Ken Moraif

So are you retired or retiring soon? Well, if that’s the case, you may be looking for a retirement planner or a financial advisor. And so we want to go over with you the five red flags that you should look for five. Wait, that’s 10, five red flags that you need to look out for. Most podcasts would maybe give you three, maybe four. If you’re lucky, we’re going to give you all five, and you don’t want to mess up with any of them, so stay tuned. Retirement planners of America, rpoa.com Hello. I’m Ken Moray. I’m the founder and CEO of retirement planners of America, and welcome to Our Podcast. Our firm serves over 6500 beautiful, wonderful families across the country, and our goal for them and for you is to have you enjoy your retirement, which we call your second childhood, without parental supervision. So subscribe to our podcast. Get all of our wonderful, delicious content by clicking on the subscribe button below. Okay, so we’re, we’re gonna get going on our podcast. This episode is about, you know, the five things that you should look out for, red flags that you should look out for when you’re gonna choose a financial advisor. But you know, before we do that, there’s been a lot of controversy that I want to share with our audience, and that is number one, they said that I shouldn’t wear my Apple watch anymore, right? And, and the reason why I shouldn’t wear my Apple Watch is because, apparently it looks too sporty

Jeremy Thornton

and dad like Right? Because those two are synonymous? No, they’re not.

Ken Moraif

No, no. Sporty and dadly. Dadly implies, you know, like couch potato and all of that. This is sporty. Why do I have to I like my Apple Watch. The other thing they said is that, you know, if the Apple Watch says what time it is and what day it is, so we don’t want anybody to know when we’re actually recording this, is live, folks, yeah, it’s always live. So okay, so that’s, so that’s and since this is, you know, we’re kind of new into the podcast thing, we’re just getting going. And so, you know, it’s like my whole so now the next thing, and, folks, I would like your comments. Okay, I need help here, because I completely disagree with that. Okay, now the next thing is, they have a problem with my button down shirts. Okay. Now I’ve been wearing button down shirts for 30 years, and there’s they’re saying button down shirts are square. I get. Is that even a term anymore? Square? No. Uncool is that? Yeah. Okay, so button down shirt is not podcast worthy. How about that? Yeah, so I need to get, like, design, like a designer shirt. Yeah, this shirt cost me $49 those designer shirts are, what, 200 I can get five shirts for one of them. Okay, so then the other thing is, they don’t like my jacket. They don’t like, you guys don’t like my jacket. It’s boxy. Seriously, boxy. Is that what it

Jeremy Thornton

well, it’s a fashion thing. I believe when approximately, what year did you buy that particular jacket?

Ken Moraif

Okay, well, we’re gonna change the subject here, and we’re gonna go to you now, because Jeremy is is normally what you go by, but I, but I was told that your nickname is jer bear. Yeah, that is so jerbear. It is from now on. So if you’re gonna, if you’re gonna attack my watch and my shirt, my coat, you know next thing, and whatever. Okay, it’s jerbear. So you’re Jeromy. That’s fair, I guess. Okay, all right, so I would like to know, because I completely disagree. I think the watch is fine. I think the jacket’s fine, and the button down shirts are fine. I don’t want to have to change my whole wardrobe to do a podcast. By the way, people listen to podcasts, correct? Although maybe some people are watching this on YouTube. Okay, that’s true, too. All right, so let’s get into our content, since that’s what people are breathlessly waiting to find out, is, what are the five flags you know that people should look for? So the first one is, you want to know how somebody gets paid, right, right? Because the way that they get you know, there’s an old expression people always do what they get paid to do. So if they’re not doing what you want them to do, check how they’re being paid right, because they’re doing what they’re being paid to do. So if somebody gets paid a commission to sell a product, right, then the question you would ask is, where is their allegiance? Right? Is it to you, or is it to who is paying them the commission? Right? I would say that most people have integrity. Most people want to do the right thing for the customer, for the client, but they got to pay their bills too, absolutely. So there’s a built in conflict of interest there, and that that put. Potentially could be a problem. So generally speaking, I would say that that you want to ask somebody, you know, how do you get paid? And my preference would be that the person got paid by me, right, rather than by a commission. So how do they get paid by me? Well, that is if they pay you for a fee, right? And so that’s the first thing that I would look at,

Jeremy Thornton

yeah. And is it a common deal for a financial advisor to be paid off of commissions?

