On the Money with Secure Money: Episode 77

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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. Brian, how are you doing? Right,


Brian Quaranta 00:30

Cynthia, it’s good to see you. It’s been a while


Cynthia de Fazio 00:32

it has been a while. It’s been too long. I’ve missed being with you in the studio, when you’ve been so busy.


Brian Quaranta 00:38

There’s been a lot going on a lot going on. Yes.


Cynthia de Fazio 00:41

Yes, let’s talk about that. What’s life like in the office for you right now,


Brian Quaranta 00:45

it’s extremely busy is extremely busy. I mean, obviously, the type of work that we’re doing, when markets are not cooperating the way that they are right now. You know, I made a decision probably 15 years ago to focus more on safe money, and helping people protect their retirement versus gambling and rolling the dice and taking risk with it. So, you know, for those people out there that have been, you know, experiencing quite a bit of losses in the market, it’s, you know, we’re kind of a different philosophy, right, for those that really want to try to protect their money, more than anything, because most of our clients are more worried about the return of their money rather than the return on their money. So, we’re very busy, a lot of phone calls coming in right now, a lot of people that are, you know, very concerned about whether or not they’re going to be able to retire or stay in retirement, that it’s the markets have been rough and air and every asset class. I mean, it doesn’t matter whether we’re talking about real estate, cryptocurrencies, you know, bond markets, equity markets, it’s a very tough environment right now.


Cynthia de Fazio 01:46

Absolutely. So, I’m sure the number one question that you’re getting, Brian is, am I going to be okay, because nothing else matters. Am I going to be okay?


Brian Quaranta 01:55

Yeah, well, we talk about that in the terms of probability of success. So, you know, I had a lady that called the office the other day, and she has a 401k. She’s getting ready to retire. And she’s lost quite a bit of money in it. And she says, you know, am I still going to be able to retire and get the amount of money that I need on a monthly basis? Because for most people, Cynthia, you know, most investors today, they’re not getting pensions, so they’re going to need to rely on the retirement savings to generate income. So, when they lose money, in those retirement accounts, when they plan on using that, for monthly income, it’s very worrisome to them, because how long is it going to last? You know, are they going to run out of money? And so, the question she asked was, how much more money Could I could I afford to lose before I should pull this out of the market? And the real question isn’t whether or not you know, rhetorical question isn’t how much more money can you lose? The better question is, what’s the probability of success with the current loss that you’ve taken meaning, if I were to run a calculation, which we can do at secure money advisors, and determine with the amount of money that you have left and the amount of income that you’re going to need from that account for the rest of your life? What’s the probability of success that it’s going to last till age 95, or age 100. So, we can run that calculation where we can determine that even with a market loss of let’s say, 25, or 30%, you may still have a 95% probability or 100% probability that the plan will still work. So, a lot of people look at their account balance is going down right now. And the first thing they think is that I’m not going to be able to retire. And it’s just not true. What that really tells me if they’re having that those feelings or those thoughts is that they don’t have a real plan in place. And a written plan that can mathematically determine the probability of success, wherever the account balance is, is what helps somebody sleep at night, right? That should be put your head on the pillow, look, I know I’m down 25%. But it’s not going to impact me from being able to retire. Here’s where people get a lot of anxiety. They call their advisor or they call the 401k company. And their advisor says, Well, don’t worry about it, you know, everything’s gonna be fine. It’s just a paper loss, the markets will come back, you know, remember, you’re in it for the long haul. And, you know, those are a bunch of sound bites and cookie cutter phrases that don’t really solve any problems. And for most people that are getting ready to retire, they’re not in it for the long haul, right? They need their money right now. So, this whole, this whole idea that you know, don’t worry about, it’s just a paper loss and hang in there, you’re in it for the long haul. Makes no sense when it comes to retirement planning device, right? And that has no room in our office, right? We really want to focus on the math to make sure that it can still work. And for some people, it might not work based on what they need, but they need to have that calculation run. And that’s something we can do through our right track Retirement System.


Cynthia de Fazio 04:44

Brian, let’s talk a little bit about that a little more in detail if you could. People are coming into the office; they’re sitting with you for the first time. Do they already have an idea of what their budget is what their spending plan should be? Or do you help them determine that?


