Ever wonder what World War 2 bombers have to do with big-box financial retail? How about why mutual funds point to their track record of success and yet say it isn’t a guarantee for success in their disclaimer? Managing money can be complex but Paul and Cory take this time to dispel a few illusions of investing in this condensed and fast-paced episode.
WHAT WAS COVERED
- 00:00 – Show starts.
- 00:35 – Paul welcomes the show.
- 01:20 – Paul and Cory give an overview.
- 04:00 – Why we’re breaking down Illusions of investing.
- 06:12 – Illusion #1 – Stock Picking
- 14:00 – Illusion #2 – The Track Record of Mutual Fund.
- 21:00 – Illusion #3 – Market Timing
- 31:17 – Illusion #4 – Letting “them” handle it
- 35:13 – Episode wrap up / what’s next week
- 37:32 – Show ends, thank you for listening.
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——————————————————————————————————————————- Paul 0:01 Welcome to your business your wealth funding is Paul Adams and the man that needs no introduction, Cory 0:39 Paul 0:42 Cory 0:49 Paul 1:03 Cory 1:10 Paul 1:18 Cory 1:32 Paul 1:36 Cory 2:06 Paul 2:10 Cory 2:32 Paul 2:48 Cory 3:26 Paul 3:33 Like Cory, let Cory recover from that cover. Yeah. Cory 3:51 Paul 3:52 Cory 5:40 Paul 5:52 Cory 8:12 Paul 8:16 Unknown Speaker 8:38 Paul 8:41 Cory 9:35 Paul 9:52 Cory 10:36 Paul 10:41 Cory 10:48 Paul 11:05 Cory 12:28 Paul 12:39 Unknown Speaker 14:06 Paul 14:08 Cory 15:03 Paul 15:09 Cory 15:50 Paul 15:56 Cory 17:30 Paul 17:33 Cory 17:54 Paul 18:26 Cory 18:31 Paul 18:37 Cory 19:28 Paul 19:28 Cory 19:59 Paul 20:00 Cory 20:37 Paul 20:39 Cory 21:30 Paul 21:32 Cory 21:38 Paul 21:40 Cory 23:00 Paul 23:13 Cory 24:30 Paul 25:30 Cory 25:36 Paul 25:41 Cory 26:12 Paul 26:20 Cory 28:52 Paul 29:05 Cory 31:32 Paul 31:40 Cory 34:43 Paul 35:13 Cory 35:50 Paul 36:02 This Material is Intended for General Public Use. By providing this material, we are not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. Sound Financial Inc. dba Sound Financial Group is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. Insurance products and services are offered and sold through Sound Financial Inc. dba Sound Financial Group and individually licensed and appointed agents in all appropriate jurisdictions. This podcast is meant for general informational purposes and is not to be construed as tax, legal, or investment advice. You should consult a financial professional regarding your individual situation. Guest speakers are not affiliated with Sound Financial Inc. dba Sound Financial Group unless otherwise stated, and their opinions are their own. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. Past performance is not a guarantee of future results. Each week, the Your Business Your Wealth podcast helps you Design and Build a Good Life™. No one has a Good Life by default, only by design. Visit us here for more details: yourbusinessyourwealth.com © 2020 Sound Financial Inc. yourbusinessyourwealth.com ———————————————————————————————————————————
Full Episode Transcription
Welcome to your business, your wealth, where your hosts Paul Adams and Corey Shepherd teach founders and entrepreneurs how to build wealth beyond their business balance sheets.
the man. But anyway,
and wishes that his eyes were as blue as his shirts, of course, Shepard
and this shirts getting less blue every day, as has been frequently commented, folks thought of their chair when they sent me to non blue shirt. And it started recently because Amazon steps making my size for some reason I don’t understand.
I’m gonna tell you right now, Cory showed up to a team meeting the other day with a white shirt on we thought he had a funeral to go to.
I thought I was meeting with a whole pack of vampires, sunlight coming in the window there as
well. So today, we’ve got something that’s gonna be similar to some we’ve done the past, we’ve done this, like, countless times have we talked about every time we’ve had this conversation with a client every time we’ve done it public speaking engagement.
We’ve talked about this a lot, a lot.
