Introducing the What's Next Podcast

[00:00:02] Speaker A: And yes, I think a good chunk of our role as advisors and kind of what we talk to our advisors here at the firm is we certainly need to kind of help our clients understand that intellectual component strategies, techniques, etc. But to your point, there is a huge, huge behavioral element to our discussions with clients. Right. It's helping them to avoid common pitfalls that investors find themselves in day in and day out to create habits and routines that enhance the likelihood toward their financial success. [00:00:39] Speaker B: Welcome to the what's Next Podcast with James Costable, Managing Partner of ICG Next in Wall Township, New Jersey. James, real pleasure to have you on here. Very excited. I'm making a cameo appearance here for, for this first maiden episode. And then moving forward, you'll be bringing your team on to to talk about the various ways you help your clients make the best decision to plan for what's next in their financial lives. So, James, thanks for joining me and thanks for doing this with us. Excited to get going. [00:01:08] Speaker A: Thanks. Excited to get going. Garrett, thanks for having us. [00:01:11] Speaker B: What is quick one off question. ICGNext is the name of your firm. Where does that name come from? That sounds like a name that's got a cool story behind it. [00:01:19] Speaker A: Yeah, it does. So ICGNext as a firm has had many different iterations over the years. Started really in one way or another back in the early 90s. My partners and I entered into this industry at various stages. And as we came together in different ways throughout the years, one of the things that we always wanted to deliver to our clients is our intellectual capital. So what is it about our team and our advisors that can truly help our clients move to what's next for them? And so there was a part of time where the firm name was actually Intellectual Capital Group. That was the name of the firm for many, many 2019. We actually underwent a rebranding. We had made some changes to our business structure. We had made some delineations in the sand about who we wanted to be as a firm over the next 10, 15, 20 years. And so we partnered with a really, really great marketing team. And what birthed was ICG Next. And what we thought about as we were kind of creating the new version of the firm, if you will, is what's next for our clients. [00:02:33] Speaker C: Right. [00:02:33] Speaker A: So so many times clients reach out to us and they talk about, you know, what may be next in their life, whether it be, you know, a birth or a death or a marriage or a job change. And so we took that concept in helping people kind of move on to what's next for themselves. And we said, well, what's next for us? [00:02:53] Speaker C: Right? [00:02:53] Speaker A: What's next for the firm? And so from that came ICG next. And so, you know, kind of kind of a neat story and that again, back in 2019, is when we launched that. [00:03:05] Speaker B: Very, very cool. So one of the things that we talked about a little bit in our preliminary meetings as we were kind of getting to know each other and coming up with concepts and ideas for the new show is just the behavioral aspect of finance as well, and that there's that intellectual capital that you're talking about, and that's a very important aspect. But at the same time, on the absolute flip side of that coin, if you will, you can have all the knowledge in the world, but if you don't apply it the correct way and you don't actually do. I was actually just talking to somebody this morning. It's one thing to know what the right thing is. It's another sometimes to do it. And one of the things that investors can struggle with or just general savers can struggle with is we kind of know what we're supposed to do. How much of your job do you think is conveying that intellectual capital versus helping the client to actually implement and apply that knowledge? [00:03:54] Speaker A: Yeah. Interesting concept, Garrett. And I think never has it been more relevant than the economy and the market that we're in today. When you look at the political climate, you look at the economic climate, there are things that are weighing emotionally on a lot of investors out there and a lot of families. And I would argue the fact that all advisors, all firms, we all have access to the same stuff. [00:04:20] Speaker C: Right? [00:04:20] Speaker A: To your point, we all have access to similar investment vehicles. We all know the concepts. We're all credentialed. We all come from a finance background. And yes, I think a good chunk of our role as advisors and kind of what we talk to our advisors here at the firm is we certainly need to kind of help our clients understand that intellectual component strategies, techniques, et cetera. But to your point, there is a huge, huge behavioral element to our discussions with clients, right? It's helping them to avoid common pitfalls that investors find themselves in day in and day out. It's about helping them to create, you know, habits and routines that enhance the likelihood toward their financial success. And that can be, you know, anything from, you know, consistent saving strategies. That can be debt management. I mean, you name it. There's a number of different topics. But oftentimes it is helping them have someone to talk to. [00:05:24] Speaker C: Right? [00:05:25] Speaker A: Recognizing that we live in highly emotional times, information is abundant, right? I