Business Innovators Radio - Interview with Erich Castillo, Founder of Cornerstone Wealth Management-Transitioning from Accumulation to Income Generation

Episode Date: March 10, 2025

Erich Castillo is the founder of Cornerstone Wealth Management established in 2004. He began his professional career in 1997 at American Express Financial Advisors, achieving numerous accolades and awards. Erich is currently an Investment Advisory Representative. He also has his Life, Accident, Health, Insurance and Annuity designation so he can act as a comprehensive resource for his clients. To round out his financial education, he holds a Chartered Life Underwriting Designation and Chartered Financial Consultant Designation.Originally from San Francisco, he has traveled and lived all around the world, eventually landing in Lexington, Kentucky. While earning a Bachelor’s degree in both Finance and Education at the University of Kentucky, Erich had the opportunity to work as an athletic trainer for several sports teams at the University of Kentucky, where he met Emily, his wife, and mother of his two sons, Brandon and Carson. Though Erich has an accomplished career, his greatest treasure is his beautiful family. Erich met his wife, Emily, at the University of Kentucky.Learn more: http://www.retirewithcwm.com/Investment Advisory Services offered through Southland Equity Partners, LLC an SEC Registered Investment Advisor.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-erich-castillo-founder-of-cornerstone-wealth-management-transitioning-from-accumulation-to-income-generation

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, Eric Castillo, who's the founder of Cornerstone Wealth Management, and we'll be talking about transitioning from accumulation to income generation. Eric, welcome to the program. Hi, Mike. Thank you for having me.

Appreciate it. Hey, you're welcome. I want to really dive in deep with this topic because I know that any time you hear transitioning, that's a change in the way you think and act. And so I want to dive into that and how you're advising your clients into this strategy. But before we get into that, give us a little bit of your background and your story and how did you get into the financial services industry. Yeah.

Again, thanks for having me. My story really begins when I was a young kid growing up in Oakland, California, my sister, Heidi, and my mom and dad, Alan Knight, they were immigrants from the Philippines. They were great parents. They believed in hard work, integrity, always just doing the right things. And I got to see that time and time and time again. And one of the things that stands out, the reason why I love this job so much is as a kid, I remember my mom taking me to the bank, and every single time she would purposely

write in this little black book. I don't know if you remember that back in the day, but she would write down in this black book the amount of money that she was saving for our first house. I remember that time when my mom and dad had enough money saved up. And when they bought that first house, I just thought that was the coolest thing. And to me, that's still, resonates. It's those principles that they've instilled in me that really carries forward to my job. And so that's just a little bit of my mom and dad's background. I want to fast forward to what really got me into the planning side of things. It started in 2001. I'm young in the business. And I'm helping people with planning and making sure that what they're doing is going to help them achieve

the retirement that they desire. And I get this. call from my dad. It was one of those calls that you know, something to happen. And what he told me was he had just lost his job. If you remember back in 2000 and 2001, things were really chaotic. Markets were all over the place. They weren't quite ready to retire. Markets were getting hammered. And so this was just coming out of that dot-com bubble. And I'll never forget. yet, I'm walking into my mom and dad's house, see my mom sitting at the kitchen table, and there she is, she's just almost like tears in her eyes. She's just that shock of not knowing what's going on.

And then I see my dad, and here he is, this backbone that I've always looked up to, but he's got that deer in the headlight look, speechless. And at that moment, what I realized was I needed to take. a lot of my skill sets that I just started learning and build a foundation where they could feel confident for their financial future. And that's exactly what I did. It's that foundation that we built that helped my mom and dad get through a tough time. And to this day, we still use that plan. My dad recently passed away, but my mom, she's still going. She still does karaoke, dancing, the things that she wants to do.

But the reason why I love this job and what brings me here today is for about 30 years, I've been helping people create this actual knowledge so that if things go the wrong way, they have a plan and it's not going to impact their raw situation. So that's my story and the reason why I love this job. You know, a couple of things I'd like to unpack there, Eric, that I observe during your conversation there about what got you started is your mom, your parents, they took baby steps toward building toward a goal. Like Stephen Covey used to say, begin with an ended mind. They had an ended mind. They wanted to get that house. They took baby steps. They weren't trying to get rich overnight and hit

it big and buy that house in six months. They just plugged away. And then to your point, what you just said there is you got to have a plan because you cannot be all over the place trying to hit grand slams and go, I want to hit this goal, this big goal overnight or quickly. most of the time, that's going to get you in really big trouble when you're talking about finances. So I love that you're talking about having that plan, that blueprint, and then steady plotting, taking those steps toward that. And maybe almost like when you play chess and you make a move and you keep your finger on it and you go, is this the best move? Well, if you have that plan and you're getting ready to make a financial move, spend money, whatever the case is, you kind of keep your finger on that proverbial chess piece and go, okay, is this going to get me closer to my ultimate. end goal in this plan or not. And I think that that's a huge mindset that you're able to help your

