What Do Banks Do With Our Money?

July 2, 2017 – Wealth Strategy with Bryan Rigg, Your Wealth Professor
Listen In Every Week: Saturday on WRR from 7:00-8:00 am / Sundays on 570 KLIF

Coming up today, we’re going to talk about stock markets being up and they’re down. Is it anything to worry about? Do we need to watch and worry about it?

We’ll also talk about what banks ‑‑ what they do with our money when we give it to them for savings and checking.

We talked off air about what we do with our kids, and how we raise our families, and how finance and savings and taxes really aren’t part of a conversation at the dinner table, but it really should be. We’re going to talk about what these guys do and what their suggestions are to get financing and savings in early at home.

Then we’re going to spend a segment to close out the show to learn a little bit about Gary and David, who both work with Bryan. You can call and ask for them directly if you are indeed charmed by their abilities and intellect.

LISTEN TO THE SHOW HERE

DISCLOSURE:

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.

SHOW TRANSCRIPT

SEGMENT 1

Rob Dalton:  Welcome, welcome to your weekend. We are appreciative of the fact that you have us along with you this weekend. This is the show, “Wealth Strategy with Bryan Rigg.”

I’ve got two guests with me in studio. Bryan, our wealth professor, happens to be on vacation. It is summer and everyone does take summer vacation, and Bryan is not excluded.

He gets family time. He’s away, so we have two people in studio today that actually work with Bryan day in and day out.

Who do we have in studio, guys?

Gary Bilyeu:  I’m Gary Bilyeu.

David Rigg:  And I’m David Rigg.

Rob:  These guys work with him. David, give us a little bit about you and what you do with Bryan.

David:  I partner with Bryan. We are involved with Rigg Wealth Management, both myself and Gary. We work together with Bryan on a daily basis.

Rob:  And Gary?

Gary:  Well, Dave, don’t forget you’re the big brother.

[laughter]

David:  That, too.

Gary:  We all have the Marine Corps connection. I’ve known Bryan and worked with him since 2005. My background started out in insurance. Bryan brought me over to the dark side of financial advising.

Rob:  Good. We’re going to stick around and talk about the dark side for the next one hour. These guys are going to be with me. We’ll talk about some different items.

What we do here during the Wealth Strategies with Bryan Rigg show is we talk about finance. It’s not something people are comfortable with at home. We don’t talk about it at the dinner table, but sometimes you talk about it at work when we’re working with our own 401ks, maybe employer contributions.

We all need to know more than what we currently do. We’re here to talk about it with you and for you. We want to educate you.

We take some of the bigger terms and a lot of the acronyms and we break them down into bite‑sized, digestible pieces. We hope to keep things light and lively for you to understand. If you can learn two or three things over the next one hour then we’ve done our job.

Coming up today, we’re going to talk about stock markets being up and they’re down. Is it anything to worry about? Do we need to watch and worry about it?

We’ll also talk about what banks ‑‑ what they do with our money when we give it to them for savings and checking.

We talked off air about what we do with our kids, and how we raise our families, and how finance and savings and taxes really aren’t part of a conversation at the dinner table, but it really should be. We’re going to talk about what these guys do and what their suggestions are to get financing and savings in early at home.

Then we’re going to spend a segment to close out the show to learn a little bit about Gary and David, who both work with Bryan. You can call and ask for them directly if you are indeed charmed by their abilities and intellect.

First, we want to take a moment and say thank you. Thank you for making us part of your weekend. We are here for the next hour. We’ll be back next week at the same time talking about the same things, just different topics.

First, we’re going to start out with a question about markets. People say markets are up and they say they’re down. It varies every day, but what exactly does that mean. David?

David:  Well, you’re really talking, when you say the Dow Jones.

Rob:  Dow Jones, let’s do that.

David:  That’s 30 large companies. We’re talking companies like General Electric, Exxon Mobile, but it’s such a small slice. It’s only 30 of them.

Rob:  30, OK.

David:  When they say the market’s up, they’re talking about those 30 companies, the average is traded up over the previous day. It’s not anything to really be worried about, especially if you’re not invested in those particular companies.

It is a slight litmus test or bellwether, maybe, for the general economy over time. They can fluctuate daily and they do. That’s not something to get upset about.

Rob:  We don’t have to lose any sleep over it.

Gary:  Can I jump in there on that? We get that question every day. The market’s up. My account’s not. Or the market’s down and my account is up. What’s going on?

That’s the first thing, is to understand, “What do you mean when you say the market?” If you’re talking about the Dow Jones, that’s one index, one indicator of many. We really get into the weeds about what market are you talking about. If it’s Dow Jones, then you’re talking about 30 of the largest companies.

You find that that’s pretty much the extent of the financial knowledge with a lot of people. The market’s up or the market’s down. That’s where it ends.

Rob:  That’s where it ends because they hear it on the news. Even ABC and CBS News, at the end of their…before what they call the bumper before it goes to commercial break, you’ll see the ticker on the bottom.

That’s why I brought it up. People see it but they really don’t know what it means. You’re saying the Dow Jones is only 30.

David:  That’s it, and there’s a formula that they calculate how those stocks, how it’s allocated. It’s a very complicated formula.

Rob:  Sure it is.

David:  But unless you’re invested identically in those 30 and weighted exactly like the index is weighted then you’re not going to have what we call a correlation, a one correlation. The market goes up, your portfolio goes up with it. If it’s down, it’s down.

You see a lot of that in mutual funds.

Rob:  Well, Gary, let me ask you. The S&P 500, also mentioned ‑‑ it’s like an A and a B when they talk about it on the news. Help me understand the S&P.

Gary:  The S&P is Standard and Poor. That’s the S&P 500. Like the name implies, that’s 500 large companies. These are the companies that are traded on the New York Stock Exchange and/or the NASDAQ.

Now it’s a little broader index. Instead of just the 30 with the Dow Jones, now we’re with 500, so a little bit more diversification there.

