary school, but I'm now frightened that soon they won't be. Uh, whereas when you're in like the diaper stage, you just don't know what's happening and you're trying to survive and now they're like old enough where you can really say, Oh my gosh, they're not going to be here forever and not think I'm the greatest forever.

Peter [00:19:53] And yeah, how, how are they going to view my legacy and how can I use money to equip them? You know, whether it's like giving my kids in allowance so I can try to really teach them some of the things that are important to how do they watch me spend my money and help others and make sure that that's important. You know, it's all all relevant.

Michael [00:20:12] Yeah. Let's, let's talk about that. So we've sort of talked about part of the book being geared towards maybe someone at the start of their investing career and the parts that apply with more complexity. Um, let's talk about, you know, the four, six, eight year old investor that we have the opportunity to educate. W what's your, what's your approach there?

Peter [00:20:32] Well I gave my oldest child an allowance when he was four years old and that usually catches people off guard. And I wrote about it and I can't tell you how much mail I got in response to all this. And I did a lot of research in advance because I didn't want to mess him up cause we're messing up our kids in our own special way. But here I was going to try to not make my child, you know, really flippant with money.

Peter [00:20:54] And so with, with a child, you know, I think it's important to be honest. It's important to not say, well that's dad's domain or that's mom's domain. And uh, we have always talked about money. And for me it's a good practice to put what I do in as simple of terms as humanly possible. And that means if at that point in life when he was four, if you understood it, I felt like great.

Peter [00:21:16] He used to walk around and telling people and they said, what's your dad do for a living? He goes, Oh, my dad helps people make smart money decisions. And I'm thinking this is, this is the best. Got my new copywriter here to, to tell her now. Um, now he tells people that I help eliminate stupid human decisions. I was like, well, you know, I'll take that, but that's a little harder.

Peter [00:21:37] It's a little rough around the edges with the allowance. Um, I'll just tell you what we did. We, um, and I tell other people regardless of age, maybe not with teenagers exactly like this, but we went out to bed, bath and beyond and let him pick out three jars and we decorated those jars. And on one jar we wrote spend on one rewrote save. And on one we wrote share.

Peter [00:21:58] And when he was four he got a dollar for each year of his age. And when he was five he got five and six you got six. But when he was four we said, okay, half of the money that you get always has to go and save. $1 can go and spend, $1 can go and share and when you turn five you'll get a $1 raise and we'll let you decide what to do with it. So we're going to let them put it wherever you want. And when he was five, he put in save.

Peter [00:22:19] I was so proud. Best moment ever for a, for dad. And when he was six he, it varied. It depended if he had a specific goal. And so for a four year old, saving for the future is really hard to picture now for you. And I actually, if we were to do scans of our brain research shows that the neural patterns think of, we would think of saving the same way that we think of giving money away to a complete stranger.

Peter [00:22:43] So that is really powerful to think about. And when you're a child that's even more true. And so, you know, we in the save bucket, we had it printed a picture of some toy he wanted to buy and we put it there so he remembered what he was saving for. And when we would go to the store, what slowly started happening was it used to be, Hey dad, can I get this? And I would respond, well how much money do you have?

Peter [00:23:06] Do you have man? And suddenly that was actually the best part. He stopped asking for stuff in stores and then I didn't have to feel like a jerk for saying no. But also I hear parents all the time saying, Oh, we don't have money or we don't have any money. And that's not true. And that is confusing for a child. And as they get older, they can discern the difference. We don't have money for this.

Peter [00:23:26] And we talk when I pay bills now I say, this is the bill we pay to live in our house. Somebody gave us a bunch of money then an exchange, we pay them for it. But if we didn't pay our bills on time, they would kick us out of the house. You know? And so we have these conversations. It's been a wonderful experience and I think it's hard to know the right time to give a child allowances by the time they're in high school.

Peter [00:23:48] I think they definitely need to. But here's the thing is you're not going to learn about money in high school or in college in a meaningful way. Mom and dad are the primary professors of personal money. And that doesn't mean that you have to be the expert. You need to set a good example. And you know, you can ask your advisor for advice when they come up with a question that you don't know how to answer, but you need to allow them to make mistakes with money too, and it's much better to make mistakes with money on little dollars, the big dollars.

