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In this episode, I speak with TJ van Gerven, a Financial Planner and Founder of Modern Wealth Builders. TJ shares his journey from growing up with contrasting financial influences—his father, a self-employed plasterer with a scarcity mindset, and his mother, who came from a more affluent background. We dive into how these experiences shaped his approach to financial planning, particularly for millennials. TJ emphasizes the importance of understanding time horizons when buying a home and the true costs associated with real estate, challenging the common belief that homeownership is always the best investment.

We also explore TJ's innovative approach to financial planning, including his use of a subscription model to make financial advice more accessible to younger clients. He discusses the value of focusing on cash flow, tax planning, and the importance of having a disciplined, rules-based strategy. TJ's insights are not just about numbers; they’re about helping people use their money as a tool to live better lives. Whether you're considering a sabbatical, navigating equity compensation, or just trying to get a handle on your finances, TJ's practical advice and genuine passion for helping others make this episode a must-listen.

📺 Watch on YouTube

https://youtu.be/ATG2dn18R4I

Key Takeaways

00:03:08: Early Lessons on Money and Entrepreneurship

00:07:15: Family Dynamics and Financial Lessons

00:10:24: Career Path from Virginia Tech to Financial Planning

00:13:05: Choosing Financial Services and Early Career Challenges

00:17:29: Conference Experiences and Networking

00:21:07: Financial Advisor's Circle of Competence

00:29:14: Big Issues in Financial Planning: Real Estate and Stock Options

00:32:46: Planning for Sabbaticals and Financial Independence

00:34:48: Simplifying Financial Success for New Couples

00:43:21: Impactful Travel Experiences

Tweetable Quotes

"Millennials think that buying a house is this natural progression, and what I try to educate them on is, number one, let's focus on time horizon. That is the biggest factor for a primary residence purchase, in my experience, is understanding how long do you plan to be in this house?"

"I think the value for advisors moving forward is going to be about making people's lives better in the sense that you're helping them use their money as a tool and not necessarily about maximizing performance, because we know that's kind of commoditized and there's a lot of good solutions for that already."

"I just don't think people have the basic financial education around just the concept of compound interest. I think if people understand that with a reasonable expected return, you actually can achieve a meaningful amount of wealth if you have a disciplined saving strategy over a long time frame."

Guest Resources

Website - https://modernwealthbuilders.com

LinkedIn - https://www.linkedin.com/in/tjvangerven/

Facebook - https://www.facebook.com/modernwealthbuilders/

Instagram - https://www.instagram.com/modernwealthbuilders/?hl=en

Twitter - https://twitter.com/TJvanGerven

Mindful Money Resources

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Website: https://mindful.money

Jonathan on LinkedIn: https://www.linkedin.com/in/jonathandeyoe

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T.J. van Gerven

0:00 - 0:35

Millennials think that buying a house is this natural progression, and what I try to educate them on is, number one, let's focus on time horizon. That is the biggest factor for a primary residence purchase, in my experience, is understanding how long do you plan to be in this house? And the data shows that people do tend to sell their home quicker than they anticipate, and that's going to get you into potential trouble because of transaction costs and because of the fact that if you are borrowing with the amortization schedule, you're primarily paying interest on the upfront of that loan.

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0:38 - 1:00

Do you think money takes up more life space than it should? On this show, we discuss with and share stories from artists, authors, entrepreneurs, and advisors about how they mindfully minimize the time and energy spent thinking about money. Join your host, Jonathan Dio, and learn how to put money in its place and get more out of life.

Jonathan DeYoe

1:03 - 1:10

Hey, welcome back. On this episode of the Mindful Money Podcast, I'm chatting with TJ van Gervin. Is it von Gervin? Van Gervin.

T.J. van Gerven

1:10 - 1:11

Van Gervin's fine.

Jonathan DeYoe

1:11 - 1:55

Cool. TJ is a financial planner, the founder of modern Wealth Builders, and the host of the podcast do more with your money. After graduating from Virginia Tech, TJ, he studied economics, by the way. He studied economics and actuarial science, which is, I'm sure, exciting. He has spent his entire career in financial services industry as a financial planner. He helps millennials specifically as they build towards financial flexibility and independence. He covers all areas of wealth management, but has specific category expertise in equity compensation, lifetime tax planning, and portfolio withdrawal strategy. Three very important things. Outside of helping clients with their financial plans, TJ enjoys Muay Thai, listening to audiobooks, and hanging with his friends and family. TJ, welcome to the Mindful Money podcast.

T.J. van Gerven

1:56 - 1:57

Awesome. Jonathan, thank you for having me.

Jonathan DeYoe

1:58 - 2:02

I'm excited to have the conversation. So first, you know, where do you call home? Where are you connecting from today?

T.J. van Gerven

2:04 - 2:12

So I'm actually in Orlando. I mean, my girlfriend are visiting the parks, but I normally reside in Woburn, Massachusetts, which is just north of Boston.

Jonathan DeYoe

2:12 - 2:14

So how long are you in Orlando?

T.J. van Gerven

2:14 - 2:26

So we are here. We're going to be here for another week, but about two weeks total. So we're just getting a little vacation in before I head into my may meetings where I meet with all clients. So it's a nice time to have a little vacation.

