Business Innovators Radio - Interview with Eddie James, CKA®, Owner of Harvest Wealth Management- Mitigating Risks in Retirement

Episode Date: November 16, 2023

Eddie has a clear vision to do things differently as a certified pastor and fiduciary advisor. He wants to challenge conventional thinking in financial services that seem to be all about selling expensive and baffling financial products to the public to generate large commissions, but which never seem to solve the real-world issues faced by clients. He has established a client-focused business culture in which he spends time getting to know his clients, listening to them attentively, understanding them, and building a long-term relationship as a true trusted adviser.Eddie believes that helping clients see money from God’s perspective changes every decision with money and so he is passionate about providing biblically-centric financial planning to help you achieve the aspirations and objectives you feel God is calling you in life.He has an incredible innate ability to translate complicated financial and tax strategies into plain English. His diversified experience working with professional employees, churches, and other non-profits helps them understand and answer client queries to the best of his knowledge. He wants to make sure that his clients are as well-versed and well-organized financially as he is, with a defined plan for how their investment funds will be managed to achieve their goals.Eddie is all about helping others. Eddie believes that helping clients see money from God’s perspective changes every decision with money. Christian clients want a return on their money and have an impact on the world. They realize the brevity of life and see their wealth to invest for eternity and so Eddie devotes a lot of his time to teaching financial literacy, leading a Stewardship ministry, and helping to create healthy churches in Arizona, the United States, and throughout the world. Eddie has a lovely wife and three lovely girls who occupy most of his time outside of the office yet encourage him to look after your funds as if they were his own.Learn More:https://www.harvestwealthplan.comThe opinions expressed by Mike Saunders, MBA, and guests on this podcast show are their own and do not reflect the opinions of this podcast station. All Statements and opinions expressed are based upon information considered reliable. Although, it should not be relied upon as such. Any statements or opinions are subject to change without notice. Investments involve risk and unless otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone, information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it is suitable for your specific situation. This program is designed to provide accurate and authoritative information with regard to subject covered. Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor. BCM and Harvest Wealth Management are independent of each other.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-eddie-james-cka-owner-of-harvest-wealth-management-mitigating-risks-in-retirement

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, Eddie James, who's the owner of Harvest Wealth Management, and we'll be talking about mitigating risks in retirement. Eddie, welcome back to the program. Thank you, Mike. Thank you for having me back there, sir.

I so appreciate what you're doing there and inspiring entrepreneurs. And thank you again for the opportunity. You're welcome. And, you know, I really like this, the way that you've worded the focus of this conversation because, you know, we can't eliminate risk in life, whether it's life or retirement or personal or professionally, but we can mitigate risks. And once we know what risks are, then we can go to work to help lessen them as much as possible. So I want to sit at your feet to listen to your wisdom of how you are working with your clients and mitigating risks.

So get started with kind of what some of those risks are that you're addressing. Sure. So the three big risks in retirement that are just sometimes are just pitfalls for a lot of people that they just don't see comments. our longevity risk, inflation risk, and portfolio risk. So yeah. Yeah. Well, let's start with one. Longevity.

I'm certain that that means, you know, how long that we are living so that we can make sure we have enough money. And I know if you read the news online or wherever that we're, as Americans, we're living longer than we ever have before because we've got better health care, better nutrition. we're exercising better. So how does a longevity risk play out? It's a great, you know, it's so interesting that when we think of the Social Security program when it was first created, so real quick, you know, backstory.

When the government came out with the Social Security Administration Department, and it was just to be a backstop for people who lived too long. And the government was going to go ahead and just provide a benefit to a small few, but have an opportunity to tax the many. And the original age, if you can recall, was the age of 62. And so now, because of us as Americans for the reasons that you've named, great health care, the opportunities for increasing and getting, getting better with our nutrition and lifestyle, that number has now increased to 67.

There are conversations in Congress now about increasing that age even higher because the Social Security Administration was never designed to have to pay for so many people. So when we think about longevity risk, the idea about living too long, which to me sounds like a blessing, especially if you have all of your wares about you, right? But some of those items are when it comes to health care. So Medicare, what does Medicare look like? What does long-term care look like? What is my, what does housing look like for me? Where am I going to live? How am I going to be able to afford it? So being well-versed in those different strategies to mitigate some of the potential downfalls. Because when you think about that for most people in their 20s through 50s, that one of their largest expenses is debt, right? So housing debt, car debt, consumer debt, and the like, that number is their health care expense when they go into retirement. So that number one expense for them is going to be health care, something that a lot of people just aren't familiar with. It's like, yeah, I know I pay for health care.

