Plan Smart, Retire Well with Mark Fried, Episode 12

Cynthia (00:20):

And welcome to plan smart retire. Well, my name is Cynthia DeFazio and I’m joined today by Mark Fried and Marcus, the president of TFG wealth management, as well as my co-host today. Mark, how are you today?

Mark (00:31):

I am doing really well. Everything is great. How are you? I

Cynthia (00:35):

Am doing really well. Also. Everything is great. And again, I know that you’ve been so busy because the show has, have been doing so extremely well for you. We were talking before the cameras started rolling today that the consultations that you and Lisa have scheduled have really been quite amazing in number

Mark (00:52):

And really amazing. And we’re just trying to work all the schedules out. You know, we, we try and we’re going to, we are committed to 10 slots for this show every week. It’s just becoming so popular. And then as people come in, they’re referring their friends, which that is the highest compliment, right? That’s the highest form of compliment is when someone will refer you in, even when they haven’t even become a client yet. So it’s really been wonderful. We just get to help so many more families. Absolutely.

Cynthia (01:24):

And again, are you allotting like 30 to 45 minutes for your new clients? Mark? How are you balancing that? Because I know it’s been quite busy,

Mark (01:31):

So 30 to 45 minutes for the first meeting, when people come in, when they call him from the show. And then after that, we might have a longer meeting when we’re really going through the retirement readiness review. You know, it takes time to really get to understand someone has as a fiduciary we’re, you know, TFG wealth management is a registered investment advisory firm, which means we’re a legal fiduciary, and we need to act in our client’s best interest. And that means we have to understand who you are, what you’re about, what are your goals? What are your needs? Well, before we can actually give advice, it’s kind of like, you know, if you go up to a doctor and you say, you know, I have the spot on my hand, you know, what do you think it is? And the doctor gives you a diagnosis without running all the tests and really getting your history well, that’s malpractice for them. And we are very similar to that in that, at our level of expertise, we have to make sure that we understand as much as we can about a person’s situation, a family situation before we give advice. Sure.

Cynthia (02:36):

Mark, let’s talk a little bit about the difference between someone who specializes in more of the accumulation years for someone versus distribution and why there’s a difference.

Mark (02:46):

Cumulation is when people are putting money away. And that really is much more of a, what I would call investment consultant. Now it shouldn’t be, it’s just what it’s evolved to. So you’ll go in, you might fill out a risk questionnaire. They’ll say you’re a conservative, your, a moderate, your aggressive they’ll pull out the pie chart and say it is keep dumping money in here. What we do is we are really transitioned specialists and then retirement specialists. You have to go from that to now introducing things like how are we going to generate income? How are we going to avoid loss? How about worrying about taxes? You’ve been putting money into those tax deferred vehicles, the 401k, the IRA. How do I get it out? Nope. So let me share with you this. We had a client who called up and they were putting a new roof on their house and they thought, well, I’ll just take money out of my IRA.

Mark (03:48):

And they’d called up to take money out of the IRA. And I said, so, you know, what’s the money for, well, I need a new roof. I called around, I got three bids. I got a $25,000 bid at $20,000 bid and an $18,000 bid. Well, they went with the $20,000 bid. So they were calling up just to take money out of their IRA. I said, hold on a second. That $20,000 is going to cost you $23,000. Wow. Because to get $20,000 out of an IRA, you have to take out enough money to pay the taxes. So instead we use one of our other strategies to help them get the money out. Now, your typical advisor, your typical accumulation advisor would never have probably gone there. You call up, you want money. You’re, you know, you’re allowed to prove under the rules and they just, you know, tell her assistant, send out the check and the back office will calculate.

Mark (04:41):

And you won’t find out that you took $23,000 out until you get your statement the next month, if you even realize it. And that’s a big difference that we are between folks who are just trying to accumulate money. And then people we work with who are maybe 10 years, five years out from retirement. And we’re transitioned them from that phase of life, into the next phase of life, retirement, which is not necessarily just hanging out and sitting around today. People are running all over the world. It’s amazing. I love hearing about the trips and the experiences and the things that everyone’s doing. Absolutely.