Jonathan DeYoe

2:26 - 2:30

Yeah, for sure. So did you grow up in Massachusetts or you grew up elsewhere?

T.J. van Gerven

2:30 - 2:50

Jonathan DeYoe

2:50 - 3:06

Robert, I'm curious, and you probably, since you listened to a couple episodes, you probably are expecting this, and maybe you prepped for it, maybe you didn't. What did you learn about money? Or since you run your own business, entrepreneurship. When you were growing up, were there any rote lessons that you, your parents. Yeah, we taught you that. Or just things you picked up along the way?

T.J. van Gerven

3:08 - 3:44

You know, not a ton of lessons. I mean, my dad was a self employed plasterer for 20 years, so I really just heard kind of that negative, negative side of entrepreneurship. I guess you could consider him an entrepreneur since he was self employed in plaster, but I really heard about a lot of kind of the feast and famine, especially with his type of industry, where it was very transactional in nature. So I actually really heard about the downside of it more so than the upside of it. But at the same time, I did always have questions for him about money, just because money was such an important thing for him with his life experience and what he experienced. The entrepreneurship journey has been something that I've kind of dove into myself.

Jonathan DeYoe

3:44 - 3:50

I'd say dig into that. What was interesting about your father's money journey that you wanted to quiz him on?

T.J. van Gerven

3:50 - 4:52

Jonathan DeYoe

4:52 - 4:59

Yeah, if I had. Who's the guy on CNBC that always rings the bells and makes the noises that everyone in the industry hates but people still watch him?

T.J. van Gerven

5:00 - 5:00

Jim Cramer.

Jonathan DeYoe

5:01 - 5:34

No, Jim Cramer. That guy. I don't like him anyway. So if I had a bell, I'd ring it. You were the first person I've spoken to on this podcast. I think this is podcast episode 100 304, who has kind of a similar father, comes with from very little. My mom had some money when she was growing up, but my dad had nothing, and so my background was very little. So how does that, as a kid, you're growing up, your dad's working hard, but talking about money, what money lessons do you learn from that? Do you take out of that scarcity? Are you worried? What are the things you come out of childhood becoming an adult, thinking about money?

T.J. van Gerven

5:35 - 7:14

It's a great question, and I should also emphasize, on my mom's side of the family, it's actually the opposite. I would categorize a little bit more of, like, a spendthrift type situation. She did come from some money. My great grandfather was a portuguese immigrant from Azores, also came from nothing and helped, you know, he founded multiple companies, but he helped the bank of Fall river merge with the bank of Boston, and he did very well for himself. At one time, he was one of the most affluent, like, Portuguese Americans in the country. And so it was very interesting dynamic to see. My parents are literally the most two opposite people in the world as far as coming from a substantial amount of wealth versus coming from absolutely no wealth. So, again, to go towards kind of why it's interesting that I became a financial planner is kind of seeing, really both ends of that spectrum as far as, like, that true scarcity mindset versus actually maybe too much of an abundance mindset where you think that money is abundant to a point where you can't run out of it, which actually, you can run out of it is what we've learned. But, yeah, I definitely took on a little bit of that scarcity mindset, I would say. And it's something to have worked to outgrow, even on my entrepreneurship journey, as far as learning how to delegate and reinvest in my business. But, you know, it's something that I've dived into deeply just because, you know, working with people, we all are impacted by our upbringing and experiences with money. And the more that I work with people, I come to realize that the lens through which we see it is based on that. And so I really try to make sure that I audit my own beliefs and make sure that I'm not pushing those biases on clients, because if I can understand their perspective around money, it helps me to better kind of steer them in a direction that'll make their life better in some way.

Jonathan DeYoe

7:15 - 7:27

Your mom comes from wealth, your dad comes from no wealth. How does that come out? Like, what sort of experiences did you have growing up? What did you witness? Like, how did that play through in your life?

T.J. van Gerven

7:28 - 9:10

Brian? Yeah, I mean, no shock. And they got divorced eventually. It didn't really work out for a lot of different reasons. My mom, full disclosures, has had a lifelong battle with alcohol. I feel comfortable sharing that. But basically, a lot of lessons come from it as far as how much money impacts a relationship and how important it is to kind of be on the same page with your partner around finances. And I do work with a lot of couples today, and that's something that I've kind of steered more towards, because, as we all know, money can be one of the biggest conflicts in a relationship. And so really having intermediary to be able to kind of be a sounding board and also just offer, like, some solutions for maybe this is how you should consider thinking about managing your finances is something that I've incorporated into my practice. You know, so basically seeing the boom and bust of how hard it can be for a self employed person, he did end up changing careers. He also was very into real estate, so that was his primary way of kind of storing his earned wealth. And he's really somebody that, like, did everything he could do to live below his means to a point where I'd say it's probably a little bit unhealthy, but, you know, it's something that I've audited as well. As far as running the numbers on real estate, when a lot of times people will confuse themselves about the return on investment with real estate, because it is an illiquid asset where it's not like a stock that's traded on an exchange, but there are so many recurring costs and transaction costs associated with real estate. And that's one thing that I've really noticed with him, is just maybe not understanding the true return on investment after those types of expenses. So that's something that I've certainly thought about a lot on my journey.

