Compelling Reasons you Need a Financial Advisor

0:00 Welcome to something more with Chris Boyd. Chris Boyd is a certified financial planner, practitioner, and senior vice president financial advisor at Wealth Enhancement Group, one of the nation's largest registered investment advisors. We call it something more because we'd like to talk not only about those important dollar and cents issues, but also the quality of life issues that make the money matters matter. Here he is, your fulfillment facilitator, your partner in prosperity, advising clients on Cape Cod and across the country. Here's your host, Jay Christopher Boyd. Hello, and welcome to another episode of something more with Chris Boyd. I'm Jeff Perry. I'm sitting in this week for Chris and I have with me my co-host Russ Ball.

0:42 We're both of the AMR team of Wealth Enhancement Group. I'm in Florida. Russ is on Cape Cod in Massachusetts. It was funny because I sent you an article that Christine Benz from Morningstar wrote. I'm a big fan of hers, by the way, and I found out that you're a big fan of hers. I said, what do you think about this subject? You said, I just read this. We're on the same page with Christine Benz and the stuff that she writes. Did you read her recent book, How to Retire, 20 Lessons for a Happy, Successful, and Wealthy Retirement? I'm about halfway through it. It's good. It's good. It's all over the place because it's a compilation of- Separate interviews with different people and experts in the field.

1:27 Honestly, I thought it was really good from what I've read of it. Some of the interviews she has there with people we've had on the show before, even recently. She definitely has a wealth of knowledge and really good about sharing that. We must subscribe to the same email. We must. A newsletter or something. I think AI figures you out. Everything Arthur Brooks writes or says, I click. Everything Christine Benz writes or says, I click. Jeremy Siegel. When you click these things enough, they feed them to you. Christine Benz is in that category for me of something that I think she's...

2:08 I guess the best thing I like about her, and she's been on the show before too, she's objective. I don't feel like she's talking up a book. I feel like she's giving it as she sees it based upon her vast experience with Morningstar and the financial planning world. That's what I like. I hope people think that about us, that the show is objective. We're not trying to sell any certain product or promote any certain service. We're just here to give you our best thoughts on given issues. Sometimes you agree with us, sometimes you don't, I'm sure. But I try to be objective. I know you do, and I know Chris has been doing it for 18 years. I think that's one of the most important things that people should demand of their information.

2:52 So much information out there today, however you want to say that, whether it's old media, newspapers, if there are any left, the news on TV, and then all the cheerleading from both political parties, so much of the news is biased towards a product, a political agenda, a service, whatever it is. So I try to demand of the things that I'm going to follow that it's not biased. We definitely are going to have our leanings, our opinions on certain things, but definitely using this as a more of an educational platform and keeping people that listen and clients up to date on our thoughts and what's going on out in the world.

3:39 So hopefully we're aligned with Christine Benz in that regard. This article, which we'll get into, so we're building her up, but she deserves it. But we're building up, and the point is we're building her up, meaning we have a great deal of respect for her. She's been in this industry for decades, financial services, financial planning, writing about it, talking about it, teaching others about it. And the article is why I, meaning Christine Benz, has a financial planner. So it gets you thinking like, ah, she doesn't need a financial planner. Right. She writes about it all the time. She knows more than most anyone about personal finance and retirement.

4:20 That's right. Why would she need a financial planner? But if you think about it, and I'm a retired lawyer, if I have a legal issue, which I hope I don't have any, but if I have a legal issue, I'm a fool to represent myself, the old saying. If a physician has a medical issue, you wouldn't think that they'd, I mean, they might know everything about the issue, but they're going to go to their doctor. They have a doctor and so on. We could keep listing professions. Why wouldn't a financial advisor turn to, maybe not every day, but turn to a financial planner advisor about their own plan.

5:03 Right. Absolutely. Yeah. So she wrote this article. It's on Morningstar. I'll put it in the show notes of people. It's not very long, but if people want to read it and she has five reasons why, and there's more, maybe we'll go off on tangents. It's entirely possible that we do that. But the number one reason is also my number one reason. It's what I did. Number one reason is she says we wanted a second opinion on a few important decisions. I knew Chris Boyd. I knew the AMR team, the company at that time, but I was handling everything myself. And I was thinking of retiring from my full-time public service job with the sheriff's department, sheriff's office.

