088 David Blanchett: Retirement Income Investing In A Low-Yield World

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welcome to fun with annuities with your

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host me stan the annuity man america's

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annuity agent can annuities be fun can

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facts about annuities with no sales

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let's have some fun with annuities and

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let's have that fun start right now

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[Music]

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welcome to fun with annuities i'm your

0:41
host stan the annuity man america's

0:44
annuity agent licensed in all 50 states

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including the one that you're sitting in

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i want to welcome all of our

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informative

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videos and i think we're going to

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contact guinness and say hey we we have

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set the record because you know how many

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videos can you do on annuities i'm going

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to test that theory listen today's guest

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is a superstar straight up let me tell

1:24
you a little bit about him and hang in

1:25
there with me because you need to know

1:27
who's on who who you're going to be

1:28
listening to today his name is david

1:30
blanchett he's the managing director and

1:32
head of retirement research for pgim dc

1:35
solutions they're they're a global

1:37
investment management business part of

1:40
prudential financial but his role

1:42
primarily is is developing research and

1:44
and

1:45
innovations and solutions to help people

1:48
improve

1:49
their retirement income

1:51
and retirement income and retirement

1:53
outcomes

1:54
so he's focused on the investors now

1:57
prior to joining that firm he was head

1:59
of retirement research for morningstar

2:01
unless you probably remember him from

2:02
morningstar and before that he was the

2:04
director of consulting and investment

2:06
research for the retirement plan

2:08
consulting group at unified trust

2:10
company now he's published hundreds and

2:12
hundreds and hundreds of

2:13
of uh articles

2:15
all over the place you know just

2:16
everywhere um he's his research has

2:19
received rewards

2:21
uh awards rewards awards everything i

2:24
mean people

2:25
follow david and what david is thinking

2:28
he's currently the adjunct an adjunct

2:30
professor of wealth management at the

2:32
american college of financial services

2:34
and research fellow at the alliance for

2:36
lifetime income

2:37
he holds his bachelor's degree in

2:40
finance and economics from the

2:41
university of kentucky go wildcats

2:43
master's degree in financial services

2:45
from the american college of financial

2:47
services go retirement incomers a

2:49
master's degree in business

2:51
administration from the university of

2:52
chicago

2:54
booth school of business go smart people

2:56
and a doctorate

2:57
in personal financial planning pro

2:59
from the tech from texas tech university

3:02
go red raiders from my good friends

3:04
harold avansky and deana katz who run

3:06
that program there he has he has a

3:08
beautiful wife and four beautiful kids

3:10
and he enjoys running

3:12
and rooting for the kentucky wildcats

3:14
but i don't think at the same time but

3:16
enough of those impossible to achieve

3:18
accolades you know this is the way i

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look at it when i'm because david's here

3:21
i'm so happy he is

3:23
if you want to talk about football and

3:24
quarterback and you talk to tom brady if

3:26
you want to talk about shooting a

3:27
basketball you talk to steph curry if

3:29
you want to talk about playing a guitar

3:30
you talk to eric clapton you want to

3:32
talk about songwriting you talk to bob

3:34
dylan if you want to talk about college

3:35
basketball recruiting you talk to john

3:37
calipari but if you want to talk about

3:39
retirement money in the markets

3:42
you talk to david

3:44
blanchett david blanchett welcome to fun

3:47
with annuities great to be here now you

3:49
see you missed uh the university of

3:50
chicago is the maroons

3:53
i like go smart people

3:54
i thought that i thought that was really

3:56
good it was good that was good that was

3:57
good but there were the maroons and

3:58
yesterday

4:01
david let's just start right there i

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don't know it's the mascot that's all i

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got for you

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that's like my daughter went to nyu

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please people don't hold that against me

4:10
um she got out of the house it was great

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it was an expensive way to get out of

4:14
the house but they're like the purple or

4:15
something i mean they're like something

4:17
that makes no sense i mean i think their

4:19
their best athletic team was ping pong

4:21
um not kidding so let's jump in you

4:23
wrote an article recently i read it and

4:25
i immediately contacted you

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and the title of the article was

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retirement income investing in a low

4:33
yield world

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talk about hitting the button and

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hitting the topic that everybody's

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talking about can we jump into that and

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start off with investors are not always

4:42
rational right david

4:45
yeah i mean so

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almost all my research right is focused

4:49
on this idea that people do

4:50
um the decision that they should that

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emotions don't come into play but we all

4:54
know that that's not reality right i

4:55
think that it's always important to kind

4:57
of work from a framework of you know

4:59
what should people do if they're kind of

5:00
you know utility maximizing robots but

5:03
nobody is and you've got to kind of okay

5:05
ask yourself this question how do you

5:07
how do you maybe adjust a strategy to

5:09
reflect the unique goals of investors

5:11
and one of the most kind of personal

5:13
goals for a lot of folks is retirement

5:15
and people have very different

5:17
perspectives on how to accomplish that

5:18
goal and i think that that you know now

5:20
more than ever given where bond yields

5:22
are

5:23
it makes things really tough and so i

5:24
think that you know investors advisors

5:26
everyone has to ask this question how do

5:28
i help people accomplish the goal that

5:30
they want to accomplish

5:33
that's a big question though you know

5:35
because everybody's goals are

5:36
customizable everybody's trying to

5:37
achieve different things

5:39
um

5:40
one example that you listed was

5:42
something called irrational preference

5:45
um

5:46
for income can you kind of dig into that

5:48
a little bit i thought that was an

5:49
interesting way to put it yeah i'm not

5:51
i'm not trying to like hate on people

5:53
but um so in theory right in theory what

5:56
you should what you should be

5:57
indifferent between

5:59
is spending down your portfolio and

6:01
living off of income

6:03
right so let's say you could buy buy two

6:05
companies

6:06
one goes up five percent every year like

6:09
clockwork one has a five percent

6:11
dividend okay in theory an individual

6:14
should be indifferent between buying the

6:16
company that goes up five percent a year

6:18
and selling five percent or buy the one

6:20
that has the five percent dividend right

6:22
that's not how people actually are right

6:24
people don't like the

6:26
the the act of selling down their

6:29
capital their balance whatever you want

6:31
to call it so people have a have a

6:33
strong preference

6:34
um at least most people do a lot of

6:36
retirees do to to not deplete their

6:39
their portfolio they want to live off of

6:41
the income and again like what you

6:43
should be you shouldn't care you should

6:45
say well i can just as easily spend on

6:46
my portfolio people don't want to do

6:48
that and so if you change the

6:49
perspective from

6:51
okay i you know i'm going to focus on

6:53
depleting my portfolio if i have to

6:54
versus i want to live off of income

6:57
it can kind of change your perspective

6:59
on

6:59
like what is the efficient portfolio how

7:01
do you build portfolios especially today

7:03
given where yields are

7:06
but the but the low yield environment

7:08
perceived low yield this might be the

7:10
new normal nobody knows um is driving

7:13
people crazy because they're they're

7:15
they're wanting that jimmy carter type

7:18
yield that doesn't exist and that's kind

7:19
of where

7:20
the bad sales practices especially in

7:22
the annuity industries start taking

7:24
place where people are selling

7:25
hypotheticals and theoreticals and

7:27
back-tested junk

7:29
at the end of the day you're buying

7:30
you're buying a contract

7:32
um

7:33
overall you're just looking at markets

7:35
and things like that but do you have a

7:39
good or bad feeling toward maybe

7:42
putting in an income floor using

7:43
lifetime income annuities using the

7:46
transfer risk taking that longevity risk

7:48
off the table

7:49
and using the mortality credits that are

7:51
in place right now that i think are a

7:52
bargain

7:54
yeah so i think that i think that that

7:56
you know

7:57
today's environment is somewhat

7:59
unprecedented right i mean the average

8:02
yield on tenure government bonds has

8:04
been about five percent we're about

8:07
one and a half percent today so

8:09
um that affects every single investor

8:12
out there it affects um mom and pop it

8:14
affects financial advisors it affects

8:16
mutual fund management affects pensions

8:18
and so we're all kind of playing in a

8:20
space right now where

8:22
um it's really hard to expect

8:25
historical average returns and you made

8:27
a great point about i i you know

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i worry about a lot of advisers a lot of

