Sep 16, 2021 . 9:00 AM . ID: 439840397

Transcript

00:01 – 00:03
[speaker unknown]
This conference will now be recorded.

00:08 – 00:10
Todd Smith
Sandy, are you still better?

00:10 – 00:11
Todd Smith
And now are you?

00:12 – 00:15
sandy
I am good, but I’m bedridden, yes.

00:16 – 00:20
Todd Smith
My admit that I’ve been meaning to reach out to you.

00:20 – 00:23
Todd Smith
I saw the pictures, and how are you feeling?

00:24 – 00:26
sandy
Hey, every day’s getting a little better.

00:27 – 00:30
Todd Smith
Yeah, it looks like it was pretty bad.

00:31 – 00:33
sandy
Two weeks down, Florida go.

00:34 – 00:35
Todd Smith
Wow.

00:36 – 00:38
Todd Smith
Well, if you’re gonna do it, do it right.

00:39 – 00:42
sandy
You know, was it wasn’t an exciting fall.

00:42 – 00:47
sandy
I just my heel hit the last step as I was coming down from the cabin.

00:48 – 00:50
sandy
And it just twist my ankle.

00:51 – 00:53
Todd Smith
Oh, man, sorry to hear that.

00:54 – 00:56
sandy
First time I’ve ever broken a bomb.

00:56 – 01:01
sandy
So, I guess my, I’m pretty good, you know, to be as old as I am and never break a bone.

01:03 – 01:06
Todd Smith
Knock on wood, Frank and I were joking about this.

01:06 – 01:15
Todd Smith
The other day, the office that you wish or cool ball, you gotta say always skiing or, you know, downhill, mountain biking or something.

01:15 – 01:16
sandy
Right.

01:18 – 01:19
[speaker unknown]
Yeah.

01:21 – 01:25
Todd Smith
So, I wasn’t aware that you broke up thing so, yeah, for sure.

01:26 – 01:27
sandy
Three places.

01:28 – 01:29
Todd Smith
Wow.

01:30 – 01:34
sandy
There’s nine pins and one play in my one little baby.

01:35 – 01:40
Todd Smith
Really, man, you go and stir crazy.

01:42 – 01:47
sandy
All I’d been reading, watching Netflix series.

01:48 – 01:51
sandy
I’ve got a beautiful view of Pikes Peak.

01:52 – 01:53
sandy
Right here.

01:53 – 01:54
Todd Smith
Yeah.

01:56 – 01:57
Todd Smith
You could be in worse spots, right?

01:58 – 01:59
sandy
Yeah.

01:59 – 02:00
sandy
It could be worse.

02:00 – 02:01
Todd Smith
Yeah.

02:02 – 02:08
Todd Smith
Well, it’s good to see you, That’s one way to do any of these calls is make an injury will get you here, right.

02:09 – 02:15
sandy
Our, our deck is in the process of getting the structure finished.

02:15 – 02:21
sandy
So that will finally see that the apparently the Todd.

02:22 – 02:25
sandy
Todd Smith said, Hey.

02:25 – 02:26
Todd Smith
Bob, How Aria?

02:27 – 02:30
sandy
Oh taking care of the critical.

02:32 – 02:33
Todd Smith
That’s good.

02:33 – 02:35
Todd Smith
Keep you out of trouble.

02:35 – 02:37
sandy
Yeah, keep her off.

02:38 – 02:40
Todd Smith
Yeah, she has no.

02:40 – 02:40
sandy
Choice.

02:42 – 02:48
sandy
The deck boards got held up by Hurricane Ida in Alabama.

02:48 – 02:51
sandy
So they’re And they’re In Transit now.

02:51 – 02:52
Todd Smith
Yeah.

02:52 – 02:52
Todd Smith
They.

02:52 – 02:58
sandy
Come from Chile to America, and then now they’re coming to Colorado.

02:59 – 03:00
Todd Smith
Really?

03:00 – 03:03
Todd Smith
What can Why Chillies, at the type of material?

03:04 – 03:06
sandy
It’s called Tiger Woods.

03:06 – 03:07
Todd Smith
Oh, that’s right.

03:09 – 03:11
Todd Smith
You mentioned that to me.

03:11 – 03:13
sandy
I’m excited about, about that.

03:13 – 03:16
sandy
The structure is all just about done, though.

03:17 – 03:19
Todd Smith
So, I’ve been on your porch.

03:19 – 03:24
Todd Smith
I know it wraps around and then with your your, where your Now is, the newer edition.

03:24 – 03:26
Todd Smith
And it goes all the way there, right?

03:28 – 03:31
sandy
No, it didn’t never connect, so we tore off.

03:31 – 03:42
sandy
The Redwood left the structure, and they’re connecting the new structure to match the one off the bedroom because you remember how narrow it was.

03:44 – 03:46
sandy
Banded it all the way out to the new.

03:48 – 03:50
sandy
It’s going to be another 10 foot wider.

03:51 – 03:52
Todd Smith
Oh, cool.

03:54 – 03:57
Todd Smith
So it’s, it’s almost done and it sounds like.

03:57 – 04:00
sandy
Now, it’s probably done.

04:00 – 04:04
Todd Smith
Ok, but you get to supervise her right from the.

04:04 – 04:05
sandy
Get to Watch.

04:07 – 04:07
Todd Smith
Cool.

04:09 – 04:10
Todd Smith
Good morning, Penny.

04:10 – 04:10
Todd Smith
I.

04:10 – 04:16
penny
Can see, somehow, I, you can see me, I can’t say, well, I can see you.

04:16 – 04:18
penny
My cameras off, but I don’t know why.

04:19 – 04:22
Todd Smith
I just see a Piece and we’ll call UP.

