1 00:00:08,000 --> 00:00:11,920 Speaker 1: Tonight, the hidden risks that those with a nice nest 2 00:00:12,039 --> 00:00:15,360 Speaker 1: egg off and overlook. You're listening to something running if 3 00:00:15,400 --> 00:00:19,600 Speaker 1: I all were financial Bob spunt Seller, along with Brian James, tonight, 4 00:00:19,600 --> 00:00:22,320 Speaker 1: we're shining a light on something that doesn't get nearly 5 00:00:22,440 --> 00:00:27,760 Speaker 1: enough attention, and that's the hidden risks financially comfortable families 6 00:00:27,840 --> 00:00:33,200 Speaker 1: off and overlook. When we say financially comfortable, we're talking 7 00:00:33,280 --> 00:00:38,200 Speaker 1: about everyday folks, not the hie rollers and multi millionaires 8 00:00:38,320 --> 00:00:41,280 Speaker 1: like Brian who fly a rynd On private jet. 9 00:00:42,520 --> 00:00:42,720 Speaker 2: Yeah. 10 00:00:43,000 --> 00:00:44,800 Speaker 3: I meant to tell you, Bob, I scratched your car 11 00:00:44,800 --> 00:00:46,760 Speaker 3: in the parking lot this morning with my private jet. 12 00:00:46,800 --> 00:00:48,480 Speaker 3: My bed came in a little too hot. 13 00:00:48,720 --> 00:00:48,920 Speaker 2: Yeah. 14 00:00:48,960 --> 00:00:50,760 Speaker 3: So who are we talking about here? Who falls into 15 00:00:50,760 --> 00:00:53,280 Speaker 3: this category? If you've built a comfortable life, a second home, 16 00:00:53,360 --> 00:00:56,200 Speaker 3: we've got investment accounts, maybe even a family business, you 17 00:00:56,280 --> 00:00:58,800 Speaker 3: might assume that you've checked all the financial boxes. But 18 00:00:59,000 --> 00:01:01,000 Speaker 3: there's a lot of risks that are still quietly sitting 19 00:01:01,000 --> 00:01:03,480 Speaker 3: in the background. They could sneak up and come get you. 20 00:01:03,560 --> 00:01:06,000 Speaker 3: One of the big ones, Bob, is liability. So this 21 00:01:06,040 --> 00:01:08,640 Speaker 3: is where an umbrella insurance policy comes in. A lot 22 00:01:08,640 --> 00:01:11,840 Speaker 3: of people think they're covered until something big happens. So 23 00:01:12,120 --> 00:01:14,960 Speaker 3: you're autoing your homeowns assurance that might give you a 24 00:01:15,000 --> 00:01:17,280 Speaker 3: half million dollars in liability coverage, and you might think 25 00:01:17,280 --> 00:01:19,760 Speaker 3: that that can check the box. But things can happen. 26 00:01:19,760 --> 00:01:22,039 Speaker 3: They have nothing to do with your car or with you. 27 00:01:22,120 --> 00:01:25,039 Speaker 3: What happens if your teenager causes a major car accident, 28 00:01:25,280 --> 00:01:27,720 Speaker 3: somebody is seriously injured at a rental property you have, 29 00:01:27,959 --> 00:01:30,280 Speaker 3: or falls on the ice outside your own home, Suddenly 30 00:01:30,280 --> 00:01:32,640 Speaker 3: you're on the hook for millions of dollars. That's what 31 00:01:32,680 --> 00:01:36,080 Speaker 3: an umbrella policy will cover. They're very cheap. It did 32 00:01:36,120 --> 00:01:38,280 Speaker 3: not much to add on maybe three four hundred dollars 33 00:01:38,280 --> 00:01:41,000 Speaker 3: to add a million dollars worth of coverage, but they 34 00:01:41,000 --> 00:01:43,759 Speaker 3: will cover things that could absolutely sink your ship. That's 35 00:01:43,760 --> 00:01:46,280 Speaker 3: why it's so cheap. The events that they cover, the 36 00:01:46,360 --> 00:01:48,800 Speaker 3: risks that they cover are fairly rare that they're going 37 00:01:48,840 --> 00:01:50,760 Speaker 3: to occur, so it doesn't cost very much, but if 38 00:01:50,800 --> 00:01:53,800 Speaker 3: they do occur, they are absolutely ship sinkers. 39 00:01:54,640 --> 00:01:57,400 Speaker 1: Yeah, it's really one of the best returns on peace 40 00:01:57,440 --> 00:02:02,800 Speaker 1: of mind out there. It's something to get enough liability 41 00:02:02,840 --> 00:02:05,440 Speaker 1: covers to cover basically your net worth in case you 42 00:02:05,480 --> 00:02:08,720 Speaker 1: get sued because the higher your net. 43 00:02:08,560 --> 00:02:11,040 Speaker 2: Worth goes up, the more of a target you are. 44 00:02:11,760 --> 00:02:15,240 Speaker 1: And with all the cybersecurity stuff out there and people 45 00:02:15,280 --> 00:02:19,200 Speaker 1: getting their hands on your information, you know, we're often 46 00:02:19,240 --> 00:02:23,760 Speaker 1: surprised at how many people know about our situation. And yeah, 47 00:02:23,800 --> 00:02:26,200 Speaker 1: you want to take that bullseye off your chest and 48 00:02:26,240 --> 00:02:29,400 Speaker 1: make sure you're covered in case something wild and crazy 49 00:02:29,440 --> 00:02:31,440 Speaker 1: happens that we don't see coming down the pipe. 50 00:02:31,800 --> 00:02:35,200 Speaker 3: Yeah. So when I bought my umbrella policy, my my 51 00:02:35,320 --> 00:02:37,920 Speaker 3: property and casualty guy pointed out to me it was 52 00:02:37,919 --> 00:02:40,240 Speaker 3: something I needed, and because I was having conversations about 53 00:02:40,240 --> 00:02:43,600 Speaker 3: the first of at the time three coming young drivers, 54 00:02:43,880 --> 00:02:45,880 Speaker 3: and he basically said, you're kind of an idiot if 55 00:02:45,880 --> 00:02:47,960 Speaker 3: you don't do this, And from there we got into 56 00:02:48,000 --> 00:02:50,880 Speaker 3: a conversation about what else does it cover, and I 57 00:02:51,040 --> 00:02:53,360 Speaker 3: basically told him to throw the whole thing into the boat, 58 00:02:53,400 --> 00:02:55,560 Speaker 3: because any of this stuff can happen to me. So 59 00:02:55,600 --> 00:02:57,480 Speaker 3: one of the bigger ones that wasn't really a thing 60 00:02:57,520 --> 00:02:59,960 Speaker 3: ten fifteen years ago, Like you just mentioned it, CyberSecure. 61 00:03:00,520 --> 00:03:03,280 Speaker 3: So there's a reason we bring the expert Dave Hatter 62 00:03:03,400 --> 00:03:05,000 Speaker 3: on our show to talk about these things. 63 00:03:05,120 --> 00:03:05,680 Speaker 2: If you are a. 64 00:03:05,600 --> 00:03:08,360 Speaker 3: Wealthier family, then you've got a lot of things out there. 65 00:03:08,360 --> 00:03:09,679 Speaker 3: You've got a lot of irons in the fire, and 66 00:03:09,720 --> 00:03:12,000 Speaker 3: a lot of that stuff is tied to Internet access. 67 00:03:12,160 --> 00:03:14,560 Speaker 3: So that makes you a prime target not just for 68 00:03:14,639 --> 00:03:18,880 Speaker 3: identity theft, but ransomware, financial fraud, phishing attacks, any way 69 00:03:18,919 --> 00:03:21,480 Speaker 3: that they can get into your assistant to your system. 70 00:03:21,520 --> 00:03:25,280 Speaker 3: And remember how often we hear about data being exposed 71 00:03:25,280 --> 00:03:27,680 Speaker 3: in ways that it shouldn't just about every big box store, 72 00:03:27,760 --> 00:03:31,000 Speaker 3: some government agencies, lots of places have exposed your data, 73 00:03:31,320 --> 00:03:33,720 Speaker 3: So it's not too hard for these criminals to piece 74 00:03:33,800 --> 00:03:36,240 Speaker 3: lots of things together to figure out that you might 75 00:03:36,320 --> 00:03:37,880 Speaker 3: be a big, fat, tasty target. 76 00:03:37,920 --> 00:03:40,240 Speaker 2: So they're going to come after it. Well, let's not 77 00:03:40,280 --> 00:03:41,880 Speaker 2: forget about our kids either. 78 00:03:41,960 --> 00:03:45,120 Speaker 1: I mean, my youngest son, who's now I think twenty four, 79 00:03:45,360 --> 00:03:48,800 Speaker 1: still has a TikTok account. And I mean we all 80 00:03:48,880 --> 00:03:51,720 Speaker 1: know how those You know, there's all these Chinese bots 81 00:03:51,760 --> 00:03:54,760 Speaker 1: that monitor everything that goes on TikTok. I've tried to 82 00:03:54,760 --> 00:03:57,839 Speaker 1: get them to cancel that thing for years. I think 83 00:03:57,880 --> 00:04:01,520 Speaker 1: that younger generations they love TikTok for some reason, but 84 00:04:01,600 --> 00:04:06,280 Speaker 1: it exposes them and possibly me to people getting a 85 00:04:06,320 --> 00:04:07,200 Speaker 1: hold of information. 86 00:04:07,400 --> 00:04:08,040 Speaker 2: I don't like it. 87 00:04:08,080 --> 00:04:10,560 Speaker 1: I wish it go away, but yet that's another reason 88 00:04:10,640 --> 00:04:12,400 Speaker 1: to have, you know, liability protection. 89 00:04:12,760 --> 00:04:14,600 Speaker 3: Come on, Bob, and we all know you you're a 90 00:04:14,600 --> 00:04:16,640 Speaker 3: big TikTok star out there. I know you're dancing in 91 00:04:16,640 --> 00:04:18,359 Speaker 3: front of your phone on a nightly basis just to 92 00:04:18,360 --> 00:04:19,560 Speaker 3: blow off team you can. 93 00:04:19,720 --> 00:04:22,599 Speaker 1: Well, I did put a credit freeze on all my 94 00:04:22,760 --> 00:04:25,360 Speaker 1: stuff for that reason, so at least nobody can. 95 00:04:25,240 --> 00:04:28,880 Speaker 2: Go borrow money. Question. 96 00:04:29,600 --> 00:04:32,920 Speaker 1: We talked about some of the solutions multi factor authentication, 97 00:04:33,080 --> 00:04:36,599 Speaker 1: which I think now really comes with about everything we 98 00:04:36,720 --> 00:04:39,200 Speaker 1: deal with and I know people get aggravated by it, 99 00:04:39,600 --> 00:04:43,920 Speaker 1: but it is there, uh, for our protection, and some people, 100 00:04:43,960 --> 00:04:46,560 Speaker 1: Brian go to the step of hiring someone to like 101 00:04:46,600 --> 00:04:50,919 Speaker 1: a Dave Hatter, a cybersecurity consultant, just to take a 102 00:04:50,960 --> 00:04:53,599 Speaker 1: look at all of our don't and do kind of 103 00:04:53,600 --> 00:04:57,159 Speaker 1: a one time sweep to get some of this stuff 104 00:04:57,200 --> 00:04:59,920 Speaker 1: off of our computers that can make us an easy target. 