Wealth from Wisdom

Is Your Financial Advisor Truly Creating Value?

April 08, 2017
Wealth from Wisdom
Is Your Financial Advisor Truly Creating Value?
Chapters
Wealth from Wisdom
Is Your Financial Advisor Truly Creating Value?
Apr 08, 2017
Carson Wealth
Show Notes Transcript

This show is about posing a very simple question … Is your financial advisor truly bringing value for you? Ron Carson and Paul West discuss questions you should be asking your financial advisor in every review meeting as well as what to look for in a quality advisor.

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 assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an SEC registered investment advisor.
Speaker 2:
0:31
This Morgan hit another old time records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 203 the 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, and straightforward and objective advice and how you could make your money go further in retirement. And now here's your host, Ron Carson. Welcome to wealth from wisdom radio. I'm Ron Carson here with my cohost Paul West. Hey Ron, how you doing? Yeah, Michelle, the last couple. I know I'm back now. It's gonna be a great show today. We've got, I think one of the big value adds that we can possibly have.
Speaker 2:
1:23
And really our show is all about being a consumer advocate and really educating the consumer. And today's show may be a little uncomfortable for some people, especially for some financial advisors out there listening to the show. We get, I get several emails, linkedin messages from other financial advisors, some wall to show, some hate the show, uh, but at least at least they're all listening to this show, right? And so the t today's topic is really about honesty and being honest and objective with yourself about your financial adviser, not beyond your financial advisers, just your financial team. And the question on the table is, are they adding value beyond a shadow of a doubt? Are they truly adding value or what has happened in our profession? Are they, are you paying them a fee to guests? Are they holding themselves out to do something that they can't possibly do because they don't have the resources.
Speaker 2:
2:16
And today we don't have a raging bull market to cover a lot of that up. And Are you having conversations about a holistic way? All this stuff, taxes, social security, generating income, health care, medicare risk, inflation, even RMD, so on and so forth. Paul, we know all kinds of complexity and that's all about making the complex simple. Are they doing it all? But is it easy for you to understand what they're doing and how they're doing it? And if you can say yes, then you have a great advisor and you're probably in the top one or 2% of teams out there today that are able to really do this. But if your advisor's not building value and you're not having those conversations, you're the one that's going to be most impacted around this. And we're just saying go get a second opinion. Not necessarily with us, just with anybody out there, you know, but we're going to give you some checklists, some questions to ask, some things you should be looking at.
Speaker 2:
3:11
Um, in anybody that you're going to evaluate. We're going to dramatically improve your probability of getting a team that's going to, and I, and these little things in the end make a huge difference. And you may be saying to yourself, I don't have Warren Buffet's fortune while, Hey, you know what? As I tell my clients, it's all the wealth you have. So you have to maximize it. You're the one that's worked 40 50, 60 hours a week, 52 weeks, a year for decades. And a lot of times that's two people. A lot of times that's not only all the hours, but it's also some inheritance from a mother or father. And this, these assets are sacred. So you need a team. And you notice I said team gone are the days where you can be a solo person and really be effective in this profession. So we're going to talk about, you know, what are the questions you should ask?
Speaker 2:
3:59
What are the things you should look for? Because getting this right really means the difference between having a great retirement and living the way you thought you were going to be able to live and having disastrous pain throughout retirement. Yeah. Ron, I think you're dead on. I mean, one of the things that we see in working with our clients is they blindly trust their financial advisor, and in doing so, it's good that you trust and you want that inherent trust between your advisor and yourself, but also trust, but verify, right? You want to make sure you understand exactly what happens. So there's so many times we get phone calls, people just want a second opinion, and many times we give them advice that they need to make changes. If there's also plenty of times as a fiduciary, we tell them things are absolutely correct. You're doing the right thing, and I don't know about you, but I like to make sure I'm comfortable with stuff.
