2021 EP1211 Planning Matters Year End Planning

Welcome once again to Planning Matters Radio, the show where we try to shed a little light on the complex financial issues of the day and maybe have a little fun along the way. My guest today is Peter Rishon. He is a Fiduciary Financial Investment and Retirement Planner, and he offers that proprietary optimized retirement plan for all his clients throughout the great state of North Carolina. He's also a Dave Ramsey SmartVestor Pro. Peter, thanks for joining the show. Always a pleasure, Scott.

And yeah, today we're getting into the holiday season here. So I'm going to try to keep it light, maybe have a little bit more fun on today's program, but always touching on those important financial topics, giving some tips, providing some clarity, trying to help people in their planning. Awesome. If you want to talk directly to Peter, you can call him at 919-300-5886. That's 919-300-5886. Or go to his website, www.rishonplanning.com.

That's richonplanning.com. And we're in the home stretch. It's been a crazy year. I feel like we've been saying this every year, but 2021 sure has been a crazy year. So why don't we try to keep sane and balanced during this holiday season for once? Now it's easy to do as I say, not as I do, but we're going to try to keep sane this holiday season. So we're going to review a couple lists here, Peter.

I'm going to see what you think about them. The good folks at Ramsey Solutions have provided a list of great ways to boost your holiday budget. And I want to kind of ask you what things stuck out on this list to you, but I'm going to start with the one that stuck out to me. Number one on the list is try the four gift rule. I love that.

I love that. And if you're trying to cut back on gift giving while still providing some great gifts, it's four gift rules, something they want, something they need, something to wear, and something to read. Now that rhymes, so it must be true, but it's simple and practical and really does allow you to kind of cut down on that holiday budget. What do you make of that, Peter? Well, if you have done that for someone, bought them four gifts, something they want, something they need, something to wear, and something to read, you've given them value.

I hope so. And you've given them some of the desires, right? So you've really checked off a lot of boxes there.

And if you've covered those four things, you may not need to buy 100 other things. I mean, I remember Christmases where the line of gifts stretched way beyond the base of the tree, into the living room. It seemed like down the hallway, around the corner. And I remember them myself as a kid. I can't say that I went without. I was pretty blessed in that aspect. Now, I grew up in a single parent-teacher household, but somehow mom always got it done for Christmas, and some Christmases were better than others.

But I also remember doing it for my own son. And in both instances, I remember that the week after Christmas, probably 90% of the toys and the stuff was just junk laying around the house. It didn't get played with. It didn't get used.

It broke almost immediately. And so if you cover these things, something they want, something they need, something to wear, something to read, maybe you don't need to get a million other pieces of junk that will accumulate around the house and end up unused and in the trash in a month or two. Yeah. It's the law of diminishing returns. I mean, if you are well aware with your financial expertise, I mean, the more you have of something, perhaps the less that each individual unit of whatever that thing matters. So if you get someone 10 books, that's great.

But if you get them the one that they really want, and maybe you were able to spend more time pondering what that book would be, then they'll appreciate it more. Peter, what are some other things that stick out to you on this list? How do you set a holiday spending goal? Well, so for one, I am, as you are aware and stated at the beginning of the program, a Ramsey trusted SmartVestor Pro. So I believe in a lot of the things that Dave Ramsey and the Ramsey team talk about on a day to day, week to week, month to month basis.

And over the years, I think that they have probably helped more people get out of debt, build a found financial foundation and begin to build and accumulate wealth than any other financial documented system on record. So setting spending goals, that's just maintaining the budget through the holidays, right? We really should be paying attention to our budget. And I know a lot of people that don't, they are lucky or hardworking or blessed enough to be earning more income than it takes them to cover their expenses. Right.

And so fantastic. But it also leads to maybe not paying as much attention to the budget and expenses. They need something. They go out and buy it.

No problem. Not not really pinching pennies or watching where dollars are going. Well, guess what? For those same individuals, when they leave that paycheck, they leave the job when they retire. Not only does it become important, but the change in income is that much more dramatic. So we really should be no matter what our financial status is, be paying attention to where our money is going and setting a holiday spending goal specifically is just doing that through the holidays.

