TPOR PODCAST 0715.mp3: Audio automatically transcribed by Sonix
TPOR PODCAST 0715.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Producer:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
Producer:
Welcome to take point on retirement with your host, Erick Arnett. Erick is a fiduciary and licensed financial advisor who always places your needs first. The experienced team at Tech Point Wealth Management takes pride in knowing they've helped so many pursue the financial future of their dreams. And they can help you, too. And now let's start the show. Here's Erick Arnett.
Erick Arnett:
Hey, good morning, everybody. It's Erick Arnett. Take point on retirement radio. Good morning and welcome, Tampa Bay, welcome Adventure Coast and welcome to the Port Charlotte, Punta Gorda area as well. So happy to have everybody with us today. And of course, we have Mr. Sam Davis with us today as well hosting the show, which is always wonderful. I'd like to just give a shout out and say, hey, you know, take point on retirement dot com is where you can find us that schedule free consultation. You can go to any podcast site that you use and also find us there. And of course, our website is Take Point Wealth Management. Our phone number is 3526160511 serving the entire coastline up and down the Gulf Coast of Florida. And super excited about that and look forward to hearing from you guys. And if you have our questions, if you're listening to the show, you have questions or concerns, you can easily just go to any of those websites in the upper right hand corner. You can hit a little button there. So set an appointment. And really all it is is just setting up a little chat session with me and or you can just give me a call on Saturday or Sunday wherever the show is airing and we'll chat then as well.
Erick Arnett:
But Sam, good morning and I guess we got a lot to talk about this week as it seems like earnings seasons ramping up, the market volatility has in a sense cooled down a bit. I know we still have some volatility out there, but there's a lot of things and reasonings behind it. We're going to give you a market update today. We're going to talk about what is a fiduciary. You know, is it right or wrong to work with a fiduciary? And we're going to play I guess we're going to play a little game, too, and ask some questions. And you folks can feel free to answer those questions. And we also offer you a full retirement plan consultation. We'll talk about that and how that works and why you need to plan right now and the biggest mistake people make when planning for retirement. So a lot of good stuff on the show today. So let's get it started. Mr. Davis, how are you today?
Sam Davis:
I'm doing great, Erick. It's always good to be here bringing important information to everybody in the Sunshine State. You know, we we're in a few different parts of Florida now, and we serve clients all across the state of Florida. So we're happy to be here at a really critical time. We're kind of at halftime, if you will, the midway point of 2022 in really a critical year here in the United States. It's an election year which always makes things interesting. I'm not sure if it's interesting in a good way or a bad way, but it's definitely going to affect everything that we're talking about with regards to the markets policy and the Fed. And, you know, one of the things that we do here on take point on retirement is help everybody make sense of what's going on out there. So, Erick, what's on your mind with regards to the markets and the economy right now?
Erick Arnett:
Yeah, and, you know, some good points there. I just what we do at take point wealth management is we take the lead. You know, we we do it all for you so you can enjoy retirement. And one thing is, it's easy for us to get so focused and so influenced, I guess, and constantly bombarded by all the headlines and and what's going on in the world and the markets and the economy and news. You got to remember that all these news outlets, all these cable channels, Cramer on TV ringing the bell, buy these stocks, all these stocks, all this kind of crazy stuff. It's really a lot of noise. And and it also, unfortunately, it can stir up a lot of emotion. And so, unfortunately, that emotion can sometimes get the best of us as long term investors. And so if you don't have a solid plan in place that has been put in place in is already prepared for times like these of volatility, sometimes those headlines and all that news and all that chatter can get the best of you. And that's what we truly focus on eliminating here for our clients is we take all the emotion out of investing and we take it over for you and we don't include any emotion in our plans or our investing. So and that's what I feel is. Really best. And quite honestly, when just chatting about this, it comes to mind. Sam You know, being an investment advisor for 25 years and by the time I retire, I'll probably be 45 years as an investment advisor.
Erick Arnett:
I honestly, once I get to retirement and hang it up and head down to Costa Rica or wherever I'm going to be, I'm not going to manage my own money. I don't want to do it. I want to find the right team and the right place that aligns with me and let them take it. Because I don't want to have to look at it every day, worry about it. I don't want to worry about the emotions. We know that it's been a rough first half of 2022. It's been one of the worst half's in over 50 years. People are going to start opening up those statements. As you mentioned earlier, we were chatting before we came on the show because those half those annual or those half year statements are coming out and they're here in the second quarter and they're going to be ugly and it's going to stir up some emotion. But you had brought up an awesome you brought a great quote to the table here, which I love. Anything that you talk about when you bring Warren Buffett to the table, I love. But the and here's his quote and and I love it just like I do all his quotes. But the most important thing to do if you find yourself in a hole is to stop digging. And that's Mr. Buffett. I mean, I love the guy. Just keeps it simple, keeps it real, but he makes sense, right? You know, it's not a bunch of all this hubbub and fancy words.
