In Episode 73, we welcome Jeff Porter and Barbara Schelhorn from the financial planning group, Sullivan Bruyette Speros & Blayney.

We start with Jeff’s background. He was a contemporary of Meb’s at the University of Virginia. The guys share a laugh recalling running out of class to check stock quotes back in the Dot Com boom.

As the conversation turns to investing and financial planning, Meb asks about changes in the industry – with the rise of robo-advisors, indexing, target date portfolios, and so on, how does Jeff, as a financial planner, continue to add value on the investment side?

Jeff tells us how the aforementioned products can be great for many investors, but less so for others. For investors who need more handholding, and/or have more complex financial situations, advisors can add significant value.

What follows is a great discussion on questions Jeff asks his clients as he seeks to evaluate the right market strategy for them, as well as the right implementation. There are myriad issues: what’s the best asset mix? Do you add hedges? Active or passive? Factor tilts? And so on.

Jeff looks to understand what his clients need from a return perspective in order to reach their goals, as well as their ability to handle risk. This includes variables such as when will the client need to take withdrawals. This leads to an interesting conversation about those risky years shortly before and after retirement begins. If luck is against you, and the market is down in those years, it can make a huge difference in your portfolio’s balance and therefore, your retirement lifestyle. Jeff tells the story of how retiring at two different points in time led to two very different outcomes.  

Another question Jeff asks clients is what percentage, or dollar value, could they accept as a temporary loss in a bear market?” He tells us another story about a husband/wife client who realized they had very different answers to this question.  

Meb asks what’s the average answer to “how much can you stomach being down?”. Apparently, most clients say they can handle about 15-20% declines.

Meb then brings up how portfolio creation and management is just one part of a person’s entire financial picture; therefore, as Jeff and Barbara think about risk and a client’s holistic financial view, where do they begin?

Barbara answers this one. She tells us one of the most important things she does is help clients organize their financial lives. She accomplishes this by asking three questions: Who? What? And how much?

She goes on to give us great details on what really goes into these questions. In essence, she’s helping clients gain far greater control over their financial lives. You’ll hear Meb sound a bit overwhelmed in response, noting how simply the organizational side of getting someone’s financial life in order can be massive – and that he could personally use the help.

The conversation drifts toward allocating cash and savings. But one of the problems is that many investors have way too much cash sitting in accounts earning nothing. At a minimum, they could use that cash to pay down various debts or mortgages. Meb makes the point that countless investors are bad at optimizing the cash/debt equation. He says there are simple techniques to easily turn cash earning 0% into cash earning 1% per year.

Meb continues to steer the conversation toward traditional financial planning topics: Social Security, retirement benefits, health and liability risks, and so on…

Barbara provides some wonderful information on insurance and long-term health care. As an interesting aside, she tells us that most of her male clients don’t want to waste their money on long-term health care, while her female clients find it to be more of a need. Barbara says the reality is somewhere in between.

This hardly even begins to scratch the surface of what’s covered in this episode. (It’s our longest to date!) You’ll hear about umbrella insurance policies (and why Meb could use one for some property he owns in Colorado)… The importance of proper titling of your assets and how it can protect you from litigation… Gifting loved ones with stock rather than cash to get around big capital gains… Effective financial strategies using tax bracket trends… SEP IRAs versus 401Ks vs Roth IRAs… When to start taking Social Security… And way more.

And of course, you’ll hear Jeff and Barbara’s most memorable investments. While Barbara’s is interesting, Jeff’s involves a huge market loss thanks to a bad tip from a certain college friend (you guessed it – Meb was to blame).

What was Meb’s bad investment advice that cost Jeff thousands? Find out in Episode 73.