5 Things Financial Advisors Wish Their Clients Would NOT Do

Today, we'll be discussing the five things financial advisors wish their clients would not do. Hello and welcome to Money Talks. My name is Ken Wink from Summit Financial Consulting. If you'd like a little bit more info after you watch or listen to our show today, give us a call at 586-226-2100 or you can visit us on the web at summitfc.net. As always, if you go to the website, make sure you check out that podcast page and you can check out all of our past shows and subscribe on Apple Podcasts, Spotify, or Amazon Music. So have you ever wondered what financial advisors say when their clients aren't in the room? Believe it or not, we're not just sitting around complaining about our clients. In fact, most financial advisors genuinely enjoy working with people and helping them accomplish their financial goals. But there are certain clients that... can make the plan a little bit harder to execute than it has to be. So today I'm going to talk about five of those, I don't want to say pet peeves, but five things that we just wish clients would not do. And if one of these is you, don't feel bad. My goal isn't to criticize anybody. The goal is to help people make any type of financial decision that maybe they wish they could take back later. Before we jump in, let me introduce my co-host, Tony. Tony, what annoys you? What's one of your pet peeves?

Well, and it's something that's popped up more recently. You know, my strength wasn't numbers like you. My strength growing up It was actually words, English, creative writing I excelled in. I was the editor of my high school newspaper, loved to write. And I love words. I love word games. And I read a lot. So what really annoys me is when people pluralize words that add an S to words that don't need it. I was actually in Tennessee, and there's actually an ice cream place, and they have more than one location. I think there's like two or three locations called, and I forget the lady's name. It's a person's name followed by ice creams. Oh boy. With an S on the end. It's like Mary's ice creams. You just made me think of one. When people just randomly replace an S with a Z in the title of their business.

Oh.

That drives me crazy.

Like I'm like, all right, I'm not going to.

Yeah. Heads. Oh yeah. You know, barbershop. Or a C with a K. Yep. Right. Yeah. I don't you know, it's like classy with a K. That's you know, when I see that, I say that's classy with a K. But ice creams and, you know, I'm a record collector. Right. My number one pet peeve and a lot of the younger people. have started using this word, and it's not a word in the English language, vinyls. So instead of saying records or vinyl, they say vinyls. And so that irritates a lot of us older record collectors who actually speak English and know the English language because the plural of vinyl, Ken, as you know, is vinyl. Yeah, man, we're dropping bombs on the podcast this morning. Is that a little too intense? But the plural, but it's proper English. I mean, the plural of vinyl is vinyl. I don't know why they don't just say records, but, you know, I have a big vinyl collection. I'll say use the word vinyl. A lot of people call records vinyl now, but it's vinyl. It's not vinyl. There's no such thing as vinyls. Yeah. Or ice creams. That's my pet peeve. Okay, off my soapbox.

Yeah, I'm going to have a discussion next about alumni versus alumnus, and then we'll just... Oh, my gosh. Okay.

It could go on and on and on. We'll refocus, I guess. Yes, we'll refocus. Hey, speaking of that, you said your voice is pretty good because you haven't been doing the show or doing meetings lately. We missed you for a little bit. But you said you might go sing some karaoke. Our listeners and viewers want to know, Ken, when or if you did karaoke, what's your go-to song? What's a go-to karaoke song for you?

I have a handful of songs that I put on my phone that I can cover, but my number one is Billy Joel Piano Man. Piano Man. That's where I sound the most like him and I can do it.

Wow, that's really impressive. Yeah. I go for the song Wooly Bully by Sam the Sham and the Pharaohs. Probably our younger listeners don't know it, but it starts off uno, dos, tres, cuatro, dun, dun, wooly, wooly. I don't know if people know that song. And then Come on Eileen by Dexy's Midnight Runners is another one. Very nice. All right. Now we're going to get into the topic. So here you're talking about five things that financial advisors out there wish their clients would not do. You got it. Okay. What's number one? I can't wait to hear your five concerns about things clients do.

Do not call me after you have bought a new house or a new vacation home.

Oh, no. Well, especially if it's not in the plan, right? Right. But if it was a part of the plan and they've discussed it with you, but don't tell you about it for the first time after it's done. Right.

