Money Matters Episode 321- Outsmarting The Money Magicians W/ Chris Manske

Money Matters Episode 321

[00:00:00] But I think also I'll, uh, reiterate the importance of any money that comes into your life, any money, whether you made it in the garage sale or it's your pay, regular pay, make sure it all of it goes to savings first, everything to savings first. If you can implement this, you're on a path to being wealthy.

It's just really hard to mess that up. And, and also this happens to be very Eastern, you know, here in the West, we, we say, Oh, all your money goes into checking accounts, your operating account. But, uh, that's, that's not the only way to look at it. And I, and I think that, you know, it's, it's worth it to at least examine why are you putting money in your checking account because you're probably messing up your, your future without even realizing it.

Welcome to Money Matters, the podcast that gives you the strategies and the insights to take control of your financial future. I'm your host, Chris Hensley. And today we have an incredible episode lined up that you won't want to miss.

Our guest today on the show is [00:01:00] Chris Mansky, the author of Outsmart the Money Magicians. He's here with us today. Chris is not only a successful financial advisor, but also a former army captain who uses his unique experiences to guide individuals towards financial independence. In this episode, we'll uncover the hidden tactics used by Wall Street and reveal how you can navigate through them to secure your financial freedom.

Uh, make sure to stay all the way to the end because we're going to get some of those key tips that, uh, Chris might not have mentioned in the book. I'll ask you a few questions outside there and, and just to encourage listeners to listen all the way, uh, to the end. Chris, thank you so much for being on the show today.

It's a pleasure. Good to see you. Yeah, absolutely. Absolutely. And full disclosure, we had a, a, uh, uh, a time when we worked together, even though we weren't in the same . Uh, you, you were a veteran, uh, uh, uh, fa at Merrill when I was there, and I was just going through the beginning of that program. I, I think I [00:02:00] shared with you that you had done a motivational talk for some of the newbies there.

So I remember you from back then. I, I actually got. early and I noticed you were one of the only people that had gotten into the office early as well. And I picked up on that. So just to share that. So Chris, thank you so much for joining us on the show here, but let's dive right into it. That what I really want to talk about is the newest book that you have out.

This one, uh, it's picked up by a major publisher. It is called outsmart the money magicians. This is not your first book. This is going to be, you know, that your most recent book there, but what inspired you to write outsmart the money magicians? And what message do you hope readers to take away from it?

The main message I hope readers take away from reading my book is that there really are tricks and flaws in today's financial industry. And once you understand them, you're much better situated to do well for yourself. Um, [00:03:00] if you like, I could give you a quick example of one of those tricks or flaws.

Yeah, absolutely. Okay. Well, so here, here's a, here's a great example because these things are not hidden, we're all aware of them. But once you put a light on it, it's kind of like, oh yeah, I'm scratching my head. Why is it this way? And so a perfect example of that is for the vast majority of the financial industry, the advisor, that financial advisor.

Is required by their firm to offer almost every possible financial product. So we're talking about, you know, credit cards, insurance products, long term care, mortgages, banking, uh, you know, and by the way, they'll also do investing for you. And so, I mean, this is a clear systemic flaw. No, once you really think about it for a moment, you can see that.

Well, that jack of all trades approach forces the majority of these advisors to be masters of none. And our common sense [00:04:00] really kicks in when, when you put it in that light and it's, look, we need to find that professional that focuses, you know, the master in insurance, the master in investing, the master with debt products, you know, and, uh, it's just for most of, uh, wall street, that's not the way it's set up.

It's a real systemic flaw. I love it. I love it. I, when you said that, I pictured, uh, going into chase bank and then pulling up your account and all of a sudden you get pre approved for a credit card, whether you want it or not when you walk into the bank and it just qualifies you based on your accounts and stuff.