But what we’re doing today is trying to make it more concise. This is going to be the illusions of investing. And these are the things that investors are missing, that they don’t realize is out there. The fees that they’re being charged by big box financial retail, the lack of disclosure that is totally allowable, and totally legal, by big box financial retail, and we’re going to take that that currently is in episodes 163 through 167. But those episodes range from like 25 minutes to 45 minutes,
so we assign a half hours total. Yeah.
And we assign that to our clients, they diligently get through it, we’re going to record something today that’s meant to make it easier for our clients, and easier for all of you to be able to take some chunks of this. And either you may want to reach out to us afterward. So Cory, do you want to tell them how to do that because I don’t think we’re getting a commercial break in middle of this with the pace we’re gonna go.
So you can email us at info at SFGW comm or there’ll be a link in the show notes to schedule a 15 minute conversation with some of someone on our team, just to get just to get the conversation started.
So there’s there’s our sound Financial Group advertisement, right. But here’s what I want all of you to think about is one, there are people in your life who haven’t seen this people who have small amounts of money, people have large amounts of money, share this video, like this channel, follow our profile, follow us on social media, you can find us just about anywhere, just search for ask Paul Adams, Instagram, Twitter, Facebook, etc, Facebook and LinkedIn where we post mainly now but we receive messages on all of those channels. So with that, Cory Are you ready for us to get through this at breakneck speed?
Yep, roll up your sleeves everyone put on your face shield, not because of COVID because the when streaming by,
and maybe maybe a lot like my wedding night. I’m just gonna break it to you guys. Is isn’t going to be great. But it ain’t gonna last long. All right, let’s get let’s get into our topic at hand.
So we’re gonna talk about delusions investing, we’re not even going to summarize them in advance, we’re going to hit them in rapid order. But let’s start with why we do this and why most of the financial industry doesn’t get exposed to it. Now Cory has his own stories. This you guys can hear mine in more detail. But basically, when you start in this business, you start out and there’s some friendly mutual fund wholesaler who leads a class of your peer advisors and it seems like that’s normal. Or my family chairs, they bring sandwiches or my case they take you to lunch at Denny’s. And I was a like 20 year old that. I don’t know if I told you this Cory, I weighed 248 pounds, and I was not one foot taller, I could put away groceries. So what we ended up doing is going to lunch and I go to pay because this guy spent the lunch educating me on mutual places. Oh no, no, this is what I do. Which turned into lunches at Ruth’s Chris turned into dinners at Ruth’s Chris turns into people like Cory and I getting invited on due diligence trips. For those of you listening to the podcast, those are my air quotes tone, and the due diligence trip is meant to To be able to go out and learn more about the fund and meet the managers, all that, but it also happens to usually be pre COVID in a Luxe location, with great activities, all that all that come down to the mutual fund industry is an enormous marketing apparatus. The marketing departments at big box financial retail are no joke. And they go out of their way to get as early as possible in a financial advisors career to provide the education that they’re going to ultimately pass on to their clients. And much of what we’re going to talk about today, you’ll never get exposed to, if you or your advisor are not deeply steeped in the academics of investing. Sorry, go ahead.
Well, I just I won’t name any names, but I can still rattle off some of the ticker symbols of some of the first mutual funds I was introduced to as a young advisor as my go to
bag of tricks. So man, oh man, or, or you remember taking a program like Principia pro and your sales manager would teach you, oh, just put together a portfolio you want the client tab principio find the all the funds in the last 10 years that had good performance. And which we’re going to see later in this talk may not be ones that have good performance in the future. Let’s hit illusion. Number one, illusion number one is stock picking. And the definition of stock picking is someone choosing stocks based upon a belief that they’re going to do well in the future. But the illusion is that investment advisors can consistently and predictably add value through individual stock selection. Now, what we don’t think about much is World War Two and how it counts toward investing. Okay, I don’t think that comes up super often. For those of you that are fans of World War Two, you’ll know we won in large part due to our air superiority over Europe in the Pacific. And people often times if we ask in a group setting, where did the tide turn in World War Two people say things like in the Pacific Theater, Battle of the Bulge, V day. And those are all relevant responses. But the funny thing is we asked an economist where World War Two is one, he’s going to point to a smoke filled apartment in Harlem. You see, there used to be these folks in the field, these generals and other people that would gather data, and then they would send it back to the United States to be analyzed to give them the math needed to make the decisions they make in the field. And so a group of these studies came in to this group of government paid mathematicians. And what they were supposed to do is figure out how much armor needed to be added to these aircraft, because they had these scatter graphs of the bombers who had returned and had been shut up. And so they did all the math. And what it was going to cost was range, which is one of our big superiors, how far our planes could fly. And munitions, what total amount of bombing capacity they could carry to the targets. All the math was done was getting go out the door and a guy named Abraham Wald stopped it and said, We can’t send this out. And they said, why not? There’s something wrong with our calculations. He said, No, you’re studying the wrong aircraft.