04:22 – 04:23
penny
Ok.

04:24 – 04:27
Todd Smith
We’ll see if you can get it, and it’d be nice to see your face, said it wouldn’t.

04:29 – 04:30
penny
Do it.

04:30 – 04:31
penny
I don’t know why.

04:32 – 04:33
Todd Smith
I.

04:33 – 04:34
sandy
Like the donuts.

04:35 – 04:36
Todd Smith
Donuts.

04:40 – 04:41
Todd Smith
Good idea, I don’t know.

04:41 – 04:49
Todd Smith
Do we deliver Ruin pennies in Arizona, You’re across town, Franks and the other side of town, and I guess we could, right?

04:53 – 05:02
Todd Smith
Penny, I am, we’ll talk later, I, I really was going to Korea last night, but Jessica and I were both working till nine and then we kinda passed out.

05:02 – 05:03
Todd Smith
So we’ll catch up.

05:04 – 05:05
penny
Yeah.

05:05 – 05:05
Todd Smith
Yeah.

05:06 – 05:10
penny
I only stay awhile because I gotta go to the airport and get my cousin.

05:11 – 05:12
Todd Smith
Ok.

05:12 – 05:16
Todd Smith
Oh, I didn’t know that we need to catch up, we spent too long.

05:17 – 05:18
penny
I know, I know.

05:19 – 05:21
Todd Smith
So Penny is to live in Colorado.

05:21 – 05:22
Todd Smith
She’s now in Arizona.

05:22 – 05:26
Todd Smith
She was up here, and I thought we’re gonna get to visit, didn’t happen.

05:26 – 05:29
Todd Smith
So we’re overdue, matures up up here.

05:29 – 05:40
Todd Smith
So this little FYI there, OK, we had a couple other register registrations but I’m gonna get started since it’s six after.

05:40 – 05:43
Todd Smith
Just drop off whenever Penny and then we’ll catch up.

05:44 – 05:44
penny
Ok.

05:45 – 05:49
Todd Smith
Sandy, I think this is your first session down in, so welcome.

05:49 – 05:53
Todd Smith
So let me just give you, kinda kinda preface this, and what this is all about.

05:53 – 06:04
Todd Smith
So we started this format earlier this year as just another channel where people could connect with me and my team to really does have an open forum.

06:04 – 06:06
Todd Smith
Just a chat catch up.

06:07 – 06:11
Todd Smith
If there’s any questions at all, you bring him here, and we’re happy to discuss it.

06:12 – 06:21
Todd Smith
We typically try to have a few remarks at the beginning, a particular theme, where I’m answering questions that maybe people have sent me that couldn’t make it.

06:21 – 06:23
Todd Smith
But really, this is not a webinar.

06:23 – 06:28
Todd Smith
It’s really just designed to be informal, Kind of drop in.

06:28 – 06:34
Todd Smith
It’s what you guys make it, so many of your family members, remember, you know, you’re happy to invite them.

06:36 – 06:39
Todd Smith
For the most part, we can answer any question you have.

06:39 – 06:42
Todd Smith
If we can’t, we promised to find out and get it to you.

06:43 – 06:46
Todd Smith
My brain trust tends to be here with me.

06:47 – 06:50
Todd Smith
So, you know, Frank, I don’t know, Sandy, have you met Frank Penny?

06:50 – 06:51
Todd Smith
I don’t think you have.

06:52 – 06:54
sandy
I think none time I did.

06:54 – 07:02
sandy
Yeah, When you were at the other building, I had brought the dog in, and he when the?

07:03 – 07:03
Todd Smith
Ok.

07:03 – 07:09
Todd Smith
Ok, so Frank is another Certified Financial Planner as part of the team.

07:09 – 07:12
Todd Smith
And so, he’s frequently here when he can.

07:12 – 07:18
Todd Smith
He’s back from his sabbatical, he goes to Wisconsin every summer to his cabin.

07:18 – 07:24
Todd Smith
So he’s back in town now, so I, I got a more full-time than I normally do, so that’s good, Michael.

07:25 – 07:26
Todd Smith
Who’s a new team member?

07:26 – 07:27
Todd Smith
He sometimes here.

07:28 – 07:30
Todd Smith
And then Tracy, I see just logged in.

07:30 – 07:36
Todd Smith
So that’s kind of our core team that generally is here to answer any questions you may have.

07:36 – 07:37
Todd Smith
Just have a conversation.

07:37 – 07:40
Todd Smith
I also want to bring that up, is because most people don’t know.

07:40 – 07:44
Todd Smith
They’re accustomed to kind of working with me.

07:44 – 07:48
Todd Smith
And I just want to make sure that you understand that there’s a whole team behind me.

07:48 – 07:54
Todd Smith
So somebody from my team might e-mail you or call you, or help work on a project.

07:55 – 08:02
Todd Smith
I’m the owner and typically kind of the, the face of the business, but I have a whole team behind me that’s working as well.

08:02 – 08:15
Todd Smith
So Feel free to reach out to any one of us at any point, and you’ll see more of that going for this team based on sample approach that I’m really trying to push.

08:15 – 08:18
Todd Smith
Because I think it’s a better service to clients and in general.

08:18 – 08:29
Todd Smith
So, speaking of themes, so what I said is, sometimes we had 15, 20 minutes of opening remarks, center theme base.

08:30 – 08:36
Todd Smith
If you’ve noticed over the last year, so we tried to have a quarterly theme of some financial planning topics.

08:36 – 08:43
Todd Smith
So the first of the year, the first quarter was all about beneficiaries in estate planning, then we get into the tax planning.

08:43 – 08:50
Todd Smith
That’s why we want to collect people’s tax returns, because that’s one of the deliverables for you, is really to analyze your tax return theaters.