Peter [00:24:16] Now, one more thing, and I know this is a little bit long winded on the investing side of things. My grandmother gave me a share of a different stock every birthday from ages 12 to 18 my fear arguably what got me interested in investing in the first place was she gave me a share of Nike stock on my 12th birthday and man did that thing just take off and it still goes up and it's just unbelievable.

Peter [00:24:38] I am not a big believer in individual stock investment. However, it is very tangible for a younger person to understand even through college. And I think it's really important fear students in college who have a little money to learn how hard it is to pick good stocks. They've probably been doing great during the blast during the bull market. They probably think they're geniuses and they're going to get crushed eventually.

Peter [00:25:00] But again, smaller dollars and seeing the importance of investing in companies and when you're at a young age, investing in brands that you know, really puts that sense of this is real. You are owner of the company, you are providing them financial capital. So those are all things that I typically coach, uh, with our clients. And you know, certainly with my own children now my children are not old enough where I've told them they have an investment account.

Peter [00:25:24] All they have are index funds in their investment account. Uh, we'll happily be buying them single shares of individual stocks. And I think they'll see that way, how hard it is. And if they want to make mistakes, fine. They can't mess with the big piece that I've been putting away for him. But I'm happy to let them go crazy like a casino in a smaller account where they can't hurt themselves. Yeah.

Peter [00:25:44] Small mistakes as a learning tool. So I'm really interested in the, the single share thing that your grandmother did. And, and I, I remember a time where you could go get that stock certificate, you know, frame and hang a share of Disney for your child. And that made it tangible, uh, you know, just having a line item with a one on it.

Peter [00:26:04] And, uh, you know, in some website investment account isn't, isn't quite as tangible. Do physical stock shares still exist? They do and you just have to play it a little bit ahead. You also have to make sure not to lose it. What's really cool about some brands is that they have perks. So if your own share of Disney, for example, you have perks at Disney world, you know, they have things for shareholders.

Peter [00:26:28] Um, same with Coca-Cola. Nike did not, Apple does not, you know, but yeah, I do remember distinctly my grandmother gave me a share of Nike one year, or excuse me, of, of Disney one year. She did do, Nike just had a big swoosh on it. The had Mickey mouse and goofy. It had all these people on it. And I'm like, Oh my gosh.

Peter [00:26:48] Now if you give a teenager that they might be looking more for ESPN or star Wars, but you get the point. They, it is all, they're all in the business of image. These consumer brands, you even if you got an Exxon Mobil or Chevron or you know, something that is less consumer brand but still recognizable, they're not going to have as many shareholders services.

Peter [00:27:09] But I this the physical share does still exist. It is a little bit of a pain to get rid of it when you grow older, but

Michael [00:27:17] totally worth it for the learning experience. Yeah. If you even choose to write, you may just hang onto it, um, as, as a memory. You know, it'd be nice if somebody had given me one share of Berkshire Hathaway and I know that comes with some shareholder benefits. I'd probably hang that one somewhere. Yeah, that's one that if you had to cash in, you wouldn't, you'd be, it'd be a good day.

Michael [00:27:37] That'd be all right. Yeah, no doubt. Well, um, I mean maybe let's, uh, let's talk about the failure piece a little bit more. And I liked the concept of teaching children about being, being honest and transparent and finding learning lessons. And a lot of those lessons sometimes come and failures. We, as long as we learn from those failures, then it's, you know, it's not an end state, it's just a path towards success.

Michael [00:28:01] So is that something you talk about in your, uh, financial publications, your personal blog or your book about some of the mistakes you've made and what you learned from this?

Peter [00:28:10] So book, I talk about investment mistakes. Blog, I talk about personal mistakes a little more in the book. You know, in my opinion, most of investment success comes down to simply minimizing mistakes in staying the heck out of the way, a compound interest. And so I do go when I do dedicate one full chapter, two common mistakes investors make.

Peter [00:28:31] And generally it's just stems from overconfidence. They chase performance, they try to time the market that try at a time when to get in and when to get out on the personal side. You know, I think that failure is one of the great opportunities to learn. And I probably did not view it that way until my young adulthood. You know, failure was not super okay when I was growing up.

