On the Money with Secure Money: Episode 102

To see a full schedule of our TV airtimes, please click here.

Video Transcript

Rebecca Powers 00:23

Welcome to On the Money with Secure Money. I’m Rebecca Powers. So happy to be with you today. And of course, the CEO and founder of secure money advisors who brings you the show each week is Brian Quaranta. Good to see you.


Brian Quaranta 00:35

Good to see you as always. Yes.


Rebecca Powers 00:37

So, we get tons of, he’s getting fan mail, now. A lot of people are saying this fixed annuity you’re talking about, zero risk, seems too good to be true. So, let’s start there.


Brian Quaranta 00:49

Yeah. Well, first off, you know, let’s first talk about risk in general, right? Because, you know, a lot of people need to define risk, in my opinion, a little bit differently than what we have been for a long time. You know, the way that we define it at Secure Money Advisors is if it can go up in value, or down in value, it’s going to be risky, and you have no control over it. And you have- no matter what you do you have no control over it. I mean, look, you- look at just even the bond market right now. I mean, you know, you can look at a 20-year treasury bond, who would ever have thought a 20-year United States Treasury bond would be down over 20%? Is that amazing? Yeah, I mean, most, you know, most people are going to buy a 20-year treasury bond for safety, right. But now used to be the truth that it used to be the truth. But the problem is, is that you have interest rates going up at such a rapid pace right now that it’s impacting the bond market. So, risk is anything that can go up in value, or down in value. And that’s the reason why we define it that way is because the financial industry has convinced us that there’s different, you know, levels of risk, and some are more safer than others, like conservative, moderately conservative, aggressive, very aggressive, but we saw conservative portfolios this year. things, you know, 20 plus percent, you know, more in some cases, and even some equity portfolios. So, you know, the first thing we always have to do is define what the purpose of your money is. And I always say that there’s only four things that your money can do for you. It can either grow, it can provide you with income, it can be liquid and available to you, or it can be safe. So you go, okay, these are the four things that the money can do when I asked folks, right, that come to my office, out of out of growth, income, liquid and safe, what’s the number one priority? And they’ll say, Well, my account needs to provide income. And then I’ll say, Well, what’s number two? And they’ll say, well, we need it to be safe. And then you’ll say, What’s number three? And they say, we still want it to grow, because we want it to be, you know, keep up with inflation, right? And then they’ll say, Well, we also want to have access to it in case of an emergency. So now they just numbered these for me, and they say, Okay, well, incomes. Number one, safety is number two, growth is number three, and liquidity is number four. Okay, so now from there, you have some information of, okay, out of all the investment vehicles that I can choose from, Okay, where am I going to go find something that can provide income? So you go, Okay, what about a traditional mutual fund? Well, that can’t provide income, right? Most traditional mutual funds are growth based.


Rebecca Powers 03:25

So, you’re locked in.


Brian Quaranta 03:26

So, you basically put money in, it’s gonna go up, it’s gonna go down, there’s no- if you want to take income out, right, you could, but the problem is, if you’re taking income out, and it’s going down in value, you could run out of money, it comes down the law. So, what’s the point? Right, so now, let’s take that to your question. That is the fixed annuity. Okay. So where does a fixed annuity come into play? Well, if you need if you need income, and then you need safety, this is a good place to do it. So, you know, I had a lady come in, this was probably I don’t know, three or four weeks ago, she had money at the bank, right that she had in a money market account there. And she had called me and said, Listen, I, you know, I’ve referred to I’ve never come in, I’ve never sat down with an advisor before. But the problem is, I’ve got $400,000 in the bank, and I’m getting $33 a month in interest. And I use this money to pay my heating bill in the winter, I pay my taxes with this. And now all I’m seeing is this money going down because I’m only earning $33 a month in interest. So, we brought her in, and I talked to her about, you know, what the purpose of the money was in what it needed to do. And when we showed her how to go from $33 a month in interest to over $1,500 a month in interest. So now she has a mortgage note. Yeah, I mean, she literally has $1,500 a month in interest coming in now that she can use to pay your bills to pay, you know, her gas bill to pay her taxes. And that what I’m describing there is the fixed annuity. That’s what it does. So, it’s a very powerful tool for some people. And again, do you have to take risk? No, you’re getting a contractual guarantee where it’s principle protected.