Ken Moraif

Well, there there are fiduciaries, and there are commission based and then there are hybrids. Okay? So you could have a situation where somebody does both, oh, okay, so they may have some products that they get paid a commission on, and they may have some products, and then they may give advice. The thing that I would, I would steer away from, is somebody that is 100% commission based right, because then their allegiance is to the insurance company or the mutual fund. Whoever it is that’s paying them their commission, they want to push

Speaker 1

product right. You mentioned a fiduciary. What is that? Well,

Ken Moraif

essentially, a fiduciary is somebody who their advice is for your best interest, you know, as opposed to their own, they’re basically selfless. They’re giving the advice based on what they perceive to be their income. You know, their personal financial situation is not involved in that conversation in their head, right? They’re entirely wanting to make decisions. Give you advice that’s best for you, gotcha, and that’s what you want. Now, you know, in our business, for example, we also, you know, have an insurance arm, and so if somebody buys insurance based on that, unfortunately, there aren’t any at this time, fiduciary insurance products, yeah, you know, pretty much they all pay commissions. So even though I don’t want to get a commission if a client, if we suggest to them that they should get insurance, I don’t want that commission, because I don’t like that conflict of interest, right? But unfortunately, those products don’t exist yet. I’d like to create them, you know, a fiduciary insurance product. How about that? That would be interesting. Wouldn’t it be cool? Yeah, so. But right now we have to So, but we fully make sure if somebody is going to do something, ask them how they get paid, have them fully disclose to you, if I buy this insurance product, if I take your advice, you know, whatever it is, Do you get any commission? Do you get paid to do that? Okay? And if there’s an incentive for do that, it doesn’t mean that they’re a bad person. Sure, or that it’s wrong, sure, you just need to know which side of the toast their butter is on.

Jeremy Thornton

Yeah, absolutely. It could skew their opinions or their advice just a little bit, even if it’s subconsciously That’s correct, yeah, yeah, that that makes a lot of sense. So if someone is partially a fiduciary. You said that some people are fiduciaries, but they have commissioned products. Are they able to claim that they are a fiduciary?

Ken Moraif

Yes and no. I mean, yes, they can be a fiduciary on the advice side, but they have to fully disclose properly what is on the commission based, or the non fiduciary side, gotcha. And you know, there’s no shame in being paid for what you do. No Right, right? And there’s no shame in getting a commission. In fact. You know, sales people make the world go around, in my view. And so there’s nothing wrong with that. Inherently. It’s just you need to be aware of it. And if you have a choice between somebody that’s purely commission based and somebody that is purely fiduciary, I would say you go with the fiduciary or, you know, maybe a hybrid version,

Jeremy Thornton

yeah, yeah. That makes, that makes a lot of sense. Money makes the world go around. Everybody has bills to pay. So true.

Ken Moraif

So next we’re going to talk about credentials, right? And licensing, yeah, yeah. So that one’s really important, you know, just like, if you’re, if you’re going in for for surgery, right? And, you know, I’m a tennis player, I’ve had two elbow surgeries, and so because of that, you know, I want to go to somebody who is an elbow surgeon, right? And so I want to know that they have credentials in the world of elbow surgery. You know that they actually have gone to school they learn how to do it. They have experience in that. And so, you know, credentials and licensing when you’re choosing a financial advisor, I think is really, really important. And you know, in our firm, we require every single one of our advisors. We call them retirement planners, okay, as opposed to financial advisors, because, you know, we specialize in retirement planning. So our people are retirement planners. And in our case, we require all of them to have a designation called CRPC, which is a chartered a retirement planning consultant. It’s a specialized credential, and what it means is that they have had training. They’ve been chartered in the area of retirement planning specifically. And so, you know, it’s if, if somebody’s looking for retirement planning, it seems to me that they’d want to talk to. To a retirement planner, not a general practitioner. Just like if I’m getting elbow surgery, I don’t want to go to like a, you know, a dermatologist or a general practitioner. I want to go to somebody that does elbow surgery and has training and credentialed in that area.