105 00:05:00,480 --> 00:05:03,360 Speaker 3: Right, And let's drill into that multi factor authentication stuff 106 00:05:03,360 --> 00:05:05,000 Speaker 3: a little bit, because I think that gets that those 107 00:05:05,040 --> 00:05:07,680 Speaker 3: are big words that get thrown around. People don't generally understand. Yes, 108 00:05:07,720 --> 00:05:10,000 Speaker 3: you can hire a consultant, but there are things available 109 00:05:10,000 --> 00:05:12,719 Speaker 3: on your computers and your phones right now. For example, 110 00:05:12,800 --> 00:05:15,200 Speaker 3: Google has an authenticator app that's already built into your 111 00:05:15,240 --> 00:05:17,920 Speaker 3: Android phone, can be downloaded on iOS, and it will 112 00:05:17,960 --> 00:05:21,440 Speaker 3: generate a random number that you can tie to your 113 00:05:21,440 --> 00:05:24,960 Speaker 3: bank accounts, to to other things. That itself is multi 114 00:05:24,960 --> 00:05:28,960 Speaker 3: factor authentication. Plus you're already doing multi factor authentication. If 115 00:05:29,200 --> 00:05:31,839 Speaker 3: the website sends you a text message with a number in, 116 00:05:31,920 --> 00:05:33,800 Speaker 3: it's the same kind of thing. But there are apps 117 00:05:33,800 --> 00:05:35,719 Speaker 3: on your phone built in already that will allow you 118 00:05:35,760 --> 00:05:38,080 Speaker 3: to put that in place. If you need more than that, 119 00:05:38,080 --> 00:05:40,120 Speaker 3: then absolutely go hire a consultant and they'll tell you 120 00:05:40,160 --> 00:05:41,200 Speaker 3: exactly where your holes are. 121 00:05:41,560 --> 00:05:42,400 Speaker 2: Well, this is good. 122 00:05:42,520 --> 00:05:44,919 Speaker 1: It sounds like you've already forgotten more than I know 123 00:05:45,000 --> 00:05:47,240 Speaker 1: about all this stuff. And since your office is right 124 00:05:47,279 --> 00:05:49,240 Speaker 1: next to mine, how about if I buy you lunch 125 00:05:49,279 --> 00:05:51,320 Speaker 1: and you come into my office and look at all 126 00:05:51,360 --> 00:05:52,800 Speaker 1: my stuff and help me get some. 127 00:05:52,800 --> 00:05:55,159 Speaker 2: Of this garbage off of all my devices. 128 00:05:55,320 --> 00:05:58,279 Speaker 3: I will do that in exchange for in exchange for 129 00:05:58,320 --> 00:06:01,120 Speaker 3: some for a personal TikTok dance show by Bob Sponsor. 130 00:06:01,360 --> 00:06:03,680 Speaker 1: I will that you're listening to Simply Money presented by 131 00:06:03,720 --> 00:06:06,839 Speaker 1: all Worth Financial. I'm Bob Sponsller along with Brian James 132 00:06:07,600 --> 00:06:10,960 Speaker 1: An uncoordinated a state plan. You know, this is another 133 00:06:11,040 --> 00:06:14,240 Speaker 1: thing that people overlook, and this is a big one, Brian. 134 00:06:14,360 --> 00:06:17,559 Speaker 1: This isn't just about having a will. It's about making 135 00:06:17,560 --> 00:06:21,760 Speaker 1: sure your legal documents, your financial accounts, your insurance policies, 136 00:06:22,279 --> 00:06:25,520 Speaker 1: they all work together. In other words, the word that 137 00:06:25,560 --> 00:06:28,279 Speaker 1: I want to use here is coordination, Brian, And a 138 00:06:28,279 --> 00:06:31,480 Speaker 1: lot of times there's not a whole lot of coordination 139 00:06:31,680 --> 00:06:36,440 Speaker 1: going on with the overall wealth plans of people, especially 140 00:06:36,480 --> 00:06:38,960 Speaker 1: the higher their network situation becomes. 141 00:06:39,320 --> 00:06:41,039 Speaker 3: Yeah, it's great that you bringing this up. I just 142 00:06:41,160 --> 00:06:44,640 Speaker 3: had a conversation with a brand new client yesterday. The 143 00:06:44,680 --> 00:06:47,400 Speaker 3: main reason they wanted an advisor and that they ended 144 00:06:47,480 --> 00:06:50,720 Speaker 3: up hiring Allworth is simply because they they had just 145 00:06:50,800 --> 00:06:54,160 Speaker 3: settled in a state with a deceased parent that was, 146 00:06:54,320 --> 00:06:56,960 Speaker 3: as you put it, uncoordinated. So what that means is 147 00:06:57,000 --> 00:06:59,120 Speaker 3: that there was nothing but a will. A lot of 148 00:06:59,160 --> 00:07:01,200 Speaker 3: times people just go, I'll have a will written by 149 00:07:01,200 --> 00:07:02,840 Speaker 3: an attorney and that's going to check every box and 150 00:07:02,880 --> 00:07:05,840 Speaker 3: I'm good to go. But the will that actually can 151 00:07:05,839 --> 00:07:09,240 Speaker 3: make things slightly more complicated because that drags probate into it, 152 00:07:09,520 --> 00:07:11,560 Speaker 3: and if all you really have, you might have a 153 00:07:11,560 --> 00:07:14,120 Speaker 3: decent amount of assets. But it's really just financial accounts 154 00:07:14,120 --> 00:07:17,560 Speaker 3: and relatively simple things. Go to each financial institution and 155 00:07:17,680 --> 00:07:20,960 Speaker 3: simply name beneficiaries on each of those accounts. That takes 156 00:07:20,960 --> 00:07:23,720 Speaker 3: the will entirely out of the mix, and all those 157 00:07:23,720 --> 00:07:26,280 Speaker 3: people have to do, your beloved airs, All they have 158 00:07:26,320 --> 00:07:28,240 Speaker 3: to do is take a death certificate to your bank 159 00:07:28,280 --> 00:07:30,200 Speaker 3: and your investment firms and so on and so forth, 160 00:07:30,480 --> 00:07:32,560 Speaker 3: and they will have accounts set up in their own 161 00:07:32,640 --> 00:07:35,400 Speaker 3: names and the assets distributed into them within a few days. 162 00:07:35,440 --> 00:07:37,800 Speaker 3: It's not that complicated. But if you leave it all 163 00:07:37,840 --> 00:07:39,920 Speaker 3: to the will, the county gets involved. 164 00:07:40,320 --> 00:07:40,600 Speaker 2: Brian. 165 00:07:40,640 --> 00:07:43,880 Speaker 1: It's not that complicated. But the words that you actually 166 00:07:44,000 --> 00:07:48,480 Speaker 1: used in your prior comments go to your various financial institutions. 167 00:07:48,840 --> 00:07:51,960 Speaker 1: That takes a lot of work and time and aggravation 168 00:07:52,280 --> 00:07:54,160 Speaker 1: that a lot of people don't want to fool with. 169 00:07:54,480 --> 00:07:57,400 Speaker 1: Therefore they don't do anything about it. And one of 170 00:07:57,400 --> 00:08:00,440 Speaker 1: the main benefits that we do perform for our clients 171 00:08:00,440 --> 00:08:03,520 Speaker 1: here at all Worth is we do the coordination for them, 172 00:08:03,840 --> 00:08:09,000 Speaker 1: We do the consolidation, We check the beneficiary designations. We 173 00:08:09,080 --> 00:08:12,000 Speaker 1: can put a transfer on death, you know, designation on 174 00:08:12,680 --> 00:08:16,360 Speaker 1: certain accounts. We take care of that for people, so 175 00:08:16,400 --> 00:08:19,120 Speaker 1: they don't have to be driving around to umpteen different 176 00:08:19,160 --> 00:08:21,880 Speaker 1: banks and savings institutions to get some of this done, 177 00:08:22,280 --> 00:08:24,840 Speaker 1: because you know as well as I do, Brian, if 178 00:08:24,920 --> 00:08:27,200 Speaker 1: left to their own devices, a lot of this stuff 179 00:08:27,400 --> 00:08:31,680 Speaker 1: doesn't get done. And that's what you know, rears its 180 00:08:31,760 --> 00:08:34,120 Speaker 1: ugly head for the airs down the road when there 181 00:08:34,200 --> 00:08:35,360 Speaker 1: is a lack of coordination. 182 00:08:35,960 --> 00:08:38,559 Speaker 3: Yeah, and if you're somebody who truly really just wants 183 00:08:38,559 --> 00:08:40,880 Speaker 3: somebody to handle all of this stuff on your behalf, 184 00:08:41,120 --> 00:08:43,080 Speaker 3: you may look at hire, putting a lot of things 185 00:08:43,080 --> 00:08:45,680 Speaker 3: in a trust and hiring a trustee to actively take 186 00:08:45,720 --> 00:08:48,520 Speaker 3: things over for you. Now, you can also do that 187 00:08:48,520 --> 00:08:51,120 Speaker 3: with powers of attorney if you have a trusted you know, 188 00:08:51,160 --> 00:08:54,440 Speaker 3: attorney or a CPA, or just a family friend who 189 00:08:54,520 --> 00:08:56,640 Speaker 3: wants to handle this for you. What we're referring to 190 00:08:56,679 --> 00:08:59,120 Speaker 3: here is something called a family office, where you basically 191 00:08:59,240 --> 00:09:02,280 Speaker 3: hire people to run your financial and legal life for 192 00:09:02,480 --> 00:09:05,400 Speaker 3: you and simply bring you things to sign off on. Now, 193 00:09:05,440 --> 00:09:08,440 Speaker 3: these are obviously there are expenses involved here. You're literally 194 00:09:08,480 --> 00:09:11,439 Speaker 3: hiring employees in an employment type relationship. But if you're 195 00:09:11,440 --> 00:09:13,439 Speaker 3: in a situation where there are that many moving parts 196 00:09:13,440 --> 00:09:17,439 Speaker 3: to your financial situation, perhaps there's a lot of business entities, 197 00:09:17,440 --> 00:09:20,320 Speaker 3: maybe real estate, family limited partnerships, those kinds of things. 198 00:09:20,440 --> 00:09:23,280 Speaker 3: Then absolutely you probably want somebody to coordinate at all. 199 00:09:23,320 --> 00:09:26,559 Speaker 3: That's a good move to make, but it'll come with expenses, 200 00:09:26,600 --> 00:09:28,200 Speaker 3: but it does take a lot of stuff off your plate. 