Business Innovators Radio - Interview with Bill McDowell President of The McDowell Agency Discussing 401K Rollovers

Episode Date: September 15, 2024

Bill has been in the financial services industry for over 20 years. His goal has been and remains to help his clients achieve their retirement goals, protect and grow their assets. Whether it is to leave a TAX FREE legacy TO THEIR LOVED ONE’S or to provide an income for life FOR THEMSELF AND THEIR SPOUSE. He takes pride in helping achieve your specific outcome.He is licensed in approximately 20 states and has protected over 250 Million Dollars in Assets. Unlike the bigger agencies he can provide a more personal level of attention and care. He looks forward to seeing you.Learn More: https://www.mcdowell-agency.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-bill-mcdowell-president-of-the-mcdowell-agency-discussing-401k-rollovers

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with this Bill McDowell, who's the president of the McDowell agency, and we'll be talking about 401K rollovers. Bill, welcome back to the program. Thanks for having me, Mike. Hey, so I know that 401ks are just so commonplace and they build up over years of people being there. In fact, people, you know, these days statistically work several jobs, whether it's two, three, four, five over their career.

And they might have these trailing 401Ks all over the place and one didn't get rolled into the other. And you got four 401K. So I know that you're going to help us understand and clarify the confusion of four. 401k roll over. So where do we start? What are you seeing out there with your clients? Do people have several 401ks from working in their career and then you're having to look at combining them? Or what does that look like? Yeah, I mean, the landscape's different nowadays. I mean, people are working more jobs. I mean, it's not like my grandparents where they started at one job and worked there in their whole life and they just had one job their whole career. It's not, it doesn't, the landscape's not

that way anymore. People are working, you know, two, three, four different companies throughout their working years. So they've got multiple retirement accounts set up. And, you know, I mean, I run into a lot of people, you know, that have them just sit there and they don't know what to do with. So, you know, that's where I come in. And, you know, I mean, they can be any age, you know, I mean, I've run into people in their 30s that I've got, you know, two or three, four or one case just because, you know, they've had a couple different jobs. Yeah. Yeah, that's a good point.

And I think that, you know, people, you know, just mindlessly, you know, they start a job and HR gives them paperwork, they sign it. And now all of a sudden it's like, I don't even know about how much they're putting in or matching or a former K's. And so I think that's one place that you can even start working with people even before they move on or retire is helping them understand their. current 401k and, you know, what percent they should put into this kind of allocation. Where do you start educating your clients on the best asset allocation for their 401k?

Well, if someone comes to me, it doesn't matter what age they are. If they've got a 401K that is at a past job, what we call that is called a orphaned 401K. It means that somebody has, they've got a 401K sitting there that's just sitting there. I mean, it might be growing, it might not, you know, just depending on what the stock market's doing. You know, they might be in their 20s, 30s, 40s. Their age really doesn't matter, but we still call them orphan 401ks. And the best thing to do with those 401ks that are sitting there is to get them into an investment type with someone like myself that can position that money into a place where, you know, they've got more, more grasp, more hands-on on on. where the funds are at and, you know, that kind of thing.

With, I don't know, a 401K, the average fee is 1.74% that the average 401k fee is for in the whole United States. Okay. That's a lot of money. And if you're not, what is, what's the alternative fee? Well, I mean, for myself, I am a fiduciary, first of all. So, and I don't charge any fees for my services, okay? I mean, like some of these brokers out there, they're charging one to two percent. I don't charge any fees for my services.

You know, I do get paid, but mine's worked out a little differently than how theirs is. But, I mean, if you, if anybody that invest money with me, I don't, like I said, I don't charge them any fees. And just say they've got a, just saying someone comes to me and they've got a 401K that was at a job that they left two years ago, you know, it's an orphan 401K. They're still getting charged, you know, somewhere between one to two percent by the company that is where that money's

sitting at. And they're not really doing anything to manage it. It's just sitting there. You know, they're not, you know, they're not doing anything to it. You know,

I mean, they, they could care less if that money makes money or doesn't make money. Like I said, there's no one person that is managing that money. So, you know, when somebody comes to me and they say,

I go into my role at that point. I say, okay, well, look, you know, I can put that money somewhere where you're not going to be charged the fees. You'll have more control over where it's invested. And, you know, you're not going to, like I said, the fees aren't going to be all there. Okay. And like I said, at any age, these people, they can be at any age. And like I've said earlier in the previous podcast, I mean, I work with mostly people that

or retired or getting ready to retire. But I mean, I do have some clients that are younger just because they come to me and they say, look, I've got 401Ks that, you know, they're just sitting there. So I work with everybody. Yeah, yeah, that's a huge point. And, you know, you mentioned about what did you say? The average 401k fee is 1.7% on a, on a million dollars, that's a sizable amount of money that just disappears up in smoke with fees.

