The Smart Take:
Now that you understand the basic building blocks of an investing process, listen to Kevin explain what key factors investing science has shown to drive stock and bond returns over time and which to favor to build a better portfolio. Kevin also explains a recent phenomenon in stock prices that is reminiscent of the late 1990s Tech Bubble as it relates to one of the key factors that drive stock returns.
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Introduction : 00:03 Welcome to Retire Smarter with Kevin Kroskey. Find answers to your toughest questions and get educated about the financial world. It’s time to Retire Smarter.
Walter Storholt : 00:15 Thanks for joining us on Retire Smarter. Walter Storholt here alongside Kevin Kroskey, President and Wealth Advisor and True Wealth Design. Kevin, hope you’re feeling good this week.
Kevin Kroskey : 00:26 Walter. I’m great. I had an experience with my daughter, she just started in a local soccer league and last Saturday, and I can’t tell you how many kids were at this park, but it gave me the context for our show today, so I look forward to sharing.
Walter Storholt : 00:41 Oh, I can’t wait to hear about this. I’m just picturing madness of just hundreds of kids running around is it one of those parks that’s just got field after field after field and you’re just overwhelmed by the humanity that’s out there.
Kevin Kroskey : 00:54 Yes. So, our local school colors are red, white, and blue, and it was a sea of red, white, and blue, and they were all, I don’t know, probably I would say like 10 and under. So it gives, it gives you an idea probably of a couple hundred kids it seemed like. Anyway, maybe with parents, but a lot of people,
Walter Storholt : 01:13 I actually over the last couple of months have been digitizing some of my dad’s old home videos. We still had them on some eight-millimeter tape. And so I’ve been digitizing them and you know, putting them on DVDs and just adding them to the cloud just so that we’ve got them in case the tapes melt one day or the player of the video camera that actually plays them stops working at some point. And it’s funny because I came across a lot of soccer games from my youth and it was pretty funny to just watch the mass of people running around, bouncing off the ball, bouncing the ball off of each other. And then there’s always the three or four kids just sort of standing there looking around and brought back some good memories, that’s for sure. So I look forward to the financial connection on today’s show. Speaking of which we’re continuing part two of our series about working on portfolios. What goes on behind the scenes, what the process is really all about. Taking that look under the hood. Kevin give us a real quick recap of what inspired this two-part series on the podcast this time around and where are we headed on this episode?
Kevin Kroskey : 02:13 Yeah, sure. Part of our, the regular work that we do here for clients is to go ahead and basically monitor and tweak the investment or as we need to over time. A real high level of the process is, your financial plan, your retirement plan is the overarching goal for your investment portfolio. That’s step one. Step two is that we believe in using science-based evidence to construct your portfolio. And we really got into, I would say asset allocation and talked about that and how asset allocation or the recipe is more important than the ingredients. And then we talked about the process of going ahead and doing asset allocation work. We got into the weeds a little bit there. But the key is I really wanted to explain to the clients as well as to anybody that’s listening, what a process looks like to go ahead and do proper asset allocation work and do proper portfolio work.
Kevin Kroskey : 03:08 You go in to buy a car, it’s, it’s easy to go ahead and smell. I was going to say taste, touch and feel, but you hopefully don’t do that a car at the dealership that. It’s a strange analogy, but anyway, it just makes it a little bit more concrete about what goes into it, what you need to be doing, what we’re doing for our clients or what are some questions to ask your own financial advisor or somebody that you’re considering working with. What does their process look like? You’re not going to become a financial advisor necessarily unless you have some passion to do so. But at least it gives you an idea about what goes into the investment part of your planning.
Walter Storholt: 03:52 All right. And I’m looking forward to diving in a little bit deeper into the conversation. Let’s get started.
Kevin Kroskey : 03:56 I would go back and listen to the prior episode if you haven’t already, even though I just did that recap. I think they do build upon one another, but there’s going to be two things we’re going to talk about today. I’m going to talk a little bit more about asset allocation and types of asset allocation. And then I’m also going to talk about risk factors and that’s where kind of the soccer story came in. I’ll start there. No particular order here. It was at the soccer field, I mentioned it was red, white and blue. And my oldest daughter was born in 2013 and in her league, there were four different teams. there was a red team, a white team, and a blue team. And those are colors. But there’s one more team Walter.