08:51 – 08:56
Todd Smith
Something of value are some opportunities, planning opportunities.

08:56 – 09:04
Todd Smith
So we’ll be looking at that, again, going into the fourth quarter to make sure there’s not anything that needs to be done by the year end.

09:05 – 09:06
Todd Smith
There’s Tracy.

09:06 – 09:08
Todd Smith
I teased her last night when I left the Office.

09:08 – 09:12
Todd Smith
I said, Do your hair because you need to get on camera for a while because she’s a camera.

09:12 – 09:15
Todd Smith
So you can put a face to a name.

09:15 – 09:19
Todd Smith
This is Tracy the glue that holds it all together.

09:20 – 09:23
Todd Smith
Um, so anyway, we try these, the max.

09:23 – 09:30
Todd Smith
This is the same medical approaches in terms of our deliverables, kind of our call to action for the organization.

09:30 – 09:32
Todd Smith
We meet with people once or twice.

09:32 – 09:32
penny
A year.

09:32 – 09:36
Todd Smith
For kind of an periodic review of formal review.

09:36 – 09:39
Todd Smith
But there’s always some kind of something we’re doing behind the scenes.

09:40 – 09:48
Todd Smith
Our most recent theme, and it ties in today, is behavioral finance and behavioral finance.

09:48 – 09:50
Todd Smith
I find quite intriguing.

09:51 – 09:58
Todd Smith
And Penny might have some insight into this because she, her career as a therapist for how many years Penni.

09:59 – 10:02
penny
That 30, 35, I don’t know, somewhere in there.

10:03 – 10:04
Todd Smith
Yeah.

10:04 – 10:07
Todd Smith
And so, she started when she was 10, because she early in her forties.

10:07 – 10:08
Todd Smith
Right?

10:08 – 10:08
Todd Smith
Penny.

10:12 – 10:14
Todd Smith
So, Behavioral finance, I, I find it fascinating.

10:14 – 10:18
Todd Smith
And I think it, so, not only is it interesting, but I think it’s important.

10:18 – 10:25
Todd Smith
You know, we are, so there’s two sides to kinda, life and finances.

10:25 – 10:30
Todd Smith
It’s really the behavior, but then it’s the mechanics of logistics, the technical side.

10:30 – 10:38
Todd Smith
So, um, Frank, incidentally, he was he was writing a lot of our blogs recently using the theme.

10:38 – 10:45
Todd Smith
So, every quarter, when he writes blogs, can go to our website and look at them And it’s consistent with that.

10:46 – 10:53
Todd Smith
So, it was interesting, I was thinking when I became, when I first got the Certified Financial Planner designation.

10:53 – 10:57
Todd Smith
Gosh, franke United at the same time, about 20 years ago.

10:57 – 11:00
Todd Smith
Behavioral finance, I don’t think was even included.

11:00 – 11:09
Todd Smith
And it was really the mechanics that covered retirement planning, estate, planning, taxes, insurance, investment, and so on and so forth.

11:10 – 11:21
Todd Smith
More recently, I took the Chartered Financial Counselor designation or classes, and one of the key components is actually behavioral finance.

11:21 – 11:27
Todd Smith
So I thought I would share that with you guys today and when we talk about it.

11:27 – 11:30
Todd Smith
So, big picture, why is this important?

11:31 – 11:39
Todd Smith
So Level five, the name level five really started with Maslow’s kind of hierarchy needs of Hierarchy of Needs human needs.

11:39 – 11:42
Todd Smith
Are you familiar with that, Sandy, of you heard of that now?

11:43 – 11:55
Todd Smith
So Basically Abraham Maslow came up with the pyramid and he said that everybody’s behavior and motivation as humans is based on where you are on the pyramid.

11:55 – 11:59
Todd Smith
And really, at the bottom of the pyramid is kind of security.

11:59 – 12:12
Todd Smith
Um, know, your your basic needs worth, and then the top is really more about abundance, living your greatest life, an actualization.

12:12 – 12:17
Todd Smith
So we all operate, sometimes, at our highest level, out more, at the security level.

12:17 – 12:19
Todd Smith
Somewhere in between, we cycle around.

12:19 – 12:36
Todd Smith
So his pyramid, Some of it, six level, so 7 below 5 was based on the concept that financial planning and coaching really help people move, help people move up the pyramid to live a better life through that process.

12:36 – 12:43
Todd Smith
Tony Robbins also came up with their talks a lot about the six human needs motivations.

12:43 – 12:48
Todd Smith
And I’m going to have Frank talk a little bit more granular, but I just want to kind of give you the foundation.

12:48 – 13:05
Todd Smith
When he talks about the six human needs, we, all, have them, subconsciously, or subconsciously, in terms of, no, how we interact with each other, what we may do that’s maybe effective or not.

13:05 – 13:08
Todd Smith
So effective, So on and so forth.

13:08 – 13:16
Todd Smith
But it kinda ties into that, Tony Robbins and others who’ve talked about those six needs being one certainty.

13:17 – 13:23
Todd Smith
Assurance, you can avoid pain or gain pleasure to is kind of uncertainty the opposite or variety.

13:23 – 13:25
Todd Smith
We need some unknown.

13:26 – 13:27
Todd Smith
Change, your new stimuli.

13:28 – 13:33
Todd Smith
Three, it would be significance, for, would be connection and love.

13:33 – 13:36
Todd Smith
Five would be growth, and six would be contribution.

13:36 – 13:37
Todd Smith
I wish there was five to mirror the Level five.

13:39 – 13:54
Todd Smith
I think, if you consider those, that we all have a little bit of each of those, in terms of how we are kind of wired, however, we probably have 1, 2, 3 in the high-end that are more prevalent than others.

