Bruce Sellery is the author of the national bestseller, The Moolala Guide To Rockin’ Your RRSP. He is a columnist for MoneySense magazine as well as one of the founding staff members of Business News Network, where he spent ten years as anchor and the New York Bureau Chief. This interview took place at the Toronto Reference Library on March 27, 2018 (Tuesday @ 1600). The duration of the interview was 28 minutes and 19 seconds.
Urgen Kuyee: Hi Bruce, why don’t you let my readers know a little bit about yourself? Which school did you go to? How did you get into personal finance?
Bruce Sellery: I went to Queen’s University, to the Smith School of Business and I was deeply conflicted about what I should do with my life. I wasn’t sure if I should pursue a career in journalism or career in business. So, I thought long and hard about all this stuff. I decided to go to Queen’s and then I will see what happens from there. It turned out to be a hundred per cent the best path for me because I found my people. I showed up and I felt a deep connection to the school, to the program and to the friends that I made. That was a fantastic experience. And then what happens soon after was I found out that Queens had a weekly television show so I was able to have my cake and eat it too. So, I reported on this weekly television show and was in business school.
And then coming out of business school, I got an offer from Procter & Gamble which is a fantastic company. It is a great job offer to have. I took it and I took it even though it wasn’t what I thought I really wanted to be doing. I thought you know what I’m going to try for 2 years and again, I found my people. It was a great organization I worked really hard there, I got promoted and I ended up staying for five years. The reason I when I knew it was time to go was I didn’t want my boss’s job and I had become bored with the kinds of business questions that I was tasked to answer. So, I was done and I knew I always wanted to be on TV. That was the dream for as long as I could remember. After 5 years in P & G, I decided I need to figure this career question out and I got this book called I Could Do Anything If I Only Knew What It Was.
UK: Who is the author?
BS: Barbara Sher. So, I took this book. I booked a 3-week vacation in Central America. I was sitting on the shores of Lake Atitlan in central Guatemala when I read the question that altered the course of my career. The question was this, if you could do anything and knew you would be successful, what would it be? And, I thought FUCK because I was very clear on the answer. I knew exactly what the answer was. The answer was I wanted to be on TV. I was just terrified to make that change. So, I will simplify the story to say that I developed a plan. I submitted my resignation and I was unemployed. I was unemployed for a very short period of time. I met up with a bunch of producers connected to the CBC and one of them offered me a job very very quickly. So, I took that job.
UK: How long have you been doing this for?
BS: I left traditional corporate world, this is kind of scary but I left the traditional corporate world 20 years ago. So, I spent a year at a bunch of gigs, nine years at BNN and then the last 9 years I’ve been focused on personal finance.
UK: What is Moolala and what led you to start this financial company?
BS: The mission of Moolala is to inspire people, to get a better handle on their money so they could live the life they want. That’s what it is. It came about because I realized that people in my life who I considered smart, capable, successful, awesome human beings were not doing the things they needed to do to get a handle on their money. It wasn’t “Oh well, if they were just smarter or if they were just better at being organized or if they just took more actions,” they could do it. No, there was something missing. So, because of my training background, I decided I was going to do a workshop. I was going to design a workshop so I designed a workshop with 22 friends and friends of friends in Calgary. I was going to train them in personal finance basics but not from the perspective of knowledge, from the perspective of insight.
So, what are the catalysts that I could provide in a training context that would have the light bulb go on. It is all about the light bulb. The knowledge is really easy. Like what there is to do is super easy, you can google it. It is easy but the light bulb is really really hard. So, I developed this workshop and it really resonated with people. I did more of them. I got a book deal. Then, I got a reality show on The Oprah Network. Then I got a whole bunch of media and speaking and consulting. So, the company today is three things. Media – CityLine, Breakfast Television, MoneySense, CBC Radio and books. Speaking – I go out, represented by speaking bureaus and speak at events. Lastly, consulting. I am the executive advisor for financial literacy at a company called Carrot, which is a start up. It’s an app for your phone, which basically rewards you with whatever points you are affiliated.
