What to consider when choosing a financial advisor.

Male voice: You see that Apple right there?

Little boy: Yes Pa.

Male voice: Now that’s the only one in the bowl ain’t that right? Now suppose me and you both wanted that Apple and I grabbed it and wouldn’t give you half of it, now how would you feel?

Little boy: I wouldn’t mind.

Male voice: You wouldn’t?

Little boy: There’s a worm in it.

Male voice: Hopi that’s beside the point, I’m trying to give you an example of sharing. Now I take half and I give you half, now that’s sharing and it’s fair to everybody concerned.

David Scranton: As Baby Boomer, many of us learned about values not only from our own parents but from our television parents. Naturally, the lesson shared in the more innocent age of television were positive ones about honesty, integrity and the values of hard work. And even though we live in a more cynical age I think most people still try to live and work according to these positive values with which we grew up but there are exceptions and that’s why it’s so incredibly important to try to understand the values of any kind of business or professional with whom you’ll be working. This is such an important issue when it comes to managing your money and choosing a financial advisor that I actually wrote an entire book about it and today I’m devoting an entire show to it. It’s time to tune out the hype and focus on the facts, facts that matter to you; The Income Generation. Let’s get started. Get ready to separate reality from myth.

Hello everyone and welcome to The Income Generation, I’m David Scranton your host. You know it’s no secret that we live in a world where dishonesty and deception today are unfortunately all too common. You can add to that list poor workmanship and outright incompetence but despite all that I really do believe that majority of people try to live not only by positive values but by values specifically right for the work they do. For example; detail orientation might be more important to a doctor especially a surgeon or an architect than it might be to a farmer. I believe that knowing and practicing the right values is the key to excellence and success in any job or task and that includes managing your money. Joining us today to talk about this important topic is Bob Burg, author of the best-selling book The Go-Giver and leader of The Go-Giver movement. We’ll also talk with other financial advisors about the importance of values in their work but first let’s look at why it’s so necessary to examine your own values when it comes time to plan your retirement.

There aren’t many lines in American literature quoted more often than these by Robert Frost. “Two roads diverged in a wood and I took the one less travelled by and that has made all the difference.” I think those lines are so famous for one simple reason. For most people it’s very hard to take the road less travelled in life, not only do you have to possess the right values to take the road less travelled but you have to act on them. Courage, individuality and perseverance are some of those values. Proclaiming those values may be easy but living could be much more difficult. In fact, making good financial decisions very often means recognising when it’s time to take the road less travelled and having the ability and courage to actually do it. That’s easy to understand when you consider one of the most basic principles of investing which of course is buy low and sell high. The whole concept runs contrary to what most people have wired in their minds. We’re often sceptical when something is priced low and we tend to want to hang on to things when they’re valuable and priced high. To be a good investor you actually have to be a bit contrary, you have to know when to zig when others are zagging and to have the courage to actually do it; that’s truly many areas of saving and investing which I’ll discuss more later in the show.

Right now let’s look at why it’s so crucial in retirement planning to examine your own values with brutal honesty. I encourage you to start by asking yourself; what are my retirement goals? I’ve discussed this many time before but it’s so important that it bears repeating. The best way to ensure that your financial strategy is moving towards your goals is to start by identifying exactly what those goals are in the first place; you plan to retire and sail around the world or are you’re going to buy a boat or a second home? For some people retirement goals do include major purchases or expensive projects but in my experience most people have much simpler retirement goals; they want to travel, they want to dine out where ever they feel like it, golf, fish, visit their children and their grandchildren and most importantly spoil their grandchildren. Those things do take money of course probably as much as any Yacht or house over the course of a the long run so it isn’t that any one retirement goal is necessarily cheaper or more expensive than another but the difference between a life style goal and a major purchase goal comes down to how you’re going to pay for that goal.

When you bought your first new car for example; did you pay in full or did you pay it out of your weekly income, did you draw cash from a savings account that covered the full amount or did you finance it? For a few people the answer might be cash savings but for most the answer is probably that you financed it. The same goes for of course your home and most major purchases. Those usually aren’t the kind things we purchase from our regular income stream, they tend to require lump sum amounts or payment plans separate from your income. On the flip side, most of us probably wouldn’t take a loan or take a huge withdrawal from savings to go out and play golf or to dine out at a nice restaurant or to stay in a hotel or even take a vacation. Those are things we generally finance from our income and this is why I always pose the question; if your retirement goals include mainly things that you want to finance through your income, through your cash flow then doesn’t it make sense to gear your investment strategy toward generating income? I think you already know my answer for what I believe; after all his show isn’t called The Income Generation by accident.

