10/29/26 Tech's Good, Bad & Ugly: Scams, Layoffs, and the Price of Progress

The Moneywise Radio Show and Podcast Thursday, October 29th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com https://www.moneywiseguys.com/ facebook: Moneywise_Wealth_Management https://www.facebook.com/moneywiseguys/ LinkedIn: Moneywise_Wealth_Management https://www.linkedin.com/company/moneywise-wealth-management-bakersfield/ The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

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  Live from the basement inside the historic Woolworth Building in downtown Bakersfield.

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  Call or text in at 661-396-1000.

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  Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.

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  Now, let's start the MoneyWise Show.

• 0:41Speaker 03

  That's right. Welcome to the MoneyWise Show. We are live from the basement of the historic Woolworth Building in downtown Bakersfield, which is right now is being prepped and readied for the trunk or treat around the corner. BPD or maybe the city office getting ready. There's a lot of action downtown, man. It's crazy being down here. There's

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  There's a lot that goes on.

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  Power outages.

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  That fried our server, correct?

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  I did it really?

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  Yes. That's why we can't scan. Now, don't worry, MoneyWise clients, everything is backed up. But no, it did something to where I guess the surge protector didn't do its job and has caused

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  Ba-da-boom, ba-da-been, huh? Technology, technologia.

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  Technologia. Yep.

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  Oh, you gotta love technology. There you go. Well, um, yeah. So anyways, we are, we are here. We are here 96.1, 1230 AM, KERN, streaming live at MoneyWiseGuys.com. You can call or text into the show 24 hours a day, but we always love it live. We love those live callers. 661-396-1000. Call and talk to Steven over there. I'm your host today, Chris Pelster and

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  Seth Perry.

• 1:51Speaker 03

  Seth Perry. Sometimes we're on together. Most of the time we're on together, but it has been a while. You know, uh, most people don't realize this. Our, our radio show has been on the air for over 20 years. Kudos to the team. Kudos to Steven for always being there. Um, Brian Wiley, Gero Ellis, Dave Maynor. I mean, some of the old school names, you know what I mean? Going back there. But, uh, but we actually run a financial planning firm.

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  That's right.

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  Wealth management. We have wonderful clients and their families and business owners and we love them dearly and we, we try to work hard for them every day. And then run down. Now we run down. We get in the elevator. I mean, how weird is that?

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  I've carried a couple of clients up to the second floor. Chris, have you done that?

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  Was the elevator not working or something?

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  No, they just asked for it. I said, yeah, I got you.

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  You have piggyback rides?

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  Yes.

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  Going above and beyond.

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  You have clients asking for that?

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  Yes.

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  There's no shortage of service at MoneyWise.

• 2:48Speaker 03

  Excellent. Well, there you go.

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  A little reverb helped. Yeah, the reverb, yeah.

• 2:52Speaker 03

  Yeah. Yeah. We won't mention all of Seth's back issues. But anyways, um, so, uh, before we get into, we actually don't have any guests today. So I'm really excited to just talk about some things, go over some things. We got some great questions. So again, you guys are what make the show great. 661-396-1000. Again, throw those questions in there. We got some good stuff to go over, but we did want to go over the markets. Markets are red on the screen. There is a little bit of a sell-off going on. Uh, no, no reason to panic. We always try to make you listeners and clients money wise. Uh, but yeah, there is red on the screen today. We are, we are not done with trading today,

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  but the major indexes are in negative territory, not major, uh, but they're, they're red on the screen. So the S and P 500 is 7,026. It's down about point two, three percent. The dumb Dow, we call it, the Dow Jones is at 52,364, down about point two, about the same. NASDAQ tech stocks, where we're seeing some of the movements.

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  Technologia.

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  Technologia.

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  There you go. It's the technologia, uh, index or composite. It's down about 1.1%. And actually we had a comment from a listener come in and say, man, what in the world is going on with the Dow? Well, again, that's why we just called it the dumb Dow. It's 30 stocks. It's price weighted. And what that means is a bigger stock has a bigger impact on the index.

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  Which doesn't necessarily mean a whole lot.

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  Correct.

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  Maybe they're getting ready to do a split or they, you know, it, it is a dumb index, but it's a general, what I like about it is that they, they pick and select from little, little pieces of each of the major industries. So it is, it is a reliable index, but prefer the S and P.

• 4:43Speaker 03

  Yeah. Well, and one of the reasons why people have looked at it for a long time is because there are companies like Caterpillar on there. And so it's a real quick synopsis. Uh, you know, the thought process is if dirt is moving, if Caterpillar, big earth movers are selling, uh, probably good things are going on in our economy, right? If, if caterpillars are, are going up in value.

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  Yep.

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  You know, so kind of a simplified look at it. And then that's why we do call it the dumb Dow though, because we just mentioned technology is, is having a little bit of a sell-off. Well, lo and behold, what else is part of the Dow? Google.

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  Yep.

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  And Google is going under a little bit of a sell-off right now.

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  Google, I was, I

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  Yes. Yes. That, that's when you know you have the best producer in all of the business. Just seconds ago, I said, hey, man, can you get some Wild West music to queue in? For Google, it is the Wild West. It's one of the wildest trading days in history for that company. It is down 12%. Lots, lots going on. And what's happening is the market is saying, okay, you guys are still investing all this money into AI. What are you going to do about it? When are we going to see the returns? And we are seeing the returns, but there was also the other really big news yesterday, Chris.