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you know projections if they rely on

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historical because you cannot buy bond

8:36
you cannot buy a 10-year government bond

8:37
today you're holding five percent fee

8:40
right and so then given where we are it

8:42
kind of begs the question again like

8:45
what is the optimal strategy and so like

8:47
you mentioned you know one example of

8:48
that and so you know when you get to

8:50
retirement you know every american for

8:51
the most part has some kind of

8:53
guaranteed income social security

8:54
benefits right

8:55
excellent base to kind of cover your

8:57
non-discretionary expenses okay the

8:59
question that every household has to ask

9:01
beyond that is does that cover enough of

9:04
my need money the money that i know that

9:07
i need to have guaranteed for as long as

9:09
i live and the end the answer there is

9:11
no i think that's where you have to ask

9:13
this question okay where else can i get

9:14
it right one way to get it is delaying

9:16
claiming social security hasn't claimed

9:17
yet another way that i think is actually

9:19
increasingly attractive right now you

9:20
alluded to this is is buying some kind

9:22
of annuity or product that provides

9:24
lifetime income now

9:26
there's all kinds of fun new flavors

9:28
there's a new product in canada

9:29
introduced like a ton teen a few months

9:31
ago that's moshe that's that's moshe

9:33
moleski's baby right there right yeah

9:35
and i don't want to you know i i don't

9:37
want to you know spend too much time on

9:38
like is there one kind that's but

9:40
another so i think that you know that

9:42
too many people

9:43
in retirement aren't asking these

9:45
questions and and you know it's somewhat

9:47
counterintuitive but the lower that

9:49
interest rates are

9:50
the more there's benefits to longevity

9:53
point right so when you buy these

9:54
products that have a group of people

9:56
that you know that say hey it's like any

9:58
it's like a public pension you know some

10:00
folks might lose money some folks might

10:02
make money but you know every investor

10:04
today has to earn less less off of their

10:06
investments but the benefit of longevity

10:08
pooling hasn't gone away and so for

10:10
those folks that are really worried

10:12
about do i have enough money to provide

10:15
income in retirement these products make

10:17
a lot of sense and like here's the thing

10:18
like if interest rates were like eight

10:20
percent and inflation was two percent

10:23
you don't have to worry about depleting

10:25
your portfolio if you could earn six

10:26
percent guaranteed you can't do that

10:27
right now in real terms you're going to

10:30
be just fine but that's not today right

10:31
today is you're going to earn a negative

10:33
yield on on government bond real yield

10:36
and what that suggests to me is that if

10:38
you want to make sure that you're going

10:39
to be okay in 20 or 30 years you need to

10:41
think about right now how you should

10:43
reposition your portfolio to help

10:44
accomplish that

10:47
does it

10:48
keep you up at night when you you i mean

10:50
under the uh the fact that we live in a

10:52
pensionless world

10:54
and i think a lot of what's happening

10:56
right now with people like you that are

10:57
trying to advise consumers in a factual

11:00
way non-salesy way because you don't

11:02
sell anything you are a researcher you

11:04
are a smart guy in the room

11:07
the fact that companies don't offer

11:09
those type of defined benefit plans

11:12
that has to be the biggest problem right

11:14
now facing the baby boomers coming out

11:16
because they have to convert

11:18
what they have into an income type

11:21
stream whether they're just peeling off

11:23
money from a growth portfolio but at the

11:25
end of the day and i hate this word we

11:27
we use it called decumulation it's just

11:29
horrific

11:30
um

11:31
what do you say to the person out there

11:33
the majority of the people out there

11:34
that don't have that pension and the

11:35
only annuity they own

11:38
is social security

11:40
yeah you know i've heard of defined

11:41
management plans before like i haven't

11:42
actually seen one out in the wild yet

11:44
myself maybe maybe i will one of these

11:46
days i hear they're out there some

11:47
people have them you know i just i can't

11:48
wait to experience my own at some point

11:50
but yeah like like

11:53
defined benefit plans you know are are

11:56
are one of the best ways for individuals

11:59
if you stay with an employer for

12:01
30 or 40 years to fund their retirement

12:03
right the movement away from defined

12:05
benefit plans radically

12:07
changes the way that american households

12:10
have to plan for retirement right i mean

12:11
in a five minute plan you have

12:13
institutional

12:14
fiduciaries professional money managers

12:16
actuaries all these smart people

12:18
figuring this stuff out

12:20
and you're pulling the risk together

12:22
okay we're moving you know

12:24
significantly away from that approach to

12:26
one where every single person is

12:28
responsible for all their all their

12:29
stuff and to me like that's that's

12:31
terrifying right because i mean this is

12:33
this is not easy stuff it requires lots

12:36
of lots of good decisions for a very

12:38
long time horizon you don't know what

12:39
the how long you're going to live how

12:41
much you're going to need to spend on

12:42
stuff what the return of the market to

12:44
be it creates it creates uncertainty and

12:46
panic and that's how retirement should

12:48
be right it is like both of my parents

12:49
are retired teachers they have you know

12:52
almost all their income in uh the public

12:54
pension you know like that is that's

12:56
that's the ultimate easy button right

12:59
having to figure out how much you can

13:00
take from a portfolio every month every

13:02
quarter every year with all this

13:04
uncertainty that is like the opposite of

13:06
the easy button and you can get someone

13:08
to help you you can pay a financial

13:09
advisor i'm a big believer in that to

13:11
help you figure out what all those

13:11
things are but it doesn't alleviate the

13:14
stress right we saw this back in 2020 um

13:16
you know i always make the joke i love a

13:18
good market downturn so i can study

13:20
investor behaviors and see what we did

13:22
wrong and so the good news is we had one

13:24
smoking like a true researcher exactly

13:26
the bad news it didn't last very long

13:28
but one thing that that is that

13:30
fascinates me about about people and

13:33
investors and we i actually saw this in

13:35
oa when we sold it in 2020 sure is that

13:37
is that you would think that the older

13:39
someone gets

13:40
the better investor they become the less

13:43
irrational they are about reacting to

13:45
downturns but it's the exact opposite

13:47
and so if you look at trading behaviors

13:49
in 2020

13:50
it wasn't those those those you know all

13:53
these young kids that are on the news

13:55
that were selling out of stocks they

13:56
actually leaned into stocks okay like

13:58
they got more aggressive as the markets

14:00
went down it's it's it is it is without

14:02
a doubt you can it's a it's a it's

14:04
called a monotonic relationship it was

14:06
just perfect and that the older you got

14:08
the higher the probability of you making

14:10
the trade the more the portfolio you

14:12
trade moving to a conservative

14:14
investment so they are like the worst

14:15
market timers and so what's happening i

14:17
think

14:18
is that retirement becomes more salient

14:21
the closer you are to it right your 401k

14:23
goes down a year like 35 years old you

14:25
don't care what is retirement right but

14:27
if you're 55 years old and you see the

14:30
market dropping 10

14:31
20 and you're 55 you are you have a very

14:35
