GulfCoast Financial Podcast, Episode 33: A New Reality
Peter: Welcome into the program. This is GulfCoast Financial brought to you by your team at GulfCoast Financial Services voted best of the best by the Lake City Reporter in financial services. Founder and CEO John Kuykendall here with us is our resource for perspective and guidance and a common sense approach to planning. John, always a pleasure. Welcome back in.
John: Thank you, Peter. It’s great to be here. I tell you what, it’s a great day. I hope everybody out there is safe and staying inside as much as they can.
Peter: Yeah, we’re all quarantined here still, John. I got my mileage app reporter. It tracks my mileage for work and business and personal. I just didn’t go anywhere. Gas is cheap. It’s nice but not getting to take advantage of it, really.
John: Why is it that when gas is cheap you can’t go anywhere?
Peter: Right, yeah. Just works out that way.
John: I think drove 40 miles last week.
Peter: Yeah, I think that the whole month of March it was only 80 miles total. It was pretty low, just one of the inconveniences going on right now.
John: I got to tell you, Peter, I stayed home most of last week and decided that retirement wasn’t for me. Even though I was working from the house, it was like every day was the same. I couldn’t tell what time it was. I couldn’t tell what day it was.
Peter: Groundhog day.
John: Yeah, every day. This week, I came back to work for a couple days. I’m going to break it up that week. We’ve closed the doors. We’re talking to clients on the telephone and using internet to communicate with them but trying to cut down the exposure as much as we can.
Peter: What are you talking with clients about? Are you hearing some concerns about market volatility or recession or where do we go from here and how long does this last and how do I get my money back, those kind of things?
John: I think that that’s it. I think this is the first time in history that we’ve had this that I know of where – we’ve had other recessions. We’ve had other downturns, bear markets, but never a bear market where we couldn’t do anything. We’re all getting cabin fever I think. A lot of them are wanting to know how long I think this is going to last, when the market’s going to come back. As I told you on the show before, our clients came out of this really in good shape. We’re just waiting to get back into the market. They’re concerned about the length of time, how their money’s going to last them during retirement. I keep telling them that’s why we have that income plan, we’ve got that work. If this lasts for a while, we may take a look at how we’re taking the distributions, because as you know, this year we don’t have to do the RNDs per the SECURE Act. If we can use other money this year and save the RND, we may be able to use that for Roth conversion, do some other things. We’re real excited about the planning opportunities that really this is going to afford us.
Peter: Even in this grave crisis, we’ve got some opportunities to do things to help further our financial progress and you’ve just got to identify where those opportunities are right for your planning, a solution for you. John Kuykendall, his team there at GulfCoast Financial Services can help you identify those opportunities. Pick up the phone and give them a call, 386-755-9018. It does seem like we’re suddenly in a new world, have a new reality, but planning still remains of vital importance. We’re going to have some real lasting change here, John. The impact has attempted to have been lessened by several programs that have been passed. The Corona Aid Relief and Economic Security Act, or the CARES Act, they always have to have those acronyms, $2.3 trillion in stimulus. What does this mean for individuals or for small businesses trying to keep their employees on payroll?
John: The thing is that it’s only $2.3 tri, which seems like a lot of money. You remember a couple of years ago the President gave everybody $2,000 and that money came into your account and you spent it. I don’t think it really stimulated the economy a lot. This year we’re getting $1,200 and $2,400 for a married couple plus $500 for each child under 16. I don’t think that it’s going – if this lasts a long period of time, that’s not going to be enough to really make a difference in the people that are unemployed. Unemployment is at an all-time high. It’s going to have to affect taxes down the road. Somebody’s got to pay this $2.3 tri in back. They say that’s just the first iceberg. There are more coming down the road that we’ll have depending upon how long this lasts that will kick out. Anytime we give money away, Peter, somebody’s got to pay for it. That’s going to be us in the long run which goes back to what we’ve been saying all along. Today is the cheapest tax dollars you’ll ever have. We’re going to be higher rates, higher taxes, we’re going to have to have it. I’m encouraged by what they’re doing in trying to help people but I think, as you told me, most of the money for the businesses is already gone.
