Business Innovators Radio - Interview with D. Scott Kenik, Founder and Principal of Wealth Concepts Group Discussing Market Volatility

Episode Date: May 26, 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 COMPANIESInfluential 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-market-volatility

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 us Scott Kinnick, who's the founder and principal of wealth concepts group, and we'll be talking about market volatility. Scott, welcome to the program. Hey, thanks so much for having me, looking forward to our talk. Yeah, I always like learning for people.

And no matter how many times I talk to different people, there's all these nuances and perspectives from life experience and personal and business experience. So it's always neat just to learn from each other. And before we get into the meat of the matter, market volatility, I want to find out about your story. What's your background? And how did you get into financial services in the first place? Oh, I am a financial professional, specialized working with people in retirement.

retirement and nearing retirement, showing them how to protect their assets from market risk. You know, today's topic of volatility is very, very important. When I opened my practice, I decided to specialize retirement planning for a couple of things. One, what happened to my parents in their investment portfolio. They built up quite a nice little nest egg for themselves, and they spent a lot of time learning about investing in the stock market. They took lots of seminars and classes and all of that. And they were doing well. They never said otherwise to me.

So I thought they were doing well with their portfolio. And then unfortunately, when my dad passed, my mom admitted to me that they lost a lot of money in the stock market. Now, you know, these are two very smart people and they spent a lot of time learning about how to invest in the market. And, you know, basically they lost a lot of money. And my mother at the time had to start pinching pennies because she didn't have the assets in a retirement plan that they had hoped for. The other big thing was in 2008, that major drop. My account dropped like a rock, as did my friends. And I knew they had to be a better way.

So that's when I decided that when I opened my practice, retirement planning and protecting people's accounts from market volatility was going to be my specialty. Now, I hear that same type of story over and over. It reminds me one time I interviewed a chiropractor and he said, hey, I fill out of a tree as a child. And no doctor can help me until this chiropractor, all of a sudden, changed my life. life and that's how I got into chiropractic and same with you you know you you had a personal story with your parents and it's like you know this cannot have it happen again and I want to help other people from the same problem so I think that is so spectacular and um it becomes like a personal story for you because you're impressing your desire and love of protecting your family

onto other people which is your clients absolutely it's it's very very personal, both me as well as my entire family. So let's dive into volatility, which we don't need to get into the weeds of volatility and things. But what you just mentioned was, wow, your parents' portfolio, they kind of just thought that everything was fine and ups and downs and all around and, wow, lost, loss, loss. So what is kind of a 30,000 foot overview of what market volatility is as it relates to your portfolio for retirement? Yeah. You know, when you hear Wall Street talking about it, they talk about long-term averages and growth and all of that.

You know, the long-term average of the stock market's a little over 5%. But it's not a 5% steady climb. It is volatile. It is a rollercoaster. It is up and down. One year, it might be 28%. Another year might be 40%. The next year it could be minus 50%. Yeah. So that rollercoaster, that volatility, that rollercoaster is really what destroys people's accounts, destroys their income, especially when they're nearing, retirement in retirement. The average time it takes the break even from major crash is a little over six years. So if you were about to retire a year or two years and we had a major stock market crash and you lost 50%, would you still be able to retire? Could you still afford that if your portfolio went from a million down to half a million or from 600,000 down to 300,000? Could you still afford to retire? If you are retired and you're relying on that account for income and it dropped 50%, Can you afford to stay retired? You're going to have to get a job in retirement. You know, I tell people, it's great to have a job in retirement.

If you want to work, it's quite another to have to have a job in retirement. And, you know, we just came off of a 12-year high, except for last year. We were in the biggest bull run of the market, you know, 12 years of positive returns. And a lot of people have forgotten about market risk, have forgotten about the volatility in the crashes. We just got to wake up reminder last year. This happens constantly. If you look at the history of the market, it is a continual roller coaster. It is not a smooth path upwards.