Speaker 2:
4:49
Now, what can happen? What most people do, they Google stuff, right? Yeah. When you're Google stuff, you're stuck down, whatever the search engine is, whoever's paying the most for Seo and all of those things. Search Seo, search engine optimization, sorry, make sure everybody understands that. But you don't know if that's in your best interest. You're just getting the most frequently viewed article. But that doesn't mean it's what's best for you. And I had actually had someone that was referred to me from Louisville, Kentucky, and you know, we looked at their stuff. I mean, it was, it was so well done. There was, I mean, literally we said, where can we improve? And there was nowhere. There was, there might've been some philosophical, slight differences, but the plan was beautiful. And I told the advice that the client, I said, you got an awesome team here. I would not make a change. And he said, my hearing you right, you're actually having an opportunity. We, they were referred by another client of mine. And I said, yeah, I mean, I would be doing a disservice if, uh, if we actually ask you to move to move to us. And he said, well, I don't really like the financial advisor. We don't match. I said, them find a different one there. You don't want to go through the pain of change when you got a team that's proactive. And that's I guess another message is, you know, make sure
Speaker 3:
5:58
that you enjoy, you look forward to the communications you get from the team, um, and that you mash and you fill that there's a cultural fit because if not, even if you're getting great advice. Uh, so in this case, you know, don't, don't, don't, don't throw the baby out with the bath water. Just find another advisor within the organization to work with. All right. And the thing is there's zero downside to get it in a second opinion, whether it's financial advice, tax advice, planning advice, will, advice, trusted advice. There's nothing that hurts getting information. People are going to provide you information, whether digitally or in person with all of us. And this makes me think of a recent story, Ron and you and I actually, it was fine. We don't get it very often. Talk to new clients together, part of the organization. But we did a phone call, I'm with a family coming on board and they ended up choosing us and they chose multiple advisors to help manage their investments.
Speaker 3:
6:49
And that's fine. I mean that's what a lot of people wanted to do. So we feel one of like three teams. So we're one of three teams and you're on the phone call with me and him and you know we said you got to pick one to be your trusted advisor out of the three who can help give you opinions on what everyone else is doing. And actually earlier this week Ron, we got an email from this client and by the way, he's brand new just came over cause he wanted another opinion, decided to use us as one of his trusted advisors and he sent us, he said, can you look at this for me? And I just want to share this with the audience here today. So he got emails from one of his other trusted advisors, an illustration to buy a pretty significantly sized variable universal life policy.
Speaker 3:
7:27
So when when we were looking at this for him, it was really amazing to me. So there was almost $43,000 worth of costs that were administrative costs in this. There was a 15 year surrender charge schedule 15 so what that means is he paid 43,000 and cost of admin costs, which are coming out right away, but if they made a change within 15 years or it was going to be additional exit fees that they were going to hit him with. Yeah. Thanks for adding on to that because a lot of people aren't gonna stand that. By the way. Speaking of that, it takes our team. We had to get to page eight and page 10 of the actual document this client received from this advisor to actually read that fine print to understand it. So I can't even imagine. Most consumers, you would have no idea what it looks like.
Speaker 3:
8:13
But this individual was able to come to us and see that he had a second opinion because we also saw in the first year, Ron, there was 18% of his premium. The first year we're fees and costs. Oh teen imagine that. Most people are never going to know that. And the other scary part to me was, and by the way we just told him not to do it was the illustration was ran with our rate of return at 8% 10% and 12% where do you get that in the market today? Especially with those kinds of internal fees? Yeah, you have such a head when, I mean I did along those lines, we had someone that had bought what was known as a BDC, but uh, business development corporation and it was an investment. The internal
Speaker 2:
8:56
internal fees were almost 6% a year. Client had no idea. And I really the, the way they wrote it, because they actually not only charged what appears to be a pretty high management fee, but in addition to that, when they levered up and borrowed money, you actually paid a management fee on the borrowed money in addition to the capital you actually put in. It ended up being close to 6% a year. And not all situations are like this round, but it's just an example. Sometimes it's not as high a fee, but most people don't understand it. So again, there's zero downside for you for getting an advisor to give you a second opinion because you don't know. I mean it's the same thing as going to a physician. So let's give our listeners a couple things they should be watching for. I mean one is do you feel that they really understand your risk budget, what your risk tolerance level is?
Speaker 2:
9:43
I had to argue we're an elevated risky times today with interest rates moving up markets. Third, most expensive in history. You can't afford not to really understand what the true risk level is. And this is a biggie. And a lot of times we see it, people come in, we run the risk analysis, downside on their portfolio, the upside will take care of itself. What's the downside? What's, how much can it actually fall? And their objective doesn't match the amount of risk they're taking at all. And you've had a lot of creep in getting away from the objective. So, number one, is it on par? Do they understand what your risk level is? And do you know what your downside is? If we had the market go down 20 or 30% and stay there for a 12 or 24 month period of time. The other one is do you, are they explaining things in a common language that you understand what the heck it is that they're talking about?
Speaker 2:
10:35
Because these are complex ideas sometimes. So are they making the complex complex, simple. And then are they, do they ever talk about selling you something? It should be everything at the firm. It Carson for example, it's revenue neutral. We don't care what you do cause we're just charging an asset management fee, um, on, on the advice we're giving versus hey, you do this, I make this, you do this, I make that. Make sure that they're not selling you. They're truly, the team is truly a trusted advisor. So here's that. Here's a phrase I would help all of our audience with is if they're saying here's a solution for you, that's a positive. If they're saying, here's our product for you, that's a negative because that may not be in your best interest when it's a product versus a solution. So listen in for those keywords is you're talking to an advisor and getting a second opinion and your client, client focus, solution focus or product focus there in centered, that's what you have to ask yourself.