This is where values become so incredibly important because making that determination, understanding the practicality and sense of investing for income is one thing but acting on it is another. It takes the right values to be able to do it successfully both from a technical and a personal standpoint. It takes values not only help you identify when it’s time to take the road less traveled but again the courage to act upon that knowledge once you see it. It takes the ability to zig while everyone else is zagging and the plain truth is not everyone possess just the right values to manage money successfully that includes even people who do it professionally. Let’s face it, brokers and financial advisors are human beings and as a result, many of them are wired the same way as individual investors that’s why I always say that just like 80 percent of the population may not be wired to be a good do-it-yourself investor, it shouldn’t surprise anyone that eight percent of financial advisors fall into that same statistic.

What exactly are the right values for protecting your money and investing for income? We’ll talk about that more in just a bit. Right now I’s like to welcome a man who like me, literally wrote the book on values; actually a series of books. Bob Burg is going to help us understand why some of those old fashion values our parents and television parents taught us are still the best avenues to success in both business and in life. Bob Burg is thought leader and popular speaker; always in demand with huge corporations, small companies and business organizations of virtually every size and type but Bob is perhaps best known for his best-selling book entitled The Go-Giver, a little story about a powerful business idea that he co-author with John David Mann. In the 10 years since the book’s release, the term Go-Giver has actually become shorthand for a set of values embraced by hundreds of thousands of people around the world both in their work and in their daily lives. Bob welcome to the show.

Bob Burg: Thanks David, great to be with you

 David Scranton: Of course what our viewers need to know is we’ve met many times before and I was actually at an event where I saw Bob do a presentation in front of a group of people, read your book and I love The Go-Giver concept.

Bob Burg: Thank you.

David Scranton: Thanks. My first question is what motivated you to write a book entitled The Go-Giver with this whole concept as opposed to a go getter or go giver?

Bob Burg: Sure. Well my first major book was a book called Endless Referrals which was a how-to book on how to create relationships or where you develop the know, like and trust with people which results in more business or results on a better feeling about the way you do business. The Go-Giver is a business parable; a fable, so it was a way of taking those kind of principles that you talk about or the values you talk about and putting them into story form and I got to work with a wonderful co-author and great storyteller by the name on John David Mann as you mentioned, but it’s really in a sense about shifting your focus from getting to giving. When we saying giving in this context we simply mean constantly and consistently providing to others; understanding that especially in a free market-based environment where no one is forced to do business with anyone else, not only is it a pleasant way to conduct business, it’s a very financially profitable way as well.

David Scranton: So before we dig down into the actual business side of it, can you target income generation members for just a minute? Now how can they use go giver concept in their everyday life if someone for example if someone for example is retired?

Bob Burg: Absolutely and you know what you talk about this so much in your book it’s a basic value system of understanding that when you can take your focus off yourself, when you can move from that all too common I-focus or me-focus to an-other focus David, looking for ways to make other people’s lives better, happier, more fulfilling. It just feels good and people feel good about you.

David Scranton: You know I call it something you know I talk about the law of attraction a lot and I talk about the law of abundance versus scarcity and if you’re thinking about me me me me it comes across that way but if you’re thinking about what I can do for you, you get more exchange in almost every area even personal relationships.

Bob Burg: Absolutely

David Scranton: If one of the gentleman that’s sitting here watching our show today decides that he’s going to be motivated to go out and do something really special for his wife today, and somehow directly or indirectly it’s going to come back and benefit him isn’t it?

Bob Burg: Well you know my folks just celebrated 60 years of marriage; they adore each other and one thing my dad always said to me and so this was when I was; and we kind of put this in the book as part of the story, I said how is it you and mom have such a great marriage? I was I think 10 years or 12 years and all my friend’s parents were… He said Bob when you truly love someone you actually care about their happiness than about your own and he didn’t mean that in the way of co-dependency or something like that no, he meant when you truly seek value in the happiness of those you love again it feels right but that other person feels the same way about you.

David Scranton: Yeah exactly that’s great I love it. I can’t hear you talk about this stuff too much, it’s impossible.

Bob Burg: Thank you.