And these dips can destroy your retirement account. The volatility kills income. You know, when you were explaining that, it made me think of something. And I want you to talk about it because I am confident that it is a common feeling that many people have, which is, I see my portfolio at X. and market volatility hits and now it's gone down whatever percent, 15, 20 percent, let's say. And you're like, oh, no, I need to catch up. And the temptation then is let's catch up. And then that means you might even be faced with taking more risk.

And the market volatility happens again and you take more risk and now you're down, down, down, all because you're chasing the catch up. Talk a little bit about, you know, how you need to view catching up. Well, the problem is you can't time the market. Yeah. You know, 2022 was down, you know, almost 19%. 2003. We're up right now.

But that doesn't mean we're not going to be down next week, next month, or next year. So there's no way to know where at the bottom of that roller coaster volatility is. So when we're nearing retirement and in retirement, especially so, we need to protect our accounts from marketability. We need to eliminate that volatility because there is no way to time. the market. There is no way to say, hey, it's in the bottom. It's time to invest. When the bottom may not be the bottom, it may be the midway in the crash. Yes. And if you knew how to time the market, you'd be a whole other kind of a guru out there and no one knows that anyway. So that's a I'd be in a beach in Hawaii since I was age 20 if I knew how to time the market. And if someone out

there tells you they know how to time it, run. Exactly. And speaking of when I was saying the word run, thinking about runway. And you mentioned this too. It takes time well ahead of retirement to have things in place so that you can weather volatility so that you can make certain moves and be ready for retirement. So talk a little bit about the time and the runway ahead of retirement. When should people start planning? I know that as soon as possible, but I'm sure you get people that go, hey, I'm 62. I want to retire next year. And it's like, oh, there's not enough runway. So talk a little bit about that time aspect. Well, by all needs, the earlier you start, not only the better it is, it's the less money

that you're going to have to save. You know, you need the discipline in your younger years to start putting money away. I know in my personal case, you know, I remember my parents telling me as a teenager, as soon as you get a job, you start putting money away. Well, you know what? When I forgot my first job, second job, even third job, I'm five, ten years, 15 years into the market. I've got a car to pay for.

I got a house to pay for. I got a kid on the way. I can't afford the plan. I can't afford to put money away. So it keeps getting delayed, delayed, delayed, and all of a sudden you're 40, 50 years old, you got, oh, geez, I've got to start planning on retirement. So the early years start by far the better.

Even if you're, like you said, you know, 60 and you realize you want to retire in a few years, you've got to get started. While it may not be optimal, you certainly don't want to wait any longer. There's an old Chinese proverb, when is the best time to plant a tree? Well, that was 20 years ago. But when is the second best time? Today. Yep.

I was thinking the same thing. Wait. You know, if you're not thinking about retirement until you're 64, you're going to be living on Social Security, which is fine if your expenses are low enough to do that. But, you know, there's a lot of people, especially these years, these times that are, you know, working into 70, 75 that can't afford to retire anymore. You know, when I grew up, most families were one income earner and they had a nice house, car, kids went to college.

You don't see that anymore. And back then, which is probably about when I was growing up, I'm 55, and I remember people that worked a job, you'd work 20, 30 years, retire from the same job and get your gold watch plus a pension. Well, these days, those don't exist. Exactly. So, you know, even if you are 64 and you're about to retire, there's things that you can do, but that's certainly not the optimal situation. You want to get started as soon as you can. And, you know, don't think of the money that you're putting into a plan as an expense. It's not an expense. It's a savings. So if you put $500 a month into your retirement plan, it didn't cost you money. You're saving money and you'll be

earning money on that. So it's not an expense. You know, it reminds me of, have you ever heard of Parkinson's law? No, I've not. It, I'm sure I'll butcher it, but it's something to the effect of the time that it takes to complete a specific task will expand or contract given the time you have to a lot to it. Exactly. And it reminds me of what you were saying about, you know, oh, I can't afford to start putting money away for retirement because I've got to put the kids through school or I've got to, well, here's the deal. Your standard of living will expand or contract given what you have to work with. So if you, quote, unquote, paid yourself first, however that looks, whether it's, you know, qualified plans or when you get your paycheck and the first thing you do is put money into that retirement account and then you live up with what's left. somehow some way you will figure out how to live off of what's left.

