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2022 EP0115 - Planning Matters Radio - Know Your Advisor

Planning Matters Radio / Peter Richon
The Truth Network Radio
January 16, 2022 9:00 am

2022 EP0115 - Planning Matters Radio - Know Your Advisor

Planning Matters Radio / Peter Richon

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January 16, 2022 9:00 am

What are the most exciting or most disappointing moments I have experienced as an advisor? This is just one of the many questions you can ask Peter Richon to find out answers to your questions just call at (919) 300-5886. 

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Peter Richon

We want you to plan for success.

Welcome to planning matters radio welcome once again to planning matters radio. I am joined once again by understanding your investment options.

A fiduciary financial investment and retirement planner serving the great state of North Carolina and Dave Ramsey trusted smart Mr. Breaux, Peter Shaw, thanks for joining. Always a pleasure Scott, thank you for the warm welcome were here to help people in their financial path in progress. Looking at their investment, their retirement plans is making sure that we got no stone left unturned not know blind spot that that we have not uncovered and identified and trying to just provide down to earth education.

So you have a better understanding and more confidence with your money is not just financial product offer here and by your financial advisor at savers and investors ongoing relationship or you can have a resource for guidance to get vital questions answered and your concerns addressed and up Peter. I think trust and communication are probably paramount in forming that relationship with a financial advisor and the client.

Yeah, indeed. I mean, I think that there are a few questions that people have in mind when they end up speaking with an advisor. What are your credentials. How long have you been doing this what kind of investments do you use, how much do you get paid. How do you get paid. Where does that compensation come from. Do I write you a check to you take it out of the accounts to somebody else pay you but really it is a relationship and people may not on the surface level, understand it, but I got just as many questions for them when they show up in my office trying to get to know who they are as people as savers as investors and and how they handle their money and then what are their views and values with their money.

You know, have you had any bad experiences with money dig that you have any good influences in your life with money. What was money like growing up and and then as a professional. How have you.

How have you handled your money thus far, those kind of questions are really going to give me kind of an insight into what were talking about and why it's important to you and there's a lot of additional question that goes into what do you own and how have you invested will get to that. But in order to formulate a plan to achieve your goals. I got to know who you are and what your goals are just like you want to know who I am and and and what I do and how I'm going to help you achieve those goals, yet knowing each other so that you know even if you have a great relationship to know. Maybe. What are the terms of that great relationship. Why is your relationship why are you a good fit. Why is it a good match in terms of investing philosophy, your shortcomings are your strengths of a given given person so when someone comes to you. What are some of the first questions that you'd like to hear and if you don't hear the baby you asked yourself you will. You mentioned the word relationship and it is a relationship and I've gotten into what I feel are some really good friendships with many of my clients and and many of my friends have also become clients. At the end of the day. It is a business relationship and I'm always conscious and aware of that that friendships actually can maintain even if that business relationship is severed like any relationship that changes that can put some different dynamics on it, but with an advisor. I think that everybody should always be cognizant of the fact that that client advisor relationship is a business relationship and it's based on them helping you achieve the financial goals that are most important to you. So if it's all just about how smart I am. What investments I have and what the rate of return has been for you and not about will what has gone on in your life. What has changed in your life what you want these things. These accounts these dollars to do for you in the future, then maybe maybe assess that dichotomy of the personal relationship in the business relationship because I think a good financial relationship does have a bit of both but when people come in they want to know who I am Norma Dave Ramsey smart Mr. Pro I am husband. I am a parent I am a baseball coach.

I am a fledgling musician from from times gone past. I actually cut my teeth in the radio industry fresh out of college, I was running for talk radio stations.

I started a couple online stations well before the buzzwords of streaming or podcasting ever even were heard or muttered, but you know I take the confidence in the trust that people placing me very seriously and when it comes that relationship.

I I want to honor that confidence and trust and have follow-through in service on a continuing basis and and that's who I am as a person is who I am is a businessman and and and as an advisor I own my own company's are not beholden to any manager on high, telling me what solutions or products or funds to sell. We are independent we are fiduciary and that's a buzzword but it technically means that I put the best interest of my clients first. Legally, morally and ethically and I think the legally is the least of those concerns morally and ethically I think that the fiduciary responsibility is perhaps the most important question that you can ask an advisor but how how do I do what I do.

