On the latest episode of The Get Ready Money Podcast, I spoke with Sheryl O’Connor and Phil Lubinski, co-founders of IncomeConductor about changing the way we think about money, and managing retirement income to provide retirees peace of mind.
In this episode we discussed:
Sheryl O’Connor has spent over 25 years in the financial services industry at insurance and investment management firms where she led strategic business growth and technology innovation. After leading an investment management firm for 11 years, Sheryl co-founded IncomeConductor in 2017, a retirement income focused wealthtech firm that provides a revolutionary strategy and technology to advisors and their clients that meet the needs of today’s retirees and serves as its CEO. Sheryl has won numerous leadership awards and serves as a global ambassador to encourage women entrepreneurship in technology.
Phil Lubinski, CFP has spent over 35 years as a financial advisor, serving almost exclusively retirement income planning clients. He was first to develop a ‘bucketing’ approach to income planning and has co-developed several fintech systems designed to help advisors create income plans for their clients. After successfully transitioning his practice, he co-founded IncomeConductor, which utilizes his time-segmented strategy. Phil serves as the firm’s Retirement Income Specialist, contributing his expertise in the areas of advisor training, case design consultation, and software enhancements.
Connect with Sheryl O’Connor and Phil Lubinski:
Income Conductor Website: www.incomeconductor.com
LinkedIn (Sheryl O’Connor): https://www.linkedin.com/in/sheryl-o-connor-72170837/
LinkedIn (Phil Lubinski): https://www.linkedin.com/in/phil-lubinski-cfp-3685aa5/
On the latest episode of The Get Ready Money Podcast, I spoke with Sheryl O’Connor and Phil Lubinski, co-founders of IncomeConductor about changing the way we think about money, and managing retirement income to provide retirees peace of mind.
In this episode we discussed:
Sheryl O’Connor has spent over 25 years in the financial services industry at insurance and investment management firms where she led strategic business growth and technology innovation. After leading an investment management firm for 11 years, Sheryl co-founded IncomeConductor in 2017, a retirement income focused wealthtech firm that provides a revolutionary strategy and technology to advisors and their clients that meet the needs of today’s retirees and serves as its CEO. Sheryl has won numerous leadership awards and serves as a global ambassador to encourage women entrepreneurship in technology.
Phil Lubinski, CFP has spent over 35 years as a financial advisor, serving almost exclusively retirement income planning clients. He was first to develop a ‘bucketing’ approach to income planning and has co-developed several fintech systems designed to help advisors create income plans for their clients. After successfully transitioning his practice, he co-founded IncomeConductor, which utilizes his time-segmented strategy. Phil serves as the firm’s Retirement Income Specialist, contributing his expertise in the areas of advisor training, case design consultation, and software enhancements.
Connect with Sheryl O’Connor and Phil Lubinski:
Income Conductor Website: www.incomeconductor.com
LinkedIn (Sheryl O’Connor): https://www.linkedin.com/in/sheryl-o-connor-72170837/
LinkedIn (Phil Lubinski): https://www.linkedin.com/in/phil-lubinski-cfp-3685aa5/
Are you looking to get ready, be prepared and transform your financial future? Then you've come to the right place. This is the Get Ready Money Podcast with Tony Stewart, where Tony has insightful conversations with financial experts who are changing the way we think about money. Watch up on the latest financial trends and hear practical advice from Tony and his expert guests so you can build healthy habits that work. Be empowered with tips for implementing small changes that can have a big impact on your financial future. So sit back and get ready to hear from today's guest.
Speaker 2:Welcome to the Get Ready Money Podcast changing the way we think about money. I'm pleased to be joined today by Cheryl O'Connor and Phil Lubinsky, co-founders of Income Conductor. In this episode, we'll be discussing Cheryl and Phil's thoughts on how we change the way we think about giving retirees peace of mind in retirement. Cheryl and Phil, welcome to the Get Ready Money Podcast.
Speaker 3:Thanks for having us, Tony.
Speaker 2:Yeah, I'm excited. I appreciate your time and look forward to your insights. You know to get started, you know. Tell us a little bit about yourself. What are your origin stories?
Speaker 4:Go ahead, cheryl. Okay, there's just more interesting.