David Scranton: This is just all part of what’s woven into your being as an individual and the same kind of life I try to live.

Bob Burg: I know you do.

David Scranton: I don’t always succeed but I try. In the book there’s a story about a financial advisor; how did you come up with that particular character, is it copied after someone? If it is I’m sure you’re not going to tell me who it is.

Bob Burg: Well you know it was a gentleman… And it was loosely based  on; but it was still the basic story of Ben Feldman who is a very well-known actually more in insurance and so forth and he learns just as the character in the book that when he took his eyes off himself… When he thought he was selling insurance to people he wasn’t doing very well because it was about him, it wasn’t about the product. When he took his eyes off himself and realised what it was really about, he is helping people attain happiness as they understood happiness and I think when we do that all of a sudden things really start to come together for us and that’s when he realised that when he could take his focus off himself and place it on others happiness, that’s when all of a sudden his business really started to climb and many of us know the story of Ben Feldman being probably best of all time.

David Scranton: Well the story about Ben Feldman is really about someone who si probably the most successful life insurance agent ever even today and the thing about Ben Feldman is he didn’t need a lot of crotches of backup in order to convince people of the value of life insurance, it was really simple because he just focused on what’s important to them and their values and the life insurance fulfil the need. Great story, great metaphor; we have to take a commercial break right now. We’re going to be right back in just a minute with more words of wisdom from the original go giver, Bob Burg.

 

[Commercial Break]

 

David Scranton: As we record this show the markets are still technically in a rally that began with Donald Trump’s election in November but they’re also responding negatively to a news leak’s worth of controversy surrounding the Trump administration. In fact, all free market indices were down between one and one and a half percent in the wake of new media allegations about President Trump’s White House meeting with Russia’s foreign minister and about the firing of FBI director James Comey. Regardless of what you think about these allegations or the mainstream media in general, the potential for these kinds of distractions to disrupt his domestic agenda seem very real. That’s important because as we’ve discussed many times, the post-election rally is based mainly on optimism about President Trump’s economic agenda. If criminal allegations and non-stop media firestorms derail or even delay that agenda, the question becomes; what might that mean for the overvalued stock market.

It’s a question that gets a heart of why it’s so important to possess the right values for managing your money especially in uncertain times. You might think the main value I’m referring to now is something like cautiousness or restraint and maybe those would be right if you were in your thirties but if you’re over the age of fifty and you’re part of the income generation, then you perhaps didn’t go far enough with cautiousness and restraint. The first value I advocate for managing your money once you’re passed age fifty in a thing we call over protection; the willingness and ability to air on the side of caution where your assets are concerned. Often that means going against what’s popular or trendy, it means zigging while others are zagging and it means that going against others when they’re telling you to zag also. To some extent, it has meant that for todays over protective investors ever since 2013.

That’s when the stock market rebounded to its previous state from before the 2007 2008 crash. It has trended upward even ever since 2013, reaching new records several times. Now some brokers and financial advisors will say that if you haven’t had most of your savings in the stock market over these last four years; no matter who you are, you’ve been missing out on gains. I would argue these advisors probably don’t possess the most important core value for saving and investing within fifteen years of retirement and that is again over protection. Chances are they may not possess any other critical value necessary for the job either, including detail orientation. I believe that if they were detail oriented they would understand that none of the market rallies we’ve seen since 2013 have been based upon economic realities, instead they’ve been based on unprecedented levels of manipulation by the Federal Reserve. They’ve been based on stock buy-backs, hiring freezes and other tricks by corporations to disguise their lack of growth on the bottom line. They’ve been based on pure emotion and irrational exuberance which is certainly the case with the so called Trump Bump.

In other words, the market has been very high risk throughout this so called recovery which I would argue has it been a true economic recovery as much as it’s been as asset recovery. Yes, investors over age fifty who have been taking the risk following the busy road instead of following the road less travelled have left out so far but an increasing number of economists are warning that they may be living on borrowed time and that the overvalued stock market is overdue for another major market crashing. The lessons of market history suggest the same thing and President Trump’s trouble plagued presidency may trigger it sooner rather than later. What about fixed income investors who have been taking the road less travelled, who have been living by the values of over protection and detail orientation either on their own or through a financial advisor; have they really been missing out?

Well if their goals are aligned and are not in conflict with their strategy then no, they would have been missing out on unnecessary risks. Why because by also practicing diligence, leadership and other essential core values, they’ve been enjoying solid returns through income based retirement strategies designed to match their goals. Now let’s bring back out guest today; Bob Burg, the original go giver.

