453 How To Talk To Your Parents About Money Before It’s Too Late | Category Pirates

0:15Thanks for pressing play. This is Christopher Lochhead, Follier Different, the odd cast for entrepreneurs, marketers, category designers, creator capitalists, and frankly, anyone who wants to become legendary by being different. because different wins and better doesn't. And I'm your host. All right, on today's episode at Category Pirates, we just recently dropped a newsletter about how to talk to your parents about money before it's too late, and especially how not to make your mother cry. You see, my partner and collaborator, Eddie Yoon, we lovingly refer to him as Pirate Eddie, and he refers to me as Pirate Christopher.

0:57You know, silly, but fun. But here's the bad part. Pirate Eddie made his mother cry. Let's start there. You see, Eddie was trying to help his parents with their money. He's been doing that for decades. And then a few years ago, he gave his mother some advice about what to invest in and what not to invest in. And unfortunately, she ignored him. Which, by the way, is one of the greatest traditions of parenting to parents ignore their children. And of course, children get to ignore their parents. You spend 20 years ignoring your parents' advice, then you become successful and they spend 20 years ignoring yours.

1:35Anyway, that's kind of how it often goes. In this situation, however, Eddie's mother put a significant chunk of their nest egg into these things called annuities or guaranteed annuities. And we'll get to that in a second. Eddie told her he didn't think that was a great idea. And then life happened. And sadly, Eddie didn't follow up with his mom until recently. And then he discovered, holy shit, a bunch of his parents' money is locked up for years in these things that are often called guaranteed annuities. So Eddie started doing the math. And if you know Eddie, he's the master of weird category science.

2:16He's got spreadsheets and historical returns and deep analysis and opportunity costs and the S &P 500 and all these things dancing around in his AIs. And he's always looking at this stuff. And so when Eddie's doing math, he's digging into something. And in this case, the more he dug, the more animated he got. Because from his perspective, he was watching years and years and years of potential compounding in his parents' portfolio disappear because that's what annuities do. We'll get to that more in a second. So he started to explain this to his mom and then he got it all right. He had the data, he had the facts about why what they had done was a mistake with their portfolio.

2:58The math said he was right. The spreadsheet said he was right. The historical return said he was right. The well-documented problems with these annuities that are often sold to older people were right. There's just one problem. Eddie's mother was crying. And that's when Eddie realized that maybe this conversation is not as easy as he thought it was. We'll get back to that. But first, now, let's get to these annuity things. Or what we refer to as the Kaiser Soce of financial products. And if you've never seen The Usual Suspects, first of all, it's one of the greatest movies of all time. I highly recommend you watch it right now.

3:38It's fantastic. This movie, The Usual Suspects, is one of those movies that if I'm flicking around on the TV and I see it, I'll just watch it again. I just love this film for lots of reasons. Anyway, in the movie, there's this mythical bad guy named Kaiser Sose. By the way, how legendary is that? A name Kaiser Sose. Fantastic. And throughout the movie, they're trying to figure out who this Kaiser Sose really is. And I don't want to give away anything, but let's just say the brilliance of the movie is. is that who the bad guy is, is hiding in plain sight. Well, annuities can be a little bit like that.

4:17And I want to be precise here. Not every annuity is necessarily bad. So we're not throwing the entire category under the bus and not every annuity salesperson is bad. And there can be some circumstances where it is an appropriate financial product for the right person. But as a category, annuities are fascinating and not always for good reasons because the annuity category is a masterclass in category design. You see, the insurance companies who sell these things, they know exactly who their super consumer is. Older people who are terrified, scared of outliving their money. And that's a very terrifying thing.

4:55If you're older, if you're not necessarily earning an income anymore and you're living off of your nest egg and maybe you're living well and maybe your health is pretty good. And you start to think, oh my God, if I live to 80, if I live to 90, if I live to a hundred, human beings are living longer and longer. Will I run out of money? That's a very understandable problem for somebody who's not working, living off of their nest egg. This uncertainty is what they tap into. They understand this fear and they make it the enemy. Losing money is the enemy. This fear of running out of money is the enemy.

5:29And most importantly, the financial services companies with these annuity products, they understand languaging, which, as you know, is a core of category design. Languaging, borrowed from Warner Earhart, is sort of the strategic use of language to change thinking, to broaden thinking, to provide a different lens, to frame a different problem in a new and different way. As a result, one of the things we teach category designers is to listen to the words. And these are the kinds of things that people in the annuity category say. Guaranteed lifetime income, downside protection, 0 % floor, etc., etc.

