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2022 EP0716 | PLANNING MATTERS RADIO | FINANCIAL CONFLICTS

Planning Matters Radio / Peter Richon
The Cross Radio
July 16, 2022 9:00 am

2022 EP0716 | PLANNING MATTERS RADIO | FINANCIAL CONFLICTS

Planning Matters Radio / Peter Richon

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July 16, 2022 9:00 am

Do you remember a time when the news anchor on TV told you what happened in the world and left it up to you to formulate an opinion? In today’s world, it seems we have to view everything with jaded glasses, do extra research to verify what we are told, and gather other information from different sources just to draw our conclusion about what we can believe. Tune in this week as Peter Richon discusses a few of the potential conflicts in today's financial world. Contact Peter Richon at (919) 300-5886 or visit the website at https://richonplanning.com/

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We want you to plan for success planning matters radio. Another addition cleaning matters radio will be one of your house today, Amber Rochon and I'm here with my late husband Peter Rochon doing well good to see you two doesn't go but Peter not done everything together for the past 20 years we've pretty much done everything together, so be talking about financial conflicts right. People want to know that they can get trusted advice. They want to know that they can trust their advisor. So what are some hot financial conflict tips we can talk about today.

Peter will when I talk about financial conflicts. What I'm really talking about is where we are receiving guidance on what to do with our money when behind the scenes in the financial industry exactly the opposite is typically going on or where there may be an inherent conflict in what we are doing or what our expectations with our money are versus what is actually happening behind the scenes old man behind the curtain so there are a couple that I think are big. The bank mantra of saving your money and then I suppose that what banks actually do when they get your money the old Wall Street mantra of I and hold is Wall Street are mutual funds. In fact, following their own advice and then there's the inherent conflict of interest regarding compensation. I think that professionals providing the service deserve to be compensated, but do you know all of your costs and fees are they fair, are they fully explained so you can actually make a judgment on whether or not you're getting what you're paying for. And then there's our right conflicts in unfortunately fraud and identity theft and things that you just need to be very vigilant and careful about in the financial world.

So when you talk about all those things a little bit today. Important topics, but if you have any questions or concerns. We are local here in central North Carolina wave arena.

We are independent we are fiduciaries. That means that we are morally and ethically, legally responsible for looking out for our clients best interest whenever formulating plans and making recommendations and we do offer a complementary conversation initial review consultation and we put together that optimized retirement plan, no cost, no obligation, just give us a call 9193 005-8860 like to take advantage and that's a great way to take a birds eye look at where your expenses are going to do. We like to think we just put money in the stock market or enter an annuity and it just does what it's supposed to do but having that report to be able to look at where your fees are going good here actually paying and how much are losing or gaining on the front side backside is very important and that's what we do here at Rochon planning for free so you want to have that complementary review with us to get the phone gives a shout. 919-300-5886 believe that anyone has the ability and everybody has the right to feel confident about their money and with their money. If provided with good and accurate information and so that's our mission at Rochon planning is by that information so that you can know more about what's going on with your money and your company about so you can give us call 919-300-5886. You can visit online to do a little bit of background in research. Find out a little more about us Rochon planning.com it looks like Rich on planning.com is our website directly, but if you just search Rochon planning online.

You'll find plenty of information about theory yet.

Indeed, serial X in order find the podcast planning matters radio Rich on planning podcast and I pulled up the technology ultimately only the kind of a when we are not counting a line on but if you ask Siri or Alexa offer the Rochon planning podcast. You may already be there. That may be how you found this today, but if not I like to walk in a friend's house and ask Siri and Alexis guidance subscribed to the Rochon planning podcast is right so moving on to news headlines during those times where you just depended on the news to tell you what to do and you kind of went from there, or at least present the information right that just the facts, as they say on dragnet. Just the facts ma'am news headlines use to at least feel like they were presenting just the facts, and then allowing you to draw your own conclusion.