UK: Yes, I have heard about Carrot. I actually saw a poster downstairs beside the washroom on the ground floor.
BS: That’s it. I am also working with Ontario Securities Commission on improving the outcomes for millennials when it comes to investing. So, I have got my hands in all sorts of different pots but the through line is all about helping people get a better handle on their money.
UK: What are one to three books that have greatly influenced your life?
BS: The first is The Wealthy Barber. I read it you know when I was a teenager, whenever it came out, in my early twenties. So, while I was on my book tour, this reporter said, “Oh, do you know Dave?” I said, “Dave? Who is Dave?” Then, she said, “David Chilton.” DAVID CHILTON. He is a legend. Of course, I don’t know him. It is like knowing The Queen or Brad Pitt. Why would I ever know David Chilton?
BS: And, she said, “Oh, he is no big deal. He is a friend of mine.” So, I am in my next interview and my phone rings but I can’t answer. I check my voicemail and it’s David Chilton.
BS: “Hi Bruce, it’s David Chilton. I have read your book. This is the thing I really liked about your book. I liked this, this and this. This is this thing I didn’t like about your book. I didn’t like this, this and this.” He had already read my book. So, I called him back. I was totally intimidated and terrified to call him but I round up the courage to do that. I was also just returning his call and he is one of the kindest, most generous Canadians currently living in our country. He is an amazing human being.
UK: What is the best thing about working as a financial journalist? What are some of the challenges?
BS: The best thing about working as a financial journalist is I feel like I can make a difference. So, I spend a lot of time covering the traditional business news and there is no CEO that I didn’t interview. There is no economic number that I didn’t report on but the audience was very very targeted on people who really care about their money and want to do that as a leisure activity. The regular Canadian does not engage in that kind of content. Like most people don’t, it is not interesting to them. So, my new world, not new but this world allows me to talk in a more authentic way about a broader set of issues and capture a holistic view of people’s life. I feel like I can have more of an impact so that is very very satisfying. It is also something I am truly passion about. I can talk about money all day. I love it.
The challenge is getting people to engage because their predisposition is that it’s not interesting, it’s not relevant, it’s not fun and they can’t make it or they can’t move the needle in terms of their own personal circumstance. So, I will do almost anything to engage people. I will crack jokes, I will get slimed, I will get a pie in my face, I will do anything.
UK: You will wear a dollar hat as well.
BS: I will wear a dollar hat. I will do whatever it takes and I think that’s you know the part of the thing that has me be a little bit different. I’ve never worked for a bank. I’ve never been a financial advisor. I really feel like I am an investor or a consumer advocate that I want to engage people and bring them along this path because I don’t believe it’s beyond people to improve their lot in life. I don’t believe that it’s too complex for people who can hold down a job, who have some limited education, who are vertical and walking through their life. They can get a getter handle on their money. It’s not that hard.
UK: Let’s say a 27-year-old nurse, she makes about 65K/year and wants to save about 10 percent yearly for her retirement. Would you tell her to go with a TFSA or an RRSP?
BS: I would tell her to go with an RRSP because the number one thing is about a habit. Saving for your retirement is about a habit. RRSPs are less flexible that TFSAs. You can take the money out of your TFSAs, you don’t lose your contribution room, and it’s no big deal. There is no withholding tax, it is very very simple. So, the risk is that you save for retirement and something happens. And, it’s a terrible thing that has happened. You take that money out of your TFSA for what in the moment seems like a really good reason and that’s a problem. It is easy to access where as when it’s in an RRSP, it’s just harder. It’s harder in practical terms and it’s harder in conceptual terms because it is a registered retirement savings account. TFSA is great for saving for retirement but it is not what it is designed for. Again, number one is habit.
