Bogleheads® Live with Dan Egan: Episode 13

The John C. Bogle Center for Financial Literacy is pleased to sponsor the thirteenth episode of Bogleheads® Live. In this episode Dan Egan, VP of Behavioral Finance & Investing at Betterment joins us to discuss robo-advisors and conflicts of interest. Dan comments: Many (most) robo-advisors have hidden conflicts of interest that lead them to not focus on doing the most possible for client.

• Tax Loss Harvesting [TLH] with secondaries.
• Schwab with it’s ‘free’ robo, forces you to hold cash, doesn’t TLH.
• VPAS with no-non-VG funds, no state-munis, no TLH.
• Wealthfront with it’s “risk parity’ fund.
• If an RIA has it’s own funds, it inherently will find it hard to put you into the ‘best’ funds as seen by an independent.

Transcript

Bogleheads Live with Dan Egan

Thank you, everyone, for joining us for the 13th episode of Bogleheads Live. My name is Jon Luskin, and I'm your host. My guest for today is Dan Egan. Today we'll be discussing conflicts of interest with robo-advisors. If you're not familiar with robo-advisors, they're automated investing platforms. Robo-advisors frequently offer more competitively priced investment management compared to a run of the mill asset manager. Yet robo-advisors are not without their downsides, which we'll be discussing today. Knowing the pros and cons of robo-advisors can help folks determine if using a robo-advisor is right for them.

Before that, let's talk about the Bogleheads, a community of investors who believe in keeping it simple, following a small number of tried and true investing principles. You can learn more at the John C. Bogle Center For Financial Literacy at boglecenter.net. 

We will be holding the annual Bogleheads Conference on October 12 through 14th in the Chicago area. The speaker lineup is phenomenal and will include Eric Balchunas, author of The Bogle Effect, Mr. Burton Malkiel, Jason Zweig of The Wall Street Journal, CPA Mike Piper of The Oblivious Investor, Rick Ferri, host of the Bogleheads on Investing Podcast, Christine Benz, Director of Personal Finance at Morningstar, and much more. You can find a link to register pinned to the top of the Investing Theory and News general forum at bogleheads.org

And mark your calendars for the next episode of Bogleheads Live. On June 16, we'll have David Blanchett, Managing Director and Head of Retirement Research for Prudential Financial, discussing retirement planning. Other future guests include Barry Ritholtz, J L Collins and Jim Dahle of the White Coat Investor. You can see the full list of future guests at Bogleheads live. 

We're doing a call for volunteers. If you'd like to volunteer to help turn Bogleheads Live episodes into podcasts, we're looking for both podcast editors, transcribers and help with proofing transcriptions. If you want to help spread the message of low cost investing, shoot me a DM at John Luskin on Twitter. 

Before we get started on today's show, a disclaimer. This is for informational and entertainment purposes only and should not be relied upon as a basis for tax, investment or other financial planning decisions. 

Let's get started on today's show with Dan Egan. Dan is VP of Behavioral Finance and Investing at Betterment. He has spent his career using behavioral finance to help people make better financial and investment decisions. Dan is a published author of multiple publications related to behavioral economics. He lectures at New York University London Business School, and the London School of Economics on that topic. Dan, thank you for joining us today on Bogleheads Live. Why don't you tell us about the conflicts of interest in the robo-advisor space.

Dan Egan: My pleasure. Thank you for having me. Thanks everybody for joining. This is a topic that I probably think a little bit too much about and have thought about too much for too long. So my apologies if I go in and go hard on it. One of the things that I'm famous for repeating a little too much is that Charlie Munger thing, “show me the incentives and I will show you the outcomes,” and how that applies to conflicts of interest in the robo-advisor space. 

And one thing I want to say off the bat is that there is no good platonic ideal here of the perfect setup by which an advisor or an investment manager is perfectly aligned with their clients. We can go into why, but you can actually think about setting it up perfectly. I don't think customers would want to enter into that kind of contract where the investment manager or the advisor shares in all of the outcomes that they're going to experience. So we're talking about that standard thing of like democracy is the worst form of government except all others. So we're going to talk about these incentives, arrangements are the worst. Accepting that everything else is worse than them. 