Peter: Yeah, that’s what I’ve heard.
John: We’re in day four. I know I filed my application four days ago and the bank didn’t know what I was talking about. There were no banks in my community that were ready to take my application, even though I could do it on April 3rd. As of today, I got my application taken by one bank. The banking community wasn’t set up to handle this. I think that while it’s great, I don’t think it’s going to help us a lot. I’m concerned about the people who, the barbers, the hairdressers, the waitresses, who didn’t really put into Social Security because their boss paid them on a $10.99 wage and therefore they can’t file for unemployment.
Peter: There’s going to be a lot of people hurting out there, no question about it. The individual stimulus probably won’t get stretched too far. The stimulus for the business, that portion, the $350 billion, again, the engine of the economy, the vast majority of American workers are in small business environments, 500 or fewer employees or even self-employed, John. Obviously, there’s going to be some pain here, continued pain, as we move forward. What do you see as the outlook here? Is there a real possibility of lasting recession? What are the implications and effects on the economy and therefore on our money?
John: Peter, I lived through the ‘80s and I was in banking and we had super inflation back then. We ran a recession. We had prime rate was in the 20s there for a while. We lived through it. We got through it. We prospered. We did better after that. I think here this is going to make some lasting changes in how we do business. It’s going to make some lasting changes in how people operate going forward. No doubt, there are going to be a lot of business that are going to go broke that won’t come back out of this. A lot of individuals, it’s going to take them a while to get back. Overall, I’m optimistic about the economy. I’m optimistic about our growth in the future. This wasn’t something that was caused by our economy. It was caused by a health situation that therefore affected the economy a lot more than we ever I think felt possible.
Peter: John, in previous downturns if we look back at history, those that were inherent flaws in the financial system and in the markets, the great recession, the tech bubble collapsing, those had lasting implications. When there were problems that historically had been caused by specific events, such as 9/11, and even though with that one we were in the midst of a greater downturn because of the tech bubble, but the actual event itself, the rebound was pretty swift, pretty quick after that specific event. Now, this is obviously different. It’s going to have more lasting implications. Again, I think your point is that there was no inherent flaw in the economy or the financial systems prior to this virus.
John: No, the economy was moving along fine while the media kept saying that we were in the largest bull market in history and were constantly hyping that to get exposure. The market was running along fine. I think the market will come back. I think people historically will spend money after this because we’ve got a lot of pent up demand now. You’ve got to remember we haven’t been able to go anywhere. We haven’t been able to spend any money. Even though you’re not working properly, you’re still getting some kind of benefit. Just I think the economy is going to take off fine after this. I think it’s just a matter of the number of cases showing a downturn, and once we see that downturn, then I think the economy is going to bust at the seams.
Peter: Are there other implications that we need to potentially worry about? The debt, obviously, that the country has taken on with $2.3 trillion of additional money digitized into existence, we have to worry about the national debt, but each of us as individuals have the potential to have to or be forced to take on some additional debt. Is that going to be a lasting implication of this that we’re going to need to attend to?
John: I think it all goes back to the income plan, Peter. If we planned our income and we’re working towards a plan, then I think that we’re going to be able to get through this. I think that what’s going to happen is that we’re not going to be able to – it’s the difference between the wants and the needs. Our wants in this country have been a lot bigger than our needs and so some people have been living way above their means. They’re going to be back living the kind of lifestyle they can afford –
Peter: I think one benefit of this whole thing, John, is that we’ve really realized just what it is that we need, what’s truly essential, a roof over our heads, some food stocked in the fridge, of course, your good supply of toilet paper and a good high speed internet connection, right?
John: Yeah, the internet connection is really important, let me tell you and then the other thing is unlimited data because I think I’m about to stream my limit. I’d like more internet data. I think we’ve realized that there’s a simpler time that we had when we weren’t so busy and trying to buy everything in the world on time. I think inflation’s going to kick up but that’s not going to drive our economy bad. Taxes are going to go up but we’ve been preaching about that for years that we need to do things now to change our portfolios so it’s not all tax deferred. We’ve been taught in this country to tax defer, tax defer, tax defer. Now we need to figure out a way to be able to get our money out tax efficiently and not have to pay higher taxes in retirement. That’s just going to kill those people that are coming down the road as they retire. The income plan, the planning that we do here, the tax planning, all of that is just that much more important. The thing that I love about this country is we will survive this. Five years from now, we’ll look back on it and it’ll be a blip, like the real estate debacle of 2008 and we’ll say, my gosh, I can’t believe it’s been that long since that was here.