You see if my stomach just like Rob’s like, Oh,
it’s so close. We and you remember the first time I shared this with you? Mm hmm. Cory was working for a big box financial retailer, he later tells the story, and you guys have heard in other podcasts that this totally changed his view. When he saw like, Wait a second, the cockpit the engines in the weakest part of the tail are the only place with no shots.
You see those? That plan with fine?
Yeah, yeah, it delivered its bombs, and was able to return. In this case, the only parts that had to be armored, were basically the engines in the cockpit. We didn’t we just need to reinforce the tail a little bit. But the rest of it was light armaments, and didn’t jeopardize our bombing capacity. Now, this is usually where people would ask, what the heck does this have to do with Finance? Well, let’s go into the individual mutual fund universe. Now this is from the first mutual fund all the way through to 2017. And that first mutual fund was created by the First Bank of Boston now called MFS, or Massachusetts financial services. Now, we’re gonna hit this really briefly, to take care of the speed with which we need to get through it. But what you can do is go back to Episode 163, if you want to see this more in detail.
Well, can I just ask a question for everyone to consider? Why do financial institutions keep making new mutual funds? And is it and it would it be because they already thought that they had everything figured out?
It’s, it’s a great point, Cory. Because if they had it all figured out when they just have one really great big, mutual fund. That always works.com or something that would. Hashtag always pays. But in this case, what you can see is that they consistently and predictably close mutual funds. Now why would they do that? If you think you had two mutual funds side by side, one of them went up 10% a year for three years now same investment objectives, let’s just call it a mid cap Fund. The other mid cap fund went down 10%, a year, three years or a bad stock selection. Now they got to close one of the two funds. Cory, do you think they close the one that goes up? Every year? The other year?
Why did they close mutual funds? Is it because they were doing really, really good?
Nope. It’s always because it’s the poor performing fund. And you ask yourself, right, yeah, go ahead. Yeah,
the crazy, crazy part, you would think that the money from the bad fund going into the money of the fund is doing better, that that rate of return should come along with and that history should should be involved. But it’s just left by the wayside.
Like your kid who drops classes in college, and they don’t figure into his average, it still costs you. But you no longer see the negative performance. That’s exactly what happens in mutual funds. How bad is it? Well, this is as of the end of 2017. At the end of 2017, we had almost as many funds killed off as we had still alive. Think about that today, there’s more who have been killed off than those that are currently live. Why? Why because it becomes a strategy in which they can close the mutual funds that don’t, by the way, you guys have probably had this happen in our audience, what you get is a letter that says something effective, we are going to be combining these two mid cap funds, because similar management styles are similar investment objectives and save our clients money, all that, and then they combine them but what they’re actually doing is raising the rate of return of the poor performing fund. That’s having clients leave in droves. Anyway, they don’t want to send you the money back. They want to roll it into something else they control. Well, how bad could it be? Cory, I mean, all these funds that had to close? Well, the worst 200 of them. Average was negative 81% cumulative return before being closed. That That means half were worse. I don’t know how you get worse, worse than 81%. But
if you got that letter in the mail, what happened is your money went down by some degree, it went over into the new thing. But to you, it just looks like it’s been growing.