But today in in the modern world we gotta do our due diligence. We gotta take everything with a little bit of a grain of salt is this actual fact is this somehow slanted opinion and then we got to do additional research.

Are there other opinions out there. Is this the complete story in order to be able to draw conclusions about what's actually going on now.

Remember, ladies and gentlemen, here's here's the rub here is the inherent conflict is that the news is designed to keep you watching so that they can sell advertised mints during the news right. I've heard if there is no product being sold. Guess what, you are the product and that's the case with the news so or really any television or information or or or entertainment program is if there is not a product or service being sold. Then you are the product or service so you gotta keep that in mind when sort of doing your screening and and choosing to believe or or to be skeptical about what you are hearing is that with the news. In particular, the headlines are meant to be sensational. They are meant to drive a motion because that's what's going to keep viewers continuing to tune an end view if they were plain vanilla noncontroversial. That just doesn't attract the viewership and so as you are kinda looking for where can I find a reliable source of financial information. What source can I choose to believe.

Just keep in mind that a the news is generic in nature is never specific or intended as guidance for your individual situation. Regardless, send and then you are there because they are trying to drum up viewership.

They've got to leave with what bleeds is is sort of the saying in the news world because those are the things those are the stories that are going to captivate and capture and retain attention so to sorta be wary of that is you are looking for any kind of financial information of what source you are choosing to rely on may or may not be specifically intended nor applicable to your individual situation and that by the way, includes this very program in order to get specific guidance for your situation.

That's why we offer the ability for those follow-up conversations to ask questions to sort get to know one another and then to put the plan together if needed, warranted, and and desire. So knowing the past is super important and a lot of folks say the best way to predict the future is to know the path right well if you don't learn from the past are doomed to repeat it is one saying but in the financial world. The saying goes something like this.

Past performance does not guarantee future results or past performance is no indication of future results. And yet so often what I see is that plans that are projecting out or forecasting the future are in fact exactly based on that past performance. They say will this fund has average this overtime will this one has done this over time. That does not mean the data is reliable, that you can depend on that fund or that result to happen again into the future and that's why that disclaimer language in the financial world is always included and is necessary, but the inherent conflict here is were talking about financial conflicts on today's program is that it is still, despite those disclaimer words of past performance is no guarantee or not indicative of future results. It is still what is so often used to sort of predict the future and people count and rely on those projections and those assumptions based on past times. But notice if we were looking at the past history of a mutual fund that it will. This fund has average 8% over time right and then you count counted and relied on that 80% to continue to happen in the future. No guarantee that does actually have a great story and analogy Amber. You and I were heading out on on African Safari. Right now I'm your tour guide helper staying at the Ritz Carlton and I can't think that is not the style of shed like bugs so we had out on African Safari.

We got a river that we got across this as part of the Safari adventure we got a river that you got across, I tell you Amber. Don't worry. The average depth of this river is only 1 foot now are you going to feel safe crossing that river knowing that the average depth is only 1 foot or are you going to worry about.

The deepest part of the river, not the average depth in the hippopotamus right so that's the kind of thing that people are doing with their financial projections is that they are using that average when the average is what matters is the deepest part of the river that matters.

That's the dangerous part and that average.

In fact, can be very misleading was one of the I think the biggest fallacies and false advertising that's done in the financial world is advertising. Past performance of the funds because if I have a fund let's say that averages a 10% rate of return over a three year period. The first year goes up 60% second year of falls 50% third year goes up 20%. So 60-50 is 10+20 is 303 is a 10% average rate of return. Here's what happens with your money. I know numbers are confusing over the radio folks, but bear with me, and if you'd like to see an example of this. Get in touch and an obscenity show you how this works but if I have hundred thousand dollars and get a 60% return now have $160 and I lose 50% now have 80,000, and then I grow 20% now have $96,000. I got a three year track record of history and I is a mutual fund can average or can advertised an average 10% rate of return, but after three years I actually have less money than when I started. That's why the using of past performance to me is one of those inherent conflicts in the financial world. We need to be aware of. We need to do a better job in educating ourselves on and again armed with good information.

