7 - Interview With a CFP: Financial Planning

 

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  • Joe Rodriguez

    Hello. My name is Joe Rodriguez and you're listening to Get the Money Right with Todd Butzer. Todd has decades of experience in giving real estate agents the training and resources they need to get their finances on track. In this episode, Todd will be interviewing Ashley Skillman, a certified financial planner, about investing and financial planning.

    And now here's Todd.

    Todd Butzer

    All right. Thanks, Joe. And welcome, everybody, to episode seven of Get the Money Right. You know, back in, I think it was episode three, we were talking about building your financial team and who needs to be on that team. And one of the people we suggested that you get on your financial team was a financial planner. And we also said during that episode that in a future podcast, we would bring on a financial planner to kind of give us some oversight and some ideas and lend some expertise into the whole concept of planning for our futures. And so, I'm really, really excited to welcome our second guest ever on Get the Money Right. Please welcome Ashley Skillman. Ashley, thanks for being here.

    Ashley Skillman

    Thanks so much for having me, I really am excited for this!

    Todd Butzer

    Yeah, we're excited about it too. So first off, for everyone listening, Ashley is not here. And you hear me say this every episode, folks, she's not here to give you financial advice. This is not financial advice coming from get the money right or from Todd or from Joe or from Ashley. So, we're going to we're going to advise you to seek your own professional tax, legal and investing advice. Ashley is here to lend some expertise and give us some ideas on questions we can ask when we start moving toward this for our future. All right. So, Ashley, let's start with this. What got you into financial planning?

    Ashley Skillman

    Well, I went to school to be a financial analyst, and I knew I loved numbers. I loved research. I loved the markets forever. Changing so quickly. Realized I could not be behind a computer all day. Someone suggested that I take an internship in financial planning and give it a shot. And I kind of love the fact that I got to pair both working with clients and each of their situations and goals and what they are working for with markets and numbers and analytics. And it was kind of the perfect pair for me and me after that internship, I just it just kind of stuck.

    Todd Butzer

    And so, this has been your entire career. You've done this your entire professional life, correct?

    Ashley Skillman

    Entire professional career. So, I did an internship and then I went right into working at the same company and I've been there for nine years.

    Todd Butzer

    Oh, that's awesome. While we're excited to hear your thoughts today, so Ashley and you and I have talked a little bit about this prior to the episode, but the real estate industry being entrepreneurial, independent contractors, these are wonderfully creative, smart, gifted businesspeople. But we what we have a challenge in the industry and the challenges and its people I bump into often where they're really good at grossing revenue and really good at selling. But this part of their lives seems to be off. And the reason I say that is because I simply ask them, I'll say, how are you set up for your future? Or How are you set up for retirement? Or What are you what are you doing to set money aside? And the overwhelming answer is kind of about a myth we talked about in episode two, which is all kind of I'm thinking I'll get to it later. Okay. So, with that in mind, what are some of the common… mistakes might be too strong a word, but what are some of the common challenges people have when considering their financial future?

    Ashley Skillman

    Well, it's interesting that you say that, because, number one, it's not just the real estate market, but it is a big thing in general of people. You just people don't want to plan for their future. They want to plan for the here and now. I'd say the first mistake, if we're going to call it a mistake, is they don't start early enough. Exactly what you're saying. And I will worry about when I'm older, when I have a better job, when I make more money, when I have the next big sale, that's when people just try to, you know, want to think about it now. So, they just say in the future, when that event happens is what I'm going to start. But really what we find in general is compound interest starting early, even if it's just a little makes such a huge difference for your future. If you start at 25, 35 or 45 and just what a huge, huge impact by just putting a little bit of money away each year can make for a financial future.

    Todd Butzer

    You know, actually what you just said made me recall an example. And you can shed light on this if it's accurate or if it's not. But I think the example was this If a 20-year-old put $2,000 away into a retirement account every year for ten years and then stopped. And then I think a 30-year-old started, you know, at 30 and put 2000 a year for the rest of their lives. They would never catch up to the 20-year-old. Is that in my in the ballpark?

    Ashley Skillman

    Exactly. The example I was going to give was if you start at 25, putting $5,000 away, earning 8%, you'd end up with nearly $1.3 million at 65. Or if you start about ten years later at 35, still putting $5,000 away annually, you'd end up with $566,000 at 65.

    Ashley Skillman

    So even though you're putting $50,000 away more, you're still making over $600,000 of a difference.

