You’re watching Retirement Talk with Eric Kearney in Cape Coral, FL. Eric Kearney is an author, a radio host, a fiduciary and Southwest Florida’s premier investment advisor.
Today’s show is the sky is falling and dealing with market corrections. Is it always a bad thing when corrections are happening in the market? No, it’s actually a very healthy thing, but a lot of people feel that way. A lot of times when the markets actually start to correct, people do panic. I think that there’s a lot of uncertainty, uncertainty that the markets can’t recover.
People always say, oh, maybe this is it. Maybe this is the big one. And I always say the big what? Like, you know, and I’ve been hearing this and someone told me this. Who? And so maybe it comes back to the darn media. The media sometimes is not always our best friend.
Because they want to suck us into that. They want to make us sure that we’re watching all the time. So we can be left with “I don’t know what to think”.
When it comes to these corrections, we have to be prepared. I think the biggest thing is that we’ve been so spoiled by a 12-year bull market run that people think that’s just how this market is, but it truly isn’t, it’s going to correct. It’s going to go into a pullback mode and that’s actually very healthy for it.
It’s also a good time that we can take opportunity to really make changes to your portfolio, to update it and actually make it a better more sound portfolio. A correction is simply just an adjustment in the market. It’s not necessarily a crash in the market, and I want everybody to think about this. If you’ve ever gone hiking up a very large hill, you understand that you’re going to get to a certain point and you’re tired.
And what you want to do is you actually have to stop. Fuel, get some water, get something to eat, and take a break. That’s exactly what the markets are doing. And when you’re going up this high mountain and you take a break, what you’re doing is you’re resting. And once you’re rested, now you can reach new highs.
Think about the market that way. Every time that the market rests or it corrects, take your time to refuel that portfolio. Buy some more things that you like take advantage of that opportunity. That is what a proactive advisor is going to do for you. There’s a lot of times where there’s so many opportunities out there for you to grab, that’s what they’re really looking for from us.
Investment behavior is kind of taking a look at behaviors that people have – irrational decisions or making poor choices. And that’s when all of a sudden the emotions get involved, you’re kind of putting to the side all the strategic planning that we actually put into the portfolio.
If we take a look at the ingredients of a portfolio, what is really the most important part about that? There’s a lot of times when we go through the portfolio, especially a current portfolio for someone, what we’re doing is we’re identifying the risk, the volatility, the alpha, and their actual past rate of return.
And what we’re trying to show them is this is why your portfolio’s either doing really well, or it’s not doing very well. We’re comparing it against appropriate benchmarks. We’re then showing them their standard deviation standard deviation is just a big word for volatility. And we want to get that volatility down when people actually say the sky is falling well, let’s take a look at your standard deviation because your volatility.
The second thing that we take a look at is your sharp ratio. This is your annual rate of return adjusted with risk involved. And what we want to know is if we can lower your volatility, hopefully you have a higher rate of return or a higher sharp ratio.
People start to understand this, and they’re like, Eric, no, one’s taught me this in the past. When you want to know how we did so well in 2021, we take a look at alpha. Alpha is actually the horsepower in your portfolio. I want you to think about being out in a little boat and you have a little tiny motor on there, and all of a sudden it gets kind of volatile out there.
It’s very scary to be in a small boat with a small motor. Sure. Your alpha is that bigger boat with that bigger motor that can get through all the tough. That’s your alpha in your portfolio. So again, we go, we revert back to March of 2020. If you had very high, alpha, very strong alpha, you actually got out of that market, you ended up doing very well.
Again, whatever your advisor did or didn’t do in March of 20, really set the tone for the rest of the year. Our clients had very high alpha in their portfolios. It had the ability to fight through all the volatility, fight through all the commotion that was going on last. And then lastly, we take a look at beta.
Beta is just a big word for risk. What we want to do is lower that risk. It’s kind of like when you walk into a room and that TV is super loud. When all of a sudden you turn down the volume. Now, all of a sudden what you’re doing is you’re lowering the risk, lowering the volatility. So when that, when that comes down to Cynthia is, someone says, what’s your rate of return.
I’ll sell them. I don’t know. Cause I don’t know what the markets are going to do over the next 12 months. Right. But the one thing that I can do is more than likely lower your risk and lower your volatility. And hopefully that ends up giving you a smoother rate of return. Absolutely. So what’s happening is when we build a better portfolio, a more sophisticated portfolio, we’re getting them away from making all those emotional decisions.
And there’s a lot of people that say I have to have this certain investment in my portfolio. They think that that’s going to make everything change. Yeah. It’s not, it’s having a sound asset allocation, low fees, strong asset allocation, making sure that it’s tied to your lifestyle, income plan, making sure that it’s sustainable over time.
So I want you to think. Lasagna lasagna can be a very intricate dish to make because there’s multiple layers. Sure. The better, the ingredients that we put inside that lasagna, the better the byproduct or the end product is going to be it’s really no different than your portfolio. The better ingredients that you have inside your portfolio.