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  Which is?

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  The massive, and I mean massive layoffs at Microsoft.

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  Right.

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  60,000 employees were offered a severance package of some kind, and then they're doubling and tripling and quadrupling down on their AI infrastructure. So we're seeing now with one of the majors, and we're seeing it more and more, this massive shift in our workforce and, and how business is done and

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  And so, uh, percentage, percentage wise, 60,000 is a humongous number because most of us don't work at companies that have anywhere close to that. What is, was it 20% of the workforce?

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  I'll, I'll look that up right now. I remember, um, Halliburton, at one point we ballooned up to like 70,000. So I just like, that's like the entire global, I mean, that's massive.

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  I forget what the, uh, what the employee count is at Microsoft, but yes, obviously humongous news. Um, I've been telling people and, and love it or hate it, it's one of those reasons when I talk to clients about why they should own stock or, or be invested in these different things. It's like, there's this challenge because it's both scary about these technology changes, but guess who benefits from like AI? Guess who benefits from, uh, being able to still create, keep, uh, revenue and profits up and, and they're confident that they can do what they're doing with 60,000 less employees, which means way more profit. And so the winners are stock owners.

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  If you own Microsoft and you may think, well, I own mutual funds. Well, there's a very high probability that you're, one of your top stock holdings in any of your growth funds. One of them is, is Microsoft.

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  Yep.

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  And one of them might also be Google. So unfortunately Google's going down. We just talked about that. There's ebbs and flows and different things, but you want to participate in some of these changes that happen in our economies. And the unfortunate thing is, is you might be somebody that is negatively impacted because of your job, because of AI. But if you have investments and stay invested, you get to participate in the value increase in your stocks. And I am not discounting anybody going through job changes or job loss because of some of these changes. It's devastating. I myself, the financial advising industry is changing big time and going through, uh, changes, you know?

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  I mean, all of us are being impacted. So not wanting to take away from anybody, but one of the ways you can still win, you go through a little bit of a transition in, in your job, um, and hopefully you can hold on to as many of those investments as possible. And as companies like Microsoft are able to continue to move forward with 60,000 less salaries, that they're going to be worth more.

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  And I stand corrected. It's a little bit of a, for now, voluntary buyout has been offered to 26% of their employees.

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  Yeah.

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  That's how, that's how big this is, right? And so I'm like, if you're in your, I don't know, even my age, 46 or 50 or mid 50s, if they're offering you this buyout, what would you think? I said, well, hey, how much, on average, how many Microsoft shares does each employee own? 350 shares. And this comes out on their annual report. It's probably heavily skewed, you know, to executive level and everything, but you figure that's like another 143,000, right? So they're getting offered a buyout plus this.

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  It'd be a tough one to pass up.

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  Yeah.

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  Cause the writing's on the wall. These probably are not going to continue to be voluntary.

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  Yeah. And this is the, the good and the bad and the ugly of, of our economy and, and technology as it changes. And all of us out there probably have complained about like government waste at times and this and that. Well, this right here is the economic reality of a company that's going, hey, I think we can keep moving forward with 20% less of our workers.

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  Yep.

• 9:55Speaker 03

  So if you've ever walked into a government agency or maybe a company that's just like, man, they have four employees sitting there doing nothing. Well, with AI and some of these technology increases, this is unfortunately what happens. And so again, uh, one of the biggest things that we've also talked about in this, uh, you know, on this show for a long time is investing in yourself, uh, educating yourself, having skills and, and, and, uh, abilities that make yourself marketable in our economy. And it's very challenging right now because there's many, many changes taking place and, and it can kind of seem like, you know, you chase one thing and you know, like forever, we were telling kids to, to learn coding. Well, AI is definitely stepping into the coding world. And so, uh,

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  And then it's hammered to the young people. I used to do it. You know, the value of college, you show them the figures, you get a college degree. This is how much more you're going to make, but all of that is changing. We're seeing this with our own clients, shifting their whole mindset and perspective. And as an advisor too, around how much are you putting into that 529, right? Now you'll still get the, the growth, but if it's not used for secondary education, then you've got some penalties you have to then deal with, right?

• 11:00Speaker 03

  But it can also go towards, uh, trade schools.

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  Yeah, absolutely.

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  And so that's one of the things, you know, like

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  Accredited

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  Mike Rowe and Dirty Jobs for years has been screaming from the hillsides for 10 years, 15 years now. Um, and I'm not saying everybody can just shift gears and go to more of a manual type or, or trades type of a career. But definitely for somebody younger that might feel like, man, I have no clue what, what, what direction to go. If you can become skilled in a trade and then also educate yourself on how to run a marketable business and skill. That man, that's, that's a lot of potential there, but you also have to know.

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  Five to eight years, you could probably become not a complete expert, but you could become so knowledgeable in your field. Let's say you, let's say, uh, uh, uh, someone working at Microsoft is like, you know what? I'm going to get into the trades. I'm going to get into plumbing. Right? And they're gonna, they're gonna struggle initially probably with the pay and everything, but if they do a good job and a lot of these plumbers, they get, they get incentivized. If they sell a, you know, they go out and they've got a couple leaky valves and they're like, hey, you realize you're going to get some pinhole leaks. We've seen this in your neighborhood because you're using this, this old, uh, Chinese copper. Then you might sell Marie pipe for 15 grand and then you get a commission on that.

