Bogleheads® Conference 2024 Bogleheads Financial Planning Experts Panel

00:00:00.000 | (audience applauding)

00:00:03.160 | Okay, well it's great to see so many people

00:00:09.520 | still hanging in here Sunday morning.

00:00:12.640 | I wanna give a special shout out

00:00:14.800 | to all of our first time Boglehead attendees.

00:00:17.800 | It's been so exciting to talk to so many of you

00:00:21.160 | over the last two days.

00:00:24.080 | I think the first timers, like all the rest of us,

00:00:27.560 | probably will go home feeling, I hope,

00:00:30.840 | that a lot of your core Boglehead principles

00:00:34.320 | have been reaffirmed and probably, hopefully,

00:00:37.920 | there are some things that you've been prompted

00:00:40.920 | to think about or question that maybe you hadn't focused on

00:00:45.920 | and probably a to-do list.

00:00:47.800 | I definitely have a to-do list.

00:00:49.980 | So I hope it's been a great experience for you.

00:00:53.720 | For this panel, we have another wonderful panel.

00:00:57.600 | I'm proud to have Christine Benz and Mike Piper

00:01:02.600 | and John Luskin to serve with them

00:01:07.360 | on the board of the Bogle Center.

00:01:09.300 | We're thrilled to have Carolyn McClanahan here

00:01:13.600 | for her first Bogleheads Conference

00:01:16.320 | and a special welcome to Harry Sitt,

00:01:19.080 | who is here for his first Bogleheads Conference.

00:01:23.380 | Harry runs the popular blog, The Finance Buff.

00:01:28.380 | He has written two books.

00:01:31.380 | He's been a speaker to our San Jose

00:01:34.260 | and Sacramento Bogleheads Chapters.

00:01:37.680 | As at the other session, so just going

00:01:40.620 | from your left to right, Mike Piper,

00:01:43.460 | Carolyn McClanahan, Christine Benz,

00:01:46.320 | Harry Sitt, and John Luskin.

00:01:49.500 | (audience applauds)

00:01:52.500 | As at our other sessions, we'll encourage you

00:01:58.820 | to put questions on cards.

00:02:01.860 | Alan Roth will be going around at some point.

00:02:04.980 | He's in the back.

00:02:06.700 | So we'd love to have your questions.

00:02:09.180 | So we're gonna talk about a variety

00:02:12.420 | of financial planning topics in this session,

00:02:15.260 | including planning for retirement.

00:02:17.860 | We'll talk some about lessons

00:02:19.660 | from Christine's wonderful new book, How to Retire.

00:02:23.720 | Before we get there, Carolyn, I wanna ask you

00:02:27.620 | about something you had said in preparing for this panel.

00:02:31.020 | You said you would, quote, "Love to talk about

00:02:34.180 | "how we need to quit this unhealthy focus on retirement."

00:02:38.100 | What do you mean by that?

00:02:39.300 | - Yeah, amen to that.

00:02:40.380 | You know, retirement was invented in the 1930s

00:02:43.020 | when Social Security came into being.

00:02:44.980 | They picked the age of 65 for retirement.

00:02:47.700 | Life expectancy at that time was 65.

00:02:50.620 | If you made it to 65, you had about a half a chance

00:02:54.980 | of living to 72.

00:02:56.460 | So people did not live very long in retirement.

00:02:59.080 | Most people died before retirement.

00:03:01.520 | And as an emergency room doctor, I saw a lot of bad things.

00:03:05.420 | You know, people die before their time

00:03:07.020 | or have just these horrible events or illnesses happen

00:03:10.720 | that forever change their trajectory of life.

00:03:13.660 | And I just think we're so messed up in this country

00:03:16.460 | about how hard we work for this endgame of retirement

00:03:20.460 | when we need to enjoy life along the way.

00:03:22.860 | And so in our practice, the number one question,

00:03:25.700 | I have a whole talk I do around this at conferences,

00:03:28.080 | it's called Are You Happy Now?

00:03:30.100 | And so the number one thing we do with clients

00:03:33.020 | is are you happy now, and if not, why?

00:03:35.680 | Kills me when I get somebody who's like 50

00:03:38.220 | and they say, "I hate my job, I wanna quit at 55."

00:03:41.100 | Well, that's the wrong goal, you know,

00:03:42.940 | 'cause work gives a sense of purpose.

00:03:45.660 | You're not meant to live on your money for 30 years

00:03:48.480 | without, and give up your safest asset,

00:03:52.220 | both psychologically and financially,

00:03:54.100 | and that's your human capital,

00:03:55.260 | your ability to contribute to society.

00:03:57.720 | So we focus on trying to get people to work less

00:04:00.720 | when they're young and enjoy life more along the way

00:04:04.740 | and plan on working longer

00:04:06.460 | so you have that psychological and financial safety,

00:04:09.560 | but plus it also helps reduce your risk of dementia

00:04:12.620 | and cognitive decline as you age.

00:04:16.060 | - I just wanna follow up on that,

00:04:18.360 | and so it's funny that you're saying

00:04:19.700 | we talk too much about retirement,

00:04:21.380 | I just finished a book on retirement.

00:04:23.020 | (all laughing)

00:04:25.540 | But I could not agree more.

00:04:27.060 | In fact, in the book, Laura Karstensen,

00:04:29.820 | who's a researcher at Stanford,

00:04:31.740 | says something that really sticks with me.

00:04:34.060 | She says, "Work is good for us,

00:04:37.140 | "the way we work is all wrong."

00:04:39.820 | That people are just crawling to the finish line,

00:04:42.860 | completely burned out.

00:04:44.860 | We know some people die right after they retire,

00:04:48.620 | and so I could not echo Carolyn's sentiment more

00:04:52.660 | that being thoughtful about what you want

00:04:55.440 | from your work life,

00:04:57.340 | picking up on Jordan Grumet's idea

00:04:59.980 | of creating addition by subtraction,

00:05:04.980 | like take note of your calendar

00:05:07.860 | as you go through your weeks if you're still working.

00:05:10.420 | If you look ahead and you see,

00:05:12.500 | okay, oh God, yeah, that day,

00:05:15.220 | those things that fill you with dread,

00:05:17.180 | if you're in good standing with your employer,

00:05:19.340 | see if you can't find your way to do less of those things.

00:05:24.340 | So for me, it was managing people, it was meetings,

00:05:29.080 | those were things kind of in my stop doing list,

00:05:32.620 | and I wanted to do more writing on my own,

00:05:35.580 | I wanted to work on a book,

00:05:37.940 | and so just be really thoughtful

00:05:40.900 | about observing what's working for you about work.

00:05:43.480 | Maybe nothing is,

00:05:44.500 | and you need to do something completely different,

00:05:46.420 | but maybe there are some kernels there,

00:05:48.440 | and try to see if you can't bring them forward

00:05:51.560 | in your work life.

00:05:52.900 | Try to find better balance, certainly,

00:05:56.140 | to just make sure that you are enjoying work

00:05:58.480 | as you're going along.

00:05:59.540 | - Yeah, I agree.

00:06:01.840 | I call myself a part-time self-employed,

00:06:04.700 | so to me, that's a very good arrangement.

00:06:07.100 | I work on what I want to work on,

00:06:09.180 | I control my own hours,

00:06:10.980 | so then that's a good transition

00:06:13.500 | versus working full-time 100% and then retire 100%.

00:06:18.500 | - And I know, Harry, you have said,

00:06:22.020 | you've written about priorities also,

00:06:25.360 | and one of the things,

00:06:27.740 | you know, this is a crowd of people,

00:06:29.140 | many of whom are very into investing,

00:06:32.580 | put a lot of energy into personal finance.

00:06:36.180 | You've suggested maybe we don't have to be

00:06:38.980 | quite so obsessive about that, right,

00:06:41.700 | as Paula would say, right?

