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Video Transcript
Joe 00:22
Pittsburgh, you’re watching On the Money with the man I call BQ. Brian, I want us to talk about, I’m a history guy. Yeah, we’re making history. We are not in a good way. That’s right. And so, I’m gonna rattle off some stuff. One of the things that just alarms me, and we see this all the time in the business, that we’re in debt, that there are good markets and bad markets. But the geopolitical events that are happening right now are just history making event history making let’s start with the first war in Europe in over 70 years. And yet, how many portfolios are you seeing from folks calling in off the show? And they’ve got 401K money and IRA money heavily allocated into the international growth? Right.
Brian Quaranta 00:59
That’s right, that’s right. Heavily, yes.
Joe 01:01
You’re looking at inflation that has been running rampant. We haven’t seen moves. It’s the worst bond market since 1981. And the Fed has made a mandate, they will beat this inflation and they’re raising rates. And on that point, the last time they met, not too long ago, they raise 75 basis points, three quarters of a percent. BQ, the last time they did that I was a senior in high school, right. It’s history making movement.
Brian Quaranta 01:26
I know. By the way, I was a junior in high school.
Joe 01:28
I know. Mid 90’s boys, I love it. My son just graduated high school. Yeah, this one got me, four years ago he’s a freshman walking into the freshman building. I drove him, right, because he didn’t have a car. You know what our national debt was four years ago?
Brian Quaranta 01:43
What was it?
Joe 01:44
20 trillion. Know what we’re at today?
Brian Quaranta 01:46
What is it?
Joe 01:46
- In four years. There are so many geopolitical risks that are coming down the line. And I think the modern retiree, especially in Pittsburgh, sophisticated investors, but just kind of got comfortable hitting an easy button on investing.
Brian Quaranta 02:00
Well, when the markets going up for as long as it was people think it’s easy this act, it’s never this easy. Never. When you see kids starting to put their college money that they’re getting from their grandparents into Robin Hood and making a lot of money. It’s a good time to probably exit. You know, Warren Buffett, most people don’t know this, but he hasn’t bought anything probably in the last, I don’t know, five years, eight years, somewhere around there. It’s been a long time, Berkshire Hathaway shareholders were getting upset that he wasn’t buying anything. Do you know what he’s doing right now? He’s buying like crying like crazy. He’s buying like crazy, because he waits for times like this. So many people are not Warren Buffett, though, right? They do the opposite, right? Do the opposite. And that’s where people get themselves in trouble. And these rising inflation rates, bad bond markets, this is bad stuff for people’s portfolios, because typically, when we’re looking to hedge risk, and you know this, when we’re be dealing with retirement dollars, we have to have a way to hedge risk for people, because our clients, because we’re dealing with those that are approaching retirement and every time we can’t afford to lose large sums of money for them. And we have to be able to protect them from that. And these folks, what are happening is when they’re losing money, they may have to delay retirement, they may have to go back to work. And this is not where we want to be. The question is this, and nobody’s talking about it, but this markets really bad, I mean, could we start seeing 201K’s again?
Joe 03:14
I hope not.
Brian Quaranta 03:15
I hope not either, because that was devastating to people, absolutely devastating.
