Intro: Royal Standley of Oregon Pacific Financial Advisors offering securities through United Planners Financial Services member FINRA SIPC, guides clients with empathy in discovering and reaching their financial goals and creates financial plans for clients so they can live their life by design. In these episodes, he relates his expert financial insights and discusses timely topics. Royal strives for excellence and has a passion for sharing his knowledge and supporting his community. Now onto the show.
Aric Johnson: Hello and welcome to Life by Design with Royal Standley of Oregon Pacific Financial Advisors. Royal, how are you today?
Royal Standley: I'm doing fantastic. Aric, how are you?
Aric: I am great. I am. I'm excited about today's podcast because this is almost like a, almost like a reset button in a way. Uh you're, you're going to do something, uh, cover a topic that you kind of covered early, early, early on in your podcasting career. But I think we're going to be updating some things in this too, right?
Royal: That's right. I thought we would go over what our financial planning process looks like. It's been a few years since we last did that podcast. I thought it'd be good to just freshen up, revisit that topic and just get into it because I think a lot of people really don't understand what our financial planning process looks like. They don't really understand financial planning as a whole,
Aric: Mm-hmm.
Royal: Because oftentimes it just gets mixed up with simply investment management and asset management. And while we do a lot of asset management and investment management, investment consulting here at Oregon Pacific Financial Advisors, our primary duty to our clients is really in the realm of financial planning.
Aric: Mm-hmm.
Royal: And so a lot of times, I'll just spend the first five minutes talking about, uh, with a new client, what financial planning is, what it isn't and try to distinguish between investment management and the planning side, which is, um, really where I feel we can bring the most value to someone's life is by being a financial planner, in addition to, uh, asset management.
Aric: Yeah. And I think another thing that people don't quite understand, or they have this trepidation maybe, is they think that you guys are going to sell them something and that's not what a, a planner does. I mean, there, there, there may be things in ther,e tools and resources that they can utilize as part of their overall plan, but you're not, you know, you're not one of these salespeople. Like they, uh, I don't want to put down insurance people by any means, ‘cause insurance is a key component of what you're going to talk about, I'm sure. Bottom line is that they think of ambulance chasers, they think of people that are taking advantage of others. And until you sit down and really understand what a planner does, it's mind blowing, how much, how much you guys do for a client. And it's not about sales.
Royal: That's right. Really, when we sit down with a client we're evaluating number one, are they a right fit for our firm. Is there a connection there, is there a similar thought process when it looks at their lives? And what we're trying to do is evaluate, will this be a good client that we're going to have in our firm for the next 20, 30, 40 years. Because ultimately when you hire a financial planner to walk alongside you, you really are, and you should be thinking about it this way, you really are hiring somebody for the rest of your life. Because what the financial planner is doing is building out a plan, helping you evaluate where you're at, where you're going, and really guiding you along that entire process. So, working with, uh, with a firm that you really trust and are comfortable with is really the beginning of a fantastic relationship. So, if it does feel salesy, if it does feel like you're being pushed to product, then probably you're not in the right place to begin with.
Aric: Mm-hmm, mm-hmm. All right. So you spoke about reviewing where people are at and that's kind of the first step. Help, helping them to understand what planning truly is, what it is, what it's not. And then you're diving into more of their, their information, right? I’m assuming?
Royal: Correct, correct. So really what I try to do is I really try to keep the first, you know, 20 minutes, half hour of our appointment, um, not looking at any of the documentation they've brought in. I really want to get a sense of who you are. What brought you to this point? What are those big things that have happened in your life? You know, what do you do for a living? What does your family look like? You know, what have been some of the challenges, what have been some, some of the successes you've had up until this point, and then we'll transition and start talking about, okay, well, we, we have, uh, a sketched out framework of who you are and what brought you to this point. Now, the next thing is, is where do you want to go from here. And that's really where we start talking about, you know, those dreams, those goals, those milestones in people's lives that they want to start planning around. Whether that's retirement, saving for college, transitioning their wealth to the next generation. We really want to start building that framework of where are you at today? Where do you want to go? And then we'll transition into talking about, well, what scares you about this?
Aric: Mm-hmm.
Royal: What are your fears? What are your worries? What are your concerns? What are the things that are keeping you up at night when it comes to your financial situation in your life situation, and what are the things you're trying to avoid by sitting down and having this conversation with a financial planner.
Aric: So what are those, what are some of those fears, worries and concerns that, that people bring up to you?
