Podcast - What a Financial Planner Does

Jag:

Welcome back to Financial Matters with Richard Oring. I am John Jag. Hey, Rich, always great to be with you.

Richard:

It's always great to be here.

Jag:

So today, we're going to talk about what a financial planner does, and who should be looking to use one. This is so important.

Richard:

That's a great intro for this topic. And just the other day, I was talking to my son, and he's a competitive kart racing. It's what you do if you ever want to try to get into a professional career in racing. You usually cut your teeth in karting. And these aren't like your little go karts you see down the street. These things are going 60, 80 miles an hour.

Jag:

These aren't soap boxes, got it.

Richard:

It's crazy. If you ever YouTube my last name, his first name is Ethan. You'll see this crash, and as a parent, your heart just drops and you're freaking out. Gets thrown, there's no seat belts on these karts, by the way. So it was one of his first races, and he just flew out. Everyone was shocked. We thought the ambulance was going to go on the track. And he got up, thumbs up, and hour later, got back on the track. I was impressed. But anyway, one thing I've learned from racing is you can't do it on your own.

Jag:

Yeah.

Richard:

You need a coach, so Ethan's part of a team, and there's some experienced drivers on the team, and they coach the newer drivers. And there's a captain and owner of the team, who happens to be the national driver, won the National Driver of the Year last year.

Jag:

Nice.

Richard:

He's been racing since he was a little kid. He probably could go pro, but it's not what he wants to do for a career. But he has a coach. He actually has two coaches in racing. So after a race day or race weekend, one of the coaches and he, do a Zoom meeting, and they analyze the video step by step for a few hours, and looking to see what he could do differently. With the technology now, you can see where you're accelerating, where you're braking too fast, what kind of lines you're taking. You can overlap someones else's lines on top.

Jag:

Yeah, wow.

Richard:

It truly is amazing. But he has that coach who does it, and then he has the team captain, who's another coach. And he's there teaching him the same things, but as a driver and probably more technical. I probably should, third coach, who actually owns an F4 team, which is like the minor leagues of F1. And he's been coaching Ethan on the business side of racing, like how to get sponsors. How do you get from karting to F4 and things like that? So we all have had coaches in our lives. If you played sports, you had a coach. Look, you can have natural talent. Natural talent by itself does not make you a pro though.

Jag:

Tom Brady, Bill Belichick, understood, yeah.

Richard:

Yeah, exactly. Even Tiger Woods has a swing coach. You know? So we have life coaches. Some people see therapists for some coaching for themselves. Some people have business coaches, professional coaches, family members who guide you, or friends guide you in tough decisions in life, or hard times in life. So I think we're all used to having a coach, and a financial planner is a coach.

Jag:

Right.

Richard:

We can come up with the greatest plans in the world. We can come up with the greatest recommendations, but the player, the client, has to still execute and perform the best and follow through what we teach them.

Jag:

That is so true in so many different things. And even when I was a radio DJ, I had some great coaches in that space too, who it's funny you talk about your son, Ethan, because the analogy of this old radio mentor for of mine gave me is doing a radio show or a podcast is like driving a race car. You do all the work in the pit, so that when the race starts, all you've got to do is drive, so prep and understanding and executing on all of that. Rich, I've got to tell you, over the last few years, I have a lot of friends I've seen on social media, just in passing, looking for referrals for financial advisors. Why do you think this is trending that more people are looking for financial advice here in 2021?

Richard:

Wow, that's a great question. I think there's a lot of different reasons. Just recently, I read an article CNBC actually came out with. I found it online. They did a survey in 2019, and what was interesting, that survey showed that only 1% of American adults actually use a financial planner.

Jag:

Wow.

Richard:

Now you're probably thinking to yourself, "Wow, that's really low percentage." I know a lot of people who use investment guys and things like that with Merrill Lynch or an independent advisor like myself. But that's not a financial planner. That's someone you went to, you had a 402K, you wanted to roll it over. You didn't want to invest the money yourself, so you hired someone to manage your investments. That's not what a financial planner is. A financial planner can do investments, but they're usually documenting a plan for you, for retirement, your taxes, and things like that. We'll go over that probably later on.

