Capitalist Investor

What to Expect from a Quality Financial Advisor, Ep. 281

• Strategic Wealth Partners

Share episode

In this insightful episode of the Capitalist Investor, Derek, Luke, and Tony dive into essential aspects of financial advising and investment strategies. Here are the five hot topics they explored:
1. The Importance of Aligning with an Advisor’s Values and Beliefs
Luke opens the discussion by stressing the importance of finding a financial advisor whose values and beliefs resonate with yours. He shares personal experiences about the importance of a solid client-advisor relationship built on shared values, trust, and open communication. The hosts agree that this alignment is crucial for a successful financial strategy that meets your unique needs and goals.
2. Planning Beyond Investments
Derek emphasizes that retirement planning is not solely about investments. He highlights the comprehensive approach they take, which includes stress testing for various financial scenarios and adjusting plans as needed. The team agrees that focusing only on making the most money from investments is a narrow and often risky approach. Instead, they advocate for a holistic financial plan that considers long-term goals and risk management.
 3. Quantitative vs. Qualitative Analysis
Tony brings in his engineering mindset to discuss the importance of both qualitative and quantitative analyses in financial planning. He elaborates on the detailed work that goes into creating a robust financial plan, which often involves multiple meetings and iterative processes to get precise information. The significance of having a well-rounded plan, with both qualitative insights and quantitative data, is a recurrent theme throughout the episode.
4. Managing Risks Instead of Chasing Returns
Continuing the conversation, Luke and Tony discuss the importance of managing risks rather than focusing solely on high returns. They explain how taking calculated risks and being prepared for market downturns can often lead to better long-term results. Luke uses gambling analogies to convey the idea of sometimes needing to play defense rather than going all-in during uncertain markets.
5. The Role of Education and Communication in Financial Planning
Tony wraps up the discussion by highlighting the critical role of educating clients. He explains that an informed client is an empowered client, capable of making better financial decisions. This involves not just handing over complex financial data but breaking it down into understandable terms. Good communication is essential for ensuring that clients are aware of what’s happening with their investments and feel confident in their financial plans
Conclusion
Episode 9-4 of the Capitalist Investor offers invaluable insights into what you should look for in a financial advisor and how to approach your financial planning. From aligning values with your advisor to understanding the importance of risk management and comprehensive planning, Derek, Luke, and Tony provide a roadmap for making informed and strategic financial decisions.
If you have any questions or topic suggestions for future episodes, the hosts invite you to reach out at swpconnect.com. Don’t miss out on this episode, filled with practical advice to help you navigate the complexities of financial planning.

