Business Innovators Radio - Interview with D. Scott Kenik, Founder and Principal of Wealth Concepts Group Discussing Alternative Investment Options

Episode Date: May 29, 2023

I first started in the industry back in 1995. I spent several years educating financial advisors from Merrill Lynch, Morgan Stanley, Prudential and other national companies on retirement plan design, and I worked for Metropolitan Life helping them launch a new retirement program.There were 2 significant events in my life that led me to my current and most rewarding path of helping families gain financial security.The first was my parents’ retirement problems. They spent much of their retirement taking seminars and learning about investing and they traded their own accounts to supplement their retirement income. As far as I knew they were successful. They never said otherwise.When my dad passed, my mom told me that, in fact, they had lost a lot in the stock market and she was concerned about having enough money to live on. Now they were both smart people and had dedicated a lot of their time to learning about investing. Instead of Mom enjoying her golden years, she pinches every penny hoping that her money will last.The other significant event was the economic crash in 2008 from the mortgage crisis. I watched my retirement account drop like a rock, as did my friends and associates. I knew there had to be a better way.If a No-Stress Retirement is your goal, then we invite you to contact us for a complimentary Wealth Concepts Group consultation.Learn More: https://wealthconceptsgroup.com/ and get a complimentary copy of Scott’s book “No Stress Retirement Roadmap” https://www.nostressretirementroadmap.com/ALL CONTENT IS FOR INFORMATION PURPOSES ONLY. OPINIONS EXPRESSED HEREIN ARE SOLELY THOSE OF WEALTH CONCEPTS GROUP AND OUR EDITORIAL STAFF. MATERIAL PRESENTED IS BELIEVED TO BE FROM RELIABLE SOURCES; HOWEVER, WE MAKE NO REPRESENTATIONS AS TO ITS ACCURACY OR COMPLETENESS. ALL INFORMATION AND IDEAS SHOULD BE DISCUSSED IN DETAIL WITH YOUR INDIVIDUAL ADVISER PRIOR TO IMPLEMENTATION. THE PRESENCE OF THIS WEBSITE SHALL IN NO WAY BE CONSTRUED OR INTERPRETED AS A SOLICITATION TO SELL OR OFFER TO SELL INVESTMENT ADVISORY SERVICES. ANY GUARANTEES REFER TO INSURANCE PRODUCTS, AND ARE BACKED BY THE CLAIMS-PAYING ABILITIES OF THE UNDERWRITING COMPANIES.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-d-scott-kenik-founder-and-principal-of-wealth-concepts-group-discussing-alternative-investment-options

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 with Scott Kenneck, who's the founder and principal of the wealth concepts group and we'll be talking about alternative investment options. Scott, welcome back to the program. Hey, thanks so much for having us back. You're welcome, and I know we had touched on last conversation, taxes, and boy, we could

spend about a four-day weekend seminar on that one point alone, but maybe we can pick up on that conversation and talk about some ways that you work with your clients on mitigating or reducing taxes as much as possible. One of the things I want to touch on is the popularity of Roth conversions. They're very, very popular, and for a good reason is it does several basics. benefits for you. One, by converting your IRA, your traditional IRA to a Roth IRA, you're going to take money out of that, pay the taxes on that, convert that into the Roth, and then the money comes out tax-free. And there's a couple of benefits to that. One is you're paying the taxes now before

potentially taxes go up, and also you're eliminating the RMDs, the required minimum distributions, and the money goes to your errors tax-free. But let's talk about the tax rate. we don't know what the tax rate's going to be 10, 15, 20 years when we take that money out in retirement. We have no idea. But we're most likely in our lowest tax bracket, the rest we're going to see in our life. But the question is, what is that taxes? What are those taxes going to be? So imagine if I came to you as a mortgage broker when you bought your first home and said,

listen, I'll go ahead and lend you the money to buy your home. But as far as the interest rate is, we're not going to decide that today. What we're going to do is going to take when your loan is due in 30 years, whatever the interest rate is that year, we're going to apply it to your mortgage from the first day you got your loan. Now, Mike, would you ever take out that loan? No. Absolutely not. But that's exactly what we're doing with all of these qualified plans with the IRAs, the 401ks, etc.

