Wealth from Wisdom

The RMD Tax Trap and Volatility

February 17, 2018
Wealth from Wisdom
The RMD Tax Trap and Volatility
Chapters
Wealth from Wisdom
The RMD Tax Trap and Volatility
Feb 17, 2018
Carson Wealth
Show Notes Transcript

If you own an IRA, 401K, or other pre-tax retirement account, you will be impacted by required minimum distributions learn more with Ron and Paul on this weeks episode

Speaker 1:
0:00
Okay, and here's the legal Mumbo jumbo, the opinions voiced and Wellframe wisdom with Ron Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk including possible loss of principle, no strategy. It's your success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CW m L L C an SEC registered investment advisor.
Speaker 2:
0:30
The stock market hit another all time. Records as much as $10 billion in social security benefits go unclaimed every single year. The Federal Reserve announced that they will raise interest rates by 250 skyrocketing cost of healthcare and retirement could now run 350,000 planning for retirement today is a whole new ballgame. It's loaded with challenges, obstacles, and trap doors that you can do this and we can be your guide. Welcome to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. Straightforward and objective advice and how you could make your money go further in retirement. And now here's your host, Ron Carson.
Speaker 3:
1:07
The market, the market, it goes up, it goes down, it goes all around in. It drives a lot of people crazy. But you know, I've been doing this for 36 years and one thing I've learned is a market we'll do whatever it needs to do to prove the largest number of people wrong at any given moment. See the mistake people make in investing is they think the market is going to dictate how they do and that couldn't be further from the truth. It's actually not the market at all. It's how you react to the market because investor behavior year after year after year is what destroys value. You know, also destroys value as unrealistic expectations, not being prepared for what was about to happen. Paul, I talked about the fact that we had an unprecedented low volatility wasn't normal. I remember reading a piece in one of the financial magazines about the millennial now thought it was safe to invest in the market in the last several weeks because safeguards are put in place where a financial meltdown could not happen again.
Speaker 3:
2:23
And I told myself, wow, we're in for a wild ride. How did I know it was going to happen so soon? I didn't, but I knew at some point it was, let's just go back in history when you think that things can't go down by a lot, the market lost 85% of its value from 1929 to 1932 lost over 50% between 1972 in 1974 and crash abruptly in 1987 I'll never forget that one and then lost over 50% again from 2000 to 2002 and again, again between two seven and 2009 and a lot of people are still afraid of what happened in the financial crisis. And then we had a less memorable because it happens so quickly, but the market did lose 20% in 2011 matter of fact, August of 2011 is the last time we had any kind of real volatility in the market.
Speaker 3:
3:24
Some remember some don't. But the key today and what Paul are going to talk about, we're going to talk about a couple of different things where it's like you're talking about Iras has, that's what we'd planned on talking about. We also want to talk about what's going on with the market and how critical is to have a plan. And Paul that's really adhere. I mean we've seen it investor behavior, we saw it happening in the financial crisis. People would come in, they were sitting in cash, sometimes cash for several years because you've got to make two correct decisions when you decide to sell or do something abruptly, you gotta know when to get back in the market. It's hard enough making the first call, right? But making too is virtually impossible. But what is not impossible is understanding your risk budget and having a process in which you follow.
Speaker 4:
4:10
Yeah, I couldn't agree more Ron. And one of the things that we've been on the show many times talking about this, I called 2017 the B word boring. It was boring. And I don't mean that by the way, don't get me wrong, I love that the market was up, but it was very boring from a volatility perspective. We kept telling everyone, you better be careful. You're jumping further out from the cliff. You're jumping higher than you should, or taking more risk than any point in time. People forget quarter four we did not have a 1% move up or down and the whole entire quarter. Right. I mean, think about your career in the markets here and mind 20 plus years. You're a few more than me, but it's, there's just, that's unprecedented. So now we're just
Speaker 3:
4:54
back to, we didn't have to, we had 150 some days up until recently. We didn't have a quarter of a percent decline two days in a row.
Speaker 4:
5:02
Is that amazing? Yeah. I mean, but so what happened? A lot of you started stretching and going a different direction and now volatility's just back to normal. We just forget what normal is. What happened in 17 is not the new normal. That was an anomaly. So everyone just don't think that's going to happen. Again, we're really back to where the market's traditionally trade and look like and this is where your behavior is going to be. So important. And Ron, as we seen a couple of these, you know, dramatically down days of 4% or two and a half percent, that doesn't mean you need to sell out everything or make a change. If you got the right game plan in place, you're fine. It's no different is you're watching Nebraska football and sometimes on first and 10 we have a penalty or they get a sack. So your first and 15 or your second and 12 it doesn't mean you're going to give up and you know, just pull players off the field.
