Do I Even Need A Financial Advisor?



There are so many pitfalls that people unknowingly trip over when it comes to planning their retirement. Explore the ways in which you can better prepare yourself for it. Avoid the mistake of thinking that you don’t need a financial advisor. Bringing out the topic of behavioral economics, it’s clear how capable people are of creating irrational decisions with their finances as they are with making rational ones. The Thrive tribe goes deeper into that and more, pushing forward the idea of properly planning your retirement. A financial advisor for your retirement can aid you through all this. After all, not everyone has the luxury to do it all again when it goes wrong.

Listen to the podcast here:

Do I Even Need A Financial Advisor?

David, we begin and set the table, “I can, I will and I must.” When I came by the office I snapped a picture of that. I was intrigued by that. I’ll give you an opportunity to explain what that means.

A motto, a credo that Thrive tries to live by. Joe, we love what we do. When we meet with our team, we have this belief of TEAM stands for Together Everybody Achieves More. One of the things that we want to make sure happens at Thrive is that we create an amazing client experience. We want to bathe people in warmth and love. We want to make sure that we provide amazing education and advocacy for them. Both Karen, myself and Bret, we try to make sure that the team that we surround ourselves has the same belief. When you walked in and saw that up on our TV set in the lobby, that\’s what we demand, expect and try to breathe into our organization.

It\’s another example, David, of what you encounter when you come to the office. I observe things like that. I wanted to share that with the audience.

You\’ve got a son in the military. Bret and I played a lot of sports and athletics, you as well. You get that built into you. To be successful in what you do, those are the main three things that we think you got to do.

Bret, what\’s on the agenda for conversation?

I had some great meetings with prospective clients and people who came in through the workshops. We had two successful workshops. It keeps us busy at a level we enjoy. We feel we\’re having an impact in the community. We’ll go through some of that. We\’ll go through some case studies of people. When we tell these stories, they\’re factual. We leave names and confidentiality in the equation. It teaches us lessons. It shows people, “I never thought of that.” It never ceases to amaze me that people come in. By the time they\’re ready to walk out the door, it\’s been an incredibly enlightening situation for them. We encourage our audience about that.

Karen, nice to have you back. Zero us in on some of your conversation.

What I\’ll be talking about are mistakes that people make when planning retirement and retirement in general. One of the biggest mistakes I have come across is when people walk through that door and don’t think that they need a financial advisor. They\’ve already made the mistakes, but sometimes we can help them out. When I hear people talking on TV, radio or commercials, it makes me crazy when I hear things that aren\’t true. If you don\’t have a fiduciary advisor working for you on your behalf, where are you getting your information from? There\’s definitely some bad information out there.

Have a conversation with your spouse about any element of retirement or any possible scenario that would factor into your retirement. You and your spouse will ultimately agree, disagree, be confused, not have the answer and wonder. That\’s part of the analogy and part of the process. Bret, what\’s on the agenda with you?

I’ll talk a little about the theory of behavioral economics. We\’re going to talk about a little bit of studies that have been done out there talking about behavioral economics. As we enter retirement, there is no chance for a do over. Try to get a little bit of clarity where there may not be any. It\’s part of that Thrive Retirement Roadmap Review.

We’ll give you the updated workshops in case you want to plan. The workshops have been spectacular up-to-date with two great workshops this past week.



We don\’t take the foot off the pedal by any stretch. We\’ll have a boatload of these educational workshops on social security and taxation, retirement income planning throughout the months. We do about 100 of them on an annual basis. We feel compelled, almost a fun obligation to make sure that we\’re delivering. Every single time we do it, new conversations start from that. It\’s a great situation.

There are many ways for the audience to gather information. It\’s one thing to get it, it\’s another to be able to understand it and then be able to apply it to your circumstances. Is that fair?

I would not want to be a retail consumer investor, someone taking care of my own finances now with all the noise that\’s out there. I started this business back in 1989. We were starting with dial up onto America Online, AOL. Information wasn\’t coming at you with this light speed type scenario. Now, it\’s 24/7. If you\’ve got notifications, like I do, set on my iPhone for certain types of things that are financially oriented, that thing’s dinging twenty times an hour. That\’s what we see, Joe, why people come out to the workshop. They said, “I’ve worked with a financial advisor. They\’ve talked to me about what investments I have and so on and so forth. When the conversations came up, ‘Tell me what the playbook is for retirement,’ they didn\’t have one.”