Yeah, this happens all the time. I get a call where they're like, yeah, we just signed the purchase agreement or I just dropped off the check for this new vacation home. And it's like... I just had it happen last week, and it was absolutely no problem. The people could absolutely afford it. It was not a big deal in their particular case, but sometimes it can be life-changingly terrible because they're just not thinking about all of the unintended consequences of a move of this magnitude. So what happens if the old house doesn't sell on time? What happens if some other... Incident arises and you need an emergency fund. When you move, there's usually a large increase in property taxes. Sometimes it's a two or 300% increase in property taxes. What does that do to your monthly cash flows? Are there association fees? What's the history of the association fees? What are the roofs and the cement look like in this condo complex in Florida? Is everything up to code when it comes to hurricanes if it's in Florida? If it's up north, is there mold? What's the water supply look like? Have you had the water tested? Is it going to be polluted with PFAS? There's so many things that can happen. I've just had people that say, I'm going to buy this place. and move out of state. And then their kids have grandkids and they're like, wait, I don't want to live there anymore. And it's just like these little things that I can bring up from experience of having over 1000 clients, you know, grandkids and can you afford it? And how does this affect the overall financial plan? And please, please, please clients, just give me a call before you commit to buying a new home or buying a vacation property, just so we can give it a once over and talk things over.

Plus, financially, how is it going to affect your long-term retirement? Some people are in a situation where it looks on paper like they could do it, and they do the calculations themselves and think, yeah, we can do this, but it's going to derail their whole retirement. Oh, it's no problem to take $40,000 out of our IRA right now to pay for a down payment on a new home or whatever they're going to do, and it can completely derail your retirement. You might run out of money sooner because you don't want to derail your retirement.

Let's at least have a game. So more unintended consequences. Taking that money out of the retirement account could bump you into a higher tax bracket. So now you're paying an extra $10,000 or $20,000 in taxes. Maybe it pumps you into... an IRMAA bracket for your Medicare. So now old mean aunt Irma is coming around and charging you more, taking a chunk of your social security every single month. Again, there's just so many.

People are so emotional about the excitement of owning a new home and a big new move and purchase. They don't, they're not looking at all the details. There's no way they can. That's why they need somebody who who's been through it hundreds of times who say, well, you have, what about this? Oh, we never thought about that. What about this? Oh, we never thought about that. Even people who are good and think they have their bases covered. There's always something they haven't thought of. So just discuss it with it. And chances are, if you really want to do it, you might be able to. But talk to your financial advisor first is what you're saying. Yeah, let's just let's just chat about it.

You know, cause they might have a vacation home now and they're going to say, yeah, but we were still planning to spend $25,000 a year going to Europe every other year. You know what I mean? There's just like, well, you can't afford that anymore. Like what? You know? So yeah, let's, let's talk it over.

Can't afford the payments on that $500,000 motor coach you bought to travel around the country, the RV. Yeah. because you bought a house. So what are you going to do? There's so many things to look at. Well, that's number one. Don't make a gigantic purchase without discussing it first with Ken Wink and his team at Summit Financial is the deal. Okay. What's number two on the list?

Don't let the news make your investment decisions. Absolutely. So, you know, I want my clients to watch the news. I just don't want them to watch the news and see the stock market falling and immediately decide that they need to get out. Or maybe they see the market going up and they decide that they need to buy stocks at the all time high. So, you know, the problem isn't that you're paying attention. We just don't want to make long term financial decisions based upon a short term headline. People just get very emotional.

Yeah. Oh, yeah. I mean, that's... Study after study, Fidelity does a study every year on investors, individual investors and independent investors that invest on their own always end up buying high and selling low. Like, I mean, it's over 85 percent of them, almost 90 percent of individual investors buy high and sell low. And that's because of human nature, emotion. And, you know, they're acting on hot tips or they heard this company might buy that company. And they're trying to play it when Wall Street and the market are moving at lightning speed, nanoseconds of computers doing these things. And there's no way they can predict the market. Nobody has a crystal ball. So, yeah. I think a lot of people let emotions dictate their investment decisions, and those emotions are driven by the news. I mean, I watch CNBC, Fox Business, and it's the sky is falling half the time, you know, and headlines. It's clickbait, and they're trying to get, you know, the old saying, if it bleeds, it leads. So the sky is falling, you know, recession might be near, and people let their emotions dictate. Yeah.