Jag:

Goes back to the coach thing.

Richard:

Yeah. So I think one of the reasons we see a lot more of this is that we see a lot more TV commercials. Honestly, turn on the TV now, and you've got big corporations in the investment world offering financial planning because they know if they don't offer the financial planning, they might also lose the investments.

Jag:

That's where it's going. It's where the industry's trending, yeah.

Richard:

Correct. Especially with the robo advisors out there. The robo advisors can't replace a human doing planning.

Jag:

Yes.

Richard:

They might be able to do low cost investing, but they can't give you the planning advice, making wise decisions with your money. They can give you some wizards and templates to use to help you, but it doesn't replace a professional one on one conversation about your particular needs.

Jag:

Some people talked about this before, Rich, that so much of what you do is psychology, the psychology of investing. And an algorithm is not going to take into account your pain points, or your fears, or your wants, or your desires, or your long-term plans of what you want to do with your money in your life, so that human touch is just so important.

Richard:

Exactly. And I think it's interesting, when we see more financial planning clients coming, you mentioned the social media. On the social media, I've also noticed an increase of people asking for referrals. I live in Yardley, and there's a page called Great Places to Live in Yardley. And there's a page called Great Places to Live in [inaudible 00:05:58] Township. And I think every week, someone's posting, "Anyone have a good financial advisor they can recommend?" And I get a little blurb that someone mentioned my name. And I go out and thank them, and I introduce myself. But it's interesting, the younger clientele now, who are going to advisors, a lot of it has to do with debt planning, which is interesting. Or they want to get to the next level of their life like, hey, okay, we got college taken care of. We got our house. We're doing this. But we want to make sure, we're 45, we've only got 20 more years, or 27 more years of working. We can't make mistakes. We're focused.

Richard:

And maybe that people are working at home right now, maybe they're looking at their expenses, their savings a little bit closer, maybe couples are having conversations. Maybe that's sparking the conversation to go out and hire an advisor. A lot of times, what I see is that one person in the household handles the finances. And that's great for so many years. And then eventually, the other spouse is, one or two things is going to happen. They're going to want to get involved because maybe they think they should be in a better situation, or they don't really know what's going on. Or maybe the assets have grown so much that they don't trust their spouse to completely manage that.

Jag:

It's funny, you're kind of preaching to the choir there because my wife works in corporate finance, so she handles the bulk of the finances in the house here. But we have conversations, and I think we've got a pretty good, open line of communication between each other with it. But we think about, we've both been working from home for over a year now with the pandemic. And we were looking at, as we were doing our taxes for 2020, like, "Okay, well, we did not spend X amount of dollars on trips this year because we didn't go anywhere." Okay, so we weren't expecting to have this amount of money at the end of the year. We would've spent this on travel. What do we do with this money? Is there something we've been wanting to purchase for the house? Do we invest it? And we've had these conversations in light of the events of the last year.

Richard:

Correct. And probably now, you're also having conversation not just about how to spend the money you saved last year, which was an article in the newspaper just the other day warning people not to splurge and adjust their budget based on last year's numbers.

Jag:

That's good advice, yeah.

Richard:

But I've also had time to really focus on what you want in life and where you want to be when you retire because now you have more time together to have these conversations. It's not like you're running off to work, she's running off to work, you come home, you're talking about your day. You're having dinner. Then you're plopping down, watching TV on the couch.

Jag:

Right.

Richard:

And then falling asleep.