5:47 And I had a plan and I was like, yeah, I think it's good. Me. Yeah. Right. Chris is a community person as a friend, if you will. And I said to my wife, Lisa, I said, let's go in and meet with Chris and get a second opinion. I think that's a lot of people come to us looking for that second opinion. And just, you know, you could be as confident as possible and you could feel like you've read up on it, you know what you're doing, but sometimes just getting that seal of approval or thoughts from another professional really helps give you that sense that, okay, I either I am on the right track or maybe I was a little bit off.

6:28 I wasn't thinking about this in quite the right way. They'll help you find your blind spots. I think that's very well said. Help you find your blind spots because so many people who DIY their financial plan are about a number. Yep. You know, they can do math. I know what they spend, especially the detailed people, which many people are. I, I am, I was, I had, I had my plan, my numbers. I knew about inflation. You know, I thought about those things, but when I had my meeting with Chris, I was like, oh, yeah, you know, that's, that makes sense to think about it that way. And he, you know, he put a rubber stamp on my plan that I'm going to be okay. But he also gave me a lot of insights from his experience that made me think like, I should think, think about that.

7:15 I should focus on that. I should have a, I should have a strategy towards that, or, you know, maybe I'm taking too much risk because I've had a high risk tolerance. So ultimately I became a client and ultimately became a member of the team. But you're right. People getting a second opinion is really important. It's just like a doctor, you know, they might know that they have a problem, but it makes sense not to self-diagnose. It's go get a second opinion. Yeah, exactly. And in Christine Ben's case, she was, she, you know, she said she was handling her investments herself or her and her husband were and currently are, but there were specific questions that she had that she thought a financial planner could help with.

8:01 And that's, again, that's a lot of people come in looking for the answer to one specific question or maybe a couple specific questions and thinking, oh, well, you know, I have X amount in the bank. I'd like to get that working for me a little bit harder. They'll come in and they'll think, well, here's my problem. Give me a solution. And we want to be able to do that as fiduciaries to be able to give the entire picture, that entire context. How does that all fit together? It's not just about one problem. Here's your one solution. Let's see how everything works dynamically and together. So yeah.

8:42 Yeah. And, you know, one of the biggest benefits that I receive personally and that I hope I provide to our clients along with the rest of the team is to give them those projections that have some testing. It's not just, you know, a spreadsheet. Well, here's how much money you're going to have. Here's how much money you're going to take. But testing a financial plan against things that, you know, when you're 60 years old and thinking of retiring that you're not quite zoned in on the what ifs of life and the bigger goals, you know, what do you want to do? Whether that's travel, whether that's be generous, whether that's help family, you know, buy a second house, move, relocate, whatever it is, or long -term care, you know, negative things that could happen, premature death, pension options, when to take Social Security, all these things that, you know, you know about, you might have thought about them or heard about them or read an article about them.

9:38 But when you test your own plan against these things that may or may not happen, it's super insightful. And it can either give you a confidence to know that you are making the right decision to retire and the type of lifestyle, or it can create a pause and say, okay, I need to deal with that before I, you know, pull the plug on my earnings year, right? So second opinion on those important decisions is a good reason to have a financial advisor. The second reason she mentioned was, we found a business model that makes sense for our situation. Yeah, so different advisors will work it with under different models.

10:21 So we're talking compensation models, basically, compensation models, that's right. Some firms like Wealth Enhancement, use a managed assets as the base for, you know, we're the investment advisor, we're comprehensive financial planning is part of that package, I guess you could say. So we handle the investment management side, but we also look at how everything fits together. You know, what should we do about Social Security? What should we do about buying this house down the road? So it's kind of a combination. Then there are other advisors that work on an hourly, you know, basis. And I think we can certainly, you know, our team does that too, time to time.

11:04 So whether it's for a specific situation, or on an hourly, like a routine, like a monthly type thing, there are different models out there for financial planners. There are and so I love to give this advice. Sorry, you're going to hear it again. You've heard it before. Whoever you work with in the financial services sector, now I'm going to make that really broad, because a lot of, you know, there's no regulation on the term financial advisor or financial planner, like so some people who, in my opinion, are not broad based, holistic financial planners might use that term, right. And so I mean, if you're certified financial planner, that's a designation that you have to earn.

11:48 And you know, everyone can't use that. But sometimes people involved in insurance industries might be presented as a financial advisor. And so whoever you work with in the financial services world, I want you to ask them three questions. One is, are you a fiduciary, you mentioned that word. And that's a legal, moral and ethical standard that you as the advisor will work in the best interest of the client. You don't, so you're not selling them a certain product, because you're paid a commission that is higher than other products. You're not promoting something that you get kickbacks for, without disclosing it.

