Creating Better Financial Outcomes

[INTRODUCTION]

[00:00:12] Dean: Hey, it’s Dean Barber, your host of The Guided Retirement Show and this week’s show we’re going to be talking with Brie Williams. She is Vice President of State Street Global Advisors and she is really dedicated to helping financial advisory firms across the country facilitate efficiency and growth beyond asset management. And Brie’s going to be talking to me in this podcast about really how you get better outcomes in life and we’re going to talk a little bit about behavioral finance and the effects of cognitive decisions as we age and talk about what you should expect from an advisor relationship and what order should the investment discussion come within that old context, and then ultimately, how do you evaluate the value of an advisor and the fees that they’re going to charge.

So, as we explore in this particular podcast, we’re going to talk with Brie and there are going to be three different conversations that we’re having with Brie. This is the first part of a three-part series. Enjoy.

[INTERVIEW]

[00:01:26] Dean: Brie, let’s start out by just a little background on you, your career at State Street Global Advisors and maybe a little bit before that. What’s your passion for this and how did you decide that this is what you wanted to do?

[00:01:40] Brie: Sure. So, my passion is really about better outcomes, not only for myself personally and my family but in the career path that I’ve pursued. So, it’s an opportunity to help people grow their bottom line, of course, but also grow in the journey of their experiences. So, this is an opportunity for us at State Street Global Advisors to dig a little bit deeper and understand behaviors. Why do we do what we do? What is our true source of motivation? And can we take those influences and the understanding of those influences and actually turn it into a positive force for action, which can change our outcomes to be in the more positive or in the green if you will?

[00:02:22] Dean: Okay. So, in the research that you’ve done, what are you seeing? What’s kind of the one thing that you would say, “Everybody really needs to be aware of this?”

[00:02:31] Brie: So, what we all need to be more conscious of is it’s not a bad thing to seek help and that you don’t have to be an expert to align yourself with one. It’s your money. It’s your financial life. Why not make the most of it? So, we have a lot of preconceived notions of what a financial advisor is and isn’t and a lot has changed in financial services when you think about working with someone that will treat your financial life comprehensively because it’s not just about a stock or a bond. It’s a better way to get the most out of the purpose for investing.

[00:03:10] Dean: So, you think the people are afraid or hesitant to seek out the help of a professional?

[00:03:16] Brie: There’s definitely some hesitancy because we historically as an industry tend to sell complexity, and if we can talk everyday language and make this something that we can all understand and be more inviting in terms of how we bring people to the table. This is a conversation. This is about really understanding what your wants and your needs are about. And then we can get to the nuts and bolts of the investment vehicles and the choices and plan that will help us you go from point A to point B to point C, as well as some of the contingency planning, what we don’t know and how we can protect ourselves with what-if planning much like we would buy insurance for the house, the car, or our lives.

[00:03:54] Dean: You know, it’s interesting because this is my 32nd year as a financial planner and I can tell all kinds of stories, but I think that this hesitancy for people to seek out help is more of a self-inflicted wound from the financial services industry than it is anything else. I can remember back in my very young days when I had a good friend of mine who was an insurance salesman and he would show me these, at that time we would think today they were very antiquated tools, but these tools that they would use to take people through a process in order to sell them life insurance because life insurance was the solution for literally everything that could potentially be needed. It can fund your college. It can fund your retirement. It can give you cash reserves, and it can be tax-free and all these.

And so, I think there was a lot of people and that’s just one example, but there’s a lot of people that have been taken advantage of. And, of course, when somebody gets taken advantage of, that bad news travels a heck of a lot faster than if somebody actually had a good experience. And so, I think your point that you made where not all financial advisors are created equal, I think a lot of people just think, “Well, a financial advisor is a financial advisor is a financial advisor. They all do the same thing. They all have the same credentials,” and our industry’s done a horrible job again at differentiating what is a financial planner, what is the role, what do they do versus what is an investment advisor or what is an insurance salesperson. So, can you talk a little bit about how that might have tainted the public’s perception of what we do, and do you think that’s part of why people are hesitant?