6:11No upfront fees, etc., etc. This sounds fucking fantastic. Who doesn't want that? But then there's something that most people don't understand about language. Language doesn't simply describe reality. Language can frame perception to create reality. That's why languaging is such a powerful part of category design. And the financial services industry is world-class at it. And sometimes the most powerful languaging is technically true while creating an impression that is, let's say, radically incomplete. You could call this, if you were less than generous, lying with the truth. Liquidity feature.

6:56What do you hear? I can get money. Maybe. But what does it cost? What's the, quote, surrender schedule? What happens if you need a large amount of money unexpectedly? Zero percent floor? What do you hear? I can't lose money. Maybe the number on the statement doesn't go backwards, but purchasing power can. Inflation exists. Healthcare costs are on the rise. Opportunity costs exist. No upfront freeze. What do you hear? Oh, this is going to cost me nothing, et cetera, et cetera, et cetera. But you got to understand what's really going on here. And today we have a new way to do that. You see, AI is a complexity destruction machine.

7:37We can take the most complex documents and contracts and so forth, dump them into our favorite AIs and say, give me the TLDR. What does this mean? And then we can go back and forth with the AI, asking questions, pushing back and forth. Well, I thought it meant this. What does it mean that? Well, what does that actually mean? Tell me the truth. One of the things I say to AI all the time is I say, hey, net this thing out. Tell me what this is and talk to me like I'm five. and force the AI to get out of all the mumbo jumbo and tell me what's actually going on with, you know, a complex document. So AI is a complexity destruction machine.

8:14And what many of these companies in financial services, and frankly, in other categories too, is they view the way that they language things to create impressions as a way to create information asymmetry. AI destroys always information, asymmetry. It tells you what things actually say, no matter how much lawyers and marketers try to obscure it. So if your parents are looking at any kind of a financial contract, or frankly, you are too, put it into your favorite AI and then have a conversation with the AI. What am I actually paying for? What commissions are embedded in this? What happens if I need to get some of this money out next year?

8:56What happens if I die next year? What does guaranteed mean? What isn't guaranteed? What is guaranteed? What's the surrender schedule? What is a surrender schedule? Et cetera, et cetera, et cetera. You know, one of the things we teach category designers is law number one in the 22 laws of category design is thinking about thinking is the most important kind of thinking. And the way you can start to think in an unshackled way from the past is to do this thing that we teach category designers called reject the premise. That is to say reject the way it is now, reject the status quo, and then you can think in an unencumbered way about what could be true, what could be possible in the future.

9:37Anyway, what's my point? My point is you could help AI to demystify all the bullshit in any kind of financial contract or agreement. But also, of course, don't trust the AI blindly either. This is your money. This is your future. And this is your parents' future. So it behooves us to fact check it. to use smart questions. And where appropriate, listen, I've had a financial advisor for decades and he's done an extraordinary job for me. And so when making big decisions like this around my parents or younger people in my life, sometimes I'll do it on my own, but the more consequential decision, the more often I'm likely to call my advisor, Dave.

10:20All right. So with AI, it's not, the goal isn't necessarily to replace smart people or people you trust with the machine. No, The goal is to understand what the fuck is actually going on in all of these instruments, that is to say, investments that we make ourselves and especially for our parents. So increasingly, AI can protect consumers from complexity. And it's worth thinking about that with annuities and frankly, all of our financial planning. OK, now let's get on to the problem here. Who's advising your parents? If you are of a certain age, you have parents who are 20, 30, 35, maybe even 40 years older than you.

11:02And as they age, you want to make sure that they are set up to win for a long time and not have to worry about money. So who's advising them? Seriously, do you know the name of their financial advisor? Do they have a financial advisor? Do they have an insurance person? Do they have a banker? Do they have an accountant? Do they have some kind of a Schwab or E-Trade type account? Is some nice person from their church or community group working with them or somebody whispering in their ear? Here's what you'll find out if and when you start to talk to your parents. Many of us discover that we have no idea who's influencing them and who's telling them to buy what.

11:46Now, a little over 15 years ago, my wife Carrie and I, at their request, we were lucky in this case that her parents asked us to sit down and take a look at their finances. Boy, and I'll tell you, if your parents, or in this case, my in-laws, who I absolutely love dearly, call them mom and dad, if they ask you for help, then you're in great shape. If they don't, you know, you have to find a way to sit down and say, hey, mom and dad, I really love you. And, you know, we've been doing some thinking and planning on our financial plan for the long term. And if you're amenable to it, we'd love to talk to you about your portfolio because we want to make sure you're in great shape for the rest of your lives.