Kevin Kroskey : 04:36 So what Keller, could that other team be?
Walter Storholt: 04:40 Red, white and blue you said?
Kevin Kroskey : 04:41 Yes.
Walter Storholt: 04:42 This is a money show. I’m going to say green.
Kevin Kroskey : 04:44 Nice try. It was gray. I through that, out there, but there was four different colors. All of these kids were all born in 2013, my daughter’s five for another couple of weeks. There are some six year old’s that were there, but basically everybody that was born in 2013 and you had all these kids probably 9 or 10 and under. There are several soccer fields just to sea of kids. One sort was, well, hey, we’re going to get all the kids born in 2013 and then put them in a league. And then another sort of all these kids was, Hey, we’re going to break up these 2013 kids and then we’re going to put them on these four teams.
Understanding Bond Returns
Kevin Kroskey : 05:23 And what that made me think of when it comes to investing is something that we call these risk factors. Let me explain what that means and hopefully bridge this gap here because people were probably saying the what the heck does that mean? Whenever you look at, say I’ll start easy for bonds. Whenever you think about a return that you’re going to get from owning a bond really can be distilled down into two different factors. One is the term of the bond, whether it’s a very short-term bond or a very long-term bond or the credit quality of the bond. If it’s a us government bond or FTC insured CD or there’s something called high yield bonds, which is a nice marketing term for something that was previously known as a junk bond.
Kevin Kroskey : 06:09 Definitely a lot more risk for a high yield or junk bond. You get the idea there. What we can do is we can take bonds and we can sort them just like we sorted all the kids on the soccer field into 2013 birth year and then further onto the team. We can sort them into short term, long term, high quality or junk bonds and everything in between. And then we can go through a mathematical process and whenever you go ahead and look at returns, say for a bond mutual fund, we can go ahead and get an idea of how much factor exposure that mutual fund has to ,in the case of bonds, be it term or credit. A lot of times people say, hey, where do returns come from? Literally this is where returns come from for owning bonds.
Kevin Kroskey : 06:57 They come from how long are you going to give somebody your money or how much risk are you going to take. If you go down to the bank and you’re getting a mortgage and say you don’t have a 720 credit score, well you’re probably going to get charged a little bit higher interest rate. You get the idea. We see that all the time. Whether we had varying interest rates on your credit card or on your mortgage or your kids, you get the idea about credit quality. And it’s pretty simple. The other thing within their mortgages are a good example too. But if you go out and you get a 30 year mortgage and you use the bank’s money for 30 years, you’re going to pay a little a bit higher interest rate than say a 15 or a 10 year mortgage.
Kevin Kroskey : 07:41 When you look at those two factors within bonds, it’s relatively easy to see we have that experience borrowing money from a mortgage or what have you, both in terms of kind of how long we’re going to borrow for. And in terms of our credit worthiness, when you get into stocks it’s a little bit hairier.
Understanding Stock Returns
The first one is pretty easy. The granddaddy factor of them all is well, hey, are you going to own stocks or not? We call that the market factor. The more money you put into stocks versus bonds, the more risk you’re taking. Risk and return tend to be related. Now as we go ahead and we sort again within stocks, so again, if I go back to that analogy, we have all these, call it a hundred kids that are on the field.
Kevin Kroskey : 08:28 We have all the kids born in 2013 that we’ve sorted and identified and then we’ve further refined it and just happened to say, okay, there’s fourteens and all of you get different colored jerseys. We went through a couple of different sorts there and really what financial researchers, what university professors have done over the time is basically go through the stock market and sorted it and identify these factors and it’s become very popular over the last five or so years we’ve been doing this for as long as we’ve been in business now. But it’s something that I learned about in grad school back 20 years ago and it’s just like it’s finally catching on in common practice. But it’s maybe caught on a little bit too much because I think there’s some marketing hype around it too. In general, the few key factors that are probably most universally agreed upon.