Speaker 3:
5:59
You're just going to adjust the playbook and your plays may remain dramatically the same. So as we look at the overall economy and Ron has, we're talking to our chief investment officer and many other of our portfolio managers, we still see a strong economy out there right now. But what happens is, I love this quote by the way, I, we actually heard it earlier today is volatility tends to cluster. And I think it makes sense is because behavior gets in place and when things start moving fast, people want to get on the train and when people start jumping off, everyone else wants to jump off a, and I think that's going to be fascinating for us to watch here. Oh, I couldn't agree more. I mean it is that it does cluster right? And so it goes from one extreme to another if that's what the market's done forever.
Speaker 3:
6:46
I wanted though, um, what is actually happening here is that the market's starting to reprice the idea. And actually we talked about this BC, one of our analysts had said, you know, I'm not sure this tax package is going to be good for the market in the short run because it's going to spur more economic growth interested. He's going to go up and we could have a real reset in values before we move higher. Now make me make no mistake about it. The fundamentals are fantastic and the economy and actually as painful as this volatility is, it's a real opportunity for those that have a process and a plan. Um, a great example of that, you know, one of our hedge strategies, we had sold a put for four times what we had bought it for just two weeks ago. Dramatically lessens a downside. And just simple rebalancing, Paul, it's not that we're making a call that's Mark's going to go lower.
Speaker 3:
7:37
We know what we have to have as a hedge. So that forced us to sell that put right because we would could only have, we only wanted so much downside protection. So it forces you to sell high. Let's say the market would have gone up. We had a had to buy more protection, but it's a process that we're following following. And it's not, emotions aren't having this change our ideas from moment to moment. Especially when you think about Monday biggest historic point drop, not even the top 20 for percentage drops. But what's crazy, I don't think even in my 36 years have ever seen thousand point fluctuations in a matter of, you know, a couple of hours I was watching the market and sometimes in four or five minutes it'd be up 300 down 200 we'd have a 500 point swing in five minutes, which is just hard to fathom.
Speaker 3:
8:26
I mean that's just irrational Ron. And that only time your rationality happens is when behavior becomes involved rather than systematic thought processes and ways to approach it. So as we think about the market, um, you know, and we've had a couple of these days recently where there's been dramatic swings down. And what's happened is, and I was actually at an event recently, Ron and I was sitting there and talking with a few people about that and I said, Oh Paul, what are you guys thinking? What are you guys thinking? You guys are in the business. You're one of top Ras and the country.
Speaker 4:
8:56
What do you guys thinking? I'm like, this is normal. This is, I said, I'm actually happy. I think this is going to stop everyone from Fomo, that fear of missing out of the top returns and realize there is some downside here. I said, actually in our hedge strategies we were just fine. We were actually slightly up on these days. It was down and they looked at me like I was a unicorn. Ron, like I had a big or coming out of my head. But the flip side of it, we only captured about half the upside. So you got to give something up to get something when you're managing risk. But it goes back to, I mean, listen, all the people on the phone today and hearing us across the country is if you, so you had $1 million in your account and you knew you could get move that up 100,000 a year to 1.1 million.
Speaker 4:
9:41
But if you do that, you also risk may be going down to 750,000 but if you could also go up to a million and maybe 60,000 so 1.06 but you know you're not going to fall further than 900 which one would most people choose? Nobody wants to fall from a million to 750,000 that's just too darn scary. So what people are seeing now with the volatility is the extra risks they're taking maybe wasn't necessary for your return. So if our listeners today, do you really know, are you, are you truly risk adjusted appropriately for your longterm goals? Don't think about just 2018 where do you want to be in 2020, 20, 25 and beyond. That's the risk is we're afraid people are going to turn their ankles and fall right now. Yeah, they just in the key there is Paul, they didn't know that they had that much risk in the portfolio and if you've got a great advisor, you've been preparing for this, you know what your downside is.
