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Knowing your financial goals and how to reach them are some of the basic concepts for planning a happy and healthy retirement. And while it might not be at the top of your list now, having a financial plan is what sets you up for success later (so that you can live by your standards). 

And if you don’t have any goals or a plan in place, simply ‘hoping’ for a fulfilling retirement won’t get you there. In fact, it works the opposite end.

In this episode, I discuss your most successful financial plan for a stress-free retirement (without penny-pinching or running out too early). 

Show Highlights Include:

  • What the ‘Harvard Graduates’ study says about your current financial plan (or what happens if you don’t have one). (0:52)
  • Where you fall in the three categories of retirement planning  – and what this instantly reveals about the ‘junk drawer’ of your finances. (5:23)
  • Why you need to use the ‘Atomic Patterns’ theory in the conversations you have with financial advisors today. (10:13)
  • Why treating finances like your favorite sports team is the only way to live a comfortable retirement. (15:26)

To schedule your complimentary retirement track review, head to https://onecapitalmanagement.com. You can also call us at 805-410-5454 or text the word ‘TRACK’ and we’ll reach out to you.

Read Full Transcript

Welcome to Make your Money Matter, the show that aims to change the way we think about financial advice. So you can make better decisions.

Brad Barrett is a managing director and partner at One Capital Management, a wealth management firm serving nearly 1500 clients nationwide. With over $2.5 billion in assets, they’re a group of advisors dedicated to ensuring their clients achieve their investment and retirement goals. And now here's your host Brad Barrett. [0:26.1]

Brad: Welcome to Make your Money Matter. The show for truth seekers who are fed up with outdated financial advice. My name is Brad Barrett, I'm a Managing Director and Partner here at One Capital Management. And it's my goal on this show to reaffirm what you know, to be true and to challenge the advice you may have been told is true. Here at One Capital, our mission is simple to help our clients and you listeners live well and not just survive, but thrive. Friends, we live in a world where we are consuming information at warp speeds, and it's easier than ever before to access information yet more difficult to find truth. And that's what we're after because after all your money matters and knowing how to plan your financial future is vital to your financial success. Before we jump into today's topic, you want to find out more about me or our firm, you can go to our website at onecapitalmanagement.com or you can give us a call at (805) 410-5454. [1:19.1]

As the inaugural episode of Make your Money Matter podcast, I thought it fitting to talk about a subject that we talk about here constantly at One Capital and with our clients, and that is planning and why having a financial plan or retirement plan is so important. And so vital again, to the success of your overall financial future. We plan all the time for things as innocuous as what time we're leaving the house and hopefully for things like as big as important as having your retirement planning put together, I mean, think about it. Has anyone ever asked you what your plans were for the weekend let's say, or maybe if you've made plans for, let's say a family vacation? You know, we tend to think things out in pleasurable and more personable aspects of our life. You know, we plan because we don't want things to go wrong. We want to ensure success. I mean, after all, when taking a vacation who wants to miss their flight. I mean, who wants to arrive at a hotel to learn that there is no reservation? I know I don't, I'm sure you don't either. [2:19.3]

Planning comes before doing in a way planning creates a blueprint for potential success. It increases the odds that if we follow our plan, we will enjoy success. We'll arrive at the airport on time, in my analogy, and we'll be greeted at our hotel with great anticipation. And planning, you know, it encompasses setting goals. What time do we need to leave the house to arrive at the airport for example. I mean, think about a boat for a moment. If, if a boat sets out to sea without a clear destination in mind, I mean, in other words, without a goal, what would happen? Well, it would likely sail aimlessly through the open sea, perhaps ending in Iraq and falling victim to treacherous waters. But if it started out with a specific goal in mind and followed a careful plan, it would likely experience a much higher degree of probability of arriving at its destination. It just makes sense. [3:07.9]

Having worked in the financial industry for over 15 years now, I spent a lot of time in planning sessions. And planning has helped me personally achieve more than I otherwise would have. And when it comes to planning, there's an author I was reading about, a guy named Stephen Covey and he's credited with the simple, but profound statement, “Start with the end in mind.” In other words, what's your goal? What are you trying to accomplish? Where is your ship heading? The English writer and mathematician Lewis Carroll said any road will get you there, if you don't know where you're going. Just like the boat, that wanders aimlessly, so too, will you, if you don't have goals. [3:43.6]