So it shouldn't be a leap to do that. But even if you're not one that pays a large amount of attention to the budget, to the spending, limiting yourself during the holidays is going to prevent pain into future months the following year. It's going to get you in a better situation come January. You won't have those credit card bills to pay off. And you can maintain and stay on track with spending and savings goals. What are some good kind of methods or techniques that you know about for someone to kind of save up for Christmas all year long as opposed to paying for Christmas last Christmas next year and then redoing the cycle all over again?

Yeah, well, unfortunately, that's the way Americans have actually been taught to do it. Pay for last Christmas next year. That's called a credit card going into debt.

We don't want to do that. There used to be something offered through a lot of employers called the Christmas Club. I remember that. It was a fairly interesting concept. It's basically you budget a little bit of money to go to a separate savings account right out of your paycheck and then it's there for you to buy your holiday gifts and goodies and that was a pretty interesting concept.

It was very useful. I wish that the Christmas Club money had earned a little bit more throughout the year had been put to some some better use rather than just being kind of cold storage for your dollars. But, you know, if you don't have that Christmas Club at your employer, you can do the same thing with your personal money. Set up an extra little savings account at your bank and just every month or every week or every paycheck. Move a few dollars over to that and then you don't have to use the credit card. You've got the money that's in that account earmarked specifically for an intended purpose, which is to buy the Christmas gifts and and bring joy to your family and loved ones. Yeah, I mean that you could make your own Christmas Club, essentially.

And and if in an ideal world, to your point, make it so it pays you a little bit more interest or or or avoids fees or whatever in the most effective way. Now, now look, you know, there are there are other things that we can do. You need to earn a little extra money. Plenty of seasonal jobs out there. I mean, no matter where you turn, you see five help wanted signs on every corner.

So you could go out and earn a little extra money. A lot of people I know bake, bake their their Christmas gifts. You know, something nice to eat is always appreciated, whether it be sweets or breads or what have you through the holidays. We love those things. You can make your gifts.

You know that that handmade heartfelt gift may be the one that is the most appreciated, even if it's just an ornament to hang on the tree for next year to remind whoever you're giving it to that you love them and continue to have loved them. You know, those are the kind of great things that that I really appreciate. I love experience gifts, just time, time with my my loved ones. Those are the things that I like.

And I, I try to give those kind of things to others as well. This this holiday season is a great time to kind of reset your your financial situation, maybe your situation with your advisor. If you're someone who maybe does not have a financial advisor or does not have sufficient financial advisement this time of year. What would you what are the type of questions that you would ask? Maybe if you're vetting financial advisors this time of year?

What type of questions would you ask and why would you ask them? Well, listen, money is important, but ultimately it is not the most important thing. It's a tool that supports the values that you have that are the most important thing. And so you want to make sure that your your advisor, your source of advice aligns with your beliefs and your values.

So really, the initial interviewing part of this should be, who are you? Tell me some of your experiences with money. Why do you believe that money is important? What does money mean to you?

What are some of your good or bad experiences with money? You know, I think that those are conversations that advisors and clients should have. And those questions should go both ways like that information should be shared reciprocally so that both people know that they've got similar values with money so that the planning can can be done together.

Now, look, I'm not going to hop into somebody else's profession and be able to do what they do on a high level day one. And for most people seeking financial advice, they don't know everything that I know because I'm in this profession day to day. But at the core of it, the values around money should be in alignment there, you know, and you should get a good feeling that I'm talking to somebody who believes a lot of the same things that I believe. And they may be in a different kind of financial situation potentially.

They may be 20 years older or 20 years younger than me or have more or less. And depending on what side of the advisor client relationship you're on, you decide which one of those is important to you. But the values I think are really the most important thing. Beyond that, I think that you need to talk about big events in your life. I think you need to talk about where you are and where you want to be. If you've already done some planning, what the results have been from that, what you envision to be your lifestyle when you retire. Not everybody, believe it or not, envisions retirement to be the same thing. I talk to more and more people all the time that say, well, I'm going to keep working in retirement. And I'm like, well, so is that retirement? Yes, it's retirement because I'm not going to do what I've been doing for the last 30 years. I'm no longer going to do what I have to do. I'm going to work the way that I want to work. Some people don't want to work at all.

