How to Manage Liquidity Events

Sunday, February 19, 2017 Wealth Strategy with Bryan Rigg Radio Show
Every Sunday 1-2:00 on 520 KLIF

Rigg Wealth Management in the radio studio

We see quite often in life a lot of people do not manage liquidity events very well. The most dramatic example are lottery winners. When they get a lot of money, what happens in a few years? It’s all gone. Granted we don’t encourage you to be banking on winning the lottery, but we see that when people do get a liquidity event like that they’ve put no thought into how to manage that cash.

Whether it’s on this massive scale of a lottery or whether it is being in control of your 401K, selling a house, having an inheritance, a lot of times when people get that money they do a very poor job of managing it.

Another example out there that we’ve heard quite often about when people get a liquidity event and manage it poorly, and here they know they’re getting a liquidity event, are professional athletes.

We hear so often that 70, 80, 90 percent of NFL players and NBA players, once they leave the league they’re bankrupt in a few years because they haven’t properly focused on how to deal with those liquidity events, putting that money away, making sure ‑‑ like I always like to say during these programs, ‑‑ they get their sacred cow, making sure they get the pot of money they need, putting it away and securing it to support their lifestyle going forward.

By way of illustration, a lot of times people say, “Hey, I want to replace my salary of $60,000.” A good number right now with interest rates is, if you have $1.5 to $2 million put away, you can be fairly assured that you’re going to be able to replace that $60,000 salary per year if you put that money away. You have then secured your sacred cow.

That’s one thing to be looking at when you start having these liquidity events, how it plays into you planning for your future and you securing the bucket of money that you need to maintain your lifestyle. If you manage liquidity events well, that is one huge tactic to be focused on in order to help ensure that you have the retirement you need

Listen to all 4 Segments of the show below:

SHOW TRANSCRIPT

Rigg Radio Show 7 Segment 1

Host:  “RIGG Wealth Management offers securities to Broker Dealer Financial Services, Member SIPC and advisory services through Investment Advisors Corp and SCC registered investment advisor. RIGG Wealth Management is not a subsidy area of Broker Dealer Financial Services. Neither RIGG Wealth Management nor Broker Dealer Financial Services offer legal advice. Client should consult their attorney of choice on all legal matters.”

“Opinions expressed on this program do not necessarily reflect those of Broker Dealer Financial Services. The topics discussed and opinions given are not intended to address the specific needs of any listener.”

“Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. Examples mentioned are for illustrative purposes only, individual results may vary. Past performance is no guarantee of future results. Investing involves risk including loss of principle.”

“Rebalancing can entail transaction costs and tax consequences that should be considered when determining a rebalancing strategy.”

Host:  Welcome to “Wealth Strategy” with Bryan Rigg for every Sunday at one o’clock on KLIF. Bryan is a celebrated Yale graduate, adding a PhD from Cambridge, a former officer in the Marine Corps, a man of profound integrity and honor, and your wealth professor.

Please, welcome your host for the next hour, Mr. Bryan Rigg.

Bryan Rigg:  Good afternoon, ladies and gentlemen. This is Bryan Rigg with Rigg Wealth Management. Thank you so much for joining us. The theme for today will be liquidity. We’ll be talking about liquidity events. We’ve highlighted four different liquidity events that people can will experience throughout life.

That is the change of a job. We’ll be looking at divorce. We’ll be looking at inheritance, and we’ll be looking at the sale of a home. Many people have been asking about a lot of the issues that we have talked about the last couple weeks primarily about getting a plan together.

Before we go into liquidity events, I want to encourage all of you to think about what is your financial plan and what are you doing to achieve those goals. A lot of people seem overwhelmed with the fundamentals of how you put a plan together, getting all your documents together and so on.

What we encourage you to do is just call a financial advisor. Please feel free to call us at 972‑383‑1210. Again, that’s 972‑383‑1210. Come in, and let’s just talk about where you’re at, what you need to do. A lot of times people feel extremely overwhelmed when they start thinking about what they have to do with getting their bank statements together, their tax forms, and so on.

It’s OK to feel overwhelmed to some degree. A lot of times people don’t put a lot of thought into it, and that’s where hopefully we come into play and can help you put together a plan, help you ask the right questions. Don’t feel bad if you feel like you’ve delayed it, put it off, or you haven’t had enough assets to really work with us.

We want to help you regardless of where you are in your life. We’ve had several clients recently come, and they say, “Hey, you know, if I start out with $5,000 or $10,000,” or, “I’m embarrassed I only have $70,000.” We don’t care. We want to help you.

