Sometimes things get pushed or catch a lot of buzz in the financial landscape and they just aren’t all they’re cracked up to be. Let’s explore some of the things that might be sold to you as the greatest thing since sliced bread, but in reality it’s probably way too much focus and attention being paid to them.Find out more information about Brian Butler and Beyond The Pie Charts here: https://www.wealthstandardfinancial.com/Full transcript below...----more----Transcript:Marc Killian: Hello, and welcome back to another edition of Beyond Pie Charts. Thank you so much for tuning into our podcast with Brian Butler, president and wealth management advisor at Wealth Standard Financial, serving you in the greater Houston area. You'll find Brian and the team online at WealthStandardFinancial.com. That's WealthStandardFinancial.com. Don't forget to subscribe to the podcast on iTunes or Google Play, or your platform of choice while you're there, and share us also, and give us maybe a like or review. We always appreciate that. Give Brian a jingle if you've got questions or concerns, and you need a little help before you take action. It's 713-955-6007. That's 713-955-6007. Brian, welcome in this week. How are you, bud?Brian Butler: Hey, man. I'm good. How are you?Marc Killian: I'm doing pretty good. Are you still sweating to death down there? Is things going okay?Brian Butler: Yes, it's better.Marc Killian: It's better. All right, that's good to hear. Summertime is upon us, and it is going to be a hot one. I think it's going to be an actually really hot summer versus maybe even the past couple, so I'm curious to see how it's going to shake out. I'm in North Carolina. For our listeners, Brian is, of course, in the Texas area. I think we're in for a hot one.Brian Butler: Yeah, I think so too. I'm preparing.Marc Killian: I'm glad I got my pool up and running early this year. I was into it in May, so early May I was like, "This is pretty sweet." Now I'm thinking maybe it wasn't so sweet because it's just going to be a hot year, so we'll see how it goes. Hey listen, if you caught our podcast last week we talked about some financial things that are underrated. This week, we're going to talk about some financial things that are overrated, big surprise, right? We're going to go the opposite way. If you haven't checked out our prior podcast, please do. We've just gotten started. This is number three, but we're so happy to have you folks here that are listening to us. Again, make sure you share it with folks who might find it useful and interesting.Marc Killian: What we've been doing is we've been kicking it off with kind of a getting to know you moment, just kind of getting to know Brian a little better. It's been really financially based thus far, these two that I've asked him, but I'm going to ask him a random one this time and get his-Brian Butler: Uh oh.Marc Killian: Yeah, I'm going to give him a random thought. Now I know this is going to go against your better judgment because you are a Texas boy, born and raised, but I'm going to ask it. If you had to live in another state, what state would it be?Brian Butler: I believe that state would probably be Colorado.Marc Killian: Interesting. Do you like to ski, just a difference in temperature? What makes you say that?Brian Butler: I'm all about the weather, man, and scenery.Marc Killian: Got you, it's beautiful there.Brian Butler: I got mountains, lakes, rivers. You can hunt there. It's just beautiful.Marc Killian: You can hunt in Texas too.Brian Butler: It'll be hot sometimes.Marc Killian: It'll be hot, yeah.Brian Butler: I went hunting in December, and it was 85 degrees one year.Marc Killian: Yeah.Brian Butler: It can be hot or super cold, so you never know.Marc Killian: I hear you. My wife's family is actually from Casper, Wyoming. When we go out you have to fly into Denver, and then you have to drive up from there. Yeah, it's absolutely gorgeous out there, that's for sure. In some ways, it's kind of like Texas. There's long stretches of nothing but brown.Brian Butler: Yeah, that's true.Marc Killian: You definitely see that from time to time, but cool. Again, I didn't want to upset your Texas listeners. I didn't want to upset the Texas in you and say, "If you had to live someplace else." You went with Colorado, so that's a pretty cool choice. I like that. Let's turn our attention to our main topic, which is, of course, like I mentioned earlier, it's things that are overrated, some financial things that are overrated. Now this might sound a little weird, but we're going to just stick with this. This should make sense for you. Some things get pushed, Brian, as you know. They get pushed a lot whether it's in the financial