Rick Ferri: A Fighter Pilot’s View of the Markets

About Fun With Annuities Episode #131

Rick Ferri is an absolute unicorn in the world of financial advice.  He is one of the best financial advisors in the world, a leader of the Boglehead investment community, and a retired fighter pilot.  Yes, I said retired FIGHTER PILOT.  If anyone can be calm during volatile market times, it would be a damn fighter pilot!  Can I can an annuity AMEN on that?!

I love having Rick on the Fun With Annuities podcast because he is so calmingly insightful.  I first had him comment on the recent Boglehead convention he was a part of and the sentiment of the people there.  It was not surprising to hear that there was no panic in the room.  For those unfamiliar with John Bogle, he was the founder of Vanguard and a no-nonsense believer in low-cost mutual fund investing using simple strategies.  His legacy is not only cemented but growing under the leadership of Rick Ferri and others.  John “Jack” Bogle would be so proud to see how his timeless messages are still having an impact across the globe.

Rick & I pivoted to markets and how the Fed handles current inflation issues.  I threw the ball to Rick and asked what he would do as Fed Chairman.  His answer was to the point and brutally honest, as I expected, and worth your time to listen in full to this podcast.  On a side note, we would all be better off if Rick were Chairman of the Federal Reserve.  I wish people like him were running this country.

His take on Bitcoin and the crypto space was refreshingly factual and a wake-up call to all the dreamers trying to be the master of the universe with this new version of the tulip bulb (Google it).  Rick said that he glances at the current Bitcoin price every morning as an indicator of S&P movement.  So much for crypto being “non-correlated.”

I also asked about Rick’s recent article on why November 1st is a critical date for people with pension buyout offers.  Like me, Rick gets a lot of calls from people trying to figure out the best thing to do when offered a lump sum or an annuity-type payout from their employer.  It all comes down to what you are trying to achieve with your money, but the main takeaway was reaching out to your HR department or plan administrator to understand the rules fully.  It’s your money, so you need to know the details to make an informed decision.

In my opinion, the line of the podcast happened when I asked Rick to give his fighter pilot a 30,000-foot view of the markets.  His response was an instant classic.  He said it’s a tough view from 30,000 feet with a $31 Trillion national debt in the way.  Well said, Rick Ferri.  Well said.  Enjoy the podcast!

"Come up with a sense of a plan. Implement it. Keep your costs down. Keep your taxes down, stay the course, and you'll be fine. That's it. Don't worry about the day-to-day fluctuations there. They’re always there, they’ve always been there, and they're always going to be there." —  Rick Ferri.

Brief Bio on Co-host: Rick Ferri

Rick Ferri’s professional life has been an interesting public and private service mix. He is a US Marine Corps officer and fighter pilot now retired, a former stockbroker, adjunct college professor, a former low-fee advisory firm founder, and now an hourly-fee consultant who helps individual investors achieve their financial goals’ and advisers achieve their business goals.

Rick started his investment career in 1989 as a stockbroker at a large Wall Street firm. After a few years in the industry, he concluded the sales culture and high fees did not meet his ethical standards. Rick was determined to change how the system worked and became one of the first brokers to advocate using low-cost index funds in client portfolios.

In 1999, he left the brokerage industry and founded an advisory firm focused solely on low-cost investment principles. Clients held index funds and exchange-traded funds (ETFs) in their portfolios, and he set his firm’s fee at a revolutionary low 0.25% per annum. His company employed 20 people and managed over $1.5 billion in assets. Rick left the firm in 2016 after a private equity investor acquired control and changed the company’s focus.

Today, he is helping individual investors drive their investment costs even lower by “decoupling” advice from portfolio management. Ferri Investment Solutions provides as-needed hourly advice. This includes portfolio reviews, investment recommendations, and, when requested, a referral to an investment firm that will implement a portfolio for a low annual fee.

Rick continues to publish books and articles, speak on investment topics and is the host of the “Bogleheads on Investing” podcast. He also provides industry consulting to advisers and helps them grow their practices. The advice ranges from practice management to investing.

Last, he has the Core-4 Portfolios, a FREE website for public use. There are six simple portfolio models that any individual investor can adopt. Custom portfolio design is also provided for investors and advisers.

In this episode, The Annuity Man® and Rick Ferri discuss:

• The Bogle-Head philosophy in investing
• Access to good financial advice
• The urgency of getting serious with retirement
• Implementing a plan for your own life

Key Takeaways:

• Keep it simple, keep it low cost, and keep it low tax. Use index funds when you can because the performance of active funds that are trying to outperform the indices is not very good, and this historically goes back 100 years.
• People don’t really have a lot of access to good financial advice as there aren’t a lot of advisors willing to get paid just for giving advice. To enhance your financial literacy, you have to find real advisors, surround yourself with a community, or educate yourself through the abundance of free information available right now on the internet.
• If you’re getting ready to retire in the next few months or so, you’ll need to make a decision. You need to learn and understand everything you have to make an informed decision about your retirement day.
• The world economy might go through a lot of slow pain, but what’s important is that you have a plan you can implement for your own life. Keep it simple, as always. Fluctuations will always be there; you have to look through to the other side.

Fun With Annuities® Podcast is hosted by America’s Annuity Agent®, Stan The Annuity Man®, and a Celebrity Co-Host. Hear facts with no sales pitches from the top independent agent in the country, licensed in all 50 states. Stan and his guests dive deep into topics such as annuities, finance, retirement, and so much more. It’s fun learning the facts and seeing if they’ll fit your personal retirement lifestyle. Thanks for being here!

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