04.28.26 Ask An Advisor With Wes Moss

Summary

The Clark Howard Podcast

Episode: Ask An Advisor With Wes Moss
Date: April 28, 2026
Host: Clark Howard (absent this episode)
Guest: Wes Moss
Co-host: Krista Dibias
Format: Listener Q&A and financial discussion

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Overview

In this episode of "Ask An Advisor" on The Clark Howard Show, Krista Dibias and seasoned financial advisor Wes Moss address Americans' declining retirement confidence, answer detailed listener questions on a range of retirement and investment challenges, and demystify the difference between fiduciary and non-fiduciary advisors. Wes provides actionable advice on everything from account selection and trusts to self-insuring for long-term care. The tone is conversational, supportive, and focused on practical, data-backed guidance.

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Key Discussion Points & Insights

1. Americans’ Plunging Confidence in Retirement (01:35–09:02)

• Main theme: Recent studies reveal a significant drop in Americans' confidence regarding retirement readiness.
• EBRI (Employee Benefit Research Institute) Study:
  • For workers, confidence in having enough money for a comfortable retirement has fallen from 72% in 2021, to 67% in 2025, to 61% in 2026.
  • For retirees, confidence is somewhat higher at 73%.
  • Wes highlights the importance of longstanding surveys for tracking real trends:
    “When you have a study that is year after year after year, you can really start to see trends as opposed to a brand new study." (01:42)
• University of Michigan Consumer Sentiment Index:
  • The index is at its lowest reading ever (47.6), far below the historical average of ~80 and well under its 2019 "peak calm" pre-COVID value.
  • “Today it's at 47.6. And again, that's the lowest reading in history.” (05:39)
• Key factors:
  • Cumulative inflation post-2022, especially energy and oil price spikes, is cited as the primary culprit undermining financial optimism.
  • Inflation described as “a speed bump that never goes down... it just gets higher,” affecting real purchasing power in retirement planning. (07:25)

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2. Listener Q&A: Retirement Accounts, Planning & Investments

A. 457 vs. 401(k) and Roth vs. Traditional (09:08–12:03)

• Question: Mike, age 47, asks whether to prioritize contributions to his 457 or 401(k), both with Roth options, given his early retirement goal at 55.
• Wes’s Advice:
  • Since both plans have similar investment options and a minor match in the 401(k), the 457 offers easier early access.
  • For those in lower tax brackets (24% or below), Roth remains appealing.
  • Actionable tip:
    “I would do 20% [in] 401(k)... and I would do the majority in the 457.” (11:54)

B. HRA/VEBA Accounts for Retirement Planning (12:03–14:52)

• Question: Nathan asks how his wife’s employer’s VEBA HRA compares with an HSA for retirement healthcare costs.
• Wes’s Advice:
  • VEBA HRAs, unlike standard HRAs, can be used long-term and are portable.
  • Larger annual contributions are possible compared to HSAs, but funds must be used for qualifying medical expenses.
  • “I would be treating it much like you would an HSA because it should be your money, your wife's money, long term.” (14:32)

C. Improving Roth IRA Growth & Target Date Funds vs. Fidelity Go (14:52–17:28)

• Question: Tanya, age 54, is concerned her Roth IRA isn’t growing and wonders if switching to a target date fund or Fidelity Go makes sense.
• Wes’s Advice:
  • First, check if returns are low due to conservative investments or small account size.
  • For higher equity exposure, choose a target date fund at least 10 years out or select a higher-risk level in Fidelity Go.
  • “If you want equity exposure, that probably needs to be on the scale of a 6 or 7 or an 8.” (16:55)

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3. How to Identify a Fiduciary Financial Advisor (20:30–26:08)

• Issue: Listeners are confused by "fee-only" versus typical financial advisors, especially when advisors sell insurance under a different "hat".
• Wes’s Renowned Food Analogy:
  • Both fiduciary and non-fiduciary advisors may look identical—like two orange peppers in the produce aisle. But one is a mild bell pepper (fiduciary, safest for most), the other a hot habanero (non-fiduciary, might bring surprises).
  • "The fee only fiduciary...is the bell pepper, and the financial advisor is the Habanero. They look the same until you get into what really makes those two peppers tick." (21:37)
  • Fee-only fiduciaries must act in clients’ best interest, without conflicts of commission.
  • Regular advisors need only meet a "prudent" standard, which allows for commissions.
• How to Check:
  • Look for “fiduciary” in writing, on the website, and in your written agreement.
    “In that contract, it should tell you the kind of advisor you're working with.” (25:55)

