2022

Don’t Move to Another State Just to Reduce Your Taxes

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By Jerry Golden

We know lots of friends who are considering moving from a high-tax state, such as New York, to a state with low or no state income taxes. They think they will end up with more money, although they are torn because they may also be moving away from family and friends just to escape state taxes.

What I advise them to do is think about spendable income — the amount they’ll have to spend after taxes — and not just low or zero tax rates. If you have more money to spend after paying the tax bill wherever you currently live, you might as well stay where you are, if it’s closer to the grandkids. You may be able to pay for at least one warm-weather winter trip, too.

Design a Smarter Retirement Income Plan

Before making life decisions about moving (or downsizing, purchasing insurance, etc.) retirees ought to know their number for their total starting income, and have a plan for retirement income that includes a projection of income and savings, and all planning assumptions.

The income plan ought to cover:

  • Starting income
  • Inflation protection
  • Beneficiary income protection
  • Spousal income (if applicable)
  • Plan management (when plan assumptions are not realized)
  • Market risk to plan (when markets fluctuate)
  • Legacy passed on to beneficiaries or heirs

All these subjects are covered in articles on Kiplinger.com. In one article, How to Generate an Extra $20,000 a Year in Retirement, we examined the income from our favorite investor (a 70-year-old woman with $2 million of savings, of which 50% is in a rollover IRA). We saw a large before-tax income advantage from Income Allocation planning. Even if she invests a portion of that to meet her legacy objective, she still has a $20,000 advantage in spendable annual income.

The question is whether she gives back that advantage in federal and state income taxes in her home state of New York.

Reducing your Combined Federal/State Retirement Tax %

You may have heard that New York is a high-tax state, and that’s true. It ranks No. 5 on Kiplinger’s list of the 10 least tax-friendly states for middle-class families.

Importantly, most states exclude Social Security income from taxation, as well as a portion of IRA distributions and employer pension plans. Together with interest on state and local bonds that is not taxed, a retiree has a head start in reducing state income taxes.

But the question remains how much of that advantage is eaten up in New York state income taxes. The key for our Go2Income planning is that annuity payments are treated the same in both the New York and federal tax returns, meaning the tax benefits carry over. And with some of the adjustments at the state level mentioned above, the favorable tax treatment of annuity payments may be even more valuable.

Let me share with you the high-level elements of our 70-year-old investor’s federal and New York state tax filing.

A table shows a total gross income of $168,183 results in federal taxes of $20,191 and New York state taxes of $3,564.

Benefits and Cost from this Planning

For our investor the income taxed by New York would be around $67,500 — or about 40% of her total gross income. As a percentage of total income, the state income tax is a little more than 2%. Even after adding federal taxes, her Retirement Tax Rate is less than 15%. That leaves her a big advantage in spendable income. A traditional plan without annuity payments and with lower income actually pays more in total taxes — with a combined tax rate of over 18%.

So, our plan produces more cash flow from savings, much of it tax-favored, and gives our retiree the freedom to live where she prefers.

And the cost? The primary one is that annuity payments don’t continue at your passing even before the premium has been recovered.

You can elect a beneficiary protection feature that makes sure total annuity payments will equal the premium at a minimum. However, that choice will reduce the level of guaranteed annuity payments and some of the tax benefits. Or you can use the higher annuity payments to purchase some life insurance. And those planning choices aren’t the only options you will have in terms of beneficiary protection.

What if the lure of zero state income taxes is too great? Our retiree could move to Florida, save the $3,500 in New York taxes, adopt a Go2Income plan for her circumstances — and pay for the kids’ trips to visit her.

So be with the kids, live where you want and possibly leave less at your passing if it’s early in retirement. Bottom line: Don’t follow the crowd. Do your own research. And rely on resources at Kiplinger.

At Go2Income, we can provide you with a complimentary personalized plan that delivers both a high starting income and growing lifetime income, as well as long-term savings.

Read the Full article: https://www.kiplinger.com/retirement/604701/dont-move-to-another-state-just-to-reduce-your-taxes

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersDon’t Move to Another State Just to Reduce Your Taxes
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Looking to Curb Your Retirement Savings? That’s a Bad Idea

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By Brian O’Connell

Americans are doing what they can to deal with skyrocketing inflation.

According to a new survey from New York Life, U.S. adults say they’re cutting back on dining out, and are pushing back big-ticket items like vacations, buying a car, or buying a home. That’s understandable, as consumer prices are up 8.5% on a year-to-year basis through April 2022.

Americans are also curbing their emergency fund contributions, partly to keep focusing on long-term retirement savings, which haven’t hit the chopping block — yet. According to New York Life, monthly household savings contributions are falling by $243 (and $289 by millennials), yet 72% of respondents still expect to retire at their desired age.

Keep the Retirement Train Rolling

With so many Americans whittling away at the household budget, should retirement plan contributions be on the chopping block next?

No way, say investment experts.

“Lost good habits take a long time to recreate,” said Paul Tyler, chief marketing officer at Nassau Financial Group in Hartford, Conn. “It’s much better to learn how to live on less now than live with regret later.”

According to Tyler, when you stop contributing to a retirement fund, you lose a valuable money-growing tool — compound interest.

“Depending on the growth rate of your savings in the future, the compound effect – both positive and negative – can be eye-popping over a twenty-year period,” he said. “So even with the occasional downturns, putting money in a 401(k) or an annuity could prove to the best hedge yet against inflation.”

Other money managers say that retirement funding should be deemed as a major household financial priority, just like food, mortgage payments, and health insurance.

“It’s a big concern when I hear people tell me that they should cut back or reduce their retirement contributions,” said Ashley W. Folkes, director of growth at BridgeWorth Wealth Management. “I like to talk to clients about their financial priorities, very similar to a hierarchy of needs pyramid, as funding retirement is very much foundational to their futures.”

Unless you can’t put food on the table and gas in the tank to get to work, Folkes advises looking at the budget to find other ways to reduce costs.

“Cutting our back on retirement contributions may feel like the easier, softer way to reduce cost, but it can be detrimental,” he said. “It’s very similar to trying to time the market. We don’t know how long inflation will stay at these levels.”

“You’re not only missing out on putting money into a bucket to fund your future, you’re also missing out on buying funds when they are cheap,” he added.

If You Have to Cut Retirement Savings, Try This Approach

Preston P. Forman, a certified financial planner with Seasons of Advice Wealth Management in New York, said he has yet to see clients reduce retirement contributions. But if you have to cut long-term savings, take a short-term mindset.

“For most of this century inflation has been an afterthought but I expect some people will trim their 401(k) contribution,” he said. “After the pandemic, no one is in the mood to deprive themselves of anything.”

Forman advises clients to reduce, not eliminate, retirement contributions if necessary and then reevaluate in three months.

“By then often the storm has passed, and it’s a lot easier to increase a contribution from 10-to-12 percent than from 0-to-12 percent,” he said. “The funny thing is that many clients who were going to cut their contributions never get around to doing it. And that’s a good thing, ultimately.”

Read the full article: https://www.thestreet.com/investing/dont-curb-retirement-savings

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersLooking to Curb Your Retirement Savings? That’s a Bad Idea
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Episode 148: Planning for Very Long Happy Retirement With Steve Vernon

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People are living longer. Much longer. How should that change how we plan for retirement? Steve Vernon, President at Rest-of-Life Communications and Consultant for the Stanford Center on Longevity joins us today to talk about the financial and emotional issues we all need to consider.

Also, do you want to get regular updates on news about guests of our show? Go to https://thatannuityshow.com and subscribe to our newsletter.

We hope you enjoy the show.

https://www.linkedin.com/in/svernon/

Steve Vernon

Don’t Go Book in Retirement:

Thank you to our show sponsor; The Index Standard!

Fixed Index Annuities and RILAs are getting more complex and technical just when fiduciary rules are getting stricter. How do you choose the right index and allocate to them? The Index Standard is your answer. They are an independent provider ratings and forecasts on all indices and ETFs used in the US insurance space. Their process is systematic and unbiased, identifying robust and well-designed indices. We all know finance is complex and The Index Standard has a clear ratings system and uses approachable language to demystify this complexity. Visit theindexstandard.com for more information.

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Ashley SaundersEpisode 148: Planning for Very Long Happy Retirement With Steve Vernon
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Episode 147: Preparing for Life 2 With Don Ezra

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Planning for retirement should not be just about figuring out how to pay the bills when the paychecks end. Planning should be about finding a new identity, purpose, and direction that is fulfilling in later years. Don Ezra, investment expert and author joins us to talk about his own journey into retirement and the guide he has created to help people learn from his own experiences.
Also, do you want to get regular updates on news about guests of our show? Go to https://thatannuityshow.com and subscribe to our newsletter.
We hope you enjoy the show.
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Transcript

1
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[Paul Tyler]: hi this is paul tyler and welcome to another episode of that annuity show ramsey

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[Paul Tyler]: another great guest this time do you want to do the honors and introduce us

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[Ramsey Smith]: absolutely i’d be happy to so we’re joined today by don ezra from sunny toronto

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[Ramsey Smith]: canada

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[Ramsey Smith]: and this is a fantastic opportunity today for a number of reasons but the primary

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[Ramsey Smith]: reason is

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[Ramsey Smith]: that don spends a lot of time talking about what we do and how we feel about

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[Ramsey Smith]: retirement both the transition into retirement and and life

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[Ramsey Smith]: in in retirement or graduation as he likes to put it which i think is a fantastic

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[Ramsey Smith]: word so don spent many years at russell investments and has a phenomenal

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[Ramsey Smith]: background was an actuary but

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[Paul Tyler]: thank

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[Ramsey Smith]: this very interesting thing that that don does he’s forward focused and we’re

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[Ramsey Smith]: going to talk about that and that’s something that all of us in our lives will

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[Ramsey Smith]: have to face and and that annuity show is about more than just the money and so

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[Ramsey Smith]: that’s why is this is really a fantastic opportunity for us so

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[Ramsey Smith]: tell us

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[Paul Tyler]: help

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[Ramsey Smith]: tell us a little bit about your about your journey and and how you came to the to

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[Ramsey Smith]: the conclusion that it was worth it made not just worth it was it was worth it

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[Ramsey Smith]: was an important time opportunity to focus on life after graduation if you will

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[Don Ezra]: absolutely thank you for the the very generous introduction and it’s an honor to

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[Don Ezra]: join the past list of guests you’ve had on your show it’s fantastic thank you

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[Don Ezra]: so i actually retired as the word goes i hate it as you said i prefer graduation

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[Don Ezra]: from full time work but i i retired at a time of my own choosing which many

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[Don Ezra]: people don’t get do and in a way i wanted to do

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[Don Ezra]: and i continued working part time with

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[Don Ezra]: russell and so everything was absolutely perfect and i was absolutely astonished

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[Ramsey Smith]: it’s like everything

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[Don Ezra]: as a result of that to find that i felt completely discombobulated i had no idea

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[Don Ezra]: what had suddenly gone wrong

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[Don Ezra]: but all of a sudden

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[Don Ezra]: things seemed to be falling apart even though i was doing it exactly the way i

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[Don Ezra]: wanted to and and i realized that

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[Don Ezra]: something

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[Paul Tyler]: what

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[Don Ezra]: my friend mayor sta and a professor at santa clara university

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[Don Ezra]: had said was really really really important and i’d never realized he so when

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[Don Ezra]: when

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[Paul Tyler]: what

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[Don Ezra]: when you when you leave work

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[Don Ezra]: you lose part of your identity you lose

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[Don Ezra]: access to your accomplishments you you you lose a community and at russell we

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[Don Ezra]: were not just colleagues we were friends and i lost all of that even though i

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[Don Ezra]: only lost half of it because the rest of the time was all my own

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[Paul Tyler]: the

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[Don Ezra]: but i felt that

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[Paul Tyler]: my

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[Don Ezra]: i i’d been i was a tree that had been uprooted i was

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[Don Ezra]: a very healthy tree it it had grown in soil that nurtured the growth and it was

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[Don Ezra]: thriving and all of a sudden it was uprooted and now i had decisions to me what

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[Don Ezra]: kind of a tree did i want to be where did i want to plant it and wherever i was

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[Don Ezra]: going to plant it the roots would take time to penetrate and grow back again and

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[Don Ezra]: as it happened it took me about three years of thinking about this and

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[Don Ezra]: researching it i mean i

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[Paul Tyler]: oh

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[Don Ezra]: was a consultant what do consultants do other than research

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[Don Ezra]: and benefit from other people’s wisdom which they absorb it took me three years

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[Don Ezra]: before i realized the kinds of things i wanted to do

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[Don Ezra]: and and part of that was actually moving from new york back to toronto which i

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[Don Ezra]: had left twenty five years earlier and it was all that kind of stuff

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[Don Ezra]: that that made me realize that transition i mean we talk about retirement as if

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[Don Ezra]: yesterday you were working today or retired transition is actually

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[Don Ezra]: psychologically a very important stage and in my case it was a three year long

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[Don Ezra]: stage and one of the things that the guys at russell had me do was the first

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[Ramsey Smith]: yeah

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[Don Ezra]: year into that they had me back at the client conference which it had been my job

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[Don Ezra]: to organize in the past and they

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[Paul Tyler]: i think

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[Don Ezra]: had me give a keynote just describing myself s in retirement and it’s the only

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[Don Ezra]: time in my life i ever had a standing ovation and i know what it was i mean we

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[Don Ezra]: were friends with the clients too so they they liked the old guy they were seeing

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[Don Ezra]: in front of them like seam again et cetera

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[Paul Tyler]: what

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[Don Ezra]: etc but i think they realized that this was something they were going to have to

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[Don Ezra]: go through and the honesty of here’s how i feel here’s what i’m doing here’s

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[Don Ezra]: what’s going right here’s what i’m wondering about i think i think that got

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[Don Ezra]: through to them in a very personal way because they knew they were going to have

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[Don Ezra]: to go through that as well

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[Paul Tyler]: then

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[Don Ezra]: and it was as a result of that that i thought ok can i be a consultant again can

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[Don Ezra]: i research this and so i started researching in god bless the internet and and

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[Don Ezra]: that ended up first in a book on happiness because i’d been studying the brain

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[Don Ezra]: for behavioral finance considerations and stuff like that and after that into

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[Don Ezra]: what are the issues that are involved that have caused me to be to be so

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[Don Ezra]: uncomfortable i don’t know if combobulated is a word but after being disco bob i

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[Don Ezra]: finally got cobo bl it again

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[Don Ezra]: and it occurred to me that sort of if you think of this as a journey life this is

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[Don Ezra]: a journey through the second part of your life it’s long enough to be a life so i

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[Don Ezra]: call it life too

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[Don Ezra]: the

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[Paul Tyler]: no

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[Don Ezra]: there are there are some rocks you need to avoid and as i thought about it i mean

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[Don Ezra]: education is the way to do this but what are the subjects it’s not history math

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[Don Ezra]: geography literature and stuff like that the three rocks to avoid there’s there’s

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[Don Ezra]: there’s an identity rock there’s an activity rock and there’s a money rock so

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[Don Ezra]: exactly as she said ramsey there’s there’s much

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[Paul Tyler]: oh

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[Don Ezra]: more to this than just money

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[Don Ezra]: and some people avoid them all some people hit them all but if you’re aware of

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[Don Ezra]: those rocks the identity the activity and the money rocks at least you know what

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[Don Ezra]: you’re looking for and you can get i put together as much wisdom as i could

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[Don Ezra]: assemble from other people’s lives and my own

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[Don Ezra]: and then put them under these headings and say what can you do

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[Don Ezra]: how do you identify the issues and these headings in your own life and then what

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[Don Ezra]: questions can you ask yourself to relate to how you can then start to at least be

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[Don Ezra]: in control it’s it’s like most people have fear and dread when they think about

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[Don Ezra]: retirement they they they don’t want it it’s they don’t say that they say it’s

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[Don Ezra]: too complicated but it’s not actually too complicated for them it’s just they

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[Don Ezra]: don’t want to think about it they’re scared and so that’s that’s where i where i

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[Don Ezra]: tried to help with the book and with my blog posts on my website and stuff like

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[Don Ezra]: that

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[Paul Tyler]: so three rocks i love it uh

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[Paul Tyler]: do you navigate the rocks by yourself or on who helped you navigate your rocks

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[Paul Tyler]: who were the guides along that path

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[Don Ezra]: well

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[Ramsey Smith]: we see that too

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[Don Ezra]: they say there are ten thousand baby boomers a day retiring now

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[Don Ezra]: and they don’t have enough help et cetera baby boomers baby boomers are kids to

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[Don Ezra]: me i’m a world war two baby so i had

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[Ramsey Smith]: hm

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[Don Ezra]: absolutely no help so i had to do this myself i think more and more

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[Paul Tyler]: i

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[Don Ezra]: today there are people who are becoming experts in this area who can help you on

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[Don Ezra]: the money side of course

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[Paul Tyler]: st

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[Don Ezra]: there are there’s expertise all over the place but on the psychological side

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[Don Ezra]: more and more that there are retirement planners who are coming along who who

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[Don Ezra]: retire and coaches is i think they call themselves and they deal with the

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[Don Ezra]: psychological and practical aspects as opposed to the financial aspect so it is

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[Don Ezra]: possible to get help these days

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[Ramsey Smith]: but what is the best way to think about

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[Ramsey Smith]: like let’s start with the identity rock that’s a that’s a really tough one that’s

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[Ramsey Smith]: that in some ways that’s the you know that seems like the the the least solvable

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[Ramsey Smith]: one of the hardest one to solve right because it’s so it’s so

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[Don Ezra]: i i think you spot on yeah

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[Ramsey Smith]: sub subjective yeah so so how do people so jill or john is retiring and they’re

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[Ramsey Smith]: dealing with this i mean you took three years and you know you took you worked on

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[Ramsey Smith]: it very deliberately so

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[Paul Tyler]: oh

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[Paul Tyler]: god

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[Don Ezra]: yeah

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[Ramsey Smith]: what should people expect is the right amount of time for that transition and

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[Ramsey Smith]: what are the most concrete steps they can make to get to get going on it

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[Don Ezra]: i i think i think you probably ought to start maybe at five years before you’re

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[Don Ezra]: planning to graduate

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[Ramsey Smith]: wow okay

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[Don Ezra]: and start thinking about well one of the reasons is that i’ve seen statistics

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[Don Ezra]: that say half of retirees retired before they planned to

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[Paul Tyler]: it is

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[Don Ezra]: i mean it it it it it could be uh your ill health the ill health of someone else

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[Don Ezra]: you have to look after it could be layoffs it could be all kinds of things but

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[Don Ezra]: half of people don’t retire when they’re planning to so give it five years to

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[Don Ezra]: think about it

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[Don Ezra]: and i think some of the things you need to think about as what is important to

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[Don Ezra]: you

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[Don Ezra]: as i quoted mayor staten

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[Don Ezra]: the more successful you’ve been

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[Don Ezra]: the more your identity is tied to your work

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[Don Ezra]: and the more your life sort of surrounds it in fact until covid came along

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[Ramsey Smith]: yes

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[Don Ezra]: most of us the happier we were at work spent far more time at work than we ever

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[Don Ezra]: did at home and in fact having to work from home i understand has driven the

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[Don Ezra]: divorce rate up so it’s it’s yeah it’s not an easy thing to come back so it’s

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[Don Ezra]: partly the activity the combined activity but partly the identity thing too so

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[Don Ezra]: who am i is the big question

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[Don Ezra]: and

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[Don Ezra]: i i found there were a couple of sets of questions to ask yourself

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[Don Ezra]: that tend to help here at at a very very very high level gentleman named george

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[Don Ezra]: kinder i came up with with three life questions and there as follows one is

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[Don Ezra]: you have all the money

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[Don Ezra]: you want how would you live your life okay

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[Don Ezra]: question two

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[Don Ezra]: you’ve just been told you have five to ten years to live

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[Don Ezra]: how would you change your life

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[Don Ezra]: question three you’ve just been told you have twenty four hours to live what are

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[Don Ezra]: your regrets

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[Don Ezra]: and out of that you can start

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[Don Ezra]: i mean these are not questions you answer in sixty seconds these are questions

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[Don Ezra]: you ponder over and take your time over and perhaps every five years you want to

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[Don Ezra]: rethink them

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[Don Ezra]: but these are things that ought to give you some sense of what is the most

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[Don Ezra]: important purpose i have etc etc etc that’s a very high level one at a lower

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[Don Ezra]: level one another one i found very useful is is by a guy named ed jacobson

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[Don Ezra]: who came up with the concept of a life’s abundance portfolio so a portfolio is

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[Don Ezra]: just a collection of things under different headings and this is your life’s

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[Don Ezra]: abundance and he said there were seven different factors

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[Ramsey Smith]: no

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[Don Ezra]: to me there’s seven asset classes in the life’s abundance portfolio and i cannot

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[Don Ezra]: remember

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[Don Ezra]: the names ed gave it but i remember them myself very simply in pairs family

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[Don Ezra]: and friends

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[Don Ezra]: work and play

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[Don Ezra]: mental health which

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[Ramsey Smith]: you

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[Don Ezra]: includes spirituality and

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[Ramsey Smith]: w

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[Don Ezra]: physical health i said there were seven oh yes money

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[Ramsey Smith]: so

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[Don Ezra]: so these are the seven asset classes in your life’s abundance portfolio and on

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[Don Ezra]: each of them give yourself a personal rating where am i on a scale of zero to ten

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[Don Ezra]: where would i wreck myself there are no right answers or wrong answers and only

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[Don Ezra]: your answer is relevant people may say you’re an awful so and so and you should

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[Don Ezra]: rate yourself very lowly on that no no no only your own answer is

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[Ramsey Smith]: what

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[Don Ezra]: relevant so rate yourself there and then look back on your ratings and say are

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[Don Ezra]: there which are the ones i’m comfortable with i mean you could be comfortable

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[Don Ezra]: with a force somewhere and uncomfortable with the seven that’s okay which are the

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[Don Ezra]: ones i’m uncomfortable with and then what is in my power

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[Don Ezra]: to raise my rating in those asset classes in my life’s abundance portfolio and

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[Don Ezra]: that starts to give you some feeling of what are the things you can do that are

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[Don Ezra]: more important to you etc etc etc and one of the other things this starts to

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[Don Ezra]: to get to and it took me far more than my personal three years of transition to

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[Don Ezra]: come to this realization that one of the things that has become important to me

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[Don Ezra]: personally is the legacy i leave not financial legacy the emotional legacy will

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[Don Ezra]: people think of me after i’m gone on this earth that’s as close to immortality

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[Don Ezra]: i’m likely to get and it’s gonna be family and friends and it’ll be for a few

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[Don Ezra]: years that’s it but will they think of me happily

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[Don Ezra]: i

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[Don Ezra]: the way i’ve been behaving they will think of me

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[Don Ezra]: not only with the smile but with a laugh because i’ve they they keep pointing out

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[Don Ezra]: all the stupid things that this very intelligent person does and they say oh do

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[Don Ezra]: you see what don just did oh uncle don did so and so grand et cetera et cetera

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[Don Ezra]: and and

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[Don Ezra]: i i love i love that because intellect is not what this is all about money

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[Don Ezra]: financial legacy is not what this is all about it’s the emotional legacy that at

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[Don Ezra]: this stage of my life has become important to me and i think questions like that

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[Don Ezra]: start to start to change your mindset it may take a

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[Paul Tyler]: i

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[Don Ezra]: long time as i say particularly the more successful we’ve been the longer it

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[Don Ezra]: takes for us to say but that was in the past what about the future

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[Don Ezra]: and and that’s why that’s why i describe myself not just as retired because

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[Don Ezra]: retired is a backward looking word

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[Don Ezra]: but happily retired because i i i feel i’m in the driver’s seat i i still have to

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[Don Ezra]: make decisions on direction on speed

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[Don Ezra]: but in my life’s car at least i’m in the driver’s seat and that’s as as any as

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[Don Ezra]: anyone could have

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[Paul Tyler]: yeah i i’m not sure many people have a true accounting of their assets for

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[Paul Tyler]: happiness right don i think it also adds a whole nother

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[Paul Tyler]: layer to the question of

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[Paul Tyler]: are you leading a rich life

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[Don Ezra]: beautifully put yes exactly exactly

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[Ramsey Smith]: so one of the things that that comes to mind is as i listen to you spell out

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[Ramsey Smith]: these these various priorities these two different sort of paradigms for

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[Ramsey Smith]: priorities is in the in the first or the second one it was interesting that that

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[Ramsey Smith]: money came last and the first one money i don’t believe it was mentioned

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[Ramsey Smith]: mentioned at all

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[Ramsey Smith]: and

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[Don Ezra]: right man

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[Ramsey Smith]: one of the things i think is

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[Don Ezra]: what

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[Ramsey Smith]: often lost on people is that how you prioritize

