Finance Lab DALBAR

In this episode we are sitting down with Rick White to talk all about the science of risk vs. return. Rick is definitely the perfect person to help us tackle this topic because he is a seasoned pro in tax planning and asset coaching for business owners and is the President of both Patriot Business Consultants and Triangle Adult Learning Center. He will provide listeners with a structured way of thinking about risk versus return.
We all get the basic idea that when it comes to risk vs. return, it's a balancing act; you want those high returns but not at the possible expense of losing your shirt. It's like a tug of war, where on one side, you're pulling for those gains, and on the other, you're desperately trying to minimize losses. The thing is, though; there is a science behind it that we can actually optimize.
Many of us tend to get fixated on the thrill of maximizing returns, but there's a hidden danger there, and Rick has some eye-opening insights into why obsessing over gains might not be the smartest move. Join us as we unravel the mysteries of measuring risk, exploring concepts like standard deviation, and digging into how volatility can make or break your portfolio. Stay tuned to learn how you can make your money work smarter, not harder!
 
Guest Bio: Rick White is President of Patriot Business Consultants Inc. as well as President of Triangle Adult Learning Center. Patriot Business Consultants is a tax-planning and asset coach to business owners and Triangle Adult Learning Center provides adult financial educational material to advisors who wish to be an educator first. The flagship course, authored by Rick is entitled, “The New Reality in Our Retirement”. Rick is the instructor in North Carolina, with other advisors teaching the course in various locations around the country. Rick is also a mentor to advisors nationally and is a founding member of Next Level™ Advisors along with other experts in various fields associated with Financial Planning.
 
Key Moments:
0:46: This episode covers the science of risk vs. return.
2:19: Today’s guest - Rick White - is introduced.
3:32: How does Rick measure risk and return?
5:23: Rick affirms that he absolutely measures risk via volatility.
7:24: Rick explains how managing portfolios without assessing risk can harm retirees, as losses demand substantial gains for recovery.
9:44: Consistency in managing volatility, illustrated with a 6% return and 6.5% deviation, ensures steadier growth.
12:36: The importance of risk mitigation is emphasized; missing the worst days holds more power than avoiding market peaks.
13:29: Rick adds that there are tools to mathematically lower standard deviation for portfolios.
16:28: Rick emphasizes the active management of various financial instruments for risk mitigation in fluctuating markets.
19:24: Tightening rate of return and standard deviation boosts retirement success with significant financial improvements.
22:04: Rick states that volatility is a critical factor in determining the longevity of one's financial resources.
22:20: Reducing standard deviation preserves the mean return; managing risk shields gains without sacrificing potential returns.
25:55: Rick underscores the significance of matching one's perception of risk with actual behavior in investment decisions.
Additional Resources:
Finance Lab website: https://www.financelab.dalbar.com
Visit the Patriot Business Consultants website: a...

Join us as we sit down this week with Jeffrey Bettermann, President and CEO of Thorngate Financial. Jeff brings more than twenty years of experience in retirement income planning, and he also brings a nuanced perspective to the annuity debate which is our main topic of discussion this week.
We discuss the polarization within the industry, where some advisors criticize annuities while others emphasize their importance. Together, we navigate the complex landscape of annuities, shedding light on the different types, their virtues, and potential pitfalls.
Jeff also shares valuable insights into the undersold and oversold aspects of annuities, emphasizing the importance of finding an advisor who strikes a balance, offering fee-based accounts, acting as a fiduciary, and understanding when annuities might be appropriate for your unique situation.
I hope that you will tune in for this insightful conversation as we unravel the complexities of the financial industry, ultimately aiming to help you make informed decisions about your financial future!
Guest Bio: Jeff is an Investment Advisor Representative, RFC or Registered Financial Consultant and is the President and CEO of Thorngate Financial, a firm that specializes in retirement income planning. Jeff has also served as a consultant to other financial professionals across the country on various types of asset management and income planning strategies. He has also been a delegate at the Kehrer-LIMRA Retirement Income Planning Roundtable Discussion and a guest speaker at the National LIMRA Retirement Industry Conference. Most recently, he was featured in Forbes Magazine, Yahoo Finance, Bloomberg, Apple News, and Market Watch.