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4. Trusts: When Do They Make Sense? (26:29–29:54)

• Question: Will in Kansas, with $500,000 net worth, asks when a trust is necessary—net worth vs. family complexity.
• Wes’s Insight:
  • Trusts are more about complexity (multiple accounts/assets, blended families, business interests) than asset level.
  • A “living trust” helps avoid probate and streamlines asset transfer; useful at almost any net worth if complexity is present.
  • Higher-level trusts (irrevocable) are for tax and asset protection—usually only for those with significant assets or exposure to lawsuits.
  • “The asset level doesn't necessarily give it any more complexity.” (27:38)

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5. Are Bonds Still Worth It with High-Yield Savings Rates? (29:54–31:35)

• Question: Brian in South Carolina wonders if it’s smarter to keep money in high-yield savings or money market rather than in bonds.
• Wes’s Perspective:
  • High-yield savings rates fluctuate quickly with Fed policy, while bond yields lock in for a defined period.
  • Bonds are useful for stabilizing income over the long term during rate shifts.
  • “Yield is destiny...over the next five years you'll get about 4% per year [in bonds], whereas in a cash savings account...if the Fed lowers rates next year, you're only getting two.” (30:35)

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6. Self-Insuring for Long-Term Care (31:35–34:40)

• Question: Heather in South Carolina asks how much to earmark for long-term care if planning to self-insure instead of buying a policy.
• Wes’s Approach:
  • Use your retirement plan’s “green zone” income to cover potential long-term care instead of relying on insurance.
  • Spending needs often shift: discretionary spending drops as health concerns rise, freeing up income for care.
  • HSA contributions also play a vital role as a long-term healthcare funding vehicle.
  • “Your income in retirement planning doubles as your long term care planning as well.” (34:40)
  • Long-term care insurance is difficult to buy and increasingly unavailable for many.

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Notable Quotes & Memorable Moments

• Wes Moss on the power of inflation to erode confidence:
  “Inflation is a lot like a speed bump that never goes down. It just gets higher.” (07:25)

• Krista Dibias on verifying fiduciary status:
  “Usually it'll be in writing...on the website, and then in person, do they sign an agreement?” (25:38)

• Wes’s food analogy for advisor types:
  “They look the same, they act the same, they slice the same...until you get into what really makes those two peppers tick.” (21:37)

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Important Timestamps

• Retirement Confidence and Consumer Sentiment: 01:35–09:02
• 457 vs. 401(k) & Roth vs. Traditional: 09:08–12:03
• HRA/VEBA and HSA planning: 12:03–14:52
• Target Date Funds vs. Fidelity Go: 14:52–17:28
• Identifying Fiduciary Advisors: 20:30–26:08
• Trusts for Estate Planning: 26:29–29:54
• Bonds vs. High-Yield Savings: 29:54–31:35
• Self-Insuring Long-Term Care: 31:35–34:40

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Summary

This episode blends data-heavy economic discussion (retirement confidence, inflation, and consumer sentiment) with relatable, concrete financial guidance. Wes Moss and Krista Dibias provide clarity on complex topics—like the nuanced differences between types of retirement accounts, the practical value of a trust, and how to pragmatically assess advisor credentials—while addressing a spectrum of listener situations.

Listeners are reassured that, despite pervasive pessimism, solid planning and thoughtful account selection are still effective tools in navigating today’s economic landscape. The conversational tone, occasional self-deprecating humor, and creative analogies (peppers!) help make intimidating financial decisions more approachable and actionable.

Transcript

[Krista Dibias]

Foreign. Welcome to this week's edition of Ask AN Advisor on the Clark Howard Show. I'm Krista Dibias here with Mr. Wesley.

[Wes Moss]

Hi, Krista Dibias.

[Krista Dibias]

Hello, Wes. And thank you for joining us again this week as we delve deeper into investments, retirement and the economy.