We're saying, hey, we don't know what the tax rate. We don't care what the tax rate's going to be 10, 20 years. We want those tax benefits now. So if you wouldn't take out that loan, understand the same thing applies to that IRA and the 401K. So convert to the. Roth, convert that money, pay the taxes now, and make sure you don't go over your tax bracket. You know, do it piece by piece to make sure you're not increasing your tax bracket. But the Roth conversion is a very, very good option to reduce your taxes.

And I talk about that quite a bit in my book, No Stress Retirement Roadmap, or I give some actual financial numbers as examples. You know, Scott, what you mentioned there reminds me of the analogy, and I know you've heard it 10,000 times. Would you rather pay tax on the seed or the harvest? Well, I've got a couple bags of seed. That's little. But man, when I plant it and it comes, you know, to harvest time, that's like acres and acres.

So, yeah, I want to pay tax on that. And so if I'm understanding correctly, we don't want to get into the weeds. But with the Roth conversion, you might incur some taxes now that you were trying to put off, you know, down the road. But if you're going to pay taxes at today's tax rate, which you actually know, so it's the devil you know, but you're going to then put off and not have to pay them. way down the road, which is the huge question mark. Exactly. And the devil you know, we're actually taxes are on sale right now. It's hard as it is to believe as it is to believe where it's some of the lowest tax rates historically. So you're much better off paying the taxes now when not only do you know them, but they're low. Yes, exactly. And I think we probably

touched on this as well, but it's like, do you really think taxes are going to be the same, if not better, down the road, decades down the road? Probably not because there's, There's that trillion gazillion dollar deficit that has to be closed. The gap is closed from taxes. So I think that's a huge aha for people. And they can go, hey, let me lock in. You know, like the mortgage example you gave, you know, people don't want to get the rate that's going to be way, way, way down the road. In fact, they don't even want to wait two months.

They want to lock in right now. They don't even want to wait the 30 days, 60 days in escrow and hope for the best and let it float. They want to lock it in now. So there's that strategy that you can talk with your clients about to say, let's see if we can lock in at today's tax rate to preserve what could happen down the road. That's a huge aha. So, you know, it's all about preserving and building your retirement portfolio. So talk a little bit about some how to get competitive income without risk because that's what it's all about. You know, taxes is a big word and risk is a big word. Yeah, I strongly recommend that the closer

and closer you are to retirement, that you reduce the risk in your portfolio. You eliminate the You eliminate the volatility of the stock market, which means get out of the place where you could lose money, the stock market. I work with pre-retirees and retirees to show them how specialized interest contracts, safer money options, will give them the profits of the stock market, give them competitive returns to the stock market with none of the risk. And this is so, so important. The stock market is a roller coaster up and down, up and down. It is not a straight ride. need that money while the market is down. You may not be able to afford to retire. You may not be able to afford to stay retired. So eliminate the volatility market, get out of the market, but get

competitive returns with these safer money options. You know, and I hear some people say about safer money options that those types of things are quote unquote tied to the market. So I think that sometimes that's a confusing topic. How can something be tied to the market, but not have the volatility of the market. These products use the stock market performance as a calculator to determine the interest credits every year. So we're not invested in the market. We're not your money actually stays in cash, but we use it as a calculator.

The financial institution looks up at the end of the year and says, hey, the stock market did 8%. We're going to pay, Mike, a percentage of that. Stock market did 12. we're going to pay Mark 12. We're going to pay Sally 12%. So it looks back at what the stock market did and says uses that performance to calculate what the interest is without investing in the market.

Your money stays in cash so you eliminate your losses. So so important. So this is kind of like an in-depth question and maybe I'm incorrect. But if I know that my returns are locked in and guaranteed and can't lose money, doesn't that also mean that the upside is capped to where if I were in the market and the market made 20% gains, I'm not going to get that kind of gain, but at least I'm not, at least I've got a floor where at least I'm not going to lose money. Yeah. In most instances, the concept has a cap and a floor. The floor is zero, meaning you could never go below zero percent.

