Announcer:
It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINRA, SIPC. Investment advisor representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor.
Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now, here’s today’s Financial Focus program.
Gary Determan:
Well, it is the first Wednesday of the month, so the program’s going to be live expanded to the bottom of the hour. Dave Nelson joins me by phone. Hey, Dave, did you hear that last story in the news about baseball players?
Dave Nelson:
No. Clue me in.
Gary Determan:
Well, okay. They’re making a lot of money. 11% … well, you knew that. But 11% across the board for all of the players. Now, do you represent any Major League Baseball players, Dave?
Dave Nelson:
We do, yeah.
Gary Determan:
You do? Do you really? Oh my gosh.
Dave Nelson:
Yeah. NFL guys probably more so, and a couple golfers. So that’s really interesting. Again, you look across the board and sports are a big part of my existence, what have you. And I was blessed enough to be able to make the journey as far as with the Hawkeye women, as far as all the locations, what have you. So I’m a little out of the loop as far as on a few things, so thanks for the insights. We’ll have to make some contact with a few people.
Gary Determan:
Well, I am just blown away by the fact that you represent players from the NFL, Major League Baseball, and golfers. How did that all come about?
Dave Nelson:
Well, it’s typically friends of friends. I think people are a little astounded sometimes when we’ll talk to them. They’ll get on the website and see that we’re licensed in, I think it’s now 44 different states. And so it typically starts with, you’re working with somebody that knows somebody that knows somebody. And people today, sad but true, are so paranoid … for a good reason. As far as who can I trust, who can I work with that that won’t run off with my money? I mean, all you have to do is turn on CNBC at night and look at the stories that they have. They have a program … and I’m drawing a blank right now. But it’s essentially showing criminals in various capacities. And half of them, Gary, are from our industry. This is an industry that supposedly is highly regulated, but depending on the capacity that you’re in, it may not be as highly regulated as what people think.
And so we go back to the importance of being a fiduciary. We go back to the importance of doing more than just passing a test to sell a product, that you need to know what the heck you’re doing. And so certifications in various areas are extremely important. And again, getting back specifically to the question. It’s typically, we start working with an individual. We’ve got, as you probably are well aware, an individual from town that’s now making big money down coaching for the University of Illinois, the women’s basketball program. It happens. And so you have a friend, and again, they refer you to somebody else and it just leads sometimes to various things.
I will say this, as far as that there’s … it’s kind of cool in some regards. But it’s also, many of them, when we first meet them … I don’t know how to say it nicely. But there’s a fair amount of arrogance and children in some of these adults. And they don’t realize the importance of saving, and so you try to be the parent, the overseer of the money. I mean, you’re wearing a lot of different hats. And so there’s a fair amount of coaching, this type of coaching, money coaching that comes into play as far as for that type of stuff.
So yeah. It’s neat, because again, we get access to a lot of other stuff that people don’t as far as access to certain games, what have you. And so that’s cool. And some preferred seating. We were in to watch the Cubs one day, and literally we’re sitting in the owner’s chairs, as far as my wife and I. So that was cool. So it just builds, I guess is the bottom line. If you take care of somebody, they know somebody that knows somebody. And so we’ve got a lot of good, good relationships out there all over the country.
Gary Determan:
Just continuing on this, and I’m just amazed, I am amazed at what you do. Having been in radio all my life, I don’t have a lot of money. But people who have have millions, how do you work with them?
Dave Nelson:
Yeah, it’s a challenge. It’s important, because again, they’re being peppered from a lot of different directions as far as, you need to work with me, I’m so much better and our investments are so much better, et cetera, et cetera. And what you find is as you move up the food chain, as we call it, what becomes more crucial is just the ability to communicate with them. And them knowing at all times that you’re always telling them the good and the bad. And you’re always going to tell them the truth on everything, whether they want to hear it or not.
And so our biggest individual case, as far as money that we oversee, is right around 50 million. It was 52. He’s bought a couple different things here and there, but 50 million. And then we’ve got accounts that are 100,000. So it ranges all over the place. The important thing is … we’ve had people through the year say, oh, we thought you guys were too big. And then other people that, oh yeah, you work with the average people. We didn’t think you could handle this type of stuff. So it’s all over. Perceptions are just wacky when it comes to our line of work.
