Ryan Nauman hosts Zephyr’s Adjusted for Risk podcast with guest Phil Palumbo, CEO/CIO of Palumbo Wealth Management and host of the Palumbo Pulse, to discuss aging demographics and implications for retirement planning and advisors. Palumbo describes leaving UBS to go independent for fiduciary alignment, better economics, and broader investment access, and explains his firm’s focus on helping founders prepare for and execute business exits, then manage taxes, planning, investing, and wealth transfer. He contrasts “retirement” with “make work optional,” emphasizing saving discipline, compounding, and long-term exposure to risk assets (stocks, real estate, private equity) to combat inflation and longevity risk. They stress the need for written financial plans, tax-aware investing, appropriate risk during distribution, bucket-based income planning, diversification, and client education to avoid panic selling during market volatility.

Learn more about Palumbo Wealth Management here.

Connect with Ryan Nauman:

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00:00 Welcome and Sponsor

01:13 Meet Phil Palumbo

02:59 Going Independent RIA

04:54 Make Work Optional

07:50 Saving and Compounding

10:26 Spending and Longevity

12:14 Inflation and Risk Assets

15:39 Why Plans Matter

17:38 Tax Smart Investing

19:28 Exit Planning Playbook

24:14 Retirement Spending Strategy

29:14 Ignore Market Noise

32:05 Emotions and Marathon Mindset

34:13 Wrap Up and Where to Find

Let's go.

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Ryan Nauman Market Strategist Zephyr:

Hello everyone and welcome to

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zephyr's adjusted for Risk Podcast

from the shores of Lake Tahoe.

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I am Ryan Amman, the market

strategist here at Zephyr.

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As most know, more and

more people are turning 65.

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In fact, research shows that more

than 11,200 Americans, we'll be

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turning 65 per day through 2027.

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These demographics are putting a

renewed emphasis on financial planning

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or specifically retirement planning.

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Well, I have on the perfect guest to

talk about the aging demographics and

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what it means for financial advisors.

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But first, today's episode is sponsored

by the award-winning Zephyr, which

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helps investment professionals

make more informed investment

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decisions on behalf of their clients.

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Alright, let's move on

to the star of the show.

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It's enough from me.

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I'd like to give a very warm welcome.

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To Phil Palumbo.

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Phil is a CEO and Chief Investment Officer

at Palumbo Wealth Management, and also

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host of the very popular Palumbo Podcast.

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Phil, thank you so much

for coming on the show.

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It's an honor to have you on really

excited about this conversation as

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it's a very timely and important one.

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Can you please tell us a little

bit more about yourself and

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Palumbo Wealth Management?

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Philip Palumbo CEO & Chief Investment Officer Palumbo Wealth Management:

Ryan, thank you for having me on as well.

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Yes, so my firm, Palumbo Wealth

Management is now on its seventh year.

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I launched out of UBS, which is a,

obviously a major financial firm.

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at the major financial firms for 20

years of my career and then decided

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to go independent, mainly to get away

from the conflicts of the major firms.

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And also to have that fiduciary

hat for my clients going forward.

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And, and, and also you have more

unlimited resources in my world.

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Everything on, on the alternative

investment side, direct access

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to privates as an example.

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So really been an, an, a great experience.

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The, the primary focus of my

firm is working with founders

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and helping them exit.

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So we work with founders pre-ex exit

to increase multiple, to get maximum

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value and get 'em to best in class.

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And we help them post exit in

minimizing the overall taxes of

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the actual exit event to 90%.

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then after that, we assist them with

all the advanced planning in terms

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of financial planning and helping

'em, making sure that they, they can

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live comfortably maintaining their

lifestyle and what I call U2 0.0.

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We helped them on the investment

management front as well.

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Everything as it relates to

the transfer of their wealth.

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So it's pretty comprehensive in how

we assist our clients all through

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the process of helping founders exit.

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Ryan: Yeah, Phil real quickly, let's

go back to when you transitioned

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from UBS to being independent.

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Seven years ago, that was probably

a little bit before it got

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really popular and the trend.

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Now it's like every time I

read wealth management.com

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or something, I never read

somebody on the Independence.

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I go on.

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Captive or going to a wirehouse,

it's always the other way.

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Do you think that's gonna continue that

shift from being, going from wirehouse

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or large broker dealers to independent?

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You think that trend is going to continue?

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Phil Palumbo: I absolutely do.

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It's because this, this world that you

are in, first of all the, the assets

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on the, on the management in the RIA

space is, is getting larger if not

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larger now than the wirehouse space.

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So to your point, I mean the

trend has been parabolic and

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I think that'll continue.

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And the reason why is because

you recognize that you don't

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need these big banks behind you.

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To bring in new clients.