 

Bob Burg: Thank you David.

 

David Scranton: You’re very welcome. So Bob we’ve been talking so far about things like how the go giver concept could be used generally, not just financially but in general ways in people’s life time because a lot of people are watching us through The Income Generation members are retired but I also know that a lot of those are not retired and that’s why the show airs on a weekend. So one of the things we talked about earlier on the show as you heard was the fact that to be a good investor, sometimes you have to be contrarian. Sometimes being a contrarian goes hand in hand with that go giver concept.

Bob Burg: Well many of the five laws are contrarian in nature whether it’s a law of values that says your true worth in a business sense or in the personal sense is determined by how much more do you give in value than you take in a payment. What that means is not that you don’t profit and profit is not just financial, we can profit financially, physically, spiritually, mentally, emotionally, socially, relation wise; all sorts of ways but what it means is when you’re always focused on giving to others and helping them profit, help them bring about their happiness; because remember, everyone pursues happiness in their own way according to their own values and the pursuit of happiness is one of our big three in this country.  So when we focus on giving more in value to others, boom that starts the echo effect and as we say, money is an echo of value but so is wealth, so is kindness, so is everything else that’s good.

David Scranton: Well it’s funny because you talk a lot about crony capitalism and how some people don’t see it the way you see it.

Bob Burg: Right. Well unfortunately, many people; especially those on the political lift, they see crony capitalism as being the same as capitalism and the fact is crony capitalism is to capitalism what Chinese Checkers is to Checkers; nothing, only the name is right because crony capitalism is not free market capitalism, free market capitalism says that government has the legitimate function of protecting it’s citizenry from force and fraud but other than that it’s leave everyone alone to buy, trade, sell with each other and when they simply do that now, people are able to buy because they believe it will bring them happiness as they value happiness, people are able to sell for this… And what that does is it creates a true economy for everyone as opposed to the false economy that’s created when government puts their hands where it really shouldn’t be.

David Scranton: Well it’s always great because just last week we had Steve Forbes sitting in your seat talking about how to get true growth and it’s very much the same. When I think of go giver concept and people getting compensated to the extent in which they give value, the person I always think about is Steve Jobs. If you think about; it wasn’t long ago I was walking around with a flip phone and you probably were too and no we can’t get away from those things; our phone, our computer, they are virtually everything. SO can you give us some other ideas of some other corporate leaders that you’ve put in that go giver category?

Bob Burg: Well I think of Bob Chapman who’s the Chairman and CEO of Barry Wehmiller a huge humongous manufacturing firm based out of St Luis but worldwide and he also wrote a book called Everybody Matters. And here’s a man who absolutely treats his employees as family members, it’s not just a slogan on the wall. He understands that making them feel good about where they work and feeling good about themselves of not only again the right way to do business but then they have more invested in their job and they have a wonderful family of companies, that’s a true go giver and a go giver company.

David Scranton:  As a go giver you have to fever go giver, you don’t have to be a chaser and a go getter because you’re a go giver, it’s perfect. In the corporate world then; I always complain about the fact that although we have the best system I believe in the world economically, there is little conflict of interest. We talked about the media in a recent show where we talked about the fact that a CEO is; their fiduciary responsibility is to maximise shareholder value, not to do the best thing for the customer but do the best thing for shareholders and that is and inherent conflict of interest but you say that the corporation follows the go giver concept in the last forty five seconds or so we have then really it’s a win win isn’t it?

Bob Burg: Look at an old example that people use all the time because it’s so great; South West Airlines, here’s a company who in a field in which no one is profitable, they have been profitable; other than the first year they were in business, they’ve been profitable every single year because they focus on bringing value to their team of people and their team of people focuses on bringing value to their customer, they do the right thing. As Harry Brown used to say “Profit is simply the reward for pleasing the customer.”

David Scranton: That’s great. So you are a South West flier I assume?

Bob Burg: When I get to fly on South West, I love it but I typically go to where my clients hold their sales conventions and I take the best plane out there to get there.

David Scranton: I love South West too except for that I’m not from the mid-west and that whole herding concept.

Bob Burg: Yeah

David Scranton: [Inaudible] so much but we have to go. Before we do though, can you do me a favour; can you please tell our Income Generation members where they can get their copy of The Go Giver?

