Episode Transcript
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Speaker 1 (00:05):
Tonight. What did it mean when even the Federal Reserve,
our nation central banks, because they.
Speaker 2 (00:11):
Don't know where the economy is heading.
Speaker 1 (00:13):
You're listening to simple Wheney presented by all Worth Financial
Imami Wagner along with Bob Sponseller.
Speaker 2 (00:18):
You know what, I actually appreciate it.
Speaker 1 (00:21):
Whenever there's a person that you're dealing with or an
entity that you're dealing with, it is like we do
not have all the answers about what's going to happen
in the future. Right It's the people who pretend like
they know that make me nervous. And I think if
I were going to sum up what happened yesterday with
the Federal Reserve chair Jerome Palell kind of saying here's
(00:41):
where we think things are going in the future, it's.
Speaker 3 (00:44):
Kind of what he said, humility combined with transparency or
wonderful things. Amy, isn't that refreshing? RT combo So, I
think this was one of the most telegraphed fed announcements
we've had in months, and that's kind of usually the
way this works. I mean, things get out there in advance.
People pretty much know what's going to happen before it happens.
(01:04):
In terms of the actual announcement. But then what happens
after the announcement is where all the fun begins because people,
you know, institutional investors, individual investors, they literally in that
hour after the actual announcement, parse every syllable yep. A
lot of people day trade on that announcement if you
could believe that, because you can index, you could trade
(01:27):
index futures and ETFs now virtually twenty four to seven.
So there's a lot of things that go out on
right after that announcement based on well, what did he say?
What did he say? Because the market's always looking forward
to what's going to happen next.
Speaker 1 (01:41):
Yeah, So it's kind of like the actual decision, which
is where the impact comes, is like okay, yoahn, we
knew that was coming, and then everyone leans in on
every syllable of what Pal says. I mean really to
the point where I kind of joke about this, But
it's like, if he looks up into the left, what
does that mean?
Speaker 2 (01:59):
If he's wearing a purple tie, what does that mean?
Speaker 4 (02:01):
Right?
Speaker 1 (02:02):
But it's you know, what is he telling us about
what they are seeing in the data and what they
are discussing behind closed doors?
Speaker 3 (02:10):
Well, let's just throw out a few quotes here rather than,
you know, give our opinions and thoughts. Let's just repeat
what the man actually said, because I think it's very
consistent with what we've been saying, you know, you and
I amy in the last week or so heading into
the federal Fed announcement. So chair Pal said it's too
early to know, yeah, in terms of when they're going
(02:31):
to move rates. Another quote, I don't think we know,
you know, to your point here going into the trade
and tariff policy and everything else. And then another quote
from chair Pal quote, we think we can be patient.
We are going to be watching the data. Another one quote,
it's a fairly clear decision for us to wait and
(02:55):
see and watch. There you go. That's that's the whole
hour's worth of drama in a nutshell and about four sentences.
Speaker 1 (03:03):
But I appreciate that very much, you know, and I think,
you know, it's just kind of been reading through coverage
today all the stuff that's being said about what Pal
you know, said yesterday, and you know, a lot of
it is like, well, people are worried, people are worried,
people are anxious about what could happen with these tariffs,
and I'm like, that's fine. People can be worried, people
(03:25):
can have whatever emotion we want to have as investors,
But it is not the Fed's job to act on
our collective emotions. In fact, thank goodness, that is not
their job to act on our collective emotions.
Speaker 2 (03:39):
Their job is to look at the data.
Speaker 1 (03:41):
And essentially, also what Pale said is we are not
seeing any impact of tariffs yet in the data.
Speaker 3 (03:50):
Yeah, and we talked about this earlier this week when
we when our chief investment officer, Andy Stout was in here,
and we talked about, you know, really going under the
hood and look at those ten indicators of the what
we call our recession scorecard here at all Worth and
there's really no signs of anything you know, drastic going
(04:11):
on in the economy. The employment is fine, interest rates
are fine, inflation is under control, corporate earnings are pretty good.
Right now, we have not yet seen the potential impacts
of tariffs really take hold in the economy, you know,
as of now. So again to quote Chairman Pale, he said, quote,
(04:33):
usually things clarify and the appropriate direction becomes clear. And
then he ended by saying, the economy is doing fine.
I think that's a very responsible FED announcement, in total
agreement with it. Obviously, President Trump didn't like it. He
went out on truth Social right after that and talking
(04:53):
about pal is too late and he's an idiot or
what I'm paraphrasing. But then he said, other than that,
I really like it. I think he's just kind of
joking around. Yeah, he really wants him to move rates.
And I said this yesterday, I think on the show Amy.
I mean, the European Central Bank has already dropped rates
seven times this year. The Bank of England dropped interest
(05:17):
rates earlier this morning. So I think the President is
sitting out there and say, hey, I want lower rates too,
you know, do it, do it.
Speaker 2 (05:24):
Do it, give me, gimme, gimme.
Speaker 3 (05:25):
That's not how things work. And I think a lot
of that stuff is tongue in cheek. But again to
the main point here, I think our Federal Reserve chairman
is kind of stating the obvious and being patient, transparent, responsible,
Let's wait and see, let's let let's let the data
speak to us. And that's what they're doing right now.
Speaker 1 (05:45):
You're listening to simply money presented by all Worth Financial.
IMMI Wagner along with Bob Sponseller, as we continue to
digest what's coming out of the Federal Reserve, our nation
Central Bank, which was no movement on interest rates yesterday,
and also, hey, we're not seeing anything in the data yet,
which means that which tells us that we need to move.
Speaker 2 (06:06):
So we are going to be patient. And wait.
Speaker 1 (06:08):
I've said many times I would not want this job,
but I actually am thinking about it today.
Speaker 2 (06:13):
I would also be terrible.
Speaker 1 (06:15):
At this job because when I get any kind of information,
I immediately want to act on it. I am not
a let's get more information kind of I'm learning. I'm
getting there, but I historically have always been a little
bit impatient and one to.
Speaker 2 (06:32):
Act pretty quickly.
Speaker 1 (06:33):
Those are not great attributes for someone who's on the bed,
and I appreciate very much kind of where they've landed
with this. You know, there's people kind of starting to say, oh,
we could have empty shelves soon because of these tariffs, right.
Speaker 2 (06:47):
But we're not there.
Speaker 1 (06:48):
We don't know how this is going to bear out.
You and I were talking this week about the fact
that maybe we're starting.
Speaker 2 (06:56):
To see this anecdotally.
Speaker 3 (06:57):
Right.
Speaker 1 (06:58):
I sent you something that a friend of mine put
her daughter had ordered some kind of a bathing suit
out of Australia, but that bathing suit is manufactured in
Hong Kong, and so whatever the cost of the bathing
suit was, there was an additional like one hundred.
Speaker 2 (07:11):
And fifty dollars charge put on it because of tariffs.
Speaker 3 (07:16):
Right, which was two times the cost of the bathing suit.
Speaker 1 (07:19):
Right, yes, right, exactly. In extreme examples like that. Okay,
we are starting to see those, you said, maybe someone
you know is starting to see it in their job.
Speaker 3 (07:29):
One of our colleagues here in the office, Amy and
you know, just went to the dry cleaner. So this
is where we're starting to see what I'll call green
shoots of inflation, you know, related to tariffs. And I
think the President and his team are, which is why
you're starting to see these negotiations and hopefully deals ramp up.
A couple of quick examples. One of our colleagues in
(07:51):
the office went to the dry cleaners the other day
and asked for a few extra hangars, you know, just
the wire hangers. Yeah, there weren't any, and the dry
cleaner explained, hey, we have to reorder a bunch of those,
and they're being tariff surcharge right now because most of
those come from China. We've held off on buying more
right now, so you're seeing that it's just a little
(08:12):
dry cleaner here in Cincinnati. My own sister in law
works for a jewelry what i'll call wholesaler. They import
a ton of stuff overseas. They're starting to see those
shipping costs go up, you know, terraff related charges come up.
It's it's impacting the kind of stuff and the quantity
(08:34):
of stuff that they're deciding to bring into the United
States right now. So we are starting to see those
green shoots of tariff related inflation. Something to keep an
eye on. And I think that's what our FED chair
was basically saying yesterday. Let's let the data speak to us,
because trade deals could happen or they couldn't happen, and
(08:55):
if they don't happen, relatively soon, you're going to start
to see some of this stuff, you know, inflation related
to terariffs happen and that that impacts then.
Speaker 1 (09:05):
Yeah, and understand this, the FED is not going to
move on these anecdotal situations that we're starting to hear about.
That's not their job. Their job is to say, what
are we seeing in the data? Is this slowing the
economy down? Are we seeing companies purchasing less? Are we
seeing a shift in consumer sentiment? Are we seeing a
(09:25):
shift in consumer behavior? Keep in mind, the American economy
is made up by seventy eighty percent what you and
I are spending, right, you know, And if there's a
shift in that because of any.