[Wes Moss]

Actually we can touch on it. We can talk about all of it.

[Krista Dibias]

So today, in addition to the questions I have for you, Wes, which you can ask a question, we have a new form that you can ask a question directly to [e-mail] Ask and if you have a question for Clark, you go to clark.com ask today's show you're going to talk about unfortunately, Americans retirement confidence is plunging.

[Wes Moss]

It really is. The numbers do not look good.

[Krista Dibias]

Yeah. And then later on we're going to talk about we get so many questions about how do I tell if an investment advisor is a fiduciary, non fiduciary or we'll just get questions from people who are clearly with non fiduciary advisors that are in a bad situation. So if you choose to have a financial advisor, not everyone does, then how do you do that? How do you tell the difference?

[Wes Moss]

It's so confusing that I had to come up with a brand new analogy and it ended up a food analogy to try to tell.

[Krista Dibias]

I love a food analogy. Your financial burrito. You've had the slow cooker, the crock

[Wes Moss]

pot, the crock pot, the different kinds of apples.

[Krista Dibias]

All right. All right. So we'll get to that. So first we're going to start about talking about Americans retirement confidence.

[Wes Moss]

So Americans confidence in retirement over the last several years has been plunging. And I usually try to stay away from those hyperbolic words. But when you see a really big shift in the percentage of folks who are feeling good about whether it's retirement, if they're working and they're looking forward to to it or those are in retirement. There's a new study from ebri, the Employee Benefit Research Institute that does a perennial study and they've been doing it now for the better part of three decades. So when you have a study that is year after year after year, you can really start to see trends as opposed to a brand new study. So that's why I like the EBRI and what they do in their research. Number two, some of the economic data that is not that really is just government data from the Bureau of Labor Statistics is also showing signs of a lack of confidence. There's a couple of reasons for it. So we're going to talk about EBRI's numbers. And then we're going to talk about the University of Michigan consumer sentiment, which again, you can find if you go to Fred, which is the Federal Reserve economic database out of St. Louis Fed. And you can look these numbers up and they've changed a lot recently.

[Krista Dibias]

Can I ask a quick question? Sure. So when you say confidence in retirement, what is it exactly? Confidence that they'll be able to retire. Confidence that their retirement will be comfortable.

[Wes Moss]

Okay. So here's the language they use in this study is either, and these are for workers. So let's start with these numbers. 61% of workers say they are very or somewhat confident they'll have enough money for a comfortable retirement.

[Krista Dibias]

So both kind of they'll have enough money to retire and for it to be comfortable. Okay.

[Wes Moss]

Right. And again, these surveys or studies or research can be a lot of different ways of asking the question. But I think the reason I like this one is that has been the same question over and over and over again.

[Krista Dibias]

Data, lots of data.

[Wes Moss]

So the level's important, but then the change is really important. And this is a big change in 2021, which, if you think about 2021, was a pretty scary year. It was Covid and the world was shut down. Now we had a giant stock market correction, but. But then we had a giant rebound too, in fairness. So it was a bad year and a good year all at the same time. And during that year, the confidence level, someone saying, I I think I'll have enough money and I think I'll be comfortable in retirement was 72%.

[Krista Dibias]

Wow.

[Wes Moss]

So it went from 72% in 2021, then it went down to 67% last year, and now this year in 2026, it's all the way down to 61%. Now I look at that on the flip side to some extent, and I say you'll hear people say that it's really only the 1 percenters or the top 5 percenters in America that are going to be able to retire. This says something different than that. So even though levels are lower, that still means that about that 40% of people do feel confident or they feel somewhat or very confident about they will have enough money in retirement. But clearly the number is going to in the wrong way. It's a little bit better. For retirees, the number is 73%. 73% of those who are already in retirement feel confident or very confident that their money will last and they'll have enough money for the duration of their retirement. The second survey point which is very telling because this goes back. I have this going all the way back to 1976, which is the University of Michigan consumer sentiment. And this is again, a perennial study that happens every month that the University of Michigan process goes out and asks thousands. I don't know the exact number, but let's call it thousands of people about how they're feeling today, their confidence in the future. And it's a list of questions that say, well, do you feel comfortable making a purchase over this amount? As an example? And that has changed dramatically. And it's the lowest reading that it's ever gotten.

