Are We on Track for Retirement?

Updated : Sep 05, 2019 in Articles

Are We on Track for Retirement?


it’s the weekend and you have financial
questions that need answering that can only mean one thing
it’s time for Jill on money the show that takes the mystery out of your
finances here’s your host Jill Schlesinger welcome welcome thanks for
tuning in it is Jill on money I’m Jill Schlesinger and we are broadcasting live
from the Capital One Bank Studios here in New York remember this is the program
that takes the mystery out of your financial life and there are a lot of
mysteries out there so we usually start the program with a caller but caller
said we had to wait a little bit so we’re just gonna do a quick bit of
emailing okay first from a guy named Mark who says wants to know how to find
a new financial planner and you know look there’s lots of different
opportunities for you to get great advice out there and in fact in honor of
the just deluge of questions that we have been getting about this very topic
I updated our resource list and Mark I see that you updated it but you didn’t
update the title of it that is on the resource page it says still says ten
questions and we’re gonna get that fritzed up he says we’re gonna fritz
that up anyway so it’s 13 questions to ask about financial advice it’s not just
the questions that you’re gonna ask the professional but some of those questions
or questions you should ask yourself mark not mark the producer mark the
person and sending this I mean the first one is do you really need someone to
help you out with your money that’s that’s a good place to start and we go
into some other questions around you know can you use a robo or an online
platform or a human being and then we get into some of the questions but also
in this post what we’re going to do is make sure that you can see that there
are lots of places you know the CFP board which is let’s
make a plan dot org we have you can click on the link to the National
Association of personal financial advisors or naptha all these things are
questions because look I don’t know if you even need financial advice there’s
that okay here’s a question but but go there and check it out alright
Steven writes is it a good idea to use a shorter duration target date fund which
has more bonds right now Steven says I’m using a 2030 fund and maybe it’d be a
good hedge against stock funds well wait a minute why using this target date
funds anyway maybe you should just use a stock index fund and a bond index fund
maybe you don’t even need a target date fund I need to know more information
Steven but I think that if you’re going that route and you’re starting to really
check out different types of allocations then I would say it may be time for you
to just do this on your own okay also we got this really awesome email from
somebody who wrote a note in Arabic and I said to mark what does it say and he
says I’m pretty sure it says I love your book alright it may not say that but it
may be a bot anyway let’s go take our caller we now have Nick from Milwaukee
who’s on the line hi Nick hi I had a question I I just recently purchased a
house congratulations yeah thank you had a condo before that
which I sold and I’ve made enough from the sale that I can pay down my mortgage
to where I no longer have PMI great and I was wondering I have the option of
doing a recast and have reset the payments on the mortgage
mm-hmm wondering if there would be any benefit to doing that if I’m in the
long-term if I’m paying say the same amount each month would there be any
benefit to recasting and paying extra or just paying the normal payment now which
would be about as much as I can for it anyway okay so let’s just let’s go back
for a second you sold a condo and you bought a new home how much should you
pay for the new home 125 okay and the mortgage amount that
you have for this home is how much what’s the outside like what did you
borrow the total amount 118 okay what do you mean so how do you not have PMI well
I bought the house before I sold the condo so I had to wait to get the money
okay I got you I got you now so how much
equity do you have to be able to pay down this mortgage what did you get out
of the condo sale I got about thirty thousand out of it but I had to I
appliances for the house it didn’t come with any and there are some other
expenses so I’m going to be putting about twenty thousand in so you have
twenty thousand dollars available essentially and so you’re gonna say to
the mortgage company let’s just use round numbers you know I have I bought
this thing for a hundred twenty-five thousand and now I want a hundred
thousand dollar mortgage right essentially right you’re gonna pay it
down and they’re saying to you okay if you pay down this much equity you can
either have a payment that’s exactly the same as what you had including your PMI
or how much what’s the recast give you like how much is the monthly savings okay
does it cost money to do the recast do they do it with you know with fur fees
or what what’s the story with that should be about a hundred and fifty
dollars in fees okay I probably would recast it do you know what the rate is
gonna be is it gonna be the exact same rate just without it okay
what’s your rate by the way okay this is what I would do
I would have them recast it you know it’s a 30-year fixed rate is that
correct yeah okay so yeah recast it hopefully your mortgage payment will go
down a touch and what you do with that extra money is a different question so
tell us so I and then don’t make any extra payments don’t do anything so just
keep whatever the lower payment is fine even if it’s fifty bucks a month I don’t
care tell me a little bit more about yourself how old are you
thirty-three married single single okay and you have a job yeah using a
retirement plan through work yes how much you putting into your retirement
plan seven percent okay how much do you earn right now fifty thousand a year
fifty-five Oh mm-hmm yeah so once you have the mortgage amount once you’re
sort of like at this new level whatever it is you say you probably don’t have
tons of extra money but will you do you have an emergency reserve fund that you
have like just some knots the proceeds from the condo sale but do you have some
money that’s just safe money for yourself yeah I have a bunch of savings
bonds but $11,000 worth perfect that’s great
okay so what I would say is this you may want to save but again you’re gonna save
some money on a monthly basis you may want to beef up your emergency reserves
just a tiny bit just because you know what as you said you go in a house now
things happen someone gave me very good advice in the real estate business they
said you know it’s a pretty good idea to have some money set aside just for being
a homeowner essentially you know one or two percent of the purchase price just
to have that every year you’re gonna have things that happen so what I would
say is the 11,000 and the savings bonds is sacrosanct don’t move it
beef up your savings a little bit and then you can actually increase your
contribution to your 401 K maybe you go up to 10% and that’s what you do with
that extra money that you have on hand every single month that’s a better use
of your money than plowing every single dollar into your mortgage and then also
you know using that higher payment to pay your mortgage down faster I’d rather
use your money today to put money into the retirement plan does that make sense
yeah that’s what I would do okay during the break head on over to Jill on
money.com and you can subscribe for our free weekly newsletter just check it out
Jill on money comm and there you can always click on contact us and we will
