On the Money with Secure Money: Episode 69

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Video Transcript

Cynthia de Fazio – 00:20

And welcome to On The Money with Secure Money. My name is Cynthia De Fazio and I’m joined today by Brian Quaranta. He is founder and president of Secure Money Advisors, as well as joined by Neil Major. He is senior investment advisor. Brian, how are you today?

Brian Quaranta – 00:33

Doing great. Cynthia, how are you today?

Cynthia de Fazio – 00:35

Fantastic. Thank you so much for asking. And Neil, how are you?

Neil Major – 00:38

Well, Cindy, how are you doing?

Cynthia de Fazio – 00:40

Really, really well. Thank you. I’m so excited to have you both in the studio today. Because obviously, every time we’re together, we’re talking about such an important topic, planning properly for retirement. And a lot of people in the viewing audience today, they might think they have a plan just by grabbing statements out of the mail. But that is not a plan. So, Brian, you’re passionate about people being on the right track for retirement. Let’s talk a little bit about what that is, in case someone’s watching for the first time today.

Brian Quaranta – 01:07

You know, we call that pile out of the mailbox, the POS that stands for pile of stuff, by the way. Yep. Right? Well, we do we, you know, we’ve been doing this for 23 years. And the first question I always had, when people would come to the office is they bring their POS, which means their pile of stuff. And when people have a pile of stuff, that means they’re very serious about retirement, they just need to get organized. But yeah, being on the right track, I think is something that a lot of people don’t know whether they are or are not on the right track. Because I don’t think retirement planning has been explained very well to the consumer. A lot of people think retirement planning is making contributions to a 401 K plan or an IRA account. But that’s a very small portion of the whole planning process. You know, retirement planning, and being on the right track includes the five key areas that Neil and I always talk about on the show on the radio show. And our educational events is the income strategy, the tax strategy, the investment strategy, healthcare strategy, and even your estate planning strategy that really completes a well thought out plan where every is dotted and every T is crossed. So, getting on the right track is very important for people. But you know, how do you know if you’re not on the right track, because a lot of times when people are meeting with their advisors, they’re only going over performance, you know, you’re accounted Well, this year you earned X amount, you know, it’s gone up a little bit, but people aren’t really having real conversations about planning. And those five key areas, and so a lot of people are just not getting the advice that they should. But you’re starting to see a change in the industry. I mean, you’re starting to see, you know, secure money advisors, we are a fiduciary. So, we have to do what’s in the client’s best interest. But we also have to provide a plan. And for the longest time, our industry was very transactional, you know, it was buy a mutual fund, buy a stock, but we’re starting to see a big shift in the industry, which, you know, I’m very optimistic about because it’s been needed, we’re starting to see regulation come to where they’re going to start getting rid of commissions, which is great, because, you know, you really don’t want an advisor, incentivize earning a commission. That’s true. Yeah. When they buy from you. Yeah, you know, the way that we’re structured is we do well, when our clients do well, so we’ve got skin in the game. So, but getting on the right track is exactly what we help people do it secure money advisor, we’re doing it every single week. You know, we see 25 to 30 people a week that have that same question. You know, are we on the right track? For sure.

Neil Major – 03:39

You know, what we’ve identified is that, you know, most people just don’t have the game plan. Right. And so, when we say right track, they, they say, I know, I know what they’re talking about. Yeah. My, my advisor says I can retire. And that’s the end of it. Right? That’s the planning and they’re getting my he says

Brian Quaranta – 03:57

I’m okay, yeah. Okay. Was that mean? I’ll be alright. Yeah, I’ll be okay.

Neil Major – 04:04

Yeah, it’s just think about some of the stuff that we’re able to provide these people that are coming in. And one of the things that we do, is we evaluate their investments, and we want to see, you know, how are they positioned? Are they positioned properly? Do they have a great efficiency in their portfolio? Are they getting the return for the amount of risk that they’re taking? Do they have any idea, the amount of risks that they’re taking, you know, a lot of times people will come in there, say, I’m a conservative investor. And when we do the analysis, their portfolio has a drawdown of 40% 50%.

