Financial Advice for Seniors with Altair Gobo, CFP

Larry (00:07):

I'm Larry Barsh. And you are listening to specifically for seniors on today's show. I'd like to introduce Alta gobo CFP founding partner of us financial services in Fairfield, New Jersey Al has been a guest on CNBC, NBC, ABC MSNBC, Fox news, Fox, business news, Bloomberg, and C. And we are very privileged to have him on specifically for seniors today. Hey Al. Good morning. How are you today?

Altair Gobo (00:46):

I'm fine. Thank you, Larry. And thank you so much for having me on this morning.

Larry (00:50):

Oh, it's a pleasure, Al tell me about your company.

Altair Gobo (00:55):

Well, us financial services was formed, some 30 years ago and it's started out with just a, a couple of financial advisors, very small company, and it's grown, to be, about 20, people right now managing about a billion and a half dollars. Wow. and growing, we have offices in, New Jersey Carolina. we're building an offices in Florida. and what we do basically is comprehensive financial and estate planning, primarily for small business owners and retirees. and, and that's how we built up practice. we pretty much built it one client as a, at a time. And, right now out our business primarily grows due to, referrals. we're lucky enough to, to have great clients and, you know, they give us a fair amount of referrals every year. So we don't have to spend a lot of time or money, you know, doing things like putting up a billboard or something like that on route 95. you know,

Larry (02:10):

you and I met in an interesting way. you wanna tell the story or should I,

Altair Gobo (02:19):

Well, I think you should tell it because, you, you experienced it firsthand.

Larry (02:24):

You know, it's been a while, but I know I was watching CNBC one day and I had just retired and I was, looking for somebody to help me manage finances in retirement. And I saw you on CNBC being interviewed. And I said, that's a guy I'd like to talk to, but CNBC wouldn't give me a phone number. So I had to start looking through the internet and I did find a gobo in New Jersey and I called him up and it happened to be father who told me you were a good boy. You were a smart boy. And I'd be very happy working with you, but I don't suppose really that's the best way to find the financial planner. Well,

Altair Gobo (03:16):

What, what better testimonial can you get than from someone's dad? Right. But, but, but part of the story that you left out was that my father, is in this country, I'm a first generation American. He got here a year before I was born and he still had, a very heavy accent. And if I could to mimic him, I think he said something like, my son is a very good boy. You should call him. He's a very good boy, something to that effect. And the fact that you called me after that says volumes.

Larry (03:51):

Yeah. Except, then you sent me a picture of you and one of the leads in the Sopranos, I think he was playing Furio. and you asked me if you, you, if I still wanted you, I manage, well,

Altair Gobo (04:09):

Listen, I knew you, I knew you were from Boston. And I figured, let me send you a little bit of New Jersey humor and if you can get it, we'd probably get along. And we did do.

Larry (04:20):

Yeah. Well, I don't think anybody's gonna be looking for you from specifically for seniors, but what's the best way, people should find a financial advisor. how, how do you start looking and what questions do you ask?

Altair Gobo (04:36):

Well, I, I think it's almost like any, anything else, you know, how do you find a, a good restaurant? How do you find a doctor? You know, you, you ask people that, you know, and, and that, that have, what you're looking for and see if they're happy. you know, because the, the dirty little secret about this business is everybody has the same stuff. Meaning whether you go to the biggest, you know, Merrill Lynch, AP Morgan, or the smallest guy down the street, two man operation, whatever everybody has access, pretty much to the same,  you know, bag of, of instruments, whether they be stocks, bonds, mutual funds, ETFs, whatever. So that being said, what you real should look for is someone that you can get along with personality wise, someone whose character, you know, is in line with yours, because you're gonna be spent spending a lot of time with that person.

Altair Gobo (05:34):

So in the, in the medical field, they call that bedside manner, you know, and I know many people that, that have been to doctors, for example, that's say the guy's a great, great doctor, but I can't stand him because, you know, he doesn't spend any time with me. He doesn't, you know, he talks above my head or whatever, and I think this field is the same. So the first thing I would do would be if I'm looking for someone would, would ask, you know, acquaintances, coworkers, relatives or whatever, if they have an advisor. And are you happy with 'em and tell me a little bit about 'em and if you think it makes sense, make an appointment with the fellow or, or, or, or a woman and, and, you know, interview them as much as they probably will be interviewing you,

Larry (06:15):

What should you ask and an interview?

