Nobody skips reading a contract because they’re careless. Contract attorney Leo Mann spent 30 years writing the fine print that governs leases, car loans, job offers, and gym memberships, and he says the reason smart people sign blind isn’t laziness at all. It’s four specific psychological pressures, engineered on purpose, stacked on top of each other in the exact moment you’re handed the paperwork. Today he walks through exactly how those tricks work, and more importantly, how to spot them before you sign away something you’ll regret.
What You’ll Walk Away With
- The four psychological traps, stacked together on purpose, that get otherwise careful people to sign without reading
- Why the phrase “this is standard” should be one of the biggest red flags in any negotiation
- A green flag, yellow flag, red flag rundown of common contract moments, from blank spaces to rush deadlines to page-by-page initials
- The hidden clause in shared leases that can leave one person legally responsible for an entire group’s unpaid rent
- Why the number on the front page of a lease or job offer is often just marketing, and where the real total actually lives
- The critical difference between an employment offer letter and the actual employment agreement, and why only one of them is legally binding
- Why severance is almost always more negotiable than employers make it seem, and the two questions worth asking about any financial product before you commit
Why This Matters Now
Every adult signs dozens of contracts over a lifetime, apartment leases, car loans, job offers, gym memberships, and the fine print in most of them is written to be skimmed, not read. That’s not an accident, and it’s not really about intelligence or diligence either. It’s about recognizing the exact moments you’re being nudged to move fast, and knowing which few sentences in a stack of paperwork actually matter. A little contract literacy doesn’t just protect your money, it gives you real leverage the next time someone slides a stack of paper across the table and says, “just sign here.”
From the Basement
A headline about Pepsi’s infamous 1996 fighter jet promotion becomes the day’s trivia detour, proving that even the biggest brands occasionally get burned by their own fine print, right alongside the rest of us.
Resources Mentioned
Stacko Financial Action Month board — the interactive game with a money move for each square
Don’t Sign That by Leo Mann — Leo’s #1 bestselling guide to consumer contracts
The Contract Literacy Movement — Leo’s initiative teaching everyday people to read what they sign
Stacking Benjamins Field Kit — the all-in-one budgeting, credit monitoring, and financial tracking tool
Monday Mentor: Leo Mann
Big thanks to Leo Mann for joining us today. To learn more about Leo, visit The Contract Literacy Movement™ — Read it before you sign it. Grab yourself a copy of the book Don’t Sign That: A Consumer’s Guide to the Contracts Running Your Life
Our Headline
Doug’s Trivia
- In a 1996 Pepsi ad, what $37.4 million prize did a customer actually try to claim after collecting seven million Pepsi Points?
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Other Mentions
Join Us Wednesday!
Tune in on Wednesday as we continue Legal Week and are joined by attorney Tim Semro.
Written by: Kevin Bailey
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Episode transcript
[00:00:00] opener: When I was a little boy, I thought the greatest thing in the world would be to be able to make records. Okay, now let’s just play this, and you’ll see what it sounds like
[00:00:15] Doug: From Joe’s mom’s basement, it’s The Stacking Benjamins Show
[00:00:29] Doug: Joe’s mom’s neighbor, Doug, and it’s Financial Action Month in mom’s basement. And today, we’re helping you take better action on all those contracts you sign. You know the ones where you skim to the bottom and sign away who knows what at the gym, online, or when you buy a car, house, or worse of all, start a new job.
[00:00:47] Doug: Today, we’ll introduce you to a guy who used to write those contracts and who’s here to teach you how to read them well without taking all day. Attorney Leo Mann is here. Plus, that’s not all, because you’ve been looking to win at Stacko. We’re going to find another spot on the bingo board and help you take action on putting more money in your pocket so you can build your stack faster.
[00:01:12] Doug: And what goes down fastest of all? You know, because it’s delicious. That’s right. You’ll also get a dose of my incredible delectable trivia. You won’t wanna miss it. And now, two guys who would never miss a Monday episode, they’re so fun to make, it’s Joe, oh, and O, J- J- J- J- G.
[00:01:38] Joe: Hey there, Stackers. It is Monday fun day, and we are rounding out, we’re rounding the corner on financial action month, and man, do we have some great actions for you to take today. I am Joe Saul-Sehy. Super happy that you’re here with us, and across the table from me, the guy I’m also happy is super here with us, Mr.
[00:01:57] Joe: OG. How are you, man?
[00:01:59] OG: I am super here with you. That is correct.
[00:02:01] Doug: Like, did he
[00:02:02] Joe: say super here? So you-
[00:02:03] Doug: Like, are you extra present this morning?
[00:02:05] OG: Super here.
[00:02:07] Joe: Here’s the question, OG. Have you ever been scrolling along while you’re trying to play the next video game, or you’re looking at your Apple terms of service or whatever and they have that, “You gotta read it to agree,” and you just kinda scroll to the bottom so that it’ll actually give you the sign here clicker?
[00:02:26] OG: Uh, I, I can acknowledge that I’ve been guilty of that. I can stipulate that, uh, I have not read every contract in my life put in front of me, yes.
[00:02:35] Doug: I love when, when the company’s just like, “Look, we know what everybody wants to do. Let’s just put the button that says scroll to bottom.”
[00:02:41] Joe: Yes.
[00:02:42] Doug: And they just do it for you.
[00:02:43] Joe: It’s one thing on the video game. It’s another thing when we do that because you’re at the closing for your new house.
[00:02:52] OG: Well, that I wouldn’t do.
[00:02:53] Joe: Well, right. You’re signing for your new car, but as you know, OG, a lot of people do, and Leo Mann is, Doug, you said earlier, is here, and he’s written a lot of those contracts over the years, and now he’s on the other side of the fence telling you about all the things that he put in those that were pretty complicated.
[00:03:13] Joe: And also, now that he’s on the other side of the fence, some of the issues his clients have had, and man, does he have some stories about what happens. But
[00:03:21] OG: this goes both ways. Wasn’t there a story about somebody who got a credit card, uh, application in the mail? took the terms of service and scratched out a bunch of stuff and, and said, you know, 0% interest, lifetime, you know, credit limit of 99,000.
[00:03:37] OG: You know, like basically, you know, signed it- Yeah … and then put a spot there for the bank to sign, sent it in with a little clause that said, “If you don’t sign it, it’s a negative consent,” and just, you know, racked up a bunch of stuff, and then as soon as he got interest, he sued the bank and said, “No, I have this contract here that I signed, and it says that, you know, if you, by not signing, you agree to the terms.”
[00:03:58] Joe: You accept.
[00:03:59] OG: Yeah. Negative consent is what it’s called. It’s great.
[00:04:02] Joe: As Leo and I were prepping for today’s discussion, he was telling me that nobody reads it, including
[00:04:09] OG: the companies. Well, nothing’s gonna endear people to lawyers more than, uh, hearing about all the lawyers, uh, that, uh- … maybe, you know, don’t work for you.
[00:04:19] Joe: It is contract week here, and one thing you have to take action on is knowing exactly what you sign. And then on Wednesday, we’re gonna talk about another big, important contract, which is your estate plan. It’s
[00:04:29] OG: kind of an interesting thing about, uh, lawyers, actually from, written by lawyers. Maybe we can talk about it a little bit later.
[00:04:36] Joe: Awesome. Let’s dive into- Yeah … that as well. So as you can see, Stackers, action-packed show today. We’ve got a couple sponsors that make sure that we can bring this for you for free every Monday, Wednesday, and Friday. So we’re gonna hear from a couple of them, and then Leo Mann joining us into the basement to talk about what you maybe shouldn’t sign before you read the fine print.
[00:05:00] Joe: Well, if you’ve been with us for any length of time, Stackers, you remember all the cool things the vault did, but guess what? The vault is now the field kit, and the field kit adds to it two things, budgeting and net worth tracking. So if you already knew that what you really wanted d- was to get rid of eight different apps on your phone and make them one, we just gave you two new reasons to do that.
[00:05:20] Joe: Have your financial life in a place where you can find it quickly, and you can go about those financial decisions and get down to the trail of stacking more Benjamins. Where do you find out the details? Head to stackingbenjamins.com/fieldkit for more to get organized.
[00:05:45] Joe: Well, think about how many times you’ve done this, Stackers. Somebody hands you a lease, job offer, car loan, contractor agreement, or a screen gives you 47 pages of terms and one brightly colored button that says, “I agree.” So you skim, you assume the important parts are obvious, you assume somebody would tell you if anything truly dangerous were buried in there, and then you sign.
[00:06:05] Joe: Well, attorney Leo Man has spent decades reading, writing, and negotiating the agreements that govern how people work, rent, buy, borrow, and increasingly click their way through life. And today, we’re gonna borrow his attorney brain. We’ll learn what should immediately slow us down, what may actually be negotiable, where expensive surprises might hide, and what to do when we realize we signed something that maybe we shouldn’t have.
[00:06:31] Joe: Leo, welcome to Mom’s Basement, man. How are you?
[00:06:33] Leo: I’m doing good. I’m doing good, Joe. How are you doing?
[00:06:36] Joe: Well, I’m better now that you’re here, because I’ve done this so many times. I’ve done this so many times where I’ve got something in front of me, the person’s kind of staring at me. I’m like, “Oh, okay,” and I just go, “All right, I’m gonna sign this.”
[00:06:51] Joe: So before we open a lease or a job agreement, help me understand this one basic mystery. Why do otherwise intelligent people sign legally binding documents they haven’t read? Why do we do it, Leo?
[00:07:04] Leo: Oh, you’re getting into the meat of it right away, Joe. That’s the whole psychology. It’s all psychology behind it.
[00:07:10] Leo: This is what happens, because it’s really a behavioral finance question more than anything that you’re asking, right? If, if not reading a contract can cost you your actual house at some point, why does absolutely nobody read them? That’s just a query that bothered me for 30 years. People will read 20 consecutive one-star Yelp reviews just to pick a taco place-
[00:07:32] Leo: right? But, but they’ll sign a 40-page lease without moving their eyes. Why do they do this? And for 30 years, Joe, I assumed it was laziness. It’s not. It’s four psychological traps that’s stacked on top of each other, going off all at once like a booby-trapped Jenga game, if you’ve ever played Jenga. It’s just booby-trapped against you.
[00:07:51] Leo: And I’m just gonna quickly through them, okay? Sure. First, reading a contract feels rude, right? Picture the moment. You’re there, salesperson’s smiling at you, your spouse is next to you radiating, “Let’s go,” energy, “Let’s get this thing done.” To stop and actually read the thing, you become the unhinged person in the room.
[00:08:10] Joe: Yeah. I don’t wanna second-guess your intentions, Leo.
[00:08:13] Leo: Correct. You don’t wanna do that. That’s
[00:08:14] Joe: so rude of me. Yeah.
[00:08:15] Leo: Right. Y- yes, if you’re gonna stop and read it, even for four minutes, you’re basically gonna stand up and announce to everybody in the room, “I believe every single one of you is trying to rob me.”