Brian Quaranta – 04:37

Yeah, and we should talk about that analysis, because that’s a big deal. Absolutely. The analysis that we do at the office, because, you know, we’re quantifying risk today in a way that we’ve never been able to quantify it before because of technology. You know, back in the day when we would identify someone’s risk tolerance, we would do it through a questionnaire and of course, you know, the adviser would ask a number of questions and based on, you know, the answers from the client, you would determine whether a not they were conservative, moderate or aggressive. But today, things are very sophisticated. We use a very sophisticated software at the office, which allows us to remove our opinion, which is great, because when people come in, and we do an analysis for them, it’s truly an analysis, right? We’ve got, we’ve got no agenda other than delivering the data to you. That’s it. Okay. And when people have that black and white information, they can make informed decisions. But the risk is quantified based on a number now. So for example, you know, our risk analysis quantifies the risk from a score from one to 99. Okay, so to give the viewer viewing audience an example, this s&p 500 index, which most people know has a risk score of 75, all right. So a lot of times we will come in, they’ll say, Well, I’ve asked my advisor to be conservative for me, and we’ll run it and the risk score will come back and the risk score will be an ad. And so they’re actually much riskier than the market, and they’ve asked to be conservative. And so a lot of people are taking someone else’s word for it, that their position the way that they’ve asked to be positioned. This is not about telling you, yeah, we’ve got you in a conservative portfolio. No, no, this is identifying and quantifying it based on the data from each of the positions that you have, because we get the statements and do the analysis, we enter in every single position that they have. And the software analyzes it based on all the historical data that’s available on that mutual fund on that stock on that bond. And it quantifies that risk score, and boy, it is eye opening for people when they come in.

Neil Major – 06:34

Yeah, absolutely. Then the other challenge is, I think, you know, because the market has done so well, since 2009. People really have no idea how well they’re doing or how well they could be doing. Right? Yeah, they just see it going up each and every month when they get their statement. So they really have no idea. And this really, were able to quantify, like Brian said, the amount of risk, they’re taking the performance, I had a couple come in not too long ago, they’re taking the same amount of risk as the s&p 500. So if you’re going to take that amount of risk, you’re going to hope that you have a similar return show over the past five years, the s&p 500 has done over 18% in return. Well, they came out at a 13% return over the past five years. Wow. So it wasn’t in an efficient portfolio. We’re missing 5% symbol. Yeah, this is a five year time period that adds up. That’s right. significant dollar.

Brian Quaranta – 07:27

Yeah, and this is where we say, you know, people are taking this much risk, and they’re only getting this much return. This is the risk reward for investments. And, and what that software does is it quantifies that risk reward. So I have no problem with you taking risk. But if I’m going to take that level of risk, I should be getting that level of reward. I mean, do the math on missing out on 5% over five years. Yeah, that’s a big difference in the accumulation of that account, though, you over compounded So, but that analysis that we do is absolutely eye opening for people. And it’s a big reason why people wind up onboarding with us, because they realized for the first time, you know how much risk they’re really taking how inefficient as Neil talks about the efficiency of the portfolio, but how inefficient the portfolio is, the fees that are dragging down the returns the unnecessary risk to get a very small rate of return. And so people now feel much more in control of what they’re actually doing, because we’re actually quantifying it based on real data, not opinion.

Cynthia de Fazio – 08:27

Sure, yeah. And how often can you run that report? Is that something that you do just the one time where they’re in with you? Or do you do it yearly? How does that look?

Brian Quaranta – 08:35

It depends on where the clients at. So for example, you know, Neil has a number of clients that, you know, are still working. So he’ll run that risk analysis on their 401k for them, right. And so he can run that risk analysis for them each and every year to see where the risk is, and to see if it can be adjusted. Now, why does he do that? Because a lot of these people will not might not be at the age that they can actually take their 401k from their employer yet. So what we do is, is a lot of times, the client might have positions that they have to hold outside of our firm, okay. And when I say our firm, we do everything through TD Ameritrade with most people know who TD Ameritrade is, you know, it’s a big, big company. But they hold that on the outside and we but we at the end of the day, somebody has to be the quarterback. And so us as the financial quarterback or coach, we’re still taking into account what they have with us plus what they have outside of us. And so we’re monitoring that on a year to year basis to make sure that risk stays in check. Not only that, but you know, as we have we have clients hit milestones we reduce that risk to right. You know now for us a lot of our clients are 55 and older if we do have younger clients is because they’ve been referred to us. But that analysis is important to do. If you’re still having assets outside of us is important to do every single year. Sure.