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  And then, but basically you do that for a few years and then open your own business. You know, give it a shot. I, I think, and it's rewarding work. You get to get outside, fill the air, fill the elements, get hot, get cold. And there's huge parts of my old job that I miss for sure.

• 12:34Speaker 03

  Yeah. So, uh, the Fed did, uh, vote on Wednesday. Um, they voted 10 to two to maintain its benchmark of interest rates between 3.75 to 4%. Uh, inflation obviously remaining a concern. Markets are watching for another potential rate increase in December. Uh, so that's going to be a little bit of a, a headwind, uh, for the markets and, and the economy. Uh, third quarter GDP grew at an annualized 3.4% while, uh, PCE inflation reached 3.1. Challenging combination for the feds, but it is a resilient econ- economic alongside persistent price pressure. So, uh, some of these things are going on. You mentioned Google and the big pullback there.

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  We're seeing technology take the biggest hit today with the NASDAQ down over a percent. But even with today's volatility, the S and P 500 remains up nearly 13% for the year. Uh, even if you look back 12 months, uh, it's up 12.9, uh, or 12.1. So actually what that shows you is November and December of last year was a little bit of a pullback. So the year to date is actually up a little bit higher than the 12 year mark. Normally that's not what we've been, uh, kind of talking about, but the 12 month mark is a little bit lower than the year to date. Again, alluding to the fact that November and December was a little bit of a pullback last year.

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  And we're on the, we're on the eve of the midterms too. Well, if there's been some, you know, well, this comes up in reviews or when we're just chatting it up with clients, you know, so, so what, what, what do you think's going to happen? What's your prediction, right? We can always look backwards. We don't know exactly what's going to happen, but you uncovered this phenomenal statistic that every midterm election since the Great Depression, the next year, so one year after the midterms, the market is up. Historically, after every single midterm.

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  Right.

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  We are not saying that's what's going to happen, but you can rest assured knowing that if it goes left or it goes more right, you know?

• 14:32Speaker 03

  Yeah.

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  The stock market's going to be all right.

• 14:35Speaker 03

  Yeah. And one of the, one of the reasons we've always said that is what the market doesn't like is uncertainty. So whether you think left is better or right is better or whatever, uh, what the market likes is certainty. Okay. This is what it is. It is what it is. And usually the market, I shouldn't even say usually historically it's been positive 12 months later. Uh, so you can at least, uh, take that, you know, uh, for what it is. Like I said, it doesn't guarantee what's going to happen over the next 12 months after the elections close. Uh, but, uh, but yeah. So, um, why don't we take a, well, it's already 1220. Let's just keep rocking and rolling because we had this come in here. And, uh, I don't know if they were talking about AI yesterday or something like that, but it says, do you pay for the AI you use daily?

• 15:19Speaker 03

  Or if it's Claude or AI? And so, um, we have definitely, um, instituted using AI. We have a, a note taker technology that has helped us, uh, be able to be a little bit more present with our clients. Cause it helps, uh, keep, keep notes for us, uh, while we're talking to our clients about different things. We also use it in our searches because it does help clean things up and bring.

• 15:42Speaker 00

  We pay a premium for it because we need a, a highly, highly secure, closed system.

• 15:47Speaker 03

  Correct.

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  Can't be hacked and we pay a premium for that to protect our clients.

• 15:50Speaker 03

  And so, I mean, basically that's what the question is, do you pay for it? There's free services. There's free ones you can use, but when you're not paying for it, basically what you're, what, how you're paying for it is your searches and your technology, or not technology, your information you're giving the, the, the system is that's what you're paying is you're giving them information. Uh, and so if you're not wanting to give information to the, the, the, you know, AI world at large, you pay for closed systems. Or you pay for, um, you know, unique to your office type systems. And so, yes, and then some of the more, uh,

• 16:29Speaker 03

  advanced AIs, if you're wanting the latest and greatest ones that are coming out, you're having to pay for those systems. So if you see some of the, uh, you know, this new version of Claude or whatever can actually do, uh, cartoons, you can tell it to make a, basically a movie. And it will literally make a movie for you to where the more original versions might be able to redo a picture.

• 16:50Speaker 00

  There's actors that are nervous, man. I've heard of this and I've seen them being interviewed because they're, they're going to be able to generate these phenomenal. I don't know if they have done one yet. Listeners, correct me if I'm wrong. I don't know if there's been a fully 100% AI produced movie yet. But at some point, it's not going to be best AI film. It'll be best AI actor. Like they'll create some actor or actress. It's just, it's just wild, but we, I do use personally, I use an upgraded GPT and it does give you more advanced AI capabilities. It is, it just calculates things quicker. It uses bigger, uh, language models, I guess. You get higher limits. And then also uploading and analyzing documents.

• 17:32Speaker 03

  I, uh, I'm actually kind of surprised to hear you say that you use it and you're not in a relate, relationship.

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  You know what, Chris? So I wouldn't call it a relationship yet.

• 17:45Speaker 03

  Okay.

• 17:45Speaker 00

  But it's, I guess it is.

• 17:49Speaker 00

  I am in a relationship. I am in a relationship. I, I just make sure I always am very polite. Please, thank you.

• 17:56Speaker 03

  I'm the same way.

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  Ha, ha here and, and we laugh at each other, me and chat.

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  I saw an AI generated, uh, meme thing the other day that was, uh, Arnold Schwarzenegger crying and it was Sarah Connor found a new chat GPT robot.

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  That's tough.