Hello and welcome to this episode of the Capitalist Investor. As always, you have me, Diamond Hands D, and we got the whole crew together today. Tony the tiger, cool hand Luke. What's going on, guys? Yeah, see you both. Best friends. There's certain songs about that. Exactly. Should we start having like, a theme song coming in, like the booze and buddies? We can put, you know, alan up there from the hangover. That's fine. That's funny. All right, so planning corner this week is a pretty good one, I think. And we talk about this from time to time, but it obviously is kind of fluid changes over time. So if you have an advisor, that's great. If you don't, maybe you're looking for one. Obviously you should kind of figure out what their job description would look like. So today I think we will talk a little bit about what an advisor could be doing for you, should be doing for you, and how do they make a positive impact on your overall situation. Because there's obviously many different ways advisors do business, and I think that's pretty important for, if you're out there looking for one, selecting one, what should you be looking for? What do you think, guys? Where do you want to start with this one? I'm just going to open this up. I truly do believe it's important to find an advisor that resonates with your values and your beliefs. I truly think that's important. If you're not aligned values and beliefs, it's just not going to be a great relationship from the start in a lot of ways. A lot of our clients, a lot of my conversations, people are worried about the up and coming election. They're worried about the world, the craziness, the loss of nuclear family values, loss of some religious value, all that stuff. A lot of these conversations stem from that. And it's like, okay, well, we can't always use history as a gauge for the future. I always say this out there, like, every advisor out there, you go to any kind of dinner with advisors, you go to any institutional conference, they're always like, all you need to do is invest in the stock market for 50 years and earn 7% compound every single year, and you're gonna retire with a couple million dollars. Okay, I get that. Like, history is a great gauge for the future. There's a time and place for that conversation, especially if you're young to save money in your 401 ks. I get that. But also you. I think in this environment, you truly want an environment or an advisor that will sometimes take into account what the future projections are. And factor those into your investments or financial plan. I think that's truly important. You know what? I'm glad that you started off, because my engineering mind would have been like, well, you got to do a, b, and c. And I love that you kind of bought it. It actually is. If you meet somebody for the first. 510 2030 minutes, you'll know if you align. Yep. And you know what? That you're right. You brought it back to the very beginning. Luke, good job. That's seriously, like, it. That is a big deal. I always tell people, like, this is a relationship business. I don't want to have a client, and I dread every time I talk to them. Right. Don't want to. I don't want to go down that path, because then everything else is just. It's just not worth it. Right. So thank you. You know, it's a very, very, very good. Well, this. This. Relationships built on trust. Yes. And beliefs. Values. Communication. Trust, values. Same. I don't know. For me, I don't want to say, like, I can see through people, but I think I'm a pretty good judge of character. Like, I can tell right away within the first five minutes, like you said, whether I like them or whether they're just like, you know, the Wall street asshole kind of person. Like, put the chest out, you know, that somebody I don't want to be friends with because I know they're just in it to make some money. Right. I think that shines through. I don't want to, like, talk myself up a little bit, but I think that shines through. Like, I'm just a real. Trying to be a real person. Like, I'm just trying to make a name for myself. I'm trying to build it up myself. Like, I'm. You know, a lot of people don't come from wealth. A lot of people that have wealth, like, 90% of millionaires have a million dollars in the bank or self made. Yeah. Like, they. They worked their ass off to accumulate some sort of money. And I think that, you know, you can kind of see that in somebody where it's like, you'd rather have somebody that's working their way up, working day in, day out to do the best for them, rather than somebody that's already worth a couple million dollars that's 70 years old, and the golf course is five days a week. Like, you can kind of see through that, I think. Yeah, I mean, I'll hit it with the engineering mind. I will bring it back to a more quantitative rather than qualitative so the quantitative thing is that, you know, having a comprehensive plan, making sure that that planning software that they're using, in my mind is not something that I can make a plan in ten minutes, and then you got your life's worth of savings and decisions made up. In my ten minutes of work, it takes our team hours of an hour interview. I interview the first meeting, then my planner interviews them to polish up what I heard. And then we present the plan and probably polish that up because it's always trying, trying to get the most accurate information. Building stress tests, you know, what ifs. Like, hey, what if this happened? What if that happened? What if, what if, what if they do change the tax rules and they do start taxing unrealized cap gains? Like, holy cow. Like, you know, like, how jammed up our plans gonna be then, and. But here's the other thing. It's one thing to talk. I like this one the most, is that after a plan is presented to a new client and even existing clients, because we refresh those, too. There's a to do list, right? There's recommendations. They're the same thing. Some are on this side of the table. Some are on your side of the table. But keeping each other accountable and executing the recommendations and not just having fluff and say, oh, we should do this, that, and the other, and not do it is a big, big thing. We have to check these things off. Obviously, there are things that are hotter than others and cooler than