real reaction to what that means for you

14:37
in terms of oh my god i'm not going to

14:38
do this retirement i've got to get up

14:40
so what you see happening is those

14:42
individuals that that can't afford to

14:44
make a mistake are those that make them

14:47
and so i think that we have a situation

14:48
now where you've got you know each

14:50
individual responsible for these

14:52
decisions and you might have an advisor

14:53
but a lot of advisors got fired in

14:55
2008-2009

14:56
yeah

14:57
right and so i think i think for me like

14:59
the best thing you can do is is create

15:01
is create easy buttons and a way to

15:04
enjoy retirement where you're not

15:05
stressed out all the time the market

15:07
goes down five percent eight percent

15:09
nine percent

15:10
so what's your take on and for the uh

15:14
the senior citizens out there that uh

15:16
don't be offended by this because we're

15:18
all getting there

15:19
do you think that

15:21
what you just described also has to do

15:23
with cognitive

15:25
decline that we all have as we get old i

15:28
mean you're young i'm old other people

15:30
listen to this they're in their you know

15:31
50s 60s 70s 80s 90s

15:34
does that irrational um

15:38
decision making does that also play into

15:41
cognitive ability decline has that been

15:43
studied

15:44
it has and so you know what what what

15:46
you see is people don't

15:48
perceive their their investment acumen

15:51
ever trolling off we think that we're

15:52
just like solid to the bitter end the

15:54
problem is is to your point that older

15:56
ages we'll just say like 70 75 plus is

15:59
where there should be a noticeable gap

16:01
in

16:02
actual abilities and perceived abilities

16:04
like it's really important because even

16:06
if you if you have cognitive decline but

16:08
you know you do you could institute

16:09
safeguard you can say hey you know what

16:11
i'm on a downhill slope here i have to

16:13
make a change the problem is is if

16:15
there's a gap and you're perceived in

16:16
actual abilities and and that's what

16:19
tends to happen

16:20
as we age and you know there's obvious

16:23
kind of

16:24
additional implications there so like as

16:26
you age you know you're gonna have you

16:28
know you're gonna be more susceptible to

16:29
making poor decisions you can't get the

16:30
money back and so like again like that's

16:32
where if you you have something that's

16:34
locked in to provide income for life you

16:36
don't have to worry about it but if you

16:38
don't have that there is there is the

16:40
chance you can you know make a poor

16:41
decision you can get prayed on by some

16:44
kind of fraudulent scam

16:46
a lot of bad things can happen

16:48
what's interesting about where we're

16:50
headed with this conversation is it

16:51
falls into

16:53
it it's almost like saying you're

16:54
overweight or you are you know when you

16:57
start talking to people about cognitive

16:59
decline or planning for that eventuality

17:02
which is going to happen one of one out

17:04
of one of us is going to have that um

17:07
when you talk to the industry advisors

17:10
masters of the universe

17:12
are you

17:13
are you advising them to at least broach

17:15
that subject with people because that's

17:16
a tough one i do it all the time because

17:18
i'm bullying a china shop i have no

17:20
problem talking to people at anything

17:22
and my clients are like nodding their

17:23
head

17:24
but i do think that um having some type

17:27
of guaranteed income

17:28
or uh as some in the industry call it

17:31
protected income

17:33
it does

17:34
put in that income floor and that peace

17:36
of mind that when things happen in the

17:38
future things are taken care of do you

17:41
see a shift with that with the

17:42
demographic tidal wave of 10 000 baby

17:44
boomers hitting 65 every day do you see

17:46
that kind of happening and maybe that's

17:49
an angle for

17:50
um a lifetime income products to

17:53
to be positioned

17:55
yeah so i don't know that my

17:57
what i perceive is representative of the

17:59
entire market but i i do believe that

18:01
there is a a a rising interest among

18:04
advisors among the public

18:06
in

18:07
products that provide protected or

18:09
guaranteed income there's lots of

18:10
products that do it in different ways

18:12
but you know to your point a lot of

18:15
advisors i think

18:17
will will will say to clients hey like

18:19
i'm your

18:20
i'm your i'm your key to ensure that

18:22
nothing bad happens

18:24
right

18:25
wrong answer yeah there's there's a lot

18:26
of there's a lot of things wrong with

18:28
that like that's how people get money

18:30
stolen yeah um the client can fire you

18:32
and hire a really bad advisor instead

18:34
and so i think that you know

18:36
delegation is is important it's good to

18:38
have that trusted advisor but it's also

18:40
good to have you know safeguards in

18:42
place to make sure that nothing truly

18:43
bad can happen

18:44
and the more of your money that is

18:47
protected or guaranteed you know like

18:49
like it it's this range of outcomes and

18:52
you know you know every day i see a

18:55
story about some advisor who sold some

18:57
ponzi scheme that you know wiped out

18:59
people's savings okay

19:00
like that is that is not going to happen

19:02
if you have money in a guaranteed

19:05
protected product you've got you've got

19:06
income for life and so i think that you

19:08
know the key is is finding that balance

19:09
and just in just ensuring that no matter

19:12
what happens with respect to the markets

19:14
that you've got what you need taken care

19:16
of

19:16
do these market at the time of this

19:18
typing do these market valuations and

19:20
where we're at

19:22
is it making your stomach a little

19:23
queasy

19:24
are you

19:26
i mean i've been crazy for a while i

19:27
mean i just i don't get it i mean you

19:29
know i don't know what there's lots of

19:30
metrics that you can use like the cape

19:32
ratio it's the the schiller pe and

19:34
others i mean sure

19:36
pretty much you know i mean

19:37
the only okay what scares me we've had

19:39
like a like a market that's gone

19:41
straight up for like 15 years or however

19:42
long at 14. i don't know what it is okay

19:44
like that doesn't happen no right you

19:47
know i mean don't get me wrong i would

19:48
love it if the markets went up 15 every

19:50
year forever that would to me would be

19:52
you know that

19:54
you know that would be spectacular

19:55
amazing use all the nice words you can

19:57
so we haven't had that right and there's

20:00
like no point in history that markets

20:02
just keep going up forever without a

20:03
correction right usually the longer it

20:05
goes up the the longer that eventually

20:07
goes down and so you know someone could

20:09
say well we had a correction in 2020 we

20:11
we really didn't right we're already

20:12
well past that point and so like for me

20:15
i i am genuinely concerned um

20:18
increasingly i feel like that we're due

20:20
for some kind of correction i don't know

20:21
when that's going to happen what it

20:22
looks like but um the markets have done

20:25
awfully well for a long time it just

20:26
doesn't it doesn't feel sustainable

20:29
yeah when i read that people are buying

20:31
i'm nothing against cryptocurrency

20:32
people i mean nothing but when i read

20:34
that people are leveraging crypto to buy

20:36
crypto you know the old curmudgeon in me

20:38
that's been here for 30 years is like oh

20:41
you know

20:42
that kind of dot-com

20:43
type play

20:45
um you know comes comes to the forefront

20:47
the other thing i read and i don't know

20:48
if this is true maybe you have a better

20:50
clarification on this is over 90 of

20:52
crypto is purchased by what we consider

20:55
young people you know not not the old

20:57
heads in the room that's that's a little

20:59
interesting as well because all of those

21:02
