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:
A real pleasure to have in studio with us today, Dave Nelson. He couldn’t make it on the first Wednesday.
David Nelson:
Yes.
Gary Determan:
But here he is on the third Wednesday.
David Nelson:
I’m sorry about that folks. That’s [inaudible 00:00:53].
Gary Determan:
That’s all right, great to have you in now.
David Nelson:
Thanks.
Gary Determan:
Your father just recently had a milestone birthday.
David Nelson:
He did, yes, turned 90. Had a little gathering as far as, I say, a little gathering, 76 of us. Family members got together as far as up at Rastrelli’s and they did such a wonderful job. We had a wonderful day. All the normal goodies as far as up there, the pizza and the pasta, and it was just a really good time.
And yeah, he’s 90, mentally pretty decent shape. Physically, the body isn’t what it used to be. I describe it as 80% as far as the mental capacity would be my best guesstimate, and physically probably 20% of where he’d like to be. But, yeah, it’s quite an accomplishment. Mom’s 87, Dad’s 90. People say good bloodlines, we’ll see about that as far as this guy.
Gary Determan:
There you go. You got that going for you.
David Nelson:
I’m doing what I can as far as to try to stay fit, whatever, but you never know. So anyway.
Gary Determan:
You come from a pretty good size family.
David Nelson:
Yeah, yeah.
Gary Determan:
I would imagine with the grandchildren, I would imagine there’s great grandchildren as well?
David Nelson:
Sure, there are, yes. Yeah, it was really nice. Again, 76 of us, and we had three that were missing. Almost everybody else made it. My nephew, Brian Peterson, who some of the folks out there probably know, Petey, he’s coaching up in the Dakotas and, as far as basketball, so they’re kind of getting after it these days. And so for him to get away to come down here wasn’t going to happen. So we totally get it, it’s part of the job description. And so anyway, he checked in.
And the biggest surprise was my mom made a big deal out of… So dad has two siblings, a younger brother, Dick, who ran Nelson Auto Electric for a number of years, 40, 50 years, I’m sure, at least, who’s in his eighties. And then a sister that’s 75 years old, and the sister’s been down in San Antonio for, I don’t know, 40 years, 50 years, something like that. And anyway, she popped up here.
And my mom was making a big point that at two o’clock we got to get on the phone and we’re going to call from the party as far as to talk to Aunt Vicky and she’s going to wish Dad a happy birthday, whatever. Well, I walk in as far as with Dad, and out she pops. And he was just so pleasantly surprised. Mom was shocked. I was shocked when I saw her an hour prior to that. But anyway, Dad, it was probably the most moving part of it. The kids, the grandkids, all this was really special. But the big surprise, somebody he hadn’t seen in over 20 years made her way up here. So it was really, really a special moment as far as for him and I think the entire place.
Gary Determan:
Well, that is great. I did not realize Dick Nelson was his brother.
David Nelson:
Yeah, exactly. Yes.
Gary Determan:
I called on Nelson Auto Electric and I’d never put the two together.
David Nelson:
Yes, that’s the brother. Yeah, Dick, great guy. I mean so handy and still just active as can be, and never guess he’s in his mid eighties. But yeah, he’s chugging along and doing great. And Dad went in the military, came back, and the place was kind of, I guess I would say full, because Dick was working with Grandpa and they just didn’t need extra heads necessarily.
So he went down the path and started working with DuPont back in the day. Worked there for 44 years, I think it was, 45 years, something like that. Anyway, that’s the family. And Mom was the travel agent. I hear that from people occasionally as far as I used to travel with your mom. And some are kind of surprised when they’d hear that, oh, that’s your mom, huh? And probably through the years, I bet there was no less than probably 20, 30 people that said, oh, so that’s where you get your gift of gab or something like that.