Jeremy Thornton

So with retirements, there are a lot of different facets to what that is. So how do you kind of tackle taxes, estate planning, things of that nature?

Ken Moraif

Yeah, that’s the other thing. Someone who specializes in retirement planning also needs to kind of have a lens that they look at the world through, okay? And the lens isn’t through. I want to build your retirement plan. You know, 2030, years from now, when you’re going to retire. It’s not that lens anymore. Now it’s the lens of, how do you minimize your income taxes when you’re going to be getting Social Security? How do you minimize your income taxes when you’re going to be required to take minimum distributions from your IRAs, yeah. How do you minimize your taxes if you’re going to roll over your 401 K, how do you minimize your taxes when you’re getting income from your investments and you’ve got a 401 K, you’ve got IRAs, you’ve got non IRAs, you got insurance, you got all these different places. What

Speaker 1

that is so much? Why am I paying all these taxes?

Ken Moraif

Well, there’s one, there’s two things that are sure in life, right? You know what? They are, right, death and taxes, right? That one’s not for this show. I don’t know. You know why we have to pay taxes, but I think we do. But so, so, you know, yes, taxes, insurance, estate planning, you know, passing it on to your greedy, unwashed, undeserving airs after you go. All of those things are important throughout your lifetime, but when you are nearing retirement, or once you are in your retirement, the rules around those things are generally different, okay, so talking to somebody about your income taxes that doesn’t understand the nuances of you know when and how you take Social Security benefits and your required distributions and all the things I just mentioned, that person is going to give you an incomplete picture, because they don’t understand those nuances, right? So it’s also so specializing in the needs of what you want is a very important part of retirement planning and also the credentialing to show that they, in fact, can do those things right.

Jeremy Thornton

And I’m guessing that is something not everyone can do, obviously. How do you kind of broach that when you’re generally looking because you know, when you go on to Google or anything like this, and you’re just looking for our financial advisor. Let’s say you look up a retirement planner, or investments for retirement, something like that. How do you really tell on paper or at a glance, if that is something that they can do for you? I

Ken Moraif

guess that’s a good question, because I would say that just about every firm would love to work with somebody who’s retired or retiring soon. But many of them would also like to work with anybody who can fog a glass and has enough money you know to fit their their criteria. So they may be working with a 30 year old or a 20 year old or a 90 year old across the spectrum. They want everybody, you know, they’re not focusing in on one specific demographic. We do, you know. And so I would be a question, yeah, it’s just a straight up question, yeah, do you only work with people who are retiring or who are retired, you know, who are retired or retiring soon, gotcha. And if the answer is, well, you know, we work with 40 year olds and 30 year olds, and we work with this and we work with that. Well, then you’re not a you’re not specialized, you’re a generalist. Yeah, you know. And again, there’s nothing wrong with that necessarily. You know, general practitioners serve. You know, they’re good doctors. Nothing wrong with them. But again, if you want elbow surgery, you’re not going to general practitioner. You’re going to an elbow surgeon. If you want retirement planning, in my view, you go to somebody that specializes in retirement planning. Gotcha. Seems pretty logical to me.

Jeremy Thornton

Yeah, yeah. Ask questions, essentially, essentially. A lot of this is just ask questions.

