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 at Retirement Wealth Advisors, Inc, an SEC registered investment advisor. Thanks for joining us today, and let’s get started.
Traveling this summer is top of mind for many. I was talking to you, Mike, about borrowing your beach house for a weekend, for a little girl’s trip because I’ve got to lock in those airfares. They’re starting to go up. If you are thinking about traveling somewhere soon, The Points Guy, CEO Brian Kelly, tells NBC News that as travel makes a comeback, so are surprise fees.
Brian Kelly Clip (00:53):
Consumers should look at the total picture when they travel. There are now fees to enter countries, mandatory health insurance, mandatory COVID testing, and especially for families those fees can add up very quickly.
Mike Lester (01:05):
We’re looking at some family stuff, and that is a little bit of a roadblock for us, trying to figure out: A, can we get there? B, what if it changes again? And then, just these fees and stuff.
Right. Surprise fees when you’re traveling are one thing. Before COVID, it was resort fees, and stupid little fees like that. Now it’s a whole different ballgame. What about surprise fees for investors? Do you come across that quite often where you sit down with someone for the first time, they haven’t been working with you, and they’re going, “Whoa, whoa, whoa hang on a second. I’m paying that on that to use that? Nobody told me that.”
Mike Lester (01:35):
Yeah, unfortunately it happens too often, Kristen. People who invest understand they don’t get to invest for free. If you’re buying a mutual fund, of if you’re investing with a financial advisor, you realize that they have to make a living somehow/some way. It’s just that when it’s not disclosed, that it’s an issue. It just feels like you-
It makes you angry.
Mike Lester (01:54):
It makes you angry.
It’s personal at that point.
Mike Lester (01:55):
It is personal at that point. The idea is just be up front, and just be forward, and just tell me what I’m going to pay in fees if I decide to invest in that particular investment, or if I decide to work with you. I had a real life situation come up with Jim Bailey, one of our advisors. He was a great guy. We talk about Jim on the program. He’s one of my favorite people in the entire world. But he was talking to a couple and going over the financial planning process, and of course just like we should at the end, he explains to them exactly what our fee is. When Jim talks to individuals about their fee, he tells them what the total fee is.
Mike Lester (02:36):
He combines it together, and this is the total fee to work with us. They took that information and then they went on, and Jim followed up with them a week later, maybe two weeks later and just said, “Hey listen, really appreciated the meeting. Just wanted to follow up and see if there’s anything else we can do.” They said, “I actually sent in an email,” because he copied me on it, and he said, “Hey listen, we’ve decided to go in a different direction, but we really enjoyed the meeting. Let me tell you why we decided to go in a different direction.” So they highlighted the fees. Again, full disclosure. This person said, “Well your fees are higher than the other person’s fees.” Of course, Jim and both know.
Mike Lester (03:10):
He’s like, “Whoa, whoa, whoa, first of all that’s probably not the case. Second, did that advisor that you’re talking to tell you what the fee that they get is? Or did they tell you what the total fees are?” It turns out, well in order to, and I don’t know why but this particular advisor decided to only disclose the advisor fee. An advisor might be getting… Let’s say advisors on average get about 1%. The advisor fee might be 1%, but then you got to look at the actual expense of the portfolio. What does it cost to be in the investment that you’re in? Those are additional fees. That advisor did not disclose that. In this case, we were able to point out. Jim just reached out and said, “Hey listen, no pressure. Just make sure you actually ask that advisor that you’re thinking of going with what the total fees are, because it does make a difference.”
Mike Lester (04:02):
And fees do make a difference longterm. So it turns out, by the time they disclosed total fees, [inaudible 00:04:07] the fee was higher than what the fee was to work with us. It’s just that Jim had taken the time, full disclosure, “This is what it’s actually going to cost you,” and the other advisor didn’t do that. Again, fees are important. They are relative. So, we meet individuals who are paying fees, sometimes a little bit of a fee, sometimes a lot of the fee, and maybe too much, and they’re just not getting any service. I would say understand exactly what your fees are because many times we can find ways to help people save money on fees, but at the same time, what are you getting for that fee?
Mike Lester (04:40):
That’s why you’ll hear me say over and over again on our program, value. Are you getting any value? What are you getting for your fee? You realize if you’re going to work with Mike Lester and his team at Talon Wealth Management, Mike Lester doesn’t do this for free, Kristen. So I’m going to have to pay him something. What are you going to get out of it? I’m very adamant that we take the time to explain, “This is what we do. This is how we do it. This is what it costs to work with us.” If we can show you how to get a higher average rate of return net of any fee, we’re providing value. If we can’t do that, there’s really no reason to work with us. At the same time, our clients are retired or close to it. We understand that they’re not looking to take a lot of risk, so they want the highest rate of return they can get, but not looking to take a lot of risk to get there.
Mike Lester (05:22):
Again, all of that goes into the financial planning process. We can do that fee analysis. Hopefully, we can help save you some money. At the end of the day, Kristen, we can be right up front straightforward and honest, “This is what it costs to work with us. Let’s find out if it makes sense for you to work with us and if we’re providing value.”