Jonathan DeYoe

9:11 - 9:48

Literally had this conversation with a client yesterday where they're like, yeah, we bought this apartment and we go over once a week for a couple hours to look at this sink or this thing or this thing or that thing. And I asked them, do you calculate your time, how much time you spend on this and got to re get the insurance and get things rented and place ads. I'm like, do you calculate any of those personal expenses or thing? No, they don't put that in the ROI when they're thinking out about. So it's like, people don't. You're right. They do not calculate everything into their return when they're thinking about these things. So it's important. Thanks for that. And thanks for kind of being just honest about your history. I mean, thanks for being honest about your history. That's difficult, for sure.

T.J. van Gerven

Yeah, no, I have no problem speaking about, I mean, it is part of who I am and obviously about who I've become. And so, you know, I like to audit these things and be honest with myself. And, yeah, to your point, again, about thinking through kind of that return on hassle is something that I'm super passionate about because ultimately, at the end of the day, we want to use our money mindfully and use it as a tool. And so, you know, it's not always just about return on investment. It's also about kind of the return on hassle, about how do you want to live your life? And that was always my journey was like, how can I figure out how to use money in a smarter way that actually allows you to live your life better?

Jonathan DeYoe

Yeah, absolutely. It sounds like you spent your entire professional career in financial services, but can you just give us the arc? How did you get from Virginia Tech to today?

T.J. van Gerven

Yeah, absolutely. So that is true. I graduated Virginia Tech in 2015. I did work for ameriprise. So, like, if you're not familiar, it's just like a corporate financial planning wealth management company. I've got my series 66, series seven insurance license, CFP designation. And basically after that 2018, I moved back to Massachusetts from northern Virginia. Northern Virginia was kind of a spot that a lot of people go to work after graduating. And so I ended up working for another small advisory practice, independent practice. And I kind of had my wheels turning already that I didn't want to take the leap and create my own independent practice working with a little bit of a younger generation, just because typically the industry is geared towards serving those retirees with a million or more of investable assets. And so I really wanted to create a practice where I could work with some of my peers and help them a little bit earlier on their journey. So that they could have that impact that you could see over time. And so in 2018, I took the leap and started my practice and been building it since.

Jonathan DeYoe

So why financial services? Do you think you went this way because of some of the struggles you experienced or saw that your dad had? Or was it like, this is obvious, or were you really good with numbers? What attracted you to being a financial advisor specifically, but to financial services in general?

T.J. van Gerven

That's a great question. I've definitely always been math oriented. I mean, I did study, like, actuarial science, which is, like you said, a pretty kind of bland thing to study when you're thinking about insurance pricing statistics. But I've always been interested in definitely investing side of things and understanding kind of wealth creation and the math behind that and compounding interest. And then that led into thinking, okay, what are some careers involved around that? I did consider becoming an actuary, but that didn't really suit my personality. I do like to interact with other people, and I just thought that it was a nice blend. I didn't know much about financial planning until I actually graduated, and so it was just something that I stumbled upon because it was something that I had already been passionate about when it comes to personal finance and investing. And then this was a way to help people. And then as I learned more about the independent space and creating kind of alternative business models and having the technology to create that independent practice was just something that I knew right away. I wanted to get to as fast as possible, and I pretty much did that as fast as you could do in this industry, I would say.

Jonathan DeYoe

Were there any like. So I spent five, six years with different Wall street firms. So I had a whole bunch of contacts before I launched my own firm in 2001. What kind of stumbling blocks did you run across in the very beginning when you just launched your practice?

T.J. van Gerven

Yeah, I mean, finding clients, obviously is the hardest part of this. Luckily, I had a pretty good network of friends that are ambitious and are doing well in their careers. And so I knew that they would be willing to take a chance on me essentially early on, and I knew that I could kind of grow with them in their career. I priced things vary, doing subscription type model, really just essentially trying a startup type of vibe where it's basically just getting clients going and then growing with them and then increasing the services over time, refining the services and finding different ways to add value for clients. So it was really a grind, you know, from the beginning, and I've just continued to iterate on it since.

Jonathan DeYoe

Yeah, I'm actually really impressed. I don't know many people that have the subscription model. I do think it's something that's growing in the financial services world, especially as your generation, younger generations, become advisors. How did you originally decide, hey, this is what I'm going to do? Is it because of the network didn't have a lot of assets? Or is it like, how do I get compensated for this work? Or what was the reason you chose subscription at the outset?

T.J. van Gerven

Yeah, it's a great question. I discovered Michael Kitsis, which, if you're not familiar, he's the industry leader for financial planning. And so he really, along with XY Planning Network, which again, he's a co founder of, which kind of brings together advisors who are more geared towards serving those Gen X and Gen Y clients. The technology was there to have access to a custodian, to manage clients assets, or more so access to like, the financial planning software, the compliance software. And so I just, you know, while I was working at Ameriprise, I worked under a really a great advisor. However, I did see a lot of kind of the conflicts of interest when it comes to product driven sales and with a corporate type structure as well. And I just really thought that I could provide the same amount of value, if not more value, to clients at a lower cost, in a more transparent way. And with that subscription type model, like you said, if they're younger in their career, and they may not have that level of assets yet, if they are maybe a higher earner or have some complex planning needs, then they may still be willing to pay for that advice directly, and then you can grow into that more traditional wealth management space. But I really wanted to do that kind of fixed fee subscription model because my focus was always on really thinking about clients net worth, not just necessarily the investment side of things, but really figuring out how can we optimize across, you know, debt, tax planning, considering insurance and risk needs, things like that, but really just focusing on the advice component and then keeping that product separate and that fixed fee subscription model, just lend towards that.

