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It’s been a crazy year. One full of unprecedented events. And when times are this confusing, it can be tempting to abandon your plans and wait for them to be over.

But this is the worst thing you can do!

Chaotic times call for more careful and detailed planning, not less.

In this episode, I discuss how to protect your investments in a turbulent market. I also explain why you need to start building your plan now if you want to meet your financial goals.

Show Highlights Include:

  • One key step you must take today to safeguard your investment portfolio in uncertain times (6:12)
  • How to set up “Emergency Preparedness Plans” for your finances to ensure you don’t lose everything you saved (10:19)
  • A simple way to make sure the government doesn’t steal all your savings if you die suddenly (11:16)
  • Commonly overlooked principles for financial planning that can leave you without the cash you desperately need (12:49)
  • The “Q & Q” method for planning your financial future and why you need to start today (14:43)

To schedule your free retirement tracking meeting, specifically for first responders, head to http://pensionattention.com/ or call us at 805-409-8150.

Read Full Transcript

Welcome to Pension Attention, the best show for first responders who want to take control of their finances.

After advising Los Angeles city firefighters for over 12 years, financial advisor, Brad Barrett now shares how you can grow your wealth, build your legacy and enjoy a life of freedom. And now here's your host, Brad Barrett. [00:19.9]

Brad: Welcome to Pension Attention, the show for you, first responders who want more out of their deferred compensation and pension plan. My goal with this podcast is to reach you where you are. At whatever stage in your career you are in to provide my nearly 15 years of experience working with both active and retired service members on their investment and retirement planning. My team of fiduciary advisors here at ONE Fire and Police are dedicated to ensuring you take control of your finances and build the life you deserve. To find out more about me or our team at ONE Fire and Police, you can go to our website PensionAttention.com or give us a call (805) 409-8150 again (805) 409-8150. [01:05.6]

Many of you probably heard of evil knievil, the Daredevil on a motorcycle, but I bet few of you have heard of a guy named Charles Blondin. Instead of a motorcycle he used a tight rope and he became famous in June of 1859 when he attempted to become the first person to cross a tight rope that was stretched over a quarter mile across Niagara Falls. Now, what was unique about this event is that he didn't just do it once he was doing this several times, each time in different ways. One time he did it in a sack. One time he did it on stilts. He did it on a bicycle one time and in the dark and even one time carried a stove and cooked an omelet along the way. Now, as you can imagine, a large crowded began to form, right. Because he was now doing this multiple times in different ways. And each time he was stretching the limits a little bit, right. So the crowd is going to see how far this guy can go. But to the crowd Blondin had established, okay, that he can do this. And not only can he do it, he can do it multiple times and in different ways. [02:03.6]

Now, as he was heading back out for another run across this rope, that was 160 feet above the falls, he was looking for the participation of someone from the crowd. At this point, as we mentioned, the crowd is buzzing, right. I mean, you're hearing Oooohs and Aaahs and all this excitement around him. And he was coming across towards them, carefully walking across with a wheel barrel as he was blindfolded. Now upon reaching the side where the crowd was, the crowds applause louder than the roar of the falls. I mean, it was, this was the event, right. And as he got to the side where the crowd was, he suddenly stopped and he asked the audience, do you believe I can carry a person across in this wheel barrel? The crowd enthusiastically shouted. Yes, yes, yes, of course you are the greatest tight rope walker in the world. You can do anything. So Blondin at this point probably a little bit arrogant looks at them and says, all right, which one of you will get in the wheelbarrow. Now you can probably imagine how many people jumped at that opportunity. Yeah. Zero. [03:06.4]

Because even though they have seen this guy walk across this tight rope, they still realize that he's nuts. I mean, I shouldn't say it that way, but let's be honest. The guy's walking across a tight rope, 160 feet above the Niagara falls, which if he missteps is presumed for sure death right. Now, as much as he's done this in different ways, like I mentioned, and it's, he's shown this to the crowd and the crowd believing in it. As soon as he asked them to participate in it, all of a sudden their tone changes a little bit. He'll ask them, Hey, okay if you think I can get across in the wheelbarrow, why don't you hop on in? Big NO, from everyone who actually wanted to engage in that whole question and answer session, right. I'm bringing this story up today because we've gone through a crazy, I think anyone listening to this podcast would agree. This is not lost on anyone. listening here, myself included that what's going on in 2020 has been nothing short of miraculous or crazy, whatever adjective you want to use to describe it. Right? [04:02.4]