[Krista Dibias]

Wow.

[Wes Moss]

Ever. If I look at the scale, their scale is from, let's call it 0 to 140. And it's not a percentage of people that feel good or bad. It's just. That's the measuring stick, if you will. Most of economic history over the past 50 years, it's around 80. The consumer confidence rating is around 80. When people are really confident. As an example, kind of right before COVID in 2019, that was, in my mind, almost the peak of calm and peace. The economy had had a whole decade to recover from the financial crisis. We hadn't had Covid yet. There were less scary things happening in the year 2019. My family will joke, we had a family kind of reunion this weekend, and we talk about the year 2019. My little brother got married. He got married in this gorgeous ranch in Colorado. And we thought like this was peak life. But it was 2019, and so was consumer confidence. Those levels were over 100 on the university of Michigan consumer sentiment. Then, as you can imagine, during COVID they got down into the. Let's call it 5560 range. So huge drop in consumer sentiment. I don't feel good about the economy. But what's wild is that today it's at 47.6. And again, that's the lowest reading in history. The other piece of the equation, if you were to look at this chart that I did the other day, if you plot oil prices on top of that, and it's not just oil prices, but it's a very clear relationship between oil prices going up and consumer sentiment going down. Oil prices coming down, consumer sentiment going up, because oil and gasoline is the very first. It's really kind of the front line of inflation. If you get inflation, you immediately see it. So the question is, what is the main culprit? And in both cases, the EBRI study of folks saying they feel less confident about retirement, the culprit is the same in many Ways as why US consumer sentiment is down, and that is the cumulative impact of inflation. Remember, inflation is a lot like a speed bump that never goes down. It just gets higher. It just gets higher. Now, the speed of it getting higher can slow, and that's what the Fed is looking for. The Fed wants the speed bump or the hurdle in our lives to just go up a little bit every year, but it never really goes down. Yes, there are some months in economic history where prices actually go down, but for the most part, in any given year, it's only getting more expensive. And I think what we're seeing is that the cumulative effect of the inflation that we saw, that was hyperinflation in 2022, that hasn't gone away. And the recent shock of oil prices spiking because of everything that's happening in the Middle east, that's kind of a double inflation whammy. And I think that is one weighing on the larger picture, because people feel like they can't afford their original retirement budget because prices have gone up so fast. They feel like they can't keep up. Then you throw on top of that an oil shock, an oil price shock, and you end up with consumer sentiment that is as low as we've ever seen it.

[Krista Dibias]

Wow. Okay. Well, thank you for that. I've got some questions.

[Wes Moss]

Supposed to be slightly optimistic. Remember, 40% of people do still feel good about retirement, and I think that's a pretty good number.

[Krista Dibias]

It is. Okay. Mike in Tennessee wrote into you, Wes. He said, I'm conflicted on whether or not I should be putting more money into my 457 retirement plan rather than my 401k. Can you give me some direction for background? I'm 47. I'm in the 24% tax bracket. I fully fund a Roth IRA. My 401k match is only $50 per month. I'm funding my work retirement accounts, 80% to the Roth 401k and 20% to the Roth 457. They both offer generally the same low cost Vanguard and Fidelity index funds. I also have a pension that will pay about 50% of my working salary, and I plan to retire at 55. So my question, should I flip that 80:20 ratio to make the 457 the majority account, to which I add my retirement savings to cover my retirement between 55 and 60? Also, should I consider balancing traditional and Roth accounts?

[Wes Moss]

Mike, there's a bunch of questions that you had because really, you're asking Roth versus regular. So Roth 401. Regular 401 Roth 457, a regular 457. You're also asking about the ratio between those two. And you plan to retire early. And I think that's the common denote. That's the crux of this question, is access. And it seems to me if the investments are the same, you only have an. It's 50 bucks, I think maybe a month in the 401k, which it's not nothing, but it's probably not enough to really move the meter on making the choice. And you are on that 24% bracket and below where we typically say that it still leans. Roth versus Traditional. I think that answers the question. I still keep leaning Roth versus traditional. The good news about the 401 is that at age 55, remember the early access rule of age 55, you can still get money out of the 401. If you leave that job and you leave that 40155 or older, that's that early access rule. It's not 59 and a half. You. Now, if you leave at 49 or 54 and 11 months, you don't qualify for that role. So the tie, in my opinion, goes to the 457, because that automatically gives you access at age 55 when you leave your employer, even if you left before that. You don't have to to have the get to 55 rule like you do in the 401k. So I would be. If the investments are pretty much the same, the only slight advantage is 50 bucks a month in the 401k and you've got a pension coming. Mike, that's going to be 50% of your income. I would swap it. You're doing 80. 20. I would give 20.