Jag:

Although I will say, we do work at opposite ends of the house, which is good that we're not in the same room 24/7, probably mainly for her sake, so I'm not driving her crazy. But we'll have five minute conversations throughout the day as we sort of pass each other in the kitchen, or whatever it is. But we have our separate workspaces during the day, and then at night, we have dinner together. We walk the dog. We watch TV and we go to bed. So there is something to be said for that. But you're right, not having that hectic of, I'll see you for two seconds in the morning and then when you get home for an hour, watch TV, and go to bed.

Richard:

So you guys got a new dog.

Jag:

Yeah. We got her about a year ago. We got Miss Jewels Easter or so last year. So actually, her got you day was this past weekend.

Richard:

What kind of dog?

Jag:

She is a lab mix. She is seven, and she's got a lot of personality and she's a lot of fun. So we're really happy with her.

Richard:

Labs have a lot of energy. We have three dogs. We have a Labradoodle. We have a chocolate lab and a small little mix. My chocolate lab is the laziest dog, ever since a puppy. And during COVID, he had two hip replacements.

Jag:

Geez.

Richard:

So it was a birth defect. And then my Labradoodle is the most hyper dog, and thank God she's getting old and beginning to calm down. But she's a Labradoodle, and they're very intelligent. And when you're very intelligent, you kind of do what you want to do.

Jag:

Yeah. They have a way of outsmarting the owners sometimes, no offense.

Richard:

I ask her to do something, she looks at me, thinks about it, and just walks away.

Jag:

That's like having another kid, right? Yeah.

Richard:

So we talked about a few reasons why we're seeing it. And there's probably a lot of other reasons too, why people are more aware what ... There's financial advisors out there asking for referrals. I mentioned the younger adults are probably the newest clientele coming for advice. But don't forget the baby boomers.

Jag:

Right.

Richard:

It's been a few years now. Baby boomers started retiring. There was an article from Pew Research Center. They came out with an article not too long ago. But the third quarter of 2020, they saw a humongous increase in retirees in the baby boomer category. And their feeling is that probably, logically would say because of COVID, and a lot of businesses had to scale back and things like that, that these baby boomers, who might've been at the highest pay scale, might've been let go, forced into retirement. So when you're forced into retirement, even if you created your ideal financial plan for retirement, that just is coming a lot sooner.

Richard:

So people are seeking advice like, "Hey, I've got to retire," or I've had clients now in their late 50s looking to retire. I had a new client come in just the other day. She was 60 and she wanted to retire. And I had to explain to her, I need two more years of you working because the medical costs would cost a lot and things like that. And then the last thing is there's been a lot of tax code changes over the last couple years. And again, we talked about this in one of the first episodes, what you expect when you hire someone. And if you remember, I mentioned that when you hire an accountant to do your tax return, they're there to prepare a tax return. They're not there to give you tax advice always.

Jag:

Right.

Richard:

So they're preparing a return, delivering it to you. Wow, I owe money. What's going on? They'll answer it. But they might say, "This is the reason." They'll just throw a few reasons out. I mean, don't forget, they're swamped doing tax returns. They're not going to sit down with you and analyze your tax return and go over how you can change to reduce your tax. So I think those are probably the biggest reasons right now why I personally feel that people are asking for referrals, or seeking professional advice that coach strategy to help.

Jag:

So I know a lot of folks are coming to financial planners because it might not be as expensive as they thought it was at one point. What is the price structure for financial planners, Rich?

Richard:

That is one of my issues in our industry. I mean, a financial plan does take a lot of time.

Jag:

Yeah.

Richard:

It doesn't have to. It's usually, you start the process and you're waiting for information for the client to give it to you. And you start and stop, start and stop, and start and stop. And then you kind of lose interest pushing the client too much. So if you're upfront with the client and you tell them, "Look, this is the process. I need you to be committed before you start the process with us, I can bring the pricing down." But the traditional way for ... Financial plans were for the wealthy, in the past, when the state tax was $5 million limit and things like that, and they have to create these trusts, and gifting strategies and all this kind of fun stuff. But that's totally changed now. I think everyone could use a financial planner to help.

Jag:

Agreed.