Erick Arnett:
And he's not bringing out charts and numbers and quotes. He's just telling you like it is, you know? And the guy's got a little bit of experience and a little bit of success. So, you know, I love that. Thank you for bringing that to the table today. But, you know, we want to obviously talk about the market, give a little bit of a market update, some of the mechanics behind it. You know, like I said, one thing that we do here at take point, wealth managers, we focus just on the data, you know, what's really behind the scenes and we're watching that every day so you don't have to. And so, of course, markets have been volatile, even though the last couple of weeks it seems like there's been some stability. Stability here in the selling has slowed. We are going into earnings season. So a lot of corporations are going to be reporting their earnings here in the next couple of weeks. There's definitely going to be guidance down. There's going to be no surprise. There's probably earnings have slowed because we know that we have a lot of headwinds. Right. The Federal Reserve is raising interest rates as fast as they can to bring the economy to a halt and even potentially put it into a mild recession because we still have serious supply chain issues. I mean, I talk to all kinds of people from all kinds of walks of life and all types of different businesses.
Erick Arnett:
And I hear the same things. Erick We just can't get the materials, you know? So that's concerning. But I think that, you know, we have to be in a much better situation than we were a year ago or six months ago. So the supply chain issues have to eventually get better and clear themselves up as demand slows. If the demand stays super high, they're never going to be able to catch up and build their inventories. So but we are seeing signs that the supply chain is improving. So that's really good. We are seeing signs that inflation is peaking. So that's really good. Even though inflation numbers came out for June, we're once again hit a record high 9.1% inflation year over year from a year ago. This is a 50 year high. However, that was old news. That was back in June. We're already in July. So we look at current data, current forecast, oil production, a key chart that we look at here and I'm happy to share any of this stuff with with our listeners. You just got to reach out to us. You can even shoot me an email if you want. Erick at take Point Wealth and I'm happy to share this stuff with you. You even get on a 15 to 20 minute chat, share my charts and but a cool thing is, is that a good thing is that drilling is back to pre-COVID levels.
Erick Arnett:
So industrial production of oil and gas. I look at this subindex here and it's so we're back to pre-COVID levels. And so crude prices have obviously gone way up, but we're seeing that they're cooling a bit here. Production is increased and so that's helping quite a bit. And we have noticed that gas prices are coming down a bit at the pump. And so that's going to eventually trickle into every aspect of the economy and hopefully kind of put inflation at bay as we work towards a better tomorrow. But what's happened is with all of this kind of shrinking of growth and shrinking of earnings and and supply chain issues and the Fed raising rates, is the stock market, anything that's been a growth stock has been beat up pretty good. And so that offers us a great opportunity to plan ahead and be long term investors and to take positions in some really great stocks that are very, very fairly valued now and even somewhat undervalued. You know, we look at a growth stock basket that we manage and, you know. You look at the recent price of the stock versus its estimated fair value and you get a price to estimated fair value ratio. And we're at historic lows. I mean, we're at 0.56. Or usually if you have a 1% ratio on that, it means that a stock's very fairly valued. We're at a 50 basis point or a half percent ratio on big names. And so we're seeing growth stocks much more fairly valued.
Erick Arnett:
And so now is a great opportunity to rebalance, reposition portfolios. God forbid you have a bunch of fixed income and bonds in your portfolio, you've already taken a massive hit on those is the aggregate bond index is down almost 12%. But still, as rates rise and the Fed will be continuing to raise rates, you just really shouldn't have fixed income in your portfolio. And we have other ways to hedge the stock market. So, you know, as opposed to that traditional conventional portfolio that you might have had 50% stocks, 50% bonds. And the only reason you're really holding the bonds is to hedge against stock market, even though the bond market has now gone down drastically as well. And that will probably continue as that trend will we see continuing. So we have great alternatives to that. But you know, this week, a lot of earnings coming out, starting to come out. Gas prices are cooling, inflation we're seeing potentially peaking. So what that means is, is now is probably as good a time as any to reposition that retirement plan, get a retirement plan in place if you didn't if you don't already have one. And when I say retirement plan, Sam, I don't just mean, you know, what's my stock portfolio look like? This is a total retirement plan, Social Security. When do I take it? How do I take it? You know, an investment management insurance. So I have long term care, you know, do I have my Medicare set up properly? Taxation, you know, what are my taxes looking like? You know, all of this stuff we take into account, we build out a plan over 30 years.
Erick Arnett:
We test that plan. We throw 1000 different scenarios at it to test it and see how it's going to hold up in good markets, bad markets, high inflation, low inflation combinations thereof. And so we can really, with a good degree of certainty, determine how these portfolios are going to react in good times and bad. And so I think we have a really great process, and it's a process that, quite frankly, once our clients are in it, we never hear the phone ring. And so it's important to have that confidence, that clarity and have a solid plan in place. So if you're feeling a little wobbly and you're not quite sure what's going on, if communication is broken down between you and your current advisor, or you just might want a third opinion, it might be a good idea to give us a shout out. 3526160511 or go to take point wealth management dot com and upper right hand corner. Just click there and set up a chat session with me. We'll just chat for 1520 minutes and take it from there. But the key a key thing, too, that I love to look at is consumer sentiment. And what we we follow this chart all the way back to the seventies and we can see where the consumer sentiment index is at a historical low.
