Episode 108 – The Philosophy of Money with guest John D. Spooner

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The Philosophy of Money with Guest John D. Spooner
James Lange, CPA/Attorney
Guest: John D. Spooner
Episode 108

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TOPICS COVERED:

  1. Guest Introduction: John Spooner
  2. Getting Jobs by Enhancing Your Resume
  3. Personal Notes
  4. Picking a Financial Advisor
  5. Insurance and Choosing the Right Agent
  6. Wills, Trusts, and Estate Planning
  7. Doing Your Due Diligence
  8. Wrap Up and Final Advice on Families

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1. Guest Introduction – John D. Spooner

David Bear:  Hello, and welcome to this edition of The Lange Money Hour, Where Smart Money Talks.  I’m David Bear, here in the KQV studio with James Lange, CPA/Attorney and author of two bestselling books, Retire Secure! and The Roth Revolution: Pay Taxes Once and Never Again.  Learning the financial lessons of life is a challenge for every generation, and while today’s young people face a host of new and unknowable factors, other maxims remain constant, no matter when or where they’re encountered.  To help shed some light on the philosophy of money (that learning process), we welcome a unique guest to the show today: John D. Spooner, maybe America’s only investment advisor/novelist.  In addition to heading an investor group at Morgan Stanley in Boston, he’s a prolific and accomplished author of ten books, including five novels.  His articles have appeared in publications as varied as Town & Country, Esquire and Time.  He’s been director of the Atlantic Monthly, a contributing editor of Worth magazine, and the business editor of Boston magazine.  He lectures widely on the philosophy of investing and has appeared on numerous TV and radio programs, including Wall Street Week, Fox News, NPR and Bloomberg Radio.  Ink magazine called him as much a psychologist and futurist as an investment advisor.  Mr. Spooner’s most recent book, No One Ever Told Us That: Money and Life Letters to My Grandchildren, is 59 short chapters that cover a range of essential lessons every young person just out of college or high school should consider.  Today’s program will focus on his financial philosophies, but he and Jim will also offer plenty of thoughtful advice on other of life’s lessons that grandparents and parents can pass on to the next generation.  So, stay tuned for what’s sure to be an interesting and informative hour, and with that, I’ll say hello, Jim and welcome, Mr. Spooner.

Jim Lange:  Welcome, John.

John Spooner:  Thank you.  Nice to be here, Jim.

Jim:  Well, you know, the book, by the way, which is No One Ever Told Us That, which I assume is available at Amazon?  John, is that the best place that people can get this?  Because I think after hearing some of your advice, they’re going to want to get it.

John:  Well, almost all the independents have it, certainly Barnes & Noble, Amazon is the quickest, easiest, and it’s also available on audio and the Kindle version.

Jim:  Okay.  The way I picture the book, you know, going through the different chapters, (and it’s very good for today’s readers because it’s kind of short snippets of a couple pages, let’s say between two and six pages on each piece), I kind of picture you as the elder statesman, somebody who has been in business and family, with children and grandchildren, for fifty years, and offering your best advice on a variety of topics, financial and non-financial, and I think a lot of these are gems.  I understand why the book is a smashing success and a huge bestseller throughout the country.  I don’t know if that’s a fair characterization.

John:  Well, my mother couldn’t have said it better.  Let’s put it that way, Jim!


2. Getting Jobs by Enhancing Your Resume

Jim:  All right.  Well, perhaps we’ll go through them in some of the order that I think is probably according to the table of contents, and some of the things that I thought were particularly valuable.  And the first one, you have ‘getting jobs.’

John:  Umm-hmm.

Jim:  And you talk about your advice to grandchildren, and, by the way, I think this would apply to not just grandchildren, but to people in the job market in general, about resumes and some of the things that…and plus, you’re an employer who has gone through thousands of resumes.  Could you give advice to somebody who is looking for a job as to what they should include in their, let’s say, cover letter?  And then I might add a few thoughts after you’re done with yours.

