1 00:00:04,360 --> 00:00:07,520 Speaker 1: Tonight a warning for anyone out there who thinks their 2 00:00:07,600 --> 00:00:12,840 Speaker 1: financial advisor is absolutely legit, but they've never even checked 3 00:00:12,840 --> 00:00:16,360 Speaker 1: that person out. You're listening to simply Money presented all 4 00:00:16,400 --> 00:00:19,680 Speaker 1: Worth Financial on Bob Sponseller along with Brian James. Now, 5 00:00:19,720 --> 00:00:22,520 Speaker 1: we all like to think we'd spot a scam from 6 00:00:22,600 --> 00:00:25,720 Speaker 1: a mile away, But what if the scammer looks the part, 7 00:00:25,920 --> 00:00:28,960 Speaker 1: walks the walk, talks the talk, and even promises to 8 00:00:29,200 --> 00:00:32,919 Speaker 1: never lose you a dime. Are you really sure your 9 00:00:32,960 --> 00:00:36,519 Speaker 1: advisor is who they say they are. This is a 10 00:00:36,520 --> 00:00:40,280 Speaker 1: pretty important segment, Brian, especially you know, stemming from a 11 00:00:40,320 --> 00:00:43,920 Speaker 1: situation that happened recently in New Jersey. 12 00:00:44,600 --> 00:00:47,640 Speaker 2: Yeah, the SEC has filed fraud charges in federal court 13 00:00:47,680 --> 00:00:50,479 Speaker 2: against forty six year old Joel Sophia No idea if 14 00:00:50,479 --> 00:00:53,840 Speaker 2: I'm pronouncing that right, but for allegedly posing as an 15 00:00:53,840 --> 00:00:56,760 Speaker 2: investment advisor and misleading his clients. What they say he 16 00:00:56,840 --> 00:00:59,920 Speaker 2: did that he never registered with the SEC as an 17 00:01:00,120 --> 00:01:03,000 Speaker 2: investment advisor and never held any securities licenses. You and 18 00:01:03,080 --> 00:01:04,440 Speaker 2: I both know there's a lot of work that goes 19 00:01:04,440 --> 00:01:06,760 Speaker 2: into that, not only to get those licenses in the 20 00:01:06,760 --> 00:01:08,640 Speaker 2: first place, but to maintain them and do all the 21 00:01:08,640 --> 00:01:10,480 Speaker 2: things you have to do to stay. 22 00:01:10,200 --> 00:01:11,880 Speaker 1: On the good graces of the SEC. 23 00:01:12,319 --> 00:01:16,280 Speaker 2: So they say, he falsely claimed decades of professional experience 24 00:01:16,319 --> 00:01:19,680 Speaker 2: as an options trader and misrepresented his credentials to at 25 00:01:19,720 --> 00:01:21,800 Speaker 2: least three of his clients. I'm going to guess there 26 00:01:21,840 --> 00:01:24,319 Speaker 2: was probably more than that. And his pitch was that 27 00:01:24,360 --> 00:01:26,840 Speaker 2: he guaranteed clients would never lose money. Oh, by the way, 28 00:01:26,880 --> 00:01:29,360 Speaker 2: this is what you should listen for. If you hear this, 29 00:01:29,560 --> 00:01:32,840 Speaker 2: run the other way and warn people around you. Guaranteed 30 00:01:32,880 --> 00:01:36,480 Speaker 2: that clients would never lose money, and promoted fake proprietary 31 00:01:36,560 --> 00:01:41,160 Speaker 2: AI trading software that would supposedly eliminate all risk. You know, Bob, 32 00:01:41,520 --> 00:01:43,880 Speaker 2: why haven't we signed on for these things yet? 33 00:01:43,959 --> 00:01:44,119 Speaker 1: Right? 34 00:01:44,520 --> 00:01:46,679 Speaker 2: It's so easy that I can't believe that we don't 35 00:01:46,720 --> 00:01:48,760 Speaker 2: need Andy Stout or his team anymore. What a bunch 36 00:01:48,760 --> 00:01:52,400 Speaker 2: of clowns. We just need some proprietary AI trading software. 37 00:01:52,440 --> 00:01:55,160 Speaker 1: Too prietary. You and I could come up with this software. 38 00:01:55,200 --> 00:01:57,880 Speaker 1: We could beat the market all day, every day and 39 00:01:57,960 --> 00:01:59,280 Speaker 1: never lose any money. 40 00:01:59,160 --> 00:02:02,000 Speaker 2: In briary and never have to explain how it works. 41 00:02:02,520 --> 00:02:06,520 Speaker 1: Well. And here's the problem, here's the downside. Here, clients 42 00:02:06,560 --> 00:02:10,280 Speaker 1: gave him direct access to their brokerage accounts basically said 43 00:02:10,320 --> 00:02:14,320 Speaker 1: here log in traded at will, and you know, he 44 00:02:14,480 --> 00:02:18,080 Speaker 1: placed thousands of trades on their behalf, no doubt, marked 45 00:02:18,120 --> 00:02:21,280 Speaker 1: them up for commission spreads, what have you. And instead 46 00:02:21,280 --> 00:02:25,600 Speaker 1: of consistent gains, the option trading caused severe losses, with 47 00:02:25,680 --> 00:02:30,080 Speaker 1: accounts losing sixty one to nine percent of their value, 48 00:02:30,080 --> 00:02:33,920 Speaker 1: and by early twenty twenty three, total losses to just 49 00:02:34,000 --> 00:02:38,720 Speaker 1: these three clients exceeded one point six million dollars. And 50 00:02:38,960 --> 00:02:43,280 Speaker 1: is usually always the case when stuff like this happens, 51 00:02:43,320 --> 00:02:48,520 Speaker 1: When investors raised any concerns whatsoever, this guy was nowhere 52 00:02:48,560 --> 00:02:52,240 Speaker 1: to be found, or in some cases he allegedly blamed 53 00:02:52,320 --> 00:02:55,760 Speaker 1: them or promised a recovery and then he stopped calling 54 00:02:55,840 --> 00:03:00,799 Speaker 1: them back altogether. Bryant, that we've seen has happened from 55 00:03:00,880 --> 00:03:02,760 Speaker 1: time to time. You and I have both been doing 56 00:03:02,760 --> 00:03:06,800 Speaker 1: this a long time. I can remember one situation, you know, 57 00:03:06,960 --> 00:03:10,000 Speaker 1: here in the in the greater Cincinnati area with a 58 00:03:10,040 --> 00:03:14,520 Speaker 1: local insurance agency where uh, the guy was building fictitious 59 00:03:14,560 --> 00:03:17,640 Speaker 1: statements and you know, built up a lot of trust 60 00:03:17,720 --> 00:03:20,040 Speaker 1: with people. I think it was over on the west 61 00:03:20,080 --> 00:03:23,359 Speaker 1: side of town. I won't get into names, but you know, 62 00:03:23,560 --> 00:03:29,080 Speaker 1: I'm sometimes surprised at how few questions people actually ask 63 00:03:29,200 --> 00:03:31,400 Speaker 1: when they come into the office. I mean, you have 64 00:03:31,440 --> 00:03:35,360 Speaker 1: a nice office, you know, nice lady at the front desk, 65 00:03:35,440 --> 00:03:38,360 Speaker 1: welcoming you in, free coffee, We got a good you know, 66 00:03:38,520 --> 00:03:40,680 Speaker 1: monitor on the wall. We look like we know what 67 00:03:40,720 --> 00:03:43,400 Speaker 1: they're doing or what we're doing. But you still have 68 00:03:43,480 --> 00:03:47,240 Speaker 1: to ask some basic questions. Let's get into some of 69 00:03:47,240 --> 00:03:48,720 Speaker 1: that because this is important. 70 00:03:49,400 --> 00:03:52,720 Speaker 2: Yeah, it is important because Americans report losing five point 71 00:03:52,760 --> 00:03:56,240 Speaker 2: seven billion to investment scams in twenty twenty four, according 72 00:03:56,240 --> 00:03:56,800 Speaker 2: to the FTC. 73 00:03:56,960 --> 00:03:58,200 Speaker 1: Again, that's billion with a B. 74 00:03:58,560 --> 00:04:00,720 Speaker 2: I think how many four O one k's rollovers and 75 00:04:00,760 --> 00:04:03,720 Speaker 2: life savings and all that are involved there that just 76 00:04:03,760 --> 00:04:06,080 Speaker 2: went poof, And now those people are scrambling and living 77 00:04:06,080 --> 00:04:08,520 Speaker 2: off of I don't know, welfare, their relatives, their kids. 78 00:04:08,560 --> 00:04:11,760 Speaker 2: Who knows, but that since ftc is data is based 79 00:04:11,760 --> 00:04:15,400 Speaker 2: on consumer reports of fraud, we don't really know exactly 80 00:04:15,400 --> 00:04:16,960 Speaker 2: how much. You know that those are the ones where 81 00:04:17,000 --> 00:04:20,200 Speaker 2: it's caught and people are, you know, willing to admit it. 82 00:04:20,200 --> 00:04:21,800 Speaker 2: There's a lot of people out there who take losses 83 00:04:21,839 --> 00:04:23,320 Speaker 2: and don't tell any about it about it, so we 84 00:04:23,320 --> 00:04:25,960 Speaker 2: don't know about those so the true scope is probably 85 00:04:26,040 --> 00:04:28,599 Speaker 2: even higher. And then these are some of the words 86 00:04:28,640 --> 00:04:30,680 Speaker 2: you hear occasionally. But some of these frauds include pig 87 00:04:30,720 --> 00:04:34,159 Speaker 2: butchering scams, which references the practice of fattening a pig 88 00:04:34,200 --> 00:04:36,360 Speaker 2: before slaughter. Right, So what in other words, what you're 89 00:04:36,400 --> 00:04:39,120 Speaker 2: doing is doing probably legitimate things to pull in more 90 00:04:39,160 --> 00:04:42,640 Speaker 2: and more money by managing it legitimately before the actual 91 00:04:42,680 --> 00:04:44,919 Speaker 2: scam occurs. You're fattening the pig by getting them to 92 00:04:44,920 --> 00:04:46,839 Speaker 2: bring in more and more to their account. Then you 93 00:04:46,880 --> 00:04:49,080 Speaker 2: pull the trigger as the scammer. So here's the things 94 00:04:49,080 --> 00:04:52,000 Speaker 2: you got to look for. Are you a fiduciary. That's 95 00:04:52,000 --> 00:04:54,320 Speaker 2: something we mentioned from time to time, and that that's 96 00:04:54,360 --> 00:04:56,680 Speaker 2: what we here are at all Worth twenty four hours. 