Subscribe
Share
Share
Embed
A bite sized discussion on timely financial news and investment topics, to help you maximize your net worth and wealth for the next generation with Justin Dyer and Mena Hanna of AWM Capital.
Justin Dyer: Roger Ferguson has advised
presidents and run a trillion dollars in
retirement assets throughout his career.
We asked what he'd tell
his 25-year-old self.
Market performance did not
end up high on that list.
Somewhere in this conversation, we
started calling it Maslow's hierarchy
of portfolio needs, which is really
the idea that there's an order to what
you fund, and almost everyone really
tries to skip straight to the top.
Roger spent a career
doing it the right way.
This is part three of three.
So far, we've covered how Roger got here
and what he thinks about the world today.
This conversation is about
the long-term investor.
Enjoy.
OBJ, Odell Beckham Jr.
plays in the NFL, recently was reported
to say $100 million net worth is not
enough to build generational wealth.
What do you think about that?
Roger Ferguson Jr: I agree and disagree.
$100 million today is
not what it was in 1960.
There's no doubt about it.
Full stop.
Doesn't mean it's not enough
to build generational wealth.
It does mean that you've really
gotta manage the consumption and
investment in a very different way.
Justin Dyer: I'd love to ask some
questions just around may- more
tailored towards the individual,
a lot of whom are our audience.
Um, and really starting with kind of
a piece of, of, of advice to yourself,
you know, going back to your 20s, what's
one piece of financial advice you, you
may have given, wanted to give yourself?
Roger Ferguson Jr: No, I think
I already told you, actually.
You, um
When I was young, it was pretty clear
that I had to prepare to fend for myself
and save as much as possible, you know.
And, you know, all the cliches about,
you know, investing fully in, in a
retirement account if you have one.
You know, I, I was very, very lucky.
Young people cannot do this anymore, um,
but the ability to actually buy a, a co-op
in a, in a nice neighborhood in New York.
It wasn't big, but, you know,
getting established in real estate,
it's a, it's a dream now for
young people to be able to do it.
Uh, but, you know, the main message of my
life and the main message for 20-year-old
people is, you know, take some portion
of whatever you're making and figure
out a long-term savings plan for it.
if you're working, max
out in, in retirement.
Once you do that, if you've got
any extra income, you know, figure
out a, a long-term savings plan.
things.
Notâ¦
That's true for your population as
well, you know, dollar cost averaging.
Justin Dyer: Yeah
Roger Ferguson Jr: They're just a
bunch of basic, basic, simple things
that you can do, and it doesn'tâ¦
If it's $1,000 or $100,000 or $1.50,
you know, start to use
those tools right away
Justin Dyer: Yeah, I mean, in our
population, our clientele, for the
most part, it's even more compressed.
You have to be even more
disciplined 'cause their
earning window is, is so short.
We, we jotted this down.
I think we sent this to you ahead
of time, but, um, and and Mina, you
can, you can jump in here as well.
But, uh, OBJ, Odell Beckham Jr.
play- plays in, in the NFL, I guess
recently was reported to say $100
million net worth, I believe is, is
what's implied here, is not enough
to, to build generational wealth.
What, uh, what do you think about that?
I'm curious if you would agree or,
or disagree to kind of put you,
put you on the hot seat there.
Roger Ferguson Jr: Um
I agree and disagree.
So, you know, $100 million today
is not what it was in 1960.
There's no doubt about it, full stop.
Doesn't mean it's not enough to
gen- build generational wealth.
It does mean that you've really gotta
manage the consumption and investment
in a, in a very different way.
You know, you-- If you have, if you
have $100 million, you've gotta be
careful not to think of yourself as
being super wealthy if you want that
to be a multi-generational pool Um,
you know, and so, you know, if it does
surprisingly enough mean living within
a budget and actually having your budget
be more constrained than you might
imagine, 'cause $100 million sounds
like it's a massive amount of money.
if you're thinking about, you know,
a generational pyramid that gets
to be, you know, three kids and
then, you know, 17 and then whatever
it may be, that, you know, you
really have to, you have to plan.
and what that means at the end of the
day is you've gotta really restrict
the consumption early on to get
the advantage of, you know, patient
investing over long periods of time.
Justin Dyer: Which, which that, it's a
phenomenal point and I, I just wanna hit
on, especially for a professional athlete.
