Business Innovators Radio - Interview with Michael Opp Founder of Opp Financial-Purpose vs Performance – Fiduciary Concerns & Purpose Driven Accounts

Episode Date: May 13, 2024

Michael has been working in wealth management for over 25 years. He holds a Series 65 license and an Insurance license. As a Fiduciary, he has provided financial services to business owners, families, and individuals. Michael has access to a wide array of financial assets. Enabling him to successfully meet the financial planning needs of his clients while building long-lasting, meaningful relationships with them.Michael received a B.S. in Business Administration and a minor in Economics in 1992. Michael’s belief in being a well-rounded individual, allowed him to compete in college football and track at the University of Redlands in California. He continued to compete in the track and field circuit until just after the 1996 U.S. Olympic Trials. This experience compelled him to give something back to his community. Michael coached high school, youth football, and track and field for over 17 years. He also has been married to his wife, Tamalynn since 1996. They are proud parents of three children Brady, Lance, and Elena.Learn More: https://www.oppfinancial.com/Advisory services offered by Wealth Watch Advisors, LLC. All other services are offered through Opp Financial Group, LLC. Wealth Watch Advisors, LLC and Opp Financial Group, LLC are not affiliated.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-michael-opp-founder-of-opp-financial-purpose-vs-performance-fiduciary-concerns-purpose-driven-accounts

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 Michael Op, who's the founder of Op Financial, and we'll be talking about purpose versus performance-driven account. Michael, welcome back to the program. Thanks, Mike. Glad to be here.

Hey, so I like that title of what you want to discuss today because purpose versus performance, you know, it just really gets down to the why behind what you're doing. So I'm excited about diving into that. So let's talk a little bit about what is purpose versus performance regarding investment accounts. Yeah, absolutely. You know, this for us has kind of been a resonating theme. to really kind of define with our clients and new investors of what is this money for? And so let's talk about, first of all, purpose money.

When you take a look at your money and you're trying to devise an investment strategy, it's important to say, okay, I've got money that needs to have a purpose. And that means that money is obligated to a bill, right? It's obligated to your mortgage. It's obligated to paying for insurance. It's obligated to something. So that means that money, right, it has a, you know, it's purpose driven. So we need to make sure that there is a guaranteed income for that purpose money, that that's covered, right?

All your bills, your expenses, those things that have obligations to. You know, whatever it is, your living expenses, that money has a purpose. Now, the rest of your money, that is performance money. Now, with that money, okay, it's not obligated something. So what does that mean? That means that you can grow it. You can spend it. But really, you have the opportunity to have more what I call latitude with it,

whether it's growing it with risk or growing it without risk. there just is two different types of money that you have. We really feel it's important to position in an investor's mind. What is this money for? It kind of would relieve a little bit of the stress if you knew that one, you know, quadrant of your money is there to accomplish this need, you know, our living expenses, for instance. That's the purpose of that.

But this other little quadrant of X percent of your portfolio, if there's a little bit more volatility or risk, we don't love it, but it's not going to impact our standard of living. And I think that that would be a neat feeling to have set up for a client, right? Absolutely. I think that when we have that discussion and we're doing this discovery with, you know, clients or, you know, new families and businesses that are coming with it to us, they really, that theme really resonates with it. I'm like, oh, okay, that makes sense, right? You know, so we can segregate it because if you throw all your money in performance, right? And then you have the gyrations, the market drops 20, 30%, well, what about your bills, right?

You know, now you have less money in that pot. So if you can segregate it, purpose money, money that you've got obligations to, that's where that money goes. Performance, you can grow it. And you don't have to worry about the gyrations in the market. That seems to give our clients a lot more peace of mind when they're going over financial plan. Yeah, I agree. Hey, can you explain what a fiduciary is? I feel like that word is something that a lot of times people bandy around and they don't really understand what the full impact is.

So what is a fiduciary and why is it so important for individuals to understand and consider when choosing a financial professional? Yeah, absolutely. So, you know, fiduciary is basically, you know, an advisor has to pass a test. It's called your Series 65, okay? And three-hour test, but really what it is, it's a test that is going to ensure that your advisor is going to, he makes an oath or she makes an oath that you're putting the client first, right? So when you're named a fiduciary, to accept that role. By law, you have to manage the person's money for their benefit, not for yours. And so, you know, this is a license that, you know, I first acquired in, you know, in 1997. And it's really evolved over the years. And I think if you see watch TV, you know, you see the advertisements, a lot of different companies saying, you know, hey, we're a fiduciary. You know, we put you first, we're on the same page. But again, you know, I think you need to expand on that because there's also a difference between what we call a captive fiduciary and an independent fiduciary.