Peter [00:28:55] I'm not saying it was a the end of the world I got to eat if I failed. Um,

Michael [00:29:00] but

Peter [00:29:01] you know, I didn't want to fail. I was very competitive. I still am. However, I do view failure differently where I'm always trying to learn. And I'd mentioned even with the book, one of the things that scared me most was that I wouldn't be able to finish. I know that I am not a finisher. I am great at innovating and creating all sorts of out of the box ideas and projects and seeing them like 90% through.

Peter [00:29:24] But then I start planning the next thing because I just, I just can't stuff it through into the, into the end zone. So, um, you know, the, the, the failures on the money side, I feel like for me personally, I've been fortunate because I took such a high interest in it that I haven't had to have a lot of struggles there. I certainly have watched other clients fail and make poor money decisions.

Peter [00:29:46] But from a career perspective, I've really always found it important to have mentors both internally at the firm and externally from the firm. And that's helped me prevent mistakes from time to time. But I will just say my calling card, my opera, when I am going to personally fail, it's usually because I'll let my emotional response trigger before the pragmatic one.

Peter [00:30:08] And we do a lot of testing here with our employees to know like what roles they'd fit into well and how to communicate. And my heart's on my sleeve. I'm one of the few employees that scores in a way that, you know, you know, that I'm not hiding anything when we speak. And so I think for failures, you know, the biggest thing for the book, I think that was hard was editing and the production. Like, what font do you want?

Peter [00:30:28] What do you want your cover look like? I don't care about those details. Look, let me just go. But I didn't, I underestimated how much time it would take under estimated the amount of stress it would cause and then in turn, you know, how much stress that might cause in other areas of my life. And I think debt the year that, so my book actually came out last year and it was the year that I decided to hire my own advisor.

Peter [00:30:51] It was the year that I decided to get a personal coach. Um, that goes across the gamut of my life, uh, my life and your personal and professional. It was also the year that I just became more self-aware okay. When I'm setting myself up for not optimal performance. So that's, I think the book was probably the hardest thing I've ever done in my life.

Peter [00:31:12] Previously I would've said it was fear, um, one of these professional designations that I carry a CFA exam where only 20% of people who take it finish it. That was really hard. Writing a book was way worse. So those, that's kind of a little outline. I've talked about the struggle of writing the book on my blog and been pretty honest about that because I like people to know who I am. I'm not this robot who just makes perfect money decisions and has a nice life.

Peter [00:31:37] You know, all of us have our own struggles. I think it's nice when you can share those struggles and hopefully someone else can learn from them.

Michael [00:31:43] Yeah, absolutely. I think that that transparency really, that vulnerability creates a connection because nobody's perfect. We all have similar struggles and I'm glad you brought it back to the, the writing of the book. I want to check out your blog on that. I, um, you know, people say that when, when you feel fear, when you're afraid of something, it's a signal that it may be something that's really important to you.

Michael [00:32:04] And rather than running from the fear, you need to lean into it and really tackle that challenge. Uh, so I had an opportunity, I've met a number of authors through this podcast and one recently published a book. It's called fear as fuel, uh, or fear is fuel. Patrick Sweeney. And so he has studied the science, um, through, you know, through learning from scientists at John Hopkins and some more places about what goes on in our brain and how important it is to yeah, address fear really chase it as something that is such a growth opportunity.

Michael [00:32:38] So looking on it, as hard

Peter [00:32:40] as that was, I was maybe scary as it was when you set out to do it. And with the uncertainty of whether you could accomplish it worth the effort, it was worth the effort. I will probably do it again, which speaks volumes, but you know, overseeing, I want my kids to be a little older and you know, I oversee assets.

Peter [00:33:00] What's almost about four and a half billion dollars today at a relatively young age. It was a lot to juggle and I think I should have brought in more help. Like I should have had someone editing every chapter as chapters were being finished. Huge lesson that'll make life so much easier. So like trying to understand and what are the objectives of the book? I mean, it was never to be a New York times bestseller, but I did want what to me is a fancy business card that lets people peer into my world a little bit and know me a little bit better and allows us to open doors.

Peter [00:33:29] And in that sense it's been tremendously successful and I 100% would do it all over again. Just maybe a little more efficiently. No, that's great to hear it. And uh, I mean the other thing you said there is you're effectively following your own advice in spending money to free up time, which is, which is awesome. So on the, uh, on the mindset peace before maybe we get into some wrap up, um, things are volatile right now.