12:26You know, that's a conversation that does need to have. Anyway, in the case of my in-laws, what we quickly discovered was that there was a nice lady from church in their life. Let's just call her Betty. And Betty sold annuities. And Betty was a lovely lady. And here's what's important. I don't think Betty thought she was screwing anybody. I think Betty genuinely believed she was helping people. And that she had been sold a story by one of these large financial companies about safety and security. And she actually believed it. And so when she sold these quote unquote guaranteed annuities, what she thought she was doing was sharing that story with other people who trusted her.

13:06Which is why these financial companies want to use this multi-level marketing approach. because people say, well, she's a really nice person. So I'll trust her. And I know her from church or from the community group or from a friend of a friend or whatever the case may be. Because of course, WOM is, was, and always will be the greatest form of marketing. So when somebody shares word of mouth with you and says, oh, I know this nice gal, Betty, and she specializes in these guaranteed programs that help people get income for life, that is guaranteed. That sounds like a nice person selling a nice thing, right?

13:43so here's the aha even nice people well-intentioned people people who truly want to make a difference can be selling shitty products can fall prey to not understanding all the facts which can lead smart people to make bad investments and people we love can be sort of find themselves in a situation of conflict of interest. Okay. So before you give your parents any financial advice, think about, um, think about something, go somewhere private, look yourself in the mirror and ask right in the eye yourself, you know, the person who brushes your teeth every morning, that person look yourself in the eye before you go talk to your parents about their retirement planning in their portfolio and all the good stuff.

14:31Say, do I need my parents' money? That's it. That's the test. The test of whether or not you have a conflict of interest. You see, because children who need money, whether it's inheritance or ongoing support from their adult parents, if you're counting on that inheritance, you're counting on that support, then some part of your financial future depends on what happens to their assets. Ask yourself, would my life materially change if they spent everything? Because if the answer is yes, then you do have a conflict of interest. Now, all conflicts can be managed, okay? Doesn't mean you're evil, just means you're human.

15:10But the incentives matter. If you need the money, maybe you shouldn't be the only person advising them. That is to say, you don't want your inherent conflict, no matter how good of a person you think you are and try to be, as we all try to be. if we need money from our parents via inheritance or maybe support on an ongoing basis, you know, we need, we need somebody else in the room to check us. Okay. Bring a sibling, bring a trusted attorney, bring a CPA, bring a qualified independent financial professional who you know and trust because there's something that adult children can forget. Your parents' money is not your fucking money.

15:53It's theirs. They earned it. They saved it. They sacrificed for it over an entire lifetime. And what they want to do with it while they're still alive and what they want to do with it after they go, that's up to them. They want to leave it to you. And if you have siblings, great. They want to leave a bunch to charity. Great. If they want to give it all to grandchildren and what have you, younger people, great. That's their decision. And also, if they want to spend the rest of their lives flying first class around the world and drinking expensive wine and going to Italy and going on cruises, and my mother loves to go on cruises, that's fantastic.

16:32When we sit down with our parents to talk about their financial planning for the rest of their life, our job is to ask them for how we can help them optimize their money for them, not their money for us. and this is where my partner Eddie says he made a mistake you see Eddie was right about the math remember his mom he had the spreadsheets he had the S &P 500 data by the way most people don't know this the S &P 500's compound annual rate of return on average for the last 70 years is approximately 10 to 11%. And so if all you ever do is put the maximum amount in your retirement plans and then above and beyond the retirement plans, what you can afford to squirrel away in your nest egg, it will compound at 10 % a year on average in perpetuity.

17:29So if you put in$10 ,000, you're going to have$1 ,000 in a year. You put in$100 ,000, you're going to have 10 grand a year. And then that will compound and that will compound, et cetera. By the way, if you ever want to understand how this works, the AIs are great at this. You can pull open your favorite AI and say, if I had a portfolio of$5 ,000 invested in the S &P 500, what would it do over a 20-year period? And you could start playing with the amount of money invested and the timeframe, and you can change things. You can say, well, it turns out the NASDAQ, I think it's the NASDAQ 100, has performed a little bit even better than the S &P 500.

18:10So my point is, just by asking a few questions about a few different life scenarios, you can see the impact of compounding over time. All right. So Eddie then decided to take a different tack. He decided to start really listening to his mom. And of course, he knew his mother wasn't stupid. And she was not financially irresponsible. She's not an irresponsible person, quite the opposite. As a matter of fact, Eddie's mom had spent and has spent her entire life working hard and saving as his father did. And his mother's good at math. She's also good at what's called delayed gratification, right? In order to invest for the future, you have to decide that you're putting some money away for the future.