Brian Quaranta 04:58

Yeah, some do. Those don’t. Okay. And that’s something that we really helped bring them through a process. So, the right track retirement system was based around five key areas of retirement. Well, number one, most importantly, was income. And the reason why we built it around income was because income is the foundation that a plan, without monthly income are what we call mailbox money, right? There’s no way to continue to maintain your lifestyle. So, the number one priority for anybody is, you know, is the making sure that you’re gonna have enough income for the rest of your life. And for most people, they are going to need the retirement accounts to do that. So, number one is making sure they have enough to income number two is when we pull money out of retirement accounts, most people have never paid taxes on that money before. So, when they withdraw it, they’re going to have to pay taxes. And that means they’re actually going to net a lesser amount. Number three is making sure they own the right investments. Number four is making sure if a health event were to take place that we have a plan for that, that does happen, we just got a call the other day at our client of ours just had a stroke out of the blue, we would have never guessed that with this individual. He’s a very healthy individual. And number five is making sure that when the good Lord, this does decide to take you home, that there’s a plan for your money, meaning it goes to your family members or your charities and not to the IRS. Okay, so when we sit down because income, the income is the most important part of the planning process, we do have a cash flow worksheet that we use, where we lay out all of their sources of income, along with their monthly expenses. And we help them walk through the best practice of how to build out your monthly expenses, there’s a there’s a way that you want to do it, there’s a way that you want to look at your expenses to get it as accurate as possible.


Cynthia de Fazio 06:37

Okay, all right. Brian, how long does it take for you to design a plan for someone isn’t an hour process? And are we talking days? What does it look like?


Brian Quaranta 06:46

It’s a pretty lengthy process. I mean, the time we, the time we do the analysis of where they’re currently at, we have a roadmap that we use, where the first phase of meeting with a client really is just learning, understanding and evaluating their goals, right, that’s, that’s the first part of it, then what we do is once we understand what the purpose of the money is, what their goals are, what they needed to do, then what we do is my team, and I take all the information they bring. And then we run an analysis on that think about almost like an X-ray or an MRI, right, we’re able to look through and actually see what’s happening. Okay, once we can find out what’s really going on. Now what we can do is we can bring the client back and educate them on where they are and where they need to go. And sometimes it’s just a matter of maybe changing a few things in the plan to make it a little bit better. Sometimes you need a complete overhaul of the plan. And then we give them turn by turn directions of actually how to implement it. And if they want, they can hire us, right. And if they hire us, my team and I will implement the plan, we do all the transferring everything we move the money, the client just gives us the thumbs up, says yes, this is what we want to do, and we take care of the rest. And then my team helps with the implementation of it. And then throughout the years, we monitor everything for them. And that monitoring process happens on a daily basis. We’re constantly monitoring, making sure that things are going in the right direction. And a lot of people just don’t have somebody looking out after them, right, really looking over their money. For most people, if you ask them who’s looking over your money on a daily basis, you know, they’re what they think their financial advisor is, but what they don’t realize is their financial advisors, probably not looking at those accounts every single day, right. And if your financial advisor is actually the one that is investing your money for you, you should think again, because we employ very smart, third-party firms that do that, because they have teams of people that monitor our clients’ accounts for us. So, it’s a very in-depth process. I would say that, you know, it’s about a two to three appointment process, sometimes a little bit shorter, depending on how complicated could be even longer if it’s a very complicated case. But on average, you could probably do it in a few hours, you know, so.


Cynthia de Fazio 08:53

Okay, perfect. Well, Brian, I know you have a very special offer to present to the viewers at home today, let’s talk about what that is, before we open up the phone line.


Brian Quaranta 09:01

Our Right Track Retirement System, it really is a special system, folks, and it really was designed with you in mind. You know, most people will come to me and say, am I going to be on retire? Am I going to have enough money for the rest of my life? Am I doing the right things with my money? Am I on the right track? Let me ask you if you weren’t on the right track, when would you want to know that? That’s what the right track Retirement System is all about. It’s helping you understand whether or not you’re doing the right things and you’re moving in the right direction. We’ll go over five key areas. When you come in. We’ll talk about your income. We’ll show you how to plan for taxes. We’ll show you the proper investment mix that you want retirement. We’ll also show you how to plan for a health event and make sure that when the good Lord decides to take you home, you’ve got a good legacy plan to make sure that the money that you’ve earned over the course of your life goes to your charities and your family members and not to the IRS. That’s the Right Track Retirement system for the next 10 callers who call in right now. We’re going to give you a way a complimentary no obligation, right track retirement review where we will go over those five key areas, all you got to do is pick up the phone 1-888-382-1298. Folks don’t procrastinate on this, this is not the time to kick the can down the road, this is not the time to keep your head in the sand, you really have to take action during times like this. Most people think I really don’t want to do anything because you know, I’ve lost money, and I don’t want to make changes. That’s the worst thought process that you can have. Because sometimes just making a few changes can make all the world of a difference. So again, for the next 10 callers. 1-888-382-1298. That’s a right track retirement review.


