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Real World Retirement is a podcast hosted by Alexander Pushman, dedicated to exploring all aspects of retirement planning with the help of expert financial advisors. Each episode dives into crucial topics like Social Security, investing, taxes, legacy planning, and income strategies, offering real-world insights and practical advice. Listeners are encouraged to stay engaged by following the podcast, sharing their questions, and shaping future episodes tailored to their retirement needs.
00;00;00;07 - 00;00;20;03
Unknown
Welcome back everybody. Real world retirement. The podcast. I am your host, Alexander Bushman. And you know the whole purpose of this podcast is really to educate you. If you're sitting out there and you're just looking for information, you're trying to learn, God bless you. And hopefully you've stumbled upon a great resource too, that if you're thinking about retirement, you're already retired.
00;00;20;05 - 00;00;43;24
Unknown
This whole educational platform that we've put together is 100% to give you real world examples of obstacles that you will come in touch with at some point in your retirement journey and then giving you solutions. Our goal is not to be fear oriented in this podcast. It's to be solution oriented, which is exactly how we handle our financial advising that we do here at Focus Financial Group.
00;00;43;28 - 00;00;58;04
Unknown
So our whole goal is education. If this is your first time joining us, please look back through some of the other episodes. We have a great, wealth of information that's already in past episodes. Is this your first time joining us? Welcome. And our whole goal is that you walk out of here with a couple nuggets.
00;00;58;05 - 00;01;18;00
Unknown
Learn something new. Get you thinking about something maybe you weren't aware of. So, today, very excited. I have a phenomenal guest, Cody Campbell, here. He's one of our our lead advisors out of our grand Rapids office. Cody, thank you for joining us. Thanks for having me. Absolutely. And Cody is, he's a pretty unique guy pertaining to.
00;01;18;00 - 00;01;43;22
Unknown
He's got a wealth of experience in the business. When it comes to portfolio analysis and understanding portfolios. Cody's one of the best. And so. But no, no. Better subject to have Cody talk to is we're going to be talking about purpose behind your portfolio or purpose behind a portfolio. And really what we're going to be talking about is, you know, something we always talk about is like, hey, give money one job.
00;01;43;28 - 00;02;00;09
Unknown
You know, you've referred to that. You know, I say that all the time. I'm the broken record. But really, what's your portfolio do for you? You know, and we're going to dissect that and we're going to go through kind of three different areas. We're going to talk about number one. We're going to talk about some, you know, how do you create a purposeful portfolio.
00;02;00;09 - 00;02;15;26
Unknown
How do you how do you create something that actually has meaning behind it? Number two, we're going to talk about some of the struggles that people who self-manage their money go through and give you some ideas and some solutions to that. And the third thing we're gonna talk about is the old 6040 stock to bond ratio blend and kind of poke some holes at that.
00;02;15;26 - 00;02;31;29
Unknown
Make sure you're thinking if that's you. So, Cody, first thing I always like to start out with let's, you know, kind of tell us a little bit about yourself and how you got to be a financial advisor. Of course. Yeah. I'd like to, just say, you know, I don't think there's a more perfect job. Perfect career for myself.
00;02;32;01 - 00;02;48;28
Unknown
You know, given my personality, skill set and what I enjoy doing, and I. I don't want to say I fell into the industry. Yeah. But it did take me about a year after college to actually pursue the financial services industry. And it was, you know, kind of funny because at the moment I decided to do that.
00;02;48;28 - 00;03;09;20
Unknown
And then, the woman of my dreams, right now, wife and mother, two of our children, and she had a third grade teaching job lined up in Denver, Colorado. So, I started my career in Denver, and I always felt this gravitational pull towards the equity markets right here. The charts and the day trading and the excitement around the stock.
00;03;09;20 - 00;03;33;09
Unknown
So, I got my start, a big brokerage firm, started at the bottom, taken 60 inbound phone calls a day, and have been really helping clients do everything and anything, from opening account times to moving money to placing trades. And it gave me a great experience, you know, about the industry and how it operates.
00;03;33;12 - 00;03;49;29
Unknown
And, you know, I got licensed right away, my 763, I was on an active trader overflow line. So, you know, people would call in and I had read through, charts, you know, overlays. But you.
00;03;50;02 - 00;04;10;00
Unknown
Also, it was, it was a great learning experience that I carry with me today. Absolutely. And this will tell you a little bit about me, but, seven months into the industry, I lost about a week of sleep trying to decide whether to pursue the CFA or, you know, and these are two of the highest regarded designations.
00;04;10;01 - 00;04;39;26
Unknown
Absolutely. And very different designations. The CFA stands for Chartered Financial Analyst. And I like to explain it's, you know, two feet wide and two miles deep because it's all about capital markets analyzing stocks, earnings reports, accounting practices. Great. Sharpe ratio standard deviation, duration of yeah. All the fun stuff. Right. And that's really what intrigued me to get into.
