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The wealth management industry is changing fast, but many financial advisors are still using the same old playbook. Join hosts Sean Allocca and John Manganaro, along with leading industry expert guests, as they break down the trends shaping your business.
Each week, we'll cover critical topics while also having a little fun. It's all on the table, from retirement income planning and Social Security to the behavioral side of investing and what clients are hearing elsewhere. We've created The Advisor Upside Show because staying informed isn’t enough anymore. You need to stay ahead.
New episodes every Wednesday.
#FinancialAdvisor #WealthManagement #FinancialPlanning
Sean Allocca (00:00)
the one war that is gonna impact us would be a Chinese invasion of Taiwan,
That one is gonna be an extinction level
financial
John (00:12)
everybody, and welcome back to another episode of the Advisor Upside Show. My name is John. I'm I'm joined by Sean, my editor, colleague, and and my friend here at the Daily Upside.
just off the top, want to recommend that folks subscribe on whatever platform that they prefer to get their podcasts on. We're also coming to you on YouTube. There's a video version of the podcast if you'd like to kind of tune in and see us each week and and our guests.
This week's another episode with just Sean and I talking about some news topics, some things that really caught our eyes and our attention. ⁓ please, you know, if you want to reach out and give us feedback or get involved with the podcast, you can contact us directly at podcast at the daily upside.com. We welcome your feedback, we welcome your ideas for content, and we'd also welcome, you know, those of you who are newsmakers who want to join us on the podcast. We we've had some great guests already and and we plan to bring on a lot of
A lot of ⁓ other industry experts in the in the weeks and months ahead. So, Sean, how are you doing today, first of all? And are you excited about the World Cup kicking
Sean Allocca (01:12)
yeah, I'm excited about the World Cup. It's amazing. We have the obviously the US in here, right right in our neck of the woods at at MetLife. So it's gonna be amazing. We'll see how the trains hold up and all the with all the influx of tourists, but there's a lot of lot of energy. I'm excited to go to a game too
John (01:27)
a huge soccer or football fan, depending on you know where you're listening to us. so I'm I'm very excited. It's bringing great a great energy here in the in the northeast and and across the country. So anyway, let's get to business. Sean, I know this week you traveled to the Wealth Management Edge conference down in Boca.
I think you presented too, Sean. So I I want to ask you about a particular panel that you attended, but what what did you present on?
Sean Allocca (01:49)
artificial intelligence in alternative investments. So both AIs. We had to we had the Alts and the Artificial Intelligence. We had a great, great panel. We had three really, really smart folks up there. One of them was Matthew Tuttle, who ⁓ is from Tuttle Capital Management, ETF issuers. So we had a lot to say about how he's using AI
in his workflow to build out some of these new products and new strategies in their ETFs. He actually is doing some 2X leveraged SpaceX funds that are out. So
I think the high level takeaway is both AIs are a little new to advisors and a little kind of scary. You know, it's like, I don't know, it's gonna take my job, I don't know, what are these alts, these fees, these no liquidity, these less visibility.
So but both of those things are evolving in the advisory channel and they really need to be paid attention to as they move forward. I mean, especially AI, obviously, but even alts, the access is opened up. And as I made a point, I don't think clients need to be a hundred percent illiquid, a hundred percent of their assets a hundred percent of the time. So I do think there is some place for these private investments. And you know, again, it's always education where it starts and and adoption. And we talked about some of the compliance issues that go along with it.
with AI but also with alt. So it was a very interesting panel
John (03:03)
So I want to ask you about a particular session that you wrote a story about for one of the newsletters this week. And it's really about this idea of the way markets seem to have really kind of absorbed and been able to f navigate geopolitical tension, you know, wars that have been happening in in the past decade. You know, it it it really seems like the market has repeatedly shrugged off these things from the the war in Ukraine to the war in the Middle East between our country, United States and and Iran.
stocks have continued, you know, marching higher and hitting record highs. And and many leading advisors are now kind of wondering and discussing what does geopolitical risk mean to portfolios in in 2026. So Sean, I think you attended a session that was hosted by the geopolitical strategist Robert Kaplan, who who really got into some of this stuff. So what were some of the high level takeaways that you shared in your article and then maybe we could talk about some particular issues.
