1 00:00:00,080 --> 00:00:06,240 Speaker 1: The talk station eight O six fifty five krosee the 2 00:00:06,400 --> 00:00:08,640 Speaker 1: talk station. It's Monday. That means it's time for money 3 00:00:08,640 --> 00:00:10,719 Speaker 1: Money with Brian James. Thanks to Allur Financial for one 4 00:00:10,800 --> 00:00:13,240 Speaker 1: and amount every Monday for a few segments Talk Bunny Issues. 5 00:00:13,280 --> 00:00:15,400 Speaker 1: Welcome back, Brian James, hope you had a wonderful weeknd 6 00:00:15,400 --> 00:00:15,760 Speaker 1: my friend. 7 00:00:15,920 --> 00:00:18,040 Speaker 2: Good morning, and welcome back to snow day weather. 8 00:00:18,079 --> 00:00:21,079 Speaker 1: Apparently man not too bad though, I mean, hell, isn't 9 00:00:21,079 --> 00:00:23,080 Speaker 1: it nice that we're not over in the East coast 10 00:00:23,480 --> 00:00:24,480 Speaker 1: two feet of snow? 11 00:00:24,840 --> 00:00:26,640 Speaker 2: That is true. I'm glad that that waited to move 12 00:00:26,640 --> 00:00:28,880 Speaker 2: a little bit further across the country before it dumped. 13 00:00:28,680 --> 00:00:29,800 Speaker 1: On no key kidding. 14 00:00:30,240 --> 00:00:32,200 Speaker 2: Yeah, I feel sorry for I just missed our sixty 15 00:00:32,200 --> 00:00:32,800 Speaker 2: degree days. 16 00:00:32,960 --> 00:00:35,760 Speaker 1: I do. It's coming fast enough, fifty two degrees on Wednesday, 17 00:00:35,840 --> 00:00:37,640 Speaker 1: so we're going in the right direction there. Maybe the 18 00:00:37,880 --> 00:00:40,480 Speaker 1: maple sap will start flowing again on my tapped maple 19 00:00:40,520 --> 00:00:42,960 Speaker 1: trees because the hit stopped there for a couple of days. 20 00:00:43,080 --> 00:00:44,599 Speaker 2: That's the indicator of spring right there. 21 00:00:44,640 --> 00:00:47,880 Speaker 1: I know. Oh my god, mape so good too, Brian, 22 00:00:48,000 --> 00:00:51,200 Speaker 1: Oh my god, the mapel syrup is wonderful. Anyway, something 23 00:00:51,600 --> 00:00:54,160 Speaker 1: got shot down in any the constitutional scholars that were 24 00:00:54,160 --> 00:00:56,040 Speaker 1: listening are looking at this. The ones who listened to 25 00:00:56,160 --> 00:00:59,640 Speaker 1: oral arguments for the Supreme Court pretty much all uniformly said, well, 26 00:00:59,840 --> 00:01:02,680 Speaker 1: don Trump's actions on tariffs are going to get shot 27 00:01:02,680 --> 00:01:04,560 Speaker 1: down as unconstitutional. Of course, they were a lot of 28 00:01:04,560 --> 00:01:07,039 Speaker 1: the major questions doctrine and said, listen, Congress did not 29 00:01:07,120 --> 00:01:12,240 Speaker 1: specifically authorize a president under the applicable law to levy 30 00:01:12,280 --> 00:01:15,080 Speaker 1: taxes or tariffs. It's not there. The absence of that 31 00:01:15,160 --> 00:01:17,520 Speaker 1: means it's a major question. They would have talked about it. 32 00:01:17,520 --> 00:01:18,840 Speaker 1: They would have put it in the language of the 33 00:01:18,880 --> 00:01:22,480 Speaker 1: statute had they intended it. Since it's not there, it's unconstitutional. 34 00:01:22,840 --> 00:01:24,520 Speaker 1: That is a good thing for a lot of people 35 00:01:24,520 --> 00:01:27,600 Speaker 1: who hate the regulatory state. That's that Major Questions decision 36 00:01:28,160 --> 00:01:31,520 Speaker 1: or from the West Virginia versus EPA. No, a tablespoon 37 00:01:31,560 --> 00:01:33,840 Speaker 1: of water is not a navigable river, and you can't 38 00:01:33,840 --> 00:01:35,920 Speaker 1: say it is, even though you want to. They didn't 39 00:01:35,920 --> 00:01:39,040 Speaker 1: give you the express authority to regulate bits of water 40 00:01:39,200 --> 00:01:41,920 Speaker 1: here and there. You need a specific authority. This is 41 00:01:41,920 --> 00:01:45,280 Speaker 1: the same kind of argument. So we should be rejoicing 42 00:01:45,280 --> 00:01:47,760 Speaker 1: in this on some level because it keeps the administrator 43 00:01:47,760 --> 00:01:50,920 Speaker 1: from administrative state from growing. But obviously it really shot 44 00:01:51,000 --> 00:01:54,200 Speaker 1: down a major pillar of Donald Trump's foreign policy, held 45 00:01:54,280 --> 00:01:56,880 Speaker 1: up by his ability to quickly enact or remove tariffs. 46 00:01:57,320 --> 00:02:00,520 Speaker 1: Now they're not there anymore. Brian, what does this mean, Well, what. 47 00:02:00,440 --> 00:02:03,280 Speaker 2: It means is more chaos. And what's interesting to me 48 00:02:03,640 --> 00:02:06,480 Speaker 2: is that the market is not reacting at all as 49 00:02:06,480 --> 00:02:08,400 Speaker 2: we're sitting here right now. Futures are down in about 50 00:02:08,400 --> 00:02:10,840 Speaker 2: a half a percent. Yeah, really kind of nothing. And 51 00:02:10,880 --> 00:02:14,320 Speaker 2: the thinking there is because tariffs are no longer shocked 52 00:02:14,320 --> 00:02:16,680 Speaker 2: tariffs and the chaos that come along with them. That 53 00:02:16,840 --> 00:02:19,760 Speaker 2: was last April when we first we first started going 54 00:02:19,800 --> 00:02:22,800 Speaker 2: down this path and levying tariffs on countries, and the 55 00:02:22,800 --> 00:02:26,919 Speaker 2: market dropped nearly twenty percent at that time. Ever since then, 56 00:02:26,960 --> 00:02:29,000 Speaker 2: the dust has kind of settled, the parties have sort 57 00:02:29,040 --> 00:02:31,520 Speaker 2: of kind of staked their opinions out, and it's all 58 00:02:31,560 --> 00:02:34,520 Speaker 2: known information. So more chaos coming out of the tariff 59 00:02:34,560 --> 00:02:36,280 Speaker 2: discussion is really not that big of a deal to 60 00:02:36,320 --> 00:02:37,959 Speaker 2: the market, because it had assumed it was going to 61 00:02:38,040 --> 00:02:41,360 Speaker 2: be there, you know, all the time until I don't know, 62 00:02:41,360 --> 00:02:44,640 Speaker 2: maybe until this administration shifts out or there's another viewpoint 63 00:02:44,720 --> 00:02:47,359 Speaker 2: or whatever. But it's not the initial cold water shock 64 00:02:47,400 --> 00:02:50,760 Speaker 2: that it was, and there has been no real concrete 65 00:02:50,840 --> 00:02:53,160 Speaker 2: here's what's going to happen next. All we have said 66 00:02:53,200 --> 00:02:55,960 Speaker 2: so far is that what has happened is unconstitutional, but 67 00:02:56,000 --> 00:02:58,400 Speaker 2: we haven't said that there going to be refunds. The 68 00:02:58,440 --> 00:03:00,200 Speaker 2: president has come out and said he does have the 69 00:03:00,240 --> 00:03:03,400 Speaker 2: power to enact these ten percent then wait, no, fifteen 70 00:03:03,400 --> 00:03:05,840 Speaker 2: percent tariffs that can last for one hundred and fifty 71 00:03:05,919 --> 00:03:07,440 Speaker 2: days under. 72 00:03:07,200 --> 00:03:09,280 Speaker 1: A completely set of a different set of laws. 73 00:03:09,560 --> 00:03:11,560 Speaker 2: Exactly, yeah, right, So he could have done this to 74 00:03:11,600 --> 00:03:13,519 Speaker 2: begin with. There wouldn't have been much the Congress could 75 00:03:13,520 --> 00:03:15,360 Speaker 2: have done, but the one hundred and fifty day limit 76 00:03:15,480 --> 00:03:17,720 Speaker 2: kind of limits the authority and the bite that that 77 00:03:17,720 --> 00:03:20,440 Speaker 2: would have. So you know, that's that's why the market's 78 00:03:20,480 --> 00:03:22,000 Speaker 2: ever reacted a whole heck of a lot, because we 79 00:03:22,000 --> 00:03:24,520 Speaker 2: don't know, the market doesn't like. It's always uncertainty that 80 00:03:24,520 --> 00:03:26,919 Speaker 2: the market doesn't like. That's where we're at right now. 81 00:03:26,960 --> 00:03:29,480 Speaker 2: Because there is no concrete can't do this, but you 82 00:03:29,560 --> 00:03:31,720 Speaker 2: must do that. All we have is can't do this. 83 00:03:32,280 --> 00:03:35,360 Speaker 1: Right, And you know this is I guess uncharted waters 84 00:03:35,600 --> 00:03:39,280 Speaker 1: because no president had ever asserted the ability to implement 85 00:03:39,320 --> 00:03:44,120 Speaker 1: tariffs based upon that particular law before that emergency powers declaration. 