Go back about twelve years when Betterment was founded. I've been with them for about ten years now. The thought was we want to bring good independent advice to more people and we're going to use technology to do that. We're going to use it to scale it out, systematize it, and allow everybody to benefit from it both in terms of financial planning advice and in terms of investment management. Let's make the computers do the math and do the hard work. And the big thing there was this idea of independence. And it's independent from what? Independent from both a sort of mutual fund or fund complex where they want to put you into their own funds And independent from any questionable broker dealer arrangement where you're getting large commissions or bid/ask spread fees or payment for order flow and so on. 

Jon Luskin: For those of us who aren't super investing nerds, payment for order flow is a super nerdy way of saying that if you're going to have someone either manage your money for you or if you're going to place a trade--maybe you're going to buy an ETF-- and you go ahead and you make a purchase of that ETF, you hope that you're getting a fair price for that. But if you're putting that order through a custodian, or if you have a robo-advisor putting that order through on your behalf, perhaps either that custodian or that robo-advisor isn't necessarily going to have the objective of getting you the best price on that order as much as they're going to send that order to someone else who's going to make a little bit of money on that and is going to send the custodian a little bit of the profit that they make off selling your trade. Which means smaller investment returns for yourself. Ideally as an investor we want to avoid those platforms that are going to be using a technique such as payment for order flow or at the very least if we are using a platform that is using payment for order flow then we alterably don't want to be charged commissions for it. 

To Dan’s point that he hinted at if you're paying for asset management you want to make sure you're probably not also paying for payment for order flow as well, because that's two ways you're paying, and that second payment, that payment for order flow isn't transparent.

Dan Egan: So there were a number of things that, again, we're talking about 10 -12 years ago, we were looking at avoiding from a conflict of interest point of view. So 12b-1 fees on fund kickbacks, large commissions on trades, holding a lot of cash in client accounts in a way where they didn't benefit from the cash that you as a margin lender did. One of the really important components to it was we needed to be able to charge people directly, we needed to be an advisor, an RIA [Registered Investment Advisor] under the regulatory scheme, and people needed to pay us for being an advisor. 

This is actually one of the first most important things, is our clients pay us and that's good because that's how we make money. We are incentivized to do the best job possible both in terms of they pay us for what we do, but also we charge either a percentage of AUM fee meaning 25% of 1%, so if you have $100 with us we would charge you twenty five cents per year. And if you want a la carte ad hoc financial planning advice stuff in addition to that, you pay a one time fee of $150 to $300 to speak for one or 2 hours with a CFA [Chartered Financial Analyst]. So that also gives us some skin in the game, that we have an incentive to try and help your money grow over the long term because if your money grows we make more money and you make more money.

But this issue of them paying us is actually one of the trickiest things because people sometimes think that if they can get something for free it is better than them paying for it. And if you're getting something for free, if you're not the person paying your adviser or your investment manager, unless they are set up as a charity of some kind, they are probably getting paid by somebody else, or they are obviously making money to pay their employees, their investors, whoever it is in some other way. You can think about the possibility of having a free doctor who gets paid by drug companies and treatment companies. You could have a free car mechanic who gets paid by the parts manufacturers, etc. It's not that you wouldn't be paying, it's just that the cost of that paying would be a little bit hidden.

That kind of question, of how are the incentives changing the way people make money, either when it's free or not free, is really the big question. People are smart in finance investment management. They've come up with some very clever ways to not charge the client or charge the client less, or make money in ways that are incredibly transparent to them. I'll come out and say that Betterment is not free of conflict of interest. Just keep that out at the door. We generally want people to have higher asset bases. So generally speaking, getting people to save more, save more to stickier accounts like IRAs and 401-k’s are in our best interests. We want people to consolidate with us so that they hold their cash savings accounts, their IRAs and 401-k’s with us. 