Speaker 2 (09:37):
Of this, that will bear out in the data, and
at that.
Speaker 1 (09:40):
Point the Federal Reserve will decide, Okay, which direction do
we go with things?
Speaker 3 (09:44):
Now? Yeah, and we get a lot of revisions too
on employment numbers, GVP numbers, all that. So there's a
whole lot of data that we'll be coming in and
I'll call it the next three to five to six
weeks between the you know now in the next FED meeting,
I think something will probably happen in June, but it
(10:06):
will be data driven, not social media driven, and I
think that's what we all want.
Speaker 1 (10:13):
And I think as an investor, you have to understand
we probably will have some volatility while here. You know,
markets don't love uncertainty. We've said that many times here
on the show. And essentially what our Jerome Pal said
yesterday was we have no certainty right now.
Speaker 2 (10:28):
We don't know how this is all going to play out.
Speaker 1 (10:31):
So you know, as an investor, I think you can't think, Okay,
well the worst is over right.
Speaker 2 (10:36):
We wrote out that volatility for a few months.
Speaker 1 (10:38):
We did get lucky in twenty twenty when we saw
that volatility in the beginning of COVID. It could have
lasted a lot longer than it did, but for whatever reason,
markets just started to rebound a couple of months after
that started, and then went on a great tear after that.
Speaker 2 (10:51):
I don't know that that's where we are right now.
Speaker 3 (10:54):
Well, I think now it's different than COVID. And now
I'm going to share an opinion, you know, separating opinion
rather than facts. I mean, you can juice an economy
in the short term by printing money and sending out
stimulus checks. You can do that. You can run the
country on a proverbial credit card, and we did that,
and that's in part what caused inflation to go up
(11:17):
to nine point two percent. Fast forward to today, as
we talk about all the time, this tariff policy is
being imposed by one human being, the President of the
United States. He can put them on, he can take
them off. He can solve a lot of these problems
quickly by what decisions he makes on tariffs. So this
(11:38):
has little to do with fundamentals of the economy, and
I think that's the key point to drive home here,
and frankly, Amy, I think it's why most investors have
ridden this out stayed the course, because the economy is
not broken. It's fundamentally pretty sound right now if we
don't purposely break it.
Speaker 1 (11:58):
If we were seeing volatility be because there were cracks
in the actual armor, cracks in the foundation of how
our economy was being run, that would be one thing.
That's not what we're seeing this volatility coming from.
Speaker 3 (12:10):
Now.
Speaker 2 (12:10):
Here's the all Worth advice.
Speaker 1 (12:12):
Avoid emotional decisions during any turbulent period. Attempting to time
the market or shifting to cash can jeopardize your long
term financial goals. It's always important to keep that long
term plan front and center. Coming up next y, it
will soon become easier to invest in something only the
ultra wealthy could manage. Not too long ago, you're listening
(12:33):
to Simply Money presented by all Worth Financial here on
fifty five KRC the talk station.
Speaker 2 (12:43):
Well, I mean me Wagner, along with.
Speaker 1 (12:45):
Bob's sponseller, should more aggressive target date funds change where
you put your money in your portfolio.
Speaker 2 (12:52):
We're going to get into that stree ahead at six
forty three. Okay.
Speaker 1 (12:55):
For the longest time, your four oh one K options
included stocks bonds.
Speaker 2 (13:00):
Essentially, now that could look different. There could be any
version of exchange.
Speaker 1 (13:04):
Traded funds, mutual funds, baskets of stocks, whatever, baskets of bonds.
But essentially those were your choices. And interestingly, now as investors,
we may have more options.
Speaker 3 (13:16):
What we're talking about here, Amy is the rise of
private and private assets being included in a menu of
choices and four to one K plans. And the CEO
of t row Price came out after their earnings announcement
earlier this week, and by the way, trow Price overseas
one point six trillion dollars in assets. They're a leading
(13:37):
record keeper and provider of for to one K plans.
Most people have heard of them. Their CEO came out
and said, there's quote no question that's eventually going to
happen in terms of putting private equity and private debt
in four to one K plan options. And I think,
and we had a segment on this earlier in the
(13:58):
week about using these type of assets. Is just as
an individual investor in your portfolio. Different things to talk
about here on pros and cons. But I personally think
this is a good thing as long as folks know
what they're buying. And we'll get into that here for
a couple of minutes.
Speaker 1 (14:14):
I never think that more choices is a bad thing, right,
I mean, more choices is always going to work out
well for the investor. But you have to understand this
as an investor, it's on you to educate yourself on
what is truly a good fit for you. So, you know,
you start a new job in the next few months
and suddenly you see private equity as an option in there,
(14:34):
and you were at a red scheme and your buddy
was talking about investing in private equity, or you read
a headline about it, or it just sounds kind of
sexy as an investor or something new. Oh, I'm going
to put my you know, ninety percent of my four
oh one k in that. Nope, Nope, that's not the
way to approach this. The opportunity to invest in it.
I'm glad it's there. For the average investor. For many,
(14:57):
many years, it was right only the old, such a
high net worth that had access to this.
Speaker 2 (15:02):
And you know, many times to the years.
Speaker 1 (15:04):
You probably anecdotally kind of hear about a company and
be like, oh that's interesting, can I invest in? Oh no,
they're not actually publicly traded. This is your opportunity to
get in on companies that are not available in the
public marketplace. That's fantastic, But with that opportunity comes risks,
and you have to understand what they are and go
(15:26):
into this kind of investment with eyes wide open.
Speaker 3 (15:29):
There's a couple of reasons why these type of things
can now be included in four one K plans and
these are all for good reasons. Amy. When you're you know,
when you can buy in bulk so to speak, you
know the t row prices, the vanguards, the American funds
of the world, and our chief investment officer Andy Stout
talked about this on the segment you know we did
(15:49):
with him earlier in the week. The fees are coming down,
the lock up periods are coming down, the barriers to
entry are coming down to be able to allow you
regular old individual investors to be a part of this,
and I think that's a good thing. What we got
to watch out for are fees are higher, there are
(16:10):
lock up periods. The reasons people that get want to
get into these asset classes is they can tend to
be non correlated to just the good old stock and
bond market, which is a good thing.
Speaker 2 (16:23):
From a diversevlatility.
Speaker 3 (16:24):
Yeah, and for people that are willing to hold them
for a reasonable period of time, you can. We're not
guaranteeing you will, but you can have returns that are
higher than just traditional investments. A lot to learn here,
and I would say at the outset, like we talked
about all the time, this is not kind of a
do it yourself proposition. If your plan starts to offer
(16:48):
these types of private equity and private debt asset classes,
make sure you sit down with a fiduciary who can
walk you through the fees, the expenses, the lock up periods,
the vault f latility, the pros and cons of having this.
You know, to make sure you're you know what you're
buying before you get involved.
Speaker 1 (17:06):
I'm so glad you made that point, because if you
were with a fiduciary financial advisor, you know and their manager.
They obviously you know most of the time they cannot
manage your flour O one k, but they should be
looking at your investment options with you in talking you
through what's the best fit, because you can't kind of
look at your flour O one k separate from other investments.
(17:27):
If you do have other investments outside of that floural
one k, it should be kind of a comprehensive strategy
that you are applying. So you know, if you're starting
a job and you've got reams of paperwork that you've
got to fill out and you're just kind of breezing through,
or you're gonna, Okay, I'm gonna jump online and I'm
gonna figure this out when it comes to my flour
one k, this looks good.
Speaker 2 (17:46):
Oh, the returns on this last year were good.
Speaker 1 (17:48):
I know a lot of people who make those choices
because if based on and not a great way to
look at it, you're likely missing out. And this is
where hey partner with someone who you know as a fiduciary,
who you know you can trust, and don't make this
decision in a five seconds and move on.
Speaker 3 (18:07):
Yeah, And as somebody who has been an advisor to
several large four oh one K plans over the years.
I can almost predict what will happen with some participants.
Those that do not get properly educated and have somebody
walk them through this, they'll see the names on the
private equity find and say, Wow, I get to play
with the big boys. I can buy what all the
(18:28):
rich people buy. Count me in, and they're going to
pile in.
Speaker 2 (18:31):
I read somewhere that Tom Brady is investing in.
Speaker 3 (18:35):
Yeah, I'm gonna put eighty five percent of my money
in some private equity if it's.
Speaker 2 (18:39):
Good enough for Tom Brady's going to see me right.
Speaker 3 (18:41):
Yeah, that'll happen. And then the other thing that you've
already brought up always invariably happens. People look at the recent,
very recent short term return on anything and they over
allocate to that asset class or that investment because they
think that return is going to be exactly the same
or even better in the future.
Speaker 1 (19:00):
Yeah, Anita, you mentioned Hey, listen to the entry point
to these. It's becoming much more accessible.
