Announcer: [00:00:01] You're listening to Advisors on Call.

Cheryl White: [00:00:06] This is Advisors on Call the podcast with Greg Ramirez. I'm Cheryl White. On this podcast, we delve into the financial and retirement information that you need to live the retirement you deserve. So Greg, first of all, hello. How are you doing today?

Greg Ramirez: [00:00:24] Well, I'm doing pretty good.

Cheryl White: [00:00:26] Excellent. You know, I wondered if we could go over a term that I think is such a loosely used term that I'd really like to get the details on financial professional. I see it used all the time, but I don't really know what that means.

Greg Ramirez: [00:00:43] Well, a lot of people don't know what that means because there's a lot of people out there portraying themselves to be a financial professional. I think we should start at the root of first of all, there's people known as financial advisors. So what is a financial advisor? So normally when you go to a bank investment program or a wire house and I'll use examples like, you know, Merrill Lynch, we have Chase Bank, we have Wells Fargo, which also calls themselves Wells Fargo Advisors. We have credit unions. Credit unions have investment officers inside the credit union and they call themselves financial advisors. But you have to remember, folks, they're really not fiduciaries because they work for a broker dealer. So you have to know that there's a difference between what someone does in the broker dealer field where they work on commission. So, for example, as a financial advisor who works for a broker dealer, all the deals that you do, you're going to get paid a commission. So when they see you as a client, they see you as a commission, which is a transaction. And a lot of people may not like to hear that because nobody wants to say, well, gee, I'm a transaction, I'm not a relationship. Well, that's the difference.

Greg Ramirez: [00:01:45] Because if you notice, if you go to most bank programs or credit unions or wire houses, you're not going to be dealing with the same person. Let's say you've been working in that field. Let's say you've been there for 20 years. They're not going to have the same advisor. These advisors, they change because a lot of times those are starting points for people starting their careers. And the way the bank programs and the wire houses is they're looking for young kids that want to be successful. They want to cap how much the kids can make, but they want to make the most off of these young people that are going into their. It's not like it used to be. I mean, I'll be very honest with you, when I started 25 years ago, you could actually get a career. You would learn, you would move on, move up. These programs now don't want to do that. They basically want to take all of your people that you know, you know, friends, family and basically keep it for themselves. It's changed. And that's one of the reasons why a lot of people go independent, which is the next thing I'm going to discuss compared to financial advisor to a fiduciary or a registered investment advisor.

Cheryl White: [00:02:36] Yes, Thank you. Because I was going to ask you to explain fiduciary.

Greg Ramirez: [00:02:40] So you have to remember this when you're dealing with an RIA--registered investment advisory--they have a fiduciary duty. And what that means is that we don't get paid commission folks, anytime we're talking about an investment product, a securities. Now, if I'm talking about insurance, that's a different story, which I will talk about next. But right now we're just talking about the fiduciary duty of what a registered investment advisor has. We have to do things that's in your best interest in any investment that we have that pays a commission gets paid to you, the client. So already, you know, if someone's making a recommendation to you, that person is getting paid a commission. Because unfortunately sometimes what you see is that those other programs, you see proprietary products being sold to you. And there's a reason for that because the bank or the wire house makes more money. When you're an RIA, we don't have proprietary products. In addition to that, we're not being paid a commission. We're not getting an extra 1 or 2% if we sell this investment. And that's where some of the things that those other places do that we don't because we have to do. What's in your best interest, because all we can do is we can charge you a fee. And remember that fee varies by the amount of money that you have with us. Typically, anyone who has, let's say, $100,000, we might charge you start at 1.5%. You've got $1 million?

Greg Ramirez: [00:03:46] You know, obviously it's going to be substantially less. The more money that you have with us, the less the fee is going to be, because one of the things that we can't do is we can't charge you an astronomical amount because that becomes usury. You know, we can't charge 1.5% on a $3 million portfolio. It just can't be done. You have to be a lot less. And, you know, you negotiate that fee with your client. And what we're facilitating here is a fiduciary wants a relationship because since we get those fees, if your money loses, guess what, folks, we lose. If I was to do it as a transaction, I really don't care because I got paid. And you have to remember that's the difference between the two programs. One program gets paid a transaction, they move on to the next client. As a fiduciary, I want to keep you. I want to keep that relationship because the more I build with you, the more assets you add to me and the better that I can perform for you. Obviously, that instills confidence. It's going to instill that you want to work with somebody. One thing I do know is that even though we have a lot of social media and it seems like people don't stay at jobs for the next 30 years, we all want to have that relationship. One question that I have, folks, is how many times do you change your doctor? How many times do you change your CPA? How many times do you change your financial advisor? If we can, you can find that good person that you can work with.