Erick Arnett:
I mean, it hasn't hit this low. You'd have to go all the way back to 1981, 1975, the 070809 period. And we're seeing where it's broken even lower than that. So and that is a key indicator to positive. Timing for stocks. So I think we're somewhere when things just feel the worst and we feel the most awful, that's when it's a good time to to start looking at stocks. And you won't know if it's a good time to get invested in until you look back six, seven, eight months from now. But now is the time to be thinking about getting those portfolios rebalanced, get that plan in place more than ever, and get a really solid plan, well diversified portfolio, one that's going to hold up in all different times. But some key data there. We look at it just wanted to kind of I know I've been blabbing away here, Sam, but it's just some key. I just want people to know we look at the key data, things behind the scenes. We don't pay attention to all the news and the headlines. And, you know, there's so many talking heads out there that get paid just to talk. Right. And so and we know how that goes. So just super important to be with an advisory team, a fiduciary that can truly take all the emotions out of investing and stay focused on the key data and get you to and through retirement successfully.
Sam Davis:
Yeah. And we definitely want to talk a little bit about what a fiduciary is on the show today, because it is important to trust someone if you're going to trust someone with your money that you've worked so hard for, you want to make sure that they have your best interests in mind. And that's exactly what a fiduciary is, right? It's someone who's on the same side of the table as you. In fact, we pulled up the definition online from Investopedia. You can read it for yourself, but we'll give it to you here. A fiduciary is a person or organization that acts on behalf of another person, putting their client's interests ahead of their own with a duty to preserve good faith and trust. Being a fiduciary thus requires being bound both legally and ethically, to act in the other's best interests. So Erick, when you think about being a fiduciary, what are the main benefits for people working with the fiduciary?
Erick Arnett:
Yeah. So, you know, speaking from experience and being in the industry a long time, I have a lot of gray hair here. You know, I've worked in this industry just about going on 25 years and I've worked in all different aspects. I've been an analyst, I work at broker dealers, I've worked at hedge funds, I've had my own practice for years now. And so I've seen all of the different, I guess you could say, business models out there. And probably about ten years ago I realized that the one for me and the best one for clients out there and truly caring about folks and building relationships was the fiduciary model. And so I took that model and that model is where fee based. And so if your account is going up, our business revenue is going up, you know, we're mutually aligned with our clients. We treat their money as if it's our own, it's that important to us and we get nothing on the front end. So we don't we're not just getting paid a commission and then we're going on to the next sale. Unfortunately, this industry is a very sales driven industry. And so I remember when I first came in in the industry, I hated it. It just drove me crazy. It was like I was going through all the sales training and how to sell people. And, you know, it just wasn't for me. It wasn't my personality. I didn't feel right about it. It's like, Are you coaching me on how to basically influence people and close them? And and so I knew I was a circle and a square peg, let's say, you know, and it just wasn't a good fit for me.
Erick Arnett:
And so this business model is just, I think, the best and what's best for most folks out there. If you're a self doer, you know, maybe the brokerage model is good for you. But remember all those big commissions, they're not Wall Street didn't get those billion dollar buildings and those billion multimillion dollar salaries, you know, because they were just so fair and they were so concerned about the main street folks out there. Right. So they're there to make money for themselves. And that's something that I just was never comfortable with. And so you put it nicely, the definition is pretty clear, but I just look at it like this. We sit on the same side of the table as you. And we bring the best solutions fee based to the table completely open. We have complete open architecture so we don't have to sell a specific product. You know, whatever the company is pitching, we have a complete open architecture so we can truly design and do what's best for the client. So I think that's super, super important. We don't push products. What we do push is preparation and planning and you have to have a plan in place. I say this over and over again ad nauseam, and people even listening to the show are our listeners that listen on a regular basis. They probably get tired of me saying it, Sam, but it's just so important if you don't have that plan in place, you're really just kind of out there floating around and and don't truly know where what your destiny is or what it's going to look like.
Erick Arnett:
So super, super important. We don't push products, we push plans, you know, and we have confidence in our plans. And that's why we don't charge you on the front end, you know. So we have 100% confidence we test those plans. And and they're also, you know, they're not set in stone. I mean, we we always are constantly we can change those plans and and manage them in a way in which we can move and maneuver in different cycles and economic cycles. But we work for you while the cat, while a captive advisor works to serve their company. So we're not a captive advisor. We don't work for any big corporation. Take point. Wealth Management is our locally owned and veteran owned investment management firm. We do partner with the big guys, Brookstone Capital Management, to bring solutions to the table. And we have a back office of certified financial planners. We have attorneys, admin, staff, we have all the tools. That's the cool thing about being an independent these days, which was different ten, 20 years ago. As an independent, you still have the support of a large firm, and that's what we are. We're investment advisor, representatives of Brookstone, Capital Management, big firm, hundreds of employees, great solutions that we bring to the table. So even though we're a local financial planning practice, we use the tools and we have great backing and support behind us.
Sam Davis:
Yeah, that's great. And I'm glad you brought up fees a little bit ago because and we don't need to name names, right? Because all you got to do is go to any major city and look up at the biggest buildings. And those names are on those buildings. And and they were built because of the fees that they're charging on on AmErickans money like you. And so it's an important time now, especially with the market being the way it is, to make sure that you get as many of those fees out of your portfolio as possible. Make sure you get your expense ratio in a better spot so that you can take advantage when things start to come back, right?