Yeah, at least in the historical returns. Yeah. And now, if we look and all this data is coming from the Center for Research and securities pricing and analysis at the University of Chicago, and what they did is they did a correction to the survivorship bias. The survivorship bias is we look at those who made it through a situation and make our decisions based upon that, and not include the information the data from those who did not survive. So this is a survivorship bias corrected, cumulative rate of return, you can see those top two numbers near 9 million. Those numbers are just if you had your money in indexes, one is the crisp index. And then for comparison, we include the s&p 500. That bottom line is your average output a little over 4 million. If you’re we’re in the survivorship bias corrected performance of retail mutual funds, and asset manager. So that means the total amount of wealth lost 4.8 million, if you just started with 100 grand back in 1972. Now that 4.8 million is more money than most families are going to have in total in their old age. And that’s just the last wealth to the stock picking inside the funds. Now, we’re gonna cross into illusion to an illusion to really answers what’s probably going through your mind right now.
you’re talking about the average on not the average person, and I certainly would not choose. Yeah, that’s right. And I certainly wouldn’t choose an average asset manager. And I would say, how would you find who would be above average? And they would say I just look at their performance history, also known as track record. So this track record, the, the actual definition of it is the use of performance history to determine the best investment for the future. But the illusion is that finding funds that did well in the past is a reliable method of indicating which funds will do well in the future. That sounds pretty articulate. Seems like it would work. The only problem is that it doesn’t. So what this is This graph could look a little bit confusing.
But it’s one of my favorite favorite pictures, it is my tears.
So what they did is they studied starting in 2004, rolling five year periods, so 2004 through the end of 2008, five years, the end of 2005 through the end of 2009, five years, and took only the top 25% of best performing us equity based mutual funds. And then they assess them over the next five years to see what percentage would have outperformed. And what you can see is the average amount of those asset managers who outperformed is 21%. Well, we adjust the top 25
out of 25. of everybody followed for the next five years.
Yeah, over and over and over again. And what we find time and time again, is a total inability for them to consistently or predictably outperform what the market would have done if it was just left alone. So not only do they have survivorship bias in their favor, that they can close a fund that’s had bad performance, put it in a new fund, and they disappear that track record. But on top of it, even the ones that perform well, are not likely to continue to be able to repeat that performance. And without belaboring it, it’s no better really even with fixed income management for those that are bonds. Now, we illustrate this in our in person settings, by having people flip coins. And after about the fifth coin flip, where if your heads you stay standing, you’re an asset manager that continues to beat the market. If you got tails, you have to sit down and hand your quarter or your half dollar over to somebody that’s still managing money. This is exactly what big box financial retails allowed to do. They’re able to say see 10 mutual funds with $10 million each. And then watch each of the asset managers if they outperform they keep their job if they underperform, their fund gets folded as somebody who performed well. Because Haven’t you ever wondered why you never see a mutual fund that’s being marketed to you with no performance history? There’s always like a three year history.
Because why would there be to talk about under that model?
Yeah, we’re just hoping it all goes well, it’s pretty hard to raise funds. That’s how they develop these mutual funds, they seed them. And now at the end out of 10 mutual funds, there’s one left, and that one has 100 million dollars under management and a really solid three year track record. But they don’t talk about like the other nine in my example that would have closed.
This is kind of like the legal version of the stock newsletter scam. where someone sends three different stock picks to 1000 people and three different stock picks to 1000 people and and then they do it enough times that one of those groups gets three stocks that look amazing. And they divide that in the five or six groups and send them different picks. And eventually, three in a row is going to happen by some odds. And then person thinks that their newsletter writers a genius and that’s when they ask them for a bunch of
money. Exactly. And we watch it when people start getting heads. It’s like you even see them take pride in
even though they know it’s a random event, magic wrist or they say they’ve got some technique or huh.
