Business Innovators Radio - Interview with Financial Professional Bill Andrews Discussing How to Protect Wealth

Episode Date: August 28, 2023

With over four decades of experience in the insurance, banking, and brokerage industries, Bill Andrews began his career in 1979 as a life insurance and securities professional. The financial world became his early playground and he loved it.In the 1980s he joined one of the most respected firms in the securities industry and gained valuable expertise advising and planning for many of the retirees making their way south from the northeastern seaboard.Having grown up in Miami, Florida, he had the opportunity to work with his father, his first mentor and respected private yacht captain who catered to the mega-wealthy, politicians and corporate titans. The experiences gleaned from living and working on these floating hotels provided him with unique insights, and a rare opportunity to observe and converse with some of the world’s most successful people.Throughout his career, he received numerous awards and accolades, including being recognized as a top representative for numerous nationally ranked banking, insurance and securities behemoths, thanks to his unwavering dedication to success and client service.Since 1995, he has been managing his own retirement planning practice. Over the past two decades he sponsored and spoke at more than 200 financial seminars on topics such as 401k/IRA rollovers, cash management, investment tax strategies, annuity and asset allocation, investment and income planning and Social Security planning. Additionally, he has frequently collaborated with CPAs and attorneys to provide expert guidance on tax, estate, and trust planning.Between 2002 and 2005, he partnered with a physicians’ financial advisory and practice management firm, participating in speaking engagements focused on pre-retirement and retirement planning for practicing physicians.For the past decade, he has been advising on 403b, 457, 401k/IRA rollover and pension planning in 15 San Francisco Bay Area and Silicon Valley school districts, conducting over 100 retirement and compliance seminars for all levels of educators from janitors to superintendents.So far, over the course of his career, he has advised thousands of individuals and families. These relationships and experiences translated into valuable lessons, stories, and life experiences. His clients have benefited richly from his lifetime of seasoned insights.He frequently travels for business or pleasure but usually both. As his clients retire many are relocating from the West Coast closer to their children and grandchildren or simply to realize their dreams. He estimates his client base now spans 17 states. He hikes the Great Northwest forests, rivers, and the most majestic NW Pacific coast beaches. He even indulges in a little salmon fishing on the Columbia River.As he continues to adopt new technologies and grow his practice, he is driven by a passion for the industry and a commitment to being productive, balanced, and helpful thereby, meeting his own retirement goals. He looks forward to building new relationships and experiencing an abundant life filled with love and happiness.“MY STRONG BELIEF IN EDUCATION AND PLANNING HAS BEEN THE FOUNDATION OF MY CLIENT’S SUCCESS”Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-financial-professional-bill-andrews-discussing-how-to-protect-wealth

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 financial professional Bill Andrews and we'll be talking about how to protect wealth. Bill, welcome back to the program. Could be back, Mike. So I think this protecting wealth would probably be about a nine-hour conversation.

So it's probably pretty broad and deep protecting wealth because you spend a whole lot of time over your life to build wealth. Well, at some point, you need to protect it. So why do you think it's time to protect your wealth? One word, Mike, risk, or better yet, a confluence of a multitude of risks. Things are getting crazy out there. I'll give you a list of a little rundown here about six different categories that we're dealing with today. The first one is debt risk. We're seeing all sorts of debt going through the roof.

For instance, I was just on a call the other day. And the economist that was speaking said that the credit card debt in the U.S. alone has exceeded for the first time $1 trillion. Good night. The stock market volatility risk. We have interest rate risk. Everybody knows that interest rates have been rising. Just in the last year, the rates on treasuries have multiplied by seven times. So they're not only moving big, but they're moving fast, which leads to bond price decline risk.

There goes the safety portion of most asset allocation models. And then we have inflation. risk. That's what the Fed is trying to fight by raising interest rates higher, causing all of the other problems. And then we have that leads to increased government spending because the government interest rate risk is almost an interest rate bill is about a trillion dollars a year at this point. And that ultimately leads to the risk of higher taxes because they need to raise more money to pay those things, which impacts the average investor. greatly. So we have to be concerned with whether interest rates are going to remain the same or

if they're going to be higher or lower in the future. And then finally we have ratings risk, which the U.S. Treasury, or the U.S. was just, as a creditor, was downgraded recently by Fitch, you know, for probably the second time in history. And we're seeing ratings risk with corporations across the board, you know, and these are some of the companies people are investing in. It's all across the board at this point, and you definitely need to have strategies to, you know, as you were describing that, the picture came to my mind of a boxer in the middle of a ring with a blindfold on and getting hit from, you know, like seriously, hit from five or six different people from five or six different angles. And the boxer goes, who hit me? Who hit me? Where did it come from?

