1 00:00:02,279 --> 00:00:05,640 Speaker 1: Global business news twenty four hours a day. If Bloomberg 2 00:00:05,720 --> 00:00:08,800 Speaker 1: dot Com the radio plus Globo lapt and on your radio. 3 00:00:09,080 --> 00:00:13,280 Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters 4 00:00:13,280 --> 00:00:16,360 Speaker 1: on Katherine Cowdery. The stock market is advancing, recovering some 5 00:00:16,640 --> 00:00:19,840 Speaker 1: of last week's deep declines. A private survey shows US 6 00:00:19,880 --> 00:00:23,520 Speaker 1: manufacturing expanded in April for the second straight month, suggesting 7 00:00:23,520 --> 00:00:26,560 Speaker 1: that factories are adapting to a strong dollar and economic 8 00:00:26,600 --> 00:00:30,400 Speaker 1: weakness overseas. After the report, traders lowered their expectations for 9 00:00:30,480 --> 00:00:33,479 Speaker 1: higher interest rates in June. Crude oil is falling for 10 00:00:33,520 --> 00:00:35,440 Speaker 1: a second day as a rock sax sports approach to 11 00:00:35,560 --> 00:00:38,560 Speaker 1: record high in April. We checked the markets every fifteen 12 00:00:38,560 --> 00:00:41,519 Speaker 1: minutes throughout the trading day. Down Industrial Average is up 13 00:00:41,560 --> 00:00:44,200 Speaker 1: one d twenty nine points shortly before the closing bell. 14 00:00:44,280 --> 00:00:46,320 Speaker 1: That's a gain of three quarters of a percentis trading 15 00:00:46,320 --> 00:00:49,680 Speaker 1: at seventeen thousand, nine hundred three. SMP five funded up 16 00:00:49,680 --> 00:00:52,120 Speaker 1: seventeen points, seven eighths of a percent to two thousand 17 00:00:52,200 --> 00:00:54,960 Speaker 1: eighty two. The NAZDAC is of forty five points, a 18 00:00:55,000 --> 00:00:58,080 Speaker 1: gain of one percent, trading at forty twenty. West Texas 19 00:00:58,120 --> 00:01:03,320 Speaker 1: Intermediate crude oil down a dollar a bear two spockled 20 00:01:03,400 --> 00:01:07,080 Speaker 1: up a dollar ninety announce at ten your treasury down 21 00:01:07,319 --> 00:01:09,360 Speaker 1: thirty seconds with the yield of one point eight six. 22 00:01:10,200 --> 00:01:15,959 Speaker 1: And that's a Bloomberg Business flash. You're listening to Taking 23 00:01:16,000 --> 00:01:19,400 Speaker 1: Stock with Kathleen Hayes and Pin Box on Bloomberg Radio. 24 00:01:19,959 --> 00:01:24,080 Speaker 1: New rules, new rules are governing the responsibility of the 25 00:01:24,160 --> 00:01:27,600 Speaker 1: individuals that manage your money. Let's find out what these 26 00:01:27,680 --> 00:01:30,640 Speaker 1: new rules mean to you. Noel go Farb is a 27 00:01:30,680 --> 00:01:34,800 Speaker 1: financial advisor for National Financial Network. He is a c 28 00:01:35,000 --> 00:01:38,320 Speaker 1: f A charter holder and is a certified professional when 29 00:01:38,319 --> 00:01:41,200 Speaker 1: it comes to retirement income. No, thanks very much for 30 00:01:41,280 --> 00:01:43,240 Speaker 1: coming into the studio. Much appreciate it. Thank you very 31 00:01:43,280 --> 00:01:44,920 Speaker 1: much for having me. So tell us a little bit 32 00:01:44,959 --> 00:01:47,800 Speaker 1: about these new fiduciary rules. This is coming from the 33 00:01:47,920 --> 00:01:51,560 Speaker 1: Department of Labor. Correct, That is correct, the d o L. 34 00:01:52,240 --> 00:01:56,160 Speaker 1: They put out a one thousand odd page ruling. It's 35 00:01:56,240 --> 