Marc Killian  00:18

Hey everybody welcome into the podcast. This is the Roth guy with the Roth guy himself, Jude Wilson and me as we talk about investing, finance and retirement. And Jude twice the advisors, twice the fun, twice the confusion, right? So let’s talk about

 

Jude Wilson  00:33

how you doing? I’m doing excellent, man. I’m so excited to talk about this subject. Well, listen, I

 

Marc Killian  00:38

want to make sure I set the I’m gonna set the ground rules in the table here we’re gonna read an email from a listener that had come in. And when I’m talking about two advisors within the same company, right? Because, you know, you have Junior advisors, you have staff, you have helpers. We’re not talking about that. We’re talking about like, going to two separate sources, you know, two different firms, right? To get invite advice and having your money in two different places like that. So here’s a question. Let’s break it down. So the question comes in from this person and says, look, for years, I’ve had half my money with a broker and half with somebody else. They’re both really nice people, and I thought it would be good to get advice from two different sources. Now I just feel confused and I’m overwhelmed. Am I better off having it all in one location? So we’re going to dive into that topic and talk about that, I guess, first and foremost, why do some people, Jude, in your years of experience, why do they feel like they want to split the money up to begin with?

 

Jude Wilson  01:34

Well, there’s so many reasons. And I love this topic because early on in my career, I faced this a lot, okay, 27 years into this industry, in the beginning, say that in the beginning

 

Marc Killian  01:49

I heard the I heard the voice of the movie the end,

 

Jude Wilson  01:53

right when I was a rookie of my career, what I would what I found was many People saw advisors as a broker, like was mentioned in this email, you went to a stock broker to buy investments, you went to an insurance agent to get insurance, you went to a CPA to do your taxes, you went to an attorney to get your estate plan done, and most of them did not talk to each other, So you had multiple advisors, but that model has kind of died down a little bit. If you’re working with a true wealth management financial planning firm like ours, some of those things are in house, and some of those things are being advised on in conjunction with your advisor. For instance, in our firm, we do a lot of tax analysis, but we aren’t CPAs. We have we work with the clients tax professional to make sure some of the observations that we’ve noticed that could possibly benefit them is also brought to the table with their CPA, and we work in conjunction. So that model in the beginning is where I think some of this started. And then the other thing that I think is funny, that I that I’ve heard over the years is, well, I’ve been told not to put all my eggs in one basket. Sure. I’m sure you heard parents, right?

 

Marc Killian  03:13

Yeah, grandmama said that, right? You know, a long time ago.

 

Jude Wilson  03:16

So, and that really stems from investment diversification, but advisor diversification really could be more detrimental to your overall success, because you really want a quarterback that is looking at everything. And I think we’re going to talk about some reasons why. Yeah, it’s beneficial.

 

Marc Killian  03:37

Yeah, I’ll set up. I’ll set a little stage for you on that too. So what are some hidden problems with having two firms handle your stuff? Well, to your point, you know, yes, if you’ve got a financial team where you’ve got an attorney, an estate attorney, you’ve got a CPA and you’ve got a financial advisor, and they’re not all in the same building. They are kind of working together because you’re, you know, you’ve got that going on, but typically, you’re not going to get two different advisory firms talking back and forth, saying, Hey, I’m doing this with half of Jude’s money, and the other one saying, Well, I’m doing this with half of Jude’s money. That’s probably not happening, so you’re going to have some issues there. But one of the things I was thinking about with this Jude is, how do you even measure performance? Because a lot of times people are doing this with the concept of who’s performing the best for me, right? I want the best bang for my buck. Well, if you give advisor a all of your Let’s see your growth assets, right? And they’re going after the aggressive, and you give advisor B, all the conservative, what you go back and look at the end of the year, and you think all the stock markets, our stock market’s been on a tear. Advisor A’s killed an advisor. B, well, yeah, but they’re doing two totally different things. So how do you measure performance?

