Capitalist Investor

The Cookie Cutter Financial Advice You Hear on TV Could Wreck Your Retirement, Ep. 334

• Strategic Wealth Partners

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On this episode of The Capitalist Investor, Tony Zabiegala is joined by Dave Abate to tackle the dangerous “one-size-fits-all” advice that floods financial media—from TV personalities to radio shows and podcasts. 

They break down three of the most common myths they hear from clients: 

  • Annuities that promise 8–9% returns
  • Fear-based Medicaid planning strategies that can destroy your retirement plan
  • Hot tips about crypto, gold, and stocks that sound exciting—but rarely make sense in a real portfolio


Tony and Dave share the behind-the-scenes truth about how these recommendations are sold to the public and why you need a personalized strategy built around your specific goals—not media hype.
 
They also share their “apple pie” analogy that simplifies how real planning works.
 
🎯 Have a financial idea you’ve been pitched recently? Bring it to your advisor before you implement it.
 
📬 Questions or topic ideas? Email info@swpconnect.com

on this episode of The Capitalist Investor, we are going to talk about the cookie cutter advice that you might hear on TV, on the radio, on a podcast that actually, it's probably not meant for you. We're going to dive in to a couple things that we see and hear on a day to day basis, and we have to constantly debunk. All right. We're going to start our Capitalist Investor podcast. I am I am missing Derek and I call to the bullpen. I have they they have a bat with me. Long time friend, colleague. And, I always say arguably one of the smartest guys in the office. So I'm glad you're here, man. How you doing? Thanks for the warm welcome, Tony. Glad to be back. Absolutely, man. All right, so today we are going to talk about the way I kind of say this is that, you know, Dave and I, and Derek are our quarterbacks of of relationship, right. Because we don't we don't pick the stocks. We don't do the taxes. We don't build the plan. Well, we probably build part of the plan and do a lot of reviewing of the plan. But there's there are people in their specific roles that are experts, and it's us to understand everybody's role so that when a client needs something, we know exactly, we can probably diffuse it right away. But if it's something a little bit more precise, we can go to, you know, Steve, to do the tax projections or the investment team. Hey, why did why are we in these stocks and not those. Right. Like we can ask specific questions to the experts, but we generally have a really good understanding why we're in something, not doing something, whatever we may be doing. But where some of the things that we do get and there's nothing wrong with this. But sometimes we have a client saying, hey, Tony, I heard this on TV, or I heard Jim Cramer say this, and you know, if you don't know who Jim Cramer is, he's been on CNBC for years and years and years and years. And he's the buy, buy, buy sell sell sell guy. Right. He's he's talking stocks. He's been on TV so long I'm pretty sure he might own everything at this point or has owned something at you know these I mean he has to come up with content. He's a household name, right? Yeah. It's like Holy cow, man. Like what stock haven't you really looked at and buy, sell or hold? I don't know, but those, those I guess the way that they are presented is that people need something to talk about or they're not going to have a show, or they're not going to have a podcast, or they're not going to be able to get notoriety and maybe sometimes people just say stuff, to say stuff, or maybe their agenda is a little bit hidden. So, Dave, help me understand. I think it's a lot of those things, like you're hitting the nail on the head here, like TV media, like it's the entertainment business. Correct. If you go out there and give kind of the, we'll call it chicken noodle soup, like the boring recipe of like what you need to do to be successful. Not many people are going to watch your show. Right. Well, I had the conversation with, you know, somebody I was meeting for the first time, and they're working with, kind of a person locally that is known for stock picks on radio, like like he's been on the radio for a long, long, long time. And all he does is talk about stocks. And, you know, it's kind of like I was thinking, I'm trying to put myself in that guy's shoes. Like, man, how how many weeks can he talk about Nvidia or AI stocks? Like, there happens to be 490 other stocks out there, not the ten that are driving performance in the index. Right. So like again, what sometimes people talk about and say is just it just we just happen to need it, want it or you know, or they need to talk about it to come up with something new. It's a hyperbolic world. If you're not speaking in extremes, you're not getting attention, you're not getting the eyeballs, you're not getting the clicks. Right. And that means you're not getting the revenue. Right? Right. So, so, so the so what we're going to do on this episode is talk about essentially like the three things that Dave and I kind of hear more times than not, you know, we hear all kinds of ideas and things