Rebecca Powers 05:02

Zero, you lose zero when the market goes down, you can- So, instead of rolling the dice in the market to maybe get 9 to 20%, I know for a fact it’s locked in at maybe four or 5%, roughly


Brian Quaranta 05:13

Yeah, so a fixed annuity is going to give you a fixed rate of return for a for a specified period of time. So, you might get, you know, 4% or 5%, for five years, right? So now, every single year, that’s what you’re gonna get no matter what doesn’t matter what’s going on in the market, you turn the TV on, if there’s absolute pandemonium on Wall Street, you’re still getting your four or 5% guaranteed every single year.


Rebecca Powers 05:34

And you know, that’s exactly what my husband and I chose to do. Yes, because the thought of just losing 20 Getting this silly statement that’s gotten number out 40,000 Less, it’s, it’s, I can’t stomach it. I’d rather make 4 or 5% and know that zero is my hero.


Brian Quaranta 05:48

That’s right. And the thing is, is that it’s okay to have some money in the market, potentially, because you want to be able to get that big growth, right. But yeah, cash down, if you’re going to be in the market, that is a long-term game. Yeah. And you can’t be rolling the dice with 100% of your money.


Rebecca Powers 06:02

When you say long term, I’m 54, so…


Brian Quaranta 06:06

So, if I was building a plan for you, yeah, okay, what I would do is I would have enough of your money go into what I call our safe account or our pension account, all right, and that I would want to have enough money in there that could generate at least 15 to 20 years’ worth of retirement income for you. Okay, so now I know this bucket right here is going to last for 15 to 20 years. That means that any money that we now have in the market is 15-to-20-year money, meaning it’s got that long period of time to grow. When you have a time period of 15 to 20 years to grow your stock market money, you have a high probability of success of that account balance being up.


Rebecca Powers 06:49

Because of compounding interest, the miracle.


Brian Quaranta 06:52

Compounding interest, time,


Rebecca Powers 06:45

And I’m not taking it out for income.


Brian Quaranta 06:56

And you’re not taking it out from income because you’re taking it out from over here.


Rebecca Powers 06:59

I have it over here. That’s fantastic. Okay, one more thing about annuities, because that’s the route, like I said that we chose to go you know that, how is it possible? Because, again, we get so many letters and emails about you, how is that possible? Explain how the insurance companies do that?


Brian Quaranta 07:14

Yeah, so it’s actually really simple. So, let’s first talk about how the banks do it. And then you’ll understand how the insurance companies do Okay, so when we would give our money to the banks, right, actually, when they wanted our money, right, they used to have to pay us some interest to get our money, they don’t need it anymore, they give us you know, a 10th of a percent now, so weird. I don’t understand that either. But let’s just say that you know, the bank, you can go to the bank and get a 3% CD. Okay. So let’s say I give $100,000 to the bank, right? And now they’re gonna give me 3% A year or $3,000. But they tell me that I need to have that account for the next three years or four years, right? So, I’ve got to choose a term to hold that account for right. But every year that I’m in there, I’m gonna get 3% on that money. Now, what the bank is going to do with that money is they’re not going to put it a little box called Brian Quaranta. And this is $100,000. And it’s here and it’s earning 3% interest, no, the banks are gonna use our money to invest, they’re gonna lend it out and lend out or invest, right? They’re doing wet lending it out is investing, right? So, they’re gonna lend it out in the form of a car loan, they’re gonna lend it out in the form of a mortgage. Now, if they’re giving us 3%, right? How much is a mortgage right now? Mortgages at like 7% right now, 6-7% percent right now. Okay, how much is a car loan right now it could be six 7%. So, let’s just say it’s six. Okay? So, they’re paying us three, but they’ve just lent the money out. And they’re earning six. So, the difference between the six that they’re making and the three that they’re paying us is 3%, called the spread. And that’s how the banks make money. The insurance companies do exactly the same thing. But here’s the difference. The insurance companies are highly regulated, meaning they can only invest in certain things. The banks can do risky things like car loans, mortgage loans, yeah, and all kinds of different things, right. And I won’t even get into how our fractional reserve system works, because that’ll blow everybody’s mind.