be happy to make sure that you get on the air and we can answer your questions
okay we’ll be right back if you’ve missed any part of the show or
want to check out a past she’ll go to jail on money.com for more great
personal finance content your back it’s Jill on money and if you would like to
get on the air with us and just give us your all of your background all the
information we need to help you out with your financial life just send us an
email ask Jill at Jill on money.com that’s what Michelle did she’s calling
from Georgia welcome to the show how are you I’m fine thanks yeah what can I do
for you well my dilemma is this my husband and I are going to retire in a
few years we’re thinking around four years we have been thinking maybe we
need some help trying to figure out exactly how to manage our money and
what’s the best way of getting money on a certain accounts and the tax situation
around what we use when and so we’ve been interviewing some financial
advisors or they’ve approached us some of them I’d like to do things myself a
lot of times I really like investments like researching and knowing more about
it and all these investors want to charge us of course because we’re using
their services they’re going to charge us a fee which is fine however it’s
going to be at least $10,000 a year probably more well then let’s just go
back up for one second so you’re four years from retirement tell me how much
money have you saved in retirement assets approximately in 401k we have
about two and a half million okay great and how about non qualified earn on
retirement assets I’ve got about in a band guard account
where that just has a lot of different index funds in it we have
money my husband has gotten a lot of stock so we’ve got a hold of stock and
his old company about a half a million dollars and that’s that’s vested and
just straight up publicly traded stock yes got it and that’s in an account and
then he’s got other stuff coming I love that kind in the yeah I mean that’s why
for years because for years for me he will be getting others thought from his
new company okay so there’s he’s got probably one and a half million dollars
in stock from old company a new company either in our account or coming or and
course it depends on the price exactly exactly I was gonna say so how old are
you guys I’m 56 and he’s 57 okay and then we also when were that we all know
I have about four hundred thousand dollars in money markets just for safety
right well just for safety yeah I’m thinking that’s like too much you know
I’m I’m a wimp Michelle I am I am way wimpier than most people would imagine
and I do know that you know when bad things happen that extra money that
everyone tells you is inefficient and stupid to keep in cash can feel pretty
darn good how much do you think you guys need to live on let’s you know put the
clock ahead by four years what do you think you need we’re pretty frugal in
our day-to-day activities however we do want to travel so we were thinking we
could live off of a hundred and fifty hundred and sixty thousand dollars okay
so and I know that the million dollars that’s coming in in stock we can’t count
on it I can’t count on that it’s going to be worth a million is it possible
that I could ask you to just give me like a guess like what would you like if
you could say worst-case scenario I think it’ll be worth X what do you think
X would be should we assume that that’s really worth zero right now or should we
assume that that has some value I think no I think it has some value
because both of the companies are fairly stable and strong so I I think it has
some value you want to marked it down by some amount do you want to mark it down
by half do you want to say like worst case it’ll be worth the million that’s
coming in would probably probably get half of that
yeah well the billion is coming in yeah go ahead all right let’s just be boring
why not right so and you own your home we own well i we still own about
$170,000 okay okay all right I’m doing quick back of the envelope calculation
for you as we speak see I’m hoping that you speak slower so I can type faster
into my calculator no I’m just kidding all right so I just ran quick
calculation I like to take a discounted value of stock that’s expected because
it’s not in your account yet so it is hard for me to say that’s an absolute
guarantee in other words it’s not like a cash bonus that’s been guaranteed and
you just have to wait to earn it so if I look at your total holdings you’ve got
about 4.3 million bucks I’m sure you’ve got equity in your home
because that’s more than right and if you look at your life I guess that most
people when they retire what they always say oh I I presume I’ll just downsize
and so don’t presume that presume you’re just gonna use your equity in some other
ways 4.3 million about when I do the calculation that you can use a
withdrawal rate of you know some investment places will say four and a
half percent a year and you’ll be fine you won’t run out of money but if you’re
in conservative that’s not a great bet because that that will make you a little
nutty so what I would suggest is you use a 3% withdrawal rate which is really
super wimpy and that will give you about 130 grand a year and you won’t run out
of money and that kind of works pretty well for you guys you said you need 160
and you know in the first few years you won’t you know before you get social
security you need to spend down some of the already taxed money but once you get
Social Security you’re both gonna get you both work your whole lives you’re
probably gonna be in great shape okay so now I’m gonna tell you that most people
who call me in their 56 57 years old they say now you can’t
I think you can do this this is great so this is not a pipe dream this is real so
now the question really is about whether you can do this yourself and I don’t
know what people have been quoting you in terms of charging but you know fees
can range for investment management services you know in your category like
literally at you could go to a Robo advisor and you can pay as little as
point to five percent a year right that’s pretty great but then you even go
to a full-service amazing CFP who also does a great amount of tax planning and
customizes things and but it’s gonna cost you more and chances are with four
million bucks it’s gonna cost you I don’t know I have to maybe 75 basis
points so you’re gonna pay up for this right right so now the question becomes
how much do you need that hand-holding personal service of a dedicated person
whose office you want to actually enter on an annual basis and you know how
comfortable you are with that because the asset allocation part is not going
to be the hard part for you guys what is it that you think you need the most in
the relationship with a CFP the taxes is what I I wonder about if you know tax
strategy around when to sell stock this is when to pull it out the money out of
you know the 401k versus you know what that’s what I think I need the most help
with and so I’m wondering do I really need the CFP or do I just need a really
good CPA you might have consider this is kind of wacky but I can give it to you
there is one more certification that’s not as popular that I want to just flag
for you that’s interesting and I I actually like this credential it’s it’s
a CPA can get a credential called the PFS so you’re a CPA and you want to do
financial planning and then you can get a certification that’s called the CPA
PFS personal financial specialist and what this basically does is this is a
CPA specializes in personal financial
planning I mean they are different because they come from a real CPA