I don\’t want to say it ceases to amaze me. I recognize that\’s the case out there. It makes us understand why what we do is critically important. Our new website went live. That is a fantastic center hub for people to get information. Lots of good, valuable stuff there. If they ever want to connect with us, they can do that through the website via email. One of the things we\’re going to start to do is we\’re going to take some live feeds, whether it comes from email or text messaging on the show. People will be able to text us or email us live on the show and we\’ll answer those questions that they have. If they need to get a little deeper or more granular on the topic, we certainly welcome to come in and get one of those Thrive Retirement Roadmap Reviews.

You\’re going to hear a lot of radio spots. You\’re going to hear a lot of encouragement. Conveying that message about going to the website, It\’s new, it\’s interactive. There\’s an easy way to be able to communicate. That will give the audience more of an opportunity to be able to connect with us. Bret, I want you to set the table for the conversation ahead with what you talked about few moments ago.

I got a major in mathematical economics. You talked about economics. It means that people are rational and make decisions that maximize their utility. If I were probably to go back now and probably look at behavioral economics or behavioral finance, we\’re going to talk about five quick topics of that influence people. Conventional wisdom is one thing, but things that impact people. As we enter retirement, not getting a do over. Want to bring those to light and hopefully people will think about those. An opportunity through that Thrive Retirement Roadmap Review, would love the opportunity to chat with people, bring a little bit of clarity to where there isn\’t any.

[bctt tweet=\”What\’s right isn\’t always popular. What\’s popular isn\’t always right.\” username=\”\”]

We were talking a little bit about behavioral economics. Basic economics tells us that people are rational and make decisions that maximize their utility. Reality is we\’re human beings. People can and will do irrational things with their finances. It\’s an interesting academic subject. It has useful implications for understanding, especially for us retirees’ behaviors and how their decision-making processes can either help or hurt their finances. It\’s important that as retirees, you can\’t hit that reset button as younger people have the ability to do. What I thought I\’d do is go through five things that have been identified from a behavioral economics standpoint. I want to go through them first, Krause. I want to talk about an example of some people that we\’ve met and how that applies.

The first thing we\’re going to talk about behavioral economics is herding. Back when human beings were hunters and gatherers, the instinct to herd and stay with large groups of people and follow their actions made a lot of sense. There was safety in numbers but history doesn\’t translate that well into finances. David did a great job talking about Warren Buffett a little bit. He has a quote, “The instinct to herd can wreak havoc on our investment returns,” and Warren Buffet\’s mantra, “Be fearful when others are greedy. Be greedy when others are fearful,” is something that clients with the instinct to herd will often find meaningful. There\’s one, doing what everyone else is doing.

Anchoring is the second one. When clients anchor, they incorporate irrelevant information into their financial decisions. If we go through a quick example of somebody who says, “I like this stock at $100 per share. Now, it\’s $60 per share. It\’s a 40% discount. I should check it out now.” All that meant was that\’s all it traded for. Way back when it didn’t mean it was necessarily worth $100. At that point in time, it was simply what the market dictated. Let’s say we wanted to go sell a house. I know in my mind my house is worth $1 million.

The market says it\’s only worth $800,000. I had that emotional attachment to it that I\’m not going to sell it any less than that. A lot of people with the same sentiment talking about the stock Microsoft. Microsoft hit a high back in December of 1999. It did not go past that value of what that stock was worth until seventeen years later in 2017. Trying to take some of those biases off the table and getting rid of some of that emotion. Traditional economics say we make rational decisions. Trying to bring light to that.

This next one\’s a big one. Confirmation biased. Everyone likes to make correct, well-informed decisions. Consequently, we seek out information that supports our decisions and downplay or overlook contrary opinions. Think about the last time you bought a new car. You\’re trying to tell everyone about that car and trying to hear from everyone, “It\’s a great buy,” and everything else that\’s out there. We\’re looking for validation to reinforce the purchases that we make. Some clients will focus on the negative number and ignore positive results.

