Five Common Advisor Questions with Joe Saul Sehy

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Five Common Advisor Questions with Joe Saul Sehy

One of the many things I love about working as a financial planner is that you get to become the sounding board for your clients. Every time you meet with a client and they ask you a question, you have no idea what direction they’re leaning and all you can do is give the best advice from your personal experience, from a financially sound decision, and also from an understanding of your client. I was recently asked by a listener to do a show about one of the most common sounding board questions financial planners get so I thought I would expand the conversation to answer other hot topic questions financial planners get. When I thought about who I would have this conversation with, the only person who came to mind, who happens to be one of my favorite and retired financial planners, Joe Saul Sehy of the Stacking Benjamins podcast. Joe joins me today to get thrown under the bus and answer some common financial planner questions. As usual, I loved hearing Joe’s financial advice and guidance and I hope you do as well.

What are we drinking?

Joe — Black Keurig Coffee

Shannon — Tea

Podcast Notes

  • Joe was a financial advisor for 17 years. He has now been in the financial services industry for 25 years.
  • Shannon and Joe talk about how being a financial advisor is like being a marriage counselor.
  • Shannon has five common questions people ask financial advisors.
  • Question 1: Should we pay down our mortgage or invest?
    • Joe: People who nail financial independence don’t have a lot of debt. The numbers say invest the money, but when he sees successful people, they pay attention to the bottom line and pay down the debt. Joe likes a hybrid approach: set aside money to pay down the mortgage in an S&P 500 fund. For student loans, if the interest rates are close but the debts a little lower, pay off the debt. If there is a big difference, put it toward the debt instead. Look for ways to consolidate to a lower interest and then invest.
    • Shannon: If you have a 3% interest mortgage, you are better off putting the extra in the market. Do you build wealth in your home or in an investment account? You can build it in both places – don’t put all your eggs in one basket. Invest with the intention to pay off your mortgage whenever you want. Same for student loans. It depends on your interest rate. It is the freedom to know you could be debt free.
  • Question 2: To invest or not to invest?
    • Joe: A few times a year Joe would come across people who are great at saving but not investing. Get the stuff where it needs to be right now since the market is up 60-70% of the time. However, if the market is down, his clients could fire him. For risk-averse clients, he would have them invest slowly over time instead of all at once like he would want.
    • Shannon: If money is sitting in a cash account, it is earning less than 1% and inflation is 2-3%. Only do this if you need the cash right away. Most clients don’t realize how much their investments are up over the course of a year, they only realize it when it is down.
  • Question 3: Should we buy a house or rent?
    • Joe: This is a tough question since people don’t stay with the same employer forever. The issue is not that real estate is a bad investment. The house you live in is such an expensive transaction to get into and out of and you need a long period of time for it to make sense financially. The life expectancy of a job went from 30 years to 6 years. If you don’t know where you will be in six years, you would be better off renting. Renting reduces the decisions you need to make and is often a better option than it used to be. The first six years your mortgage payment goes to interest.
    • Shannon: If you can cover your rent and build wealth, that is okay. When you sell the house you need to pay the realtor and closing costs, which is about 6-7%. Shannon is concerned with the long-term real estate market, since millenials are less into home ownership and more into tiny homes and traveling.
  • Question 4: Should we buy a car or lease?
    • Joe: For most people leasing only makes sense if you love cars, want the new car smell all the time, and the freedom from worry is worth it. You are paying down only the depreciation of the car plus the dealer’s profit. Joe wouldn’t lease because he can get more car and he gets a new car every three years. It may be a good option for those who need it to take clients around. Joe would rather have a paid off car, because it is not a big inconvenience if his car is at the mechanic for three days.
    • Shannon: It depends on your financial state. Cars are not an investment. What is going to work best for you? If clients don’t want a car payment, they will eventually be responsible for the repairs. Shannon has people with paid off cars have a car account so they can either pay for repairs or save for a different car. If you have annual repairs that equal $250 per month, it is no different than having a low lease payment. It’s more of a budget decision, not an investment decision. Leases are not inherently evil – it depends how they are used.
  • Question 5: What do I do with an extra lump sum of money?
    • Joe: He loves the financial plan, because it will show your strengths and weaknesses and answers this question. Joe looks at a few areas:
      • Budget and Debt: if this not okay, use the money to fund your emergency fund and make a debt payoff plan.
      • Risk Management: The more cash you have, you can cut your insurance costs. For instance preparing in case of disability or death.
      • Short- and Long-Term Goals: Are you ahead or behind? Save X dollars times Y return to get to the goal. You can now take the extra money to save faster to get caught up.
    • Shannon: She gets this question a lot, but she can’t answer it if she doesn’t know your financial plan. Get a financial plan done if you do not have one. This question will answer itself.

TAKEAWAY: My biggest takeaway from this conversation is the value of a sounding board. No matter how smart we think we are in a particular area of our lives, it always makes sense to get another opinion, especially when money and large sums of it are involved.

Random Three Questions 

  1. If you weren’t doing a money podcast what podcast would you be doing?
  2. When was the last time you were scared?
  3. What is your latest movie recommendation you would give to listeners?

Connect with Joe

Website/Podcast: stackingbenjamins.com

Podcast: Money in the Morning

If you need someone to be your sounding board when it comes to financial decisions, I hope you’ll reach out to my team at the Financial Gym. We’re constantly working with our clients to make sure they’re making the right choices that not only make sense financially but also make sense for their personal life journey. You can schedule a free call here to find out more. No matter where you are in your financial journey, my financial trainers can help you get where you want to go. So head over to or send friends to financialgym.com/friends to sign up today!

 

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