Are Fees Stealing Your Future? What LGBTQ+ Retirees Need to Know

TPIR Ep 93 Full Show.mp3: Audio automatically transcribed by Sonix

TPIR Ep 93 Full Show.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Speaker2:
Welcome to Take Pride in Retirement, the podcast dedicated to helping members of the LGBTQ+ community protect and grow their hard earned money. Get set for a show full of education and insights with your host and advisor, Matt McClure. We recognize every family is unique. The goal of the show is to help you achieve financial freedom so you and your loved ones can have the retirement you've always dreamed of, a retirement you can take pride in, no matter who you are, where you're from, or who you love. So now let's start the show. Here's Matt McClure.

Speaker1:
Hello there, and welcome to another edition of Take Pride in Retirement. Matt McClure here with you, your host, your advisor, your friend, your pal and your confidant. Really appreciate you taking some time, as always. I can't say it enough, so that's why I say it every time we get together here. How much I appreciate you. A lot of great stuff to get to today on the show that we always talk about LGBTQ, plus retirement planning issues, getting you to and through retirement. That is my goal. And we're going to talk about a lot of hidden fees today and things that are kind of quietly draining your retirement security, especially as an LGBTQ plus person. I will bring it home to that as always. Um, first, though, I want to just say in addition to saying thank you, in addition to saying welcome to the show, if this is your first time joining, please, please, please also go to the website. Take Pride in Retirement Comm. Appreciate that. Subscribe wherever you get your podcasts and view us on YouTube. Hello YouTube land. Yes. Search for. Take pride in retirement there. Like this video? Subscribe to the channel. Really would appreciate that. It really helps the cause quite a bit. And if you enjoy what you're hearing, spread the word. I'd appreciate that as well. All right, so this is sort of our question of the day today. Is your retirement money working for you or is it quietly working against you in a way? And, you know, I mean, if you've ever wondered whether your retirement plan is truly working in your favor for you, for your, uh, partner, your spouse, your chosen family, then we invite you to schedule a 100% complimentary consultation and a review of your plan.

Speaker1:
And you know, here on the show, I am giving information. I'm giving. You know, it's it's educational, right? It's for educational purposes only, as we always say. But when I meet with you in person, that's when I can offer For advice while acting as a fiduciary in a fiduciary capacity. What does that mean? It sounds like one of those wonky words. Um, and it kind of it kind of is a little bit, but it basically just means that I am when I meet with you and I start working with you, I have to act in your best interest, not my own. I can't, you know, just be looking out for lying in my own pockets and that kind of thing. And that would be true for me anyway. But I'm also, you know, legally, morally and all of those things ethically bound to do that. And so up front, you know, I'm going to be working for you and in your best interest. So go to take pride in retirement, take pride in retirement, and, uh, reach out there. You can schedule a consultation that buttons directly at the top of the page.

Speaker1:
You can also give me a call if you'd like to do that. You know that thing in your pocket that's, uh, you know, kind of rectangular, and it's got all the buttons and the apps and stuff. One of those is a phone button. Yeah. And you can dial people up and call them 85524692 11 (855) 246-9211. Is that number. All right. So we're talking about fees today. It's one of everybody's favorite topics. But I'm going to try and turn it into a favorite topic because I'm talking about not like just oh here the all these fees that you're going to have to pay. And some of them you may not know that you're paying and you just can't do anything about it. No, I'm going to talk about fees and how much you may be paying and not even know it. And then at the same time, I'm going to say, okay, here's what you can actually do about it, right? Here are the things that you can do to minimize those fees, because I want you to be as efficient as possible. Right. So get the most growth for your particular scenario, your particular situation in life. Also, I want you to be efficient as well and tax efficient. So we want all of those things we talk about quite a bit on the show. And today we're focusing on that sort of fee efficiency piece. And that means not paying fees that you don't have to pay if you're paying unnecessary fees.

Speaker1:
Let's get rid of those. Right. So what does that mean? Well, investment fees are one of the few things in retirement that you can actually control. I always say control the controllables right. Make sure that you take the reins of the things that you can actually control. And for households in the LGBTQ plus community, you know, you often have fewer safety nets, perhaps. And that can often mean less room for error. So you've got to know what your plan is going in and control those things that you can control. Hidden fees are a big one that can shorten your retirement or even force lifestyle change compromises later on. You know you might not be able to take that month long vacation to, you know, some tropical destination that you want to go to. And it's always been on your bucket list. That might have to be a week in the mountains nearby. You know, it's it's true, though, because fees like, it seems like a little thing. You're like, oh, it's just like 1% here or, you know, half a percent there. Those percentages can add up over time. They really, really do. And so, you know, fees kind of don't feel dangerous for that very reason. You know, they're small. They're sort of buried in the statements that you might get every month or every quarter or whatever the situation is for you. And you kind of just sort of skip over them.

