In my mind, it has to do with just maximizing your resources for you and your family and enjoying your life to a point where you're living in a place where you're not riddled with worry and anxiety and you're seeing the people that you want to see. You're having freedom of time, freedom of money, freedom of relationship, freedom of purpose in your life. And if any of those become compromised, at some level, potentially your financial plan has failed. Welcome to Keen on Retirement, a show dedicated to helping you thrive before and during your retirement years.
If you are looking to grow and protect your wealth and want to make the second half of your life the best half, then listen in as well as advisor Bill Keen and his host sort through the key issues that you need to know in a lively and candid way. Hello, everybody, and welcome back to Keen on Retirement. I'm your co-host Steve Sandusky and with me, Bill Keen, Matt Wilson, Gentlemen. We're in spring.
How you doing? We're enjoying it, Steve. We thought it would never come and we're also happy to have most of the restrictions having been lifted now when it comes to moving around the community and the country. Yeah, that's very nice and certainly COVID at this point as we're having our conversation today is way down.
Let's hope it stays down and continues to go lower and lower until hopefully that is in the rear view mirror and we can move forward. All right, well, we got a couple things. We're going to talk about here. First one, just really short, we got a little interesting thing to talk about Apple and the iPhone and then from there, we're going to talk about why financial plans fail.
We're going to go through eight areas here. We're going to quickly go through the first seven and then number eight, we're going to spend some time on because we think that is a critically important area. So Matt, what you got here when it comes to Apple? Speaking of spring, my wife was going through the house doing some spring cleaning and she found a drawer that stashed a bunch of old iPods and the first generation iPhone, which was kind of interesting to see.
I don't know if anyone even remembers. I pulled it out and I'm like, this thing is tiny and weighs a ton. It's just so funny to think about. I googled it because I had like the model number and that's when I realized it was the first gen.
Interestingly enough, if any of you happen to have purchased the first generation iPhone and never opened it, they're going on eBay right now for about $25,000. Oh, my goodness. Matt, I'll hold on to that for you if you'd like me to store that for you. Yeah.
I'll sell it to you for $25, I mean, this one. This one doesn't work and I don't think it would ever take a charge anymore. Those were on eBay for about 50 bucks. So you want to buy a paid $25,000 for it.
All right. But it got me thinking about Apple because Apple came out with their earnings for 2021 and the iPhone, it was released in 2007. It was kind of the game changer when it came to cell phone communication. We think about how you use your cell phone today versus what it was 20 years ago.
It's just hard to imagine. So in 2007, you're going to have to help me. We weren't still T9 texting where we, not at that point. There were other phones, not nearly as good as the iPhone.
So there were still a lot of people that were T9 texting. The Blackberry kind of eliminated some of that with the keyboard. That's right. And Blackberry was the high flying stock of that kind of early 2000s period, which didn't pivot very well when the iPhone came out.
But iPhone sales now are $192 billion for 2021 per year, for the year. And that represents just over 50% of their total revenue introduced in 2007. Now, we're going to go into kind of an emotional decision making framework when it comes to financial planning. But this got me kind of thinking about that.
Well, in 2006, do you know what Apple's top seller was? Well, you gave it away when you said you found these in your drawer. I would have to estimate it was the iPod. It was the iPod 50% of the revenue, which at that time was a much smaller number because Apple wasn't as big of a company.
The iPhone killed the iPod. So think about that as Steve Jobs at the time being the great visionary that he was, I'm going to take my best selling product and essentially make it obsolete. It's being pretty smart at this point. Yes, it was.
Do we have a phrase for that? Steve, is there something that we call that now? Creative destruction or something like that? Yeah, it's a real destruction.
Yep. Shumpers creative destruction idea for sure. He disrupted his own industry with his own product. Yeah.
And had the emotional ability to do that. I mean, can you imagine as a business thing, I'm going to get rid of this most very profitable 50% of our revenue and I'm going to come up with something better. Pretty wild. Well, the iPhone did everything the iPod did, but so much more exactly it and really changed how we communicate, how we work.
