David Scranton: The classic movie “the sting” gives us a good reminder, that when it comes to investments remember one word, plastics! Wait a minute that was the wrong movie. When it when it comes to money, remember the following advice about what's important, and that is important to have a reliable source. Of course, is not always easy to tell whether a source is or isn't reliable and that's especially true which so much information bombarding us today, in this online age. But it is possible to improve your odds, of finding good intelligence and to decrease your odds of getting stung. You'll find out how on Today show. Yes, once again it's time to tune out the hype and focus on the facts, facts that matter to you the income generation.
Hi everyone and welcome to the income generation, I'm David Scranton, your host. Last year we did a show all about media bias and we demonstrated how the financial media isn't immune to this problem, in fact far from it. Most of the information that comes to you through the media be it network T.V. or the Internet is probably biased to some degree or another, just being aware of that is a good first step toward protecting yourself from potentially harmful advice and information. But, there are other steps that you can take and sources that you can access to help make sure that you're getting good “intel” when it comes to your finances. Joining us to talk about this today as well as other important issues, is Tobin Smith, author of the forthcoming book “Fear in unbalance Confessions of a Fox News hit man”, and later on we'll also be welcoming Karen Murphy of A.I.G retirement, but first, let's review some things about the financial media and why bias is a natural byproduct of our system. In our show “all about media bias” last year we pointed out that the explosion of the Internet in the last fifteen years has only made this problem much worse. Liberal bias in the mainstream media was already an issue, but rather than solve it, the rise of the Internet along with cable and satellite T.V. simply spawned even more biased than ever before. It also made things more confusing for everyday investors who are trying to get good reliable intelligence. When we talk about bias we're talking about information that is in some way self-serving and has a hidden agenda which not surprisingly is usually profit based. When it comes to the financial media specifically, this can be particularly problematic. Many Americans base their savings and investment decisions on news and information that they get through financial programs, magazines, blogs, and websites. If that source has an ulterior motive that puts the needs of the network author or blogger, ahead of your needs then the question becomes, exactly how trustworthy can't really be? As I've explained in some of my books bias in the financial media isn't always malicious it's just how the system works plain and simple. It starts with the reality that a Wall Street C.E.O.'s primary fiduciary responsibility is to his shareholders not his investors or customers. That one simple fact creates a trickle-down effect that makes it almost necessary for much of the financial media to put the goals the needs of their advertisers ahead of those of their customers, and let's face it most of these programs magazines and websites. Get most of the revenue from advertisers today, not subscribers knowing that it only makes sense that they would want to keep these advertisers happy. And that's fine except when the goal of pleasing advertisers runs counter to serving the needs of viewers and readers. So for example, let's say that celebrity expert that you see on television who's yelling that the sky-high stock market is the only game in town and that you'd be a fool not to ring you know every bell and every last penny out of it, you have to ask yourself. Is that advice really being given for my benefit or is it being given for the benefit of the station's advertisers and their C.E.O.’s?
