Excel in Retirement

It’s fascinating to me that in our day of high speed innovation, how we invest is slow to innovate. Modern Portfolio Theory was developed years ago and it’s broken. Harry Markowitz developed MPT in 1952 and won a Nobel Peace Prize for it.

Investopedia.com states, “Modern portfolio theory (MPT) is a theory on how risk-averse investors can construct portfolios to maximize expected return based on a given level of market risk.

Leland B. Hevner in an article states, MPT dictates that portfolios be designed to match the risk tolerance of each investor using asset allocation techniques. Then they are to be held for the long-term. Because these portfolios have no sensitivity to market, they are dangerously vulnerable to market crashes.

Hevnver goes on to state that we saw portfolios that were constructed using MPT experience 30% to 50% losses in 2008 during the Great Recession and states we saw these portfolios strained again this year with the coronavirus pandemic.

The average portfolio construction for those within a 10-year window of retirement is normally problematic. Why? Because many portfolios are setup using MPT and they are on a set it and forget trajectory.

A better way is to use professional money managers who dynamically position your investments. By doing this, when economic storms happen, we can potentially mitigate losses and develop a more consistent return.

Often, at our firm we use mutual funds and exchange traded funds that are either evaluated on a daily or monthly basis in an attempt to ensure your investments are not sustaining massive losses. 

But why is set it and forget it method not okay for a retiree? Well, number one volatility is here to stay. We’ve seen thousand-point drops in the market somewhat routinely the last few years.

Right now, the market is running up on the hope that a Covid vaccination will get things back to normal. The market likes when the rules stay the same. When the rules shift, the market gets nervous. So, when more regulations come or higher taxes, volatility may increase.

Our goal is to avoid violent downturns in the market. Our goal is to create an all-weather financial plan where you are able to make a return, but attempt to limit your downside losses.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program. 

David further expands on our Empowering Women in Retirement topic. He discusses the 3 legged stool of retirement planning and expands on practical approaches we can all take in our financial planning. He also shares what to look for in a financial advisor. He expands and explains each of these points. 

5 Criteria for a Financial Advisor

•      Listen

•      Open and honest

•      Respond in a timely manner

•      Speak clearly

•      Create a written retirement plan and review regularly 

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program. Roth IRAs offer tax free income if distributions are taken after age 59-1/2 and the account has been open for at least 5 years. When converting funds to a Roth IRA, ordinary income taxes are due on the amount converted in the same year, and ideally should be paid with funds outside of the retirement plan.

Did you know that 90% of all women will eventually be solely in charge of household finances? Unfortunately, that can also be very scary for some. To me this was very exciting. 

 I try very hard to empower women around me when it comes to financial planning. One of the reasons I wanted to do the podcast this week is because, based on a recent survey, it was found that only 20% of women feel very well prepared to make wise financial decisions.  

If 90% of women are going to be solely in charge of finances, would you agree that you need to be 100% prepared to make financial decisions?

It isn’t uncommon for us to encounter a couple where the man has been the sole person in charge of the finances; this can lead to unforeseen problems if and when the husband makes decisions not planning for what will likely be his death prior to his wife’s. 

Think of this: What happens if he was the primary or even sole bread winner? What becomes the financial reality if his wife is left behind and hasn’t been involved in the finances or the financial decisions? 

We have seen scenarios where the woman is left without the financial resources that she needs to maintain her lifestyle. 

We are not saying women have to control all household finances. What I am saying is you have to be involved. You have to make sure your voice is being heard. It is completely alright if you are married to have a different investment philosophy than your spouse. 

Women sometimes more conservative investors than men. What you need to make sure of is the advisor you work with hears both of your voices. 

They have to listen to concerns from both of you, because an average women live five years longer than men. Make sure both of your lifetimes are being planned for. 

David expands on this further in our podcast this week. Please take a listen. 

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program. Roth IRAs offer tax free income if distributions are taken after age 59-1/2 and the account has been open for at least 5 years. When converting funds to a Roth IRA, ordinary income taxes are due on the amount converted in the same year, and ideally should be paid with funds outside of the retirement plan.

On this show David cover three segments. First, he goes over some current events, then he covers a behavioral finances study then we conclude by going over what the exceptions are to withdrawing money from your IRA early are. Remember, if you’re younger than 59.5 years old if you take money out of your tax-deferred plan like your 401k you’ll be penalized in most cases. We’ll go over what the exceptions to that rule are. 

Next week, our show will be geared towards women and what they face in retirement. It’s no secret that women often live longer that us guys. We’ll give some actionable steps for retirement and what to look out for. We think it’ll be a really cool show!

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program. Roth IRAs offer tax free income if distributions are taken after age 59-1/2 and the account has been open for at least 5 years. When converting funds to a Roth IRA, ordinary income taxes are due on the amount converted in the same year, and ideally should be paid with funds outside of the retirement plan.

What will happen to the national debt under a Trump or Biden presidential administration? David outlines possible outcomes and what that could mean for your retirement assets. Also, he discusses what happened last week in the markets.

Everything sold off including bonds and gold. He tells listeners what they may be able to do to hedge against this issue. Also, he discuss what Nobel Prize winning economist Robert Shiller has recently found.

Shiller's Crash Confidence Index is measured based on asking investors “What do you think is the probability of a catastrophic stock market crash in the U.S., like that of Oct. 28, 1929, or Oct. 19, 1987, in the next six months, including the case that a crash occurred in the other countries and spreads to the U. S.?” Their answers have been fairly bearish and the lowest readings of confidence he’s ever seen.

David finishes by telling listeners what they can do protect their life savings from the whims of the market.