97 00:04:56,400 --> 00:04:58,280 Speaker 1: A day, seven days a week. That is, that's all 98 00:04:58,320 --> 00:04:58,600 Speaker 1: we do. 99 00:04:58,680 --> 00:05:01,400 Speaker 2: Every decision we make has to be for the benefit 100 00:05:01,520 --> 00:05:03,120 Speaker 2: of the client. We have to be able to prove 101 00:05:03,120 --> 00:05:05,280 Speaker 2: that in the court of law. That's why we focus 102 00:05:05,279 --> 00:05:08,240 Speaker 2: so much on financial planning. That's the job of an advisor. 103 00:05:08,279 --> 00:05:11,160 Speaker 2: In my opinion, of fiduciary advisor is responsible to make 104 00:05:11,200 --> 00:05:13,760 Speaker 2: sure his or her firm, even if it's their own 105 00:05:13,760 --> 00:05:16,279 Speaker 2: shop and they hang their own shingle. That advisor is 106 00:05:16,320 --> 00:05:18,520 Speaker 2: responsible to be able to say, yes, we know the 107 00:05:18,560 --> 00:05:21,280 Speaker 2: story of the Johnson family, here's where their resources are, 108 00:05:21,320 --> 00:05:24,440 Speaker 2: Here's what they're trying to accomplish. Therefore, we recommended X, Y, 109 00:05:24,520 --> 00:05:27,240 Speaker 2: and Z. That's what being a fiduciary is, knowing the 110 00:05:27,320 --> 00:05:31,400 Speaker 2: understand and making those decisions based on the best situation 111 00:05:31,480 --> 00:05:34,640 Speaker 2: the client can have. Compensation matters, is it fee only, 112 00:05:34,720 --> 00:05:38,320 Speaker 2: is a commission fee based? None of those are particularly 113 00:05:38,360 --> 00:05:41,200 Speaker 2: evil unto themselves. They're just different ways of doing business 114 00:05:41,240 --> 00:05:43,919 Speaker 2: and they have different conflicts of interest in there. But 115 00:05:43,960 --> 00:05:45,960 Speaker 2: make sure you understand exactly how the advisors are going 116 00:05:46,000 --> 00:05:46,840 Speaker 2: to get paid to work with you. 117 00:05:48,040 --> 00:05:51,880 Speaker 1: Yeah, and a lot of folks are fiduciaries, but are 118 00:05:51,880 --> 00:05:54,279 Speaker 1: they fiduciaries all the time? I mean, there's a lot 119 00:05:54,279 --> 00:05:57,320 Speaker 1: of people that you know, wear both hats. They're fiduciaries 120 00:05:57,360 --> 00:05:59,400 Speaker 1: some of the time with their fee based accounts, but 121 00:05:59,480 --> 00:06:02,960 Speaker 1: they also so offer broker dealer based accounts and commission 122 00:06:03,040 --> 00:06:06,120 Speaker 1: based accounts. Again, like you said, that's not evil or 123 00:06:06,160 --> 00:06:08,920 Speaker 1: wrong or doesn't mean you shouldn't do business with one 124 00:06:08,920 --> 00:06:11,840 Speaker 1: of those folks, but it needs to be disclosed up front. 125 00:06:12,160 --> 00:06:15,160 Speaker 1: How are you paid, what's in it for me? Are 126 00:06:15,200 --> 00:06:18,360 Speaker 1: you acting on my best interest all the time or 127 00:06:18,480 --> 00:06:23,040 Speaker 1: just selling me a quote unquote suitable product. Credentials and 128 00:06:23,160 --> 00:06:27,320 Speaker 1: background questions these are important, but I don't think that's 129 00:06:27,360 --> 00:06:29,320 Speaker 1: the end all be all. I mean, people could go 130 00:06:29,400 --> 00:06:31,479 Speaker 1: out and take the like you and I have. We 131 00:06:31,520 --> 00:06:35,800 Speaker 1: could still take the CFP, the CHSC, have all these 132 00:06:35,839 --> 00:06:39,039 Speaker 1: designations and still be crooked as all get out right. 133 00:06:39,080 --> 00:06:42,080 Speaker 1: I mean, you know there's things like broker check out there. 134 00:06:42,320 --> 00:06:45,000 Speaker 1: You know that that is a tool that's been created 135 00:06:45,040 --> 00:06:49,440 Speaker 1: by FENRA, the Financial Industry Regulatory Authority, to research the 136 00:06:49,520 --> 00:06:54,080 Speaker 1: background and experience of all financial advisors and the firms 137 00:06:54,120 --> 00:06:58,200 Speaker 1: they're with. But that's really no absolute safeguard that anyone's 138 00:06:58,279 --> 00:07:01,640 Speaker 1: going to act in your best interest just because they 139 00:07:01,640 --> 00:07:06,080 Speaker 1: have fifteen letters behind their name. A couple other things 140 00:07:06,080 --> 00:07:10,400 Speaker 1: to ask about, just process and philosophy, which I think 141 00:07:10,440 --> 00:07:12,400 Speaker 1: people do a good job of when they come in 142 00:07:12,440 --> 00:07:14,920 Speaker 1: at least and talk to us. Here's the one I 143 00:07:14,960 --> 00:07:18,720 Speaker 1: want to spend some time on, and this is a must. 144 00:07:19,080 --> 00:07:23,720 Speaker 1: You have to have your assets custodian and a reputable 145 00:07:23,960 --> 00:07:27,760 Speaker 1: custodial firm like a SCHWAB, like a fidelity, like a 146 00:07:27,880 --> 00:07:30,920 Speaker 1: major broker dealer out there. There has to be someone 147 00:07:31,440 --> 00:07:36,040 Speaker 1: between the advisor and your money, who's holding the assets, 148 00:07:36,280 --> 00:07:40,840 Speaker 1: building the statements, reporting the results all that, and where 149 00:07:40,880 --> 00:07:43,560 Speaker 1: most of these fraud cases come in is where this 150 00:07:43,880 --> 00:07:48,560 Speaker 1: quote unquote advisor is not only making the recommendations, but 151 00:07:48,640 --> 00:07:52,440 Speaker 1: they're building their own statements and there's not a good, 152 00:07:52,560 --> 00:07:56,560 Speaker 1: reputable custodial firm in the mix. That is a must have, 153 00:07:56,840 --> 00:07:59,000 Speaker 1: I think in today's day and age. 154 00:07:59,000 --> 00:08:00,960 Speaker 2: Brian, Yeah, I think you're right, and that was a 155 00:08:01,360 --> 00:08:03,920 Speaker 2: That is a huge red flag if you that doesn't 156 00:08:03,920 --> 00:08:06,120 Speaker 2: mean you'll you have to have heard of the custody 157 00:08:06,120 --> 00:08:07,520 Speaker 2: and maybe you've never heard of You're not that close 158 00:08:07,560 --> 00:08:09,000 Speaker 2: to the industry. You might not know who all the 159 00:08:09,000 --> 00:08:12,360 Speaker 2: players are. But the big ones are Schwab, Fidelity, LPL, 160 00:08:12,880 --> 00:08:15,040 Speaker 2: and there's a few other big names out there. Doesn't 161 00:08:15,080 --> 00:08:17,240 Speaker 2: mean the smaller ones are less capable. But the point 162 00:08:17,280 --> 00:08:19,440 Speaker 2: is pay attention to it. This is how Bernie Madoff 163 00:08:19,480 --> 00:08:21,120 Speaker 2: got away with what he did. He used to be 164 00:08:21,160 --> 00:08:22,960 Speaker 2: the chair of the sec SO and nobody asked him 165 00:08:22,960 --> 00:08:23,520 Speaker 2: any questions. 166 00:08:23,520 --> 00:08:25,160 Speaker 1: They just assumed he was on the up and up. 167 00:08:25,440 --> 00:08:28,240 Speaker 2: He made up every statement he ever had what he 168 00:08:28,280 --> 00:08:30,560 Speaker 2: would do if it's an interesting read, if you get 169 00:08:30,560 --> 00:08:32,280 Speaker 2: to get the book on it and read exactly how 170 00:08:32,280 --> 00:08:33,760 Speaker 2: he did this, because it's a lot simpler than you 171 00:08:33,840 --> 00:08:36,760 Speaker 2: might think. What he would do is spread the newspapers 172 00:08:36,800 --> 00:08:39,400 Speaker 2: out on the floor and he would slide across with 173 00:08:39,480 --> 00:08:42,480 Speaker 2: a magnifying glass on a rolling office chair, and he 174 00:08:42,480 --> 00:08:46,080 Speaker 2: would simply look for movement from the day before that 175 00:08:46,120 --> 00:08:49,160 Speaker 2: would support the fake returns. He wanted to put in 176 00:08:49,240 --> 00:08:52,120 Speaker 2: his on his statements and so it was verifiable. All 177 00:08:52,120 --> 00:08:53,360 Speaker 2: he had to do is put it on statements and 178 00:08:53,360 --> 00:08:55,360 Speaker 2: he could say, well, yeah, XYZ Stock did this, and 179 00:08:55,400 --> 00:08:57,160 Speaker 2: therefore that was our return. None of it was real 180 00:08:57,200 --> 00:08:59,319 Speaker 2: because he didn't actually make the investments because the money 181 00:08:59,320 --> 00:09:01,800 Speaker 2: wasn't there to begin with. However, there was nobody there 182 00:09:01,800 --> 00:09:04,840 Speaker 2: to pay attention because nobody asked him any questions. There 183 00:09:05,000 --> 00:09:09,280 Speaker 2: was no custodian, so there was also nobody to ask 184 00:09:09,360 --> 00:09:11,920 Speaker 2: questions because of that, because the clients simply trusted this 185 00:09:11,960 --> 00:09:14,000 Speaker 2: guy's making me money hand o or fist, because I 186 00:09:14,040 --> 00:09:16,400 Speaker 2: have this piece of paper that says so that's all 187 00:09:16,440 --> 00:09:19,040 Speaker 2: it was. These scams are not that hard to pull off. 188 00:09:19,240 --> 00:09:22,040 Speaker 2: Pick off a couple people you know who trust you, 189 00:09:22,120 --> 00:09:24,160 Speaker 2: and those people were bringing you their friends because we 190 00:09:24,400 --> 00:09:27,600 Speaker 2: just super super want to believe that there really are 191 00:09:27,679 --> 00:09:31,640 Speaker 2: these guaranteed double digit returns with no risk to principle 192 00:09:31,679 --> 00:09:34,480 Speaker 2: that just doesn't exist. Turn around as soon as you 193 00:09:34,520 --> 00:09:36,920 Speaker 2: hear that, you know, and start to warn your friends 194 00:09:37,080 --> 00:09:38,920 Speaker 2: because these A lot of times, these guys show up 195 00:09:39,160 --> 00:09:41,960 Speaker 2: in trusted groups, right. They pop up off and in 196 00:09:42,120 --> 00:09:44,920 Speaker 2: church groups, you know, and other kinds of affinity groups, 197 00:09:44,960 --> 00:09:47,839 Speaker 2: neighborhood groups, those kinds of things