We want to get you on the right compass heading and get your documents in order so you understand how to do a lot of the things that we’ve been talking about here, which is ultimately making sure you’re OK in retirement, making sure that the 20 or 30 years or 10 years that you still have productivity and working is going to be utilized in an efficient way to achieve your goals.

Getting to the theme that we want to explore today, liquidity, what is a liquidity event? Everybody goes through these events in life where they get a lump sum of money, where they’re expecting a certain amount of cash to come into the bank.

Quite often people do not prepare appropriately with how to transfer that money, how to invest that money, how to deploy it very quickly to start working for them. That is something here at Rigg Wealth Management we really like to focus on, when you have a liquidity event what you need to be thinking about how to take care of that money.

We see quite often in life a lot of people do not manage liquidity events very well. The most dramatic example are lottery winners. When they get a lot of money, what happens in a few years? It’s all gone. Granted we don’t encourage you to be banking on winning the lottery, but we see that when people do get a liquidity event like that they’ve put no thought into how to manage that cash.

Whether it’s on this massive scale of a lottery or whether it is being in control of your 401K, selling a house, having an inheritance, a lot of times when people get that money they do a very poor job of managing it.

Another example out there that we’ve heard quite often about when people get a liquidity event and manage it poorly, and here they know they’re getting a liquidity event, are professional athletes.

We hear so often that 70, 80, 90 percent of NFL players and NBA players, once they leave the league they’re bankrupt in a few years because they haven’t properly focused on how to deal with those liquidity events, putting that money away, making sure ‑‑ like I always like to say during these programs, ‑‑ they get their sacred cow, making sure they get the pot of money they need, putting it away and securing it to support their lifestyle going forward.

By way of illustration, a lot of times people say, “Hey, I want to replace my salary of $60,000.” A good number right now with interest rates is, if you have $1.5 to $2 million put away, you can be fairly assured that you’re going to be able to replace that $60,000 salary per year if you put that money away. You have then secured your sacred cow.

That’s one thing to be looking at when you start having these liquidity events, how it plays into you planning for your future and you securing the bucket of money that you need to maintain your lifestyle. If you manage liquidity events well, that is one huge tactic to be focused on in order to help ensure that you have the retirement you need.

Is that in line with what you’ve been thinking about with how we deal with our clients and how we explain those type of things, Gary, to them?

Gary Bilyeu:  Yeah, I think so, Bryan. If you don’t mind, I want to reach out to some of those people. You threw some numbers out there. I’m assuming that we have listeners that fall into those categories that they’re looking to get started.

You threw some numbers out there, if you have $50,000, $70,000, or $100,000. Those might be big numbers for a lot of people. How do they get to their first $50,000, their first $70,000, their first $100,000? We help plenty of people pursue those goals. That’s what we’re talking about, getting started.

We do a very good job here at Rigg Wealth Management of keeping the process very, very simple. You mentioned it in your opening comments. You don’t need to bring in a lot of documentation. You just need to bring yourself in. We’ll have coffee on. If you’re a coffee drinker, we’ll have coffee on. Come in and have a cup of coffee. Let’s just talk.

That’s the first step, and that’s usually the hardest step for so many people. Come in. Set an appointment, and let’s visit. We mentioned in the past we don’t prefer the marathon meetings. We would rather have several short meetings to stimulate the conversation, the dialog, to get the dialog flowing.

Then we can help you build that plan. As we mentioned before, and we say this all the time, there is no perfect plan, but let’s get started. Let’s come up with a plan that is comfortable, and let’s start executing.

Bryan:  Yeah, I agree with you, Gary. The worst thing you can do in financial management is say, “I’ll do it tomorrow.” It’s an interesting psychological phenomenon. Quite often, a lot of times when people are dealing with their financial home, they delay doing anything about it.

I don’t know how psychiatrists and psychologists would explain why that is, but it is a phenomenon that’s out there. You need to know that is a bad decision, deciding to do it tomorrow. Start today. Start being proactive. All the research is showing us is that most people out there do not do it.

If you’re one of those who have not done it, don’t feel bad. Like Gary said, come on in. Sit down with us, and we’ll be happy to talk through the issues that are on your heart because this is something that is very important for not only you but for your family and loved ones, that you get your financial house in order.

David Rigg:  A lot of times the liquidity events that we’re talking about, that may be considered a long ball hitter type of an event. I’ve got to do something. I’ve got a large amount of money that I need to manage and get working for me.