Speaker 4:
10:35
But I want to go back to only capturing half the appreciation. Don't think you that over a full market cycle because you have a strategy. So I'm only going to participate in half that. You're going to underperform a full business cycle. I'm going to go back to the.com meltdown, uh, again in then the financial crisis. Even with hedge strategies in general here at the cars from group, we didn't gain nearly as much and the appreciation, but because we lost so little during the decline, through a full market cycle, they did beautifully well and you didn't have, I'm gonna say periods of where you saw those massive swings in your portfolio. Mainly to the downside. Most people don't matter matter, they're not too conservative. They made more money than they expected. It's just all run into that often. Um, although we'd have one client that made that comment and Nashville, but uh, but the flip side is absolutely true. You've gotta be careful and that's really what I'm telling you you should be thinking about doing now is taking a look at what your risk tolerance is, what your risk budget, absolutely no cost or obligation at the Carson Group. We can take a look at this for you. You can actually go to the website, Carson group.com or Carson wealth.com. Either one, you can go to the risk tolerance questionnaire going to just complete that and we can actually do a comparison. We can
Speaker 3:
11:54
give you some really valuable information so you can assess whether or not you're taking an appropriate amount of risk. And we're going to talk later on the show today, Paul, about taking RMDs out. Because boy, if you have to start having that requirement, minimum distribution, you have to get out, you have to sell, and the things are down. That can be pretty devastating. There's a lot of money coming out. So if you want help with that or just looking at your risk budget, which is critically important today, no cost, no obligation to do this. Uh, we'd love to give you a second opinion on risk, but you should know regardless, eight, eight, eight, four one nine 85, 13, that's eight, eight, eight four nine 85, 13. If you don't manage the downside risk, you're the one that's going to suffer really painted consequences. We're an unprecedented time that guess what?
Speaker 3:
12:42
The fall activities, not over eight eight eight four, nine 85, 13. I'm Ron Carson with Paul West, and you're listening to wealth and wisdom, trust, transparency, accountability. These are the values that drive Ron Carson and Carson. Well, you're listening to wealth from wisdom with bear until the fame advisor, Ron Carson, he's a published author and has been featured in Forbes Investment News, the Wall Street Journal, CNBC, and more now back to, well from wisdom with Barron's hall of Fame Advisor, Ron Carson. Hi, I'm Ron Carson and you're listening to wealth from wisdom with my cohost Paul West, and we're just talking about market volatility, managing the downside. What's your risk budget? But I won't even go back further because we always say that you know, the past is no guarantee of future results, but you know what, you can learn a lot from the past and there's Paul, there's a lot of similarities today. When I look at going back to 1982 I started in this business in 1983 and what's really going on in really the tax package to Trump tax package is very polarizing subject right now.
Speaker 3:
13:48
Can we afford it? The jobs, I mean it would make no mistake about it. Trump is running the US like a business. It's about time, by the way. It's been a long time since we've had people running it like a business. I understand there's pain and there's things that get created, but this also reminds me of the Reagan era and going all the way into the 1986 TAC fat tax package, which really set us up for unprecedented growth. But I wanted to go back and own a few shows ago. We looked at 1982 so I went and did a comparison of today, for example, the Fed funds rate, 1982 was 18% today, one half of 1% right? Slight difference. Yeah, so we having an increase in interest rates is actually a good thing. The 10 year, 15% this morning, 2.85% now this is partially what's really got everybody concerned is, you know, there's other things going on with the market.
Speaker 3:
14:44
One is that a lot of people were long, low volatility, so the vol trade is getting unwind. We won't get into the details that, but there's some, you know, funds actually blowing up some of these ETFs. By the way, ets, if you own ets, had an 85% drop in a matter of a week. Well a matter of two trading days actually. So be careful. Really understand what the heck you own in the portfolio. Mortgage rates and 82 were 16.25% under 4% today. Here's his household debt to income. 62% in 1980 230% today. So definitely we are, we're more levered. We're more levered to the average person's income. Um, US government debt, 30% in 1982 this is the GDP. So just us debt, it's 105% so we've had a big increase and just even the ratio, you total debt. Now this combines consumer debt as well as government debt.
Speaker 3:
15:48
This one's is concerning. It is was 0.9 hours today it's 3.6. Wow. Yeah, that's big. You've got a lot of leverage just in debt here. Productivity growth and 82 is 2% today it's 0.25. But I'm going to argue that in 1982 we didn't have a tax package. So until things got to roar. And again, the reason we have all these ratios as we've had our country manipulated by the government doing, you know, trying to, trying to do things that were unnatural, not letting Adam Smith invisible hand operate. Now all of a sudden we've got someone running the country like a business, right? Going back to what happened before. And I think all of these ratios can improve dramatically. Um, you look at the inflation rate then was eight today, it's 1.6. So that's a lot better. You don't need as much return to have a high actual real rate and real rates. The purchasing power that you retain with dollars. Yeah, yeah.
Speaker 4:
16:48
Right. I mean, I think it through a lot of this and the short term and the longterm impact of the tax package and what's going to happen here. So of course one of the famous, you know, phrases we use is hid. The pain of change is the price of progress. Right? And so I think about all the time, I mean, even let's take, you know, here, we both live in Omaha, Nebraska and uh, construction. So everyone complains about, oh, there's construction on a roadway, 168th street or the dodger express or whatever it is. But then you, when it's done and it's extra lanes and it looks better and it feels good and you're getting somewhere more efficiently, you're so happy, those things happen. And so some of this short term volatility is related to that wage growth went up unexpectedly. So what that could be a little painful that creates inflation that now is something that all of these employers and corporations are going to have to look at.