mean, there's so much information out there, whether it's, you know, your brother in law or at the holiday dinner table or of course the Internet. And you know, what of that information is truly relevant to the client and relevant to the decisions that they have to make for themselves. And so to your question, I would say that an overwhelming amount of our job is really to act as a behavioral counselor to our clients, right? Helping them understand the impacts of their decisions and again, helping them to avoid some of the most common pitfalls that might be out there for investors. [00:06:07] Speaker B: I'm sort of a finance geek, right? So I've dove into a lot of different corners and a lot of different interesting topics I guess in my career. And one of them that a little rabbit hole I went down at one point was behavioral finance in general. Just fascinated by all the different biases that we can have and all the different ways we can sort of frame reality the way we want to see it instead of necessarily the way we, the way it's actually is true. One of the most important areas I think of behavioral finance is going to be your risk tolerance and actually being honest with yourself about what your risk tolerance is. I've seen a lot of trouble or a lot of problems come up for clients and myself maybe to some extent as well, where you, you answer the question the way you think it's supposed to be answered, but it's not necessarily true. Right. I can't tell you how many times I'd ask the question with clients. What would happen? How would you react if the portfolio is down 10%? Right? That's one of the benchmark questions. You put a lot on risk tolerance questionnaires and inevitably everyone would say, I would either hold my investments or potentially double down and put more in or take more risk until the market's down 9%. And then my phone is ringing off the hook with people saying sell, sell, sell, because we're falling apart and this is different. So that can be. And that creates a big problem because if you take more risk, if you're, if you're dishonest with yourself about how much risk you can actually take, then what happens is when the market goes down, you're going to overreact and you're not going to do what you said you were going to do, and then you're going to sell in a down market, which pretty much everybody knows you don't sell when things are down, you sell when they. But there's a flip side of that too, if I am too conservative in my risk tolerance, and I'm probably a little bit more this way. I'm an aggressive investor, an aggressive personality. So if I try to box myself into a 70, 30 and I'm okay being up 8% when the market's up 12, and then what's going to happen is when the market's up 12 and I'm really up a, what am I going to do? I'm going to start getting a little greedy and I'm going to take more risk at the top of a market when I probably shouldn't. So whatever your risk tolerance is, it's very important that you're honest with yourself about that in advance and stick to that. Otherwise, if you lie to yourself on the front end of that, you're going to make a bad decision on the back end. [00:08:23] Speaker A: You know, Garrett, I think that a lot of that comes down to, you know, having done this for two decades. It really comes down to each client's unique story. [00:08:31] Speaker C: Right? [00:08:32] Speaker A: We all feel differently about finances. We were all raised differently, we come from different demographics. So risk tolerance is, in my opinion, often not best defined by a questionnaire. [00:08:48] Speaker C: Right. [00:08:48] Speaker A: It's defined by how have you been trained to think about money, how have you been trained to think about the markets and how that impacts you? And so for us as advisors, and we tend to look at things very, very holistically, the scope of our advice extends into many, many, many different areas. And I think that a lot of folks that walk through our front door, they, they, they gravitate towards that investment conversation with us. I think that's kind of what the industry norm is. But what I think they realize pretty quickly is that in order to have a sound investment discussion, we need to kind of delve into these other topics of your finances, whether that be cash management, debt management, your taxes, your estate, your, your protection planning. All of these things really run together. And, and, and simultaneous to that, we have to understand, you know, where do you fall in terms of your risk or where do you fall in terms of what you're hoping to achieve? And from our perspective, the stronger the conversations can be on the front end, really allowing clients to kind of define their vision, define their objectives. Right. Where do you see yourselves in 3, 5, 7, 10 years? It helps us kind of get to the end, right. And we view the financial piece as a means to an end. [00:10:12] Speaker C: Right. [00:10:13] Speaker A: It's not the end result. [00:10:15] Speaker C: Right. [00:10:15] Speaker A: A well performing investment portfolio, a well rounded financial set of circumstances. It's actually not the end for A lot of our clients, the end is that, you know, beach retirement or whatever it may be that they're looking to move toward. That's really, I think, where our focus ends up, spending a lot more time. [00:10:38] Speaker B: Do you have a top three, top five list of most common struggles that people have in sticking to their. Sticking to their guns, so to speak, and