Ken Moraif

It is. But again, it’s knowing how to filter out, you know, who doesn’t fit what you want, right, right, what your needs are at the time. So if you are, you know. And we consider the five years before you retire and the five years after you retire, that decade to be the single most important decade of your entire financial life. Because if you’ve been building and you’ve been saving and you’ve been all, you know, you’re putting money in your 401, K, you’ve been very disciplined, you’ve built up the money the nest egg is, you know, I don’t even like nest egg, for some reason. I don’t like that, but the nest egg that you’ve built up, you know that now you’re going to retire on Well, if now the rules have changed in terms of how you’re going to address that right during that decade, it’s not the same. You know? I would say that before you get into that decade. If this was a football team and you were a coach, you’re the opposite. Defensive coordinator, right? All those years you’re on offense, you’re, you know, you’re, that’s your that’s your thing. Once you get into that decade, now you become the defensive coordinator. Oh, yeah, you know now you’re, you have to protect what you’ve built right, from taxes, from inflation, from bear markets. You know, from yourself you spend, you know, how much, how much should you be spending all those kind of questions. It’s very different than what it took to get you there, yeah. And so this is an area that probably you have no experience with. Yeah, most of the people that we talked to have never retired before. This is, like, the first time. Funny how that works, yeah? Although we have people that retire multiple times, they’re like, serial retires. They go back to work and then they retire again. But you know now that you get into this area that you’re completely not familiar with because you’ve never done it before, right? The importance of hiring the right person who understands what you’re going through and has done it multiple times, and that’s what they do is, in my view, is an important criteria to look at,

Jeremy Thornton

yeah, because you could definitely be confident, essentially, in the first 50 years of your life with you know, as you become more and more confident, like this is how you invest this is how I save my money. This is how I do all kind of stuff. And then it is a total kind of paradigm shift on what you’re doing. So all that knowledge you have is good, but it may not be entirely relevant for the next 30 years of your life.

Ken Moraif

That’s correct. And not only that, but there’s new things. For example, you know, social security, yeah, the the Social Security itself says there’s over 9000 combinations of how and when to take Social Security. Good thing to make it simple, yeah. In fact, you know, you know, I joke about that, right? Social Security, if there was, if there was an Olympics of complexity, Social Security would win the gold medal every single time. They’re incredibly good at that. But so you’ve got Social Security? Well, Social Security is very complex, right? And if you don’t do it properly, you literally could leave, you know, 10s, if not hundreds of 1000s of dollars on the table over your lifetime if you do it the wrong way. And if there’s 9000 combinations of how to do it, I don’t know how a lay person knows to do that, right? You know? So I would seek out a professional and all of our retirement planners. We put them through rigorous training, and we certify them once a year to make sure to the best we can, that they’re up to speed on all the new laws and the changes. Because there’s lots, it changes a lot. Yeah, and so being on top of that, and being functionally able to give advice on that, can’t be a part time job, in my view. So if you’re talking to somebody that’s a generalist, right? Can they take the time to understand, you know, social security, right? The way, if they’re going to give you the advice on that that they should, you know, I think it’d be difficult, yeah,

Jeremy Thornton

yeah, you got to ask them, Hey, how do you stay up to date on the changes in social care? I think, I think that’s a pretty good barometer for, really, not, not for everything, but to see if they are proactive in learning what has been changed? So if you’re talking to a financial advisor of some kind and you’re considering them, ask them. Ask them that question. Ask them, do you or how do you stay up to date with Social Security? Because to your point, it changes every year, and a lot of the changes make a big difference,

Ken Moraif

huge, you know. And in fact, depending on how you know, things go politically. They can change, yeah, you know, our deficits and what? When the government needs more money, that may cause them to change. So there’s lots of things that affect it, and staying up to speed on that is really important. So, yeah. So I guess you can boil it all down to, you know, do they specialize in what you are interested in doing?

Jeremy Thornton

Yeah, and I think one of the other things that we should definitely talk about is asking that potential advisor, what you know your goals are. I know what my goals are for my financial and if you’re retired, you know what your goals are, asking that advisor what their goals are with your money? Oh, yes. Like, what? What is your ideals? What is your philosophy?