John:  Sure.  Well, originally, all books come from the germ of an idea, something that just…the nub of something that you might work on for a long time, and the nub of the idea for this book came from me giving a talk to graduate students at Brandeis about five years ago, and they were all in business, and they were all foreign students, as well.  And it was supposed to be street-smart ideas on almost everything they’d see when they got out into life, including if you marry, what kind of person should you look for?  And when I was done, a young woman from France raised her hand, and she said, “No one ever told us that.”  So, I noodled the idea and that phrase and it turned into this book, and the most important thing on every young person’s mind these days, they’re really nervous about ‘What’s my future?  Will I get a job?’  So, my advice on resumes, it’s not just for young people, it’s for almost all ages, and that advice is that the unexpected things are going to get you jobs, and mostly, it’s not about academic achievement or grades, it’s about, what are your hobbies?  What are your interests?  For instance, there are clubs in life, and when it comes to schools, say, rugby is a club.  Rowing is a club.  Women’s ice hockey, or volleyball, or, if you live in the Midwest, wrestling is a club.  And if this is on your resume, it’s amazing how many interviewers also played volleyball or field hockey or wrestled.  And that’s what they’re going to focus on, and you’ll find the whole interview is on mutual interests.  You will get a job because of your interests and your specialties.  And I see dozens of resumes of young people, and older people, too, during the year.  Most of them are plain vanilla and boring, and at one point, I was counseling a young man who lived in Japan, an American working for a bank, and desperately wanted to come back to the U.S.  And I said, “Send me your resume.”  And I spoke to him and I said, “This is the most boring resume I’ve ever seen.  Haven’t you ever done anything in your life?”  And it was like pulling teeth to get out of him that he was a black belt in karate, and I knew what it took to achieve that, which was an awful lot of hard work and determination.  I said, “It should be on your resume.”  He said, “Well, it’s irrelevant.”  I said, “Put it on.”  He did, and in two months, he got two job offers to come back to New York, and all they talked to him about was his black belt.  And it’s the things that you haven’t thought about.  Just last week, I saw a young man who had come out of the service, and he had a resume and it just said he was in the Navy, and I said, “What about your specialty?”  It turns out he was in submarines, and he did special things on submarines, and he’s already had employer interest because people are interested in hiring young people who have come out of the military, particularly if you’ve got something exotic or different, and being a submariner made a huge difference to him.  So, I advise everybody out there looking for work to reexamine your lives.  If you collect stamps, or you’ve chased butterflies all your life, put down something unusual because there are 300,000,000 Americans, Jim.  How do we separate ourselves from the crowd and make us a little different?  That’s what’s going to give you a leg up in almost every part of your life.

Jim:  Well, I would agree with that, and by the way, personal experience, I happen to be a table tennis player, and I got a resume and the guy said something like ‘Junior National Table Tennis Champion,’ and he had a huge edge, and I did ultimately hire him.  So, I think that that’s a very good thing, and people are interested, and in terms of military experience, one of the things about the military is people learn how to follow directions, and that’s something a lot of employers love to hear because usually we’re not necessarily looking for huge, wild, imaginative types that’ll give us a million ideas.  We’re probably more interested in having people organize and execute our ideas, and military people have been very good.  The other group of people that I would put on a resume is if you grew up, say, in a family business, particularly like the restaurant business, those guys…if you grew up in the family business and you worked in that restaurant, those kids know how to work, and in my business, I have kind of a unique arrangement with a financial advisor where I do the tax and conceptual and Roth work, and the other advisor (although actually, there’re several of them), but one of them, in particular, that does index investing.  He grew up working in his dad’s restaurant and he’s the hardest working financial advisor I know.  So, I think that that’s great advice.

The other thing that I would offer is, and I’ve just hired two people even within the last year, and I would also say…and in a later chapter, you say ‘do your due diligence,’ for people to read about the company that they are going to work for, and do a cover letter that is relevant to the company.  So, for example, in my case, if somebody said, “I saw you had a radio show.  That’s of great interest to me because I worked in radio in college,” or, “You know, I see that you’ve written books.  That’s of great interest to me because I like to write.”  It just shows that they’re doing their due diligence, and they’re not going to be plain vanilla, and those are the people who I hire, people who wrote relevant cover letters and had something on the resume.  So, I thought that was some great advice.

John:  Well, and you’re the living example of it because with your radio work, you’re multi-dimensional, you do several things, and I like to see a resume, what jumps off of the resume at you?  And it’s often your interests, and you know, again, it’s ‘no one ever told us that.’  And how do we separate ourselves from everybody else in order to get the edge in life, get a job, or get business once you have a job?


3. Personal Notes

Jim:  And another one of your chapters, when you’re talking about how to get the edge, and for that personal touch, you have a chapter on the value of personal notes.

John:  Umm-hmm.