Yep. And, and what it shows is how random It is our our record, I think Cory was 16 heads in a row. gonna say that 160 some year old woman. And she just kept flipping heads and we let her keep going even after everybody else had Sit down. She ended up at 16. She said something about wisdom is what gave her the ability. That’s Yes. And to which I said not to embarrass you. But this is how you get a legendary fund like the fidelity Magellan fund. Because somebody out of all those mutual funds that have been created and killed, you’re going to have a certain amount of people that look like they’re extraordinary, just due to the massive numbers. So, Cory, do you want to tell our audience why it is they see past performance is no guarantee of future. That’s
That’s exactly right. That’s why that disclosure. Past performance is no guarantee of future results is on every statement. It’s because they know stone solid that that asset manager It doesn’t matter if it’s Ray Dalio or it’s somebody to American funds. There is no academic proof these people can consistently or predictably buy stocks that will outperform the market and a little bit of bad news. Neither can you
neither can I
Know that we get and not you, Cory, you, all of us, but we can’t do it. And, and what we think and this is you’ve heard me talk about this before. We think that the E trades and the Scott trades of the world are on the other side of the equation from the Fisher Investments, Morgan Stanley. And they both act like they’re on opposite sides arguing with each other, but they’re both in the same game is that somebody can outline the market, Morgan Stanley just thinks that they’re great big asset managers in big box financial retail can do it. And Scottrade says you can do it, you just need a little bit of reading and you’ll be no
nobody can do it.
No one can do it. At least no one we’ve found who’s willing to share what they’re doing can do it. If they can, as we’ve talked about on the show before, they’re on a private island by themselves not talking to you or anybody else. You know how you know that? Because if you could do it, you wouldn’t tell anybody either here. Alright, let’s get into market timing. market timing is our third illusion, market timing is any attempt to alter or change the mix of assets based upon a prediction or forecast for the future. The illusion is that money managers are able to utilize market timing to effectively predict up and down markets. Now, there’s two different forms this take one is the one all of you are familiar with. And that’s just the idea of moving money from cash, say to the stock man, and I get out when
I get in, when should I get out? Yeah.
But then the craft your version of this is sometimes referred to as tactical asset allocation.
Oh, I want? I want some of that. That sounds
Wow. How about we do tactical strategic Cori asset allocation with perhaps some sort of reverse nuclear split dollar like, whatever. Like, it just sounds really cool. But really all it is, instead of trying to guess on a binary cash versus stocks, what you’re doing is you’re introducing like eight or nine variables and trying to get it right, or 14 variables. If you’re in a widely diversified portfolio in every asset class, now, you’re guessing 14 variables. The truth of matter is very few can do it. And it speaks to it right in the research. You see, dalbar is a company that studies investor and investment behavior. And this is a consistent study that they release standard Poor’s 500, at the end of 2017, starting in 1985, did 11.35% 11.35 the average equity investor 4.28%. Let’s say that again, 11.35 was the market the s&p 500, the average individual investor over the same period of time, got 4.28%, after tax, barely ahead of inflation over the same period, which is 2.62.
So here’s another question for you. How could the average investor in the market do a third of the overall index of the market that they’re investing in?
Yeah, it’s a blend of two things. One is we’re relying on stock selection from those asset managers, which we know is not an effective strategy in second, because I think inherently people know that somebody else can’t predict them or get good returns, etc. So what happens when the market has volatility in turmoil? I want to get out. Because all I’m doing is trusting that this competent person is the tall on top of a very tall ivory tower somewhere is managing my money. And suddenly, you realize, you know very little about their investment strategy, you know, little to nothing about the way that they think you have no idea how many stock positions you have, and you freak the heck out and you liquidate your portfolio. And then when do you get back in? Not while there’s blood in the streets, not in that model, you wait until things calm down. And just like we saw from the recent COVID downturn, and thus far correction, we just produce most of the rates of return for the entire year over the last two weeks after or right before starting right before two after the presidential election. When there’s volatility, that’s where returns are and people break under that. Cory, I think this is one of your favorite charts.
It says there’s a couple of my favorites. This is another one of my favorites, because it just blows my mind every every time. So January 119 98. You put $10,000 into the market, a little bit of everything out there, essentially just very even index. And then Oh, sorry, is it the s&p 500 in this one? Yep. Yeah, sorry, s&p 500. And you just put 10,000 in and forget that. You have a portfolio and you you find a statement, like you move, move to a new house, you don’t change your address, December 31 2017, they finally catch up with you, and you get a statement in the mail, you wake up and you would have had $40,000. Now, if you had tried to time the market and got in and out during that time, and as part of that movement guessed wrong, just 10 times meatiness is the 10 out of 5040.
Gets it 10 days out of 5040 days, and what you end up like 20,000. Cory,
yeah, half your rate of return is in half, from 10 days.