86 00:03:44,840 --> 00:03:47,280 Speaker 1: So we don't know what's going to happen with the 87 00:03:47,320 --> 00:03:49,400 Speaker 1: tariffs that have been lovied already exactly. 88 00:03:49,440 --> 00:03:50,920 Speaker 2: And that's you know, we have a lot there's a 89 00:03:51,000 --> 00:03:53,520 Speaker 2: lot of cases right now with this administration where we 90 00:03:53,560 --> 00:03:56,840 Speaker 2: all assume the Constitution said one thing, administration is going 91 00:03:56,840 --> 00:03:59,000 Speaker 2: in an entirely other direction based off of some kind 92 00:03:59,040 --> 00:04:02,040 Speaker 2: of different interpretation or maybe really no interpretation at all 93 00:04:02,120 --> 00:04:04,880 Speaker 2: sometimes of what's in the Constitution and just kind of 94 00:04:04,920 --> 00:04:07,160 Speaker 2: rolling the dice to see what happens. But that even 95 00:04:07,240 --> 00:04:10,040 Speaker 2: that itself is chaotic as that sounds that itself is 96 00:04:10,080 --> 00:04:12,800 Speaker 2: becoming the norm. Unfortunately. I don't love that. But the 97 00:04:12,800 --> 00:04:15,280 Speaker 2: market doesn't react to these things very passionately, and that's 98 00:04:15,480 --> 00:04:17,560 Speaker 2: that's not a bad thing. We're gonna wait and see 99 00:04:17,560 --> 00:04:18,400 Speaker 2: mode right now. 100 00:04:18,360 --> 00:04:22,080 Speaker 1: Right And I get Trump's wanting to use tariffs as 101 00:04:22,080 --> 00:04:25,479 Speaker 1: a lever to implement the foreign policy and negotiate treaties 102 00:04:25,560 --> 00:04:28,839 Speaker 1: or arrangement, financial rerangements, or otherwise with foreign countries. That 103 00:04:28,960 --> 00:04:33,400 Speaker 1: is within his power, but to within the constitutional framework, 104 00:04:33,440 --> 00:04:37,080 Speaker 1: as we now have confirmed by the court, Congress is 105 00:04:37,120 --> 00:04:40,880 Speaker 1: going to have to enact the tariffs if he threatens them, 106 00:04:40,880 --> 00:04:42,480 Speaker 1: they're gonna have to be willing to stand behind him 107 00:04:42,480 --> 00:04:43,640 Speaker 1: and do that. You know, they're going to have to 108 00:04:43,640 --> 00:04:45,480 Speaker 1: deliberate on her. That's I think one of the points 109 00:04:45,520 --> 00:04:48,080 Speaker 1: that you have to have. Congressional action to the deliberative 110 00:04:48,120 --> 00:04:51,200 Speaker 1: process is extremely important. Matter of fact that Gorsich even 111 00:04:51,240 --> 00:04:55,520 Speaker 1: pointed that out in his opinion. Deliberation tempers impulse and 112 00:04:55,600 --> 00:04:59,560 Speaker 1: compromise Hammer's disagreements into workable solutions. That has been suspiciously 113 00:04:59,640 --> 00:05:03,120 Speaker 1: absent and on anything with Congress for the last I 114 00:05:03,120 --> 00:05:04,760 Speaker 1: don't know, as long as Trump's been around, and they've 115 00:05:04,800 --> 00:05:07,760 Speaker 1: been struggling with Trump to arrangement system syndrome. They can't 116 00:05:07,800 --> 00:05:13,280 Speaker 1: agree on anything at all. That's the problem, I suppose, 117 00:05:13,400 --> 00:05:15,760 Speaker 1: as revealed the robmo of our constitution is revealed by 118 00:05:15,800 --> 00:05:18,000 Speaker 1: the current gridlock we face. You're not going to get 119 00:05:18,000 --> 00:05:21,840 Speaker 1: tariffs enacted with a very slim majority on either party. Therefore, 120 00:05:21,960 --> 00:05:24,800 Speaker 1: it's sort of a toothless gesture for Trump to threaten tariffs, 121 00:05:24,839 --> 00:05:27,719 Speaker 1: at least under the original structure, because Congress wasn't going 122 00:05:27,760 --> 00:05:28,360 Speaker 1: to back them up. 123 00:05:29,120 --> 00:05:31,880 Speaker 2: Yeah, And that's kind of the point, you know, because 124 00:05:31,920 --> 00:05:35,279 Speaker 2: these are things that can that can of course permanently 125 00:05:35,320 --> 00:05:37,600 Speaker 2: shift trade relations with a lot of the different countries 126 00:05:37,600 --> 00:05:40,760 Speaker 2: that we work with. And the slightly scary thing to 127 00:05:40,880 --> 00:05:43,720 Speaker 2: me is how the international markets have behaved over the 128 00:05:43,800 --> 00:05:45,640 Speaker 2: last couple of years through all of this. If you 129 00:05:45,680 --> 00:05:47,920 Speaker 2: don't have international stocks, and we've talked about this before, 130 00:05:47,920 --> 00:05:50,440 Speaker 2: but if you don't have international stocks in your portfolio 131 00:05:50,600 --> 00:05:52,640 Speaker 2: to some extent, right, we're not saying that the farm 132 00:05:52,680 --> 00:05:55,080 Speaker 2: on anything, you are missing an opportunity because there are 133 00:05:55,160 --> 00:05:58,839 Speaker 2: relationships being forged that probably would not have been explored 134 00:05:58,920 --> 00:06:01,560 Speaker 2: but for these tariffs. Right, So other countries are saying, 135 00:06:01,560 --> 00:06:03,640 Speaker 2: you know, if it's going to be this difficult to 136 00:06:03,680 --> 00:06:06,040 Speaker 2: do business with the United States, then let's figure out 137 00:06:06,040 --> 00:06:07,920 Speaker 2: if there are any other resources that we can tap 138 00:06:07,960 --> 00:06:11,160 Speaker 2: into for these different supplies and whatever that we need. 139 00:06:11,480 --> 00:06:14,280 Speaker 2: And those are those relationships are starting to take root, 140 00:06:14,480 --> 00:06:16,359 Speaker 2: and we're starting to see that in the international markets 141 00:06:16,400 --> 00:06:19,360 Speaker 2: they are outperforming the US markets by far these last 142 00:06:19,400 --> 00:06:22,320 Speaker 2: couple of years. So hopefully that's a temporary thing. But 143 00:06:22,360 --> 00:06:24,200 Speaker 2: at the end of the day, if we continue to 144 00:06:25,320 --> 00:06:27,520 Speaker 2: the longer we push this out and the longer we 145 00:06:27,560 --> 00:06:30,039 Speaker 2: want to smack our customers around, then that's probably going 146 00:06:30,080 --> 00:06:33,000 Speaker 2: to have a much more permanent taking of route than 147 00:06:33,040 --> 00:06:35,719 Speaker 2: we might prefer. I don't know that these other countries 148 00:06:35,720 --> 00:06:37,520 Speaker 2: are necessarily going to line up to do business in 149 00:06:37,560 --> 00:06:39,400 Speaker 2: the United States when the dust settles and we finally 150 00:06:39,400 --> 00:06:41,080 Speaker 2: have a clear trade policy out there. 151 00:06:41,240 --> 00:06:44,280 Speaker 1: Well, I guess curious, like on a post mortem basis, 152 00:06:44,320 --> 00:06:47,960 Speaker 1: since that particular, those particular, that particular avenue of tariffs 153 00:06:48,000 --> 00:06:50,880 Speaker 1: has been foreclosed by the Supreme Court, do we ever 154 00:06:50,960 --> 00:06:53,719 Speaker 1: do we know right now as we sit here reflecting 155 00:06:53,760 --> 00:06:56,200 Speaker 1: back on the tariffs, who actually ultimately paid them? Was 156 00:06:56,240 --> 00:06:58,520 Speaker 1: this something that you and I shoulder of the burden on? 157 00:06:58,640 --> 00:07:01,159 Speaker 1: Is this part of the inflationary reality or did we 158 00:07:01,160 --> 00:07:02,800 Speaker 1: listen to the other side of the argument, which is no, 159 00:07:02,920 --> 00:07:04,440 Speaker 1: the other countries ended up paying it. We got a 160 00:07:04,480 --> 00:07:07,240 Speaker 1: much better deal overall because the tariffs were in place. 