In an example of confirmation bias, clients who become pessimistic gravitate towards news or information that confirms their pessimistic outlook. Think about this in a research. You put it in Google anything we want to find, you\’re going to find it. Without diversity of information, it is difficult to make well-informed investment decisions. In order to be helpful, we often point out data and perspective is contrary to a client\’s pessimistic outlook. You need to take a look at all the options. I’ve got a lot of people come in here with perceived notions. As licensed fiduciaries, we take that seriously here at Thrive. Sharing information with clients, that’s supporting data.

Is it almost when your client comes in to meet, they literally have to dump their mind of what they think is right? Is that possible? Is it a process that you have to work through with conversation? Based on what we think, even though that might not be correct is what a client will do. Yes or no?

A lot of times we tell people during workshop, “Come in for that second opinion.” That\’s part of that Thrive Retirement Roadmap Review. Sometimes people come in looking for validation what they\’ve already done, looking for these confirmations that we\’ve already spoken about. Some people do come in with that open mind though. They don\’t know what they don\’t know. David chatted about it a little bit earlier about people that are self-managed today with all the information that\’s going out there. Inevitably what do I do? That\’s the process that we take people through, all part of that Thrive Retirement Roadmap Review.

David, based on what Bret shared, would you go to your thought? Would you say that all of the information that\’s pinging on your phone throughout the day or pinging on a client\’s phone puts them in a position to accept the information that they want? That they\’re familiar with, more so than new information?



Going to what Bret\’s talking about, people will gravitate to what they want it to be. They\’ll seek out information that validates which may not be the right. What\’s right isn\’t always popular. What\’s popular isn\’t always right. The thing that I notice is it\’s random. It\’s a process. When people come visit with us, it\’s a process. We have people walk through the door, who literally at the end of the workshop were in panic. That will come up to you. They\’ll say, “I’ve been to a lot of these. This was thought-provoking and it\’s got me scared.”

That\’s not our intention. That was the way they received it. When they come in, it\’s 50/50. Sometimes they\’re right for being scared. There are other people that we have to talk off the cliff and tell them, “You\’re fine. Don\’t wait three more years because you think you have to. You can definitely retire now.” I’ve got a case sitting in front of me that I\’m going to share with people, “I\’m fine. I got nothing to worry. I just came here,” and I tell him, “You\’re not fine.”

They don\’t always like that.

It is what it is. Let me go through these last two topics that we\’re talking about and related to that behavioral economics. The inability to make changes, we see this sometimes as people chronologically mature. Clients who lose physical flexibility as they age, but they also experience reduced intellectual adaptability. We\’ve chatted about this in previous shows in terms of when the brain function hits its peak and starts declining from there. We find that as people continue to get a little bit further into retirement. They find it\’s a little bit more difficult for them to make changes. Some of that big part is looking to make those changes. Make them earlier on number one, while you have the energy because they’d lose as well.

The last one is what we call base rate bias, which is the tendency for people to judge the likelihood of the situation by not taking into account all relevant data. Focus more heavily on new information without acknowledging the new. Information impacts the original assumptions. We\’ve shared it over the shows, this tool that we have that\’s called Riskalyze. It assigns a number associated with how we believe how you\’re going to react to different markets. That\’s not where it stops there. You aren\’t just a number. It\’s taking that conversation and what we\’ve identified, and then figuring out, “What does that mean to you?” That\’s part of the Thrive Retirement Roadmap Review. One of the exercises we take people through is that Riskalyze analysis so that we can try and understand your behavioral economics. How behavior finance inevitably applies to you.

We continue to talk about second opinion. We continue to talk about education. We continue to talk about absorbing information. The reason we say it, Karen, is we want to be able to educate the audience so the mistakes are minimized.

David, he\’s better at this than I am. He\’s on a healthy eating, clean diet. I\’m trying to be healthy. We were watching one of our favorite channels the Food Network. In the story, they were talking about a woman whom the lead in line was she cashed in her 401(k) to buy a food truck. The first thought in my mind wasn\’t, “That\’s great that she did that.” My first thought was, “She looks young. She is not 59 and a half years old. She probably made a mistake,” but somebody probably said to her, “You’ve got that 401(k) sitting there. You should take that money.” That got me thinking about mistakes that when we meet with people, when they come through the door that people commonly make. The reason that they don\’t make it is they don\’t have the correct information.