Speaker 3:Yeah, I started out as a professional musician and teacher and then got into software development and project management technology, eventually founded an asset management firm with my husband and a partner back in 2006. And it was there that I got interested in this whole area of retirement retirement income planning. That's where I became acquainted with Phil and we decided to start Income Conductor in 2017 and have been, you know, supplying our technology to advisors and firms throughout the US, canada and Australia.
Speaker 2:Fantastic Phil, how about your origin story?
Speaker 4:Well, let's see, having been expelled from Catholic schools and fired from my first corporate job, I realized I should probably be a financial advisor. So that's been my only career long-term career ever since 1977. And it was in 1984, when I started specializing in working primarily with retirees, and in working with them is when I designed the strategy. That's kind of the basis of the technology that Cheryl and I started developing back in 2017.
Speaker 2:Fantastic. So you know on that line, is you know? So what inspired you to actually create Income Conductor, to expand this? Because it is very different than the normal thinking in the industry.
Speaker 3:Well, from my standpoint, I was running a tamp when 2008 hit and we were managing a lot of accounts for people in retirement or very close to retirement, and there was a significant number of these accounts where we didn't hear from the customer, we didn't hear from the end client, we didn't hear from the advisor, and those accounts remained untouched. They didn't go to cash, they didn't even rebalance, and I thought, gosh, what's making these people feel so confident and comfortable through what was the largest market crash I ever experienced? So, in doing research, all roads led back to Phil and his strategy of these advisors at disparate broker dealers and RA's were using Phil's strategy with these clients and I thought, wow, that that must be a really, really powerful strategy that manages the client behavior so well, which is critical in retirement.
Speaker 4:And kind of what developed the strategy was back in the early 80s when I started working with retirees. I didn't have a strategy. I mean I would go to different meetings and everybody would just talk about you know, have a well balanced portfolio, and the 4% rule hadn't even been invented yet. But what bothered me was when Monte Carlo kind of hit the retail market and I tried it with my clients they never celebrated that probability of success. They always obsessed over that probability of failure and I realized that the only reason a portfolio fail I shouldn't say the only reason, but the main reason it fails is that you're drawing income from an account that has some growth exposure.
Speaker 4:So why not build a strategy that has a combination of guarantees in the early years and then the longer term money. Let it ride the markets and as long as you have confidence that the markets will eventually recover, then you'll be fine. And if you have no confidence that the markets will recover, then it doesn't matter where your money is, because we'll all be in the same sandwich line together. So my clients instilled that confidence in them that 10 year and beyond money is safe to invest and just leave it alone and it'll be fine. And they did and it worked.
Speaker 3:Yeah. So we wanted to develop a technology based on this strategy and also solve other problems that advisors had, you know, engaging clients, bringing all of these very complex components of retirement into a one screen view where they could work with the clients and solve various issues the clients were having, but also, you know, have the client be educated about these concepts along the way and really understand what their plan was all about and give the advisor the efficiencies of scale to be able to serve hundreds of these clients very effectively.
Speaker 2:Well, I think. Well, there's a lot to unpack with what you both said. I think one of the things too is to be able to serve clients scale, because there's only so many hours that a financial advisor has that they can spend per client, and most financial advisors are capped out with the number of clients that they can serve. So if you can extend that, I think that's valuable. But, Phil, I think what you said, I think goes to the heart of this is you mentioned two words fear and confidence. You didn't mention you know that, income conductor. You know all the technical things that go into it because it is a highly complex program, but you mentioned two things that what people are really trying to solve. They're scared, they're going to run out of money. That's the problem. And income conductor is instilling confidence in it and I think that's amazing.
Speaker 4:You know it was interesting. When I saw my practice a few years ago and retired from, you know, working one on one with clients, and started to work with Cheryl, I got literally 165 congratulations on your retirement cards for my clients. But a single one thanked me for managing money, for managing standard deviation, for the yields, for the tax planning. Every single one, without them talking with each other, said thanks for giving us the confidence to retire, thanks for giving us the permission to spend and enjoy our money. So it was that peace of mind. It's basically saying thanks for the peace of mind and that's what retirees want. They know that all that other stuff has to be taken into consideration, but bottom line in their hearts, they want their hearts and minds. They want to know that they made a good decision to retire because they can't undo it and that they can enjoy their money. And that's exactly was my goal in working with them.