sticking with that. That mentality of staying results focused instead of maybe the process. I mean, you want to follow the process, right? But when you keep your eye on the ultimate prize. Am I going to reach my goal? [00:10:59] Speaker C: Yeah. [00:10:59] Speaker A: I mean, listen, I think that in my experience, at least, you know, we talk about behavioral finance and you talk about, you know, how people's personalities and their attitudes, you know, shape their decisions. You know, this concept of recency bias, right? People have a tendency to believe that what's happening now is going to continue, right. And that's because it's in front of them and they're experiencing it. And so, you know, they have a short memory of what took place in the past, and they have no foresight necessarily into what will transpire in the future. And that's myself included, Right. We all fall into that as humans with our different psyche. And so I would say the hardest part for folks is sticking to a plan. [00:11:39] Speaker C: Right? [00:11:40] Speaker A: We tend to want to deviate if we. If we feel that something's not working exactly how we had intended it to. You know, one of the best examples of that is, you know, not to be technical, but average rate of return, right? Well, the reality is average rate of return is like the average temperature for the day, right? The average temperature for the day might be 70 degrees, but I went out in the morning when it was 50, I was working all day, and by the time I went out at night, it was 50 again. So I never actually experienced the 70 degrees. The same is true with regards to the portfolio, right. There's going to be a number of ups and downs along the way, and sticking to that plan and making small adjustments and tweaks along the way is what's going to give us a higher probability towards the outcome. So I would say sticking to any particular plan, right? Whether that's an athletic plan, a diet plan, or certainly a financial plan is very, very difficult to do. It requires a degree of discipline, it requires a degree of habit, and I would argue it requires a degree of faith. [00:12:44] Speaker C: Right? [00:12:45] Speaker A: And a lot of that faith is put in, into your advisor, into the firm that you choose to work with. And we take that really, really seriously. And I think that Clients should as well. [00:12:56] Speaker B: You've mentioned the term a few times once, I think, on the show or on this episode. And you've mentioned to me a couple of times, too, that each client has their own unique money story. And the way they see things, their experiences, they have their own goals. What's the dig in a little bit for me, if you don't mind, on the. The true meaning of that, of that phrase, the money story, what makes it up and what makes each client's money story unique? [00:13:23] Speaker A: Yeah, you know, again, I go back to, you know, each client's unique circumstances, right. So there are, there are some folks that come, you know, from a scarcity mentality, right. They grew up in a demographic that was much, much different than perhaps where they are today. And so you see folks that, you know, might be in a very, very leverageable financial position, but they continue to think back to those times where they may not have been. So there's a degree of modesty in their expenses. There's a degree of modesty in what they expect from the markets. And, you know, contrary to that is this kind of abundance mentality, right? Which is, hey, you know, perhaps I was lucky in terms of my upbringing and really had access to whether it be the best schooling or higher degrees of finance. And that shapes who they are as an. Their risk tolerance might be higher. What they expect out of the market in terms of return might be higher. And so again, you know, for us, it really is trying to kind of delve into the mentality, the unique mentality of each of our clients because, you know, the end result could end up being the same, but the method that you take to get there can be very, very different. You know, a boring example, but a really good example is debt, right? All of us treat debt very differently, Right. And you. Some clients who are very, very comfortable with debt, you know, they view it in terms of leverage the way a company may do. You know, the concept of using other people's money. And that could be very, very wise, right. Depending on who they are and interest rates and things like that. And then, and then you look at other clients and sometimes this baby boomer generation kind of falls into this category fairly often that very, very debt averse. Right. The idea is to have absolutely, absolutely no debt on their personal balance sheet. The idea is to kind of, you know, we don't want to pay interest to any degree. And neither of those stories, Garrett, is right or wrong. [00:15:23] Speaker C: Right? [00:15:23] Speaker A: Neither of them is right or wrong. It's just kind of about how they view it or as one of my partners likes to say, that their individual world view on their personal finances. And, you know, one of the things that I've been saying for years and I, you know, when new clients consider the firm and maybe I introduce myself and talk to them as managing partner, the reality is, you know, we serve very, very often as a CFO for your individual finances. Right. I think it's a really good analogy for what a very intensive, holistic financial advisor, financial professional will do for their clients is really fill that