And yeah, nobody needs that. So, um, so I love it. I love it. Cause one of the things you're talking about is, is somebody being a, just a generalist, but not really dialing down into the areas that, That would really help the clients out the most. And not only is that this is systemic with, with a lot of the different firms and the banking investment side and all of that, can you maybe share a personal experience or a story [00:05:00] that significantly influenced your financial philosophy and your approach to investing?

That's a good question. You know, and in my book, outsmart the money magicians at the start of chapter eight, I describe how I was heckled. Off of the stage at a financial conference in New York city. And the reason was because I was suggesting that wall street should have a defined service model for the clients instead of just letting each individual advisor do whatever they want.

And it did not go over well. And, you know, that was 15 years ago, maybe a little bit more. Uh, but, uh, yeah, I am still on the war path for, you know, giving clients a service model that they can understand, you know, this to me is just a, another trick or systemic flaw because. When a client signs those papers and hires an advisor, for the most part, they really don't know how they are going to be taken, taken care of.

[00:06:00] They don't know if that advisor is going to call them once a quarter, or maybe they're just going to get a newsletter every month, or maybe that advisor will give them a present at Christmas and give them a call on their birthday and you know, and there's everything in between. You just don't know. And to make it worse, the advisor might give them a call every quarter and they're really happy with the service.

And then two, three years later, they changed their mind. And the advisors now sending them an email once a month and not really calling them and that service has just changed and there's no way to hold them accountable or hold their feet to the fire because wall street does not have a defined service model.

I love that. I love that. The idea of having this. standard for, for service, for clients, uh, for sure. I, I, I'm being heckled off the stage. I'm assuming that some people didn't like that out there, but, but, but I think from a client perspective, the idea of having a standardized, uh, uh, you know, this is what you can expect out of the service model is, is a, a really good [00:07:00] approach and a good way to do it.

In your book, you discuss various what you would call money magicians, uh, that can mislead investors. Can you elaborate on who these money magicians are and how they operate? Oh, sure. So there's basically, there's two major money magicians in the system and one is the IRS and the other is wall street. And they basically, they operate together to sustain the system.

Get investors to do things that are not in their best interest. Uh, and I don't mean to say like this is some hidden conspiracy. We're all very well aware of it. It's just that we accept it and we shouldn't. I'll give you an example. The biggest. Example, most obvious example of this is the monthly statement, no matter where your money is held, the, uh, the rules for what should be on that monthly statement there across the board.

And we all see the same kind of data. Well, here's the thing. We as clients, we want to see what is our [00:08:00] profit. What is our actual profit or loss? Have we made money? Have we lost money? But the statements do not show that and we often think they do, but they don't. Instead, they show taxable gain and that's not actual profit.

That's not actual gain. And, and this misnomer. They call it cost basis. You know, that instead of showing actual gain or loss, it's a cost basis and a taxable gain or loss, and it often makes really good investments look bad. And, uh, and if we have time, I'd love to give you an example of that. But I know. No, absolutely.

I'm smiling because that's one of the biggest pet. You hit a, you hit a nerve for me. Uh, one of my biggest pet peeves is when a client brings in a statement. This may be a new client and you have to have a decoder ring to figure out what the year to date performance is. And it's kind of all over the place for so sure.

Definitely give us some examples on that. [00:09:00] Okay, well let's start with something that's easy that anybody can understand. Uh, let's say that we are in the, uh, the, the pig industry. We are buying and selling pigs, you know, pork. Okay, so we go out there and let's just make this easy. Every pig, no matter what, Is worth a hundred bucks no matter what it's every pig is a hundred bucks Okay, but we're we're new to this.

We're bad at investing in pigs And so we buy our first pig and we spend two hundred dollars. So right now our Wall street statement would say that we've got an asset that we paid 200 for and it's worth 100 So we have a loss. We've got a 50 loss. This is looking bad. Okay, but then that pig gives birth To let's say three more pigs.

Well, as I said, every pig is worth a hundred. So at this moment we now have Something that's worth [00:10:00] four hundred dollars because we have our original pig and the three babies It's four hundred dollars, but wall street will not show That we have made money and we have anyone would look at that situation say we've made money But what the the statement is going to say is That we've spent 500 to have 400 worth of pigs.