13:54 – 14:10
Todd Smith
So, I just wanted to kinda introduce that because how you interact with your spouse or your family members, community, co-workers, kind of boils down to what are these things, but also your finances?

14:11 – 14:22
Todd Smith
So financial decision making also ties into what may be no related to one of these human needs, right.

14:22 – 14:25
Todd Smith
So certainty, right.

14:25 – 14:29
Todd Smith
Certainty is one of your prevalent human needs.

14:29 – 14:33
Todd Smith
How is that going to impact your financial decision making?

14:33 – 14:35
Todd Smith
That could be investing.

14:35 – 14:39
Todd Smith
It could be in using debt, a whole host of things.

14:40 – 14:42
Todd Smith
I want to kind of just open that up.

14:42 – 15:01
Todd Smith
That’s kind of our theme this quarter, and I want to put Frank and the hotseat then maybe talk about a few of the granular, um, you know, behavioral finance concepts that he’s been writing about, that maybe we see in our practice.

15:01 – 15:04
Todd Smith
And with working with clients over several decades.

15:04 – 15:16
Todd Smith
But before I do that, Penny, was that a good explanation or I know some of it I know there’s a much broader topic but would you have any input from kinda your work on that?

15:18 – 15:18
penny
Pretty good.

15:19 – 15:27
penny
I’ll take that Maslow a little differently but but that’s no that really explains it.

15:27 – 15:28
penny
Cool.

15:29 – 15:36
Todd Smith
I just wanted to make sure you’re not sitting there thinking Todd’s getting and psychology and he’s not a psychologist show this totally off base.

15:38 – 15:38
penny
No.

15:39 – 15:42
Todd Smith
Ok So I call this the softer side of finance.

15:42 – 15:56
Todd Smith
You have the hard side and the soft side, the hard side is, the mechanics of investing, or what type of retirement account, or how to create a sustainable distribution retirement.

15:56 – 16:01
Todd Smith
The softer side is what goes on between our ears and how reacting, you know, my experiences.

16:02 – 16:05
Todd Smith
You could all have all the technical knowledge in the world.

16:05 – 16:17
Todd Smith
But if you haven’t mastered, or at least be aware of how you’re thinking about things, the cognitive component and the behavioral component, um, it’s hard to be successful.

16:18 – 16:35
Todd Smith
But that’s where we come in, as you’re, kind of, your planners, and your advocate is to make sure that the hard side and the soft side of finance were kinda consistent, so that we can maximize and optimize, know, your overall finances in life.

16:35 – 16:44
Todd Smith
So, um, with that, Frank, did you have any thoughts or there are a couple examples that you had, that you wanted to share today?

16:45 – 16:45
Frank Zawatski
Sure.

16:48 – 16:50
Frank Zawatski
Yeah, you bet you the soft side versus the hard side.

16:50 – 17:07
Frank Zawatski
And research should help in trying to develop the inputs for the the blog postings, which is for me to join a bar, I’m definitely Lean lean toward the heart side of things, being an engineer by training.

17:07 – 17:15
Frank Zawatski
I want a master’s in business administration, Psychology isn’t, Is it too prevalent in those disciplines?

17:16 – 17:24
Frank Zawatski
But as as I learn more about this, you know, it really helps helps you understand why people do what they do.

17:25 – 17:33
Frank Zawatski
And I think it’s thoughts that it’s the biases and behavioral aspects of it are rum.

17:34 – 17:35
Frank Zawatski
You’re not only financial.

17:35 – 17:50
Frank Zawatski
There are other things in life, and then, just to, you know, numerous spillover effects and it’s time to particular biases like, for instance, a lot of what discussions of politics were.

17:50 – 17:51
Frank Zawatski
Confirmation bias yesterday.

17:52 – 17:52
Todd Smith
In.

17:52 – 17:58
Frank Zawatski
The financial sense, No confirmation bias is that you make that investment decision.

17:58 – 17:59
Frank Zawatski
And.

17:59 – 18:00
penny
You always seek.

18:00 – 18:04
Frank Zawatski
Information that confirms what you already know, thought they were, truly listen to.

18:04 – 18:05
Frank Zawatski
Who you want to listen to.

18:06 – 18:15
Frank Zawatski
And I think in these days, with our polarized political situation, everybody’s got their, their favorite media source.

18:15 – 18:20
Frank Zawatski
And, yeah, it’s, it’s really easy to fall into a trap when we listen to people that say what you want to hear.

18:21 – 18:34
Frank Zawatski
And so, the idea with, with the, you know, being aware of these behavioral biases, is, and that’s where I think we add some value, is that, you know, we know we can’t, we were human.

18:34 – 18:36
Frank Zawatski
We can’t have the biases.

18:36 – 18:43
Frank Zawatski
We just have to be aware of them, and we have to make a conscious effort not to let them overly influence thought processes.

18:43 – 18:53
Frank Zawatski
And Todd talks about this a lot with the group, then we try to follow processes that basically, you know, overcome devices because the processes are the processors.

18:53 – 18:57
Frank Zawatski
They have nothing to do with opinion in the motion.

18:57 – 19:00
Frank Zawatski
Or, you know, what we’re thinking?

19:00 – 19:04
Frank Zawatski
You know, there’s other examples, um, loss aversion.

19:04 – 19:07
Frank Zawatski
People or people don’t like to admit they were wrong.

19:08 – 19:12
Frank Zawatski
But sometimes you have to do that because there’s better opportunities elsewhere.

19:12 – 19:15
Frank Zawatski
But loss aversion basically shows the pain over.

