2022

Why Advisors Shouldn’t Dismiss Index-Linked Annuities

May 9, 2022 2022, Media, Michael Finke No comments

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.

Reverse Mortgages and Estate Planning

May 9, 2022 2022, Media, Wade Pfau No comments

By GREG DAUGHERTY

Published April 28, 2022

Fact checked by VIKKI VELASQUEZ

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.

Read the full article, here: https://www.investopedia.com/reverse-mortgages-estate-planning-5223222

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Retirement Planning Is No Laughing Matter: WealthConductor CEO

May 9, 2022 2022, Media, Sheryl O'Connor No comments

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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Episode 146: Your Marketing Must Go Digital With Greg Dinetz

May 5, 2022 2022, Greg Dinetz, Podcast, Retirement No comments

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:

https://www.linkedin.com/in/greg-dinetz-1a532218/

https://www.lonebeacon.com/

Thank you to our show sponsor; The Index Standard!

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Episode 145: Diving Deep into the Power of Annuities With Michael Finke

April 28, 2022 2022, Michael Finke, Podcast, Retirement No comments

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:

https://www.linkedin.com/in/michael-finke-8134808/

https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=57590

https://www.thinkadvisor.com/author/profile/michael-finke/

http://www.michaelfinke.com

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Transcript

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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

363
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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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00:17:33,660 –> 00:17:34,660
[Paul Tyler]: they get it

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00:17:37,737 –> 00:17:40,857
[Michael Finke]: better care of themselves they’re eating better they’re exercising for whatever

380
00:17:41,097 –> 00:17:46,697
[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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00:17:56,617 –> 00:18:02,457
[Michael Finke]: remember the formula that you use to estimate the benefit from delayed claiming

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00:18:02,537 –> 00:18:04,537
[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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00:18:18,777 –> 00:18:21,977
[Michael Finke]: of people think they’re sticking it to the government by claiming it sixty two

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00:18:22,457 –> 00:18:26,057
[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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00:18:38,697 –> 00:18:43,897
[Michael Finke]: sixty two and sixty three is five percent but between sixty four sixty three and

397
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[Michael Finke]: sixty four it’s six and two thirds percent per year and then between sixty six and

398
00:18:48,057 –> 00:18:52,457
[Michael Finke]: sixty seven it goes up to eight percent per year and when you actually back out

399
00:18:53,017 –> 00:18:55,737
[Michael Finke]: the benefit the present value benefit that you get

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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

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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

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00:19:43,577 –> 00:19:48,457
[Michael Finke]: we recommend to everybody who is healthy that they delay claiming again because

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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

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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

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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

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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

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00:20:29,497 –> 00:20:35,017
[Michael Finke]: value of the cost of an insurance company guaranteeing an income starting say at

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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

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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

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00:20:47,577 –> 00:20:53,337
[Michael Finke]: pretty significant income for a relatively modest amount of your savings through

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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

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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

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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

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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

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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

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[Michael Finke]: security

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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

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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
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[Paul Tyler]: happy to

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[Paul Tyler]: email s name too quick zoom

1130
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[Paul Tyler]: yeah so when you can you cook start looking at page check

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[Paul Tyler]: a check

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[Paul Tyler]: might be a nice tian you to re imagine it could be it it really could it really

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[Paul Tyler]: could here so um

1134
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[Paul Tyler]: so so we have to think like let’s see what the answer is but there’s like is the

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[Paul Tyler]: age tech or is it you know

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[Paul Tyler]: health and

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[Paul Tyler]: senior health

1138
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[Paul Tyler]: yeah yeah

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[Paul Tyler]: to see home age tax sounds better i’d rather oh i do a senior health care podcast

1140
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[Paul Tyler]: right yeah no i agree yeah

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[Paul Tyler]: um okay i’ll do some research around that yeah

1142
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[Paul Tyler]: because it could be just a limited thing man we’re just doing it this i’m looking

1143
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[Paul Tyler]: at this is like get us in the door with these people

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[Paul Tyler]: absolutely

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[Paul Tyler]: alright

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[Paul Tyler]: let’s see oh for he kudos to you for taking these courses ashley i wish everybody

1147
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[Paul Tyler]: were doing what you’re doing okay

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[Paul Tyler]: um i i would like you to take people through that write up that you did on the um

1149
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[Paul Tyler]: social media examiner thing what was your like what were the big like you know the

1150
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[Paul Tyler]: things you say i’m like we should be doing you know x y and z like what’s the

1151
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[Paul Tyler]: what’s the we’re doing the lot of it i think’s room for enhancement in a lot of

1152
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[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

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[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

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[Paul Tyler]: like when instagram releases things or facebook meta releases things

1157
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[Paul Tyler]: be clues about what they’re looking for right um video is a huge one so they’re

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[Paul Tyler]: moving away from picture towards video the other thing i thought was interesting

1159
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[Paul Tyler]: was they didn’t mention twitter at all

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[Paul Tyler]: yeah there was one word about not one session about twitter

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[Paul Tyler]: that was super interesting they did talk about long form video coming back on

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[Paul Tyler]: youtube and how to kind of work around that and what to do there

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[Paul Tyler]: um

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[Paul Tyler]: you know it was huge that was like the big big takeaway

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[Paul Tyler]: current parent making yourself trustworthy right

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01:03:30,880 –> 01:03:34,160
[Paul Tyler]: things that we don’t understand just made very clear

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[Paul Tyler]: right so i i i guess the qu you know the question i was struggle with is okay how

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[Paul Tyler]: much of this is you know do we do this for the consumer

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[Paul Tyler]: versus how much it is for the agent and we you know for the community we tie into

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[Paul Tyler]: right absolutely go for an instagram we need an instagram account for our company

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[Paul Tyler]: to you so i started setting it up this morning do you wanna go with a user name

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[Paul Tyler]: nasa financial group or would you like to go if user named nasa careers

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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

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01:04:10,540 –> 01:04:11,540
[Paul Tyler]: like we go

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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

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[Paul Tyler]: in his head right

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[Paul Tyler]: which is terrifying to me but that’s okay

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[Paul Tyler]: yeah um

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[Paul Tyler]: the only worry i have about care is is

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[Paul Tyler]: it feels like i you know i i don’t want to get us in the hook of its you know

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[Paul Tyler]: because i remember when this popped up i think it’s popped up right around the the

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[Paul Tyler]: pandemic a little bit before when everybody’s using a hashtag travelers cares

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[Paul Tyler]: i didn’t know about that yeah yeah like i think

RIAs Sell Verbs. Agents and Brokers Sell Nouns

April 25, 2022 2022, Media, Michelle Richter No comments

If time flies when you’re having fun, then it stands to reason that the opposite is also true. Unbelievably to me, over two years have now elapsed since I penned this article predicting how insurance could integrate with wealth management.

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 Institute of Financial Wellness Introduces Advisory Board of Nationally Noted Thought Leaders

April 25, 2022 2022, Media, Tom Hegna No comments

America’s first-of-its-kind multi-media financial education content network observes National Financial Literacy Month by expanding its platform of unbiased financial education, resources and services

MIAMI, April 20, 2022 /PRNewswire/ — In conjunction with National Financial Literacy Month in April, the Institute of Financial Wellness today announced the establishment of an advisory board comprised of nationally noted thought-leaders in the financial services, business, insurance, entertainment, health and wellness industries. These experts support IFW’s educational mission by providing valuable perspectives and advice for Americans at all stages of life.

Launched in the fall of 2021, IFW is America’s multi-media platform providing free access to all the financial information and resources people need to develop customized strategies for every stage of life. IFW’s financial services thought-leaders, digital media veterans, and financial professionals developed the first-of-a-kind platform as well as a Financial Professional Network to enable customers to implement their customized plans.

The advisory board members include:

Fabrice Braunrot, IFW Financial Services / Health & Wellness Expert
Fabrice Braunrot retired from JPMorgan Chase as a Vice-Chairman of the JPMorgan Private Bank in 2018, after a 34-year career working in London, New York and Chicago. Currently, he is a Director of Spiral Sun Ventures, as well as an advisor to Tensility Ventures and Genivity/HALO. Braunrot has a bachelor’s degree and a master’s degree in modern history from the University of Oxford (Oriel College).

Renee Haugerud, IFW Commodities Expert / Female & Young Women in Finance Advocate
Renée Haugerud is the Founder, Chief Investment Officer, and Managing Principal of Galtere Inc., founded in 1997. She is an investment advisor focused on top-down real asset macro themes, allocating across global asset classes. Throughout her 40-plus year investment career, Haugerud acquired expertise across all asset classes, through posts in the U.S., Canada, the U.K., Switzerland, Australia, and Hong Kong. She began her tenure in financial markets by trading cash commodity markets in The United States and Canada. Active in the community of women and business leaders, she advocates for numerous global education initiatives.

Tom Hegna, IFW Retirement Income Expert
Tom Hegna, CLU, ChFC, CASL, is an acclaimed author, speaker, and economist widely known as “THE” retirement income expert. As a former Senior Executive Officer at New York Life, retired Lieutenant Colonel, and economist, he has delivered over 5,000 seminars, helping baby boomers and seniors retire the “optimal” way. Hegna specializes in creating simple and powerful retirement solutions based on math and science – not opinions.

David Adefeso, IFW College Planning & Investment Strategy
David Adefeso is the Chief Executive Officer of the Pacific Group, a full-service investment advisory firm for new investors and experienced investors alike, and Sootchy, a mobile technology platform used to combat United States student debt. Upon graduating from Harvard Business School with a master’s degree in business administration, he worked as a Certified Public Accountant and a Wall Street Investment Banker with Wasserstein Perella & Co. and Salomon Smith Barney. After this, he founded Sootchy with the idea that all children could enjoy higher education without the crippling debt that comes with student loans.

Malik Yoba, IFW Inner City & Urban Community Development / Arts & Entertainment Advocate
The three-time NAACP Image Award Winner is probably best known for his roles as an actor in the 1993 Disney classic, Cool Runnings, and the hit Fox television series Empire and New York Undercover. As an actor, writer, director, producer, musician, activist, educator, inspirational speaker, entrepreneur, and author, Yoba tackles his quest to live a purpose-filled life and not only entertain but also educate young and old alike in communities across the world on the value of accountability, integrity, and leadership.

Joe Jordan, IFW Behavioral Finance Expert
Joe Jordan, inspirational speaker, behavioral finance expert and award-winning author, is a founder of the Insured Retirement Institute and has been featured on the cover of Life Insurance Selling magazine. He previously ran insurance sales at Paine Webber and more recently was a senior vice president at MetLife. Jordan. For three consecutive years, he has been honored by Irish America magazine as one of the “Top 50 Irish Americans on Wall Street.”

Laurie Sallarulo, IFW Student Leader of Financial Education & Entrepreneurship
CEO Junior Achievement South Florida
Elevating through the corporate ranks to CFO, Laurie developed the skills that take organizations from struggling to good to great. She transitioned to the non-profit sector as a CEO, applying her business and relationship-building experience to satisfy her passion for helping young people and rising, middle and female managers prepare to lead. She currently serves as Governor Appointed Chair of the Early Learning Coalition of Broward and is a member of the Florida Early Learning Advisory Council.

Dawn Nic, Money and Psychology Expert
Dawn Nic, CCH, CLC, an author and certified life and health coach, studied medical sciences at Harvard University and received an MDC in neuroscience and pathology. She is the founder of Whole Self Approach and the Whole Self Approach method, and has authored several self-help workbooks. She has also created TFEE (Teens for Empowering Each Other), a program to empower teens to be kind and compassionate instead of bulling one another.

Kristin Chenoweth, IFW Arts Advocate
Emmy and Tony Award-winning actress and singer Kristin Chenoweth’s career spans film, television, voiceover, and stage. In 2015, Chenoweth received a coveted star on The Hollywood Walk of Fame. Chenoweth is a graduate of Oklahoma City University with a master’s degree in opera performance.

“On National Financial Literacy Month, we are thrilled to introduce our advisory board of esteemed thought leaders as part of our mission to promote financial literacy and wellbeing,” said IFW CEO Erik Sussman. “We will continue to keep a close pulse on the changing needs and preferences of our audiences and expand our platform in response to a growing demand for our fact-based, agnostic financial education, resources and services.”

About the Institute of Financial Wellness
The Institute of Financial Wellness is America’s first multi-media financial education company providing free access to the unbiased, engaging, fact-based information Americans need to ensure their best lives. Established by professionals with decades of experience running financial services firms and media companies, the IFW seeks to serve as America’s most trusted company for financial education, resources and services. More information is available at www.the-ifw.com

Full release on: https://www.yahoo.com/now/institute-financial-wellness-introduces-advisory-125600600.html

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Episode 144: Charting a New Course for the Industry with Dave Levenson

April 21, 2022 2022, Dave Levenson, Podcast, Retirement No comments

What role should an industry association play to support the growth of the life insurance and annuity business? This week’s guest, David Levenson has invested a lot of time of energy answering this question. As President and CEO of LIMRA, LOMA & LLGlobal, Dave has redefined the mission, structure, and operations of our major industry association during a period of crisis and rapid change. Today, he gives us an update on the group’s future direction and his perspective on major industry trends.

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:

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

https://www.limra.com/

Thank you to our show sponsor; The Index Standard!

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Transcript

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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]: there’s no tie you lost your tie

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[Ramsey Smith]: yeah i came back from new york so i don’t i don’t need the uniform anymore

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[Paul Tyler]: all right so we’re back to sort of normal attire got a great guest once again okay

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[Paul Tyler]: you know i’m ramsey you you you got a very good person on to talk about where the

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[Paul Tyler]: industry is headed do you want to introduce him

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[Ramsey Smith]: yeah so we’re joined today by dave levinson who’s president and ceo of limber loma

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[Ramsey Smith]: and he’s an old friend of yours too paul so

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[Paul Tyler]: yes

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[Ramsey Smith]: i’m happy to share credit

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[Ramsey Smith]: for bringing him on the show

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[Ramsey Smith]: dave dave is a is a unique individual in a lot of ways he was at hartford for many

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[Ramsey Smith]: years at edward jones and now running limma so

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[Ramsey Smith]: the different elements of the industry that he has covered is broad and unique and

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[Ramsey Smith]: we’re really delighted to have him join us today so dave welcome

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[Ramsey Smith]: let’s get started but would definitely like to hear more about your journey you’ve

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[Ramsey Smith]: you’ve covered so many different areas and then now you’re back in at hartford

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[Ramsey Smith]: focusing on limma tell us about tell us about that trip

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[Dave Levenson]: yeah would would love to first you know ramsey paul thanks for having me and

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[Dave Levenson]: it is great spending some time with you guys again it’s spent a little bit little

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[Dave Levenson]: bit of time but it is good seeing you in a a casual a more casual environment so

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[Dave Levenson]: again thanks for the opportunity to to be with you today

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[Ramsey Smith]: so

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[Dave Levenson]: so look you know it’s been a fun journey

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[Ramsey Smith]: so

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[Dave Levenson]: so i was with hartford for seventeen years

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[Dave Levenson]: and did a lot of fun and interesting things

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[Dave Levenson]: it is the annuity show so i was i was managing the domestic u s business in

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[Dave Levenson]: addition to some other responsibilities

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[Dave Levenson]: and then you know i had the opportunity to go out to japan which you know was a

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[Dave Levenson]: tremendous

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[Dave Levenson]: a tremendous amount of fun for me

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[kate_theroux]: Ssssssssssssss,

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[Dave Levenson]: and just incredibly interesting so you know hartford entered and i’m going to

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[Paul Tyler]: yeah

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[Dave Levenson]: diverge a little bit but just to give you know listeners a background but you know

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[Dave Levenson]: hartford entered the

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[Dave Levenson]: the japanese

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[Ramsey Smith]: yeah

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[Dave Levenson]: insurance business there was really an

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[Dave Levenson]: annuity business

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[Ramsey Smith]: so

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[Dave Levenson]: in nineteen ninety nine two thousand

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[Dave Levenson]: and shot up like a rocket

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[Dave Levenson]: and you know within five years

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[Dave Levenson]: the company was doing more business in japan than it was in the u s and in the u s

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[Dave Levenson]: it was number one in market share so just pretty incredible

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[Ramsey Smith]: well

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[Dave Levenson]: but then it kind of went down as fast as it went up

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[Dave Levenson]: and you know i was sent out there to um try to stabilize things for a little bit

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[Dave Levenson]: so i went out spent three years there uh and just it was just

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[Dave Levenson]: a tremendous learning experience we did a lot of great things

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[Dave Levenson]: but you know ultimately came back after three years and uh you know harford went

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[Dave Levenson]: through a lot during the two thousand eight two thousand nine crisis

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[Dave Levenson]: and then you know i got to run the life company so life annuities

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[Dave Levenson]: retirement plans

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[Dave Levenson]: um

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[Dave Levenson]: you know that that was a lot of fun for me as well in twenty twelve hartford

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[Dave Levenson]: decided to get out of the life business and really focus on pnc

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[Dave Levenson]: and at that point ramsay i needed another job

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[Dave Levenson]: so you know most of my time was focused on our employees land

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[Dave Levenson]: but a fortuitous meeting with edward jones led to my next adventure and i spent

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[Dave Levenson]: six years in st louis ultimately leading their product suite in north america for

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[Dave Levenson]: everything that they did so advisory platforms mutual funds insurance annuities et

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[Dave Levenson]: cetera and that was great and then this opportunity came along around three years

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[Dave Levenson]: ago and

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[Dave Levenson]: you know at this point in my career the ability to give back to the industry was

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[Dave Levenson]: just compelling the ability to get back to the east coast

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[kate_theroux]: Ssssssssssssss

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[Dave Levenson]: uh to family was compelling and then here we are

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[Paul Tyler]: well e look this fascinating journey and i think it it feels long time ago but not

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[Paul Tyler]: that far along when yeah we were having a dinner in downtown hartford and you were

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[Paul Tyler]: talking to me about i think at that point dave you maybe it had been on the job

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[Paul Tyler]: maybe you know i don’t maybe six months and i

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[Dave Levenson]: yeah

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[Paul Tyler]: know you were doing a huge you know review to say okay

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[Paul Tyler]: hey listen lammers come a long ways you know world’s changing you know how do you

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[Paul Tyler]: keep an industry association relevant and you’d really taken a undertaken a bold

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[Paul Tyler]: strategy to reposition the organization now this was pre covid

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[Dave Levenson]: yeah exactly

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[Paul Tyler]: so tell us you know what happened covid hit um what had

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[Ramsey Smith]: what is that

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[Paul Tyler]: happened w you know how did the strategy prove out

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[Ramsey Smith]: no

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[Paul Tyler]: how did you have to change

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[Paul Tyler]: talk to us about the whole covid experience here

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[Dave Levenson]: yeah again another uh incredible adventure paul so and you’ve got a good memory so

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[Dave Levenson]: you know i joined the association in twenty nineteen

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[Dave Levenson]: january twenty nineteen i took over as ceo

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[Dave Levenson]: and you know we laid out what we call our compass twenty twenty five so you know

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[Dave Levenson]: where were we going over the next five or six years and you know what did do we

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[Dave Levenson]: really want to do with the association how could we benefit members all the stuff

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[Dave Levenson]: you would end up doing in a strategic plan

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[Dave Levenson]: and you know that’s still our north star

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[Dave Levenson]: and in some ways in many ways the pandemic which hit just you know fifteen months

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[Dave Levenson]: later

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[Dave Levenson]: accelerated a lot of things i mean some things we had to slow down on but some

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[Dave Levenson]: things we truly accelerated on i’ll give you an example

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[Dave Levenson]: one of the things that we said in our plan is we’ve got to do a better job

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[Dave Levenson]: connecting with c suite executives

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[Dave Levenson]: so a lot of the c suite

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[Dave Levenson]: has known us but not everyone in the c suite knew us well and yet we have a lot of

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[kate_theroux]: Ssssssssssssss,

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[Dave Levenson]: wonderful research that you know most people in the c suite should be looking at

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[Dave Levenson]: um fairly often

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[Dave Levenson]: so what we did early in the pandemic is we created i mean we have about one

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[Dave Levenson]: hundred twenty committee study groups that type of stuff but we didn’t have a lot

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[Dave Levenson]: for the c suite so we created what we called our cxo committees so we brought

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[Dave Levenson]: together cfos and chief investment officers and chief human resource officers and

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[Paul Tyler]: maybe

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[Dave Levenson]: chief underwriters and chief actuaries

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[Dave Levenson]: and the demand for

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[Dave Levenson]: executives to talk to one another

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[Dave Levenson]: nobody’s been through this pandemic right to talk to one another and say what are

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[Dave Levenson]: you experiencing and you know what are best practices and how are you getting

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[Dave Levenson]: through this and how are you getting through that it was really a unique time and

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[Dave Levenson]: it enabled us as an industry trade to really host some wonderful meetings that

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[Dave Levenson]: helped our member companies

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[Paul Tyler]: maybe

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[Dave Levenson]: kind of get through a pretty tough time

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[Dave Levenson]: there were other things that we were able to do that i thought were

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[Paul Tyler]: see

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[Dave Levenson]: incredibly valuable so go back to twenty twenty

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[Dave Levenson]: the markets were pretty crazy right for the first couple of months

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[Dave Levenson]: but you remember how low interest rates were

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[Ramsey Smith]: yeah

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[Dave Levenson]: right and we had just taken on a project at the request of some of our board

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[Dave Levenson]: members to

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[Paul Tyler]: i

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[Dave Levenson]: really study low interest rates and the long term impact on the industry

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[Dave Levenson]: so we brought together oliver ween and the acl and the three organizations worked

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[Dave Levenson]: with over one hundred executives to put out a lot of great insights and research

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[Dave Levenson]: about how to get through this low interest rate environment so again in many ways