And the reason is because That's the cost basis rules. That's how they show Like if a stock gives us a dividend if it gives birth to a dividend and we get a piglet from our stock Well now we have more stock because we automatically reinvested Any normal person would say that was profit, but that is not considered profit on the statement.

It's lost. It's considered cost basis And so you could have truly have something that you're You're not wonderfully profitable and the statement is showing you that you have a loss and people will look at it and they're like, man, every [00:11:00] month I see this, I've got a loss in this. I need to get rid of this.

And bam, we just got tricked by a serious systemic flaw. And that's very common. Oh yeah. Okay. That's a great example. And I can even see it being a double edge if they get their statement and it's in like a non retirement account and they have to pay taxes on the, uh, on, on, uh, dividends at the end. And they're like, okay, what is, Sean has a, okay.

Yeah, no. I think anything with transparency is going to help the situation. So getting people to understand that is, is, is fantastic. What are some common financial myths or misconceptions that you address in your book and why do you think they still persist? Oh, I love to talk about why they persist.

It's because it's easy. The easy way to think about it is. You know, is the, uh, you know, is what's going to persist the hard, nuanced way, the complex way to think about it, which is usually the right [00:12:00] way. That's what gets lost and becomes a misconception. And I, I mean, my book addresses a lot of misconceptions.

I think probably the one that has gotten the most attention is the set it and forget it misconception. Uh, I'm going to guess that the vast majority of your listeners, that they think It the word it set it and forget it. They think that it's savings. You're supposed to Set your savings aside. And so now you're saving let's say 400 a month into your savings account.

You set it up It's automatic. So you set it and forget it Or the other way people will say that same thing is, Oh, I, you'll pay yourself first. So the first thing that comes out is this automatic amount to savings. That way you know that you saved. And this is such a trick. Because it is the foundation of a lot of problems that everyone is dealing with in America.

Connected to Keeping up with the Joneses. [00:13:00] We, I mean, almost every client that, uh, you know, has talked with me or other advisors is, you know, as I travel and help advisors with their practices, the thing that, uh, you know, we're all dealing with is do we look successful? Are we showing our success in a meaningful way?

Are we on social media in a way that looks right? And so keeping up with the Joneses is an issue and set it and forget it supports it, and here's how that works. I get my money into my checking account. I move 400 over to savings and I forget it. My savings is taken care of, but what's really happened is I've told myself now that everything else in that account is available to be spent because my savings is taken care of.

Everything else is available to be spent. And the problem with that is None of us are robotically living the exact same pay every single pay cycle. Nobody is. Our pay changes. [00:14:00] Maybe we have a garage sale. Maybe we get some gifts for the holidays. We get a little extra money from a side job. We've got that, you know, uh, a side gig that makes us a little bit or we do overtime or we have a bonus that comes in.

There's so many, we get a promotion, you know, there's so many ways that our pay actually changes. And all of that fluctuation, it gets spent in the set it and forget it mentality. Now, I'm not saying that nobody will capture that, nobody will save it. Of course, some people have that discipline. But the system is set up to make you say to yourself, I've saved.

I don't have to save any more. All the rest of it is available to be spent. And I've seen couples, this is, this is a real problem. I've seen couples that they're doing the same savings that they did a decade ago and their lifestyle is shot up. They're spending a lot more money than they did a decade ago.

And It could have been the opposite. It could have been they could have stayed happy with the way their lifestyle was 10 years ago, and all of [00:15:00] that could have been saved. But because of pay yourself first, they don't think that way. It's a real problem. You know what pops into my head when you, when you talk about this is there was a real issue with 401ks when they first rolled out the auto enrollment, the, when they did a poll, the most common number that came up was 1%.