    Todd Butzer

    Interesting. Okay. So, all right. So, let's just cut to it. I waited too long, so, you know. So, yeah. Right. So, if I'm if I'm one of those and I don't mean me necessarily, but what I'm talking about is I'm a listener and I'm thinking, okay, well, she just said I should have started young. And I'm not by any means that that 20-year-old anymore. What thoughts would you have for us?

    Ashley Skillman

    My thought is start as soon as you can, make sure you do pay yourself first and make sure that, well, first and foremost, you want to make sure that you're paying off liabilities first. I know you've talked about in previous episodes of how paying interest on credit cards or to the IRS, if you're late on your taxes, how behind you can get because you're paying penalties and interest. And in the stock market, you never can count on a 16 to 20% rate of return, which essentially is what you're getting by paying off those credit cards early. So that would be really the first and foremost thing that you want to do is make it a priority to pay down any consumer or credit card liabilities.

    Todd Butzer

    Okay. So, take care of that first before I start passing my money, so to speak. And I think that's great because I think a lot of us might say, well, I want to get something going, but yet I'm carrying this massive amount of consumer debt or I'm late with the IRS and paying interest and penalties there. So, let's get that taken care of first, as is what you would you would tell us to at least look at.

    Ashley Skillman

    Absolutely. I mean, there are some great years in the stock market and there's years like there's this year. So, you want to make sure if you can pay off your credit card and say, I'm going to guarantee myself a 16 to 20% rate of return. There's no good financial advisor that will ever use the word guarantee. You're not allowed to use the word guarantee, let alone say that they can average a 16 to 20% rate of return. That's unheard of.

    Todd Butzer

    Yes, got it. Okay. So, if. If I feel so. I shouldn't have asked you this already. But if I feel behind in this area and let's say that I've committed now to getting my credit card, my consumer debt down and get my affairs in order regarding the IRS and so on. And I've got a pretty good handle on that. Now, what do I do?

    Ashley Skillman

    Then you look to open up a retirement account. There's all sorts of different retirement accounts that you'll want to consider. It comes from you go down taxability wise. I think we'll talk about this in more detail later in the episode, but you'll want to open up a retirement account to start saving and investing. There is a difference between saving and investing savings into saving your checking account. It just sits there. Of course, that's important for having a cash reserve, but you are losing to inflation every single year. So getting those dollars invested and working toward for you, for your retirement is the next the next thing that you would want to work on and make a priority and put in as much money as you can towards those accounts.

    Todd Butzer

    Okay. So what if I, I have taken care of my consumer debt, my IRAs, all that, and I'm ready to open one of these. But I always find myself. Really tight financially. So I'm thinking I don't know where I'm going to find the money to even start putting some away in this. Even if I've got my other garbage, if you will, taking care of. What thoughts would you have?

    Ashley Skillman

    It sounds pretty cliche, but just create a plan. Write it down. Look at your inflows versus your outflows. And by having a plan written down, it keeps you accountable. Share it with your spouse or your significant others, or someone that will hold you accountable. And look at it often by looking at it. Often will keep you on track. And when you're looking at your cash flow, you're going to look at what your inflows are and what your outflows are and see what you can cut out. Me personally, I try not to have any monthly subscriptions because it's something that you're going to be liable for every single month. And so I've made sure I've gone through my own personal budget and I've put out anything that I know that I have to pay every single month.

    Todd Butzer

    I think that's one of the most brilliant marketing plays in the world is the subscription play. I talked about it yesterday in a class that I taught where if you subscribe to something for $3.99 a month and next month it goes to $4.99. Nobody cares, except it went up 33%. And we don't we don't even notice it. And we all know who these who these subscription services are. But that's great advice. All right.

    Ashley Skillman

    So and all of a sudden, you have five, ten, 15 of them. It adds up on your monthly budget and it really cuts into it.

    Todd Butzer

    It absolutely does. Thank you for that. All right. So as independent contractors and small business owners, there are there is a plethora that I've at least looked into are of different vehicles. That they could utilize. For example, there are solar for one case and you're familiar with all these. I don't need to tell you these and seps and so on. How do I sort through that? What steps would you would you offer there?

    Ashley Skillman

    This would be a situation where you having a financial professional will be helpful to be able to look at your personal situation because you're going to look at things of how is your company set up. I know you talked with your CPA about are you an LLC? Are you a sole proprietorship? Though it's going to matter how your company is set up for what, what for you and care what retirement account is going to make sense for you. You also will take into account if you have any employees that are working under you, because then you'll have to say, okay, if we're going to open up this certain account, we might have to make contributions for the employees on their behalf as well, which is going to, of course, cut into cash flow and revenue. You want to look at things such as your current income and contribution limits. There'll be things such as pretax or post-tax, the taxability in the current year that comes with that. There are benefits to both. If you do things that are pretax and put your dollars away, of course that grows tax free and you don't pay taxes. This year is going to be a benefit in the year that you do that. Or if you put dollars away post tax, you don't get the benefit this year, but you'll surely get the benefit when you are retired and those dollars are grown tax free until you need to take those dollars out. There's also got this catch up provisions. There's all sorts of different things to consider when you're looking at those investment vehicles. And it really does come down to what your current situation is. And every client or every person is different.

