Capital Market Assumptions & Elements of Satisfaction
by SGL Financial
Our 2 Cents – Episode #112
Capital Market Assumptions & Elements of Satisfaction
Our 2 Cents is back this week with a great episode! Steve and Gabriel are discussing forward-looking assumptions and forecasts for financial planning and then they’re diving into the world of “financial satisfaction” as it relates to how you feel personally about your planning. Join in now for this conversation!
- Capital Market Assumptions – The Experts Predict:
- What are capital market assumptions and what are the designed to do?
- How can these forward-looking forecasts help you in your long-term planning?
- How and why do major investment & research firms like Blackrock, Morningstar, Vanguard, and Research Affiliates change their predictions based on market behavior?
- We’ll share ways these forecasts are used to model portfolios and potential performance.
- Elements of Satisfaction:
- The elements to satisfaction in retirement planning
- What, finances aside, are we trying to provide to our clients when building them a plan?
- Peace-of-mind, confidence to spend, independence: What can you do to accomplish these feelings of satisfaction?
Tune in now to join us for this discussion!
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Announcer: You’re listening to Our Two Cents, with a team from SGL Financial, building wealth for life. Steve Lewit is the president of SGL Financial, and Gabriel Lewit is the CEO. They are here to discuss all the latest in financial news, trends, strategies and more.
Gabriel Lewit: Good morning, everybody. Gabriel here, and Steven Lewit with Our Two Cents at SGL Financial. Welcome to the show. The reason I’m chuckling here is because we had quite a lead in to our show here today, Shooting the Breeze. I thought I’ll share some of this with you.
Steve Lewit: We weren’t shoot-
Gabriel Lewit: Kick things off before we get-
Steve Lewit: We weren’t shoot-
Gabriel Lewit: Into the specifics of the show.
Steve Lewit: Wait, wait, wait. We weren’t shooting the breeze. I was presenting to you, a very creative new business idea that I have a gut feeling would be a home run and you dissed it.
Gabriel Lewit: I did not dis. I said, “I politely disagree.” So folks, we were talking about many things. We spent 15 minutes talking about the differences between simile, analogies, and metaphors. A quiz for you, sitting in the audience, is do you know the difference between a simile, analogy, and a metaphor?
Steve Lewit: Yes. But that’s really interesting. We also discussed some financial stuff folks. But we got sidetracked like we’re doing right now.
Gabriel Lewit: We spent a good 10 minutes on that, and then Steve, we were about to start the show and do our countdown with producer, Katie. She was about ready to roll, and Steve said, “Hold on, wait, wait, wait. I’ve got a great business idea that I’ve got to share with you.”
Steve Lewit: Yeah.
Gabriel Lewit: He prefaced it. He said, “Do you know why men don’t get manicures?” I said, “Because most men don’t want manicures.”
Steve Lewit: Are reluctant, yes. Yes. Well, I disagree with you.
Gabriel Lewit: And he said, “Well, I disagree, and I’ve got the best business idea ever.” You want to share what it is?
Steve Lewit: No. You share it.
Gabriel Lewit: Okay, he wants to open up a shop.
Steve Lewit: I’m not giving out my ideas. You can do it.
Gabriel Lewit: He wants to open up a shop called Men-acures. I did like the name actually.
Steve Lewit: It’s for men. Imagine folks, imagine your spouse or friends that was a guy. He’d like to have nice nails and be treated nicely, but won’t go to a beauty salon to sit with 12 other women, while he’s the only guy there having being tended to. If you look at Sports Clips, Gabriel, Sports Clips made a fortune on hair cuts, because they catered it to men with TVs and hold on, let me turn off my phone.
Gabriel Lewit: Oh, my goodness. Well, Steve, I guess you’ve got to retire and I got to buy you out. You can launch your new venture.
Steve Lewit: No, I think it should be called The Holding Company.
Gabriel Lewit: SGL Manicures?
Steve Lewit: The Holding Company will be SGL Financial.
Gabriel Lewit: Folks, let us know your thoughts on this. If you think Steve’s onto something.
