Ep 3: Why The Role Of Your Financial Advisor Isn’t What It Used To Be

On This Episode

As the financial industry has changed, the role of the financial advisor has also changed in order to fit the needs of today’s retirees and pre-retirees. So let’s talk about some of the crucial elements that your advisor should be providing you with in a retirement plan, as well as how you can spot an advisor that may not have your best interests in mind.

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PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

Here is a transcript of today’s episode:

Marc Killian: Hey everybody, welcome in to another podcast edition of Retirement Planning Redefined, with financial advisors John Teixeira and Nick McDevitt of PFG Private Wealth, an independent RIA serving you in the Tampa Bay area. Their office there is in Tampa Bay. If you want to get on the counter and come in for a consultation or a conversation, or you know someone who needs a little help, give them a jingle at 8132867776, that’s 8132867776 to give them a call and always, you can check us out online, check out the team and there’s some good tools, tips, and resources to be found at PFGPrivateWealth.com, that is PFGPrivateWealth.com. You’ll be able to click on podcast and also subscribe to the program, catch past episodes, and future episodes as we continue to put these out. Hopefully you’ll extract a useful nugget or two of information to help you along your retirement journey. PFGPrivateWealth.com.

Marc Killian: And guys, welcome in this week. Thanks for being here, I hope you’re doing well.

Nick McDevitt: Doing well. And how are you doing, Marc?

Marc Killian: I’m doing very well, thanks I appreciate you asking me that. John, how are you, buddy?

John Teixeira: I’m great, how are you?

Marc Killian: Doing pretty good. How’s the weather been here lately? It’s been pretty hot in my neck of the woods. You guys are starting to roast a little bit, or at least it’s coming anyway, right?

John Teixeira: It came.

Nick McDevitt: You know, it’s actually pretty nice and then all of a sudden the next day it’s like mid-90s.

Marc Killian: Just bam, huh? Out of the blue? Well that’s Florida, right? And as they say, if you don’t like the weather wait five minutes, it’ll change.

Nick McDevitt: Winter’s not coming here right now

Marc Killian: Yeah, winter’s not coming. That’s right. A little Game of Thrones thing there, uh-oh. So let me ask you guys a question this week if you caught our previous podcast last week folks you know we talked a little bit about industry overview, just, I guess, how things have changed in the last decade. I kinda threw this bull market we’ve been on, honestly it’s been a lot going on the last ten years so we’ve teased up the fact that we were gonna talk about how the financial advisor’s role itself has changed. So let’s kick it off and talk about that. Over the last decade what have you guys seen that’s changed for your specific role as financial advisors?

Nick McDevitt: Yeah, so, in the classes that we teach, one of the things that we talk about quite a bit are that seeing that the majority of the clients, and the majority of the people that come through our class, are kinda that and that, 50-55 years and up range. Many of them have, at one time in their life, maybe earlier on but maybe still, have worked for an employer where there was a pension plan or maybe a significant benefit packages, and their lives are very closely, have been very closely touched by one company’s head pensions for everybody and one really employer took on the major amount of risk from the standpoint of a person having a respectable retirement. So, [inaudible 00:02:43] transition from the worker having a pension plan, having really good benefits, to them becoming more responsible for their retirement.

Nick McDevitt: So that’s kinda driven the changes as an advisor where maybe before, the advisor really only had to worry about managing the investments, where now it’s much more planning and strategy focused. And really it’s trying to take all of these different decisions that have to be made like maybe it’s a couple situation, one of them has a pension, they’re both in the social security system, they haven’t paid off the house yet, they’re trying to determine, “Do I pay off the house? Do I save? What age should we retire? Shall we both take social security at the same time or should one of us wait? What sort of options should we take on our pension plan?” And so it’s taking all these different decisions and putting them together, and then making sure that the risk that they’re taking with their investments lines up properly with what they’re actually comfortable taking as they approach retirement.

Nick McDevitt: That transition of what we’ll kind of talk about as accumulation, where they go to work, they save money into their retirement plan, and now, all of a sudden, they’re starting to realize that, “Hey, I need this money to start to generate income for me. How do we work through that transition and how do we give ourselves, how do we empower ourselves with the information that we need to make the right decisions, and also feel comfortable so that we don’t derail that plan if, let’s say there’s a pull back in the market or something like that.”

Marc Killian: I gotcha. Okay, so, if we’re gonna talk about some of these variances when it comes to how these roles have changed, let’s talk a little about advice and planning versus investment management.