Knowing and understanding how this works.

I think people can feel more comfortable and confident with going on for money. You are absolutely correct in one of the number one conflicts that I run into a lot with my women's empowerment group is money and they ask a lot how much money should they have, how much money should I have in the bank versus an investment yet I think means that the question of how much do I need to retire is probably the quintessential most common most important question about financial planning. Right. The deal that we make is what we trade our time for money and we want to know when we can stop making that trade-off because of the two of the time is actually the more valuable of the two, so we trade enough of our time that we can build up enough money so that we can stop making that trait ultimately but when when oh when can I afford to stop making that trade off. So how much do I need or how much should I save in this case is the question now, specifically when it comes to banks. This is kind of one of those inherent conflicts in the financial world because the banks love to tell you to save money save money save money. Guess what happens to your money when you stated you imagine that it goes into some locker and sits on a table in the back of the bank under under lock and key in and of all well when you save money with a bank that's a liability to the back. There actually is not much, but they're paying you to store your money. That is a liability.

It cost the bank. It's it's it's a potential that there there are not the dollars there when you go back there is the potential for robberies or fire reserve that is a liability for the bank.

Banks not in business of having liability sitting on the books. Are you driving any major city in the biggest buildings in the skyline or bank buildings.

They don't build those buildings off of liabilities sitting.

They in turn don't save the money they've told you to save the money.

Save your money, save as much as you can guess what, when the bank gets that money they choose and try to deploy it as quickly as possible.

They don't want it sitting there is a liability. They try to create assets with so they loan it out.

They invested that money that they're telling you to save they are in fact doing the exact opposite with so that's kind of the inherent conflict in the financial world again we hear that we should save money save money save money. I think there is an appropriate amount to be say you need to have that emergency account right 3 to 6 months worth of living expenses, but more than that your your losing money safely, and it's a liability, not an asset.

You're absolutely correct. They want you to buy and hold, but they do not always follow that advice and not following their own advice about tax and legal advice. Peter it will mean the again standard language in the financial world is that this is not tax or legal advice. Financial recommendations are are not, do not constitute tax or legal advice. If he, like tax or legal advice. Consult your tax and/or legal professional. Here's the content. Every financial move has tax and legal consequences. So how can I make a financial recommendation and de facto default offset the fact that I am not making any tax or legal recommendations. I absolutely in fact a.m. and is a qualified and experienced professional advisor. I better understand the tax and legal implications of the recommendations that I make it you should invest in IRA versus you should invest in a Roth verse you should buy or sell a specific fund versus you should realize that Gaynor offset it versus how you set up your beneficiary designations you know you you got a line of order of operations of primary and contingent beneficiaries.

Those beneficiaries are listed within retirement accounts. Those beneficiaries haven't been updated since you had a divorce or or a change in family situation. Those are tax and legal qualifications and when financial recommendations are made, it absolutely does in fact involve tax and legal consequences, and so unless your team of professionals. Your accountant or CPA your attorney in your financial advisor are working in coordination from one of those professionals to just simply dismiss the other aspects of the advice that they're getting you're not getting the best or comprehensive advice you could have the absolute best professional with their not working together or at least cognizant of how those impact can affect each and every aspect when you're not getting the full service of what you pay so again that's that's why we offer the complementary review because a lot of people have incomplete advice were incomplete plants and then one of the big parts of of our services that we work to optimize and complete your plan. You may have an IRA or 401(k) or an investment account out there. How is it working in in in coordination with your total picture to make sure that you are making progress toward achieving your goals. From a financial aspect from a tax planning aspect of the legal planning aspect. They all work together in coordination and and so the advice that you're receiving these two as well is speaking of tax implications that no one wants to go into business with Uncle Sam right Peter know that we are taught to write. I never inherent conflict here in the financial world is that really first for a generation.