people have never seen market downturns

21:05
yeah i have i have i have mixed to

21:07
negative feelings on crypto um just from

21:10
the perspective of an investment right

21:12
you know sure it has like a potential

21:14
public use you know and sure i i don't

21:16
want to you know

21:18
blockchain's real let's we can all just

21:19
say blockchain technology is real but i

21:22
don't know i don't know how to quantify

21:23
like how much doge is worth or bitcoin

21:25
or any of those what is their value i i

21:28
don't know and so that's why i feel like

21:30
you can buy them but like it's

21:32
effectively speculating i mean people

21:34
you know i talked to a lot of my friends

21:35
i've read i've researched this for

21:37
hundreds of hours and i'm like i'm like

21:39
i highly doubt that your research is

21:41
unbiased and represented like a

21:43
collective view of the thoughts on what

21:44
crypto could write

21:46
you know it's like it's like the rabbit

21:47
holes people get out online anyways and

21:49
so you know i would say that you know

21:51
like in terms of like a contagion effect

21:53
for the markets i'm looking about crypto

21:55
because i don't know how you know the

21:57
the market cap isn't necessarily high

21:59
enough um it's younger people so i think

22:02
i think there's there's there's risks

22:03
there in terms of obvious loss of

22:05
capital but i don't know that that's

22:07
enough to kind of like you know destroy

22:09
the market or have the big downturn but

22:10
it could be one domino of five that

22:13
happened at the same time like you know

22:14
i think the the fun thing with with

22:16
market crashes is they always seem so

22:18
easy to kind of predict after the fact

22:20
that it's it's looking for that makes it

22:21
really hard so i think at some point we

22:24
will have this negative shock the

22:26
question just is what what are the thing

22:28
or things that that cause it to happen

22:30
i like how you started that sentence the

22:31
fun thing with market crashes

22:33
i mean you know

22:35
look at the right side okay yeah is you

22:37
get to see your neighbor walk out in the

22:38
front lawn and throw up and they you've

22:40
never seen that before in your article

22:42
on retirement income investing in the

22:44
low u world and by the way we're going

22:46
to have a page for

22:48
um

22:49
for david on the site with a link to

22:51
this so don't worry about it we'll have

22:53
that for you there was a a survey from

22:56
from probably the most um

22:58
probably the most energetic group of

22:59
people ever on the planet the society

23:01
society of actuaries

23:03
that was pretty interesting can you go

23:05
into kind of the

23:06
percentages of the senior citizens that

23:09
plan to spend down their wealth i found

23:10
this fascinating and disturbing at the

23:12
same time

23:13
yeah so i i forget that the numbers i'll

23:15
tell my head but i think one thing that

23:17
that if you look at

23:19
it and they do that survey every every

23:21
few years

23:22
and let me read it for you i know let me

23:24
just read from your articles because

23:25
it's straight

23:26
only 17 percent of pre-retirees plan to

23:29
spend down their wealth and retirement

23:30
while 32 percent plan to withdraw only

23:33
earnings and try to leave the principal

23:35
intact

23:37
that sounds like a dream world right now

23:39
it is well and so i i think that like if

23:41
if we were in a place where bonds were

23:43
in four or five percent

23:45
doable right i think that i think that's

23:47
a realistic goal possibly at that point

23:49
but it's just not today and so i think

23:50
that

23:51
that a lot of people are going to have

23:52
to kind of recalibrate their

23:53
expectations the longer we stay in this

23:56
environment and so that wasn't

23:57
necessarily you know i think that was

23:58
like a 2019 survey that wasn't

24:01
incredibly unrealistic then but it

24:03
definitely is right now

24:05
right and so i think that the longer we

24:06
have this persist the more that people

24:09
have to kind of you know really

24:10
understand to the extent they can live

24:12
off the income and i think that again it

24:14
gets back to the earlier idea that

24:16
people don't i mean when you don't know

24:17
how long you're going to live

24:19
you know it just creates all this

24:21
uncertainty because as soon as you

24:22
deplete your savings you can't replenish

24:24
that i mean like you're the the job

24:26
possibilities when you're 80 years old

24:28
are not that enticing these days that

24:30
could change in the future but unless

24:32
you want to kind of be a walmart reader

24:34
it ain't going to happen

24:36
right and so you know when you stop

24:37
working you've got what you've got now

24:39
maybe you'll get inheritance things like

24:41
that can happen but i i understand that

24:43
very real fear that if you spend that

24:45
money down it's gone forever therefore

24:47
you don't want to do it the problem the

24:49
obvious problem is you save that money

24:50
to enjoy your retirement

24:52
right and so if you if you want to

24:54
maximize your your life satisfaction you

24:57
need to find a way that your comfortable

24:59
behaviorally accessing your funds and

25:01
that to me is this whole you know

25:04
new thing i looked at it's like this

25:05
idea of a license to spend and that's

25:07
what protected

25:09
guaranteed income does it gives you a

25:10
license to spend you don't have to worry

25:12
anymore about you know i've got to save

25:14
everyone with 105 because that's taken

25:16
care of and so i think in the past i've

25:19
i've focused a lot on maybe even too

25:21
much on

25:22
the academic benefits behind

25:24
you know moving into protected income

25:26
categories i think the biggest minutes

25:28
are actually behavioral it's allowing

25:29
someone to understand hey i save this to

25:32
enjoy my retirement i can spend it if i

25:35
know that i have income as long as i'm

25:36
going to be a lot and it's to me it's

25:38
all messaging and it's all it's all

25:40
marketing and obviously i'm sitting here

25:42
wearing all kinds of stand the annuity

25:44
main gear so i'm into that kind of thing

25:45
but you know people have fire fire

25:47
insurance and home insurance and flood

25:49
insurance and car insurance but somehow

25:51
we have not sold income insurance

25:54
or retirement income insurance because

25:56
it falls under the same categories it's

25:58
there when you need it you know if you

26:00
need it but you probably are going to

26:02
need it going into retirement because of

26:05
just kind of where where we're at and

26:07
the interesting part is and you're

26:08
probably seeing the same thing

26:10
the promises that i heard from people

26:12
after the 2008 debacle those people have

26:15
forgotten that well understand i'm never

26:17
going to have that's never going to

26:18
happen to me again i'm never going to

26:19
let that happen to me again but boy the

26:21
greed factor does take over when you see

26:24
at this point people throwing darts at

26:25
things and it's going up um

26:27
i mean it's it's tough from an inflation

26:30
standpoint

26:33
i know that's i i'd like to get your

26:35
your take on if you believe it's

26:36
transitory or not and then from there

26:39
what your advice is to people on how to

26:43
address it because there's no perfect

26:44
answer just bad sales pitches

26:46
yeah i mean i i think the the inflation

26:49
question is a difficult one i mean i'm

26:51
i'm only 40 so i haven't experienced you

26:53
know the good old days of you know 10

26:56
plus percent inflation um

26:59
i i i don't think we're gonna get back

27:01
to that um i i do think it could be an

27:03
issue i mean i i see it every time i go

27:06
to the grocery store right um you see

27:08
you see it everywhere today and so i

27:09
think that you know um it makes sense

27:12
that it that it could be very real at