Bob Burg: Sure, visit thegogiver.com; no hyphen, just thegogiver.com and you can get chapter one while you’re there.

David Scranton: That was easy wasn’t it?

Bob Burg: Sure was.

David Scranton: There you go. Alright, stay with us we’re gonna have our financial advisor round table as soon as we come back The Income Generation, stay with us.

[Commercial Break]

Miranda Khan: Welcome back to Income Generation, I’m Miranda Khan. Now let’s take a look at some of the big finance news stories that moved the market this week. The congressional budget office released its new scoring of the GOP’s health care plan. According to that report 23 million Americans will lose coverage under the American Health Care Act but the deficit would fall 119 billion dollars over the next 9 years. US stock Ownership hasn’t yet recovered since the 2008 financial crisis, this according to a new Gallup Survey. It found that only 54 percent of adults say they own stocks; that is down from 62 percent before the crisis. American Steelmakers warn that foreign imports threaten national security, they argue the flood of imports erodes their profit margins and their ability to meet US defence needs but foreign governments disagree, and they say the industry adequately meets the need. Some good news for Sears; the retailer posted its first quarterly profit in nearly two years. The gain is reportedly due to the company’s sale of its craftsman brand and a program to cut more than a billion dollars in cost. For much more on these stories visit newsmax.com/finance. Now back to David Scranton and The Income Generation.

David Scranton: Thanks Miranda. Now that you’re all up to date, let’s hear from some other financial advisors in the field and gets their insights on today’s topic of Values. It’s time for another financial advisor’s round table, joining me today we have Mike Burleigh and David Wright. Mike Burleigh is president of Peak Capital Management in Jensen Beach Florida. He’s been an advisor for over 25 years and has helped thousands of clients protect their hard earned savings and achieve their retirement goals.

David Wright is the owner of Wright Financial Group in Toledo Ohio and he wins the contest because he’s got 31 years of experience under his financial belt; actually one year more than yours truly. He and his team work closely with clients to design tailor made financial strategies for individuals, families and businesses specialises particularly in; you guessed it, retirement planning. Gentlemen, thanks for joining us today.

Mike Burleigh and David Wright: Thanks for having me David

David Scranton: So first let’s talk about you and what value you think is most important and how you determine how to run your practice; David.

David Wright: Good question Dave, there’s a lot of values that are important to the financial planning process but the one thing I think I bring to the clients or prospects more than anything else is the art of listening. God gave us two ears and one mouth and we should use them in that proportion and many times when I meet with people for the very first time, it is absolutely eye opening how ahh-struck they are that someone digs into as much details as we dig into, not just the hard data but the data that’s important about retirement but what’s important to them; grand-children, travelling and tuning out the world and tuning  in to them, zoning into them is probably the most enjoyable and exciting part of what I do.

David Scranton: Wait a minute wait a minute wait a minute, you can’t be a real man right because we all know that men don’t listen, they just like to hear themselves talk and unfortunately most financial advisors are men and weren’t you in that movie Mrs. Downfire; was that you Dave?

David Wright: Well it was Dave, how are you sir?

David Scranton: Mike

David Wright: Hey you’re busting my shops here.

David Scranton: Hey we got to have some fun, we’re on television right? Mike tell our Income Generation members in your practice what you think is the most important value that help you run your practice successfully and to add the most value for your clients.

Mike Burleigh: What I find Dave is, most of our clients are 55 and up; they’re either in retirement or near retirement and when we meet with them we find that a lot of times they’ve done really well with savings as far as 401k’s IRAs but they really don’t have any defined goals for their retirement. Believe it or not they don’t have any defined strategies. So if you don’t have any defined strategies and you don’t have any defined goals, those two things can be in conflict. So what we like to do is sit down with our clients and find out really what their retirement is going to be all about; nobody has ever really asked them that question. In other words, what do you want to do in your retirement? Is it going to be travel, visit your grandkids, golf, whatever your hobbies are and that type of thing? Once we have that information we’re able to put a plan together and build that around their goals.

David Scranton: Now Mike I can’t help but ask you here; you’re sitting there and of course there is a door behind you so is that an escape route in case you have angry clients? I mean what’s up with the door? I need to know.

Mike Burleigh: Well it’s actually an escape route in the event where maybe the clients aren’t a fit for us, we have a way to put them out the back door.