[00:08:25] Leo: So you sign the thing. You trade years of consequences just to escape four seconds of awkwardness. We are so wired to keep the peace that we will literally set our own house on fire to avoid that tension. That’s number one. The second thing they stack against you is the choice feels like it’s already over.
[00:08:43] Leo: Let’s say you’re at the car dealership. You see the car you like, you pick out the options, you negotiate the price. This thing is done. I’ve bought this thing. That’s not true. This paperwork is not the annoying troll standing between you and the keys. That’s completely backwards. The paperwork is the decision.
[00:09:00] Leo: Everything before that was shopping and marketing. The whole system is rigged against you, that when the paperwork is slid in front of you, the decision’s already made. You’ve bought this thing. Just, just stand and just sign it.
[00:09:11] Joe: I’m thinking through this as you’re talking, Leo. The, number one, the houses that I purchased, in those agreements, I go into this office.
[00:09:19] Joe: I have a woman who’s got a stack of paperwork that is, you know, the, the, the- Dust stop … yeah. It doubles as a dust stop. It is. It is. And she is like, “I could read all this to you, or we can just sign it.” And I’m like, “Oh, God. Save us.” But she presents it in a way as well that’s like, “Hey, look at all this paperwork.
[00:09:34] Joe: Do you wanna be here all day? I don’t wanna be here all day. Let’s just sign this stuff and forget it.” ‘Cause to your point, we think it’s already done. At the car dealership, I’ve been dealing with this salesman over here. He sends me to this room with, again, a guy with a bunch of paperwork going, “Oh, my God, you’re almost done.
[00:09:48] Joe: I got the keys sitting right here. All you gotta do is sign these things and you’re out the door.”
[00:09:52] Leo: And it’s standard, the most dangerous word in the English language when you’re looking at a contract. It’s standard. It’s boilerplate. Just sign it, right? And I think what you’re getting at right there is the third tenet, the third thing they stack against you, or I did.
[00:10:05] Leo: I was part of this, right? I, I, I engineered a lot of this stuff when I worked for the brands and the, and the companies and the dealerships, right? It’s the authority gap. The person across the desk from you has done this 10,000 times in their career, the salesperson. You’re doing it once, and if you’re a young guy, young gal, like this is the first time you’re doing it, your first auto loan, your first car at 25, and they just smile at you and say, “Oh, it’s just standard boilerplate language.”
[00:10:30] Leo: Your brain doesn’t hear a salesperson. It hears an expert giving you the all clear, and it powers down. It’s the same instinct that stops you from questioning your doctor, right? Except this doctor works on a commission and, and, and you’re gonna regret it in, in, in the end.
[00:10:45] Joe: I’ve been in salesperson training before.
[00:10:47] Joe: They teach you, “Don’t be the salesperson. Be the expert so that people won’t, A, won’t question you, but B, it’s gonna make things much easier.” People are gonna walk out and they’re gonna feel like, “Hey, I did, I did the right thing because this expert told me to do it.”
[00:11:01] Leo: And that’s not inadvertent. That’s not, just doesn’t happen by chance.
[00:11:04] Leo: That’s all engineered. There are people that dedicate their lives to the psychology of this stuff. They don’t want you questioning anything. They don’t want you changing anything. They don’t want you doing anything that upsets the process, and that, that leads to our fourth and final thing they stack against you, Joe, and this is what I call organized chaos.
[00:11:23] Leo: It’s manufactured confusion. The document is aggressively exhausting. It’s dense. You’ve read these things. You’ve seen them. It’s 8-point font. You barely see. You gotta put your glasses on. It’s written in words no human has spoken since the Civil War. These are the words they drop in there that you have no idea what they mean.
[00:11:41] Leo: And then when something looks impossible to understand, we as humans don’t fight. We surrender. And trust me, that’s not a bug. The confusion is the strategy. And if I look at all four of these points, this is the biggest one. Somebody got a Christmas bonus for making that paragraph unreadable, that you just glossed over and said, “You know what?”
[00:12:00] Leo: You know, because of the other three things stacked against you, “I, I’m not gonna read this. Like, I, I’m gonna sound like an idiot.” This is all what it’s all about, the four things: social pressure, decision fatigue, authority gap, manufactured confusion and chaos. And here’s the truth that changes how you walk through the world.
[00:12:16] Leo: People don’t get wrecked because they’re dumb. They get wrecked because the entire moment is engineered around exactly how the human brain is wired, and these salespeople and these corporations, they know this. I’ve sat in the board rooms for 30 years talking about this. Uh, that’s just what it is. Those are your four things stacked against you in any contract you sign.
[00:12:36] Joe: It is wild how much homework they all do for you. It seems like we should be doing a little homework on our end to get ready for them. And actually, it’s funny, since I became a little more savvy, I f- f- I actually feel like they appreciate it, on the other hand. It … I’ve had people tell me, they’re like, “You’re the only person sat in front of me and read this thing.”
[00:12:57] Joe: And I still don’t read it from cover to cover, and Leo, y- you’ve forgotten more than I know. But like, getting the contract the day before, people are like, “Why do you want it the day before?” I’m like, “So I can read it.” They’re like, “What? What are you talking about?” “I don’t wanna waste your time, so I want you to send it to me 24 hours before we sign.”
[00:13:11] Joe: But even though you and I both come across like a couple really young guys, very handsome, just started out at this, we’ve both been doing this for a long time, Leo. It feels to me like these contracts are getting longer. Mm. Is that true, or is that just my old guy, old guy hat being blamed?
[00:13:30] Leo: That’s absolutely on purpose, Joe, and you’re absolutely right.
[00:13:33] Leo: They are getting longer. Like I said, there are literally teams of people at the corporations I used to represent where we’ll sit in a conference room for days making the contract as obtuse and long as possible because the longer it is, the more it goes to that psychology of chaos, right, and confusion.
[00:13:49] Leo: Like, “This paragraph, what does this mean? I don’t know. I’m not a lawyer. What do I do?” You know, and that, and that’s the thing. This is so stacked against you, these four things that we mentioned, that it’s unbelievable to me that corporations get away with it, but they do. This is their playbook. We’re gonna look at this as a playbook.
[00:14:05] Leo: This is their playbook, and how do I know this? Because for 30 years, I’m the guy who wrote that playbook. And here’s the beauty of it. The second you know these four buttons exist, these psychological buttons that we just talked about, they completely lose their power when you understand exactly what they’re up to.
[00:14:22] Leo: You know, next time one of your listeners is at a desk, whether it’s a leasing agent, whether it’s a car dealership, catch yourself. “Wait, I’m about to sign this purely because I don’t want to look awkward?” And you’ll slow down. Pull out my book and get to work. And here’s what I do too, Joe. I work, um, I- my Contract Literacy Movement has a six video module.
[00:14:41] Leo: Long story short is, you know, to keep the lights on here, we sell it to NCAA Division I schools. I work with a lot of 19-year-old athletes, you know, the whole NIL concept that’s come up in the last couple years. Boy, they need this. They’re getting compensated. These
[00:14:52] Joe: 19-year-olds, Leo, are signing a bunch of crap they have no idea what they’re getting into.
[00:14:56] Leo: Yeah, and I’ve, you know, I’ve signed up, uh, Big Ten schools, Pac-10 schools. They, they all love it. But here’s the thing that I tell them, because I do an in-person workshop and then give the six video module series. The first thing I say to them is this: “Listen, you can always say, ‘I wanna take this home and read it.’
[00:15:12] Leo: You don’t have to sign it on the spot. That’s part of the psychology, the pressure. You don’t have to sign on the spot. You can take it home.” Once you tell them, “I’m going to take this home and read it,” you’ll see how quickly all of those really obnoxious provisions disappear. You’re the one person that said that.
[00:15:29] Joe: I just think to myself too that if, if I have to sign this today, is this the person I wanna do business with? Is this truly the person I want across the table from me? I wanna play a game. Y- you know, Leo, you’ve heard the show. Yes. We like to play, we like to play some games. I think this is a great way to begin to pick your brain on all of these contractual situations.
[00:15:49] Joe: Let’s find out whether my contract instincts are completely broken. I’ll give you a situation. You tell me green flag, yellow flag, or red flag. You’ve been doing this for a long time. You see this thing. Is it green flag, you’re fine, yellow flag, eh, or red flag? And then just give me a quick sentence or two why.
[00:16:06] Leo: Sure.
[00:16:07] Joe: All right. They need my signature today. Green flag, yellow flag, red flag?
[00:16:12] Leo: Red flag. They don’t need your signature today. There’s nothing about it. I, I’ll give you just really quickly an example. My daughter bought her first car. She’s in college, went to the Ford dealership, got a little Bronco. I’m trying, in the background, I’m trying to let her be herself and do her thing, right?
[00:16:26] Leo: Sure. So I’m in the background listening to the sales guy, the whole thing, right? He, he’s a dad. “Oh, you know, this is the safest car for your daughter. Don’t worry about the paperwork.” And he says, “Listen, in order to get the Ford employee pricing today, it ends today. The deal’s over today if you don’t sign today.”
[00:16:43] Leo: I go, “Really?” So I scroll on Ford’s website and I look. It doesn’t end for 10 days from today There’s no reason to be signed today. Red flag.
[00:16:53] Joe: You just mentioned this one. The salesperson says, “Don’t worry about that paragraph.”
[00:16:58] Leo: That’s red flag. I, I, I’d like to give it a yellow. It’s kind of borderline, but I’d give it a red flag because he’s telling you not to worry about it, you should be worrying about it.
[00:17:08] Joe: There are blank spaces. You’ve seen this one. Sign it, there’s some blanks, we’re gonna fill it in later.
[00:17:14] Leo: Absolutely not. That’s the oldest trick in the book. This gets into a very obscure clause in a contract called, you probably heard of it, the integration or merger clause, right, or the four corners of the document clause.
[00:17:25] Leo: What that basically means is whatever a salesperson has promised to you, he’s promised you the moon, it doesn’t matter. If it doesn’t appear in the contract, it’s not legally binding. So those blanks are a trick for this integration clause. So you heard a salesperson say, “Oh, the monthly payment will be 600 a month.”
[00:17:41] Leo: Right? You look, it’s blank. You, you, you sign everything, go away. Two weeks from now you get something from the finance company. It’s $1,000 a month. And you go, “Wait a minute.” You go back to the dealership, say, “Wait a minute.” You, you find the guy. You say, “You said 600.” He says, “No, I didn’t.” And you say, “Yes, you did.”
[00:17:55] Leo: Say, “Well, regardless if I did or not, look at the clause, read it. Integration merger. Whatever’s in the documents would hold. I see a number of 1,000 in the document you signed.” Memories fade very quickly at car dealerships.
[00:18:07] Joe: We had this with my spouse, Cheryl. I was away on business. This actually was part of writing my book.
[00:18:14] Joe: I was hours away from home. She goes into the car dealership to sign. I’ve already negotiated the entire deal, and she’s just gonna go sign. And when she goes to sign, Leo, I said, “Hey, just, you know, put me on video,” and I had her show me the pages. The numbers were completely different, Leo, than what we had talked about.