If you are so committed to down the road in X number of years, I know that these calculations, if they hold true, I should have this much for retirement. I've got to stick to it. And that literally becomes a discipline. And we need to be disciplined in all areas of our lives, personally, professionally, spiritually, financially, physically, all of that. But I think what you're saying here is so important because it's not an expense. It's not like, oh, well, I can't, I couldn't afford to pay this bill this month.

No, your retirement is something that it's going to come before you know it. And you know how time flies. All of a sudden, it's like, oh, my word, it's been 10 years. Yeah, it seems like a switch goes off in people's heads. They're not stressing about retirement for 5, 10, 20 years. And all of a sudden, they're stressed about retirement. Their stress level goes from 0 to 100, you know, immediately. So we need to make that a smooth bill rather than a straight up stress line.

And, you know, I think too, and this is probably another four-hour conversation, but, you know, how much will it take to retire? Oh, my word, that's a long conversation. But the thing that I think a lot of people don't pick up on is, oh, retirement is this long thing way down the future. And, oh, my income in retirement, the taxes of retirement. My tax bracket is going to be much lower. So I can live off of that amount of money. But in reality, just like Scott Kinnick cannot time the market. know what's going to happen. Neither can anyone. We don't know what the tax rates are going to be.

Your tax bracket is going to be. The inflation, so your standard of living, that's a huge question mark. So you may need more than you expect that you need today. And I think that's another big thing. And one of the questions I have when I'm talking with families is, I find out what their current income is. My next question is, how much income do you want have in retirement? Do you want the same amount you want more you want less and a staggering percentage of people say they think they could live on less yeah and i kind of stumps me because and i refer this you know i mentioned this to all my families i talked to retirement could be a lot more expensive than you realize and i'll tell you why right now you're working five days a week and you're spending two days a week when you're

no longer working you're now spending seven days a week because you're tired of watching tv and tending to the lawn. So you go, let's go travel. Yeah. Even if you go do free things, you've got to pay for the gas to get there to, you know, go fishing at the lake down the street. Right.

To go antiquing, even if you don't buy anything. You got lunch on the way, the gas. Right. So you're doing things seven days a week now spending money. So I really caution people to say, well, I'm going to need less money. The other thing is tax brackets. So let's assume we all agree that we don't need less money. Our tax brackets is not going to be reduced.

And you know why we know that? Because, and I'm not an economist and I can't predict things, but you know that deficit number that is in the T's and the trillions and the gazillion, they're going to create another number for as big as it's going to get. But the only way to close that gap is to raise taxes. So how else are we going to close that gap? So you and me and everyone, you know, around us, we know that we will be paying more and more taxes down the road because that deficit is increasing. Now, we can get into all kinds of debates about that, but we just know that is it trending to make our taxes go down or a tax bracket down in 10 to 20 years? Probably not. Well, I believe that we're in the lowest tax brackets now that we'll see for the rest of our lives, regardless of how old you are.

Right now, as hard as it is to believe, we're in some of the lowest tax brackets in the country's entire history. If you look at the history of the income tax, we are at some of the lowest in the entire history. So with our out of control debt, our out of control spending, all the giveaways, we've got to pay for it somehow. The only way to pay for it is either cut spending or increased taxes. And you know they're not going to cut spending. Yep. Yep, you know that. Okay, so all of this talk about unknowns and volatility and you need runway and time and planning. All of that is the case. It kind of then now brings us to the point of what do you do? How can I protect my retirement account from market volatility. What are some strategies or thoughts that you teach your clients?

Regardless of what age you're at, whether you're 20 years old, 30 years old, or you're nearing retirement, market volatility is what kills your account and what kills your income and retirement. So I recommend getting out of the market, not being in the stock market, but using specialized income, excuse me, interest contracts that I call safer money options that a limited the volatility because you're not in the market, but still allows you to participate in the gains of the market. So we use the stock market as a calculator to determine your interest rates, the higher the stock market goes, the higher your interest is. But with these safer money options, you eliminate the volatility. When the market crashes, you don't lose any money.