[AT&T Business Announcer]

80.

[Wes Moss]

So I would do 20%, 401, because it's still good to have some there, and you may very well have access to it. And I would do the majority in the 457.

[Krista Dibias]

All right, this one's from Nathan in Oregon. Since my wife uses my employer's insurance instead of hers, her employer makes a monthly contribution, $800 into an HRA account with H. And then they say the name of the company, which is this.

[Wes Moss]

Oh, no, no, that's not that. VEBA is a kind of hr.

[Krista Dibias]

Oh, I didn't know that you.

[Wes Moss]

Maybe you're thinking Voya.

[Krista Dibias]

Oh, I was.

[Wes Moss]

You're the Voya. But that's Veeba, which is super important for this because Aviva is a voluntary employee version. It's a benefit, voluntary employee benefit of an hra. But keep Going okay.

[Krista Dibias]

Learn something new every day. I've never heard of that. Looking at the details of her plan, she can use this money in retirement for healthcare related expenses. Could you offer advice on how to treat this account for retirement planning? Should I look at it the same way as an HSA and any other caveats I should be aware of with these plans? Thanks for all the useful information you provide, Nathan.

[Wes Moss]

Yeah, I'm glad you put in there that it's one of these. It's a VEBA health retirement account because usually just a regular hra, it is almost like an expense account for health care, much like an HSA at your work, but you have to be at that job to use it. So huge difference. It's. And that's why that's a pretty. You see those contributions. It's a higher amount too. You can't put almost 10 grand a year into it. HSA, right? That's above. So there are some differences here, but the main difference is that you can't. It's not really portable, it's not yours forever once you leave. But an HRA with a vee bar really is an employee benefit that you can take with you long term. Oh, so it is. I know there's a few nuances I'd probably have to be looking at the rulebook to. To decipher between a. An HRA that is Aviba and an hsa. But the reality is that they act very similarly. The cool thing is here you're getting one of the nuances is there's more money that can go into these. That's almost ten grand a year. I would look at it very much like your own long term healthcare account that you can use forever. The access is slightly different. That's the other thing. It's that HRA really has to be only medical specific medical and health care costs where the HSA you can take money out even without a medical cost. You do place some penalties or taxes to do that, but you can't really do that with the hra. So that's the nuance. But again, we're going to probably spend most of the money we save if it's specifically for health care because those costs almost never go down. So I would be treating it much like you would an HSA because it should be your money, your wife's money, long term.

[Krista Dibias]

All right. Tanya in Colorado says, I have a Roth ira, but it's not doing much. The funds don't seem to be growing. I'm wondering if I should invest in target date funds. Or fidelity, go. I'm 54 years old and I want to make a little more money rather than having it sit still. I have a Fidelity account and I'm wondering which of these two investments you'd recommend.

[Wes Moss]

Tanya. So think about this. The stock market in general is up about 30%, 30, 35% over the course of the last year. So when I hear somebody that says my account isn't doing much, there are two reasons for that. One, sometimes if you have a smaller account and I don't know the size of this account, but if you have an account that's 10,000 and it's up 10% and it goes to 11,000, people will say, I don't think that account's doing much. But if it were a million dollar account and now it's 1.1 million, they'd say, wow, it's doing a lot. I made 100,000. So sometimes our perception of how things are doing is skewed a little bit when it comes to how much money did I really make 1000 bucks an entire year? It's not really doing that much. So I would first question that, try to find the percentage. Now, if it's literally in the last year done 3%, then we also know something else is the problem. And that's just that you've been invested in an ultra conservative fund that's probably just bonds or money market, then that would be the culprit of why you haven't made any money over this past year. That would mean, yes, if you were going to look at a target date fund, any target date fund that's out a while. So it's the year 2026. So a 2040 fund, which would be 14 years from now means there'll be a lot of equity exposure in that any particular target date fund. So I would be thinking if you really want equity exposure, then you want to be going out at least 10 years on the target date options. And that's at any mutual fund company. Fidelity. Go. My understanding with that is that that's almost an algorithmic type of portfolio that you choose the risk level from, let's call it 1 to 10, and 10 is going to be probably 100% in stocks and a 1 would probably be all bonds and cash. So again, it's not just that, it's the program. It is what you choose within the program. And if you want equity exposure, that probably needs to be on the scale of a 6 or 7 or an 8. If you want equity exposure, all right,