I mean, you know, I guess the pros and cons, not everyone agrees that the iPhone has been maybe good for society versus everyone now staring at their phones and not having a in-person conversations anymore. I saw something online where someone said they had a family friend visiting and they brought their daughter who was just so worried about posting on Instagram the whole time that they're not participating in any of the activities that they were actually doing. Right. Yeah.
And I love that story here about Apple because I think there's some really important lessons here about business. You mentioned here that the iPhone sales are more than 50% of Apple's total sales. And just coincidentally, we were talking about this before we hit the record button. I saw a tweet this morning about Apple, click through to the article on Bloomberg and it showed the breakdown of Apple's sales last year in a pie chart.
And to your point, iPhone sales, 52.5% of total sales last year. The iPad, 8.7%. Macintosh, their computers, 9.6%. So think about this.
Apple was a computer company. It was called Apple Computer. Today, less than 10% of their business comes from computers. So this idea of creative destruction of them innovating, coming out with new products, new lines of service to the point where their original product computers is less than 10% of their business today, which I think is great.
So it's a good lesson for everyone in business that if you don't continue to reinvent, if you don't continue to innovate, you're going to be out of business. Apple's going to do it to you unless you have the foresight to do it to yourself first, like Apple has at one point. I don't know if they still are today, but the most valuable company in the world by market cap. Yeah, having the ability to adapt is key.
And I think that actually goes really well with our topic today of financial plans and why they fail it. And we have the technical or the mechanical reasons why they fail. Like, one, not even having a financial plan, kind of an obvious one. Well, if you're failing to plan, you're planning to fail, but people that have unrealistic expectations, not sticking to a budget, so over spending plans don't work when it's budgeted for a certain way and that budget is not able to be maintained, not understanding markets and volatile markets and not even having a plan for those markets too, because they happen.
We know markets just don't go in a straight line. We talk about that a lot. Neglecting Social Security planning, not creating an estate plan, not having the proper insurance coverage. I mean, these are all things that can blow up a financial plan.
But one that we talk about, but maybe doesn't get as much airplay in the financial planning community is the emotional side of it. And I completely understand why advisors are trained to say that emotions trigger illogical thinking. If you're making an emotional decision, that's the wrong decision. And we've essentially been taught and trained within the industry.
And this has been changing over time. We talked about our internship program and how we're working with the CFP program or the personal financial planning program at K-State. One of the courses that all the students have to take now is behavioral finance, because it's been taught through behavioral finance that it is impossible to remove the emotion from our decision making. It's impossible.
You can't look at everything and just think from an economic standpoint, they talk about making rational decisions and everyone's going to make a rational decision. It's like, well, no, that's not true. That's not work that way. And so, advisor training has evolved to bring in more of this behavioral finance.
We're going to talk about how advisors aren't just the numbers experts, the spreadsheet experts. They are that. But a great advisor, the ideal advisor is a guide and a coach as well, who leads with empathy, not only instruction. And that's an important facet to look for, especially when we talk to potential clients all the time about.
It's not just who shows you the best returns or the best financial plan. You've got to work with somebody that you get along with, you trust with, you can communicate with. Communication is key when it comes to creating a financial plan that's going to work. And Matt, when we talk about today, why financial plans fail, let me think about what do we mean by that even?
You know, of course, we could go kind of a nuclear route that says someone outlives their money through a number of these issues that you've talked about already, up to it, including making negative emotional decisions that we can talk about more. But there's probably other ways financial plans can fail as well that aren't just, hey, I'm destitute. In my mind, it has to do with just maximizing your resources for you and your family and enjoying your life to a point where you're living in a place where you're not riddled with worry and anxiety and you're seeing the people that you want to see, you're having freedom of time, freedom of money, freedom of relationship, freedom of purpose in your life. And if any of those become compromised, at some level, potentially your financial plan has failed, maybe not completely failed, but certainly not being optimized.