Speaker 4:
17:37
That doesn't mean that's bad in the longterm and people need to do a fire sale or I know recently, um, the super bowl happened. Um, and I actually thought it was brilliant, brilliant marketing, but also because it hit home. So one of the most frequently talked about commercials after this was the one, um, it was a financial company and actually had a bunch of people in their eighties that were firefighters and other professions and it was 85 and I want to go home. Yeah. Nobody wants to be there. We, you and I are famous raise on the show is, you know, nobody wants to be 85 years old full of life and flat broke more life, more life than money. Yeah. No one wants to be in that situation. So what happens is when volatility increases, fear happens and one is fear. Create fear causes people to make bad decisions.
Speaker 4:
18:29
Think about anytime you're scared, what do you do? You run away or you run their direction, you go to avoidance or you go to anger. All of these emotions that are not calm and smart, their emotional based and think about you had an argument in your family or something. When does it turned? Really band. When emotion gets heavily involved cause people you see either extreme levels of happiness or frustration that goes along with that. And that's something I think Ronald, we've got to talk with everyone about is there's actually still people. Imagine this by the way, there are still people you and I know and they're our listeners today. I know who you are and you know who you are, who never got back into the market after the 2008 crisis. So now we actually got one of these emails last week. Ron is is now the time to get back in, but it doesn't matter when they get back in because they jumped out.
Speaker 4:
19:22
The pain of jumping back in and second guessing themselves is created immense pressure and that's why they're, there are strategies and approaches to help people like that. But you need to go talk to professional who can help you stick to a game plan, whether it's dollar cost averaging, whether its downside protection vehicles, whether it's short term instruments, but don't make this mistake cause maybe you have a chance to jump back in now and you could actually do it and feel better about yourself. And you're right Paul. That's the wrong question to be asking. That's always the wrong question is now the right time is bad time because nobody knows for sure. Here's what we do know is we're in an economy, we're in the United States of America. Capitalism does actually work. And while you could short term, you could have timing could have been a little better getting the allocation right and your risk budget right? And managing your behavior is the most critical thing. That's what's going to drive success. I just want to finish up on these personal savings rate in 1982 Paul was 10%. Today it's five half labor force participation. What do you think it is? Uh, 82 from today? Uh, well I think it's down significantly for two reasons. One, the today. Yeah, it's actually the same. Is it real? It's actually 64%. Okay. That was a little surprised by that too. Um, and then the age of the median baby boomer was 26 and 1980, 60 today.
Speaker 3:
20:49
And uh, so anyways, it's fun to look at that, but there's a lot of good things that are really setting up here. But the always the wrong question to ask is, is now a good time to get in the market? I'm always reminded by the rollercoaster of emotions. This is something I always used to use with clients and a friend of ours, um, Dr. Crosby put this out on linkedin and I like, Gosh, I haven't seen this in a long time. And it, you know, it goes from optimism to excitement to thrill to your Foria, right? Everybody's checking their statements everyday, how much money did I make yesterday? And then there's a little bit of a downturn, anxiety and then it goes further denial and then it falls further fear. And you know, a lot of people do, they're like, I want to be right. So they doubled down on a physician and then it falls further and there's depression and there's panic or they're like, if it goes another 3% or 4% or whatever it is, I'm going to sell out of the market.
Speaker 3:
21:52
And then what happens? Capitulation, they actually do it. Normally it's within just a couple of percentage points of the absolute bottom. Then they're despondent because they're like starting to recalculate. Oh my gosh, what have I done to myself? How long is this going to take? I shouldn't have been so stupid, you know, to get caught up in all of this stuff and then all of a sudden the market starts to come back and now they have anxiety because wait a minute, it's now, well, I'm not going to fall for that again. And it keeps going and it keeps going and it keeps going. And your today, some people jump in and there's a relief and optimism, those that actually said, I'm not going to try to outguess the saying I'm going to have a approach. I'm not going to listen to the noise and I'm going to stick with it.
Speaker 3:
22:36
By the way, a couple of shows ago, we talked about why women make better investors than men because they follow more of a process and they're not, uh, they're, they normally won't make knee jerk reactions or wholesale changes. Like some of us guys are more impulsive, more confident, right? Of, Hey, this is exactly what we should do. So let's be all in or all out. Yeah, it was a, speaking of catching up Ron, so I mean if the market drops 10% you have to then earn 11.1 to get back to the same level you were before. If the market drops 20 you've got to go up 25% if the market drops 30 you gotta go up 42.9 or like 2008 and by the way, there's some people that I talked to last week that still have not recovered from 2008 because the market was down 40% you have to increase 66.7% think about those numbers.