What we also really need to emphasize is the base hits. How do we start getting someone involved in a 401K, getting them involved in an IRA, getting them involved in some draft situation where it automatically goes to the account and they can start getting into the game as opposed to just managing sales from a house, divorce settlement, something along that line.

We’ve got to get them going, get them started.

Bryan:  I agree with you, David. Getting started is incredibly important. What you can do today, even if it’s imperfect, is a heck of a lot better if you think waiting a year will be the perfect time. There is no perfect time. Starting now is what will help create “a perfect time later on” for you as far as achieving your goals.

Please stay tuned. We’re going to be talking more in‑depth about liquidity events, what they are, how you can plan for them and manage them. Please feel free to visit our website at riggwealthmanagement.com. That is Rigg with two Gs, R‑I‑G‑G wealthmanagement.com. Please call us at 972‑383‑1210. Again, that’s 972‑383‑1210.

Come in for a no‑cost consultation, sit down with us, and go over your goals and needs for retirement and also what you’re doing right now to organize your 401K.

We’re looking at insurance, if you have insurance needs, also succession planning and estate planning that we can do on our side as far as beneficiaries on retirement accounts or doing transfer of death or TODs on individual accounts, which we’ll go into more in‑depth when we’re talking about liquidity events.

Thank you so much for tuning in today. We look forward to talking to you further, and we’ll be right back with you here in a few moments.

Rigg Radio Show 7 Segment 2

Bryan:  Welcome back, ladies and gentlemen. You’re with Rigg Wealth Management. My name is Bryan Rigg. I’m here with my two partners, Gary Bilyeu and David Rigg. If you just joined us, we are talking about liquidity events, and how you can prepare for them, and how important they are, because everybody will go through liquidity events in their lives.

We’re going to focus on four. We’ll probably bring in a few others as well, but we’re focusing on when you change a job ‑‑ it could be a liquidity event, because you will be moving retirement accounts, hopefully into an IRA rollover and have more control of those accounts ‑‑ divorces, inheritances, as well as a sale of a home.

In this segment, I want to focus at first on inheritances. This is something that a lot of people do not do proper planning for. They do not do proper planning for. They don’t do proper planning of working with their parents or relatives who know they’re going to benefit from, working with them in coordinating how about inheritance is going to look.

They don’t do a good job of setting up their estates, so their children or their beneficiaries will inherit it properly, and they also don’t do a lot of thinking about when they do receive an inheritance. A lot of people who do have that benefit of what they do with that money, and how that plays into their overall estate planning.

One thing that I have found dealing with clients for years is they don’t know that one of the best ways to organize an individual account for inheritance is to do a transfer on debt. By way of illustration, let’s say you’re taking care of your elderly parents. You’re the only child.

You know that you’re going to get their assets when they die. They’ve told you that. They’ve told you it’s in the will. One thing that you can do, if you have a good communication with them, is you can say, “Mom and Dad, how about I put a ‘transfer on death’ on the joint account that you two have?”

What that does is when they pass, all the money that’s in those accounts will go directly to you and bypass probate. You don’t have to probate the will to get access to those funds, and they can be controlled within a few weeks of having a TOD, so it’s seamless.

Also, let’s say you have a situation where you’re taking care of your parents, you’ve been the responsible child. They lean to you to help take care of them, and you have a sibling that is very irresponsible, has been into drugs. You know if that sibling gets any of the money, it’s going to be wasted.

David and I, we have a godbrother, if you will, a child of our godmother, who was a case in point with this. This happens. A lot of families have this problem. Let’s say you do not want that person, who has not been responsible, who has been a drug addict or whatever is the problem, to be able to see what’s in the will, or see what the assets are.

Doing a transfer of death bypasses probate, and nobody knows about this transfer. You can set up accounts that take care of your children, or have your parents take up those accounts to take care of you later on, and it basically prevents you from having to go through the expensive ‑‑ a few thousand dollars ‑‑ it could be several thousand dollars process of probating a will.

When that happens, that’s a liquidity event. If you know that you can do this TOD, and you decide to do it, you’re working with your wealthy uncle or your working with your parents, you have it on there, then you can start planning about when that day happens.

As Shakespeare says, “Every man owes God a death.” We all are going to die, so when that death happens, and the inheritance occurs, what are you going to do with that money? A lot of people do not plan accordingly.

A lot of times, people don’t know exactly what they’re going to get, but if they have a loving relationship with a relative that they know they’re going to inherit assets from, they should talk to them about it. Talk to them, what the intent is for that money when it goes to them, how they want that person to use it.

These are very important issues to look at, and I find countless times with clients, that this is something they have not done properly. There’s a case that happened a long time ago, when I was at Credit Suisse.