00:01:59,520 Speaker 1: very technical, actually, and many firms are reviewing that as 36 00:01:59,600 --> 00:02:02,400 Speaker 1: we speak to kind of figure out exactly how that's 37 00:02:02,400 --> 00:02:07,320 Speaker 1: going to affect UH advisors and investors. Because what happens 38 00:02:07,440 --> 00:02:09,600 Speaker 1: is um there are there's a lot of money out there, 39 00:02:09,680 --> 00:02:12,520 Speaker 1: a lot of money in qualified plans for one case, 40 00:02:12,560 --> 00:02:15,240 Speaker 1: four or three bs and down the road, these these 41 00:02:15,320 --> 00:02:19,280 Speaker 1: moneys will most likely be rolled into I RA s, 42 00:02:19,440 --> 00:02:22,079 Speaker 1: and the d o L is who wants to have 43 00:02:22,280 --> 00:02:25,720 Speaker 1: rules associated with that money to make sure that the 44 00:02:25,840 --> 00:02:28,079 Speaker 1: clients are taken care of. Okay, Now, when they say 45 00:02:28,200 --> 00:02:31,920 Speaker 1: clients are taking care of what is the current state? 46 00:02:31,960 --> 00:02:34,119 Speaker 1: I mean, why do they need rules? What is wrong 47 00:02:34,160 --> 00:02:36,280 Speaker 1: with the current situation? It's funny, it's according to the 48 00:02:36,360 --> 00:02:38,320 Speaker 1: d o L. Funny to say that because I as 49 00:02:38,320 --> 00:02:40,639 Speaker 1: a c F, a charter holder, and being that ethics 50 00:02:40,760 --> 00:02:43,280 Speaker 1: is is up there as the top part of that 51 00:02:43,440 --> 00:02:47,720 Speaker 1: whole program. I've always considered myself a fiduciary and always 52 00:02:47,760 --> 00:02:51,040 Speaker 1: consider myself putting my client ahead of myself. And that's 53 00:02:51,080 --> 00:02:54,280 Speaker 1: the way it should be. Uh in every aspect of life, 54 00:02:54,320 --> 00:02:58,680 Speaker 1: I believe. But unfortunately there are there are sometimes bad people, 55 00:02:58,880 --> 00:03:02,360 Speaker 1: and and I think these people need to uh there 56 00:03:02,440 --> 00:03:05,440 Speaker 1: needs to be regulations to make sure that at least 57 00:03:05,600 --> 00:03:08,480 Speaker 1: those people with money in I RA s are taken 58 00:03:08,520 --> 00:03:11,000 Speaker 1: care of. And there are not certain products and high 59 00:03:11,040 --> 00:03:13,600 Speaker 1: feed type products that may may they may be taking 60 00:03:13,639 --> 00:03:16,120 Speaker 1: advantage of. Now, when you say high feed products, is 61 00:03:16,440 --> 00:03:20,480 Speaker 1: that really the underlying issue? Here that products that would 62 00:03:20,560 --> 00:03:25,839 Speaker 1: benefit the seller, let's say, with a commission, are sometimes recommended, 63 00:03:25,919 --> 00:03:29,040 Speaker 1: and the Department of Labor wants you to be able 64 00:03:29,120 --> 00:03:32,600 Speaker 1: to say legally that you're a fiduciary and that the 65 00:03:32,639 --> 00:03:34,920 Speaker 1: product is either good for the client or the client 66 00:03:35,000 --> 00:03:39,080 Speaker 1: should stay away. Right. Well, the ruling again, it's being 67 00:03:39,120 --> 00:03:41,240 Speaker 1: looked at, so we don't exactly know everything yet. But 68 00:03:41,680 --> 00:03:43,560 Speaker 1: the way I see it is that we want to 69 00:03:43,600 --> 00:03:46,520 Speaker 1: make sure that the products are what's best for the client. 