07.28.26 Ask An Advisor With Wes Moss

Summary

The Clark Howard Podcast – "Ask An Advisor with Wes Moss" (07.28.26)

Overview

In this episode, financial advisor Wes Moss joins co-host Krista Dibias for a deep dive into two steps from the "Retire Sooner Method"—the Financial Green Zones and the “Superpower” of Sleep. The show answers listener questions about memory care funding, managing large cash holdings, the bucket strategy for retirement, and more. As always, the focus is empowering listeners with actionable advice for saving more, spending less, and achieving true financial freedom.

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Key Discussion Points & Insights

1. The Financial Green Zones

[02:22 – 09:29]
Wes Moss introduces the concept of the "money green zones"—clear, research-based checkpoints that predict higher levels of happiness and financial autonomy as people approach and enter retirement.

Main Insights:

• Retirement Savings Targets are Overwhelming:
  "There’s a number that nobody agrees on... $500K, $1 million, $2 million, some say $10 million. It’s not agreed upon because it’s different for everyone." – Wes Moss [02:22]
  The constant moving of benchmarks in popular media makes retirement planning feel unattainable for many.

• National Net Worth Realities:

  • In your 50s: Median net worth is $190,000
  • In your 60s: Median net worth is $290,000 (mean $1.5 million, but skewed by the wealthy)
    Moss emphasizes median is a more realistic measure for most Americans. [04:26]

• The Three Green Zones Identified by Moss’s Research:

  1. Liquid investable assets:
     • Red: <$100K
     • Yellow: $100K – <$1M
     • Green: $1M+, next threshold at $3M
       "Happiness levels are dramatically higher relative to the average in America" at the $1M+ level. [05:57]
  2. Household income:
     • Happiness rises dramatically above baseline after $100,000 in household income.
  3. Years to pay off mortgage:
     • Red: 20+ years left
     • Yellow: 10–19 years
     • Green: 9 years or less or already paid off
       "Once we hit that green zone... all levels of autonomy and freedom." [07:47]

• Purpose of Green Zones:
  "There's power in just knowing a goal... It gives us a higher probability of happiness and retirement." – Wes Moss [08:58]

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2. Listener Q&A: Practical Financial Advice

A. Paying for Memory Care & Tax Implications

[09:29 – 12:05]

• Question from Kristen in Alaska:
  Navigating investments and tax consequences for parent's memory care.
• Wes’s Advice:
  • Consult a CPA for personalized strategy.
  • Much of the cost should be tax-deductible (medical expenses deductible above 7.5% of AGI).
  • Using brokerage money triggers capital gains (0–15% tax), but the deduction may offset IRMAA surcharges.

B. Managing Large Short-Term Cash Holdings

[12:05 – 13:35]

• Moki in Texas:
  Where to keep $350,000 for safety and growth.
• Wes’s Advice:
  • If it’s true “dry powder,” US short-term treasury money market funds within a brokerage firm offer safety and yield.
  • Warns this is a high amount; ensure it matches your risk profile and financial plan.

C. The Bucket Strategy & Aggregators

[13:35 – 15:01]

• Kevin in Texas:
  Tools to set up and monitor retirement account buckets across firms.
• Wes’s Advice:
  • Aggregators (like Betterment) are crucial for tracking your true portfolio allocation.
  • "You really need to know your allocation, aka your buckets..." [13:51]
  • Sites like Empower (formerly Personal Capital) are also useful.

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3. The Sleep “Superpower” and Retirement

[18:12 – 24:32]

Main Insights:

• Personal Story:
  Krista accidentally took nighttime supplements in the morning, highlighting the importance (and impact) of sleep routines. [19:03]

• Sleep and Retiree Happiness:
  "Almost 70% of retirees who were also in the happy camp said yes to [getting enough sleep], compared to only 38% of the unhappy retirees. So it's two to one." – Wes Moss [20:41]

  • Happy retirees are far more likely to report getting enough sleep.

• Cultural Resistance:
  Discussed the toxic glorification of sleeplessness among some entrepreneurs vs. the clear health and happiness benefits of adequate rest.

