Ep 40: Quit Cutting Corners In Your Financial Plan

On This Episode

It can be tempting to cut corners as you make your retirement plan – but those decisions can often turn into a huge inconvenience, if not an outright disaster. We’ll go over some common ways people cut corners in their financial plan, and what you should be doing instead.

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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 to the podcast. Thanks for tuning in to Retirement Planning – Redefined with John and Nick here from PFG Private Wealth. Going to have a good conversation, as we usually do, about investing, finance, and retirement, and cutting corners. Quit it, stop that. You don’t want to cut corners when it comes to your financial plan. So we’re going to look at a few ways that people try to do that. And the guys will give us some feedback on why that is not a good idea.


Marc Killian: And we are moving right along here in the year, it’s just winging by. So how you guys doing, everything going all right?


Nick McDevitt: We’re getting ready for approaching the holiday season here. Usually these last couple months of the year just fly by, just end of the year stuff and get through the holidays.


Marc Killian: John, how about you, buddy?


John Teixeira: Doing good, yeah. Doing good. Actually this morning I picked up my wife and kids from the airport and I like to think I saved someone’s life. Some guy fell on the escalator and couldn’t get up so I had to run there and help him up. So I did my good deed for today.


Marc Killian: Fantastic. Nice. I’ll tell you what, those things, man, they can hurt. You get trapped on one of those things-


John Teixeira: Oh no, he’s okay, but he’s definitely scratched up. And when I grabbed him, his head was like on the bottom and I was having flashbacks of seeing those things where people kind of get knocked out. So I was just trying to keep his head up. But he ended up getting up all right.


Marc Killian: All right, well, let’s get into some cutting corners here, guys. There’s no cutting corners when it comes to the financial strategies because, again, it’s not a good idea. So where we typically see this stuff is taking too much risk when you’re trying to make up for the perception of being behind. And I think that’s the reason I wanted to frame it that way, is a lot of times people come in for a review, their first time sitting down with an advisor, guys like yourselves. They think, most people think, they are actually in worse shape than they are, but often fairly pleasantly surprised. So you could be taking risks when you don’t even need to.


Nick McDevitt: Yeah. I would say that one of the… and some people do end up coming through the classes that we do and maybe they are a little bit behind. But the thing that we try to emphasize with people is that just like many other things in life, we can’t change the past and regrouping and just making decisions based upon where you are now and moving forward is important. And being able to show them via the planning about the things that they can do to catch up, because you’re right, that perception, there are a lot of people that have that, some that are doing okay, some that are maybe a little bit behind. But usually when they’re behind, they just don’t know what they can do to get themselves caught up.


Nick McDevitt: And oftentimes if they are behind, taking more risk doesn’t really make a huge difference because they haven’t accumulated enough money for that risk to benefit them yet. So yeah, that’s usually not the way you want to do it. And the good thing about planning is that we can really kind of illustrate like, “Hey, if you are a little bit behind here, there are decisions that you could make that can get you ahead.” And when we work with people, those decisions don’t ever include taking more risk than they should.


Marc Killian: Gotcha.


Marc Killian: John?


John Teixeira: Yeah. I would jump in on that. And we do hear that a little bit and it’s a bad idea to go ahead and start taking too much risk just to try to catch up because when you find yourself in the wrong portfolio based on your risk tolerance, you could really make bad decisions. So example, market dips, and let’s say, you’re a conservative investor and you say, “I got to get more aggressive.” And all of a sudden, you’re in an aggressive portfolio, the market dips. And it’s like, “I can’t take this,” and you bail, you leave the strategy. And the next thing you know, as we all know, in a couple of weeks, or a month or so, it bounces back up and it’s like, “Okay, you just lost out on some stuff there.”


Marc Killian: Yeah, especially in the environment that we’re in right now because we’re not sure what’s going to cause a downturn at some point, but certainly we’re overdue, I mean, just from a historical standpoint. So if you’re take too much risk and then one of these different things we’ve got going on out there, it’s a very volatile time, you don’t want to be caught holding that bag, per se. So definitely having a plan and getting a strategy put together and making sure that you’re not taking too much risk for the type of portfolio that you need and can handle is certainly a good idea. So don’t cut that corner.


Marc Killian: Another one is legal documents, guys, not getting these put in place. This one just frustrates me because it’s super easy to do and it’s often not that costly. And a lot of these things you can just handle them pretty quick and it saves a whole lot of heartache for a loved one down the way.


John Teixeira: Yeah, this is really important. It is one of those things that, it’s not expensive to put in place, but it’s just one of those things that are on your to-do list for a while and it just never really gets done. But that’s something we try to make sure we’re active with our clients in making sure they have the right documents in place because we’ve seen scenarios where someone passed away and they didn’t have the documents. And it was just really, I won’t say it’s a nightmare, but it was very difficult for the beneficiaries to track things down. And I’d say especially in the case of a second marriage where you have maybe two sets of kids, one on each side, it’s even more important to make sure that you have the right documents in place and that your assets are going where you want them to go. So we can’t stress that enough.