where there's several people 198 00:09:47,920 --> 00:09:49,760 Speaker 2: in the room who say, yeah, this guy's legit or 199 00:09:49,760 --> 00:09:52,520 Speaker 2: this lady is legit. I trust them, so you should too. 200 00:09:52,679 --> 00:09:54,839 Speaker 2: And that's really all it takes to knock our shields down. 201 00:09:54,880 --> 00:09:58,640 Speaker 1: Bob ran Show. I'll share one example of how this 202 00:09:58,760 --> 00:10:01,760 Speaker 1: is supposed to work, and this is a mistake that 203 00:10:01,840 --> 00:10:05,200 Speaker 1: I made personally earlier in my career. It was all 204 00:10:05,240 --> 00:10:08,320 Speaker 1: well intentioned, but the moral of the story is you 205 00:10:08,360 --> 00:10:11,400 Speaker 1: also need to have a good compliance department behind you. 206 00:10:11,480 --> 00:10:14,160 Speaker 1: And here was the story. I had a client. You know, 207 00:10:14,600 --> 00:10:17,160 Speaker 1: we're with a broker dealer. They're getting their statements there 208 00:10:17,240 --> 00:10:19,840 Speaker 1: are and the client would call and say, I can't 209 00:10:19,960 --> 00:10:22,360 Speaker 1: understand my statement. I you know, I want to see 210 00:10:22,360 --> 00:10:25,680 Speaker 1: the information this way or that way. Will you just 211 00:10:25,800 --> 00:10:29,400 Speaker 1: build me a letter once a quarter or something that 212 00:10:29,520 --> 00:10:32,400 Speaker 1: just tells me how I'm doing, you know, relative the 213 00:10:32,440 --> 00:10:35,920 Speaker 1: indices and my portfolio and what have you. So, in 214 00:10:35,960 --> 00:10:38,920 Speaker 1: an effort to help this gentleman, I did it. I 215 00:10:39,000 --> 00:10:41,400 Speaker 1: published a letter, I think it had a spreadsheet and 216 00:10:41,440 --> 00:10:44,120 Speaker 1: a few columns with it, and I reported kind of 217 00:10:44,559 --> 00:10:48,640 Speaker 1: you know, Bob's cliff notes version of his investment statement. 218 00:10:49,040 --> 00:10:52,400 Speaker 1: And I'll tell you what, within three days, I got 219 00:10:52,480 --> 00:10:56,480 Speaker 1: my hand not only slapped, but I got levied personally 220 00:10:56,840 --> 00:10:59,600 Speaker 1: with a pretty big fine from my broker dealer that 221 00:10:59,640 --> 00:11:03,600 Speaker 1: I had to a check for. And because I unknowingly 222 00:11:03,640 --> 00:11:07,280 Speaker 1: broke a rule, and the rule was you never personally 223 00:11:07,320 --> 00:11:11,400 Speaker 1: report any investment returns to a client. All of those 224 00:11:11,480 --> 00:11:14,800 Speaker 1: kind of reports have to come directly from the broker 225 00:11:14,840 --> 00:11:17,920 Speaker 1: dealer or the or the custodian. And I learned that lesson, 226 00:11:18,280 --> 00:11:20,720 Speaker 1: you know, the hard way. But it was a lesson 227 00:11:20,760 --> 00:11:23,240 Speaker 1: I'm glad I learned because I knew I was with 228 00:11:23,320 --> 00:11:26,920 Speaker 1: a reputable firm that had my clients back, and there 229 00:11:27,000 --> 00:11:30,200 Speaker 1: was no way that these clients were going to get 230 00:11:30,240 --> 00:11:33,160 Speaker 1: you know, deceived or lied to or what have you. 231 00:11:33,160 --> 00:11:35,959 Speaker 1: You know, through me or some other advisor just making 232 00:11:36,080 --> 00:11:39,920 Speaker 1: up numbers or self publishing, you know, some kind of document, 233 00:11:40,040 --> 00:11:42,880 Speaker 1: and that's that's I believe me. I got religion on 234 00:11:42,920 --> 00:11:45,760 Speaker 1: that whole topic, you know, that day, you know, after 235 00:11:45,800 --> 00:11:48,240 Speaker 1: writing a fairly sizable check. 236 00:11:48,880 --> 00:11:52,080 Speaker 2: So my one one time I had an issue and 237 00:11:52,280 --> 00:11:54,920 Speaker 2: nothing similar, but it was slightly different. But the one 238 00:11:54,960 --> 00:11:57,720 Speaker 2: an interesting thing that taught me about how important compliance is. 239 00:11:58,320 --> 00:12:00,520 Speaker 2: I was I was involved in an email discussion with 240 00:12:00,559 --> 00:12:02,880 Speaker 2: another advisor or another firm, just somebody I knew personally, 241 00:12:02,920 --> 00:12:04,880 Speaker 2: and we were just we were griping about something with 242 00:12:04,920 --> 00:12:08,280 Speaker 2: the SEC and he made some comment about how the 243 00:12:08,320 --> 00:12:10,480 Speaker 2: SEC should be banished because of it, and he just 244 00:12:10,600 --> 00:12:12,840 Speaker 2: listed off a bunch of stuff that wasn't true at all. 245 00:12:13,160 --> 00:12:15,240 Speaker 2: I replied to it with kind of like, what are 246 00:12:15,280 --> 00:12:17,200 Speaker 2: you talking about, and then just kind of shutting down 247 00:12:17,200 --> 00:12:19,360 Speaker 2: a conversation and I'd let it go after that. About 248 00:12:19,360 --> 00:12:23,840 Speaker 2: two days later, I got an email from my compliance department, 249 00:12:23,880 --> 00:12:27,080 Speaker 2: who had been reading those emails because that's their job, 250 00:12:27,480 --> 00:12:31,120 Speaker 2: and they it picked up in the scanner thing because 251 00:12:31,160 --> 00:12:33,600 Speaker 2: of his reply, which was in my reply when I 252 00:12:33,640 --> 00:12:35,720 Speaker 2: replied to it. I'm glad they do that though, because 253 00:12:35,760 --> 00:12:37,720 Speaker 2: what they're looking for is the bad apples. They're looking 254 00:12:37,720 --> 00:12:41,760 Speaker 2: for somebody who is communicating, in providing guarantees and doing 255 00:12:41,760 --> 00:12:44,160 Speaker 2: all this stuff. That's why they're reading emails that leave 256 00:12:44,200 --> 00:12:45,800 Speaker 2: the firm. I'm very glad they did that, but it 257 00:12:45,840 --> 00:12:47,679 Speaker 2: was just ye I didn't know they were looking that closely, 258 00:12:47,920 --> 00:12:50,400 Speaker 2: because again they picked up something that somebody else said, 259 00:12:50,600 --> 00:12:52,760 Speaker 2: and it simply came up in my reply because his 260 00:12:52,840 --> 00:12:54,920 Speaker 2: message was pasted at the bottom of it, just the 261 00:12:54,920 --> 00:12:58,000 Speaker 2: way outlook does things. So anyway, I believe compliance is 262 00:12:58,040 --> 00:12:59,760 Speaker 2: there for a reason, and they sure do a great 263 00:12:59,800 --> 00:13:02,120 Speaker 2: job job of keeping me from having to know the rules. 264 00:13:02,520 --> 00:13:06,680 Speaker 1: Absolutely. Here's the all Worth advice. Don't just trust, verify, 265 00:13:06,960 --> 00:13:10,360 Speaker 1: ask the tough questions up front, because recovering from a 266 00:13:10,360 --> 00:13:14,160 Speaker 1: scam is a whole lot harder than preventing one in 267 00:13:14,160 --> 00:13:19,080 Speaker 1: the first place. Should gold be in every investor's portfolio. 268 00:13:19,120 --> 00:13:21,480 Speaker 1: There's a new argument out there being made for it. 269 00:13:21,600 --> 00:13:24,600 Speaker 1: We've got our take on that topic. Next, you're listening 270 00:13:24,679 --> 00:13:27,400 Speaker 1: to Simply Money presented by all Worth Financial on fifty 271 00:13:27,400 --> 00:13:34,480 Speaker 1: five KRC the talk station. You're listening to Simply Money 272 00:13:34,559 --> 00:13:37,280 Speaker 1: presented by all Worth Financial u BOP sponsorer alone with 273 00:13:37,320 --> 00:13:40,600 Speaker 1: Brian James. If you can't listen to Simply Money every night, 274 00:13:40,679 --> 00:13:44,520 Speaker 1: subscribe and get our daily podcast. Just search Simply Money 275 00:13:44,559 --> 00:13:48,320 Speaker 1: on the iHeart app or wherever you find your podcast. 276 00:13:49,559 --> 00:13:52,720 Speaker 1: How do you adjust when your monthly budget and actual 277 00:13:52,840 --> 00:13:57,240 Speaker 1: spending just don't quite match up. We'll help two local 278 00:13:57,720 --> 00:14:00,440 Speaker 1: couples figure that out straight up. He head is six 279 00:14:00,600 --> 00:14:03,040 Speaker 1: forty three. That'll be fun, Brian. All right, there's an 280 00:14:03,080 --> 00:14:06,400 Speaker 1: opinion piece here in Market Watts that we came across, 281 00:14:06,480 --> 00:14:10,480 Speaker 1: and the headline made this blanket statement quote, Gold just 282 00:14:10,600 --> 00:14:13,120 Speaker 1: made the case for why it should be in every 283 00:14:13,160 --> 00:14:18,440 Speaker 1: investor's portfolio. The article was written by Naim Oslam I 284 00:14:18,480 --> 00:14:21,520 Speaker 1: Hope I got that name pronunciation right. He is a 285 00:14:21,600 --> 00:14:26,000 Speaker 1: chief investment officer at Zay Capital Markets in London. What 286 00:14:26,040 --> 00:14:27,479 Speaker 1: do you say about this, Brian. 287 00:14:27,840 --> 00:14:29,840 Speaker 2: Well, let's look at his arguments first. What he's talking 288 00:14:29,840 --> 00:14:33,400 Speaker 2: about here, gold just surged past five thousand dollars an ounce. 289 00:14:33,440 --> 00:14:35,920 Speaker 2: That's a historic high and that isn't just about inflation 290 00:14:36,040 --> 00:14:37,200 Speaker 2: or a week dollar anymore. 291 00:14:37,640 --> 00:14:37,760 Speaker 1: So. 292 00:14:37,800 --> 00:14:41,119 Speaker 2: What his argument is is that gold's rise reflects structural 293 00:14:41,160 --> 00:14:46,160 Speaker 2: concerns about geopolitical risks, unpredictable polities, policy decisions and market instability. 