00:06:43.420 | - Yes, I'm very big on reducing stress and anxiety,

00:06:48.340 | maybe just because I'm naturally an anxious person.

00:06:51.780 | So if, also, news media tend to sell

00:06:54.980 | on fear of making mistakes, making you anxious,

00:06:58.460 | create the impression that there are landmines

00:07:00.780 | left and right everywhere,

00:07:02.020 | that you're gonna make a mistake.

00:07:03.680 | So if you feel anxious and overwhelmed,

00:07:08.020 | I would suggest that you take a step back

00:07:10.460 | and evaluate where you are.

00:07:12.540 | Are you on solid ground, you're 90% there,

00:07:16.220 | or are you fighting between failure and success?

00:07:20.540 | The financial planning moves

00:07:22.020 | tend to be on the side of improving things.

00:07:24.260 | They make good things, good situation better.

00:07:27.740 | I was in Mike's presentation yesterday,

00:07:30.700 | so he pointed out that Roth conversions

00:07:34.020 | increase your bequest to your heirs,

00:07:38.140 | but they don't raise your financial security.

00:07:40.940 | So if you're already 90% there,

00:07:44.060 | you're all for improving, that's great,

00:07:45.900 | that's all we're here for.

00:07:47.700 | But if you make your plan contingent

00:07:50.580 | on making all the expert moves

00:07:53.100 | on knowing how much international small cap value

00:07:58.100 | or real estate or Bitcoin in your portfolio,

00:08:01.460 | claiming social security at the right age,

00:08:04.260 | having the right order of withdrawals from your accounts,

00:08:08.440 | having the well-calibrated Roth convergence,

00:08:12.180 | I would say that's probably not a good plan

00:08:14.460 | because those are too fragile.

00:08:17.180 | They count on everything has to line up perfectly

00:08:20.740 | for you to succeed.

00:08:22.200 | I'd rather see a plan that's naively counting

00:08:26.460 | on target date fund,

00:08:28.700 | claiming social security at the full retirement age,

00:08:32.540 | withdrawing from my accounts proportionally

00:08:34.980 | and not doing any Roth conversion.

00:08:37.180 | If my plan is successful

00:08:39.900 | based on those seemingly suboptimal moves,

00:08:43.140 | then I know I'm good no matter what.

00:08:45.840 | Then I can pick and choose at my own leisure

00:08:48.500 | at here and there, learn things.

00:08:51.500 | Everything can only improve from here.

00:08:53.680 | So then I'm less conscious, I'm more confident.

00:08:56.840 | - And Harry, you had said about simplifying.

00:09:00.740 | Give us a couple of examples of things at the margin

00:09:05.080 | that I could let go of

00:09:07.400 | and not feel like I absolutely have to optimize.

00:09:11.140 | - Sure.

00:09:12.040 | I did a presentation for Sacramento San Jose chapters

00:09:16.440 | in June, so I did lots of simplifications move here.

00:09:20.740 | So for myself, I use one bank account for everything,

00:09:25.520 | so checking and saving all in one pot.

00:09:28.440 | So I don't move money across different accounts.

00:09:31.920 | I use one credit card for all my purchases.

00:09:34.720 | I don't use one card for this, another card for that.

00:09:37.800 | I use one broker for 95% of all my investments

00:09:43.840 | between Vanguard, Fidelity, Schwab, pick one.

00:09:47.960 | They're all pretty much the same.

00:09:50.760 | For as much as I love iBonds, I sold a lot of my iBonds.

00:09:55.320 | I just use a TIPS fund.

00:09:57.840 | I wrote a book on TIPS.

00:09:59.280 | I know how a TIPS ladder works.

00:10:01.800 | I know the difference between a fund and a ladder,

00:10:04.360 | but I just use a fund, so.

00:10:07.000 | - Yeah, I wanna add to that just real quick.

00:10:08.880 | You're gonna be great to work with as you age

00:10:12.320 | and get cognitive decline.

00:10:15.000 | So simplicity is so important, right?

00:10:19.240 | It's so important for when you can no longer do it

00:10:22.580 | for people to be able to take over for you,

00:10:24.480 | so that's beautiful.

00:10:25.840 | - And I know, Carolyn, you talk also about resiliency.

00:10:32.120 | So what do you mean by that when you say

00:10:35.120 | that that's a focus that you work on with clients?

00:10:37.760 | What does that mean?

00:10:38.760 | - So to me, you can never predict what's going to happen,

00:10:43.080 | and I talk about complex adaptive system science,

00:10:46.480 | and that's basically we don't know what we don't know.

00:10:50.160 | And our goal in our practice is not for people

00:10:53.600 | to have this endgame of a certain amount of money

00:10:56.840 | at a certain time.

00:10:57.780 | It's to make sure that they have enough savings,

00:11:01.000 | emergency funds, and that they're saving enough

00:11:04.040 | for the future that no matter what life throws them,

00:11:06.720 | they're gonna be resilient and ready for that.

00:11:09.360 | And that's, you look at the studies on regret,

00:11:13.160 | and our number, the other thing we try to get people to do

00:11:16.200 | is is there anything, if you didn't do it,

00:11:18.720 | you'd have regret?

00:11:19.880 | And so when people have less regret

00:11:24.720 | and something bad happens,

00:11:26.880 | they're actually more resilient

00:11:29.240 | and able to weather that bad thing happening more easily.

00:11:33.240 | So focusing on gratitude builds resiliency.

00:11:38.240 | Focusing on relationships build resiliency.

00:11:41.880 | So it's more than just money.

00:11:43.760 | It's making certain you're living fully in the moment

00:11:46.960 | so when the world falls apart

00:11:49.200 | that you're gonna have less regret

00:11:50.800 | and be better able to weather it.

00:11:53.040 | And one thing I always say to people,

00:11:54.720 | and you talked about anxiety.

00:11:57.920 | For me, I always ask myself,

00:12:00.120 | when something bad has happened,

00:12:01.680 | she's heard me say this before and people gross out,

00:12:04.160 | will I be able to wipe my butt?

00:12:05.880 | Because if you can wipe your butt,

00:12:09.800 | it means your brain works, your hands work,

00:12:13.000 | and that you're gonna get through this.

00:12:14.760 | So just step back and think, is this really the worst case?

00:12:18.200 | And most of the time it's not.

00:12:19.560 | And when you can recognize that,

00:12:21.400 | it lets you be able to weather

00:12:23.040 | whatever's happening a little bit better.

00:12:25.720 | - Related to being able to weather tough times,

00:12:29.760 | what are some of the financial things

00:12:33.640 | that bogal heads should be doing

00:12:36.240 | that maybe they aren't doing?

00:12:38.960 | Do you wanna address that, John?

00:12:40.760 | - Yeah, I really like what Harry is doing

00:12:43.680 | in simplifying his finances

00:12:45.080 | because I think one thing that folks often ignore

00:12:49.280 | when choosing the more complicated approach,

00:12:52.080 | having multiple accounts to get a signup bonus

00:12:54.760 | or chasing the highest yield,

00:12:56.440 | is that assuming there's no downside to that strategy.

00:12:59.240 | And there is a downside, it's complexity.

00:13:01.880 | And if you don't do what you need to do right,

00:13:05.240 | then you might just shoot yourself in the foot

00:13:07.560 | and not get the benefit of all that complexity

00:13:09.560 | in the first place.

00:13:10.760 | And then to speak to the theme of Paula Pant,

00:13:14.480 | yes, you can afford anything but not everything.

00:13:17.000 | So if you're using your energy to chase the highest yield

00:13:20.200 | on a savings account or a CD,

00:13:22.520 | that means you're not doing something else.

00:13:24.880 | Human energy, time, attention is limited.

00:13:27.440 | So you can only do a few things well.