We're not free of those issues either. I think we've done a good job of working within the confines of reality to try and set it up so that we are well incentivized rather than badly, but we have them too. And operating as an RIA under the Investment Advisors Act also gives us regulations that we have to follow. To say we're doing what we believe to be in the best interest of those people who pay us to be our own advisors. And the last thing I'll say, potentially even more powerful than that, we eat our own cooking. My mother, my father, my brother, myself, a lot of people who are my friends, most of the employees here at Betterment are Betterment clients.

And not only does that set up incentives in a good way, but it also means that if there's something wrong, if there's something that we think isn't correct, we're going to come across it in the course of us using our service ourselves. There's a big part of our internal culture that's around helping to check that everything's working well and that we're doing the right thing by being consumers of our own services.

Jon Luskin: I think if I was working at a shop where folks are being charged only a quarter of a percent for investment management, I think I'd be okay with putting my friends and family in those portfolios too because that is a reasonable fee to pay for investment management. 

Now, I've worked at shops that have charged four times that and when that has been the case, I haven't advocated for my friends and family putting their money into those portfolios because that's going to be a huge drag on your investment returns. 

This question is from chipperd from the Boglehead forums. chipperd writes, “being one who hasn't done much research into robo-advisors, I guess my overly elementary question would be if robo-advisors have hidden conflicts of interest, how do we know? Since the premise of the topic is that these conflicts of interest are hidden, and how do these conflicts of interest differ from human advisor conflict of interests? 

Dan Egan: Great question. So the first element of it is actually straightforward, it's just that most people don't know about it. The SEC requires all advisors, be they digital or flesh and blood, to put together some systematic documentation that you can read if you google “SEC investment advisor public disclosure” for any given firm who is registered as an investment advisor, they have to put these together. Generally the salacious bits that you're going to be interested in are going to be in the brochure part two. That will generally open up a PDF doc, where you just do command-F [for Mac; and for Windows control-F] to search for conflicts and there will be a whole section on conflicts of interest that they have to disclose as part of that. You can do it for Betterment, you can do it for anybody.

They will say right there what their conflicts of interest are. Sometimes they will talk about how they attempt to mitigate them or reduce the impact on it, but they have to list out what their conflicts of interest are within that doc. You're not going to see these things listed on their web page when you land there, but there are regulatory required systematic things they have to answer to say what are our conflicts of interest that clients should know about.

Jon Luskin: One way that a robo-advisor can differ from the conflict of interest from a human advisor is going to be normally if you're paying for asset management, you're going to pay that full freight, that 1% or more, and then that advisor is frequently going to include not only investment management but also financial planning. That's where you can get a conflict of interest because if you're going to ask your financial planner, who's also your investment manager, if you should spend down your portfolio to achieve some financial planning goal, there's going to be conflict of interest right there because the investment manager is going to want to keep that portfolio as big as possible. The financial planner, that's not necessarily going to be their objective. Their objective is going to be, hey, what are my clients goals? Certainly with a full freight advisor you can get that conflict of interest. With a robo-advisor it depends upon what you're signing up for.

Dan mentioned at Betterment you can have the investment management-only offering, or you can pay that additional fee and get financial planning as well. And now you've got this conflict of interest because that investment manager and that financial planner is the same person. Normally that's going to show up in the decision to claim Social Security early or pay down debt such as a mortgage.

This one is from typical.investor from the Bogleheads forums. typical.investor writes, “Schwab's fixed income allocation” – and for those who aren't investing nerds, that just means bonds. Fixed income are bonds – ”Schwab's bond allocation, including the cash, has the best one, three and five year trailing performance of any robo-advisor. Granted overall investment returns, the total portfolio of stocks and bonds aren't the best, as the Schwab robo-advisor has a small value tilt, and international allocation which hasn't done well. Other than having the best returns and the lowest cost, what more are robo-advisors supposed to do? Also, Schwab is very upfront about where they earn their money”--and he gives a little copy and paste disclosure about Schwab using their own ETFs. “What does Dan say about how Schwab mitigates its disclosed conflict of interest? Do other Robo-advisors have such provisions? And are we saying that target date funds have hidden conflicts of interest too?”