Joe 03:19
They had to stay in the workforce longer. That’s right. You look back at the history. And I think this is important to point out when you are giving me some stats. I love this. So, we looked at some target date funds. You talked about the easy button, you know, everyone in the 401k I feel has this target date fund now. Yeah, yeah. Right. Do you know right now we’re mid-year, right? The 2025 targeting that’s 2022. We’re three years away from this. Yeah. Is down over 14%. That’s right. These folks are three years away from walking out and retiring. Yeah. And they’re down almost 50% mid-year, right. Then you go in and look at 2030 fund, that’s people getting ready to hit those retirement zones, right. They’re down over 15%. This market at everyone managing their money the same way. There are so many concerns because of the history and where bonds and stocks are both feeling this correlation together. What is the current bottom retiree in Pittsburgh to do? Well,
Brian Quaranta 04:09
I had somebody come in with a 22 retirement funds down over 20%. Now, here’s what we got to remember; mutual funds are a business. Yeah. So, what happens when you have all these target date funds out there? You all these companies have a 2022 target fund 2023 2024. So, they’re competing on return? Correct? Right. So, what happens when there’s a commodity, it becomes a commodity, and these funds are probably taking more risk than others to try to increase return. But what the investor was told was that, hey, rather than trying to figure out what to choose within your 401k, just choose a date in which you want to retire, and we’ll make sure that that portfolio rebalances along the way, in the hopes that when you approach retirement that that portfolio is more conservative. Now, I don’t know about you, but a 2022 retirement fund that lost over 20% is not conservative, not at all. Somebody’s losing 20% Right before they retire. What we have learned from statistics is that when people retire at the top of a bull market, there’s a higher probability of running out of money. And as you approach retirement, when you’ve won the game, when you’ve accumulated enough money, there is no reason to take a large amount of risk anymore, it becomes all about principal protection, because the losses will hurt you more than the gains will help you in retirement. So, it’s really about being efficient with protection, right, and thinking about your purchasing power, long time versus your account value and trying to get big rates, which is what I love with what you and your team do with utilizing alternative asset classes and sophisticated options strategy. That’s right, help hedge that risk. You know, you and I don’t think people understand that that exists, Joe, they don’t they think it’s a target date. Because you utilize the same strategy, we talk about it all the time, because you’re only going to get it through alternative asset classes and different options, strategies, this type of protection to hedge against the risk, because for folks that don’t understand hedging risk, we typically use bonds to offset the risk of stocks. But when bonds and stocks become correlated, that becomes a problem major. So, the only way to truly hedge against risk is through alternative asset classes and very sophisticated options.
Joe 06:02
You know, it’s fun to look at history till we’re talking about history. And you go back to Oh, eight and oh nine, and one of the only airlines that really survived through that whole thing was southwest. Yeah. When you look at what they were doing, they were hedging their biggest risk. That’s what was jet fuel. Yep. And when Jeff, you went over $140, they were hedged. And that’s what they’re doing now in this gas continues to run. And so big corporations will hedge their risk. The modern retiree in Pittsburgh gets their head some risks, because you can’t manage all your money, the same way you ever been sailing?
Brian Quaranta 06:33
I have. It’s amazing to me that you can actually move into the wind.
Joe 06:38
Move in, and what do you have to do to do that? You have to adjust the sail. That’s right. And I have so many folks are just saying, Well, no, I’m just gonna set it, forget it and wait for the wind to come back in my way, that is a very dangerous way to walk into retirement, right, hoping on an exterior factor. Control what you can control.
Brian Quaranta 06:54
That’s right. And that’s why having a written retirement plan is so important. And so many people and I know you experienced this in your practice, so many people come in, and they have investments, right. And they have this pile of stuff, we call it their POS their pile of stuff. And that’s all it is. There’s no strategy around how to utilize it, how to maximize return from it, how to reduce risk, and more importantly, how to generate cash flow, which is the most important thing is generating cash flow. Because cash flow allows you to create memories, how many people out there are not creating memories, with their families with their grandkids with their kids, because they’re afraid to spend their money, because no one’s taught them how to use it. Every advisor out there, the majority of them out there do not focus and specialize in the areas that we focus on, which is the distribution phase. And it’s a very important phase of retirement. And everybody thinks the strategies and techniques that you use during your accumulation years are the same, you can use that you have to adjust this you have to adjust and that’s what people have to know, Joe.
Joe 07:46
Folks, That’s why it’s so important in these markets in these historic times that you have a clear understanding of what we’d like to say the hidden risks sitting inside your portfolio. But to do that, we need you to doubt (888) 382-1298, Brian and his team are standing by to help you be and stay retirement ready. And what they want to offer is a no obligation complimentary retirement Readiness Review. And in that review is a detailed risk analysis. You cannot march into retirement without knowing how much hidden risk you have sitting in there. So, today’s the day take control of your retirement and dial that number.
Announcer 08:21
Call 888-382-1298 for your own complimentary retirement Readiness Review and Risk Report. Why take unnecessary risk when you don’t have to at 65 years old? Would you drive to the grocery store at 100 miles per hour at 40 miles per hour would get you there safely When nearing retirement? Are you still driving your investment accounts like you’re in your 30s or 40s? Have you changed your investment election since you first chose them in your retirement accounts at work? Call Brian and his team at 888-382-1298 for your own complimentary retirement Readiness Review and Risk Report. Do you know exactly how much risk you’re taking in your investment accounts. Now that you’ve accumulated a nest egg for retirement, you want to be certain the risk you’re taking in those investments matches your goals and objectives. Call Brian and his team (888) 382-1298 for your own complimentary retirement Readiness Review and risk report or use the QR code below to begin scheduling your appointment you may not have time to recover from taking too much risk.