Speaker1:
Right. And they're rarely explained in a clear, concise way that you can actually understand. So that is why they don't feel dangerous. But as I said, over time it really can build up. It could delay A retirement by years. You know, perhaps if, if that, you know, compared to what the situation otherwise would have been had you not been paying those fees that you didn't need to be paying. It turns out. And so, you know, you didn't have that money growing for you. It was going into somebody else's pocket. And I get it like, you know, people gotta make money and people got to do what they're going to do. But as someone who acts in a fiduciary capacity, meaning working in your best interest, again, not my own, I am bound to look out for you and make sure that you're not paying those unnecessary fees. Right. And so that not only those, those hidden fees can, uh, delay retirement by years, they can also drain hundreds of thousands of dollars, potentially depending on how much money you have to work with. And so some common fees that we are going to take a look at here. Advisory fees, obviously. Um, that's one that I am familiar with. When we meet, I can explain to you what any advisory fees are, um, and, and how the advisory fee structure that we can work with is going to generally be lower than pretty much anybody else that you're going to find out there.

Speaker1:
So you know that that's what we'll talk about in our one on one consultation, which again is free. Uh, we'll talk about transaction costs, which with us, you know, there's no like if you want to make a, you know, change your, your asset allocation or whatever or anything like that there, we're not going to charge like per transaction fees and things like that. That just isn't a thing that we do. Um, workplace plan fees. Boy, that's a big one. We'll get into that a little bit more. Um, and all of that, like the fees that you're paying and, and one of the one of the fees, too, that's kind of under the hood that you might not, um, think about or really might not even register for you is like a mutual fund. Like a fund management fee, right? Because if you if you're invested in mutual funds, those are going to tend to have a lot more fees than something like an ETF. And so that's why ETFs have gained a lot of popularity because of the lower fee structure. There's more flexibility there as far as when you can make trades like with with mutual fund. You have to wait until like you can put in a in a trade like a sell order or buy order during the trading day. But a mutual fund cannot be bought or sold technically until the end of that trading day.

Speaker1:
And Lord knows, if you're selling for a reason, there's a lot of market movement or whatever happening that day and you're like, oh, get me out of this, or oh, let me buy that. Lord knows what's going to happen by the end of the day. The situation could have changed if things were kind of wild. So with an ETF, you don't have to worry about that. You can buy sell whatever during the day. So some more flexibility there with ETFs and the lower fees, low fees or no fees. A lot of the time with an ETF. So all that to say that, you know, if you sort of do the math on it, you'll come up with a number called your expense ratio. And without getting too wonky or technical about it, it's basically like you take the total amount that's in your account in your investments, and you kind of divide that by the fees that you're paying. And then you get your expense ratio number. And we want that number to be as low as possible. And we can look at what your expense ratio is. Compare it to what it would be if you work with us again go to take pride in retirement schedule that complimentary consultation. And so here's the thing though I don't say all of this to say, oh, you're doing something wrong or you've you bad, bad person, you up and slap you on the wrist.

Speaker1:
No, it's not about doing something wrong. It's about finally seeing what's been hiding under the hood, what's been invisible to you? What's been out of your line of sight? And unfortunately, there are a lot of scenarios where that your, you know, line of sight, you're where you're looking is not going to be inclusive of those fees, because a lot of people want to try and keep those fees out of sight, you know, because out of sight, out of mind and you don't know about them and they're lining their pockets and the whole deal. So the whole point of this show and the whole point of this episode especially, is to, you know, take those blinders off to to take a look under that hood to make sure that you know what you are paying. And if nobody has ever clearly explained that to you, explained to you what you are paying, explain to you the fees. Explain to you, uh, whether they charge a fee for a particular thing or not. You are not alone in that, because a lot of people are confused about these. And so let's take a look at that together. Again go to take pride in retirement. Take pride in retirement. Com or call 85524692178552469211. It is a complimentary consultation. So the back to the sort of bigger question that we're asking today is your retirement plan putting a strain on your savings.