I say, “Well, honestly, I get home and I don’t want to talk.” I said, “For eight to 10 hours every day I’m talking, and I don’t have the gift of gab.” It’s part of my job description, so it’s what I need to do. But I get outside of work and I just as soon sit in front of the TV, get on my computer, whatever. But it doesn’t seem to work that way.
Gary Determan:
It’s kind of the same with me. I talk all day, I do sports, and then when I get home, I really don’t say a whole heck of a lot.
David Nelson:
Yes, exactly, exhausted.
Gary Determan:
And now when I talk to my children, I interview them, because I do so many interviews.
David Nelson:
That’s awesome.
Gary Determan:
It’s more of an interview than a conversation.
David Nelson:
Yeah, that’s good, that’s good. Nothing wrong with that.
Gary Determan:
You, of course, last year fell in love with the Iowa Women’s Basketball Program and you were out there Sunday.
David Nelson:
Yes, yes. Boy, what a thrill. I mean, if folks aren’t aware, the Iowa Women basketball team played at Kinnick Field, which is the football field for the University of Iowa. And they set up a court and I mean it was big time, showtime, as far as out there.
And yeah, my daughter, number two child, bought a couple tickets for me. So I brought my granddaughter Sophie, who’s 12 years old and really into sports, and really loves basketball. She knows all the players, she knows most of the competitors as far as the big time players and the Big 10, she’s into it. And so I said she’d be a perfect fit. So we went out there and we just had a great time. We were one of 55,500 and some people that were sitting attendance. It was just exciting. We had good seats, we got to see them fairly close. And as you said, we got into it.
I’ve enjoyed it in the past, but the problem is when you’re coaching, number one, you can’t go. And even getting and watching a game, most of their games it was impossible because I was in a gym someplace. Whether it was ours or we were on the road someplace, as far as for a lot of their games. So last year is the first year that I was done as far as coaching, and not in any capacity as an assistant or just a helper or anything. I was done, done. And so we attended six games. I had a really good time as far as doing that.
And then the Big 10 tournament came around. We said, should we go? Yeah, we went. We had front row seats, we got there early, stood in line for hours to get tickets because there wasn’t assigned seats. It was basically first come, first serve. So we had a great time doing that. We went to Seattle and watched them as far as in the regionals.
And then we said, what the heck, let’s go to the final four. And we had sixth row. Sixth row as far as behind the bench, as far as in Dallas. So it was a thrilling time. Again, I love basketball. I don’t know why. I mean, our family, it wasn’t beat into us at an early age by any means, but all of us seem to really enjoy the game of basketball. And having coached girls, women’s basketball, what have you, it just kind of felt right. And I started, I guess I’m, I have three girls, I have a very outspoken wife. I have many, many, many girls as far as grandchildren. So I’m a huge advocate for more fairness and whatever as far as them.
And again, having a player like Clark that I was, superstar player, if you don’t know. She’s a total, I mean, she could almost play with guys, she’s that good. And so we go watch and it’s just thrilling. So we’ve got season tickets this year. We’re going to be taking in, probably most of the games. I don’t think we’ll hit them all, but we’ll probably catch most of them. So it’s thrilling times. So we love it.
Gary Determan:
Before we take a break for the weather, let’s talk a little bit about finance.
David Nelson:
Yes.
Gary Determan:
Name, image, likeness.
David Nelson:
Yes.
Gary Determan:
And Caitlin Clark is really cashing in on that.
David Nelson:
Yeah, she is. And for those that don’t know, college athletes couldn’t get paid up until, I think it was roughly a year ago, a year and a half ago, whatever it’s been. And this Caitlin Clark has just captured America. I talk to people outside. I traveled to various events. They hear that I’m from Island. Oh, do you like the, we’ve got guys that probably could care less about women’s sports as far as prior to this gal and the impact that she’s had. And again, you don’t know, she shoots shots from almost just a step over half court and she’ll let it go, and she makes a decent percentage. It’s not like she’s just throwing up garbage. And she’s really competitive. So anyway, she’s, yeah, I think it’s north of 4 million bucks that she’s making a year right now. State Farm’s the most recent, I believe. Go ahead.