from clients on like, hey, would this idea work in our plan? Or why do we do this and not that? Or why do we do that? You know, whatever that might sound like. So I'm going to start with, I'm going to start with like annuities. So annuities have their place. They're not for everybody. And definitely not for all of your money. Right. Because they have a illiquid component and they also have, you know, they they're built in a way to provide a particular rate of return because annuity companies don't take your money and invest in the stock market. They are doing all kinds of crazy things to generate guaranteed income. So whether they're doing call options, they might even own, like real estate or get into a venture where there are guaranteed money. And then from those guarantees, they can calculate money to give you the annuity holder while they still make money. So, a lot of annuities that I have worked with our investment team. What I would say is that the rate of return on a long period of time for an annuity falls somewhere between a stock and a bond, okay? They're not going to perform like a stock. And we hope that they perform similar, if not better than a bond and with with a lot less volatility of both of those components. But I do hear people, they'll come up and say, hey, Tony, I just heard about this annuity. It's paying like eight, 9%. And I'm like, no, it's not. And I know this for a fact because if you if it was, I would know about it and you'd be in it would be that simple. And and as soon as I have to start, you know, I always ask questions, layering questions of like, okay, eight, 9%. How do they pay that? What is it doing? Like, where did you hear this information? I start connecting some dots, and that is easily something that is positioned on what, an income annuity. Right. Like they, you put your money in, but then the company is going to guarantee you an income rider like we we do that quite a bit for our clients to give us, another layer of guaranteed income in retirement. But the headline number that is always positioned for these is how much does it earn every year. And and I always call that there's your actual money and these type of income annuities. And then there's this I don't want to call it fake money but this this income value that's actually not your money. It just they just they make that money grow so that they can guarantee you an income stream at any time down the road, a deferred option, and they're guaranteed and they'll even illustrate it. But they have to make that money grow. And it might be at 8 or 9%, but that's not your actual money. It's the it's the value that they're going to base their guaranteed income from you. So Tony definitely like complicated investment vehicles that you need to have a full understanding of to know how they fit into someone's life. Right now, I'm I'm willing to bet if you put on the radio in the next hour and you flip through the dials and they have dials anymore, but anyways, you flip through the channels, you will hear a an advertisement for a fixed indexed annuity. There's some usual suspects that will tell you they're risk free in the next market, crashes around the corner, and you need to put all your assets in this vehicle, this magic vehicle that will protect you and grow, like you said, seven, eight, 9%. And everyone smiles in this story is the part that they leave out is it's not quite that simple. There's a place for them. But there are also risks related to these investments, specifically liquidity. Liquidity is the biggest. And specifically purchasing power, the loss of purchasing power, right? So if you have all your money in this magic buying vehicle, there's a chance that that initial payout amount right isn't going to keep up with inflation, right? I mean, the liquidity side is most annuities are, you know, at least mostly ten years, but you could find some that are maybe 5 or 7 years, things like that. So there is a there is a liquidity component or a lockup period. Right. Duration. But you know, you can always get 10% out penalty free or, or if it is an income annuity has an income rider on it, you can always start the income. And then like you said, it's you're capping yourself. Like these things are designed based on what what less risk the insurance company can invest your money while they still make a profit. So again, they're doing some things that are they're not putting your money in the in the stock market. They're definitely not doing that exactly right. And it goes back to the headline of like understanding the growth rate. You personally need to make your financial plan work. That's that's the key. Well, we we plug these into the planning software to see the sizing first if it's appropriate. If it is, is it a growth annuity or is it an income annuity. And then what the sizing should be. How much do we put in here. Because again we understand if there's a liquidity issue we you know and we we you know, putting more than 50% of your money into something like this is a very risky venture because you're going to you're not going to get probably the growth that you could or that you might need in your financial plan. And then the liquidity part. So that's one thing. So the next thing