Jonathan DeYoe

Yeah, I love it. I wonder if, or do you ever second guess it? Do you ever say, you know what, I left business on the table here, or do you get a lot of referrals because of the structure of your fees? I think the industry is moving more towards where you already are, so you're probably ahead of the curve. But I also think that there's a large preponderance of people that think that 1% is what they should pay for these services. I'm just curious do you feel like you ever leave something on the table?

T.J. van Gerven

Yeah, that's a great question. So I never had the opportunity to manage assets for a percentage or sell commission products. I really came in as a paraplanner and admin type role, so I never really got to experience that. So for me, it wasn't like I was walking away from anything like that. Yeah, you could argue that I leave money on the table, but I really did think about the future, and I'm still thinking about the future. And you mentioned as far as being future proof, my goal was obviously with automation and how much access there is to technology for investment management, things like that. I wanted to create a business that I felt was sustainable for the future and a business model that I felt was sustainable. So, yeah, there are times where I could be leaving revenue on the table, but at the same time, I feel like I want to feel confident that I'm going to be able to keep the same business model for a long time and not have as much risk to be automated away as well.

Jonathan DeYoe

So did you just drop a little nugget for the Ritholtz future proof conference? Is that what you just did? Did you go last year?

T.J. van Gerven

I'm not familiar. Why is future proof. So I did. I've been the last two years, actually. Yes.

Jonathan DeYoe

All right, cool. Yeah, that's awesome. That's great. I think that you referenced kitsis. Like he's the top of every single list of people that have a massive impact in the industry. And I think the very next couple people are Josh Brown and Bear Ritholtz. So I think that whole firm is incredible, what they do. So it makes sense. I have yet to go. Is it worth it?

T.J. van Gerven

Oh, no, for sure. Yeah. You know, it is definitely worth it. I think it's a great place to meet advisors who are thinking about the future and are growth oriented. I keep my expectations pretty low with conferences in general just because for me, I treat them a little bit more as kind of like a learning vacation. And so it depends what you're looking to get out of it. I definitely think it's a great conference to meet other growth minded advisors.

Jonathan DeYoe

Yeah, that's a good plug. I've heard nothing but absolutely fantastic things about it. I'm just, I'm on the tail end of my conference life. So it's like, that's just launching. I don't think I'm going because I have the same sort of reduced expectations of conferences you do. I've been to so many that I just can't do it anymore. I'm curious about this. So first, how do people find you? Like you said, the difficult slog when you launch is finding clients. So how are you finding or discovering that people are finding you?

T.J. van Gerven

Yeah, that's a great question. I mean, it's a mixture of a lot of things. It's definitely a lot of luck involved in the sense of just being accessible and being visible. My whole goal was to basically kind of build a portfolio of expertise on my website. So really through trying to do things like podcasting, blog posts, social media as well, things like Twitter, things like LinkedIn. Early on, I was doing things like Instagram, YouTube as well. And so really, the whole goal is I try to be pretty specific about who I serve as far as, like, millennial couples and equity compensation. And so the idea is that when somebody gets to my website, you can learn more about how I think about managing money, the services that I offer. And then the goal is just to have an intro call with them to see if it makes sense, and then we go through my sales process there. But the whole goal is getting people through the website, and that's come from just basic search engine optimization. Find a divisor tool, and then early on, just being present in front of friends and people who that it could make sense for.

Jonathan DeYoe

So when they find you and you chat with them the first time, what are they looking for? What are you discovering or coming across that most people, when they're looking for an advisor, that they're looking for?

T.J. van Gerven

Yeah, I mean, it depends. I mean, I would say I've gotten a little bit better about my messaging these days. So typically, they have some kind of pain point specific to equity compensation. Like a big one is incentive stock options. They're concerned about, like, exercising options and the potential for things like alternative minimum tax. So those are some pretty specific things. But a lot of times, if it's just more general, people just want to have peace of mind that they are doing what they should be doing with their money. I mean, I definitely think a common one is people tend to search for complexity. Like, they don't think that they're necessarily doing enough, and sometimes they are, or they kind of know that their finances are getting more complex, especially when they add in, like, a partner into the situation. I work with kind of a lot of newly married couples, and they're not necessarily used to combining finances, and they're looking for somebody to kind of be, like I said, a little bit of a sounding board for them and how to come together and have a joint strategy. You know, I think millennials are a little bit more his and hers when it comes to their money. And so, like, combining things into a joint, whether it's joint investing, joint checking accounts, that's a new frontier for them. And so they want to have somebody that can kind of take that pressure off their plate as far as how much should we each be saving? How do we think about tax planning as a joint unit? Also, if they are doing something that they probably think they shouldn't be doing, they will say that. I do have people from time to time who will have a lot of individual stock positions, and they're doing individual stock trading, and they've had some bad experiences with that, and they realize that, hey, maybe we should get some professional guidance on what a long term investment strategy looks like.