Here is where I get blowback is the math. So, for someone who is lower income or if that nurse has a defined benefit pension plan, she doesn’t necessarily need the RRSP because there’s going to be a pension adjustment and she should be saving in her TFSA. But, my starting point for everyone is a registered retirement savings plan (RRSP). Then, there are a number of exceptions. One is pension, another is lower-income but the habit benefit trumps the math. And people who criticize me only ever criticize me on the math and it’s not mostly about the math. It’s mostly about the habit.
UK: Interesting. I did ask the same question to Rob Carrick and Shannon Lee Simmons and both of them opted for TFSA.
BS: Yes, I totally understand why.
UK: How do you invest your money? Do you mind sharing what’s in your portfolio today?
BS: I am a very simple exchange-traded fund, index fund investor. I will over simplify but basically, I have four ETFs and you know the percentages are fixed income equal my age and the remainder is in largely International, US and Canada. I have been doing that for, gosh, certainly 15 years. I think it is longer than that. Anyway, for a long period of time. I track my net worth every single year which is much more important to me than my investment returns. Even though they’re connected, to me it’s all about net worth.
UK: I know you spoke about this during your recent BNN interview but what are some of the hard questions adults need to ask their aging parents when it comes to personal finance?
BS: First question would be where is everything? Where is everything? Because at some point, it is probable that your aging parents will die. When they die, it is really helpful for you to know where everything is. And, that’s not just the will. It is the financial advisor, the deed to the house, six years of tax returns, passwords, everything, everything, and everything. Secondly, is seed the question before you need to really talk about it on how you can be helpful to your parents in managing their financial life. So, while they are young and vibrant and it’s not relevant, book a meeting with their financial advisor if they have one so you have a relationship with that person. Because when they are 105, you may well need to be the direct contact to that financial advisor. Have those relationships already so that they are in place and be aware that there are things you may need to do that you never thought you are going to have to do. Just have the conversation. Now, some families, its no big deal. In my family, no big deal. It was really helpful for me to have the list of questions. In other families, it opens up a whole can of worms. It opens up potential conflict for equity amongst siblings, it opens up parent-child angst that could take back decades, and it opens up the parents and the child fear of their own mortality. It can be a really hard conversation to have but I recommend, I still recommend people to have it.
UK: At what age should adults have this conversation?
BS: It really depends. I would say if you haven’t talked to your parents seriously about money by the time they are 65, you are late to the party.Even though their life expectancy at 65 is probably going to be into their late 70s and early 80s but have the conversation. I take copious notes, I save the file and I never look at it. And, then every couple of years, stuff comes up and we chat about other stuff but you’re prepared. I find great comfort in just being prepared. So, I know when the time comes, I know. I already know. I know what’s going to have to happen so there’s no fear or worry about the financial part. Of course, there’s fear and worry about losing my parents, of course. There is nothing you can do about that but what you can do a lot about is looking at the financial issues.
The other thing in that conversation and this is really customized to the family, “How are they doing financially?” because sometimes they’re not doing very well and they don’t want to tell you that. Or, they’re doing incredibly well and some of their frugal behaviour makes absolutely no sense. Like they’ll say, “Oh I just can’t afford to go to the movies and I don’t drive anymore.” Like book a cab, can you afford to book a cab? “Well, yeah because I am sitting on 200 grand.” BOOK A CAB, GO TO A MOVIE. Go to a movie every single day. You can afford $100 a week in cabs to go to see a movie. So, kids can provide a prompt for their parents to have permission to live a great life and sometimes they won’t do it because they are worried about the money. Sometimes, it makes sense because there isn’t money. Sometimes, it makes no sense because they have no financial concerns and they are not spending their money.
UK: Lastly, what are bad recommendations you hear in your profession or area of expertise? What advice should Canadians ignore?