• Financial Anxiety as a Sleep Disruptor:

  • "Reducing financial anxiety... is such a big part of why we don’t sleep well at night."
  • Having and regularly reviewing a conservative financial plan is "the melatonin of personal finance." [22:53]

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4. Additional Listener Questions

A. Health Insurance Before Medicare

[24:32 – 26:11]

• Patrick in Massachusetts:
  How to cover healthcare when retiring before Medicare eligibility.
• Wes’s Advice:
  • Healthcare.gov is now a reliable resource for coverage.
  • Use the KFF "Health Insurance Marketplace Calculator" to estimate costs; manage income for subsidy eligibility.
  • Private insurance is expensive—plan for $1,200–$1,400/month or more.

B. Fixed Annuities in Retirement

[26:11 – 29:24]

• Joe in North Carolina:
  Should I put $300K into a fixed annuity (10 years) as my advisor recommends?
• Wes’s Advice:
  • Strongly dislikes annuities for their inflexibility and tying up money long-term:
    "They are a product. They're not a solution... you're locked forever." [27:33]
  • Advises negotiating lower management fees instead.
  • Questions whether the advisor is a fiduciary; be wary of commission incentives.

C. Structured Notes for Dry Powder

[29:24 – 31:27]

• Tom in Texas:
  Are structured notes a good alternative to bonds/cash?
• Wes’s Advice:
  • Cautions against them, referencing past failures (e.g., Lehman Brothers).
  • Calls structured notes “Burritos of mass destruction”:
    "All these different layers of options… all wrapped up into a product, not a solution." [29:56]
  • Prefers traditional, high-quality fixed income for safety.

---

Notable Quotes & Memorable Moments

• On Retirement Targets:
  "If somebody says it's a 50-mile hike, I might not go on the hike. I could take a five-mile hike... It’s got to feel as though it’s within reach." – Wes Moss [02:58]
• On the Power of Sleep:
  "We live in... this culture where we celebrate, 'Oh, I don’t need a lot of sleep.'... For 99% of Americans who do want to enjoy our time… sleep is part of the equation." – Wes Moss [22:06]
• On Annuities:
  "They’re a product, not a solution… What I’ve learned is things really do change." – Wes Moss [27:33]
• On Financial Planning and Anxiety:
  "If you’re revisiting your cash flow model once or twice a year, it's the melatonin of personal finance." – Wes Moss [22:53]

---

Timestamps for Important Segments

| Topic | Timestamp | |----------------------------------------------|-----------------| | Intro to Ask an Advisor | 01:05 | | Financial Green Zones Discussion | 02:22 – 09:29 | | Q1: Funding Memory Care (Kristen, Alaska) | 09:29 – 12:05 | | Q2: Managing $350K Short-term (Moki, TX) | 12:05 – 13:35 | | Q3: Retirement Bucket Strategy (Kevin, TX) | 13:35 – 15:01 | | Power of Sleep & Happiness | 18:12 – 24:32 | | Q4: Healthcare Before Medicare (Patrick, MA)| 24:32 – 26:11 | | Q5: Fixed Annuities (Joe, NC) | 26:11 – 29:24 | | Q6: Structured Notes (Tom, TX) | 29:24 – 31:27 | | Wrap-up | 31:27 – 31:50 |

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Tone and Language

The conversation is educational, practical, and empathetic, aimed at demystifying complex financial issues and empowering listeners with actionable information. Both Wes Moss and Krista blend humor with personal stories, making challenging topics accessible and relatable.

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Conclusion

This episode is a valuable resource for anyone planning retirement or seeking clarity on key financial issues like investment goals, cash management, health care planning, and the behavioral aspects (like sleep) that drive true happiness and financial well-being. The "green zones" concept offers reachable benchmarks, and the Q&A segment delivers real-world solutions. Listeners walk away better equipped to face their financial futures with confidence and less stress.

Transcript

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[Krista Dibias]

Welcome to this week's edition of Ask an Advisor here on the Clark Howard Show. I'm here with Wes Moss, and my name is Krista Dibias.

[Wes Moss]

And I'm here with Krista Dibias, and

[Krista Dibias]

we're here to go deeper on all things investing, helping you with your money, answering your questions that you [e-mail] ask and last week you mentioned the two topics you're gonna be talking about today, but you weren't able to go in depth on them.