And to give that last question a little bit of context, let's talk about the target date funds. Vanguard's target date fund is going to be a mix of Vanguard funds. So here the question is, hey, how come the Vanguard targeted fund has Vanguard funds and it isn't also that a conflict of interest too? So Dan, with that, there's a whole bunch of questions there. I'll let you take it away.

Dan Egan: I'm going to split this into a few things. One is historical performance. This is one of these perennial questions where you have to say, is there something systematic in past performance that leads me to believe that it is useful for future performance. That's one where I throw  in the ‘I'm not sure and I don't know that I want to rely upon it” pile. I'm not sure that there's an intrinsic thing. Various different investment companies have people move in and out. I'm not sure if it's the talent or the process. I generally am pretty conservative in thinking that any kind of performance is something to rely upon as a difference moving forward. I would want to know why there is a systematic repeatable component to that performance that would exist in the future. And it wasn't luck. It wasn't randomness in timing. 

Yes, cash looks good when the market goes down and yes, cash looks bad when the market goes up. So I want to know that there is something systematic. I generally downweight historical returns significantly compared to how well does the provider lay out how they do things and why they expect that to be effective.

Are we saying that target date funds have hidden conflicts of interest too? Target date funds aren't advisors. They are not registered investment advisors. They are not held to a fiduciary standard. They're investment companies. And investment companies are expected to put forth investment products so they don't have it because they're not out there holding themselves up as an advisor. But the question, generally speaking of if you go to somebody who's associated with a fund house, be it Vanguard, Schwab, Fidelity, whoever it is, there is going to be a couple of different components of bias in their investment selection that I've seen very clearly over the years. 

One is the straight, simple one that we're all thinking about. Well, if we include our funds in here, we get paid more. I do think that happens, but I don't think it's the full core fundamental reason as much as we might think, especially for places like Vanguard where there's not as much of a profit minimum. On the other hand, there's number one, what I call the “my children are better,” which is if you work at a place you are going to tend to believe that. I think the people you work with are smart, good people and you have to see them in the hallways and in a lunchroom. 

There might be some hard conversations about why would you not include my fund in the portfolio that you were building? Do you not believe in us? Do you not believe in this company? There's also an element of image, that it would be very strange if you saw inside of one company's target date fund, a different company's fund – that would throw you off and say, well wait are they not taking responsibility. Why don't they have a fund that does this?

Where I've seen this in a couple of places is robo-advisors, who for instance, don't have state-specific municipal bond funds in their fixed income portion. And in client taxable accounts, we'll put in AGG or BND or a taxable bond fund even with a high rate taxpayer in New York or California because they wouldn't want to put it into an ETF by another provider. Even though it's clear that the client would be better off if they used a different fund, it would mean going outside of the fund family. 

One of the other places I've seen it kick up is with tax loss harvesting. I'm going to try to avoid going into the nitty gritty of it, but one of the components of tax loss harvesting is that you move out of one fund, like an S&P 500 tracker fund, into a large cap fund that doesn't track the same index. And if a fund company doesn't have some kind of similar yet slightly different fund to tax loss target into, they will just not tax loss harvest, they will just not provide that service for their clients. 

There have been a lot of different ways in which this comes up. A while ago, Wealthfront, one of the other robo-advisors, decided they wanted to roll their own risk parity fund, which was substantially more expensive than a lot of ETFs, and then defaulted their clients into it. That definitely increased their revenue from that point of view. But I actually think there's a lot of subtler- like we are not incentivized to go outside of our fund family, we are not incentivized to do the best thing for you independently because it would be really awkward internals of the company if we did that. At Betterment the process by which we choose funds is code. It's algorithmic and at no point does it ever say if a fund has the name Vanguard in it, prefer it to something else. 

