Business Innovators Radio - Interview with David Royer, Financial Advisor and Educator

Episode Date: June 8, 2023

David F. Royer entered the financial services industry after completing his military obligation. He began studying the growing IRA Distribution market in 2002 and today he is a nationally recognized speaker and trainer in qualified plan distribution. He has trained thousands of financial advisors and agents in the discipline of qualified retirement plan accumulation and distribution. David’s many articles on IRAs, 401(k)s and other qualified retirement plans have been published in leading national financial periodicals. He is a frequent guest on financial radio shows and is also the author of “The Top 10 IRA Mistakes and How to Avoid IRA Tax Traps”Today he is focused on helping those who are retired or planning for retirement, to keep their retirement accounts safe and make them aware of ever-changing rules that could affect their retirement savings.In 2004 David developed the ultimate IRA distribution training course “The Keys to the IRA Kingdom”®, that he teaches nationally. He educates financial advisors and agents in the art of helping their clients get the most out of their IRAs, 401(k) plans and other qualified retirement accounts. David teaches a simple lesson: “The IRS has given IRA/401(k) owners and their beneficiaries complex rules and guidelines that must be followed to avoid additional taxes and penalties. “They just need a little help to navigate them.”Learn more: https://americannetworkoffinancialeducation.org/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-david-royer-financial-advisor-and-educator

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 David Royer, who's a financial advisor and educator. David, welcome to the program. Thank you, Mike, and I appreciate the invite.

You are welcome. I followed your work for years and I appreciate you coming on. It's a real pleasure to get to know you and meet you. Before we get into your kind of your platform for how you serve the communities and the consumers that you work with, give us a little bit of your story and your background and how you got into financial services in the first place. Well, gosh, that's a long story, Mike. That started four decades ago. At age 20, I entered the financial services industry and I've served as a, senior officers with insurance companies. I've done a number of things. But beginning in 2002, I focused most of my energy on qualified planes, IRAs, 401Ks, 403Bs, et cetera. And I watched those plans from 2002 through this past year, 2022, grow from $17 trillion to close to $37 trillion. So that's approximately a trillion dollars a year. So that's what got my attention. And I focused my energy. My goal was to become an expert and authority in that area.

And hopefully I've managed that. You know, it sounds like that Malcolm Gladwell book talking about 10,000 hours. You know, you need to be focused on one thing for 10,000 hours to be a true, true expert. And also it reminds me of the Bruce Lee quote where he says, I don't fear someone that knows 10,000 punches. I fear someone that knows one punch and has practiced it 10,000 times. So all of that revolves around your, you know, leading up to constantly and never ending and proving yourself learning about these things. And you've got a bestselling book, Top 10 IRA mistakes and how to avoid IRS tax traps.

So talk a little bit about that book and what readers will learn in that concept. Well, actually, I wrote that book, Mike, based on a very simple premise. The IRS has given owners of IRAs, 401Ks and other types of qualified retirement plans. and their beneficiaries, very complex rules and guidelines that must be followed to avoid additional taxes and additional penalties. And Mike, these penalties can be up as high as 25% on top of the taxes. But it occurred to me, they need a little bit of help to navigate those rules. And so that's what prompted me to write the book, Top 10 IRA mistakes.

I always love when I hear people that have said, I've done the hard work, the heavy lifting, and I've researched this. Let me just give you the high level point. So it's like, boy, the top 10 mistakes. Let me know about that. So obviously, we don't have four and a half hours to talk through all of these 10. But give us the high level. What are some of the low-hanging fruit that people typically would not think of?

Like, oh, I've heard that one mistake. Yeah, yeah, I've heard that for. What are a couple that maybe are the below the surface that people haven't heard of that make a big impact? Okay. Well, let me start with the Secure Act of 2019 and 2020. a very important piece of retirement legislation. And it really changed the landscape in terms of beneficiaries' rights, when you must start taking required minimum distributions.

And it's very easy to miss those dates. One of the chapters in the book is devoted to missing a required minimum distribution. So, like, people that don't qualify plans, they have to begin to take their distributions no later than April the first of the year, following the year in which they turn age 73. If for any chance they miss that distribution, or they miss that deadline or subsequent distributions, in addition to having to pay the tax,

they'll wind up paying a 25% penalty on top of that. So think about it. They're in a 25% tax bracket, and they pay a 25% penalty. That means 50% of that missed distribution is going to wind up in the hands of the Internal Revenue Service. I also spent some to my book about I was just going to make a comment there because I think that sometimes I'm as a person listening to that as like a consumer putting my consumer hat on.