Cynthia de Fazio 10:32

Brian, thank you so much to the viewers at home, the phone number to call is on your screen. That number is 888-382-1298. We know you have a lot of questions for Brian about how to plan your perfect retirement. He has the answers for you. We’re going to take a very short commercial break, but don’t go anywhere we come back, I want to talk to Brian a little bit more in detail about market volatility. And what can you do to protect yourself during uncertain times. Stay tuned.


Brian Quaranta 10:59

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 Mager 11:13

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 11:21

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


Neil Mager 11:36

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


Brian Quaranta 11:41

9 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. Probably now,


Neil Mager 11:52

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


Brian Quaranta 11:57

This is about you. If you’re not getting what you need and you feel that when you walk out of the advisor’s 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 you dream of.


Cynthia de Fazio 12:28

And welcome back to On the Money with Secure Money. My name is Cynthia de Fazio. I’m joined today by Brian Quaranta. He is founder and president of Secure Money Advisors. Brian, I want to talk to you so much about market volatility. But you actually mentioned this in your book isn’t a chapter one.


Brian Quaranta 12:45

Yeah, it is chapter one matter of fact, my book Right Track Your Retirement. It’s all everything we talked about here on this show is all in the right track retirement book, it really is a simple guide for helping you plan for retirement help you build income, and truly give you peace of mind. And in the first chapter is called Why hasn’t anybody told me about this. And when I started in the business back in 1999, I got right from college, they get right into the financial industry, I go to work for a big brokerage firm in Pittsburgh, and I’m watching everybody lose money. And you know, it’s the .com bubble crash, right. And then we got 2000 2001 The markets continued to drop. And my first few years in the business, you know, here I am a young guy trying to find my way in this business. And, you know, I remember answering the phones at this this large brokerage firm and a gentleman had called in, he was very upset, because he had lost quite a bit of money. And he said that he’d like to get out of the market he’d like to sell while I was still new at that point. So, I went to my manager who had 25 years of experience in the business. And I said, Listen, we’ve got a guy on the phone, his name’s Sam, he wants to sell. What do I do? You know, what do I What do I tell the guy says I just get back on the phone and just let them know that everything is going to be right, let Sam know. It’s just a paper loss that just hang in there that he’s in it for the long haul. And so, like a good employee, I went back to the phone and I said that exact words to Sam and Sam actually changed my life. Because he said to me, he said, Brian, I’m 75 years old, how much damn long haul Do you think I got left? Yeah. And I said, You know what? He’s 100% right. Because somebody at that point in their life should have never been taken the risk that he had been taking, you know, and it’s really easy to tell somebody else to take risk with their money, especially if you get paid a commission to do it. Right. And so, the problem with our industry for a long time has been it’s been around a sales process right selling products selling stocks selling mutual funds. That’s not how a retirement plan is built. Our retirement plan is really built around three buckets. It’s called bank money, pension money and growth money or also what we call market Money or risk money. And the reason why you have to look at retirement planning in three separate buckets is because each bucket, the money that you put in there has a purpose. For example, the bank money really represents emergency cash reserves, right? So, if a situation comes up and you need, you know, a few $1,000, there’s an easy place to go get it, yes, we’re not going to earn a whole lot of interest on this money. But it’s still money that’s liquid and available when we need it. Sure. We also have to take some of the money that we’ve accumulated over lifetimes and create a private pension with it. Most people don’t realize that you can create a private pension for yourself just like the good old days. Wow, my grandfather worked for Kirby remember, Kirby Vacuum Cleaner? Of course, he worked for Kirby retired from Kirby with a great pension. Yeah. So, when he retired, my grandmother and him had a Social Security, Social Security checks. And they also had a pension check. And when he died, they lost a Social Security check. Well, my grandmother kept the pension check, right, and any additional money they needed. At that time, you didn’t even need to take risk with it, because a lot of people just went down to the banks. And they bought bank CDs, because bank CDs were paying 10 or 15%. At that point in time. Excellent. What, but in today’s world, companies are not giving pensions anymore. There’s just not doing it. So, we have to create one for ourselves. And we have the ability to do that, with certain product designs in the marketplace today that are really good for retirees that will guarantee a stream of income for the rest of their life. Also, in those accounts, they earn some really good interest, right, and they don’t have any potential loss for money. And then of course, the third bucket is that we still need growth money. But just like Sam, I’m not in it for the long haul. Right? That’s what he said to me when he lost money. Well, Sam could have potentially been taking some risk if he had the three buckets, because the third bucket that he put, put at risk, truly would have been longer term money, because his pension bucket would have taken care of the first 10 to 15 years as a retirement, which means that he would have had 10 to 15 years for that third bucket or that growth bucket to be able to grow and absorb market volatility. The biggest mistake people make Cynthia is they put 100% of their money in the market. They you know, cross their fingers, and they hope for the best. And is Hey, as long as the market is cooperating, which it did for a long time, you know, last 12 years, that was getting problems. Yeah. And I remember talking to a lot of people about, you know, few years ago, to taking money out of the market, protecting it coming out why the markets at a high, people said, You’re crazy. I’m making a lot of money 25 30%. We know that how this story ends, it ends this way all the time. It never stays that high, right. But people get greedy. And they forget to do the most important thing is that when they make gains, they should take some of those gains and actually protect them. So, they’re putting money in their pocket. So, the first chapter, why hasn’t anybody told me about this is about the three-bucket approach. And truly, folks, the three-bucket approach is how you truly build a retirement plan. Most people have investments, not a retirement plan.