[Wes Moss]

Two of the steps in the retire sooner method.

[Krista Dibias]

Yes.

[Wes Moss]

One is about the financial green zone, so we'll cover that today. And the other is the superpower sleep,

[Krista Dibias]

which I'm obsessed with sleep and trying to improve my sleep. Clark is too. He got me into the oura ring and now I'm not wearing it today because mine's on the fritz. But I'm gonna it should be okay by to when I sleep, but it is important for so many things and so sleeping well, you know, for physically but also mentally right. Is so important.

[Wes Moss]

I just think of you, you know, tinkering. It's like you can't open up the hood on the order ring like in a car. There's like something you can work on. The Ora ring is just a ring.

[Krista Dibias]

I have a really old one of

[Wes Moss]

those things get fixed.

[Krista Dibias]

I have a really old one and so sometimes I have to charge it for a couple of days for it to come back to life. It's really weird.

[Wes Moss]

All right, so let's meet the money green zones. There's a number that nobody agrees on and depending on who Says how much we need for retirement. It could be 500k, could be a million, it could be 2 million. There are plenty of folks that say it needs to be so much more than that. 2 million, 5 million, 10 million. It's just not agreed upon number and it's not agreed upon because it is different for everyone. But it also is flying a little bit blind. And it also, when you hear and read that it needs to be millions and millions of dollars to financial freedom, I think it can do some real damage because it makes it seem so far away. It's like the hike you're just not going to take. I could take a five mile hike, but if somebody says it's a 50 mile hike, I might not go on the hike. And I think it's the same way when it comes to financial planning and wealth accumulation, it's got to feel as though it's at least within reach. My financial green zones that I'll talk about today, I think they are within reach for most Americans. It's not easy, but it is within reach. That's the problem. It's that how much do I need is all over the map. I want to. I like having these concrete checkpoints I know will work really, really well for a lot of people.

[Krista Dibias]

Years ago, when you were first starting your podcast, I remember you talking about at that time a financial advisor who's well known said you need $10 million to retire. And you poked a lot of holes in that theory.

[Wes Moss]

Yeah, yeah. And that number's going up even higher for that particular potential financial advisor. And I think there's just some sh you in that and it's a wackadoodle number. But can we retire with less than that? Absolutely. I've seen so many people do it and this is new research. So let me get to the numbers in America though. Empower, through their personal dashboard data gives us the most recent average net worth in America and the median. The average I don't think really is worth contemplating because it's so skewed, Krista, by the really, really high end. We've got some trillionaires now in Americ.

[Krista Dibias]

Mm.

[Wes Moss]

Right. So we've got billionaires and trillionaires that skew those averages. So we really want to look at the median. So the middle point where most people are in the United States. So here are some of those numbers. In our 50s, the mean or the average net worth is $1.3 million. The median is 190 grand. That's a more realistic number. And by the way, that's net worth. That's not liquid, that's total. And a huge percentage of our net worth in America for most people is the equity in our home in our 60s the mean average is 1.5 million. That's again total net worth. That's not necessarily in an account. That's just total net worth. The median which again more representative and by the way, this is the highest category from 20s all the way to 90s is 290,000. So those are the numbers in the United States of America. That's the middle point. So what are these money green zones again? I've done research over the years in the latest project I've worked on, which is the book the Retire Sooner Method, I wanted financial data in relation to how people are categorized on a happiness scale and what I found on what I think are the three critical checkpoints that are again I think attainable. Not easy, but attainable are these three money green zones where I see happiness levels jump dramatically relative to the average in America. The money green zone for liquid investment assets there's three categories, kind of like a stoplight. The red category that we don't want to be on is essentially $100,000 or less. It's really 999 and less. The yellow zone where I see happiness levels that are pretty neutral around the average which is fine are from 999, let's call it 100,000 to 999,000. So just below a million. But when we get to that $1 million plus level and then the next category is the $3 million plus level, happiness levels are dramatically higher relative to the average in America. Doesn't mean that money buys happiness, Krista.

[Krista Dibias]

Right.

[Wes Moss]

It does mean that through our research and statistically it has a real impact and that may be well being but I correlate that back to a sense of happiness and freedom. And I think that is, that is what we're trying to do when it comes to retirement planning.