Now, my favorite is actually the last bar on the chart, which is you missed the top 30 days. And if this doesn’t blow your mind, I don’t know what well, you missed the top 30 days out of 5040 trading days, and you lost money, you have a negative rate of return for this entire 20 year period 21 one month of days, that just happened to be the debt best days in the market and your return is far lower.
And so you missed one month of a 20 year mortgage, they don’t even take your house away from you. But
that’s a great point, Cory, but you can lose all your investment returns by just beating missing the top 30 days. And what I loved was this quote from Charlie Ellis, a respected academic and leader in the investment management world and somebody that really speaks to why individual investors need to know this information in his book in 1993. And the evidence hasn’t gotten any better the evidence on investment managers success with market timing is impressive, and overwhelmingly negative. Or as I like to say, investment managers expertise looks a lot like my golf game. It is impressive, and overwhelmingly negative. Now, okay, so we know that they’re not producing performance in consistent predictable way, we know that market timing doesn’t work. But certainly, Paul, at least mutual funds are inexpensive. See the cost investing the fees incurred by investor to buy and sell stocks in mutual or mutual funds. In one of those assets that we own, the illusion is what you don’t see can’t hurt you. And I would just point all of you go to Google, Google this term real cost of mutual funds. Now we just kind of copy and pasted the first article that shows up. But I want you to notice something when you Google this, you will find very, very, very little from the what I might refer to as the financial media, the financial entertainers, in this case, Forbes, that they will write an article like this and why flip through their pages, go to their website, look at the banner ads. And what you will see over and over again, is mutual fund company, mutual fund company, mutual fund company, almost all of which are offering actively managed mutual fund solutions. So you’re not gonna find things like this on the real cost of owning mutual funds. Now, where we kind of condense this, here’s the big point. When you put money in a mutual fund, your expense ratio is not your only cost. Your asset management fee is not your only cost. What you also pick up are things like cash drag, the fact that mutual fund managers have to keep a certain amount of money in cash, because they have to deal with redemptions from the undisciplined investors that you don’t realize you’re locked arms with. They’ve got you in there with a bunch of other people they’ve just sold the performance of this fund to and there’s the same people that are going to crumble when markets are volatile. As a result, you suffer because they have to keep more money in cash.
So even if you are disciplined and not market timing, other people market timing the same funder in hertz, you Yes, this this is also one of my favorites, that just blew my mind the first time that I that I heard that,
well, then think about that you’ve got this asset manager, he’s got out performance index, there’s a ton of pressure for him to keep his job. So he’s trading and that trading creates transaction costs that are often not disclosed. Now, again, you guys can go through and get these deeper in episodes 163 to 167, if you’d like. But also check out Dr. Shark can’t ski on our podcast, he talked about his website, personal, fun, calm, that gives people insight to the actual transaction costs and some of these other costs they’re paying in their fund that are not readily disclosed by the advisors. So the bottom line is the cost of investing can cost you and it’s going to have as a part of it something called the bid ask spread bid, ask spread. Because when we understand what it really costs us in those transaction costs, because there’s a market maker that’s handling the trades, that’s not coming out of our expense ratio that’s coming out of the game. of whatever particular stock transaction that they’re doing it, it doesn’t report as a cost us as the individual investor and you need a tool like personal fund.com. To see through that and understand what the internal transaction costs are. And let’s hear from Charlie Ellis again. When he talks about even something like a no load mutual fund, you would think would avoid this. But the key question of the new rules of the game is this. How much better must an active manager be to at least recover the cost of active management? The answer is daunting. And I would just draw this parallel for you. If you ever seen a football player gymnast, somebody’s trying to increase speed and strengthen their legs will sometimes run with like this type of parachute that goes around their waist. And the more you run, you train like this. Cory, what happens to the resistance? Harder, it pulls harder poles. And the same thing is happening with disaster managers trying to trade trade, trade, trade trade. It’s like running trying to pull a parachute. The more they do it, the more drag they create against their very objective. The only problem is in this case, them not moving well with that parachute is your money at stake, not their physical fitness. Okay, Cory last illusion, we’re coming in on the homestretch here. This is the illusion of letting them handle it. Now, I’m going to stereotype here a little bit. Corey gets nervous. Whenever I create a disclosure like that if you guys can hear the tension in the air,
I think where I know where you’re going, it’s it’s one that has been predominant for, say, baby boomers.
