Episode Transcript
[00:00:00] Speaker A: The biggest mistake that I see people make is not having a decision making process. I don't know what the medication is. The problem is people want to accumulate so much money and then they have a bunch of dough and they're in the no go years. Like I don't want to forget about it. The Importance of Everything talks about the importance of doing comprehensive holistic planning.
[00:00:26] Speaker B: John Link is an Investment Advisor representative of Royal Fund Management, llc, an SEC registered investment advisory firm. This content is for information purpose only and does not constitute precise investment advice. Full disclosures will be included in the description of this podcast. Welcome to The Entrepreneur's Lifebook Logbook I'm your host Zach Minard. You can find me on Social at. It's Zack B. In each episode I bring on experts from various industries for you to learn about their strategies and and insights driving extra business growth. Today we're joined by John Link, President of Link Financial and Link Wealth Management, an independent fiduciary retirement and financial planning practice helping individual at or near retirement turn their savings into a sustainable lifelong income plan. But what kind of makes John interesting is that he didn't actually start in the finance space. He started at 10 years old with a paper route, worked his way through various job and his team and eventually spent 23 years in the grocery industry, becoming the youngest store manager in his company at just 23 years old, overseeing millions in revenue and hundreds of employees. And after nearly two and a half decades in that world, he made a deliberate pivot toward a career where he could build something meaningful. And the decision turned into a career of over three decades in financial services where he's built a solid team, has experience as a public speaker and he also has a book coming pretty soon here. But John, it's great to have you to show. Welcome. Welcome aboard here.
[00:01:54] Speaker A: Thank you Zach. I appreciate the opportunity to be on. Great.
[00:01:57] Speaker B: I love that we I would tell you that we've had a lot of business owners but on the finance side of things it's not something that we talk a lot about on and I feel it's probably a very important component that not everyone thinks about on like a day to day basis. But one of the things I'd be kind of curious and I asked this to everyone that comes on the show if you had to like restart I guess your career or maybe like the other current practice that you have, knowing everything that you know today, what's maybe the one thing that you feel you would do differently?
[00:02:24] Speaker A: Right? Well fortunately I started in the grocery business at age 16 through age 30, 39. So I started from the ground up, worked in all the departments, learned everything from the ground up and internalized that, was able to use it to my advantage over time. So that was a kind of a learn as you go type process.
When I got out of that business and at age 39, which is pretty old to restart stuff at age 39 and got into financial services for the first time, now that was a wake up call because that was completely different. I mean, I'm pretty good with math, but that's a whole different kind of math. So from the grocery business. So the first thing I did, and I would not change this, the first thing I did was I got every designation I could get. I went to every class, every course, wherever it was in the country.
I learned as much as I possibly could as quickly as I could. Because when you think about having people's money, their finances as a part of your responsibility, you want to know stuff. And so, so I did that and I think that was really, really a good start.
If I would change one thing though, I would probably spend more money on marketing right out of the chute.
But there's a push pull because, you know, you have to know what you're talking about if you're going to talk to a lot of people or anyone for that matter. So, so it's, it's kind of a, a tough, tough thing to do. But I think one of the main things is spending money and marketing.
And I like to say if you're not willing to risk everything, you'll never really have anything.
[00:04:05] Speaker B: Oh, I like that. And I feel like it's a push and pull in a way where again, you have to do things to learn from them. And then you only afterwards learn that maybe I should have done it this way, but if I didn't do it the way I did it, I wouldn't have understood and learned these things here. So everyone always has a different answer, but I'm always curious to hear like what the other answer is here. But, oh, interesting. So you would just go back full in, spend more marketing, invest more like yourself. From what I could understand, I would, I would.
[00:04:37] Speaker A: Except it's that spending money is scary that you don't have. I mean, I came out of that business with, you know, I transitioned and I didn't have a lot of money for anything, so. So then you have to borrow some money. And that's the importance of interest rates too. When they talk about interest rates coming up and down, interest rates, you know, is the cost of Doing running, growing, starting a business and borrowing money is important, so that all comes into play. But, but I would, I would, I would try to get in front of more people earlier than I was able to without the marketing expense.