18:55That in and of itself is called delayed gratification. It's part of growing up and learning to be an adult. Eddie's mom has raised a wonderful family. She's a wonderful mother. She's a wonderful grandmother. And her and her husband were smart. So they accumulated money precisely because they were careful with it. Now, what Eddie was telling her, the instinct that helped you create all this security is wrong. That's what she heard. Think about that. Eddie thought that he was discussing financial returns with his mom. His mom thought they were discussing whether or not she had spent her life doing the right kinds of things and protecting them and doing the safe and smart things.

19:41Those are not the same conversation. Those are different contexts. So Eddie changed the question with his mom. Instead of, why did you buy this? He started asking, what do you want? and that's when the whole conversation changed you see eddie's mom didn't want to depend on eddie and his siblings and their families for the rest of their lives they wanted to be independent she wanted to live comfortably she wanted to feel secure she wanted to leave something to her grandchildren as most grandparents do those weren't financial objectives those were eddie's mom's life objectives. And they really mattered to her.

20:23And she lived her entire life and has lived her life kind of in accordance with that as a true north. So what's the aha here? When we go to talk about money, there's a lot of emotion involved. And sometimes money is not the outcome. Matter of fact, money's never the outcome. Money funds the outcome. Now, of course, that sounds obvious to most people, but think about how backward most financial conversations we have are, how much do you have? What's your net worth? What's your asset allocation? How much you invested in this? What about that? What about what kind of returns you're getting? What's your withdrawal rate?

21:00What's your risk tolerance? All this stuff, which is all important to talk about. However, maybe the first question to tee up all of those more specifics could be something like, what do you want the rest of your life to be? when you do that when you view money as a tool for fueling your life as opposed to money in an end of itself the context shifts three buckets once you understand what your parents actually want you can simplify the plan you don't have to try to impress them you don't have to give them 37 investment categories you don't have to build a freaking bloomberg terminal in their living room that make it simple.

21:42Simplicity is velocity. We've written about it. Simplicity is velocity. So think in three buckets. Liquidity. So how much money do your parents need on a day in and day out basis, week in and wake out, month in, year over year? And so what pays for their life today? Around category pirates, we say, if you look at your, let's just call it your annual monthly spend, what does it require to fund your life? We call that pay for the party. Some people call it cash burn. Some people have other kind of negative terms for it. We think a positive term is more fun. So when you think about liquidity, that's about funding the life that you want to have or pay for the party.

22:23So how much money is required on a monthly basis, on a yearly basis to pay for the party? That's around liquidity. And then there's longevity. What protects your parents if they live a very long time and or need expensive care? You know, many of our parents, even if they're pretty healthy as they age and grow, they might need 24-7 in-house care. Even if they can walk and take care of themselves, you know, people in their 90s often need some extra help around the house more than even the most loving children can give. In addition to that, of course, you could have a situation where one or both of your parents need very expensive medical care because things start to go badly beyond just needing some help in the house.

23:06Regardless, all of us want a feeling of financial security so that we can have the life that we want. We can pay for the party. And if this shit hits the fan with health, we have a buffer to help us with that. Okay, so that's longevity. And then the third L is legacy. What do you want to leave behind? So different families might have different buckets, and you could come up with different buckets if you want. But at a high level, it's easy to think about liquidity, what pays for the party, longevity, do I have a nice cushion over time? So if I live long and or have expensive health care or other issues that come up, I'm okay.

23:46And then when I'm gone, what do I leave behind? That's sort of a simple but yet powerful way to think about it. And then as we sit down and talk to our parents about that, as we construct the plan, we want to make sure it's their plan. They're in control. We are helping them clarify. We're helping educate if required. We're helping bring in others if required, CPAs, advisors, et cetera. And we're doing it in a loving way and in a way that makes them feel good, that they can pay for the party. They have a nice cushion and a good situation if something comes up and they have something powerful to leave behind if that's what they want to do.

24:27Now, this part is also very important. In this conversation with your parents, do not leave your siblings behind. And for the love of God, if you have siblings, think very carefully about how you bring them into this conversation. because money has an incredible ability to surface things in families that maybe didn't get surfaced or have been sitting under the back, sitting under the surface for 40 years hiding down there. And there are all sorts of potential scenarios that we have to deal with. Here's the first one. Mom and dad are going to die. That's going to happen, just like we're going to die.