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[Don Ezra]: right

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[Ramsey Smith]: all those quality of life issues actually can really help

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[Don Ezra]: i

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[Ramsey Smith]: inform the right answer on the money problem right and sometimes

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[Don Ezra]: that

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[Ramsey Smith]: sometimes we’re trying to fix things with money when they’re not really money

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[Ramsey Smith]: problems and that creates stress in and of itself so so

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[Don Ezra]: so so

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[Ramsey Smith]: h how do you

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[Paul Tyler]: and

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[Ramsey Smith]: do you think that

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[Don Ezra]: you

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[Ramsey Smith]: that in in the world of advice if you will do you think this should be a more

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[Ramsey Smith]: important part of

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[Ramsey Smith]: the the advising that is given to retirees potential retirees and maybe is the

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[Ramsey Smith]: case today

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[Don Ezra]: i yes i think so but i think the the client has to be open to it and in fact ed

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[Don Ezra]: jacobson’s life’s abundance portfolio was something i came across at an aicpa

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[Don Ezra]: conference so accountants and ed was speaking we were both speaking there and so

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[Don Ezra]: i done my stuff and and here was a session about having good conversations with

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[Don Ezra]: clients that was what ed

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[Ramsey Smith]: uhhuh

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[Don Ezra]: was talking about and one of the things he mentioned was here are some subjects

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[Don Ezra]: you can talk about and call it the life of life’s abundance portfolio et cetera

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[Don Ezra]: but it’s not always easy to raise the subject one of the things i remember him

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[Don Ezra]: saying was that you want to if you were the one raising the subject

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[Don Ezra]: you want to raise it at a time when things are going well from an investment and

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[Don Ezra]: financial point of view otherwise there might be a suspicion that you’re raising

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[Don Ezra]: it for other reasons so raise it at when other things are going well and

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[Paul Tyler]: i mean

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[Don Ezra]: now you can introduce these new subjects and it’s not always easy to get client’s

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[Don Ezra]: attention because they’ve got to give of themselves much more personally this way

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[Don Ezra]: they have to open up they have to expose themselves and it’s very difficult but

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[Don Ezra]: if you can get a client involved in that way these are things that are that are

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[Don Ezra]: doubly helpful because

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[Don Ezra]: they’re they they’re helpful not only in the

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[Paul Tyler]: i

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[Don Ezra]: conversation and helping the client shape their lives in the future but also

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[Don Ezra]: it allows them to focus on things other than money and

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[Ramsey Smith]: mm hm

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[Don Ezra]: then from your point of view i think it it it helps as well because

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[Don Ezra]: i read i don’t know if this is still true or not because i i don’t have the facts

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[Don Ezra]: but i read that many people have multiple advisors

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[Don Ezra]: and they would like to consolidate under one advisor

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[Don Ezra]: i think the likelihood of being that one advisor is higher if in fact you were

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[Don Ezra]: talking holistically about the whole life’s abundance portfolio then if all

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[Don Ezra]: you’re doing is talking about you know here was your return in the last month the

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[Don Ezra]: last year the last five years et cetera et cetera et cetera because

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[Don Ezra]: that also helps

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[Don Ezra]: for well for

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[Don Ezra]: for example for for people who are not necessarily financially very

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[Don Ezra]: interested literate whatever the word is take my wife she’s a very very very

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[Don Ezra]: intelligent person

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[Don Ezra]: but she does not want to get involved in finance she leaves that to me

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[Don Ezra]: the one thing she understands about our

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[Don Ezra]: arrangements are that we have enough all our needs permanently and as far as our

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[Paul Tyler]: what

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[Don Ezra]: wants are concerned

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[Don Ezra]: that depends on where markets are et cetera et cetera et cetera and we have we

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[Don Ezra]: have set up a our own portfolio this ’cause this was my

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[Don Ezra]: world war two having to do things for myself i learned i learned from my pension

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[Don Ezra]: fund clients to first you survive then you thrive so we’ve got five years of

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[Don Ezra]: cash flow needs okay

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[Don Ezra]: with cash like

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[Don Ezra]: in investments

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[Ramsey Smith]: oh

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[Don Ezra]: and that gives us five years of security should the market fall suddenly if it

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[Don Ezra]: doesn’t fall we will take money out of our market portfolio and spend it if it

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[Don Ezra]: falls we’ve got five years for it to recover and at least historically who knows

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[Don Ezra]: what the future will bring at least historically seventy fifty five percent of

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[Don Ezra]: the time the market has recovered in real terms inflation adjusted terms after

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[Don Ezra]: five years and she gets this that we have five years of virtual safety and then

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[Don Ezra]: the rest is all in a growth

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[Ramsey Smith]: he

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[Don Ezra]: portfolio and what she understands when for example

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[Don Ezra]: two years ago in march when covid started and the market just crashed she said

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[Ramsey Smith]: what

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[Don Ezra]: what what does this do to us

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[Don Ezra]: and the answer was right now nothing we are doing nothing and we will know what

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[Don Ezra]: it does to us five years from now because

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[Ramsey Smith]: oh

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[Don Ezra]: we don’t have to worry and as a matter of fact as the market has gone up so much

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[Don Ezra]: one of the things we’ve done is expanded our safety net from five years to much

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[Don Ezra]: more because

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[Don Ezra]: sorry i’ve i’ve got way off to wear off your question

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[Ramsey Smith]: now keep going

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[Paul Tyler]: no have

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[Ramsey Smith]: this is good

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[Don Ezra]: what one of the things that in our projections is i’m hoping for a real four

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[Don Ezra]: percent return on the equity portfolio on average over the long term if i get if

343
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[Don Ezra]: i get four percent i’m happy to cash out the next year’s worth etc in addition to

344
00:20:38,419 –> 00:20:42,579
[Don Ezra]: the five years where we’ve had such high returns that i’ve cashed out an extra

345
00:20:42,739 –> 00:20:45,059
[Don Ezra]: year for each of the four percents we’ve made and

346
00:20:44,740 –> 00:20:45,740
[Ramsey Smith]: okay

347
00:20:45,219 –> 00:20:50,499
[Don Ezra]: so now we have a safety net a safety part that is way longer than five years

348
00:20:51,939 –> 00:20:57,059
[Don Ezra]: and and so it’s stuff like that that psychologically i think is very important

349
00:20:57,859 –> 00:21:02,899
[Don Ezra]: and if you can put that psychological fear to rest then you can help with all the

350
00:21:02,979 –> 00:21:07,939
[Don Ezra]: other things etc and and you get so much more personal in the conversation with

351
00:21:07,939 –> 00:21:12,259
[Don Ezra]: the clients when you’re talking about family and friends work and play mental and

352
00:21:12,259 –> 00:21:16,819
[Don Ezra]: physical health etc etc because now now you’re a friend you’re not you’re not

353
00:21:16,979 –> 00:21:19,459
[Don Ezra]: just an expert you are an expert who’s a friend

354
00:21:19,766 –> 00:21:23,046
[Paul Tyler]: don the timing of the conversations you mentioned i think is

355
00:21:23,746 –> 00:21:24,746
[Paul Tyler]: so important

356
00:21:25,446 –> 00:21:30,006
[Paul Tyler]: want to have my conversation about my wife about the following ramsey there’s

357
00:21:30,406 –> 00:21:31,446
[Paul Tyler]: certain times that do it at certain

358
00:21:30,999 –> 00:21:31,999
[Don Ezra]: th

359
00:21:31,606 –> 00:21:35,926
[Paul Tyler]: times not today this morning was not a couple topics but dodd

360
00:21:36,039 –> 00:21:37,039
[Don Ezra]: what

361
00:21:37,766 –> 00:21:42,166
[Paul Tyler]: you might also mention retirement coaches sort of the evolution of retirement

362
00:21:42,326 –> 00:21:43,686
[Paul Tyler]: coaching coming in here

363
00:21:45,686 –> 00:21:50,486
[Paul Tyler]: can i i if i if i were a financial advisor and you were advising me on how to

364
00:21:50,566 –> 00:21:54,566
[Paul Tyler]: reshape shape my practice should i lead with that conversation

365
00:21:56,266 –> 00:21:57,266
[Paul Tyler]: purpose

366
00:21:59,026 –> 00:22:00,026
[Paul Tyler]: you know a

367
00:22:01,126 –> 00:22:06,486
[Paul Tyler]: happiness assets or is this something i earn the right to the conversation i have

368
00:22:06,566 –> 00:22:09,046
[Paul Tyler]: the e have to earn the right in order to have that with you

369
00:22:10,499 –> 00:22:14,179
[Don Ezra]: i really don’t know i don’t know what the answer is and i suspect it probably

370
00:22:14,499 –> 00:22:20,739
[Don Ezra]: varies from client to client and with the personality of the advisor and and what

371
00:22:20,679 –> 00:22:21,679
[Don Ezra]: kind of relationship

372
00:22:22,579 –> 00:22:23,779
[Don Ezra]: you have right from the start

373
00:22:23,546 –> 00:22:24,546
[Paul Tyler]: but

374
00:22:24,899 –> 00:22:26,579
[Don Ezra]: i really don’t know the answers to

375
00:22:27,699 –> 00:22:29,379
[Don Ezra]: is there a right way to do it or not

376
00:22:30,419 –> 00:22:32,819
[Don Ezra]: i think your judgment there would be much better than mine

377
00:22:32,480 –> 00:22:35,360
[Ramsey Smith]: well listening to your listening to your story it’s

378
00:22:35,520 –> 00:22:40,480
[Ramsey Smith]: there’s a lot of things going on so there is there is obviously there’s trust

379
00:22:35,539 –> 00:22:36,899
[Don Ezra]: look in one

380
00:22:40,880 –> 00:22:43,360
[Ramsey Smith]: you’re in a marriage that’s something that’s you know

381
00:22:43,500 –> 00:22:44,500
[Ramsey Smith]: extant

382
00:22:43,559 –> 00:22:44,559
[Don Ezra]: yes

383
00:22:45,920 –> 00:22:47,120
[Ramsey Smith]: so there’s trust

384
00:22:49,280 –> 00:22:50,640
[Ramsey Smith]: there’s been this ability to

385
00:22:50,639 –> 00:22:51,639
[Don Ezra]: ye

386
00:22:51,520 –> 00:22:54,320
[Ramsey Smith]: narrow sort of a complicated investment strategy

387
00:22:54,879 –> 00:22:55,879
[Don Ezra]: scrap

388
00:22:55,600 –> 00:22:58,800
[Ramsey Smith]: into a few key parameters five years of

389
00:22:58,599 –> 00:22:59,599
[Don Ezra]: but

390
00:22:58,960 –> 00:23:01,280
[Ramsey Smith]: safety you know if this then that

391
00:23:01,079 –> 00:23:02,079
[Don Ezra]: if that

392
00:23:01,520 –> 00:23:03,600
[Ramsey Smith]: else this then that right it’s a very

393
00:23:03,799 –> 00:23:04,799
[Don Ezra]: right

394
00:23:04,400 –> 00:23:07,520
[Ramsey Smith]: small subset of pieces of the puzzle

395
00:23:07,306 –> 00:23:08,306
[Paul Tyler]: that’s

396
00:23:07,479 –> 00:23:08,479
[Don Ezra]: a

397
00:23:08,480 –> 00:23:10,000
[Ramsey Smith]: and also a very fundamental element

398
00:23:09,719 –> 00:23:10,719
[Don Ezra]: one

399
00:23:09,940 –> 00:23:10,940
[Ramsey Smith]: is

400
00:23:11,760 –> 00:23:16,480
[Ramsey Smith]: is this notion that if something does happen there’s a willingness to make the

401
00:23:16,640 –> 00:23:20,480
[Ramsey Smith]: necessary adjustments we had bill banging on in the last couple of weeks and this

402
00:23:20,480 –> 00:23:24,800
[Ramsey Smith]: is one of the things that he talked about a lot is just the the

403
00:23:25,900 –> 00:23:26,900
[Ramsey Smith]: ultimately like

404
00:23:26,439 –> 00:23:27,439
[Don Ezra]: oh

405
00:23:26,880 –> 00:23:31,920
[Ramsey Smith]: the killer app using my own words killer app and retirement is is flexibility in

406
00:23:32,000 –> 00:23:33,600
[Ramsey Smith]: your spending like almost more

407
00:23:33,639 –> 00:23:34,639
[Don Ezra]: absolutely

408
00:23:34,000 –> 00:23:35,600
[Ramsey Smith]: almost more than anything else and so

409
00:23:36,640 –> 00:23:38,240
[Ramsey Smith]: a and and to get to that

410
00:23:38,900 –> 00:23:39,900
[Ramsey Smith]: part

411
00:23:39,079 –> 00:23:40,079
[Don Ezra]: yeah

412
00:23:39,600 –> 00:23:43,200
[Ramsey Smith]: of it is figuring out what’s really important everything else you’ve emphasized

413
00:23:43,840 –> 00:23:48,480
[Ramsey Smith]: so it’s just interesting to see how all the other qualitative issues that you

414
00:23:48,620 –> 00:23:49,620
[Ramsey Smith]: brought to the fore here

415
00:23:51,120 –> 00:23:56,480
[Ramsey Smith]: all that ultimately translate into you know greater safety and retirement because

416
00:23:57,120 –> 00:24:01,680
[Ramsey Smith]: you’ve narrowed down parameters and you and you’ve and you’ve imparted a you know

417
00:24:01,760 –> 00:24:03,520
[Ramsey Smith]: a culture a philosophy of

418
00:24:03,466 –> 00:24:04,466
[Paul Tyler]: understood

419
00:24:03,600 –> 00:24:04,640
[Ramsey Smith]: like a flexibility

420
00:24:06,979 –> 00:24:10,259
[Don Ezra]: absolutely absolutely anything bill says is gonna be wise

421
00:24:10,300 –> 00:24:11,300
[Ramsey Smith]: yeah right

422
00:24:10,419 –> 00:24:12,419
[Don Ezra]: anyway we know that because he’s such

423
00:24:12,100 –> 00:24:13,100
[Ramsey Smith]: yeah

424
00:24:12,279 –> 00:24:13,279
[Don Ezra]: a great guy

425
00:24:14,359 –> 00:24:15,359
[Don Ezra]: but

426
00:24:16,839 –> 00:24:17,839
[Don Ezra]: i think

427
00:24:20,019 –> 00:24:24,819
[Don Ezra]: an important thing that i’ve realized as i’ve come across many advisors

428
00:24:25,859 –> 00:24:27,699
[Don Ezra]: is the question of defining risk

429
00:24:29,379 –> 00:24:34,819
[Don Ezra]: and from a professional point of view risk in terms of standard deviation of

430
00:24:35,139 –> 00:24:38,979
[Don Ezra]: investment returns the stuff marco witz came up with seventy years ago when

431
00:24:39,139 –> 00:24:41,299
[Don Ezra]: modern portfolio theory started

432
00:24:42,579 –> 00:24:47,539
[Don Ezra]: i think that that’s a completely foreign concept to most people it it’s it’s only

433
00:24:47,699 –> 00:24:52,419
[Don Ezra]: us geeks who get into that kind of thing risk is actually a psychological

434
00:24:52,100 –> 00:24:53,100
[Ramsey Smith]: yeah

435
00:24:52,579 –> 00:24:58,339
[Don Ezra]: question it’s a lifestyle question it’s what is the risk to my lifestyle what are

436
00:24:57,999 –> 00:24:58,999
[Don Ezra]: the things

437
00:24:58,266 –> 00:24:59,266
[Paul Tyler]: but

438
00:24:58,819 –> 00:25:00,179
[Don Ezra]: i might not be able to do

439
00:25:01,219 –> 00:25:06,499
[Don Ezra]: and you have to understand the client’s lifestyle the clients’ goals and fears

440
00:25:07,699 –> 00:25:13,699
[Don Ezra]: and and in in that area the clients the expert and the financial expert is in

441
00:25:13,699 –> 00:25:18,579
[Don Ezra]: fact the person learning from it whereas most of the time the financial expert is

442
00:25:18,579 –> 00:25:23,139
[Don Ezra]: the expert and the client is trying to learn or relate to it but the idea of

443
00:25:23,219 –> 00:25:27,939
[Don Ezra]: saying the client is the expert on himself or herself and you have to learn about

444
00:25:28,019 –> 00:25:34,499
[Don Ezra]: it is very very important then with your financial expertise you can translate

445
00:25:34,659 –> 00:25:40,179
[Don Ezra]: their psychological lifestyle risk into investment terms and you can do that and

446
00:25:40,259 –> 00:25:44,019
[Don Ezra]: they may not understand that and they may not but but you’ve understood it and

447
00:25:44,099 –> 00:25:48,739
[Don Ezra]: that’s what you’ve done and then when you explain the results or when you explain

448
00:25:48,746 –> 00:25:49,746
[Paul Tyler]: school

449
00:25:49,379 –> 00:25:53,859
[Don Ezra]: the basis on which you have made a proposal or given advice et cetera et cetera

450
00:25:54,339 –> 00:25:55,539
[Don Ezra]: you can then relate it to

451
00:25:56,819 –> 00:26:00,979
[Don Ezra]: these are the goals you have here’s what we’re trying to achieve and these are

452
00:26:01,059 –> 00:26:05,539
[Don Ezra]: the things we’re trying to avoid and nothing is ever given this is an uncertain

453
00:26:05,699 –> 00:26:10,259
[Don Ezra]: world and in the investment world is one of the more uncertain parts even in an

454
00:26:10,419 –> 00:26:14,499
[Don Ezra]: uncertain world but here are the kinds of precautions which you’re trying to take

455
00:26:14,599 –> 00:26:15,599
[Don Ezra]: have i

456
00:26:14,986 –> 00:26:15,986
[Paul Tyler]: okay

457
00:26:15,459 –> 00:26:20,739
[Don Ezra]: have i read you right is this is does this sound right to you this is so much

458
00:26:20,899 –> 00:26:26,979
[Don Ezra]: better than a quarterly return then which quartile are you in et cetera etc and i

459
00:26:26,979 –> 00:26:32,259
[Don Ezra]: think it’s that psychological aspect of risk being able to translate investment

460
00:26:32,419 –> 00:26:33,939
[Don Ezra]: risk into lifestyle

461
00:26:35,239 –> 00:26:36,239
[Don Ezra]: effects

462
00:26:36,020 –> 00:26:37,020
[Ramsey Smith]: but that

463
00:26:36,659 –> 00:26:40,899
[Don Ezra]: that that would then distinguish you from the vast majority

464
00:26:42,099 –> 00:26:45,939
[Don Ezra]: of others who are doing this because they are professionals they are very good

465
00:26:46,019 –> 00:26:50,659
[Don Ezra]: professionals they enjoy being professionals but they are only professionals and

466
00:26:50,739 –> 00:26:54,739
[Don Ezra]: experts and not relating to the client and i think

467
00:26:55,939 –> 00:26:57,379
[Don Ezra]: i i think that would make you stand

468
00:26:57,146 –> 00:26:58,146
[Paul Tyler]: yeah

469
00:26:57,239 –> 00:26:58,239
[Don Ezra]: apart

470
00:26:59,846 –> 00:27:01,126
[Paul Tyler]: i think you’re so right around

471
00:27:02,106 –> 00:27:03,106
[Paul Tyler]: risk equaling

472
00:27:04,086 –> 00:27:09,286
[Paul Tyler]: a psychological state of being for me this comes from my journey is home housing

473
00:27:09,346 –> 00:27:10,346
[Paul Tyler]: that’s kind of what

474
00:27:11,386 –> 00:27:12,386
[Paul Tyler]: my

475
00:27:11,700 –> 00:27:12,700
[Ramsey Smith]: see

476
00:27:13,686 –> 00:27:17,366
[Paul Tyler]: center point is okay do i have a house over my head will i have a house or my

477
00:27:17,366 –> 00:27:21,446
[Paul Tyler]: head don you mentioned time time seem to be important five years why why five

478
00:27:21,526 –> 00:27:23,046
[Paul Tyler]: years went up four one at six

479
00:27:22,399 –> 00:27:23,399
[Don Ezra]: oh i’ve

480
00:27:26,259 –> 00:27:29,459
[Don Ezra]: give a take a few years maybe hay somewhere around five

481
00:27:29,386 –> 00:27:30,386
[Paul Tyler]: yeah his

482
00:27:30,339 –> 00:27:35,459
[Don Ezra]: that’s that’s my approximation i mean i think the actual saving for retirement

483
00:27:35,539 –> 00:27:40,019
[Don Ezra]: you need at least twenty to twenty five years you can get started but twenty to

484
00:27:40,099 –> 00:27:44,099
[Don Ezra]: twenty five years ago you get serious and then you get set and all that kind of

485
00:27:43,719 –> 00:27:44,719
[Don Ezra]: stuff

486
00:27:46,099 –> 00:27:49,779
[Don Ezra]: and compound interest has enough time to work if you give it twenty twenty five

487
00:27:49,939 –> 00:27:51,299
[Don Ezra]: years because the base

488
00:27:50,940 –> 00:27:51,940
[Ramsey Smith]: wow

489
00:27:51,379 –> 00:27:55,859
[Don Ezra]: is relatively low in the early years and these are your best earning years etc so

490
00:27:56,099 –> 00:28:00,579
[Don Ezra]: i think that’s okay but all i’m i think all i’m saying five years was a number

491
00:28:00,739 –> 00:28:04,899
[Don Ezra]: that came into my head all i’m saying is that you ought to start thinking about

492
00:28:04,979 –> 00:28:07,459
[Don Ezra]: the psychological aspects the identity question

493
00:28:08,739 –> 00:28:14,099
[Don Ezra]: before you retire and usually it takes some time because it’s not an adjustment

494
00:28:14,179 –> 00:28:18,659
[Don Ezra]: you make overnight it’s a psychological adjustment it’s an adjustment to your

495
00:28:18,819 –> 00:28:23,779
[Don Ezra]: definition of who you are and that takes time five years i haven’t a clue i have

496
00:28:23,939 –> 00:28:25,619
[Don Ezra]: no clue you’re absolutely right yeah

497
00:28:27,139 –> 00:28:31,379
[Don Ezra]: and i think the other one forgive me the other one we haven’t touched on is the

498
00:28:31,539 –> 00:28:38,179
[Don Ezra]: activity rock which is how do i fill my time when i’m not working full time and

499
00:28:38,259 –> 00:28:42,019
[Don Ezra]: whether it’s volunteering a part time career carrying on et cetera there are a

500
00:28:42,099 –> 00:28:47,299
[Don Ezra]: whole bunch of things but there’s one aspect that my friends and even my kids’

501
00:28:47,119 –> 00:28:48,119
[Don Ezra]: generation

502
00:28:49,219 –> 00:28:51,219
[Don Ezra]: they were very amused by this and remembered it

503
00:28:52,579 –> 00:28:57,139
[Don Ezra]: there’s another aspect that’s very important if you have a life partner and that

504
00:28:57,219 –> 00:28:58,339
[Don Ezra]: is that there are two of you

505
00:28:59,379 –> 00:29:03,779
[Don Ezra]: and you are not just a couple you were also two two separate people and so

506
00:29:04,739 –> 00:29:09,619
[Don Ezra]: actually at my my my son’s my son’s wedding i i i i mentioned this to the gang

507
00:29:09,779 –> 00:29:13,779
[Don Ezra]: assemble there my son said say anything you like whatever you say will embarrass

508
00:29:13,779 –> 00:29:17,779
[Don Ezra]: me so just go ahead sorry i said okay so so here here are two circles

509
00:29:19,059 –> 00:29:23,379
[Don Ezra]: your set of interests and your partner set of interest and they have some overlap

510
00:29:24,339 –> 00:29:28,739
[Don Ezra]: and when you meet you notice the overlap and you get all soppy about it oh we

511
00:29:28,819 –> 00:29:33,139
[Don Ezra]: have so much in carbon et cetera et cetera et cetera and then later on you have

512
00:29:34,739 –> 00:29:38,819
[Don Ezra]: the outside bits sometimes if you have kids they get they get

513
00:29:40,179 –> 00:29:44,739
[Don Ezra]: the kids fill the the middle bit and you lose your chance to do your own outside

514
00:29:45,059 –> 00:29:49,779
[Don Ezra]: bit and then if with any luck the kids leave home one day you may find that the

515
00:29:49,859 –> 00:29:56,259
[Don Ezra]: middle overlapping bit is almost empty and that’s why again divorce goes up at

516
00:29:56,339 –> 00:30:02,019
[Don Ezra]: this kind of stage and so what you need to realize is that as i told them the

517
00:30:02,099 –> 00:30:06,339
[Don Ezra]: most romantic thing you can say to each other every anniversary as you hug each

518
00:30:06,419 –> 00:30:10,499
[Don Ezra]: other in kiss and express your love in whatever way you do if you can say in all

