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Episode #1824
Grow Your Money
Holt: Deborah Holt, host
Dean: James C.
Dean, Northwestern Mutual Financial Network
Fulbright: Ed Fulbright, Fulbright Financial Consulting, PA
Alexander: B. Diana Alexander, Mechanics and Farmers Bank
Holt:
You’ve cleared away debt and found yourself with extra
cash flow. Now, perhaps for the first time, you’re ready
to make your money grow. Do you go it alone or is it time
to entrust a financial advisor? Questions to consider—next
on Black Issues Forum.
Voiceover:
This program was made possible by contributions to UNC-TV
from viewers like you. Thank you.
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Holt:
Good evening, everyone. I’m Deborah Holt, the producer
for Black Issues Forum, in for Mitchell Lewis and Natalie
Bullock Brown, who are both on assignment. In a previous episode
we talked about getting out of debt and becoming financially
healthy. Tonight we bring you part two, Growing Your Wealth,
and we have a great panel of guests, all extremely knowledgeable
on money matters. First, James Dean, a financial representative
for Northwestern Mutual Financial Network, rated by Fortune
Magazine as the number one company in their group for the
past 20 years. Also Ed Fulbright, a 21-year veteran of the
financial services industry and host of the weekly radio program,
Mastering Your Money, which airs locally on WNCU radio, 90.7
FM. And B. Diana Alexander, she’s the assistant vice
president and loan review officer at Mechanics and Farmers
Bank, a five-star African-American owned bank that has been
a cornerstone for community banking in North Carolina for
nearly 95 years. Welcome all of you to the program.
ALL:
Thank you.
Holt:
I’d like to start off by just helping our audience
understand what kind of expertise you bring to the program.
Let’s start with you James, and I know that you also
host a program on NBC-17.
Dean:
I do, it’s called Making Your Money grow, and it
airs on Monday mornings around 6:15, and the class at Northwestern,
what I do as a rep there is I work with individuals in their
personal or family planning, and business owners in their
professional planning. Products would range from disability
income to life insurance to retirement planning, to mutual
funds, to long-term care; basically the entire gamut of the
services you would need in both arenas of the financial planning
areas.
Holt:
Okay, and Ed?
Fulbright:
Yes, we’re in the business of saving people money.
This could be in the area of income taxes; it could be helping
them on their investments; it could be helping them pick the
right insurance; it could be making sure their estate plan
is proper. And we focus on those things because we think that’s
critical for people to turbo charge their ride on the financial
freedom highway.
Holt:
Well that sounds great. Diana?
Alexander:
Well, at Mechanics and Farmers Bank we try to position you
to get ready to meet the challenges that both James and Ed
have talked about, by way of making sure that your liquidity
is in place, as well as offering your advice on what it is
you need to do to prepare to get ready for the larger investments
that you’ll do in the future.
Holt:
Now, all of you have dealt one on one with people; what
would you say is the most common obstacle to actually making
that next move, to taking some responsibility for your money
and actually allowing your money to grow, doing something?
Ed?
Fulbright:
Well, it’s just getting started is really the biggest
obstacle, is making the commitment to send that money each
and every month to where it belongs. It could be to a 401k
account, it could be to a stand-alone savings account. It
could be to a mutual fund that you’ve selected. But
those things are very important and people have to make those
commitments. And this could be problems that have been created
through their childhood. You’ll find that a lot of people
have problems that stems from ideas that their parents have
taught them. So the ideas that your parents have taught you
may no longer exist. The reasons why your parents did certain
things are no longer applicable.
Holt:
Well, we’re going to talk about some more of these
reasons, obstacles, and solution and strategies when we come
back, but first I had an opportunity recently to visit both
James and Ed in their natural habitats to find out firsthand
what you can expect on your first encounter with a financial
adviser. And as you’ll see, it’s a very painless
experience. Here’s what I learned.
Dean:
We’re working a three-step process. The first step
is simply to introduce ourselves to a client, either through
referral, or someone who has contacted the firm directly.