Peter [00:33:53] There's crazy stuff going on in the world and we're seeing that swing both directions in the, in the market. Uh, how do you, how do you stay calm? Well, I think in that sense, I am a robot, so I know how I personally stay calm. I never check my portfolio. So, despite overseeing about four and a half billion dollars, I personally have all of my money in a single fund that's globally diversified and rebalances on its own.

Peter [00:34:19] And you know, for me the, I don't believe that there's a perfect portfolio out there. I think there's just the one that you can stick with for as long as possible. And part of my job is to look at new funds every day. And if I changed it up, I would be changing my portfolio all the day. Cause I see all these great research ideas and you know, I just tried to keep it simple and do something I knew I could stick with. And on my 50th birthday I'm going to, you know, make a tweak that I've already defined.

Peter [00:34:43] And then after that, I'm not sure where I'm going to do. However, um, you know, when the market goes down a lot, I acknowledge and I know in advance that the market's gonna go down a lot. Similar magnitude and frequency frequencies is, it has in the past. I just never know why. And clients come all the time concerned about different things.

Peter [00:35:03] You know, 12 months ago they would've pointed to politics or the trade war or some other sort of nuanced thing in the economy because they read some article in the newspaper about it. And my response is usually, Hey, like we've built a plan that acknowledges markets fall 10 2030 sometimes 40 50% it's in your financial plan.

Peter [00:35:25] You don't have to do anything. Here's what we do. When that happens, we're going to rebalance, we're going to tax loss harvest to get you some tax benefits, where to look for opportunities to cut cost in the portfolio. But in, we don't know the reason why this is all gonna happen, and 12 months ago nobody would've said it was the Corona virus that was going to do this. And you know, there have been recessions.

Peter [00:35:47] No, this is just a, honestly, at this point, it's a run of the mill downturn. You know, it could it turn into something else? Of course it could, but nobody knows. It's the way that market activity works. It's not so linear and the a causes B and as a result B causes C, it is far more complex than that. There's actually um, a biology sort of discipline called complex adaptive systems that talks about how the millions of independent inputs are always going to behave differently.

Peter [00:36:16] So if, if you've ever been on, well, you're in San Diego, so you've been geared by the beach in the sand. If you make a pile of sand and you're pouring a bucket and it makes this big mountain and eventually the sand sort of avalanches and cascades down the sides. There was a physicist, Phil Bach, who replicated to the exact precision of poor speed and temperature and, and a surface.

Peter [00:36:40] And the thing is he couldn't get the sand pile to avalanche at the same time ever because each little grain of sand as so different and it interconnects and inter interacts with different people differently. And honestly that is a lot of what the stock market is. Complex adaptive systems is a huge rabbit hole. That's probably not super interesting to most people. But once you see the market through this lens, you recognize that prediction is completely futile.

Peter [00:37:04] Uh, and you're better off planning on downturns occurring than trying to predict them. And I think that you can planned for them quite effectively and the best thing you can do is just not look, find something else to do. You know, if you had money that you needed to come out of the market in the next say one to five years, that money should not be in stocks. It should be in bonds or cash.

Peter [00:37:26] Most bear markets last on average two years. So, you know, it's, I, it's not to be dismissive. It is definitely a big swings. And we've had an unusually low volatility bull market run. And so the next recession, whenever it is, or the next big, big dip, whenever it is, maybe we're in the midst of one, maybe we are not, it's going to feel scary.

Peter [00:37:47] And that's totally normal in our human instinct is to run, you know, if we're, if we're cavemen and we hear a rustle in the bushes and we stand there to calculate the probability of it being a lion, we got eaten. Those species of humans did not survive. We just ran. And an investing, it's that same tendency that while from an evolutionary standpoint was super helpful is the exact opposite of what you want to be doing with your investments.

Peter [00:38:13] So I mean fortunately we don't have to worry about being eaten by lions, but we do have these responses where we want to do something and it's really hard for us to accept that sometimes the decision to do nothing is it choice is an action. But if nothing else, I would say if you're worried about your portfolio now or anytime, the better course of action is usually go review the underlying assumptions in your financial plan because those are all things you can control.