Sean Allocca (03:55)
I preface it by saying I'm not a geopolitical expert very much, but I do love attending those kind of keynotes that are little bit tangential or where they aren't in geopolitic. The Edge actually had like Eli Manning and his dad once, and they were they were great actually. One of the great ones that I remember from my career of going to these things was ⁓ at Finra in DC. It was John Meacham, who's actually the biographer. I didn't know at the time, biographer of both the bushes and amazing
historian like presidential historian. He gave a great speech on ⁓ or talk on just the behind the scenes with JFK and the war of pigs and how he how he messed that up really and how he fixed it and with the help of some of his predecessors like Eisenhower and things. It was just an amazing thing. So I wasn't gonna miss this one either with Robert Kaplan, who admittedly I didn't know a ton about, but when I was talking to people, they were like, he's he's the man. I was reading his book since I was a boy. ⁓ so he's a super popular
popular person had a great speaker and he did say how surprised he was about how well the markets can price in these these different wars. And ⁓ I think that a lot of the times, and this is one of his points, that we've had been lucky as a country with our ⁓ where we are on the map, basically. I mean even in World War Two we had very little, you know, ph physical, you know, anything on our so I mean obviously there was Pearl Harbor, ⁓ but even that was in the middle of the Pacific and the the h entire country has been unscathed.
And so we were able to rebuild and help build Europe and help build NATO and help, you know, pay for some of those things. but he did say that the one war ⁓ that isn't gonna be far as is gonna impact us and the would would be a Chinese invasion of Taiwan, which obviously we see in some of the headlines. He said any other war is is is not a big deal. That one is gonna be an extinction level financial event.
And he said it could take up to 10 years. He he would expect, if that were to happen, a forty to fifty percent decline in the markets, ⁓ which would which would take a decade to recover from. He would say it would be like World War One, like what happened after World War One, which I don't really know what happened after World War, but I imagine it's very, very bad and led to ⁓ a a lot of issues, obviously, globally. And the reasons for that, ⁓ he said, well, mostly because obviously they have the semiconductors.
John (06:05)
Yeah.
Sean Allocca (06:16)
in Taiwan. So that's that's a big one. The AI build out that's been pushing up the global economy, global GDP, ⁓ like for the last, I don't know, five, ten years almost. ⁓ so that would be a big problem. But also the the South China Sea is one of the world's major chokepoint choke points for for travel, which I I didn't know that. He'd said oil coming out of the Middle East, fifty percent of oil coming out of the Middle East goes through that the the South China Sea. So if there's a engagement there and that gets closed,
it's gonna be even worse than the the closure that we're seeing here in Hormuz. So ⁓ those are two interesting takeaways ⁓ for sure. And I I think the what what his point was it's not really about predicting wars, but just under 'cause those are harder to predict than the markets, what's gonna happen. I mean you might there's no way you can kind of bank on those things, but understanding which ones are the most important and could be the most impactful is one way to think about.
John (07:04)
Indeed.
really interesting. I mean, it's it's a very, very cons deeply concerning prospect f you know, to think about a forty to fifty percent pullback in the market. I'm a retirement reporter, as you well know, Sean. I I think about that as like the ultimate sequence of returns risk. I mean, if if you you can do everything right and spend a whole career saving and investing in a four one K plan. And if you happen to be unlucky to sort of reach your retirement at a point when the market does something like that, it's it's really
could be very, very painful and completely derail your your strategy.