70 00:03:46,760 --> 00:03:49,040 Speaker 1: And the great thing about what I do is is 71 00:03:49,120 --> 00:03:51,400 Speaker 1: I help my clients understand all the risks that are 72 00:03:51,440 --> 00:03:55,440 Speaker 1: associated with retirement and with getting to retirement that when 73 00:03:55,480 --> 00:03:58,760 Speaker 1: they get there they have everything they need to be 74 00:03:58,880 --> 00:04:02,160 Speaker 1: able to the income they require when they retire. Right, 75 00:04:02,200 --> 00:04:04,440 Speaker 1: but can't can just just the point and then we'll 76 00:04:04,440 --> 00:04:08,160 Speaker 1: go on. But it can the client now can ask 77 00:04:08,600 --> 00:04:14,320 Speaker 1: anybody who is UH soliciting their business, are you a fiduciary? Correct? 78 00:04:14,360 --> 00:04:16,480 Speaker 1: I mean it's a it's an specific term and it 79 00:04:16,560 --> 00:04:19,480 Speaker 1: has legal implications. Sure, sure they can ask that. And 80 00:04:20,360 --> 00:04:24,080 Speaker 1: myself being an advisor and and UH a fee based 81 00:04:24,120 --> 00:04:28,080 Speaker 1: meaning I charge fee for the assets I manage. I 82 00:04:28,160 --> 00:04:31,080 Speaker 1: am fiduciary, I'm held at at higher standard. I think 83 00:04:31,120 --> 00:04:33,400 Speaker 1: in this instance, again it's being reviewed, so I don't 84 00:04:33,440 --> 00:04:35,360 Speaker 1: know all the detail because it's a very large document. 85 00:04:35,440 --> 00:04:38,160 Speaker 1: I didn't You didn't get through the thousand pages last night? Right? Well? 86 00:04:38,200 --> 00:04:42,960 Speaker 1: I I fell asleep halfway through. All right, So given this, 87 00:04:43,640 --> 00:04:45,200 Speaker 1: will you do you believe that there will be a 88 00:04:45,320 --> 00:04:48,520 Speaker 1: change in the financial industry The smaller firms will be 89 00:04:48,680 --> 00:04:53,320 Speaker 1: forced to consolidate in order to defer the cost of 90 00:04:53,400 --> 00:04:58,280 Speaker 1: these new rules. Well, um, I think unfortunately what might happen, Um. 91 00:04:58,960 --> 00:05:01,320 Speaker 1: All speculation of co us is that maybe the little 92 00:05:01,600 --> 00:05:04,760 Speaker 1: investor might get hurt in the end because the costs 93 00:05:04,839 --> 00:05:08,120 Speaker 1: involved might be too great to take care of those people, 94 00:05:08,160 --> 00:05:10,120 Speaker 1: which is unfortunately because those are the people who need 95 00:05:10,160 --> 00:05:14,120 Speaker 1: the most help. Let's turn our attention now to retirement. 96 00:05:14,240 --> 00:05:18,320 Speaker 1: Particularly in a low yield environment. You must be getting 97 00:05:18,320 --> 00:05:21,120 Speaker 1: a lot of calls or a lot of questions from 98 00:05:21,240 --> 00:05:24,640 Speaker 1: people about how are they going to live when you 99 00:05:24,760 --> 00:05:28,200 Speaker 1: know you've got, what is it the tenure today one 100 00:05:28,279 --> 00:05:30,640 Speaker 1: point eight six percent. If you want to go out 101 00:05:30,680 --> 00:05:33,279 Speaker 1: even longer than thirty years, you'll get two point seven 102 00:05:33,640 --> 00:05:36,240 Speaker 1: one What kind of questions? What kind of issues are 103 00:05:36,279 --> 00:05:39,320 Speaker 1: you dealing with? Well? The big issue is I see 104 00:05:39,800 --> 00:05:42,240 Speaker 1: um now in going forward, is is there used to 105 00:05:42,320 --> 00:05:45,919 Speaker 1: be U pensions. People used to receive pensions to find benefits, 106 