So you participate in the upside of the market with none of the losses. And long term, this will outperform, has outperform the stock market historically, and, certainly expected to do in the future. And these financial vehicles that you're talking about are tied to the market so that as the markets go up and down, there's some movement there, but it's not those extreme swings. And also, if I'm correct in thinking, it protects your downside. So it's like even if a market sector crashes, you might have just less of a return or no return, but you're not going to lose your money.

Exactly. And that difference is huge. You know, take a look at the market, the S&S. from January 2000, January 2013. January 2000, the market was at 1469. January 2013, 13 years later, it was still at 1469. Market went up 50%. Up 100%, down 50%, up 100%, 100%. 13 years in the market, we didn't gain a single penny.

Not a single penny. All of the losses wiped out our profits. So if we're in these safer money options that don't lose money, you get the gains from those positive years without those losses. And that is a huge, huge difference. It's a huge difference financially. And I would suspect that it's a huge difference mentally. Oh, yeah.

You're not going to bed. You're not watching the news talking about the stock market crashes. Yeah. You know, so wide-eyed staring at the ceiling all night worried about your account because you know you're not going to lose money with these safer money options. You know, I think that's a big piece that people just don't pick up on. You know, if you feel like, oh, the market crashed or the market this and let me call my guy and let me, oh, we need. No, no, no, no.

If you know that it's all safe and secure and not going to lose and all of those benefits, and I know we'll talk about that in future conversations, but boy, wouldn't that be such a relief off of your mind to know that I'm good? And maybe your friends are you're playing cards with your friends and they're freaking out. You're like, I'm good to go. And I think that's such a neat position to be in. Do you know what I call that? Peace of mind. sleep insurance. Ooh, I like that.

Yeah. Right. Or heart, heart or blood pressure insurance because when your heart's going crazy or your blood pressure is going up. But yeah, sleep insurance. There you go. You got to trademark that phrase. You could go to bed at night knowing your account will not drop. You could watch the news, the financial news, and they're talking about how you just lost 18%.

It's going to continue down and you can fall asleep knowing you're not going to lose a penny. And I'm going to ask for a confirmation of this thought. and we don't need to go into detail. But also, when there are gains, aren't there certain financial instruments that you're mentioning that you would not be paying taxes on those gains? Whereas if you're in the market and you have big gains, here comes the tax man knocking at your door the next year as well.

Yep, there's a couple of different ways that we can do it, depending on your goals, your financial situation, etc. Is some of them are tax deferred and some of them are actually tax free. Yeah. And that's another big thing because you hit that bucket with whole, in it and you're thinking, yay, money's coming in, but if it's going right back out the holes with expenses and taxes, boy, if you can mitigate or plug up as much as possible, that is a good thing. So I think that that's kind of setting the stage for kind of, you know, what would be some of those,

you know, financial instruments that could provide that safety, security, sleep insurance. I love, love with that. Well, Scott, I think if someone is listening to this going, hey, let me learn a little bit more. You know, I'm not going to make a decision right away, but teach me. help me understand what's a good way that they can reach out and connect with you. And I also know, actually, actually, let me even throw in one benefit here and one bonus. I know you've got a book called No Stress Retirement Roadmap. And you're going to make that available to listeners as well as picking up a free copy of that. And boy, I just love even the sound of that. You know, no stress

retirement. Boy, that's kind of like sleep insurance. I want to learn about no stress retirement. So if someone is interested in picking up a copy of that book for free and learning more about what you're teaching, what's the best way they can reach you. Just get a hold to me through the website, Wealthconceptsgroup.com, or you can give me a call directly. My number is 832-880-5555. And the book is really valuable. We cover numerous financial topics that can have major influences on whether families' retirement is successful or not. The reason I wrote is to help people understand and avoid the potential problems that could derail their retirement. retirement. A lot of great information in the book.

Well, Scott, thank you so much for coming on. It's been a real pleasure talking with you today. Thanks so much for having me. I enjoyed our 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.Influential Entrepreneurs Radio.com.