It depends on on the approach that we are taking.

I can be pretty laws a fair and hands often and just help you set up your plan or I can be very involved in active and hands-on on a almost day-to-day basis, managing my clients funds and accounts and investments in and plan on a comprehensive level mentioned that work for you sharing it sound like a very positive thing. It understands that is the position that you're in. What's the alternative, if some financial advisor is not a fiduciary what's what. What the alternative, what's the other option. So this is a little bit of a history lesson, but there were a couple different levels of of responsibility that were created by different laws that were passed in the 1930s and the 1940s, the investment advisory acted in and the securities exchange commission. Basically stepping in to license those that can offer cell and transact securities.

The first set of rules and licenses basically gave permission to those that have the ability to buy or sell securities and investments on somebody else's behalf and that created a suitability level responsibility. This type of investment just needs to be generally suitable for this type of person of the second level was the license and the laws and requirements that were pertaining to giving advice and both are important. You want to be able to give advice and offer securities, but I think that the giving of advice is actually more important and that is what carries with it the fiduciary responsibility so I've heard this great kind of story and analogy where if I go into the local butcher shop, and I am looking for something to grill out Lou. The butcher is going to be full of suggestions. You know he's got the Lamb Shanks he's got the veal chops got the nice ribeye steaks.

He's got the Tomahawk stakes. Those are some of my favorites. You know, N and II like steak so he says I got these fresh, high-stakes, and these are delicious to these are what you want and I trust Lou because he knows meat and I like meat and he's going to offer me the product that best fills my desire to buy what he is offering. However, if I go to my dietitian.

He is probably going to tell me I Peter you know, easy on the meat buddy a few more greens. A few more fruits and vegetables a little healthier diet is going to help you stay healthy longer. Keep your blood pressure and cholesterol under control and and live a better life now. It's not that Lou, the butcher was wrong in offering me what I was looking for, but he wasn't necessarily looking out for my best interest know that's the suitability standard verse. The fiduciary standard.

The dietitian is the fiduciary, even if they love meat or or hate me.

They're going to give me the advice that is in my best interest in the problem in the financial world is that most people think that they are talking with a dietitian when it comes to those conversations with their advisor and often times there talking with Lou the butcher, who's who's there to sell mutual funds because they are a suitable investment for this client that is coming in when in actuality those mutual funds may not be the best thing we may want to pay off some debt. We may want to pay off the house we may need to invest more in our 401(k) or Roth or mutual funds may not be the.

The best overall investment or the mutual funds that that that potato particular family has may not be comparable to this other institutions family of funds made have a better rate of return are cheaper price. A fiduciary is supposed to sort through all that and give recommendations that are in your best interest advice if you're hungry, which I am now for more than advice business website Peter, what are some things that you see is common problems with the way the people plan as a fiduciary, and financial advisor that you strive to help them address so probably the biggest is that they wait until a big event happens to even think about planning it out by yet yeah yeah human nature is that we are procrastinators, but planning is proactive. It's not a profession of financial reacting. It is, it is planning it is. Looking ahead, and so being proactive in having these conversations in advance is always going to be to your advantage and benefit. Now that's not to say that with certain things we can't do some planning. After the big events have happened, but you are always going to be in better shape. If you are proactive and then there are certain things that you can't. Unfortunately do much about. After the event has occurred so often times I see people coming in after a big event or right on the precipice of a big event like retirement or maybe you know sadly the passing of a family member or something like that. Being laid off like let's be proactive.

Let's talk about what Canon and and might and will go wrong into the future way ahead of time so that we have a plan of action and are prepared for those things when they do happen, the, the old ostrich approach of burying your head in the sand.