12:29 Your advice is about what is best for this client, and not just what might be suitable for a client, or something that maybe it's the only product that you sell. There are financial services companies under certain company names that they're only going to recommend things that have their title on it, their specific brand, if you will. So are you a fiduciary is number one. Number two is how are you compensated? We've just touched on this. The key isn't so much, I mean, you might prefer a different model as a consumer, which is your right to do so. The key is can that advisor that you're about to engage easily explain within a minute how you're compensated?

13:14 Because if not, if it's like, oh, it depends, and here's a 42 page pamphlet that explains it, they should very easily be able to explain to you how you're compensated. And number three is where are your assets, where are your investments, where are your accounts held? And to me, I think your assets should be held at a third party custodian. So for example, how do we do it? So we're your financial advisors, wealth enhancement group, we're going to give you advice, we're going to give you a financial plan, we're going to meet with you, we're going to get to know you. And then say you have an IRA that you want to bring for us to manage for you. We're going to manage that, you're going to understand that, but that IRA isn't going to be held by us in our office, it's going to be held at a third party custodian, in our case, Schwab or Fidelity, for example.

14:07 So if you get mad at us, if you want to fire us, if we ghost you, you know, all these things that don't happen often, certainly not to us, you can just go to Fidelity in this case, if that's where the funds are at and say, you know, I want to move my funds, I don't like this advisor anymore, I'm not as happy with their service or whatever the situation is. So are you a fiduciary? How are you compensated? And where are my assets being held? I think is a foundational three questions if you're thinking about working with an advisor or if you're working with an advisor and you don't know those questions, that's even worse, right? If you're working with somebody, you don't know the answers, but I think are appropriate to ask them and if they can't answer them quickly, succinctly and to your satisfaction, you know, might be time for a different advisor.

14:55 Totally agree. One comment, not to be long-winded, which I can be, on this number two business model, I like the asset under management approach, you pay a certain fee, you know, one company out there, one of our competitors say, we make more money when you make more money, that kind of thing, your assets go up, our fee goes up. I like that because it doesn't detract you from using the full breadth of services of a financial advisor. If you have, if you agree to an hourly format, and it's time for an annual review, it's time, you have a question like, oh, we find the second house, how does it impact my financial plan?

15:37 And these things take time. Some consumers will be hesitant to engage in seeking advice if they're being charged hourly. If you're just paying the fee based upon your assets, our clients are encouraged to reach out to us and it doesn't cost them more if they reach out to us and say, I'm thinking about long-term care, can we discuss some options? Do I still need my life insurance? When should I take Social Security? And the list is endless and things that people ask us. Yeah, I think the, and the amount that, there are studies out there that show this over time, the amount that can be saved by having that advice over time and not just a one-off kind of conversation.

16:20 Because the fact is, your life is changing, hitting different milestones. Your finances are going to be different from one year to the next, potentially, especially as you get closer to retirement. What does that look like when you start moving out of a 401k and your target date fund or whatever it might be? So yeah, having the model that we work by, I think it's, I like to think of it as having an advisor and retainer where you can give them a call, email, if decisions come up, if things come up, you don't have to worry, oh, well, I have to write this check, I have to set up this one-hour meeting and hope I can get everything in in the one hour, that kind of thing. Yeah, exactly.

17:01 And then when you get in the context of developing a financial plan, which we do for our clients, that can be multiple hours and people, it's part of our service we give to them. I encourage them to take advantage of spending the time on it, but they're spending the time, which is a resource, but they don't have to write that extra check, which is the model of some other people. So number three of the reasons that this financial advisor has a financial advisor, it gave us an impetus to get and stay organized. Anything about that, Russ? Well, I think that's huge. There's so many things that are vying for our attention out in the world, family, your job, things outside of work, whatever it might be.

17:50 Finances are not always top of mind, and if they are, maybe they are for a week and then they're not again for another couple of years. Like tax season. Right, exactly. Like tax season or you start thinking about retirement and you go on a deep dive and you do a lot of research, but then it kind of fizzles off because the fact is there are just a lot of things in life that need your attention. So the idea of working with a financial planner to get organized, especially those advisors that start with a financial plan, because Christine Benz also referenced that in her article. She didn't think she was going to have a financial plan when she started, but as part of the process, that's what they developed with her and they created a framework, a model to reference over time.

18:37 It's not like set it and forget it type of model. Financial plan is dynamic and things are changing and as things change, you could use that as your organizing guideline for how essentially the rest of your life might look from a financial lens. Yeah, absolutely. And it's so critical to have a written financial plan that you can review for a lot of reasons. First, you touched on it, but for the rest of your life, you have a base financial plan, you meet at least once a year with your advisor, hopefully more, but at least once a year, like if we don't hear from you, we're going to harass you almost to meet with us and go over the plan because we get the opportunity to say, has anything changed?