Rob:  That’s why that one doesn’t move so much.

Gary:  Right. Unless you’re invested identical to that index, the market shouldn’t have that much of an impact on your portfolio. It depends on the strategy you’re using.

I mentioned it earlier. We have clients that say, “The stock market is down but my accounts are up. What’s going on?”

We’re not tied. We invest differently. We’re looking for, depending on the objective of the client and what’s appropriate to them…we use a lot of dividend paying holdings that pay monthly and quarterly.

We’re not concerned. The only time you should really be concerned, because when the market goes up or goes down it’s not an issue unless you’re selling. It’s all a paper gain or a paper loss.

If your time horizon is 5, 10, 15 years you shouldn’t be concerned. We have a good friend of ours, Art Dinken, that says, “Investing is like walking up a flight of stairs with a yo‑yo.” The daily changes are the yo‑yo, but over time the market is…traditionally, it goes up.

Rob:  Like stairs.

Gary:  Like stairs.

Rob:  I get that. That’s a good analogy.

I want to remind people that when you hear of the Dow Jones and the S&P it’s only, as we decided, 530 stocks. They’re large caps but…

Gary:  That’s good math. You did the math right.

Rob:  Without a calculator. Again.

David:  I was told there would be no math.

The other thing people have to understand, these are specific companies. When we start talking about mutual funds or exchange traded funds or limited partnerships or any of the other things you can invest in, this has no bearing on any of that. That’s not included anywhere.

When people start talking about the market, what is the market? You just eliminated all of that out of the market when you start talking about S&P or the Dow Jones. It is still ‑‑ even at 530 companies ‑‑ a very small slice of what’s actually available out there.

Rob:  That’s true. It isn’t always a direct reflection of the economy.

David:  No, not necessarily.

Rob:  It’s barely a thumbnail‑print.

Gary:  Right. Most of our clients are…what we try to educate them on is we’re more concerned about the day that you decide to stop working. When you stop working you have no more earned income. That’s the day that transition, or that baton, is passed to your cash cow, your nest egg, your retirement account.

When your earned income stops you need to look at your retirement account and look at it from the perspective of how much does it generate in income for you each month or each quarter.

And so, with our way of investing we’re more concerned about the dividends that it pays.

Rob:  That it pays, right. I’m guessing, I know with mine a lot of my holdings, in essence, are diversified into much smaller companies because the bigger ones actually cost more, like Apple and Google and things like that.

Gary:  Yes.

Rob:  It’s an index.

Gary:  If you’re looking at just stock prices, yes, there could be variations. Some could cost more but when we’re in exchange‑traded funds we may be diversified…we may hold that one fund but it may hold many, many different holdings inside that.

Once again, we’re looking to what your portfolio generates in income, whether you need it now or at a future point in time.

Rob:  15 years from now.

Gary:  Right.

Rob:  I get it.

Gary:  If the market’s up today and you’re not looking to sell, great. We don’t get a lot of phone calls, people saying, “Hey, the market’s up. Great. My account is up 5, 10, 15 percent.”

We get plenty of calls when it’s down. Once again, if you’re not selling for another 5, 10, 15 years it’s really not…

Rob:  It’s just a loss on paper.

Gary:  It is.

David:  It is, and it’s actually an opportunity, especially if you’re reinvesting your dividends and reinvesting what you’re making off your portfolio. If the market’s down, you’re getting shares cheaper.

Gary:  And it’s all about shares. Dividends are paid on the number of shares. If the market does drop and we’re reinvesting those dividends and we’re buying more shares, well, the hope is that we are going to get bigger dividends the next month or the next quarter, the next time they pay.

Rob:  Great point.

When you watch the news or you listen to the radio and you hear the Dow Jones and the S&P, pay attention but don’t pay much attention. Don’t lose any sleep over it. It’s just an index. It’s just a number but it doesn’t always…

Gary:  As you get closer to retirement, then yes. We pay more and more attention to that but we’re tracking it a lot more closely.

Rob:  David, if people have questions about the Dow Jones and the S&P, can they call you? What’s the number?

David:  Absolutely. Call us at (972) 383‑1210.

Rob:  Gary, what’s the website if they want to send you an email?

Gary:  It’s www.RiggWealthManagement.com. That’s R‑I‑G‑G WealthManagement ‑‑ all spelled out ‑‑ dot com.

Rob:  Great.

Coming up in the next segment we’re going to talk about banks. We all use them for checking and savings and some CDs, but what exactly do they do with our money? We’ll be back after the break.

SEGMENT 2

Rob Dalton:  Welcome back from break. This is “Wealth Strategy with Bryan Rigg,” Bryan on vacation, and so I have a couple of guys in the studio today that work with Bryan on a daily basis. Gentlemen, your names, please.

Gary Bilyeu:  I’m Gary Bilyeu.

David Rigg:  And I’m David Rigg.

Rob:  These guys work with Bryan day in and day out, and you can reach them directly by reaching Rigg Wealth Management right here in North Dallas on Spring Valley.

The last break, we talked about the markets. If you missed it, we talked about the Dow Jones and the S&P 500. Coming up next, this segment’s going to talk about banks.

We all can relate to banks. They’re everywhere. They’re on every corner like 7‑Elevens and such, QTs and Racetracs. You can’t drive to one bank without driving by another bank. They’re everywhere.

We make deposits. We use them for savings. We use them for checking. We give them so much of our money ‑‑ which is fine ‑‑ but you don’t get a lot of return on that. It might be safe, but there’s…

What is it that they do? Gary, I’ll start with you. Let’s say we have $22,000 in savings. What are they doing with that money, exactly?

Gary:  I’m sure all of our listeners have dealings with the banks. You’ve already mentioned that. It’s not here to define banks, it’s really to talk about what they can do for you. A lot of people are willing to invest their money with banks.