 

Jude Wilson  04:46

I don’t know if you had a microphone in my office last week, but that’s the exact situation with a new client that came in, where this client had most of their equity portfolio, their stock portfolio. People at one firm, and most of their fixed income at another firm or at a bank and and they thought that, you know, they were providing themselves diversification well in after really doing a thorough analysis of their portfolio, we found several things was wrong, because one of the things that that you alluded to is that you want to not only have a balanced portfolio, but you want to rebalance that portfolio to give you the best opportunity to lower your risk and have more potential growth that can’t be done if you have two different firms that are either trying to do the same thing, or worse, doing two, two completely different types of portfolios. So that is just one example, yeah,

 

Marc Killian  05:47

yeah, just one strategy. And being the Roth guy, let’s, let’s, we could spend an hour on tax. There’s no unified tax strategy if you’re in two different places. How can you so

 

Jude Wilson  05:58

one of the things that we love to do as part of our process, we have something called the tax management journey, and it looks like a map. We’ll put a picture of the tax management journey. It looks like a map. There’s seven steps on the tax management journey. We can’t effectively do the tax analysis in combination with a in combination with our financial plan, if some of the assets are that we have no access to, so things like tax loss harvesting is virtually impossible to do if you’ve got two different quarterbacks on the field at the same time. And you know me, I’m a big college football guy. I’ve never seen a college football team successfully able to have two quarterbacks on the field at the same time,

 

Marc Killian  06:44

unless they’re running the Wildcat or something, and it only, it’s only a trick play once in a while, right? So it doesn’t last for long, yeah? So, I mean, you got, it’s going to be hard to have that unified, unified, you know, kind of strategy going to this question, to this person’s question that started this conversation? It’s getting more confusing, right? That’s kind of where they were at. And so you’ve got all these different pieces then, you know, like the overlap, you know, we talk about having these, these things out there. So I think sometimes people do this because they think, to your point earlier, diversification by going to multiple places, I’m going to diversify. Yeah, and we’ve heard this a million times. Well, I went to big box corner store a, and I bought a mutual fund, and then I went to big box corners, you know, on corner B, and got another mutual fund, and then I went to C and got a third mutual fund. And now I’m diversified. It’s like,

 

Jude Wilson  07:35

and here, okay, to your point, we see this all the time. Two things. One, that diversification isn’t there.

 

Marc Killian  07:43

Most the same thing, probably right,

 

Jude Wilson  07:45

exactly. If you look at the average equity portfolio today that’s focused on on the US stock market, there’s something called The Magnificent Seven. And The Magnificent Seven are some of the largest companies in the s, p, well, if you’ve got three different mutual funds like you’ve set set up, more than likely each one of those funds has a high allocation to that Magnificent Seven, so you’re probably not diversified, which means if the market starts to go the other way, all three of those funds are going to go the other way, simultaneously. And so the most common portfolio that we see is a 6040 split, 60% in the stock market equities, 40% in fixed income bonds or some type of more conservative investment. Well, if you’ve if you’ve got two different mutual funds, and they’re both in the 6040, portfolio, there’s a light, very high likelihood that they have overlap. The other thing I wanted to mention is going back to the to the tax planning as part of that tax map journey that we do, we set a tax budget every year with our clients. You know, how much are you willing to pay in capital gains this year? Now we’re not going to hit that number exact, but if you’ve got funds at multiple places, it’s almost impossible to do that tax budgeting because one person is not overseeing that entire portfolio.

 

Marc Killian  09:17

Yeah, and so integrating. We’re just talking mutual funds right this second. There’s a lot of other pieces. Lot of other pieces, but I kind of started this thing by saying, twice the fun, twice the you know, twice the knowledge. How about twice the fees? Exactly, that could be waiting on you too, exactly.

 

Jude Wilson  09:34

Because if you look at most institutions, the more money that you have with a particular institution or a particular mutual fund. Sometimes there’s price breaks along the way, but if I’ve got a million dollars and I’ve got 200,000 at five different prices, I’m probably not getting the economies of scale to reduce my fees. So. Yeah, not only from a financial planning standpoint and all of the things we talked about before, but from a net cost standpoint, it’s probably costing you more to have multiple advisors.

 

Marc Killian  10:10

Yeah, I didn’t really even think about that. That’s a great point as well, right? So if you’re a larger, you know, higher net worth person, you know, yeah, I could see maybe there’s an argument for a strategy to have two different people, because maybe you’re having them do very specific, you know, niche kind of things. But then again, at the same time, to your point, you know, having that larger dollar amount with one firm might also get you the quote, unquote better rate, right? So, kind of a better breakdown. And that’s not to say that people get less service because they have less money, though.

