The CEO of Abundo Wealth discusses the Advice-Only Network, younger investors’ advice preferences, and why consumers should prioritize financial planning over investment advice.
Our guest on the podcast today is Eric Simonson. Eric is CEO of Abundo Wealth, an advice-only financial planning firm he founded in 2019. In addition, he heads up the Advice-Only Network, which is a platform dedicated to helping consumers find advice-only financial planners. Before starting Abundo, Eric was a financial advisor and managing director of Ameriprise Financial. He’s a certified financial planner and received bachelor’s degrees in finance and English from the University of Minnesota. Eric, welcome to The Long View.
“Our Investment Philosophy,” by Eric Simonson, abundowealth.com, Aug. 2, 2022.
“What Is a Flat Fee Financial Advisor?” by Eric Simonson, abundowealth.com, May 8, 2022.
“Investments Are a Small Part of Financial Advice,” by Jeremy Zuke, abundowealth.com, Jan. 13, 2025.
“When Do You Need a Financial Advisor?” by Lori Bodenhamer, abundowealth.com, June 22, 2022.
“What If You Can’t Retire Yet?” by Chris Mamula, abundowealth.com, Feb. 26, 2023.
“The Value of International Diversification,” by Jeremy Zuke, abundowealth.com, July 7, 2024.
“DIY Investing: Managing Your Own Investment Accounts Is Easier Than You Think,” by Lori Bodenhamer, abundowealth.com, July 20, 2022.
“How to Travel and Still Meet Your Financial Goals,” by Eric Simonson, abundowealth.com, Aug. 1, 2022.
“How to (Properly) Use Your Credit Card Points When Booking Travel,” by Andrew Dressel, abundowealth.com, Aug. 24, 2022.
(Please stay tuned for important disclosure information at the conclusion of this episode.)
Christine Benz: Hi, and welcome to The Long View. I’m Christine Benz, director of personal finance and retirement planning for Morningstar.
Amy Arnott: And I’m Amy Arnott, portfolio strategist for Morningstar.
Benz: Our guest on the podcast today is Eric Simonson. Eric is CEO of Abundo Wealth, an advice-only financial planning firm he founded in 2019. In addition, he heads up the Advice-Only Network, which is a platform dedicated to helping consumers find advice-only financial planners. Before starting Abundo, Eric was a financial advisor and managing director of Ameriprise Financial. He’s a certified financial planner and received bachelor’s degrees in finance and English from the University of Minnesota. Eric, welcome to The Long View.
Eric Simonson: Thank you so much for having me. I’m happy to be here.
Benz: Well, we’re happy to have you here. So, we want to talk about the financial planning firm that you run, but before that—and maybe the main thing that we want to talk about today—is this Advice-Only Network that you oversee. Maybe you can talk about what you were trying to address by starting up the Advice-Only Network?
Simonson: Yeah, I would love to talk more about that. So just a quick definition for your listeners. For those of you who do not know, the term advice-only, what it means is financial planners who do not take custody of investments but still give advice. So, we couldn’t think of a better term than advice-only, but that’s what stuck. So we only give advice. We’re not selling products. We’re not taking custody. And it’s very much a new thing in our industry that started within the last 10 years, and more and more advisors are starting to run their businesses this way. And so, we wanted to create kind of a landing spot for the public and for advisors to come together and really learn about what advice-only is and find advisors that meet that definition.
Arnott: So, can you talk a little bit more about what you mean by advice-only as well as what types of business models wouldn’t fall under that umbrella?
Simonson: So, I think the easiest way to maybe think about advice-only is it works very similarly to other financial professionals like a CPA or a lawyer where you pay them just an agreed-upon flat fee or fixed fee for advice. So there’s no insurance sales, annuity sales. There are no assets-under-management fee. That advisor still will help you. They’ll recommend to you if you need insurance or need annuities, and they’ll give you investment advice, but they’re not going to have their compensation tied to that recommendation in any way. Which, we really believe that’s probably the most transparent, ethical way to provide advice as a financial planner. And within that umbrella, there are different fee types. So, for example, there could be hourly advice-only financial advisors that they can charge $100, $200, $300 an hour and give you advice on specific topics that you need help on. There could be project-based advice-only advisors where maybe you just want a Roth IRA conversion analysis, and they’ll charge you a flat fee for that project. Or there could be ongoing monthly subscription advisors where they’re going to help you throughout the ups and downs of your life for a flat monthly fee. But again, the underlying idea here is that whatever you’re agreeing to pay them is the fixed fee, and there’s never going to be any additional hidden fees or sales pressure involved with that relationship.
Benz: So with commission-based advice, I think most consumers are pretty clear on the conflicts of interest that can be involved there. I’m wondering if you can talk about why you think the advice models that you just discussed are preferable to the dominant form of financial advice, the assets-under-management model, where the advisor is charging an ongoing fee to do sort of all-in financial planning and portfolio management.