And we know that if you're only saving 1 percent for retirement, that's not good. So one, a couple of the things that you just mentioned here really gives you this, this overconfidence, uh, that you are okay. Uh, when it comes to your finances, that when you set it and forget it, You said, you know, that people's situations change, um, and they're assuming that that the rest of the money is available to spend.

But in reality, that changes on a month to month basis. This is a dynamic thing, right? Uh, great, great information for clients. Uh, because I've heard, I even have heard myself say, Hey, set it and forget it. But we should put this giant asterisk on the [00:16:00] side of it and say, Say that this is not permission to not go back and reexamine.

I, I think this, this is a, an extremely good, uh, good point to make here. You also, now you emphasize in the book the importance of long-term financial planning. What key strategies do you recommend for individuals just starting their investment journey? Um, you know, let me share two with you. I, I think one is going to be an obvious one, but the other one is going to be probably something many people have never heard before.

Uh, so my, my first thought is if you're just starting the journey, reading is an important tool and it's an important tool right this minute. And I don't just mean reading my book. You know, I have a list of books and I'd be willing to email anyone who reaches out to me and ask for it. Uh, it's a great way.

to change your journey for the better. Uh, so that would be my first thought is really take reading seriously. Give yourself 10 minutes a day, you know, an hour a week, some kind of real goal that, uh, [00:17:00] exposes you to, to knowledge. And that, that's a great way to, you know, get yourself starting your investment journey properly.

But my second thought for you, you might not have heard this before is connected to set it and forget it. Like we just spoke of is do not let any money That you earn from any source. Do not let any of it go to your checking account, send all of it to your savings account. So that means you need to go to your employer right now and say, look, I need to change where my direct deposit goes to.

Somehow I got the idea. It's supposed to go to the checking account, but that's wrong. It needs to go to the savings account. Everything goes to savings and then any money that you get is in savings. Then you decide what is your lifestyle and then you truly set it and forget it. The it is your lifestyle.

It's not the savings. You set your [00:18:00] lifestyle and have that come out automatically from savings. And now you can stay that way as long as you like. And when you want to change it, then you'll go in and you can make that change based off of what is happening with you and your family and your household.

But, uh, yeah. If you said it and forget it the wrong way, you're forcing yourself to have to go back and reexamine, go back and reexamine and, and it's not gonna work. But if you do it the right way, you are starting your investment journey so beautifully because your savings account is just gonna get bigger and bigger and bigger.

All of the fluctuation than your income is gonna get captured and saved. I love it. Two really, really strong ideas there. The first one's reading. I mean, boy, every the most common trait I find with people who are the most intelligent is reading, right? Going back. It's just a lifelong thing. And even for clients, when if they're not super excited about investments, I don't let them off the hook.

Here's some books, you need to go and read [00:19:00] these. And I think that's awesome to just tell people, hey, you know, keep reading throughout your entire life. The second thing that you said was do not let any money go into that checking to let that go into the savings first, and you're creating kind of this firewall between the checking and the it was not, um, uh, What the end it turned out to be was your lifestyle.

So you're, you're dialing it in. You're adjusting it. You're not just when we say paying yourself first. Yes, but there's this giant asterisk there. And there's this filter where we're actually putting our lives into the mix. So I love that. I love that. Let's talk about, uh, let's pivot just a little bit and talk about how can investors protect themselves from financial scams.

Unethical practices and investment in the, in the investment world. I'm smiling too. We're both here in Houston. So listeners from outside of the, you know, the state we've got, you know, we had Enron here, uh, we had, had, um, [00:20:00] uh, what was it? State, uh, Stanford, uh, was off down. off a Westheimer, right? So, uh, you know, in the Houston area, we've had these, these financial events that really kind of leave a bad taste in, uh, in the mouth of an investor, right?

Um, talk about that a little bit and what what people can do to protect themselves from that. Well, I think what you're wanting to protect yourself from is the kind of Experience that lowers your net worth in a fraudulent way. I mean, that's the thing you want to protect yourself from. So that could be a cyber criminal that is, uh, you know, infiltrating you through your, uh, technology, or it could just be someone that you meet, that they scam you, uh, through, uh, you know, person to person relationship.