Kevin Kroskey : 09:20 Again, market factor, the size. The smaller the stock, the riskier the stock, the smaller the company, the riskier the company. People kind of get that one. It’s not too far removed from the analogy that I gave over on the bond side of the equation. Larger companies, more pricing power, more control over their supply chain, you name it, but they just move around. They have a smaller wiggle factor all else being equal compared to small companies. So again, kind of a risk and return story there. Another sort is looking at value stocks compared to growth stocks. The way that these academics and financial researchers have identified these, it’s usually something related to price. For example you could go ahead and have a dividend yield. Let’s say, and people love dividends, but whenever you look at say a dividend compared to price the lower the price for the same dividend, the higher the yield.
Kevin Kroskey : 10:21 That’s a way to identify a value company price to cashflow, price to sales. It’s all some sort of ratio of price to some sort of accounting metric by and large. And then what these researchers do and says, well hey these ones that you know, say maybe the top 30% they’ll look really expensive on those different sorts that I just talked about for price compared to something. Well those are the growth stocks. Say the bottom 30% that look really like, hey, it’s a good deal. Those are the value stocks. And then the stuff in the middle is kind of a blend, if you will. It’s not getting a kind of a true characteristic. These are the sorts that I was just thinking about on the soccer field. And whenever you look at that in terms of value versus growth over time, studies would show that you can expect maybe about an extra percent, maybe a percent and a half or so know from owning these boring value stocks compared to growth stocks.
Kevin Kroskey : 11:16 The question is why it could be a risk story. It could be that the people that go bragging about their investments want to say that, Hey, I own Netflix or Tesla or you know, these big high flyers that everybody kind of pounding their chests on. But over time tend not to be as great of an investment as these value stocks that are, tend to be a little bit more boring and out of favor, but tend to be better investments. So those are the factors of value and growth, if you will. And then lastly, another one that we believe in and believe that it has credibility both domestically as well as outside of the US or just owning quality stocks. Sometimes people call them profitable stocks. These are companies that their current profitability is strong.
Kevin Kroskey : 12:04 They tend to have low leverage and not use a lot of debt to finance their operations. Their earnings stream tends to be more stable than other companies. Again, if I dive into the accounting world, they tend to have smaller accruals than other companies. They tend to get paid more quickly compared to other companies. These are all things a quality of profitable company that go into it. All that we’re doing is similar to how my daughter’s soccer team got divided up by age and then on the color of a jersey, we’re just basically sorting stocks in the market based on these different accounting metrics. And studies have shown, and this has been going on for probably 30 40 years now, is that certain stocks with these certain traits tend to do better over time than others.
Kevin Kroskey : 12:54 And that’s all that these investing factors are. You know, how you actually do it. The devil is in the details, the little things matter. But by owning certain stocks by favoring certain stocks or tilting your portfolio to certain stocks value stocks, over growth, stocks, owning a little bit more small company stocks than large. Having more profitable and quality companies in there compared to those that aren’t over time tends to go ahead and add return to your portfolio. All else being equal, if we can take a similar amount of risk and get a higher return, who wouldn’t want to do that?
Walter Storholt: 13:28 So all the work that you’re describing here, a lot of financial firms will farm that out to other companies to do for them. Correct? Whereas you guys are doing this in house. Making these analyses on a case by case basis for your clients and seeing what fits with their scenarios, their situations. You’re helping not only to determine the different buckets or these different categories, the different teams to use your daughter’s soccer team analogy, but, but also who gets on the team.
The Asset Allocation Recipe
Kevin Kroskey : 13:55 Yes in the sense that we are selecting the ingredients to go ahead and fulfill our asset allocation recipe that are consistent with the investing science. And, basically what our belief system about how markets work and about portfolios. We’re not going out and we’re not buying the individual stocks. We wouldn’t do that, that topic for another day. But buying individual stocks forsakes diversification and we just don’t believe in that. And the evidence shows that that doesn’t work really well. But what we are doing is understanding how the underlying investments are constructed.