Ken Moraif

Yes, yeah, philosophically, it’s very important that you align with the advisor that you’re going to work with. You know, what we tell our what we tell our clients is we want to be the last, you know, retirement planner you ever work with. So this is a lifetime commitment. We’re going to be together, you know, hopefully for 2030, years. And so if that’s the case, it’s like a marriage. You know, if you’re going to get married, you have to align philosophically with your spouse, because otherwise you’re gonna be fighting all the time if you don’t align philosophically, right? And so you know, again, when it comes to retirement planning, our view is that your investment philosophy is going to be far different than if you’re in growth mode, right? So for. One of our philosophies is that growth is important, but protection of principle is even more important. Okay, why? Well, because if you’re going to retire, then you’re not contributing anymore to your retirement monies, right? So now you’re going to be taking income from it. So this is like a it’s like a producer of income, yes. So you want to protect that, right? If you lose that, then you got to go back to work. Yeah, so protecting that is now more important than growing it, even though growing is very important and you want to grow it. So don’t misunderstand. I’m not saying we don’t want to grow what I’m saying is that growth is important, but protection of principle is even more important, right? That’s if I was working with 40 year olds and I said that to them, I would expect that 40 year old to walk out the room. Yes, no, I want to grow, right? I gotta. I want to grow my money as fast as I can so I can retire and, you know, build it all. I’m willing to take more risk, etc. But if you’re within that decade I was just talking about now, growth is still important, right? But protection of principles even more important. So if that, if you adopt that philosophy, now, what does that do to you? Well, you start thinking about, okay, how do I do that, right, right? How do I protect my client? How do I protect their principal? Well, now you start talking about maybe being a little bit more conservative in how you allocate your investments. Maybe you’re now going to have a strategy to address, you know, big, bad bear markets. You want to look at, you know, reducing income taxes from income and so there’s a whole bunch of things that happen now when you start thinking about protection of principle being more important than growth. Yeah, I would say that if you’re 2030, barely, if you’re 50, I think once you get into your 50s, you need to start transitioning away from it. But during those periods, I would say the opposite would be true. Yeah, you know, protection of principle is is important, but, but growth is even more important, absolutely, once you get into that decade, I think you need to start thinking in the way of protecting what you’ve got, you know? And the other thing we always say is, we’re not here to make you rich quick, we’re here to keep you from becoming poor, yeah, okay, right? And so that’s a huge if you absorb that thought, right? We’re not here to make you rich quick, we’re here to keep you from becoming poor. So we want your money to last as long as you do. How are we going to do that? We have to protect your principal. We have to make sure you’re getting the right you’re spending the right amount. So there’s a lot that goes into the philosophy of how we’re going to manage your money and how we’re going to work together. And if somebody’s philosophy is we want to grow your money and get the highest return and beat the market right which there’s nothing wrong with that. A lot of people that that’s their sales pitch. You know, if you invest with us, we’ll do better than the market. Well, if that’s the case, I would say, if you’re within that decade, maybe they’re not the right person for you, because to beat the market most of the time, you got to take more risk, right? And right now risk is your enemy,

Jeremy Thornton

yeah, and that’s, that’s a big philosophy change, if, especially, you know, from 20 to 50, you’ve been in growth mode. And I think that that’s a that philosophy change you have to be cognizant of that. You really have to think about that. And so one thing I think that’s our listeners and viewers should take into consideration, is, are you making that change? Are you? Because if you’re confident in your ability to I’ve grown all this money, I’ve done all this kind of stuff, how do you have that conversation? And hey, maybe we don’t concentrate as much on growth. We we concentrate on protecting your your your safe haven, essentially, your retirement. What questions should people ask themselves