Royal: The number one is not having enough. There is an absolute fear of, well, what happens if, if I run out of money and I will tell you, this is a common fear. Not everyone has it. Some people are really just of the mindset we're going to get by with whatever happens. But there's a vast majority of people who do have that concern of, okay, I'm going to retire. I'm going to sell my business or I'm going to retire from my profession that I've done for years. And now I don't have really any safety net other than maybe Social Security, maybe a small pension, other than the assets that I've, I've saved up. What happens if something happens to those assets?
Aric: Mm-hmm.
Royal: What happens if something happens to Social Security? How do we make sure that I'm protected and can make it through the rest of my life at the level and, you know, style of living that I'm accustomed to. That really is fear number one. Fear number two I would say is, what about my kids?
Aric: Mmm.
Royal: I just want to make sure my family's taken care of could be other loved ones, could be a partner, could be children, could be, uh, parents. We want to address those as well, because those really can be quite a drag on someone's kind of mental energy of
Aric: Mm-hmm.
Royal: Well, what about the kids? What happens if, if I pass away and I leave my kids, you know, $500,000, a million dollars, are they, is that going to do harm to them or am I in my blessing them with that? Or do we need to put some guardrails so they don't hurt themselves and they have some time to process those things,
Aric: Mm-hmm, mm-hmm.
Royal: Because let me tell you, after doing this job for 20 years, I have seen a lot of different family situations and it's amazing how different they are and as parents, we want the absolute best for our kids. And sometimes we just don't know how to give it to them. Especially when we get into the complex nature of, money, assets, investments, property. How do we address those things and pass them on in a way that is a blessing and doesn't cause harm to them.
Aric: Yeah. Yeah. That's a great point. So after you kind of worked through that and they've actually, you know, now they're meeting with you, what do you go to?
Royal: So, a couple of different things. Number one, we want to start looking at what their assets are and what their liabilities are. And when we talk about assets, we're really talking about a number of different things. There, there's the easy ones here of, cash and investments. Those are assets. Real assets like property, uh, maybe a business, we’ll start taking those into account. But then there's, there's other things such as Social Security and pensions that are going to add to cashflow in retirement. And then there's also, um, your earning potential right now. If you're still working, okay, how much can you make? How much can you save? And then ultimately the biggest asset that we have here is time. If you know, if you're, if you're coming into the financial planning process earlier, you have a lot more options. If you're sitting down with a financial planner for the first time and you're within that last year of work or, um, approaching the sale of a business, you don't have as much time to make improvements on things. So, we really view time as an asset. And then on the other side of that coin is the liabilities. Uh, what are your debts? What are your family obligations? Uh, what are, do, are there any health impairments or fears that, that you have when it comes to health? We were just talking before the podcast about, uh, dementia and Alzheimer's,
Aric: Mm-hmm.
Royal: Those are all concerns there that we want to be able to address and make sure that we're, we're factoring into the plan. And then another liability I would say is lack of time. Not having that time to make those changes or consider options, really creates some challenges. So, we want to get all that on paper. Get a good sense of where people are at and, and what are the positives? What are the potential negatives there? And from there, we, we really jumped into understanding the team that these people have put around themselves before,
Aric: Mm-hmm.
Royal: Maybe they, they they're already working with a financial advisor or investment manager. Maybe they already have a CPA or an estate planning attorney, an insurance agent, all these different people that we hire to surround ourselves and give us advice and guide us. We really want to evaluate and see who else is on the team. And are they the right people for this individual client?
Aric: Yeah. And you've spoken on in previous podcasts, I know that there'll be some listeners that this is their very first one, but go back and listen to Royal's other podcasts you'll find out very quickly that he does a great job of working with an existing team. If the team member is the right person for the job, just like you said. Can you kind of elaborate on that just a little bit as far as how you kind of coordinate that?
Royal: Yeah, absolutely. So, it's really just as we build the financial plan, we start to get a view of a client's life, both personally and financially that not a lot of the other professionals necessarily have. Your CPA,they might sit down with you once a year just to do taxes and taxes really are a report on what happened last year.
Aric: Mm-hmm.
Royal: So CPAs for the most part are really backward-looking. And there's good CPAs that can also look forward and give advice into the future and do that tax planning. And that's something that we really look for when we're evaluating tax professionals is your capacity to have those future-looking conversations. The attorney or insurance professional, those are, those are often kind of one-time transactions where maybe it's a check-in every few years just to say, okay, is everything running correctly? So, we really want to make sure that everyone on the team is rowing in the same direction.