[00:18:32] Joe: 100%. Completely different. Happens too many times, you know. No, no, no, Leo. You’re gonna find this completely shocking. The salesman’s like, “I have no idea how that happened. I know this wasn’t what we talked about.” And for those of you not on YouTube watching this, the look on Leo’s face, like, “Yeah, right.” All right, how about this one?
[00:18:49] Joe: They tell me, “This language is non-negotiable.”
[00:18:53] Leo: Uh, I’d give that a yellow flag. I’ll be honest with you- You know, let, let’s take a gym membership for example, right? You go in and you sign up for a gym membership and, and they, you know, free T-shirt. You know, you go in there, it’s the beginning of the year. You know, you’ve got a water bottle size of a fire hydrant ready, ready to go.
[00:19:10] Leo: You bought your Lululemon, and you sign this thing, right? And you sign it on a tablet with, with your finger that looks like a seismograph reading- Right, right … when you’re done with your
[00:19:18] Joe: signature. Right.
[00:19:19] Leo: Here’s the thing, like if you stopped and read that whole thing, and there’s something in there that bothered you, let’s say auto-renewal, that’s the biggest problem with gym memberships, auto-renewal.
[00:19:28] Leo: They’re not gonna change it for you. They’re not gonna say, “Oh, whoa. You know, Joe, okay, yeah. No auto-renewal for you, my friend.” Like, they don’t have the authority. This buff guy standing there that, you know, smells like cucumber water and, you know, he’s got eight-pack abs showing you, you know, “Go to the Zumba class, Joe.”
[00:19:44] Leo: That’s their whole shtick. But there’s things you can do, and that’s why I give it an orange flag, because there are things you can do to combat that. So what’s the quickest way you can deal with an auto-renewal clause, right? Auto-renewal clause is basically, you know, if you don’t cancel it 60 days before the membership ends, you renew for another year, and you have to send a certified letter, certified mail like your grandmother used to send you the crisp $5 bill with in your birthday card, right?
[00:20:09] Leo: It came certified mail, and it has to go to a state two time zones away from you. Okay, so here’s what you do. You’re not gonna change that, ’cause that was engineered, right? I engineered those things. Like I, like I mentioned to you before, the guy who came up with the certified mail idea, he got a big bonus for that.
[00:20:24] Leo: That’s a big one. Oh my Like, that’s gonna get so many people, right? 24 Hour Fitness, Planet Fitness. That’s their whole game that you’re not gonna cancel. Got to be certified mail. Drives you crazy. Yeah, right? But here’s the thing you can do to combat that, and the reason I give it a yellow flag because this one’s on, on us as the consumer, is pull out the one thing you have with you all the time, your phone.
[00:20:43] Leo: Right? Your phone has a calendar function. Go eight, nine months from now, 10 months from now, whatever the 60, 30-day cancellation policy, put it in your calendar right there when you sign to go off. That way you’re never caught with an automatic renewal. I had a client like that. She came to me, brilliant woman, beginning of the new year she’s ready to go.
[00:21:02] Leo: It’s like I said, she’s got the fire hydrant water bottle ready to go. You know, fast-forward eight months, she’s been to the gym four times, and it’s literally she can see it from her East Village apartment, she can see the gym.
[00:21:12] Joe: Sounds like somebody I’m related to. But anyway.
[00:21:17] Leo: You know, she signs up for this thing, doesn’t look at the auto-renewal clause, and now she’s stuck, right?
[00:21:21] Leo: She didn’t send it in the 60 day that was in the, in, in what she signed. She didn’t send it certified mail. She didn’t send it to the corporate offices. She thought, “I’ll just walk into the gym tomorrow. I’m right across the street, and I’m gonna cancel this thing. I’ve been here literally four times since January.”
[00:21:35] Leo: It’s now October, November. She goes finds out, no, that’s not how it works. We can’t cancel it here. You know, you gotta, you gotta write the mother ship back in, you know, Delaware, wherever they were at the time. Put that in your calendar. Had she calendared that in her phone that September 15th, send the certified letter.
[00:21:51] Leo: Send it, you know, with notarized, with a wax seal, whatever, you know, crazy things they require, and you do it. So to your question about non-negotiable, I would say most of that’s not negotiable, but there are things we can do to combat these tricks they use on
[00:22:06] Joe: us. Yeah, you’re not helpless.
[00:22:07] Leo: You’re not helpless.
[00:22:08] Joe: Yeah. And the other thing I like about this that you’re really giving me this aha about, Leo, is that also by reading the contract you know what the end game looks like. I mean, when it comes to gym membership, it comes to, let’s say I’m leasing a car, something that we generally most of the time don’t advocate here.
[00:22:25] Joe: Yes. But if you lease a car, like, what are the conditions at the end of my lease? What are the conditions to get out? We’ll talk a little bit about severance in a little bit. Is there severance at the end of this job? What’s my out game look like? If I know that going in, I feel so much more empowered even if I can’t negotiate it.
[00:22:42] Joe: What about this one? They want me to initial every page.
[00:22:46] Leo: Ah, a green light. It, it’s… Some states, that’s just a legal formality. Some states require initial every page. You see some of these cities, New York City for example, has this new thing about canceling subscriptions. They’re making it a lot easier for the consumer to do so.
[00:23:01] Leo: There’s a lot of stuff going on. So there are some, some states that consumer advocacy’s a big thing. They make every page be initialed. But what good is initialing every page, Joe, if you’re not actually reading it? Yeah. It’s almost like a second, or be- we call it in the law belts and suspenders. If you say, “Well, I didn’t know that clause was there.”
[00:23:17] Leo: “Well, you signed it.” “Well, yeah, but I didn’t read the whole thing.” “Oh, yes you did, you initialed every page.” It’s there for a formality and, and, and just another trick, but I’d give it a green flag. Go ahead and sign, uh, initial every page. It’s not, it’s not gonna do much, change anything. Read the thing. If you’re gonna initial it, read it.
[00:23:32] Joe: Initial it. Take just a second longer. Let’s walk through a contract almost everybody encounters, Leo. You find this apartment, the location’s right, the rent works. The landlord slides this 12-page thing across the table in a font, as you mentioned earlier, apparently selected by somebody who hates human eyesight.
[00:23:52] Joe: You flip to the end, you sign. When I’m looking at leasing an apartment, what are two or three things I might have just agreed to without even realizing it if I didn’t read this apartment lease?
[00:24:08] Leo: Two or three things. You know, I have in a checklist that I think I provided over to you, can give to your listeners for free.
[00:24:15] Leo: Um, I actually look at every contract, whether it’s a lease or anything else, and we can definitely take a lease, and there’s five things I always look at. I had a client, a hedge fund guy, daughter’s got her first lease for an apartment in college, freshman year. Signed it for four years, got a great rent.
[00:24:32] Leo: He did what every great dad should do. He looked, made sure the rent number was right, the lease term was right. You know, he took pictures on the move-in, taught her everything. She also had three roommates. One of the biggest thing in the lease, and it’s very obscure and it’s, it’s language that most people don’t understand, you probably know what it is, um, it’s called joint and several liability.
[00:24:52] Joe: I don’t.
[00:24:53] Leo: Oh, okay. So joint and several liability means if you have three roommates like this, this young woman did, this young college student. She took in three roommates. They split the rent fourths. There was four of them, one fourth, 25% each. Dad paid the 25%. Fast-forward to soph- middle of sophomore year, okay?
[00:25:09] Leo: One roommate’s dropped out of school. Another roommate’s taken off with her boyfriend. Another one just doesn’t want to live there anymore. She’s gonna go live on her own. She doesn’t wanna be part of this anymore. So Dad does the good thing. He says, “Listen, sweetheart, I got you 25% covered. Don’t worry about it, like, we’re all good.”
[00:25:25] OG: Oh, boy.
[00:25:25] Leo: Wrong. Right? Wrong. Oh. He calls me and he’s like, “Leo, I just got a, just got a letter for, like, 200 grand that I owe,” right? Personally, ’cause he personally guaranteed it too. “What, what is this all about? I don’t understand. Like, only my daughter’s there. I am only liable for a 25%.” I said, “Listen.” I call him George.
[00:25:44] Leo: I said, “George, send it over to me.” Take a look at it, and of course on page six, ’cause nothing’s ever on page one. Nothing, except the terms, the important things you look at. Hidden in page six is what’s called joint and several liability. And now he’s on the hook for all of them, and there’s really nothing we can do about it.
[00:26:00] Leo: I mean, is there a fix? Sure. Get three more new roommates, right? Get two to defray the cost to your dad a little bit. But that’s one of the bigger ones that I see, especially where there’s multiple people signing onto a lease is that joint and several liability. That’s one that I would tell your listeners to definitely look out for.
[00:26:19] Joe: You even mentioned when I was reading about this, they can even dictate whether you can have roommates or not in the lease.
[00:26:25] Leo: That’s correct. That’s right, and you may think you can. They think you can’t. You don’t read the lease. You have three roommates. All of a sudden the landlord or the maintenance person’s over there, “Out.
[00:26:33] Leo: Two people out. You’re not on the lease. Get out.” And they have the right to do that, right? If you’re not on the lease, they can technically toss you out of there, right? They have to get an eviction proceeding, I would assume, most states. That’s the first one I see when you have multiple situations. What if you don’t have a multiple situation, multiple tenants?
[00:26:50] Leo: Let’s look at a really big one. Auto-renewal. This is a big one in a lease. Always look for that. And how do you find that? Like, all leases now, all documents come in DocuSign or Adobe Signature and these, these electronic things. You can now search them, right, electronically. You go in DocuSign, you hit search.
[00:27:08] Leo: Search for the word automatically. That is the magic word. That says whether or not your lease is going to automatically renew, and that’s a big one, right? You sign up for a 12-month lease, and there’s, like we said about the gym membership, there’s some archaic, you know, voodoo mechanism that you have to use to get out of this lease so it doesn’t auto-renew for another 12 months that you’re on the hook.
[00:27:30] Leo: And that could be certified mail. It could be, it could be a number of things. Look for that word. And again, are you gonna change this? Probably not. Can you put it on your phone as a reminder? Absolutely. Beat them at their own game. So automatically renewal clauses, that’s another big one. Joint and several liability, automatic renewals.
[00:27:48] Leo: Now here’s the big one, Joe, that I think your listeners will really like ’cause it’s, you know, financial literacy, right? This is what you guys teach, what you preach. What does this lease actually cost me? So my daughter just got her first car in college. She also got her first lease. So I’m there with her at the management company looking at the lease for her, and we go see an apartment.
[00:28:09] Leo: Of course, it’s floor-to-ceiling windows, beautiful view of the city, loves it. “How much is this?” “Oh, it’s $2,200 a month.” “$2,200? Wow, that’s a bargain. Whoa, that’s a bargain.” Then they put the paperwork in front of you, right, like a DJ, you know, spinning here, you know, doing some scratching. They put the lease in front of you.