00:13:29.920 | Are you gonna do it to chase the highest yield

00:13:31.800 | or are you gonna do it to make sure

00:13:33.160 | your estate planning is done?

00:13:34.960 | A lot of time folks come to me when working with me

00:13:37.600 | and they wanna talk about how to manage taxes

00:13:40.640 | when selling the concentrated Apple stock position.

00:13:43.360 | And I understand that can be an important point to them,

00:13:46.360 | but that can be so largely irrelevant

00:13:49.120 | if they haven't done something like their estate planning,

00:13:51.680 | have enough umbrella insurance, for example.

00:13:54.160 | So yes, we love investing, it's so sexy and interesting

00:13:57.800 | and we hate taxes and we wanna manage those,

00:14:00.640 | but often they're not always the most important thing

00:14:03.720 | that we can be thinking about.

00:14:05.160 | - Right, so this goes to what Paula was saying

00:14:07.040 | about the areas we may be avoidant of.

00:14:09.640 | And sometimes they are emotionally difficult too.

00:14:12.680 | Some of the things you have to wrestle with

00:14:14.720 | in making your estate planning documents,

00:14:17.440 | all the dire scenarios you have to talk about

00:14:20.840 | and things you have to think about.

00:14:22.800 | - Yeah, just one thing to add.

00:14:25.440 | Financial planning is a broad field,

00:14:30.640 | but on Bogleheads we spend 95% of the time

00:14:33.160 | talking about investing, which is one piece of it.

00:14:35.400 | And the other 5% is taxes, that's what we talk about.

00:14:39.400 | We spend almost no time talking about estate planning

00:14:41.760 | or insurance, even though those are so critical.

00:14:44.960 | And that happens all the time.

00:14:46.040 | People come to me and they wanna do this deep dive

00:14:49.200 | on Roth conversions and it's well, we can do that,

00:14:52.520 | but there's six other things that are such high priority

00:14:56.280 | and you don't have these boxes checked off yet.

00:14:58.840 | And basic estate planning documents,

00:15:01.720 | you don't have disability insurance,

00:15:03.280 | but you're still definitely not financially independent.

00:15:05.840 | I mean, whatever it is, there's so much more

00:15:08.480 | to financial planning than your asset allocation.

00:15:11.760 | And on Bogleheads, we just spend so much time

00:15:15.040 | talking about just a few things.

00:15:17.760 | - I couldn't agree more, Mike.

00:15:19.480 | And I have this conversation all the time

00:15:21.600 | with individuals who say, I need a financial advisor.

00:15:25.720 | And so I'll listen to them and I'll be like,

00:15:28.120 | kind of sounds like you need a financial planner,

00:15:31.000 | especially when I'm moving in Boglehead circles.

00:15:33.360 | And I have to say, it's kind of a tough sell

00:15:36.640 | about why they're so focused on the investment piece.

00:15:40.640 | They have questions there and they really underrate

00:15:44.360 | the financial planning piece.

00:15:45.880 | So I would say, if you go into it, my guess is many of you

00:15:49.960 | probably need financial planning

00:15:51.960 | more than you need investment advice.

00:15:54.520 | You may need both.

00:15:55.920 | And sort of the counter to that is,

00:15:58.600 | if you're meeting advisors and their main selling point

00:16:02.400 | is I'm gonna do this, this, and this for your portfolio

00:16:05.240 | and they're not talking about financial planning,

00:16:08.320 | they're serving you in a very limited way.

00:16:11.560 | And many advisors still style themselves in this fashion.

00:16:15.160 | And if they're charging you a very low fee

00:16:17.680 | to do that investment piece, that's one thing.

00:16:21.040 | But many of them are charging the full 1% AUM

00:16:24.520 | for something that looks to me an awful lot

00:16:27.120 | like just sort of investment management

00:16:29.920 | and they're ignoring the financial planning piece

00:16:32.280 | or might be doing a few things around the margin.

00:16:34.920 | So just find there's a mismatch

00:16:37.040 | in terms of what people think they need

00:16:39.480 | and what I believe they need.

00:16:41.240 | And I think they need more financial planning.

00:16:43.160 | - And the one thing I wanna really add to me,

00:16:45.280 | the most important question you have to ask yourself

00:16:49.120 | is what is the goal of your money?

00:16:51.880 | The money is the tool, it should not be the object.

00:16:55.600 | And I've talked, I have loved this conference

00:16:58.360 | and so many of you have come up and talked to me

00:17:00.480 | and I can tell you most of you

00:17:02.320 | don't really know the goal for your money.

00:17:05.040 | And when you understand what you need, why you need it,

00:17:09.200 | then it makes it much easier to create a financial plan

00:17:12.280 | that actually serves you well

00:17:14.160 | to create a great life for yourself

00:17:15.840 | 'cause that's what you're trying to do.

00:17:17.800 | - Yeah, just echoing one thing Christine said

00:17:22.440 | about financial planning versus investment management.

00:17:25.600 | Literally I checked in on the forum Thursday night

00:17:29.560 | very recently and there was a post discussing John actually,

00:17:34.560 | discussing John and Rick and someone said,

00:17:37.920 | well, I just don't see how John could possibly

00:17:40.760 | do anything better and beat a Vanguard Balanced Index Fund

00:17:44.480 | and how that would be worth the fees.

00:17:46.040 | And it's like, you're exactly missing the point.

00:17:49.200 | The fact that you think that that is

00:17:51.640 | what a financial planner does

00:17:53.080 | is try to beat a Vanguard Balanced Fund

00:17:56.200 | tells me that there's almost for sure

00:17:58.400 | some things in your financial planning picture

00:18:00.080 | that you're not looking at

00:18:01.200 | and that you actually would benefit

00:18:03.400 | from working with John or somebody else.

00:18:05.760 | - I think we'll shift to retirement a little bit.

00:18:09.680 | So I will say I am partway through

00:18:11.480 | Christine's wonderful book.

00:18:13.000 | I am reading it just as Jonathan Clements says

00:18:16.560 | in the introduction with a pen.

00:18:18.360 | I am underlying quite a lot.

00:18:21.440 | So Christine, I want to ask you to share with us

00:18:24.160 | some of the lessons in the book,

00:18:27.160 | either things that resonate with you personally

00:18:29.780 | or lessons you think don't get enough attention.

00:18:32.920 | - Yeah, thanks, Karen.

00:18:35.400 | So the book, people may be surprised,

00:18:37.600 | is not all financial.

00:18:40.360 | It's about half or maybe more non-financial.

00:18:44.720 | So it's a lot about having a vision for retirement,

00:18:49.960 | picking up on Jordan Grumman,

00:18:51.760 | the idea of having purpose.

00:18:54.960 | If you got purpose through work,

00:18:57.240 | just making sure that you're having something else

00:19:00.040 | that gives you purpose when and if you retire from work.

00:19:04.280 | The book I should explain for people who don't know,

00:19:08.000 | each chapter is an interview

00:19:09.880 | about how to do some aspect of retirement planning.

00:19:13.440 | And the contributors are well-represented

00:19:16.040 | at this conference.

00:19:17.000 | So Jordan Grumman does a discussion with me,

00:19:21.000 | Mike Piper, Carolyn McClanahan,

00:19:23.400 | Mike on taxes, Carolyn on healthcare.

00:19:27.160 | But we do cover a lot of non-financial ground

00:19:30.200 | because I have to say,

00:19:31.120 | as I've kind of moved along in my life,

00:19:34.320 | I feel like I've got the financial piece well in hand.

00:19:37.320 | Like there are always things I could do better.

00:19:39.400 | But the allocation that makes,

00:19:41.880 | that is just more important to me at this life stage

00:19:44.160 | is my time on earth allocations.

00:19:46.640 | Like what decisions am I making with this precious life?

