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Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, healthcare, and more. This show is an extension of the book How to Retire on Time, which you can grab today on Amazon or by going to www.howtoretireontime.com.
This show is intended for those within 10 years of their target retirement date or for those are are currently retired and are concerned about their ability to stay retired.
Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, How to Retire on Time, which you can grab today by going to Amazon or go to www.how to retire on time.com. My name is Mike Decker. I'm the author of the book, How to Retire on Time, but I'm also a licensed financial advisor, insurance agent, and tax professional. Which means when it comes to financial topics, we can pretty much discuss whatever's on your mind.
Mike:Now that said, please remember this is just a show. Everything you hear should be considered informational as in not financial advice. If you want personalized financial advice, then request Your Wealth Analysis from my team today by going to www.yourwealthanalysis.com. With me in the studio today is my colleague, mister David Franson. David, thanks for joining me.
David:Hello. Thank you. Glad to be here.
Mike:David's gonna be reading your questions, and I'll do my best to answer them. You can send your questions in anytime really during the week by texting them to 913-363-1234. Again, that number is 913-363-1234, or email them to hey mike at how to retire on time.com. Let's begin.
David:Hey, Mike. I'm having a hard time understanding fees. I'm paying my current adviser 1%. All of the mutual funds he has recommended have fees as well. Is this normal?
Mike:It is normal, but that doesn't make it right.
David:Yeah.
Mike:So, yeah, I don't know if you've heard that expression. It's right as rain.
David:I have heard that.
Mike:Who likes rain? I mean, I I kinda do. Yeah. Farmers like rain. I'm from originally Seattle.
Mike:Yeah. So I grew up with rain. It's very therapeutic in my mind because I just you know, it's it's nostalgic. But the expression right as rain isn't saying that rain is amazing. It came from the United Kingdom.
Mike:So England. Right? And it's because that's what they expect over in England. It rains a lot there too. So right as rain isn't necessarily saying it's right.
Mike:It's saying that this is what's normal. And a lot of people are in this normal situation to where they're paying an adviser, a quote unquote fiduciary because they have their series 65 license who charges a typically 1% fee management fee on whatever they're managing. And then their job is to do the research and pick mutual funds or ETFs that also have fees associated with it. So in some sense, you could say that the fiduciary position or the advisor you're working with is the middleman doing the research to pick funds of people that are actually managing the money in the market. So you've got 2 layers of fees because you've got 2 layers of relationship or responsibility.
Mike:It bugs me. I'll be the first to admit it. It it does bug me. Most of our models really focus on stocks so that we're cutting out that middle management fee. This is gonna be like Festivus if I can say that.
Mike:You know the Seinfeld episode Festivus where you air your grievances.
David:Yeah.
Mike:Here are my grievances. K. All businesses need to make money. I get that. But to make money, you you need to earn it.
Mike:So what are you doing to earn the money? I don't believe it is ethical in most situations to charge, let's say, a 1% fee on CDs. Or let's say you have a bond ladder that you don't need to touch for a couple of years because once it matures, it pays out and then you spend the money. Right? Like, the question is, what are you actually managing?
Mike:And so for me at least, I don't believe in charging fees for annuities. If you want annuity, there's no fee associated with that. There's for CDs, for treasuries, for all these things. There was an email that came out. I don't want to say much more than this that there's a high yield savings account that advisors can give access to their clients that's rather competitive.
Mike:And I believe they're now incorporating the way that advisor can charge a a small fee on the high yield savings account to earn extra revenue. When you go into the alternative space, advisors can charge a fee on things like a Delaware statutory trust, where you're not really doing anything once the money's in there. So these situations do bug me. It is normal. I just don't like it.
Mike:I don't believe in it. Here's how how I typically structure portfolio. They could just give you the the antithesis or the opposite.
David:Okay.
Mike:So let's say you've got a $1,000,000 portfolio and, you want to ladder out your income for the next 5 years. And so you've got I'm I'm making up simple numbers here. 250,000 that's in CDs, treasuries, or non qualified assets that you just don't there's no need to touch it. It's kind of a set it and forget it, and you're either going to spend it or you don't need to touch it for 10 years. I wouldn't charge a fee on that because there's nothing to be done.
Mike:Once it's set up, you're good to go. Yeah. Then let's say half the assets are actively being managed in the market and are doing IRA to Roth conversions. I mean, it's really intense. Okay.
Mike:That might justify a fee. And then let's say they wanted to buy an annuity. Okay. There's a commission that the company would receive for that. Let's not kid ourselves.
Mike:But there's no ongoing fee for that. So this is the thing. These things bug me, trying to get the most out of multiple fees or multiple ways or participation awards or whatever you wanna call it. But if you have the intuition of why am I paying fees, you may not be getting as much out of the relationship as you should. That's my opinion.
Mike:And if you wanna check your fees and and get our opinion on it, which will be biased because we also are growing our our book of business here. So it will be a biased thing, but we'll try and get be as objective as we can. But if you want our opinion on your relationship and what you could do and if you wanna say, well, could I just do this on my own? We can tell you, yeah, you probably could. Let us know.
Mike:We'll run the analysis for you, give you some context. And and if you wanna self manage, if you want us to manage some of it, whatever the situation is, we can go from there. But, yeah, if you want an interesting conversation that's taken many people by surprise about fees and if it actually makes sense or not, request your wealth analysis right now. Go to www.yourwealthanalysis.com. That's www dot yourwealthanalysis.com to request your wealth analysis at no cost.
Mike:And let's have a fun fee conversation. Let's really pull back the curtain and explain what's really going on. That'll be fun. Go to www right now, www.yourwealthanalysis.com to request a comprehensive analysis that will also include a fee conversation. That's all the time we've got for the show today.
Mike:If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles or
David:if you're missing tax minimization opportunities that you may not even know exist. Explore strategies that may be able
Mike:to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility. This is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could
David:do for you regardless of your age, asset, or target retirement date. Go to www.yourwealthanalysis.com
Mike:today to learn more and get started.