19:16 – 19:26
Frank Zawatski
Payable loss is disproportionate, because the joy of again, and sometimes you start to say, Let’s, let’s harbors for law for instance, safe subtractions admit that maybe that was a mistake.

19:27 – 19:27
Frank Zawatski
Ah.

19:29 – 19:32
Todd Smith
Doctor Ross, I’ll just say one thing.

19:32 – 19:33
Frank Zawatski
Sorry to.

19:33 – 19:33
Todd Smith
Interrupt here.

19:33 – 19:41
Todd Smith
Yeah, I was gonna say, I can’t tell you how many times people said, oh yeah, I want free returns, but I don’t want to lose any money.

19:41 – 19:41
Todd Smith
Right.

19:42 – 19:46
Todd Smith
There’s no such thing, nothing goes up and never comes down, right?

19:46 – 19:53
Todd Smith
So anytime we’re looking for rates of return higher than the bank or something stable, there is at risk of things going down.

19:53 – 19:56
Todd Smith
So, that just ties into what you’re saying and made me think of?

19:57 – 20:06
Todd Smith
Loss aversion, nobody wants to lose money, but they want to make great money and they don’t go, they don’t go together, typically, there’s no such vehicle that you can do that.

20:07 – 20:08
Todd Smith
So, anyway.

20:09 – 20:28
Frank Zawatski
Right, yeah, and there’s other examples up in our business, We know, there’s bias, and especially when purchased research segments of the market outperform in, wow, like growth of technology, stocks have done real well, the last year and a half or so.

20:29 – 20:39
Frank Zawatski
You know, people will ask is why we loaded up on those services like, well, we’re not we’re trying not to follow the herd because, at some point, the hurricane, it would be wrong.

20:39 – 20:42
Frank Zawatski
And it can be very painful when it went wrong.

20:44 – 20:58
Frank Zawatski
So we try to avoid her bias and follow a discipline of diversification rebalancing which basically takes that herd, by herd, tendency away from the away from the management of your money.

20:59 – 21:11
Frank Zawatski
Not all account of laugh at that because, you know, my wife likes cripple Creek and I love to watch the people who are winning and they get more aggressive because they don’t treat.

21:11 – 21:21
Frank Zawatski
You know, mental accounting means that we have certain compartments, our brain for money and a dollar should be a dollar regardless of where we get it from.

21:22 – 21:28
Frank Zawatski
But, know, the marketers of the world have taken advantage of it for a long time.

21:28 – 21:39
Frank Zawatski
It’s very, you know, in the casino one where, again, we’re a win some money, they now think they’re playing with the house of money, and they’re more aggressive.

21:39 – 21:47
Frank Zawatski
Likewise, you know, I think us as consumers, we tend to think of all money we earn from work.

21:48 – 21:53
Frank Zawatski
We have to protect and be more fresh as opposed to a windfall, if you will.

21:54 – 22:00
Frank Zawatski
And I think that, like, say, the marketers, who the world have taken advantage of that, people get their income tax refunds in the spring.

22:00 – 22:06
Frank Zawatski
And they think that’s found money, and they, they tend to go out and buy things when in actuality all the government was doing.

22:06 – 22:07
Frank Zawatski
Was giving your money back to you.

22:08 – 22:10
Frank Zawatski
When they, when they over withheld.

22:10 – 22:18
Frank Zawatski
And yet, so that dollar, coming back into formal refunds should be treated exactly the same as the dollar that came in your paycheck.

22:18 – 22:19
Frank Zawatski
But people don’t think that way.

22:19 – 22:28
Frank Zawatski
And similarly, you know, that mental accounting goes on in the decision making process, if you will, if you don’t follow a discipline.

22:28 – 22:42
Frank Zawatski
So, there’s hundreds of these viruses that a lot of movies seem somewhat similar, but they actually are maybe slightly different, or they have some overlap, with maybe got 2 or 3 biases at one time affecting your thinking.

22:43 – 22:50
Frank Zawatski
So, they kind of run together, but I think the most important point is to be aware of them, and to, you know, try it.

22:50 – 23:02
Frank Zawatski
Try to not let them overly influenced your decision making process, and that’s, again, as far as spots, you know, method of doing that is to try to follow a process, regardless of what we think.

23:03 – 23:06
Todd Smith
Yeah, I think that’s well stated, Brian, Thank you.

23:07 – 23:20
Todd Smith
Yeah, I know when we talk about protocols and systems, as a team, we’re talking about all the time, a perfect example is, when cash comes in, we invested immediately, we’re not timing the market.

23:21 – 23:26
Todd Smith
That’s to protect investors, but also ourselves where we may be second guessing ourselves.

23:26 – 23:27
Todd Smith
Is this the right time?

23:27 – 23:28
Todd Smith
Is it not the right time?

23:29 – 23:30
Todd Smith
So that’s one protocol.

23:31 – 23:43
Todd Smith
I just want to also re-iterate what, Frank, when you mentioned rebalancing, that’s that’s a behavioral protocol as well, if you’re not familiar with the rebalancing, your portfolio worry we rebalance at least every quarter.

23:44 – 24:01
Todd Smith
What that means in the simplest form is if you, if we have you allocated 50% to conservatives fixed income, and 50% to stocks more aggressive in a good year, you’re going to have drift, right?

24:01 – 24:04
Todd Smith
So when a good year, the stock market will outperform your fixed income.

24:04 – 24:13
Todd Smith
So now, you’re probably could be 60, 65% stocks or equities where the rest is in fixed income.

24:13 – 24:21
Todd Smith
And on the surface, a lot of people in the data supports it would say, oh, stocks are doing great.

24:21 – 24:22
Todd Smith
Let’s add to that.

