1 00:00:04,280 --> 00:00:07,440 Speaker 1: Tonight a warning for anyone out there who thinks their 2 00:00:07,480 --> 00:00:12,720 Speaker 1: financial advisor is absolutely legit, but they've never even checked 3 00:00:12,720 --> 00:00:16,119 Speaker 1: that person out. You're listening to Simply Money, presented by 4 00:00:16,160 --> 00:00:19,600 Speaker 1: all Worth Financial on Bob Sponseller along with Brian James. Now, 5 00:00:19,640 --> 00:00:22,480 Speaker 1: we all like to think we'd spot a scam from 6 00:00:22,480 --> 00:00:25,640 Speaker 1: a mile away, But what if the scammer looks the part, 7 00:00:25,840 --> 00:00:28,880 Speaker 1: walks the walk, talks the talk, and even promises to 8 00:00:29,120 --> 00:00:32,839 Speaker 1: never lose you a dime. Are you really sure your 9 00:00:32,880 --> 00:00:36,440 Speaker 1: advisor is who they say they are. This is a 10 00:00:36,440 --> 00:00:40,199 Speaker 1: pretty important segment, Brian, especially you know, stemming from a 11 00:00:40,240 --> 00:00:43,839 Speaker 1: situation that happened recently in New Jersey. 12 00:00:44,479 --> 00:00:47,560 Speaker 2: Yeah, the SEC has filed fraud charges in federal court 13 00:00:47,600 --> 00:00:50,360 Speaker 2: against forty six year old Joel Sophia No idea if 14 00:00:50,400 --> 00:00:53,720 Speaker 2: I'm pronouncing that right, but for allegedly posing as an 15 00:00:53,760 --> 00:00:56,680 Speaker 2: investment advisor and misleading his clients. What they say he 16 00:00:56,760 --> 00:00:59,840 Speaker 2: did that he never registered with the SEC as an 17 00:01:00,040 --> 00:01:02,960 Speaker 2: investment advisor and never held any securities licenses. You and 18 00:01:02,960 --> 00:01:04,319 Speaker 2: I both know there's a lot of work that goes 19 00:01:04,360 --> 00:01:06,640 Speaker 2: into that, not only to get those licenses in the 20 00:01:06,640 --> 00:01:08,520 Speaker 2: first place, but to maintain them and do all the 21 00:01:08,560 --> 00:01:10,640 Speaker 2: things you have to do to stay on the good 22 00:01:10,680 --> 00:01:14,479 Speaker 2: graces of the SEC. So they say, he falsely claimed 23 00:01:14,480 --> 00:01:18,679 Speaker 2: decades of professional experience as an options trader and misrepresented 24 00:01:18,680 --> 00:01:21,119 Speaker 2: his credentials to at least three of his clients. I'm 25 00:01:21,120 --> 00:01:23,399 Speaker 2: going to guess there is probably more than that. And 26 00:01:23,520 --> 00:01:26,320 Speaker 2: his pitch was that he guaranteed clients would never lose money. Oh, 27 00:01:26,360 --> 00:01:28,120 Speaker 2: by the way, this is what you should listen for. 28 00:01:28,480 --> 00:01:30,720 Speaker 2: If you hear this, run the other way and warn 29 00:01:30,800 --> 00:01:34,400 Speaker 2: people around you. Guaranteed that clients would never lose money, 30 00:01:34,400 --> 00:01:38,759 Speaker 2: and promoted fake proprietary AI trading software that would supposedly 31 00:01:38,800 --> 00:01:42,840 Speaker 2: eliminate all risk. You know, Bob, why haven't we signed 32 00:01:42,880 --> 00:01:43,800 Speaker 2: on for these things yet? 33 00:01:43,880 --> 00:01:44,000 Speaker 1: Right? 34 00:01:44,440 --> 00:01:46,720 Speaker 2: It's so easy that I can't believe that we'll need 35 00:01:46,760 --> 00:01:49,200 Speaker 2: Andy Stout or his team anymore. What a bunch of clowns. 36 00:01:49,360 --> 00:01:52,480 Speaker 2: We just need some proprietary AI trading software too. 37 00:01:52,480 --> 00:01:55,080 Speaker 1: It prietary. You and I could come up with this software. 38 00:01:55,120 --> 00:01:57,800 Speaker 1: We could beat the market all day, every day and 39 00:01:57,840 --> 00:01:59,400 Speaker 1: never lose any money. 40 00:01:59,200 --> 00:02:01,920 Speaker 2: They proprietor terry and never have to explain how it works. 41 00:02:02,440 --> 00:02:06,400 Speaker 1: Well, And here's the problem, here's the downside. Here, clients 42 00:02:06,440 --> 00:02:10,200 Speaker 1: gave him direct access to their brokerage accounts. Basically said 43 00:02:10,240 --> 00:02:14,240 Speaker 1: here log in traded at will, and you know, he 44 00:02:14,360 --> 00:02:18,000 Speaker 1: placed thousands of trades on their behalf, no doubt, marked 45 00:02:18,000 --> 00:02:21,160 Speaker 1: them up for commission spreads, what have you. And instead 46 00:02:21,200 --> 00:02:25,480 Speaker 1: of consistent gains, the option trading caused severe losses, with 47 00:02:25,560 --> 00:02:29,960 Speaker 1: accounts losing sixty one to nine percent of their value, 48 00:02:30,000 --> 00:02:33,840 Speaker 1: and by early twenty twenty three, total losses to just 49 00:02:33,919 --> 00:02:38,600 Speaker 1: these three clients exceeded one point six million dollars. And 50 00:02:38,840 --> 00:02:43,200 Speaker 1: is usually always the case when stuff like this happens. 51 00:02:43,240 --> 00:02:48,440 Speaker 1: When investors raised any concerns whatsoever, this guy was nowhere 52 00:02:48,440 --> 00:02:52,160 Speaker 1: to be found, or in some cases he allegedly blamed 53 00:02:52,200 --> 00:02:55,720 Speaker 1: them or promised a recovery and then he stopped calling 54 00:02:55,760 --> 00:03:00,760 Speaker 1: them back altogether. Bryant, that we've seen this happened from 55 00:03:00,760 --> 00:03:02,640 Speaker 1: time to time. You and I have both been doing 56 00:03:02,680 --> 00:03:06,720 Speaker 1: this a long time. I can remember one situation, you know, 57 00:03:06,840 --> 00:03:09,880 Speaker 1: here in the in the greater Cincinnati area with a 58 00:03:09,960 --> 00:03:15,119 Speaker 1: local insurance agency where the guy was building fictitious statements 59 00:03:15,160 --> 00:03:18,200 Speaker 1: and you know, built up a lot of trust with people. 60 00:03:18,440 --> 00:03:20,600 Speaker 1: I think it was over on the west side of town. 61 00:03:20,680 --> 00:03:24,959 Speaker 1: I won't get into names. But you know, I'm sometimes 62 00:03:25,000 --> 00:03:29,440 Speaker 1: surprised at how few questions people actually ask when they 63 00:03:29,480 --> 00:03:32,200 Speaker 1: come into the office. I mean, you have a nice office, 64 00:03:32,480 --> 00:03:36,240 Speaker 1: you know, nice lady at the front desk, welcoming you in, 65 00:03:36,360 --> 00:03:38,960 Speaker 1: free coffee. We got a good you know, monitor on 66 00:03:39,000 --> 00:03:41,080 Speaker 1: the wall. We look like we know what they're doing 67 00:03:41,720 --> 00:03:43,800 Speaker 1: or what we're doing. But you still have to ask 68 00:03:43,840 --> 00:03:47,640 Speaker 1: some basic questions. Let's get into some of that because 69 00:03:47,680 --> 00:03:48,640 Speaker 1: this is important. 70 00:03:49,280 --> 00:03:52,600 Speaker 2: Yeah, it is important because Americans report losing five point 71 00:03:52,640 --> 00:03:56,120 Speaker 2: seven billion to investment scams in twenty twenty four according 72 00:03:56,120 --> 00:03:58,720 Speaker 2: to the FTC. Again, that's billion with a B. Think 73 00:03:58,760 --> 00:04:00,880 Speaker 2: how many four O one k's and rollovers and life 74 00:04:00,880 --> 00:04:03,800 Speaker 2: savings and all that are involved there that just went 75 00:04:03,840 --> 00:04:06,160 Speaker 2: poof And now those people are scrambling and living off 76 00:04:06,200 --> 00:04:08,880 Speaker 2: of I don't know, welfare, their relatives, they're kids. Who knows, 77 00:04:09,440 --> 00:04:11,760 Speaker 2: but that since since ftc is data is based on 78 00:04:11,800 --> 00:04:15,680 Speaker 2: consumer reports of fraud, we don't really know exactly how much. 79 00:04:15,720 --> 00:04:17,440 Speaker 2: You know that those are the ones where it's caught 80 00:04:17,880 --> 00:04:20,280 Speaker 2: and people are you know, willing to admit it. There's 81 00:04:20,279 --> 00:04:21,800 Speaker 2: a lot of people out there who take losses and 82 00:04:21,839 --> 00:04:23,400 Speaker 2: don't tell any about it about it, so we don't 83 00:04:23,400 --> 00:04:26,560 Speaker 2: know about those, so the true scope is probably even higher. 84 00:04:27,120 --> 00:04:29,200 Speaker 2: And then these are some of the words you hear occasionally. 85 00:04:29,200 --> 00:04:31,680 Speaker 2: But some of these frauds include pig butchering scams, which 86 00:04:31,720 --> 00:04:34,800 Speaker 2: references the practice of fattening a pig before slaughter. 87 00:04:34,880 --> 00:04:35,120 Speaker 1: Right. 88 00:04:35,200 --> 00:04:36,760 Speaker 2: So what in other words, what you're doing is doing 89 00:04:36,800 --> 00:04:39,719 Speaker 2: probably legitimate things to pull in more and more money 90 00:04:40,200 --> 00:04:43,400 Speaker 2: by managing it legitimately before the actual scam occurs. You're 91 00:04:43,440 --> 00:04:45,240 Speaker 2: fattening the pig by getting them to bring in more 92 00:04:45,240 --> 00:04:47,440 Speaker 2: and more to their account. Then you pull the trigger 93 00:04:47,480 --> 00:04:49,320 Speaker 2: as the scammer. So here's the things you got to 94 00:04:49,360 --> 00:04:52,599 Speaker 2: look for. Are you a fiduciary. That's something we mentioned 95 00:04:52,640 --> 00:04:54,720 Speaker 2: from time to time, and that that's what we here 96 00:04:54,760 --> 00:04:56,800 Speaker 2: are at all worth twenty four hours a day, seven 97 00:04:56,880 --> 00:04:58,760 Speaker 2: days a week. That is, that's all we do. Every 98 00:04:58,800 --> 00:05:02,159 Speaker 2: decision we make to be for the benefit of the client. 