161 00:07:07,960 --> 00:07:10,440 Speaker 2: I don't see how the vast majority have not been 162 00:07:10,480 --> 00:07:12,920 Speaker 2: paid by the by the American consumer, because if you 163 00:07:12,920 --> 00:07:14,280 Speaker 2: think about how it works, if I'm going to go 164 00:07:14,280 --> 00:07:17,560 Speaker 2: buy something from Costco, Costco has to then they're going 165 00:07:17,640 --> 00:07:20,520 Speaker 2: to import some you know, box fans or something like that. Well, 166 00:07:20,520 --> 00:07:24,400 Speaker 2: all that stuff is made overseas, and the tariff is 167 00:07:23,840 --> 00:07:27,440 Speaker 2: is imposed when the stuff hits the shore. That's on 168 00:07:27,520 --> 00:07:29,360 Speaker 2: cost Co's end of it. Costco is either going to 169 00:07:29,440 --> 00:07:31,080 Speaker 2: eat it or they're gonna pass it along in the 170 00:07:31,120 --> 00:07:33,920 Speaker 2: form of pricing. And I'm mentioning Costco specifically because they 171 00:07:33,920 --> 00:07:36,400 Speaker 2: were among the very very very very very first to 172 00:07:36,480 --> 00:07:40,400 Speaker 2: file the paperwork for potential refunds when this first came up, 173 00:07:40,440 --> 00:07:43,360 Speaker 2: because of their opinion is that this isn't gonna hold water. 174 00:07:43,560 --> 00:07:45,400 Speaker 2: It's gonna all come apart. Let's be at the front 175 00:07:45,400 --> 00:07:49,280 Speaker 2: of the line. So I cannot believe that most of 176 00:07:49,320 --> 00:07:51,520 Speaker 2: these have not been paid ultimately by the American consumer, 177 00:07:51,560 --> 00:07:53,960 Speaker 2: because that's just how the math works. The prices get 178 00:07:54,000 --> 00:07:56,600 Speaker 2: increased along the way as the suppliers get what they 179 00:07:56,640 --> 00:07:58,400 Speaker 2: need in order to deliver to the consumer. 180 00:07:58,640 --> 00:08:01,200 Speaker 1: Yeah, obviously all this brought about globalization, which has been 181 00:08:01,200 --> 00:08:03,240 Speaker 1: going on for decades and decades. I mean, this is 182 00:08:03,360 --> 00:08:06,120 Speaker 1: I think fundamentally a use tax. You know, if you 183 00:08:06,160 --> 00:08:09,360 Speaker 1: want to buy foreign goods, then go ahead, You're gonna 184 00:08:09,360 --> 00:08:11,160 Speaker 1: pay more for them. You're gonna pay more because you 185 00:08:11,200 --> 00:08:14,400 Speaker 1: went with a foreign company. Choose the American alternative, which 186 00:08:14,440 --> 00:08:16,720 Speaker 1: is not gonna go along with this extra tax you're 187 00:08:16,720 --> 00:08:21,160 Speaker 1: paying because the tariff problem is there probably isn't a 188 00:08:21,280 --> 00:08:26,000 Speaker 1: US made product, right, That wasn't in the brochure about 189 00:08:26,000 --> 00:08:28,400 Speaker 1: tara If the longer term strategy that you want to 190 00:08:28,440 --> 00:08:30,160 Speaker 1: have bring up brought about at least a lot of 191 00:08:30,160 --> 00:08:33,000 Speaker 1: people are trying to achieve that dejective reshore if the 192 00:08:33,080 --> 00:08:35,920 Speaker 1: manufacturing into the United States to give us these tiff 193 00:08:35,960 --> 00:08:39,360 Speaker 1: free alternatives. Sadly, that just that that infrastructure isn't in place, 194 00:08:39,800 --> 00:08:41,439 Speaker 1: because it's kind of like you can make a parallel 195 00:08:41,480 --> 00:08:44,320 Speaker 1: to the grid situation electric electric electric. Yeah, but we 196 00:08:44,360 --> 00:08:48,679 Speaker 1: don't have the grid to support the electric That's an 197 00:08:48,679 --> 00:08:51,920 Speaker 1: important detail, right, Yeah, extremely important detail. Brian James. 198 00:08:52,320 --> 00:08:54,680 Speaker 2: It's it's one thing to show the outline of if 199 00:08:54,679 --> 00:08:57,280 Speaker 2: we impose tariffs, then down the road jobs will magically 200 00:08:57,320 --> 00:08:59,960 Speaker 2: appear onshore here in the United States, but it's another 201 00:09:00,120 --> 00:09:02,680 Speaker 2: thing entirely for that to actually occur. So, yeah, there 202 00:09:02,760 --> 00:09:06,439 Speaker 2: have been some example since twenty twe US manufacturing construction 203 00:09:06,520 --> 00:09:09,839 Speaker 2: spending is more than doubled, just driven by these semiconductors, 204 00:09:10,040 --> 00:09:12,760 Speaker 2: EV's batteries, those kinds of things. Tariffs were part of that, 205 00:09:12,800 --> 00:09:15,880 Speaker 2: but also industrial policy, the old Chips Act, Inflation Reduction 206 00:09:15,920 --> 00:09:19,160 Speaker 2: Act that helped as well, but that has not spread that. 207 00:09:19,160 --> 00:09:21,920 Speaker 2: That's the clearest example where we can say of the 208 00:09:21,960 --> 00:09:25,880 Speaker 2: impact of tariff's. Manufacturing jobs though have not structurally exploded, 209 00:09:26,360 --> 00:09:29,440 Speaker 2: we haven't seen employment, and manufacturing employment is higher than 210 00:09:29,480 --> 00:09:32,320 Speaker 2: pre pandemic levels, but it's still well below the late nineties. 211 00:09:32,559 --> 00:09:35,800 Speaker 2: Automations starting offset these labor gains, and a lot of 212 00:09:35,840 --> 00:09:39,400 Speaker 2: reshort facilities are really highly automated and not creating as 213 00:09:39,440 --> 00:09:43,680 Speaker 2: many jobs, So we're not seeing this impact yet. Maybe 214 00:09:43,679 --> 00:09:47,040 Speaker 2: fingers crossed the state the stay optimistic, but we are 215 00:09:47,040 --> 00:09:49,880 Speaker 2: not yet seeing identical impact of job creation, which is 216 00:09:49,880 --> 00:09:52,000 Speaker 2: supposedly what all this was about. If we make it 217 00:09:52,040 --> 00:09:54,360 Speaker 2: expensive to drag stuff on shore so we can buy it, 218 00:09:54,600 --> 00:09:58,320 Speaker 2: that will encourage companies to create things here. But I 219 00:09:58,320 --> 00:10:00,800 Speaker 2: think that assumes that labor costs and all these other 220 00:10:00,840 --> 00:10:02,240 Speaker 2: things that we have to do in the United States 221 00:10:02,280 --> 00:10:04,960 Speaker 2: are exactly the same as everywhere else. Businesses are not 222 00:10:05,040 --> 00:10:08,439 Speaker 2: seeing the profit opportunity unfortunately that that this administration thinks 223 00:10:08,559 --> 00:10:09,040 Speaker 2: is out there. 224 00:10:09,200 --> 00:10:11,560 Speaker 1: Brian James will continue and this is a puzzle to me. 225 00:10:11,840 --> 00:10:16,199 Speaker 1: No idea in next subject matter, democratizing access to alternative 226 00:10:16,280 --> 00:10:19,280 Speaker 1: assets for four oh one K investors, there's a mouthful. 227 00:10:19,400 --> 00:10:21,960 Speaker 1: It's a, I guess an executive order. Brian James gonna 228 00:10:21,960 --> 00:10:25,840 Speaker 1: explain that to us coming to talk station, Hey nineteen 229 00:10:25,840 --> 00:10:29,840 Speaker 1: ifif about their ceed talk station all with financials Brian 230 00:10:29,960 --> 00:10:32,600 Speaker 1: James every Monday for money, money to getting at eighty 231 00:10:32,800 --> 00:10:34,880 Speaker 1: five get it for a few segments and pivoting over 232 00:10:34,920 --> 00:10:36,199 Speaker 1: to all right, we're gonna have to find out what 233 00:10:36,240 --> 00:10:41,400 Speaker 1: an alternative asset is. But executive order characterizes democratizing access 234 00:10:41,440 --> 00:10:44,440 Speaker 1: to alternative assets for four to one K investors. This 235 00:10:44,520 --> 00:10:47,400 Speaker 1: sounds like expanding opportunities for investment. Brian James. 