That rate of return ends up becoming a byproduct of all of those clean ingredients that actually go into the portfolio. So again, there’s a lot that goes into building this portfolio and it kind of calms down people and we get emotional, we get away from making those emotional decisions. And so again, this is what I’ve been so proud of my whole entire staff about because like I.
It’s like we’re putting our clients through that whole process that panoramic financial planning and people really enjoy that. Absolutely. And I love how you just described that as being basically a portfolio design. That’s going to weather any storm so it’s not so much based on what the return would be, but it’s about just keeping safe and actually not losing too much, but actually being able just to coast along, right.
Absolutely. What kind of questions Eric, do a lot of people call you with right now, specifically, is there one that you’re hearing more than anything else? Um, I think a, again, there’s a little bit of, I don’t want to say desperation, there’s more people that are calling us in right now.
They’re calling in after the show. The radio show and they’re like, Eric, we need to come in. We have no direction. Yeah. And so what they’re asking is, is, you know, what are you going to do for me? And I think what they’re really what they’re really wanting to ask is what value are you going to provide for me, Eric?
And so that’s when we go in the list of everything that we do, again, there’s four sides to critical financial planning there’s the full blown financial plan that’s written for you. There’s the lifestyle income side. There’s the wealth management portfolio. And then lastly, there’s a concierge service when our clients call us up into the office and they need something taken care of, we take care of it. Yeah. But that’s the whole thing that concierge service is set up to put out fires very quickly so that we don’t have any day to day issues. And so the client feels like they’ve been taken care of.
After that, um, issue has been taken care of the client then gets an email. Can we do anything for you? It has that. Have we solved everything that you needed? Mm. And they’re like, yeah, thank you very much. So it’s all these things that we have put into play for our clients to make sure that they know that we’re reaching out to them, but we’re taking care of these.
And so, again, it’s, it’s a very powerful process that we’re putting people through, but this is something that they don’t have out there. Sure. Eric, is it ever too late to get started on a retirement? Um, I’m going to say yes. Okay. I mean, it’s, there’s really some people that come in and if they had seen me five or six years ago, even four years ago, yeah.
We could have changed their situation significantly. Mm. And that’s something where I can’t really pull any punches about. The one thing is, is that. You know, we have to be 100% truthful with people. The number one thing that we have with our clients is trust sure. And that’s where as laid back as I am.
And we’d like to have fun with our clients. I’m also very blunt with them. And so if we see them going down a path and we don’t think it’s a proper path, I will reach out and say something to them. And the bottom line is, is that we want to make sure that everyone is going to be successful in their retirement so we de we do see some people coming.
that we really can’t make a lot of significant changes for. And unfortunately there’s not really much. We can. But they also realized, you know, what, we procrastinated way too long. We stayed with an advisor that we shouldn’t have too way too long. And so sometimes, like I said, we can’t fix a lot of situations, but the majority of people that call us.
When we come back, I’m going to have some more questions for Eric about how to plan your perfect retirement. Please stay tuned. What does your retirement look like? Is it filled with travel, spending time with family uninterrupted rounds at the golf course? Or are you too worried to even think about your hopes and dreams?
Questions about your retirement are normal. So come into our office, sit down. And let us help you find those answers, Eric and his team can answer your questions with a complimentary review of your retirement and income plan. And it all starts with getting to know you. We specialize in helping people, just like you prepare for the retirement that they’ve always dreamed of.
They’ll do exactly that by going over your current strategy to expose the weaknesses that may exist in your retirement portfolio. Plus they’ll explain potential risks and possible strategies to you and easy to understand terms and help get you reacquainted with your portfolio and income strategy.
What I enjoy most about retirement planning is sitting down with you and having real conversations about your retirement dreams and goals. Once they understand your retirement goals, objectives, and dreams. They’ll work to custom, build a retirement plan to help ensure that you cannot outlive your income in retirement.
Retirement. Doesn’t have to be scary. Let us help you retire confidently because every dream needs a plan. Call Eric today and schedule your visit. You only retire. So let’s get it right the first time.
Welcome back to retirement talk TV. My name is Cynthia DeFazio. I’m joined today by Eric Kearney, he’s president and CEO of Retirement Wealth Advisors. Eric, a great show, obviously that we’re having today. And I love listening to you with all of the guidance and advice. That you provide to the viewing audience.
Let me ask you a question. How do you help determine someone’s likely retirement expenses, if you will, and what their spending plans should be? Is there a formulation that you follow? Well, what we do is, you know, about 10 or 15 years ago, we brought out a budget worksheet. Okay. And I had one client of mine.
Who’s. Feisty. And she says, Eric, have you ever filled one out ? And I was like, Hey, Hey, I’m the one here asking the questions. Right. You know what? She kind of called me out Cynthia. And the funny thing was is that she’s like, I don’t want to fill out a budget worksheet who does. Yeah. And it kind of made me think about that.
And so we ended up changing that to lifestyle expenses like that. And now all of a. Funky right. Because everybody’s like, yeah, I want to have a good lifestyle. Right. Yeah. But they don’t want to think about budget. Yeah. And so there’s a lot of times where people that’s the very basis of any foundation of, of, of foundation of a financial plan is understanding how much your monthly base, uh, expenses are.