Remember that C.E.O.'s first responsibility is to shareholders, and how does he please those shareholders? The primary way is by keeping as many customers as possible invested in the company stock at all times. Get the picture? Again, it's simple, how the system works. Another important point to keep in mind is that a lot of the so-called experts providing information in the media really and truly aren't actually experts at all. In print, for example, a lot of articles are written not by financial professionals but by general assignment reporters. A reporter who for example might be someone who writes a piece for Sports Illustrated on Monday and then an article for a financial magazine on Wednesday, and who is he likely to interview to get the information for this financial story? Well in many cases there's a really good chance that it will be a financial firm, that yes. Advertises in that very same publication, meaning the story may be slanted to please that advertiser and that advertiser C.E.O. Again get the picture? And as for those smooth talking experts on television let's face it some actually have no financial credentials at all. They're really more like actors or professional celebrities and this creates what's known as authority bias, where you tend to be inclined, subconsciously to trust someone, just because he or she looks good speaks well and therefore you assume that that person knows what he or she is talking about. The bottom-line is that it's important to approach media based, advice and information with some degree of healthy skepticism. It's also important to keep in mind that media experts can really speak in generalities. You know, let's face it, every individual's financial situation is different and because of that, there is really no such thing as a one size fits all piece of financial advice. This is one of the main things that make successful planning such a challenge to do it yourself, investors. Now, none of this means that you can't potentially find helpful or valuable information through the financial media. But it does mean that it's probably not smart to make major financial moves or decisions purely on that basis. It's important to dig deeper, to look further and to discuss the information with a qualified objective financial advisor who can help you apply it to your individual situation. Think of it this way, if a so called medical expert on television told you it's a good idea for every person over the age of fifty eat a whole bag of walnuts every single day you probably wouldn't do it without running it by your doctor first, right? I mean, after all, that would be kind of sort of nutty, and possibly very dangerous for the health of many people. Well, it's a similar situation when it comes to the “intel” that you get about saving and investing on television in the print as well as on the Internet. Make sure, that the information we're receiving is really right from you and that it passes what I call the sniff test. While a qualified financial advisor can certainly help you distinguish good “intel” from potentially harmful information. You can improve your own skills at this as well, and we'll talk about that a bit later on the show. But right now I'd like to welcome our first guest; author, entrepreneur and former Fox News analyst Tobin Smith. Tobin has been with us on the show before, he's the founder of Change Wave Incorporated and Investorplace.com. He's also the author of several books and a former financial commentator for Fox News. Toby, welcome back.
Tobin Smith: David good to see a lad.
David Scranton: Of course we're, I love it when you call me lad, that's perfect, it makes me feel young again, I like that.
Tobin Smith: Exactly.
David Scranton: It's funny we're talking of course as you know, about bias in the financial media today, and you know your new book that's coming out really talks about that in a very specific way. “Fear and unbalanced Confessions of a Fox News hitman”. So is the president right then, is there a lot of fake news out there? Is it all over the place?
Tobin Smith: Well you know me, my, book specifically is on you know what I did and what I was involved in it Fox News. I assume that a lot of your viewers, you know are Fox News fans and watch etcetera and I would guarantee you, David, that if you asked them. Do you know, do you realize that almost every opinion program that I ever participate in about two thousands of them, by the way, was specifically scripted and rigged by the producers by Fox News producers so that I the conservative person, would win the argument and they did it in a number of ways. Starting with, did you ever notice, that the liberal opponent of mine on Fox News was always a third or fourth string person? I mean if you were a Democratic strategist which basically meant you're an attractive male or female but even better attractive female. We put you on Fox and then we'll give you a subject like me I've run an investment research company, a hedge fund, a mutual fund micro-economic research guy and they would bring up a subject, that was exactly what I do for a living and that poor you know liberal person had no idea other than what the Democratic talking point was. But that was great because if they the Democratic talking point, we would hit the first mark of our performance art show. Which was, we wanted to get that person to stand up David and feel like they wanted to throw a brick through the television. That was exactly what people told me for years, that you know viewers have said, oh man I just wanted to throw a Brick! Well, if we've got your blood going and that liberal opponent, put out these apostasies, and these heretical remarks against conservative ideology and then I swooped in at the end and I said listen sweetheart, that's great, let the big boy take it over now. First off you don't know this, second, you don't know this, number three, you know, I hit a couple of conservative illogical points, boom. The reader at home the viewer at home says Toby you kill that lip tard they get Jack, I mean they literally get a shot not of adrenaline but of dopamine you know the really good stuff there are capable, it makes you feel great. This segment is over, there is a commercial and we will have you in two minutes back yeah.
David Scranton: So basically can't officially rig it because they never know what the liberal opponent so to speak is actually going to say
Tobin: Oh and that's wrong.
David Scranton: But I guess if you take in an all-star pitcher and you put him up against a double a batter, chances are you stacked the deck sufficiently, that batter is going to strike out. Right and you, you are that all-star pitcher.
