On the Money with Secure Money: Episode 79

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Video Transcript

Cynthia de Fazio 00:20

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 today?


Brian Quaranta 00:31

Cynthia, I am doing great. Good to see you. As always,


Cynthia de Fazio 00:33

it’s good to see you as well. Because I know that you’ve been so extremely busy. So let me ask you, what types of questions are you hearing from people right now?


Brian Quaranta 00:41

How’s your one month old?


Cynthia de Fazio 00:43

Yes, that’s the one right? I know, that’s the most important. How’s Kate?


Brian Quaranta 00:48

She’s doing good. She’s doing good. Yeah, we’re surviving. You know, you go from one child to two kids. And it’s like going from, you know, one to 10.


Cynthia de Fazio 00:57



Brian Quaranta 00:57

You know, so, a very busy, but the office is extremely busy right now. People that we’ve met years ago, you know, are resurfacing, that, you know, not everybody is a good fit for what we do at secure money advisors. But we met a lot of people over the years, because between the radio show that we do on three ws DVE, all the educational events that we do at all the colleges and local universities, you know, a lot of people come out and they see us and you know, it might not be the right time for them, or, you know, we walk them through our strategy, it might not be the best time for them. And a lot of those people say, you know, when things change, we’ll reach out, we’re hearing from a lot of those people. Because, you know, I believe in safety and retirement, I believe truly in protecting what you’ve earned. And too many people roll the dice and take too much risk with it. And a matter of fact, I was, I was working with a guy that a couple of years ago, he had come into my office a number of times, and he had about $1.8 million in his 401 K plan. And I had said, you know, I really recommend that we protect some of this for income because he wasn’t gonna have a pension, and he wanted to retire in about five years. And the markets were really good. It was it was right, kind of towards the end of COVID. Okay, the markets really had rebounded quite a bit. And he says, you know, I’m just making so much money right now, I’d hate to take $800,000 out and only get a four to 5% rate of return on it. And I said, Well, I think you’re really missing the bigger picture here, you know, you’re two to three years away from retirement, and you’re going to need to generate income because you don’t have a pension, we really have to protect the first 15 to 20 years of your retirement with that money. And he said, You know, I just I hate to pull that out and miss out on all of these gains. Yeah. And so I said, that’s fine. You know, just know that eventually, this is what you’re going to have to do, because you’re not going to get through retirement, keep it 100% of the money at risk. Anyway, he called me he says, I need to come in and see he says, You are right. He says my 401K is down to 1.2 million now. And, you know, he says, I wish I would have listened to you. And you know, it’s not too late, though. I mean, you know, if, if your accounts have gone down, that doesn’t mean that you have to hang in there until they recover. Because your number one priority still and responsibility with your money is to make sure that it still gets you through retirement. So, if you still have won the game, which a lot of people probably have, because the markets have been up for about 12 years. So, there’s been a lot of gains. So, if you think about it, market goes up, right? And it’s come down, but it hasn’t gone all the way down to here, right? It’s just come down. You can’t look at it and go, geez, I’ve lost it. I’ve you know, and that’s it. And I’ve just kind of wait until it goes back to that peak. That’s not how it works. You’re still probably doing okay, even though it’s drawn down a little bit. The question is, what’s your probability of success of still retiring? And that’s what we can help you figure out?


Cynthia de Fazio 03:41

Absolutely. Well, Brian, also, we were talking before the show started today, the three interest rates that matter? Yeah. How does that tie into everything going on in the world right now?


Brian Quaranta 03:51

Well, it’s important because most people don’t know how much risk they should be taken with their portfolio. Okay. And so, I write about it in the right track retirement book about the three interest rates that matter. And the reason why they’re so important is because it really starts to guide you and point you in the direction of what you need to do. And I’ll explain these rates, the first rate, you’ve got to figure out and we figure this all out, when you come in, right, the first one is what we call the spend down rate. So, this is where we look at how much money you’ve got. And we plug in a rate of return a small rate of return, maybe 2, 3, 4 percent, whatever. And we take the amount of money that you’re going to need out of your portfolio every single year. And what we want to do is we actually want that portfolio to spend down over time you want it to go down in value, because I want to drive that portfolio balance to zero. Okay, you know, a lot of my clients will say, Look, I don’t want to leave my money to anybody, you know, I want to take all my money out. And the last check I wanted right is to the Undertaker, and that’s it. Okay, that’s our spin down rate. So, we look for that spin down rate. Then the next one is we look for the preservation rate. That’s where we take the same amount of money out, but we just want to make sure that we maintain principle. And then of course, we’ve got the legacy rate, which is where we take that money out the portfolio still grows. Why is that important? Because it really identifies the level of risk we need to take. But more importantly, most people don’t even know what rate of return that they need their portfolio to do to make it through retirement and not run out of money. And that’s what we’ve got to figure out.