Steve Lewit: A manicure place built for men.
Gabriel Lewit: Send us your vote at info@SGLfinancial.com if you’re listening to the show. We’d be curious to aggregate your feedback on men-acures.
Steve Lewit: Some people have no creativity. It’s mind boggling.
Gabriel Lewit: Manicures. Manicures for men. I can see the commercials now.
Steve Lewit: It’s fantastic. All right.
Gabriel Lewit: Get your craft beer at the same time.
Steve Lewit: Exactly. Something like that.
Gabriel Lewit: 10 beers on tap. One for each hand. Or finger.
Steve Lewit: Hot towels, TVs with football on it. Nice people-
Gabriel Lewit: Rock and roll playing.
Steve Lewit: Maybe a little metal.
Gabriel Lewit: All right. We should get to the show.
Steve Lewit: We should.
Gabriel Lewit: All right, so folks.
Steve Lewit: Good morning. Good morning.
Gabriel Lewit: Good morning. Or afternoon or evening, depending on when you’re listening. We are going to talk to you about a couple of different things here today, but to kick things off, we’re going to talk about something called capital market assumptions. Isn’t that exciting sounding?
So, what are capital market assumptions? Well these are forward looking forecasts that are put out by most major investment firms and research firms. What they are designed to do, they are designed to help you make assumptions in your long term planning for the returns of various asset classes in the market.
Steve Lewit: Well said.
Gabriel Lewit: Okay, now this is important, because when you’re running your financial plan and you put your account in there and you’ve got an account that has x, Y Z in it, maybe U.S. stock or some U.S. bonds, you’ve got to put a forecast in there for how that asset class is going to perform. So the question is what do you put in there? Do you put in the historical average? Do you put in whatever number you want it to see? Or do you put in something else? And that’s where Capital Market Assumptions tend to come into play. The goal is to give you a better looking, more research-based forward looking outlook that you can use to model your planning with.
Steve Lewit: So, if I may elaborate, your portfolio, if it’s diversified, it has many different asset classes but inside those asset classes there are other components of it, like consumer durables, financial institutions, what else Gabriel? Help me here, I’m running into a road block in my mind. Health care-
Gabriel Lewit: Yeah.
Steve Lewit: All those sub-classes. So when you put those all together that’s how you have a diversified portfolio and each one of those classes and sub-classes needs a projection to it.
Gabriel Lewit: Right, so if you’re looking to model what your entire portfolio is likely to perform at over the next five or 10 years, you’ve got to look at the sum of all the parts. Just like if you’re… Oh, I’ve got a good analogy here, if you’re cooking your dish and you throw in a lot of different flavors, different ingredients will make it all taste differently, because each ingredient adds its own flavor, to create a blend of all the flavors.
Steve Lewit: Yeah. So for example, domestic technology was a very big play for a lot of people over the last 10 years, that’s where all the money was really made. Domestic technology… Things always change, things go from first to last or first to second or third to first, so we don’t know where domestic technology is going to end up, so we need projections. What does that class do? Should I buy into it?
Gabriel Lewit: Yeah, we’ll talk a little bit about how you use these in a second, but lets talk about what they are and what the numbers are showing. So before I give you the current forecast, going back to the start of 2022, we look at these very periodically, in fact I subscribe to a couple newsletters that send me market assumptions every month, I find that to be a bit overkill as if anyone can predict that accurately. I like to look at them on a six month basis, I like to look at them typically at the start of the year and then typically somewhere middle of the year and some new ones have just come out, so that’s why this is coming and bubbling up to the surface.
But at the start of this year, pretty much across the board the consensus was the 10 year outlook on U.S. was in the 1% to 3% range annualized. Bonds were in the also the 1% to 2% range annualized and internationals were in the 5& to 6% range annualized depending on the exact asset class type.