Rebecca Powers 09:10

But maybe you’re here to keep it simple.


Brian Quaranta 09:14

But just understand that okay, the insurance this spread the money they take, that’s right. So now the insurance company is going to do the same thing we give $100,000 to the insurance company, right? But the insurance company now is going to do the same thing, but they are typically going to buy long term, triple A rated bonds, right that they can get money on now, you might be thinking yourself, well wait a second, I thought when interest rates go up, bond prices go down they do right. But if I hold the bond till maturity, I get all my interest and all my principal back and an insurance company because they have billions of dollars can hold the bond to maturity, right? So, if it’s a if it’s a 20-year bond paying 7% Even if interest rate rates are up and the bond price is potentially down, they’re still getting their 7% a year on that money. And by the way, when they hold it the full 20 years, they’re gonna get all their principal and interest back.


Rebecca Powers 10:09

So, it’s guaranteed to us.


Brian Quaranta 10:10

It’s guaranteed to us, and it’s guaranteed to them. Okay, yeah, so the insurance companies are working exactly the same way the banks are, the only difference is it’s with an insurance company, and not a bank and highly regulated. And the insurance companies are highly regulated, they can’t go out there and just roll the dice with that money. They’re very, they’re very strict in what they can buy and the quality of what they can buy. And this is why we can trust the insurance companies during very volatile times. Because think about it. Where do we where do we insure risk? Who do we insure risk with? We insure risk with insurance company? Right. So, think about, you know, if-


Rebecca Powers 10:47

your home, your car insurance


Brian Quaranta 10:49

-Car insurance, right, you know, my health insurance, they’re insuring all of our risks. So, if I have- if I want to insure my retirement risk, okay, I can do that by utilizing an insurance company, and Wall Street did a really good job in, you know, painting the annuity word as this really bad thing.


Rebecca Powers 11:09

They demonize it. So, we would keep our money in the risky stocks and bonds, and I hate to cut you off Brian, But let’s pick this up in a minute, because we need to take a very short break.


Brian Quaranta 11:16

We’ll come back, we’ll come back to this topic. But folks, before we, before we go to break, I want you to take advantage of our right track retirement review, because they really, truly built it to help you get some more clarity and peace of mind around your retirement. So, I want you to pick up the phone, call us today, we’re gonna go over five key areas. When you come in, we’ll talk about your income, your taxes, your investment strategy, your healthcare strategy, and your estate planning strategy. But you got to do your part, you got to pick up the phone and call us call 1-888-382-1298 and schedule your right track retirement review to that.


Rebecca Powers 11:48

Alright, and we’re going to talk more about Wall Street and the risk you might be taking, do you even know your risk? Stay with us.


Brian Quaranta 11:54

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 will 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 12:09

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 12:16

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


Neil Major 12:31

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


Brian Quaranta 12:36

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 Major 12:46

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


Brian Quaranta 12:52

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 you dream.


Rebecca Powers 13:22

Welcome back. So, we were talking about risk and how you don’t need to be risky. You don’t need to be worried at night, every time you turn on the news. It’s so upsetting. We were talking about how Wall Street’s done a really good job of painting a picture.