Speaker 2:
11:27
And you really, today we're talking about getting a second opinion and the conversations, it's critical that you have with your financial advisor and really with the entire team that will make the difference between a great retirement and maybe a painful retirement, one of the staples of all of these, believe it or not, it's just starting with social security and getting that right. That's where everything really starts. And the problem is there's so many options out there and there's so many different ways you can claim it. If there's all kinds of complications, potential trap doors, and if you make the wrong decision and it's a year later, you can't go back and undo it. And one simple mistake we've seen, it costs a hundred $200,000 in loss benefits. We've got a report, it's free. It's a latest social security report. It's packed full of actionable strategies that reveal several ways that you can claim benefits, including precisely how and when you should claim your benefit. Number two, whether you're eligible for additional benefits, you could put thousands of dollars in your pocket and then three we're going to give you some ideas on how you can reduce taxes on those benefits. Be One of the first callers and you can get this report. It's (888) 419-8513 (888) 419-8513 it's (888) 419-8513 is your advisor and your team creating value? If not, you're the one who's going to pay coming up next, we're going to give you some real life stories of those that had bad outcomes of what you can do to avoid them.
Speaker 4:
12:57
Is it possible you could pay fewer taxes in retirement and keep this money for yourself? You could learn right here and right now on wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. Welcome back. I'm running
Speaker 2:
13:10
person with my cohost Paul West today, and thank you for joining us for wealth from wisdom. I'm warning you right now what we're talking about is a little uncomfortable, may even make you feel a little guilty, but ultimately it could be the best thing you've ever did for yourself and for your family, and in fact it will make the difference, I believe, between a great retirement and one that may not be what you envisioned. And it's really a simple, straightforward question. Is your financial advisor creating value beyond a shadow of a doubt? Do you have confidence in the team? Do you feel great about where you're heading? Because if not, it's you. Who's going to face the consequences? And it's not as easy as just I like him. It got us got to go well beyond that and we're going to be talking about real life stories, things good and bad that happened to people who were not evaluated or who did truly evaluate their team.
Speaker 2:
14:02
Yeah, Ron, it's so important when, when we don't know something, what do we do? We tend to avoid it, right? We avoid confrontation. That's the biggest thing we see is he would beads and we avoid not knowing information. And one of the best things we've seen in the car industry is this transparency of people now knowing what they can pay or not. And that is increasing. So I'm happy to see that happen in the financial adviser profession, but people are still scared or intimidated to ask tough questions to adviser and you shouldn't be. And so I think in today's show we're going to do a good job of helping you figure out how to ask those questions and get a second opinion on what's going on. Let's run through a few of those. I mean, one is, uh, first of all, what is the education and experience of the team?
Speaker 2:
14:42
And education is important if they're fairly new to the profession and then it's experience. Matter of fact, I recently read where, uh, you'll once you're in a, in a, for more than three years, employers look at the experience over the education. Not that the education isn't important, but what's the body of work and what they've done. And not for one person, but for the entire team. And two, what are the certifications? What kind of, what kind of team do you have? At a minimum, at a minimum today there should be at least one CPA on the team, one attorney on the team, one CFA on the team when CFP on the team. So the, and they should work together to give you a holistic view of everything. Because if one person's trying to do what the CPA does and what the attorney does and the CFA once it's just too much.
Speaker 2:
15:30
And we see this a lot where they're a jack of all trades. Always ask because we coach financial advisors, we have, we have a company that coaches and consults with nearly 5,000 financial advisers all in, in the independent space. And a question I challenge them with is if your clients knew how you're spending your time versus how they perceived you spend your time, would they be happy advisors? Got Probably not. And if then let's make you the CEO of the organization so you can bring in these capabilities around you. I love that Ron. And if you can even take it one step further. So imagine a video camera, it just followed you around and watch and you made that visible to all of your clients. Would they be happy with what's going on? And it's impossible in today's world to do everything for every client.
Speaker 2:
16:12
And that's why you have to have a team of people. At the end of the day, a client wants to come to you and make sure you're the trusted advisor that you can help give them ideas and information. Probably more importantly, Ron, you're sitting on the same side of the table. Them asking their CPA and their attorney questions to make sure they understand what to ask and how do you put those complex pieces of the Rubik's cube together so you've got the right colors on all up. A great point. And also the goal of a team shouldn't be like for example, we do tax and we do tax planning. We actually do the tax returns. We're not looking to replace any professionals on your team but to work with them. But in some cases you don't have that capability. We're able to actually do that. So I mean, ask that question.