role. And there's a lot of back and forth, there's a lot of discussion, there's a lot of brainstorming, and I think that's really what clients really want. [00:16:12] Speaker C: Right. [00:16:12] Speaker A: They want a partner that they can rely on to kind of help them introspect their finances and make those most educated decisions. Notice I don't say the best decisions because we just don't know if they're the best decisions. Right. Part of financial planning, part of, you know, providing advice is making the most educated decisions that you can make given their unique circumstances, given the economic landscape, and then being able to pivot very quickly. [00:16:41] Speaker C: Right. [00:16:42] Speaker A: Should something change, whether that be in the economy or whether that be in their lives. And I think that's a real, real big topic that we talk about at the firm very frequently because I think it is, you know, hands down, what kind of makes us valuable to our clients. [00:16:58] Speaker B: Yeah, I love that you said that. And it's something that, as you're aware or as you know, a lot of the work that I do in the industry is working with financial advisors who are transitioning or selling their practice. And my primary podcast, the Advisor Advocates Podcast, is aimed at educating advisors on that particular topic. And the way you worded that just reminded me of the way I try to approach that. And I'll say this a lot on my own podcast, is I'm not here to help the advisors make the best decision that they can, because I can't guarantee I don't know the future any more than anybody else does. Right. But my. So I'm very careful with my website, my marketing slogans, and anywhere I'm using that kind of stuff to not say, help you make the best decision possible, but to make the most informed decision possible, because I can't guarantee it's going to be the best one. But I can make sure you have the most accurate information that you need to make the best decision that you can with that information. And I think that's an important thing. And I. Part of the reason for me bringing that up is as a whole, and I'm not trying to. Nothing that I ever do on podcasting is designed to just make it sound like the other person on the show is the best and everybody else stinks. Or I'm not trying to throw mud at anybody else, but I will say that the industry as a whole, I think you've got a lot of advisors and firms who take the mentality or take the approach of saying, we have the best way, our way is the only best way, and you should do it our way, because we figured out that that's the best way to do it. And that approach, I think, is, first of all, academically wrong. And second of all, I don't think it's even from a marketing standpoint, the best way to go about it, because not everybody is going to like your way, even if it was the best way. And the reality is, I think advisors as a whole should be more about making sure the client has the right information that they need to make the decision less than it is just to have advisors telling them, this is what you should do, because this is the only right way to do it. [00:18:53] Speaker A: Yeah. I mean, the concept that I hear you talking about, and it's interesting to hear you say it because we talk a lot about it around here, is it's the secret sauce concept. [00:19:02] Speaker C: Right? [00:19:03] Speaker A: Who has the secret sauce? And I would argue that every firm does in its own unique way. And I have a tendency to talk to clients, particularly clients that are considering our firm is, you know, I would never categorize us as any better or worse than another firm, but what we offer you may find to be different and different in these. In, you know, in various ways. And so I agree with you. [00:19:26] Speaker C: Right. [00:19:27] Speaker A: I don't think that there's any one way, you know, there's no silver bullet. And guiding clients through, you know, multiple. Multiple life events that may come up, you know, over the course of their lives. I think back to some of the clients that have been with the firm for, you know, 20, 25 years. And I. And I think back to all of the things in their lives that we advise them on, from maybe their very, very first corporate job to their promotions, to their marriage and their births, and, you know, caring for elderly parents in today's, you know, day and age. I mean, all of these various topics. And you have to be nimble in how you guide them, because there is no silver bullet. [00:20:06] Speaker C: Right? [00:20:07] Speaker A: There is no one way that will work for all of your clients. There's concepts Right out there that are, you know, agreed upon and methodologies that are proven statistically to work over time. But I think, you know, a firm that is providing advice to the general public does, in my opinion, really need to recognize that you have to be flexible enough to tailor that guidance for what that family needs at that moment. And so, you know, I tend to agree with you on that. [00:20:39] Speaker B: Yeah, it's, you know, spending less money than you make is a pretty tried and true piece of the. That's a pretty tried and true formulation. Stick with the index funds versus mutual funds can be six for one, half a dozen or the other depending on who you talk to. And there's arguments to be made for either side of it. So yeah, yep, kind of on, on that you, you were starting to just. You, you kind of flowed this conversation very beautifully because it's like what