Gary Determan:
And so she has got to have some financial advisor or somebody like that, have you?
David Nelson:
Yes.
Gary Determan:
You were at a ball game, did you give her a business card?
David Nelson:
I would like to, it’d be nice to have her as a client just from, just helping them out. Dad and Mom are really intense. They always have the camera on them as far as at games and whatever. They’ll flash it on them and just you watch the intensity in them.
But this girl’s paid a price. I mean, people talk about it. They’d say it about Jordan that, I mean, he’s just blessed, the guy had a big body and he was just. No, no, no, no, you don’t understand the sacrifices that these people go through to get to this level. And she has certainly paid the price.
And yeah, we would love to have her. I just hope that she’s being taken care of by the people that are working with her, that they’re doing it right. And I hope that the people around her, and I don’t know if she has an agent or not, I suspect she does. Sometimes you see situations like this where it’s apparent, but I don’t think she has that in her situation. So hopefully they’re taking good care of her.
Gary Determan:
I know we’ve talked about this in the past with athletes and money, and it really can be a problem for some of them.
David Nelson:
It is. And, again, we’re firsthand as far as football players, NFL football players. And we’ve seen some of the destruction there as far as without good mentoring. It’s not that these people aren’t bright, it’s just that they’ve never dealt with it. And you get a lot of money in a very short period of time. And so making good decisions with it is really important.
And the problem that many of them face is that they kind of, growing up, all their buddies were competing as well. And this was the lucky one that made it. Lucky, this was the one that made it, I should say. And they feel indebted to some of their pals. And we’ve had some that have thirty three, thirty four different phone bills that they pay per month as far as for their pals. So anyway.
Gary Determan:
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Gary Determan:
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Gary Determan:
Again, continuing with Dave Nelson to the bottom of the hour. We were just talking during the break about someone just won the Powerball, one individual, over a billion dollars.
David Nelson:
Yes.
Gary Determan:
Now I play the Powerball, but when it gets that big, I am a little hesitant to play because I wouldn’t know how to handle it.
David Nelson:
Sure. Well, most people won’t. And for somebody to say that they’d absolutely make the best decisions, you don’t know until you’re there. But I will say this, that their lives are turned upside down and most likely they will be very unhappy people as far as with it. They think they’ll be happy, and financially they’ll be happy, very short term. But the amount of problems that come along with that, you look at it, where’d we top out, was it one five?
Gary Determan:
Yeah, something like that, over a billion.
David Nelson:
Okay, so a billion five and the payout was I think somewhere, which everybody takes as far as the lump sum, and I think that was like six or 700 million. And then you carve that in half because of federal income tax. And I think this one was California, wasn’t it?
Gary Determan:
Yes.
David Nelson:
So that’s 14% out there, plus 42, so it’s more than half that’s thrown out the window in the form of income taxes. So that person sitting with, sounds like a billion, it’s not a billion, it’s probably closer to 250 million net net net numbers, as far as what they get. And then each year, whatever earnings there are on that block of money, there’s going to be taxes as far as paid.
But every person in the planet is going to be asking them for money. And putting up the shields, they’ll have to move, they’ll have to have security. They’ll have to have, I mean, there’s a lot of stuff that comes along with it.
Again, people can say what they want. And I’ve played the Powerball, I’ve played that a couple different times. I’m always hesitant. Again, the industry that I’m in, it’s kind of like a priest. They have to be real careful in what they do and don’t do. I feel like I’m the same in many ways that you got to be careful. You’ll never find me in a casino.
Anyway, so that’s the backdrop. I was buying a ticket, this was probably five years ago. And there was a gentleman over in Fulton that I’ve known for 50 years, and he saw that I was buying a ticket and he says, “You don’t need that. You’re doing well as it is.” And he used different terms than that.