24:22 – 24:26
Todd Smith
Let’s keep let’s keep putting money into that particular area.

24:26 – 24:28
Todd Smith
We instead say, no.

24:28 – 24:35
Todd Smith
We want to shave off what is doing well and move into something that’s not necessarily performing as quickly.

24:35 – 24:38
Todd Smith
So it sounds counter-intuitive, but it does two things.

24:38 – 24:49
Todd Smith
One, it’s keeping your risk kind of profile and check, because we’ve determined you should be 50, 50 for a reason, not too heavy in stocks.

24:50 – 24:50
Todd Smith
Too.

24:50 – 24:59
Todd Smith
It’s the behavior we’re forcing ourselves as advisors and infirm as well as investors to sell something.

24:59 – 25:01
Todd Smith
When it’s high shave off profits.

25:01 – 25:10
Todd Smith
And buy into something that said this, it’s possibly underperforming, and people don’t want to buy something that’s underperforming necessarily.

25:11 – 25:15
Todd Smith
So that’s one of the I just wanted to re-iterate what rebalancing is and why we do it.

25:16 – 25:19
Todd Smith
So that’s one of the behind the scenes things that we do quite frequently.

25:21 – 25:24
Todd Smith
Any questions about any of this?

25:29 – 25:31
Todd Smith
Is the soft side too soft for you?

25:31 – 25:31
Todd Smith
Is it not?

25:31 – 25:33
Todd Smith
Is it not interesting?

25:33 – 25:35
Todd Smith
Or, What do you think Sandy feel?

25:36 – 25:36
Todd Smith
Like, I’m stuck in bed.

25:36 – 25:38
Todd Smith
I just want to see you guys retirement just.

25:39 – 25:40
sandy
Listen.

25:43 – 25:46
Todd Smith
Know, that’s, that’s, this is good stuff.

25:46 – 25:52
Todd Smith
So, if you want to read some more of this, it’s on our website.

25:52 – 25:53
Todd Smith
So, our blog.

25:53 – 25:57
Todd Smith
We try to update at least a few times a month.

25:57 – 26:03
Todd Smith
So there’s all sorts of topics there, Move thing from Tax Planning and Retirement: Investing to Behavioral Finance.

26:03 – 26:05
Todd Smith
We try to keep that fresh.

26:05 – 26:10
Todd Smith
Um, any, any questions, Penny?

26:10 – 26:10
Todd Smith
No.

26:10 – 26:11
Todd Smith
You gotta go pretty soon.

26:11 – 26:13
Todd Smith
Did you have any questions before you came on?

26:13 – 26:15
Todd Smith
So these are our remarks, but as I.

26:15 – 26:16
penny
Mentioned.

26:16 – 26:18
Todd Smith
This is also a Q&A, so.

26:19 – 26:21
penny
Question, I do have one question.

26:21 – 26:22
Todd Smith
I.

26:22 – 26:26
penny
Noticed you send out that little thing about measuring risk.

26:27 – 26:27
Todd Smith
Mm.

26:28 – 26:32
penny
Know, it’s a little cartoon quiz or something that you send.

26:33 – 26:36
penny
But how much does that it, as we’re saying?

26:37 – 26:39
penny
But as we’re giving input, how much is that?

26:39 – 26:42
penny
What do you do with that when you’re looking at a portfolio?

26:43 – 26:44
Todd Smith
Here’s a great question.

26:44 – 26:49
Todd Smith
So, Sandy, I think you have filled this out in the past, but it’s the same thing.

26:49 – 26:52
Todd Smith
There’s, there’s different risk profile questionnaires out there.

26:52 – 26:56
Todd Smith
And I’ve used it for ones, just depending.

26:56 – 26:59
Todd Smith
They’re all fathers and capacity.

26:59 – 27:09
Todd Smith
Now, none of them are perfect, so they wouldn’t are currently using, is risk allies, and assigns a number to assigns a number to the portfolio that you have.

27:09 – 27:15
Todd Smith
So, it’s 0 to 100 being most aggressive, zero being the most conservative.

27:16 – 27:30
Todd Smith
Um, so, when you take that diagnostic, I would say that’s maybe a quarter or a third of, part of our decision, in terms of how we build the portfolio.

27:31 – 27:44
Todd Smith
So, we’re looking at things like age, where you are, your life, what your, what your goals and objectives are, what your income needs may be, Ultimately, what, what is the money going to be used for?

27:46 – 27:47
Todd Smith
Things like that.

27:47 – 27:55
Todd Smith
So, I would say it’s, it’s a part of that in terms of our decision of how to invest.

27:55 – 28:03
Todd Smith
So, generally the way I describe it for those of us, for those that we’ve done a financial plan for retirement income plan.

28:04 – 28:09
Todd Smith
The plan is going to be really the larger dictator of the type of portfolio, right?

28:09 – 28:20
Todd Smith
So, we project, we create a plan for somebody that goes out to age 90, 95, or 100, and we’re trying to solve for a high probability of success.

28:20 – 28:23
Todd Smith
Whatever that is, depending on your objectives.

28:23 – 28:29
Todd Smith
The rate of return of the portfolio is going to be intricate, right?

28:29 – 28:44
Todd Smith
So if the plan dictates that, you know, you’re going to be 100% successful, or close to 100% successful, at an 8% rate of return, then we can shape the portfolio to match that.

28:44 – 28:46
Todd Smith
Because that’s the engine inside the plan.

28:46 – 28:53
Todd Smith
So it’s really the planning that drives the portfolio in my mind.

28:53 – 29:01
Todd Smith
But your risk tolerance, penney’s really important, because we can create the best plan, and the best portfolio, that scares you.

29:03 – 29:08
Todd Smith
The portfolio, we’re out of the plan and it doesn’t work, right?

