BOB, Chris Payne discussed on No Payne, No Gain


And now with the very very special guest on the show Bob's son my brother money it's a visor pain capital management Chris Payne Chris man as always it's good to have you on the show man it's good to have that second favorite son at on the service yeah right that that is good to be here and you know I just I just can't get over how how it how handsome will look you know we must take after mom wow one all pain to gain so you know let's let's keep because keep an honest here this is our spotlight segment every week we take a real case and we break down how we helped a certain person or couple get on their path to financial freedom Chris you worked on a case recently whiny break it down for Bob and I and tell us how you help this couple get on their path to financial freedom yeah sure so I did work in a really interesting case and I like to start off by asking a question dad have you ever gone to the doctor and without even looking at you the doctor give you medication never you know its would totally be medical malpractice Chris to prescribe something without knowing my symptoms or what my problems were what a great word that used out now practice and I would say that's probably the case with this particular case that we're talking about today so I sat down with this couple nice couple from New Jersey and they had to be a portfolio and I couldn't make heads or tails of the poor fully I don't understand why they're invested what they're interested in and then they can it be a projection of that the that the adviser had given them you know based on their their goals and on the projection it showed a nine point nine three percent rate of return at a two percent rate of inflation over time so I guess my question would be does that sound like a reasonable and cheap football conservative rate of return for a couple going into retirement and living off this portfolio for the rest their lives would you think that's an actual order the number that means that this advisors outperforming the grace investors of all time so sign me up if that's the case yeah I I think I think we can all agree that's a pretty phenomenal return the only problem is is that in two thousand nineteen not only was this portfolio did not out perform its its underlying indexes but it actually was in the negative for the year two thousand nineteen I think we can all agree that's pretty astounding considering the phenomenal year that we had last year yeah it's absolutely incredible today can put numbers like this down as well it's important to if you're gonna get a financial projection find out what the numbers the are using our I mean I know we run projections could be as low as four five percent returns but nine percent return is that really realistic I mean obviously it's probably not with a lot of risk and I'm assuming since we're getting close to retirement this couple wanted to reduce risk not add more risk their portfolio yeah you're absolutely right right and you know what we went through a very comprehensive financial plan with them and I'd ask I said you know how did the adviser derive the expenses that you're using on the planet they put together for you and their response was well he just took an average number of what people that we take the security our age would pull out of the portfolio and you know what we actually found out is that the number that they're actually spending was more than double the what the adviser had put on their their long term conservative projection and I don't know about you guys but I think that that's pretty astounding to think that you know not only did the adviser promise a rate of return which is completely unachievable but but also had put a number down of what they're spending that was completely inaccurate now the makers I see all the time people come in with cookie cutter portfolios is the first time I saw a cookie cutter financial plan that was just the you know plug in the person's name same plan applies to everybody that comes through the door exactly and you know the other thing that that kind of blew me away just kind of sit there and think about it this is a portfolio they're gonna live on for the rest of their lives to find out at some point without having a second opinion which they were smart due to come to us to find out that at some point they're going to run out of money that would come to a shock when it was way too late so really it's a it's a great thing that they actually came in and said you know what I'm concerned about this can you take a look are we actually in good shape and is this a reasonable portfolio for someone our age in our our goals and our lifestyle Christy the suspected that the numbers weren't correct because I mean how do you know you're going to financial professional corn quote you just assume that the numbers at the running are are correct what were the red flags to say Hey we need a second opinion here I'm not these numbers seem a little bit out of whack with what's probably realistic well fortunately at one of the members the couple they I have worked in the financial services industry she actually worked for for potential and when she took a look at it she thought you know she had a red flag something something in her heart said you know what this is this isn't right this doesn't feel right nothing about this seems to make sense to me and she was absolutely spot on you know you talk to me about the did beginning to you know doctor prescribe something that they'll do an examination yeah I guess my question is did anybody do a stress test on this portfolio before you you know if I were a betting man I'd say absolutely not so when you did the stress test on his portfolio how would a fair back in two thousand and nine Chris with a fifty percent decline in the stock market I did this portfolio would have declined fifty percent plus so not only was it not conservative it's actually very aggressive and and and these people not a position Donnelly Teather gold but actually could be out of money as you said you know early in their retirement years yeah that's absolutely right that you know what the other thing that I noticed about this portfolios that they own a lot of to liquid investments a lot of elected real estate investment trusts so that's a big one like for me that was huge red flag and I want to explain this to them that they own portfolios that that you know there there's there's very little certainty or there there may not be a possibility that they could take the money out any time soon they were they were extremely shocked they had no idea and third thing to say they were very angry too well I think it's a good point to make Ryan Chris is that there's there's no investment that see a liquid that can't be made with a liquid investment something that you know we can always sell we can always get out of and most in most cases not a hundred percent of time but I think ninety nine point nine nine nine percent of the time you'll have a better return a lower cost yeah I to percent dad you know I like to say if it's a liquid it's inappropriate I might that Chris another zinger today Chris start a new book and the book of criticisms I couldn't agree more great job on this is by legs and other financial masterpiece does great job putting out all of the things that this couple didn't know that was going completely wrong and getting yourself right now I I'd like a second opinion like this I just wanna make sure what I'm doing is correct and everything I own is in line with what my goals are here's your shot to do it we really have two slots left if you.

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