BS: A bad recommendation is to just go and buy the mutual funds at your local branch without asking any questions. BAD advice because the average management expense ratio (MER) on a bank sold mutual fund is about 2.3% to 2.5%. It’s high. You don’t need to pay that so what are your options? There are lots of different options available to you now more than ever before with the launch of robo-advisors. So, that’s probably my number one thing. My number two thing would be we focus more way way way WAY too much on investing and investment advice. And, way way WAY too little on financial advice, financial planning in particular. The great financial advisors out there deliver great financial planning and that’s where the magic is. Financial planning is where the magic is. Investing on the other hand, it’s like a commodity. You can get the performance of the benchmark for you know 20 basis points, super easy. But a great financial plan and someone who is engaged and has your best interest at heart, that’s not easy to find. It is worth paying for it. So, some people will say, “Bruce, is it worth paying the advisors?” The great ones are worth every single penny. Every single penny. But, they are not the ones who are putting you in mutual funds or mutual funds with a deferred sales charge that cost you a lot of money. If you’re sitting on you know five hundred grand in mutual funds. Are you really getting the 10 grand worth of service from that cost? Instead, could you be in an environment where you got a 1% fee or 1.25% fee and they do amazing things for you. Do that. Make sure as consumers, you get what you pay for and you are paying. Hopefully, Canadians now know that they are paying. So, if they know they are paying, just get what you pay for.
UK: Now, they show the exact numbers, how much they paid on fees, et cetera.
BS: They only show the exact numbers on the advice piece, which is a problem. So, CRM2 (The Client Relationship Model) has raised the fee topic but it’s typically not the whole cost, right. So, people look at it and go okay that’s a lot of money but it’s not. There could be another underlying expense there that has to get called already.
UK: Got it. Thank you so much for your time, Bruce.
BS: My pleasure.
This interview has been edited and condensed.
[…] Interesting interview with Bruce Sellery here, how this personal finance expert invests: “I am a very simple exchange-traded fund, index fund investor. I will over simplify but basically, I have four ETFs and you know the percentages are fixed income equal my age and the remainder is in largely International, US and Canada. I have been doing that for, gosh, certainly 15 years.” It was also interesting to read he favours the RRSP over the TFSA as an investment account because “RRSPs are less flexible that (sic) TFSAs”. I can see that angle but I like growing my tax-free dividend income stream (via the TFSA). […]
I would love to have heard about the light bulb moments you inspire to give people the incentive to take care of their financial health. Personally, I agree with you that this stuff can be fun – certainly building some financial security that leads to the choice to exercise options in life (like taking a cab to the movies – my parents would never have done this either!) is fun, if not the day-to-day of keeping organized. The key for me is to automate as much of it as possible, automating the habit, in effect.
Cate, I agree. Automation is King. It spreads magic.
I just set up the auto-withdrawal to my TFSA. I had automated everything else, except that. Love me some automation.
Interesting perspective on TFSA vs RRSP. He is saying to invest in an RRSP BECAUSE of its inflexibility rather than the usual view of choosing TFSA for its flexibility. I will have to think about that.
Pat, TFSA vs RRSP is always a tough call. Personally, my pick is TFSA. You?
Definitely. Currently I am melting my RRSPs by moving them into the TFSA in kind. My goal is to have them all carefully moved over before I start my OAS as there will be clawbacks. RRSPs were great for their time, and for people in certain taxes brackets before and after retirement. I stopped contributing to RRSPs well before TFSAs existed as I realized it didn’t make sense in my tax bracket. Instead I accelerated my mortgage payments. Right now I am encouraging my daughter to use her TFSA exclusively. If/when she gets to a middle tax bracket she can move some in kind into an RRSP.
I hadn’t thought about Bruce’s take on the benefits of inflexibility but I can see his point. Everyone has to assess their own situation and goals. No one size fits all.
What do you mean by moving your RRSP into the TFSA ” in kind”? Could you elaborate on the ” in kind” process.
I was under the impression one would need to sell the RRSP investment, transfer the cash and repurchase in the TFSA and that in kind transfers can occur in special circumstances.
Pat, can you help Vicki?
Hi Vicki, here is Pat’s response.