I then go out to that client and meet them on their terms,
and just kind of briefly describe in 15 minutes or so, the
type of services we provide.
Holt:
what are we going to talk about today?
Dean:
we’re going to talk about your financial future.
Holt:
My financial future!? I didn’t know I had one.
Dean:
So in 15 minutes or so, the focus of the first meeting
is just to meet, shake hands, build a relationship, relax
in defensive walls that may be up, and ask a few questions
that might uncover a need for my services. The second meeting
we go through what we call a confidential personal questionnaire,
but we really call it just a fact finder. The reason we call
it a fact finder, it’s just the facts. This sums up
all the terrifying information that you think you would gain
from a plan, the terrifying experience that you think is going
to happen is summed up in these few pages, and they’re
not terrifying at all. The hardest question typically is,
How do I spell your last name? From the personal information
of where do you live and what do you do and what’s your
address, I then move into what are some of the financial goals
that you have for your life, how do you look at money, what
is your saving philosophy? If you have a savings goal, what
would you like to see yourself save each year; if you’re
not doing it, would a systematic program to help you do that
be helpful? You should do more talking than the planner. I
call it the 80/20 rule. If you hear the planner talking more
than you are, then they’re not learning enough about
you to really make a fair design program to fit your needs.
Oftentimes when I take the fact finder, initially I’m
acting as the quarterback. I might be able to make the pass
right from there, or I might have to hand it off to a representative
who’s more qualified and more skilled in that particular
area. But once I have the information, I take it back to the
office and we have programs here designed to compile that
information and make an assessment off different avenues to
accomplish their goals. When I meet with a client again, that’s
my opportunity to shine, and remember if it’s gone correctly,
the first two meetings should have been completely about the
client, uncovering information about them. They should hear
themselves talk probably more than they’ve ever talked
about money. But at that final meeting, that’s my opportunity
to introduce solutions to the concerns that were uncovered
in the first two meetings, and that’s an opportunity
where you would either introduce insurance, financial concepts
such as mutual funds or retirement planning, or retirement
accounts, whatever, that will appeal to them. If I’ve
gathered enough information, it’s going to be a perfect
fit with the needs you have and the solution to meet that
need. And then we outline the steps, and moving forward from
there.
Holt:
Thanks again, James, for allowing me to come by and find
out what it is that you do, firsthand. What would you say
might disqualify someone or make them ineligible to receive
your services?
Dean:
That’s a great question. Really nothing will disqualify
you from being an ideal candidate except the improper attitude,
a feeling that you cannot accomplish your goals. And that’s
an attitude that I humbly suggest is something we have to
overcome in meeting with our clients. It’s just to encourage
them to empower them that their goals are within reach if
they just sit down and decide, “I’m going to do
this if I just get the right help in making it happen,”
and we do that through some of the processes you saw there,
and getting information, finding out their income and finding
something that comfortably fits within their budget. But as
far as disqualifying yourself, there’s no way to do
it; everyone’s an ideal candidate.
Holt:
Great, great. Well, so goes the process of meeting with
a financial representative at Northwestern, now let’s
take a look at what distinguishes Fulbright Financial Consulting
PAs as a financial service provider.
Holt:
Today Ed is meeting with long-term clients, a couple that’s
been working with the Fulbrights for several years. His relationship
with this couple is typical of the kind of relationship he
tries to groom with all of his clients.
F:
Well, we needed some assistance in guiding us through the
financial maze of 401k, retirement, how to get where we want
it to be, at least by a certain age that we could get our
money together and retire comfortable. Race wasn’t the
primary factor, but it did help because Ed could understand
where we had been and where we were trying to go to.
Fulbright:
They’re going to have somebody that is fully interested
in them accomplishing what their goal is without an agenda.
So you’re going to be objective about what’s happening
in this situation. We’re going to help them try to structure
their finances in a manner that’s going to help them
to accomplish their goal.