Simonson: That’s a great question. I think there’s a number of reasons. The first being what you mentioned that as a consumer, you can feel kind of a comfort and a relief knowing that the advice you’re getting from that advice-only advisor doesn’t have any conflicts of interest really attached to it. So if they’re recommending, hey, go get life insurance. They really, truly want you to have that because they’re not making a commission on that. That’s kind of the easiest one maybe to start with. Secondarily to that, I would say fees is a big piece with the traditional kind of assets-under-management or commission-based advisor, the fees that are being charged to the consumer really do compound and add up over a long period of time versus if you’re paying a flat fee, depending on your portfolio size, that can end up being a significantly less amount you are paying to the advisor over time in the advice-only world. And then maybe the third I would highlight is just the inclusivity of it that with the assets under management-based advisor, they’re typically going to have minimums to say, hey, we’re not going to work with somebody unless they have $500,000 or $1 million to invest with us versus advice-only really you’re able to help anybody who can afford your fee. So in some instances on the Advice-Only Network, we have advisors charging less than $100 a month for advice. And if that is affordable to a consumer, that advisor would love to help them. And I think that’s another big difference.
Arnott: So why do you think the AUM-based model still seems to be pretty entrenched industrywide? And in addition to that, it seems like even though fees on the investment management side have come down significantly, fees for investment advice really haven’t had that same sort of pricing pressure. And a 1% AUM-based fee is still sort of the norm unless you’re at a higher asset level.
Simonson: Yeah, I wish I had a really great answer here. The best I can tell, I think it’s largely inertia, that that’s just kind of how it’s been done. And there’s never been anything to really challenge that. And that’s part of what we’re all excited about in the advice-only space to maybe bring something to light here that can challenge this model and really show that there’s another way to charge consumers that might be a little bit more consumer-friendly. And the second, I think it might have to do with just the economics of it, where an advice-only, an AUM fee, a 1% fee is oftentimes going to be a lot more financially beneficial to that advisor than charging a flat, $3,000, $4,000, $5,000 fee. And you have the idea that as the market grows—which over time, the market has always grown—that AUM fee does give that advisor some nice natural growth to their business, where advice-only advisors, it has to be a little bit more organic, you have to find that client and grow your business that way instead of based on market growth.
Benz: I wanted to ask, Eric, about the advisor perspective on this. What would you say to young advisors who are trying to sort among the different business models for proffering financial advice and might be attracted to the steady cash flows that that AUM model offers? What’s the incentive to them to be an advice-only planner?
Simonson: I’m really fortunate that I get to actually have a lot of conversations with young advisors who are just getting into our career field about advice-only. And what I’ll say is there is a lot of energy right now around young new advisors who want to get into this space, which has been really positive to see. And what I tell them is, twofold. One, it’s the right model for you. To go advice-only, it’s the right model for you if you really are led with your ethics and morals, because that’s the thing that I’m hearing from them, most of the time is they don’t want to feel pressured to sell an insurance policy to a friend. They don’t want to feel pressured to take over someone’s investments and charge a 1% fee. But they still want to help, they still want to give advice and still want to help people achieve their goals. And advice-only allows them to do that in a very transparent way. So that’s the first kind of benefit, I would say, to a young advisor or even an experienced advisor that’s thinking about transitioning their business to advice-only.
The second is we are seeing a lot of growth in this space. By and large, most advice-only financial planners are having no trouble bringing on clients. So, well, it’s true, you may not make as much per client, you might bring on three or four times as many clients, or three or four times faster than an AUM advisor is to kind of offset that. So, it could be an interesting dynamic where you can actually grow your business maybe a little bit faster to start as an advice-only advisor.
Arnott: You mentioned the growth in the advice-only model. And I know Christine has had a lot of conversations with advice-only planners in the Chicago area who are totally overwhelmed with new business and have long waiting lists. So, why do you think there’s kind of a disconnect between supply and demand, where a lot of people say they want to receive advice in this way, but there’s a shortage of people to offer it?
Simonson: Well, I think one is because there hasn’t been a lot of consumer awareness around this, which is why I’m thrilled that you guys are shining a spotlight on this. So, I think that the more that consumers and advisors become aware that this is an option, I think we’re naturally going to see more advisors come into this space. Two, this is a big reason why we created the Advice-Only Network was to try to showcase advisors and let consumers really spread out the wealth to say, hey, this advisor is open to new clients and maybe that can help again with bottleneck that you’re describing that these advice-only advisors sometimes feel because they are growing so fast. But yeah, it’s an interesting problem to have, but one we’re definitely hoping to solve as we all grow.
Benz: So, what kind of vetting process do advisors have to go through to be on the network in addition to having their business model pass muster as advice-only?
Simonson: First and foremost, we’re actually overly strict, I would say, about who is on the site. We’ll do a regulatory check, so we’ll make sure that the advisor is properly registered with their state or with the SEC. We’ll review their ADV to make sure that they—we look line by line and make sure that there are no hidden compensation arrangements with other advisors that they might refer to. We look at the advisor’s website, we look at their fees, we make sure their fees are matching what they’re saying. And so, for consumers who are on the Advice-Only Network, we want them to be really confident that they’re looking at truly advice-only advisors. It’s not a mixture of, hey, this person does advice-only, but they also offer AUM, or this person does advice-only, but they’re part of a larger firm that is a commissioned firm. No, these are all just true RIA, stand-alone RIAs that offer advice-only as the sole product for their clients.