So those were pretty dismal, looking at those at the start of this year people were not super thrilled about that. But why were those the way they were? Well, people were valuing in the fact that at the start of this year U.S. was overvalued and we’re starting to see why those projections, they might be accurate, in fact we did a back study on the accuracy and Vanguard is one of the big forecast companies that puts out their projections, they’ve been incredibly accurate with their predictions over the last 15, 20 plus years. So what were people predicting at the start of this year? Well, if you have U.S. it’s highly overvalued and you have bond rates at an ultra-low place, with inflation they were modeling that inflation’s likely to rise, U.S. is likely to drop and both of those are starting to materialize as you’re seeing that come to light here in 2022.
Fast forward now and the market is down and interest rates have risen, so if you were to look today and start modeling your portfolio-
Steve Lewit: And inflation.
Gabriel Lewit: And inflation’s still up-
Steve Lewit: Still up.
Gabriel Lewit: Okay, but if you’re updating your plan and now you’ve got lower balances today, and you’re trying to model your next 10 years worth of returns, what would you use?
Steve Lewit: Are you asking me that? Are you asking me to give you an answer?
Gabriel Lewit: Well, it could have either been a rhetorical question or you could chime in, it’s up to you.
Steve Lewit: Yeah, so I’m not quite clear what you’re asking but there’s looking back, I have historical information-
Gabriel Lewit: Let me… Can I clarify?
Steve Lewit: Sure.
Gabriel Lewit: Lets say you update… The values of your accounts are down today…
Steve Lewit: Yeah, I have a million and now I have 800,000.
Gabriel Lewit: Or 850.
Steve Lewit: Right.
Gabriel Lewit: Now lets say you are managing your own financial plan, for simplicity.
Steve Lewit: I’m doing it myself.
Gabriel Lewit: Yes, you click into your spreadsheet and now you’re updating your forward looking returns for your portfolio. What do you use today for a rate of return versus what you used six months ago when you had a million dollars, a million dollars you had a different rate of return in your plan, now today you’re at 850, do you keep the same rate of return in your plan, or are you adjusting it?
Steve Lewit: Oh man, I’m still not sure what you’re asking. I know you’re looking for a simple answer but here’s the deal, most people that are managing their own portfolios Gabriel, when it goes down they look in their portfolios then they say, “What’s going to be hot going forward? Where should I switch this to? Well, I did good in technology, maybe I should stick with it, or oil stocks are really really high, I’m going to trade this… I’m going to put a lot of money into oil stocks.” I don’t think they think about it in terms of historical returns for portfolio and diversification or forward looking returns based on current economics. I don’t think it’s quite that sophisticated, frankly.
Gabriel Lewit: Yeah well I think you’re over complicating what I was trying to get to…
Steve Lewit: We’re off to a great start today.
Gabriel Lewit: We are. What I was saying was, if you’re starting from a much lower point because the markets have already been down then at this exact point your return over the next 10 years is likely to be different than it would have been if you were modeling a return before the market dropped.
Steve Lewit: Okay, so if you’re… I think I’m getting your question, I’m starting to understand. So if my portfolio is low now and I think the market is down-
Gabriel Lewit: Well we know it is down, it’s not that we think it’s down, it’s down.
Steve Lewit: It could go further but I’m adding low points so it’s going to recover, so I’m going to have a higher return starting today than when I projected it six months ago.
Gabriel Lewit: Yes, exactly and this is… My point there was this is what the forecasters and the researchers have the big institutions like Morning Star, Vanguard and many others that we’re going to talk about, this is why they’re re-adjusting now their 10 year forward looking returns. They’re re-adjusting them based on what it is as of today. So when you’re looking at different forward looking returns analysis you’ve got to count into the fact that those are being made based on current market conditions.
Steve Lewit: I think that’s a great point. Now I really understand what you were trying to explain to me, that I couldn’t understand. So what you’re saying is the level of the market at the time of the prediction, will change the prediction. If the market is really high I’m going to have a lower prediction going forward but if I’m coming out of 2008 and the market’s really low I’ll just say “Wow, this is going to recover and I’m going to have a higher prediction”.