 

Jude Wilson  10:42

Jude, no, not at all, because basically what it’s like I said to some clients, sometimes if you buy that bottle of ketchup at 711 the per ounce cost is way different than you buy that big, huge bottle at Costco for this for the same ketchup. And so economies of scale absolutely helps. But whether you get the ketchup at 711 or get the catch up at Costco, you’re still going to get ketchup. So that works. Hey, I try to come up with some analogies, but you bottom line is that you’re going to get with a good firm. You’re going to get solid financial planning, no matter the size of your portfolio, but if you can get solid financial planning and you can reduce your cost, why not?

 

Marc Killian  11:27

Okay, so let’s answer this person’s question directly. I’ve talked with several advisors, and they all have different opinions. Most tend to follow the same direction. So we’re going to see what you say here. Is it a Good Idea to work with two different advisors? What say you

 

Jude Wilson  11:40

I say for most people, it probably is not the best thing to do, and you and you said it best. There may be some circumstances where one advisor specializes in a pretty niche area and that, and absolutely, if that’s their specialty, that may make sense. But for all the reasons we talked about financial planning, tax planning, coordination, simplicity, reducing fees, it makes a whole lot of sense to have one captain of the

 

Marc Killian  12:13

ship. Yeah, that’s another great point. If you’re working with two different firms, who’s the quarterback of this team you are as the client, right? And do you even want to do that? Do you even want to make sure that both are doing their, you know, the jobs are supposed to be doing now, you’re managing two people you know, that are managing your money, versus working with one firm. You know who to go to. You’re going right to the, you know, the horse’s mouth, so to speak, and saying, Okay, now you’re the quarterback. Jude handled my stuff for me, right? So that’s a benefit, too, in my mind,

 

Jude Wilson  12:43

yeah, the last analogy I’ll leave you with is sometimes I explain it to clients. If you’re a Seinfeld fan, you may remember how you they used to pick on George Steinbrenner all the time. Well, you’re the owner of the the Yankees. You don’t want to be the general manager, the coach, the position coach, all at the same time. You want to make sure that the Yankees are successful, that your team is successful. You want to hire a good general manager, and you want the general manager to report up to you. That’s what’s having a good financial advisor in a wealth management firm does for you.

 

Marc Killian  13:20

Yeah, so Cowboys fans right now are shaking their head. They’re not happy with that analogy. So, all right, that’s gonna do it this week for the podcast. So again, two advisors, twice the confusion, probably make sure that you’re talking with somebody. And honestly, that’s why so many advisors offer complimentary consultations. That’s why so many do podcasts now, and they do, you know, YouTube channels and all this. There’s all these ways we do content now and things out there, it’s a great way for you to learn about them, right? So you can consume some content and go, Yeah, I like what this person has to say, or I like their personality, or whatever. Then I can go in and see if they are the right fit within their infrastructure for my needs, right? And they, most of them, offer that complimentary so take advantage of it. Reach out to people, have a conversation, interview, one, two or three, and find the one that’s right for you. But do something for yourself and your retirement journey, and if you need some help, Jude and his team are easy to contact. We’re going to have links in the show descriptions below, so just click on one of those and get started today with Mr. Wilson and his fine folks there at centros financial strategies. And don’t forget to subscribe to us on Apple Spotify and of course, here on YouTube. Thank you, my friend for breaking it down. Always enjoy our time together. Yes, sir. You have yourself a great week, and we will see you next time here on the Roth guy with that guy, Jude Wilson,

 

Speaker 1  14:41

financial planning and advisory services are offered through prosperity Capital Advisors, PCA, an SEC registered investment advisor with its principal place of business in the state of Ohio, centrist financial strategies and PCA are separate non affiliated entities. PCA does not provide tax or legal advice. Insurance and tax services offered through centrist financial strategies are not affiliated with PCA. Information received from this podcast should not be viewed as individual investment advice. Product discussions and illustrations are hypothetical in nature and will vary based on many factors, including, but not limited to age, health product insurance carrier and product design. You should consult the insurance carrier website and policy for detailed information, for information pertaining to the registration status of PCA, please contact the firm or refer to the Investment Advisor public disclosure website, www.advisorinfo.sec.gov, for additional information about PCA, including fees and services send for our disclosure statement as set forth on form, ADV from PCA, using the contact information herein, please read the disclosure statement carefully before you invest or send money you.