Tobin Smith: Right but au contraire David. Right but David you have that wrong. We have every talk show you get what's known as the point of view, the talking points right and they get e-mailed and backed by all the combatants the difference was, I was live on Fox a lot of times you know the other conservative people, were off like me. They're off on Skype or on a satellite. I was in the studio and I was in the production offices. And at four o'clock when everything was all tied up. Then I would get my final instructions. I would get the final point I would see what the final point of view from my opponent was and then the producers would give me these scripts that basically say here's how you kill him here's what I want you to hit. Also remember that Roger Ailes, God bless him. Was the one who gave out the talking points for the show's every day the producer executive producer we get we call them our R.T.Ps Roger Talking Points, R.T.Ps and that's what our television show was about and that was because Roger had his finger right on the pulse of the conservative small town rule viewer, who is our core audience. So if we know what was going to tick them off.
David Scranton: Toby, we take a quick commercial break I want to hear a lot more but stay with us we'll be back in just a minute ok, and for income generation members you stay with us also we're right back with more from Toby Smith.
So, exactly how then do you improve your ability to distinguish good “intel” from bad when so much of it is bombarding you want to daily basis? A good first step is to improve your own personal financial literacy. According to a study recently by FINRA investor education foundation, an estimated two-thirds of Americans today cannot pass a basic financial literacy test. What that means, unfortunately, is that two-thirds of Americans don't really know or understand the various investment options available to them or how each of them differs from the other, they don't fully understand the concept the financial defense or the strategies involved. They know little about the stock market, how it works or the bond market or how it works, or how market changes can impact their own investments. They don't really understand the relationship between the economy and the financial markets or why it's so, incredibly important when it comes to making financial decisions, especially, after the age of fifty. While all of this is unfortunate, it's also understandable. Traditionally, the public education system has mostly neglected these important topics and continues to do so today. Then they get some coverage, in a basic economics class perhaps, but that's often not even a requirement for every student. The Center for Financial Literacy at Champlain College recently graded public school systems throughout, on the teaching of financial literacy and on their most recent report card twenty-two percent of states received a failing grade, less than half of all U.S. states received above a C. Nor do most businesses provide financial literacy training for their employees, even though would probably be in their best interest to financially literate workers. Yet, now yes, in some cases large companies to pay for personal financial planning services and financial training, but typically only for their top managers not for most employees. Not having that basic understanding of finance does indeed put you at an enormous disadvantage, when it comes to distinguishing good financial intel from bad and by the same token being financially literate, helps you to process information from an educated and informed perspective. Think of it this way, who is less likely to be victimized by a shady used car salesman someone who's never looked under the hood of the car or someone who took two years of auto shop in high school and still changes own oil? Obviously, it's the latter not the former.
He's able to listen to the salesman from an informed perspective and has a better filter for distinguishing good accurate information from biased information and of course most used car salesmen are likely to be biased to some degree because they have a self, serving motive also and that is to sell the car and to get their commission. But if schools and businesses aren't providing financial literacy training. Then where you have to get it? Well yes, there are a number of books that can be helpful but another option is to keep an eye on your local newspapers, websites and social media for information about workshops and adult education programs. There are in fact many financial professionals who offer financial literacy training for free, as a public service. Now that may sound too good to be true, but I know from experience that most good advisors consider themselves educators first and they're always eager to teach. It also makes good business sense because a financially literate public is good for the local economy in general, in fact I feel so strongly about this that a few years ago I started my own nonprofit organization the Scranton Academy for Financial Education. The goal of SAFE is to make it easier for Americans of all ages to access free financial literacy classes and programs in their communities. I'll talk more about ways to improve your financial literacy in just a bit. But right now I'd like to welcome back to the show Tobin Smith. So Toby you were you telling us about how the deck got stacked because, you'd always get the notes the talking points from the liberal opposition as you said and then the brainpower would get together in give you the best solid argument, so you kind of knew what your argument was going to be but they didn't. You knew what the arguments are going to be but they didn't.
Tobin Smith: But even more than that, you know in talk show world you call the ball game. The ball game is you are going have two people who go at it right?
David Scranton: Right
Tobin Smith: The other side of that, was that, not only was the ball game rigged but many times it would tell me what they want to be to say. I mean, for instance, you know, you're a bond guy right, I was bound for a long time. What people, on Fox with Roger said look at the price of eggs and meat is up, so let's talk about inflation. I would say, well the reason why we take meat and eggs and gasoline out of out of inflation because it goes up and down and the director would say a producer said I don't know if you get this Toby but here's what you're going to say. You're going to say yea dammit I'll tell you this inflation the government is lying about inflation numbers, they're lying about it and I would and I would say myself after a while. OK you know you paid me five or ten grand a week to do this, OK. I didn't know that anybody would listen to this stuff. Honestly, I didn't, I thought people understood just like to WWE you remember back in ninety-four. The MCC came and said you had it disclosed that all your matches were rigged.