David Scranton: Excellent answer I love it, that’s great. So tell me what values now that you see in your clients who come in; which values are most important for them, give me the top two values you find are most important for these individuals most of whom I know in each of your practice is a part of The Income Generation; David

David Wright: I think the most important goals today are leadership, honesty; it’s easy to follow the herd mentality and I’m shocked to see clients and prospects come in here day after day who have goals in retirement when we ask them, many of which Mike just highlighted but their assets aren’t put in places that can meet those goals. So having the leadership to… And you know what, having leadership values means feeling alone and sometimes not following the herd. It’s important to have that courage to have honest conversations with clients so you know that their assets are aligned for their go-go years, their slow-go years and so on. So it’s important to be a good listener even though you don’t think men are good listeners; some men are, even Mrs. Downfire.

David Scranton: It’s just that that’s what women told me, that’s why I believe it. If they say it, it must be correct right guys? So I know you mentioned leadership and I talked earlier in the show as you two know about the road less travelled; Robert Frost’s famous poem and I guess your way of defining it and also in my book I define it as leadership which means the ability for people to take that road less travelled, you have to be a leader and not a follower in order to do that. So I agree with you completely and honesty because if one is not brutally honest with him or herself well then they’re not going to be able to do what they need to do to have a successful retirement. Mike how would you answer that question?

Mike Burleigh: Well very similar to David. I mean if you’re going to pop follow the herd you’re going to have to watch where you step right? So show people that you care, I know as corny as that sounds but that’s the number one thing. You have to let people know you care about their retirement. The number one goal for us is to again find out what their goals are in retirement, show them that you care about what they want to accomplish and then you can build a plan around that.

David Scranton: So tell me what do you think prevents people; when you see conflict as you said David between someone’s goals and values versus their strategy, give me an idea first of all of what’s the conflict that you most commonly see? Let’s start there.

Mike Burleigh: Well the most common conflict I see it the inability for that client or prospect to really accurately assess the risk that they have. I being the older states man here having 31 years of doing this, when you and i first broke into the business Dave, there were a lot of corporate sponsored pension plans people didn’t have to worry about their income, they simply worked for 30 years for one company and had a pension plan but as you know in the 80s and 90s that kind of went away and everything got put into the consumer’s hand to plan for their own retirement and the 80s and 90s were robust years in the stock market but once 2000 occurred, it’s been less advantageous for clients and prospects. They come to retirement, they don’t know necessarily the skills that got them to retirement are not the skills to get them to the end of retirement.

David Scranton: Now David I do have to tell you; you are a good looking guy an all and I know you love to look at yourself on the right hand corner of your screen there while your Skyping but really we’re up here, we’re straight ahead in the camera so you could look at yourself in the mirror later after we get of the show if that’s ok.

David Wright: Oh gee, thanks.

David Scranton: Mike in the thirty seconds we have left, tell us what values you think are most in conflict when you talk to your clients.

Mike Burleigh: Well we get a lot of clients that come in and they just don’t even realise the risk they’re taking. We have a tax practice; we had somebody in last month a matter of fact, and reviewing their tax return and going over their broker statements; they seem like conservative people and they found out they had a hundred percent of their account in equities and their response was “well we have conservative stock.”

David Scranton: Oh I love that, that’s my favourite. What an oxymoron; conservative stock, isn’t it ridiculous?

Mike Burleigh: And you really don’t know how to sit down and explain it to them.

David Scranton: Well we need to take a break now so gentlemen I assume you can stick around for a little while. For Income Generation members stay with us, we’re going to dive next into the philosophy of psychologically why these conflicts exist.

David Scranton: Welcome back to The Income Generation, I’m David Scranton your host. Now let’s bring back our financial advisor round table again we have David Wright the owner of Wright Financial Group in Toledo Ohio and Mike Burleigh the President of Peak Capital Management just a little bit north of us here in Jensen Beach Florida. Gentlemen thanks for sticking around.

Mike Burleigh and David Wright: Thanks David

David Scranton: So you know we talked about some of the conflicts that clients of yours have when they first walk in the door between their values and their strategies but mostly in terms of risk in various stages of life but have you ever thought about why that conflict exists, what creates it in the first place? Dave

David Wright: I think it’s pretty simple, people love opening their statements when they know markets are up and it’s that whole concept that drives the market; fear and greed, they are natural human tendencies. When things are up, people want to open their statements, they want to try to squeeze out every last drop of gain they can make but you and I both know from 03 and 08; I had clients that had 401ks with their companies, they wouldn’t open statements for quarters on end because they didn’t want to see the negative news. So I think their goals and how they are invested are in direct conflict because of that reason.