There was a client that was taking care of a very wealthy uncle. He had several nieces and nephews, but this client was a dear, dear niece, and was very responsible, was very wealthy in her own right. He wanted her to take care of his assets. About a year before he died, he put a TOD on his accounts, and all his assets went to her.

One of her cousins, who was very irresponsible, tried to sue her in court to get some of the assets, saying that he was the rightful heir because he was the same bloodline, if you will. They later found out that had it been a will, he probably would have been able to grab a lot of the assets and been in litigation for many years over the estate.

Because it was TOD and passed directly to her, she was able to keep all that information from the public domain. He did not know how big the estate was, and the assets were protected. Basically, he had no grounds to do any legal action.

This is something I think that’s very important when you look at inheritance, liquidity events, how you transfer wealth in the liquidity event, and then how you can prepare for that liquidity event when you’re dealing with aunts, uncles, parents, and so on.

That’s something here at Rigg Wealth Management we can help you do. I think a lot of people should seriously consider about putting TODs, transfer of death, on their accounts to help their children manage their estate and manage the liquidity event that they will have when the inheritance occurs.

Gary:  I think that’s a great point, Bryan. I think that’s what we do very well. Many of our listeners may not even know what a TOD, a transfer on death, is. That’s our job, to explain it. It’s very simple for us to set that up on an account where it’s appropriate.

It’s simply checking a box when we either set up the account or doing the paperwork to get it set up in place for an existing account, but it’s a very simple process. I don’t expect clients to know about that.

It’s our job to pull that information. Information is pushed and pulled. If they’re not pushing the information to us, it’s our job to ask the right questions to pull that information from them, and then we can take it from there. I think we do a very good job of that with our clients.

David Rigg:  I think it’s important to emphasize, this is a very simple process, just like Gary said, but doing nothing is the absolute worst plan that anybody could do. Once again, we’ve talked about it before, it’s uncomfortable to talk about this.

It’s uncomfortable to broach this subject sometimes with your relatives, but it’s necessary. People need to understand, we have seen so many messes with dealing with this stuff. That, just a few simple questions could have alleviated a lot.

Bryan:  By going down that road, David, it comes to mind what happened with our great grandfather. He’s in the Cowboy Hall of Fame. He was a very smart businessman, cattle man. He got a lot of land that had, luckily for his heirs, a lot of mineral rights and oil on it and in it.

But he died intestate. He had nine children, seven that made it to adulthood, seven that amassed big estates themselves, and that got married and had children. We know that by him not having a will has created massive chaos.

We’ve heard recently the rock star, Prince, dying intestate. That’s going to create a mess as well. Doing nothing about estate planning and doing nothing about the liquidity events that happens because of estate planning is very poor judgment. You need to get something in place to deal with those liquidity events.

That’s something I think is important, here again, when you’re looking at your overall structure, one of the main things that we’ve been talking about for weeks now is getting a retirement plan together. One piece of that is knowing what you could possible inherit later on, to help you have peace of mind.

Also, it helps generate the discussion that’s uncomfortable, as you were saying, Dave, with your relatives, about death and how you’re dealing with that death, and if you’ve proper arrangements for it. I think that is extremely important to look at.

Gary:  Can I throw one thing in here, Bryan?

Bryan:  Yeah, please, Gary.

Gary:  We find often, that our clients that at least get started and have a plan, they’re not planning on an inheritance, but when it comes, they’re better prepared. They already have a plan in place. Now they have some type of lump sum, but they’re more confident in their decision making.

David:  They’ve got a structure to go with.

Gary:  Yes.

Bryan:  On another side, I had a client just recently, she thought she was going to be getting several million dollars from a grandmother. I said, “Go talk to her and verify that.”

She went and talked to her, she found out that was not the plan. [laughs] She needs to rethink how she’s going to do things. She was devastated by this, but she had been led for many years to think that was the case.

When she really sat down and tried to verify it, she found out when she did, it was not what she thought. These are the issues we’re going to be talking about today, liquidity events, how you plan for them, how they play into your overall retirement strategy.

Please, stay tuned. We’re on every Sunday from one to two am here on KLIF. Our website is riggwealthmanagement.com. That’s Rigg with two Gs, R‑I‑G‑G, wealthmanagement.com. Our telephone number is 972‑383‑1210.

Again, that’s 972‑383‑1210. Please feel free to call us and come in and talk about some of your goals and what you hope to achieve with your retirement, and what you hope to achieve when you have your liquidity events. We’ll be back here shortly, in a few minutes, so please stay tuned.