25:16And if it goes the quote unquote right way, they'll go before we do. Because if you've ever had to, if you've ever seen a parent have to bury a child, you have witnessed a very particular kind of pain. And as much as it hurts us to lose them, it is the law of the universe. Anyway, so your parents will go and they will leave some things behind. Let's say maybe there's a vacation house. Let's say maybe there's three children. Let's say everybody loves the house. Everybody loves Christmas there, summer's there, learning to swim there, ski there, whatever they did there. So now parents are gone. What do we do?

25:54Do we sell it? Do we keep it? Do we rent it? Who pays for it? Do we split it? Does somebody get it? Et cetera, et cetera, et cetera. Suddenly now you have three people who love each other, grieving over the loss of their parents. But if prior to your parents' death, we haven't had the conversation and there isn't a plan. Sadly, and I'm sure you've seen this in your family, I've seen it in mine and certainly my friend's family, you can run into a situation just like this that ends with children and or loved ones in the family not speaking with each other. So in this example, the house didn't destroy the family.

26:32What did is unspoken expectations. what did is not preparing ahead of time, getting in front of this thing. And if we did prepare ahead of time and we did get in front of it, but we weren't transparent with our siblings, that's probably not good either. So we do not create secret financial alliances with mom and dad. Look, I will tell you this straight up, okay? I have been and am the executor of a handful of people's wills. And when I am in that role, I'm very honored to do it. And every single thing I do is a hundred percent transparent with everybody who is involved in that will. No hanky panky up front.

27:24And as the executor, you and we must realize, and again, I'm not a lawyer, caveat, caveat. I'm not a financial planner. I'm just a dude who's been through some shit. Eddie's a dude who's been through some shit in this regard. And we're sharing with you some of these learnings. What I know is if you're radically transparent, first of all, there's a legal hurdle you have to get over. You're not allowed to play hide the hot dog from anybody who's in the will. Okay. And we also always have to remember as the executor of a will, our job is to execute the plan that in this example, mom and dad created.

28:03in a radically transparent way. Okay? Also, remember, fair doesn't necessarily mean equal. Your parents may decide one child needs more help and they may not split everything equally. Maybe they will split everything equally. Maybe they will leave a higher percentage to grandchildren. Maybe they'll say, I don't want to leave a ton to my children and grandchildren. I want to leave them more of a token and I want to donate most of it. Whatever they want to do, that's their decision. And when we're helping them construct their financial plan so that they can have as much financial security as they age as possible, or being the executor of their will and they're gone and we're now implementing their wishes, it's their decision, it's their wishes, okay?

28:53The goal isn't to engineer the outcome that we think is fair. The goal is to help our parents make the right decisions and then when they're gone, make their wishes clear enough so that the people who are left behind don't have to guess. It's transparent. It's clear. Now, here's where we think the entire conversation changes because we've been talking about the danger of your parents losing money, getting bad advice, buying bad products, paying unnecessary fees, running out of money, etc. All that, super important. But what if there's a bigger risk and that bigger risk isn't losing the money. What if the bigger risk is that they die with it?

29:39Think about how many of our parents built some kind of wealth over whatever period of time. It's meaningful to them, no matter what the number is, because they were the ones that saved, they sacrificed, they did the delayed gratification, they bought the shitty car instead of the nice one that they could have afforded, but they wanted to build their nest egg for the long term. Maybe they stayed in their starter house for their whole lives or a lot longer than they might have because they were delaying moving into a dream house. Maybe they skipped going on the trips that they wanted to go on. Maybe they didn't order the super ding dong wine, et cetera, et cetera, et cetera.

30:12And maybe that's why they have money. You know, when I was a kid, one of my favorite books that I read growing up in Canada, there's this book, and I think you can find it if you're in the U.S. It should be everywhere, called The Wealthy Barber. And it's sort of a lot like Rich Dad, Poor Dad. and the stories about how just a barber was very wise with his money and lived below his means and socked away as much as possible and retired very wealthy. Regardless of how your parents got there, they did get there. And then when they retire, something strange happens. Paychecks stop. And if you're somebody who's worked their whole life, and particularly for somebody like Eddie and I who come from, let's just call it very modest backgrounds, Jones, not working feels weird and even a little dangerous.

30:57Even if the math says that your parents are fine, they spent 40 or 50 years developing the habit, make money, don't spend money. And now we're trying to ask them to come up with a plan that actually allows them to enjoy it. That's a psychologically hard mind fuck because we don't want our parent. I don't think, I'll speak for myself. I think Eddie feels this way. We don't want our parents to die with a ton of money. We want them to have a great time with their money while they're alive. Go on the cruises, do the things, buy the new high-end garbage disposal or tote. I have no idea. Do what you want.