Richard:

So traditionally, a financial planner, you would go there and you would pay them a lump sum. They probably would bill you half upfront, and then bill the rest at the delivery, the day of delivery. And I've seen plans, I mean, you can get a really inexpensive plan, but I would say it's not quality.

Jag:

You get what you pay for, yeah.

Richard:

Correct. So normally, you would be looking at $2000, and I've seen plans over $10,000 easily, depending on how wealthy. But the average American, I would say it's between $2000 to $10,000, depending on the location, the zip code, where they live and everything. Then a lot of times, people, what they would do in this kind of planning arrangement is they would pay upfront for the one year. And they wouldn't do anything for the second, third, fourth year. And then they would get it updated. And usually, when you get one updated, it's not as expensive.

Jag:

Sure.

Richard:

It might be two thirds the cost, one half the cost, because there's not as much input to start the plan.

Jag:

Got it.

Richard:

So that's the traditional way. You probably will see more of that than anything else, still to this day. Then you've got the AUM model, assets under management. There's fee only advisors. They're going to charge you to manage assets. We don't have to manage your assets. But we're not going to charge you any ... We're not going to sell you any commission products, nothing. You're going to come in, we're going to do your financial plan, and we're going to charge you a couple basis points, anywhere, basis points is percentages. We're going to charge you anywhere between a quarter percent to a percent, based on your assets, your AUM.

Richard:

So some companies calculate that differently. Some will say it's your investible assets. Some will say ... That would be usually on the higher percentage rate. Other people will say, "All your properties, if you have a house, a rental property, your 401K, everything."

Jag:

There you go, AUM, assets under management. So you're saying for 1%, just for the sake of keeping the math simple here, if you've got $100,000 in assets, you're going to pay them $1000 to manage that.

Richard:

They might not even take that as a client for $1000.Now let's just say though, they don't do it that way. Let's say they do it at a quarter percent, and they include your house, they include your rental properties, they include everything else. And now you have a $1 million at a quarter, $2500. And that would probably be inexpensive too.

Jag:

Got it.

Richard:

So that's one way of doing it. And they're not going to take your investment accounts and hold it at their firm to manage. What they would usually do is tell you to go to Schwab or something, and they will give you a buy, sell recommendation when you meet once a year, maybe twice a year. They'll review the investments and then reallocate based upon where you are today with your goals or your risks, and so forth. Then there's a combination of the two, where they charge you something upfront, and they also charge you a percentage to manage the assets, or either way. It could be the investments or the AUM, everything you own. So that's another way people are doing billing.

Richard:

They can just increase your fees in your investment accounts. So let's say the average advisor charges 1%. They might come in and say, "We're going to manage your investments at 1.5." Now they have to disclose that, and there has to be a contract explaining why there's additional fee and things like that. But that's another way of doing it. The newest way of doing financial planning is the way I like to do it. It's what we call subscription based planning, or the Netflix way of planning. So I believe that planning has to be affordable.

Jag:

Sure.

Richard:

If you come to someone and you tell them it's going to cost them $4000 to do a financial plan, and they're in debt, that's a lot of money.

Jag:

Absolutely. Yeah.

Richard:

And they don't know. This is their first experience. They don't know what the value of that planning relationship's going to be. So what subscription based planning does is, a lot of times, there's an upfront fee, anywhere between $750, to $2000, I'd say. Every company's different. But they want to capture an upfront fee. Sometimes they charge the first year's fees the traditional way, and then start the subscription the second year. So there's a lot of work on the first year. There's input. There's questions. There's really getting to know someone, getting their employee benefit packages, everything, and reviewing it and doing it. So that's why usually there's an upfront fee.

Richard:

And then the subscription fee then is a monthly fee. You can cancel it usually within 30 day notice. If they want to raise the fee ever, they have to give you notice, re-sign a contract. But that's a more affordable way. So let's just say they charge you $750 to set it up, and they charge you $150 a month.