Key Moments:
0:47: Today’s guest is Jeff Bettermann of Thorngate Financial.
2:26: Jeff raises a crucial but polarized issue in the financial advisory industry regarding annuities' value and safety.
4:58: Grappling with conflicting advice on annuities is a common challenge for investors nearing retirement.
7:57: Jeff helps us clear the air about annuities, highlighting their varied types and emphasizing the importance of understanding them for better informed decision-making.
10:29: Jeff explains a bit about what a guaranteed lifetime income rider is.
12:50: Jeff explores the complexity of whether an annuity is suitable, stressing it depends on the individual's financial circumstances, especially in addressing income gaps during retirement.
14:37: Learn of a case in which a teacher was sold a variable annuity with an income rider, incurring substantial fees for a product she didn't even need.
16:19: Jeff stresses educating clients on market principles, avoiding undue influence from insurance-only agents.
17:57: For optimal income with reduced risk, annuities make sense in strategic allocations.
20:31: Jeff argues that strategically using annuities is key and that dismissing them entirely may defy fiduciary duty.
22:33: I point out how determining the right financial professional requires navigating the diverse options based on individual circumstances.
24:30: Jeff agrees, adding that selecting a financial advisor involves finding a middle ground and considering annuities, fiduciary status, and personalized planning.
27:03: Fair compensation for valuable advice is crucial.
28:52: Jeff argues that the payment method should align with the value received and that fees are only a concern when they lack corresponding value.
30:54: Jeff values fee-only advisors, offering ongoing monitoring and higher fiduciary standards.
32:29: Jeff asserts that collaboration between fee-only advisors and insurance agents for annuity use is increasing.
35:43: Choose an advisor you trust; ask tough questions about fiduciary duty and annuities.

Additional...

Welcome back to the second part of our conversation with Artie Green, Certified Financial Planner and founder of Cognizant Wealth Advisors, continuing our discussion from last episode on unraveling the complexities of investing when the future is unpredictable. Today we continue the conversation on managing risk effectively.
Artie shares insights derived from the renowned economist Harry Markowitz's modern portfolio theory. He emphasizes the power of diversification, explaining how spreading investments across various assets and using tools like mutual funds or exchange traded funds can help mitigate risks. We also explore the concept of correlation, understanding the delicate balance needed between assets to maximize diversification.
Artie also sheds light on the tumultuous year of 2022, marked by the worst performance in bond history. He unravels the intricacies of the bond market, discussing the impact of rising interest rates and inflation on bond prices.
Despite the challenges, however, Artie remains optimistic about bonds as an investment option, pointing out the potential for attractive returns, especially if the Federal Reserve stabilizes rates. Our conversation delves into the nuanced world of short-term and long-term rates, providing listeners with valuable insights into navigating the complex landscape of bonds.
 
Guest Bio: Artie is a CERTIFIED FINANCIAL PLANNER™ Professional and founder of Cognizant Wealth Advisors. He is a recognized expert in financial planning and has been quoted in numerous print and online media such as The Wall Street Journal, Kiplinger, Forbes, Bloomberg, and Money. He has served on two non-profit boards and currently on the Los Altos Community Foundation investment committee.
Key Moments:
0:46: We are continuing our conversation from the last episode with Artie Green.
1:33: Artie explains diversification, a principle from modern portfolio theory.
3:59: Diversification involves selecting uncorrelated assets to reduce risk and potentially increase returns.
6:12: Bonds, known for stability, exemplify assets with low or no correlation.
7:00: Artie details how a rapid rise in interest rates led to historic losses in bond market in 2022.
10:09: Bond holders are unaffected if they're holding until maturity; issues arise for bond mutual funds in 2022.
11:39: Bond duration, based on maturity, affects sensitivity to interest rate changes.
13:30: Artie explains why he sees bonds as one of the better investments today.
17:08: Artie predicts that Fed is likely to slow or stop rate hikes if inflation mitigates and recession risks rise.
18:17: Artie adds that any time is the right time to invest in the capital markets for future growth.