The bottom line is, I said, “Well, my objective is to get it and to hopefully change the world in a real positive way. I would not take one penny. I’ve already got it all mapped out in my mind as far as what takes place. It goes into a donor-advised fund, which is a fancy way of saying go into charity. And then the money’s doled out over the next a hundred years as far as the income and whatever from that.” And again, selfishly, the lion’s share of it would make its way back into this community. Clinton’s treated me well. I’ve lived here pretty much my whole life. That’s what would happen.
Now, most people aren’t going to do that. So they’re going to have the stress of people jabbing them for money. And you’ve got enough, I am in this crisis. I need some money, blah, blah, blah, blah. And some of them will be legitimate and many of them won’t.
And so it’s a fun idea, it’s not so fun probably living through it. Don’t get me wrong, I’ve never lived through that type of experience, but I think the answer is to make a difference in the world. We tell people all the time that money is either a blessing or a curse, and there’s no middle ground. And I truly believe that.
I mean, we’ve seen people as far as with lots of money that are miserable. And then we’ve seen people with lots of money, we’ve got a person that we’re currently in the early stages of working with that’s in Wyoming, and this guy’s a billionaire. And the bottom line is, and he has a billion, it’s not a billion like the lotto that turns into 250 million because of taxes, et cetera. He has a billion and he’s one of the happiest people that I’ve ever been around. But whether he had a billion dollars or whether he had a hundred million, I’m guessing his life would be exactly the same.
Most people can’t say that. And people that don’t have money oftentimes are unhappy, but I’ve seen people that don’t have money that are very happy. So I think it comes back to the mental state that you find yourself in. And we try to help coach people as far as in that regard, and try to help prepare them as far as family members that are going to be inheriting a fair amount of money.
We did it this last Friday at 7:00 PM. We’ve got a client out south of Iowa City that’s north of a hundred million as far as net worth. And we’ve got the two children that will be at some point inheriting a whole bunch of that money. And we’re coaching them as far as on the phone through a zoom call. And it’s important. And, again, remember it’s a blessing or a curse, and most people say, I’ll take my chances with a blessing, so give me a whole bunch of money and I’ll see. But again, there’s a lot of people that have lots of money that are unhappy, I guess is the conclusion.
Gary Determan:
Again, visiting with Dave Nelson. Now, were you wearing black when you were talking to these people?
David Nelson:
Yes.
Gary Determan:
We had talked about that before.
David Nelson:
Yes, exactly.
Gary Determan:
Because you got to pay the bad guy sometimes.
David Nelson:
Yes, exactly. And, again, parents don’t oftentimes want to do that. Parents oftentimes don’t know the importance of doing that, because they don’t realize. Like this gal, she said, “It’s like monopoly money.” She says, “It doesn’t even feel real.” So it’s a husband and wife, but she’s the one that made it, so that’s why I reference her.
But anyway, it doesn’t feel like it’s really their money. And, again, in some ways it isn’t because it’s in a privately held company. It’s not like they can convert it into liquid cash tomorrow. But over a five year period of time, they will be able to liquidate and be sitting on a fair amount of money.
But it’s not a part of the job that I really necessarily enjoy, don’t get me wrong. But it’s a really important part of, as we tell the kids, oftentimes, we say that we work for mom and dad, we don’t work for you. And the bottom line is that this is the plan we put together. And notice we didn’t ask your permission. This is what we decided that’s best for them.
And ultimately you’re coming into some cash. And the bottom line is we want to make sure that you’re going to make good decisions with it. And we’re starting the process now so that we can test you. And so, again, they may not like that, but the bottom line, that’s exactly what takes place.
Gary Determan:
Well, I would think that, my goodness gracious, that would be difficult.
David Nelson:
And, again, if you look at it from the kid’s perspective, in this situation, there’s 10 million of insurance we know. And for those that don’t know life insurance, if you own it yourself, it’s included in your estate when you die. Subsequently, you may not get the full amount, the beneficiary may not get the full amount.