294 00:14:46,160 --> 00:14:48,720 Speaker 2: In other words, he's saying investors aren't buying gold to 295 00:14:48,840 --> 00:14:51,400 Speaker 2: chase price gains. They're buying gold because they're worried about 296 00:14:51,400 --> 00:14:53,640 Speaker 2: what might happen. Now, Bob, I don't know about you, 297 00:14:54,000 --> 00:14:57,160 Speaker 2: but I think that defines every single time investors have 298 00:14:57,200 --> 00:14:59,800 Speaker 2: bought gold. It only happens when we have a whole 299 00:14:59,800 --> 00:15:02,000 Speaker 2: bunch scary things going on, and then we get the 300 00:15:02,240 --> 00:15:04,360 Speaker 2: We get the goldbrokers that come out of the woodwork 301 00:15:04,800 --> 00:15:07,800 Speaker 2: who don't care about the value of gold. They're trying 302 00:15:07,840 --> 00:15:10,120 Speaker 2: to create the transactions because they're the middleman. That's where 303 00:15:10,160 --> 00:15:12,720 Speaker 2: you start seeing all the commercials and you see all 304 00:15:12,720 --> 00:15:14,720 Speaker 2: the ads on the internet, and I'm seeing an awful 305 00:15:14,720 --> 00:15:17,400 Speaker 2: lot of that lately. But again, those shops don't own 306 00:15:17,440 --> 00:15:19,120 Speaker 2: a bunch of gold that they're trying to sell to you. 307 00:15:19,160 --> 00:15:21,440 Speaker 2: They're trying to affect the transactions so they can carve 308 00:15:21,480 --> 00:15:22,280 Speaker 2: off a little piece of it. 309 00:15:22,280 --> 00:15:25,480 Speaker 1: They're just being brokeer. Yeah, you make a good point there, 310 00:15:25,520 --> 00:15:27,800 Speaker 1: and believe it or not, And I didn't know we 311 00:15:27,800 --> 00:15:30,200 Speaker 1: were going to be doing this segment. Yesterday I listened 312 00:15:30,200 --> 00:15:34,480 Speaker 1: to a pretty interesting podcast with an interview with Peter 313 00:15:34,600 --> 00:15:38,080 Speaker 1: Schiff who is a pretty well known investment guy and 314 00:15:38,160 --> 00:15:41,120 Speaker 1: he actually owns a gold company, a gold broker, among 315 00:15:41,160 --> 00:15:45,120 Speaker 1: other things. And he was warning folks exactly of the 316 00:15:45,160 --> 00:15:48,560 Speaker 1: point you just made. We all can flip on cable 317 00:15:48,600 --> 00:15:53,240 Speaker 1: TV at night and we see these celebrity spokespeople for gold, 318 00:15:53,720 --> 00:15:55,720 Speaker 1: you know, go on and on and on about why 319 00:15:55,760 --> 00:15:58,480 Speaker 1: you should own gold. And the point Peter was making, 320 00:15:58,560 --> 00:16:02,600 Speaker 1: and it's a good one, is there are tremendous markups 321 00:16:02,640 --> 00:16:05,920 Speaker 1: on this stuff. I mean, these gold companies that advertise 322 00:16:05,960 --> 00:16:07,560 Speaker 1: all the time, they got to come up with some 323 00:16:07,720 --> 00:16:11,440 Speaker 1: money to pay for all these advertisements. And the place 324 00:16:11,480 --> 00:16:13,800 Speaker 1: they come up with the money is this the bid 325 00:16:13,840 --> 00:16:16,400 Speaker 1: and the ask on these coins or bars or whatever 326 00:16:16,880 --> 00:16:19,480 Speaker 1: between you know, what they're really worth and what the 327 00:16:19,480 --> 00:16:22,240 Speaker 1: public is paying for them, you know, to say nothing 328 00:16:22,280 --> 00:16:26,680 Speaker 1: of paying their celebrity spokesperson. So it is kind of 329 00:16:26,680 --> 00:16:30,480 Speaker 1: the wild West out there sometimes. And so buyer beware 330 00:16:30,680 --> 00:16:34,400 Speaker 1: if you're just saying, well, so and so spokesperson who 331 00:16:34,520 --> 00:16:38,600 Speaker 1: I love, they buy their gold from that particular broker. 332 00:16:38,760 --> 00:16:41,680 Speaker 1: So it should all be good and you just dive in, 333 00:16:41,920 --> 00:16:45,360 Speaker 1: you know, headfirst into the pool. Good point that you 334 00:16:45,520 --> 00:16:48,120 Speaker 1: raise there, But let's let's get into the fundamentals of 335 00:16:48,160 --> 00:16:51,360 Speaker 1: gold itself. I mean, there's a lot of reasons to 336 00:16:51,440 --> 00:16:55,520 Speaker 1: buy it, but I think, at least from my standpoint, 337 00:16:56,240 --> 00:16:59,320 Speaker 1: I look at it as a good long term play. 338 00:16:59,440 --> 00:17:02,000 Speaker 1: I think, with no more than five to ten percent 339 00:17:02,000 --> 00:17:05,959 Speaker 1: of your portfolio, just to protect the purchasing power of 340 00:17:06,000 --> 00:17:09,200 Speaker 1: your money. Because let's face it, Ever since nineteen seventy one, 341 00:17:09,680 --> 00:17:12,680 Speaker 1: when the United States went off the gold standard, you 342 00:17:12,720 --> 00:17:15,480 Speaker 1: know where you could actually trade, you know, dollar for 343 00:17:15,600 --> 00:17:20,600 Speaker 1: dollar currency for the current price of gold, gold has 344 00:17:20,640 --> 00:17:25,080 Speaker 1: gone up in value by a way wider margin, you know, 345 00:17:25,200 --> 00:17:28,000 Speaker 1: than the dollar. And I think gold is a good 346 00:17:28,080 --> 00:17:34,280 Speaker 1: hedge against inflation in purchasing power, uh gold, I mean silver. 347 00:17:34,440 --> 00:17:38,040 Speaker 1: Let's face it, Silver has doubled already, Brian in twenty 348 00:17:38,080 --> 00:17:40,639 Speaker 1: twenty six. You know, some of this stuff is getting 349 00:17:40,680 --> 00:17:44,159 Speaker 1: parabolic right now. There's a lot of people I like 350 00:17:44,240 --> 00:17:46,000 Speaker 1: in it in the short term. Now I'm talking about 351 00:17:46,040 --> 00:17:49,160 Speaker 1: short term trading. It's it's no different than buying navidia. 352 00:17:49,280 --> 00:17:51,840 Speaker 1: You know, after it goes up three hundred percent and 353 00:17:51,880 --> 00:17:55,119 Speaker 1: everybody knows about it, they start asking questions, should I 354 00:17:55,200 --> 00:17:58,200 Speaker 1: be in it? Well, the big money has already been made. 355 00:17:58,240 --> 00:18:01,560 Speaker 1: That doesn't mean don't get into gold. Just understand that 356 00:18:01,680 --> 00:18:05,240 Speaker 1: gold can't decline in price, it can fluctuate in price. 357 00:18:05,720 --> 00:18:08,679 Speaker 1: It's a lot more ballattle of an asset, you know 358 00:18:08,840 --> 00:18:12,840 Speaker 1: than holding currency or cash or what have your treasury bonds. 359 00:18:12,920 --> 00:18:15,480 Speaker 1: So you just got to look at why you're doing it, 360 00:18:15,800 --> 00:18:18,720 Speaker 1: and over what time frame, I guess is my look 361 00:18:18,760 --> 00:18:19,040 Speaker 1: at it. 362 00:18:20,000 --> 00:18:23,400 Speaker 2: Yeah, And I think, you know, for the for those 363 00:18:23,440 --> 00:18:25,359 Speaker 2: of you who are sitting on the sidelines and thinking, well, 364 00:18:25,400 --> 00:18:26,920 Speaker 2: I don't have any gold, maybe I should get into 365 00:18:26,920 --> 00:18:28,600 Speaker 2: precious metals and all that kind of thing, remember the 366 00:18:28,640 --> 00:18:30,480 Speaker 2: time that you're doing your gut, your gut is telling 367 00:18:30,520 --> 00:18:32,480 Speaker 2: you to look into it at a time where, like 368 00:18:32,520 --> 00:18:34,679 Speaker 2: we just said, it's all at a historical high and 369 00:18:34,720 --> 00:18:35,679 Speaker 2: this is not yet. 370 00:18:35,840 --> 00:18:36,040 Speaker 1: Uh. 371 00:18:36,080 --> 00:18:38,440 Speaker 2: You know, this is not a question I'm taking from 372 00:18:38,440 --> 00:18:41,880 Speaker 2: clients very often right now, because you know, I think 373 00:18:41,920 --> 00:18:44,239 Speaker 2: that's because the market is actually holding up pretty well 374 00:18:44,280 --> 00:18:46,320 Speaker 2: and we're still it seems like it should be a 375 00:18:46,359 --> 00:18:48,840 Speaker 2: little bumpier than it is, with you know, with concerns 376 00:18:48,840 --> 00:18:51,000 Speaker 2: about just about everything under the sun at the moment. 377 00:18:51,040 --> 00:18:53,240 Speaker 2: But right now, you know, I'll remember, all the market 378 00:18:53,280 --> 00:18:55,919 Speaker 2: cares about. The only opinion the market ever has is 379 00:18:56,480 --> 00:18:58,640 Speaker 2: can we make a profit or not. And right now, 380 00:18:59,040 --> 00:19:01,439 Speaker 2: visibility seems to be pretty good that that that that 381 00:19:01,600 --> 00:19:04,840 Speaker 2: is going to continue. Anything can drive us over the cliff. Remember, 382 00:19:04,840 --> 00:19:07,080 Speaker 2: we never we never have declared this soft landing from 383 00:19:07,359 --> 00:19:10,359 Speaker 2: you know, the from the COVID recession, but we just 384 00:19:10,440 --> 00:19:12,800 Speaker 2: kind of stopped talking about it. So there's still there's 385 00:19:12,840 --> 00:19:15,600 Speaker 2: still things out there, there are still challenges to be had, 386 00:19:16,040 --> 00:19:18,880 Speaker 2: but at the same time, just be calm and rational 387 00:19:18,920 --> 00:19:20,680 Speaker 2: and decide what you you know, if you want a 388 00:19:20,680 --> 00:19:22,919 Speaker 2: little piece and precious metals, that's fine, I have no 389 00:19:22,960 --> 00:19:25,080 Speaker 2: issue with that, But this is definitely not a time 390 00:19:25,119 --> 00:19:26,879 Speaker 2: and I'd say it's never a time to bet the 391 00:19:26,920 --> 00:19:29,800 Speaker 2: farm on any one thing or or don't. 392 00:19:29,600 --> 00:19:32,080 Speaker 1: Put money that you're gonna need then the next one 393 00:19:32,040 --> 00:19:34,439 Speaker 1: to two or even three years in gold. It is 394 00:19:34,520 --> 00:19:37,840 Speaker 