So what we'd like to do is optimize someone's situation. Would you agree with that? That's right. I mean, we want people to thrive and flourish in retirement.
It's not just about surviving. And these financial plan failures, yes, outliving your money, overspending, making your emotional decisions around the volatile markets. But there's also periods where we're talking to clients that are going to pass away with more than enough money. If you're overly stressed about it too, even though we're trying to show you with our spreadsheets, look, you're going to be OK.
And now it's like, OK, the spreadsheet isn't solving that anxiety situation. It's now, OK, what are the emotional reasons why you have this fear, this anxiety about spending the money, taking the trip, go buying a new vehicle. You clearly can afford it. I mean, we're talking, then it's leaps and bounds, now to question that they can afford that, but they have a difficult time doing that.
And eliminating that, because if you're really stressed and anxious about it, you're not thriving in retirement. You're just constantly worried about it. That's right. Bill, I want to go back for a second here on something that you just said.
You talked about trying to come up with optimal financial decisions. Are there situations where the optimal or the best financial decision, the best numerical decision, would not be the best decision for that particular client? Are there situations where those are not the same thing? Some of you may remember if you've listened to prior episodes, I think I brought this up early six years ago, maybe on an episode.
It is in my book, Keynon Retirement Engineering the Second Half of Life. I've used this as kind of an opener to some of our live events over the last, my goodness, 20 years. And it's a great question, Steve. And what I want to make sure I'm discerning between is what is best for a family financially and what is best for them in a broad view of their life.
So the question that I ask is when is the best time to retire from a financial standpoint only? And I ask that to a group and I won't ask it to you too because you know the answer. But as I posed that today, when is the best time to retire? Come up with a financial standpoint only, the answer to that question is never.
So if you were only worried about the financial aspect and having more, then you would never retire because you could always work another year. You could always earn more money, save more money and forego spending money one more year. So there comes a point. I call it a crossover point where you realize that one more year of life at work is not worth what you're going to do in that next phase.
And it feeds back into what I said earlier just on this very episode about freedom of time, freedom of relationship, freedom of purpose, and yes, freedom of money. So the answer to your question is it's not always about what gets you the most money. It's all about a holistic look at the broader aspects of life and relationship and these other things that we talked about. And that's where I believe a good financial advisor will help folks realize they have choices and they have that freedom to move forward and look into the future and be inspired about that next phase of life.
I call it the second half. So I love thinking about it as habs, if you will. Well, and I love how you just said that because as your last point that you just made here about the best financial advisors, that's what they help you do. Sure, they're going to help with the financial aspects.
They're going to do all the calculations and all of that. That's standard. But the best financial advisors are going to take the time to understand your situation, understand what tradeoffs you may have, help point out the options that you have, help identify some of the factors that you may not have taken into consideration. And this is a third party that is not emotionally attached in the way that maybe your spouse might be in the outcome that can show you from their wisdom and their experience, what that looks like.
So that to me is one of the greatest values of a financial professional is being able to lay out those different options and help you decide like when is it the best time to retire? Like you say, never if it's just about the money. But we know we're going to have to retire likely at some point. How do we make that trade off and figure out when is enough enough, so to speak, for the other things I want to do in my life, they go beyond traditional work.
That's right. And it's quite an honor and a privilege. And that's a message that Matt and I give as we're doing our stay in the company, quarterly meetings to our team and our regular communications with our team members and our planners here. It is a privilege and an honor to get to sit down with each and every family that we advise and help them find what inspires them in their lives and what they're working toward and help them make that come true and then get to participate on that journey with them.
It's probably one of the most fulfilling things that this profession brings to us as financial planners. Yeah. And I think that really ties in with this point eight on why financial plans fail, which is about letting emotions take over. And Matt, just a moment ago, you were talking about how, yeah, we actually have to work with the emotion.