00:05:45,960 --> 00:05:48,160 Speaker 1: find benefit plans, and you know, once upon a time 107 00:05:48,960 --> 00:05:51,679 Speaker 1: people lived happily ever after. And now what I find 108 00:05:51,800 --> 00:05:54,000 Speaker 1: is that when I read when the east of my 109 00:05:54,080 --> 00:05:55,920 Speaker 1: daughter doesn't like reading a books anymore. When I used 110 00:05:55,960 --> 00:05:58,040 Speaker 1: to read her books, the fairy tales used to end 111 00:05:58,080 --> 00:06:01,799 Speaker 1: in living happily ever after, And now that unfortunately, because 112 00:06:02,040 --> 00:06:06,719 Speaker 1: of pensions really disappearing and the individual needing to take 113 00:06:06,800 --> 00:06:10,680 Speaker 1: better care of their own retirement plan and throw in it. 114 00:06:10,920 --> 00:06:13,280 Speaker 1: The biggest risk that we have right now is that 115 00:06:13,400 --> 00:06:16,680 Speaker 1: we're all living longer. That's the longevity risk. So all 116 00:06:16,720 --> 00:06:21,920 Speaker 1: of these risks are are pointing towards a more difficult environment, 117 00:06:22,080 --> 00:06:25,680 Speaker 1: especially when is low interest rates. Uh. And what happens is, 118 00:06:25,760 --> 00:06:30,400 Speaker 1: unfortunately is there are certain types of strategies that people 119 00:06:30,560 --> 00:06:34,400 Speaker 1: can implement that can help them reduce the amount of 120 00:06:34,480 --> 00:06:38,000 Speaker 1: risk they're taking and as well as reduced taxation. So 121 00:06:38,400 --> 00:06:40,919 Speaker 1: as I always tell people, I can't control the market. 122 00:06:41,000 --> 00:06:42,320 Speaker 1: I don't know where it's going to go. We know 123 00:06:42,440 --> 00:06:44,760 Speaker 1: we have to have a diversified portfolio, but what we 124 00:06:44,839 --> 00:06:47,680 Speaker 1: can control is the amount of risk we take and 125 00:06:47,760 --> 00:06:50,680 Speaker 1: the amount of taxes that we may pay in retirement. 126 00:06:50,880 --> 00:06:53,600 Speaker 1: And if we can do those correctly, then they can 127 00:06:53,640 --> 00:06:57,240 Speaker 1: actually have a higher net after tax cash flow in 128 00:06:57,360 --> 00:07:00,280 Speaker 1: retirement and not have to worry about interest rates. Does 129 00:07:00,320 --> 00:07:03,600 Speaker 1: that involve what things like life insurance or annuities? I 130 00:07:03,640 --> 00:07:06,679 Speaker 1: mean what kind of cash involves and involves all the above. 131 00:07:07,000 --> 00:07:09,840 Speaker 1: Every everything depends on the case on the every that's 132 00:07:10,000 --> 00:07:12,600 Speaker 1: that's the whole deal. Every situation is different, and we 133 00:07:12,720 --> 00:07:16,200 Speaker 1: need to analyze each situation, look at how much how 134 00:07:16,240 --> 00:07:19,400 Speaker 1: many assets they have, and determine the type of income 135 00:07:19,480 --> 00:07:22,360 Speaker 1: that they require in retirement. Can you can you outline 136 00:07:22,400 --> 00:07:24,480 Speaker 1: what are some of the big mistakes that people make 137 00:07:24,520 --> 00:07:28,520 Speaker 1: when they when they looked at their financial planning for retirement. Well, 138 00:07:28,560 --> 00:07:31,440 Speaker 1: the first mistake most people do is is they don't 139 00:07:31,440 --> 00:07:34,240 Speaker 1: save enough. It's as simple as that. If people would 140 00:07:34,320 --> 00:07:38,280 