[Krista Dibias]

we're going to take a quick break and when we come back, you're going to help people who want to know how to tell the difference between a regular investment advisor fee only.

[Wes Moss]

We'll sit. I'll give it a shot. It's a very hard thing to explain. We'll see if I can do it.

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[Wes Moss]

Welcome back to Ask an Advisor. I'm Wes Moss here on the Clark Howard Show. Krista Dibias here next to me. What is our next topic?

[Krista Dibias]

Financial advisors. We get so many questions about this and then there's been so much confusion. Clark has always just said you want to feel only fiduciary. But then we've had some questions recently from people who they have a fee only fiduciary who then takes off the fiduciary hat to sell insurance under a different but it'll be the same. It'll be like a separate company under the same firm kind of thing.

[Wes Moss]

Right? And then one of my team members this week sent me an article that I had found and read in the Wall Street Journal that said that the fiduciary advisor rule just got more complicated and got murkier. I read through it and I couldn't even understand it really because so I thought how do people really understand something that is so nuanced in language? That's the problem here is language is really hard to understand. What is the difference? And this is what I'm going to try to explain. What's the difference between a financial advisor and a financial advisor who's a fiduciary? Here's the confusing answer is that the financial advisor, typical quote, financial advisor, has to follow what is called the rule of prudence, which sounds pretty good. I want to make sure that what I invest in or help you invest in is prudent for you. That sounds okay, sounds good. But the fi only fiduciary says I want to make sure that what I'm investing for you is in your best interest. How are people supposed to really understand that? Best interest, prudent for me. Best interest financial advisor, fee only fiduciary advisor. But the financial advisor also charges a fee. So there's fees. So I wanted to go maybe to the root of the issue and explain this in a food analogy is the only thing I could come up with. And I, I walk into the produce section. You walk into the produce section and you see the tomatoes and the potatoes, and pretty much all potatoes are pretty similar, right? Onions, some variety between them, some sweets and ones that'll really make you cry. But think about peppers. I want you to think about an orange pepper and I want you to think about a middle sized, not perfectly shaped orange, bright orange pepper. And there are two of them sitting next to each other and they look pretty much the same. The color's almost identical, the shape's pretty similar, the size is similar, and they're just two orange peppers. One's a financial advisor, one's a financial advisor who's a fiduciary. Again, they still look pretty much the same. One of those peppers is a bell pepper. We know what that is. Super mild. You can eat those things raw on a salad. The other one is a habanero pepper. The other orange pepper is a habanero pepper. Imagine if you slice that thing up and threw that in a salad and started eating chunks of habanero. Whoa. Totally, totally different, Krista. They look the same, they act the same, they slice the same. To your everyday public, they're pretty much the same until you get into what really makes those two peppers tick. One's meant for super mild, one meant is for super spice. And that's the difference. The fee only fiduciary probably gets some pushback on. This is the bell pepper and the financial advisor is the Haben Yarrow pepper. And I'm actually not making commentary if one is bad and one is good, they are just different. And the bell pepper side is of a different standard that is called the fiduciary best interest standard. The decisions that particular kind of advisor to make for you should be in your best interest. That means that from a product selection standpoint, there should be no conflict in the investments they're choosing and what they're getting paid. The other kind of pepper, it's totally fine to do that. The Haben Yarrow pepper, the non fiduciary standard. The regular financial advisor can choose from 10 different things as long as they're prudent or meaning good for you. Pretty good. These are supposed to be good investments, but they can select them on what potentially pays them and a commission or a higher commission versus a lower commission. And that is the difference. Now you can say one is better than the other.