Speaker 2:
16:52
Are you okay proactively working with the team that I have or do I, are you asking me to replace everybody? That's never a good thing. You have good team in place. Make sure they can work. The other one is, are they an ria and not a broker or a registered investment advisor. Also important here, registered with the SCC. If you're, if you're, if you're not at least a hundred million of discretionary assets, you cannot be registered with the sec you have in your register with a state. You want someone who's registered with the SEC, um, and, and making sure that, that, that everything is compliant, the registered properly and then take time to go read their adv. That's just a disclosure of how they actually do business. Yeah. I will actually makes me think of a story of a calling, um, on our show recently. So, uh, this individual called an actually wanted a second opinion.
Speaker 2:
17:46
And by the way, they were listening to another show, um, from an advisor and it was interesting to me is is they want it to financial talk to them about their financial talk show just like this. And they wanted a second opinion. So it was, we were evaluating everything. This is somebody that was nearing retirement needed some help, um, but they were offered only one solution. And the solution by the way was an income oriented solution and annuity. Um, but they didn't really need the income. What did they need? They needed full planning. They needed to make sure they figured out how they spread their money out of their lifetime, making sure they don't run out of money and that they weren't going to. But what was interesting was this person shared as they were listening to this other show and met with the other show and they were asking this person about the annuity.
Speaker 2:
18:30
They were asking for costs, what are the all in costs and this other show provider wouldn't provide it. And for me, the huge warning sign of all of that agree. But the also Ron, the word fiduciary, when they say that they actually have to be it. So I went and looked at this other advisor's website and they have the word fiduciary on there. However, they have no disclosures or disclaimers on their site that actually proves that they were, so you should look on the bottom of their site to make sure that it says they are an sec registered investment advisor and they shouldn't hyperlink and explain exactly what that means. And if they don't, again, they, they're just throwing a buzzword out there and they're not really walking the walk there. Yeah, and I think it's fair. Come back to your existing advisers or if you're interviewing a new team, is, are you getting paid a commission?
Speaker 2:
19:16
What's the total cost? What's everybody else taken out of this thing? All annuities aren't bad. I think that annuities are a wonderful tool, but you can do them with advisory fees. You don't have to pay, there shouldn't be a commission paid and there can be a lot of hands in the till. That's actually extracting value, extracting value from you. So in this segment, I promise you we're going to give you some, some ways to fair it out. So here's, here's how I'd start. We talked about education and then are they registered Ria with the SCC? Uh, do they have a team, minimum CPA, attorney, CFA, CFP? Do they work together and where they work with your team, those are table stakes. Get a referral. Also talk to one of your clients. A friend, someone who's had a great experience, but keep in mind, get the referral from someone who's an engineer.
Speaker 2:
20:05
Type someone who digs deep. It gets them all the information out there because you want it, you want all of it. Also screen for the team minimum. Those are minimum, those are table stakes these days. Shit, ladies and gentlemen. And it wasn't when I first got started in the business in 1983. Those are table stakes. Then if you get to that point, do an interview in the office, in the office, not having them come to your home in their office and sit down. You get a feel for the professionalism, the Vibe, the people that are there. Uh, and also you want to actually meet the people that you would be working with. All of them, not just the advisor. And then then if that all checks out, get references, get references. Not for someone that's been with them for a year, but someone that maybe had a unique your situation, someone that's been with them for a long time and, and be, be willing, that adviser shouldn't be on the phone.
Speaker 2:
21:02
Um, when you have that, that conversation with them. Um, and then d make sure that they have the ability to do everything in an advisory way. There's, there's probably 1% of the time a brokerage relationship makes sense. You want to buy a stock, you want to do something. There's no reason you should be paying an ongoing fee for that. But if they're giving you advice and they're being proactive, it should be discretionary. It should be paying an advisory fee. I think there's one more important one I would ask Ron is what's your succession plan? So it was, you're coming to them as a family member. Yes. What you want to work with the same firm. I would hope you do for the rest of your life and all of a sudden if you go and work with an advisor and they're due to retire in five years or they're going to potentially sell their business or worse yet, they don't have a succession plan, how comfortable does that make me?
Speaker 2:
21:47
If their job is to plan out your life, but they don't even have their own internal plan, that's a big red flag to me on their level of detail orientation, and if for that reason, you don't know, maybe they sell their business or move it somewhere else and that's not going to be in your interest by the way, that's in their best interest. We do see this again because we have this view of 1,126 offices that we consult with, which comprise close to 5,000 advisors. My Gosh, about 7% have an x, an actionable succession plan, and what happens if they die or become disabled? All of a sudden your life is thrown into turmoil because of theirs was and there wasn't a thoughtful plan to continue those services to you. A lot of times they're the only one registered so no one else there can even give advice.