Neil Major – 09:52

Thank you so much, Cynthia, that analysis, what we’re able to look at I remember in March of 2020 when COVID first hid in the market went down significantly. Our phones were ringing off the hook with people calling in and saying, you know, 2019 was a great market year, my portfolio didn’t follow the market the way up. But now that March of 2020 has hit, it’s followed the market on the way down. Why is that? So this program really helps us identify the efficiency of the portfolio.

Brian Quaranta – 10:23

Yeah, you know, it was it was really interesting to us when the pandemic did hit Yeah. How many people reached back out to us that had gotten the analysis and said, I see what you guys are talking about now. Because for the first time, we had quantified it for them, and then they actually experienced it. And so when they experienced the loss, and we told them that that was going to be the loss, they said, Wow, maybe we better listen to these guys, because we just have a better way of controlling risk. We use technology to control risks, or the use of computer I was we can talk about on the next segment. But I want to talk about people today about getting an opportunity to sit down with us and get a right track retirement review, because most people don’t know whether or not they’re on the right track. And I want to help you get on the right track. And being on the right track means that you have five key areas that you’re reviewing. Number one, and most importantly is your income. Number two is taxes. Three is your investments. Four is your health care strategy, and five is your estate planning. So for the next 10 callers who call in right now, we are going to give you a right track retirement review. It is complimentary, it’s not very often that you get an opportunity to come in, sit down with a fiduciary at no cost, and have this level of analysis done for you complimentary, but you got to do your part. Pick up the phone, call us today schedule with our office. It’s 1-888-382-1298.

Cynthia de Fazio – 11:41

Brian, thank you so much, Neil, thank you so much to the viewers at home, the phone number to call is on your screen. And that number is 888-382-1298. We do have to take a very short commercial break, but don’t go anywhere. When we come back, I do have some viewer questions. The next one could be yours. Stay tuned.

Brian Quaranta – 11:59

So, everybody can tell you how to invest your money. There’s not a lot of people out there and a lot of firms that can teach you how to use your money. Most people also tell you that they’re scared. And the reason they’re scared is because they’re afraid of running out of money.

Neil Major – 12:13

The last thing you want to do is have a really good job and you’re in your 60s retire, be looking for work again in your late 70s.

Brian Quaranta – 12:21

The average person might say, well, a good portfolio would be a good mix of stocks, bonds and mutual funds. A good portfolio is all designed around the five key areas income, taxes, investments, health care and legacy planning.

Neil Major – 12:36

Because we’re not just product pickers here, what we do best here as we build retirement plans.

Brian Quaranta – 12:41

Nine out of 10 people when they walk through the door would ask us, we just want to know if we’re on the right track. And I always say if you’re not on the right track, when would be a good time to know it.

Neil Major – 12:52

Probably now, people you know can actually see a vision once we start to really build out their plan.

Brian Quaranta – 12:57

This is about you if you’re not getting what you need. And you feel that when you walk out of the advisors office, it’s time to get a second opinion. And you can’t get a second opinion from the person that gave you the first the difference at secure money advisors. As a fiduciary firm, we help you manage the risk, build the income and give you the retirement.

Cynthia de Fazio – 13:30

and welcome back to on the money with secure money. My name is Cynthia De Fazio and I’m joined today by Brian co entre He is founder and president of secure money advisors as well as joined by Neil Major senior investment advisor, gentlemen, a great show that we’re having today. And obviously I love this part of the show, because we’ve had viewer questions come in from one week to the next. So, I thought it might be really amazing for us to go ahead and address a couple of those would that be okay? Yeah. All right. Neal, this first question deals with so security. So I’m going to guide it towards you. It says this is from Pittsburgh, Neil, my ex husband and I were married 25 years before we divorced, he passed away this year. He was 68. And I am as well. My question is, how is Social Security affected? Will I still be entitled to half of his social security, even though he passed away?