Jonathan DeYoe

I love so not a single time in there, did you say investment expertise? It's all planning specific, whether it's isos or alternative minimum tax, whatever, it's all about planning issues. That actually leads me to this next question. I think this is really important, and I love asking this question of advisors. So what do you think the financial advisors circle of competence includes? I think that if I was asked that question 20 years ago, I would have answered. 25 years ago, I would have answered something like, yeah, my job is to create performance. Because I was raised as a broker, we sold performance. That's what we talked about. But then fast forward to today. You're not saying that at all. So what does belong in the circle of competence for an advisor?

T.J. van Gerven

Robert? No, that's a great question. And that's why, again, I'm trying to get ahead of that curve as far as, like, investment management, because that has been so heavily commoditized. I think that the biggest thing is accountability, implementation, and actually keeping people disciplined to a rules based strategy. So you can look at it on the financial planning side or the investment side of things. There still is a ton of value in actually executing. You can come up with a financial plan, you can come up with an investment strategy, but if you're not actually implementing and having rules for how you're doing those things and then staying accountable, that you're actually carrying those things out, then it doesn't really matter in the long run. So I think an advisor's value is really still identifying areas of improvement. I mean, there's still a ton of tax planning opportunities to add value. There's a ton of ways to add value on the investment management side. But then on a recurring basis, it is about actually implementing, keeping people accountable. And then again, there's still all kinds of risks that people don't consider as far as the insurance side of things. So making people aware of some of the risks, and then ultimately a lot of it too, is quantifying trade offs. So I have a lot of decisions around, like real estate purchases for primary residence. So really understanding, like, how is this purchase going to impact my long term future? Do I really value spending this much on my primary residence? Am I aware of kind of like an amortization schedule, how much interest Im going to pay? And is this really a long term decision that aligns with what Im trying to accomplish? And so I think the value for advisors moving forward is going to be about making peoples life better in the sense that youre helping them use their money as a tool and not necessarily about maximizing performance, because we know that's kind of commoditized and there's a lot of good solutions for that already. So that would kind of be my answer to what an advisor does.

Jonathan DeYoe

TJ, that is not blowing smoke here. That's a great answer. I think that the idea of helping them understand the trade offs before they make them and then holding them accountable to the trade offs that they choose, that's everything. That's the whole idea of behavioral advice. Yeah, I think that's the greatest answer you could have offered. Absolutely fantastic. Hope everyone hears me say that, because I'm just praising this kid. He's good. Anyway, so awesome.

T.J. van Gerven

Thank you. Appreciate that.

Jonathan DeYoe

You're welcome. I'm being totally sincere. I actually upgrade up. Was it upgrade the industry so much for the way we charge for a lot of the. We create the soup that everyone then has to believe that the value we provide is this. We invest better. And that's just nothing could be further from the truth. Like, we can help you do planning, help you figure out your life, help you stay on course. These are things we do, and we're really good at that. It's really important, but investing, not really the thing that we can improve anything at. So I love it. Who do you think benefits the most from, given what we just said, what type of clients or what types of people do you think benefit the most from working with a financial planner, a partner like yourself?

T.J. van Gerven

Yeah, I mean, it depends. So I think the great thing about the independent space is that there are a lot of advisors that are more focused on serving specific niches. Like I said, I like to work with millennial couples, and when one partner has some kind of equity compensation planning need as well. And so it really depends on what you're looking for. I mean, I tend to attract a little bit more of an engineer type client just because they want more of a partner. They don't necessarily want to totally delegate. I'm really here, like I said, to educate them on what I think makes sense for what they're trying to accomplish. And then here are the rules by which we want to manage and implement things, but they still want to know and be educated on that. So it depends on what you're looking for. I mean, I don't necessarily think everybody needs a financial planner. I do think that there is a point where your finances become complex, where it can make sense to outsource and delegate things. It depends on if you're looking to save time, if you're just looking for peace of mind, if you're looking for a second opinion. I think those are the best uses of delegation. I mean, what I explained to clients as well is that this is my only focus. You know, this is what I think about all day. This is, you know, what I try to make my practice better and optimize around. We all choose career paths and so it's really just about kind of that specialization. And so it's not that you couldn't necessarily do it. It's about the fact that you are going to delegate to a professional who this is all they think about and all they do. So I think the best use of an advisor is if you're in a situation where you feel like it's too complex or you don't have the time to do it, maybe again, if you're a young couple with children and you're focused on your career and you don't have time to think about tax planning, you don't have time to think about, you know, basic estate planning, insurance planning, automating cash flow, and the impact of the decisions you make over time are going to compound just like our investment returns compound. And it's the sad part. And the reality of financial planning is that if you wait until you're 60 and you're not saving enough, you're not learning how to live below your means and make smart decisions. There is a point where I would say it's very hard, if not impossible, to turn that ship around. And so the earlier you can build those habits, the better you're going to be.