And so the importance of, again, having a good team. And all of this comes back to having a good team. We’ve got a gentleman out in California that’s a billionaire. And we’re really, really close to having a pretty tight relationship as far as with him, and I think doing a lot of work with him. We have a CEO of another company that is on the doorstep of a hundred million right now, but some of it’s in fixed assets. So from our management perspective, we’re not dealing with … and I want to be careful on the wording here too. We’re only managing right now, I think for her, somewhere in the neighborhood of 12 million, I think it is. But at some point here in the next five years, it’ll be probably closer to a hundred million just because she’s selling off the private stock that she owns as far as for this one company and wants to diversify, et cetera.
But understanding the tax rules, understanding the estate planning issues, as far as in most situations. Understanding the family dynamics, understanding as far as what they want out of life. The people that have lots of money, you would think they would be more, I guess I’d say loose goosey with their money, many times really aren’t as loosey goosey as people would think. Many of them are terrified of going broke even though they have that much money. So it’s fun to work with them. There’s no question about it as far as the bulk of them, because they’re really nice people. And the perception that wealthy people don’t pay any taxes is bogus too.
I mean, it couldn’t be further from the truth. I know there’s thieves out there that lie about their tax situation, but I’m telling you, we’ve got probably, I would say we’re in the doorstep of 10 individuals that pay over a million a year in taxes. And some, well over a million a year in taxes. So I mean, again, there’s just a lot of bad information out there. We tell people all the time, we’re in the trenches every day, and so we know what’s taking place. And we’ve got a pretty good field, not just locally here. We’re in little Clinton, Iowa, but we’ve got clients … I mean, one of my biggest clients is in Atlanta.
He lives in a Four Seasons hotel. He’s got a condo in the Four Seasons hotel and this guy’s worth millions and millions and millions. And he’s a great guy and he’s a humble individual. The wife is a minister, he was a hotshot attorney. But they pay their fair share of taxes, I guess is the bottom line. And I don’t want to get into politics and I’m not going to, but the reality is that there’s just a lot of bad info that wealthy people don’t pay any taxes. I’ve got plenty that are paying a boatload of taxes as far as each and every year.
Gary Determan:
Visiting with Dave Nelson. We’re going to take a break for the weather in just a minute. Dave, but just one more thing as far as players are concerned. Because for the majority of them, especially I would imagine in the NFL, the career is so short, I would imagine taking care of their money that they’re making now is so important.
Dave Nelson:
It is. And again, I could drag this into a long explanation as well, but I’ll give you an abbreviated version. The pressure on most of these individuals is immense off the field as well as on the field. And what I mean by that is that the family, many of them have had this relationship with their buddies growing up that if we ever make it, we’ll take care of each other.
So we have one person that the day one when we met, had something like 30 some phone plans that he was paying for. So these are the pals from back in the streets where many of these guys grew up. And so I made it to the big time, I told these guys I’d help take care of them. So this is just one way of doing that, that they’re paying the telephone bill as far as for all these individuals. And that’s just one tiny example of many times what these people are doing.
Gary Determan:
Incredible. Again, we’re going to continue on right after the weather with Dave Nelson of NelsonCorp Wealth Management. Our 1545 weather, brought to you by Van’s Carpet Korner.
Morgan Strackbein:
Happy Wednesday. Still going to work through a couple of showers and thunderstorms through the morning hours. But by the afternoon, really going to dry those skies out, get some sunshine back into play. Temperatures are going to drop throughout the entire day today, a lot of areas going to drop to the low 50s and upper 40s through the afternoon. We are going to continue to see some breezy winds with gusts up to around 35 miles per hour as well.
Tonight going to be clear, a lot colder too, lows in the low 30s. This has been your Storm Track Eight weather update from meteorologist Morgan Strackbein.
Gary Determan:
Thank you, Morgan. Well, the temperature continues to drop. It was over 60 when I got to work this morning. It is now 48 at the airport. Fog, mist, breezy. They are listing visibility right now at the airport at one mile. West winds averaging 25. Our update brought to you by Van’s Carpet Korner.
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Gary Determan:
Financial Focus presented by NelsonCorp Wealth Management. First Wednesday, so we go to the bottom of the hour and Dave Nelson joining us by phone.
Well, Dave, that was an interesting first half of the program. What are we going to focus on here in the second half?