Brian Quaranta 13:36

Yeah, of how, you know, terrible annuities are right. Yeah, they’ve done a good job demonizing them. And, you know, it’s interesting, because, you know, I believe in all financial products, okay, I think there’s anything bad out there, you just have to really educate yourself on them. Because, you know, if you’re reading an article, and someone’s demonizing a specific financial product, you have to ask yourself, well, what’s their agenda? Why don’t I do you know, as an independent fiduciary firm, think about it? If I’m a fiduciary, and I’m held to the highest standard, why in the world would I choose to ever use an annuity? Right? It’s bad. If it’s a bad product. Yeah. Wouldn’t I have to? Wouldn’t I be worried about regulators coming down on me like crazy, right, because I’m using an annuity? No, it’s because the annuity solves a problem that no other financial product can solve. And that’s providing safety and income. Now, I will say, there are definitely annuities that I would stay away from. Yeah, like, I’m not a big fan of the variable annuity. Okay. The variable annuity, invest your money in the market, it’s at risk. You know, there’s lots of fees associated with it. There’s a bunch of bells and whistles on it’s a pretty complicated product. I personally don’t like it, all right. But you know, at the end of the day, it might solve a problem for somebody, right?


Rebecca Powers 14:52

And variable means it varies.


Brian Quaranta 14:54

It varies. It goes, it goes up and down in value. Yeah. So, and then, you know, I’m not advantage of what they call the immediate annuity either this is when you would give your money to an insurance company, and they would pay you monthly income, but you lose control of your principal. So, at secure money advisors, we want to use the plain vanilla annuities that give our clients the protection, the security, the income they need, but the flexibility to take their money out to make changes and never lose control of the money and lower fees. lower fees. Yeah. Which is another really great thing about fixed annuities is there are no fees. It’s a no


Rebecca Powers 15:33

Oh, no fees.


Brian Quaranta 15:34

There’s no fees on it. Because it’s no different than the bank. Think about it. Do we pay a fee on a bank? CD? No, no, because again, the bank’s lending it out, right? And they’re making money off the spread. Same thing with the insurance company, they don’t need to charge a fee. Why do you think Wall Street doesn’t like them? They can’t charge fees on them.


Rebecca Powers 15:50

They can’t charge fees. And again, not to keep going back to the big box retailer, we won’t say any of their names. But that’s exactly what the great thing is about you being an independent, yes, you can pick any annuity, any company, any insurance, you can kind of sit back with your cup of coffee and look around and get the best for your individual person.


Brian Quaranta 16:10

And we do- that’s exactly what we do. And that’s the one thing that I love about what we do and why I’m passionate about my work today. Because when you’re at the big box firms, you got a menu of services, you got a menu of products, you know, a lot of these guys will talk that they can do anything. But the reality is, there’s a menu there, you know, and I know because I worked at them, right? I know, you still work at them. So, you know, this is why if you look at my industry, the financial planning industry, more and more individuals are leaving the big box firms to go independent, because they don’t want to sit down with a client and have an agenda or only have a very specific group of products or services that they can offer. And that is one thing that we pride ourselves on secure money advisors is that we get to do the very, very best for our clients, because we have the freedom and autonomy to do it.


Rebecca Powers 16:59

And you don’t have to hide under the desk. Like you said, market’s down 20% And everybody’s calling. So, your clients, you kind of keep up with them. It’s not just a once a year, I want to talk about that. It’s that trust, it’s the relationship. I know your beautiful wife works in the office. Yeah, it is truly a family affair. So, they can go there’s no there’s no question too small, like ask Yeah, hey, should I buy my daughter a car with cash? Or should I go ahead and get that bank loan? Is any question too small?