Since the ERISA laws of the 1970s created the 401(k) and subsequently IRAs and we were told to defer paying taxes on those retirement accounts. Well guess what we have entered into a business arrangement with Uncle Sam and when you're in retirement. It really is more like owning your own business during your working career for W-2 wage earning employees. You are paid after Uncle Sam has already taken a bite out of your income, whatever you are or if it's your $10,000 a month you don't receive $10,000 a month you receive $7500 a month because Uncle Sam has already taxed your money. By the time you see it. However, in retirement, it's much more like owning your own business where you take those IRA and 401(k) withdrawals. You've got to specifically and intentionally choose how to address the tax implications of each dollar of income that you create and your partnership with Uncle Sam if you got this tax deferred accounts.

Nobody wants to be in a partnership. Sam nobody wants to be in business with the IRS because guess what, they can change the rules they get to determine the rules they set the rules and that doesn't seem fair.

I worked so hard to save my money and yet you get set and change in and controls on this and by the way they do change the rules to a lot of people. I was in a room. Recently we we we had a presentation to two rooms full of retirees or near retirees and I asked the room who knows about the secure act and not a single hand went up.

We had about between the two different sessions we had about 60 different people in the room and then these are not un-savvy savers and investors. Not a single person in the room knew about the secure act secure act was one of the largest changes to be rules regarding your retirement that has been passed in recent years.

It was passed the week between Christmas and New Year's of 2019. It went into effect January 1 of 2020 and it changes the rules when it comes to your IRA and retirement account. You need to be up-to-date on these things and you need understand the IRS and the government can and will likely continue to change the rules. In fact tax laws as they stand today. The rules would change again in 2026 and taxes on income will go up 12% bracket will become the 15%.

The 22 becomes the 25 and continues up the tax brackets.

You gotta understand the implications of that and the opportunities that can be created by controlling some of that right that the planning profession I think is about controlling risk what is risk risk is variables that are outside of our control.

That will determine our outcome. That's that's what risk is a variable that I cannot control that might determine what my outcome is well there are opportunities to take control over certain very taxes being one of them why we can't control what tax rates are brackets OR we can control when and how we choose to pay taxes and often times being a little bit proactive in choosing short-term pain and paying a little bit right now might result in a significant savings in the overall tax bill that you end up being responsible for those of you who are holding on. Currently to a traditional IRA and you have any questions about tax implications and tax rates who are 100% decided to go up and are interested just to learn a little bit more for free about Roth conversions to give us a call 919-300-5886, and taxes are not the only way we can lose money from our accounts right commissions, fees, compensation expenses, you know what you're paying what you're getting for what you're paying for right and in the financial world. What I've found is that fees and costs and expenses are like the layers of an onion, a lot of times people can see that outside light right they know what the outside layer looks like it's hard sometimes to dig beneath the surface and right there on the front page the cover of your 401(k) statement or your brokerage account statement. It doesn't say you've paid X amount in fees. You've paid X percentage in fee. So that's one part of our financial analysis it's it's a forensic dive into fees, costs and expenses and we can really identify how much your advice and your investments are costing you. There are certain vehicles out there that are are very cost-efficient. There are certain vehicles out there that are the exact opposite that that quite frankly cost way too much and unjustifiable expense for what you are getting and then there's the service fees on top of that. Are you getting the kind of advice that allows you to understand the difference between the two. So again I think that any competent professional experience qualified that provides a service there is a justifiable expense to that study showed that the more affluent, more financially successful among us. They tend to use and rely on advisors and professional advice and understand that there is a cost to that, but you gotta make sure that you're getting what you're paying for, and I am cost-conscious when I go out shopping when I go out looking for service.

Not that the cheapest option is always the best option but I am cost-conscious and I'm going to try to make sure to do my due diligence do my best to make sure that I am getting what I am paying for and understand what those costs are you living in a world where social media is on the boom and are ever needing ability, our want for information on demand.