And we've been that crowd hooting and hollering on both sides potentially. Right? The idea with this concept, I'm trying to bring up is the reality is we can move forward. We can manage our lives, both our health and our wealth into 2021 and beyond. It's not going to end here with whoever gets elected. It's not going to end here with the end of this year and COVID is going to most likely go into 2021. The fact is it's a virus and it's probably gonna be around and hopefully we have vaccines and we'll go through all that, that's not for me to discuss necessarily, right. But the reality is we can plan an uncertain world. And today on this podcast, what I really want to focus on is making sure what are the hot points that you want to make sure to hit when it comes to planning. And there are two main ones I want to touch on today. And if you're a client of mine right now, and you're listening to this, you probably heard me describe these kinds of concepts. Not maybe in our first meeting, as we usually go through our discovery meeting with each of our clients, but on the course of the first year together and many, many years thereafter, right, we'll talk about these concepts. [04:59.8]

And if you're listening to this right now, and you're, you're not currently working with me or my firm at ONE Fire and Police give us a call (805) 409-8150.You can also go to our website at PensionAttention.com. There you can actually schedule a 15 minute free retirement tracking meeting to take a look at where you currently are. And this is true, whether you are just a year or two on the job, or you got 25 years on and you're about to look into and drop entrance, right? The reality is our experience has held that we can actually build a solid diversified plan that encompasses uncertainties. So the first item I think everyone should focus on when it comes to planning in an uncertain world and we're gonna talk about an investment management first for a second, right. And this is a word that you've probably heard many, many times and to be honest, it's not lost on me that's probably overused sometimes, but I promise you, it is insanely important. That word is diversification, building a portfolio and having your entire assets, not just your liquid assets and liquid assets. I mean, by that as deferred comp plan, maybe your spouse has a 401k or an IRA or things like that, or maybe trust assets or individual brokerage accounts, having diversification across the entirety of your family's portfolio is important. [06:10.1]

And by the entirety of your family's portfolio, what I mean by that is your real estate, your deferred comp plan, 401k is trust assets, anything that comes into play there, making sure that all works together. So having a coordinated plan, something we'll talk about on this podcast, right. We have a whole episode on that. Having a coordinated plan put in place is important. So although it's an overused term, I can promise you the importance of it is, is massive. And to break it down for a second, diversification is essentially a risk management strategy. It mixes a wide variety of investments within a portfolio, right. A diversified portfolio contains, like I said, a mix of distinct asset types and investment vehicles in an attempt at basically limiting exposure to any single asset or risk. The rationale of portfolio diversification, it's a technique that if a portfolio is constructed of different kinds of assets, right on average, it should yield longer rate of returns while also lowering the risk of any individual holding or security, one that's maybe what we call over-weighted in the portfolio. [07:07.0]

To go one step further, the basics of diversification it strives to smooth out unsystematic risk events in a portfolio. So the positive performance of some investments neutralize the negative performance of others. This gets into a word that we use in our business called uncorrelated. We want assets inside the portfolio that work inversely from each other, they're uncorrelated. The reality with a good portfolio diversification we're having a good mix of equities and bonds is kind of the paramount that the bedrock that we want to build a portfolio on and then construct it to make sure it fits the needs of our clients, both in the yield or the return needs of our clients, as well as an equally, as important as the risk classifications and the risks that our clients want to take on. So although a broad topic, and although it's probably something you've heard before, the reality is it's important for you to hear it from an advisor has been doing this almost 15 years and our firm manages, almost $2 billion in assets for clients. [08:00.3]

We do this every day, all day and the reality is building long-term diversified strategies that are actively managed and rebalanced, which is something that we do here at ONE Fire and Police and not most places do. Those all are very important to not only having a long-term investment return, but also smoothing out volatility a lot of times, and also managing a portfolio, managing a deferred comp plan or any other assets that you may build up and have in an uncertain times and no doubt of this year, if it's not showing us that anything can happen, we are in an uncertain times and we will be again. The reality is we will be again so having a good, proper disciplined, I'm going to use that word very appropriately here. Disciplined plan allows us to win. And that's what we want to do is make sure our clients win. We want to make sure we define their goals, define your goals. I want to define what you have to build. And if you don't know what your goals are, objectives are for retirement, or you're not sure how to classify that, that's where we come in. That's where an advisor comes. You can give us a call. You can call us at (805)409-8150. Or like I said, you can go to our website at PensionAttention.com. You can actually schedule some time to talk with me or one of my advisors, and we can build that plan for you, help you define your goals and objectives. And then we'll marry the deferred comp plan strategy and your other assets and your overall pension and drop planning with that goal. [09:15.1]