99 00:05:02,279 --> 00:05:03,279 Speaker 2: We have to be able to prove that in the 100 00:05:03,279 --> 00:05:05,560 Speaker 2: court of law. That's why we focus so much on 101 00:05:05,600 --> 00:05:08,640 Speaker 2: financial planning. That's the job of an advisor. In my opinion, 102 00:05:08,680 --> 00:05:12,120 Speaker 2: of fiduciary advisor is responsible to make sure his or 103 00:05:12,160 --> 00:05:14,120 Speaker 2: her firm, even if it's their own shop and they 104 00:05:14,160 --> 00:05:16,920 Speaker 2: hang their own shingle. That advisor is responsible to be 105 00:05:16,960 --> 00:05:18,960 Speaker 2: able to say, yes, we know the story of the 106 00:05:19,040 --> 00:05:21,680 Speaker 2: Johnson family, here's where their resources are, Here's what they're 107 00:05:21,680 --> 00:05:24,640 Speaker 2: trying to accomplish. Therefore, we recommended X, Y, and Z. 108 00:05:25,080 --> 00:05:27,760 Speaker 2: That's what being a fiduciary is, knowing the understand and 109 00:05:28,040 --> 00:05:31,719 Speaker 2: making those decisions based on the best situation the client 110 00:05:31,760 --> 00:05:34,760 Speaker 2: can have. Compensation matters, is it fee only, is a 111 00:05:34,800 --> 00:05:39,400 Speaker 2: commission fee based? None of those are particularly evil unto themselves. 112 00:05:39,440 --> 00:05:41,560 Speaker 2: They're just different ways of doing business and they have 113 00:05:41,640 --> 00:05:44,240 Speaker 2: different conflicts of interest in there. But make sure you 114 00:05:44,320 --> 00:05:46,280 Speaker 2: understand exactly how that advisor is going to get paid 115 00:05:46,320 --> 00:05:46,760 Speaker 2: to work with you. 116 00:05:47,920 --> 00:05:51,760 Speaker 1: Yeah, and a lot of folks are fiduciaries, but are 117 00:05:51,760 --> 00:05:54,160 Speaker 1: they fiduciaries all the time? I mean, there's a lot 118 00:05:54,200 --> 00:05:57,240 Speaker 1: of people that you know, wear both hats. They're fiduciaries 119 00:05:57,279 --> 00:05:59,320 Speaker 1: some of the time with their fee based accounts, but 120 00:05:59,360 --> 00:06:04,119 Speaker 1: they also offer broker dealer based accounts and commission based accounts. Again, 121 00:06:04,240 --> 00:06:06,920 Speaker 1: like you said, that's not evil or wrong or doesn't 122 00:06:06,960 --> 00:06:09,480 Speaker 1: mean you shouldn't do business with one of those folks, 123 00:06:09,520 --> 00:06:12,360 Speaker 1: but it needs to be disclosed up front. How are 124 00:06:12,400 --> 00:06:15,600 Speaker 1: you paid what's in it for me? Are you acting 125 00:06:15,680 --> 00:06:18,880 Speaker 1: on my best interest all the time or just selling 126 00:06:18,920 --> 00:06:24,200 Speaker 1: me a quote unquote suitable product. Credentials and background questions 127 00:06:25,000 --> 00:06:27,600 Speaker 1: these are important, but I don't think that's the end 128 00:06:27,640 --> 00:06:29,600 Speaker 1: all be all. I mean, people could go out and 129 00:06:29,640 --> 00:06:31,960 Speaker 1: take the like you and I have. We could still 130 00:06:32,560 --> 00:06:36,839 Speaker 1: take the CFP, the CHSC, have all these designations and 131 00:06:36,960 --> 00:06:39,279 Speaker 1: still be crooked as all get out right. I mean, 132 00:06:39,760 --> 00:06:42,279 Speaker 1: you know there's things like broker check out there. You 133 00:06:42,279 --> 00:06:45,520 Speaker 1: know that that is a tool that's been created by FINRA, 134 00:06:45,960 --> 00:06:50,080 Speaker 1: the Financial Industry Regulatory Authority, to research the background and 135 00:06:50,160 --> 00:06:54,320 Speaker 1: experience of all financial advisors and the firms they're with. 136 00:06:54,880 --> 00:06:58,360 Speaker 1: But that's really no absolute safeguard that anyone's going to 137 00:06:58,440 --> 00:07:03,159 Speaker 1: act in your interest just because they have fifteen letters 138 00:07:03,200 --> 00:07:07,360 Speaker 1: behind their name. A couple other things to ask about, 139 00:07:07,400 --> 00:07:10,880 Speaker 1: just process and philosophy, which I think people do a 140 00:07:10,920 --> 00:07:12,840 Speaker 1: good job of when they come in at least and 141 00:07:12,880 --> 00:07:15,520 Speaker 1: talk to us. Here's the one I want to spend 142 00:07:15,800 --> 00:07:19,520 Speaker 1: some time on, and this is a must. You have 143 00:07:19,640 --> 00:07:24,920 Speaker 1: to have your assets custodian and a reputable custodial firm 144 00:07:25,200 --> 00:07:28,520 Speaker 1: like a SCHWAB, like a fidelity, like a major broker 145 00:07:28,600 --> 00:07:31,960 Speaker 1: dealer out there. There has to be someone between the 146 00:07:32,080 --> 00:07:37,400 Speaker 1: advisor and your money, who's holding the assets, building the statements, 147 00:07:37,680 --> 00:07:41,360 Speaker 1: reporting the results all that, and where most of these 148 00:07:41,400 --> 00:07:45,160 Speaker 1: fraud cases come in is where this quote unquote advisor 149 00:07:46,120 --> 00:07:49,440 Speaker 1: is not only making the recommendations, but they're building their 150 00:07:49,480 --> 00:07:53,920 Speaker 1: own statements and there's not a good, reputable custodial firm 151 00:07:53,960 --> 00:07:57,160 Speaker 1: in the mix. That is a must have, I think 152 00:07:57,280 --> 00:07:58,880 Speaker 1: in today's day and age. 153 00:07:58,880 --> 00:08:00,840 Speaker 2: Brian, Yeah, I think you're right, and that was a 154 00:08:01,240 --> 00:08:03,800 Speaker 2: That is a huge red flag if you that doesn't 155 00:08:03,800 --> 00:08:06,000 Speaker 2: mean you'll you have to have heard of the custody 156 00:08:06,080 --> 00:08:07,480 Speaker 2: Maybe you've never heard him. You're not that close to 157 00:08:07,480 --> 00:08:09,360 Speaker 2: the industry. You might not know who all the players are. 158 00:08:09,400 --> 00:08:13,080 Speaker 2: But the big ones are Schwab, Fidelity, LPL, and there's 159 00:08:13,120 --> 00:08:15,160 Speaker 2: a few other big names out there. Doesn't mean the 160 00:08:15,200 --> 00:08:17,480 Speaker 2: smaller ones are less capable. But the point is pay 161 00:08:17,520 --> 00:08:19,800 Speaker 2: attention to it. This is how Bernie Madoff got away 162 00:08:19,800 --> 00:08:21,360 Speaker 2: with what he did. He used to be the chair 163 00:08:21,360 --> 00:08:23,520 Speaker 2: of the SEC, so nobody asked him any questions. They 164 00:08:23,600 --> 00:08:25,480 Speaker 2: just assumed he was on the up and up. He 165 00:08:25,560 --> 00:08:28,440 Speaker 2: made up every statement he ever had what he would 166 00:08:28,440 --> 00:08:30,480 Speaker 2: do if it's an interesting read if you get to 167 00:08:30,520 --> 00:08:32,240 Speaker 2: get the book on it and read exactly how he 168 00:08:32,280 --> 00:08:34,160 Speaker 2: did this, because it's a lot simpler than you might think. 169 00:08:34,679 --> 00:08:36,960 Speaker 2: What he would do is spread the newspapers out on 170 00:08:37,000 --> 00:08:40,080 Speaker 2: the floor and he would slide across with a magnifying 171 00:08:40,120 --> 00:08:43,040 Speaker 2: glass on a rolling office chair, and he would simply 172 00:08:43,080 --> 00:08:46,679 Speaker 2: look for movement from the day before that would support 173 00:08:46,760 --> 00:08:49,400 Speaker 2: the fake returns. He wanted to put in his on 174 00:08:49,480 --> 00:08:52,200 Speaker 2: his statements and so it was verifiable. All he had 175 00:08:52,200 --> 00:08:54,000 Speaker 2: to do is put it on statements and he could say, well, yeah, 176 00:08:54,080 --> 00:08:56,320 Speaker 2: XYZ Stock did this, and therefore that was our return. 177 00:08:56,440 --> 00:08:58,000 Speaker 2: None of it was real because he didn't actually make 178 00:08:58,000 --> 00:09:00,640 Speaker 2: the investments because the money wasn't there to begin with. However, 179 00:09:00,679 --> 00:09:03,560 Speaker 2: there was nobody there to pay attention because nobody asked 180 00:09:03,600 --> 00:09:08,040 Speaker 2: him any questions. There was no custodian, so there also 181 00:09:08,160 --> 00:09:10,080 Speaker 2: there was also nobody to ask questions because of that, 182 00:09:10,320 --> 00:09:12,680 Speaker 2: because the clients simply trusted this guy's making me money 183 00:09:12,679 --> 00:09:14,520 Speaker 2: hand o or fist, because I have this piece of 184 00:09:14,559 --> 00:09:17,400 Speaker 2: paper that says so that's all it was. These scams 185 00:09:17,440 --> 00:09:19,640 Speaker 2: are not that hard to pull off. Pick off a 186 00:09:19,679 --> 00:09:22,600 Speaker 2: couple people you know who trust you and those people 187 00:09:22,600 --> 00:09:25,559 Speaker 2: will bringing you their friends because we just super super 188 00:09:25,600 --> 00:09:29,080 Speaker 2: want to believe that there really are these guaranteed double 189 00:09:29,080 --> 00:09:32,760 Speaker 2: digit returns with no risk to principle that just doesn't exist. 190 00:09:32,880 --> 00:09:35,480 Speaker 2: Turn around as soon as you hear that, you know, 191 00:09:35,520 --> 00:09:37,600 Speaker 2: and start to warn your friends because these a lot 192 00:09:37,640 --> 00:09:40,439 Speaker 2: of times these guys show up in trusted groups, right. 