They’re a lending organization. If you’re placing your money with them, for whatever your objective is, they are taking that money, and they are lending it to other clients. They may pay you a small percentage on that, but they’re receiving a lot more for those that they are loaning the money to. They’re lending institutions.

One of the things that people like about banks is, you said it, the safety. They like the guarantees, and with the accounts, they have the FDIC insurance, the depository insurance on each account up to $250,000 per account ‑‑ so the safety of it.

But you come back to the risk/reward. Traditionally, the more risk you’re willing to stomach, the potential for greater reward. Banks are one of the safest.

Rob:  Safest.

Gary:  It’s safety. Conservative, ultra‑conservative people will put the majority of their money in banks, but they may not be beating, and this is what, at Rigg Wealth Management, we’re always focused on ‑‑ that’s the rate of inflation. Traditionally, it’s historically three percent.

If you’re not achieving at least three percent on your investment, then you’re running a risk called purchasing power risk, meaning the money you have today will not buy as much in the future. That’s really a starting point for us. If your bank is paying you less than three percent, sure you have the safety, but you’re not necessarily getting ahead, if that makes sense.

Rob:  [laughs] You’re not.

Gary:  That’s easy math that even Dave can do.

[crosstalk]

Rob:  David, we were talking about safety and risk. What is the reward of using a bank for savings?

David:  I think access. It’s easy to get it, normally. You show up and use it. You’re comfortable with it. I think that’s most of the reason people use it.

It’s the same bank that they have a checking account. It’s the same bank that they’ve always used for 20 or 30 years.

When you talk about what a bank does with their money, I think an illustration that’s easy to understand, if everybody remembers the movie “It’s a Wonderful Life,” when they had the bank run. George Bailey’s there pulling his hair out, and everybody wants their money.

He goes, “Well, I don’t have the money here. It’s in Joe’s house, and it’s in Bill’s business,” and that sort of stuff. That’s what they’re doing with your money. Your money is not sitting in the bank.

Rob:  It’s diversified.

David:  Exactly.

[crosstalk]

Gary:  Can I add one thing to that? My grandparents liked the bank because they could walk in and deal with their banker. I tell people, “Well, you can walk in our office and deal with us.” They want to deal with a person face‑to‑face, and that’s a service we offer.

Rob:  They do, right. It is.

Gary:  Come see us, or come see you.

Rob:  And an online service as well. You guys offer the online service.

David:  Absolutely.

Rob:  Those that aren’t good with the face‑to‑face, or it’s not convenient, scheduling an appointment, they have access to their accounts online.

David:  Absolutely, and as far as access to your money, typically, we’re three business days to get access to your money, if that’s what you want to do.

Rob:  I was asking about return, and risk and reward. I know that they savings account that I have, I don’t a lot in, but I’m getting like 0.35 percent. That’s not very good.

Gary:  Yeah, and by the way, you’re paying taxes on that interest as well, so it’s actually going be less than that.

Rob:  [laughs] Ouch.

David:  An even better deal.

Rob:  You were mentioning that doesn’t keep up with the rate of inflation.

Gary:  It doesn’t. Listen, we’re not disparaging any of the financial institutions out there. Banks have a purpose, and that’s where we sit down and talk to our clients.

Rob:  Of course not.

Gary:  We need to understand what you’re trying to achieve, and understanding your risk tolerance, your time horizon, those type of things. If you have a ultra‑low risk tolerance, then you know what? Banks and CDs, certificates of deposits ‑‑ CDs may be the appropriate investment for you.

We don’t give recommendations until we sit down, visit with the clients, and understand what they’re trying to achieve. Otherwise, in my opinion, if you came to me and said, “I have x number of dollars. Where should I put it?” and I give you a recommendation without asking you a half dozen or a dozen questions, then really, I’m selling you a product.

We don’t sell products. We don’t do that at Rigg Wealth Management.

Rob:  We mentioned CDs. David, what is a CD, exactly? I think I know, but…

David:  A certificate of deposit is what it basically is. The bank will take your money, and they’ll pay you a set rate, basically, for the use of your money.

Gary:  For a certain period of time.

David:  For a certain period of time.

Rob:  Six months, two years, whatever you determine.

Gary:  Yeah, and usually, the longer you have your money tied up with the bank, the higher the interest rate.

Rob:  Because they can use it more.

Gary:  Right, but once again, if you’re not achieving that three percent or greater, then you’re running the risk of purchasing power risk.

David:  You’re going backwards. The use of a bank is really for your personal comfort level. If you’re more concerned with not losing money, rather than making money…Just like we talked about, purchasing power. It may be entirely suitable for you.

Rob:  It might work.

David:  It might work for you.

Rob:  It might be enough. Speaking of that, speaking of banks, and we talked about savings, checking. I was thinking the other day. I was having a dinner, and I got to thinking about how much is too much to keep in a checking account?

Everyone has their own comfort value. Some people, it’s five. Some people it’s $3,000, just to keep in the checking, but at some point, how much is too much to just sit there and waste away. Is there a bar? Does it matter?

[crosstalk]

David:  I think you hit the nail on the head. It’s according to the person’s own comfort level. What are they comfortable being able to write a check for? I kind of think you get past a couple month’s salary, you’re probably better off taking the rest of that money and trying to make some money with it.

Rob:  Make some money, because otherwise, the bank is taking that money, and they’re making money on it.

David:  Absolutely.

Rob:  You can do the same thing by taking some of that out.

David:  But that’s my own personal threshold.

Rob:  Right. I was asking as a gauge.

Gary:  A lot of people will keep an emergency fund there, and that maybe three months, it may be six months. Heck, it may be a year.

Rob:  That might be better in savings than checking.

Gary:  Sure. They want access, and tangible dollars. There’s a lot done over the Internet, and a lot of paper transactions, but you know what? There’s still a lot of people out there that just wants cold, hard cash.

Rob:  And access.

[crosstalk]

Gary:  A tangible asset, absolutely.