[00:28:25] Leo: They shove it in front of you. And I’m like, “Well, wait a minute.” She goes, “Okay, Dad, let’s sign it. $2,200. Oh, Dad, that’s in my budget. You told me up to 2,500.” “Nope, slow down. Let’s read this thing. What is actually going on here?” So you look at the front page, and that’s where the big friendly font on the front page is.
[00:28:41] Leo: It says $2,200 a month base rent. That’s just marketing. Flip the mattress over and add up every hidden fee, convenience fee, management fee, breathing our air tax, right? You’re breath- Oh, no … you know, you owe us money. Yeah. She has a little dog, tiny dog. Oh, the dog has to rent too, 50 bucks a month, you know, $500 deposit.
[00:29:01] Leo: Water, 50 bucks a month. Internet, 70 bucks a month. Cable, 30 bucks a month. Parking space, which they showed us the beautiful new shiny parking garage, didn’t tell you it was 150 a month tacked on to the base rent. So now what you should do in that lease is read the pages, look for other numbers. They are charging you more than the base rent.
[00:29:21] Leo: That 2,200, Joe, became close to $3,700 a month. Whoa. It was- Wow … 1,500 in hidden fees when you were all said and done.
[00:29:30] Joe: That wasn’t in her budget.
[00:29:31] Leo: That was not n- that’s not in your budget, sweetheart. Let’s go on to the next building. That’s what you got to do.
[00:29:36] Joe: You know, you mentioned that the word automatic or, or automatically, either one of those words, like searching for those, I think that’s great.
[00:29:43] Joe: Is there… Are, are there any words that I can use to search for that, or is there a section that’s usually under where it says, like, additional charges?
[00:29:50] Leo: Uh, additional charge. Yeah, it’s always in there, your additional rent. Okay. So in any lease there’s base rent and there’s additional rent, right? There’s two rent components, and if you look at a commercial lease, you know, retail space, then you also have what’s called percentage rent based- Yeah
[00:30:04] Leo: on your sales. In a consumer-facing residential lease, you’re going to have two rental amounts. One is the base rent, second is what they dub additional rent. But additional rent is not just one, one thing. It’s, it’s a multiple of things. It could be buried everywhere. Sure. But they’ll always say, “This is part of additional rent.”
[00:30:21] Leo: So if you were to want to find those, I would run terms like additional rent, rental charges, total rental amount, because that’s buried deep in page 10. The total amount is 3,700 bucks a month, not 22, 37. But we put that big shiny, and it was in, like, 126-point font right on the front there bolded. 2,200 a month base rent.
[00:30:41] Leo: Gorgeous place. Can you believe that? What a deal.
[00:30:44] Joe: What a deal. So the, the time a deal becomes, becomes not a deal. I want to take this because I want to use that, and obviously a lot of these terms we’re going to look for no matter what we’re doing, right? I mean, you, you brought up the auto renewal thing on two different types of contracts.
[00:31:01] Joe: That’s a problem in a lot of different types of contracts. When you open up any, any contract, Leo, any unfamiliar document, is there anything you’re scanning for first? Like, just can you give me the anatomy of how you scan these documents when they first land on your desk?
[00:31:17] Leo: Yeah, you know, I have a 20-point checklist, which is pretty much in my head and what I look for.
[00:31:22] Leo: And obviously I’ve done this for 30 years, so I can find those things really quickly. Sure. Like for example, you had started to ask about automatically, where is that? It’s always in the terms section or the section that, that’s after the terms section, which is the renewal of terms, sometimes called, extension of term, option to extend.
[00:31:40] Leo: That’s where you’ll find the words automatically.
[00:31:42] Joe: But it sounds like you don’t begin on page one and just read it from top to bottom. No. You’re, you’re boom, boom, boom.
[00:31:47] Leo: I’m scanning. I’m scanning. And I will go back, I will go back and read the lease because that’s where unethical, immoral people can sneak things in, right?
[00:31:58] Leo: And you gotta be careful. But most of these things are standard, right? You know, these are all based on form real estate documents that a state’ll put out, a residential lease, a, you know, a mortgage, a purchase and sale agreement. They’re standard. So for, in order for them to sneak something in, it usually goes to the end because they’re pretty lazy.
[00:32:13] Leo: They’ll put it at the end so you’ll find it. But yeah, you’re right. And, and Joe, that’s an interesting point. I don’t start on page one. I start looking for the things I want. It’s human nature, right? You start reading the first five pages, like you’re really detailed focused, and then by the time you get to page 20, you’re, you’re like daydreaming about going to play golf and- Yeah
[00:32:30] Leo: it doesn’t work that way. You gotta look for the most important things. And the few I went through with you, I call them the big five system- Right … um, that I went through with you. Auto renewal, um, what does it actually cost that we just went through, what’s the eject button, and what can they change later?
[00:32:45] Leo: Change later is the integration merger, what your wife w- was subjected to. Those are four, and then the fifth is, does the paper meet the promises? What the salesperson say to you, do this. That’s one of the things I’ll ask clients for typically is, “Listen, what did the leasing agent tell you was happening here?
[00:33:00] Leo: What did your real estate broker tell you was going on in this purchase and sale agreement? What did they say? I wanna make sure it made it into this agreement.”
[00:33:07] Joe: A lot of us during our lifetime are going to hire contractors. I think almost 100% of us at some point are gonna work with a contractor. So this is another agreement that I think is gonna be ubiquitous, like each of us either have signed or will sign a rent agreement.
[00:33:22] Joe: Before I sign, walk me through what do you look through in a contractor agreement that might be a red flag?
[00:33:30] Leo: How much money do they want up front? Number one red flag. Go right to that section. States usually regulate how much a contractor can ask for up front. Some states 10%, some 20, 30. And listen, there’s nothing wrong with that.
[00:33:43] Leo: I mean, the contractor probably doesn’t have a ton of money. They’ve got to buy the supplies, the wood, the sinks, whatever you’re doing. One, one thing I always look at is how much they want up front. There were a lot of scams down here in Florida you’ve probably read about, where guys were going to these elderly people saying, “Put a pool in for the grandkids,” you know, salesperson.
[00:33:59] Leo: Da, da, da. 50% down. Okay. You know, they write the check right there. Wow. They’re pressured. The other big one is these Generac salespeople that sell the home generators down here in Florida because of the hurricanes, no electricity. 50% down. Most of those people in Florida with the swimming pools, and you can look at it, it’s all in the news, never came back.
[00:34:16] Leo: They dug the hole and never came back. Just kept collecting that 50%. It was a scam. So that’s what you look for, that contract. Don’t sign it. Say, “You know what? This is great. We really want the pool for the kids, the grandkids. This is awesome. I want to show this to my attorney,” or, “I want to just sit down and read this with Leo Manz’ book,” whatever they want to do.
[00:34:33] Leo: That’s when you do it, right? A, a big red flag of any contractor agreement is how much do they want up front. That tells you a lot about it because most contractors, first of all, if they’re legit, they’re making a lot of money, they don’t need you to bankroll the purchase of the materials. So 10% is usually the norm, and I think down in Florida now it’s 10%.
[00:34:52] Leo: I’d have to look. I haven’t looked at that in a while.
[00:34:53] Joe: A lot of this, Leo, might be remodeling. What happens if they find stuff that’s unexpected later on? Is that- Change order …
[00:35:00] Leo: i-
[00:35:00] Joe: is that pre-written in the contract, or is it something that I should expect might be different than the contract?
[00:35:07] Leo: It’s usually in the contract legally it’s required to be.
[00:35:10] Leo: It’s what’s called a change order or a change work order, right? So you wanna do, and usually, and again, I highly advise this, usually have a description at the end that’s an addendum which details what the contractor’s doing for you. Because you don’t want… And I’ve had clients get in situations where the people show up, they agreed it was $15,000 to remodel a bath.
[00:35:29] Leo: They show up, they demo the whole thing, demolish the whole existing bath, and they give you a bill for an extra $5,000. Well, wait a minute, demo was never in there. I didn’t say that was part of it. I’ve got dumpsters I gotta get. I gotta, you know, pay to get rid of this stuff. That wasn’t part of it. The part was actually constructing the new once I had the frame in the box.
[00:35:46] Leo: No. The description is, is everything, right? Make sure you to the every nth detail you can think of, make sure you get in that description what it is. Now, that gets to your question. What if something happens, right? They, they tear out the wall, there’s mold damage. They gotta do some mold remediation.
[00:36:04] Leo: There’s a concept called the change order, and what a lot of contractors do, and th- this is the trick, this is why you have to read it, is they say if there’s a change order, they can unilaterally, unilaterally meaning one party can change the contract themselves. They can unilaterally change the contract to cover any change orders that weren’t anticipated, like hidden latent things that just went, “Eh.”
[00:36:25] Leo: Not their fault there was mold. Not your fault. Maybe you just bought the house, you know, there’s a leak in the, the board, that cement board they put up. That’s okay. But here’s the thing. As a consumer, as the purchaser, as the homeowner, you should have the right to speak with them about what that change order entails and how much it is.
[00:36:42] Leo: They should not be making that decision for you, because you can see right there what I just said, where you’re gonna get taken advantage of. Like, “Oh my gosh, I got in here, I need more profit. So this $5,000 mold remediation, I’m charging 20.” Right? So now the 15 contract is 35. “Hey, it’s mold.” I got, you know, the guy buys a hazmat suit at Home Depot or a thing and comes in.
[00:37:00] Leo: Doesn’t really need it, but he comes in with the, like he’s hazmatting the place on you. He’s got the NASA space pack on. You know, no. No. You should have the right to call a mold re- remediation place, right? “Well, okay.” Y- you’re the contractor, Joe. “Okay, Joe. Thank you. Thank you for finding that. Not your fault.
[00:37:15] Leo: Totally get it. It’s gonna cost a little bit more money. I’m gonna get a second opinion. That 20 you quoted me for mold remediation sounds like a lot. I’m gonna call the guy down the street over here that, that advertises mold remediation, bring him in at $750.” I took care of it thing like that. That’s why it should be a bilateral decision in the contract.
[00:37:34] Leo: That’s, that is one of the biggest things, Joe. You just hit upon one of the biggest reasons a lot of people come to me. Like I said, I represent a lot of Wall Street bankers, hedge funds, CEOs. They all do this type of stuff to their homes, millions of dollars of renovations. They come to me after they signed the contract, didn’t read it and show it to me.
[00:37:49] Leo: These are not dumb people. They’re highly intelligent, and they come to me with that exact question. “Oh, mold remediation, 20 grand, Leo. What is this? I’m getting ripped off.” Yes, you are- Yes, you are … and you signed up for it. And it was in the contract. Yes. It was in the contract. I, I can go negotiate for you.
[00:38:04] Leo: I’ll use my magical negotiation skills here and try to get you something better, but- You have no right to go find your own remediation company. You have no right. They make the decision how much that’s gonna be
[00:38:16] Joe: I wanted to pick a few of the different things that we do in our life. All of us are gonna have a job at some point.
[00:38:23] Joe: You write about this wonderful woman, Emily, Leo. She’s excited, getting a bump up in salary, title looks great, reads the paperwork and tells you it all looks standard. These words terrify you. It all looks standard. Why does it terrify you?