M:
So far it’s been working real well because a lot
of things that I would have to try to rack my brain trying
to figure out how to do, you know, I can just pick up the
phone and call Ed. It’s money well spent.
Holt:
Ed and Genevia, both certified public accountants, work
closely as a team. Ed is a financial investment advisor, as
well as a tax advisor, and Genevia is the income enhancement
advisor.
Genevia:
I would say that we provide holistic comprehensive financial
planning, we work with the entire client; so in other words,
we look at their tax situation as well as with their investment
advisory advice.
Fulbright:
We don’t do financial planning by the pound. What that
is, is that when you come up with this huge document and give
it to them, it’s very interactive that they have action
lists and they know what they need to do and they’re
clear on what we need to do, whether it’s we help them
to shop for mortgage or whether we help them reallocate their
401k plan, or maybe they need to start cleaning out their
closets so they can get a better tax deduction. Those are
things that we try to focus on so that people can increase
their savings. Because there really are about 10 things that
people need to really worry about, and rate of return is almost
dead last. And most people focus on rate of return. So that’s
really critical that they understand how they need to build
their net worth, because that’s really the name of the
game is building net worth that you can afford to spend.
Holt:
Well, I tell you, I wish I could just pick up the phone
like Bobby does and feel that everything’s alright.
But Ed, tell me, you talked about financial goal setting,
what kind of questions does a person need to be prepared to
answer when they’re setting those financial goals?
Fulbright:
Well the first thing they need to do is determine what
are their goals, in the sense that usually you’re going
to look at them in a timeframe, and usually I try to get people
to focus in a five-year format. Because once you get beyond
five years, basically it’s kind of pie-in-the-sky. Those
move toward your financial dreams or your long-term goals.
And what a person needs to consider is where they are right
now, and that can be fine: you can be unemployed and still
have financial dreams, because tomorrow is an opportunity
for a better day. And so what we want to do is focus people
on where they are now and moving them forward onto more positive
situations, and people have got to change their attitude,
because if they believe they cannot achieve wealth, then they
never will achieve wealth.
Holt:
Now, Diana, you’ve worked a lot with individuals
in the community through financial literacy programs and just
one on one as a loan officer. Ed talks about the attitudes;
have you noticed kind of the same thing in terms of people
having a mindset about their finances?
Alexander:
Yes I have. A lot of times when a customer has come in,
they have in mind that they want to get one specific product,
but as we try to develop a whole relationship, we always try
to advise them on other products that we have, in addition
to trying to steer them to understand that in order to achieve
their goals and dreams of home ownership or whatever, they’ve
got to start at a base of savings. And once they begin to
deal with that concept, then we can then work with them one
on one over a long period of time, so that as they maximize
their earnings and realize what they are doing, we can then
refer them to Ed or to James or to someone else, because they’ve
gotten a sense of liquidity and they’ve got a cushion
whereby they can use other excess funds to do greater and
bigger things to get that return of investment that Ed talked
about.
Holt:
And you also mentioned the word “relationship.”
Now, when I think about having a relationship with a banker,
I’m thinking Donald Trump, _____: those folks have a
relationship with their banker. How important is it for just
the runoff the mill person to have a relationship and how
do you build one?
Alexander:
That’s very important, Debbie. When you come into
the bank, the first person that you’re probably going
to interact with is going to be our customer service rep,
and you start there building relationship—she’s
going to ask a lot of questions—and it’s not that
it’s invasive, but we’re trying to develop and
find out what it is you want to do, where you want to be,
how we can tailor your needs to fit what we have to offer
in addition to looking beyond that to other avenues that you
can realize as a stepping stone to do what you want to do.
Fulbright:
Can I add something to what Diana has said, is that everybody—I
really believe that everybody should have a relationship with
their banker, because there’s going to come a time that
you’re going to need that banker to believe in your,
and your numbers may not be exactly the right ratio. You’ll
be asking them to take a risk, and they will only do it if
they believe in you.
Alexander:
Correct.