Brian Quaranta 09:24
Welcome to On the Money with Secure Money. I’m your host Brian Quaranta and I’m here with a good friend of mine. Joe Wilson PQ another financial advisor from Ohio.
Joe 09:35
Are we allowed to be in the same room?
Brian Quaranta 09:37
I don’t know!
Joe 09:38
I mean my god, rival football teams and here we sit.
Brian Quaranta 09:43
And I thank you so much for coming and doing this with me because you know you’ve been practicing financial planning about as long as I have, probably the last 25 years, close to it or so.
Joe 09:52
We’re getting old.
Brian Quaranta 09:53
Yeah, we are getting old although you’re sending your kids to college. Yes, I have a I have a three-year-old and a four-month-old.
Joe 10:00
I think that means I win.
Brian Quaranta 10:02
You win. I don’t know who did it, right. But, you know, I want to know, how are you guys deal with inflation? Because you know, the biggest problem we’re dealing with right now is that, you know, it’s the worst start to the stock market in what, 70 years, yeah? Worst start to the bond market in the last 31… Since ‘81. Yeah. You know, how old I was in 81? Very young. We were young, very, very young. So, I mean, I know we’re seeing it in our office right now. People are coming in. They’re saying, look, it’s costing me more to live. Sure. I need more income. What are you guys doing to address it right now?
Joe 10:31
I think right now, and we talk, we talked a little bit about this at much. I think it’s so important. And what I love about what you do, and with your clients, and we try to do the same is we want a detailed written income plan. Yep. Because even though we’re talking about inflation, I think it’s been this silent tax that’s just been attacking these portfolios, especially those folks that have just crossed over into retirement. But what we want to look at is inflation’s hitting everyone differently, right? Yeah. Just because some client likes to do travel and maybe stay at hotels and go over to Europe. That’s a different inflation rate than maybe someone that just likes to hang out and go hiking in Pittsburgh. Yeah. And so even though the average inflation rate is one of the highest we’ve ever seen in 40 years, percent, 90 plus percent, right. It’s affecting the modern retiree differently. And it all comes back to personal, comprehensive, individual written income plan.
Brian Quaranta 11:26
I love that you shared that because I don’t think people realize it. I mean, if you’re, if you’re a retiree, that is in your go-go years, right? Go, go, go, go, go go; and you’re traveling the world and traveling the country, compared to the person that might just be staying home taking care of their grandkids, and tending to their garden, it’s a different rate, the cost of their living, or the cost of their inflation is much, much different, much because travel is up 40% gas’s up 100%. Right. And it’s costing more to do those things.
Joe 11:53
Had a good friend that just flew to Italy, took his whole family to Italy. And when he came back said, how was it over there, and he’s like, the flight, the cost to fly was the most expensive tickets he had ever purchased, ever. And I travel annually. And he goes, he got over there. And the dollar has gotten so strong, there are some benefits. But they’ve raised all the prices on the hotels to combat. Yeah. So, you know, for a traveler and many retirees I know in Cincinnati and all they are here in Pittsburgh, you know, we have some ugly winters, we want to get out of here. And that modern retiree is definitely probably facing an inflation rate of more than just 9%. And I’m not sure everyone watching the show, is planning that into their individual planning.
Brian Quaranta 12:29
No, because most people focus on the wrong number. They focus on their account balance number, not their future purchasing power. That’s right, right, because and one of the things that, you know, I know you do differently at your practice, as I do is that we focus in a different area of financial planning than most firms do. Most firms focus on that first phase of retirement where they’re just accumulating something. But there’s a phase that you shift to in retirement where you’re starting to distribute that money yourself. And you know, we’re one of the only financial or professional services that don’t have specialties. Everybody thinks every financial planner’s are the same. I mean, if you hurt your knee, you would go to the doctor, right? If you had an issue with your heart, you’d go to a heart doctor audiologist and with financial planning, it has not yet been understood that there are people that specialize in different areas of financial planning in retirement. Yeah, and you and I both believe in the importance of having a written retirement plan, a true income plan. And this is where we can make all the bad things happen on paper. That’s right, you know, so we test it, we test it, we test that I think that’s important, because the biggest fear of most people in retirement, and I don’t know if you experienced this, but people will come in, they’ll say, Look, we’re at a point in our life where we can’t afford to take another big market. Well, that’s right. We can’t afford to, you know, not have our income coming in on a monthly basis, because we need that income to live off of.