Gabriel Lewit: Yeah, and I’ll try to just reclarify one other way, I you had money in cash that you were going to invest in January, when markets were high and interest rates were low, there was a much lower anticipated forward looking return. Now, if you’re investing money in cash today, markets are low interest rates are high, there’s a different forward looking outlook based on the changes in the macro-economic and global environment in the factors here.
Steve Lewit: Okay, okay. So, okay I’m going to let you get to the main point of the points.
Gabriel Lewit: Well, I wanted to explain the concept here first because I’m going to give you the numbers, okay so Black Rock for example is one of the big research firms, Morning Star is another big research firm, Vanguard is another one, that’s actually not on this list but I was just looking at it the other day and then there’s another company called Research Affiliates and the summary here is all of them are a little bit different but they are all generally pretty close with their capital market assumptions.
So as an example, based on today the 10 year expected forecast for Black Rock for U.S. equities, as of today, would be 7.1%, Morning Star says 5.8% and then Research Affiliates says 6.3% and I don’t have it in front of me but I believe Vanguard had adjusted theirs to actually more like 4%-ish.
Steve Lewit: It went up a little bit.
Gabriel Lewit: Now, there’s different classes of U.S. equities, I think this is very important. You were mentioning this earlier about some sectors or individual sub-classes. So U.S. growth, if we get more specific, is actually still anticipated to be much lower than U.S. large and that’s because growth stocks have been… Look at Facebook, some of the climbs that we’ve seen in some of these growth stocks are substantial and so all those get factored in, the pricing, the valuations, the price to earnings ratio, all these are getting factored into the capital market assumptions that we see.
So what does that mean? It means one thing, it means that we can have it sense that as of today we’re going to get a little bit higher returns than we would have gotten six months ago, that makes sense because we’re skipping the 20% decline and starting at a lower point. Right, because of the assumptions.
Now we also can compare that to other asset classes, so for example Black Rock thinks that developed market’s equities is about 8.3% over the next 10 years. Morning Star thinks about 8.8% for developed markets and Research Affiliates thinks about 11.8%, very optimistic and then Vanguard, which again I don’t have in front of me, but I believe is around 7% range for international equities.
Steve Lewit: Yeah so lets be clear, developed market is like European, things coming out of Europe.
Gabriel Lewit: Yes, your more modern economy is not what’s called your emerging market, that’s a separate asset.
Steve Lewit: Like China, even though it’s not emerging, but it’s considered in the emerging market.
Gabriel Lewit: I should know that but I don’t know if 100% of China is considered emerging markets or developed market. But the idea here is that internationals, if we compare them to U.S. are still forecasting at a higher projected rate of return.
Steve Lewit: Which is a shift in what happened over the last 10 years.
Gabriel Lewit: Yes.
Steve Lewit: Now I had a conversation with a client who is very familiar, does a lot of traveling, very familiar with Europe and emerging market markets, who was very negative on the… Saying “No, no, international is terrible, it’s awful, it going to be bad, I don’t want any of my portfolio, I only want 15, 20% in my portfolio”. Is she right or wrong? The fact is we don’t know.
Gabriel Lewit: Well, the quick answer would be that’s a form of market timing.
Steve Lewit: Exactly.
Gabriel Lewit: Now if you go back decade by decade, it’s very interesting the fact that we got a great report that we can send to you if you’re interested that… A decade by decade game. So if you look in the 2010 to 2020 decade, guess who won that game? You should know.
Steve Lewit: U.S.?
Gabriel Lewit: Yes, by a good chunk. We had clients saying “Hey, Gabe, Steve, why in the world do we have internationals in our portfolio, look how great the U.S. is doing.
Steve Lewit: Yep.
Gabriel Lewit: And we’ll circle back to that, but the prior decade 2000 to 2010 what was the winner? Absolutely internationals.
Steve Lewit: International.
Gabriel Lewit: That was the loss decade for U.S. stocks, I think this is really important that we look back and remember this-
Steve Lewit: Between 2000 and 2013, that’s 13 years the S and P started, I don’t remember what level but it ended at the same level for those 13 years.