You could never lose money. And many of these do have caps, meaning that there's a cap to a certain level of interest. say your cap is at 12%. So if the market does market index does 12, does 15, you get 12. Market index does 11. You get that 11, but you got that cap. Not all of them do have the cap, but the ones that do, even though that you will not get the highs, they tend to pay higher than the uncap strategies when you're talking the lower

interest rates and the mid-sized returns. even with the cap, even if you have an index with a cap, the advantage of this is not necessarily the highs of the returns, but the fact that you're never going to lose money when the market crashes. In my book, I show examples of a cap strategy with this particular example in the book is 12.5%. It very rarely does the stock market go over the 12.5%. But because the index concept, the safer money options, does it. doesn't lose money, we end up with a lot more money at the end of an example in my book than

we do in the stock market because we don't take losses. I think that a lot of people feel like, you know, don't hold me back. Don't cap me. But in this scenario, it's like, hey, I'll take a little bit of a cap to have that guaranteed rate of return, which cannot lose money. So I think that's the huge thing. And, you know, it's like the analogy of the tortoise and the hair. You know, the hair sprinted off and yep, I'm going to win, but then he got winded or lost, and now the tortoises is just thinking steady progress. And the steady progress wins in the end.

Yeah. I mean, our listeners can take a napkin, you know, the old napkin illustration, draw an upline, a downline, upline, the downline, that's the stock market. Now, compare that to, let's say you only got 80%. So where the stock market went up 100%, your line went up 80%. When the stock market crashed 50%, your line stayed the same, didn't stay the same. So they can see, even though you didn't get the whole 100% of what the stock market crashed 50%, your line stayed the same. So they can see, even though you didn't get the whole 100% of what the stock. market did because you had a cap, you kept it when the market crashed. And that far outweighs the disadvantage of a cap. Yeah, exactly. Well, I think that's, you know, we've talked about a couple of ahas so far with, you know, a Roth conversion strategy and some of these guaranteed returns. Talk a little bit about annuities because I think pre-retirees can benefit from this and there tends to be potentially, you know, misconceptions there where people hear the word and they're like, oh, nope, nope, I've heard from whoever that that's not good. Well, is that that? the case. I'm glad you brought that up. And we do use annuities. That's what these interest contracts,

these safer money options are. A lot of people have a preconceived notion out there of what annuity is and an annuity is not. And a lot of people's perception, unfortunately, is wrong. There's a lot of misinformation and there's a lot of outdated information out there. So today's annuities have dramatically improved since the concept was developed 50-some-odd years or so ago. So this is a tremendously good opportunity to protect your money from risk and still earn competitive returns. One of the clients I had last week, I'm doing an interview. My first interview is what we call a fact finder. We get all the information about their family, their goals, the finances, et cetera.

And without any prompting at all, she just blurted out, I heard that annuities are really bad. And I'm thinking, geez, I'm just taking facts. We're not even talking anything. Yeah. We haven't gotten to that part yet. And I says, well, you know, not, you know, unfortunately, you've got some bad information. I spent just a few seconds talking to her about why annuities are good. And I just kind of ignored the conversation from there because I really wanted to get back to the fact finder.

And, you know, sure enough, I recommended the annuity to her and read my book and got all this information. And, you know, someone who just blurted out saying, I heard annuities are bad. And then I'm buying one after learning the facts. Yeah. Not the innuendo, not what you hear on the internet. not what you hear from your neighbors, cousins, father-in-law. Get the facts from a professional, and you'll see that they're actually a great option, regardless of all the bad information you hear.

And we don't need to get into the specifics of why people think that, but I would suspect that someone back in the day got an annuity where it wasn't right for them and the person that put them into an annuity should not have put them in in the first place. So of course they felt like, oh, well, I'm constrained or this happened or that happened, but it wasn't the annuity. it was the fact that that person should never have recommended it to them. Yeah, and there's also different types of annuities, and they may not have had the right one. But the key to not having that happen to you is to make sure that you get information from professional.