Joe 13:53
To keep the standard of living and stay in the retirement that we’ve dreamed of.
Brian Quaranta 13:57
Right. And you know, at least in Pittsburgh, I bet you 85 90% of people Joe that come through the office or not retire with a pension. So, you know, they’re utilizing their 401k is their IRAs as a source of income years and years of work to save that money. And I think what’s really frustrated about it is that no one’s ever really taught them how to start utilizing these accounts as a stream of income. And the problem is, is that when you pull money out of these accounts, you actually have to pay taxes on it. So, if you’ve got 9.1% inflation, and then you have to pay taxes on that money, you can see how that started to compress your purchasing power very very, very quickly. So, you know, if someone’s watching I mean, what best practices do you guys follow in in order to help someone give peace of mind in retirement so that they don’t run the risk of running out of money?
Joe 14:45
I gotta tell you this story. We had someone that called in off of off of our show, yeah, too long ago, and they came in with a retirement savings. They’ve done a great job of saving quite a bit of money. Her concern was do I have enough to enter retirement? Yeah, and she had amassed a good amount of A good amount of money for her spinning. It was it was well within reach. Here’s the challenge. And I know you’re going to know what I’m talking about. I we call it if planning. And she started the conversation like this. She’s like praying, Joe, if, if I earn 6% Yeah. And if inflation is it too, right? And if I can just keep taking only 4% out this Monte Carlo system thing here says I’m good one. I’m like, well, that’s if planning and Monte Carlo sounds like a really bad casino in Vegas, right? Yeah. And so, it’s if planning, the challenge is wishing one of the worst starts to the market and doesn’t have to just go down and come right back up. Right. I think so many folks have been rolled to sleep about this amazing run up, we’ve had a great point, but that markets can hang on around a while. Yeah, 2000 2001 2002. That was a 42% decline in the market. So, if you’re in retirement, you’re going to take money out and you start in those types of years. You can’t keep an IF 4% withdrawal rate. And we already know inflation is not at two. So right then and there, I looked at I said I don’t want to tell you other than three of the things that you said have to happen aren’t happening this year. Yeah. And that becomes a problem. And that’s the challenge with doing a financial plan once it is an ongoing, comprehensive plan. And I know that’s what you all-
Brian Quaranta 16:15
Yeah, and this is why reviews are so important. Because the game does change from year to year as variables change, target change, market changes, tax rates change, inflation rates change. And so things need to change along the way. Folks, I will tell you, if you’re at a point in your life, where you’re concerned about potentially running out of money, or you don’t want to run the risk of not being able to do the things that you promised yourself you were going to do in retirement, I want you to call the number on the screen 1-888-382-1298. And I want you to get scheduled for your complimentary retirement Readiness Review. And I want to give you an inflation report with that something that’s going to help you understand where you are right now and where you need to go again, call the number on the screen, it’s 1-888-382-1298 and tell our folks that answered the phone that you want to schedule your complimentary retirement readiness review today and also get your inflation report with it again 1-888-382-1298. Or you can scan the QR code at the bottom of the screen. Thanks for watching.
Announcer 17:20
Call (888) 382-1298 for your retirement Readiness Review with inflation report. Inflation continues to hit all-time highs. While your investments provide you with income you need in retirement. Are you losing purchasing power of your savings? Don’t let runaway inflation erode your retirement dreams. Now’s the time to act to be certain you have an income strategy that overcomes the effects of inflation. Call Brian and his team at 888-382-1298 for your no cost retirement readiness review with inflation report. You might have the savings you need today to weather the storm. But how will inflation affect your nest egg 5, 10, 15 years from now? Discover the peace of mind you deserve call Brian and his team (888) 382-1298 for your no cost retirement readiness review with inflation report or use the QR code to schedule your appointment today.