Gabriel Lewit: Now, the decade prior to that guess who won?
Steve Lewit: U.S. tech did it, that was the tech bubble.
Gabriel Lewit: U.S. won that decade.
Steve Lewit: The tech bubble that burst in 2000-
Gabriel Lewit: In the 90s, yes.
Steve Lewit: Yep.
Gabriel Lewit: So the 90s decade U.S. won, guess who won the 80s decade?
Steve Lewit: Let me see, had to be international.
Gabriel Lewit: International, correct. So are you sensing a theme here? International wins then U.S. wins, international wins, then U.S. wins. I’m not prognosticating the future but one would also argue that sets up a good next decade for internationals, but what’s really happening here is valuations of U.S. get high and then the market crashes or declines or there’s a bare market that gets back to low attractive levels again, very [inaudible 00:18:04]. Well that’s also happening in reverse for internationals. In our portfolios of course we try not to time this, we build a all weather portfolio that has everything we need in it.
Steve Lewit: Well, here’s a question Gabriel, because what you’re saying if I’m listening to you, what you’re saying is “Oh well, now we should switch to international”, you’re saying-
Gabriel Lewit: Sell all U.S. and switch to international, right?
Steve Lewit: Lets go and do that, why wouldn’t I do that?
Gabriel Lewit: Well market history is helpful but it’s also not guaranteed. Just like the weather forecast says it’s going to be partly cloudy today with a good chance of sunshine, only a 10% chance of rain, and you’re going on a long hike you could not bring an umbrella but if you’re really being prepared maybe you pack an umbrella too, just to be on the safe side.
Steve Lewit: Or is it partly cloudy or partly sunny?
Gabriel Lewit: Yeah, the ideas we can certainly make predictions based on historical data but it’s not guaranteed and so-
Steve Lewit: And how do we know when to make that change?
Gabriel Lewit: Yes.
Steve Lewit: When do we make the shift?
Gabriel Lewit: Exactly. So folks, the way portfolio allocations are built are done via a lot of research or foreign allocations, historic allocations, the neatest part of all of this, if we’re thinking about a portfolio allocation is historically speaking a diversified portfolio of U.S. and international, where you don’t try to time it has always long-term out-performed a pure U.S. based portfolio.
Steve Lewit: So what you’re saying Gabriel is that in a diversified portfolio, there’s always going to be winners and losers, right? Because I have everything, I have international, I have emerging markets, I have U.S., I have tech, I’ve got all the different sectors in there and some are going to do better and some are going to do worse.
Gabriel Lewit: `.
Steve Lewit: But what we don’t know is when the worse becomes better and the better becomes worse.
Gabriel Lewit: Correct.
Steve Lewit: So we need them all in there.
Gabriel Lewit: Yeah. So-
Steve Lewit: And that’s over time, that’s how these portfolios win over somebody that sticks with one major asset class.
Gabriel Lewit: Or tries to time, right. Your client that says “Hey I only want 20% internationals”. Look, one of two things is going to happen, she’s going to be right and she’ll be slightly ahead or she’s going to be wrong and she’ll be slightly behind.
Steve Lewit: So now I have to add one piece onto this-
Gabriel Lewit: Sure.
Steve Lewit: I think it’s very important. So in our portfolio, as in a well managed portfolio, lets say we have a diversified portfolio with all of this in there, internationals and so on. Now, U.S. really grows and international lags, now U.S. becomes over-allocated and has too big of a percentage of that portfolio, so in a well managed portfolio there’s going to be a balancing of that portfolio. So if it’s out of whack we’re going to sell U.S. and buy the international when it’s low to rebalance the portfolio, so in a well managed portfolio rebalancing always having you selling high and buying something low, which takes advantage of the low sector or low asset class coming back and growing in the future.
Gabriel Lewit: Yep. Yeah, so rebalancing is important as well and definitely a key component. One last thing about the-
Steve Lewit: That was hard, that was hard to get out.