background and that may be interesting to you any CFP worth his or her salt
should be able to help you but if that’s if it’s really a tax issue this may be
something you should consider and if you need help you know offline you mark will
tell me where you live and I can find you somebody who does this okay the
bottom line for you you’re in great shape I’m so happy for you because as I
said many people who call up in their fifties late you know mid to late 50s
you’re not gonna get to 60 and retire the way you want you guys are okay we
will be right back gonna pay some bills during the break hop on to Jill on
money.com and buy the book Jill on money comm click on the link to the book it’s
called the dumb things smart people do with their money thirteen ways to write
your financial wrongs hey it could be a nice graduation gift all right we’ll be
right back follow Jill on Twitter and Instagram for
more personal finance content just use the handle at Jill on money now back to
the show you’re back it’s Jill on money and this is basically the last month I’m
gonna work really really hard for the summer that’s it
it has been a bruising five plus months here in Jill on money land a great five
plus months of 2019 but exhausting and also exhausting for poor mark who had to
give birth to his kidney stone I don’t even think he gave birth I think it’s
just hiding somewhere right and a baby and we and I birthed my book it’s been a
crazy year 2019 so far so I’m gonna try to do I don’t know if I’m really gonna
be able to do it but I’m gonna try to take a big chunk of time off not from
the radio but just to kind of do a more modified schedule you guys won’t notice
a thing it’s gonna be seamless but here’s the thing if you would like to
send us a note you know what I should do mark when I take that chunk of time off
just forward me all emails and I should just answer them I mean not all but you
know what I mean like a bunch of them that I can just respond to or you know
you now that you are CFP almost almost not yet maybe you could answer some of
them I know I get more of that anyway do send us a note it’s ask Jill at Jill on
money.com here’s a nice note that we got from some
can you believe this I love getting something from someone at
CFPB gov hi Jill I’m Laura a senior content specialist at the CFPB
we’re so pleased to hear you recommend money as you grow to listeners as a
resource for children and adults alike so this is so cool
I’ve worked she’s worked valeurs worked on money as you grow since it came to
the CFPB in 2015 as part of the office of financial education so remember what
happened was money as you grow as a was actually this content was developed by
friend of the show Beth kobliner and then it got housed under the CFPB so I’m
hoping that we can get Laura on the program or get some people out there
from from the CFPB who can talk about some financial education you know what
mark let’s book somebody maybe we should do sort of a back to school well see
poke around mark see what you got and that’s cool thanks for writing this is a
note from Victoria and she says the subject is stocks are in my name and I
added my son and daughter’s name should I change them as beneficiaries can I
leave it are there tax implications once you put anyone’s name on an account
there are automatic tax implications depends kind of how you do this so you
know a lot of people do this with their homes and I’ve warned about it the
problem is let’s just say it’s an additional signer on a bank account
that’s different let’s say it is something called a Tod or a transfer on
death and then your kids names will pop up but once you make your kid a joint
owner of the account it’s considered a gift so if you had a stock or a mutual
fund account non retirement account right and you say oh I’m gonna add my
daughter Jill on the account and you just put my name on that account you
know what happens it’s as if you gifted me half of the account so it can have a
tax a it can cause a tax problem it could cause
state-issued where instead of your kids inheriting that asset and having the
cost basis step up meaning increase at your death that the kids half of the
accounts is essentially treated as her or his own so before people just start
willy-nilly adding names to accounts I would encourage you to make sure that
you are doing this for the right reason and consulting an attorney before you do
it okay Peter writes that his wife will be 62 this summer he’s gonna be 65 in
early 2020 they both still work so Peter says I’m gonna wait I was going to wait
until 66 years in two months to collect my Social Security but I was thinking
would it be wise for my wife to start collecting at 62 my benefit would be
more than hers any direction on the scenario would be greatly appreciated
you know I hate these Social Security questions sometimes because I’m really
not a total social security expert and whenever I’ve had a secure Social
Security so called experts on the show what they do is they say you should call
Social Security like not exactly the right answer I think that this works for
and I think that she can draw her benefit and then switch to yours
I think but I’m not a hundred percent sure so what you could do is you could
call Social Security which is annoying but they’re also some Social Security
calculators out there and the other thing is I wanted to make a plug because
a lot of times people have questions about you know whether or not to claim
Social Security or Social Security claiming strategies you know there’s
this cool website called our s planner calm and I haven’t talked about it all I
really want to get this guy in the show mark what’s going on we weren’t we
trying to get the guy on the show Kotlikoff isn’t that his name and I
think that this is a really interesting website because it does planning but it
does it at a flat fee and it’s usually like now it’s like 120 I said maybe
net oh it’s not RS it’s es planner I’m sorry I keep saying RS es planner
es planner that’s the right one all right so what I think you might want to
check out is something called e s planner comm and the reason is that it
allows you to do broader financial planning for retirement and weaves in
Social Security and you know look I I’m just I just popped on to the website and
we have a link to this on our website but what’s kind of cool is it has all
sorts of different inputs and I think it could be really helpful to incorporate
all these different social security scenarios into that kind of planning so
check out ES planner calm and let me know what you think all right good luck
you’re listening to Jill on money and to click on to the es planner and other
resources go to Jill on money comm click on the resource tab we’ll be right back if you’ve missed any part of the show or
want to check out a pass she’ll go to jail on money.com for more great
personal finance content you’re back its Jill on money got a question send us a
note ask Jill at Jill on money.com go to our website Jill on money.com sign up
for the free weekly newsletter okay um here’s you know I wish the IRS as much
as I love the IRS website I just wish some of the rules were a little bit more
straightforward it does make it a bit more difficult for us the mortals out
there so why do we have to do half year kind of things okay let’s get to this
here is a note from hold on Bernice I’m a widow I’m going to turn seventy and a
half this year and I have some questions about taking my required minimum
distribution so here’s what she’s got to annuity IRA accounts and some IRA money
invested with a broker in a TD Ameritrade account so is it best to take
the RMD from each one of the annuities and the IRA funds in the TD Ameritrade