Kevin Kroskey : 14:34 From these mutual fund companies who we are going ahead and sliding into our asset allocation recipe. And again, you have to understand the science , to go ahead and really kind of carry the process. That’s where we started in the last episode talking about this investing process. And if you don’t understand the history and the science, then frankly, it’s easy to get led astray into something that maybe sounds good. But again, when you peel back the onion just like Shrek did, right. Walter?
Walter Storholt: 15:05 I love it.
Kevin Kroskey : 15:06 Yeah, you can see that the emperor didn’t have any clothes or hey, this sounds all good, but there’s some really key things that the idea is missing and it’s probably not going to work as well as what you’re expecting. So the investment stuff is, again, it’s pretty heavy stuff full disclosure some people have a passion for this stuff, but the key is that there is a process that’s here. These investing factors, the way that we use them is we decide how much we want to go ahead and include into our investment recipe and then what ingredients are most consistent with them, most likely to best fulfill our investment recipe. And that’s really how we use the factors. We’re not going out and picking the individual stocks or sorting them. How I talked about
Walter Storholt : 15:47 Just one more, a clarification point, Kevin, is when we’re looking at these different metrics that you’ve defined, you talked about the quality stocks and value versus growth stocks and smaller companies and you start creating these different segments. These different buckets, are you following under that you use the term science-based a lot in the show and for your philosophies, are you following some sort of preset metric to create these baskets for lack of a better term? Or you internally have kind of aligned through just the work that you’ve done? How are you determining what passes the bar to fit into these metrics and how have you defined these metrics yourself? Is this something that’s more of a personal belief? Are you pulling this from outside resources and saying this is, I believe in this predetermined theory from someone else? Just how have you kind of arrived to this method of financial planning because it is so different than a lot of other advisors?
Kevin Kroskey : 16:40 Let me answer that by giving an example. I kind of paraphrase the question to. Well how was the research done? And then you know, why does it end up in your portfolio that way? I can go back and I can look at past patterns and stock prices and I could do a sort. So again, we’ve been talking about sorting kids by year of birth. Then by further by colors. I can go back and sort stock returns on all kinds of different things and I could say, well hey, let me look at all the companies that start with the letter P versus the companies that start with a letter M and the companies that started with a letter P, they have better stock returns. So, I’m going to call it the P factor and I’m going to own all these stocks and start with the letter P.
Kevin Kroskey : 17:24 Well, you may be able to find that in the data, but it’s pretty illogical, right? There should be no reason why your company name is going to have anything to do with your performance in terms of your stock return to investors. You have to be careful that there’s not data mining. Simply put these ways that you go about defining value. For example, any of those different metrics that I mentioned, price to sales, price to cash flow, price to book value, sorting by dividend yield. You can use several different metrics and you come up with a similar result that these value stocks do tend to outperform. The fact that it’s not relying on one metric gives us pretty good comfort that, hey, it’s really there and it’s not some sort of outlier. It’s not kind of this P factor phenomenon and data mining.
Kevin Kroskey : 18:11 And we talked about then what history has done and what financial researchers have done. Say, hey look, we think we found something. And we think that this is the cause for it. And then they’ll go, and they’ll do something what’s called out of sample testing. They’ll go look at a different time period and hey does the factor show up during say the 30s and 40s and maybe not just in the 60s and 70s and keep repeating that process. And then they’ll say, well, hey let’s not just look at the US but let’s go on to international markets and look at Australia and Europe and Japan. And now let’s even look at emerging markets. You know, does it hold up there? And you find that for value stocks, it does, it holds up in, in all those countries for size, it does as well.
Kevin Kroskey : 18:51 So this out of sample testing, it passes it holds up in different markets, so on and so forth. It’s very robust. These are peer reviewed papers that are put out there. It’s just like New England Journal of Medicine, it’s running different trials and there tends to be this investing science and financial science is not like physics, which I used to teach. If I drop the microphone that I’m speaking into gravity tells me it’s going to fall and hit the floor and it’s probably not going to sound very good. Right? But financial science, it’s a social science and it’s not a hard science. Like physics is. There’s more uncertainty. People construct markets. And so this how we go about doing this science based testing, if you will, in financial markets and in investing that there’s a lot that has been out there and these factors have really proliferated over the last 5 or 10 years and there’s, I don’t know, there’s several hundred that have been written about, but a lot of times they’re just explaining something that’s already out there or you adding it on to the existing literature is not really additive.