Arnott: It looks like fees in this model can vary pretty widely, so if you’re looking at a subscription-based fee, for example, you might see something of less than $200 a month all the way up to $1,000 a month. Is there a good way for prospective clients to gauge the reasonableness of a given advisor’s fees?
Simonson: Yeah, that’s a great question. And for advisors who are on the higher end of that, I would say there’s typically a reason. Some of them might be CPAs that also include tax preparation as part of that fee, or it might be a very, very niche specialty that they have around, maybe stock-based compensation or small-business planning. So, I would say, really look at the advisor and make sure that if it’s on the higher end of that fee scale, their expertise is matching exactly what you’re looking for, and if it is, that’s a great fit. If what you’re looking for help with maybe is more general financial advice, maybe budgeting, basic retirement planning, cash flow planning, picking benefits through work, those would be standard advice topics that most advisors can have that maybe don’t require quite as high of a fee.
Benz: So, sticking with the fee question, if I’m looking at the network or looking for someone who charges for advice in this way and trying to decide whether a monthly, or a per-project arrangement, or an hourly arrangement is right in my situation, do you have any guidance on how to settle on that?
Simonson: Yeah, that’s a question that we talk about on my company, Abundo, we talk about this quite a bit because we charge a monthly ongoing fee for advice, but there are definitely times where that’s not the right fit for clients. I would say if you are looking for a specific question to be answered, so if you just want to know, should I start taking Social Security now or should I wait until a later age? Or, I just left my job, should I keep my 401(k) where it’s at or should I roll it? Those are great questions for an hourly advisor or for, again, a project-based advisor, but if you’re looking for more entrenched help, if you have a lot going on in your life, maybe you’ve got a family that you’re working on saving for your kids, plus maybe you’re trying to help out your parents, where you want an advisor to hold your hand through the ups and downs of life, that’s where a monthly subscription-based advisor or an annual financial planner would be the better fit in my opinion.
Benz: I wonder, Eric, how you think about a hybrid-type model where maybe I’m paying, say, hourly for the financial planning that I need to have done, but then also maybe some small assets-under-management fee for ongoing portfolio management. Do you think that’s a reasonable idea? Do you think more advisors should use that approach? I’m guessing you don’t, but I wonder why?
Simonson: No, I do. I think it’s a reasonable strategy. Ultimately, anything that moves toward more fee transparency and lower fees, I am very much in support of. I would say from a consumer standpoint, if you don’t want to be the one pushing the buttons on the trades and in charge of the investments for yourself, that can be a great option, as long as that asset-based fee that you’re paying is reasonable. I would push back a little bit, Christine, and just say that I think that the investment piece isn’t as hard for a lot of people as they might believe it is. I think financial planners do a good job of maybe creating opaqueness around just what exactly is happening with the investments and how hard it is to manage that. But I think we’ve definitely seen on our end, helping over 1,000 clients at Abundo, that most people are pretty excited about taking that on. And with our help and with our advice, they actually really enjoy the investment piece. So it still might not even be worth that small fee, but again, for those people who don’t want to do that on their own, and they want to pay a small asset-based fee, that’s totally fine.
Arnott: I guess the flip side of many financial advisors creating the idea that portfolio management is more difficult than it really is or more complex than it needs to be, is that the financial planning side of things is often underrated. Why do you think that is, and are there things that you think advisors can do to help people better understand the value of the financial planning side?
Simonson: I have been so happy to see that financial planning has become more widely adopted in the past 15, 20 years. It used to be that a financial planner, all they did was investments, and that has slowly been changing. And I think, Amy, that the 1% fee—if we’re just going to make a generalization—the 1% fee the advisors charge, I think that they made investing seem more complicated to justify that fee. But now we’re seeing advisors do financial planning and start to offer value in other ways to help cover that 1% fee, which I think is a great thing. But yes, I do think that consumers historically have overvalued the investment planning part of the relationship and drastically undervalued the financial planning part of the relationship, because I think that certainly advice-only advisors, the financial planning is the vast majority of what we do and what we talk to our clients about. That’s really the fun part and the part that changes lives. Investing in one investment or one index over another isn’t going to actually make a huge difference for most people, like budgeting would, or setting up a college fund for a child would, for example.
Benz: I have had that conversation so many times with consumers where they are convinced they need an investment advisor, and maybe they do, but having to quickly make a sales pitch on, well, maybe you should look at a financial planner. How do you approach that when you’re talking to someone who is not sure of what they need and maybe is a little bit skeptical about why financial planning might be a fit for them? How do you address that?