or should I take the total from one or two of these accounts the rule is you
don’t have to take money from each of your IRA accounts if you have more than
one IRA you can calculate your required minimum distribution for each IRA
separately but you can aggregate the amount you take and you just take it
from one so I don’t know whether it makes sense to annuitize your accounts
or not I don’t know what those annuities are actually paying you or what the
other investments are so you don’t have to take a separate required minimum
distribution from each account but I don’t know whether or not you know she
follows up with a question about a newett izing maybe I knew it
would work well for you I don’t know you’ve got a really I need more
information about what is the annuitization what are the costs of
these annuities where do the where does it stand and then the second so that so
we need a little more information excuse me but the most important piece is when
you have multiple IRAs you only need to take the chunk of money for all required
minimum distributions from one account okay next question if I receive more
money from the RMD than I need to live on what would be a good investment
choice totally depends in other words if your distribution is 20 grand for the
year and you only need to spend 15 of it I don’t know what to do with the other
five maybe put it into a safe checking saving money market account maybe add it
to a general investment account it depends what else is going on so I
just want you to know that bernice finishes this by saying i’m asking for
your assistance because i am not too confident in the advice i get from my
current financial adviser you know talk about burying the lede this to me is the
critical part of Bernice’s question why are you still with someone who you have
no confidence in or not too much confidence I think it’s time to get a
new advisor or shop around at least okay Barry his writing in with a subject
parent loan nightmare I have one hundred forty seven thousand
dollars federal parent loan at seven percent ten thousand dollars of interest
in 2018 was the only was only tax-deductible piece should I mortgage
two homes to pay off the loan at five percent Interest
a hundred percent tax deductible interest hold on one second can we just
talk about this you can’t do what you think you’re gonna do I mean you can
refinance alone you can basically say I’m going to refinance my house get a
lower rate and pay off the student however because of the tax law change
when you refinance your home the amount that is not attributable to the house or
to home improvements meaning paying off other debt is no longer eligible for
mortgage interest deduction got that so the reality is that if you are looking
at this from the standpoint of getting a better tax deduction you it won’t happen
now here’s the other thing it may be in your best interest to refinance your
mortgage to get a lower rate but I don’t know and there are costs that are
associated with this so I want to know about how much of the houses how much
are the house is worth what are the current mortgages that are outstanding
on them if you have them and what else is going on in your financial life
essentially I want you to come on the show with me could you do that that was
so good because it’s very very hard to do this without a little bit more
information Linda is now a single woman and she’s
floored at the amount of taxes I have to pay why is there anything I can do to
reduce them I don’t know I mean like you’re floored did you not know how you
might how much you were paying in taxes previously I don’t know so I’m not sure
about that I’d need more information it would be interesting to find out what
your taxable income is and wife while you are paying so much come on come back
with me I need some more information pretty please please please all right
Mark’s giving me the rapid up sign all right no more questions for you
Schlessinger all right it’s Jill on money and hey you shopping around for a
new financial advisor I got a website for you
naphtha and a P and a P as in Peter NAPFA
nap fun org check that out they’ll help you out
those are folks that won’t sell you anything so that’s kind of cool too all right
Jalad money we’ll be right back you’re back it’s chill on money if you’ve got a
financial question send us an email ask Jill at Jill on money.com that’s what
Ron did and he says I have $50,000 in a non retirement mutual fund account and
pay taxes on it every year I know I can’t just transfer it from a non
retirement account to a retirement account but I think I can sell 13,000
dollars this year 14,000 dollars next year keep doing this and okay so what
he’s basically saying is he thinks he can sell a certain amount of money a
certain amount of the the mutual fund and pay zero tax on it to keep him in
the zero percent tax bracket so long-term capital gains rate the zero
percent bracket married filing jointly it’s up to seventy eight thousand seven
hundred fifty dollars so if you sell enough and you can stay below seventy
eight seventy five your income plus what you sold is under that amount zero tax
so yeah you can totally do this and if you sold if you essentially sold the all
of it in one chunk and you jumped up into the next tax bracket that would be
the fifteen percent tax bracket anyway and then if you if you were somehow
thinking about I’m not sure why he’s bringing up so he also brings up the an
in-kind transfer I’m not sure why you would do that I mean I don’t know what
you’re thinking about doing with that so anyway long story short is you can sell
an asset you can cash it out and if you can qualify to put it into a retirement
account the proceeds if you still have income that’s
and if you can put it into a Roth IRA that would be great and if you can put
it into a non-deductible IRA presuming you have no other IRA accounts you can
do a backdoor Roth put it into a non-deductible IRA turn around and turn
it into a Roth IRA you got to do a little research on this and again if you
have other IRA accounts this will not work okay now here we go it is Jill on
money we are broadcasting live from the Capital One Bank Studios here in New
York if you’ve got a financial question hop onto our website Jill on money comm
we will be right back with more of your great questions it’s the weekend and you have financial
questions that need answering that can only mean one thing
it’s time for Jill on money the show that takes the mystery out of your
finances here’s your host Jill Schlesinger welcome back it’s our number
two very exciting we are broadcasting live from the policy genius studios
policy genius is the easy way to compare and buy insurance go to policy genius
comm mark did you buy some insurance from policy genius would you buy I’m not
from them just looked at it mark is a big online insurance purchaser
got up that coverage now that you got the baby all right we’ve got a great
guest for you here’s what happened I read the New York Times and I see an
opinion piece that literally says consider firing your mail broker this
got my attention for sure and certainly got the attention of many people who
kind of went nutty on this anyway her name is Blair do kanae and here’s the
coolest thing I had a connection to her I didn’t even realize it that my friend
Michael Goodman who’s been on the show previously had said to me well you know
Blair she used to work with me so Blair Dukan a who is an investment
advisor now it was great because I could get her into the studio and figure out
what the heck she’s talking about why should you consider firing your mail
broker the sub is years of research show female investors outperform men but only
about one in five brokers are women so here is the beginning of our interview