236 00:10:47,559 --> 00:10:49,839 Speaker 2: Yeah, Now this isn't new news. We talked about this 237 00:10:49,960 --> 00:10:53,440 Speaker 2: last summer. We're at a second step of this. Really 238 00:10:53,440 --> 00:10:55,120 Speaker 2: the executive order, and that's the thing we sent you 239 00:10:55,240 --> 00:10:58,719 Speaker 2: this morning, the executive orders from August seventh, and basically 240 00:10:58,920 --> 00:11:01,480 Speaker 2: that made it poly see that four oh one K 241 00:11:01,640 --> 00:11:04,280 Speaker 2: and other defined contribution plans. This is an important word, 242 00:11:04,559 --> 00:11:08,000 Speaker 2: should be allowed to include alternative assets if the plan 243 00:11:08,080 --> 00:11:11,280 Speaker 2: fiduciaries decide that that's an appropriate thing for that specific plan. 244 00:11:11,480 --> 00:11:15,400 Speaker 2: Plan fiduciaries. Those people exist in each and every company. 245 00:11:15,440 --> 00:11:19,000 Speaker 2: This is an individual employer decision. This isn't a you know, 246 00:11:19,040 --> 00:11:21,600 Speaker 2: the the United States government cannot force plans to offer this. 247 00:11:21,840 --> 00:11:24,520 Speaker 2: That's why we use the word should, But anyway, that's 248 00:11:24,559 --> 00:11:28,440 Speaker 2: not news. What we're talking about here is the where 249 00:11:28,480 --> 00:11:30,840 Speaker 2: we are within the timeframe. So we are now at 250 00:11:30,880 --> 00:11:34,800 Speaker 2: one hundred and eighty days past the initial announcement. Yeah, 251 00:11:34,880 --> 00:11:39,360 Speaker 2: exactly what was required the executive order was that within 252 00:11:39,360 --> 00:11:41,360 Speaker 2: one hundred and eighty days the Department of Labor should 253 00:11:41,400 --> 00:11:44,680 Speaker 2: re examine and clarify fiduciary duty guidance for again for 254 00:11:44,720 --> 00:11:49,360 Speaker 2: those individual employers under the ARISA Act, and and propose 255 00:11:49,679 --> 00:11:54,280 Speaker 2: rules and guidance, including some safe harbors, basically saying here's 256 00:11:54,360 --> 00:11:56,640 Speaker 2: what you can and cannot do with these things. And 257 00:11:56,679 --> 00:11:58,280 Speaker 2: so we are at the point where we've got the 258 00:11:58,280 --> 00:11:59,760 Speaker 2: first proposal. By the way, I think we kind of 259 00:11:59,760 --> 00:12:02,960 Speaker 2: got over we're talking about alternative assets. These are private 260 00:12:02,960 --> 00:12:06,120 Speaker 2: market investments. That's as opposed to public public means stocks 261 00:12:06,120 --> 00:12:09,640 Speaker 2: and mutual funds. Private market investments are literally the purchasing 262 00:12:09,760 --> 00:12:15,760 Speaker 2: of individual standalone companies as an investment, real estate, real 263 00:12:15,840 --> 00:12:18,880 Speaker 2: estate debt, as well, commodities, just different things beyond your 264 00:12:18,880 --> 00:12:21,840 Speaker 2: standard index based investments. So we're at the point now 265 00:12:21,880 --> 00:12:24,959 Speaker 2: where that guidance is being released. 266 00:12:26,000 --> 00:12:28,440 Speaker 1: How does one go, I mean complicated as it is, 267 00:12:28,440 --> 00:12:30,480 Speaker 1: at least from my perspective. Brian James. This is out 268 00:12:30,480 --> 00:12:33,120 Speaker 1: of my element, I'll admit. But how does one acquire 269 00:12:33,120 --> 00:12:35,560 Speaker 1: if it's not a stock you're buying, How does an 270 00:12:35,640 --> 00:12:38,400 Speaker 1: individual like you or myself, or anybody else for that matter, 271 00:12:38,480 --> 00:12:41,240 Speaker 1: acquire part of a company? 272 00:12:41,720 --> 00:12:44,880 Speaker 2: Sure it is. It is simpler and more complicated than 273 00:12:44,920 --> 00:12:47,480 Speaker 2: you might think. So if you're driving up and down 274 00:12:47,480 --> 00:12:49,440 Speaker 2: the street and you see that that little vet clinic, 275 00:12:49,559 --> 00:12:52,280 Speaker 2: or maybe that HVAC repair man that's been in that 276 00:12:52,320 --> 00:12:54,760 Speaker 2: little house forever, now all of a sudden has a 277 00:12:54,800 --> 00:12:57,160 Speaker 2: flashy new sign and then some kind of marketing campaign 278 00:12:57,160 --> 00:12:59,800 Speaker 2: that goes with it. That very frequently means that there's 279 00:12:59,800 --> 00:13:02,880 Speaker 2: a private equity investor behind that private equity is simply 280 00:13:03,080 --> 00:13:05,760 Speaker 2: a gigantic pile of money that comes in and buys 281 00:13:05,800 --> 00:13:09,320 Speaker 2: up little businesses and knits them together for the purposes 282 00:13:09,320 --> 00:13:12,320 Speaker 2: of economies of scale serve. For example, maybe that HVAC 283 00:13:12,520 --> 00:13:14,960 Speaker 2: repairman needs a lot of supplies and things. Well, you 284 00:13:15,000 --> 00:13:17,560 Speaker 2: could buy ten of those different little tiny companies and 285 00:13:17,600 --> 00:13:20,960 Speaker 2: then begin to negotiate different contracts with the suppliers for 286 00:13:21,000 --> 00:13:22,920 Speaker 2: the sheet metal and all the other stuff. And get 287 00:13:22,920 --> 00:13:25,280 Speaker 2: a better deal. That's just the American way. That's business 288 00:13:25,440 --> 00:13:27,439 Speaker 2: becoming more efficient in increasing profit. 289 00:13:27,520 --> 00:13:30,560 Speaker 1: Now that's a private company, not a publicly traded company. 290 00:13:30,640 --> 00:13:33,520 Speaker 1: So once you are, we're there. We appreciate the concept 291 00:13:33,559 --> 00:13:36,480 Speaker 1: you're talking about. So the buying of a share or 292 00:13:36,520 --> 00:13:38,240 Speaker 1: a part of that business in order to reap the 293 00:13:38,240 --> 00:13:40,000 Speaker 1: benefits of their profit. How does that happen? 294 00:13:40,160 --> 00:13:42,520 Speaker 2: Correct? Now that that's what we're talking about. So these 295 00:13:42,559 --> 00:13:46,640 Speaker 2: remain private investments, right, there's still these aren't public traded publicly. 296 00:13:46,880 --> 00:13:49,319 Speaker 2: These are partnerships that exist no different than you and 297 00:13:49,360 --> 00:13:52,040 Speaker 2: your neighbor could get together and create a partnership and 298 00:13:52,120 --> 00:13:54,720 Speaker 2: go buy these little companies. That's all this is, but 299 00:13:54,760 --> 00:13:56,960 Speaker 2: it's being offered. It's almost sort of in a gray 300 00:13:57,040 --> 00:14:00,400 Speaker 2: area that the grouping of those companies is of being 301 00:14:00,400 --> 00:14:03,640 Speaker 2: made public. And that's really a convoluted way to explain it. 302 00:14:03,679 --> 00:14:06,840 Speaker 2: But basically grouping these together and marketing them and inviting 303 00:14:07,240 --> 00:14:10,400 Speaker 2: larger piles of money. Remember there's twelve trillion dollars out 304 00:14:10,440 --> 00:14:12,640 Speaker 2: there in the four oh one K, four h three 305 00:14:12,679 --> 00:14:15,920 Speaker 2: B space. Of course these different investment groups would like 306 00:14:15,960 --> 00:14:18,240 Speaker 2: to get access to those funds. That's the same thing 307 00:14:18,280 --> 00:14:20,720 Speaker 2: that drove the stock market from the late seventies when 308 00:14:20,760 --> 00:14:23,200 Speaker 2: the four oh one K was first invented and permitted 309 00:14:23,200 --> 00:14:26,080 Speaker 2: to invest in the equities markets, when pensions were eliminated 310 00:14:26,120 --> 00:14:28,520 Speaker 2: and there was an enormous amount of interest with in Okay, 311 00:14:28,520 --> 00:14:30,240 Speaker 2: if I don't have a pension, then I need to 312 00:14:30,240 --> 00:14:32,280 Speaker 2: do something to grow my money. And that's where the 313 00:14:32,960 --> 00:14:36,400 Speaker 2: fifty years stock market boom largely stemmed from that we've 314 00:14:36,400 --> 00:14:38,720 Speaker 2: been in this is just another iteration of that. So 315 00:14:38,760 --> 00:14:41,520 Speaker 2: now we're taking these retirement dollars and we are allowing 316 00:14:41,560 --> 00:14:44,480 Speaker 2: them to basically go purchase that teeny tiny little bakery 317 00:14:44,520 --> 00:14:46,960 Speaker 2: down the road that might be, you know, providing a 318 00:14:47,000 --> 00:14:50,080 Speaker 2: decent profit margin, basically saying that yes, you are permitted 319 00:14:50,120 --> 00:14:52,200 Speaker 2: to invest in other things beyond the P and g's 320 00:14:52,240 --> 00:14:53,960 Speaker 2: and the facebooks and the apples of the world. 