Cynthia de Fazio 18:07

Well, Brian, obviously, I know the most important topic that we’re going to talk about for the remainder of the show will be how to properly plan for retirement. But you have a very special offer to present to the viewers at home today. Let’s revisit what that is, before we go back to the phone lines.


Brian Quaranta 18:21

Yeah, so the I built the right track retirement system to help people get on the right track and do the right things. And folks, I really want you to take advantage of this because it’s complimentary, there’s no obligation. And you’re gonna, we’re gonna go through five key areas of your retirement planning process. When you come in, we’re going to talk about your income, we’re going to show you the best way to build out a cash flow model for yourself. Number two, we’ll talk about how to mitigate taxes and reduce the amount of taxes you pay when you start withdrawing money. We’ll also show you the order in which you should withdraw money. Number three is we’ll walk you through what’s the best investment mix that you can have going into retirement and through retirement as time goes on. Also, number four is going to help you understand how to build a plan in case of a health event where to happen. Most people cannot afford any type of long-term care insurance these days. But if a health event were to happen, you’d better have a way to pay for it. And of course, number five is making sure when the good Lord takes your home, you have a good legacy strategy. So, I want you to take advantage of our right track retirement review. It’s complimentary no obligation. So, for the next 10 callers who call in right now. That’s 1-888-382-1298 you can schedule a complimentary no obligation, right track retirement review with us today.


Cynthia de Fazio 19:33

Brian, thank you so much to the viewers at home, the phone would a call is on your screen. That number is 888-382-1298. Again, we realize you have a lot of questions for Brian about how to plan your perfect retirement. He has the answers for you. We’re going to take a very short commercial break but when we come back, I want to dive in a little bit further with Brian about how to understand what your risk tolerance really is. Are you taking too much risk? How do you know, how do you find out? We’ll be right back act momentarily.


Announcer 20:02

How confident are you in your current financial plan? Do you know with certainty how the recent market volatility will affect your future hopes and dreams? How much are you paying in taxes? And how much are you losing to unnecessary high fees? You didn’t work to save this money so that you could spend your time worried in retirement. Now is the time to take charge of your finances so you can feel confident about your future call in during the next 30 minutes of today’s show only. To set up an absolutely complimentary no obligation, full blown financial review that will result in your own customized written plan that we’re giving away complimentary to the first 10 people who respond. We’ll start with a full-blown analysis of what you already have. By running a report to untangle how much you are currently paying in fees, how you’re allocated for risk, and what it’s costing to work with your current advisor. Next, we’ll identify your goals. Where do you see yourself in the next five years? Where do you want to go? And who do you hope to go there with is your current financial plan set up to get you there without mishap? Let’s design a roadmap to create a financial plan you can follow with confidence, get the piece that so many people are missing from their retirement. Find out how having a written plan can make a difference to your retirement dreams. Call now to schedule your complimentary no obligation full blown financial review today.


Cynthia de Fazio 21:37

And welcome back 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. Brian a great show we’re having today talking, of course, about the importance of planning properly for retirement, we talked about stock market volatility. In this segment, I want to dive in a little bit further about someone’s risk tolerance, because we have a lot of questions that come in about that. So, is someone’s risk tolerance ever tied to their age? What are your thoughts on that?


