Free Yourself

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. You know, we used to have a crowd cheering when we started the show. I kind of missed it, so I'm just throwing that off there.

0:40 Anyway, welcome everybody. I'm just playing around, glad to have you with us for another segment of Something More. I'm Chris Boyd. I'm here with Jeff Perry and Russ Ball. We are all of the AMR team at Wealth Enhancement and our show today, we're talking about freeing yourself. Freeing yourself up in time and all kinds of things when it comes to whether to do things on your own or to get some help in the process. Jeff, where should we begin as we get started today? It's an interesting topic because it comes up in almost every part of your life, right? So do you want to paint that wall? Do you want to paint that room?

1:22 It's going to make a mess. Or do I do it? It's tax season, right? I remember you and I had this conversation last year and I struggled with it last year. The listeners missed that episode last year. I was like, I can do this myself. I really think I can do this myself. I know I have a good understanding of it, but I'm not sure about this issue. Should I do the research? And I decided because time, you know, it's tough to replace time. I don't know anybody who can do it. Most valuable of assets. Valuable commodity or whatever the saying is. So I decided, and I decided again this year, Chris, to pay the money because that's what you're giving up, right?

2:07 Everything that you have somebody else do costs something usually. So what do we want to do ourself? What are we capable of doing ourself? If I, you know, need a new outlet cover on my electrical switch because it cracked, I can do that. But if I need a new electric circuit panel, I don't think I should look at YouTube to how to do that. So what are we willing to give up? And is it worth the cost? And, you know, it's an individual question, but you do, if you allow other people to do things that they're experts at, it's usually done better.

2:48 Yeah. Oh, there's, yeah, that's a good point. There's expertise. Right. And I think there's also maybe sometimes confidence, you know, that that brings, right? People feel a little more confident in the outcome. So I think medical things come to mind as well. Like, you know, you think some things you could do yourself, but you wouldn't even think about it when it comes to some of the medical things. You want to get the expert to give you an opinion. It usually, as a retired lawyer, quote unquote, legal items, like so many people use legal forms or one of the websites, simple things, what they think of simple things, maybe a simple will, or maybe a contract, or maybe a lease, and everything's fine until it's not.

3:48 Yeah, because it's not as customized, as tailored as it might be if you went somewhere local. And it's not written, it's not written for your individual circumstances. Right. It's a template form. It's a template form designed to be happy, that everyone using it might be happy. Yeah. Yeah. For most circumstances, but not necessarily what you're trying to do. I saw several lease cases, tenant and landlord cases where people just use the standard form and things, you know, disputes came up. And sometimes those subjects aren't even in the lease. Right. So, you know, it's fine, you save some money, you can do it yourself, but you're probably not protecting yourself in the legal sense.

4:36 Or, you know, it's not accomplishing what you intended it to do. That's right. And ultimately, it can cost you more money. Well, and that's the case when it comes to the kinds of things people deal with when it comes to our profession as well. Definitely. We run into people routinely who are smart people. You know, they can they they're doing investing on their own. And sometimes people who really spend the time and develop the skills of evaluating a company's balance sheet or trying to evaluate why to buy, why to sell a company, they can do that effectively.

5:18 Sometimes more broadly, they look into which fund to mutual fund or exchange traded fund they might want to own. And these are things that people can do. It's not say you can't do it, but you do it with the same kind of time and energy. Right. There's a there's a value to the time. One, freeing up that time to when you deal with this day in, day out, are the things you recognize and are there things you learn that someone who does it on the weekend doesn't necessarily have the opportunity to do?

6:02 Let's talk about timing. Right. Sometimes we talk about not wanting to time the market. Right. But that doesn't mean there aren't times when we make some judgments. About do we want to what's happening with interest rates? Oh, maybe we want to change a little bit of the weight of where we have emphasis in our portfolio on the duration, the interest rate sensitivity of our portfolio. There may be changes in the spread of the credit spread of how much more benefit am I getting by taking credit risk or is it enough benefit to take that credit risk?

6:46 In an example I came across recently, people had their fixed income investments entirely in high yield bonds. Well, that's not really going to give you the the uncorrelated experience you might be expecting the bonds to play the role of being less risk in the portfolio. Right. So, you know, these are that's just one small example in thinking about like a fixed income slice. And there's like times when you say, yes, I do want this and no, I don't. Right. Sometimes they're paying you for the risk, extra risk, and sometimes they're not.

7:26 And it might be worth it. Or in the same with the interest rate sensitivity of, well, their interest rates expected to be rising or falling. That could have an impact on where I want to position myself when it comes to duration and what that would mean for the consequence of price on my bonds, my existing bonds. So when it comes to stocks, you can you can make similar analogies, right? That there's there's times when you want a little more of this, a little less of that and why that might be right. So we run into routinely, this is a very common thing, how much international one owns in their portfolio.