193 00:09:40,440 --> 00:09:43,400 Speaker 2: They pop up off and in church groups, you know, 194 00:09:43,480 --> 00:09:46,040 Speaker 2: and other kinds of affinity groups, neighborhood groups, those kinds 195 00:09:46,040 --> 00:09:48,760 Speaker 2: of things where there's several people in the room who say, yeah, 196 00:09:48,800 --> 00:09:51,640 Speaker 2: this guy's legit or this lady is legit. I trust them, 197 00:09:51,640 --> 00:09:53,720 Speaker 2: so you should too. And that's really all it takes 198 00:09:53,720 --> 00:09:54,719 Speaker 2: to knock our shields down. 199 00:09:54,760 --> 00:09:58,520 Speaker 1: Bob Brian Show. I'll share one example of how this 200 00:09:58,640 --> 00:10:01,640 Speaker 1: is supposed to work, and this is a mistake that 201 00:10:01,720 --> 00:10:05,080 Speaker 1: I made personally earlier in my career. It was all 202 00:10:05,120 --> 00:10:08,200 Speaker 1: well intentioned, but the moral of the story is you 203 00:10:08,240 --> 00:10:11,280 Speaker 1: also need to have a good compliance department behind you. 204 00:10:11,360 --> 00:10:14,040 Speaker 1: And here was the story. I had a client. You know, 205 00:10:14,480 --> 00:10:17,120 Speaker 1: we're with a broker dealer. They're getting their statements there 206 00:10:17,120 --> 00:10:19,720 Speaker 1: are and the client would call and say, I can't 207 00:10:19,840 --> 00:10:22,240 Speaker 1: understand my statement. I you know, I want to see 208 00:10:22,240 --> 00:10:25,560 Speaker 1: the information this way or that way. Will you just 209 00:10:25,679 --> 00:10:29,240 Speaker 1: build me a letter once a quarter or something that 210 00:10:29,400 --> 00:10:32,280 Speaker 1: just tells me how I'm doing, you know, relative the 211 00:10:32,320 --> 00:10:35,960 Speaker 1: indices and my portfolio what have you. So, in an 212 00:10:35,960 --> 00:10:39,360 Speaker 1: effort to help this gentleman, I did it. I published 213 00:10:39,400 --> 00:10:41,360 Speaker 1: a letter I think it had a spreadsheet and a 214 00:10:41,400 --> 00:10:44,679 Speaker 1: few columns with it, and I reported kind of you know, 215 00:10:44,920 --> 00:10:49,280 Speaker 1: Bob's cliff notes version of his investment statement. And I'll 216 00:10:49,320 --> 00:10:52,960 Speaker 1: tell you what, within three days, I got my hand 217 00:10:53,080 --> 00:10:57,000 Speaker 1: not only slapped, but I got levied personally with a 218 00:10:57,000 --> 00:10:59,679 Speaker 1: pretty big fine from my broker dealer that I had 219 00:10:59,720 --> 00:11:03,440 Speaker 1: to write a check for. And and because I unknowingly 220 00:11:03,520 --> 00:11:07,160 Speaker 1: broke a rule. And the rule was you never personally 221 00:11:07,200 --> 00:11:11,280 Speaker 1: report any investment returns to a client. All of those 222 00:11:11,360 --> 00:11:14,680 Speaker 1: kind of reports have to come directly from the broker 223 00:11:14,720 --> 00:11:17,800 Speaker 1: dealer or the or the custodian. And I learned that lesson, 224 00:11:18,160 --> 00:11:20,600 Speaker 1: you know, the hard way. But it was a lesson 225 00:11:20,640 --> 00:11:23,120 Speaker 1: I'm glad I learned because I knew I was with 226 00:11:23,200 --> 00:11:26,800 Speaker 1: a reputable firm that had my clients back, and there 227 00:11:26,880 --> 00:11:30,080 Speaker 1: was no way that these clients were going to get 228 00:11:30,120 --> 00:11:33,000 Speaker 1: you know, deceived or lied to or what have you, 229 00:11:33,000 --> 00:11:35,880 Speaker 1: you know, through me or some other advisor just making 230 00:11:35,960 --> 00:11:39,800 Speaker 1: up numbers or self publishing, you know, some kind of document. 231 00:11:39,920 --> 00:11:42,880 Speaker 1: And that's I believe me. I got religion on that 232 00:11:42,960 --> 00:11:46,040 Speaker 1: whole topic, you know, that day, you know, after writing 233 00:11:46,080 --> 00:11:48,120 Speaker 1: a fairly sizable check. 234 00:11:48,760 --> 00:11:51,960 Speaker 2: So my one one time I had an issue, and 235 00:11:51,960 --> 00:11:54,600 Speaker 2: then nothing similar but it was slightly different. But the 236 00:11:54,640 --> 00:11:56,960 Speaker 2: one an interesting thing that taught me about how important 237 00:11:57,000 --> 00:11:59,760 Speaker 2: compliance is. I was I was involved in an email 238 00:11:59,800 --> 00:12:02,079 Speaker 2: this gosh with another advisor or another firm, just somebody 239 00:12:02,080 --> 00:12:04,040 Speaker 2: I knew personally, and we were just we were griping 240 00:12:04,080 --> 00:12:07,520 Speaker 2: about something with the SEC and he made some comment 241 00:12:07,559 --> 00:12:09,880 Speaker 2: about how the SEC should be banished because of it, 242 00:12:09,920 --> 00:12:11,800 Speaker 2: and he just listed off a bunch of stuff that 243 00:12:11,880 --> 00:12:14,480 Speaker 2: wasn't true at all. I replied to it with kind 244 00:12:14,480 --> 00:12:16,320 Speaker 2: of like, what are you talking about, and then just 245 00:12:16,400 --> 00:12:18,200 Speaker 2: kind of shutting down a conversation and I'd let it 246 00:12:18,240 --> 00:12:20,400 Speaker 2: go after that. About two days later, I got an 247 00:12:20,440 --> 00:12:24,720 Speaker 2: email from my compliance department, who had been reading those 248 00:12:24,760 --> 00:12:29,560 Speaker 2: emails because that's their job, and they picked up in 249 00:12:29,600 --> 00:12:32,520 Speaker 2: the scanner thing because of his reply, which was in 250 00:12:32,679 --> 00:12:34,839 Speaker 2: my reply when I replied to it. I'm glad they 251 00:12:34,880 --> 00:12:36,559 Speaker 2: do that though, because what they're looking for is the 252 00:12:36,600 --> 00:12:39,800 Speaker 2: bad apples. They're looking for somebody who is communicating, in 253 00:12:40,280 --> 00:12:43,080 Speaker 2: providing guarantees and doing all this stuff. That's why they're 254 00:12:43,120 --> 00:12:45,240 Speaker 2: reading emails that leave the firm. I'm very glad they 255 00:12:45,240 --> 00:12:46,480 Speaker 2: did that, but it was just, yeah, I didn't know 256 00:12:46,480 --> 00:12:48,960 Speaker 2: they were looking that closely, because again they picked up 257 00:12:49,000 --> 00:12:51,440 Speaker 2: something that somebody else said and it simply came up 258 00:12:51,480 --> 00:12:53,959 Speaker 2: in my reply because his message was pasted at the 259 00:12:54,000 --> 00:12:56,280 Speaker 2: bottom of it, just the way Outlook does things. So anyway, 260 00:12:56,800 --> 00:12:58,920 Speaker 2: I believe compliance is there for a reason, and they 261 00:12:58,960 --> 00:13:01,200 Speaker 2: sure do a great job of keeping me from having 262 00:13:01,200 --> 00:13:01,960 Speaker 2: to know the rules. 263 00:13:02,400 --> 00:13:06,559 Speaker 1: Absolutely. Here's the all Worth advice. Don't just trust, verify, 264 00:13:06,840 --> 00:13:10,200 Speaker 1: ask the tough questions up front, because recovering from a 265 00:13:10,240 --> 00:13:14,040 Speaker 1: scam is a whole lot harder than preventing one in 266 00:13:14,040 --> 00:13:18,960 Speaker 1: the first place. Should gold be in every investor's portfolio. 267 00:13:19,000 --> 00:13:21,440 Speaker 1: There's a new argument out there being made for it. 268 00:13:21,480 --> 00:13:24,520 Speaker 1: We've got our take on that topic. Next, you're listening 269 00:13:24,520 --> 00:13:27,280 Speaker 1: to Simply Money presented by all Worth Financial on fifty 270 00:13:27,280 --> 00:13:34,760 Speaker 1: five KRC the talk station. You're listening to Simply Money 271 00:13:34,880 --> 00:13:38,439 Speaker 1: presented by Allworth Financial. Lumpbop sponsorer alone with Brian James. 272 00:13:39,000 --> 00:13:41,680 Speaker 1: If you can't listen to Simply Money every night, subscribe 273 00:13:41,800 --> 00:13:44,920 Speaker 1: and get our daily podcast. Just search Simply Money on 274 00:13:44,960 --> 00:13:50,000 Speaker 1: the iHeart app or wherever you find your podcast. How 275 00:13:50,000 --> 00:13:53,720 Speaker 1: do you adjust when your monthly budget and actual spending 276 00:13:54,000 --> 00:13:58,440 Speaker 1: just don't quite match up. We'll help two local couples 277 00:13:58,480 --> 00:14:01,600 Speaker 1: figure that out straight ahead at six forty three. That'll 278 00:14:01,640 --> 00:14:04,520 Speaker 1: be fun, Brian, all right, there's an opinion piece here 279 00:14:04,559 --> 00:14:07,559 Speaker 1: in Market Watts that we came across, and the headline 280 00:14:07,600 --> 00:14:11,559 Speaker 1: made this blanket statement quote, Gold just made the case 281 00:14:11,600 --> 00:14:15,480 Speaker 1: for why it should be in every investor's portfolio. The 282 00:14:15,640 --> 00:14:19,280 Speaker 1: article was written by Naim Oslam I hope I got 283 00:14:19,280 --> 00:14:23,240 Speaker 1: that name pronunciation right. He is a chief investment officer 284 00:14:23,280 --> 00:14:26,720 Speaker 1: at Zay Capital Markets in London. What do you say 285 00:14:26,720 --> 00:14:27,760 Speaker 1: about this, Brian. 286 00:14:28,120 --> 00:14:29,880 Speaker 2: Well, let's look at his arguments first. But what he's 287 00:14:29,920 --> 00:14:33,240 Speaker 2: talking about here, gold just surged past five thousand dollars 288 00:14:33,280 --> 00:14:35,480 Speaker 2: in ounce That's a historic high and that isn't just 289 00:14:35,480 --> 00:14:38,320 Speaker 2: about inflation or a week dollar anymore. So what his 290 00:14:38,400 --> 00:14:42,120 Speaker 2: argument is is that gold's rise reflects structural concerns about 291 00:14:42,160 --> 00:14:46,520 Speaker 2: geopolitical risks, unpredictable polities policy decisions and market instability. In 292 00:14:46,520 --> 00:14:49,360 Speaker 2: other words, he's saying investors aren't buying gold to chase 293 00:14:49,400 --> 00:14:51,760 Speaker 2: price gains. They're buying gold because they're worried about what 294 00:14:51,840 --> 00:14:54,360 Speaker 2: might happen. Now, Bob, I don't know about you, but 295 00:14:54,520 --> 00:14:58,040 Speaker 2: I think that defines every single time investors have bought gold. 296 00:14:58,080 --> 00:15:00,800 Speaker 2: It only happens when we have whole bunch of scary 297 00:15:00,840 --> 00:15:02,840 Speaker 2: things going on, and then we get the We get 298 00:15:02,840 --> 00:15:05,520 Speaker 2: the goldbrokers that come out of the woodwork who don't 299 00:15:05,560 --> 00:15:08,400 Speaker 2: care about the value of gold. They're trying to create 300 00:15:08,440 --> 00:15:10,480 Speaker 2: the transactions because they are the middleman. That's where you 301 00:15:10,520 --> 00:15:13,080 Speaker 2: start seeing all the commercials and you see all the 302 00:15:13,120 --> 00:15:15,160 Speaker 2: ads on the internet, and I'm seeing an awful lot 303 00:15:15,160 --> 00:15:17,800 Speaker 2: of that lately. But again, those shops don't own a 304 00:15:17,800 --> 00:15:19,400 Speaker 2: bunch of gold that they're trying to sell to you. 305 00:15:19,440 --> 00:15:21,720 Speaker 2: They're trying to affect the transactions so they can carve 306 00:15:21,760 --> 00:15:23,600 Speaker 2: off a little piece of it. They're just being broken. 