David Scranton: The human emotions of fear and greed; Mike, what would you say?

Mike Burleigh: Well you know to me it’s one of those challenging things that we have to deal with is actually breaking habits. What I mean by that is; you take in an individual investor, he’s working 20 or she is working 20, 30, 40 years and all of a sudden they’re in retirement. And for that whole period of time, they’ve developed the habit of saving, putting money away in their IRAs 401ks year in year out, year in year out for 20, 30, 40 years and this is deeply engraved into them and all of a sudden now they’re in retirement so that changes. Now they’re going to… You know Bill King doesn’t go away into retirement; now they want income but they have a difficult time spending the money they have accumulated, spending their interests and dividends because the habit has been so deeply engraved in them over 20, 30, 40 years. So it’s almost like you’re part financial advisor and part psychologist with some of these clients.

David Scranton:  Though they have us often referred to as the 401k mind-set, the 401k brain and it’s hard to make that pardon shift it seems. I always talk about the fact that if a particular Basketball team; Laslight Cleveland they were recording this Cleveland just had the last game beating the Celtics there ahead by so much with few minutes to go that was all but defence and not so much offence but I guess my next question is, how much do you think other financial advisors are at fault for this? For maybe perpetuating that mind-set that’s in direct conflict with their values of most retirees and pre-retirees. Dave

David Wright: Well I think it has a lot to do with who that advisor works for or works with, whether they’re independent, whether they do their own research. Most of the clients that come in here that have multiple advisors have heard their advisor that drank the cool aid of wall street along with all the hype on T.V., we just find that they are way over invested in stocks and not thinking about dividends and interest and their advisor at other locations comes off more like the “raw raw go wall street” type of person and it’s tough to sometimes break through that but when they see what the risks really are long term and how that can impact their values in retirement, many times they wake up and see it but I think that has a lot to do with it, it’s the current status of our media; what things look like on T.V., what their advisor is saying.

 

David Scranton: So you’re talking about the dreaded wall street cheerleader; full with the cheerleader uniform, the pompoms, jumping up and down and no Dave don’t worry I’m not going to ask you to imitate the cheerleader, I’ll save you that.

David Wright: Alright thank you.

David Scranton: Mike why do you think this happens with some financial advisors?

Mike Burleigh: We kind of all get painted with the same brush David and the reality is we couldn’t be more different.

David Scranton: Yeah and people think that any financial advisor is just all the same but it’s not. It’s like saying every doctor is the same but it doesn’t work that way does it?

Mike Burleigh: It does not work that way but the general public does not know that. They walk in and say anybody can call themselves a financial advisor. They walk in, they don’t understand the business model with different financial advisors; some are more risk based, some are more conservative, they don’t know walking in the door so they definitely need to ask a series of questions before they hire somebody.

David Scranton: I can see why in Jensen Beach retirees flock to you Mike because with that income based model it’s what they need and probably have nobody else in town that’s doing that which is probably why you have those sun glasses because when you go out in public, you don’t want other advisors taking pot shots at you so you need to go with a disguise; is that what the glasses are about?

Mike Burleigh: Yeah this is true, I have to kind of go incognito sometimes and kind of watch; you never know who’s going to come up to you.

David Scranton: You know both you guys I have to tell you, I love you guys but I also hate you guys because you guys are all a couple years older than me and you have way way too much hair on your head for somebody who is at all older than me for goodness sake. With that comment, we’ll be right back and for Income Generation viewers we have much in terms of words of wisdom from our financial advisors round table. Stay with us, we’ll be right back after the break.

David Scranton: Welcome back to The Income Generation, I’m David Scranton your host and today with us are David Wright and Mike Burleigh financial advisors with accumulative of 50 years of experience between the two of them. I think you’re both right that the reason that there’s conflict regard what most advisors teach clients that is between the creates conflict with the values and the actual strategies is part of it yes the wall street cheerleaders a fact a certainly think that’s some of it and the other part of it is the source of the research. I think part of it also has to do with how difficult, how much diligence it takes to really invest in fixed income. Most people don’t realise that advisors have gotten lazy in the 80s and 90s with the advent of mutual funds and fixed income takes a lot of work, in fact it takes more work than stock picking. In stock picking, you kind of go “okay, I think this stock is going to go up” and you buy and hopefully you’re right; it’s more of a subjective right brain function but fixed income analysis is much more of a left brain function. So how much of this do you think really has to do with just laziness of financial advisors or the industry in general?