So in this situation, we set up what’s called a special type of trust that owns it. So the kids each are coming into 5 million from that. We know that for a fact, that is an irrevocable decision. It’s the rest of the money that we’re now testing them as far as on. And so we’ve gifted some money as far as to the kids, we’re coaching them as far as how to invest it. We’re making sure that they’re putting money into their own retirement plan, even though they won’t need that because there’s going to be enough other money, in all likelihood. But we want to make sure that people understand.
And then it’s just trying to drill down to say, do you really understand how lucky you are? And do you realize how many people are out there that aren’t that lucky? And so a giving a percentage is part of the deal as well. We set up, again, these what are called donor-advised funds. And they’re essentially a bucket of money, you put it in, you get a tax deduction. And then you can dole it out to any charity that you want over a year, over 10 years, whatever it is that the case may be.
So we’re testing them as far as that regard as well. And I say I’m giving the client the advice, and ultimately it’s their manner in how they handle it and the decisions they make based on how the kids react. It’s not my money, it’s their money, but we’re just giving them advice as far as what we think from other people’s experiences.
Never forget this quote folks, it’s really helped me a lot. And it’s, I think, applicable certainly in this situation. And that is that fools learn from their own mistakes, and it’s much cheaper to learn from other people’s mistakes. So we try to emphasize that to people. It’s true. We try to give them real life type experience from other individuals, and hopefully that they can make good decisions with their money.
Gary Determan:
Been visiting with Dave Nelson, down to about the last three minutes or so of the program. So we’re getting toward the end of the year. What do people really need to be looking at right now, Dave?
David Nelson:
I think the big thing for most individuals is, if they own mutual funds, what type of distributions, capital gain distributions, are they going to be receiving? We’re using some really cool technology and when we get together with clients as of about a month ago, moving forward, we’re going to have this analysis basically looking at their situation. If we have all their data, in other words, we’re doing their taxes. We’re going to have a snapshot of last year. We’re going to have a rough snapshot of this year, and can we make some strategic moves to minimize their tax liability or just improve their situation?
And we’ve never had anything like this. This, again, comes back to the importance of this relationship on the accounting side, having that data to be able to help people make better informed decisions. Because a lot of people, I think, are going to find out the hard way, this year started out things were pretty good. And if you’re in mutual funds, chances are the mutual fund team, the managers of that portfolio, probably were doing some shaking and baking, which is a fancy way of saying they probably were buying and selling a whole bunch of stuff internally.
Well, that internal swaps that they made will flow to the consumer, and the bottom line, the investor, and they may be looking at some tax liability. Don’t forget about making your 401K maximum contributions. Don’t forget about the IRAs. Seriously consider the Roths, the Roth IRAs, the Roth 401Ks. They can make a big, big difference as far as come tax time. And, again, get with your people. If you don’t have people, pick up the phone, give us a call, we’ll try to help you out as best we can.
But, again, it comes down to take home pay. It’s not just the gross rate of return that you made, it’s what you get to keep that matters. And so we spend a lot of time talking and discussing tax situations with people and how to improve their situation best we can.
Gary Determan:
And one final thing. Of course, we are nearing the holidays and I know you folks at NelsonCorp Wealth Management are so generous at this time of year.
David Nelson:
The big box is out, folks, so stop by, drop the gifts by. We’re going to be matching. We’re going to be doing a whole bunch of stuff. There’s a lot of people, again, my quick soapbox, there’s a lot of people in need out there, kids that don’t have what we had growing up. And we want to make a difference. And we hope that you’ll participate and help us as far as to make some lives a little bit better for those individuals out there.
Gary Determan:
All right, great to see you. We’ll see you again in a couple of weeks on All Saints Day, November 1st.
David Nelson:
Sounds good.
Gary Determan:
Talk to you then. Thank you.
David Nelson:
Thank you, Gary.
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.