31:34You made this financial outcome happen for yourself. Enjoy it while you're alive. All right. So you may have to help your parents understand you have enough. Go on the trip, buy the watch, bring the grandchildren to wherever you want to bring them. Have that giant anniversary party, that ridiculous birthday party, go out and buy that vintage convertible. Fly everybody to Hawaii once a year if you can afford it. Order the fucking lobster. Maybe you develop a taste for caviar. I'll tell you a funny personal story. My mother and I have always had a good relationship, and we have always liked to do things together, even when I was young.

32:16Well, one of the things that we now like to do together, She lives far from me. So one of us is traveling when we're together. So what we've decided to do for the last handful of years, years ago, I saw Cher was playing in Vegas. And when I grew up, I used to watch the Sonny and Cher show when I was a kid with my mom. So I thought, oh my God, wouldn't this be great? So I flew her to Vegas. I didn't tell her why we were there. I just said, we're going to Vegas. and I believe that was the first time she had been there. If it wasn't, it was certainly the first time she'd been there in a very long time, if not the absolute first time.

32:55Anyway, we get there. We got a couple of days on the strip. And of course, the big surprise is Cher, right? Do you believe in love and love? She was awesome, by the way. It was a ton of fun. My mother had a great time. I had a great time. Fast forward to today. I had a conversation with my mom not that long ago. And she says to me, you know, Chris, my happy place is in Vegas with you. So I'm going, taking her back to Vegas to see Rod Stewart soon. Anyway, what's my point? This, I think, is what we want for our parents. And frankly, as a son who loves his mother, I love being able to do these fun things with my mother.

33:36Isn't that exactly what we're saving and building all this money for? In my case, I grew up working class. A single mother from the time I was five. We didn't have a lot of money. I started delivering newspapers when I was about 10 or 11 years old. And as I became successful as an entrepreneur and executive, I started helping my family financially when I was in my 30s. And I've done so increasingly over time. And I will tell you something. One of the greatest joys, one of the greatest motivators to achieve some level of financial success as an adult is the ability to do things for and with your parents that they couldn't for themselves when you were a kid.

34:22They couldn't do. We didn't have it. You know, I bought my parents' cars. And it's an incredible thing when you're a child who can give gifts back to your parents. Because we only have two parents. And as I remind my mother all the time. Without you, I'm nothing. And I say the same thing to my dad as well. And so there's something really beautiful about that. If you are lucky enough to have some success and you can share that success with your parents, fantastic. Because they spent years sacrificing for you and now you can do things with them. All right. So this was never really a pure money conversation.

35:06The thing that Eddie shared with me that he learned when he made his mother cry was he thought he was talking about returns when she was actually talking about safety. He thought he was talking about opportunity cost when she was talking about independence. He thought she was talking about a financial product when in fact she was talking about the rest of your life. So talking to your parents about money isn't really about talking to your parents about money. It's about time. It's about dignity. It's about independence. It's about agency. It's about fear. It's about family. And it's about love.

35:42And there's one more thing that might happen if you have this conversation, something you probably won't expect. You might learn something about yourself because you might watch your mother refuse to spend money. She clearly has and think, holy shit, I do that. You might hear your father explain why he's losing money terrifies him and suddenly understand why losing money terrifies you. You might discover that the weird shit that you do with money isn't weird at all. You learned it from somebody, your parents. Our relationship with money doesn't come from nowhere. A lot of it comes from the house that we grew up in.

36:22So maybe helping your parents understand their financial life helps you understand yours. And if we go back to annuities, I want to be clear. The problem with these things is they are not investments. You put money down and after that money is gone, it's gone. They basically, let's say you put a hundred thousand dollars into one of these guaranteed annuities. They give it to you back in, let's just say$500 a month increments. and if you die before they give you your hundred thousand dollars back they keep the money there is no money it's not a portfolio that's the rub and so once the amount you give them gets burned down there's nothing left and the insurance companies are betting you die before they pay you back that's the problem it's not invested in the stock market in the s &p 500 that grows 10 % in a year.

37:20It's not. They're just giving you your money back and they are making money on the interest that you gave them. Okay. So this conversation is a conversation that's very worth having with your parents. I've been through it with my parents, with my in-laws, and with some of my friends' parents, actually. Not because they come to me or anyone else who has some ability in this area because they think we're smarter than they are. No, no, no, I don't know. They think that not necessarily because they think you know all the things, although that can certainly help. And certainly not because they're not coming to you because they think you want their money.

