Have you ever wondered how your relationship with money can impact your ability to invest in the causes and companies you believe in? In this thought-provoking episode of The Angel Next Door Podcast, host Marcia Dawood explores the intersection of personal finance, values, and entrepreneurship with guest Sarah Charles, a veteran of the financial services industry. Sarah Charles brings nearly 25 years of experience to the conversation, having worked with high net worth individuals and families in traditional wealth management before starting her own advice-only planning firm, Sanctuary Financial Planning. Her unique approach to financial advice focuses on transparency, accessibility, and aligning resources with personal values. Throughout the episode, Marcia and Sarah discuss the importance of having a financial plan that not only accounts for personal goals and risk tolerance but also allows for purposeful investing in line with one's values. They discuss the potential for angel investing to generate both financial returns and emotional fulfillment by supporting causes, founders, and world-changing ideas that resonate with the investor. This episode is a must-listen for anyone interested in exploring how to navigate the world of investing while staying true to their values and making a positive impact on the entrepreneurial landscape.
Have you ever wondered how your relationship with money can impact your ability to invest in the causes and companies you believe in? In this thought-provoking episode of The Angel Next Door Podcast, host Marcia Dawood explores the intersection of personal finance, values, and entrepreneurship with guest Sarah Charles, a veteran of the financial services industry.
Sarah Charles brings nearly 25 years of experience to the conversation, having worked with high net worth individuals and families in traditional wealth management before starting her own advice-only planning firm, Sanctuary Financial Planning. Her unique approach to financial advice focuses on transparency, accessibility, and aligning resources with personal values.
Throughout the episode, Marcia and Sarah discuss the importance of having a financial plan that not only accounts for personal goals and risk tolerance but also allows for purposeful investing in line with one's values. They discuss the potential for angel investing to generate both financial returns and emotional fulfillment by supporting causes, founders, and world-changing ideas that resonate with the investor. This episode is a must-listen for anyone interested in exploring how to navigate the world of investing while staying true to their values and making a positive impact on the entrepreneurial landscape.
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Marcia Dawood
Hi, Sarah, welcome to the show.
Sarah Charles
Hey, Marcia. So happy to be here.
Marcia Dawood
Sarah, I'm excited to have you here today to talk about everything about money. That's what we're going to talk about a lot today. And I know you're a veteran in the financial services space and know a lot of things about this industry and a lot of things about investing. So why don't you get started by just telling us a little bit about your background and what you're up to now.
Sarah Charles
Sure. I've been in the financial services industry for quite close to 25 years, and I spent a lot of time in the traditional wealth management space working with a registered investment advisor that was part of a regional accounting and advisory firm. I worked with high net worth individuals and their families and did the traditional, hey, you've got a million dollars.
Marcia Dawood
Great.
Sarah Charles
Let me charge you 1% to manage your assets and provide all the services. And I did that for many years. And then last summer, almost a year ago, I left my company, I quit my job, and my husband Jim and I started our own advice only planning firm, sanctuary financial planning. Sanctuary does not take custody of assets. We don't care how much money you have. We don't need a minimum amount of wealth to work with you. We don't charge a percentage. We showcase on providing advice leading with planning, and we either charge for our time or do flat fee planning packages.
Sarah Charles
And so that's a very different way to approach delivering financial advice. And in our opinion, not only is it a more transparent, straightforward and fair way to serve clients, it also makes it easier for more people to get financial advice, because not everyone has a million dollars.
Marcia Dawood
So on the show, I try to go through, especially when we're talking about different terms. And so you were talking about a registered investment advisor. And sometimes that does come up where we're talking about that. Can you explain exactly what that means and what that means related to private and public investments?
Sarah Charles
Yeah. So our industry, the financial services industry, is just overcomplicated and confusing and so true. So registered investment advisors, or RIAs, are structured in a way that they're actually able to deliver advice to clients. Ras are held to a fiduciary standard, which means they have to do what's in the client's best interest. And this would be in contrast to banks and brokers who are typically licensed to sell products and are held to a different standard of care. They're held to a suitability standard. And so it's how our industry chose to really differentiate between selling products and.
Marcia Dawood
Delivering advice when I hear newer angels talking about becoming an angel or potentially becoming an angel investor, and they tell me about the financial planner that they're working with, sometimes they are discouraged from potentially investing in a private company. And tell me a little bit more about that and how that works and why.
Sarah Charles
Since most advisors charge an assets under management fee, which means they charge a percentage of the assets they're managing, they need to be able to manage those assets. And the stock market is the easiest way for people to manage assets. There's a few other vehicles, but angel investing, a traditional wealth manager wouldn't be able to charge a fee on that and make any money, so they might not suggest clients do that. Also, I don't know how many wealth managers and financial planners know a lot about angel investing, so they might feel like it's out of their scope, out of their comfort zone.
