In this week’s episode of Retire in Texas, Darryl Lyons, CEO and Co-founder of PAX Financial Group, explains the pivotal role financial advisors play in helping clients navigate complex financial decisions. Highlighting real-life examples and personal insights, Darryl underscores the importance of having a trusted advisor as a thinking partner. Additionally, Darryl introduces his new podcast, The Dark Side of Finance, which will spotlight stories of financial crime and underscore the need for vigilance.
Key highlights include:
*How financial advisors assist with major life decisions, from evaluating job offers and insurance policies to planning for children’s education and setting up wills and trusts.
*Why frequent check-ins with your financial advisor are crucial for staying on track with your financial goals.
*An exploration of the dynamics of trust between clients and financial advisors.
*A sneak peek into Darryl’s new podcast, which will explore the darker aspects of the financial world, highlighting stories of financial crime and deception. This new series aims to raise awareness and promote vigilance among listeners.
Tune in to this week’s episode to gain a deeper understanding of the value of a trusted financial advisor and how they can help you navigate financial challenges. If you enjoyed today’s episode, please leave a comment and share the show with a friend!
Transcript:
Hey, this is Darryl Lyons, CEO and Co-founder of PAX Financial Group. Thanks for tuning in. This is Retire in Texas and I want to remind you that this information is general in nature only. It’s not intended to provide specific investment, tax or legal advice. Visit PaxFinancialGroup.com for more information. Okay, so we’re starting a brand-new podcast. We’re going to keep Retire in Texas going for sure, but we’re starting a new one.
And the reason we’re starting a new one, it’s going to be called the Dark Side of Finance because I did two episodes prior. One was about Caz Craffy who deceived Gold Star families through the military’s counseling, financial counseling program. The other podcast I received a lot of great reviews on was that one with the San Antonio Spurs, Tim Duncan.
He was fleeced out of over 20 million. And because of the excitement around those stories, we’re going to do is complete spin off and it’s going to be called The Dark Side of Finance. It’ll be out any day now. And my purpose of this is to bring awareness to these con artists. I don’t want to say hate, but it’s pretty close to hate when these con artists are around our communities, our families, our churches, and they steal.
It really is disgusting, and I’ve seen it a lot over the years. My biggest concern about doing this podcast, and it’s not huge because I feel it’s necessary to help people understand the stories. But my biggest concern is that it could weaken the trust that exists in either me or PAX or financial industry in general, but I do think it’s worth the risk.
I do think that, I think we’re on point. We have to earn trust every single day. And I really, sincerely want to share stories about financial crime, also called fin crime, through this microphone in a very focused way. And so, I’m excited to share The Dark Side of Finance with you and that will be coming soon. So, check it out.
I’m still convinced though, despite the crooks out there, I’m still convinced that Americans and consumers are frankly just better off. They’re better off if they have a good financial advisor, one that does the right thing. And the majority, I know financial advisors all across the country, the majority, just like most professions, are pretty good people. And I think about financial advisors in the context. Oftentimes we think about them as number crunchers. We’ve seen kind of an evolution over the years that they’re really collectively good thinking partners.
Let me give you a couple examples of what I mean by this. Suppose you’re thinking about getting a new job and you’ve done all your due diligence. You’ve done the T-chart and all that stuff, but then you get the benefits.
You’re like, man, I’m just not sure this stuff, all these benefits, I don’t even know if it’s good or not. Who do you turn to? You could turn to your spouse and y’all could go over this stuff over the kitchen table. You could call your uncle, but this is the kind of stuff that you just wrestle with, with a financial advisor or like oftentimes you want to know if you’re getting ripped off.
Now that could be a car buy or it could be a house. But a lot of times, I mean, its insurance, like, hey, I’m bought this insurance and I’ve been paying premiums, and I just haven’t looked at it. Am I getting a fair shake here? Who do you turn to? And so that’s when a financial advisor comes in.
A couple more like, when I think of it’s relevant for me right now. What’s the best way to pay for kids’ college? Now I’m not talking about like distributions from a 529 plan. I’m thinking about, hey, I want them to have skin in the game, so they don’t take this thing for granted. That kind of decision, which is not something necessarily, yeah, you can Google it and get articles on it, but it’s still one of those things that you just need somebody to kind of talk it through.
Should I have them do work study programs? What if we really have to take out loans or we want to take out loans? You know, there’s a difference there. And should I put it in their name, my name? Let’s talk through this.