8:10 Over the last decade or so, it's been advantageous to be overweight U.S. equities relative to foreign stock. All right. And that won't always be the case, no doubt. And there will be times when things flip. But if you are invested in a, say, a target date fund or some blend of indexes, a balanced fund that has different indexes, you probably have a lot more international exposure than what you might do if you were designing things yourself.

8:53 So if you're kind of relying on the experts when it comes to do it yourself or offering, you know, a streamlined, simplified offering, you may not get the nuance and the judgment of how to position things. If you're doing it yourself and trying to say, well, what should I compare it to? How much should I have? You either might totally miss out on international and not have some of the diversification effects that there's reasons to have. And at times we want more. Right. And at times we want less. Or you might be inclined to just say, well, what's the index?

9:35 And I'll have 40 percent of my equities be international and 60 percent be domestic. And in the process, you know, you might be have been overweight over the last decade. You follow my point. I'm just coming to things that sometimes having someone who's in it a little more in the thick of it, they can bring some judgment to this that you might not always know. Well, and then there's you don't know what you don't know. Right. So, you know, that we do a very thorough meeting. Meeting number one, getting to know the client and before we are suggesting anything.

10:15 And part of that is doing a risk analysis, risk assessment. And I don't think too many do it yourselfers do a self or even, you know, any structured risk assessment. It's just they kind of have a feeling. Right. Which I think when you're just having a feeling, you're either one or the other. You're like, oh, I risk doesn't bother me. I'm going to. You know, develop a portfolio of individual high tech stocks because I'm OK with risk or risk really bothers me, I'm not doing anything with the stock market, I don't know, I can't handle that. So I think that's something that do it yourself is miss the opportunity to, you know, do a proper risk assessment and develop a portfolio that's in line with that risk assessment.

11:01 So many of them are maybe not taking enough risk, excuse me, or they're taking too much risk that they wake up in the middle of the night. Right. Yeah, exactly. And I think sometimes when, you know, this you bring this topic up, not only are they starting out at the right place of what's the right allocation that they should have, but there's also the notion of markets move and create anxiety. I'm missing out. I should maybe I want more of that. Yeah. Oh, my gosh. The market's dropped. What the hell? I don't want any of that. Get me out. Right. And there's that overreaction.

11:42 We've seen a Dalbar study year upon year upon year where the average investor invested in a given fund has a drastically different performance under performance relative to the performance of the fund. So what the fund posts as its returns. The average investor typically gets far less than that because they tend to buy it after it's done well and sell it in a year after it's done poorly and they move on to another investment. And in the process, the experience they had is far different than the experience of the fund itself.

12:22 That's right. We've referred to the study from Vanguard that they talk about the value of a good financial advisor and that this can add as much as three percent per year to a portfolio because of all the things that advisors can do, including paying attention to the risk profile that you described, right, paying attention to costs of the investments you own, when to pull money, where do we draw from decisions about asset location, you know, like which investments go in, which tax status, all of these considerations can add some incremental value.

13:07 The biggest thing they focus on is behavioral coaching, which is to say, I'll give you an example that's common these days. My politics are X, therefore, I want more, I want less, whatever it is I want in or I want out. And that's an example where behavioral coaching can really add value because what we've seen year after, you know, administration after administration is stocks tend to rise. It's not to say they always rise, but they tend to rise over time.

13:47 And we're better to have exposure than to not. It's a question of that asset allocation decision, how much is befitting your temperament for volatility, your tolerance for risk. We had Russ and I had a conversation about this just yesterday with a client who their risk tolerance on their questionnaire kind of kind of landed them more like a conservative investor. But they've been really nervous and had a lot of cash and didn't really feel comfortable with markets. So they were really underweighted. So we said, all right, let's let's at least incrementally enhance how much, you know, risk you're taking.

14:30 So instead of it being an amount that was in line with their appearance of risk tolerance, we recognized that their actual risk tolerance was far less. But the fact that we're saying, hey, we're going to do this in a measured way, they're open to doing some, you know, more than they otherwise would have. And so I think long term, that'll help them get better returns. The other piece is, I think, especially around politics, clients will come in and rather than they might come in with a with a stance of, oh, I want to sit on the sidelines now or now I want to get even more invested.

15:12 I think just having our take on what the way we're seeing the market, what we're seeing in the whole political atmosphere, you know, our part of our full time job is to keep abreast of all the information that's out there and read these reports and assess its impact. And we're really in the weeds and we're learning what the consensus is and we're building our own views. And that kind of dialogue with clients can help them either decide to stay the course or, you know, scale back risk, but maybe not take everything out or put everything in and make some kind of drastic decision there. So let's go back to this this notion of do it yourself.