Speaker 2 (19:05):
But also fees are still higher, and also there could
be liquidity issues with these. It may not be where
if you decide you're going to sell an ETF at
two o'clock on a Tuesday. You can do that.
Speaker 1 (19:17):
You may not have those kinds of options with these
kinds of assets, So this is a do a deep
dive before you jump into this and make sure that
you're working with someone if you have any questions and
don't fully comprehend this.
Speaker 2 (19:31):
Here's the all Worth Advice Private assets and a four
to one K.
Speaker 1 (19:35):
They can offer diversification and long term potential growth, but
understand this, they are not for everyone. Make sure you're
talking with a fiduciary advisor to understand whether they truly
make sense for you. Coming up next, a look how
real or how estate planning has changed over the decades
as we check in with our longtime expert. You're listening
to Simply Money presented by all Worth Financial here on
(19:55):
fifty five KRC, the talk station. You're listening to Simply
Money presented my all Worth Financial. I'm Amy Wagner along
with Bob Sponseller.
Speaker 2 (20:10):
They say all good.
Speaker 1 (20:12):
Things must come to an end, and I sure do
hate that line. I've been doing the show for about
a decade now, and someone who was on it before
I even sat in the studio for the first time
is our dear friend, Mark Reckman, our state planning expert
from the law firm of Wood and Lamping, who has decided,
(20:32):
after years of helping us all make smart decisions about
not only how to retire well, but also how to
plan for a state planning and our loved ones, well,
now it's your turn to retire and retire well. And Mark,
I just want to start by saying thank you for
everything that you've added our conversations. Our lives are better
(20:54):
because you've been in them.
Speaker 4 (20:57):
Well, thank you very much. And doing with you guys
that enriched my life. I feel like I've made some friends.
Speaker 1 (21:05):
Yeah, well you have, and I certainly count you among mine,
and I'm really grateful for that. Mike, you were saying
that you started as it started practicing law back in
nineteen seventy nine, so forty five, forty six years. You've
been doing this almost fifty years.
Speaker 2 (21:21):
Talk to us.
Speaker 1 (21:22):
About how estate planning has changed during that time and
maybe the most important things you think that people need
to know about it.
Speaker 4 (21:33):
I would say the most significant change in the state
planning in Ohio, Kentucky, Indiana has been the change in
the state tax laws. A state tax used to be
a threat or an enemy or I shouldn't say an enemy,
but it's something that we always dealt with. There were
federal estate taxes and there were state estate taxes, and
(21:55):
what has happened over the years is the federal government
has revised their tax so that the tax threshold has
gone higher and higher and higher. That threshold now only
affects It means that only about half a percent of
people actually worry about the federalist state tax. In Ohio,
(22:15):
the situation has gotten even simpler because, oh I guess
it's been over a decade now, Ohio repealed the Ohio
state tax, so we don't deal with it at all here.
So that's probably been the single biggest change in my career.
Speaker 1 (22:30):
And talk to us about you know, what you think
for anyone who has never done an estate plan or
sat down with someone like yourself, what's the benefit of
getting that taken care of. I know that's probably a
large question for you, but boil it down for us.
Speaker 4 (22:47):
You know, I think most people, most people leave their
money to family members, family members that they dearly love,
and getting this done provides it's a tremendous sense of
relief that you've done everything you could to be sure
that your assets good to the right people and that
(23:08):
they do so as efficiently as possible. For those who
do not have family, it means finding the right charity.
Often it means finding the right place to put your
money to good use. A tremendous amount of satisfaction having
done that. You know, it's it's it's in some respect,
it's sort of like medical care. It's it's not fun
(23:32):
to do, but well, you feel relieved when you go
in for that annual physical or you or you whatever
procedure you may need to correct your health problem. It's
a big, a big deal.
Speaker 3 (23:47):
Hey, Mark, I know you're not completely going away, You're
just cutting back a little bit. And I'm curious now
that you're going to have a little more free time
on your hands. What do you like to do in
your free time when you're not drafting complex generation skipping trust?
What are you going to do to go have a
little fun? Mark?
Speaker 4 (24:08):
You're going to be totally bored by this answer. But
the first thing I got to do is make some
contributions around this household that comes somewhere close to the
contributions my wife has been making for the last fifty years,
which means that means picking up a lot of the
domestic duties that I really should have been sharing more
of during my career years. But I also have got
(24:33):
some travel involved. My wife and I both enjoyed the outdoors,
in particular water. We're both very active scuba divers. In fact,
I leave Saturday for a place called Cayman Brack. And
if any of your listeners have ever heard of Cayman Brack,
they will be a very few among a very few people.
This is not Grand Cayman. It's a tiny little spit
(24:55):
of sand off the coast of Cuba any rate. And
I've done a lot of woodworking since I've retired, and
mostly I make things cutting boards and cheese slicers, work
benches for putting next to your back door, simple things
that bring me pleasure and create a lot of noise
(25:16):
and a lot of dust.
Speaker 1 (25:18):
You know, Mark, as I'm listening to you talk, I'm
thinking that sounds like a really full life in retirement.
And you know, we do talk about money a lot
on the show, but there's a huge kind of social
and emotional component to a jew. What are you going
to do at that time now that you're not, you know,
driving to wooden lamping every day, and in crafting trust
(25:39):
and estate plans for your clients.
Speaker 2 (25:42):
It sounds like you've got a pretty good plan in place.
Speaker 4 (25:46):
Well, the gift of time is a lot more complicated
than you may think. When you're working full time and
it never seem to have enough time. You think yourself, Oh,
but if only I had more time, I would do this, this,
and this, and when the time comes. They what they
have been telling me, and what counselors, retirement counselors have
been saying for decades. Plan ahead, don't go into this
(26:07):
thing without a very clear and specific and flexible game plan.
And I did that to some degree. And I am
generally a planner, maybe to an obsessive level, but I
did not really plan this in much detail, and as
a result, it has taken to some degree, has sort
(26:28):
of taken directions that I didn't expect, and I have
just tried to go with it, and that has worked
for me. I'm kind of a compulsive guy. Have followed
the rules, followed the routine, and done the same thing
over and over for decades, and I guess I'm experiencing
things a little differently and it's broadened my worldview.
Speaker 3 (26:49):
Mark.
Speaker 1 (26:49):
You know, we talk about different kinds of retirements and
also different kinds of retirement transitions. You know, some people
their their final day is certain Friday and then Monday
it starts, and some people kind of cut back responsibilities
and kind of ease into it. Talk to us about
what your retirement transition has looked like and your thoughts
(27:11):
on it.
Speaker 4 (27:13):
Well, it has not been that simple. You know, when
you are self employed and you run your own I mean,
I'm with a big firm, but it's still my practice
and my clientele, and I have developed relationships with people
over the years who don't have family or don't have
a supportive profile, and you I just can't walk away
(27:36):
from those folks. So, for example, this afternoon, I'm going
downtown to science some paperwork to go look at a
condo of one of my clients who died and asked
me if I would be the executor, So I'm going
down to do that. Yesterday I went looked at a
nursing home for a client who's got advanced Alzheimer's disease
and can't stay in her union anymore. So I still am.
(27:58):
I sat down the other day, and it comes out
to about fifteen to twenty hours a week. I'm sorry,
fifteen to twenty hours a month, which is not a lot.
It's like less than five hours a week that I
still doing that kind of thing.
Speaker 3 (28:15):
I don't.
Speaker 4 (28:16):
I feel like it's probably as much social work as
it is legal work. But it feels particularly important because
these folks are folks who don't have anybody else to
do it, and I know how to do it, and
I charged very very little folks, and I know that
their property and their affairs are going to be properly
(28:38):
managed and that nobody's going to take advantage of them.
Speaker 3 (28:42):
Mark.
Speaker 1 (28:43):
Of course that's what you're going to do. It doesn't
surprise me in any way, shape or form. Just thank
you again. We have used your handbook for years around here.
We have, you know, sent clients to you. You have
been good to eye, you have taught us, we have
learned from you, and I just want to say we
(29:04):
wish you all the very best in retirement. Thanks so
much to our good friend Mark Recman from the law
firm of Wood and Lamping. You're listening to simply Money
presented by all Worth Financial here on fifty five KRC,
the talk station you're listening to Simply Money, presented by
all Worth Financial. I mean you Wagner along with Bob Spondseller.
(29:26):
Do you have a financial question you need help with.
There's a red button you can click on while you're
listening to the show. It's right there on the iHeart
opp record your question. It's coming straight to us. We'll
help you figure it out.
Speaker 2 (29:36):
Okay.
Speaker 1 (29:36):
We talk often on the show about target date funds,
and the reason why is because we get a lot
of people in our office who have a significant portion
of their four oh one ks in target date funds.