Greg Ramirez: [00:04:54] You're going to stay with them. And that's the one thing that we have here as a fiduciary that we can do. So what I would like to do now is I'm going to explain to you the difference, because unfortunately. We have some people in the industry who have insurance licenses only, and they call themselves financial advisors. And that's one thing I want you to know, folks. One of the biggest red flags, if somebody doesn't have a securities license, they are not a financial advisor here in the state of California. They're called an insurance analyst. They cannot call themselves financial advisors. You don't know how many people I've come across that have told me, Oh, yeah, I dealt with this financial advisor. And then when I looked at them, they only have a life and disability license and that's because they were selling fixed indexed annuities. I'm not trying to be negative for those people that are out there, but you're not an advisor. You're selling a product that's fixed, that's an insurance product. You can't talk about stocks, you can't talk about securities, you can't do alternative investments. All you're offering is insurance. You're an insurance analyst. And so when you need to know that and again, folks, insurer analysts get paid commission.

Greg Ramirez: [00:05:49] So when they lock you up into that annuity, that's five, 7 or 9 years, your money is locked up. And compared to a fiduciary like here, we do things on a fee-based in some cases there's some alts that, yeah, your money can be locked up for 4 or 5 years, but for the most part, most of your money is not going to we can move it out. Or if this broker dealer again, they're going to lock your money up too, because the longer that these other two classes can lock up your money, the more likely that you're going to be forced to stay with them because you don't want to take a surrender penalty. So you have to be wary of these other two types of individuals that are out there. A lot of times they look for the higher incentive products. And that's not to say that some of the products they offer may be in your best interest, but unfortunately, most advisors is an 80 over 20 rule. And I think that goes in any type of business. Usually 20% are doing what's best for people's interests and the other 80% are just out there. And so, you know how many times you've come across a good doctor or you come across, like I said, a good accountant. It's hard to find good people in this industry. It's hard to find good people. You know, the best people go independent because when we go independent, we can offer so many things.

Greg Ramirez: [00:06:50] Because you have to remember, folks, when you work for a bank or a wire house program, the investment products that they offer are going to be in the best interest of the bank or the wire house, not your best interests. Do you ever wonder why when you go to a bank or credit union or a wire house, why they can't give you tax advice because they're not allowed to? Do you ever wonder why they can't give you a tax mitigation strategy? They're not allowed to. And an insurance agent. Do you know why they don't give you tax mitigation? Because they can't. Because an annuity is tax deferred. So all they can do is talk about tax deferral. They can talk about rates, but they can't talk about anything else. So you have to remember who and what you're dealing with, what type of licenses, how do they work? Because that's going to play a big part into how these individuals can help you. You know, here are the advisors on call. We have all the licenses, we have the securities license, we are an RIA, we have an insurance component. You know, we can do everything. We can do the financial planning. And we are a fiduciary, which is, I think one of the things that people want. They want to know that they, you know, is that person a fiduciary? Well, it's very important.

Cheryl White: [00:07:51] It is important. And if I just look at your name, your title, are there any initials behind your name that would indicate to me if I'm looking for a financial advisor, that you are a fiduciary?

Greg Ramirez: [00:08:03] Yeah, a registered investment advisor. RIA.

Cheryl White: [00:08:06] So that's going to be very helpful for people because as they're looking, they can identify those folks right away. Correct? So what services can you provide as a financial advisor? As a fiduciary? If I'm looking for a wide range of services, can you do everything for me from financial planning to estate planning?

Greg Ramirez: [00:08:27] Yes, we can. So if you don't know if you're headed in the right direction for retirement, we can do retirement planning. We can do estate planning, which also involves tax mitigation strategies, creating trust wills, looking at life insurance, looking at long term care, which is, I think, one of the most important topics that people don't like to talk about because it's an asset class that should be taken into account because insurance is very important, folks, because the older we get, the more expensive it gets. So if you can get it when you're younger, you're going to be much better off. We do all these things. We do alternative investments, we do easements, we do advisory annuities. And I want you to know, folks, advisory annuities are annuities. As a fiduciary, you have 100% liquidity to those annuities as to if you go to the folks that are the insurance analyst or the person that's a broker dealer, they're going to lock you up for five, seven, nine years. And if you're not in California, it could be as much as 13 or 16 years. So here we can give you the same products when we're going to charge you a fee, but you have 100% liquidity to that. And I think that's a huge deal, especially as we get older, because we want to know that our money is liquid, which allows us to move that money. As the market changes, we can move it from one product to another. We can make changes that can help your portfolio and balance it out.

Cheryl White: [00:09:37] Hey, Greg, at what point in our lives, our careers, do you think it becomes really important to work with a financial advisor?