38:01No. If parents show up and ask a child or in this case, an in-law child to help, it's because they trust them. It's because they know you love them and have their best interests at heart, and you have a little bit of financial or investing savvy and a little budgeting savvy, and that you will listen to them, that you will understand them before you start trying to optimize their portfolios, that you will use AI in a way that probably they're not comfortable with to help destroy the complexity and get to the TLDR and figure stuff out, to help them get great independent advisors where they need it, where it matters.

38:44you see your parents want to know who's advising them and it's primarily you and bring your siblings along help protect their independence help make their your parents wishes clear and maybe help them spend some of the fucking money because i don't know about you i don't want my parents or my in-laws to die wealthy i want them to die having had as much fun and doing as many of the things that they wanted to do. And yes, of course, they want to leave a legacy, which is great. I want to help them do that as well. But I don't know about you. I know many of us have conversations all the time trying to talk our parents into doing the fun thing with money.

39:28And here's the reality. Eventually, there isn't another Christmas. There isn't another Hanukkah. There isn't another trip to be taken. There isn't a nice dinner to go to. and there is no text or phone call. Those of us who've lost parents, those who've lost loved ones, grandparents, it is a shocking experience because one day they're here and the next day they are not. You know, when my grandmother on my father's side was dying, she's one of my favorite people of all time and I used to call her we used to call her Nana and my Nana taught me how to laugh she had incredible sense of humor she was a beautiful woman incredible voice she was a singer always dressed impeccably like many of the women of that era she was a true lady and she could laugh at anything including her own misfortune and of course, if you live long enough, you will experience a tremendous amount of misfortune.

40:34And so my Nana, when she was dying, I believe she was in her early nineties, she had taken it on and we knew things weren't going well. She was living in Montreal. I was in California at the time and I was getting ready to go on a business trip. And I got a phone call from my father and I thought, oh shit, we need to monitor the situation. I threw a couple an extra pair of pants and some extra underwear in my luggage because I thought I might be making an emergency trip. Sure enough, I was in a meeting in Atlanta. A couple of days later, my dad called me and said, I think you need to come. And I did.

41:10And I camped out in Montreal for, I don't remember exactly how long, but maybe a week. And at the time I was a senior executive and doing all this stuff. So I spent all this time with her and it was great. And it wasn't clear that she was going to go anytime soon, that she might actually rebound and get out or what have you. And so, um, I left and she was in reasonable shape, but kind of unknown shape. Well, fast forward and, um, the end comes quickly after it seemed to have slowed down. That often is the case with life. And so one day I was in my office and, uh, my admin says, Hey, it's your dad on the phone.

41:52So I say, hi, dad, how you doing? And he said, just so you know, yeah, Nana's not going to make it much longer. And he said, do you want to talk to her? And I said, yeah, I sure do. And I said to her, hi, Nana. I love you. And she said, I love you too. And then she said something incredible. She said, and I won't be here. when you get here. Because she knew she was going, and she knew that even if I left right then, I wouldn't see her alive. And I did leave right then.

42:36And one of the gifts my father gave me was he taught me how to complete with people who are dying. This experience with my Nana happened when I was an adult. My grandfather on my mother's side died when I was 16. And as he was dying, he had emphysema and he was in and out of the hospital all the time. And when you're a younger teenager, it's no fun to have granddad in the hospital, but I had no context for how serious things were because he did have emphysema. He was a smoker. He worked in a factory. He was in the Navy. You know, things were a lot different back then. Anyway, he went into the hospital before Christmas one year when I was 16.

43:21And my father, Bruce, said to me, hey, I know your granddad's in and out of the hospital a lot, but I think this time might be different. And so if you have anything to say to him, you might want to get that done now. And he said, you know all those stories he likes to tell you, some of which you're sick of hearing? He said, if there's anything you want to hear from him, you might want to get that done now. and so he was in the hospital and I spent as much time with him as I could I heard my father even though he was a young man I got it and my grandfather died that January and so at that early age my father had taught me how to be aware and in these kind of circumstance do everything you can to be powerful to be with them and to complete as best you can Now, why do I share that with you?

44:17I share that with you because when you are with people in their final moments, all of everything we've just been talking about comes into tremendous perspective. And so if you love your parents, as I know you do, and you want to make sure that they have the best possible life for as long as possible and they can deal with any uncertainty and they have the security that you want them to have, it may very well be time to have a powerful conversation with them about money. and learn about certain kind of instruments, certain kind of investment vehicles that are good for them and others that are not.