Neil Major – 14:18

Yeah. And I’m sorry to hear about your loss. But yes, you are still entitled to 50%. But in fact, you’re actually I believe that this is correct. You’re actually entitled to his full benefit now that he’s deceased.

Brian Quaranta – 14:30

Yeah. And then that would be because she hasn’t been remarried. She didn’t say she got remarried. Right. She does her ex spouse, right. Yeah. Okay. Yeah. So, she’ll probably be entitled to his full benefit amount. So, yeah, so she should be you know, as long as the key here is that she doesn’t get remarried. Doesn’t sound like she’s going to get remarried. But if you get remarried, that all goes away, okay. And he wouldn’t be able to take it but if she hasn’t been remarried, she still is going to be able to get her initial security amount off of her spouse’s.

Cynthia de Fazio – 14:59

Okay, yeah. Okay, perfect. Brian, this next question is to you actually says I’m 64 still working. I make 130,000 plus a bonus each year. I don’t have any debt. And I don’t own any property. I’m about to inherit 1 million half of this this month, I have a decent 401k. Where should I invest the inheritance? Would real estate be a viable option for me?

Brian Quaranta – 15:23

Yeah. So I mean, this is why planning is so important. Because the question again, this comes right back. This is when we teach people about the five key areas of retirement planning. Our clients don’t have questions like this anymore, because immediately they know what to do. So the first thing you’re going to go to with a question like that is you’re going to say, Okay, well, how’s it is the individual’s income, all right, because if this person wants to retire, okay, they want to do things in retirement, they want to gift money to kids, whatever they might want to do they want to travel, they’re going to need income. So the first question is, let’s talk about the income because the million dollar inheritance may need to go towards building out an A income strategy first before anything else. So once the income has been taken care of, then of course, now, you can start to look at the mitigation of taxes, because this is going to be an inheritance. I don’t know that they say if they were going to do it, that was an IRA or an IRA. I don’t think it did right now. Because we’ve got a problem. If it’s a, if it’s a an IRA, because the IRA is going to force that individual to take all the money, which is going to force them into paying a massive amount of tax as a matter of fact, what was it 2019 Was the cute secure act? Right? Right. Yeah, tell me a little bit about that. Because that can really affect this person is the secure act.

Neil Major – 16:39

Okay, so Brad is referring to is in the secure act on inherited money in IRAs, they changed the law. So you no longer have a lifetime to inherit an IRA, you only have 10 years. So if you have a million dollars in an IRA, she’s only going to have 10 years to remove that money from the IRA and pay the taxes on it. So that she was she the one that has the high income? Yeah. 30,000. Yeah. So we don’t know if she’s married or single, there become the challenges. We don’t know what he has, is she going to retire when we’ve 64?

Brian Quaranta – 17:16

I think she said it works, right. So, but to the point, she’s got high income. So, if it is an IRA account, there’s going to be a problem there because the IRS is going to force her into a tenure drawdown of that money. So, every time money comes out of that account, it’s going to get added to her $130,000 a year plus her bonus, whatever she’s getting, so now she can be but why to pay in taxes on a quarter million dollars. My gosh, if she’s single, even if she’s married, she’s going to be in a very, very high tax bracket. That million dollars is not going to be a million dollar inheritance. If it’s an IRA account, it’s probably going to be more like a $700,000 inheritance versus a million the time we get them paying taxes on it. Yeah. So, there’s more of a problem there, then, do I What do I do with it? How do I invest it? Because the first question, regardless of whether it’s IRA or non-IRA, we have a tax problem. Yeah. Okay. So that has to be handled first. And, and of course, number one, most importantly, the foundation behind making sure that you’re taking care of is making sure you have a good income plan. So, there’s a lot in that question right there. That can be deciphered, but a lot of problems that I see too, with that. So, this is why it’s so important to work with a comprehensive financial planning firm.

Cynthia de Fazio – 18:26

Absolutely. Because what it comes down to is no one situation is exactly this. Right? It’s really impossible to have an answer for something so diversified without meeting that person face to face.