Greg Ramirez: [00:09:44] The sooner you work with one, the better off you are. I think one of the biggest problems that we have here in the country is that we never are given a course when we're in high school or college about how to talk about finances. Usually it's our friends, our family, our parents. And I think as soon as you get a job, if we can start telling people, you know, get a Roth IRA. Control your credit cards, have a medical plan, savings accounts. The earlier you do it, the better off you are. I mean, sometimes you look $6,000 a year. Doesn't sound like much. But if you start saving when you're 20 and by the time you're 60, do the math on $6,000 a year over 40 years, let's say with an average return of 7%, you're going to have over $1 million. And I'll be honest with you folks, you have to remember Social Security is not going to be there for you to help you out when you retire. It's a supplement. You have to make your own retirement. So it's very important that the earlier you start, the better off you are.

Cheryl White: [00:10:39] But what about someone who's waited and they are, let's say 50, 55, they're getting ready for retirement. Is it too late or can you still help get all of their financial things in order?

Greg Ramirez: [00:10:51] First of all, it's never too late. Our highest earning years are between 50 and 65. So anyone depending on your career, those are the highest earning years. Those are the years that you're probably going to need a financial advisor the most because you want to know how can I save on taxes? How can I save on retirement? At that point, you may have children that are going to college. How did we pay for college? I think it's very important to have a financial advisor at that time and if you haven't had one, it's never too late. And depending if you work for a company, hopefully you're contributing to a 401(k) plan. If you are self-employed, hopefully you have a SEP. Hopefully you have a single K. Hopefully you're using the benefits of a plan so that you can save yourself on taxes. It's never too late. You can talk to us, we can help you. That's something not to worry about.

Cheryl White: [00:11:33] So let me just ask you one simple question as we wrap things up for our podcast today. Why do I need a financial advisor?

Greg Ramirez: [00:11:41] You need a financial advisor to help you navigate through your life, just like you need a doctor, just like you need an accountant. Those are probably three of the most important people you can have in your life, separate from your parents and family. Because having the right one can save you a lot in taxes can also help you prepare for retirement. The sooner you get an advisor, the better you're going to be because you're going to be more prepared than someone who doesn't have one. Because remember, folks, what we do today is not indicative of what's going to happen in the future. Things change. And as things change and evolve, you have to have somebody that does that for you. You know, we can't operate on ourselves, you know? So are you going to be your own financial advisor? Exactly. Are you going to be. No, you're not going to be your own financial advisor. You're going to fix your own car. I mean, cars today are so much electronics in it or can you do it? Can you fix your own computer? That's why there's experts, and I think the three most important experts is, like I said, doctor, an accountant and a financial advisor.

Cheryl White: [00:12:37] And you know, Greg, another point that I would just like to make is that you in your profession, you see all kinds of things. You've created so many different scenarios. Talk to people in so many different areas of life and stages of life. And I think that working with a financial advisor, a fiduciary, helps you understand what might come your way. Things that you perhaps had not considered.

Greg Ramirez: [00:13:00] Yes, I've been in this industry for 25 years, folks, and I've seen it all and I'm still seeing more. So nothing surprises me. I could probably sit here and have a whole podcast season of scenarios that we've been through, and I obviously I'm going to talk about certain things that I think are very important. One of the biggest concerns that I have right now is that I think there's going to be a lot of elderly abuse as we get older because some of these young people don't want to work and they see their parents. I mean, right now we have the highest level of young adults living with their parents. I think this is the highest level we've had in over like 80 years or 100 years. It's not getting better because look at the inequalities in regards to getting a home. It's become very expensive. And again, if there would have been the right financial planning going and then on the other end, you see that the luxury brands are being bought by these people that are living at home because they don't have home payments. So again, if we teach our children correctly not to buy that Gucci purse or that Chanel purse and instead to save that money, then you can have a house or a condo. You know, we all got to start somewhere. But I think that a lack of planning is what's causing this.

Cheryl White: [00:14:01] Wow. We have covered so much today. Greg Ramirez, thank you. And I want to remind everyone that if you have a question that you'd like Greg to address to answer, just let us know. You can give us a call at (562) 269-1007. And remember that we're also online, available 24/7 on our website, advisorsoncall.com.

Announcer: [00:14:24] We know life is busy, but any time you have a question about your retirement, drop us a message online at advisorsoncall.com. Investment Advisory Services are offered through Greg Ramirez at Advisors on Call, a state registered investment advisor. Advisors on Call and this radio station are not affiliated. The investment ideas and financial vehicles discussed here should not be considered personalized investment advice, nor are these recommendations to buy or sell any particular investment or product. And the information you hear should not be considered tax or legal advice. Individuals should first consult with competent tax, legal, accounting and other professionals regarding the applicability and suitability of any investment ideas. Certain investment ideas contain substantial risk, are illiquid and may only be appropriate for accredited investors pass for. Performance is not a guarantee of future results. All investments will fluctuate and when redeemed, may be worth less than when originally invested. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company. None are offered or sold through Greg Ramirez at Advisors on Call.