Money Misnomers & Digital Currency

by Mike Lester

Apr 18, 2022

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Speaker 1 (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. Thanks for joining us today. And let’s get started.

Kristen (00:30):

Connect to us anytime at did a poll recently and discovered that almost 62% of us rinse our mouth with water after brushing our teeth. Apparently, that’s a bad thing though, because rinsing our mouth with water, washes away the protective fluoride left on our teeth by brushing. Experts say we should instead spit out any excess toothpaste and wait to eat or drink for 30 minutes afterwards. Mike, I had no idea I was brushing my teeth wrong all of these years.

Mike Lester (01:05):

Yeah, I’ve been doing it for, I guess, going on 48 years now. Finn though is going to be so happy he doesn’t have to rinse anymore. He’d rather just wipe his sleeve on his mouth after he [crosstalk 00:01:15] and just take off.

Kristen (01:16):

He’ll have better teeth than all of us. Look at that. Way to go, Finn.

Mike Lester (01:19):

He’s going to have the greatest dental health ever. Poor guy his two bottom teeth fell out on the same day. The bottom two. [crosstalk 00:01:24].

Kristen (01:23):

Are you serious?

Mike Lester (01:25):

Same day. I was like, I’m afraid he is going to grow just like one giant tooth that comes out in the middle from underneath.

Kristen (01:30):

Bless his heart.

Mike Lester (01:34):

Doesn’t come back in- [crosstalk 00:01:35]

Kristen (01:35):

Being five, there are so many struggles.

Mike Lester (01:37):

I sent you that video of him doing the chicken thing.

Kristen (01:40):

And squawking. That was really cute.

Mike Lester (01:41):

Yeah. He just belted that out and our listeners wouldn’t know this, cause I didn’t know it, and we’re all getting older, but something about macaroni and chicken strips or something.

Kristen (01:53):

Yeah, I didn’t really understand all of it, but the squawking I got.

Mike Lester (01:54):

It’s something he saw on a video somewhere. He actually was able to reproduce the video. So yeah, it is what it is.

Kristen (02:00):

Well, thanks for sending me the video.

Mike Lester (02:01):

Thank you, social media. Yeah. It’s great watching him do it, but, yeah.

Kristen (02:04):

Well your five-year-old is ahead of the curve because he just wants to brush and go and not brush.

Mike Lester (02:10):

I’ll let him do it from now on.

Kristen (02:11):

But as a financial advisor, what are some misnomers that you’ve felt the need to clear up for folks over the years?

Mike Lester (02:18):

First of all, things have changed. And so if you go back to just how the financial services industry has evolved, it used to be back in the ’80s, if you had an advisor, it really wasn’t an advisor, it was a stock broker. So the idea of having a financial advisor really wasn’t something that was going on back then. And then in the ’90s, it evolved into, well I have a stock broker, but that industry evolved into mutual funds.

Mike Lester (02:43):

So mutual funds were a way to create diversification and it was a way for brokers to sell again, another product. So ’80s, ’90s, you paid basically transaction costs on trades. Then we got diversification in mutual funds and then there were still fees. And now it’s evolved into, as things get more and more efficient. And certainly technology in the internet, people are evolving to portfolios that are actively managed, but they’re actively managed through fiduciaries, advisors who don’t necessarily get a commission fee base.

Mike Lester (03:19):

But here’s the thing. There are plenty of advisors out there that are still more brokerage. They do more products. There are still plenty of individuals working with advisors and they feel like they don’t get active management or they feel like they’re being pressed towards a product. A product could be anything from a mutual fund. I mean, technically that’s a product that the advisor gets a fee for. A product could be an annuity. A product could be a real estate investment trust. Products can be lots and lots of things. Now, if you start to Google or Bing or whatever your preferred search engine is, who should I work with when it comes to a financial advisor, the term financial advisor can mean a lot of things to a lot of different people. And I think what you’ll start to see popping up are the word fiduciary.

Mike Lester (04:05):

We talk about it on our program. What is a fiduciary? How does that work? What is a fee-only advisor versus a fee-based advisor? And so if you start looking into that, it all becomes well, are you working with a broker, someone that incentivized to sell your products, because that’s how they get a commission. Or are you working with someone who you pay a fee to help you manage the portfolio? We prefer the fee-based approach. Meaning if you work with us, we’re incentivized by charging you a fee to manage your portfolio. If you’re doing well, we’re doing well. If you’re doing poorly, we’re doing poorly. To me, that just makes the most sense. I am a fiduciary. I am a financial advisor, but if I wasn’t, that’s the type of advisor I would want to work with. So it just stands to reason to me that that’s the type of advisor I would want to be to our clients.

Mike Lester (04:55):

So if we go back and we take a look at what are the misnomers? I’d say, well, one of them’s hang in there. The hang in there as a very old-school brokerage approach to, well, I’m going to build out a portfolio for you. I’m going to charge you a commission to go into it, or I’m going to put you into products that paid me a fee to go into it. And now I need you to hang in there because I can’t go back and change it around all the time. Technically it’s illegal. And that example, that would be called churning. You can’t churn investments for someone and get a new commission every time. You have to convince them to stay in there. So you may have an advisor that wants you to stay in there because they got paid fees to put you in there and they can’t keep moving you around. Or there are other, maybe more unfortunate situations where you’re working with an advisor that frankly is charging you a fee. Maybe they didn’t get paid a commission to go in it, but they just aren’t active money managers. It’s just too much work. Either way, if somebody’s telling you to hang in there. I think that’s bad.