201 00:09:29,080 --> 00:09:32,920 Speaker 1: Well, Brian, I think so many times for the clients 202 00:09:32,960 --> 00:09:35,720 Speaker 1: that I've worked with for years, they see me as 203 00:09:35,760 --> 00:09:37,680 Speaker 1: the coordinator and appropriately so. 204 00:09:37,960 --> 00:09:38,600 Speaker 2: And what that. 205 00:09:38,600 --> 00:09:44,800 Speaker 1: Means is developing a regular rhythm of communication between their 206 00:09:44,840 --> 00:09:48,760 Speaker 1: CPA and between their attorney. So we're all working off 207 00:09:48,800 --> 00:09:51,600 Speaker 1: the same sheet of music, and we are keeping things 208 00:09:51,760 --> 00:09:55,760 Speaker 1: proactively coordinated. And I see that as my job as 209 00:09:55,800 --> 00:09:58,160 Speaker 1: a fiduciary financial advisor, and I know you do a 210 00:09:58,200 --> 00:09:59,520 Speaker 1: great job of that as well. 211 00:10:01,200 --> 00:10:03,080 Speaker 3: Now, these are all things that come up in the 212 00:10:03,080 --> 00:10:06,480 Speaker 3: course of a holistic financial planning relationship where we throw 213 00:10:06,480 --> 00:10:09,079 Speaker 3: all the puzzle pieces on the table and figure out 214 00:10:09,120 --> 00:10:10,920 Speaker 3: what are our resources, what are we trying to do 215 00:10:11,000 --> 00:10:13,319 Speaker 3: with them, and then therefore, what steps do we need 216 00:10:13,360 --> 00:10:15,400 Speaker 3: to take now so that we get the outcome we 217 00:10:15,440 --> 00:10:16,200 Speaker 3: want in the future. 218 00:10:16,720 --> 00:10:17,840 Speaker 2: Here's the all Worth advice. 219 00:10:17,920 --> 00:10:22,680 Speaker 1: Protecting wealth isn't just about investing wisely. It's about defending 220 00:10:22,720 --> 00:10:26,600 Speaker 1: your financial house from risks that don't show up in 221 00:10:26,679 --> 00:10:30,480 Speaker 1: a market chart or stock market chart. Next, look at 222 00:10:30,520 --> 00:10:34,400 Speaker 1: what real diversification looks like. You're listening to Simply Money, 223 00:10:34,400 --> 00:10:37,719 Speaker 1: presented by all Worth Financial on fifty five KARC the 224 00:10:38,080 --> 00:10:45,640 Speaker 1: talk station. You're listening to Simply Money presented by all 225 00:10:45,640 --> 00:10:49,160 Speaker 1: Worth Financial. I'm Bob Spondseller along with Brian James. If 226 00:10:49,200 --> 00:10:52,000 Speaker 1: you can't listen to Simply Money every night, subscribe to 227 00:10:52,040 --> 00:10:55,200 Speaker 1: get our daily podcasts. Just search Simply Money on the 228 00:10:55,240 --> 00:10:58,600 Speaker 1: iHeart app or wherever you find your podcasts. 229 00:10:59,200 --> 00:11:00,600 Speaker 2: Straight ahead A six forty three. 230 00:11:00,640 --> 00:11:04,280 Speaker 1: What to do when significant ownership of your company's stock 231 00:11:04,920 --> 00:11:06,800 Speaker 1: becomes a potential liability? 232 00:11:08,040 --> 00:11:09,800 Speaker 2: All right, does this describe you? 233 00:11:09,800 --> 00:11:12,840 Speaker 1: You've got five different accounts or maybe ten, a dozen 234 00:11:12,920 --> 00:11:17,240 Speaker 1: mutual funds and a couple of ETFs. You think you're diversified, right, 235 00:11:18,120 --> 00:11:20,880 Speaker 1: but do you know whether those accounts are all holding 236 00:11:20,960 --> 00:11:26,480 Speaker 1: the same stuff. That's not diversification, that's duplication. And Brian, 237 00:11:26,559 --> 00:11:29,480 Speaker 1: we see this all the time. Bob, We're gonna go 238 00:11:29,520 --> 00:11:31,600 Speaker 1: to the story vault here. Let's talk shop a little bit. 239 00:11:31,840 --> 00:11:34,079 Speaker 1: You probably remember this too. We didn't know each other 240 00:11:34,080 --> 00:11:35,640 Speaker 1: at the time. That about twenty years ago. 241 00:11:35,760 --> 00:11:38,720 Speaker 3: The Janis funds were just the greatest things ever, and 242 00:11:38,760 --> 00:11:41,160 Speaker 3: they were all anybody had to have for a couple 243 00:11:41,120 --> 00:11:43,360 Speaker 3: of year period. And there were four of them, Janis 244 00:11:43,360 --> 00:11:46,400 Speaker 3: Worldwide and Janiss Enterprise and two other ones that I 245 00:11:46,440 --> 00:11:48,600 Speaker 3: don't that are lost to history. But the reason everybody 246 00:11:48,600 --> 00:11:50,600 Speaker 3: loved him was because they were up double digits every 247 00:11:50,640 --> 00:11:52,920 Speaker 3: single year. So people would say, I'm just gonna get 248 00:11:52,920 --> 00:11:55,120 Speaker 3: the Janis four. That's all I need. Look at these things, 249 00:11:55,160 --> 00:11:58,120 Speaker 3: they're just doing great. But if you looked under the hood, 250 00:11:58,160 --> 00:11:59,840 Speaker 3: which it's a lot easier to do that now than 251 00:11:59,840 --> 00:12:01,840 Speaker 3: it was then, you looked under the hood, they all 252 00:12:01,880 --> 00:12:05,040 Speaker 3: owned mostly the same stocks, so that when things finally 253 00:12:05,120 --> 00:12:07,520 Speaker 3: turned in two thousand and one two thousand and two, 254 00:12:07,800 --> 00:12:10,160 Speaker 3: all those stocks took a beating and all four came down, 255 00:12:10,360 --> 00:12:13,000 Speaker 3: and people who thought they were diversified were completely caught 256 00:12:13,000 --> 00:12:14,840 Speaker 3: with their pants down because there was nothing in that 257 00:12:14,920 --> 00:12:18,360 Speaker 3: portfolio to support when when the winds started blowing the 258 00:12:18,400 --> 00:12:22,160 Speaker 3: other way. So more accounts doesn't mean more protection. That 259 00:12:22,200 --> 00:12:24,520 Speaker 3: doesn't mean that you have you know, you that you 260 00:12:24,640 --> 00:12:27,280 Speaker 3: have things that offset each other. Having the same stock 261 00:12:27,320 --> 00:12:29,800 Speaker 3: across four different institutions or the same mutual fund does 262 00:12:29,840 --> 00:12:31,720 Speaker 3: not protect you at all. It's going to behave the 263 00:12:31,760 --> 00:12:32,240 Speaker 3: same way. 264 00:12:32,679 --> 00:12:35,000 Speaker 1: Yeah, if you're gonna take me back twenty years, Brian, 265 00:12:35,080 --> 00:12:37,600 Speaker 1: do you remember the aim Wingarten Fund? 266 00:12:38,280 --> 00:12:38,760 Speaker 2: I do. 267 00:12:39,520 --> 00:12:42,440 Speaker 1: That was another fund that just they were selling this 268 00:12:42,520 --> 00:12:44,440 Speaker 1: as the Widows and Orphans fund. 269 00:12:44,480 --> 00:12:47,640 Speaker 2: It could never go down and lo and behold. You know, 270 00:12:47,679 --> 00:12:50,280 Speaker 2: it had sixty percent in tech stocks. 271 00:12:50,360 --> 00:12:52,520 Speaker 1: And when we had the tech bubble in two thousand 272 00:12:52,520 --> 00:12:53,640 Speaker 1: to two thousand and two. 273 00:12:53,920 --> 00:12:55,120 Speaker 2: Boy did that take a hit. 274 00:12:55,240 --> 00:12:58,760 Speaker 1: And boy were people shocked and disappointed and in a 275 00:12:58,760 --> 00:13:01,440 Speaker 1: lot of cases angry. All right, well, back to what 276 00:13:01,480 --> 00:13:03,000 Speaker 1: we want to do about it. You know, we run 277 00:13:03,080 --> 00:13:05,840 Speaker 1: into people all the time. You know, the more institutions 278 00:13:05,880 --> 00:13:09,160 Speaker 1: you have and the more you know accounts you have, 279 00:13:09,840 --> 00:13:12,040 Speaker 1: what I like to tell people is you've got a 280 00:13:12,080 --> 00:13:16,560 Speaker 1: great collection of products, but you don't have a strategy 281 00:13:16,600 --> 00:13:20,800 Speaker 1: and you don't have as much diversification as you think. 282 00:13:20,840 --> 00:13:24,199 Speaker 1: And to your point, Brian, the more institutions and funds 283 00:13:24,240 --> 00:13:26,680 Speaker 1: and all that you spread yourself out among you tend 284 00:13:26,760 --> 00:13:30,679 Speaker 1: to you when you actually look at what is comprising 285 00:13:30,760 --> 00:13:34,920 Speaker 1: these funds. People are amazed when you own the same 286 00:13:35,000 --> 00:13:37,280 Speaker 1: stocks and those funds, and you know, you look at 287 00:13:37,320 --> 00:13:39,559 Speaker 1: the S and P getting as high as thirty to 288 00:13:39,600 --> 00:13:42,720 Speaker 1: thirty five percent over the last year. And these MAG 289 00:13:42,840 --> 00:13:46,880 Speaker 1: seven stocks. People think because they have five six hundred 290 00:13:46,880 --> 00:13:49,280 Speaker 1: companies in their portfolio that they're diversified. 291 00:13:49,400 --> 00:13:50,360 Speaker 2: They really are not. 292 00:13:51,480 --> 00:13:53,760 Speaker 3: Right, And you have to look also at how some 293 00:13:53,800 --> 00:13:56,080 Speaker 3: of these index funds how they actually work. Right, So 294 00:13:56,320 --> 00:13:58,440 Speaker 3: an S and P five hundred, a lot of people think, well, 295 00:13:58,440 --> 00:14:01,400 Speaker 3: that's five hundred different stocks, I've got evenly spread across 296 00:14:01,480 --> 00:14:01,960 Speaker 3: five hundred. 