Gabriel Lewit: One other forward looking assumption here, and if you want this report I’m happy to send it to you, U.S. bonds, now interest rates have risen, so what are bonds likely to do? Black Rock thinks that the 10 year forecast is around 3%, Morning Star thinks about 3.6, Research Affiliates thinks about 3.8 and Vanguard was in about the 3% range.
Also sub-classes of bonds, you’ve got intermediate, short-terms, high-yields, corporate, okay lots of… But just on the aggregates of U.S. bonds that’s what’s being projected. So, what does that mean for you today? Should you… I just read an article this morning about a big bond fund manager that, no surprise, was saying “Hey this is the best time to sell all your stocks and just by bonds”.
Steve Lewit: Pay by violence, right? Really?
Gabriel Lewit: Well of course, that’s market time and they’ll sell all your stocks and buy bonds.
Steve Lewit: And he manages a bond fund.
Gabriel Lewit: He does manage a bond fund, a little bias there. But it is interesting to see that even though interest rates have risen the forward looking outlook on bonds is still subdued. It’s possibly being factored in there, is also the likelihood if you run out and buy bonds today, what might still happen in the next year? Rising interest rates. So you might lose a little in the short-term just to gain some higher yields in the long-term.
So all of this is to say guys, when you run your projections, or when we run them for you, there’s a method to the madness, it’s not just arbitrarily plugged in there. It’s helpful sometimes to see the research that’s out there from big investment research firms. What I like to do, is I like to look at the aggregate of all the big investment research firms to come up with some level of consensus of what’s out there. I find that to be the most helpful for us.
Steve Lewit: It is helpful Gabriel, but the truth is nobody knows what’s going to happen in the future. When you aggregate, you got folks in there that’s saying internationals going to be horrible and then you have folks in there that is using the same data, looking at the same picture, they’ve come out with a totally different conclusion. I don’t know about you, I don’t know who’s right or wrong, you don’t know who’s right or wrong and they don’t know who’s right or wrong, which is why we showed folks a while back that we had two head honchos at Morgan Stanley that had two totally different predictions for the market.
Gabriel Lewit: That was funny, I remember the… I think there was also another one with Chase, where the CEO came out one day and said the market is terrible, it’s going to crash, the same day his head investment researcher came out and said it’s going to go up-
Steve Lewit: This is great.
Gabriel Lewit: All right.
Steve Lewit: All right.
Gabriel Lewit: Thanks for the clarity. All right, so folks if you have a question on that, I know that’s a little technical but we sometimes focus on bigger picture planning items, we thought it would be good to dive into some specifics on investment portfolio assumptions, capital market assumptions going forward. If you have questions give us a call 8474993330 or email us email@example.com and let us know your questions and we’ll answer them on one of our upcoming shows.
Okay, so how about a little less technical of a topic-
Steve Lewit: Phew, my brain is tired.
Gabriel Lewit: Hopefully we didn’t wear you guys out out there, so we wanted to talk about… The title of our segment here is Can You Get Any Satisfaction? Wasn’t there a song, we were joking earlier, wasn’t there some song-
Steve Lewit: Yeah.
Gabriel Lewit: Rolling Stones-
Steve Lewit: It was the Rolling Stones (singing). Something like that.
Gabriel Lewit: Golden pipes over here.
Steve Lewit: No I don’t know, I don’t know if that’s the right tune for this song.
Gabriel Lewit: So, can you get any satisfaction in your planning? That’s the question at hand and we’re going to look at some things that we are aiming for from a non-technical non-numbers perspective and we’ll talk a little bit about how you get these.
So what are some of the elements of satisfaction? One of them is, I say this word a lot because it’s one of my favorites, the core of what we do dad, we’re planners as you know, what are we trying to provide to people when we build them a plan?
Steve Lewit: This is the core of what we do, is that money is money but life is much more important than money and all decisions, this is my philosophy, is all decisions we make are to give us more piece of mind.