that we we hear about and this one, this one, you know, Dave, and I've actually seen this firsthand and we had to really roll up our sleeves to, debunk. But, the, there's some, attorneys that go around town. And again, it's not everybody, and, and there's places for this idea, but there's attorneys out there that, that, you know, they specialize on Medicaid planning. And my high level interpretation of what they do is that they they'll do a presentation. They will build it off of the fear of losing all your money because you have absorbing an amount of medical bills, and you will go on the Medicaid. They will take everything from you, and you're leaving your surviving spouse or, you know, or a family with, you know, and destitute and essentially, you know, when you talk to somebody and maybe all their money is in an IRA, well, the solution that some of these and most of these, people doing these presentations are saying, hey, you need to liquidate your traditional IRA and put it into this trust. And the trust will go into an annuity that is Medicaid protected. So not only are we on, you know, prepaying the tax in. And then it's like taking out all of your IRA money in one year. You know how much income that is. You know how much taxes you're going to pay unnecessarily to do that is one thing. And then we're using an annuity that is probably not the it might protect your money, but it's probably not going to grow. It is. It is probably not designed to be the it's probably not the best annuity on the market, for performance that those are two things that I have seen and I have known. And when Dave and I see this, we immediately say, hey, you know, Mr. and Mrs. Client, like, if you take all of your money and do this and we take it out of the investment strategies, cut the account in half because you won't you're going to all this money in taxes. Your plan goes from a, highly successful plan to failing. Like we've seen. This plan went from an 80% Monte Carlo to 30%. And you're, you're you're you're racking your, your plan for something that may not even happen. You might not have a long term care event, but but you will need your money when you are 85, 90, or 95 years old. It feels like, the medical equivalent of malpractice. In terms of the advice, some of these, you know, some of these attorneys are peddling. And to your point, yes, it's the analogies. You may be like fixing one future potential problem. We know we know for sure this is going to happen for some folks, but you're creating a host of other problems. So it's it's really it's eye opening on this stuff comes across our desk. Yeah. Fortunately most of the time our clients use us as a sounding board. They bring this play to the huddle. Yeah, we take a look at it like, hey, here's what, here's what this looks like in the grand scheme of things, of what we're trying to accomplish. It's not necessarily the right play call at this point in time. Yeah. I would say like if you if you are presented with this idea and it does sound like a good idea, like, again, a lot of clients have come to us and say, hey, this is what I heard. Like, is this, is this what I should be doing? And Dave and I again immediately start building the plan, which it typically ruins. And the plan we're planning for something that might not happen. You might not have a long term care event. Right. And then I also did a, a presentation with the one attorney that I sincerely trust. And he hates these guys like the the guys out there doing these presentations that have a law office and a financial firm in the same building. And they are, you know, he we did a presentation for our clients on like, hey, this is what you might hear. And this is why it's a bad idea. And, that's the first that. So not only what Dave and I build the plan, but then we take it to a, you know, what do you call them? Dubbed, subject matter expert? Yes. And we take that to the attorney that we that we work with and say, hey, here's their outline of of accounts. Like what? What could we do without blowing up their. Plan and to that point, like, we understand, too, that life unfolds differently for everyone, right? When you're when you're in the throes of this long term care, like you can see it kind of happening, you're in the middle of it. There's there's another level of urgency. We get that it's called crisis planning. And there's still some tools and some leverage you can pull out that can help, you keep your retirement plan intact. Maybe for the survivor in the relationship or the the non impacted. So we just I guess the biggest takeaway is when you see this stuff. If you're a client of ours please bring it to us before you sign any and any lines that are dotted. Because you may go down a path that's just not good for your for your future. Right? So that that I can't say it any better, Dave. And then the next thing is it's the Kramer effect, right? Like I'm using him as, as a person, right? But, like, there's a lot of them out there. Hey, I heard about this hot stock. I heard about. Hey, I should put all my money in gold or. Hey, crypto. What do you think about that? You know, like, those are all just examples. We can have an a whole show on each one of those, hot