297 00:14:02,000 --> 00:14:02,880 Speaker 2: Well that's not the case. 298 00:14:03,200 --> 00:14:06,720 Speaker 3: The S and P five hundred itself is capitalization weighted, 299 00:14:06,800 --> 00:14:10,120 Speaker 3: meaning the bigger the stock is. In reality, the more 300 00:14:10,160 --> 00:14:12,000 Speaker 3: of the S and P, the more of the index 301 00:14:12,040 --> 00:14:14,800 Speaker 3: it makes up. It's not divided evenly across five hundred 302 00:14:14,800 --> 00:14:17,760 Speaker 3: different stocks. So to your point, those MAG seven stocks 303 00:14:17,800 --> 00:14:19,480 Speaker 3: are the ones that are driving the S and P 304 00:14:19,560 --> 00:14:22,400 Speaker 3: five hundred right now. You can specifically look for other 305 00:14:22,520 --> 00:14:25,440 Speaker 3: funds that do not have that risk, same five hundred companies, 306 00:14:25,440 --> 00:14:28,400 Speaker 3: but equally weighted as as opposed to cap weighted. But 307 00:14:28,560 --> 00:14:31,160 Speaker 3: you have to understand what these things own. What's under 308 00:14:31,200 --> 00:14:33,840 Speaker 3: the hood of all these various mutual funds in extreme 309 00:14:33,960 --> 00:14:37,520 Speaker 3: exchange traded funds ETFs that you probably have, They do 310 00:14:37,560 --> 00:14:40,480 Speaker 3: serve the purpose of I own one thing that owns 311 00:14:40,560 --> 00:14:43,160 Speaker 3: underneath it five hundred, maybe a thousand different things. They 312 00:14:43,280 --> 00:14:45,080 Speaker 3: can serve the role of being the sort of the 313 00:14:45,160 --> 00:14:48,400 Speaker 3: Kellogg's variety pack, if you remember that from your family vacations, 314 00:14:48,720 --> 00:14:50,640 Speaker 3: by one thing that has a bunch of different things 315 00:14:50,680 --> 00:14:52,400 Speaker 3: in it. So it is diverse by that way, but 316 00:14:52,480 --> 00:14:54,840 Speaker 3: you have to understand what those things are so that 317 00:14:54,880 --> 00:14:57,160 Speaker 3: you can make sure you're not duplicating. Even though I 318 00:14:57,200 --> 00:14:59,440 Speaker 3: have the ABC and the XYZ fund, they're both the 319 00:14:59,480 --> 00:15:00,320 Speaker 3: same risk. 320 00:15:01,040 --> 00:15:03,480 Speaker 1: Well, we only have to go back about six weeks, 321 00:15:03,520 --> 00:15:05,880 Speaker 1: Brian to look at what can happen when the market 322 00:15:05,920 --> 00:15:10,080 Speaker 1: takes a turn and you are over allocated without knowing 323 00:15:10,120 --> 00:15:12,880 Speaker 1: it in some cases with a lot of overlap in 324 00:15:12,920 --> 00:15:16,600 Speaker 1: certain companies and certain industries. When that volatility comes, and 325 00:15:16,680 --> 00:15:19,560 Speaker 1: it always does, that's where you can see what actually 326 00:15:19,680 --> 00:15:22,800 Speaker 1: happens in real time with your own money when you're 327 00:15:22,800 --> 00:15:26,360 Speaker 1: a little underdiversified. So let's talk about what real diversification 328 00:15:26,680 --> 00:15:30,320 Speaker 1: looks like. At its core, it means owning investments that 329 00:15:30,480 --> 00:15:35,600 Speaker 1: respond differently to different economic conditions. And our industry likes 330 00:15:35,640 --> 00:15:41,200 Speaker 1: to throw around a lot of terminology, you know, like 331 00:15:41,400 --> 00:15:44,480 Speaker 1: negative correlation and all that. All that means is having 332 00:15:44,600 --> 00:15:49,640 Speaker 1: some things in your portfolio that zig when other things zag. 333 00:15:50,240 --> 00:15:53,000 Speaker 3: The market gets distracted by different things at different times. 334 00:15:53,000 --> 00:15:55,400 Speaker 3: When we're in a rising rate environment, that means we 335 00:15:55,440 --> 00:15:57,760 Speaker 3: want to own a certain type of bonds, for example, 336 00:15:58,080 --> 00:16:01,040 Speaker 3: and sometimes we will pivot away from that. The pendulum 337 00:16:01,080 --> 00:16:03,800 Speaker 3: swings back the other way and we'll pivot away from 338 00:16:03,840 --> 00:16:06,600 Speaker 3: that rising rate environment. We'll sit in a flat rate environment, 339 00:16:07,160 --> 00:16:09,520 Speaker 3: and that means we need to change those bonds out 340 00:16:09,560 --> 00:16:12,320 Speaker 3: to something that reflects a little bit more accurately what 341 00:16:12,360 --> 00:16:14,760 Speaker 3: that portfolio needs to do. And then we'll be on 342 00:16:14,800 --> 00:16:16,840 Speaker 3: the other side where the rates start to drop whenever 343 00:16:17,200 --> 00:16:19,600 Speaker 3: the government feels like we need to sort of goose 344 00:16:19,640 --> 00:16:22,920 Speaker 3: the system a little bit. All three of those scenarios 345 00:16:23,000 --> 00:16:26,400 Speaker 3: require different types of holdings. In addition, you know, most 346 00:16:26,440 --> 00:16:29,280 Speaker 3: people think about stocks anyway. When we're talking about diversification. 347 00:16:29,640 --> 00:16:33,280 Speaker 3: At any given time, the herd wants to shy away 348 00:16:33,280 --> 00:16:35,600 Speaker 3: from one type of thing and invest in something else. 349 00:16:35,640 --> 00:16:37,560 Speaker 3: This is why we have that term. There are stocks 350 00:16:37,600 --> 00:16:42,080 Speaker 3: called defensive stocks. Defensive simply means, for example, grocery stores, Right, 351 00:16:42,120 --> 00:16:44,400 Speaker 3: no matter what's going on, grocery stores are going to 352 00:16:44,440 --> 00:16:46,520 Speaker 3: make money. We may not go to Best Buy and 353 00:16:46,560 --> 00:16:48,760 Speaker 3: buy that new gigantic TV when the economy is a 354 00:16:48,760 --> 00:16:50,560 Speaker 3: little bumpy, but we are sure going to go buy 355 00:16:50,560 --> 00:16:51,960 Speaker 3: a loaf of bread and a bottle of milk on 356 00:16:52,000 --> 00:16:54,480 Speaker 3: the way home. That's a defensive stock. So the market 357 00:16:54,480 --> 00:16:56,960 Speaker 3: will be attracted to the types of things that it 358 00:16:57,000 --> 00:16:59,160 Speaker 3: feels like are going to do better, you know, in 359 00:16:59,200 --> 00:17:01,440 Speaker 3: the very short run, and then as things clear up, 360 00:17:01,560 --> 00:17:04,040 Speaker 3: we'll move toward a more growth approach. But that's that's 361 00:17:04,080 --> 00:17:06,560 Speaker 3: the reason we can't predict the timing of these swings. 362 00:17:06,600 --> 00:17:08,679 Speaker 3: That's why we need to own all of them at 363 00:17:08,680 --> 00:17:10,280 Speaker 3: the same time and make sure we're diversified. 364 00:17:10,680 --> 00:17:13,280 Speaker 1: You're listening to Simply Money presented by all Worth Financial. 365 00:17:13,320 --> 00:17:16,360 Speaker 1: I'm Bob Sponseller along with Brian James. Brian, let's get 366 00:17:16,359 --> 00:17:20,600 Speaker 1: into how a lot of this duplication happens for clients 367 00:17:20,720 --> 00:17:23,040 Speaker 1: and and look, it's often unintentional. 368 00:17:23,400 --> 00:17:24,760 Speaker 2: You open an account. 369 00:17:24,359 --> 00:17:27,760 Speaker 1: Here, you do a rollover IRA there, You've got three 370 00:17:27,880 --> 00:17:31,199 Speaker 1: or four different advisors that adds news funds, and all 371 00:17:31,240 --> 00:17:34,160 Speaker 1: of a sudden you've got this collection of products without 372 00:17:34,160 --> 00:17:38,080 Speaker 1: a strategy that I alluded to before. Sometimes people think 373 00:17:38,119 --> 00:17:43,159 Speaker 1: they're being cautious, and they are diversifying by spreading money 374 00:17:43,200 --> 00:17:47,879 Speaker 1: across different firms. But if the advisors at these different firms, 375 00:17:47,920 --> 00:17:50,359 Speaker 1: you and I know this, Brian, they don't talk to 376 00:17:50,400 --> 00:17:53,920 Speaker 1: one another, they don't coordinate with one another, their competitors, 377 00:17:54,400 --> 00:17:58,520 Speaker 1: And so the more you spread across your institutional exposure, 378 00:17:59,000 --> 00:18:02,200 Speaker 1: you're actually defeating the purpose of what you're trying to do, 379 00:18:02,640 --> 00:18:07,080 Speaker 1: which is build a consolidated, diversified portfolio, especially if you've 380 00:18:07,080 --> 00:18:11,399 Speaker 1: got three or four advisors all doing certain things with 381 00:18:11,440 --> 00:18:13,399 Speaker 1: your money and not talking to one another. 382 00:18:13,840 --> 00:18:16,119 Speaker 3: Yeah, I'm thinking of an example of about about a 383 00:18:16,119 --> 00:18:17,720 Speaker 3: month ago, I had a client who was doing the 384 00:18:17,760 --> 00:18:20,359 Speaker 3: kind of the same thing she had. We had worked 385 00:18:20,359 --> 00:18:21,920 Speaker 3: for her for a long time, and she had inherited 386 00:18:21,960 --> 00:18:25,560 Speaker 3: some assets from her deceased parents and she just decided 387 00:18:25,560 --> 00:18:28,080 Speaker 3: to keep those with the other advisor. Didn't take very 388 00:18:28,119 --> 00:18:31,280 Speaker 3: long before she realized that that made her the advisor 389 00:18:31,359 --> 00:18:33,840 Speaker 3: because we would share our thoughts. She would talk to 390 00:18:33,840 --> 00:18:35,800 Speaker 3: the other side, who was perfectly legitimate firm, and now 391 00:18:35,800 --> 00:18:37,080 Speaker 3: there's a lot the way. We're good at what we do, 392 00:18:37,119 --> 00:18:38,920 Speaker 3: but we're not the only ones, and they would share 393 00:18:38,960 --> 00:18:40,439 Speaker 3: some thoughts too, and it was up to her to 394 00:18:40,560 --> 00:18:43,720 Speaker 3: coordinate to make sure that we weren't. We can't see 395 00:18:43,760 --> 00:18:45,320 Speaker 3: what each other is doing, so it was up to 396 00:18:45,359 --> 00:18:47,400 Speaker 3: her to make sure that there wasn't a lot of overlap. 