I'm about to ask. You've kind of segued right into it a couple of times. There's. And one of the things that you just mentioned there is being prepared and nimble in those situations. This has just been a topic of interest, I guess for me over the last few weeks that there's one again, two sides of the coin. On one side, you want to be as prepared as possible. You want to plan for contingencies, you want to have some of the best advice I ever got. I was a competitive golfer growing up and someone told me to map out my game plan before a tournament. Say, okay, and it can be situational. You can say, if I'm playing well, I'm going to do this. If I'm not maybe playing as well, then I might do that. But know ahead of time what you're going to do for situation A, B, C so that when you're in that moment, you're not making an emotional decision. You've come up with your strategy before the emotions were in play and I think that's very sound. That being said, you're not going to sit down with a 28 year old couple and start to plan for, okay, what are we going to do if we have kids in three years? What are we going to do if it takes five years to have kids? What's going to happen if we have two kids and then get divorced? And what are we going to do in this? You can't plan for every single. So it comes both ways. You have to have a degree of control, which is what advisors are. I think sometimes again, advisors can give off the impression that we are selling control of your financial situation. Right. What we provide is we give you the ability to control your financial future. That's not quite true because there's a whole lot of variables out there that we don't have any impact on. At the same time, we certainly do play the role of helping you make those better, more informed decisions and give yourself a higher probability of a successful outcome. But it doesn't mean there's not going to be some things that come up that we have to be reactive to and we have to have a. I want to say this. We have to know in advance how we're going to react for the what ifs in life, even if we don't necessarily know what those what ifs are going to be. [00:22:57] Speaker A: Yeah, you know, I think choices are what many of our clients aim to have right? In life, having choices is generally viewed as a good thing. So you know, whether we're Talking to that 28 year old couple that is looking for a firm to kind of help them make financial decisions that is going to set the foundation for their financial future, or whether we're talking to that, you know, 50, 60 plus that is now looking for that foundation that's going to lead them to retirement. I think a lot of the guidance that financial professionals offer is about how can we create a scenario by which you have choice? And I think, you know, one of the. When you think about visual visualization, right. It's often very difficult for clients to lay out explicitly for you what they want their retirement to look like. Very, very rarely do you find someone that says this is where I want to be, this is when I want to be there and this is what I want to be doing. I mean, geez, you know, I have two kids and I know that, you know, as I age, because I see this with other parents and grandparents, much of my decision making, much of my choices might be rooted in where my kids and my grandparents grandkids are. [00:24:13] Speaker C: Right. [00:24:13] Speaker A: And so as we guide clients and try to do so in a nimble fashion, I think the, the approach that we take is about offering them choices, right. Making financial decisions that are going to empower you in the future to have the ability to continue working if that's something you want to do, reduce working, if you want to enhance the quality of the life, but not yet really disconnect from that, you know, from that working world or you know, as I say, often a retirement living on X in New Jersey, there's an entirely different set of steps to get there than a retirement living on Y in, let's just say the Carolinas, neither of them is better or worse. There's just a whole different set of steps that we likely have to take to accomplish one versus the other. And of course, New Jersey tends to be a pretty expensive place to. To be, which is, which is why I use that example, because we often do see folks, you know, kind of move out of some of these more metropolitan areas, you know, New York, New Jersey, et cetera, you know, to get to somewhere where they can live a little bit more of a relaxed lifestyle and do so, you know, on a reduced expense structure. So again, I think choices is really something that we, that we voice pretty, pretty explicitly to clients, and I think they relate to that and say, hey, I don't know exactly what I want to do or where I want to be, but if I have the choice to kind of go in one direction or another financially, right, that. That puts me in a very good position. [00:25:39] Speaker B: One of the other things that I've heard you say that I really agree with wholeheartedly, but it's a very counterintuitive concept maybe, is having all these choices. I'm very analytically minded and have very analytical nature. So you give me too many choices and I'll just sit there and, you know, kind of go into mental meltdown mode, paralysis by analysis kind of thing. But one of the things I've heard you say is that sometimes the best thing that you can, the best action you can take is no action. And that's something I've definitely experienced a little bit in, in various