So obviously it's something we we really hope and and pray never comes to be. But, you know, we we do have to go into these things with our eyes wide open and and yeah, thinking about, you know, what we've seen in terms of the Iran war and how disruptive it's been to supply chains and oil. And and that's a a very important but relatively small part of the world. You know, imagining that at a the scale of a a China Taiwan conflict is it's almost hard to
Sean Allocca (08:01)
would probably be almost unprecedented I think to to have that. I don't want to want to say unprecedented, but when you think about and it was to cap to Robert's point in in his in his talk too is that even when we had COVID, that was a blip compared to what he's talking about here. I mean it was three months or six months and we I mean it was what a it was a massive decline, 20% or more I I don't remember off the top of my head. But three to six months after the Fed did some pulled a couple levers and we were back in and did obviously some ⁓
They gave a bunch of money and injected into the economy and to the consumers. But a war like this, they're not gonna be able to do that. And there's gonna be the Fed is gonna be helpless to do anything to protect kind of the the markets here and our economy if these things happen globally. So for a couple of reasons, unprecedented and yeah, pretty scary, like you said.
John (08:48)
Yeah. What were some of the the reactions of the advisors there at the event? And and I think, you know, again, kudos to to wealth management for bringing in a speaker like that. I to your point earlier, you know, you've seen some amazing speakers. some of my favorite conference experiences I've ever had were these, you know, the keynotes where it's somebody who's just kind of an off-the-wall speaker who's, you know, they're not the the star portfolio managers, they're not, you know, the CEO of the biggest
RIA that's acquiring, you know, every other firm out there. There are people from other walks of life that really help us within the financial services industry have a broader perspective, you know, keep things in sort of in their global context. for example, ⁓ it was three probably three years ago, and I think it was at the Raymond James conference, but they had ⁓ Magic Johnson sort of give his life story and and it was just very
Very impressive. Like obviously he's a very impressive individual with all his entrepreneurship, but he w just kind of really told this story of the struggles that that he's had in his life, the the highs and lows, and how he's, you know, through that has really developed a leadership philosophy that he shared with us. And and I I honestly left that speech like really inspired. And and I wrote a, you know, an article about it. And even though, you know, it wasn't a financial topic at all, it was about leadership and sports and and perseverance. That article ended up being one of the, you know, the most
clicked on things that I had done. So at that point. And obviously the name recognition of a Magic Johnson is is important. But anyway, long winded way to say, you know, what what was what were the advisors in the room thinking? I mean, I'm sure they valued getting that perspective. And I don't know, are they do they feel kind of that they're being complacent in terms of portfolios? Are they gonna really go defensive? What what did you hear?
Sean Allocca (10:30)
I I don't think for this reason they would. There'd probably be some other larger geopolitical forecasts that we're looking where the fifteen, twenty percent in the markets might turn into more like five as the GDP comes down. There's a lot of debt like just globally, ⁓ that's sloshing around as some people concerned. In terms of the war though,
He's just amazed by how resilient the markets have been globally. everyone talks about advisors that you have to you have to focus on these geopolitical rewards. He hasn't seen it. He hasn't seen the need for them, for advisors to do that at all, frankly. And I think he suggested otherwise. And if you do think about what advisors, they're always in for the long haul. I think your point to
the you know, someone in retirement, there's not a lot you can do there. That is just a very unlucky circumstance. But when you do have some time horizons that are significant, I mean I think the decade that he ⁓ that he threw out there'd probably be a very, very worst case scenario in in any situation.
that would be like a complete black swan event. But it could be spurred, spurned by that by by an invasion in China, which is very much in the card. So yeah, I mean nothing to lose sleep about, I would say, and nothing to move portfolios around. But yeah, maybe when if you do have some folks very close to retirement, retirement, something that maybe a conversation, maybe if you know, maybe get a little bit more defensive in those areas. But I
I would I don't think anyone would suggest that at this point.
John (11:49)
think it was our prior episode or maybe two episodes ago where we talked about the importance of going to industry conferences, even though it it can be disruptive to your weekly schedule. But, you know, as this conversation kind of proved, you're very likely gonna kinda learn a lot and you're probably gonna be surprised by some of the stuff you hear at the event. So I think we could probably conclude this segment by just encouraging people to kinda
Step out of the office when you can and and send your send your young talent to these events. It can really spark creative thinking or or change the way they look they view important topics. So
Sean Allocca (12:18)
And also you can get out of the office, so why not? Everyone likes to stretch the legs
John (12:23)
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Sean Allocca (13:01)
All right, everyone, so time for our next segment. And on this one, we're gonna be talking to John. ⁓ he recently attended a presentation given by Alex Davis. she's author, well-known CPA and CFP, who actually founded AGA Tax and Consulting Services. she gave a great presentation, which John was lucky enough to sit in on, on what can derail even the best retirement plans. And specifically, she has identified three really common patterns.