Aric: Mm-hmm.
Royal: And then as financial planners, we have this, this incredible view of a client's life where we are picking out issues that might be five years down the road that need to be addressed now. Or if we're doing a estate planning with a client really digging into, well, what does this transition look in 30 years when Mr and Mrs.Clients pass away. What are the things we need to be planning for now to make sure that when we get to the point of transferring assets upon death, that we have the right planning in place and we've been following a plan that entire time to reduce or eliminate taxes as much as possible.
Aric: Gotcha. All right.
Royal: So, as we're collecting all this information, we also want to have that conversation about risk tolerance. You know, risk tolerance is, is an extremely important part of investment management. And it also factors into that financial planning conversation as well. A quick definition of risk tolerance is how much risk are you able to handle in your portfolio or your life before you reach a point of breaking or capitulation. My, when we evaluate investment portfolios, we are really trying to match up people with a portfolio that they can stay in, regardless of what the markets are doing. If someone has a very high risk tolerance, they can be in a portfolio that fluctuates 30 or 40% in, in a given year. Like something we saw in 2008, like what we saw in March of 2020.
Aric: Mm-hmm.
Royal: Other people, if they see that kind of fluctuation, they're just not able to stay in there and it causes them a lot of undue panic, concern, worry, et cetera. And in those situations, okay, how can we diversify out some of those risks? How can we use some, some other alternatives to really build in some guardrails so they can stay invested throughout that period of time. So, when we look at risk tolerance that comes back to you, as we're projecting out future values of assets and what people will be able to take on income, we want to make sure that we have a good understanding of our client's risk tolerance. So, we're making those proper recommendations as well as using the proper rate of return over a 20- or 30-year period in our plan, that's going to be comfortable for those clients.
Aric: Yeah again, I think that's why people come to you in the first place is because they're not sleeping well at night or they're not sure. And so that's, I love that part of it understanding their tolerances, because again, you could, you could build something out, but it would still be uncomfortable for them. And that doesn't really solve that issue. So I love that.
Royal: Yeah. It's, it's extremely important. I always say that the times that we fail a client is where we put them into, into a portfolio that when we have a pullback in the market, they feel that they need to get out and move into cash. Once that happens, we have failed as investment managers,
Aric: Mm-hmm.
Royal: Because we haven't lined up their portfolio and their investments with who they are as people and their personality. And from a behavioral finance standpoint, that is essential.
Aric: Yeah. Yeah. I can see that.
Royal: So, after we have this, this great conversation and gather all this information, then it's our time where we take that information and myself and my team, we start putting that together into a financial plan. And from our conversation, we're really going through and identifying the opportunities and, and options that an individual has um, when they're looking at the future. We're identifying those milestones in life that we know that they're going to be coming up on it. It could be retirement, it could be changes in health. It could be, you know, a death of a spouse. How are we evaluating all those? How are we building those into the plan to stress, test this and make sure that, while we don't have a crystal ball, that we're trying to model what life could look like in factor in things like, well, what if inflation spikes up?
Aric: Mm-hmm.
Royal: What happens if we get low returns in the markets? How do we build in those guardrails for people so they can live their lives as comfortably as possible, uh, without worrying too much about what's happened in the stock market.
Aric: Gotcha.
Royal: And then from there, once we've built that into our system, we start running some, some different model in there, some different options. And that's where we get to come back with the client, go back over, and, and, uh, what's interesting here is oftentimes when we sit down with a client for the first time, it's usually an experience they haven't had before, where they're sharing some things pretty openly with myself and my team about, you know, who they are, what they want, what they've saved you. Those money conversations are not always easy.
Aric: Mm-hmm.
Royal: So the first thing we always want to check in on when we sit down for that second meeting is okay, what, what was your conversation like driving home? What questions came up for you? What changes have happened in your life, uh, because of that initial conversation? And it's surprising how often there has been a major shift just from that first appointment of well, we've decided to do this, or we're, we're really thinking about doing, you know, X, Y, Z now, uh, just because of having that conversation. And having that third party, oftentimes with a married couple or a couple brings up things and brings up questions and brings up new conversations. So, we always want to come back to that and see if anything major has, has shifted there since we, we initially sat down. Now from there, we get to deliver the financial plan. Now we always start the financial plan from the aspect of what have you been doing up to this point. You know, we, we're going to look and see is what you're doing up until this point, adequate? You know, will you reach your goals, just doing what you're doing. And that gives us a sense of, okay, well, if you continue on this path, here's where you wind up. Then we can start pulling out the options of, okay, well, here are the things we identified. Here are the things that you identified that you'd be willing to do to improve your financial plan or get to the place where you want to be.