Speaker 2:Yeah, I think that's critical help. You know that they can enjoy their retirement without the stress. And I know that I was a few days consultant and analyzing insurance policies you know, predominantly with wealth managers as my clients and I think was really interesting and they never really put this into practice. The question they would always ask me is this policy any good? Are these policies going to take care of what my client thinks are going to take care of? You know I provided them pretty in-depth reports but a lot of times they wouldn't even really read the report. You know they go okay, what's the bottom line? Is this going to work for my client or not? What changes do we need to make? And I think it's interesting that that was even the connection the financial planners were asking the financial advisors. You know they didn't care as much about the details as the big picture in answering that question.
Speaker 4:Yeah, my doctor didn't tell me what's in the prescription. All I want to know is is it going to work? And I assume that after they've done their research, don't tell me the makeup of the pill, just tell me it's going to work.
Speaker 2:I say the exact same thing, phil is you know they don't make you watch a video. You know, read a brochure on how the pill is made. You know before you could talk about it. So you know. I think one thing that's fascinating is that you know, phil, your practice was so focused on this time-segmented approach, so what made you get into that? Why is this time-segmented approach so important to managing retirement income?
Speaker 4:Well, I think the main thing is exactly what we've been talking about.
Speaker 4:It's not going to give and we've never purported that it's going to give the retiree more income than other strategies.
Speaker 4:What it's designed to do is to manage behavior, and the big reason for plans failing or for retirees running out of money is bad behavior, sometimes by the advisor, sometimes by the client, and bad behavior usually is, you know, overspending or panicking and jumping in and out of the market at the worst possible times. So the segmented approach where you're always making, you know the money that's in the markets, that's exposed to those things that cause fear, is money that they're not going to need until several years into the future. Then people don't like that. Their accounts may be going down, but they also know they don't need them right now, and so they don't panic and they're not fearful and they do what they need to do, which is ride it out and believe that eventually the market is going to recover and take care of them. But in the meantime, you know they're getting their income from a fixed place with no market exposure, and that's the whole driving force of the kind of the overriding philosophy of this strategy.
Speaker 2:Well, that's powerful, I mean. And, cheryl, how did this reflect for you coming from your background?
Speaker 3:Well, for me it made total sense and, as I mentioned, I could see it in action. So it wasn't just. You know, somebody writes a white paper and claims these things. I lived through it with our clients on the TAMP and understand the power of Phil's strategy. But the other thing you know that I think we really needed to get into place, and what the strategy supports is an actual written plan.
Speaker 3:You know I have a master's in project management and for me a plan is a written document. It's time bound, it has a scope, it has budget. You know that's what people think about out in the. You know the world. When you talk about a plan, what's your construction plan? What's the plan for your trip? Well, it's the plan for your trip. You know this is what people think about when they hear the word plan.
Speaker 3:They don't think that a plan equates to analysis and probability. They think of a plan containing actual data. So for me, phil's strategy gives you the structure to actually create a plan and then track and manage against that plan, because things are going to change throughout retirement, right? So a plan is only kind of a best case scenario on day one, but then you have to monitor it. So it made total sense to me, and the other thing I saw that technology could do is the data is out there.
Speaker 3:We don't need to use these old rules of thumb. Let's bring the data into the technology. Let's make it available within the editor and show people what the impact of that data is, instead of going out to these disparate tools that advisors do to get the data here, to get the data from the internet, to get the data from this calculator. No, let's bring it all in and then let's personalize it to the actual client. It's the 21st century, you know we have this data out there, so why not use it to our best advantage from a planning perspective? So that's what really excited me about just you know, phil's strategy being a proven, time-tested retirement distribution strategy, but also the ability to build a really great technology to use that strategy and bring in the data necessary to make people's plan customized and more successful.