Jim:  And I’m not talking about an e-mail, and I’m not talking about a text, and I’m not even talking about a phone call.  I’m talking about a handwritten note, and some of you grandchildren, I don’t even know if they do cursive anymore.  I’m not kidding, by the way!  My daughter doesn’t use cursive.  She’s actually a Computer Science major at the University of Pittsburgh, and, you know, you say ‘cursive’ and like, she kind of looks at you, and like, the idea of a personal note…

David:  She curses!

John:  Right!  “Did you say ‘curse?’”  “No, I said ‘cursive.’”

Jim:  Right, and frankly, her grandfather is a very generous man, and getting her to write a thank you note is like pulling teeth.  But you talk about the value of personal notes, both from a personal side and from a business side.  So, maybe you can tell our audience a little bit about your experience with personal notes and how important it is.  And I will just tell you that it has made a huge difference in my life, and when my mom died, I got, you know, probably a hundred personal notes from people, a lot of them clients, and I’ll be honest with you,  I remember who wrote something and who didn’t.

John:  Yes, you do.  Yeah.

Jim:  And now, when somebody dies, I mean, I was always okay about it, but now, I try to be much better, and the same thing with other issues that come up.  A personal note, there’s nothing better.  But anyway, why don’t you tell us your experience and how important you think it is?

John:  Okay.  Well, again, how do we separate ourselves from the crowd?  And since nobody writes, generally speaking, these days, personal notes, everything is texts and e-mails, which, no matter how intimate they may appear, they’re impersonal, and we have 300,000,000 Americans.  So, we live in an increasingly anonymous world.  So, I have one little story: thirty-five years ago, forty years ago, I was a rookie stockbroker in those days trying to get clients, and I’d knock on people’s doors, and one particular lawyer, a full-time lawyer in Boston, I knocked on his door several times and was becoming a pain in the neck to him.  But, one day…I was persistent, and he gave me a little bit of business, just a little crumb here and there.  One day, I was in his office and his wife was there, and she had a very good sense of humor.  We hit it off, and a few months later, unexpectedly, she died.  And I sent the man a personal note.  And he was so touched by it that he ended up giving me all of his business, and this was, say, thirty-five to forty years ago, and he had a small office, maybe he had five or six other lawyers with him, and little by little, he sent all of his younger partners to me.  They became clients, and as recently as three months ago, one of the series of lawyers who have evolved in that office sent me a couple of estates to liquidate and help with the beneficiaries and planning their money, and I’ve gotten business from this condolence note from almost forty years ago.  It’s continued to resonate, since it has resulted in dozens of accounts over the years, and the fact that it still happens.  So, when I said this in the book, I didn’t do it cynically, I did it because I thought she was a neat person, and it meant so much to him, as it does to me if I get personal notes.  Because of the book, every week, I get notes mostly from young people, from older people, too, around the country, and all the young people say the same thing: “I’ve never written a personal note before in my life.  Thanks for writing the book.”  And, at the bottom of every note, it says something like, “Would you talk to me about my pitiful life and future?”  And half a day a week, I’ve been calling these young people, and sometimes not so young, to say, “This is a one shot.  You can’t call me again.  But, you took the time to write me very kindly and in a gracious way.  Tell me about yourself, and if I can give you a leg up or some help, I’m happy to do it.”  So, it has almost created a whole new sidebar for me, just because of personal notes.

Jim:  Well, it’s interesting that you say that because I take this whole book as kind of like, the elder statesman/trusted advisor telling people who know less than you do about various things, and, interestingly enough, you’re also a financial advisor.  I say ‘also’ because you’re combining the two, and I like to look at myself as a trusted advisor telling people who could use your council, and I think it’s wonderful that you’re doing it both for your clients, where you’re presumably making some money, but then also doing it for other people, because I know, even in non-financial areas, one of my favorite questions that I get is when somebody’s lost and they’re asking for directions, or if they’re on the trail and they say, “Geez, is this the right trail for me?”  You know, I genuinely enjoy helping people, and it’s obvious that you do too.

David:  When you’re speaking about notes, though, I mean, it would be okay to type a note and sign it and send it by mail.  It doesn’t have to be handwritten, does it?

John:  No, it doesn’t, but I think the ones that resonate really, and these days of increasingly anonymous society…

David:  Right.

John:  …people get personal notes and they say, “Oh boy, it’s a personal note!”  They save them…

David:  Right.

John:  …because it’s so unusual.  Well, you know, we’re in, as I said before, so many revolutions at once, mostly internet-related and the digital world, but that one thing that doesn’t change throughout history.  The inventions change, technologies change, and we go from the automobile to the radio to television to the internet, but human nature, I say, never changes.  Market movements are dictated, in my view, 80% emotionally (by things like fear and greed) and 20% reality.  And we can talk about fear and greed and how markets move, and even today’s markets, if you want to.