Peter: Again, the planning’s so important there. If you’d like to do some proactive tax planning strategies, if you’d like to get a market recovery action plan, if you don’t want to risk going through this again and would like a principle protection action plan, pick up the phone. Give the team from GulfCoast Financial Services a call. John Kuykendall and his team standing by, no cost, no obligation to have that conversation, to run through that strategy session, even just to ask a couple simple direct questions that have been on your mind. If you’d like to review anything, here’s the opportunity, no cost, no obligation, 386-755-9018. That’s 386-755-9018. John, the byproduct of low interest rates that have been with us for an extended period of time was that I think more people were chasing some amount of reasonable return and perhaps taking a little more risk than was appropriate than they were truly willing to accept. When we did hit market volatility, they lost more money than they wanted to as a result of it. Do you foresee, do you believe that we’ll continue to see a pretty delicate balance there of low interest rates but safety on one hand versus taking that risk in the market and having to experience volatility on the other?
John: We’re Americans and we’re greedy and so we’ll start out slow, Peter. We’re going to be more worried about being safe getting in, but once we get the bull market back and it starts taking off, you’re going to see more and more people deviating from the plan and getting into riskier investments to get the and get the return. A lot of people are going to be prone to try to make what they’ve lost up immediately. We can’t do that. We’ve got to know how much we’re going to need in retirement because that’s coming and we need to work towards a plan of taking care of our income needs. I think that we need to be safer in what we do than we have been. Some of the people I talk to, some of the people we’ve met with on a recovery repair situation, they’ve had as much as 100% of their money in individual stocks and alternative investments that they had no idea what they had. That is something that we can’t have in the future. If you’re within that ten years to retirement, you need to start thinking about how you’re going to structure your portfolio, start working towards your income plan so that we can get sustainable income. Always work on that risk number. You only have as much risk as you can afford to sleep at night and not have to worry about your money.
Peter: That income plan, John, that is truly paramount to retirement success and contentment, because as we have seen here with the disruption of the economy and as a result with so many people’s paychecks, the income is what we depend on. It’s truly the foundation on which all other financial progress is built. You’ve talked about how to structure the income plan and the ways and the methodology that you do that there at GulfCoast Financial Services. You still believe that to be important and still structuring those the same way?
John: Peter, I don’t think there’s any other way we can do it. We have to know how much sustainable income I’ve got coming in that I know that I can pay my bills every month because my paychecks are coming from me and what I did during my post retirement years. I need to make sure that I’ve got everything set up so that I can get my income coming in. The one thing we’ve talked about on our show is we do an income plan for people, but you out there in the audience, all you need to do is figure out all your bills, look at your checking account, look at all your utility bills, all the stuff you have to have, and then add that up, look at your – you know you’re going to have Social Security. You know that if you’ve got a pension you know how much that’s’ going to be. Very few people have pensions anymore. Subtract how much you need to live versus how much income you’ve got coming in and that gives us our income gap. What we do here at GulfCoast is we try to fill that gap with you so that we know that no matter what the market does, you’re going to be able to meet your bills. Then the market, the stuff we have in the investment part, that’s to grow to do the things that we want to do or we need to do later, a new roof, long-term care, whatever the need may be. I know no matter what the market does, I’m going to be able to pay my bills.
Peter: That is so reassuring, especially in retirement. John, I know that there are inherent dangers if we don’t have such a plan, especially when the market is volatile and takes a downturn. It can really decrease our likelihood of making it through retirement, maintaining our lifestyle and being able to afford the lifestyle that we’ve become accustomed to.