Kevin Kroskey : 19:59 Those are some of the things that we kind of go through and do. But there’s also some connecting these factors to economic theory, kind of a topic for another day. But there’s some good underlying evidence about why they should work economically as well. It’s not just looking at prices, not just sorting something, but having a theory as to why this is the way it is. And not just finding something in past prices. But I don’t know if that helped Walter or if I sounded like Charlie Brown’s teacher there, but it all comes down to robustness and reliability.
Walter Storholt : 20:36 No, it is helpful. Although I love the image of the Charlie Brown teacher with the wah, wah, wah, wah. We should redo your logo so that it’s got that little like caption coming the side of your head on the podcast logo with the wah, wah, wah, wah coming out of the side. I think that’d be good.
Kevin Kroskey : 20:56 Yeah. I think whenever you look at investing in general, and again, working with real life clients for, for many years now, you need a good relationship with an advisor. If you’re working with an advisor and that person needs to earn your trust over time and I think that’s great, but when you can see the process as well and you can at least understand that there is a process, even if you don’t understand all these little kind of nooks and crannies we’re starting to get into and which there’s literally a lot more of, but you know that there is a process, you know that it is built on science, you know that it works over time.
Kevin Kroskey : 21:32 Again, in the absence of having a crystal ball, I don’t know what’s better because nobody can go ahead and look into the crystal ball. They don’t work and predict the future and it sounds good. People certainly try to do all the time they say get in or get out of the market by sell, whatever it may be, but the evidence shows that that just doesn’t work. You come back to, well, what we are designed to do. And for us it just seemed logical. Again, it’s kind of how my science-based mind works. As a former physics teacher you go to the science, you understand history, you understand these relationships and you know it may not work in six months, it may not work in a year, it may not even work in six years and that’s investing.
Kevin Kroskey : 22:16 But when you believe in something and the evidence supports it, a lot of times you have to have the discipline to do it. I’ll give you a good example. We talked about this value premium, very well documented. One of the probably the closest thing to gravity that we have in financial science, but it’s been getting its pants beat off by growth over the last probably the last year and a half particularly, it’s been pretty unique. But in general, the last decade, growth stocks we’ve done better than value. And you can say, well wait, you told me there’s a value premium and you can say over a 10-year period with about 90% confidence that there is going to be. But there hasn’t been. When you start peeling back this onion a little bit more, again, we’re regularly looking into the decisions that we’ve made. How did they pan out?
Growth and Value Stocks
Kevin Kroskey : 23:02 What do we need to do going forward? We talked about that process in more detail in the last episode that we were looking at this value premium and saying what the heck is going on here? And even our value fund just seemed to be out of favor. And so, we were asking of course the question why and what’s been interesting, at least over the last say, year and a half from 2008 through mid-2019 is when you go and you look within just the stock market in general. And if you look at the largest thousand stocks in the US. Well let me ask you a question, Walter. If give you these softballs, but I’m going to have to serve you some more difficult questions. If you are an investor in a company, would you prefer to invest in a company that has positive earnings or one that does not?
Walter Storholt : 23:54 Okay, I would say that is a softball, I’ll say positive earnings.
Kevin Kroskey : 24:00 It seems pretty rational. Right? Well, if you go back through all the way through 1980 through mid-2019 and certainly the companies may go ahead and go through periods of high levels of investment, but we’re talking about pretty large publicly traded stocks in this example. And again, generally as investors, we want to go ahead and earnings are going to go ahead and dictate the returns that we’re going to get over time. But what’s been happening recently is really unique and when you look at say beginning of 18 through mid-2019, so the 18 months or so, companies with negative earnings and negative cash flows have been doing a lot better than companies that have earnings. And when you go back and look at that whole time period all the way back to 1980 on average, companies with negative cashflow lose about 5% per year to just those average 1000 stocks, which is rational.