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[Dave Levenson]: the pandemic has helped us um but you know let’s be let’s be honest i mean just

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[Dave Levenson]: being working remotely and going through a lot of change has also been a little

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[Dave Levenson]: difficult

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[Ramsey Smith]: are there any are there any key takeaways

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[Paul Tyler]: what

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[Ramsey Smith]: sort of big picture takeaways

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[Ramsey Smith]: from that study i mean that’s clearly right it’s an industry that lives and

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[kate_theroux]: Ssssssssssssss,

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[Ramsey Smith]: breathes on yield

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[Ramsey Smith]: so i’m curious what some of the there were what were some of the key conclusions

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[Ramsey Smith]: there

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[Dave Levenson]: well you know from uh you know i appreciate that question ramsey from a regulatory

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[Dave Levenson]: perspective i would say

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[Dave Levenson]: you know the regulators weren’t really um

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[Dave Levenson]: ready for this right you know what happens if interest rates go negative and you

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[Dave Levenson]: know when rates are when the ten years at one hundred seven

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[Dave Levenson]: nobody really thinks about that maybe they do more so than when they were at three

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[Dave Levenson]: or

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[Ramsey Smith]: yeah

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[Dave Levenson]: four when they’re at forty or fifty basis points it becomes a little bit of a

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[Dave Levenson]: different a different focal point for the industry

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[Dave Levenson]: so

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[Dave Levenson]: you know i think we

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[Dave Levenson]: we got our members to really think about negative rates and the impact of negative

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[Dave Levenson]: rates and we got our members to really think through

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[Dave Levenson]: what happens if this doesn’t turn quickly

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[Dave Levenson]: from a capital management perspective from a sales perspective from a product

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[Dave Levenson]: value perspective there’s so many different perspectives

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[Dave Levenson]: so i think ultimately ramsay there are a lot of really interesting takeaways i

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[Dave Levenson]: know i remember having six subgroups and each subgroup focusing on a different

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[Dave Levenson]: dimension and then we had a wrap up presentation at the end of twenty twenty

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[Dave Levenson]: but you know here we are what just just a couple years later and now we’re worried

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[Dave Levenson]: about you know wage inflation and inflation in general and you know will interest

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[Dave Levenson]: rates pop too quickly as opposed to we in a forty basis fifty basis point scenario

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[Dave Levenson]: again so it’s interesting how quickly the world changes

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[Ramsey Smith]: so you know just just just following up a little bit on that and you talked about

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[Ramsey Smith]: your experiences in japan and so things like negative interest rates are something

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[Ramsey Smith]: that

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[Ramsey Smith]: you probably saw at least on the horizon in

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[Dave Levenson]: yeah

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[Ramsey Smith]: japan not just not just low and negative but but over a long period of time

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[Ramsey Smith]: just very

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[Paul Tyler]: great

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[Ramsey Smith]: curious about how your experience outside the u s in the insurance industry which

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[kate_theroux]: Ssssssssssssss

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[Ramsey Smith]: is unusual we can be a very domestic industry if you think about it like you know

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[Ramsey Smith]: how that is how that is informed you know your thoughts on the industry and

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[Ramsey Smith]: frankly

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[Ramsey Smith]: your broader goals for limma

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[Dave Levenson]: yeah look it you know the world’s a big world

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[Dave Levenson]: and you know i think one of the key lessons for me going through the pandemic was

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[Dave Levenson]: you know one of the groups that i mentioned there were six groups looking at these

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[Dave Levenson]: slow interest rate what one of the groups looked at just what was going on in

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[Dave Levenson]: different parts of the world so what happened in japan what happened in

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[Dave Levenson]: switzerland because some of those countries you know we’re in a negative rate

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[Dave Levenson]: environment

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[Dave Levenson]: and of course in japan they’ve been in a low interest rate environment for an

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[Dave Levenson]: awfully long time

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[Dave Levenson]: so the ability to kind of look into you know how are those industries working

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[Dave Levenson]: what are their concerns challenges

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[Dave Levenson]: i think those were some pictures that we were able to really

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[Paul Tyler]: oh

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[Dave Levenson]: help members with

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[Dave Levenson]: but look there’s a lot of different factors at play so i’ll give you i’ll give you

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[Dave Levenson]: an example

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[Dave Levenson]: of the product that launched hartford in japan and really got us to this amazing

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[Dave Levenson]: position

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[Dave Levenson]: so it was

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[Dave Levenson]: a one year

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[Dave Levenson]: annuity

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[Dave Levenson]: uh with a payout over fifteen years

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[Dave Levenson]: right if

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[Dave Levenson]: if you if you’re you had below your prin if the account value were below principle

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[Dave Levenson]: so think about it as a gm b

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[Dave Levenson]: a twenty five year product

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[Dave Levenson]: and all we did was guarantee you’d get your money back over that two five year

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[Dave Levenson]: period right and this is this is about low interest

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[Ramsey Smith]: yeah

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[Dave Levenson]: rates so that doesn’t sound like much of a guarantee right

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[Ramsey Smith]: yeah

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[Dave Levenson]: but it enabled hartford to go from nowhere to to more sales than it what it was

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[kate_theroux]: Ssssssssssssss

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[Ramsey Smith]: yeah

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[Dave Levenson]: doing in the united states which is pretty incredible

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[Ramsey Smith]: sure

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[Dave Levenson]: but you know just to finish that story in japan what happened is

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[Dave Levenson]: a lot of the domestic players were watching this saying oh my god you know here’s

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[Dave Levenson]: this this u company coming in to to japan and you know taking this massive market

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[Dave Levenson]: share and you know we can do better than that right so it became like an arms race

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[Ramsey Smith]: yeah

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[Dave Levenson]: and pretty soon people were doing ten year g mab s in a low interest rate

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[Dave Levenson]: environment

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[Dave Levenson]: and we were looking at it saying you know we went to your former company and said

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[Dave Levenson]: how much would it cost to hedge this and the hedge was fifty percent more than the

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[Dave Levenson]: price of the product right

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[Ramsey Smith]: yeah

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[Dave Levenson]: so it just became a really crazy environment and just shows you how much

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[Dave Levenson]: you really need to understand it’s not just about the sales as you know

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[Dave Levenson]: this is a big risk management play

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[Dave Levenson]: but putting those pieces together

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[Dave Levenson]: was so fascinating again to watch our rise than to watch how the whole industry

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[Dave Levenson]: adjusted

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[Paul Tyler]: yeah we’ve had a couple of companies on ramsey over the last six months focused on

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[Paul Tyler]: flat out optimizing interest rates safe interest rates

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[Ramsey Smith]: yeah

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[Paul Tyler]: it’s interesting dave some have had both of them have had very little to do with

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[Paul Tyler]: insurance and annuities but i think they will end up leveraging annuities at some

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[Paul Tyler]: point

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[Dave Levenson]: yeah

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[Paul Tyler]: now with inflation rates again whole new whole new ball game

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[Paul Tyler]: maybe talk to us about maybe we could shift to one other sort of sort of big under

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[Paul Tyler]: underlying theme pre pandemic during pandemic post and

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[Paul Tyler]: post pandemic is going digital right you

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[Dave Levenson]: yeah

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[Paul Tyler]: know i think before the pandemic

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[Paul Tyler]: it was kind of innovation

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[Paul Tyler]: thinking about the future felt like the middle of the pandemic was we we just have

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[kate_theroux]: Ssssssssssssss

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[Paul Tyler]: to do it in order to even do business

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[Paul Tyler]: you know where’s the puck headed on on digitization of insurance carriers

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[Dave Levenson]: yeah look i think the industry made a lot of progress in the last couple of years

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[Dave Levenson]: because it had to right

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[Dave Levenson]: so you know on the life side we saw just a big jump in things like accelerated

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[Dave Levenson]: underwriting

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[Dave Levenson]: we saw a big jump in terms of

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[Dave Levenson]: the digitalization tools and the digital tools that advisors need to interface

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[Dave Levenson]: with clients

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[Ramsey Smith]: i’m so

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[Dave Levenson]: and we saw tremendous productivity gains right so all of that i think was very

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[Dave Levenson]: positive

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[Dave Levenson]: we saw changes in uh

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[Dave Levenson]: you know things like e signatures and just again those are all positive things for

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[Dave Levenson]: our industry so it is going to continue

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[Dave Levenson]: um

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[Dave Levenson]: and

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[Paul Tyler]: yeah

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[Dave Levenson]: you know i’m bullish that some of the changes that i think were long overdue

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[Dave Levenson]: have made but there’s still a ways to go for sure

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[Dave Levenson]: um you know one of the things that uh

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[Dave Levenson]: i think was really good for our industry is uh with life insurance we

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[Ramsey Smith]: uh

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[Dave Levenson]: saw

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[Dave Levenson]: just tremendous demand right and that’s not a surprise in the middle of a pandemic

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[Dave Levenson]: so we saw sales at levels that we hadn’t seen since nineteen eighty three

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[Dave Levenson]: and even the annuity business which

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[Dave Levenson]: really surprising to me has been flat like if you take the pandemic years out it

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[Dave Levenson]: it’s been flat for the last decade

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[Dave Levenson]: but we saw that that business jumped sixteen percent in aggregate if you just look

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[Dave Levenson]: at twenty one versus twenty and twenty was up versus nineteen toward the end of

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[Dave Levenson]: the year from a runway perspective so

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[Dave Levenson]: so i do think the pandemic’s been good to the industry when it could have been

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[Dave Levenson]: really bad

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[Dave Levenson]: but to your point about digital there are some things that we did that are great

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[kate_theroux]: Ssssssssssssss

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[Dave Levenson]: and there’s a lot that we have to still do

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[Paul Tyler]: now that’s interesting you mentioned life insurance sales and i’ve heard that i

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[Paul Tyler]: mean if the companies i saw dave who had

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[Paul Tyler]: you know on they were they had a use signature they had e app they could take

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[Paul Tyler]: do direct sales to consumers they can do rapid underwriting they had banner years

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[Paul Tyler]: you know i’ve talked to some of my

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[Dave Levenson]: yeah

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[Paul Tyler]: my peers around the market

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[Paul Tyler]: do you think the spike was effectively an acceleration of purchases of insurance

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[Paul Tyler]: or do you think it its somehow sort of changed the demand going forward and just

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[Paul Tyler]: in the life insurance sector

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[Dave Levenson]: yeah so that’s that’s the that’s the sixty four thousand dollar question i’ll say

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[Dave Levenson]: that we know that the demand increased so

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[Dave Levenson]: we did a study in the fall of two thousand and we know that

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[Dave Levenson]: because of the pandemic demand for life insurance increased about thirty one

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[Dave Levenson]: percent

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[Dave Levenson]: so similar to the study that we did on low interest rates with oliver weyman and

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[Dave Levenson]: ac what we did when we saw that pall because we want to be much more action

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[Dave Levenson]: oriented

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[Dave Levenson]: is we brought all of the life trade associations together so back to a cli finsec

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[Dave Levenson]: nab mafa mrt lid which is a the trade association for direct writers life happens

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[Dave Levenson]: all of us got together and said this is the time to unify and we came together and

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[Dave Levenson]: we we worked with seventy six

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[Dave Levenson]: of our member companies

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[Dave Levenson]: manufacturers and distributors

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[Dave Levenson]: and

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[Dave Levenson]: kate thau

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[Dave Levenson]: on our pr side every week sent out a kit um to all of these companies about what

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[Dave Levenson]: you need to know and it they were fact sheets it was social media

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[kate_theroux]: Ssssssssssssss,

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[Dave Levenson]: it went out to the distribution

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[Dave Levenson]: organizations and you know it was our feeling that

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[Ramsey Smith]: aw

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[Dave Levenson]: everybody became much more aware of their mortality right in the midst of the

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[Dave Levenson]: pandemic

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[Dave Levenson]: and

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[Dave Levenson]: not only was it important for our industry to support customers but we also felt

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[Dave Levenson]: like it was our responsibility

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[Dave Levenson]: as we heard all of these you know horrific stories so you i really

328
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[Ramsey Smith]: scary

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[Dave Levenson]: think this was a good time for our industry to step up and it was just i’m so

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[Dave Levenson]: proud of how how the insurance industry did step up

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[Ramsey Smith]: so in terms of your vision for for limma i remember we were speaking i think a few

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[Ramsey Smith]: weeks ago

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[Ramsey Smith]: and you’ve got grand plans

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[Ramsey Smith]: so so so so share some of those with us i mean you were you’re obviously doing a

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[Ramsey Smith]: lot of things here in the u s it’s interesting because

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[Ramsey Smith]: there’s existing organizations that are already trade organizations but you’re

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00:19:05,360 –> 00:19:09,600
[Ramsey Smith]: playing a unifying role even among the organizations here in the u s and

338
00:19:10,045 –> 00:19:11,045
[Paul Tyler]: it’s

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[Ramsey Smith]: you’re taking steps to expand outside the u s tell us tell us about what your

340
00:19:14,020 –> 00:19:15,020
[Ramsey Smith]: vision is there

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00:19:15,775 –> 00:19:18,015
[Dave Levenson]: yeah ramsay i appreciate the question so

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[Dave Levenson]: you know look you know when i came in

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[Dave Levenson]: you know limmer hass been around for you know one hundred six years it’s it’s it’s

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[Dave Levenson]: um it’s such a wonderful organization

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00:19:31,695 –> 00:19:34,255
[Dave Levenson]: and so it’s got rich pedigree and

346
00:19:35,295 –> 00:19:38,895
[Dave Levenson]: strong reach in size right it’s the largest

347
00:19:39,995 –> 00:19:40,995
[Dave Levenson]: association in the world

348
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[Paul Tyler]: oh

349
00:19:41,375 –> 00:19:47,215
[Dave Levenson]: supporting life annuity and workplace benefits so there was a lot of great things

350
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[Dave Levenson]: that had been done historically with the association

351
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[Dave Levenson]: but let’s face it our industry was changing and has been changing very very

352
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[Dave Levenson]: quickly

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[Dave Levenson]: so

354
00:19:58,575 –> 00:20:02,655
[Dave Levenson]: i think it’s our responsibility to get ahead of it and help guide our member

355
00:20:01,995 –> 00:22:00,315
[kate_theroux]: Ssssssssssssss

356
00:20:02,975 –> 00:20:04,975
[Dave Levenson]: companies through a lot of this type of stuff

357
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[Dave Levenson]: so one of the first things that we did as part of our strategic review as we kind

358
00:20:10,175 –> 00:20:14,655
[Dave Levenson]: of stepped back and said look why do we exist why are we here and what would

359
00:20:14,895 –> 00:20:19,695
[Dave Levenson]: happen if we weren’t here so that enabled us to step back and you know something

360
00:20:19,935 –> 00:20:23,615
[Dave Levenson]: as basic as developing a purpose statement right and we developed a purpose

361
00:20:23,695 –> 00:20:25,375
[Dave Levenson]: statement that said what you know why we here

362
00:20:26,235 –> 00:20:27,235
[Dave Levenson]: and we’re

363
00:20:26,660 –> 00:20:27,660
[Ramsey Smith]: your

364
00:20:27,055 –> 00:20:32,335
[Dave Levenson]: here to advance the financial services industry by empowering our members with

365
00:20:32,495 –> 00:20:36,015
[Dave Levenson]: knowledge insights connections and solutions

366
00:20:38,095 –> 00:20:39,775
[Dave Levenson]: so that purpose statement

367
00:20:40,975 –> 00:20:45,135
[Dave Levenson]: allowed us to be very very focused on the things that we should do and the things

368
00:20:45,155 –> 00:20:46,155
[Dave Levenson]: that we shouldn’t do

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00:20:47,295 –> 00:20:51,135
[Dave Levenson]: so when i think about things like knowledge i think about professional development

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00:20:52,735 –> 00:20:58,415
[Dave Levenson]: and we have a designation program fm which is one of the largest in the world

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[Dave Levenson]: and over a hundred thousand people

372
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[Paul Tyler]: yeah

373
00:21:02,035 –> 00:21:03,035
[Dave Levenson]: have

374
00:21:02,580 –> 00:21:03,580
[Ramsey Smith]: cheese

375
00:21:02,735 –> 00:21:04,255
[Dave Levenson]: taken the fli designation

376
00:21:05,535 –> 00:21:10,175
[Dave Levenson]: but our designation i mean this is this is probably one hundred fifty hours to get

377
00:21:10,255 –> 00:21:14,495
[Dave Levenson]: your full designation is that where the world is going or do people want more

378
00:21:14,475 –> 00:21:15,475
[Dave Levenson]: quick hits

379
00:21:16,415 –> 00:21:19,935
[Dave Levenson]: so we’re shifting a little bit more toward foundational education

380
00:21:21,315 –> 00:21:22,315
[Dave Levenson]: was shifting to

381
00:21:22,340 –> 00:21:23,340
[Ramsey Smith]: just

382
00:21:22,415 –> 00:21:26,815
[Dave Levenson]: executive development work but that’s not something that we should do it’s

383
00:21:26,815 –> 00:21:30,095
[Dave Levenson]: something that we can partner with a wharton to do and in fact

384
00:21:31,695 –> 00:21:33,935
[Dave Levenson]: in the summer uh it’s gonna be our first

385
00:21:34,975 –> 00:21:38,495
[Dave Levenson]: program for wh executive education with lira

386
00:21:40,255 –> 00:21:41,535
[Dave Levenson]: and we only had a hundred

387
00:21:41,540 –> 00:21:42,540
[Ramsey Smith]: i guess

388
00:21:41,695 –> 00:21:45,455
[Dave Levenson]: seats because that’s all wharton would give us and here we are in march and we’re

389
00:21:45,455 –> 00:21:47,935
[Dave Levenson]: sold out right we’ve got fifty four companies

390
00:21:48,085 –> 00:21:49,085
[Paul Tyler]: hm

391
00:21:48,835 –> 00:21:49,835
[Dave Levenson]: that have signed up

392
00:21:49,420 –> 00:21:50,420
[Ramsey Smith]: wow

393
00:21:49,775 –> 00:21:51,695
[Dave Levenson]: for this and you go to wharton you

394
00:21:51,405 –> 00:21:52,405
[Paul Tyler]: yes

395
00:21:51,855 –> 00:21:55,855
[Dave Levenson]: go to the wharton school one week a year for three years and you know

396
00:21:55,485 –> 00:21:56,485
[Paul Tyler]: that

397
00:21:55,935 –> 00:22:00,015
[Dave Levenson]: you’re taught about you’re taught by some of the best professors in the world

398
00:22:00,335 –> 00:22:04,735
[Dave Levenson]: about how to work through this change and navigate this change and you know the

399
00:22:01,995 –> 00:24:00,315
[kate_theroux]: Ssssssssssssss,

400
00:22:04,735 –> 00:22:08,255
[Dave Levenson]: peer group you meet et cetera et cetera so you know i’m going down a little bit of

401
00:22:08,255 –> 00:22:12,095
[Dave Levenson]: a rabbit hole but what i’m trying to do is give you a sense that we’re looking at

402
00:22:12,255 –> 00:22:15,535
[Dave Levenson]: our knowledge bucket we’re looking at our insights bucket we’re looking at our

403
00:22:15,535 –> 00:22:19,535
[Dave Levenson]: solutions bucket we’re looking at our connections bucket and we’re saying what

404
00:22:19,775 –> 00:22:20,895
[Dave Levenson]: does that need to look like

405
00:22:21,915 –> 00:22:22,915
[Dave Levenson]: in three years

406
00:22:23,935 –> 00:22:28,415
[Dave Levenson]: for us to be truly indispensable to our members and we have a full

407
00:22:28,340 –> 00:22:29,340
[Ramsey Smith]: what else

408
00:22:28,575 –> 00:22:32,255
[Dave Levenson]: fledged plan as far as what we’re going to do this year next year the year after

409
00:22:33,935 –> 00:22:39,375
[Dave Levenson]: to enable us to get to that point of indispensable with the vast majority of our

410
00:22:39,455 –> 00:22:43,055
[Dave Levenson]: members so again i could go on and on about different examples of different things

411
00:22:42,880 –> 00:22:45,600
[Ramsey Smith]: well so i’ve got two questions first one was so after three

412
00:22:43,215 –> 00:22:44,975
[Dave Levenson]: we’ve done but yeah

413
00:22:45,245 –> 00:22:46,245
[Paul Tyler]: we

414
00:22:45,680 –> 00:22:50,000
[Ramsey Smith]: years one one week a month you said like do you come out with an mba or what is

415
00:22:49,780 –> 00:22:50,780
[Ramsey Smith]: what is

416
00:22:50,445 –> 00:22:51,445
[Paul Tyler]: yeah

417
00:22:50,940 –> 00:22:51,940
[Ramsey Smith]: are you

418
00:22:51,855 –> 00:22:56,895
[Dave Levenson]: well that’d be a three week nba right um no you come out with a certificate and

419
00:22:57,055 –> 00:23:00,735
[Dave Levenson]: you know candidly we modeled this after a program that already existed

420
00:23:00,820 –> 00:23:01,820
[Ramsey Smith]: got it okay

421
00:23:01,615 –> 00:23:02,735
[Dave Levenson]: it’s called si

422
00:23:02,660 –> 00:23:03,660
[Ramsey Smith]: uhhuh

423
00:23:02,975 –> 00:23:06,655
[Dave Levenson]: and it’s between sif ma the securities industry and wharton

424
00:23:06,500 –> 00:23:07,500
[Ramsey Smith]: got it

425
00:23:07,615 –> 00:23:10,255
[Dave Levenson]: and whenever i went out and i talked to our member companies

426
00:23:09,805 –> 00:23:10,805
[Paul Tyler]: yeah

427
00:23:10,495 –> 00:23:13,135
[Dave Levenson]: they had no idea what i was talking about when i brought up that program and i