David:  Which, there’s very few things in our life, though, that you can’t wait three business days. I want people to think about that. Is it really worth having all of that in a checking account?

For instant access, you can go write a check. That’s fine. But is there anything that happens to us normally that you can’t wait three days?

Rob:  That’s how quickly you guys can…

David:  That’s how quickly we can get it to you.

[crosstalk]

Gary:  Most people look at banks…There’s a hard line there. Banks, they think, are safe. They think they have access to immediately, and they do.

But if you mention anything other than a bank, then it’s risky. “The market.” “Oh, that’s risky.” Well, it can be, but it doesn’t have to be.

Rob:  It doesn’t have to be.

Gary:  No. There’s very few products that have the guarantee, and that’s why people like that FDIC insurance. Depending on your risk tolerance, if you’re willing to accept a little bit more risk ‑‑ it doesn’t have to be a whole lot more ‑‑ but if you’re willing to accept some more risk, then that 0.35 percent could be 1.35 percent, 2.35 percent, or 4 or 5. It depends on your risk tolerance and what you’re trying to achieve.

Rob:  It just depends. The banks use our money to make money. When we invest our money with Rigg Wealth Management, we have that opportunity to make that same money, but we get to keep it ourselves.

I want to remind everyone that when you buy services here in the great United States of America, you’re going to pay somebody to do the work for you, and you guys are no different, right?

Gary:  Correct.

Rob:  You guys have service fees, but I want to mention that the service fees are not like a CPA or a lawyer, where you’re going to pay…

Gary:  By the hour.

Rob:  …$350 per hour.

Gary:  No.

Rob:  Can you help people understand how you guys…?

Gary:  Sure.

Rob:  And it’s people make money on their money. You make money on your clients’ money. That’s just the American way, but define how you guys do that.

Gary:  There’s two ways that financial advisors are compensated. They’re either paid commission, or they’re fee‑based.

As financial advisors, we’re almost entirely fee‑based, and like you said, it’s not by the hour. We earn a fee based on assets under management, or AUM. We charge a flat one percent.

Rob:  So the more money you’re managing, the more money you make, and the less money that you’re managing, the less money. Go ahead.

Gary:  Correct, and one very important point is ‑‑ we put this out there ‑‑ so you should ask your financial advisor, “How are you being compensated?” We’ll tell you how we are, and one important point is we’re paid in arrears, meaning you bring $100 to us, and we get it invested, we don’t make our fee until the next month. We get paid on the back end instead of the front end.

Rob:  Instead of up front.

Gary:  Yeah. A very important concept. All your money goes to work for you.

Rob:  David, if someone has a question about all this, where can they call you?

David:  They can call us at 972‑383‑1210.

Rob:  Gary, the website?

Gary:  The website, www.riggwealthmanagement.com. That’s riggwealthmanagement, all spelled out, .com.

Rob:  You guys are great at answering the voicemails and the emails, too. I encourage people to send emails.

[crosstalk]

Gary:  Yeah. We have a contact inquiry, so if you have a question, send it to us, and our policy is 24‑48 hours, we’ll get back with you.

Rob:  We’ll be back after these messages.

SEGMENT 3

Rob Dalton:  Welcome back. I am Rob Dalton. With me today are…

Gary Bilyeu:  Gary Bilyeu.

David Rigg:  And David Rigg.

Rob:  These guys work with Bryan Rigg, who’s on vacation this week. We’re trying to fill in and add as much volume and character, and integrity, for that matter, as if he were here. Thanks for sticking with us through the break. We appreciate you being here, and thanks for being here this hour.

We’re here to talk about financial wealth, managing money, and saving money ‑‑ how to save it, where to put it, and how to diversify it. These guys, they live this vocabulary, they live this industry, and they’re here to help you understand what they do, and sometimes, what you can do yourself to make your life a little better later on in retirement, by saving.

On this particular segment, we’re going to talk about training our families about savings and finance. I want to have some fun with this, because most of us have kids, and those of you listening that don’t, you probably will someday soon.

I, myself, I’ve got two sons. Most us, again, out there, have kids. Schools don’t teach finance. They teach kids how to count money in elementary school, but they never talk about financing, saving, or managing money. Guys, any reason why or why not? Is it just too complicated?

Gary:  Complicated, yes, but education is how you mitigate some of the complexity of it. Educating yourself. None of us are born with a high financial IQ, but we put in the time to learn about money and financing. That makes it easier, with any subject that we go…

[crosstalk]

Rob:  The more we talk about it, the easier it is to talk about.

Gary:  I think so.

Rob:  I do, too. David, they don’t teach it in schools. Are they getting better at it, or are they trying to ignore.

David:  No, I don’t think they ever have. I think they’ll do some very basic things, and then if you took some business courses or something like that in high school ‑‑ I remember they offered some of that, but not much, and it was very basic.

I don’t know why it’s not really developed or focused on. It should be, at least to a certain level. I think that it puts the load on the family, or whoever’s handling the finances in the home, to try to generate some interest, and it creates an education of some sort.

Rob:  And a comfort level.

David:  And a comfort level with it, absolutely. I think one of the best ways to teach your children is the mistakes that you’ve made. Share that with them. We’ve all made financial mistakes.

Rob:  You can learn what not to do, but you can also learn what to do. They are both lessons.

David:  Absolutely. When I got out of college, went and bought the new car. The first one, whatever the interest rate was, I had to have it, you know?

[laughter]

David:  That was not a good plan. Share that with your kids, so they don’t do the same mistakes, examples like that.

Rob:  It’s funny you say that, because I did much the same thing when my boys were both around 16. I showed them one of my credit card statements to show them how much of the minimal payment is actually interest. I had to show them a second time, because they just didn’t…”Really? You…?”

It took some time for them to understand, because it was so foreign to them. You have to go back a couple of times, and make sure they absorb it.

David:  Make sure they understand that you will have to be reincarnated three times to actually pay that card off, if you’re paying the minimal. It’s just not going to happen. It’ll never happen.