[00:05:12] Speaker B: That makes sense. And I guess, like, shifting gears a little bit. Cause I want to talk about, like, the practice a little bit. So for people who aren't really like, familiar with like, how fiduciary practice actually works, like day to day. Can you like, walk us through, like, what that process looks like? When someone comes to you, they're looking for help, they're looking for some guid.
What does, like, working with your practice actually look like from a client perspective?
[00:05:34] Speaker A: Right. So probably good to start with a definition of what's a fiduciary. Right.
Fiduciary means you're legally responsible and liable for doing what's in the best interest of the client.
Now, there's another standard out there in the financial world called suitability.
So something, someone might be under the, the standard of suitability and be able to provide a product to someone and be just fine, but it might not be in their best interest. Which means that a fiduciary couldn't use that particular product or shouldn't use that particular product because there could be something cheaper, more efficient, maybe at the individual fiduciary, or the firm's detriment might not make as much money. But still there's a requirement for the fiduciary to do that. So the best interest standard means process.
You know, it's like when you go to the doctor and you, hey, doc, I got a cough. What do you think? And the doc says, well, I got some red pills and I got some blue pills.
I use the red pills on the last guy, so I'll use some blue pills this time.
Well, that, that might not work out, you know, Right. I mean, you would expect the doctor to ask a lot of questions, run some test and see what the problem is before using some kind of medication for, for the patient. It's the same with us. I don't know what the medication is till I know what the problem is. And that's what differentiates a fiduciary from someone who. Now, I'm not saying, look, I'm not saying bad things about other advisors because there, there are a lot of good, good advisors out there and good advisors that probably are not under the fiduciary standard. So I'm not really saying that. But from our practice, and you ask, what do we do?
We, we start with a Very definable and strong process to help people understand who we are. Because we're not for everyone, right. So we, we want to determine if we have a good fit or not. And that is process driven.
[00:07:40] Speaker B: I love that because I feel like a lot of people are just going to take on like anyone, like everyone, then they're just gonna take a one size fit all approach and then I might not.
[00:07:49] Speaker A: One size fits all. It doesn't fit anyone very well, does it?
And so the idea then is not really the amount of money that someone has. I think sometimes people get really kind of intimidated. They don't have enough money to go talk to a financial advisor and things like that. Well, you know that, that becomes problematic for the individual. We don't have, believe it or not, we don't have an account minimum here at our firm.
Bear in mind, we don't have an account maximum either. So we have people with millions and millions and millions of dollars and we have people that have been referred in by parents or grandparents or whomever that are in their 20s that are starting to invest right here, right now and taking advantage of what Albert Einstein called the eighth wonder of the world, which is compound interest.
[00:08:36] Speaker B: Yeah, I think that's been an interesting learning. I'm obviously young. I mean, I don't want to say you're old by any means here, but I say that you can say the
[00:08:45] Speaker A: truth, it's the way it is.
[00:08:47] Speaker B: Right.
But yeah, I mean that's what I've learned. I mean just historically looking at like even there's like some simple calculator online, like compound interest. And you can see like, hey, if I just stick to this one thing, I do it consistently, I invest a little bit of money, it's going to like compound like you know, 30, 40 years, you know, I'll have a little nice like nest egg that I can use for like retirement or anything like that. And so I'm a big believer in the compound interest model here. And I mean it also applies in like anything that you do. Like it's 1% improvements every single day, whether it's with your personal life, professionally or anything like that. But in money, I, I know that's obviously where the concept goes here, but one of the things when we talk about like rate of return, there's like a lot of noise in like the financial world about it. Like everyone wants like the, the best performing portfolio, which is not necessarily wrong by any mean, but I get the sense that someone approaching retirement that might actually be like the wrong thing for them. To focus on, like, maybe there, there's another approach that they should be looking at where, what should people really be like thinking about instead when they're at that point?