428
00:23:13,215 –> 00:23:17,135
[Dave Levenson]: said you know i went through it when i was with edward jones it was a phenomenal

429
00:23:16,835 –> 00:23:17,835
[Dave Levenson]: program

430
00:23:17,380 –> 00:23:18,380
[Ramsey Smith]: yeah

431
00:23:18,495 –> 00:23:22,975
[Dave Levenson]: why shouldn’t our industry have the same thing so that’s essentially what we did

432
00:23:23,295 –> 00:23:28,015
[Dave Levenson]: and the people on our team that put this together just doing an exceptional job

433
00:23:28,175 –> 00:23:31,215
[Dave Levenson]: and i’m super excited about what it’s going to look like in july

434
00:23:31,520 –> 00:23:34,560
[Ramsey Smith]: and the second thing was you said you were talking about things you should do and

435
00:23:34,620 –> 00:23:35,620
[Ramsey Smith]: shouldn’t do so i

436
00:23:35,395 –> 00:23:36,395
[Dave Levenson]: right

437
00:23:35,500 –> 00:23:36,500
[Ramsey Smith]: can’t resist

438
00:23:38,035 –> 00:23:39,035
[Dave Levenson]: right right

439
00:23:39,440 –> 00:23:43,120
[Ramsey Smith]: what would what were the things you get what were the things you you thought that

440
00:23:43,280 –> 00:23:46,880
[Ramsey Smith]: maybe you could deemphasize if if it’s not controversial

441
00:23:48,335 –> 00:23:50,735
[Dave Levenson]: yeah you know i’m not sure i want to go into a ton of detail

442
00:23:50,660 –> 00:23:51,660
[Ramsey Smith]: okay

443
00:23:51,055 –> 00:23:54,175
[Dave Levenson]: about that type of stuff but what i’ll share with you is

444
00:23:55,695 –> 00:24:02,095
[Dave Levenson]: you know we are an industry association which means if we’re not going deep with

445
00:24:01,995 –> 00:26:00,315
[kate_theroux]: Ssssssssssssss,

446
00:24:02,175 –> 00:24:04,975
[Dave Levenson]: our solutions with fifteen twenty fifty companies

447
00:24:06,175 –> 00:24:09,375
[Dave Levenson]: there’s probably limited value uh in what we do

448
00:24:09,140 –> 00:24:10,140
[Ramsey Smith]: uhuh

449
00:24:10,315 –> 00:24:11,315
[Dave Levenson]: so we had

450
00:24:10,605 –> 00:24:11,605
[Paul Tyler]: yeah

451
00:24:11,375 –> 00:24:12,815
[Dave Levenson]: a lot of solutions that

452
00:24:14,495 –> 00:24:16,975
[Dave Levenson]: three companies picked up or two companies picked up

453
00:24:18,015 –> 00:24:21,215
[Dave Levenson]: and candidly we’ve done away with several of those

454
00:24:21,980 –> 00:24:22,980
[Ramsey Smith]: got it all

455
00:24:22,365 –> 00:24:23,365
[Paul Tyler]: yeah

456
00:24:22,420 –> 00:24:23,420
[Ramsey Smith]: right

457
00:24:23,645 –> 00:24:24,645
[Paul Tyler]: yeah

458
00:24:24,180 –> 00:24:25,180
[Ramsey Smith]: very helpful

459
00:24:25,945 –> 00:24:31,305
[Paul Tyler]: yeah absolutely uh now we also do have a lot of agents who are listening

460
00:24:31,355 –> 00:24:32,355
[Dave Levenson]: yeah yeah

461
00:24:31,465 –> 00:24:32,665
[Paul Tyler]: and i know agents

462
00:24:34,425 –> 00:24:37,145
[Paul Tyler]: i’m trying to think if i’m an agent i know lira from

463
00:24:38,005 –> 00:24:39,005
[Paul Tyler]: you know

464
00:24:38,180 –> 00:24:39,180
[Ramsey Smith]: am

465
00:24:38,825 –> 00:24:40,585
[Paul Tyler]: taking my sorry am

466
00:24:40,365 –> 00:24:41,365
[Paul Tyler]: l

467
00:24:40,420 –> 00:24:41,420
[Ramsey Smith]: am ml

468
00:24:40,995 –> 00:24:41,995
[Dave Levenson]: am

469
00:24:41,485 –> 00:24:42,485
[Paul Tyler]: t taking my

470
00:24:42,475 –> 00:24:43,475
[Dave Levenson]: absolutely

471
00:24:42,665 –> 00:24:48,105
[Paul Tyler]: licensing you know uh or take my mandatory training there’s a lot of stuff i

472
00:24:48,265 –> 00:24:49,865
[Paul Tyler]: probably don’t know um

473
00:24:51,385 –> 00:24:54,825
[Paul Tyler]: how does how does your industry touch me as an agent

474
00:24:58,315 –> 00:24:59,315
[Dave Levenson]: yeah so

475
00:25:00,075 –> 00:25:01,075
[Dave Levenson]: when i think about

476
00:25:02,015 –> 00:25:06,255
[Dave Levenson]: and i’ll give you i’ll go a little deeper now so i gave you a little bit of a

477
00:25:06,655 –> 00:25:10,815
[Dave Levenson]: vision for knowledge i’ll give you a little bit of a vision for insights all right

478
00:25:10,895 –> 00:25:13,775
[Dave Levenson]: so when you think about insights think about our

479
00:25:13,660 –> 00:25:14,660
[Ramsey Smith]: thank you

480
00:25:13,935 –> 00:25:17,535
[Dave Levenson]: research organization which is the heart of who we are and who we’ve been

481
00:25:18,655 –> 00:25:19,775
[Dave Levenson]: um we’ve got about

482
00:25:21,055 –> 00:25:25,535
[Dave Levenson]: thirty percent of our organization that’s focused on the research function thirty

483
00:25:25,775 –> 00:25:27,375
[Dave Levenson]: percent of our three hundred twenty people

484
00:25:28,755 –> 00:25:29,755
[Dave Levenson]: so

485
00:25:30,495 –> 00:25:32,095
[Dave Levenson]: when i think about uh

486
00:25:33,135 –> 00:25:37,775
[Dave Levenson]: where we are very focused again we used to do a lot of stuff we just the

487
00:25:37,380 –> 00:25:38,380
[Ramsey Smith]: but

488
00:25:37,855 –> 00:25:41,215
[Dave Levenson]: breadth of what we did was incredible and this might get back into what did we

489
00:25:41,375 –> 00:25:46,575
[Dave Levenson]: stop doing and now what we’re saying is we are very focused on three verticals

490
00:25:47,375 –> 00:25:51,055
[Dave Levenson]: life insurance annuities and workplace benefits

491
00:25:52,095 –> 00:25:53,615
[Dave Levenson]: and there are three functions

492
00:25:54,895 –> 00:25:59,295
[Dave Levenson]: that we are very focused on because we could we could go all over the place with

493
00:25:59,455 –> 00:26:04,175
[Dave Levenson]: life annuity and workplace benefits but from a research perspective we are focused

494
00:26:01,995 –> 00:28:00,315
[kate_theroux]: Ssssssssssssss,

495
00:26:04,195 –> 00:26:05,195
[Dave Levenson]: on distribution

496
00:26:06,415 –> 00:26:11,535
[Dave Levenson]: and we are focused on the customer and customer insights and we are focused on

497
00:26:11,775 –> 00:26:16,095
[Dave Levenson]: product those are the three so when you think about you know paul your question

498
00:26:16,075 –> 00:26:17,075
[Dave Levenson]: you know

499
00:26:17,935 –> 00:26:22,815
[Dave Levenson]: we are going to be doing a lot of research in that we call it our three by three

500
00:26:23,775 –> 00:26:26,895
[Dave Levenson]: so annuity distribution is one of those boxes

501
00:26:28,015 –> 00:26:33,695
[Dave Levenson]: and you know we will be able to provide a lot of research to

502
00:26:35,295 –> 00:26:39,695
[Dave Levenson]: our members that manufacture products and our members that distribute products

503
00:26:40,735 –> 00:26:48,015
[Dave Levenson]: about annuity distribution so what do advisors want and what do customers want and

504
00:26:48,095 –> 00:26:53,455
[Dave Levenson]: how do advisors meet those needs and we’ve got a ton of research already that

505
00:26:53,535 –> 00:26:56,975
[Dave Levenson]: we’ve done around these things but we’re going to get even more focused around it

506
00:26:59,165 –> 00:27:00,165
[Paul Tyler]: got it

507
00:27:01,545 –> 00:27:05,225
[Paul Tyler]: again from the agent perspective i’ll stick to our area

508
00:27:05,395 –> 00:27:06,395
[Dave Levenson]: yeah

509
00:27:05,465 –> 00:27:09,545
[Paul Tyler]: annuities we talked about life insurance lots of change you know i think

510
00:27:09,460 –> 00:27:10,460
[Ramsey Smith]: i think i like

511
00:27:09,625 –> 00:27:13,145
[Paul Tyler]: about my career dev it work i started with a mutual it turned into a public

512
00:27:12,925 –> 00:27:13,925
[Paul Tyler]: company

513
00:27:14,075 –> 00:27:15,075
[Dave Levenson]: hello

514
00:27:14,985 –> 00:27:18,425
[Paul Tyler]: worked for a private equity owned insurance company when i think it was you know

515
00:27:18,425 –> 00:27:22,505
[Paul Tyler]: we were one of the first few now it seems to be you know private equity ownership

516
00:27:22,585 –> 00:27:23,625
[Paul Tyler]: is almost the the

517
00:27:24,180 –> 00:27:25,180
[Ramsey Smith]: becoming the norm

518
00:27:24,965 –> 00:27:25,965
[Paul Tyler]: it is the norm

519
00:27:26,275 –> 00:27:27,275
[Dave Levenson]: yeah

520
00:27:27,145 –> 00:27:30,745
[Paul Tyler]: but lots of change you know you got pe firms coming in but

521
00:27:30,355 –> 00:27:31,355
[Dave Levenson]: yeah

522
00:27:30,825 –> 00:27:31,865
[Paul Tyler]: then you see a lot of companies

523
00:27:32,985 –> 00:27:37,305
[Paul Tyler]: boxing up their annuity business and giving it to people to run as closed blocks

524
00:27:37,085 –> 00:27:38,085
[Paul Tyler]: how do i

525
00:27:37,475 –> 00:27:38,475
[Dave Levenson]: yeah

526
00:27:37,865 –> 00:27:41,785
[Paul Tyler]: make sense of this as an agent you know do i need to worry about it is this just

527
00:27:41,865 –> 00:27:47,065
[Paul Tyler]: sort of a normal changing of the guard in an industry and whose bank account is is

528
00:27:47,225 –> 00:27:48,425
[Paul Tyler]: backing the products

529
00:27:49,295 –> 00:27:53,535
[Dave Levenson]: he again you you’re asking all the right questions and i wish i had a crystal ball

530
00:27:53,615 –> 00:27:58,575
[Dave Levenson]: to tell you kind of what it all means but what it does mean is that again there’s

531
00:27:58,435 –> 00:27:59,435
[Dave Levenson]: a lot of change

532
00:28:00,335 –> 00:28:04,735
[Dave Levenson]: so the industry just in the last twenty four months has changed tremendously

533
00:28:01,995 –> 00:30:00,315
[kate_theroux]: Ssssssssssssss

534
00:28:05,855 –> 00:28:07,935
[Dave Levenson]: with the amount of private equity firms that

535
00:28:08,675 –> 00:28:09,675
[Dave Levenson]: are

536
00:28:10,815 –> 00:28:15,135
[Dave Levenson]: in place and you know people always say you know dave is that good or is it bad

537
00:28:15,215 –> 00:28:18,815
[Dave Levenson]: and i say look i don’t know if it is good or i don’t know if it is bad it just is

538
00:28:19,535 –> 00:28:21,695
[Dave Levenson]: right and that’s our reality so

539
00:28:22,735 –> 00:28:27,055
[Dave Levenson]: you know when i think about and again you know edward jones had eighteen thousand

540
00:28:27,375 –> 00:28:31,055
[Dave Levenson]: financial advisors when i think about the role of the financial advisor

541
00:28:32,335 –> 00:28:36,335
[Dave Levenson]: they’ve got to make sure that the products and solutions that they bring to

542
00:28:36,195 –> 00:28:37,195
[Dave Levenson]: customers

543
00:28:38,115 –> 00:28:39,115
[Dave Levenson]: meet their needs

544
00:28:40,575 –> 00:28:41,855
[Dave Levenson]: and are good for

545
00:28:42,975 –> 00:28:47,215
[Dave Levenson]: the time period that the customer wants them to be good for right so if i’m fifty

546
00:28:47,455 –> 00:28:51,535
[Dave Levenson]: five and i want to turn income on at sixty five i need a product that’s going to

547
00:28:51,615 –> 00:28:53,215
[Dave Levenson]: be around for twenty thirty forty years

548
00:28:55,075 –> 00:28:56,075
[Dave Levenson]: so

549
00:28:56,735 –> 00:29:02,175
[Dave Levenson]: i think with the help of insurance regulators there’s a lot of products that are

550
00:29:02,495 –> 00:29:05,935
[Dave Levenson]: in force that are still good products and whether they’re owned by

551
00:29:06,875 –> 00:29:07,875
[Dave Levenson]: you know

552
00:29:08,495 –> 00:29:12,255
[Dave Levenson]: you know blackstone or whether they’re owned by a traditional mutual company i’m

553
00:29:12,335 –> 00:29:13,695
[Dave Levenson]: not sure it matters that much

554
00:29:14,735 –> 00:29:15,935
[Dave Levenson]: um you know i think

555
00:29:17,135 –> 00:29:21,055
[Dave Levenson]: there’s a lot of solvency for the companies that are backing those products

556
00:29:22,175 –> 00:29:29,295
[Dave Levenson]: as it go as it has implications to new products right and what advisors or agents

557
00:29:29,235 –> 00:29:30,235
[Dave Levenson]: could get excited about

558
00:29:31,215 –> 00:29:32,575
[Dave Levenson]: i think it’s going to open up

559
00:29:34,015 –> 00:29:36,735
[Dave Levenson]: more creativity and innovation in

560
00:29:36,420 –> 00:29:37,420
[Ramsey Smith]: so

561
00:29:36,475 –> 00:29:37,475
[Dave Levenson]: our space

562
00:29:38,415 –> 00:29:41,695
[Dave Levenson]: anytime you have new entrants that’s what they do right to disrupt i’ve got to

563
00:29:41,775 –> 00:29:45,535
[Dave Levenson]: come up with different solutions different ways of doing business i’m a big

564
00:29:45,695 –> 00:29:47,775
[Dave Levenson]: believer that that is never a bad thing

565
00:29:49,135 –> 00:29:52,975
[Dave Levenson]: so it’s good good for customers and ultimately i think it’s good for our industry

566
00:29:52,995 –> 00:29:53,995
[Dave Levenson]: so

567
00:29:55,215 –> 00:29:59,455
[Dave Levenson]: those that get in front of the change and those that can leverage the change

568
00:29:59,775 –> 00:30:02,815
[Dave Levenson]: effectively you’re going to win i think over the next several years

569
00:30:01,995 –> 00:32:00,315
[kate_theroux]: Ssssssssssssss,

570
00:30:03,600 –> 00:30:07,680
[Ramsey Smith]: so now you brought up pardon me you brought up as one of your three key areas

571
00:30:08,720 –> 00:30:10,480
[Ramsey Smith]: workplace benefits and

572
00:30:10,115 –> 00:30:11,115
[Dave Levenson]: yeah

573
00:30:11,440 –> 00:30:15,120
[Ramsey Smith]: secure act is something we’ve talked about on this show a lot and something

574
00:30:14,675 –> 00:30:15,675
[Dave Levenson]: yes

575
00:30:15,360 –> 00:30:17,920
[Ramsey Smith]: i spend a lot of time thinking about in terms of my own

576
00:30:18,940 –> 00:30:19,940
[Ramsey Smith]: business objectives

577
00:30:19,405 –> 00:30:20,405
[Paul Tyler]: well

578
00:30:20,900 –> 00:30:21,900
[Ramsey Smith]: very interested to hear

579
00:30:24,000 –> 00:30:29,440
[Ramsey Smith]: what sort of thoughts have been developed within limma vc v vc v

580
00:30:30,800 –> 00:30:35,840
[Ramsey Smith]: implant annuities and other other initiatives that are essentially born of the

581
00:30:35,660 –> 00:30:36,660
[Ramsey Smith]: secure act

582
00:30:36,445 –> 00:30:37,445
[Paul Tyler]: yeah

583
00:30:37,120 –> 00:30:41,120
[Ramsey Smith]: would love to get your perspective is somebody one who sort of in the middle of

584
00:30:41,200 –> 00:30:44,720
[Ramsey Smith]: the in the middle of the industry united nations if you will

585
00:30:46,560 –> 00:30:49,040
[Ramsey Smith]: and how many years do you think it’s going to take before it really

586
00:30:50,080 –> 00:30:51,200
[Ramsey Smith]: finds its momentum

587
00:30:52,895 –> 00:30:56,415
[Dave Levenson]: yeah uh so ramsay you probably know more about this than i do

588
00:30:57,615 –> 00:31:03,455
[Dave Levenson]: but you know what i’d share with you is you know the secure act good thing right a

589
00:31:03,535 –> 00:31:05,615
[Dave Levenson]: good thing that it requires an annuity solution

590
00:31:07,215 –> 00:31:08,415
[Dave Levenson]: on a lot of these plans

591
00:31:09,775 –> 00:31:11,055
[Dave Levenson]: but you know early on again

592
00:31:12,175 –> 00:31:15,775
[Dave Levenson]: if i’m a provider of the industry if i’m a four hundred one thousand provider i

593
00:31:15,935 –> 00:31:19,695
[Dave Levenson]: kind of look at this and say you know meps peps good bad

594
00:31:19,460 –> 00:31:20,460
[Ramsey Smith]: yeah

595
00:31:20,175 –> 00:31:23,935
[Dave Levenson]: growing fast i mean so the fact that we can get in front of this

596
00:31:25,135 –> 00:31:29,215
[Dave Levenson]: because we’re so good with benchmarking i mean it’s kind of when i talk about

597
00:31:29,375 –> 00:31:33,855
[Dave Levenson]: research the heart of our research is our benchmarking so people will look to us

598
00:31:33,675 –> 00:31:34,675
[Dave Levenson]: and say

599
00:31:35,935 –> 00:31:40,815
[Dave Levenson]: alright i’ve been watching but like is this happening like what’s happened the

600
00:31:40,815 –> 00:31:45,375
[Dave Levenson]: first couple of months and we provide those insights to our members which is super

601
00:31:45,195 –> 00:31:46,195
[Dave Levenson]: helpful

602
00:31:46,895 –> 00:31:52,975
[Dave Levenson]: similar for implant annuities and you know you know as well as i do that the take

603
00:31:53,155 –> 00:31:54,155
[Dave Levenson]: on that has been slow

604
00:31:54,980 –> 00:31:55,980
[Ramsey Smith]: yeah

605
00:31:55,315 –> 00:31:56,315
[Dave Levenson]: so

606
00:31:57,455 –> 00:32:01,615
[Dave Levenson]: there are a number of plans that are offering these solutions

607
00:32:01,995 –> 00:34:00,315
[kate_theroux]: Ssssssssssssss,

608
00:32:03,055 –> 00:32:06,495
[Dave Levenson]: but at the participant level it’s still fairly complicated

609
00:32:08,335 –> 00:32:11,535
[Dave Levenson]: but i’m so when you ask the question how long will it take

610
00:32:13,695 –> 00:32:18,655
[Dave Levenson]: i think about this and i say are implant annuities the right thing or the wrong

611
00:32:18,975 –> 00:32:20,015
[Dave Levenson]: thing right

612
00:32:21,215 –> 00:32:24,095
[Dave Levenson]: and i say for a retirement plan

613
00:32:25,375 –> 00:32:26,895
[Dave Levenson]: they’re absolutely the right thing

614
00:32:27,795 –> 00:32:28,795
[Dave Levenson]: because

615
00:32:30,015 –> 00:32:35,375
[Dave Levenson]: we are getting tax preferred treatment on retirement plans because the government

616
00:32:35,775 –> 00:32:38,415
[Dave Levenson]: wants us to help people in retirement right

617
00:32:38,260 –> 00:32:39,260
[Ramsey Smith]: yep

618
00:32:39,295 –> 00:32:44,015
[Dave Levenson]: and the best way to help people in retirement is to ensure that people have income

619
00:32:44,815 –> 00:32:47,775
[Dave Levenson]: while they’re in retirement at the end of the day that’s what that’s what you know

620
00:32:48,015 –> 00:32:52,575
[Dave Levenson]: the government is is supporting us to do thats what we should do so i’m a big

621
00:32:52,655 –> 00:32:57,215
[Dave Levenson]: believer in implant annuities it’s just it’s a very sophisticated solution

622
00:32:57,935 –> 00:33:02,815
[Dave Levenson]: relative to what people are used to it may maybe it’s not super sophisticate it’s

623
00:33:02,815 –> 00:33:06,815
[Dave Levenson]: just different right but when i think about back to your question paul about

624
00:33:06,975 –> 00:33:13,215
[Dave Levenson]: digital and the role of i think that’s all gonna come together nicely and i do i

625
00:33:13,295 –> 00:33:17,295
[Dave Levenson]: am bullish that we’re going to see growth in that space but i don’t think it’s

626
00:33:17,375 –> 00:33:23,295
[Dave Levenson]: going to be at you know a speed at a level of speed that you know over the next

627
00:33:22,980 –> 00:33:23,980
[Ramsey Smith]: true

628
00:33:23,455 –> 00:33:26,255
[Dave Levenson]: two or three years is gonna you know break any speed records