[00:05:53] Brie: Absolutely. So, trust is essential to any relationship, especially involving one with money whether that’s your partner in life or someone you’re hiring to help you. So, when you think about what shapes your reality, a lot of that is driven by the influences around us. Mass media for one of them. So, what is an example of financial services that was fairly recent in the mass media? Wolf of Wall Street. How does that paint our industry? Very cutthroat sales. It’s about lining their own pockets. It’s not helping.

[00:06:27] Dean: Or Bernie made off for Stanford or any of those.

[00:06:28] Brie: Exactly and that’s a small percentage of the population that may have those intentions, where through proper due diligence of looking for the right wealth manager to help you with your financial life takes a disciplined approach to finding the right person, but it’s about understanding what you want. So, if you want someone to help you holistically, so you’re getting value for the investment you’re making in yourself because arguably you are the most important investment you’ll ever make so if you make that investment in your financial life, then you can achieve more than you thought was possible. So, if someone’s going to take care of you, comprehensively, very simplistically, that is, of course, wealth management that’s led through the financial plan so that person should have credentials that allow them to be an expert in financial planning. Certified financial planner as an example. Then there is the engine behind the plan. The investment management component. That is all the different investment vehicles that are within the portfolios or the different types of accounts that will help you find the reality behind your goals.

[00:07:35] Dean: Right. But I think what’s broken is so many people they want, we live in like I think what I call this drive-through mentality of a society where we’ve been conditioned that I want it now, I want it to be easy, and I want it to be cheap. And I think that some parts of the financial industry have really glommed on to that whole idea and that then is their marketing approach. We’re the cheapest, we’re the quickest, go online, do your five-minute retirement plan, and I think that does as much a disservice to somebody as it does service. Yes, it might capture assets and it might get clients but is it really solving the underlying problem of financial illiteracy in our country and is it really improving people’s lives the way that financial planning is supposed to?

[00:08:25] Brie: Right. Well, you do get what you pay for, and the value is in the eye of the beholder. So, if things are very simple and straightforward, yes, you can get some assistance for a lot less or next to nothing. But if you have more challenges, such as you have a family, you’re taking care of elders, you’ve lost a spouse, you’re saving for college.

[00:08:49] Dean: A life transition of some sort, right?

[00:08:50] Brie: Yes. And you’re trying to see if you can buy a larger home or rework capital to start a business, those are complexities that affect the basics, your taxes, the type of cash flow you need, the different savings, challenges that will be presented before you, some limitations on what you can and cannot do, a proper prioritization, and that’s not something a basic online algorithm can provide today.

[00:09:18] Dean: Yeah. Really that would be virtually impossible. I mean, it’s interesting because when all these like five-minute or 10-minute online retirement plans come out, I was, “Well, I got to see what these things are doing, right? This is magic,” and go out and I run a couple of them and within five minutes or so, here’s your number. That’s one that I really remembered. What’s your retirement number where the guys open up his briefcase where he’s carrying around his number, sitting on the park bench with the number and I’m like, “Well, how they get that number? What is the math behind that?” I was curious. So, I said, “Well, I’m going to go online. I’m going to put my situation in there,” and voila, five minutes later, man, I had a number, but you know what it never asked me? It never said, “Dean, how much Social Security are you going to have?” It never said, “What are your earnings today and where should you be placing your money?” It never said, “Are you married?” It never asked about how much income do you really want to have in retirement, what’s your tax situation going to be like? Is your money going to be saved in a 401(k), a Roth 401(k), traditional or a Roth IRA?

All it did was a very simple time value of money calculation that came up with a number but if all of that money was in a tax-free account, my life would be totally different than if all of that money was in a tax-deferred account versus a third of it being a tax-free, tax-deferred and taxable, all extremely different lifestyle and net spendable income outcomes to me with one number and that’s when I looked at that and I said, “Wow. That’s overly simplistic and that’s really going to mess people up.”