[00:38:40] Leo: Because standard is the most terrifying word in the English language to anyone who reads a contract.
[00:38:46] Leo: There is no such thing as standard. Look at the definition. It says standard is something neutral, right? This is neutral, you know, it’s standard, we do it all the time. It’s neutral, it’s standard. That is not true. The provisions that were drafted in that contract, and how do I know this? Because I drafted them, are one-sided and rigged against you.
[00:39:03] Leo: They’re completely rigged against you. There’s nothing is standard. What you’re describing in Emily, probably aside from, uh, you know, apartment leases, probably the second-biggest clients that come to me because of who my clientele are, that they’ve signed an agreement. They’ve wr- they send it to me. Just had a woman yesterday, huge biotech company, signed on a deal.
[00:39:21] Leo: “I signed it.” “Why did you sign this?” Now she wants to leave. “The, why did you sign this? Like, you lose all your equity that you got. Like, why did you sign this?” “Oh, they told me it was standard.” Nothing is ever standard. That is the biggest lie going in the contract industry.
[00:39:35] Joe: Well, let’s dive into this because you make a big deal about there is a thing called an offer letter, and there’s a different document called an employment agreement, and these are two terms that you, man, you hammer home.
[00:39:47] Joe: You gotta know the difference between these two things, Leo. So what are they? What’s an offer letter, and how is it different than an employment agreement?
[00:39:53] Leo: Yeah. So when we talked about a residential lease, there’s the front page. It has all of the terms on it, right? It has your rent, your base rent that we just went through and why that’s not true, all these things.
[00:40:01] Leo: Your offer letter, your employment offer letter has all of these same things. Your base salary is this. Your this is that, this is that. But if you look at an offer letter, most times, especially if you’re getting equity, stock options, it’ll say subject to the plan, right? What they’re talking about is an equity incentive plan that a corporation issues typically under ERISA, so it’s tax-deductible, and that is the magic words right there.
[00:40:23] Leo: So let’s just take that in an offer letter. It says it’s subject to the plan. And then by the time you get to the employment agreement, it once again references the plan. What is this plan? And it’s magical, right? I don’t have any right to ask what this plan is. If you get that plan, Joan, if you’ve ever looked at these, I know you in the business.
[00:40:41] Leo: Like, if you ever looked at them for clients and private companies, that plan is at the absolute discretion of the board of directors to change, modify, delete, amend, anything they want to do. So your offer letter, it now becomes codified and legalized in the employment agreement, is subject to the plan. So not only are you now being legally bound, ’cause the offer letter is not legally binding, says it right in there, non-legally binding, you know, its intentions.
[00:41:05] Leo: The legal binding is in the contract, the agreement. You now become not only bound by that employment agreement, but by that equity incentive plan. It goes by a bunch of different names. We call it an EIP, equity incentive plan. So yes, the, I, I do make a big deal about that because that’s where most employees at that level getting jobs, whether you’re C-level or, or below C-level, you’re getting something that looks shiny and pretty and bright and new.
[00:41:28] Leo: That first page of the lease has all the terms, the $2,200 a month that my daughter was starry-eyed over. “But, Dad, I, I came well below budget.” “No, you didn’t. Go read…” So the rest of the lease is the legal agreement, is your employment agreement, and that’s where they bury all the terms, and you don’t read it because it’s set up that way.
[00:41:44] Leo: HR departments are notorious for this. They’re set up that way.
[00:41:48] Joe: You read the offer letter, so you think you’re good.
[00:41:51] Leo: You’re good. It’s standard. “Oh, this is standard.” Yeah. Everything you need to know is in that offer letter. That’s not legally binding. What’s legally binding is what you’re signing. Read the thing.
[00:41:58] Joe: One that surprises creative people or people that wanna have what we call a side hustle, Leo, is that let’s say I write a book, I build an app, I record music, launch a newsletter, start a side business while I’m employed. Could my employer claim ownership over this thing that I make while I’m working at this company?
[00:42:19] Leo: 100%. 100%. There’s a document also that goes along with your employment agreement. It’s typically in the employment agreement, and we call it PIIA, which is proprietary information invention assignment. What they do to trick you is they say there in the agreement, “If you have any preexisting inventions that are not gonna be owned by the company, list them out on the back on the schedule.”
[00:42:39] Leo: So if you were in the process of writing your book and you’re joining a company, you could list that out. They would have no rights to it. But what if you forget to list it? What if you didn’t read it, didn’t even know what that said? Or what if you start writing the book after you start work? There’s no going back and amending that schedule.
[00:42:54] Leo: Not happening. Some states are pretty careful, like if you look at the notoriously, and I don’t mean that in a bad way ’cause I think it’s actually good, states like California, Massachusetts, which is super employee-friendly, they do have statutes around this kind of stuff, right? But still, those statutes are kind of rigged in the employer’s favor.
[00:43:13] Leo: Did you u- They have this whole test. Did you use their computer to write that book, Joe? Were you sitting there at your desk utilizing their office space to write that book, Joe? Did you call any of their customers, clients, vendors, um, to try and sell your book? Say, you’re in, in some, you know, peripherally in that industry, media, whatever.
[00:43:29] Leo: Did you use any of that? Non-solicitation that you’re subject to. All of that, so that’s, that’s scary. I’ve had a lot of clients come to me because some of the work or a good, good part of the work I do also is I work with founders and startups, and that’s the first question they ask when they come to me, and these are kids, like, “Oh my gosh, we got this great idea.
[00:43:45] Leo: We’re gonna change the world.” Okay. First question I ask them, “Give me everything you signed with your employer when you were working at Adobe, when you were working for Goldman Sachs. Send me everything you signed.” And not just what you signed, Joe. There’s another X factor there. That’s the employee handbook.
[00:43:59] Leo: That’s the biggest thing. You agree in the employment agreement that there is this thing called the employee handbook, which somebody at some point’s gonna send to you on your first day maybe, along with 10,000 other pages of documents. In there, there’s a lot of stuff that govern inventions, that govern non-solicitation.
[00:44:15] Leo: Non-competes sometimes are buried in the handbook, and all these things. Non-competes are what they are. They’re statutory prohibited in California. The FTC tried to federally ban them. Never happened. Lobby’s way too big with employers in Washington, so that didn’t happen, but…
[00:44:31] Joe: The surprising thing to me, though, is you also make a point of, uh, y- you can, once you know this stuff exists, you can negotiate this.
[00:44:40] Joe: Yeah. This is negotiable. I got a book. I wanna write my book while I’m… For you, I wanna make sure that in the employment agreement it says I own it, you don’t. You can put that in your employment agreement.
[00:44:49] Leo: If you read it.
[00:44:50] Joe: If you
[00:44:51] Leo: read it. Absolutely. There’s… That’s one of the agreements, especially this day and age with AI and people who can do AI stacks and, you know, skilled in AI.
[00:45:01] Leo: It’s everybody wants to hire right now, right? Huge salaries. You have leverage. Probably of all the contracts we talk about today, employment agreement is probably the one where you have the most leverage, especially if you’re a sought-after skill set like AI today, you know, or a software developer five years ago.
[00:45:16] Leo: If you’re in high demand and people really want you and you’re coming from a shop they want you coming from, there’s a lot of ability to negotiate. But the problem is, there’s two things. One, you have to read the thing, and then after you read it, you got to know what to negotiate. If you’re getting a six-figure salary, spend the whatever it costs you to have a lawyer look at it.
[00:45:33] Leo: But if you don’t wanna do that, you’re not inclined to call a lawyer and get them involved because, again, you’re afraid of spooking the employer. Like, “Oh, I’m not hiring you. Get out of here. I’m not dealing with a lawyer. Go hire somebody else.”
[00:45:43] Joe: It always just seems to me, Leo, like it’s just this insurance policy.
[00:45:47] Joe: You know, I’ve met people that don’t wanna do the inspection when they buy the house. Are you kidding me? You’re paying how much money for this house? You’re not gonna have an inspector go through it, you’re gonna, you’re gonna waive the inspection? I would never waive the inspection. I wouldn’t sign up for something that’s gonna, you know, be my lifeblood to this income stream without, at the very least, knowing what the hell I’m reading and making sure that my income stream’s happening the way that I want it to.
[00:46:09] Joe: And on that note, I mentioned earlier I want to talk about severance, Leo, before we say goodbye. Can I negotiate severance originally? ‘Cause that, ’cause that also seems awkward. If I’m sitting across from you and I’m going to work for Leo, and I’m like, “Leo, I want to talk about my severance,” Leo’s like, “You son of a…
[00:46:26] Joe: You ain’t working here yet, you’re talking about leaving.”
[00:46:29] Leo: Yeah, that again, that’s the psychology of it, right, Joe? You don’t wanna feel rude, you don’t, you don’t wanna do any- Like, this is, if it’s your dream job and the salary’s more than you were thinking, the bonus, the options, you don’t wanna do anything to trip that up, right?
[00:46:41] Leo: And that’s engineered to do that. Severance is 1000% negotiable, and it’s negotiated all the time. And if I’m representing an employee, a CEO negotiating their contract, their employment agreement, that is the one thing I always negotiate. Now, here’s what the employer will tell you. It’s, “Hey, okay, it’s industry standard to get one month, and then you get one month for every year up to a total maximum of three months of severance.”
[00:47:06] Leo: That’s not true. That is completely negotiable. And here’s the thing, like I, I would tell listeners today. If you got severance in that package, right? And you wanna negotiate that. They’ve also gave you a signing bonus, let’s say. And read that signing bonus. Read the language. They have no qualms about telling you, “If you leave within the first 12 months, you have to pay us back every penny.”
[00:47:26] Leo: So they’re thinking on the same thing. “Hey, this, this, this woman may leave,” right? “Great executive, we love her, but she might leave too and we just gave her a $100,000 signing bonus. That, you’re putting every penny back if you leave in the first 12 months.” They have no problem doing it to you. Talk about what happens at the end.
[00:47:40] Leo: Here’s the thing. You have to always be thinking about the worst-case scenario. That’s what we as lawyers do, right? That’s how our brains are wired. That’s what we’re taught in law school. What is the worst thing that could happen here? Not the best thing, right? So I think that’s part of what our contract literacy movement is about too.
[00:47:55] Leo: Again, it’s not really about changing clauses that you can’t, like in gym subscriptions that we talked about. It’s arming yourself with information, knowledge, and ability, right? Ability to talk to people. Ability to say, “Hey, I’m not concerned about this. Like, I have no intention of leaving. Like, I love you guys.
[00:48:11] Leo: I want to spend the rest of my career here, but things happen,” right? It’s like a prenup. “Companies get taken over.” Yeah, it’s like a prenup. I talk about those too. Don’t wait till the day of your wedding to do those. But bad move
[00:48:22] Joe: There’s so many areas. You talk about healthcare, you talk about wedding venues or event agreements.