Brian Quaranta 18:20
Welcome to on the Money with Secure Money. I’m your host Brian Quaranta. And in studio with me today is my good friend Joe Wilson from Cincinnati, Ohio!
Joe 18:30
I can’t believe you said that word on Pittsburgh airwaves.
Brian Quaranta 18:34
One day we’re gonna do a show with during football season, Pittsburgh and Cincinnati we have to it’d be a lot of fun. You know, we’re talking about the greatest trick ever played.
Joe 18:45
Ever played.
Brian Quaranta 18:45
Not the greatest play. But the greatest trick. When we first talked about this topic, you would think like, what is the greatest trick ever played? Would it be like a hat trick by Wayne Gretzky? Yeah, it could be you know, it could be but tell us what is the greatest trick ever played on all of us when it comes to retirement?
Joe 19:05
Well, I think you have to go back in history in history when you go back and look at what retirement used to be right. You know, Mom and Dad would go work somewhere and they work, and they would be there for 30 plus years. And there’s a big retirement party, they get the watch, and they get the party and maybe a little vacation trip. And then they got this glorious pension mailbox money that came from that company for as long as they live. Right. Right around that 1980s You started seeing a big shift right away from that into this 401k market. And here’s the trick. The government was brilliant, because what we know is if you put money in the market and allow time and compound interest to work in your favor, it is the eighth wonder of the world, right? And what the government did is said BQ Why don’t you just take this this little bit of money? We’re gonna give you a tax break on this sheet, put money in a 401 K and an IRA will give you a tax break on it. We’re just gonna let it grow 2030 years and when you go to retire way down then it’s time to harvest you can pays taxes. So, you got to break on the seed. But when it’s time to harvest the corn or caulk, it’s taxed as tax time. And what we’ve seen is a buildup in these qualified plans. And so, the government man, they’re like a fat kid sitting, just waiting on the deli to open because they’re gonna go in with sandwiches in two hands because they haven’t been taxed on that money and this is a great opportunity for the government to help pay off some of this debt. My God, we got to talk about the debt.
Brian Quaranta 20:25
about the debt, I look at it as almost like, I mean, think about having a shareholder, you know, think about any business owner, you have a partner, right? And that partner doesn’t show up for work. They have no skin in the game at all. They don’t give you any advice on how to operate your business or anything. However, they get a share of your business. Yeah. Now take it one step further. They can change the rules on you. Oh, yes, in the middle of the game? Yes. So, they can decide one day when you wake up, they can say, you know, we were thinking about only taking 30% Fumiya. But now we’re going to take 40% from whatever they want. And always look at it like this, let’s say that you only contributed ever in your lifetime $15,000 into an IRA or a 401 K or four, three bay, right? Any type of tax deferred retirement now, let’s say you made and never made another contribution again. So that meant you got to you got a tax deduction on that $15,000 You put in. However, let’s say that we get some really good returns on that 15,000 grows to a million. Okay, you’re telling me that when I want to pull out that million, I’m going to be taxed on all $1 million. And they are a shareholder in all $1 million,
Joe 21:35
It’s not all your money BQ.
Brian Quaranta 21:38
My three-year-old would know that that is not a fair game.
Joe 21:41
It’s a losing game.
Brian Quaranta 21:43
So why is it that you know, when I meet people, when I say tell me a little bit about, you know, your current plan and what you’re doing and the strategies that you have in place. And I’d say, tell me a little bit about your income plan, your tax strategy, your investment strategy, your healthcare strategy, your legacy strategy. Tell me a little bit about what tax planning is going on right now? Are you moving any money from taxable accounts to tax free accounts? And they said, We’re not having those discussions most of the discussions people have is about how the investments performed last year. Right. Right. Why is it that you think, and you know, I’ve got my opinions, but what’s your opinion on why people are not getting advice about these types of things to make their planning better? Right? Well,
Joe 22:23
one, usually some of these big box firms don’t have the tools to give you advice on it. Yeah, I think that’s important. Yeah. And what separates us as fiduciaries, you know, with your practice, it’s if you’re a fiduciary, right, and you guys do comprehensive wealth planning, right. And so, there’s just a fundamental difference right there because they’ve been focused on growing the assets, right. And if there is a Roth conversion, we’re gonna talk about that in a bit. That money has to come out and move out of that account to another account, and you have to pay the tax on the year that you do that right. Now, we’ll talk about why you might want to do that. But when that money comes out, that manager now is managing less money and almost ensuring a pay cut. Wow. So, there’s a lot of theories out there of what’s going on. But a lot of times, it’s just that number one, they’re they’re bound by really not having all the tools in the toolbox to help those modern retirees get to this this conversation.