I might think, well, you know, if I get to that age and I just don't need the money because I'm good to go, I might just check it off in my mind going, I'm good. I don't need a distribution. But there's that R word that is in their required distribution. So that's a huge thing that you just mentioned. It's not just a recommendation. it's a mandate. You have to do this certain distribution at that certain agent. If you don't, that's a hefty penalty. Yes, it is. And, you know, unfortunately, a lot of people really are not being properly counsel about that. They're making that mistake. And they are paying less penalties. A couple of the things that I get into in the book, not properly designating beneficiaries. So, Mike, another issue I've noticed is people not properly designating beneficiaries. I get called from advisors all the time.

finding out that somebody passed away and their IRA or 401K got paid out to their ex-spouse. And people just don't get around to change you in those beneficiaries. But here is a really big one, and that's not knowing the IRA and 401K roll over rules. Now, people, Mike, they roll their IRAs or they roll their 401Ks, 403Bs, and TSPs, typically into an IRA so that they can take control of that when they're no longer employed and no longer making contributions and no longer getting company matching funds. But the rules are extremely specific about how those rollovers must take place. The mistake a lot of people do is they do what's called an indirect rollover,

which means the current custodian, maybe it's their 401K custodian, sends them a check, they cash the check, and then within the 60-day deadline, they write a new check into an IRA. Well, that's fine. But you know you can only do that indirect rollover one time per year. So give you an example, John, I'm going to use John, had two IRAs, one for 50,000, one for 250,000. In January, John did a rollover of one of his IRAs, the 50,000, rolled it over to a new custodian. He got the check, cashed the check, and wrote the check within that 60-day deadline to the new custodian.

That was okay. Well, John kind of liked that, and he preferred the new custodian. And so about two months later, he did the same thing with his $250,000 IRA. had them send him a check. He cashed it and wrote a check to the same custodian. Well, guess what? He just broke the two indirect rollovers in the same year rule. And he had to pay taxes on that entire $250,000. And it's like the question I asked before, which is, you know, well, it seemed to me, if I don't need the money, then I'm good to go. But you don't know these things.

It's like when you play chess and you make a move and leave your finger on it. You need to look around, look around and make sure that's the right move. And then you take their finger off and know, okay, good. Now my move is set. Well, before you make these kinds of moves, you better check with a qualified, well-educated financial professional so that they are able to say, yeah, yeah, that would make sense. Or no, hold on. There's this rule that you have to, so don't just do what John did, quote unquote, make sure that you're getting advice from a qualified retirement specialist. So that's a huge trap that you just mentioned. You know, Mike, it's interesting

that you said that I was interviewed for the cover story feature article in Money Magazine, and the name of the article was the one retirement move you must get right. And when they interviewed me, the question they asked me was, when somebody's planning to do a rollover from a 401K, 403B, TSP to an IRA, do they really need the help of a well-trained advisor? And my answer was absolutely, if you make one mistake, if you're going to foul of these rules, you're going to wind up paying additional taxes, and very large penalties.

Because there's no do ever. It's not like once it's triggered, you go, oh, okay, yeah, I'll just do it over. Nope, it's done. It's live. And it's not like you wrote it in with pencil. It is permanent ink. So I think that's a huge piece. And, you know, after these decades of you spending all the time and making all of the

research that you've done to become this expert here in IRAs and all of the nuances there, you've now started a network for advisors called the American. network of financial education. Talk a little bit about what that is and how that serves your clients who are financial professionals to help them grow their business. Great question. You know, prior to COVID, prior to actually March of 2020, many advisors across the country offered educational workshops to kind of help people work through some of these rules to make sure they didn't make those mistakes. But when COVID hitting those venues closed, those advisors needed a solution So I created the American Network of Financial Education, and the whole purpose was, is to offer that same kind of education, but in a safe way where they don't have to attend a venue.

And we offer this through written material, recorded material, articles, et cetera, so that consumers today can still get that same education they could pre-COVID. So that was the initial purpose of the American network of financial education. And then how does that help the advisors that you work with? What is it that you are, what service are you providing to advisors to help them grow their business? Well, first of all, they become a member of the American Network of Financial Education. And Mike, many of the advisors are using my book to help educate consumers so that they don't make these mistakes. You know, the informed consumer is going to do well. The misinformed or uninformed consumer is the one most likely to make these mistakes.

And so I work with agents literally from Massachusetts to Honolulu. advisors that know these rules and that are using my book to help educate consumers. Yeah, and I think that's a huge piece is if you can associate with people that are well respected, then all of a sudden you are borrowing the trust and credibility from that person. The prospective client that the advisor is working with, they're viewing that advisor not as a salesperson, but as a trusted advisor because they're educating them. they're not pushing a product. They're saying, hey, here's this book. You need to take a look through this because there's some powerful concepts. So talk a little bit about how that helps the advisor with some of those good educational resources so that that helps them bring in new clients.

Well, in addition to being a third-party influence, Mike, I want to mention the fact that the majority of the $37 trillion that's in America's retirement funds is at risk in the market over 80%. And one of the things that I teach advisors to educate their consumers about is there are really three primary custodians of qualified plans or qualified retirement plans in this country. And that would be Wall Street, banks, and insurance companies. And obviously, Wall Street offers the greatest level of uncertainty. There's no federal bailout. When you lose your retirement savings, you've lost it. And currently, retirees and pre-retirees are concerned about the lack of stability in the market. And many have taking substantial losses. Banks who always felt to be safe, well, they're FDIC insured, but how can the FDIC guarantee your money is safe if the current bank issues turn out to be