[00:48:28] Joe: Online terms of service, oh my goodness, the number of times I’ve scrolled on Apple all the way to the bottom just to click that button. Give
[00:48:34] Leo: up one of your kidneys. Give up one of your kidneys. That’s right. Joe, can I give you a great story about terms of service? I’ve gotta give you this story if you don’t mind.
[00:48:41] Leo: Oh my God, yeah. This is great. Okay, this is the GOAT of paperwork, greatest of all time of paperwork, and almost nobody who signed it knew they did. This is my favorite contract in human history. Picture it, Joe. It’s April Fools’ Day 2010 A video game retail in the UK called GameStation decides to run a little experiment.
[00:49:00] Leo: Overnight, some beautiful, unhinged genius in the legal department slips one new paragraph into the terms and conditions. What did it say, Joe? It, here it is, and I’m barely paraphrasing this, okay? “By placing an order today for the new Call of Duty game, you agree to grant the company a non-transferable option to claim,” are you ready for it, “your immortal soul.”
[00:49:21] Leo: I’m not kidding. Your soul, Joe. Not store credit, not your email address- … your eternal soul in fine print. And here’s the thing, Joe, they were thorough. And listen, that’s not all it said, right? You could maybe gloss over a couple of words, right? It was explicit in the contract a couple of times that if they ever chose to collect your soul, they would notify you with six-foot-high letters of fire delivered by-
[00:49:45] Leo: one of our duly authorized minions, okay? Which means there’s an HR department in hell, right? Talking about Severance, there’s an HR department in hell that’s gonna get this. And here’s the thing, they’re not playing Satan. It was a joke, right? Sure. They put a little link right next to that said, “If you’d like to keep your soul, click here.”
[00:50:01] Leo: And the people that did that got a $5 voucher towards the new Call of Duty. Oh, that’s so cool. Now, Joe, I, I got a question for you. What percentage of people do you think actually kept their souls that day? 7,500 people bought the game that day.
[00:50:13] Joe: Oh,
[00:50:13] Leo: I- Of 7,500 … didn’t even know
[00:50:14] Joe: percentage-wise. I was gonna say number might be two.
[00:50:17] Leo: Yeah, no, well, it was a little bit more than that. So- Was it? … 12%. Yeah, 12%. Wow. That shows you that there are people out there doing this. We gotta get everyone to do this through contract literacy. But that still means 7,000 people legally signed away their eternal souls to this company. Now, that’s a joke, right?
[00:50:33] Leo: And, and these people weren’t dumb. They just scrolled through like everyone does. I’ve done it. Like I said, signing all these Apple things, all these Apple products, I’m sure some nut job at Apple put in there that you give them the, your kidney, right? Somebody said, these, people, you know, lawyers have a really weird sense of humor.
[00:50:48] Leo: You can probably tell. So somebody probably did it at Apple, too. But this is a joke. This, this was fake. It was done as an April Fool’s joke. L- listen, the landlord who puts this kind of stuff in a lease isn’t joking. The gym isn’t joking. The car dealership isn’t joking with your wife. I, I just had to tell you that story, though.
[00:51:04] Leo: That’s one of my favorites from 30 years. That is- I’m in attorney humor, sorry.
[00:51:09] Joe: That is fabulous. There’s something for everybody. Yeah, it saddens me that it’s that few people, even though I was… I’m actually pleasantly surprised that it was that many people. Yeah, I was,
[00:51:19] Leo: I was too when I looked at statistics.
[00:51:20] Leo: Yeah, me too.
[00:51:21] Joe: Leo’s book is called Don’t Sign That: Consumer’s Guide to Contracts Running Your Life with this hilarious, “Oh, God, why are you signing that?” And a big X. Graphic- With a big X … on the front. When Leo and I were first talking about this, we were changing networks. And so we were going from Westwood One Cumulus to Gamut, where we are now, and it was interesting, Leo, ’cause I’d just been reading your chapters on employment agreements, and it certainly wasn’t an employment agreement, but it was close.
[00:51:49] Joe: It was a distribution agreement.
[00:51:51] Leo: Yeah,
[00:51:51] Joe: sure. And I was promised that the new network was going to send me to an industry conference each year. Like, that was part of our- Mm-hmm … discussion.
[00:51:59] Leo: Mm-hmm.
[00:52:00] Joe: And because I’d been reading your book getting ready for this, I went through the contract, and it wasn’t in there.
[00:52:07] Joe: And it just, it was nowhere in there, and I’m like, “No, no, no. This is, like, the offer letter and the employment agreement.” So I wrote back to the guy that runs the network, who I really like a lot, John Goforth, and I write to John, I go, “Hey, John, this, this agreement that we had that you would send me to a conference every year on your dime, not mine, is not in the agreement.”
[00:52:28] Joe: And he said, “No, it’s not in, in the agreement. We never put that in the agreement. But I love two things. Number one, you’re the first person so far this year who’s questioned me on the agreement, so you’re the first one to read it.” By the way, that wasn’t the only question I, that I had. I had many questions, and he answered them all.
[00:52:47] Joe: He said at first it freaked him out that I read the agreement, but then he was like- Of course it did … “This is a financial show. They should know how to read the agreement.” And then I gotta tell you, Leo, it was because of you. But the second- … thing was, and I actually cleared this with an attorney later, he’s like, “But I like this email exchange back and forth because, yes, I am sending you to this on our dime.
[00:53:10] Joe: It’s not in the agreement, but you can present this, this email back and forth as evidence that I said it, and it’s it. And by the way, it’s not part of the standard agreement, but it is our agreement, and it is gonna happen.” So I got it in writing, Leo, because of you.
[00:53:24] Leo: Good. I’m glad you did, and that’s… I, I commend your attorney.
[00:53:27] Leo: That is… He’s, he’s right. That is a good defense against what we talked about, which was the integration and merger clause. So had you not read it, had you just signed it like most people do, then, you know, the conference comes up, you go to it, y- you submit the, the invoice. “Oh, what are you talking about?”
[00:53:43] Leo: Yeah, right. “What are you talking about? We’re not doing that.” You say, “No, you promised me.” Say, “Well, let me… Let… Hold on, Joe. Let me look at the agreement. It says right here, I don’t see it in the agreement. It says integration and merger. Everything we agreed upon is in the four corners of this document.” Show me where it is.
[00:53:56] Leo: Now you have email. That’s good evidence.
[00:53:58] Joe: I got an email from him- So you- … saying, “It’s not in the document, but that doesn’t mean it’s excluded. It’s still something we’re agreeing to.”
[00:54:05] Leo: And there, Joe, is the thing, right? They probably have a policy there. A- and they have a policy there, “We’re not changing anything.
[00:54:11] Leo: Like, don’t even try. Like, it’s gonna take six acts of Congress to get through our legal department before we change that, Joe.” But you did the right thing, which is that’s a way to combat it, is get it in writing.
[00:54:20] Joe: So Leo has already made me money on this book. I know it will- I’m
[00:54:26] Leo: very glad, Joe …
[00:54:26] Joe: I know it will help you too.
[00:54:28] Joe: Don’t sign that. You can get it at leomand.com, or I’m assuming wherever books are sold. At Amazon?
[00:54:34] Leo: Books sold, Amazon. Yeah, it’s the number one bestseller on Amazon. Please read it. Please reach out to me, my email, whatever. I’m always here. Um, that’s the funny thing. When I wrote the book, Joe, it was something I felt like I wanted to do, right?
[00:54:45] Leo: It wasn’t, uh, entertainment purposes. It wasn’t historical. This book was written because of all the things I saw. I just, you know, our legal profession is backwards, right? We’re the fire department that sells matches, right? Lawyers. Right. Like, we make billions on litigating contracts- That’s right … but we never tell you how not to go into litigation, right?
[00:55:01] Leo: How to change them. So always thought that was a, just a real backwards thing in my profession, and I, you know, 30 years of doing this bothered me a lot. And I wrote the book, and it ended up becoming a number one bestseller. And I don’t, that’s not a compliment to me. That’s showing you that there’s people out there that this is important to, and people, the 12% on the games saying, “You reading your agreement.”
[00:55:20] Leo: People out there are concerned about this. More people need to be concerned. You know, and this book led to the contract literacy movement, which I’m so happy to do. It is funny, because when people emailed me after reading my book, it wasn’t other lawyers, shockingly. It was NCAA athletic directors. It was labor union leaders.
[00:55:38] Leo: It was credit unions. It was public libraries. It was high schools. They all said, “How do we teach this to our people?” And then I created the six video module that we license. And shockingly, we, we try to make a profit here too to feed our families, but we also do a lot of free stuff, Joe. And that’s one of the things I’m most proud of is right now we’re finalizing a pilot program with a very famous city on the outskirts of Boston to do free workshops at, at their libraries, through the mayor’s office, through the chambers of commerce.
[00:56:08] Joe: Oh, that’s so exciting.
[00:56:09] Leo: Every event, 50 free books. So if you don’t wanna pay for my book, come to one of my events, you get it for free. Because I want everybody out there, like I said, our, our, our, our goal here is to serve, not to sell. And I’m really excited about this, because our goal is by 2027 to have this launched in, like, 20 major metropolitan cities throughout the US, and all free.
[00:56:27] Leo: All free. And I’m, I’m really proud of that.
[00:56:29] Joe: Well, and if you thought this was entertaining, I, I’m thinking about the last time I read a book about contract law that I found entertaining. This, this, this may be the first one. Thank you for being a mentor to our Stackers, Leo, today. I super appreciate your time, and I think we helped a lot of people.
[00:56:45] Joe: Read the contract
[00:56:46] Leo: Thank you, Joe.
[00:56:48] Doug: Hey, this is Lou Mongello from WDW Radio, and when I’m not at Walt Disney World or sharing my passion for Disney World or eating, I am stacking Benjamins
[00:57:02] Doug: Hey there, stackers. I’m Joe’s mom’s neighbor, Doug, and huge thanks to Leo Mann. Look at all the things that can go wrong when you don’t think enough about the wording. Case in point, how about what happened to Pepsi back in 1996? A clever ad exec came up with the idea of a loyalty program where fans could earn Pepsi points and trade them in for real items, like free sodas or maybe a TV.
[00:57:27] Doug: Cool stuff. Well, in their advertising, these not-so-smart execs featured a protagonist who won, well, something that cost a lot of money. Sadly, someone came to claim the fake prize, prompting one of the biggest, most publicized lawsuits of the 1990s when Pepsi didn’t wanna pay up. What was the big prize that Pepsi didn’t wanna hand over?
[00:57:50] Doug: You know, because it was a prize worth only $37.4 million at the time. I’ll be back right after I see if Joe’s mom will create a window washer loyalty program. Maybe offer free lasagna nights for participants. Seems like a great idea to me, Ma.
[00:58:15] Doug: Hi there, Stackers. I’m lasagna lover and guy who maybe needs to brush up on his persuasive argument skills, Joe’s mom’s neighbor, Doug. I described to you earlier how Pepsi stepped in it in a big way by getting too clever during an ad campaign. In one ad, they showed a guy who redeemed seven million Pepsi points into what item that was valued at $37.4 million at the time, or over double that amount today, an amount that an actual person really tried to cash in?