27:14
least in the near future you know but it

27:16
does create interesting challenges for

27:18
retirees i think one really important

27:19
point to make

27:21
is that retiree spending does not

27:23
increase every year by inflation

27:25
right you know how much spending evolves

27:27
in retirement depends a lot

27:30
based upon for example

27:32
each each retirees you know if you go to

27:35
group you're spinning into wants and

27:36
needs or essential non-essential

27:38
discretionary whatever you want to do it

27:40
you know and what you what you tend to

27:42
see is that is that you know if

27:44
inflation goes up say three percent a

27:45
year

27:46
spending only goes about one percent for

27:48
the average retiree now it actually goes

27:50
up even less than that if you're if

27:52
you're spending a lot because more of

27:53
your spending tends to be on

27:54
discretionary items but when it comes to

27:56
like retirement income strategies um

28:00
i'm a little bit less worried about

28:01
inflation because you have the explicit

28:04
inflation um

28:06
income guarantee from social security

28:07
but i do think it's important to layer

28:09
on top of that you know other benefits

28:10
that possibly could have you know a

28:12
fixed cola or cost of adjustment or

28:14
other investment strategies like like

28:16
tips or real estate that provide a

28:18
a perfect or quasi-perfect inflation

28:20
hedge but i'm probably less concerned

28:22
about inflation than maybe other

28:24
retirement academics because you know i

28:26
i just don't see that that that

28:28
historical pattern where retirees

28:30
actually increase their spending based

28:32
upon you know oh cpi was up two and a

28:35
half percent last year i'm going to

28:36
spend 200 more years that just doesn't

28:37
happen

28:39
and i blame the media like i blame the

28:41
media for a lot of things they just take

28:43
inflation and they just it's a drive-by

28:45
and they just kind of shoot it out there

28:46
they really don't know what they're

28:47
talking about and then it scares the

28:49
heck out of people and then everyone

28:50
tries to find you know the product to

28:52
address inflation and there's nothing

28:54
out there that exists in a perfect world

28:55
to perfectly address it one of the

28:57
things i want to talk to you about as

28:58
well was

28:59
something that came out in the journal

29:00
of wealth management there was some

29:02
research done

29:03
and you

29:04
it kind of went in and explored

29:06
specifically

29:08
the optimal equity allocations for

29:11
income focused investors can you dig

29:13
into kind of what that is and put it in

29:15
english for us peons out here to

29:17
understand what you were doing and

29:18
thinking yeah so we talked about this

29:21
actually um at the beginning of the

29:22
podcast and this idea of like how do you

29:25
invest

29:26
when you have low yields if you're

29:29
focused on income right and so um i i i

29:33
will not get all weird math here i'll

29:35
try not to i promise but when we think

29:37
about about risk normally it's it's like

29:39
the volatility of an investment so it

29:41
goes up five percent it goes down ten

29:43
percent of all that okay so like

29:45
government bonds are an interesting

29:48
vehicle to assess from a risk

29:50
perspective because like long government

29:52
bonds that have say at 20 plus your

29:54
maturity are actually pretty risky right

29:56
so there's like a rule of thumb that you

29:58
can use for duration so duration's kind

30:00
of like maturity how many years the

30:02
payments are going to last

30:04
cash flows so you know there's this rule

30:05
where you know like if if interest rates

30:08
go up two percent

30:10
and you have a bond for that as a

30:11
15-year duration it would go down 30

30:15
right so there's a lot of a lot of

30:17
potential loss there for that that bond

30:20
fund however

30:22
if you're going to hold that bond fund

30:24
until maturity you wouldn't realize that

30:27
loss

30:28
right so if i buy government bonds it's

30:30
yielding two percent

30:32
and i'm going to hold that thing for 10

30:34
years and then the kind of the the

30:37
definition of volatility changes right

30:39
you know if i want to get two percent a

30:41
year of income and i'm going to hold

30:42
that thing no matter what well i i

30:44
shouldn't use the fact that it could

30:47
drop in value i should focus on how does

30:50
it do in terms of creating sustainable

30:52
income and for that it is like perfect

30:54
it is it is often described as the

30:56
risk-free asset for investors well

31:00
if you take that perspective on a

31:01
portfolio if you ask this question well

31:04
i am focused not on the variation in the

31:07
in the and the volatility of the

31:09
investment i'm focused on income i want

31:12
income stability right so for a stock

31:14
portfolio that's dividends you're going

31:16
to say i'm not worried about you know

31:18
whether it goes up and down i want

31:19
consistent dividend income if it's from

31:22
a bond portfolio it's it's the yield and

31:24
so if you take that perspective that

31:26
more behavioral perspective it actually

31:28
does make equities look quite a bit more

31:30
attractive today simply because you know

31:33
the dividend yield on the s p 500

31:35
actually exceeds the the yield on

31:37
attenuate bonds today that's not to say

31:39
that that that equities are by any means

31:41
a bargain or a good deal but if you're

31:44
focused on income historical evidence

31:46
does suggest that it it actually might

31:49
make sense to own some equities just

31:50
based upon relative yields

31:56
yeah it's it's it's kind of a weird

31:59
environment that we're in including i

32:01
wanted to get to kind of the political

32:02
silly season that's always

32:04
occurring in dc and i'm assuming when

32:07
you're doing your research there's

32:08
probably two parts to it there's the

32:10
actual math and the research and doing

32:11
that but but i'm assuming you have to

32:14
factor in

32:16
dc and what's coming out of dc not only

32:18
from the standpoint of actual law but

32:21
proposed law as well

32:23
when talking about people's retirement

32:26
especially i feel i feel for people that

32:28
are right at the retirement

32:30
uh

32:31
you know they're getting ready to cross

32:32
the tape and go into retirement and now

32:34
we have all this nonsense that's going

32:36
on in dc from the standpoint of taxation

32:38
they're floating ideas about

32:39
interrupting roth rules and all kinds of

32:42
things can you weigh in a little bit i

32:44
know you're not you're not political

32:46
like me

32:46
you're just not i know that reading your

32:48
stuff but can you weigh in on what's

32:50
happening and what you think people

32:52
should be preparing for

32:54
yes i mean you know my my focus has been

32:57
on

32:57
dc

32:59
i've worked in the dc business now for

33:01
about 20 years and

33:03
i think why that's so important is

33:04
people do not

33:06
americans do not save outside of defined

33:08
contribution plans the only reason

33:10
there's any money in iras because people

33:11
roll money from a dc plan to an ira now

33:14
i hope that that changes right but dc is

33:16
the preeminent way that that americans

33:19
save for retirement now and dc for

33:21
people out there in english is 401 k so

33:23
1k403b yeah

33:25
it's it's that type of plan that you're

33:27
our employer sponsor type plan where

33:29
you're putting money in and they're

33:30
matching whatever that's what that's

33:32
what dc means right a defined

33:34
contribution plan and so you know i'm

33:37
you know people get all been out of

33:38
shape like sure they can cover more

33:40
people they aren't perfect but like you

33:42
know those that have them and use them

33:43
well it's been a it's been an effective

33:45
way to save for retirement right um

33:48
you know there have been positive