Gabriel Lewit: Yes, number one thing that I say all the time is “Hey look folks, we’re planners, we’re money managers, we’re tax advisors, but you know what we’re here to do? We’re here to give you piece of mind.” So, that’s really important dad, I think the question folks is if you’re out there ask yourself this right now, do I feel with everything going on right now that I have piece-
Steve Lewit: Financially. We can’t get into other things.
Gabriel Lewit: That reminds me actually, I had someone call me the other day and they spent the first… I said “Hey what would make this a good call for you? And how can I help?” And they spent the first 10 minutes of the call saying “Well, I’m a little worried about”, what was it? “Grocery store supply chains and I’m a little worried about there’s the war going on and then I’m really worried about the digital dollar that might be being built and then the government’s going to come in and take away the digital dollar and you’ve got the border thing going on down there” and he went on for 10 minutes about all the problems that he saw in the country and I said “That’s a lot, must be weighing on your mind, is this impacting you financially?”
Steve Lewit: Right.
Gabriel Lewit: Then we started talking about his portfolio but yeah, to your point, there’s a lot going on out there in the world that can be stressful and concerning and everyone’s got their own particulars of what’s what, but do you have piece of mind regarding your portfolio and your plan? Your financial plan.
Steve Lewit: So what that means, piece of mind… Let’s look at the opposite of that, what does it mean not to have piece of mind? If you have, if you worry, if you’re nervous, if you have anxiety-
Gabriel Lewit: Unsure.
Steve Lewit: Unsure, if you argue over money, all of those are elements that-
Gabriel Lewit: Indicators.
Steve Lewit: Indicators of, no I really don’t have piece of mind about this.
Gabriel Lewit: Yeah and I think it could be as simple as you just… No I don’t have 100% piece of mind, I am a little worried about this.
Steve Lewit: Yeah.
Gabriel Lewit: And the goal folks, this may not sound realistic, but is to truly not be [inaudible 00:28:02] really, where you can look at you plan and say “Huh, I’m not worried”. How cool is that?
Steve Lewit: What we find… Look, we have the evidence, we’re financial planners we have the evidence, our clients come into us Gabriel and I love this, this is why I keep doing this, they say “Thank you, for giving me piece of mind about my money” and to me that’s what it’s all about.
Gabriel Lewit: It is, it’s the number one thing we’re looking to build. Now, another element of satisfaction, we want to get you some satisfaction, right? Is the ability for you, Steve you love this one, the license to spend.
Steve Lewit: Oh I love this. We’re going to do a show, Katie we’re going to do a show that talks about you need to spend more in retirement.
Gabriel Lewit: Well of course, one of the things that causes people lack of piece of mind is feeling like they can’t spend. Okay, “Oh I can’t buy this, I got to pinch my belt here”-
Steve Lewit: You’re looking over their shoulder, they’re off at dinner and it’s a $200 bill and they don’t enjoy it because they’re saying to themselves, “Gee can I really afford that?”
Gabriel Lewit: Yeah, yeah. Well it’s funny, you know how always on the show we’re talking about we want to get it so you can buy first class tickets in your retirement?-
Steve Lewit: You should fly first class.
Gabriel Lewit: Fly first class.
Steve Lewit: Fly first class.
Gabriel Lewit: Fly first class. Well I had a client the other day say “I listened to your podcast and I like that idea, I would never buy myself first class tickets” and then we went through her plan and we started talking about a big trip that she had coming up and I said guess what Jane, her name wasn’t Jane, she said “What?” I said you can buy a first class ticket for this, she’s like “Are you sure?”
Steve Lewit: Are you sure.
Gabriel Lewit: I was like yes, I’m a 100% sure.
Steve Lewit: And even then knowing that it fits into the budget people still won’t-
Gabriel Lewit: Well she looked at me, she said “You know what, I think I might”. I said that’s great, you should.
Steve Lewit: Treat yourself well, just like a man would if he had a good manager person to go to.
Gabriel Lewit: I had another client the other day that finally called me up and said “The stock you’ve been telling me I should sell for a while, I’m going to finally sell some of it and spend it, I’m going to go on a big European trip but I’m going to contribute to my son’s wedding and I’m going to do this and that” and I said, I’ll say Joe, even though it wasn’t Joe, “Joe, that’s great, I’m excited for you, you should” and so that’s the idea, this piece of mind, this confidence that comes with spending is another key level of building satisfaction with your money.