Speaker 2:
22:32
We see that. We see that's the importance of having the team we talked about just a moment ago. Yeah, and those are, these are all great questions and Ron and this is something we're big believers as everyone knows on this show of transparency, trying to educate all of you as consumers what's important. We've actually published a list of the top 10 questions you should ask your financial advisor, but we help answer those as part of our second opinion. So it was we were helping out families across the country with their second opinion will help you really talk through those questions and analyze what's important for you. Yeah, there's there, I'm going to share a story. I had, I had a client who we're with a team, we were looking at everything they had done and literally when we were evaluating their estate plan, the attorney had done really good work on the estate planning, but the attorney didn't take the next step to make sure everything was titled Properly and the client thought, the attorney said, well, here's a list of everything you need to do.
Speaker 2:
23:25
The clients thought the attorney was going to do it and then, or the financial advisor that introduce them to attorney and neither one of them did it. And I'm going to come back in the next segment and I'm going to tell you what happened as a result of that. Again, you could get partway there, you paid the money, you did everything, but it's that next step, which is really critical and that's why we're talking about are you blindly trusting the financial adviser? You know, if you own stock bonds, mutual funds, there could be a ton of hidden fees and backdoor payments. That's, we want to understand it. If your advisor doesn't understand this clearly or or just doesn't disclose them, those were both bad and it you may, you may say, well, does it really add up to anything? Yeah. Over 2030 40 years. It can make the difference between a great retirement and not having a great retirement and it should make you furious because there's still too much of this going on in our profession.
Speaker 2:
24:19
So we want you to know what you're paying in fees, how much it is, what are all the other costs associated with it. We see this in bonds. People buy bonds. They don't think they're paying a markup. They are. We can run your CUSIP. We can tell you exactly what you paid. It's quick. It's easy. It won't cost you anything. It's straight forward. Give us a call. (888) 419-8513 we will give you straight advice. We'll give you a second opinion and we'll even tell you what the total cost of the relationship with your adviser is. (888) 419-8513 (888) 419-8513 what conversations are you having with your advisor will come up next I'm going to talk about a client real life story of, because they didn't take the next step, they didn't evaluate the practice of the team. It nearly cost them millions of dollars in taxes.
Speaker 4:
25:12
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. I'm Ron Carson and you're listening
Speaker 2:
25:25
the wealth from wisdom radio here with my cohost today, Paul West. You've heard stories about someone. How's that big health scare and maybe even had one yourself and you think something's wrong and the doctor dismisses it as nothing, but then you say, you know what? I'm going to get a second opinion and the second opinion ends up saving your life. Paul, you and I both know cases where this has happened to family members and clients and nothing. Nothing. I mean, nothing bad happens from just getting a second opinion. It gives you more information. And the same holds true with your money and your retirement. It'll confirm you're on the right track. It could save you, could save you a lot of money. So there's just zero downside risk. We're going to talk about the downside risk. You want to give you a real life example of a client who were able to save millions of dollars in taxes because it was just pure lucky in timing.
Speaker 2:
26:19
And to follow up on that conversation, Paul, um, these clients had come in, we were evaluating and we're like, holy smokes, you get the same. You're, you know, you did the first step. You set up these teeth plant but nothing's titled Properly. And so as we were making plans to do to help them get things retitled they'll, they thought the attorney was going to do it or their financial advisor made the referral to the attorney when in fact both of them were looking at the client. You are never the quarterback responsible for this stuff. Your team that you hire and pay is responsible to do those things for you. And then it got worse because the wife slipped on ice, hit her head, was in really on her deathbed and she, um, she did end up dying literally a week later. We were scrambling getting a lot of things that had to be done, even though she couldn't sign, her husband had power of attorney to get, it was very morbid. Right. She's going to, they knew she was going to not make it, but that's not when you want to do the planning and start jumping through all the hoops and it had to be done or there was going to be several million dollars in estate taxes because the stuff was at sitting a lot of in her name and it wasn't titled Properly to maximize your unified tax credits that they had at the time.
Speaker 3:
27:38
Yeah, I mean that's just, it's, it's amazing me, Ron, and I think for all of us, you know, across the country and here on the show today, uh, you know, just makes me think about an individual that the other day, um, I was speaking with and he called up and he just, he wants somebody to give him a second opinion on everything has um, successful individual but just wanted help children, grandchildren. And it was amazing to me, Ron, of everything they do and everything were done. Second pain and I'm having this conversation with them. The thing that just dumbfounded me was the, so many people we talked to don't have a simple will or don't have a reason. And it scares me because I hear stories like this about people falling on ice and what do they do? Taking care of themselves often falls to the bottom of their list.