Brian Quaranta – 18:37

You change, you change a few of the variables on there, you can have that same person, you can say, I’m hearing, I’m hearing a million dollars, and you could just simply change the fact that they’re married versus single completely changes the game, you could you could say that their income is much lower than what hers is, and it completely changes the game. So those little nuances change everything in the way that you approach it. And it’s one of the things I always say, I always tell this to the team. You know, we’re more than financial planners, we’re really financial engineers, because you are engineering something here, and there’s so many moving parts. And if you touch this, it affects this, if you touched this, it affects this, it’s going to be very careful, even your planning model, that you build it out appropriately to maximize what can be maximized.

Neil Major – 19:20

That makes perfect sense. Yeah. So I just had a an example because I had a woman come in who inherited a bunch of money from her brother, and the market got volatile on her. And so she started to experience 12% loss. Now, she’s 78 years old, she doesn’t want to experience 12% loss at this point in her life, and she needs the money for income. Right? So here’s one of those little nuances, right? She has short term capital gains, right on the money that she inherited. She had taken some out initially the money grew really well and then all of a sudden it pulled back. So she wants safety, but we have to be very, very careful and not impact the short term capital gains right on the other side. So, you know, like financial engineers, you got to make sure that you piece everything together and you don’t make a little mistake for a client that’s going to cause them a big headache.

Cynthia de Fazio – 20:14

Sure, sure. Thank you, Neil. Well, Brian, I know that you and Neil have a very special offer to present to the viewers at home. Let’s talk a little bit about that again, before we reopen the phone line. Sure,

Brian Quaranta – 20:22

our right track retirement reviews, Cynthia has been really designed with the viewer in mind to help you determine whether or not you’re on the right track. And I always say, if you’re not on the right track, when would be a good time to find that out. So for the next 10 callers, who call in, we are going to provide you with a complimentary right track retirement review, where we’re going to go over the five key areas that we talked about all the time on the show your income, taxes, investments, health care, and of course, your estate planning. But you got to do your part today, you got to pick up the phone and you have to call us. Remember, retirement is not a dress rehearsal. We do not get a second shot at this; we have to get it right from the very beginning. So do your due diligence, work with a comprehensive financial planning firm, and more importantly, schedule your complimentary right track review with us at 1-888-382-1298.

Cynthia de Fazio – 21:11

Brian, thank you so much, Neil, thank you so much to the viewers at home, the phone number to call is once again on your screen and that number is 888-382-1298. We’re going to take a very short commercial break, but don’t go anywhere. I have so much more with Brian and Neil when we return.

Brian Quaranta – 21:28

If I could help you increase your income, if I could help you pay less taxes, if I could help you potentially maximize the returns of your investments while reducing risk reducing fees if I could help you prepare for a health event or more importantly, when the good Lord decides to take you home to make sure that the money you’ve accumulated over your lifetime goes to your family into your charities rather than the IRS would that be worth the time to come in and get a second opinion.

Cynthia de Fazio – 21:59

And welcome back to On The Money with secure money. My name is Cynthia De Fazio and I’m joined today by Brian co entre He is founder and president of secure money advisors as well as joined by Neil, major senior investment advisor, gentlemen, a wonderful show. And I love this part of the show specifically because we get viewer questions, and we never know what people are thinking until we actually open some of these. It’s really great right? Now, this is a great question. I’m going to guide this towards you. It says Neil, I’m very curious about lowering my taxes. Is there a strategy that you would recommend for me, I’ve heard that Roth conversions are good for most people.

Neil Major – 22:34

Yeah, interesting question. And obviously, there’s a lot more data that I would need in order to guide you on that question. I will tell you, Roth conversions. Roth IRAs are kind of a hot topic, but we’re hearing a lot about them, and how they work and they make a lot of sense to people. It just doesn’t apply for everyone. So I don’t know if most would be the right word there. Okay. Yeah, we certainly when you work with someone like secure money advisors, we want to make sure that we’re utilizing all strategies to further the chances of success for our clients. Now, I’d have to really sit down with you and understand your situation to let you know, if a Roth conversion made sense for your case, though,