Oh, yeah. Yeah. I mean, it's a lot of money. I mean, they all say that everybody's going to charge a fee, which, you know, like I said, the way I get, the way my, and I do get paid, don't get me wrong. I mean, everybody's going to get paid. But, you know, I don't charge any of these ridiculous fees that, you know, the Edward Joneses and your Morgan Stanley, those type of companies, I don't charge the fees that they do. Like I said, And my compensation structure is a lot different than theirs. And, you know, if someone wants to sit down with me and discuss it, I'll be more and happy to go into more detail about that. But it would take us way too long on this particular podcast. You know, and let's say that someone has a 401k or two, but, you know, maybe they didn't roll one into the other. And they're going, well, you know, I looked and the fees really aren't that bad.

So I'm just going to leave it there. What are some of the risks of leaving it in, in that order? account, that old, old employer that you used to work at. What other than fees, what are some of those other risks? Well, I mean, a lot of people have worked with a company that they change their 401k company while they're working for them. Okay. I mean, just saying you're working for a company and they start off with one 401k company and all of a sudden, you know, two or three years into it, they switch to a different 401k company. You know, a lot of people will lose track of where there might be.

money's at. You know, I mean, that's very easy for someone to do. Just say, you know, it's a small account and it's, you know, just say it's been there for 20 or 30 years. I mean, you might, I mean, I'm not saying you're going to lose it, but the possibility of it maybe getting lost in the shuffle somewhere down the road or, you know, it could be, it could, you know, just, let me just disappear. I mean, you say the company goes bankrupt, you know, that it was with, you know, I mean, that's a possibility, you know. If you, if you put it, if you put it with someone, you know, like myself, you know, you're going to know somebody's looking after it. Yeah.

So, you know, that's an interesting point is you hear, you hear that, you know, someone forgot about this inheritance or this money and, and, and it might sound crazy. But I'm sure that there are times that people forgot where a 4BNK was and maybe it was, you know, a sizable amount. How often, how prevalent is that? well i mean it's it can happen i mean i had a client um he was they were and this is this is a little bit off this of you but i mean they were in their late 80s and they and one day he just got a check in the mail for 300 000 and it was like from one of these you know how you get these lost funds the state run companies that where money just shows up and they say there's so many billions of dollars sitting there lost money sitting there well apparently they're

They had tracked this one guy down. It was, I don't know how we didn't know. It was a brother of his that had passed away. But apparently his brother had passed away like 10 years earlier. And that money was just sitting in the California Lost Money Division. And they finally tracked him down in North Carolina and sent him a check for $300,000. It was sitting in a 401K. Wow.

I mean, it was. It happens. Yeah, he didn't even know it was there. So, I mean, you know, I don't know how you miss. Mrs. Eddie. I mean, if you have a brother. Yeah, really, really. But he had a, he had a, oh, happy day moment when he got that check in the mail and then finally figured it out. So that's awesome. Oh, yeah. So you mentioned about, you know, prior companies and they might not pay attention to the 401k and managing it because I'm sure that's accurate. One thought that comes to my mind is what about company

instability? What if there's a company you used to work for and now you've moved on to another company, your 401k with with whatever you know company that was what if that company starts having instability and maybe they're faltering would that have a negative impact on your 401k funds? Yeah, I mean like I said, every situation is a little different. I mean, if you got a company that's going bankrupt, you know, I mean, there's certain, you know, the laws are changing all a time. I mean, I know with insurance companies, with the insurance companies that you

do these contracts with, you're guaranteed a certain amount. It's like the FDIC is set up with the bank, but the FDIC got set up with the bank's not all it's cracked up to be. I mean, most people don't know this, but you know, you get a,

what is it, $250,000 guaranteed with the FDIC? But most people don't know this is that they have a up to 10 years to pay you any of that money back. So technically, they can wait till a ninth year on the 11th month before they pay you anything. And they would actually be smart to let their money keep working for them for those nine years and 11 months.

So, you know, it's not like, oh, your car was totaled in an accident. Here comes a check two weeks later. Ten years is a long time. Those people, those people don't know that. Because, I mean, the bank, and the bank, if a bank's gone under, they're not going to be jumping to go give your money back to you. Right. They're going to wait as long as they legally, they're going to wait as long as they legally can. So, you know, we've talked, we've mentioned about having, you know, multiple 401K accounts.

Like if you worked for two, three companies and you just never rolled one into the next into the next. And now you might have two or three or four 401Ks, you know, 20,000 here, 30 there, whatever the case is. And that would be difficult for you to, A, keep track of, B, to make sure that everything is allocated the right way and just confusion there. So when you are talking with a client that might have a handful of 401Ks and they are no longer with those companies, what is your advice to have them start considering? Like, do you roll all of them into what? What are some options to roll all of those funds into one central place and what should they be considering? Well, it depends on, you know, if we're setting up something that's got guaranteed income for them, then, you know, we'd have to separate that.