forms and that sometimes just sitting and saying, okay, what? As I like the way you said. In fact, I might suggest this as the title of the podcast, the what Next Podcast or what's Next? Because I think that sometimes the best thing you can do is kind of sit and say, okay, let's see what happens next, and let's gather more information before we make that. Do we have to make this decision right this second or there? If we wait a month, two months, two years, will we have more information to make a better decision at that time? And that's something. That's a key concept too, is that we are wired as individuals to be. A lot of times we're. We're going to be wired to take action. We want to. We. We're hardwired to want to take that control right, of that situation, and we're going to have to do something to take control. Right? Sometimes it's better to sit back and see what comes along that might help make that decision a little bit more. Obvious. [00:26:58] Speaker A: Yeah. And again, I mean, this is a really, really popular topic right now given what's going on in the markets. But I would say a lot of, you know, action versus inaction regarding what's next for anyone, I think really starts with preparation. [00:27:12] Speaker C: Right. [00:27:12] Speaker A: So what steps have you taken that leads you to the point that you're at right now? So one of the perfect examples that I talk to clients right now about is how solid of a foundation do you have? So as the markets are experiencing some turbulence, right. To put it lightly, you know, if, if you are well positioned from a cash perspective, if you are well positioned from an income and an expense, you know, standpoint, if you have equity in your home, these are non market related items that you can hang your hat on and say, I'm very, very well prepared in that regard. It should give you a degree of faith in being able to weather the proverbial storm. When we moved the conversation to the portfolio, I would say, you know, action versus inaction can be different for two different folks. So if I have a client that maybe is new to our firm and says, hey, James, if I'm being honest with you, you know, I really haven't had much of a relationship with my former firm. I really don't to want feel that I've attended to my portfolio perhaps the way it needs to be, I would argue that action may very well be necessary in that regard. But if a client can actually look and say, I've had consistent meetings with my advisory team over the past couple of years, we've made rebalances, you know, when they were necessary. We're very well diversified, very well allocated, very focused on dividend. Well, therein lies a scenario where action is likely not necessary. Right. It's a time to say, let me feel very comfortable in where I am, even though the world might be on fire around me. Because I know that I've taken these steps that have led me to where I am. And for a long time I give this example, and maybe my mom's gonna listen to this one day, but we lived down on the shore area in New Jersey. And so as a kid, when storms used to roll in, we would hop in the car and we'd drive down to the beach and we'd kind of watch the wind twirl around and we'd, you know, watch the waves come up, you know, but. And again, I love her to death, but what my mom didn't do usually is kind of, you know, put the patio furniture away and kind of bring in, you know, so the prep, the level of preparation really wasn't there. And so, of course, you know, when the storm came, the patio furniture would get, you know, into the neighbor's yard and all this kind of stuff. And, you know, I love those memories. That was fantastic. But I think the same thing applies to people's finances, right? If you are honest with yourself and you've given it the amount of tension that it deserves, and arguably that could be, you know, a couple of meetings a year with your financial advisor or what have you. But if you've made those preparations, if you've batted down the hatches, then I think you can feel very comfortable, you know, weathering the storm. And history tells us that, right? We can. We can track, you know, the historical movements of the market and kind of, you know, downturns and upturns and plateaus and things like that. And so, again, I tell that story fairly often, but I think it's a really good analogy to how people can navigate and when to take action or when to start thinking about what's next. [00:30:19] Speaker B: Awesome stuff, James. Well, thank you again. James Constable, the managing partner of ICGNext in New Jersey. Very excited to get started on the what Next podcast. The what's Next podcast with you and your folks there. Moving forward, you're gonna have you and your team on the show, kind of hitting on some of the areas of specialization that they've worked with families on. So very excited to see you bringing others from the firm on and then letting them kind of, kind of take it and run with it as well. So super excited about this. Think it's going to be a great show and really appreciate you joining me, James. [00:30:51] Speaker A: Thanks, Garrett. Appreciate it. [00:30:54] Speaker B: Thank you for joining us on the what's Next podcast. If you would like to speak with someone with the ICGNext team, you may reach them@icgnets.com or give them a call at 732-359-3838. If you enjoy the show today, please consider subscribing on your favorite podcast provider or The Wealth Partners YouTube channel. We look forward to seeing you next time.