landscape, whether it's a catch phrase or a buzz word, or whatever. It may be just fine, but in some cases it may not be the right fit, or maybe it's just being overblown for the purposes of ratings, or to sell something, or whatever the case is. Let's just talk about a couple of three items here or so that maybe are overrated. Tax advantages is the first one. Now people are probably going to go, "Wait, what? Tax advantage is overrated?" Where could I be going with this?Brian Butler: Of course, saving money on taxes is important. Taking advantage of opportunities to defer taxes, avoid taxes or create deductions is a good thing, but anytime those tax advantages are being pitched as the primary advantage of the investment is probably a sales pitch, to be honest with you.Marc Killian: See, we're already lined up, man. You knew exactly what I was thinking. Good job, keep going.Brian Butler: Right. Hey, man, you wouldn't buy a municipal bond just because the interest is tax-free, and you wouldn't buy a fixed annuity solely for the tax deferral. You wouldn't get a mortgage for the tax deduction. You're buying those things for a specific reason. Are you trying to guarantee income? Are you trying to augment your current income and not going to another tax bracket? Those are important things to look at, but you wouldn't buy a house just so you could get a deduction even though you're paying interest on that house in taxes and maintenance. You're buying those things for a specific reason, and do you know why you're buying them? That's one of the things that people get caught up. Most people don't know why they own anything.Marc Killian: A lot of things, yeah. No, I agree. We're going to definitely dive into that because there's a lot of times we do have a ... Look, especially if we're talking about maybe being a pre-retiree, or retiree, as we get to that age we've collected an assortment of things through life, and sometimes we just have a lot of stuff, we don't really know why we have that stuff.Brian Butler: Right.Marc Killian: I think that's a really good point, so yeah. In these cases, the tax advantage part of it is really just the ancillary benefit to Brian's point, so that's where we say it could be overrated. I think that's a great way of looking at it, as simple as looking at the mortgage. You would just say, "I'm taking a mortgage just for the tax deduction," and of course, especially now that we're into this new tax program. It may not even benefit you anyway, so the same kind of idea to consider. All right, so number two, Brian, rates of return. Now again, people are probably listening and going, "This guy is nuts." I want to get as much as I possibly can get, but let's talk about why a rate of return may be a little overrated.Brian Butler: Nobody is denying the power of compound interest over time. It's one of the greatest wonders that we've ever seen on earth.Marc Killian: Einstein said it was the eight wonder, right?Brian Butler: Absolutely.Marc Killian: Yeah.Brian Butler: Placing too much emphasis on the rate of return can be dangerous. At different points in your life, it's going to be more important to reduce volatility and avoid losses, so you can be sure not to get too focused on the wrong metrics. I've seen people retire and just try to hit the ball out of the park of returns, and think of 2007.Marc Killian: Right, okay.Brian Butler: The market was at an all-time high. People were spoiled, to be honest with you. It had been 10 years of a good run, and people didn't see an end in sight. Immediately, that end came quickly, and many people that retired in 2007, it took them 10, 11 years to break even because you have to remember when the market is going down, and you're retired, what are you doing? You're still taking income.Marc Killian: Yeah.Brian Butler: Many of those people were afraid of the market, and so they went from a moderately aggressive or moderate risk tolerance all the way down to conservative, which drug out that break even point. If you're not invested the same way you were when the market fell, you're not going to recover as fast when the market rises. If you went from a more aggressive risk tolerance, and you're a conservative, you're going to get conservative returns when the market bounces. If people underestimate how much of rate of return and sequence of returns has an effect on how much money you can take out of your retirement.Marc Killian: Brian, correct me if I'm wrong, but also too, people kind of forget. When you go down you have to make more to get back just to where you were. If you lose 20%, if you gain 20%, you're not exactly back where you were.Brian Butler: No, absolutely not.Marc Killian: Right. You