Speaker 3:
28:25
They're so worried about helping everyone else, their kids and their grandkids. Everyone take care of yourself or call one of us to help. We'll give you a second opinion on who's a good attorney to help you draft these simple documents. It's so important. I know you're thinking it costs money or you're thinking, Ugh, I'll never get to it or this will never impact me. I can't tell you the emotional feeling of how good you feel when you get those completed and if you need help looking at them. So by the way, Ron, a lot of times we help look at other people's trust and just simple tests you set up for your family and helping your children. We look at those all the time because most people don't understand what they means is a little bit like when you go in and we have two attorneys right here that are part of Carson group. Yeah. I think most people sign for their home and they sign all the mortgage paperwork you signed, you know, a stack of three. Yeah, three feet tight. You don't know what you're signing. The same thing with your trust. Your, you're blindly trusting your attorney. So we want to help people understand, but those documents are not static. They do need to evolve and you've got to make sure when you set them up before, are they doing exactly what you need them to do at this point in time.
Speaker 2:
29:29
By the way, if you ever hear a dog barking, um, we actually have Nellie Archie, the comfort officer. She uh, she loves doing these radio shows with, is it every once in a while if she hears something she loved, she'll bark and that go to our, of course wealth.com and you can learn all about Nellie. I heard that she's a second most visited person on our website. She's in the office every single day and she's great. She's also a therapy dog. So if you're around town, um, where she's at nursing homes and hospitals giving therapy to people and then when she's not doing that she goes up and bird hunts with us. Paul, she does. It's great having around. Actually my son loves to come in here in the office and the first question he asked is, is not Ron or Paul or who's here is, is Nelly here?
Speaker 2:
30:09
Hang out with them. Let's talk about some of these. I mean, so estate planning with these particular clients, the other thing we notice all the time clients off the wrong beneficiaries. They thought it was going to go here and they don't know what some of the different terminology is or they switched counts two or three times and someone along the line made it. So one of the checklists we have for all of our advisors is to double check and sign off on the beneficiaries every time we do a review it's just good practice. And then err on tax advice. Um, financial, we're not CPAS, but we have CPAs in the organization. So you want to, is there someone that can really look at everything to give you the best tax advice and taxes. I mean, taxes are a huge estate taxes, income taxes, penalty taxes on taking the wrong distribution at the wrong time or not taking a required minimum.
Speaker 2:
31:01
We had a case here not too long ago where someone, they came in, they had it taken or distribution for 11 years, 11 years, 1111 and the penalty is 50% of what you should have taken plus penalties plus interest. And so you know, it had a favorable outcome because there was a position made to the IRS that they could not have known about this as a way it was inherited. There some other factors and they actually agreed to it. So you know, you can make an appeal that they're not very forgiving, the IRS isn't and there sometimes they're not in a very good mood either. But so tax is a biggie. Social Security, we've talked about a lot in this show, but there was three of the best case in the worst case is huge. We recently had a client come in and they had made the wrong optimization was pretty straight forward, cost them about 116,000 and benefits, it was done too long ago so they can't go back and make up for it. And we're assets titled. So you did the estate planning, are the assets actually titled Properly? So your estate plan, we even work really important to understand.
Speaker 3:
32:06
Yeah. I just think about the pain these people are feeling and when we're talking to them, Ron, it was, they said, I wish I would've talked to you sooner. So if you're sitting there and you're debating it, and by the way, if it's in your head or you wake up in the middle of night thinking about it, just go do something about it. Make the effort and sometimes you're going to feel good. A family just came in a couple of weeks ago, Ron, and they want to, like many of you, you have a retirement plan. So they've got a four one k plan and they wanted to know is this good for them. And when we looked at it, we reviewed, they were very well allocated. It was a great plan. They had some good options aside
Speaker 2:
32:40
of it. We've told them to keep it exactly where they were. Yeah. And you should have seen the relief on their shoulders, Ron. And it was like, you're the only people that went into told me not to do something else with it. You actually just told me you're really doing a good job. And that made them feel comfortable that they were getting honest, transparent, and straightforward advice. Along those lines. Paul, we had a, we had a group come in last year, client and they were the third opinion, second opinion. There were getting big decision and they want to know should they take the rollover or should they just take the payout? And normally normally it's in your best interest to do a rollover. You control your own destiny. But with interest rates as low as they are with the market at elevated levels were like, man, you're getting an 8% or around there, guaranteed return on these assets.