397 00:18:47,520 --> 00:18:49,280 Speaker 3: She eventually got fed up with that and ended up 398 00:18:49,280 --> 00:18:51,359 Speaker 3: deciding just to bring it all to all Worth and 399 00:18:51,560 --> 00:18:54,000 Speaker 3: have us deal with it, just to remove that sense 400 00:18:54,040 --> 00:18:56,639 Speaker 3: of conflict. And so again having two is going to 401 00:18:56,800 --> 00:18:58,240 Speaker 3: it can cause more trouble. 402 00:18:58,240 --> 00:18:58,920 Speaker 2: Than it could solve. 403 00:18:59,320 --> 00:19:03,280 Speaker 1: Well, this is where just a simple portfolio analysis can 404 00:19:03,359 --> 00:19:06,040 Speaker 1: really help. And this doesn't mean fire all your other 405 00:19:06,119 --> 00:19:09,359 Speaker 1: advisors and move all your money with one advisor and 406 00:19:09,400 --> 00:19:14,840 Speaker 1: one fell swoop, but most good, well intentioned fiduciary advisors 407 00:19:15,000 --> 00:19:19,080 Speaker 1: will do for no cost or no obligation, a thorough 408 00:19:19,119 --> 00:19:22,440 Speaker 1: portfolio analysis where we take all your statements and there's 409 00:19:22,680 --> 00:19:25,960 Speaker 1: really nice salts available today where you can show a 410 00:19:26,080 --> 00:19:29,600 Speaker 1: client here's what you really own, here's how it's broken 411 00:19:29,680 --> 00:19:33,360 Speaker 1: down by asset class, here's some of the risks inherent 412 00:19:33,480 --> 00:19:36,639 Speaker 1: with the allocation you currently have, and Brian, that helps 413 00:19:36,680 --> 00:19:40,600 Speaker 1: people make an informed decision on how to proceed going further. 414 00:19:40,800 --> 00:19:43,960 Speaker 1: I find that to be very useful and helpful, and 415 00:19:44,080 --> 00:19:47,120 Speaker 1: potential clients really like that when we take the time 416 00:19:47,160 --> 00:19:48,520 Speaker 1: to do that for them. 417 00:19:48,840 --> 00:19:51,080 Speaker 3: Yeah, I think that's great advice. Just understand, Like a 418 00:19:51,080 --> 00:19:53,160 Speaker 3: lot of things we talk about, look step back, look 419 00:19:53,200 --> 00:19:55,520 Speaker 3: at your big picture and understand what you have and 420 00:19:55,560 --> 00:19:56,919 Speaker 3: what you're trying to do with it. 421 00:19:57,760 --> 00:20:01,679 Speaker 1: Here's the all Worth advice, ask yourself, I diversified or 422 00:20:01,760 --> 00:20:06,879 Speaker 1: just busy because in investing motion doesn't always mean progress. 423 00:20:07,480 --> 00:20:11,520 Speaker 1: Coming up next, how to fireproof your finances from family drama. 424 00:20:12,000 --> 00:20:14,640 Speaker 1: You're listening to Simply Money presented by all Worth Financial 425 00:20:14,680 --> 00:20:22,800 Speaker 1: on fifty five KRC the talk station. You're listening to 426 00:20:22,840 --> 00:20:25,679 Speaker 1: Simply Money presented by all Worth Financial. I'm Bob Sponseller 427 00:20:25,720 --> 00:20:30,120 Speaker 1: along with Brian James. Time to tackle everyone's favorite topic, 428 00:20:30,520 --> 00:20:34,479 Speaker 1: money and family. What a loaded topic that is, Brian. 429 00:20:35,119 --> 00:20:38,399 Speaker 1: And when they don't mix money and family, don't mix, boy, 430 00:20:38,560 --> 00:20:41,840 Speaker 1: the sparks can flying. We're not just talking about who 431 00:20:41,920 --> 00:20:46,560 Speaker 1: gets Grandma's china. We're talking about real money, inherited wealth, 432 00:20:47,000 --> 00:20:51,440 Speaker 1: business succession planning, estate planning decisions, and what happens when 433 00:20:51,480 --> 00:20:56,040 Speaker 1: your kids, your spouse, or your siblings don't see eye 434 00:20:56,040 --> 00:20:59,119 Speaker 1: to eye. It's a very important topic that we're going 435 00:20:59,200 --> 00:21:00,400 Speaker 1: to get in in here. 436 00:21:00,440 --> 00:21:03,200 Speaker 3: Brian you know, Bob, one of my very first lessons 437 00:21:03,240 --> 00:21:05,359 Speaker 3: as to how people can be when I became an 438 00:21:05,359 --> 00:21:07,880 Speaker 3: adult and I was a young financial advisor, I got 439 00:21:07,880 --> 00:21:10,280 Speaker 3: a phone call from somebody who was in the hearse, 440 00:21:10,760 --> 00:21:13,840 Speaker 3: their father's hears on their way to the cemetery, wanting 441 00:21:13,880 --> 00:21:15,879 Speaker 3: to know if they could stop by the office and 442 00:21:15,960 --> 00:21:17,879 Speaker 3: pick up their money. And I'm using air quotes, I 443 00:21:17,920 --> 00:21:19,240 Speaker 3: want to pick up my money because it's in a 444 00:21:19,240 --> 00:21:22,240 Speaker 3: shoebox with my name on it. Obviously that's not exactly 445 00:21:22,280 --> 00:21:24,640 Speaker 3: that's not a very common scenario. But people do think 446 00:21:24,680 --> 00:21:27,320 Speaker 3: funny about money, and they're different no matter if they're 447 00:21:27,320 --> 00:21:29,560 Speaker 3: in the same family. Everybody has different opinions on it. 448 00:21:29,600 --> 00:21:31,560 Speaker 3: So one of the big things we can run into 449 00:21:31,600 --> 00:21:34,040 Speaker 3: is values versus vision. What this means is, if you've 450 00:21:34,040 --> 00:21:36,960 Speaker 3: got a parent who built their wealth by being frugal, disciplined, 451 00:21:37,000 --> 00:21:40,160 Speaker 3: maybe they started a business which is its own huge 452 00:21:40,200 --> 00:21:42,560 Speaker 3: lift to carry you got the next generation that all 453 00:21:42,600 --> 00:21:44,560 Speaker 3: they know was that they didn't really want for anything. 454 00:21:44,560 --> 00:21:46,960 Speaker 3: They kind of got whatever they wanted, did not have 455 00:21:47,040 --> 00:21:49,280 Speaker 3: to put that same amount of blood, sweat and tears 456 00:21:49,320 --> 00:21:52,040 Speaker 3: into growing that wealth. Their goals are very different. Their 457 00:21:52,040 --> 00:21:54,600 Speaker 3: priorities are different. So we see this all the time, 458 00:21:54,640 --> 00:21:56,720 Speaker 3: where the parents are the ones who want to preserve 459 00:21:56,800 --> 00:21:59,480 Speaker 3: that wealth and the kids kind of assume. 460 00:21:59,200 --> 00:21:59,919 Speaker 2: That it's always there. 461 00:22:00,440 --> 00:22:02,400 Speaker 3: They want to use it to start a nonprofit, which 462 00:22:02,440 --> 00:22:04,679 Speaker 3: is a very honorable thing to do, but it's a 463 00:22:04,840 --> 00:22:08,120 Speaker 3: very different mindset than something you know that they're trying 464 00:22:08,160 --> 00:22:13,280 Speaker 3: to grow something to provide for future generation. So one 465 00:22:13,320 --> 00:22:15,760 Speaker 3: child might be conservative with money, the other one's ready 466 00:22:15,800 --> 00:22:17,520 Speaker 3: to kind of live it up. And you know, yolo 467 00:22:17,640 --> 00:22:20,239 Speaker 3: want you only live once and kind of live that 468 00:22:20,320 --> 00:22:23,359 Speaker 3: life of luxury. Maybe launch a music career, take a 469 00:22:23,359 --> 00:22:24,680 Speaker 3: swing for the fence. Is that kind of thing. 470 00:22:24,720 --> 00:22:25,879 Speaker 2: That's when the friction starts. 471 00:22:25,880 --> 00:22:28,600 Speaker 3: When you've got those two children who are arguing over 472 00:22:29,440 --> 00:22:31,560 Speaker 3: what mom and dad built and how we are treating 473 00:22:31,600 --> 00:22:31,880 Speaker 3: it now. 474 00:22:32,680 --> 00:22:35,480 Speaker 2: Well, and I'm dealing with the situation right now, Brian. 475 00:22:35,560 --> 00:22:39,240 Speaker 1: Involving a closely held business where this couple has four kids. 476 00:22:39,800 --> 00:22:43,120 Speaker 1: Two of the kids are actively involved in the business. Now, 477 00:22:43,240 --> 00:22:46,080 Speaker 1: I mean it's their livelihood, it's their paycheck. They are 478 00:22:46,119 --> 00:22:49,360 Speaker 1: putting blood, sweat and tears into that business. The two 479 00:22:49,440 --> 00:22:52,159 Speaker 1: other kids have nothing to do with the business. But 480 00:22:52,280 --> 00:22:55,560 Speaker 1: this is a significant chunk of this couple meaning the 481 00:22:55,640 --> 00:22:58,879 Speaker 1: parents net worth and when they came and met with me, 482 00:22:59,080 --> 00:23:02,000 Speaker 1: they had done zero estate planning. They knew it was 483 00:23:02,040 --> 00:23:05,399 Speaker 1: the elephant in the room, but they hadn't really sat 484 00:23:05,480 --> 00:23:08,719 Speaker 1: down and talked and thought through it as as spouses, 485 00:23:09,080 --> 00:23:11,840 Speaker 1: to say nothing of sitting down with their kids. And 486 00:23:11,920 --> 00:23:13,639 Speaker 1: the good thing is, you know, I brought in an 487 00:23:13,680 --> 00:23:16,680 Speaker 1: attorney that I've worked with for years that is wonderful 488 00:23:16,800 --> 00:23:20,320 Speaker 1: at working with closely held business owner clients, and Brian, 489 00:23:20,440 --> 00:23:22,280 Speaker 1: in the course of about an hour and a half, 490 00:23:22,359 --> 00:23:24,680 Speaker 1: we were able to sit down together in one room, 491 00:23:25,080 --> 00:23:27,560 Speaker 1: throw around some ideas, and come up with an actual 492 00:23:27,600 --> 00:23:29,920 Speaker 1: plan that we think is going to make everyone happy. 