Steve Lewit: Satisfaction is really hard to get. I think we get it, then we lose it and we get it and we lose it, but what I love about what we do and I know I’m tooting our own horn here, but when people have a plan and they have someone to go to that adjusts it when things come up and stuff like that, they have more piece of mind.
Gabriel Lewit: Yep.
Steve Lewit: It’s just amazing, at least we help those folks with that part of their psychological life.
Gabriel Lewit: Yeah, I want to give one last element of satisfaction. So we’re going to change it from can’t get no satisfaction to you got oodles of satisfaction, that’s the new song title.
Steve Lewit: Okay.
Gabriel Lewit: I got oodles of satisfaction. Well independence is another key component. Felling like you don’t have to be a burden on somebody, feeling like you’re able to take care of yourself, feeling like you’ve got the autonomy to run and control your own life. Most of the time in retirement manifests itself with long-term care and health care planning, but also when you’re in your working years it’s financial independence, feeling like “Oh I’ve got control over my career, over my job, over my retirement timeline, I’m not a slave to the system that’s making me money, I’ve got independence.”
I think this is another big factor we’re looking to build for you, where you feel you’ve got that financial independence.
Steve Lewit: It’s empowering. It makes you feel like “Hey I’m in control, in a healthy way”, so it’s very empowering. In Maslow’s hierarchy of needs what he’s talking about is if you don’t have your finances in order, if you’re not feeling safe which is what finances are all about, that affects all the higher level things of satisfaction all the way up to love. It says if you don’t have financial security and feel safe in the world then that’s going to affect everything else above that, including your ability to love or receive love.
Gabriel Lewit: Yes. So that’s really actually… Producer Katie if you could take a note about Maslow’s hierarchy of need, that would be a great topic for a future show-
Steve Lewit: Yeah, I would.
Gabriel Lewit: I’d like to explain that more but we’re running up against our time deadline here for you all. We try to stick to around 30 minutes for our show. So I’d love to circle back on that dad, that’s a great point, I love that concept of Maslow’s hierarchy of needs and we’ll explain that on maybe even our next episode.
Steve Lewit: Yeah we might, I would like to circle back on that when we circle back on my success in the men-icure business.
Gabriel Lewit: The men-icure business. Folks, okay, let’s put a bow on our episode here, we got some homework for you on the show, you listeners of ours that we love. We’d love for you to email us firstname.lastname@example.org and tell us what you think of Steve’s men-icures idea, that number one.
Steve Lewit: Men-icures.
Gabriel Lewit: Men-icures for men. Okay, expertly groomed by Steve.
Steve Lewit: I’m going to take a course, I’m going to take a course.
Gabriel Lewit: Number two if you have any concerns at all about your satisfaction, your piece of mind, your confidence of spending, your financial independence call us or email us, our phone number is 8474993330 or email us email@example.com and let us get you the satisfaction that you so much deserve.
Steve Lewit: And if you think men-icures would add to satisfaction let us know here.
Gabriel Lewit: Folks, new perk, if you’re an SGL Financial client you get free-
Steve Lewit: Men-icures.
Gabriel Lewit: Men-icures at the new, unbuilt men-icures locations. All right guys, thanks for joining into our show today, we appreciate having you here. Make sure you share with your friends, hit the forward button, send it off to them, we love having new people join into the show and have a great week. We’ll talk to you next time.
Steve Lewit: Stay well everybody.
Announcer: Thanks for listening to Our Two Cents, with Steve and Gabriel Lewit. For any questions about your finances give SGL a call at 8474993330 or visit us on the web at sglfinancial.com and be sure to subscribe to join us on next week’s episode.
Prerecorded Voice: Investment advisor services are offered through SGL Financial LLC an SEC registered investment advisor. Insurance and other financial products are offered separately through individually licensed and appointed agents.