For while there, it seemed like we were getting a new personal finance book released every day. Now publishers are way more selective in who and what they publish. Hence, Peter Lazaroff’s new book: Making Money Simple: The Complete Guide to Getting Your Financial House in Order and Keeping It That Way Forever.

In Making Money Simple, Peter Lazaroff (@peterlazaroff) tries to do exactly that. He goes through the steps everyone needs to take to get their money lives on track and stay there. Peter is the co-CIO of Plancorp and BrightPlan. He also writes regularly on all things personal finance at his blog.

I had to the pleasure to ask Peter some questions about his new book. Below you can find my questions in bold. Peter’s (unedited) answers follow. Enjoy!

AR: First off, why a book? You blog pretty regularly so you know what is involved. Why put yourself through the torture?

PL: Torture is probably the right word. It’s the hardest project I’ve ever done, and was far more challenging than anticipated.

The actual writing process wasn’t the challenge. When I decided to write a book, I was in a good routine of writing at least 500-1,000 words a day. At that pace, it seemed reasonable to assume I could complete a first draft of the manuscript within a year.

The editing process is what really got me. Editing a 60,000 document is a completely different task than editing a 600 to 1,000 word blog post. Plus, the vulnerability of publishing something that is physically printed (as opposed to something that can be easily edited online) took an emotional toll on me.

The other piece that never occurred to me in the beginning was the need to market it. I probably didn’t do the best job with promotion leading up to its launch, but fortunately there are good people like you to help me.

AR: A big theme running through your book is the importance of systems vs. willpower. I totally agree, but how realistic is it for people to be able to do that on their own? That is, to what degree can an advisor help with that process.

PL: You can’t take human nature out of humans, so it’s important to build a plan that acknowledges our human tendencies rather than try to eliminate them. Automating systems and processes goes a long way in creating positive outcomes in this context, but an advisor is going amplify that result.

A human advisor is an enhanced form of financial automation. The word “automatic” means having the capability of operating independently. When you hire an advisor, they do everything for you. And unlike technology-driven automation, a human advisor provides dynamic and proactive automation that is customized specifically to your needs.

AR: I found it notable that the first four chapters in the book, don’t have anything to do with investing. It makes sense, from a “systems” standpoint, but is there another reason why you structured the book like this?

PL: You can’t invest if you don’t have savings. Similarly, it’s hard to make progress if you don’t know what you are trying to achieve.

I think it’s also a reflection of the planning first mentality at Plancorp, which started as a fee-only financial planning firm in 1983 – way before that was really a thing. The founders didn’t even manage investments the first decade or so of the business because they felt there were too many conflicts involved. Today we manage roughly $4 billion, but the planning firm mentality remains a core part of our culture.

AR: Is there any cure for feeling that a simple portfolio made up of index funds just isn’t working hard enough for you? Many advisors recommend this approach these days, but there is a psychological hurdle to overcome.

PL: There is no such thing as a perfect portfolio. The most important thing is to build a portfolio that you can stick with through thick and thin. The book emphasizes the importance of using strategies that keep costs low and utilizes a rules-based approach that doesn’t rely on predicting the future. Index and factor strategies fit this mold.

Anyone thinking index funds don’t work hard enough should look at their cost – they’re basically free because they don’t work as hard. Paying an investment vehicle to “work hard” is going to cost more and, all else equal, less likely to have a successful outcome.

In my experience, the biggest obstacle clients face when using an all-index portfolio is the feeling that an advisor is unnecessary. A close second is always trailing the benchmark by advisor fees. In both cases, communicating the value of an advisor is crucial.

AR: You talk in the book about being specific about writing down your goals. For many people this is a difficult exercise fraught with anxiety. Do you have any thoughts on how to better put together a set of realistic, achievable financial goals? 

PL: Yes, sign up for BrightPlan 🙂

In all seriousness, I’ve never had someone unable to complete my goals worksheet. However, I do see anxiety sprout up when a person doesn’t have enough cash flow to meet their goals. There are exercises in my book to address this issue, but the key is to focus less on cutting expenses and more on aligning your current spending with your priorities.

AR: Stay tuned for the second half of our Q&A tomorrow!

*Full disclosure: Peter was kind enough to send me a review copy of his book.

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