Speaker 2:
33:28
You're, our advice is don't do anything with it. And the client even sat or prospect said, you understand I don't have any other money, so if I want to do those rollover, this doesn't benefit you guys at all. So no, we get that. But let's start with what's in your best interest. We'll work backward from there. Um, our job is to put just to be a fiduciary and give you the best interest, not in making sure that we're going to make money off the relationship. I can only imagine when they walked out of the building, Ron and how they felt getting into their car. Well, I tell you what, it did come back to benefit us because they referred, they were referred some people to the firm that ended up doing business with us because they had, they had total total confidence and the other one that we looked at, um, I'll come to come back.
Speaker 2:
34:11
I'm going to talk about that just on how do you know what you're really paying. It's really important. One of the critical components we just talked about how big a state planning is and if you think about those priorities, that stuff that really matters to me. It matters to you Paul. It's my family and making sure something happens to me. My estate is protected because we don't have a plan. Everything could go through probate. You could have a lot of additional tax could be tied up in courts for years and lots of fees and you could get double tax as well. We see this happen especially with retirement plans. They can get double taxed. We have a guide. It's a latest report, a state planning simplified. It's short, it's 10 pages. It's easy to understand, easy to read, and as jam packed full of actionable ideas. And the best news is it won't cost you a dime. Get be one of the first callers to give us a call now, (888) 419-8513 eight eight (841) 900-8513 four 198-EIGHT-88498Y-5 13 and we will get you that report. What conversations we come back, I'm going to give you five positive signs to look out for and some things specifically you should get when you hire a financial advisor and or get your next section.
Speaker 4:
35:29
He's a published author and has 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
Speaker 2:
35:38
Advisor Ron Carson. Welcome back. I'm Ron Carson and you're listening to wealth from wisdom radio. I'm here with my cohost Paul West and we're talking about conversations you need to be having with your financial advisor. Are you talking about strategies to help reduce taxes and retirement where you're talking about when you should claim social security benefits or when you withdraw from Your Ira 401k how much you should take, what other assets you should take out. If so, that's fantastic. If you've got a proactive team, send them a thank you for being a good team. But if you're not, if you're not having those, those conversations, ultimately you're the one who's going to be impacted and getting a second opinion. It costs nothing and it will benefit you because you're the one, it's either going to have a great retirement or not have a great retirement and we're going to talk about some of those things you should be looking out for when evaluating whether or not you have the proper team or if you're just looking to hire a team.
Speaker 2:
36:37
You notice I said team. Someone has at a minimum, a CPA, CFP, uh, uh, uh, uh, j d an attorney on staff and and that they're all going to work together. You know, make sure that there's a holistic view. What are the five things? One, your advisor should be talking openly about the risk. You don't ever want to be in a situation where their permit bowls or though, or don't worry about it because there's times you need to adjust the level of risk that you're taking in your portfolio. If you protect the downside, the upside will take care of itself. Understanding what your downside is. Can you live with that? If not, make adjustments in the plan. Do you understand what fees in total costs? And that's, I want to get away from even saying, what are you making? What's everybody making on my relationship?
Speaker 2:
37:25
Does your advisor try to educate you? Does he make, do they make the complex simple? Does your team meet regularly to review your portfolio? Do they communicate with you proactively in, Oh, Paul, that's what came from our advisory council over the years as we stand out. A lot of proactive communication when there's things or adjustments made in their strategies, in layman's terms, but they know that someone's paying attention to it. And does a team remember your goals? And more importantly, do they really care about you hitting your goals and objectives? Yeah. So I think about all the time we're in the year 2017 think about this. Does your advisor, do you have continuous access to your account? It still amazes me, Ronald, when people want a second opinion from us that they can't log in and see what their accounts actually worth. They still get a statement from monthly or not just at the firm, but every, every asset that they own.
Speaker 2:
38:19
You should have, whether that advisor has it or not, you should be able to see everything. Yeah, and it's so not only the statement from us, but actually a personalized balance sheet so they can see a comprehensive view of what that is. And by the way, if you're getting a statement that's an excel or other base format, huge warning signs to you that you, that you better be careful on what's going on there. So as we think about being transparent, always make sure your advisor can give you continuous information because the data's available. It's so it should be made available to you in this day and age too, is or should be theirs. Theirs. I continue to watch American greed and I'm a love watching it, but I continue to ask myself, how can people keep making the same mistakes over and over and over again?