with Blair Duquesne a you started in this model of a brokerage house of wire
house as we call it and what was it about that experience that that you said
this is not quite for me what was it about that experience that you didn’t
like yeah I did start on the brokerage side which 15 years ago that was really
the only place to start with no experience one of the
good things about my experience there was I was not an advisor I was not what
they call a producer somebody who had to go out and bring in clients in order to
earn my pay I was on a team I was a salaried employee so I learned the
business I learned the operations of the business
I learned client service but after a few years you start to realize there’s a
relationship with the client where you don’t feel like you’re on their side
there are pressures there are you know the office that you’re in has goals that
they’re trying to set they want to have so many clients using the banking
products they want to have so many clients using structured products
whatever it might be and they have goals and they’re gonna go around and ask you
to help them meet those goals so there’s pressures there what did you find when
you left that world what was the what was opened up to you I had no idea that
there was a way of being a financial adviser that didn’t require being in a
broker broker dealer Oh so by happenstance I knew someone who on the
mutual fund wholesaling side covered the independent Channel and the broker
dealer channel who introduced me to the first RA a firm that hired me and which
was that wealth stream advisors wealth stream advisors ladies and gentlemen you
may have heard that because Michael Goodman who was on our program at the
end of last year we did a year-end tax planning with Michael so you are a
Michael Goodman acolyte but you no longer are with wealth stream because
you had to move to New Orleans because you wanted a better city with great food
and there was a spouse involved correct I would probably still be at wealth
stream if I hadn’t met my husband and so one of the reasons that we wanted to
have you on is that you wrote an op-ed in The New York Times did you have any
idea how crazy this was gonna go I knew it was a big deal they approached me
they had seen a blog that I wrote about the lack of women in in this field and
asked me if I wanted to write it and it took a couple of months between me
mulling over it and the edits so I was excited about it but not until it was
published it I realized how big of a deal it was did you write the headline
today they did okay so the headline is consider firing your male broker and the
subtitle those years of research show female investors outperform men but only
about one in five brokers are women funny thing is that wait when I looked
at the word broker like the hair in the back of my neck went up a little bit
that’s their word not your word right yes so you’re not a fan of the brokerage
model anyway so let’s start with that premise you like the model of a
fiduciary advisor who’s putting your best interest first at all times we put
that on the table what was the big takeaway after the publication when you
got the feedback what was the sort of the positive and the negative that you
received most of the feedback that I received was incredibly overwhelmingly
positive all of the men that I’ve worked with in my career agree they know that
there’s not enough women they’ve been trying to find more women I think it’s a
it’s a problem that has to come from both sides we need more women to be
interested and then we need the firms to hire more women so from that perspective
everybody in the industry agreed a lot of people did take umbrage with the
salacious title we did talk about with the New York Times that the term broker
an advisor an advisor with an O versus an e yeah and I think that’s a topic for
another op-ed that I would love to write I decided that I had no problem with the
word broker because you know what the investing public does not know the
difference right they use these words interchangeably and to be honest my
title would have been why aren’t there enough women as financial advisors and I
doubt that would have gotten as many eyeballs reading it yeah and also the
idea that the whole financial services industry is really chasing after women
and we are not attracting them why are women more willing to go into Investment
Banking than in the advice-giving business I use this analogy with other
professions whether it’s accounting or law or medicine there’s a clearer path
and maybe an investment banking there’s also a clear path you do your two to
three years and then you make associate in wealth management you really have to
work for a senior advisor and you have to just hope that they’re going to help
you progress in your career there’s no clear delineation that you would get
when you go to medical-school you’re a doctor
everybody’s going to respect you you have the white coat when you go into
accounting firms they have the same clear progression to partnership in
those firms so I think it’s just a lack of clarity that women don’t see how am I
going to make it here hmm that’s one of many reasons but I think it’s a big one
I’ve also heard when I was doing some work with the CFP board and I would talk
to young women they would say I don’t want to go into these high-pressure
sales organizations so they were really you have started by saying that you were
in a wire house but you were part of a salaried team that learned the business
that’s a lot different than like hey Blair here’s the here’s the white pages
go and you eat what you kill so part of the problem is some of them the model
doesn’t really appeal to a ton of different people like when I say to my
nephew comes out of pen none of his colleagues and cohorts wanted to go into
this the retail business they sort of thought like oh that slimy sales
business I don’t want to do that how can we rectify that I think you really hit
on a good point because most of the advisors in the broker firms who are
going into this you know program of call that all of your friends and then call
everyone in the phone book less than one and ten make it it’s not
easy it’s it’s extremely difficult and I absolutely agree I never wanted to be in
sales I loved building relationships and the sales part is a slog I think what
we’re seeing now on the independent side with the fiduciary RAAS is that these
businesses are finally moving past the single founder and a few staff they’re
becoming real firms they’re growing and so now they can offer these young
professionals that salary position that they were looking for you know 15 years
right interesting okay we’ll get back to our interview with Blair do kanae in
just a minute hey are you thinking about firing your mail broker or even your
female broker well maybe you should head on over to Jill on money.com and click
on the resource section and you can find a new one right there
find a CFP find someone from Napa anything like that or maybe get the
questions you need to ask those people before you even start
interviewing its @jill on money.com and we will be right back Twitter Instagram
Facebook YouTube she’s all over the place go to jail on money.com to find it
all now back to the show with Jill Schlesinger you are back it is Jill on
money and we’ve got a real interesting guest for one more segment she had to go
and do stuff so come on her name is Blair Dukan a she’s an
investment advisor and she wrote an op-ed in The New York Times that went
viral but she’s really talking about how women are potentially at least according
to research better at managing lots of things in the financial world than men