Speaker 1: just budget better and save more, they would have more 141 00:07:38,760 --> 00:07:41,280 Speaker 1: in retirement. Now, the other big mistake people make is 142 00:07:41,280 --> 00:07:42,920 Speaker 1: they take too much risk. I mean, we look at 143 00:07:42,960 --> 00:07:45,920 Speaker 1: the uh, the interest rate environment. Of course it's forcing 144 00:07:46,080 --> 00:07:48,280 Speaker 1: some people. I see this every day when I meet 145 00:07:48,320 --> 00:07:50,000 Speaker 1: people and they say, well, I need a higher rate 146 00:07:50,040 --> 00:07:52,480 Speaker 1: of return, where do I go? And they end up 147 00:07:52,520 --> 00:07:54,320 Speaker 1: taking a lot of risks as people that are in 148 00:07:54,360 --> 00:07:57,080 Speaker 1: their sixties and seventies, who are you know, invested too 149 00:07:57,120 --> 00:07:59,840 Speaker 1: heavily in the stock markets because they need that that 150 00:08:00,080 --> 00:08:03,480 Speaker 1: rate of return to generate that income that they require. 151 00:08:04,440 --> 00:08:09,440 Speaker 1: Now I understand that in a previous life you manage 152 00:08:09,480 --> 00:08:13,520 Speaker 1: money on an institutional level. For McCay and shields, what 153 00:08:13,720 --> 00:08:16,480 Speaker 1: did you learn? What did you take away from the 154 00:08:16,960 --> 00:08:19,680 Speaker 1: from that experience, how the market works that you're able 155 00:08:19,720 --> 00:08:23,520 Speaker 1: to apply now on a retail side. Well, the one 156 00:08:23,760 --> 00:08:27,080 Speaker 1: big thing that I've learned from that aspect from institutional 157 00:08:27,160 --> 00:08:29,160 Speaker 1: side is, first of all, I I dealt with the 158 00:08:29,280 --> 00:08:32,400 Speaker 1: international equity markets on the developed side, and that is 159 00:08:32,559 --> 00:08:35,480 Speaker 1: really a very should be a very small part of 160 00:08:35,679 --> 00:08:39,400 Speaker 1: everyone's UH financial strategy, if you will, So it's it's 161 00:08:39,440 --> 00:08:41,319 Speaker 1: just a little piece. So what that has taught me 162 00:08:41,679 --> 00:08:44,040 Speaker 1: was when I look at a person's entire balance sheet, 163 00:08:44,840 --> 00:08:47,560 Speaker 1: we need to invest it properly and have a diversified portfolio, 164 00:08:47,640 --> 00:08:49,520 Speaker 1: for sure, but we need to have other things in 165 00:08:49,559 --> 00:08:51,719 Speaker 1: that strategy that are going to help benefit them down 166 00:08:51,760 --> 00:08:54,719 Speaker 1: the road, both on a risk and tax perspective. I 167 00:08:54,760 --> 00:08:58,440 Speaker 1: want to get your thoughts now on the current investment environment. Uh. 168 00:08:58,600 --> 00:09:00,920 Speaker 1: If you take a look right now, uh, Dow Jones 169 00:09:00,920 --> 00:09:02,920 Speaker 1: Industrial average year to day, you're up two and a 170 00:09:03,000 --> 00:09:06,040 Speaker 1: half percent, SMP five, you've got a gain of maybe 171 00:09:06,120 --> 00:09:09,040 Speaker 1: two percent. What do you see for stocks the rest 172 00:09:09,040 --> 00:09:11,360 Speaker 1: of your what are the big issues? Oh? Well, the 173 00:09:11,440 --> 00:09:13,120 Speaker 1: rest of the year. It's such a short term. I'm 174 00:09:13,160 --> 00:09:16,400 Speaker 1: I'm a longer term person, all right, so, but but 175 00:09:16,600 --> 00:09:18,240 Speaker 1: I mean the way I see it right now sitting 176 00:09:18,320 --> 00:09:20,320 Speaker 1: here is, obviously we see all the data coming out. 177 00:09:20,360 --> 00:09:23,319 Speaker 1: We see GDP numbers not so great half a percent. Yeah, 178 00:09:23,400 --> 00:09:26,760 Speaker 1: we see earnings reports not so great for the most part, 179 00:09:27,600 --> 00:09:30,960 Speaker 1: unless you're Amazon dot Com all right, EXCEP always exceptions. 