Jim:  All right.  Well, I think that that is great advice on the value of personal notes.  By the way, I have a business mentor named Bob Gallagher, and he told me that he wants me to write at least one personal note a week, no matter what.  I think that that was a great piece of advice and I should certainly be doing more of it.  And when I say a personal note, again, I don’t mean text, and I don’t mean e-mail, and I don’t even mean…in a cynical attempt, I actually have my handwriting as a font on the computer.  So, I could do what looks to be a handwritten note, but the truth is, people can tell, so what I’ll often do, even for the kind of formal business notes that I send out to people like ‘Enclosed, please find your tax return,’ or, you know, ‘your wills’ etc., is I will write a handwritten note on top of the typed material that just shows, you know, yes, I know you’re a real person and I try to say something that’s personal to them.

John:  Well, where you live, Jim, has a lot to do with what you do, and the people on both coasts, pardon me for saying this, there’s a cynicism.  There’s an attitude about things.  In my view, the Midwest is bedrock in this country, and I just went to a wedding I wrote about in the east that was so amazing because it was really young person-oriented as opposed to clients of the parents, and the kids almost all came from Chicago and parts of Wisconsin, and they were so respectful and so nice, and what you saw was what you got.  There was no hidden agenda and they were on the dance floor for four hours dancing, singing, and so were their parents.  It was a wakeup call.  I wrote about it to say, “Folks, you’ve got to get out there and see different parts of the country.  Not everything is New York or Boston or Washington D.C., thank goodness!”  And the bedrock that you represent and the values that you represent are pretty great.

Jim:  Well, thank you.  Pittsburgh takes a lot of pride in having really good people.

John:  No question.

Jim:  And it’s interesting that you mentioned Chicago because I have a friend who went to school in Chicago, and she says that the Chicago men are the nicest that she’s ever met anywhere, and if her goal was to find a nice guy as a husband, that she would be in Chicago.  So, that’s another area.  The other area that you talk about is picking a financial advisor.


4. Picking a Financial Advisor

John:  Umm-hmm.

Jim:  So, you have some advice on a couple questions to ask.  I’m actually on page 64 if you have your book in front of you.

John:  Umm-hmm.

Jim:  The first two questions I thought were particularly relevant.  So, I thought maybe you could share some of those pieces of advice on picking a financial advisor.

John:  Yes.  Well, I’m big on…one other part of the book involves asking the unusual questions that really kind of get to the heart of the matter.  Well, I’ve been in this business for fifty years plus and seen thousands of clients over the years, and Wall Street change dramatically.  At any rate, these three questions are ones that no one ever asks me, or asks anybody who presumably is going to manage your money, and I think they’re key.  The first question is, “Mr. or Ms. Financial Advisor, what is your investment philosophy?”  And if you can’t give me your investment philosophy in a couple of simple paragraphs, then you better start looking for a different investment advisor.  So, that’s number one: “What’s your philosophy of investing?”  And anybody you ask should be able to discuss it with you in simple terms so that the potential client understands it.  The second thing that almost nobody ever asks is: “What have been your successes over the years and what was the thought process in getting to the successful investment idea?  What did you learn from the successes?  And even more importantly, what have been your biggest misses over the years, and what did you learn from those mistakes so that you can try and not repeat the mistakes over and over again?”  And the third thing that no one has ever asked me in all the years I’ve been in business, “Mr. and Ms. Investment Advisor, what do you own for yourself?  Where do you put your own money?”  And if I were not in this business and looking for somebody to watch over my money, I would want somebody to be eating their own cooking and consuming the same things that I was going to put my clients into, and nobody has ever asked me where do I put my money.  So, those are the three key things, and they’re unusual and different questions, and I think the different questions get the most interesting answers.

David:  Let’s just take a quick break.

BREAK ONE

David:  Welcome back to The Lange Money Hour, with Jim Lange and John Spooner, author of No One Ever Told Us That: Money and Life Letters to My Grandchildren.

Jim:  We’re talking with John who has this wonderful book No One Ever Told Us That, and I kind of see John as the elder statesman on giving both financial and non-financial advice to readers, and the book is a smashing success, and I think it’s partly because of the common sense advice derived from fifty years of being in business and being a father and grandfather himself.  And I think some of the things are really good.  We’re really concentrating on some of the financial ones in this interview, but probably the non-financial ones are as good as any.  One of the chapters, though, is on insurance and some of the recommendations that you have for talking to people about insurance and choosing an insurance agent.