15:54 I think sometimes we've talked to people and they like doing some of this stuff. You know, they have the enjoyment from it. We've got a longtime client who has coined the phrase, you know, he wanted to play in a sandbox and we use that. We've applied that to all of them, talking about this notion. And, you know, while he's interested and enjoying it, he's doing some of it himself. But what he's also said is, I don't want to put all my money at this kind of risk I'm willing to take when I do this, because I'm not as an individual. He's not as focused on risk management.

16:37 He's looking at, oh, where do I think there's opportunity? So he's delegated to us to say, hey, you do some of this stuff in a way that's responsible and careful in an allocation that's befitting our circumstances. But I'm going to take these risks over here and have some fun with it and see what I can do. Nice way to end that impulse, knowing that he's taking more risk, willing to take the risk because he thinks he can outperform. But at the same time, maybe saying just in case and the thing he's also really focused on is I may not be here forever or I may not have capacity forever.

17:22 If and when something happens that I'm not able to do this, I want the team in place with my estate plan, with my financial plan, with my portfolio, with my insurance, whatever it is, to be in a position that others will be able to help my spouse in his case, his wife, have confidence and be in a position where things will work out OK. I think that's a big driver for people when they do it themselves. The reason they hire help, it's not because they can't do it themselves. It's because they recognize their mortality or the risk of an incapacity as, you know, you know, as time people age and sometimes get less engaged in their portfolio, less attentive.

18:11 And the potential for incapacity or whatever that they may not be bringing to it as much of the judgment that they love now, you know, someday they won't. And so the idea of having the opportunity to select the team, to build around them, they think is a good plan for just in case and and it gives them a little bit of that. I don't know what I don't know. So this helps me to, you know, hedge the risk. Yeah. Even though even the individuals who do who are interested, whether it's in a sandbox or they're managing their whole account and they, you know, they're reading Barron's on Saturdays and they're watching CNBC in the morning and they really feel like they're putting the time in.

18:58 Yeah. One of the things I see from even the people who fit in that category is they're not they either don't recognize it or don't have the skills. What you don't know is to put that their investment, their their savings, their investments, their IRAs, their 401ks, whatever it is, in the context of a comprehensive financial plan and to do proper forecasting. Like so you can be really good at and interested in investing and analyzing and think you can pick the right funds. But is this a plan that's actually going to work for you in the decades to come? And is your you have goals, the goals in line with your that you're investing in your plan that you kind of have in your head?

19:46 So I think I'm glad you brought it up. The idea that there is a difference in investing and the overall personal finance picture. And again, whether it's on the part of the portfolio management where, you know, the depth of resources may be different for an individual than for someone who does it for lots of people with, you know, hundreds of millions of dollars or more, depending on who you're working with. And then. The the same thing about when it comes to financial planning, the kind of tools and resources that might be at the disposal of the professional can be really beneficial.

20:37 And it it's not say that people can't do some spreadsheets and come up with some similar kinds of resources, but. You know, we go through these analysis with people and I mean, the in an instant, we can evaluate alternative scenarios. What if what if the person one dies at a young age? Boom. It affects all the pension numbers. It affects spending numbers. You know, we've we've got it all structured in the way the program works that we can then forecast, OK, the income is different.

21:22 You know, how does that play out? Oh, it's good. It's bad. Whatever. What's the reverse? What if this person dies too soon and that person lives long? What if we have long term care events? What if we change our Social Security timing? What all these variables that we can kind of. Do assessment around in rapid succession, it it's funny, we had a conversation recently with a client and they were saying, hey, I want to make sure we're dealing with I saw this thing on TikTok, I think it was, I don't know, whatever it was. It was one of the social media somewhere with that opening line. It could be anything.

22:03 Well, no, it was social media was. But anyway, they saw this this reel, you know, and the guys talked about all these pillars and he's like, are we dealing with have we looked at all these pillars? And it's like we don't talk about it necessarily with the sizzle that they had from the from from the presentation. But it was like, yes, we've looked at your income planning and your your portfolio design and your tax strategies and, you know, whether you should do a Roth conversion and what's going to be the impact of health care and estate planning and so forth. It's all been done, but it's been done in a way that we tried to jam it into a communication very rapidly where we've done all this work behind the scenes.

22:49 And then we have a one and a half hour meeting trying to go through everything. And, you know, a lot of times people don't realize there's a lot of work that's gone into this that's been done in the background before they even came in. You know, and then in the meeting, we're going through a what if this and what if that. And if we wanted to change this, we could, you know. Yeah. And and it's a peace of mind thing as well. And not just it's a time thing. You know, obviously you're gaining time by having someone else do these things for you. But it's also equally it's a peace of mind. You have long term projections. You have annual reviews, which I think are just really key where you come in at least once a year.