629
00:33:26,800 –> 00:33:28,080
[Ramsey Smith]: got it so i have

630
00:33:28,155 –> 00:33:29,155
[Dave Levenson]: but it’s coming

631
00:33:28,240 –> 00:33:33,360
[Ramsey Smith]: i have one more one more question uh that really sort of harks back to your time

632
00:33:33,520 –> 00:33:35,600
[Ramsey Smith]: at edward jones so you were

633
00:33:35,395 –> 00:33:36,395
[Dave Levenson]: do

634
00:33:36,080 –> 00:33:40,560
[Ramsey Smith]: you were working for you know one of the premier sort of financial advisory firms

635
00:33:40,720 –> 00:33:45,120
[Ramsey Smith]: in the united states and you know you were you you’re coming in there as an

636
00:33:45,280 –> 00:33:51,040
[Ramsey Smith]: insurance expert one of the tensions in the industry is how we engage with

637
00:33:51,840 –> 00:33:54,880
[Ramsey Smith]: financial advisors effectively so

638
00:33:54,435 –> 00:33:55,435
[Dave Levenson]: yeah

639
00:33:55,840 –> 00:33:59,440
[Ramsey Smith]: meeting them where they are in terms of the kind of products they’ll like they

640
00:33:59,600 –> 00:34:02,080
[Ramsey Smith]: like compensation structure et cetera

641
00:34:01,995 –> 00:36:00,315
[kate_theroux]: Ssssssssssssss,

642
00:34:03,520 –> 00:34:08,000
[Ramsey Smith]: any insights it means that you can share from that experience would be would be

643
00:34:05,085 –> 00:34:06,085
[Paul Tyler]: sure

644
00:34:08,100 –> 00:34:09,100
[Ramsey Smith]: would be fascinating

645
00:34:10,655 –> 00:34:15,055
[Dave Levenson]: yeah look edward jones is an exceptional firm as are a lot of the other

646
00:34:16,335 –> 00:34:19,775
[Dave Levenson]: firms out there that a lot of the you know your listeners work for

647
00:34:21,375 –> 00:34:25,615
[Dave Levenson]: but you know one of the things that i respected greatly about the organization is

648
00:34:25,695 –> 00:34:27,775
[Dave Levenson]: that its focus on the consumer

649
00:34:29,695 –> 00:34:35,375
[Dave Levenson]: and ensuring that whatever we did was right by the customer and we had checks and

650
00:34:35,455 –> 00:34:40,335
[Dave Levenson]: balances all all through the organization to ensure that that was always true

651
00:34:41,875 –> 00:34:42,875
[Dave Levenson]: so

652
00:34:43,595 –> 00:34:44,595
[Dave Levenson]: vmc what

653
00:34:44,125 –> 00:34:45,125
[Paul Tyler]: yeah

654
00:34:44,575 –> 00:34:50,095
[Dave Levenson]: i’ll do is i’ll draw i’ll draw a little analogy here right because this is the way

655
00:34:50,255 –> 00:34:53,935
[Dave Levenson]: i always used to think about things so think about how much time and effort

656
00:34:55,935 –> 00:34:59,935
[Dave Levenson]: the industry is spending on fiduciary and

657
00:35:00,975 –> 00:35:06,415
[Dave Levenson]: the dol rule and the sec rule and the syncing up of the rules and where’s it going

658
00:35:06,895 –> 00:35:08,735
[Dave Levenson]: and you know and then think

659
00:35:08,445 –> 00:35:09,445
[Paul Tyler]: yeah

660
00:35:08,895 –> 00:35:13,855
[Dave Levenson]: about the core of what it’s designed to do right at the end of the day it’s really

661
00:35:14,175 –> 00:35:18,655
[Dave Levenson]: designed to protect consumers right to ensure

662
00:35:20,015 –> 00:35:25,215
[Dave Levenson]: that whatever somebody sells them is right for them right

663
00:35:26,575 –> 00:35:30,575
[Dave Levenson]: and then think about um if you step back and think about

664
00:35:31,315 –> 00:35:32,315
[Dave Levenson]: how many

665
00:35:32,915 –> 00:35:33,915
[Dave Levenson]: um

666
00:35:34,575 –> 00:35:36,655
[Dave Levenson]: consumers sit down with an advisor

667
00:35:37,695 –> 00:35:42,175
[Dave Levenson]: and truly get a broad based plan that addresses all of their needs

668
00:35:42,915 –> 00:35:43,915
[Dave Levenson]: right

669
00:35:44,435 –> 00:35:45,435
[Dave Levenson]: and insurance

670
00:35:47,275 –> 00:35:48,275
[Dave Levenson]: retirement income

671
00:35:49,635 –> 00:35:50,635
[Dave Levenson]: investments

672
00:35:51,615 –> 00:35:55,615
[Dave Levenson]: uh college planning that all has to factor in together

673
00:35:57,455 –> 00:36:03,935
[Dave Levenson]: so the way i looked at it is that is the gold standard that’s what every advisor

674
00:36:01,995 –> 00:38:00,315
[kate_theroux]: Ssssssssssssss

675
00:36:04,095 –> 00:36:08,255
[Dave Levenson]: should be doing and look i know life insurance can be very clunky right sometimes

676
00:36:08,495 –> 00:36:12,415
[Dave Levenson]: you have to fill out an application and maybe it’s more paper intensive than it

677
00:36:12,155 –> 00:36:13,155
[Dave Levenson]: should be

678
00:36:13,855 –> 00:36:19,055
[Dave Levenson]: but is it necessary for a forty year old with a young family to have life

679
00:36:18,835 –> 00:36:19,835
[Dave Levenson]: insurance

680
00:36:20,655 –> 00:36:25,375
[Dave Levenson]: and if i’m an advisor is that my responsibility right back to again

681
00:36:26,895 –> 00:36:29,375
[Dave Levenson]: the uh the concept of fiduciary

682
00:36:30,575 –> 00:36:35,455
[Dave Levenson]: so in my heart right and i think in your hearts and i think in most advisors

683
00:36:35,615 –> 00:36:40,095
[Dave Levenson]: hearts that is absolutely what they should be doing and they can point to

684
00:36:40,255 –> 00:36:43,375
[Dave Levenson]: insurance and say it’s clunky or they can point to annuities and say the

685
00:36:43,615 –> 00:36:47,295
[Dave Levenson]: technology is not where it needs to be and things aren’t integrated but

686
00:36:48,655 –> 00:36:52,575
[Dave Levenson]: we as financial professionals need to go that extra mile

687
00:36:53,695 –> 00:36:57,855
[Dave Levenson]: and ensure that it’s all coming together the right way even if it’s extra work

688
00:36:58,895 –> 00:37:03,535
[Dave Levenson]: because our responsibility is to make sure that consumers are invested and have

689
00:37:03,755 –> 00:37:04,755
[Dave Levenson]: protection where they should

690
00:37:06,425 –> 00:37:08,105
[Paul Tyler]: wow that that that’s great

691
00:37:08,540 –> 00:37:09,540
[Ramsey Smith]: absolutely

692
00:37:09,705 –> 00:37:15,225
[Paul Tyler]: it is now we’re almost at the top top of our time so dave i i’ve got the big y

693
00:37:15,545 –> 00:37:18,665
[Paul Tyler]: question so you’ve got a huge board

694
00:37:20,025 –> 00:37:25,545
[Paul Tyler]: of i’m sure probably if you have twenty members on your board i you got two strong

695
00:37:25,855 –> 00:37:28,255
[Dave Levenson]: twenty five yeah yeah yeah

696
00:37:26,105 –> 00:37:27,225
[Paul Tyler]: strong opinion right

697
00:37:30,165 –> 00:37:31,165
[Paul Tyler]: you know you’ve

698
00:37:33,385 –> 00:37:38,745
[Paul Tyler]: you’ve got a very complicated organization a lot of different set of very

699
00:37:38,985 –> 00:37:42,585
[Paul Tyler]: important services that you deliver to the industry why do you do this

700
00:37:43,165 –> 00:37:44,165
[Paul Tyler]: why

701
00:37:43,835 –> 00:37:44,835
[Dave Levenson]: why do i do it

702
00:37:44,365 –> 00:37:45,365
[Paul Tyler]: yeah why do you

703
00:37:48,580 –> 00:37:49,580
[Ramsey Smith]: so

704
00:37:49,295 –> 00:37:55,455
[Dave Levenson]: so paul i i think i think that this is a little bit of a higher calling for me

705
00:37:55,155 –> 00:37:56,155
[Dave Levenson]: right

706
00:37:56,735 –> 00:38:02,175
[Dave Levenson]: i i love what our industry does i think it serves an incredible purpose so whether

707
00:38:01,995 –> 00:40:00,315
[kate_theroux]: Ssssssssssssss,

708
00:38:02,335 –> 00:38:06,895
[Dave Levenson]: it’s life insurance or annuities or even you know investments long term care

709
00:38:07,935 –> 00:38:14,655
[Dave Levenson]: you know you know group life group disability they are wonderful solutions for so

710
00:38:14,815 –> 00:38:16,975
[Dave Levenson]: many people in our country and so many people in the world

711
00:38:18,495 –> 00:38:22,335
[Dave Levenson]: and if i can just take this last leg of my career

712
00:38:23,315 –> 00:38:24,315
[Dave Levenson]: and help

713
00:38:26,495 –> 00:38:30,895
[Dave Levenson]: more companies deliver those solutions effectively to consumers

714
00:38:32,015 –> 00:38:33,535
[Dave Levenson]: then i think there’s more value

715
00:38:35,135 –> 00:38:37,775
[Dave Levenson]: i do in this role than working

716
00:38:37,565 –> 00:38:38,565
[Paul Tyler]: sure

717
00:38:38,335 –> 00:38:43,615
[Dave Levenson]: any one company trying to influence what that one company does so you know it’s a

718
00:38:43,695 –> 00:38:48,575
[Dave Levenson]: privilege to work with a trade association much more so than i could ever have

719
00:38:48,735 –> 00:38:54,095
[Dave Levenson]: imagined and you know yeah i’ve got a large board but it’s not a corporate board

720
00:38:54,175 –> 00:38:58,895
[Dave Levenson]: right a corporate board with twenty five people would be a circus i’ve got a i’ve

721
00:38:58,895 –> 00:39:04,575
[Dave Levenson]: got a member board of twenty five people and you know they provide me guidance and

722
00:39:04,735 –> 00:39:06,255
[Dave Levenson]: advice and stewardship

723
00:39:07,615 –> 00:39:09,775
[Dave Levenson]: but they’re also the consumers of what we do

724
00:39:11,135 –> 00:39:15,215
[Dave Levenson]: and that’s one of the key reasons that we have twenty five people but i’ve got to

725
00:39:15,295 –> 00:39:17,135
[Dave Levenson]: tell you i work with some of the best people

726
00:39:18,575 –> 00:39:22,495
[Dave Levenson]: every day whether it’s these leaders of uh of our member companies

727
00:39:23,615 –> 00:39:26,895
[Dave Levenson]: or whether it’s the employees that i’m privileged to lead every day and

728
00:39:27,935 –> 00:39:30,095
[Dave Levenson]: it’s been a thrill that that’ why i do it paul

729
00:39:30,985 –> 00:39:35,465
[Paul Tyler]: thank you yeah and and thank you dave i think what you’re doing is is tremendous i

730
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[Paul Tyler]: mean limmer really has had a huge impact in the past i think what you’re where

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[Paul Tyler]: you’re headed what you’ve done over the last couple of years has been phenomenal

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[Paul Tyler]: and you know i can’t wait to see uh what the next chapter is so

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[Dave Levenson]: yeah it’ll it’ll be fun you know before you guys cut me off i do want to promised

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[Dave Levenson]: ramsey this just gives you a sense for some of our annuity research because

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00:39:59,695 –> 00:40:04,335
[Dave Levenson]: there’s some fun stuff coming so annuity income by race and ethnicity this report

736
00:40:01,995 –> 00:42:00,315
[kate_theroux]: Ssssssssssssss,

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00:40:04,575 –> 00:40:06,095
[Dave Levenson]: is coming out real soon from us

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[Dave Levenson]: the upside and the downside of annuity product selection

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[Ramsey Smith]: i’m so now but

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[Ramsey Smith]: yes

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00:40:11,715 –> 00:40:12,715
[Dave Levenson]: that is already out

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00:40:13,775 –> 00:40:15,935
[Dave Levenson]: annuities what do advisors think

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00:40:17,135 –> 00:40:18,495
[Dave Levenson]: that research is already out

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[Dave Levenson]: a reference guide which is like a two hundred page

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00:40:23,775 –> 00:40:27,855
[Dave Levenson]: book about the retail retirement reference guide the fifth edition

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00:40:28,435 –> 00:40:29,435
[Dave Levenson]: um

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[Dave Levenson]: uh we’ve got uh a forecast a future view of annuity sales we didn’t even talk

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[Dave Levenson]: about riles and fis and so people should certainly tune in for that and gosh we’ve

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[Dave Levenson]: got a lot of convening opportunities with our conferences and our committees and

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00:40:44,335 –> 00:40:47,455
[Dave Levenson]: if any of the listeners would like to have more information about this just

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[Dave Levenson]: contact me or anybody at limma

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00:40:50,205 –> 00:40:51,205
[Paul Tyler]: that’s great right

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00:40:50,560 –> 00:40:53,920
[Ramsey Smith]: so yes how do people get that debt obviously members get that data

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[Ramsey Smith]: if you’re an agent or an agency do you subscribe

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00:40:59,440 –> 00:41:01,680
[Ramsey Smith]: how do they get exposure to all that great information

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00:41:02,575 –> 00:41:06,175
[Dave Levenson]: yeah you know again we’re a member based organization so most of the stuff we do

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00:41:06,075 –> 00:41:07,075
[Dave Levenson]: is for our

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00:41:06,740 –> 00:41:07,740
[Ramsey Smith]: yeah

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00:41:06,975 –> 00:41:09,695
[Dave Levenson]: membership but our membership is not

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00:41:11,295 –> 00:41:16,175
[Dave Levenson]: unique to the carriers anymore so distribution firms almost all of the large

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00:41:16,335 –> 00:41:22,735
[Dave Levenson]: broker dealers our members a lot of the large insurance bg’s our members we’re

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00:41:22,815 –> 00:41:25,855
[Dave Levenson]: always looking for more members and then you know we

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00:41:25,460 –> 00:41:26,460
[Ramsey Smith]: sure

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00:41:26,015 –> 00:41:30,335
[Dave Levenson]: share some of these things obviously with other trade associations whether you

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00:41:30,335 –> 00:41:33,135
[Dave Levenson]: know it’s finsec as an example on the

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[Dave Levenson]: on the life insurance side or riri as an example on the annuity side so we’re all

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00:41:40,095 –> 00:41:44,175
[Dave Levenson]: big on sharing if it helps make the industry a lot stronger

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00:41:43,940 –> 00:41:44,940
[Ramsey Smith]: fantastic

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00:41:45,065 –> 00:41:50,825
[Paul Tyler]: excellent hey dave thanks so much for spending some time with us and ramsey any

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00:41:51,065 –> 00:41:52,665
[Paul Tyler]: anything else on your end

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00:41:53,280 –> 00:41:55,280
[Ramsey Smith]: i’m excited to see what the preacher holds

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00:41:56,320 –> 00:42:02,480
[Ramsey Smith]: i’m really excited to see what what dave has in mind to g lim lomas influence

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00:42:01,675 –> 00:42:31,995
[kate_theroux]: Iss.

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00:42:03,040 –> 00:42:06,480
[Ramsey Smith]: outside the u s internationally so i’m watching with great interest

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00:42:07,085 –> 00:42:08,085
[Paul Tyler]: excellent

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00:42:07,295 –> 00:42:10,815
[Dave Levenson]: i’d love to come back and tell you about our international plans it’s it’s pretty

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00:42:10,635 –> 00:42:11,635
[Dave Levenson]: exciting

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00:42:11,145 –> 00:42:12,505
[Paul Tyler]: oh great okay you’re on

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00:42:12,400 –> 00:42:13,600
[Ramsey Smith]: be careful what you wish for

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00:42:14,265 –> 00:42:15,785
[Paul Tyler]: we’ll we’ll write this down and

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00:42:17,465 –> 00:42:21,305
[Paul Tyler]: look yeah dave all right listen thanks so much and hey thanks all to all our

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00:42:21,465 –> 00:42:27,385
[Paul Tyler]: listeners join us again next week for another episode of that annuity show thanks

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00:42:27,020 –> 00:42:28,020
[Ramsey Smith]: thank you

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00:42:27,295 –> 00:42:29,455
[Dave Levenson]: great seeing you guys and thanks for doing this

785
00:42:27,295 –> 00:42:29,455
[Dave Levenson]: great seeing you guys and thanks for doing this

401k Education Without Walls And Beyond Boundaries

April 20, 2022 2022, Media, Paul Tyler No comments

By Christopher Carosa

Finance is hard. It’s harder if you’ve never learned about it. Chances are if you’re an adult you’ve had precious little in terms of financial literacy training. In fact, the most exposure you’ve had might probably be at your regular 401k employee meeting. That likely isn’t the ideal environment to learn.

“In adult learning, we say that adults learn what they want to learn when they want to learn it,” says Jay Zigmont, Founder of Live, Learn, Plan in Water Valley, Mississippi. “The best chance we have to help adults to change is to have resources ready for them when they need them. Adults want to learn when they are going through or preparing for some transition or life event. For example, when they are starting a job there may be an opportunity for them to learn about benefits and the impact on their financial plan.”

Certainly, having new hires sit down and learn about company benefits is standard fare for the company onboarding process. But doesn’t this also represent an opportunity to think outside the box? Because a new job often suggests a major change in one’s life, the onboarding experience can be redesigned to address employee needs beyond the walls of the conference room.

Paul Tyler, CMO at Nassau Financial Group in Hartford, Connecticut, says, “We’re often guilty of creating too much art for ourselves. Unfortunately, many tools and books are written by and for the already-financially literate population. We, as an industry, need to listen harder to the real financial problems faced by those with little knowledge and large needs. And then we must rethink the tools we build that will help deliver relevant solutions for them.”

“Employers and retirement plan sponsors should provide more holistic financial education resources as opposed to content that is singular in focus on retirement planning only,” says Courtney Hale, Chief Hope Dealer at Super Money Kids Co. in Nashville, Tennessee. “It’s really difficult to adequately contribute to retirement when you are buried by student loans and paying for daycare in a city with a high cost of living. Our monthly budget impacts how much we are able to contribute to retirement. Our debt repayment plan impacts our budget which impacts how much we are able to contribute to retirement and so forth. There needs to be more emphasis on how these things can work together for a more prosperous future.”

Still, the very mechanism of delivery may be faulty.

“Employers have the administrator of their company 401k plan provide seminars,” says Havis T. Bardouille of Bardouille Financial and host of the Tuesdays with Terrence Financial Insights Podcast in Lancaster, South Carolina. “But just because they offer them, does not mean their employees understand them fully. They can follow up with ongoing series, workshops, or resource documents. Mailers and social media campaigns are great options too for adults who are more private and may not want to attend a public gathering to alert others that they lack financial knowledge. Adults learning financial literacy need to be taught more strategically and customized for their later stages in life to take away the difficulty of the task. They need long-term tailor-made plans, but also, quick tips that are valuable and strategic, that can reveal results quickly.”

One of the most cost-effective methods for addressing the challenges of employee financial literacy training is video.

“Video gives people the most amount of information in the shortest amount of time,” says Robert Weiss, President of MultiVision Digital in New York City, who has produced over 1,000 videos over the past 11 years, many of them on the subject of money. “When busy people go to learn, they seek video first. Video tells as opposed to having them read and figure things out. Video is easy to rewatch and share versus re-read.”

In addition to offering the advantage of privacy, videos have no bounds of use. It’s been around for a while, but NetFlix et al have made ‘binge-watching’ a social norm. Is this habit about to trickle down into 401k education and financial literacy in general?

“Employees can access the videos on their own time when they’re most able to absorb the information,” says Shawn Plummer, CEO of The Annuity Expert in Atlanta, Georgia. “What’s more, many of the concepts can be hard to grasp at first, but with rewatching, closed captions, and transcripts, the information absorption becomes easier.”

Imagine what you do when you want to learn how to fix something in your house that you’ve never fixed before. You look it up on the internet and read how to do it. After going through a few articles and still not confident you know enough, you through in the towel and play a video that shows you how to do it.

This works for what ever appliance, yard tool, or stingy stain you need answers on. And it’s right there at your figure tips whenever you need it. Wouldn’t it be great to find financial solutions the same way?

“For especially dense topics, videos are a way to make personal finance content more engaging and easier to understand,” says Gabi Slemer, CEO & founder of Finasana in Fort Lauderdale, Florida. “A video library can also be tailored to individuals’ interests and needs so that they can watch only the topics that interest them and therefore are more likely to be fully engaged than during a traditional meeting.”

To be truly effective, 401k plan sponsors can’t rely on just one generic video. You need a fairly comprehensive selection to address the variety of needs out there. You never know when someone has a desire to learn something. An extensive array of short videos covering narrow topics provides an efficient way for employees to gain more satisfaction with the benefits package offered by the company.

“Online video libraries give adults time to process the information,” says Jerry Han, CMO of PrizeRebel in Los Angeles, California. “Assignments and application sessions are highly personal, and many adults don’t have the time to do them immediately. Online video libraries give them time to process the information. The e-learning experience becomes much more effective when adults can set aside a 20-minute session for learning. In-person education meetings are usually given in lecture form, not giving students the time to truly dig into the information. In-person 401k educational meetings don’t give adults preferential times for learning. That usually means adults suffer from fatigue and don’t understand difficult material when given in large doses.”