Cynthia (05:19):

Again, life begins again with retirement. Mark is what we’re hearing. And I think that’s amazing today. I want to talk to you a little bit about diversification and actually risk if you don’t mind those two things together. So let’s talk about diversification first.

Mark (05:34):

Well, you, you know, I give talks throughout the year different venues and, and part of, one of my talks is I call it the myths and misconceptions of risk and diversification. And the question that I will ask when I start is why do we take risk? So Cynthia, why do we take risks?

Cynthia (05:55):

I would say for the, you’re looking for the reward, the chance, right?

Mark (06:00):

So, and what I’ll usually hear is we take risk to make money. And so then my response is, well, if we take risks to make money and we all want to make money, why don’t we take as much risk as possible? And you of course answered correctly, which is the chance to make money, but you also have the chance to lose money. And so it’s really important. Everybody thinks, wow, risk reward. I’m going to take this risk, you know over time, I’m going to make all this money. Yes, probably, but there’s a lot more to it than that. And that’s where diversification, which I call the other side of the coin. So risk is on one side, diversification’s on the other diversification is a part of the process of managing risk. But again, it’s the myths and misconceptions of diversification because a lot of folks think diversification is one thing, but it’s really something else

Cynthia (07:01):

Let’s talk about that. They think it’s one thing, but it’s really something else. So now we have to dive further in, because now I’m curious,

Mark (07:09):

Diversification is a way to limit risk. And most folks think diversification is I’m going to take some bonds. I’m going to take some stocks. I’m going to have a 60, 40, a 50 50. Maybe we’ll throw in a little real estate because each one of those investment classes is what we call them. That’s stocks, bonds, mutual funds, ETFs, all that good stuff. And they’ll kind of play off of each other. And you know, when one’s down the other’s up and it’ll moderate the risk, right? Moderate the risks, but that’s not the case. Diversification is very different. And you know, because it’s so important to understand risk and diversification. One of the things we did when we put together the retirement readiness review is one of those parts which we call our stress test is about diversification and risk, where we actually analyze and let people understand how much risk they’re taking and what kind of diversification they have. And what they often find out is that they don’t have any diversification. And they’re taking a lot more risk than they thought. Hmm.

Cynthia (08:23):

Well, Mark, this is the perfect time for us to open up the phone lines to the viewers at home. Can you tell them what they can expect to receive this week by calling in? Yes.

Mark (08:30):

For the first 10 callers every week we set aside 10 appointments to take you through our retirement readiness review. I just mentioned that we do a risk diversification analysis. We also take a look at how much income you can expect from your investments for retirement, and then how much you need to make or earn on your investments in order to make sure your money for the rest of your life. So call now (888) 568-1755 that’s (888) 568-1755. I can’t stress enough that you need to do that right now, because as the show is going on and we’ve gotten more and more popular, those slots filled up faster and faster every week. So call now, if you want to come in and speak with me or Lisa at (888) 568-1755.

Cynthia (09:21):

And you’ve had people ask if they can be on your waiting list, Mark as well. So to the viewers at home, the number to call is (888) 568-1755. As Mark mentioned, there are 10 spots available each week. Please don’t miss the opportunity to grab one of those spots. Again, all you have to do is pick up the phone and call (888) 568-1755. Don’t go away. When we come back, we’re going to have so much more about diversification and risk. You’re not going to want to miss it.

Speaker 4 (09:48):

How confident are you in your current financial plan? Do you know with certainty how the recent market volatility will affect your future hopes and dreams? How much are you paying in taxes and how much are you losing to unnecessary high fees? You didn’t work to save this money so that you could spend your time worried in retirement. Now is the time to take charge of your finances. So you can feel confident about your future call in during the next 30 minutes of today’s show only to set up an absolutely complimentary, no obligation full-blown financial review that will result in your own customized written plan. This is a $999 value that we’re giving away complimentary to the first 10 people who respond. We’ll start with a full-blown analysis of what you already have by running a report to untangle how much you’re currently paying in fees, how you’re allocated for risk and what it’s costing to work with your current advisor. Next we’ll identify your goals. Where do you see yourself in the next five years? Where do you want to go? And who do you hope to go there with is your current financial plan set up to get you there without mishap, let’s design a roadmap to create a financial plan. You can follow with confidence, get the piece that so many people are missing from their retirement. Find out how having a written plan can make a difference to your retirement dreams. Call now to schedule your complimentary no obligation full-blown financial review today,