[bctt tweet=\”When you start to hear things, don\’t take action. Evaluate, do your due diligence, and then make your decision.\” username=\”\”]

We were saying if you put something into Google, your mind is going to get fried. If you look on our website,, there\’s information that is real and true. We can\’t lie and we can\’t make up stories. We know if you have a 401(k), it\’s there for one reason, retirement. If it\’s prior to retirement, is it a good idea to take your money out of 401(k)?

It\’s not a good idea. It depends on the situation. If it\’s a hardship situation, then there\’s consideration but in investment in a lot of times, it\’s not that case. We\’ve seen many times where with the advice of their financial advisor, we\’ve had people cash out 401(k). Not rollovers, not transfers but cash out. Use that money as down payments on vacation homes and secondary homes. Not as frequently the penalty situation but the tax implication. Bret goes over a particular situation of a client that we had. We use it as a story in one of our workshops.

I was thinking of somebody in particular that came in to meet with us. They took their information from somebody who they thought a financial advisor. He was an insurance agent. He was not acting in their best interests. He was acting in his best interest. They said they were interested in buying a beach house, a shore home. He\’s like, “Sure, take it from this account.” They did, not knowing the consequences. We do know the consequences. We take an overall holistic approach. We look at every which way your finances are going to affect you in retirement and prior to retirement. We look at taxation. We look at going into retirement. “How is my Social Security going to work? Is it going to benefit me? Do you have a pension? Is the pension going to be there when you\’re ready for retirement?” It goes back to where am I taking my advice from?

One of the things on that too, Joe, is it came across that this Department of Labor fiduciary rule basically got squashed. You would think that the intention of it, although it was a little convoluted and probably a little overarching, was designed to benefit the consumer. To make sure anybody dealing with your finances had a responsibility, had an obligation to adhere to the fiduciary rule. Which means you must act as a prudent person and do what\’s in the best interest of the client.

I’ve had some conversations with people. I deal with people who are at the institutional level and in charge of making decisions on how things and procedures work. I would caution our audience to be careful about the information that they get out there. Not everybody is a fiduciary. Not everybody\’s obligated and held to that standard. People in our industry have moved from a defensive position back into an offensive decision. I mean offense in the sense of business, but also it can be offensive that they\’re not given the right information.

It becomes the Wild, Wild, West in some ways.

Karen\’s exact example of somebody distributing money out of a 401(k) which is designed for retirement. It gets advice from an insurance agent that, “Sure, you can do that.” Did they consider what it\’s going to do to their future social security? If they were already at Medicare age, did they see if there was going to be a surcharge impact cause of that? If they were going to do it, should they have waited a calendar year or wait for the calendar to turnover? That there wasn\’t that much income showing up in the same year and it wouldn\’t be as big of a tax bite. It\’s those types of considerations that our team takes.



You also see it too, especially when you talk about juggling that healthcare piece. David talked about Medicare. What happens when people are taking it out early and there may be entitled to a health care subsidy? A withdrawal from a 401(k) or an IRA can ruin that planning that\’s out there. We meet a lot of people that are fortunate enough to retire before the age of 59 and a half. Typically, we talk about penalties in 401(k)s of 10% before the age of 59 and a half.

Sometimes it\’s doing that planning. Maybe you are fortunate enough to retire at 55, 56, 57 where you don\’t want to roll that money into an IRA. Where if you keep it in that employer-sponsored plan is it\’s possibly one way to avoid that 10% penalty. These are all things that when people come in and take advantage of our complimentary Thrive Retirement Roadmap Review session that we go through. Just making sure all these puzzle pieces are put together.

I can think of a client that I\’m meeting tomorrow morning that their big thing is looking at purchasing a new house. It\’s the third one for them and being an investment property. They were starting to talk about pulling money out of their IRA or 401(k). Not only they\’re going to withhold a mandated 20% from that 401(k), but you\’re going to be subject to that additional 10% IRS penalty in addition to. It\’s taking our time, slow down. People try to make this a race. This is an endurance race of rationally getting behavior economics out of the equation. I\’m making sure that we\’re making rational decisions when putting all these pieces together.

