Tony Robbins’ 4 pieces of advice for financial advisers

Shortly into my one-hour podcast conversation with Tony Robbins last week it was clear: this man is connected!

Mr. Robbins mentioned he spoke to Ray Dalio, head of the world’s largest hedge fund, just hours before my conversation. A few days earlier, he interviewed John Paulson, the hedgie best known for making $4 billion in one year by shorting subprime debt, and then topping it with a $5 billion score three years later.

Former Federal Reserve chairman Alan Greenspan was also on Mr. Robbins’ schedule recently, as they had a private meeting and discussed, among other things, the scary state of the world today.

(Related read: Tony Robbins wants to be the new voice for independent advisers)

A master questioner, Mr. Robbins asked Mr. Greenspan, “If you were head of the Fed today, what would you do?” Mr. Greenspan responded, “I would resign.”

Who knew Mr. Greenspan had a sense of humor?

Head to Head

While some advisers may dismiss Mr. Robbins as “out of his element” when it comes to financial services, it’s clear he’s getting a crash course in our business from some of the world’s sharpest thinkers.

Mr. Robbins confidently said he could go “head to head” with anybody in finance, “not because I’m so smart, (but) because I got my PhD in four years basically with 50 of the smartest Nobel Prize winners, the greatest hedge fund people on the face of the earth, and self-made billionaires, (who) would give me their insight because they saw that I was sincerely here to deliver.”

And he made it clear that the financial advice in his current bestseller, “Money: Master the Game,” is not his advice, but rather is his distillation of the insights he gleaned from those 50-plus conversations he had with financial experts.

In particular, he mentioned the All-Seasons portfolio. As described in the book, it is a specific allocation given to him by Mr. Dalio.

A handful of advisers criticized the allocation as being too bond heavy. A “rookie mistake,” as Barry Ritholtz wrote. Someone else said Mr. Robbins is giving toxic financial advice. Nonsense, said Mr. Robbins. “You’re arguing with Ray Dalio, you’re arguing with Paul Tudor Jones, you’re arguing with the greatest investors in history.”

Mr. Robbins told me this “rookie mistake” portfolio actually outperformed the S&P 500 in 2014 and year-to-date in 2015 even though it’s not designed to beat the index. Rather, it’s designed to deliver a smoother ride and keep investors from getting scared out of the market at the worst possible time.

(More: Back-testing the Tony Robbins All-Weather Portfolio)

Of course, nobody knows how it will perform over the next few years.

Fiduciary and High Fees

Beyond investing, Mr. Robbins made specific comments related to RIAs that are worth noting.

He said, “I’ve been a huge promoter of RIAs,” and then added, “Not all RIAs are equal.” He said the distinction among RIAs has become clearer to him in recent months.

To explain the difference among RIAs and advisers, he said picture a cross with the far left of the cross representing a salesman or broker, the far right a total fiduciary, the bottom an unsophisticated RIA, and the top of the cross a super-sophisticated RIA.

The goal, he said, is to be in the top right quadrant. “You want to have somebody who is a total fiduciary, highly sophisticated, and with the best possible skills.”

While promoting the “total fiduciary” concept, Mr. Robbins said, “The financial business is the least transparent business I know of.” He went on to say his key reason for working with advisers is to increase transparency in the industry, particularly as it relates to high fees embedded in financial products.

Portfolio CheckUp

Beyond his book, Mr. Robbins decided the best way to shed a light on high fees was to create an online tool where investors could see exactly what their investments cost.

This morphed into what is now called Portfolio Checkup, a joint venture between Jemstep and Stronghold Financial, an RIA. Mr. Robbins said he is involved with PortfolioCheckup in an advisory role, not as an investor. According to its ADV, Ajay Gupta is the sole owner of Stronghold Financial.

(Related: More on the launch of PortfolioCheckup)

Mr. Robbins said the Porftolio Checkup online tool is designed to help investors answer three questions:

1. What am I paying in fees?
2. What’s the level of risk I’m really taking?
3. How does my portfolio compare to other choices I may have?

Jemstep is the technology engine behind the tool, and Mr. Robbins said more than 30,000 prospects have linked over $4 billion to the service through its account aggregation feature.

Prospects using the Portfolio Checkup tool have two options:

1. They can take what they learn from the system and be a do-it-yourself investor.
2. They can be referred to a pre-vetted network of fiduciary advisers around the country who agree to certain high standards including an investor bill of rights and limits on the fees they charge.

Currently, United Capital and Gupta Wealth Management are the two largest RIA firms in the Portfolio Checkup referral network. They’re looking to add two more national firms to the network as well as a number of smaller firms.

Portfolio Checkup network members have closed approximately $70 million in referred assets in just the past few months, according to Portfolio Checkup management.

Down the road, Portfolio Checkup is looking to add more refined “match making” tools so users can refine the advisor results by gender, age, specialty, location, and other categories.

TED Talk for Advisers

Mr. Robbins’ 2006 TED talk, Why We Do What We Do, has become one of the most popular TED talks of all-time with more than 14 million views. With that in mind, I asked Mr. Robbins, if he gave a new 18-minute TED talk to a room full of financial advisers, what would he say?

He shared four points.

1. You have to decide if you want to be self-employed, or if you want to build a business. And if you’re going to build a business, “You’re really going to have to leverage yourself to great people, and in order to do that you’ve got to build a culture.” Moreover, he said building a business requires advisers to move from being an “artist” to being a “business owner.”

2. You have to understand how to be an effective disruptor in the industry. He said disruptors “won’t always be liked but they’ll always be successful.” Further, he said, “You don’t get to be a disruptor just by disrupting, you disrupt by doing more for people than anybody else is doing.” You have to be “really, truly committed to giving raving fan service.”

3. There is a tremendous opportunity coming. “You can hear it, you can feel it,” he said. What’s behind the opportunity? “We’re doing things in this world that have never been done in human history with finance, and there’s going to be a day of some adjustments,” said Mr. Robbins. Advisers who are “nimble” and “ready in advance” will be able to profit from these adjustments on behalf of themselves and their clients.

4. It’s about adding more value. “If you’re willing to step up, if you’re willing to do more than anybody else has for clients, you can dominate the space,” said Mr. Robbins.

(Also: Tony Robbins pumps up advisers at MarketCounsel’s annual summit)

Most Important Finance Lesson

Mr. Robbins wrapped up our conversation by telling a story from early in his career that completely changed his life. It taught him to move from a feeling of scarcity to one of abundance.

The experience from decades ago made him realize, “If you don’t give a dime out of a dollar, you’re never going to give a million out of 10 million, or 10 million out of 100 million. So the place to start is when you think you have nothing because you’ll teach your brain there’s more than enough.”

Despite the vagaries of life, Mr. Robbins said, “If you can truly live a life that’s abundant and not scarce, then the quality of your life, and the quality of life you can provide for others will truly be as unlimited as possible.”

There’s much more to the interview so be sure to click here to listen to full podcast and access the 11,000 word transcript.

Steve Sanduski is a New York Times bestselling author and president of Belay Advisor. Follow him on Twitter @SteveSanduski or connect on LinkedIn.