00:19:50.560 | I have a friend right now who is about my age,

00:19:53.560 | dying in hospice with ovarian cancer.

00:19:56.320 | So, and a healthy, aggressively healthy person.

00:19:59.560 | And so these things can just come up

00:20:01.600 | and very quickly turn everything around.

00:20:05.000 | So that's what I wanted the book to be

00:20:07.440 | is sort of like you have this wonderful life,

00:20:10.800 | what will you do to maximize

00:20:13.800 | however many years you have left?

00:20:16.360 | And so that was something I wanted to

00:20:18.600 | bring out loud and clear.

00:20:19.760 | So we talk about relationships,

00:20:21.940 | purpose certainly,

00:20:25.560 | perhaps the role of working in some fashion longer.

00:20:29.840 | Scott Burns, who was our speaker last night,

00:20:32.400 | night said something to me.

00:20:33.600 | He's not in the book,

00:20:34.440 | but he said something to me in another conversation.

00:20:36.880 | He had tried to retire and he said,

00:20:40.960 | he was stocking shelves in the food pantry.

00:20:43.320 | And he said, even though he enjoyed that work,

00:20:46.080 | he said, I took a step back and realized

00:20:48.320 | that my highest, best use in this world

00:20:51.120 | was probably not stocking food pantry shelves.

00:20:54.920 | Even though I liked meeting people

00:20:56.320 | and I wanted to continue to do it,

00:20:57.880 | it was probably going back to some version

00:21:00.480 | of my life's work.

00:21:02.000 | The work that he did with financial education

00:21:04.960 | in his column.

00:21:05.840 | And so I guess for me,

00:21:07.780 | that's something I've been thinking about

00:21:09.320 | and I would urge all of you to think about.

00:21:11.820 | Is there an aspect of your work

00:21:13.680 | or maybe something that you didn't explore in your work

00:21:16.080 | that you wanna carry forward later in life?

00:21:18.680 | I'm hoping people will come away

00:21:20.400 | with some impetus to think through those things.

00:21:24.960 | - One of the things that many people talk about

00:21:30.920 | as they're thinking about retirement

00:21:32.480 | is where they wanna live.

00:21:33.980 | So I know, Harry, you had shared

00:21:36.960 | that you've lived in five houses in three states

00:21:40.480 | in the last six years

00:21:41.800 | after leaving your full-time job in California.

00:21:45.300 | Tell us a little bit about that adventure

00:21:47.840 | and lessons you've learned along the way.

00:21:50.440 | - Sure.

00:21:51.260 | I worked in San Jose, California for about 20 years.

00:21:56.260 | Quit my job in 2018.

00:21:59.120 | We moved to Nevada, Reno, Nevada in 2020,

00:22:03.720 | right before the pandemic.

00:22:05.900 | Moved again in 2021 to our current place,

00:22:08.880 | Midway, Utah, about one hour east of Salt Lake City.

00:22:12.420 | Out of all those moves,

00:22:15.960 | I think my biggest takeaway is,

00:22:18.160 | A, you don't have to move.

00:22:20.340 | (audience laughing)

00:22:23.340 | News media publish a lot of lists,

00:22:27.720 | best places to retire in America.

00:22:30.200 | They create the impression that everybody has to move

00:22:32.920 | or everybody's supposed to move.

00:22:35.280 | If you have your family,

00:22:36.960 | you have your kids grow up in the area,

00:22:39.520 | they're still there.

00:22:41.000 | You have your network, you have your activities.

00:22:43.560 | Don't have to move.

00:22:45.280 | If you do move, I would say,

00:22:47.940 | have a strong non-financial reason for your move.

00:22:52.940 | You want to move closer to your family

00:22:55.040 | or for us, it's activities.

00:22:57.360 | We like skiing and hiking,

00:22:59.460 | so we picked Reno, Nevada for skiing and hiking

00:23:02.040 | near Lake Tahoe area.

00:23:03.920 | And then we found a better place in Midway, Utah,

00:23:07.000 | and that's where we currently are.

00:23:09.000 | Don't move for financial reasons.

00:23:12.040 | Don't move because of cost of living or taxes.

00:23:16.120 | So when we moved to Nevada,

00:23:17.600 | people say, "Hey, you moved to Nevada, no state tax.

00:23:20.360 | "You must have saved a lot of taxes."

00:23:23.200 | The first year that we moved there,

00:23:24.780 | we saved $1,000 in California state tax.

00:23:28.520 | So, and then we moved to Utah.

00:23:31.680 | Utah's state taxes are higher than California state taxes

00:23:35.160 | because it's a flat rate versus progressive.

00:23:37.860 | So move because you like somewhere,

00:23:42.600 | some activities there.

00:23:44.320 | Don't move because of cost of living or taxes.

00:23:47.320 | Living comes first before costs.

00:23:50.240 | - I have two important points to that.

00:23:52.200 | A lot of people want to move to where their kids are.

00:23:54.960 | A high percentage of kids move

00:23:56.500 | after you move to where they are.

00:23:59.200 | And so be careful about that.

00:24:01.280 | The second thing, I have seen this over and over.

00:24:04.240 | Think about healthcare where you move.

00:24:07.000 | Do not retire in rural areas.

00:24:09.640 | Rural areas are struggling with good healthcare.

00:24:12.080 | If you need long-term care, long-term care services,

00:24:15.280 | it's almost impossible to get.

00:24:17.120 | So be very careful that wherever you do move,

00:24:20.320 | that you know there's a good healthcare community there

00:24:23.680 | and people that are gonna help you as you age.

00:24:26.480 | - I guess it depends on your age.

00:24:28.160 | I'm in my 50s.

00:24:30.120 | So I trust whatever illness I have,

00:24:33.120 | anywhere in a good-sized metropolitan area,

00:24:35.960 | doctors can treat me.

00:24:37.480 | But if I develop some rare disease,

00:24:40.120 | I have to live close to a Mayo Clinic

00:24:42.800 | or a Cleveland Clinic

00:24:44.400 | or that sort of caliber of medical facilities.

00:24:48.240 | Yeah, definitely that's a consideration.

00:24:50.520 | - My book has a chapter on housing

00:24:52.560 | and I talked to Mark Miller

00:24:53.800 | about all the different dimensions of housing,

00:24:56.280 | including home equity and potentially unlacking home equity.

00:24:59.720 | But Mark made a really astute point about downsizing,

00:25:03.440 | like getting into a more age-appropriate home,

00:25:06.080 | sort of separate from the relocation decision.

00:25:08.320 | And his point was like,

00:25:10.040 | there's never a better time

00:25:11.760 | than just when you're embarking on retirement.

00:25:14.640 | You'll never be more in the driver's seat

00:25:17.040 | with the decision-making about where,

00:25:19.680 | how that move gets executed,

00:25:21.840 | how your possessions get disposed of.

00:25:24.400 | And his point, I mean, many of us have been through this

00:25:26.960 | with older parents passing away

00:25:29.360 | where you're in charge of cleaning out

00:25:32.200 | a very large and full house.

00:25:34.280 | It's not a great gift to get from your parents, I will say.

00:25:38.400 | So if you can kind of get in front of that decision-making

00:25:42.920 | and that process,

00:25:44.840 | I think that that redounds to the benefit

00:25:47.640 | of everyone's well-being,

00:25:49.880 | yours and your family members.

00:25:52.640 | - I wanna remind everyone,

00:25:55.600 | if you have questions,

00:25:56.960 | please write them on the little pieces of paper.

00:25:59.640 | Alan is walking around and he'll gather them up for us.

00:26:04.640 | I wanted to turn the conversation a bit

00:26:07.720 | to charitable giving.

00:26:09.480 | So we've talked about some tax strategies

00:26:13.880 | related to charitable giving,

00:26:15.920 | that it can be efficient to leave tax-deferred IRAs

00:26:19.240 | to charities or give appreciated securities

00:26:23.880 | to a donor-advised fund for later granting.