That come up among people who have been very successful in their careers, but as preparing for for retirement, ⁓ at least on paper, they've been very successful preparing for retirement. But there are some things that that can get in the way and they're sort of unforeseen or unexpected. So how about we jump into that? We'll talk through some of these patterns, some of these issues that can come up and then ways that advisors can identify them and I guess mitigate them. Would that be the right word, John? How about you kick us off?
John (13:55)
Yeah.
Yeah, for sure. I would first say that, yeah, if if you're not aware of Alex and her work, ⁓ she's a very impressive speaker. ⁓ her presentation kind of stood out for a couple reasons. Number one, because she told her own sort of backstory in a very open and and personable way. ⁓ she's an African-American woman who has earned a CPA and a CFP, which is, you know, that sh she's one of the few people in her demographic ⁓ sort of segment that's done that. And she's very proud of that.
But she's also very outspoken about the challenges that she's faced in her career, ⁓ including some, you know, businesses that she's was involved in and founded early on that that didn't work out so well. And and so she is very sort of aware and and willing to talk about how people's past experiences really do affect, you know, their current thinking and and how they make decisions. And and s in some cases that can kind of get in people's ways. So she's in in the course of her practice, as as she explained during the presentation.
She's really seen through predominantly three sort of patterns that people fall into whenever they have successfully saved for retirement, but they they can't, they just have trouble, you know, enjoying their retirement. And the first one is is sort of she attributes it to a scarcity mindset. So this is people who maybe early on in their careers, maybe during their childhood,
did not have, you know, adequate resources to, you know, pay for all the necessities. They they lived a period of financial scarcity. And that really leaves a mark on them for essentially for life. So how she recognizes this pattern is when she sees folks who, you know, are hoarding cash. You know, maybe they're in their fifties and sixties. They they they're you know have a lot of cash relative to what a typical financial plan would would show is the most efficient or effective. I mean
w we commonly get the advice of having, you know, six months in terms of an emergency savings fund, you know, to make sure we don't have to draw from our retirement accounts during a market downturn. She sees people with two, three, four, five times that. And it's really hard for them to let go of that. In other cases, you know, people, they have a great retirement portfolio, but they're only living on the required required minimum distributions, the RMDs that the IRS requires you to withdraw every year. And so their lifestyle is very modest, even though they could do a lot more.
⁓ they repeated reassurance seeking is another pattern. They're, you know, every meeting, you know, rather than talking about the positive things in life and or in retirement, it's all about fear. It's all about worry. And then finally, ⁓ you know, reluctance to spend on things like travel, even though they want to give the charity, they they they hesitate to pull the trigger. They're very obsessed with sort of the worries about healthcare costs. So it's sort of a scarcity mindset mindset that she sees. And as I mentioned, you know, that
generally stems from periods of past instability, but it also stems from things like a fear of burdening others, you know, ⁓ a belief that security only comes from holding on to more. I mean, these are very common patterns in human behavior. So what do we do when we recognize clients in this situation? ⁓ you you have to lean into it, basically, Alex says, and focus on safety and security. So what are some practical recommendations? Maybe this person's a great candidate for
Purchasing annuities. Those sorts of products can can really resonate with a person who's protection oriented. if they don't want to quote unquote lock their money up in an annuity, ⁓ maybe things like bond ladders. Sean, you may recall editing an article I did a couple weeks ago about using bond ladders to bridge your way to a higher social security benefit. That could be a very effective technique for this group as well. And for those who are of of greater means and can afford it.
Long term care insurance that you source in your forties or fifties can be a very powerful tool to help ease some of these people's fears. So scarcity mindsets, it's quite important. ⁓ Sean, I mean, I'm I'm sure you you know, you can identify with some of these challenges. ⁓ any any thoughts come to mind?