Speaker1:
And I'm in this sort of little section of the show I'm going to be talking specifically about. Are you seeing the results that you want to be seeing from your workplace plan, or are there fees under the hood there that you might not be aware of? And a lot of people, and this is true, you know, just at least anecdotally from from what I experience in my life, a lot of LGBTQ+ people in the workforce stay in their jobs longer than they wanted just to keep those benefits. Because workplace benefits, I'm telling you, they're worth a lot. They're worth a lot. And so especially when you compare things like, oh, the costs to private plans these days and those Obamacare subsidies that that they let expire and all this stuff and Medicare premiums going through the roof and all those things. And so that's one big reason why a lot of people, especially LGBTQ plus folks, stay in their jobs longer than they want to because they get those health care benefits. And so that makes the efficiency of your plan absolutely critical, because, you know, if you've got a lot like a fee heavy asset allocation under the hood, then that's going to be eating away at what you could be getting for your retirement years. Then, um, it could be eating away at that more than you would realize. And so 401 is kind of the fees in them really tend to fall into two different categories.

Speaker1:
One is administrative fees. Right. So there's an administrator of that plan. You may have a 401 K at work just as an example or a 403 b or you know, TSP if you're a fed, but you've got different sort of asset allocations or different kind of plans to choose from. Underneath the hood of your 401 K, generally speaking, it's not just a one size fits all thing. And and even that may come as a surprise to you. Um, I know back in the day, it did to me. I'm like, wait a minute, I can there are choices I can make for my 401 K. It's not just an automatic thing. Like set it and forget it. And there you go. And, um, you know, I ever since I sort of went in now as a speaking as a financial advisor, ever since I sort of went in, made some changes myself. I'm like, oh, okay. Now I'm actually seeing some growth. It's kind of crazy when you know that there are choices to be made. So yeah, generally speaking, there are choices to make under the hood as far as your asset allocation and stuff like that. And so those different kind of plans and, and all of that and uh, just even being able to offer you those plans and keep the lights on in the offices of the people who actually do the thing and pay the people who do the things, those are administrative fees.

Speaker1:
Right? And then there are the investment expenses themselves. So talking about the mutual funds, are those, you know, going to be a higher fee, um, thing that is, is contained within that 401 K, the investment portfolio that's within that 401 K. Um, or you know, are there more ETFs, are there lower fee options there. And so, you know, even a small difference, you might say, oh, well, you know, if we're just talking about a half a percent or 1%, it's not that big of a deal. But over time, like even a half a percent or 1% fee difference can be a big deal. I mean, that can quietly cost six figures over time, and asset based fees grow as your balance grows. So if you want to, like, pay attention to that. And we can take a look at that. If that's something that you're concerned about like do because I have a larger balance in that 401 K, does that mean I'm paying more in fees percentage wise in addition to just dollars and cents that, you know, because obviously 5% of $100,000 is more than 5% of $50,000, for example. But am I also paying, you know, rather than 5% of whatever. Am I paying 6 or 7 or 8% of whatever, you know, because I have a higher balance in the account, like is it structured that way? And we can take a look at that under the hood.

Speaker1:
So that's what I mean by asset based fees. And that's even when the service doesn't improve. You know like go try calling the HR department about your 401 K at work. And they'll be like oh, nope, sorry, you got to call this other person and then your chances are not going to get like personalized help with your own situation, because the people at the call center for whatever plan are not going to be financial advisors, they're not going to be fiduciaries or people acting in a fiduciary capacity, rather, and they're not going to necessarily have your best interests at heart. They may know the different plans and can explain to you like, oh, this allocation is for a person in this situation. And that person, uh, in a different situation might invest over here. That may or may not apply to you, but if you meet with me, I'm going to talk to you about what applies to you. Right. That's the difference. And so there are some, um, red flags really. And then there are some red flags with flashing neon signs, uh, attached to them. Um, but there are some red flags to work out, uh, to, to look at here Rather, though, as we go through this and high cost mutual funds are kind of the default a lot of the time. So beware of those and we can again take a look under the hood, do a deep dive analysis of that and show you what your expense ratio is now versus what it could be.

Speaker1:
If you work with us, variable annuity wrappers could be inside plans. That means that. So an annuity a lot of times people think oh good. That's going to be like a more guaranteed thing. And there will be some guarantees even inside a variable annuity. But that money, that principal that's inside that variable annuity, that's something that is at risk in the market. So beware of that as well. And then there are a lot of I mean, if you ever get to the bottom of a statement of any kind, but especially an investment statement or, um, you know, some sort of, even a bank statement, sometimes it will be this way. There are just paragraphs and paragraphs of disclosures that can be confusing. They'll use language that maybe you don't understand. They are supposed to be as clear as possible. Like just like from a compliance sort of standpoint, we're supposed to be clear about those things. But as a layperson, looking at the teeny tiny little fine print at the bottom or on the back of a page of a statement, your eyes can just glaze over, right? And so that is like getting an explanation of that can be very difficult inside a work based plan. And so here's kind of the bottom line on all of this. Knowledge is power. Knowledge can be power like like knowledge really is I guess a better way to put it.