Jag:

Yeah, because most of the work is going to be in the initial setup, the maintenance is a little bit less when it comes to hourly, hours that you're putting in.

Richard:

Correct. So some months, you're going to do a little bit less, and other months, you're going to put a lot in, and it averages it out. So what's nice about that kind of relationship billing is that you're not doing the plan and then talking to the client three years later when they want to update the plan. It's an ongoing relationship. So when somebody has to make a tough decision, something stupid like buying a car. Should I buy it? Should I lease it? I get that question every month. And there's a lot of emotional question about ownership of a car. Do you get one every couple years? Do you want to trade in? What's the interest rates? What's the residual value? We started doing analysis work to figure out. What's the best financial decision? And what's the emotional decision? Can you afford to take the emotional decision?

Jag:

Yes, exactly.

Richard:

All right. So sometimes it's a bad financial decision, but you can afford that bad financial decision if it makes you happy. And other times, you can't afford to make that decision.

Jag:

Everything's a trade off. Got it, yeah.

Richard:

But it's an ongoing relationship. And you get to know the client more and understand their goals and where they want to go when you're talking to them on a regular basis. You're going to be talking a couple times a year and updating the plan, and it's nice when you don't have to fix a client's mistake. The person I told you who came to my office earlier this week, who wanted to retire early, and I told her to work another two years because of medical insurance and so forth, she ended up, and it came from a referral from an accountant who happened ... And it's funny because this client was actually my tax client before I sold my tax practice.

Jag:

That's funny.

Richard:

In 2011, so it was quite a few years since I'd seen here. But she looked at me and she goes, "How much do I owe you for today?" We were there probably for an hour and a half. I said, "You don't owe me anything today." And she goes, "Why? You spent a lot of time with me." I said, "I'd rather correct a mistake now than when you become a client two years from now, and I have to fix a problem you made two years ago." Makes my job a much easier now.

Jag:

Fix the mistake before it happens as opposed to after. Right?

Richard:

Yeah. So we usually give a complementary meeting. Usually, you don't give advice. But this was someone I knew, I had the account on the Zoom call. We were all looking at each other. And it was the right advice to give her. I could've probably tried to sell her a financial plan at the time, but there was no value I was going to give her, which I already gave her. Just to do a plan and charge her, just to show what I already knew, wasn't worth it. So just doing the right thing when you're doing these financial plans. And usually when the client comes to you, they're usually asking for help on something.

Jag:

Right.

Richard:

The other thing is a lot of people don't realize you don't have to hire a financial planner to do a financial plan. So I get people who call me and say, "Hey, I know you're working with Joe Schmo down the street. He told me that I should call you before I buy this life insurance policy. They're recommending this whole life policy, the premium's $8000 a year for this amount of death benefit, and I wanted a second opinion." Okay, you know what, I can do some life insurance analysis independently. And I'll charge you probably $300 or $400 for the work, depending on how much work's involved. And I'll be able to tell you, one, if you need that amount of insurance. Do you need a whole life policy? And is that the best company to go with?

Richard:

And I'm not looking to make the sale. I'm doing it as an independent person to give advice, so I'm not looking to try to get that life ... It's not my line of work I do. I'd rather that person close the deal, and they know that I endorsed it, so they refer me business.

Jag:

Sure.

Richard:

So it's a peace of mind. When you're going to commit to $8000 a year to protect your family, you want to make sure that's the right thing to do.

Jag:

For sure, yeah.

Richard:

I see a lot of insurance sales which aren't appropriate, unfortunately. So the other thing is, what I find is, a lot of people have most of their investments in their 401K. And if you think about it, you're managing your own 401K. So at some point, you may not feel comfortable what you're doing, so you want a second opinion. Or they have another investment advisor, and they don't know if they're great or not. They're just making assumptions that they're doing their job, and they just want a second opinion. And there's many times where I review an outside investment account and I tell them they're doing a good job based on your risk, your goals. I'm going to keep my mouth shut.