[00:09:51] Speaker A: We like to put things in buckets. And so when we're talking about money, you're going to need some money right now to live on. Right. So you need some like, cash reserves, emergency reserves, savings, checking, things like that.
And then you're going to need some money in the not too distant future.
That money can be invested in a way that's not too aggressive. You're going to need some money way on down the line. Like if you, if you retire at 60 or 65, heck, you may have 30 years of time left and you need to have some portion of your money growing. And rate of return is important at that point. But when you look back at your point that you're making, we, we consider cash flow a big component of a person's retirement program and process. Like how much cash flow do we need? How much cash flow can we generate from a particular investment or a particular item where we're not worried about what the rate of return is, we might be worried about the rate of return for something that's going to grow for 10, 15, 20 years. Sure, yeah.
Depending again on the person's time horizon. Risk tolerance, risk appetite, risk capacity, things like that. Yeah. But the important thing about income and retirement is to have it not so not to worry about. You get, it's kind of like you can't have it both ways. A big giant rate of return and generating, you know, a cash cow cash flow for you to live on from day to day. So again, it's part of the process as a part of the buckets. It's a part of the grouping of when do we need how much money?
When do we need what, how much for how long before we get to the next, the next bucket.
[00:11:44] Speaker B: Yeah. Because I feel like a lot of people, they're going to default. Okay. I just need as much money as possible. Like, let's make sure my portfolio like performs like very well. But they're not factoring like, hey, maybe I'm, I'm 75, you know, getting a little bit close to like the 80, you know, I'm in retirement, hopefully you never know. But maybe I should be using my capital to like enjoy life. I mean, I'm 75, 60, which, whichever it is. And maybe I shouldn't be looking like, oh, I want to maximize my portfolio as much as possible when maybe it's time to like, enjoy it from what I could understand.
[00:12:15] Speaker A: Great, great point, Zach. Because again, we, we, our process includes thinking about things in kind of time frame. So yeah, we consider when somebody's nearing or beginning retirement, the go go years, right. Where they're wanting to, to go. They feel both people, if they're married or together, feel pretty good.
And so they're ready to go and travel and cruise or whatever. The next phase might be the slow go years where, yeah, they still want to do some stuff, but maybe not as much as they were before, maybe not overseas, maybe go to, you know, Texas or something.
And then the no go years where they're like, nah, I'm done. So the problem is, your point is well made because the problem is people want to accumulate so much money and then they have a bunch of dough and they're in the no go years. Like, I don't want to forget about it. Yeah, it's not, it's kind of inverse like that.
By the same token, the individual doesn't want to run out of money either, which is where the process comes back in and the plan.
And to have one of the things that we do in our, in our practice and a part of the process is to do an expense plan. Now you might call that a budget, but I've had people tell me, I've never had a budget in my life. I'm not going to have a budget. Okay, fine, we'll call it an expense.
Call the refrigerator if you want to. I really don't care what you call it, but we have to know how much money you're spending now so we can structure a portfolio and a strategy that makes sense for you for now and in the future.
[00:14:00] Speaker B: Yeah, and that's where I like, like the planning approach because a lot of people, I mean, hopefully that's not the case, but a lot of people end up doing that like very later on. They're like, oh, you know, I'm 55. Maybe it's time to start planning for retirement. But from your perspective, that's maybe like the other way around. Like you should have maybe done a little bit like earlier.
[00:14:19] Speaker A: From what I could understand, the time to start planning for your retirement is day one of your first job.
[00:14:28] Speaker B: Yeah. So you did that early, like 10 years old. Right. You started planning for retirement.
[00:14:33] Speaker A: I had a bunch of dora knee when I was, when I was 14. And so I, I, I had a lot of money. I had $800 when I was 14 years old.
