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My Investments Underperformed the Market - Should I Fire My Advisor? · TaylorMade Retirement with Taylor Demars, CFP®

• 0:01
  SPEAKER_02: Recently, we had a listener question submitted asking, My investments didn't do as well in the last 12 months as the overall market has done.
• 0:08
  SPEAKER_02: Should I be reevaluating my advisor based on this lack of performance?
• 0:12
  SPEAKER_02: It's a question a lot of people ask during some point in their investing lives, so let's break it down.
• 0:19
  SPEAKER_00: Welcome to Taylor Made Retirement, where we explore what it takes to build a retirement that works for your money and your life with third generation certified financial planner Taylor DeMars.
• 0:35
  SPEAKER_01: Welcome in.
• 0:35
  SPEAKER_01: This is Taylor Made Retirement with Taylor Demar Certified Financial Planner.
• 0:39
  SPEAKER_01: Learn more at Demars Financial.com.
• 0:42
  SPEAKER_01: Well, Taylor, I'm assuming most people think of financial planning as investing, right?
• 0:47
  SPEAKER_01: And getting returns.
• 0:48
  SPEAKER_01: And a lot of people probably overvalue that aspect of planning uh until they're actually working with a firm like yourself.
• 0:55
  SPEAKER_01: But uh this question probably has come up a time or two for you, right?
• 0:58
  SPEAKER_01: Uh if I'm not getting my returns, is my advisor doing their job?
• 1:01
  SPEAKER_01: 100%.
• 1:02
  SPEAKER_02: And it's a fair question.
• 1:03
  SPEAKER_02: I mean, people work on save and and this is their representation from a numerical standpoint of their worth, right?
• 1:09
  SPEAKER_02: And many and for some people.
• 1:11
  SPEAKER_02: And uh so when they see their investments going up or down in correlation with the stock market or not, it can it can mean a lot.
• 1:18
  SPEAKER_02: So it's fair to be asking and scrutinizing whether your advisor is is is their worth in what you're paying them.
• 1:24
  SPEAKER_01: As Taylor mentioned, this this came from a listener question, right, about investments not doing well over the last 12 months as an overall market.
• 1:32
  SPEAKER_01: So there's a lot of different ways to kind of look at this question and really provide an answer for it.
• 1:37
  SPEAKER_01: So let's kind of start just with what the market means.
• 1:40
  SPEAKER_01: When when somebody says, Taylor, the the i I haven't met met the returns of the market, I haven't kept up with the market, what does this actually mean, right, when you're when you're kind of setting up this comparison?
• 1:50
  SPEAKER_02: It's a great question.
• 1:51
  SPEAKER_02: I would I would have to ask the the listener, you know, right?
• 1:53
  SPEAKER_02: What what when they hear the market, what are they thinking of?
• 1:56
  SPEAKER_02: But in their defense, most of the time people are referring to the S P 500, uh, which is kind of the largest, most commonly referred to conglomerate of the US-based stock market.
• 2:06
  SPEAKER_02: But you've got the Dow Jones Industrial, you've got the NASDAQ, and so uh those are very different lenses of thinking of the quote unquote market.
• 2:14
  SPEAKER_02: At the end of the day, I kind of throw that out the window because we gotta we gotta make sure we're not comparing apples to oranges here, not just from what's what's under the hood, right?
• 2:23
  SPEAKER_02: If you look at your your investments, you gotta say, uh, do you do you own bonds, stocks, international stocks, small caps or cash, all that technical jargon to say, hey, what's what's the meat and potatoes of your portfolio?
• 2:36
  SPEAKER_02: And is there even really reflective of what the SP 500 is?
• 2:39
  SPEAKER_02: Are we are we trying to race a golf golf card against a Lamborghini?
• 2:42
  SPEAKER_02: It's it's it's hard to tell unless we know exactly what is under their hood versus what's under the quote unquote market's hood.
• 2:48
  SPEAKER_01: Yeah, so I guess that most people look at the SP 500, but again, you want to kind of have an understanding of what you're comparing there before you know you do hold someone accountable.
• 2:56
  SPEAKER_01: And also you have to kind of keep the perspective of your perp the purpose of what you're trying to accomplish, right?
• 3:00
  SPEAKER_01: I'm assuming we don't know the age of the person that that wrote in here, but if you're a little bit older, you're I guess your goals are a little bit different than someone that's that's younger earlier in their career, correct?
• 3:09
  SPEAKER_02: Yeah, 100%.
• 3:10
  SPEAKER_02: Yeah.
• 3:10
  SPEAKER_02: Going back to that golf cart versus Lamborghini, uh, you it's it's hard to compare yourself against the market when you're fundamentally geared for different goals.