493 00:23:30,400 --> 00:23:33,040 Speaker 1: And boy, was at a game changer for that family 494 00:23:33,160 --> 00:23:36,560 Speaker 1: to head off some potential discord down the road. 495 00:23:36,880 --> 00:23:39,000 Speaker 3: Yeah, you said the key word The word is planned, 496 00:23:39,080 --> 00:23:42,200 Speaker 3: just basically meaning do all have this conversation in advance, 497 00:23:42,520 --> 00:23:44,959 Speaker 3: not you know, on the deathbed or you know, at 498 00:23:44,960 --> 00:23:47,760 Speaker 3: the estate settlement meeting with all the attorneys. So I'm 499 00:23:47,800 --> 00:23:49,879 Speaker 3: reminded of another situation I had years ago where there 500 00:23:49,880 --> 00:23:52,880 Speaker 3: were two brothers who owned a business and they both 501 00:23:52,960 --> 00:23:54,239 Speaker 3: knew that they were about the same age, and they 502 00:23:54,280 --> 00:23:55,640 Speaker 3: knew they'd want to get out at the same time. 503 00:23:55,680 --> 00:23:57,719 Speaker 3: But they both felt kind of equally about the business. 504 00:23:57,720 --> 00:23:59,639 Speaker 3: They could continue it or they could bow out at 505 00:23:59,680 --> 00:24:02,679 Speaker 3: the right place price. So what their agreement was was 506 00:24:02,720 --> 00:24:04,800 Speaker 3: that they were going to agree or one of them 507 00:24:04,840 --> 00:24:07,200 Speaker 3: would come up with the value of the firm. Here's 508 00:24:07,240 --> 00:24:08,879 Speaker 3: what the price of this firm is worth, and we're 509 00:24:08,880 --> 00:24:10,560 Speaker 3: going to split it in half, and then the other 510 00:24:10,880 --> 00:24:13,080 Speaker 3: would decide whether he was going to buy or sell. 511 00:24:13,400 --> 00:24:16,000 Speaker 3: And that worked out perfectly because that forced them both 512 00:24:16,000 --> 00:24:18,159 Speaker 3: to be honest about their intentions. If I'm going to 513 00:24:18,240 --> 00:24:20,840 Speaker 3: value my own business, but I don't know whether I'm 514 00:24:20,840 --> 00:24:22,560 Speaker 3: on the buying or selling end, then it's going to 515 00:24:22,560 --> 00:24:24,800 Speaker 3: be a pretty fair valuation. So that's kind of a 516 00:24:24,880 --> 00:24:27,280 Speaker 3: unique situation. It did work out really well for those 517 00:24:27,280 --> 00:24:29,240 Speaker 3: two guys, But the whole point is they had that 518 00:24:29,320 --> 00:24:32,720 Speaker 3: discussion well in advance of any actual settlement of this thing. 519 00:24:32,960 --> 00:24:34,280 Speaker 3: For a lot of people, like you said, it's going 520 00:24:34,320 --> 00:24:37,160 Speaker 3: to involve bringing an attorney into the mix, bringing everyone 521 00:24:37,240 --> 00:24:39,600 Speaker 3: to the table, and just talking about what is important 522 00:24:39,600 --> 00:24:41,600 Speaker 3: to you. What do you want to have as a 523 00:24:41,680 --> 00:24:43,600 Speaker 3: memory of mom and dad. Do you want the business? 524 00:24:43,680 --> 00:24:45,600 Speaker 3: Do you not want anything to do with it? Lay 525 00:24:45,640 --> 00:24:48,359 Speaker 3: it all out and then after everybody understands the different 526 00:24:48,359 --> 00:24:51,600 Speaker 3: points of view, don't do anything that's hail everybody, go 527 00:24:51,680 --> 00:24:53,240 Speaker 3: think about it, then come back to the table and 528 00:24:53,240 --> 00:24:53,960 Speaker 3: see where we land. 529 00:24:54,520 --> 00:24:56,840 Speaker 1: Yeah, and even if we're not talking about ownership of 530 00:24:56,840 --> 00:24:59,680 Speaker 1: a family business, just basic a state planning. You know, 531 00:24:59,760 --> 00:25:02,840 Speaker 1: when you've got multiple kids or grandkids or what have you. 532 00:25:03,640 --> 00:25:07,800 Speaker 1: As you've already mentioned Brian, everybody's interest and you know 533 00:25:07,880 --> 00:25:11,040 Speaker 1: their preferences can be different, and that's where you can 534 00:25:11,160 --> 00:25:15,199 Speaker 1: get created creative. It doesn't mean over complicate things. But 535 00:25:15,280 --> 00:25:17,760 Speaker 1: we might have one kid in the family that's maybe 536 00:25:17,880 --> 00:25:20,879 Speaker 1: not very responsible with money, and you don't want to 537 00:25:20,960 --> 00:25:23,680 Speaker 1: just dump a couple million dollars on them on one 538 00:25:23,760 --> 00:25:26,159 Speaker 1: day when you pass away, because they're not prepared to 539 00:25:26,200 --> 00:25:29,480 Speaker 1: handle it. And that's where you could put some contingencies 540 00:25:29,480 --> 00:25:32,119 Speaker 1: into that trust to dole that money out over time. 541 00:25:32,600 --> 00:25:35,280 Speaker 1: You can tie that with some incentives, you know, to 542 00:25:35,320 --> 00:25:38,040 Speaker 1: hopefully motivate them to do some right things with that 543 00:25:38,160 --> 00:25:41,000 Speaker 1: money rather than blow it. There's some creative things you 544 00:25:41,000 --> 00:25:44,000 Speaker 1: can do with trust and estate planning, but you've got 545 00:25:44,040 --> 00:25:46,840 Speaker 1: to get out ahead of it, you know, proactively, to 546 00:25:46,920 --> 00:25:49,359 Speaker 1: make sure you don't leave a mess. You know, for 547 00:25:49,440 --> 00:25:51,840 Speaker 1: those you know coming in the next generation. 548 00:25:52,840 --> 00:25:54,600 Speaker 3: Right, So you can do some mechanical things. You can 549 00:25:54,680 --> 00:25:57,679 Speaker 3: use what's called a discretionary trust. That's the trustee, so 550 00:25:57,760 --> 00:26:01,000 Speaker 3: the trustee decides on your behalf. How and when children 551 00:26:01,040 --> 00:26:02,879 Speaker 3: get access to the funds. That way they don't have 552 00:26:02,920 --> 00:26:06,000 Speaker 3: a blank check. Well drafted trust can to protect assets 553 00:26:06,000 --> 00:26:08,560 Speaker 3: from xpouses as well, and there's plenty of other toys 554 00:26:08,560 --> 00:26:10,000 Speaker 3: you can play with them. 555 00:26:10,040 --> 00:26:12,840 Speaker 1: Here's the all Worth advice. You don't just pass on money. 556 00:26:13,240 --> 00:26:17,280 Speaker 1: You pass on meaning protecting your legacy means protecting your 557 00:26:17,359 --> 00:26:22,080 Speaker 1: family from the drama that unmanaged wealth can create. Coming 558 00:26:22,160 --> 00:26:24,680 Speaker 1: up next, how to manage the risks of holding too 559 00:26:24,800 --> 00:26:28,719 Speaker 1: much company stock. You're listening to Simply Money presented by 560 00:26:28,720 --> 00:26:32,399 Speaker 1: All with Financial on fifty five KARC, the talk station. 561 00:26:37,200 --> 00:26:39,760 Speaker 1: You're listening to Simply Money presented by All with Financial 562 00:26:39,800 --> 00:26:42,760 Speaker 1: on Bob' sponseller along with Brian James. You have a 563 00:26:42,800 --> 00:26:45,399 Speaker 1: financial question you'd like for us to answer. There's a 564 00:26:45,440 --> 00:26:47,680 Speaker 1: red button you can click while you're listening to the 565 00:26:47,720 --> 00:26:52,080 Speaker 1: show right there on the iheartapp app. Simply record your 566 00:26:52,160 --> 00:26:55,520 Speaker 1: question and it'll come straight to us. All right, you've 567 00:26:55,520 --> 00:26:58,920 Speaker 1: worked hard, you've climbed the company ladder, or maybe you've 568 00:26:58,920 --> 00:27:02,320 Speaker 1: built the business from the ground up, but now you're 569 00:27:02,359 --> 00:27:06,439 Speaker 1: sitting on a whole lot of one thing, your company stock. 570 00:27:07,320 --> 00:27:09,600 Speaker 3: Yeah, company stock is not a bad thing at all. Right, 571 00:27:09,600 --> 00:27:12,000 Speaker 3: we should get paid, you know, we should be compensated 572 00:27:12,000 --> 00:27:15,560 Speaker 3: when our company does well. The risk, however, though, and 573 00:27:15,600 --> 00:27:18,720 Speaker 3: there's a lot of companies that put their their customer 574 00:27:18,840 --> 00:27:21,800 Speaker 3: or their their employees in this situation, is that now 575 00:27:21,880 --> 00:27:25,000 Speaker 3: a lot of your financial stability is tied to it. 576 00:27:25,080 --> 00:27:27,159 Speaker 3: Your salary comes from this company. If you've got your 577 00:27:27,200 --> 00:27:29,000 Speaker 3: you know, a large chunk or sometimes all of it. 578 00:27:29,040 --> 00:27:30,720 Speaker 3: I still see that every now and then, sometimes every 579 00:27:30,800 --> 00:27:34,560 Speaker 3: nickel of it is in the employer's stock. Then everything 580 00:27:34,640 --> 00:27:37,320 Speaker 3: you have in this universe is tied to that company. 581 00:27:37,359 --> 00:27:39,200 Speaker 3: And if it goes under, well, then that's going to 582 00:27:39,240 --> 00:27:41,760 Speaker 3: take everything with it. And we haven't heard a story 583 00:27:41,800 --> 00:27:44,199 Speaker 3: like this in a very long time. But if the 584 00:27:44,280 --> 00:27:47,159 Speaker 3: name Enron rings a bell. Enron was the Procter and 585 00:27:47,160 --> 00:27:50,040 Speaker 3: Gamble of Houston and was being the key word, it 586 00:27:50,080 --> 00:27:52,760 Speaker 3: no longer exists and it basically evaporated overnight because it 587 00:27:52,800 --> 00:27:55,119 Speaker 3: was all a house of cards. Lehman Brothers a slightly 588 00:27:55,119 --> 00:27:57,280 Speaker 3: different story, but they made too many bets in too 589 00:27:57,320 --> 00:28:00,160 Speaker 3: many bad places. These are companies that went poof overnight, 590 00:28:00,200 --> 00:28:03,480 Speaker 3: and they took obviously the market. These things triggered market 591 00:28:03,520 --> 00:28:06,320 Speaker 3: downturns which dragged for one k's down just in general 592 00:28:06,359 --> 00:28:09,080 Speaker 3: across the country. But if you had company stock in 593 00:28:09,119 --> 00:28:11,080 Speaker 3: those firms and a large chunk of it, then you 594 00:28:11,160 --> 00:28:12,959 Speaker 3: lost a heck of a lot more than, you know, 595 00:28:12,960 --> 00:28:15,720 Speaker 3: than a simple diversified portfolio would have lost in those 596 00:28:15,720 --> 00:28:18,080 Speaker 3: downtimes one hundred percent loss of course, in the case 597 00:28:18,080 --> 00:28:20,119 Speaker 3: of Enron. So these are things you want to pay 598 00:28:20,119 --> 00:28:22,240 Speaker 3: attention to make sure you know what position you're in. 599 00:28:23,000 --> 00:28:27,240 Speaker 1: Well, we don't have to see a company entirely implode 600 00:28:27,560 --> 00:28:30,040 Speaker 1: like an Enron or a Layman Brothers. Those are pretty 601 00:28:30,080 --> 00:28:34,240 Speaker 1: severe examples. You know they're real, but they're extreme. I mean, 602 00:28:34,359 --> 00:28:36,920 Speaker 1: just a big market decline or a change in a 603 00:28:37,000 --> 00:28:41,120 Speaker 1: company's structure or earnings report, anything can cause a lot 604 00:28:41,120 --> 00:28:47,520 Speaker 1: of unexpected volatility when you're overexposed to anyone company. So, Brian, 605 00:28:47,600 --> 00:28:50,719 Speaker 1: let's talk about how people get stuck in this situation. 