so here is more or the end of our interview with Blair Dukan a
besides the salacious headline which I loved you say that maybe the problems
that occurred in the financial crisis may have some root in how many women
were in the financial services business can you explain that certainly if you
look at the top of not only banks but all corporations there’s very few women
I mean less than 5% of CEOs of Fortune 500 companies or women women when they
make it to the top they tend to be HR general counsel they’re not in the
operational business line model Christine Lagarde a head of the World
Bank and the IMF and quote had was quoted saying maybe if there had been a
few more women in leadership we wouldn’t have had this problem and it comes down
to gender diversity of teams that are making complex decisions gender
diversity is the laziest form for cognitive diversity what were all these
banks doing they had a complete blind spot they had
no idea that all of these mortgages they had levered up and put on their balance
sheets could become worthless and maybe if there was some more cognitive
diversity among those teams gender diversity being the easiest way to get
that we wouldn’t have had such a problem it’s so funny that you say that because
there are so many times where people will say you know you
want to build a diverse team because I want to make the business model for
doing that and what you’re saying cognitive diversity is really true
because when you get not just all white dudes making if who come from the exact
same schools perpetuating their same stuff you get someone who raises a hand
it’s wet why but why are we doing this right what is it about women that you
think just the way that and again this is broad brush but like the the focus is
more goal oriented than transaction-oriented is that how it it
kind of breaks down here we’re certainly seeing that with women as clients women
as clients focus much more on the long term perspective their financial goals
than they do how did we do against the S&P 500 last year which seems to be you
know a very common question from men as clients so this characteristic is
beneficial for the long-term investor remember our brains are hard-wired not
to be good investors investing for the long term is very hard it requires
patience and discipline and a long-term view which we’re seeing women have more
of that than men do average I wonder if you think there are some there’s some
role to be played by how to how to make fiduciary the standard right because we
just in fact I just answered a question that came in that someone who said how
do I know if someone is a fiduciary is this a license why is it that the big
fund families as well as the big wire houses are so congenitally incapable of
adopting a standard that puts their clients first well if you go back to the
original legislation in 1940 with the investment advisors Act the
broker-dealer firms were written an exception to the fiduciary rule because
their primary business is the transaction of securities buying and
selling from their own account to their clients they have an exception to the
fiduciary rule that they are not giving advice except subsequent to an
individual transaction that’s their entire business model so you’re talking
about ripping apart the core of the business model there and what’s really
is that when the Department of Labor tried to enforce the fiduciary standard
only in retirement accounts because that’s worth only purview they had a
couple of years ago the brokerage firms were taking out ads in the Wall Street
Journal saying we have your best interests at heart and yet at the same
time their attorneys were fighting the DOL rules saying we can’t be fiduciaries
because of our exception so it’s very confusing we never really adopted as
other professions like law and medicine did a fiduciary standard and a true
profession and that’s really because those professions happened over a
century ago and this is the first generation of Americans who had to save
for their own retirement we had to find benefit plans pension plans at work
people worked until the final years of their life were just now getting to the
point where the average American has had to save for and plan for a 30-year
retirement on their own we’re just really getting to the point where most
Americans need a fiduciary in the space I actually moderated a focus group on
behalf of the CFP board and the Consumer Federation in AARP and we got a group of
investors around a table we videotaped it people had no freaking idea what role
the person who was providing financial advice had they didn’t know whether it
was a broker an advice or advice or of course you they would imagine that
someone put their best interest first they didn’t know that there was no
requirement not to put their best interest first I just think that if you
really want to be considered a profession and you’re unwilling to put
your client first like would you go to a doctor and say hey I’d love to go come
to you for medical advice but do what’s right for you before me would we ever do
that of course not it’s insanity right tell me what you think about like CFP
board going to a stricter standard this year in 2019 CFP board is trying to do
the right thing the problem that they’re having is that the CFP was originally a
designation for insurance agents to sell more insurance by doing financial plans
and a lot of their members are in insurance companies and broker dealers
and it’s very hard for them to apply the fiduciary standard to certificate
holders who don’t work in the business model so they’re trying
to say when you’re doing the act of financial planning as a CFP you’re going
to be held to a fiduciary standard and you’re gonna have to have a separate
contract that’s the other thing what we have now with the broker-dealer and
hybrid Raa model which is how a lot of independent firms operate is that the
advisor can on the same client at one point be operating as a fiduciary and
then turn over in the other account and do a sales transaction and never have to
tell the client that that’s been changed so I think the CFP board is trying to do
their best they can but it’s very difficult for them considering who their
certificate owners are so if someone’s listening here and they want to know
well how do I know I want to Blair by the way you can get Blair yourself you
don’t deliver New Orleans what do you think is the best way for people to seek
financial advice the first thing you have to find out is does this person
have an affiliation with a broker dealer or an insurance company or a bank if
they’re in any of those models even half of the time they are licensed to sell
you products it doesn’t mean that they’re bad people and a lot of them are
very talented and might give good advice they are in a business model that is
subject to conflicts because nobody’s conflict free right all have conflicts
but please ask my therapist about that dwive conflicts exactly so what you want
to do is find an advisor with an e who works at an RA a a registered investment
advisory firm that has no affiliation with a broker dealer so if you go on the
broker check website this person should not have active licenses like the series
7 or an active insurance license ok so you’re not going to necessarily find
that because even if you go to the CFP website if you go to let’s make a plan
or you’re not sure but if you go to naphtha will you to have someone who is
always held to the fiduciary standard and sells no product naphtha is one
organization you know that all of their members are going to be fiduciaries but
a lot of us who are fiduciaries are not necessarily members of that’s the weird