And I go and see the doctor and a dentist, you know, two or three times a year, trying to do some items to kind of keep up with my health care. but to know that that healthcare is going to be an expense out of pocket. And that's if you're healthy. That's a big hole in that bucket. Yeah. That also that hole has a question mark on it because it's not something that's fixed. Correct. Correct.

And the health insurance companies, they know that. And so I'm trying to go ahead and just be as kind as possible. But knowing that health insurance companies, they're not non-for-profits, right? They're there to go ahead and make a profit as we've, and I don't think that's going to surprise anyone who's part of your audience. So knowing that how do we go ahead and mitigate those costs and fees by, by not only ensuring and controlling our controllables when it comes to our own health, but also by being well-versed in the options that are available and how to best choose the options that are available to me based off of the way that the federal government has set up for us.

Yeah. You know, when you think about these risks that you mentioned, longevity and inflation and portfolio risk. These tend to sound to me like other financial advisors typically don't address these because they're typically like, I can get you this rate of return or some of the broader things, but why aren't some of these topics addressed by other advisors? Well, because one of the biggest opportunities to kind of mitigate that longevity risk, that health care risk usually means taking funds out of the portfolio or divesting those funds

into other different types of options to kind of mitigate. And financial advisors, that means that for most financial advisors, that means that their portfolio has now decreased, which now means that they're getting a lower fee. Yeah. So they're disincentivized. It's, I hate to say it. It's that way, but that's the biggest reason. Yeah, but isn't that exactly what you just said about the healthcare industry?

Let's face it, you got to pay the bills and keep the lights on and they're a for profit. Well, that mentality works with your response there. Well, why wouldn't other ideas and options, you know, be recommended? Well, because it doesn't benefit the financial. planning firm and that's not a slam on a firm or a person. It's just the way the industry works. So here you are kind of holding the torch going, let's talk about these things because I want my clients to be well cared for. You know, it's a blessing that I, you know, since I am independent, I'm an independent fiduciary, which means that I don't have some, you know, boss looking over my shoulder stating,

why are you offering that, you know, well, because it's the best thing that's for the client. Yes, but that's going to lower your fees. Well, you know what? That's going to all work out. Yep. Let's go ahead and do what's best for the client. That way, every mirror that I ever pass, I have no problem being able to look myself in the mirror. Yep.

That's a good point. So that other risk you mentioned, portfolio risk, give us a little synopsis of what that even means. Yes. So I don't know if you've ever heard the term sequence of returns. So the way that kind of works, so imagine that you have two people, let's go ahead and call them Mr. White and Mr. Black, both have had, both start off with $100,000 in their portfolio at the age of 40. And by the age of 60, let's say that that portfolio is now grown to $500,000. Right. And so here they are. Now, let's say that the returns that they've received in those portfolios have been the exact opposite. So let's say that for hypothetically for the first five years, Mr. White was getting returns of 10%, 12%, 8%. Mr. Black was getting 8%, 12%, 10%. So the returns based off of their sequence for both Mr. White and Mr. Black have given them the same end result at the end because they're not taking out any kind of disbursement out of that portfolio. But once you retire, now we're looking at a different story because now when you're starting to go ahead and take out

funds. And if you end up coupling that with returns in the market, returns in your portfolio, which are not conducive to your portfolio, either staying at its constant number or growing, now you're looking at compounding, you're having compounding withdrawals. Meaning like I have to take out X amount of dollars, but this happens to be in a down year. So I'm taking a loss and I had to take money out. Exactly. Wow. Exactly.

When you add that to an asset class, which is dying, of course, I mean the bond market. You know, when you look at when the traditional portfolio of stocks and bonds was created back in the 70s, it was because stocks and bonds were the seesaw of each other, right? Stocks, when you put money in stocks, that means that you believe the company is going to become more profitable. So the stocks are going to grow. Bonds means when you put money into bonds, that means that this company is looking to borrow and you're making money off of the interest rate of the amount that you're loaning to them. so that when in other words, when stocks are up, bonds are down, and when bonds are up, stocks are down.

But what we've been experiencing since 2018 and then the, when the pandemic occurred, it just exacerbated and took it to the endth degree to where now when stocks are up, bonds are up, and when stocks are down, bonds are down. So where is the asset class, which is going to be the opposite of that seesaw, to ensure that when I am taking returns out of my portfolio in retirement, that I'm not now experiencing that downward spiral of a decreasing, a decrease of my portfolio due to both negative or down returns plus me withdrawing funds as well? Yeah. In other words, where's my downside protection? Yep. Yep. It kind of gets back to give me just something to count on. Give me some guarantees.