Erick Arnett:
Yeah, absolutely. I mean, that's there's really three key things that I like to focus on when I'm going through the planning process and evaluating folks current plans or current portfolios. And the number one thing we first look at is fees and expenses. And quite often the client or the prospect isn't even really aware of what those are because they can be hidden even. And so we extract that and we show you and so make sure you're getting value for what you're paying for. And then we look at taxation and how taxation is eroding your retirement plan. That's really important. And then we look at what's even more important is the risk of the portfolio. What type of risk are you taking to achieve the returns that you're getting? So if you're not getting decent returns, but you're in a very risky portfolio, something's wrong there. So we look at risk reducing expenses in tax sensitivity. And those are really three main things that we focus on, even though the plan encompasses a lot more. You know, we've got to get control of those because those are the silent killers and there are so many hidden fees out there. So you've got to be aware. So ask your adviser or your broker if you've got one currently. What exactly am I paying? Not only my internal costs, but what are you charging me as well on top of those internal costs? What are my mutual funds costing me? You know, do I have variable annuities? What are all the fees? And those we see variable annuities as high as four and 5% and fees. Know. So how are you going to get ahead when those companies are making all that money and you're not so keeping those fees at a minimum utilising tools. There's so many great tools out there now that we can utilise that can keep those expenses really low. And that's super important not to have that drag on your retirement plan and your portfolio.
Sam Davis:
Yeah, we're going to talk about variable annuities a little bit in our game of right or wrong in the next segment. But with just about a minute or two left here in this first segment, we want to remind people we bring this up at least once a month here on take point on retirement, helping people avoid that biggest mistake that we're seeing people make when planning for retirement, because there's people driving around right now today and they've got their half a million dollars in their IRA or their million dollars, whatever, their quote unquote magic number is. Right. And they feel like they're set for retirement. But what they don't realize is that they've got all that money in a tax deferred account. And retirement is really more about income than it is about building up that one big pile of money. Right. So the government is your partner in retirement when you've got all that money and in a tax deferred bucket and you strive to make sure that people have a balanced portfolio in these different tax buckets. Erick So with just about a minute left, can you explain people, explain to people how they cannot make that mistake and the changes that they can make?
Erick Arnett:
Yeah, absolutely. I mean, there's basically three key buckets that your money can be in currently. You know, it can be in a taxable bucket. It can be in a tax deferred bucket, which is what you just alluded to with the four one K's and the IRAs. Or it can be in a tax free bucket. And so. Unfortunately, what we see with probably 95% of people that we work with is they have really nothing in their tax free bucket. And so with taxes, deficits, everything potentially arising in the future. And so they can increase taxes, they can change the rules. And so if we're in a huge deficit in our country, is spending too much money, where are they going to look for those for those for that revenue? And so we have strategies that can get you into or slowly start moving you into that tax free bucket and get Uncle Sam out of your wallet. You currently have if you have money in tax deferred, which most of us do, you know, we've been told just save, save, save, put the money, money away in your IRAs and your four one K's. And what we don't realize is we're also we've got this silent partner with us, Mr. Uncle Sam, and he's going to be able to tax that as high as 30%. 20%. Who knows? 40, 50% historical tax rates back in the seventies, sixties, fifties were as high as 50, 60, 70%. So we don't know where tax rates are going, but I'm going to guess they're going to go higher than they are currently. And so we've got to get the tax man out of your partnership. And so we have strategies for that.
Erick Arnett:
And if you don't have a Roth, let's talk about it. There are some rules about Roth conversion. If you don't or you don't have any, you've never considered life insurance or a life insurance retirement plan. We have some amazing I mean, the tools and the products and the strategies that these insurance companies have put together these days are really awesome. And so you just owe it to yourself to just walk through it and get the education. You don't have to do anything. You don't have to implement anything. No one's holding a gun to your head and saying, Oh, you got to buy this. In fact, I'm probably I've been in this business almost 25 years, Sam. I'm probably the worst salesman on the planet. I'm horrible at it. So I just want to educate folks and I want people to open up their minds. And I want people to I don't know if the word is forget or or move away from that conventional wisdom that's been drilled into us. It's a lie. It's all a lie. And so we've got to flip things around and look at things differently and forget about conventional wisdom when it comes to investment and retirement planning, especially in this time, in this day and age, we've we've got to get much more creative. And so we have the tools. We have the strategies, and you just owe it to yourself to take some time and look at it. And I think we've got to go to a break here. And so I'll pause there. But I have a cool story to tell you when we come back.
Sam Davis:
Well, that's fantastic. We'll hear that story from Erick when we come back from the break. You can give him a call at 3526160511 or visit them online at Tech Point. Well, you're listening to Take Point on retirement.
Producer:
You're listening to Take Point on retirement. To schedule your free no obligation consultation visit take point on retirement dot com. At Take Point Wealth Management. We know you've worked hard to earn your money and you've worked even harder to save it. When it comes to wealth management and planning for retirement trust, Erick Arnett and his team of experts who have been helping individuals, families and business owners find financial freedom for more than 20 years. Let us help you protect and grow what you've worked so hard for. Schedule your free no obligation consultation now at tape point wealth dot com.
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Producer:
Welcome back to take point on retirement schedule. Your free financial consultation now at take point on retirement.