00;04;39;29 - 00;05;16;02
Unknown
Absolutely. One side of things. But the CFP is more broad and it's three miles wide and or. Yeah, three miles wide and 3000ft. And it covers investment planning, insurance planning, tax planning and estate planning and retirement planning. So this, this CFA certified financial planner was ultimately the decision I made. And I've been a CFP now for almost eight years, and it's really a perfect match between the investment world and actually bringing that knowledge and applying it to families that can.
00;05;16;04 - 00;05;39;17
Unknown
Couldn't agree with you more. So, I was lucky enough, at the age of 26 to get my first advising gig, took over 188 households, 330 million away. And it was a pure investment. It's called in every quarter. They wanted my market outlook. We want we reviewed economic data. You know, what's going on in the financial markets?
00;05;39;17 - 00;06;07;23
Unknown
Should we be making changes? Why do we have this fund manager over this fund manager? So it was really an offering, where I was able to design, rebalance, and manage portfolios. But after my CFP, I wanted to have deeper conversations around this thing. Right. Strategy. So I found a local firm in Denver, over 30 years experience and got to tap into that planning expertise.
00;06;07;23 - 00;06;34;13
Unknown
But I also got to bring my, investment knowledge, improve the portfolios of the firm, and ultimately help lead the investment committee of, almost no, Ken. So, you know, that brings me full circle to where we are today. My daughter was born in 2022, and so we spent two years really deciding if we should stay in Denver or move back to Michigan to be close.
00;06;34;16 - 00;06;56;16
Unknown
Right. All right. In Michigan, which, found Soviet financial group and, and, the rest is history, right? Yeah. You know, joke around the blessing, the curse of coming back to Michigan. I also did the same. The only difference. Where was your wife originally from? Fenton, Michigan. Okay, so she knew she. She knew what she was getting into.
00;06;56;18 - 00;07;14;20
Unknown
I brought my wife up here. We met in Arizona. She was from, Florida. Miami area. Never had a winter. So real real quick, I got to hear that side of the coin. You know, her first winter. She's not a happy camper. But anyway, the blessing curse in Michigan, right? So. Okay, well, appreciate you sharing the story for yourself.
00;07;14;20 - 00;07;35;03
Unknown
And and I think, again, you kind of alluded to it. You didn't really get into financial planning to go down in the tax planning. The income planning. You got into it purely for your passion of the investment side. And and, you know, you have just a natural passion for that. But now you fast forward and you identified, hey, that's probably an important part of this puzzle.
00;07;35;05 - 00;07;57;18
Unknown
You go fix that piece. And now you're a very well-rounded advisor. But, you know, I think there's nobody else that better to talk about this portfolio piece. For the record, I have a blessing and a curse myself. If I enjoy doing something, you know, I want to take learning to mastery. And as soon as possible. So, you know, it's been great because there's, you know, so much information out there.
00;07;57;20 - 00;08;25;02
Unknown
Right. So yeah, I've just over a decade long career and you know, really great to see my passion turn into applicable. Yes. Absolutely, absolutely. And so let's kind of jump into the first, you know, thing is, hey, creating a purposeful portfolio. What do you mean when you say that, you know, if we kind of use this as our first key takeaway for people to be thinking about kind of as a bullet point here, what do you mean by that?
00;08;25;02 - 00;08;47;27
Unknown
Creating a purposeful portfolio. What do you mean? Yeah, it's simply you know, what can my portfolio do for me? Right. Where where am I at? Where do I want to go and how best to achieve that? And, you know, I'll just kind of set some context here. If you if you're in the process of hiring an advisor or transitioning into retirement, you want to work with somebody.
00;08;48;00 - 00;09;11;15
Unknown
You can walk into the average advisor's office and, you know, right, exactly what's going to happen. And or for the majority of the industry is they'll ask you some questions to ask you what you have, what you need from the portfolio. They'll run you a 90 page financial plan, confuse the heck. It shows that they're doing some sort of work.
00;09;11;17 - 00;09;35;29
Unknown
They'll run your Monte Carlo analysis, tell you that you have an 85% chance of success. You know, whatever that means. And then they'll hand you a risk questionnaire. And based on your investment biases and experience and how you subjectively feel about the market at that point in time, you'll be more conservative or more aggressive. And then at the end of all that, they'll probably just put you in that 6040 portfolio, right.
00;09;36;01 - 00;10;04;28
Unknown
And to me, and there's again, there's got to be purpose behind it. Right. Once you retire, the paycheck starts, right. Have some sort of income gap. Right. Whether it be 20 grand, 50 grand, a hundred grand, whatever the need is, you need to design your portfolio to provide that income, continue to grow, but also have the confidence to last however long your retirement.
00;10;05;00 - 00;10;24;11
Unknown
Absolutely. And I know we've talked about this in the past, too, but, you know, kind of continuing this conversation of like, hey, giving your portfolio purpose to basically connect the dots with your lifestyle, right? And when you can be like, okay, that that money there is for me to spend every year, that money has this job, that money has this job.
00;10;24;11 - 00;10;39;20
Unknown
Now everybody's got a job. And it's really simple for a the client, whether they're super educated and they're engineers and they enjoy this and they like it or they're the blue collar worker who hasn't cared about it. They're just like, hey, I do it because I'm supposed to, and I'm not really comfortable with this. And again, I'm just making generalizations.