307 00:15:24,400 --> 00:15:26,720 Speaker 1: Yeah, you make a good point there, and believe it 308 00:15:26,800 --> 00:15:28,440 Speaker 1: or not. And I didn't know we were going to 309 00:15:28,480 --> 00:15:31,040 Speaker 1: be doing this segment. Yesterday I listened to a pretty 310 00:15:31,080 --> 00:15:36,240 Speaker 1: interesting podcast with an interview with Peter Schiff, who is 311 00:15:36,280 --> 00:15:39,320 Speaker 1: a pretty well known investment guy and he actually owns 312 00:15:39,320 --> 00:15:42,880 Speaker 1: a gold company, a gold broker, among other things. And 313 00:15:42,920 --> 00:15:46,440 Speaker 1: he was warning folks exactly of the point you just made. 314 00:15:47,080 --> 00:15:50,320 Speaker 1: We all can flip on cable TV at night and 315 00:15:50,360 --> 00:15:54,400 Speaker 1: we see these celebrity spokespeople for gold, you know, go 316 00:15:54,520 --> 00:15:57,000 Speaker 1: on and on and on about why you should own gold. 317 00:15:57,120 --> 00:16:00,080 Speaker 1: And the point Peter was making, and it's a good one, 318 00:16:00,360 --> 00:16:04,160 Speaker 1: is there are tremendous markups on this stuff. I mean, 319 00:16:04,200 --> 00:16:07,160 Speaker 1: these gold companies that advertise all the time, they got 320 00:16:07,160 --> 00:16:09,560 Speaker 1: to come up with some money to pay for all 321 00:16:09,560 --> 00:16:12,480 Speaker 1: these advertisements. And the place they come up with the 322 00:16:12,560 --> 00:16:15,160 Speaker 1: money is this the bid and the ask on these 323 00:16:15,200 --> 00:16:18,400 Speaker 1: coins or bars or whatever between you know, what they're 324 00:16:18,440 --> 00:16:21,040 Speaker 1: really worth and what the public is paying for them, 325 00:16:21,480 --> 00:16:24,800 Speaker 1: you know, to say nothing of paying their celebrity spokesperson. 326 00:16:25,000 --> 00:16:29,000 Speaker 1: So it is kind of the wild West out there sometimes. 327 00:16:29,080 --> 00:16:32,720 Speaker 1: And and so buyer, beware if you're just saying, well, 328 00:16:32,840 --> 00:16:37,040 Speaker 1: so and so spokesperson who I love, they buy their 329 00:16:37,080 --> 00:16:40,360 Speaker 1: gold from that particular broker. So it should all be 330 00:16:40,440 --> 00:16:43,400 Speaker 1: good and you just dive in, you know, headfirst into 331 00:16:43,400 --> 00:16:46,640 Speaker 1: the pool. Good point that you raise there, But let's 332 00:16:46,760 --> 00:16:50,280 Speaker 1: let's get into the fundamentals of gold itself. I mean, 333 00:16:50,320 --> 00:16:53,000 Speaker 1: there's a lot of reasons to buy it, but I think, 334 00:16:54,320 --> 00:16:57,760 Speaker 1: at least from my standpoint, I look at it as 335 00:16:57,800 --> 00:17:00,880 Speaker 1: a good long term play. I think, with no more 336 00:17:00,920 --> 00:17:04,359 Speaker 1: than five to ten percent of your portfolio, just to 337 00:17:04,440 --> 00:17:07,800 Speaker 1: protect the purchasing power of your money. Because let's face it, 338 00:17:07,880 --> 00:17:11,200 Speaker 1: Ever since nineteen seventy one, when the United States went 339 00:17:11,200 --> 00:17:14,560 Speaker 1: off the gold standard, you know where you could actually trade, 340 00:17:15,000 --> 00:17:18,399 Speaker 1: you know, dollar for dollar currency for the current price 341 00:17:18,440 --> 00:17:23,240 Speaker 1: of gold, gold has gone up in value by a 342 00:17:23,480 --> 00:17:26,840 Speaker 1: way wider margin, you know, than the dollar. And I 343 00:17:27,160 --> 00:17:32,320 Speaker 1: think gold is a good hedge against inflation in purchasing power, 344 00:17:32,880 --> 00:17:35,960 Speaker 1: uh gold, I mean silver. Let's face it, Silver has 345 00:17:36,000 --> 00:17:39,800 Speaker 1: doubled already, Brian in twenty twenty six. You know, some 346 00:17:39,880 --> 00:17:42,439 Speaker 1: of this stuff is getting parabolic right now. There's a 347 00:17:42,440 --> 00:17:45,560 Speaker 1: lot of people I like in it in the short term. 348 00:17:45,560 --> 00:17:47,960 Speaker 1: Now I'm talking about short term trading. It's it's no 349 00:17:48,080 --> 00:17:50,680 Speaker 1: different than buying navidia. You know, after it goes up 350 00:17:51,040 --> 00:17:53,840 Speaker 1: three hundred percent and everybody knows about it, they start 351 00:17:53,880 --> 00:17:57,320 Speaker 1: asking questions, should I be in it? Well, the big 352 00:17:57,359 --> 00:17:59,600 Speaker 1: money has already been made. That doesn't mean don't get 353 00:17:59,600 --> 00:18:03,879 Speaker 1: into gold, but just understand that gold can decline in price, 354 00:18:04,040 --> 00:18:07,160 Speaker 1: it can fluctuate in price. It's a lot more ball 355 00:18:07,200 --> 00:18:11,000 Speaker 1: little of an asset, you know, then holding currency or 356 00:18:11,080 --> 00:18:13,960 Speaker 1: cash or what have your treasury bonds. So you just 357 00:18:14,040 --> 00:18:16,880 Speaker 1: got to look at why you're doing it, and over 358 00:18:16,960 --> 00:18:19,320 Speaker 1: what time frame, I guess is my look at it. 359 00:18:20,280 --> 00:18:23,439 Speaker 2: Yeah, And I think, you know, the for the for 360 00:18:23,480 --> 00:18:25,639 Speaker 2: those of you who are sitting on the sidelines and thinking, well, 361 00:18:25,640 --> 00:18:27,200 Speaker 2: I don't have any gold, maybe I should get into 362 00:18:27,200 --> 00:18:28,879 Speaker 2: precious metals and all that kind of thing. Remember the 363 00:18:28,920 --> 00:18:30,720 Speaker 2: time that you're doing your gut, your gut is telling 364 00:18:30,800 --> 00:18:32,760 Speaker 2: you to look into it at a time where, like 365 00:18:32,760 --> 00:18:34,919 Speaker 2: we just said, it's all at a historical high and 366 00:18:35,000 --> 00:18:35,960 Speaker 2: this is not yet. 367 00:18:36,119 --> 00:18:36,320 Speaker 3: Uh. 368 00:18:36,359 --> 00:18:38,720 Speaker 2: You know, this is not a question I'm taking from 369 00:18:38,720 --> 00:18:42,120 Speaker 2: clients very often right now, because you know, I think 370 00:18:42,200 --> 00:18:44,520 Speaker 2: that's because the market is actually holding up pretty well 371 00:18:44,560 --> 00:18:46,600 Speaker 2: and we're still it seems like it should be a 372 00:18:46,600 --> 00:18:49,080 Speaker 2: little bumpier than it is with you know, with concerns 373 00:18:49,119 --> 00:18:51,280 Speaker 2: about just about everything under the sun at the moment. 374 00:18:51,320 --> 00:18:53,520 Speaker 2: But right now, you know, I'll remember, all the market 375 00:18:53,520 --> 00:18:56,199 Speaker 2: cares about. The only opinion the market ever has is 376 00:18:56,760 --> 00:18:58,880 Speaker 2: can we make a profit or not? And right now 377 00:18:59,320 --> 00:19:01,719 Speaker 2: visibilities seems to be pretty good that that that that 378 00:19:01,880 --> 00:19:05,080 Speaker 2: is going to continue. Anything can drive us over the cliff. Remember, 379 00:19:05,119 --> 00:19:07,360 Speaker 2: we never we never have declared this soft landing from 380 00:19:07,640 --> 00:19:10,639 Speaker 2: you know, the from the COVID recession, but we just 381 00:19:10,720 --> 00:19:13,080 Speaker 2: kind of stopped talking about it. So there's still there's 382 00:19:13,080 --> 00:19:15,920 Speaker 2: still things out there, there are still challenges to be had, 383 00:19:16,320 --> 00:19:19,160 Speaker 2: but at the same time, just be calm and rational 384 00:19:19,200 --> 00:19:20,960 Speaker 2: and decide what you you know, if you want a 385 00:19:20,960 --> 00:19:23,199 Speaker 2: little piece and precious metals, that's fine, I have no 386 00:19:23,240 --> 00:19:25,360 Speaker 2: issue with that, But this is definitely not a time 387 00:19:25,359 --> 00:19:27,159 Speaker 2: and I'd say it's never a time to bet the 388 00:19:27,200 --> 00:19:30,080 Speaker 2: farm on any one thing or or don't. 389 00:19:29,840 --> 00:19:32,280 Speaker 1: Put money that you're gonna need then the next one 390 00:19:32,359 --> 00:19:34,719 Speaker 1: to two or even three years in gold. It is 391 00:19:34,800 --> 00:19:38,119 Speaker 1: not a short term liquidity vehicle. It is a long 392 00:19:38,240 --> 00:19:41,600 Speaker 1: term play, you know, to project protect your purchasing power 393 00:19:41,640 --> 00:19:44,040 Speaker 1: and by all means, if you're going to get involved, 394 00:19:44,680 --> 00:19:48,120 Speaker 1: find or get a referral to a good, reputable dealer 395 00:19:48,440 --> 00:19:50,639 Speaker 1: who will treat you right. Everybody's got to make a 396 00:19:50,640 --> 00:19:53,720 Speaker 1: little money, but you know, the markup should not be 397 00:19:53,800 --> 00:19:56,439 Speaker 1: that big. All right, here's the all Worth advice should 398 00:19:56,440 --> 