I people call me all the time and they say, I've been spending a lot of time on YouTube and on Reddit doing my research, my investments. And I'm like, oh, my gosh, no. But, you know, that's like sometimes some far flung investment opportunity or idea or stock. But, you know, where it gets hectic around here is the market drops 15, 20, 30%. And now people are glued to their TVs. They are, um, addicted to it in a scared way, you know, and then they're hearing on TV about recessions and war and bombings and Iran and inflation and elections and all this stuff, interest rates. And I get why people get nervous, but, um, You know, they think maybe I should get out now and I'll get back in when things are looking a little bit better. But typically when things do look better, the market has already recovered. So I love talking to our clients and we do everything that we can through our monthly market commentary to let people know. what we're thinking and how we're preparing for different scenarios. And, you know, we do offer actively managed portfolios where we do proactively try to stay out of harm's way when possible. But overall, the hardest lesson in all of investing is, you know, you want to buy low and sell high rather than buy high and sell low.

But like you mentioned- It sounds easy. It sounds like, well, that's easy. I can do that. Oh, just wait. Just wait. Yeah, if you've found somebody on Reddit, this guy knows what he's talking about on YouTube. Research, Tony, research. I mean, even TikTok, there's financial TikTok people. And so it's just like you're getting your financial soundbites in one minute. Yeah. It's like, no, you need to sit down face to face with a trusted financial professional who gets to know you personally in your situation. And you want it actively. Maybe has some education. Yeah, really. Some certification, some accountability is held to standards and is audited. Yeah, regularly. Every decision you make for your clients or a decision you help them make, every decision they make based on your advice, you're held accountable for that. They audit you. Okay, why did you tell... You have to answer. Why did you tell... Is this in your... Was this... You told your client to do this or use this tool for retirement or put their money there. Why was that in their best interest? Why did you tell them to make that decision? And you have to answer for it. People don't understand that the dude on TikTok is not responsible for anything he says. So he's not being held accountable, but I, you make a great point. And that is, um, I think, you know, markets, you say when the market's down 10, 20%, people get panic. Um, for those not yet retired, a market corrections are really good. Like, uh, I like to see a 10% to 20% correction because sometimes things are overvalued, number one, and it's the market resetting that's going to happen. And number two, I'm dollar cost averaging my way into the market. So every paycheck money is going in to those accounts, my retirement accounts, my IRA and my 401(k). So those downturns are opportunities. And if your dollar cost averaging out of every check, that's good. That's how it works. That's how you take advantage of compounding interest when it goes back up. Now, in retirement, yes, big drops in the market are a little scarier, but not if you have a plan, not if you work with, I'm not going to name names, Ken Wink and Summit Financial Consulting Inc., but LLC, I should say. But that is really important, isn't it? I agree. Yeah.

So what's the next one? What's something else?

Don't ignore the boring stuff. So boring stuff is beneficiary designations, estate planning documents, wills, trust, power of attorney, patient advocate, insurance coverages, especially on auto and homeowners, making sure that you have enough coverage available. having an emergency fund, doing tax planning when you get older, long-term care planning, making sure that all your stuff is organized so that if you're in the hospital in a coma or God forbid you pass away, you're not leaving an absolute disaster for everyone to try to figure out where all your stuff is. Make sure your spouse or a family member knows where all your stuff is. If you have a divorce or a marriage, make sure you update your beneficiary designations everywhere. Um. You know, these aren't like super exciting conversations. Like nobody wakes up on Saturday morning and says, you know what I want to do today? I want to double check all my beneficiary designations. But, you know, these things really matter.

Oh, yeah. And I mean, you've talked about those things on past shows and how important they are. But I bet it is frustrating for you when clients just, you know, they ignore that or let it blow over or don't really care. I want to tackle those things. And those are things people put off or don't do at all. And that is that is tough because that's going to make a huge difference for you and your loved ones. Beneficiary designations. You've probably seen some horrific mistakes with those, haven't you?

The horrific mistake that is most common, unfortunately, is somebody spends 30 years saving up all their money to be a millionaire, a multimillionaire, and then they die. And their current wife doesn't get anything because the husband still accidentally had the ex-wife from 25 years ago still listed as a beneficiary.

Yeah. Guy might have been married for the man or woman married for five years. Yeah. and or two years and it didn't work out, then gets married and is happily married the rest of their life. And when they pass away, their current spouse and children get nothing because the ex from years, years ago was still the beneficiary. That's what you're saying. Yeah. And that happens. People think, oh, that had never. Oh, yeah. There's no way to claw it back either. There's no way to do it. It's gone all the way to the Supreme Court. You can't go, well, I'll take him to court and say that's not what he intended. Oh, he changed it in his will. It doesn't matter. The beneficiary designation takes precedent over a will.