Richard:

It may not be the exact way I would do it, but they're doing a good job. And they're doing it their way, and it's going to work for them and the client, so that's okay. And people like that. They like to have that reassurance that my advisor's doing the right thing because we all hear these horrible stories about advisors, too risky, they took all these risks in these penny stocks. They lost money or they stole the money like Bernie Madoff. So they like to have that second set of eyes, just to make sure everything's okay.

Jag:

So Rich, you can work with a client on a particular issue, as you've kind of illustrated here. What about comprehensive planning? What does that consist of?

Richard:

I guess to understand about comprehensive planning, you have to know what goal based planning is first. All right, so and now there's a new term called holistic planning. So goal planning is a very simple financial plan. It's usually goal based, that's why it's called goal based planning.

Jag:

Right, yep.

Richard:

So you pick a category, let's say retirement planning. We want to know that if we save this amount of ... We have this much money. We save this amount of money every year. What's that going to look like projected with a rate of return and then with a withdrawal rate?

Jag:

Got it.

Richard:

Usually, when you look at the reports, if you're 45, the report's not going to start until you're 65 or 67, depending on when you start retirement.

Jag:

Right.

Richard:

So you don't see any of the numbers in between from 45 to 67, so it's making all these assumptions. And then it's usually a short report, and there's not much planning we do in a goal based plan. We just plop numbers in, what you have, what your savings rates are, what type of accounts, IRAs, non qualified, blah, blah, blah. So then it spits out a report. I'm not a big fan of those. You can go online to a free website and find those.

Jag:

Probably just plug the numbers in a calculator, yeah.

Richard:

Yeah. I mean, you could probably do it on Excel if you can do some time value calculations. I like to do what we call comprehensive planning, or cashflow planning, which takes every single dollar from the time we work together, so 2021, we'd start in April 2021, the plan would start. And it takes every single dollar into consideration. So I need to know what your expenses are right now. On a goal based plan, I don't really care what your expenses are right now. I care about it when you're retired, what you need to live on. So to maximize your retirement, I can't do that with a goal because I don't know if there's surplus money and how you're saving it appropriately and so forth.

Richard:

So cashflow planning is taking every single dollar into consideration from the day you start the plan. And it allows me to do tax strategies. So now I can say, "Hm, I've got taxable accounts. I've got IRAs." The client is concerned about their income needs, not so concerned about their children's inheritance. So maybe what we're going to do is we're going to do a strategy to keep the tax rates low during the retirement years on distribution, so maybe we can make some of that social security not taxed. And we'll take a little less out of the qualified accounts, which the children can inherit and pay taxes on. So with a cashflow, there's a lot more planning you can do for taxes, on strategies. And that's the same for every topic within a comprehensive financial plan. There's life insurance. There's disability insurance. There's estate planning. We'll talk about all the ... I mean, I can keep going right now.

Jag:

What are some of the common topics you create a plan for?

Richard:

I mentioned a holistic financial planning. That's the same thing pretty much as comprehensive planning, it just sounds better for marketing.

Jag:

Yes, it's a buzzword.

Richard:

But comprehensive planning, holistic planning, what it involves is these particular topics. Normally, what you want to do is you want to talk to your client and document a plan for retirement savings. How much money do you need to save to get to retirement? Retirement distribution, let's say now you're retired, how do you want to take your money out? Are you concerned about maximizing your cashflow? Are you worried about Uncle Sam? Are you worried about your children? Things like that. Knowing how to take money out from different type of registration accounts, like the IRAs and non IRAs, is very important, very, very important. That's a big issue right now in our industry that we keep talking about that with our clients.

Richard:

Investment review and allocation, what was good two years ago may not be good today. More important, when you were 30 when you started your 401K, now you're 65, is probably not the same allocation you want to be in.

Jag:

Agreed.

Richard:

Sometimes you can take too much risk and not get rewarded for that risk.

Jag:

Indeed.