Cynthia de Fazio 05:15

Is that still the number one fear brand, and we’ve talked about that before in the past, but the poll that’s been done with the people that were actually on the phone, they all said, instead of dying, they are fearing running out of money.


Brian Quaranta 05:26

You have Yeah, AARP did this. AARP did this study, or survey and they interviewed 1000 people. And they said, What do you fear most? running out of money or death? Yeah. And over 95% of those people said, they fear running out of money more than they fear death alone, I would be part of that group of people that would be fearful of running out of money, I would never want to run out of money. Right? And I unfortunately, Cynthia, meet those people. There’s so many people out there and people don’t realize that are so close to running out of money. You know, and the worst day of retirement is not the day you run out the worst day of retirements that day you figure out you’re going to run out and there’s nothing you can do to stop it.


Cynthia de Fazio 06:06

Yeah, absolutely. Well, again, it goes back to proper planning. Because that’s what you’re so passionate about. Let’s talk about why you are so passionate about that before we open the phone lines shortly.


Brian Quaranta 06:17

Yeah, well, look, I didn’t grow up with a silver spoon in my mouth. My mom and dad worked really hard for their money. My dad had a big gun rewards catalog store, remember my common words to remember Montgomery Ward and things were great for my family. I mean, I remember working at my dad’s store, it was you know, early 80s. And there was a very popular doll being sold back then you remember what that doll was?


Cynthia de Fazio 06:35

I think obviously, cabbage parents, everyone had to have a cat, everybody, forever for them.


Brian Quaranta 06:39

Here’s lines out the door. Oh, yeah, what my dad had a catalog store that was Amazon before Amazon, right? You know, you’d go in and you pick everything out, I remember, you know, my dad coming home with that catalog, I couldn’t wait to get it in my hands, kid, and be able to circle all those toys you want and dream about them all night long. And but you know, my dad become rewards by not filing for bankruptcy. And my parents lost that store. And so, we went through some very hard times financially. And, you know, that’s what really inspired me to learn about money. Because I feel like whether it’s the market or loss of a job, you should never be in a position to where you can’t retire. And so many people put themselves in this position of risk to where if one thing goes wrong, they have to delay retirement, or they have to come out of retirement. And it’s just that I didn’t want to see that happen to other families. And so, I got into the financial industry. And I learned about all different asset classes. And what I learned is that you have to have asset classes that are non-correlated to the market that have the ability to grow, but not lose money. And so that really helps when you’re building a retirement plan to have a little bit of a hedge against that market risk. And people don’t realize how to do that most people just take risk with 100% of it. Sure. Hence the name secure money secure money was built around that.


Cynthia de Fazio 07:55

Absolutely. Well, Brian, I know there’s a very special offer that you’re going to be presenting to the viewers at home today. Let’s talk about what that is. And then open the phones.


Brian Quaranta 08:03

Yes, Cynthia, I worked so hard to put this together. Because I want people to have good information. I want them to have sound information. And the reason is, is I know that there’s a lot of noise in the marketplace. I mean, if you google how to retire or you google how to build an investment strategy, there’s so many different opinions, and you get so confused. And unfortunately, a confused mind does nothing. And that’s unfortunate, because the worst thing you can do is do nothing. I want to help you have a simple process to follow a simple plan. And that’s what the right track system is all about. So, for the next 10 callers who call in right now, we are going to give you a complimentary no obligation, right track retirement review. All you have to do today is pick up the phone and call us now 1-888-382-1298 and schedule your appointment today.


Cynthia de Fazio 08:50

Brian, 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’re going to take a very short commercial break. We’re going to be right back momentarily. And I’m going to ask Brian, what is income without striking out so stay tuned, you’re going to want to hear his response.


Brian Quaranta 09:09

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 09:23

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 the late 70s.


Brian Quaranta 09:31

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 09:45

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


Brian Quaranta 09:51

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. probably now,


Neil Major 10:01

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


Brian Quaranta 10:07

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 10:38

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 love this saying “income without striking out”. What is that exactly, income without striking out?