Or what about setting up wills? You need somebody like a financial advisor to say, do I need a will? Of course, you generally need a will. But what about a trust? Maybe I should consider a trust. And who do I go to? Because I don’t want a bad experience and I don’t want to waste my time.
So, do you have some people that you can recommend as a financial advisor? So, that’s kind of the very essence of a thinking partner in the world of finance. Somebody who is engaged in money, that spends time kind of wrestling with these things with other people. Yes, a problem solver. But the key thing is to make sure that you have this engagement, and this is a responsibility of you as a consumer, is to make sure you have this level of engagement with your advisor before bad things happen.
This is probably one of our biggest key metrics in our organization is the frequency of checkups of our clients. And so, if you have a financial advisor and you’re not going in and do checkups with them, whether PAX or anywhere else, then when bad things happen, they’ve got to get caught up on your life. Oh, I didn’t know you got divorced.
Oh, I didn’t know you had another kid. Oh, I didn’t know you won the lottery. I know those are extremes, but you got to make sure that you’re checking in with your advisor. So that way when stuff happens, when risk hits the fan, they’re in the know. They’re not just blind and need to get caught up or just like an idea person.
Maybe new ideas and the marketplace is always generating new ideas. Like we recently started doing a lot more private equity in our investment portfolios. 10 or 15 years ago, that really wasn’t an option. ESG, not ESG. Forget ESG. I just read an article on that. ETFs, exchange traded funds, those were new ideas that are now have really become the staple in the investment industry.
Markets are always changing, and so you just need somebody who keeps up with these new ideas. And so just an idea person problem solving, a thanking partner. And you know what, if I were honest with you, if I were in my 20s, I probably wouldn’t have hired a financial advisor, to be frank. And I don’t know, maybe that would have lasted longer.
30s, 40s. I really don’t know because I’m like the perfect not financial advisor client. I can run numbers and spreadsheets, I can solve problems, I can research. So, I’m like kind of engineer-ish accounting person. I’m an accountant, like my undergrad degrees in accounting. I’ve been studying accounting a lot, but I would be the kind of guy that is like, you know, I don’t need a financial advisor.
And then I know me. This is just me. I would have woken up one day and said, you know what? I am really frustrated with myself because I’ve made a bunch of stupid decisions that had zeros attached to them. It’s one thing to make a stupid decision about hiring the wrong landscaper or buying a lemon. I mean, all those things can be frustrating, but where it really gets frustrating is when you make decisions, money decisions with zeros on them.
You can make them. They can be acts of commissions, or they can be acts of omissions. And acts of commission would be like, I bought this stock, I had a hunch, and it really went south. Acts of omission is, I’m just nervous, I don’t know what to do, so I don’t do anything. And so, both of those exist when you’re just isolated by yourself.
And that’s why we’re just uniquely wired to be in relationships with one another. And so today I’m 47. And I had honestly, over the years I have hired a lot of thinking partners. I’ve got a lot of good financial advice over the years from people that I pay, and I’ve done this for decades now. I say decades.
Yeah, it’s been decades where I pay people to give me advice, to think through things. You know me, I’ve studied, if you’ve listened to my podcast, I’ve studied very, very successful people, very in-depth, and they all have people that they go to for financial advice. It’s like when you plug it in Excel, it doesn’t tell you, hey, are you sure? This is kind of a dumb decision.
So Northwestern Mutual did a study in July 9th, 2024. So very recently they asked a bunch of people about their financial advisor relationship. There’s four data points I want to discuss, and I’ll put a show note in the show notes, a link to this study. They asked a group; do you have inflation factored into your plan?
So, 69% of the people who had a financial advisor said, yeah, I got inflation in there. I got that covered. 48% that didn’t have a financial advisor said they got that covered. So, there was a disparity there. Now inflation is very important because if you’re off just a little bit in your inflation numbers, that could impact the timing of your retirement or the number of vacations you take in retirement. That inflation number compounded over time is very, very important.
And sometimes you need to tweak it because inflation in health care in college is 6%, not the traditional 3%. So, modeling that out, not only getting it in there, but being accurate with it and then finally monitoring it and adjusting it for current information is very important. The second question, do you have health care costs addressed in retirement?