Altair Gobo (06:18):

Well, I think, you know, you start out with, you know, exactly, you know, how do you do, what exactly do you do? What is your business? Okay. And they'll explain to you whether they are just providers of, of, of, financial instruments, or do they actually write and develop financial plans, estate plans, what's their follow up, what are their fees,  you know, look for what you are looking for. So for example, if someone came into our office today with, $10 million and said, invest this for us, we wouldn't do it. Okay. There's a process that we have. And our process is we do an exploration study, which is basically taken all of their information, everything that they own, everything that they own, their cash flow, et cetera, et cetera. And we develop a,  an exploration study that says, what are we getting ourselves into with this client?

Altair Gobo (07:17):

What will we have to do? And if it requires a financial plan, a written financial plan, we'll quote, 'em a fee at the time. And F fee usually is nominal, you know, a couple of thousand dollars, maybe, all right. And that plan, they can take wherever they want and they can implement it wherever they want. I would say 95% of 'em do that because once they've divulged all this information to you, remember we're collecting not only financial information, we're, we're collecting their wills, we're collecting their, any trust that they have. So we can opine on that. We're collecting tax returns. So we're giving them a full diagnosis of where they are today. Now that's the qu side. And that's usually the easier part of, of the relationship because that's crunching numbers and putting things in order. The next step is the qualitative side. Now that we have all your information, what is it you wanna do? What do you wanna accomplish? And tell us in English, I wanna do this, this and this. I want to have a, I wanna buy a second home. I wanna give money, my grandchildren, I want to, provide for a, a scholarship at Mont or whatever it is. And then we will write the plan to try to see if we can make these things happen and show them how they can make them happen.

Larry (08:35):

Yeah, I, you, you brought up an interesting point. How do you guys get paid once you set up, a management plan?

Altair Gobo (08:45):

Okay. Well, today people get paid in a lot of different ways. There's a very clever commercial on TV, and I won't say who it's for, but, the woman in the commercial, the advisor says we make more when you make more. Okay. And that's another way of saying they charge a percentage of the assets that they're managing. And that's very common for many people to do that. So, as I said, we have a very nominal fee to do the, a financial plan. And that's, if it's warranted, cuz sometimes we, we do the exploration study and they don't need a full plan. They just need some fine tuning. And so up to that point, they haven't paid anything, but if they need a financial plan, it would be a nominal fee to do the plan. If they decide to,  do the management of the assets through our firm, okay.

Altair Gobo (09:37):

We will get paid a percentage, small percentage. Usually the go and rate on average is probably 1%. Okay. And, and then that's how, that's the fuel that drives our engine, you know? and if they do that, if they, if they do the management through our firm, then there were no recurring fees because every year we are monitoring that plan and we are updating it. And so there will be no additional fees to update the plan. and there will be, you know, just, there's just that management fee because there's no commissions on anything else, anything that we sell, it's all fee based.

Larry (10:18):

Oh, thanks. for, for explaining that, I know a lot of people just don't understand that it's sort of like what, trial lawyers do when they say we don't get paid until you get paid. Yeah,

Altair Gobo (10:32):

Yeah. Yeah. So it sounds clever, but you know, look, the reality is it's like everything else, if someone's doing work for you, obviously they gotta get paid and you have the right to know what they're getting paid and how are they're getting paid.

Larry (10:49):

Okay. I've got, when I announced that you were gonna be on the show, I got a bunch, your questions. I'll try to limit them from, from some of our, listeners. One of 'em was how did, how do you take over financial management when a husband specifically, or a primary financial manager in the household dies? What do you have to do? I've spoken to, to a couple of women who just don't understand how they're gonna manage anything because the husband was the financial manager.

Altair Gobo (11:28):

Right? Well, it, it, it's very common, to have one person in the relationship to be the,  you know, in charge of the finances. And what we encourage before a death happens obviously is to try to get both people up to speed. but when, when, when we're, we're approached with situations like this very often where, you know, my husband, my wife, whatever, divorce passed away and, and now I have no idea what's going on. So we, we then become, part teacher part advisor. And the teacher part is, you know, how, how much do you really want to get into the weeds? And there are some people that want to know, you know, down to the, you know, might the smallest bit of minutia of how things work. And there are some people that are just bottom line to show me, you know, what time it is.