1: not a short term liquidity vehicle. It is a long 395 00:19:37,960 --> 00:19:41,320 Speaker 1: term play, you know, to project protect your purchasing power, 396 00:19:41,359 --> 00:19:44,800 Speaker 1: and by all means, if you're gonna get involved, find 397 00:19:44,960 --> 00:19:48,360 Speaker 1: or get a referral to a good, reputable dealer who 398 00:19:48,359 --> 00:19:50,960 Speaker 1: will treat you. Right. Everybody's got to make a little money, 399 00:19:51,320 --> 00:19:54,000 Speaker 1: but you know, the markup should not be that big. 400 00:19:54,280 --> 00:19:56,560 Speaker 1: All right, here's the all Worth advice. Should gold be 401 00:19:56,640 --> 00:20:00,000 Speaker 1: in every investor's portfolio. Sure it can have a play, 402 00:20:00,560 --> 00:20:04,800 Speaker 1: but how much and why depends on your personal long 403 00:20:04,880 --> 00:20:08,040 Speaker 1: term financial goals. Coming up next, we launch a rescue 404 00:20:08,119 --> 00:20:10,920 Speaker 1: mission on one of the most overlooked parts of high 405 00:20:10,960 --> 00:20:15,120 Speaker 1: net worth portfolios that dreaded, neglected four oh one K. 406 00:20:15,480 --> 00:20:18,040 Speaker 1: You're listening to Simply Money, presented by all Worth Financial 407 00:20:18,080 --> 00:20:26,080 Speaker 1: on fifty five KRC the talk station. You're listening to 408 00:20:26,080 --> 00:20:29,359 Speaker 1: Simply Money presented by all Worth Financial Bob Sponseller along 409 00:20:29,359 --> 00:20:32,720 Speaker 1: with Brian James. Let's be honest, when you hear the 410 00:20:32,720 --> 00:20:35,640 Speaker 1: words four oh one K, you probably think about your 411 00:20:35,840 --> 00:20:38,600 Speaker 1: very first job out of college. You set it, you 412 00:20:38,760 --> 00:20:41,880 Speaker 1: forget about it, and you move on. But if you're 413 00:20:41,960 --> 00:20:44,960 Speaker 1: now worth let's say a few million bucks, maybe even more, 414 00:20:45,320 --> 00:20:48,080 Speaker 1: that first four to oh one k or first two 415 00:20:48,160 --> 00:20:51,600 Speaker 1: or three four oh one ks could be the weakest 416 00:20:51,640 --> 00:20:55,320 Speaker 1: link in your whole financial plan if you've completely thrown 417 00:20:55,359 --> 00:20:58,640 Speaker 1: them in the proverbial drawer and forgotten about them. And 418 00:20:58,720 --> 00:21:01,359 Speaker 1: so tonight we're gonna go on a little rescue mission. 419 00:21:01,400 --> 00:21:04,159 Speaker 1: We're gonna tell the story of someone who built some 420 00:21:04,280 --> 00:21:07,560 Speaker 1: real wealth over the course of their career. But never 421 00:21:07,760 --> 00:21:11,359 Speaker 1: circled back to fix that major blind spot, those old 422 00:21:11,400 --> 00:21:14,040 Speaker 1: four to oh one ks. Brian, Well, we're gonna talk 423 00:21:14,080 --> 00:21:16,120 Speaker 1: about Laura. Laura is a fake person. Now. 424 00:21:16,280 --> 00:21:18,159 Speaker 2: Most of our I'm gonna say, all of our stories 425 00:21:18,200 --> 00:21:20,600 Speaker 2: we share here are real stories that come from real clients, 426 00:21:20,600 --> 00:21:23,159 Speaker 2: but obviously names are changed to protect the innocent, and 427 00:21:23,160 --> 00:21:26,160 Speaker 2: today the innocents fake name is Laura. Laura's fifty eight, 428 00:21:26,560 --> 00:21:28,679 Speaker 2: married with two grown kids, and she owns a marketing 429 00:21:28,720 --> 00:21:30,960 Speaker 2: firm in Cincinnati that did really well in her forties, 430 00:21:31,520 --> 00:21:33,240 Speaker 2: and today she and her husband have a net worth 431 00:21:33,280 --> 00:21:35,680 Speaker 2: of about three point two million, including some real estate 432 00:21:35,760 --> 00:21:39,679 Speaker 2: brokerage accounts, you know, growing cast reserve typical assets for 433 00:21:39,720 --> 00:21:42,080 Speaker 2: somebody in that kind of a position, and life is good. 434 00:21:42,520 --> 00:21:44,400 Speaker 1: But she came out to me with a financial. 435 00:21:44,080 --> 00:21:47,600 Speaker 2: Advisor, and during that whole review, what stuck out was 436 00:21:47,600 --> 00:21:50,000 Speaker 2: a four to oh one K that was a four 437 00:21:50,119 --> 00:21:52,040 Speaker 2: hundred and eighty thousand dollars account, you know, that's a 438 00:21:52,080 --> 00:21:54,480 Speaker 2: significant chunk of her networth, still one hundred percent and 439 00:21:54,560 --> 00:21:58,240 Speaker 2: a twenty thirty five target date fund. Really no customization 440 00:21:59,160 --> 00:22:01,320 Speaker 2: and no so real It looked like there hadn't been 441 00:22:01,359 --> 00:22:05,080 Speaker 2: any discussion of this account really at all because she 442 00:22:05,240 --> 00:22:07,520 Speaker 2: was busy building her business and that's where their net 443 00:22:07,560 --> 00:22:09,440 Speaker 2: worth was. So now that wound up being a half 444 00:22:09,440 --> 00:22:11,960 Speaker 2: million dollars, they could have been handled a lot differently. She's, 445 00:22:12,080 --> 00:22:13,960 Speaker 2: for example, she's in a position where she's got a 446 00:22:13,960 --> 00:22:17,920 Speaker 2: decent amount of assets sitting there outside the four Okay, 447 00:22:17,960 --> 00:22:21,400 Speaker 2: that's what they're going to rely on to live off 448 00:22:21,440 --> 00:22:23,480 Speaker 2: of in the earlier years of retirement. That means that 449 00:22:23,560 --> 00:22:26,240 Speaker 2: these accounts, the tax advantage ones a couple of things 450 00:22:26,760 --> 00:22:29,240 Speaker 2: nobody had had a conversation with her about should this stay, 451 00:22:29,640 --> 00:22:32,320 Speaker 2: you know, should this stay in the traditional side, Should 452 00:22:32,320 --> 00:22:34,640 Speaker 2: we be thinking about roth conversions here after you retire, 453 00:22:35,240 --> 00:22:37,080 Speaker 2: And more importantly, should it really be in a twenty 454 00:22:37,080 --> 00:22:39,280 Speaker 2: five thirty twenty thirty five target day fund that is 455 00:22:39,359 --> 00:22:41,239 Speaker 2: not that far out, and that these assets are going 456 00:22:41,280 --> 00:22:44,040 Speaker 2: to sit there for you know, maybe twenty years or longer, 457 00:22:44,119 --> 00:22:46,480 Speaker 2: or possibly just be inherited by your kids. Then that 458 00:22:46,560 --> 00:22:48,920 Speaker 2: is a very very different strategy. That's really where we're 459 00:22:48,920 --> 00:22:51,960 Speaker 2: talking about roth conversions. But again, it sat there in 460 00:22:52,280 --> 00:22:54,680 Speaker 2: the same fund that she had decided when she first 461 00:22:54,680 --> 00:22:56,679 Speaker 2: set the thing up, when the business was barely off 462 00:22:56,760 --> 00:22:59,000 Speaker 2: the ground, and hadn't thought about it ever since because 463 00:22:59,040 --> 00:23:01,879 Speaker 2: she worked so hard. The end result, it underperformed the 464 00:23:01,920 --> 00:23:04,120 Speaker 2: market by about two percent every year over the past 465 00:23:04,200 --> 00:23:07,200 Speaker 2: seven years because it was targeted for a risk tolerance 466 00:23:07,240 --> 00:23:10,159 Speaker 2: portfolio that really didn't match what she needed. Now, is 467 00:23:10,160 --> 00:23:12,560 Speaker 2: this going to bankrupt her, Of course not. But this 468 00:23:12,680 --> 00:23:14,880 Speaker 2: is a question of efficiency. When you look at any 469 00:23:14,920 --> 00:23:17,640 Speaker 2: context of her wealth. That's a big hole in the boat, Bob, 470 00:23:17,680 --> 00:23:19,440 Speaker 2: because she left a lot of money on the table 471 00:23:19,440 --> 00:23:22,119 Speaker 2: over those years for an asset that most likely is 472 00:23:22,160 --> 00:23:24,600 Speaker 2: going to sit there for several decades till it gets inherited. 473 00:23:25,400 --> 00:23:27,439 Speaker 1: Yeah. I think the important thing here is just to 474 00:23:27,480 --> 00:23:29,840 Speaker 1: make sure when you sit down with your advisor you 475 00:23:29,920 --> 00:23:33,560 Speaker 1: are talking about all of your assets, you actually know 476 00:23:33,640 --> 00:23:37,119 Speaker 1: what you have and where it's sitting. I mean, sitting 477 00:23:37,119 --> 00:23:40,960 Speaker 1: in a target twenty thirty five target date fund isn't 478 00:23:41,000 --> 00:23:43,160 Speaker 1: the worst thing in the world. I mean, the thing 479 00:23:43,240 --> 00:23:46,080 Speaker 1: got probably a pretty nice return over the period that 480 00:23:46,160 --> 00:23:49,040 Speaker 1: this person was ignoring it. I came across it. So 481 00:23:49,040 --> 00:23:51,960 Speaker 1: a situation late last year was which was a bit 482 00:23:52,000 --> 00:23:56,040 Speaker 1: more dramatic than that. These folks had sold a business 483 00:23:56,200 --> 00:23:59,200 Speaker 1: for quite a bit of money, and they were very 484 00:23:59,359 --> 00:24:02,480 Speaker 1: and are very risk averse people. I mean they want 485 00:24:02,520 --> 00:24:05,199 Speaker 1: to be almost one hundred percent in bonds, you know, 486 00:24:05,240 --> 00:24:07,639 Speaker 1: maybe a ten to twenty percent slice in the stock 487 00:24:07,720 --> 00:24:11,600 Speaker 1: market just for some inflation protection. And you know, I 488 00:24:11,640 --> 00:24:14,640 Speaker 1: asked them about these old couple, old four to one 489 00:24:14,720 --> 00:24:17,720 Speaker 1: k accounts that they had. They hadn't looked at them 490 00:24:17,760 --> 00:24:20,600 Speaker 1: in fifteen years, and I said, well, why don't you 491 