And a target date fund is essentially, hey, you've got
this whole menu of options when you're looking at what
you can invest your four o one k in, and
there's options that say, hey, if you're going to retire
(29:58):
in twenty thirty five, put all your money in this
fun kind of thing. And so we have some mixed feelings,
I would say, about target date funds, but also some
new information about how they might be changing.
Speaker 3 (30:10):
Yeah. I don't think target date funds are necessarily good
or bad. You know, I'm pretty agnostic on them. I
think the point here is to make sure you understand
what you are owning and why. And I think to
your point, Amy, that depends on your own personal circumstances,
not what's some fund company or some employer thinks is
(30:31):
quote unquote best for you. You know, all these plans
and provide they're trying to help because a lot of
people aren't getting very good education. Some people think they're
smarter than they are and they make yeah, and they're
they're not very good at picking these funds for reasons
we talk about all the time. So these target date
funds can be a good one size fits all solution
(30:55):
to have a constantly rebalanced and managed portfolio. But I
think think we need to watch out for a couple
changes that have come down to the pike. Some recent
data from morning Stars saying the typical target date fund
for workers is starting to creep up in terms of
the percentage allocation to stocks. That could be a good
(31:16):
thing if that fits your risk profile. It could not
be such a good thing if you get into a
more aggressively positioned allocation and then gets surprised when the
market starts whipsawing around allah like what we saw in
April of this year.
Speaker 1 (31:32):
Yeah, In this research from morning Star says, listen, like
for the entry point right when most of us are
kind of just entering the workforce, if you were to
get into a target date fund at that point, on average,
you're going to have about ninety two percent of your
assets in the stock market. And that's up from eighty
five percent a decade ago. So we're trending in a
(31:52):
direction here. You know, I think my criticism of target
target date funds, and I've looked at lots of research
on this, is they're kind of sold as kind of
a one size fits all, right, if you're going to
retire in twenty thirty five, this is the asset allocation,
kind of stock to bond ratio that you should have.
But the problem is, if you were to stack up
ten different target date funds right managed by different companies,
(32:15):
different money managers, and looked at that asset allocation individually
and how they were diversified amongst them, you would have
vastly different scenarios. So here you have this thing saying
the proposition is, oh, if you're going to retire this year,
this is how you should be invested. Yet depending on
how it's managed, who it's managed by, what company, owns it.
Speaker 2 (32:37):
It's actually a vastly.
Speaker 1 (32:38):
Different investment, and I think it's important to understand that.
Speaker 3 (32:41):
And that's where the well intentioned, one size fits all,
simplistic approach to retirement can give people a different result
than perhaps they were looking for. So I think I
think it's important to get in there with a good
fiduciary advisor. I mean, if your company offers somebody that
does that for folks, great, I can tell you right now,
(33:02):
I'll venture to say ninety five plus percent of companies,
the person handling their four oh one k is does
not have the time, the expertise, or the patients to
sit down and actually walk every employee through how they
should be positioned based on their own personal financial plan.
And that's why you need to seek the advice of
(33:23):
a good advisor on your own, because, yeah, to your point,
these target date funds are all different and Amy, I've
had people sometimes come in and where we do the
risk assessment and we determined together what their proper allocation is.
Oftentimes the best solution for them was to use a
target date fund, but it might be a target date
(33:46):
fund with a different date than their retirement date. In
other words, we're customizing their overall risk profile, looking under
the hood to your point at the actual components that
make up that target date fund. And at least we've
customized things to their personal risk tolerance and their time horizon,
and that at least helps so people aren't surprised.
Speaker 1 (34:08):
It's an excellent point because you have to understand how
these target date funds work. There's what's called a glide
path in them, and that means, yes, you know, talking
about when you maybe first invest in one of these
ninety two percent in stocks if you are a younger investor,
but over time they get more and more conservative, which is,
you know, for many people what makes sense, but how
(34:31):
conservative you need to get is kind of different.
Speaker 2 (34:34):
For all of us.
Speaker 1 (34:35):
And so you know, if you're the target date fund
that you happen to be invested in is a lot
more conservative than actually your plan needs or your desire
as an investor.
Speaker 2 (34:45):
It's important to know that.
Speaker 1 (34:47):
And so I think kind of doing the additional due
diligence of a little bit of research here other than
retiring in twenty thirty five, So I'm going to take
the twenty thirty five target date fund.
Speaker 3 (34:56):
Well, Amy, and you alluded to this point earlier in
the segment. You know you also have to factor in
the investment assets that you own outside of your four
to one K plan, and that comes down to comprehensive
financial planning. So amy we have clients where they might
want to position their retirement or four to one K
accounts completely differently than their non taxable account and think
(35:20):
and raw iras and things outside.
Speaker 2 (35:22):
The retirement from strategy stamp.
Speaker 3 (35:24):
Yes, and there's good reasons for that. So yet another
point to just don't swallow the one size fits all
advice and hit you know, make the mouse click and
think you're done, Sit down with the fiduciary within the
context of a comprehensive financial plan, and make sure how
you're positioning your retirement plan assets really is designed to
(35:46):
work with your overall plan.
Speaker 2 (35:47):
Here's the all Worth advice.
Speaker 1 (35:49):
Target date funds can be a helpful set it and
forget it option, but the target date doesn't mean it's
tailored to your individual retirement needs.
Speaker 2 (35:58):
Coming up next, a trip into Bob's World of wealth.
Speaker 1 (36:01):
At what point do you need to bring others into
your financial conversation you're listening to simply money presented by
all Worth Financial here on fifty five KRC the talk station.
Speaker 2 (36:15):
You're listening to your Simply Money presented by all Worth Financial.
Speaker 1 (36:18):
I mean you Wagner along with Bob's wandteller. Time to
walk into Bob's world of wealth.
Speaker 2 (36:23):
What do you have for us?
Speaker 3 (36:24):
Well, Amy. As a result of a meeting I had
with a long term client yesterday, this is fresh in
my mind and it brings up an important topic that
I think you know others will benefit from, and that's
the topic of power of attorney. Financial power of attorney.
You know in this case, and here's what I mean.
You know, this client I'm talking about is now in
(36:45):
they're mid eighty seven years old, has three adult sons,
and we're starting to see some evidence of cognitive impairment
just regular role. I mean, people that are eighty seven
don't have the same kind of memory. Recall somebody forty
seven does. I think we all know that the key
is when do you start to involve your power of
(37:06):
attorney in these meetings and decisions? And I kind of
got to the point in the meeting yesterday where I'm like,
I'm starting to realize that the time has come, and
that's a very difficult decision to have. You never want
to look at somebody and say, I think you need
some help, But we have a fiduciary responsibility to say
nothing of a compliance responsibility to make that call. And
(37:30):
here's the advice. I think it's time. Once you have
that power of attorney in place, and you've got your
retirement plan put in place, it's a good time to
maybe bring that financial power of attorney into some of
your annual review meetings with your advisor, just so he
or she is up to speed on what's going on
(37:50):
with the plan in advance of when we might start
to see some cognitive decline. Because the relationship can be built,
the rapport can be built, and it's a very smooth transition,
so no one's feelings are hurt, no one's caught off guard.
It's an important thing to talk about, you know, with
folks out there.
Speaker 1 (38:09):
It's a terrible feeling as an advisor to sit down
with someone right and sometimes we're you know, we're not
talking to all of our clients regularly, so sometimes it's
been a few months since we've been in front of someone.
And I had a situation earlier this year where someone
mentioned to me that they were hearing voices telling them
that something should be done with their money. And they're
(38:29):
in the office with me, by themselves, and I'm thinking,
oh my goodness, I wish one of their kids was
here too, so that we could bring them into this
conversation because it's a really delicate matter.
Speaker 2 (38:40):
As an advisor.
Speaker 3 (38:41):
Well, and when they're sitting in our office, everything's fine
because we're going to take good care of them and
be a fiduciary. But you know, we hear about identity theft,
we hear.
Speaker 1 (38:49):
About scams or someone acting on something that they're thinking
without running it by their advisors.
Speaker 3 (38:55):
That's what I'm alluding to here. I'm sitting there in
that meeting yesterday thinking I can only imagine what kind
of mail this person might be opening, or those texts
that are coming on their phone. I mean they are
open to you know, elder abuse. Yeah, if someone is
not involved and brought up to speed on this. So
I think it's an important planning point here, you know,
(39:16):
before you get to that point where health and memory
starts to decline, get your kids and get your power
of attorney involved in. It doesn't have to be every year,
but at least once a year, in with your parents
and in with your advisor, just to smooth out that transition,
protect yourself and make sure there aren't any problems down
(39:39):
the road.
Speaker 2 (39:40):
Thanks for listening. Tune in tomorrow.
Speaker 1 (39:41):
We're talking about the great piece of advice Warren Buffett
gave the world just last week.
Speaker 2 (39:46):
You might have missed it.