Nick McDevitt: Sure, so it’s always an interesting kind of experience as we will go through and teach these classes where just like any sort of situation you have certain people that are very comfortable asking questions that are particular to them, and other people are quiet. So, we’ll have people that will raise their hand and will say to us, “Oh, I’m going to retire in two years, and I’m a teacher, and I’m gonna have my pension. And how much should I take out of my retirement account?” And John and I kinda typically joke with them, and we just oftentimes say, “It may be frustrating for you to hear it, but what you’re gonna hear from us a lot is it depends.” And that’s where we really try to shift people into having that mindset of building that plan and trying to walk through the decisions that they’re trying to make in the basis of a plan, and then that plan then dictating how they manage their investments. And even if they’re gonna have us managing investments or they’re gonna manage them themselves, they need to have a broad based plan and we want the risk that they’re gonna take in the investments to be dictated by the overall plan.

Nick McDevitt: We’ll oftentimes make a joke that, “I’m sure that your mailman, or your plumber, or your electrician, or your cousin, or your brother have great advice for you but their situation is different than yours. And they may have a much higher ability to handle risk, they might have a pension, they may not have kids that they want to leave money to, they may have a house that’s paid off. And so everybody’s situation is different and how they develop their investment strategy should be based upon that plan first. Where, in the past, most people have just said, “Hey, I wanna achieve some arbitrary sort of way to return their investments.” And there’s no rationale or rhyme or reason behind how they’re doing that.

Marc Killian: You’re listening to Retirement Plan Redefined podcast with John and Nick from PFG Private Wealth. And so John let me get you in on this conversation a little bit. Let’s talk a little bit about focus on the strategy and broad based planning and how that’s changed over the last few years.

John Teixeira: Yeah, so, most people that we meet with we like to call if they have the financial junk drawer.

Marc Killian: Right. [crosstalk 00:06:46]

John Teixeira: It’s kinda going through work and they’re really just purchasing financial vehicles and there’s really no rhyme or reason to it. So we make sure that whenever we meet with someone or we’re going through the classes, that we really focus on A) establish what your goals are, let’s put a strategy in place to hit those goals; and then second, is really then let’s put the investments in the products that are appropriate to make sure that you do [inaudible 00:07:10] those goals versus vice-versa where a lot of people will just end up, “Hey, let me get all these things.”

Marc Killian: Right.

John Teixeira: And then really no strategy to make it happen. The negative to that, or what could be bad is that you back yourself into a corner where you can’t adjust. So it’s important, when you’re doing the plan, as Nick mentioned, the plan really dictates how you should be investing your money, what type of rate of return should you shoot for. So example, we’ve seen some people where their plan looks good and they’re investing very aggressive, shooting for 9%, and in reality they can hit all their goals with a 4-5% expectation in the portfolio. And what that does is if your plan works at 4-5%, why take the risk of 8-9%? [crosstalk 00:07:51] We really want our clients to be able to sleep at night. So that’s kinda part of focusing on the strategy, which ultimately will let you focus on what investments in your strategy to go into.

Marc Killian: Yeah, and I think that makes a lot of sense. Especially when you’re talking about time horizon because as you’re aging and getting close to retirement, if you don’t need to reach for those higher return rates, I mean I get it, everybody wants to make as much as they can make but why take the risk? Especially as you’re getting closer if you don’t need to.

Nick McDevitt: Yeah and where planning can actually help with that is, so let’s say for example, because people tend to think about all of their money in one pot, so there will be times where we’ll have conversations, and sometimes it’ll be referred to as bucket strategy or something like that, and so while we’re having our conversation we’ll say, “How about we carve out, let’s say, 10% of the overall nest egg and that 10% we can invest for a long term growth and that’s gonna have a little bit more ups and downs, but that’s gonna replace the money you’re gonna spend in the meantime.” So that lets them get that kind of exposure that they may want just on a smaller scale. And it makes the whole transition a lot smoother for them.

Marc Killian: Okay. Well I think we’ll finish up this week’s podcast, we talked about some of the financial advisor role changes here. And a lot of times, guys, people just are a little overwhelmed, as we touched on. There’s the kind of wondering, well this person has this designation, and that designation. All the little stuff that goes on your business card, right? And so it can get a little overwhelming. So John, is there some things we can do when we’re doing a little research, when we’re looking at people we want to talk to, maybe sit down with, some ways we can kind of do our own homework on if it’s maybe the right fit or not?