Rigg Radio Show 7 ‑ Segment 3

Bryan Rigg:  Welcome back, ladies and gentlemen. My name is Bryan Rigg. I’m with RIGG Wealth Management. I’m here with two of my partners, David Rigg and Gary Bilyeu, and we’ve been talking today about liquidity events.

We just talked about inheritance and how you can get some liquidity events through that. Gary had a couple of interesting insights, especially from his long experience in insurance, about liquidity events. I’ll turn it over to him.

Gary:  Thanks, Bryan. What we were mentioning at the break is that the two most common liquidity events that I come across in the clients I deal with are a life insurance settlement or some type of CDs ‑‑ Grandma or Grandpa or their parents had CDs.

They’re in the bank, still in the bank, but they get the statements now, and they simply don’t know what to do with them, and so they’re still in the bank. There’s nothing wrong with that. What we do is sit down with them and talk to them about those two specific events.

If it’s a life insurance settlement, it’s fairly simple. Once that event happens, a death certificate is supplied and the life insurance companies settle that claim. Then the check is cut, and it goes to those people.

I will tell you that most of them put it in the bank. It’s a large lump sum, and large ‑‑ I’ve seen anything from $10,000 up to hundreds and hundreds of thousands of dollars. It’s all about perspective on a lump sum, but it is still a lump‑sum money, so many people them in the bank and leave it there because they don’t know what to do.

We would encourage them, “Go see a financial professional and understand the options that are available to you.”

Bryan:  Yeah, on that note, a lot of times I find that clients don’t know that when they get a life insurance settlement, it’s tax‑free, and then when they get that lump settlement, many know it’s coming. They’re not banking on a relative passing on, but they know that eventually will happen, and then when it does happen and the settlement comes, a lot of times they’re kind of a deer‑in‑a‑headlight look.

They don’t know what to do with it, and they put it in the bank. That’s one thing we can do here, is sit down and if we know that you’re going to be getting a life insurance policy and we know how much roughly it’s going to be, we can start planning for you as far as what type of investments you should be doing once you get that.

Gary:  One of the things that people convey when we start talking about why did they put it in the bank ‑‑ and many times, the majority of the time, it’s because they didn’t want to risk it. They didn’t want to risk that money, so they put it in a savings account that’s drawing well below one percent.

They put it there and they say “because it’s safe.” There’s risk. There’s all kinds of risk, and we could do an entire program on the different types of risk out there. The one risk that I explain to them that they don’t really realize by doing that is purchasing power risk.

What that is…When your investments or your portfolio are not staying even or exceeding the inflation rate, then that dollar has less purchasing power. They think they’re doing a wise decision by keeping that safe in a bank with FDIC insurance, but they’re losing purchasing power. It’s a very real risk.

Bryan:  To give some further explanation to what Gary is astutely talking about, purchasing power is very, very important to look at when you look at inflation. You may think, “Hey, I’m going to put something into treasuries, and I’m going to get 1.2 percent yield on that, and it’s going to be secure.”

You’re right. It’s going to be secure. It’s not going to go away ‑‑ unless United States goes away, which is highly unlikely in the near future ‑‑ but if you don’t stay ahead of inflation, you don’t stay above ‑‑ usually it’s three percent is what people put out there when you look at the Consumer Price Index which monitors inflation ‑‑ if you don’t keep your money at earning more than three percent, one way of looking at your cash is that it is actually earning a negative return.

Let’s say you got one percent return on your money, and this is how you prepared for your liquidity event, is putting it in treasuries or putting it in a cap account at a bank drawing one percent ‑‑ you need to think about your purchasing power is going to decrease by negative two percent every year.

Gary:  One thing to add on that, Bryan, is they’re paying taxes on that interest that they’re getting. It’s actually worse than that.

Bryan:  Yes, good point. Absolutely. This is what we enjoy doing with clients ‑‑ sitting down, looking at a strategy, educating them. I can’t tell you how often I’ve had, with clients, when you sit down with them, you tell them about that aspect of putting it in a bank and not getting above three percent and that they’re actually decreasing, when you look at inflation, because people understand inflation, then it’s like the light bulb comes on.

Gary:  It does.

Bryan:  A lot of times people haven’t ever even thought about that before, and that’s always been something that’s shocking to me, but that’s something that it’s OK to not know about this. This is why we have a profession, but we encourage you to get educated and learn about this, because this will help you structure how you deal with your liquidity events and, in this case, life insurance or inheritances.