Brian Quaranta 17:29

No, we, you know, those weak questions. We feel those questions all day long. You know, we’ve got a great team at the office, there’s 15 of us there. You know, my wife, Kate has been able to take over some operations. You know, obviously, with us being new parents, you know, she was an HR director for a long time at a company in Pittsburgh. And, you know, we decided that after we had the two boys, that it was just going to be a lot easier for her to stay at home. But she’s very career driven to where she was. So, you know, running the business and being financial planner are two different jobs. So by her being able to take over some of the operations has really helped me stay in the seat of planning and doing things like I’m doing today, being on TV and sharing my message with folks. And those are the things that I absolutely love to do. But your question was, you know, what is kind of our servicing model look like to our clients, as the years go on. And, you know, my dad had a Montgomery Ward’s catalog store. Do you remember Montgomery Ward’s? Yeah. And then my grandfather had a Kirby Vacuum store. Do you remember that now? True story, my dad’s and my grandfather’s store was in a strip mall. My dad’s Montgomery reward store was here. And my grandfather’s Kirby store was here. And so, they got me real cheap labor, I would bounce back and forth all day long, right? Go help your grandfather, go help your dad, go help your grandfather, go help your dad. And one of the things that they both taught me, because they both had their own businesses was it’s one thing to have a client, right. But it’s another thing to service the client and the client, the client, right. So, you know, we do a lot of things throughout the year. And, you know, we have a what we call our 411 Client Servicing process, which I love. We have, you know, four individual client events a year, I send out a weekly email with all kinds of updates on all kinds of different things of what’s going on in the marketplace. And so, and then we have this mandatory annual review, but we also give our clients access to unlimited financial planning appointments throughout the course.


Rebecca Powers 19:35

Really, that’s great. It’s great, fantastic. Alright, we need to take a very very, very short break. We want you to know the number 888-382-1298 There’s always that QR code that do easily take you to our landing page. Please have your calendar ready. We want to get you an appointment we save about 10 slots each week for each individual show. Tell them what they’re gonna get when they come in.


Brian Quaranta 19:53

Right Track Retirement Review. Please take advantage of this. I truly built this for you to help give you more clarity and peace of mind and Retirement, when you come in, you’re going to meet with my team, we’re going to sit down, we’re gonna go through five key areas with your income taxes, investments, health care, and your estate planning. It will be an appointment that will give you a tremendous amount of clarity. So, but you got to do your part, pick up the phone, call us today, schedule that time 1-888-382-1298, my team is standing by to get you scheduled to come in. And when you schedule, we’ll also send you a copy of my book complimentary, right track your retirement, it’s a simple planning guide to help you minimize risk and maximize your income in retirement.


Rebecca Powers 20:34

And he will even pay for the postage and handling and there’s no obligation just about an hour for that first appointment, make that call make your appointment, stay with us more with on the money and your secure money.


Brian Quaranta 20:45

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 and to your charities rather than the IRS. Would that be worth the time to come in and get a second opinion?


Rebecca Powers 21:15

All right, welcome back. We’re talking about ways to mitigate your risk completely get rid of your risk, which my husband and I decided to do now we do have still some of it in the stock market. And you said because of my age, it’s good to let it grow. But is it wise for someone to just say, Forget Wall Street? I’m done with those jokers and take it completely out? Or you would not suggest that?


Brian Quaranta 21:35

I mean, there Look, there are people that are fortunate enough that they don’t need to take any risk at all, you know, so we met with some clients who, you know, some folks a few weeks ago, and they’re both going to be retired teachers. Okay.


Rebecca Powers 21:52

So, they have pensions, which is rare.


Brian Quaranta 21:53

They both have pensions. So not only do they have pensions, but they have Social Security also. So, between the two of them, they got four sources of income coming in the pensions, and the Social Security that they have coming in is more than enough money for them to live off of. So, then you say, Well, okay, well, what is your goals with your money? We just don’t want to lose it. Yeah, we just don’t want to lose it. We want to protect it. Yeah, we want to try to get a reasonable rate of return. But we don’t want any risk to it right now. And secure money advisors. We understand that is zero risk, no downside. So sure. why would why in the world for somebody like that, that has more than enough income coming in from pensions and Social Security, right? Why in the world wouldn’t we take that money and buy a guaranteed account, maybe paying 4 or 5% and guaranteed interest to work and never lose our money whatsoever? Because people might say, well, at 4 or 5% interest? How are you going to keep pace with a 9% inflation rate? Well, I’m going to tell you how I’m keeping pace with it. I’m not going to lose any money. You are. Right? So, your $500,000 is going to go down by 20 or 30%. They’re $500,000? No matter what happens, they’re going to earn 4 to 5%. Every single year, guaranteed. Warren Buffett said the Number one pay way to keep pace with inflation. Don’t lose any money.