00:24:20,680 --> 00:24:22,760 Speaker 1: send the statements and we'll look at it. Well, they 492 00:24:22,800 --> 00:24:26,320 Speaker 1: sent the statements, Brian, and they were one hundred percent 493 00:24:26,480 --> 00:24:29,680 Speaker 1: invested in the stock market and they were in a 494 00:24:29,760 --> 00:24:34,040 Speaker 1: variable annuity. So not only was the risk profile completely 495 00:24:34,119 --> 00:24:37,480 Speaker 1: different from where these people wanted to be today as 496 00:24:37,520 --> 00:24:40,480 Speaker 1: they progressed through their retirement years, but when you ran 497 00:24:40,800 --> 00:24:44,320 Speaker 1: a fee analysis on the whole thing, I mean, they 498 00:24:44,320 --> 00:24:47,760 Speaker 1: were paying very very high fees upwards of you know, 499 00:24:47,760 --> 00:24:51,439 Speaker 1: about three percent all in on these annuities. And you know, 500 00:24:52,040 --> 00:24:55,399 Speaker 1: so again it in some cases it makes sense to 501 00:24:55,480 --> 00:24:57,640 Speaker 1: leave the money at the four to one k if 502 00:24:58,040 --> 00:25:00,640 Speaker 1: it matches what you're trying to do and you can 503 00:25:00,680 --> 00:25:03,400 Speaker 1: get the investments for low cost. But in a lot 504 00:25:03,400 --> 00:25:06,640 Speaker 1: of cases it's not the case. This was one example 505 00:25:06,680 --> 00:25:10,479 Speaker 1: where it was just a no brainer for multiple reasons. 506 00:25:10,480 --> 00:25:13,600 Speaker 1: That I've already covered to just consolidate this over to 507 00:25:13,640 --> 00:25:16,800 Speaker 1: the assets that we were handling for them, and they 508 00:25:16,800 --> 00:25:18,240 Speaker 1: were glad we had the conversation. 509 00:25:19,160 --> 00:25:20,920 Speaker 2: Well, that's good to hear because and that's the whole 510 00:25:20,920 --> 00:25:23,840 Speaker 2: point of that entire type of a discussion, so just 511 00:25:23,840 --> 00:25:26,000 Speaker 2: to make sure that you understand what you own. And 512 00:25:26,000 --> 00:25:28,199 Speaker 2: I would one of the interesting phenomenons we see every 513 00:25:28,240 --> 00:25:31,320 Speaker 2: now and as well we take people through this risk discussion. 514 00:25:31,720 --> 00:25:34,359 Speaker 2: They'll say that they're super conservative people and then, like 515 00:25:34,400 --> 00:25:36,479 Speaker 2: you just said, we look at the portfolio and it's 516 00:25:36,520 --> 00:25:40,960 Speaker 2: invested really really aggressively, and they haven't. And oftentimes they won't. 517 00:25:40,960 --> 00:25:43,679 Speaker 2: They'll show us this and they won't have reacted to 518 00:25:43,920 --> 00:25:45,520 Speaker 2: you know, twenty twenty two, which was one of those 519 00:25:45,600 --> 00:25:47,520 Speaker 2: I always say, one of the five worst market years 520 00:25:47,520 --> 00:25:50,200 Speaker 2: we've ever had, and it's like, are you really risk 521 00:25:50,400 --> 00:25:53,600 Speaker 2: this risk averse? Because it didn't appear to have bothered 522 00:25:53,640 --> 00:25:55,800 Speaker 2: you that twenty twenty two came out the way it did. 523 00:25:55,960 --> 00:25:58,880 Speaker 2: So it's almost like sometimes those risk questionnaires are more 524 00:25:58,960 --> 00:26:01,280 Speaker 2: of a here's where I think we should probably be, 525 00:26:01,359 --> 00:26:03,800 Speaker 2: but we're really okay not being there. So that's why 526 00:26:03,960 --> 00:26:06,199 Speaker 2: risk is a discussion not just a question there, but 527 00:26:06,200 --> 00:26:08,120 Speaker 2: that's still an important thing for you to talk about 528 00:26:08,119 --> 00:26:10,360 Speaker 2: with your advisor to make sure everybody's on the same page. 529 00:26:10,760 --> 00:26:13,520 Speaker 1: Here's the all Worth advice. If you've built some real wealth, 530 00:26:13,600 --> 00:26:16,080 Speaker 1: you can't afford to just let those old four to 531 00:26:16,240 --> 00:26:19,800 Speaker 1: one k plans lay around in coast. It deserves the 532 00:26:19,880 --> 00:26:24,199 Speaker 1: same level of scrutiny and customization as everything else in 533 00:26:24,240 --> 00:26:28,160 Speaker 1: your plan. All right, can you afford to give your kids, 534 00:26:28,320 --> 00:26:31,320 Speaker 1: let's say, twenty five thousand dollars each for a house 535 00:26:31,400 --> 00:26:34,960 Speaker 1: down payment and still retire comfortably? We'll dig into that 536 00:26:35,080 --> 00:26:38,440 Speaker 1: question from Loveland next, plus whether an eight thousand dollars 537 00:26:38,440 --> 00:26:42,440 Speaker 1: a month retirement budget really holds up over the long haul. 538 00:26:42,760 --> 00:26:45,280 Speaker 1: You're listening to Simply Money presented by all Worth Financial 539 00:26:45,320 --> 00:26:52,879 Speaker 1: on fifty five KRC, the talk station. You're listening to 540 00:26:52,880 --> 00:26:55,400 Speaker 1: Simply Money present up by all Worth Financial. I'm Bob 541 00:26:55,440 --> 00:26:58,480 Speaker 1: Sponseller along with Brian James. Do you have a financial 542 00:26:58,600 --> 00:27:00,520 Speaker 1: question you'd like for us to answer? Thank sir. There's 543 00:27:00,520 --> 00:27:02,720 Speaker 1: a red button you can click while you're listening to 544 00:27:02,760 --> 00:27:06,240 Speaker 1: the show. If you're listening on the iHeart app, simply 545 00:27:06,280 --> 00:27:09,280 Speaker 1: record your question and it will come straight to us. 546 00:27:10,080 --> 00:27:13,119 Speaker 1: All right, Brian, greg And Madeira says, I'm worried that 547 00:27:13,320 --> 00:27:17,920 Speaker 1: one bad year early in retirement could change everything for us. 548 00:27:18,240 --> 00:27:21,720 Speaker 1: What practical steps can you take to protect against that 549 00:27:22,359 --> 00:27:24,359 Speaker 1: without parking everything in cash? 550 00:27:24,480 --> 00:27:27,600 Speaker 2: Great question, Well, Greg, you're talking about something called sequence 551 00:27:27,600 --> 00:27:30,040 Speaker 2: of returns risk. And the reason this is so dangerous 552 00:27:30,080 --> 00:27:32,800 Speaker 2: it's it's timing, not the long term averages. So a 553 00:27:32,840 --> 00:27:34,880 Speaker 2: poor market year, like you said, in the first few 554 00:27:34,920 --> 00:27:37,560 Speaker 2: years of retirement can permanently shrink that capital base you're 555 00:27:37,600 --> 00:27:40,199 Speaker 2: drawing off of, even if markets recovered later, as they 556 00:27:40,280 --> 00:27:42,600 Speaker 2: have always have in the past. The solution is not 557 00:27:42,680 --> 00:27:45,120 Speaker 2: to walk away from growth, because this can happen. It's 558 00:27:45,160 --> 00:27:47,600 Speaker 2: to separate the income I need now from the money 559 00:27:47,600 --> 00:27:50,320 Speaker 2: that can that can grow over time. So really, what 560 00:27:50,359 --> 00:27:52,719 Speaker 2: that looks like, you know, maybe somewhere between a giant 561 00:27:52,720 --> 00:27:56,240 Speaker 2: cash pile, you know, and and and no cash pile 562 00:27:56,280 --> 00:28:00,000 Speaker 2: at all. Build that retirement paycheck buffer. I always suggest, look, 563 00:28:00,240 --> 00:28:02,080 Speaker 2: look at the things you're gonna need to spend money on, 564 00:28:02,160 --> 00:28:03,800 Speaker 2: you know, the bills that are coming due over the 565 00:28:03,800 --> 00:28:07,000 Speaker 2: next twelve to twenty four months. A good idea would 566 00:28:07,000 --> 00:28:09,520 Speaker 2: be to make sure that that particular pile of cash 567 00:28:09,720 --> 00:28:12,080 Speaker 2: is sitting somewhere safe, generating a little bit of interest, 568 00:28:12,119 --> 00:28:14,280 Speaker 2: but its job is to be spent to pay those bills. 569 00:28:14,480 --> 00:28:16,320 Speaker 2: That means that if the market does go the wrong 570 00:28:16,359 --> 00:28:19,200 Speaker 2: direction earlier retirement, it doesn't hurt you because you weren't 571 00:28:19,200 --> 00:28:22,320 Speaker 2: going to spend those particular dollars anyway. And you can 572 00:28:22,359 --> 00:28:24,439 Speaker 2: also take this a little further by looking at and 573 00:28:24,480 --> 00:28:27,280 Speaker 2: segmenting your dollars into buckets. You know, maybe the first 574 00:28:27,280 --> 00:28:29,680 Speaker 2: bucket is money you're gonna need between now and three years, 575 00:28:29,680 --> 00:28:31,800 Speaker 2: and that's really liquid. You know, again you're looking for 576 00:28:31,840 --> 00:28:33,760 Speaker 2: you know, money markets, high yield savings accounts of those 577 00:28:33,840 --> 00:28:36,680 Speaker 2: kinds of things. Maybe a CD second bucket for four 578 00:28:36,720 --> 00:28:39,240 Speaker 2: to ten years, which would be a little maybe like 579 00:28:39,240 --> 00:28:42,800 Speaker 2: a balanced fund, you know, inflation protected assets, those kinds 580 00:28:42,800 --> 00:28:44,480 Speaker 2: of things. And then of course you are ten years 581 00:28:44,520 --> 00:28:46,960 Speaker 2: in out bucket. That's the long term growth money that's 582 00:28:46,960 --> 00:28:49,840 Speaker 2: going to be pretty heavily invested towards the stock market side. 583 00:28:49,960 --> 00:28:52,960 Speaker 2: So just be thoughtful about when these dollars are due, 584 00:28:53,600 --> 00:28:55,800 Speaker 2: and you don't have to invest every single dollar the 585 00:28:55,840 --> 00:28:58,240 Speaker 2: exact same way if these are concerned. So I hope 586 00:28:58,240 --> 00:29:01,000 Speaker 2: that helps Ron and marymont Ron says they need about 587 00:29:01,000 --> 00:29:03,600 Speaker 2: one hundred and ten thousand dollars to live comfortably, and 588 00:29:03,640 --> 00:29:06,080 Speaker 2: he's wondering how much of that should come from dividends 589 00:29:06,160 --> 00:29:09,320 Speaker 2: interest versus selling investments, especially in a down market. 