Finding Balance in Wealth Management


Finding the delicate balance between passive oversight and active involvement in personal financial management is a crucial challenge that everyone has to learn to overcome.

In today’s episode of Retire in Texas, Darryl Lyons, CEO and Co-Founder of PAX Financial Group, discusses the importance of finding the perfect mix of being “lazy” with being proactive in financial planning.

Today’s show highlights include:

*Why we see many individuals struggle with the overwhelming options and complexity of personal financial planning.

*The concept of behavioral traps, which some investors fall into such as inertia, overtrading, or overconfidence, can then lead to poor financial performance.

*Simplifying personal finance by being “lazy” (not obsessing over every investment trend) as beneficial for many individuals. However, this doesn’t mean disengaging entirely from financial planning.

*Why regular checkups with a financial advisor are crucial for adapting to changes in taxes, life circumstances, product offerings, and market conditions.

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Hey, this is Darryl Lyons, CEO and co-founder of PAX Financial Group. Thanks for tuning in to Retire in Texas. This information is general nature, and is not intended to provide specific investment, tax or legal advice. Visit PAXFinancialGroup.com for more information. 

Also, be sure to visit PAX Financial Group. You can get a 15-minute consultation with one of our advisors. We have ten advisors. They all have hearts of a teacher. The 15-minute consult. You go to the website, just click a button. There’s a call-to-action button and you can click that button, fill in just basic information and just get a good feel for us, the advisor, and see if it’s a good fit.

So that’s a good, non-threatening 15-minute phone call that I would encourage you to do if you haven’t done already. Okay, so let me set the stage and then I’ll jump in. So just hang with me for just a second. We like pets. We got a couple dogs, couple cats, got a bunny, and had some more bunnies. But my cats, I want to talk about them.

Cats as you know, I don’t have to tell you this, are lazy. And what is fun, though, is putting on a YouTube video. YouTube videos for cats and let them watch birds or a mouse or whatever noise. It is funny. So, cats can be funny. But I will admit they’re mostly lazy and it’s a love/hate relationship with my cats.

I generally love them, but they’re lazy. And so that’s what we’re going to talk about is being lazy today. Morningstar wrote an article about this, and that’s what got me thinking about my cat is Morning Star. Morningstar wrote an article, actually Samantha Lamas, for Morningstar. And if you don’t know Morningstar, it’s one of my favorite places to go for content.

It’s probably a little nerdy for a lot of people, but Wall Street Journal and Morningstar have some great content, different, but I go there a lot. Morningstar has an article written by Samantha and it says this, and I’m going to actually read you a little bit of this content. It says, “The key to personal financial planning; being lazy.”

Okay, So I’m going to take a slight issue with this, but I’m going to read it to you first. So, bear with me. Let me read it and then I’ll give you five points that I think are very relevant to this that I think you need to know about 100%. You need to know about this. So let me read this first and set the stage.

So, she says, “The problem, so many options overwhelm and over complicate personal financial plans.” Yes, true. “Many of us want to improve our finances, but that’s much easier said than done. The truth is, it’s hard to make sense of all the tools, options and information at our disposal. If you’re feeling this same stress, you’re not alone. According to the American Psychological Association, most adults in the United States reported that money was a significant source of stress.

Furthermore, our research has shown that a lack of confidence in making financial decisions is the primary reason why investors hire financial advisors and keep them. Although helping investors build confidence in managing their money plays a big role in financial advisor’s value. This research speaks to the prevalence of money, related stress and lack of confidence. To make matters worse, the financial industry can sometimes add fuel to the fire with the rate at which it introduces state of the art financial products, financial tools, shiny new tools and novel investing opportunities. These tools offer investors new opportunities but are often overwhelming.

 So, what happens when people are faced with monumental decisions, with a dizzying array of choices? There are a few possibilities. Some people may excel and use these tools and options to create financial plans perfectly tailored to their circumstances. Others may fall into the trap of inertia where they avoid the decision altogether.