Speaker 4:You know, tony, I was interested. You know I was talking with an advisor a couple of weeks ago and who's considering an income conductor but currently uses MoneyGuide Pro, and he said let me show you the plan I did for a client on MoneyGuide Pro. So we went through it. It was very well done and I said that's great. So what's the plan? And he said what do you mean? What's the plan? This is the plan. I said really looks to me like a great analysis, but I don't see a plan here. What is the next step? Well, I guess I'll just draw the cash flow we projected here from their existing assets and hope that that 85% probability was right. And I said that's not a plan. I said you need a structured plan. That's what income conductor is. It's not designed to compete with MoneyGuide Pro or eMoney or Right Capital. It's designed to implement that analysis and that's the. I think that's the step that advisors aren't understanding is they need an implementation roadmap and that's what income conductor gives them.
Speaker 2:Mm-hmm. Yeah, I think that's so important and I think that's a missing piece for financial literacy and financial education overall. Nope, somebody goes out and watches a video on 401K, so that doesn't really help them understanding. I mean, to your point, cheryl, it's not personalized. But it's also, phil, as you point out, it's not actionable. It's just a video on what a 401K is.
Speaker 3:I was a teacher, tony, and I realized that the best kind of teaching, the best kind of learning, happens within a context. So you can have somebody go off and watch videos or read articles about making a clay pot, but they're not really going to understand how to make a clay pot until they get their hands in there with a wheel and start to make a clay pot. So I think that's a very powerful feature of income conductor is that advisors can educate clients along the way, within the context of their own plan, their own issues, their own situation, instead of sending them off to these arbitrary videos or read this article or whatever they can see it, and it's much more meaningful to them because they're engaged in the process.
Speaker 2:Yeah and I'm with you 100% on that, because I think it's that hands-on ability and people are learning what they need to know when they need to know it, and we're all, to some degree, a little bit self-centered, so when it's about us, we tend to. It's like when somebody calls your name, it says, hey, cheryl, you're gonna turn your head and pay attention to it. So it's awesome. So let's get into the Get Ready questions. So, cheryl, why don't you start with this? One Is what basic money concept do you wish people knew?
Speaker 3:The power of compound interest. Too many people start saving too late and if they just realized the power of compound interest just putting a little away as soon as possible and being consistent about that they would not have to worry about being ready for retirement.
Speaker 2:That's awesome advice. I have to say, probably half of my guests come out of compound interest. It is by far the most popular answer and the most powerful answer. Phil, how about you?
Speaker 4:I mean, I think it's not so much. I think they need to unlearn accumulation concepts, because the tax strategies and the investment strategies that you use to successfully accumulate wealth, they're inherently different when you distribute wealth and if you apply those accumulation concepts on the distribution side. Because a lot of retirees think that retirement is just, and advisors too, the retirement is just accumulation in reverse, and it's not. And so the concepts of tax deferral, the concepts of dollar cost averaging they work great on the accumulation side, but tax deferral can create horrible problems in retirement. Dollar cost averaging out of the market versus dollar cost averaging into the market can destroy a retiree, and that's what Monte Carlo is all about. Is that whole concept of dollar cost averaging out of the market. So they don't need necessarily. They need to abandon some of the concepts that are in their heads and adopt the new ones for distribution.
Speaker 2:Yeah, that's powerful. You know, something I had a thought on is, I don't know, have either of you seen some of those studies how people's brains change when they get older and that sometimes people in their 70s and 80s become bigger risk takers? Is that something that you've reflected upon within the conductory?
Speaker 4:You know I personally I don't know if I experienced that, I mean I certainly know that your financial acumen, you know, changes as you age and to me that was a big advantage of clients working with me because for the most part I was younger than them and so, as bright as they may have been, you know accumulating their wealth and as much as they knew, they also knew that at some point in their lives they weren't going to be as sharp as they once were and they wanted to have, once you get a plan in place that anybody could look at and continue to monitor, but they wanted to have a partner with them as well. I didn't personally experience retirees getting riskier as they age. Sometimes they would make mistakes that they wouldn't have made in their fifties, but it wasn't necessarily along the lines of taking more risk with their money.