David Scranton: World Wrestling
Tobin Smith: Like, no one didn't know that. I thought that people at home would you know and understood this.
David Scranton: So with that thought in mind you get the, talking points, the notes in advance. I typically don't bother to look at those but whenever I get you to know a big-time nationally known guest like yourself, I always read those talking points and I want to ask you about one of those it's quite interesting here. A claim, a claim, that in part because of alienation, that some people go through from being so radically conservative that recent studies show that the premature death rate of some of those individuals can be forty-five or fifty percent higher. You, so in that essence you contributed to the deaths of a lot of Americans how is this possible help us to understand this.
Tobin Smith: It's absolutely true and I didn’t really first when I left Fox There was a movie that came out, called “The brainwashing of my dad", it was an eighty-minute documentary that went through what happens with someone when they go off the cliff. Remember when you go off the cliff at Fox News that means, you’re over sixty-eight years old they're median average age is sixty-eight which means half the people are older. When you start watching two to four hours that's the average that Nielsen says it's a lot you know what I would call the Fox News addict and then what happens is you become dissocialized in many times and I've done studies, across the United States that one out of five people know someone who's become so hyper radicalized that their family doesn't want to spend any time with them their friends they become ostracized when you become ostracized when you're sixty-eight plus years old you become a chronically lonely and now we have three recent research deals that say the number one way you become chronically lonely is pushing away your friends and your family and one of the top ways you do that, is when you become that angry, always pissed off, always outraged person that frankly just no one wants to be around. I mean, so we've connected the dots we're doing more research on this but this is BYU this is an escapee, this is the U.K. the chronic loneliness kills more people in the United States over sixty years old than obesity. It certainly more than you know addiction to opioids etc. It is an absolute epidemic and if.
David Scranton: It can help and it happens older folks perhaps more easily than any others if you think about all it
Tobin Smith: Of course because number one you're already you know basically lonely Your lifestyle is Dimmer, a lot of times they're retired you're isolated , if you move to Florida and your family still lives up in New England, you're not seeing them as much, I mean that also gets going there. But once you sort of becoming this person this person that's always angry that uses the "N' word when they never used the "N" word before and uses all the terminology. You know your kids up on the east coast probably want a better school than you did you know and they come home and all they hear is this anger and this victory all and liberals are killing this country and Obama was born in Kenya and yet and they're just, you know it's just a natural thing. When you sort of say hey I'll see you in about five more Thanksgiving.
David Scranton: Well, you know I'm not sixty-eight but I have to tell you how I solve that problem with a really easy. I simply fired all my liberal friends, that said I got rid of them so now I don't have to worry about that I alienated myself but at least I try to be unbiased here on Newsmax the best like him but. Thanks so much for being here with us today I need to leave it there for now but hope to have you back in again Thank you, Toby, and stay with us we'll be right back.
John Bachman: And hello I'm John Bachman when this is your Newsmax Finance Update, let's take a look at some of the stories that move the market this week. Commerce secretary Wilbur Ross says the U.S. is not trying to start a trade war with China instead he says the U.S. is trying to level the global playing field. His remarks come one day after President Trump announced steep import tariffs on washing machines and solar panels. China and South Korea have condemned those tariffs. The dollar had a three year low against the U.S. bond prices as they eased on Wednesday this after Treasury secretary Stephen Mnuchin confirmed, that he welcomed a weakness in the currency fears of protectionism from the U.S. economy had already pushed the dollar down but recent remarks at the Davos World Economic Forum pushed it down even further and Ford Motor Cars is complaining about the rising cost of metal cutting into its profits the car manufacturer presented its earnings estimates for 2017-2018 it is the higher cost of a loon I'm stealing other metals plus currency volatility, could cost of more than one and a happy billion dollars this year alone aluminum prices have risen twenty percent over the last year and just nearly eleven percent since just the middle of last month for more of these stories, you can check out Newsmax.com/finance. Now back to David Scranton on the income generation.