Cynthia (11:22):

And welcome back to plan smart retire. Well, my name is Cynthia DeFazio. I’m joined today by Mark freed. And Mark is the president of TFG wealth management, as well as my co-host today. Mark, a great show that we’re having today. I love listening to you talk about risk and diversification. Let me ask you a question. Why is diversification even more important as you’re approaching retirement and in the retirement years than ever before?

Mark (11:47):

Well, I want to thank you for saying that you enjoy listening to me because I don’t often, you know, I like to talk this stuff, so it’s always great to have someone to listen to me, but okay. Diversification is how we minimize your what’s called volatility. Okay. But we’re not going to get into volatility because it’s a big word and I don’t want to get too complicated. Let’s just leave it as we’re trying to avoid loss during retirement. And that’s why we use diversification. Now, when you’re saving money during the accumulation phase, you diversify to make sure not necessarily to avoid loss, but to make sure you’re taking advantage of different gains, but in retirement, that loss, that one-time loss that might be temporary could destroy your whole retirement plan. So that’s why we need to diversify. And well, most folks think diversification, I’m going to have some stocks and bonds.

Mark (12:45):

I have some bonds. I’m going to have some mutual funds, some ETFs, and that’s a nice start, but it really doesn’t go far enough because what happens is during a downmarket, during a recession, we see that almost every asset class that people talk about in diversification, they all go down. Some might not go down as much as the other, and nobody’s doing anything. There’s no management of it. You’re just, you’re diversified. You’re holding these investments and that’s it. So we have to go to the next level. We kind of call it, investing evolved, right? And this next level is where you actually have to use different strategies. Okay? And we call them core tactical and diversify. And we use diversifying two ways. But diversify core is this traditional approach, okay? Asset allocation, what everybody does. And that’s usually where folks stop tactical means that we have experts in different areas that are managing for a specific strategy, right?

Mark (13:55):

They are experts at large companies in a certain field or they’re experts at managing a long investments in short investments, or they have different models that they use, where if things are going downhill, they might get you completely out of the market. And all this just happens. You don’t have to call up freak out. It’s not like, Oh my goodness, I see the market going down and you call your, I have to call your broker. And you got to tell him, you know, do this, do that. That’s not how it works with us. That’s what we’re paid to do. And that’s why we have all these different experts that we oversee to make sure that if things are going in the wrong direction, that adjustments are made now on the other hand, tactical can also help us what we call enhanced returns. All right. If things are going really well, we might want to do even more of that.

Mark (14:48):

Whatever it is, growth stocks are doing really well. Things are doing really well. Now we’re not making a dramatic change, but we’re going to, what’s called tilt your investments. And so we’ll move your money in a way that to help participate more in that upside. So tactical means limiting losses, trying to get more out of gains. So that’s a part of it. That’s another layer. Another part of strategy is a diversifying strategy. And this is kind of completely off the market. It’s not about following the stock market or the bond market. It’s about investing in things that don’t follow the market. Things like commodities, managed futures currencies different types of funds or ETFs. We don’t have time to get into it right now, but just understand that if you have all your investments tracking the market, that means at the end of the day, you’re just going to go up and down as the market goes up and down, and you really can’t afford that.

Mark (15:57):

You need some of your investments to be safer, and you need some of your investments following other types of investments than just the market. And we put all that together. Now there’s a third level of diversification. And this is one that I don’t think any of those accumulation folks do. And it’s called tax diversification and people think, well, why do I need to diversify taxes? You need to diversify your tax situation with your investments because a lot of your money might be tied up in a tax deferred account. If you have a 401k or an IRA, every dollar that comes out is taxed as income, right. Just goes right on top of your income. Okay. Sense. Yep. Absolutely only. Not all investments need to be taxed as income. Some investments can be taxes. What’s called capital gains. And oftentimes that’s a lower tax bracket, right?