Mike Burleigh: I think yeah a lot of advisors are more geared towards stock market based investing and they can just sort or check the box and put the client in a bond fund so there’s no real management there.

David Scranton: And that’s about how much work it takes to buy a bond fund too right you just simply check the box.

Mike Burleigh: It takes about thirty seconds so there’s not a lot involved there but it’s not really fixed income investing.

David Scranton: David

David Wright: People just don’t understand the time and the research that it takes to not only find the right fixed income investment but the right timing and when to purchase it  and  it requires patience, it requires diligence and most of all it requires a lot of research and like you said, wall street is intoxicating, people have gotten away from the income model but everything old is new again and this whole concept of income investing is not new, it’s been around; it’s just been forgotten.

David Scranton: It’s going back to basics if you think about it in lots of ways. So what do you think though, how much does this have to do with corporations trying to cover their own rear ends by the outsource big rogue in terms of outsourcing a lot of the management, do you think that’s part of it too?

Mike Burleigh: Yeah I don’t think they want to deal with it anymore absolutely.

David Scranton: It’s still a bit of CYA right because if you have a broker out there picking individual things you might do good things or bad things, creating liability for the corporation but if you outsource it to a third party money manager you have as the batteries would call it plausible deniability.

Mike Burleigh: You’re building that layer of protection.

David Scranton: You are that’s correct, that’s correct.  So since we’re talking about diligence here,  we’re going to come back and we’re going to give you a little quiz, I hope you gentlemen don’t mind; we’re going to find out how you do your research okay, so I want you to think about that while we’re taking our break. And for Income Generation members, stay with us we’ll see how they do whether they pass the test or not, we’ll be right back in a moment.

 [Commercial Break]

David Scranton: Gentlemen so now that you had a commercial break there to think about the answers to the question; how would you answer the question in terms of how you do your research and remember these are some of the questions I put in my book, Return On Principle for people who are interviewing advisors so let’s hope you get this right, Mike.

Mike Burleigh: Well you know we do our own research here so I have to set aside time each week and research through various sources. Bond markets, bond and bond-like instruments unlike the stock markets aren’t efficient markets so we have to look at different factors, we look at their credit quality, the ability of the companies to meet their obligations and those type of things, so we have to set aside time each week to do that.

David Scranton: And you talk about credit quality; you can’t just trust the rating agencies anymore.

Mike Burleigh: Not anymore, nit after 08 09.

David Scranton: That’s right.  Dave how would you answer that question, how do you do your research for your clients?

David Wright: That’s a good question Dave. I’ve taken on the outsourcing of my investment research but I’ve done it in the right way for income investing. Who I use they take time to select individual securities. The whole universe of non stock market income generating type investments; it takes time, it takes a lot of research and not only research on my part with the outsourcing firm but with the client themselves.

David Scranton: So you don’t just check off a box and throw them into some bond fund, you e outsourced the professionals who know what they’re doing. Well gentlemen you’ve both passed the test according to my book so for anyone who’s reading my book in your area who’s coming to see you and interview you as a potential advisor, you’re going to past the test. Thanks for being here today both Dave and Mike, I really appreciate it.

David Wright and Mike Burleigh: Thanks for having us.

David Scranton: And again I want to thank all of my guests for joining us for another stimulating episode of The Income Generation. I’d also like to thank you our new and returning viewers. I hope we’ve helped shed some light on why it’s incredibly important to examine your own values and the relationship to your retirement goals. Do you have the right values and characteristics to achieve that goal? Are you practicing over protection and detail orientation? Are you willing to take the road less travelled when you know it’s time and do you know exactly how to take it? These are questions I’d encourage you to examine closely and to answer with brutal honesty about yourself and about your financial advisor. Again you or he may possess and live by all the kinds of positive values that’s completely possible but if you don’t have just the right ones for this particular job, it’s probably a good idea to find someone who does. There’s simply too much at stake to leave this issue to chance when we’re talking about your life savings. So if you’re close to retirement and you really want to know how to protect and maximize your money, it’s absolutely essential you stay informed and up to date and thank you for watching we’ll see you next week.