Brian Quaranta 10:53

Striking out is a big deal when it comes to income. Imagine you needing $25,000 a year in additional income and 10 years into retirement striking out and no longer having that $25,000 a year. Or imagine a different scenario. Imagine having $25,000 A year coming in. And no matter what happens, you always have $25,000 a year coming in. So, if I said to you, there was two ways I could approach building your retirement strategy. One is $25,000 a year I just don’t know how long it’s gonna last. Or I can get to $25,000 a year, and it’s guaranteed for your life. And if you die, it’s guaranteed for your spouse’s life. Which one would you choose?


Cynthia de Fazio 11:31

I’m going to go with that one.


Brian Quaranta 11:32

Okay, if I told you it was an annuity, would you still choose it?


Cynthia de Fazio 11:35

I trust you


Brian Quaranta 10:56

Yes, of course. All you’re doing is getting yourself a pension. See, so many people don’t realize that. And the world we live in today, the insurance companies have done a such a great job and building out product that allows you to get income for the rest of your life. And if you die for the rest of your life, wives or spouses’ life, a lot of people will say, Well, you know, I heard that the if I die though, the insurance companies keep my money. It’s not true in the new style products today, older style products, that was absolutely true. And some of those products are still around. And those are not good annuities. But the world we live in today, you can get guaranteed income for husband and wife. And if you ever want to take all that money out, you could certainly do it, you never lose control of your money, you can take it out anytime. If you take it out before its maturity period. There could be some, you know, some penalties if you if you did that. But most people what they want is something that’s going to guarantee their money, even if their account balance goes to zero. So think about that. The insurance company says, Look, if you live so long that you’re pulling this money out of his account, even if the account balance goes to zero, we will continue to pay you that income. What happens if you’re investing your money in the stock market and your balance goes to zero? You’re out of money? Absolutely. You’re out of money. And the biggest mistake that people make is never insuring their income in retirement. You know, we insure everything in our lives. We insure our cars, we insure our homes, we insure our life. Yeah. And most people never insure the most important thing that they’re going to need on an on a daily basis. And that’s their income. And that’s all an annuity is it’s just you insuring your income. And so, people need to understand that there’s a reason for insurance, the reason why it’s there is so that if something bad happens, you can replace something. And then in this case, if the balance of the account went to zero, you’re not losing your income.


Cynthia de Fazio 13:29

Okay, let’s step back for just a moment and talk about annuities and why some of them have a negative stereotype. Can we uncover and unpack rather, the different types of annuities in case people in the viewing audience are wondering that same question.


Brian Quaranta 13:43

Yeah, well, there’s really four types. And you know, in my opinion, there’s only really one good one that you should look at. There’s one called an immediate annuity where you do give your money to an insurance company, they pay you an income, but if you die, they do keep the money. Personally, I don’t like it. I would never buy it for myself. I would never buy it from my mom and dad because I don’t like the idea. If I put the money in and two years later I die, they keep the money. So, it’s not a good deal. Right. The other one is called a variable annuity. Now this type of annuity is investing your money in the stock market, but it has this insurance wrapper where for pretty large fees and I when I say large fees, most people that have a variable annuity when they come in my office, and I review it, I’ve created a process called the variable annuity escape, because most people don’t know what they don’t know what these annuities and they don’t realize that they’re paying three to 4% a year in fees. And really the benefits and those annuities in my opinion are just not worth it. They’re not strong enough, and they have to pay these high fees in there because of the money being invested in the market. So, I would not purchase personally a variable annuity. I don’t like them. People do have them. They are recommended, but I don’t like them. I think it’s one of the bad ones. I do like fixed annuities. Fixed annuities are great. I personally own one myself. My parents own one, a lot of a lot of our clients own one, because fixed annuities are like bank CDs, you know, tell me what’s wrong with a bank CD other than the low interest rate that it pays. But go back to the 1980s, when, when CDs were paying, you know, 10 to 15%. You know, if you could get a bank CD pay in 10 to 15%. Right now, FDIC insured, would you have any of your money in the stock market right now? Right? Most people, if they could get 10%, on a guaranteed CD at the bank, they would never have any of their money in the market, why would there be, there would be a rush to buy the CDs, right? But the only problem with CDs today is that they’ve been at such low interest rates, where fixed annuities have come into the marketplace, and they’ve replaced the bank CD, they’re the alternative. And you can get really good rates. Right now we’re seeing rates anywhere between three and a half to four and a half percent. So, imagine, I mean, you could take a million dollars invested in a fixed annuity at 4% and get $40,000 A year and never touch a principal. Right. never have to worry about the ups and downs of the stock market. I liked the fixed annuity for some people. Okay. I also like the indexed annuity, and the indexed annuity is a type of annuity where if the market goes up, you make money. But if the market goes down, you don’t lose any money. You know, so a lot of people say, Well, that sounds too good to be true. How in the world did they do that? Well, there’s strings attached to everything, right. And they’re not perfect accounts. I personally do own that one, too. But the reason why they will give you some of the gains without the loss is because they don’t give you 100% of the gains. So, let’s say they only give you 50% of the gains, okay, so that means that the market goes up, 10%, you get 5%, the market goes up 20%, you get 10%. But if the market goes down, you don’t lose anything. And all they’re doing behind the scenes is they’re just buying a hedge on the market called an option. And they’re using that that that money, the sharing in that game with you to buy that hedge. So, they’re not keeping half your money, by the way, a lot of people do think that. Okay, so and the reason I like that annuity is you can also get it with a guaranteed income feature where it can provide you with income for the rest of your life. So that if you’re taking money out, and you know, and let’s say the market isn’t cooperating, and that cap account goes to zero, they’re still going to give you your income. So fixed annuities and fixed indexed annuities are great for retirees, especially if you want to guarantee and protect your principal and generate income at the same time.