Let's talk about the differences. When I first got my fiduciary license, I worked for some large wirehouses, right? And so working for them, you go look at their product mix. You go to the cupboard and you have a certain amount of investments that are available. And what I found is when I went independent, you know, created a lot of financial in 2004, that I was actually missing the boat. There was this whole universe of investments out there that I had no idea about. It didn't even exist.

Those products, those things that could have helped my clients, could have helped them through the 2000, 2000, 2001, 2002 crashes. They were not available to me, Mike. They weren't. And so what I realized is that when you work for a captive fiduciary, guess what, if you look up the role of a, what, you know, the role of a fiduciary for like a publicly traded company, they have a oath to the shareholders, right? And so it's a big, it's kind of a conflict of interest in a way because you're told to do what's right for your clients, but you're also answering to managers. You're answering to publicly traded companies that have. Shareholder. Yes, exactly. And so inherently, that's where the conflict exists. And so that's when I realized that, you know, if I really am going to do this after seven years of being a captive fiducius, I became an independent fiduciary. It really opened up the whole universe of investments

so that I could really do what's in my best, what's in the best interest for the clients. And that's where things really started to change. That's where, again, I became really what I would call a comprehensive planner, not just your captive agent, whether it's at a fidelity or a Merrill Lynch or Prudential, something like that. Big difference. Yeah, exactly. just opens up a whole universe to offer your clients. What makes me wonder, can you think of an example of maybe a type of product recommendation that a client would get from a captive advisor versus what is opened up with what you can provide, just some ideas, not specifics?

Yeah, I know, absolutely. So, you know, my brain really started turning in about 2003 when I was working at a firm and I had a guy come into my office, he was sort of a wholesaler. And he happened to tell him, he said, I was asking me, you know, what kind of business, you know, what kind of things I work with. And I'm like, well, you know, bonds, you know, mutual fund stocks, kind of your typical things. And he said, you know, Mike, have you ever worked with hybrid investments? And I said, I don't know what you're talking about, Vince. I've never heard of it. He goes, well, you know, these are the type of investments that, you know, take the best of both worlds of they can get market returns

when the market goes up, but they also can protect the client from losses if the market drops. And I said, well, can you elaborate? He said, yeah, I mean, basically if the market goes up, your client will make money, but if the market drops, they're not going to lose. And, you know, this was 2003. And I thought, what are you talking about? You know, I worked at Prudential. I worked at Payneweber. I've worked at these large firms. Come on. I, you know, if that investment was out there. I would certainly know about it. Yeah, too good to be true. Right, right. And he's like, no, no, really. And so he started showing me this. And I thought, my gosh, how did I miss the bonus? How did I know this? And what I found is the firm just didn't offer it. In fact, I called a couple of my friends who worked at A.G. Edwards. I worked at Smith Barney. I said, have you ever heard of these hybrid investments? No, we've never heard of it. And that's when it was, it was like an epiphany, me, Mike, I realized, you know what, if I want to do what's best for the clients, I better find an independent platform, create my own firm where I can do that, where I can offer the entire

investment product universe for their best, I mean, again, for the needs and the best interests of my clients. And again, that's why I became an independent fiduciary and started off financial. Yeah, that's amazing. It kind of makes me think about, you know, the safety and security of a bank CD, well, that's fine and good. You're not going to lose money. But if the markets go sky high, your rate of return doesn't change at all. Well, then you compare that to let's put our money in whatever fund in the markets. And if it goes sky high, you benefit from that.

But if it crashes, you take a sock to the gut. So what's the, you know, the nice hybrid is what you just described. You benefit when the markets go up, but you can't lose. money and I would venture to say that that just gives people such a nice piece of mind aspect. Yeah, it really does. I mean, you're getting the best of all for all. And really where this is so beneficial is again, when we're in these inflationary times that we're in right now, Mike, people are not just worried about protecting their principal, but they need to keep up with inflation. And so if you're relegated to low interest,

rate investments, whether it's CDs or money market, you're losing money every year, right? You're losing every year. And so you have to find ways to keep up. And so these hybrid type of investments that they're offered through insurance companies or even large financial institutions, boy, I'll tell you what, they really have been a game changer for our clients. And, you know, when I look back to a market that is eerily similar to a market. what we're seeing today, you know, back post-2003, you know, if you look at from 2000 to 2011,

really the S&P 500, if you look at it, it really didn't do much. You know, if people were invested in that period of time, you know, the market went down, it went up, and it was this big up-down zigzag. And at the end of that 10 years, you might not have made a dime. But we were able to, you know, for our clients, average 5 to 7 percent during, those tough time periods using some of these hybrid investments. And it was a game changer for our clients who are in retirement or about Triton. I love it.