Simonson: Yeah, we recently wrote a blog post about this because, like you’re saying, consumers still think—I had dinner last night with friends, and they still think that what I do is investment advice. And it’s like, no, that’s part of it. That’s like 2% of what I do. I would say, in the conversations I have with people where I like to immediately go, is a pointed question around, hey, do you track your spending? And typically people will be like, no. And you say, well, why not? And then they’ll fumble with an answer. And then that starts almost like crack open a little door to be like, wait, why are you asking me about this? Why do you care about how much I spend? Because that’s not typical for what they would imagine a financial planner would be asking them. Or asking them, hey, are you saving into an HSA through work? Again, another kind of disarming question, like, oh, that’s interesting. Why should I be doing that? That’s how I like to approach it, is start to almost open their eyes to some of these different topics that we actually talk about with clients. I’ve found success with that.
Arnott: We’ve heard that people often start looking for a planner by searching on geography, looking for people in their state or in the vicinity of where they live. Is that changing with younger age cohorts? And do you see more planners and clients meeting virtually these days?
Simonson: One hundred percent. Yeah, I would say it’s changing not just for younger consumers, but really for everybody. Covid obviously created an adoption to virtual online interactions. But it’s just more convenient. We like to tell clients, you don’t have to drive 30 minutes each way to come see us. You’re not paying for the office space that we would have to rent so we can keep our costs lower to serve you better. If you move, you’re not also moving advisor relationships. So yeah, we have clients in over 40 states, and I know most advice-only advisors are almost entirely virtual. There are a handful of them that will still meet folks in person, but it is, by and large, that is a changing dynamic in our industry.
Benz: How about younger clients? I think that the holy grail in the financial advice industry is figuring out what they want, how they prefer to pay for advice. Can you provide any insight on that? Because it seems like your firm does generally target, I would say sub-age 50, but maybe you tell me what are younger clients looking for in terms of financial advice?
Simonson: Yeah, and I might be biased here because of my advice-only background here, but the consumers that we are seeing, and we are talking to, the younger ones, never in their wildest dreams would they ever want to pay a 1% fee. I don’t know if where the education has been coming from with that. I don’t know if it’s TikTok or Instagram, but definitely younger folks are coming to us and saying, hey, I love your model because I would never pay a 1% fee. Like I just know that over time that that wouldn’t be the best thing for me, but I still need help. And younger people are way more comfortable with technology, they’re way more comfortable doing their own trading. A lot of them grew up on Robinhood, Webull, and they’re not afraid of pushing the buttons to buy the index, but they still need somebody to help tell them if they can retire and how much can you save for that. So yeah, I feel very bullish on advice-only as a whole because of the younger generation and what they’re demanding of us.
Arnott: So we also wanted to ask about the financial arrangements for the Advice-Only Network platform. Do advisors pay to be on the platform and are there any benefits that you receive if a client actually signs up to work with a given planner?
Simonson: Yeah, they do pay a small fee. The advisors pay a small fee to us to be on the site, to be listed, but no, we don’t have any type of compensation arrangement or solicitation arrangement with them. Advisors are free to choose whoever they want to work with. We just want them to find the best fit. We have no financial incentive over one person or another. Ultimately, yeah, we’re just trying to make it as easy as possible for consumers to go on the site, filter down to find the perfect advice-only advisor for them, and then hopefully have a great relationship moving forward with that person.
Benz: We wanted to switch over to discuss your firm, Eric, Abundo, which you have referenced a couple of times. You worked for Ameriprise Financial for many years before starting up Abundo. What were you trying to do differently with your own planning firm?
Simonson: I think a lot of what we talked about, probably the biggest thing was I just did not think that the fees, again, that 1% fee, over time, I didn’t think that that was going to be the right thing for the client relative to just investing in the index and matching market performance. I felt like long term they would probably perform better without that fee drag. I wanted to invest in the Vanguard indexes, but I could not do that as an advisor at a broker, and obviously you really can’t do that anywhere. I looked around and I thought, gosh, I would love to be able to help my clients, still give them financial planning advice but just shed some of these investment fees. That’s really where the idea of Abundo was born. I was really not sure if it was going to work because I didn’t know if consumers would be willing to not delegate that investment management component and do it on their own. I was thrilled that right off the bat, people were actually really excited about keeping their investments at Fidelity or Vanguard or wherever it was that they wanted to have them but still get advice around it. Right off the bat, we knew it was going to work, and we’ve been very fortunate to grow substantially from then.
Arnott: What’s the typical profile like for one of your clients?
Simonson: Forty-five, 46 years old is the average. Typically, it’s a couple, so we work with more couples than we do individuals. We also, on average, see that they’re usually about $1 to $2 million in overall net worth. That’s an average. We do work with quite a few younger folks in their early to mid-20s who don’t have accumulated wealth yet. Then we also work with a ton of preretirees and retirees, but on average, it’s mid-40s and a lot going on in their life between retirement, thinking heavily about retirement, trying to manage tax planning and tax strategies, saving for kids while balancing maybe daycare. Those are fun people to work with.
Benz: You create what’s called a financial story for each of your clients. Can you talk about what that includes?