Sean Allocca (17:50)
Yeah, actually one thought I was thinking because we did talk about the six month ⁓ emergency savings rule. And actually our producer flagged something that he saw on Reddit that we might want to w chat about. This might be a good place to do it, because on Reddit, and I know we sometimes see some things out there and there's a bunch of advice ⁓ all of the all of the spectrum from very good to very bad. That's right out on Reddit and all of social media. So I want to take get your take on this one. I have my personal opinion, but financial advisor.
John (18:03)
Yeah.
Sean Allocca (18:19)
says to keep ten K as emergency fund and put rest of ninety K savings into a brokerage account. I'm on the fence. Would you be too dumb?
John (18:28)
Yeah.
Well, it that's it's a great I'm glad you connected the two of these things. I was thinking the same. So just a little more detail, because I I pulled the post up myself. This person's forty-five and a single mother who just met with a financial advisor for the first time. She considers herself an avid saver who's accumulated approximately a hundred thousand dollars in cash, and that's where the question comes from. But I think what makes this a very interesting discussion ⁓ is that this person also apparently has three hundred thousand dollars saved in their four one Ks.
with ⁓ you know a wage that's approximately two hundred thousand dollars per year, a hundred and sixty K base with approximately forty thousand dollars in bonuses. So I this to me, like whether what the right move is, it it really we'd have to know her personal circumstances. It seems like she's very risk averse, but I mean this to me screams scarcity mindset, right? I mean I'm the being a single parent, you know, I'm I have I live here in New York City. I have friends who are single parents, single mothers and and
the ch the financial challenge that it represents, even if when you have a good job, like to source childcare and healthcare, I mean it it is very, very challenging. it's really interesting to see in the comments as well people's advice. Some people are like, yeah, it makes total sense, you know, invest for the future. Other people bring up the point, you know, well, you know, if you already have 300K and you are truly a single parent and, you know, if you imagine losing your job for six months or a year.
Burning through a hundred thousand dollars in cash in a in a high cost metropolitan area, I mean that that would be e very easy to do, frankly. So I it's I I wish we could give this person a a better better insight, but I I think this is scarcity mindset in practice. ⁓ what jumped out at you, Sean?
Sean Allocca (20:06)
For me, I was thinking that I mean, you would have to know what she spends monthly to figure out what her emerging savings would be. But to me, if you had a hundred K and you go ninety in a brokerage account, ninety percent, even with the three hundred K and the four and one K, I mean, okay, so then she's on pace for retirement probably at forty five or three hundred K. I don't know what the averages are. I think they're much less than that, but she's
John (20:26)
Yeah.
Sean Allocca (20:26)
She's okay on
that. She's probably 90 so percent to her goal on that. On the 10K emergencies, I don't unless she's only spending two K a month, ⁓ which I doubt. I with the single child, I mean, with rent or mortgage and and and expenses, I mean, I think her probably six month emergency fund should probably be more like fifty K. ⁓ I would
John (20:37)
Yeah, it doesn't seem like quite enough.
Sean Allocca (20:49)
I don't know. I don't again, we don't know her exact circumstance. But if without knowing anything else, going ninety, ten percent emergency on hand cash and ninety brokerage seems kind of ⁓ a little bit aggressive to me. But she does have other assets,
John (21:01)
a broader point that I think we'll be continuing to return to, you know, episode after episode when we do dip into Reddit like this, which which is something we we plan to do, is if you filter through these comments, th there is, and I think advisors have to recognize this, a real degree of skepticism about what financial advisors are and do. And it it really belies a misunderstanding, I think
that's it's very prevalent in the marketplace between what brokers do and and what sales oriented financial professionals do compared with fiduciary fee-based financial planning. I if if you look through the comments of this Reddit post, ⁓ as much work as as you and I have done personally, Sean, to try to educate the public about the differences between advisor types and and the ways that advisors work and are compensated, it's it's not common knowledge out there. And so I think advisors really need to be cognizant of this because the
This the person who started the post said that she had a meeting with a financial advisor and she left with kind of an icky feeling. And and I think that's important to recognize. I I doubt that the advisor who met with her, who gave her this advice, that maybe on on paper he probably asked her about her situation. And maybe in his mind it's like or her mind, I should say, ⁓ voila, easy. You know, put ninety K in the brokerage, roll with 10K. Like that just makes total sense. I'm the advisor, I'm smart, I know what to do.