Aric: Mm-hmm.
Royal: And so that's where we start looking at options. Hey, here are the things you can start doing. Here are the things you can stop doing. And then from there we really kind of build out and have this conversation of, okay, you're on the right track or you're on the right track or here are some things that you can do to make improvements.And with that we really start to, to come up to and meet our clients where they're at and start walking alongside of them. Once we deliver that financial plan and say, okay, here's where you're going, here's where we think we can get you. And now it's often at this point when, once we've delivered the financial plan, that we'll start having the investment management conversation.
Aric: Okay.
Royal: And start coming up with some recommendations there on how to manage those assets, how to mitigate taxes, all, all of those strategies that we bring from the investment management side of thing. Um, that's where we started building those into the financial plan as well. And so if you did that once and just did a financial plan one time, you're, you're probably a lot better off than a lot of people who don't have a financial plan at all.
Aric: Mm-hmm.
Royal: But in my mind, the real value here is coming back on an annual or maybe every two-year basis and updating and re-running that financial plan by measuring something on a year-by-year basis. It's amazing to see the changes that happen in people's financial life. Just, just from the standpoint of, hey, we're going to measure how we're doing on savings. We're going to measure is our net worth growing. We're going to measure what our cash flows look like in retirement. And by doing that, we almost always see improvements even regardless of what the markets are doing. Um, we're just seeing based on behavior of the individual clients that we're, we're seeing an improvement there on, on those metrics. So that's really the power of financial planning. It's not a one-time process. It's not a, hey, let's check this box. We did a financial plan.
Aric: Mm-hmm.
Royal: We're good. It's really something we need to come back to and keep testing on. And maybe nothing really changes, you know, from year-to-year, maybe it's just minor tweaks here and there. But the power of doing this plan is when the unexpected happens, you know, when you lose a spouse early, um, when you have a cancer diagnosis and you need really some quick answers on, okay, well, well, what, what does this mean? We can just open up our financial plan and start making those adjustments right there on the fly,
Aric: Mm-hmm.
Royal: To say, hey, you're going to be okay. Or, hey, these are the things that we need to do to make sure you're okay. And that's the power of financial planning. It's not a static document. It's not, not a lot of binders that you get with a, hey, if this happens, XYZ. What we're really trying to do here is have a living, breathing relationship with the financial plan that we can go back to and get into and adjust on an ongoing basis. And that's really the true value. I feel that myself and my team brings to financial planning.
Aric: Yeah. I, I think that, I mean, you mentioned, you know, some things that can happen in life, but at the same time, you are constantly in communication with your clients. So those things that happen in life that are, that are positive as well, Right? You want to know about those life changes because maybe you're going to have a grandchild and it's your first and you never expected that. Or maybe in retirement, I'm sure, Royal, you've got some stories about this, but in retirement, somebody decided I'm going to pick up a hobby and you know, I'm going to do some, I'm going to learn how to do woodworking.
Royal: Mm-hmm.
Aric: Well, there's, there's a good cost to, you know, getting good tools and good equipment to be able to do that. Or any of those types of positive life changes. You know, the daughter's going to get married. Well, you're going to, you know, spend, how much do you want to spend, you know, on that? Uh, so, so how do you handle those types of situations? Same thing I would assume? Right? You just kinda go in and review it and see how the, what it can do.
Royal: Absolutely. Absolutely. And, and the, the other thing that we're looking at here is oftentimes you'll have that question of, hey, we need, we need, $50,000 or whatever that number might be, you know, to do this thing. And maybe it's a positive thing. Maybe it's, hey, we want to take the family to Hawaii.
Aric: Mm-hmm.
Royal: We want to have a once in a lifetime trip, we want to have a great time. Maybe it's hey, a family member or a friend needs some medical help. You know, how can we help them?
Aric: Mm-hmm.
Royal: We can take our financial plan, factor in that expense and say, yep, you're good. Or well, you know how there might be some, some better ways of doing this. The other thing that financial plan does versus just, you know, working with an investment manager, who's only seeing the accounts you have here at the firm is what the financial plan. We can look at all of the, your assets because we have that and we update that on a regular basis and say, Hey, have you thought about doing this with a home equity line of credit, for instance.