systemic and spread to the largest banks? You know, according to Forbes, six, I'm sorry, 465 banks failed between 2008 and 2012. And that list includes the largest of the banks, which is Washington Mutual that had $307 billion in assets. Moving on to the third custodian insurance companies provide solutions that offer guaranteed principal, guaranteed income, and peace of mind. And they're inherently stable because of the statutory reserve requirements, reinsurance reserve requirements, and the mandatory membership in the Guarantee Association. So an interesting number, during that same period of time between 2008 and 2012, when 465 banks failed, only three annuity. providers fail during that same period of time. Wow. That's a staggering statistic because those of us that lived through that time period, it was like too big to fail. And look at this

financial institution and they were the big, you know, heralded, respected names from decades and decades, but to have that disparity between those banks and then annuity companies, that gives a little bit of a warm and fuzzy feeling of, you know, credibility to that section, right? Absolutely. I think one of the biggest problems today in America's retirement accounts is having too much risk. You know, there's nothing wrong with the market. I'm not saying people shouldn't invest in the market. I have nothing against stocks, bonds, or mutual funds when you're in your 20s, when you're in your 30s, even into your late 50s. And you have time. If the market does correct, you have time for it to grow back. But once you get past 60 and getting closer to age 65, the situation becomes more critical. because you may not have time to watch the market grow back. So too much risk, I think is probably the biggest issue facing consumers today. If they're in 401Ks, 403Bs, TSPs, 457 plans, etc., almost all of that money is invested in at risk in the market. So one of the things that I teach to

advisors and that they can pass on to consumers is when you hit a certain age, you need to start preserving some of that money that you've made in the market. Take some of those chips off the table as it were. And when you get even to a more advanced stage, for example, at age 73, when you have to start taking out distributions, well, guess what happens? If your money's in the market and you're taking out distributions and the market drops, guess what else drops? Your income, because that's based on the amount of money in your qualified plan. So risk to me is the biggest risk facing American savers today. You know, that's a huge point.

And I think that I like how you say stocks, bonds, mutual funds, Wall Street, the market, whatever you want to freeze in that. They're not evil. It's just all in due time, all at the right place. So at certain age is good. Have that in there. You've got more runway. But when you get to a certain age, so I think that that's a nice connection there. And having the guaranteed income with no risk of loss is huge.

And I want to kind of take that one step further and have you comment on this. if and when people now rebalance their portfolio at a certain age to make sure that they've got all that risk taking care of and guaranteed returns. What does that do to their mental state of peace of mind, of sleeping at night kind of a thing? Because now it's like, I don't need to worry about watching the news when everything tanks or ups and downs and all around because I know that my money is safe. Well, I'll tell you, it's better than a sleeping pill. Because when you go sleep at night, you don't wake up in the morning, get on your cell phone before you get out of bed and see how your investments are doing because you know that they're safe. Yeah. Just as importantly, most people at retirement, they live longer and they live happier if they have a guaranteed income for life.

And one thing that the market in Wall Street cannot do is guarantee the income because they cannot guarantee the principal. Right. So when you reach that age where you're being forced to take out, or you choose to take out distributions. Whatever that income is, I think if you ask most people, Mike, they'll tell you they want that income guaranteed and you can't get that on Wall Street and you can't get that from banks. A hundred percent. You want to sleep better at night. You want to have that pit in the bottom of your stomach go away. And once that is done, I'll bet that we could find some research that shows, wow, longevity and lifespan has been increasing over the years anyway because we're taking better care of ourselves. we're exercising more, we're eating better.

Medicare or medical coverages are better these days. But if you add that last factor in that you just described, I bet you that adds just a little bit more there to that lifespan because people aren't having that extra stress and worry. So what a nice, tangible effect that that has in securing and making sure that your portfolio is going to always perform safely for you. Totally agree. You know, I believe that people that are having to,

you know, look at their stock account holdings every morning. They're not enjoying life. They're worried about taking a loss. And you know what I liken that too? It's kind of like getting laid off. So you have this income coming in and then all of a sudden the market corrects as it does periodically. And that income is either gone or dramatically reduced. It must be the same kind of stress that somebody goes through when they get laid off from a job.

And again, you know, they take no fault in this. You know when you invest in the market, maybe you're going to get some great returns. Maybe you're going to lay flat or maybe you're going to lose 20 or 30 or 40 percent like people did back in 2008. Yep. I think that's a really, really big point there that people need to realize. And when you bring it all together, it's a holistic 360 degree approach to making sure that your retirement is protected as much as possible. So, David, it's been a real pleasure talking with you. If someone is interested in learning more about what you've talked about and connecting with you, what's the best way they can do that?

Well, they can go to one of my websites. The one I recommend is the American Network of Financial Education. And the quick way to get in there is A-N-O-F-E.org. So Anof-Fee, standing for American Network of Financial Education.org. And they're also welcome to reach out to me. My email is David at I-R-A-A-E-Y-S.com. It's just like Karky. So it's David at IRA-E-E's dot com.

Well, David, thank you so much for coming on. It's been a real pleasure talking with you today. It's been my pleasure, Mike, and I appreciate it again the invitation. 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.

influential entrepreneurs radio.com.