[laughter]

Rob:  And it’s not worth coming back.

David:  No.

Rob:  No, [laughs] to do that.

David:  No.

Gary:  David, you mentioned that there may be some electives in high school, but really, the first opportunity to learn anything significant about money is usually in college. With the ability, and the easy access to credit cards, so many people are already in trouble by the time they take that class.

You graduate high school, there are so many credit cards willing to give you that piece of plastic so you can have anything at a swipe. By that time, people are in debt. They just are, and unless you focus on getting that debt resolved and paying it off, that problem doesn’t get better with time. In fact, it gets worse.

Rob:  It gets worse, and I remember having this conversation with my sons when they first started college as a freshman. He got a card at the college.

David:  Sure, they’ll give it to them right there.

Rob:  He had a $3,500 spending limit, and he got it pretty close to the limit pretty quick. I said, “That $3,500 is not a savings account.” They see it as a balance maximum. “I’ve got $3,500 in savings I can use…”

David:  Yeah, “Look what I have available.”

Rob:  In their mind, it’s the closest thing they can relate it to is savings, but it’s…

David:  Not only that, you start talking student loans on top of it. That is so easy to access as well.

Rob:  Sure, it is.

David:  They’re coming out of college with six‑figure in debt.

Gary:  When you have the ability to defer payments, you lose sight of it. That’s why there’s some people that give financial advice out there that say, “Pay with money.” That’s not a bad thing.

If you have that money, and you’re able to pay and see exactly what’s coming out, it’s not just a swipe of a card, but you are counting out those green dollar bills and paying, you’re a little more conscious of what you’re spending.

Rob:  You see the value. There’s the value of it, too.

You guys are both parents. What have you done with your kids? David, we’ll start with you.

David:  Like I shared earlier, I try to share my personal experience of what’s worked, what hasn’t worked. I was kind of like what Gary was describing. I always had an interest in finances and in the financial world, but I didn’t get really involved until much later in life, way into my 30s, probably, before I really started thinking about what I was going to do when I quit working.

Rob:  The future.

David:  Absolutely, because at some point, watching my father and what happened to him, that was a lesson. “Oh, wow. I don’t want to be in that particular situation. How do I change that? How do I do things differently?”

I’ve tried to share that with my children so that they don’t have that same mistake, so they don’t wait so long to get started. Like we’ve talked many times before on many of these shows, our business is basically two parts ‑‑ it’s time and money. The earlier you start, the easier it will be for you to obtain the goal of being able to retire.

Rob:  True. Gary?

Gary:  I’m a product of a middle‑class, blue collar family. I think the traditional blue‑collar family, there’s a few things you just don’t talk about over the dinner table ‑‑ politics and money.

Rob:  That’s true. And money.

Gary:  You just don’t talk about those things. Those two things affect our lives in so many different ways. We made the decision, my wife and I, we were going to break that mold. One of the things that I started talking to my boys about ‑‑ and they’re 10 and 12, about to be 11 and 13, and we’ve been doing this for many years.

Each one of them have three jars. They are labeled Give, Save, and Invest. Give, Save, and Invest.

Rob:  We all do that, to some degree.

Gary:  We do. But they have to make a conscious decision. At birthdays, Christmas, and different times of year, Grandma comes over and slips them a little money, something along those lines. They know they have to take 10 percent. Everything we do is about math.

One of my sons loves math. The other one hates it, but everything we do is about math. They have to calculate 10 percent. 10 percent comes off the top, and it goes to the Give jar. What we use that for is really at Christmas time, Little Angels, things like that.

Rob:  Actual giving away.

Gary:  Where they go and give, yes. And then saving. The Save jar, what we do is they have something in mind that they want to save for.

Rob:  Saving for a purpose.

Gary:  We put a dollar amount on that, maybe 50 bucks, maybe 100 bucks, and maybe more, but they choose the number. Grandma comes over, slips them some money. They take 10 percent off, put it in the Give jar. The rest of it goes to the save jar until they reach their goal.

Anything else goes to the investing jar. They get to save. They get to give. They understand those two concepts. It’s the investing piece that they struggle with, so what we did is we talked about them buying a gumball machine and placing it in a restaurant.

You have to buy the equipment, put it in there, replace it with gumballs, but when they saw that bag of quarters, they were hooked. They were hooked. They make a little more money, and they see. Now they understand the basic concept of investing.

Rob:  Even if it’s a small business like a gumball machine.

[laughter]

David:  That’s exactly what it is.

Gary:  I have a good one for taxes, as well. You mentioned that.

Rob:  I did. I was going to get to that. I want to hear that story.

Gary:  Taxes, difficult for most people, our listening audience, and even if you understand it, it’s kind of hard to digest.

David:  It’s always hard to digest. [laughs]

Gary:  Yes.

Rob:  No matter the age, yes.

Gary:  We are not advocating avoiding taxes. You should pay your taxes. But you know what? We want to reduce that burden wherever possible within the confines of the law. Very simple, we’re in line at Dairy Queen. The boys want a Blizzard.

Rob:  Blizzard, love Blizzards.

Gary:  I reach, get the Blizzard. They had it upside down, turned it, tested it, handed it to me. I take my bite, and said, “That’s the Daddy tax.”

[laughter]

Gary:  Their response was just like most people. “But wait. That’s mine.” That’s my money, or my Blizzard, but I took my tax off the top.

Rob:  The first one, and then the second one comes to the window.

Gary:  Yes, and if they’re really bad, I pass it to my wife, and she takes her tax.

[laughter]

Gary:  The bigger the size of Blizzard, the bigger the bites.

Rob:  The bigger the bite, the bigger the spoonful.

Gary:  That, they understand taxes. They still don’t know the details, but they understand the concept, for sure.

Rob:  I love that story, and that’s something you can do every time you go to Dairy Queen. Same thing with maybe…

Gary:  Yes. If my wife’s on a diet, she has to be paid her taxes first.

