Influential Entrepreneurs with Mike Saunders, MBA - Interview with Curtis Cottle, Founder of SBC Financial Discussing Market Risk & the Sequence of Returns Trap

Episode Date: November 25, 2025

Curtis Cottle is a Certified Financial Fiduciary, visionary growth strategist and cofounder of one of Michigan’s fastest-scaling financial services firms. He specializes in retirement planning, estate planning, and strategic tax strategies designed to help families and business owners protect and grow their wealth.At the core of his firm’s approach is a deep emphasis on strategic tax planning as it relates to retirement, helping clients keep more of what they’ve earned and build long-term financial confidence.He’s the creator of the Wealth Wellness Checkup, a planning experience that uncovers hidden financial blind spots and helps people make smart, informed decisions. The firm is built to simplify complexity, bring structure to planning, and deliver personalized strategies that work in the real world.With nearly two decades of experience, Curtis is known for cutting through the noise, building lasting relationships, and helping people create long-term security without the guesswork.When he’s not driving growth or designing new campaigns, you’ll find him investing in his team, building partnerships, or spending time with his family, living the same values his business is built on: fun, unity, and getting things done.Learn more: http://www.gosbc.net/DISCLAIMERThe content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. We take protecting your data and privacy very seriously. As of January 1, 2020 the California Consumer Privacy Act (CCPA) suggests the following link as an extra measure to safeguard your data: Do not sell my personal information. SBC Financial Advisory services are only offered to clients or prospective clients where SBC Financial and its representatives are properly licensed or exempt from licensure. This website is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by SBC Financial unless a client service agreement is in place.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-curtis-cottle-founder-of-sbc-financial-discussing-social-security-timing-strategy

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 us Curtis Cottle, who's the founder of SBC Financial, and we'll be talking about market risk and the sequence of returns trap. Curtis, welcome back to the program. Thank you, Mike. It's good to be back.

You know, first of all, I think we need to define sequence of returns to see what this trap actually is. I think most people would go market risk, yeah, yeah, yeah, got it. You know, the market can be risky. But first of all, what is sequence of returns? And why is that something that is so detrimental and potentially a trap to people? Yeah, so this is where the game changes, Mike. And a lot of people when they're working and they're adding to.

to their retirement accounts, and the market goes down, it's not such a big deal because they have a couple of things. One, they got time on their side, but two, they're adding money to their portfolio. And so as the market's going down, they're still adding money, and they're buying at a discount, and they're getting better and better returns on all the money they're buying on the way down, which helps it recover. That's called dollar cost averaging. But when you're not adding money anymore to the portfolio on the market goes down, recovering from market losses totally changes. And I'll give you an example of this is if we have a $1 bill in the stock market, we're not adding any money to it. We have $1 bill and the market goes down 50% in one day, Mike.

How much money do we have left of that dollar bill? 50 cents. But let's say the market just takes another spike right back up and it goes up 50%. How much money do we have then? I think that most people would say, oh, 50 cents and we're back to where we were. but I don't think the math works out, right? No, it doesn't because if you have 50% growth on 50 cents, that's only an extra quarter. So now we have 75% of what we started with. The market went down, 50% went back up 50%, but we're at a 25% loss. And so that kind of illustrates, if we're at 50 cents, we need the market to earn 100%.

We need to double our money just to get back to where we were to a dollar. And so that's the impact of having not contributing to your account and recovering from market losses. Well, this is where sequence of returns trap comes in. What if we take it even one step further where not only are you not adding money, but you're taking money out. And you're taking that for income during those downturns. Because most people want to take money and they don't want to stop taking their income in retirement because the market's down. So they will oftentimes just keep drawing right through the downturns. And then all of a sudden, recovering from the market is even more difficult and often can ruin portfolios. And people run the risk of running out of

money. You know, and the point you bring up there is important because I think that number one, we, you and me, people, we can't control what the market does. So we're at the mercy of the market and there may be times where we must take money out because of requirements or we've already retired and we need the money. So there's no two ways about it. So if the market's heading down and you need the money, you now have that double whammy. So it kind of gets down into the necessity, right? Exactly right. And that's where the, well, what do you do about it, right? We've got the sequence of returns risk. And so what you do is you have the proper foundation of your portfolio. And there are three pillars of foundation in every portfolio. There's emergency fund money. Usually keep that of the bank, safe, liquid. You can access it. If you go on in and have money where you have low risk, was what we call it, where there's a guarantee of principal feature, meaning I can't lose a penny in the market if it goes down, except on this pillar, we're really trying to get some good growth. So you would have emergency fund money.