David Rigg:  One of the concepts that we’re talking about here that really apply to everybody’s life is preparation. If you know you’re going to have one of these events, or even if you’re not, get with a financial advisor. Get a plan in place. Get a structure in place.

If one of these events happens to you ‑‑ if you get divorced and sell a house or change jobs or something like that ‑‑ you have some sort of a structure and plan already ready to go which will help you.

When people get overwhelmed, it’s when they had the liquidity event and they have no idea what to do with it. They have no idea who to go to talk to to get some ideas of how to deploy that money and get it working for you.

The number one important thing that I want to stress is, “Let’s get prepared.” Let’s think about what we’re doing. As kids we all heard fables, whether it was the boy who cried wolf or the crow dropping the stones in the pitcher to get the drink of water.

Then there was the one with the grasshopper and the ants. All summer long the ants worked really hard. The grasshopper wanted to lay around and play music and do whatever. Winter comes, and he’s in…

Gary:  Dire straits.

David:  He’s in dire straits. Let’s get prepared. Let’s think about that, and let’s get a structure in place for you.

Bryan:  One thing I continually emphasize throughout all these programs, and I can’t say it enough, because people are always horrified by this fact, is that 50 percent of all people today who retire have 50 percent less than what they need ‑‑ not than what they want, but than what they need.

That means 50 percent of the population needs to do a better job of planning. That means 50 percent of all the listeners right now [laughs] need to put a plan in place, and we would love to help you with that.

We’ve been talking about liquidity events. One thing I want to encourage people to think about that with insurance policies as well as with retirement accounts, beneficiaries are put on that. That also bypasses probate. That goes directly to the people who are the beneficiaries.

That’s one thing that, looking at liquidity events, you need to focus on and make sure that if you have a good dialogue and a good relationship with the people who have put you on as beneficiaries that you know, so you can plan for those liquidity events.

Also, conversely, it can help you if you are looking at estates that if there are some problems there, you can change. By way of illustration, there’s one person I know who was taking care of his father’s estate, and there was a life insurance policy that he found out that still had an old ex‑wife on it.

Once he had the power of attorney, he was taking care of the estate, he was taking care of his father…Once he found that out, he was able to go and he was able to change that beneficiary to he and three brothers that he had, and this allowed them to avert a disaster.

Obviously the father, who was incapacitated at this time, did not want it to go to his ex‑wife. Learning about this and getting involved ‑‑ here was a liquidity event that would have not have happened that suddenly these four brothers were able to benefit from.

This is very important to learn about the fundamentals of how these structures are set up and how they benefit people, and then like you were saying, Dave, once you get that cash then how to deploy it to take care of yourselves.

Another thing that we’ve talked about is changing of jobs. This is something that I encourage a lot of people to think about. I can’t tell you, guys, and you had the same experience, how often we sit down with people and we find they have three or four 401Ks just laying around with no direction.

They don’t know what offerings were in the old jobs. People move jobs an awful lot now. It’s not like it was 40, 50 years ago, where somebody stays at a job for 30 years, gets the gold watch and the pension when he retires.

As a result, a lot of times there is these 401Ks floating around. One thing that people do not understand and realize that they can do is that they can roll over that 401K into an IRA rollover account, an Individual Retirement Account, and that they can start managing it themselves.

They have a lot more options than what are usually in a 401K. We manage 401Ks here as well. We have a lot more options when we can roll it over into an IRA rollover account, and we encourage people to do that, because that is a liquidity event when you can move that stuff out and redeploy it and get a good compass heading on it.

You were about to say, Gary?

Gary:  Yeah, I wanted to let people know that we take a look at that, and where it’s appropriate and suitable we can help them roll that over. I think humor, it serves me well. It lessens the tension, but I often say, when I find out they have two, three, four 401Ks out there ‑‑ and some of them are sizeable…

There’s tens of thousands of dollars if not hundreds of thousands of dollars in those accounts, and I simply say, “I have two small kids. I don’t leave five bucks on the counter or it’s gone. Why would I leave $10,000 or $100,000 behind?”

One important point is you can have control over that now by rolling it over ‑‑ once again, where it’s appropriate and suitable ‑‑ but once you…We’re not saying take possession of it ‑‑ then we have tax consequences and we go down that rabbit hole ‑‑ but by having control, if you’re able to roll that over into an IRA, a rollover IRA, now you have control of how it’s invested.

You don’t have to rely on whatever options you had before. They may have been great options, but being an independent firm, we can do many of those same options that they had or we can either implement a new strategy or dovetail and do a combination.