• 3:20
  SPEAKER_02: Um you you referenced somebody in their 60s versus somebody much younger.
• 3:24
  SPEAKER_02: Uh I don't invest my personal investments the exact same way that my retired clients do, right?
• 3:30
  SPEAKER_02: That would be a disservice to them or to me or both, because someone who's much younger has a much longer time horizon to see the investments go up and down with the fluctuations.
• 3:39
  SPEAKER_02: So when the market goes down, I frankly get excited, right?
• 3:42
  SPEAKER_02: That's a buying opportunity for me.
• 3:44
  SPEAKER_02: Like when the market goes down for my clients, they're the ones that are asking, hey, am I still able to make my withdrawal this month to take care of my groceries and my gas, my gas, right?
• 3:52
  SPEAKER_02: So it's a different perspective that we want to make sure that you're not, even if you're you're compared against your neighbor or or a coworker, you want to make sure that you have the same goal.
• 4:01
  SPEAKER_02: Uh, you don't have to have the same goal, but you want to make sure that you're aligned on the goal first before you start looking at what the numbers actually say.
• 4:07
  SPEAKER_01: Yeah, and you got to protect your portfolio a lot more than someone that's that's a little bit younger as well.
• 4:12
  SPEAKER_01: How often do you have conversations, let's say for someone that's in their 60s that isn't trying to top or to meet the market or exceed the market every year with their returns?
• 4:21
  SPEAKER_01: How how specific are you getting about returns for those portfolios?
• 4:25
  SPEAKER_02: Yeah, yeah, that's a very great question.
• 4:27
  SPEAKER_02: I mean, as the name of the podcast implied, we want to tailor that to their specific situation.
• 4:31
  SPEAKER_02: So um if we were to pick somebody who's who's completely retired, let's say, that then we want to make sure that we have uh in our firm, we adopt a what's commonly referred to as a buckets income methodology, where we're looking at their portfolio, their nest egg, and saying, okay, we're going to segment different sections of your portfolio for different timeline purposes.
• 4:50
  SPEAKER_02: So a portion of it is meant to take care of the next few years, having no exposure to what we would call aggressive or growth-focused investments.
• 4:59
  SPEAKER_02: Another portion of your investments are going to be more moderate, more conservative, so that they can outlast several years' worth of the ups and downs of the market.
• 5:07
  SPEAKER_02: And another portion is going to be there for the long-term growth.
• 5:09
  SPEAKER_02: And tweaking that exact balance is specific to each person's situation, not only because we don't know exactly what their risk tolerance is, but for our firm inside of the retirement readiness roadmap process, we want to reverse engineer what their withdrawal needs are, specifically saying what are your needs, wants, wishes.
• 5:28
  SPEAKER_02: We can calculate all that in conjunction with their other income sources to say we know how much you are going to withdraw.
• 5:33
  SPEAKER_02: Well, we project how much you're going to withdraw off from your portfolio over the next five years.
• 5:37
  SPEAKER_02: That gives us a really strong sense of knowing how much you should have set up in a more conservative blend.
• 5:42
  SPEAKER_02: So, and and in that case, then we're really far away from the SP 500 because we're making a very specific allocation straight to them.
• 5:51
  SPEAKER_02: Hopefully that makes sense.
• 5:52
  SPEAKER_01: It does make sense.
• 5:53
  SPEAKER_01: Again, that's why you work with uh an advisor, right?
• 5:55
  SPEAKER_01: To make sure that you have a customized investment strategy that that meets your meets your purpose.
• 6:00
  SPEAKER_01: Again, you might be more aggressive at 65 than someone else, or you may be more conservative.
• 6:03
  SPEAKER_01: But again, you've got to make sure you're taking the right approach and having the right purpose for your portfolio.
• 6:08
  SPEAKER_01: Now, the other part of this question, too, Taylor, I thought was interesting was that 12-month timeline.
• 6:12
  SPEAKER_01: Hey, this last year I haven't met the same returns as maybe I would have hoped for.
• 6:17
  SPEAKER_01: Does that 12-month, one-year timeline mean anything?
• 6:21
  SPEAKER_01: Should you be judging things on that time period?
• 6:24
  SPEAKER_02: Yeah.
• 6:24
  SPEAKER_02: Oh, I wouldn't say you want to be blind to it, right?
• 6:26
  SPEAKER_02: Because you can't ignore the indicators around you.
• 6:29
  SPEAKER_02: But as I thought about this question and saying, hey, I'm in, I'm, I'm, I'm in this investment portfolio allocation and it's doing this good, and I'm looking over left and right, I'm seeing the market and my neighbors getting this much.