And going back to that household repair process, where you really take your time before acting, financial videos can give employees the confidence – and the time – to make those important financial decisions.

“401k videos can provide real-life applications and connect to e-learning activities,” says Stewart Dunlop, Founder of LinkBuilder in Edinburgh, Scotland. “Traditional in-person training often doesn’t go into depth. Videos allow for tangents, for moving into directions most in-person training can’t due to time constraints.”

Now that you understand the value of video, you’re probably wondering about some of the more practical aspects of the medium. For example, how long should videos be? Here, you’ll find answers from across the spectrum.

Slemer says, “3 to 5 minutes, consistent with adult learning principles. Shorter videos are better at keeping attention spans and allowing individuals to process one topic at a time and fully grasp it before moving on to the next. Ideally, a library with sequential videos that cover micro topics one at a time.”

Han, on the other hand, says, “20-minute videos are the best length. Humans generally struggle to focus after 25 minutes, so retaining optimal focus during education settings gives them the time to fully devote themselves to learning. Breaking those videos into chapters and sessions is also helpful. If adults only have a short time to learn, they can always refer back to chapters within videos to pick up where they left off.”

In the spirit of not-too-hot/not-too-cold, Plummer says, “Try to stick to the 10-15 minute mark. You’ll notice that most online courses follow this rule of thumb as well. It’s a standard across information genres.”

But Weiss provides the answer you’d expect from a film producer. He says it “depends on the content at hand. There is no rule aside from ‘never make a video longer than it has to be.’”

The next most important question is how do you arrange the material. Even though videos can be short and focus only on one small topic, that doesn’t mean they can’t be sorted into broader categories.

“When it comes to financial literacy topics,” says Slemer, “there are three basic rules that make up overall financial planning: (1) save money, (2) avoid (or get out of) bad debt, and (3) invest for the future. Of course, each of these topics can be further broken down into greater detail to be fully explained, which is where a video series comes in!”

You’ll probably want to find the right talent for the videos you offer. That doesn’t mean you’ll be making the videos. Someone else will. You just want to know about the folks creating that content. After all, just because you can do an internet search for financial literacy videos doesn’t mean the advice and lessons offered in those videos are sound.

“The challenge right now is that the primary resource people use when they want to learn may be the Internet,” says Zigmont. “The Internet allows you to have information at your fingertips, but without context. The result for many people is that they end up trying to solve each problem with whatever is popular that day, resulting in a financial plan that is disjointed and not heading towards their goals.”

Although it’s good to have some entertainment value in these videos, don’t lose sight of their real purpose.

“Videos need to be relatable enough that users will benefit from them,” says Slemer. “However, relatability is not a substitution for education and knowledge. You should always ask questions about the creators’ background: why are they giving me financial advice, are they qualified to do so (and if so, by whom?), and why should I trust them? If you can’t answer these questions, I would strongly suggest fact-checking the information you get with more reputable sources!”

One obvious/not-so-obvious choice is people who teach for a living.

“Financial educators should make the videos,” says Dunlop. “Professors in finance understand the basics of retirement contribution law. Because most financial educators have experience in online courses (due to COVID), they can provide a solid outline. Professionals within the 401k sphere. They can answer questions regarding fees, the best financial options for 401k support, and how to create your own should you work for yourself.”

How can you be sure your video library is accessible to your employees? Are these videos better delivered on an open platform like YouTube or behind an “employees” company website?

“If you’re making your own videos for a limited audience (employees, namely), then keep them on your own platform,” says Plummer. “YouTube gives you a lot of data on your viewers, which isn’t useful information if you’re not trying to build an audience. You can keep the videos on YouTube unlisted if you need to use their platform.”

It’s generally easier to control how videos are stored on the “library shelf” if you use the company website. Already YouTube does allow for something similar to this, navigating their platform requires a certain level of internet familiarity and intuition. This isn’t something you can count on among every single employee.

“The benefit of an open platform like YouTube is that the content is widely available and accessible to everyone,” says Slemer. “The detriment, however, is that by its very nature the content ends up being viewed as a one-off and not part of a sequence, which can be harmful to overall comprehension and understanding because it then becomes difficult to conceptualize as part of a greater topic.”

Finally, it’s important to remember no single method of delivery is foolproof. They all have shortcomings, including video. The bigger question is how to overcome these shortcomings (if you can).

“When you create mass content via any delivery method (such as videos), you’re generally creating content for the lowest common denominator within your target audience,” says Slemer. “As a huge proponent of eliminating jargon and answering the ‘stupid’ questions that are on everyone’s mind, I find videos to be a huge advantage to help level the playing field. Having said that, this means that the content can be quite generalized, and people may feel that it isn’t specific enough to their situation, which can be mitigated by ancillary offerings, such as 1×1 guidance or Q&A.”

That lack of live talent is the major drawback of videos.

“Videos don’t offer immediate support,” says Han. “If you have questions, teachers can’t immediately answer them. Only 48% of people believe that e-learning is as effective as online learning, mostly because they can’t ask questions. Provide FAQ sections for every section. Assign someone with no experience to go through the video and answer their questions in a FAQ section. The more people you ask, the more in-depth your course becomes.”

Oddly enough, while the lack of a live teacher presents one problem, the lack of a live audience provides another.

“On the other end of the spectrum,” says Slemer, “it’s also incredibly easy to fall prey to the ‘curse of knowledge,’ especially when you don’t have a captive audience giving you live feedback and asking questions. The curse of knowledge is a cognitive bias that occurs when you unknowingly assume that others have the background to understand the information you are conveying (enter: ‘jargon’). You overcome this by creating a community and tailoring your videos to their needs.”

In a few years, employee 401k education meetings might be a thing of the past. In the future, it’ll be all about those weekend 401k education binge parties.

Break out the popcorn!

See the article on FiduciaryNews.com: https://fiduciarynews.com/2022/04/401k-education-without-walls-and-beyond-boundaries/

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Episode 143: When Should Your Client Pay Off The Mortgage With Jason Fichtner

April 14, 2022 2022, Jason Fichtner, Podcast, Retirement No comments

Should your client pay off their mortgage as they head into retirement? Today, Jason Fichtner joins us again to talk about the risks inherent in answering this question with confidence. Jason is Vice President and Chief Economist at the Bipartisan Policy Center and Senior Fellow for the Alliance for Lifetime Income.

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:

https://bipartisanpolicy.org/person/jason-j-fichtner/

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

https://www.protectedincome.org/about-us/

https://squaredawayblog.bc.edu/squared-away/readers-see-pros-cons-to-paid-off-mortgage/

https://squaredawayblog.bc.edu/squared-away/boomers-repairing-their-mortgage-finances/

https://squaredawayblog.bc.edu/squared-away/pre-retirement-debt-is-rising-over-time/

https://cfsrdrc.wisc.edu/project/wi19-10

https://cfsrdrc.wisc.edu/project/wi20-10

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Tanscript

1
00:00:05,819 –> 00:00:10,699
[Paul Tyler]: hi this is paul tyler and welcome to another episode of that annuity show and

2
00:00:12,059 –> 00:00:14,539
[Paul Tyler]: this is a special one but sometimes you know we have

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[Paul Tyler]: interviews with guest ramsey that beg for a part two and this certainly was the

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[Paul Tyler]: case for an interview we did about a month and a half ago do you wanna set it up

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[Ramsey Smith]: sure so we had jason fitch on about a month and a half ago and we talked about a

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[Ramsey Smith]: number of amazing subjects including social security and we just got

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[Paul Tyler]: let talking about

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[Ramsey Smith]: started talking about mortgages and decisions sets around mortgages

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[Ramsey Smith]: and today we’re going to continue that conversation when we left off so just to

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[Ramsey Smith]: reintroduce jason he is the

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[Paul Tyler]: like

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[Ramsey Smith]: vice president chief economist at the bipartisan policy center and he’s a senior

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[Ramsey Smith]: fellow for the alliance for lifetime income so he and the

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[Paul Tyler]: yeah

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[Ramsey Smith]: alliance have been great friends of great friends of the show and we’re just happy

16
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[Ramsey Smith]: to have them back so jason welcome back

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[Paul Tyler]: back and

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[Ramsey Smith]: and like just first of all like for for people that are new in the

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[Paul Tyler]: the audience

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[Ramsey Smith]: audience or for people that are that are coming back just remind us again that you

21
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[Ramsey Smith]: know the things that the work that you’re doing for

22
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[Ramsey Smith]: for the alliance and for the bipartisan policy center and let’s get right into it

23
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[Ramsey Smith]: on mortgages

24
00:01:24,160 –> 00:01:27,120
[Jason Fitcher]: awesome well thank you both for having me back it’s good great to see you and

25
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[Jason Fitcher]: again and looking forward to the conversation

26
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[Jason Fitcher]: my responsibilities and roles you know my fun

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[Paul Tyler]: what

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[Jason Fitcher]: job if you will is to help people have a financially secure retirement that’s

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[Paul Tyler]: oh

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[Jason Fitcher]: kind of my mission in life and i get to do that both the bipartisan policy center

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[Jason Fitcher]: and at the alliance for lifetime income and it’s talking about protected income

32
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[Jason Fitcher]: it’s an understanding of how to help people be more secure in retirement when

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[Jason Fitcher]: thinking about protected income and that just does not just mean annuities which

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[Jason Fitcher]: you talked about last time it’s also social security which is a form protected

35
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[Jason Fitcher]: income and it’s helping people understand what the role of social security and

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[Jason Fitcher]: other protected income means for having a financially secure retirement one in

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[Jason Fitcher]: which they can spend and

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[Ramsey Smith]: yes

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[Jason Fitcher]: enjoy retirement and one in which they can mitigate risks and too often we’ve been

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[Jason Fitcher]: brought up on this culture of you need to save save sake which i’m very in favor

41
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[Jason Fitcher]: of you need to maximize your return which i’m also in favor of but we don’t often

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[Jason Fitcher]: talk about what the risks are and we help people save for retirement through our

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[Jason Fitcher]: four hundred one thousand plans our four hundred three bs and iras we have

44
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[Jason Fitcher]: employer sponsored plans we have a lot of tax advantages people get to retirement

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[Jason Fitcher]: we say have a nice day and they’re looking around for help and what do they do now

46
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[Jason Fitcher]: with these defined contribution assets they built up they were afraid of spending

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[Jason Fitcher]: them down and running out of money retirement how do we

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[Ramsey Smith]: so

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[Jason Fitcher]: help them psychologically and financially make sure they can draw down that income

50
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[Jason Fitcher]: appropriately whether it’s through protected income strategies like annuities

51
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[Jason Fitcher]: whether it’s drawdown strategies whether it’s thinking about debt and what does it

52
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[Jason Fitcher]: do with debt levels because that’s very important both from a financial standpoint

53
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[Jason Fitcher]: and a psychological level how do we help them have the best retirement and we can

54
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[Jason Fitcher]: do that with the funding our future campaign we have the bipartisan policy center

55
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[Jason Fitcher]: and the alliance to lifetime income and the research were doing at the retirement

56
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[Jason Fitcher]: income institute and we had a great discussion last time so for the new audience

57
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[Jason Fitcher]: members who didn’t listen please pull up the last episode about a month and a half

58
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[Jason Fitcher]: ago and we left it off we ran out of time but we were talking about whether or not

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[Jason Fitcher]: people should pay off their mortgage and retirement and i had mentioned some

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[Jason Fitcher]: previous research i had done that showed that with each successive generation less

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[Jason Fitcher]: people are paying off their mortgage before they enter retirement and what does

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[Jason Fitcher]: that mean do you have some financial professionals telling you of course interest

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[Jason Fitcher]: rates are low you

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[Ramsey Smith]: yep

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[Jason Fitcher]: shouldn’t pay it off invest that money someplace else others are saying you want

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[Jason Fitcher]: to risk a less risky retirement pay off your house and use that investment in that

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[Jason Fitcher]: cash or something else what do you do and that’s where we left and we’re hoping to

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[Jason Fitcher]: tee it off again today

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[Paul Tyler]: yeah well and i guess for most people right if you said what are the biggest

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[Paul Tyler]: assets in retirement it would be number one probably social security

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[Paul Tyler]: probably number two would be any equity you have in your house and maybe you know

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[Paul Tyler]: if you’re lucky you’ve got a four hundred one thousand jason is that is that kind

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[Paul Tyler]: of the right way to think about it

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[Jason Fitcher]: yeah

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[Ramsey Smith]: yeah think about

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[Jason Fitcher]: to think about when you think about an asset and retirement so the the beauty of

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[Jason Fitcher]: social security is it pays your scheme of income but it’s not giving you a lump su

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[Jason Fitcher]: so you can’t go to social security right now and say hello i’m sixty seven i would

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[Jason Fitcher]: like my lifetime have income as a lu sum and then you think of an asset you think

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[Jason Fitcher]: of it as an income stream but you are right to talk about it as an asset the

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[Paul Tyler]: no

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[Jason Fitcher]: house and your four one k you see as a lump sum but you can convert that into an

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[Jason Fitcher]: income stream and that’s where you we start thinking about how do we use this kind

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[Jason Fitcher]: of assets to create protected income or income streams that would help people have

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[Jason Fitcher]: their most financially secure retirement but those are the three biggest and

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[Jason Fitcher]: actually for most people when you think about the lump sum amount like what you

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[Jason Fitcher]: actually

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[Paul Tyler]: yeah

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[Jason Fitcher]: can convert to cash today it usually is the house that’s bigger than the four one

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[Jason Fitcher]: k plan for most people that is their primary asset going into retirement so how

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[Jason Fitcher]: they utilize that asset when they do with that is very very important for

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[Jason Fitcher]: financial security and retirement

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[Paul Tyler]: yeah now i f i probably fall on the extreme when it comes to homes and it’s

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[Paul Tyler]: interesting what shapes your perspective of ris jason your smack on i i don’t

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[Paul Tyler]: think we talked about this like my mother’s a small business person and i would

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[Paul Tyler]: say she never should have been

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[Paul Tyler]: it was

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[Paul Tyler]: and we we frankly grown up had it was it was rough you know we had a couple times

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[Paul Tyler]: when our house was close to being repossessed because she got too far over skis

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[Paul Tyler]: with work

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[Paul Tyler]: and mortgages so there’s nothing coming home to see like auction notices on your

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[Paul Tyler]: door to say okay this will never happen and so you know i i i’m somebody who opted

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[Paul Tyler]: for the smaller house was paid off

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[Ramsey Smith]: no

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[Paul Tyler]: i’ve always adjacent had friends and rams you’re probably in the other you know

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[Paul Tyler]: probably from more from a a more risk uh have a better view of the risk but jason

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[Paul Tyler]: i had friends saying you’ve got to be kidding me you know in the real estate

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[Paul Tyler]: market unlv property is an asset that’s just going to waste

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[Paul Tyler]: how do you how do you think about risk

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[Paul Tyler]: like especially you’re they’re in going getting closer retirement

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[Jason Fitcher]: so this is i always found the buying a house the process so much backwards than

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[Jason Fitcher]: say buying a car so if if you were to go buy a car and if buying a car today’s

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[Jason Fitcher]: environment is a lot harder because of supply chain issues so the prices are

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[Jason Fitcher]: higher but usually you went to buy a car the salesman ask you paul ramsey how much

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[Jason Fitcher]: do you want to pay a month for your car what would the best answer be

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[Ramsey Smith]: i don’t know six hundred dollars a month

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[Jason Fitcher]: well i’d like to say zero right i’d like to

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[Jason Fitcher]: pay zero but that’s not the option

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[Ramsey Smith]: okay well

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[Ramsey Smith]: okay

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[Jason Fitcher]: right so you say zero but then you know but some people say well i pay four

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[Jason Fitcher]: hundred dollars so the dealer finds a way to fit you into the most expensive car

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[Jason Fitcher]: for four hundred dollars by doing what when they could extend the terms of a loan

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[Ramsey Smith]: sure

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[Jason Fitcher]: so one of

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[Paul Tyler]: what

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[Jason Fitcher]: the even though we’re talking about housing debt think about card debt so my

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[Jason Fitcher]: grandparents always paid cash for their car then you started getting loans out so

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[Jason Fitcher]: the average term for a loan used to be three years then four then five now it’s

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[Jason Fitcher]: seven years

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[Paul Tyler]: seven

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[Jason Fitcher]: so people

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[Ramsey Smith]: for a car really

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[Jason Fitcher]: are taking out for a car so now

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[Ramsey Smith]: wow

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[Jason Fitcher]: people are taking our seven year mortgages for a car and some people don’t own the

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[Jason Fitcher]: car longs when they go to get a new car they’re actually under water they owe more

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[Jason Fitcher]: than the resale residual value of the car is and the deal’s like don’t worry you

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[Jason Fitcher]: want to pay five hundred dollars a month we’ll just roll that balance into the

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[Jason Fitcher]: next slow so they keep getting further and further under water with debt by

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[Jason Fitcher]: getting new cars so the house sort of works

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[Ramsey Smith]: yeah

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[Jason Fitcher]: in the same way but backwards we go in and people say look mortgage rates are

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[Jason Fitcher]: lower because the rates are lower now you can afford to buy more house so let’s

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[Jason Fitcher]: get a more expensive house a bigger house because the rates are down we can keep

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[Jason Fitcher]: your

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[Ramsey Smith]: aw

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[Jason Fitcher]: mortgage payment slower you’re like this is a fantastic deal or out doo it so now

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[Jason Fitcher]: people have been buying bigger houses more expensive houses with lower rates as

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[Jason Fitcher]: rates go up better of course changes housing becomes more expensive than might the

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[Jason Fitcher]: downsize but we’ve created a generation

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[Ramsey Smith]: generation

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[Jason Fitcher]: of people who are used through lower interest rates and buying bigger houses are

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[Jason Fitcher]: they gonna be under water are they gonna pay them

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[Ramsey Smith]: harder

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[Jason Fitcher]: off they gonna keep using revolving credit

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[Jason Fitcher]: this is the problem with risk and again we might be more comfortable with debt now

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[Jason Fitcher]: we we take out debt for a lot of things and i now see online when i go

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[Ramsey Smith]: so that

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[Jason Fitcher]: to amazon it says do you want to pay this in four quarterly installments and i’m

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[Jason Fitcher]: like no i don’ i i but i still put it on a credit card and it’s it’s a much

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[Jason Fitcher]: different psychological thing if you have to go and pay cash out of your wallet

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[Jason Fitcher]: with everything you buy than just putting it on plastic or clicking your apple

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[Jason Fitcher]: watch or using an auto paes through a credit

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[Ramsey Smith]: it’s right

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[Jason Fitcher]: card where then you get a month they’re like wait how much should i spend how did

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[Jason Fitcher]: i do this so this is where we’ve gotten used to credit we’ve gotten used to

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[Jason Fitcher]: spending we’ve gotten used to low interest rates and we’ve carried that retirement

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[Jason Fitcher]: so when i did some research looking at what was called the health retirement

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[Jason Fitcher]: survey health return study through the university of michigan they look at those

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[Jason Fitcher]: who are fifty and older with each successive generations they track people so we

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[Jason Fitcher]: can look at the you know the world war ii generation we can go up to the baby

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[Jason Fitcher]: boomers with each generation they’re taking a higher level of debt into retirement

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[Jason Fitcher]: and less of them are paying off their houses going into retirement it used to be

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[Jason Fitcher]: you were told you know you when you basically retire pay off your house because

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[Jason Fitcher]: one as you said paul that’s sort of your biggest if not the biggest asset

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[Jason Fitcher]: retirement but two think about your current budget constraints so everyone who is

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[Jason Fitcher]: listening on this call right now think about your expenses what are you paying out

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[Jason Fitcher]: a month for food

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[Paul Tyler]: let’s see

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[Jason Fitcher]: for utilities for your cell phone for your cable my guess

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[Paul Tyler]: yeah

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[Jason Fitcher]: is that the largest expense people have or at least most people is mortgage or

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[Jason Fitcher]: their rent housing is the biggest expense what if that expense was gone in

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[Jason Fitcher]: retirement that frees up a lot of extra income source income whether it’s coming

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[Jason Fitcher]: from social security or from annuity or from your investments to use someplace

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[Jason Fitcher]: else you minimize risk if you carry

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[Ramsey Smith]: hear

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[Jason Fitcher]: that mortgage with you into retirement you’ve got to pay it and if you get

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[Ramsey Smith]: get down the

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[Jason Fitcher]: a downturn in the market or there is a hell shock or you get a shock in your

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[Ramsey Smith]: years ago

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[Jason Fitcher]: income do you want to get kicked out of your house we’re seeing more bankruptcies

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[Jason Fitcher]: in retirement because of housing than we have previously this is where we need to

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[Jason Fitcher]: start thinking about reframing our discussion

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[Paul Tyler]: excuse me

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[Jason Fitcher]: around risk mitigation retirement and not necessarily trying to have the biggest

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[Jason Fitcher]: and greatest yield you can get off your assets

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[Ramsey Smith]: yeah that makes a lot of sense i mean it it is it is it’s remarkable and

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[Paul Tyler]: yeah that makes a lot of stuff

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[Paul Tyler]: father had

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[Ramsey Smith]: problematic that decisions are made based on

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[Paul Tyler]: how about you

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[Ramsey Smith]: how much i can fund how much the how much the bank at any given point in time will

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[Ramsey Smith]: let you fund as opposed to what your utility is now if your

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[Paul Tyler]: no

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[Ramsey Smith]: utility happens to be you know in the same place and then

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[Paul Tyler]: maybe

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[Ramsey Smith]: maybe maybe there’s some other sort of reward for for buying the bigger house but

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[Ramsey Smith]: maybe maybe there’s some other sort of reward for for buying the bigger house but