Bryan:  One thing I want to reiterate there is knowing that these assets are out there and that you haven’t done anything with it, getting coordination, getting accounts consolidated is very important. What I’ve found that helps people with looking at liquidity events and looking at strategy is that when they take the 10 or 15 accounts that they had out there ‑‑ I’m being a little bit hyperbolic here.

Normally people have three or four accounts, but they don’t know what’s going on with them ‑‑ and then consolidating them in one, under one umbrella ‑‑ really helps give a clearer vision of what to do and to strategize.

Another thing I wanted to reiterate is a lot of times, sometimes people with these retirement accounts, if they’re the beneficiaries, sometimes they don’t know about it, and sometimes the institution that’s managing it doesn’t know about it. That’s something else that we can help, by finding lost assets.

One thing I encourage people to do is look at lostmoney.com. There’s a lot of accounts out there that people are beneficiaries of or should be inheriting and they don’t know. We can help out with that, as well.

Please stay tuned. We’re going to be breaking away for a commercial break here, but back in a few minutes. Please feel free to visit our website at riggwealthmanagement.com, that’s RIGG with two Gs, R‑I‑G‑G wealthmanagement.com.

Also, please call us at 972‑383‑1210. Again, that’s 972‑383‑1210, and come in and let’s talk about what your goals are, what your estate planning is, and what liquidity events you may be having. It’s a no‑charge, complimentary consultation that we’ll do with you.

Please stay tuned. We’ll be back very shortly.

Rigg Radio Show 7 Segment 4

Bryan Rigg:  Good afternoon, ladies and gentlemen. Thank you for tuning in. You’re with Bryan Rigg at RIGG Wealth Management, and I’m here with my two partners, Gary Bilyeu and David Rigg.

We’ve been talking about liquidity events, and we have been discussing inheritance and change of job liquidity events. If you’re just tuning in and you’d like to learn about those two areas that we’ve already explored, please, go to our website.

Everything is podcasted through that, and you can listen to our radio shows ‑‑ all the radio shows we’ve been doing for the last couple of months ‑‑ on our Web page at riggwealthmanagement.com. That’s RIGG with two Gs, R‑I‑G‑G‑wealthmanagement.com.

In this last segment today, we’ll be discussing two other liquidity events that we wanted to focus on. One is divorce and the other one is the sale of a home. Quite often I have found when I dealt with, especially single women who’ve just gone through a divorce.

Especially if they’re older and come from that generation where they were homemakers and they didn’t deal a lot with the finances and that was something that the man did ‑‑ if they’re in their 60s and 70s ‑‑ they don’t know what to do with that liquidity event that that divorce creates.

That’s something I’ve found, especially David and I, who were raised by a single mother and single grandmother, that…Our grandmother did a very good job with financial management, but a lot of times they don’t know what to do.

Sitting down and helping them get a plan in place ‑‑ how they’re going to support themselves, where they should go with different financial instruments ‑‑ is something I’ve found that they really appreciate and quite often is the first time they’ve ever had that conversation because they haven’t paid attention to it.

Now, with younger people, we’re having liquidity events on both sides. Sometimes the woman is the breadwinner, so we’re seeing more now that divorce is an equal opportunity for a male and female as far as liquidity events, and quite often people in general, even if they’ve had some financial experience, have not planned for that liquidity event.

Many of them have never planned for that divorce that hit them, blindsided them. That’s something that I think is very important to look at because divorces change a lot of things about the strategy.

You have to rethink about the new reality you’re going to be living in, the new expectations, and that’s something that we’ve all had experience with divorce with our own families or ourselves.

50 percent of the population is divorced, and that is something that is important to look at because that is something that when you’re in the fog of all that divorce ‑‑ and a lot of times it’s very traumatic for people.

That’s where I think a financial advisor can really earn his keep by helping you focus on planning and doing a good job of strategizing and taking that off your table while you’re going through that divorce or while you’re healing after the divorce is final.

We will be talking about that more in this segment. Also, the other liquidity event we want to talk about is the sale of a home. Some people think, maybe they have rent homes, they’re going to sell that.

One benchmark that I like to tell people is that if they’re going to sale a home later on…If they’re going to buy it right now and in the meantime and rent it out, let’s say. Usually, you use 150 from a month, that’s like 12.3 years, 12 and a half years, and you look at what the rent is per month.

Times it by 150, and that will give you a kind of feel of the value of that home and what you can expect from that. That could be a liquidity event in some respects, as far as the cash flow off the home and then the value of that home when you sell it.