00;10;39;26 - 00;11;01;26
Unknown
But you know, you know, keep keep walking me down the path here because I know you got some good stuff. Yeah, definitely. So when we think about specifically that, you know, that family or that person that's transitioning into retirement and they need income, to me it's, you know, like I kind of just said it's when you're working and you're asking yourself, what can I do for the portfolio?
00;11;01;29 - 00;11;23;06
Unknown
Right? You get the raise, you get the bonus, you get extra money. Should I invest in this? What type of account should I invested in? How should I invest it? But when you transition into retirement, you really asking, what can my portfolio do for me, right. And you're saying, okay, how much can I spend? Because I think, you know, a lot of people and again, everyone's different.
00;11;23;06 - 00;11;50;08
Unknown
Different set of values. Right? Absolutely. Bucket list items, things, things of that nature. But what is the maximum number I can spend per year given my assets? With confidence, I won't run out and not leave too much behind. Right. Because if you can spend it now, give it now. Why wouldn't you want to see the, you know, the absolutely that you can give to give to your family or communities or church.
00;11;50;10 - 00;12;19;29
Unknown
So you have to have, a framework or an approach. And I'll share with you my perfect. And the framework really starts with basic needs. So just to throw some numbers out there to give you kind of an example, if you, you know, those who say you have $1.2 million, various account types and you need $20,000 to pay the bills and, you just think you should live, right?
00;12;20;01 - 00;12;43;10
Unknown
Well, I'm going to do some math in the background, crunched the numbers, and if we allocate the portfolio appropriately, I'm going to come back and probably tell you you can spend, you know, for example, 50,000 a year with complex. And, so that's a different conversation, right? You come into my office and you're only 20, and I can tell you you can spend 50.
00;12;43;13 - 00;13;13;16
Unknown
That's a fun. Absolutely is. That's absolutely a fun conversation. And, the purpose behind the portfolio is so important to give you confidence to spend that and make it last. So the first stage of this framework is your basic needs. I like to start with five years, or at least as a starting point of spending in a conservative or principally protected obligation, something that won't go backwards, that we can weather out market volatility.
00;13;13;16 - 00;13;35;17
Unknown
And so we have five years worth of spending. And I don't just pick five years just because it's, you know, a number out there, but historically down markets or I should say bear markets last under 18 months. They can last up to three years in 2008 or 2, almost six years for the markets to fully recover and get back to where they were.
00;13;35;17 - 00;13;59;20
Unknown
So five years really historically gives us a good confidence level to withstand any type of. Right. If we need to pull cash from the portfolio, we're going to take it from that buffer in down markets. So the second piece of the puzzle is the meat of the portfolio. I want 15 years roughly of spending in this allocation.
00;13;59;20 - 00;14;24;04
Unknown
So 15 times 50 is 750,000. And we want some growth. We want to focus on income. We still want some defensiveness. But this is going to generate us a lot of the cash flow that we, support that $50,000, ten number in this hypothetical example, because we're going to focus on dividend yields, dividend strategies, you know, which we have.
00;14;24;07 - 00;14;49;26
Unknown
And, from there, if you've been following along, we have 250 in that conservative if you will, for lack of a better term. 750 in moderate. So we still have 200,000 to allocate. And we can get more aggressive. We can maybe earmark this for legacy. Right. 15 plus year time, time horizon. We can invest in the future AI technology, things that are going to be more volatile.
00;14;49;28 - 00;15;13;04
Unknown
But give us a chance for a higher growth. Right. And really what you're talking about is when you when you're saying, I'm going to give your portfolio purpose, you're you're going to give X amount of dollars, one specific task, hey, 250 grand. I want you to be safe. I don't want you to have any risk right. Avoiding fees is always a benefit.
00;15;13;06 - 00;15;30;05
Unknown
But I really just need you to get, you know, 4 to 6% a year. Be safe, do your thing. Which is daunting. Allow me the $750,000 bucket to be a primary income source outside of a bad year. And then, hey, we got this other 200 grand. We're just going to go for long term growth, right. And again, you're using an example.
00;15;30;05 - 00;15;48;10
Unknown
But that's a very well diversified. You gave everybody their job and now it has purpose. Exactly. Yeah. And I I use the analogy of teaching my three year old how to ride a bike. Yeah, it's a tough job right now, but you just starting to get the hang of it. But the very first thing I teach her is you have to wear a helmet, right?
00;15;48;11 - 00;16;16;14
Unknown
You have to be safe. And it's not only for protection, but it allows her to to go faster on that bike, right? To to take more risk because she has that safety in place. And that's why that buffer is so important. Yeah. Great analogy. Right. Right. And that's where I use this analogy all the time too. My, my wife tells me from birth to age eight is the most important time frame for a child's development.
00;16;16;16 - 00;16;38;28
Unknown
It's the same exact thing for retirement right now, That first decade? Yes. Volatility is probably one of the biggest things that disrupts people's. Absolutely. Yeah, we talk about that all the time right. It's like if you can avoid who is it the Warren Buffett. Right. Right. Rule number one don't lose money in retirement. And don't forget rule number one.