00:19:59,879 Speaker 1: gold be in every investor's portfolio. Sure it can have 399 00:20:00,080 --> 00:20:03,920 Speaker 1: a place, but how much and why depends on your 400 00:20:04,200 --> 00:20:07,679 Speaker 1: personal long term financial goals. Coming up next, we launch 401 00:20:07,680 --> 00:20:10,760 Speaker 1: a rescue mission on one of the most overlooked parts 402 00:20:10,800 --> 00:20:15,000 Speaker 1: of high net worth portfolios that dreaded, neglected four oh 403 00:20:15,000 --> 00:20:17,639 Speaker 1: one K. You're listening to Simply Money presented by all 404 00:20:17,640 --> 00:20:21,399 Speaker 1: Worth Financial on fifty five KRC. The talk station is 405 00:20:21,440 --> 00:20:30,119 Speaker 1: fifty five KRC and iHeartRadio station. You're listening to Simply 406 00:20:30,160 --> 00:20:33,080 Speaker 1: Money presented by all Worth Financial on Bob Sponseller along 407 00:20:33,080 --> 00:20:36,439 Speaker 1: with Brian James. Let's be honest, when you hear the 408 00:20:36,480 --> 00:20:39,400 Speaker 1: words four oh one K, you probably think about your 409 00:20:39,560 --> 00:20:42,320 Speaker 1: very first job out of college. You set it, you 410 00:20:42,480 --> 00:20:45,640 Speaker 1: forget about it, and you move on. But if you're 411 00:20:45,680 --> 00:20:48,680 Speaker 1: now worth let's say a few million bucks, maybe even more, 412 00:20:49,040 --> 00:20:51,800 Speaker 1: that first four to oh one K or first two 413 00:20:51,920 --> 00:20:55,320 Speaker 1: or three four oh one ks could be the weakest 414 00:20:55,359 --> 00:20:59,080 Speaker 1: link in your whole financial plan if you've completely thrown 415 00:20:59,119 --> 00:21:02,400 Speaker 1: them in the proverbial drawer and forgotten about them. And 416 00:21:02,480 --> 00:21:05,080 Speaker 1: so tonight we're gonna go on a little rescue mission. 417 00:21:05,119 --> 00:21:07,879 Speaker 1: We're gonna tell the story of someone who built some 418 00:21:08,040 --> 00:21:11,320 Speaker 1: real wealth over the course of their career, but never 419 00:21:11,480 --> 00:21:15,080 Speaker 1: circled back to fix that major blind spot, those old 420 00:21:15,160 --> 00:21:16,000 Speaker 1: four oh one ks. 421 00:21:16,040 --> 00:21:18,879 Speaker 2: Brian, Well, we're gonna talk about Laura. Laura is a 422 00:21:18,920 --> 00:21:19,600 Speaker 2: fake person. 423 00:21:19,680 --> 00:21:19,840 Speaker 1: Now. 424 00:21:20,000 --> 00:21:22,000 Speaker 2: Most of our I say, all of our stories we 425 00:21:22,080 --> 00:21:24,320 Speaker 2: share here are real stories that come from real clients, 426 00:21:24,320 --> 00:21:26,879 Speaker 2: but obviously names are changed to protect the innocent, and 427 00:21:26,920 --> 00:21:29,880 Speaker 2: today the innocents fake name is Laura. Laura's fifty eight, 428 00:21:30,280 --> 00:21:32,399 Speaker 2: married with two grown kids, and she owns a marketing 429 00:21:32,440 --> 00:21:34,680 Speaker 2: firm in Cincinnati that did really well in her forties, 430 00:21:35,240 --> 00:21:36,960 Speaker 2: and today she and her husband have a net worth 431 00:21:37,000 --> 00:21:39,439 Speaker 2: of about three point two million, including some real estate 432 00:21:39,480 --> 00:21:43,399 Speaker 2: brokerage accounts, you know, growing cast reserve, typical assets for 433 00:21:43,440 --> 00:21:46,119 Speaker 2: somebody in that kind of a position, and life is good. 434 00:21:46,240 --> 00:21:48,240 Speaker 2: But she came out to me with a financial advisor 435 00:21:48,320 --> 00:21:51,399 Speaker 2: and during that whole review, what stuck out was a 436 00:21:51,440 --> 00:21:54,119 Speaker 2: four to oh one K that was a four hundred 437 00:21:54,119 --> 00:21:56,280 Speaker 2: and eighty thousand dollars account. You know, that's a significant 438 00:21:56,320 --> 00:21:58,359 Speaker 2: chunk of her networth, still one hundred percent in a 439 00:21:58,440 --> 00:22:03,040 Speaker 2: twenty thirty five target date fund, really no customization and 440 00:22:03,359 --> 00:22:05,680 Speaker 2: no real It looked like there hadn't been any discussion 441 00:22:05,720 --> 00:22:09,320 Speaker 2: of this account really at all, because she was busy 442 00:22:09,600 --> 00:22:11,720 Speaker 2: building her business and that's where their net worth was. 443 00:22:11,800 --> 00:22:13,640 Speaker 2: So now that wound up being a half million dollars, 444 00:22:13,680 --> 00:22:16,320 Speaker 2: they could have been handled a lot differently. She's, for example, 445 00:22:16,320 --> 00:22:18,240 Speaker 2: she's in a position where she's got a decent amount 446 00:22:18,240 --> 00:22:21,919 Speaker 2: of assets sitting there outside the four Okay, that's what 447 00:22:21,960 --> 00:22:25,399 Speaker 2: they're going to rely on to live off of in 448 00:22:25,400 --> 00:22:28,080 Speaker 2: the earlier years of retirement. That means that these accounts, 449 00:22:28,200 --> 00:22:30,959 Speaker 2: the tax advantage ones a couple of things Nobody had 450 00:22:31,040 --> 00:22:33,560 Speaker 2: had a conversation with her about should this stay, you know, 451 00:22:33,800 --> 00:22:36,200 Speaker 2: should this stay? And the traditional side, should we be 452 00:22:36,240 --> 00:22:39,600 Speaker 2: thinking about roth conversions here after you retire, and more importantly, 453 00:22:39,600 --> 00:22:41,600 Speaker 2: should it really be in a twenty five thirty twenty 454 00:22:41,640 --> 00:22:43,640 Speaker 2: thirty five target day fund that is not that far 455 00:22:43,680 --> 00:22:45,520 Speaker 2: out and that these assets are going to sit there 456 00:22:45,880 --> 00:22:48,400 Speaker 2: for you know, maybe twenty years or longer, or possibly 457 00:22:48,440 --> 00:22:50,480 Speaker 2: just be inherited by your kids. Then that is a 458 00:22:50,600 --> 00:22:53,080 Speaker 2: very very different strategy. That's really where we're talking about 459 00:22:53,160 --> 00:22:56,400 Speaker 2: roth conversions. But again, it sat there in the same 460 00:22:56,480 --> 00:22:58,720 Speaker 2: fund that she had decided when she first set the 461 00:22:58,760 --> 00:23:00,800 Speaker 2: thing up. When the business was barely off the ground 462 00:23:00,800 --> 00:23:03,200 Speaker 2: and hadn't thought about it ever since because she worked 463 00:23:03,200 --> 00:23:06,040 Speaker 2: so hard. The end result, it underperformed the market by 464 00:23:06,040 --> 00:23:08,440 Speaker 2: about two percent every year over the past seven years 465 00:23:08,440 --> 00:23:11,760 Speaker 2: because it was targeted for a risk tolerance portfolio that 466 00:23:11,880 --> 00:23:14,199 Speaker 2: really didn't match what she needed. Now, is this going 467 00:23:14,200 --> 00:23:16,480 Speaker 2: to bankrupt her, Of course not. But this is a 468 00:23:16,880 --> 00:23:19,159 Speaker 2: question of efficiency. When you look at any context of 469 00:23:19,160 --> 00:23:21,359 Speaker 2: her wealth. That's a big hole in the boat, Bob, 470 00:23:21,400 --> 00:23:23,160 Speaker 2: because she left a lot of money on the table 471 00:23:23,160 --> 00:23:25,840 Speaker 2: over those years for an asset that most likely is 472 00:23:25,920 --> 00:23:28,320 Speaker 2: going to sit there for several decades till it gets inherited. 473 00:23:29,119 --> 00:23:31,159 Speaker 1: Yeah. I think the important thing here is just to 474 00:23:31,200 --> 00:23:33,560 Speaker 1: make sure when you sit down with your advisor you 475 00:23:33,640 --> 00:23:37,280 Speaker 1: are talking about all of your assets, you actually know 476 00:23:37,359 --> 00:23:40,840 Speaker 1: what you have and where it's sitting. I mean, sitting 477 00:23:40,840 --> 00:23:44,680 Speaker 1: in a target twenty thirty five target date fund isn't 478 00:23:44,720 --> 00:23:46,880 Speaker 1: the worst thing in the world. I mean, the thing 479 00:23:46,960 --> 00:23:49,800 Speaker 1: got probably a pretty nice return over the period that 480 00:23:49,880 --> 00:23:52,760 Speaker 1: this person was ignoring it. I came across it. So 481 00:23:52,800 --> 00:23:55,680 Speaker 1: a situation late last year was which was a bit 482 00:23:55,720 --> 00:23:59,760 Speaker 1: more dramatic than that. These folks had sold a business 483 00:23:59,840 --> 00:24:02,920 Speaker 1: for quite a bit of money, and they were very 484 00:24:03,080 --> 00:24:06,200 Speaker 1: and are very risk averse people. I mean they want 485 00:24:06,240 --> 00:24:08,919 Speaker 1: to be almost one hundred percent in bonds, you know, 486 00:24:08,960 --> 00:24:11,359 Speaker 1: maybe a ten to twenty percent slice in the stock 487 00:24:11,440 --> 00:24:15,320 Speaker 1: market just for some inflation protection. And you know, I 488 00:24:15,400 --> 00:24:18,360 Speaker 1: asked them about these old couple, old four to one 489 00:24:18,440 --> 00:24:21,440 Speaker 1: K accounts that they had. They hadn't looked at them 490 00:24:21,480 --> 00:24:24,320 Speaker 1: in fifteen years, and I said, well, why don't you 491 00:24:24,400 --> 00:24:26,479 Speaker 1: send the statements and we'll look at it. Well, they 492 00:24:26,520 --> 00:24:30,040 Speaker 1: sent the statements, Brian, and they were one hundred percent 493 00:24:30,200 --> 00:24:33,399 Speaker 1: invested in the stock market and they were in a 494 00:24:33,480 --> 00:24:37,760 Speaker 1: variable annuity. So not only was the risk profile completely 495 00:24:37,840 --> 00:24:41,200 Speaker 1: different from where these people wanted to be today as 496 00:24:41,240 --> 00:24:44,200 Speaker 1: they progressed through their retirement years, but when you ran 497 00:24:44,520 --> 00:24:48,040 Speaker 1: a fee analysis on the whole thing, I mean they 498 00:24:48,040 --> 00:24:51,480 Speaker 1: were paying very very high fees upwards of you know, 499 00:24:51,480 --> 00:24:55,159 Speaker 1: about three percent all in on these annuities. And you know, 500 00:24:55,760 --> 00:24:59,119 Speaker 1: so again it in some cases it makes sense to 501 00:24:59,200 --> 00:25:01,440 Speaker 1: leave the money the four to one K if it 502 00:25:01,960 --> 00:25:04,560 Speaker 1: matches what you're trying to do and you can get 503 00:25:04,600 --> 00:25:07,199 Speaker 1: the investments for low cost. But in a lot of 504 00:25:07,280 --> 00:25:10,680 Speaker 1: cases it's not the case. This was one example where 505 00:25:10,760 --> 00:25:14,280 Speaker 1: it was just a no brainer for multiple reasons that 506 00:25:14,280 --> 00:25:17,439 Speaker 1: I've already covered. To just consolidate this over to the 507 00:25:17,480 --> 00:25:20,639 Speaker 1: assets that we were handling for them, and they were 508 00:25:20,680 --> 00:25:21,960 Speaker 1: glad we had the conversation. 