Cynthia de Fazio 17:11

Okay. Brian, do you feel that they benefit all of your clients like one annuity product, or the next, if you will? Is it something that you recommend to people that are coming in?


Brian Quaranta 17:20

You really, you have to evaluate the client’s specific situation, right, because some might be better in a fixed annuity versus an indexed annuity. What I like and what seems to be a good fit for a lot of people is splitting it between the two having a little bit in fixed and having a little bit in index. That’s personally how I do it myself, I find when we run the models, that that works really, really well. But you have to evaluate each person’s situation to determine which one really is best.


Cynthia de Fazio 17:45

Okay, so again, there’s not a cookie cutter approach, there’s not one size.


Brian Quaranta 17:50

Right. And as a fiduciary firm, you know, I always say this, think about this. As a fiduciary, I am held to a very high standard, okay. And, you know, think about Adam, all the products that are available in the marketplace, as a fiduciary where I am on the hook, why in the world, would I be choosing in an annuity to recommend out of all the things that I could do? Why would I choose that because it’s the only product that can do something that no other product can do. And that’s guarantee and protect your principle and provide you with guaranteed income for the rest of your life. There is no other product to be able to do that. And like I said, Cynthia, most people insure everything, their cars, their health, their life, but they never insure that income.


Cynthia de Fazio 18:31

Brian, it keeps circling back to secure money,


Brian Quaranta 18:33

it does secure. Absolutely. And that’s what people should be shooting for. Now, as a full-service firm, we’re also making sure that they’ve got plenty of money still in the markets to where we can get higher rates of returns, and keep pace with inflation. But again, you cannot have 100% of that money there. Because if the market doesn’t cooperate, that’s where will people’s lives get destroyed apps, they get absolutely destroyed. There’s so many stories over the recent months of just people having too much money on one stock too much money in one cryptocurrency that have been hurt so badly. And we’re talking, you know, the younger folks have nothing to worry about, you know, if you’re 30 years old, and you lose a bunch of money in cryptocurrency or an individual stock, you got plenty of time to recover. Of course, you got people that are 55 years old, 60 years old, 65 or older that have lost large chunks of money, they’re never going to have the time to recover.


Cynthia de Fazio 19:21

No, no, absolutely. Well, Brian, oh, there’s a very special offer that you’re going to present to the viewers at home today. Let’s talk about what that is, once again, before we reopen the phone line.


Brian Quaranta 19:31

Folks, I really want you to take advantage of this right track retirement system that we’ve built. It truly is a simple strategy to help give you peace of mind help you build income and get you into retirement and through retirement without any anxieties or worries. You know, most people will say to me, Brian, I don’t even know if I can retire. Are we going to have enough money? Are we going to run out of money? I want to show you three very simple approach how to build a proper retirement plan, one that’s mathematically figured out that we can get you to Retirement all the way through without ever running out of money and even possibly leave a lot of money to your family members and do it in the most tax efficient way. The Right Track retirement system is built around the five key areas that I always talk about. Its income, taxes, investments, health care and legacy planning. I want you to pick up the phone and I want you to schedule an appointment with us today. There is no cost and no obligation to that appointment. All you got to do is pick up the phone call 1-888-382-1298. And schedule with us today.


Cynthia de Fazio 20:29

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’re gonna take a very short commercial break. But when we come back, I’m going to ask Brian, how do you protect yourself against big market swings? Stay tuned.