And you leave the meeting thinking you've solved this person's financial problem, but later she turns to Reddit and and people are sort of really voicing a degree of skepticism. So I think that's an important takeaway.
Sean Allocca (22:28)
Yeah.
I for sure. Again, we don't know the circumstance all the circumstances, but it when I just saw that at face value, it's sort of screened to me like that this advisor maybe works for a brokerage. If you want to put ninety percent in a brokerage, you might work for a brokerage and you might have a fund to sell that client as well. So I don't know. I I maybe I'm skeptical too, but
John (22:47)
Indeed.
Sean Allocca (22:49)
let's move on to the second big
question, right? ⁓ on this on these patterns that we're talking about that can derail retirement. So the second one, which Alex identified, she said money ⁓ is equal to identity. So what's going on there?
John (23:05)
Yeah, yeah. I think we can probably all identify some loved ones or friends or neighbors and who fit into this category. I think it's a actually a probably and I'm th this is just my gut instinct, but I think this is probably the most common one that your typical financial advisor out there is going to experience because a lot of the, you know, clients that advisors who are listening to us serve are going to be those, you know, successful professionals who s started saving early.
You know, they've been in this process of accumulating wealth for decades and decades and it gives them a sense of pride, it gives them a sense of purpose. But, you know, that's great during the accumulation phase. But what happens when it's when it's time to retire and it's time to actually live off the fruits of your labor? Some people really, really struggle with that. They they have a resistance to spending because growth feels like a proof of value is how Alex put it. They it also have difficulty imagining purpose outside of work and and purpose outside of the
the you know, the the bi weekly process of getting a paycheck and getting that validation that you're you're doing a good job, your employer is paying you, you're getting, you know, good reviews at work. That for a lot of people is is a tr truly a a a big part of their sense of identity. And they also, you know, in in her experience, they display a real sense of restlessness and and irritability or withdraw when it comes to like actually talking about retirement. And yeah, I I think it's a very widespread problem. And again, what
What has she identified that is underneath, you know, this pattern? It's self-worth tied to performance or doing well at work. It's the fear of irrelevance, the fear of losing status that comes along with a potentially important job title. You know, you're one day you're a VP or an executive at a a Fortune 500 company, and the next day you're just you. You don't you don't have a title anymore. And and some people really struggle with that. They have fear of emptiness or or loneliness in in retirement. And and so they really, they kind of ⁓
glom onto this one more year syndrome. ⁓ there's somebody I'm not gonna name names, but there's one person who's near and dear to me in my personal life who I would firmly put into this camp where they just really they derive a ton of self-value out of their work. But the the idea of seeing this person actually retire and hang it up is very difficult, even though they've been talking about it for five or six or seven years now. And and all of a sudden you've been talking about, just one more year. And a decade goes by. And and this is a decade where you on paper had
every dollar that you would have needed to, you know, go on those dream vacations to, you know, contribute to your kid like help your kids pay for their bills or or that, you know, all these things that money should be used for, you know, you don't do it. You could just be out of a sense of of fear of of sort of irrelevance and and leaving. I think this is one area where advisors can also have a huge impact. ⁓ it I think it was Jamie Hopkins from Brenmar ⁓ Brenmar Trust who one time told me the idea that he's
put into practice, which is kind of the idea of test driving retirement. So he actually has some of his clients who he fears are falling into this trap. Take, you know, the he calls it test drive retirement. Take a three month leave of absence from your job, assuming they'll they'll let you and live during that period on your 401k. Don't you know you might have cash and on the side that's your emergency fund. Maintain that, but get into the the actual practice of of taking money out of your retirement accounts
in order to live. And actually going through that for a lot of people helps them work through this idea of of, you know, actually, okay, I'm I can draw money off this 401k. I I I can find purpose, you know, without having to get up and go to the office every day. ⁓ of course other people maybe choose to get involved with charities or local causes. There's a lot of ways you can respond to this. But again, it's important to recognize this this pattern.
in our world.