519
00:30:10,659 –> 00:30:15,059
[Don Ezra]: honesty to each other all the parts of our venn diagram are healthy

520
00:30:16,099 –> 00:30:19,699
[Don Ezra]: that is a very very romantic thing to say to each other if you can

521
00:30:19,500 –> 00:30:20,500
[Ramsey Smith]: sorry

522
00:30:20,099 –> 00:30:24,899
[Don Ezra]: and so you know the kids this but the whole idea of the venn diagram and keeping

523
00:30:25,139 –> 00:30:28,979
[Don Ezra]: all the parts of your venn diagram healthy in retirement not

524
00:30:28,740 –> 00:30:29,740
[Ramsey Smith]: just

525
00:30:29,219 –> 00:30:31,859
[Don Ezra]: just doing things together but doing things separately as well

526
00:30:32,899 –> 00:30:37,859
[Don Ezra]: is very very important because as i say until covid we didn’t have to spend our

527
00:30:38,099 –> 00:30:42,739
[Don Ezra]: time that much time together now we will have much more time together and so

528
00:30:42,899 –> 00:30:47,139
[Don Ezra]: getting that middle bit and allowing the fact that there are the two outer edges

529
00:30:46,839 –> 00:30:47,839
[Don Ezra]: as well

530
00:30:48,499 –> 00:30:53,379
[Don Ezra]: it’s perfectly legitimate for each person have their own outer edge and do their

531
00:30:53,459 –> 00:30:56,739
[Don Ezra]: own thing you don’t have to be a couple all the time you’re also two separate

532
00:30:56,819 –> 00:30:58,259
[Don Ezra]: people that’s very important

533
00:30:59,539 –> 00:31:03,699
[Don Ezra]: in planning your activities and that will also give a separate sense of purpose i

534
00:31:03,319 –> 00:31:04,319
[Don Ezra]: think

535
00:31:04,646 –> 00:31:09,126
[Paul Tyler]: and if we were to look at sort of the macro balance sheet for happiness and covid

536
00:31:09,206 –> 00:31:12,486
[Paul Tyler]: you kind of introduced it clearly disrupted a lot of people

537
00:31:13,526 –> 00:31:16,806
[Paul Tyler]: however i’ve seen studies and rams you i think i’m i’m sure if somebody’s

538
00:31:16,886 –> 00:31:18,566
[Paul Tyler]: mentioned this on our show or not where

539
00:31:20,086 –> 00:31:24,566
[Paul Tyler]: don you may know where they’ve done studies of people where they live where they

540
00:31:24,806 –> 00:31:29,046
[Paul Tyler]: work you know where their activities are and their life is the closer that

541
00:31:29,366 –> 00:31:34,806
[Paul Tyler]: cluster is in terms of sheer distance generally the happier are now clear some

542
00:31:34,826 –> 00:31:35,826
[Paul Tyler]: outliers people who

543
00:31:38,300 –> 00:31:39,300
[Ramsey Smith]: i think

544
00:31:38,486 –> 00:31:42,966
[Paul Tyler]: stayed together because they were not together but do you think this has brought

545
00:31:38,486 –> 00:31:42,966
[Paul Tyler]: stayed together because they were not together but do you think this has brought

546
00:31:43,206 –> 00:31:47,526
[Paul Tyler]: you know do you think happiness has gone up collectively as a result of kind of

547
00:31:43,206 –> 00:31:47,526
[Paul Tyler]: you know do you think happiness has gone up collectively as a result of kind of

548
00:31:47,846 –> 00:31:52,166
[Paul Tyler]: slowing down being all sort of parked and home or or you you couldn’t say

549
00:31:47,846 –> 00:31:52,166
[Paul Tyler]: slowing down being all sort of parked and home or or you you couldn’t say

550
00:31:52,259 –> 00:31:57,219
[Don Ezra]: i have absolutely no idea whatsoever this is something i would wait to see the

551
00:31:57,299 –> 00:32:01,779
[Don Ezra]: united nations happiness survey they do a survey every year and i would wait to

552
00:32:01,779 –> 00:32:05,299
[Don Ezra]: see the results and see not only is it gone up or down but are there some

553
00:32:05,379 –> 00:32:08,499
[Don Ezra]: countries where it’s gone up and somewhere it’s gone down etc and then see what

554
00:32:08,579 –> 00:32:10,979
[Don Ezra]: you learn from that i have i have absolutely no idea

555
00:32:12,019 –> 00:32:16,019
[Don Ezra]: but but i think it’s brought the notion that we are

556
00:32:16,100 –> 00:32:17,100
[Ramsey Smith]: i am

557
00:32:17,059 –> 00:32:18,419
[Don Ezra]: two people as well as a couple

558
00:32:19,439 –> 00:32:20,439
[Don Ezra]: um to the four

559
00:32:21,459 –> 00:32:25,699
[Don Ezra]: because we’ve been forced to confront that and for some people this is good and

560
00:32:25,779 –> 00:32:26,979
[Don Ezra]: for some people it’s not good

561
00:32:28,560 –> 00:32:35,600
[Ramsey Smith]: so you’ve now in this in this new chapter you you’re evangelizing this very

562
00:32:35,840 –> 00:32:40,080
[Ramsey Smith]: important these is very important concepts you’ve written written a book well

563
00:32:40,240 –> 00:32:44,880
[Ramsey Smith]: long book and then and a shorter version of it and you’ve got your blog how much

564
00:32:44,960 –> 00:32:50,640
[Ramsey Smith]: is this going to continue to be part of your activity to to spread this to spread

565
00:32:50,720 –> 00:32:53,200
[Ramsey Smith]: this knowledge in this philosophy sort of more broadly

566
00:32:54,259 –> 00:33:00,099
[Don Ezra]: oh i i love it i’m absolutely pathetic at selling always have been which is why i

567
00:33:00,319 –> 00:33:01,319
[Don Ezra]: became a consultant

568
00:33:02,339 –> 00:33:07,779
[Don Ezra]: and so i have no idea how to propagate this so i write for my own benefit

569
00:33:07,900 –> 00:33:08,900
[Ramsey Smith]: i like

570
00:33:08,579 –> 00:33:10,499
[Don Ezra]: i write to explain something to myself

571
00:33:10,340 –> 00:33:11,340
[Ramsey Smith]: i

572
00:33:11,239 –> 00:33:12,239
[Don Ezra]: i find that

573
00:33:11,780 –> 00:33:12,780
[Ramsey Smith]: think about

574
00:33:12,179 –> 00:33:14,419
[Don Ezra]: if you think about something and you think you know it

575
00:33:14,580 –> 00:33:15,580
[Ramsey Smith]: you watch

576
00:33:15,139 –> 00:33:19,459
[Don Ezra]: until you actually write it down you don’t really know it because writing slows

577
00:33:19,539 –> 00:33:25,779
[Don Ezra]: you down and you don’t go from a to d to m to x you go a b c d and suddenly you

578
00:33:25,859 –> 00:33:29,539
[Don Ezra]: find my god i may never get to m it because the logic is taking me somewhere else

579
00:33:29,779 –> 00:33:34,259
[Don Ezra]: so i write for myself so i write in the first person i because i’m doing the

580
00:33:34,499 –> 00:33:39,619
[Don Ezra]: explaining and the person i’m writing to is also myself that’s the i’ve got two

581
00:33:39,619 –> 00:33:43,939
[Don Ezra]: bodies i’m i’m the speaker and the listener and so when i say you that’s also me

582
00:33:43,879 –> 00:33:44,879
[Don Ezra]: and

583
00:33:44,020 –> 00:33:45,020
[Ramsey Smith]: work

584
00:33:44,499 –> 00:33:48,739
[Don Ezra]: then i write that stuff and at the end i see have i understood this or not have i

585
00:33:48,899 –> 00:33:54,099
[Don Ezra]: have i encountered a block or not so i just write for myself and when friends say

586
00:33:54,339 –> 00:33:58,419
[Don Ezra]: this is good stuff that got me started on you know put it together in a book et

587
00:33:58,419 –> 00:34:04,499
[Don Ezra]: cetera et cetera et cetera and so the fulfillment i get from from the website is

588
00:34:04,279 –> 00:34:05,279
[Don Ezra]: that every

589
00:34:04,660 –> 00:34:05,660
[Ramsey Smith]: years

590
00:34:05,139 –> 00:34:07,219
[Don Ezra]: now and again i don’t know every few months

591
00:34:07,180 –> 00:34:08,180
[Ramsey Smith]: so you

592
00:34:07,539 –> 00:34:11,539
[Don Ezra]: someone will write to me and say you know i’m in australia i’m in south africa

593
00:34:11,859 –> 00:34:15,619
[Don Ezra]: i’ve just done this i’ve just done that and you helped me enormously in this and

594
00:34:15,699 –> 00:34:19,299
[Don Ezra]: someone else once told me it was like being hit in the head by a two

595
00:34:18,986 –> 00:34:19,986
[Paul Tyler]: eight

596
00:34:19,459 –> 00:34:24,419
[Don Ezra]: by four i really have to do this and never realize it etc and those those are my

597
00:34:24,239 –> 00:34:25,239
[Don Ezra]: rewards

598
00:34:26,019 –> 00:34:27,539
[Don Ezra]: that that to me is the

599
00:34:27,466 –> 00:34:28,466
[Paul Tyler]: thank

600
00:34:27,619 –> 00:34:33,059
[Don Ezra]: feedback that says oh my god you’ve helped someone somewhere and i don’t know how

601
00:34:33,139 –> 00:34:36,659
[Don Ezra]: many people in my pension consulting career i actually

602
00:34:36,780 –> 00:34:37,780
[Ramsey Smith]: do you

603
00:34:36,979 –> 00:34:43,139
[Don Ezra]: helped i i may have helped institutions i did not help people and my life is now

604
00:34:43,699 –> 00:34:48,019
[Don Ezra]: people oriented as opposed to institution oriented my focus has changed from

605
00:34:48,179 –> 00:34:51,139
[Don Ezra]: institutional investing and finance to individual

606
00:34:51,980 –> 00:34:52,980
[Ramsey Smith]: i don’t know

607
00:34:52,099 –> 00:34:58,339
[Don Ezra]: investing in finance and happiness and that’s that’s in a way my my my purpose

608
00:34:58,380 –> 00:34:59,380
[Ramsey Smith]: oh that

609
00:34:59,619 –> 00:35:00,899
[Don Ezra]: and and that as i say

610
00:35:02,499 –> 00:35:07,219
[Don Ezra]: that will that i hope will create some kind of emotional legacy that goes beyond

611
00:35:07,379 –> 00:35:10,819
[Don Ezra]: family and friends to people who read it and say my god that really helped i

612
00:35:10,979 –> 00:35:16,099
[Don Ezra]: really like that thank you and that’s that’s my reward and i’m i’m absolutely

613
00:35:16,179 –> 00:35:21,779
[Don Ezra]: thrilled with it and if if the book doesn’t sell i really don’t care i mean

614
00:35:21,500 –> 00:35:22,500
[Ramsey Smith]: hm

615
00:35:22,179 –> 00:35:25,939
[Don Ezra]: once as far as i’m concerned i mean i had a best selling book pension fund

616
00:35:26,019 –> 00:35:30,019
[Don Ezra]: excellence that’s sold ten thousand plus copies which is an awful lot in these

617
00:35:30,099 –> 00:35:32,259
[Don Ezra]: terms my my happiness and and

618
00:35:32,180 –> 00:35:33,180
[Ramsey Smith]: smoke

619
00:35:32,499 –> 00:35:37,859
[Don Ezra]: and life two books have each sold a thousand plus copies and if it hits a

620
00:35:37,939 –> 00:35:40,259
[Don Ezra]: thousand i’ve been absolutely thrilled with that

621
00:35:40,666 –> 00:35:41,666
[Paul Tyler]: i

622
00:35:40,819 –> 00:35:45,299
[Don Ezra]: totally thrilled that’s a success to me best seller list hell no not a chance

623
00:35:45,539 –> 00:35:50,019
[Don Ezra]: forget it but that’s not the goal the goal is self satisfaction in learning

624
00:35:51,539 –> 00:35:56,979
[Don Ezra]: in being able to keep learning and to explain and every now and again something

625
00:35:57,299 –> 00:36:00,899
[Don Ezra]: gets through to someone that’s m that’s my that’s my reward

626
00:36:00,806 –> 00:36:05,846
[Paul Tyler]: oh this is great now the book is called life two love the title we will put a

627
00:36:05,926 –> 00:36:10,886
[Paul Tyler]: link in our show notes and we i know don will sell a few more for you so

628
00:36:11,626 –> 00:36:12,626
[Paul Tyler]: love

629
00:36:11,959 –> 00:36:12,959
[Don Ezra]: thank you

630
00:36:12,326 –> 00:36:14,166
[Paul Tyler]: to put a zero on that but you know we’ll look

631
00:36:14,239 –> 00:36:15,239
[Don Ezra]: thank you

632
00:36:15,046 –> 00:36:18,726
[Paul Tyler]: think i don’t ramsay any what are your final thoughts or questions for don

633
00:36:19,280 –> 00:36:23,760
[Ramsey Smith]: no i think we i think we i think we covered it i think we covered the the key

634
00:36:23,920 –> 00:36:27,920
[Ramsey Smith]: elements there’s really this existential link between

635
00:36:29,040 –> 00:36:31,760
[Ramsey Smith]: quality of life issues identity activity and

636
00:36:32,800 –> 00:36:37,680
[Ramsey Smith]: money decisions and money happiness and and that’s really where we really really

637
00:36:37,840 –> 00:36:39,920
[Ramsey Smith]: nailed that today so thanks thanks for coming don

638
00:36:39,986 –> 00:36:40,986
[Paul Tyler]: yeah dawn

639
00:36:41,219 –> 00:36:45,059
[Don Ezra]: my pleasure my pleasure you made this very may i say you’ve made this very easy

640
00:36:45,379 –> 00:36:50,739
[Don Ezra]: for me i am a i i do this a lot but i am a very very very nervous performer and

641
00:36:50,819 –> 00:36:53,219
[Don Ezra]: you have made this an absolute joy thank you

642
00:36:52,586 –> 00:36:53,586
[Paul Tyler]: oh no thank

643
00:36:53,740 –> 00:36:54,740
[Ramsey Smith]: our pleasure

644
00:36:53,846 –> 00:36:58,326
[Paul Tyler]: thank you our pleasure and uh all our listeners thanks for listening check out

645
00:36:58,226 –> 00:36:59,226
[Paul Tyler]: the show notes

646
00:37:00,566 –> 00:37:04,326
[Paul Tyler]: buy the book look at the website reach out to don we’ll put some links here and

647
00:37:04,486 –> 00:37:08,086
[Paul Tyler]: join us again next week for another episode of that annuity show

The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersEpisode 147: Preparing for Life 2 With Don Ezra
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Why Advisors Shouldn’t Dismiss Index-Linked Annuities

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Sales of protection-focused annuity products were higher in the fourth quarter of 2021 than the combined total of accumulation and income-focused annuities, according to data from the Secure Retirement Institute.

In fact, the sales of registered index-linked annuities (RILAs) have led the protection annuity charge with sales more than doubling from $4.3 billion in the second quarter of 2020 to $8.9 billion by the end of 2021.

What’s driving the appeal of protection products offered within an annuity wrapper? Why would any investor want a complex financial product that promises protection at the expense of significant upside? And why choose an annuity when similar products exist as ETFs?

In a new white paper written for the Retirement Income Institute, fellow American College Professor Wade Pfau and I take a deeper dive into a collection of financial products that offer varying loss protection and compare them to outcomes from a traditional investment portfolio.

How should advisors think about protected annuities?

First, they shouldn’t dismiss them as an inefficient gimmick. In a series of detailed articles written while he was head of retirement research at Morningstar, David Blanchett lays out the complex economics that underlie the potential benefits of financial products that use a combination of fixed income investments, equities, and financial options to create a customized distribution of outcomes.

Why might a retiree prefer an option-controlled retirement investment to a traditional long-only portfolio of stocks and bonds?

According to Nobel laureates Robert Merton and Myron Scholes, financial options can be used to construct investments that “can be used by investors to produce patterns of returns which are not reproducible by any simple strategy of combining stocks with bonds.” A retiree may prefer this altered distribution of possible returns to a conventional portfolio.

Limiting Risk

Consider a 60-year-old baby boomer who is five years away from retirement. The market has performed well over the last decade, and they have $500,000 invested today in the S&P 500 and $500,000 in bonds to fund the lifestyle they hope to lead.

The distribution of bond returns over the next five years is relatively narrow. The distribution of the overall portfolio is wider and depends primarily on five-year stock returns.

If we run a Monte Carlo analysis on the S&P 500, we can see how much their future wealth can vary by the time they retire at age 65. At the 10th percentile, they will have $410,000. At the 1st percentile, stocks will fall to $265,000. A lucky retiree at the 90th percentile will have over $1 million.

In five years, they should be able to withdraw about $22,000 from the portion of their portfolio invested in bonds (of course this is a simplification and ignores the potential risk of bonds, which can be significant as we’ve discovered recently).

If the retiree gets lucky and achieves the 90th percentile of returns, they’ll be able to withdraw $47,200 from their stocks based on the 4% rule. If they get unlucky at the 10th percentile, they’ll only be able to withdraw $16,400.

Is the retiree willing to accept the downside risk of spending $38,400 each year in order to achieve the potential upside of $69,200 if they get lucky? At lower percentiles the potential downside and upside become even more extreme (as low as $32,600 at the 1st percentile). Is this a risk the client is willing to accept?

An alternative is to give up some of the upside to cut off some (or all) of the downside risk. In a low interest rate environment, products with floors offer less upside potential and more closely resemble fixed income investments.

However, unlike the intermediate-term fixed income investments that constitute the bulk of an insurance company’s general account portfolio, products such as fixed indexed annuities (FIAs) won’t fall in value if interest rates spike.

In practical terms, the distribution of FIA outcomes in a low interest rate environment over five years ranges from 0% at the 1st percentile to 7% at the median to about 12% at the 95th percentile.

Growth is similar to expected growth on safe bonds but without the potential downside of term and credit risk. It should be noted that any attempt to position 0% floor products as “upside with no downside” is disingenuous since the upside is lower at the 95th percentile than a bond fund.

Purchasing a RILA with a -10% floor allows an investor to increase the potential upside to 19% at the 90th percentile. The upside is limited to the call options budget available to capture modest growth after the insurance company invests in bonds to guarantee returning 90% of principal.  A -10% floor allows a bigger options budget than a 0% floor.

Buffered RILAs

RILAs with a buffer allow an investor to accept a greater range of potential upside and downside outcomes. Buffered annuities are an interesting concept because they seem to be tailor-made for loss-averse investors. Why? The insurance company protects against the first 10% of losses, preventing small losses that often result in a big emotional response. However, investors are on the hook for losses beyond -10%.

For example, a -10% buffer would turn the -37% return from the S&P in 2008 into a -27% return. Big negative returns are far less common than small negative returns with a bell-shaped return distribution. Investors are completely protected against most losses and buffered against large ones.

Of course, there is a cost. The insurance company needs to employ an options strategy to provide the buffer. This will limit the upside potential of a RILA distribution. For example, at the 90th percentile a buffered annuity will have a 31% return over five years and taxable stocks will have an 87% return.

At the fifth percentile, a buffered RILA has a -8% return and stocks a -26% return. At any return below the 25th percentile, the buffered annuity provides a higher return than stocks and the difference increases toward the tail, resulting in significant downside protection.

Another Option

Another interesting protection annuity that performed well in our analyses is a variable annuity with a so-called guaranteed minimum accumulation benefit (GMAB).

The product used in our analysis offers a true five-year floor of -10%, resulting in a lower extreme downside than a buffered annuity. GMABs also provide more modest protection than RILAs against smaller downside outcomes with a -10% return at the 10th percentile and a 1% return at the 25th percentile.

The upside of a GMAB, however, was far higher than a buffered annuity with a 53% return at the 90th percentile and a 66% return at the 95th percentile.

For an investor who wants to get rid of any possibility that they will have to cut back significantly on spending if they get unlucky with their stock investments over the next five years while giving up only the more extreme upside outcomes if they get unlucky might find the GMAB product more attractive than an unprotected stock investment.

Deferring Gains

An additional advantage of holding nonqualified assets in products that use financial options to tailor an investment portfolio in an annuity wrapper is the ability to defer short-term gains until after a worker has retired.

This is particularly valuable when a worker is in a significantly lower tax bracket after retirement. Of course, gains could be further deferred if the annuity is turned into lifetime income using an immediate annuity that benefits from the exclusion ratio where only a portion of each payment is subject to income taxes.

The insurance companies who manage these products provide value by managing option trading on behalf of the advisor and providing guarantees that insulate a client from volatility swings that could increase option prices.

Option-protected portfolio strategies aren’t new, but the outcomes they produce appear to be increasingly popular among investors nearing retirement.

This shouldn’t be surprising since many retirees base their decisions about when to retire on the lifestyle they can generate from the investments they hold today. A negative return shock can result in a delayed retirement, or an unacceptable drop in lifestyle that could have been eliminated by cutting off some upside.

Read the full article: https://www.thinkadvisor.com/2022/04/26/downside-down-why-advisors-shouldnt-dismiss-rilas/ 

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersWhy Advisors Shouldn’t Dismiss Index-Linked Annuities
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Reverse Mortgages and Estate Planning

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Your home may be your most valuable asset and represent the largest portion of your estate. A reverse mortgage can help you hang onto that asset, by letting you tap into your accumulated home equity without having to sell the home. Still, the money you receive from the reverse mortgage will also have to be repaid after you die, reducing the value of your estate, possibly substantially. Here is what you need to know about reverse mortgages and estate planning.

KEY TAKEAWAYS

  • If you have a reverse mortgage on your home, it will have to be paid off after you die, reducing the home’s value to your heirs.
  • The rules are different for spouses who inherit homes with reverse mortgages than for other heirs.
  • A reverse mortgage could allow you to supplement your retirement income without drawing down other assets in your estate.

What Happens to Your Reverse Mortgage After You Die?

When you leave a home with a reverse mortgage to someone, you’re also leaving them with responsibility for the mortgage. What they’ll need to do next depends on their relationship to you.

If Your Heir Is Your Spouse

Spouses who inherit a home with a reverse mortgage fall into three groups. Which group your spouse is in will determine whether they have a right to stay in the home and possibly continue to receive benefits from the reverse mortgage.

  • Co-borrowing spouse – A co-borrowing spouse is listed as such on the original loan documents. Any co-borrower (they don’t have to be your spouse) can stay in the home and continue to receive money from the reverse mortgage.
  • Eligible non-borrowing spouse – Spouses who didn’t qualify to be co-borrowers (typically because they were under age 62 when the loan was issued) can be listed on the mortgage as eligible non-borrowing spouses. If they meet certain other requirements, they can also remain in the home, but they won’t receive additional money from the reverse mortgage.
  • Ineligible non-borrowing spouse – Such spouses don’t meet the requirements for one of the first two categories. They must buy the home themselves if they wish to remain in it. They can also sell it.1

In the case of co-borrowing or eligible non-borrowing spouses, the home and reverse mortgage become part of their estate when they die.

(Please note that this article describes the rules for Federal Housing Administration (FHA)–insured home equity conversion mortgages (HECMs) originated on or after Aug. 4, 2014; older HECMs have somewhat different rules. The Consumer Financial Protection Bureau provides both sets of rules on its website.)2

If Your Heir Is Someone Other Than Your Spouse

If you leave your home to your children or other heirs who are not your spouse, they will not be eligible to keep the reverse mortgage; instead, they must pay it off within a specified time frame. Essentially, they will have three choices:

  • Sell the home –After they pay off the mortgage, anyequity that remains is theirs to keep.
  • Buy the home –They can also pay off the reverse mortgage with their own funds if they want to keep the home.
  • Deed the home over to the lender – This way of settling the debt is known as a “deed in lieu of foreclosure.”3

Fortunately, no matter how much you owe on a HECM, your heirs won’t be stuck with a net debt. The most they’re obligated to pay is either the full loan balance or 95% of the home’s appraised value, whichever is less. The FHA insurance will cover any difference.4

Your heirs may have to take action fairly quickly. Technically, they have only 30 days from receiving a due and payable notice from the lender, although they can ask for an extension of up to a year to give them time to sell the home or arrange for financing to buy it themselves.5 Which course they are likely to follow will depend on a variety of factors, including how attached they are to the home and how much debt it carries.

One suggestion you may see online is to use some of the proceeds of the reverse mortgage to buy a life insurance policy made payable to your heirs. This could provide them with sufficient cash to purchase the home after your death. However, you may need all the money you receive from the reverse mortgage to cover your living expenses and not have any left over to buy life insurance, which can also be costly in your later years. Still, this could be an option for some people.