321 00:14:54,240 --> 00:14:57,120 Speaker 1: How is your new How is your ownership interest expressed 322 00:14:57,120 --> 00:14:58,920 Speaker 1: as in the form of a contract as opposed to 323 00:14:59,000 --> 00:15:01,720 Speaker 1: a share, Like I want a slice of that action, 324 00:15:01,840 --> 00:15:03,200 Speaker 1: I'm going to have to enter into some sort of 325 00:15:03,200 --> 00:15:05,760 Speaker 1: agreement so I know that I'm entitled to get whatever 326 00:15:05,840 --> 00:15:07,720 Speaker 1: percentage of profits that they turn. 327 00:15:07,960 --> 00:15:10,040 Speaker 2: Oh sure, So I think there's two different questions there 328 00:15:10,040 --> 00:15:12,480 Speaker 2: are two different conversations we're having here. To answer your 329 00:15:12,520 --> 00:15:15,440 Speaker 2: question directly, this would be something where you're literally sitting 330 00:15:15,480 --> 00:15:17,760 Speaker 2: down and you are signing a contract that you are 331 00:15:17,800 --> 00:15:21,640 Speaker 2: purchasing a percentage share of a partnership. Right, that's pure 332 00:15:21,720 --> 00:15:24,240 Speaker 2: private equity. That's just two people getting together saying, Hey, 333 00:15:24,280 --> 00:15:25,960 Speaker 2: I have a thing. I want to buy a chunk 334 00:15:25,960 --> 00:15:28,120 Speaker 2: of that thing. What this is doing and it's right 335 00:15:28,120 --> 00:15:29,560 Speaker 2: there in the name of the thing the White House 336 00:15:29,600 --> 00:15:33,400 Speaker 2: released democratizing four oh one K investments. This is putting 337 00:15:33,440 --> 00:15:35,320 Speaker 2: it in a format where you won't be jumping through 338 00:15:35,360 --> 00:15:37,880 Speaker 2: the hoops, you won't be signing those contracts because there's 339 00:15:37,920 --> 00:15:40,520 Speaker 2: a middleman who has done it for you. Exact same 340 00:15:40,560 --> 00:15:43,560 Speaker 2: structure is when people first learned about mutual funds at 341 00:15:43,560 --> 00:15:45,720 Speaker 2: a wide scale in the sixties and seventies. You're not 342 00:15:45,760 --> 00:15:48,120 Speaker 2: buying individual stocks, You're buying something that will do it 343 00:15:48,160 --> 00:15:51,080 Speaker 2: for you. That's the same structure. But right now there's 344 00:15:51,080 --> 00:15:54,000 Speaker 2: no legal infrastructure in place. That's the discussion we're having 345 00:15:54,040 --> 00:15:55,920 Speaker 2: right now, how do you actually make this happen? 346 00:15:55,960 --> 00:15:57,600 Speaker 1: And the person that would make that happen would be 347 00:15:57,640 --> 00:16:00,960 Speaker 1: the planed fiduciary plan fiduciary. 348 00:16:01,000 --> 00:16:04,080 Speaker 2: That's somebody who generally works for or or or supports 349 00:16:04,160 --> 00:16:07,160 Speaker 2: your employer. Uh, you know, this could be your your 350 00:16:07,160 --> 00:16:08,840 Speaker 2: your company might have like a four to oh one 351 00:16:08,880 --> 00:16:12,200 Speaker 2: k discussion group or a four oh one k fiducial group, whatever, 352 00:16:12,400 --> 00:16:16,040 Speaker 2: investment committee, and they're the ones who decide, we will 353 00:16:16,040 --> 00:16:18,520 Speaker 2: offer this mutual fund but not that one. And they'll 354 00:16:18,560 --> 00:16:21,080 Speaker 2: soon be discussing we will offer this private equity solution, 355 00:16:21,280 --> 00:16:24,200 Speaker 2: or this this private debt solution, not that one. Those 356 00:16:24,240 --> 00:16:27,440 Speaker 2: are people who purely support your company in making those decisions. 357 00:16:27,760 --> 00:16:30,880 Speaker 2: Guess who's behind the construction of all of these different partnerships, 358 00:16:31,240 --> 00:16:34,320 Speaker 2: all the major financial institutions, So make make no bones 359 00:16:34,360 --> 00:16:36,200 Speaker 2: about it. That's where this is coming from. This is 360 00:16:36,240 --> 00:16:40,040 Speaker 2: an opportunity for big financial institutions to tap into a 361 00:16:40,080 --> 00:16:42,080 Speaker 2: pile of money to which they have not had access 362 00:16:42,120 --> 00:16:44,720 Speaker 2: before for these types of alternative assets. 363 00:16:44,760 --> 00:16:47,320 Speaker 1: And they'll presumably then be doing uh what. 364 00:16:47,360 --> 00:16:50,080 Speaker 2: Hanging money, charge charging, charging admission. 365 00:16:50,400 --> 00:16:52,720 Speaker 1: That's right, all that comes down to because this clearly 366 00:16:52,760 --> 00:16:54,400 Speaker 1: is going to result in more work to be done. 367 00:16:54,600 --> 00:16:57,560 Speaker 2: Oh, of course absolutely. I don't think it's necessarily a 368 00:16:57,600 --> 00:16:59,600 Speaker 2: bad thing. I mean, private equity is not a new 369 00:16:59,640 --> 00:17:02,120 Speaker 2: investment and class at all. It's been around for you know, 370 00:17:02,280 --> 00:17:05,840 Speaker 2: for centuries. Really, it's just not relying on a public 371 00:17:05,840 --> 00:17:08,040 Speaker 2: market to introduce the buyer to the seller. That's all 372 00:17:08,080 --> 00:17:10,680 Speaker 2: it is. But that's that's where the bridge is being 373 00:17:11,160 --> 00:17:15,000 Speaker 2: built between to provide easier access to the end investor, 374 00:17:15,160 --> 00:17:18,880 Speaker 2: which nowadays can be your average consumer, your average four 375 00:17:18,880 --> 00:17:21,280 Speaker 2: to one K participant, versus somebody who just has a 376 00:17:21,320 --> 00:17:23,240 Speaker 2: gigantic pile of money and can afford to buy these 377 00:17:23,240 --> 00:17:24,240 Speaker 2: little companies on their own. 378 00:17:24,560 --> 00:17:27,879 Speaker 1: Well, might a poor fiduciary suggestion. In other words, Yeah, this 379 00:17:27,920 --> 00:17:29,439 Speaker 1: is a great idea, We're going to open it up 380 00:17:29,440 --> 00:17:31,720 Speaker 1: for your investments. And that didn't work out real well. 381 00:17:33,119 --> 00:17:35,880 Speaker 1: Will there analysis along the fiduciary lines, and whether it's 382 00:17:35,880 --> 00:17:38,160 Speaker 1: an appropriate investment or not be challenged later in court 383 00:17:38,200 --> 00:17:40,520 Speaker 1: to the extent somebody loses a whole bunch of money. 384 00:17:40,320 --> 00:17:43,240 Speaker 2: Oh absolutely, And that's what the fiduciary is there to do. 385 00:17:43,280 --> 00:17:45,280 Speaker 2: They're the ones who make the decision. So a lot 386 00:17:45,320 --> 00:17:47,520 Speaker 2: of people don't know this, but your employer takes a 387 00:17:47,560 --> 00:17:50,240 Speaker 2: fiduciary role by purely offering a four to one K 388 00:17:50,320 --> 00:17:53,280 Speaker 2: to begin with. So, and that means your company can 389 00:17:53,320 --> 00:17:55,359 Speaker 2: be exposed. Maybe you make widgets and they roll down 390 00:17:55,400 --> 00:17:58,760 Speaker 2: a conveyor belt that's the primary profit driver for the business. Well, 391 00:17:58,760 --> 00:18:01,399 Speaker 2: they have to have this little side entity that worries 392 00:18:01,440 --> 00:18:03,600 Speaker 2: about whether they are making the right decisions for their 393 00:18:03,640 --> 00:18:06,840 Speaker 2: employees or not. They're exposed there too, just as much 394 00:18:06,840 --> 00:18:09,159 Speaker 2: as they are exposed if their widgets, you know, do 395 00:18:09,280 --> 00:18:11,520 Speaker 2: some damage to somebody. So this is not going to 396 00:18:11,560 --> 00:18:13,360 Speaker 2: be a quick thing. The rules and all that aren't 397 00:18:13,400 --> 00:18:15,280 Speaker 2: even out there. Really, the reason we're talking about it 398 00:18:15,320 --> 00:18:18,640 Speaker 2: today is because we've got the first iteration of that guidance. 