It does not save you from danger. Your backside is still exposed, so you can't can't take that approach. I would say that that's one of the biggest problems if I could snap my fingers and fix something about the financial industry itself. I probably would talk about the advertisement of past performance. The way that mutual funds advertise their past performances is problematic at best and at worst, it's an out and out fallacy and lie in yet people make their investment decisions based on that, and I can give a quick example I know math doesn't translate fantastically over the radio, but if I said hey I got this mutual fund with an average rate of return of 10%. That's gonna sound pretty good, but if I if I invest $100,000 over a three-year period in the first year we get a 60% rate of return. The second year we lose 50% in the third year we get a 20% rate of return. Well that's an average of 10%, 60-50 is 10+ 203 is 10 but I actually end up with $96,000 for the hundred thousand. I invested The 60% return my hundred turns into hundred and 60, the 50% loss. It goes down to 80 the 20% return. It goes up to 96. So I've averaged 10%, but I've lost money over three years.

So to me that's problematic about the financial world, and people really need to understand the way that that past performance is advertise and not make decisions based off that it's interesting that the order of operations is so important, both in the planning in and the results and and furthermore the marketing that people absorb having it past performance is not a good way to advertise something.

What would be a good way, as it is it, the more the process that goes into it or what you think. Well, I think that a lot of people go about it in the in the little bit of a backwards way they focus first on the rate of return when that should be almost the last part of the process. It's important.

I'm not discounting the importance of getting a good return, but you should be looking at the amount of risk that you are willing to take, and then only taking the risk that is necessary or appropriate to achieving your goals.

Look I want to go to my brothers house.

He sees about an hour away and I ride on the highway to do so. The speed limit is 65 miles an hour if I travel 65 miles an hour. I've got a pretty good chance of making it their unscathed and on ticketed I could maybe push it risk it a little bit get there a minute or two early, go, go 70 instead of 65. I'm taking a little bit more chance there or I could say hey I want to get there.

I have to get there in 1/2 hour so it's of 65. I need to do 130 miles an hour. And guess what my car cannot do that, but my risk is significantly increased. By doing so right that the risk of a car accident the risk of passing an officer of the state of North Carolina or or a man with a badge. It it it significantly increases my risk and the same is true in the financial world, we can shoot for the moon and and go full speed ahead and chase higher returns but is is that risk really worth it and we have to think about the risk. First, because if I get arrested for reckless driving or have an ax and I don't get to see my brother at all and if we take more risk than is appropriate and our financial path is derailed.

We might not achieve those retirement timeline goals that we have into the future. Device 919-300-5886 or www.which I'm to talk with Sean. You mentioned people reacting to events, and possibly putting off what they should've done in the past what you say to the person who comes in who maybe has procrastinated two longer has waited too long, but they have now made it into your auspices or the auspices of a financial planner. What you do at that point. Is it too late. What you recommend Wolf. I wanted a tree in my yard the best time to have planted it would've been 30 years ago. But if it's not there now, the best time to plan it is today.

It's never too late to start planning it's never too early. In fact, the earlier the better. But it's never too late. It's never too little. It's never too much. Let's start where you are and formulate a plan and guess what, even if it's not the best news that the absolute optimal scenario. At least you move forward with the knowledge of what you need to do to improve the current situation and get where you want to be or closer to that target into the future. A lot of people actually want to plan proactively but don't know where to start and that's where kind of our process begins with just a conversation, a 15 minute phone call and we get to know a little bit about each other gauge whether it makes sense to get together. We offer the opportunity for a complementary review that initial time is about an hour.

I could go to an hour and 1/2.

It could be 45 minutes, but in about an hour to sit down and talk about you and introduce ourselves to each other no cost, no obligation for that in that time alone.

I mean, I have seen others charge hundreds of dollars for that thousands of dollars for the planning that we will do after the fact if we agree after that time that we want to step forward, but before any bridges is crossed where it cost you anything.

We have a specific conversation about that. You know what it is it's going to cost you what to expect out of that and and we have that conversation so we can both gauge if if continuing the relationship is going to be mutually agreeable and beneficial but but there are a lot of people that don't know where to start.

That's why we have that process.