They'd rather garden or travel or just sit on the lazy boy and read books. Nothing wrong with that. But defining what that means to you and what that looks like to you is going to be an important part of that process. If you want to let somebody else do the worrying for you, if you're not a financial professional and don't want to become one when you retire, that's a reason to start having those conversations.

Some people have had that relationship but aren't necessarily thrilled with the results. That may be a time to talk with an advisor. But those are the things that that conversation really should be about.

And at its core, really all about education. How do I know more about my money and what my money is doing for me? Studies show that those folks that avoid going to the dentist, their reason for avoiding that is that they haven't been to the dentist in a long time and they're kind of afraid of what they're going to find out. What do you say to the person who kind of has that relationship with their financial advice? They put off getting the proper planning or being proactive for so long that they're almost afraid to talk to someone about what they're going to hear. The fear is real.

And I get it. I understand that I'm worried about what I may uncover. I am scared of going to the dentist because I have not been to the dentist in so long.

They're going to tell me that I have cavities. Listen, if you don't go, that problem is not going to get better. As guys, we are notoriously slow to ask for directions and go to the doctor. Just kind of the facts there.

And whether that's a wild stereotype or not, it is what it is. We don't get less lost by not stopping and asking for directions. We don't get more healthy by not addressing existing health issues. You don't get in better financial shape without addressing some of the problems, some of the behaviors and formulating a plan.

So, I would get over that inertia. I would encourage people to be proactive. And I know this is the time of year where other things are higher on the priority list, but they really shouldn't be. We want to move into 2022 with a plan in place and knowing that we're making solid financial progress. Well, that doesn't start on January 1 or 2. That starts now.

And I had another analogy that I've heard. If I wanted shade in my yard, the best time to have planted a tree would have been 30 years ago. But if I don't have shade now, the best time to plant the tree is today.

If I want shade eventually, I need to go ahead and start planting that tree today or as soon as possible just because I didn't previously. I can't beat myself up for that. I probably can, but I shouldn't.

I should just start where I have the ability to start now, knowing what I know now. You mentioned that this time of year is so kind of fraught with both stress and stress can be good and stress can be bad. I mean, that's part of the fun and the anxiety of this time of year.

The idea of letting someone else do the worrying for you, that sounds pretty attractive for me as someone who has seemed overwhelmed with not just everyday issues, but the holiday in specific. What kind of value is that for the clients that you have that you're doing the worrying for them? Well, I see this most commonly as people are making the transition to retirement.

And I do see this across the spectrum. But particularly as somebody who may have done a very good job in working and earning money and then putting some of that money away and saving and building and accumulating. When you leave the paycheck behind, it is a whole different set of worries. And so we don't want to say, whoops, I made a mistake with retirement. Well, better luck next time.

It'll go better next time. You know, there's an old saying, smart people learn from their own mistakes and geniuses learn from the mistakes of others. Well, in retirement, we don't have the luxury to just be smart and learn from our own mistakes. We really need to be geniuses and learn from the mistakes of others. But if you don't know the mistakes that others have made, and oftentimes when we're working, we haven't really focused on a lot of what are the retirement mistakes others have made.

We may not know what those are nor how to avoid them. And that is the benefit of letting somebody else do some of that worrying for you. And I'll let you know, when I do that worrying, I'm worried. I look at somebody's situation and I look at Murphy and Murphy's law as though it's optimistic. What can go wrong will, and it's probably going to go very wrong and right at the worst time.

And if that happens, what's the outcome? And we poke through that on paper during the planning process so that after we're done, it doesn't sound like that's a whole lot of fun during that process, but after we're done, hey, now we don't have to spend a lot of time worrying about those because we prepared and planned for them. We now know what the worst case scenario may be and how we will handle it if it does happen. That is a true plan for the worst and hope for the best kind of situation.