I don't know, I don't know OBJ's age, but
athletes, yes, you have the compressed
earnings and you need to be incredibly
disciplined and saved, but you have the
incredible benefit that you're, you have
that pool of money at a very young age,
and the power of compounding, if you're
disciplined, can be absolutely phenomenal.
It is, it is really, uh, implied
in exactly what you're saying
Roger Ferguson Jr: No, it is.
But you've gotta do both
Justin Dyer: Yeah
Roger Ferguson Jr: You, you gotta
be disciplined about consumption.
Y-y- I don't know how many Maseratis
one actually needs, if any,
and maybe even a smaller house.
And then you've gotta
be wise about investing.
And, you know, s- and one of the
major-- regardless of how wealthy
you are, the diversification
story is also really important.
You know, because, you know, in this
modern era, I think a lot of folks think,
"I'm just gonna shoot for the sky."
And that may make some sense
because, you know, you may get lucky
and get the next, next, you know
Alphabet or, or, or, or Elon Musk
rocket ship that goes nowhere but up.
But you may not.
And so you also need a portion of your
portfolio that's in, call it index fund.
Um, and you, and you really need
to think about, you know, owning
all of America, which is what an
index fund may allow you to do.
And, and so, you know, the kind of advice
that I hope you guys are giving is about
thinking through a diverse portfolio
where you have some stuff that's really
high risk and hopefully high reward,
but, and then some stuff that maybe is,
seems less frothy and less exciting and
less sexy, but starts to build a base on
which that generational wealth can ride.
And I, I don't know how
you, you know, you mayâ¦
I don't know how you guys think about
advising your clients, but, but some range
of that discussion's gotta take place
Justin Dyer: it,
Mena Hannah: Sounds like you
have a cheat sheet somewhere
there.
Justin Dyer: know, yeah.
We, I, I love to frame it.
I, I don't know if this resonates with
you, but, uh, y- I'm sure you're familiar
with Maslow's hierarchy of needs.
We, we say Maslow's
hierarchy of portfolio needs.
You need the, the basic
boring stuff first, and then
you can build on from there.
And yeah, and, and, and, and
diversification is truly your friend.
Even in the, the higher risk, higher re-
reward, reward stuff, you can still be,
um, diversified in, in the right way.
Uh, along those lines,
I'm curious how i- and if
Roger Ferguson Jr: since I,
since I intuited that, will you
hire me if I, if I need a job?
I'm just
Roger Ferguson III: No, we're not hiring.
We're not hiring
Justin Dyer: Oh, Ro- Roger shut that down.
Okay.
We, you
Roger Ferguson III: it's a prepared mind.
you know?
No, we gotta, you gotta
give them something
to
yearn for, right?
If you just hire them off the bat, we
found out that's not what motivates them.
You gotta give them
something to to chase, right?
You gotta learn more about AWM.
Yeah, there's a lot,
there's levels to this.
Roger Ferguson Jr: re-repeat the, the
Roger Ferguson III: Yeah.
Yeah.
We're not just gonna give you
the job, and you're not a--
you gotta be a social person.
Put you through coaching, all the above.
Roger Ferguson Jr: Oh sh- I gotta
talk to your clients, figure
Roger Ferguson III: Exactly.
You get.
it.
Yes.
Exactly.
Justin Dyer: You gotta be a
Mena Hannah: The email address
is also taken.
It's gonna be, it's gonna be an
Roger Ferguson III:
already one RFerguson@AWM.
Thank you
Mena Hannah: already one
Curtis in AWM, I think.
Justin Dyer: but, uh, well, l-
one of the last questions here,
um, kind of along these lines.
Do you have any tips or tricks
for listeners, young individuals?
How do you tell a real opportunity from
something that's just absolute hype?
I mean, and, and, and like you
just kind of alluded to, in
this day and age, there's such
a mindset around get rich quick.
Social media's so influential and yeah,
I'd love to hear your wisdom there
Roger Ferguson Jr: Yeah, so
look, I, I think there's no
such thing as get rich quick.
You may get lucky, uh, but the, uh,
I've been doing this for 50 years.
You know, there's, there's no
substitute for the kinds of advice it
sounds like you're giving your folks.
The only thing I'm always looking
for, particularly for, you know, the
startup world, et cetera, is this
company actually solving a problem that
people want, that people will pay for?