Richard:

So we want to weigh out the risk and the return, and more important, we want to make sure we're taking the right amount of risk to the goal we need to fund. Big one is tax planning. I do a lot of the tax planning for my clients, especially having a tax practice in the past. I'm very sensitive to taxes and investments. It's kind of embarrassing if I cause an unexpected tax consequence for the client.

Jag:

Yes.

Richard:

So can't really do that, so most of my clients actually probably started off as a tax client of mine at one point. Insurance planning, that could be for life insurance, disability, home, car insurance. Here's a big one that surprises me is umbrella insurance, how many people don't have that. It's so inexpensive. And God forbid, something happens and you need it, so umbrella insurance is excess insurance. You get one for $2 million, it would be like 300 bucks a year. For those who don't have it, call their insurance agent, talk about it. Find out if you need it.

Richard:

If they own a business, that's a big one right now. A lot of business owners always feel like they can't sell their business when they retire, that no one can do as good of a job as them. I came from a bigger tax firm, that was always a thing we always told them, every business is sellable. You might be a key factor to that business, but through a proper transition of selling the business, it's sellable. But more important, with the tax code changes constantly, right now with Biden being president, there's a lot of things we're looking at, accountants in particular are looking at, to see if businesses need to re-characterize. Does it make sense to be an LLC to go to an S corp?

Richard:

If Biden increases the FICA tax for people making over $400,000, you're going to see LLCs go to S corps, take W-2 income up to $250,000, $300,000 and take dividends not subject to the FICA tax. So there's business planning to and how you structure your business and your expenses, and your depreciation, and when you're going to sell and all that kind of fun stuff.

Jag:

Absolutely, yeah.

Richard:

So that's big one right there. Estate planning is going to be big, especially with the new IRA distribution rules for beneficiaries. Now you get to liquidate an IRA when you inherit, non spouse, of course, within 10 years of the death. There's a lot of planning strategies for that. Education planning, being for middle school, high school, all the way up to college and master's degrees and PhD. Big one is the budgeting and savings. It's interesting. I don't think I've ever, until the last two years, I think the last time I sat down to work on a budget, it wasn't even a client. It was a friend of mine, who was trying to be responsible and needed help, and just the way he thought. And I had to bring back the old envelope trick, like you put your money in the envelope and this is what you spend. When your envelope's empty, you're done.

Richard:

But that is now becoming a lot more common, people are coming to me for help with the budgeting. If you properly budget, then you can save more. And if you can save more, you have options maybe putting it into a qualified retirement account, lower your tax rates, things like that. Another big issue, you know this other advisor, Eric, he's younger than I. And when he did financial planning, he was really focused on debt planning, people with credit cards, school loans and things like that. And we were always arguing which financial planning software to use because the one he was using had a really strong planning for debt, and mine didn't. But mine was like, everybody else was better. So I remember saying to him, I go, "Hey, Eric, here's a really easy solution. Stop getting clients with debt, and maybe get clients with money."

Jag:

Man, you guys always just rip on each other all the time.

Richard:

But fast forward, I just did a credit card payoff plan for someone. I don't need a financial planner to do that, there's other software I could pay for to do it. But there's strategies, like you have credit card debt, and you think you're never going to get out of it, and there's a way to structure the payments based on your balance, minimum payments and interest rates, on how much more ... When you have excess money than the minimum, which one you should apply for first, and then taking, when that one's paid off, take that money and put it to the next. So there's usually two major strategies. One is-

Jag:

Snowball strategy, right?

Richard:

There you go. Do I want to pay off as quick as possible? Or do I want to pay the least amount of interest? Those are the two strategies. And I had a client just recently, she's preparing for a divorce, and they have a lot of credit card debt. Good thing is that she makes a lot of money. And when you look at the credit card statements, and it says, if you continue paying this, how many years it's going to take up. And she was freaking out, I said, "Don't freak out. Let's sit down. Until you see it in writing, a plan, you're never going to feel comfortable with debt."