Jon Luskin: To add a little bit about what Dan mentioned with past performance, to give a question a little bit more context, typical.investor wrote, ”hey, the Schwab bond portfolio did really well.” And if you're a little bit of an investing nerd, you'll know the reason why it did well is because we've had a period of rising interest rates. So if you're going to be holding bonds during a period of rising rates, your bonds are going to lose value. Therefore, if you've got a chunk of cash in your fixed income portfolio, then your portfolio is going to do better than the alternative. Now, that's not to say Schwab had some crystal ball and they knew rates were going to rise and therefore decided to hold a chunk of cash. The issue is that this is part of how Schwab makes money, that they pay investors a little bit, just a little bit, for holding cash, and then they invest that cash themselves and earn the difference between what they're going to pay the investors in their robo portfolio versus what they can get on investing cash themselves. So Schwab got lucky, if you will. If we had this conversation perhaps a year ago, this wouldn't be the case. 

To Dan’s point, we don't necessarily want to use past performance as a metric for how investments are going to be going forward, really. We want to look at costs. And with robos, you are able to invest in a much lower cost way compared to more traditional asset management, but yet still a little bit more than if you did it yourself, which is what many Bogleheads do. Dan, let's talk a little bit more about using those proprietary ETFs. You gave a really fascinating lunchroom perspective about, hey, how come you're not using my funds? Why aren't they any good? 

Recently, SoFi Wealth, which has their own robo-advisor, got into some trouble for doing just this. Here is some highlights about SoFi Wealth robo-advisor. They intended to use client assets to make their own proprietary ETFs look more attractive to the market. The SEC says when the firm moved clients into its own ETFs, it sold shares in third party funds, leaving some clients in SoFi’s robo-advisor with taxable gains. The SEC ordered SoFi to pay $300,000 in penalties. 

Dan, is this something common that we see in the robo-advisor space? 

Dan Egan: I work at one of them. I do have my finger on the pulse here. I can say that it has not been something that we've done in no small part because of the fact that we employees, we “eat our own dog food”-- we do stuff to ourselves before we can really do it to clients. And that actually came up recently where we were doing some specific portfolio updates and an employee had something happen to them first, and brought it up and said,' 'hey, this is a little bit odd. This seems like a weird way of doing this. Was this right?“ And that kicked off a whole little, “okay, that's not the best way to do it. This isn't the way that was most tax efficient and it was the most graceful of ways to do it.” So before the entire thing went up to the client base, we fixed it and we improved it. That's a good case study in what happens if you are not eating your own cooking. There have been a couple of different fund companies and robo-advisors who effectively said we are going to do things that make it easier on us, either technically or in terms of portfolio management or in terms of having better branding in our portfolios, where we are going to have the discretion to cause a tax burden on our clients.

One thing that Betterment is extremely careful about is causing taxes and especially being very wary of causing short term capital gains taxes. That's something that has come up multiple times and it's really tricky. Unless you're very savvy about it, you're not going to know until the following April that this has happened to you. Maybe you won't even pick up on that it could have been avoided by holding till you have a long term capital gain. This issue of number one, you make the trades, but the client pays the tax bill. Or number two, you make the trades and the client gets dinged in terms of the bid/ask spread, etc. It's definitely something that, again, I'm not sure that there's any cabal of people sitting around giggling that they're making lots of money off this, but it is definitely a case of the incentives not being aligned because the adviser might want to make their life easier and that just increases costs in a very hard-to-see way upon the client.

Jon Luskin: Taxes are a cost, they're an expense when we invest and any good Boglehead wants to keep their investment expenses as low as possible. Taxes are no exception to that. When opting for an investing approach, we want to consider not just the fees we're going to pay, but also those taxes. We want to look at those investing strategies that can help keep those tax costs low.

This one is from Misnamed Mod from Reddit, who writes, ”what are you not telling us, Dan? Smiley face. My default is to recommend against robos of any stripe, but I'm generally curious to know what the pro arguments are, and curious about all those cons too.”

Dan Egan: Yeah, I love this. Let's go straight at it. So I'm going to start with the cons. I do think that you pay a robo-advisor. I really think at 0.25% that's de minimis in the scheme of things that is not going to make or break anybody's plan or retirement and so on. One of the cons that I am very aware of, though, and I go back and forth on this, is the “experience and knowledge comes from experience” question. I managed my own portfolio for years using an Excel spreadsheet and going in and placing trades. And that experience led me to say, well, I have systematic principles that I want my portfolio to manage by. I want it to be rebalanced on a threshold basis. I want it to be managed with a risk as a time horizon-type approach. 