If You Have Other Assets

Reverse mortgages may be of greatest appeal to people who lack retirement accounts, nonretirement investment accounts, or adequate cash savings, making their home their only significant financial asset.

For example, if you know your heirs would like to inherit your home, drawing on those other assets for income could make more sense than running up a large balance on a reverse mortgage. On the other hand, if your heirs don’t have any particular attachment to the home, borrowing against it can be a way to preserve your other assets for them.

Wade Pfau, author of Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement,notes that having a reverse mortgage to draw on is one way to protect your other assets in a bear market. Rather than being forced to sell investments when prices are down to supplement your income, you can tap the reverse mortgage for income until prices rise again.6 Of course, you’ll pay a price for that flexibility in terms of the reverse mortgage’s steep up-front costs.7

A reverse mortgage might also help protect your other assets if you ever face major long-term care costs. Bear in mind, though, that the mortgage will have to be repaid if you move out of the home and into a care facility for 12 consecutive months or more, unless you have a co-borrowing or an eligible non-borrowing spouse living in it.8

How Much Can You Borrow With a Reverse Mortgage?

How much you can borrow with a reverse mortgage depends on your age (or the age of your co-borrowing or eligible non-borrowing spouse, if they’re younger than you), the equity you have in your home, and current interest rates. The current maximum for a government-insured HECM is $970,800.7

Where Can You Get a Reverse Mortgage?

To get a HECM (the most common type of reverse mortgage), you must go through a lender approved by the FHA. There is a search tool for locating lenders on the website of the FHA’s parent organization, the U.S. Department of Housing and Urban Development (HUD).9

At What Age Do Most People Get Reverse Mortgages?

While you’re eligible for a reverse mortgage at age 62, most people who get one wait until later. A Consumer Financial Protection Bureau study found that in 2019, the latest year for which data is available, the median age of reverse mortgage borrowers was 73.10

The Bottom Line

Your home may represent a significant part of your estate and having a reverse mortgage on it will affect how much of its value your heirs will receive when you die. If you have financial assets in addition to your home, supplementing your income with a reverse mortgage can help you preserve them for your estate. Because your heirs will generally be responsible for paying off the loan when you die, it’s worth discussing the situation with them well in advance.

Today’s Refinance Rates Are Better Than Ever

$400,000 for 1.93% APR for a 15-year fixed mortgage. These low rates won’t last forever. Experts agree rates will likely rise 30% over the course of this year. Skip this month’s payment if you refinance today. Calculate your new payment and see how much you could save with LendingTree.

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersReverse Mortgages and Estate Planning
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Retirement Planning Is No Laughing Matter: WealthConductor CEO

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By Jane Wollman Rusoff

Approaching the challenge of retirement income planning in a lighthearted fashion may have friendliness written all over it, but it’s unlikely to be an effective strategy, argues Sheryl O’Connor, co-founder and CEO of the technology firm WealthConductor, in an interview with ThinkAdvisor.

“Retirement income planning is a deadly serious topic,” she says. “It’s scary.”

Engaging people through “games or funny videos” is “really insulting” — “and it isn’t going to help people save more,” she maintains.

What pre-retirees want, surveys show, is a written customized plan that gives them confidence they’ll conquer their “two top concerns” in retirement: the cost of health care and outliving their money, according to O’Connor, winner of two 2021 ThinkAdvisor LUMINARIES awards in Executive Leadership.

Advisors who specialize in the retirement planning distribution stage “are going to be the ones benefiting from the largest migration of assets from the accumulation phase to the distribution phase in the history of financial services,” O’Connor says in the interview.

“This represents the biggest opportunity that advisors have seen in at least 30 years,” she notes.

WealthConductor’s prime offering is its platform IncomeConductor, which supports advisors with an income distribution strategy customized to a client’s needs and goals.

Further, it helps advisors position themselves as specialists in retirement income distribution.

The online software is available to them on a subscription basis.

IncomeConductor pivots on the strategy of “time-segmented milestones,” devised by O’Connor’s partner Philip Lubinski, a veteran certified financial planner who developed the strategy of bucketing assets, she says.

The firm’s third co-founder is Tom O’Connor, chief marketing officer.

Because client and advisor collaborate on building the IncomeConductor plan, clients “are more likely to adhere to it,” Sheryl O’Connor says.

Before launching Hartford, Connecticut-based WealthConductor in 2017, she co-founded 3D Asset Management, an RIA where she built a turnkey asset management program designed to let advisors completely outsource their back-office administration.

Earlier — from 1998 to 2004 — she was with The Hartford and MassMutual.

In the interview, she describes IncomeConductor’s distinctive features and benefits — including sending alerts to advisors that “there are opportunities to take some risk off the table” — and how it differs from other bucket strategies.

A former schoolteacher, O’Connor is taking the industry to task for not “evolving correctly.”

“It is sticking with the old way of doing things. But we have to move forward and realize that retirement is different today,” she says.

“We can’t keep using the tools and strategies that we used for our parents’ generation for [today’s] generation,” she stresses.

Speaking by phone from South Windsor, Connecticut, O’Connor says: “There’s a lot of talk in the industry about financial wellness, financial education and client engagement. Those are great goals.

“But I don’t see anybody doing them really effectively,” she says.

Here are highlights of our conversation:

THINKADVISOR: What aspect of retirement planning is most critical for advisors to focus on today?

SHERYL O’CONNOR: Because of the huge wave of baby boomers going from a working career into retirement, we’re experiencing the largest migration of assets from the accumulation phase to the distribution phase in the history of financial services.

Therefore, people are looking for advisors to provide retirement income planning services.

This presents the biggest opportunity that advisors have seen in at least 30 years.

Advisors that specialize in this area are going to be the ones benefiting from the big change of assets from accumulation to distribution.

How can they approach this in the most effective way?

Retirement income planning is a deadly serious topic: People are starting a whole new phase of their lives full of unknowns. It’s scary. So the best way to engage them isn’t through games or funny videos. That’s really insulting.

Gamification isn’t going to sustain somebody’s interest and get across what they should do. It isn’t going to help people save more.

Why is being assured of a secure retirement so challenging?

Today’s retirees have to rely almost solely on Social Security benefits and what they’ve managed to save in a 401(k) plan or an outside account, or maybe an investment in property.

Read the rest of the article, here: https://www.thinkadvisor.com/2022/04/11/retirement-planning-is-a-deadly-serious-topic-wealthconductor-ceo/

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersRetirement Planning Is No Laughing Matter: WealthConductor CEO
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Episode 146: Your Marketing Must Go Digital With Greg Dinetz

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Everything in marketing changed with the pandemic. If you don’t have a digital presence, you will not grow in the future. However, the first place to start is usually on improving your core business processes. Greg Dinetz, Co-Founder of Lone Beacon joins us today to talk about how examining your customer experience will uncover the most important digital holes for you to fill first.
Also, do you want to get regular updates on news about guests of our show? Go to https://thatannuityshow.com and subscribe to our newsletter.
We hope you enjoy the show.
Links mentioned in the show:

Thank you to our show sponsor; The Index Standard!

Fixed Index Annuities and RILAs are getting more complex and technical just when fiduciary rules are getting stricter. How do you choose the right index and allocate to them? The Index Standard is your answer. They are an independent provider ratings and forecasts on all indices and ETFs used in the US insurance space. Their process is systematic and unbiased, identifying robust and well-designed indices. We all know finance is complex and The Index Standard has a clear ratings system and uses approachable language to demystify this complexity. Visit theindexstandard.com for more information.

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersEpisode 146: Your Marketing Must Go Digital With Greg Dinetz
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Episode 145: Diving Deep into the Power of Annuities With Michael Finke

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In this business, we have all heard about the ability of annuities to create a guaranteed income in retirement. Today, Michael Finke, investments/retirement professor and Frank M. Engle Chair of Economic Security Research at The American College joins us  to bring the actual numbers into sharper focus.
Also, do you want to get regular updates on news about guests of our show? Go to https://thatannuityshow.com and subscribe to our newsletter.
We hope you enjoy the show.
Links mentioned today:

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[Paul Tyler]: hi this is paul

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[Paul Tyler]: tyler and welcome to another episode of that annuity show ramsey welcome

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[Ramsey Smith]: thank you it’s great to be back live from new york city having a good time

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[Paul Tyler]: yeah and yeah it’s good to see you

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[Paul Tyler]: so we’ve had kind of an

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[Michael Finke]: hundred and

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[Paul Tyler]: interesting series of discussions about rules of thumb for a variety of topics

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[Paul Tyler]: including withdrawal and mr bill bengen joined us a week or two ago to talk about

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[Paul Tyler]: the four percent rule

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[Paul Tyler]: and

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[Michael Finke]: sure

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[Paul Tyler]: we’ve got a great discussion teed up with somebody else who’s a very important

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[Paul Tyler]: voice in

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[Paul Tyler]: understanding how that may work do you want to introduce our our guest ramsey

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[Ramsey Smith]: sure absolutely so delighted to be joined today by michael finke he is he is

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[Ramsey Smith]: one of you know number of sort of very important voices of what i like to call the

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[Ramsey Smith]: academic and sort of pragmatic cabal in

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[Ramsey Smith]: retirement uh in retirement research

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[Michael Finke]: hm

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[Ramsey Smith]: and we’re just delighted to have him he’s the professor of wealth management at

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[Ramsey Smith]: the american college of financial services and he is the frank m

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[Ramsey Smith]: angle chair of economic security

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[Ramsey Smith]: so

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[Michael Finke]: yeah

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[Ramsey Smith]: michael

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[Ramsey Smith]: it’s been we should have done this six months ago a year ago delighted to have you

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[Ramsey Smith]: on

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[Ramsey Smith]: so many things to talk about

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[Ramsey Smith]: let’s get right into it i would like to first of all find out

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[Ramsey Smith]: what you’ve been focusing on you know most recently in your you know in your

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[Ramsey Smith]: travels and your practice

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[Michael Finke]: well i topic

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[Michael Finke]: a couple of topics ramsey so first of all great to be here

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[Michael Finke]: just as a way of background this is one of

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[Michael Finke]: i

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[Michael Finke]: those topics that i’ve been working on now for over a decade it’s been i think now

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[Michael Finke]: ten years

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[Paul Tyler]: yeah

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[Michael Finke]: since wade vow and david blanchett and i wrote the original article criticizing

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[Michael Finke]: the

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[Michael Finke]: four percent rule in a low interest rate environment

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[Ramsey Smith]: yeah

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[Michael Finke]: and since then

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[Michael Finke]: like that

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[Michael Finke]: i’ve done a lot of different studies on

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[Michael Finke]: understanding what risk means in retirement helping clarify the idea of

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[Michael Finke]: taking risk

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[Michael Finke]: oh yeah

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[Michael Finke]: by investing in stocks and bonds and

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[Michael Finke]: bed

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[Michael Finke]: understanding what happens when things go well and when things don’t t go not so

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[Michael Finke]: well

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[Michael Finke]: uh what if they

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[Michael Finke]: and one

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[Ramsey Smith]: i think

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[Michael Finke]: of the things that i’ve been thinking a lot about over the last year or two is

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[Michael Finke]: this idea of a fixed withdrawal rate and a certain amount

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[Michael Finke]: you know

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[Michael Finke]: of safety so the whole

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[Michael Finke]: like

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[Michael Finke]: idea of a monte carlo analysis so if you run one of these monte carlo analyses

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[Michael Finke]: which by the way it is just a randomizer it has a distribution of returns that you

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[Michael Finke]: can get on an investment portfolio you have to plug in your expected returns your

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[Michael Finke]: expected standard deviation it’ll spit out an asset return the first year’ll

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[Michael Finke]: simulate

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[Michael Finke]: about

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[Michael Finke]: thousands of retirements you know sometimes people get lucky sometimes people get

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[Michael Finke]: unlucky

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[Michael Finke]: but i didn’t

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[Michael Finke]: but i think when you run a money carlo just and you just do it at one point in

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[Michael Finke]: time it gives you this idea that you’re ninety five percentage safe or ninety

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[Michael Finke]: ninety percent safe what does that safety mean it means that you can withdraw a

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[Michael Finke]: certain amount of money every year from a retirement portfolio and this is

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[Michael Finke]: really

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[Michael Finke]: really the idea behind bill

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[Michael Finke]: bacon

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[Michael Finke]: begin’s work is let’s look at historical time periods and let’s see how much you

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[Michael Finke]: could have withdrawn from an investment portfolio of stocks and bonds safely

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[Michael Finke]: historically

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[Michael Finke]: and one of the points

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[Michael Finke]: the white on

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[Michael Finke]: that i think is not covered enough

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[Michael Finke]: he he want a money car

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[Michael Finke]: is that when you run a money carlo and you’re doing a simulation and you’re

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[Michael Finke]: i remember that

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[Michael Finke]: trying to capture what asset returns are probably going to look like in the future

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[Michael Finke]: because again we’re in a low interest rate environment we have very high prices on

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[Michael Finke]: risky assets like stocks that’s going to adjust our expectations of returns

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[Michael Finke]: downward what sort of a risk does that involve does that change the mechanics of

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[Michael Finke]: the four percent rule

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[Michael Finke]: but also

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[Michael Finke]: but also what happens when you get unlucky and to me that is the one area of

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[Michael Finke]: retirement income planning that is not discussed enough so if you get unlucky the

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[Michael Finke]: first year of retirement so for example you experience something like investors

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[Michael Finke]: experienced in two thousand

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[Michael Finke]: you

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[Michael Finke]: eight how much does that affect the safe withdrawal rate now we

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[Michael Finke]: no

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[Michael Finke]: know that you may have had a ninety percent chance of success the first year of

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[Michael Finke]: retirement but

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[Michael Finke]: back in the

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[Michael Finke]: that can go down to a sixty percentage chance of success that you’re going to be

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[Michael Finke]: able to maintain the same lifestyle if you have a two thousand eight occur and

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[Michael Finke]: that might

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[Michael Finke]: that gets into this idea of the

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[Michael Finke]: we

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[Michael Finke]: requirement of spending

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[Michael Finke]: like

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[Michael Finke]: flexibility if you have no safety net you have to be able to adjust your spending

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[Michael Finke]: downward if you want to maintain the same probability of success

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[Michael Finke]: and

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[Michael Finke]: you

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[Michael Finke]: there’s no getting around that you know people they just cling to

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[Michael Finke]: like

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[Michael Finke]: this idea that

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[Michael Finke]: he couldn’t

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[Michael Finke]: because you had a ninety percentage chance of success the first year of retirement

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[Michael Finke]: you always have a ninety percentage chance of success

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[Michael Finke]: the

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[Michael Finke]: but that changes every

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[Ramsey Smith]: it’s still nice

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[Michael Finke]: day every day you’re a chance of being able to maintain a given income changes and

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[Michael Finke]: whatever

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[Michael Finke]: whatever asset prices were the first day of retirement which are very high

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[Michael Finke]: right

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[Michael Finke]: right now that’s irrelevant a year from now if you would have just waited a year

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[Michael Finke]: of retirement to retire and you went from a million dollars down to seven hundred

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[Michael Finke]: fifty thousand dollars

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[Michael Finke]: that

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[Michael Finke]: all of a sudden your four percent rule would be thirty thousand dollars instead of

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[Michael Finke]: forty thousand dollars

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[Michael Finke]: yeah i been thinking bi that

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[Michael Finke]: and i think it’s one of these ideas that people don’t give enough thought to that

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[Michael Finke]: if you want to maintain the same probability of success

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[Michael Finke]: your spending path has to be

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[Michael Finke]: why

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[Michael Finke]: widely variable that was a very long answer to what are you working on right now

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[Michael Finke]: but it’s one

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[Michael Finke]: what

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[Michael Finke]: of these things that i feel very passionate about that’s not discussed enough is

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[Michael Finke]: the requirement of spending variability if you have no safety net because you have

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[Michael Finke]: to avoid that worst possible outcome

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[Paul Tyler]: so i it’s interesting you mentioned control and expenses

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[Michael Finke]: so it’s interesting you mentioned control and expenses

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[Paul Tyler]: i listened to you know susie armon the other day on one of her our shows interest

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[Michael Finke]: i listened to you know susie arman the other day in one of her hour shows interest

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[Paul Tyler]: interesting i just really wanted to sort of catch up and hear what she’s doing and

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[Michael Finke]: interesting i just really wanted to sort of catch up and hear what she’s doing and

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[Paul Tyler]: michael her her advice always also seems to come back to yeah but

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[Michael Finke]: michael her her advice always seems to come back to yeah but

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[Paul Tyler]: you know lower your cost of lower expenses that is one thing i have in my own

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[Michael Finke]: you know lower your cost of lower expenses that is one thing i have in my own

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[Paul Tyler]: control

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[Michael Finke]: control

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[Paul Tyler]: is managing expenses down

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[Michael Finke]: is managing expenses down

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[Paul Tyler]: as you go into retirement a hard thing to do or is it easier is it natural do you

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[Michael Finke]: as you go into retirement a hard thing to do or is it easier is it natural do you

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[Paul Tyler]: have any sense of what that pattern looks like for a typical senior

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[Michael Finke]: have any sense of what that pattern looks like for a typical senior

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[Michael Finke]: well this is a great

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[Michael Finke]: but

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[Michael Finke]: question so i think at the beginning of retirement the first step needs to be to

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[Michael Finke]: look at your expenses and to identify which of those expenses is flexible and

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[Michael Finke]: which of those expenses is not flexible your property tax is clearly inflexible

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[Michael Finke]: your health care is inflexible paying for insurance on your car is inflexible all

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[Michael Finke]: of these expenses represent about

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[Michael Finke]: but

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[Michael Finke]: seventy percent of a retirees’ budget

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[Michael Finke]: and it does not make sense to fund those expenses using risky assets because you

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[Michael Finke]: cannot withstand a drop in value

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[Michael Finke]: but you can fund those expenses with safe assets so things like social security or

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[Michael Finke]: a pension or an annuity or maybe a bond ladder and here’s where it gets

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[Michael Finke]: interesting because if you fund it with a bond ladder versus an annuity we know

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[Michael Finke]: that you spend less each year or it requires more money up front you have to

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[Michael Finke]: allocate more money up front to fund those basic expenses now the second part of

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[Michael Finke]: the equation is the flexible expenses of those flexible expenses

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[Paul Tyler]: yeah

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[Michael Finke]: how willing are you to cut back

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[Michael Finke]: okay

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[Michael Finke]: if markets don’t perform well

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[Michael Finke]: how about

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[Michael Finke]: and a lot of people they look at their gym membership and they say that well

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[Michael Finke]: that’s

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[Michael Finke]: what

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[Michael Finke]: not that flexible of an expense my vacations are not that flexible of inexpensive

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[Michael Finke]: my going out to dinner with friends is not that flexible of an expense therefore i

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[Michael Finke]: am not willing to adjust my spending significantly if markets don’t perform well

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[Michael Finke]: remember the whole point of taking investment risk is that you’re hoping to

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[Michael Finke]: get

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[Michael Finke]: good

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[Paul Tyler]: thank you

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[Michael Finke]: a higher return

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[Michael Finke]: but you have to accept risk in retirement what risk means is the possibility of

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[Michael Finke]: spending less so the question you have to ask yourself is are you willing to

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[Michael Finke]: accept the possibility of spending less on going out to dinner with friends in

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[Michael Finke]: order to

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[Michael Finke]: about

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[Michael Finke]: have on average more money to go out to dinner with

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[Paul Tyler]: yeah

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[Michael Finke]: friends in the future that’s the trade off all retirees need to accept and anybody

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[Michael Finke]: who tries to say that you don’t have to make that trade off does not understand

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[Michael Finke]: the basic economic concept of risk risk is real if it wasn’t real we wouldn’t get

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[Michael Finke]: rewarded for taking it but it does mean that we have to be thinking about our

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[Michael Finke]: spending first when we’re developing a retirement income investment plan

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[Ramsey Smith]: so that’s a

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[Ramsey Smith]: it’s it’s a concept that’s that’s very compelling and

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[Ramsey Smith]: there’s some interesting sort of second sort of in my mind two ways to look at it

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[Ramsey Smith]: obviously there’ the expenses that are clearly inflexible right so that the true

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[Ramsey Smith]: fixed costs and then there are others that that aren’t flexible um but for

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[Ramsey Smith]: personal utility reasons people want to treat them as as as is inflexible and why

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[Ramsey Smith]: i find that interesting is that that potentially opens up the use case for

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[Ramsey Smith]: annuities to a broader socioeconomic audience so maybe there are wealthier people

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[Ramsey Smith]: that that ultimately are determined that there is a lifestyle that they want to

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[Ramsey Smith]: lead

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[Ramsey Smith]: that again

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[Ramsey Smith]: there may be activities that aren’t absolutely necessary but they’ve decided for

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[Ramsey Smith]: sure they want to pursue them

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[Michael Finke]: well

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[Ramsey Smith]: and the question is should those sort of voluntary inflect i’ll call them

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[Michael Finke]: oh

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[Ramsey Smith]: voluntary and flexible expenses is there a use case for greater use of annuities

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[Ramsey Smith]: is for coverage of that part

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[Ramsey Smith]: of their income needs as well

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[Ramsey Smith]: i’m not sure if that’s part of the conversation but i’ve always thought that that

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[Ramsey Smith]: was another sort of additional use case

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[Michael Finke]: what is the weather i

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[Michael Finke]: when i interview retirees sometimes what i hear is

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[Michael Finke]: yeah

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[Michael Finke]: they’re

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[Michael Finke]: very crowd

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[Michael Finke]: very proud of the fact that they’re not spending that much in retirement

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[Michael Finke]: yes

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[Michael Finke]: and

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[Michael Finke]: i

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[Michael Finke]: like

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[Michael Finke]: say great you know it’s great that you’re using coupons or going out to the two

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[Michael Finke]: for one dinner early you’re not taking too many vacations you’re not spending too

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[Michael Finke]: much money you must really want to give more money to your kids

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[Michael Finke]: and then what i very often hear is

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[Ramsey Smith]: hey

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[Michael Finke]: no well you know they have plenty of money i i help them pay for their education

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[Michael Finke]: they make more money than i ever did and then there is this silence this sort of

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[Michael Finke]: see

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[Michael Finke]: realization that there’s only two places your money can go in retirement you can

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[Michael Finke]: either give it to other people

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[Michael Finke]: or you can spend it to live better now spending it to live better could mean

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[Michael Finke]: spending it on fun stuff it can it can mean giving money to a grandkid to help

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[Michael Finke]: them with something that they want to be able to do

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[Michael Finke]: like

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[Michael Finke]: but it’s still spending and you know it’s it’s the the the objective no matter how

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[Michael Finke]: much money you have is what plan can i use that will allow me for the portion of

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[Michael Finke]: my wealth that i want to devote to my lifestyle how much what

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[Michael Finke]: what

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[Michael Finke]: what what

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[Michael Finke]: strategy can i use that’s going to allow me to spend the most money every year and

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[Paul Tyler]: or something

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[Michael Finke]: the big

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[Michael Finke]: big mar

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[Michael Finke]: barrier is that you don’t know how long you’re going to live and you don’t know

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[Michael Finke]: the returns you’re going to receive on your investments therefore

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[Michael Finke]: optimally you’ll cut back you won’t spend as much because you want to avoid the

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[Michael Finke]: risk of potentially

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[Michael Finke]: yeah

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[Michael Finke]: running out it’s like if you’re in a circus and they take away the safety net

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[Michael Finke]: you’re not going to take as many risks because the downside is far worse but if

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[Michael Finke]: you can somehow take away the risk of that potential downside from living too long

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[Michael Finke]: or getting bad investment returns that frees you up to spend more money especially

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[Michael Finke]: when the money can do the most good in terms of your lifestyle in your sixty

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[Michael Finke]: seconds and seventy seconds when your physical and cognitive abilities are

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[Michael Finke]: sharpest as opposed to you know in your ninety seconds when you know so how many

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[Michael Finke]: people do you see that end up in their nineties with more money than they can ever

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[Michael Finke]: spend and in essence what they’ve done is they’ve been overly cautious especially

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[Michael Finke]: if they don’t have a strong motive to give the money to someone else you know they

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[Michael Finke]: at the last minute that they could have lived better but they didn’t because of

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[Michael Finke]: that potential fear and you know

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[Michael Finke]: annuitity the whole point of it is let’s take away that source of risk to free you

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[Michael Finke]: think

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[Michael Finke]: up to be able to spend more especially when you can enjoy the money the most

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[Paul Tyler]: so how many retirement plans michael do you think a retiree actually needs i mean

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[Michael Finke]: so how many retirement plans michael do you think a retiree actually

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[Michael Finke]: mm hm

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[Michael Finke]: needs i mean again back to sort of rules of thumb well meet with ramsay your

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[Paul Tyler]: again back to sort of rules of thumb well meet with ramsey your advisor once a