So you're getting hit from all of these different directions from areas you cannot control. We can't control inflation and interest rates and treasuries, all of these things we can't control. So yes, we need to do things to protect our wealth from all of these outside assailants. And the general retiree, pre-retiree does not have the knowledge to do it the right way because Google is not our friend. we can't just Google how to whatever. So I think you're bringing up some huge pieces, which is, boy, we're getting hit from all angles and we've got to do something to keep those plug in those holes in the bucket. Sure, absolutely. So what do you recommend?

What are some of the strategies that you work with your clients on to protect that wealth from all of these different angles? Well, for instance, the first one is, let's just say a lot of this, a lot of these different levels of, risk will lead up to stock market volatility. And since most people we find are in the stock market these days, it's important to protect it in that way. So there are accounts out there where you can invest and get a substantial portion of what a stock index returns. But it will also guarantee that you won't participate in any downside losses. So that would be one way to do it. And by the way, stock market was one of the ways is probably the primary way that most advisors will recommend their investing in the stock market is the way most advisors will recommend that their clients will save on the inflation risk or protect against inflation.

Because over time, stock market generally tends to keep up with inflation. But if you're in that, now you're straight into the stock market, now you've just jumped into, you know, the stock market volatility risk. So how do you do it? Well, you have to try to find, you have to try to find accounts, which we're talking mostly about the fixed indexed annuities at this point, where it will protect against the downside by giving you guarantees to that effect. and you can still participate in substantial portion of what the stock market does return. Yeah, so it's tied to the stock market, but it's not in the stock market. Correct, correct. That's a big distinction people don't really pick up on.

It's like in these certain types of investments you're describing, you can't lose your money, and you can't say that in the stock market. And when the stock market increases or different sectors increase, you're going to see your product, your financial tool benefit from that. But if the stock market crashed, you can't lose money. And that's a pretty comforting thought. Exactly, exactly. Now, a lot of what we find, too, is a lot of people will be in an asset allocation model,

maybe a 7030, a 6040. Well, that larger portion is usually the stock market portion. And then the smaller percentage is usually bonds, which are the safety feature because, you know, they tend not to be as volatile. as stocks, and they pay a fixed interest rate in most cases. The problem with rising interest rates, it has a direct impact on bond prices, and negative, actually. And so there goes, like I said earlier, the feature of an asset allocation model, which has safety and risk assets in it. Now, if you can guarantee that you're not going to be losing any money in that, which is probably one of the

primary features of bonds, not that they guarantee you don't lose money, but that they are safer and less volatile in most cases than the stock market. But if you can guarantee your assets, you have no need to worry about that feature. Plus, then you go into interest rates. So with interest rates rising, you don't want to be locking, you know, it used to be where you would invest in a bond, a longer term bond, you know, 10, 20, 30 year bonds to try to get the higher rates. But in this world, with interest rates rising fast, that has a direct impact on bond prices. Now, in these fixed index annuity accounts, you can choose your interest rates if you want to go a fixed interest option where you can take your rate, but average it over a year. And then at the end of each year,

you can reallocate in or out of those different choices that you have. You know, that's a big, I think what I hear you saying there is it used to be, you know, the allocation used to be this percent, that percent, this fund, that fund, bond, all that. Well, because of how things are moving these days, maybe those old mindsets are now out the window because of what we're experiencing with high rates and inflation and this, that, and the other. So looking at some of these options that you're mentioning here where you can't lose money and then you can make some small shifts as as the market moves. But I guess I just always think about, you know, we feel self-sufficient. I can just do it on my own.

Let me just go Google this or figure this out. These are not moves that you can make on your own confidently. Sure, you could do things on your own. But I think that what you're describing here is you need someone that's going to kind of guide you through the process, like be the, you know, the guide through the jungles and got the machete, you know, clearing the path. And knowing that you are making the right decision because you really can't afford to lose your hard-earned money in this stage of your retirement planning. Correct.