Now, you know, to be fair, every
once in a while you get a genius
who, you know, creates the iPhone.
You know, if somebody walked down
the street and said, "I'm gonna give
you something in your pocket that's a
typewriter and a telephone and a camera
and, and, you know, a, a TV," you,
you, y- you'd think it's massive thing
that's a suitcase So there are, there
will be genius products that emerge.
But what I would also look for in
this world of hype and new things is,
is this actually solving a problem
that people care about or is it
another dot-com, you know, story?
Um, and when I do my own investing,
I really wanna see something that
has a technology that actually works.
I wanna see what I call product
market traction, uh, product
market fit or traction, i.e.
there will be somebody who says,
"I'm willing to pay for that
tomorrow if you can create it."
And then obviously you wanna have a
team that's actually got the range
of skills to, to not just envision an
idea, but actually bring it to market.
and so, you know, I'm always looking for,
that are solving a problem and the team
that comes out of an industry that, know,
knows what those problems are, and then a
technology that actually has been proven.
you know, the, the challenge
Roger Ferguson III: Sure.
Roger Ferguson Jr: theory of investing,
by the way, is you'd probably look
at Elon Musk and say, "I'm not gonna
do any of those things," right?
Because we've never actuallyâ¦
He's building a technology that will,
you know, catch rockets when they
return in the so-called chopsticks.
You know, he's building, you know, the
first electric car out of stuff that does
exist, but no one's ever done it before.
And so that's, that's the dilemma about,
you know, thinking about investing in
this era because you've got the wealth
creation of the geniuses that are driving
things, and then you've got the maybe slow
but steady accretion of wealth for really
smart people that are actually solving,
you know, sort of here and now problems.
getting exposure to both of those is
really, you know, is, is really, is
Roger Ferguson III: We
were, because we were pretty
Roger Ferguson Jr: And, and in, in this
modern era when we've got, you know, so
much excitement going on, trying to figure
out, you know, which bucket you're in.
So it's back to your, you want a
portfolio, probably has a, a bunch
of moon, some moon shots in it.
then even for your alternatives,
you probably want a portfolio where
there's a high degree of confidence
that this actually is likely to work
because it's solving a problem that
people in the industry know exists.
And, you know, gettingâ¦
And, and that, that's for your
private money, you know, much
less for your, your public sector,
publicly traded company money.
Mena Hannah: As an angel investor and,
and the CIO of, of a venture firm now, are
there any checks that you've written where
you've, you've
regretted them, you've fallen into some
trap, lessons learned that you would never
kind of write that check again based on
the attributes and, and the functionality
that you saw either with, with the person
that you were investing with, the maybe
company problem it was addressing yet?
Roger Ferguson Jr: So it's
almost always the person.
I mean, every once in a while I will
have an investment in, you know, it'sâ¦
You take some technology risk,
okay, you know, that, that's fine.
Um, ironically, with enough
time, most technologies work.
Uh, but I think what happens is
the ability of the leadership team,
uh, to sort of get it balanced.
And so if I have to think about
investments I made where I
wouldn't make it again, it's almost
always about the leadership team.
And importantly, it's a- about
the ability to, to swap out the
leadership team as things get going.
You know, the other mistake that I
see, um, anyone makes in investing,
including myself, is the team that's
zero to one may not be the team
that's one to five and certainly
not the team that's five to fifteen
other mistake I've made
a few times is, you know
So much of this is about
execution and focus on detail.
Um, and, and, you know, thisâ¦
And there's some folks who get carried
away with their vision, but don't actually
have any construct of how to, how to turn
that into, into a, a workable product.
Um, so at the end, name it, I
mean, it's almost always something
in the people chemistry, right
people in the right seat, you know,
ability to flex, ability to grow.
almost never, you know, this
technology just will never work.
The other, the other mistake that
one makes, particularly in early
stage investing, um, is there's some
things that just cost massive amounts
of capital to get off the ground.
You know, in the United States, if you
have a great new idea for a drug that
has to go through the FDA, it's a six,
seven-year process if you're lucky.
not quite consistent with,
you know, VC kinds of returns.
Uh, and, and, you know, even the
deepest, deepest pocketed people will
find that they're, they're stretched
if they're getting behind nothing
but, you know, single-use drugs that
have to go through an FDA approval.
That, that's, you know, even, even,
even big drug companies find themselves
having, having struggles in that space.
make sense, that
Roger Ferguson III: Yeah.