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[Michael Finke]: advisor once a year once a quarter review how your portfolio is going

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[Paul Tyler]: year once a quarter review how your portfolio is going

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[Michael Finke]: oh

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[Paul Tyler]: sounds to me like there may be three major you maybe you’re redoing your plan in a

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[Michael Finke]: sounds to me like there may be three major you may maybe you’re you’re redoing

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[Michael Finke]: your plan in a significant

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[Michael Finke]: oh

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[Paul Tyler]: significant way what three times four times in the course of retirement do you

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[Michael Finke]: way what three times four times in the course of retirement do you have any sense

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[Paul Tyler]: have any sense at how

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[Michael Finke]: at how many how this actually works in practice with retirees who say you yeah

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[Paul Tyler]: how this actually works in practice with retirees who say you yeah i

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[Paul Tyler]: i i will end up with too much money and my kids don’t need it so why am i why am i

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[Michael Finke]: i i end up with too much money and my kids don’t need it so why am i pinching

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[Paul Tyler]: pinching pennies here i want i wanna go on the vacation

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[Michael Finke]: pennies here i want i wanna go on the vacation

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[Michael Finke]: well you know ideally

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[Michael Finke]: it

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[Michael Finke]: if technology advances enough

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[Michael Finke]: yes

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[Michael Finke]: and you know this may

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[Michael Finke]: he

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[Michael Finke]: not be something that requires constant meetings because you’re going to be given

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[Michael Finke]: the information you need to guide you towards making the right decisions your

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[Michael Finke]: portfolio is going to be automatically rebalanced you are going to have that

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[Michael Finke]: protection you’re going to have an idea a guideline about how much you can safely

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[Michael Finke]: spend

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[Michael Finke]: then you know part of the value of going to advisor obviously is well beyond the

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[Michael Finke]: retirement income plan it is

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[Michael Finke]: first of all

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[Michael Finke]: i

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[Michael Finke]: deciding how much you want to pass on to others what is the most efficient way to

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[Michael Finke]: do that how much you want to spend what is the most efficient way to do that

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[Michael Finke]: adjusting along the way

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[Paul Tyler]: eight

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[Michael Finke]: having a voice of comfort so that you don’t freak out when markets fall these are

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[Michael Finke]: all the things that advisors provide tax efficiency understanding rds all the rest

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[Michael Finke]: of it now there’s a huge amount of value that an advisor provides but when it

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[Michael Finke]: comes to the retirement income aspect ideally you put it on autopilot and i think

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[Michael Finke]: one of the reasons why you want to put it on

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[Paul Tyler]: that’s true

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[Michael Finke]: autopilot is that especially as you get to your eighty seconds and ninety seconds

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[Michael Finke]: your you ability to manage an investment portfolio

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[Michael Finke]: is not the same as it was in your sixty second and seventies and decide how much

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[Michael Finke]: you can safely withdraw from that investment portfolio

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[Michael Finke]: it’s good to have professional help to do that not everybody has access to that

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[Michael Finke]: kind of professional help

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[Michael Finke]: for them what i’m hoping is that we eventually get to a point where people first

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[Michael Finke]: of all don’t have to worry about running out of money and second of all have a

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[Michael Finke]: clearer idea of how much they can

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[Paul Tyler]: what

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[Michael Finke]: spend every year

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[Ramsey Smith]: fascinating

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[Ramsey Smith]: so

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[Ramsey Smith]: one of the um one of the other things that uh that you’ve been talking about

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[Ramsey Smith]: recently uh is a social security claiming and you’ve also been talking about

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[Ramsey Smith]: contingent deferred annuities why we start with social security claiming what it

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[Ramsey Smith]: it’s a a it’s a topic that is as often as it’s discussed it is not a it’s not

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[Ramsey Smith]: knowledge that is widely as dispersed among consumers as one would hope or imagine

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[Ramsey Smith]: so tell us a little bit about how you approach that discussion and how you help

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[Ramsey Smith]: educate consumers and frankly advisors on the importance of this

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[Michael Finke]: first of all social security is an annuity you know

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[Michael Finke]: it fun

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[Michael Finke]: for anybody who says they hate annuities well then you must really hate social

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[Michael Finke]: security

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[Michael Finke]: but as it turns out a lot of people like their social security so the idea of

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[Michael Finke]: getting an income

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[Michael Finke]: every month for life

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[Paul Tyler]: yeah

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[Michael Finke]: yeah

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[Michael Finke]: is actually not such a bad thing to have in retirement essentially that is what an

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[Michael Finke]: annuity is and when you think about it as an annuity by delaying claiming for a

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[Michael Finke]: year what you’re doing is you’re giving up the amount of money that you could have

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[Michael Finke]: gotten between say sixty two and sixty three and you’re getting a higher income

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[Michael Finke]: every year in retirement

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[Paul Tyler]: i think

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[Michael Finke]: that begins at age sixty three and then last as long as you’re alive and the way

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[Michael Finke]: that we calculate the value of that income stream is we estimate what it would

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[Michael Finke]: cost to buy that income stream in the future in a low interest rate environment

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[Michael Finke]: that costs a lot and then we look at the likelihood that you’re going to be alive

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[Michael Finke]: at a given age and we’re especially focused on the kind of people that would

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[Michael Finke]: listen to this show who actually have made the biggest gains in longevity over the

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[Michael Finke]: last twenty or thirty years so

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[Michael Finke]: men in the top tenth percentile of income have gained six years of longevity over

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[Michael Finke]: the last twenty five years or so that’s one of the most interesting phenomenon

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[Michael Finke]: that’s happened in the united states is that

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[Michael Finke]: especially higher income men and women but higher income men especially because

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[Michael Finke]: they’re not doing stupid things that they used to do and in the

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[Michael Finke]: sixties and seventies they’re not smoking they’re not you know they’re taking

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[Paul Tyler]: they get it

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[Michael Finke]: better care of themselves they’re eating better they’re exercising for whatever

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[Michael Finke]: reason they’re living longer uh women as well so women who earn more money live

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[Michael Finke]: longer on average they’ve gained about three years and so when we’re estimating

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[Michael Finke]: the value of delayed claiming we now use these updated mortality tables and

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[Michael Finke]: remember the formula that you use to estimate the benefit from delayed claiming

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[Michael Finke]: was actually created in the one thousand nine hundred eighty seconds when people

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[Michael Finke]: were not living as long and when real interests rates were higher than they are

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[Michael Finke]: today so those delayed claiming rules are wrong

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[Michael Finke]: it means that the actuarial value from delayed claiming is significant and a lot

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[Michael Finke]: man

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[Michael Finke]: of people think they’re sticking it to the government by claiming it sixty two

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[Michael Finke]: well in fact it’s the exact opposite the government is sticking it to you if you

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[Michael Finke]: claim at age sixty two

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[Michael Finke]: the

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[Michael Finke]: yeah

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[Michael Finke]: other thing that we’ve noticed is that the delayed claiming rules are tiered in

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[Michael Finke]: other words the percentage increase in income that you get from delaying between

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[Michael Finke]: sixty two and sixty three is five percent but between sixty four sixty three and

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[Michael Finke]: sixty four it’s six and two thirds percent per year and then between sixty six and

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[Michael Finke]: sixty seven it goes up to eight percent per year and when you actually back out

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[Michael Finke]: the benefit the present value benefit that you get

400
00:18:56,857 –> 00:19:01,577
[Michael Finke]: the biggest benefit you get is from waiting between sixty seven and sixty eight

401
00:19:02,617 –> 00:19:07,897
[Michael Finke]: why because that’s the first year of the eight percent bump in income and that

402
00:19:07,977 –> 00:19:12,217
[Michael Finke]: means that you know by just waiting between sixty seven and sixty eight you have

403
00:19:12,297 –> 00:19:16,377
[Michael Finke]: almost the same expected longevity but your income is so much higher that the

404
00:19:16,537 –> 00:19:21,097
[Michael Finke]: present value of that bump is you know as high as twenty thousand dollars for a

405
00:19:21,257 –> 00:19:27,017
[Michael Finke]: healthy woman and it’s significant for a healthy man as well and if you’re healthy

406
00:19:27,177 –> 00:19:32,057
[Michael Finke]: every year you delay claiming has a positive net present value is it if you’re

407
00:19:32,217 –> 00:19:38,617
[Michael Finke]: buying an annuity that is priced below market it is pretty much the best deal that

408
00:19:38,697 –> 00:19:43,417
[Michael Finke]: you can get from buying annuitity is from delayed claiming of social security so

409
00:19:43,577 –> 00:19:48,457
[Michael Finke]: we recommend to everybody who is healthy that they delay claiming again because

410
00:19:48,537 –> 00:19:52,217
[Michael Finke]: the rules are meant to be actly fair but in fact they’re not

411
00:19:53,197 –> 00:19:54,197
[Michael Finke]: because they’re old

412
00:19:54,700 –> 00:19:55,700
[Paul Tyler]: snacks

413
00:19:54,857 –> 00:19:58,457
[Michael Finke]: they’re stale they’re probably going to get changed at some point but if you can

414
00:19:59,017 –> 00:20:03,577
[Michael Finke]: delay claiming now it’s definitely in your best interest now annuities are priced

415
00:20:03,577 –> 00:20:07,817
[Michael Finke]: the exact same way or at least the simple fixed annuity products are priced the

416
00:20:07,817 –> 00:20:11,417
[Michael Finke]: same way it’s simply a matter of multiplying the probability that you’re going to

417
00:20:11,417 –> 00:20:15,977
[Michael Finke]: be alive at a given age by the present value of buying that income in the future

418
00:20:16,297 –> 00:20:22,617
[Michael Finke]: and that’s one of the reasons why especially late life annuitity is so cheap so

419
00:20:22,777 –> 00:20:29,097
[Michael Finke]: buying an income late in life is so cheap because when you multiply the present

420
00:20:29,497 –> 00:20:35,017
[Michael Finke]: value of the cost of an insurance company guaranteeing an income starting say at

421
00:20:35,097 –> 00:20:39,737
[Michael Finke]: the age of eighty five well there’s you know a relatively and certainly not one

422
00:20:39,817 –> 00:20:42,697
[Michael Finke]: hundred percent chance that you’re going to be alive at the age of eighty five and

423
00:20:42,777 –> 00:20:47,497
[Michael Finke]: the probability of being alive goes down every year after that so you can buy a

424
00:20:47,577 –> 00:20:53,337
[Michael Finke]: pretty significant income for a relatively modest amount of your savings through

425
00:20:53,897 –> 00:20:57,257
[Michael Finke]: some kind of a deferred income annuity and of course i’m a huge fan of the

426
00:20:57,337 –> 00:21:01,977
[Michael Finke]: qualified longevity annuity contracts the q lax because they take away a lot of

427
00:21:01,977 –> 00:21:06,377
[Michael Finke]: that longevity risk for a relatively modest price and that’s what’s known as

428
00:21:06,377 –> 00:21:10,537
[Michael Finke]: mortality credits if you try to do it without an annuity then you would have to

429
00:21:10,537 –> 00:21:14,697
[Michael Finke]: set aside so much money today let’s say you wanted to make sure that your money

430
00:21:14,777 –> 00:21:18,377
[Michael Finke]: lasted to the age of one hundred which is realistic if you were a healthy woman

431
00:21:18,457 –> 00:21:21,497
[Michael Finke]: you still have a nine percent chance that you’re going to live beyond the age of

432
00:21:21,577 –> 00:21:25,977
[Michael Finke]: one hundred so let’s say you only want a ten percent chance of failure you have to

433
00:21:26,057 –> 00:21:28,137
[Michael Finke]: build the bond ladder up to the age of one hundred

434
00:21:29,337 –> 00:21:34,137
[Michael Finke]: it may be three or four times as expensive to do that as opposed to buying a late

435
00:21:34,217 –> 00:21:38,697
[Michael Finke]: life annuity in which case you can way that risk at a relatively low price you

436
00:21:38,777 –> 00:21:42,617
[Michael Finke]: have more money available to spend early on in retirement you can live better you

437
00:21:42,697 –> 00:21:46,537
[Michael Finke]: can spend more with less risk and that’s one of the advantages of annuities it

438
00:21:46,617 –> 00:21:50,297
[Michael Finke]: sounds like you’re a salesperson it’s like you get something for nothing but in

439
00:21:50,377 –> 00:21:54,697
[Michael Finke]: fact you do get something for nothing you can spend more and you’re at less risk

440
00:21:54,857 –> 00:21:56,217
[Michael Finke]: of potentially running out

441
00:21:57,337 –> 00:22:01,177
[Michael Finke]: when you pool some of your retirement savings with other retirees and have it

442
00:22:01,257 –> 00:22:04,697
[Michael Finke]: managed by an insurance company or the federal government in the case of social

443
00:22:04,477 –> 00:22:05,477
[Michael Finke]: security

444
00:22:05,600 –> 00:22:08,320
[Paul Tyler]: okay i’m about to throw a curve ball here which is

445
00:22:05,623 –> 00:22:08,343
[Michael Finke]: okay i’m about to throw a curve ball here which is

446
00:22:10,000 –> 00:22:15,680
[Paul Tyler]: how much does the math and the risk calculus change based on events over the last

447
00:22:10,103 –> 00:22:12,263
[Michael Finke]: how much does the math and

448
00:22:11,837 –> 00:22:12,837
[Michael Finke]: co

449
00:22:12,343 –> 00:22:17,143
[Michael Finke]: the risk calculus change based on events over the last couple of years and i’ll

450
00:22:15,840 –> 00:22:19,920
[Paul Tyler]: couple of years and i’ll throw some provocative statements at one is yeah delay

451
00:22:17,223 –> 00:22:21,063
[Michael Finke]: throw some provocative statements at one is yeah delay social security because

452
00:22:20,080 –> 00:22:22,720
[Paul Tyler]: social security because everybody’s living longer well actually

453
00:22:21,143 –> 00:22:22,823
[Michael Finke]: everybody’s living longer well actually

454
00:22:24,160 –> 00:22:29,280
[Paul Tyler]: mortality tables reversed last year with covid and you know your statement you

455
00:22:24,183 –> 00:22:29,303
[Michael Finke]: mortality tables reversed last year with covid and you know your statement you

456
00:22:29,280 –> 00:22:33,200
[Paul Tyler]: know michael if you’re healthy well a lot of people who are sick looks or had

457
00:22:29,303 –> 00:22:33,223
[Michael Finke]: know michael if you’re healthy well a lot of people who are sick it looks or had

458
00:22:33,360 –> 00:22:38,320
[Paul Tyler]: covid looks like they’re experiencing some longer term health problem so hm that’s

459
00:22:33,383 –> 00:22:38,423
[Michael Finke]: covid looks like they’re experiencing some longer term health problems so that’s

460
00:22:38,480 –> 00:22:39,920
[Paul Tyler]: one another one is well let’s

461
00:22:38,503 –> 00:22:39,943
[Michael Finke]: one another one is well let’s

462
00:22:40,763 –> 00:22:41,763
[Michael Finke]: you know not not

463
00:22:41,600 –> 00:22:42,720
[Paul Tyler]: not necessarily yours but

464
00:22:41,643 –> 00:22:42,643
[Michael Finke]: not necessarily yours

465
00:22:42,157 –> 00:22:43,157
[Michael Finke]: four

466
00:22:42,743 –> 00:22:44,023
[Michael Finke]: but you know

467
00:22:44,400 –> 00:22:48,400
[Paul Tyler]: take money out of the equity market put into bonds some other people in the market

468
00:22:44,423 –> 00:22:48,023
[Michael Finke]: take money out of the equity market put into bonds some other you know people in

469
00:22:48,023 –> 00:22:52,663
[Michael Finke]: the in the market are saying that well look at the credit risk you know ramsey

470
00:22:48,720 –> 00:22:52,720
[Paul Tyler]: are saying that well look at the credit risk you know ramsey from

471
00:22:52,283 –> 00:22:53,283
[Michael Finke]: from

472
00:22:53,920 –> 00:22:57,520
[Paul Tyler]: you know half the world defaulting effectively right on

473
00:22:54,023 –> 00:22:57,543
[Michael Finke]: you know half the world defaulting effectively right on

474
00:22:58,720 –> 00:23:02,240
[Paul Tyler]: you know on some of their bonds what does that do michael to some of these

475
00:22:59,383 –> 00:23:02,823
[Michael Finke]: on some of their bonds what does that do michael to some of these with their all

476
00:23:02,320 –> 00:23:03,760
[Paul Tyler]: withdrawal right assumptions

477
00:23:02,883 –> 00:23:03,883
[Michael Finke]: right assumptions

478
00:23:04,880 –> 00:23:10,160
[Paul Tyler]: diversify your portfolio let’s you know yes you put money in the u s but spread it

479
00:23:04,983 –> 00:23:10,823
[Michael Finke]: diversify your portfolio’s yes you put money in the u s but spread internationally

480
00:23:10,240 –> 00:23:14,240
[Paul Tyler]: internationally we’re starting to see almost a bifurcation of economies you know

481
00:23:11,143 –> 00:23:15,143
[Michael Finke]: you know we’re starting to see almost a bifurcation of economies you know given

482
00:23:14,480 –> 00:23:17,680
[Paul Tyler]: if given what’s sort of where we’re seeing the world

483
00:23:14,957 –> 00:23:15,957
[Michael Finke]: oh

484
00:23:15,283 –> 00:23:16,283
[Michael Finke]: what’s sort of

485
00:23:15,780 –> 00:23:16,780
[Ramsey Smith]: oh

486
00:23:16,743 –> 00:23:17,783
[Michael Finke]: where we’re seeing the world

487
00:23:18,880 –> 00:23:22,640
[Paul Tyler]: get pushed with this war and oh yeah the really ugly one that everybody’s looking

488
00:23:18,903 –> 00:23:22,583
[Michael Finke]: get pushed with this war and then oh yeah the really ugly one that everybody’s

489
00:23:22,663 –> 00:23:25,943
[Michael Finke]: looking as inflation so michael is this just

490
00:23:22,880 –> 00:23:24,880
[Paul Tyler]: as inflation so michael

491
00:23:24,797 –> 00:23:25,797
[Michael Finke]: like

492
00:23:25,260 –> 00:23:26,260
[Paul Tyler]: is this just uh

493
00:23:25,997 –> 00:23:26,997
[Michael Finke]: just

494
00:23:26,880 –> 00:23:30,960
[Paul Tyler]: is this the one of those bumps you just described you know i’m in retirement i see

495
00:23:26,880 –> 00:23:30,960
[Paul Tyler]: is this the one of those bumps you just described you know i’m in retirement i see

496
00:23:26,983 –> 00:23:30,983
[Michael Finke]: is this the one of those bumps you just described you know i’m in retirement i see

497
00:23:31,040 –> 00:23:36,320
[Paul Tyler]: a bump and you know guess what you survive it manage the expenses you can survive

498
00:23:31,040 –> 00:23:36,320
[Paul Tyler]: a bump and you know guess what you survive it manage the expenses you can survive

499
00:23:31,063 –> 00:23:33,143
[Michael Finke]: a bump and guess what you survive it

500
00:23:33,680 –> 00:23:34,800
[Ramsey Smith]: movies pretty

501
00:23:33,703 –> 00:23:36,743
[Michael Finke]: manage the expenses you can survive it or

502
00:23:36,397 –> 00:23:37,397
[Michael Finke]: like

503
00:23:36,400 –> 00:23:40,800
[Paul Tyler]: it or do you see a fundamental shift in how you start to approach long term

504
00:23:36,400 –> 00:23:40,800
[Paul Tyler]: it or do you see a fundamental shift in how you start to approach long term

505
00:23:36,903 –> 00:23:41,623
[Michael Finke]: do you see a fundamental shift in how you start to approach long term planning for

506
00:23:41,120 –> 00:23:42,800
[Paul Tyler]: planning for the next ten fifteen years

507
00:23:41,120 –> 00:23:42,800
[Paul Tyler]: planning for the next ten fifteen years

508
00:23:41,703 –> 00:23:42,823
[Michael Finke]: the next ten fifteen years

509
00:23:43,897 –> 00:23:49,337
[Michael Finke]: you know it’s it’s a great point like we retirees did not realize that they were

510
00:23:49,497 –> 00:23:53,337
[Michael Finke]: exposed to this risk of a pandemic a lot of scientists understood that that risk

511
00:23:53,477 –> 00:23:54,477
[Michael Finke]: was a possibility

512
00:23:56,057 –> 00:24:00,057
[Michael Finke]: they face that in retirement now if they’ve gotten through it and assuming that

513
00:24:01,177 –> 00:24:02,297
[Michael Finke]: the pandemic is

514
00:24:01,940 –> 00:24:02,940
[Paul Tyler]: that’s

515
00:24:02,457 –> 00:24:07,817
[Michael Finke]: on its way out everybody else now is facing the same expected longevity that they

516
00:24:07,897 –> 00:24:11,657
[Michael Finke]: had before covid so for them it didn’t really make that much of a difference

517
00:24:12,137 –> 00:24:18,617
[Michael Finke]: obviously it has a effect on on overall longevity unfortunately you know some

518
00:24:18,697 –> 00:24:20,697
[Michael Finke]: people who had expected to live longer did not

519
00:24:21,737 –> 00:24:24,857
[Michael Finke]: but you’re still exposed to that same longevity risk

520
00:24:26,057 –> 00:24:31,817
[Michael Finke]: you know and your job when you’re planning for retirement is to address the risks

521
00:24:32,057 –> 00:24:37,017
[Michael Finke]: that you’re aware of and do it in in an efficient fashion but there is always

522
00:24:37,177 –> 00:24:40,217
[Michael Finke]: going to risks that you’re not aware of i mean that’s just part of

523
00:24:42,137 –> 00:24:46,217
[Michael Finke]: the game that you play in financial markets and just being a human being we all

524
00:24:46,377 –> 00:24:49,897
[Michael Finke]: face a certain amount of risks that we cannot anticipate and so maybe

525
00:24:49,700 –> 00:24:50,700
[Paul Tyler]: yeah

526
00:24:50,137 –> 00:24:55,337
[Michael Finke]: part of that risk is the possibility that bond markets crash maybe part of that

527
00:24:55,497 –> 00:24:59,897
[Michael Finke]: risk is the possibility that equity markets also fall or that the dollar loses

528
00:24:59,977 –> 00:25:05,257
[Michael Finke]: value or that inflation goes up those are all things that we have to face we are

529
00:25:05,337 –> 00:25:07,097
[Michael Finke]: aware of those risks we try

530
00:25:06,843 –> 00:25:07,843
[Michael Finke]: what do you

531
00:25:07,177 –> 00:25:12,857
[Michael Finke]: to address them as best we can but the only way to respond to risks that we’re not

532
00:25:12,917 –> 00:25:13,917
[Michael Finke]: aware of is to

533
00:25:13,977 –> 00:25:18,217
[Michael Finke]: recognize that we can be overconfident about the lifestyle that we expect to lead

534
00:25:14,043 –> 00:25:15,043
[Michael Finke]: i have

535
00:25:18,357 –> 00:25:19,357
[Michael Finke]: and to

536
00:25:18,603 –> 00:25:19,603
[Michael Finke]: better

537
00:25:19,097 –> 00:25:22,377
[Michael Finke]: build a certain amount of slack into that lifestyle to account

538
00:25:22,043 –> 00:25:23,043
[Michael Finke]: yeah

539
00:25:22,537 –> 00:25:25,497
[Michael Finke]: for the possibility that there may be risks that we don’t anticipate

540
00:25:26,697 –> 00:25:31,897
[Michael Finke]: one of those risks that i think david blanchett and wade fou and i have been

541
00:25:31,977 –> 00:25:37,017
[Michael Finke]: thinking about for a long time is the risk of united states equities and

542
00:25:37,837 –> 00:25:38,837
[Michael Finke]: a lot of people

543
00:25:39,897 –> 00:25:44,297
[Michael Finke]: almost have a religious belief that united states equities are going to continue

544
00:25:44,777 –> 00:25:49,737
[Michael Finke]: to provide ten to twelve percent return indefinitely in retirement and if you can

545
00:25:49,897 –> 00:25:54,297
[Michael Finke]: just wait it out if equities go down in value then everything’s going to be okay

546
00:25:54,357 –> 00:25:55,357
[Michael Finke]: in the long run

547
00:25:56,457 –> 00:26:01,257
[Michael Finke]: this fervent belief that we are all entitled to what’s known as an equity risk

548
00:26:01,497 –> 00:26:05,977
[Michael Finke]: premium in other words a higher return from stos for than from bonds can get

549
00:26:06,137 –> 00:26:10,857
[Michael Finke]: people in trouble as well because there is no guarantee and especially as

550
00:26:10,937 –> 00:26:14,297
[Michael Finke]: expensive as stock prices have been in recent years