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[Ramsey Smith]: you know

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[Ramsey Smith]: you know

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[Ramsey Smith]: in my mind right you’re taking on a lot

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[Paul Tyler]: that

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[Ramsey Smith]: of ex for risk without any true incremental utility

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[Ramsey Smith]: and i think that people could put themselves could avoid

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[Paul Tyler]: a lot

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[Ramsey Smith]: a lot of issues if if they if they thought about it they thought about it that way

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[Ramsey Smith]: because then they’re forced to downsize later and it might not be in a good market

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[Ramsey Smith]: so

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[Paul Tyler]: well i

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[Ramsey Smith]: i think this is a very good discussion for for precisely those reasons

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[Paul Tyler]: yeah no jason the calculation

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[Jason Fitcher]: yeah

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[Paul Tyler]: has shifted three if

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[Ramsey Smith]: um i studies at is rural

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[Paul Tyler]: let me put the step back if i were you know sixty six

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[Paul Tyler]: sixty seven owned a house with a mortgage

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[Ramsey Smith]: what is

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[Paul Tyler]: the calculus has changed so so dramatically over the last two years pre pandemic

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[Paul Tyler]: you know a lot of suburbs real estate market was down you probably had lost equity

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[Paul Tyler]: in your house

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[Ramsey Smith]: it’s w

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[Paul Tyler]: okay but the rates were low so you could afford to sit there and pandemic hits a

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[Paul Tyler]: lot of

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[Jason Fitcher]: what’s that

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[Paul Tyler]: suburban areas real estate goes way up okay it also means your equity is higher

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[Paul Tyler]: suburban areas real estate goes way up okay it also means your equity is higher

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[Paul Tyler]: maybe you can sell your house where you go

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[Paul Tyler]: now i don’t know like we just we we were talking before the show this last month

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[Paul Tyler]: wow interest

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[Ramsey Smith]: why

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[Paul Tyler]: rates are starting to spike again stock market

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[Ramsey Smith]: yeah that’s

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[Paul Tyler]: i don’t i wouldn’t want wanna to have sold my house and but i put it in the market

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[Paul Tyler]: last month not good how do you

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[Ramsey Smith]: yeah the last um r is

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[Paul Tyler]: how do you dynamically approach something like this

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[Ramsey Smith]: per person what

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[Jason Fitcher]: i well you you’ve bought out some great points paul and i think maybe the word

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[Jason Fitcher]: dynamic is something to focus on any dynamic and risk or two words we need to have

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[Jason Fitcher]: as our framing here because there are many people who again go into retirement

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[Jason Fitcher]: without paying off their house and think i’ve got income coming in from a variety

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[Jason Fitcher]: of sources including the market if the market

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[Paul Tyler]: what

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[Jason Fitcher]: this is where i think we talked about this last time too whether you should have

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[Jason Fitcher]: the three percentage rule the four percent drawdown rule that

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[Ramsey Smith]: that work

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[Jason Fitcher]: rule can work if you have an ever increasing market right the market keeps going

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[Jason Fitcher]: up ten percent a year and you’re taking out three or four it probably works for

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[Jason Fitcher]: you that only works if you don’t have a recession in the first two or three or

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[Jason Fitcher]: five years’ retirement and you don’t have it till the end it’s the sequence of

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[Jason Fitcher]: return risk we’re talking about the same goes for housing if people haven’t paid

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[Jason Fitcher]: off their housing or they’ve done something even worse like you know you’ve heard

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[Jason Fitcher]: the old jo of people taking out a whole meck line of credit when they retired to

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[Jason Fitcher]: buy a boat so

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[Ramsey Smith]: oh

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[Jason Fitcher]: now they

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[Paul Tyler]: i did

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[Jason Fitcher]: not pit off their boat they’re pay off their house

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[Paul Tyler]: i

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[Jason Fitcher]: they have a boat they’ve got to pay for and and the old joke is you know how do

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[Jason Fitcher]: you become a millionaire first you get a billion dollars and you buy a boat and

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[Jason Fitcher]: thats how

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[Ramsey Smith]: right

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[Jason Fitcher]: you become a millionaire

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[Jason Fitcher]: people take on this extra level of debt and debt i think we should really call

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[Jason Fitcher]: debt risk right and it really is risk can you are you at risk of not being paid

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[Jason Fitcher]: have an asset collected a secure asset someone can come after maybe you’re okay

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[Jason Fitcher]: with someone possessing your car your boat but your house

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[Jason Fitcher]: you live in it you need housing and in retirement

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[Ramsey Smith]: yes

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[Jason Fitcher]: and i think the dynamic nature is what i would like for us to start having is

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[Jason Fitcher]: these kitchen table conversations you never know she made the right decision until

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[Jason Fitcher]: that decision has passed have hindsight right hindsight is twenty twenty is the

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[Jason Fitcher]: market going to go up is the market going to go down boy i

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[Paul Tyler]: what

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[Jason Fitcher]: wish i would have done this you know if i had tried bought apple stock when it was

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[Jason Fitcher]: going to eight dollars back when i you know twenty thirty years ago i’d be a

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[Jason Fitcher]: millionaire a billionaire but you know i didn’t so i missed out

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[Jason Fitcher]: what do we do when it comes to these discussions about dynamic nature of housing

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[Jason Fitcher]: and risk and i think what i think people should think about is the house is an

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[Jason Fitcher]: asset if it’s paid off and you go into retirement you have minimized risk and you

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[Jason Fitcher]: have expanded your flexibility so for many people

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[Jason Fitcher]: if

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[Ramsey Smith]: yeah

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[Jason Fitcher]: your house is paid off you could use that home equity

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[Jason Fitcher]: down the road for long term care long term care insurance if you can find it now

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[Ramsey Smith]: we just don’t need that we here

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[Jason Fitcher]: it’s really really expensive

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[Jason Fitcher]: think about long term care as your housing in your really really senior years if

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[Jason Fitcher]: your house is paid off and you have to go into long term care you could sell your

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[Jason Fitcher]: house or you saw home equity or reverse mortgage to pay your long term care and

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[Jason Fitcher]: not leave that bill on your on your kids or your grandkids or you know hopefully

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[Jason Fitcher]: you’re not going to go on medicaid if you’re indigent to go into long term care

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[Jason Fitcher]: thinking about planning for this and the dynamic nature of what retirement means

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[Jason Fitcher]: and what the markets can do helps people think about how do you better use their

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[Jason Fitcher]: assets and i mean my fear is too often we’ve trained people to think about acid

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[Jason Fitcher]: accumulation in their years of working we haven’t talked about the either

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[Jason Fitcher]: distribution or accumulation phase and retirement and what that means for risk

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[Jason Fitcher]: mitigation and how to make sure people don’t outlive their savings they’re not

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[Jason Fitcher]: afraid to spend what they have and can actually have a financially comfortable

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[Jason Fitcher]: secure retirement that they’re enjoying that they enjoy their golden years you

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[Jason Fitcher]: know you want to be as worry free as possible if you’ve got that mortgage sitting

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[Jason Fitcher]: of your head you know in turbulent times like right now you know with how long

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[Jason Fitcher]: does this russian ukraine g were going to last is it gonna end tomorrow is it

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[Jason Fitcher]: going to end in three years whatever end what does that mean for oil prices that

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[Jason Fitcher]: go to one hundred thirty dollars a barrel one day and then down to below one

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[Jason Fitcher]: hundred the next mortgage

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[Paul Tyler]: just

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[Jason Fitcher]: rates again they’re now creeping upwards above four and five percent going towards

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[Jason Fitcher]: five the federal reserve is going to start raising interest rates to start trying

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[Jason Fitcher]: to tamper down on inflation if you need to sell your house and you haven’t put off

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[Jason Fitcher]: your mortgage are you going to be under water did you take out a home lot of

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[Jason Fitcher]: credit so you are under water now these are all really important factors to

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[Jason Fitcher]: consider when talking about the dynamic na paul but i think you’re right we need

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[Jason Fitcher]: to start talking about what this means for risk and when people say oh don’t

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[Ramsey Smith]: don’t

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[Jason Fitcher]: pay off your house because you can use that money to go to the market

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[Jason Fitcher]: well you can lose money in the market you really don’t wanna lose your home

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[Ramsey Smith]: so

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[Paul Tyler]: i she got couple

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[Ramsey Smith]: let me ask you this so there’s this is a this is a decision that’s that’s

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[Paul Tyler]: i

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[Ramsey Smith]: obviously very difficult

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[Paul Tyler]: christmas

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[Ramsey Smith]: for for consumers to make often they are going to financial advisors is your

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[Paul Tyler]: that’s pretty good

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[Ramsey Smith]: experience that the financial advisors or the financial advice community

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[Ramsey Smith]: is is is answering this question the way you think they ought to

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[Jason Fitcher]: i

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[Jason Fitcher]: would put it differently it’s not

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[Paul Tyler]: i would

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[Jason Fitcher]: whether they’re

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[Jason Fitcher]: answering it properly it’s

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[Ramsey Smith]: ja mm

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[Paul Tyler]: school

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[Jason Fitcher]: whether they’re having the right discussion and i think

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[Ramsey Smith]: okay

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[Jason Fitcher]: that’s what’s missing right so the answer shouldn’t be yes you should sell no you

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[Jason Fitcher]: shouldn’t sell you should you know pay off your mortgage no you shouldn’t it

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[Jason Fitcher]: really should be a discussion with the individuals about what are their risks what

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[Jason Fitcher]: other income do they have what other assets do they have what are their goals do

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[Jason Fitcher]: they have

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[Ramsey Smith]: they have

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[Jason Fitcher]: a spouse are they sick right there’s

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[Paul Tyler]: water

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[Jason Fitcher]: a lot of things that go into this conversation it’s the same sort of factors we

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[Jason Fitcher]: talked about when it was thinking about when do you claim social security

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[Jason Fitcher]: retirement benefits it’s a personal decision one science is not fit all the fear i

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[Jason Fitcher]: have is that somebody goes into financial professional and says what do i do and

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[Jason Fitcher]: they just give a quick answer without having the

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[Jason Fitcher]: discussion about what their needs are what their risks are and how they can

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[Ramsey Smith]: i would say a kid

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[Jason Fitcher]: minimize risk and there’s a difference between saying selling

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[Ramsey Smith]: what

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[Jason Fitcher]: an asset like selling a stock asset to pay off a house versus taking out a reverse

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[Jason Fitcher]: mortgage or another

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[Jason Fitcher]: mortgage i mean the number of people i’ve seen who in the research get into their

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[Ramsey Smith]: have the testimony i’m going

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[Jason Fitcher]: late fifty seconds and then refinance for another thirty year mortgage is really

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[Jason Fitcher]: surprising to me the idea that you could be paying off a mortgage until your

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[Jason Fitcher]: seventies or eighties it is just surprise not how i grew up that’s not how that

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[Jason Fitcher]: framing i was brought up with and some people like maybe we’re comfortable just

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[Jason Fitcher]: live in the

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[Ramsey Smith]: i

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[Jason Fitcher]: house if we died then someone comes and takes the houses where dead who cares

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[Paul Tyler]: yeah

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[Jason Fitcher]: that may be a smart decision for somebody who understands that and has other

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[Jason Fitcher]: assets and make sure that they have income coming in so there’s a market

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[Paul Tyler]: s

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[Ramsey Smith]: what

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[Jason Fitcher]: downturn they’re protecting they’re always paying their mortgage for somebody else

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[Jason Fitcher]: it might not be the right decision

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[Paul Tyler]: hm

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[Jason Fitcher]: and they might talk about how they can use their financial assets besides the

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[Jason Fitcher]: house to have a protective stream of income that also then pays off the house so

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[Jason Fitcher]: that’s off their balance sheet in retirement and becomes a pure asset that they

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[Jason Fitcher]: have flexibility with so it’s a discussion that i want to encourage not

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[Jason Fitcher]: necessarily focusing on what is the right or wrong answer because that really does

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[Jason Fitcher]: depend on the individual circumstances

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[Ramsey Smith]: so

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[Paul Tyler]: you been

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[Ramsey Smith]: you’ve mentioned reverse mortgages a few times and we don’t necessarily have a dog

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[Ramsey Smith]: in that fight on the show but it’s

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[Ramsey Smith]: it’s come up we’ve had um we’ve had don graves on here recently and we’ve had

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[Ramsey Smith]: we’ve had way at wed fowl also on a couple of times and both of them speak a lot

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[Ramsey Smith]: about the rule of reverse mortgages

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[Ramsey Smith]: you how do you feel about them there’s there’s two

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[Paul Tyler]: what

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00:18:37,757 –> 00:18:42,397
[Ramsey Smith]: questions one is the function of them and the other is how they’re priced so i

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[Ramsey Smith]: will you know i guess

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00:18:43,757 –> 00:18:46,397
[Ramsey Smith]: let’s focus on the function first and then we can

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00:18:43,979 –> 00:18:45,179
[Paul Tyler]: spoke function first

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00:18:46,180 –> 00:18:47,180
[Jason Fitcher]: okay

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[Ramsey Smith]: if you have an opinion on how their price we can talk about that too but as a

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[Ramsey Smith]: function

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[Ramsey Smith]: as you know for their utility what are your thoughts

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[Jason Fitcher]: so i again

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[Paul Tyler]: been white

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[Jason Fitcher]: my my hope in this discussion is we can talk about how the house can be used as a

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[Jason Fitcher]: financial asset and retirement to mitigate risk

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[Jason Fitcher]: and then one of i know wait fo talks about the idea of you know the risks you have

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[Jason Fitcher]: of sequencing of market timing and how you could use reverse mortgage to basically

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[Jason Fitcher]: get some more income later on your retirement years i think that’s an important

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00:19:13,280 –> 00:19:14,720
[Jason Fitcher]: tool to talk about is the basket

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[Ramsey Smith]: yeah

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[Jason Fitcher]: of options one may have and again this goes back to my earlier thing early

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[Jason Fitcher]: discussion i want financial

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[Paul Tyler]: what

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[Ramsey Smith]: what

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[Jason Fitcher]: professionals to be able to talk to their clients about the options

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[Ramsey Smith]: oh yeah

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00:19:23,520 –> 00:19:27,760
[Jason Fitcher]: that are available what the risks and rewards are the pros and cons and give them

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00:19:23,520 –> 00:19:27,760
[Jason Fitcher]: that are available what the risks and rewards are the pros and cons and give them

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[Jason Fitcher]: a menu and walk them through it right no pressure just talk about your options

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[Jason Fitcher]: a menu and walk them through it right no pressure just talk about your options

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[Jason Fitcher]: here’s what they are

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[Jason Fitcher]: here’s what they are

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[Paul Tyler]: oh i think

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[Jason Fitcher]: i think

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[Ramsey Smith]: i think

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[Jason Fitcher]: a reverse mortgage would be part of that discussion but so could a home equity

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[Jason Fitcher]: line of credit right you could do a whole amount of credit as well if you wanted

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[Jason Fitcher]: to there are a lot of structures you can do and think about how to tap into the

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[Jason Fitcher]: assets of your home equity to help in retirement

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[Paul Tyler]: it

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[Jason Fitcher]: but it’s new at its conversation

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[Paul Tyler]: well is it wrong of me to think of taking a reverse mortgage effectively is doing

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[Paul Tyler]: what you’re saying i’m paying off your mortgage right because i think tell me if

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[Paul Tyler]: i’m wrong if i do a reverse mortgage and i’ve got a mortgage say hundred thousand

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[Paul Tyler]: dollars in the house i think that you got to wrap the whole thing up and get rid

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[Paul Tyler]: of the mortgage right is that yeah

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[Jason Fitcher]: yeah yeah so and this is again how do you use your house retirement the

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[Paul Tyler]: yeah yeah

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[Jason Fitcher]: asset and again as you said po it’s for most people it is their largest asset in

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[Jason Fitcher]: retirement and you know and if someone it again depends

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[Ramsey Smith]: definitely

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[Jason Fitcher]: on are youre to leave a request you do you have a spouse what’s the role you know

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[Jason Fitcher]: if you are a single let’s say you’re a single person you have no kids you have no

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[Jason Fitcher]: grandkids you’re not trying to leave a request to somebody why do you want to die

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[Jason Fitcher]: and leave thistles att

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[Jason Fitcher]: if you got a spouse to worry about if you’re worried about want to leave money to

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[Paul Tyler]: yeah

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[Jason Fitcher]: your kids or your family it’s a different conversation so again it’s it’s it

456
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[Jason Fitcher]: really is amazing how

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[Jason Fitcher]: times one of the reasons i love this show is we can talk about money yeah and but

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[Jason Fitcher]: but i mean that sincerely do you know how uncomfortable is talking money with

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[Jason Fitcher]: people like

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[Paul Tyler]: right

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[Jason Fitcher]: real people

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[Ramsey Smith]: sure

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00:20:56,640 –> 00:20:59,840
[Jason Fitcher]: they’re they’re they just yeah you know this they get they they get nervous

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00:21:00,580 –> 00:21:01,580
[Jason Fitcher]: going

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[Ramsey Smith]: what

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00:21:01,360 –> 00:21:05,360
[Jason Fitcher]: back to this idea we can have kitchen table conversations with your family members

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00:21:05,760 –> 00:21:08,720
[Jason Fitcher]: and this is what becomes important even for like people who aren’t retiring yet

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00:21:08,720 –> 00:21:11,920
[Jason Fitcher]: but whose parents might be retiring you just sit down with that of discussion

469
00:21:12,160 –> 00:21:16,480
[Jason Fitcher]: about what are their finances what are their worries do they actually no one likes

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[Jason Fitcher]: to talk about death but do you have a will do you have you know do you have a

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[Jason Fitcher]: power of attorney have you structured all this i’m starting to have friends whose

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[Jason Fitcher]: parents are passing away and they’re finding

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[Ramsey Smith]: yeah

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00:21:25,920 –> 00:21:30,560
[Jason Fitcher]: that their parents didn’t have the proper legal documents in order to help

475
00:21:30,880 –> 00:21:33,840
[Jason Fitcher]: straighten out their affairs because they were nervous about talking about it or

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00:21:33,840 –> 00:21:36,560
[Jason Fitcher]: their kids now find out that they didn’t have much money as they thought and

477
00:21:36,640 –> 00:21:39,920
[Jason Fitcher]: there’s debt they’ve got to figure out how to pay off we need to go back to being

478
00:21:40,000 –> 00:21:41,840
[Jason Fitcher]: able to have these kitchen table financial conversations

479
00:21:43,920 –> 00:21:48,160
[Jason Fitcher]: in a responsible way without feeling guilty about it or nervous so we can talk

480
00:21:48,320 –> 00:21:51,760
[Jason Fitcher]: about what actually are our risks our trade offs the pros and cons of various

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00:21:52,000 –> 00:21:54,640
[Jason Fitcher]: things and that’s where a financial planner comes in that’s where family and

482
00:21:54,720 –> 00:21:58,880
[Jason Fitcher]: friends can come in and we can have this again discussion of risk and how to

483
00:21:58,960 –> 00:22:01,120
[Jason Fitcher]: minimize risk especially in retirement

484
00:22:02,059 –> 00:22:06,379
[Paul Tyler]: so so if i think about the problem we’re really trying to help solve right you can

485
00:22:06,539 –> 00:22:11,259
[Paul Tyler]: step back a couple layers and say well it’s really how do you reduce your housing

486
00:22:11,339 –> 00:22:17,179
[Paul Tyler]: expenses in retirement right so big component obviously in a debt’s a hugely

487
00:22:17,339 –> 00:22:20,219
[Paul Tyler]: expensive proposition right there are other expenses

488
00:22:25,899 –> 00:22:27,499
[Paul Tyler]: okay i agree i

489
00:22:27,057 –> 00:22:28,057
[Ramsey Smith]: agree

490
00:22:27,579 –> 00:22:29,099
[Paul Tyler]: ha i wanna get my

491
00:22:30,379 –> 00:22:35,339
[Paul Tyler]: get rid of my mortgage it feels like a kind of high a rare solution where somebody

492
00:22:35,579 –> 00:22:38,539
[Paul Tyler]: could just go in and say hey you know rams i’m going to pull money out of my money

493
00:22:38,699 –> 00:22:42,939
[Paul Tyler]: market and pay off my mortgage right that feels like jason what are the most

494
00:22:42,660 –> 00:22:43,660
[Jason Fitcher]: yeah

495
00:22:43,099 –> 00:22:44,619
[Paul Tyler]: likely scenarios here where

496
00:22:45,420 –> 00:22:46,420
[Jason Fitcher]: so he here’s

497
00:22:45,659 –> 00:22:48,219
[Paul Tyler]: i actually do get rid of my eliminate my mortgage

498
00:22:48,480 –> 00:22:51,840
[Jason Fitcher]: here’s how the people should think about one is there’s when you pay off your

499
00:22:51,920 –> 00:22:54,880
[Jason Fitcher]: mortgage there’s a couple ways to do it right you just brought the idea of

500
00:22:55,040 –> 00:22:58,080
[Jason Fitcher]: basically taking money from another pot i have a you know buy a

501
00:22:57,839 –> 00:22:58,839
[Paul Tyler]: yeah

502
00:22:58,160 –> 00:23:02,720
[Jason Fitcher]: cash i have a money market i have stocks i have bonds i have a four one can retire

503
00:23:02,720 –> 00:23:07,120
[Jason Fitcher]: and going to sell x to pay off the mortgage y that’s one way and that becomes a

504
00:23:07,200 –> 00:23:10,400
[Jason Fitcher]: decision on one risk management it also becomes in how do you want to allocate

505
00:23:10,480 –> 00:23:15,200
[Jason Fitcher]: your assets think about your house it’s a portfolio right the first rule portfolio

506
00:23:15,280 –> 00:23:17,360
[Jason Fitcher]: diversification is it has to be diversified