19:22 And it may be something small, but it might be something substantial to your financial plan and life events, things change, there's illnesses, there's retirement, there's social security, there's the desire to give away money or help family and all these things by having a plan, an advisor who wrote the plan with you and understand you and knows you can understand what you want to do or what your fears are or what concerns or goals and test that, let's use the idea of a gift, rather than just answer a random question is, can I afford to pay for my granddaughter's wedding for $40,000?

20:03 And just, oh yeah, that sounds like a good idea, you know, some random answer off the cuff, you can put it into the model, if spending an extra $40,000 in this given year, how does it affect your long term projections? How does it affect your goals, your cash flows? And it's so easy to do when you have that financial plan in place already. Yeah. On the point of getting organized as well, I think that's really key. I use a budgeting app or like a money tracking app for my day to day finances. And I get these ads on social media telling me, oh, you could save X amount of dollars by using this app. And I thought about it, I'm like, I probably have saved a lot of money just by getting my finances organized.

20:47 By knowing, right? Yeah, by knowing and by tracking and by seeing, all right, well, like, maybe I could cut here, maybe I could cut there, or here are things I could do differently. Same principle applies to working with an advisor. It's like, once you start getting that ball in motion, sometimes your finances is something you don't want to think about. It's that scary thing in the closet that you don't want to confront. But once you start, we see it with a lot of clients where they weren't particularly organized with their finances when they came in. But when they start, they get their estate plan ready to go. They get their investments in order. They have one central place to see what their net worth is and their assets. And it helps you create more goals and visualize how these things look over time.

21:30 So I think that is sort of a hidden benefit of working with advisors, getting organized and having that really benefit your life moving forward in terms of your finances. Yeah, exactly. Number four on the list of why this financial advisor has a financial advisor is we love having a succession plan. Yeah, I mean, a succession plan, and I think in this sense, she was talking about succession plan for her and her husband's wife and their finances. So if anything were to happen to one or both of them, it could be cognitive decline or some terrible accident, God forbid.

22:15 There's one central place where her loved ones, her family members can go and get answers. And she mentioned that this planning firm that she worked with had a lot of the information. They weren't necessarily managing her assets, but they had the information linked to her accounts. So they would be the ones who had all the answers. And having that peace of mind is beneficial. A lot of clients come meet with us and they want to have that succession plan in place. If something were to happen, oftentimes it's the husband that's been managing the finances, could be the wife. And they're like, well, what's my husband going to do? Or what's my wife going to do when I'm not able to do this anymore?

22:57 If I'm not able to manage the finances, I want to have some kind of plan in place for them to know who to go to and know who to trust. Yeah, it's super important. And from time to time, every family is different. So this general statement isn't meant to be for everyone. But from time to time, the client will want to bring their family into their financial planning sessions. Usually the goal isn't to disclose where every dollar is and certainly not disclose spending. And sometimes they want to, but most of the time it's not. It's just to explain to the people who are going to take care of them if they need it. And for the heirs, this is why this is set up.

23:40 This is my intentions. This is what I'd like to happen if you say the power to your health care proxy or executive or successor trustee is doing work on our behalf because we need you to. This is the format and this is who to go to. And so meeting that meeting the financial planner as a family can add some great benefit to when it's time for that successor to step in. Yeah. Yeah, absolutely. The last thing that Christine Benz noted about why she has a financial advisor is my favorite. And it's, it's something that I didn't realize existed in the financial planning world and that clients would struggle with this.

24:25 But number five is a third party. The financial advisor can help give us permission to spend. And I'm surprised that the number of clients, the number of people that I serve who are, their financial plan is solid, right? Not all of them. Their financial plan is solid and they are living a life that is significantly below financially. And that's just not mean spending. That could be an emotional one too. Where they are able to, they worked a long time, they were diligent savers. They had a budget. They were responsible with their spending.

25:06 They made good choices. They have pensions or they don't, they have real estate or they don't, whatever it is, their financial plan, they get a good grade. They can spend X amount a year and they're not. And then they call and say, is it possible that I could have a new car this year? You know, and you look at the numbers and yeah, by three, you know, joking, of course, but so giving that it's just like a check, like this is a big thing. I use the idea of gifts because that comes up a lot with my clients. Like they're thinking about, they want to help a grandchild or maybe a child, or maybe there's a divorce in the family and they want to help their child who got just divorced, or maybe there's someone sick.