thing right so so like that’s the part of the confusion is because the models
are so weird and gray areas exist in so many places real
hard for the consumer so is the best question to ask simply are you held to
the fiduciary standard at all times I would like to say yes but when the DOL
rule was still looking like it was going to come through I heard that those who
work at broker-dealers were saying yes and in some way could because maybe they
have a corporate RIAA attached to a broker-dealer it’s very confusing I
don’t have the answer do we need to start an organization yeah I need to do
something about this I agree somewhere where we could all be
searchable right that’s what I mean like there was some database where you could
say like fiduciary org this is where every fiduciary all over America I got
to talk to someone about this you and I can make this happen I’d be willing to
help as much as I can let’s do it thanks to Blair Dukan a for
joining us while we go to the break and prepare for all the questions you have
why don’t you go to the website and check out all the great content that we
are creating every single week here at Jill on money just go to Jill on
money.com and you can check it out surf around we’ll be right back 401ks IRAs refinancing she covers it all
back to Jill on money with Jill Schlesinger you are back it’s Jill on
money Marc’s telling me to stop peppering somebody with emails because
he says I’m never gonna get anywhere it’s just somebody who came on our
program and we were very generous to and and this person won’t has basically
ghosted me and is not now returning the favor can you guess who it is now it’s
just fun mark now it’s just going to be every because you know you’ve been on
the other side of that where you feel slightly guilty now I’m venturing into
maybe becoming a nudge slash stalker will say but it’s just I don’t know I
would thought we were very nice to this person and mark says I should have known
better no now we do now but I’m gonna try
anyway all right let’s get back to you if you’ve got a financial question send
us a note it’s a ask Jill at Jill on money.com or just go to the website Jill
on money.com click on the contact us button and we
will help you out hi Jill I hate using the fan word but I am an avid listener
to your show for how long who knows I trust your judgment and I admire your
wit and knowledge a great combination oh that’s very nice I’d see it don’t you
wish that we could have that as a in her words rather than me reading it about
myself sounds sort of weird mark get on that microphone and you read these okay
in a nutshell I’ve had it counts with Charles Schwab fidelity mutual fund
store and American Century just to name a few I feel that I’ve gotten bad advice
everywhere mm-hmm darn it I’m not being negative I just want an
advice I can trust the markets have been high but I feel my accounts don’t
reflect as much growth as they should I was even talked into getting an annuity
which I regret and my husband’s not happy about it
I’ve heard you help others and was hoping you may know a reliable
intelligent person in my area who could review my accounts if I like
them I would switch to them someone who could just review and tell me all’s okay
the financial planning I advise the financial advice I’m receiving is
lacking I’m 54 I’ve got bills college on the horizon two kids in a couple years
uh you know look I feel like many people have this very similar complaint and I
think it is now incumbent on us to demand that we just we have to stop
working with people who are selling crap and not giving us financial advice so
you’ve heard me talk on this show about the National Association of personal
financial advisors or naphtha and I think this could be a good resource now
I’m gonna do a little research and help out this person in you know just to try
to see if I can kind of get to another place but I want to be sure that
everyone understands that if you’re just paying money for service that is just a
product sale or just like someone managing your money you’re you you just
not you deserve more so we’re gonna try to help you out and that’s why I do
really like the National Association of personal financial advisors they take a
holistic approach they look at your money and your life and they make you
get on track with this I like it I was never a member of naphtha I wasn’t when
I was in the business anyway uh here we go
this is I’ll do a little work and follow up okay uh Dan is thinking of retiring
soon working for a company for over 45 years should I take a lump sum I’ve
heard pros and cons about this not sure what to do I just like to get a monthly
pension check for the rest of my life but I worry something will happen that
would affect the pension if you get the money upfront at least to have it what
would you do the question of taking a lump sum versus a pension check is about
whether or not the company has funded the pension I didn’t mention the name of
your company but I think one question to figure out is whether
the company has an adequately funded pension I don’t mind a pension I think
that it might be worth your while if you’re the type of person who just wants
your monthly amount that that’s great but remember once you have that pension
you don’t have liquidity so I think that what I would do is I would first figure
out is this pension on shaky ground or not and if it’s not do you have money
outside of the actual pension fund that you could dip into that would be a good
question because I would hate for you to need the money or need some chunk of
money that you don’t have so I mean the real pros of a pension of pension income
is pretty simple you do get that monthly cheque you don’t to worry about anything
the downside of that pension check is that you don’t have the money and it’s
something big were to come up you don’t have access to your money and the other
the other risk would be that the company changes the terms of the pension after
you retire I’m not sure if that’s your case or not but it’s worth thinking
about okay Gary writes that he and his wife are 62 years old 60 grand in a
Sepik and $30,000 in credit card bills high rates my wife has an IRA a hundred
thirty thousand our retail business is down so incomes not there
should we start taking retirement cash in some September money to pay down
bills can’t find the answers this is a tough one
well maybe what I would do is if I wouldn’t necessarily start taking social
security at 62 I think that’s what you’re asking I don’t think I would want
to do that because now you’re gonna have a permanently lower amount but here’s a
question could you take some money out of one of these accounts maybe take if
your income is down maybe it’s you do take some money out of either the Eyre
or the SEP and take them I don’t know if you’re gonna bump yourself into another
tax bracket I don’t know how much money you have but if you can get some money
out and pay down those credit-card bills that might really help you out so let’s
see if if you could let’s say you you I don’t know what your income is but let’s
say that you have income that puts you in the twelve percent tax bracket right
now if you’re married filing jointly you can make up to seventy eight thousand
nine hundred fifty bucks and stay in that bracket if you’re in the twenty two
percent it goes all the way up to one hundred sixty eight thousand so seventy
eight nine to 168 I think I’d take money out of that SEP right now actually and
pay down the credit card bill I think that once you have that credit card debt
paid down then you might have a little bit more ability to manage your cash
flow don’t claim Social Security yet okay you’re listening to Jill on money