509 00:25:22,880 --> 00:25:24,640 Speaker 2: Well, that's good to hear because and that's the whole 510 00:25:24,640 --> 00:25:27,560 Speaker 2: point of that entire type of a discussion, so just 511 00:25:27,560 --> 00:25:29,800 Speaker 2: to make sure you understand what you own. And I 512 00:25:29,800 --> 00:25:32,080 Speaker 2: would one of the interesting phenomenons we see every now 513 00:25:32,119 --> 00:25:35,040 Speaker 2: and as well we take people through this risk discussion, 514 00:25:35,440 --> 00:25:38,080 Speaker 2: they'll say that they're super conservative people and then, like 515 00:25:38,119 --> 00:25:40,000 Speaker 2: you just said, we look at the portfolio and it's 516 00:25:40,040 --> 00:25:44,320 Speaker 2: it's invested really really aggressively, and they haven't. And oftentimes 517 00:25:44,320 --> 00:25:46,720 Speaker 2: they won't. They'll show us this and they won't have 518 00:25:46,800 --> 00:25:49,000 Speaker 2: reacted to you know, twenty twenty two, which was one 519 00:25:49,000 --> 00:25:50,680 Speaker 2: of those I always say, one of the five worst 520 00:25:50,720 --> 00:25:53,119 Speaker 2: market years we've ever had, and it's like, are you 521 00:25:53,280 --> 00:25:56,760 Speaker 2: really risk this risk averse? Because it didn't appear to 522 00:25:56,800 --> 00:25:59,000 Speaker 2: have bothered you that twenty twenty two came out the 523 00:25:59,000 --> 00:26:01,280 Speaker 2: way it did. So it almost like sometimes those risk 524 00:26:01,359 --> 00:26:04,119 Speaker 2: questionnaires are more of a here's where I think we 525 00:26:04,160 --> 00:26:06,800 Speaker 2: should probably be, but we're really okay not being there. 526 00:26:07,040 --> 00:26:09,800 Speaker 2: So that's why risk is a discussion, not just a questionnaire. 527 00:26:09,840 --> 00:26:11,560 Speaker 2: But that's still an important thing for you to talk 528 00:26:11,600 --> 00:26:13,399 Speaker 2: about with your advisor to make sure everybody's on the 529 00:26:13,440 --> 00:26:14,080 Speaker 2: same page. 530 00:26:14,480 --> 00:26:17,199 Speaker 1: Here's the all Worth advice. If you've built some real wealth, 531 00:26:17,320 --> 00:26:19,800 Speaker 1: you can't afford to just let those old four to 532 00:26:19,960 --> 00:26:23,520 Speaker 1: one k plans lay around in coast. It deserves the 533 00:26:23,600 --> 00:26:27,919 Speaker 1: same level of scrutiny and customization as everything else in 534 00:26:27,960 --> 00:26:31,880 Speaker 1: your plan. All right, can you afford to give your kids, 535 00:26:32,040 --> 00:26:35,040 Speaker 1: let's say, twenty five thousand dollars each for a house 536 00:26:35,119 --> 00:26:38,639 Speaker 1: down payment and still retire comfortably. We'll dig into that 537 00:26:38,800 --> 00:26:42,160 Speaker 1: question from Loveland next, plus whether an eight thousand dollars 538 00:26:42,160 --> 00:26:46,160 Speaker 1: a month retirement budget really holds up over the long haul. 539 00:26:46,440 --> 00:26:49,000 Speaker 1: You're listening to Simply Money, presented by all Worth Financial 540 00:26:49,040 --> 00:26:56,720 Speaker 1: on fifty five KRC, the talk station. You're listening to 541 00:26:56,760 --> 00:26:59,240 Speaker 1: Simply Money that up by all Worth Financial on Bob 542 00:26:59,320 --> 00:27:02,400 Speaker 1: spondseller Low with Brian James. Do you have a financial 543 00:27:02,480 --> 00:27:04,760 Speaker 1: question you'd like for us to answer. There's a red 544 00:27:04,800 --> 00:27:07,080 Speaker 1: button you can click while you're listening to the show. 545 00:27:07,280 --> 00:27:10,679 Speaker 1: If you're listening on the iHeart app, simply record your 546 00:27:10,760 --> 00:27:14,320 Speaker 1: question and it will come straight to us. All right, 547 00:27:14,359 --> 00:27:17,879 Speaker 1: Brian greg And Madeira says, I'm worried that one bad 548 00:27:18,000 --> 00:27:22,280 Speaker 1: year early in retirement could change everything for us. What 549 00:27:22,400 --> 00:27:26,600 Speaker 1: practical steps can you take to protect against that without 550 00:27:26,680 --> 00:27:28,200 Speaker 1: parking everything in cash? 551 00:27:28,359 --> 00:27:31,440 Speaker 2: Great question, Well, Greg, you're talking about something called sequence 552 00:27:31,480 --> 00:27:33,880 Speaker 2: of returns risk. And the reason this is so dangerous 553 00:27:33,920 --> 00:27:36,639 Speaker 2: it's it's timing, not the long term averages. So a 554 00:27:36,720 --> 00:27:38,720 Speaker 2: poor market year, like you said, in the first few 555 00:27:38,760 --> 00:27:41,400 Speaker 2: years of retirement can permanently shrink that capital base you're 556 00:27:41,440 --> 00:27:44,080 Speaker 2: drawing off of, even if markets recover later, as they 557 00:27:44,160 --> 00:27:46,439 Speaker 2: have always have in the past. The solution is not 558 00:27:46,560 --> 00:27:48,960 Speaker 2: to walk away from growth, because this can happen. It's 559 00:27:49,000 --> 00:27:51,440 Speaker 2: to separate the income I need now from the money 560 00:27:51,440 --> 00:27:54,000 Speaker 2: that that can that can grow over time. So really, 561 00:27:54,040 --> 00:27:56,159 Speaker 2: what that looks like, you know, maybe somewhere between a 562 00:27:56,200 --> 00:27:59,399 Speaker 2: giant cash pile, you know, and and uh and no 563 00:27:59,520 --> 00:28:02,960 Speaker 2: cash pile at all. Build that retirement paycheck buffer. I 564 00:28:03,000 --> 00:28:04,840 Speaker 2: always suggest look a look at the things you're going 565 00:28:04,880 --> 00:28:06,680 Speaker 2: to need to spend money on, you know, the bills 566 00:28:06,720 --> 00:28:08,520 Speaker 2: that are coming due over the next twelve to twenty 567 00:28:08,520 --> 00:28:11,760 Speaker 2: four months. A good idea would be to make sure 568 00:28:11,760 --> 00:28:14,680 Speaker 2: that that particular pile of cash is sitting somewhere safe, 569 00:28:14,720 --> 00:28:16,639 Speaker 2: generating a little bit of interest, but its job is 570 00:28:16,680 --> 00:28:18,879 Speaker 2: to be spent to pay those bills. That means that 571 00:28:18,880 --> 00:28:21,440 Speaker 2: if the market does go the wrong direction earlier retirement, 572 00:28:21,600 --> 00:28:23,560 Speaker 2: it doesn't hurt you because you weren't going to spend 573 00:28:23,600 --> 00:28:26,760 Speaker 2: those particular dollars anyway. And you can also take this 574 00:28:26,760 --> 00:28:29,479 Speaker 2: a little further by looking at and segmenting your dollars 575 00:28:29,480 --> 00:28:31,800 Speaker 2: into buckets. You know, maybe the first bucket is money 576 00:28:31,840 --> 00:28:33,600 Speaker 2: you're going to need between now in three years, and 577 00:28:33,600 --> 00:28:35,840 Speaker 2: that's really liquid. You know, again you're looking for you know, 578 00:28:35,880 --> 00:28:38,160 Speaker 2: money markets, high yield, savings accounts, those kinds of things. 579 00:28:38,160 --> 00:28:41,280 Speaker 2: Maybe a CD second bucket for four to ten years, 580 00:28:41,440 --> 00:28:44,040 Speaker 2: which would be a little maybe like a balanced fund, 581 00:28:44,520 --> 00:28:47,120 Speaker 2: you know, inflation protected assets, those kinds of things. And 582 00:28:47,120 --> 00:28:49,000 Speaker 2: then of course you are ten years in out bucket. 583 00:28:49,000 --> 00:28:51,120 Speaker 2: That's the long term growth money that's going to be 584 00:28:51,120 --> 00:28:54,160 Speaker 2: pretty heavily invested toward the stock market side. So just 585 00:28:54,200 --> 00:28:57,680 Speaker 2: be thoughtful about when these dollars are due, and you 586 00:28:57,720 --> 00:29:00,280 Speaker 2: don't have to invest every single dollar the exact same 587 00:29:00,320 --> 00:29:02,480 Speaker 2: way if these are concerns. So I hope that helps 588 00:29:03,080 --> 00:29:05,280 Speaker 2: Ron and marymont Ron says they need about one hundred 589 00:29:05,280 --> 00:29:08,040 Speaker 2: and ten thousand dollars to live comfortably, and he's wondering 590 00:29:08,080 --> 00:29:10,880 Speaker 2: how much of that should come from dividends interests versus 591 00:29:10,880 --> 00:29:13,160 Speaker 2: selling investments, especially in a down market. 