Sean Allocca (26:49)
Well, I thought that
was interesting what Jamie said. I guess you'd have to be a certain age, right? You'd have to be sixty, whatever it is now. Seven is it? Fifty-nine. So yeah, I think that's a super interesting point. And again, you'd have to also be able to take three months or two months, but even if you do two weeks or three weeks and kind of see what that feels like, don't go on a vacation or something and just kind of be with yourself and imagine what it might be like or what you might spend your time with. I think this all comes down again, and I I think we said it before, but just to
John (26:55)
After fifty nine and a half you can withdraw from most accounts, yeah. Tax or penalty free.
Sean Allocca (27:18)
Money is is probably one of the most like emotional things that we all have to do. It's either that and death, frankly, probably. And both of these things wrap into retirement and moving on to a next phase of life. Just like, you know, when you hit, you know, mid you your midlife crisis kind of thing, this is maybe f kind of feels like another turn and it's ⁓ it's scary for a lot of people and there you know, there's no one you know, the like you said, the emptiness, the lack of purpose, the you know, all these things kind of wrap into one. So it makes a lot of sense to me, honestly. And I think it's great the work.
John (27:24)
Yeah.
Sean Allocca (27:48)
That Alex is doing to kind of identify these things. So at least they're on advisors' radars and they can kind of work through them with clients. ⁓ because to all of these things and the emotional aspects of these, like grief, for example, is another one. Like there's steps and there's different levels to each part of that grief. And if you know what they are and you can identify them and you can kind of work through all of them, you have kind of a roadmap. It's not going to make it necessarily easier for clients to retire, but if you
know kind of what they're feeling and sort of why they're feeling it. The advisor might be able to help them kind of give some information and help them work through it a little bit easier at least. so yeah, I mean I I I love it. And I think I think there's one more,
And that one is avoidance. Alex identified the last one as avoidance. So let's maybe we can dive into that a bit.
John (28:34)
Yeah, yeah, for sure. So this is kind of just c the classical pattern of denial that that crops up in many other areas of our lives. But as it pertains to retirement, ⁓ how she's identified it in her practice is, you know, there are people who miss follow-ups. They, you know, they kind of maybe cancel a string of meetings where they know retirement's on the agenda. Maybe they, you know, you give them important paperwork, you don't get it back, you know, in a timely fashion. You
You send, you know, electronic statements and you see that they haven't been opened, you know, these sorts of things. ⁓ she's seeing procrastination around decisions or chronic postponements of actions that they say they want to take. That's an important one there. I think you kind of have to look at people's the way she put it, you have to look at people's behaviors more so than even what they say. Cause a lot of times people f who are in this avoidance pattern, they're still talking about, yeah, you know, I'll I'll organize this for them or I'll do this. So yeah, I'll I'm I'm definitely
Definitely thinking about retirement, but they just again, it's the one more year. They they don't actually take action. So you really have to look at ⁓ their their behaviors and and sort of make judgments that way. other people, you know, they they kind of display this almost more impulsive or unplanned financial decisions can be a a way because they, you know, they spend so much time avoiding something and then, you know, there's a n it's psychological incentive just to kind of get it done. So they just
pick pick a choice and and go and run with it without really considering their options. That's that's arguably the the worst sort of outcome that comes about from avoidance. I mean it it's one thing to delay decisions. It's another thing to kind of be so psychologically intimidated by some of these decisions that you just kind of jump into something with your eyes wide shut, so to speak. So the this is something that ⁓ she sees pr pretty frequently in her practice. And you know, upon sort of pushing and analyzing this in her experience
A lot of it stems from a few things. Number one is sort of shame about not understanding a lot of these retirement topics. Cause I think, you know, folks who have worked with an advisor for many years, you know, they sometimes have shame. They're like, Well, I you know, I should understand like Roth conversions or I I should understand like what it means to bridge social security, but I I really don't. So I'm just kind of gonna push it off and I'm not gonna make these decisions about, you know, when to take a taxable hit or or when to sort of make a conversion.