Simonson: Really, our financial story is our version of a financial plan. We call it a financial story to really better mirror what we think of it as. Each person’s life is a constant evolution of changes. Our financial story for them is constantly evolving. Every time we meet with a client, we’re updating their key tasks, their key strategies to keep in mind through this financial story. Then as things are being completed or maybe archived, we’re moving it into more of a finished state and then adding new things to it. It’s a living, breathing document that the clients have access to at all times through our website as well as through an app that we built for them. We love the idea of a financial story because we think that financial planning is very much a narrative that everyone goes through during their lives.
Arnott: It seems like budgeting and helping your clients align their spending with their priorities is a key aspect of what you do. How do those things get out of whack and how do you help people bring them back into alignment?
Simonson: They get out of whack more often than you would imagine. So it’s interesting. I remember during covid, when people were out of work, we actually spent a lot of time talking about budgeting and value-based spending with them. And then once everything kind of opened back up and people were traveling again, it was like, oh, no, my budget has been blown up. I got to revisit that. So yeah, what we do is we have everyone go through a values exercise to really figure out what’s important to them as people. So that might be health or family or security. And once we’ve identified kind of what those pillars are that motivate them as individuals, we like to make sure that their spending is not coming into conflict with that. So if we find out they spend a lot of money on dining out, but maybe they have a value that is much more based in eating at home and cooking. We’ll have a conversation about that and see if they want to revisit that. And we have our financial planning software, it has a built-in budget that we can track their spending. And we don’t make every single client become hardcore budgeters all the time, but it’s great every couple of years to just revisit the spending and see, hey, has it ticked up more than inflation? Do we need to try to cut back in any particular way? And I think at least that’s one of the big reasons why we love ongoing financial planning because that’s one of those things that can be really helpful to do every year or two.
Benz: Are there any spending cuts that you would identify as low-hanging fruit that tend to appear in a lot of budgets where you’re like, oh, here’s an easy place for us to address some overspending, like I’m thinking subscription fees, but are there any others that seem to come up again and again?
Simonson: Yeah, the big one is delivery services. So the DoorDash and Uber Eats. Uber as a whole, those really add up, can be oftentimes hundreds of dollars a month. And so that can be a quick thing to be like, hey, just hop in the car and go get it. And you’ll save quite a bit of money. Dining out can be one that I love to talk to folks about because, Christine, you and I talked about this, we love dining out. I think that’s a fun thing to do. But sometimes it can get overboard for folks. And I ask them, hey, that meal you had two weeks ago at so-and-so restaurant, tell me about that. And they might struggle to even remember what they ate. They might struggle to remember if they enjoyed it or not. And it’s like, OK, well, that maybe that $200 expense that happened two weeks ago, it didn’t have a lasting impact for you. And if you would have instead spent that $200, maybe just having friends over and cooking for them and having some great wine, would that have been a better use of the $200 for you and your values and you as a person? And that can be a fun thing to just challenge people on to get them to be like, yeah, you know what, I probably would have—that would have been a memory that I would have kept on to better.
Arnott: So you mentioned working with a lot of people in their 40s who might have young children. And I’m curious if you ever get pushback from those types of clients who say, yeah, I know I need to look at my budget and spend less in certain areas, but I’m just totally overwhelmed with keeping up with my work and my kids and ordering out and having food delivered is one of the few things I can do to save time and make my life more manageable.
Simonson: Absolutely. It is something we are very mindful of. And all of our financial planners and team, it’s not our job to lecture or to force anybody to do anything that they don’t want to do, but we love to just meet people where they’re at. And maybe rather than just creating a full-blown budget that they’re tracking for months on end, it might just be, hey, what’s one thing? What’s one positive change we can make right now? Maybe it’s cutting Netflix for six months or another subscription for six months and just getting a little bit of momentum that they can feel really good and positive about as the first step. And then of course, as life changes and maybe they have a little bit more bandwidth, we can go a little deeper on it, but we still don’t want to lose sight of it even for those busy professionals.
Benz: I wanted to ask about FIRE—the financial independence retire early. I think my initial connection to Abundo was through one of your planners, Chris Mamula, who is kind of a FIRE person. I’m wondering if you can talk about your thoughts on FIRE and whether you have worked with many FIRE people—people who wanted to gain financial independence earlier?
Simonson: Yeah, we are so grateful and lucky to have Chris on the team, and he has brought a ton of FIRE knowledge to us. We do; we work with a lot of folks who are going down this path. I don’t have an exact number, but it’s in the hundreds for sure of FIRE folks. And I would say there’s actually a lot of overlap between FIRE-focused people as well as Boglehead-focused people, people who are really into low-cost index investing. And those people just have a natural tendency to gravitate toward advice-only because a lot of them have been DIYers, a lot of them have been kind of doing it on their own for a while and reaching out to Abundo or reaching out to an advice-only advisor might be their kind of first taste of professional help. But the key underlying thing for all of them is that they don’t want to give up control of the investments and with advice-only, you don’t have to do that. You’re still in charge; you still manage the investments. We’re just here to support you and guide you along your journey. And so, yeah, FIRE is a fun topic. And in addition to Chris, another one of our financial planners himself actually FIREd. And so he loves to tell his story to his clients and teach them on how they can do it as well.