00:26:27.320 | And I'm wondering just in sort of a bigger picture way,

00:26:31.040 | are there conversations that you have with clients

00:26:35.360 | or questions that we should be asking ourselves

00:26:38.480 | about how charitable giving fits into our goals?

00:26:43.160 | - At the risk of getting into the investing section,

00:26:46.840 | I can see charitable giving as an opportunity

00:26:48.600 | to clean up one's portfolio.

00:26:50.240 | A lot of times folks will come to me

00:26:52.040 | with some stuff they bought themselves

00:26:54.000 | or maybe some old employer stock,

00:26:56.120 | or often it's gonna be that 1% advisor portfolio

00:27:00.400 | that they've fired the advisor

00:27:02.040 | and now they're left with this dumpster fire

00:27:04.640 | of an investment portfolio.

00:27:06.200 | And so that can be a good time

00:27:08.120 | to prioritize getting rid of those things

00:27:10.480 | in a tax-efficient manner,

00:27:12.080 | giving it to a donor-advised fund, et cetera.

00:27:15.000 | - Yeah, I'm not QCD ages yet.

00:27:18.040 | So before QCD, donor-advised fund

00:27:21.080 | is probably the best vehicle.

00:27:23.000 | But I would suggest if you use a donor-advised fund,

00:27:26.320 | use it more as a pass-through.

00:27:28.240 | Don't hold money there.

00:27:30.080 | Donate to donor-advised funds

00:27:31.760 | and then disperse the money right away.

00:27:33.720 | - I sort of disagree with that.

00:27:37.640 | It depends on the situation.

00:27:39.680 | I mean, we've had clients with long-time

00:27:42.200 | donor-advised funds that are invested

00:27:44.080 | and it's been fun for them that they've grown.

00:27:49.160 | That pie that they're giving to charity

00:27:51.360 | and they're giving along the way.

00:27:53.200 | But like I talked about the golden age

00:27:56.520 | of tax planning and retirement from 60 to 70 yesterday

00:28:00.480 | and we'll do a nice lump sum of appreciated stock,

00:28:05.160 | cleaning up portfolio like you said,

00:28:07.520 | that we know what their charitable intentions are

00:28:10.240 | for the next 10 years.

00:28:11.600 | And now we've been able to do other nice things

00:28:14.040 | like get rid of other appreciated stock

00:28:16.560 | or do Roth conversions or IRA distributions.

00:28:19.640 | So it can, yes, there is a fee

00:28:21.760 | with having a charitable gift fund,

00:28:23.680 | but it's not that high.

00:28:25.040 | I mean, well, fidelity is what we use

00:28:27.280 | and it's not that high to have that.

00:28:29.680 | And so, I mean, every situation's different.

00:28:39.120 | And so just make sure that you're thinking through

00:28:42.160 | both short-term and long-term

00:28:44.520 | about what your goals are charitably

00:28:47.360 | and doing it in the most tax-efficient manner.

00:28:50.760 | - I will say, I kind of agree with Harry though.

00:28:54.200 | I do not understand why the fees are so high.

00:28:56.920 | If I'm putting some plain vanilla security in there

00:29:01.640 | like employer stock from a large company,

00:29:04.440 | why am I having this, is it 50 basis points

00:29:07.320 | or something drag on?

00:29:09.060 | I don't understand what the fees are about.

00:29:12.000 | So, you know, when you give money to,

00:29:14.720 | when you put it into fidelity charitable,

00:29:16.880 | the fees are not 50 basis points.

00:29:18.480 | It's actually a lot lower.

00:29:19.800 | The reason the fees are there is because they have to check

00:29:23.280 | and make sure the charities are qualified charities.

00:29:25.560 | So it's more, it's a logistical thing.

00:29:28.320 | Your stock is going to be sold

00:29:30.320 | and that's going to be invested in a diversified portfolio.

00:29:34.360 | So, you know, there's a fee for that.

00:29:36.640 | I don't think it's, I mean, let me,

00:29:38.640 | I think fidelity's 35 basis points.

00:29:41.240 | So it's not, and it goes down.

00:29:43.760 | So it's not that high,

00:29:45.560 | but that's what you pay for, for that tax efficiency.

00:29:50.560 | - A thing I didn't know about donor advised funds

00:29:56.640 | until became the treasurer of a nonprofit organization,

00:30:00.240 | Schwab Charitable, they don't have direct deposit.

00:30:04.560 | They just send you a check every time.

00:30:06.700 | What the heck?

00:30:08.960 | (all laughing)

00:30:11.800 | - Yeah. Fidelity Vanguard.

00:30:13.160 | Yeah. It's just, anyway, small little tidbit.

00:30:17.480 | I love donor advised funds.

00:30:18.840 | One thing I do like to point out,

00:30:20.420 | because some people, financial services companies,

00:30:25.000 | promote them as this tax strategy.

00:30:28.260 | They are helpful, but they are an administrative tool.

00:30:33.000 | Like any tax savings you would have had

00:30:36.840 | from donating to a donor advised fund,

00:30:38.320 | it's exactly, literally precisely the same

00:30:40.880 | as if you just donated to some other charity.

00:30:42.820 | They're helpful from an administrative point of view,

00:30:44.540 | because you can do, like we were just talking about,

00:30:47.280 | where you can donate some all at once,

00:30:49.920 | get some tax savings right now,

00:30:51.440 | and then spread that out over some years,

00:30:53.720 | or useful if you want to keep yourself anonymous

00:30:56.120 | so you don't end up on mailing lists.

00:30:58.320 | Also convenient if you have your Vanguard account

00:31:01.460 | and Vanguard charitable account,

00:31:02.560 | so you can just add your appreciated stock

00:31:06.160 | to the charitable fund, whereas not every organization

00:31:09.560 | is set up for you to give them shares of stock.

00:31:12.040 | So lots of administrative benefits,

00:31:14.320 | but it's just the same thing from a tax point of view.

00:31:17.680 | And I'm gonna add one thing to that.

00:31:19.880 | I find that when clients set up a charitable giving fund,

00:31:23.440 | and I don't know, I only use Fidelity,

00:31:26.100 | I haven't used any other ones,

00:31:27.680 | it's so easy to give away money,

00:31:29.800 | so they become more charitable,

00:31:31.880 | which is, for a lot of our clients, it's a good thing.

00:31:34.320 | And I actually have a Fidelity donor advised fund,

00:31:37.480 | and I get on there, and it keeps this big list

00:31:39.800 | of all the shares, it's like, oh, I gotta give money to them,

00:31:41.800 | and you just go cha-ching, cha-ching, cha-ching.

00:31:43.880 | And so I don't know whether that's good or bad.

00:31:46.080 | If you have a client with spending issues, it's bad,

00:31:48.000 | but if you have a client that needs to be more charitable,

00:31:51.000 | it's a good thing.

00:31:51.900 | - I'm gonna turn to a different topic.

00:31:55.920 | So we're hearing every day, cyber frauds,

00:32:00.480 | data breaches, all sorts of scams out there.

00:32:04.600 | Are there steps that people should take

00:32:06.640 | to protect themselves?

00:32:08.120 | Asking for a friend, should I finally do

00:32:10.560 | those credit freezes that people talk about?

00:32:13.160 | - Yes. - Yes, awesome.

00:32:15.040 | Any other steps I should be doing besides that?

00:32:20.520 | - Yeah, freeze your credit, freeze your spouse's credit,

00:32:24.520 | freeze your kid's credit.

00:32:27.960 | Gosh, be very suspicious of any text messages you get.

00:32:32.880 | Don't click on any links on any text messages.

00:32:35.880 | If a financial institution calls you or texts you

00:32:39.040 | and says there's an issue, do not respond via that medium.