if you’ve got a financial question give us a call give us a shout can’t call us
anymore send us an email ask Jill at Jill and money calm during the break go
over to Jill on money.com and why don’t you sign up for a free
weekly newsletter okay we’ll be right back Twitter Instagram Facebook YouTube she’s
all over the place go to jail on money.com to find it all now back to the
show with Jill Schlesinger you’re back its Jill on money and if you’ve got a
financial question this is the show for you and hey don’t worry we’ve got a lot
of interviews we got a bunch of stuff in the can you’re gonna not you’re gonna
get bored of my voice very shortly oh wait that’s me I’m bored by my voice but
I promise it will be okay Sarah writes I’m single retired at 56
years old with no children 56 my god I’m the wait a second I’m sorry I’m single I
retired at 56 I’m 59 this year 56 let’s see what this person has here I have a
pension once I reached 65 of $1,700 a month’s Social Security Papapa current
allocation 50% stocks 38% cash and bonds 12% fixed annuities I am living modestly
on my bank savings my monthly expenses I’m sorry I’m laughing $2,500 a month
that’s why you can retire I guess it includes health insurance I have several
non qualified annuities to use if I need them before Social Security 403 B this
is a teacher I think 640 grand older fixed annuities a bunch of money in
there some Roth more annuities all this stuff I since my income is low I’ve been taking
advantage of slowly converting some of my retirement accounts into Roth IRAs
very smart i co-own a second home mortgage is 79,000 my primary home is
paid in full I have a will and a power of attorney you’re in great shape put it
this way gang let’s say you are like this guy or gal because I don’t know the
name is a non gender-specific in my mind at least and you have as pension at 1700
a month plus your social security at 2250 a month
I mean you got more money than you need so you’re about a 50/50 investor you’re
really more like a 60/40 investor I would say I’m sorry 60/40 the other way
so because you have yeah yeah that’s right I would say 5050 let’s make that
5050 but part of your 50% of fixed or cash is in fixed annuities I mean I’m
not in any rush to annuitize create income I would live off of what you can
the bank account I would wait to claim Social Security and and I’m wondering I
mean you’ve got your bank account savings that’s gonna last you you don’t
you know I don’t think you need to do much and you might not even need to take
as much risk in the stock side of it this is a good story I’m just I I mean
it’s just amazing to me to retire I guess because I’m now I’m closing in on
those mid fifties it is a bit weird for me to consider not working
well I can’t retire because then mark has to retire with me look you’re gonna
have your whole life ahead of you you’re gonna have all these things that are
going on you’re not gonna be like leaving me in the dust Mark’s got his
whole little like separate gig going on people are gonna want him doing stuff
all my colleagues I want to talk to mark about this talk to mark about that dude
it is a long ball game you are a long ball player so you’ll see okay Marianne
is Elle eligible to take a reduced widows
benefit in two months and has been she’s been living on $2,000 a month from
savings for the last six years okay so she can take her retire widows benefit
she earns less than $15,000 a year she’s got seven hundred thirty-two thousand
dollars in retirement money my plan is to take two thousand dollars a month
from Social Security stop the flood of money leaving my savings at max
retirement I could collect $2,800 I like that max but you know what she says I
like the idea my children can inherit my retirement I like the idea of you living
well how about that so I mean you could do this gosh people I don’t know I know
you want to leave money to your kids but mathematically would certainly make more
sense for you to simply wait to claim Social Security get that higher benefit
and then later your the kids are gonna get money I don’t know you do what you
want it sounds to me like you don’t spend a lot of money you’ll be fine so
here are two cases where people just don’t spend a lot of money so the money
they’ve saved is more money than they need so maybe you don’t really have to
do much but I just can’t I can’t be like I’m not just leave the huge fan of
trying to like scrimp and save and not live life when you have 700 grand and
you’re worried about leaving money to your kids so I’m spend some of the money
and remember when you wait for your Social Security you get a guarantee of
an increased paycheck a guarantee that’s why I never like taking money early from
Social Security I mean in your case I don’t think it’s gonna really change
your life again you don’t spend a lot of money and when you don’t spend a lot of
money good news is your needs are pretty low your savings will cover it
all right it’s Jill on money if you’ve got a financial question head over to
our website Jill on money.com and there you can see all the great
resources we talked about you can subscribe to our podcast and you can buy
the book the dumb things smart people do with their money thirteen ways to write
your financial wrongs we’ll be right back your back it’s Jill on money and before
we close out the program let’s do one more email from Tom because this is a
fantastic question Tom writes I’ve read in many articles
that you should have six times your annual salary saved by age 50 I don’t
know like I mean I’ve heard 10 times I’ve heard 6 times I’ve started eight
times but whatever let’s just say that there’s fine ok Tom’s like no problem
I’ve got that in my traditional IRA but what these articles never say says Tom
is that six is it six times your pre-tax or six times your post tax ah very right
very right you are my friend six times your salary and a traditional IRA is a
lot different than six times your salary in a Roth I don’t know if having six
times my salary and a traditional means I’ve not saved enough because when you
factor in taxes I’ll pay I don’t have six times my salary hope this makes
sense what you’re really bringing up is a fantastic point and that is that when
we look at retirement planning and even when you hear me do these like quick
back of the envelope calculations for people you do have to factor in taxes
and inflation and so what I would say to you is if you have six times your net
salary that’s one thing six times your gross salary it’s another thing and if
that’s in a Roth obviously it’s more valuable because it’s already been taxed
but the reality but you know really look let’s what are we talking about here you
want a rule of thumb for something that’s more complicated than that
so what I think you should do is forget about six times run your retirement
numbers see how much money you have there are so many calculators so many
tools online so many ways that you can do this probably right where you hold
your IRA account plug the numbers in add in the number
the amount of money you think you’ll be contributing to retirement accounts use
a very low rate of return and see where you stand forget about six times eight
times ten times that’s going to be better all right thanks so much for
listening we have been broadcasting live from the policy genius studios policy
genius is the easy way to compare and buy insurance go check them out at
policy genius.com and next week we’re gonna answer more of your questions so
please send us emails hop onto the website Jill on money.com and you can
click on the contact us button at any time all right have a great weekend
thanks for listening

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