I mean, you know, I mean, I would definitely recommend them consolidate some of them. You know, I mean, I had one client that had seven for them case at one time. And, you know, he had a mess going on. And, I mean, I don't even know he might, there might have been some more out there than he didn't even really realize he had. You know, I mean, I know I know that he had seven. And it was what we did. We consolidated all seven of them into one account, you know, which is a lot easier to keep up with than seven accounts.

And, you know, when you're working with someone like me, you know, I do my yearly reviews with them, you know. And if you've got a 401 case in an old company, you're not going to hear from anybody. You know, you might get a statement, but you might not, you know. I mean, they say they're legally obligated to send you out statements, but, you know, you know, You know how it is with the mail.

I mean, they say they sent something out, but you never got it, that type of things. You know, I mean, it's, but if you, if you're working with someone, you know, like me, you're going to hear from, you know, me every year, you know, and it's going to be something where I don't, I'm not a, I'm not a person that you never hear from again. Let me put it that way. You know, another aspect, too, and I know everything, everyone is different and every 401k is different. But I would venture to say that most 401Ks would be at risk of volatility in the market because most of those funds are now tied to what the markets are doing. And you open up the news and your portfolio statement and you see it's gone up down all around. And so I know that you specialize in helping people make sure that they've got enough money to get to and through retirement.

talk a little bit about, you know, even leaving your money in those old 401ks, you know, just dealing with that loss and risk and volatility. Oh, yeah. I mean, like I've said previously, I work with most people that are retired or getting ready to retire. And when it all boils down to it, their main goal is to make sure they don't lose any of the money that they've worked their whole life to save. So I specialize in safe money investments only. Okay. So when someone invest any money with me, me, you're not going to lose anything. Okay. And there's, I mean, people, right, well, that's impossible. It's not impossible. Trust me, I've been doing this for a long time. And it is very possible. And that's, I do it every day of the week. But, you know, and that's the reason that people like the way I approach things is because, you know, I don't charge fees. I'm a

fiduciary also. And, you know, I mean, when people invest with me, they can't lose any money. when you got it in 401ks, whether it's an old 401k or a current 401k, you know, you're, at risk of some sort. If your money is sitting in the stock, it is at risk. You know, even if they say it's not at risk, it still is at risk. You know, you might not lose as much, but you can still lose some. Yeah. Yeah, that's a really, really good point.

And I think that a lot of people really don't know that they have options because they just assume, well, it's in that 401k and it just sits there and I guess when I retire all access it then, but they've got options. They've got options to get it out of that 401k and get it into something else where they have a little bit more control, flexibility, and maybe even get it into something where they can eliminate the fees like you were saying, boy, you know, 1.7% or whatever that number is, if you can shave that off for them, that's a huge win. And then if you can get them into something where there's some guaranteed income, that just which set their mind.

It is so huge. Yeah. I mean, I mean, here's what I tell people. I mean, this is almost like a broker record. I say,

look, you know, you're retiring or you're getting ready to retire. You want to be able to go to sleep every night and no and, you know, have nightmares of your money going or losing money. I mean, like I said previously,

Mike, you know, people don't want to have to work and save for retirement. all these years and then, you know, 10 or 15 years after they retired, they've got to start looking to go back to work. They've got to be a grader at Walmart or something because they ran out of money. You know, I mean, or they lost the money because it was in the stock market. And, you know, I mean, like I've said before, everybody went through the OA crash. I mean, and everybody was at a different age. I'm sure I was in my 30s. I was in my early 30s when

that happened. It didn't affect me as much as it affected somebody. that was maybe 62 to 65 years old, you know, because I had time to recoup it. If you're getting ready to retire and the market goes down 40%, you're not going to recoup that money. It just isn't going to happen because you got a requirement on distributions coming up. You've got to start using that money to live off of. I mean, it just, it doesn't, you're not going to recoup it. It just doesn't happen.

Exactly. Well, I tell you, it's. It's really powerful to be able to have a little bit of clarity, and that's what you've been able to bring us here with realizing some of the options that are available for 401K. You know, currently, if you've got orphaned 401Ks in the past and what you should do with them. So, Bill, if someone is interested in learning a little bit more and reaching out and connecting with you, what's the best way that they can do that? My website is

W.W.W. McDowell-Agency.com. Phone number is 336-9-8-7-2933 and my email address is McDowell manage at g-mail.com. McDowell is spelled exactly

like it sounds MC-D-O-W-E-L-L. Awesome, Bill. Thank you so much for coming back on and chatting with this today. It's been a real pleasure talking with you. Great, Mike. Thanks a lot. I appreciate it. Good talking to you. Have a good week. Have a good rest of your week. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www.com.