00;16;38;28 - 00;16;58;14
Unknown
Yeah, right. You know, I only joke around about a podcast, but yeah, it's a that's a great analogy. It's the same things kids, you know, and scary statistic. As a dad, though, I remember my, my, I was reading this article and I was saying that there's some crazy number, like 90% of the time you spend with your kids is before they're 12 years old in their lives.
00;16;58;17 - 00;17;17;11
Unknown
I was like, that's terrifying. But anyway, side note yeah. So anyways, okay, so long story short, what you're really talking about when you say, okay, first main takeaway we want to push to the audience is you need to have purpose with a portfolio. And how do you create that? Well, you take X amount of money based on specific reasons.
00;17;17;11 - 00;17;33;29
Unknown
You said, hey, the reason it's a five year window is because we know if there's a bad market, right, we should be able to solve your income for five years. That's where the 250 grand came from. Singer and spend 50,000 a year. The next bucket, the moderate money. Right where you may need some income. You may play a little defense.
00;17;33;29 - 00;17;54;22
Unknown
But we do want it to grow is that's going to be your, main primary source of income for retirement. And then the last piece is a growth piece okay. Now we have diversification. Everybody's got their job. Now we've created purposeful to connect back to your lifestyle okay. Yeah. And there's an important piece of you know the managing the cash flow right.
00;17;54;29 - 00;18;22;03
Unknown
And down markets we're going to take from, from the different allocations and rebalance or replenish. So there's active management. Great point. You know, also I would say from a tax strategy standpoint as a location is. Big thing that I think is under utilized or not talked about a lot in the industry. And what I mean by asset location is you know having your growth assets if possible in your office.
00;18;22;05 - 00;18;44;23
Unknown
Yeah. Your tax for your. So you want all that growth in the tax free account. So the second option would be to have it in a brokerage account. Right. You want more growth in the brokerage because capital gains more advantageous than ordinary income. You want some of the more conservative investments probably in your IRA, because down the road, something called R&D is required.
00;18;44;23 - 00;19;06;00
Unknown
Minimum distributions are going to come, pop up and create a tax liability. Right. I think asset allocation is another important piece. Yeah. And I and I always joke around when I'm talking to like my, my clients or, or just, you know, random people, you know, I'm golfing and they're like, oh, you're a financial advisor, right? And I always make the joke on the podcast, it's like, here comes, you know, questions for four hours.
00;19;06;03 - 00;19;24;16
Unknown
But you know, the type of money and the taxation of the money is such an important piece of the investment portfolio. You know, it's like if you just ask somebody a simple question, hey, you got 30% gains on an account. Would you prefer to pay taxes on that or not? Model I don't want to pay tax. If I don't exactly.
00;19;24;16 - 00;19;47;08
Unknown
Then put it in your Roth. Right. And and I love that. And that's a great point. Asset location 100% is under utilized conversation in financial planning. Because if you ask somebody, hey, what's the difference between an IRA Roth and a non-qualified dollar, they're just staring at you, you know, nine out of ten people, unless you know, you're interested in this stuff and you're passionate about it, it's something really important.
00;19;47;08 - 00;20;06;03
Unknown
That's a phenomenal point. Anything else you would kind of add to this kind of creating purpose with your portfolio piece? Yeah. I think, you know, the, the backdrop of this design is to really get, get things in place, because, you know, the market's going to have volatility, right. We we know the market's going to go up and down.
00;20;06;06 - 00;20;39;09
Unknown
And if you structure your portfolio with this type of purpose you can be more easily I but emotionally, great point. You in your seat longer. And we've seen historically over time, you know, have that payoff over ten 1520 absolutely, absolutely. Okay. So that was a perfect tip for the record for our second bullet point, which is struggling or the struggles, we identify with people who self-manage their assets in retirement.
00;20;39;09 - 00;21;01;15
Unknown
Right. So you're a do it yourself or if you will. And there's nothing wrong with that. Nothing wrong with that. What are some of the things that you would say would be quote unquote, issues that you've identified and maybe given some people some tips who are self managers out there? Yeah, I think the two biggest things are just the education and knowledge and the time that it takes to do this yourself.
00;21;01;17 - 00;21;31;08
Unknown
Well, you not only have to know all the different investment types, investment account types, time strategies, and let's just say you have that understanding and the time the second piece of it is managing your own emotions. Right? You're you're retired, the paycheck stops. You're looking at your life savings and April. Yeah. 1,520%. And you're sitting alone in your home office really battling with am I making the right decisions.
00;21;31;10 - 00;21;52;13
Unknown
Do I hold it. Do I sell it. Yeah. Yeah. And you just you don't have a sounding board. You don't have anybody there other than yourself to control your your emotions. Yeah. That is the those are the two biggest things where I, when I see people come into my office, and say that they do it yourselfers, you know, they, they, they're going to struggle with that at some point.