Mark (17:02):

So what happens is people will put the wrong kind of investment in their IRA. They need to own it, right? You need to own a particular investment. Let’s say Apple has done really well, right? So apples in your IRA, great. It’s going up and you sell it and it comes out and you’re going to pay 25% tax on it because it came out of your IRA. Now, if you own your growth stocks in a different kind of account that let’s say was taxed at capital gains, you probably could have saved half of that. Half of the taxes. So even where you’re putting your investments as important. So it’s just layer after layer after layer. Now, again, not everybody needs all these different of diversifications. You know, it’s important for some and not for others. And that’s why we have to go through our process.

Mark (17:55):

That’s why we have to really analyze, you know, and when we talk about the first step, which is the retirement readiness review, so what we’re doing is we’re starting in really understanding somebody’s situation so we can figure out, do you need all three levels of diversification? Maybe you just need one or two. So we start and that’s where the retirement readiness review starts. And then we get into you know, how much income do you need? How much do you need to earn? Which again gets back to risk and diversification. And then the last piece is where are you now? What’s happened over the last 30 years? How much risk do you have? If we see another downturn in the market, are you going to lose 20, 30, 40%? And if you do, is it going to be on the day you retire? You don’t want it to be on the day you retire, right? That would be bad. So folks can give a call. Eight eight, eight five six eight +1 755-888-5681 seven five five. And you can ask for an appointment with me or Lisa and we’ll start the retirement readiness review process. And as everybody knows, there are a limited number of slots. So please call right now. (888) 568-1755. If you are all concerned about, do you have too much risk? Are you ready for retirement? You know, what’s the road ahead look like for you? Eight eight, eight five six eight one seven five five. Give a call right now,

Cynthia (19:26):

Mark. Thank you so much to the viewers at home. As Mark mentioned, we have a limited number of spots each week. We have four available still this week. Only that number is (888) 568-1755. Again, if you have any questions about how to retire comfortably, Mark and Lisa have the answers for you. Don’t miss the opportunity to take advantage of this complimentary consultation. (888) 568-1755. We’ll be right back after this very short commercial break

Speaker 5 (19:52):

As a good saver, you’ve been putting away money during your working years. Studies find that the biggest fear of retirees is running out of money market volatility. Isn’t just a downward movement of stock prices. It’s the size and frequency of change. The more dramatic the ups and downs, the higher the volatility. This can put sabers who are newly retired or a few years away from being retired at greater risk. Today’s generation of retirees is not receiving traditional pensions as our parents or grandparents did. Instead. We have retirement accounts such as 401ks or four Oh three BS. These accounts typically exposure, muddy to market risk. The last thing you want right before retirement is to lose a portion of the money you need for income. But how do you turn these accounts into a retirement income? Is it safe to keep all your retirement money sitting in the stock market? The last you want is to lose a portion of the money you need for income due to market loss, by working with a financial professional, you can learn how to turn a portion of your savings into an income stream for life and income for the life of your spouse. If you’re married, we all have moments in our lives. When we wish we had taken action sooner, don’t let procrastination rain on your retirement parade act. Now, before it’s too late, please call our office to set up your no cost, no obligation retirement income review today,

Cynthia (21:18):

And welcome back to plan smart retire. Well, my name is Cynthia DeFazio and I’m joined today by Mark freed. And Mark is the president of TFG wealth management, as well as my co-host today. Mark a great show. We’re having again, talking about the importance of understanding risk and diversification. So I have a very important question for you, and I’m very curious to your answer. How do you know if someone is taking too much risk? How would I know if I’m taking too much risk?

Mark (21:43):

Great question. So there’s a couple of different measures that we have to take. We have to do some testing, right? Because like doctors, you have to kind of test the patient to see what’s going on. There is an emotional aspect of risk. And then there is the numbers part of risk. Now, a lot of folks, if you’ve ever been to a financial professional, you probably were given something called a risk questionnaire where they asked you, how do you feel if the market goes up down 10% or down 10%, and at the end they add up a score and they’ll tell you you’re conservative. You’re a moderate or you’re aggressive or somewhere in between. Well, that’s great and need to do it. But the purpose of that is to protect the financial professional because you see, as long as the financial professional puts you in a risk PI, you know, that matches or is less than that questionnaire, then they’ve done their basic level.