Give us a call in and we can start that conversation with you. There a lot of people who have done some amount of proactive planning but want to take it to the next step wants to understand what has been left unaddressed, that's another big area. A lot of people have done a really good job in saving you there a lot of millionaires out there then. Not everybody is, but for your situation. You may have done a very good job in saving and investing in emulating money, but the rest of the story may still be a mystery.

I owe Paul Harvey used to say in the rest of the story, you know, making the transition to retirement and actually using those dollars. Scott, you mentioned earlier order of operations, and I still remember back to algebra pediments. Please excuse my dear aunt Sally parentheses, exponents, modification, division, addition, subtraction, that was the specific order of operations that you had to go through in order to get the correct answer on a math question and guess what with your money in retirement. There is a correct order of operations as well. And if you don't go through the right order of operations, you might come out with the wrong answer. And we don't want the wrong answer in retirement when when our money runs out to your financial advisor you mentioned that you have your various philosophies and strategies. What if someone comes to you and they have done a bunch of planning and information, but perhaps not the best version of that date. There they have a procrastinated they maybe gone down a path that that's maybe not your floss. Maybe not so great in general, we how you feel that's a church we look at it and we help run some analysis and get a better understanding of what's currently going on and and you know if if I'm flashing back about a decade when I actually went to a mall. My goal was to get in and get out as quick as possible. So always started with the map and where nowhere I wanted to get to, but more importantly, that the little red arrow that said you are here right and you gotta know where you are.

In order to get where you want to go and so really running those analysis of the investments the risks that you're taking the fees that you're paying the taxes that you may be liable for how to incorporate Social Security what the order of operations should be into retirement like just going through that actually provides all of a lot of light and illumination on where the flaws are in somebody's portfolio and from there it's kind of the natural progression of okay we have spotted this problem now are we going to do something about, and that's it. I don't usually put it that way. That sounds kind of blunt heat on the radio, but that it at the end of it.

That's that's what it is like when we run that analysis and we see inherent flaws. It's not that you have done things poorly or incorrectly, but again there's like two halves of the game here.

There's the first half where we grow and accumulate and the paycheck provides our lifestyle, financial support, and the ability to invest. And then there's the second half when we go out and we have to use those assets and the rules completely change in the second half of the game and you know a lot of football teams can attest that just because we have a lead at halftime does not mean we win the game. The same is true in the financial world. A lot of times I'm actually congratulating people that they've done a fantastic job but also illuminating places where the plan is not 100% complete and it's my job to help them as much as possible to complete that plan 919300586 is the number talk to Peter, Sean, Peter, what about someone who just can't deal with worrying about their financial situation all the time. There may be aware of it, maybe a little bit too much and it just kind of consuming that what you do as a financial advisor that dictates so I actually I have people that like to do the worrying all the time and then I've got people that don't want to worry at all. I have clients that I like and almost guarantee you look at their accounts and their portfolios multiple times a day now, having me to bounce ideas off of and ultimately hold some responsibility for making the right decisions. I think they appreciate that, but more often the people that I deal with. They don't want to become a full time financial professionals after they retire nor do they want their mood for the day or week determine by the direction of the stock market is a Raiders. It is a green and that determines you know if I'm going to feel good about myself, my life and and and my day or not.

So you know, there used to be an old Greyhound bus commercial leave the driving to us and from a financial perspective kinda leave the worrying to us.

To whatever extent you feel comfortable. If you want to be involved. By all means we can we can form a relationship based around that if you just will enjoy your time and know that the check is going to show up and that the money is there and that somebody's going to warn you if anything is off course. That is all right as well and we conformed the relationship around that premise back and be the basis for the way and end any advisor again going back to getting to know you getting to know me and having that relationship both both a personal and a business relationship.

Any advisor should be having that balance and and and talking through what those expectations are. Do you want to be day-to-day intrinsically and deeply involved in your planning.

Or do you want to be blas, fair, and hands often forget the whole thing and just let me run the ship and let you know if if we need to change course.

How much of your role is educating people on just the different options that are out there. The difference that are out there.

Even if maybe it's not the path that your advise them to take but all these things are out there hundred percent.