69% of the people who had a financial advisor said, yes, I’ve got health care covered in my plan. Only 38% of the people who didn’t have a financial advisor said they got that covered. This is very important not only for acute, but also chronic care like the long-term care, eating, bathing, dressing, toileting, transferring. Yes, you can buy long term care insurance, but if you don’t buy that, which is become really expensive, you got to factor that in there into your plan.
Probabilities of how long you might need it based on your unique family history. Very important. It could completely crush what you plan in the future. And then, of course, acute care that’s Medicare or traditional health insurance or even some of these Christian sharing programs. What are those look like? And then what are the deductibles look like? So very, very important.
I’m really surprised people omit that or don’t put thought behind it. The other question I thought was interesting, will you have enough to leave an inheritance or charitable gift? 64% of those that have a financial advisor said, yeah, I got that covered. Only 33% of those that don’t have a financial advisor said they cover inheritance. Now, I understand why, because this is very important to understand.
If you don’t have a high degree of confidence that you won’t run out of money, you won’t leave an inheritance or you won’t intentionally leave an inheritance, you might do it accidentally. So, what’s really cool. Those people that have a high degree of confidence that they won’t run out of money. They’ve run all the probability scenarios and they’re like, yeah, it’s hard for my gut to tell me this, but the mind is very clear.
The math is clear. There’s a high probability I won’t run out of money. Those people are smart enough to say, well, I’m going to set aside a chunk of money for inheritance, and that’s going to be the inheritance money. And guess what? You invest in that differently because you’ve got a 20- or 30-year time horizon, and you can be aggressive with that.
That’s not for you. That’s for the next generation. So, it’s really cool when you’re able to orchestrate your financial plan in such a way that you can carve out money for an inheritance. It’s very cool. Now, the last one I thought was interesting is and there’s not a huge disparity on this one, by the way, but I have in my financial plan, it accounts for ups and downs in economic cycles.
89% of those that have a financial advisor says, yes, my plan accounts for that. Only 75% of that don’t have a financial advisor. I don’t think that’s a huge disparity. Obviously, both people, those that don’t and those that do have an advisor account for ups and downs in economic cycles. But here’s the difference. When the risk does hit the fan, then those that don’t have a financial advisor oftentimes make emotional decisions.
You’ve heard me say this over and over again. Emotions and money just don’t mix. And that’s just like orange juice in toothpaste. And so, you can factor that into the plan. But when it really happens and the headline says that the world is going to end and your money’s down 30%, it’s what you do and who you work with that helps walk you through that that really matters.
So yeah, I would suggest that in my 20s or 30s, I might not have hired a financial advisor and certainly would have regretted it. I didn’t know this, but the average age that people seek advice is 38. I guess at that point you burn your hand on the stove a few times, and maybe you need somebody other than your rich uncle to tell you what to do.
Maybe he’s not as wise as you might have anticipated. It’s interesting that people across the country still trust a financial advisor more than anybody else for advice, except one generation. That’s Gen Z. Gen Z says they trust family more than a financial advisor, and that’s fair. That may evolve over the next couple of years as they start to see that their uncle isn’t really the right resource anymore, or whoever else.
Who do you trust, really? Trust is won or lost every day, and it’s a matter of competency and integrity. Who do you trust? I mean, is it a financial advisor? Is it family members, spouse, business news, online influencers? There’s Reddit, there’s TikTok. We’ll pay attention to these trends. I think it’s incumbent upon us as an organization to take inventory of our clients.
We are getting incredible feedback, better than we’ve ever gotten before. So, I know that we’re on the right track, but I’m not complacent. We do surveys once a year and then we get third party, we look at third party surveys to just make sure that we’re giving the type of financial advice is making a difference in people’s lives.
And again, this idea that trust being won or lost every single day is not lost on me. And so, as I launch this new podcast called The Dark Side of Finance, I know this tension exists where in one breath I’m going to get people a little nervous about the financial stuff out there and the crimes that exist in it.
On the other hand, I’m going to encourage people to work with an advisor that they trust. I think it’s important that you take these two ideas, and you frame a cerebral methodology for your family, specific to your family, so you have to stay engaged with the financial advisor. At the same time, you have to trust and verify. I think this is a reasonable request from me to stay engaged with a financial advisor, but trust and verify.
So, you’re going to have these two messages going out there through both podcasts. And so, I hope that you take that to heart. I encourage you to check out this new podcast coming out. And as always, you think different when you think long term. Have a great day.
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