We've actually created a little bit of problem for ourselves in the form of identity theft and fraud. So, what are some things that we should be cautious and what are some things that we can do to take precautionary measures. You gotta be careful and all of the other conflicts that we spoke about so far. I don't think there necessarily malicious in nature, right there. They're not intended to harm, but in this world every minute of every day there is somebody aiming to separate you from your money is just the cold hard ugly truth is that there are unscrupulous people out there. We have to be extra vigilant against fraud, identity theft every day.

It is so important and studies have shown that the number one group that is susceptible and most often fall victim to financial fraud are actually successful men over the age of seven. Those that are are actually pretty affluent. Now it may not be a surprise that senior citizens end up being the most targeted but for men in particular financial status and success is a measure of out of our accomplishment and, therefore, we often extend ourselves into more vulnerable positions in the hopes of achieving that financial success and unfortunately that makes us more susceptible to potential fraud and unscrupulous financial moves and so just be ever vigilant if you you set yourself. Are you know, considering any financial moves may be run that by a trusted resource whether friend, family acquaintance advisor if you have one that you you do trust if you have family members that may be in that kind of of situation. Do your best to check up on you and Eric, I understand to be like difficult and sensitive because sometimes money is like the last conversation people have with those that are closest to them discussing finances within the family can be a sensitive topic but where possible safeguard in and help to protect those those loved ones and there's lots of resources on what to watch out for how to be careful and cautious, but in today's world of modern technology.

No AAA a touching of the wrong link in your email or your text message could ultimately result in you ending up with information that has been compromised as a we've got to be vigilant. We got to teach others how to use those devices and maneuver in this financial world and where possible, put safeguards in place so that we don't subject ourselves to that possibility. So you know a lot of information on today show a lot of different things that kind of think about to reconsider. As far as financial conflicts to watch out for as far as like identity theft and and and potential fraud. You've got to do your due diligence and again we believe it was on playing that anyone has the ability and and has the right to feel confident about what's going on with their money in order to achieve that. You gotta have good information that's our mission is to provide that information to listeners to viewers to clients to maybe not yet clients the proactive savers and investors. If you're serious about making that financial progress give us a call will have a conversation, answer any questions you have as directly as possible. Run a report analysis on your current holdings for you if you'd like that optimize retirement plan together for you and all of that is before ever becoming a client for any kind of cost, expense or obligation. We will talk about what it entails. If you choose to become a client and enter into that relationship.

But we are not for everyone and everyone is not a perfect fit for us so that's what the initial conversations are really all about to inform and educate you on on if there is anything that we can spot and identify were things that we would want to know if if we were in your situation and working toward achieving the financial goals are important. You learn that they were things here at Rochon planning as we actually take the time to get out into the community teach you how to generate more money. Not just wait around for you to show up and given it to us so that we can invest for you and so I deftly appreciate you and all your hard work and everything that you do for the community and every person who comes into Rochon planning retreat as our family so if you have an interesting show topic inside of you that you're just dying to get out or something that you would like for us to talk about pick up the phone and give us a call 919-300-5886 were also here for you to offer you a one hour complementary financial review whether in person or in zoom.

Would love to sit down and talk to you, give you a better look. Our understanding of where you're going to work if it's just to see if you're on the right track or not. I seem Peter turn plenty of people away and say hey guess what you done a great job you done a great job of planning stay on track and if we have any questions or concerns, you can always bring them to our lack again telephone number is 919-300-5886.

We love to chat with you. Thanks for getting in for another amazing informative show with Rochon planning on planning matters radio and we look forward planning matters, radio, the content of this radio show is provided for and of any investment strategy you were encouraging investment tax or legal advice from an independent professional advisor.

Any investment and/or investment strategies mentioned involve risk and possible loss of principal advisory services offered through virtual capital management is a registered investment advisor.

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