00:32:41.780 | Say, thank you for the information, hang up,

00:32:44.840 | and then go to the website and contact them via the website,

00:32:47.780 | via the phone number that's on the website.

00:32:50.160 | Moreover, do not Google an organization's phone number,

00:32:54.160 | 'cause that is a common scam now.

00:32:55.960 | The scammers are getting really good at SEO.

00:32:58.160 | So if you're looking for a financial institution's

00:33:00.200 | phone number, and you failed a Vanguard or whatever,

00:33:04.320 | and you Google it as opposed to going to the site directly,

00:33:07.480 | the search tools may pull from a scammer's website,

00:33:11.320 | and then you'll be connected directly to a scammer.

00:33:13.640 | So always connect with the organization directly

00:33:16.080 | on your own, even if that organization

00:33:18.320 | supposedly reaches out to you.

00:33:20.060 | - I would find having fewer accounts

00:33:23.840 | or fewer institutions help.

00:33:25.880 | So if I get a scam message saying my Chase account

00:33:28.600 | has some problems, I don't have a Chase account.

00:33:31.560 | So if I only have one account,

00:33:33.640 | then those messages will tend to have less effect.

00:33:37.760 | In this realm, I find usually brokers

00:33:40.680 | have better security than banks,

00:33:43.140 | because they deal with large sum of money.

00:33:45.220 | So that's why I use a broker account for my cash flow.

00:33:49.600 | - One piece of feedback we had on this conference

00:33:52.320 | is that this would be a good future session.

00:33:54.800 | So I have taken that away, how to protect yourself,

00:33:58.640 | you know, all dimensions of your financial life

00:34:01.760 | from fraudsters.

00:34:02.600 | I think that would be a great next session.

00:34:04.440 | Couple things I would add.

00:34:06.220 | Password manager is a really good practice.

00:34:09.040 | If you haven't set one up, it's a little bit of a pain

00:34:11.080 | to set it up, but once it's up and running,

00:34:13.220 | it's not too difficult.

00:34:14.560 | And then I just wanted to mention,

00:34:16.480 | we did for our podcast a conversation with Kathy Stokes,

00:34:20.320 | who is director of fraud prevention for AARP.

00:34:23.880 | And I asked, so where is sort of the epicenter

00:34:27.160 | of financial fraud right now?

00:34:28.600 | And her answer was very clear, crypto, crypto, crypto.

00:34:32.640 | And she said that there is so much scamming going on

00:34:35.440 | in the crypto space.

00:34:36.380 | So for those of you who are crypto curious,

00:34:38.820 | after Matt Hogan and Rick Ferry talked yesterday,

00:34:43.240 | just really be on your guard in that space.

00:34:46.920 | Not everyone is out to scam people in the crypto space,

00:34:49.740 | but I think scams are alive and well there,

00:34:53.240 | and it's certainly less regulated,

00:34:55.020 | so you just need to be super careful.

00:34:57.280 | - One thing I wanna add,

00:34:59.720 | not that I'm pushing financial advisors,

00:35:01.880 | but we get, as an independent RIA,

00:35:06.640 | we sometimes get people calling us,

00:35:09.960 | trying to impersonate a client to try to get money.

00:35:13.160 | And we know every client, and it's interesting,

00:35:18.800 | the stories we get told, but we catch it right away.

00:35:22.420 | We have people try to email us

00:35:24.260 | when they've hacked into a client's email,

00:35:26.700 | email us pretending they're a client,

00:35:29.600 | but we know our clients so well,

00:35:31.100 | and we have processes in place to call the client.

00:35:33.820 | And then as soon as we recognize

00:35:35.740 | that a client's been compromised, we freeze everything.

00:35:39.180 | We notify the custodian.

00:35:41.680 | So that is, especially as you get older,

00:35:44.300 | the scams are getting hard, just amazing what they do.

00:35:48.500 | So that is one benefit as you get older

00:35:51.720 | and maybe facing some cognitive decline

00:35:53.700 | of working with an advisor.

00:35:55.140 | Again, not that I'm pushing, but it's another layer of help.

00:35:58.360 | - So we've talked some, Carolyn talked yesterday

00:36:03.500 | about getting a less involved spouse

00:36:05.780 | more involved in the finances.

00:36:09.100 | Mike did a great session on that last year.

00:36:12.980 | Harry, when we spoke before this session,

00:36:16.180 | he said something that really resonated for me

00:36:18.500 | 'cause it would be like the kind of thing

00:36:19.980 | that I would be guilty of.

00:36:21.860 | Just writing down a complex system really doesn't help.

00:36:26.220 | So tell us some more things that would be helpful

00:36:31.220 | in getting a less financially involved spouse

00:36:36.420 | ready to be more involved if necessary.

00:36:40.200 | - Sure, I read Mike's excellent book

00:36:42.900 | "After the Death of Your Spouse" or something like that.

00:36:46.100 | My biggest impression from reading the book

00:36:48.220 | is it's a little late by that time.

00:36:50.660 | So you wanna get your spouse involved or partner,

00:36:55.660 | get them on the same page, keeping them informed.

00:37:00.800 | Part of the battle is just know what you have.

00:37:03.460 | So Mike talks a lot in the book

00:37:05.780 | about how to find out where you have your accounts.

00:37:09.180 | It's a little late there.

00:37:11.240 | You don't wanna leave a detective worker

00:37:13.060 | for your spouse after you die.

00:37:14.820 | So it's better to keep your spouse informed.

00:37:18.380 | And the best way to do that is while you're still here.

00:37:21.540 | And from my writing, a lot of people talk about

00:37:25.900 | having a death binder or a letter of instructions.

00:37:29.480 | To me, that's less helpful

00:37:32.980 | because whenever I write something,

00:37:34.860 | I always forget some basic

00:37:37.260 | because the knowledge level is different.

00:37:40.620 | So what you deem, of course, assumptions,

00:37:43.740 | you have a lot of assumptions when you write down things,

00:37:46.700 | a lot of things that you didn't realize

00:37:49.380 | that's needed for your spouse to understand.

00:37:52.060 | So if you make your system simple,

00:37:55.140 | then you can involve your spouse right now.

00:37:58.460 | Then you don't have to write that instruction.

00:38:00.860 | Or better yet, have your spouse write down your system.

00:38:04.780 | And then he or she is writing in his or her own notes

00:38:10.020 | and language, and then he or she knows

00:38:12.660 | what should be written down.

00:38:16.260 | - Well, that's why we also have clients do yearly,

00:38:19.180 | what we call yearly audits with the spouse

00:38:21.700 | of them sitting down and going through things.

00:38:24.500 | And we always say, make your spouse pay the bills,

00:38:27.860 | make your spouse look at the investments,

00:38:30.980 | make sure they can log into everything.

00:38:33.100 | And just taking, it takes an hour or two each year

00:38:35.980 | to make sure that they're doing it.

00:38:37.740 | And like I talked about yesterday,

00:38:40.300 | make sure they know how to get into your phone,

00:38:42.140 | that you don't just have a thumbprint on there

00:38:44.460 | that use the same similar passwords

00:38:48.100 | so you guys know how to get into each other's phones.

00:38:51.060 | So there's lots you can do,

00:38:52.860 | it just, you have to be intentional about doing it,

00:38:55.340 | and it saves a ton of anguish

00:38:57.460 | when something actually happens.

00:38:59.860 | - So I want to segue into a related question

00:39:02.900 | from the audience.

00:39:04.100 | If one spouse is the bogal head

00:39:06.460 | and the other is less financially savvy,

00:39:09.340 | what should I look for in a financial planner

00:39:12.260 | to help guide my spouse after I'm gone?

00:39:15.060 | - I think it's, to a very significant extent,

00:39:20.300 | the same things that you would just look for

00:39:22.220 | in a financial planner normally.