606 00:28:51,080 --> 00:28:54,600 Speaker 1: Why do people finding them why do people find themselves? 607 00:28:54,840 --> 00:28:58,560 Speaker 1: And let's face it, we're talking about well educated, very 608 00:28:58,600 --> 00:29:01,920 Speaker 1: intelligent people in most cases, why did they get stuck 609 00:29:01,960 --> 00:29:06,040 Speaker 1: in this position of being so highly concentrated in one position? 610 00:29:06,440 --> 00:29:06,640 Speaker 2: Yeah. 611 00:29:06,680 --> 00:29:09,160 Speaker 3: So, first, it starts off with a generous benefits package, 612 00:29:09,200 --> 00:29:11,680 Speaker 3: so you're rewarded this company stock year after year. We're 613 00:29:11,680 --> 00:29:16,360 Speaker 3: talking about restricted stock stock options in employee stock purchase plans, 614 00:29:16,400 --> 00:29:18,520 Speaker 3: things like that, you might even bought more on your own, 615 00:29:18,680 --> 00:29:20,880 Speaker 3: and a lot of times they entice you with perhaps 616 00:29:20,960 --> 00:29:23,520 Speaker 3: a fifteen percent discount. So, in other words, if the 617 00:29:23,520 --> 00:29:25,640 Speaker 3: stock is worth ten bucks to share on the market, 618 00:29:25,800 --> 00:29:27,400 Speaker 3: you're able to buy it as an employee for eight 619 00:29:27,400 --> 00:29:30,160 Speaker 3: dollars and fifty cents, meaning there's an instant fifteen percent 620 00:29:30,240 --> 00:29:33,800 Speaker 3: gain that's hard to resist. So, and a lot of 621 00:29:33,840 --> 00:29:36,560 Speaker 3: it comes from simply loyalty. I believe in this company. 622 00:29:36,680 --> 00:29:38,880 Speaker 3: I'm familiar with it, I know it. I do this thing. 623 00:29:38,920 --> 00:29:40,520 Speaker 3: I do this stuff every single day. I can do 624 00:29:40,520 --> 00:29:42,239 Speaker 3: it in my sleep, so I understand it better than 625 00:29:42,240 --> 00:29:44,520 Speaker 3: anything else that might be sitting inside a mutual fund. 626 00:29:44,880 --> 00:29:47,120 Speaker 3: And then after some time, after you've been in this 627 00:29:47,160 --> 00:29:50,840 Speaker 3: situation eventually becomes taxes. Bob, if I sell, i'll oh 628 00:29:50,840 --> 00:29:53,160 Speaker 3: too much. Therefore, I'm never going to sell. I just 629 00:29:53,240 --> 00:29:55,840 Speaker 3: had this conversation with a client yesterday who's got who 630 00:29:55,920 --> 00:29:58,560 Speaker 3: has had stocks that he's owned for forty some years, 631 00:29:58,880 --> 00:30:01,000 Speaker 3: and he can't he doesn't have the capital gains, let 632 00:30:01,000 --> 00:30:02,400 Speaker 3: alone that he doesn't want to pay it. He doesn't 633 00:30:02,440 --> 00:30:04,560 Speaker 3: have the data to even know what the capital gain is. 634 00:30:04,920 --> 00:30:07,440 Speaker 3: So he's stuck in a situation where he says, it's 635 00:30:07,480 --> 00:30:09,320 Speaker 3: going to cost so much to sell this, I'm just 636 00:30:09,440 --> 00:30:12,560 Speaker 3: never gonna sell it. That's great, but as your advisor, 637 00:30:12,600 --> 00:30:14,160 Speaker 3: I need to take it out of your financial plan. 638 00:30:14,240 --> 00:30:16,400 Speaker 3: If you have walled it off because you don't want 639 00:30:16,400 --> 00:30:18,000 Speaker 3: to give a nickel to the irs, then it is 640 00:30:18,080 --> 00:30:19,720 Speaker 3: not an asset for you. So I either need to 641 00:30:19,720 --> 00:30:22,959 Speaker 3: solve that problem or find another way to work your 642 00:30:22,960 --> 00:30:26,080 Speaker 3: financial plan around it. That tax can feel like a punishment, 643 00:30:26,120 --> 00:30:27,640 Speaker 3: so people just hang on and hang on. 644 00:30:28,880 --> 00:30:31,280 Speaker 1: You're listening to Simply Money presented by All with Financial 645 00:30:31,400 --> 00:30:35,000 Speaker 1: Umbob sponseller along with Brian James. Yeah, when people don't 646 00:30:35,000 --> 00:30:38,280 Speaker 1: even understand what their tax exposure is, I think sometimes 647 00:30:38,320 --> 00:30:41,880 Speaker 1: they underestimate what can be done with some proper planning. 648 00:30:42,360 --> 00:30:44,720 Speaker 1: And Brian just within the last you know, I'll say 649 00:30:44,760 --> 00:30:47,560 Speaker 1: five to ten years, there's been a lot of really 650 00:30:47,680 --> 00:30:51,440 Speaker 1: nice strategies come down the road to help people gradually 651 00:30:51,480 --> 00:30:56,080 Speaker 1: get out of these concentrated stock positions with way less 652 00:30:56,200 --> 00:30:59,640 Speaker 1: income tax exposure and capital gain exposure than they ever 653 00:30:59,720 --> 00:31:00,560 Speaker 1: thought possible. 654 00:31:01,040 --> 00:31:03,960 Speaker 3: Yeah, there are vehicles out there, such as exchange funds. 655 00:31:04,000 --> 00:31:06,760 Speaker 3: An exchange fund is something where a lot of people 656 00:31:06,760 --> 00:31:09,920 Speaker 3: who own diversified or I'm sorry, the whole point is 657 00:31:09,960 --> 00:31:12,680 Speaker 3: that they're not diversified. Who own a single stock own 658 00:31:12,800 --> 00:31:15,120 Speaker 3: one a big position in one thing. If I have 659 00:31:15,280 --> 00:31:17,440 Speaker 3: fifty different people who have nothing to do with each 660 00:31:17,480 --> 00:31:20,800 Speaker 3: other who have too much in one stock, those fifty 661 00:31:20,840 --> 00:31:24,120 Speaker 3: stocks probably make up a decent portfolio. So there's something 662 00:31:24,160 --> 00:31:27,160 Speaker 3: called an exchange fund where everybody can contribute their stock 663 00:31:27,280 --> 00:31:31,160 Speaker 3: as is and receive in exchange a share of that 664 00:31:31,280 --> 00:31:33,760 Speaker 3: whole pile of stocks. The point of that is you 665 00:31:33,800 --> 00:31:36,520 Speaker 3: didn't sell it. The IRS does not recognize that as 666 00:31:36,520 --> 00:31:40,040 Speaker 3: a sale. You exchanged it for a different pile of securities. 667 00:31:40,280 --> 00:31:43,160 Speaker 3: So that is a way to diversify their risk without 668 00:31:43,200 --> 00:31:45,560 Speaker 3: actually selling it. There's other things you can do as well. 669 00:31:46,040 --> 00:31:48,960 Speaker 3: You can also do what's called a collar around a 670 00:31:49,000 --> 00:31:52,320 Speaker 3: major position, which basically means you place option trades on 671 00:31:52,400 --> 00:31:54,840 Speaker 3: the upside and the downside and that will at least 672 00:31:54,880 --> 00:31:57,920 Speaker 3: restrict the stock It can't can't go through the floor 673 00:31:57,920 --> 00:31:59,800 Speaker 3: because you'd have an option in place to protect that 674 00:32:00,200 --> 00:32:02,240 Speaker 3: also won't grow to the sky. Should the thing ten 675 00:32:02,440 --> 00:32:04,000 Speaker 3: x in the next couple of years, it's not going 676 00:32:04,040 --> 00:32:06,120 Speaker 3: to help you because you have something else. 677 00:32:05,920 --> 00:32:06,719 Speaker 2: On the top side. 678 00:32:06,800 --> 00:32:09,040 Speaker 3: But when we've got this situation, the main thing we're 679 00:32:09,040 --> 00:32:11,560 Speaker 3: trying to protect from is a massive loss from something 680 00:32:11,640 --> 00:32:13,880 Speaker 3: unpredicted that can happen to any company out there. 