Aric. Mmm.
Royal: It might be better from a tax standpoint to just borrow this money and gradually pay it back over time. We want to look at all those options so we can give the absolute best advice to our clients. And having the financial plan and having that updated is really our tool for giving that advice.
Aric: Gotcha. All right. That makes a lot of sense. What are we missing for today's podcast?
Royal: Well, I think, I think that covered just about everything in our process.
Aric: Mm-hmm.
Royal: Now it's really just the question of, do you need a financial plan? You know, as our listeners are listening to this, is it time that you sat down and really dove into okay, what does my future look like? You know, I'm, I'm, I'm building this wealth, I'm building these assets, I'm building this business. What does it look like when we put it all together? How do I make this transition? How do I pass on these assets? Right now I would say is a great time to reach out to our office, sit down with myself or someone else on our team and start that conversation of okay, let's start the financial planning process. Let's start digging into this and make an, a plan for the future. I think that's the essential part of all this is we have the tools here to help people and it's just up to them to say, hey, I'd like to come in.
Aric:Mm-hmm.
Royal: And start getting a picture of where I'm going.
Aric: Absolutely yeah. And something you said is stuck in my head and I hope it flows right into this, but, you had mentioned, look, if you've done a financial plan you're probably ahead of most people out there, but I would, my thought is without having somebody review it on, on a semi-annual or annual basis, kind of what you were talking about, they may have done a financial plan with an advisor years ago, and then the advisor just either fell away or they just haven't done anything with it. Since would you, I'm assuming your team also will review somebody’s plan?
Royal: Yeah, absolutely. Absolutely. And we see that quite often. They'll, people will get a printout from a an investment managers and it's just a very basic, you know, here here's the pluses, here's the minuses. Okay. Yeah. You should be fine. That's better than nothing,
Aric: [laughter] But not much...I hear it,Royal, I hear it in your voice.
Royal: Yeah. Yeah. But, but it's really that, that annual review process that we build into our financial planning. That's the true power. Is those adjustments that can be made and the power of measuring things on a regular basis, you know, that's where we provide tremendous value to our clients.
Aric: Yeah, I agree. And I was actually just on your website yesterday. I know that you have a link on your website where people can actually schedule time with you on there, correct?
Royal: That's right. You can just go to our website at opfa.com. You can click on any of the advisors here and schedule an initial meeting. We'll reach out. We'll send you some information on, uh, what we need from you for that appointment and get that process started. We don't charge anything for our initial meeting and, you know, we, we go through what those costs will be, um, as we're, we're meeting with you and, uh, looking at your personal situation.
Aric: Yeah, fantastic. Royal, thank you so much for your time today. I think this was a lot of great information and Audience, you're gonna hear me say it in the close, but please share this with somebody that, you know. Especially if it's maybe, maybe your kids have not done a financial plan yet, or maybe you've been talking around the water cooler, when we used to do that, uh, to somebody else, and they're, they're just not sure what's going on. Please share this podcast with them. That would be great. Uh, Royal again, thank you so much for your time today and all the education you bring.
Royal: My pleasure.
Aric: All right. And of course our last thank you does go to your listening audience. Thank you so much for tuning in and listening to the life by design podcast with Royal Standley. If you have not subscribed to the podcast yet, please click the Subscribe Now button below. This way when Royal comes out with a new podcast, it'll show up directly on your listening device. This makes it really easy to share these podcasts like I was asking about. Again, thank you so much for listening today for everyone at Oregon Pacific Financial Advisors, this is Aric Johnson reminding you to live your best day every day. And we'll see you next time.
Outro: Thank you for listening to the Life by Design podcast. Click the subscribe button below to be notified when new episodes become available. The views expressed are those of the presenter and may not reflect the views of United Planners Financial Services. Material discussed is meant to provide general information and is not meant to be construed as specific investment tax or legal advice. Individual needs vary and require consideration of your unique objectives and financial situation. Always see your financial advisor or other qualified financial service provider with any questions you may have regarding your investments. Planning and advisory services offered through Oregon Pacific Financial Advisors, Inc.Securities offered through United Planners Financial Services of America member FINRA, and SIPC. Oregon Pacific Financial Advisors, Inc. And United Planners Financial Services are independent companies.