You know, years ago, I was exposed to a really interesting study that focused on the 1979 graduates of the Harvard business school. The graduates were asked if they had, and I'm quoting here “clear written goals.” Now what the study found out was only 3% had written goals and plans. 13% had goals, but they weren't in writing and 84% hadn't set any goals at all. Now here's what I found absolutely astounding 10 years after the initial study, the same Harvard MBA students were interviewed again. And here's what it was concluded. The 13% of students who had goals, but hadn't committed them to writing were earning on average twice the amount of income as the 84% who had no goals at all. Now the 3% of students who had written goals were earning 10 times as much as the other 97%. And can you imagine that? I mean, the only differentiator is actually having written goals and plans to achieve them. Now, for those of you, who'd like to learn more about the Harvard study and more on this topic, you'll enjoy reading a wonderful book. It's by author, Mark McCormick, it's titled, ‘What They Don't Teach You at Harvard Business School.’ [4:51.2]

And ultimately it doesn't always make sense, it's just common sense. We all know that we should have written goals and then the plans to achieve them, yet for some reason few of us do. In fact, most of us don't. You know, a couple of years ago, the investment company, Charles Schwab conducted a study of a thousand retirees. They found that more than half of those surveyed spent five-fold, more time researching and planning the purchase of a new car than choosing an investment strategy and their company sponsored 401k plan. And over the years, I have met with countless retirees who have spanned the spectrum of wealth, but most have been average Americans, probably a lot like you and me and out of all those meetings, I've been with few who have truly planned for their retirement. Yet everyone expresses a concern about their retirement. Everyone tells me it's an important topic, but few have actually laid out concise written plans. You know, I found that people generally fall into three planning categories. And as you're listening to me right now, I bet that you indeed fall into one of these three. [5:48.6]

The first category is someone who has completed absolutely no planning for retirement. And I mean, no planning whatsoever. There's an old adage as many of you know, ‘no one plans to fail, they just fail to plan.’ Remember if you don't know where you're heading, any old road will do. And many of these roads just might take you down somewhere bad and they often do. So make sure we get a plan in place. The second category is someone who is actually taking the time and effort to plan for their retirement. They may have met with an investment advisor who in conjunction with other professionals, such as a, an attorney or a CPA and they've composed this elaborate retirement strategy. I mean, this might've been like an 80-page document filled with charts and graphs and hypotheticals and probabilities. And of course, pages of disclaimers and disclosures. I mean, in essence is a largely computer generated, you know, great American novel, if you will, of retirement planning. And after spending thousands of dollars on the report, it's seldom read and really sell them understood by anyone. So, let me ask you, if you don't know how to understand your retirement plan well enough to concisely articulate it to your spouse, say how can you reasonably be expected to successfully execute your plan? [6:55.1]

I mean, I don't believe you can. So, the whole thing just becomes this pointless exercise almost. Maybe making you feel better, but likely not accomplishing much. I mean, we gotta be honest here. Most people don't need the same level of planning as say Jeff Bezos. I mean the average American should have a coordinated plan pulling together their social security benefits, 401k assets, IRAs, pensions, and savings, all of which should be balanced against their standard of living expenses in retirement. And it should be an uncomplicated plan in which you understand why you are doing what you are doing with your retirement assets. And of course, it has to be a plan that you can explain that you understand. Now, before we get into the third category, if you fall into one of those, those two, and you haven't put your plan together, or if you're working with a current advisor, that's not really walking you through the retirement strategies and goals that you want to see for yourself, you can give us a call. You can call us at (805) 410-5454. You can also go to our website at onecapitalmanagement.com. You can set what we call our retirement track review meeting, it's complimentary it's for you. It's to be able to take a look at where you currently are and make sure you're on track with your retirement goals. [8:03.3]

And if you haven't sat with that person or you're sitting here, Brad, I don't even know what my goals are. We as part of our firm at One Capital Management, our process, which starts with our discovery process helps you align and ask the right questions to build your goals and your objectives and help you define them for yourself in order to build a plan that encompasses not only your investment management, but your retirement planning, your tax planning, insurance planning, and making sure it's all coordinated in order for you to have a happy and healthy retirement, which is ultimately what most people are striving for. And if you don't want to give us a call and you don't want to go on the website, I'll tell you what you can actually text us. You can text us the word track, T R A C K. You can text that to the number (805) 410-5454 and we'll reach out to you. We'll set that time for us to get together and review where you are currently at and making sure you're on track for what your retirement goals are. [8:55.0]

Now, the third category, as I mentioned, it's kind of funny. It's actually what I call the junk drawer. You know, I'll often meet with someone who over the years has made a whole bunch of unrelated financial purchases. And now years later, seemingly mistakes, these unrelated purchases for some big cohesive plan. Now, for example, when they first got married, they might've purchased a life insurance policy from a mere college friend. Then when they had their first child, they might've started a college savings plan of some sort with a neighbor or someone who's in the business, but probably really no longer is. And then further along the way they may have picked up a long-term care insurance and made a few other investment decisions. And every financial decision was made in somewhat of a vacuum made on its own merits and not really in coordination with other products or other services, or as a part of a larger plan. Now, despite all that today, it's thought of as this coordinated retirement plan. But as you know, and if you've been listening for the past few minutes, it's not. You know, I call it the junk drawer plan because it's somewhat like the junk drawer in my kitchen. [9:57.0]