Let's say that's a blue color and the low risk, safe money. That's a green color. And then you have the red color, which is the at-risk money. You're willing to take some risk to try and get some higher returns. And those are your three pillars. And it's important to have the proper foundation. And we use a software to determine exactly what percentage should be at each pillar. Usually most of it's between green and red, small amounts in the emergency fund. And you need to have that green there because when the market does go down, now you've got a safe place to continue drawing your income that did never, did not lose a penny when the market went down. And then you can let that market recover without sabotaging it. And then when it comes back, now it doesn't matter which

part of the portfolio we grow out, pull out of for, because everything's growing. And then you can kind of bounce back. So market's not down every day. It's it's down one out of four one out of five years usually is roughly what it is. So most of the time you're fine. But when you find yourself the market going down, you can save yourself by having the proper foundation. You know, that's a huge point. And I think that if we were to say, oh, look, this bucket or this color, what percentage you're going to, you're going to respond by saying it all depends. And everybody is different. And one person might want 60, 20, 10, all of these things. And it's going to be different. And it's going to be different for every person. And I think that that's the art and science of what you do is sitting

down with someone going, what does retirement look like to you? What do you need? And let's make sure we get you there without all that volatility punching holes in the bucket, right? Exactly right. Yep. And then, so once you've got that foundation, now you can feel, we've all heard that you don't want to build a house on a foundation of sand. And this is where you can build that rock solid foundation for your portfolio and you can really just count on your money being there and available for you and fulfilling the maximum potential of being a retirement income for the rest of your life. So what do you think are some warning signs that someone's plan might have vulnerabilities to that sequence of returns risk? Yes. So this is where

we find people a lot of times are just largely in that red at risk. pillar. And if you're at 90 plus percent or 80 plus percent, that doesn't leave a lot of room for most people to draw enough income out during those down years. And so that's where it's like, when we see that, it's kind of like you see a child laying in the road. And you might ask the child, hey, you know, get out of the road. And the young kid might say, hey, well, why should I get out of the road? You're like, well, a car could come. And it can ruin everything. And that's kind of how it is here. So you really feel as an advisor, to say, hey, let's make sure we're the proper safety, because if you're going to continue

to take that, and a lot of people think, well, I'm safe in bonds. And a lot of people don't realize that bond funds are also in that red at-risk pillar. 2008 bonds went down 24%. I mean, that's a pretty darn big loss. And that does absolutely count as an at-risk asset. You know, I think that a lot people get a misconception of diversification and go, oh, I'm diversified because I've got money in these 12 stocks, but it's still in that red category, right? It's like, no, no, no, no, no, you're still all red. You just might have it spread out across a bunch of red. So true diversification lends itself leaning more toward protection and safety, right? Yeah, yeah, that's a really good clarification because I do hear that a lot. They were really diversified. They might even have

100 positions or 200 positions, but if it's all in that at-risk category, the pillar of foundation of your portfolio, where you want to be diversified is in the foundation. If you're not diversified in the foundation, that's where it can cause true problems, because diversification is a day-to-day in the at-risk, what most people think, oh, I have a mutual fund, all of it's at-risk, but I've diversified. Well, that's great. If you have 200 stocks and one of them goes out of business, you're diversification. you're not going to feel that. But that doesn't protect you from an overall market crash or economic downturn where everything in that at-risk side is going down or a majority of it's going down. Now you need the foundation to be diversified. So you can go to a full safe, rock-solid foundation part of your portfolio that isn't going to lose and you can wait for things to recover.

So what are some of those things within the good bucket that can help someone protect the retirement income from volatility? but without locking up all their money because I think there's that aspect too. It's like, oh, this is safe and it is, but there might be an aspect of it's locked up. So you need to have a percentage where it's liquid in case you needed something. So where do you guide clients in that thought process? Yeah, absolutely. And you mentioned the good bucket. I would really say the safe bucket because, you know, at risk.