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In fact, I've grown the most I've

ever grown since I launched up four x

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in just a short period of time, and,

and that's only growing from there.

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So I think advisors are nervous that

they need some big name behind them.

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The reality is my clients are

custody with Pershing BNY Right?

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Which is the largest

custodian in the world.

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And they all the, all the protections

you get these majors, you know, with

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strong custodial ship and safeguarding,

you know, and you do have some

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access to resources of these major,

you know, custodian firms as well.

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So, so for me, it's, you get.

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The best of both worlds where you

still get the strong custodial ship

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safeguarding, you get better economics,

you get to wear the, the fiduciary hat.

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And by the way, with the better

economics, you could reinvest back

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into the business to put together

and continue to put together a strong

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platform for clients And resources are

are like, are unlimited, unlimited.

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So you're no longer limited to

just whatever a single firm has.

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So for me, I think it

continues going forward.

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Ryan: Phil, that's a great point.

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And just gives you more options

also, especially like you said,

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on, on the investment side as well.

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You know, one of the primary

philosophies at Palumbo Wealth

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Management is, is make work optional.

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Found that very interesting.

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I love it.

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But what does it mean though, really?

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And how does it differ from just retiring?

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Phil Palumbo: Yes, it differs

from the standpoint that I, the,

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Phil Palumbo Palumbo Wealth Management:

my problem I have with the

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word retirement, I just feel

like it's very archaic, right?

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It's overused in marketing and

sales, these retirement type

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seminars and so on and so forth.

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When, and everybody's walking around

saying, I'm gonna retire at 60, 65

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because my aunt or sister, my brother did.

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When the main goal that everybody

should have, and they should say to

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themselves, how quickly can it get to

the point where work can be optional,

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where you are working because you want

to, not because you have to, you know

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where you're at the point where you have

enough money saved that will generate

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enough cash flow to maintain your

lifestyle and what I call again, you 2.0.

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for me that's the, it's the

race to financial independence,

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which could happen at 50, could

happen 45, it could happen at 53.

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It doesn't necessarily have to

wait till you're 65 or 67 or 68.

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When you receive social security.

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So it's that mindset

that's much different.

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Phil Palumbo: And that's the first thing.

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And the second thing is in, you

know, today's world, it's like my

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father, he retired at the age of

53 as a local three electrician.

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'cause he climbed ladders

and it was hard work.

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So in today's day and age, people aren't

just fully retiring, So it's like, I feel

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like I have to retire the word retirement.

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So the idea behind to make work optional

is you working because you want to now.

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'cause you have to.

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So maybe you.

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You are financially independent.

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So now you could get involved with

that industry or maybe do do that

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consulting job you always wanted to do.

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'cause now you have the flexibility.

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So it's a totally different mindset.

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But the idea is that from the day

you start working to think about

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financial independence and getting

there as quickly as possible.

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And what you need to do to

get there is the mindset.

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So my book make work optional.

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It walks people through

exactly how to do that.

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Ryan: I love that Phil, and nobody wants

to be forced to really do anything.

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Thing.

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Right.

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Especially, you know, like when

you get older, it'd be great

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to have the option to work in.

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And like I said, I, for me, I don't

think I'll ever like really retire.

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I'll drive myself nuts and

everybody in my household nuts.

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But like, you know, having the

option to work, maybe shoot, I'm

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being a lift at, at having least

ski resort or something, right?

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Where it's optional.

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I'm just doing it for fun

to keep myself mind my mind.

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Occupied and and busy.

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So I'm just not sitting

around watching TV all day

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Phil Palumbo: Yeah, there are many

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Ryan: or the news.

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Phil Palumbo: There are many times

I'd be in the mountains of Vermont

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and taking, and getting lessons

from various ski instructors.

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Those ski instructors were like 55,

60, 65 years old, and they were, they,

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they were financially independent.

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They loved to ski.

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It's something they always wanted to

do, and, and that was there, quote

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unquote part-time or full-time jobs.

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So that's the beauty behind it.

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Ryan: Yeah, that's fantastic.

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So.

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People love, probably love that idea,

you know, making work optional, but they

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might be a little bit concerned, right?

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Like, are we ready to make it optional?

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What are some of the biggest

obstacles to making work optional,

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and, and how can your clients or just

individuals overcome those obstacles?

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Phil Palumbo: Yeah.

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First of all, it's not an obstacle.

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The the the what you

need to, what you need.

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People need to understand first, right?

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Is Franklin Templeton, the way he always

thought about life is every dollar he

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made, he saved 50 cents and then he.

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Used the other 50 cents for his

lifestyle, his regular expenses, and

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obviously became super successful, but

always had this sort of mindset, right?

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So he always saved 50%,

invested 50% that 50%.