Another group of individuals may instead do too much. Researchers noted that some investors overtrade, leading to overall poor performance in lost returns. Some investors are also prone to overconfidence, which may prompt them to take part in financial opportunities that they do not have enough experience in and are bound to make mistakes. So, what to do instead? Personal Finance Simplified.

Instead of jumping on every investment trend or obsessively watching personal finance videos, many individuals may benefit from being lazy. Now, this is not a recommendation to disengage and leave your financial future to fate.” 

And so that’s enough for now. There’s plenty more to the article. I put a link in the show notes, but the final statement was important.

Many individuals may benefit from being lazy. And I agree. I agree. But maybe not 100% lazy. Maybe 80% lazy. So, can we talk about that? Why do I say 80% lazy? Because there’s about five things that I thought about that are necessary that will not allow you to be 100% lazy. I had a client come to me the other day and he told me, he goes, I never look at my stuff.

I just don’t look at it. I just trust you guys to do it. And he comes in for checkups, so that’s good. But I contrasted that in my mind with a client who recently pulled out all of his money, all of his retirement money at the very end of the third quarter, maybe the last day of the third quarter of last year.

So that’s September of last year, just like I’m done. I can’t watch this stuff anymore. He was watching it daily and I’m not exaggerating probably multiple times a day. Pulled out. The stock market rebounded in the fourth quarter, 11%. He missed out on all those gains in one quarter. It was absolutely foolish. I tried to walk him off the cliff, but he was watching it too much.

The other guy. You could call him intellectually dishonest. Very brilliant man, by the way. Just intuitively knew that watching it wasn’t good for him. So, this idea of being lazy makes sense. But there’s five elements that have to be considered in the context of being lazy. So, I’m going to suggest to you that 100% lazy is not good.

80% lazy is probably the right mix. So why? What do you need to be doing? What’s the benefit of not being 100% lazy or being to a certain degree engaged? Well, first of all, stuff is going to hit your inbox. I bet I get these emails five times a day. 

Here’s the one I got today. ‘Biden Deploys Phase One.’ Okay. No matter what they say, it’s not something that will help you. They’ll have control over your retirement funds, control over how much money you can send or receive. Next phase begins in 2024. But if you subscribe to this newsletter or if you buy gold, I get these all the time. So in my conviction, if you are staying on pace with your financial plan and the advice that you’re getting and doing a checkup, we call it checkups.

Once a year with your advisor. You’re not going to fall into these traps. If it does ping you emotionally. Do you check your plan, check the notes, keep the notes that your financial advisor sends post-meeting. And just so that it reminds you of how you orchestrated your investments to weather these ups and downs. Make sure you’re diversified. You have a reasonable amount of risk, but really, more than anything, this stuff, this noise and nonsense that you get in your inbox and I get my inbox, I don’t opt out because I want to know what everyone’s getting.

All this nonsense is not even in your control. So, first of all, it’s not your control. Second, is it possible? Yes. Is it probable? Extremely. The probabilities are extremely low. So, focus in on what you can control. Your financial advisor gave you strategies. Either pay down your debt, focus on your health, spend time with family, save more, spend less.

You get my point. None of these nonsense emails have any relevance in your life when you’re focused in on your plan. Number two, you need to not be 100% lazy, about 80% lazy because taxes change. In fact, at the end of 2025, the Tax Cuts and Jobs Act will expire. And so, working with your advisor, you may think about doing charitable giving.

And this is an example. Suppose I want to do a large charitable contribution. Should I do it in 24 or should I wait till 2025 or wait till 2026? Because in this Jobs Act that was passed, you should know by now your standard deduction is really high. So, your benefit of itemized deduction is basically gone away, so charitable contributions are really irrelevant in a lot of people’s lives now.

So, because of these upcoming changes in tax laws, it’s important to do a checkup each year and to try to understand and digest how these future changes in the tax laws affect my strategy going forward, because they could have significant tax savings if you think through them critically. All right. Number three, the reason you don’t want to be 100% lazy, rather 80% lazy is good, is because life situations happen.