You know, I'm sure you have those as well. I've been throwing stuff into my junk drawer, my kitchen for years, just a bunch of unrelated purchases. You know, it's all valuable, it's important stuff, but it's all standalone items. Nothing's really corded with the other. The good news is in your financial junk drawer, many times these items can be pulled together. Synergies, you know, they're usually possible, but each needs to be analyzed. They need to be put together, you know, really like a puzzle quite honestly. And we weed out the bad and keep the good and make sure everything fits in context of a true plan. So, at this point in the show, I want to ask which category do you fall into? One, two or three? Did you fail to plan or did you create a plan that you don't really understand or are you entering your retirement years, potentially armed with your junk drawer? And to be clear, these three phases are these three categories, it doesn't mean you necessarily are nearing an entering retirement. You could also be sitting here listening in your thirties and forties. And trust me when I say this, the sooner you get on your planning, not only does it become easier and more accustomed to it, and it starts fitting into your lifestyle, but it's also wise. [11:04.2]

You ask anyone who's nearing retirement, I had hundreds and hundreds of these meetings over many, many years. Okay, around these kinds of concepts of man I wish I'd done this 10 years earlier. And it's really wise for anyone at any age, listening to his podcast today and this topic around why planning is so important is to get that planning started. Make that first move. And you don't want to judge yourself too harshly, if you fall into one of those categories. There's a Supreme court, justice Oliver Wendell Holmes once said, “I find the important thing in this world is not where you stand, but rather in the direction you're headed.” So regardless of which category you fall into, you can set a new direction or maybe just make a course correction. And if you do, you may be much more likely to reach your ultimate destination, which is a happy retirement. But the worst thing you can do is nothing. Remember no one plans to fail, they just fail to plan. So start your plan today. There is no better time to begin than now. So, pick up the phone or drop me a note. You can call us at (805) 410-5454. You can also text us. You can text the word track, T R A C K to that same number (805) 410-5454. We'll reach out to you. And to set that time, to get together, to take a look at what you have going on, where you're at, and by the way, the amount of assets that you have accumulated, if you're in that accumulation phase, which is the phase of working in savings, there is no wrong number. [12:22.7]

It's understanding what that number means to you now and what your goals and objectives are for your retirement. And again, if you're sitting here saying Brad, you know, I don't entirely sure what you mean by goals and objectives. We'll help you define that. That's a part of our discovery process to meet with you, sit kneecap to kneecap, or nowadays, as many of our clients have done, who haven't even stepped foot in our offices, we'll meet via zoom. We want to make it very technologically, you know, updated to make sure that we're meeting with you to how you want to meet, to be able to go through these kinds of really important concepts. Don't put it off. And again, if you don't want to call her texts, you can go to our website onecapitalmanagement.com. You can find out more there about myself and the firm and set some time with one of our advisors to be able to go through again, your retirement planning objectives. [13:06.3]

And in speaking of making a course correction, or maybe setting or charting a new direction, it reminded me of a book I just read called Atomic Habits by James Clear. It's a great book, if you haven't read it. And it reminded me of something around just the little impacts, the seemingly innocuous changes that we make and how impactful those can be. Now, quick caveat. My sister who's an aeronautical engineer is probably gonna be laughing at me when she hears this podcast today, but I found it really profound and had to do with, again, the impact created by a change in your habits or in your planning. So, as we talk today about making that first step, taking that initial step to set a time to talk with someone about, Hey, how are my investments being managed? Are they being managed with regards to my overall goals and objectives, whether it's from a risk tolerance or from an income perspective in retirement and or do I even know what I need to earn or what I need to pull from my retirement accounts when I actually get to retirement and the impact created by this, it was a good analogy that he made in this book. [14:06.5]

And it was the effect of shifting the route of an airplane by just a few degrees. So, imagine you're leaving from Los Angeles to New York city. If a pilot leaving from LAX, adjust the heading just 3.5 degrees South, you will land in Washington, DC instead of New York. Such a small change like that is barely noticeable at take-off. The nose of the airplane, moves just a few feet, but when you magnify it across the entire United States, you end up hundreds of miles apart. And similarly, if you make tiny changes, whether it's continually increasing your 401k contributions, for example, or continually funding on a dollar cost averaging strategy into a brokerage account. And by the way, if you don't know what a dollar cost averaging strategy is, it's time for us to go through those topics and help educate around your investment planning and why that's so important in the overall grand scheme of things. [14:59.6]