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And when you do that in compounds over

long periods of time, the power of

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compounding, which you always hear about

and, and we've always talked about.

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But Einstein said the most powerful

thing in the world, you know, if you

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start doing it at twenties and you

really learn how to manage your money

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properly by saving properly, not going

to a restaurant every single week,

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twice, three times a week, not not

going out to lunch every single day.

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If you are working in Manhattan

spending 25 to $30, all of that

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compounds over a 20 year career.

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If you invested that money,

it makes a big difference.

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So people really have to

really grasp their arms around.

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I mean, I got clients who have 10,

20, 30, 40 million, 50 million,

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a hundred million, me that.

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have like a, a, a lifestyle spending

problem, which sounds crazy 'cause

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they have all this money, but it's

all relative at the end of the day.

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So it's learning this mindset

like any type of other habit

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that you have, and then getting

into that groove is number one.

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It's saving.

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Saving is the hardest thing

because people love to spend money

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and it's so hard to save money.

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So saving is absolutely number one.

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If you have that habit built

in, then you have to put your

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money exposed to risk assets.

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have to aim for 10 to 15% average returns

over a long period of time, and the

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only way to do that is to investing in

stocks, real estate and private equity.

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Those are the three main ways

you can compound growth of 10 to

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15% over long periods of time.

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So those, those are the two main

focuses that people have to think about.

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Ryan: I love that you

brought that up, Phil.

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Being April April's Financial

Literacy Month, we're doing some

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good things in Zephyr just about

educating, you know, creating a budget.

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But part of that, one of the

biggest pieces is saving and

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compounding interest, which.

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You know, people I think often

forget about just how powerful it

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can be, but how important it is.

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But also you talk about saving, but I also

have a lot of conversations with people

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about the risk of their clients just

not spending enough come retirement too.

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They, they're so used to saving, they're

worried about, you know, running outta

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money so they're not spending enough.

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Phil Palumbo: Yeah, so this

is another point that I bring

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to the table all the time.

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So when people come in to visit

with me, I mean, focusing on

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retirement has been my entire

career for the past 25 years, right?

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So I've met with hundreds of people and

going through this scenario and, and

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the first thing people are concerned

about, there's two main things that

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people are concerned about, right?

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Number one is being able to

maintain their lifestyle.

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Everybody loves their lifestyle.

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They just want to be able

to maintain that lifestyle.

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And the second thing is the

fear of running out of money.

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And being depending on their children.

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So those are two main, main,

main goals that people have.

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what I tell people all the time, by the

time you're getting ready to stop working

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or retire or make work optional, right?

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By the time you're ready for that,

whatever your habits have been

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for the past 30 years, or greater

or less, that's not gonna change.

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So if you were spending 200,000 a

year, now that you're retired, you're

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not gonna go and spend 500,000 a year.

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because you're just used to a

certain lifestyle and that's, it's

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habitual, and that will continue.

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You're not gonna go out and buy

three Ferraris, two Lamborghinis,

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and then and two additional vacation

homes, one in the one in Aspen, and

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then one in the Hamptons, right?

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You're just not gonna do that.

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You may have desires above and

beyond whatever that may be, but most

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likely you'll stay at the spending

level that you're going to stay at.

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Now, that may increase 10% to 15%.

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For various reasons, right?

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So that's where, that's why you have

to have a little bit of a buffer.

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So if you think you're spending $200,000,

think like 2 20, 2 30, just to give

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yourself a little bit of a buffer.

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Ryan: And you also talked

about just investment returns.

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Now you've gotta, you know, trying to

achieve 10, 12, 15% over an extended

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period of time, and there's a.

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Only really a few options out there.

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And you mentioned them, you know,

people are living longer than ever

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and that probably is putting a bigger

emphasis on the 10, 12, 15% return

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for an extended period of time.

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Does that also, you know, that mindset

for your clients too, because I'm gonna

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age myself here, Phil, when I started in

the industry 20 years ago, it was like.

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And very simply, your allocation

to equity should be what?

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A hundred minus your age, and that

should be your rough estimate of

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what your allocation equities.

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That can't work anymore because

people are living longer.

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They need, is that hard to

get over to is like you're 60.

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You can't just be in 60% bonds.

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Phil Palumbo: Yeah, so that formula

stuff is so ridiculous to me,

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by the way, I always thought it

was even before I became, and to

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really understand the industry.

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And the reason why I say that

right is a couple of reasons.

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Fir, first of all, the two major

risks that people are exposed to,

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which relates to what you just said,

obviously, is number one I always

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thought was inflation risk, right?

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Inflation risk is the risk of

your purchase of power eroding

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over time, and that is a major

risk that people are exposed to.