Speaker 3:Yeah, I think that taking more risk might be a factor of people are much wiser, so I think the risks they take are on a much more informed basis than when they're younger. So you know, part of Phil's strategy is the money you won't need until much later in retirement you can take more risk on. So that is a little bit counterintuitive when it comes to you know, your typical risk assessment in the industry because you get, you know you get a rating, you get a number, you're put in. Oh, this is a conservative investor versus a aggressive investor. I think, if you put it within context, people are willing to take more risks because they feel more comfortable with them, because they know that they're not going to be harmed by them in the near term. It's a much more thoughtful risk taking process than you know, your typical 15 or 20 year old would take.
Speaker 4:So yeah, you know, and thinking more about it, tony. I mean, I always had clients that would come in and they'd read an article somewhere and they'd say, hey, phil, I understand somebody really got rich off bitcoins. Is that something we should be doing? And I was so appreciative that they would come to me with that question because I think, without someone to bounce that question off of, they may have taken that risk not knowing and understanding what the true risk was. So my standard answer was always I don't know.
Speaker 4:Let's look at your situation and let's make sure we both understand bitcoins as well as we need to before we take that risk. So a big part of answering that should I take more risk or can I take more risk was let's educate each other on what this risk is and then let's decide does it make sense? And if it doesn't work, is it going to, you know, negatively impact your overall plan? Everything goes back to that plan. So there certainly is an amount of money that everybody should have that they could take risk with that. They wanted to. It's like you know don't go to Vegas and gamble anymore than you can afford to lose. That's the rule with any investment, not just gambling in Las Vegas.
Speaker 2:Yeah, that's powerful. I'm with you all the way. I think people need to think about that. First, you know what you said about is Bitcoin the right investment for your portfolio? And that's what you were talking about earlier, cheryl, about personalization. So let's move on to the next question is what is one simple thing you can do each year to set yourself up for financial success? Phil, you want to start on that one.
Speaker 4:I mean, I think it's I hate to pound, you know, go round and round on the same thing theme, but it's you got to have a plan and every year you got to renew that plan. Every year I got to go to the doctor. The doctor has a baseline bloodwork for me, and every year I got to go back and measure my current blood against the baseline. And has anything changed?
Speaker 4:Same thing with the financial plan. You got to have a plan, and every year because when I'm setting a goal for a client that may be 15, 20 years from now and they want to retire, that's a pretty fuzzy goal and so the plan that we're creating, you know, in general, should get us there. But every year we've got to measure as we get closer, because the closer we get to that goal, the more definition they'll come with that goal and we have something to measure. You know, are we zeroing in on exactly what we're going to need? And the annual steps are have a plan and review it carefully at least once a year, if not more frequently than that.
Speaker 2:Yeah, that's powerful advice and I think that's something you have to miss with so many financial services and products is you know people just don't go back and monitor them. It's a pretty simple thing, but you know so many people is like it was last time you looked at that 401k. Oh, I have it. You know, I've been meaning to, but it's been 10 years since I rebalanced. How many times have you heard that one? I'm serious, cheryl. What do you think?
Speaker 3:Yeah, I would just reiterate everything Phil said. You know. And and for people out there who think, oh, a plan is so daunting, you know putting together a budget is daunting. Just think about the benefits of GPS in your car you know who going. I just drove down to New Haven to a university I've never been to for an event. Last night I put on my GPS and I didn't have to worry because I had step by step instructions of what I needed to do to reach my goal. And when I got closer to the city, you know, there was an accident. So the GPS gave me an alternative route.
Speaker 3:You know it looked ahead and said, hey, our plan isn't really viable anymore at this point and you might want to consider this for these reasons. You know that's something that people rely on every single day in our country, around the world. Why not do that with your finances? You know something that's so critical to your security. It's not just getting lost, I mean, it's literally, you know, life or death in some cases. So I think if you think about it as a GPS, it kind of makes a little bit more sense and is a little bit less daunting than you know the thought of developing this huge, complex plan. It doesn't have to be complex, you know, just as long as you have a budget in place. You know your goals and then, as Phil said, being able to monitor them along the way.
Speaker 2:Yeah, that's so important. So the next question is about habits. Cheryl, we'll start with you. What is one habit that people can change when it comes to their money?
