Tony Robbins needs little introduction. The personal development guru has touched millions of lives around the world through his ability to “awaken the giant within”. He released his first book in 20 years – Money: Master The Game which tackles the issue of financial advice. To summarize the book in a sentence Robbins advocates becoming an investor instead of a consumer, paying yourself first, having winnable goal, avoiding fees, choosing the right advisor, knowing your risk tolerance and learning from experts money makers (e.g. Icahn, Buffet, Bogle, Templeton, and others).
You can find a great summary of opinions on the book here.
So why does this matter to you? Robbins’ 600+ page tome is already an Amazon Bestseller and NY Times Bestseller. It will be a favored holiday gift and some of your clients will undoubtedly come across it.
Isn’t it useful to know what one of the most respected life and business coaches is saying about you? Here is a short summary.
1. Don’t Trust Brokers – If there is one rallying cry from the book regarding financial advice it is that you should not trust brokers. They often funnel you into expensive actively managed mutual funds, that don’t beat the market (over a sustained period), don’t perform as advertised and favour their own interests. Robbins’ goes on to say the suitability standard is “pre-engineered to be in the best interests of the “house”” and what individuals need is the fiduciary standard.
2. You Can Trust A Fiduciary or Can You? – Robbins’ says the best way to “solidify yourself as an insider” is to “align yourself with a fiduciary”. However, he goes on to say, “not all advice is good advice” and a fiduciary may not be “fairly priced”.
He recommends individuals find advisors from NAPFA and ensure they are…
a) Registered with the SEC.
b) Compensated as a percentage of your assets under management.
c) Not compensated for trading stocks and bonds.
d) Not affiliated with a broker-dealer. Robbins says “This is sometimes the worst offense when a fiduciary also sells products and gets investment commission as well!”
e) Ensure your investments are custodied with a third-party like Fidelity, Schwab, or TD Ameritrade.
Robbins then goes on to make a final point….
“The added cost of a fiduciary may only be justifiable if they are adding value such as tax-efficient management, retirement income planning, and greater access to alternative investments beyond index funds.”
This aligns with a consistent theme throughout the book that individuals should avoid fees at all costs unless they are justifiable and most fees are not justifiable. However, Robbins falls short of calculating the value of a fiduciary. After all it’s not a simple calculation and depends on the skill of the advisor. To wrap up, Robbins somewhat disappointingly champions his own financial advisor’s robo-advice platform Stronghold Financial in which he is in talks to become a partner.
3. Conclusion – Overall Tony Robbins is a supporter of fiduciary financial advisors. He believes they can make investors insiders and give them the advice they need to meet their goals. However, more than a supporter of fiduciary financial advisors, Robbins hates fees including expense ratios, transaction fees, cash drag, soft dollar costs, redemption fees, and countless others.
The book gives a lot of mathematical examples of how fees can eat into your returns but it does little to show how a fiduciary’s fees can help you. If you are fee-only financial advisor this book is generally supportive of your work. If you are not, I’d be wary.
