Financial Planning Is For Everyone

January is a time to re-consider your financial goals.  Today, Richard Oring of New Century Financial Group explains why financial planning is no longer for only the rich - it's something that is accessible to everyone.

You should start a financial plan in order to develop real, tangible goals and work toward them. These can include education planning, retirement planning, big purchases, estate planning, tax planning, investments and more.   A financial plan can also lead to better financial communication with your spouse!

There are many different models of financial planning, including subscription based, goal based, and advanced planning.  Chances are, there's a plan that's right for you.

To contact Rich at New Century Financial Group:
www.ncfg.com
Or call: 609-924-2049 x126

Transcript

Jag:

Welcome back to Financial Matters with Richard Oring. I'm Jon "JAG" Gay. Rich, it's great to be back with you.

Rich:

It's good to be back. It took me a while to remember how to set up my equipment.

Jag:

That's all right. Better late than never. It is good to be back with you into a new year, 2022. How have you been?

Rich:

I think great. Business was good. Family's doing good, visiting colleges and so forth. I know that you just traveled to Hawaii. I just got back from Orlando, so it's good to be back on planes and getting away with the family and seeing relatives. It's great.

Jag:

I don't know if this as cold in New Jersey as it is in Michigan today as recording this on January 20th, but I've got a few layers on as we sit here in the studio.

Rich:

I took my wife's truck today. It was snowing.

Jag:

Yeah, there you go. So Rich, as we turn the page to 2022 and we zoom out a little bit, where are we at in the business world?

Rich:

Well, I think 2021 really was great for businesses, coming from 2020 with COVID started and we saw all the businesses and our favorite restaurants closing down and airlines not flying as much and flights being canceled. I mean, it's really good to see businesses thriving again and opening their doors and restaurants reopening and new restaurants coming out. I know, for me, 2021 was great for my business.

Jag:

Well, speaking of your business, at New Century Financial Group and financial advice is what you do. What we're talking about today is how financial planning is not just for the high net worth client. I think sometimes there's a little bit of a stereotype that, "Oh, you've got to have a million dollar portfolio or $2 million portfolio before you bring on a financial advisor." I certainly do not have yet a million dollar portfolio, but I have a financial advisor because this is such a key to your future in terms of your overall wellbeing, I think.

Rich:

Absolutely. It's like a roadmap, maybe that's a bad example since we don't use roadmaps anymore, but...

Jag:

How about a GPS? It is a GPS for your future. Let's do that.

Rich:

It's a GPS with auto routing for you. A couple of years ago, we really started focusing on the financial planning for the middle class families, and it's been blowing up, been getting a lot of new clients. And what's interesting is those who have signed up and did the financial planning, I've been getting referrals for their siblings, for their neighbors. It's amazing how much of that has grown for my practice on the financial plan, which I love to do. I mean, I would rather talk to people every day about their households and their goals and dreams than slacking out paperwork. So it's been really, really nice. And you're right. When we first got into business, it was for high net worth clients. I don't even know if a million dollars was considered high net worth. It was people who were transitioning for estate planning and they have to think about selling their businesses. And what's the most tax efficient way of doing it. We don't see that as often anymore. It's more about meeting certain goals we all have every day.

Jag:

It's refreshing to hear you say that because I'll share a personal story. So my wife and I did have a financial advisor and he managed our investments and all that, and it was growing and we got a good rate of return and we were happy with him. And then we, at our last meeting with him, we asked him about some life stuff, some big picture stuff, some goals and stuff that we were planning for our future. And he didn't really get into it that much with us. He just kind of threw some numbers at us and that was it. And my wife and I kind of looked at each other and we got off the zoom call. And we said, "I think we want somebody that we can talk about a 360 degree view with." And again, this is stuff that I've learned in talking to you these last couple of years, Rich. We want somebody that's going to be a partner in the planning and not just, "Here are the numbers, here's what you're invested in, here's what your rate of return is", because it is so much more than that. Isn't it?

Rich:

Yeah. And we talked about this in previous podcasts. I think it was the one on expectations. One of the first ones, when people come to a financial advisor or an investment advisor, those terms are mixed up all the time. You have an investment advisor who manages your investment based upon your risk.

Jag:

Sure.

Rich:

A financial planner is someone who offers not just investments a lot of times, but the financial planning, what you're looking at. In our industry, I would say there's more investment advisors than financial planners, but financial planning is going to be coming much more popular. And those who are doing investments better get on the bandwagon to start offering financial planning and get their education up and their software knowledge to offer it. Because it's being demanded now.

Jag:

Well, this is really the perfect time of year to be talking about it, Rich, because I think a lot of times people have those resolutions to get their finances into order. And if done correctly, it can be a lot more successful than going to the gym. I know you see those empty gym parking lots by the middle of February, but if you want to start a financial plan for our listeners, where do we begin?