Erick Arnett:
Hey, welcome back everybody to take point on retirement radio. Thank you so much for listening. Adventure Coast, Tampa Bay and up and down the Gulf Coast, Port Charlotte, Punta Gorda. So glad you guys are listening today. And this is the show for you. It's an educational show. Please reach out to us any time you can. Call us at 3526160511. We'll answer your questions and concerns. You can go to our website, take point wealth management dot com. And in the upper right hand corner you can just click a button there and set up a 15 minute chat session with us. Or you can go to take point on retirement radio, which is our podcast website, or you can also listen on any of your podcast stations and we'll be right there for you. So I guess, Sam, I in the first segment I want to I was talking about all the different tools that are available out there to get your money into a tax free bucket for long term retirement planning and kind of a cool scenario and a cool thing that we've done. We did recently. I thought it was a cool, really cool thing to share with the listeners because I think there's a lot of people out there probably in the same situation had had a had an individual she's I think 72 years old. And she came to me and she's like, look, you know, I have this IRA, roughly 500,000 IRA. It's not really growing a whole lot because of the markets and the volatility. And she had.
Erick Arnett:
And right away I grabbed her statement and I said, Well, ma'am, you've got like 50% of your portfolio in fixed income. And so the last two years you've done nothing but lose money in that whole portion of your portfolio. And by the way, you've been paying fees on it. And so just not the time. And it's a shame. It's really a shame that people out there are in these portfolios and their advisors or brokers or whoever they're working with hasn't made some shifts there or given them some alternatives to bonds and fixed income. Because, you know, we saw that coming three years ago where when rates rise, prices of bonds go down. And so if you're holding bonds and your mutual funds, you know, you might not even know it. They've been losing value anyways. It was really cool. She's like, Erick, I don't want I hate these RMDs. I don't need them. I'm doing fine with my pensions and my other investments. I hate having to take these RMDs. And I asked her, I said, Well, what is what is your plan for this money? And she's like, literally, I'm just want to grow this and leave it to my daughter. And so we were able to transition that IRA into a life insurance retirement plan and so and utilize the RMDs internally to basically purchase the life insurance. And so and she automatically, the minute you sign up, you get a huge leverage of death benefits. So just as an example, and this isn't you know, this isn't real data, but I'm just giving you an example.
Erick Arnett:
You might take 300 grand and instantly get a 400, 500,000 death benefit depending on your age and everything else. So in super simple underwriting, you ask a few questions on the phone and you're you're in. And so and these have good growth rates. And once the money is in there, it grows tax free and then it goes to your children tax free as a death benefit. So that's just one process, almost like a Roth conversion of slowly converting her IRA into a tax free bucket. So you're utilizing all of the life insurance tools that are out there. We can custom design a life insurance plan for anybody. I mean, it's amazing. Back in the day, you just had kind of these plain vanilla plans, but now we can almost customize them and build them any way we want. They give you the kind of give you the the chassis or the body per se, and you can kind of add all the tools and things that you need to to for specific clients goals and needs. So just a super cool example I wanted to share with folks, but we do have the answers. We do have the solutions to get you out of that taxable equation and get you more into that tax free bucket. So just wanted to kind of follow up with that, but I guess now we're going to play what I like and love, so hopefully our listeners out there will play along with us. Right or wrong?
Sam Davis:
Yeah, we're going to do a little right or wrong. We're going to see if these statements are right or if they are wrong, because there are a lot of misconceptions out there, especially when you get into finances and retirement. We understand that it's it's complex for people out there. So we've got three statements and I'm going to read them. And then Erick is going to let me know if that statement is right or if that statement is wrong. So you ready, Erick? Let's do it. All right. Statement number one, it could cost you as much as. Five and one half percent to buy a mutual fund from a stockbroker that works at a bank.
Erick Arnett:
So I believe that that is right. So we were talking about that earlier. You know, mutual funds, especially depending on where you're purchasing them from or who you're working with. There's classes of shares that have big upfront charges. And so you easily if you invested $100,000 into a mutual fund with a bank or a brokerage firm, you could easily be starting with 95,000. Know. So you're already medically in the hole and so you've got to watch out for mutual funds. We're not a big fan of mutual funds at all. Doesn't even matter if you have 5000 to invest or 5 million. Not big fans of mutual funds. There's so many other alternatives out there that are much better, we believe, for our clients.
Sam Davis:
All right. Absolutely. So statement number two, a variable annuity involves market risk and can lose account value.
Erick Arnett:
Yeah. So this is the this is the thing about variable annuities is one as the fees are crazy 3 to 6% easily in these products and there's because the underlying investment in a variable annuity is a mutual fund. And so those are in the stock market or in the markets. And so you've got the volatility, the ups and downs, plus the high fees. Unless we're in a bull market, which I think the bull market is over for a little while, where unless you're just in this bull market where everything's just raging and heading higher, how the heck are you going to keep up with five, 6% fees plus the market's going down. I had a client prospect come in off the show a few months back and it was tragic. I mean, she had no idea what she was even in. She's been in it for years and she just thought, well, it's great. Every time I get the statement, I see it's increasing. But now she's getting slaughtered because the portfolio is going down as well as all the fees on top of it. Plus, think about this. She's a retiree. She's taking income from that portfolio. So this is devastating. I mean, devastating. We're talking about hundreds of thousands of dollars evaporated out of that retirement plan for that one specific person that I was talking to. So I've got to be careful with the variable annuities. Very rarely are these, I think, appropriate for investors. There's so many other alternatives and great things out there and, you know, super high fees and very, very volatile. So there's no they there's some guarantees on what they call an income rider, which is not real money. And that's what people get kind of soaked into, is like, well, I've got this guaranteed income rider, but that's not a lot of fun. If they say after a few years, hey, your principle is basically way, way down, but give you this income payment for life if you'd like. And that's how they that's how they get you. So you've got to be super careful with that.