But, but all of those kinds of fraudulent situations. They can be mitigated very well with checks and balances. Checks and balances are a powerful way to avoid financial scams. And so the way to have checks and [00:21:00] balances in your personal life is to separate out the expertise that you rely on. So for example, if you've got a tax expert, the CPA who is separate, From your investment expert who is separate from your estate planning expert and so on.

These people are not connected that except maybe they know each other, but they're not in the same firm or they're not, they don't have any contracts with each other. There's no. You know, uh, uh, you know, deep connection. It's just, they respect each other. That is a great way to put a big firewall between you and the problems out there because those separate people are going to see what the other people are doing.

And they're going to, you know, be able to. Raise the standard of your financial situation. And what's more is when you get some advice from somebody, anybody, and you've got these multiple experts, [00:22:00] you'll be able to go and talk to a second person, talk to a third person. Well, maybe before. I send that hundred grand as a, you know, as a money order, as a, you know, as a money order to Nicaragua.

You know, maybe before I do that, I'm going to ask my CPA, I'm going to ask my financial advisor and you can get some feedback from someone who's in your network and knows your finances. It's a, it's a real good way to insulate yourself. I love that. I love that. That's the idea of having multiple experts on board when it comes to your finances.

You gave the example of the CPA, uh, having a second set of eyes where they're really doing what you said, the checks and balances where they're going in and looking at each, each other's works and everybody sees it a little bit different and the client benefits at the end. Um, I, I'm kind of smiling here too, because I know we probably have stories where some of the worst.

fraud cases. You hear about them after the fact, right? They didn't give you the courtesy of raising your hand and saying, Hey, and bringing [00:23:00] the financial advisor on board or the CPA or asking them. So definitely tapping the resources that you have and having those multiple Advisors, multiple experts.

There is a fantastic way to insulate yourself from these financial scams, the fraud that we're talking about. Let's talk a little bit about the role of emotions in investing. How can investors manage them to make better financial decisions? Well, you know, emotions are a result, uh, emotions are the reaction that you feel in response to the world around you.

So the easiest way to manage those emotions is to see the world around you more clearly with less fear, with less misunderstanding. The fastest, most effective way to accomplish that is by reading, [00:24:00] you know, I think it's Tony Robbins, the famous motivational guru who made famous this idea that if you just read on the same subject, For 30 minutes a night for one year at the end of that year, you know more about that subject than like 99 percent of the global population.

I mean, it makes a big difference. And so reading is your best friend when it comes to managing your emotions because it changes how you see the world. the world around you and that will change your emotional response. I love it. I love it. I, you, you can say nothing wrong when it comes to reading. I, I am a, that is probably if somebody asked me like what's in your top 10 hobbies list, their readings always right there at the top.

So I love that. I love that. Let's talk about, and we've just got about seven minutes or no, I'm sorry, nine minutes. So we're bumping towards the end of the show here, but let's talk about discussing the impact of recent economic trends, market conditions on your investment strategy, [00:25:00] anything in the news or headlines that you think should be on people's radar when it comes to their investment strategy.

Well, I do. Uh, so I think that the, the trends that, you know, we're paying a lot of attention to are connected to major crisis. So specifically, I think it's important that people are aware of what's happening in the South China Sea. You know, what is China doing? What is the result of their, uh, efforts? To, you know, have more influence in that arena, what do they think is next with the Taiwan, you know, that that's an important thing to stay abreast of, but also, you know, Russia's a war right now, you know, I think that's.

Front and center. People are able to see the news on it, but it's starting to, I think, have some, uh, have some tired legs, you know, it doesn't have the pizzazz that it used to, and I could see where people might stop paying attention, but it is important to continue to look at what is happening over there, because [00:26:00] as Europe is reacting to Russia's advance, that's going to have an impact on it.