00:39:24.060 | Is this a human being whom I trust?

00:39:27.020 | Do they have the levels and areas of expertise

00:39:30.540 | that are applicable to us?

00:39:31.740 | Because again, financial planning is a broad field,

00:39:34.740 | and so the financial planning that somebody needs

00:39:37.340 | in their 60s is different from in their 40s,

00:39:39.300 | and it's different, again, from in their 80s.

00:39:41.540 | So do I trust this person?

00:39:44.380 | Do they have the areas of expertise that I need?

00:39:46.820 | And is the way that I would be compensating them

00:39:49.780 | something that makes sense to me and that I can afford?

00:39:52.620 | - Do they have your same investment philosophy?

00:39:56.380 | That's key.

00:39:57.660 | - And Rick Ferry once made the point

00:39:59.380 | that I've often thought about,

00:40:00.620 | which is take that next step and introduce them

00:40:04.580 | preemptively if you've identified the person.

00:40:07.620 | Just make sure that they click,

00:40:09.180 | that your spouse is comfortable sharing information

00:40:12.840 | with that person.

00:40:14.780 | Does he or she address the spouse who's not engaged?

00:40:18.860 | All that interpersonal stuff I think is very important

00:40:22.540 | to do a check on just to make sure

00:40:24.780 | that the spouse has that comfort level.

00:40:27.460 | - I wanna echo that point by both Rick and Christine

00:40:29.620 | and add it to not just your financial advisor,

00:40:32.220 | your financial planner, but your tax professional,

00:40:34.700 | your estate planning attorney as well.

00:40:36.180 | Any other trusted parties who your spouse

00:40:38.900 | is gonna turn to in that worst case?

00:40:41.860 | - I don't have a financial advisor.

00:40:44.200 | So I go back to simplicity.

00:40:46.300 | If I make my system simple enough,

00:40:48.980 | maybe my wife doesn't need a financial advisor.

00:40:52.620 | So last year I had my wife do our taxes.

00:40:57.620 | She opened up TurboTax.

00:40:59.980 | I was sitting by her side.

00:41:02.060 | She went through all the steps.

00:41:03.500 | She wrote down the notes and then she actually

00:41:07.620 | clicked the button to file the taxes.

00:41:09.540 | So treat it like training a new hire.

00:41:14.380 | Then make sure that she understands.

00:41:16.420 | (audience laughing)

00:41:18.020 | - So okay, so I had a client, I have a client.

00:41:21.380 | Her husband was a CPA and he had colon cancer.

00:41:24.940 | They were not clients at the time.

00:41:27.020 | And he said you cannot hire a financial advisor

00:41:29.900 | 'cause you can't trust him.

00:41:31.260 | I have done this financial plan for you.

00:41:33.620 | He had like this life, they were in their 50s,

00:41:36.380 | they had this life plan and she was a smart woman

00:41:40.580 | but she just wasn't into investments.

00:41:43.040 | And then the year after he died,

00:41:45.820 | that's when the stock market fell apart

00:41:47.780 | and she was so upset and stressed

00:41:51.700 | because she didn't know how to deal with it.

00:41:53.740 | So a friend of hers talked her into coming to us.

00:41:56.500 | So you can't control your spouse from the grave

00:41:59.860 | and it's great to me that you're doing that

00:42:03.100 | but still if they don't have the interest or inclination

00:42:06.340 | and they're gonna get old at some point and need help,

00:42:10.140 | it's really good to make sure you have some sort of backup

00:42:13.500 | whether it's a savvy family member or an advisor

00:42:16.500 | but you can't control from the grave.

00:42:18.700 | So don't try to teach them everything

00:42:20.300 | and think they're gonna do it

00:42:21.420 | 'cause the plan's not gonna work out like you expect.

00:42:24.420 | - Okay, another question.

00:42:26.600 | My parents are 80, they have a funded trust,

00:42:30.340 | a binder with all their financial home information,

00:42:33.520 | their wills.

00:42:34.920 | As they age and begin to decline mentally,

00:42:37.640 | what should I do to protect their financial legacy?

00:42:41.200 | Should they add me as a fiduciary?

00:42:43.480 | Should I get alerts on their accounts?

00:42:45.640 | What should I do?

00:42:46.600 | - Well, you know, this is my love of mine to work.

00:42:50.760 | So this needs to be a gradual process.

00:42:52.800 | You know, especially for do-it-yourselfers,

00:42:54.920 | taking care of your money is a sense of purpose to you.

00:42:58.120 | And so you don't wanna rip that

00:42:59.800 | from your parents away immediately.

00:43:02.540 | You want to make it,

00:43:04.200 | so we first start off with financial transparency,

00:43:07.800 | not just with one person but with the entire family

00:43:10.600 | so that there's nobody worrying

00:43:12.320 | that somebody's trying to take advantage of other people.

00:43:14.920 | And then as they have issues,

00:43:18.240 | then you start having that look behind.

00:43:22.240 | And so whether they're logging into your accounts,

00:43:24.720 | you know, we use an e-money portal

00:43:26.520 | where everything gets scraped

00:43:28.160 | and is in one financial portal

00:43:30.220 | that the surrogate can look through

00:43:32.160 | to make sure everything looks good.

00:43:34.280 | And then you might still let them write,

00:43:37.440 | if they become more declining,

00:43:39.520 | let them write the bills but don't let them send them in.

00:43:42.720 | You check the bills before they get turned in.

00:43:45.520 | The same with the tax return.

00:43:47.800 | You know, to me, at that point,

00:43:49.920 | maybe you should be getting an outside accountant.

00:43:52.440 | And you've gotta make sure

00:43:54.320 | that you have that power of attorney document.

00:43:56.700 | It depends on the estate issues.

00:43:59.480 | It's easier to become a joint account holder

00:44:02.020 | for that checking account where the bills are paid,

00:44:04.560 | even though that child who's the surrogate

00:44:07.080 | is gonna get that money.

00:44:08.760 | If you don't have joint accounts,

00:44:11.120 | then somebody dies and that account gets frozen.

00:44:14.320 | And so, you know, there's pros and cons of joint account

00:44:17.960 | versus using a power of attorney,

00:44:20.420 | but you've got to figure out what's right for you,

00:44:23.120 | but make it a gradual process.

00:44:25.240 | And what ends up happening with a lot of older people

00:44:27.920 | is once they feel comfortable with whoever's taking over,

00:44:30.960 | they're like, "God, I'm happy not doing this."

00:44:33.560 | And then they just let the child take over.

00:44:36.440 | And, but again, you wanna keep transparency the whole way.

00:44:40.680 | As we talked about yesterday,

00:44:42.080 | 90% of financial fraud is actually perpetrated

00:44:45.020 | by people who are close to you.

00:44:47.000 | So that's why it's important to have transparency

00:44:49.120 | and multiple people involved.

00:44:50.620 | - Carolyn, I have a question for you about that.

00:44:53.400 | When my parents were declining,

00:44:55.080 | I had full trading authority on all of their accounts.

00:44:59.920 | Is that recommended or is that,

00:45:01.840 | and again, it depends on the relationship,

00:45:04.000 | but is that risky?

00:45:05.320 | - Risky in what way?

00:45:08.400 | - Risky in that you have to have complete and utter trust

00:45:12.000 | in that person you've given that authority to.

00:45:14.040 | - Well, and so ideally,

00:45:16.240 | you've got to trust somebody as you age.

00:45:19.040 | So first off, it's important for everybody

00:45:21.520 | to be clear on their investment policy.

00:45:24.120 | I see so many families

00:45:25.400 | not having an investment policy statement.

00:45:27.760 | How is my money gonna be invested?

00:45:29.760 | And so if you have a younger child

00:45:32.080 | who has a different investment philosophy than you,

00:45:35.060 | that is dangerous.