Do you know how much you should be contributing to your deferred compensation plan? Are you getting the most out of your current investment options? Looking at entering or about to exit the drop program? go to www.pensionattention.com to find out how we can help. [09:31.4]

So although the word may be overused, like I've said before, it is massively important and it's one of the key tools to managing your deferred comp plan in an uncertain world. For the second item, I want to bring up with regards to managing a plan and managing your financial future in an uncertain world is a larger overarching topic that I'll call planning or planning for emergencies, so to speak. Some of the structures to put in place that a portfolio would sit in, and some of those structures like planning for emergencies rely around building a trust or having a, a will or a trust or an estate plan that we can build and go forward. And as you guys well know, the relief association has a great benefit with regards to paying a certain amount for trusts and wills that are built, and you can reach out to them and go through that. [10:18.0]

Also, we've talked, we'll talk about this on our estate planning 101 episode, which will come up here in a few weeks as well, you know, with regards to using the new Hyatt plan, it's benefits. So it's also a great tool to use and we've been talking about that at stations and with our clients. And if you want more information on that, you can reach out to us. You can reach our website at PensionAttention.com or give us a call at (805) 409-8150. But building a plan is important, right. So having the plan, the house that we built, right, it's, it's no different than, you know, a lot of times I get the analogy and we've heard this before, right. You can almost start furnishing a house without the house being built. So I can talk about all the diversifications within side of the house, but unless the walls are built, it's really just sitting out in the open, right? So we need to build those walls. [10:59.4]

So the second biggest thing we want to build out when it comes to an uncertainty world that we're going to be in, right, is making sure that we have our stuff tight and it could be as simple as, as one quick key advice here is go take a look and make sure your beneficiaries are listed, how you want them to be listed at Voya at the defer comp plan. I mean, it's as simple as that, sometimes things change and sometimes they're kind of outdated. A lot of times I want to meet with clients, that's one of the questions I ask them. It says, we're going to go through your beneficiaries and sometimes when we set up new accounts, you know, we make sure that beneficiaries are how they want it to be done. So that's kind of a simple rounding first base example of just doing some checkpoints here as we head into 2021 and making sure that we have things in place that we want to have in place. [11:36.1]

Now there's other items that come under that, which we talk about with our clients. And we'll, we'll talk about in this podcast as well and what we do as advisors and those things can re, like I said, around estate planning, insurances, cash flow management, and short-term savings. And we do something that I like to call sometimes bucket planning, so saving for the short-term mid-term long-term. A lot of times when I meet with clients, we, they have a long-term at least started. They have their deferred comp plan being invested towards or contributed towards. And obviously you guys are out of your pension; you're paying into your pension out of your paycheck, right, I don't care what the LA times or people say about that. I know you guys are in, you know it, we all grew up in the family, right? So we know you are paying into your pension. So your long-term planning is actually more solid than you think, and I'll help you see that is one of the things that I like to do for my clients, right, is to help you see that. [12:22.6]

The reality is we need to talk about our short-term and our midterm buckets. And what I mean by that is defining the number that makes sense for you from what I'll call liquidity, right. Making sure we have enough short-term savings for whether it's a trip or a purchase you want to make, or even an uh-oh situation. Right. We want to make sure we have that, you know, nice, solid short-term money supply there for you. And that mid-range that mid-range comes in, we'll we'll help build that for you. That mid-range is after the initial one to two year, you know, just having some cash on hand and before the 25 or 30 year Mark, when it comes to defer comp plan and drop. There is a mid-range that we can add and then there's a plenty of strategies to do that. So that's another tool when it comes to managing an uncertain world is getting our, our cash flow in order. And largely when we talk about our cash flow in order, we naturally have to talk about debt. And when we talk about debt, which is a topic I, an episode I bring up specifically on this, and it's one that we want to focus on because getting our debt in line helps us get our cash flow in line. [13:19.9]