Holt:
Now, you’ve actually developed a top-ten list for
becoming financially independent. Let’s take a look
at that top-ten list, the top ten factors in becoming and
staying financially independent. Number one is income, how
much money do you make? Number two, savings, how much money
do you save? Debt, how much debt do you have? Housing, are
you properly housed? Is your house properly leveraged? How
stable is your primary relationship? How much risk are you
taking outside of your portfolio? Eight, how is your health?
Nine, how much in taxes do you pay? Finally, what is the return
on your investments? Some of these—why relationships,
Ed?
Fulbright:
Well, haven’t you heard, divorce is a quick way
to lose 50% of your assets. So you know, that’s why
we put that in there. If you have unstable primary relationships,
it’s the quickest way to go from being a multi-millionaire
to less than a millionaire.
Holt:
James, did you want to comment on any of those top ten,
does it seem like a pretty comprehensive list?
Dean:
Ed mentions your health, and that’s something that’s
really particular to what I do. Our signature product at Northwestern
is the portfolio life product, and another one of his suggestions
was how diversified are you? Our life product provides for
some defensive needs you have, as far as we take your income
or some future goals you have, but a misconception is that
you can purchase it any time you’re ready to do so.
Your health is a big factor in determining when you’ll
be qualified, if at all, to purchase this. The other side
is that as a portfolio product, it actually builds cash value
for you, so it’s actually having a dual-leveraging effect,
protecting some of your defensive needs, but at the same time,
saving money for you. And those are focused on two of the
things, he mentions your health and are you diversified?
Holt:
Now in terms of life insurance, I think a lot of people
may get confused about when is it really necessary, and is
this an investment strategy?
Dean:
It can be. There are basically two forms of life insurance,
term and whole life, and there are different types of philosophies
of how they should be used. But they can be used an investment
vehicle if you choose some of the portfolio products. If nothing
else though, the defensive side the term insurance offers
you can provide the protection you need, especially if you’re
on a fixed income and just need to look out for the welfare
of others if you are a primary income earner.
Holt:
Let’s expand a little bit on that term, “dual
leveraging.”
Fulbright:
That sounds very interesting, but insurance can be a great
vehicle, in fact I think everybody needs insurance. You need
to make sure you have your risk coverage, whether it be if
you haven’t built up your wealth then you definitely
need life insurance. But you know, a lot of situations, you
need maybe a mutual fund outside of your insurance portfolio,
because that can help you to grow money faster, and one of
the concerns that I have with using it inside of insurance
portfolio is that some times the expenses, if you can stay
committed to a program for 15 years, then insurance will start
to beat out those programs. My problem is that a lot of times
people’s lives change a lot. And so unless they have
a lot of resources outside of that insurance product, then
they may have to dip into that insurance product to make whatever
life changes, you know, companies are downsizing. If you own
a company you may have to put that money into the company
in order to leverage the relationship with your bank. And
so these things can be very useful in having money available
whether it’s inside of an insurance product or in a
mutual fund, are great ideas, because you never know when
you may run into the triple whammy.
Holt:
The triple whammy?
Fulbright:
Yes, the triple whammy is when you have three unexpected
events happen to you, and usually they’re negative.
You may lose your job, your house may burn down, the stock
market may crash. And how you weather those three things are
very critical, and they can be very different things for everybody.
Holt:
And Diana, now, once again, with your financial literacy
program, where would you say the issue of, say, housing fall
in? You’ve probably dealt with a lot of folks who are
seeking loans for housing. Housing was on that list; how does
that impact?
Alexander:
Well, Deborah, as we look at trying to qualify individuals
for housing, we look at on e of the things that Ed talked
about, if something happens, are you able to make sure you
have the resources available beyond your investments to meet
all the specific needs that you have? And one thing I’m
sure that you covered in your previous piece, was the issue
of credit, and that we start with credit and we just continually
build; we talk about savings and we continually talk about
building. Now if we can get individuals to realize that one
of the most important things that they can do is to begin
the process of saving, no matter how little, that’s
going to be your stepping stone to your wealth and to the
basic necessities, such as a home, and we do look at the possibility
of even trying to assist with the financing if you’re
a first-time home buyer. So it’s important that you
know what your credit is, it’s important that you have
your goals outlined as stated, so that when you come in to
talk with me or Ed or James, we can get a real good idea as
to what we have to offer that we can partner with you. And
that’s the importance of relationship building: it’s
really partnering, so that you can win in reaching your goals
and desires that you have.
Holt:
I’d like to talk a little bit about investment strategies,
for example, retirement accounts; when do you get into stocks
and bonds, mutual funds, and also any other strategies, even
real estate investing is being seen currently as a good strategy
for investing your money, but what cautionary advice might
you have for folks that are considering these areas? James?
Dean:
Well, I would say first you’re going to take care
of your knowns in life before getting into what I’ll
define later as the unknowns, and that’s more of your
stocks and your investments that have a higher risk. Taking
the knowns out of life first, knowing the situation where
you know you’re not going to live forever, life insurance
could take of it. You know you’re not going to work
forever; retirement planning could take care of that. If you
have children that you want to see go to college, they will
be 18 before you know it, are you taking care of that? Once
these knowns are in place, you’ve go your risk factors,
your defensive measures in place, then you can move into some
of the other areas that involve a little bit more risk, but
also take advantage of the incredible gains. And I’ll
defer to Ed here on how to take advantage of those risk factors
when you’re ready.
Fulbright:
Sure. The real estate I think can be a great strategy for
people, but they do need to take care of the basics. They
need to make sure they have a home before they start buying
rental investment property. They need to make sure their home
is properly leveraged. And when we talk about properly leveraged,
is that the house is two and half times your annual income,
that’s the mortgage on it, and because what I found
in doing research is that that starts to affect your other
savings, like you may have a 401k plan at work, and if you
can’t contribute your 6% to that 401k plan, you may
be missing out thousands of dollars that your employer owes
to you. I mean, they want you to take this money, that’s
why they set up this plan. But if you can’t take an
advantage, you’re leaving money on the table. And so
when you take care of those basics, then you can start to
move onto saving for extra money like that second home or
whatever else that you want to do, and you want to take advantage
of things in a tax-effective manner, because tax is usually
our number two or three bill when we start to look at things.
You know, usually the mortgage is number one or two, and then
there may be some other bills: it could be student loans,
it could be some other things. But taxes typically rank pretty
high up there.
Holt:
Now, all three of your offer expert advice. What if there
are people out there who feel like they can’t afford
your service, how do you get paid?
Alexander:
Well, working with Mechanics and Farmers Bank, we’re
a community service bank, so coming to us because you’ve
developed relationship, you come in and talk and that’s
free, that’s a service that we provide, looking at what
your needs are, looking at everything that you have. So that
we can come up and help you devise a plan to start wealth
building. So there is no cost, we just invite you to come.
Fulbright:
Well, one of the things that I would suggest is that we
do the radio program, and they can send in free emails to
talk about their situation, and we have shows that are especially
designed for people who may have a certain situation and we’ll
do a show about that. In fact, we’ve been considering
doing interviews of people not that they have to give their
personal name, but we have done shows where we’ve had
people who have had challenges in their life and we can do
it that way, or they can always take me out to lunch.
Holt:
We are completely out of time, and if folks want to get
more information please log on. I’d like to thank our
financial experts, James Dean, Ed Fulbright, and Diana Alexander,
for coming and sharing their wisdom and advice. If you’d
like more information on tonight’s program or a transcript,
please visit us online at www.unctv.org/bif, and when you
visit, be sure to send us your comments and your program suggestions.
You can also call us on the BIF Line at 919-549-7167. Join
us each and every Friday night at 9:30 for more dialogue on
the topics that matter. For Black Issues Forum, I’m
Deborah Holt, have a good night.
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Voiceover:
This program was made possible by contributions to UNC-TV
from viewers like you. Thank you.
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