Rob:  We can do that with McDonald’s French fries, too. You take four French fries. That’s your French fries tax.

Gary:  Absolutely. When politics comes on, and we’re discussing that, “Do you want to raise taxes or reduce them?” Well, of course, my kids say, “Reduce,” and that means one smaller bite out of their Blizzard, or one less French fry.

Rob:  That works.

Gary:  Simple concept.

Rob:  Lots of small ways for the kids to grasp, but again, talking about it is the key thing. I know we talked about what we learned, and we need to teach our kids what not to do. I did something, on a personal note. I’m not proud of it, and I almost didn’t want to say something today, but I will, just for full disclosure.

I had no discussion growing up with my parents about money. I had zero understanding. In fact, I moved from upstate New York, around Rochester, down to Texas. Three days after I graduated high school, I was ready to come to Texas.

I did, and I went to UNT, up in Denton. No one told me about out‑of‑state tuition. I spent all of my savings on out‑of‑state tuition. No one told me the hazards of out‑of‑state tuition. I burned through everything I had in the first year.

Because I’d learned, I was making sure that my kids knew about those types of things. There’s ways to save money, and those mistakes not to make. You have to do those, but credit cards, savings, the power of investing, it needs to be communicated comfortably at the dinner table. You don’t need the big numbers, but the concepts, right?

David:  Absolutely. Yeah, communication. I think your family was probably like my family in that we didn’t communicate real well. Dad’s not going to tell you what he’s investing in. He’s not going to tell you how much he makes. He’s not going to do any of those things.

Rob:  Not going to show you statements.

David:  Not going to show you statements, and say, “This worked, this didn’t work.” Bryan and I found out about his investments much later in life. I think we do a better job now in today’s environment. Families do a better job of communicating, and they need to.

Gary:  You know, do as much as you can, and when you get to a culmination point where you have exceeded your experience or technical ability, then bring in a professional. Bring in a financial advisor that can take the ball from there, take the baton and run with it.

Rob:  Where can they get a hold of a professional like yourself?

Gary:  They can always call our office, and that number is 972‑383‑1210.

Rob:  You’ve got a website, too, David. What’s that?

David:  Yes, we do. It’s www.riggwealthmanagement.com.

Rob:  Great website, good resources. The phone number. You guys are great about answering emails. We’d like to see some of those emails once in a while, so ask a good question, and it might make it on air.

Gary:  Yeah. If they send that question, either general or specific, to us on email, we’ll get it answered.

Rob:  We’ll be back after these messages.

SEGMENT 4

Rob Dalton:  Welcome back from the break. We want to say thank you for listening to our WRR guests and our listeners. You bring us in every Saturday morning at 7:00 AM until 8:00, and it’s one of our favorite hours of our week, is getting to share the 101.1 FM airwaves with you. We’re so glad you’ve made us part of your morning today.

This particular segment is going to be what we call client stories, both horror stories, and some good stories. Rigg Wealth Management has been around for several years. My two guests today, Gary Bilyeu and David Rigg, they work with Bryan Rigg who’s actually on vacation today so he’s not in studio.

We have a couple of guys working with him. When we were off air between segments, we were talking about some of the good, and the bad, and the ugly of clients coming and going. Everyone’s got a good story, so we’re going to ask them for some client stories.

David, let me start with you. What’s a good story that these listeners can learn something from? We want our WR listeners to see that it’s not always perfect.

David Rigg:  No, no. Probably as far as the horror stories that I have, they’re just…we had a few clients that after the last downturn, 2008, 2009, as opposed to staying the course, we had mapped out a plan, and as opposed to staying on track they panicked.

They pulled their money out of the market, which is understandable with what all was going on. It’s a horrible feeling watching your life savings go down 30, 40, 50 percent.

Rob:  Even on paper you watch them dwindle.

David:  That’s the key. It’s on paper. Until you pull it out, you haven’t taken that loss.

Rob:  There’s no loss until you take it out.

David:  Exactly. We had clients take it out. We have clients that are probably 50 percent down. It’s hard to say exactly what the number is, but when you took the loss, a 50 percent loss back then, it’s very difficult to make that up.

Rob:  When you say that, what did they miss out on? I want to be clear.

David:  Well, the recovery.

Rob:  The recovery.

David:  Absolutely. There’s been some opportunity. Energy costs are down. If you got in at the right time then, you could have done very well. So there’s been several points of opportunity over that time frame, that they were not able to take advantage of.

Rob:  But if they had stayed the course?

David:  They’d be fine.

Rob:  Again as a financial adviser, you guys just advise.

David:  Absolutely.

Rob:  You don’t make decisions, the client makes they decision. If they decide to pull it out, you’re only doing what they ask.

David:  Yes. If the client calls up and says, “I want my money now,” you get their money now.

Gary Bilyeu:  It’s still their money.

David:  It’s still their money. Absolutely. Absolutely.

Rob:  If they get it out and they decide to put it back within a month, you could do that too if they changed their mind.

David:  Sure.

Rob:  If they have second thoughts. That’s good. It’s good advice. That’s an interesting story because one of the things we talked about with Brian every couple of weeks is that you invest when markets are down.

Gary:  Yeah. The contrarian view.

Rob:  The contrarian view. Thank you.

Gary:  When it’s all about dividends paid on a number of shares, wherever you get in you’re in. If the market does pull back a little bit and that price drops, your overall portfolio may be…the value may have been reduced. When you’re reinvesting those dividends on a monthly or a quarterly basis, you’re buying more shares.

Rob:  It’s creeping back up.

Gary:  If and when those prices rebound, you’re going to have some appreciation there and everybody feels good about it. Still, whether it’s a decrease or an increase unless you sell it’s a paper gain or paper loss. You haven’t realized anything.

Rob:  One of the things we were discussing earlier was annuities. Gary, you had a story about annuities.

Gary:  We’ll jump right to the ugly. [laughs] Those were the good.