180 00:09:31,000 --> 00:09:33,839 Speaker 1: I buy I buy things from there. Uh. But the 181 00:09:33,960 --> 00:09:37,480 Speaker 1: issue here is going forward. It might be that we're 182 00:09:37,480 --> 00:09:41,760 Speaker 1: a little little ahead of ahead of ourselves, and a pullback, 183 00:09:42,040 --> 00:09:44,600 Speaker 1: Um may you know, may happen, should happen. I mean, 184 00:09:44,679 --> 00:09:47,360 Speaker 1: I market uncles straight up. And really we've had a 185 00:09:47,480 --> 00:09:49,920 Speaker 1: decent market run for the last two years, and of 186 00:09:50,000 --> 00:09:54,360 Speaker 1: course since the FED stopped intervening with with with que, 187 00:09:55,000 --> 00:09:57,480 Speaker 1: the markets have been kind of flatished to down. So 188 00:09:58,880 --> 00:10:01,000 Speaker 1: we'll see what happens. I I think longer term, we 189 00:10:01,120 --> 00:10:03,319 Speaker 1: have a lot of issues, and maybe we'll get through 190 00:10:03,320 --> 00:10:06,240 Speaker 1: the election year and we'll see what the new president 191 00:10:06,320 --> 00:10:09,360 Speaker 1: brings to the table. What about bonds, Uh, you see 192 00:10:09,400 --> 00:10:12,959 Speaker 1: people pounding the table saying buy treasuries or what what's 193 00:10:13,000 --> 00:10:15,200 Speaker 1: the what's the outlook there? See if you go if 194 00:10:15,240 --> 00:10:17,560 Speaker 1: you go back to the early eighties, it made sense 195 00:10:17,679 --> 00:10:19,839 Speaker 1: to to buy bonds when rates were so high. I 196 00:10:19,880 --> 00:10:21,880 Speaker 1: remember I had a paper out in the early eighties 197 00:10:21,920 --> 00:10:24,240 Speaker 1: and I was putting my money in the bank at 198 00:10:24,280 --> 00:10:28,160 Speaker 1: thirteen four c d s h. But unfortunately that that 199 00:10:28,520 --> 00:10:31,800 Speaker 1: situation is just nostalgia. Man, that doesn't exist anymore. Right, 200 00:10:31,840 --> 00:10:33,640 Speaker 1: So with the low, with rates where they are, I 201 00:10:33,960 --> 00:10:39,760 Speaker 1: can't see how bonds can perform much more again traditional bonds. 202 00:10:39,840 --> 00:10:42,160 Speaker 1: I mean, there might be some places to invest in 203 00:10:42,360 --> 00:10:46,000 Speaker 1: in floating rate notes or or other inflation protectors or 204 00:10:46,120 --> 00:10:48,760 Speaker 1: something if people want to obviously take less risk, and 205 00:10:48,800 --> 00:10:52,080 Speaker 1: that's also, uh, just a piece of the overall strategy, 206 00:10:52,160 --> 00:10:54,679 Speaker 1: and it's important to people to understand that. Thank you 207 00:10:54,800 --> 00:10:56,480 Speaker 1: very much for spending time with us. So no Go 208 00:10:56,679 --> 00:11:02,000 Speaker 1: Far Financial Advisor National Finance Shill Network on new fiduciary 209 00:11:02,120 --> 00:11:06,200 Speaker 1: rules and planning for your retirement. You're listening to Taking Stock. 210 00:11:06,679 --> 00:11:09,160 Speaker 1: I'm Pim Fox and this is Bloomberg Radio.