Correct. No, I mean, you're right. You're right. I spend all day, you know, working with my clients on this and looking at all these different levels of risk. And not every client has every level of risk, you know, but we have to determine. determine which ones are going to affect, which ones are going to affect who and what their particular needs are.

So, but you just have to know that these risks are out there. And this isn't, this isn't, what was a good year? 2000. You've got to think hard. When the market, when the market was booming, you know, that's not, that's not, that's not, that's not the world we're living in right now. You know, we talked about some of the. these risks and things we can't control. Another thing we cannot control is taxes. And I know that

when you think about taxes and starting taking money out of these accounts and it triggers taxes, what are some of your recommendations on how to save taxes in retirement? There's a number of primarily tax deferral. The longer you can defer your taxes, the better off you are because you're going to be compounding. Compounding. And there are a number of strategies that you can use for that. You know, I don't need to get into all the little details of that, but there are strategies to do that. The second thing is you can do these Roth conversions.

We're starting to see an emergence of that again. If you think that taxes are going to be higher in the future, you might want to consider taking your tax hit by rolling qualified plans like IRAs and 401Ks. out of the tax qualified status and moving them into a Roth conversion where you pay the taxes today, but now the money isn't ever going to be taxable again. You do decide to need that you need it. Those are a couple of big ones that we're looking on. There's also another one that I call the bonus offset.

A lot of these, particularly in annuity products, they offer bonuses to where, you know, essentially you're going to be paying taxes. You're going to be using that bonus to offset any taxes that you might be paying in the future. You know, what you mentioned about Roth conversions, I've heard of that strategy before. And I know it benefits some people and it's different for every person. So everyone has to check into it. But one of the takeaways that I remember hearing about is if you're going to incur the taxes now, at least you now know what your level and your tax rate is. And the tax bracket is today, whereas in the future, 10, 15 years down the road, it's a big question mark because we've got rising interest rates, we've got deficits. We don't know what the taxes or the tax brackets are going to be. So it could be a good choice to just take it on the chin now, pay the taxes, and then your money grows tax-free in those kind of accounts. Absolutely.

And another thing, a lot of people don't realize is that for the last several decades, We've been in the lowest tax rate environment that the nation's ever been in. Back in the 40s and 50s, we were seeing tax rates as high as 90 percent, you know, as progressive. And, you know, return to that, it's not out of the question that we see rising interest rates like that in the future. Yeah. You know, it's like, let me deal with the devil I know now rather than the question mark of the future. So that could be a great strategy. So what are some final thoughts on saving money and taxes?

I know, again, like you said, I don't want to get into the weeds of specific strategies, but what are some of the other things that people can be thinking about? Well, you can also take your income instead of taking it all, taking it all at once. You take it, you take taxable income as you need. And then also there are there are accounts that you can use to take tax-free income as well. You know, that gets into other types of products. There's a lot of interesting things being used with utilizing life insurance policies and saving money through that way. Because most of the money, whether it comes out as a death benefit, whether it comes out as a lifetime income or, you know,

just random withdrawals, those typically can come out tax-free. So those are some interesting things. But now we're getting into strategies and there are hundreds of them that we can use, you know, for different costs. Yeah, the point is there are forces beyond our control that impact our wealth. Absolutely. Like you mentioned, debt, interest rate, inflation, all of these things. So we need to do things to temper that, control it as much as possible.

And then make sure that we're, you know, putting strategies in place to save on taxes with some proven things that can be done now. And I think another final point to make is do things now rather than later. You know, you get to age whatever, 68, 70. At that point, you don't have much runway to put things into place to be best prepared. So the time to do these is well ahead of when, you know, you need the benefit to be there. Right, right. You got it. Well, Bill, I think it's really, really huge points that we brought up here.

Any final thoughts before we say, you know, if someone is listening to this and it kind of resonates with them, what's the best way that they can reach out and connect with you? Like we reached, my cell phone number is 760-803-4833. Feel free to call directly. I answered my phone typically within a 24-hour period, usually a lot sooner than that. Excellent. Well, Bill, thank you so much for coming back on today. It's been a real pleasure talking with you. You got it. Thanks a lot, Mike. You've been listening to Influential Entrepreneurs with Mike Saunders.

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