Rob:  That’s a good lesson though. I want people to hear that.

Gary:  Early on, this is one of the accounts that Bryan and I were working with. It was a financial client of his that had an annuity, and it was an insurance product. Listen, annuities can be good products. They’re meant to solve a certain problem. This lady was approaching 80.

She was either at her 80th birthday or right a few months before. She had her life savings, and it was well over a million dollars tied up in two annuities. They had 10‑year‑surrender charges. For 10 years if she pulled that money out, she was going to incur a significant hit on that money.

Rob:  So she put money in annuities around 80, and she really couldn’t without penalty take it out until she was 90.

Gary:  In her products…all products are different.

Rob:  In general.

Gary:  She could take a minimum amount with no penalty.

Rob:  Sure.

Gary:  But she couldn’t access…

David:  A very optimistic person. [laughs]

Gary:  In my mind, in my opinion, I didn’t think that was an appropriate investment for her at her age with those surrender penalties, because they are substantial in the first couple of years. I didn’t think it was appropriate. Bryan and I worked together with that and contacted the necessary government agencies and of course, the carriers explained the case.

Lo and behold both of those companies agreed with us, and she was reimbursed that money with no penalties.

Rob:  Let me get to the point that I think is the lesson to be learned here. One of the flaws might have been that these are commission based.

Gary:  Those are, and they’re paid up front.

Rob:  Explain that to me. Why was an 80‑year‑old woman given $1.3 million worth of annuities?

Gary:  Well, that’s an interesting question.

Rob:  It is an interesting question. What I’m trying to get to in a roundabout that way is…

Gary:  In talking to this client, she was trying to solve a problem. She had no idea of the fees associated with that. Now, was there documentation? Did she sign it?

Rob:  Sure she did.

Gary:  Yes she did, but she didn’t have a good grasp and understanding. That’s what we do as financial advisers. We have a fiduciary responsibility, meaning we put the client’s needs and objectives ahead of ours and any of our carriers. So explaining those fees, that’s a huge part of what we do.

There’s a lot more paperwork when you’re a fee‑based adviser like we are because we explain all those. We put it right there in writing, “Here’s what it is going to cost you.” You need to know that. Those fees were significant, tens of thousands.

Rob:  The fees were significant, and the commission on the sale was significant.

Gary:  That’s the way it’s been.

Rob:  Someone was rewarded at the level that was…

David:  Absolutely. Right up front.

Rob:  Right up front.

Gary:  That’s a fire and forget product. It’s a contract between you the client and that company, that insurance company. There’s no advising with that.

Rob:  One thing I want to close on, is you guys are OK with second opinions. I want to mention that.

David:  Absolutely.

Gary:  Yeah.

Rob:  Both giving second opinions, and you’re OK with a client going to get someone else’s second opinion.

Gary:  Sure.

Rob:  Just like a doctor. It’s OK.

Gary:  You should see three advisers. We just want to be one of the three. Regardless of how many you see, you’re going to get that many different opinions on their vision, and their philosophy, and their concepts, and how they’re going to go about trying to meet your objectives. We just want to be one of the three.

David:  We do.

Gary:  We are very successful by just having our hat in the game.

Rob:  Getting the first complimentary consultation is obviously the hardest because you’ve got to break that threshold. Getting the second or third it should be easier, yes? David?

David:  Normally it is. Normally we sit down, we try to get to know the client. The client is going to start to feel a little more comfortable with us. They’re going to want to come back, and maybe see some specifics that we have worked up. It’s actually just curiosity, starts working out for us.

Gary:  But we’re not compensated on that second and third. We’re only compensated when assets are under management, when you actually move finances to us.

Rob:  Complimentary consultation. Who do they call, Gary?

Gary:  You can call us at Rigg Wealth Management. That number is 972‑383‑1210.

Rob:  Thank you so much. WR listeners, we’re glad you were here. Thank you for spending this hour with us. We want to see you next week, right here on Saturday morning at 7:00 AM on WRR. Thank you and have a great weekend.

SEGMENT 5

Rob Dalton:  Welcome back from the break. I am Rob Dalton. With me today are…

David Rigg:  David Rigg.

Gary Biyeu:  And Gary Biyeu.

Rob:  These gentlemen work with Brian Rigg every day. Brian, our wealth professor, is actually on vacation because it’s summer. Brian, he went on vacation first, and these guys get to go next. But without Brian here, we needed someone to talk finance.

They are here today helping you understand the world of finance. We’re going to take a moment so you can get to know them a little bit more. We’re going to talk this segment about Gary, about David. They’re going to describe and help you understand Brian’s roots, as well.

That way, if you ever do reach out to Rigg Wealth Management, you’ll know who you’re getting with. You’ll understand their integrity and their character, as well as their background and education in finance. As well as, we’ll talk about their incredible service to this country in the Marine Corps.

First, let’s talk about Brian. We’ll have some fun, and we’ll talk about Brian Rigg as if he’s not here, because, well frankly, he isn’t. What better time to talk about Brian than when he’s not here?

Gary:  This is only an hour show.

Rob:  [laughs] We’ve only got this one segment. In your own words, tell us about Brian, his background and why he’s so good at what he does.

Gary:  Dave, I’m going to defer to you as the big brother.

David:  I think part of the reason Brian does so well is he’s got a very diverse background, especially when you look at most people in the financial industry. Brian was a very successful and is a very successful historian. He’s a very successful author.

He’s going to bring a little bit different perspective than somebody who went right out of college into the financial industry.

Rob:  He will, and he does, yes.

David:  He does. He’s looking at things on a much more grander scale, maybe a macro version of what’s going on. Like we talked earlier in the show about variations in the market and things like that, he doesn’t get upset over that, because he’s looking at it over time, over history, what has the market actually done?

He brings a unique perspective to it due to his background. All three of us were in the Marines Corps. We have that in common. That brings a little bit different perspective to things. I’m not running through the woods, picking bugs off me, sweating to death. Things aren’t that bad. [laughs] Things are OK.

