On this episode of "On the Money," Ruedi Wealth advisors and Dr. Fred Giertz discuss the essential features of wealth management and answer several listener questions.
What is Wealth Management? (8:51)
“Wealth management is taking all the assets you have accumulated over your life, and putting those into place to give you the best lifestyle possible.”
- Ryan Repko
Read more: What is Wealth Management?
Listener Question: What do you all agree on when it comes to investment management? Do you disagree on anything? (9:58)
“What we do agree on – I think first and foremost - keeping costs super low, and being super diversified. I think those are all no-brainer answers that we all fundamentally agree on and believe in.”
- David Ruedi, CFP®, RICP®
“You are better off keeping your investment costs low, harnessing returns of the broad market globally, as opposed to trying to pick winners and losers.”
- Paul A. Ruedi
The 3 components of wealth management (20:04)
“Wealth management means you’re going to have a financial plan that spells out your goals, an investment portfolio designed to fund those goals, and a trusted advisor committed to the plan that is going to make adjustments.”
- Paul A. Ruedi
“A financial plan is really stating: How do I want to live my life? What do I want to accomplish with my money? That will inform all the objective financial decisions that you make, to make sure that you give yourself the best chance of accomplishing those things.”
- David Ruedi, CFP®, RICP®
“A trusted financial advisor [will be] committed to the plan and portfolio and able to make adjustments.”
- Paul A. Ruedi
“Having a diversified portfolio is a good idea, having diversified financial planners is not necessarily a good idea. You don’t want to have 2 or 3 different people planning your situation; you need to have a centralized plan.”
- Dr. Fred Giertz
“Should I be diversified as far as financial advisors? I have strong feelings on this. I always tell prospective clients, I’m honored you consider us for even half of your money, but we either manage the whole war or we manage none of it. I’m not saying you should pick us, I’m saying you should pick one and be very careful with that choice.”
- Paul A. Ruedi
“That is the role of a trusted advisor – that person is the unique individual who has to call a truce between my near-term emotional wants and my long-term financial needs.”
- Paul A. Ruedi
Listener Question: What are the pros and cons of just having a will vs. a trust? (35:45)
“I don’t see a strong reason not to have a living trust if you have a reasonable amount of assets outside just retirement accounts. It just makes everything go smoother, quicker, it is a little less costly, and it’s not that expensive to have a basic living trust drafted. So why not do it and make everything easier on your heirs, they are going to have enough to deal with.”
- David Ruedi
“An estate attorney will be able to give you the knowledgeable advice on what is best for your situation.”
- Ryan Repko
GE and the Risk of Owning Employer Stock (42:04)
“When you have a concentrated position, it just represents a risk that you should not and don’t need to take. All of these workers, just like Enron, were not forced into this situation and they always had the ability to diversify out of that stock as they were approaching retirement and many of them chose not to. They could have allocated that towards something as simple as a Vanguard total market index, and they could have eliminated the disaster.”
- Paul A. Ruedi
Carle pension termination and annuity vs. lump sum decision (49:14)
“[If you are already receiving a monthly benefit] You are not going to have a diminished pension, it’s just going to be shifted to an annuity payment but not at a lower amount on a monthly basis.
For people who aren’t taking it: You are going to be offered a lump sum; you can take it all in cash but you have to pay taxes, or you can roll it over into an IRA or other qualified plan like a 401k or 403b. Or you can have them purchase an annuity for you that is not going to be less than then pension benefit you were promised.
This is really common this day and age for defined benefit plans to be taken over by insurance companies. Nobody’s harmed. Worst case scenario you get the same promised payment for life as you were getting before. Perhaps for a lot of people, it will be a really big positive.”
- Paul A. Ruedi
Read More: Lump Sum vs. Annuity
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*Past performance is not an indication of future results. Examples are for illustrative purposes only and should not be considered personalized investment advice. You should not make any investment decisions without first consulting your own financial advisor and conducting your own research and due diligence.