Benz: I wanted to ask, Eric, about some of the rules of thumb that I hear people in the FIRE community talking about like the 4% guideline. Do you have more refined systems for helping people figure out how much they can safely spend if they’ve retired early?
Simonson: We do. The 4% rule obviously is great as a general rule of thumb. But our financial planning tools and software that we use, it’s going to be much more customized to that individual in terms of, OK, well, do you also have Social Security or pension income? Do you have rental income that can help supplement that portfolio withdrawal rate? And so, yeah, if you had nothing else to go on—I personally always like 3.5% a little bit better just because I tend to be on the more conservative side. But yeah, that’s a good starting point. But again, it really depends on where that money is because if it’s all sitting in 401(k) or IRA, it can be a little bit more tricky to start your withdrawals if you FIRE versus if you’re building up a taxable brokerage account, for example. So yeah, that’s where planning I think can help is just really fine-tune some of the loose ends to make sure that what you’re doing is going to work versus just relying on a little bit more of a blanket statement. Like, yeah, my income is 4% of my investments.
Arnott: What about the idea of taking a more flexible approach to work in general? So instead of saying, I want to retire at age 40 or 50 and then I’m done for the rest of my life, do you think it can be beneficial for people to take a more flexible approach where they might take some time off for a few years to travel and then start back working, or work part-time for a while and then start up to full-time?
Simonson: If we were texting, I would give you a bunch of heart emojis right now because I love that so much. That is something that I think is so underrated. And Chris, that’s really what he did. Chris is like, you know what, I’m going to work at Abundo part-time and be fun employed because he knew that that can be a really great strategy to help him stay financially independent. And yeah, Jeremy Zuke, the other financial planner in our team, same thing with him. He is a big believer in, it doesn’t have to be all or none. It doesn’t have to be, you go full retirement at 50 or 52 or whatever. It can be, yeah, you transition to it. It’s just so hard to know—nothing is permanent really anymore, and we’ve seen so many people who have thought they were going to just retire off to the sunset and they get really bored after a couple years and now they’re doing some part-time job that they just love and they’re happier than they were when they retired. And so I think just having an open mind to all the possibilities and understanding that, yeah, life is very much a winding river of things that are going to happen to you and, you shouldn’t get too focused on the rigidity of your financial plan and your target numbers because it’s just hard to say what’s going to happen even in a year.
Benz: I noticed that you use RightCapital as your financial planning software at Abundo rather than the better-known eMoney or MoneyGuidePro. Maybe you can talk about what you like about it.
Simonson: What we like most about it is that it had the best, in our opinion—they’re all great, all those softwares you mentioned are great—but in our opinion, RightCapital was a little bit better from a consumer usability standpoint. And for us at Abundo a big thing was making sure that the relationship that we’re having with our clients is very collaborative and we want them to be involved and have access to the financial planning tool even between meetings. And so we wanted to use something that we felt like they could understand and feel really good about logging in and looking at their net worth and playing around with. And yeah, and so that’s why we went with RightCapital over the others.
Arnott: How much leeway do your advisors have to put their own spin on client plans and portfolios? So do you have like a house view about whether to use index funds or active funds or do you have certain portfolio allocations that you recommend for different age groups?
Simonson: We, for compliance reasons, we very much have to have a unified view, which we do. So, as a team, we are big believers in passive indexes and just buying the market and have exposure there. But each individual advisor with each individual client is going to have a tailored conversation to that client. And if that client maybe has significant inflation fears, we might look at holding TIPS as part of the bond exposure. So, there’s going to be a little bit, but yeah, it’s not like one advisor is recommending VTI and the other advisor is recommending, an actively managed mutual fund. No, it’s kind of the core portfolio, but then just small changes based on each client’s needs.
Benz: We’re recording this toward the toward the end of April and there has been a lot of uncertainty in the market related to tariffs mainly. Wondering if you are hearing from many clients who are worried about their portfolios and financial plans during this period. And if you have a stock script that you stick with when talking to those clients, or does it vary by the individual?
Simonson: We have heard from, I’m not going to say like the majority of our clients because the Boglehead clients and some of those FIRE clients, those clients aren’t quite as concerned, I would say as others, but definitely a decent percentage of our clients we’ve been in contact with who have had market concerns. And the advice that we give our clients, it actually might be a little bit different than what you’re kind of used to. So I’m a big believer that each person has their own unique risk tolerance. And we want to make sure that we know what that risk tolerance is. And so times like right now are great time to revisit like, are you actually OK with 80/20 or 90/10 or whatever it is that you’re at? And because if people are really, really concerned being down 15%, they might not be in the right investment portfolio. So we’re doing a lot of education. We are also really talking to clients about what it means to take on the risk that they’re taking on. And ultimately, I think a lot of people right now, just because of all the changes that are happening, a lot of people do feel powerless and like they don’t have a lot of control over what’s happening. And even making some really minor investment tweaks like rebalancing the portfolio or adjusting the risk slightly can be enough to really empower them. Like, OK, I’ve taken some action. I feel good. So we’re just really trying to have a really in-depth conversation with as many people as we can just about exactly how much of risk we’re taking on what that means for them, if any changes need to be made. And people have been very appreciative of that.