592 00:29:14,600 --> 00:29:17,480 Speaker 1: Well, ron I would first say, you know, don't let 593 00:29:17,480 --> 00:29:20,720 Speaker 1: the proverbial tax tail wag the dog, meaning that you 594 00:29:20,760 --> 00:29:24,680 Speaker 1: should build a financial plan based on your personal goals 595 00:29:25,200 --> 00:29:28,240 Speaker 1: and your investment risk tolerance, and then set your asset 596 00:29:28,360 --> 00:29:33,360 Speaker 1: allocation accordingly. Once that's done, you know, if you've got money, 597 00:29:33,800 --> 00:29:35,640 Speaker 1: like you said, if you've got money coming in from 598 00:29:35,680 --> 00:29:39,040 Speaker 1: dividends and interest from bonds or some dividend paying stocks, 599 00:29:39,080 --> 00:29:41,520 Speaker 1: you know that's those are going to be pretty consistent. 600 00:29:42,160 --> 00:29:43,920 Speaker 1: The other thing to look at, you know, if we're 601 00:29:43,920 --> 00:29:48,320 Speaker 1: talking about selling investments or using capital gains, you want 602 00:29:48,360 --> 00:29:51,520 Speaker 1: to try to get as much control over those capital 603 00:29:51,520 --> 00:29:55,520 Speaker 1: gains as possible, meaning have some type of tax loss 604 00:29:55,520 --> 00:29:59,239 Speaker 1: harvesting or tax smart investing going on, you know, in 605 00:29:59,280 --> 00:30:02,160 Speaker 1: your non eye or IRA accounts, so you have some 606 00:30:02,320 --> 00:30:07,040 Speaker 1: control over capital gains and when those are generated, versus 607 00:30:07,120 --> 00:30:09,400 Speaker 1: just waking up in the fourth quarter of the year 608 00:30:09,800 --> 00:30:12,520 Speaker 1: and being surprised when you get a capital gain distribution 609 00:30:13,000 --> 00:30:15,400 Speaker 1: Obviously from your question, I don't know how much of 610 00:30:15,440 --> 00:30:19,280 Speaker 1: your assets are in iras versus you know, taxable accounts. 611 00:30:19,360 --> 00:30:21,960 Speaker 1: That's a big, you know, part of this whole discussion too. 612 00:30:22,120 --> 00:30:25,440 Speaker 1: So I think, you know, sit down, build your plan 613 00:30:25,520 --> 00:30:29,360 Speaker 1: from an allocation standpoint, and a good fiduciary advisor can 614 00:30:29,400 --> 00:30:33,120 Speaker 1: take your plan and then also apply some tax mark 615 00:30:33,600 --> 00:30:37,200 Speaker 1: strategies to it as well to make sure that we're 616 00:30:37,560 --> 00:30:42,360 Speaker 1: pulling money from the right places without triggering unnecessary taxation. 617 00:30:42,600 --> 00:30:45,520 Speaker 1: Hope that helps all right. Alan In Lovelin says, we 618 00:30:45,560 --> 00:30:48,160 Speaker 1: want to give our kids twenty five thousand dollars each 619 00:30:48,720 --> 00:30:53,000 Speaker 1: toward home doown payments. How do I evaluate Brian making 620 00:30:53,040 --> 00:30:56,920 Speaker 1: those gifts against our long term plan instead of just 621 00:30:57,040 --> 00:30:59,680 Speaker 1: going with our gut and giving the kids the money. 622 00:31:00,000 --> 00:31:01,760 Speaker 2: This is a common you know, this is really the 623 00:31:01,760 --> 00:31:03,000 Speaker 2: core of financial planning. 624 00:31:03,080 --> 00:31:03,200 Speaker 1: Right. 625 00:31:03,280 --> 00:31:05,160 Speaker 2: So, I know I've got money now and I can 626 00:31:05,200 --> 00:31:07,680 Speaker 2: do whatever I want to do with it. But my 627 00:31:07,800 --> 00:31:10,240 Speaker 2: question is what's that impact in the future. Can I 628 00:31:10,240 --> 00:31:11,840 Speaker 2: get away with this now or is this going to 629 00:31:11,920 --> 00:31:13,720 Speaker 2: hurt me, you know, ten fifteen years down the line. 630 00:31:13,880 --> 00:31:16,160 Speaker 2: So think of it in terms of retirement income. A 631 00:31:16,240 --> 00:31:19,200 Speaker 2: permanent twenty five thousand dollars gift is probably about one 632 00:31:19,200 --> 00:31:22,080 Speaker 2: thousand to twelve to twelve hundred bucks a year of 633 00:31:22,160 --> 00:31:25,160 Speaker 2: lifetime spending you're giving up, and if you've got two 634 00:31:25,240 --> 00:31:27,640 Speaker 2: kids going on now, you're thinking twenty twenty five hundred 635 00:31:27,640 --> 00:31:30,160 Speaker 2: dollars per year for the rest of your life. So 636 00:31:30,400 --> 00:31:32,880 Speaker 2: now you're thinking this is different from can we spare 637 00:31:32,880 --> 00:31:36,160 Speaker 2: the cash? Now you're thinking are we comfortable trading this 638 00:31:36,240 --> 00:31:38,720 Speaker 2: much future spending for this outcome? And then you're also 639 00:31:38,760 --> 00:31:40,680 Speaker 2: going to look at what dollars that you're using for. 640 00:31:40,720 --> 00:31:43,720 Speaker 2: If this is coming from your own excess taxable assets, 641 00:31:43,920 --> 00:31:46,160 Speaker 2: then that risk is usually pretty managable, not too painful. 642 00:31:46,160 --> 00:31:47,560 Speaker 2: But if you're going to be taking this out of 643 00:31:47,920 --> 00:31:52,080 Speaker 2: tax sheltered accounts, you know wroth irase traditional iras, that's 644 00:31:52,120 --> 00:31:55,480 Speaker 2: going to be income taxable and or you're sacrificing that 645 00:31:55,520 --> 00:31:57,840 Speaker 2: tax free growth, that'll have a bigger impact on it. 646 00:31:58,480 --> 00:32:00,880 Speaker 2: And I would also stress that's the timing of it. 647 00:32:01,320 --> 00:32:03,640 Speaker 2: What if markets fall twenty percent right after we make 648 00:32:03,680 --> 00:32:05,600 Speaker 2: the gift, Well, hopefully you've already got a financial plan 649 00:32:05,640 --> 00:32:07,760 Speaker 2: in place where you can easily do this, model this 650 00:32:07,880 --> 00:32:10,200 Speaker 2: out and then pretend the market takes a hit. But 651 00:32:10,400 --> 00:32:12,920 Speaker 2: on the other hand, we don't know when you're talking 652 00:32:12,920 --> 00:32:14,360 Speaker 2: about doing this. You didn't give us the age of 653 00:32:14,360 --> 00:32:16,080 Speaker 2: your kids. They might be ten years old. We're talking 654 00:32:16,120 --> 00:32:18,120 Speaker 2: fifteen years now. You're thinking way ahead of time. It 655 00:32:18,120 --> 00:32:19,560 Speaker 2: could be this Christmas you're going to do it. 656 00:32:19,560 --> 00:32:19,960 Speaker 1: Who knows. 657 00:32:20,480 --> 00:32:22,400 Speaker 2: But in any case, what I would look at is 658 00:32:22,440 --> 00:32:25,880 Speaker 2: what have your investments done recently, because very often the market, 659 00:32:26,120 --> 00:32:28,240 Speaker 2: if the market has had a positive run, you might 660 00:32:28,280 --> 00:32:30,160 Speaker 2: be able to do these gifts with money you didn't 661 00:32:30,200 --> 00:32:33,080 Speaker 2: have a few months ago. If that's the case, oftentimes 662 00:32:33,120 --> 00:32:35,800 Speaker 2: I say, you know, as long as the plan floats, 663 00:32:35,960 --> 00:32:38,520 Speaker 2: take the windfall that you found from that recent market 664 00:32:38,520 --> 00:32:41,040 Speaker 2: performance and do the things that you want to do 665 00:32:41,080 --> 00:32:43,240 Speaker 2: for your family. So it's not about affordability, it's about 666 00:32:43,240 --> 00:32:45,960 Speaker 2: intentional trade offs. If you'd still be comfortable with that 667 00:32:46,000 --> 00:32:48,560 Speaker 2: decision after a bad market year, it fits the plan, 668 00:32:48,800 --> 00:32:51,600 Speaker 2: if you wouldn't change the size, the timing, or maybe 669 00:32:51,600 --> 00:32:54,440 Speaker 2: the source of that gift. We got one more for 670 00:32:54,920 --> 00:32:57,400 Speaker 2: Tony in Newport, and Tony's asking about a single stock. 671 00:32:57,440 --> 00:32:59,880 Speaker 2: He's got one worth over a half million dollars in 672 00:33:00,000 --> 00:33:02,560 Speaker 2: it's about twenty five percent of their portfolio. He said, 673 00:33:02,600 --> 00:33:04,240 Speaker 2: he's concerned that if he sells it all, he's going 674 00:33:04,280 --> 00:33:06,960 Speaker 2: to owe about ninety thousand dollars in capital gains, and 675 00:33:07,000 --> 00:33:09,240 Speaker 2: it's he's wondering if it's smarter to spread that out 676 00:33:09,280 --> 00:33:11,120 Speaker 2: over the years or just tear the band aid off 677 00:33:11,120 --> 00:33:14,000 Speaker 2: and write the check and smile, Well. 678 00:33:13,760 --> 00:33:16,000 Speaker 1: Tony, you know, if you can help it. We don't 679 00:33:16,040 --> 00:33:18,160 Speaker 1: want to just you know, rip the band aid off 680 00:33:18,160 --> 00:33:21,480 Speaker 1: and write a ninety thousand dollars check. Usually there's some 681 00:33:21,600 --> 00:33:24,080 Speaker 1: better ways to go about this. But you know, twenty 682 00:33:24,120 --> 00:33:27,080 Speaker 1: five percent of your overall net worth is a bit high, 683 00:33:27,160 --> 00:33:29,000 Speaker 1: and we want to try to get that down, you know, 684 00:33:29,120 --> 00:33:32,680 Speaker 1: under ten if we can, but do it responsibly. So 685 00:33:32,840 --> 00:33:35,200 Speaker 1: we got to take a look at your overall tax situation, 686 00:33:35,440 --> 00:33:38,640 Speaker 1: what your income goals are. I mean, just as a reminder, 687 00:33:38,800 --> 00:33:41,760 Speaker 1: you know, up to ninety six thousand and change of 688 00:33:41,880 --> 00:33:45,920 Speaker 1: taxable income, you don't pay any capital gains taxes. So 689 00:33:46,040 --> 00:33:48,800 Speaker 1: you might be able to, you know, to use your words, 690 00:33:48,920 --> 00:33:51,480 Speaker 1: rip some of the band aid off this year, spread 691 00:33:51,480 --> 00:33:53,800 Speaker 1: it over a couple of years, and maybe you know, 692 00:33:53,960 --> 00:33:57,440 Speaker 1: gradually move down out of that position without paying any 693 00:33:57,520 --> 00:34:00,400 Speaker 1: taxes at all. But you know, the other option is 694 00:34:00,440 --> 00:34:03,680 Speaker 1: you can literally use options, meaning you can buy some 695 00:34:03,720 --> 00:34:06,560 Speaker 1: put protection to protect your downside. If you want to 696 00:34:06,560 --> 00:34:09,640 Speaker 1: help pay for some of that downside protection, sell and 697 00:34:09,719 --> 00:34:11,799 Speaker 1: out of the money call option on your stock to 698 00:34:11,880 --> 00:34:14,480 Speaker 1: help pay for some of that. There's some there's varying 699 00:34:14,480 --> 00:34:17,279 Speaker 1: ways to go about it, but yeah, I would not 700 00:34:17,440 --> 00:34:19,560 Speaker 1: rip the band aid off at once, sit down with 701 00:34:19,600 --> 00:34:22,719 Speaker 1: a good fiduciary advisor and come up with a good strategy. 