399 00:18:18,680 --> 00:18:21,199 Speaker 2: It's going to change a lot. So don't look at 400 00:18:21,200 --> 00:18:23,040 Speaker 2: your four to one k right now for these for 401 00:18:23,080 --> 00:18:25,720 Speaker 2: these options, they're not there yet. The guidance is going 402 00:18:25,800 --> 00:18:27,840 Speaker 2: to have to come out and your investment committee of 403 00:18:27,880 --> 00:18:30,080 Speaker 2: your employer is going to have to decide that, yes, 404 00:18:30,119 --> 00:18:32,159 Speaker 2: this is a good thing we should offer our employees. 405 00:18:32,240 --> 00:18:34,040 Speaker 2: So something to pay attention to. But it's still a 406 00:18:34,080 --> 00:18:34,800 Speaker 2: bit on the horizon. 407 00:18:34,840 --> 00:18:36,720 Speaker 1: Well, we do like options out here in the world, 408 00:18:36,760 --> 00:18:39,200 Speaker 1: and apparently Blackrock has also confirmed that we're going to 409 00:18:39,240 --> 00:18:42,439 Speaker 1: be talking about the black Rock Retirement survey with Brian James. 410 00:18:42,480 --> 00:18:46,399 Speaker 1: Don't go away. This was your Week, Reverend Jesse Jackson 411 00:18:47,080 --> 00:18:50,080 Speaker 1: get bit. Yeah, it's a thirty fifty five kir CD 412 00:18:50,240 --> 00:18:52,760 Speaker 1: talk station Money Money with Brian James. One more segment 413 00:18:52,800 --> 00:18:56,320 Speaker 1: here with Brian. Apparently American investors like choice, at least 414 00:18:56,320 --> 00:19:00,640 Speaker 1: that's what the Blackrock Retirement survey suggests from my cursory 415 00:19:01,240 --> 00:19:02,520 Speaker 1: reading of it. Brian James. 416 00:19:02,920 --> 00:19:04,919 Speaker 2: Yeah, So this is coming from a black Rock survey 417 00:19:04,920 --> 00:19:06,800 Speaker 2: that was conducted not long ago, right at the end 418 00:19:06,800 --> 00:19:10,680 Speaker 2: of January, and go figure. Americans want broader retirement tools. 419 00:19:11,400 --> 00:19:14,080 Speaker 2: Another not earth shattering our conclusion from this is that 420 00:19:14,160 --> 00:19:16,920 Speaker 2: people aren't financially prepared. I think we know that we 421 00:19:17,000 --> 00:19:19,560 Speaker 2: want we want to ask that question every every six 422 00:19:19,560 --> 00:19:21,680 Speaker 2: months or so, just to make sure everybody feels that 423 00:19:21,760 --> 00:19:24,080 Speaker 2: there's a train, you know, still closing down on them. 424 00:19:24,160 --> 00:19:26,080 Speaker 2: But in any case, so some of the questions they 425 00:19:26,119 --> 00:19:29,439 Speaker 2: asked about about two thirds of US registered voters support 426 00:19:29,520 --> 00:19:33,000 Speaker 2: expanding retirement plan options to include private market assets. And 427 00:19:33,040 --> 00:19:35,000 Speaker 2: this goes back to what we were just talking about, right, 428 00:19:35,640 --> 00:19:37,399 Speaker 2: you know that that that is starting to happen, The 429 00:19:37,440 --> 00:19:40,600 Speaker 2: discussions are happening out there to allow for that, you know, 430 00:19:40,680 --> 00:19:43,360 Speaker 2: and that same two thirds that say that retirement plan 431 00:19:43,400 --> 00:19:47,040 Speaker 2: should have equal access to investment options. Whether their government, nonprofit, 432 00:19:47,119 --> 00:19:49,480 Speaker 2: or corporate doesn't really matter. The interesting part of this 433 00:19:49,520 --> 00:19:52,560 Speaker 2: is this is bipartisan, So about two two thirds of everybody, 434 00:19:52,560 --> 00:19:54,920 Speaker 2: two thirds of Republicans, two thirds of Independents, and two 435 00:19:54,920 --> 00:19:57,639 Speaker 2: thirds of Democrats all agree that this is a good idea. 436 00:19:58,119 --> 00:20:00,280 Speaker 2: So so I think this is just a conclude usion 437 00:20:00,480 --> 00:20:02,520 Speaker 2: where we can say, yes, people are looking at what 438 00:20:02,560 --> 00:20:04,959 Speaker 2: their options are there understanding that the market has kind 439 00:20:05,000 --> 00:20:06,360 Speaker 2: of moved and there's different things out there. 440 00:20:06,440 --> 00:20:08,560 Speaker 1: Well, you mentioned in context of the last second with 441 00:20:08,880 --> 00:20:12,200 Speaker 1: alternative asset investment, that the plan fiduciary would be the 442 00:20:12,240 --> 00:20:14,600 Speaker 1: one responsible for determining whether or not they would allow 443 00:20:15,080 --> 00:20:18,119 Speaker 1: investment any to give an alternative asset. But you know, 444 00:20:18,200 --> 00:20:20,280 Speaker 1: I read something which is of course in the black 445 00:20:20,359 --> 00:20:23,320 Speaker 1: Rock survey, for example, a certain pensions plans for government 446 00:20:23,320 --> 00:20:26,320 Speaker 1: workers invest in options not available to plans provided to 447 00:20:26,359 --> 00:20:29,639 Speaker 1: employees through for profit or non for profit companies. When 448 00:20:29,680 --> 00:20:31,720 Speaker 1: I read something like that, it just makes me wonder, well, 449 00:20:31,720 --> 00:20:34,040 Speaker 1: how do we end up with a system where some 450 00:20:34,240 --> 00:20:37,760 Speaker 1: can and some can't. That just seems to be fundamentally unfair. 451 00:20:37,800 --> 00:20:39,960 Speaker 1: You're you're just you're limited by virtue of where you 452 00:20:40,000 --> 00:20:41,800 Speaker 1: are in the world, and why wouldn't we all have 453 00:20:41,880 --> 00:20:43,120 Speaker 1: access to the same kind of thing. 454 00:20:43,280 --> 00:20:45,680 Speaker 2: Well, I think that goes that goes down to what 455 00:20:46,119 --> 00:20:49,119 Speaker 2: you just mentioned, that fiduciary decision making body that exists 456 00:20:49,200 --> 00:20:52,080 Speaker 2: for each four oh one k they can choose to 457 00:20:52,119 --> 00:20:54,080 Speaker 2: offer this and not offer that. I think what that 458 00:20:54,119 --> 00:20:57,040 Speaker 2: refers to is there are some federal benefits out there. 459 00:20:57,080 --> 00:20:59,639 Speaker 2: They're just better than what the rest of the you know, 460 00:20:59,680 --> 00:21:02,720 Speaker 2: democ critized society can get a hold of. And I 461 00:21:02,720 --> 00:21:04,840 Speaker 2: think it goes back to that's the American way, h 462 00:21:04,920 --> 00:21:07,560 Speaker 2: pick your poison. There there if if the federal government 463 00:21:07,600 --> 00:21:09,879 Speaker 2: funds a lot of this, so we basically buy the 464 00:21:10,040 --> 00:21:13,200 Speaker 2: by the process of putting people in place as are representatives. 