Kristen (05:49):

Investing in crypto has been a hot topic for some time. And according to Reuters, President Biden recently signed an executive order for the federal government to come up with a plan to regulate cryptocurrencies and the most interesting part to me explore creating a digital dollar.

Speaker 4 (06:07):

The President’s order requires the Treasury Department, the Commerce Department, and other key agencies to prepare reports on the future of money. It’s a first step toward coordinated government regulation of the now $3 trillion industry. Administration officials said oversight of the booming sector is essential to ensure US national security, financial stability, and to fend off the growing threat of cyber crime. White House officials said the US was taking great care to decide whether and how to move forward with the central bank at digital currency or CBDC.

Kristen (06:40):

First of all, she sounds really pumped about what she does.

Mike Lester (06:43):

She sounds like a computer.

Kristen (06:46):

I know. It’s not a computer.

Mike Lester (06:47):

Well, they should hire her to be the computer voice of the computers.

Kristen (06:49):

She could be the new Amazon lady or Siri.

Mike Lester (06:53):

Amazon lady or Siri or the navigation in your car.

Kristen (06:57):

All joking aside. It does sound like the administration is saying digital assets are here to stay, but we need to make sure we’re making it safe for investors and not illegal activity. Okay, great. Do you think a possibility of this regulation and talks of creating a digital dollar could negatively or positively impact our retirement accounts overall, Mike?

Mike Lester (07:17):

So obviously this is a buzz when it comes to digital currency or crypto, I get the question all the time, whether it positively or negatively affects it I think depends on how you are invested in cryptocurrency. There are so many versions of it right now, and I think that most realistic people, when it comes to cryptocurrency would agree, and I do, that it’s here to stay. It goes back to forever ago, people had coins in their pocket that were literally made out of gold or literally made out of silver. And that was the way to transact business. That evolved into coins that weren’t literally made out of gold or silver. And then that evolved into being able to write it, check, and your check was good. And then it evolved into credit cards. And the idea was you just swipe a card for a promise of getting paid later.

Mike Lester (08:06):

So this idea of Bitcoin or cryptocurrency being super strange I don’t quite understand it. I think history proves that’s not the case. But the questions is that we get about the value of crypto, people don’t call me up every day and go, hey, I want to trade currency, Kristen, value of the dollar versus value of the Euro versus value of the Yen. They don’t think of it in terms of that kind of volatility. If you look at cryptocurrency and you look at Bitcoin, people do look at trading it because there’s a tremendous amount of volatility,

Kristen (08:40):

Tremendous, as somebody who has a little play money in it, yes.

Mike Lester (08:43):

Right. It’s huge. So as far as currency moving forward, yeah. I could see it being a huge part of currency moving forward because it just makes sense. But when you have as many players as we do in the market, it doesn’t make sense that all of those players are happening at the same time. When we look at your question, government regulation of it, we’ve been talking about this for years, Kristen. I mean, why would governments around the world allow this to happen? It’s not in their best interest to allow it to happen. So as we start getting more and more regulation, if you’re an investor in cryptocurrency, you need to be very, very careful about how that affects you. So nobody has a crystal ball about what’s going to be the best or worst moving forward. I would say crypto is here to stay, but being invested in it means you got to be willing for a lot of volatility.

Mike Lester (09:32):

And if you’re betting it’s going to be worth a lot more later, you might be really disappointed, particularly if governments around the world come up with their own crypto. And I would just oversimplify this by saying, and again, people that are way, way into crypto would have a problem with the statement. But I would just say, listen, if the United States comes up with their own cryptocurrency and then we’ve got a, I mean, pick another one, Ethereum, or Bitcoin or something, and you had to choose which one was most likely to survive all of this volatility.

Kristen (10:05):

It’s a no-brainer.

Mike Lester (10:06):

Would you bet against the US government?

Kristen (10:08):


Mike Lester (10:08):

Probably not. So again, there’s a lot underneath that I realize, but just be very, very careful, it’s very speculative. I would be a lot more interested in the blockchain technology behind it than I would in any particular company.

Mike Lester (10:24):

Great client of ours wanted to get into Bitcoin. He’s got plenty of money to do pretty much whatever he wants with it. But I also know he’s a pretty conservative investor. So when a conservative investor who sold his business, he doesn’t need to make a lot in the market, but then he’s calling me up wanting advice on crypto. And should he be doing this or should he be doing that? Or what would we be willing to do for him? Realizing it’s probably not what he wants to hear, I have to go back and say, hey, listen, George, yeah, I know your friends are talking about it as you’re hopefully playing golf or doing something fun. But is that really what you want to be a part of? Because if these 10% swings, or potentially more, that’s just not you. And he comes back and goes, well, yeah, you’re right. It’s not me. I’d rather… So it’s easy to get caught up in the hype, but take a look at who you are, how you want to invest, what makes you happy. That’s what real financial planning’s all about.

Speaker 1 (11:16):

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Speaker 1 (11:32):

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Speaker 1 (11:43):

Thanks for tuning in to today’s show. And we’ll see you next time on the Retirement Wealth podcast.

Speaker 1 (11:49):

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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Money Misnomers & Digital Currency