Marcia Dawood
Right.
Sarah Charles
And what I would say as a financial advisor is, I don't know a lot about angel investing, but I also know that public markets are shrinking. I know there are opportunities in private markets. And so if a client were interested, certainly something were willing to explore, assuming it makes sense for them and the.
Marcia Dawood
Things they're trying to accomplish and their own financial goals. Sure.
Sarah Charles
Yeah.
Marcia Dawood
So when you decided to set up your own agency that would help with financial planning, and you decided to do it based on a fee instead of a percent of assets under management, why did you decide that, and how have people reacted to it?
Sarah Charles
It was a no brainer for us. So once upon a time in our industry, you had stockbrokers who sold products and got paid commission, and there wasn't a lot of transparency around the commissions. At one point in time, they were very high. Then in the 1970s, commissions were deregulated and commissions got flashed. And so people needed a different way to get paid. And what evolved was this idea of, hey, I'm not going to sell you products and get paid a commission. I'm going to offer you advice, and I'm going to get paid a percentage of the assets I'm advising on. And for a long time, it was seen as almost a white night in response to some of the dirty, underhanded, sleazy tactics of product pushing salespeople.
Sarah Charles
But in reality, Aum is just another form of commission. It's just a trailing commission. And so when my husband Jim and I started sanctuary, we asked ourselves, where is the future of this industry headed? And Aum is probably not disappearing anytime soon. Much like people selling products for commission have not disappeared. But we saw a need to diversify beyond Aum to give people a different way to receive financial advice. We wanted to make sure that people who didn't have a lot of money could still access financial advice and get planning done and have their questions answered. We wanted to make sure that people who were very wealthy weren't penalized and paying egregious fees just because they had a lot of money. From our perspective, it was, as I've said, the most transparent, straightforward, and fair way to deliver advice and structure our business to serve clients.
Sarah Charles
And the response has been tremendous. People love it. We hear over and over again, oh, I didn't know people like you existed. Oh, this is exactly what I've been looking for. And it's all ends of the spectrum. It's people who could easily afford to pay a percentage of assets under management, but don't want to and appreciate that they can work with us for a lot less money. And it's people who previously thought they would not be able to find someone to answer their financial question. It's a very appealing model to a lot of people, and we feel really good about it.
Marcia Dawood
Yes. And we hear that term sometimes the rich get richer. In a lot of cases, the only people that were really able to afford financial planning were people who had a lot of assets. And nowadays, with the younger generation coming up, everything being online, they want to do everything on their phone. That model just seems pretty archaic.
Sarah Charles
Yeah. And again, I don't know that it will ever go away completely. And if anything, you see these firms moving further and further upstream. The minimum used to be 250,000. Now that's 500,000. Now it's a million. And now it's 3 million. And you've got people, 5 million, 10 million.
Sarah Charles
There's only so many people who need that level of service. Meanwhile, the vast majority of the country is what we would call the unserved and the underserved, and they need help. Right? We can go. We can start talking about the fact that we don't get any kind of. Most of us don't get any kind of financial education. Growing up, I always joke I learned how to dissect a frog in grade school. I didn't learn about budgeting or saving or common interest or anything that might help me, you know, as an adult. So until we get to a place where we have stronger financial foundation, the world would be a better place if people have less money stress.
Sarah Charles
And you tend to have less money stress when you have a plan and you have answers to your questions and you've got competence and understand your financial situation?
Marcia Dawood
Yes. So you and I served on a panel not that long ago where we were talking about all things related to money and how people feel about money. And that's a very good point about just people's stress levels, the way that they think about the money that they have, and then what they can do in order to try to plan so that they can make their financial situation even better down the road. So how do you get started with people? What are some of the things that people should be thinking about?
Sarah Charles
One of the things we actually like to start with is what we call beyond the numbers. And so it's really focusing on perspectives, preferences, and values. So before you even dig into the quantitative analysis, which is what a lot of us are looking for, it's helpful to understand your relationship with money. What was money like growing up? How do you feel about different areas of your life? And are there certain areas that need more attention? How do you use the resources you have in a way that aligns with the things that are most important to you and will really provide a sense of purpose? So that's where we like to start. And then, of course, there's the exercise of taking an inventory of what you have, thinking through goal setting. What are the things you want to accomplish both short term and long term? Have you thought about all areas of your financial health and being just investment? Have you thought about estate planning? Have you thought about tax planning? You thought about protection strategies, risk management? And each client has different priorities, different goals, different things they need to focus on. No two planning conversations are the same.