Mark (22:43):

All right? And they’re protected from any kind of liability. Now, obviously as fiduciaries, we take a couple of extra steps though, on an emotional level, we actually have this wonderful chart starts with the amount of money. You have a million dollars, and then we show you if the market went down in real dollars, how much would you have lost? And we asked you which one, now husband and wife get a separate question and a separate graph. Each one has to answer because what we find is it’s very different. And by the way, the man may be aggressive or conservative, or the, the wife might be aggressive or conservative or you know, partners. It can be all different. So you can’t make any assumptions. The last part, which we think is very important, something that really differentiates us is we figure out how much you need to earn.

Mark (23:42):

Okay. Do you need to earn four, 5%, 6%, right? That’s step two of the retirement readiness review because doesn’t matter whether you’re conservative, moderate or aggressive, it doesn’t matter how emotionally tied you are. If you’re not making enough money for retirement free money to last, well, then you got to change something. So we look at that and then once we have that number, we take all three pieces and we can come up with an investment strategy for you. Now that an investment strategy will have the three levels of diversification to it. And and then we get started. Now your risk level does not stay the same throughout your life. And I’ll tell you something even more interesting. Most people’s risk level changes as the market changes. So if someone walks in and the markets are down, they’re going to have a much lower risk level tolerance, risk tolerance, this level emotionally, then when the markets are up.

Mark (24:43):

So as a professional, we have to take that into consideration. We have to adjust, understanding what’s going on in the world. Our basic philosophy as an advisor, and every advisor should have a philosophy. If you’re working with someone and they don’t have a philosophy that they believe in and they follow well, then, you know, it’s just whatever, you know, the next, the next strategy through the door, our philosophy is in retirement. You need to take enough risk to achieve your goals, but no more than you need to take. So it isn’t about maxing out risks. You might be an aggressive investor, but if you don’t have to be in retirement, why should you? That’s true, right? We want to make sure the money’s there. It’s going to serve its purpose, right? Your money is going to serve you. You’re not serving your money.

Mark (25:36):

You’re not going to, you don’t have to get all scared when the statement comes in and you open it up or, you know, what’s the number going to be because when we take you through the process, when you take you through the retirement readiness review, and then you become a client in, we’re doing even more work with you and we’re educating you and we’re showing you how the investments work. And, you know, you come to our different events over time. You’re really going to understand what’s going on with your money to a point that you can enjoy your retirement, that you can relax and do the things that you want to do.

Cynthia (26:09):

And that’s really what it’s all about. Mark. We’ve talked about this before and in the beginning of the show, that retirement really is when life begins again, gone are those days when people retired and they just sat on the porch with lemonade. We don’t think about that anymore. We think about people being active and doing the things that they’re passionate about and the things that they enjoy.

Mark (26:26):

I think that retirement is when you know that you can stop working, right? You don’t have to stop working. You can change jobs. We have a client and she was a big time executive at a major corporation. And she just wanted to relax, retire and work with kids, you know, and her advisor that she was working with told her she couldn’t. Whereas when, because, you know, she didn’t have enough money, but when she came in to visit with us, we started with our retirement readiness review. And then we went through our plan. We showed her how to do it, right. And, and I think that that’s our job. It’s teaching people how to get their dreams and goals with, through a smart financial management, through planning smart so they can retire well. And you know, let’s, it’s going to give the number one more time. We’re wrapping up eight, eight, eight five six eight +1 755-888-5681 seven five five. Call schedule an appointment. Let’s get started. It’s never too early and it’s never too late to start planning for retirement.

Cynthia (27:32):

Mark. Thank you so much for another amazing show this week. I know the viewers are soaking up all the information and the phone lines are going crazy already to our viewers at home. Thank you so much for spending time with us again this week. We know you have questions about how to retire comfortably Mark and Lisa have the answers for you. Again, we look forward to seeing you back here next week, be safe, be happy, be blessed. And thank you for watching.