Kevin Kroskey : 24:51 Some of those companies maybe Tesla goes ahead and completely reinvents what automobile driving is and they have massive, massive profits from it. Amazon’s a good example. They weren’t all that profitable for many, many years. They kept reinvesting. Then at some point they turned the corner and are very profitable. But how many Amazons are there? You know, there’s one and Jeff Bezos himself said big companies typically hang around maybe 30 years. Amazon’s no different. My job is just to try to extend that a little bit longer. And I think that was very humble of him to say it, but also very insightful and something that a lot of investors just don’t think about. But capitalism is fierce. And if there’s high profit margins, that’s going to induce competition. Then you have a company like Netflix that is just piling and piling on more and more debt and saying, well we need to build a platform.
Kevin Kroskey : 25:44 Well now you have other competitors like Disney and Hulu and many, many others that are coming into this market that already have content a content library like Disney. It’ll be interesting to see how Netflix does, but you can’t have companies that perpetually are not making money and have negative cashflow. Are you borrowing or bringing on new equity or shareholder money to go ahead and finance their operations and have that be a good investment over time. The other interesting thing about these companies with negative earnings, negative cash flows doing better than companies with earnings and cash flows over the last 18 months or so. Is that over the last 30 years back to 1980 the only other time that that has happened was Walter, do you want to take a guess?
Walter Storholt : 26:30 Probably another one of our crashes from the past because I feel like that’s what you’re setting us up for.
Kevin Kroskey : 26:37 Yeah. I mean I don’t want to pretend that I know what’s going to happen here, but you’re right, it was at the height of the tech bubble in 1999 and 2000 and back then it was anything with a “.com “ was going gangbusters. And those they old boring, stodgy value companies that Warren buffet like to invest in or those quality companies that have high profitability and steady earnings. They were just out of favor because that was old economy.
Walter Storholt : 27:03 That was boring.
Kevin Kroskey : 27:05 Yes, they were completely boring. You couldn’t go to the golf course and brag to your golf buddies about Hormel who makes Spam. I mean, come on. So literally for the last, let’s round up call it 30 years, I mean we’re six months short of, 30 years. But companies that have positive earnings and positive cash flows tend to return that to shareholders. And we do well as shareholders and that over the last 18 months.
Kevin Kroskey : 27:33 That is not been the case. So, companies with no earnings and negative cash flows have been doing better. And I’d be happy to have this recorded and come back and listen to this five years from now and just see how this plays out. But I’m going to keep with those stodgy value companies and those high-quality companies that actually have positive earnings. I went off on a little tangent there, but it’s a unique period. My point being is you have to understand that there is a process or you should have a process. Let’s back up. You better have a process and then what the process should be, in our opinion, relying upon science and then understanding some of that and knowing that, hey markets are noisy. It takes a while for things to play out. Markets are comprised of people; people tend to be irrational. We are comprised of emotions that justify how we’re feeling with reason. It’s just human beings and so stuff happens in the short terms. They can overshoot, they can undershoot but over time, these principles, these science-based principles that we believe in that again, I’ve been out there for many decades at this point, short of that crystal ball, we believe it’s the best way.
Understanding The Investment Process
Walter Storholt : 28:44 You mentioned the colors of your a, the different teams that were at that soccer event that your daughter participated in, the red, white, blue and gray. Well, it’s the same in the financial world. It’s not black and white. There are a lot of different colors, a lot of variations that go into the mix. There are a lot of gray areas in the financial world and I know it’s your job to kind of interpret and understand and navigate through all of those different moving parts in the best interest of your clients. And I guess that’s my last question of the day. Given these last two episodes, Kevin, for somebody who listens to this podcast regularly, or even if they’ve just stumbled across these two episodes for the first time, my guess is that they’re going to have a pretty high interest in making sure that their money lasts, that they’re getting the most out of their dollars in their financial life, and as they get into retirement, if they’re listening to today’s program, it’s almost a guaranteed element of interest in their lives. How will they see all of work when they meet with you and your team at True Wealth Design? How involved are they in this level of process if, if they don’t want to get this heady with it, are you able to kind of make it easier to understand? I mean, how much do you want folks to be part of this process? How deep do you want to take them with their portfolios, just so that they can have an expectation of what that would look like working with you?