00;21;52;17 - 00;22;11;22
Unknown
Yeah. Yeah. And, and you know, it's like what I would say also is I'd encourage the audience, if you're listening right now or if you're watching, the podcast that if you're somebody out there who, number one, you don't really understand how your portfolio set up. It's just in this. I don't know why this is just what I was told.
00;22;11;22 - 00;22;34;12
Unknown
And you don't have that kind of peace of mind, that purpose with your investments or your portfolio. Please reach out to us. You know, I, I you know, when Cody said, hey, Alex, I'll do the podcast, I thought he was one of the best guys to do the portfolio side just because, again, his rich, rich information in education pertaining to the CFP, understanding portfolios, why he got into the business.
00;22;34;15 - 00;22;51;21
Unknown
So if you're sitting out there, you're like, hey, I don't know why I'm invested the way I am. I'd like to understand if this is the right thing or not, the right thing. On the specific creating a good portfolio that has purpose. A Cody's a phenomenal resource. Cody, if you don't mind, what's the best way somebody should get a hold you email questions, call in to the office.
00;22;51;21 - 00;23;18;00
Unknown
What works? Yeah, all the above. Campbell. Focus financial.com team Campbell their financial, call the office. Yeah. Yeah. Perfect. And again, if you're see me listening, you can comment. You can engage with us on social media, if there's a specific question. But if you're sitting here thinking, I don't have a portfolio, that I have any purpose or I don't really understand how much I can or can't withdraw whatever those questions are, absolutely reach out to us.
00;23;18;00 - 00;23;34;18
Unknown
Number two, if you're somebody self-managing and you'd like to have your investments looked at, hey, how do I pay fees? Am I in the right stuff? Am I taking too much risk? Am I not taking enough again? We're here for you. This is what it's all about. I'm going to encourage you to take some action, though, because there's a reason you're hearing it.
00;23;34;18 - 00;23;51;25
Unknown
There's a reason, you know, and the last podcast I did, we end up getting the conversation like talking about like, God, you know, the spirituality of like when you hear something, you're supposed to take action. You know, anyway, it wouldn't do it to a different place. But, if you're hearing something, you're and you're just sitting there thinking, hey, I need some help or some further education, you know, that doesn't have a cost with us.
00;23;51;25 - 00;24;07;11
Unknown
We do this stuff. We give, you know, we do referrals all the time where we sit down with folks we don't charge nothing to give you our take and give you a recommendation. So just as a good expectation if you're out there, having some some thoughts of saying, that sounds like me, please engage with us. So what else would you talk about pertaining to the people who self-manage?
00;24;07;11 - 00;24;36;16
Unknown
Because you said something really important that I think, you know, I just like to put an emphasis on, which is the discipline, the discipline you have to have when things get bad. Right. Everybody says they're a risk taker until the market's down 20%. You know what I mean? You know, the emotional the the emotional hide. You know, I always say like I think in my, in my take of our job is our advisor team part of what people pay us for is to not be emotional in our job.
00;24;36;18 - 00;25;00;14
Unknown
What other things would you add? That would be things to talk about for the folks who are managing their own investments. Self managers? Yeah, I think you know, one of the first questions I always ask somebody is what is your ideal retirement? What is it you want to do in this new chapter of retirement? And what I see you kind of do your question of do it yourselfers is they they don't have a good grasp of what they can actually spend.
00;25;00;17 - 00;25;32;10
Unknown
Yeah, that's a good point. So you see a lot of, retirees get more conservative as they enter retirement because they're saying, oh, well, I can't take risk anymore. I'm going to just have to settle for whatever the the risk free rate is, you know, 4 or 5% on treasuries or CDs or other investments. And it really, you know, yes, maybe you don't run out of money, but really it's it's about maximum spending and living.
00;25;32;12 - 00;25;49;29
Unknown
On film and out of retirement, something you just sacrificed 40 years for. And I'm sure you're young enough still, and you want to do things and cross some things off the bucket. Yeah. I would say that's a common. And you know, what I also see, too, is like, people usually spend more in the first couple of years than they even anticipate.
00;25;50;03 - 00;26;13;00
Unknown
Yeah. You know, yeah. That's what the, like go, go years ago years. And then that's 60, 7080s, right. I call it, you know, there's a bunch of research out there about the smile. Right. So meaning you're you're going to spend more on those first. That first. Yeah. Great. Great point. Kind of smiles out. But it picks back up because of health care costs right.
00;26;13;00 - 00;26;30;10
Unknown
You end up in a home, right? You're spending more than you want. I can guarantee you that. So that's a great point. The other thing I know you and I had talked about with the self managing piece and again, just things to think about was the folks who maybe have a spouse who isn't as well educated as them.
00;26;30;10 - 00;26;53;01
Unknown
Right. What would you kind of give us some advice for? You know, proactive approaches for those folks is there's nothing wrong with managing your own money. Just make sure you know the the game in the rules you're playing at. Right? Exactly. If you're doing this yourself, there's typically, in my experience, a financial spouse, someone that, enjoys doing this, has the knowledge, has the confidence, has the time.