You research it yourself, and there's a tremendous amount of information in my book about them. Don't go on the internet, for gosh sake. The internet is full of wrong information, outdated information. And the problem with the internet, the problem with searching for the internet, you can get good answers and you can get bad answers. And if you're not already an expert in the subject, you're not going to know which is correct. So what I always tell people is watch the videos that I said, read my book, read whatever information I give them before you go out and Google the concept. That's going to do two things.

That's going to give them a better understanding of what questions to ask online and a better understanding of the answers that they receive. So get that information from a professional first before going out in research. it and base your information not on in your window online, but the information you get from your financial professional. Yeah, that gives you the solid baseline. So I think that a lot of people also hear about alternative investments. You know, they hear, oh, stock bonds, mutual funds, annuities, insurance, but what are some alternate investment options that maybe people haven't even heard in the mainstream that can

also give some safe competitive income returns? You know, Wall Street likes to say that the answer to risk is diversification. But Wall Street's answer to diversification is to put you at different types of risky. A risky, yeah. Different types of risk, not no risk. So these alternative interest contracts, I'm assuming these interest contracts, these safer than money options, annuities are great one. Gold's another good one. A lot of people talk real estate, but, you know, problem with real estate is it goes up and down too.

I, you know, I knew a particular couple bought a duplex to try to rent it out to pay off their kids' college in 15 years. And they ended up with bad tenants. They didn't get all the rent they wanted. And they ended up selling it for $100,000 less when they needed the money when the market was down. So, you know, real estate's not necessarily a good investment as well. It has risk. The question is, how much risk are you willing to tolerate? How much risk can you afford?

Can you afford to lose that money? Yep. And I think that your point about be careful where you research things because Google can become very helpful and it can become very confusing. And I think that also there are some alternative investments out there you can see online that get that stray really far from what the traditional alternative investments would be. Like as an example, I've seen an offering for you can invest in comic books. Now, why are you going to give money to some fund that's investing in comic books? That might be viable, but it sure is, you know, not the norm alternative investment. So be careful when you hear the word alternative investment of where you're getting facts from, right?

Yeah, one of the things I see very often in related to that is investing in art. Art is highly subjective. And take a look at the I like to watch Antiques Road Show on PBS. And very often they'll have shows. They'll go back 15 years and they'll show you what the value was 15 years ago and they'll show you what today's value is. It's an amazing number of things that were high 15 years ago that are now low. And the same thing with the art market.

It's very subjective. There's a lot of risk in there. Sure, some unknown artists may get big in the next 15 years or he may not. Even if you're investing in a normal market. artist, you don't know what's going to happen. It's all about risk. When you get closer and closer in retirement, we need to eliminate that risk because we can't afford it. You know, when we're in our younger working years, the stock market crashed, you know, 2008. We really didn't feel the pain because we didn't need that money yet. We're still working. We're still getting our paycheck. But when, let's say that

stock market crash happens again when we're just about to retire or are retired. Can we afford to lose half our money. And I say half our money is, it's not outrageous. Take a look at the history of the stock market. It's quite common. The average crash is 47%. So the stock market has risk. The bonds have risk. Real estate has risk. So the question is, do you want risk? Can you afford risk? And what happens if you lose? You know, and wasn't it you that was talking about in a previous conversation, sleep insurance? Yes. Risk is the opposite of sleep insurance. I want to go to bed at night knowing my money is safe. I wake up. I've got the same amount of money that I did when I went to bed and that's what I do for my clients. They sleep better and I sleep better knowing

that their money is protected. I love it. Well, Scott, it's just been real pleasure bringing some of these points back up and I just love your approach to these and it's just a very sane and safe approach. So thank you for coming on. And so what's someone listening to this going, hey, I want to hear a little bit more, learn a little bit more, maybe pick up a copy of your book, No Stress Retirement Roadmap, what's the best that they can do that? They can go to No Stress Retirement, Roadmap.com for some more information about the book or my website, wealthconceptsgroup.com, get in touch and we'll send out a complimentary copy. Excellent.

Well, Scott, thank you so much for coming on today. It's been a real pleasure talking with you. Thanks so much for having me. Look forward to our next conversation. 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. www.

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