And that wasn't. No, it wasn't in this century. I don't guess, but it was a long time ago and I was able to buy some, join a garage band actually.
Right. And I bought an amp and a bass guitar and a microphone and I. And I was able to join the group because of that, because I had the money.
The one thing I lacked was talent. That was.
And I couldn't buy that, but I could buy the other stuff. Yeah, but yeah, you can accumulate a lot of money if you start early.
[00:15:14] Speaker B: Pretty important components here, you know, the talent side of things. But yeah, and like your, the compound interest plays a big favor in you. I mean at 14, if you put the 800 bucks in like the market for like the next like six years or so, you'd have a good amount of dough stock when you, when you get to retirement there, you know, there's
[00:15:31] Speaker A: a pretty easy formula to kind of calculate what that looks like and it is based on rate of return. So it's called the rule of 72. I don't know if you've heard that about that or not, but The Rule of 72 says you take your rate of return, your interest rate, and divide it into 72 and the result is how many years it will take your money to double.
So for example, if you got 6% rate of return on your money, 6 into 72 is 12, right? So at 6%, your money doubles every 12 years.
Conversely, if you take can make 12% a double digit rate of return, which is pretty high but still doable, particularly if you're young, 12 into 72 is 6, so it doubles every six years. So that's, that's a pretty, very, well, very simple way to calculate the importance of the time value of money. And to your point earlier about the rate of return under certain circumstances, in certain situations where rate of return does need to be maximized.
[00:16:28] Speaker B: Yeah, it's all like a case by case, depending on like where you're at in like your life and like which bucket as well that you should be focusing on here. And we've spoken before, Tron. Like one thing that you mentioned I thought was interesting, we started talking a little bit about like Social Security and you told me like, hey, I could speak to that for like hours and like hours. And it seems that everyone has a different perspective around what it is. Everyone has a different opinion, but most people don't fully understand the strategy behind it. I'd love to understand like from you, what are some of the most common mistakes or things that you see people make when it comes to deciding like how much and like when they should look at claiming not.
[00:17:08] Speaker A: The biggest mistake that I see people make is not having a decision making process, which is what we offer people. Because I have clients and there will be advisors that completely disagree with me on this, which is just fine.
I don't view myself as a contrarian, but if I am, sometimes I am because it's what I think and what I've seen and what I believe. So I've had given people advice for both people to start their Social Security at age 62.
So what happens at age 62? You get, you take a reduction, you get like a 30% reduction in your pay from full retirement age, which is age 67.
And if you wait until 70 from full retirement age until 70, you get an 8% per year bump in that.
So think with me on this. So what if you started your Social Security at 62 instead of 70, which you would get the most per month?
How many paychecks are you missing between age 62 and age 70?
The answer is 96.
So while the paychecks are smaller, you get more of them.
The break even point on Social Security, if you start taking it at 62 and instead of taking it at age 70, at age 70, you would have to live to about age 80 or 82 to break even.
So, so go back again and say, what kind of, what kind of family history do you have? Do you have a history, family history of some kind of bad disease? How do you feel currently? Personally? I mean, are you in good shape? Have you been a smoker?
Things like that. So Social Security dies when you do. Right. So it doesn't like, it's not like your investments that can continue on.
So you have to be really.
The calculus is one thing, but the reality and, and how it fits into a plan and where it fits in the process of what you're wanting to do. The reason I, I suggested people take it to age 62 was because he had gotten laid off early.
They weren't quite prepared fundamentally and foundationally with their asset base.
So both of them were on Social Security. They weren't really paying any taxes. They did have some Roth IRA income that they could take. That doesn't count against the complicated strat, complicated calculus that Social Security requires.
So they were able to get. What's one of the most expensive things that you have in your life if you don't work for a big company? Health insurance.
Right. So if you have to go into the marketplace and get health insurance, you want to be on the lower end of the income tier. So if you if you're on Social Security and Roth IRA income, for example, then you can get the best rate. So that makes some sense for people.