David Scranton: Tell our viewers in your own words why financial literacy is so important to you?
Mihir A Desai: Well as you pointed out, finance is an important part of all goal almost all goals in our lives and so the key thing to kind of question is whether we really have the financial understanding that we think we do?
David Scranton: Now if you watch our show on goal setting recently, then you know I believe that setting goals are one of the absolute most important first steps in successful financial planning. After all, if you don't know exactly where you're going, then, how do you expect to get there? Well improving your ability to distinguish good financial “intel” from bad and to access information that's right for you specifically is I guess another important step and again a great way to get there is by improving your own financial literacy. A recent data shows that most Americans of all ages still have plenty of room for improvement. A 2017 survey by the company Financial Engines, found that even though nearly half of Americans say they feel more secure about their money than they did five years ago. Still, only six percent could pass in eleven question financial literacy quiz.
So while people might believe they make more financial decisions it seems that their lack of basic knowledge could be making them vulnerable to that intelligence and setting them up for disaster, so now, let's have some fun together let's see if you can correctly answer the four questions on the survey that tripped up quiz takers the most, number one. How much will the typical married couple retiring at age sixty-five spend in today's dollars for out of pocket medical costs throughout retirement? Is it A. fifty thousand B. Hundred thousand C. One hundred fifty-seven thousand D. Two hundred thousand E. Two sixty-six or F. Three-thirty. The answer is E. Two hundred sixty-six thousand dollars. Question number two. If you purchase a bond and then interest rates rise what will happen to the price of the bond? Will it be. A. Rise B. Stay the same or C. Fall. Surprisingly less than twenty percent of quiz takers gave the correct answer which sees the bond price will fall if interest rates rise. Next question, A typical sixty-five-year-old man can expect to live on average for how many more years? is it A. about ten B. About fifteen C. About twenty D. about twenty-five or E. about thirty. The answer is C. About twenty more years although many Americans today are living up to thirty years or more in retirement and finally what is the average annual rate of inflation for college tuition around the country, is it A. two percent B. Five percent C. Eight D. Eleven. Well, the answer is also C. Eight percent. So, how did you do? Even if you aced all four questions keep in mind the more you learn the better off you'll be. That's because you'll be better equipped to sort through the morass of information and advice coming your way every single day to distinguish good “intel” from bad and to work with your financial advisor to create the right plan for you. Joining me now to talk more about finding good financial intelligence and the importance of financial literacy is Kara Murphy, a chief investment officer of Sun America a subsidiary of A.I.G. Kara, welcome to the show.
Kara Murphy: Thanks so much for having me.
David Scranton: Now I want to talk to you about finding good information how people can tell when recommendations are biased and not bias but before we get into that I've got to ask you. One CFA to the other, what's going on with these financial markets? Is this the stock market is it making sense to you or are we getting in the realm of irrational exuberance, what's your take on this?
Kara Murphy: So it's really, it's been a fascinating time and 2017 was a record year for records. We had the S&P, the NASDAQ, and the Nikkei all making a record number of new highs. You had the S&P that was up every single month of the calendar year, that's never happened before and then to Dow, which is you know typically a more sleepy index actually outperformed all of the other U.S. major indexes. So 2017 was a fantastic year and then here we are not even finished with January and we have the S&P 500 up six percent so it's really been an extraordinary time, but you know despite the fact that valuations feel lofty that we're pretty we're getting a little long in the tooth, there was a lot of economic underpinnings for the enthusiasm that we're seeing in the market.
David Scranton: But is this, the enthusiasms there granted but you know it seems to me like the gains we had last year at least a good chunk of those weren't really backed up by economics and fundamentals, that maybe over the last few months that's been the case, so are we getting into this blow-off period in the market here do you think? Or are or do you think we have maybe a solid 2018 ahead of us in the stock market?
Kara Murphy: Well so we look at things like business confidence, earnings, all at pretty lofty levels and actually getting better we're seeing earnings being revised up. We also see pretty strong consumer confidence and that's really mirrored by the strength that we're seeing in the labor market when we look at manufacturing activity that's actually quite strong and a lot of these numbers are being mirrored it's not just in the U.S. but they're being mirrored in non U.S. markets. So there has been increasing momentum in the economy and then, of course, more recently we have the tax reform package which is just put another you know a shot of adrenaline into the arms of the markets.