29:10 – 29:11
Todd Smith
Does that make sense?

29:12 – 29:12
penny
Yeah, it was.

29:12 – 29:14
Todd Smith
Kinda long winded.

29:14 – 29:23
Todd Smith
So, I always Was talking to another therapist or a couple of weeks ago when I was talking about the the cat that jumps on the stove, right.

29:24 – 29:24
penny
Then.

29:24 – 29:25
Todd Smith
She termed it.

29:25 – 29:26
Todd Smith
Something I can’t remember.

29:26 – 29:26
Todd Smith
She calls it.

29:26 – 29:31
Todd Smith
But, um, is Bob here, San Diego CA listening to this or.

29:31 – 29:33
sandy
Oh, he’s outside book outside.

29:34 – 29:38
Todd Smith
Well, I don’t think he’d mind me mentioning that he kind of fell into that a little bit.

29:38 – 29:40
Todd Smith
He’s he’s the cat on a hot stove.

29:40 – 29:52
Todd Smith
And what is the cat on a hot stove is if a cat jumps on a Hot stove and Byrnes itself, they’ll never get on the stove again and even if it’s off and cool.

29:54 – 30:04
Todd Smith
So, it’s similar to you, designing a portfolio for somebody, even though I think that there may be young enough, their objectives would dictate that they can be more aggressive.

30:05 – 30:19
Todd Smith
The plan dictates that they need a higher rate of return, therefore, the risk profile that’s commensurate with that, If they are the cat in the hot stove, or there’s something going on.

30:19 – 30:24
Todd Smith
It wouldn’t make sense for me to put them in a portfolio, at least initially.

30:24 – 30:38
Todd Smith
Then I would have to put them maybe something more conservative than I would want, and coach them along the way to maybe get something more in line that’s gonna increase the probability of them reaching their goals this year.

30:40 – 30:43
Frank Zawatski
So, that, that is an example.

30:43 – 30:49
Frank Zawatski
Your cat on the stove analogy is one of the Biases Availability Bias.

30:49 – 31:05
Frank Zawatski
What they found is that people who’ve had experiences, a negative experience, or something, tend to over overestimate the likelihood that it can happen, for instance, one of the examples in our readings I was going to talk about.

31:05 – 31:08
Frank Zawatski
If you know somebody who has perished.

31:09 – 31:25
Frank Zawatski
In a plane crash, you’re far more likely to overestimate the possible probability that a plane will go down, because that that availability bias in your brain, it’s indelibly, burned in their, in their brain, and you just have a hard time overcoming it.

31:26 – 31:30
Frank Zawatski
And what causes an investor that got burned because of a mistake.

31:30 – 31:40
Frank Zawatski
Or just bad luck is, know, it’s kind of cautious, and that, you know, they may overestimate the likelihood of a market crash.

31:40 – 31:48
Frank Zawatski
Those are kind of things you try to try and not let them overly influence your thinking.

31:49 – 31:58
Todd Smith
That’s a great point, in, even if it’s not you, personally, I hear frequently, like, Oh, I know, so and so, that lost alive know, 700 or, before that, it was the dot com.

31:58 – 32:01
Todd Smith
Oh, so and so lost 75%.

32:02 – 32:03
Todd Smith
So, great.

32:04 – 32:13
Todd Smith
Our job is to circumvent that perspective through education and coaching to try to guide them to make the right decisions.

32:14 – 32:16
Todd Smith
Um, so a good question.

32:16 – 32:19
Todd Smith
I will say, the other component of that Penny is compliance.

32:19 – 32:20
Todd Smith
Right?

32:20 – 32:31
Todd Smith
If, if regulators show up and they say, why do you have Penny invested in a portfolio that is a 55, you know, but she scored a 25?

32:31 – 32:33
Todd Smith
I need to explain that.

32:34 – 32:40
Todd Smith
So we’re always looking at, know, what we designate your portfolio specific number, but then also what your score.

32:40 – 32:57
Todd Smith
And if there’s a deviation from that we have to have a reasonable explanation so we’re always looking for consistence but also no metrics and data to make a case of, in terms of why we make a, why we giving the advice that we’re giving.

32:58 – 33:11
Todd Smith
And so you’ll see that questionnaire, I try to revisit every year, or 18 months, because as you, your, your life changes, et cetera, your risk, your tolerance for risk is likely to change.

33:13 – 33:16
Todd Smith
But also, what’s going on in the world can change that, too.

33:16 – 33:18
Todd Smith
So, we try to revisit that.

33:18 – 33:28
Todd Smith
But then, you get those, those kinda quarterly automated check ins that say, hey, how are you feeling about the markets, how you’re feeling about your financial future?

33:28 – 33:34
Todd Smith
It’s kinda just as always checking in and reminding you of the portfolio risk.

33:35 – 33:37
Todd Smith
So, you don’t forget, so.

33:39 – 33:40
penny
Thanks.

33:40 – 33:41
penny
I gotta leave.

33:41 – 33:42
penny
But, thanks, that was interesting.

33:43 – 33:43
penny
Which.

33:43 – 33:45
Todd Smith
A cousin is coming into town real quick.

33:46 – 33:47
penny
My cousin Bil.

33:47 – 33:51
Todd Smith
Ok, Matthew, you’re supposed to go on a trip with last year.

33:51 – 33:51
Todd Smith
Yeah.

33:53 – 33:55
penny
Yep, he’s coming for the weekend.

33:55 – 34:00
Todd Smith
Ok, well, maybe I won’t call you then, if you’re going to be busy for that, I’ll call you next week, or simply.

34:00 – 34:01
penny
Because I would like strategies.

34:02 – 34:03
penny
Ok, Ashby.