Jonathan DeYoe

Absolutely. You mentioned that it's possible that people do this themselves, but that would be for those, it sounds like that would be for those folks that have less complexity, for one. And for do they have the time to do it themselves. And like you said, you get married, you have a kid, job changes, you got to move. Your parents get older, life gets overwhelming. So it's difficult ultimately, to do it, to be DIY, DIY forever. But let's say that someone wants to be DIY. Where would you suggest they go for the resources to educate themselves and support that process? We have a lot of listeners that are DIY. That's why I'm asking.

T.J. van Gerven

No, that's a great question. I mean, I think it's. If they probably are already aware, right? I'm sure they're like a lot of the boglehead community, right? Vanguard. I'm sure that's a big part of it. I mean, there's tools like portfolio visualizer online. If you're looking to, like, understand from just an investment standpoint, like, you know, returns and things like that. But again, that's just the investment side of things. So you do want to be careful about overanalyzing your investments, because especially if you are in that boglehead camp, a lot of times, once you have that more, you know, static allocation and you're really investing for the long run there, then there's not much you need to be thinking about on that side of things. It's more about getting educated on the tax planning side of things. So I would say even if you are DIY oriented, it's still, you know, it still makes sense to have a tax professional, at least. I think way too many people are preparing their taxes, especially at, like, more complex and higher income levels, where, number one, it's not worth your time, and number two, there's so many things that you could be missing. You know, there's. You have to consider value versus cost, right? Price is what we pay. Value is what we receive. So you want to. This goes back to that scarcity mindset where I think a lot of people tend to focus too much on the cost and not necessarily the value that they could receive. So a little bit of a rant there. But I would say for DIY folks online, great tools are things like portfolio visualizer, the vanguard community, bogle heads, really a big fan of monarch money. If you're looking to dive deeper into tracking your cash flow and understand your budgeting spending there, those are some great DIY tools that I like.

Jonathan DeYoe

I appreciate that. That's the one I looked at recently, did a review of, like, five or six of these budgeting tools, and that's the one I came up with is the one I liked as well. So that's. Thank you, because I'm not sure about all that stuff. I spend very little time with the apps and these kinds of things, so it's helpful to get that confirmation. So what are the. You mentioned a couple already, but what are some of the big issues that come up in the practice? You mentioned, you know, stock option planning. You mentioned young couples a minute ago. You said something like, people tend to, like, buy too much house. Could you just speak to that real quick? I run into this all the time, and I'm in San Francisco Bay Area, so, you know, even the smallest house is quite expensive. How do you counsel people around making good decision around that house purchase?

T.J. van Gerven

Yeah, it's a great question. This is the definitely the biggest thing that I see with millennials, and I think it comes back to our upbringing as far as, like, you know, what our parents experience with their housing situations is that our parents, a lot of times their best investment was their primary residence because it was the one asset that they held onto for a very long time. And so they experienced compounding interest partly because they weren't trading, buying and selling, because your house isn't trading on exchange. Now, the price does fluctuate, but let's say in 2008, you didn't necessarily see the value of your home drop 30% or whatever it did, like you would see your stock portfolio. So behaviorally, it's a great asset that people say, oh, I paid this much for it, and then I sold it for this much. But then, like we talked about, they totally disregard all the recurring costs of property taxes, insurance, maintenance. Right. All these things. Now, there obviously was a, they were recouping what they would have paid in rent. So that is part of the calculation. But to my point, millennials think that buying a house is this natural progression. And what I try to educate them on is, number one, lets focus on time horizon. That is the biggest factor for a primary residence purchase, in my experience, is understanding how long do you plan to be in this house? The data shows that people do tend to sell their home quicker than they anticipate, and that's going to get you into potential trouble because of transaction costs and because of the fact that if you are borrowing with the amortization schedule, you're primarily paying interest on the upfront of that loan. So you're really not building as much equity in that house that you believe you are. And people will say, oh, renting is throwing away money. But again, if you are primarily paying interest on the upfront of that mortgage, and then you're selling, you're also paying a transaction cost. You actually might have been better off financially just renting. And then also, I work with a lot of clients in like, major cities like Boston and New York City. And if you look at the cost of renting versus the cost of ownership, renting is actually a much more feasible option because the cost of ownership is so high, because the values of the homes are so high. And then also with the increase in mortgage rates, that's also made it much more unaffordable. So what I try to show them is, hey, a lot of times what they'd pay in mortgage interest, they could rent a property for like $10,000. In some of the situations that I've ran, they could rent an apartment for up to $10,000 per month, and they'd actually save money in the short term. They'd have to own this property for a very long time to make it a better financial decision. So it's really just having an honest conversation and quantifying it for them is like, hey, if you don't own this property for more than ten years, then you're most likely going to have a better financial situation renting, and you're going to maintain more flexibility to change, do things and save outside of your residence. So I really just like to educate them on the true cost of ownership and then also understanding that time horizon holding period.

Jonathan DeYoe

Yeah, there's one other thing you talk about, and I've never seen somebody else talk about this. So you talk about planning for a sabbatical. What's the special thing that you have or secret sauce you have to plan for sabbatical?

