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Play along with this episode and see if you can answer some of these questions, if not it might be a red flag. Important Links Website: http://www.yourplanningpros.com Call: 844-707-7381 ----more---- Transcript Of Today's Show: Speaker 1: Hey, everybody. Welcome in to the podcast. Thanks for tuning in to Plan With the Tax Man with Tony Mauro and myself, talking investing, finance, and retirement. And this week, we're going to talk a little bit about red flags, how to spot some of those things in our finances, because Lord knows there's enough red flags going on around the rest of the world, but we're certainly going to talk about those a little bit from a financial standpoint. Tony, what's going on, buddy? How are you? Welcome in. Tony Mauro: Thank you. I'm hanging in and enjoying the last few days of summer here. Speaker 1: Yeah, the dog days of summer I suppose is what they call it, right? Tony Mauro: Yeah, it's coming. Speaker 1: Although it's super hot. I'm kind of looking forward to some cool down a little bit. I'm not going to lie. Tony Mauro: Yeah. Speaker 1: But it'll be here soon enough, I suppose. I believe this is our Labor Day podcast so this will be coming out right around Labor Day. So hope everybody has a great holiday and stay safe and all that good jazz and good stuff. And we're going to talk about these flags here a little bit. Speaker 1: So Tony, depending on your answers, the questions that we cover today on the show could raise a flag for folks, right? So if they're playing along with us, for example ... Not your answers, sorry, but the answers of someone listening. So if they're playing along with us here and they answer some of these or can't answer some of these, it might be a red flag. Tony Mauro: Correct. Speaker 1: So for now, I'll let you give us some reasons why it could be. Tony Mauro: Okay. Speaker 1: Should the average person be able to name all the investments in their portfolio? Yes or no? What do you think? Tony Mauro: I would say probably not, right off the top of my head. Now, there's different ways to look at it. Obviously, if you're in mutual funds and you have three or four mutual funds, hopefully you can remember and know what those are, but if you have say two stocks in your entire retirement portfolio, that's probably a red flag that you need more diversification. Speaker 1: Okay, you can remember them because you only have two, right? Okay. Tony Mauro: You only have two. Speaker 1: Yeah. Tony Mauro: And so that's probably something that unless you have some really good reasons for that, you should be talking with an advisor about that, because that could be a potential disaster in the making if those few companies happen to have some problems. Speaker 1: Yeah. Tony Mauro: And so I would definitely keep an eye on that, but yeah. I mean most people can't remember the names of the investments in their portfolio. A lot of times, they'll get anywhere from, I don't know, six to 20 or even the funds sometimes they can't remember. They go to their advisor and they talk about them, but then they kind of forget, but yeah, just be careful. Speaker 1: Yeah, and if you're really diversified, as we should be, you're probably going to have a lot of stuff and the whole point is to not know all of the investments, I would think anyway, because your advisor's taking care of that stuff, they're helping you. You want to know about the plan, you want to understand it, and sure you want a working knowledge, but if you happen to be invested in 100 different items, it's going to be very hard to obviously keep track of all of that. And that's the whole kind of point. Maybe you're spending too much time thinking about this versus letting the advisor do their job. And in that case, are you really getting the value that you're after? Tony Mauro: Exactly. Speaker 1: So a couple of ways to look at it, whether it's too little or too much. Okay. How often do you meet with your financial advisor? I think most people on average would say once a year, and that's kind of the norm, I talk to advisors all across the country. Is that a good norm or is it truly a case-by-case, person-by-person scenario? Tony Mauro: I think it's a case-by-case scenario. I would say at minimum, you should be doing a once a year. If you're not doing that, again, red flag, maybe not on your part or the advisor's, but if you're not getting that one meeting a year, even if it's a Zoom call, then you've got to ask yourself, "Okay, what am I really paying for," number one. And then you have no idea really, unless you're, again, following the stuff of where you're at, but ... When I say case-by-case basis, I mean a lot of our clients, we're quarterly. It just kind of depends on what they want a little bit, sometimes quarterly is too much for a lot of people. Other times, if you've got a smaller IRA let's say, there's really not a whole lot to discuss, and then we go semi-annual because we like to update the plan. We don't spend the time talking about individual investments as much as, are we on track with our plan and meeting the goals that we set up when we did the plan? Speaker 1: Right, and checking in, I think on the annual basis for most people is probably good, but you should also be taking the thing on yourself to say, "Something's happened. Something's changed. Let me reach out to my advisor, let me reach out to Tony and say, 'Hey, this thing is coming up or something's happened in our life,'" and I think that's really where a good value to be found working with an advisor is because you can call up and say, and you should call up and say, "Hey, something major's happened or something's about to happen," whatever. Something as simple as your kid's going to get married and they've upped the timetable and you're trying to pay for part of that, you want to figure out the best ways to access that money or whatever. Tony Mauro: Exactly, and in fact, right before this call, I was just on a call with a client and they were asking me about, they were thinking about buying a house in North Carolina. So even though it's not directly related to their finances, it is in a way of they're going to be spending some money, they wanted to know if they should pay cash or finance part of it and how long they should go. So just some general stuff they want to bounce off of me, which you should be doing with your advisor. Speaker 1: Yeah, and you can't get that from a robo-advisor. Tony Mauro: No. Speaker 1: A relationship goes a long way into that. So that's another red flag. Account balances. Tony, there's always conversations about moving up, moving down, is it a red flag? Isn't it? I would've said maybe 30 years ago, 35 years ago, it might've been a bigger red flag, but with all the volatility, balances are certainly going to hop up and down. I guess maybe the question is, how much and how much can you handle? Tony Mauro: Exactly. That's what I would ask people because unless you're in something say like money markets, CDs, things like that, where they aren't going to bounce around, you're