Then the primary home, when you sell it, a lot of people don’t understand basic things. If you’re married and you sell a home, $500,000 profit on that home is tax‑free. If you’re single, it’s only 250,000. These are things that we can talk about, strategizing how you can form a plan once you sell that home.

We encourage you not to think of your home as the liquidity event that’s going to provide for your retirement, but a lot of people do that, and as a result, we will bring that as part of the plan. These are the two themes I want to end the segment with today, and that is divorce and the sale of a home. David?

David Rigg:  Yeah. When you start talking about divorces, sell of a home, job changes or inheritance, everybody that’s listening has probably been affected by one of those at some point in their life. They may have mishandled that in the past. We have all made mistakes in our past, whether it’s financial or whatever.

It’s important to learn from that. Let’s get together, talk, find out what your needs are and get a plan in place so that when these events happen in the future, even if you’ve mishandled something in the past, that we are able to capitalize and take advantage of these situations.

We’ve all had friends of ours that have changed jobs or lost jobs. If you were in the real estate industry or the construction industry in 2008 or 2009, there was tremendous upheaval, and we all know people that were in those industries and have had to change.

They’re embarrassed now because of what they had or they had to live on their 401(k)s or pull money out or whatever they had to do to survive at that point. Don’t be embarrassed about mistakes that have happened.

Don’t be embarrassed about situations that you’ve been put into, whether it’s a divorce situation or whatever. We’re here to try to help you move forward from that point or any future event that you’re going to have.

Gary Bilyeu:  Can I say something, Bryan?

Bryan:  Yeah, Gary.

Gary:  I’m surprised at how many times I hear exactly what you said, Dave, that they were embarrassed. It’s not a mistake. It may be an error, but I coach Little League baseball. I coach my two sons in baseball ‑‑ 10 and 12 years old ‑‑ and I tell the boys every day, every practice ‑‑ we do not have a zero-defects mentality.

We don’t have that mentality here at RIGG Wealth Management. You’re going to make mistakes. We know that. You’re going to make mistakes. It’s what you do after you make the mistake.

I tell the boys, “If the ball goes under your legs, don’t throw your glove down, throw your hat down. Everybody knows you made a mistake. You know you made a mistake, but fix your hat, get up there, and have that attitude, ‘Hit me the ball. I want the ball. I’m ready to make up for it.'”

That’s all we’re doing. There’s no shame in it. We all have to get started. I’ve said it many times, we’re not born with a high financial IQ. It’s learned over time. We had to learn it, but we focus…That’s our profession, so we focus on the financial IQ, and we can help you improve yours.

Bryan:  Yes, and that reminds me of “Woody” Williams, a famous Marine Corps NCO of World War II, a Medal of Honor recipient from Iwo Jima. I have the honor of writing his biography. I’m working on that right now, walked Iwo Jima with him.

One thing that he said to me that resonates all the time and now, he says, “It’s not so much what happens to your life. Anything’s possible in life ‑‑ mistakes and disasters and that sort ‑‑ but it’s how you respond. It’s how you respond. It’s how you learn from those mistakes. It’s how you respond to the situation, how you have planned for different eventualities.”

It’s like that old phrase, “It’s better to be prepared for a situation and not have it than to have the situation and not be prepared.” Quite often when it comes to the financial management and finessing these liquidity events, we find that people have done no preparation, which goes to your point, Dave, that that’s not the good solution here.

We encourage you to come in and talk to us, sit down with any one of us and go over what your fears are, what your frustrations are. In some respects, we’re like a financial doctor in that respect, that you can tell us what your innermost fears are about finances in the future, and hopefully, we can alleviate some of those fears by getting a plan in place.

These are the type of issues that we here at RIGG Wealth Management like to explore, like to help, what we consider financial planning and financial strategies. We encourage you to continue to listen to us every week on KLIF from 1:00 to 2:00 on Sundays, and we’ll be talking about these issues.

We also encourage you to visit our website at riggwealthmanagement.com. That’s RIGG with two Gs, R‑I‑G‑G‑wealthmanagement.com. You can see the biographies of Gary, David and I on there and learn more about us.

If you’ve missed our radio programs from the past, they’re all streamed through that Web page. Also, you can contact us through our web page and set up an appointment. Our telephone number is 972‑383‑1210. Again, that’s 972‑383‑1210.

Please, feel free to call us and set up a no‑charge, complimentary consultation. We’ll put, like Gary said, a pot of hot coffee, if you’re a coffee drinker, a hot pot of coffee on, and sit down with you as long as you need. Please, have a good day, and again, thank you so much for tuning in.