clients with. I just really think that is so solid. Yeah, it's been an important part for my clients and helped our clients achieve over the years, knowing that they have this plan in place, they know that everything's going to be okay. And they know that they're not worrying about this and that. You know, when you get to retirement, it's really about just living the lifestyle that you desire. the most out of your funds moving forward so you can do the things you want to do. And so having a foundation to me is just extremely important in retirement. And so obviously if we're talking about moving or transitioning from an accumulation mindset to income generation, you are not working with newlyweds or people just getting out of college. You know, nothing wrong with that subset

of investor. But you're working with people that have paid their dues and now they're looking at at not really grinding and striving to grow their retirement funds. They've got retirement funds and now they're looking to make them safe and protected, right? That's exactly right. Most smart clients, they're either approaching retirement or in retirement. They've done a good chop safe, but it's a bit of a different mindset. They want to make the most out of their retirement. They want reliable income.

They want to make sure that they don't run out of money. and they want to be able to do the things that they want to do. That's what they work hard for. And a lot of them, they've had a plan to build it up, but they really don't have that plan to transition to that next phase. Getting to retirement is one part of it, but getting through retirement, well, that's a different equation. And so that's what we help our clients do is not only get them to retirement,

but also get them through retirement. Well, obviously, in order to get to retirement, you have to have specific number goals. And then through retirement, there's even other goals, but objectives, meaning this. You know, a lot of times people are like, oh, well, you want to retire at X age. That means you need Y amount of money. Well, then how long are you going to live? Nobody knows, right? Nobody know when your dad is going to pass away or my parents were going to pass away.

Nobody knows that. But you have to at least pick a number to be working toward. So that makes me think of this. How does that mindset shift from saving for retirement to then shifting over to generating that retirement income impact what you're advising your clients to take advantage of? Yeah. When you think about saving for retirement, that's always going to be focused about growth, right? Rate of return.

How do I build it? Living in retirement is about security. It's about reliability. It's making sure that the paycheck keeps hitting the bank account so that you can do the things you want to do. And a lot of people that don't plan for that transition, well, they often experience a lot of anxiety. They may be poor decisions that could hurt their financial future. So if you think about it, a lot of retirees have spent 30, 40 years savings, and they've been trained to see growth as the goal. And you think about all these commercials that you see on TV.

It's about growing the portfolio and getting to that point. But at retirement, that's where the game changes. And the goal just shouldn't be about growth alone. It should be about consistent, predictable income that lasts for life. So most people just focus on growing it instead of having a plan that, how do you spend it? well, that's once again at a different ballgame. There's a lot of emotions around that.

I even look at the idea of like people when they get to retirement, they might resist spending. They're saving because they just don't know how much to withdraw safely. And a lot of times they just underspend. They don't really plan for those things that they really want to do.

They don't enjoy retirement. They're just afraid of running out of money. I mean, you're not putting money into your portfolio, right? You're withdrawing from it. Really what that means is strategies that focus on protecting against losses. We still need to keep up with inflation. And we just don't know how long we're going to live. There's a stat from All the Ed's Life, 80% of retirees, say, predictable income is critical for that peace of mind. But only 27% of people approach in retirement have a formal income plan.

So there's a lot of people that want that predictable income, but they haven't really planned for it. Well, that's how we want to change that narrative. Yep. So I know that when you think about striving to get to retirement, you're like grow, grow, growing. You want to look for those investment returns in your portfolio. But now when we're making this shift in this transition to income generation, how do the returns differ between when you're growing and then when you're looking at?

income generation. Do you approach it the same way, but you're just flipping a different switch or what should people be expecting in this phase? Not specific numbers. I mean, numbers can change and rates of return change all over the place, but from the overall macro approach. Yeah, I share this with people that we meet for the first time. And one of the first things that I like to say is when it comes to your portfolio, your portfolio is not a paycheck. What I mean by that is getting a high rate of return, well, that doesn't guarantee sustainable income. And I really think that retirees just have to shift a little bit of that focus. I'm not saying that we want returns.

We do, but it needs to be for that part that you're trying to get returns on. But when it comes to income, does it make sense to carve out some of those assets so that you have more of a reliable, strategy, a reliable method, that at the end of the day is going to withstand the downturns of the market. Market drops are going to happen. It's just a matter of when and to what degree. A lot of people that we talk to the first time, they assume that they have a good, strong return. They're going to be fine. Everything is going to be taken care of. But in retirement, taking withdrawals, well, it changes the math. And one of the biggest risks that's out there is this concept called sequence

of returns risk. I think some people understand it. Some people don't. What is sequence a returns risk? Well, it's the risk that apply specifically to retirement income planning. And it's not retirement planning. It's income. And the concept is simple. It's the risk of negative market returns occurring in your retirement years. I've got an example if you want a recent example of a client that I was talking with. If we have time, I can share it with you, but I just want to make sure. Yeah, go ahead. Definitely. Okay. So I met a prospect. Her name is Amy. It was towards the end of 2021. And she was retiring, had built up about a million dollars in her account. And the markets over the last decade, they've been really good. It's been good. Her returns have been really solid. Her goal.