[Krista Dibias]

Less stress I'm sure like that stress of wondering if you're going to have enough.

[Wes Moss]

It's not no stress, but it's less stress. So that's the liquid investable asset piece again, not counting home equity here. This is liquid money we can get to number two is, is household income. So again many of the statistics we see financially are per the household in America. So it's, it makes it harder if you're single, it makes it harder to hit these green zones if it's just you in retirement. But for the household, once we cross that $100,000 level in household income, happiness levels again rise dramatically above the baseline. We looked at the same thing for years to pay off mortgage. This is a financial and time question. When do happiness levels really rise in relation to years to pay off mortgage? If you're 20 to 30 plus years on having mortgage debt lower, that's the red zone. Our happiness levels are lower than the US baseline from 20 or let's call it 19 years to 10 years. You're in the neutral zone, it's the yellow zone. And once we get to nine years or less or paid off again, we're in the money green zones because now we see happiness levels well above the US happiness baseline. And if you think about it, all of those pieces in once we hit that green zone, they're all levels of autonomy and freedom and every single one of them individually gets us one new pillar or layer of financial autonomy, financial freedom. And you put all three of those together, you're going to be in a good financial position or a great financial position. Not easy to do. Krista. I remember getting pushback when I mean this is 15 years ago. My first book came out and my the happiness level I found it was 500k and people are yelling at me. They're saying that's too much money, must be nice. And the reality here is that's just what the research says. So it's not my opinion on it. That is what our research over this past two years has borne out. And I believe very strongly that if we can get to those and we know those targets, there's power in just knowing a goal. If we can get to those targets. It's a powerful piece of the equation not only to end up having our retirement GPs get us there a little sooner but also gives us a higher probability of happiness and retirement. And that's all of course in the retire sooner. I almost said my old book, the retire sooner method.

[Krista Dibias]

All right, well these questions came in for you Wes. Kristen in Alaska is the first one I'm going to read. She said my father will need to go into memory care soon. I'm trying to figure out where to take the money from to pay for it. I've been making sure they stay under Irmaa and when I move investments inside my parents brokerage account. I took over the investing when his brain started failing. They have about $500,000 in a brokerage and 900k in a Roth. It would be better for my mom to inherit Roth money but I'm worried that if I pay for the memory care out of the brokerage, they will go over IRMAA. Between Social Security and pensions, I think they're around 160k. Memory care is 9 to $10,000 per month. I've read that the long term care costs might be tax deductible. So maybe if I did take it from the brokerage they wouldn't go over irmaa. It's unclear in my research and I just want to say to Kristen, my heart goes out to you as someone who's also helping her parents. I have one parent with Alzheimer's. It is a really tough situation, really

[Wes Moss]

hard, Kristen, and it is complicated. So you really do need a cpa. You need to sit down with a CPA on this. But my sense is remember health care is deductible above a certain level, a certain percentage 7 1/2% of your of your overall income. It seems to me from the income picture you're talking about if your dad's in memory care, it's going to be like 10,000amonth or more. So it's going to be $120,000 to $160,000 per year.

[Krista Dibias]

Yeah. She said 9 to 10k a month.

[Wes Moss]

Yeah. Yeah. So it is my understanding that after that 7.5% of AGI kicks in then it should or could very well be deductible which would then make it so that your overall taxes are much lower and it doesn't kick you into a higher Irma issue. So just sit down with a CPA locally where I know you're in Alaska. There's great CPAs in Alaska but I would have a consultation and get your tax projection done. But I think the deductibility because it's going to be so high will make it so that it is a less burdensome tax situation. The other thing to remember, if you're using brokerage money, your taxes shouldn't be that big anyway because it's after tax money and the most it really should be would be long term capital gains if you're having to sell, which should probably be in the 0 to 15% range as well. Okay, so keep that in mind.

[Krista Dibias]

Kristen, best of luck with that. And this one came in from Moki in Texas. How would you hold about $350,000 in a short term account, savings, credit, union, online bank or CDs? We already have investments and are retired but we want this to still grow but stay available. Is this too much to hold as a short term amount? Thank you your guidance Moki.