Peter [00:38:40] And if it's been awhile, maybe things have changed. That's really gonna determine whether you're successful or not. And you know this volatility, these losses, that is the cost of the higher returns you earn in stocks. So if you put all your money in cash and you could somehow save enough for retirement, that would be wonderful. But unfortunately that's not going to work. It would require an unbelievable savings rate.

Peter [00:39:02] And so investing's all about trying to outpace inflation without taking unnecessary risks. Stocks tend to earn more than bonds and cash over time because they are riskier. So this risk, this is the cost of those higher equity returns is higher stock returns. Um, if I had just led, said that and left it alone, that's the robot response.

Peter [00:39:22] I acknowledge it's scary. That's why you need somebody or a system. If you don't have somebody there to keep you to stay on the course, you do need a system to stay the course. Fortunately, there's a lot of good technology out there that allows for that. On the other hand, most of wall street wants you to believe you can do it by yourself because 95% of trades is institutional traders.

Peter [00:39:43] And if we're playing poker and we can invite a bunch of dumb people to the table, we want them to come to the table so we can take their money. That's what wall street really wants from you. And that's what the financial media ones from you cause they want you to your eyeballs to sell advertisement. So a lot of things working against us. The best course of action again either is to call your visor, to pick up the phone, call your visor.

Peter [00:40:03] If you don't have an adviser, hire an adviser and a, you know, when you're talking to her advisor, review those underlying assumptions of your financial plan.

Michael [00:40:12] Nice. I like that you have that mention of what's actually controllable and yeah, just taking it back to the fear element that you mentioned for a moment. Yeah, we're not, most of us are not dealing with mortal fears. And so again, it goes back to, well maybe fear is a healthy response in this case. We need to potentially hold the course, look for opportunity and, and yeah, I mean the true, uh, the truth of the system is it is so complex, but our brain is wired to try to simplify things and look for patterns.

Michael [00:40:42] As you said, we can't stand there waiting for the lion to eat us. We got to make a snap decision of all these millions of data points and then just act and act and move. But um, yeah, if it's, if it's a decision based on emotion, if it's a decision based on maybe false patterns or assumptions or if it just comes back to the stress and worry thing and uh, and these things are beyond our control, then you know, if we can't affect it that I'm not really sure it's worth worrying about.

Michael [00:41:10] Honestly, this week, uh, you know, somebody made a comment to me about about how much the market was down or how much the market was up. And I said, Oh wow. Really the truth is I had no clue cause I'm just, I'm not looking and I, and it never did. It's just, it's there, it's, it's got a plan and, you know, advisors and professionals are, are working the plan. And, and quite honestly, you know, I had a conversation with a client about the coronavirus and, uh, my restaurants was somewhat similar, you know, was like there are a lot of unknowns.

Michael [00:41:37] It's evolving. It's not something I can control. And so I'm just going to focus on what I do control and, and that's, you know, that's kind of where my,

Peter [00:41:45] where my focus lies. Yeah. Wash your hands and don't look at your portfolio. I think that's about all we can do some it up that way. That's, that's a great summary.

Michael [00:41:53] Well, you, you, you know, usually I like to wrap with a few actionable items and I think you've given us a ton of them here throughout, um, focus on controllable decisions. You know, if you don't have a planner, get one, you know, look at a plan and work the plan. And then, you know, we also talked about, I really love the point about happiness and fulfillment and some of the things you could focus on financially to, to accomplish that.

Michael [00:42:17] Um, anything else that comes to mind when I ask for actionable advice?

Peter [00:42:21] Sure. Well, I developed a quick assessment called smart money, quiz.com it's nine questions and what it does is your responses tailor the resources that I give you. So I've been writing for a long time and the book only captures where I feel like is half of my knowledge base. And so if you go through that process and you answered the questions, what it'll do is it'll point to areas if there is a true area of concern and be like, Hey, you really ought to consider doing X, Y, or Z and here's a bunch of resources about that decision that will help you make it in a smart manner.