I mean, my job, at its core is is educational now that that education is not necessarily saying okay will now you know and handing the implementation and execution off to you, but you should be able to explain your plan to a friend, a neighbor or a loved one, a perfect stranger comes up and ask you what you're doing with your money like at its core.

You should be knowledgeable enough to explain and educated on how to explain what you're doing.

Guess what that's going to benefit both of us because if you can explain it, you're gonna feel more confident and if you can explain that Peter Rochon helped you have this understanding and confidence. That's ultimately going to benefit me as well. So at the core of my job. It's it's education is making you feel confident and knowledgeable enough about your money that you can do the things that are more important to you and and be more assured that the money is doing what it's supposed to do. In fact, Scott. I think that's one of the most fulfilling things about my job and probably one of the biggest reasons that I got into this profession. I mentioned that my background I was in the radio, I actually used to host a lot of different financial talk programs in Once upon a time I got to run the board for the Dave Ramsey when he was touring the country was great experience, but through that experience, I got an insight kind of backed off and third-party thirdhand experience. I got the insight that not a lot of people actually had that fantastic understanding of what they were doing with their money or what their advisor was doing with their money and I realize that I actually had a pretty good understanding of money. My mom taught me to balance a checkbook very early on in my life.

We sit down and just single parent teacher household ends didn't always meet exactly and and your dad helped out and shipped in, but it still was important for us to make sure we were intentional with our money and she taught me about that and not straight up made a couple mistakes of probably a books worth of them. But I've learned from those and improve the next go around, but that understanding of how to handle my own money was actually something that I found I was able to convey to others and help them get a better understanding and more confidence.

That's really what what led me to this career and and I would say continuing day-to-day is is one of my goals and missions in and makes this job worthwhile.

It's great to hear it's right.

There's a reason why every buddy does the things that they do and your you specifically in your financial planner to that the listener out there there's a reason that they're doing it, what wonders what is the core reason why you became a financial advisor to boil it down as we come to the so II actually saw some bad experiences that people were having with their money and and I was standing off to the sidelines and I recognized why they were having those bad experiences and that they actually didn't didn't have to go through that and these were not family members. It did not directly impact me, but I understood that I I had a working knowledge of money.

I mean, you know I'm a Dave Ramsey Ramsey trusted smart investor. I have not always been debt-free in college I ran up five figure credit card debt. It took me years to dig out of that.

It was a painful lesson for me but it taught me a lot and now I'm a big fan of that let's get that for you and stay there for it, but I said I saw that people had been given guidance that did not end favorably and from from the 30,000 foot view that I had at the time I questioned why were they ever given that guidance know how how how did they end up receiving that ended as advice because it didn't make any sense and it cost them significantly severely and so I began my my, inquiry, and how do I become a financial advisor to help more people understand how and why to make certain financial decisions and choices.

While Peter really appreciate you opening up, shedding some light on the fund on your personal relationship ended in Europe and the relationship that our listeners can have with their financial advisor and, if you'd like to talk with Peter himself about his financial advising strategies and perhaps that optimize retirement plan.

You can call him at 919-300-5886 or visit his website Peter anything else before we hit the road here today will don't forget about the 2022. Financial and retirement planning checklist. It's one page 5 big topics with several items to check off beneath those big topics income investments healthcare taxes legacy and several key milestones within each one of those to make sure you're on the right path right to go over on your own will happily mail it or email it out to you. You can also go to the website rich on the is what it looks like it's my last name Rochon Rochon and download a copy of my book.

Understanding your investment options. Another educational resource and we hope that you have a better understanding and more confidence with thanks so much for your time today Peter I know I've enjoyed it.

I'm sure all of us are so enjoyed it as well and will catch you next time. Planning matters matters. The content of this radio shows were fighting for information over is only is not a solicitation or recommendation of any investment strategy you were encouraged to think investment tax or legal advice from an independent professional advisor. Any investment and/or investment strategies mentioned involve risk and possible loss of principal binary services offered through virtual capital management, a registered investment advisor. Fiduciary duty extends only to investment advisory advice does not extend to other activities such as insurance or broker-dealer services advisory clients are charged a quarterly fever as the management belligerent product a commission which may result in a conflict of interest regarding

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