Sam Davis:
Yeah. So that is right. A variable annuity does involve market risk and it can lose account value statement number three, also about variable annuities. Is this right or wrong? A variable annuity has 3 to 6% in product fees and is essentially a mutual fund wrapped inside an annuity.
Erick Arnett:
Yeah, so I guess we pretty much already answered that. But unfortunately, yeah, I mean, the underlying investment mechanism is, is mutual funds. And so, you know, with high, high fees. And so even if you had bonds in there, you're getting creamed right now. So and more than likely, this is what you don't want to have. This is my biggest concern, too, is like if people don't look at their portfolios and get some second or third eyes on it to reevaluate things, let's say when this market does start to climb higher and get some traction, they're not going to catch the upside of the market because they're going to have this huge drag on their portfolio. So how are they going to recover? We know that most of the people out there have taken losses if they're if they're fully invested, especially in a variable annuity. So when things do recover, how are you going to recover? It's going to be very difficult. If you have those major drags, you've got to cinderblocks tide around your ankles right now, you know, and you're in the water and so you're going to be struggling. So that's a big concern for me. We've got to take charge. We've got to take point and we've got to change things now and get things on track.
Sam Davis:
Yeah. And folks, I think it all kind of just comes down to, you know, you deserve to put yourself in a situation where your money is working as hard for you as you worked for it. Right. And Erick, you said earlier in the show, like there will come a age, you know, that you will reach, that you don't want to have to worry about your money anymore and you will entrust a fiduciary to take care of things. And a lot of people out there are are at that age right now and they need help and what take point wealth management can offer is a comprehensive plan not just the investments, but helping you build that income plan. So all your different sources of income, what you take from your portfolio, your Social Security, any pensions that you have, any fixed income, any fixed, fixed indexed annuities that you may have, that kind of help provide you income as well as helping you reduce all those things that cost you money in retirement, like taxes and Medicare and all of those sorts of things as well. So Erick, if people want to get in touch, how do they get in touch with you? What's the process like when they initially start meeting with you and they need to get a plan in place with take? Wealth management.
Erick Arnett:
I mean, the easiest thing to do is if you're in your car or you even sit at home, pull off the side of the road, take that little phone you got in your hand. It's called a smartphone. And you just go into the little search window there and you just all you got to do is type take point wealth. Our website will pop up. All our information will pop up. You just click on there and you can set up a consultation right there on the website or you can give us a call at 3526160511 and just reach out to us and we're happy to chat with you and set up some time to talk with you. Also, go to the website if you want to just go to the website. You can get all the information there, but super easy to find, you know, and if you if you don't get us on the phone, please leave us a detailed voicemail with your name number and we'll get back to you as soon as possible, because more than likely, we're on the phone chatting with other folks. And so one thing that unfortunately happens, Sam, is that people will call in. They'll get our voicemail, they'll leave a voicemail, and they won't even give us their return phone number. And so we don't have a system that has caller ID, so please leave us your phone number and we're happy to get right back to you.
Sam Davis:
Yeah, happy to help anybody who gets in touch again. That phone number is 3526160511. You can also find the phone number on the website take point wealth dot com. And also the show you're listening to take point on retirement is available wherever you listen to podcasts. If you missed an earlier part of today's show or if you missed last week's show or any week you can find take point on retirement wherever you listen to podcasts and start learning more about how you can improve your situation. So Erick, we know you're a fiduciary. You can help people with comprehensive plans and it's really important for people to have a plan right now because whenever you're going into anything, you want to plan your work and work your plan, right? You know, you may be able to start today if you do it by yourself, but how many times in life are you better off if you do things by yourself? Right. I like to say if you want for the best for yourself, you can't do it by yourself. You know, if my car needs some repair work done, I'm going to be out there for a week trying to figure out what's going on. I'm much better off seeking help from an expert, or if I need to remodel my bathroom, I'm not going to do it myself because I'm not going to get all the tiles in the right place. There's going to be gaps in my floor. And, you know, just like with with planning for retirement, you don't want gaps in your plan. Right. And so when people get in touch with you and and they start working with you, you know, you've said before, you know, you get a plan in place and then the phones, the phones not really ringing, right?
Erick Arnett:
Yeah, exactly. I mean, you know, it's a process and we're happy to take the time that it takes to bring you through that process and truly educate you. You know, we don't want to move forward. We don't want to do anything until you're 100% educated and understand what it is that your plan needs to do and is doing so super, super important. But it's it's it's a it's an easy process. It's an educational process. We do all the work for you. All we need is a little bit of time and for you to share a little bit of data and information with us, and then we'll go to work for you. And, you know, listen, I understand there's a lot of people out there kind of doing it on their own. Trust issues are at an all time low with investors and retirees, and that's just an unfortunate thing. However, you know, we'll slow you, walk you through it and educate you. And guess what? We're going to provide that plan 100% free. You know, it's it's got more than a $4,500 value to it. And we're going to do all that planning for you a lot of hours and a lot of work and deliver that plan to you and walk you through it. And guess what? You can take that plan and walk with it. You can do whatever you want with it. You're not entitled or you're not going to you don't have to work with us.