When I started using Betterment, I used Betterment as a client first before I worked here, it was like, “oh, thank God there's somebody's just going to do this grunt work for me.” One of the things that it is good to do though, is with some small percentage of your money, go out and get the first hand experience of what it's like to invest. What is it like to run a portfolio? When it is time to rebalance because the market just drops 20 or 30%, how comfortable are you doing it?

Are you going to actually be able to go through with the transaction? Being forced to go through and say like, what is a fund expense ratio? What's the turnover of this thing? Like high school calculus, I'm not really sure that it's something that you're going to use over and over again through your life after that. But there is some level of understanding the way the world and portfolios work that it is beneficial to do if you're forced to do it with your own hands.

The pros, I think of it as I have a car. I don't think I've ever changed the oil on that car myself. It is not my competitive advantage. Robo-advisors are really good at doing the day-to-day stuff that I don't think a lot of us want or care to do very effectively. There's a whole range of research around this thing called the Morovec Paradox, which is that when people start writing computers, they write computers and they keep saying, like, when is it going to be more human? When is AI going to be human or machine learning to be human? And what the Morovec Paradox says is that actually computers are really good at the things that humans find very cumbersome. So they're really good at math and doing the same boring thing over and over again. They don't get tired, they're very patient. But they're not creative, they're not emotional.

The benefit to a robo-advisor is exactly that. We can run the algorithms 40 times a day to check for any tax loss harvest or rebalances, and it's going to be really good. It's going to be able to implement things like asset location that is very mathematical in nature in terms of dynamic yields and tax rates and so on. This is a problem that computers love. Lots of complicated, boring math over and over again. 

The real upside to robo-advisors is to offload a lot of the good hygiene, a good day to day brush your teeth, clip your toenails type stuff, that is good portfolio management that I want done. I can offload that for a very low price to a computer who's going to do it very reliably and very well. 

The big downside, I think, is they're less flexible because you're going to follow an algorithm that somebody has written out, and that by offloading that work, you might have some muscles that atrophy in terms of how you understand how portfolios work, or what your investments are doing.

Jon Luskin: I just keep coming back to: It's really a personal decision about whether you want to use that robo or not. Thinking of a couple of clients I worked with recently, one had several million dollars and we were talking about what would be appropriate for him, how does he want to invest some money. And for him, the quarter of a percent on a few million, that's going to add up. So he decided, hey, even though a quarter percent is a reasonable fee, I'm going to do this myself. Alternatively, there's another gentleman that I worked with recently. He was an oral surgeon, the guy made 1.3 million a year. For him, he was using Betterment, continuing to use Betterment for him made sense. His time was much more valuable being an oral surgeon. The first gentleman I mentioned, he was a little bit more of a do-it-yourselfer, had some more free time and less of an opportunity cost.

Let's talk about tax loss harvesting. Financial Planning thought leader Michael Kitces cautions that tax loss harvesting, if not done properly, could generate greater lifetime taxes than not done at all. I'll link to that article in the show notes. Dan, does tax loss harvesting make sense? 

Dan Egan: The things that it depends on, I think some of them are obvious and known at the point in time when you are deciding whether or not you want to turn it on or off. If you are currently in a 0% rate tax bracket, no, it does not make sense, especially if you think that you are going to be in a higher tax bracket later. If you are going to be taking that money out in under a year, which means that you would be triggering short term capital gains in the future. No, it doesn't make sense. 

There are very clear, specific circumstances under which you know in advance this doesn't make sense. Any advisor who is going to be including any digital advisor--Betterment does this--you go through a flow that asks you these questions to say, hey, if this is your situation, then you shouldn't be doing this. There are other ones that sometimes people get concerned about that are much more difficult to try and think about, what are tax rates and tax brackets going to be in the future? Generally speaking, if you look back through history, there are, as far as I know, no changes to the tax system by which somebody in a normal course of their life would have ended worse off because of tax loss harvesting. After you've taken care of, are you in a 0% tax bracket? Is there an obvious reason why you would be in a much higher tax bracket in retirement, or when you're going to be liquidating these things?