[Wes Moss]

Well, it depends if that's your dry powder. Maybe it's not too much to hold. If that's truly your cash account, that's almost like an operating account, then that does sound really high to me. Where would you put this? It's enough that I would say you wanted this to be in a brokerage firm, not necessarily an online bank. And I would be looking at a US short term treasury type of money market fund. I think that's about as high level of safety as we can get. And rates are still pretty strong with the federal funds rate where it is today. But note that your intuition is that might just be way too much in ultra short term savings. So I'm a believer in at least three years of dry powder. I know people that like having 10 to 15 years of dry powder. So if that's if your overall risk profile says that you have 10 years of dry powder and that's a big part of it, that may be totally fine. But it is a lot to have in essentially a cash like vehicle.

[Krista Dibias]

Okay, this is from Kevin in Texas. What would you recommend as a good step by step guide for setting up and managing the bucket strategy for retirement? What would be a good all in one platform for monitoring multiple retirement accounts from different brokerage firms?

[Wes Moss]

That's the second question to row from Texas. Hey, hey Kevin in Texas. First of all, it's an important thing to do. I'm a big believer that you really need to know your allocation, AKA your buckets. And I guess I should probably develop a website that puts everything into buckets. Krista, because that'd be cool but I haven't done that yet. You do want an aggregator though. If you've got Fidelity, Schwab, Vanguard and Power and multiple different brokerage accounts, it's impossible for you to tell with any one of those brokerage firms what your true bucket allocation is. There are plenty of different aggregators where you don't have to necessarily have an account that you can still link your accounts and they will give you an allocation and keep it lived and tracked to some extent. Now you may have to go in and mess with the categories and make sure you're identifying a fund that may be a balanced fund or international. It doesn't pick it up perfectly. But I think a company like Betterment can do that where you aggregate and you can see the big picture if you're not using one particular brokerage. But smart Kevin to do. Yeah, I think you got to do that.

[Krista Dibias]

Coming up straight ahead, we're going to talk about something actually does not put me to sleep because I find it so interesting and that is the power of sleep. And yes, it has a lot to do with happiness and retirement.

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[Wes Moss]

Welcome back to Ask an Advisor. I'm Wes Moss along with Krista Dibias here on the Clark Howard Show. We're going to talk sleep. You actually have kind of a funny story about this. I love that you love sleep. And if you have an aura ring, you know somebody is prioritizing sleep, it's important.

[Krista Dibias]

I mean, Clark's passed on his obsession to a lot of listeners, too, and viewers. But yeah, recently I had an incident where I was like, I got up, I worked out and I came in and I was working with Clark and he had to pre record some episodes because he was going out of town. And then I was recording with you. So it was a busy day, long day, a lot going on. And I just kept getting more and more tired throughout the day. And I was like, what is wrong with me? Because usually I have a lot of energy.

[Wes Moss]

Yeah. Yeah.

[Krista Dibias]

And I just couldn't figure it out.

[Wes Moss]

And then you were getting sick. Like, you were.

[Krista Dibias]

I did.

[Wes Moss]

Like, you're feeling like you were sore. You're, like, thinking, maybe I have the flu.

[Krista Dibias]

I was like, I just don't know what's wrong. Something's really wrong with me. And then I realized I had accidentally taken my night supplements, including melatonin stuff to help me sleep in the morning. And I took a nap on the desk in here because I was so tired.

[Wes Moss]

In your defense, I remember when you woke up, you were totally kind of whatever it was, you were like, back to normal.

[Krista Dibias]

Yeah, almost. I mean, I tried to be, but you guys have relentlessly made fun of me since, and I totally deserve it. So.

[Wes Moss]