Announcer 20:48

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 could 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 22:23

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 about how do you protect yourself from big market swings. What can people do? Because obviously I know that there’s a lot of nervousness, if you will, going on right now. So how do you protect yourself?


Brian Quaranta 22:44

Yeah, through our three-bucket approach, okay, three bucket approach is really the best way of protecting yourself from huge swings. And the reason why it works so well. Is that it most people look at their money as one sum. Okay, I look at at it as three parts. Okay. Okay. So, and the reason why I look at it three parts is because money does different things for us. And there’s really only four things that money can do. It can provide you with growth, okay? It can provide you with safety, it can provide you with income, and it can provide you with liquidity. And if you ask most people out of those four, which is the most important to you, most people will say, I want it to be safe, right? I want it to be safe, I really don’t want to take any risk with it. And then I’ll say, well, what’s the next thing they say? Well, I needed to provide income, okay, 90% of the people that come to the office, when I go through the exercise, those are the two things they’ll give me. Some will say I want income and growth. But it’ll always start with, it’ll always start with either income or safety. So, they’ll say safe growth and then income, you know, or they’ll say, income growth and then say, but the point is, is that we have to identify what the purpose of the money is. And then we can start to structure into these three buckets. We always want liquid money available for emergency cash reserves, we need what I call pension money to generate cash flow. And because we want to protect those first 1015 20 years of retirement, and we do that through that pension bucket, when you protect that first 1015 20 years of retirement that allows you to confidently, confidently take risk with the money that you do have in the market. But hedging against big market losses. So, you don’t strike out really comes to with also what we call active management. And active management means that when the market changes we change, right when asset classes come in and out of favor. We move asset classes that are in favor, and a lot of people will you look at their portfolios, especially most people have 401 Ks, or standardized portfolios with mutual funds. A lot of those are in what I call static portfolios, set it and forget it. There’s no changes being made. Market conditions change. Usually they’re just getting advice to not worry about it hang in there. They’re in it for the long haul. We actually move we want to we want to rotate asset classes when things change and that’s how through that confidence You should have everything you can protect yourself from big swings like that.


Cynthia de Fazio 25:03

Brian, thank you so much. I know we only have about three minutes left of the show this week. But I wanted to ask you, what advice do you give people who are thinking that they just want to keep everything in cash right now? I mean, underneath the mattress in the pantry? Yeah. What do you say to those folks who are too afraid to even think about anything else?


Brian Quaranta 25:20

Yeah, well, cash is king sometimes, you know, I mean, it is and deploying that money slowly over time is my best advice, you never want to just take it and deploy it all at once. But usually, if you’re in cash, that probably means that you want that money to be safe, right. So, pulling that money out and dump it into the market may not be the greatest idea market may have hit its bottom, it’s may not have hit its bottom. So, you got to be very careful in deploying that money. Because cash can open up a lot of doors for opportunity to in down markets, real estate prices start to drop, you could be a cash buyer, there’s all kinds of things you can do. So, I’m okay with hanging on to a little bit of cash. The scary thing is this is when somebody’s lost 20 or 30% of their portfolio, and they sell and then they sit in cash with that money. Because now if the market does rebound, they have no ability to rebound and make that money back. And I meet people like that all the time, they pulled their money out in 2007 2008, and never bought back in and think about all the gains they missed out on. And a lot of those people will tell you, they regret it. But they didn’t have they didn’t have the courage to go back into the market because they’ve gotten hurt so badly. And so, you know, a lot of times our job is financial advisors has again, demonstrating to the client that even if the portfolio has gone down a little bit, there’s still a high probability of success. And when you work with somebody like secure money advisors, and we can build out that model based around good math and show you in black and white, right in that model that you’re going to be okay. There’s a different feeling about continuing to stay here. And so, a lot of people if you’re out there today, and you’ve lost money in the market, you’re not sure what to do and you’re not getting the advice your advisors aren’t communicating with you. Come in, sit down with us get a second opinion. I say this all the time, you cannot get a second opinion from the person that gave you the first opinion. But I want you to have access to this right track system. Because it is so simple and easy to understand. It’s going to give you the information you need to build a true Retirement Plan. Something that’s going to give you a peace of mind and safety and retirement. Call today right track retirement review, no obligation, dial the number and schedule 1-888-382-1298


Cynthia de Fazio 27:32

Brian, thank you so very much to the viewers at home most specifically we would like to thank you for spending time with us today. That number is 888-382-1298 We know you have a lot of questions for Brian. So please feel free to pick up that phone and call in. Be safe. Be happy be blessed. We’ll see you back one week from today On the Money with Secure Money. Take care.