• 18:13Speaker 03

  Anyways, uh, yeah, it's definitely, like I said, it's, it's scary. Some of these unknowns, there's definitely, um, I will say this. I got the privilege of listening to a guy that was part of the creation of OpenAI. Uh, very, very smart individual. And he spoke at a conference that we went to a few months ago. And, um, he, he definitely does not, he's not like a naysayer now and like, oh, I've created this thing and now it's going to kill everybody and it's going to kill the world. But what he did say is, is AI is, it's going to give humanity the tools to do either great things or horrible things.

• 18:50Speaker 03

  It's going to give us the ability to use AI to like increase, uh, medicine, figure out ways to solve problems that, that make realities that shouldn't be like the fact that I can Uber somewhere for $12, but then if I'm having a medical emergency, it's going to be $14,000 and could put me in bankruptcy.

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  Yep.

• 19:09Speaker 03

  He, what he's saying is we could use AI technology to, to right some of those wrongs. Like why, why do we?

• 19:16Speaker 00

  Businesses are faced with it. Think about it. You're a pharmaceutical, you're, you're in the medical industry. You're a massive hospital conglomerate. And they have to, they have to make that tough choice of these, because you know, Microsoft's doing it. They're kind of. Carving the path of what these companies are going to do, they're going to do these massive layoffs and then, and then switch over. It will become cheaper for the customer, but that's it. We live, I think, our age group. So we're forty six years old, right? So I think if you're around our age, they're going to look back at history and see that our generation has gone through the most radical change more than anyone because we didn't have, I didn't have a cellphone in high school. You, a couple of guys might have had pagers. I don't know if you had one. I wasn't dealing any drugs, didn't have one.

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  Nine one one.

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  Yeah, these kids don't even know what pagers are, right? But I mean, cassettes, V H, V H S, right? And then DVD, then Blu-ray, and then look where we are now, right? The old LaserDisc. And carbureted vehicles, everything's electronically fuel injected and it's just wild, man.

• 20:18Speaker 03

  It's been a lot of changes.

• 20:19Speaker 00

  A lot of changes.

• 20:19Speaker 03

  But AI, the, the way I look at it, for a lot of people, they're just basically using it as a new way to Google things. And it is actually beneficial because like what I tell people is back when I used to Google things as an advisor, you have questions and, and issues that come up for your clients and tax situations. You're having to go Google a topic and, and look through six different articles and simplify it down. And before you can, you know, find the different sources and all that stuff. AI really simplifies it, can look at what, what people have given the best feedback for, and it simplifies it down. But you also have to be careful because it can give incorrect information.

• 20:58Speaker 00

  Always check the source.

• 21:00Speaker 03

  Yep. It can also mess up numbers. Uh, there's been numbers that have been messed up before. So sometimes the AI tools, uh, mess up numbers.

• 21:07Speaker 00

  I've even heard of people being able to now get to the point, let's say that the marriage goes through a tough patch and it's irreconcilable differences and they're going to be divorcing each other. If they can both be in agreement about things, AI can come in and literally walk you through every form necessary. And then you can go to an attorney just for a consultation. You don't have to get this huge retainer and then each spend fifteen to fifty grand on attorney's fees. If you agree to things, you can go in, of course, have an attorney look it over and bless it. But you can do all of the filings. You can even do them remote. It's pretty wild what you can do with AI these days.

• 21:44Speaker 03

  Yep. That's what I mean. I mean, some of the things that's going to simplify those things. So like, you know, I don't take away from, uh, you know, legal professionals and, and me being a financial advisor, but AI is simplifying some of the processes. What, what's going to end up probably happening? It's going to allow me to help more clients, which hopefully eventually will make fees and expenses for all clients go down. It's called fee compression. It is a reality and, and something that I hope, I hope I can work with more clients and do an even better job with more clients. And then that will ultimately hopefully lead to, uh, fee compression. So these are realities we're all having to walk through and live through. I don't think we need to be as scared of AI as possible, but like this gentleman was talking about in his speech about AI, and he was one of the ones who created it.

• 22:28Speaker 03

  We have to have a robust conversation about what we want to have out of it. And, uh, and, and those kinds of things, because basically AI can bring out the worst in us or the best in us. And we don't really have a shared morality right now. As, as a, as a people group, as, as humanity and those kinds of things, you know, people have different opinions on morality. But, but we need to kind of hone in on what are the most important things and make sure that we're, you know, using these technologies and, and trying to benefit the most people as possible.

• 22:58Speaker 00

  If you're not anchored to, uh, a belief system or a absolute truth, like I know you and I are for sure. And that's a tough, tough time to be alive, right? Now, this is, this is funny. Listen to this. So crazy times is a listener. Crazy times feels like yesterday we were just taking computer classes at school. And now it's doing teacher prep and a lot of the kids homework. You know what? It's so true, man. My daughter, I, I used to be a math teacher. I was math credentialed in this state, right? But she's doing some advanced algebra, algebra two stuff right now. And I look at this, I'm like, dude, I haven't seen this years. And so she can work through the problem. I can just take a picture of it, throw it in G P T and then refresh my memory and then boom, be able to help her. So

• 23:39Speaker 00

  it's, it's just such a unique time that we're in. I remember being at Actus Junior High, the typing class, right? Who remembers being at Castle Elementary mid, late eighties and playing the Oregon Trail? Anyone?