Speaker 1 (39:47):
You've been listening to Simply Money, presented by all Worth
Financial here on fifty five krs the talk station
Tonight. What did it mean when even the Federal Reserve,
our nation central banks, because they.
Speaker 2 (00:11):
Don't know where the economy is heading.
Speaker 1 (00:13):
You're listening to simple Wheney presented by all Worth Financial
Imami Wagner along with Bob Sponseller.
Speaker 2 (00:18):
You know what, I actually appreciate it.
Speaker 1 (00:21):
Whenever there's a person that you're dealing with or an
entity that you're dealing with, it is like we do
not have all the answers about what's going to happen
in the future. Right It's the people who pretend like
they know that make me nervous. And I think if
I were going to sum up what happened yesterday with
the Federal Reserve chair Jerome Palell kind of saying here's
(00:41):
where we think things are going in the future, it's.
Speaker 3 (00:44):
Kind of what he said, humility combined with transparency or
wonderful things. Amy, isn't that refreshing? RT combo So, I
think this was one of the most telegraphed fed announcements
we've had in months, and that's kind of usually the
way this works. I mean, things get out there in advance.
People pretty much know what's going to happen before it happens.
(01:04):
In terms of the actual announcement. But then what happens
after the announcement is where all the fun begins because people,
you know, institutional investors, individual investors, they literally in that
hour after the actual announcement, parse every syllable yep. A
lot of people day trade on that announcement if you
could believe that, because you can index, you could trade
(01:27):
index futures and ETFs now virtually twenty four to seven.
So there's a lot of things that go out on
right after that announcement based on well, what did he say?
What did he say? Because the market's always looking forward
to what's going to happen next.
Speaker 1 (01:41):
Yeah, So it's kind of like the actual decision, which
is where the impact comes, is like okay, yoahn, we
knew that was coming, and then everyone leans in on
every syllable of what Pal says. I mean really to
the point where I kind of joke about this, But
it's like, if he looks up into the left, what
does that mean?
Speaker 2 (01:59):
If he's wearing a purple tie, what does that mean?
Speaker 4 (02:01):
Right?
Speaker 1 (02:02):
But it's you know, what is he telling us about
what they are seeing in the data and what they
are discussing behind closed doors?
Speaker 3 (02:10):
Well, let's just throw out a few quotes here rather than,
you know, give our opinions and thoughts. Let's just repeat
what the man actually said, because I think it's very
consistent with what we've been saying, you know, you and
I amy in the last week or so heading into
the federal Fed announcement. So chair Pal said it's too
early to know, yeah, in terms of when they're going
(02:31):
to move rates. Another quote, I don't think we know,
you know, to your point here going into the trade
and tariff policy and everything else. And then another quote
from chair Pal quote, we think we can be patient.
We are going to be watching the data. Another one quote,
it's a fairly clear decision for us to wait and
(02:55):
see and watch. There you go. That's that's the whole
hour's worth of drama in a nutshell and about four sentences.
Speaker 1 (03:03):
But I appreciate that very much, you know, and I think,
you know, it's just kind of been reading through coverage
today all the stuff that's being said about what Pal
you know, said yesterday, and you know, a lot of
it is like, well, people are worried, people are worried,
people are anxious about what could happen with these tariffs,
and I'm like, that's fine. People can be worried, people
(03:25):
can have whatever emotion we want to have as investors,
But it is not the Fed's job to act on
our collective emotions. In fact, thank goodness, that is not
their job to act on our collective emotions.
Speaker 2 (03:39):
Their job is to look at the data.
Speaker 1 (03:41):
And essentially, also what Pale said is we are not
seeing any impact of tariffs yet in the data.
Speaker 3 (03:50):
Yeah, and we talked about this earlier this week when
we when our chief investment officer, Andy Stout was in here,
and we talked about, you know, really going under the
hood and look at those ten indicators of the what
we call our recession scorecard here at all Worth and
there's really no signs of anything you know, drastic going
(04:11):
on in the economy. The employment is fine, interest rates
are fine, inflation is under control, corporate earnings are pretty good.
Right now, we have not yet seen the potential impacts
of tariffs really take hold in the economy, you know,
as of now. So again to quote Chairman Pale, he said, quote,
(04:33):
usually things clarify and the appropriate direction becomes clear. And
then he ended by saying, the economy is doing fine.
I think that's a very responsible FED announcement, in total
agreement with it. Obviously, President Trump didn't like it. He
went out on truth Social right after that and talking
(04:53):
about pal is too late and he's an idiot or
what I'm paraphrasing. But then he said, other than that,
I really like it. I think he's just kind of
joking around. Yeah, he really wants him to move rates.
And I said this yesterday, I think on the show Amy.
I mean, the European Central Bank has already dropped rates
seven times this year. The Bank of England dropped interest
(05:17):
rates earlier this morning. So I think the President is
sitting out there and say, hey, I want lower rates too,
you know, do it, do it.
Speaker 2 (05:24):
Do it, give me, gimme, gimme.
Speaker 3 (05:25):
That's not how things work. And I think a lot
of that stuff is tongue in cheek. But again to
the main point here, I think our Federal Reserve chairman
is kind of stating the obvious and being patient, transparent, responsible,
Let's wait and see, let's let let's let the data
speak to us. And that's what they're doing right now.
Speaker 1 (05:45):
You're listening to simply money presented by all Worth Financial.
IMMI Wagner along with Bob Sponseller, as we continue to
digest what's coming out of the Federal Reserve, our nation
Central Bank, which was no movement on interest rates yesterday,
and also, hey, we're not seeing anything in the data yet,
which means that which tells us that we need to move.
Speaker 2 (06:06):
So we are going to be patient. And wait.
Speaker 1 (06:08):
I've said many times I would not want this job,
but I actually am thinking about it today.
Speaker 2 (06:13):
I would also be terrible.
Speaker 1 (06:15):
At this job because when I get any kind of information,
I immediately want to act on it. I am not
a let's get more information kind of I'm learning. I'm
getting there, but I historically have always been a little
bit impatient and one to.
Speaker 2 (06:32):
Act pretty quickly.
Speaker 1 (06:33):
Those are not great attributes for someone who's on the bed,
and I appreciate very much kind of where they've landed
with this. You know, there's people kind of starting to say, oh,
we could have empty shelves soon because of these tariffs, right.
Speaker 2 (06:47):
But we're not there.
Speaker 1 (06:48):
We don't know how this is going to bear out.
You and I were talking this week about the fact
that maybe we're starting.
Speaker 2 (06:56):
To see this anecdotally.
Speaker 3 (06:57):
Right.
Speaker 1 (06:58):
I sent you something that a friend of mine put
her daughter had ordered some kind of a bathing suit
out of Australia, but that bathing suit is manufactured in
Hong Kong, and so whatever the cost of the bathing
suit was, there was an additional like one hundred.
Speaker 2 (07:11):
And fifty dollars charge put on it because of tariffs.
Speaker 3 (07:16):
Right, which was two times the cost of the bathing suit.
Speaker 1 (07:19):
Right, yes, right, exactly. In extreme examples like that. Okay,
we are starting to see those, you said, maybe someone
you know is starting to see it in their job.
Speaker 3 (07:29):
One of our colleagues here in the office, Amy and
you know, just went to the dry cleaner. So this
is where we're starting to see what I'll call green
shoots of inflation, you know, related to tariffs. And I
think the President and his team are, which is why
you're starting to see these negotiations and hopefully deals ramp up.
A couple of quick examples. One of our colleagues in
(07:51):
the office went to the dry cleaners the other day
and asked for a few extra hangars, you know, just
the wire hangers. Yeah, there weren't any, and the dry
cleaner explained, hey, we have to reorder a bunch of those,
and they're being tariff surcharge right now because most of
those come from China. We've held off on buying more
right now, so you're seeing that it's just a little
(08:12):
dry cleaner here in Cincinnati. My own sister in law
works for a jewelry what i'll call wholesaler. They import
a ton of stuff overseas. They're starting to see those
shipping costs go up, you know, terraff related charges come up.
It's it's impacting the kind of stuff and the quantity
(08:34):
of stuff that they're deciding to bring into the United
States right now. So we are starting to see those
green shoots of tariff related inflation. Something to keep an
eye on. And I think that's what our FED chair
was basically saying yesterday. Let's let the data speak to us,
because trade deals could happen or they couldn't happen, and
(08:55):
if they don't happen, relatively soon, you're going to start
to see some of this stuff, you know, inflation related
to terariffs happen and that that impacts then.
Speaker 1 (09:05):
Yeah, and understand this, the FED is not going to
move on these anecdotal situations that we're starting to hear about.
That's not their job. Their job is to say, what
are we seeing in the data? Is this slowing the
economy down? Are we seeing companies purchasing less? Are we
seeing a shift in consumer sentiment? Are we seeing a
(09:25):
shift in consumer behavior? Keep in mind, the American economy
is made up by seventy eighty percent what you and
I are spending, right, you know, And if there's a
shift in that because of any.