33:50
changes to how we operate defined

33:53
contribution plans in the us we have you

33:55
know these these things called default

33:57
investments or target date funds you

33:58
might automatically roll all good things

34:01
there is you know

34:02
um you know there's obvious others

34:04
there's there's budget shortfalls and a

34:07
place that they they always threaten to

34:09
fix it is by overhauling or removing

34:12
certain

34:13
benefits that we've had in the 401k

34:16
structure for a long time um you know

34:19
i i hate to speculate on on legislation

34:22
as it's working

34:23
because it just changes but you know i i

34:25
i want i want to see us do more as a

34:28
country to open these programs up

34:31
and provide more incentives versus the

34:32
opposite and i i worry that that we're

34:35
we are moving in the wrong direction

34:37
with some of these proposals just

34:38
because they are looking for ways to

34:41
close shortfalls and budgets and that is

34:44
a very appetizing way to do it

34:45
especially based upon the way for

34:47
example the money is your school word

34:48
during the budgetary process

34:50
well and also too things like trying to

34:52
text unrealized games and things like

34:54
that that just are head scratchers to

34:56
people that are thinking pragmatically

34:58
and rationally even though i was

34:59
watching a

35:00
news program this morning and one of the

35:02
the hosts was like this is a no-brainer

35:03
this makes total sense to tax unrealized

35:06
gains and i'm going really

35:08
want to disincentivize savings it sure

35:10
does but it does i mean what

35:12
it's interesting what's happening out

35:14
there if you're following the elon musk

35:16
person that started tesla he's got a

35:18
conundrum on his hands of probably a 15

35:21
or 20 billion dollar tax bill depending

35:23
on what's going to happen

35:24
if you don't know what i'm talking about

35:26
you know

35:27
pull that up i was talking to jason

35:29
fitner the other day and i was you know

35:31
i know that you you both work for the

35:33
alliance for lifetime income and trying

35:35
to get the messaging out etc and i'll

35:38
ask you the same question ask him

35:41
do you think the annuity industry as a

35:42
whole has kind of dropped the ball on

35:44
the monopoly that they have for lifetime

35:46
income because when people hear the word

35:49
annuity they vomit i call annuity the

35:50
curse word in the financial industry

35:52
which leads to the question hey stan

35:54
why did you name yourself stay in the

35:56
annuity man i believe in these products

35:58
i believe in the transfer risk nature of

36:00
them and i think a monopoly is good when

36:02
the product is good

36:04
um

36:05
how can how can the messaging be better

36:07
to the public out there when every

36:08
single person already owns social

36:10
security which is the best inflation

36:12
annuity on the planet what's your what's

36:14
your take on that as a smart guy in the

36:16
room

36:17
well i mean there there have been

36:18
dateline specials against annuities

36:20
right you know jeff hanson pops out and

36:22
says hello like bad things are about to

36:24
happen i don't think it was actually

36:25
chris hanson but i think i think i think

36:27
you know

36:28
as an industry we're moving forward

36:30
right i think the problem is is that is

36:32
that you often get judged by

36:35
the

36:37
worst within your ranks yeah there's bad

36:38
apples in every industry for sure yes

36:40
and and i i would even go as far to say

36:42
that maybe there's more bad apples in

36:44
this world versus other financial

36:47
products because there isn't the need to

36:48
be a fiduciary right a lot of people out

36:51
there are selling products

36:53
they make a commission and they're done

36:54
they have no you know they're not really

36:57
looking out for the best interests of

36:58
their clients correct so like that's one

37:01
way to address it i don't know that i

37:02
think that that's the best way

37:04
i think the one thing that has gotten me

37:06
excited is that is that more advisors

37:10
are looking into these products and you

37:12
know i i get so tired of advisors saying

37:16
that they hate annuities

37:18
and you know and anyone listening might

37:20
even know what i'm there's and it's the

37:22
dumbest statement of all time it's like

37:24
saying i hate all restaurants

37:26
right so and that's my point it's like

37:27
i'm like i'm like you know advisors i

37:29
know and i will often engage them on

37:30
linkedin and they never have an original

37:32
thing to say because you know like

37:33
they're like they always say the same

37:35
thing they say like oh i've seen so many

37:37
crappy products and i'm like listen like

37:39
do you buy crappy mutual funds for your

37:41
clients portfolio right you know there's

37:43
crappy funds out there but you know what

37:45
you can do because you have human

37:46
capital specifically in helping clients

37:48
accomplish their financial goals so what

37:50
you're good at is helping select

37:52
products that help them do those things

37:54
and so when it comes to investments you

37:56
can pick a portfolio of the best mutual

37:59
funds or etfs around right of course i

38:02
can okay well let's just acknowledge

38:04
that there's a spectrum of quality of

38:06
annuities out there too sure you may

38:08
tell me there's not a single one that

38:09
that that can't help your clients

38:12
that's when they stopped they're like

38:13
well you know like you know i'm just

38:15
like like really like

38:17
if you have a hundred clients that are

38:19
retirees sure maybe only 20 of them need

38:22
one i'm just gonna pick a really low

38:23
number sure but for that 20 it is like a

38:26
rock solid

38:27
option that you should be considering

38:29
but you're not and so i think i think we

38:32
i'd like to think that there are more

38:33
advisors that are realizing that that

38:35
like you know being aware of at least

38:37
certain strategies the ones that best in

38:38
your store whether it's a dsp uh i don't

38:41
i don't know that i have a strong

38:42
preference on the product type as long

38:44
as it's a quality it comes down to what

38:46
you know i always ask people two

38:47
questions what do you want the money to

38:49
contractually do and when do you want

38:51
those contractual guarantees to start

38:53
from there then we go to the product

38:55
that's going to provide the highest

38:56
contractual guarantee and you go to my

38:57
site and run the quotes yourself the

38:59
point is i think the industry that lasts

39:02
for a lifetime income i'd rather instead

39:04
of sponsoring the stones and i love

39:05
making the stones i've partied with them

39:07
in bahamas many a time

39:09
um not

39:10
i'd rather that money be spent bring

39:12
everyone in and let's let's have it out

39:14
and let's get one message let's all have

39:16
one message and let's go forward and

39:18
let's get in front of this demographic

39:20
tidal wave now the interesting part is

39:22
even if they don't do that the annuity

39:24
industry is going to benefit because

39:26
there's a demographic title wipe and

39:27
they're all looking for guarantees but

39:29
the educ the time for education is

39:31
certainly now that's the reason i have

39:33
400 plus videos and do 20 a month and do

39:35
my podcast and written seven books on

39:37
educating the public that yes you might

39:40
think it's a curse word but it's not and

39:42
and i'll one last thing and i want you

39:44
to comment on this you know banks and

39:46
brokers firms will bring me in

39:48
undercover and have me speak to their

39:50
grand their masters of the universe

39:52
people that are managing a lot of money

39:53
and i'll say this if you have the income

39:55
floor in place because i used to work

39:57
for morgan stanley dean wood or payment

39:59
weber ubs i did that i was on that side