Speaker 3:You know one thing and I'll say I personally am bad at this a 2020 study by Intuit found that over 60% of people had no idea how much money they spent in the previous month. I think to be successful, you need to understand both sides of the balance sheet. You know what's coming in and you also should know what's coming out, and again, technology can help us with that. You know bank statements, download credit card statements and the credit card companies will even categorize your expenses, and if you look at those you know, maybe once a quarter, and look at what you're spending money on, you'll be more thoughtful about your purchases and your spending habits and you may be able to cut back on some things that you didn't even know, like subscriptions you haven't used for years. You didn't even know you were still paying for. So I think more awareness of our spending habits would be helpful.
Speaker 4:I had so many situations where clients would come in three or four years away from retirement and they'd say, yeah, we need 8,000 a month. I said, oh good, I would always have them bring in their paycheck stubs and I saw they were taking home 10,000 a month. And I said, well, right now you're taking home 10,000 a month. Why do you think you'll only need eight in retirement? Oh, we're saving that other 2,000 a month. I said, oh really, where are you saving it? Well, in our bank. And I said, oh, did you bring your bank statement with you? And they say, yeah, and I said, well, I'm looking at it.
Speaker 4:Over the past year it hasn't grown much. Why didn't it grow by $24,000? Oh, we took money out to buy this. We took money to buy it. So I said, then you really need more than 8,000 a month. Well, over the course of the year we do, but month to month aid is the base, so that as much as people hate budgets, they hate diets. People were afraid to come in. I had so many couples that would say to me we're afraid you're going to pass judgment on how we're spending our money. And I had to assure them my job is not to pass judgment on how you're spending your money. It's to make sure that you can continue spending money at the rate that you enjoy doing it now, and so that's great stuff that Cheryl's talking about.
Speaker 2:And this resonates with me, phil, and it ties into your time segmented approach. You said something really important about the flow of expenses. So often the advice is well, you can spend $5,000 a month. I know for me. I just got a property tax bill and it's more than $5,000 a month. If that's all I can spend this much, how am I going to pay my property tax bill? You have to have some flexibility.
Speaker 4:You have the ongoing expenses and then you have the not necessarily reoccurring, but you have other expenses that hit at different times than just on a monthly basis. And habit wise also particularly for retirees. I mean, what I found was for people who were good savers and accumulated enough money, the biggest habit I had to break was to get them out of that savings habit and into a spending habit. And that was psychologically very, very difficult because they would still have in their budget saving and I'd say to them you're going into retirement, why do you still have savings in your budget? Well, we've been doing that for the last 25 years and I'd say we've got to replace that word with spending. That's what retirement is all about. So that was a tough habit to break.
Speaker 2:Probably reality and it comes back to what you said before is because of fear. I think that plays a huge factor in it because it keeps coming back to that they go. Oh, I knew one person who ran out of money in retirement and I don't want to be. That person Rans out of retirement. So, phil, I know this one. You're ready to answer? What money myth are you trying to break?
Speaker 4:Well, that should be myths. There's probably 100 of them. That'd be another episode.
Speaker 2:Yeah.
Speaker 4:Yeah, I did a webinar last year called Rules of Thumb or Dumb and I think the 4% is a myth because when somebody that retires at 65 and says they're going to claim their Social Security at 70, well then they need more income from their investments during that five years while they're waiting for Social Security to kick in. The 4% rule they may need a 10% withdrawal from their portfolio during that first five years and then, once Social Security kicks in, that withdrawal rate may drop all the way down to two or 3% and then as expenses change along the way. So that's a myth. Like I said before tax deferral, people say, oh, I'm not going to touch that 401k plan until I have to.
Speaker 4:Well, unfortunately, when they have to is when the RMDs kick in, and we've seen so many situations where the RMDs suddenly launch them into a higher tax bracket. It causes Irma surcharges on their Medicare Part B premiums and they're thinking at that point it's too late, I'm in the tax trap, and that's part of what income conductor identifies is. Should we break down that myth of I should always use non-qualified money first, qualified second and Roth last? That's part of the liquidation order analysis we do and in many, many situations we're seeing that people should be taking their qualified money first, not second or third.
Speaker 2:I think that's powerful advice. So you know what's. Oh, cheryl, I almost missed you. What's your money myth? What money myths are you trying to break?