• 23:53Speaker 00

  Johnny gets cholera. And you go to hunt bison and then you get the, you know, get to eat the meat and all that stuff. And then, but yeah, it's, I mean, it was a tough game. It was a tough time, the Oregon Trail. Get attacked by Indians.

• 24:05Speaker 03

  Kudos to Mr. O'Connor and, uh, and at Laurel Glenn doing the same thing. Yeah.

• 24:09Speaker 00

  I was.

• 24:10Speaker 03

  I broke a couple of legs. I broke a couple of wagon wheels. It was tough times.

• 24:14Speaker 00

  Mrs. Scrivner, she's now, I don't know where she's moved on to, but Patricia Cathy Scrivner and Mr. Keeler. Poor Mr. Keeler. I had him fifth and sixth grade and I'm sorry, Mr. Keeler, if you're listening.

• 24:25Speaker 03

  Yep. Hey, well, this has been a great conversation based off of, uh, you guys bringing it in here, six, six, one, three, nine, six, one thousand about AI. When we come back, we're going to jump into a couple other questions from you guys as listeners. Stick around, we'll be right back.

• 24:52Speaker 00

  Oh, yeah.

• 24:56Speaker 03

  Welcome back to the Money Wise Show. Chris Peltier and Seth Perry.

• 25:01Speaker 00

  My favorite group growing up. How did you know, Steve?

• 25:07Speaker 03

  Been talking about AI.

• 25:09Speaker 00

  Our heads are just. Just bobbing, dude. They had it, man. They could do it.

• 25:14Speaker 03

  Yeah, they were, they were the bomb. Um, so, uh, one of the things that, uh, leads into our next, it's like, it's like our listeners, everybody's like gelling because this next topic has a lot to do with what we've been talking about. We've been talking about AI and how it's changing our lives and how it's changing our workforce and how it's changing some of our realities and some of the things to be considerate of. And one of the things that this guy talked about is unfortunately AI and AI, what it can do for bad actors. When I talk about bad actors, I talk about scammers.

• 25:48Speaker 00

  I hate scammers.

• 25:49Speaker 03

  I mean, we have seen this, we have seen this blow up and we love our clients. We love parents, grandparents, we love their grandkids. We want this money to be used to reach as many financial goals as possible and to be passed down through the ranks, generational wealth. We want it to happen. And unfortunately, you know who else wants to put their grubby little fingers in there and make things happen?

• 26:12Speaker 00

  In the silver tsunami, they're putting a net to try to catch some of these fish.

• 26:16Speaker 03

  They are. We were talking about scammers. And so the next comment that came in said, great topic and right on time. So my mom is in her late seventies and lives by herself in Ridgecrest. Lately, she's been getting phone calls from people claiming they are with her bank, our social security, and I'm worried she is going to fall for one of these scams. Is there anything we can do financially to protect her accounts without completely

• 26:41Speaker 03

  uh, taking away her independence? And man, you are hitting this topic right on the head because the, um, a lot of the, uh, older generation does not like to talk about money, does not like to talk about their accounts. Uh, it's kind of, uh, my business, not your business. And then also when you start to talk about these things, they're also having to accept giving up some independence or assumed independence. So one of the things that, um, our industry as financial advisors and our clients' accounts has started to make a push to try to get on file is what is called a trusted contact. Very, very important to try to have a trusted contact on file.

• 27:26Speaker 03

  Now, what is a trusted contact? A trusted contact is somebody that you identify that I trust this person. And if there's anything going on with my account, if you're not able to get a hold of me, if there is, is a behavior with this account or something going on that doesn't seem like it's what you understand about me. I trust, or I, I trust this person. You can call this person and ask or bring up questions or comments. A lot of times it's explained as this is just a person if we can't get a hold of you, which is a part of it.

• 27:58Speaker 00

  They have no power of the account. They can't make investment decisions. They can't get a statement balance, but my goodness, and trusted contacts used to be, you know, if you have an elderly client, you know, make sure they have a, absolutely not. Young people could have a stroke and, and they, or they could go on vacation and we just don't hear from them in a long time. That's a great person to be able to reach out to, but it's mainly to protect against these scams.

• 28:19Speaker 03

  Yep. So you definitely want to, uh, you definitely want to set up a trusted contact or be a trusted contact on their accounts. It would allow you to call and ask some questions about an account. Um, if you had some concerns, if you had concerns about, um, uh, mental faculties or, or slipping in that area. It would allow you to call that, uh, investment, uh, account. You know, maybe the advisor or the custodian of where it's held and ask some questions. You won't be able to change investments. You won't be able to change distribution setups. You won't be able to change and, you know, any of those things or banking information on those files, but you can definitely call and ask questions and voice concerns.

• 29:04Speaker 03

  They might be able to then flag those accounts. We've had situations where clients have had fraudulent activity on their bank accounts. So we flag their account then. Just to be a little bit heightened awareness that there has been maybe a stolen identity or something going on in their bank accounts. And then we are on high alert to make sure that there is, uh, it may just be an extra phone call if a distribution is made like, hey, just making sure this is you. We always confirm distributions, uh, you know, via phone call and different things. And sometimes we do ask, uh, you know, like, hey, what is this distribution for? You know, because unfortunately, if it is somebody that might be starting to struggle in an area or be susceptible to, um, a scammer.

• 29:50Speaker 03

  And you, having done this for a while, you can start to learn if somebody all of a sudden hasn't taken any money out of the account in forever and all of a sudden is every other week and so is

• 30:02Speaker 00

  There's certain distribution amounts too. It's not like they're just taking 50 or 60 bucks, you know, or 500,000. These are typically between 5 and 20,000 and there becomes a pattern and

• 30:13Speaker 03

  Correct.