Not to belabor the 401(k) story, but we met with a lady. A lovely person came in and she has a 401(k). She has a pension plan. She said, “I have the option of taking a lump sum. Why would I do that? If I took the lump sum, it\’s not going to equal my $5,000 a month for the next ten, fifteen years.” I said, “Yes, and who is the beneficiary of your pension that\’s getting paid?” She said, “There\’s no beneficiary. There\’s not one.” I said, “What happens to all that money that you saved? God forbid you drop dead or there is an accident. You take that pension for two years, then what happens to the money?” She said, “Yes, that\’s why I\’m here. I\’m glad that I took the time to come in, meet with you and to come to the workshop.”

It\’s our ignorance.

It is, and there\’s nothing wrong with that.

I\’m included, I’m in the circle. There is much to know that we don\’t know, and life gets in the way. Life pops up, a scenario pops up. An interest in buying a third property for a rental property looks to be a good idea. Perhaps I can add extra money or add additional dollars. All of that is what causes us all of our trouble, which is why we need you.

Vice versa. Go back months ago when we first started this radio show, what was it like getting ready to get online? We sat here trembling, like we were scared. We relied upon you to give us guidance, education and make us feel good when we did a good job. Point out when we could have done a better job. That’s the same thing we do. It\’s not your day-to-day occupation to understand how all your finances work. At some point people also forget that.

[bctt tweet=\”Don\’t act on behavior. Try to go get the facts.\” username=\”\”]

We\’re starting to see a lot of people at our workshops that are at that point where they\’re starting to say, “In a few more years, number one, I might not be here. My spouse may outlive me.” Depending on which spouse handled all the finances, they have somebody who may be not that experienced handling that person\’s future. We\’re hearing a lot of that or, “I’ve managed my own money. I\’m getting a little tired. I want to enjoy myself instead of being glued to the TV or whatever it is that I get my financial information from.” That\’s another reason people consider a transition to a qualified financial planner.

I can\’t stress it enough. I continue to support it. I continue to ask our audience to don’t be afraid to get educated. Don’t be embarrass to get educated and to ask the questions.

It\’s a good time to ask questions. It’s a good time to probe. It’s a good time to try and figure out where you are. If you\’re thinking about finances, if you\’re thinking about retirement, we encourage you to think of those questions. We\’re going to do some text and some live email. We\’re going to take some interaction with the audience and try and be able to bring what they don\’t know to help educate others.

You bring up a good point there. You know where most people get their financial information?

From that circle of friends and family.

Across the fence, “I was thinking about this. What do you think about that?” We had a client call back. We\’ve managed their money for some time. They heard at work and the industry that they happened to be working in towards this where they wanted to invest in some of this new cannabis industry. He had two particular investments that he wanted my validation on. I tell this to clients all the time. I say, “I can\’t be diplomatic with you. I must be honest.” I flat out told them. He argued and debated it with me and I said, “God bless. If I\’m not the guy for you, I\’m not going to fold on the situation. I\’m going to do what is the right thing and tell you to.” Ultimately, he heeded the advice. These stocks that he picked we\’re going to go through the roof.

Even though that\’s a booming industry, it wasn\’t the right ones. They\’re worth about half of what they would have been from his initial investment. The idea is to buy low and sell high and not vice versa. Be careful, our audience when you go out to these picnics, outings and congregations of different things where you start to hear things, don\’t take action. Evaluate. Do your due diligence. Do a little bit more homework and then make your decision. Bret talked a little bit about that. Don\’t act on behavior. Try to go get the facts.



Maybe go through a couple of quick things as we\’re going to wind up the show. A quick quote, “In 1968, the personal savings rate in the United States was 12% and the debt to annual income ratio was at 15%.” If we fast forward to 2018, the personal savings rate has fallen to 3%, while the debt annual income ratio has increased to 22%. On the whole, Americans are saving less and borrowing much more. I don\’t think that\’s news to anybody. It\’s something we\’ve got to break that trend.