Uh, not just supply chain, but on, you know, people's individual finances. And then another thing is, uh, the Middle East unrest. You know, this, some of this is kind of politically sensitive. And so a lot of people, they'll avoid it because, well, I don't want to get into politics. We can't avoid the Middle East.

That knowledge of what is happening because whichever side of the aisle you're on politically You need to be aware of what's going and and the last couple items i'll mention are Our debt as a nation and our deficit as a nation You know, that's something that we're paying a lot of attention to as well and I don't think tomorrow that either one of those are going to have a You know, an impact, but I think that to, to not be aware of it is to really put your head in the sand on something that is going to be a problem.

No, I agree. [00:27:00] Every one of those things right now, super important. You mentioned the stuff going on in the China Sea, Taiwan, we've got the stuff going on with semiconductors, but you know, all of this is, is, is. a piece of the global economy. You talked about the Middle East that's tied into energy, right? The Ukraine, I agree.

I think people are getting compassion fatigue. It's just we're, we're, you know, a couple of years into it and the headlines just aren't hitting as hard. But when you look at it from the financial perspective, all of this stuff's super important. And then, and then even macro, you mentioned the, the, just the U.

1. debt, um, what a huge thing, and as a long term. thing that plays into the finances and investment strategy. Ultimately, what advice would you give to young professionals who are trying to build their wealth in today's economic climate? Well, let me reiterate. I said, reading, I'm going to say it again. I mean, make it a part of your life.

You've got to get that exposure to. What experts, you [00:28:00] know, I'm a published author McGraw Hill, uh, published outsmart the money magicians and it's not like I just Could just vomit anything I wanted on the page There's so much vetting and so many eyes that make sure that that book you finally put in your hand That it's a good book.

It's worth it to to you know to really commit to reading but I think also i'll reiterate the importance of Any money that comes into your life any money whether you made it in the garage sale or it's your pay regular pay Make sure it all of it goes to savings first everything to savings first if you can implement this You're on a path to being wealthy.

It's just Really hard to mess that up and and also this happens to be very Eastern You know here in the West we we say oh all your money goes in the checking account your operating account But that's that's not the only way to look at it And I think that you know, it's it's worth it to at least examine why are you putting money in your checking account [00:29:00] because You're probably messing up your, your future without even realizing it.

I love it. Yeah. Imagine a country where we're in Senate, incentivizing savings. It's a, it's held higher than that's a good thing. That's a good thing for sure. So giving us those tools, the, really the idea of everything going into the savings account first, then deciding after the fact, if we, you know, what goes into the checking.

That's huge. We are right here towards the end of the show. Chris, what have I forgot to ask you that you'd like to share with listeners today? Oh, I love that question. Well, I would really like to share the importance of thinking critically. You know, when you read a book like Outsmart the Money Magicians, there's nothing in there that's like, oh, I didn't know that or I'd never heard of that.

But then once you look at it in that light, that critical light. You can never go back. You can never change and say, Oh, I don't know how this works. We'll know once, you know, you know, and it, it, it makes everything different going forward. So, uh, you know, really practice [00:30:00] thinking critically. I love it. I love it.

What a great note to end on. Chris, for listeners who'd like to, thank you for the galley copy, by the way, I've got my copy, but for listeners who'd like to get a copy of the book, what is the best place for them to get a copy? Well, you could just Google outsmart the money magicians. It's sold wherever you get your books, but the easiest, fastest place is probably Amazon.

And I'd love it if you did a review, if you read it and have good or bad things to say, you know, let other people know, that'd be wonderful. I love it. And for listeners who'd like to find out more about you, where can they go to find out more about you? Sure. Uh, my name, Chris Manske, Manske spelled M A N S K E.

You just Google that you'll see all kinds of stuff. Uh, but, uh, another place to go directly would be to my company's website, which is manskewealth. com. I love it. I love it. Chris, thank you for spending time with us today. Have a good rest of the day. Back at you.