Speaker1:
Knowledge is like the possibility of power, because having knowledge that you don't apply is just unused knowledge. And that's not power, but having knowledge about something that you do apply like applied knowledge. That's true power. And so yeah, I'm trying to help give you the knowledge, the education here, but I also want you to take that and apply it and take some next steps to make things better and control those things that you can control. And then that control leads to confidence, because then if you are at least if you at least have the reins of the stuff that you can take the reins of, then my goodness, how much better you feel about life and about the possibilities that are there in the future for you, just because you know more about what's going on and you control more about what's going on. So a strong retirement plan, it's not about just the dollars and cents of how much you have saved, it's how efficiently that money is working. Are you paying those high fees in those mutual funds that may be the default of your 401 plan. Give me a call. We'll find out and then we can help you cut those fees, get you a more fee efficient portfolio. So then you've got more money working for you. You've worked hard for that money. You have worked so hard for that money.

Speaker1:
Let's make sure that it is working as hard as possible for you so that you can have a retirement you can take pride in. Now, if you want clarity around fees, around risk, around taxes, around any of the things that we're talking about here on the show, give a call to 85524692178552469211. You can also go to take pride in retirement comm. Take pride in retirement comm. You can also, uh, shoot me an email. Just email me at. Matt. Take pride in retirement. Com. Once again Matt at take pride in retirement comm I'd love to hear from you. I'll answer your questions there. We can hop on a quick call. Uh, you don't have to be. By the way, in. I'm based in metro Atlanta. You don't have to be in Atlanta for me to work with you. I can meet you with you via zoom. Uh, we can do it that way. A lot of people prefer to do it that way. So you can meet at your convenience, right? Like, we can be kind of virtually face to face anyway. Still. So. Yeah, just clarifying that. Give me a shout. Matt at take pride in Retirement. We'll set something up for you. Okay? All right, so one more thing that we want to cover in this particular episode that I've sort of emphasized a couple of times, but I want to kind of bring it home, wrap it in a nice little bow for you.

Speaker1:
So it's a pretty little present. Um, and that is the fact that small percentages we talked just about, oh, it's all, you know, he's talking half a percent or 1%. Those small percentages can, over time become big losses. That can become big losses. Like. And truth of the matter is, in my experience, LGBTQ plus retirees plan for longer retirements oftentimes. And that makes compounding good and bad. So like if you are like what was it, Einstein, I guess, who called compounding interest the eighth wonder of the world? And that is for very good reason Because the people and I think he went on to say something like, the people who understand it, make it the people who don't pay it. And that's really what this is about, right? Compounding interest is, you know, if you have an 8% return, um, year over year in investment, well, then basically so that year, that next year, that 8% becomes essentially part of the principal part of the part of what you have, the money that you have made that you've put in there. Like it's added to that balance, right. And so then that following year that you have another 8% return on whatever the investment might be. So that 8% is not just on the original principal, it's on the principal plus the other 8% that's been added to it. And so then you're making that 8% on a higher amount and so on and so forth.

Speaker1:
And so it's it's really a, um, you know, and that compare that to like simple interest, right. Instead of compounding interest, like a simple interest, is 8% on the original balance each and every year in this example. But this would be 8% compounding in in my illustration here that I've just thrown out there that hopefully you'll understand, um, this illustration is, you know, compounding. So it gets all added to it, kind of snowballs and grows at a faster rate. And so compounding can be good in that sense. It can also be bad in another sense if you're paying too many fees. If you're not, you know, if something is eating away at that growth, that can compound over time as well. So it can work for you or it can work against you. Just like Einstein said, boy, he was a smart guy, wasn't he? Um, and so you lose when you've got like, sort of reverse compounding. I wish there was like a better word for that. And I can't think of one. Um, I might just make one up and say it. Who knows? I'm not really good at just making up words, but the reverse compounding effect You're losing the money that you're paying in fees, the growth that you could have earned on that. And then all future growth on those lost dollars. Think about it. If those if those dollars, year after year after year, stay inside that portfolio.