Rob:  Once upon a time, but…

David:  Once upon a time, exactly.

That allows you to also think about the big picture as well. Things aren’t that bad. Don’t worry about it right now. We used to say in the Marine Corps, “Never run when you can walk. Never walk when you can lie down. Never lie down when you can eat.”

[laughter]

David:  Things could be worse than what’s actually going on.

Rob:  Right, right. Gary, what’s it like working with Brian? What do you know about working with him?

Gary:  Well, Dave mentioned his pedigree, and that’s how I was first introduced to Brian. They were talking about his pedigree, that he went to Yale, did his undergrad in Yale. Then he went to Cambridge in England and got his masters and PhD.

As an infantry officer, my first thought was, “And then he joined the Marine Corps? How smart is this guy?”

Rob:  [laughs] Didn’t he learn anything?

Gary:  Yeah. Let’s face it, that’s a very impressive pedigree. A very knowledgeable person. Dave, is he on his fourth or fifth book?

David:  This will be his fifth book.

Rob:  The fifth book, yes.

Gary:  An accomplished author. Fascinating individual. He just is. With it being World War II, and my two boys are fascinated with World War II.

Rob:  He always had a story.

Gary:  Always has a story.

Rob:  Always has a story.

Gary:  Yeah. Everything he reads, he absorbs and can recall that at any given time. That ability is just amazing. That applies with this. Financial advising can be very complicated, and Brian is very good at what he does. He is. We learn something from him every day.

Rob:  That’s good.

Gary:  I don’t know. He probably learned something from Dave and myself, but as an infantry officer I don’t know how valuable that is.

David:  Yeah, a lot of times it’s negative learning, what not to do.

[laughter]

Rob:  David, tell me about yourself. You’ve been working there for a while. You’re Brian’s brother. You’re also a commercial airline pilot. How did you get into this realm?

David:  Into the financial realm?

Rob:  Yes.

David:  I’ve always been interested in it. Brian and I talked many years ago about working with him. I was excited to do that, just the chance to work with family. Also, I knew Brian was very successful in this world, has done very well. I was excited to do it, because I had no worries, zero worries about his integrity, about his honesty, and who I was going to go into business with.

Rob:  Beyond a brother.

David:  Beyond a brother, just as an individual, and speaking to his character.

Rob:  Sure.

David:  That motivated me to get all of my licenses, and get started working with Brian.

Rob:  Good. Gary, I know you started out in the insurance industry a while back.

Gary:  I did.

Rob:  You came over to join the dark side, as you once said. You do this for what reasons?

Gary:  Brian and I worked together. Brian is licensed, he’s an insurance license. But that was my everyday job, all day, every day. I would handle any of the insurance needs that his clients had. Well, my clients had financial needs. Dave, you mentioned it, the integrity, having that Marine Corps background, that same ethos.

I knew that reputation and your word, you could count on that. I had no problem referring my insurance clients to Brian for their financial needs.

I was heavily leveraged in healthcare. With the Affordable Care Act, that really put a damper on my business. I was an independent guy, still am on the insurance side. I understood the importance of being independent. Brian, the way his financial services are set up, being independent, not beholden to any one company, it was attractive.

I’ll echo what Dave said. Seeing how successful Brian has been, lots of hard work, but we don’t shy away from hard work. It’s really understanding the industry, the knowledge. We were playing catch up, and we still do.

Brian is a good resource. He can send us in the direction, give us a little rudder steer, where we need to go to find it, and expects us to educate ourselves. We do that, on a daily basis.

Rob:  Good.

David:  Integrity and honesty means so much in this business, as in any business quite frankly.

We talk about the Marine Corps background. I remember as a 20‑something year old lieutenant in a harrier squadron, took over the engine shop. I signed for $70 million worth of equipment, on the word that the guy I was taking the job from, he said it’s all here.

We had 20 harrier engines. You had three spares. You had all the equipment, everything to change everything out. Then when I left that job, I signed it over to the next guy. It’s all here, and it better be.

That’s kind of where the Marine Corps background comes in. When Gary tells me something or Brian tells me something, I can trust that.

Rob:  Your word is your honor.

David:  Yeah, absolutely.

Rob:  I know you guys, all three of you work together. One of the great things you do is complimentary consultations with your clients when they come in, over the phone or in person. Tell me what that’s like. If someone comes in to you with a first time, what’s the first experience? What can they expect?

Gary:  I think we’re all a little different.

Rob:  We are. I want each of you to comment on that, sure.

Gary:  Well, with me I can speak to the way I do business. It’s understanding what you’re trying to do, what the potential client wants. Why are you here? It’s an interview. They should be interviewing me, but guess what? I’m interviewing them as well.

We need to understand what they’re trying to achieve. Either we can help you or we can’t. I need to know that. I think it saves us all a lot of time.

Rob:  David, what’s the first session like with you?

David:  I want to know your expectations. I want to get to know you as a person. Like Gary said, what are your goals? What are your expectations? Where do you want to go? What’s your background?

The first meeting is really just trying to get to know the individual, because there’s some individuals, quite frankly, that we have sat down and talked with, and their expectations are something that we will not be able to meet.

Rob:  That’s just reality.

David:  That’s reality.

Gary:  It’s better to tell them that up front.

David:  Absolutely.

Gary:  I’d rather do a series of short meetings than one marathon meeting. This subject matter, financial advising and finances in general, can be very complicated. It can be overwhelming. Let’s have a couple of short meetings to understand what you’re trying to achieve. Then, we’ll put something together, give you some recommendations, and we can go from there.

Rob:  If someone wants to schedule a meeting, who can they call?

David:  Well, they can call us at 972‑383‑1210.

Rob:  The website, Gary?

Gary:  Www.riggwealthmanagement.com.

Rob:  Thank you for giving us this time and this hour. We’ll see you next week. Thank you.