40:01
of the table if you have the income

40:03
floor in place and it's contractual

40:04
you're a better investor or you're a

40:06
better advisor

40:07
and there's no disputing that do you

40:09
think that's true

40:11
undoubtedly i mean i think that it

40:12
changes

40:13
your client conversation right i mean

40:16
advisors know that

40:19
they don't usually have all the assets

40:20
especially that people have tons of

40:21
money and so i think that you evolve

40:23
your conversation from

40:25
i'm going to create alpha and i mean

40:28
alpha is not an easy thing to do to i'm

40:30
helping you accomplish your financial

40:32
goals and ensuring that you have income

40:35
for life that to me just is a better

40:37
story it is a it is it is a remarkable

40:40
story and you're actually helping the

40:41
client do what they're effectively

40:43
paying you to do but in a different way

40:45
i mean a lot of advisors grew up

40:47
building portfolios this idea of

40:49
planning is a new thing well and most

40:52
advisors always say i have cowboy boots

40:54
older than they are because they've

40:55
never seen a down mark and they just

40:56
think it's always going to go up there

40:58
will be a reckoning you and i both know

41:00
that we don't know how long it's going

41:01
to last but um you know it will happen i

41:05
wanted to ask you without you giving

41:06
away the intellectual property

41:08
uh pie here and you know the the head

41:12
the main company that you work for is

41:14
prudential

41:15
and i know that you're doing you know

41:17
research and and trying to create

41:18
solutions for good retirement outcomes

41:23
what surprised you

41:24
in the past few years of what you've

41:26
found or have you been surprised as

41:29
you're going down a path and looking at

41:31
blue water strategies that's never been

41:33
looked at before

41:36
well i think the the most interesting

41:39
place

41:40
for

41:41
the future and i'm not the only person

41:43
that's kind of well aware of this is is

41:45
is making 401k plans

41:48
retirement income

41:50
vehicles today

41:52
401ks get you to retirement i'd like to

41:54
see the future as them getting people

41:56
through retirement

41:58
it's not to suggest that individuals

42:00
can't or should roll out to an advisor

42:02
but a 401 k it's it has an institutional

42:06
fiduciary it has

42:07
you know professional money management

42:09
you can get economies of scale it's not

42:11
a defined benefit plan but you can get

42:13
it pretty close if you start layering in

42:16
you know guaranteed income protected

42:18
strategies advisors advice and you know

42:22
where

42:23
i get excited is is just for kind of for

42:25
mass america i know that people that

42:27
have lots of money will always want to

42:28
go

42:29
with an advisor but the idea of an

42:31
institutional fiduciary available to

42:34
everyone having low cost high quality

42:37
options with some kind of guaranteed or

42:39
protective strategy that to me

42:41
is a is a better a better way forward

42:44
then hey why don't you save some money

42:46
in this in this dc 401k plan and then

42:48
when you're done

42:50
later figure it out on your own

42:52
yeah the current process as you

42:54
this is a good and bad example is you

42:57
accumulate in 401k you retire you re you

43:00
roll that money over to a to an ira and

43:03
then you go to a bad chicken dinner

43:04
seminar or a very expensive steak dinner

43:06
seminar and some idiot

43:09
without license

43:10
license licensure proper licensure to

43:12
talk about it sells 100 of your

43:14
portfolio into an annuity which is the

43:15
reason the annuity industry has a bad

43:17
reputation

43:19
unfortunately that's what's happening i

43:21
hope that what you're proposing happens

43:23
at a faster scale my only question is

43:26
because annuity

43:27
products are commodity products and they

43:29
change every seven to ten days like a

43:30
gallon of milk from a quotation

43:32
standpoint the fiduciary part i'm

43:34
scratching my head a little bit on if

43:36
you are a company a and you're offering

43:39
income solutions inside your defined

43:41
contribution plan whatever that is

43:44
and you have three choices are you being

43:45
a fiduciary i'm not sure about that

43:48
well so

43:50
the decision to offer the product is a

43:52
fiduciary choice that's made by the

43:54
planned sponsor you can hire a

43:56
consultant or delegate that via what's

43:58
called a 330 arrangement sure you can

44:00
also hire someone to advise on whether

44:03
you should own the product or not given

44:04
your facts and circumstances so i mean i

44:06
see i mean there's all these different

44:08
ways that that employers or place

44:10
watchers can delegate fiduciary

44:11
responsibility i see most of them going

44:14
down that path if i'm a i mean if i'm a

44:16
if i'm a company i want to offer a 401k

44:19
i don't want to have all this liability

44:20
for it so i think you can i think what

44:21
we'll see is more

44:23
entities come in that they can hire to

44:24
do

44:26
and provide solutions for participants

44:28
that that reduces or eliminates the

44:30
fiduciary risk for the employer

44:33
as wayne gretzky says you skate to where

44:35
the puck's going to be not behind the

44:37
puck

44:38
for you

44:40
where's the puck headed other than what

44:42
you just told us on the 401k side where

44:44
do you think

44:45
um

44:46
you know with this demographic tidal

44:48
wave where what advice do you have for

44:51
people here because they're they're

44:52
thirsty for it that's the reason this

44:53
podcast is growing by leaps and bounds

44:55
they know it's not salesy they know i'm

44:56
bringing on the smartest people in the

44:58
country to talk about it

45:00
you're talking to thousands and

45:02
thousands of listeners and viewers right

45:03
now

45:04
they all have different viewpoints but

45:07
in the current environment that we're in

45:08
both market and political and global for

45:11
that matter

45:12
um

45:14
this is a tough one but kind of can you

45:15
can you give a broad view to make people

45:18
give people places to go to to think

45:21
about it read about obviously we'll have

45:22
your stuff

45:23
i know i asked you a big question but

45:25
can you help with people because that's

45:26
in essence why they tuned in they wanted

45:28
to hear that

45:29
yeah i mean i don't i don't have i mean

45:31
i don't know that i have a great answer

45:32
i think that that you know

45:35
to me one of the most important things

45:36
for people is to get

45:38
personalized advice or guidance from a

45:40
fiduciary i think that for most

45:42
americans it's not necessarily

45:44
economically viable i think that it

45:46
would cost too much and

45:48
you'll end up in some that you don't

45:49
need or want i think that you know

45:52
um

45:53
education is critical i think that more

45:55
and more advisors are moving away from

45:57
being portfolio pros to being you know

46:00
holistic planners but you know

46:02
i

46:03
i wish i had a better single site to

46:05
send someone to but but i think i think

46:08
trying to educate yourself is the key

46:10
and then and then bringing someone in

46:12
that you think can complement that that

46:13
is a professional fiduciary that you

46:15
know has access to you know a whole

46:18
suite of products and solutions not just

46:21
etfs or mutual funds is a the best path

46:24
for

46:25
20 years from now you'll be the ripe old

46:26
age of 60 correct that is correct

46:30
where are you going to be what are you

46:31
going to be doing what's the future for

46:33
you

46:34
i think i'll still be doing this i mean

46:35
i i don't i don't ever i am not one to

46:38
dawdle i i don't i don't think i'll i

46:40
don't think i'm you know it's ironic

46:42
that i'm the head of a time of research

46:44
and i don't think i'll ever retire and i

46:46
think i want financial independence i