• 6:42
  SPEAKER_02: It kind of reminds me of sitting in traffic, whether the traffic is, you know, bumper to bumper or just going slow.
• 6:48
  SPEAKER_02: You're always tempted to change lanes.
• 6:50
  SPEAKER_02: At least I am.
• 6:51
  SPEAKER_02: And inevitably, it feels like whenever I change a lane to say, oh, go going into the faster one, it feels like it's now the slowest one.
• 6:58
  SPEAKER_02: And obviously, I don't really care about how fast I get from here to the next mile.
• 7:02
  SPEAKER_02: I care about how fast I get from here to my freeway exit, right?
• 7:06
  SPEAKER_02: Which may be several miles.
• 7:07
  SPEAKER_02: And I think the same way when it comes to our clients' investment allocation and goals is we're not here to invest for the next 12 months.
• 7:15
  SPEAKER_02: We're here to invest for many times uh 12 years or 20 years or 30 years.
• 7:19
  SPEAKER_02: And so it's that lens of perspective that we're thinking of for the long term.
• 7:24
  SPEAKER_02: And so, yeah, inevitably, if you want to think about racehorses, uh, the market or whatever we want to compare ourselves to, uh, they're we're gonna be neck and neck, they're gonna be ahead of us, we're gonna be ahead of them, hopefully.
• 7:35
  SPEAKER_02: But at the end of the day, we're not trying to uh get caught up with the short term because that's where people start to make you know knee-jerk reaction decisions and short-term decision making, and uh that generally does not bode for the best.
• 7:48
  SPEAKER_01: Yeah, I like that that uh the analogy of of driving.
• 7:50
  SPEAKER_01: That's an interesting one.
• 7:51
  SPEAKER_01: I've never heard that one before, but yeah, you can kind of it kind of paints the picture pretty clearly.
• 7:56
  SPEAKER_01: Uh now I I can't let you off the hook of just saying, okay, you know, you you gotta avoid the return numbers, don't look at it that way.
• 8:02
  SPEAKER_01: There has to be a time though when you are working with someone when maybe your returns do become a red flag.
• 8:09
  SPEAKER_01: So when when it where is that kind of measurement?
• 8:12
  SPEAKER_01: How do you measure that underperformance to say, okay, maybe I need to reevaluate things?
• 8:16
  SPEAKER_01: Oh yeah, it's a great question.
• 8:17
  SPEAKER_02: Like I said, none of these numbers we're we're trying to dismiss, dismiss away or ignore.
• 8:22
  SPEAKER_02: Where do I start?
• 8:22
  SPEAKER_02: I I would say if if you have a relationship with someone who you're depending on them growing your money or or helping you not not lose value, you want to understand, first of all, what you own and why.
• 8:35
  SPEAKER_02: I find too many times clients come to me with, you know, they they share all their documents and their statements, and I say, okay, can you summarize for me why you're invested this way?
• 8:44
  SPEAKER_02: Unfortunately, most of the time, they can't.
• 8:47
  SPEAKER_02: And it's not that they need to be an expert or be a nerd in all the investments, but I feel passionate that if if a client is able to look at their statement and say, here's what I'm invested in and why, it's kind of like looking at a nutrition label, right?
• 8:58
  SPEAKER_02: Uh, there's a big, you know, food movement out right now about about eating healthy and whole foods.
• 9:04
  SPEAKER_02: I I try and look at a food label, and if I can't pronounce the food and the ingredients inside of my food, I it's probably not a whole food or in my best interest.
• 9:13
  SPEAKER_02: It kind of leans in that processed food category.
• 9:15
  SPEAKER_02: I think it's the same thing when it comes down to clients' investments.
• 9:18
  SPEAKER_02: It should be uh relatively simple and easy to explain.
• 9:22
  SPEAKER_02: And so that's that's the first flag, is even before we get to the numbers of their performance.
• 9:26
  SPEAKER_02: You want to make sure you understand what you're under.
• 9:29
  SPEAKER_02: And the next thing that I'm looking for is is it being checked in on regularly?
• 9:33
  SPEAKER_02: Yeah, we're not trying to, you know, be day traders here or overreact on a on a too frequent a basis, but the it's that regular check-in that people should be expecting from their professional to understand hey, what's going on with my portfolio in light of the market economy?
• 9:48
  SPEAKER_02: Should we make any changes or not?
• 9:50
  SPEAKER_02: And why?
• 9:51
  SPEAKER_02: It's though those sorts of criteria that I think many people are looking for, at least to have the confidence that things aren't just being said and forget it, right?
• 9:59
  SPEAKER_02: And that unfortunately, too many times that's what I'm hearing from people is they feel like the communication is only flowing in one direction from them to their advisor.