[00:10:53] Brie: Right. Well, it’s helpful to have some target information but the data is only as good as what you put in. And so you’re right, it doesn’t account for the variables of the unknown, which as we all know, if we just look back at our life, there’s been many things along the path of living that we didn’t anticipate happening both good and bad, and that can change the trajectory of what comes next is even with the best-laid plans, you have to allow for fluidity of life to be lived.

[00:11:22] Dean: Thanks for listening to The Guided Retirement Show. I’m Dean Barber, Managing Director at Modern Wealth Management. We’ll be back after the short break.

[ANNOUNCEMENT]

[00:11:29] Female: At some point in everyone’s life, you have to go to school because let’s face it, a good education is important and just because you’re nearing retirement age or you’re already there, it doesn’t mean the learning stops. One of the easiest ways to learn about retirement is that Modern Wealth Management’s Education Center. There, you’ll find things to read, to watch and to listen to about important retirement topics. So, go to BarberFinancialGroup.com. Click on the menu dropdown. It’s in the upper right-hand corner and select Education Center. There you can download and read our Social Security checklist, watch Dean Barber’s latest video on the current state of the markets, or listen to an audio recording about tax reduction strategies and so much more. There’s no cost. Just sign up for access at BarberFinancialGroup.com. It’s as simple as that. Besides, there’s no tests, no textbooks, and I promise not to move your seat, even if you talk too much. There’s so much to learn about retirement. Just go to BarberFinancialGroup.com. Click on the menu drop down and select Education Center.

[00:12:43] Dean: I said, “Well, I’m going to go online. I’m going to put my situation in there,” and, voila, five minutes later, man, I had a number, but you know what it never asked me? It never said, “Dean, how much Social Security are you going to have?” It never said, “What are your earnings today and where should you be placing your money?” It never said, “Are you married?” It never asked about how much income do you really want to have in retirement, what’s your tax situation going to be like? Is your money going to be saved in a 401(k), a Roth 401(k), traditional or Roth IRA?

[INTERVIEW]

[00:13:24] Dean: Welcome back. I’m Dean Barber, Managing Director at Modern Wealth Management and this is The Guided Retirement Show. All right. So, somebody’s listening to us and they’re saying, “All right. Well, I think I need some help.” What is it if they want that holistic view somebody to let’s use it as an example will be the financial architect of the rest of their lives? And just as you would sit down with an architect, if you’re going to build a home and say, “This is what I envision. This is what I want it to look like,” the architect’s going to come back with an initial set of drawings. Is this what you meant? Well, kind of but let’s make a few adjustments, let’s do some things different, and you have really meaningful dialogue with that architect to get down to what you call the final blueprint. This is what I want. So, if somebody really wants a financial planner to go through that process with them, what do you think is the right approach?

[00:14:19] Brie: You have to be prepared to share. So, the term I like to use is you have to be willing to get financially naked. That’s sharing what you have in your life today in terms of all your saving but also your spending habits. Who you have responsibility for? Where the income flow is coming from? What are your liabilities? And then you also have to be talking about where do you want to go? What do you want to achieve? And between those two factors, it’s really a values-based approach. You’re using goals to shape the financial plan. You’re using the time horizon that you have as well as the financial capital that you have to work with today and what you potentially anticipate as your life continues to unfold, and then the responsibilities that are part of your daily life. And potentially those you’ll be taking on later. If you anticipate helping with eldercare or if you plan to adopt or have children at some point in your life or if you never intend to get married or you want to go back to school midway through your career because you want to change path, all of those have implications on what you can and cannot do. So, the first thing I’d look for when starting those interviews is I want someone to be sitting side-by-side with me. I need to know the interests are aligned.