others. So, like, there's a priority list, but keeping each other accountable, because there's some things I just can't do for you. I can't walk you to the attorney's office and get your estate planning docs done. I can make the introduction, but you got to make the time, you know, to go and get it done. Yep. So, a couple points from that. Everything you just outlined, you know, perfect. What I would say is, for the people out there looking, it seems to be there is a. You know, a lot of people have a bias towards, you know, retirement planning is investments. Right. That's really the only thing they're looking at. You know, I'm investing in this or versus that. I really like reits versus bond, all investment based conversations. Obviously, you want to make the most that you possibly can on the investments, but the longer that we do this, the more that it's easy to see that it is a very long term game. And if you're in the business of trying to outperform the market, you know, over a long period of time, you're going to be wrong and you're probably going to lose. It's not about, though, making the most amount of money on investment. That's like the wrong philosophy, actually. Yeah, exactly. It's really about managing the best risk possible along the way. That's the biggest key, because the conversations I'm having now with a lot of clients is look like now's. I hate to use, like, gambling references, but you don't want to push in chips now like this. Now might not be the time to push in a lot of chips. Right. Maybe some taking some chips back, playing some defense. Like, that's okay in some environments. There are environments and there are times we can sometimes have conversations, like maybe it is about trying to make the most out of investments, but if you do that and you don't take risks into account, you can get caught off size. Yep. And that's where the plan comes into play. You need to know what kind of risk you can take and plan out your investments accordingly. Just, you know, having random conversations about investments. And I like this investment versus that investment. You're never going to get anywhere, honestly. You might be right. Everyone, you know, you might be right a lot, but outperforming the market in a couple years out of your whole plan is not really going to materially affect your plan at all. A lot of percentages. If you're down 25%, it takes 33% to get back to even. Yeah. So if you catch a bad year and you're only down half of what the market is, when it's down 20%, you're down ten, it takes you a lot less to get back to even or back ahead. Right. So, like, taking that into account, like, sometimes the big roller coaster, the small roller coaster, sometimes outperforms a big roller coaster. Even in the years, you don't outperform the market on the up years. Yep. Like right now, I mean, again, when you got. It's unfiduciary, in my opinion. I mean, you can be in the index and things like that, but if you have a managed account, like the market's up 17 ish percent right now at this point in the year. Right. A professionally managed account might be up twelve or 13 because they're just not loaded up in Nvidia. It's just that simple. Right. As being a fiduciary. Like having 20% of your money in Nvidia is not a fiduciary thing to do. If you want to gamble on that, tell me and I'll lock it in for you. Got to tell me when to get out. But when we're trying to manage risk, that's a risk measure, right. And then, so when the market's down 20 and we're down ten, it's. That's a. It's a smaller hole to crawl out of. Right. And because if you're down 20, you need to be up 25 to get. Back to what's interesting. The clients I've had the past two years after 2022, like, they've only seen the market really go up. Like, maybe we saw an 8% correction this year so far. But, you know, in 2022, I'm like, well, if you were here in 2022 and you were only down 8%, like, in our growth and income strategy, when the market was down 20, like, you would have seen exactly why that strategy work. So it's like, it's interesting. The timeframes, the clients that saw through that period, when they saw us protect a lot of wealth that were in that strategy, they understand it. People that have just come on the maybe past year or two years, they haven't seen a downturn yet. You know, it's kind of harder to have that conversation. Full market cycles. You know, if you're gonna. If you're gonna make the decision to work with a financial advisor, financial professional, you gotta give them some time, because there's. The investments are piece of the puzzle. They are not the puzzle. They're a large piece. You know, we need to make money, but we also need to make sure we don't lose money. Mm hmm. And that's. That's the biggest part of this, is that managing the risk? Yeah, absolutely. Any. Any parting comments? Oh, no. Like, we always go back to the. What I said originally, the first thing, values, trust, all that stuff. And, you know, I'm sure friends and family that you guys, everyone listening, I'm sure you guys have friends and family that share similar values, and if they're looking to work with somebody that shared your values and you maybe work with us, keep that in mind as well. Yeah, absolutely. Another qualitative thing, education. I feel an educated client is a great client, and if you're not, if you don't understand what your advisor is doing, you have to ask them and then say, put it into my language. Like, maybe I have in finance, a PhD level at understanding, or maybe I have a high school education, understanding of what the heck's going on. You got to communicate. Communicate in education are very important so that you're, you know, so you're not standing around as a client saying, what the heck is happening? Everything's moving and I have no idea what's going on. That's not good. Yep, yep. And the behavioral finance stuff, you know what Tony just said, you gotta listen to them. They are trying to help you out. You have to manage that risk and you can't be chasing past performance. So stick to your plan. But thanks for listening this week. If you guys have any questions, comments, show ideas, topics for the planning corner, let us know at info connect.com and we'll talk to you next time. Opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.