Speaker 2:
39:04
And you need to be sure that your assets, you can go direct to the custodian, a fidelity, TD Ameritrade, uh, Schwab and actually see your assets independent of this report. Now our clients come into the portal, they come in and they get everything, whether bank accounts, every asset they have with us and away from us. But you also periodically want to be able to just log in and see your assets. Like Reagan said, trust but verify, I think all the time. What are simple things we do? We get quotes on our homes, right? We need new siding. Or I needed a, I needed a tree cut down in my yard run. So what do I do? I get multiple quotes. So I got multiple second opinions on what it would take, one to work. But guess what? I see the stories on the news all the time.
Speaker 2:
39:48
Contractor disappeared with someone's money or things happened. So I trust them and their quote. But then I go verify online. I go look at their ratings, I go actually make sure they're part of the better business bureau so I at least can have some form of confidence that they're doing what's good for them. And we even had it happen unfortunately right here in Omaha, you know, or a financial advisor started borrowing money from the client. Um, and then it just snowballed and he's borrow more money to pay more clients back. And this is where had he not had such a strong personal relationship that just would not have happened. And we even know some of the people directly impacted by that. But this trust but verify not only on where your assets are, but what are you really paying. We had an example where someone came in and they said, well Mike, you guys are just too expensive and we do appear expensive sometimes cause we disclose all the fees were actually, I think we're the best value in the world.
Speaker 2:
40:37
But that's on the world authority on my opinion. Right? But in this case, so I'm only paying 50 basis points when we started looking at the portfolio. And we dug into, they were proprietary mutual funds held by owned by managed by Merrill Lynch and their total expenses, all expenses included. We're pushing 3% so it made us look like a screaming deal and they weren't getting nearly the holistic services. So you want to ask now, what are you getting paid? What's everybody? All the hands in the till taking out of my pocket. Yeah. So the top two questions we get asked when people are doing a second opinion before we can even get into it is what's your performance and what are your fees? And the question about the fees is so important, Ron, because it does. We want to look at your net return and that's important, but also your net return for what's important for you.
Speaker 2:
41:24
I don't care what your next door neighbor is doing, I don't know their level of risk. I don't know what's important to them. I don't know how much income they have. So your backyard barbecue conversation should be thrown away. The only one that matters is yours. But when people ask them about fees, we're very transparent. We'll show them exactly what our fee schedule R is and what our costs are. But I want them to know in order to do an apples apples comparison, they need to know what their total costs are. And it's amazing to me. You're on how many people don't know. So it was worth getting a second opinion for people. It's the paint on their faces when I show them or our advisors show them how much they're actually pain. They have no idea. And they'd rather they feel comfortable there. Okay.
Speaker 2:
42:02
If maybe they're paying us or other advisers more, but they know what their pain and that is so important in a relationship. You don't want to always be wondering what's actually out there. You're going to like this, I don't even know if I've shared this with you. I was on, it was at Tiburon. I'm out in San Francisco and they have two meetings a year and they bring a bunch of c level executives and from the financial services and they thought would be fun to get a consumer panel. So they source locally in the San Francisco Bay area. Um, some one was a retired executive of a fortune 500 company. The other one was an entrepreneur business owner, and the third was just an average retire per retiree that had it several hundred thousand dollars rollover. And they, the guy that was the high level CEO of the retired CEO of the fortune 500 companies said, well, I know exactly what I'm paying.
Speaker 2:
42:49
And we're like, well what are you paying? And he said, well, I'm with Goldman Sachs and I'm paying either 50 basis points to zero. And I said, I, first of all, what do you own? And he owned a lot of their stuff. I said, okay, you may be paying 50 basis points to zero. I'll guarantee you Goldman's making out like a bandit. Matter of fact, I'll bet my life on it if you let me look at your, he didn't do that. But there's a big difference between what they're showing. And it's the tip of the iceberg many times. So getting the second opinion so you understand what's underneath the tip of the iceberg can help you avoid making huge financial mistakes. And it'll benefit one person that you, there's no downside. There's absolutely no cost to have a conversation. We'll be happy to look over your shoulder and help you ensure you're on the right track and we may even tell you, just stay exactly where you're at.
Speaker 2:
43:44
Let us prove to you we can make the most out of every dollar you've saved with our living in retirement master plan. This plan will address key components we're talking about today. It'll also show you, show you how to avoid making expensive financial mistake and how your money can actually last a lot longer in retirement. Does it cost anything you've got nothing to lose. Be One of the first callers, (888) 419-8513 that's (888) 419-8513 that's (888) 419-8513 you've been listening to wealth from wisdom radio with my cohost, Paul West. Paul, great having you on the show today. Thanks for having me, Ron, Ron Carson, and we'll see you.
Speaker 5:
44:44
Risk, 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:
44:58
Okay. And here's the legal Mumbo jumbo. The opinions voiced and Wellframe 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 LLC, an SEC registered investment advisor.