David Scranton: So you think then, there's a good chance 2018 could continue its momentum, potentially?
Kara Murphy: I do, I do, and you know I'm a lot of the reasons to be cautious in the market are somewhat lofty valuations and I agree. The valuations definitely above average. Another reason is that we've just been in an up cycle for a really long time but typically when we look at timing indicators for the market those aren't great signals for when to sell the market. So the types of things that we look for when to sell the market are things like an inverted yield curve or a leading economic indicator starting to turn down and we're not seeing those type of signals right now.
David Scranton: Plus, the Federal Reserve is trying their darndest to create inverted yield curve so who knows they might they might get their way. So now I know you manage really the mutual fund side of the division of your company. So are you starting to see now shifts were there are more outflows from the Bond funds and inflows into stock funds are you starting to see that sign at all because historically from my experience that has been telling of getting near the top of a market cycle?
Kara Murphy: Yes and it's interesting we're actually just discussing this very issue yesterday in our weekly meeting because we've been waiting, we've been waiting for this whole cycle to see flows coming back into mutual funds and ETFs and while we've seen a lot of shift from mutual funds to E.T.S. we haven't seen the shift to equity funds just in general. Most of the flows that we've seen coming into the market have really been going into fixed income. So I feel like this time around that signal may not work the way that it has and other cycles, so no we haven't seen people necessarily changing behavior in terms of switching between asset classes but that hasn't really functioned like you might expect in this cycle at all. We do see higher levels of cash on balance sheets, so, for instance, private equity funds alone have a trillion dollars in dry powder sitting on their balance sheets right now.
David Scranton: Yeah, that is a lot absolutely are you seeing that also a lot of cash in money markets that you manage or higher than historical or are not really?
Kara Murphy: We have not seen big shifts in money markets. Again like you know that's another indicator that we might look to see growing caution in the market we have not seen major changes in the money market funds.
David Scranton: Interesting and I wonder I don't have an answer I wonder how much of that is because a lot of what of course your company does as an insurance company, put protection around a lot of these mutual funds in the form of annuity wrapper so does that makes a difference or not, but stay with us we'll be back in just a minute to ask you a lot more about today's markets and you stay with us also we'll be right back with more.
Welcome back to the income generation I'm your host David Scranton. Becoming financially educated or financially literate doesn't necessarily begin or end with finding and taking a course pacifically on financial literacy. There are many issues and topics that incorporate or touch upon basic elements of said financial literacy. In other words, you can improve your own financial literacy by learning more about any number of related topics. For example, a workshop or course on the stock market or the bond market is likely to arm you with a lot of valuable information you might come away with a better understanding of things like how the financial markets really work, what terms like Bull and bear market really mean. The important differences between bonds and bond funds, and how everyday investors like you and me differ from majority shareholders like let's say, Warren Buffett. All of that improves your financial literacy. Similarly, if you are part of the income generation classes or workshops on topics such as tax savings, estate planning or depending upon your age maybe Social Security Medicare or required minimum distributions can be extremely beneficial. Not only can they provide you with the information you need to make important decisions in the short term, but they can greatly improve your financial literacy in the long run. So keep an eye out for classes or workshops in your own town or neighborhood. Now it's time to welcome back Kara Murphy chief investment officer of Sun America to discuss financial literacy in your takes on all of this. So Kara obviously Sun America has its own products that it advisers offer but are not required to offer. They can offer your proprietary products they can offer some other ones. How do you and your company help ensure that what they're saying is unbiased and that any information that's coming out in terms of advertising is unbiased, I know I'm putting on the spot this isn't your area your chief investment officer you're you know you're a C.F.A. money manager like me but. How does your company do that?
Kara Murphy: Well we spend a lot of time making sure that we have the right message about our products. We have to make sure that we understand what goes into our portfolios, what we're holding and more importantly sometimes the process by which we get there. So we spend a lot of time talking about process, we talk with a lot of advisors about the way that we construct our portfolios or systematic approach how we view different factors and how that all feeds into the end result of the whole of the holdings that we actually have in there, so it's very important to us to make sure that we get the message correct and that that's what we're really going for we talked to advisers.