    Todd Butzer

    So I think and I love what you said there, and I think that there's an underlying tone here, folks. There are there are a lot of vehicles available. And the government will help in terms of how you save your money. So and invest your money so early on. I don't know if we announced it with you, but you are you are what is termed a CFP or certified financial planner. And folks, we're not suggesting that everybody has to go get a certified financial planner, but I thought it would be interesting to learn what that is versus a financial planner that I might just meet in my day to day life. So what does a CFP?

    Ashley Skillman

    CFP stands for the certified financial planner. And according to the CFP board for more than 30 years, Certified Financial Planner Certification has been the standard of excellence within financial planners. CFP planners have met extensive training and experience requirements and commit to their ethical standards that require us to put the client's best interests first. So essentially that's a lot of words to say. A CFP has to be a fiduciary or a fiduciary must put the client's interests first and foremost at every point within the relationship. And if a financial planner is not a fiduciary, that just means they're held to a different standard of they can do no harm, means they don't have to necessarily put the client's best interests first and foremost. They just can't do something that's going to hurt the client or not be helpful to the client. But one thing to note is that a financial advisor can be a fiduciary without being a CFP. Got it. So if you have a financial planner, folks, and it's been a great relationship up till now and you're getting good results, continue that. That's not we're not we're not trying to insert into that. I just wanted a description of what a CFP is.

    Todd Butzer

    What traits do you see, Ashley, among those that have a good handle on it? What do they have in common? People that are really good at, you know, securing their future? And incidentally, I'll just add this real quick, folks. This doesn't mean you're making millions of dollars a year in income. It simply means you're you have a plan and you're sticking with your plan. So and it could be any amounts of income that, you know, at any level economically, so. Ashley, what do they have in common? The strong planners.

    Ashley Skillman

    The first quality that strong planners have in common is they spend less than they make and invest the difference. I know I talked about that earlier. There's a difference between saving and investing. If you're putting dollars just in a savings account, which is important for your cash reserve, what you're losing to inflation and again this year especially. That means that you're losing to inflation. Inflation significantly, but you're investing the difference. Then you will have those dollars grow for you, for your future. I think the next thing for what makes people successful is that they have a plan and they stay the course. They're not trying to market time because there's going to be times that you don't want to stay part of a plan. You want to go buy that bigger purchase, or you do want to pull dollars out because your investments are going the way that you want them to or to stick to the plan. And the long term plan is key.

    Todd Butzer

    You know, I think you and I had had a conversation a while back when the market took a particularly volatile day when one of those massive thousand point drops that it has had recently. And you had made the comment to me that that virtually none of your clients called in saying, you know, hey, I'm freaking out. And you were you were happy about that, that they're there. Just their mentality is, I'm just going to stay the course.

    Ashley Skillman

    Absolutely. We've talked over and over again and having a true financial advisor. It's all about you have to look at your investments as when will you need those dollars? There's a time horizon. And if you're not going to need those dollars, when you see those big drops, you just don't look at your accounts because you know that you're not going to need to access those dollars for many years down the road. And if you do remain, if you have a shorter time horizon, then you have more conservative investments that aren't going to be impacted by that. So it really comes down to having a smart place to take your money from, based off your time horizon if you actually are pulling dollars out of your portfolio.

    Todd Butzer

    Okay. So I have got a handle on my expenditures. I'm spending less than I'm taking in. I've got my long term debt down or my consumer credit card debt down and things like that. So I'm pretty well set up there. But frankly, I haven't done any of this because I don't know anything about markets. I don't know anything about mutual funds, I don't know anything about ETFs or options or any of this stuff. And so what I'm doing is I'm just kind of turning a blind eye to it. Do you do you find that it's a somewhat common event?

    Ashley Skillman

    Absolutely. It's an industry that there is so much risk and so much emotion because it's your own money tied up into it. And instead of looking into it or trusting someone else, because when we were talking about the CFP and a fiduciary, it really comes down to do you trust your financial advisor? Because it has to be a good fit and there has to be trust involved more than any designations. That is truly what a financial good financial planning relationship looks like. And if you have everything in place and you're not, you're nervous about investing, of course you're going to be worried if you don't have someone that you trust to teach you the cost, the pros, the cons, the risk, all of those things when it comes to investing. It really is the industry with a lot of jargon, in a lot of words that people don't necessarily understand. So it's up to the financial advisor to really educate, to make sure people understand what they're doing with their money and the risks, the rewards that come with it and costs, quite frankly.