And if you're listening to this right now, and you're going into man, you look, Brad, I'm making, you know, $80,000 on active duty pay, but I have another 30 or $40,000 coming in from sod. So my gross is around 120, 130, you know, that's, by the way, plenty good, there's nothing wrong with that, right? It's just understanding how much we have going out, which relates to that income and how much of that is on active duty versus overtime and make sure that we build that plan that shows that, okay, if we kept that, what's it going to look like going out a year or two or 10 years and then we kind of go into, you know, 15 and 20 years, right. And we'll add in things like N no different than I've added in this year for clients, which is the MOU update, each of you got. We'll also talk about things when it comes to promotions, obviously those base points and your active duty pay will change. Right. And so we, we adjust those things when the planning, so planning itself comes with an ongoing management, something that we do for our clients, making sure that when we build the plan, we also take a look at all the changes that come into how your life evolves. [14:14.3]

And for my younger clients, for example, a lot of times I have a lot of guys coming in that, you know, are don't have families yet they're going to be not even married yet. And the beauty of that is, is that's a great thing because you can kind of get your financial picture, you know, put together. And then we can be able to use that to launch into other areas of our lives. Because there's two words I use in this business that are interesting quantitative and qualitative. Now those are fancy sounding words, but the reality is all, I mean by that is quantitative being the numbers, the money side of things, and the qualitative being the quality of life that you want to live. And my practice and what we believe here at ONE Fire and Police, those have to go hand in hand, that's essentially defining what's called private wealth management. Its sometimes I talk with clients, they hear the word financial advisor and those kinds of things and that's what we are no doubt, right? But wealth management is an added benefit and I think that's something that we specialize in which it comes to making sure that your advanced planning goals, what you want to have happen not only is protected and growing, but actually has a success around it. Right. [15:13.1]

And and we can't guarantee that success because life happens right. And we're going to adapt and go through that. But the reality is if we build it and we keep disciplined with it, we can adapt with those changes and we can help manage your overall plan and manage in an uncertain world, which is what this podcast is around. We're heading into, we've been in an uncertain world, right? We've had a crazy year, we can all agree upon. We're heading into another year that really we're carrying in some stuff from this year into next year. Right. So the reality is let's take a good chance this time around to take a look at some quick rounding first and second basis to take a look at where we currently are. And if you are not working with a current advisor right now, I strongly recommend you do so because having an advisor in your corner and working with you is really important. And if you have it and you want to give us a call, please do again, (805) 409-8150 or website at PensionAttention.com. And you can talk with any of the clients that I'm working with right now, we know we get together, we meet and we talk and they know I'm just a phone call away. And I want that for our clients. And our team is built that way to do that for each one of you. [16:08.7]

So, although we've been in some uncertain times, the reality is, and the hard truth is, is we're going to have uncertain times in the future, but discipline and diversification and taking care of our emergency situations are key points that I wanted to make sure that we went through today. Now in Pension Attention on this podcast, we're going to be talking about a lot of different topics. Some I mentioned today with regards to how much to contribute to the deferred comp plan, we're going to go through pension planning, estate planning, insurance, planning, investment planning, things to avoid when it comes to investing things to look at and, or some common things you should have in investment plan. We're going to talk about the need for an advisor and why planning is important. And we're also gonna have some, some of you on, we want to make sure that we have this as an open mic forum, to be able to talk about some of the things that we get to talk about in stations. And although this year we haven't been able to, because of COVID right. I wanted to make sure I got reached out to you guys and was able to, you were to hear my voice on a weekly basis now. And so we're excited about this. We are grateful for the clients that we get to serve and help build the items we mentioned today for their retirement planning. And hopefully we're able to help some of you that are listening to this. [17:12.0]

So thank you for listening to Pension Attention. Now, before acting on anything I discussed today, remember speak with a financial advisor near you about your specific situation, or if you'd like our help, you can visit us@pensionattention.com or for a free retirement tracking meeting as I've discussed, you can give us a call at, (805) 409-8150. Next time on Pension Attention, we're gonna be discussing how to manage and reduce your debt. Debt of any amount, whether that's credit cards or mortgages, we're gonna be discussing that and how that fits into your overall financial picture. I'm looking forward to it until then stay safe. [17:45.6]

The information in this podcast is educational and general in nature and does not take into consideration the listeners personal circumstances. Therefore it is not intended to be a substitute for specific individualized, financial, legal, or tax advice.

To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a final decision. [18:08.7]

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