00:45:36.880 | If you have multiple children

00:45:41.040 | that one person's doing it and the other ones don't know,

00:45:44.760 | that can cause some issues.

00:45:46.600 | So you've got to trust in somebody.

00:45:49.840 | And if you don't trust them from the beginning,

00:45:52.680 | and that's also why it's good to let this happen

00:45:55.720 | while your brain is still there

00:45:57.640 | so you can watch that surrogate in action

00:46:00.900 | and feel comfortable with what they're doing

00:46:02.840 | so that when you are losing it,

00:46:04.560 | you know they're gonna do the right thing.

00:46:07.240 | - I think we're gonna circle back to a couple of things,

00:46:09.600 | a little bit more in the investment space.

00:46:12.280 | From your point of view, this is very different,

00:46:16.280 | from your point of view,

00:46:17.620 | what's the true difference between Fidelity and Vanguard?

00:46:21.480 | Yes, Fidelity is privately owned,

00:46:24.000 | but is that a reason to move

00:46:25.620 | my entire Fidelity portfolio to Vanguard?

00:46:28.680 | - No, no, not at all.

00:46:33.080 | To me, as an individual DIY investor,

00:46:38.200 | the differences are very minimal.

00:46:40.980 | They all have the ability to build

00:46:43.960 | a low-cost, diversified, simple portfolio.

00:46:46.480 | Like Rick said yesterday, at some of the firms,

00:46:51.720 | you'll maybe get more incoming sales contact.

00:46:55.080 | As Bogleheads, hopefully you know,

00:46:57.480 | that, you know, opt out, basically.

00:47:00.540 | But no, they're all very, very fine

00:47:04.400 | in terms of almost all of the stuff that matters, really.

00:47:08.440 | - Well, and the one thing, you just have to think of,

00:47:10.680 | they're both supermarkets.

00:47:12.480 | You can pretty much buy anything you want there,

00:47:15.640 | so you can buy all the low-cost ETFs and stuff,

00:47:19.080 | and so it doesn't really matter.

00:47:21.000 | They're the supermarkets.

00:47:22.040 | So to me, you have to look at

00:47:24.040 | what's giving the better client service,

00:47:26.160 | and they all, I've been around so long,

00:47:28.460 | they all rotate when they stink, you know?

00:47:31.400 | And so, and when you are, you know,

00:47:35.800 | working with them and they stink, you complain,

00:47:38.520 | and a lot of times they fix it.

00:47:40.360 | You know, so for us, we use Fidelity,

00:47:42.200 | 'cause they've done a good job.

00:47:44.280 | Vanguard has gone through periods

00:47:46.000 | where they do a good job, doesn't,

00:47:47.240 | but Fidelity's done that, too.

00:47:49.080 | So you just gotta look at the platform,

00:47:51.820 | what's comfortable to you,

00:47:52.920 | who's giving you the better service.

00:47:57.040 | - If you're using a 60% stock, 40% bond portfolio,

00:48:02.040 | it's gotten you to your number

00:48:04.280 | for a comfortable, confident retirement,

00:48:07.580 | does it make sense to be more aggressive with stocks?

00:48:10.440 | Say, go up to 70% to try and earn more wealth?

00:48:14.140 | - Well, I'll be real quick.

00:48:17.640 | It's like, what is, I said this earlier,

00:48:19.880 | what is the goal for your money?

00:48:22.000 | If you have a goal of trying to grow it,

00:48:25.180 | to leave it to your kids,

00:48:27.160 | and you wanna take that risk

00:48:28.920 | that you're gonna either leave them more

00:48:30.680 | or you're gonna leave them less,

00:48:32.120 | then you can become more risky.

00:48:34.160 | But you gotta make sure you understand

00:48:35.840 | what are your goals for your money,

00:48:37.080 | do you have enough for yourself first,

00:48:38.840 | how much risk do you wanna take psychologically

00:48:41.920 | and financially for those goals?

00:48:43.680 | That should drive that decision.

00:48:45.520 | - Okay, I like when we agree.

00:48:49.480 | (audience laughing)

00:48:51.720 | - I think one mistake that I see folks make a lot

00:48:54.240 | when it comes to that stock-bond-mix decision

00:48:57.420 | is looking at only the amount of risks

00:48:59.220 | they're taking in that decision.

00:49:00.060 | For example, hey, retirement's well-funded,

00:49:01.660 | so I wanna invest more aggressively in stocks.

00:49:03.860 | Okay, yes, maybe it makes sense to take risks there,

00:49:06.780 | but think holistically about all the risks in your life

00:49:10.260 | and if you wanna be taking risks in all those other places.

00:49:12.780 | So often what I see, for example,

00:49:15.220 | is okay, yes, I'm fully funded for retirement,

00:49:17.220 | I'm gonna invest in more stock funds

00:49:19.780 | compared to bond funds for that reason,

00:49:21.540 | and again, that might be reasonable,

00:49:22.900 | but also consider do you have a aggressive overweight

00:49:27.360 | relative to international, because that's more risk.

00:49:29.520 | Are you holding a bunch of concentrated employer stock

00:49:32.080 | 'cause you don't wanna sell it 'cause of taxes?

00:49:33.800 | Okay, that's more risk there.

00:49:35.280 | Do you have additional money

00:49:37.400 | in a non-qualified deferred comp plan of that same company?

00:49:40.560 | That's more risk yet.

00:49:41.920 | Have you decided to self-fund for long-term care insurance?

00:49:45.000 | That's more risk there.

00:49:46.320 | So if deciding to be aggressive

00:49:48.800 | in the portfolio aspect of your life,

00:49:52.060 | look at everything holistically and decide

00:49:54.400 | should I also be aggressive in all these other places too?

00:49:57.720 | - Just to follow up on that real quick.

00:49:59.960 | So at the time when people feel like,

00:50:02.040 | eh, yay, I'm fully funded,

00:50:03.800 | they're also, you're also getting older, right,

00:50:06.080 | as the years go by, and so that may,

00:50:08.380 | as you get closer to needing the money,

00:50:10.200 | and of course it gets to Carolyn's point

00:50:11.840 | about what is the goal, but if your goal is to retire,

00:50:14.400 | you, you know, your portfolio may be larger,

00:50:18.240 | you can spare more, but you also do need to de-risk.

00:50:20.880 | I would say this is the main thing I encounter

00:50:23.740 | when I talk to older adults about their portfolios.

00:50:26.900 | It is a tough sell getting people to de-risk appropriately,

00:50:30.460 | and you guys would know about this as well,

00:50:33.260 | but it, stocks have been great,

00:50:36.180 | and it is very difficult to encourage people

00:50:39.480 | to step away from them.

00:50:40.500 | Bonds haven't made an especially great case

00:50:43.100 | for themselves over the past decade,

00:50:45.820 | but I do think, you know, as you get close to drawdown,

00:50:48.600 | you need more bonds, you need more cash,

00:50:51.000 | you still need stocks, but you, you really do need

00:50:54.340 | that balance at that life stage more than ever.

00:50:56.860 | - Is there an advantage to converting

00:51:00.860 | Vanguard Mutual Fund shares to their ETF equivalents?

00:51:05.700 | - There can be an advantage if you're holding them

00:51:11.060 | in Fidelity accounts, converting them to ETFs

00:51:14.500 | allow you to buy Vanguard ETFs at no fee.

00:51:17.900 | Fidelity does charge a fee if you buy Vanguard Mutual Funds.

00:51:20.840 | They don't charge fees on selling,

00:51:22.280 | they only charge fees on buying.

00:51:23.960 | - Okay, I think we are gonna wrap up here.

00:51:29.560 | Thank you all for so many great questions.

00:51:32.500 | Thank you to our panel.

00:51:33.720 | (audience applauding)

00:51:36.880 | (audience cheering)

00:51:39.880 | you