stocks, cryptos, gold, commodities. The biggest thing with that is it's not it's not that you can't have them. It's it's designing, understanding your situation. And making sure that we size the alternate outcome, alternative investments, alternative investment ideas. Appropriately so I always use this analogy when I was teaching, like our educational classes, is that, it always that your planning process should always start with your goals? What are your goals? What do you want to do? What does retirement look like? Then we build the strategies to go around it. The investment strategies. The tax strategies are the Roth conversion strategies like what are the strategies. And then then we start figuring out what the tools are to fulfill the strategies. And I use the the one analogy of, you know, baking a baking a pie. So like every, every Thanksgiving, it's my it's my job, my particular job to build or to make, the apple pie. Right. That's that's my that's my key component. And so I know my goal is to make the apple pie. Well, the recipes, the strategy. But, Tony, I want to give you pumpkin spice. Right. Well, hang on, Dave, hang on, hang on. I'm getting there, I'm getting there. The goal is to make the apple pie. The next thing is like, I got to go grab the recipe because it's going to tell me how to do it, right. Those are the strategies. So I need flour, sugar dough, you know, a pie sheet Leo all these thing. I need, these things. I need the oven to be at this temperature. Well, the tools, the actual ingredients. I need the sugar. I need the apples. I need the dough, I need all this stuff. And if I were to walk into my pantry and there's a bunch of chocolate chips staring me in the face, guess what? I'm not making. I'm not making an apple pie, right? So we need to that there's we can definitely add tools that make sense. But sometimes again, we talked about it earlier in the show is like maybe somebody just saying something to grab your attention. Right. There's nothing wrong with owning gold. It's an all time high in it's continuing to launch off. It is. We've owned it. We don't own it because it is in such a stratosphere of where it has never been before. It's actually a very risky investment at this point. Same thing with crypto. I don't know, I don't I mean, it's highly talked about. It's there's a lot of money in it invested. But what if it disappears tomorrow? It's an electronic currency. You can't even hold it. You just got to believe that you own it. And you're exactly right, Tony. I love your food analogy. You're making me hungry. Yeah, but what I would say is, like, we're built, you know, say someone needs this apple pie, or that's the recipe. These, like, I'll call them satellite ideas. They're not necessarily all bad. Maybe they can enhance the pie, like if we size them properly. So what I mean by that is maybe there's whipped cream we bring to the table, maybe a scoop of vanilla ice cream. Maybe we say, hey, what do you think about warming that apple pie up in the microwave for 30s? Like there are things that could enhance the apple pie. Yeah, and these ideas, as long as we put it into the context of the entire goal. Yeah, I can put like those little, like, crumbs on, like the crumbs, sugar that the sugary crumb topped on top, you know, like use that ice cream or whipped cream or whatever you want to do. Right. So we can add that. But to have it the base of, you know, the whole investment strategy is a whole different ballgame. So we we need like whenever somebody says crypto all right. Great. Could be a great idea. We are we have an administration. The Trump administration is very pro crypto. So I assume that it's not, you know, that we don't have somebody that's talking against it all the time, and there's a good possibility that it continues to melt up. But what if it gets cut in half? What if it doesn't work out? What if it changes? What if Bitcoin is not the thing in Ethereum or XRP is like there's all these other cryptos that are trying to gain, you know, notoriety. So again, like how much do we want to own so that if it goes to zero tomorrow, you're not going to lose any sleep? That's exactly right. We got to size it. Right graph correctly. So those are just some examples. So we have to be careful what we hear, what the angles are. From just we're bombarded with information constantly and it's hard to not listen. And it's not and it's and it's hard not to question is it a good idea or not. But you know, if you're if you're working with, you know, a financial advisor who has a team bring that idea to them before you implement, because then they will figure out, does it fit? Does it not fit? If it does, what's the sizing word of the funds come from? How do you how do you implement it. So that again, if it if it becomes a bad idea, you're not overly exposed. That's right. You said it perfectly. All right. So that's it for today. If you have any, questions or comments on this episode, you know, leave it in the comment section. You know, you can shoot us an email at info@connect.com to ask questions or show ideas, whatever it may be. And but outside of that, I we're good. Thanks for listening and we will catch you next week. The 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.