Yeah. So you got to pay attention to those details. It's good to stay really organized. Whenever we sit down with someone, we give them what's called an estate planning organizer. It's just a way to put all your statements in a booklet and who you want contacted upon your death. Like my wife doesn't know all my old college buddies or work friends that I would want to be notified if I pass away. You know, it's just important to have a list of that stuff in case it's ever needed. So yeah, getting organized. Let's not, let's not ignore the boring stuff. Yeah.

Yeah. And you mentioned taxes in there, too. I mean, that's something that a lot of people don't have an idea on or don't think about. Well, I'm not going to need to worry about taxes in retirement. We don't need to plan for that. And taxes affect everything. They affect all your retirement accounts and tax designations and new tax laws. That's why we do whole shows on those things all the time. They're so important. Yeah. All right, what's the next thing that people need to understand?

Lesson four is don't chase the next big thing. So my favorite, I guess, blunder when it comes to investing is NFTs. Oh, yeah. Yeah. So like NFT stands for non fungible token. It's basically just digital art. You know, it looked like there was going to be a market for digital art. So in 2022, after all those COVID checks went out, 21 and 22 NFTs were all the rage. So at one point, Justin Bieber paid one point three million dollars for an NFT of what was titled Bored Ape. And that is now worth $50,000. And then Jack Dorsey was the founder of Twitter and his very first tweet. The NFT sold for $2.9 million. Well, obviously, Twitter has since been purchased by Elon Musk, and that has dropped from $2.9 million down to $5 now. From $2.9 to $5.

Talk about a... Well, that immediately I knew that was a terrible because there's no way to... It's just a digital file. It's crazy.

Yeah. There's an old saying on Wall Street. If your cab driver is talking about an investing idea, it's time to sell. Like it's... It's run its course. Yeah. So, but yeah, if you just look at the past few years, like there's been Bitcoin, you know, which at one point here in the last couple of years lost 50% and gold and silver were on a tear and then ended up losing 20% Nvidia and AI stocks. Um, I like talking about the collectibles we've joked over the last year about the boo-boos and Pokemon cards and squish mellows, Stanley cups. They were women fighting each other and target over Stanley cups. Uh, Thank you. You know, but going back to 2007, you know, right before the financial crisis, I would meet with clients and they'd be talking about investing in rental real estate or vacation properties. And, you know, if it seems like a get rich quick scheme, there's a decent chance that a drop is coming at some point in a lot of cases. And every single situation is different. I'm just generally speaking.

Time shares were a big thing for a while and now people can't get out of them and they want out of them and it's a money pit. And yeah. If it's the next big thing, the bottom's typically about to fall out. That's my experience. Yep. Yep. Yep. That's what scared me when, I don't know, my son and I went to McDonald's for an ice cream cone or something. There were some young guys, college age, sitting at a table in McDonald's that we overheard talking about SpaceX and how they were getting into SpaceX. And I'm like, Adam, that right there, if people in McDonald's are talking about it, it's too late for you.

And it dropped 50%.

And those guys, and it was like a month after that, it dropped like a rock. And I'm like, those guys, like the ones like, I just got, you know, I'm going, my dad has a way to get into the SpaceX and get some, you know, and I'm like, oh my gosh. Yeah. It's just the latest thing. And I'm like, you might want to wait a spell on that one.

Give it a minute.

And every situation is different, but you know. Yeah. Oh yeah. And sometimes some say, well, I know a guy who went from nothing to a multimillionaire on Bitcoin, but it's just like, okay, that's him. That was at that time. Bitcoin last I saw was down like 24, 25% or something. So. Yeah, it's taken a beating lately. Yeah, it has. Well, wow.

OK, so what's the next lesson? Last and final lesson. You already mentioned it earlier a little bit. Invest every single month, not every once in a while. So I get people that maybe have never invested before or they're just getting going investing and they always want to go for home runs. They're they're trying to, you know, OK, I'm going to give you this five grand, 10 grand, 100 grand. And I want you to put it into your best idea. And when you're trying to hit home runs and you're trying to swing for for power like that, there's a good chance you're going to strike out. So, yeah. I just try to change everyone's mindset that building wealth takes time. Investing automatically through your paycheck or your bank account can add up over time. It's not going to look like anything's happening for a while, but when it comes to compound interest, it does. grows, grows, grows. And then before you know it, it will shoot up historically. So past performance can't predict future performance. But all I'm trying to say is don't ask your financial advisor for home runs. Get singles and doubles for decades, and you'll most likely make all your retirement dreams and goals come true. Yep.