Speaker 2 (09:37):
Of this, that will bear out in the data, and
at that.
Speaker 1 (09:40):
Point the Federal Reserve will decide, Okay, which direction do
we go with things?
Speaker 3 (09:44):
Now? Yeah, and we get a lot of revisions too
on employment numbers, GVP numbers, all that. So there's a
whole lot of data that we'll be coming in and
I'll call it the next three to five to six
weeks between the you know now in the next FED meeting,
I think something will probably happen in June, but it
(10:06):
will be data driven, not social media driven, and I
think that's what we all want.
Speaker 1 (10:13):
And I think as an investor, you have to understand
we probably will have some volatility while here. You know,
markets don't love uncertainty. We've said that many times here
on the show. And essentially what our Jerome Pal said
yesterday was we have no certainty right now.
Speaker 2 (10:28):
We don't know how this is all going to play out.
Speaker 1 (10:31):
So you know, as an investor, I think you can't think, Okay,
well the worst is over right.
Speaker 2 (10:36):
We wrote out that volatility for a few months.
Speaker 1 (10:38):
We did get lucky in twenty twenty when we saw
that volatility in the beginning of COVID. It could have
lasted a lot longer than it did, but for whatever reason,
markets just started to rebound a couple of months after
that started, and then went on a great tear after that.
Speaker 2 (10:51):
I don't know that that's where we are right now.
Speaker 3 (10:54):
Well, I think now it's different than COVID. And now
I'm going to share an opinion, you know, separating opinion
rather than facts. I mean, you can juice an economy
in the short term by printing money and sending out
stimulus checks. You can do that. You can run the
country on a proverbial credit card, and we did that,
and that's in part what caused inflation to go up
(11:17):
to nine point two percent. Fast forward to today, as
we talk about all the time, this tariff policy is
being imposed by one human being, the President of the
United States. He can put them on, he can take
them off. He can solve a lot of these problems
quickly by what decisions he makes on tariffs. So this
(11:38):
has little to do with fundamentals of the economy, and
I think that's the key point to drive home here,
and frankly, Amy, I think it's why most investors have
ridden this out stayed the course, because the economy is
not broken. It's fundamentally pretty sound right now if we
don't purposely break it.
Speaker 1 (11:58):
If we were seeing volatility be because there were cracks
in the actual armor, cracks in the foundation of how
our economy was being run, that would be one thing.
That's not what we're seeing this volatility coming from.
Speaker 3 (12:10):
Now.
Speaker 2 (12:10):
Here's the all Worth advice.
Speaker 1 (12:12):
Avoid emotional decisions during any turbulent period. Attempting to time
the market or shifting to cash can jeopardize your long
term financial goals. It's always important to keep that long
term plan front and center. Coming up next y, it
will soon become easier to invest in something only the
ultra wealthy could manage. Not too long ago, you're listening
(12:33):
to Simply Money presented by all Worth Financial here on
fifty five KRC the talk station.
Speaker 2 (12:43):
Well, I mean me Wagner, along with.
Speaker 1 (12:45):
Bob's sponseller, should more aggressive target date funds change where
you put your money in your portfolio.
Speaker 2 (12:52):
We're going to get into that stree ahead at six
forty three. Okay.
Speaker 1 (12:55):
For the longest time, your four oh one K options
included stocks bonds.
Speaker 2 (13:00):
Essentially, now that could look different. There could be any
version of exchange.
Speaker 1 (13:04):
Traded funds, mutual funds, baskets of stocks, whatever, baskets of bonds.
But essentially those were your choices. And interestingly, now as investors,
we may have more options.
Speaker 3 (13:16):
What we're talking about here, Amy is the rise of
private and private assets being included in a menu of
choices and four to one K plans. And the CEO
of t row Price came out after their earnings announcement
earlier this week, and by the way, trow Price overseas
one point six trillion dollars in assets. They're a leading
(13:37):
record keeper and provider of for to one K plans.
Most people have heard of them. Their CEO came out
and said, there's quote no question that's eventually going to
happen in terms of putting private equity and private debt
in four to one K plan options. And I think,
and we had a segment on this earlier in the
(13:58):
week about using these type of assets. Is just as
an individual investor in your portfolio. Different things to talk
about here on pros and cons. But I personally think
this is a good thing as long as folks know
what they're buying. And we'll get into that here for
a couple of minutes.
Speaker 1 (14:14):
I never think that more choices is a bad thing, right,
I mean, more choices is always going to work out
well for the investor. But you have to understand this
as an investor, it's on you to educate yourself on
what is truly a good fit for you. So, you know,
you start a new job in the next few months
and suddenly you see private equity as an option in there,
(14:34):
and you were at a red scheme and your buddy
was talking about investing in private equity, or you read
a headline about it, or it just sounds kind of
sexy as an investor or something new. Oh, I'm going
to put my you know, ninety percent of my four
oh one k in that. Nope, Nope, that's not the
way to approach this. The opportunity to invest in it.
I'm glad it's there. For the average investor. For many,
(14:57):
many years, it was right only the old, such a
high net worth that had access to this.
Speaker 2 (15:02):
And you know, many times to the years.
Speaker 1 (15:04):
You probably anecdotally kind of hear about a company and
be like, oh that's interesting, can I invest in? Oh no,
they're not actually publicly traded. This is your opportunity to
get in on companies that are not available in the
public marketplace. That's fantastic, But with that opportunity comes risks,
and you have to understand what they are and go
(15:26):
into this kind of investment with eyes wide open.
Speaker 3 (15:29):
There's a couple of reasons why these type of things
can now be included in four one K plans and
these are all for good reasons. Amy. When you're you know,
when you can buy in bulk so to speak, you
know the t row prices, the vanguards, the American funds
of the world, and our chief investment officer Andy Stout
talked about this on the segment you know we did
(15:49):
with him earlier in the week. The fees are coming down,
the lock up periods are coming down, the barriers to
entry are coming down to be able to allow you
regular old individual investors to be a part of this,
and I think that's a good thing. What we got
to watch out for are fees are higher, there are
(16:10):
lock up periods. The reasons people that get want to
get into these asset classes is they can tend to
be non correlated to just the good old stock and
bond market, which is a good thing.
Speaker 2 (16:23):
From a diversevlatility.
Speaker 3 (16:24):
Yeah, and for people that are willing to hold them
for a reasonable period of time, you can. We're not
guaranteeing you will, but you can have returns that are
higher than just traditional investments. A lot to learn here,
and I would say at the outset, like we talked
about all the time, this is not kind of a
do it yourself proposition. If your plan starts to offer
(16:48):
these types of private equity and private debt asset classes,
make sure you sit down with a fiduciary who can
walk you through the fees, the expenses, the lock up periods,
the vault f latility, the pros and cons of having this.
You know, to make sure you're you know what you're
buying before you get involved.
Speaker 1 (17:06):
I'm so glad you made that point, because if you
were with a fiduciary financial advisor, you know and their manager.
They obviously you know most of the time they cannot
manage your flour O one k, but they should be
looking at your investment options with you in talking you
through what's the best fit, because you can't kind of
look at your flour O one k separate from other investments.
(17:27):
If you do have other investments outside of that floural
one k, it should be kind of a comprehensive strategy
that you are applying. So you know, if you're starting
a job and you've got reams of paperwork that you've
got to fill out and you're just kind of breezing through,
or you're gonna, Okay, I'm gonna jump online and I'm
gonna figure this out when it comes to my flour
one k, this looks good.
Speaker 2 (17:46):
Oh, the returns on this last year were good.
Speaker 1 (17:48):
I know a lot of people who make those choices
because if based on and not a great way to
look at it, you're likely missing out. And this is
where hey partner with someone who you know as a fiduciary,
who you know you can trust, and don't make this
decision in a five seconds and move on.
Speaker 3 (18:07):
Yeah, And as somebody who has been an advisor to
several large four oh one K plans over the years.
I can almost predict what will happen with some participants.
Those that do not get properly educated and have somebody
walk them through this, they'll see the names on the
private equity find and say, Wow, I get to play
with the big boys. I can buy what all the
(18:28):
rich people buy. Count me in, and they're going to
pile in.
Speaker 2 (18:31):
I read somewhere that Tom Brady is investing in.
Speaker 3 (18:35):
Yeah, I'm gonna put eighty five percent of my money
in some private equity if it's.
Speaker 2 (18:39):
Good enough for Tom Brady's going to see me right.
Speaker 3 (18:41):
Yeah, that'll happen. And then the other thing that you've
already brought up always invariably happens. People look at the recent,
very recent short term return on anything and they over
allocate to that asset class or that investment because they
think that return is going to be exactly the same
or even better in the future.
Speaker 1 (19:00):
Yeah, Anita, you mentioned Hey, listen to the entry point
to these. It's becoming much more accessible.