Rebecca Powers 23:09

Don’t lose any money. And Ben Franklin said it’s so many years ago, a penny saved is a penny earned, right? I just thought about that. But now that I’m older, and paying taxes and all these wonderful things and realize, Wow, it’s so true, because that compounding interest.


Brian Quaranta 23:23

Yeah, well, I’ll tell you, I mean, you know, look, everybody’s situation is just so different, right? Like that, you know, the folks that I just shared with you, right? Not everybody can do that. Because you know, people, most people, 85 to 90% of people are not getting pensions, right. So, this is that rare group of people that have enough money between social security and pensions, that they don’t need to roll the dice. Yeah. You know, so and when I do meet folks like that, and I say, Why are you taking the risk that you’re taking? And they said, well, to keep pace with inflation, or they just don’t know how to pace with inflation when you’re down 30% Right now, right? If you look at your average return over the last 10 years, you would have been better off in a guaranteed account paying four to 5%. Because your 10-year average is at like 2% now. So sometimes people aren’t connecting these dots, because Wall Street has been so loud with her for so long. And look, Rebecca, I don’t want people to be mistaken. I believe in Wall Street, we do risk investments at secure money advisors, but I want people to get really serious about not just taking risk, as somebody tells them it’s that’s the place to go. Right? You got to really think about why do you need risk, what is going to be the benefit of it? And if the market goes down 20% 30% You know, and then it does it goes down again the next year and then it goes down next year? Are you going to be able to stomach staying in there right now because you want to know the biggest mistake people make selling at the wrong time. And this is why I believe in the bucket strategy because if you have enough money protected, while your retirement’s protected and you have money that you can afford to take risk within the market. Now when the market goes down Oh, you’re not panicked. The people that are panicked are the ones that are taking risk with money they cannot afford.


Rebecca Powers 25:06

And like you just touched on, they lose, lose lose because it goes down. They panic they sell. Worst time. Because- explain that.


Brian Quaranta 25:16

Yeah, because it well, because they’re down and now you really lose because you have no way. Right? They typically will sell and go to cash. But here’s the next thing they do. The storm rolls through, right. And now the market goes up, up, up, up, up, up, and they don’t get in right down here when the markets going up. Right, they wind up getting in up here, they miss a lot of the recovery here before they actually get back in. And so, they never recover. And you know, and there’s a there’s a study that was done. I think it was by either DALBAR or Limmer or whatever, don’t quote me on who it was, but they looked at the average return of the average mutual fund it was 10.6% average return to the average mutual fund 10.6% Now or historically, historically, okay, then they looked at the average return of the average investor, and it was 3.7%. So why is the average return of the average mutual fund 10.7 And the average return of the average investor 3.7. And it was all due to bad investor behavior, selling low, buying high. So why do you need a plan that’s going to give you staying power, emotional staying power, right? Because you have to understand you’re never gonna be able to control the markets. So, if you’ve got 100% of your money at risk, when things get volatile, I can promise you, most people make poor decisions when they have their entire life savings in the market. And it’s gone down this year. And it goes down next year. Look at 2000 2001 2002. And market went down three years in a row. How many people had the guts to stay in, you know, and a look, if you were 35 or 45 or even 50? Back then you could do it, you probably had no problem staying in. But if you were 65, I can guarantee you are thinking about things differently. Because I talk to people all the time, right? They say we just think about our money differently now that we’ve reached our 60s Absolutely about the same, but this is why I created the right track retirement review, folks, because these are the things that we talk to you about. We want to give you the clarity, the peace of mind that you deserve going into retirement. We want to show you better ways to approach retirement than what you might currently be doing. So, call today to schedule your complimentary right track retirement review. It’s 1-888-382-1298 Don’t keep your head in the sand here. Get a second opinion. Okay, this is not the time to kick the can down the road called 1-888-382-1298 and schedule your right track retirement review today.


Rebecca Powers 27:48

Absolutely. Thank you, Bryan and it’s great to find out if you’re on the right track. Thanks for joining us. See you next time.