She wanted to travel, spend time with the grandkids, and just draw out about $50,000 a year. And that was what she needed to maintain her lifestyle on top of Social Security. When we started talking, I mentioned, did she have a structured plan, so structured to draw income and take some of that market volatility off the table just in case? It's not what if we're right, it's what if you're wrong? And she told me, well, yeah, her portfolio is well diversified. It's in a basket of stocks and bonds. And I was like, okay. But I emphasize that this approach is it going to give her the control that she desired?

So we had a couple meetings. And towards the end of 2021, she went a different way. That was the last that I heard from it. Fast forward to today. And she jumped on one of my webinars. and we got back together. I reminded her of our process on helping clients create predictable income and then letting the rest of it grow. So we want to create that predictable income first, making sure that the money is going to be there no matter what.

But then we can take the rest of it and just let it run. Well, we went through the same means, but this time she's like, let's do it. Eric, I want to go ahead and I really want to look at the plan because, and this is what she's, told me, I don't want to go through again what I just went through the last two to three years. And I was like, well, what do you mean? What happened? So in 2022, she was like, I'm going to do it this way. This is what got me here.

I'm just going to have a balance of stocks and bonds. So in 2022, she took out $50,000. But in that same year, the market dropped 20%. So one year, she saw the value. value of her portfolio go down 25%. Well, how do you think she was feeling? I mean, she was panicking. She was concerned that she may run out of money.

This was a huge, huge hit. I think what she realized is traditional investment strategies, they don't work the same when it comes to retirement income plan. And by following a well-structured income distribution plan that I helped her plan out, it balanced investments. We still want to have growth to keep up with inflation, but we also had some safe assets, safe money that we knew was reliable, it's going to be there. And then we coupled that with predictable income sources to provide more of that financial security and control that she was desiring. You know, a lot of people spend their

whole life focusing on growth. But now I think you have to ask yourself that new question, is your portfolio a paycheck? And how are you going to turn a part of the portfolio in a reliable income stream that's going to help your money last the rest of your life? So if I'm understanding what you just mentioned there correctly, and I'm pretty sure I did, that sequence of returns, which can be kind of a confusing topic. In her example, she had to take out around $50,000 to supplement her security income,

but she took it out and she had to, but it just so happened that the market was dropping. So now she's not only removing money, but she's removing it during a downturn. And that's kind of a double whammy. And that didn't feel too good. Not only was the 20 or 25% drop bad, but she's also taking money out there. So you feel like you're really, really behind. So that's a big, big hit that you want to help people avoid. And then from what you're also saying is you need to find out that amount that people need.

And then you can take out a certain amount of money and go, let's put this in a safe vehicle that's going to give you that income. Guaranteed, no risk. Okay, there's that. And then whatever's left over, we can let it ride and see what the market's going to do. But then you don't have that pit in your stomach going, ooh, the market dropped because you know your income is coming in reliably. That's right. That's right. She's not selling in a downturn.

She's maintaining and allowing that part of the portfolio to recover because I believe, in the markets. I believe overtime markets will come back, but you've got to give it a chance to come back, right? And so it's not timing the market, it's time in the market. And that's what we try to emphasize is you've got to give it a little bit of time, whether it be growing it or whether it be recovering it, that part of the portfolio has got to give it. It's time. It's time in the market. So how do you bridge that gap to give it the time it needs to grow? And so. And in your 30s and 40s, you have plenty of time to let it recover and come back. But once you get into 50s and 60s, then it's like, okay, now listen, I don't have that

much runway to wait around for it to recover. So let me pop out a certain percentage of my portfolio to put it into a specific product or class of products where it's nice and tight and safe and secure. And then the rest of the money that's still in the market make it as safe as possible. But then we can have a little bit of that waiting game there. So I think that's really powerful. You've got some ways that you're showing people. how to repartition their funds so that they're locking in some safe returns and they get that

reliability, but also you're focusing on that monthly income to cover their expenses that they need. Yeah, I like that word repartition. I might use that. Yeah, go ahead. That's just me as a non-financial professional, I'm just using words like I see it, but that is something that makes sense because you're not bringing in new money. You're just taking the money that's already there and repartitioning it out so that they look at their portfolio and go, the majority of my funds are safe and secure and protected and

who cares what the market does. That's got to be a massive peace of mind that you're providing to them. Yeah, very much so. The clients that we work with, they like that idea that there's that peace of mind. And once again, it's reliable. You're not having to worry about the volatility impacting that part of the plan. So yeah. Well, that's a huge gift. And anyone, listening to this going, you know, I'd like to have a little bit of that peace of mind in my retirement planning and have some of that income coming in. What's the best way that they can learn more and also reach out and connect with you, Eric? They can go to www.retire with CWM, so cornerstone wealth management, so cwm.com. My email is Eric at retire withcwm.com. And my office number is

859, 381, 055. So love to have an opportunity to talk with him. Excellent. Well, thank you so much for coming on today. It's been a real pleasure talking with you. Yeah, thank you again for having me. I appreciate it. You've been listening to Influential Entrepreneurs with Mike Saunders.

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