507
00:23:18,640 –> 00:23:22,160
[Jason Fitcher]: a house is part of your diversified portfolio so you don’t want to sell all of

508
00:23:22,160 –> 00:23:25,760
[Jason Fitcher]: your stock assets to pay off a house but how do you balance it my

509
00:23:25,439 –> 00:23:26,439
[Paul Tyler]: what

510
00:23:25,920 –> 00:23:28,960
[Jason Fitcher]: thing has always been i’ve always been concerned that people take out these home

511
00:23:29,200 –> 00:23:34,080
[Jason Fitcher]: economic credits or keep refinancing to do cash refinancing to buy something else

512
00:23:34,640 –> 00:23:39,360
[Jason Fitcher]: so they start looking at their houses an atm and a cash machine as opposed to

513
00:23:39,840 –> 00:23:45,360
[Jason Fitcher]: retirement asset housing consumption et cetera so my first advice for people when

514
00:23:45,440 –> 00:23:48,240
[Jason Fitcher]: they get a mortgage is just unless rates drop

515
00:23:47,839 –> 00:23:48,839
[Paul Tyler]: water

516
00:23:48,640 –> 00:23:52,240
[Jason Fitcher]: stick with it and if race dropped you when to refinance don’t keep refinancing the

517
00:23:52,320 –> 00:23:55,680
[Jason Fitcher]: thirty years and pushing it out if you had a thirty year can you get a twenty year

518
00:23:55,760 –> 00:23:59,600
[Jason Fitcher]: next time perhaps a fifteen maybe you can do a ten year i

519
00:23:59,279 –> 00:24:00,279
[Paul Tyler]: i

520
00:23:59,680 –> 00:24:04,400
[Jason Fitcher]: ref you know my first house i couldn’t afford to pay cash for my first house i got

521
00:24:04,480 –> 00:24:06,320
[Jason Fitcher]: a thirty year mortgage rates started

522
00:24:05,919 –> 00:24:06,919
[Paul Tyler]: you

523
00:24:06,400 –> 00:24:10,000
[Jason Fitcher]: dropping i refinanced and at some point i was able to refinance to a fifteen year

524
00:24:10,160 –> 00:24:13,440
[Jason Fitcher]: mortgage and we were talking before the show and i’m happy to put it on in public

525
00:24:13,600 –> 00:24:17,680
[Jason Fitcher]: i am fifty years old and i’m two years away from paying off my house because i’ve

526
00:24:17,680 –> 00:24:21,520
[Jason Fitcher]: been paying it monthly and got a fifteen year mortgage i am going pay off my house

527
00:24:21,760 –> 00:24:24,640
[Jason Fitcher]: i am not i mean i get letters from you know banks

528
00:24:24,457 –> 00:24:25,457
[Ramsey Smith]: i think

529
00:24:24,720 –> 00:24:28,080
[Jason Fitcher]: saying hey you could be finance the equity you have in your house like yes that is

530
00:24:28,080 –> 00:24:31,120
[Jason Fitcher]: going to be my long term care insurance that is to me what my wife is gonna have

531
00:24:31,120 –> 00:24:35,600
[Jason Fitcher]: when i pass away that is going to be a worry free asset yeah i’ve gotta pay taxes

532
00:24:35,680 –> 00:24:39,440
[Jason Fitcher]: on it yes i’ll have to have maintenance i don’t have to pay rent i have to pay a

533
00:24:39,440 –> 00:24:44,160
[Jason Fitcher]: mortgage and that money that was allocated for housing can now go into other

534
00:24:44,320 –> 00:24:47,920
[Jason Fitcher]: things whether that’s vacation travel whether i want to put that back in the

535
00:24:47,920 –> 00:24:50,640
[Jason Fitcher]: market and reallocate money that what is going to housing and i’ll put

536
00:24:50,319 –> 00:24:51,319
[Paul Tyler]: see

537
00:24:50,720 –> 00:24:55,520
[Jason Fitcher]: it in investments i now have that flexibility but having the house paid off means

538
00:24:55,520 –> 00:25:00,000
[Jason Fitcher]: i can start going into retirement not worrying about housing which again for most

539
00:25:00,080 –> 00:25:03,920
[Jason Fitcher]: people it’s the biggest expense so that’s when we start thinking about housing you

540
00:25:03,920 –> 00:25:08,080
[Jason Fitcher]: know paul it’s not do i sell off all my assets to pay down the house when i retire

541
00:25:07,860 –> 00:25:08,860
[Jason Fitcher]: it’s what

542
00:25:08,239 –> 00:25:09,239
[Paul Tyler]: what

543
00:25:08,640 –> 00:25:13,280
[Jason Fitcher]: have i got is my portfolio and am i overleveraged in one versus the other and

544
00:25:13,440 –> 00:25:17,200
[Jason Fitcher]: don’t look at your house as a cash machine in the sense of using it to buy a boat

545
00:25:17,600 –> 00:25:21,360
[Jason Fitcher]: think about it as how you would take that house to mitigate risk and retirement

546
00:25:21,360 –> 00:25:24,720
[Jason Fitcher]: and presumably down the road maybe turn into a stream of income which could be

547
00:25:24,720 –> 00:25:27,760
[Jason Fitcher]: either again i’m not saying i’m buying into reverse mortgages because there’s a

548
00:25:27,760 –> 00:25:31,120
[Jason Fitcher]: lot of ways you could do home equity there’s a lot of things you can do but that

549
00:25:31,200 –> 00:25:34,640
[Jason Fitcher]: house you might decide to sell it maybe you get to the point where the house is

550
00:25:34,720 –> 00:25:39,280
[Jason Fitcher]: too big you bought this big house and the kids are gone the dogs are gone it’s

551
00:25:39,280 –> 00:25:42,400
[Jason Fitcher]: just you or maybe you’re in a spouse in this big house and you want to downsize

552
00:25:43,600 –> 00:25:46,560
[Jason Fitcher]: what do you sell how do you downsize what do you use the additional proceeds for

553
00:25:46,560 –> 00:25:48,960
[Jason Fitcher]: how do you use that to do you buy more protected income

554
00:25:48,737 –> 00:25:49,737
[Ramsey Smith]: she

555
00:25:49,040 –> 00:25:50,560
[Jason Fitcher]: do you reallocate it into the market

556
00:25:51,680 –> 00:25:54,720
[Jason Fitcher]: there’s a lot of things you can do and you have a lot more flexibility if the

557
00:25:54,720 –> 00:25:56,320
[Jason Fitcher]: house is paid off or close to it

558
00:25:56,857 –> 00:25:57,857
[Ramsey Smith]: i think

559
00:25:56,919 –> 00:25:57,919
[Paul Tyler]: i think

560
00:25:58,557 –> 00:25:59,677
[Ramsey Smith]: part of the issue here is

561
00:26:00,797 –> 00:26:05,437
[Ramsey Smith]: is is when financial advisor or somebody else is having a conversation

562
00:26:06,557 –> 00:26:08,957
[Ramsey Smith]: with a consumer that’s kind of in that right in

563
00:26:08,500 –> 00:26:09,500
[Jason Fitcher]: i

564
00:26:09,037 –> 00:26:13,037
[Ramsey Smith]: this age range we’re talking about is to sort of express upfront that

565
00:26:14,157 –> 00:26:16,397
[Ramsey Smith]: it is a it is a normal goal

566
00:26:16,500 –> 00:26:17,500
[Jason Fitcher]: yeah

567
00:26:17,197 –> 00:26:21,517
[Ramsey Smith]: to go under retirement with a debt free with debt free housing right like that

568
00:26:21,757 –> 00:26:26,557
[Ramsey Smith]: like that is a that is an aspirational first set it up as an aspirational goal so

569
00:26:26,717 –> 00:26:28,317
[Ramsey Smith]: people people see it as a

570
00:26:29,577 –> 00:26:30,577
[Ramsey Smith]: as a target

571
00:26:31,757 –> 00:26:33,117
[Ramsey Smith]: the second part of that i think

572
00:26:33,117 –> 00:26:35,357
[Ramsey Smith]: that that you said that’s very important

573
00:26:33,120 –> 00:26:35,120
[Jason Fitcher]: right um what

574
00:26:36,657 –> 00:26:37,657
[Ramsey Smith]: is

575
00:26:37,200 –> 00:26:39,040
[Jason Fitcher]: it down and the one is

576
00:26:37,277 –> 00:26:41,677
[Ramsey Smith]: ultimately highlighting that it’s an asset and then there are things that you can

577
00:26:41,677 –> 00:26:45,357
[Ramsey Smith]: do to create some liquidity around that asset so it’s the line of credit or the

578
00:26:45,357 –> 00:26:46,637
[Ramsey Smith]: verse mortgage driver you

579
00:26:46,340 –> 00:26:47,340
[Jason Fitcher]: uhuh

580
00:26:46,717 –> 00:26:49,117
[Ramsey Smith]: happen to do it but the key thing is that

581
00:26:50,397 –> 00:26:54,077
[Ramsey Smith]: that the liquidity and resources that you draw from your house

582
00:26:55,137 –> 00:26:56,137
[Ramsey Smith]: should be spent

583
00:26:55,700 –> 00:26:56,700
[Jason Fitcher]: watch

584
00:26:56,537 –> 00:26:57,537
[Ramsey Smith]: on things

585
00:26:57,180 –> 00:26:58,180
[Jason Fitcher]: know i said i

586
00:26:57,517 –> 00:27:00,077
[Ramsey Smith]: that are essential as opposed to things that are non essential

587
00:26:59,839 –> 00:27:00,839
[Paul Tyler]: what

588
00:27:00,157 –> 00:27:04,717
[Ramsey Smith]: i’m trying to i’m trying to take everything you said and sort of try to find a way

589
00:27:04,417 –> 00:27:05,417
[Ramsey Smith]: to sort

590
00:27:05,040 –> 00:27:06,640
[Jason Fitcher]: condense it yeah i think that’s great

591
00:27:05,117 –> 00:27:09,517
[Ramsey Smith]: of frame it for people that like you know that you really that that it’s okay to

592
00:27:09,199 –> 00:27:10,199
[Paul Tyler]: ban

593
00:27:09,257 –> 00:27:10,257
[Ramsey Smith]: finance

594
00:27:09,460 –> 00:27:10,460
[Jason Fitcher]: that

595
00:27:10,317 –> 00:27:11,597
[Ramsey Smith]: things but if you’re financing things

596
00:27:11,140 –> 00:27:12,140
[Jason Fitcher]: i

597
00:27:11,597 –> 00:27:15,437
[Ramsey Smith]: that are non essential you’re imparting more risk if you’re financing things that

598
00:27:15,377 –> 00:27:16,377
[Ramsey Smith]: are essential or

599
00:27:16,159 –> 00:27:17,159
[Paul Tyler]: that’s

600
00:27:16,477 –> 00:27:21,357
[Ramsey Smith]: potentially essential then you’re actually reducing risk so you know anyway i’m

601
00:27:21,337 –> 00:27:22,337
[Ramsey Smith]: this has been this

602
00:27:21,700 –> 00:27:22,700
[Jason Fitcher]: yeah

603
00:27:22,157 –> 00:27:24,237
[Ramsey Smith]: has been very helpful i’m trying to put a

604
00:27:23,600 –> 00:27:25,280
[Jason Fitcher]: well this is this is also where i

605
00:27:24,977 –> 00:27:25,977
[Ramsey Smith]: yeah

606
00:27:25,360 –> 00:27:28,800
[Jason Fitcher]: think for financial professionals to start talking to people about the role of

607
00:27:28,960 –> 00:27:32,240
[Jason Fitcher]: income and retirement what does it mean right to basically take the wealth you

608
00:27:32,320 –> 00:27:36,000
[Jason Fitcher]: have and make into a stream of income whether it’s a drawdown strategy or annuity

609
00:27:36,080 –> 00:27:40,880
[Jason Fitcher]: but it’s the role of income and we do find with research and also our anecdotal

610
00:27:40,960 –> 00:27:45,360
[Jason Fitcher]: experience talking to again real people is that they fear running out of money and

611
00:27:45,440 –> 00:27:48,320
[Jason Fitcher]: outliving their money so they fear they’re going to be living off cat food they’re

612
00:27:48,320 –> 00:27:51,840
[Jason Fitcher]: gonna spend down their money they don’t spend enough and for some people they

613
00:27:52,000 –> 00:27:55,440
[Jason Fitcher]: actually die with a significant amount of assets that they could have spent but

614
00:27:55,520 –> 00:27:59,120
[Jason Fitcher]: they were just afraid to do so and what we see this is research that david

615
00:27:59,120 –> 00:28:02,800
[Jason Fitcher]: blanchet michael have done and we’ve got some work at the alliance that this call

616
00:28:02,960 –> 00:28:06,560
[Jason Fitcher]: this license to spend right if you have enough income coming in that’s protected

617
00:28:06,640 –> 00:28:11,600
[Jason Fitcher]: it’s like your budget constraints if youer the number is that you know you’re

618
00:28:11,600 –> 00:28:16,560
[Jason Fitcher]: getting monthly it’s guaranteed it’s so security plus maybe annuity maybe it’s a

619
00:28:16,620 –> 00:28:17,620
[Jason Fitcher]: pension but you know you’ve

620
00:28:17,217 –> 00:28:18,217
[Ramsey Smith]: you

621
00:28:17,680 –> 00:28:22,480
[Jason Fitcher]: got it you spend up that and you allow other money then you can invest it you can

622
00:28:22,560 –> 00:28:26,000
[Jason Fitcher]: take it say i can go and be more risky in assets now because i know i’ve got this

623
00:28:26,080 –> 00:28:28,000
[Jason Fitcher]: printed income that pays for my essentials

624
00:28:30,000 –> 00:28:34,400
[Jason Fitcher]: if that essential includes housing whether it’s rent or mortgage that takes up a

625
00:28:34,480 –> 00:28:38,240
[Jason Fitcher]: significant dollar amount of your flexibility to do other things mitigate risks

626
00:28:38,240 –> 00:28:39,280
[Jason Fitcher]: that maybe your car

627
00:28:39,440 –> 00:28:42,720
[Jason Fitcher]: breaks down maybe you need to buy a new car during covid which is very expensive

628
00:28:39,517 –> 00:28:40,877
[Ramsey Smith]: hardly so s

629
00:28:42,960 –> 00:28:46,800
[Jason Fitcher]: if you have a housing repair get health shock all these things come into play so

630
00:28:46,880 –> 00:28:50,320
[Jason Fitcher]: you really need to think about what that means and then try to mitigate risk and

631
00:28:50,400 –> 00:28:53,200
[Jason Fitcher]: people don’t realize that a lot of these things start happening when you retire

632
00:28:53,440 –> 00:28:57,280
[Jason Fitcher]: again we get older things start breaking down not just you know our bodies start

633
00:28:57,440 –> 00:29:00,480
[Jason Fitcher]: going but we’re not as young as we used to be and who

634
00:29:00,097 –> 00:29:01,097
[Ramsey Smith]: good

635
00:29:00,640 –> 00:29:03,520
[Jason Fitcher]: knows it’s going to happen with inflation right you know is inflation going to

636
00:29:03,520 –> 00:29:06,320
[Jason Fitcher]: turn around also and go lower again is it going to continue to go up is it

637
00:29:06,400 –> 00:29:10,320
[Jason Fitcher]: transitory is it permanent how do we mitigate the risk and try to protect

638
00:29:10,640 –> 00:29:14,320
[Jason Fitcher]: ourselves and this is where it comes into big thinking more dynamically and the

639
00:29:14,480 –> 00:29:18,480
[Jason Fitcher]: more you can reduce debt to retirement the better off you’re gonna be

640
00:29:18,619 –> 00:29:24,859
[Paul Tyler]: yeah i i totally agree you got to have somebody you who’s knowledgeable helping

641
00:29:24,939 –> 00:29:30,219
[Paul Tyler]: you through this and and and i’ll just had this great chat we i i kind of read you

642
00:29:30,299 –> 00:29:33,419
[Paul Tyler]: a little bit of this just before the show but had an agent coming on an online

643
00:29:33,519 –> 00:29:34,519
[Paul Tyler]: chat and i

644
00:29:34,140 –> 00:29:35,140
[Jason Fitcher]: mm

645
00:29:34,539 –> 00:29:36,939
[Paul Tyler]: think of the risks okay the planning that’s

646
00:29:36,820 –> 00:29:37,820
[Jason Fitcher]: like

647
00:29:37,019 –> 00:29:40,859
[Paul Tyler]: involved in doing something like this and the amount of risk you’ve got to sort of

648
00:29:42,059 –> 00:29:45,499
[Paul Tyler]: dynamically work through can all you know kind of buil

649
00:29:45,260 –> 00:29:46,260
[Jason Fitcher]: but i

650
00:29:45,579 –> 00:29:51,019
[Paul Tyler]: your head so says and i’ll sanitize this a little bit so we’re not promoting

651
00:29:51,179 –> 00:29:55,419
[Paul Tyler]: products here but i have in laws that just sold their home and considering putting

652
00:29:55,499 –> 00:29:57,499
[Paul Tyler]: their profits into either one of your two

653
00:29:57,659 –> 00:30:03,259
[Paul Tyler]: annuities okay all right so they had this house they clearly sold it and they had

654
00:29:57,940 –> 00:29:58,940
[Jason Fitcher]: how you

655
00:30:03,339 –> 00:30:06,539
[Paul Tyler]: to make a bet on g do i keep this thing and

656
00:30:06,260 –> 00:30:07,260
[Jason Fitcher]: yeah

657
00:30:06,699 –> 00:30:09,819
[Paul Tyler]: get the appreciation keep you know is the market going to still going up so they

658
00:30:09,979 –> 00:30:14,059
[Paul Tyler]: bet that the probably the market’s up as high as it’s going go or they don’t need

659
00:30:14,119 –> 00:30:15,119
[Paul Tyler]: you know it’s something they

660
00:30:14,580 –> 00:30:15,580
[Jason Fitcher]: he

661
00:30:14,719 –> 00:30:15,719
[Paul Tyler]: don’t need

662
00:30:16,619 –> 00:30:19,659
[Paul Tyler]: so they’re gonna take their profits so they’re clearly using the principle and

663
00:30:19,659 –> 00:30:23,659
[Paul Tyler]: doing something else with whatever their or whatever their basis was in one of

664
00:30:23,659 –> 00:30:27,899
[Paul Tyler]: these news so they’re diversifying their risk right so they’re keeping some who

665
00:30:27,979 –> 00:30:30,619
[Paul Tyler]: knows what they’re doing the the capital gains the

666
00:30:30,340 –> 00:30:31,340
[Jason Fitcher]: and

667
00:30:30,779 –> 00:30:35,499
[Paul Tyler]: thinking of putting in annuities now here’s what it’s it’s more complicated i had

668
00:30:35,659 –> 00:30:41,259
[Paul Tyler]: to go dig deep on this one ramsey you love this if they submit jointly will a

669
00:30:41,060 –> 00:30:42,060
[Jason Fitcher]: what i

670
00:30:41,339 –> 00:30:42,859
[Paul Tyler]: policy continue as normal should

671
00:30:42,820 –> 00:30:43,820
[Jason Fitcher]: the new york

672
00:30:43,019 –> 00:30:47,419
[Paul Tyler]: one pass or is it better for just one to submit okay so he’s also managing

673
00:30:47,439 –> 00:30:48,439
[Paul Tyler]: longevity risk

674
00:30:48,160 –> 00:30:50,320
[Jason Fitcher]: but if and spouse

675
00:30:50,439 –> 00:30:51,439
[Paul Tyler]: the spouse

676
00:30:50,860 –> 00:30:51,860
[Jason Fitcher]: possible benefit

677
00:30:51,737 –> 00:30:52,737
[Ramsey Smith]: yep

678
00:30:52,619 –> 00:30:55,659
[Paul Tyler]: right how long are they are they going to go and you know the answer is

679
00:30:55,739 –> 00:31:00,139
[Paul Tyler]: complicated because you know if if one’s an owner as it turns out ramsay don’t

680
00:30:59,919 –> 00:31:00,919
[Paul Tyler]: know this before

681
00:31:00,880 –> 00:31:02,560
[Jason Fitcher]: why you go over that i

682
00:31:01,659 –> 00:31:07,259
[Paul Tyler]: you know certain of these features are disappear if the spouse is a is just listed

683
00:31:07,339 –> 00:31:11,979
[Paul Tyler]: as a beneficiary so you got to think through what the contract is who you put on

684
00:31:11,599 –> 00:31:12,599
[Paul Tyler]: as

685
00:31:12,100 –> 00:31:13,100
[Jason Fitcher]: i did like

686
00:31:12,219 –> 00:31:13,819
[Paul Tyler]: the owner and then

687
00:31:14,139 –> 00:31:18,139
[Paul Tyler]: jason the next questions we sort of dig down is like when the money is

688
00:31:14,400 –> 00:31:15,600
[Jason Fitcher]: she would be man

689
00:31:17,820 –> 00:31:18,820
[Jason Fitcher]: like you

690
00:31:18,219 –> 00:31:21,979
[Paul Tyler]: withdrawn on a monthly basis how’s it taxed oh

691
00:31:23,020 –> 00:31:24,020
[Jason Fitcher]: i think i

692
00:31:23,659 –> 00:31:27,499
[Paul Tyler]: you know here’s it okay well is it a free withdrawal versus income versus

693
00:31:28,939 –> 00:31:32,859
[Paul Tyler]: what does the tax rate look like five six ten years from now

694
00:31:32,640 –> 00:31:36,800
[Jason Fitcher]: ten year again your point life is complicated these are complicated decisions

695
00:31:36,859 –> 00:31:37,979
[Paul Tyler]: yeah so yeah

696
00:31:37,120 –> 00:31:40,640
[Jason Fitcher]: and i think well this is you know again there’s a lot of things we don’t know