25:51 So they're not working. They want to help them substantially for a period of time, whatever it is, the list is endless of life things. Um, but just being able to check, I alluded to this before, but just being able to check in and saying, I'm thinking of doing this. If I do this, whatever it is, am I okay? That's pretty valuable. Not just the financial advice, but the emotional side of it. Yeah. And it's interesting that people like Christine Benz, you know, and I've heard podcasts recently about this, like real experts in, uh, in this field, they have trouble switching from saving to, uh, you know, spending what that money was intended for.

26:38 So you're saving for retirement and now you're retired, but you're not really, you know, living the lifestyle that you imagined that you would be because you're fearful. And, uh, it's not always that, but sometimes it's habit, but other times it's, I'm scared I'm going to run out. You know, uh, that's probably the biggest one that we see. And again, not to belabor the point, but, uh, having that financial plan, and she mentions it here as well, is like, you get to see what would happen if the market dropped, what would happen if taxes went up, if, if, uh, healthcare costs were through the roof. Um, we can, you know, model those scenarios, even from a conservative starting point and see how that would affect things.

27:25 And if it has a dramatic effect, okay, then maybe there are things we need to do. If, if not, that is sort of that permission to be like, okay, like you're, you're going to be okay. So let's think about enjoy. What are the things that you would do and not just to spend money to spend money, but what are the things you would do to enjoy the life that you've made for yourself in retirement? Sometimes that's charitable giving. Sometimes that's, you know, going on the extra trip. So, you know, you name it for every family, it's gonna be something different. But, uh, one, one, uh, anecdote I'll add is, uh, some, so when you guys had recently on the show, it was, um, uh, is it Gilbert? Uh, something, something Fritz. Yeah.

28:05 Fritz Gilbert. Yep. It's got a retirement manifesto. That's right. So I was listening to a podcast with him recently, and he was saying, uh, rather than reinvesting his RMDs, uh, or what's left of his RMDs after he spent what he wanted to spend, he kind of uses that as the benchmark. Like I need to use up my RMD to be able to spend the money. So whether it be, and in his case, he was saying the remainder he would give to a charity or he's, you know, he's running this, um, organization himself, him and his wife, uh, for dogs. So, uh, there are a whole bevy of things that you can do with that money, but being able to spend what you've worked so hard for, that's, that's the goal, right?

28:48 That when you're thinking about retirement, you're thinking, well, I'm going to do this and that and the other thing, but then the fear steps in and the habit of, you know, you're used to saving, how am I going to be pulling from that? It's a hard, uh, It is a hard transition. Like you've programmed yourself for decades to save, save, save, and, uh, you know, limit your spending some level. Um, so I think it's super valuable, um, to have that plan, to test that plan and to get that second opinion or whatever, to, to ask those questions and working with an advisor, you have a trusted fiduciary to use the word again on your team, just like you should have a good tax person and a good lawyer for your estate planning, to have a team of professionals around you and turn to them in these certain times and check in with them regularly to make sure that you're, uh, you know, checking those boxes and you're prepared for things, but also that you're living the life that you're able to live.

29:48 And, uh, I don't know how you put a price on that. I think it's invaluable for that peace of mind and that certainty that you're going to be okay and be able to not only meet your obligations, but live the life that you've earned. Yep. Well, if any of these things, uh, hit home with you, if you're wondering if you should get a second opinion, or if you're thinking about, should I have a plan? The answer is yes. Uh, we're here to help. We're part of the AMR team of wealth enhancement, and we have an office in Hyannis. Uh, we help clients all over the country. So if we can help you out, please don't hesitate to reach out. And thank you very much for listening to our podcasts until next week.

30:31 Keep striving for something more. Thank you for listening to something more with Chris Boyd, call us for help, whether it's for financial planning or portfolio management insurance concerns, or those quality of life issues that make the money matters matter, whatever's on your mind, visit us at something more with chrisboyd.com or call us at 866-771-8901, or send us your questions to amr-info at wealthenhancement.com. You're listening to something more with Chris Boyd, financial talk show, wealth enhancement, advisory services, and Jay Christopher Boyd provide investment advice on an individual basis to clients.

31:11 Only proper advice depends on a complete analysis of all facts and circumstances. The information given on this program is general financial comments and cannot be relied upon as pertaining to your specific situation. Wealth Enhancement Group cannot guarantee that using the information from this show will generate profits or ensure freedom from loss. Listeners should consult their own financial advisors or conduct their own due diligence before making any financial decisions.