465 00:21:13,440 --> 00:21:15,800 Speaker 2: They are the ones who choose what federal benefits for 466 00:21:15,960 --> 00:21:18,600 Speaker 2: federal employees. What that looks like. They've got an awful 467 00:21:18,600 --> 00:21:20,760 Speaker 2: lot of money with which they can do that versus 468 00:21:20,800 --> 00:21:24,720 Speaker 2: an individual you know, company can only offer what's available 469 00:21:24,800 --> 00:21:26,919 Speaker 2: to it it can fund. You know, individual companies can 470 00:21:27,000 --> 00:21:29,119 Speaker 2: can throw out a lot of benefits if they want to, 471 00:21:29,119 --> 00:21:31,720 Speaker 2: if they've got the money to support it. But nobody 472 00:21:31,800 --> 00:21:35,119 Speaker 2: is forced to use one set of benefits, and you know, 473 00:21:35,520 --> 00:21:37,600 Speaker 2: so I guess it kind of goes both ways. Maybe 474 00:21:37,640 --> 00:21:40,280 Speaker 2: the federal benefits are bigger, are better in some cases 475 00:21:40,320 --> 00:21:42,760 Speaker 2: because there's simply more money with which to build it. 476 00:21:43,440 --> 00:21:45,240 Speaker 2: But on the other hand, there's a lot of people 477 00:21:45,240 --> 00:21:47,240 Speaker 2: out there who would object to the notion that the 478 00:21:47,240 --> 00:21:49,080 Speaker 2: federal government is going to tell me what I can 479 00:21:49,160 --> 00:21:53,000 Speaker 2: and cannot offer, you know, without giving me any say whatsoever. 480 00:21:53,240 --> 00:21:55,440 Speaker 2: The downside of that is, now we've got these little 481 00:21:55,480 --> 00:21:58,479 Speaker 2: fiduciary groups inside of each employer who has to make 482 00:21:58,520 --> 00:21:59,240 Speaker 2: those decisions. 483 00:21:59,480 --> 00:22:01,720 Speaker 1: Fair enough, that's the way the system is designed, although 484 00:22:01,720 --> 00:22:04,159 Speaker 1: I'm still puzzling over how it is that way, but 485 00:22:04,960 --> 00:22:06,560 Speaker 1: everybody seems to be in fair A lot of people 486 00:22:06,600 --> 00:22:08,520 Speaker 1: in favor of child savings accounts, whether or not you 487 00:22:08,560 --> 00:22:10,520 Speaker 1: think Trump has it within his authority to create one 488 00:22:10,600 --> 00:22:13,240 Speaker 1: thousand dollars savings accounts for certain people but not others, 489 00:22:13,520 --> 00:22:17,200 Speaker 1: the concept of child savings accounts is widely embraced. Why 490 00:22:17,200 --> 00:22:19,760 Speaker 1: wouldn't you have a tax advantage investment account for your children? 491 00:22:20,240 --> 00:22:22,840 Speaker 2: Well, see, this is where I think the first of all, 492 00:22:22,840 --> 00:22:24,720 Speaker 2: these don't exist yet. We don't have the ability to 493 00:22:24,720 --> 00:22:26,920 Speaker 2: invest in them yet. And I would argue nowadays you 494 00:22:26,960 --> 00:22:29,680 Speaker 2: already do have a tax advantage account you can set 495 00:22:29,720 --> 00:22:31,400 Speaker 2: up for your kids. That's a five twenty nine place. 496 00:22:31,920 --> 00:22:34,280 Speaker 2: And now, especially now that they change the rules to 497 00:22:34,359 --> 00:22:37,440 Speaker 2: allow for to allow it to become roth contributions down 498 00:22:37,480 --> 00:22:39,920 Speaker 2: the road, so you can start investing now for something 499 00:22:39,920 --> 00:22:43,159 Speaker 2: that will be permanently tax free for a newborn sixty 500 00:22:43,200 --> 00:22:46,240 Speaker 2: five years later. These Trump child savings accounts, I think 501 00:22:46,240 --> 00:22:49,159 Speaker 2: the attraction right now is the federal seed money. So 502 00:22:49,200 --> 00:22:52,120 Speaker 2: they're being proposed that one thousand dollars for any child 503 00:22:52,240 --> 00:22:56,560 Speaker 2: born within the second Trump administration. These types of accounts 504 00:22:56,600 --> 00:22:59,439 Speaker 2: will continue past that, but the federal seed money doesn't exist, 505 00:22:59,520 --> 00:23:03,119 Speaker 2: doesn't ass exists on into the future. I'm struggling a 506 00:23:03,160 --> 00:23:05,000 Speaker 2: little bit to get excited about these things. There's not 507 00:23:05,080 --> 00:23:08,199 Speaker 2: a ton of money that is that is allowed to 508 00:23:08,240 --> 00:23:12,080 Speaker 2: go into these that that offsets the fact that it's 509 00:23:12,119 --> 00:23:15,119 Speaker 2: going to be taxed. I mean, beyond the original money 510 00:23:15,119 --> 00:23:17,280 Speaker 2: that comes from the federal government that is free. Yes, 511 00:23:17,320 --> 00:23:18,960 Speaker 2: you're allowed to put your own dollars in, but it's 512 00:23:19,000 --> 00:23:21,919 Speaker 2: going to be taxed in the future when that child. 513 00:23:21,640 --> 00:23:24,359 Speaker 1: Pulls it out like a four account, correct. 514 00:23:24,000 --> 00:23:27,000 Speaker 2: Yeah, yeah, And that's not unlike a custodial account. It's 515 00:23:27,040 --> 00:23:29,760 Speaker 2: not that different. So these aren't magical accounts that somehow 516 00:23:29,800 --> 00:23:33,040 Speaker 2: provide some financial benefit beyond that thousand dollars. I'm not 517 00:23:33,080 --> 00:23:35,680 Speaker 2: you know that thousand bucks a thousand bucks. But we're 518 00:23:35,680 --> 00:23:38,880 Speaker 2: still talking about investments, We're still talking about tax I'm 519 00:23:38,920 --> 00:23:41,880 Speaker 2: still preferential to leaning toward the five twenty nine sides 520 00:23:41,920 --> 00:23:44,239 Speaker 2: supported by the Wroth option in the future, because that 521 00:23:44,280 --> 00:23:47,159 Speaker 2: can be purely tax free. If I'm looking for something 522 00:23:47,200 --> 00:23:49,480 Speaker 2: for when they're sixteen, eighteen years old, I might just 523 00:23:49,560 --> 00:23:51,360 Speaker 2: keep those dollars in my own name, and when it's 524 00:23:51,400 --> 00:23:53,159 Speaker 2: time to buy a car or whatever, I can do 525 00:23:53,200 --> 00:23:54,840 Speaker 2: that out of my own dollars. It doesn't have to 526 00:23:54,880 --> 00:23:57,040 Speaker 2: have been first in their name. I'm not excited about 527 00:23:57,040 --> 00:23:57,960 Speaker 2: the benefits of this yet. 528 00:23:58,119 --> 00:24:00,720 Speaker 1: No, and doubling down on depressing you finally get to 529 00:24:00,840 --> 00:24:03,600 Speaker 1: retirement and emergency savings issues, and I'd say it's a 530 00:24:03,600 --> 00:24:06,600 Speaker 1: pretty substantial issue. Thirty percent of US registered voters have 531 00:24:07,320 --> 00:24:10,560 Speaker 1: zero dollars in retirement savings. Zero. And I write a 532 00:24:10,560 --> 00:24:12,320 Speaker 1: statistic the other day, Brian, you can correct me if 533 00:24:12,359 --> 00:24:15,159 Speaker 1: I'm wrong on if you saw it, average American is 534 00:24:15,160 --> 00:24:17,480 Speaker 1: something like nine hundred and fifty bucks save for retirement. 535 00:24:18,080 --> 00:24:20,680 Speaker 2: Yeah, I mean, and if you're you're talking about everybody 536 00:24:20,720 --> 00:24:22,800 Speaker 2: under the sun. Remember there's a lot of people outside 537 00:24:22,840 --> 00:24:25,959 Speaker 2: our various social bubbles who are living very very very 538 00:24:26,000 --> 00:24:28,280 Speaker 2: different lives, and we don't tend across pass all that month. 539 00:24:28,680 --> 00:24:30,719 Speaker 2: So you're talking every person under the sun that you're 540 00:24:30,760 --> 00:24:33,400 Speaker 2: seeing every every homeless person out there. We're just dividing 541 00:24:33,440 --> 00:24:36,200 Speaker 2: this across you know, the entire population. Yeah, most people 542 00:24:36,200 --> 00:24:39,080 Speaker 2: don't have don't have squat and that that is a 543 00:24:39,160 --> 00:24:41,520 Speaker 2: major problem. But it's not something that we've chosen to 544 00:24:41,560 --> 00:24:43,960 Speaker 2: do much about. We've chosen to you know, it's a 545 00:24:44,040 --> 00:24:47,600 Speaker 2: it's a merit based you know, a merit based opportunity 546 00:24:47,640 --> 00:24:50,399 Speaker 2: here and good bad are indifferent those That's how we 547 00:24:50,440 --> 00:24:54,280 Speaker 2: structure our benefits. If you can get yourself educated and 548 00:24:54,280 --> 00:24:56,240 Speaker 2: can get yourself a good career, then you're going to 549 00:24:56,280 --> 00:24:58,040 Speaker 2: do okay. If you can't fight your way out of 550 00:24:58,040 --> 00:25:00,880 Speaker 2: that system, then you may be there. And that's who 551 00:25:00,960 --> 00:25:03,080 Speaker 2: we're talking about that has the nine hundred and fifty bucks. 