Dealing with a Rocky Market & Rolling Over Accounts

by Mike Lester

Mar 21, 2022

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Automated (00:02):

Welcome to The Retirement Wealth podcast. Our goal is to help those retired, or soon to be retired, investors make more informed financial decisions and live an enjoyable retirement. Our host, Mike Lester, is the founder and CEO of Talon Wealth Management. Mike is an investment advisor representative of Retirement Wealth Advisors, Inc, an SEC registered investment advisor.

Automated (00:27):

Thanks for joining us today, and let’s get started.Kristin

Kristin (00:30):

The market is off to a rough start in 2022, plus concerns about Russia, Ukraine. And we’ll talk to Mike about how he’s helping people deal with higher prices for just about everything, questions about that or anything to do with your retirement. Connect and find out more anytime at

Kristin (00:50):

Mike, you’re the founder of Talon Wealth Management, a fiduciary financial advisor, and most importantly, a father. You and Katie have raised some beautiful children, and we were talking before today’s show about how recently you guys had such a good time disconnecting and going to the lake house.

Mike Lester (01:09):

Yeah, I mean, when we get a chance we go up there. It’s not a lot of distractions, just the outdoors and a little bit of basketball. It’s winter time, so kids are a little nutty, but not nutty enough to jump in the lake at this point in time, it’s a little chilly. I mean, we all put a lot in during the week and for us in our industry, fortunately, the markets are closed on weekends. And so it gives us some time to-

Kristin (01:31):

When we’re not doing the radio show.

Mike Lester (01:33):

… when we’re not doing the radio show and not managing money for individuals, to take a break.

Kristin (01:38):

The reason I brought this up is you mentioned that you were so excited the kids were outside, there were no electronics. They were just enjoying themselves like we used to do as kids.

Mike Lester (01:48):

Yeah, we spent a lot of time playing horse. And if we didn’t want to play horse, we played pig. I had to explain to them the difference between horse and pig. And I said, “Pig is a shorter basketball game than horse, horse is just more letters.” Yes. So they’re like, “Oh, okay,” so we played a lot of pig.

Kristin (02:05):

We’ve got to embrace those moments of family time and fun, whatever that is in your life. Listening today because there’s so many headlines and especially with what’s going on with the market, a lot of folks start to feel discouraged. And Mike’s goal is to be an advocate for you when it comes to dealing with that information and navigating your investment accounts to and through retirement. And there’s a saying, “As goes January, so goes the year.” If that old Wall Street saying holds true, Mike, it looks like we may be in for a lot more volatility this year. The Stock Traders Almanac says the so-called January barometer has been right nearly 85% of the time. Now you’ve been doing this well over two decades. Do you think we should pay attention to seasonal trends like this?

Mike Lester (02:52):

Well, seasonal trends are right until they’re wrong, you know? So I don’t like the idea of, “Hey, it’s been a bad January, so it’s going to be a terrible year.” But we were expecting it to be a bad 2022 here for a little while. So, I’m not a, “Hey, I told you so,” kind of a guy-

Kristin (03:09):

But you did tell us, so.

Mike Lester (03:11):

We were talking about it a bit. I don’t like to be a, “Hey, I told you so guy,” because what if I’m wrong, right? I don’t control the stock market. I don’t have a crystal ball, but we just look at probabilities. And to me, and the team, the probability was that things weren’t going to go too good for 2022 for a lot of reasons. Do I really want to be in the market if or when Russia goes into Ukraine? I mean, I totally get it. That kind of stuff does go into the emotional part, the psychological part of investing. So we’ve been making adjustments to portfolios and just taking steps to protect clients from what we thought could be bad. So far, clients, looks like they’re getting good advice from us and that could change, Kristin, pretty quickly.

Mike Lester (03:54):

But I think when we take a look at markets and what’s likely to happen, I think about our clients and everybody else who’s out there that is either retired or very close to it. They’re looking at a portfolio that’s probably close to or high as it’s ever been. They’re looking at potential retirement, maybe it’s next year, maybe it’s five years from now, but regardless, tons of volatility in the portfolio or just hanging in there on your portfolio, probably isn’t what you’re looking to do. But then I talk to people every week who haven’t experienced what active management looks like, the idea of being tactical versus passive in a portfolio isn’t something that they’ve been introduced to. So we spend time on the radio show, just talking about it.

Mike Lester (04:35):

And you know, I think right now I worry about individuals that are out there with those retirement accounts, the 401ks, the 403(b)s, these plans through your employer, there are several different types of them, where there’s no active management. And the reason we talk about things like, “Well, listen, if you’re 59 and a half or older, give us a call,” it’s because most people, not all people, but most individuals that are participating in a company retirement plan, once you’re 59 and a half and older have the opportunity to have the retirement account actively managed by rolling it to an IRA. It’s not that you get to do away with your 401k. It’s not that you don’t make contributions to it anymore. It’s not that your company stops matching, if they’re matching.