[00:15:25] Dean: You know, what’s interesting because I think whenever people start down that path and for 32 years, I’ve been helping people through this process and people sit down with me and they say, “Well, I’ve got a plan done. I’ve done some planning,” and we start having a conversation about what they want their life to look like and what that really means and they go, “Oh no, no, no. I just need $5,000 a month,” and I’m like, “You can’t do it that way because what is that $5,000 a month going to provide for you? You need to really dig in and get that detail.” And so, the interesting thing is because I had mentioned that kind of that drive-through mentality society that we live in, that people want this to be a simple and easy and a quick process, but the reality is that that initial conversation with a financial planner might be two hours long and you haven’t even talked about underlying investments or the resources that you have. For that financial planner to truly understand you and what you want to do, it takes time. It’s not a quick data entry set. It’s not just numbers in the computer or on a spreadsheet. It’s your life.

[00:16:39] Brie: Right. So, when we say interests are aligned, you’re looking for someone that can be integral to your life. Essentially, if you want to give them a title, that’s your CFO and it’s not a capability gap necessarily in your part when you seek expertise in someone to alignment. It can be a matter of time management. It can be you don’t have expertise in all the different areas of your financial life that could be beneficial to you being able to do more than you thought possible. That’s what they can bring to the table for you with that proactive lens as opposed to you being reactive or even just methodical. They are looking for ways to help you be creative and wise with what you own today and what you could potentially own tomorrow when you think about your worth.

[00:17:26] Dean: Yeah. So, this is a daunting task and I think that one of the misnomer’s about financial planning is that some people think, “Well, I did my financial plan it’s done.”

[00:17:41] Brie: It’s never done.

[00:17:42] Dean: Never.

[00:17:43] Brie: Life’s not static. Your financial plan is not either.

[00:17:45] Dean: Yeah. And I’ve had the opportunity I guess to I would say to help the next generation in multiple cases continue the plan that the parent or the grandparent had put together and so people think, “Well, when I’m dead, it’s done.” Well, if you’ve really done the right type of planning, no, it’s not because that planning should include that surviving spouse should include the children and the grandchildren. And a proper estate plan is integral in putting this thing together. Now, I think a lot of time it’s all backwards, that people want to say, “Well, how do I make the quick buck? Dean, how should my money be invested? Brie, how should I invest my money? You’re VP at State Street Global Advisors. What’s your hot tip?” Well, you can start there and then you’ll have somebody come in and say, “Well, I need to get a trust done.” Okay. Well, what do you want to happen? “Well, I’ve never really thought about that. I just want to make sure it doesn’t go through probate.”

Well, that’s not why you get a trust. You get a trust to carry out your wishes well beyond your life here on earth. And so, all these things have a very specific spot in the planning process and if you try to put one in front of the other then you wind up with a jumbled mess that oftentimes doesn’t provide the desired results.

[00:19:07] Brie: Correct. So, if you choose a solution before you actually had the conversation, it’s not necessarily the right fit for you. Its appeal whatever it was in the first place is to let you to ask about it or believe you needed it, maybe a completely different influencing factor that’s relevant to your life. So, we think about all the white noise that surrounds us, whether it’s on television, it’s in the books. It’s what our neighbors say. It’s where the water coolers happening at work. How much of that is really relevant to you is probably like this big, very small amount of that information is applicable to you.

[00:19:41] Dean: And you know it’s interesting you say that because a lot of times when I visit with somebody what they come in with as their perceived issue or their perceived want of what they want solved isn’t at all what needs to be addressed and it’s only through that really thorough dialogue with both the husband and the wife present that you can really discover what’s the real issue that needs to be addressed. A lot of times there’s multiple issues that need to be addressed and they need to be addressed slowly, methodically, and over time. I always tell people, “You didn’t get into the position you’re in overnight. You don’t get to the position where you want to be overnight. It takes time and sometimes it’s months. Sometimes it’s years of planning in order to get that done.” And so, I think when people hear us talk about things like that, they think, “Oh my gosh, this must be like the super-expensive thing. This is only for the ultra-wealthy. I can’t afford this.” What do you say to that?