We have to understand the emotion and work with it as opposed to ignore it. If we just ignore it, it's not going away. It's just going to pop up somewhere else and most likely going to cause a problem elsewhere. And I think again, talking about quote, a great financial advisor, they're not going to ignore the emotion.
They're not going to say, oh, this is awkward. I want to go there. Okay. I'm not psychologist, so don't get me wrong.
I'm not suggesting that. But these are things that affect people's decision making. And so we've got to be open. And that's why it's so important to work with the financial professional that you trust because you need to trust that they are going to take this emotion and this conversation and work with you on it to make sure that you are making good financial decisions, good life decisions where you're using your money as a tool to support the kind of life that you want.
And when you find that combination of a fiduciary financial advisor who understands the financials, who understands the numbers, who understands the planning process, combined with the ability to have these real heartfelt conversations that you can trust. That's when you know you have one of the best financial advisors in the country. And I would say, and you guys aren't paying me to do this, but I would say you too and the rest of the folks at your firm, that's the ideal that you guys live up to. We can always be better, but it's certainly something that we do aspire to do is to honor and acknowledge each client's journey and each client's emotional makeup as we travel the path of this long-term financial planning process.
I remember a meeting that I was in, this was years ago, and Bill and I were meeting with this couple and the wife was just really nervous and anxious about retiring and starting to take distributions out of their account. And the husband, great saved, I mean more than enough money, they were completely fine. And it was less of an issue for him. He was ready to retire all good with the plan, but we could just really send some hesitation there.
And as we're sitting in that meeting, we're kind of digging in with the wife around what was going on. And she shared, and I still remember the story, she shared the reason she has such a hard time spending money is because when she was in high school, one, I think it was her grandmother told her that she is terrible with money and will never leave her anything. And that stuck with her whole life. I mean, this person's now in their 60s getting ready to retire and has lived with that statement, their whole life trying to not, I guess, upset her grandmother who told her this back 40 years prior about how she viewed herself with money.
And when we've kind of finally got that out of her, and we're able to kind of talk about that and dig into that a little bit more and really understand her emotional reaction, she was able to make much better decisions post this and even with her husband involved too. You know, having that information was just phenomenal to building the relationship and then getting everyone on board with the right plan. Matt, wouldn't you say that once we were able to have that conversation and it was through a series of questions, it was through a series of listening, it wasn't us talking, it wasn't us presenting charts. Although my point to this is interesting.
Once we were able to have that conversation and help her kind of dig in a little bit and realize some of the things that were causing her feelings and her emotion around this, she was then more able and capable to engage in the financial planning process. And then the data and the numbers and the projections actually meant something to her. She was able to believe in them and have some faith in that process and faith in what we were telling her. But until we were able to get to the root cause of that, she was pretty closed off.
And in 30 years of doing this, I can tell you, I've had many iterations of exactly what Matt just described in various forms and different detail. But once you take the time to let someone work that out, then they become more open to the actual process. But in order matters, we talk about order matters in a lot of things in life. And this is one that orders certainly matters here, Steve.
Yeah. And Matt, I have never heard that story before. And so I appreciate you sharing that and Bill, your comments are so spot on there. A typical financial advisor, and I'm not trying to throw financial advisors under the bus here.
I'm just trying to do a contrast here between an outstanding financial advisor and what a normal financial advisor might do. A normal financial advisor would take the situation that you just described there, Matt. And they would try and respond with more facts, with more information about, well, we've done this projection, we've done reasonable assumptions in here and you're not going to run out of money. So you're fine.
You don't take this money out. But that's an intellectual appeal. Her situation was such that she didn't get into her thinking because of some factual fallacy or some intellectual misunderstanding. That's not how she got into it.
She got into it because of an emotional situation. And so just trying to shove more facts onto her is not going to enable her to exit something that she got into because of an emotional situation. So what you guys did was you approached the emotion with emotion and trying to understand the emotion and the situation in that case. And by simply having that conversation, like Bill said, we're asking questions.