Dave Nelson:
Well, I guess the first thing that would come out of my mouth is what a joy it was as far as to watch the Iowa Hawkeye women play this year. My wife and I, we really got into it. After 26 years of coaching, much of which was at the varsity level, we didn’t have a lot of time as far as to do a lot of watching of basketball elsewhere. And shamefully, through the years I look at the games that you’ve announced as far as family members of mine, and many of which I either didn’t see a game or I saw one game of theirs. Because I’m coaching varsity basketball and you either have practice every night or you got games, and so it’s really, really tough.
So we hit the road, Gary. And we went up to the tournament as far as up in Minneapolis and watched the Hawks win that. We went out to Seattle, spent several days as far as out there. Watched a whole bunch of basketball out there, really had fun. And then we said, the heck with it. Let’s go down to the Final Four. And we went to the Final Four and it was just such a wonderful environment. Again, the game is just a small part of what takes place there. It is so cool as far as not just being entertained, but just being around some really high caliber, high quality individuals. And spending time and listening to their stories as far as what they’ve done, et cetera, et cetera.
So anyway, just wanted to get that in. And if anybody ever has an opportunity to do something like that, it’s certainly worth it. I don’t know if the Hawk women will make another run come next year, but we didn’t want to take chances. So we wanted to get on that bandwagon this year and we certainly enjoyed it.
Gary Determan:
Well, as long as they have Caitlin Clark, I think they’ve got a pretty good shot there, Dave.
Dave Nelson:
Isn’t she special? I mean-
Gary Determan:
Oh my goodness.
Dave Nelson:
And we won with class and we lost with class. And I just, I’m thrilled. She just sets the bar so high as far as just from a talent level. And yeah, I think as long as she’s around, we got a legitimate chance. She could keep you in a ball game as far as by herself, which is just stunning. Beyond that, we’ve gotten questions as far as what’s this going to mean as far as the politics of the day, which is taking place in New York and what have you, and we see what’s the good and the bad as far as there. And again, I don’t take sides on any of this stuff. All I know is that when clients are asking us questions, it typically comes back to what impact is this going to have as far as on my account balance.
And obviously there’s a whole bunch of stuff that we don’t know and there’s a whole bunch of issues that are still out there. Inflation, what is it at now? And again, you have some that are arguing as far as are these numbers even accurate as far as that are being reported, or is the deck being stacked and whatever. So I try to, again, stay out of those type of discussions. I’m not the individual out there that’s looking for every excuse to find some conspiracy, what have you. But the reality is this all impacts one’s 401(k) balance and IRA analysis, et cetera.
So again, we’ve taken a pretty conservative approach to it. We’ve been pretty lucky as far as that we’ve come down a fraction of what the market actually came down. We’ve been pretty lucky as far as we’ve had a pretty good run this year, knowing that we’re sitting with a whole bunch of cash as far as in clients’ accounts. We don’t think that the party’s over, that this thing’s just going to rocket up, but we’re still cautious in that regard. A typical person today that we work with … everybody’s different. I want to make that clear. But generally speaking, we’re probably between 30 and 40% in cash, which is as high as it’s been since probably going back to ’07, ’08.
So it’s really important that people pay attention to this stuff. It’s really important that they have someone that they’re working with that pays close attention to it and is willing to make the tough decisions. And the tough decisions typically center around, how do I protect the principle of the people that we work with? Because again, if it’s a 30-year-old, people make the argument that they can afford the ups and the downs. People make the argument for a 40-year-old, that. But again, I guess I could argue that and basically give the other side of the discussion there and say, that’s just stupid. Why would you want your account balanced to go down 50% and then have to make 100% to get back to where you were? That seems idiotic, from our vantage point.
But the folks that are probably listening today, and the folks that we work with aren’t 30 and 40. Those people are typically 50, 60, 70, 80. And those individuals don’t have a do-over. They’ve got to get it right. They retired, they have X number of dollars. They need cash flow, many of them, as far as from their pile of money, whether it’s a large pile or a modest pile, but they need the income from that. And so because of that, you need to listen and you need to do the hard work and make the hard decisions. And that is, should we be invested today? And if so, how much?