44:57Do your homework. We're warning you about these annuities because they leave them with nothing at the end. There's no principle. They just, they take your money and give it back to you. And if you outlive the amount, they keep paying you, but you don't get any upside return. Anyway, so if you're lucky, you get a moment where you can sit down and help protect them and help build this for them. And if you're wise, you'll do this long before you need to. If I go back to the story I shared with you about my in-laws, had we not been able to speak with them over 15 years and refocus their portfolio away from these annuities that would have left them with nothing into a careful, thoughtful financial plan that included a good mix in their portfolio of things that return and grow and compound over time.

45:56Well, guess what? They don't have financial trouble right now. They're fine. And had we not stepped in 15 or so years ago, maybe 18, wherever it is now, they would not have been fine and it would have been terrible. And there's two things about that. there's the emotional impact on elderly parents who run out of money that's a big fucking hit for them and if you love your parents like i know you do them running out of money becomes your money problem too because you're not going to let them go down you're not going to let them live in squalor you're not going to let them go without if you can help it and so another reason you want to have this discussion with your parents in a transparent way, open with your siblings, is because their financial problem will cause them pain and suffering.

46:52And it could very well cause you pain and suffering directly too. So go talk to your parents about money, make it fun, and use the money to fuel the legendary outcomes they want in their lives. And ultimately, you can have with them. All right, that's it for today's oddcast. And before you disappear into whatever the algorithm has planned for you next, a couple of things. First, I want to thank you. Thank you very much for your time and attention. All of us here at Follow Your Different, a.k.a. Category Pirates, deeply appreciate you investing part of your life with us. Now, if you got something out of this episode, I'd also like to say don't forget to share two podcasts you love with somebody with two people that you love.

47:37because podcasts make incredible gifts. Unlike most gifts, they don't end up in the drawer. They don't sit next to charging cables. They don't get lost. And they can make a big difference for the person who receives the podcast and make the giver of the podcast feel good. And guess what? It doesn't cost any money and doesn't come out of your financial plan. And if you want to go deeper, don't forget, the business media covers companies. The Wall Street Journal covers companies. We cover categories at Category Pirates. Category Pirates is the newsletter, is the training academy for entrepreneurs, marketers, category designers, creator capitalists, and anybody who wants to become legendary by being different.

48:21Go to CategoryPirates.com today. Check it out and subscribe. CategoryPirates.com. All right. I got to remind you of some critical things here. Number one, did you know that a group of flamingos is called a flamboyant, which is really spectacular languaging when you think about it? A group of ferrets is called a business, which raises serious questions about who is in charge of ferret category design. And of course, a group of pirates is called category pirates. Today's information is provided you solely for informational purposes. And this this oncast is a whole property of the category pirates oddcast network.

49:02And it does contain content known to the state of California to cause radically non-obvious thinking, new categories and exponential results. All odd casts do contain nuts and all rights do remain perturbed. Please contact your door, your door. Yeah, your door, your door. It's a new category of doctor, lawyer, accountant, yoga instructor, shaman, bartender, boat captain. And of course, category designer before attempting to do anything you heard on today's odd cast. Remember that everything is the way that it is because somebody legendary just like you changed the way that it was. And marketing that doesn't produce revenue is called arts and crafts.

49:37We are produced and edited by the greatest of all time, Jason DeFillippo. Check out his podcast, Grumpy Old Geeks. It will make you grumpy and it will probably make you smile. Sarah Knox and Jamie J handle the technical execution around here. Show notes by GM Simon and the Bobas Brothers. RJ and EX do our web development, graphic design. is done by Cedric Biros. Our law firm is Weed & Jack, and our accountants are three balance sheets to the win. Dolly Parton was right. Joan Jett was also right. Listen to Joan Jett. Not everybody was kung fu fighting, and not everybody gets down with the sickness.

50:13Please ensure that your legendary is stowed in its full and upright position. Dance like Iggy Pop. Listen to Blue Rodeo. I love you, Mom and Dad. And hey, Flip, this odd cast really ties the room together, doesn't it? All right, that's it. And today our deepest apologies go out to David Breach and Robert F. Smith of Vista Equity Party. Partneys? Yeah, they're not parties at all, those guys. They're actually not a lot of fun. Vista Equity Partner, David Breach and Robert F. Smith. Sorry, Dave. Sorry, Bobby. We just ran out of time for you. All right, that's it, my friends. Please stay safe, Stay legendary, and until we're together again, follow your different.