That’s the way it should be everywhere you go. That’s what working with a fiduciary, a financial advisor, should mean. If you go to GuardingYourNestEgg.com, you can link up there. You know, they have those National whatever days, weeks, months? Sometimes those are kind of fun. National Be A Millionaire Day is May 20th of every single year. It’s a made-up holiday that celebrates the idea of being a millionaire. In reality, Mike, you have a lot of clients that are self-made millionaires and they weren’t all CEOs with big six figure salaries. They are folks that worked hard in various professions, and from what you’ve told me, if we saw them drive up to the office or walk by on street, or saw their home even, we wouldn’t go, “Wow, they’re millionaires or multi-millionaires.”
Mike Lester (06:24):
I think if you just take a look at how things have transitioned, and I never want to downplay $1 million. $1 million is a lot of money. But if you take a look at how money grows over time, how the Stock Market’s been doing in the past 10/12 years, it’s just been a really, really good ride. If you’ve been just diligent about making contributions to your 401K, and if your company was matching and you were making decent money, it’s not that uncommon anymore to have $1 million in your 401K or your TSP. People have done a good job of saving, and markets have worked in their favor.
Mike Lester (06:58):
So, whether you have a $500,000.00 or $1 million, or $5 million, even though lifestyles might a little bit different from one to the other, people are still in my experience looking for the same thing. The conversation is, it’s not all the same, I don’t want to say that, but it’s similar. The conversations that we’re having is, “All right you’ve got this much money set aside for retirement. This is your particular lifestyle. These are your expenses. These are your concerns. How do we make your money work for you for the rest of your life?” It simply turns into an income question. You can have more income on $1 million than you can $500,000.00. You can have more income on $5 million than you can on $1 million.
Mike Lester (07:36):
The process is similar, and I find some people have done better than others, but it just depends. So, working with someone who is a millionaire, I find, like you said Kristen, they don’t often think of themselves that way.
What are some of the professions that they have had, that aren’t necessarily six figure salaries constantly in their life?
Mike Lester (07:53):
It could be a variety of things. I know you think people say millionaire and people automatically go, “Oh, well you’re a doctor, or an attorney, or something,” which is true.
Mike Lester (08:02):
Doctors make good money. You’ll also find that people that were in engineering. We work with lots of engineers around the country that again had good salaries, but just made contributions. Engineers tend to be pretty conservative. They’re math people like myself. Then we have individuals that frankly a lot of the state and government workers have done very, very well. Police officers, federal government. We find a lot of people that have done well in federal government programs, so maybe their income wasn’t as high as some of other professions along the way, but the benefits. It’s just kind of a good benefits environment.
What about small business owners?
Mike Lester (08:37):
Sure, small business owners fall into that category too. What I find a lot of times with small business owners is that they invested back into their business. They didn’t necessarily spend a lot of time with 401Ks, or don’t have these lavish 401K plans that they just made contributions to. They understood and they knew their personal economy pretty well. We work with individuals in that situation a lot. I’m just thinking about a conversation I just had with a gentleman here last week. He’s been listening to our show for a long time, over five years he said.
Wow. We appreciate that.
Mike Lester (09:09):
Yeah. We had a great conversation. It was one of those situations where he’s been busy. He was kind of putting off coming into the office. So, we sat down and just had a great meeting. He’s in a situation, recently sold his company. Typically, when you sell your company you don’t get all the money up front. It kind of comes to you in increments. You get a certain payment up front, and then it might take a couple of years to get the rest of the money. He’s getting to the point where the company was sold a little while ago, and he’s coming up on that last payment where he’s actually going transition into retirement. And now that income is going to go away because he’s not going to have income from employment, and he’s going to be sitting on his nest egg, and he had very, very specific detailed goals that he wanted to accomplish.
Mike Lester (09:48):
I had the privilege of sitting down with him and walking him through everything. He had met with another financial advisor. He’s like, “Hey, he’s a nice guy but it just didn’t go the way I wanted it to go. The guy didn’t follow up on a few things.” Sometimes that happens, but again I told him, and I tell you, and I tell our listeners all the time, that’s my favorite part of this business. Kristen, no offense, I love doing radio with you, but just sitting down and getting to know people and putting together financial plans. We had a great conversation. I think we’re probably going to wind up working together. We have another meeting coming up next week.
Mike Lester (10:17):
At the end, and I take it as a huge compliment, he said, “Listen, I’ve been listening to your show forever. I love it. I really wish I would have taken the time to come in a little bit sooner,” because at least he told me this Kristen, I don’t think he was blowing smoke. He said, “I really enjoyed it. I’m really glad I came in. Would you mind if maybe I could refer some of my friends to you?” That’s a huge compliment.
Speaker 1 (10:39):
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Speaker 1 (10:55):
Thanks so much for joining us on today’s show. Be sure to subscribe to our podcast. Visit our website at Retirement.Tips for more free retirement planning and investment resources. Thanks for tuning in today’s show. We’ll see you next time on the Retirement Wealth podcast. 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.
Speaker 1 (11:36):
Past performance is not a guarantee of future results. Investments may fluctuate and when redeemed may be worth more or less than originally invested.