Speaker 2 (19:05):
But also fees are still higher, and also there could
be liquidity issues with these. It may not be where
if you decide you're going to sell an ETF at
two o'clock on a Tuesday. You can do that.
Speaker 1 (19:17):
You may not have those kinds of options with these
kinds of assets, So this is a do a deep
dive before you jump into this and make sure that
you're working with someone if you have any questions and
don't fully comprehend this.
Speaker 2 (19:31):
Here's the all Worth Advice Private assets and a four
to one K.
Speaker 1 (19:35):
They can offer diversification and long term potential growth, but
understand this, they are not for everyone. Make sure you're
talking with a fiduciary advisor to understand whether they truly
make sense for you. Coming up next, a look how
real or how estate planning has changed over the decades
as we check in with our longtime expert. You're listening
to Simply Money presented by all Worth Financial here on
(19:55):
fifty five KRC, the talk station. You're listening to Simply
Money presented my all Worth Financial. I'm Amy Wagner along
with Bob Sponseller.
Speaker 2 (20:10):
They say all good.
Speaker 1 (20:12):
Things must come to an end, and I sure do
hate that line. I've been doing the show for about
a decade now, and someone who was on it before
I even sat in the studio for the first time
is our dear friend, Mark Reckman, our state planning expert
from the law firm of Wood and Lamping, who has decided,
(20:32):
after years of helping us all make smart decisions about
not only how to retire well, but also how to
plan for a state planning and our loved ones, well,
now it's your turn to retire and retire well. And Mark,
I just want to start by saying thank you for
everything that you've added our conversations. Our lives are better
(20:54):
because you've been in them.
Speaker 4 (20:57):
Well, thank you very much. And doing with you guys
that enriched my life. I feel like I've made some friends.
Speaker 1 (21:05):
Yeah, well you have, and I certainly count you among mine,
and I'm really grateful for that. Mike, you were saying
that you started as it started practicing law back in
nineteen seventy nine, so forty five, forty six years. You've
been doing this almost fifty years.
Speaker 2 (21:21):
Talk to us.
Speaker 1 (21:22):
About how estate planning has changed during that time and
maybe the most important things you think that people need
to know about it.
Speaker 4 (21:33):
I would say the most significant change in the state
planning in Ohio, Kentucky, Indiana has been the change in
the state tax laws. A state tax used to be
a threat or an enemy or I shouldn't say an enemy,
but it's something that we always dealt with. There were
federal estate taxes and there were state estate taxes, and
(21:55):
what has happened over the years is the federal government
has revised their tax so that the tax threshold has
gone higher and higher and higher. That threshold now only
affects It means that only about half a percent of
people actually worry about the federalist state tax. In Ohio,
(22:15):
the situation has gotten even simpler because, oh I guess
it's been over a decade now, Ohio repealed the Ohio
state tax, so we don't deal with it at all here.
So that's probably been the single biggest change in my career.
Speaker 1 (22:30):
And talk to us about you know, what you think
for anyone who has never done an estate plan or
sat down with someone like yourself, what's the benefit of
getting that taken care of. I know that's probably a
large question for you, but boil it down for us.
Speaker 4 (22:47):
You know, I think most people, most people leave their
money to family members, family members that they dearly love,
and getting this done provides it's a tremendous sense of
relief that you've done everything you could to be sure
that your assets good to the right people and that
(23:08):
they do so as efficiently as possible. For those who
do not have family, it means finding the right charity.
Often it means finding the right place to put your
money to good use. A tremendous amount of satisfaction having
done that. You know, it's it's it's in some respect,
it's sort of like medical care. It's it's not fun
(23:32):
to do, but well, you feel relieved when you go
in for that annual physical or you or you whatever
procedure you may need to correct your health problem. It's
a big, a big deal.
Speaker 3 (23:47):
Hey, Mark, I know you're not completely going away, You're
just cutting back a little bit. And I'm curious now
that you're going to have a little more free time
on your hands. What do you like to do in
your free time when you're not drafting complex generation skipping trust?
What are you going to do to go have a
little fun? Mark?
Speaker 4 (24:08):
You're going to be totally bored by this answer. But
the first thing I got to do is make some
contributions around this household that comes somewhere close to the
contributions my wife has been making for the last fifty years,
which means that means picking up a lot of the
domestic duties that I really should have been sharing more
of during my career years. But I also have got
(24:33):
some travel involved. My wife and I both enjoyed the outdoors,
in particular water. We're both very active scuba divers. In fact,
I leave Saturday for a place called Cayman Brack. And
if any of your listeners have ever heard of Cayman Brack,
they will be a very few among a very few people.
This is not Grand Cayman. It's a tiny little spit
(24:55):
of sand off the coast of Cuba any rate. And
I've done a lot of woodworking since I've retired, and
mostly I make things cutting boards and cheese slicers, work
benches for putting next to your back door, simple things
that bring me pleasure and create a lot of noise
(25:16):
and a lot of dust.
Speaker 1 (25:18):
You know, Mark, as I'm listening to you talk, I'm
thinking that sounds like a really full life in retirement.
And you know, we do talk about money a lot
on the show, but there's a huge kind of social
and emotional component to a jew. What are you going
to do at that time now that you're not, you know,
driving to wooden lamping every day, and in crafting trust
(25:39):
and estate plans for your clients.
Speaker 2 (25:42):
It sounds like you've got a pretty good plan in place.
Speaker 4 (25:46):
Well, the gift of time is a lot more complicated
than you may think. When you're working full time and
it never seem to have enough time. You think yourself, Oh,
but if only I had more time, I would do this, this,
and this, and when the time comes. They what they
have been telling me, and what counselors, retirement counselors have
been saying for decades. Plan ahead, don't go into this
(26:07):
thing without a very clear and specific and flexible game plan.
And I did that to some degree. And I am
generally a planner, maybe to an obsessive level, but I
did not really plan this in much detail, and as
a result, it has taken to some degree, has sort
(26:28):
of taken directions that I didn't expect, and I have
just tried to go with it, and that has worked
for me. I'm kind of a compulsive guy. Have followed
the rules, followed the routine, and done the same thing
over and over for decades, and I guess I'm experiencing
things a little differently and it's broadened my worldview.
Speaker 3 (26:49):
Mark.
Speaker 1 (26:49):
You know, we talk about different kinds of retirements and
also different kinds of retirement transitions. You know, some people
their their final day is certain Friday and then Monday
it starts, and some people kind of cut back responsibilities
and kind of ease into it. Talk to us about
what your retirement transition has looked like and your thoughts
(27:11):
on it.
Speaker 4 (27:13):
Well, it has not been that simple. You know, when
you are self employed and you run your own I mean,
I'm with a big firm, but it's still my practice
and my clientele, and I have developed relationships with people
over the years who don't have family or don't have
a supportive profile, and you I just can't walk away
(27:36):
from those folks. So, for example, this afternoon, I'm going
downtown to science some paperwork to go look at a
condo of one of my clients who died and asked
me if I would be the executor, So I'm going
down to do that. Yesterday I went looked at a
nursing home for a client who's got advanced Alzheimer's disease
and can't stay in her union anymore. So I still am.
(27:58):
I sat down the other day, and it comes out
to about fifteen to twenty hours a week. I'm sorry,
fifteen to twenty hours a month, which is not a lot.
It's like less than five hours a week that I
still doing that kind of thing.
Speaker 3 (28:15):
I don't.
Speaker 4 (28:16):
I feel like it's probably as much social work as
it is legal work. But it feels particularly important because
these folks are folks who don't have anybody else to
do it, and I know how to do it, and
I charged very very little folks, and I know that
their property and their affairs are going to be properly
(28:38):
managed and that nobody's going to take advantage of them.
Speaker 3 (28:42):
Mark.
Speaker 1 (28:43):
Of course that's what you're going to do. It doesn't
surprise me in any way, shape or form. Just thank
you again. We have used your handbook for years around here.
We have, you know, sent clients to you. You have
been good to eye, you have taught us, we have
learned from you, and I just want to say we
(29:04):
wish you all the very best in retirement. Thanks so
much to our good friend Mark Recman from the law
firm of Wood and Lamping. You're listening to simply Money
presented by all Worth Financial here on fifty five KRC,
the talk station you're listening to Simply Money, presented by
all Worth Financial. I mean you Wagner along with Bob Spondseller.
(29:26):
Do you have a financial question you need help with.
There's a red button you can click on while you're
listening to the show. It's right there on the iHeart
opp record your question. It's coming straight to us. We'll
help you figure it out.
Speaker 2 (29:36):
Okay.
Speaker 1 (29:36):
We talk often on the show about target date funds,
and the reason why is because we get a lot
of people in our office who have a significant portion
of their four oh one ks in target date funds.
