September Coffee Talk: Mind Over Money

Transcript

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?