And it's what dollar cost averaging is what it's called. Just have it automatically. Every paycheck, some money go into the market via your 401(k) or via your financial advisor at Summit into an IRA or a Roth. And that's how you're going to win is dollar cost averaging because the market goes up and down. And you're not going to time the market. You know, Warren Buffett, who's considered possibly the greatest investor of all time and knows more about the market than anyone, he said, Berkshire Hathaway, he says that it's time in the market, not timing the market. Right. It's not timing the market. It's time in the market. So in other words, don't try to swing for that fence. Yep. And you're you're not in the know enough to get it before. I mean, if you read or hear something publicly. It's too late. There are people that find out about those things and you think, well, they can't because that's insider. No, that's all inside. And the more the market progresses, the less you can know about something in time to be one of the initial capitalizers. That's why how you make money in the market is by dollar cost averaging and having actively managed funds by professionals like you do.

I couldn't have said it better, Tony. Right?

Am I right? You're right. Yeah. I mean, I would love to hit that home run. I'm always thinking, is there a way? And the more I learn about the market and the more I learn about how things really work, the more I realize, no. You know what I mean? It's like, that would be like playing the lottery. You don't want to gamble with your money. You want good, consistent growth. And over the last hundred years, it shows that if you dollar cost average your way into the market, you're going to do just fine. Right? Yeah.

Yeah. And there's been so many ideas over the years, you know, like in 2008, after the financial crisis and President Obama got in, I had clients come in and they were investing tens of thousands, if not hundreds of thousands of dollars into solar panel stocks because that was going to be the next big thing. And most of those companies, despite subsidies, went out of business. Yes. So the clients lost all their money. I had a client that after Trump got into office the first time, he invested in every tech company that was supposed to be involved in building the border wall. And that floundered. And those companies, you know, he lost tons of money on that. So like something that just seems like a sure thing, it's not always going to be a sure thing. Again, let's not try to hit those home runs. Let's not try to get cute and smarter than the market. And there's nothing wrong with doing that with a portion, you know, diversification.

Yeah. Well, sure. And if you have a lot of money, I mean, if you're sitting there with plenty of money and you've got, you're very wealthy and you've got an extra $20,000 to play with, you know, the majority of people don't, but if you have an extra 20 or 50 grand to play with and it's not needed for retirement and it's not needed for any of your goals or desires or your family, you have people who have enough money, they have play money and it's like, okay, go play in the markets. You have people that do that, right? Absolutely.

Yeah. It's every situation is different. You know, we can have a conversation about it. We'd love to sit down with any of our listeners and viewers. Even if you have a hot idea, even if you want to try to hit a home run, we'd be happy to talk it over with you and give you our two cents. We met with dozens of clients about SpaceX stock over the past six months. Oh, I'm sure. And I'd be happy to share our insights because we always do our due diligence on insights. any opportunity that we deem worthy. So listeners and viewers, they can give us a call at 586-226-2100 or visit us on the web summitfc.net. We'd love to sit down with you, help you put together a retirement income plan, help you see at what year you're going to be able to retire at, see how much you can help your kids or grandkids through gifting or spending or paying for tuition, helping with college, um, Do you have to completely retire? Could you start working part-time? If I do retire, how much can I spend on vacations every single year? These are the questions that we can help you answer confidently, and we'd love to.

That's awesome, Ken. Well, great show. A lot of great information. I love the topic, and I think it's very helpful. It's helpful for me to hear this. What does Ken like and don't like? I'm never replacing an S with a Z. We learned that. Never replace the C with the K. Don't use letters and words that aren't supposed to be there. And don't add an S to the end of vinyl ever. If you take anything away from today's show, obviously that's the most important. I'm kidding. I'm kidding. Ken, great stuff. Listeners and viewers, that does it for today's episode of Money Talks with Summit Financial Consulting LLC and our host, the man with the plan himself, Ken Wink. Thank you for joining us for money talks. Don't head into retirement without a strategy that addresses both income and taxes. For more information, please contact Ken Wink at Summit Financial, working with people you trust. Call 586-226-2100 or visit summitfc.net. Join us again soon for another episode of Money Talks.