That\’s not the way that you get out to retirement. It\’s important as Karen and I are parents to a 21-year-old and a seventeen-year-old. Bret\’s got three kids younger than that, it\’s our responsibility to get them educated. The education that they\’ve received thus far it\’s based on that. People who are teaching our younger generation are the people who\’ve made the problem all along. We\’ve got to get much more diligent about getting the information out there.

As an example, we had somebody who came to our workshop in Montgomery Township Community Center. A nice couple who came up to me after the workshop and asked me a bunch of questions. I said, “I’ll be happy to answer this question. I’ll get a little bit more detailed than we can spend here. Why don\’t you come in for one of the Thrive Retirement Roadmap Reviews?” They agreed to. What I’ve got sitting in front of me here is all of their financial information. They filled out a retirement planning form where they congregated all their data, all their information. No social security numbers, no policy numbers, no account statement numbers. We don\’t need any of that, but we need to know what your situation is.

It’s like we need an X-ray, a CAT scan, an MRI and a blood test. I can\’t make a diagnosis unless we have all of those. We want to make the right diagnosis. Pension statements, brokerage statements, social security statements, have all that information. When they walk through the door, Joe, I could get a sense of two things. One was which one of them was in control of the situation? It\’s not hard. He or she who speaks the most, probably the one who\’s making the decisions. I also sensed a degree of pride about thinking that they\’ve done well and everything\’s taken care of. They were organized. That was good signs.

I\’m a little bit of I know more than you know. Which we had no ego. If you do, tell me. If not, hopefully your ego and pride are a little bit in check so that you\’ll take the information. As we went through, long story short is they\’re not in great shape. I said exactly what I said a little bit earlier, “Do you want diplomacy or you want honesty?” I said, “I\’m obligated to give you honesty. We may not end up friends. We may not end up with a relationship together. I at least want you to have a conversation with yourself.” They have two financial advisors. I said, “This is something. Go test them. Go back. Make sure. You only got one shot to do this.”

In summary of the whole thing is they\’ve got expenses of about $6,500 a month, which is a good standard of living. They still have a mortgage that\’ll probably be with them for fifteen years in retirement. One of the things that we see is if people who will have a successful retirement tend not to have any debt. Usually the mortgages are eliminated by that particular point in time. For this family of the $6,500, about $1,800 was covering housing costs. Fifteen years from now, yes, sure. We’ll get it skinny down, but pension.

[bctt tweet=\”People who will have a successful retirement tend not to have any debt. \” username=\”\”]

Some of the things that we saw were the pension. The survivorship benefit was 50%. They didn\’t know that they lose one of the social security checks after the first spouse passes away. They converted a bunch of their money into annuities and didn\’t understand the annuities that they had. Why they purchased them? They bought the safety concept, but they don\’t understand that they\’ve got ten and fifteen-year surrender charges. It locks up their money and they don\’t have liquidity. One spouse has already taking Social Security.

The second wants to start taking it next year when that person retires. We went through a ton of things. That\’s what we do on our first appointment. After that first appointment, I asked him. I said, “We\’re going to prepare these reports for you. We\’re going to give you social security maximization. We\’re going to do tax clarity and make sure everything looks good there. We\’re going to stress test and then we\’re going to analyze your risk.

That\’ll be our second appointment and that\’s completely complimentary. At the end of that appointment, everybody sitting at this table is going to have a good idea whether or not you\’re definitely on track to meet your goals and objectives. After that, it\’s up to you. You want to work on your own. You want to work with your existing advisors or you feel that we\’ve created enough value that you want to engage us. That\’s a conversation. Joe, all of that exists on our website.

I want to encourage people not to hesitate. Communicate with us. Let us know what you want to know more about, so we can discuss it on the radio show. We\’ll get back to your responses via email or text message. Do it through the website for email. We will definitely get back to those questions. If at some point in the future you\’re comfortable, come engage us. We\’ll have a conversation with you.

What a great way to end this program with an example of how much detail is part of that complimentary sit down with David, Karen and Bret here at Thrive Financial Services. On behalf of David Bezar, Karen Bezar, Bret Elam and all our audience, I\’m Joe Krause. See you next time.

Important Links:

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top
Call Now Button