Speaker 3:
23:23
How much, so then people take Moreso talk about double down. What happens when people go to the Casino and keep doubling down? It usually doesn't turn out well for them cause they're like, well I lost five hands in a row at blackjack. So guess what? I'm going to double my bet or I'm going to triple and back because I'm due to win. And this is still the same odds is before. And what it is though is like your investments here. You've got to have a plan in place and don't double down because we don't know if the market could collapse tomorrow or the market go up significantly high. It shouldn't. But why put all of your chips on the one specific bet? Oh, I agree. Um, Andrew and I actually got to see this firsthand a few weeks ago. And y'all Aaron, who's the executive VP or at the Carson group, he loves to play Euchre and he's, he's never lost four than two games in a row to me.
Speaker 3:
24:11
So after he lost three games, like, like I'm going to double, I'm going to double and double and Andrew, why eight games in a row right here. We're on a, we're, Andrew and I are on a hot spring matter five were coming back from Phoenix last night. We're trying to get him to play and he's like, now I'm not playing. It's like, hey, we want to go for nine and 10. We're excited about that. We're so, so confident that if you can influence your behavior, you're going to make much better decisions. But you have to understand what your risk budget and it's all about discovering, designing a plan. That's what our wealth design life to find processes all about. Discovery, designing, having a listening session to really get to know you, to see if we can add value. If we can't add value, we're going to ask for the business. If we can't add value, I promise we're not going to tell you we can't help because for the limited, for the benefit of our existing clients, we will only accept a limited number of new clients each year, but we would love to see if we can make a difference in your life. Know what your downside risk is. Give us a call. (888) 419-8513 (888) 419-8513 or standing by (888) 419-8513 I'm Ron Carson with Paul West and you're listening to wealth.
Speaker 2:
25:20
He seems good times and bad times and he's got the gray hair to prove it. You're listening to wealth from wisdom with their ins hall of fame advisor Rod Carson.
Speaker 3:
25:30
He's a published author and he's been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more now back to wealth from wisdom with Barron's hall of Famer Divisor Ron Carson. Hi Ron Carson with my cohost Paul West, and you're listening to wealth from wisdom. Well, we had a lot going on in the financial markets we had leading up to just a couple of weeks ago, the lowest volatility ever in the market and then all of a sudden just like that, it changes and you've heard us say many times here and wealth and wisdom that the market will do whatever it needs to do to prove the largest number of people wrong at any given moment. That's why you cannot gas it. That's what you have to have a process and what the market does has so little to do with how you're going to do, it's going to be your behavior. If you look at the Dalbar studies and they go back for 20 plus years, those that actually don't have a plan get killed and the average investor over that time period that's actually goes back to oh one underperforms.
Speaker 3:
26:29
The actual actual equity fund investor underperformed the s and p 500 by four to 5% per year and behavior is the biggest driving force in that end. Paul, you know Fidelity Magellan, some people remember this fund. It's the point that it was the most successful mutual fund in history. Peter Lynch was running at close to 80% of those had ever owned a sheriff. Fidelity Magellan had lost money even though it was a number one mutual fund because he didn't own it at the right time. They would buy it, they would read something and then it would have a decline. They would sell those shares out. Now true net net people made a lot of money, but a lot of money was, was had by by a relatively small percentage of people and that's what's going on now. Markets Volatility Shakeout, we investors, we cans and it just moves assets from the week cans into the strong hand.
Speaker 3:
27:17
It moves assets from the uninformed to the informed. It moves assets from those that don't have a plan to those that do have to have a plan. I love what Warren Buffet said. He said, are our capital markets are simply relocation centers of wealth. And it is for those that don't have a plan to those that do have a planned capital markets, we're really efficient. That's why people of modest means, but have a strong way of investing in following a plan, whether they do it themselves or work with a financial adviser you see do very, very well.
Speaker 4:
27:52
Yeah, well I mean Ron, we even talked about that a couple of weeks ago on our shows. We had so many questions about cryptocurrencies and what's going on with bitcoin and should we do this or not? And so everybody heard a story about somebody else that made thousands or hundreds of thousands or maybe a million dollars. So what did they start doing chasing that? They started going after that and chasing it when it was in the mid teens and now it's below 10,000 and guess what? They're not going to be successful because they let behavior and the fear of somebody else is doing better than them and letting that happen and cause actually makes me think about it. Just very recently, Ron, um, I was down in Florida visiting some people and we're having some great conversations and this gentleman, you know, with all of volatility is like, well, what do you guys think? I heard, I heard that you guys are a top investment advisor across the country.