Would that make some sense for most people? Probably not.
Yeah, but again, it's the process. It's going through the process to figure out where it fits in your lifestyle, in your buckets and the asset base that you have and your tax. Tax situation. Because Social Security is tax favorable.
[00:20:31] Speaker B: Yeah. Again, it's like all depending on, like, where you're at. It's really about, like, figuring out exactly like, where you're trying to be. But I like the fact that you mentioned and I've never thought about that. It's like, hey, you have to think like, okay, I'm old, but yeah, do you have any disease? Am I, like, in shape? Like, dude, do I plan on living to like, this age? Like, if not, it's like, okay, historically I've seen my family typically like 80, like most of them ended up passing away, maybe that we start planning based on that. And I feel like a lot of people don't take that more like, strategic approach, like their, their financial planning, Social Security and everything, which I think is pretty interesting. And a lot of people, yeah, guys,
[00:21:06] Speaker A: about 82, 83 years old. You know, that's kind of it, you know, for the most, for the most part.
So again, but you're right about the exercise too. And that's a big component of the process is.
[00:21:18] Speaker B: Yeah,
[00:21:21] Speaker A: you know, you shouldn't wake up at age 60 or 65 and say, okay, I'm going to start exercising today. Right. I'm going to get engaged today with some group.
You know, I want to lay around and watch TV all day long. Because a successful retirement, not always about the money.
It's about a strategy to enjoy something.
And if you don't feel like it, if you're sick or, you know, not really wanting to go do anything, then why did you go through the process of having all the dough? You know, some, some stuff just doesn't happen.
[00:21:56] Speaker B: Yeah, that's fair enough. And one of the things I want to go back to something that you mentioned earlier. You mentioned like at like your, your practice, you guys want to have like a minimum or like a cap in terms of like, aum, not you. I'm sorry, but like, how much capital they want to bring to like, the, the practice. So you do end up working with a lot of people that you would call more like middle America. So like savers, people who have not worked with an advisor because they, they don't think that they have like enough money. And from what I could understand, it's a second that's like often like overlooked by a large, like a lot of like the more like larger institutional firms. Why is that? Like, why does it actually cost people when they end up in like the, the wrong hands?
[00:22:37] Speaker A: Yeah, well, I think it's, it's really unfortunate. It really is because I think people who work on what their hands maybe or work in not a, maybe a big company that had a generous 401k or something like that and they have been in an income range that has been challenging enough to get some money put away, much less, you know, seven figures.
And so they're like, well, that guy would never talk to me. Or, and maybe they won't. I don't know. Some, some people, some advisors do have, you know, seven figure minimums and some don't. But I think people get the idea that it's like if, if I don't have X and define X depending on which coast you live on. You know, New York or California or here in Kansas, you know, X is a different number. Right. Because it doesn't cost quite as much to live in Kansas City as it does in New York or la.
So. But still people, people just, I think they get intimidated, honestly. Like I, I, the guy's in a big building, you know, he's got a thing. And I, but I think that's such so horrible that, that we have somehow made people think that. Because the, at any level, even if you, if you have a lot of money or if you don't have a lot of money, it's equally important at every level to have good financial guidance.
And everybody goes through our process, by the way. So how many times have you heard of a professional athlete that made millions of dollars and winds up broke? Or the guy that wins the lottery millions of dollars and winds up. Why is that? Because he's got a friend down the street that says, hey Joe, do this. This would be great. Do this. This will work out for you. I'm sure it will. You know, professional advice is important and I, I just think that people in middle America and middle income America that maybe don't have quite as much as they hope they would, would see a professional as quickly as they can to help rectify the situation.
[00:24:40] Speaker B: Yeah, because they have like this, it's not a lack of education, it's more like awareness that these options are still available to them. Like there are still professionals that will like actually help them. And if they take the time like early on to do it at least. Then we talked about the compounding rule. It obviously compounds and it's going to help their case in a lot of scenarios here. But yeah, I mean, I've obviously seen like the people like, yeah, minimum eight figures. I mean that's obviously more of like the higher net worth individuals, but there are still options and people that can obviously support people are like more.