Yeah, absolutely.
As
another, maybe another,
softball/rapid fire question.
Who, who's your idol?
Who do you-- who have you looked up to
your
whole life, mentors, and why?
Roger Ferguson Jr: I've had a, yeah,
good que- I've had a ton of mentors.
Um
As I think back on it, they all
have a couple of things in common.
You know, one is they
actually have expertise.
I mean, you know, uh, uh, names you,
y-y-even you Roger would know, you know,
uh, uh, Jim Goodrich, who was my, my
boss at, at, at McKinsey and Company.
A guy named Dick Caves, who
was my dissertation advisor.
Um, obviously in a different
way, Alan Greenspan.
Um, but they're also, all my mentors
have something else in common, which is
they are just incredibly kind people.
You know, I think we underestimate
the importance of being, the word
now is empathetic, but I would
use the word just sort of, uh,
you know, a generally kind person.
I mean, I really, you know, I really do.
I, I want to be able to balance
EQ and IQ, um, and it, it's those
folks that I really admire most.
And, you know, and I've been in the
room with people who are literally
the smartest people in the world, and
what I've observed is their absence
of EQ is just a massive Achilles heel.
Justin Dyer: Hmm.
Roger Ferguson Jr: The flip side is
you can't just be a nice guy without
having, you know, the, the, the,
the, the gray material that matters.
And so th-these folks are, you know,
the folks that I, I look up to that
have been my mentors, um, so to speak
Roger Ferguson III: Yeah
Justin Dyer: Ki- along those lines and,
and maybe bringing it, this to a close,
um, I'm a fan of, of Tim Ferriss, who
has had a very long-standing podcast,
and one of the last questions he, I don't
know if he does it anymore, but he asked,
he asked some of his guests is, "If you
had a billboard, you know, that many,
many people, uh, saw and drove by each
day, what's a simple phrase or statement
you would put on that billboard?"
Roger Ferguson Jr: Well, you heard it.
It's the phrase my parents asked
me, "What did you learn today?"
Justin Dyer: Yeah, it's great
Roger Ferguson Jr: You know, there
are lots of other things you can say.
It's, it's not as aspirational as some
things, you know, but it's, it's so
much of it is as, as you know, you,
you work with athletes, it's, you
know, it's all about the coaching.
It's the self-coaching or taking
coaching from other people.
You know, you, you, you had a phrase
that would be a great, what is it?
Com- uh, don't compete.
Uh,
Justin Dyer: Uh, don't compare, compete.
Yeah.
Roger Ferguson III: Yeah
Roger Ferguson Jr: compare, compete.
Justin Dyer: Yeah.
Or compete, don't compare.
I don't-- Yeah, there's, there's
an order there, but- Right
Right
Roger Ferguson Jr: you know, I like
the one that's the, not the Churchill
quote, but everyone thinks it was,
which is, you know, failure is
never fatal, success is never final.
The rest of that sentence is, you
know, it's, it's all about the,
the will to keep going that makes a
Justin Dyer: Yeah.
One
Roger Ferguson Jr: uh, I've
got another one I put up.
I've got a lot of them.
not a, it's not a career
ladder, it's a climbing wall.
Justin Dyer: Yeah, I like that
Roger Ferguson Jr: really important for
professionals to recognize you're gonna
get knocked down, you're gonna to go
sideways, then you're gonna take off, you
know, chutes and ladders, whatever it is.
Justin Dyer: I think that's actually
a, that's a really relevant quote
to professional athletes as well.
I mean, you, you know, you're climbing
and you're, you're solely focused
on that route and, and it's gonna
end, you know, and you're gonna have
to traverse and, and, and whatnot.
Um, it's, it's really, really powerful.
Well, Roger, you have, uh, shared
all sorts of wisdom with us today.
I, I certainly am better off for it.
I think our listeners definitely will
be as well, and I, I truly can't thank
you enough for your time, so thank you.
Roger Ferguson Jr: Great.
Thanks a lot.
It was really a, a great
joy to get to do this.
And, um, you know, I do hope that
some of this sticks together and
your listeners actually get to learn
Justin Dyer: Oh, we know.
We, there's, there's a lot, there's
a lot of good stuff in here.
I, I will tell you that.
Yeah, I truly appreciate it.
I can't, can't thank you enough.