5. Insurance and Choosing the Right Agent

John:  Umm-hmm.

Jim:  So, maybe you could tell our listeners a little bit about what you’ve found in terms of looking for the right person to represent you.

John:  Sure.  Well, I do believe, Jim, that if I could have a number one headline for the book, it would be “All life is relationships.”  And, again, in this increasingly anonymous universe we live in with 300,000,000 Americans and 7,000,000,000 people on the planet, the numbers are so large, it’s almost…you can’t really come to grips with it because they’re so big and amorphous.  So, if all life is relationships, my simple approach to insurance is the following:  I want to find an agent whose own personality is such, being a very gregarious person, and that the agency he works for, or she works for, should have clout.  In other words, the one thing I look for in an insurance agent would be someone who can service my claims, wherever I have claims, with efficiency.  And I had one insurance agent for years and years and years who never did particularly well in school, but he had a great personality, and it turns out he was perfect for insurance because he gave service, service, service.  I think, with an insurance agent, I want to find out how much clout the agency has with the insurance companies to service my claims without undue time, or without too much verbiage.  Most insurance agents, or many over the years who I’ve heard about anecdotally, once they write the policies, never check in with the client.  I would want somebody who at least once a year calls me and says, “Has anything changed in your lives?  Any acquisitions of real estate or valuables or collectables?  What about children?”  All kinds of issues like this.  And too many agents get the order and that’s it.  They don’t come back to you and say, at least once a year, “What’s changed in your life?  Is there anything else I can help you with?”  So, it’s really service, service, service is what I want in an insurance person, more than anything else, and also, make sure they are paying attention to me and my family.

Jim:  Well, funny that you should bring that up because a number of years ago, I had an office above a pizza shop, and there was an electrical fire.  By the way, one little side note on this is never, ever put your office above a pizza shop.  But anyway, we had this electrical fire, and my office was literally wiped out on February 15th with 500 tax returns still to be prepared.

John:  Oh boy.

Jim:  And, luckily, when the agent was talking with me, talking about how much coverage was, he was just trying to make a sale and he was trying to, you know, appeal to my cheap side, which I have a strong cheap side to me, and he recommended an amount, and I thought, “Well, gee, if something happens, that amount isn’t going to be anywhere near enough.”  And without thinking about it at all, I just said, “Well, let’s double that.”  So, we did.  And, anyway, after the fire, I never heard from him, not one time, nothing, and I had to do everything with the insurance company myself, and I really understand the value of when you say service, service, service, and I’m not necessarily talking about life insurance here.  I’m talking about other types of insurance.

John:  Yes, correct.

Jim:  But even for life insurance, you want somebody who will go to multiple companies and present your case in the best light, come back with multiple quotes, and then tell you the advantages and disadvantages of the different quotes, and then help you select one of those.

John:  Exactly right.

Jim:  So, again, it is service, service, service.

David:  Well, how do you know when you’re looking around that you’re going to get that kind of person, that kind of representation?  How do you know that in advance?

John:  Well, in my case, I’ve always believed in being out there, meaning socially…

David:  Mmm-hmm.

John:  …and belong to things, and belong to non-profits, and be philanthropic in your community, and be a community person, not just isolated.  So, we pick up names and acquaintanceships and friends, and you’re going to call, all of us do, who are our smart friends, particularly street smart?  One of the chapters is ‘Beware of Genius or Perceived Genius.’  So, it’s perceived genius that got us in the financial mess of the last five years.  People who were ‘more brilliant’ than anybody else, but they weren’t practical.  They had no common sense and greed played a role.  So, we all know who are our most practical friends, and who do we go to for advice, looking for common sense advice, not speaking from on high.  So, I would always go to my practical friends over the years and say, “Who do you use for an agent?”  And typically, one little strategy I’ve used over the years, I do play golf.  I have since I was a caddy when I was eleven or twelve years old years ago.  And on a golf course, you find out a lot about character.  You learn a lot about someone for four hours or more traipsing around a golf course and it’s a character builder, and it reflects an awful lot on who’s got the answers in a smart way.  So, you learn to build up your own team of people you can trust in the three key areas of our lives, which are law, medicine and money matters, and in building your team, I think I’d much more trust anecdotal stories from friends than I would lists from the internet that can have all sorts of hidden meanings.  So, when I say all life is relationships, that’s where I get recommendations.