702 00:34:23,000 --> 00:34:25,560 Speaker 1: All right, coming up next, I've got my two cents 703 00:34:25,600 --> 00:34:28,560 Speaker 1: on a few things to consider when you go over 704 00:34:28,800 --> 00:34:32,719 Speaker 1: a periodic review of your life insurance. You're listening to 705 00:34:32,719 --> 00:34:35,720 Speaker 1: Simply Money presented by Allworth Financial on fifty five KRC 706 00:34:36,200 --> 00:34:41,920 Speaker 1: the talk station. You're listening to Simply Money presented by 707 00:34:41,920 --> 00:34:46,080 Speaker 1: Allworth Financial on Bob Sponseller along with Brian James. Let's 708 00:34:46,080 --> 00:34:48,960 Speaker 1: spend a few minutes talking about what everybody should do 709 00:34:49,040 --> 00:34:52,160 Speaker 1: as part of their comprehensive financial plan. I'd say at 710 00:34:52,200 --> 00:34:54,279 Speaker 1: least every two to three years. And that's just a 711 00:34:54,320 --> 00:34:57,440 Speaker 1: life insurance review. Brian, Let's get into some of the 712 00:34:57,480 --> 00:35:00,200 Speaker 1: things we should be reviewing. What it was? What does 713 00:35:00,239 --> 00:35:03,440 Speaker 1: a life insurance review actually mean? I think I'd start 714 00:35:03,480 --> 00:35:07,399 Speaker 1: with step one. As part of your financial plan, determine 715 00:35:07,760 --> 00:35:11,640 Speaker 1: how much life insurance you even still need, giving your 716 00:35:11,719 --> 00:35:15,239 Speaker 1: current goals in your current stage of life, not what 717 00:35:15,760 --> 00:35:18,319 Speaker 1: you know was in place fifteen, twenty thirty years ago. 718 00:35:18,520 --> 00:35:20,600 Speaker 1: So a lot of people never do that. They have 719 00:35:20,719 --> 00:35:23,960 Speaker 1: these old policies they've had for years or decades, they 720 00:35:23,960 --> 00:35:26,160 Speaker 1: don't touch them, they don't look at them, and they 721 00:35:26,160 --> 00:35:28,360 Speaker 1: don't even you know, take a look at do I 722 00:35:28,480 --> 00:35:30,920 Speaker 1: even still need them? And a lot of times, Brian, 723 00:35:31,320 --> 00:35:34,040 Speaker 1: there's a lot of hidden cash value in these policies 724 00:35:34,400 --> 00:35:37,960 Speaker 1: that could be put to better use elsewhere. So that's 725 00:35:37,960 --> 00:35:40,279 Speaker 1: step one. Take a look at whether it's you know, 726 00:35:40,440 --> 00:35:44,200 Speaker 1: insurance that you actually still need or want. The other thing, 727 00:35:44,239 --> 00:35:48,400 Speaker 1: if you're talking about cash value type of policies, and Brian, 728 00:35:48,480 --> 00:35:51,959 Speaker 1: I find fewer and fewer I'll call them advisors. Even 729 00:35:52,040 --> 00:35:56,319 Speaker 1: do this anymore, is do what's called an enforce illustration 730 00:35:56,440 --> 00:36:00,359 Speaker 1: of the policy. Go back to the insurance company and say, hey, 731 00:36:00,880 --> 00:36:04,800 Speaker 1: run an illustration as of today based on the current 732 00:36:05,120 --> 00:36:08,040 Speaker 1: amount of cash value, and assuming I want to keep 733 00:36:08,120 --> 00:36:10,960 Speaker 1: this coverage for the next fifteen to twenty years, what 734 00:36:11,080 --> 00:36:13,480 Speaker 1: am I gonna need to pay out of pocket to 735 00:36:13,600 --> 00:36:17,480 Speaker 1: keep this thing inforced? With the current interest rates structure 736 00:36:17,800 --> 00:36:19,759 Speaker 1: and then run in a couple different ways. What if 737 00:36:19,800 --> 00:36:23,080 Speaker 1: interest rates go up interest rates go down. If you're 738 00:36:23,080 --> 00:36:26,040 Speaker 1: in a variable policy where your cash value is tied 739 00:36:26,080 --> 00:36:28,160 Speaker 1: to the stock and bond market, you want to look 740 00:36:28,160 --> 00:36:31,200 Speaker 1: at some variable average rates of return there too. What 741 00:36:31,320 --> 00:36:34,320 Speaker 1: we don't want to have happen is someone who really 742 00:36:34,360 --> 00:36:37,920 Speaker 1: wants to keep life insurance into their eighties or nineties 743 00:36:38,239 --> 00:36:41,280 Speaker 1: wake up at AIDS seventy seven seventy eight and realize 744 00:36:41,320 --> 00:36:44,400 Speaker 1: their cash value is about to go to zero, which 745 00:36:44,440 --> 00:36:48,960 Speaker 1: means unless they start writing humongous checks, their coverage is 746 00:36:49,000 --> 00:36:51,560 Speaker 1: going to lapse. So those are a couple things to 747 00:36:51,640 --> 00:36:55,319 Speaker 1: factor in, you know, as you're doing insurance reviews. I 748 00:36:55,360 --> 00:36:57,960 Speaker 1: guess the third one would be, you know, if we 749 00:36:58,080 --> 00:37:01,839 Speaker 1: decide that the life insurance is really not something that's 750 00:37:01,840 --> 00:37:05,279 Speaker 1: suitable for your current financial plan, there's some things that 751 00:37:05,320 --> 00:37:07,840 Speaker 1: you can do with that coverage. You can try to 752 00:37:07,920 --> 00:37:12,120 Speaker 1: convert that into some long term care type of coverage, 753 00:37:12,320 --> 00:37:15,640 Speaker 1: maybe a hybrid approach, or you know, just put it 754 00:37:15,680 --> 00:37:19,480 Speaker 1: into you know, avoid the taxes, put it into an annuity, 755 00:37:19,560 --> 00:37:21,440 Speaker 1: turn it into an income stream. There's a lot of 756 00:37:21,480 --> 00:37:24,400 Speaker 1: options there. The important thing is to sit down with 757 00:37:24,480 --> 00:37:28,200 Speaker 1: a good fiduciary advisor, someone that's not just trying to 758 00:37:28,239 --> 00:37:32,200 Speaker 1: sell you the next insurance product, but actually customize what 759 00:37:32,239 --> 00:37:35,920 Speaker 1: you have into your current financial plan based on your 760 00:37:35,920 --> 00:37:38,799 Speaker 1: current needs. Yeah. I think you run into this all 761 00:37:38,800 --> 00:37:39,720 Speaker 1: the time too, Brian. 762 00:37:39,840 --> 00:37:42,719 Speaker 2: Yeah, My absolute favorite thing to do is when we 763 00:37:42,760 --> 00:37:45,920 Speaker 2: find a policy like this, where it was and most 764 00:37:46,000 --> 00:37:48,680 Speaker 2: times it was these things were purchased for good reason. Right, 765 00:37:48,719 --> 00:37:50,839 Speaker 2: we got babies, Now we got a mortgage, and we're 766 00:37:50,840 --> 00:37:52,759 Speaker 2: going to buy a whole life policy because that's what 767 00:37:52,960 --> 00:37:54,839 Speaker 2: is recommended to be a good idea. Now, now thirty 768 00:37:54,920 --> 00:37:57,440 Speaker 2: years have gone by, mortgages paid, the kids have their 769 00:37:57,480 --> 00:38:00,640 Speaker 2: own mortgages, we just don't need this anymore. Asolutely, favorite 770 00:38:00,640 --> 00:38:02,919 Speaker 2: thing is to redeploy that into something that doesn't cost 771 00:38:02,920 --> 00:38:06,120 Speaker 2: a nickel in taxes, but now we'll provide long term 772 00:38:06,120 --> 00:38:08,879 Speaker 2: care benefits. That's like trading in your old thirteen inch 773 00:38:08,920 --> 00:38:13,440 Speaker 2: black and white TV for a sixty inch led screen 774 00:38:13,520 --> 00:38:16,200 Speaker 2: and not paying in anything at all. You're just redeploying 775 00:38:16,239 --> 00:38:18,560 Speaker 2: those assets for a need you have now and getting 776 00:38:18,600 --> 00:38:20,360 Speaker 2: rid of that need you don't have anymore. 777 00:38:21,080 --> 00:38:23,279 Speaker 1: Yeah, So just again, make sure you sit down with 778 00:38:23,360 --> 00:38:26,480 Speaker 1: your advisor and talk about this stuff, because there might 779 00:38:26,520 --> 00:38:30,279 Speaker 1: be some better, more efficient uses for that capital that 780 00:38:30,320 --> 00:38:32,319 Speaker 1: you've worked so hard to build over the years. Thanks 781 00:38:32,360 --> 00:38:35,120 Speaker 1: for listening tonight. You've been listening to Simply Money presented 782 00:38:35,120 --> 00:38:38,360 Speaker 1: by All with Financial on fifty five KRC, the talk. 783 00:38:38,200 --> 00:38:40,160 Speaker 2: Station Mark Levin. 784 00:38:40,400 --> 00:38:44,200 Speaker 3: Let me tell you the Internet is breeding evil, breeding evil, 785 00:38:44,320 --> 00:38:46,880 Speaker 3: and TikTok is the main culprit. And I don't know 786 00:38:46,920 --> 00:38:49,440 Speaker 3: what's happening with TikTok, but that damn thing needs to 787 00:38:49,480 --> 00:38:51,600 Speaker 3: be sold now and it needs to be cleaned up. 788 00:38:51,680 --> 00:38:53,480 Speaker 3: And I don't want to hear about free speech and 789 00:38:53,520 --> 00:38:56,680 Speaker 3: everything else. It's a private company. The company needs to 790 00:38:56,719 --> 00:38:59,560 Speaker 3: clean it up because this is crazy, between the communist 791 00:38:59,680 --> 00:39:02,600 Speaker 3: Chinese and all the crap that people put on this stuff. 792 00:39:02,640 --> 00:39:06,360 Speaker 2: Mark Levin tonight at ten o six on fifty five KRC. 793 00:39:06,800 --> 00:39:10,120 Speaker 2: The talk station. Berner was recently ranked number