Well, so Nurse Lynn, my wife has two roles at our house and this, by the way, we're talking about the happy retiree superpower, which is sleep. One is hydration and one is sleep. And it's a constant argument. I have four boys, so in the house, like bedtime for literally a decade. It's always like a little. It's always this battle a little bit. But she is always so adamant about sleep. Hydration may even be More. I mean, the first call I usually get, I'll land at one of these sporting events in another city. And before we even get to the field or the hotel, her first call say, have you stopped at cvs? Have you gotten a case of water? Did you get some liquid iv? And then she'll ask about bedtime. The boys are playing at 8, they need to be there at 7. That means they need to be in bed at 9. It's a constant thing and our kids always roll our eyes. But mom is right about it. And the amount of sleep we get is enormously important as we're growing, of course. And then as we get into retirement, it's enormously important for our own, just our psychological well being. And one thing that really surprised me in the health section of this research that I did recently that ultimately helped become the retire sooner method had to do with sleep. And it was a really simple question, do you get enough sleep? Not, not do you get the most sleep or not that are you able to get by on little sleep? It was do you get enough sleep at. Almost 70% of retirees who ended up or who were also in the happy camp said yes to that 70%. Almost 70% compared to only 38% of Urops unhappies retirees on the block. So it's two to one. The happy retiree group in two to one says they get enough sleep. We live in. It's almost a little laughable, this culture of we had celebrated like, oh, I don't need a lot of sleep. Like the great billionaire entrepreneurs. They only need three, four hours of sleep. That's not me. And it's not those who are wearing the OURA ring usually. But it is a little bit of the culture and it's hard to turn it off when we get into retirement because we've been working and working and there's a little guilt associated with sleep. But there is no shortage of evidence that if we're depriving ourselves of at least seven hours of sleep even in retirement, then we have health issues because of that. Harvard says that they followed nurses over decades. Chronic short sleep less than six hours associated with higher rates of heart disease and stroke. National Institute of Health followed people who consistently slept poorly more significant to develop dementia. I mean, these are real consequences. So in a hustle culture where it's every year or so, I'll see a new article. My favorite from last year was Wall Street Journal. It was no sleep, no booze, no fun. That was the title. Entrepreneur touts winning formula no booze, no sleep, no fun, no kidding, of course. And the story was about how this guy would he need. He wanted to get to 10 billion before he slowed down work. 10 billion before you start, slow down. 90 hour workweek, zero vacation in like a decade. And I think that's great. Yeah, if, if you're so driven and you're so singularly focused on making money, which some people are okay, and there zero worry about kind of a well rounded quality life, then that's kind of the only way to do it. But for 99% of Americans who do want to enjoy our time on this planet before we go, then sleep is part of the equation. So as we. And it stays part of the equation all the way through retirement. It's not just being a teenager and you need your sleep. The other big piece of it I think is this is an elixir to help with that is reducing financial anxiety. It's such a big part of why we don't sleep well at night. We're worried about our finances, we're worried about our plan, we're worried about being off track. We go back to that great insidious worry, which is running out of money that people, even with $10 million worry about. The elixir to that, of course, is having some sort of structured plan that you get to revisit on a fairly regular basis. You don't need to look at it every week or even every month. But if you're doing, if you're revisiting your cash flow model with conservative assumptions once or twice a year, it's the Melatonin of personal finance. And it helps you not have that constant mosquito buzzing, ooh, am I doing, Did I plan to count for that? And it's a powerful sleep well at night elixir. And it just so happens to be one of the core tenets of being a happy retiree and the retire sooner method. So I think it's an important thing not to give short shrift.

[Krista Dibias]

Okay, we're going to go to questions. Patrick in Massachusetts sent this one and he says, hi, Wes, I'd like to retire at 60, but how do I pay for a constantly rising healthcare cost before becoming eligible for Medicare?

[Wes Moss]

Patrick, if you don't have cobra, which it sounds like you said you're retired, so you likely do not.

[Krista Dibias]

Well, he said he'd like to retire,

[Wes Moss]

he'd like to retire. Okay, so this is where healthcare.gov comes in. And I remember much earlier in my career there, there really wasn't a solution to this issue. When you retired before 65, you would have to go out and get a private plan that was really expensive. And if you had any sort of anything wrong with you, you couldn't get coverage, period. So you're just, you're totally uninsured. Healthcare.gov is the exchange that we all know of that now we can go and find coverage in our state and through a reputable health care provider, health care insurance provider. And it might be 1200 bucks a month, it might be 1400 dollars a month. So it's not cheap, but it's doable. Now if you can manage your income, Patrick and this is the cool thing about it. And yes, some of these, the subsidies have gone away. But if you go to kff.org which is the Kaiser Foundation, Family foundation, there's a calculator there for you to be able to plug in your zip code and your income, which you may be able to manage as low as possible in retirement. And maybe you don't end up having to pay full freight for the plan that you would like when it comes to coverage.