Arnott: So we’ve seen some articles in the media about, people moving into cash or gold based on fear and panic. Do you see a lot of people doing that or do you think that trend is maybe overstated?
Simonson: I can only speak to our clients. I can’t say for folks who are not working with a financial professional in any capacity, I don’t know what they’re doing, but definitely within our clients and other financial planners who I’ve spoken with, I think that clients have brought it up. They’ve said, hey, should I be doing this? But then the advisor can quickly say, yes or no. But, in our case, like no, gold’s typically not a great long-term investment. So we shouldn’t add it in as a long-term part of your portfolio. And I want to mention too that that was one of the things as an advice-only financial planner that I was really curious about, hey, would clients kind of go rogue on me? And I started Abundo at the end of 2019, which is right before covid. And I was really encouraged that during that covid crash, nobody did anything irrational or anything without talking to me. And so that gave me confidence, like even though clients are in charge of the portfolios, they’re the ones that have the access and the control over it. They’re still relying on us to guide them through what is the right long-term thing for them. And so I think that’s similar with what we’re seeing now. Clients are definitely asking questions, are curious, but yeah, nobody is—we’re not checking in on them and all of a sudden, they’re 100% in gold. That is not happening.
Benz: Well, speaking of clients going rogue, I’m curious, do you ever allow for the mad money portfolio if the client wants to own something that you don’t really think makes good financial sense? Do you allow them to scratch that itch with a small portion of the portfolio or do you generally try to discourage that?
Simonson: Oh, for sure. We let people do that. A lot of people, especially younger people, that can be their outlet to. That little 5% exposures that they have, maybe to individual stocks, that can be the thing that then allows them to stay the course on everything else because they feel like they’re able to do what they want over there. So yeah, it’s definitely not like the majority of our clients, but 10% to 20% have a small portfolio that’s not as, it’s not like crazy, crazy, but yeah, they’re doing the mad money stuff, if you will.
Arnott: One question that’s been top of mind for a lot of investors is whether they should increase their exposure to stocks outside of the US. And, at least so far in 2025, where we’re seeing international stocks finally pull ahead of stocks in the US. Do you have thoughts on how people should approach that decision or a baseline recommendation in terms of percentage of stocks you would want to have in the US versus outside of the US?
Simonson: I remember vividly about a year ago, we were doing a webinar for clients, and we were showing them this chart that was showing international investing versus US investing and how the US investments had outperformed so much over the preceding 10 years or whatever it was. But everything was cyclical. There are periods of time where the international performs and so we were actually showing that chart as a reminder that like, hey, don’t just go all in on the US. Like, we’re recommending international for a reason. And so it’s been really interesting to see that pendulum shift so much in the last four months. And so we have always recommended, we haven’t changed our weighting in international, just recently. We’ve always recommended, if somebody were going to be 100% in stocks, for example, I would say reasonably 20% to 25% should be international. That number would go down, obviously, if you start adding in bonds to the portfolio, but that would be a good starting point. But if you’ve got, if a client is really, really interested in international investing, we could tick it up a little bit. But yeah, that’s a good starting point.
Benz: You mentioned inflation protection and it seems like inflationary worries are running high right now. You mentioned TIPS as a means of addressing inflation risk. Are there any other things that you think of in the toolkit when you’re talking to clients about how you are defending against inflation?
Simonson: Yeah, honestly, it’s staying invested. The best hedge against inflation long term has been the stock market. And that can be a really hard thing to hear during times like right now. But it’s a good reminder to say like, hey, really, your best chance of keeping up or beating inflation is to just make sure you’re not going to cash, you’re not doing anything like that in your portfolio and you’re just staying invested for the long term. That is a conversation that we have all the time with folks, and that’s probably the biggest—we don’t, beyond TIPS, we’re not looking at any type of more exotic inflation hedges. But yeah.
Arnott: Another issue that a lot of people have been thinking about is whether bonds can still fill their traditional role as a buffer asset or portfolio diversifier. And we’ve had some days in the market recently when stocks have been down, but simultaneously, Treasury yields have spiked up. Do you have a view about that pattern? And can we still expect bonds to fill their role as a diversifier against equity risk?
Simonson: Boy, I wish I could see fully into the future on that one. I have to go off of history on this and say that I do think it will stay as a great diversifier and a great hedge to stocks. As you both know, with bonds being so tied to interest rates, eventually, if there is an economic slowdown, if the Federal Reserve is forced to lower rates, that is when bonds are going to outperform. And that is also when usually the stock market is probably going to underperform. And so that could be the time where they really shine and that’s when you want them in your portfolio. So, yeah, we’re not encouraging people to do away with bonds by any means. I think it’s a good time to be thinking about them in a portfolio.