David:  Mmm-hmm.

John:  And if somebody screws up, then don’t wait around and say, “Well, you know, they’re half baked friends of mine,” and we can only tell this in time, but I basically think referrals from friends rather than the net.


6. Wills, Trusts, and Estate Planning

Jim:  Well, I like your advice and your theme of it all being about relationships.  The other area that you have (and this is probably near and dear to my heart because I am, among other things, an estate attorney) some advice on is wills, trusts and estates, and I thought if we spent a little bit of time talking about those, I think that that would be a really good thing because you have some terrific advice, particularly if you’re following the…I thought practically everything on page 110-111 of your book…and again, for the audience, I’ll repeat this if this is piquing your interest, the book is No One Ever Told Us That by John Spooner, which is available at Amazon.com and also in your local bookstore, at least the ones that are left.  So, can you tell us a little bit about wills, trusts and estate planning from your perspective?

John:  Mmm-hmm.  Well, my wills, trusts, and estate lawyer, who’s typically the key lawyer in everybody’s life…

Jim:  Hopefully!  You know, if you’re not getting sued or divorced.

John:  Correct.  Right.  I found my lawyer, as so much in life happens, which I call the accidental nature of life, who walks in the room at the right time or the wrong time, and this particular lawyer was representing one of my biggest clients, and the biggest client is a very tough, demanding guy.  So, I figured anybody who is representing him, in this case, a main client, had to be very smart and practical, because the client is about the most street smart person I’ve ever met, and that’s saying a lot.  So, his lawyer trained at one of the best law schools in America and one of the best colleges in America, and guess where he grew up?  Pittsburgh, specifically Squirrel Hill.

David:  One of the best cities in America!

John:  So, strictly by coincidence, any state in the east, and what I like best about him, and I like best about all of the people who professionally take care of me in law and medicine particularly, is street smarts as opposed to preaching from on high, genius variety.  So, in being street smart, he has given me various principles of how to pick lawyers, particularly wills, estates and trusts people.  So, he says (among other things), “Choose that person for your trustee or executor whom you trust most in the world.  It is an act of conferring power, and it becomes the ultimate act of love for a man to give his wife that power, and vice-versa.  A client should never make his lawyer the trustee.”

Jim:  I would agree with that, by the way.  In fact, every time I see a will prepared by another attorney that names himself as the executor and the trustee, I always wince, and I think, you know, that’s really not a lawyer’s role.  That’s really a role of…preferably, by the way, you have another piece of advice there, never make a bank or institution…I don’t know if I’ll go as far as never…but I’ll go as far as about 98% of the time, and I’d better watch out here because we might have some trust companies listening to me.

John:  Well, you can let me do the talking because…and I’m using the advice of my friend, when it comes to never make a bank or trust institution your trustee, they charge big fees, and my friend says, furthermore, never make any professional your executor.  Make it a personal relationship.  My personal problem with, say, banks as trustees is that whoever is in charge is going to change and probably change on a constant basis.  You’re not going to have the same person watching over your affairs if they’re at a bank for fifteen or twenty years.  Maybe that would have happened when we were little, or maybe fifty years ago, but it’s not going to happen now, particularly in the current climate of banking.  And because I believe firmly in all life being relationships, I want to personalize my life, not have it be anonymous, and the bigger the institution, the less efficient it can be.

Jim:  And the other thing that I would add is that I like to keep the power in the family.

John:  Absolutely.

Jim:  If you name a spouse, a son, a cousin, somebody that you trust, even if they’re not particularly good with money, even if they’re not particularly good with taxes, even if they’re just a good, basic person, they can hire a financial advisor, and if the financial advisor isn’t doing the job, they can fire him.  They can hire an attorney, which, by the way, you add on an hourly, not a percentage basis, and that’s fine, and if the attorney is doing a good job, great, and if not, they can fire him.  They can hire an accountant who can prepare the tax returns and give them the appropriate advice, and if they pick the right person and that goes well, great, and if not, they can fire them.

John:  Umm-hmm.

Jim:  If you name a bank as the executor and the trustee, you’ve lost control over the investments, you’ve lost control over the tax preparation, and you’ve lost control over the distribution of assets when it’s appropriate.  So, I would agree with that that really, you want to keep the power in the family.

David:  Well, let’s take one more break before we get back to the rest of The Lange Money Hour.

BREAK TWO

David:  And welcome back to The Lange Money Hour, with Jim Lange and John Spooner, author of No One Ever Told Us That: Money and Life Letters to My Grandchildren.