John Teixeira: Yeah, so we always recommend that if you’re interviewing or looking at advisors, you wanna do a broker or adviser look up. So you can look at Finnvera.org, you can look up, put in their last name, their location, and you can do a broker check and then also the SEC advisor website has an advisor lookup that you can do. And what that will tell you is where have they worked? So you can kinda see how long they’ve been in the industry, where they’ve been, and more importantly are there any complaints or any issues with that advisor.

John Teixeira: So we like to tell stories, and Nick and I had a meeting with someone and something wasn’t right. It was an initial consult to really get to know who we’re sitting with. We could tell that something was off, and Nick likes to google quite a bit, so he went on there and pulled up the advisor’s history and there was a lot of complaints and there were actually, Nick, jump in if I miss something, they were actually kicked out of the industry. So it raised a lot of red flags, had those people looked him up prior they would have saw that and maybe not backed themselves into a corner kinda going back to just focusing on what we were talking about, just focusing on products versus strategy. It’s just important to really know who you’re dealing with.

Nick McDevitt: And more specifically, when you do that lookup you can see what sort of license they have, and that license will tell you what kind of role that they can have as far as, are they able to provide advice or are they simply a broker where they’re just selling products? And so as John mentioned, you can see if there’s been suspensions, you can see if there’s been complaints, you can see if they’ve had to settle financially, if they’ve had to pay out money to maybe a past client that’s complained about them.

Nick McDevitt: And it will also will show if they’ve had any personal financial issues. So a lot of people, especially back through kind of the 0809, one of the things that popped up that we’d have questions on from people where they or their advisor had gone through some sort of bankruptcy or something like that. And that doesn’t necessarily mean that that person’s no longer a good person or they’re not trying to do what’s best for the client.

Nick McDevitt: But, they way that we approach it and they way that we think about it is that it’s important for people to arm themselves with as much information as possible to help them make smart decisions. So being able to look up that information, seeing what kind of licenses they have, see if there’s been any complaints, see if they’ve been at a different firm, if they’ve been at five different firms for one year at a time then that’s usually a red flag [crosstalk 00:12:01] that’s something they should be asking questions about. Again, it’s just one of those things where it’s good to know things like that.

John Teixeira: Yeah [crosstalk 00:12:09] sorry, so one thing I do wanna mention on this and I kinda feel passionate about, so I do wanna jump in on it. We’ve run into some people where they thought they were working with an advisor that, let’s say, had all the licenses, but they were only insurance license. So basically, what I mean by that is, they can only sell certain insurance products so, specifically, certain types of life insurance and annuities. And basically, what they did with this one person I was working with is they just jammed him into all annuities and life insurance because they couldn’t sell anything else or offer advice for anything else. So important where you are looking up someone, make sure that they can offer you everything that comes into the financial planning world.

Marc Killian: Yeah, and I think, when you’re doing your homework, folks, do a little bit of research again, it’s one of those situations where it’s your money, it’s your retirement obviously you need to care about it more than the person you’re hiring. But you wanna hire someone who is gonna have your best interests at heart. Which is we talked about that last week as the fiduciary versus the suitability. But do a little homework, check some things out. The guys gave you some good places to consider to take a look when you’re kinda checking someone out. And because we all are gonna have that gut feeling as well. So when you sit down and talk with someone, you’re gonna also be able to decide if they give you the warm fuzzies, so to speak. So do a little bit of homework, sitting down and checking out some different people, certainly a good way to go when you’re trying to find that right advisor to build that relationship with.

Marc Killian: And if you’d like to come in and talk with John and Nick, and have that conversation with them, feel free to do so. Give them a call at 8132867776, again 8132867776. They do classes throughout the year as well, there’s more information you can find on that at the website PFGPrivateWealth.com. You can learn about when those are gonna take place, and how to get involved, and all that good kind of stuff. And while you’re there make sure you subscribe to the podcast on iTunes, Google Play, and whatnot.

Marc Killian: And, John, Nick, thanks for your time here on Retirement Planning Redefined. I hope you guys have a great week or two, and I’ll see you the next time we do one of these.

Nick McDevitt: Thanks, Marc.

John Teixeira: Alright, thanks. Have a good one.

Marc Killian: Take care of yourself and enjoy yourself, and have yourself a fantastic day, and we’ll see you next time here on Retirement Planning Redefined, with John Teixeira and Nick McDevitt of PFG Private Wealth an independent RIA. We’ll talk to you next time, bye bye.