[00:20:43] Brie: Well, there’s something for everybody and it’s about what you want to achieve first and foremost. So, if you have half a million saved up for retirement and you’re not even 10 years out yet from retiring, you still have a lot of time on your side to continue to build and maximize that wealth as well as continue to accumulate it, contribute to it. Where if you’re closer to retiring and you have half a million then you have different choices in front of you. So, depending on what you seek to achieve and what you need in terms of these services, let’s look at it that way to enable your financial plan to live and breathe as a guiding post to achieving your purpose for investing, there can be different price ranges, yes, but you will get different services in return. So, if it’s basic diversification, an online algorithm can give you that for a lot less money. You can go online and do a Google search and find something.

But if it is about including estate planning, tax efficiency, and effectiveness, helping a fund college education, treating your wealth really as a business, a family, that’s a different ball of wax. And that’s a comprehensive approach, so the different services that you’re paying for, you should have, one, full transparency of the fees you’re being charged and that could be separate from if it’s not all-inclusive underlying fees for some of the investment choices. And so, you have a right and you want to know what am I paying but more importantly, how is that connected to the services I receive. So, then when you think about a total years’ worth of information and fees associated with that and the partnership you’re getting in exchange, then you have context for how expensive is this, or how much of a value is this.

[00:22:30] Dean: And I think the value part of it is where it really comes in and people will often say, “Well, what are your fees?” Well, it depends. What are we going to be doing? And it’s one of those things where you have to go through this dialogue and this planning process initially to actually determine what’s the scope of services that are going to be required to get this person from the point they are today to where they want to be and then everything in between. And it really is only after that point you could really say, “Okay. This is what we’re going to charge and this is why and here’s what you’re going to receive in return.” Now, I think if people understand that you can go through this process and discover whether there’s value or whether there’s not value because that’s really what you want to look at.

[00:23:15] Brie: Right.

[00:23:15] Dean: Right? If it was all about the cheapest thing, nobody would buy hamburger anywhere but McDonald’s because it’s the cheapest hamburger out there but sometimes we might have a plate and the point I make is it’s not about the price.

[00:23:30] Brie: No.

[00:23:30] Dean: What you’re going to get at the end of the day is really the most important thing.

[00:23:34] Brie: Yes, and you should be able to sit down without a cost implication to begin the discovery process of is this financial advisory firm/team/individual potentially a good fit for me? And let them walk you through once they have a good understanding of what it is you are really looking for, if there is an opportunity to work together, and then if so, what the potential maybe when we think about the investment required to engage in that relationship. And then throughout the lifetime of the relationship, even as your services change, you may use a lot more in an area that you did when you first started out like I don’t know how many 25-year-olds you know need estate planning at that point. Probably not.

[00:24:20] Dean: Not very many.

[00:24:20] Brie: But they are more focused on probably liabilities at that point and getting some things started like maximizing workplace savings, making sure they’re living within their means, a reasonable spend, save, and it gives you important giving aspect to get the basics down, where someone in their 50s still has time to accumulate for their retirement years but they are probably going to need some more complex services like the estate planning aspect.

[00:24:47] Dean: And the tax planning aspect.

[00:24:47] Brie: Exactly.

[00:24:49] Dean: Risk management pieces and Social Security claiming strategy. So, there’s just a ton of things that go in, but I think the important thing that I want to get out here is that if you start with the plan and not with the product or the solution, you’re going to be much better off.

[00:25:10] Brie: Yes, both in what you pay for, but more importantly what you get out of it.

[CLOSING]

[00:25:13] Dean: Yeah. Totally agree. That was Brie Williams, Vice President of State Street Global Advisors. We’re going to have a couple more podcast coming up right here on The Guided Retirement Show. I want to invite you right now to truly understand where you’ll stand in your overall financial life with the use of our Guided Retirement System. That Guided Retirement System is there to actually help you live your life with clarity and confidence, control to be your guide on everything that’s going on in your financial life and help you make sure that you’re making the right decisions. You can find links to show notes and giveaways in the show description or you can visit us at GuidedRetirementShow.com/3. Don’t forget to subscribe to the show on your favorite podcast app so you’ll get notified when we release our next episode.

[END]

Investment advisory service is offered through Modern Wealth Management, an SEC-registered investment advisor.