Jim:  And the way I would describe this book, again, it’s No One Ever Told Us That by John Spooner, is I would look at it as the elder statesman in business for fifty years, a parent, a grandparent, writing his best advice to the previous two generations, that just is full of gems, and I understand why the book is a smashing success in terms of sales, and it has probably added a whole new dimension to John’s life.  We were just finishing up the discussion of not naming a bank or an institution as a trustee, and on that same page, page 111, number 9, you talk about how important it is that the attorney that you hire actually be practical, and not just do what, unfortunately, some attorneys do, which is they take the last will that they’ve done and they use their word processing program to change the names and change the his and hers, and everybody walks out the same.  But actually, things have to be thought out.  So, maybe you can elaborate on that point for our listeners.

John:  Umm-hmm.  Well, I have never believed in one size fits all.  My personal business life is, I refer to it as a ‘pain in the neck’ business, Jim, and you, as far as I can tell, have the same kind of business because everybody is structured somewhat differently, and we pay attention to what the hopes and fears of the clients are, and it is not one size fits all, and because what you and I do is…practical advice and counsel is a big part of what we do.  So, it isn’t just plain money management, and it’s not vanilla money management, everything is customized.  So, it’s kind of seven days a week and obsessive-compulsive, and this is true in hiring anybody who’s going to help us out.  For instance, we haven’t talked about medicine, but it’s all tied up in the people we really need in law, money and legal affairs, and I want somebody practical.  I don’t want a doctor who orders a hundred tests just to cover their tails.  I want somebody who knows about family history.  The same thing I want in a lawyer, and let’s go back and find out about your forebears, if possible, and make it really personal.  So, these days of totally anonymous medicine and, so often, if it’s an area that I need…I heard about a terrific doctor in a certain area, and it’s a closed practice, I’ve done this for years.  I call a doctor’s office and get the gatekeeper, and they say, “What’s the nature of your call?”  And I say, “I’m calling about the doctor’s emotional future.”  And there’s always a pause at the end of the line, and the person who’s the screener thinks, “Here’s somebody calling about the doctor’s emotional future.  It’s probably the doctor’s psychiatrist.  I’d better put them through.”  And almost always over the years, I get a call back from the impossible to reach doctor because he or she is curious, who would say, “You’re calling about my emotional future?”  And I almost always get an appointment, and not next April, I’ll get it next week.

Jim:  By the way, that is a great tip because there are closed practices in Pittsburgh, and I think, whatever you think of the healthcare coming on, the simple fact is we have so many healthcare resources, we’re going to have an additional 30,000,000 people insured, and good people are going to…their practices are going to fill up, and whether they go to Concierge service or they just fill it up, there’re going to be people who want appointments that can’t get appointments, and that piece of advice that you gave, I think, is really valuable.  I love that.

John:  Well, again, always, what can we do to separate ourselves from the crowd and ask the unusual questions?  For instance, one of the things that I think is an instant character definer is when people are coming to see me for the first time, or when I wander around at parties, I ask people, “What is your favorite all-time book?”  And “What is your favorite all-time movie?”  And I think it’s unusual and a terrific question in this sense.  Whatever they give me as an answer really tells you a lot about the person.  Whatever they answer, “What’s your favorite book?  What’s your favorite all-time movie?”  You can tell a lot about the person from the answers they give, and even if they say, “Well, I don’t really read,” that also tells you something, which probably for you or me, and Dave, too…

David:  Yep!

John:  …I’m probably not going to be friendly with the people who don’t read.


7. Doing Your Due Diligence

Jim:  That’s probably some good advice because, presumably, people who are trusted advisors, in order to stay current, are reading all the time, and, very frankly, one of the reasons I do this radio show is it kind of forces me to do some reading, and then also to have conversations with the best and the brightest people in the country.  And I know we’re getting near the end, but I couldn’t not do at least a short discussion on doing your due diligence, and the ultimate advice in the famous world…again, I don’t mean to be political, but I think that a great piece of advice of President Reagan, “Trust, but verify.”

John:  Umm-hmm.

Jim:  Could you elaborate a little bit on that thought?