• 30:13Speaker 00

  It's, what are some of the scams you're seeing, Chris?

• 30:16Speaker 03

  Yeah. So, I mean, some of them are romance scams, you know, unfortunately where somebody comes romantically involved with somebody online and then it spills into, oh, by the way, now that we've become these besties or maybe even romantically involved, I have fallen or I need a flight or something has happened at my house and I need distributions. Now, granted, you're, you're welcome to give money to whoever you want to give money to. And if you can confirm this is 100% a real person, why, why advisors like us and custodians like us have to become involved is because there are scammers that literally have large

• 30:58Speaker 03

  organizations and they, they use romance scams to steal money from people and

• 31:05Speaker 00

  In more ways than one, unfortunately.

• 31:07Speaker 03

  Yeah. And in your mind, if you're giving money to somebody you love, but it's actually a middle-aged man that's living in a different country and he's stealing from you, that's fraud. And these custodians, these advisors, like, we can't help, you know, we can't aid you in giving money to fraudulent activity.

• 31:24Speaker 00

  Now, in some instances with crypto scams or some of the financial scams, we have found out there can be some debt relief in, in terms, and you'd want to talk to your accountant. But any romance scam? Absolutely not. Like the, the, that's called sextortion. Maybe you exchange an unlively picture or something along the lines and you think you're sending it to some person that's probably not, well, they're not real. And then they send back, they say, hey, you will wire this money to this account or we are going to let the authorities know what you did or we're going to post this.

• 32:00Speaker 03

  Yeah.

• 32:00Speaker 00

  And a lot of, a lot of young people are falling victim to this. Unfortunately, it's a disgusting habit, but

• 32:05Speaker 03

  Yeah. So what he's talking about is

• 32:07Speaker 00

  Talk to your kids about it.

• 32:08Speaker 03

  Anything in that vein, there's unfortunately no tax relief if it's coming out of a retirement account. But if you're pulling money out of a retirement account because somebody has been telling you that you're investing in crypto or something like that, which is another big scam, and they have become very sophisticated with this, they're literally putting your money in an account or a fake account, they, they take your money and then they show you a website that looks like your money went into an account.

• 32:33Speaker 00

  For example, a fake Coinbase where it will look completely identical to an actual Coinbase account. You'll have an actual account number that appears to be real. You'll have these balances and they say, well, in order to get your money out, you're going to have to pay, for example, a gas fee or a gas tax. So we're going to need 5,000 for you to get your two, three, four, 10 million dollars. And again, being where we are and in this industry, it's like, dude, there's no way in heck that could be real. But they seem so real to someone who's vulnerable. And, and I think it's the generation right above us is the most vulnerable because they just haven't, the, the oldest generation, the grandparents, they don't mess with technology anyway. They don't, you know, and they're, they're the generation that's passing on. But our parents' generation, they kind of

• 33:18Speaker 00

  know technology. Maybe they have a Facebook, but they don't do a whole lot of stuff. And so they

• 33:22Speaker 03

  And the scammers take advantage of that then because everybody wants to like, oh, I can learn about, you know, trading in crypto. And then what they do is you make a small donation or a small contribution into a, what unfortunately is a fake account. And then they make it look like you made a bunch of money. And then when you go, hey, I want to pull my money out and spend it, they go, oh, that's going to cost another $3,000 to get your money out. And then you give them the $3,000 and they say, oh, something happened and you're going to have to give another thousand. Then you give that other thousand and then you start to realize that, okay, there's trouble in the water. I'm actually not able to get my money back and all of it is gone at this point.

• 33:55Speaker 00

  They're training, they're brainwashing the victim into thinking, hey, don't tell your advisor, don't tell your accountant about this because they're going to want to this or they're going to want to that. And they

• 34:04Speaker 03

  Don't tell your family members.

• 34:05Speaker 00

  Don't tell your family members either. And then finally, when the light bulb goes on, in some instances, two guys think if they're making these big distributions out of an IRA account, not only is that money gone forever, but now they have a tax bill due because that was money that was never taxed, which is awful. Quick comment came in. So, AI is going to replace financial advisors? Question mark. Scott, what are your thoughts on that, Chris?

• 34:30Speaker 03

  So, I don't think AI is going to completely change or replace financial advisors, but it's going to change our industry. Like I mentioned earlier, what's going to end up happening is it's going to allow me to work with more clients and still do a better job. And what that means is if you're, say you're an advisor that's 72 years old right now and you don't want to use AI and you can only work with, you know, 80 clients or 60 clients because you're still doing things the way things were done 10 or 15 years ago, it's changing our industry. It's changing the way that you're having to work with clients. And yes, it is changing, replacing some. There are some people that, that, that are

• 35:13Speaker 03

  okay with working with a 1-800 number financial advisor where again, it's one advisor or it's not even one advisor. It's

• 35:21Speaker 00

  It's a service line.

• 35:22Speaker 03

  It's a service line where you have access to a licensed advisor, but that one advisor is working with 5,000 people.

• 35:28Speaker 00

  And they can only talk about that account. They can't provide tax advice. They can't provide legal advice. Not that we do those things, but we do a lot of tax and legal education

• 35:39Speaker 03

  Correct.

• 35:40Speaker 00

  For our clients.