Marcia Dawood
Right. So I like how you were talking about people aligning with their goals, the things that they really care about. And that's really what we talk a lot about in angel investing. If people were just looking solely for a financial return, yes, there can be really amazing financial returns in the private markets, but they're also extremely illiquid. So we have a little saying. I don't know who came up with it, but you know that we only really ever want to see people put maybe five, maybe 7% of their investable assets into an asset class like angel investing. But people do it for so many other reasons, and they're doing it because they care about different causes. They care about change in the world.
Marcia Dawood
They like to back certain founders. So maybe talk about, like, people's values and how they can really start to think about aligning it financially.
Sarah Charles
And this is one of the things I love about angel investing, Marsha. I think when we use our financial resources, I think of four different areas of return. So there's the things we need, there's the things we want. There's the return on investment and a return on enjoyment or fulfillment, the emotional return. And when I think about angel investing, yes, there could be a return on investment. Right? You invest money, you hope you get more back that I also see how you can have an emotional return on that investment by choosing to use your resources to support, as you said, the causes that are important to you, the ideas that you think are going to change the world, the founders you believe in. The ability to invest in a way that aligns with your values and the things that you think are most important is so incredible. As you pointed out, the guidance isn't to take all your money and put it into angel investing.
Sarah Charles
It's a small piece of your portfolio. But what a powerful way to put your resources to work in a way that can potentially deliver so much meaning to you. And how amazing would that feel to know that you're supporting businesses, new founders, changing the world in a way that you think is important.
Marcia Dawood
Yes. And sometimes when I talk to people about investing and they hear that word, they get a little nervous. They think if I'm not, if I don't make the right investment decision and I don't get the right kind of financial return, then I might look like I don't know what I'm doing or I might look foolish. So tell me more about how you feel about that statement.
Sarah Charles
I think it common even outside of angel investing. I see a lot of people, especially women, who lack confidence when it comes to investing because they don't fully understand it. Again, our industry is, oh, over complicated for no good reason, in my opinion. But we have fear of failure, and so that keeps us from taking action. This is one of the reasons why having a plan is super helpful, because it gives you context and framework for making your decision. And so there are certain investments that I would say, if you're going to choose to invest in those buckets, are you prepared for that investment to go to zero? And if that bucket were to go to zero, what would that mean for the rest of your plan and the rest of your picture? I think planning gives people confidence because it gives them information to make educated decisions.
Marcia Dawood
Yes.
Sarah Charles
If you put all your money into one company, there is a risk that company goes to zero. And we can go through countless examples and even in the public markets, right. The average life of a publicly traded company is something like seven or seven and a half years. It's not that long, lots of companies go out of business. So how do you invest in a way that you're diversified and managing that risk, both in public market and the private market?
Marcia Dawood
Absolutely. Yes. We talk about diversification a lot. Im personally a big fan of funds, and nowadays, especially in the last couple of years, weve seen many more small funds where the minimum check sizes are quite small, like ten to $25,000, as opposed to, as you were talking about with the AUM thing. Even venture capital funds used to have $250,000 as a minimum, maybe even a million dollars in order to make an investment in a fund. But nowadays you can do that for much less and get exposure to so many different companies. So I am a huge proponent of that. And I love this idea of people thinking about it in buckets.
Marcia Dawood
So that I always say that I wish, and of course, I wrote a book thats coming out in September, but I wrote it because I wish I had had a plan, I wish I had an investment thesis and somebody had said to me, hey, just put a certain amount of money in this bucket and in that bucket, then you can invest in all different types of alternative assets or things that are a little bit riskier, but all of the money that we need for other things and other buckets, we're going to invest a little bit differently and do a little bit different strategies with. So, yes, I'm a huge fan of having a plan and making sure that you know that plan in advance.
Sarah Charles
So a fun analogy that I can't take credit for is the idea of a broccoli and pizza portfolio. So I love pizza. I cannot eat it every day. I cannot eat it every week. Maybe I can eat it once a month. The majority of anyone's net worth, in my opinion, should be invested in a way that's prudent and makes sense. Obviously, I vote for a low cost portfolio of globally diversified ETF's and funds, giving you broad exposure, managing your risk in an appropriate way. And that's great.
Sarah Charles
That's the equivalent of eating your greens, eating your veggies. And I love my veggies, but every once in a while I want pizza. And so it's totally okay to have what I would call play money. And I have tons of clients over the year who just like to buy and sell stocks, trade stocks. I don't know, is that any different than putting money into angel investing or to venture capital into things that are less proven? And I would argue that, again, angel investing, gosh, you're making a huge impact and you're getting to use your resources in a way that truly aligns with your value.