590 00:29:10,720 --> 00:29:13,640 Speaker 1: Well, ron I would first say, you know, don't let 591 00:29:13,640 --> 00:29:16,880 Speaker 1: the proverbial tax tail wag the dog, meaning that you 592 00:29:16,920 --> 00:29:20,800 Speaker 1: should build a financial plan based on your personal goals 593 00:29:21,320 --> 00:29:24,440 Speaker 1: and your investment risk tolerance, and then set your asset 594 00:29:24,480 --> 00:29:29,480 Speaker 1: allocation accordingly. Once that's done, you know, if you've got money, 595 00:29:29,960 --> 00:29:31,800 Speaker 1: like you said, if you've got money coming in from 596 00:29:31,840 --> 00:29:35,200 Speaker 1: dividends and interest from bonds or some dividend paying stocks, 597 00:29:35,240 --> 00:29:37,680 Speaker 1: you know that's those are going to be pretty consistent. 598 00:29:38,280 --> 00:29:40,080 Speaker 1: The other thing to look at, you know, if we're 599 00:29:40,080 --> 00:29:44,480 Speaker 1: talking about selling investments or using capital gains, you want 600 00:29:44,520 --> 00:29:47,680 Speaker 1: to try to get as much control over those capital 601 00:29:47,680 --> 00:29:51,680 Speaker 1: gains as possible, meaning have some type of tax loss 602 00:29:51,680 --> 00:29:55,400 Speaker 1: harvesting or tax smart investing going on, you know, in 603 00:29:55,440 --> 00:29:59,880 Speaker 1: your non IRA accounts, so you have some control over 604 00:30:00,480 --> 00:30:04,080 Speaker 1: capital gains and when those are generated, versus just waking 605 00:30:04,160 --> 00:30:06,360 Speaker 1: up in the fourth quarter of the year and being 606 00:30:06,400 --> 00:30:09,880 Speaker 1: surprised when you get a capital gain distribution. Obviously from 607 00:30:09,880 --> 00:30:12,240 Speaker 1: your question, I don't know how much of your assets 608 00:30:12,280 --> 00:30:16,160 Speaker 1: are in iras versus you know, taxable accounts. That's a big, 609 00:30:16,400 --> 00:30:19,680 Speaker 1: you know, part of this whole discussion too. So I think, 610 00:30:19,800 --> 00:30:23,320 Speaker 1: you know, sit down, build your plan from an allocation standpoint, 611 00:30:23,640 --> 00:30:26,600 Speaker 1: and a good fiduciary advisor can take your plan and 612 00:30:26,680 --> 00:30:30,920 Speaker 1: then also apply some tax mark strategies to it as 613 00:30:30,960 --> 00:30:34,600 Speaker 1: well to make sure that we're pulling money from the 614 00:30:34,640 --> 00:30:40,320 Speaker 1: right places without triggering unnecessary taxation. Hope that helps all right. 615 00:30:40,400 --> 00:30:42,560 Speaker 1: Alan In Lovelin says, we want to give our kids 616 00:30:42,600 --> 00:30:47,000 Speaker 1: twenty five thousand dollars each toward home doown payments. How 617 00:30:47,080 --> 00:30:51,440 Speaker 1: do I evaluate Brian making those gifts against our long 618 00:30:51,560 --> 00:30:54,200 Speaker 1: term plan instead of just going with our gut and 619 00:30:54,240 --> 00:30:55,320 Speaker 1: giving the kids the money. 620 00:30:55,840 --> 00:30:57,720 Speaker 2: Yeah, this is a common you know, this is really 621 00:30:57,800 --> 00:30:59,120 Speaker 2: the core of financial planning. 622 00:30:59,200 --> 00:30:59,360 Speaker 1: Right. 623 00:30:59,400 --> 00:31:01,320 Speaker 2: So, you know, I've got money now and I can 624 00:31:01,360 --> 00:31:03,840 Speaker 2: do whatever I want to do with it. But my 625 00:31:03,960 --> 00:31:06,400 Speaker 2: question is what's that impact in the future. Can I 626 00:31:06,400 --> 00:31:08,000 Speaker 2: get away with this now or is this going to 627 00:31:08,080 --> 00:31:09,880 Speaker 2: hurt me you know, ten fifteen years down the line. 628 00:31:10,040 --> 00:31:12,320 Speaker 2: So think of it in terms of retirement income. A 629 00:31:12,400 --> 00:31:15,360 Speaker 2: permanent twenty five thousand dollars gift is probably about one 630 00:31:15,360 --> 00:31:18,240 Speaker 2: thousand to twelve to twelve hundred bucks a year of 631 00:31:18,320 --> 00:31:21,320 Speaker 2: lifetime spending you're giving up. And if you've got two 632 00:31:21,400 --> 00:31:23,800 Speaker 2: kids going on, now, you're thinking twenty twenty five hundred 633 00:31:23,800 --> 00:31:26,320 Speaker 2: dollars per year for the rest of your life. So 634 00:31:26,560 --> 00:31:29,000 Speaker 2: now you're thinking this is different from can we spare 635 00:31:29,040 --> 00:31:32,320 Speaker 2: the cash? Now you're thinking, are we comfortable trading this 636 00:31:32,400 --> 00:31:34,880 Speaker 2: much future spending for this outcome? And then you're also 637 00:31:34,920 --> 00:31:36,840 Speaker 2: going to look at what dollars that you're using for. 638 00:31:36,880 --> 00:31:39,880 Speaker 2: If this is coming from your own excess taxable assets, 639 00:31:40,080 --> 00:31:42,320 Speaker 2: then that risk is usually pretty managable, not too painful. 640 00:31:42,320 --> 00:31:43,719 Speaker 2: But if you're going to be taking this out of 641 00:31:44,080 --> 00:31:48,240 Speaker 2: tax sheltered accounts, you know, wroth irase traditional areas that's 642 00:31:48,280 --> 00:31:51,640 Speaker 2: going to be income taxable and or you're sacrificing that 643 00:31:51,680 --> 00:31:54,000 Speaker 2: tax free growth, that'll have a bigger impact on it. 644 00:31:54,640 --> 00:31:57,040 Speaker 2: And I would also stress test the timing of it. 645 00:31:57,480 --> 00:31:59,719 Speaker 2: What if markets fall twenty percent right after we make 646 00:31:59,760 --> 00:32:01,760 Speaker 2: the gift. Well, hopefully you've already got a financial plan 647 00:32:01,800 --> 00:32:03,920 Speaker 2: in place where you can easily do this, model this 648 00:32:04,040 --> 00:32:06,360 Speaker 2: out and then pretend the market takes a hit. But 649 00:32:06,560 --> 00:32:08,640 Speaker 2: on the other hand, the other we don't know. When 650 00:32:08,680 --> 00:32:10,240 Speaker 2: you're talking about doing this. You didn't give us the 651 00:32:10,240 --> 00:32:11,840 Speaker 2: age of your kids. They might be ten years old. 652 00:32:11,880 --> 00:32:14,040 Speaker 2: We're talking fifteen years now. You're thinking way ahead of time. 653 00:32:14,200 --> 00:32:15,720 Speaker 2: It could be this Christmas you're going to do it. 654 00:32:15,720 --> 00:32:16,120 Speaker 1: Who knows. 655 00:32:16,640 --> 00:32:18,560 Speaker 2: But in any case, what I would look at is 656 00:32:18,600 --> 00:32:22,040 Speaker 2: what have your investments done recently, because very often the market, 657 00:32:22,280 --> 00:32:24,400 Speaker 2: if the market has had a positive run, you might 658 00:32:24,440 --> 00:32:26,320 Speaker 2: be able to do these gifts with money you didn't 659 00:32:26,360 --> 00:32:29,240 Speaker 2: have a few months ago. If that's the case, oftentimes 660 00:32:29,280 --> 00:32:32,000 Speaker 2: I say, you know, as long as the plan floats, 661 00:32:32,160 --> 00:32:34,680 Speaker 2: take the windfall that you found from that recent market 662 00:32:34,680 --> 00:32:37,200 Speaker 2: performance and do the things that you want to do 663 00:32:37,240 --> 00:32:39,400 Speaker 2: for your family. So it's not about affordability, it's about 664 00:32:39,400 --> 00:32:42,120 Speaker 2: intentional trade offs. If you'd still be comfortable with that 665 00:32:42,160 --> 00:32:44,720 Speaker 2: decision after a bad market year, it fits the plan, 666 00:32:44,960 --> 00:32:48,000 Speaker 2: if you wouldn't change the size, the timing, or maybe. 667 00:32:47,760 --> 00:32:49,320 Speaker 1: The source of that gift. 668 00:32:49,840 --> 00:32:52,440 Speaker 2: We got one more for Tony in Newport, and Tony's 669 00:32:52,440 --> 00:32:54,880 Speaker 2: asking about a single stock. He's got one worth over 670 00:32:54,960 --> 00:32:57,200 Speaker 2: a half million dollars and it's about twenty five percent 671 00:32:57,200 --> 00:32:59,560 Speaker 2: of their portfolio. He said he's concerned that if he 672 00:32:59,640 --> 00:33:01,880 Speaker 2: sells always going to know about ninety thousand dollars in 673 00:33:01,920 --> 00:33:04,720 Speaker 2: capital gains, and it's he's wondering if it's smarter to 674 00:33:04,760 --> 00:33:06,640 Speaker 2: spread that out over the years or just tear the 675 00:33:06,640 --> 00:33:08,680 Speaker 2: band aid off and write the check and smile. 676 00:33:09,600 --> 00:33:11,520 Speaker 1: Well, tony, you know, if you can help it. We 677 00:33:11,920 --> 00:33:14,120 Speaker 1: don't want to just you know, rip the band aid 678 00:33:14,120 --> 00:33:17,480 Speaker 1: off and write a ninety thousand dollars check. Usually there's 679 00:33:17,560 --> 00:33:19,800 Speaker 1: some better ways to go about this. But you know, 680 00:33:19,960 --> 00:33:22,720 Speaker 1: twenty five percent of your overall net worth is a 681 00:33:22,760 --> 00:33:24,840 Speaker 1: bit high, and we want to try to get that down, 682 00:33:24,960 --> 00:33:27,680 Speaker 1: you know, under ten if we can, but do it responsibly. 