Because most people … and I think I’ve shared this probably on several occasions. But I’m a CFP. Which, supposedly in the world that I live in, is the benchmark. That’s the highest level, a certified financial planner. Essentially, it’s two years of schooling relating to money, income tax, investing, et cetera. I’m also a CLU, which is two years of schooling relating to estate planning and insurance. I’m also a CHSC, which is also two years of schooling, primarily focusing on cash flow planning. In other words, I retired, I’ve got a pile of money. How do I juggle this cash flow for the rest of my life? How do I manage that? How do I make the good decisions with that?
And so when we put them all together, what is so crucial is that people realize that when you have these massive movements, nobody objects when it goes up. But when you have these big movements down, what impact can that have on your tomorrows? And people today are probably looking at their account balance saying, can I make it? And that extra stress is really, really tough. Now, we go back to the early days, when I started, everybody had pensions. And so the pensions, there was no such thing as the 401(k), it was a pension. And the pension said that if you worked at such and such an age, here’s how much you’ll be sent every month for the rest of your life. And we’ll send it to your spouse as well, X number of dollars.
Well, those pretty much are gone, pretty much across the board. Most companies don’t have those today. If you have one of those, you’re lucky. The other individuals have to basically create their own pension, and we call those today 401(k) plans, mostly. There’s 403(b)s and a few other things, but big picture, it’s 401(k). And so you have to make good decisions as far as not only how much do I need to put into this thing. And people, oftentimes we’ll ask them, are you maxing out? And the terminology is confusing. So maxing out to them oftentimes is, are you getting the full match from the employer? In other words, a lot of employers, if you put in 6% out of your pocket, will put in three on your behalf. So you’re going to be able to create your own pension that way.
But you can go much higher than that. And a lot of people don’t know that, they thought 6% was the max. No, that’s the maximum to get the company match, but you can go to 10%, you can go to 15%. And oftentimes you should, and oftentimes you need to go to that higher level. Yes, nobody has extra money sitting around. I get it. I’ve heard all the explanations and whatever. And trust me, I’ve been in your shoes. There’s not a lot of extra money floating around. But we’ve got to be disciplined, because tomorrow’s going to come pretty quickly. And tomorrow when you’re retired, you can’t afford the mistake. And the only way that people are going to be able to have the lifestyle that they want tomorrow is they have to be very disciplined today.
So yes, it sounds like a lecture, but it is, Gary, so crucial. And it’s really crucial in periods of time like now, where the volatility is really high, the stress levels are really, really high. What’s going to happen as far as with Trump? What’s going to happen as far as with Biden, is he going to run again? Et cetera, et cetera. All this stuff is out there. And the reality is, to the average person it is, whether directly or indirectly, impacting your account balance. So our job is to, again, try to help people make informed decisions prior to big events taking place, and trying to put them in a position where they’re going to be okay.
And being okay oftentimes is giving up a little bit on the upside, while trying to take away a lot of the downside. And that’s pretty much the type of individual that, I think, they appeal to us and we appeal to them because we have a similar mindset. That being greedy and trying to get that extra 1% on the upside is probably a mistake, because it’s probably going to expose you to a lot more downside than what people would typically assume that would be doled out to them if and when that takes place.
Gary Determan:
Always interesting hearing from you, Dave. We’ve got a couple of minutes left in the program, so what are you going to be focusing on here in April as we get ready for spring and May?
Dave Nelson:
So taxes have been a big part of our discussions with client after client, after client. And we’ll be moving beyond that here shortly, as you said, in a week and a half, two weeks, what have you. At least I will, the accounting people around here, they’ll be quite busy as far as finishing up with some, probably extensions, what have you. People that didn’t have all their information. But going forward, again, I think the main crux is going to be centered around continuing to protect your capital at this point in time.
Most of the so-called experts out there said that the first half of this year could be okay. The second half is not going to be okay, because again, that term, that R phrase that I’ve used a ton, recession. The recession is on the horizon. Again, depending on how you define recession, we’re probably already in one. But the experts are predicting that, again, it’s going to be probably a little more severe as far as what most people are believing is going to take place. Subsequently, protecting your capital is going to be even more important as far as in the second half than it has been in the first half.
Gary Determan:
All right. Hey, Dave, thank you so much for your time. We’ll visit with you in four weeks on Wednesday, May the third. You take care.
Dave Nelson:
Thanks. You too, Gary. Bye now.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINRA, SIPC. Investment advisor representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor.
Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.