[00:58:48] Doug: It was a Harrier fighter jet. How sweet would that be? Wow. Ultimately… I know, right? Ultimately, Pepsi didn’t have to pay out the fighter jet after a judge, a lame judge, ruled that no reasonable person would’ve taken that seriously. But taking a loyalty program for window washing, I don’t think Joe’s mom is taking that seriously enough.
[00:59:10] Doug: I’ll work on her as I send you back to Joe and OG.
[00:59:14] Joe: I’m not sure you know who’s across the table from you on that negotiation, Doug. That might be- Right … might be a little difficult one.
[00:59:20] Doug: I’ve underestimated her.
[00:59:22] Joe: Yeah, she may have some, uh, terms of service that, that she’s got listed somewhere that you signed without reading it.
[00:59:29] Joe: Big thanks to Leo Manne. Some real horror stories there. A good reason too, OG, when, you know, the person across the table is going, “Come on, just sign it. This is all standard.” I love Leo’s discussion around the phrase this is just standard. There is no such thing as standard. It’s all, it’s all different every time, and it’s made for you.
[00:59:49] Joe: And listen, even if it is standard, the thing that they create a boilerplate, you don’t know what’s in that boilerplate.
[00:59:55] OG: And, and with 7,000 pages of whatever, right? I mean- Right … it can be standard, but I still need to go through
[01:00:01] Joe: it. Yes. I love the… So that might be one, uh, stackers, that you go back and re-listen to because I love his point on exactly what to flip to when you go through those contracts, so big thanks to Leo.
[01:00:14] Joe: Hey, let’s, uh, cover a headline.
[01:00:16] headlines: Hello, darlings. And now,
[01:00:21] headlines: it’s time for your favorite part of the
[01:00:22] Joe: show, our Stacking Benjamins headlines. Our headline today comes to us from Investment News. Investment News is a place where, uh, financial pros go to get news and, uh, what’s going on in the business. We love covering this on Stacking Benjamins because of OG’s place on the other side of the table from where most of our stackers sit and also where I used to be.
[01:00:44] Joe: And what I think a lot of the time is there needs to be this marrying of what advisors are thinking about and what individuals are thinking about. But in this case, it, it’s a little bit of beware what you read. This is from just, uh, about a week and a half ago. “Pre-retirees want guaranteed income,” is the headline, “but advisors aren’t excited to deliver.”
[01:01:05] Joe: This is written by, ostensibly it’s written by Leo Almazora, but I get the feeling that Leo, OG, might have just taken a, uh, life insurance industry PR piece and pumped it out. But let’s see, ’cause the first half of this I like. “Nearly nine in 10 Americans approaching retirement have thought about how they will generate income once their paychecks stop.”
[01:01:30] Joe: Nine in 10. What’s the 10th person doing, Doug?
[01:01:33] Doug: They’re reading a contract
[01:01:35] Joe: They’re thinking about donuts? I don’t know. Yeah. Like, nine, nine in 10 of us are thinking, “Hmm, how will I generate income?” 10th one’s like, “Well, I’ll, I’ll deal with that later.” The new research from LIMRA… And by the way, what does LIMRA stand for?
[01:01:49] Joe: They got rid of these words, by the way. LIMRA now longer officially stands for any set of words. But what it used to mean was Life Insurance Market Research Association. So for the life insurance industry, they were doing market research to see what people are thinking. So just so you know, LIMRA has this study called a Retirement Income Readiness Report.
[01:02:12] Joe: They did this in April. 486 pre-retirees, 804 retirees, all age 45 and older. They found that most respondents called themself reasonably prepared. 59% of pre-retirees and 63% of retirees scored themselves on the high end of the 0 to 10 preparedness scale. What was most interesting here, and let’s dig into this- LIMRA found that confidence tracks closely with financial guidance rather than assets alone.
[01:02:40] Joe: Pre-retirees working with a financial advisor or planner reported high preparedness 77% of the time versus 47% of the time for those without an advisor. Yet only 40% of pre-retirees currently work with an advisor, and just 8% of the least prepared group does. So I don’t know, maybe that 8% needs to look for a different advisor.
[01:03:05] Joe: But, uh, 92% of people that are in the least prepared version feel like… I- I don’t know if they feel like it’s because they don’t have an advisor, OG, but they’re not getting any financial help.
[01:03:18] OG: Okay. So maybe they should, if they want.
[01:03:21] Joe: Yeah, if they want. But I think just this idea of, listen, whether it’s an official person with a CFP tag or not, starting to dig in and get help from people around your financial situation to see how you’re doing versus how maybe you, you should be doing, I think is an important, is an important first step for anybody.
[01:03:41] OG: At the end of the day, when it comes to financial planning, especially for retirement income, you have to have an idea of what it is that you’re trying to get to. A lot of times… I mean, I’ll give you a perfect example of this. A couple of weeks ago, I was talking to somebody, and they were, you know, trying to gauge out their retirement, kind of a late 40s, early 50-year-old couple and, you know, making pretty good money, $200,000, $300,000 a year, 250 or something.
[01:04:03] OG: And they say, “You know, just… I’ve heard about the 4% rule. You know, I make 250 grand. I don’t understand how I’m gonna get to 5 million bucks. Like, this is just nuts. Like, I just don’t see a way to do that, you know, where we are today.” But the reality was, was that after you took out their taxes and all their savings, which they were saving quite a bit, and their house payment, which was gonna be paid off by the time they got to retirement, their living expenses were closer to $90,000 a year.
[01:04:30] OG: Well, $90,000 a year versus $250,000 a year, just using that ballpark figure of 4% is a materially different retirement lump sum needed than the other number. And all this comes back to, you know, just get a sense of where, like, what reality is, you know? And- I d- I don’t like the comparisons of, like, where I should be compared to other people.
[01:04:54] OG: No. But I think it’s more about where you, comparison you should be based on what you’re trying to do. And if you’ve got garbage data going in on the front end, you know, and in this person’s case, it was very discouraging. They’re like, “Why even bother?” Like, “I’m gonna work till I’m 80 ’cause there’s no chance I’m gonna have $5 million, and by the time I get to 5 million, then I’m gonna need 10 because, you know, inflation and all that sort of stuff.”
[01:05:12] OG: And it’s like, no, no, no. You, you barely need 2 million. You’re, like, spending 90 grand. Plus, you know, you’ve got this, you know, Social Security, you know, if you wanna count on that. It’s, like, changed it from being a never gonna retire to sooner than later type of situation.
[01:05:28] Joe: There’s so many times in our life where having just an accountability partner works so much.
[01:05:33] Joe: Uh, you’re doing these, uh, amazing bicycle rides now, OG. You’re not doing this alone. You’ve got accountability buddies who are tackling this stuff with you.
[01:05:41] OG: We are, uh, tackling it, and more specifically, giving each other you know what when, uh, a day goes by, and it’s like, “Yo, I didn’t see your name on Strava today.
[01:05:50] OG: Are you sick? Are you stealth training?”
[01:05:53] Joe: That’s great. It’s the whole reason why I work out at the gym with groups, is because I know myself well enough to know that if I don’t have a group, I won’t go. Yeah. Like, I just don’t go. I, I should go. I know I should go. But if I have a group, same thing, OG. I d- I just think that having that accountability works.
[01:06:10] Joe: And most of the time, I feel better. And to your point, when I get the news from the pro, like, I get the news about, uh, my dental work or ’cause I got the dentist appointment coming up soon, or whatever it is, generally the dentist is like, “Hey,” either it’s good news that I didn’t expect, or the bad news is positioned in a way that, hey, if we just work on this now, it’s gonna be great in six months.
[01:06:34] Joe: And it always is. It always- Yeah … it always is. Uh, so people want to get help. Well, Brian Hodgins, senior vice president and head of LIMRA Research says, people also say they value guaranteed income. Imagine a life insurance research study that wants to know if people value guaranteed income. That’s pretty shocking, OG.
[01:06:55] OG: Who wants guaranteed anything? I would love to have guaranteed… I would like a guaranteed, um, pay raise for the rest of my life of- Well- … 20%.
[01:07:05] Joe: And just think about the ridiculousness of- Per
[01:07:07] OG: month.
[01:07:08] Joe: Per month.
[01:07:08] Leo: Compounding.
[01:07:09] Joe: Escalating, right. Yeah. Just think about the ridiculousness of that question. Do you want guaranteed income for life?
[01:07:20] OG: Mm-hmm.
[01:07:21] Joe: Who doesn’t- … want guaranteed income for life? Roughly seven in 10 respondents said they prefer retirement income that includes a protected component, Social Security, a pension, or an annuity, over relying solely on portfolio withdrawals. Answer, anybody gonna vote no on that? I, I don’t know who the three people are that would say no.
[01:07:43] Doug: Right.
[01:07:44] Joe: I- no idea. Nah.
[01:07:45] Doug: They’re already billionaires.
[01:07:47] Joe: Forget it. Yet, only 25% of pre-retirees believe their protected income sources will actually cover essential living expenses, compared with 52% of current retirees who say those sources fully cover their basic costs today. So the number of people who are in pre-retirement, OG, represent a smaller percentage that are gonna have covered all their expenses covered than people that are retired right now.
[01:08:14] Joe: With pensions going away, that just makes sense. Like, that tracks that there’d be a smaller number, doesn’t it?
[01:08:19] OG: Mm-hmm. Yeah.
[01:08:21] Joe: I feel like the insurance industry building a case here that’s not real, going, “Hey, there’s all these retirees that have it and love it, and too many pre-retirees don’t have it.” Well, as we get away from pensions, it just makes sense that fewer people would have it, but they then turn that immediately to why advisors are allergic to annuities.
[01:08:45] Joe: “If client demand for guaranteed income is broad,” they write, “advisor adoption of the product built to deliver it has lagged. Rich Romano, chief executive of FidEx, told Investment News earlier this year the hold-up around annuities…” What do you think Rich is gonna say the hold-up around annuities is, OG? Oh,
[01:09:03] OG: it’s advisor education.
[01:09:05] Joe: “Comes down to the operational burden of selling them. The amount of hoops one must jump through to sell an annuity versus a traditional investment’s night and day,” Romano said, uh, pointing to inconsistent carrier paperwork, licensing hurdles, and assets held away from a client’s primary account that complicates quarter views.
[01:09:22] OG: That’s the
[01:09:22] Joe: reason. Stackers, let’s just cut to the chase here. If your advisor is allergic to selling you an annuity, and they’re a good advisor that you trust, it has nothing to do, I believe it has nothing to do with the paperwork. OG, do you think it has anything to do with the paperwork?
[01:09:39] OG: Well, I mean, the paperwork does suck.
[01:09:41] OG: I will cop to that.
[01:09:42] Joe: He’s not wrong.
[01:09:43] OG: Yeah. Paperwork sucks, and every company’s paperwork is different, which sucks. And unlike, you know, we do business at Schwab, so all of our client accounts are at Schwab, so we know how to open brokerage accounts, and Roth IRAs, and traditional IRAs, and donor-advised funds, and, like, that’s all on that platform.