• 35:40Speaker 03

  Yep. And need quarterback things and work with people's finance. Yeah. So they're going to give you very limited help and advice on your specific account, but they are not going to give comprehensive overview of your estate plan, your trust, your tax situation, tools and ways to save on taxes. And so there's that world and that's, that's been going on for a while. That's going to continue to increase, but I don't think AI will completely replace financial advisors. Case in point, we just mentioned the silver tsunami. The silver tsunami is a lot of 40 and 50 year olds, maybe 60 year olds that are going to be handed mom and dad's estate, grandma and grandpa's estate. And, and maybe they've

• 36:25Speaker 03

  done pretty well with all their money, but now they're going to step into a whole new world of tax considerations. How do I best manage this money? Accomplish all my goals? Can I afford a house? Can I afford a beach house? Can I not afford a beach house? Like, I don't want to blow all this money. You're not going to get that level of service from just a service line or throwing your money at a, at a online platform.

• 36:46Speaker 00

  And I think the, the question too is since we're talking AI, they're probably thinking, okay, well, can't I just dump like all of this information? So statements and tax returns. Dude, if you're doing that, you're, that means you're dumping it into, I'm not aware of like a, an AI tool that will, like an AI advisory only system. It could get to that, maybe 15 or 20 years. But I feel like, like for me and you guys our age, we're good. Like, you know, but maybe my son, if my son wants to come into this industry, it might look pretty different. But then it's the same thing is what about a surgeon? At what point would a surgeon be replaced? But at what point, you know, and we're going to see a lot in our lifetime.

• 37:25Speaker 03

  Yep.

• 37:25Speaker 00

  Autonomous, self, self-driving cars, I think is the biggest, next biggest shift change that we'll see. So great, great question, Scott. Appreciate it.

• 37:36Speaker 03

  Good stuff. One of the things I was going to go back to about the question with, you know, the mother and protecting your mom and, and still having independence and stuff like that. It does get to the point though, eventually where you're going to want to talk to the banks. There's transfer limits that you could set up. You also could establish a durable financial power of attorney while mom is capable of making her own decisions. You know, you can have that discussion. Some, some parents might be okay with giving you power of attorney while they're even still able to act. And then there's other power of attorneys you put in place that you're only able to step in and act if they

• 38:18Speaker 03

  are incapacitated. So if there was a stroke or a medical emergency or a car crash or something that left somebody incapacitated. But definitely something that you can start to have that discussion on. You're not wanting to completely take away somebody's independence, but I would say you need to have those discussions. Also, encourage as many people as you can that you love, that you think might be susceptible to these, to always, always, always hang up and call the bank or hang up and call their financial advisor. If they're being told that they have to do something, that there's an emergency, that there's whatever. Teach them to hang up and call the company.

• 39:00Speaker 00

  Or and then also ask if you if a lot of them is the grandchild scam to hey, I'm traveling overseas and I'm I'm held by the authorities and but they're using AI voice of the actual grandchild. So you gotta be careful there.

• 39:13Speaker 03

  And that's that's why that's what you have to train or talk to the the people that you think might be susceptible to is because anytime you can't hang up, it's very high probability that it is a scam.

• 39:25Speaker 00

  And if you

• 39:26Speaker 03

  Even if somebody was in jail, even if somebody was in Tijuana in jail, like it's, oh, don't hang up, you know, you can't hang up. Wait, hold on. How about you call me back in three hours and let me make a couple of phone calls?

• 39:37Speaker 00

  Yeah.

• 39:38Speaker 03

  Like when when there's that pressure, they need to understand where when there's that pressure is typically when it is a scam. Even as scary as it would be to be in a jail in Tijuana or whatever, say, hey, use your next phone call to call me in a few hours. Uh, I'm gonna call your mom and everything else. And then and then they're gonna try to convince you to not do that. Why? Because it is a scam.

• 39:58Speaker 00

  Yep.

• 39:58Speaker 03

  So uh,

• 39:59Speaker 00

  Let's uh, let's make sure we hit hit this this last one here. This is a really, really important message. So listen up, guys. So it says, hey, guys, I've been a truck driver for 20 plus years and I enjoy being on the road. I have driven through every state in the US, but we had a meeting Monday morning and it looks like our business is closing down. They didn't say the main reason, whether it's fuel costs, self-driving trucks, but did mention that the bigger trucking companies are doing a major sweep and buying a lot of the smaller or not as big manned companies. I have put back around 50,000, so 50,000 in savings and my 401k is around 200,000. But is it true that if I pull money out of my 401k that I'll have to pay taxes on it? And what?

• 40:44Speaker 00

  So we're sorry to hear this. This is unfortunately going to be one of the new realities. We see this in a lot of the trades right now, uh, this big consolidation happening. And so it it's great that you have a nest egg. Uh, my first question would be, what is your age? Right? Because if you're 55, you can you can utilize uh, the rule of 55, the rule of 55. Go ahead and explain that real quick.

• 41:11Speaker 03

  Yeah, so the rule of 55 is uh, if money is inside of a 401k and you have separated service, you have uh, either been, you know, unfortunately let go or chosen to retire early. The rule of 55 allows you to pull money out of a 401k and avoid the 10% penalty that we all get assessed if we pull money out of a retirement account before age 59 and a half. So if you are there, there could be a thought of leaving some money inside of the 401k, even if you wanted to roll some of the money out to an IRA or start working with a financial advisor, move some of it out. Sometimes people will leave a little bit in there to have access to some if they're under 59 and a half. If you're over 59 and a half, uh, then then it

• 41:57Speaker 00

  Good.