Erick Arnett:
No one's going to hold a gun to your head. And so you have to implement our plan. And by the way, you might want to just test and see what you're doing and if it's working and if it's going to work long term. We're happy to test your current plan. Maybe you have some ideas of your own and that's fine. Let's test it. Let's look at it. Let's let's bounce those ideas around. And just like you said, if I try to paint my own house or tile my own flaws, I mean, it probably makes sense for me to bring an expert in to kind of help guide me. You know, we can do that as well. So and obviously now more than ever, it's super important to get that that reevaluation, because times have changed. Hey, listen, the markets, the world, the economy, it's very dynamic. It's always changing. And we're full students of the game and we're always entrenched in it. So. Why would you even want to be? So it'll take time to build trust. And that's okay. We're fine with that. Heck, we've had as many as six and ten meetings with folks before they come on board. Whatever your speed is, that's okay. We're looking to build trust and build a relationship with you long term and bring satisfaction and service and achieve your goals.
Erick Arnett:
And that's our main purpose and what drives us every day to come to work and and truly help folks. And, you know, we see a lot of the mistakes that are being made out there and we see them every day. And unfortunately, when you're trying to do things on your own, you know, there can be mistakes made and emotions involved. In fact, there is a study out there. We always bring it up. It's called the Dao Bar de Alba. You can Google it real quick on your phone if you're listening and look at it over. The average investor underperforms, the S&P 500 by more than 50%. So, I mean, if you're doing things on your own, chances are you could be making some mistakes. Maybe not. You know, I'm not saying that everybody out there isn't killing it. There might be some people out there just killing it. But it also takes a lot of time and a lot of effort. And I'm not sure you want to be sitting behind the screens during retirement. So if you're one of those people that don't have the time, the inclination, and, you know, you'd rather have a team approach, then please give us a call or go to take point wealth and just click that button and upper right hand corner. We're happy to get started with you. But, you know, obviously, more than ever today, it's super, super important to get that plan in place, test it out.
Erick Arnett:
And and once you truly understand what you're doing, what we're doing, you have the confidence and the clarity. You know, we've already positioned our portfolios and our retirement plans to weather the storm in 2022, back in 2021 and 2020. So, you know, our clients are the phone isn't ringing, you know, and we reach out to them and keep them updated, apprised of what's going on when we're making changes. But, you know, when they're confident and have that clarity, they're not worried about it. And so think about it. We've had one of the worst first half's in 50 years and our phone doesn't ring. So it's it's super important, I think, to just get a second set of eyes on things now more than ever. And we've been blessed to be joined by a guest and host of the show here. Mr. Randy Woodruff, CPA extraordinaire, has joined us. Thank you so much for joining us here in the second half of the show. Mr. WOODRUFF. And I think that what we see is unfortunately right, a lot of mistakes are being made out there. And, you know, Randy, you've been working in the taxation for close to 30 years or more. What are some of the mistakes that you're seeing and what are some of your concerns right now in this current economy and this current environment?
Randy Woodruff:
Good question. You know, one of the things that we have talked about on prior shows, too, is that when people are putting together their personal balance sheet, personal financial statement, to take a look at where they're at in life, what their personal net worth is, I think that when they prepare these statements, there should be a line on their for future tax obligation because so many people have their wealth tied up in tax deferred accounts for one K plans, IRAs and those kind of plans that are tax deferred. And so you have a future liability hanging out there that's no, that's not listed anywhere. And so that people it's very and not just for tax deferred accounts, but some sometimes tax deferred assets. You may have we've all heard that you can sell your home now. You may have to sell it for at least 20 years now, or as long if you're married in two years or gains under half a million dollars there, there's no tax to pay. But what if you sell real estate? What if you sell stocks that you've held for a long time? Here again, your personal balance sheet looks like you have this certain amount of net worth. But when you take a look at the tax costs that you're going to incur, when you go to sell those assets, that's a liability that's not being posted anywhere. So I think it's really important for people to as they're evaluating where they're at and before they get to retirement, take a look at what their assets, how much are tax deferred, how much have a potentially big significant tax liability tied to selling those assets and factor that in to what your true net worth is going to be in retirement?
Erick Arnett:
Yeah, super great points. And then when you're sitting down with clients, tell us a little bit about just kind of I guess when a new client comes to take point and we're doing a tax evaluation or we're setting up a new client really looking at their tax situation, how is that? Talk us through the process there and what you're looking for in an initial consultation. And then also what I see just by watching you work with our clients is that nine times out of ten there's been some mistakes made or some things overlooked. And hey, look, there's a lot of CPAs out there, a lot of investment advisors out there, a lot of doctors, everything, and they're all great. People. But guess what? Sometimes we might be missing something. And it's not my fault. Not the only thing we're doing wrong. It's just that maybe we just missed something or we weren't educated like somebody else was, or someone didn't have a strategy that we were aware of. And so one of the things that I've seen with Randy on our team and as a CPA and working with our clients, is that more often than not, he's able to see some of the mistakes that have been made, even sometimes go back and make amendments. But you bring up a really good and almost, I guess, disappointing or depressing kind of point to guess what the more gains we make in the better things are. I guess Uncle Sam gets more too, right? So because the more we make, we go up into these higher tax brackets, right? I mean, so share with us kind of what you're looking for these days and what's your biggest concerns are and kind of walk us through your process a little bit.