Additional Resources:
Finance Lab website: https://www.financelab.dalbar.com
Visit the Cognizant Wealth Advisors’ website: https://www.cognizantwealth.com

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In this episode of Finance Lab, we discuss how to invest when you can’t predict the future.
We are excited to bring you the first part of this insightful conversation with Artie Green, a Certified Financial Planner and founder of Cognizant Wealth Advisors. Embedded in the episode title is a presumption that investors cannot predict the future. If you don’t agree with that premise, we’re here to tell you that you should and it’s in your best interest to understand and accept the fact that you cannot predict the future of the markets. Despite many investors falling into the trap of overestimating their abilities, believing they can beat the market with the right research and perspective, there are ways to successfully invest without being able to predict the future.
Artie is here to help us shed some light on this fascinating topic, sharing valuable insights on controlling costs, managing taxation, and understanding the essential role of risk management in growing your investments. Be sure to tune back in for the second part of this conversation with Artie Green in next week’s episode, when we delve more into risk management, the bond market, and the Federal Reserve.
Guest Bio: Artie Green is a CERTIFIED FINANCIAL PLANNER™ Professional and founder of Cognizant Wealth Advisors. He is a recognized expert in financial planning and has been quoted in numerous print and online media such as The Wall Street Journal, Kiplinger, Forbes, Bloomberg, and Money. He has served on two non-profit boards and currently on the Los Altos Community Foundation investment committee.
Key Moments:
0:46: We are talking today about how to invest when we can’t predict the future.
2:58: Artie believes that investors can't successfully time the market due to various uncertainties and complexities.
5:36: Successfully timing any of the four market triggers is crucial; consistency is rare.
6:38: Artie explains how predicting individual stock performance is challenging due to external uncontrollable factors.
10:06: Artie details the two factors that drive stock prices.
13:46: Controlling costs is vital in investments, and reducing expenses can enhance potential returns.
15:22: Is the ultimate goal to eliminate tax?
18:22: Artie discusses the third factor: assessing risk of investments.
22:07: The increase in purchasing power depends on the gap between inflation and your return rate.
 
Additional Resources:
Finance Lab website: https://www.financelab.dalbar.com
Visit the Cognizant Wealth Advisors’ website: https://www.cognizantwealth.com

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show and subscribe to hear more illuminating financial discussions weekly.
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Welcome back to Finance Lab, we are thrilled to bring you this crucial episode centered around a topic that holds immense significance for many professionals, particularly those in the tech industry. Today, we're diving deep into the world of company stock ownership. Kevin Caldwell joins Finance Lab to discuss the topic of investing in company stock, specifically restricted stock units (RSUs). We explore the balance between the substantial rewards and risks associated with company ownership, shedding light on diverse strategies, especially when facing market uncertainties.
Unraveling the complexities of restricted stock units (RSUs), a popular form of equity compensation, Kevin also dissects the nuances between RSUs and traditional stock options. As we navigate hypothetical scenarios and real-world challenges, Kevin provides actionable advice on tax planning, emphasizing the importance of proactive rather than reactive strategies tailored to your unique circumstances. We work to explain the mysteries around taxes, discussing how to optimize your gains and offset losses, ensuring you make informed decisions, not just reactive ones.
Join us as we empower you with the knowledge and strategies necessary to approach your company stock ownership with confidence. Remember, your financial future shouldn't be dictated by market whims; it should be driven by a well-thought-out plan!
Guest Bio: Kevin Caldwell is a principal at Golden Road Advisors in Tampa, Florida. Before forming Golden Road Advisors, a registered investment advisor practice, Kevin was a financial advisor with Raymond James. Prior to that, he was a financial advisor with Morgan Keegan and a financial services specialist at AmSouth Bank.