But those tiny changes, they're not innocuous, they're not small. They have ripple effects that we'll talk about later on in this podcast, over the many episodes that produce something profound, especially those of you who have time left before retirement. And those of you who are nearing or entering retirement right now, the time is now to make sure we take an idea of where you have your assets and how they're being managed and what we're contributing to those. And ultimately what we're going to be distributing from those. Because one thing I'll say loud and clear is retirement is about income. It's less about accumulation like we do in our working years. There's usually three phases of life, right? There's the learning phase, the learning, our trade, our craft, or getting our education, the yearning that, that working and saving environment and then there's the spending. At some point, whether you're listening to this right now, and you're maybe in retirement, you're probably already there or if you're still working in that accumulation phase, you're still working in saving, working, and saving, right? [15:58.5]

Understand this, when you get to retirement at some point, whether you need to, or want to, those are two important words we go through and something you should probably know whether you need to pull money or you want to take money. But if you do take money from your retirement plan, you want to know, is that sustainable? So, understanding your distribution rate, what we call a sustainable distribution rate, understanding what that number is for you is so important. And it sets your mind at ease in a lot of ways when it comes to other conversations around investment returns or investment allocation, and certain things like buying this out of the other and making sure that your debt strategies align with making sure that it doesn't impact your overall distribution need. And right here on today's podcast, what I want to talk about is if those concepts that we just mentioned with regards to finding what your income distribution or you’re spending as a percent of your liquid assets is in retirement, you don't know what that number is, call us or seek someone's advice and make sure you find that partner you can build trust in because that's what matters. [16:57.6]

At the end of the day what I want to promote here on this podcast is finding that advisor that you can build trust in to be able to lean on and build a relationship with, to understand your true goals and objectives. I'm going to say that loud and clear again and again, because that's what matters to help define how you manage your assets, where you place those assets and how that relates to your overall tax planning, your overall retirement planning and income planning, and then ultimately other decisions when it comes to insurances and cashflow. All of the stuff that we here at one capital management go through with our clients. If you want to give us a call, you can, (805) 410-5454. You can also reach out to us on our website at onecapitalmanagement.com. And again, if you're sitting there and you just want to shoot a text, shoot us a text, you can text the word track T R A C K to (805) 410-5454 and we'll reach out to you. We will set that time with you to make sure that we talk to you specifically individually, about some of the items we talked about today and why planning is so important and make sure you get your plan set up. [17:56.3]

If you think about it for a second, if you relate yourself to say a sports team and let's use the NHL, for example, I'm a huge Kings fan, so we're going to go with that. All right. So, do you think the Kings, and let's say the arch nemesis, the San Jose Sharks or the Anaheim Ducks, they all set out with the same goal in mind, each season. In fact, all the teams in NHL, when they set out with the same goal in mind to win the Stanley cup. So, I asked what's the difference between a team winning the cup and the ones that don't, it wasn't the goal, right? Cause the goal for each of those teams was to win the cup. So, what was the difference? In my opinion, it's the systems that make the difference. It's the systems we put in place, the diversification strategies we put in place for our clients. The systematic rebalancing, we put in place for our clients, the active management, the discussions, the ongoing relationship that we have with our clients with any change that goes on, that makes the difference between winning a championship and not. Now in the sports world, their systems, whether it's training, it's showing up with the same mental attitude each day, it's going through the same programs and adapting on the fly, different changes on the ice. Those all matter. And it's the systems that come into play that ultimately went out to get deep in the season and win that Stanley cup in the same thing as for you, when you get that deep into the accumulation phase of your life and towards retirement. The systems you put in place today, the planning, the discipline that you put in place today, and you build that with a good accountability partner, as an advisor in perspective, that's, what's going to make the difference between someone who's going to set themselves up for retirement and also feel comfortable with that retirement and those that don't. [19:28.7]

Thank you for listening to Make your Money Matter. You can also listen to us on our radio program every Saturday morning at 6:00 AM and 10:00 AM on K VTA, 1590 am. And if you like what you heard today on the podcast, subscribe, you can go to our website at onecapitalmanagement.com and on our media page, you can hit subscribe, or you can go to anywhere you download current podcast and hit the subscribe button. I'm looking forward to next week, when we're gonna be talking about, why you need a financial advisor? Why that advisor client relationship is so important and what we here at One Capital Management, what we strive to do for each of our clients and why that's been proven successful for the clients that we currently work with, I'm looking forward to it and until then stay safe. [20:07.8]

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