David Scranton: So, what you're basically doing is you're educating them so that they could better educate their clients that help the clients make informed decisions.
Kara Murphy: Absolutely and again it's not just about the individual holdings that are in the portfolio it's the process and how we get there and to make sure that we do that on a consistent basis.
David Scranton: Now I know we talked about your just a minute ago before the break I talked about the fact that a lot of the business that they do as an insurance company consists of variable annuities. Which for our viewers if you're not aware are basically sub accounts kind of like mutual funds wrapped in insurance wrapper. You know tell me is there is there any difference in how you invest behind the scenes the money for a sub-account and a variable annuity, giving that they have that insurance wrapper compared to maybe a more equivalent mutual fund or does that not really matter. It depends, so we spend a lot of time talking with the folks at each of those channels to make sure that we understand, you know what type of risk that they're looking for in the portfolio so that discussion really comes in the construction part as we're developing the product and determining what the investment strategy is going to be. Now there are times when the same strategy will work in the mutual fund world and in the V.A. world but there are other times when they're looking for something different, so it's really a matter of an individual discussion for each of the channels that we work with.
David Scranton: When you when you talk to advisors if you had a say in general what is the one area where advisers might need a little bit more education. What would that area be?
Kara Murphy: So, one of the most interesting topics that have been coming up recently was where I feel like advisers are maybe a little bit behind the curve and learning about is environmental social and government investing. So this is a relative way, well I should say it's been around for a long time but it's been getting a lot more press recently and when we look at server is we find that investors are very interested in these types of strategies asset managers are increasingly beginning to offer these types of products but it's really adviser who is kind of in between these two areas who's not yet very comfortable with the types of products that are offered they don't yet understand that you don't have to give up return in order to have something that is ESG focused, so they're not really talking about it so a lot of the work that we do is getting them educated in what's out there.
David Scranton: And in the twenty seconds we have left if you can just tell us what your opinion is of where the average investor needs the most education today.
Kara Murphy: The average investor needs to make sure that whatever their plan is they stick with that is the most important thing
David Scranton: So create a plan, work your plan, stick with your plan, that's good advice. Very good advice, too many people make emotional decisions and that's why as you know a lot of investors in the buying high selling low by accident, so Kara thank you are thank you so much for being on our show today was wonderful having you.
Hanna Ostapchuk: We never know when interest rates will shoot up but they can't stay near record lows forever so if you're investing in bonds now is a good time to start thinking about playing defense and making changes to your financial future.
Monte Resnick: Well we all hear now is a great time to buy a home because interest rates are so low but we all know that at some point down the road in the future we don't know when interest rates are going to raise. Interest rates and bonds have an inverse relationship as interest rates go up the value of the bond goes down so the reason you really want to look at the bonds in your portfolio right now is to understand how your position for a rising interest rate environment.
Hanna Ostapchuk: If retirement is around the corner be careful with your bond selection to understand what individual bonds you own as well as bond you to a fund then talk with your financial advisor to figure out the best strategy for you and your family. I’m Hanna Ostapchuk.
David Scranton: I'd like to thank all my guests for joining us for another episode of the income generation. I'd also like to think you are new and returning viewers there's no question that we live in challenging times the so-called information age has indeed evolved into an age so filled with information sources in various outlets, it’s harder than ever before to know what's accurate, what's reliable and what's truthful. But that same reality makes it more important than ever to sort it all out. No one! Should ever make a major financial decision based on information that is simply convenient or just seems credible. A general would never commit his troops to battle without making sure he had good Intel first and gathering good Intel takes diligence and education the same is true when it comes to distinguishing good intel from bad in our financial world. It starts with improving your own financial literacy and it should conclude by working in partnership with a qualified objective financial advisor who understands your individual goals and challenges. Thanks for watching if you're close to retirement and you really want to know how to protect and maximize your money it's absolutely essential that you stay informed and up to date and right here is where you could do it on the income generation. I'm David Scranton, thanks again, I'll see you next week.