I don't want to worry about risk and volatility. So that explanation of sequence of returns is huge. And that kind of ties into that portfolio risk. Right. And at the same time, too, we don't want to go ahead and put everything into guaranteed income because that income that I'm receiving today in 2023 is not going to be this. It's not going to pay for the same goods and services in 2050. Because of, so that's a, that's a huge point because you think it's kind of like,

like whack a mole, that old game you, our kids played. You whack this mole and another one pops up right here and it's like, shoot, I thought I had this figure it out. And then inflation rears its ugly head. So talk a little bit about how inflation then needs to be addressed in relation to the future purchasing power and affecting retirement. Right. So as I've mentioned in a previous episode, you know, I always like to go ahead and bring up a story of a posted stamp. When my wife graduated from high school in 1993, a posted stamp cost 29 cents.

It mailed one letter. we all know that here in 2023 a post-stimmed cost 66 cents same value it still provides for one postage letter right

you don't get any more value from it you don't get any more additional goods or services from it but the cost has more than doubled that's what inflation does yeah yeah so

The money that you're making now today in 10, 20, 30 years, whatever time frame is not going to buy the goods and services that we need at the same level that they will today. And we don't know the exact formula. We don't know the rate of inflation. We don't know the numbers, but we just know where the trend is heading. Right, right. And, you know, you brought up that whack-a-mole example. and usually for clients that were DIY before they met me when they come to their to their retirement planning, that's what their lifestyle looked like.

You know, they were playing whack-a-mole. And it's like, let me fix this and let me fix this and let me fix this. Exactly. It's like, it's got to be so tiring because all you're doing is you're just being reactive to everything. Yeah. Wouldn't it be a lot easier just to be proactive? Yeah. And just playing?

The problem is, you the traditional just man or woman on the street they don't know how to be proactive so i think it's really neat that you as a financial professional are talking about not keeping all people's money in the market so what's the proper mix where what are you advising your clients on as far as we need to have a little bit of market exposure but not everything where does what does that look like You know what? It's, it's, you know, I hate to use the financial advisor term that we all use, but it does depend. It really does depend. I do like to go ahead and say that I like to look at things from almost like a buckets approach initially. You know, so a bucket as far as I like to go ahead and say, you're now bucket, your soon bucket and your future buckets. So now, you know, meaning the funds that we have discussed that you foresee needing for the next 24 months, right? So whether it's your emergency plan, do you foresee purchasing some major vehicle in the next couple years?

Do you plan on wanting to finance that or pay that outright? As far as expenses for your home and health care and the like, but that we don't. first 24 months. And then another bucket going out for the next 10 years. And so, and then your third bucket for 10 years plus. And that's going to be able to go ahead and help provide some guidance when it comes to planning. Now, true, when you look at your portfolio, it may all just be one big number. We know exactly where to go ahead and draw upon those funds when that call comes and say, hey, we need to go ahead and take out X amount of dollars for this expense. Well, yes, because we plan for it.

Or the call the next day where it's like, hey, we need to go ahead and take out X amount of dollars for this expense and we didn't see this expense coming. That's okay because we have an emergency plan. So, yeah, we planned ahead. We were proactive. So yeah. Yep. So, that's excellent.

You know, and guess what? We didn't talk about what funds and schools the bucket. are because that doesn't matter because it's different for every single person. I just feel like this conversation is so helpful for people to hear the fact that here's some broad stroke sage advice, really. And now how would this look for my situation? And what should I do? Now you're going to start asking more deep questions and really pulling apart some

opportunities and making some recommendations. So I think that is the thing that if maybe someone. when listening to this is going, you know, I talk to some advisor and they're shooting right off the bat product recommendations. That might not be an advisor to work with because they didn't know enough to even make a recommendation yet. Yeah, it's kind of like, you know, taking your, taking your child out to go buy a vehicle and the salesperson points them to a minivan. And you're like, but I don't even know if a minivan is best for them. And it's like, well, but then the salesperson's like, but that's what I sell.

Yep. Let's put that square peg in a round hole. Let's just whack it in there. Exactly. So now let me go and show you while a minivan for a 17-year-old is the best vehicle for them. Right. So let's make sure that we're not just whacking a mole or fitting square pegs and round holes. If someone is interested in just really getting a good, clear picture of what they can be planning for and being proactive, Eddie,

what's the best way that they can learn more and reach out and connect with you. Absolutely. That would be through our website at www. Harvestwealthplan.com. They can email me as well. They're my at Eddie. That's E-D-D-D-I-E at Harvestwealthplan.com. So thank you.

Excellent. Well, Eddie, thank you so much for coming back on. It's always a pleasure chatting with you. I just love your energy and perspective. Mike, again, thank you for having me back on again. It's truly been a blessing and just an opportunity to go ahead and provide people just some opportunities for peace, you know, when it comes to, you know, to their finances. So yes, thank you again for this opportunity. You're welcome. 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