551
00:26:15,897 –> 00:26:19,497
[Michael Finke]: historically when stocks are this expensive they simply don’t perform that well

552
00:26:20,937 –> 00:26:26,217
[Michael Finke]: over a long term time horizon that’s a risk we’re aware of and if you’re not

553
00:26:26,297 –> 00:26:30,297
[Michael Finke]: building that risk into your retirement income plan the possibility that equities

554
00:26:30,377 –> 00:26:34,857
[Michael Finke]: are not going to bail you out then you may end up in trouble and let me just give

555
00:26:34,637 –> 00:26:35,637
[Michael Finke]: you as an example

556
00:26:36,537 –> 00:26:41,337
[Michael Finke]: if you look at remember the four percent rule concept is based on this idea that

557
00:26:41,417 –> 00:26:46,137
[Michael Finke]: your spending goes up every year in order to match inflation of course inflation

558
00:26:46,217 –> 00:26:48,297
[Michael Finke]: is its own video syncretic risk

559
00:26:49,437 –> 00:26:50,437
[Michael Finke]: so

560
00:26:52,457 –> 00:26:55,017
[Michael Finke]: you can buy what’s known as a treasury inflation

561
00:26:55,083 –> 00:26:56,083
[Michael Finke]: man

562
00:26:55,177 –> 00:27:00,377
[Michael Finke]: protected security as a way of getting rid of that inflation risk but if you do

563
00:27:00,457 –> 00:27:04,537
[Michael Finke]: that and you follow the four for percent rule then at today’s low treasury

564
00:27:04,697 –> 00:27:06,937
[Michael Finke]: inflation protected security rates you’re going

565
00:27:06,603 –> 00:27:07,603
[Michael Finke]: that was

566
00:27:06,937 –> 00:27:12,057
[Michael Finke]: to run out of money at about age eighty seven so you’re relying on the stock

567
00:27:12,377 –> 00:27:13,897
[Michael Finke]: portion of your portfolio

568
00:27:15,017 –> 00:27:20,297
[Michael Finke]: drag your investment portfolio beyond the age of eighty seven so that you can

569
00:27:20,457 –> 00:27:25,497
[Michael Finke]: continue to spend four percent after inflation every year but there’s no guarantee

570
00:27:25,497 –> 00:27:28,857
[Michael Finke]: that it is going to do that and it could do that on average but if you get unlucky

571
00:27:28,937 –> 00:27:32,937
[Michael Finke]: the first ten years of retirement you may not have much of an equity portfolio

572
00:27:33,097 –> 00:27:39,497
[Michael Finke]: left so you’re putting a lot of weight on that equity risk premium to provide

573
00:27:39,977 –> 00:27:45,017
[Michael Finke]: safety that it simply cannot by definition provide because risk is real it would

574
00:27:45,177 –> 00:27:47,737
[Michael Finke]: not be compensated again if it weren’t real

575
00:27:50,683 –> 00:27:51,683
[Michael Finke]: you have

576
00:27:53,360 –> 00:27:56,720
[Ramsey Smith]: so uh first of all super commentary

577
00:27:57,760 –> 00:28:02,400
[Ramsey Smith]: i have to say we’ve had i’m just gonna go back quickly to to your comments on

578
00:28:02,480 –> 00:28:05,680
[Ramsey Smith]: social security we’ve talked about it a lot on this show but you’re the first

579
00:28:05,580 –> 00:28:06,580
[Ramsey Smith]: person to

580
00:28:06,523 –> 00:28:07,523
[Michael Finke]: yeah

581
00:28:07,680 –> 00:28:10,560
[Ramsey Smith]: break down the pv benefit sort of

582
00:28:10,580 –> 00:28:11,580
[Paul Tyler]: man

583
00:28:10,683 –> 00:28:11,683
[Michael Finke]: man

584
00:28:11,600 –> 00:28:13,440
[Ramsey Smith]: in those specific tiers that is

585
00:28:14,720 –> 00:28:17,600
[Ramsey Smith]: that is actually very helpful very helpful perspective there

586
00:28:19,920 –> 00:28:24,080
[Ramsey Smith]: so one other one other area that you’ve been focusing on

587
00:28:25,360 –> 00:28:27,680
[Ramsey Smith]: is contingent deferred annuities

588
00:28:28,260 –> 00:28:29,260
[Paul Tyler]: yeah

589
00:28:28,640 –> 00:28:31,840
[Ramsey Smith]: want to hear what your thoughts are on those do you think that that’s something

590
00:28:32,000 –> 00:28:33,040
[Ramsey Smith]: that that should be

591
00:28:34,320 –> 00:28:38,080
[Ramsey Smith]: uh more un offered do you think people are ready for them do you think you think

592
00:28:38,160 –> 00:28:40,640
[Ramsey Smith]: that advisors and consumers will understand them

593
00:28:42,617 –> 00:28:47,577
[Michael Finke]: well let’s say that you have a client and you’re you know you were a strong

594
00:28:47,817 –> 00:28:53,977
[Michael Finke]: adherent in the four percentage rule and the client comes to you and you tell them

595
00:28:54,137 –> 00:28:58,217
[Michael Finke]: that you can withdraw four percent after inflation every year from your investment

596
00:28:58,377 –> 00:29:01,417
[Michael Finke]: portfolio and you’re probably going to be okay and then you say well what does

597
00:29:01,497 –> 00:29:04,937
[Michael Finke]: probably mean well you’ve got a ninety percentage chance of success according to a

598
00:29:04,937 –> 00:29:09,657
[Michael Finke]: monte carlo model that uses historical returns and you say well what if returns

599
00:29:09,737 –> 00:29:10,777
[Michael Finke]: aren’t what they have been

600
00:29:10,763 –> 00:29:11,763
[Michael Finke]: yeah

601
00:29:11,017 –> 00:29:13,897
[Michael Finke]: historically what if we get unlucky what if we end up like japan

602
00:29:15,317 –> 00:29:16,317
[Michael Finke]: will you

603
00:29:17,417 –> 00:29:22,217
[Michael Finke]: provide a backstop will you continue to pay my income if i do what you tell me to

604
00:29:22,297 –> 00:29:25,417
[Michael Finke]: do if i follow the four percent rule and i live to age

605
00:29:25,140 –> 00:29:26,140
[Paul Tyler]: my

606
00:29:25,657 –> 00:29:28,697
[Michael Finke]: ninety and all of a sudden i don’t have any money left

607
00:29:28,980 –> 00:29:29,980
[Paul Tyler]: red

608
00:29:29,083 –> 00:29:30,083
[Michael Finke]: yeah

609
00:29:29,277 –> 00:29:30,277
[Michael Finke]: then

610
00:29:30,857 –> 00:29:36,617
[Michael Finke]: will you continue to send me a check and the advisor will say no i’m not gonna

611
00:29:36,857 –> 00:29:38,297
[Michael Finke]: take that liability and i’m

612
00:29:37,860 –> 00:29:38,860
[Paul Tyler]: i

613
00:29:38,237 –> 00:29:39,237
[Michael Finke]: not going to take that risk

614
00:29:40,617 –> 00:29:45,577
[Michael Finke]: and then the client says well why not you just told me that there was no risk to

615
00:29:45,737 –> 00:29:49,737
[Michael Finke]: following the for four percent rule why are you not willing to follow that up with

616
00:29:50,137 –> 00:29:54,617
[Michael Finke]: some sort of insurance to protect me so that i can feel comfortable spending my

617
00:29:54,697 –> 00:29:58,857
[Michael Finke]: money every year in retirement without the possibility without thinking in the

618
00:29:58,937 –> 00:30:03,497
[Michael Finke]: back of my mind that if i spend too much i could potentially run out of money

619
00:30:03,163 –> 00:30:04,163
[Michael Finke]: she

620
00:30:04,617 –> 00:30:11,177
[Michael Finke]: well that’s what a contingent deferred annuity is it is portfolio income insurance

621
00:30:12,057 –> 00:30:14,937
[Michael Finke]: is the backstop and of course it’s going to cost money

622
00:30:14,523 –> 00:30:15,523
[Michael Finke]: what

623
00:30:15,177 –> 00:30:17,337
[Michael Finke]: because your advisor is not going to give it to you for free

624
00:30:16,900 –> 00:30:17,900
[Paul Tyler]: know

625
00:30:17,517 –> 00:30:18,517
[Michael Finke]: he’s he’s

626
00:30:17,963 –> 00:30:18,963
[Michael Finke]: i

627
00:30:18,377 –> 00:30:23,337
[Michael Finke]: not gonna say he or she is not going to say i will write a check out of my own

628
00:30:23,497 –> 00:30:29,977
[Michael Finke]: account if you run out of money and i will continue to provide that income for you

629
00:30:30,377 –> 00:30:37,897
[Michael Finke]: in retirement now sometimes i hear advisors or advising companies say that the

630
00:30:38,137 –> 00:30:43,017
[Michael Finke]: insurance expense that people pay to provide that backstop is a fee

631
00:30:44,057 –> 00:30:45,977
[Michael Finke]: well it’s not a fee it’s

632
00:30:45,780 –> 00:30:46,780
[Paul Tyler]: what

633
00:30:46,217 –> 00:30:53,577
[Michael Finke]: insurance so you you’re paying for an insurance premium whether it be for a uh for

634
00:30:53,657 –> 00:30:58,777
[Michael Finke]: the cost of receiving a guaranteed minimum withdrawal benefit from your investment

635
00:30:58,937 –> 00:31:03,177
[Michael Finke]: portfolio or this new thing which is a contingent deferred annuity which is

636
00:31:03,337 –> 00:31:06,777
[Michael Finke]: entirely separate from your investment portfolio so you’re managing your

637
00:31:06,937 –> 00:31:10,217
[Michael Finke]: investments but then you have this insurance product that’s tacked onto it that

638
00:31:10,217 –> 00:31:12,377
[Michael Finke]: you’re gonna have to pay a fee for but

639
00:31:12,343 –> 00:31:13,463
[Michael Finke]: what okay

640
00:31:13,497 –> 00:31:19,097
[Michael Finke]: that fee allows you to spend money from your investment portfolio free from the

641
00:31:19,257 –> 00:31:24,697
[Michael Finke]: worry that if markets tank and you live too long you are not going to be able to

642
00:31:24,777 –> 00:31:26,377
[Michael Finke]: maintain your lifestyle

643
00:31:26,603 –> 00:31:27,603
[Michael Finke]: but that

644
00:31:26,937 –> 00:31:30,137
[Michael Finke]: now that’s something that i think as you know someone who comes from the

645
00:31:29,883 –> 00:31:30,883
[Michael Finke]: right

646
00:31:30,077 –> 00:31:31,077
[Michael Finke]: ria community

647
00:31:32,217 –> 00:31:33,577
[Michael Finke]: i didn’t give enough thought to

648
00:31:34,423 –> 00:31:35,863
[Michael Finke]: but you don’t have any

649
00:31:34,457 –> 00:31:38,697
[Michael Finke]: but if you don’t have an answer to that question if you’re not willing to provide

650
00:31:38,777 –> 00:31:43,737
[Michael Finke]: the backstop and if your client wants the backstop then you have to consider

651
00:31:45,017 –> 00:31:50,777
[Michael Finke]: buying portfolio income insurance now it’s not cheap but’s not expensive either

652
00:31:51,817 –> 00:31:56,617
[Michael Finke]: so in the sense that it may not be much more than what you’re charging for asset

653
00:31:56,777 –> 00:32:00,217
[Michael Finke]: center management fees the insurance company is willing to take on that risk what

654
00:32:00,297 –> 00:32:02,617
[Michael Finke]: does the insurance company do will they put the money into

655
00:32:03,817 –> 00:32:08,297
[Michael Finke]: a general account portfolio and safe investments they might buy hedging

656
00:32:09,177 –> 00:32:10,377
[Michael Finke]: instruments they might buy

657
00:32:10,443 –> 00:32:11,443
[Michael Finke]: area

658
00:32:10,777 –> 00:32:14,857
[Michael Finke]: instruments that hedge against equity risk or interest rate swaps but

659
00:32:14,580 –> 00:32:15,580
[Paul Tyler]: yeah

660
00:32:15,417 –> 00:32:20,537
[Michael Finke]: that costs money and it’s going to result in a lower expected wealth over time

661
00:32:20,597 –> 00:32:21,597
[Michael Finke]: just like any

662
00:32:21,220 –> 00:32:22,220
[Paul Tyler]: thank you

663
00:32:21,817 –> 00:32:26,217
[Michael Finke]: insurance product that you buy if you buy homeowners insurance you will have less

664
00:32:26,457 –> 00:32:33,337
[Michael Finke]: wealth over time because you are paying for that pooling risk so that if if your

665
00:32:33,417 –> 00:32:37,497
[Michael Finke]: house burns down then you’re going to get a new home in the same way you’re

666
00:32:37,577 –> 00:32:41,737
[Michael Finke]: pooling risk it results in less wealth over time but you’re getting rid of the

667
00:32:41,737 –> 00:32:46,377
[Michael Finke]: risk of potentially running out and the advantage of that is that even with a

668
00:32:46,537 –> 00:32:51,897
[Michael Finke]: portfolio that includes risky assets that could allow you to spend more so this is

669
00:32:51,977 –> 00:32:58,697
[Michael Finke]: a solution i think for the flexible part of your budget is that yes i’m willing to

670
00:32:58,777 –> 00:33:03,417
[Michael Finke]: take a certain amount of risk but with my flexible expenses i am also not willing

671
00:33:03,497 –> 00:33:04,617
[Michael Finke]: to cut back so much

672
00:33:06,137 –> 00:33:11,977
[Michael Finke]: that i’m not able to enjoy my retirement so that insurance product then provides

673
00:33:12,037 –> 00:33:13,037
[Michael Finke]: that backstop

674
00:33:12,500 –> 00:33:13,500
[Paul Tyler]: the

675
00:33:13,577 –> 00:33:18,377
[Michael Finke]: portfolio income protection now from the perspective of an insurance company this

676
00:33:18,077 –> 00:33:19,077
[Michael Finke]: is actually

677
00:33:19,977 –> 00:33:26,217
[Michael Finke]: not an incredibly onerous insurance product to provide why because it only kicks

678
00:33:26,297 –> 00:33:31,897
[Michael Finke]: in if the person lives too long and markets don’t cooperate and if you’ve hedged

679
00:33:31,977 –> 00:33:35,897
[Michael Finke]: this appropriate appropriately if markets have done really badly then your

680
00:33:36,217 –> 00:33:41,257
[Michael Finke]: portfolio that you’re using to fund this guarantee is actually doing pretty well

681
00:33:41,977 –> 00:33:47,657
[Michael Finke]: so that that’s why you can buy it for a relatively modest cost but the benefit in

682
00:33:47,737 –> 00:33:50,297
[Michael Finke]: terms of lifestyle is enormous

683
00:33:50,363 –> 00:33:51,363
[Michael Finke]: white

684
00:33:50,857 –> 00:33:54,937
[Michael Finke]: i can spend money even if the markets tank i can go out to dinner i can continue

685
00:33:55,177 –> 00:34:00,697
[Michael Finke]: to go on vacations because i know that that backstop protection exists and from

686
00:34:01,097 –> 00:34:05,097
[Michael Finke]: most of us who are in the ra world are trained to believe that this is just sort

687
00:34:05,097 –> 00:34:11,657
[Michael Finke]: of a scam but if it is a scam then are you willing to provide that yourself to a

688
00:34:11,737 –> 00:34:16,297
[Michael Finke]: client are you willing to provide the backstop if they run out of money if not

689
00:34:17,097 –> 00:34:21,817
[Michael Finke]: then you have to consider incorporating this kind of portfolio insurance into your

690
00:34:21,897 –> 00:34:23,177
[Michael Finke]: retirement income plans

691
00:34:24,400 –> 00:34:26,720
[Ramsey Smith]: yeah i look i think that’s a very strong point and

692
00:34:28,240 –> 00:34:34,480
[Ramsey Smith]: i i my view is that financial advisors provide an extraordinarily important

693
00:34:34,800 –> 00:34:36,480
[Ramsey Smith]: service along so many

694
00:34:38,000 –> 00:34:42,880
[Ramsey Smith]: parameters but they don’t necessarily have like that that skin in the game and

695
00:34:42,960 –> 00:34:44,080
[Ramsey Smith]: this is the discussion that

696
00:34:44,860 –> 00:34:45,860
[Ramsey Smith]: that sort of

697
00:34:46,100 –> 00:34:47,100
[Paul Tyler]: me

698
00:34:46,123 –> 00:34:47,123
[Michael Finke]: me

699
00:34:46,560 –> 00:34:49,680
[Ramsey Smith]: puts that puts that at the forefront i mean i imagine it’s

700
00:34:49,803 –> 00:34:50,803
[Michael Finke]: yeah

701
00:34:50,000 –> 00:34:54,000
[Ramsey Smith]: imagine it can be an uncomfortable discussion but i i think it

702
00:34:53,780 –> 00:34:54,780
[Paul Tyler]: that

703
00:34:54,160 –> 00:34:55,440
[Ramsey Smith]: you know over time you know

704
00:34:54,160 –> 00:34:55,440
[Ramsey Smith]: you know over time you know

705
00:34:56,220 –> 00:34:57,220
[Ramsey Smith]: there’s the potential

706
00:34:56,843 –> 00:34:57,843
[Michael Finke]: yeah

707
00:34:57,280 –> 00:35:01,680
[Ramsey Smith]: for it to lead to better write better and more complete solutions for for

708
00:35:01,580 –> 00:35:02,580
[Ramsey Smith]: consumers

709
00:35:04,403 –> 00:35:05,403
[Michael Finke]: yeah i

710
00:35:04,720 –> 00:35:10,560
[Paul Tyler]: yeah i i i i’d actually be interested to know like in my you’ve probably done this

711
00:35:04,720 –> 00:35:10,560
[Paul Tyler]: yeah i i i i’d actually be interested to know like in my you’ve probably done this

712
00:35:06,583 –> 00:35:10,823
[Michael Finke]: i’d actually be interested to know like and my per you’ve probably done this i

713
00:35:10,300 –> 00:35:11,300
[Paul Tyler]: i mean

714
00:35:10,300 –> 00:35:11,300
[Paul Tyler]: i mean

715
00:35:10,443 –> 00:35:11,443
[Michael Finke]: mean

716
00:35:12,720 –> 00:35:18,720
[Paul Tyler]: that product versus an fi a when i’m taking income out you know fifteen twenty

717
00:35:12,743 –> 00:35:16,423
[Michael Finke]: that product versus an fia when i’m taking

718
00:35:16,237 –> 00:35:17,237
[Michael Finke]: cool

719
00:35:16,663 –> 00:35:20,903
[Michael Finke]: income out you know fifteen twenty years from now i mean how does how does it how

720
00:35:18,960 –> 00:35:21,600
[Paul Tyler]: years from now i mean how does it how does it compare

721
00:35:20,803 –> 00:35:21,803
[Michael Finke]: does it compare

722
00:35:23,040 –> 00:35:25,360
[Paul Tyler]: in terms of the income you’d be able to show a client

723
00:35:23,143 –> 00:35:25,383
[Michael Finke]: in terms of the income you’d be able to show a client

724
00:35:26,077 –> 00:35:27,077
[Michael Finke]: so

725
00:35:26,300 –> 00:35:27,300
[Paul Tyler]: i yeah

726
00:35:26,323 –> 00:35:27,323
[Michael Finke]: i yeah

727
00:35:26,323 –> 00:35:27,323
[Michael Finke]: i yeah

728
00:35:27,897 –> 00:35:32,857
[Michael Finke]: yeah um you know one of the benefits of this type of a product is that you get to

729
00:35:33,657 –> 00:35:36,777
[Michael Finke]: capture more of the equity risk premium if

730
00:35:36,340 –> 00:35:37,340
[Paul Tyler]: right

731
00:35:36,363 –> 00:35:37,363
[Michael Finke]: right

732
00:35:36,857 –> 00:35:41,977
[Michael Finke]: you get it that’s why you invest in risky assets is so that if stocks do well then

733
00:35:42,137 –> 00:35:47,337
[Michael Finke]: your portfolio value is going to rise and then your income your guaranteed income

734
00:35:47,417 –> 00:35:50,297
[Michael Finke]: amount can also ratchet up that allows you to spend more and that’s why you take

735
00:35:50,297 –> 00:35:51,497
[Michael Finke]: risk in the first place so that

736
00:35:51,083 –> 00:35:52,083
[Michael Finke]: yes

737
00:35:51,497 –> 00:35:54,217
[Michael Finke]: you could potentially with your flexible expenses you could potentially live

738
00:35:54,217 –> 00:35:58,617
[Michael Finke]: better if stocks do well with a fixed index annuity especially at today’s low

739
00:35:58,777 –> 00:36:03,577
[Michael Finke]: interest rates the budget for your upside is really not that great so it’s really

740
00:36:03,577 –> 00:36:07,657
[Michael Finke]: more of a fixed income like potential for growth whereas this gives you more

741
00:36:07,557 –> 00:36:08,557
[Michael Finke]: upside potential

742
00:36:10,297 –> 00:36:13,337
[Michael Finke]: whereas the downside actually might be a little bit lower than it would be for a

743
00:36:13,237 –> 00:36:14,237
[Michael Finke]: fixed and extra noy

744
00:36:15,580 –> 00:36:16,580
[Paul Tyler]: yeah well

745
00:36:15,683 –> 00:36:16,683
[Michael Finke]: yeah well

746
00:36:17,920 –> 00:36:22,320
[Paul Tyler]: we’re close to the end i just got to have to have to ask you this question you

747
00:36:17,920 –> 00:36:22,320
[Paul Tyler]: we’re close to the end i just got to have to have to ask you this question you

748
00:36:18,023 –> 00:36:19,783
[Michael Finke]: we’re close to the end i i just got

749
00:36:20,763 –> 00:36:21,763
[Michael Finke]: have to ask you

750
00:36:21,277 –> 00:36:22,277
[Michael Finke]: any

751
00:36:21,703 –> 00:36:24,183
[Michael Finke]: this question you know you’ve mentioned a number of your

752
00:36:22,320 –> 00:36:26,240
[Paul Tyler]: know you’ve mentioned a number of your colleagues you’re working with wade we’ve

753
00:36:22,320 –> 00:36:26,240
[Paul Tyler]: know you’ve mentioned a number of your colleagues you’re working with wade we’ve

754
00:36:24,397 –> 00:36:25,397
[Michael Finke]: oh

755
00:36:24,743 –> 00:36:26,903
[Michael Finke]: colleagues you’re working with wade we’ve had on

756
00:36:25,980 –> 00:36:26,980
[Paul Tyler]: had on

757
00:36:25,980 –> 00:36:26,980
[Paul Tyler]: had on

758
00:36:27,840 –> 00:36:33,360
[Paul Tyler]: dave we talked to press and cherry back i guess have been like i don’t know four

759
00:36:27,943 –> 00:36:33,223
[Michael Finke]: dave we talked to press and cherry i guess it must have been like i don’t know

760
00:36:33,303 –> 00:36:38,583
[Michael Finke]: four or five months agogo we discovered texas tech was like somehow a nexus of

761
00:36:33,360 –> 00:36:38,800
[Paul Tyler]: or five months ago we discovered texas tech was like somehow a nexus of people

762
00:36:38,743 –> 00:36:42,423
[Michael Finke]: people doing really interesting work in this space tell us more i mean is there

763
00:36:39,120 –> 00:36:42,560
[Paul Tyler]: doing really interesting work in the space tell us more i mean is there something

764
00:36:42,503 –> 00:36:45,383
[Michael Finke]: something in the water in texas tech michael that just

765
00:36:42,720 –> 00:36:44,720
[Paul Tyler]: in the water in texas tech michael that just

766
00:36:46,380 –> 00:36:47,380
[Paul Tyler]: makes you want

767
00:36:46,443 –> 00:36:47,443
[Michael Finke]: makes you want

768
00:36:46,843 –> 00:36:47,843
[Michael Finke]: to

769
00:36:46,877 –> 00:36:47,877
[Michael Finke]: thank you

770
00:36:48,160 –> 00:36:51,200
[Paul Tyler]: really make a difference in this planning market

771
00:36:48,263 –> 00:36:51,223
[Michael Finke]: really make a difference in this planning market

772
00:36:51,977 –> 00:36:57,497
[Michael Finke]: you know the the credit for texas tech goes back to a guy named bill gustafson and

773
00:36:57,657 –> 00:37:02,537
[Michael Finke]: vicky hampton if you’ve ever heard those names so those two recognized the

774
00:37:03,897 –> 00:37:08,617
[Michael Finke]: importance of the financial planning profession and providing an education to

775
00:37:08,937 –> 00:37:13,817
[Michael Finke]: financial advisors that was high quality and so back in the one thousand nine