Altair Gobo (12:24):

Don't tell me how to build a watch. And so our job is to teach them what's going on to the level that they want to be taught and explain everything. I, I once had one of the best compliments of, of that I ever received was, was, and at the time I, I, I thought it was an insult cause the person said, you, you have this unique way of, of dumbing down what you're talking about. I said, oh geez, I should, I should have spent more time in English class. But, what they were saying was, you know, tell me in English, what we're doing, you know, there was a woman one time, she had a very successful business. Her office was in the empire state building. Okay. And it was interesting business. And, and we maybe on the second or third meeting, she stop a minute. She said, can you tell me the difference between a stock and a bond? And I was blown away because, you know, she had her husband had advisors for years, he passed away. And now we're even to our third meeting and she didn't have a clue what the difference between the stock and a bond was, you know,

Larry (13:34):

And impress,

Altair Gobo (13:34):

Explain it to her. She said, really? That's it? I said, yeah. So it was pretty simple, but she was kind of intimidated in, in the past to even ask the question.

Larry (13:45):

Yeah. I, that answer's gonna be a lot of help to some of the people I've talked to. another question came in, especially in Florida. It's interesting. this person was thinking about retiring planning for a retirement home and didn't know how to decide whether it should be a second home, you know, for full-time living or, or, becoming a snow.

Altair Gobo (14:17):

Right. Right.

Larry (14:18):

How, how does that decision come out?

Altair Gobo (14:20):

Well, there there's a lot of variables there. Okay. we can look at it on the economic side. It depends on what state you are coming from. If you are coming from a, a tax abusive state. Okay. Florida makes sense to become a full-time resident because Florida's a very tax friendly state when it comes to, to state income tax, et cetera. so that would require you being here, you know, over six months and becoming a full-time resident, meaning getting your driver's license here, registering your vehicle here, getting a bank here, make sure you have doctor lawyer, you know, a whole bunch of things that, that a state like New Jersey or Massachusetts or some other non-tax friendly state would come after to you. If you, if you said to them, I'm leaving your state to go somewhere else. So that part of it is, is pretty easy.

Altair Gobo (15:18):

You know? you, you, you could now whether you should do both or not depends on affordability, can you afford to maintain two homes? One for six months, one, you know, one for six and a half months, one, five and a half months. The other part of it is like we talked about before the qualitative side, what's holding you in that other state. Do you have grandchildren or family that you just don't wanna leave? I mean, I have a very good friend of mine. We just had this conversation two days ago where, you know, he came down here to visit and I'm, I'm looking, you know, we're looking at the ocean. He said, this is great. I said, well, you know, you gotta get a place here. He says, I just can't leave the grandkids right now. He goes, they're very heavily involved in sports. I go to all day games and I can't leave them for, you know, an extended period of time. So it it's financial and it, and it's an emotional, question that needs to be answered a, or, or ask anyway, any answer. And that would determine whether you should make a full-time part-time, whatever move.

Larry (16:20):

Yeah. I I've heard that story from so many people that I've asked personally, friends of mine about why they have two homes with the insurance and the, taxes in each state. and it always comes down to grandchildren and family. Yeah. another question that came up, was how do you manage a portfolio from a tax standpoint? I know you guys aren't accountants, but you work with accountants, or, or What to manage. The

Altair Gobo (17:00):

Interesting two of my partners happen to be CPAs,  as well as C P. And so tax is always a consideration, but not a motivation. And by that, I mean, I've seen people get burned by trying to do something from a tax point of view and wind up losing money. However, every investment decision has to take taxes into consideration. So depending on the person's bracket, depending on, their, their other tax situation, you know, we try to be, we try to come out of this as tax neutral as possible, but here's the, here's the problem. All right. Is the good news and the bad news, you might tell somebody they have a, a $20,000 capital gain this year, or, you know, more okay. And, oh my gosh, I gotta pay 20,000 capital game, but they made, you know, X amount of dollars, you know, over the year. Yeah. So the market goes up, you make money, unless, unless you can harvest losses, which we do, you know, over the year and especially, you know, in the fourth quarter, unless we could find some of assets that cuz not all assets are gonna go up at the same time. So if you have a capital gain and you're into the fourth quarter, you may wanna sell some of the losses that you had to offset some of the gain. And then you could repurchase those, same instruments, you know, with the 60 day washroom,

Larry (18:26):

You mentioned that, when a portfolio goes up, that brings up right now in February of 2022, managing your investments in turbulent times what, with COVID and inflation and political things going on. how do you handle that?