683 00:33:28,760 --> 00:33:30,520 Speaker 1: So we got to take a look at your overall 684 00:33:30,560 --> 00:33:33,960 Speaker 1: tax situation, what your income goals are. I mean, just 685 00:33:34,000 --> 00:33:37,120 Speaker 1: as a reminder, you know, up to ninety six thousand 686 00:33:37,200 --> 00:33:41,200 Speaker 1: and change of taxable income, you don't pay any capital 687 00:33:41,240 --> 00:33:44,040 Speaker 1: gains taxes. So you might be able to, you know, 688 00:33:44,040 --> 00:33:46,440 Speaker 1: to use your words, rip some of the band aid 689 00:33:46,480 --> 00:33:48,760 Speaker 1: off this year, spread it over a couple of years, 690 00:33:49,160 --> 00:33:52,120 Speaker 1: and maybe, you know, gradually move down out of that 691 00:33:52,160 --> 00:33:55,440 Speaker 1: position without paying any taxes at all. But you know, 692 00:33:55,520 --> 00:33:58,040 Speaker 1: the other option is you you can you can literally 693 00:33:58,160 --> 00:34:00,760 Speaker 1: use options, meaning you can buy some put protection to 694 00:34:00,760 --> 00:34:03,360 Speaker 1: protect your downside. If you want to help pay for 695 00:34:03,440 --> 00:34:06,240 Speaker 1: some of that downside protection, sell and out of the 696 00:34:06,280 --> 00:34:08,600 Speaker 1: money call option on your stock to help pay for 697 00:34:08,680 --> 00:34:11,759 Speaker 1: some of that. There's varying ways to go about it, 698 00:34:12,120 --> 00:34:14,719 Speaker 1: but yeah, I would not rip the band aid off 699 00:34:14,760 --> 00:34:17,480 Speaker 1: at once, sit down with a good fiduciary advisor and 700 00:34:17,560 --> 00:34:20,280 Speaker 1: come up with a good strategy. All right, Coming up next, 701 00:34:20,360 --> 00:34:23,000 Speaker 1: I've got my two cents on a few things to 702 00:34:23,080 --> 00:34:27,080 Speaker 1: consider when you go over a periodic review of your 703 00:34:27,120 --> 00:34:30,120 Speaker 1: life insurance. You're listening to Simply Money presented by all 704 00:34:30,160 --> 00:34:36,680 Speaker 1: Worth Financial on fifty five KRC the talk station. You're 705 00:34:36,719 --> 00:34:39,040 Speaker 1: listening to Simply Money presented by all Worth Financial on 706 00:34:39,160 --> 00:34:42,680 Speaker 1: Bob Spon Seller along with Brian James. Let's spend a 707 00:34:42,719 --> 00:34:45,759 Speaker 1: few minutes talking about what everybody should do as part 708 00:34:45,760 --> 00:34:49,000 Speaker 1: of their comprehensive financial plan. I'd say at least every 709 00:34:49,000 --> 00:34:52,680 Speaker 1: two to three years. And that's just a life insurance review. Brian, 710 00:34:52,800 --> 00:34:55,239 Speaker 1: Let's get into some of the things we should be reviewing. 711 00:34:55,920 --> 00:34:59,040 Speaker 1: What does a life insurance review actually mean? I think 712 00:34:59,200 --> 00:35:02,840 Speaker 1: i'd start with Step one is part of your financial plan, 713 00:35:03,040 --> 00:35:07,760 Speaker 1: determine how much life insurance you even still need giving 714 00:35:07,800 --> 00:35:11,120 Speaker 1: your current goals in your current stage of life, not 715 00:35:11,360 --> 00:35:14,600 Speaker 1: what you know was in place fifteen twenty thirty years ago. 716 00:35:14,840 --> 00:35:16,920 Speaker 1: So a lot of people never do that. They have 717 00:35:17,040 --> 00:35:20,279 Speaker 1: these old policies they've had for years or decades, they 718 00:35:20,280 --> 00:35:22,480 Speaker 1: don't touch them, they don't look at them, and they 719 00:35:22,480 --> 00:35:24,680 Speaker 1: don't even you know, take a look at do I 720 00:35:24,800 --> 00:35:27,240 Speaker 1: even still need them? And a lot of times, Brian, 721 00:35:27,640 --> 00:35:30,360 Speaker 1: there's a lot of hidden cash value in these policies 722 00:35:30,760 --> 00:35:34,279 Speaker 1: that could be put to better use elsewhere. So that's 723 00:35:34,320 --> 00:35:36,600 Speaker 1: step one. Take a look at whether it's you know, 724 00:35:36,760 --> 00:35:40,319 Speaker 1: insurance that you actually still need or want. The other 725 00:35:40,360 --> 00:35:43,440 Speaker 1: thing if you're talking about cash value type of policies, 726 00:35:44,000 --> 00:35:48,000 Speaker 1: and Brian, I find fewer and fewer I'll call them advisors. 727 00:35:48,040 --> 00:35:51,920 Speaker 1: Even do this anymore is do what's called an enforced 728 00:35:52,000 --> 00:35:55,960 Speaker 1: illustration of the policy. Go back to the insurance company 729 00:35:56,000 --> 00:36:00,400 Speaker 1: and say, hey, run an illustration as of today based 730 00:36:00,440 --> 00:36:03,840 Speaker 1: on the current amount of cash value, and assuming I 731 00:36:03,880 --> 00:36:06,080 Speaker 1: want to keep this coverage for the next fifteen to 732 00:36:06,120 --> 00:36:08,520 Speaker 1: twenty years, what am I going to need to pay 733 00:36:08,600 --> 00:36:11,600 Speaker 1: out of pocket to keep this thing inforced with the 734 00:36:11,719 --> 00:36:15,120 Speaker 1: current interest rates structure? And then run it a couple 735 00:36:15,120 --> 00:36:17,879 Speaker 1: different ways, what if interest rates go up, interest rates 736 00:36:17,960 --> 00:36:21,279 Speaker 1: go down. If you're in a variable policy where your 737 00:36:21,280 --> 00:36:23,720 Speaker 1: cash value is tied to the stock and bond market, 738 00:36:23,920 --> 00:36:26,120 Speaker 1: you want to look at some variable average rates of 739 00:36:26,160 --> 00:36:29,000 Speaker 1: return there too. What we don't want to have happen 740 00:36:29,480 --> 00:36:32,919 Speaker 1: is someone who really wants to keep life insurance into 741 00:36:32,960 --> 00:36:36,160 Speaker 1: their eighties or nineties wake up at AIDS seventy seven 742 00:36:36,320 --> 00:36:39,200 Speaker 1: seventy eight and realize their cash value is about to 743 00:36:39,239 --> 00:36:44,160 Speaker 1: go to zero, which means unless they start writing humongous checks, 744 00:36:44,480 --> 00:36:47,040 Speaker 1: their coverage is going to lapse. So those are a 745 00:36:47,080 --> 00:36:49,719 Speaker 1: couple things to factor in, you know, as you're doing 746 00:36:49,840 --> 00:36:53,719 Speaker 1: insurance reviews. I guess the third one would be, you know, 747 00:36:53,800 --> 00:36:57,359 Speaker 1: if we decide that the life insurance is really not 748 00:36:57,560 --> 00:37:01,120 Speaker 1: something that's suitable for your current financial plan, there's some 749 00:37:01,200 --> 00:37:03,640 Speaker 1: things that you can do with that coverage. You can 750 00:37:03,800 --> 00:37:07,880 Speaker 1: try to convert that into some long term care type 751 00:37:07,880 --> 00:37:11,520 Speaker 1: of coverage, maybe a hybrid approach, or you know, just 752 00:37:11,600 --> 00:37:14,920 Speaker 1: put it into you know, avoid the taxes, put it 753 00:37:14,960 --> 00:37:17,399 Speaker 1: into an annuity, turn it into an income stream. There's 754 00:37:17,440 --> 00:37:20,080 Speaker 1: a lot of options there. The important thing is to 755 00:37:20,160 --> 00:37:23,839 Speaker 1: sit down with a good fiduciary advisor, someone that's not 756 00:37:23,920 --> 00:37:26,680 Speaker 1: just trying to sell you the next insurance product, but 757 00:37:26,800 --> 00:37:31,520 Speaker 1: actually customize what you have into your current financial plan 758 00:37:31,640 --> 00:37:34,560 Speaker 1: based on your current needs. Yeah. I think you run 759 00:37:34,600 --> 00:37:36,040 Speaker 1: into this all the time too, Brian. 760 00:37:36,200 --> 00:37:39,040 Speaker 2: Yeah, my absolute favorite thing to do is when we 761 00:37:39,080 --> 00:37:42,239 Speaker 2: find a policy like this, where it was, and most 762 00:37:42,320 --> 00:37:45,000 Speaker 2: times it was, these things were purchased for good reason. Right, 763 00:37:45,040 --> 00:37:47,160 Speaker 2: we got babies, Now we got a mortgage, and we're 764 00:37:47,200 --> 00:37:49,120 Speaker 2: going to buy a whole life policy because that's what 765 00:37:49,280 --> 00:37:51,160 Speaker 2: is recommended to be a good idea. Now, now thirty 766 00:37:51,239 --> 00:37:53,799 Speaker 2: years have gone by, mortgages paid, the kids have their 767 00:37:53,800 --> 00:37:56,120 Speaker 2: own mortgages, and we just don't need this anymore. So 768 00:37:56,160 --> 00:37:58,560 Speaker 2: my absolute favorite thing is to redeploy that into something 769 00:37:58,560 --> 00:38:01,680 Speaker 2: that doesn't cost a nickel and tax, but now we'll 770 00:38:01,680 --> 00:38:04,239 Speaker 2: provide long term care benefits. That's like trading in your 771 00:38:04,280 --> 00:38:07,760 Speaker 2: old thirteen inch black and white TV for a sixty 772 00:38:07,840 --> 00:38:11,839 Speaker 2: inch led screen and not paying anything at all. You're 773 00:38:11,840 --> 00:38:14,359 Speaker 2: just redeploying those assets for a need you have now 774 00:38:14,440 --> 00:38:16,720 Speaker 2: and getting rid of that need you don't have anymore. 775 00:38:17,400 --> 00:38:19,600 Speaker 1: Yeah. So just again, make sure you sit down with 776 00:38:19,680 --> 00:38:22,799 Speaker 1: your advisor and talk about this stuff, because there might 777 00:38:22,840 --> 00:38:26,600 Speaker 1: be some better, more efficient uses for that capital that 778 00:38:26,640 --> 00:38:28,680 Speaker 1: you've worked so hard to build over the years. Thanks 779 00:38:28,719 --> 00:38:31,440 Speaker 1: for listening tonight. You've been listening to Simply Money, presented 780 00:38:31,440 --> 00:38:34,480 Speaker 1: by All with Financial on fifty five KRC, the talk 781 00:38:34,520 --> 00:38:34,800 Speaker 1: station