Rich:

Whenever I get a new client or an existing client, one of the things we always do is update goals. And that doesn't matter if it's a financial planning client or just an investment client, because if I'm investing money, I need to know what that money is going to be used for, long term, short term, taxable, non-taxable, risk comfort will meet their goals. So I like to ask a lot more questions even if I'm just doing the investing, but...

Jag:

It's interesting when you start asking people about goals and they're not expecting you to ask that question, it's like someone's staring at you. Like, "I never really thought about this", deer in headlights.

Rich:

It's interesting. Like, you talk about goals. Like I've never had anyone say to me, "Hey, you know what my goal is? To stay status quo. I like living paycheck by paycheck. It's kind of nice. It motivates me to go to work, keep my mouth shut, not argue with my boss. And you know, it's the best motivation for my goal is just to keep working." Well, that's great.

Jag:

I love this ax hanging over my head that if I have one major car repair, I'm going to be totally shot financially for the year. That's exactly how I want to live.

Rich:

Exactly. That's great. It's challenging. It's fun. "Oh, you know what? I like supporting the big financial institutions and let me use my credit cards. Let me not pay them off. Let me just accumulate debt. That's great. That's a great dream. I love helping the economy that way."

Jag:

For the sake of compliance, it's worth mentioning, we are of course being sarcastic and facetious right now. This is all really bad advice.

Rich:

Of course, "Maybe my other goal is, I don't really need to own a house. I like to rent. I don't need to retire one day. I see a lot of seniors working at McDonald's in retirement. It's a free meal, why not? And it's a good company in the morning to talking to other seniors who come in for breakfast." But that's not reality. I mean, those might be stupid goals, but how many people do you know who are heading in that direction?

Jag:

Yeah.

Rich:

How many friends do you have who are accumulating debt? Because, like you said, "What happens if my car breaks down? Where am I going to get that money?" I hear about this much, much too often. Maybe not for a car repair. Like, "Oh my God, my roof needs to be replaced. It's $15,000. I didn't expect that", or, "Oh my God, I can't believe how quick my son grew up. He's 18 years old." Just another week I had a client called me and his son got accepted the Tufts University. $80,000 a year, they told me. They're not going to get financial aid.

Jag:

Yikes.

Rich:

They have most of their investments in rental properties. So they don't have liquidity. And now they're freaking out like, "How am I going to pay for college?" This is stuff I told them years ago, I probably told them 10 years ago to start doing this. And they kept on thinking like we have a lot of income, we'll pay as you go, but what they didn't plan for was continuing buying rental homes. So now they're freaking out. Now they're thinking about taking loans from their cash value or 401(k) to get by.

Jag:

That is a scary thing. And every individual situation is different. I know you and I are both pet owners and love our dogs. And sometimes you have an unexpected vet bill come up and that can get pretty pricey, pretty quick. So same idea. And if you don't have a plan, like to your point, all of a sudden your kids going to school or your dog needs surgery, then what do you do?

Rich:

Right. You better have pet insurance.

Jag:

Yeah, right. It's a whole other podcast. Well, so how do we do go about setting real actual goals and get away from the sarcasm, what are some actual goals you should be thinking about?

Rich:

The first goal I always address is to retire.

Jag:

Yeah.

Rich:

You work hard. You should enjoy the rest of your life when you want to retire and do the things you want to do, enjoy time with your grandchildren, travel. What you imagine what your retirement is, you should be able to do that. There's articles, everyone says, it shows you if you're 20 years old and you start accumulating your 401(k), you only need to do this much. But if you wait 10 years, you need to do this much to get that back. If you wait another 10 years, you're not retiring.

Jag:

Yeah.

Rich:

So retirement is always something I like to address right off the bat because it's a forced savings. It's like paying yourself like a bill for the future, big purchases, home improvements, purchasing a house, jewelry, vacation. I mean, these are goals that could be short term goals, which could be a less than a year. It could be intermediate goals a few years out or long term like retirement, depending on your age.

Jag:

Absolutely.

Rich:

Like the client I mentioned the other way you could call me about college education planning.

Jag:

Yeah.

Rich:

Depending on the state you live in, some states like Florida have excellent college savings programs. Even for education, are you going to finance it? Are you going to pay as you go? Is your children be responsible? Grandparents helping, the difference between state colleges and private colleges programs like working for the government afterwards. There's a lot of stuff to do with education plan. And then just say, "Oh, I got to put money away every month to pay for tuition." Estate planning is really big. And that's changing constantly with the laws after 2019, some of the changes like IRA for beneficiary 10 year rule, there's been talks about getting rid of the step up basis upon death. I don't think that's going to pass because they did that in 2010. It didn't work out, but there's ongoing estate planning. It's about living with your money, not outliving your money, but also then pass it off to your heirs or charities.