And if we land somewhere in between, we were ready for it and we are comfortable. And that's really where letting somebody else do some of that worrying, it happens in the planning process. I don't have to worry for a lot of my clients day to day. You know, there are some things that I worry about in the financial world. I don't love seeing this inflation that we're going through. I worry that there may be a market downturn in the future. I worry about what what happens if taxes go up or their health care events that my clients go through. I worry about, you know, their their legacy if they pass away there. There's worry there for specific events, but we have planned for them.

So it's not like we've got to spend every moment of every day having those and carrying those worries. And I think that's what my clients experience by going through that planning process with a professional as well. Pretty smart. If you want to talk to Peter or Sean directly about these issues, best case scenarios, worst case scenarios, all the scenarios in between, you can call them at 919-300-5886. Peter, if someone does have a relationship with a financial advisor, what are some of the red flags maybe that they should be thinking of? Maybe they should they should change their relationship or find a different financial advisor. What are some of the things to keep kind of keep an eye out for? So a few of the big ones, if all the conversation pertains to is rate of return and and nothing else has really been discussed as far as your goals, your life, what what money means to you.

That to me is a little bit of a red flag. And I love rate of return as much as anybody. But but but it's it's got to pertain to what your specific goal is with your money. You can have a fantastic rate of return in the wrong place and it does you no benefit. You can have a moderate rate of return in the right place and you didn't need to take unnecessary risk to to achieve your goals. In addition to that, I think that if you have not heard or talk about the tax implications of your investment, if it's been all about the investments and the growth, but not about how you're actually going to be taxed on this money in the future.

That's like the tip of the iceberg that sank the Titanic on indications that something is is missing, that you are missing the picture. If if you are within earshot of retirement and your adviser hasn't talked to you or spoken with you or discussed Social Security claiming strategies or Medicare or long term costs and expenses like warning red flag indicator that you are missing half the story. And look, there are a lot of good accumulation advisers out there. But not every adviser is everything to everybody, right? And there are a lot of advisers that are specifically geared what they do is for the first half of the game in accumulation while your paycheck supports your standard of living and your ability to invest. A lot of people haven't thought about that, but the paycheck is what supports the investment portfolio.

You've never done the other most most of the time the investment portfolio during the accumulation years has not supported the paycheck. Well, that is the specific focus of a different group of advisers. Oftentimes the same adviser is not well equipped to handle both. They don't specialize in both areas.

Right. And, you know, I've got a general practitioner doctor, but if I've got something specifically wrong with my eye or my heart or my bones, they they refer me out to a specialist. And that's sort of in the financial planning world.

There are growth and accumulation specialists and then there are preservation and income and retirement specialists. And you really at some point need to get that that transition through a second opinion review and talk about that second half of the game. So it's not it's not even that it is anything good or bad necessarily about the adviser.

Your situation may have changed just through the stages of life to make it appropriate. So I see a lot of people who have done a fantastic job with great advisers. Right. But the plan is not complete. Right. They have done nothing wrong up to this point. It is just moving to the next phase of planning.

And that that that takes some work and that takes a little bit of guts to understand that, hey, the person that has has done well for me may have done absolutely nothing wrong. But it's time to double check and make sure that no no hole has been left unaddressed. No stone has been unturned in what is next to come. Right. This is planning.

It's not reacting. So we got to look forward and be proactive and prepare for what's next. Some folks might feel obligated to the person that they've had a long and like you said, maybe very fruitful and successful relationship with what are some ways. What are some appropriate ways? What are some tactical ways to kind of start that conversation? And not necessarily with the choice already being made that you're going to move on, but kind of starting the situation, the conversation about changing strategies or perhaps in an extreme scenario, finding a different adviser.

Well, what are some ways to do that delicately? And you know, we have to do what's best for us. So while there may be a very good business relationship and maybe even in some cases personal relationship, we also have to look at our personal situation and make sure that we're doing the best things for ourselves moving forward. And as a fiduciary adviser, when I'm providing advice to clients, my responsibility is to give them the advice that is best for them. So we've got to make sure that, A, we are dealing with that fiduciary adviser, that B, their advice is geared not only to where we are today, but to our future. Some ways to address that is, hey, you know, we've made great progress.

We've made great returns. We haven't talked about tax implications. We haven't talked about order of operations in creating income.