You're unpacking the situation. Again, we're not acting as a therapist here or a psychologist. We're just trying to understand what happened. And oftentimes by simply giving them that space to share that story, to bring it out into the light and sunlight can be a great disinfectant.
And in this case, that sounds like that's what happened. By simply bringing it to the surface, now it's exposed to light and she can process it. She can feel it. She can understand it and realize, well, after 40 years, I probably shouldn't let what my grandmother said to me all that time ago still affect decisions that I make today.
And by simply having that conversation, it sounds like she had this aha realization and could move forward with a financial plan that would make good intellectual sense, but also she could comfortably work with it from an emotional standpoint. So again, I think that's such a great example. And I think a perfect example of what great financial advisors do and the value that they provide in a relationship, just like you guys described there. Another aspect to that as well is now play that scenario out a few years.
What's really fun to get to see is, for instance, this specific scenario that Matt described or the many others that we've had the privilege of being a part of is you look up and a year into retirement, these folks look 10 years younger. And now they have some literacy around being engaged in the financial planning process. So that's important part of our process is helping folks have financial literacy so that they understand some of what we're doing. Not all, well, we hope they understand all of it.
They're not trying to make them financial planners or CPAs. They have some literacy around it. We've acknowledged and honored some of the emotions, so some of the behavioral aspects to this. And then that third thing that makes it ever so powerful is that now they've got history and experience to add to that kind of trifecta that gives them some real faith now in their position so that now they have a year or so of experience and then you look up and they've got five years of experience and oh my goodness, they've been through a financial crisis in retirement.
They've looked up and they've been through a really tough market and they look up and they're past it and they say, well gosh, we made it through that and we had a plan in place that we didn't throw us off course and we're good. Now all of a sudden they've got some real faith and some real peace about where they're at in this process. For us, it's really a long journey watching this play out over time and watching people settle into a place that's really meaningful and peaceful and even I would say joyous and intentional as they're living life to however they define their fullest. Well, I think we could just wrap right there.
I thought that was just a call today. Call it a day. I mean, I don't know what else we can add to that. I think it's a great episode just talking about why financial plans fail and how to avoid that.
And I think this key here that we've really been spending a little bit of time on about the emotions and really understanding the emotions and letting people get them out and let's expose them to the light and I think you just did a great summary there, Bill. So unless you've got something else to add, I think we should wrap it right here. I just would like to say everybody's situation and what they hold dear to them is different. So whatever each person and each family has that is important to them and how they want their life to look, we honor that as well.
Steve, you shared earlier that a relative up in age has done very well with their finances but that they are just completely satisfied living well below what they could live their life at. And you know, that's something that we would honor and acknowledge as well. What we just don't want to see is somebody living a life out of fear and anxiety afraid of what might come next. What we'd like to do is help folks get to a point that whatever they see as their life being lived to their fullest.
In fact, at Keen Well, this is an internal phrase that we share with our team members, but we want our clients to be competently living their best lives. And our point to that is they define what their best lives are. We don't define that culture doesn't define that they do. And whatever that is, we want to help them make that happen.
Excellent. I think that is a great way to wrap up. So Bill, Matt, thank you. All of you listening.
You can go to KeenWellthAdvisors.com and get the show notes from this episode as well as all the previous ones. We also have some outstanding blog posts on pretty much any topic you can think about as it relates to the qualitative aspects of retiring, things like travel, psychology, all those aspects. We got them all covered. So again, visit us at KeenWellthAdvisors.com.
Bill and Matt, thanks guys. Look forward to the next episode. Excellent. Thank you.
Thank you. Steve, Sandusky and Belay Advisor are not affiliated with Keen Wellth Advisors. Opinions expressed by Steve are his own and not necessarily the opinions of Keen Wellth Advisors. Keen Wellth Advisors is an SCC registered investment advisor.
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