Altair Gobo (18:51):

Yeah. Well listen, what, what we tell people all the time and, and, and it's difficult even, even for myself, because I tell, don't look at this stuff every day, please. It doesn't make sense yet. I look at it every day, you know, because that's my job. But I also look at my own stuff every day because I have to, you know, but this is, this is a marathon, not a sprint, as they say, okay, you know, you are in this for the long term and the long term has a different diff different definition to different people. I mean, if I'm 30 long term, maybe, whatever, if I'm 70 it, maybe whatever. But also at the end of the day, you're looking at this and I have, we have a fair amount of, of older clients. you know, maybe in their eighties, you know,

Larry (19:38):

I beg your pardon and,

Altair Gobo (19:40):

And, and, and higher eighties and higher, and, and they come to a time, believe it or not, where they have all the money they'll ever need. So their portfolio you is not just for them, it's for the next generation as well. Okay. So when you're talking about, you know, looking at portfolio performance, you should be looking at it over a period of time, like a 3, 5, 10 year period. What have I averaged? Because if you're gonna look at years like 20, 21 where you, most of our clients had double digit returns in, in, in their overall portfolio. And right now we just did, you know, the, first month, review with some clients for the, for 2022. And in the, in the month of January alone, portfolios were down some around four, four and a half percent. So after making 12%, 15% in 21, you, you lost four and a half percent in 22 already that's gonna happen.

Altair Gobo (20:43):

Okay. But the, the worst thing, the worst thing someone could do is panic. Okay. Because time and time again, we've seen that, you know, we're gonna have bumps in the road. The mark is volatile, and it was a quote by sir John Templeton, many years ago that he said the foremost dangerous words in an investor's, is this time it's different because every time something happens, you know, we say, well, this has happened before Y yeah, but this time it's different. Well, the reality is we have been through many, many obstacles in this country going back, you know, to world wars, presidential assassinations,  oil embargoes,  recessions,  inflation, and guess what, we're pretty resilient. We wind up coming out of it. And sometimes we come out of it quite soon and sometimes it takes a few years, but the reality is if you're investing money, your bulk of your money should not be invested with short term gains in mind.

Larry (21:49):

But it brings up an interesting point. What happens if you need cash when the market is down, and you don't wanna sell off anything to get cash, to put in a generator to buy a new car, whatever.

Altair Gobo (22:06):

Yeah, well, that, that, that's a great point because that's where the planning comes in. So when, when we are doing planning and we're looking at, you know, how much you have, how much you owe, what's your cash flow income coming in, income, going out, we're gonna know right up front, what your income needs are. And you're certainly not gonna invest every penny you have. Right. and that may harm your income needs, you know, at, at a time where you need a new, air conditioner or whatever. So we're always gonna have a surplus on the side and let's call it for the time being an emergency fund. Okay. Then we have another process as depending on cash needs. And, and it's basically in, in, in English called three buckets. My first bucket is my money. That's always available to me. It's liquid. My second bucket is my income bucket.

Altair Gobo (23:04):

And my third bucket is my growth bucket. So I have money growing in bucket number three. And when that gets to the level that we, that we intend, it goes to bucket number two, where it's income producing when it produces enough income, some of it goes into bucket number one, which is the money that's available for me to spend. So constantly besides my regular, whatever social security, and any other kind of assets, a pension plan, required minimum distribution that I'm taking from my, from my IRAs, besides that money, if I need more to live on, we provide for that. When we set up the original portfolio design,

Larry (23:46):

you mentioned something about a pension, when somebody retires from a company and has a pension, how do you end up, managing that when the, employer no longer does it?