Jag:

Sure.

Rich:

Everyone loves uncle Sam, but I don't know about you, but I don't like paying uncle Sam as much as I do. So there's tax planning.

Jag:

So you want to within the law and I know this is where your financial background comes in, Rich, only pay what you have to pay and not pay any more than that.

Rich:

Exactly. And what's really good for me is I had a tax practice, which I sold in 2011. I still keep up with the tax changes and revisions. And I will tell you this, investments and taxes go hand in hand. So if your financial advisor or your investment advisor isn't talking about where you should take your distribution from or how you should save between different types of registration, like qualified money, non qualified, like what we call net taxable money or IRAs Roth IRAs.

Rich:

You're not doing yourself justice for your own portfolios because as you're accumulating, making sure you accumulate in the right type of accounts as important as when you take the money out, you want to make sure that you taking advantage of, like you're saying the tax code legally, like there's tax brackets and we can project what your tax brackets are going to be for the future based on your distributions. Let's talk about investments. I touched on it a little bit about making sure you're funding the right type of accounts, how much you need a fund. Are you harvesting your losses for the end of the year? Are you screwing up and getting wash rules? I've been getting a lot of clients because one spouse is doing the investments and they're not doing that great of a job.

Rich:

So usually what they do is they try to convince the one spouse to allow me to handle some of the investments and see how it works. Usually after two years of doing that, I get all the investments and the one spouse has been doing kind of says, "All right, I get it. It's not worth doing", because usually you can't take out the emotional side out of investing when you're doing it yourself.

Jag:

Right. You need somebody who has that degree of separation. And that goes into another important thing. And that is communication with your spouse, right?

Rich:

Exactly. And I think that's the biggest thing about doing financial planning. How many times have you heard that one spouse handles everything for the finances, the insurance, the investments, everything, paying the bills and believe it or not, maybe that other spouse hasn't complained about it yet, but they have an uneasy feeling about not knowing what's going on in the household. So usually when you have two spouses involved in the financial planning and they have the accessibility to see where everything is online. The way I do financial planning, the plans get updated daily automatically. It gives comfort and it allows the spouses to actually have open conversations about what they want. A lot of times they never even talked about it, because they're just living day by day, they never took the time.

Jag:

My wife has worked in corporate finance in her life. So she has been the one that handles the bills, the investments and that sort of stuff. And that for in the beginning, we first got married four years ago. I was like, "Okay, yeah, you handle it. That's fine." But as we progressed in our marriage, I thought, I really should have an understanding of what's going on here. So now she still handles a lot of the stuff, but we talk about it together. So I know what's going on. And we're on the same page with both each other and with our financial advisor.

Rich:

When you have a goal set and you both agreed to it and it's being documented, there's accountability. You're more likely to meet those goals.

Jag:

That's just basic psychology. Sure.

Rich:

Right. Remember when we talked about goal planning in school, they always say, "You write them down and you look at them, you put them in front of you. So you see them every day."

Jag:

Yep.

Rich:

And you meet those goals except for my weight loss goals, it still hasn't happened. I look at the mirror and see myself and that's my daily reminder. But somehow when I get to the refrigerator, it just doesn't tie in together and work for me.

Jag:

Quick aside here, you should try what I'm trying in January. My wife wanted to do clean eating in January, I said, I'm not going to go all the way clean eating, but I will agree to no takeout and no alcohol for the month of January. And I'm already down five pounds. So little bit right there.

Rich:

For financial planning, I was looking at the credit card bills and I was like, you know what, no more Uber Eats no more DoorDash, not going to do it anymore.

Jag:

Make a sandwich, bring it to the office, make a [inaudible 00:13:52] even better, make a salad, bring it to the office.

Rich:

Right. The freezers are full. The refrigerator's full, but it's amazing how much money we have saved by not doing DoorDash or Uber Eats this year.

Jag:

Those fees.

Rich:

So when it's my turn to cook and I don't want to cook, I had to get creative and think out of the box because my rule was Grubhub, DoorDash, Uber Eats, thank god for Slice where you can order pizza and have it delivered. So I found the exception or there's other things, there's being able to make smarter decisions. Like if we buy this Tesla S how much cash flow is that giving up a month compared to maybe just buying the Tesla 3? We don't know how that's going to affect our retirement plan. We do know that we can afford the payment right now, but we don't know how that's going to trickle down for our other goals. I will tell you this though, working with couples, I don't think I've ever, ever had someone tell me it's not working out. They always say, "Wow, it's great. We're talking about it now."

Jag:

That's key is the communication.

Rich:

Yeah. Our future. At first, I don't know about you when I got married, we had children within a year of us getting married and it was about the children like daycare, work. We both were working and it was stress. So we never thought about retirement. I never thought about owning my own business then. It was about just making, buy, figuring out how to pay the mortgage and the real estate tax and the daycare. That's what we were concerned about back then.