Marc Killian: Yeah, not getting organized, Nick, that’s another one that people cut corners. It’s easy, just throw it all in a box here, kind of thing.


Nick McDevitt: Yeah. Yeah, I would say many of us struggle with this sort of thing in some part of our lives.


Marc Killian: Oh, sure. We all have a junk drawer, right?


Nick McDevitt: Yeah, for sure, a junk drawer for something, that’s for sure. Now whether it’s, up north, it was basements-


Marc Killian: A junk basement.


Nick McDevitt: Yeah. Yeah. And down here, we just try to find anywhere to put it, but-


Marc Killian: The closet.


Nick McDevitt: Garage.


Marc Killian: The one closet no one opens because they’re afraid it’s all going to come falling out, yeah.


Nick McDevitt: Exactly. So one of the things, and obviously we talk a lot about our emphasis on planning, but for example, the software that we use and what we try to emphasize with people is that, “All right, you’ve taken all these steps to get started with planning and it’ll be a little bit intensive to get rolling, but once we get everything all set up and put together, then in the platform, the client platform that we use, it allows them to upload important documents. It allows them to link all their accounts together which usually helps push them to consolidate a little bit. And they really like the fact that they can log into one place and see all of their accounts in one spot. We’ve got clients that will bring in their kids and we can create a separate login for their kids and only have a certain amount of access so their kids know where things are.


Marc Killian: All right. How about number four here on my list, guys, ignoring details about certain investments. Whether that be, “Don’t talk to me about X, Y, or Z product because I have no interest in it,” or maybe thinking something is everything you want, but you really didn’t do that much research on it. You’re just like, “Oh, that looks good. Give me that.” Don’t cut the corner of not understanding what you have.


John Teixeira: Yeah. That’s really important to understand what you have and we always harp on the plan, but really getting a grasp of what you have and how does that implement into your financial plan, so it’s really important.


Marc Killian: What do you have and why do you have it?


John Teixeira: Exactly. What’s the goal for this? What’s it doing for me? How does it operate, and what you just said there about the biases of certain investment vehicles. Really, before you shut the door on things, again, everyone’s situation’s different, you should probably be open to understanding how that works, and ultimately, how can that benefit you and help you reach your goals and give you peace of mind. Everyone’s situation’s different, but can’t stress enough, understanding what you have or what’s available to you to help you hit your goals.


Marc Killian: Exactly. My brother is a anti Ford guy. He will not drive a Ford, look at a Ford, ride in a Ford, nothing, to the point that I’m like, “Really, man? This is a strange bias.” And it’s just one of those things, he can’t really explain why. He just, “They make some really nice looking cars, but I don’t want to even check one out.” And I’m like, “Why? You’re just limiting yourself.”


John Teixeira: I’m assuming he’s a Chevy guy?


Marc Killian: Oh yeah, exactly, yeah.


John Teixeira: It’s interesting. It’s one or the other with [crosstalk 00:08:19].


Marc Killian: Yeah, exactly. But people do that. They get these weird biases, and it’s like, “Don’t talk to me about this because I won’t pay attention to it.” And it’s like, “Okay. But you could be cutting something out that’s very helpful. So just don’t do that,” Especially when we’re talking about financial stuff.


Marc Killian: All right. Well, let’s do some fun stuff here as we wrap things up. We’re going to do a little getting to know you. We don’t do this too often on the show. But I got some fun questions here I’m going to ask you guys. Feel free to answer. We’ll jump in with this first one. What’s the hardest job you’ve ever had? John, you go first.


John Teixeira: In college, I worked couple of summers with a mason. So I was basically lugging around cinder blocks and-


Marc Killian: Yep, laying bricks.


John Teixeira: … and going on scaffolding, which, I’m not afraid of heights, but I also don’t like being up on a scaffold that’s swaying, you know what I’m saying? So I’d probably say that was one of the more difficult jobs I’ve had from a physical standpoint. Yeah, I would never go back to that world of scaffold.


Marc Killian: Nick, you got anything?


Nick McDevitt: Yeah. So honestly, maybe it’s a priority for some people, but getting started as an advisor, it’s a pretty wild world. And so I started back in 2007 without local contacts and not being from the area. And so it was a little bit of a slow start, but something that I obviously really enjoy and still doing. So I’d say, from just getting things going, that was probably the hardest thing. But the good old 16 year old dish washing, and all that kind stuff. That was a different sort of hard, but gave you perspective and tell you the value of the dollar, and all that kind of thing.