Brian Quaranta 22:07

There’s some there’s some philosophy around age, I mean, there’s you know, there’s rules called the rule of 100, where we take 100 minus your age. So, if somebody’s 60 years old, that would mean that they would have a 60-40 split. 60% equities, 40% bonds. Some people look at that as maybe 60%, equities, 40% annuities. So, there’s all kinds of different things. But we use a strategy that’s based around a technology called Riskalyze. And what Riskalyze does is quantify the risk around a number, right. So, through a through a quizzing process, we can determine the client’s risk level. And by running their current plan through this software, we can actually determine what their risk score is. So, a lot of people will tell us that they’re very conservative. And when we run their model, their current model, when I mean all their investments through the software, what we find out is that they’re actually they’re actually only wanting to take this much risk, but they’re actually taking this much risk, and it’s very eye opening for people. Okay, and a lot of times what you look at one of the one of the metrics that we look at is something called a drawdown and a drawdown is how far the portfolio could go down if the markets were to drop, and a lot of people have a drawdown of up to over 40%, which means they could lose a lot of money, and they’re not in a position to be able to do that. So, we would prefer to use a software, right that quantifies it based on the investments themselves. And that helps us really determine the risk level.


Cynthia de Fazio 23:34

Okay, and people are often surprised that they’re actually taking way too much risk, so much risk. Why does that happen? What happens when someone believes that they’re more conservative? And then how can that portfolio be so drastically different once you do the analyzation? Yeah, well,


Brian Quaranta 23:48

a lot of times we’re portfolios, you know, most people are just using standard mutual funds within their, you know, 401k, or they’ve got a standard mutual fund portfolio through, you know, a brokerage firm, and nobody really has paid attention to the diversification of it, meaning they might have a lot of overlap in there. And so, what happens is, you know, clients, the client is taking this much risk, but they’re only getting this much return. And what the software does for us is it shows us that, that they’re taking this much risk and only getting this much return. And that’s all based on key metrics, like standard deviation, and beta, and all kinds of stuff, the stuff that they don’t need to worry about, but we worry about it on our side. And what we’re really trying to do is to flip that right to where the client is taking this much risk but getting this much return. And that’s what we call an efficient portfolio. So, a lot of times just people have efficient, inefficient investment structures, meaning they’ve just got, you know, poor performing mutual funds, nobody’s really taking the time to look at them. They’ve been in there for a while, you know, every time they go see their advisor, they just keep saying we’re doing good, you know, nothing needs to change. And the reality is things do need to change, because market conditions change and asset classes change and so you need a very dynamic portfolio in the world that we live in now, because the markets change more often today than they ever have before.


Cynthia de Fazio 25:06

Sure, sure. Brian, one golden nugget of advice would you give someone in the viewing audience today? Excuse me who wants to be proactive in their retirement planning? What would you tell that person,


Brian Quaranta 25:18

they really need to figure out what rate of return their portfolio needs to do. And there’s three rates that we look at Secure Money Advisors, we look at the spin down rate. And I’ll explain these in a minute, we look at the spin down rate, the preservation rate, and the legacy rate. And the spin down rate is very simple. What we want to do is we want to run a scenario where let’s say the client needed $1,000 a month out of their portfolio, we want to look at a scenario where we say, okay, if we have this much money, and we take out $1,000 A month net of taxes, what rate of return do we need for that portfolio to spend down to zero by the age of 95. Now, that might only be a one and a half, or 2% rate of return, but it’s a very important interest rate to figure out, okay? Because that basically tells us we could probably just tuck the body under the mattress and be okay. The second rate is to figure out what the preservation rate is, the preservation rate starts to differ for a lot of people depending on what they need. But the preservation rate is exactly what it sounds like, what is it going to take? What rate of return is it going to take to preserve the principle? Right? So, if I’m taking out $1,000 a month out of my retirement accounts, and I want my balance to stay the same, what rate of return do I need to get there? And then the legacy rate is if I want to take that same amount of money out, what rate of return do I need if I want to take that money out and still have my money grow over time? Okay, right. And now what we’re doing is we’re creating some parameters. We know, in a worst-case scenario, here’s what we need, right to get the money. And this is a best-case scenario. And that starts to narrow down exactly what we start to need as far as rate of return, that also drives a decision around risk. But it’s all in the right track retirement system that we have. And the right track Retirement System truly is going to open your eyes up to some of these strategies and techniques. And folks, the strategies and techniques that you’ve been using during your accumulation years during your working years are not the same strategies and techniques that you use during your retirement years. So, for the next 10 callers who call in right now, you’re going to get a complimentary right track retirement review. Okay. There is no obligation when you come in, we will go over all of these things that Cynthia and I are talking about here today on the show, but again for the next 10 callers. That’s the right track retirement review. All you have to do is call 1883821298.


Cynthia de Fazio 27:34

Brian, thank you so very much to the viewers at home most specifically thank you for spending time with us today. The number to call is 888321298. We know you have a lot of questions for Brian about how to plan your perfect retirement. He has the answers for you. Be safe, be happy and be blessed. We’ll see you back one week from today with On the Money with Secure Money.