776
00:37:13,897 –> 00:37:18,857
[Michael Finke]: hundred ninety seconds they put together this team of experts and they became the

777
00:37:19,097 –> 00:37:23,417
[Michael Finke]: place to go if you wanted a high quality financial planning education and then in

778
00:37:23,577 –> 00:37:28,697
[Michael Finke]: two thousand six i came to texas tech and my job was to lead the phd

779
00:37:28,500 –> 00:37:29,500
[Paul Tyler]: that

780
00:37:28,777 –> 00:37:32,537
[Michael Finke]: program in financial planning and a lot of the people who graduated from that

781
00:37:32,617 –> 00:37:36,377
[Michael Finke]: program are now heads of financial planning programs across the united states

782
00:37:35,963 –> 00:37:36,963
[Michael Finke]: yeah

783
00:37:36,457 –> 00:37:39,657
[Michael Finke]: so the chair of the program at georgia is from texas

784
00:37:40,043 –> 00:37:41,043
[Michael Finke]: yeah

785
00:37:40,217 –> 00:37:42,057
[Michael Finke]: tch kansas state

786
00:37:42,683 –> 00:37:43,683
[Michael Finke]: five

787
00:37:44,057 –> 00:37:47,337
[Michael Finke]: you know utah valley a lot of these smaller programs that really focus on

788
00:37:47,497 –> 00:37:52,537
[Michael Finke]: financial planning they’re texas tech graduates and when it comes to annuitity

789
00:37:53,977 –> 00:38:01,017
[Michael Finke]: this i think receptivity to annuitity came from this idea that you know we’re

790
00:38:01,017 –> 00:38:06,217
[Michael Finke]: economists we read the economic research and for a long time it kind of economists

791
00:38:06,217 –> 00:38:10,217
[Michael Finke]: have been talking about this annuity puzzle this idea that people are not

792
00:38:10,297 –> 00:38:14,777
[Michael Finke]: annuitity izing as much as they should and in financial planning practice you know

793
00:38:14,857 –> 00:38:19,657
[Michael Finke]: there’s this historical split betweens and investments and there’s not a whole lot

794
00:38:19,597 –> 00:38:20,597
[Michael Finke]: of cross pollination

795
00:38:21,897 –> 00:38:26,617
[Michael Finke]: but as economist our job is to try to tell investment advisors how they can

796
00:38:26,777 –> 00:38:32,137
[Michael Finke]: actually be fiduciary and exposing your client to an idiosyncratic risk like the

797
00:38:32,217 –> 00:38:37,177
[Michael Finke]: risk of unknown longevity is not something a fiduciary should do it’s not in the

798
00:38:37,177 –> 00:38:41,737
[Michael Finke]: best interest of a client so we have to then teach them how to do it appropriately

799
00:38:41,737 –> 00:38:45,737
[Michael Finke]: and that’s part of what motivated us to think about what are some of the tradeoffs

800
00:38:45,817 –> 00:38:50,057
[Michael Finke]: between using for example the four percent rule which exposes the client to that

801
00:38:50,137 –> 00:38:54,377
[Michael Finke]: idiosyncratic risk of not knowing how long they’re going to live as opposed to

802
00:38:54,777 –> 00:38:59,337
[Michael Finke]: another strategy that incorporates some combination of annuitity that allows

803
00:38:59,417 –> 00:39:04,377
[Michael Finke]: people to live better in retirement and so that’s really the genesis of a lot of

804
00:39:04,377 –> 00:39:08,537
[Michael Finke]: the research on david blanch had also got his phd at texas tech but he was doing

805
00:39:08,777 –> 00:39:13,977
[Michael Finke]: research on retirement income planning before he came to texas tech waited foul

806
00:39:14,057 –> 00:39:19,257
[Michael Finke]: and i and david have done a lot of research together and really our main purpose

807
00:39:19,277 –> 00:39:20,277
[Michael Finke]: is to

808
00:39:21,337 –> 00:39:22,937
[Michael Finke]: get advisors to understand

809
00:39:23,977 –> 00:39:26,697
[Michael Finke]: when annuities provide value and why they

810
00:39:26,580 –> 00:39:27,580
[Paul Tyler]: that’s true

811
00:39:26,857 –> 00:39:31,417
[Michael Finke]: provide value really how to put together a retirement income plan that does the

812
00:39:31,577 –> 00:39:37,497
[Michael Finke]: best job for your client and then we have obviously faced a lot of opposition

813
00:39:37,737 –> 00:39:40,617
[Michael Finke]: along the way from people who like to believe that

814
00:39:40,603 –> 00:39:41,603
[Michael Finke]: yeah

815
00:39:40,857 –> 00:39:45,817
[Michael Finke]: annu doesn’t actually provide value but the reality is that every economist who

816
00:39:45,897 –> 00:39:47,657
[Michael Finke]: studies retirement income planning has been

817
00:39:47,323 –> 00:39:48,323
[Michael Finke]: yeah

818
00:39:47,817 –> 00:39:51,257
[Michael Finke]: saying for a long time that people are simply don’t anu as much and they could

819
00:39:52,297 –> 00:39:55,897
[Michael Finke]: have be happier in retirement they could spend more they could have more welfare

820
00:39:56,057 –> 00:40:01,097
[Michael Finke]: if they actually annu more of their savings and we just sort of adopted that as

821
00:40:01,177 –> 00:40:02,297
[Michael Finke]: the financial planning researchers

822
00:40:05,680 –> 00:40:10,080
[Ramsey Smith]: fantastic so i think we’re i think we’re at the the top of the hour here it’s been

823
00:40:10,240 –> 00:40:16,800
[Ramsey Smith]: uh been fantastic to have you on michael and uh we would love to have you back on

824
00:40:17,120 –> 00:40:19,360
[Ramsey Smith]: or make you a regular frankly in the

825
00:40:19,140 –> 00:40:20,140
[Ramsey Smith]: coming

826
00:40:19,380 –> 00:40:20,380
[Paul Tyler]: uh hu

827
00:40:19,563 –> 00:40:20,563
[Michael Finke]: hu

828
00:40:19,620 –> 00:40:20,620
[Ramsey Smith]: months and years

829
00:40:21,557 –> 00:40:22,557
[Michael Finke]: well i’d love that

830
00:40:21,763 –> 00:40:22,763
[Michael Finke]: no yeah

831
00:40:21,840 –> 00:40:26,160
[Paul Tyler]: no yeah ab absolutely michael so for listeners out there who want to learn more

832
00:40:22,420 –> 00:40:23,420
[Ramsey Smith]: yeah

833
00:40:22,743 –> 00:40:26,743
[Michael Finke]: ab absolutely michael so for listeners out there want to learn more all your

834
00:40:26,320 –> 00:40:28,480
[Paul Tyler]: follow your research where’s the best place to go

835
00:40:26,823 –> 00:40:28,583
[Michael Finke]: research where’s the best place to go

836
00:40:29,497 –> 00:40:33,737
[Michael Finke]: well i’m a contributing editor forth advisor magazine so once or twice a month

837
00:40:33,897 –> 00:40:37,497
[Michael Finke]: i’ll be writing articles for think advisor you can always follow my research on

838
00:40:37,737 –> 00:40:43,417
[Michael Finke]: social science research network to search ss rn and my name and you’ll find the

839
00:40:43,497 –> 00:40:47,817
[Michael Finke]: articles that i’ve done recently and all the articles that i’ve done in the past

840
00:40:48,560 –> 00:40:52,560
[Paul Tyler]: excellent all right wilson thanks so much for time michael ramsey great to see you

841
00:40:48,663 –> 00:40:52,583
[Michael Finke]: excellent alright wilson thanks so much for time michael ramsay great to see you

842
00:40:52,720 –> 00:40:59,120
[Paul Tyler]: in thai and for those of our listeners join us again next week for another episode

843
00:40:52,743 –> 00:40:58,343
[Michael Finke]: in thai and uh for those of our listeners join us again next week for another

844
00:40:58,663 –> 00:41:00,583
[Michael Finke]: episode of that annuity show

845
00:40:59,280 –> 00:41:00,480
[Paul Tyler]: of that annuity show

846
00:41:04,560 –> 00:41:07,360
[Paul Tyler]: hey thanks that was great michael can you leave your um

847
00:41:08,400 –> 00:41:13,520
[Paul Tyler]: your browser open you’re about halfway uploaded so we’ll end up dropping off but

848
00:41:13,600 –> 00:41:17,920
[Paul Tyler]: just if you just let it let it run that would be great hey ramsay thank that we

849
00:41:18,000 –> 00:41:19,760
[Paul Tyler]: appreciate it this is great to get you on here

850
00:41:22,660 –> 00:41:23,660
[Paul Tyler]: yeah

851
00:41:24,980 –> 00:41:25,980
[Paul Tyler]: well

852
00:41:28,160 –> 00:41:29,200
[Paul Tyler]: for getting you on

853
00:41:34,340 –> 00:41:35,340
[Paul Tyler]: yeah

854
00:41:36,960 –> 00:41:40,640
[Paul Tyler]: yeah and michael just on your last name is it finke if fink

855
00:41:41,760 –> 00:41:47,440
[Paul Tyler]: fina okay german excellent all right hey listen no this is great well i’ll put

856
00:41:47,520 –> 00:41:50,800
[Paul Tyler]: those links in the show outs and anything else you’d think you’d want us to link

857
00:41:50,420 –> 00:41:51,420
[Paul Tyler]: to

858
00:41:52,000 –> 00:41:56,640
[Paul Tyler]: shoot me out and we’ll get it up in the next i think to look out how many weeks

859
00:41:56,640 –> 00:42:00,880
[Paul Tyler]: we’re out it what we’re one or two weeks out right now uh with show but uh good

860
00:42:01,340 –> 00:42:02,340
[Paul Tyler]: alright

861
00:42:03,440 –> 00:42:05,440
[Paul Tyler]: thank you thanks bye

862
00:42:09,520 –> 00:42:11,680
[Paul Tyler]: we call okay great thanks

863
00:42:14,640 –> 00:42:16,720
[Paul Tyler]: we leave it up ts yeah thank you

864
00:42:18,480 –> 00:42:21,520
[Paul Tyler]: uh okay so next is what

865
00:42:25,920 –> 00:42:27,440
[Paul Tyler]: ashley yeah this is really good here

866
00:42:29,220 –> 00:42:30,220
[Paul Tyler]: ha

867
00:42:30,500 –> 00:42:31,500
[Paul Tyler]: lake

868
00:42:39,660 –> 00:42:40,660
[Paul Tyler]: yeah stream key

869
00:42:50,060 –> 00:42:51,060
[Paul Tyler]: right okay

870
00:43:20,960 –> 00:43:22,000
[Paul Tyler]: here are the times

871
00:43:25,280 –> 00:43:26,320
[Paul Tyler]: okay ashley

872
00:43:30,240 –> 00:43:31,280
[Paul Tyler]: hm okay

873
00:43:36,620 –> 00:43:37,620
[Paul Tyler]: hm

874
00:43:41,840 –> 00:43:47,760
[Paul Tyler]: hey ashley oh how you doing you don’t feel it feels like two weeks i’m telling you

875
00:43:48,000 –> 00:43:50,480
[Paul Tyler]: and what we part two

876
00:43:51,060 –> 00:43:52,060
[Paul Tyler]: yeah

877
00:43:53,760 –> 00:43:57,760
[Paul Tyler]: no good good interview with michael finke finke fink

878
00:43:59,040 –> 00:44:03,680
[Paul Tyler]: who who’s a professor at the american college some he you know he’s somebody he

879
00:44:03,760 –> 00:44:09,280
[Paul Tyler]: gets written up all all over he’s a vocal but i don’t know a little stuffy guy i

880
00:44:09,280 –> 00:44:13,120
[Paul Tyler]: don’t know it it was good it was good he’ll be a good name to get on there but

881
00:44:13,680 –> 00:44:17,760
[Paul Tyler]: this guy net you can tell he never deals with clients and he’s been you can tell

882
00:44:17,840 –> 00:44:20,320
[Paul Tyler]: he’s saying the same thing over and over and over and over again

883
00:44:21,920 –> 00:44:25,760
[Paul Tyler]: he’s a te he’s a teacher exactly a teacher

884
00:44:27,600 –> 00:44:34,800
[Paul Tyler]: yeah yeah so fs out yeah and shagging on social media at least oh yeah totally

885
00:44:35,200 –> 00:44:39,040
[Paul Tyler]: okay so hey listen you’re you’re working a lot here let me let me go through my

886
00:44:39,120 –> 00:44:41,360
[Paul Tyler]: list and kind of you tell me what i what i’m missing here

887
00:44:42,260 –> 00:44:43,260
[Paul Tyler]: so

888
00:44:45,580 –> 00:44:46,580
[Paul Tyler]: pull us up

889
00:44:50,580 –> 00:44:51,580
[Paul Tyler]: let’s see

890
00:44:52,980 –> 00:44:53,980
[Paul Tyler]: okay uh

891
00:44:56,000 –> 00:44:57,520
[Paul Tyler]: all right so if i were looking

892
00:44:58,960 –> 00:45:00,720
[Paul Tyler]: backwards and i know i’m missing stuff

893
00:45:05,460 –> 00:45:06,460
[Paul Tyler]: oh yeah let’s see

894
00:45:13,440 –> 00:45:15,360
[Paul Tyler]: make sure i’m like not missing it here

895
00:45:19,600 –> 00:45:23,760
[Paul Tyler]: okay big stuff if i look at and tell me what i’m missing if i if i kind of grouped

896
00:45:23,840 –> 00:45:26,080
[Paul Tyler]: it by like okay fi work

897
00:45:28,320 –> 00:45:29,520
[Paul Tyler]: well writer courses

898
00:45:30,900 –> 00:45:31,900
[Paul Tyler]: writer pages

899
00:45:33,040 –> 00:45:34,720
[Paul Tyler]: the index videos right

900
00:45:35,780 –> 00:45:36,780
[Paul Tyler]: um

901
00:45:37,360 –> 00:45:41,280
[Paul Tyler]: th th were those kind of the big ones i think like if you look back last quarter

902
00:45:42,140 –> 00:45:43,140
[Paul Tyler]: right for

903
00:45:44,480 –> 00:45:48,240
[Paul Tyler]: i would say so i think most of the the time and organization went into those

904
00:45:51,520 –> 00:45:57,120
[Paul Tyler]: y yeah question i’m not sure i have to go back and look the rest of the stuff i

905
00:45:57,200 –> 00:46:00,000
[Paul Tyler]: know there’s a lot of stuff but i’m trying yeah if i’m going to try back and say

906
00:46:00,080 –> 00:46:04,560
[Paul Tyler]: well what did she do well you know listen ashley was played a big role in getting

907
00:46:05,280 –> 00:46:10,800
[Paul Tyler]: all those new products launched and out the door for the fs now i think on med sup

908
00:46:11,200 –> 00:46:16,160
[Paul Tyler]: you’ve been doing a ton there now the ones that kind of leaps out is all the work

909
00:46:16,400 –> 00:46:21,680
[Paul Tyler]: to get all the ads running on meds yeah that was for or for last quarter

910
00:46:22,000 –> 00:46:25,600
[Paul Tyler]: definitely for this past quarter for sure yeah obviously we

911
00:46:27,200 –> 00:46:32,080
[Paul Tyler]: yeah millions right i mean it’s it’s a it’s a it’s a lot of stuff going on but and

912
00:46:32,080 –> 00:46:35,360
[Paul Tyler]: then going back and actually looking through those pages after we got them

913
00:46:35,440 –> 00:46:41,120
[Paul Tyler]: launched now you’ve also done you did a lot for for the content for the app right

914
00:46:41,520 –> 00:46:44,080
[Paul Tyler]: a lot of the content development work for our

915
00:46:45,680 –> 00:46:49,520
[Paul Tyler]: and development part management and the app kind of going back and forth between

916
00:46:49,760 –> 00:46:53,360
[Paul Tyler]: systems and loading everything and organizing with nick how to update the website

917
00:46:53,420 –> 00:46:54,420
[Paul Tyler]: right to reflect

918
00:46:55,760 –> 00:47:00,640
[Paul Tyler]: yeah yeah that was that was big um and the other one was i think which is a good

919
00:47:00,800 –> 00:47:04,080
[Paul Tyler]: one and probably it probably didn’t take you that much time but it was i think

920
00:47:04,080 –> 00:47:08,160
[Paul Tyler]: it’s good for time just to see doing that stuff is you know pulling those pages

921
00:47:08,240 –> 00:47:09,360
[Paul Tyler]: apart and

922
00:47:10,720 –> 00:47:14,400
[Paul Tyler]: on sales net it seemed like okay how do you tell a story about going from here to

923
00:47:14,560 –> 00:47:19,120
[Paul Tyler]: here to there so i think that’s the bit you like right are we missing anything now

924
00:47:19,680 –> 00:47:23,920
[Paul Tyler]: you did a lot with salesforce but there’s still kind of stuff in flight there um

925
00:47:25,600 –> 00:47:29,440
[Paul Tyler]: yeah a lot of building of reports and organizing things tesa and i are going to

926
00:47:29,520 –> 00:47:34,000
[Paul Tyler]: have a call with them this week to renew our package for next year and ask a

927
00:47:33,820 –> 00:47:34,820
[Paul Tyler]: couple of questions

928
00:47:35,760 –> 00:47:40,240
[Paul Tyler]: yeah right i mean you got all the reimagined contacts in there right that was a

929
00:47:40,320 –> 00:47:44,880
[Paul Tyler]: big deal we had all the um update elite stuff in we had all the reimagined

930
00:47:44,880 –> 00:47:49,520
[Paul Tyler]: contacts too we added all the simple annuity and red agent information that we

931
00:47:49,680 –> 00:47:56,160
[Paul Tyler]: have and organize that um i think those are the good paths they list close yeah

932
00:48:05,680 –> 00:48:10,960
[Paul Tyler]: and the f stuff kind of being part of that oh yeah yeah yeah let me not it is a

933
00:48:11,040 –> 00:48:14,480
[Paul Tyler]: problem it’s like this action i mean this year i’m swear i’m keeping these lists

934
00:48:14,540 –> 00:48:15,540
[Paul Tyler]: so that it’s

935
00:48:16,880 –> 00:48:18,480
[Paul Tyler]: easy through the course of the year here

936
00:48:20,960 –> 00:48:24,800
[Paul Tyler]: it is as we talk about it more stuff is popping up in my mind so i’m like yeah i

937
00:48:24,800 –> 00:48:28,000
[Paul Tyler]: guess yeah it just not like you’re you know it’s not like the score points however

938
00:48:28,160 –> 00:48:29,920
[Paul Tyler]: it’s great to be able to look back and say

939
00:48:30,500 –> 00:48:31,500
[Paul Tyler]: okay

940
00:48:32,720 –> 00:48:37,760
[Paul Tyler]: w you know we just sit on our butts for accomplishments to yeah

941
00:48:40,640 –> 00:48:43,280
[Paul Tyler]: yeah five nine implementation and that was

942
00:48:47,680 –> 00:48:51,920
[Paul Tyler]: that was mary mary was mary was really involved in that one too right as what’s

943
00:48:52,000 –> 00:48:56,720
[Paul Tyler]: tea she really drove it and then he’s a kind of like handled it from the back end

944
00:48:57,840 –> 00:49:03,040
[Paul Tyler]: yeah all the calls but mary i think was kind of put together yeah okay so that’s

945
00:49:02,860 –> 00:49:03,860
[Paul Tyler]: good so that

946
00:49:04,720 –> 00:49:08,320
[Paul Tyler]: if you think either stuff tell me because i think it’s great to kind of what you

947
00:49:08,400 –> 00:49:10,080
[Paul Tyler]: know what i do right was big

948
00:49:12,480 –> 00:49:17,280
[Paul Tyler]: i think um now in progress oh my gosh okay let’s let’s kind of go through this so

949
00:49:18,180 –> 00:49:19,180
[Paul Tyler]: um

950
00:49:20,160 –> 00:49:22,320
[Paul Tyler]: this is not an order this is just how it’s sorted

951
00:49:23,680 –> 00:49:27,120
[Paul Tyler]: okay triathlon that thing’s kind of going when i’m moving along right with

952
00:49:28,720 –> 00:49:35,360
[Paul Tyler]: you and jessica yeah for that for our ordering a braided items and or where it’s

953
00:49:35,440 –> 00:49:36,800
[Paul Tyler]: coming from reasonable

954
00:49:38,320 –> 00:49:41,600
[Paul Tyler]: okay i’m getting pricing on snow fencing and other manners of

955
00:49:43,280 –> 00:49:45,600
[Paul Tyler]: yeah you know what i would do is see if you could

956
00:49:47,840 –> 00:49:52,320
[Paul Tyler]: see if neal could be there for photos why are you why do you why don’t you book

957
00:49:52,140 –> 00:49:53,140
[Paul Tyler]: him now

958
00:49:54,860 –> 00:49:55,860
[Paul Tyler]: let’s do that

959
00:50:00,180 –> 00:50:01,180
[Paul Tyler]: i think

960
00:50:02,320 –> 00:50:07,520
[Paul Tyler]: can you put something together for mark i think there’s the triathlon uh i think

961
00:50:07,300 –> 00:50:08,300
[Paul Tyler]: there’s a

962
00:50:08,820 –> 00:50:09,820
[Paul Tyler]: yeah i

963
00:50:10,480 –> 00:50:12,640
[Paul Tyler]: for sale for sales people yeah i think um

964
00:50:13,540 –> 00:50:14,540
[Paul Tyler]: day

965
00:50:16,480 –> 00:50:19,440
[Paul Tyler]: yeah it just something that he could kind of

966
00:50:20,480 –> 00:50:25,280
[Paul Tyler]: send to people to say what what the heck is this i’ve got a starter page for you

967
00:50:25,520 –> 00:50:29,360
[Paul Tyler]: feel free to start from scratch right that was one that just kind of put out there

968
00:50:32,880 –> 00:50:36,800
[Paul Tyler]: okay grow together deck we gotta wait for tom mark was actually asking for us

969
00:50:37,600 –> 00:50:40,320
[Paul Tyler]: that’s kind of out there annuity genius

970
00:50:40,900 –> 00:50:41,900
[Paul Tyler]: piece

971
00:50:43,280 –> 00:50:47,200
[Paul Tyler]: you just need to know like when can we cancel are we hooked into this thing

972
00:50:47,060 –> 00:50:48,060
[Paul Tyler]: forever

973
00:50:48,800 –> 00:50:52,080
[Paul Tyler]: i asked her in the mail yesterday and i said we’d like to consider a three month

974
00:50:52,140 –> 00:50:53,140
[Paul Tyler]: contract i want to

975
00:50:53,940 –> 00:50:54,940
[Paul Tyler]: okay

976
00:50:58,560 –> 00:51:04,480
[Paul Tyler]: so you know suffer for snub on your end is personalized agendas and then has colin

977
00:51:04,560 –> 00:51:08,720
[Paul Tyler]: given you any sort of run a show yet to figure out like what are you doing when no

978
00:51:08,960 –> 00:51:13,520
[Paul Tyler]: so she said that mary’s creating it the contractor is gonna create it and send it

979
00:51:13,600 –> 00:51:15,360
[Paul Tyler]: to us but i haven’t seen anything so i

980
00:51:16,560 –> 00:51:19,600
[Paul Tyler]: yeah just to ask her because i i don’t want you to go down there and feel like

981
00:51:19,600 –> 00:51:25,040
[Paul Tyler]: you’re sitting on your hands or worse you you’ve you kind of jumping around at

982
00:51:25,120 –> 00:51:30,080
[Paul Tyler]: last second to do stuff right enough either way is fine i mean i i don’t think’ll

983
00:51:30,080 –> 00:51:33,520
[Paul Tyler]: be sitting around cause there’s less staff now this time around than there wasn’t

984
00:51:33,680 –> 00:51:37,040
[Paul Tyler]: noa and yeah i think she wants us to drive people around

985
00:51:38,320 –> 00:51:41,040
[Paul Tyler]: i think that’s going to be part of like a big part of what we’re doing is like

986
00:51:41,120 –> 00:51:44,160
[Paul Tyler]: golf caring people okay so stay

987
00:51:45,200 –> 00:51:46,480
[Paul Tyler]: do we have insurance for that

988
00:51:48,140 –> 00:51:49,140
[Paul Tyler]: it’s a good question

989
00:51:50,240 –> 00:51:51,440
[Paul Tyler]: yeah seriously right

990
00:51:52,640 –> 00:51:55,760
[Paul Tyler]: so i think you ask because if we start to shuttle people around

991
00:51:57,600 –> 00:52:01,040
[Paul Tyler]: okay somebody falls off a golf cart somebody gets hit by a golf cart

992
00:52:02,720 –> 00:52:08,320
[Paul Tyler]: the resort yeah i don’t want to see you personally right right wrong

