Transcript of Video

Gordon: All right, here we go. We’re speaking with Joseph Falbo. He’s a certified financial planner, also author of a book called Retirement Success, Hiring Your Functional Retirement Advisor. So we talk about the year end money moves here. Joe, what are you suggesting broadly?
Joe: Yes. Gordon, I just have to get this disclosure out of the way. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you consult with your attorney, accountant, financial advisor, tax advisor prior to investing securities offered through LPL financial member, FINRA SIPC.
Some of the things that you should definitely be doing, or one thing that I would definitely do that I see a lot of mistakes happen, is if you’re 70 and a half years old and you have an IRA, I would say make sure you’re taking the required minimum distribution, which the acronym they use a lot in the industry jargon is RMD, required minimum distribution. That’s the dollar amount the government forces you to take out of your IRA and pay taxes on.
Gordon: Okay. Or else what happens, Joe?
Joe: Or else you’re getting whacked with a 50% tax on that amount.
Gordon: I didn’t realize it was that much.
Joe: Five, O. Yes.
Gordon: Wow. How do they determine what you should be taking?
Joe: They have a calculation. Typically for the first year it’s around 3%, but they have a whole table. You could actually pull it up online, but there’s a whole table on required minimum distributions. The first year it’s about 3% of your total IRA value based on December 31st of the year before. And then it goes up incrementally every year, the percentage.
Gordon: Got it. So what if you’re not 70 and a half, you’re 60, 65-ish. What are you doing with your money at that point, end of the year?
Joe: End of the year, another good thing you could be doing is tax harvesting, which is nontaxable money … I mean, I’m sorry, taxable money, non-retirement money, where you’re looking at things, like, for example, this year, maybe you’ve made some early gains in the year with maybe some stocks or mutual funds and you actually sold out of some of them and have some large capital gains, you could look through all your other investments now, especially now at the end of the year, the market’s down right now, and look through if you have any losses to offset those gains.
Gordon: We’re speaking with Joe Falbo, certified financial planner. He’s also author of a book called Retirement Success, Hiring Your Functional Retirement Advisor. We’re talking about end of the year tax moves. What else should we keep in mind?
Joe: I wouldn’t buy any mutual funds toward the end of the year because a lot of mutual funds pay out their capital gains in December or late November, and if you buy them during that time period, you’re going to be locked into those capital gains as well. That’s a mistake I see often. I would say wait until January to buy the mutual funds.
Gordon: When it comes to financial planners, generally speaking, should you go with someone who’s like an overall manager and say, I don’t know, takes a piece of your money or should you hire a fee based person who you pay once in awhile. What’s the thinking there?
Joe: Yeah, that’s the big question out there nowadays, and it’s the real reason why I wrote Retirement Success, Hiring Your Functional Retirement Advisor. Which by the way, your listeners could go to, that’s retirement success, NJ like New Jersey dot com. They could download the book for free. All they have to do is put in their first name, last name and email, and it’s going to tell you exactly what to look for.
And in the book I say, “Listen, whether they’re commission-based, whether they’re fee-based, whether they do both or whether they’re fee only, or whatever they are, I give you the five traits that I think you should look for, then it really won’t matter as much how they get paid. But these five traits and characteristics is what you should be looking for.
Gordon: Name one.
Joe: One of them is, they want to start with a plan. They want to start to understand you as a person. Understand your wants, your needs, your goals, your circumstance, first, before talking about the strategy or what kind of products to use. Products and strategy is great, but they don’t start with that, they get to understand you as a person.
Gordon: Yeah. Is it important to rebalance this time of year or is that overrated?
Joe: Rebalancing is one of the best things you could do for your portfolio. I try to do it once or twice a year. I don’t necessarily say to do at the end of the year, but at least … if you haven’t done it this year so far, yes, it is a good thing to do. Because you’re only selling a little bit of what has gone up, and then you’re buying a little bit of what has gone down. So you’re constantly doing that once a year or twice a year.
Gordon: Gotcha. What else you want to toss in? Anything else.
Joe: I just think that book is … just saying it, I’m trying to get that out there because I think it’s really going to help people that in the 21st century retirement, is up against a lot of challenges in this retirement. So I think most people need a good advisor, but the challenge is finding one and knowing you have one. So when you read the book you’re going to really know it instinctively by knowing those five traits
Gordon: Slightly off subject. You think advisors like yourself wind up getting replaced by artificial intelligence where we just plug in age, holdings, job, desires?
Joe: I do not think so. I do not think so. I think the technology is awesome, and I think it’s eventually going to help the advisors help people better. But I don’t think that’s going to happen because I think most investors are human nature. My prediction is the next time there’s a massive crash or bear market for awhile, for extended period of time, I’m not talking about this year, I’m talking about the next bear market. I think those robo advisors are going to notice that people … you can set them up and buy and do stuff like that, but to keep them invested during that time’s very emotional, and robots can’t do that.
Gordon: Very good. Good stuff. Hey, thanks for sharing a few minutes. I enjoyed the chat.
Joe: Thank you, Gordon. Me too.
Gordon: I’m going to save this. I’ll shoot it right over to you.
Joe: Thank you so much.
Gordon: Actually tell me your email while I’ve got you on the phone.
Joe: Sure. It’s
Gordon: Joseph.falbo@ …
Gordon: Got it.
Joe: Thank you, Gordon.
Gordon: I appreciate it.
Joe: Thank you so much.
Gordon: All right. Talk to you. Bye-bye.
Joe: Bye.