You don’t need to sell off your investments to transfer them into or out or between TFSAs, RRSPs or non-registered accounts. You DO however have to have cash to pay the withholding tax with. If you don’t have enough cash then you may have to sell something to cover those taxes. For example, let’s say you have lots of room in your TFSA and want to transfer $10,000 less the withholding tax from your RRSP to your TFSA for a net transfer of $8,000 in kind. The tax withholding rate on $10,000 is 20% so you will pay $2,000 in cash for the tax and transfer the remaining $8,000 worth of ETFs or whatever into the TFSA without selling them (I am ignoring any fees the brokerage may charge for withdrawals). If you don’t have $2,000 in cash in the RRSP, then you could sell some of the most profitable of your investments to get it.
NOTE: for ETFs I believe it is possible to call your brokerage late in the trading day and actually choose the value to be used for the ETF units being transferred, from that day’s range. So if your ETF units traded between 31.19 to 31.65 on the day you call in, you can ask them to use 31.19 so you can maximize the number of units you can shift over to your TFSA. Double check this with your brokerage though. For me if I decided I wanted to transfer $10,000 over, I would make sure the $2,000 (plus brokerage charges – $75 for mine) was already available before the day I actually did it.
Absolutely, no one size fits all. Thanks for your insight and sharing your case. I work as a nurse and I would definitely not consider myself to be in upper tax bracket so I am sticking with TFSA for now. Yes, Bruce has his points as well in relation to being disciplined about saving.
If you run out of TFSA space for all of your savings then RRSPs may be the next place to save if you believe your income will be rising over the years beyond inflation, and especially if your RRSP withdrawals are likely to come when you are in a lower tax bracket than when you are working.
Keep in mind that RRSP contributions can be carried forward to subsequent tax years and not claimed as a deduction right away if you want, so the tax on the growth is deferred even if they haven’t been claimed yet. You can maximize the tax benefit by choosing to deduct just enough of the contributions to lower your taxable income into the next lowest tax bracket and carry the rest forward to do the same in a future year.
Hi there: RRSP vs TFSA — definitely a personal choice. At the higher income brackets, people could be saving more than the $5,500 TFSA limit. RRSP goes up to $26,230.
I have a great defined benefit pension so I’m not putting a lot into RRSPs but I find myself more focused on the ups and downs of my TFSAs (where I hold ETFs), since I see them as shorter term. It makes me question myself every time I see them decline, even though my pension gives me the security I need, so I should be able to handle the risks in the TFSAs. I keep wondering if I should just dump them into GICs and forget about them, or move them into RRSPs, still in ETFs, so I can ignore the volatility more easily because of that underlying long-term nature of the vehicle.
Thanks for engaging Jacqueline. Seems like you are doing well especially with a great defined benefit pension plan.
I am curious about why you consider TFSAs short term? Do you have a short investing horizon of less than 5 years? If so then maybe ETFs aren’t the right investment no matter where they are. But if you are investing for retirement/ financial independence then they are long term no matter where they reside. Investing can be very, very scary until you understand your time horizon, choose an asset allocation for your risk tolerance, and the investment cycle. If the time horizon is long, then a fall in the market is a great buying opportunity – they are on sale! Buy! Rebalance your investments to match your asset allocation about once a year (or as you add more money). Then forget about it for the rest of the year. Don’t fret the ups and downs (if you have a long horizon of 5+ years). They are blips and they will happen several times in your lifetime. The key is to hang in there! Don’t panic. Buy more if you can. See this US article which applies to Canada, too. https://www.msn.com/en-us/money/markets/the-inspiring-story-of-the-worst-market-timer-ever/ar-BBm9ze7?li=AA4Zjn
It really depends on what the money is for. If you’re saving for retirement, and it is 30 years out, the ups and downs don’t matter at all. Because of your DB pension, you have a “mathematical” ability to weather volatility. But your “mindset” might mean GICs are a better option.
Invest in index funds and avoid mutual finds to avoid high MERS. Thank you Urgen and Bruce for this great interview.
No problem David. And, I agree with you one thousand percent. Personally, I invest in index funds as well.