993
00:52:09,360 –> 00:52:12,880
[Paul Tyler]: i mean i probably it prob it would probably fall on her scope right

994
00:52:14,320 –> 00:52:19,600
[Paul Tyler]: it probably is in shared with the event um but i don’t know yeah because there’s a

995
00:52:19,680 –> 00:52:22,160
[Paul Tyler]: reason why people at companies aren’t driving people around

996
00:52:23,920 –> 00:52:25,360
[Paul Tyler]: okay we be hire companies

997
00:52:26,640 –> 00:52:27,840
[Paul Tyler]: yeah yeah okay

998
00:52:29,700 –> 00:52:30,700
[Paul Tyler]: so okay

999
00:52:31,420 –> 00:52:32,420
[Paul Tyler]: personalized stuff

1000
00:52:33,840 –> 00:52:37,600
[Paul Tyler]: now i think the ones where i think you know the big impact okay

1001
00:52:38,640 –> 00:52:43,360
[Paul Tyler]: chat usage by elites this is going to be good i think the bigger salesforce stuff

1002
00:52:43,760 –> 00:52:48,320
[Paul Tyler]: is a big deal like i think that elite scoreboard i i’m calling it elite score

1003
00:52:48,400 –> 00:52:49,600
[Paul Tyler]: board in salesforce

1004
00:52:50,260 –> 00:52:51,260
[Paul Tyler]: um

1005
00:52:52,640 –> 00:52:56,560
[Paul Tyler]: uh when do you think you’re i’m sorry i keep asking so is it ended this week

1006
00:52:56,720 –> 00:53:01,680
[Paul Tyler]: they’re giving you data um ask for it by monday so we could do the first up monday

1007
00:53:01,680 –> 00:53:04,080
[Paul Tyler]: scott’s right back he’s at the office oh good

1008
00:53:04,740 –> 00:53:05,740
[Paul Tyler]: okay

1009
00:53:07,340 –> 00:53:08,340
[Paul Tyler]: that’s right

1010
00:53:09,200 –> 00:53:10,960
[Paul Tyler]: so yeah don’t worry

1011
00:53:11,620 –> 00:53:12,620
[Paul Tyler]: i think

1012
00:53:15,140 –> 00:53:16,140
[Paul Tyler]: let’s see

1013
00:53:17,600 –> 00:53:20,560
[Paul Tyler]: i think we’re in a good place though with the fields and i think he can do it all

1014
00:53:20,720 –> 00:53:24,960
[Paul Tyler]: it’s not i don’t think there’s is any issue in him mapping those skills okay all

1015
00:53:24,580 –> 00:53:25,580
[Paul Tyler]: right

1016
00:53:25,780 –> 00:53:26,780
[Paul Tyler]: um

1017
00:53:27,680 –> 00:53:32,720
[Paul Tyler]: did you see sorry back to the live chat thing you see the facebook messenger yeah

1018
00:53:32,880 –> 00:53:36,720
[Paul Tyler]: that it was great because i actually it started pop up and i think i think it gave

1019
00:53:36,720 –> 00:53:42,240
[Paul Tyler]: me a a two like a like some initial chat thing coming through there but it was

1020
00:53:42,400 –> 00:53:45,520
[Paul Tyler]: great i responded she went back through facebook

1021
00:53:47,220 –> 00:53:48,220
[Paul Tyler]: no

1022
00:53:49,600 –> 00:53:50,640
[Paul Tyler]: yeah no i yeah

1023
00:53:52,320 –> 00:53:53,680
[Paul Tyler]: yeah i think this was really good

1024
00:53:56,080 –> 00:54:00,960
[Paul Tyler]: again chat the reason i’m kind of walking through this elite and chat is going to

1025
00:54:00,960 –> 00:54:04,800
[Paul Tyler]: be really important for how do we engage these people in sort of an automated

1026
00:54:04,960 –> 00:54:08,880
[Paul Tyler]: fashion and that this will link the phone calls to the notes to the whatever so we

1027
00:54:09,120 –> 00:54:12,160
[Paul Tyler]: really you know get to know these people and

1028
00:54:16,080 –> 00:54:19,920
[Paul Tyler]: you know how do you turn into advisor for these elites right thats you know hey

1029
00:54:20,000 –> 00:54:23,840
[Paul Tyler]: i’m calling up ashley because she needs help with this stuff like i i’ll go back

1030
00:54:24,080 –> 00:54:27,120
[Paul Tyler]: to chris and give him a call and say he how’s everything going i’ll probably call

1031
00:54:27,200 –> 00:54:32,320
[Paul Tyler]: him the next next four or five days oh ashley’s great she does this she knows my

1032
00:54:32,020 –> 00:54:33,020
[Paul Tyler]: stuff

1033
00:54:36,880 –> 00:54:41,440
[Paul Tyler]: that will be i think that this will be a really good experience for you right if

1034
00:54:41,520 –> 00:54:44,960
[Paul Tyler]: you can sort of become the consult not the person’s doing it but the consult

1035
00:54:46,000 –> 00:54:50,400
[Paul Tyler]: but you know it’s a fine line between here’s the destruction manual versus i’m

1036
00:54:50,480 –> 00:54:53,360
[Paul Tyler]: actually going in and doing your phot post w where’s that

1037
00:54:54,400 –> 00:54:57,520
[Paul Tyler]: yeah there’s always a little bit of a healthy hand or at least willingness right

1038
00:54:57,260 –> 00:54:58,260
[Paul Tyler]: like you

1039
00:55:00,880 –> 00:55:03,120
[Paul Tyler]: yeah yeah so that’s that’s really good

1040
00:55:04,480 –> 00:55:08,480
[Paul Tyler]: now in terms of i don’t have the stuff on here it feels like you’re really

1041
00:55:08,640 –> 00:55:13,600
[Paul Tyler]: enjoying these podcast promotional stuff right went into riverside last night i

1042
00:55:13,760 –> 00:55:16,480
[Paul Tyler]: played around a little bit with the clips and i like redid the layouts and stuff

1043
00:55:16,800 –> 00:55:19,920
[Paul Tyler]: myself so i that was fun okay good good i’m

1044
00:55:20,900 –> 00:55:21,900
[Paul Tyler]: okay good

1045
00:55:22,880 –> 00:55:26,640
[Paul Tyler]: now i’m kind of excited about i think this will be good too for you to launch this

1046
00:55:26,720 –> 00:55:31,280
[Paul Tyler]: med sup piece frank’s going to come up here i want to work i want to work a little

1047
00:55:31,360 –> 00:55:35,920
[Paul Tyler]: more on that logo i kind of look at it it just feels a little too drab

1048
00:55:37,040 –> 00:55:39,280
[Paul Tyler]: yeah what does it feel like old

1049
00:55:40,140 –> 00:55:41,140
[Paul Tyler]: yes it does

1050
00:55:42,100 –> 00:55:43,100
[Paul Tyler]: i’m

1051
00:55:44,240 –> 00:55:47,760
[Paul Tyler]: some of the stuff that i heard in that social media examiner podcast was like the

1052
00:55:47,840 –> 00:55:52,720
[Paul Tyler]: trends and the upcoming trends are we use neons but brighter colors and things

1053
00:55:53,680 –> 00:55:57,280
[Paul Tyler]: well yeah and i’m gonna have freak like i looked at those color palettes and

1054
00:55:59,040 –> 00:56:02,720
[Paul Tyler]: you know i’ve been watching all these drug commercials like o tesla i can almost

1055
00:56:02,800 –> 00:56:08,240
[Paul Tyler]: say sing the o tesla commercial now hot you know ro zamak

1056
00:56:09,920 –> 00:56:14,560
[Paul Tyler]: but you know they’re all like real neon purple green blue and i think if frank

1057
00:56:14,640 –> 00:56:17,680
[Paul Tyler]: just tuned those colors up i think what i’m gonna do is have him i’m gonna have

1058
00:56:17,680 –> 00:56:22,000
[Paul Tyler]: him up here work through what the how to make sure the graphics are all kind of

1059
00:56:22,080 –> 00:56:25,760
[Paul Tyler]: set up but i think i’m going to have him tune those colors up a little more take

1060
00:56:25,840 –> 00:56:30,160
[Paul Tyler]: the hues up so we have a gray one but let’s take it up i agree with you we need

1061
00:56:29,940 –> 00:56:30,940
[Paul Tyler]: more of a

1062
00:56:31,660 –> 00:56:32,660
[Paul Tyler]: it seems like a very

1063
00:56:34,080 –> 00:56:38,880
[Paul Tyler]: yeah it’s too i don’t know it’s different it’ll definitely look different than

1064
00:56:39,040 –> 00:56:43,520
[Paul Tyler]: anything else that’s on the yeah yeah and it’s legible and i think it’ll appeal to

1065
00:56:43,600 –> 00:56:45,840
[Paul Tyler]: end and i think we can animate some of those characters

1066
00:56:46,420 –> 00:56:47,420
[Paul Tyler]: so

1067
00:56:48,400 –> 00:56:53,280
[Paul Tyler]: how what’s her name jessica ho her down i haven’t seen any emails come back let’s

1068
00:56:53,280 –> 00:56:58,240
[Paul Tyler]: see an emailer today to reach out towar and see kind of touch base introduce

1069
00:56:58,320 –> 00:57:01,920
[Paul Tyler]: yourself find out about the speakers yeah find find out where we are

1070
00:57:02,980 –> 00:57:03,980
[Paul Tyler]: now

1071
00:57:05,280 –> 00:57:06,640
[Paul Tyler]: we line them up i think

1072
00:57:07,620 –> 00:57:08,620
[Paul Tyler]: um

1073
00:57:09,840 –> 00:57:13,840
[Paul Tyler]: you know if we could telling actually if we could lock them all up in a week we

1074
00:57:13,920 –> 00:57:18,800
[Paul Tyler]: could bundle them up say ten of them and that could be our initial launch you know

1075
00:57:19,120 –> 00:57:25,200
[Paul Tyler]: for you know we load three or four and then push out a couple others later i don’t

1076
00:57:25,200 –> 00:57:29,440
[Paul Tyler]: know think about what that launch may be because we could do this all probably in

1077
00:57:29,520 –> 00:57:34,000
[Paul Tyler]: one set and push it up there you want to do the podcast release weekly or you do

1078
00:57:34,080 –> 00:57:38,480
[Paul Tyler]: it by week i don’t know i would think so sometimes when they i i think you talked

1079
00:57:38,480 –> 00:57:41,040
[Paul Tyler]: to jessica about how they will push and promote it

1080
00:57:42,880 –> 00:57:47,040
[Paul Tyler]: but when we apply for you know apple and stuff to get in there there’s a process

1081
00:57:47,360 –> 00:57:50,400
[Paul Tyler]: it’s super easy and lets them to sort of set up a new podcast

1082
00:57:51,680 –> 00:57:56,320
[Paul Tyler]: however i didn’t actually do the approval process for apple so it’s kind of like

1083
00:57:56,400 –> 00:58:00,960
[Paul Tyler]: you have to put it all together and then apply to apple to be listed and i have

1084
00:58:01,040 –> 00:58:04,400
[Paul Tyler]: not if you could kind of investigate that that is what we paid this other firm to

1085
00:58:04,480 –> 00:58:07,760
[Paul Tyler]: do for us you know and we used them once yeah

1086
00:58:08,800 –> 00:58:11,360
[Paul Tyler]: yeah that different versus

1087
00:58:13,600 –> 00:58:17,120
[Paul Tyler]: yeah yeah yeah it’s it’s different but it’s similar because you have to get listed

1088
00:58:17,280 –> 00:58:20,800
[Paul Tyler]: i’m not sure if they need five episodes or six episodes they just kind of want i

1089
00:58:21,040 –> 00:58:23,120
[Paul Tyler]: think they listen or screen through and say are you

1090
00:58:24,720 –> 00:58:27,280
[Paul Tyler]: doing anything offensive for something

1091
00:58:30,320 –> 00:58:35,520
[Paul Tyler]: yeah yeah so and then let’s figure out like is this a one time thing or you know

1092
00:58:35,680 –> 00:58:38,800
[Paul Tyler]: does it keep going oh guess what speak of the devil j

1093
00:58:39,920 –> 00:58:42,640
[Paul Tyler]: jw trub just sent an email through it jay says

1094
00:58:44,820 –> 00:58:45,820
[Paul Tyler]: hey

1095
00:58:46,640 –> 00:58:48,080
[Paul Tyler]: inclusive of age tech

1096
00:58:51,200 –> 00:58:53,120
[Paul Tyler]: wanna see if we align this with the event

1097
00:58:59,900 –> 00:59:00,900
[Paul Tyler]: like innovation st

1098
00:59:02,160 –> 00:59:04,720
[Paul Tyler]: yeah a little broader and then like line it up there

1099
00:59:06,000 –> 00:59:07,520
[Paul Tyler]: yeah do you want let’s see

1100
00:59:09,360 –> 00:59:11,440
[Paul Tyler]: sure like like i think the answer is

1101
00:59:13,280 –> 00:59:17,120
[Paul Tyler]: meds up if we get line with this event you don’t have to by any account

1102
00:59:19,680 –> 00:59:20,880
[Paul Tyler]: yeah absolutely

1103
00:59:22,400 –> 00:59:24,960
[Paul Tyler]: absolutely um absolutely how closely

1104
00:59:26,420 –> 00:59:27,420
[Paul Tyler]: absolutely

1105
00:59:30,080 –> 00:59:32,000
[Paul Tyler]: how closely would you want want it

1106
00:59:34,880 –> 00:59:37,360
[Paul Tyler]: how closely would you want this

1107
00:59:39,360 –> 00:59:42,000
[Paul Tyler]: to a lot to align with your event you know

1108
00:59:44,320 –> 00:59:45,440
[Paul Tyler]: you know i eat you know

1109
00:59:47,460 –> 00:59:48,460
[Paul Tyler]: levels

1110
00:59:49,980 –> 00:59:50,980
[Paul Tyler]: could be

1111
00:59:51,900 –> 00:59:52,900
[Paul Tyler]: you know

1112
00:59:53,580 –> 00:59:54,580
[Paul Tyler]: colors

1113
00:59:55,680 –> 01:00:00,800
[Paul Tyler]: um is us a really nice yeah inclusion you know you know i’d say cut your e you

1114
01:00:00,340 –> 01:00:01,340
[Paul Tyler]: know

1115
01:00:02,560 –> 01:00:04,960
[Paul Tyler]: your color palate around that n

1116
01:00:06,960 –> 01:00:08,880
[Paul Tyler]: you know include you know your you know

1117
01:00:09,620 –> 01:00:10,620
[Paul Tyler]: and

1118
01:00:15,380 –> 01:00:16,380
[Paul Tyler]: mediterranean name

1119
01:00:17,860 –> 01:00:18,860
[Paul Tyler]: mediterranean

1120
01:00:21,620 –> 01:00:22,620
[Paul Tyler]: name

1121
01:00:23,600 –> 01:00:24,880
[Paul Tyler]: include your medicare name

1122
01:00:27,140 –> 01:00:28,140
[Paul Tyler]: in the show

1123
01:00:34,080 –> 01:00:35,920
[Paul Tyler]: like it in the right end or in the reader

1124
01:00:37,580 –> 01:00:38,580
[Paul Tyler]: yeah um

1125
01:00:39,820 –> 01:00:40,820
[Paul Tyler]: you know partnership

1126
01:00:45,060 –> 01:00:46,060
[Paul Tyler]: eight

1127
01:00:52,720 –> 01:00:57,280
[Paul Tyler]: i checked him out on linkedin that looks like he’s like the entrepreneur oh he is

1128
01:00:59,420 –> 01:01:00,420
[Paul Tyler]: happy to

1129
01:01:01,440 –> 01:01:04,400
[Paul Tyler]: email s name too quick zoom

1130
01:01:08,560 –> 01:01:11,760
[Paul Tyler]: yeah so when you can you cook start looking at page check

1131
01:01:13,060 –> 01:01:14,060
[Paul Tyler]: a check

1132
01:01:14,880 –> 01:01:18,800
[Paul Tyler]: might be a nice tian you to re imagine it could be it it really could it really

1133
01:01:18,960 –> 01:01:20,400
[Paul Tyler]: could here so um

1134
01:01:22,080 –> 01:01:24,800
[Paul Tyler]: so so we have to think like let’s see what the answer is but there’s like is the

1135
01:01:24,880 –> 01:01:27,040
[Paul Tyler]: age tech or is it you know

1136
01:01:31,020 –> 01:01:32,020
[Paul Tyler]: health and

1137
01:01:33,780 –> 01:01:34,780
[Paul Tyler]: senior health

1138
01:01:36,300 –> 01:01:37,300
[Paul Tyler]: yeah yeah

1139
01:01:38,400 –> 01:01:43,200
[Paul Tyler]: to see home age tax sounds better i’d rather oh i do a senior health care podcast

1140
01:01:46,800 –> 01:01:49,040
[Paul Tyler]: right yeah no i agree yeah

1141
01:01:50,320 –> 01:01:53,200
[Paul Tyler]: um okay i’ll do some research around that yeah

1142
01:01:56,720 –> 01:01:59,840
[Paul Tyler]: because it could be just a limited thing man we’re just doing it this i’m looking

1143
01:02:00,000 –> 01:02:02,080
[Paul Tyler]: at this is like get us in the door with these people

1144
01:02:03,100 –> 01:02:04,100
[Paul Tyler]: absolutely

1145
01:02:05,260 –> 01:02:06,260
[Paul Tyler]: alright

1146
01:02:08,320 –> 01:02:13,360
[Paul Tyler]: let’s see oh for he kudos to you for taking these courses ashley i wish everybody

1147
01:02:13,680 –> 01:02:15,120
[Paul Tyler]: were doing what you’re doing okay

1148
01:02:16,400 –> 01:02:20,640
[Paul Tyler]: um i i would like you to take people through that write up that you did on the um

1149
01:02:20,800 –> 01:02:24,480
[Paul Tyler]: social media examiner thing what was your like what were the big like you know the

1150
01:02:24,560 –> 01:02:28,640
[Paul Tyler]: things you say i’m like we should be doing you know x y and z like what’s the

1151
01:02:28,960 –> 01:02:32,720
[Paul Tyler]: what’s the we’re doing the lot of it i think’s room for enhancement in a lot of

1152
01:02:32,800 –> 01:02:35,600
[Paul Tyler]: what we’re doing so like the things that really stuck out to me obviously videos

1153
01:02:36,000 –> 01:02:41,920
[Paul Tyler]: came so yeah look for the short short form video is a big deal clearly through tip

1154
01:02:42,080 –> 01:02:46,080
[Paul Tyler]: top and instagram because that’s the way like the whole world is working so they

1155
01:02:46,320 –> 01:02:48,160
[Paul Tyler]: talked about trends that they’re seeing in

1156
01:02:49,360 –> 01:02:53,600
[Paul Tyler]: like when instagram releases things or facebook meta releases things

1157
01:02:54,800 –> 01:02:59,280
[Paul Tyler]: be clues about what they’re looking for right um video is a huge one so they’re

1158
01:02:59,280 –> 01:03:03,680
[Paul Tyler]: moving away from picture towards video the other thing i thought was interesting

1159
01:03:03,920 –> 01:03:05,600
[Paul Tyler]: was they didn’t mention twitter at all

1160
01:03:06,640 –> 01:03:10,800
[Paul Tyler]: yeah there was one word about not one session about twitter

1161
01:03:12,240 –> 01:03:15,440
[Paul Tyler]: that was super interesting they did talk about long form video coming back on

1162
01:03:15,520 –> 01:03:18,800
[Paul Tyler]: youtube and how to kind of work around that and what to do there

1163
01:03:19,700 –> 01:03:20,700
[Paul Tyler]: um

1164
01:03:22,800 –> 01:03:25,200
[Paul Tyler]: you know it was huge that was like the big big takeaway

1165
01:03:27,600 –> 01:03:29,840
[Paul Tyler]: current parent making yourself trustworthy right

1166
01:03:30,880 –> 01:03:34,160
[Paul Tyler]: things that we don’t understand just made very clear

1167
01:03:35,920 –> 01:03:40,720
[Paul Tyler]: right so i i i guess the qu you know the question i was struggle with is okay how

1168
01:03:40,800 –> 01:03:43,920
[Paul Tyler]: much of this is you know do we do this for the consumer

1169
01:03:45,280 –> 01:03:50,720
[Paul Tyler]: versus how much it is for the agent and we you know for the community we tie into

1170
01:03:51,520 –> 01:03:55,040
[Paul Tyler]: right absolutely go for an instagram we need an instagram account for our company

1171
01:03:57,120 –> 01:04:01,360
[Paul Tyler]: to you so i started setting it up this morning do you wanna go with a user name

1172
01:04:01,680 –> 01:04:05,040
[Paul Tyler]: nasa financial group or would you like to go if user named nasa careers

1173
01:04:07,120 –> 01:04:10,400
[Paul Tyler]: i thought that an group is what we use on everything else even though we’re not

1174
01:04:10,540 –> 01:04:11,540
[Paul Tyler]: like we go

1175
01:04:12,720 –> 01:04:16,960
[Paul Tyler]: oh i know and then and then fi and phil wants somehow has got this nasa annuities

1176
01:04:17,100 –> 01:04:18,100
[Paul Tyler]: in his head right

1177
01:04:20,000 –> 01:04:21,840
[Paul Tyler]: which is terrifying to me but that’s okay

1178
01:04:26,140 –> 01:04:27,140
[Paul Tyler]: yeah um

1179
01:04:28,720 –> 01:04:31,280
[Paul Tyler]: the only worry i have about care is is

1180
01:04:32,480 –> 01:04:36,880
[Paul Tyler]: it feels like i you know i i don’t want to get us in the hook of its you know

1181
01:04:40,480 –> 01:04:43,760
[Paul Tyler]: because i remember when this popped up i think it’s popped up right around the the

1182
01:04:43,840 –> 01:04:49,120
[Paul Tyler]: pandemic a little bit before when everybody’s using a hashtag travelers cares

1183
01:04:51,200 –> 01:04:54,000
[Paul Tyler]: i didn’t know about that yeah yeah like i think

The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersEpisode 145: Diving Deep into the Power of Annuities With Michael Finke
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RIAs Sell Verbs. Agents and Brokers Sell Nouns

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I love the insurance industry. It’s not the puppy love I felt when I leapt headfirst into leading my first insurance business. It’s not the coming-of-age identity struggle I faced as my career progressed and I had to decide whether to focus my energy on operations or strategy. Now, I’m talking mature love. When you love something the way I love the insurance industry, you don’t just care about it in your spare time. You want to see it flourish into the best version of itself. Over and over again.

The insurance industry is in an awkward position. It is plagued by product commoditization, prolonged low-interest rates, regulatory mandates ill-matched with insurance distribution, nontraditional entrants effecting tax and capital arbitrage, and generalized disruption. In advising my insurance company clients about how to innovate our way out of these circumstances, I often empathize with Bill Murray’s character in Groundhog Day. Until we begin to acknowledge, and maybe even embrace, the changes, we will be stuck in an endless loop where insurance is perceived as a commodity and where distribution is expensive (which makes products expensive!). Insurance in this world remains isolated from an increasingly integrated, fintech-driven, fee-conscious, financial advisory community.

State insurance regulation governs the conduct of agents and insurance brokers. It needs to be adapted to govern RIAs as well. Insurance advisement is a premise different from insurance sales, just as there is a big difference between the consumer experience of advice versus sales of securities. While some insurance professionals already consult on or about contracts for consumers, and legally charge a fee for doing so, this model is not mainstream for insurance distribution. Insurance regulation currently occurs at the point of sale and does not contemplate ongoing advice. It should be adapted to do so. Such an adaptation would facilitate a transformation of both insurance, which means liability management, and wealth management as disciplines.

There is no direct corollary to the ’40 Act for insurance. There is no national authority that can define the meaning of the term “insurance advis(o)er.” There is no independent national source upon which financial professionals can rely for accurate annuity conduct, oversight and advice.

We are all receiving a high volume of rapidly changing regulatory guidance. It is not always clear how it applies to the nascent world of “insurance advice.” I empathize with the advisors who tell me that there is not one place they feel they can turn to for definitive guidance about what their responsibilities are for various forms of annuity transactions. To try and assist advisors who feel this way, I have compiled the table below. This is not legal advice, but I hope it gives a starting point for a broader discussion in the industry.

Michelle Richter’s Non-Lawyer Best Guess on Applicability of Various Laws to Different Types of Annuity Transactions. Feedback welcome, especially from financial regulatory lawyers!

Read the rest of the article, here: https://www.wealthmanagement.com/insurance/rias-sell-verbs-agents-and-brokers-sell-nouns 

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersRIAs Sell Verbs. Agents and Brokers Sell Nouns
read more