Had one situation where somebody didn’t do a checkup with me and this was when I was doing advisory work and they told me, yeah, my wife got a part time job she’s doing. I don’t remember exactly, interior decorating. She’s not making much money, so I didn’t think I’d call you. Well, how much is she making? Well, 20,000 a year?

What are you going to do with the money? Well, I don’t know. We just kind of squirrel away. Well, the reason I kind of freaked out inside, I tried to maintain my composure, and I wasn’t offended. It was just that I missed out on an opportunity, reduce their taxable income and help them squirrel money away. And they got too busy, and they didn’t meet with me.

And I’m not saying I’m the savior by any means, but the advisor relationship to be able to do checkups from time to time as life, changes and bringing that like you think this is irrelevant information, but life changes can be relevant. And so, making sure that you just don’t assume that’s irrelevant and meeting with an advisor, doing a checkup once a year is very important because there could be some tax strategies or some things that should be done.

So that’s one example. But just making sure that you keep up with life changes relative to your plan. All right. Number four products change in the industry. The big product change that I think was monumental. That happened several decades ago. It was exchanging traded funds, which basically are mutual funds, which is a basket of individual stocks. But the stocks are not managed by person, they’re managed by computers.

I’m oversimplifying the differences, but the cost savings to the consumer, the investors us, is significant. It could be I mean; in some cases, it could be 1% a year and so if you’re not doing checkups and you don’t see some of these product innovations that take place in the marketplace, it could be costing you a lot of money.

And so, you’ve seen over PAX over the years, we’ve shifted from mutual funds to exchange traded funds because there’s a material cost difference. So, you need to make sure that if there’s any new product innovations that are taking place that would benefit from you, as an example, the mutual fund ETFs shift. You need to know about those. And I got to tell you, these innovations and we talked the contributor to the Morningstar article talked about the challenges of Wall Street manufacturing new products all the time.

That is a challenge. I think we carry that burden for you as a consumer. We’re getting product innovations in front of us all the time and trying to identify which ones are relevant, which ones make sense. And so, the products do change. I mean, they change as much as your streaming subscriptions change. So, we have to stay on top of it and understand which ones make the most sense.

But if you’re 100% lazy, you’re going to miss out, it could cost you some significant money. The last reason is markets can’t go flat. So, suppose you are 100% lazy. This would have been a real problem had you done this from 2000 to 2009 because we had represented by the S&P 500 a completely flat stock market and that would have destroyed your wealth.

It could have destroyed your lifestyle forever, honestly. Or in Japan means to be a better example. Just last week, after 34 years, the Japanese market’s finally recovering. So having a stagnant portfolio for ten years is really problematic. That happens when you’re 100% lazy. But had you done this, just this one thing. So, we call it the lost decade.

It was 2000, 2009. There was a couple of wars. We had 911 in there. So that 2000- 2009 time was the lost decade. But here’s what’s interesting. If you were to just diversify just by adding T-bills, just a minor adjustment to your portfolio, instead of having negative money at the end of ten years, you’d have almost doubled. So being 100% of lazy would have killed you in the last decade.

It would kill you. You just if you would have depended on Japan if you’re living in Japan. So being 100% lazy is problematic. So, I hope I convinced you that being a cat has its benefits, but you can’t be 100% lazy for the following reasons. Let me recap. One, you’ve got to make sure that you remember your plan and you aren’t hijacked by emotional emails.

Two, you got to pay attention to tax changes. Three, life changes. Four, products change and five sometimes markets could go flat, and you need to course correct. Those are the five reasons that I believe 80% lazy is the right mix. So, continue to be lazy everyone. I never say that, but for investing I think it’s very important. Continue to be lazy and remember you think different when you think long term.

Have a great day.


Post-TCJA planning and projected 2024 bracket changes – Baker Tilly

How Diversification Won the “Lost Decade”


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