Brian Quaranta 23:11
This business model is limited. I mean, that’s why I left big box firms, I know you did too, because they’re really limiting us on what we can do and the type of planning we could do. I never wanted to look I didn’t grow up with a silver spoon in my mouth. My mom and dad worked really hard for money. My dad had a Montgomery Ward’s catalog story. Remember Montgomery Ward? My grandfather had a-
Joe 23:30
I went through that at Christmas time, every
Brian Quaranta 23:35
That was the Amazon before Amazon.
Joe 23:37
Oh, I spent hours watching a baseball game doing that. My beloved dreads probably who’s into the pirates.
Brian Quaranta 23:41
Yeah. But you know, these, these are the things that ultimately like make my grandfather had a Kirby vacuum cleaner, you remember Kirby vacuum? Yeah, you know, so my, my parents taught me to work really hard. And at the end of the day, what they taught me was, work hard, save your money, so that eventually someday your money can start to work for you. And, you know, when I was at the big box firms, what I realized was, nobody was teaching anybody how to use their money, they were teaching them how to invest their money and roll the dice with it. And as long as everything was going up, they were heroes. Right, right. But when things started to go south, the only answer they had was, don’t worry about it. Hang in there. You’re in it for the long haul. Or my favorite line was: It’s just a paper loss. It’s just a paper loss. Now, I don’t know about you, but I invest personally in the market. I know you do, too. To this day when I lose money. I don’t feel like it’s a paper loss. Now, the difference is I’ve got time before I’m going to need that money still spring chicken. A lot of people that are watching the show today. They don’t have time to recover they another big market loss would be absolutely devastating to them. So, I know we’ve talked about this a lot about protecting the retirement lifestyle, right, but are there alternative strategies out there where people can protect money still get decent returns? And do you guys choose to use that type of stuff in your
Joe 24:59
Actually, you have to use it in this market, in this world, you have to use alternative asset classes and sophisticated option strategy, right? Because that’s what’s going to propel the modern retiree to cover those necessities to position themselves in a place where they can live that retirement of their dreams. I don’t know how let’s do that when you look at the stock market down, you know, the massive that it is since the before worst since the Great Depression, and then look right on top of that the worst bond market in 41 years you have to use-
Brian Quaranta 25:23
And those alternatives you’re talking about is a real hedging of risk versus, we’re trying to a lot of people are trying to hedge risk by having bonds in their portfolio. But when you have a positive correlation between stocks and bonds, and you got both of them going down at the same time, you’ve got no hedge against risk with this, whatsoever. And people need to realize that there’s just better ways to approach absolute folks, if you’re in a position right now, where you’re concerned about how much risk you’re taking or how much money you could potentially lose, or not being able to live the lifestyle that you promised yourself that you were going to live in retirement or if you think that you’re at a place right now, where an income plan would make a difference in your life. And I will tell you if you’re five years from retirement, retired an income plan is absolutely necessary. I want you to call the number on the screen and schedule your appointment today. It’s 1-888-382-1298. Our team is waiting by tell them you want the retirement Readiness Review and the tax map tell me what the tax map or scan the QR code at the bottom of screen you can schedule. Thanks for joining us.
Announcer 26:21
Call 888-382-1298 now to receive your complimentary tax map with your retirement right in this review, learn multiple strategies that can protect you from higher taxes now and in the future taxes are a threat to your financial stability in retirement protect yourself from the potential threat of rising taxes as a retirement planning financial advisory firm, Brian and his team will help you navigate the financial waters to pursue your retirement goals call 888-382-1298. Today, Brian and his team provide inclusive retirement services such as investment directories for your portfolio income producing strategies and wealth preservation plans for your family and legacy call Brian and his team 888-382-1298. Now for your complimentary tax map with your retirement Readiness Review. Discover tax strategies to keep more of what you have saved in retirement or use a QR code below to schedule today.