    Todd Butzer

    Okay. That's great. So how do I. How do I. Is there a simple kind of rule of thumb to calculate what I'm going to need to retire on? Is there something simple for this or is it hard?

    Ashley Skillman

    That is the number one question we get from even our own clients. Everyone wants to know what that magic guru saying is that you need to have for retirement, but unfortunately, there's no magic number. It really comes down to how much you want to spend in retirement, what your goals are for retirement and for certain people, what the legacy you want to leave behind when you pass away. So I wish I could just. I wish I had a magic number to say this is how much do you need to put away in order to make sure you're going to be okay? But since every person's unique is unique and different of what their goals and desires up, that's where having a plan in place really helps you. I can tell you that generally they say if you have a nest egg and if you can live off of 4% of that nest egg, then you should never run out of money

    Todd Butzer

    Yes. Yeah, I've heard that number before. What you highlighted there, Ashley, so beautifully is that, look, everybody's needs are different. Everybody's spending habits are different, their legacy wishes are different. And so this is this is why we need our local expertise help to guide us in these particular areas. We're kind of nearing the end here of our conversation with Ashley, but if I'm already on a pretty good track, I think if I feel like I'm hitting my goals, what, what, what are your thoughts?

    Ashley Skillman

    You know, when I was listening to your earlier podcast, I something stuck out to me that fit beautifully with this question. You had said when you are building a financial team, you oftentimes hear it's just me. I don't have a real estate team. I'm just getting started. Why can't I just do this on my own? But then that real estate agent will get in their car and they're going to go try to convince someone who is selling their homes for sale by owner that they shouldn't do it on their own. Right. I think that parallels it perfectly. Essentially, people who sell their house by for sale by owner probably could know the basics of selling and probably could do it on their own. But they don't know what they don't know and who. That opens up a whole different world of. I don't know your industry very well, but I'm sure there's troubles that come along with that.

    Todd Butzer

    Right.

    Ashley Skillman

    I think it's the same thing. I is beneficial to work with a professional to help you be prepared. We're not forever predicting the future. A lot of times people do get financial advisors. They think you're predicting the future and you're finding the best next hot stock. That's what they think financial advisors are. But you're really you are you're not predicting the future, but you're preparing for the future. For the certainty of uncertain is what, as we commonly say in our industry, because we know there's going to be uncertain events in this industry. You can't tell when someone's going to have a life event, such a passing away of a spouse or a disability or the uncertain markets. There's all sorts of uncertain topics that come up, but it's really when you're working with a professional to prepare you for those things, they there's a much less likelihood that's going to disrupt your overall financial plan.

    Todd Butzer

    All right. So, Ashley, it's been just great having you on today. And I think if we could kind of put a ribbon around this, folks, if you're behind get started, get the long-term debt down and the consumer debt down. You're going to be okay. But let's take some action. If you're if you're behind on this, let's get some action going and find good, local, competent, trustworthy help in this regard and trust that they're going to they're going to help take care of you. And we do wish you all the best. We hope you get started in this right away. Ashley, thanks for being with us. We're so glad you could join us. You gave us a lot to think about today.

    Ashley Skillman

    Thank you so much. I really appreciate it.

    Joe Rodriguez

    That concludes this episode of Get the Money Right. To stay up to date on the latest in Get The Money Right, follow us on social media and be sure to subscribe on your podcast platform of choice. If you want to support the show, please leave a five-star review and share with your friends. If you are a real estate agent who is getting their money right and want to be a guest on the show, please submit all inquiries to getthemoneyright.podcast@gmail.com. Links to everything we discussed today in the episode description.

    Thank you for listening and have a wonderful day.

In this episode of Get The Money Right, Todd will be interviewing a Certified Financial Planner, Ashley Skillman, about planning and investing your money.

Subscribe to stay tuned for more real-time financial strategies that will improve your real estate business!

If you are a real estate agent that is getting their money right and would like to be featured on the show, please email getthemoneyright.podcast@gmail.com


Subscribe to stay tuned for more real-time financial strategies that will improve your real estate business!

If you are a real estate agent that is getting their money right and would like to be featured on the show, please email getthemoneyright.podcast@gmail.com

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Hosted by: Todd Butzer

Produced by: Joe Rodriguez

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