Ken Moraif

to make that transition? Yeah, well, you know, it is, it is a paradigm shift, you know, because throughout your lifetime, you know, you’ve been putting money in all the time, right, hopefully, right? Hopefully people have been doing that. I’ve been trying to their 401, k’s and, you know, all those kind of things. And they’re, they’re in growth mode, and so, and the other thing also is that it in terms of paradigm shift, it’s, you’re going to go from, you know, this money is sacrosanct. I am not allowed to ever touch this money because it’s for my retirement. So you’ve spent your entire, you know, investing and saving career, putting money in, and you’re never allowed to touch this. Yeah? Now you’re going to retire, and now you got to spend it. Not only you got to touch it, you’re going to spend it. Yeah? Eek, so, yeah, it’s a scary time. In fact, you know, I think it was Money Magazine, or maybe it was AARP, I forget, but they did a survey of, you know, what are the scariest, you know, most distressing, anxiety producing moments. You know, emotionally distressing moments in people’s lives, right? And of course, you know, death of a loved one and divorce were number one and two. But you what? You know what number. Three was, what retirement really retirement. So you work your whole life, you know, you build, you save, you do all this stuff so you can retire, right? And then when you’re faced with retirement, you’re like, oh my gosh, do I really want to do this? Yeah, you know, oh my you know, people’s entire, their self image, you know, is at work. Their their social structure is at work. You know, everything’s there, and now they got to change all of that. And this a huge paradigm shift financially, you know, you have to come to grips with that. And, and, you know, it’s, it’s super important, in our view, that you understand it for, I think the first step in making that change is understanding why you need to do it. Yes, you know. And like I said, there’s a thing called sequential risk, and we’ll get into this in other podcasts, in more detail, right? But sequential risk talks about, you know, when you take losses and when are those losses most impactful? Yeah, and early in your retirement, in that in that decade I’m talking about, is the worst possible time to take losses. So again, philosophically, you should for your own if you want your money to last as long as you do, you should, in our view, change your philosophy from I want to pin my ears back and grow my money as much as possible to growth is important, but protection of principle is more important, right? And I need to have a plan to protect my principal, yeah, yeah. And I need to have a plan to get income from it, absolutely. And this is all very different from what you’ve done throughout your the rest of your life. So philosophically, you know, you need to align with a person that is more conservative, that is, you know, looking at protecting principle, that is looking at all the things that are kind of not as sexy and not as exciting, right? You know, but sometimes boring is good,

Jeremy Thornton

yeah. And I think that’s, I think, for people that have money with an advisor right now, I think that’s a good question to ask them, as you kind of approach that milestone of shifting towards retirement, even if you’ve been happy with who you have asking them, Hey, what are we going to do when I’m in retirement? What are we doing to shift there? And so,

Ken Moraif

you know, that’s, that’s a really good point. You know, a lot of times we have people who come to us because they’ve actually understood that life has changed, right? And so it’s like, you know, changing your doctor. So you had a doctor for something, but now you have something else. And so you’re changing the doctor because this doctor addresses the new, the something else. And so there are a lot of people that we talk with who realize that, you know, I’m now going into a different phase of my life, absolutely. And so I’m now going into the retirement phase. I’m going into those last five years before I retire, or are about to retire. And so once you get into that, now you’re a different you Yeah, and you’re in a different place. And so therefore, you know, they come to us and they say, We want to talk to somebody that is, you know, that does that

Jeremy Thornton

absolutely, absolutely. One of the other things that you, you we’ve mentioned a couple times, so we mentioned a couple times in other episodes as well, is a bear market, and how that is something that can drastically make a change in your financial health? Yes. First, could you briefly explain what a bear market is? And then second, why that is so important to ask a potential advisor

