{"id":125571,"date":"2025-11-10T11:29:07","date_gmt":"2025-11-10T11:29:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/125571\/"},"modified":"2025-11-10T11:29:07","modified_gmt":"2025-11-10T11:29:07","slug":"why-the-wealthy-barbers-david-chilton-says-the-advice-model-needs-to-change","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/125571\/","title":{"rendered":"Why The Wealthy Barber\u2019s David Chilton says the advice model needs to change"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

The Wealthy Barber author David Chilton answers questions about passive investing, estate plans, spending habits, and what the future looks like for advisors.Supplied<\/p>\n

The Wealthy Barber is back, rewritten and updated for a new generation. <\/p>\n

Author David Chilton, who sold more than 2 million copies of the original 1989 book that demystified personal finance for the masses, says the wealth management landscape has changed vastly since, with new registered accounts, products and advice channels. But he adds that some things never go out of style \u2013 namely, \u201cpaying yourself first\u201d to ensure enough savings for the long term.<\/p>\n

In an interview with Globe Advisor, Mr. Chilton answered advisors\u2019 questions about passive investing, estate plans, spending habits and what the future looks like for advisors.<\/p>\n

The first exchange-traded fund didn\u2019t launch until 1990. Today, passive investing dominates much of the conversation. How has the rise of index funds reshaped your views on what smart investing looks like?<\/p>\n

At the time, we didn\u2019t have the robust research that picking actively managed funds to outperform the broad market averages is almost impossible. There\u2019s no perfect way to invest, but the evidence shows that the combination of low-cost index funds and watching your fees is the most sensible way for equity investors to gain access to the markets. <\/p>\n

That means in the advisor industry, you\u2019re going to see more models come out in which that\u2019s the investment vehicle of choice, at least for the equity component of portfolios, and, therefore, the advisor is going to have to be compensated in another way.<\/p>\n

How does the financial advice industry need to improve?<\/p>\n

The industry has come a long way. The training is much better. We have great designations. Clients have started to realize it\u2019s not just about the advisor\u2019s knowledge, it\u2019s about their communication skills. <\/p>\n

The challenge is how do we strike the balance between the industry making enough money to support itself, but also treating clients fairly on the cost front. That\u2019s a difficult balance to strike.<\/p>\n

If you have a 23-year-old looking for financial advice and to set up that first tax-free savings account, if they\u2019re put into high-cost mutual funds, that could hurt them \u2013 that could take away 25 to 30 per cent of their retirement capital down the road.<\/p>\n

But the advisors putting them in those funds make a fairly good argument: \u201cWhat else are we supposed to do? We charge them the proper amount for the time we\u2019re going to have to spend doing this on a thorough basis.\u201d<\/p>\n

Artificial intelligence will come in and play a helpful role. It\u2019s not there yet; there are still mistakes being made. I think AI will improve dramatically in the next 24 to 48 months. You\u2019ll see some efficiency in which the advisor can spend less time, still give the client a fairly solid plan and not be forced to put them into high-cost funds.<\/p>\n

How has estate planning changed in the past four decades?<\/p>\n

It\u2019s much more complex today. We have holdcos now. We\u2019ve got foreign real estate holdings. We have far more blended families. Some people have private company shares. I can\u2019t believe how many Canadians just stick their kids\u2019 names on joint accounts without recognizing potential pitfalls. They will be exposed to the other person\u2019s creditors, for example, and few people seem to know that.<\/p>\n

In the original book, I talked about wills and life insurance. But I didn\u2019t talk about powers of attorney, so I added that to the updated version. Powers of attorney are as important as wills, especially as you get older. <\/p>\n

What part of human nature did you underestimate when you first wrote the book, and what part surprised you the most over the years?<\/p>\n

I didn\u2019t underestimate the downside of what our minds can do to us and the weaknesses we have in human nature. But I may have underestimated the marketplace\u2019s ability to take advantage of that. <\/p>\n

Of course, I didn\u2019t know social media was coming. And now with the algorithms and all the scientific research, there are a lot of very clever, adept businesses trying to get us to spend money. <\/p>\n

So, I don\u2019t think human nature has changed much, but the attack on human nature and its weaknesses has intensified. That\u2019s made it tougher still for younger generations. They don\u2019t only have to battle a higher cost of living and higher real estate prices; they have this ongoing assault against their human nature, trying to get them to part with their money.<\/p>\n

\u201cPay yourself first\u201d is one of the positive things I underestimated. That was a huge part of the initial book, and if anything, I\u2019m a bigger fan of it now because of what people have been able to achieve. The idea is to take out the money before you have an opportunity to spend it.<\/p>\n

What\u2019s one thing that has surprised you about people\u2019s spending habits today?<\/p>\n

How much people spend on cars. And it\u2019s not just the car payments, but the insurance, gas, upkeep and parking. It adds up to a number that\u2019s hard to believe relative to income. For a couple, I\u2019ve seen up to $2,700 a month. It\u2019s not tenable. <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: The Wealthy Barber author David Chilton answers questions about passive investing, estate plans,…\n","protected":false},"author":2,"featured_media":125572,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[7402,697,114,268,8150,85,46,14093,266,267],"class_list":{"0":"post-125571","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-advisor-noregwall","9":"tag-appwebview","10":"tag-business","11":"tag-finance","12":"tag-globe-advisor","13":"tag-il","14":"tag-israel","15":"tag-noastack","16":"tag-personal-finance","17":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/125571","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=125571"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/125571\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/125572"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=125571"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=125571"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=125571"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}