Well, let's wrap up with this, Michael. I know that we were talking about purpose versus performance. And I think a lot of times people might think if I had a full-on portfolio focused on purpose-driven accounts and then another portfolio of performance-driven, how do they compare to each other? and I would venture to say that you would respond and say they don't compare because they're two different purposes. But just talk a little bit about an example or maybe case study of how you would make that recommendation to a client for protecting their retirement investments. Yeah, absolutely. So, you know, again, you know, as fiduciaries, like, we work with a wide

array of investments. And again, you know, we're not, one thing is we're not cookie cutter. And so as a result, we take a look at each person, each family independently, based on age, risk, tons, things like that. So when we're starting with, okay, square one, we need to know what are your needs, right? What is the absolute, what's your purpose money, okay? How much do you need per month, okay? And so when we start there, we know, okay, we can cover those needs. Now, performance money, not be money that we need later.

Maybe, you know, for medical expenses down the road. Maybe you're looking to plan vacations. Maybe you want to leave a legacy to your children or to families. So that's money that, you know, that's money that's, you know, later. It's got some time frame. And then from there with that performance money, we need to determine, okay, well, how do you want to manage that? How much volatility do you want?

Do you want growth with no risk? You want growth. And so, again, those conversations through the discovery process that we use, we're going to fine-tune that for you so that we get an exact, you know, what I call an exact estimate of what you need, when you need it. And then we're going to show you how to get there. Yeah. And guess what? that that exact formulation and structure and template is not the same for everybody. So it is definitely something where you are going to sit down and understand what that client needs,

make your recommendations, and see what fits their needs best. So I think that's what most people get frustrated if they go to an advisor and go, oh, nice to meet you. Here's what we offer. And it's like you didn't even hardly ask me anything. So that's a big, big point. No, and again, just to expand on that, you know, Mike, I can't tell you how many times. Like, we have seen portfolios literally that are 100% identical from these same financial institutions that advertise on TV.

And whether the client is 40, whether they're 60 or where they're 80, it is the exact same. In fact, we recently had a conversation with a lady in her daughter out of Arizona. And the mom was so frightened about risk. And when we did an analysis of her portfolio, we're like, gosh, you know, you are so risky that you could lose 30, 40 percent of this in your 80. Is that what you intended? It's like, no. So I said, well, let's talk with your daughter about this. And the daughter said, yeah, it's really been bothering me because, you know, I can never get an appointment with her advisor.

And so when we do, her advisor just to, oh, you know what? Markets go up and down. You know, that's just what it does. Well, yeah, they go up and down, but it's about what does that client? What do they need? And if they don't want to lose, my God, they shouldn't be getting it. Yeah. And you shouldn't rubber stamp cookie cutter template the same mix portfolio for every single

client because that certainly cannot be the case. So I would say this, Michael, that you would be probably thrilled to give a second opinion to anyone saying take a look at my risk portfolio, my layout and see what is best for me. So if someone is interested in learning more, how can they do that and also reach out and connect with you. Yeah, absolutely. And I think, you know, if you want another, you know, what I would say assessment, take a look at really where you are. Phil, reach out to us. In fact, you can reach us by phone, and that would be 720-989-4-2-95. Pop us an email at Michael Op, M-C-H-A-E-L-O-P-P, at Op Financial or just visit our website atopfinancial.com.

And you can schedule an appointment there. But again, probably the easiest way is just reach out direct to us via that 720-9-89-4-299-4295 number. And yeah, let's just see what's going on. Let's look underneath the hood and see what kind of risk you're taking. Because I can tell you, you know, we took a look at a client who said they don't want to lose money. and we looked at something for them and said, gosh, you know, not only could you lose money, but based on where you're invested right now, if the market drops, you're going to lose more money than the market.

You have something called a higher beta, which we can explain. But again, call us, reach us at those numbers, and we'll be happy to just give you another look, what's going on there for you. Excellent. Well, Michael, thank you so much for coming back on. It's been a real pleasure talking with you. My pleasure, Mike, and I look forward to our next conversation. Thank you.

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