The reason why is because you get your pension paid on a monthly basis, your social security’s paid on a monthly basis. We’re going to give you income out of your portfolio on a monthly basis. Okay. So what we ask people is if you had to write one check per month to cover all of your expenses, living expenses, insurance, Food travel, the dog, the cat, all the kids, the grandkids.
How much would that check be per month? And so people are now seeing that we’re reverse engineering. How we actually write that financial plan. Hmm. How much does your lifestyle cost? How are we going to pay for it? And where’s it going to, where’s it going to come from? And when we talk about when the sky is falling, there’s going to be events that happen all the time.
We want to revert back to a sound financial plan. That’s going to cover all of your expenses. Mm. No matter. So, whether it be a market pullback, any kind of event that happens in the markets, I’m never going to want to call my client and say, Hey, we have to turn off your income for the next three months. Right.
That’s just, that’s impossible. Right. And so, again, that’s why we, we, the past 12 months we’ve been working so hard because again, I mean, money never sleeps sounds cliche, but it’s the, also the truth. Yeah. I mean, people pass. Peop, uh, kids go to college, um, we’re going, we still want to travel. We still have to spend money.
We still have to pay our bills. They just don’t stop. . So the bottom line is, is that we have to keep that money flowing. It’s remarkable how much money goes out of our office on a monthly basis to all of our clients to pay their bills. And it was one day where autumn was actually sitting there and she’s like, I’m a little overwhelmed.
And I said, why is. And she goes, do you know how much money goes outta this office on a monthly basis? And I said, well, you send it out every single day. Yeah. She goes, yeah. But over a 30 year or a 30 day period, she goes, now I just added all all up. And there’s a lot of responsibility there. Absolutely.
Absolutely. So when you chunk it down, it doesn’t seem so bad, but when she added it all up, it was kind of overwhelming to her, but autumn does a great job. I mean, she’s in charge. You know, required minimum distributions, federal taxes, getting out our clients’ income, taking care of all of that. And again, the concierge service is designed so that clients don’t have to worry about this stuff.
They can call up and actually squash anything that be before it becomes a big problem. This is the power of having a team. And again, You know, a lot of people have had a very difficult year, but we make it easier for them through that whole entire process. Eric, let me ask you, what piece of advice would you give clients that’re sitting in the viewing audience today, perhaps waiting to be your client, going to pick up the phone and call you
How do they navigate through 2021? I think the biggest thing is, is that I want to know how they felt about 2020. Okay. You know, we all had a difficult year. It was, it blindsided all of us in one way or another so the biggest thing is, is that what was, what was on the top of your list of your worries?
and there’s a lot of times where we say. What are your top three concerns? And people say, oh, I know what they are right away. So the biggest thing is, is that list your top three concerns and then chunk them down instead of it being a really big deal. Take that big problem that you have, and let’s chunk it down.
Let’s figure out a way to solve this problem instead of it being a big problem. Again, takes slices of it at a time. Figure out how we’re going to get it down. So it’s not an issue. We can actually fix a lot of things, but people don’t think that that’s possible. But what we’re doing is, is that we’re doing a lot of portfolio recovery strategies.
We’re doing a lot of lifestyle expense changes. We’re writing a lot of and revamping a lot of old financial plans that people have. There’s a lot of people, again, that don’t ever have had a financial plan. So we’re building that plan. We’re actually providing them some optimism from a financial standpoint.
They want to know that I can make a change and that it’s going to make a big difference down the road. So the thing that I like. Putting through them through the whole process is we’re getting them reacquainted with their portfolio. And again, everyone likes that it’s actually enlightening to everyone involved.
And I’ll tell you, after the first meeting, there’s a lot of people that come in really tense . And by the end of the meeting, they’re actually sitting back in the chair and they’re like, I actually really like. This I’m, I’m excited about this. Yeah. When we can get somewhat excited about financial planning, I’m all about that.
Absolutely. Well, I can totally see that being the case, working with you, Eric, because again, you bring such joy in life to everything, everyone that you touch. So again, I can’t thank you enough for just the quality of shows that you bring to the viewing audience. And I know like we’ve talked about in the beginning of the show, your appointments have been just amazingly busy.
You’ve been so incredibly blessed. Yes. Yes. Very most definitely. Well, Eric, I can’t believe we’re almost to the end of another show because they go by so fast. So thank you very fast. You so much for another great show to the viewers at home. That number to call is (800) 779-1942. If you have questions about how to plan your perfect retirement, Eric has the answers for you.
Again, you only retire once. Let’s get it right the first time, be safe, be happy. Be blessed. We look forward to seeing you back here again next week. Thank you for watching.
Hey Southwest Florida, Eric here. Thanks so much for watching. If you are interested in a second opinion or a fully blown written financial plan. Let’s get you reacquainted with your portfolio. And again, without any obligation, if you’re interested in your very own income plan, let’s get you reacquainted with that as well.
Give us a call today. Strive for excellence. Your wealth deserves it.
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