Speaker 3:This might be unpopular, but that financial professionals can predict what's going to happen in the market from day to day.
Speaker 2:Really.
Speaker 3:Are you?
Speaker 2:sure about that.
Speaker 3:Yes, don't ever believe a financial professional who tells you that they're good at they know what's going to happen in the market tomorrow or the next month or whatever. I think we've seen, especially over the past couple of decades, the situation where it doesn't even make sense. I mean somebody, like in Hollywood, could say something and all of a sudden the market goes down, or we have these electronically driven crashes or an unexpected event with a country invading another country that has impact on oil prices and consumer prices. So we don't know. And I think the best course of action is to have a strategy where you don't have to rely on the market performance from a day to day perspective.
Speaker 2:That is powerful. Trying to get my notes in strategy does not depend on it, but it makes me think of Black Swan events which really have a dramatic impact on this. So let's get out the time machine for a minute. So, cheryl, if you could go back in time, what advice would you give your younger self if you knew then what you know now about money?
Speaker 3:I would have. Younger people don't think in terms of retirement as something that's a priority. It seems like it's so far into the future, but the fact is that those years pass very quickly, so I would have started saving for retirement earlier and I would have diversified those savings. A lot of the baby boomers we're seeing coming into retirement now have done what we told them to do. They maxed out their 401Ks, so they're coming into retirement with all tax-deferred qualified assets. And the fact is that diversification is good. We talk about diversification of investments. We should also diversify our saving strategy into different tax-treated accounts so that we will have more flexibility when we hit retirement among those accounts that are regulated by different laws and tax treatments and we'll be in a much better situation to make decisions rather than be forced to, as Phil said, force to do things because of that R&D situation and kind of have just one course of action that we can take. We'll have more flexibility and more options.
Speaker 2:Yeah, that's a unique spin on diversity. I know personally is we have too much of our portfolio in retirement assets and that's having other knock-on effects. So, phil, what advice would you give your younger self?
Speaker 4:Oh, if I could go back 30 years, I'd tell my younger self to buy Apple stock. I love it, but that kind of violates the theme of diversification. Unfortunately, today we don't know what the next Apple stock is. But you know, I developed the concept early on in my career for retirees that I called the 3D diversification plan, where I said you need to have not only diversification across your assets with different asset classes. So everybody understood that kind of diversification, but you also need diversified tax strategies, because tax rules change constantly and what might be the best tax strategy today could be the worst one 10 years from now.
Speaker 4:But I've never seen a tax law change that adversely affected all tax strategies at the same time. So if you have multiple tax strategies, there'll always be a favorable place to take money from. And then the third is to diversify your sources of income, particularly for today's retirees, because most of them over 80% of them don't have pensions anymore. So you need to diversify beyond just social security or beyond just 401k qualified money. You need to have diversified sources of income and that I think for any younger person, they should be thinking along those lines, moving forward.
Speaker 2:Yeah, I think that's so important is and I know that's why people are actually talking about single premium immediate annuities to offset that lack of pension plans that having that guaranteed source of income as a base is. It helps with the fear and it gives people confidence because even if they only take a small amount, but they have a few thousand dollars coming in guaranteed every month, that makes a huge difference.
Speaker 4:And it also gives them more courage to take some risk with the rest of their money Because they know there's a baseline that they can count on. And when me, the advisor knows they need to take a certain amount of risk to meet their goals. Having a good percentage of their income guaranteed then gives them that comfort level to take that risk.
Speaker 2:And a percent. It's all psychological. Well, it's not all psychological, but psychology plays a huge part in this. So, to wrap up, here's the last question is, phil, you can take this one first is what is your number one tip on changing the way we think about money?
Speaker 4:You know my degree's in psychology, so it was a focus on counseling. So most of my answers are more along those lines. But to me, what I try to communicate to clients is that money's not the end. I think people think of money as the end point, but it's a means to the end and it means that you not only meet your needs but you meet the needs of your family and you may wanna meet the needs of your passions and causes. So in my mind there's personal wealth, there's extended family wealth and there's impact wealth. And I think if people would think more holistic and beyond just what they want in accumulating their money, it gives so much more purpose to that wealth accumulation phase of their life.