⁓ another one that I think is is very important to recognize. ⁓ and I was actually chatting with my wife about this as we were talking over what we were going to be talking about in the podcast, but this concept of of nervous system dysregulation or deregulation is a very important psychological phenomenon that so there are, even when people are can be well educated and well informed about a topic, there are circumstances where the emotion of it will literally cause them very
will make it very difficult for them to make rational and and well reasoned decisions when talking about a subject that they may, you know, very well understand outs so it's we have to recognize that the the emotional the emotional elements of retirement, the just how charged some of this stuff is as as we were talking about in terms of people's identity, in terms of the the difficulty of of making a break with your, you know, your working self and moving to life after work. There is enough emotional sort of
baggage there that it can it can literally cause people to make decisions that they wouldn't otherwise make in a more calm and and rational state. So I think that's sort of my recommendation to advisors out there is to really ⁓ be aware of this this this pattern. And it can affect even, you know, folks who you've been working with for decades, they've shown themselves to be very rational, very capable when it comes to these big decisions, they can fall prey to things like ⁓ you know, emotional deregulation. So something you need to be aware of for sure.
⁓ in these cases, you know, what can an advisor do to respond? Address them, you know, address these worries head on, you know, focus on the simplicity. You know, normally, you know, we talk about, ⁓ rules of thumb are antiquated for retirement planning. You should be using, you know, guardrails-based Monte Carlo simulations to, you know, adjust income over time. And and on paper, those strategies are fantastic. But in a case like this where a person is very sort of intimidated and and overwhelmed.
Talk about the four percent withdrawal rule, things that are fairly simple, you know, to talk about the tried and true rules of investing. ⁓ kind of circling back to the top of the episode. Probably not a great candidate to be discussing sort of ⁓ alternative investments or esoteric private asset classes and and the potential hedging role they can play in a 30 year retirement portfolio. And and so it's it's really just kind of recognizing people where they're at and and sort of just recognizing the emotionally charged thing that is retirement.
Sean Allocca (33:13)
I didn't know there was nervous system dysregulation around money conversation. That's super interesting. It makes a lot of makes a lot of sense ⁓ to me. And I'm sure that's something that advisors can really help their clients with. I would say to bring it back to the very top of the episode, I might have some dysregulation when the US plays their next game ⁓ at the World Cup. And so we'll be seeing how how they come through the groups.
John (33:17)
Yeah.
Ha ha.
Sean Allocca (33:37)
but I'm actually like you said, I'm gonna go to a France game coming up as well. So I'm super excited. We'll see how the right at Met Life. So we'll see how it all plays out.
John (33:46)
just like that, another episode of the Advisor Upside show, done and dusted. I'm having a lot of fun doing the podcast. ⁓ I appreciate you giving me space to kind of dig into some of these nerdy topics and and talk about, you know, whether it's the markets or or more sort of specific esoteric retirement issues. I think the podcast is just it's turning into a great venue for us to do a little bit more than we can do in a in in our weekly newsletter. So folks probably already know, but if they're not signed up, we encourage you to go over to the website.
We have the advisor upside, we have the ETF upside, we have our flagship, the daily upside newsletter, and the ⁓ newsletter that's arguably nearest and dearest to my heart, the retirement upside, which is our newest ⁓ publication, which you know folks listening may not have signed up for yet. So encourage you to do that. Also encourage you to subscribe to the podcast wherever it is that you're listening now. We're we're on all the major podcast players. We're also on YouTube where you can see us and our guests, you know, each week.
Sean Allocca (34:42)
if you guys all wanna wanna pitch in, as John said at the top, you can email us. It's podcast at the daily upside dot com, So you can reach out or just reach out to me or John. We're here if you have some thoughts that we wanna go in on or you have some great guests, we'd love to hear from you guys. So thanks again for another episode. We had a blast and we'll see you on the next