• 41:57Speaker 03

  Yep, you're good. It doesn't matter.

• 41:58Speaker 00

  Uh, they still pay taxes.

• 42:00Speaker 03

  Still pay taxes on whatever amount you pull out.

• 42:02Speaker 00

  But you don't pay um, if it's in a traditional, not a non Roth, right?

• 42:09Speaker 00

  One of the other considerations is you don't have to be 55 when this happens. Let's say, let's say that uh, Big Ed got terminated and he's 54 and in December 15th, he turns 55. He could still use the rule of 55. It counts because he turned 55 in that calendar year, it applies to him.

• 42:29Speaker 03

  Yeah. And remember then how you pay taxes on that is every distribution that comes out of a retirement account like that is just added to your taxable income. And so whatever tax bracket or tax rate you're paying currently, that would just be assessed when you do that.

• 42:46Speaker 00

  And these are some of the things we help our clients with because every client has a different income tax bracket, different deductions, maybe they use standard deduction, maybe they itemize. And so we're not at a CPA, but we can get a very, very good estimate. And then we let them know, okay, you need to withhold uh, 16% federal and 6% state. Or I'd say rule of thumb for the general population, again, this is not tax advice, but rule of thumb would be 15% federal and 5% state. That's what a lot of companies do as their default.

• 43:16Speaker 03

  Yep. And one of the uh, advisable things, not knowing your situation, um, you definitely wouldn't want to cash out your complete 401k unless there was some major, major reason of why that would make sense. I can't think of a whole lot of reasons of why that would make sense. Reason being is because you would be paying taxes on all $200,000 all in one calendar year, which means the way our progressive tax brackets work, that means you would literally be pushing yourself up into the highest tax brackets or some of the higher tax brackets and paying maybe a much higher tax rate.

• 43:50Speaker 00

  Good point.

• 43:51Speaker 03

  Than if you, you know, waited and learned how to navigate uh, what your moves forward. Hopefully you're gonna have um, some sort of severance or if you're being let go, maybe there's gonna be um, uh, how come I can't think of it? Not a severance, but um, if you're let go. I I'm wanting to

• 44:10Speaker 00

  Unemployment.

• 44:11Speaker 03

  Unemployment.

• 44:11Speaker 00

  Yeah. Which I think is what, 30? Is it still as upwards of 30? It it's

• 44:16Speaker 03

  Yeah.

• 44:16Speaker 00

  But it will provide, it will provide, plus you have the cash, Big Ed. You have the cash that can float you into 2027. Maybe you are gonna retire. Maybe you're not gonna find another job. Then there is a huge argument to be made for, hey, use your cash because you're not paying any taxes on it. Then let's look into next year. Give us a call if you're interested, 661-847-1000. But I'd wanna know, are you single? Are you married? And then we navigate those brackets.

• 44:39Speaker 03

  Yeah, cuz the thing is, is uh, you know, depending on your age and stuff like that, if you're gonna turn on social security or these different things and you wanna consider that, um, probably wanna, you're probably gonna have to move it out of the 401k because the reason is, is if the company is closing down, they're probably going to shut the 401k down. Um, and so you'll probably have to end up transferring that to an individual retirement account. That's called a rollover. That moving it out is not taxable. It's only taxable if you take it out of the 401k and like, put it into your bank account, your savings account or your checking account. Now you've taken it out of that retirement plan and you're gonna have to pay taxes on that. So hopefully that all makes sense there.

• 45:20Speaker 00

  Scott, thanks for the shout, man. We got a message back from Scott. He says, wonderful content, guys. I that's why I love, it's great having guests, great hearing about the community, but I do love these segments where it's just us cuz we can address more of your guys' questions and really dive into them.

• 45:35Speaker 03

  Yeah. And I I I enjoy having an honest conversation about this because, you know, all of us, no matter what industry you're in, AI is changing things and um, you know, openly and honestly to talk about that. You know, like, is AI gonna replace me as a financial advisor? Well, you know, the relationship, the human to human

• 45:54Speaker 00

  Ida I contact.

• 45:55Speaker 03

  Reality, you know, I I don't think I'll completely go away with that, but there's no doubt, um, I'm not gonna be able to be a financial advisor like I was 15 years ago. The world has changed. Everything's changed. And so like I said, what's gonna end up happening is I think I'm gonna be able to do even a better job with more clients, which means the way that works in our economy, that's scale, but that means there's gonna be fee compression. And so there already has been fee compression. So hopefully everybody understands that. This has already been going on for years and years and years. The actual mutual funds and investments that everybody's invested in have all been going down and down and down through the years. And eventually it's going to continue uh, to to impact um,

• 46:38Speaker 00

  Real quick point, Big Ed, make sure that you have a really solid look to at how you're invested. Maybe you weren't gonna retire for another five or 10 years and you were really heavily in equities, right? But those are conversations to be had as well.

• 46:51Speaker 03

  Yeah, thank you, guys, very much for all the wonderful comments and questions. You guys are what make the the show so great. As you guys get ready for uh, Halloween, remember, uh, man, it's expensive, prices are higher, be money wise, right? Be smart.

• 47:05Speaker 00

  Absolutely.

• 47:06Speaker 03

  Be safe and be money wise.

• 47:20Speaker 02

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