Marcia Dawood
Yeah, totally. So I'm curious. I was recently given a book called die with zero, and since we're talking about money and people's relationship to money, this is something that, like, the concept of the title even just blew my mind, because we're always trying to accumulate more and build more wealth or whatever we're trying to do and get more money, make more money, have higher salaries, whatever. Anybody that you'd really talk to is all about more. But this concept is quite the opposite. A have you heard about the book or the concept, and are people talking to you about it?
Sarah Charles
Yes and yes. So I had not heard about the book, and several clients mentioned it in the context of meeting, and I was like, okay, I'm going to read this book, see what it's all about. Because the title is definitely thought provoking, and traditional financial planning software will never allow you to build a plan that has you dying with zero because there's not enough of a buffer for the unexpected. Planning is all about preparing for a wide range of outcomes. So I started reading die with zero several months ago. I stopped about a third of the way through. Conceptually, I agree with what he's saying, and I appreciate his advice to use the resources you have today. I think he talks about memory dividends.
Sarah Charles
Don't wait for some point in the future. All of that I fundamentally agree with. As an advisor, I found his book to be irresponsible because he wasn't actually providing financial advice. And at one point, he talks about a friend of his who borrowed money from a loan shark to go gallivanting around Europe. And I was like, I just seized up. And he was, I think, very blase about, oh, if you're worried about healthcare costs, just get some long term care. This is a man who has made millions of dollars, who's very wealthy, so I felt like he missed the mark in terms of actual practical execution. So I stopped reading it after about a third.
Sarah Charles
But fundamentally, again, using your resources to live a life of purpose and joy today and not just squirrel away for the future, I totally support. In fact, we've recently pivoted, and with our clients who are about to retire and retired, we do what's called dynamic income planning, where we're not looking for a probability of success, that they have money left over at the end of their plan. We're looking at how much can you spend today, and what's the probability that we want to adjust that spending up or down based on a number of factors. So those are my thoughts on Diwa zero.
Marcia Dawood
Yeah. It's almost like there has another thing that the quote, unquote, they say is everything in moderation. So that seems to me such an extreme. But this whole idea of giving it all away and having nothing at the end, I don't know, doesn't. And then how do you know when the end is exactly?
Sarah Charles
If you know exactly when you're going to die, then great. But again, I think this is where the value of planning comes in, particularly as we get older. People want confidence. Most people want confidence that they are not going to run out of money. They want to know that they're not going to be a burden on their kids, on their family.
Marcia Dawood
That's right.
Sarah Charles
But there is a psychology where people are afraid to spend. So I appreciate what he tried to do, and I know people love the book. I think my opinion is very much in the minority on this. People are afraid to spend as they get older because they've been taught to have enough in case of an emergency and in case of another emergency. So this is the value of advice. This is the value of planning. So that you do have confidence to use your resources in a way that is meaningful to you, brings you joy. You don't have to wait for some magic point in the future to say, oh, now we can take the trip.
Sarah Charles
Except, oh, wait, we can't take the trip because we've lost our physical ability to travel.
Marcia Dawood
Right.
Sarah Charles
So I do think there's an opportunity to help people have more confidence to spend as they age, and again, to do it in a way that's intentional and purpose driven. I think I talk about purpose and intention more than most advisors I know. I think that's what ought to guide decision making as much as possible.
Marcia Dawood
I absolutely love that. And as a wrap up, I think that's what people need to do more. We aren't having enough conversations, even in our own families, about how we feel about money or what are the things that we really care about, what are the goals. I hear too many people say, oh, I'll have these regrets, or there'll be regrets. And I think it's more about, let's just be purposeful and intentional with the money that we have when we have it and make plans, but at the same time have a balance.
Sarah Charles
Yeah. I'll give you a quick example as a wrap up. People talk a lot about experiences versus stuff. Somehow along the way, stuff got a bad rap and experience. Oh, I'm all into experiences I don't need stuff. Hey, you can waste money on experiences that you forget two days later, and you can buy physical things that have meaning and again, that bring you joy. I don't think it's about stuff versus experiences. It's about making informed decisions and using your resources in a purposeful way that will bring you as much meaning as possible over time.
Marcia Dawood
Oh, I love that. That's a great way to wrap up. Thank you so much, Sarah, for coming on the show and talking all things money and our relationship with it. This is a conversation that needs to just continue to go on.
Sarah Charles
Absolutely. Thanks for having me, Marcia. I really enjoyed it.