• 10:07
  SPEAKER_02: There's not this proactive or or back and forth communication that helps them understand what's going on.
• 10:12
  SPEAKER_02: And I would say one last red flag when it comes to performance is if there's a lack of uh fundamental strategy over time.
• 10:22
  SPEAKER_02: Like we said, a 30-year-old is not going to be investing the same as a 60-year-old, most likely.
• 10:26
  SPEAKER_02: So as you're moving through different phases of life, and especially in that last runway up until retirement, often the five years leading up to retirement, you want to make sure your your portfolio is rotating to be prepared for when it becomes your portfolio becomes the paycheck.
• 10:42
  SPEAKER_02: So many times we're seeing our clients rotate to a more and more conservative strategy, going back to that uh driving analogy.
• 10:48
  SPEAKER_02: Like you're going down the freeway at 70 miles an hour, you don't want to stay aggressive into retirement.
• 10:53
  SPEAKER_02: Eventually you're gonna take the freeway exit and slow down to, I don't know, 40, 30 miles an hour or so, so that you can have a different pace of life.
• 11:01
  SPEAKER_02: And that's what we're trying to do with clients' portfolios as well.
• 11:03
  SPEAKER_01: Yeah, a great list of flags there to kind of kind of things to think about too, right?
• 11:07
  SPEAKER_01: If you are a little concerned about your investments and your returns, some things to think about.
• 11:11
  SPEAKER_01: And I think it's also important to point out, too, you can have a conversation with another advisor, right?
• 11:15
  SPEAKER_01: If you aren't comfortable with where you stand, if hey, I just want to kind of get a second opinion.
• 11:19
  SPEAKER_01: I'm sure that's okay to go to someone like yourself, right, and say, hey, here's where I am.
• 11:22
  SPEAKER_01: I just I'm kind of getting a better sense of am I doing the right thing right now?
• 11:25
  SPEAKER_02: Yeah, I mean, 100%.
• 11:26
  SPEAKER_02: If you're gonna get a life-changing surgery, you better be seeing more than one physician for a second opinion.
• 11:31
  SPEAKER_02: And for people's single largest financial decision being retirement, I think they owe it to themselves to get multiple opinions.
• 11:38
  SPEAKER_02: And and unfortunately, too many people in this industry expect you to allow them, allow them to allow them to manage your life savings before they'll give you an answer and a plan.
• 11:48
  SPEAKER_02: So for us, that's where we build the retirement readiness roadmap, which is a uh just a financial planning oriented relationship where we don't manage your investments, but do cover the comprehensive lens of your income, taxes, investments, estate planning, healthcare planning.
• 12:03
  SPEAKER_02: So you can walk away from that, having all the nuts and bolts of what you need to do, whether you want to continue that relationship with us or with someone else or do it on your own.
• 12:10
  SPEAKER_01: Yeah, very good.
• 12:11
  SPEAKER_01: So to answer this question, right?
• 12:13
  SPEAKER_01: No, not necessarily don't need to fire your advisor.
• 12:15
  SPEAKER_01: You just need to understand what your benchmarks are, understand your plan, where you're heading, what the goals are for your portfolio, right?
• 12:21
  SPEAKER_01: What's what is it designed to do?
• 12:23
  SPEAKER_01: That's really what matters most, and that's what you can judge your plan on.
• 12:26
  SPEAKER_01: If you want to learn more, you want to learn more about the retirement readiness readiness roadmap that Demar's Financial uh offers, and you can always log on, demarsfinancial.com.
• 12:35
  SPEAKER_01: That link is in the show description as well.
• 12:36
  SPEAKER_01: But also click on Could We Be a Fit.
• 12:38
  SPEAKER_01: Learn more about the process as well, how they approach investing and all the other things that go into retirement planning to make sure you have a successful life and really achieve those financial goals that you're hoping for.
• 12:49
  SPEAKER_01: But yeah, good topic, uh Taylor.
• 12:51
  SPEAKER_01: So kind of put you on the spot today, but but thanks for taking us through it.
• 12:54
  SPEAKER_02: Hey, my pleasure.
• 12:55
  SPEAKER_02: Appreciate the feedback and the questions, Ben.
• 12:57
  SPEAKER_01: Absolutely.
• 12:57
  SPEAKER_01: Well, thank you for listening to another episode of Taylor Made a Retirement with Taylor Demars.
• 13:01
  SPEAKER_01: I am Ben George, sending for Mark this week.
• 13:03
  SPEAKER_01: He'll be back soon.
• 13:04
  SPEAKER_01: We'll have another episode coming soon as well.
• 13:05
  SPEAKER_01: So please hit subscribe and we'll talk to you then.