[Krista Dibias]

Clarkwood.

[Wes Moss]

Clarkwood. Don't take it from me because I'm already feeling fiduciary. So of course I would say that's better. I do believe it's better. But it's also not always a terrible thing that financial Advisors have access to products that sometimes do pay them, and not all those products are bad. You clearly can see which way I lean here, the way Krista leans here. I'm not trying to be totally neutral on this, but both peppers are an important part of the ecosystem. They both play a very big role in the system and they can both be really helpful. But that is the best I can do to describe the difference between the two.

[Krista Dibias]

All right, so as far as I know, if you're trying to tell if somebody's really a fiduciary, first of all, usually it'll be in writing.

[Wes Moss]

In writing on the website.

[Krista Dibias]

On the website, and then in person, do they sign an agreement? Is there any kind of fiduciary thing that you can get in writing when

[Wes Moss]

you're engaging any financial advisor, you're going to sign account forms and usually a, a management type contract. In that contract, it should tell you the kind of advisor you're working with.

[Krista Dibias]

Okay, good to know.

[Wes Moss]

Now in another segment, we will do, let's call it 10 things that a Fiduciary Financial Advisor should be Able to do for you beyond just investing, because financial advisors do get this. There is the thought that they just helped me invest my money. That is really just the tip of the iceberg. And that's a whole nother segment.

[Krista Dibias]

Okay. All right. Well, we've got questions that came in for you. Wes Will in Kansas says, my wife and I are in our mid-40s and just reached a $500,000 net worth. About 200,000 in home equity, 60,000 in a brokerage account, and the rest is in retirement funds. 60 in a brokerage account, the rest is in retirement funds. We both grew up in divorce households where money was always tight. So we've worked hard to build stability for our family. Someone recently told us that their financial planning firm recommends a trust for anyone with over $250,000 in net worth. That seems low to me, but maybe I'm missing something. When does a trust actually make sense? Is it about net worth or is it more about complexity in the family situation? What are the advantages and downsides for someone in our position?

[Wes Moss]

Well, I think it's very much about the latter. It's complexity. It's when you have many different accounts, many different kinds of assets, brokerage assets, real estate assets. A living trust, which I think is kind of like the entry level starter trust, is the first thing that most people do. And do you need it because your net worth is at 250 or above? Not really. You can have the same exact complexity with somebody who has 2 million or somebody has 200,000. One brokerage account, one house, same exact. The asset level doesn't necessarily give it any more complexity. The will should say where those assets go when that person passes away. But if you have a will and, and you don't have a trust, then the will has to go to probate. And then a court will say, okay, the will says this. And it takes a long period of time. There's a real long probate process where the courts say, yeah, this goes there. This goes there. The living trust is a very inexpensive way to retitle your assets into the trust name where you designate who's getting the money or who's getting the asset. So it, it makes all of that probate process. It almost eliminates most of it because you assign a trustee, you assign a beneficiary to the trust, and it happens very quickly. So I think it's a good thing for people to consider if they don't want their heirs to have to go through a long process to figure out who gets what, then there are many other levels of trusts that are irrevocable. So typically a living trust is irrevocable. You can change your mind if you want to, and you can change it again. But irrevocable trusts where you can't change your mind are meant for very different reasons. They're estate tax planning, regular tax planning, and asset protection so that you ultimately give up full control of your money so it's protected from your creditors. The complexity then would go back to how you're making a living. Are you a business owner? Do you have liability? Potentially. Are you in a business where you can get sued? A bunch of. That's when these other pieces of trust planning come into play. But I don't. There's not a lot of downside to doing living trust to title your assets, except for the cost of doing a living trust. But you can find you can do that for a relatively reasonable price.

[Krista Dibias]

I've also. I recently was looking into this, and I know there are a lot of tax implications that can come up too, in a trust versus not in a trust. So it might be worth spending an hour with an attorney who specializes in wills, estates, and trusts just to see if it's necessary.

[Wes Moss]

It's very, very helpful.

[Krista Dibias]

Brian in South Carolina says, with high interest savings accounts and money markets and investment brokers paying around 3.5 to 4% interest, why bother with bonds? Isn't it good to keep a cash balance anyway?