So many, many, many times, we will find, it’s not always the husband that’s that says, Oh, I handle the decisions. Sometimes it’s the wife. But it’s very easy for couples to say you just handle that. Or the entire couple, or one of them who handles it actually delegates it to somebody else and lets them handle it. So one way people do, they’re handed to their spouse or handed their advisor. And we just had another conversation with someone who didn’t know the difference between a bond and a mutual fund, who now is in charge of their entire household finances, net worth of about two and a half million, but had no idea how much money was there and is looking for statements to be able to give us enough information to be able to help them it’s a real issue. So if you just have anybody do something for you, that you delegate that you’re not managing, there’s only two potential outcomes. One, they did what they were, quote, unquote supposed to do. And you look at him and go, what do you want a cookie, you were supposed to get us retired, or they didn’t. And I want this to get a little heavy for a second. If you and your spouse don’t have your money handled by the time you’re in your old age. And what you want is a picture that looks like this, just happy coasting off into the sunset, no problems, plenty to pay our bills, we don’t have to move in with our kids, etc. But that is too often, not how it goes people instead end up in their old age, in retirement in a mindset in a condition that they’re blaming their spouse. You know, the one spouse says, Well, I tried to get us retired and save more money, but you kept one your new car? Well, you should have told me we’d be broken our old age and then I would need a new car. How long can that go on before you have couples over the age of 60? getting divorced, which happens more often than you think? How do you live the rest of your life when you had the expectation your spouse was handling the money and you guys were going to be able to retire and then do it a bad investment or something else, letting them handle it didn’t turn out. And it’s not just with your spouse, y’all. It’s with the CPA, it’s with a financial advisor, it’s with any of those people that you would say to them, don’t worry about it, I trust you will do what you say should never come out of your mouth about money. We tell clients that that’s a good reason for us to wrap the relationship with them. Because it’s not our job to we we will be trustworthy. But you are the best person to decide what’s going to work best for you and your family for the long run. So that you and your spouse can be this picture, not the picture taken shortly thereafter where she chokes him out and throws him in the water. Because his term insurance only has two more weeks left on it and otherwise they’re not going to be able to retire. She’s really doing it for the good of the family.
But even if it picture it goes in the best case scenario where she says to him, you handle it. He says to his advisor, you handle it, the advisor handles it husband dies and then she’s never gotten the time of day from that advisor doesn’t have a little Shepherd trust Him, and has to figure out how to run a financial ship for the first time. Because she’s gonna fall in the water if she doesn’t get in. That’s the other 70 in her 70s or 80s. Yeah,
indeed. Well with that, guys, we hope that you’ve enjoyed this condensed version of the illusions of investing next week, Cory and I are going to be live 7am. Pacific. And we’ll be on YouTube and Facebook. And what we’re going to go through is we just broke out all these illusions created all these problems. Well, what is it you can do about it. And we’re going to show you guys a mock portfolio revisit parts of this content and just have a conversation about the kinds of challenges we see people run into, in simply trying to solve for these illusions, Corey, anything else you want to send our audience off with today?
Now we’ve given more than enough for now we want to keep it tight and condensed, but tune in live, or go find the link to the live show if you’re listening to this later, for the next part of the conversation.
Now, here is what I want to leave you guys off with we at sound financial group are committed deeply. This is why we do the podcast. We want people to get exposed to this information. We do not want big box financial retail continue to harvest the surplus of our clients. We don’t want you as a listener to be in a position that you’re not being told about these things that go on behind the scenes, you’re not being told about what it can cost you to simply buy the products that every magazine has ever told you are a good idea. We want you to be in the position to understand each of your decisions and make better ones for you and your family in the future to help you design because the design comes first and then build a good life. It’s your good life. It’s not theirs. Take control back from big box financial retail. We can all do this and make it through it together. But it requires we have an eye on the future we have an eye on our financial lanes, and that we really take seriously being able to design and build a good life.
Welcome to your business your wealth funding is Paul Adams and the man that needs no introduction,
Like Cory, let Cory recover from that cover. Yeah.
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