Speaker1:
And rather than being paid out in fees or, you know, or the, you know, the growth on that money that's being paid out in fees, if that stays where it is and the growth gets compounded on top of it, rather than it all being taken away and no growth happening, and you have a smaller pot of money to grow. How big of a difference can that make, right? It's huge. And so if you want to say okay, well yeah. Still though, a 1% doesn't sound like a lot, but let's say if you've got a 1% fee, for example, and you think that's harmless, over time it can actually reduce your retirement income. It can erode the growth to an extent where your retirement income is not going to be what it would have been. And it can shorten how long the money lasts. In retirement, you want to have something that's going to live. As long as you do retirement, that's going to outlive you money wise, not you outliving your money. You know you don't want to wake up one day. Let's say you plan to age 90 and then you wake up on your 91st birthday. You got no money, you know, except for maybe Social Security, something like that. We don't want to be in that situation. So you want to plan for all of these things. And fees can be a big thing that eat away at that potential for growth.

Speaker1:
And whether it's, you know, 1%, 2%, three. I've seen fees of upwards of 5% sometimes. And so that can really like think if a 1% fee. And that could be just a 1% fee on a particular fund that's inside your portfolio. And then you've got to think about any other fees that may be charged, different portions of your portfolio or different investments or assets that you may have. And so it all has to be working together. All the oars need to be rowing in the same direction. You need to make sure that you are planning for optimal growth across the board. And so, you know, most people I talked about that fine print and all the like fee disclosures and all the things at the bottom of your documents and your and your statements and all the thing. Most people don't read those. Um, again, if you've ever tried to, your eyes probably glazed over. If you need something to read at night to make you fall asleep, that might be good reading for you, because it can be just a lot of stuff that doesn't make much sense to the normal sort of layperson. And unfortunately, that's kind of by design, because a lot of, you know, places that don't have your interests at heart might say, oh, well, this is, you know, we want to just kind of slip this in and we don't want people to look at that.

Speaker1:
That's why we put it in the teeny tiny print down at the bottom. Because don't look at don't look over there. Just look over here. The things we want you to look at. Right. But it's not a failure of yours. You're not. You're not alone in that experience. You just don't have the time or the capacity. A lot of times to read all that stuff. And so I am someone who has taken the time to get the education, to make my life about helping people in the LGBTQ plus community and beyond to make their lives better, to have a retirement that you as a listener or viewer of this show, if you're watching on YouTube to make your life better so that you can have that retirement that you can take pride in. Period. That is my goal. That's my goal. And so if this conversation has raised some questions about what your money is really costing you, let's talk. Let's find out exactly what your money is really costing you. And what that costs is not a penny for you to find out how much your money's costing you. Because the consultation is free, we'll run a deep dive like top to bottom analysis of your current situation. Take into account all of the different assets that you may have. Whether you've just got a 401 K okay, great. We'll we'll take a look at that. If you've got A41K and IRA.

Speaker1:
Maybe you own some real estate. Maybe you got, you know, a savings account. Maybe you've got money market. Whatever it is we'll take. And because everybody's different, I've never seen two people who have exactly the same goals and are exactly alike in all of their investments. Everybody's situation is different and everybody deserves a retirement they can take pride in. And that includes you. So give me a call 85524692178552469211. Or go to take pride in retirement. I mean, you have worked absolutely hard for your money all of your life. Let's make sure it's working hard for you as you get ready to retire one day. That is the goal after all. All right, so next time around on Take Pride in retirement. We're going to talk about taxes a little bit. We're going to talk about rollovers some. And I've got a very special guest who's going to join us on the next episode from Experian. He's going to talk about some the the way to build up emergency savings, how few people have emergency savings in this world. And it's, um, it's very few. And then let's talk about easy ways to build emergency savings without going broke and breaking the bank. So that's to look forward to next time. And that's going to do it for this time. I thank you again so much for listening or watching the show. I really do appreciate it each and every time we get together. And until next time, take pride in yourselves and take care of each other. We'll see you then.

Speaker2:
Thanks for listening to Take Pride in Retirement. Members of the LGBTQ plus community deserve to work with a fiduciary financial advisor who puts their needs first. To schedule a free no obligation consultation with Matt McClure and the team at Active Wealth Management, call (855) 246-9211 or go online to take pride in retirement. Com investment advisory services offered through Brookstone Capital Management LLC. Bcm, a registered investment Advisor, BCM and Active Wealth Management Incorporated are independent of each other. Insurance products and services are not offered through BCM, but are offered in sold through individually licensed and appointed agents. Matt McClure and Active Wealth Management are not affiliated with or endorsed by the Social Security Administration or any other government agency.

Speaker1:
Information provided is not intended as tax or legal advice and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional. Registered investment advisors and investment advisor representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interest of our clients and to make full disclosures of any conflicts of interest. Please refer to our firm brochure. The ADV two, item four for additional information.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including transcribe multiple languages, collaboration tools, automated translation, generate automated summaries powered by AI, and easily transcribe your Zoom meetings. Try Sonix for free today.