Speaker 4:
28:40
And I said, well, as we think about the volatility is we're fine with it. We think it's healthy. We think it's going again, prove how good people are and the people making the right decision. And he said, well, um, I said, how are you doing? And he's like, I have no idea. I'm just in with my financial guy. And so don't be someone who blindly trust their financial advisor. Because what I did was I started asking him a series of questions and we're actually the questions I asked him where the same questions we post on our website telling you to ask your advisors. So if you want, they're actually 10 questions you should ask your financial advisor. It's on Carson wealth.com. It's very easy to find. Or if you want to call in to the show, we can help email you a copy as well.
Speaker 4:
29:21
I actually started because I know these because I want people to ask me then when they're interviewing is I asked him, I said, well tell me about what you're invested in. He said, oh well it's this really neat fun these got, I said, okay, well what are the fees? Cause like I have no idea. All right, well how has it done? Well, I don't think it did so great on the upside and I don't even know how it's doing right now when the market's volatile and said, okay, so now you're oh for two on actually knowing what's going on with your money, not with his money, with your money or her money. So then we started going through, well, how experienced is this person always super experienced? Okay, well how often do you talk? Uh, not that often. And then I kind of kept going through.
Speaker 4:
29:58
All these questions are getting, are posted, Ron, but don't be one of those people that just completely blindly trust someone here. Verify. Yes. Gold old Reagan quote. Yeah. Well think of great business owners. Um, they do a really good job of you got to trust your stake holders. We don't call employees employees here at the Carson Group. We call them stakeholders because everyone's got a vested interest in helping the business. But then you've got to verify that it's going the direction you want. It doesn't mean you have to micromanage. We don't expect you to people to log into your portfolios every day. Actually, I don't think that's healthy because each day you're not going to make an individual decision. You've got to look at the aggregate. But remember, ask people these questions and keep following up. And if they're not, by the way communicating with you in this volatile time, then that's an issue.
Speaker 4:
30:43
I say it's also this week round I was sitting in, um, I was fortunate enough, uh, was out of the Omaha weather here for a couple of days is you, is were you and I was sitting in a coffee shop and we're outside talking and we talking about the market, it was a couple of days ago. Um, and what happened with volatility and it was explaining downside protection and what happens and what goes along with this. And you never know when you're like in a coffee shop and you know the people next table next to you are listening to every word you're saying in a conversation because their conversation stopped and their body language is leaning in and made me feel like those people were going through the same painful mistakes that they had just lumped up and increase the risk of their portfolio. And so they were trying to catch every word I said because someone else in my table said, oh hey Paul, how's the radio show going?
Speaker 4:
31:32
So then they labeled me as a professional can help, which I hope all of you think I am too. But it probably going to happen from that meeting is what happens all the time. I call it the brother or sister in law effect is they're going to go make decisions on their own portfolio based on what they heard from a guy from Omaha, Nebraska who is on a radio show. And they're probably going to go adjust their portfolio on their own without thinking, does it apply to them? Not even knowing really who it is. Right? You here you can get any advice you want. I guarantee you it today you can go find someone extremely bullish, extremely bearish. And what if you only heard one side of that and you know the truth lies somewhere in the middle, but it's irrelevant to you because you got to get your allocation right. Paul, I want to go a little different. So Andrew and I this weekend we did the Spartan race and him and I are both talking to this morning, we're so doggone sore and then it was a 8.6 mile race, 28 obstacles. Uh, and right before we go they make you, you, you put on this wrist band that what it say Andrew has said you're going to be, there's a chance you're going to be a catastrophic Lee injured or die. I mean it's
Speaker 3:
32:40
like, you know, it was like real stuff. I'm going to relate to us. I'm going to come back to it because you know that there's risk in doing this right. And, but it made me pause and really think because this things in red, I think we even put it out on Twitter if you want to go see exactly how they worded it. But it, it made you pause. Let's relate that to financial. What if we had to say, okay, based on your current allocation, there's a chance that you're going to get go broke because you're taking on more risks than you can take. Going back to the Spartan race cause we had a game plan. We had 10 people with various skills and where you're allowed to help each other on some of the obstacles, but you're climbing over 30 foot walls. You're, you're doing stuff that is really dangerous.
Speaker 3:
33:25
But we felt comfortable with the downside risk. Just imagine if we got in any one of those obstacles and we started to panic what was probably going to happen, we're probably going to be catastrophic. We injured or die because we got into something that we weren't emotionally prepared for. It's no different with investing is you're going to make a terrible mistake. That could be catastrophic because you don't have the right team to help manage the things that you, you know, what your, um, your blind side may be or something that you just can't, he can't handle. He can't take on your own. There's a lot of parallels. So I was thinking about the, the, the Spartan race and really what we do here at the Carson Group to help people be successful. You'll have to do it all on your own. Figure out emotionally where you're coming from and then worked with a team to help me in each of the things that you know we're going to destroy wealth during the calm
Speaker 4:
34:14
of the story. Don't be a part timer, Ron. I mean I think that's the theme is, is don't be a part timer and having an investment strategy and approach. They're going to be times where you're tilted more in equities are more into bonds, those types of things. But don't be, Hey, I'm going to go manage my own money to save time or to save fees when you go look at it at nine o'clock at night, once a month or once a quarter.