34:04 – 34:04
Todd Smith
Take Care.

34:08 – 34:09
penny
Leave session.

34:10 – 34:16
Todd Smith
Anybody have any questions that you had, when he jumped in, or you just jump in and check out?

34:16 – 34:17
Todd Smith
Check this out?

34:19 – 34:20
Todd Smith
That’s fine.

34:20 – 34:23
Todd Smith
So, I attend a mastermind group.

34:24 – 34:28
Todd Smith
A couple of them in one of whom they gather …, like, Hey, Do you have any questions?

34:28 – 34:29
Todd Smith
Jump on in.

34:29 – 34:31
Todd Smith
If not, it could be a fly on the wall.

34:32 – 34:37
Todd Smith
And I sometimes do come offline more because I hear it triggered.

34:37 – 34:38
Todd Smith
I mean, I have a question.

34:38 – 34:40
Todd Smith
But then somebody else has a question, or something comes up.

34:40 – 34:46
Todd Smith
I’m like, oh, I didn’t think about that, so I welcome you to come back to these.

34:46 – 34:49
Todd Smith
Don’t feel like you have to have a question, by any means.

34:50 – 34:53
Todd Smith
Maybe we’ll get there on some of the others on here sometimes.

34:55 – 35:00
Todd Smith
Yeah, Frank, did you have any other thoughts or treacy any input?

35:01 – 35:02
Todd Smith
No, OK.

35:04 – 35:06
Todd Smith
Ok, let’s close this then.

35:06 – 35:09
Todd Smith
I’m not gonna make this forces to be an hour.

35:09 – 35:12
Todd Smith
I’m actually hearing after woodland Park here soon.

35:13 – 35:14
Todd Smith
Do you need anything, Sandy?

35:14 – 35:19
Todd Smith
I’ll probably go buy your house, but you got Bob donuts, catches, and donuts, everyone.

35:20 – 35:21
sandy
Good.

35:22 – 35:28
Todd Smith
Let me just enclose talk about a few housekeeping items.

35:28 – 35:35
Todd Smith
We are getting to our, one of our periodic meeting windows coming in about October.

35:35 – 35:38
Todd Smith
So look for an invite coming out to sign up for that.

35:38 – 35:42
Todd Smith
If you want an in person meeting or virtual, we can do that.

35:42 – 35:47
Todd Smith
You can click on the link in the e-mail to schedule something directly.

35:48 – 35:49
Todd Smith
So look out for that.

35:50 – 36:01
Todd Smith
We’re going to probably try K believe it’s already mid september, are going to try to at least have 1 or 2 more webinars, so those are more of the educational components before your end.

36:02 – 36:16
Todd Smith
One will be on taxes and kinda tax planning, which I think is relevant before in the fourth quarter here, and then the other is possibly something on crypto.

36:16 – 36:20
Todd Smith
So crypto, currencies has been top of mind.

36:20 – 36:38
Todd Smith
For a lot of people, again, following the heard, everybody wants to invest in crypto because of all the money that’s being made where we’ve put the brakes on like a lot of financial institutions just because we want to make sure that the risks profile is appropriate for our clients.

36:38 – 36:46
Todd Smith
However, I’m taking a 15 hour certification to the New York Institute of Finance.

36:46 – 36:56
Todd Smith
Once I complete that, I am going to then be sharing my findings on probably versus a webinar, just to better educate people on what are the opportunities.

36:56 – 37:02
Todd Smith
What are the pitfalls, isn’t something that we should really be looking at seriously in any of our portfolios, et cetera.

37:03 – 37:05
Todd Smith
So, look out for that.

37:05 – 37:08
Todd Smith
Um, think that’s it.

37:09 – 37:11
Todd Smith
There are probably Sandy or a checklist or another.

37:11 – 37:17
Todd Smith
But always, we’re always, I’m always trying to react to things that are top of mind for people.

37:17 – 37:18
Todd Smith
So crypto is one.

37:18 – 37:20
Todd Smith
Taxes is another.

37:21 – 37:25
Todd Smith
So, in light of taxes, I am frequently hearing.

37:25 – 37:35
Todd Smith
Well, what does it by going to do, not to get into politics, or what’s this new, is new, you know, ideas were, how’s it going to affect me?

37:35 – 37:44
Todd Smith
So, look for an e-mail from me that’s going to have a checklist of questions that you can answer that really hone in whether it will affect you or not.

37:44 – 37:48
Todd Smith
We’ll get the results back, and then we’ll address it with you, OK?

37:48 – 37:49
sandy
We’d like to hear that.

37:51 – 37:53
Todd Smith
So that is all I had.

37:54 – 37:55
Todd Smith
Thank you, everybody.

37:55 – 37:59
Todd Smith
This is recorded as it goes online, as well as another one.

37:59 – 38:05
Todd Smith
So, Sandy, if you ever miss these, and you wanted to, if it was a topic, are you really bored sitting?

38:05 – 38:08
Todd Smith
You can pull up some of the old ones and watch them.

38:11 – 38:13
Todd Smith
Guys, thanks again for your time.

38:14 – 38:24
Todd Smith
All sign up for now, and we’ll see you will be doing this every month, Sandy, and others It’s usually that it’s now going to be the first or second, Thursday.

38:24 – 38:35
Todd Smith
We were doing a happy hour and a coffee, I think we’re just going to stick with coffee for now, Unless we get pushback that we need different times so people can attend so.

38:35 – 38:36
sandy
Mm.

38:36 – 38:40
Todd Smith
Happy healing to you, and We’ll talk to you soon.

38:40 – 38:41
Todd Smith
Thanks, guys.

38:41 – 38:41
sandy
Ok?