T.J. van Gerven

Yeah, that's a great question. A lot of like either sabbatical or even potentially like financial independence, which is harder. I want to be careful when people try to say I've achieved financial independence, when they have potentially like a 70 year or a 60 year time horizon for living, for example. Right. Because we don't know how long we're going to live, especially if, who knows, with health improvements, things like that. But I encourage people to use their resources and take a long term mindset. I mean, the biggest thing for me is their employment opportunity. As long as they feel confident in their ability to gain employment post sabbatical, then they really should feel comfortable a lot of times, depending on their resources. And we quantify this, I quantify this using financial planning software. So really understanding, running different simulations and trials with reasonable expectations. What I believe is reasonable as far as how your resources will last you over your lifetime. And there's a lot of assumptions that go into that, but basically, I just encourage people to use their resources. Your life is going to be both long in some regards and short in some regards. And I, you don't need to like, work a straight line to retirement. I think, again, that's something that millennials in particular are kind of changing their mindset around is like taking more breaks along the way or pivoting from if you did experience maybe a windfall with equity compensation, maybe you can't achieve like financial independence in the sense that you can. Your investment portfolio is not going to be depleted, but if you can supplement that with maybe, I don't know, 50,000 of self employment income, that goes a long way in creating a successful scenario there. So a lot of times there are ways to think outside the box and actually use portfolio assets in a non retirement account to supplement income right in the short term.

Jonathan DeYoe

That's nice. So there's a, you probably are expecting this as well. There's a lot of noise out there. So I ask every guest to simplify something for us. So if you're meeting with a brand new couple trying to get on the path to successful long term finances, what's the very first thing that they, in your opinion, they should focus on to lead to greater personal and financial success?

T.J. van Gerven

Yeah. For the demographic I serve, it's definitely just understanding cash flow. So like, understanding, it's very simple how much income is coming in and then after tax income. So people just tend to not understand taxes in general. So just really educating them on, like, here's your after tax income, here are your fixed expenses, here's what's left over. Do you have a personal savings rate? Meaning are you saving enough of your income that's going to lead to a successful long term outcome? There are different seasons of life, so you're not necessarily always going to be able to hit, you know, the personal savings rate that you want to hit, but we want to just be mindful and conscious of where your cash flow is actually at currently. And then from there we can start to think about how much cash reserve do you really need? How can we automate your plan savings so that you're not biting off these investment contributions in huge chunks, that you're doing it maybe over the course of the year, and so that it becomes more palatable for you to hit that personal savings rate and then that kind of trickles down into all the other plan conversations as far as like, okay, what are the trade offs? How do we have to reduce plan savings. How does that impact your long term path to independence? And so it really just starts with cash flow, in my opinion.

Jonathan DeYoe

So I have a follow up question, but before I get there, I just want to say that there's something you said that's really important. And I actually want to pull someone pull the onion back a little bit here. There's different stages of life. And I think I see a lot of TikTok videos, Facebook videos on Instagram that are these 20 to 30 year old folks who are just, I can't do it. Adulting is too hard. I don't have enough money. I can't make the income. I can't afford rent. I can't, I can't, I can't, I can't, I can't. How am I supposed to save? I'm never going to retire. These kinds of stories. So what do you say to that? I mean, what you just said is so important. I mean, it's not time for you to do that now. It's time for you to build your career. It's time for you to build your income. Don't worry so much about these other things. But how do you actually convey that in a way that helps you realize that it's okay and they just have to keep working at it and it's going to get better?

T.J. van Gerven

Yeah, that's a great question. So a couple of things. Number one, I just don't think people have the basic financial education around just the concept of compound interest. I think if people understand that with a reasonable expected return that you actually can achieve a meaningful amount of wealth. If you have a discipline saving strategy over a long time frame, and just understand that it does take time, and it's kind of like going to the gym. You're not going to get in shape right overnight. You have to put the time in and learn how to live below your means. And then there are times where you're not going to be able to live below your means. Like you said, if you're just graduating from college and you're in an entry level position, you're probably not going to be in a position to save and invest a lot of money. But as you increase your skill set, as you can provide more value to the marketplace, you're going to be able to earn a better living and you're going to be able to start saving for your independence. So, yeah, I would just encourage them to understand that it's going to take time. I think we live in a world of social media. We're all aware of our surroundings, people portray their best selves on social media. We don't actually understand people's financial situations. So we think people are in a better situation than they are, and we compare themselves. We compare ourselves to them. But I also will say, in some ways, I think it is, you know, affordability is definitely harder. I mean, obviously, if you look at the cost of living versus, like, wage growth over time, that affordability has decreased. So I don't want to say that it's not difficult, but I do think that, again, there are seasons of life and you will build into an income that will allow you to invest.

Jonathan DeYoe

Yeah, beautiful. Patience, you know, patience and discipline. These are important characteristics or character traits, I should say. So the follow up is we talked about focusing on cash flow, you know, making sure that you're understanding the cash flow and the taxes and all that. So what's one thing that people are probably doing or that people feel that they should be doing that you're like, don't worry about it. That's. Stop doing that. That's something that sales. You know what I mean?