Mike Lester (05:18):

It’s just that you can take the bulk of that, the majority of the retirement account, roll it to an actively managed account. What we’re having a conversation with people about is whether or not that’s a good idea in your current situation. So if your retirement account at work is super cheap, you don’t have to pay much for it, if you have unlimited investment options, if you’ve got some kind of active management around it or help with it, or doing it yourself, then it might not be an advantage to move it over to a tactical portfolio or an actively managed portfolio or account.

Mike Lester (05:48):

But most people aren’t in that situation. They typically have limited investment options. A lot of times the fees are a lot higher than you realize, and there’s almost never active management. So ask yourself, “What makes more sense.” And I think through a conversation, we can look at that. We don’t want to have a hang-in-there attitude when it comes to portfolios, Kristin. And unfortunately, although most people don’t want to have a hang-in-there attitude about it, they don’t understand, or nobody’s explained to them what their options are. And we’re here to explain those options.

Kristin (06:18):

Speaking of options, Mike, we’ve been getting a lot of questions lately from listeners who are making a job change and curious about how to roll over an old 401k. How complicated is that process?

Mike Lester (06:32):

Fortunately, it’s not complicated, depends on the situation. So if you’ve left your current employer and you’re moving to another one, or maybe you did it a while back, we would refer to those as orphaned 401k accounts. Those are typically very easy to roll over because you no longer have a position with a corporation, it’s called separation from service, you don’t work there anymore. And in the plan, there is a provision to allow you to roll it over. Some people roll it over to their new company, but if you roll it over to the new company, then your options are limited to what the new company’s options are in their 401k.

Mike Lester (07:08):

Typically, they’re limited, Kristin. So we would recommend that individuals look at all of their options. Now, if you roll it to an IRA account, then your investment options, they aren’t limited, they’re virtually unlimited and then you can also look at active management. So if you’re looking at making that job change, or even if you’re looking at retirement, take that into consideration. Just last week, Kristin, I personally met with four people that were in a situation where they were either, A, doing the job change or they were 59 and a half and older.

Mike Lester (07:38):

I’m thinking about one of these meetings. He had had an allocation which is typical for a 401k. His money was in a target date fund. It was a 2025 fund. So 2025, at this point’s, only about three years away. And the way target date funds work is,every year you get closer to that target date, they get more and more conservative. The way that they get conservative is they move money to bond funds inside the account. So you’re moving into bonds. Well, interest rates are likely to go up. The Fed is telling us that they’re going to raise interest rates about four times. I don’t actually personally think they’re going to do that, but they’re saying they will.

Mike Lester (08:12):

If they raise interest rates, that typically has bond values going down. And there’s a lot that goes into that, duration and stuff. But if the target date fund is automatically moving you to accounts, bonds, that are likely to go down, then the target date fund probably isn’t the best situation for you. And so in his situation, we were having this conversation about what the options were for retirement. And we compared the returns on the target date fund to other options that were available to him. And so what we found was the target date fund historically, over good and bad markets, had averaged just over 6% per year.

Mike Lester (08:49):

And because we looked at what’s called a full market cycle, I would estimate that moving forward, if he hung in there on that particular account, he would probably continue to average about that, maybe a little bit less, because it was moving towards bonds over time. But then we also found out that historically the worst that it had ever done would’ve been back in the crash of 2008 and it was down just over 41%. So a fair way to describe that investment would be to say, “Well, listen, I think that long term you could probably continue to average 5 to 6%, because again, they’re moving to bonds that are more conservative, but you would need to be willing to lose 41% if we got another crash like 2008. How does that make you feel?”

Mike Lester (09:29):

Well, it didn’t make him feel too good. He likes the idea of 5 or 6%, he doesn’t like the idea of the loss. So when we went and spent time looking at all of the investment options, we found that, well, for the same level of risk that he was taking, there were other investments averaging more than 7% per year net of fees. So for the same level of risk, if he can increase the return, that’s good. But then we also found that there were other investments available that not only had a higher average rate of return, but were either barely negative or maybe a little bit positive in the 2008 crash due to active management.

Mike Lester (10:02):

So it’s just a matter of helping people make informed decisions. And if you understand all of your investment options, it’s going to be easier. And that’s what we do through our complete financial planning process.

Kristin (10:11):

Questions about that? Connect and find out more anytime at You know, life is a lot more complex and expensive since we were kids in the fifties, sixties and seventies.

Speaker 4 (10:32):


Kristin (10:32):

According to AAA, the national average for a gallon of gasoline is rising steadily this year at $3.31 a gallon. California remains the most expensive state for gas, as usual, outpacing the national average by more than a dollar at $4.65 cents a gallon.