Marc Killian: No, that’s cool. Yeah, I like that because, I mean, what you guys do is complicated and getting your licenses and things, it’s serious stuff. So it definitely can be complex. But yeah, the manual labor side, I’m with you there, John, I worked for a construction company as well and did asphalt and, ugh, asphalt that’s a hot job, in the summer, woo, not something I recommend. That’s a tough one. So anybody does that, kudos to you. That is hard stuff.


Marc Killian: All right. Here’s a random silly one. Who’s your favorite TV character, if you have one?


Nick McDevitt: I watch a fair amount of TV, especially working from home. I usually have something going on in the background. And I want to say, two or three weeks ago, Netflix added Seinfeld. And so I went back from the beginning and have been rewatching Seinfeld. I always knew George was hilarious, but he continually makes me laugh. So he’s one of my favorite characters in all of TV in just his mannerisms and all the things that drive him crazy are just really entertaining.


Marc Killian: John, with two little ones, I don’t know if you even have time to watch TV, but if you do, it’s probably some cartoon character like Peppa Pig or something, right?


John Teixeira: Yeah. I’m trying to think what are they watching nowadays?


Marc Killian: SpongeBob.


John Teixeira: Like Fancy Nancy, I think, is what’s on my TV quite a bit or Doc McStuffins turning into my number one there.


Marc Killian: There you go. There you go, Doc McStuffins.


John Teixeira: I would say, I mean, I don’t necessarily have a favorite character, kind of Nick said there, it just depends on what I’m watching, but I’m a pretty big Game of Thrones fan. So I like Tyrion Lannister, his wit and sarcasm is pretty good.


Marc Killian: That’s right. He drinks and knows things, that’s what he says, right?


John Teixeira: Pretty much.


Marc Killian: Yeah. There you go. Well, there you go. Let’s do one more thing. We’ll wrap it up this week with an email question. And of course, if you’d like to submit your own into the show, feel free, or just ask a question period, well, just go to the website, pfgprivatewealth.com to get your questions answered. To get on the calendar to have a conversation about your retirement journey, pfgprivatewealth.com is where you go to make that happen. And you can subscribe to the podcast while you’re there on Apple, Google, Spotify, iHeart, Stitcher, all that stuff. You can find it all right there at the website and get in contact with the guys and the team at PFG Private Wealth.


Marc Killian: And here’s the email question this week, it’s from Wade. And he says, “My wife and I both earn pretty nice incomes and we don’t have any kids and we are only 45, but we think it’s reasonable to look at retirement in 10 years at 55. Any pointers on things to do to make this happen?”


Nick McDevitt: Yeah, I’ll jump in on this one. Sounds a little flippant, but it’s called a plan.


Marc Killian: There you go.


Nick McDevitt: It’s one of those things where instead of… this is a classic example of what we’ve seen in the past in situations like this, and I can almost use a client that we got about five or six years ago. They’re a few years apart and this situation, good income, no kids. They were about 45 and 50 when we started working with them and he retired last year and she retired this year. And it was really the putting the plan together, first letting them know that it was feasible instead of just like in theory, feasible like, “Hey, we’ve done well for ourselves. We think we can do it,” to making it very concrete, creating very specific goals and helping them get there.


Nick McDevitt: And they constantly tell us how big of a difference that made to them in having those specific goals. Because usually what happens in this situation is, somebody’s 45, they ask questions like this. They talk about it with themselves. They talk about it with friends, all of a sudden, it’s five years later, they haven’t done the things that they could have been doing for last few years to hit that goal. And now they end up being behind where they could have been, so the sooner the better.


Marc Killian: Gotcha. And I would think, the one thing that would jump out to me if you’re talking about retiring at 55, would be the healthcare side of things. Like what’s your plan, and that would be part of the plan, right? What is your plan? Because you’re not going to get Medicare for another 10 years until you’re 65, and that could be pretty costly.


Nick McDevitt: Yeah. Yeah, absolutely. The managing of the expenses, especially for people that work for companies that are benefit rich can be a little bit of a shock. So figuring that out and then navigating that space, especially learning some of the rules and where they’re going to generate their income from and how to keep those high healthcare costs down, all that sort of stuff can be a bit of a maze.


Marc Killian: Well, and that’s all part of getting a plan put together, as you said. You said that it’s not really flippant if it’s true, right? So get a good plan together, wait, and have a conversation, reach out for some other pointers and some things to start. If you’re serious about doing this, the longer you wait, the longer it takes to get that put together. So get started with a plan with Retirement Planning – Redefined, and the guys in the team at pfgprivatewealth.com, that’s pfgprivatewealth.com.


Marc Killian: Guys, thanks for hanging out, as always, I appreciate it. John, have a great week.


John Teixeira: You too.


Marc Killian: Nick, we’ll see you next time, buddy.


Nick McDevitt: All right, thanks.


Marc Killian: All right, we’ll talk to you later. Hear all the podcasts. This has been Retirement Planning – Redefined with John and Nick.