[Krista Dibias]

Joe in North Carolina says, I'm a recent retiree and my wife retires next year. We're both 63. We have approximately $1.5 million spread across various investments. Our advisor has recommended that we put about $300,000 into a fixed annuity of 10 years in order to mitigate risk in our portfolio. He was open and said that he would collect a commission of 0.75% on the annuity, but we would not have to pay a management fee for it. The management fee for our other investments with them is approximately one point. We can easily live off our retirement income and Social Security, so I'm not risk averse. Because of that, along with Clark's distaste for annuities, I'm reluctant to go with the annuity yet, since the annuity commission is lower than our management fee, maybe it's not such a terrible idea. What am I missing and what are your thoughts?

[Wes Moss]

Joe in the Tar Heel State, one of my favorite states, by the way, the what I would say is that the fixed annuity is I don't like it. I might dislike annuities more than Clark because I've been in the financial industry and for a long time when I was younger, I was very exposed to annuities and I even sold a couple of annuities before I was a fiduciary. So I know these things. And when I was much younger and there are some okay things around annuities and they do have some benefits. But as I got older and I got more experience in the investment world, what started to bug me about them is the idea that, number one, they are a product. They're not a solution. And the product may make a lot of sense today or next year, but it's a product and it's done and you're locked forever. And what I've learned over a long time in the financial advice world is that people, things really do change for the majority of the time. Things are really different five years out now, not for everyone, but things really change. And when you lock yourself into something that is like cement, then it can become something that you wish you didn't do. And think about how long 10 years is. So I don't like it because of that and I don't like annuities because of the fact that you're betting on that one annuity company for 25% of your assets. So I don't like that either. So the product itself may make some sense. I just don't know if it will make sense every year for the next decade for you, Joe. So I would be steering clear of that and I wouldn't let the management fee that's lower talk you into a financial solution that you're locked into. Just see if you can negotiate the management fee, which is a little on the high side that other 1.1%. I do believe financial advisors should get paid and a fiduciary. Well, I don't know if this is a fiduciary, Krista. So the advisor does have to do a lot of work and takes on a lot of responsibility for the entire relationship. So they have to get paid, maybe discuss the overall fee with them and steer clear of the annuity.

[Krista Dibias]

Tom in Texas says, my wife and I are retired with a very good financial 6040 portfolio with interest rates predicted to keep falling. What is your opinion on using structured notes for dry powder? My financial advisor is very selective with high barriers and interest rates. I absolutely love your show and can't wait to read your new book.

[Wes Moss]

Tom, I absolutely love your question and I don't know how we have. We've had so many great questions from Texas lately. Do you remember what I call structured notes? No Food analogy. Yes, you do.

[Krista Dibias]

Which one?

[Wes Moss]

It's burritos destruction because you end up with all these different layers of options and backed by a certain credit which is backed by a bank, all wrapped up into a product. Not a solution. What did we just talk about? We just talked about a product. Products can make sense. And these do they really do make sense in a lot of ways. But do they make sense for the duration of the product? And the answer is a lot of times they don't. And people, again, I've seen regrets when it comes to these. Hey, I'm locked in. And not to mention, and maybe I'm ultra conservative about this, but I remember being a young financial advisor in the financial crisis when Lehman Brothers went out of business and they had, I don't know the number, millions, maybe billions, I don't know, a huge amount of money out there in these great structured notes. They ended up being financial burritos of mass destruction because the backing of them was the bank itself. And that didn't work out very well. The credit of who backs these is an issue or can be an issue. So I'd be leery of a structured note. They do sound good on paper. They do make sense when it comes to how they formulaically are designed. It's just that to me, there's too many moving pieces that can go wrong. I'm a little more of a traditionalist and I'd be looking more for the safety of higher quality fixed income instead.

[Krista Dibias]

Okay, that does it for us today. Wes does it for us.

[Wes Moss]

Okay.

[Krista Dibias]

Yes. Yep. We will be back next week with a new episode of Ask an Advisor. Hope that you will share this episode with a friend if you enjoyed it or learned anything. And please subscribe wherever you listen or watch the podcast. Have a great rest of your day.

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