Speaker 3:
34:38
Super Dangerous for. So Paul, just imagine with all this volatility, if we, if you are out there and you were forced to sell assets in your IRA or 401k whether you liked it or not, well that's exactly what many Americans are doing right now because they have to take RMDs, are required minimum distributions being forced to sell during a market downturn. And by the way, when you do that, it locks it in. You never, ever, ever get it back. The way to avoid this is by creating an overall strategy and looking all your assets, your Iras, 401ks, non qualified assets, social security, and how that plays into that. There's a lot that can be done so you're not forced to make that kind of catastrophic move that permanently lock something in I. E. A loss. There's no costs. You have absolutely nothing to lose. Be One of the first callers to schedule your initial analysis at (888) 419-8513 that's eight eight eight four 85 13 it's your money, it's your retirement. You want to stay financially secure. You got to put some effort into it. Eight eight eight four nine 85 13 I'm Ron Carson with Paul West and you're listening to wealth from wisdom.
Speaker 2:
35:52
How could you make your money go further in retirement? Learn how next unwell from wisdom with Barron's hall of Fame Advisor Ron Carson. Is it possible you could pick fewer taxes in retirement and keep this money for yourself? You could learn right here and right now on wealth and wisdom with Barron's hall of Fame Advisor, Ron Carson, I'm Ron Carswell. It's Paul Western. You're listening to right
Speaker 3:
36:16
wealth and wisdom, what we've been talking about, market risk, client behavior, the markets do and don't how you're successful, high or not successful. It really all starts with a plan. But who actually may go even further than that? It's just not about a basic planet, but it's maybe not, maybe is about the infrastructure. If you're working with a financial adviser and team that they actually have a, Paul, I bring this up. There was a survey done, uh, not too long ago and uh, and this was on CNBC. And the question was, do you think it's essential that a financial advisors have a succession plan in place and 91% said yes. What's interesting though is about only 7% of financial adviser have an executable succession plan. One day seven or 77, seven, 7%. So 93 do not have one yet. 91% of consumers think they should have won.
Speaker 3:
37:11
Let's relate it to market volatility because I've seen this happen twice now in a relatively short period of time cause it here at the Carson Group, we actually have a sister company within the Carson Group that does consulting for financial advisers. We consult with financial 5,000 financial advisers roughly all of all over the United States. And we're actually the largest in this space. So I'd argue we get a pretty good feel for what's going on with advisors and consumer attitudes well before anybody else does. And you think of a succession plan being important in the event of death. But let's talk about death and disability. We had an advisor on the west coast who just passed away unexpectedly. No real succession plan guests who jumped in to manage the business and try to take care of the client. His wife. Really? Yeah. Did she have experience? No. So she got, she got she license, she got licensed, she got licensed.
Speaker 3:
38:07
I mean it's been, it's not been good, right? No experience. No Knowledge. Wow. Jumping in and trying to do away. She can't. Here's the worst thing is they had stuff scattered all, he had a hundred different kinds of strategies, no way she can really add value. And so it's just a scary time. We also had another advisor, uh, also on the west coast who just became disabled. And so during, you know, this happened during the column last year, but let's imagine it was happening right now. He's in the hospital for six weeks. There's nobody there. If he had a succession plan, that person would be, they're actually running things forum. And if the succession plan too is just one additional person, that person can be sick or could, could leave. So you want to make sure that you've got a team that is really not reliant on a single person, but when you look at who you're working with, there should be four or five or six people that you have confidence in that do various things for you. So knowing your succession plan. And one of my favorite sayings who comes from a mentor of mine here in Omaha, um, he said, Ron, if you protect the downside, the upside will take care of itself. A lot of the things we're talking about today is protecting your downside and then you know, time will take care of the upside.
Speaker 4:
39:23
Yeah, no, it definitely, well Ron, I think about, um, many people listening and we've talked with this on their shows. At some point in your life you're going to have a medical issue, whether it's a short term disability or things like that that happened. So it was like a friend of mine is getting a knee replaced actually today, Ron. Uh, and so what does everybody think? I need to get my knee replaced or my shoulder fixed or whatever. Oh, I'm just going to go get whoever now who their basket, who is the best person to get my knee replaced or get my shoulder fixed or getting my ankle fun. But people don't always think that way about who's the best financial advisor for me to go work with. And it's not just about the person fixing it, but their team of people. Because when you're going in for Rehab and as you're doing that, you're not always going to be seeing the doctor. You're going to be seeing their team of people and who you're trusting. And do you have the right team on your side because no one, you do a remodel on your house. You don't say, oh well who's the cheapest contractor and you want, who's the best contractor? That's what people are think, who's the best one to get this done?