Kristin (10:50):

Mike, inflation, I feel like it’s Dr. Seuss, “Inflation’s here. Inflation’s there. Inflation’s everywhere we turn.” How are you helping your clients at Talon Wealth Management adjust to this sudden inflation?

Mike Lester (11:03):

Well, I donated a tank of gas in California to someone, I don’t know who it was, but they crawled up underneath my truck and siphoned it right out.

Kristin (11:13):

Oh, my gosh. Yes.

Mike Lester (11:15):

So that’s how bad it is in California.

Kristin (11:17):

I’m sorry to hear that you had to go through that.

Mike Lester (11:19):

Well, I wasn’t even there, Kristin. It’s weird. I didn’t really go through much. I just didn’t have any gas when I got back to the truck.

Kristin (11:26):

It’s almost as bad as what’s happening with the Amazon railroad, moving of the packages, in Los Angeles.

Mike Lester (11:32):

Crime just makes me angry. I could really get on my soapbox about how irritated I was that I didn’t… and it’s not the gas, it’s just that you-

Kristin (11:42):

Would do that.

Mike Lester (11:43):


Kristin (11:47):

But do you think that that’s a sign of the times with inflation?

Mike Lester (11:47):

I think it is. Well, it is. I mean, and then also, the other side of me felt sorry for that person, that things are so bad, they got to go steal my gas. But yeah, it’s affecting everyone. And obviously, we’re most concentrated on individuals that are retired or very close to it. Things are costing more, certainly gas. All you have to do is go to the grocery store and see that it costs more and retirement makes it even tougher. So it’s causing people to go, “Hey, maybe I’m not going to retire because if things are going to cost more, I’m going to have to work longer,” so that’s an issue.

Mike Lester (12:22):

So we’re doing analysis of portfolios and doing financial planning for individuals who aren’t quite yet retired, considering it, but they’re second guessing themselves because things are costing more and they’re wondering how long it’s going to last as far as inflation. And if it’s here to stay, will their money still be there for them for as long as they need it. Outside of that, we’re working with our current clients, or individuals, that are already retired. I mean, essentially, it’s not meant to be a fixed income, Kristin, but it kind of is.

Mike Lester (12:54):

So what we do is, we coach people on, “Well, this is how much you can spend every month or every year for the rest of your life, adjusted for inflation and taxes without running out of money.” That’s the main question, right? The main concern for anybody who’s retiring is, first of all, “Am I going to run out of money?” But then the next thing is, “How much could I spend and not run of money?” And then what about all the things that are going to happen, markets are up or markets are down? Or what about inflation? Or what about taxes? What about all these things?

Mike Lester (13:21):

Well, we’ve had this huge spike in inflation which, by the way, our listeners who are on social security, that was nice, right? They got a nice bump in their social security check, but that’s not enough to offset what’s happening at the grocery store or the gas pumps. So what we’re doing is sitting down and we can stress test, and stress test is just a way of saying, “Let’s do an analysis of, well, if things are going to cost more, whether it’s right now or whether it’s, power far into the future, let’s say, forever, will you be able to maintain your current standard of living adjusted for inflation and taxes.”

Mike Lester (13:55):

And so clients who have that question, we’ll invite them in and they don’t even have to come to the office, because they’re already a client, Kristen. Frankly, they just call up and say, “Hey, listen, what if I have to spend this much more? Can you run that analysis for me?” “Sure.” We’ll run it for them, we’ll get it back. Maybe a phone call to explain, maybe just an email, however they want it. We can do that very, very easily.

Mike Lester (14:12):

But for individuals who aren’t currently working with us, we don’t know your current situation. We don’t know your current investments. We don’t know your expenses. We don’t know any of that, but we can do an analysis of it for you. We can walk you through the process and we can let you know if you’re on track to be successful in retirement. And quite frankly, we define that as being able to maintain your current standard of living regardless of inflation and taxes moving forward.

Automated (14:37):

If you would like to have a comprehensive financial plan and an analysis of your current portfolio, go ahead and visit our website at and we can do that for you complementary.

Automated (14:53):

Thanks so much for joining us on today’s show. Be sure to subscribe to our podcast, visit our website for more free retirement planning and investment resources. Thanks for tuning in to today’s show. And we’ll see you next time on The Retirement Wealth podcast.

Automated (15:10):

Exposure to ideas and financial vehicles discussed should not be considered investment advice or recommendation to buy or sell any financial vehicle. This information should not be considered tax or legal advice. Individuals should consult with professionals specializing in the fields of tax, legal, accounting or investments regarding the applicability of this information to their situation. Past performance is not a guarantee of future results. Investments may fluctuate, and when redeemed, may be worth more or less than originally invested.


Mike Lester

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Dealing with a Rocky Market & Rolling Over Accounts