really need 40%, right? Is that correct?Brian Butler: You need 100% more to break even.Marc Killian: 100% more, that's right. Okay, yeah, exactly. Okay.Brian Butler: People underestimate that because they're just looking at the rate of return that their investments gave them. 2008, your account is down, let's say, 24%, and 2009, you're up 24%, you're not even.Marc Killian: You're still down, technically.Brian Butler: You're still down. It took you a couple years to break even, assuming that you weren't taking money out.Marc Killian: Right. That's a good point too, yeah. Interesting. Yeah, so then you can kind of see, folks, where we're coming from with this. We're saying rates of return can be overrated because it can't be the only emphasis you place is on the rate of return you're getting. Yes, we would all love to make 20% forever in the market, but you have to be realistic and keep these things in focus. All right, Brian, so really great, great answers here on this, really informative information here on the podcast. What about this one? Commission-based investment accounts.Brian Butler: A lot of people think it's great when their advisor only makes money when they sell or when they buy something, but the reality is that it creates a conflict of interest with the investment recommendations that they might be making, and in many cases ends up costing them more than a fee-based account would. Now there's a place for both. You can have commission-based investments as long as you understand, again, why you own that and what the advisor is trying to accomplish with that. Then the fee-based accounts, we tend to like those the most. While we do some commission-based accounts, we like the fee-based accounts because there's transparency. The more transparency I can give clients, the better. If they win, I win. If they lose, I lose. I can do as many trades as I want in that account, and the client ends up paying the same exact fee as if I made one or two. That transparency and predictability of cost, clients tend to like that. The commission-based investment accounts used to be you have to wonder, is that advisor trying to make his boat payment?Marc Killian: Right. If you only hear from your advisor once in a blue moon, we hear that a lot of times. I host shows across the country, and people say, "I only hear from my advisor when he wants me to move something." There's a reason for that.Brian Butler: Absolutely. The more transparency you can give a client that you're calling them to really check on them and give them an update on their account and not necessarily trying to sell them something, clients appreciate that. People see through frauds.Marc Killian: Very true.Brian Butler: Yeah.Marc Killian: We'll talk about this on an upcoming podcast as well. We do different segments on like, how do I know this advisor is the right one for me, and things of that nature? I don't think it's understated, Brian, to say, "Trust your gut." If you get the warm fuzzies from somebody, usually that goes a long way than if you don't.Brian Butler: Absolutely. Trust your gut is probably the best advice that you can give people. It's there for a reason. I've followed it, and when I haven't followed it I always regret it.Marc Killian: You can do the diligence, right. There's ways to check. There's FINRA. There's some of places where you can go check some things out for the credential side, but don't undervalue, and I know this is our overrated podcast, but don't undervalue your gut reaction to some things, but yeah, that's the show for this week. A couple items that may be you hadn't thought about them in this light to say these could be a little overrated depending on you're using them whether it's tax advantages, rates of returns, or commission-based investment accounts. Bear that in mind.Marc Killian: Again, if you've got questions, you've got concerns, you feel like you need a little help, a little tweaking, a little adjustment to what you're trying to do, or you haven't done anything yet, and you're like, "I just don't know even where to start, I need some help," reach out to Brian and the team at Wealth Standard Financial. 713-955-6007. Your number to call, 713-955-6007. This has been Beyond Pie Charts with Brian Butler. He's the president and wealth management advisor, and you can check him out online at WealthStandardFinancial.com. That's WealthStandardFinancial.com, and don't forget to subscribe and like the podcast. Brian has been helping families for more than 20 years, and a fun guy to talk to. Brian, buddy, thanks for your time this week.Brian Butler: Hey, thanks, man. See you next week.Marc Killian: I'll see you next time here on Beyond Pie Charts with Brian Butler.