697
00:31:40,720 –> 00:31:43,520
[Jason Fitcher]: about their their circumstances right do they have other assets besides the house

698
00:31:43,680 –> 00:31:47,680
[Jason Fitcher]: they just sold how much of the assets do they have are they getting any other

699
00:31:47,840 –> 00:31:52,720
[Jason Fitcher]: income from dividends are they do they have an ira they taking r m ds i

700
00:31:52,720 –> 00:31:56,880
[Jason Fitcher]: don’t know so there there’s is a lot that goes into this but what i started seeing

701
00:31:52,937 –> 00:31:53,937
[Ramsey Smith]: i don’t there’s

702
00:31:57,200 –> 00:32:00,480
[Jason Fitcher]: you know again and partis and the research you seeing the data and then two is the

703
00:32:00,560 –> 00:32:03,520
[Jason Fitcher]: anecdote when we talk to real people and you start to merge the two together to

704
00:32:03,600 –> 00:32:08,240
[Jason Fitcher]: get a picture of what’s going on in retirement is that more people are entering

705
00:32:08,320 –> 00:32:12,000
[Jason Fitcher]: retirement with housing debt so they haven’t paid off their mortgage and they’ve

706
00:32:12,000 –> 00:32:17,280
[Jason Fitcher]: been so useless framing of well i can borrow for cheap it’s almost co the phrase i

707
00:32:17,280 –> 00:32:19,120
[Jason Fitcher]: always hate is it’s almost free money

708
00:32:20,240 –> 00:32:21,840
[Jason Fitcher]: there’s no such thing as free i

709
00:32:21,920 –> 00:32:25,680
[Jason Fitcher]: mean there’s just there’s this and that and i don’t mean that you know the people

710
00:32:21,997 –> 00:32:23,117
[Ramsey Smith]: that’s the truth yeah

711
00:32:25,840 –> 00:32:28,880
[Jason Fitcher]: say free money because the cost is low but it’s the opportunity cost of that money

712
00:32:29,280 –> 00:32:32,240
[Jason Fitcher]: what you could do with it and you have some people saying well take the money out

713
00:32:32,240 –> 00:32:35,520
[Jason Fitcher]: of your house in which you’re paying even if you’re paying now say you’re paying

714
00:32:35,600 –> 00:32:38,560
[Jason Fitcher]: four percent if you’re paying four percent you can put up the market making ten

715
00:32:38,640 –> 00:32:41,440
[Jason Fitcher]: percent a year and your arbitrage the taxes you’re coming out of head you’re not

716
00:32:41,440 –> 00:32:45,280
[Jason Fitcher]: financially smart where the market goes down right so you lose twenty percentage

717
00:32:45,520 –> 00:32:49,440
[Jason Fitcher]: one year in a market you’ve now got this huge debt on your house

718
00:32:49,039 –> 00:32:50,039
[Paul Tyler]: yeah

719
00:32:49,520 –> 00:32:52,160
[Jason Fitcher]: that you got to pay for you might not be able to afford it where it happened to

720
00:32:52,240 –> 00:32:55,200
[Jason Fitcher]: your income stream now you’re out of a house what do you do you gonna go live with

721
00:32:55,100 –> 00:32:56,100
[Jason Fitcher]: your kids you’re gonna

722
00:32:55,657 –> 00:32:56,657
[Ramsey Smith]: it’s

723
00:32:55,900 –> 00:32:56,900
[Jason Fitcher]: you know

724
00:32:57,840 –> 00:33:01,280
[Jason Fitcher]: this is the risk that we’re not talking about it’s too focused on

725
00:33:02,320 –> 00:33:06,240
[Jason Fitcher]: trying to get maximum yield after the point of time when you should be thinking

726
00:33:06,240 –> 00:33:09,200
[Jason Fitcher]: about yield i’m not saying you don’t think of growth mats i think about inflation

727
00:33:09,280 –> 00:33:13,600
[Jason Fitcher]: but that goes back to a diversified portfolio and the house should be part of a

728
00:33:13,680 –> 00:33:15,600
[Jason Fitcher]: diversified portfolio and also

729
00:33:15,457 –> 00:33:16,457
[Ramsey Smith]: yeah

730
00:33:15,840 –> 00:33:20,560
[Jason Fitcher]: but it’s this is where think people get confused they they see like a stock and a

731
00:33:20,560 –> 00:33:24,320
[Jason Fitcher]: bond and they think that’s an asset so in their head it’s an asset they look at

732
00:33:24,400 –> 00:33:28,000
[Jason Fitcher]: the house and for a lot of fines professionals they talk about it as an asset but

733
00:33:28,080 –> 00:33:30,240
[Jason Fitcher]: it takes two functions one is the asset

734
00:33:29,999 –> 00:33:30,999
[Paul Tyler]: yeah

735
00:33:30,320 –> 00:33:32,240
[Jason Fitcher]: so diversify your portfolio but

736
00:33:32,559 –> 00:33:33,559
[Paul Tyler]: yes

737
00:33:32,960 –> 00:33:38,000
[Jason Fitcher]: you consume housing you’re living in it so to an economist i’m looking at this

738
00:33:38,000 –> 00:33:39,040
[Jason Fitcher]: house that i sit in and

739
00:33:38,897 –> 00:33:39,897
[Ramsey Smith]: did i

740
00:33:39,120 –> 00:33:43,280
[Jason Fitcher]: i’m talking to you guys on i’m consuming living here so it’s part investment part

741
00:33:43,360 –> 00:33:47,360
[Jason Fitcher]: consumption and it’s that consumption that we talk about with our monthly expenses

742
00:33:47,440 –> 00:33:51,040
[Jason Fitcher]: we have in retirement i have to consume utilities i have to consume housing i have

743
00:33:51,200 –> 00:33:54,720
[Jason Fitcher]: to consume carss that to consume travel to consume health care if all of a sudden

744
00:33:54,720 –> 00:33:56,960
[Jason Fitcher]: my housing consumption costs are low

745
00:33:58,000 –> 00:34:02,560
[Jason Fitcher]: i have a lot more flexibility to do and afford the other things including shocks

746
00:34:03,837 –> 00:34:05,997
[Ramsey Smith]: one of which is inflation right

747
00:34:05,860 –> 00:34:06,860
[Jason Fitcher]: is it yes

748
00:34:06,057 –> 00:34:07,057
[Ramsey Smith]: so like if you

749
00:34:06,719 –> 00:34:07,719
[Paul Tyler]: yes

750
00:34:07,197 –> 00:34:08,637
[Ramsey Smith]: because if you rent if you rent

751
00:34:08,260 –> 00:34:09,260
[Jason Fitcher]: good point

752
00:34:08,717 –> 00:34:11,277
[Ramsey Smith]: housing inflation’ is going to hit you more directly than if you

753
00:34:11,119 –> 00:34:12,119
[Paul Tyler]: yeah

754
00:34:11,677 –> 00:34:14,637
[Ramsey Smith]: and if you own your home so you’re indexed no

755
00:34:12,880 –> 00:34:17,120
[Jason Fitcher]: yep that that’s yep you’re exactly right and this is also i mean pill asked what

756
00:34:17,200 –> 00:34:19,280
[Jason Fitcher]: should i rent in retirement but yeah the best answer

757
00:34:18,959 –> 00:34:19,959
[Paul Tyler]: yeah

758
00:34:19,680 –> 00:34:24,320
[Jason Fitcher]: we always talked about for any economic question is it depends right so you go

759
00:34:24,400 –> 00:34:27,840
[Jason Fitcher]: back to that couple you were talking about the advisor who emailed you paul what

760
00:34:27,540 –> 00:34:28,540
[Jason Fitcher]: if that

761
00:34:27,777 –> 00:34:28,777
[Ramsey Smith]: like

762
00:34:27,780 –> 00:34:28,780
[Jason Fitcher]: couple

763
00:34:28,159 –> 00:34:29,159
[Paul Tyler]: that

764
00:34:28,640 –> 00:34:30,080
[Jason Fitcher]: said we’re you know we decide

765
00:34:29,879 –> 00:34:30,879
[Paul Tyler]: i want

766
00:34:30,240 –> 00:34:32,720
[Jason Fitcher]: we wanna take the next eighteen months in travel

767
00:34:33,760 –> 00:34:37,600
[Jason Fitcher]: you could use in some way some proceeds have a small base sign of twelve or

768
00:34:37,600 –> 00:34:41,280
[Jason Fitcher]: eighteen month lease right lock in payments have a have a home base use those

769
00:34:41,520 –> 00:34:42,640
[Jason Fitcher]: proceeds to pay for rent

770
00:34:42,417 –> 00:34:43,417
[Ramsey Smith]: by

771
00:34:42,800 –> 00:34:46,160
[Jason Fitcher]: go travel and then figure out when you come back whether or not you need to have a

772
00:34:46,160 –> 00:34:50,080
[Jason Fitcher]: small condo or a small house or what you want to do renting is not always bad but

773
00:34:50,240 –> 00:34:54,240
[Jason Fitcher]: again you have to understand that there’s consumption and that’s part of your

774
00:34:54,240 –> 00:34:57,760
[Jason Fitcher]: budget fine but you’re now exposing yourself to rental increases and everything

775
00:34:57,540 –> 00:34:58,540
[Jason Fitcher]: else so

776
00:34:59,440 –> 00:35:02,640
[Jason Fitcher]: got i want people to have these conversations because it’s the conversations that

777
00:35:02,720 –> 00:35:06,160
[Jason Fitcher]: allow the individual to say hey i also have this issue i didn’t tell you about

778
00:35:06,240 –> 00:35:09,440
[Jason Fitcher]: maybe add that into the conversation and see what that means for my my risk

779
00:35:09,179 –> 00:35:13,579
[Paul Tyler]: you visited oh yeah well in ramsey you gotta laugh so you know where my head

780
00:35:13,659 –> 00:35:17,419
[Paul Tyler]: goes there is gee if you’re going to travel and you’re senior do you have met sup

781
00:35:13,760 –> 00:35:14,880
[Jason Fitcher]: i don’t know yeah

782
00:35:17,579 –> 00:35:22,539
[Paul Tyler]: you have that advantage and are you going to be a networker out jason it’s just

783
00:35:22,539 –> 00:35:26,699
[Paul Tyler]: it’s like you pull a thread and it’s just it just will not stop coming

784
00:35:30,480 –> 00:35:34,400
[Jason Fitcher]: these are again they’re complicated issues i i don’t want to solve them with a

785
00:35:34,480 –> 00:35:38,800
[Jason Fitcher]: bumper sticker you know rules of thumbs you know are general rules that don’t

786
00:35:38,800 –> 00:35:43,840
[Jason Fitcher]: always apply to everybody but it it is important to have these conversations and i

787
00:35:43,840 –> 00:35:46,800
[Jason Fitcher]: think that’s one of the things that is improving we are seeing it improve

788
00:35:48,800 –> 00:35:53,520
[Jason Fitcher]: but too often i and i love that in fact we have access to credit believe it access

789
00:35:53,760 –> 00:35:58,000
[Jason Fitcher]: to credit makes things work i mean this is just i’m all in favor of access to

790
00:35:58,080 –> 00:36:01,600
[Jason Fitcher]: credit i want to be more nuanced i can have a better discussion of what it means

791
00:36:02,080 –> 00:36:05,840
[Jason Fitcher]: because it becomes too easy that people don’t really understand the long term

792
00:36:06,800 –> 00:36:11,520
[Jason Fitcher]: implications of that debt that’s whether credit card debt car debt housing debt

793
00:36:11,600 –> 00:36:15,200
[Jason Fitcher]: you name it um but it’s part of that conversation you have to have before you go

794
00:36:15,360 –> 00:36:17,840
[Jason Fitcher]: into well before you go into retirement to be honest

795
00:36:18,459 –> 00:36:23,659
[Paul Tyler]: so ramsey i don’t know you maybe you you your takeaways did we make this simpler

796
00:36:23,739 –> 00:36:24,779
[Paul Tyler]: or more complicated

797
00:36:26,637 –> 00:36:30,877
[Ramsey Smith]: for me that the the the biggest thing i would hope that everybody takes away from

798
00:36:31,037 –> 00:36:33,277
[Ramsey Smith]: this is one this

799
00:36:32,879 –> 00:36:33,879
[Paul Tyler]: like

800
00:36:32,980 –> 00:36:33,980
[Jason Fitcher]: well

801
00:36:33,177 –> 00:36:34,177
[Ramsey Smith]: idea that

802
00:36:33,177 –> 00:36:34,177
[Ramsey Smith]: idea that

803
00:36:35,137 –> 00:36:36,137
[Ramsey Smith]: that

804
00:36:35,759 –> 00:36:36,759
[Paul Tyler]: you

805
00:36:35,837 –> 00:36:39,517
[Ramsey Smith]: reducing risk and retirement is critical cause you’ve got fewer options

806
00:36:39,679 –> 00:36:40,679
[Paul Tyler]: that

807
00:36:40,397 –> 00:36:41,837
[Ramsey Smith]: to an important component of that

808
00:36:40,400 –> 00:36:42,080
[Jason Fitcher]: you’re like oh oh

809
00:36:43,057 –> 00:36:44,057
[Ramsey Smith]: is

810
00:36:43,500 –> 00:36:44,500
[Jason Fitcher]: that not

811
00:36:44,237 –> 00:36:47,837
[Ramsey Smith]: reducing or eliminating the debt that you have associated with

812
00:36:47,599 –> 00:36:48,599
[Paul Tyler]: my

813
00:36:47,997 –> 00:36:51,037
[Ramsey Smith]: your your housing because it imparts more risk three

814
00:36:50,719 –> 00:36:51,719
[Paul Tyler]: we

815
00:36:51,277 –> 00:36:54,077
[Ramsey Smith]: to the extent that you have a house that is an asset

816
00:36:54,239 –> 00:36:55,239
[Paul Tyler]: yeah

817
00:36:54,817 –> 00:36:55,817
[Ramsey Smith]: and you can

818
00:36:55,780 –> 00:36:56,780
[Jason Fitcher]: what type what

819
00:36:55,917 –> 00:37:00,637
[Ramsey Smith]: use it to create sources of liquidity those are sources of liquidity that should

820
00:37:00,717 –> 00:37:03,677
[Ramsey Smith]: be used one in the case of emergencies and two in the case

821
00:37:04,717 –> 00:37:08,237
[Ramsey Smith]: of financing your sort of essential consumption in retirement

822
00:37:08,940 –> 00:37:09,940
[Jason Fitcher]: alright

823
00:37:09,677 –> 00:37:14,237
[Ramsey Smith]: and only frankly as a last resort for non essentials so

824
00:37:12,400 –> 00:37:14,400
[Jason Fitcher]: okay i know about play s

825
00:37:15,279 –> 00:37:16,279
[Paul Tyler]: that’s

826
00:37:15,517 –> 00:37:19,917
[Ramsey Smith]: that’s sort of the framework that sort of i put together as we were as we were

827
00:37:15,517 –> 00:37:19,917
[Ramsey Smith]: that’s sort of the framework that sort of i put together as we were as we were

828
00:37:20,057 –> 00:37:21,057
[Ramsey Smith]: walking through this

829
00:37:20,057 –> 00:37:21,057
[Ramsey Smith]: walking through this

830
00:37:21,120 –> 00:37:24,960
[Jason Fitcher]: that’s a fantastic for eric ramsay and now we know why you get paid the big bucks

831
00:37:25,040 –> 00:37:27,360
[Jason Fitcher]: cause you hit it right on the not right in the nose

832
00:37:28,539 –> 00:37:33,499
[Paul Tyler]: yeah well jason this was this was great um i guess you you’ve done some really

833
00:37:33,279 –> 00:37:34,279
[Paul Tyler]: good research

834
00:37:35,179 –> 00:37:36,459
[Paul Tyler]: we have a lot of advisors

835
00:37:37,499 –> 00:37:41,179
[Paul Tyler]: what would you suggest first of all where can they find more of what you’re doing

836
00:37:41,579 –> 00:37:45,099
[Paul Tyler]: and is there any place you’d say advisors should look to as they’re

837
00:37:45,057 –> 00:37:46,057
[Ramsey Smith]: uh

838
00:37:45,259 –> 00:37:49,259
[Paul Tyler]: helping their clients think through what they do with their mortgage

839
00:37:50,320 –> 00:37:53,520
[Jason Fitcher]: so my research you can you can google my name and i think you guys post links

840
00:37:53,380 –> 00:37:54,380
[Jason Fitcher]: sometimes to the research

841
00:37:53,919 –> 00:37:54,919
[Paul Tyler]: yes

842
00:37:54,480 –> 00:37:57,600
[Jason Fitcher]: so i i have two papers that were financed by the social security administration

843
00:37:57,600 –> 00:38:01,920
[Jason Fitcher]: that were done through the university of wisconsin on on debt and retirement and

844
00:38:01,920 –> 00:38:05,120
[Jason Fitcher]: that includes not just housing debt which is the largest debt but even credit card

845
00:38:05,200 –> 00:38:09,360
[Jason Fitcher]: debt which shows that debt levels are rising and and if someone is going to email

846
00:38:09,440 –> 00:38:10,720
[Jason Fitcher]: you we should say that it’s also

847
00:38:11,137 –> 00:38:12,137
[Ramsey Smith]: yes

848
00:38:11,200 –> 00:38:16,240
[Jason Fitcher]: assets arising but the debt to asset ratio is also rising so as people get more

849
00:38:16,320 –> 00:38:19,360
[Jason Fitcher]: assets they feel like they were more comfortable taking on more debt and we see

850
00:38:19,440 –> 00:38:22,480
[Jason Fitcher]: that like for ten percent of the population heading into retirement at some point

851
00:38:22,380 –> 00:38:23,380
[Jason Fitcher]: they have

852
00:38:23,097 –> 00:38:24,097
[Ramsey Smith]: yeah yeah

853
00:38:23,200 –> 00:38:27,200
[Jason Fitcher]: more debt liabilities and assets to cover them so that’s also important so

854
00:38:27,039 –> 00:38:28,039
[Paul Tyler]: that

855
00:38:27,360 –> 00:38:31,200
[Jason Fitcher]: that’s online again you can just google my name and like ho home mortgage those

856
00:38:31,360 –> 00:38:33,280
[Jason Fitcher]: two papers should come up i would

857
00:38:32,977 –> 00:38:33,977
[Ramsey Smith]: maybe

858
00:38:33,440 –> 00:38:36,240
[Jason Fitcher]: encourage people to pull up a two to pager that the social

859
00:38:36,560 –> 00:38:40,800
[Jason Fitcher]: administration does when to start receiving retirement benefits it sort of walks

860
00:38:36,577 –> 00:38:37,577
[Ramsey Smith]: see

861
00:38:40,880 –> 00:38:43,840
[Jason Fitcher]: through this kitchen table conversation about thinking about your spouse other

862
00:38:43,920 –> 00:38:47,520
[Jason Fitcher]: assets that’s even a good framework to have on thinking about what it means to pay

863
00:38:47,600 –> 00:38:50,480
[Jason Fitcher]: off your house like what other assets do you have what other sources of income do

864
00:38:50,560 –> 00:38:52,000
[Jason Fitcher]: you have what do you want to do how’s your health

865
00:38:51,799 –> 00:38:52,799
[Paul Tyler]: let’s see

866
00:38:52,080 –> 00:38:54,640
[Jason Fitcher]: those are important things to have a conversation with people

867
00:38:54,319 –> 00:38:55,319
[Paul Tyler]: what

868
00:38:54,800 –> 00:38:58,240
[Jason Fitcher]: on and then obviously the alliance for lifetime income which is that protective

869
00:38:58,320 –> 00:39:00,160
[Jason Fitcher]: income that or we have a lot of uh

870
00:39:01,040 –> 00:39:03,680
[Jason Fitcher]: materials for financial professionals they can use

871
00:39:01,057 –> 00:39:02,057
[Ramsey Smith]: hear

872
00:39:04,720 –> 00:39:09,760
[Jason Fitcher]: and also for consumers there’s a dictionary there’s glass of terms there’s things

873
00:39:09,840 –> 00:39:12,880
[Jason Fitcher]: you should ask your financial professionals so we have terms online as well and

874
00:39:12,960 –> 00:39:16,960
[Jason Fitcher]: the bipartisan pa center were doing lots of research on retirement security google

875
00:39:17,040 –> 00:39:21,200
[Jason Fitcher]: funding our future and it’ll pop up to the b b pc page you can see all the work

876
00:39:21,360 –> 00:39:24,720
[Jason Fitcher]: we’re doing there to help people have a financially secure retirement but also a

877
00:39:24,880 –> 00:39:28,800
[Jason Fitcher]: financially secure working years we’re trying to also encourage like secure act

878
00:39:28,960 –> 00:39:32,560
[Jason Fitcher]: two point zero and more employers to have financial wellness programs and to

879
00:39:32,640 –> 00:39:35,360
[Jason Fitcher]: encourage people to have access to and save for retirement as well

880
00:39:35,739 –> 00:39:39,579
[Paul Tyler]: oh that’s great listen we’ll put all those links in the show notes and jason

881
00:39:39,659 –> 00:39:42,379
[Paul Tyler]: thanks thanks for having me on here again this is great yeah

882
00:39:41,357 –> 00:39:43,277
[Ramsey Smith]: thanks a lot thanks for coming back

883
00:39:42,480 –> 00:39:45,280
[Jason Fitcher]: always a pleasure gentlemen good to see you both and have this discussion

884
00:39:43,739 –> 00:39:48,459
[Paul Tyler]: yeah hey ramsey thanks and uh thanks to all our listeners and be sure to tune

885
00:39:48,619 –> 00:39:52,299
[Paul Tyler]: again next week for another episode of that annuity show thanks

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