John:  Sure.  For hundreds of years, perhaps, and based on how society’s structured, you and I agree to come to terms about something, and it used to be I shake your hand and you shake mine and we’ve got a deal.  But that’s all gone from society, except in a very few places.  So, there are people, and the Madoff fiasco proves it, there are people who are unbelievably charming and unbelievably convincing salespeople, and you’ll be signing on the dotted line.  So, often, this proves to be a giant mistake and you get taken.  I have a couple of friends who have been hustled on the phone about gold and silver over the years, and actually put money down from people who were just banging the phones and picking their pockets because the sales pitch is so incredibly provocative.  So, there are ways to check, and again, it’s like how do you pick an insurance agent or a lawyer?  So, by doing your due diligence, I want to ask a few off-the-wall questions, like for instance, of investment advisors, “Where do you put YOUR money?”  And I think if somebody said, “Well, I put it all in gold and I buried part of it in the backyard and part of it in a Swiss bank,” I would think a hundred times before I’d give them any money because it doesn’t sound realistic or practical to me.  But if somebody says, “These days, I have to go with the times, and I think that the best place for money in the world are the great global brands with fortress-like financial strength who do business globally, and who pay me, while I wait, more than ten- to thirty-year bonds.”  That sounds practical to me, and one reason the internet does serve some good is that, I think, Googling and checking up on people’s character…I wouldn’t think of going for an interview with somebody without checking out their background.  So, there are many more ways to trust, but verify these days, and never jump because of emotion, which is how so many decisions are made.  Start thinking with your brain, not just your gut.

Jim:  Right, although, obviously, you have to trust your gut first.

John:  That’s right.


8. Wrap Up and Final Advice on Families

Jim:  You know something?  We have about two minutes left, and what I’d like to do is…I’m sure that there is a piece of wisdom that we haven’t touched on, and I’d like to throw that open to you.  But, again, before we close, I do want to mention, the book that we’re talking about, which I think is a great resource for people from this wonderful elder statesman who gives lessons in life and money, the book is No One Ever Told Us That by John D. Spooner.  So, what’s the one piece of advice that we haven’t talked about?

John:  Well, one thing…and this is universal and eternal, not just for young people, one of the chapters in the book deals with families and family relationships.  A couple of months ago, a young man knocked on my office door and said, “Do you have a minute?”  And I said, “I don’t really, but come on in.”  And he had a gift in his hands, something, a package that was gift-wrapped, and he said, “This is for you.  You changed my life.”  And I said, “Wow!  How did I do that?”  He said, “I’ve had problems with my family for years.”  And he said, “One of the lines in your chapter about families said, ‘Love your family, but don’t let them suck the oxygen out of the room.’”  And he said, “That line, ‘Don’t let them suck the oxygen out of the room,’ gave me the courage to say things that had been on my mind for years, and it was such an incredible relief to me when I finally opened my mouth that you changed my life, and thank you.”  So, I would say all families are challenging all in their own ways, and every family’s a soap opera, but if you take, as a mantra, ‘Don’t let them suck the oxygen out of the room,’ I think it’ll do you good.

David:  Well, thanks to John Spooner, and audience, you can reach him directly if you want at his website, which is www.johndspooner.com.  Thanks also to Amy, our in-studio producer, and Lange Financial Group program coordinator, Amanda Cassady-Schweinsberg.  As always, you can hear an encore broadcast of this show at 9:05 this Sunday morning, here on KQV, and you can always access the audio archive of past shows, including written transcripts, on the Lange Financial Group website, www.paytaxeslater.com, or call the Lange offices directly at (412) 521-2732.  Finally, please join us on Wednesday, October 2nd at 7:05 when Charlie Smith, the principal and chief investment officer of Fort Pitt Capital, will join us in the studio for the next edition of The Lange Money Hour.

END

 

 

jim_photo_smJames Lange, CPA

Jim is a nationally-recognized tax, retirement and estate planning CPA with a thriving registered investment advisory practice in Pittsburgh, Pennsylvania.  He is the President and Founder of The Roth IRA Institute™ and the bestselling author of Retire Secure! Pay Taxes Later (first and second editions) and The Roth Revolution: Pay Taxes Once and Never Again.  He offers well-researched, time-tested recommendations focusing on the unique needs of individuals with appreciable assets in their IRAs and 401(k) plans.  His plans include tax-savvy advice, and intricate beneficiary designations for IRAs and other retirement plans.  Jim’s advice and recommendations have received national attention from syndicated columnist Jane Bryant Quinn, his recommendations frequently appear in The Wall Street Journal, and his articles have been published in Financial Planning, Kiplinger’s Retirement Reports and The Tax Adviser (AICPA).  Both of Jim’s books have been acclaimed by over 60 industry experts including Charles Schwab, Roger Ibbotson, Natalie Choate, Ed Slott, and Bob Keebler.

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