Speaker 2:Yeah, that's powerful. I love it, cheryl. How about you? What's your number one tip on changing the way we think about money?
Speaker 3:Yeah, I love what Phil just said. I would just expand on that a little bit, in that when you look at money, it is a means to an end and I think people nowadays are so bombarded with, you know, fomo, buy this. You must have that. I think people need to sit back and first, before they even talk about strategy or planning, they need to sit down and have an honest conversation with themselves and say what really brings me joy and satisfaction in my life. You know, and I think a lot of the answers would be things that are totally unrelated to money. That would be, you know, maybe I don't know, like spending time with family, volunteering, going for a walk in nature, you know, reconnecting, and so what are you really looking at? What are you really looking at money to provide?
Speaker 3:I think the answer is basic financial security. You know, as Phil mentions, I wanna feel secure, I want my family to be secure and maybe I wanna be more altruistic if I have the means to help others feel secure. So really defining what makes you happy, what's meaningful in your life, and then what kind of money goals are tied to those items, and really being concentrating on that security versus grabbing the next best iPhone or, you know, making sure you have a new car every year, or something like that. I think that's the most we can ask for from money.
Speaker 2:Now I love it and I think you know that that is what's going to get people to stick to a plan is if it's bringing them joy and value instead of punishing them and hitting them over the head with things like don't get your daily coffee If that's your thing. You know, maybe you get your daily coffee three days a week at Starbucks, you know. Enjoy your pumpkin spice latte instead of, you know, and it's dieting, get back. I don't remember which one of you mentioned dieting, but you know, for me, that's why people don't stick with diets is because they're too rigid and people, can, you know, maybe they want a cookie every once in a while. That's not the end of the world.
Speaker 3:Yeah, and that's why your plan should really be customized and personalized to you, you know, because, like you say, if it's going to make you happy, you're going to stick to it 100%, you know, I'm just not in line.
Speaker 4:People make more progress in any aspect of their life if they have a coach Personal trainers you know people that go personal trainers have better exercise success People. One of the biggest reasons Weight Watchers is so successful is that you're accountable every week to somebody. You have a coach there and it's the same thing in money. You need a coach and the challenge is finding that coach that knows what they're doing and it goes beyond just initials behind their name.
Speaker 2:Yeah, I love it. I love it, so you know. To wrap up, is you know where can people learn more about each of you? Get in touch with you. Learn about Income Conductor.
Speaker 3:So they can go to our website wwwincomconductorcom. We have information on the website. We also have a contact form. So if you want to get in touch with us you know that reaches out to the entire team. So if you'd like to personally connect with Phil and get some more gems of wisdom from him, you can use the contact form to get ahold of us. So we also have a trial where you can try out our software and, you know, see if it fits you and your clients.
Speaker 2:Yeah, and I have to say for you know, especially for the financial advisors, because right now Income Conductor is only for financial advisors. I was playing around with it yesterday, Of course, like everybody do in my homework at the last minute, and it is really interesting and very useful in thinking about. You know, my wife is getting ready to retire, so we've been trying to figure out, okay, what does that look like? I, you know I played around with a couple different softwares, but what I loved is I can tell my wife this is gonna be your income in retirement and this is how the assets. You know, because that's her other questions like where are we gonna run out of money? You know how much can I spend? I need to know what my budget is each week, and I love that. So I encourage people to go out there, check out Income Conductor and give it a trial and reach out to Phil and he'll walk you through it, right, Phil, that's right.
Speaker 2:I don't wanna overstep for you?
Speaker 4:No, and I'll help you and your wife put together your plan.
Speaker 2:Fantastic. So thank you so much for coming on today and sharing your insights. It's been a pleasure to have you both on today. Oh, thank you, tony. Thanks Tony. Oh, you're welcome, and so to everybody. Watching and listening is always. Output a link to Income, conductor and show notes, as well as to Phil and Cheryl's profiles on LinkedIn so you can get in touch and follow them. I know Cheryl's very active with great stuff on LinkedIn all the time and, as always, thank you so much for tuning in to the Get Ready Money podcast. Please remember to subscribe and like this video Until next time.