23:31 We encourage you sometimes more depending on what's going on, but at least once a year to come in and go through those projections again. Talk about did anything in your life change? Good or bad? That's exactly it. Right. That's the reason. And even if they don't, circumstances change. That's right. You know, things around us change. That's right. And so, you know, you get these refreshers and you can add in family as you get older, you can add in family members or and then these things come up like you're you were mentioning, you know, like, oh, my gran, my grandson is going to college. Can I help him? Right. And you can meet with your advisor and say, if I do this, if I do ten thousand dollars a year, a hundred thousand dollars a year, whatever your wealth is, what does it mean to my likelihood of my plan working until I'm ninety five or whatever your target is?

24:23 Yeah, actually, Jeff, this unknowingly, we just had that conversation with someone yesterday where he was saying, you know, this year I think we're going to take out some money. Grandson's going to college and we might want to help out. And, you know, so we're like, oh, let's dust off the plan. Let's take a look. And this was interesting. This this client had been really had a lot of forethought in when we remember back when there was an opportunity for people to convert to Roth and pay the tax over a number of years. Yeah, yeah.

25:04 I forget when that was because I don't know. But Ed Slott always brags that he did it. Whenever you listen to Ed Slott, he went all in. He converted everything. Ed Slott. Oh, yeah, yeah, yeah, yeah. Yeah. So this guy did too. Basically, he had he he basically took the opportunity to do all that. And so, you know, feeling feeling good about that decision. And it's, you know, it's worth bragging about now. It's brilliant. Right. You know, no tax. Right. So anyway, in any case, so we were going through that kind of an assessment of like, what if how much, you know, we might want to do this. So it's it's exactly that, you know, things change and evolve.

25:46 And, you know, and you start thinking, well, what's the impact? How well, you know, the thing, you know, if if one of us dies, maybe our income is different considerably. Do we still have enough? You know, that kind of thing. Right. Make sure that there's resources to meet your needs. Yeah. And then when you retire or if you're retired already, what do you want to do in your retirement? Do you want to do it financially, you know, being a financial analyst, or do you want to do it or do you want to unleash your time? Right. Yeah. And so, right. What do you want your focus to be and how easy do you want the transition to be as you get older? And, you know, should something happen, it's a gift to your to your loved ones to have your situation organized and, you know, not in chaos, which happens with some people as they get older and lose their, you know, their cognitive skills decline.

26:40 It's going to happen to all of us. Right. Yeah. Yeah. So well, I mean, that's the point about time is such a great one. I mean, none of us knows how long we have. Right. And there's only an amount of time that we can spend in whatever we want to prioritize. I'm laughing because there's a talk show host that talks whenever she's talking about certain things with the caller, she says, OK, between now and dead, what do you want your life to be? What do you want to do? Right. Yeah. You want to spend your time. Doing because you get to pick that. Well, and I'll tell you, for me, it's not doing my tax return.

27:21 I guess I'm with it because I'm sure that's a good example, you know. But yeah, that's exactly it. And for other people, we deal with people all the time who, you know, they'll say, well, I'm sure glad you like doing this stuff. And we do. We love doing this stuff. But not everyone does. And that's perfect. Hey, that's what makes an economy. I'll do this for you. You do something for someone else. And we've got the we've got the economy moving along. You know what I mean? Chris, we have a guidebook called Unleashing Your Time, the Unexpected Freedom of Delegated Investing, that if anyone's listening and they would like a complimentary copy, just send us an email and we'll just email it back to you.

28:06 It's no obligation, no sales, no salesperson will call. It's just a great opportunity. And then, you know, obviously we're happy to help if we can. But Unleashing Your Time, is that what it was? Unleashing Your Time and its subtitle is the Unexpected Freedom of Delegated Investing. And I'll add in financial planning. Yeah, because we'll definitely talk about that as well. If you if you were if you were to inquire with us, take advantage of it. It's a freebie. It's not very long. It's it's a nice little resource. We'll send it either by email or in print, whatever you'd prefer.

28:46 Let us know. So to take advantage of that, there's a few ways you can do that. Let me pull up the the scroll. So I have the right scroll here. But you can well, I'll throw this one up. You can if you're watching us on video, you can send us an email at amr -info at wealthenhancement.com. You can always give us a call as well. 866-771-8901 is an easy way to do that. We would love to hear from you, not only for this purpose. So if you want the free, the complimentary brochure, OK, whatever the right to refer this book is what we guidebook.

29:32 Thank you. Take advantage of it. But if you want to tell us topics you'd like to hear more of, if you'd like to have a question, something going on that you'd like us to talk about and give some input on with, you know, just from a distance, you can send us an email. We'd love to hear from you. Amr-info at wealthenhancement.com. And if you'd like to schedule anything with us, of course, you can reach out to us by phone either locally 508-771-8900 or toll free 866-771-8901. Until next time, keep striving for something.

30:12 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 toll free 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 only proper advice depends on a complete analysis of all facts and circumstances.

30:52 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.