[01:09:59] OG: But if you’re, like, trying to shop annuities, you have to shop 10,000 of them. And then, yeah, the paperwork does suck. What sucks more is the fact that they suck. It has nothing to do with the fact that the, the… I mean, the paperwork sucks, but it’s also ’cause they suck. And, you know, it w- we come back to this from time to time on the show, and if you’re listening for the first time ever today, and you’re like, “Oh, thank God, somebody also hates annuities,” I don’t think we hate them.
[01:10:25] OG: I think they’re just misapplied. I, I think a lot of times people put the stake in the ground just to have a little bit of, uh, clickbait and, and, uh, something to argue about on LinkedIn or whatever. And I think that we come down on the f- on the fact that there’s a lot of great financial products out there, and they all have a purpose.
[01:10:43] OG: They all have a, a key that goes in them that unlocks the tumbler to, like, being a perfect fit for the perfect scenario. And the problem that exists is not the product, although they can be, you know, themselves mis- you know, mismanaged. Um, but, you know, looking at it from a big picture, it’s the application of the product.
[01:11:03] OG: It’s when the incentives are aligned incorrectly. It’s when a person who calls themself a financial advisor but is really an insurance agent. And you know what else is hard besides selling life insurance? Getting a frigging CFP or starting a company and getting it registered by the SEC or your state agency.
[01:11:23] OG: And that paperwork is 1,000 times harder than an annuity application because you have to, like, have lawyers draft it, you know, speaking of. And guess what? The state does read your documents, and they go, “Hey, this paragraph that you have in here, we don’t like this. You need to redo this,” and that’s a pain in the butt.
[01:11:40] OG: Sometimes the easiest solution, if I’m a sales guy, is to go, “Well, what’s the thing that I can sell tomorrow to put food on my table?” That’s a gross generalization and probably not totally fair for everybody. But just as many people, I’d say frankly probably more people, have the opinion that annuities solve every problem or life insurance solves every problem or whatever, just as many of those people that have that, uh, opinion or more people have that opinion than what our opinion is, I think, which is, yeah, annuities can have a purpose.
[01:12:12] OG: If you’re solving for this purpose, there… it’s a tool that can be used. As it stands from an industry standpoint, they generally suck because it’s just too costly and all these other reasons.
[01:12:24] Joe: Well, LIMRA’s report actually identified what they called a parallel barrier on the consumer side, cost concerns and reluctance to lock up savings.
[01:12:34] Joe: And you know what? I think to put a pin in this, OG, if your advisor isn’t concerned about those same two things, if your advisor said, “You know what? Here’s the cost versus a lot of annuities,” and they show you that it’s very low cost, and then second, they show you why you should be able to overcome that reluctance to lock up savings, or they say, “Listen, I’m reluctant to lock up your savings, but here’s why I think it applies.”
[01:12:57] Leo: Yeah.
[01:12:58] Joe: And they can provide a cognizant argument, a very well-reasoned argument of, “Well- well to do this,” I think that’s when it’s time to start listening. But if the advisor covers up the fact that they’re expensive or covers up the fact that you’re gonna be locking up a lot of your savings, that’s when the trouble begins.
[01:13:13] OG: I mean, two very simple questions that you can ask if this comes up in a conversation with anybody ever is, “How much does it cost? And how do I get my money out?” And if you’re not satisfied with both of those answers, next.
[01:13:27] Joe: So I think to put a pin in that, stackers, beware of annuities. Also beware of what you read.
[01:13:33] Joe: This piece is definitely, while they present some of the issues that we all have with annuities, it’s buried at the bottom of the piece because it is clearly a life insurance piece. So look at what’s the slant, what’s the point of view of the author of the piece. Annuities aren’t all bad, yet I think you need to start with a planning perspective and then maybe come to whether an annuity works or not Into the back porch.
[01:14:02] Joe: Uh, we have Financial Action Month going on all month long. We’re playing a game like bingo called Stacko. Hopefully, Stackers, you can start reporting in our basement Facebook group that you have been completing your Stacko boards. Love to see that. I’ve had seven people so far write me that they have completed their Stacko boards.
[01:14:20] Joe: Nice job, Stackers. OG, pick off another square. What are we gonna help people do today in Financial Action Month?
[01:14:27] OG: Uh, free space.
[01:14:28] Joe: Oh, perfect.
[01:14:29] Doug: I knew he was gonna say that. I knew he was gonna take that one.
[01:14:32] Joe: Besides that one, which one- Oh … would we like to do?
[01:14:35] OG: Oh, my goodness. Um, y- you know, ’cause I’m, I’m refinancing a bunch of stuff right now, I’m gonna say number 14, uh, check your credit score.
[01:14:48] OG: And I would change this a little bit. Can I make an amendment to the- Sure … can I offer an amendment for discussion-
[01:14:52] Joe: Okay …
[01:14:52] OG: to the gentleperson from, uh, Texas? I would offer, a credit score, yeah, okay, I mean, it matters. Credit report is what I want you to check.
[01:15:01] Joe: Oh,
[01:15:01] OG: good point. S- so I would say, uh, get on annualcreditreport.com, get your free ones.
[01:15:07] OG: I mean, frankly, you should be able to get a free one. Just about every credit card offers free all this stuff nowadays anyway, so you should be able to get it. Actual credit report, go through it, just make sure it’s right. Make sure there’s nothing that jumps out at you that’s a little like, “Hmm, I didn’t know that that account was still open,” or, “Since when do I have a balance on this card?”
[01:15:23] OG: Or whatever. You can do that for your family, too, your spouse or kids if they’re over 18. Um, and then after you do that, freeze your credit report. It’s very simple, takes literally under five minutes to freeze everybody in the household. Kids, grandkids, nieces, nephews, podcast hosts, you guys can freeze everybody’s credit report.
[01:15:45] OG: It just takes a few clicks of a button. You just literally type in TransUnion freeze, Equifax freeze, Experian freeze, and it will show you how to do it. You just, like, tap a button. It says boom, it’s frozen. What’s cool is, is then if you go to apply for something… So I j- I know this ’cause I’m going through it right now.
[01:16:03] OG: So we’re trying to refinance Mom’s house, ’cause it’s an ARM. When I get to the company, they’re like, “Hey, we need your TransUnion, like, uh, report unfrozen.” You go online, you click thaw. Ha, get it? Freeze, thaw. And, and you can thaw it for a period of time, like two weeks, bang, and it will automatically refreeze, unlike the stuff that’s in Doug’s freezer.
[01:16:24] OG: So check it, freeze it, do not refreeze it.
[01:16:28] Joe: By the way, if you have the field kit, you get your credit score once a month. You just press one button in the credit area, and you’re able to get that every single month, and so you can go through your credit report very easily by doing that, by being a little bit organized.
[01:16:41] Joe: So whether it’s the field kit or just going directly to freecreditreport.com, wherever you wanna go, you’ve got- You’ve got lots of resources. All right, that’s going to do it for today. Big thanks to Leo Mann for hanging out with us. Hopefully, you now are going to, at the end of today, check your contracts and check your credit score, I think.
[01:17:01] Joe: That is, check your credit report, rather. That’s a big one that OG picked today. All right, Doug, you’ve got it from here, man. What should we have learned on today’s show?
[01:17:09] Doug: Well, Joe, first, take some advice from Leo Mann and read the contract before you sign it. If the person across the table becomes indigent, it’s probably because they’re hiding something.
[01:17:20] Doug: Oh, wait, that says indignant. Well, either way, they’re probably hiding something.
[01:17:24] Joe: And you know what they’re hiding? That they might be indigent if you don’t sign it.
[01:17:28] Doug: Right. ‘
[01:17:28] Joe: Cause they’re trying to scam you out of a bunch of money. So both apply, Doug.
[01:17:32] Doug: I’m good even when I don’t know I’m being good. Second, want lifetime income?
[01:17:37] Doug: Sure, we all do, but there are often better ways to create it than to sign your money away to an insurance policy. Do your homework and finish your financial plan before investing. But the big lesson, don’t sign contracts with Joe’s mom. Who knew she even included the certified letter wording in my window-washing contract?
[01:17:57] Doug: Hey, Ma, can I just tell you when I’m done with the windows? I mean, why a certified letter? Might have overshot the landing on that one. Thanks to Attorney Leo Mann for joining us. You’ll find Leo’s new book, Don’t Sign That! The Hidden Clauses, Legal Traps and Fine Print That Can Cost You Thousands, on amazon.com.
[01:18:18] Doug: You’ll find links at our show notes page at stackingbenjamins.com. This show is the property of SP Podcast, LLC, copyright 2026, and is created by Joe Saul-Sehy. You’ll find out about our awesome team at stackingbenjamins.com, along with the show notes and how you can find us on YouTube and all the usual social media spots.
[01:18:41] Doug: Come say hello. And oh yeah, before I go, not only should you not take advice from these nerds, don’t take advice from people you don’t know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I’m Joe’s mom’s neighbor, Doug, and we’ll see you next time back here at the Stacking Benjamins show.
[01:19:55] OG: So apparently this week is lawyer week, and, um, you know, Instagram algos know that. So, you know, I’ve been seeing some content from some lawyers. And you know what? This is kind of the time where people are passing the bar exam, so they’re kind of starting to be real lawyers now, and I thought this was a pretty good piece of advice.
[01:20:14] OG: Uh, it’s kind of a Q&A that somebody wrote into this lawyer, and he posted about it. “
[01:20:19] bit: Dear Briefing Attorney, what kind of car should I buy as my first car since I passed the bar exam?” Um, okay, this is a really critical question that you’ve asked, and I’m glad that you’ve come to me with it. We’ve talked about the importance of big dicking other lawyers.
[01:20:36] bit: Also, there’s– It’s really important that you uphold the legal profession. The, the fact of the matter is, is that when you’re driving around the courthouse or even your office building, other lawyers need to see you, and they need to see you riding something that’s awesome. You, you can’t be in a Mazda 3 from 1997 with hard plastic tires.
[01:20:56] bit: That’s a disgrace to the profession. In fact, I think you can get a grievance over that. So let’s not do any of that. If, for instance, you’ve got a job that may be in a tall building and, you know, you’re not gonna be seen that much in the car, maybe you can get away with something more affordable. Park in the back of the parking garage where none of your other coworkers can see you.
[01:21:17] bit: You’ll, you’ll just sort of lose aura points, and absolutely under no circumstances park where any potential client could see it. Uh, if you’re somebody who needs to go to the courthouse, uh, there’s some Maseratis that are kinda cheap and used, and a lot of people don’t know that they’re kinda pieces of , but it’s a Maserati, and, you know, your client sees you driving away in it.
[01:21:37] bit: That might be kind of a more affordable option. But really, uh, this is a good opportunity for you to get really comfortable with excessive debt. And it’s really worth it because, again, your client expects their lawyer to be driving away in a Benz. They just do. And, uh, you’re really letting down the entire planet by not doing that for them.
[01:21:59] bit: So I’m glad you’ve come to me with, with this, and I, I hope you make the right choice.
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