Ken Moraif

about? Yeah, that is paramount. You know, from our perspective, that is paramount bear markets. So what is a bear market? It’s a drop in any investment. But what we’re talking about here is the stock market. So the s and p5 100 index, let’s say so the stock market from peak to trough. If it goes down by more than 20% that is considered to be a bear market. Wow. Okay, so more than 20% and over the years, we’ve had some significant bear markets. You know, the great depressions, bear market was over 90% they went the market from peak to trough went down 90% I can’t even fathom that. You know, in 2000 in y, 2k and you know, the.com crash and all that, the market went down 49% in 2008 it went down from peak to trough, 57% and so, you know, according to Ned Davis research, there are bear markets approximately every three years. We’ve had 33 of them in the last 100 years. So they happen about every three years. And the average drop in those bear markets is not 20% because that’s the hurdle it has to clear to be called a bear market, but the average drop is 37% Percent? Yeah. So one of the things that you know, if you if you understand that, every three years, on average, and hopefully, I’m going to be retired for 30 years, right? What does that mean? It means you’re going to have 10 bear markets during your retirement. That’s a lot, right? And so, you know, bear markets when you’re putting money in, in a way, are your friend, because when the market goes down, the share price is lower, and you’re putting money in, and you’re 41k and guess what you’re doing? You’re buying low, low, low, and if it comes back, boy, all those dollars you put in, those are wonderful, yeah. But when you’re retired, you’re doing the opposite. When it’s going down, you’re taking money out and to get money out when the share price is lower, you have to sell more shares to get the same dollar. Yeah, right. And farmers call that eating your seed corn, yeah, you know. And if you do enough of that, you know, the market may come back one day, but you may have eaten all your seed corn and you got nothing left to plant. So bear markets, in our view, are the single worst enemy to someone who is retiring, or is retired already, financial health. You know, inflation is terrible, but we can address that properly within with diversification, those kind of things. We’re confident we can deal with inflation. You know, income taxes is the second right that can have a very detrimental effect to your retirement plan. But you know, with proper planning, you can address that. Bear markets is the one hole that I see in a lot of people’s retirement plan. They have no plan to address. What happens if the market goes down by 57% like it did in 2008 and takes 567, years to come back, and I’m living on that money while that’s happening, right? How do I address that? In my view, you can’t. Yeah, you’ll run out of money if you try. And secondly, I think that, you know, we talk about having peace of mind. We always talk about we want to, we want you to be on the path to financial peace of mind. I don’t know how you have peace of mind if your investments drop by 50% and now you’re living on half your money. Yeah, the stress and the emotional turmoil that that would bring you, know, it’s horrible. I’ve met a lot of people in y, 2k and in 2008 that went through that, and it’s, it’s terrible. You know, I my heart bled for them. So having a strategy to address bear markets is a question that you should ask. You know, what’s your strategy? Actually, I’ll go one better. Okay, when you’re talking to somebody about, you know, retirement planning and all of that, right, don’t ask them, okay, if they have a strategy to address bear markets, okay, what should I ask? Just listen to what they say. Okay, if you come in to visit with us, what you’ll notice is that probably 30, 40% of what we talk about is how to protect you from the next bear market. Okay? And what our strategies, our investment protect strategy, okay, which, by the way, I’ll just plug it. It told us to sell in November of oh seven, and told us to stay out of the stock market for all of 2008 during that particular terrible bear market, right? And it’s done it multiple other times. One of them was in the day before the pandemic was announced. As a matter of fact, it told us to get out. And of course, we had a bear market after that, so we want to protect from that. But if you but we spend a lot of time explaining that, yes, because it is an important part of what we do. Yes, growth is important, but protection of principles even more important, right? So we have a whole strategy, and you know, we spend a lot of time thinking about that. Yeah, if you’re talking to somebody and they never bring it up, right? Then, what does that tell you? They’re not

Jeremy Thornton

interested, they don’t care. They don’t have a plan. Probably, yeah.

Ken Moraif

I mean, why? Why wouldn’t they tell you specifically and in great detail and with a lot of enthusiasm and pride that they have a strategy to address? Yeah? If they don’t tell you that, then maybe they don’t have it. I think, well, and the reason why I say don’t ask them Yeah, is because if you ask them, they’re gonna, they’re gonna come up with something. Yeah. Oh, we have a strategy, you know, but just don’t say anything and wait to see if they say anything, that’s a good point, right? And if they don’t say anything, then, you know, probably they don’t have one. It’s probably not important to them as much, or it’s not important, yeah? And in our view, it’s not just important, right? It’s paramount,