Jag:

Right. That's a good point.

Richard:

When we documented, we put everything in, we spit out a report. And she was like, "Oh, my God. I can do this." I said, "I know. I know you can."

Jag:

Trust the professional.

Richard:

I said, "But you will always feel nervous until you see it on paper and that it'll work."

Jag:

That's human nature.

Richard:

Yep. So those are the biggest items in a financial plan, but again, I think doing the subscription based planning, it gives you another level of planning. It allows the client to call and ask questions about buying, leasing, or having a wedding, something we have to plan for, they want this, some of the planning for one off things, and things like that. Or hey, my son got in a little trouble and I want to make sure that we're protected for his stupidity, things like that.

Jag:

Or daughter, let's not ... It could be a daughter too.

Richard:

Well, think about me. I told you in the beginning of the podcast, my son's doing racing. And I'm thinking to myself, "God forbid he's in an accident and kills someone."

Jag:

Sure.

Richard:

I don't think it's likely it's going to happen, but I don't want to lose everything I saved for and built because of a simple accident in a sport where everyone knows the risks.

Jag:

Right.

Richard:

So looking into that and planning for that risk was really important for my wife and I.

Jag:

I think as we wrap up here, Rich, the big takeaway is that this idea of financial planning, there used to be this stereotype that it was only for the super rich, who had to worry about passing money on to their heirs, and tax loopholes, and all these other things, but financial planning is something that is very affordable for the vast majority of people. And there are different ways to do it, and I think it's really important for people just to think about hiring someone like you to do something like this. And if someone wants to get ahold of you Richard at New Century, what are the best ways to do it?

Richard:

In my previous podcasts, I've always said, "If you work with another advisor, I respect that." That's great. Hopefully, you're more educated. You know what kind of questions to ask. If you're doing it yourself, same thing. If you don't have an advisor and you want to talk to one, call me. Give me that opportunity. This is the one time I'm going to say, "Call me."

Jag:

Yes.

Richard:

Because there are a lot of people who'll say they'll do a financial plan. Their main business is investment advising, but they don't want to lose that investment client because they can't do a financial plan.

Jag:

Right.

Richard:

They're worried about that. So they might do one plan a year, two plans a year. And I wouldn't want anyone to go to them, out of fairness, they might do a great job, but just statistically saying, the more plans you do, probably the better you are, better you're keeping up with the estate planning laws, the tax laws, and things like that. So this is the first time I'm going to say, "Call me if you want a financial plan." I can tell you right off the bat if I can help you or not, if it's worth getting one.

Richard:

If you live locally to one of my advisors in my group, we have advisors throughout the country, I'll introduce you to them if you want to work with someone locally. If not, I work on Zoom all day long, even before COVID. So call me. Mention the podcast. I have room for upfront fees on the subscription plans. Just mention that you're a listener of the podcast. Call me at 609-924-2049. If you don't want to call me, you can always reach me through email at roring@ncfg.com. If you're busy and you don't want to play phone tag, on my website at www.ncfg.com, you can just go to contact us, and there's a tab under contact us to schedule, has my online calendar. Just schedule some time. Let's have a talk. I think I can help.

Jag:

Ncfg.com. That's New Century Financial Group. We're going to link all of Rich's contacts in the show notes. Really important and informative stuff today, Rich. Always a pleasure to be with you.

Richard:

Thank you, Jag.

Jag:

Richard Oring's branch office is One Airport Place, Princeton, New Jersey, 18540. The branch phone number is 609-924-2049. Securities offered through Royal Alliance Associates Inc, member FINRA SIPC. Advisory services offered through New Century Financial Group LLC, a registered investment advisor not affiliated with Royal Alliance Associates Inc. New Century Financial Group LLC and Royal Alliance Associates Inc does not offer tax advice or tax services. Please consult your tax specialist for individual advice. We make no specific comments or recommendations on any tax related details.