552 00:25:02,920 --> 00:25:05,720 Speaker 1: And stuck means you are living, I mean, assuming you 553 00:25:05,760 --> 00:25:08,000 Speaker 1: contributed to it at some point. Social Security is what's 554 00:25:08,040 --> 00:25:10,240 Speaker 1: going to pay your rent when you're retired. This is 555 00:25:10,240 --> 00:25:12,440 Speaker 1: the Canarian a coal mine. Brian, I've been screaming about 556 00:25:12,440 --> 00:25:15,040 Speaker 1: so Security like everybody else who's paying attention to it. 557 00:25:15,200 --> 00:25:16,959 Speaker 1: I mean, it's set for collapse. I mean they never 558 00:25:17,040 --> 00:25:18,680 Speaker 1: got like an end date on it where the money 559 00:25:18,680 --> 00:25:20,040 Speaker 1: coming out is going to be far more than the 560 00:25:20,080 --> 00:25:23,040 Speaker 1: money coming in. It's set up for disasters. So if 561 00:25:23,080 --> 00:25:25,399 Speaker 1: you have nothing and you're not capable of preparing for 562 00:25:25,440 --> 00:25:28,520 Speaker 1: yourself in the future, that's what you're defaulting to. And 563 00:25:28,760 --> 00:25:30,760 Speaker 1: that's a problem that needs to be fixed and has 564 00:25:30,800 --> 00:25:33,040 Speaker 1: desperately been screaming for a fix for as long as 565 00:25:33,080 --> 00:25:34,080 Speaker 1: I can remember. 566 00:25:33,840 --> 00:25:36,639 Speaker 2: Right, and we have yet to see a politician on 567 00:25:36,720 --> 00:25:38,760 Speaker 2: either side of the Aisle champion it and say that 568 00:25:38,840 --> 00:25:40,840 Speaker 2: here's how we're going to fix social Security. And my 569 00:25:40,920 --> 00:25:43,200 Speaker 2: personal belief is that that's because there is no way 570 00:25:43,240 --> 00:25:46,400 Speaker 2: to position that as anything but a sacrifice by somebody. 571 00:25:46,560 --> 00:25:49,959 Speaker 2: We either need to lower benefits on future retirees or 572 00:25:50,000 --> 00:25:53,119 Speaker 2: increase taxes on current workers. End of story. There's a 573 00:25:53,119 --> 00:25:54,720 Speaker 2: million ways those can be done, but those are the 574 00:25:54,720 --> 00:25:58,320 Speaker 2: two levers we can pull, and that's a sacrifice. Nobody benefits. 575 00:25:58,520 --> 00:26:00,359 Speaker 2: There's nothing the way we can say it's happy story 576 00:26:00,359 --> 00:26:03,200 Speaker 2: for everybody. So therefore no politician is going to attach 577 00:26:03,240 --> 00:26:05,800 Speaker 2: their wagon to it and then try to run for reelection. 578 00:26:07,359 --> 00:26:09,360 Speaker 1: And then factor into something I always been worried about 579 00:26:09,400 --> 00:26:11,199 Speaker 1: with that four oh one K being taxed as the 580 00:26:11,240 --> 00:26:13,359 Speaker 1: money gets pulled out, Do you know what the tax 581 00:26:13,440 --> 00:26:15,240 Speaker 1: is going to be when you start pulling the money out? 582 00:26:15,600 --> 00:26:17,440 Speaker 2: Of course not. Yeah, we definitely don't know that you 583 00:26:17,520 --> 00:26:19,400 Speaker 2: knew what the tax was when you took the deduction. 584 00:26:19,520 --> 00:26:21,800 Speaker 2: You can look at the current taxier's bracket and calculate 585 00:26:21,880 --> 00:26:24,719 Speaker 2: exactly how much you're saving, but you can't guess at 586 00:26:24,760 --> 00:26:26,280 Speaker 2: how much you're going to be paying in the future. 587 00:26:26,720 --> 00:26:29,119 Speaker 2: And what you're referring to is Social Security and a 588 00:26:29,119 --> 00:26:32,040 Speaker 2: few other big things are unfunded obligations that means we 589 00:26:32,040 --> 00:26:34,479 Speaker 2: don't budget for them. So even though we can't make 590 00:26:34,520 --> 00:26:36,359 Speaker 2: our budget anyway, there's still a lot of stuff that 591 00:26:36,359 --> 00:26:38,080 Speaker 2: we're not even accounting for in it. So what you're 592 00:26:38,119 --> 00:26:39,960 Speaker 2: kind of hinting at is the only way we're gonna 593 00:26:39,960 --> 00:26:42,040 Speaker 2: be able to pay these bills is by someday probably 594 00:26:42,200 --> 00:26:45,320 Speaker 2: raising taxes. So somebody with millions of dollars in a 595 00:26:45,400 --> 00:26:47,080 Speaker 2: pre tax four oh one K is a little bit 596 00:26:47,080 --> 00:26:48,960 Speaker 2: of a sitting duck. You're already kind of a sitting 597 00:26:49,000 --> 00:26:51,240 Speaker 2: duck anyway, because at age seventy three or seventy five, 598 00:26:51,359 --> 00:26:53,760 Speaker 2: you're gonna have to take require minimum distributions and pay 599 00:26:53,760 --> 00:26:56,680 Speaker 2: those taxes. So what should you do about this? Start 600 00:26:56,800 --> 00:26:58,639 Speaker 2: learning about the roth side and maybe let go of 601 00:26:58,640 --> 00:27:00,640 Speaker 2: the notion that I'm in the highest pre I there 602 00:27:00,640 --> 00:27:02,479 Speaker 2: therefore I need all the tax benefits I can get. 603 00:27:02,560 --> 00:27:05,080 Speaker 2: Right now, I know a lot of happy people who 604 00:27:05,200 --> 00:27:07,800 Speaker 2: are happy because they have two different piles of money 605 00:27:07,840 --> 00:27:10,200 Speaker 2: in retirement, a wroth pile and a pretext pile. 606 00:27:10,480 --> 00:27:12,240 Speaker 1: Oh, Brian James, if I can only turn back the 607 00:27:12,280 --> 00:27:15,040 Speaker 1: wheels of time and elect a wroth option as opposed 608 00:27:15,080 --> 00:27:18,040 Speaker 1: to the four oh one k traditional that I'm in, Sadly, 609 00:27:18,080 --> 00:27:20,760 Speaker 1: I'm closer to retirement now than I ever was, and 610 00:27:20,840 --> 00:27:23,960 Speaker 1: I think it's a little rate to well unring the bell. 611 00:27:24,560 --> 00:27:26,639 Speaker 2: Yeah, well, I mean I'm sort of similar. You know, 612 00:27:26,640 --> 00:27:28,199 Speaker 2: I'm a little bit behind you, but I'm sort of 613 00:27:28,200 --> 00:27:31,000 Speaker 2: similar in terms of probably the highest bracket I'll ever see. 614 00:27:31,240 --> 00:27:33,320 Speaker 2: But I'm consciously deciding to go ahead and pay the 615 00:27:33,320 --> 00:27:35,119 Speaker 2: taxes on a portion of it because I want to 616 00:27:35,160 --> 00:27:37,959 Speaker 2: have a decent sized pile of tax free money along 617 00:27:38,000 --> 00:27:41,600 Speaker 2: alongside my pile of pre tax dollars. For that exact reason, 618 00:27:41,880 --> 00:27:44,200 Speaker 2: then there's no other way to get there than than 619 00:27:44,280 --> 00:27:46,560 Speaker 2: just by eating the taxes nowadays, but if you're talking 620 00:27:46,560 --> 00:27:48,720 Speaker 2: about roth, you're talking about dollars that are probably going 621 00:27:48,800 --> 00:27:51,440 Speaker 2: to sit there for decades, well into your retirement, if 622 00:27:51,480 --> 00:27:52,760 Speaker 2: not get inherited by your kids. 623 00:27:53,280 --> 00:27:55,480 Speaker 1: Tex Brian James. Thanks to all Worth Financial for learning 624 00:27:55,560 --> 00:27:57,400 Speaker 1: out as I always appreciate you shining light on what's 625 00:27:57,440 --> 00:27:59,119 Speaker 1: going on here and the financial world will do it 626 00:27:59,119 --> 00:28:01,439 Speaker 1: again next Monday. Have a great week between now and then. 627 00:28:01,440 --> 00:28:03,160 Speaker 2: Yees sir, having to have a good day, stay warm. 628 00:28:03,320 --> 00:28:05,560 Speaker 1: Thanks brother you two eight forty here fifty five karros. 629 00:28:05,680 --> 00:28:06,720 Speaker 1: The talk station phone lines are