Kevin Kroskey : 30:02 Well, let me answer it this way. If my wife and I were clients going into a financial advisor’s office and that financial advisor walked me through some detailed presentation on the stuff that we’ve talked about in the last two episodes, my wife would either be kicking me under the table saying, why the heck did you bring me here? Or would’ve gotten up and walked out. So everybody’s different. My wife just wants to know, hey, are we okay? Am I spending too much? Or hey, can we do these things? And then we have a lot of engineer clients that are here that want these details. Maybe not to the extent that we go into, but they’re process oriented people and they want to understand the process. Some may even want to roll up their sleeves a little bit, but usually somebody hires us because they want to delegate this stuff.
Kevin Kroskey : 30:47 They want to be informed, but they don’t want to go through a and get a graduate degree in finance or investments or what have you and spend their retirement wondering if they just made a big mistake or not. They hire somebody like us to do that. You have to communicate with people with what they need and what’s the best way to do that? Well you ask them you give them the high level. Do you have further questions? Is there anything that you want to talk about that I didn’t cover? And usually when we do those little check-ins most clients say “I’m good.” Early in my career I used to give a lot more. I don’t know if, I think with wisdom and experience you just learned that that’s not really what people want or need.
Kevin Kroskey : 31:31 But I think it’s critical and absolutely critical that they do understand that there is a process. Because if it’s just solely built on a relationship, markets are going to do funny things over time. In 2008, 2009 when markets went down by half and you had no idea about the process that your advisor was going through or if there was even a process and, if at some point that trust is going to get called into question and the client may make a bad decision and tap out when they shouldn’t. You must give people what they need. Something like this podcast, there’s probably a lot of people that may not tune into it. Others that when they see it and you know, they may listen to the beginning or listen to the end or whatever, but at least it’s there and if they want to consume it, then they can, if they want to better understand it, then they can. I think transparency is key. The fact that there is a process is it’s a necessity. It’s not important. It’s a necessity. You can have a good look in portfolio or good results from a really stinky portfolio for a while, but over time if you’re doing dumb things in your portfolio, you’re probably going to pay the price.
Walter Storholt : 32:38 The show is Retire Smarter. The host name is Kevin Kroskey. He is the President and Wealth Advisor at True Wealth Design serving you throughout Northeast Ohio with offices in Akron and in Canfield. If you are new to the show, glad that you have found us and thanks for sticking with this and learning a little bit about planning what it really looks like from a financial perspective and how Kevin and his team at True Wealth Design go about it. If you’d like to set up time to talk a little bit further and get into some of the specifics about your particular situation or your particular plan, you’ve got some questions for Kevin and the team, a couple of ways to get in touch. You can give a call, 855-TWD-PLAN is the number. That’s (855) 893-7526 and always online at truewealthdesign.com that’s truewealthdesign.com check out the events tab on truewealthdesign.com and you can find out about upcoming workshops.
Walter Storholt : 33:31 Get all the details and sign up right there on the site. We’ll put a link in the description of today’s show for where you can find that information and you can also go to truewealthdesign.com and click on the “are we right for you“ button and schedule a 15 minute call with an experienced financial advisor with the True Wealth team to see if they might be able to help you understand your situation better and plan more thoroughly for your financial future. Kevin, thanks for this two-part series on the podcast here. Enjoyed diving into the deep levels of learning about the planning process and just how much goes into it and enjoyed the conversation with you.
Kevin Kroskey : 34:06 Likewise, Walter, I’ll do my best to give you a good fastball rather than the softballs I’ve been tossing to you.
Walter Storholt : 34:11 Alright, I’m going to pull out my books and my notes and study up before our next episode so I can be ready. We appreciate it. That’s Kevin Kroskey. I’m Walter store whole. Thanks for taking the time to join us. We hope you’ll join us again next time on Retire Smarter.
Disclaimer : 34:32 Information provided is for informational purposes only and does not constitute investment, tax or legal advice. Information is obtained from sources that are deemed to be reliable, but their accurateness and completeness cannot be guaranteed. All performance references historical and not an indication of future results. Benchmark indices are hypothetical and do not include any investment fees.