Altair Gobo (24:02):

Yeah. Well, let well, let's look at the, the real death, the real definition of the pension, and you're seeing less and less of it is years ago, a person retired and they received an income distribution for life from that company. They never knew what the pile of money was that provided that. So the market didn't matter, they just knew they were gonna get X amount of dollars a month for the rest of their life. A okay. That changed, you know, starting, you know, 25 plus years ago where they went from defined benefit plans to defined contribution plans that became not only employer contributory, but employee contributory. So now some people confuse and they say, well, I have a 401k. That's my pension plan. Well, theoretically, yes, but figuratively, I mean, it's not really your pension plan, it's your retirement plan. So that's the plan that you control.

Altair Gobo (24:52):

So people have a 401k at company X, they retire, they have several choices, take the money and run, well, you don't wanna do that because you're gonna pay taxes on everything. Number two, they can leave the money there. Okay. And let whoever was managing it before, continue to manage it. And then they're subject to dealing with, you know, their ex employers, HR department or whatever, or the third thing they could do is roll over that 401k into a self-directed IRA. And they can go to a company and any company out there will do this, Mar you know, the big companies, our company, and you will set up an IRA for someone roll that money over. And if you roll it over, it will, there'll be no tax consequence. So let's say if there was a million dollars in the, in the 401k plan, you now have a million dollars in your IRA and subject to required minimum distribution, rules that you were before. So at used to be at 70 and a half, they just changed it last two years ago to 72. So at age 72, you must take a dis required minimum distribution. And that's, we calculate that every year, whatever that distribution is must come out. And I urge people to pay attention, because one of the biggest, penalties, the IRS imposes is on the money that you should have taken out on an RMD that you didn't. And the penalty is 55, 0 50%. Wow.

Altair Gobo (26:28):

So if I was supposed to take out 20,000 that year, and I did it, and I get ordered and I get caught, my penalty's gonna be 50% of the 20,000 or $10,000. That's a big penalty.

Larry (26:38):

That's a big penalty. Well, that sort of wraps up the questions that I got. Anything else you want to talk about?

Altair Gobo (26:46):

Well, you know, I, I, I just think in today's day and age, I mean, there, there's several things, you know, that people could do. And, and I advise people all the time. I tell 'em, look, we don't, we don't twist anybody's arm to say, you need a financial advisor, or you don't. I mean, it's like everything else, you can mow your own lawn or you to get a, a landscaper. Okay. Depending on, you know, if you think you need advice to seek some professional advice and find someone that, you know, above all, you know, you have a referral from, you know, that, can say I've worked with this person and, you know, they're not,  cheats or swindler. I mean, we, yeah, everybody got a bad rap several years ago. When that fellow, what's his name? Madoff

Larry (27:27):

Or Madoff. Yeah.

Altair Gobo (27:29):

All of a sudden everybody, well, oh my gosh. can this happen to me? And, first of all, if you look back on, on what was going on, I can't believe that people fell for that stuff, but the, the answer is, you know, if you're dealing with somebody reputable and you're dealing with, you know, people that, that, you know, or someone, you know, has known for a while, stuff like that is very hard to happen. Okay. Not saying it's impossible, it can't happen, but that's where you have to keep your eyes and ears open. And we, we create a team. So although I have people on staff that, that are, you know, tech savvy and everything, we don't replace anybody's advisors. So we'll work with your accountant. Okay. Like we did with you, for example, we work with your accountant, we'll work with your attorney.

Altair Gobo (28:12):

So we create this financial team. So there's always a check and balance going on. and, and like, we like to say, you know, two heads are better than one. So very often we're dealing with you a tax issue. The accountant's advice is, is, is critical. but they're not gonna pick up everything. Okay. And then, so the things that we pick up, even that he didn't pick up who she didn't pick up. So, and, and a lot of it Larry at the end of the day is common sense. I mean, if something seems like it's too good to be true, guess what it is

Larry (28:47):

Al this has been great. And I, the information I think is gonna be a value to a lot of people. we've been talking to Al gobo us financial services headquartered in Fairfield, New Jersey, and, I appreciate it.

Altair Gobo (29:07):

Oh, my pleasure. Thank you so much.

Larry (29:09):

Thanks again, Al until next time. I'm Larry Barsh and you've been listening to specifically for seniors.