[Wes Moss]

It is, Brian, there's no problem to have cash, especially with rates where they are today. Interest rates are fairly, I would say at a moderate level. They're not really that high relative to history and they're certainly nowhere nearly as low as they were several years ago when they were literally at zero for years and years and years. So as long as you're getting three and a half percent, Brian, that is, it's working for you. The difference between high yield savings accounts and bonds is that that rate will change, just like prices at the pump will change. The day rates change or the day oil changes is the day gas prices change. It's almost in reverse though, because the day the Fed lowers rates is the day maybe that next day your interest rate will go down too. That's in a savings account or a high yield savings account. What a bond investment is meant to do is lock in rates for a longer period of time. So that when we talk about bond investing, yield is destiny. Meaning that over time the starting yield of the bonds you are buying into, let's say it's a bond etf, typically is your longer term rate of return. So that, let's say you have an ETF yielding 4%. It's very likely that over the next five years you'll get about 4% per year. Whereas in a cash savings account you make it 3.5% this year. And if the Fed lowers rates next year, you're only getting two. That's the big difference.

[Krista Dibias]

Okay, and then this one's from Heather in South Carolina. How much money should we have set aside if we're thinking we will self insure our long term care? My husband and I are in our mid-50s and we're considering some version of retirement in about five years. We're comfortable with the amount of retirement savings we have worked hard and made sacrifices to be able to accumulate. We want to keep a portion of our savings and retirement savings to earmark for potential long term care instead of buying insurance. We will not use that portion in our calculations for how much we can spend in our retirement years. We are currently in relatively good health. How should we approach calculating how much to earmark? That's such a good question.

[Wes Moss]

It's an awesome question, Heather. If you end up getting to what I think are the money green zones where you have your million dollars in investable assets or more and you have multiple income streams or you end up with a household income that you're super comfortable with and living with, you've now created your own retirement income, you're no longer working. So you've got your, your Social Security one, Social Security two, maybe a pension, maybe some rental income, but then you have your investment income and that's where those asset levels become, become so important because then they should be able to produce income for you. Or you can look at your asset levels investable relative to a withdrawal rate. Four, four and a half percent per year. So on a million dollars, that's another 40 to 45 thousand dollars a year. And what that does Heather, it creates your new paycheck. And let's say that paycheck is 8 or $10,000 a month and you've managed for that, that can continue to go up for inflation. That also should be able to take care of you from a healthcare perspective. Because what happens when you need health care, let's just call it $10,000 a month that you're spending on average goes down because now you're not doing as much. It's less discretionary spending. You're not if you have to utilize health care or long term, if you would be in the situation to be using long term care, you're not traveling, you're not taking trips with the grandkids as much because you're in a health situation. So your, your normal spending goes down but your income should not go down. So then that income can now go towards health care. So as long as you're creating an income for the 30 year retirement that you are planning, if and when you need that healthcare money or for assisted living, it should double as that. Meaning that it goes from discretionary spending to more essential spending in healthcare. And that's how I look at it. Without having to buy long term care

[Krista Dibias]

insurance which is really hard to find nowadays.

[Wes Moss]

Hard to find. It's too expensive for people who don't have a lot of assets. People with a huge amount of assets don't need it. And those folks that find themselves in what's called the upper middle that can maybe afford it, it also feels unaffordable and the benefits have come down. So in my opinion you need to be your income in retirement planning doubles as your long term care planning as well.

[Krista Dibias]

Yeah. And then HSAs today about health retirement accounts, we've talked about HSAs before, all of that as well.

[Wes Moss]

That's a great point. I forgot to mention it. Krista, you're right. Think about the HSA accumulation you have at your work. Potentially if you're only 55 and you have another five to 10 years before you stop working, it would be wonderful if you can sock as much money as possible into the hsa.

[Krista Dibias]

All right, well, that is going to do it for us today on Ask an Advisor. Thank you for tuning in again. If you have a question for Wes, you can ask that [e-mail] advisor. Ask at our brand spanking new form. And that's [e-mail] you can find out more about Wes. Hope that you have a great rest of your day. Clark's back tomorrow with a brand new episode.