Jag:

So communication's certainly key in terms of couples and financial planning and anything in a marriage really, Rich. We talked at the beginning of the podcast about financial planning, not just being for the wealthy, the estate planning, those high net worth clients. It really is a useful tool for most anybody at this point. And I know there are some models in terms of how to pay for it, where it's actually pretty affordable, right?

Rich:

Yeah. I mean the way financial planning used to be, you would come in and they would charge you anywhere between like 1500. And I've seen plans go up for over 10 grand and you would pay half upfront and then half on delivery and you hope for the best. So I didn't really like that model. So I went with a newer way where some advisors are beginning to pick it up. You'll see more of it as time goes on, it's called... We call it the Netflix of financial planning.

Rich:

So instead of paying all this money upfront, you pay a monthly fee, it can be monthly, quarterly, and it's a lot more affordable than just laying out a whole bunch of money. And more important, if you don't like that advisor, you can always leave. You're only paying for it as you're with them. And then there's different kinds of financial planning. The least expensive is what we call goal base planning, which we find that is great for younger clients. And when I say younger, I'm talking about like under 50, so not 18 to 25, under 50 where we don't have to be as detailed to account for every single dollar. It's more about, are we saving properly? Are we going to meet those goals? And fund those buckets, each goal, I call bucket, a wedding bucket, house bucket, retirement bucket, and it shows you the probability of success on doing that.

Rich:

Then there's something called advance planning, which is more what we call cash flow planning, where every single dollar in your household pretty much is going to be accounted for. So that's more involved in more debt, tax planning, transferring wealth, more defined type of investment type of accounts, a lot more involved. That doesn't mean we don't touch that in conversation with the goal base, but it may not need to be documented. You can get subscription based planning for about a $100 a month now. So that's $1,200 a year updating daily conversations. I would really hope that $1,200 is going to give you value in meeting your goals and able to have those conversations with your spouse and making sure you're on the same game plan I'm getting there. And probably, just with some of the tax advice on what type of investments on distributions, you'll probably save money just right there and pay for itself.

Jag:

Yeah, Rich, I would say that, even though past performance doesn't indicate future results and we can't guarantee any kind of return or an investment, but chances are just with the financial advice and putting strategies and plans in place, the money that you're going to save over the course of your lifetime and your retirement. Again, we can't 100% guarantee anything, but I would venture to guess that in the vast majority of cases, that $1,200 could pay for itself many times over.

Rich:

Oh yeah. The more information you have in front of you, the better you can make decisions. I mean, that's with anything, not just financial planning, I mean, purchasing a car, you're going to do your research. You're not just going to go into a dealership and say, "I'll take that one." You don't know if it's the right price. You don't know if it's going to meet your needs. You're going to do some research first.

Jag:

Exactly.

Rich:

And get your information and then make the decision.

Jag:

Exactly. And Rich, if somebody wants to come talk to you at New Century Financial Group about any of these plans or anything in regard to their financial future, what are the best ways to find you?

Rich:

First off, the good thing is because of the demand, we've actually beefed up with some of the staff here, helping with the planning. So we're able to take on a lot more clients. It's been great. We enjoy doing it. We've been doing it for a long time. We have the background, especially with the tax knowledge. So first thing you can do is always reach out to me by phone, which is (609) 924-2049. My direct extension's 126. You can always go to my website, which is www.ncfg.com. That's Nancy, Charlie, Frank, George.com. And on the website, there's a link on the very top to schedule a meeting with me, feel free to set with zoom, a phone call.

Rich:

If you want to come to my office, that's great. You don't have to be local. I think COVID has taught us all how to use zoom. And it's funny even before COVID I would tell you that probably about 70% of my meetings was always on zoom or GoToMeeting or one of those platforms, Webex. So it's not new to us, but I think clients prefer that than having to take time and drive in to meet. So if you're in Washington state and you want to work with a financial advisor where you know you and your spouse can meet during lunchtime or after work hours, feel free to reach out to me. We'd love to talk to you. See if our services can meet your needs.

Jag:

Great to talk to you as always. Rich going to be with you in this new year. Take care. We'll talk again soon.

Rich:

Great. Thanks Jag.

Jag:

Richard Oring's branch offices, 1 Airport Place Princeton, New Jersey, 08540. The branch phone number is (609) 924-2049. Securities offered through Royal Alliance Associates, Inc. Member FINRA, SIPC. Advisory services offer through New Century Financial Group, LLC, a registered investment advisor, not affiliated with Royal Alliance Associates, Inc. New Century Financial Group, LLC and Royal Alliance Associate, Inc. does not offer tax advice or tax services. Please consult your tax specialist for individual advice. We make no specific comments or recommendations on any tax related details.