I forgot the color. Yeah, yeah. So the safe bucket, the green safe pillar, because the risk has its place, but you got to have that safe pillar to make. it all work. And so what options do we have? Well, in order of growing potential, you have from least to highest growth potential, you have, first of all, cash. Cash isn't going to lose anything when the market goes down, savings, checking, money market accounts. Next, you have CDs that's going to earn a little bit more at a bank, certificate of deposit. Then you have CD-style annuities is a lot of times what people refer to as a fixed annuity where it's a set rate of

return, usually a fixed rate for a term of time, just like a CD, except it's at an insurance company. And then an even higher option is a fixed index annuity where they take that fixed rate of return and they buy stock market options and they're able to generate good growth without any risk at all. So those are kind of your options in the green category. You can pick any one of those. Some of them have more growth potential, some less. But any one of those is an option for that green pillar. You know, it's interesting how you didn't say, here's the one and only thing you need to buy X because in reality when you're guiding that overall process of let's keep safety and security and guarantee and all of these buckets, you're just

presenting options and I feel like your clients are getting, um, they don't feel pressured and pushed. They feel like, okay, I understand the strategy. And that makes sense that, oh, you're showing me three or four options in this bucket, the green bucket. Okay, yeah, this one feels right. So talk a little bit about, you know, having that flexibility of being independent versus only having a couple things you can offer to a client because you're locked in working for some named company. Yeah, that's so important. It's really proven. What I found to be true is it's really proven to be just so much more effective to have an independent advisor that has all of the choices for you. Rather than operating, they have a license to sell one thing or they just choose to operate in one lane

and sell one thing or one product or one company. And so as a fiduciary and a certified financial fiduciary, which is most advisors who are not fiduciary, but there are a good number who are fiduciary license. And then I have an extra credential for the certified financial fiduciary. And so what we learn in that accreditation is it's important to just pick the strongest, as sturdy as companies and then allow your clients to then be put in the ones that earn the most that give the most benefit of that selection. So it's really just going to come down

to all of your options and then picking the best ones from there rather than having limiting options. Yeah. Yeah, yeah. Hey, so let's wrap up with this. Can you think of an example of maybe two retirees with the same savings amount who ended up with totally different outcomes because of the sequence of returns timing. Yeah, yeah. In fact, we see this quite a lot. So there was, there's, I can think of two couples, actually. They were both right around $800,000 in that worth. And the one of them had about 96% in the at-risk pillar. And the other one was pretty balanced. They had about 2% in emergency fund. And then they had about 45% in the green safe pillar. Then they had the remaining

balance in the red pillar, just a little about 63%, or sorry, 53%. And so what happens is, is the market went down about two years into retirement. This is over a 10-year period, because I've been doing this 18 years now. So this was over a 10-year period, and the clients that wanted to stay risky, they didn't understand the sequence of returns. About two years in, the market had about a 20% dip. And then that really set them in a wrong direction. They never fully recovered from that.

It was about 10 years later, the couple that had the balanced foundation, the Rock Solid Foundation, had been drawing money the entire time, but they had almost the exact same balance they started with. It didn't pretty much move. They had the same $800,000. Whereas the other couple who was in the higher risk, they were down to about $300,000 after 10 years. And so it has a massive impact.

and it can really ensure your security where you have a rock solid, balanced foundation for your situation. It seems to me, sounds to me, like, you know, the power of compounding. You know, we've heard Albert Einstein says it's one of the wonders of the world. Compound interest. Well, that works great when you're building and growing over decades, but it also seems like the sequence of returns trap risk that we're talking about has a compounding effect like the example you just gave.

just that 20% loss. It's the loss and then the withdrawal and then it compounds with the market having to come back way more than the loss. And it's something that you almost get ripped out to see with that undertow, right? Yeah, that's a good way to put it. It just creates negative momentum. And that's not what you want in your portfolio. You want to be able to feel safe. You want to be able to feel secure. You want to feel confident when you're working with your advisor to know I've got a rock solid foundation and my portfolio is going to do what my portfolio is meant to do. Yeah, love it. Well, Curtis, once again, this has been really helpful clarification, nice and clear

strategies here and mindset. So if someone is interested in maybe looking at some of the sequence of returns risk to make sure you plug up that in their portfolio, what's the best way that they can learn a little bit more and reach out and connect with you? I appreciate that. And as I mentioned, the website that we do is meant to have good content for you. So if we like to educate, education is a big focus of ours. We were awarded from Senator Heising up a Financial Literacy Education Award, and that was a big fun surprise.

But so we do that on our website at www.g.gosbc.net. That's gosbc.net. You can search SBC Financial online and find our Facebook, our Instagram, or LinkedIn. So the website, we really designed it to put. some good content for you if you want to learn. Perfect. Thank you, Curtis. I really appreciate you coming back. It's been a real pleasure chatting with you.

Thanks, Mike. As always, it's been a pleasure of mine as well. 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.