T.J. van Gerven

Yeah. I mean, to go back to real estate, I think the rental property is a huge one. A lot of people have this vision of rental properties being like, this passive income source, which I think is totally misguided. Now, obviously, you can use things like a property manager, but the numbers, again, just don't necessarily lend it to having, like, a super cash flow positive property right out the gate. And I think what we see with kind of the romanization of rental properties is because, you know, people that have owned the assets for a long time now, they're super cash flow positive. And so I think that's just a big one that I see. People, like, they always want to jump to the rental property, and so that can work. But again, if you're not in it for the long run, it can be a lot more work for a lot less money than you think. In the situations that I've seen, that would be the first one. I think that people are buying or being sold permanent life insurance policies way too much. I mean, this is nothing new, necessarily, but, like, the iuls that are being pushed are like, there's so many young people that are being sold these, you know. Yep. Universal life insurance policies that they have no business needing is a big one. Yep.

Jonathan DeYoe

Totally agree on both fronts. I got to tell you, I was raised with the, you know, by. It sounds like you were, too. I was raised with, buy real estate. Buy real estate. Buy real estate. Let it go up in value, borrow against it, buy more real estate. I was raised with that. And I did it. And I did it until like. Yeah, I was like 42, 43 years old. I had 23, 24 doors, something like that. Single family homes, duplexes, four plexus, everything. I actually did the calculation. Like, I know how to do the math and I did the calculation. Yeah, I didn't make any money. Like, I lost money and time over like 1520 years of doing it. And I just, I said, I'm done. I sold every single door except for the house I live in, and I'm out. Like, I own 24 doors now. I own zero rental real estate, and I am super happy. It doesn't take. I got sued. I had stuff fall apart in houses that I had to replace. I had just thing after thing after thing after thing. And that thing you said that it's so important. It is not passive at all. And it's so funny to hear me talk, to hear people talk about how real estate is because of passive income. No, it's never passive. It's not passive. You can't make it passive. It's impossible to make it passive. Drives me nuts. Anyway, so I'm going to get off my soapbox. Just before, just where we wrap up, I want to ask you a couple personal questions. TJ, what was the last thing you changed your mind about?

T.J. van Gerven

I try to audit my beliefs regularly, so I hope that I've changed my mind on things a lot. You know, I didn't think there was value in meditation, so this is just a kind of random one. But, you know, just learning how to sit back and observe your thoughts is extremely valuable, actually, or has been for me, because you learn a lot about yourself and it's not about removing necessarily, like any thought. It's just about observing the things that come to your mind. Because when you do that, you learn more about yourself. And then you also start to quiet your mind and you start to figure out what is the best use of your time that you're choosing. Like yourself, you're not having kind of outside, outside noise dictate your thoughts. So I didn't think there was much value meditation. And that's something that I've changed my mind on.

Jonathan DeYoe

When did you change your mind? How long ago was this?

T.J. van Gerven

I would say I started practicing about a year ago. So it's been about a year at least, since I changed my mind on that.

Jonathan DeYoe

Beautiful. Thanks for sharing. Literally, in two days, I start teaching my first meditation class. I've been in the. I've been working with Tara Brock and Jack Kornfield and the mindfulness meditation teacher training program to become a mindfulness meditation teacher. I meditated myself. I looked at it last week. I've three decades in meditating. Probably two of those decades sort of committed and consistent. You know, early on I had a struggle, and then when my kids were little, I had a struggle. And then since my brother died, I had a bit of a struggle. So there's some, you know, some time there that I wasn't that dedicated. But I can tell you it changes your life to just, as you said, just to watch what pops into your head and not let it control you sort of go, oh, no, no, I can let that one go. That one makes sense. This one I don't want to listen to. That one's good because thoughts just happen. You can, you don't control it. You don't control it at all. So beautiful. Thank you for that.

T.J. van Gerven

That's amazing. That's good to hear.

Jonathan DeYoe

It works. Just keep going. Don't stop. The only way to fail meditating is to stop meditating. Can you place, can you name a place that has had, that you visited that's had a really big impact on you and then tell us what the impact was.

T.J. van Gerven

Yeah, I would say visiting Holland, you know, visiting where my dad's side of the family came from and just learning about his history there. I think it's important to, for us all to understand our history because it obviously shapes who we are and it adds to kind of the meaningfulness of life, in my opinion, because you're carrying on kind of that legacy of the people that came before you and all the trials and tribulations that they experience. So I think it's good to understand your history. That's something that I didn't necessarily know previously, and my dad didn't even necessarily know a lot about that. And so I think just being grateful to even get to this point, I think is something special. So for me, that would be a visiting in Holland.

Jonathan DeYoe

Thanks so much. Finally, just tell people how they can find you. Where do they find you? Online? What's your website? Et cetera?

T.J. van Gerven

Yeah. So everything can be found on modernwealthbuilders.com, all my socials and everything.

Jonathan DeYoe

All right, TJ, it's been a pleasure. It's been kind of a surprisingly, a surprising pleasure. I never know when I'm talking to an advisor exactly what I'm going to hear, but I hear a lot of echoes from my own beliefs. I really appreciate having a conversation all that stuff's gonna be in the notes, but I just want to say thank you for coming on.

T.J. van Gerven

Thank you so much for having me.

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