Peter [00:42:52] So I think if you're unsure where there is an opportunity to improve your life, smart money, quiz.com is a reasonable thing to do. I, my hope is that I've designed it well enough that I can give and give the person who's just knocking it out of the park. Something to think about. The other thing, um, you know, I've alluded to many times that go talk to your advisor or the fact that even I hired my own advisor last year because I don't really have time to take care of myself and it's nice to have an objective third party to bounce ideas off of.

Peter [00:43:24] The one thing I will tell people is that I'm obviously biased in saying you should have an advisor cause you know, I own a wealth management firms, so why wouldn't I say that? You know, I, I used to mow my lawn too and I never killed my grass and it looks looked pretty good. It was relatively healthy, but I definitely made life hard on myself occasionally because I didn't mow the grass some Saturday and then it ended up raining on Sunday or you know, I just simply didn't feel like doing it and it got too long.

Peter [00:43:50] And I remember when I hired a professional, again, I didn't kill my grass, but the professional made it look good and it was healthier because he was seating strategically and cutting the grass in different directions. And you know, different lengths depending on how much sunshine there was. Anything in life that you hire a coach or a professional for is going to improve the outcome.

Peter [00:44:11] And it's a big investment in yourself. To hire an advisor. Hiring an advisor is not cheap and hiring a bad advisor is very harmful. So it's not an easy decision, but I do want to say that if you don't have somebody you should consider it. Um, I do have a full chapter dedicated to the different types of advisors in the book. It's also something you can find on my, and I'm fairly certain that when you go through smart money, quiz.com that usually it provides you with the worksheet of how to hire an advisor, which again walks you step by step through how would you collect a couple of different names to evaluate what is a way that scientifically is shown to remove bias from your decision in score people similarly.

Peter [00:44:50] Um, and so that's a resource that I think can be pretty helpful to people.

Michael [00:44:53] Oh, that sounds super cool. I look forward to, to check it out. We can all improve. We can all learn something and certainly we can all benefit from the help of professionals and coaches

Michael [00:45:02] know every professional athlete as a coach for a reason. Uh, you know, as a, as a parent, you realize that oftentimes there are things that that unbiased third party that, that coach or that uncle or someone else your child will listen to when they won't listen to mom or dad. So, um, smart money, quiz.com where else can people find you and learn more in terms of your website, your blog, social media, and the making money simple book.

Peter [00:45:28] Well, it's hard to spell my last name, but if you Google Peter Lazaroff, Google's pretty smart. My website's Peter lazaroff.com you can find me on Twitter, Facebook, Instagram at Peter. Lazaroff I think I have a YouTube channel. Peter Lazaroff now shoot, you know, a little three minute videos when stuff like the market goes wild. Um, and I think smart money quiz, if you can't, if you're afraid of spelling the word Lazaroff fear the name Lazaroff is a safe place to go.

Peter [00:45:53] The book is anywhere they sell books. Uh, it's cheapest on Amazon for whatever that's worth, but it is in the bookstores too, but it's full price. So heads up.

Michael [00:46:02] Perfect. Now I look forward to it. I, I got a pre-read on the PDF, but I'm going to go pick up the, uh, the hard back on, on Amazon and, uh, check out the quiz. I really appreciate your time and the insight. It's always fun talking to people who seem like they have a very sort of straightforward profession, but then, you know, you get to the philosophy and the personality, like you said, behind it. It's not a robot. There's always cool stuff to learn.

Peter [00:46:23] Well, this is great. Michael thanks so much for having me today. Yeah, my pleasure. I will get links to all your, all your contacts out in my show notes for this one so people can either Google or just link right to it and, uh, hopefully contact you and learn more.

Michael [00:46:39] All right, super cool one with Peter Lazaroff. You can find the show notes@manofmastery.com slash zero 47 and go check Peter out. I really liked the idea of his blog, where he talks about personal mistakes and obviously learning, learning from those mistakes, financial and personal and otherwise, and go check out his, his financial quiz, following them on social.

Michael [00:47:01] And then next week, uh, really the next few weeks as we come up to episode 50 here, milestone episode 50, we've got some really cool stuff coming on. But until then, look, just stay safe and healthy out there and get your, get your rest, your sleep, your hydration. Eat well, eat right, gets sun, get some fresh air, get some exercise at home, but be smart about helping do your part to contain this thing.

Michael [00:47:27] Take care of yourself and your families. And until then, we will catch you guys next week.