Benz: A related question is the household capital allocation question about people. I’m guessing some of your younger clients probably have mortgages with fairly high rates attached to them. Maybe newer mortgages. Can you talk about how you address whether they should prepay those mortgages? How do you tackle that problem and think about total household capital allocation?
Simonson: I would also give you a bunch of heart emojis for this question as well, because I think it’s a great one. I love talking to clients about high interest debt because, yeah, for somebody with an 8% mortgage right now, I think there is a really, really strong argument to be made to start paying that down more aggressively than you otherwise would. And really the easiest calculation is not perfect, but the easiest calculation is just that interest rate on your mortgage. If it’s not a tax deduction for you, or if it is, you just figure out what is the actual true cost of that interest. And then you compare it to what can we reasonably expect long term in the stock market? And if your cost is 8%, that’s a pretty decent long-term kind of rate to lock in on that savings. And there’s other benefits to actually pay down the mortgage more quickly. It frees up that mortgage payment more quickly, which might help you with that retirement projection a little bit. So yes, high-interest car loans, high-interest mortgages, high-interest credit card debt. That is a great time to be looking at allocating some dollars toward that.
Arnott: So not related to financial planning—on Abundo’s website, you note that you’re huge travel nerds at the firm and one of your personal specialties is travel hacking. What are one or two of your top tips there?
Simonson: Yeah, we are. And getting back to that budget conversation and talking to clients about their values. As part of that, we’re also looking at, OK where are you spending your most money? And if you are spending a lot of money on dining out, for example, we make sure that they have the right credit card to optimize that spend. And my favorite for dining out is the American Express Gold Card. It’s not like the Delta Gold Card, it’s not tied to any airline. It’s just the true American Express Gold Card. And what I love about it is it gives me four points per dollar on all dining out. It gives me four points per dollar on groceries. And that can be a really huge point-accrual benefit to me. So we’re oftentimes telling clients to go get that card. Again, we’re not incentivized. We’re not getting any sort of referral bonus to tell them that, but we still want them to have the best card for them. So that would be one, just really look at your cards and just figure out what are your biggest spending categories, and do you have the best card for that? And then the second thing would be where most people get stuck with their points is they’ll have a decent amount of points, 100,000, 200,000. But then they’ll go and they’ll use the points on the credit card portal.
And when you do that, you lose you lose a little bit of the potential that you otherwise have with them. What I would much rather folks do is actually look at what partners does that credit card have to transfer to. So for example, like Chase, you can transfer your points to United. You can transfer your points to Southwest. You can transfer your points to Hyatt. And an easy one would be like there are there are plenty of Hyatt hotels where you can stay now for 8,000 points a night or 10,000 points a night when that room might actually cost $300 or $400 a night. So if you did that, you’re getting $0.03 or $0.04 per point. Whereas through the portal, if you didn’t transfer your points, you’re only going to get typically one cent per point. So just explore—are there some sweet spots on where I can transfer my points to, to get the most value with my spend?
Benz: I have a lot of follow-up questions on what you just said, Eric, but I wanted to ask one question about points that they can stack up. And I think what many of us are seeing is that with inflation, it’s requiring a lot more points to do things than it once did. So flights require a ton of points to fly free. How would you suggest people approach that? Should they use them as soon as possible or stack them up for some rainy day? How should people triangulate that problem?
Simonson: There has been a lot of point inflation for sure. Mostly because there’s more people nowadays trying to find these deals and there’s more competition for these flights. So I would say, yes, a bad thing to do is to just hoard points and have two, three million points. You’re probably not going to serve yourself well to do that. But at the same time, you still want to have enough points to achieve your desired outcome. And so, for example, if maybe you’re hoping to fly a business class to Europe or to Asia, you’re going to need 150-200,000 points to do that. So you want to make sure you get to that amount at least. But I would say, Christine, to combat this inflation, what we’re talking to clients about is just trying to be as flexible as they can. So it’s true that the average flight nowadays is more; there are still sales, there are still sweet spots. I remember a couple of months ago, we were seeing flights to Europe for like 10,000 points, which was just insane. And that was happening in like 2025. And so just staying flexible to jump on a deal when they come would be probably more of a priority now than ever before.
Benz: Well, Eric, this has been a wonderful conversation. Really great to get travel tips and hear about your firm as well as the Advice-Only Network. Thank you so much for being here.
Simonson: Well, thank you both for having me. I really loved our conversation, and I appreciate you guys having me on.
Arnott: Thanks so much, Eric.
Benz: Thank you for joining us on The Long View. If you could please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts. You can follow me on social media @Christine_Benz on X. Or at Christine Benz on LinkedIn.
Arnott: And at Amy Arnott on LinkedIn.
Benz: George Castady is our engineer for the podcast, and Kari Greczek produces the show notes each week. Finally, we’d love to get your feedback. If you have a comment or a guest idea, please email us at thelongview@morningstar.com. Until next time, thanks for joining us.
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