And it goes the opposite way too. There are scenarios where tax loss targeting ends up being massive in terms of having to give up far less of your income. One of those examples is I donate securities in kind as my charitable giving every year and it's lovely to be able to pick off those holdings that you probably tax loss harvested to a lower cost basis at some point in the past and you donate them to a charity and the charity won't have to pay the tax on them. You have effectively reduced ordinary income and avoided the tax permanently because I donated that share to a charity. Your heirs might inherit it and they'll get a step up in cost basis.

There are definitely known circumstances where you shouldn't tax our service. There are also known circumstances where it is likely to be extremely tax efficient for you to do so. Anybody who's doing it should go through a quick questionnaire flow that checks for the circumstances and make sure that it makes sense for them.

Jon Luskin: If we don't need any of the securities in our taxable investment account. Go ahead and do that tax harvesting all day long. Get that step-up in basis at death. That is a great estate tax planning strategy then. 

Dan Egan: Yep. Feel free to use forums. I think they're a good place to graze or browse through things, see what people say, understanding that a lot of those comments are probably from the extreme sides of things. Do use the SEC's Investor Advisor search site to look up and check what the conflicts of interest are so that at least you go in eyes wide open about where and why an advisor makes money into conflicts of interest that they might have. I would say, and maybe this is my bias, it is good to pay your advisor. A lot of modern society is gravitating, especially in the tech space, towards somebody else is paying my way and that they have conflicts of interest in a hidden way within that incentive model. If you can choose to pay a reasonable fee to your advisor so that you know that you're getting independent advice, so you're getting high quality advice, and that your adviser is going to worry about you firing them because it will mean they have less money in the future, that is a good arrangement to opt into.

The last thing I'll say is do remember that the money is there to serve you. It is not your job. I've seen people, especially with higher balances, who end up getting owned by their money. They become this servant who has to constantly polish and manage and care about and be anxious on the money's behalf. The money is there to make you have a better life and a happier life. If at any point you're stressed and anxious because of my money, even though I have enough, you need to reassess the relationship and say, maybe I need to make my money the servant rather than the master.

Jon Luskin: That is a beautiful comment to close on. Naturally, that's going to be some of the behavioral finding subject matter which you are similarly an expert in. Money is just a tool. It is not the goal. 

That is going to be all the time we have for today. Thank you to Dan for joining us today, and thank you for everybody who joined us for today's Bogleheads Live. Our next Bogleheads Live will be on June 16. Our guest will be David Blanchett, Managing Director and Head of Retirement Research at Prudential Financial. And we'll be discussing retirement planning. Between now and then, you can submit your questions for David on retirement planning on the Bogleheads forums at bogleheads.org and on Bogleheads Reddit. 

Until then, you can access a wealth of information for do it yourself investors at those same forums, Bogleheads.org and on Bogleheads Reddit, as well as the Bogleheads wiki, Bogleheads Facebook, BogleheadsTwitter, Bogleheads YouTube, Bogleheads local chapters-- of which San Diego is the best local chapter. Bogleheads virtual online chapters, the Bogleheads on Investing Podcast with host Rick Ferri. And there's also the Boglehead books. 

The John C. Bogle Center For Financial Literacy is a 501(c)(3) nonprofit organization at boglecenter.net. Your tax deductible donations are greatly appreciated.

For our podcast listeners. If you can take a moment to subscribe and to rate the podcast on Apple, Spotify or wherever you get your podcast. Speaking of podcasts, we're doing a call for volunteers. We're looking for podcast editors, transcribers, and for folks to proof transcriptions. If you want to help spread the message of low cost investing, shoot me a DM @JonLuskin on Twitter. 

You can also follow the Bogleheads on Twitter @Bogleheads. Finally, we'd love your feedback. If you have a comment or guest suggestion, tag your host on Twitter @JonLuskin. Thank you again. Everyone looks forward to seeing you all again on June 16 where David Blanchett will be discussing retirement planning. Until then, have a great week.