681 00:32:14,840 --> 00:32:16,960 Speaker 1: Other things we talk to our clients about are more 682 00:32:17,040 --> 00:32:20,280 Speaker 1: gradual selling strategies, and this is where we can dovetail 683 00:32:20,320 --> 00:32:26,080 Speaker 1: the client's charitable intentions or goals with gradually diversifying out 684 00:32:26,080 --> 00:32:29,880 Speaker 1: of these highly concentrated positions, things like charitable remainder trust 685 00:32:30,040 --> 00:32:33,000 Speaker 1: donor advise funds where you can give a chunk of 686 00:32:33,040 --> 00:32:37,560 Speaker 1: this stock away, get all the tax benefits now, avoid 687 00:32:37,600 --> 00:32:42,200 Speaker 1: the capital gains taxes in entire you know, entirely avoid them, 688 00:32:42,600 --> 00:32:45,960 Speaker 1: and dole that money out to charities over time. In 689 00:32:46,040 --> 00:32:48,320 Speaker 1: the case of a charitable remainder trust, you can retain 690 00:32:48,360 --> 00:32:50,960 Speaker 1: an income stream from what you gave away. If that's 691 00:32:50,960 --> 00:32:54,000 Speaker 1: something you need to do. It can literally literally be 692 00:32:54,080 --> 00:32:57,640 Speaker 1: a win win for everybody except the irs, and you 693 00:32:57,720 --> 00:33:00,560 Speaker 1: don't need to dump everything overnight. And what this comes 694 00:33:00,640 --> 00:33:04,960 Speaker 1: down to is a well planned multi year approach, especially 695 00:33:05,000 --> 00:33:08,800 Speaker 1: in coordination with your income and your tax strategy, and 696 00:33:08,840 --> 00:33:12,080 Speaker 1: that can really soften the tax hit while getting you 697 00:33:12,160 --> 00:33:16,560 Speaker 1: out of this concentrated position that exposes your overall portfolio 698 00:33:16,600 --> 00:33:18,160 Speaker 1: to too much volatility and risk. 699 00:33:18,680 --> 00:33:20,720 Speaker 3: Bob, I'm going to take a step back even before that. 700 00:33:20,760 --> 00:33:23,000 Speaker 3: Those are great entities that can be set up, but 701 00:33:23,040 --> 00:33:25,640 Speaker 3: before you even do that, one simple thing you can do. 702 00:33:25,920 --> 00:33:27,240 Speaker 2: If you regularly give. 703 00:33:27,160 --> 00:33:29,720 Speaker 3: Money to some charity, a church or some other kind 704 00:33:29,720 --> 00:33:32,480 Speaker 3: of charity or some whatever out there, you can simply 705 00:33:32,560 --> 00:33:35,440 Speaker 3: give them the stock. You don't have to write a check, 706 00:33:36,080 --> 00:33:38,440 Speaker 3: give them the shares of the stock directly. All you 707 00:33:38,520 --> 00:33:41,800 Speaker 3: have to do is contact the development person whoever handles 708 00:33:41,800 --> 00:33:44,200 Speaker 3: that for that charity, and they know how this game works. 709 00:33:44,320 --> 00:33:46,600 Speaker 3: They're going to give you something called a DTC number 710 00:33:46,600 --> 00:33:48,120 Speaker 3: and an account number, and they'll tell you where the 711 00:33:48,160 --> 00:33:51,000 Speaker 3: broke where their investment account is held. You provide that 712 00:33:51,080 --> 00:33:54,160 Speaker 3: to whatever firm is holding your shares and tell them 713 00:33:54,200 --> 00:33:56,200 Speaker 3: I want to send one hundred shares of Procter and Gamble, 714 00:33:56,240 --> 00:33:59,600 Speaker 3: for example, and the IRS does not recognize that as 715 00:33:59,720 --> 00:34:02,360 Speaker 3: a say you did not sell it. You simply gave 716 00:34:02,400 --> 00:34:04,800 Speaker 3: it to a charity. The charity, of course, is a 717 00:34:04,840 --> 00:34:07,280 Speaker 3: five oh one C three, meaning it doesn't pay taxes. 718 00:34:07,600 --> 00:34:09,560 Speaker 3: They sell it, and they will most likely do so 719 00:34:09,680 --> 00:34:11,200 Speaker 3: instantly because they don't want to speculate. 720 00:34:11,239 --> 00:34:12,080 Speaker 2: They just need the cash. 721 00:34:12,560 --> 00:34:15,400 Speaker 3: They sell it and do not incur any taxes. So 722 00:34:15,480 --> 00:34:18,160 Speaker 3: you get the credit for having given them the same 723 00:34:18,239 --> 00:34:20,839 Speaker 3: dollar amount that you give them every single year, but 724 00:34:20,880 --> 00:34:23,160 Speaker 3: you don't have to pay any taxes for having liquidated it. 725 00:34:23,640 --> 00:34:26,440 Speaker 1: Great stuff, Brian, here's the all Worth advice. Your company 726 00:34:26,480 --> 00:34:29,719 Speaker 1: helped you build your wealth. Now your wealth has a 727 00:34:29,760 --> 00:34:34,240 Speaker 1: new job protecting your future. You're listening to Simply Money 728 00:34:34,520 --> 00:34:37,759 Speaker 1: presented by all With Financial on fifty five KARC, the 729 00:34:38,200 --> 00:34:45,560 Speaker 1: talk station. You're listening to Simply Money presented by all 730 00:34:45,600 --> 00:34:46,240 Speaker 1: Worth Financial. 731 00:34:46,239 --> 00:34:48,600 Speaker 2: I'm Bob Sponseller along with Brian James. 732 00:34:49,280 --> 00:34:51,279 Speaker 1: Brian, I want to take a few minutes to just 733 00:34:51,640 --> 00:34:54,080 Speaker 1: really get on my high horse about what we talked 734 00:34:54,120 --> 00:34:57,160 Speaker 1: about earlier in the show, and that's just the importance 735 00:34:57,200 --> 00:35:01,640 Speaker 1: of having a truly coordinated financial play and the value 736 00:35:01,680 --> 00:35:04,720 Speaker 1: that a good fiduciary advisor can bring to the table 737 00:35:04,760 --> 00:35:07,040 Speaker 1: in that area, and I'm thinking of a meeting I 738 00:35:07,160 --> 00:35:10,480 Speaker 1: had earlier this week with a new client that's coming 739 00:35:10,520 --> 00:35:14,040 Speaker 1: on board or looking at hiring us. And you know, Brian, 740 00:35:14,120 --> 00:35:16,080 Speaker 1: this was a two hour meeting, you know, and at 741 00:35:16,120 --> 00:35:19,080 Speaker 1: the beginning of the meeting, they shared a little bit 742 00:35:19,080 --> 00:35:22,160 Speaker 1: of information and asked a lot of questions. The more 743 00:35:22,200 --> 00:35:25,360 Speaker 1: I answered the questions, the more information was shared. And 744 00:35:25,400 --> 00:35:28,040 Speaker 1: as we went on, you know, I found out just 745 00:35:28,120 --> 00:35:30,920 Speaker 1: what we talked about. Stuff is with in five or 746 00:35:30,960 --> 00:35:35,120 Speaker 1: six different places, with four or five different advisors, no 747 00:35:35,320 --> 00:35:36,520 Speaker 1: coordinated strategy. 748 00:35:36,600 --> 00:35:39,239 Speaker 2: And I explain the fact that, you know. 749 00:35:39,200 --> 00:35:42,520 Speaker 1: We don't have to take over management of everything in 750 00:35:42,600 --> 00:35:47,760 Speaker 1: one day to add the value of a truly comprehensive 751 00:35:47,840 --> 00:35:52,760 Speaker 1: financial investment and tax strategy, because you don't have that today. 752 00:35:53,320 --> 00:35:55,759 Speaker 1: And the longer that meeting went on, and the more 753 00:35:55,840 --> 00:35:59,560 Speaker 1: comfort they had with that whole concept, which they had 754 00:35:59,600 --> 00:36:03,840 Speaker 1: never experienced before, they were more and more open to 755 00:36:03,880 --> 00:36:07,040 Speaker 1: sharing information. And I think it set the table for 756 00:36:07,160 --> 00:36:10,600 Speaker 1: a good relationship going forward where we can really add 757 00:36:10,640 --> 00:36:14,520 Speaker 1: the value to their situation that Brian, Honestly, I think 758 00:36:14,520 --> 00:36:17,879 Speaker 1: they've been looking for for twenty plus years and if 759 00:36:17,880 --> 00:36:20,560 Speaker 1: never found I'm sure you've had similar meetings. 760 00:36:20,840 --> 00:36:24,279 Speaker 3: Yeah, And I'm thinking back over my past. So and 761 00:36:24,520 --> 00:36:27,440 Speaker 3: when I first got started, everything was product based, right. 762 00:36:27,480 --> 00:36:29,440 Speaker 2: It was everybody knew a guy who had. 763 00:36:29,280 --> 00:36:33,520 Speaker 3: A hot stock tip from last month, or the Janus 764 00:36:33,600 --> 00:36:36,120 Speaker 3: Mutual Fund or the Aim Wine Garden Fund or whatever 765 00:36:36,440 --> 00:36:38,440 Speaker 3: something out there that was just the coolest thing ever. 766 00:36:38,440 --> 00:36:39,600 Speaker 3: And it was all we are gonna need to own 767 00:36:39,600 --> 00:36:39,839 Speaker 3: for us. 768 00:36:39,880 --> 00:36:40,040 Speaker 1: Right. 769 00:36:40,040 --> 00:36:41,839 Speaker 3: It was all product based, and it would change every 770 00:36:41,880 --> 00:36:44,000 Speaker 3: year or too, and that's nothing to build a career on, 771 00:36:44,120 --> 00:36:46,120 Speaker 3: let alone a fiduciary relationship. 772 00:36:46,200 --> 00:36:49,320 Speaker 2: So eventually it pivoted to what am I going to 773 00:36:49,360 --> 00:36:51,040 Speaker 2: do with all that? How does it all fit together? 774 00:36:51,080 --> 00:36:54,320 Speaker 3: And I think nowadays when we talked to new clients 775 00:36:54,360 --> 00:36:58,040 Speaker 3: or perspective clients, the very first thing they say is, well, 776 00:36:58,080 --> 00:36:59,800 Speaker 3: all we really talk about with my advisor is what 777 00:36:59,880 --> 00:37:01,560 Speaker 3: the market did last quarter and what we think it 778 00:37:01,640 --> 00:37:03,560 Speaker 3: might do this quarter, which nobody knows anyway. And I 779 00:37:03,560 --> 00:37:05,680 Speaker 3: don't really get the point of this anymore. How are 780 00:37:05,680 --> 00:37:08,040 Speaker 3: these people helping me? I'm in a different situation now. 781 00:37:08,040 --> 00:37:09,840 Speaker 3: I got a lot of moving parts to my situation 782 00:37:10,280 --> 00:37:13,000 Speaker 3: about to retire, you know, I've got social security decisions 783 00:37:13,000 --> 00:37:15,239 Speaker 3: to make I got a pension, maybe a business to sell. 784 00:37:15,280 --> 00:37:18,960 Speaker 3: How does all this coordinate together? And how do I 785 00:37:19,000 --> 00:37:21,640 Speaker 3: get the conversation off of just what is this pile 786 00:37:21,680 --> 00:37:22,319 Speaker 3: of money doing. 787 00:37:22,320 --> 00:37:24,000 Speaker 2: There's so many more moving parts nowadays. 788 00:37:24,520 --> 00:37:29,800 Speaker 1: Yeah, you repeated that keyword coordination, coordination, and that's really 789 00:37:29,880 --> 00:37:34,759 Speaker 1: the value add that comes from having a good, qualified 790 00:37:34,800 --> 00:37:39,040 Speaker 1: fiduciary financial advisor on your team. Thank you for listening. 791 00:37:39,040 --> 00:37:41,520 Speaker 1: You've been listening to Simply Money, presented by all Worth 792 00:37:41,560 --> 00:37:45,080 Speaker 1: Financial on fifty five KRC, the talk station