Key Moments:
1:04: Importance of managing company stock ownership
1:59: Our guest today is Kevin Caldwell of Golden Road Advisors.
3:59: Taxes on restricted stock units (RSUs)
5:10: Importance of having a strategy for company stock
6:04: Proactive planning is vital for navigating volatile stock values and tax implications.
7:38: Plan what to do before shares vest
8:15: Hear about how tech stocks faced challenges in 2022.
9:32: What does Kevin mean by “behavioral tool”?
9:36: Strategy of selling shares at vesting to lower tax implications
11:16: Discussion on the current tech stock rally in 2023
12:44: Kevin argues that being proactive is essential; control your investments wisely, considering goals and diversification.
14:17: We are encouraged to develop a proactive plan and to avoid reactive market-driven decisions.
16:32: Kevin dives into a discussion around stock vesting.
18:19: Each RSU grant has unique tax consequences based on price.
20:47: We should aim to strategically time tax payments, considering market conditions and personal finances.
22:06: Tax-Loss harvesting can be used to offset gains in the future
23:40: The key is to develop a plan for company stock ownership and RSUs ahead of time.

Additional Resources:
Finance Lab website: https://www.financelab.dalbar.com
Visit the Golden Road Advisors website: https://goldenroadadvisors.com/
Read Kevin’s company stock strategies article on Kiplinger’s: https://www.kiplinger.com/investing/rsus-ways-to-prevent-regret-after-they-vest

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Thanks for listening to Finance Lab! If you enjoyed our discussion, please rate our show and subscribe to hear more illuminating financial discussions...

In this special edition of Finance Lab, especially for financial professionals, we explore the intricate world of ERISA and what advisors need to know when advising on 401(k) assets held away. If you’re a financial advisor, particularly if you’re not an ERISA specialist, this episode is for you! There is a tremendous opportunity to provide added value to clients, but it comes with some risk if it’s not done properly. Our guest this week, Kevin Clark, the CEO and co-founder of Plan Confidence Corp., shares his journey, highlighting the pivotal year of 2008 when market upheaval compelled him to master ERISA rules and regulations and build specialized software to guide clients on managing 401(k) assets effectively. 
We discuss what it means to be an ERISA Fiduciary, the difficulties that come along with that and also how advisors who are not one can proceed. We also discuss the evolving regulations, such as the Fiduciary Rule of 2016 and later updated guidelines, shedding light on the potential risks faced by advisors who fail to adhere to both these and upcoming rules. Don’t miss this episode if you are a financial professional who has an interest in ERISA guidance!   
Guest Bio: Kevin T Clark, RF™ is a self-proclaimed ERISA nerd and a DALBAR certified Registered Fiduciaries (RF™). Previously a financial advisor for over 20 years, Kevin is the CEO and Co-founder of Plan Confidence Corporation. Plan Confidence Corporation is an “Internet Only” SEC registered investment firm specializing in providing advice to Americans investing in their employer’s retirement plans (401k, 403b, TSP, etc).

Key Moments:
0:46: We are exploring ERISA intricacies for financial advisors with guest Kevin Clark of Plan Confidence.
1:59: In 2008, Kevin tackled 401k challenges, crafting a process and software to navigate ERISA complexities.
4:48: Hear how Plan Confidence Corp offers tailored software guiding 401k holders, ensuring compliance with ever-changing regulations.
7:06: Kevin explains how working with 401k plans requires becoming a risk fiduciary.
8:36: Working with 401k plans demands a meticulous, documented process, from investment choices to advice delivery.
11:50: Cory points out that advisors must adhere to stringent fiduciary rules.
13:21: Kevin emphasizes that advisors face personal liability and their firms could face class action lawsuits under stringent fiduciary rules.
16:50: Cory adds that a documented, prudent process is key because fiduciaries are liable for their methods.
17:56: Kevin argues that a prudent process shields against liability.
21:39: Investor behavior shifts demand new strategies for advisors.
22:35: What are the two moving parts of a 401(k)?
26:05: Plan Confidence offers customizable software empowering advisors to tailor models for clients themselves based on individual needs.

Additional Resources:
Finance Lab website: https://www.financelab.dalbar.com
Visit the Plan Confidence website: https://www.planconfidence.com/
Listen, rate, and subscribe!
Thanks for listening to Finance Lab! If you enjoyed our discussion, please rate our show and subscribe to hear more illuminating financial discussions weekly.
Amazon Music: a...