And a target date fund is essentially, hey, you've got
this whole menu of options when you're looking at what
you can invest your four o one k in, and
there's options that say, hey, if you're going to retire
(29:58):
in twenty thirty five, put all your money in this
fun kind of thing. And so we have some mixed feelings,
I would say, about target date funds, but also some
new information about how they might be changing.
Speaker 3 (30:10):
Yeah. I don't think target date funds are necessarily good
or bad. You know, I'm pretty agnostic on them. I
think the point here is to make sure you understand
what you are owning and why. And I think to
your point, Amy, that depends on your own personal circumstances,
not what's some fund company or some employer thinks is
(30:31):
quote unquote best for you. You know, all these plans
and provide they're trying to help because a lot of
people aren't getting very good education. Some people think they're
smarter than they are and they make yeah, and they're
they're not very good at picking these funds for reasons
we talk about all the time. So these target date
funds can be a good one size fits all solution
(30:55):
to have a constantly rebalanced and managed portfolio. But I
think think we need to watch out for a couple
changes that have come down to the pike. Some recent
data from morning Stars saying the typical target date fund
for workers is starting to creep up in terms of
the percentage allocation to stocks. That could be a good
(31:16):
thing if that fits your risk profile. It could not
be such a good thing if you get into a
more aggressively positioned allocation and then gets surprised when the
market starts whipsawing around allah like what we saw in
April of this year.
Speaker 1 (31:32):
Yeah, In this research from morning Star says, listen, like
for the entry point right when most of us are
kind of just entering the workforce, if you were to
get into a target date fund at that point, on average,
you're going to have about ninety two percent of your
assets in the stock market. And that's up from eighty
five percent a decade ago. So we're trending in a
(31:52):
direction here. You know, I think my criticism of target
target date funds, and I've looked at lots of research
on this, is they're kind of sold as kind of
a one size fits all, right, if you're going to
retire in twenty thirty five, this is the asset allocation,
kind of stock to bond ratio that you should have.
But the problem is, if you were to stack up
ten different target date funds right managed by different companies,
(32:15):
different money managers, and looked at that asset allocation individually
and how they were diversified amongst them, you would have
vastly different scenarios. So here you have this thing saying
the proposition is, oh, if you're going to retire this year,
this is how you should be invested. Yet depending on
how it's managed, who it's managed by, what company, owns it.
Speaker 2 (32:37):
It's actually a vastly.
Speaker 1 (32:38):
Different investment, and I think it's important to understand that.
Speaker 3 (32:41):
And that's where the well intentioned, one size fits all,
simplistic approach to retirement can give people a different result
than perhaps they were looking for. So I think I
think it's important to get in there with a good
fiduciary advisor. I mean, if your company offers somebody that
does that for folks, great, I can tell you right now,
(33:02):
I'll venture to say ninety five plus percent of companies,
the person handling their four oh one k is does
not have the time, the expertise, or the patients to
sit down and actually walk every employee through how they
should be positioned based on their own personal financial plan.
And that's why you need to seek the advice of
(33:23):
a good advisor on your own, because, yeah, to your point,
these target date funds are all different and Amy, I've
had people sometimes come in and where we do the
risk assessment and we determined together what their proper allocation is.
Oftentimes the best solution for them was to use a
target date fund, but it might be a target date
(33:46):
fund with a different date than their retirement date. In
other words, we're customizing their overall risk profile, looking under
the hood to your point at the actual components that
make up that target date fund. And at least we've
customized things to their personal risk tolerance and their time horizon,
and that at least helps so people aren't surprised.
Speaker 1 (34:08):
It's an excellent point because you have to understand how
these target date funds work. There's what's called a glide
path in them, and that means, yes, you know, talking
about when you maybe first invest in one of these
ninety two percent in stocks if you are a younger investor,
but over time they get more and more conservative, which is,
you know, for many people what makes sense, but how
(34:31):
conservative you need to get is kind of different.
Speaker 2 (34:34):
For all of us.
Speaker 1 (34:35):
And so you know, if you're the target date fund
that you happen to be invested in is a lot
more conservative than actually your plan needs or your desire
as an investor.
Speaker 2 (34:45):
It's important to know that.
Speaker 1 (34:47):
And so I think kind of doing the additional due
diligence of a little bit of research here other than
retiring in twenty thirty five, So I'm going to take
the twenty thirty five target date fund.
Speaker 3 (34:56):
Well, Amy, and you alluded to this point earlier in
the segment. You know you also have to factor in
the investment assets that you own outside of your four
to one K plan, and that comes down to comprehensive
financial planning. So amy we have clients where they might
want to position their retirement or four to one K
accounts completely differently than their non taxable account and think
(35:20):
and raw iras and things outside.
Speaker 2 (35:22):
The retirement from strategy stamp.
Speaker 3 (35:24):
Yes, and there's good reasons for that. So yet another
point to just don't swallow the one size fits all
advice and hit you know, make the mouse click and
think you're done, Sit down with the fiduciary within the
context of a comprehensive financial plan, and make sure how
you're positioning your retirement plan assets really is designed to
(35:46):
work with your overall plan.
Speaker 2 (35:47):
Here's the all Worth advice.
Speaker 1 (35:49):
Target date funds can be a helpful set it and
forget it option, but the target date doesn't mean it's
tailored to your individual retirement needs.
Speaker 2 (35:58):
Coming up next, a trip into Bob's World of wealth.
Speaker 1 (36:01):
At what point do you need to bring others into
your financial conversation you're listening to simply money presented by
all Worth Financial here on fifty five KRC the talk station.
Speaker 2 (36:15):
You're listening to your Simply Money presented by all Worth Financial.
Speaker 1 (36:18):
I mean you Wagner along with Bob's wandteller. Time to
walk into Bob's world of wealth.
Speaker 2 (36:23):
What do you have for us?
Speaker 3 (36:24):
Well, Amy. As a result of a meeting I had
with a long term client yesterday, this is fresh in
my mind and it brings up an important topic that
I think you know others will benefit from, and that's
the topic of power of attorney. Financial power of attorney.
You know in this case, and here's what I mean.
You know, this client I'm talking about is now in
(36:45):
they're mid eighty seven years old, has three adult sons,
and we're starting to see some evidence of cognitive impairment
just regular role. I mean, people that are eighty seven
don't have the same kind of memory. Recall somebody forty
seven does. I think we all know that the key
is when do you start to involve your power of
(37:06):
attorney in these meetings and decisions? And I kind of
got to the point in the meeting yesterday where I'm like,
I'm starting to realize that the time has come, and
that's a very difficult decision to have. You never want
to look at somebody and say, I think you need
some help, But we have a fiduciary responsibility to say
nothing of a compliance responsibility to make that call. And
(37:30):
here's the advice. I think it's time. Once you have
that power of attorney in place, and you've got your
retirement plan put in place, it's a good time to
maybe bring that financial power of attorney into some of
your annual review meetings with your advisor, just so he
or she is up to speed on what's going on
(37:50):
with the plan in advance of when we might start
to see some cognitive decline. Because the relationship can be built,
the rapport can be built, and it's a very smooth transition,
so no one's feelings are hurt, no one's caught off guard.
It's an important thing to talk about, you know, with
folks out there.
Speaker 1 (38:09):
It's a terrible feeling as an advisor to sit down
with someone right and sometimes we're you know, we're not
talking to all of our clients regularly, so sometimes it's
been a few months since we've been in front of someone.
And I had a situation earlier this year where someone
mentioned to me that they were hearing voices telling them
that something should be done with their money. And they're
(38:29):
in the office with me, by themselves, and I'm thinking,
oh my goodness, I wish one of their kids was
here too, so that we could bring them into this
conversation because it's a really delicate matter.
Speaker 2 (38:40):
As an advisor.
Speaker 3 (38:41):
Well, and when they're sitting in our office, everything's fine
because we're going to take good care of them and
be a fiduciary. But you know, we hear about identity theft,
we hear.
Speaker 1 (38:49):
About scams or someone acting on something that they're thinking
without running it by their advisors.
Speaker 3 (38:55):
That's what I'm alluding to here. I'm sitting there in
that meeting yesterday thinking I can only imagine what kind
of mail this person might be opening, or those texts
that are coming on their phone. I mean they are
open to you know, elder abuse. Yeah, if someone is
not involved and brought up to speed on this. So
I think it's an important planning point here, you know,
(39:16):
before you get to that point where health and memory
starts to decline, get your kids and get your power
of attorney involved in. It doesn't have to be every year,
but at least once a year, in with your parents
and in with your advisor, just to smooth out that transition,
protect yourself and make sure there aren't any problems down
(39:39):
the road.
Speaker 2 (39:40):
Thanks for listening. Tune in tomorrow.
Speaker 1 (39:41):
We're talking about the great piece of advice Warren Buffett
gave the world just last week.
Speaker 2 (39:46):
You might have missed it.
Speaker 1 (39:47):
You've been listening to Simply Money, presented by all Worth
Financial here on fifty five krs the talk station
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