John: That’s right, Peter, because what happens, as you know, if I lose 30% in the market and then I’m having to draw my living expenses off of that, I’m just making it worse because I’m pulling money out in a down market. I’m not making anything so my losses continue to grow and the likelihood that I’m going to be able to survive in retirement are just that much less than they need to be. I’ve structured up a safe plan where I can still get plenty of returns in the market but I know that my daily needs are met. We should do that anyway. That’s really the way we – you’ve got to look at that when you’re working, that’s what happens. Your paycheck comes in and pays for your bills and you live within those bills. What you do is we figure out a way to make sure that your paycheck during retirement that you’re providing yourself will last you all through retirement.
Peter: The paycheck not only supports the ability to pay the bills, it actually formulates the basis for the investment plan that we had to grow assets as well. The paycheck is what afforded us the ability to do that. Wall Street and financial models that are prevalent, the status quo, says that we continue the same investment approach when the paycheck is no longer there to support it and that doesn’t work quite the same, does it?
John: It really doesn’t, Peter. Over the years, having done this now for almost 30 years, I look back and it’s almost laughable some of the stuff that we were taught early in our investment career about what we should invest and how we should invest and us as advisors how we should advice our clients. We’ve come so far and we’re so much better now at it than we’ve ever been, it’s a shame that we can’t get more people to take advantage of it.
Peter: Again, you can take advantage, you can get that lifetime retirement income plan in place. That’s the foundation, ladies and gentlemen, over and above what you’re going to need to designate for sustainable durable reliable income, you can get that market recovery action plan in place if you are willing to take some risks. If you don’t want to take the risk of the market but don’t want to give up on the opportunity for some reasonable gain or growth, you can get that principle protection action plan in place. They’re really all part of the process, all part of the review and the strategy session there at GulfCoast Financial Services to take advantage to get those for your situation, identifying your unique opportunities, giving your circumstances. Pick up the phone and give a call now, 386-755-9018. That’s 386-755-9018. You can also visit gulfcoastfinancial.net.
John, I don’t know if you had a premonition here but we did the radio program on terrestrial radio, broadcast radio for quite some time but we recently this year moved to podcast only. Now, I don’t know if you’ve made the connection here, but with nobody out driving around, radio traditional AM/FM broadcast listenership is way, way down. Point being there, ladies and gentlemen, that if you’re listening to this program today and you have found any of this information valuable, go to gulfcoastfinancial.net and subscribe to the podcast on your favorite player, on the iTunes, on the iHeart, on Spotify, Stitcher, whichever one you listen to your podcast on. Share that information with anyone else that you think would find this valuable on your social media pages or through an email link. There’s a real easy way for you to subscribe, get alerts about future episodes, and to share these episodes with your friends and neighbors and loved ones. Go to gulfcoastfinancial.net. That’s the easiest way to get started and you can go from there. John, podcast listenership, on the other hand, is increasing 1,000-fold year over year, even before we were all locked at home with nothing to do.
John: Yeah, is in November of last year, my son, Brent, and I got together and we decided that we were going to do more webinars ourselves and post them on our website and do more interaction video-wise for our clients, even before all this came out. Peter, that has really worked out well. We started a Friday coffee minute for our –
Peter: I saw one. Very neat graphic with the logo and the cup of coffee to start it off, yeah, I really liked that.
John: We’re going to start doing those on a regular basis for our clients which you can get off the website. We’re also in the process of getting ready to record some webinars that you’ll be able to pull off the website on different topics. It’s ironic that we were thinking ahead and actually it’s something that we really needed to do now because of where we are in the Zoom calls, the cut video conference calls, those things with our clients and prospects, it’s really been amazing. All I got to say, it wasn’t me that thought of that.
Peter: Take credit. Nobody’ll mind. Borrow that. John, we appreciate your time, your perspective. You make lots of valuable resources available, including your time here on the program, the guidance and the perspective that you do provide here as well as all of the resources available on the website, gulfcoastfinancial.net. Ladies and gentlemen, we appreciate you taking the time to listen to today’s program. Hope you found some value in it. If you did, again, subscribe and share right from the website, gulfcoastfinancial.net, or give a call for that complimentary review and strategy session, 386-755-9018. John, always a pleasure. We appreciate your time.
John: Thank you, buddy. I appreciated being here. Thank you.