[00:25:13] Speaker A: I love that. I love working with people at every level at frankly, the high net worth, the not high net worth, the younger people. I dig it. The whole thing, you know, it's cool. I mean it's, it's just fun. It's. At this point, it's just fun. And I work every day and I like it because I, I want to be here. Not because I have to be here, I want to be here and I want to work with people who want to work with me. But we, we have that process that holds some people back because like they don't want to do an expense plan or they want to, they don't want to go through this process because of whatever. Well, it's okay.
Can't work with us, but it's okay that if, if they don't want to, they can work with somebody else.
[00:25:52] Speaker B: Yeah. One thing as like we wrap things up because you obviously dropped like a lot of like nuggets, like little gold nuggets as, as I like to call them. We were talking about, I think it was like a week or two ago you mentioned a book coming out. And that's like one thing I'd love to like to touch on here a little bit more about. Not sure if you ended up figuring out exactly that the name that you wanted to go through, but we'd love for you to give a little bit of a teaser to the audience with the book here.
[00:26:19] Speaker A: Yeah, thanks. Yeah, the book is, I'm going to title it.
It's in process right now. We're hopefully coming to fruition before too much longer. I called basically what we've been talking about, the importance of everything.
Right. It's like that doctor story that I, that I told in the beginning. You know, the doc, you go see the doc, you got a cough, the doc's going to want to run some tests. And you don't want the doctor to not delve in and figure out what the heck is wrong. So you have to divulge a lot of information.
And in our time, our society right now, sometimes you have to, you know, trust people in order to give that information out. And I understand that part, but in order.
The Importance of Everything talks about the importance of doing comprehensive holistic planning where one decision you make on one part of your plan very definitely is going to affect one or two or more of other parts of your plan, like Roth conversions and taxes, like required minimum distribution planning now versus waiting until you have to take it later on down the road like income and reducing income to avoid Social Security's IRMAA tax. I mean, so it all works together. The Importance of Everything when it comes to financial planning is just that the whole picture, the holistic approach is what I'm getting at and hopefully that book will do my, my thinking justice in there and when we get it done.
[00:27:59] Speaker B: I love thought. Yeah, I know that there's obviously always a different timeline when it comes to releasing a book, but I pray for you that it goes out pretty soon. And what we can do is we can obviously put that in the show notes for anyone that wants to check out the book whenever John's book is fully released here and then. Yeah, I really appreciate you getting on the show here, John. For anyone that wants to get in touch with you, they're trying to learn more. They're trying to take control of their finances, they're trying to plan for retirement or they're just like, hey, John, sounds like a cool guy. I want to, I want to connect with them. What's kind of the best way to get in touch with you here?
[00:28:31] Speaker A: Yeah, you can go to our website, johnlinkcompanies.com and connect with us through that. No, no problem. And we will get get back with you and post haste and it's been great to be on your podcast. As a matter of fact, I watched your podcast earlier.
You had, I forget the guy's name. He had something text us. I think it was. Yeah, that was really interesting. So you must have a lot of really interesting people come on present company.
[00:29:04] Speaker B: A lot of different people for sure all across. I mean we've had people in like Europe, Mexico, U.S. canada, all across the globe. But it's been an interesting one. But I'll tell you, I don't think we've ever had anyone on like the financial planning side of things. So I'm glad that we could bring a different perspective to the conversation on obviously educate people coming on the show here. But. But yeah, we're going to add like all the, your information company mentioned, johnlinkcompanies.com if anyone wants to get in touch with you, we're going to put your LinkedIn, all that fun stuff here and then to your listeners. If you've enjoyed this episode, don't forget to subscribe. Like leave a review comment. Reach out to John here and then. Yeah, until then, keep pushing and we'll see you in the next one.