Speaker 3:
40:22
Well, I love that. I love where you're going. Gee, Paul, you're the master at this and like taking real life scenarios on applying to this. So let's take it up a step. Let's say you're going in for open heart surgery and you, I would want the best, but you know that's me, but the equivalent could be in financial services. You go to an advisor as a one man band and think of that as a doctor. Well, I'm not only going to pro, you're going to show up for the hospital. I'm going to process you. And then I'm going to prep you and then I'm going to scrub up and I'm going to cut you open. Oh, by the way, I'm going to do your anesthesia while I'm trying to operate on you. Just think how many people were involved in a major surgery like that. Imagine if it was one person, you know, he's coming in, he's cooking your food for you. He's, you know, he's, he or she are doing everything for you. You, you laugh, you get that image. But that's the equivalent of people that are, so they have really no resources behind them yet. They're trying to do at all. Um, and the average consumer doesn't think logically through that to say what kind of impact could that have on me.
Speaker 4:
41:26
No, they don't at all. And a lot of times it's okay to use a friend and Ron and we, we work with so many families across the country that you have a close friend that's also a financial advisor. And you do that because you feel emotionally attached to do that. And I don't always think it's right, but I, I understand it because emotions and relationships drive so much of the social element. But actually, um, it was so fun to hear this the other night. So I was actually asked to dinner with some friends. One was the client, um, and they had a couple of their friends I had never met before and one of them said, uh, hey, why do you, I didn't know Paul was a financial planner. I didn't know why do you use him because we don't live in the same city at all.
Speaker 4:
42:09
We're a long work, many, many hours away. And he said, what's that like? He said, well, it's virtual, but that's not a problem. I know I can call them at any point in time and he's going to pick up and get right back to me. But he said this, this person went to a very prestigious university, by the way, I'm known as a ton of people, both coasts. So Nebraska, Nebraska, yeah, certainly not Creighton. Just teasing three now that's for you. Eight showing us. We love great fun. We have a lot of fun with all of our crazy, those were full of them who was interesting. I mean, all of them went to a prestigious, I mean really big university that it's well known that many people would love their kids to get into and they're all graduated from there and said, why don't you use someone else from Wall Street?
Speaker 4:
42:51
And he said, you know what? I know a lot of this stuff. But the biggest thing that firms can give me, and what I didn't realize til I worked with an independent fiduciary advisor is he gives me continuous comfort that I'm always making the right life decisions with my money. Am I spending too much? Am I spending too little? Should I invest in a rental home or should I not? Am I protected from the market? He said, there's no better feeling. This was a couple of days ago after the first rounds of market volatility. Then I got a call from Paul saying, Hey, you're doing great. You're, you're protecting on the downside. You don't have to worry about it. It's like the Mayo Clinic, right? I mean, I go to the Mayo, they have a great team and they're proactive. They look at things, they detect trends. What do you need to be doing now?
Speaker 4:
43:40
So you're going to be healthy in the future and stuff that you wouldn't normally think about. And that's the same thing with anything you should do. That's how you should approach it. Not only a team approach, but what's a proactiveness of the relationship. What's the ongoing and you don't want, hey, this is great one time and then you never get anything fixed from there. It's gotta be continuous because life moves at such a rapid pace now. And look at the markets, they're moving much more rapidly. Boy, they are. Yeah. And you know, went from very low volatility at the high volatility. There's a massive amount of wealth. It's being destroyed as we speak by terrible decisions right now. You know, the market's up pretty good at this moment. Given another 10 minutes, it could be down or going to a shift. The market is trying to digest higher interest rates and I don't think it's through, but we don't know. Getting your risk budget right as the most critical thing that you
Speaker 3:
44:32
need to do get. Let us give you a second opinion here at the Carson Grope. You go to Carson wealth.com going to take our risk tolerance questionnaire. Actually just start the process was no cost or obligation whatsoever to do this. Give us a call. (888) 419-8513 the truth is no one else is going to suffer, but you and your family, if you don't manage the downside because the ramifications could be catastrophic. So take a moment, make the call, get a second opinion. Eight eight eight four nine 85 13 that's eight eight eight four nine 85 13 on Ryan cars with my cohost Paul West. And you've been listening to wealth from wisdom,
Speaker 2:
45:15
risks, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement, right here on wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson.
Speaker 1:
45:29
Okay. And here's the legal Mumbo jumbo. The opinions voiced and well wisdom with Rod Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk, including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CW m L L C an SCC registered investment advisor.