Jeremy Thornton

right? Yeah, absolutely. And I think what a lot of people hear and say is, well, we diversify our investments, and I’m guessing diversification may not be enough,

Ken Moraif

correct? Oh yeah, yeah, yeah, you know. Diversification is designed to, I’ll say, smooth out the rough edges. Okay, okay. It’s designed to make the ride smoother. Yes and yes, it does mitigate against the downside, sure. But a 6040 portfolio, for example, in 2008 Okay, went down. I believe it was about 35% so the the S and P went down 57 right? But a 6040 portfolio went down. You know, 37 or thereabouts. What’s a 6040 I’m sorry, a 60 stock, 40 bond portfolio, okay, okay, which is the standard, you know what everybody says you’re supposed to be when you’re retired, right? Okay, so you have a 6040 portfolio, diversified, right? 60 stock, 40 bond, you’re supposed to be now in the happy camper place, but you went down 35% compared to the 57 that’s fantastic, right? Yeah, okay. But if I’m talking to my financial advisor and they’re saying, Hey, listen, you only went down 35% the market went down 57 you know, you should be thanking me for that. I’d be like, thanking you. Thank you. We beat the market average. The market went down more. So, you know, in our view, that’s not sufficient, yeah, you know? And I and we can go back and look at multiple bear markets, in fact, during the the pandemic, what we saw there was also the same thing, and that is that both stocks and bonds went down right at the same time, yeah, and, you know, so, so those things happen. So diversification is incomplete. You should do it okay. There’s no question. Our view is you buy, you hold and you sell, right, right? You buy a diversified portfolio that matches your risk profile. You hold it so as to be able to give it time to grow and all that. But as Kennedy, is it Kenny Rogers, who said you got to know when to hold them and know when to fold them, right? You got to know when to sell, yeah. You know, in our view, that’s what’s it’s super important that you also have a strategy to say, Okay, I got to get out. And, you know, in previous podcasts, we talked about the magic number, yes. And I encourage viewers, listeners, to go and watch that, because we talked there about, you know, when is the point when you should really consider protecting, you know, and how to gage where you are versus your magic number, and how to protect that, that magic number, which is the number you need to have to support the lifestyle that you want?

Jeremy Thornton

Yeah, absolutely. So that was five things that we should that was five. That was already

Ken Moraif

fine, man, that went by so fast.

Unknown Speaker

We love having fun. So question you should ask, what are

Ken Moraif

they? Number one is, how they get paid. Yes. Are they commission based? Are they fiduciary? Are they a hybrid? And if they’re a hybrid, what are the things that they are going to get a commission for right. Number two is their credentials. You know, are they CRPC, you know, chartered retirement planning consultant, or not? If they’re not, then they may be a generalist, as opposed to a specialist. Number three is just taking that credentialing the next step, and that is, do they specialize in the area that you want to be talking to them about? And if you’re talking about retirement and retirement planning, then you probably want to talk to somebody who specializes in that. Number four is, does their investment philosophy align with yours? And you know, in our firm, we have eight philosophies about, you know, investing. And so we go through those in detail, and you want to know what they are, and say, Yeah, you know what? I agree with all of that. Or no, I don’t, in which case you’re not the firm for me. But at least you need to know what they are. And then finally, if you’re in the five years before you retire, or the five years after in that decade, listen for, it’s not a question, it’s a listen. Yeah. Listen for do they go over a strategy to protect from the next bear market? And if they don’t say anything about it, the assumption I would make there is they don’t have one, yeah, and without one, I think you could be in big trouble.

Unknown Speaker

Awesome. Thank you very much. Well, this was

Ken Moraif

fun. Jeromy, yes, oh God, here we go. So thank you for watching this episode of the retirement planners of America podcast. And also, I want to make sure that you click below to subscribe. You don’t want to ever miss any of our delicious, wonderful content, because hopefully it’ll help you to have the retirement of your dreams. So thank you for watching, and we’ll talk soon. Retirement planners of America, rpoa.com you.