00;26;53;03 - 00;27;20;13
Unknown
And there's usually a spouse that, you know, they're like, they take care of it. Yeah, exactly. I trust you. I just tell me, right, right, right. That's my wife. Yeah, but my wife knows exactly who to call. If something were to happen to me and to carry on, you know, our finances. Well, for our family and if you are doing this yourself and your good advisor, you know, a good advisor would plan ahead.
00;27;20;16 - 00;27;47;23
Unknown
Think about you know starting a trusted relationship you know purely for that financial spouse. Because as you age you're not going to be able to do this forever. You know health concerns life happens. So it's just really important to have your family taken care of if and when something happens. Yeah. And like when you start talking about that, I just start going through clients that I have and, and people I've worked with.
00;27;47;23 - 00;28;07;01
Unknown
It's like, you know, the first example I thought of is I work with a gentleman who's, he's in his 70s, done it himself his whole life, does a great job, very knowledgeable, knows enough to be dangerous. I always joke around and say about. But, you know what happened to him? He. He has a, let's just say, psychological mental disease where he is deteriorating.
00;28;07;01 - 00;28;24;17
Unknown
And it's not a if it's a win. And, you know, it was probably about a couple of years ago, you know, he sat down and said, listen, Alex, he goes, I don't need you today. I want to give you these two accounts just to start the relationship. I'm going to need you in the next 3 or 4 years because, you know, I have ex.
00;28;24;19 - 00;28;45;22
Unknown
And when I get to the place where I can't do it, I need to make sure there's somebody there to take care of my money, even when I'm gone. My wife is younger. She's healthy. You know as well. I need somebody there that I can, you know, go at peace and know she's going to be okay. So, you know, it's a couple small accounts that I manage, and we meet, you know, once a year, and we just talk.
00;28;45;22 - 00;29;06;01
Unknown
He upsets me. Last time I saw him, though, he said, hey, I think we're getting close because unfortunately, he's having the harsh conversation with himself. He's deteriorating, and he needs help. And, it's tough conversations. But the proactive piece, I think, is a wonderful example of, of if you're in that boat knowing at some point you're probably not going to do it the same capacity.
00;29;06;04 - 00;29;31;01
Unknown
And the alternative is you don't do that, that issue. And now you have a grieving spouse who knows nothing about the financial situation, and she has to do that while she's, you know, and cross your fingers that she doesn't get in front of some, you know, candidly, some dirtbag financial advisor who's taken advantage of people and maybe chasing commissions and not doing the right thing, you know, so I absolutely that's a phenomenal point.
00;29;31;07 - 00;29;49;27
Unknown
Anything else you would add to that kind of topic of just, you know, people who are self-managing things to think about to make sure they're not, again, not to be fear oriented, to be solution oriented. Yeah, I think we covered most of it. It's really, you know, do you have the knowledge and the time and the confidence to, to run your own investment management, financial planning?
00;29;49;28 - 00;30;17;06
Unknown
Are you going to stay disciplined when the market fluctuates and goes down and, and are you able to do it for a long time? Right. Is that your best option? Yeah, absolutely. And I, you know, kind of jumping into the third topic, we want to talk about the old 6040, the old 60 stock. So what we're talking about everybody if you're again you're not you know, well versed in the financial industry 6040 is what a lot of people do for a they'd call like a moderate investment.
00;30;17;06 - 00;30;46;09
Unknown
Hey, 60% of your investments are stocks or equities, 40% are bonds. This has been popular for a long time. The target funds you have in your 401 K or for three B, 20, 30, 20, 35, 20, 25, understanding what this really means and understanding what your alternatives are is extremely important. So if you want to kind of break down some of the things you think about and try to educate, you know, the listeners and other folks that you've sat with over your time.
00;30;46;11 - 00;31;11;12
Unknown
I mean, it's just such a blanket approach. A, you know, one size fits all approach. There is, again, the whole title of this episode is Purpose Behind Your Portfolio. Right? It's really asking yourself or your advisor or your retirement account, plan administrator or whoever's managing your for one case. You know, why do I have 40%?
00;31;11;14 - 00;31;34;19
Unknown
Why do I have 40% of stocks? Like what? What is the purpose of this and what can it actually do for me? What's the risks? Right. You know, we I think we're all we've all been settled that bonds are safe. Right? And, what's the what's the rule of thumb, like? Subtract your age. Yeah, from 100 you should have in stock or something.
00;31;34;19 - 00;32;05;11
Unknown
Yeah, I think a bond salesman came up with, just increases your bond exposure, right? Right. But really, you know, the the biggest thing is when we talk about risk, right? We we talk about diversification. That's why the framework that I illustrated earlier, it's important to have that principle protection, that conservative bucket, that purpose, behind your portfolio.
00;32;05;11 - 00;32;33;23
Unknown
Because bonds have risk too, right? I mean, interest rates above 3%, inflation above 3%. Bonds become very correlated to stocks on the downside. Right? Right. Who knows. We'll probably see that again depending on where inflation rates go. Right. So there's just you have to have other alternatives, other options in your arm, and know where they fit in the portfolio to figure out.