We haven't talked about Social Security. Are these areas that you can help me address or do I need to speak with somebody else? You know, that's one area. Or you may have already gone out and got the education and realized that those are areas you do need to address. There's nothing wrong with taking some questions back to a current adviser if you've got a relationship with them. There's also nothing wrong with moving on from a current adviser if you feel they have not adequately prepared you for those next steps.

So it's kind of a personal case by case basis. We never forbid anybody from having a conversation with the person that has done well for them. That in itself would be a red flag. Yeah, absolutely. You can't go back and talk.

That would be a red flag. I don't think that you necessarily owe it, but a lot of people do feel like it is at the very least a courtesy to an adviser when moving accounts. And there's nothing wrong with that. Also, Scott, there is nothing that says you have to move every dollar that you have to a single adviser. And we do not require exclusivity. And in fact, I can be an unaffiliated party providing advice on accounts. I don't have to manage accounts personally. If you've got an adviser that has done well managing accounts and you just want to come and get advice, that's the difference in fee only and fee based. That adviser may be getting their compensation and being paid based on the amount that they are managing. And I could be compensated based on the advice that I am providing or if you want to move accounts over, I could be compensated based on managing the accounts. But if you've got a million dollars with them, there's nothing that says you have to move over all million dollars. You know, if we decide that you want two or three advisers and a lot of people with over a million dollars do have multiple advisers, there's nothing wrong with any of those things. And if somebody tells you that there is something wrong, that is, again, a red flag. Right.

And it would probably be important to tell if you did have multiple advisers, tell each adviser that you have multiple advisers so they can kind of be aware. Oh, this is a more aggressive person. This is a more conservative person. This is what have you.

I actually have that conversation pretty, pretty often. I do not require exclusivity. But what I ask is if you've got other accounts, other advisers, other things going on, that I am made aware of it so that when we are putting the plans together, I'm not duplicating it. I'm not working against it. There is not problems within the plan because of unknown factors or accounts or amounts that are out there.

You know, it's not a problem that you've got multiple accounts in different places, but it is a problem if the plan does not account for all of them. Wow. Well, that's great stuff. That's some good food for thought from Peter Rochon there that maybe you can ladle on top of your holiday smorgasbord this year. If you want to talk directly to Peter, his number is 919-300-5886. That's 919-300-5886. Or you can go to his website, www.richonplanning.com.

Richonplanning.com is how it's spelled. Peter, any final thoughts before we say goodbye for the holidays here? Well, we've got some great checklists and Santa's got his list.

He checks it twice for your financial progress and well-being. Why don't you have a couple of lists and check them twice? We went through a couple already, but the 12 questions to know if you are ready to retire. I think that that is something that everybody within the window of retirement, if you are confident that you have answers to all 12 of these, you're probably in pretty good shape. If there's a single one of them that you don't have a confident answer to, then it probably is a strong indication it's time for you to get a review. So if you'd like that, it's a one-page list of 12 questions to know.

Are you ready? And it's great to go over on your own time. If a coworker has been talking about retiring, hand it to them, a family member, friend, loved one, spouse, what have you. It would be good food for thought for them or for yourself to go over. And then we also have the 2022 financial and retirement planning checklist. This is about 30 items that you just go through and you check off from an income, an investment, a tax, a healthcare, and then a legacy and a milestones perspective.

All things that I think are important for people to know and be aware and see where they are in their financial progress. So if you'd like your checklist so you can check them twice, give us a call and we're happy to email those out to you. 919-300-5886 is the number and that advice, Peter, much like the trees that many of us will have in our houses this holiday season is evergreen. Thanks so much for joining us on Planning Matters Radio.

We'll see you next time. This has been Planning Matters Radio. The content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy. You are encouraged to seek investment, tax or legal advice from an independent professional advisor. Any investments and or investment strategies mentioned involve risk, including the possible loss principle. Advisory services offered through Brooks' Own Capital Management, a registered investment advisor. Fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker dealer services. Advisory clients are charged a quarterly fee for assets under management while insurance products pay a commission which may result in a conflict of interest regarding compensation.