Randy Woodruff:
And one of the things is you were setting up the question there that I've seen happen on several occasions. I've had clients that have come in to the office and they've come in through take point or just come in through the CPA firm. And we're talking about their investment portfolio. And they've done really well over the last five, ten, 15, 20, 30 years and always made steady income. And I look at the returns and I see some significant capital losses. Sometimes there's six figures, sometimes they're multiple six figure capital losses and returns. And I go, Well, tell me about these losses. And sometimes I've had some puzzled looks. We mean losses. I go, Well, you've got 175, 200 or more, 100,000 of losses here on the return we're talking about, like you've actually taken some losses in some kind of investments, you know. And so I think that that people need to be taking a lot more active approach to their investing, because I said several instances where clients didn't really have any idea that they had these losses sitting on their return, they actually lost money, not just paper gains and losses in the market in terms of how it moves on a daily, weekly or monthly annual basis, but actually harvested these losses and now they're real and sitting on the returns for to be taken off in the future. So I think it's going to take point.
Randy Woodruff:
We want to make sure our clients are actively engaged with us in this planning process, not just the planning, but the implementation and then the ongoing monitoring of it. And so with that planning process, we want to make sure that as a new client comes in into into take point, that we we take a look at the assets that they have and not just take a look at what they're positioned in the market in certain kinds of asset classes. But we may we may think that it's better, better for them to begin to transition in their other asset classes to rebalance their portfolio here. Again, that may come at a cost or it may be losses, but it's good that we can take a look at what those are, we can quantify what those are, take a look at the tax returns run scenarios and see what those are going to look like. And so that way I need to rebalance my portfolio because I'm too heavily weighted in one area and that area is starting to fall out of favor with the market or with the street. So I need to go ahead and begin the shift. And we can we can talk about what those tax consequences are and run some scenarios we may want to start taking taking all of that loss in one or gain one particular year, maybe spread it over two years, because depending upon your income, you may be able to have some capital gains and not pay any taxes on those capital gains, depending what your income is.
Randy Woodruff:
We can look at all those strategies, run the run the scenarios and see how it's going to affect your tax return for that year. So again, we just don't take your returns in return, your statements in, your accountants in and just start making moves. We want to take a look and have a conversation with you. How are these moves going to actually impact you from a tax standpoint? That was no surprises. I think many times over the years. It happens lot with mutual funds and these mutual funds, especially when times are good, they take they they rotate the portfolio, have these big capital gain distributions that go out to the shareholders. They have no idea. They get bounced up in higher tax brackets on their other incomes. It makes your Social Security taxable. All different kinds of things can happen that that there's no they're not aware of. So we want to make sure that if we do make movements in your portfolio, we know what the tax consequence is going to be and you know what the tax consequences are going to be. So you're not surprised come April the 15th?
Erick Arnett:
Yeah. I mean, you bring up a key point and something that comes to mind for our listeners. If you're in a non IRA account or non what we call a non qualified account, if you have investment an investment account that's not an IRA or 41k and we've just had one of the worst first half's in 50 years. If you're an advisor or you're a team or your accountant or your tax advisors and saying, Hey, let's look at your statements, let's look at your portfolio now and even do some tax loss harvesting. And that's one thing that you and I do with our wealth management clients every year is we sit down with them in November, December and really evaluate the portfolios and say, hey, we could quite easily harvest these losses, still keep you fully invested and move you along in a different strategy. Because there's so many like kind investments out there, we can sell one thing, take the losses and get you immediately reinvested in the market. But there's ways to take advantage, unfortunately, I guess, of the losses that you currently have in your portfolio. And so that's one of the things that I think is so important why I love working with. Cpa and having a tax adviser on our team. It's not just me. It's also an adviser, tax adviser that they've been working in the field for for 30 some odd years. And we're evaluating the whole big picture and we're taking advantage of those tax strategies to better support your long term plan, because more money in your pocket, less pay. And Uncle Sam is real money. It's real dollars, you know. And so super, super important, I think, to have that total package that I think we deliver here. So I think we're running out of time here in this segment. And Sam, I'm going to let you kind of take us home here, but just love for folks to reach out to us. Lots to talk about. Lots to go over. And we're waiting for your call.
Sam Davis:
Yeah, absolutely. And you can give Erick, Randy and the team over at Tech Point Wealth Management a call at 3526160511. That's 3526160511. Or find them online at take point wealth dot com We'll see you next week on take point on retirement.
Producer:
Thanks for listening to Take Point on retirement. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets, to schedule your free no obligation consultation visit, take point on retirement, or pick up the phone and call 3526160511. That's 3526160511. Investment Advisory Services offered through Brookstone Capital Management LLC become a registered investment advisor team and take point. Wealth Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.
Producer:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer. Registered investment advisors and investment adviser representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interests of our clients and to make full disclosures of any conflicts of interest. If any exist, refer to our firm brochure, the ADV two A Page four for additional information. Any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by BWR.
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