Brian Quaranta – 23:20

you know, I mean, I think from the from the purpose of just reducing taxes, you know, Roth conversions will not reduce taxes right now. They’ll reduce taxes in the future, because in order to convert, right, it means we have to pay taxes. So you know, that she mentioned how old she was there, she did so but let’s just say she converted $25,000, that’s going to get added to her income this year. So her taxes are going to go up, why we’re preparing to have lower taxes in the future, right? Now, if she’s looking to low her current taxes, you can go the opposite direction, you can make a contribution to a to a traditional IRA, you could make a larger contribution to your 401 K. And those contributions will actually be deducted off of your gross income to lower your adjusted gross income and pay less taxes. The problem is, you know, do I want to pay taxes on the seed of the harvest? Because if I save taxes now, it just, it’s more of a problem later on down the road, again, financial engineering, right, we move these changes this. So, but then, of course, you know, there’s other ways I mean, if she’s, you know, she has the ability to start her own business. She could start a business, she could, you know, file as maybe an LLC, she could start to write things off that she purchases for the business. I mean, so there’s other ways outside of just retirement accounts that tax planning can take place. But again, I mean, just the simple answer is kind of the examples we just gave.

Cynthia de Fazio – 24:38

All right. Thank you so much, Joe. And that was an excellent response. Brian, this is also a great question, says, Brian, I’m 10 years away from retirement, I’ve been advised to pay off all of my debt. I have credit cards, mortgage and car payment. What should I start with first,

Brian Quaranta – 24:53

highest interest rate first, actually, there’s a great program out there called Transforming debt into wealth. I would highly recommend something that’s struggling with debt to look it up, it’s been around for a long time. But usually, you know, we call this the snowballing technique. So you list out all your debts, you write down the amount that you owe on a monthly basis. And then you actually divide the amount that you owe on the monthly basis by the balance of that. So if I have, let’s say, a credit card with $10,000 on it, and the monthly payments, $50 a month, I would divide 50 by 10. Okay, by the 10,000, I would do that for each account. And then you get numbers and you order them for from least to greatest, it’s called, it’s called a payoff factor. Okay. And then what you do is you start snowballing. So basically, what you do is you put as much possible money as you can on one payment at a time, right, the rest of the payment should pay the monthly payment, the bare minimum, okay. And then once that one’s paid, you now roll that payment along with the next payment, then the next one, the next one, this way, the time you get to those other payments, that payment that you’re making on a monthly basis gets bigger and bigger and bigger. Because you’re pulling, you’re taking the $50 that you were paying on this one, and 150 that you were paying on this one, now you add them together, now you make a $200 payment on this one. And then when that one’s paid off, you take the $200, and you add it to this $200 payment, and now you’re paying $400 off. So now we can accelerate the debt. That’s called snowballing. And we can get out of debt very, very quickly that way, and I would highly recommend it.

Cynthia de Fazio – 26:14

I’m learning something new every single time we’re on the show together. I’ve never heard of that before. That’s amazing.

Neil Major – 26:19

Are you going to think the simple answer was pay off the credit card?

Brian Quaranta – 26:25

People you know, I think people that you know, when they have a system that paid that off, right, they feel back in control, because a lot of people have that feel out of control, right? They don’t feel like the nice thing about snowballing is that you actually can determine the date in which we’ll be out of debt. And that’s nice, because a lot of times when you’re paying off debt, you’re like, is this ever going to end? Yeah, so but to Neil’s point, just pay the damn thing off.

Cynthia de Fazio – 26:50

Make it bigger. Brian O’Neill we’re down to the final minute of the show this week. Any final words of wisdom and advice that you would like to give the viewers at home?

Brian Quaranta – 26:58

Yeah, have a plan, right? I wouldn’t just say have a planet, you know, plan prepare. And that’s the best thing but you know, our viewers, what we’ve done for you is we’ve put together our right track retirement review that helps you determine whether or not you’re on the right track whether or not you’re doing the right things. Most people don’t know whether or not they’re on the right track. This is an opportunity for you to find that out. So for the next 10 callers, we are going to give you a complimentary right track retirement review. When you come to the office, the phone number to call to schedule that appointment is 1-888-382-1298. Again, call us today to schedule that appointment at 1-888-382-1298.

Cynthia de Fazio – 27:36

Brian, thank you so very much Neil. Thank you so much to the viewers at home. Most specifically we would like to thank you for spending time with us. That number is 888-382-1298 We know you have a lot of questions about how to retire with confidence. Brian and Neil have the answers for you. Be safe, be happy, be blessed. See you back here one week from today.