Thanks for listening!

Show 15 Principle Protection Plan Discussed

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program. Roth IRAs offer tax free income if distributions are taken after age 59-1/2 and the account has been open for at least 5 years. When converting funds to a Roth IRA, ordinary income taxes are due on the amount converted in the same year, and ideally should be paid with funds outside of the retirement plan.

Are you still using the outdated antiquated 60% equities / 40% bonds portfolio allocation?

That rule originated in the mid 1990s when bonds were paying 6% to 7%. That’s not the case anymore. 

With interest rates hovering near zero, the 60/40 rule is broken. Many bonds are not even keeping up with inflation, so using bonds may be problematic.

Couple this with the new reality that corporate bankruptcies are piling up due to Covid-19. From the Financial Post: “Bankruptcy filings are surging due to the economic fallout of COVID-19, and many lenders are coming to the realization that their claims are almost completely worthless. Instead of recouping, say, 40 cents for every dollar owed, as has been the norm for years, unsecured creditors now face the unenviable prospect of walking away with just pennies — if that.”

Corporate bonds have always carried default risk but it appears this is becoming more of a concern. 

The challenge all investors face is volatility! And many people are wondering when the next drop in the market could come. The stock market is a growth engine, but the stock market is NOT an income engine. 

Once retirement is on the horizon, we need to begin shifting our focus towards income and distribution. How will you effectively produce income once your work paychecks stop? 

You may already know why the stock market is not an income engine. The market is unpredictable. It’s common to hear commentators say the market just always goes up. While that may be true overall, if you were in the market from 2000 to 2010 you may have experienced a negative average return like many investors did. 

What happens when you need to take income off of your accounts when the market is down? You eat away at your principle investment very quickly. 

 We all need to remember that retirement is different. What I mean by that is retirement brings a new set of goals — a new set of objectives, if you will. How many of you can remember the name of the pediatrician you went to when you were kids?  

Why don’t you still see that pediatrician for medical care? Because you outgrew that physician’s area of expertise. 

Retirement is much the same way. And it makes perfect sense that the strategies we use to get to retirement may be different from the strategies we use to get through retirement.

I continue on this train of thought in the podcast this week. Click here to listen. 

David continues on this train of thought in the podcast this week. Listen in for more practical tips. 

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program. 

In this show David Treece, a financial adviser, shares with you his election analysis and explains how COVID-19 has impacted this election. He explains how this election may affect you and your retirement. David also shares how we build all weather financial plans at Clients Excel that are built to withstand market volatility. Also, he shares with listeners reasons why you may want to consider a Roth IRA conversion and why some people probably don't need to consider a Roth conversion. David ends the show by discussing what everyone's financial plan must have. He covers a lot of useful content in this show!


Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program. Roth IRAs offer tax free income if distributions are taken after age 59-1/2 and the account has been open for at least 5 years. When converting funds to a Roth IRA, ordinary income taxes are due on the amount converted in the same year, and ideally should be paid with funds outside of the retirement plan.

David Treece shares some potential consequences to this year’s presidential election. And he shares with you a new investment idea that our clients have been enjoying! 

"You know, I believe the economy is better off with competition. We don’t have to look hard to see enterprises, companies or government entities that have a monopoly. In fact, sometimes the government will intervene and break companies up when they become too big. But what tends to happen when one organization has the corner on the market? Customer services becomes secondary, the company isn’t as competitive as it used to be, and maybe there are less options… Why do you need options for what you can buy? If that company is the only choice, they can dictate what products come to market. It would be like if one farmer grew all the vegetables. If he didn’t want to grow corn that year, oh well... We don’t get corn. But if there are multiple farmers if one farmer chooses to not grow corn no problem the consumer can buy corn from the other farmers who did grow it. 

I put a lot of thought into voting. I always have. I’m 36 and the first election I followed closely was in 1996. Senator Bob Dole was running against Bill Clinton. I actually have a Bob / Jack Kemp sign in my garage now. I was 12 years old then. I quickly registered to vote when I turned 18 and if I’ve missed an opportunity to vote since turning 18, I am not aware of it. I’ve always felt that elections were really important and people sacrificed for our ability to vote. It should be taken seriously.

So, I’ve been thinking a lot about this year’s presidential election. I think one of the best things President Trump has done for America is cut regulations. As a business owner, I live by the Golden Rule. "Do unto others what I would want done to me." And all of our clients are over 60 years old. And one common phrase I tell most everybody that meets with me is there isn’t one thing I’m recommending for you that I would not recommend that my 65-year old mother do with her finances. The point is we need laws. 

David continues on this topic on this podcast and ties into the possible outcomes of the election. 

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program. Roth IRAs offer tax free income if distributions are taken after age 59-1/2 and the account has been open for at least 5 years. When converting funds to a Roth IRA, ordinary income taxes are due on the amount converted in the same year, and ideally should be paid with funds outside of the retirement plan.

David is joined by Sarry Ibrahim to discuss how to eliminate using banks for loans. The bank on yourself concept uses Nelson Nash's Infinite Banking strategy to create your on personal bank. This idea utilizes permanent life insurance to create your personal bank. Permanent life insurance has couple living benefits, and when properly structured this strategy can allow you to simultaneously use your dollars for more than one thing. If you've ever wanted to leverage your assets this episode is for you!

Book mentioned at minute 3:52

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program. Roth IRAs offer tax free income if distributions are taken after age 59-1/2 and the account has been open for at least 5 years. When converting funds to a Roth IRA, ordinary income taxes are due on the amount converted in the same year, and ideally should be paid with funds outside of the retirement plan.