00;32;33;25 - 00;32;51;16
Unknown
Yeah. And you know, it's like the term I always use is like bond replacements. Right. Understanding what things that you can use that have a similar call it risk tolerance. Right. Because to your point, the first thing is that people have an understanding that that bonds are safe. They're not safe. They're safe for their safer than a stock most of the time.
00;32;51;21 - 00;33;14;12
Unknown
But you go to that 2022 example and on both sides of the fence, you're getting beat up in a 6040. Right. You know the stock market's down 1820. Whatever the number. Bonds are down 3013. That's not a good that's a good year. And they kind of told us what was happening beforehand this. And I'm not talking about time in the market.
00;33;14;14 - 00;33;32;26
Unknown
I'm talking about if you are a well-educated person when it comes to economics, kind of 101, if you will, and you're in a seat like Cody and or seat like me, they say, hey, we're going to raise interest rates. It's December of 2021. They say we're going to raise interest rates six times. I can promise you, I wasn't using bonds at that point in time.
00;33;32;28 - 00;33;54;07
Unknown
You know, it wasn't the time to do so. Now there's a there's a reserve. Always do what they say they're going to do. No. But, yeah. So I, you know, it it's understanding your options and situations like that. I mean, the writing's on the wall to some degree. Yeah, absolutely. You know, the interest rates over the last of years, I mean, we had zero essentially for the last decade.
00;33;54;13 - 00;34;23;14
Unknown
And yeah, the great financial crisis, right. Covid happened. We were on the reverse trend. And so yes, I am again talking about struggles of managing this on your own. Or if you are in a 6040 and your advisor hasn't made those tactical shifts or at least brought some new ideas or options for the bond part of your portfolio, you know, 30 something.
00;34;23;16 - 00;34;45;27
Unknown
Yeah, yeah. And and Cody's one of the nicest guys. So when he says that I, you know, he means that you know. And it's true because I haven't you personally and I get not throwing darts at anybody I have not used bonds. I didn't use bonds in 2022 2023, 2020. For the first time, I started using bonds again was in the first quarter of this year.
00;34;46;00 - 00;35;09;20
Unknown
Personally, for my clients, I should say, and I'm not saying all bonds are bad. That's not what we're saying. We're just saying if you don't understand all the options out there. So if you're sitting in a 64 year, you're a you're heavy in bonds. I just had a phone call earlier today. Matter of fact, a guy fired his advisor and he he made some money, invested with this advisor, called the advisor when the pandemic hit in 2020.
00;35;09;20 - 00;35;31;18
Unknown
And he says, hey, I'm a little nervous about the market. You know, what can I do? Because he's a more conservative guy. And the advisor goes, what do you got in mind? He's like, well, that's what I pay you for is to bring options to me and be proactive. So he ended up moving his money and he sat in Treasury since, and so I, you know, I just said him I go, so you probably haven't had a great experience, over the last couple years.
00;35;31;18 - 00;35;47;24
Unknown
He's like, that's exactly why I'm on the phone with you right now. You know, he's a personal referral. And, to to Cody's point, though, if you're sitting in a 64 year, you got a bunch of bonds. You don't know what you can do to have an alternative, or a similar asset class pertaining to that lower risk conservative risk.
00;35;47;26 - 00;36;11;23
Unknown
Please reach out to us. You know, we can educate you and kind of the things that we're using with families that we've seen success with, and again, are more conservative investments, kind of that replacement of the bond space. Right. And just to kind of I not on that back to the illustration of the portfolio. Any allocations that I explain, you're probably more aggressive if you will in
00;36;11;25 - 00;36;34;23
Unknown
Yeah. You do have principal protection. You do have and you're talking about that 250 in the buffer space. 750 dividend if you will. And 200 aggressive. You're probably sitting on a 7030 or 70 5 or 25 if we want to zoom out and look at right macro view. So I like to kind of say it, this will all make sense.
00;36;34;23 - 00;36;59;23
Unknown
But in a 6040 blanket with no purpose, you're probably, more conservative than you need to be on the equity side and more aggressive than you need to be on the conservative. I agree with that. Yeah, I agree with that. Alternative investment choices. And again, we spend most of our time when we meet with people. I mean, you know, we've talked about this, but most of our time is spent educating people on the investment choices.
00;36;59;25 - 00;37;34;02
Unknown
This is what we like. This is what we don't like. Yeah. So I just love our process because it's it's purely educational. Yeah, absolutely. And it's really our approach. And I learned this early in my career, a lot of advisors lead with solutions first and strategies. But if you take the approach of understanding where the client is and where they want to go, if you then only can solve for how, to get there and what your options are and what's the pros and cons given, the person's value, right.
00;37;34;04 - 00;37;56;11
Unknown
Absolutely, absolutely. Understand it before you give a solution. Yeah. That's a and for the record, that's a key way. You know, some of you may be in an experience or has another agenda is they're selling you something without understanding your situation. Right? I mean, if you get to a 6040 after that, great, great, you know, usually it doesn't end up like, no, the is search approach.