going to have that and unlike 30 years ago, a lot of people are starting to understand that and they see that some. But again, it comes down to how much at once, and then, what's your timeframe, what's your goals, and are you comfortable with that? Because if you're not, then it's a red flag because you shouldn't be where you're at then. If it's keeping you up at night, that's something you need to talk to somebody about. Speaker 1: Well, I was looking at a chart of the SMP from 1950 I think until 2016, I think it was, and if you looked at it, from the fifties through the sixties — now, if you really zoomed way in, of course you could you could see some ups and downs, some bigger volatilities — but pulled back, it was a very, very low and slow curve all the way up into really until almost the two thousands. Even through the eighties and stuff, it was a fairly steady rising curve. When you get to about 2000 and on, I mean, that thing looks like a heart monitor. It's just, "Beep, beep, beep." It's just pinging all over the place. And I think that's part of the internet and the advent of all the ways to watch this stuff and all the different trading ways. So it's certainly changed a lot in the last 20, 25, 30 years. So again, if your account balances are constantly moving, that's normal nowadays, however, you've got to really determine how much you can handle and that really comes back to that volatility risk conversation with your advisor. Speaker 1: So red flag number four, how much income will you need to maintain your lifestyle in retirement? Can you answer that question? So my question, Tony, to you is, should somebody be able to answer that? If they don't know how much income they're going to need to maintain their lifestyle in retirement, is that a red flag? Tony Mauro: I think it's a red flag. For sure. You may not have it down to the exact penny, but you should know, if you're doing any planning, either on your own or with an advisor for sure, what that general ballpark number is supposed to look like based on conversations. Speaker 1: Like three grand, let's say, or five grand, or whatever. Yeah. Tony Mauro: Something like that. If you say, "Well, I have no idea. I just hope I have enough." That's a real red flag. We don't want people to be in that position. So I think the gist of this is you need to talk to your advisor about that and come up with some things, because it's one thing to have an advisor help you if you're just aimlessly plodding along and you really don't have any end goal or goals in mind, that's part of the problem. You got to have this number in mind to make sure that you understand what are the odds of you getting there. So I think that's a huge question. Speaker 1: As you're playing along with us folks and listening to this, can you answer some of these? Yes or no. It doesn't necessarily mean you're in a bad spot, but it certainly means it could be a potential red flag for you to go ahead and get this information or get some better education I suppose, if you will, about the plan you have or the lack thereof. You could not have one at all, and that's why you need to do it, so you can figure these things out. Speaker 1: All right, so let's do one more here. We'll make this one a short and sweet one this week. If somebody asked you to describe your retirement plan, could you do it? How many people do you think, Tony, could say yeah? Tony Mauro: I would say not many. Speaker 1: Yeah? Tony Mauro: Yeah, I really would. At least with clientele, if you just asked them, [ran them 00:09:22] through here, retail tax clients, I don't think they have a retirement plan. Their plan consists of, "Well, I'm going to quit my job and take social security." I mean, that's the plan, but when you ask a little more deeper type of questions as well, how much do you want to have? What do you plan on doing? Do you plan on leaving anything? They've never thought of any of that. Speaker 1: So they don't have a real strategy, they just have this general- Tony Mauro: Just kind of a general rule, I know I'm not working. Speaker 1: ... Guideline. Yeah. I'm not working, there you go. Tony Mauro: So we try to get them to think about that and what that's going to look like, into the details. First we started with, do you have enough? But then, really it goes beyond that, what do you want to do? Do you want to work? Do you want to travel? Do you want to help kids and grandkids? Things like that so they really have a detailed roadmap, if you will. It's constantly changing as they get closer, but at least they've got something to go on. Speaker 1: No, and I think that's the point. You've got to have an outline, right? And that's really kind of what a plan is. You could call it a plan or a strategy, or whatever term makes you feel good, or if you feel like, "I don't want to have to go get a retirement plan," well get a strategy, get something in place so that you've got at least a bit of a roadmap so that you're just not throwing darts at this thing. You don't want to guess in a retirement. We can guess at a lot of things in life, I don't think I feel good about guessing in retirement. Tony Mauro: No, not for that area. No. Speaker 1: Too many variables. Tony Mauro: I would agree. Speaker 1: Yeah, definitely too many variables. Speaker 1: All right, folks, so how did you do? Do you have any answers to some of these questions? If you do, that's great, then you're probably onto the right path, you might already be working with, Tony, and you can like, "Yeah, I got all these answers because I've already got a good strategy in place," but if you're not, or you feel like there's some areas you need to shore up and you have some areas that popping up here and maybe give you a red flag, then as always, make sure you reach out and talk with a qualified professional, talk with your advisor. If you're not working with one, reach out to Tony and his team and say, "Hey," and they'll certainly talk with you and see if they can help you out with things that are going on in your mind and you can do so by going to YourPlanningPros.com, that's YourPlanningPros.com. Speaker 1: And while you're there on the website, you can check out a lot of good tools, tips, and resources, subscribe to the podcast on whatever platform you like to use. Tony is a EA and a CFP, and he's been doing this for 20 plus years, so he's a great resource for you to tap into here in the central Iowa area. So 844-707-7381 is the number and YourPlanningPros.com is the website. Speaker 1: All right, my friend, I'm going to let you get up out of here. I know that you've got a trip up pretty soon, so I hope you have a great time and a great holiday week. Tony Mauro: Thank you. You guys do the same out there, yes. Hope everybody stays safe and gets outside a little bit. Speaker 1: We're going to try. So everybody have a great Labor Day. If you're catching this probably right before or right after Labor Day, then have yourself a good time and a safe time, and we'll see you next time, here on Plan With The Tax Man. Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency.