Steve S.: Tonight, why Wall Street doesn't believe Jerome Powell and the bank that started all that recent turmoil. They've got a buyer. You're listening to Simply Money presented by Allworth Financial. I'm Steve Sprovach, along with Steve Hruby. We've got a lot to get to this evening, so let's just get right into it and bring on Allworth Financials' Chief Investment Officer, Andy Stout. Andy manages billions of dollars of investments from right here in Cincinnati. Andy, let's start right off with Silicon Valley Bank. There was an announcement earlier today, First Citizens bought Silicon Valley Bank, another example of the banking system taking care of their own. Has that pretty much stabilized the concern or do we still have other concerns out there in banking?

Andy: Well, I think it certainly helps in the short-run, Steve, when we look about, or we look at across the whole banking sector there's still some issues that we're paying really close attention to. For example smaller banks like your smaller regional banks in general, they hold 67% of commercial real estate out there. And while commercial real estate's been doing okay, there are certainly some issues that we're watching when we look at the underlying characteristics on sales price, sales volume, and price pressures in general. So, is it over? There's probably a few more things to percolate up through the surface. But in terms of like your big risks that are out there, it's certainly fewer than what it was. This really comes back to that Janet Yellen saying last week, while there's no blanket insurance coverage meaningful, like FDIC insurance?

Steve S.: She scared people. She scared people when she said that. Yeah.

Andy: She did. But she also said relatively in the same breath that the Treasury FDIC is prepared to do something similar for what they did for SVB's depositors in terms of protecting the smaller banks. So if you got your deposits at a small bank, which tend to be the riskier ones in general, she basically said that they would bail them out, right? So I think that helped to stabilize it to a degree, but the market certainly wanted that blanket coverage to protect your even bigger banks like JP Morgan. But that's really kind of stretching what her authority is and would really wanted to talk with lawmakers first and iron all of those details out first. But to answer your question, we're definitely more stable than what we were, although there's certainly some issues out there I'm still watching, especially if I'm looking at deposit flows. We saw the latest data we had, Steve, showed that small bank deposits fell 120 billion, meaning that's how much got pulled out. And that's by far the biggest week ever. Now, that's as of March 15th, as of that date. So we don't have the more recent data. And so, maybe it's stabilized a little bit since then and Fed Share Pal did allude to that last week.

Steve H.: So based on last week's rate increase from the Fed, it almost seems like they're choosing to fight inflation over saving the failing banks. What would you say to that, Andy?

Andy: Absolutely, and that's what we saw in Europe with a European Central Bank where ECP, they did the same thing. They hiked by half a point couple weeks ago, Fed hiked by a quarter point last week bringing the target Fed funds rate to a range of 4.75% to 5%. And basically, they understand that the banking crisis has caused some turmoil, if you will. And it's kind of had the same effect as what rate hikes would. So when we look at the Fed's statement, and when we look at what's called also the Fed's dot-plot, which is something they release every quarter, and they just released one last week, it shows where each member of the Fed believes the Fed fund's rate will be at the end of the upcoming calendar years. It did not change for 2023, which is interesting because two weeks ago, if you remember, Chair Powell was testifying before Congress, and he said that we expect to adjust upward our expectations for this year.

So that kind of left the assumption that it would probably be about half point in additional rate hikes, but they didn't change that. So that tells me that they're viewing this banking crisis as basically having the same impact on inflation and by about half a point.

Steve S.: You're listening to Simply Money on 55KRC. I'm Steve Sprovach, along with Steve Hruby. And if it's Monday, we must be talking to Andy Stout, Chief Investment Officer of Allworth Financial. Andy, it's interesting how the Fed... I mean, this really rattled the Fed when we saw this banking crisis developed by, I guess, was about two weeks ago. One of the things I haven't seen anybody else talking about though, is the Fed is and has been selling off the bonds that they accumulated during quantitative easing.

I mean, they're selling off about $90 billion worth of bonds a month. That's a big number. And when you dump that many bonds on the market, that also raises interest rates. Has what they've been doing... Would you consider that a de facto interest rate hike where they didn't have to raise rates as much as they would have if they weren't selling off these bonds?

Andy: Well, yeah. I mean, it has the same impact of tightening credit conditions, meaning making it more expensive for people to borrow monies, to buy cars, or to buy houses. And what the Fed is doing, if you recall, they embarked on something called quantitative easing, which is a way for them to essentially make monetary policy looser and to make credit conditions better. And they did that by buying a bunch of bonds and flooded the economy with money. So when they bought the bonds, the money they had went into the economy. And they bought Treasury bonds, they bought a mortgage-backed securities.

And if you look about how much their balance sheet expanded by, I mean, it was quite remarkable in the sense that it really jumped from, I'll call it, let's go back to March 2020. It was about 4.1 trillion and ultimately grew as the Fed looked to do that through March of 2022 last year to about almost 9 trillion. So it increased a lot.

Steve S.: Yeah, that's a big number.

Andy: Yeah. And since then, it's come down a good amount to about 8.3 trillion. But you know what, it did spike when this banking crisis started as the Fed did these loans. So they do have these emergency facilities trying to stabilize the system where it's actually back up to 8.7 trillion. But what I'll say is they have not changed their quantitative tightening program that you're talking about, which still has them essentially running off about 95 billion of treasury bonds and mortgage-backed security bonds as part of that tightening. And that will likely continue, I don't see the Fed really doing anything to change that.

Steve H.: Andy, I wanna bring it back to the dot-plot. Does the market agree with what the Fed is projecting with interest rates?

Andy: So not really. When you look at the dot-plot, again, it just tells you where the Fed members think the rates will be at the end of upcoming calendar years. And when you look at... What we look at is because there's more than one member, we look at the median dot as a gauge to see where the Fed expects rates to be. And so they expect one more rate hike this year. And because Chair Powell in this press conference said no one is even thinking about rate cuts, that participants just don't see it happening this year, that tells you they got one more rate cut, and then they're pausing for the rest of the year, at least, according to the dot-plot.

And when we look ahead to the next year's dot-plot as far as like what's expected for 2024 it's almost 1% of rate cuts next year. But when we look at what the market expects, market's not buying what the Fed is selling.

Steve S.: They don't believe the Fed.

Andy: Shocking, I know. But what the market's priced in right now it's about a 50% chance of a rate hike next meeting on May 3rd. So 50% chance of a rate hike there of a quarter point, 50% chance they do nothing. So they got coin flip right now. We'll see how the data progresses between now and May 3rd. Lots of time between now and then. But when we look out the remainder of the year through the end of December, what we're seeing is basically just about three rate cuts priced in this year. And again, the Fed has no rate cuts and four quarter-point rate cuts next year. But that's what the market's saying. So the market is essentially under the assumption that what the Fed has done in terms of rate hikes will push us into a recession. I mean, that's just, I mean, you're not gonna have these sort of rate cuts unless you're in a recession.

Steve S.: So, you are still expecting a recession?

Andy: Well, that's what the markets, I would say, the market's pricing then, and based on the number of cuts. And when we look at the data out there, we look at the leading economic indicators, they are all pretty much signaling a slowdown across the board. It doesn't mean a recession is guaranteed, but it certainly means that the risks are high. And when you get situations, or I'll call it shocks, kind of like we had just with this banking issue here, it makes us more susceptible to a full-blown recession. And one can argue, and this is a really critical point, one can argue that a lot of the Fed rate hikes have not actually made their way into the economy. Because when you look at historically on how rate hikes affect the economy, it tends to happen with about a six to a nine-month lag.

And so, from that perspective, what has the Fed done really over the past, what, six, nine months? Well, they've been hiking a lot and it hasn't made its... If that lag holds true, it hasn't made its way into the economy because six months ago basically, we were at roughly two and a half percent, we'll call it, at least on the September 15th on the Fed funds rate on the upper end. Now we're at 5%. So basically, half of what the Fed has done in this whole rate hike campaign has happened within the past roughly six months. So that hasn't fully made its way into the economy. And we're starting to see some cracks as we do in the banking system. The question that we don't know is where are there other cracks?

Steve S.: Well, and I think that's the key is that lag time. The Fed may have done enough already, we just don't know that. So we've got some numbers coming up this week, Andy, in particular inflation numbers. What are you expecting?

Andy: We're going to get an update on the Fed's preferred inflation measure, which is PCE, which is not as popular as people think of when they hear inflation, they think of the consumer inflation, which is CPI. The reason the Fed prefers PCE is because it's broader-based. It includes more things than just what consumers buy. So like, think of like business spending as an example also included in there. Now, when we look at where it's expected to come in at on a year over year basis, the headline PCE is expected to be 5.1%. And core PCE, which excludes volatile food and energy prices, it's forecasted to come in around 4.7%. That is nowhere close to what the Fed targets, which is 2%.

So under that situation, the Fed would say, "We have a lot more work to do." But to your point, Steve, the Fed may have already done enough and we don't know what the ultimate pain will be as these rate hikes actually get into the economy. Because when you look at the pace of rate hikes, that's been basically the quickest ever in a 12-month time span.

Steve S.: Great insight as always, from Andy Stout, Chief Investment Officer of Allworth Financial. Thanks, Andy. Here's the Allworth advice, knowing when a recession will begin and when the market will top or bottom out, it's impossible. Don't even try. That's why we should avoid timing the market. Coming up next, where Americans are falling short on the road to financial freedom, and how you can turn that around. You're listening to Simply Money on 55KRC, the Talk Station.

You're listening to Simply Money presented by Allworth Financial. I'm Steve Sprovach, along with Steve Hruby. If you can't listen to Simply Money every night, just subscribe to our daily podcast. You can listen to it the following morning after we air during your commute, at the gym, wherever you happen to be. And if you've got some friends that could use some advice, tell them too. Just search Simply Money on the iHeart app or wherever you find your podcasts.

Straight ahead at 6:43, The Quantifiable Power of Financial Advice. Hruby, we've been talking about this a little bit Diamond Sports, which is the parent company of Ballys, which airs the Cincinnati Reds on TV, they filed bankruptcy and and I knew when they couldn't make their $140 million interest payment, that making a trillion dollar rights payment to the various teams that they were broadcasting was dicey at best. We've been talking about the MLB, Major League Baseball said, "We'll pick up the slack and stream it," but Steve Watkins, our friend over at the Cincinnati Business Courier, he broke a story saying, it looks like for a while we're still gonna be able to watch the Reds on Ballys.

Steve H.: Yeah. That's how they're closing the gap here for now. Game's still gonna appear in Bally Sports Ohio. So you paid for that package, right?

Steve S.: I did.

Steve H.: To stream it, yeah. So I guess it's when...

Steve S.: When I care, I watch a lot of Reds games, but I'm not sure I care that much this year. We'll see. Rebuilding.

Steve H.: Speaking of the Reds, the franchise has been named among the MLB's the least valuable organizations. And this is according to Forbes. So pretty far removed from the Big Red Machine, from World Series hopes. I moved to Cincinnati in 2007. Man, that was a lot of fun there for a few years. Yeah. It haven't been as great lately.

Steve S.: Literally over the weekend I hung up my 1976 signed Big Red Machine poster in my basement.

Steve H.: You sound like you're bragging, Steve.

Steve S.: Oh man, this thing is awesome. It really is. But yeah, that was their heyday. And yeah, we've had some good seasons since then, but not that many lately. And I'll tell you what, you're gonna slide down the scale if you can't put a competitive product on the field, and I think that's part of the issue here. Number one, to nobody's surprise, New York Yankees, most valuable franchise.

Steve H.: I've never liked the Yankees. Once upon a time, I lived in New York for a few years, I worked there. I hate being late. They made me late to a meeting because of their stupid parade after they won the World Series. You know how mad I was?

Steve S.: I would like to be late because of our World Series parade here in Cincinnati.

Steve H.: I'll forever hold a grudge against the Yankees for that one.

Steve S.: Oh, it's funny. But at least their fans are obnoxious, so we don't have to worry about that. Now, the Reds, were ranked number 28 out of 30 teams in value of the team. And you can argue as much about small market as much as you want. Cardinals rank number 10 worth two and a half billion versus the Reds 1.2 billion, I'm sorry. So it can be done in a smaller market, but so far, not to be the case. You're listening to Simply Money on 55KRC. I'm Steve Sprovach, along with Steve Hruby. And I wanna talk a little bit about a really interesting survey that Fidelity did. And they do some good research. I really like some of the things I see coming out of fidelity. But one of the surveys they did is showing that we're starting... We're going backwards with retirement savings.

Steve H.: They found that US adults are less prepared for retirement now than they were three years ago. So according to their asset management, the brokerage custodial giant Fidelity, average American is on track to only replace 78% of the income that they'll need in their post-work years. And this is down from 83% in 2020.

Steve S.: I know. And it's scary actually. It really is an and as more and more companies are getting rid of their pension plans, which is basically the company saving for your retirement on your behalf, and it's being put on the individual to you've gotta do it for yourself because there ain't nobody else doing it for you. And we're not stepping up to the plate.

Steve H.: No, no, we're not. So what's really to blame in this decline in preparedness, a lot of people are saving less and investing more conservatively.

Steve S.: Yeah. Which is a natural reaction. You go through a bad market and everybody, "Wow, I just lost a lot of money. I don't wanna have that much in the stock market if I lost," which is the exact opposite. If you buy into, the economy will recover, the market will recover. You should be jumping all over opportunities to buy when things are on sale, basically.

Steve H.: That's the word I wanna hone in on here is...

Steve S.: What's that?

Steve H.: Opportunity. It is an opportunity. I get a lot of folks that I work with calling me, "Hey, the markets are down, inflation is scary. What's going on with the banks? I don't know what to do. Should I stop saving in my 401(k) right now?"

Steve S.: I know, I know. I've actually had people say, "I think I need to get out of my 401(k) because it's not doing well." Ridiculous.

Steve H.: Yeah. I say, "When things go on sale, do you not buy 'em, or do you wait for them to go on sale to buy 'em?"

Steve S.: No lie.

Steve H.: End of story.

Steve S.: So, I wanna talk a little bit about how you fix it. What do you do if you're behind the eight ball and you need to save up? And first thing I'm gonna say is exactly what I did 10 years ago. I mean, we had a lot personally hit us all at once financially helping get a company off the ground, young kids eventually going to college, a lot of money going out, not as much coming in as I hoped for. And 10 years ago, what what I I did was I said... It's called looking at your future self. I said, okay, here's where I wanna be in retirement. Here's how much I want to save. And not that these are my numbers, but I think a good round number strategy is all right, if you've got $1 million when you're ready to retire, you can draw, you should be able to expect to draw 4% off of that, $40,000 a year of income over and above whatever you're getting from Social Security and maybe even a pension.

So if your goal is $1 million that you want on the day you retire in your various investment accounts, and you've got x number of dollars today, subtract one from the other, what's the difference? Put a rate of return on and say, this is how much I have to put away over the next 10 years, 12 years, whatever the number is to get to my goal. You have to figure out that number of how you get from here to there to have any chance of achieving it.

Steve H.: Yeah. And what's an easy way to figure out that number? Honestly, it's exploring working with a fiduciary financial advisor. It's very hard to go at this type of thing alone, Steve. Obviously, you're in the industry, so this is second nature for you. Coming up later in the show, we're actually gonna take a deep dive into that. Oftentimes, it leads to a more disciplined approach too. So in our role, we oftentimes light a fire up underneath clients that we work with, because we can show where they are and where they need to be, and how we can close some of those gaps.

Steve S.: Here's the Allworth advice. If you want financial freedom when you decide or can't work anymore, prepare, prepare, prepare. Coming up next, Amy joins us next to talk about some really good news for the first-time home buyers. You're listening to Simply Money on 55KRC, the Talk Station.

Amy: You're listening to Simply Money brought to you by Allworth Financial. I'm Amy Wagner, along with Steve Strovach. I have said this many times over the past couple of years, while the housing industry, while the real estate industry has gone bonkers, the people who I really, really feel sorry for is first-time home buyers. It's just really difficult for them. Tonight though, we have some good news for first-time home buyers. Joining us tonight, of course, Brett [inaudible 00:20:34], our credit expert, with some good news for anyone looking for an FHA loan. Let's talk about what that is, Brett.

Brett: Well, FHA loans are insured by the Federal Housing Administration, and they're used a lot by first-time home buyers. FHA loans allow for folks to get into a mortgage with as little as three and a half percent down. You can have a little bit less than perfect credit, and you can also on those down payments, those are allowed to be gifts and grants and so forth that you can use in conjunction with these FHA-insured loans. And they've made it a little more affordable starting this month here in March, where the mortgage insurance that is charged on a monthly basis on these FHA-insured loans is dropping 30 basis points.

So where it used to cost 0.85% of the loan amount divided by 12 as a monthly mortgage insurance premium, well, that has now dropped to 0.55%, which is 30 basis points lower. And that makes the monthly mortgage payments on these FHA-insured loans more affordable.

Steve S.: So they're three-tenths of a percent lower on their interest rate. With what we've seen over the past six, eight months or so, that's helpful because rates have gone from, what, about two and a half percent to, I think they were over 7% at one point, weren't they?

Brett: Yeah, they did go over seven, which obviously affected affordability. And of course, with FHA mortgage insurance premiums being a little bit higher than than normal PMI on a conventional loan, that made it even more costly for these first-time home buyers. And making this go down a little bit on the mortgage insurance, well, that helps offset some of that increase in the rates. Now, rates have started to settle back down now into the lower to mid sixes, depending on credit scores and the like. But this is a welcome relief on the mortgage insurance side because, hey, $40, $50, $60 less in a monthly payment, that really helps a first-time home buyer.

Amy: I was gonna say for first-time home buyers, and I remember back like it was like a matter of $20, right? Does this work? Can we make this work? I'm wondering, Brett, when you see that this decrease in the insurance here, how do you think that fits into the overall picture for people trying to decide, are we ready for this with what they're currently up against with the real estate market?

Brett: Well, I mean, we still are dealing with an inventory shortage, especially in the first-time home buyer price range, you know? Builders are continuing to build, but they, I don't know, everywhere I look, they seem to be building $300,000 or $400,000 and $500,000 houses or more, versus starter homes where someone may be in that $150,000 to $250,000 range. So one of the things that first-time home buyers, I think have been...were really kind of hurt by during the last couple of years when we had all this...the low rates and everything, and you had all these crazy offers above asking price, and waiving inspections, and doing all that sort of thing, a lot of FHA buyers were kind of frozen out because a lot of the sellers just wanted cash offers. They just wanted conventional [crosstalk 00:23:58]

Amy: The competition was so steep.

Brett: Yeah. And they had the ability to offer 10,000, 20,000 above asking price. Well, the first-time home buyer doesn't have that kind of capital.

Amy: Absolutely not.

Brett: They're getting their three and a half percent down payment on an FHA loan possibly gifted from their mom and dad, or they're getting a grant from a first-time home buyer program or something of that nature. So that was really hard on them. But now that things have started to slow down a little bit, I think they really have an opportunity right now. And sellers are no longer getting those multiple offers above asking price. So they might actually entertain more of these borrowers.

Steve S.: So a reduction of three-tenths of a percent on a 30-year mortgage, that's significant. Is that a one-time deal just this month, or is that going forward?

Brett: No, this is a reduction in the mortgage insurance premium. So the mortgage rates, obviously, they're still dictated by the market. But this is an actual change by FHA where they used to charge... They were charging for some time 0.85% as a mortgage insurance premium. So now it's dropped to the 0.55. And so, that is lowering across the board going forward on all FHA loans.

Steve S.: That's significant. That's huge.

Brett: Yes. The mortgage insurance is gonna be more affordable, and that's a big plus for... Especially for first-time home buyers that would be using these FHA-insured loans to buy their first house.

Amy: And Brett, I mean, just thinking about where we are right now as a country, I mean, everything's costing more. Has the FHA said why then they're lowering these payments?

Brett: Well, you they [inaudible 00:25:40].

Amy: It's just kind going against the grain right now.

Brett: I know. Well, let me tell you the reason. It's, they raised these premiums significantly after the crash in '08. So they were worried about solvency of the fund that they used to insure these loans. Well, here's the thing. They ended up keeping these rates higher for a lot longer than they needed to, so the fund has way more reserves and way more money than it needs. So they probably should have done this a while ago. But they're just now getting around to lowering it now that it has so much extra money in the fund.

Amy: So Washington had extra money lying around.

Steve S.: They did the right thing, and they're not spending it. Shocking.

Brett: Eventually, they decided, oh yeah, we do have way too much money in this fund. We need to lower these premiums. So that's a good thing.

Amy: Absolutely. So Brett, what's your advice for someone who's maybe during the pandemic or over the past couple of years thought about dipping their toe into buying their first home, and then they decided not now, what does it look like out there now? What's your advice to them?

Brett: Well, I think now's a good time to be jumping back into the game. I think now, first-time home buyers especially will get a little more attention from sellers, because again, you don't have as many of these cash offers coming in and multiples to a lot of the sellers. So they're more open to other types of buyers and even more open to making concessions, like helping with paying some closing costs or something of that nature. And I think you should check your credit, make sure that it's in good shape, try to make any adjustments that you need to so that your credit scores are as strong as they can be. And apply, get pre-approved with a lender, and get that pre-approval letter, and then get you a good realtor and go get out here and start looking at all these properties.

And if you buy now, interest rates are certainly... They've come down a little bit in the last couple of weeks. Unfortunately with other bank failures and everything, that's actually helping mortgage interest rates a little bit. So I think you need to be getting in position for the spring buying season. I think you're gonna see some opportunities here, and I think you'll have sellers that are more open to working with first-time home buyers again. So I think it's a good time.

Amy: Great advice as always from our credit expert, Brett [inaudible 00:28:08], you're listening to Simply Money here on 55KRC, the Talk Station.

Steve S.: You're listening to Simply Money presented by Allworth Financial. I'm Steve Sprovach along with Steve Hruby. Do you have a financial question you'd like for us to answer? Well, there's a red button you can click on while you're listening to the show on the iHeart app. Just record your question, it goes straight to us. We listen to those, and we may even put you on the air. Straight ahead, the danger of being too loyal at your job. Hey, Steve, earlier in the show, we spoke about the Fidelity study that showed Americans, they're going backwards. They're falling short on what they need for retirement. I would call it a crisis, personally.

Steve H.: Yeah, me too.

Steve S.: Yeah. Some say, "Okay, blame the government." But maybe the fix is from a study I saw earlier today. Maybe the answer is just seeking out advice.

Steve H.: Such a simple answer. So, what what you're talking about here is a, it's a study outta Switzerland that has found that simply talking to a financial advisor may be enough to dramatically boost people's savings rates to the point where they found that those that sought out the help of an advisor were 10 times more likely to open a retirement account in that month that they met with the advisor, versus a month that they didn't, 10 times.

Steve S.: And this doesn't surprise me. I mean, besides being in the industry as long as I have, I'm also a private pilot. And one of the things, when you look at reasons for plane crashes, it's there's a just a crazy percentage of pilots who never ask the most important question when things start to head south, and that's asking the tower, "Hey, I need help. I need help. Can you help me?" Okay. And we don't do that in our financial world. There's a little bit of pride involved and I think the answer is if you say, "Okay, I know I need more money than I've got, but I need help, how do I get there?" If you ask somebody in the business, chances are you're gonna be given a pathway that you wouldn't have gotten on if you didn't ask for it.

Steve H.: Yeah. It's like seeing a doctor. We look at things from different angles, different lines of sight. It can lead to different actions that you might take, absolutely.

Steve S.: Yeah. Now this is a study that was done in Switzerland.

Steve H.: That is true.

Steve S.: So this is not the United States.

Steve H.: Mm-hmm.

Steve S.: And one of the things that as I'm reading this study, I'm saying to myself, yeah, but they've got a whole different retirement system. Their pension system is extremely... It's ranked one of the top five pensions in the world. It doesn't kick in until you're 65, not like Greece, or France that they're battling over right now. So you've gotta be 65 to draw a pension, but it's got three pillars. The first pillar paid for by your employer and yourself is basically what our Social Security system is. But they've got a second pillar that's also paid by yourself and your employer for additional money based on your income while you are working.

And then they have a third pillar, which is a voluntary pillar. If you wanna pay into it, you're gonna get even more in retirement. So, they've got a real strong payment system coming to retirees, which tells me they're not as dependent on putting money into the stock market. And that bears out in some of the numbers we saw in this.

Steve H.: Yeah. I mean, the study, it only looked at cases where an advisor initiated the contact though, not where the client did. So, it isn't a case of people contacting advisors because they already wanted to up their savings, these are people that actually took action because they spoke with an advisor that reached out to them.

Steve S.: Yeah. But they did open up accounts for additional savings over and above a pretty robust pension system. So when I see things like, okay, there's only about, I think it's 60% have a retirement account, and only a third of Swiss people invest directly or indirectly in stocks, to me that tells me that they don't really need to because of the robust pension system. You're listening to Simply Money on 55KRC. I'm Steve Sprovach, along with Steve Hruby, and we're talking about how important it is to find professional advice if you're not on the track you need to be to retire.

Steve H.: Yeah. And regarding the Swiss study, it didn't, or it looked at people at different education levels and realized that they didn't respond differently to this advice. Less educated were just as likely to raise their saving rates as those with more education. And there was really no difference between men and women either in this situation. Now, shifting gears a little bit, talking about another recent comprehensive study, depending on the client's circumstances, working with a qualified financial advisor adds on average as much as 4% or more in returns above going at it alone.

Steve S.: Yeah. And I like to see those numbers from outside sources, because when we come up with numbers like that, people are gonna tell us, "Yes, sure. Of course, you think that way."

Steve H.: Yeah, I know, right? You're biased, so yeah. What do you know? But at the end of the day, it's not just because of investment returns, it's because of the behavioral coaching that advisors like us as fiduciaries provide to our clients. It's more than just investments. It's tax solutions, it's estate planning, it's insurance solutions, and that all adds up together.

Steve S.: It does. And so, what should you ask an investment advisor or a professional? I think number one is, "Are you a fiduciary?" And fiduciary means, are you working on for my benefit or for your, or your company's benefit? Very important legal distinction. Not just ethical legal distinction. "How do you get paid?" I mean, that's okay to ask, "What are your qualifications? How will our relationship work? How often do we meet? What's your investment philosophy?" Here's the Allworth advice. Asking for help might be the most important step you're ever gonna take on the road to financial freedom.

Coming up next, how to overcome the pitfalls of being a loyal employee. You're listening to Simply Money on 55KRC, the Talk Station. You're listening to Simply Money presented by Allworth Financial. I'm Steve Sprovach, along with Steve Hruby. Steve, does this describe your work situation? You do a great job, you're diligent, get results, loyal to the company, but because of that, you are rewarded with more work. Does that sound familiar?

Steve H.: I have a trend of that in my entire career, I feel like. But of course, I'm biased.

Steve S.: It happens.

Steve H.: Yeah. Yeah. I'm a little biased coming from self-reflection here, but yeah, absolutely, all the time. In different roles that I've had, I've been asked to do more. And that's fine. But there's a study that we wanna shine some light on here that says, if you are a loyal worker, you're likely also to be an exploited worker. Yeah. So, this is the key takeaway from the study that was done by a postdoctoral researcher at Duke University School of Business.

Steve S.: Did you see the name of the paper? The name of the paper is, "Loyal Workers are Selectively and Ironically Targeted for Exploitation." I don't need to read anything more. I mean, if you want people to read your paper, you probably should save a little something and not put it all in the title. It sums it up though.

Steve H.: It sure does. It does. Stanley's Research, that's the name of the guy that did the study. This involved asking hundreds of managers to determine how much work they dole out among their employees in fictional scenarios. So, kind of an experiment. The employee who identified as loyal was more consistently asked to do unpaid work, unpaid work, and take on additional job tasks compared to those that consider themselves to be disloyal.

Steve S.: Well, I would title that concept "no good deed goes unpunished." I mean you wanna be good at your job, you want to get pay raises and salary increases and all that sort of thing. But yeah, sometimes it just doesn't pay. And I think the key is you've gotta set boundaries. I mean, not doing as good a level of work, or just kind of slacking it, that's not necessarily the answer.

Steve H.: No, no, no. And this is a vicious cycle too. The more loyal the employee, the more work they do, the greater the chance that they're gonna be asked to do more. So, it can be kind of a snowball effect.

Steve S.: And you might have to be confrontational with your boss. Now, in a former company, I used to get, routinely get phone calls 9:00, 9:30, 10:00 at night, which was real frustrating because after 5:00 to me, that's my time. But I would go right from work to coach my kid in baseball and also ran the baseball program. So I was getting phone calls from parents up until 9:00, 9:30, finally relaxing, and then the phone rings.

And at one point, I had to say, "Hey, if this isn't a major issue that needs to be addressed right now, can we just talk about this tomorrow?" And after a couple times of doing that and having a very frustrated boss who was not happy, that in his view, I wasn't with the program, I did set boundaries, and it did settle down, and we did keep work nine to five from that point on. But that's a tough call. You've gotta be pretty confident in your situation at work to be able to call your supervisor on that subject.

Steve H.: Yeah. And that's not doing less, in my opinion, either. That's setting boundaries versus doing less. It's not the same thing. And that's what the study also pointed out. You don't wanna fight back just by doing less. Because we still owe our employees.

Steve S.: But weekends...

Steve H.: Employers, that is.

Steve S.: Yeah. Weekends, to me, that's off limits. You've gotta have those kinds of healthy boundaries. And I think a good boss or a good supervisor, he's going to acknowledge, okay, maybe I was a little bit out there with that request.

Steve H.: I was off on Friday, and I do have a boss. And he called me and I answered, and he realized after I answered, he's like, "Oh, I see your calendar is blocked. Oh, you're on PTO, we don't have to talk about anything right now."

Steve S.: Yeah. That's a good boss.

Steve H.: Oh, yeah. I agree. I was very happy with that.

Steve S.: Thanks for listening. Tune in Tomorrow we're gonna talk about artificial intelligence picking stocks and the danger that may involve. You've been listening to Simply Money Presented by Allworth Financial on 55KRC the Talk Station.