00;37;56;17 - 00;38;20;29
Unknown
Yeah. Yeah. Absolutely. Anything else you would add. Because, you know, we've basically covered three really good things when we talk about, you know, having purpose behind a portfolio, how to create one. Right. You kind of walk us through your framework, which is great. When you said example like the $1.2 million bucket. You know, then you delve into, you know, some of the issues that people who self-manage your own assets run into and making sure they're thinking about that proactively.
00;38;21;01 - 00;38;38;22
Unknown
And then the third piece where you're kind of just unfolding is that 6040 blend understanding, hey, is it a fit for you? Do you understand all your choices? Anything else you would add that you think is important that a listener or somebody either retired or looking at retirement should be thinking about? I guess I'll just say, I mean, there's levels to this, right?
00;38;38;22 - 00;39;12;11
Unknown
I mean, you're going to different advisors and different, experience and expertise. If you're doing this yourself, there's just a lot that you need to know. And really, at the end of the day, it's just about, you know, providing for you some purpose for your money. And if you don't have something in place and a well detailed thought out plan, for everything, your investments, your tax strategies, your estate plan, your long term care planning, I would just encourage you to sit down with a professional and and get that second set of eyes.
00;39;12;15 - 00;39;27;03
Unknown
Yeah. Make sure you're living your ideal retirement. Absolutely. Because to your point, you worked hard. You want it to work for you. You want to allow you to have that lifestyle. And I don't think to your point, I've never had some money back. Alex. I can spend an extra 30 grand a year. They're not mad about that, you know.
00;39;27;03 - 00;39;48;03
Unknown
And you don't say it just to sugar them up. You're saying it because it's math, right? And and I think a lot of advisors don't do that because they don't want to see that extra money leave. That's a phenomenal point. It's one of the that's the best conversation. I 100% is saying, hey, you can spend more money and it's and you get to have those conversations around, what do you want to do with it?
00;39;48;05 - 00;40;05;20
Unknown
Yeah, family of grandkids and college and down payment for a house, you know, whatever. That's meaningful. Because a lot of the times people, when they do get the money for the record, because he and I know better than most and our advisor team knows is better than most, most of the time when people inherit money, they don't need it anymore.
00;40;05;22 - 00;40;32;09
Unknown
Or 60 years old or 65, seven years old. They're already established. They've already done the work. When do you need to help people? Usually when they're 30. They're 40. You know, maybe, you know, kids getting into your grandchild, starting college, right? Yeah, I just noticed, like, since Covid and I don't know if it's just been a shift, but I see more of my clients wanting to give me to leave a big chunk of me to really.
00;40;32;09 - 00;40;53;06
Unknown
I can draw a line in the sand after Covid, so I don't know. Yeah, the psychology or something. I don't know. Yeah, that's a good point. And if clients want to give more if they can, but you have to educate them and give them the confidence that they can spend. Right? Yeah. Because you don't want to give too much too early and shooting yourself in the foot.
00;40;53;06 - 00;41;10;03
Unknown
Great. So Cody, thank you so much. Thank you for joining us today. This was awesome. Again, if you're sitting out there and you feel like, you know, you know, whether it's a 60, 40, you don't you don't really understand what your investments are, your self manager. And you want to better understand what that process looks like, pertain to getting a second opinion.
00;41;10;05 - 00;41;25;00
Unknown
And or you don't have a plan. You know, these are all great reasons to take action. Reach out to us, and we're here to help you. And it's not going to cost you nothing. We do, these second opinions, we we do them for free. If we end up working with people, we tell them exactly how we get paid and compensated well before we have that conversation.
00;41;25;00 - 00;41;41;22
Unknown
So just to set a good expectation. But, again, Cody, thank you for coming. It's awesome. If anybody out there wants to talk to me again. Number one, thank you to all you listeners out there who've been following us on this journey, who have subscribed to the podcast, who's followed us on social media through this podcast. We hope, we hope you're enjoying this.
00;41;41;22 - 00;41;58;06
Unknown
We enjoyed doing it. Our whole advisor team absolutely has a blast. Our marketing team has an absolute blast doing this. We love trying to educate people and again, be solution oriented. You know, our our our job is not to come out here and try to scare you into doing something. That's what the in my opinion, bad financial advisors do.
00;41;58;12 - 00;42;13;21
Unknown
A good advisor is going to educate you, just like Cody was talking about. Let you know what your options are and help you make an informed choice. And that's always our goal. So I hope you're you're enjoying this. If you're first time joining us and listening in, please make sure you subscribe. We got a whole bunch of other episodes you can listen to.
00;42;13;21 - 00;42;19;07
Unknown
We have more coming. But hopefully you're getting some good nuggets out of this and learn something new every time you tune in. So
00;42;19;07 - 00;42;25;11
Unknown
I'm Alexander Bushman, your host. I hope you really enjoyed the episode today of real World Retirement.
00;42;25;13 - 00;42;32;09
Unknown
The podcast and again, subscribe, join us and thank you for joining us. God bless you. I have a wonderful day and we'll see you next time.
00;42;39;26 - 00;42;43;25
Unknown
If you.
00;42;43;27 - 00;42;45;23
Unknown
Do 744.