46:47
want to have freedom to do whatever i

46:49
want but i really enjoy my job um

46:52
i've been interested in this in this

46:53
industry since i was in high school

46:56
i love what i do so i think i'll be

46:58
doing something like this

47:00
as long as i possibly can go back to

47:02
what you just said to high school when

47:03
did when did this when did the passion

47:06
when did the fork in the road moment

47:08
happen when did you pick up the fork

47:11
i mean i i was i had like a i convinced

47:13
some buddies of mine to give me money to

47:15
invest in a stock portfolio in high

47:16
school i was like reading forbes i was i

47:18
was doing internships at brokerage

47:20
companies i had like 10 internships in

47:23
college at the board of trade at

47:26
uh two accounting firms and every other

47:29
i mean i just

47:30
you know

47:32
the thing that's changed is you know i

47:33
when i first got in the business i was

47:35
more geared towards doing like

47:37
individual personal financial planning

47:38
so work with individuals you know now i

47:41
would say i'm more like institutional

47:42
developing solutions but it's all it's

47:44
all the same right it's all trying to

47:46
help people achieve better financial

47:48
outcomes and so i think that to me has

47:50
always been a

47:51
goal of mine and i'm just i'm still

47:52
doing it just in a different way right

47:54
now were you ever in the retail side

47:56
client

47:57
okay you did that for a while and then

47:59
what was the epiphany for you to go from

48:01
there to the research side was just the

48:04
accumulation of degrees

48:06
and so i actually i actually passed the

48:08
cfp the clu and chse when i was 21. i

48:11
was like a cfa at 24. i met msfs at 22.

48:15
um i think so i was i was i had an

48:18
internship selling life insurance in 19.

48:20
and um that was interesting right you

48:22
know three years and

48:24
um you know they tell you to do things

48:27
and you know you don't always ask the

48:29
question like is that truly in the

48:31
client's best interest and i think that

48:33
you know if you want to find the right

48:35
answer you can but a lot of my

48:37
colleagues didn't necessarily want to

48:38
educate themselves on what to do and so

48:41
you know i was like i want to make sure

48:42
that i'm actually helping people that

48:44
count on me that i'm giving them good

48:46
advice and i i was like i needed to

48:48
learn this myself and so i just started

48:50
radically taking you know more and more

48:52
uh classes and tests and i've you know i

48:55
had like eight or nine i mean i have two

48:57
master's degrees a phd and i had like

48:59
nine designations at one point in time

49:00
so i'm a i'm a big geek but like i think

49:03
it was all geared towards being able to

49:05
when i when i when i tell someone that i

49:07
think this is the right thing to do it's

49:09
because i've spent the time to learn it

49:11
and you know i might get back into

49:13
working with individuals again at some

49:15
point um i really like the more kind of

49:17
institutional focus now but i think that

49:19
for me education's been the key because

49:21
i you know yes i i obviously listen to

49:24
others and take their opinion but i i've

49:26
got enough of a background now that i

49:27
can kind of call things as i see it as

49:29
well well the reason i ask that is as i

49:31
read your stuff i can tell you you've

49:32
been in the game

49:34
um you've actually been on the other

49:36
side of the table because you can read

49:38
that into there's some people out there

49:39
that have never either sold or been on

49:41
the retail side i think it's important

49:43
for you to be there just because you

49:44
understand people and the fact that they

49:46
don't know what they don't know and then

49:48
your research then is geared toward

49:50
filling in that gap because you're not

49:52
assuming that everyone has a

49:54
foundational knowledge of these products

49:57
etc i mean i i run into that every day

49:59
in the annuity world where i'm just on

50:01
the fixed annuity side and just selling

50:03
contractual guarantees you know people

50:05
just don't know

50:06
uh about them it's been such a poorly uh

50:09
educated

50:10
um

50:11
you know thing that's that i mean the

50:13
industry has just done a poor job by the

50:15
way uh you went to texas tech university

50:17
and what people don't probably should

50:19
know about texas tech and i went and

50:21
spoke there a couple times it's one of

50:23
the few if only

50:24
university that has a financial planning

50:27
degree

50:28
and if you ever ask well who was

50:31
david blanchett before david blanchett

50:32
his name was harold ivinsky

50:35
and uh he started all that

50:37
and with his partner dina katz they um

50:41
they started that can you comment a

50:42
little bit about the texas tech program

50:44
because i don't even think people

50:45
understand that that's even out there

50:47
and available but i think it's important

50:48
to know that even some of the

50:50
universities are starting to address

50:52
this from an accreditation standpoint

50:54
sure so i mean for lack of a better term

50:56
texas tech is like the harvard of

50:59
personal financial planning like it is

51:00
the largest lubbock texas love island

51:04
love it

51:05
now so lots of lots of lots of schools

51:08
have

51:09
more and more schools offer

51:10
undergraduate degrees and personal

51:11
financial planning right it is it is the

51:14
largest without a doubt school that

51:16
offers advanced curriculum so masters

51:18
and especially ph

51:20
you know they've been going now for for

51:21
25 plus years and they i mean you know i

51:24
would guess that almost everyone that's

51:25
leading a program in the country now

51:26
came out of texas tech

51:28
and so you know there's a group of folks

51:30
you know mentioned um you know harold

51:31
and dean and others that kind of

51:33
you know create this program and you

51:35
know when i was after i finished my mba

51:37
you know i was doing research and i

51:38
wanted to i wanted to get a more

51:40
you know background in

51:42
you know what people do that you should

51:44
get a phd and that was just a great

51:45
opportunity so um i'm a big fan of texas

51:48
tech

51:49
lubbock is an interesting city but uh

51:51
yeah

51:51
it's a phenomenal program um and

51:53
individuals that are listening that you

51:55
know want to pursue this as a career i

51:57
would i would you know definitely

51:58
recommend not only texas tech but only

52:00
any school that offers a personal

52:01
collective planning degree you want to

52:03
learn more about this especially in

52:05
college

52:06
interesting david i hope to have you on

52:08
again as the time has flown any last and

52:11
final words for the i always do this

52:12
with my my celebrity guest any last

52:14
words for the listeners and viewers

52:16
before we close this thing up

52:18
i i think we're good

52:20
i think you covered it you really did

52:22
now who who have we been listening to

52:23
smart guy in the room david blanchett

52:25
he's uh i'll have all his stuff on my

52:27
site he'll have his own page

52:29
you can replay the um you know the

52:32
podcast on all major platforms and on

52:34
the youtube channel if you want to see

52:35
how young he actually is but i

52:37
appreciate you joining us and i will see

52:39
you next week on

52:41
fun with annuities

52:47
thanks for listening to fun with

52:49
annuities please hit the subscribe

52:51
button and make sure to go to my site at

52:53
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52:54
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52:56
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53:22
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53:25
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53:27
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53:41
[Music]

53:52
you