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That's why, that's why whatever assets you

have right now, you can't just grow it and

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put it all in CDs and fixed income and get

four or 5% because you factor in taxes.

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Inflation, your return on that

money is zero to negative.

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So that's the problem with putting a

good party of money in fixed income

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and bonds, fixed income and CDs, and

a lot of advisors out there half a

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client's money or more in doing that.

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That's a tremendous risk to the

disruption of a client's lifestyle, and

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that's what we're trying to prevent.

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So that's number one.

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And then number two,

this is incredible, Ryan.

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This is something I'm

talking more and more about.

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Is longevity risk is now a bigger

risk, I think, than inflation risk,

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is the risk of you living long and

your money not keeping up with that.

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And the only way for your money to keep

up with that is to invest in what's

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called risk assets, which are stocks,

real estate, and private equity with

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at least 60% or greater of your money.

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Now let's roll it real quick.

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As it relates to this, I get it.

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Well, like I don't wanna take that risk.

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The volatility.

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You gotta ask yourself two things.

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Here's volatility and here's

inflation and longevity risk.

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If you wanna run a, if you run a

one, if you want to run away from

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volatility risk, that means you're

running into inflation and longevity

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risk, which is the real problem.

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'cause volatility is just

short term in nature.

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Right.

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Meaning that when stocks go down,

if you don't sell, it will go

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back up over long periods of time.

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And don't get me wrong, you could have

long periods of time where markets are,

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you know, three 4% that can happen.

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And I get that argument.

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volatility risk is not the

risk, it's the inflation.

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And longevity risk is the true risk to

the main concern that our clients have,

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which is maintaining their lifestyle

and the fear of running outta money.

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Ryan: Yeah, I think that's

fantastic, Phil, and feels as if

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too many people they focus on.

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Like you said, volatility or just losing

their money and they forget about, you

301

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know, they've still got 20, 30 more

years yet to make this money last, so.

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Great point there.

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Let's talk a little bit

about the financial plan.

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You know, I'm, as I'm assuming,

and I'm sure having a comprehensive

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00:15:47,029 --> 00:15:50,659

financial plan in place is the most

important piece to making work optional.

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We gotta have that plan work,

that plan to making work optional.

307

00:15:55,069 --> 00:15:58,939

Is there part of that holistic financial

plan that might be underutilized?

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00:15:59,089 --> 00:16:03,589

We've just talked a lot about

investment management piece, but is

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there something else that may be.

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Isn't considered enough for retirees or,

or folks that are thinking about retiring

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or, or I should say, making work optional.

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00:16:15,491 --> 00:16:19,391

Phil Palumbo: So regards to financial

planning, about 70% of people out there do

313

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not have a formal written financial plan.

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It's back in the envelope writing things

down saying, Hey, I need 10 million.

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I need 20 million, because I, I think

that's my number without any type

316

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of formal written financial plan.

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00:16:31,131 --> 00:16:34,761

That's a tremendous mistake, and

I understand why people don't take

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financial planning as serious as they

should, because in their mind it's all

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about the investments and their return.

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And I get that.

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Yeah, that's a important part.

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But the foundational element of

everything is your financial plan,

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because it's a roadmap for you to

follow along with year after year

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after year to see if you're making

progress towards your goal, number one.

325

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Number two, it keeps you

accountable to your goals, right?

326

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So if you're saying you're spending

200,000, the year is up, well, did you

327

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spend 200,000, number one, number two.

328

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The goal objective in terms of

return performance is six to 8%.

329

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If it is, how did we do right?

330

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If we're we, if we're in a bear

market, is that factored into the plan?

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Right?

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So, so the, the planning aspect is,

is really important to help people

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to, to help people first understand

do they have enough money and can

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they achieve their financial goals?

335

00:17:22,116 --> 00:17:25,806

Number two, it's a game plan to

be able to follow on a playbook,

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to follow on a consistent basis.

337

00:17:27,726 --> 00:17:31,086

You know, that's really important

to the accountability of the

338

00:17:31,086 --> 00:17:32,646

professional that you're working with.

339

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And then you as the client.

340

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Ryan: Yeah, very, very good point.

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So, when we're recording this, it's

tax season, what, how does taxes play

342

00:17:44,389 --> 00:17:45,979

a role in the whole overall plan?

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Do you, you know, it feel as if

tax management, tax planning is

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00:17:49,729 --> 00:17:54,049

becoming a hotter topic than it

was maybe five, 10 years ago.

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Is it still underutilized right now?

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Phil Palumbo: Yeah, so Ryan, one of

the most important thing too, I talk

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to clients about all the time is,

you know, I'll give you an example.

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Even besides talking to a client, I

have many money managers that knock on

349

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my door, hedge fund managers, private

equity, and they say, Hey, my average

350

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return is 14% a year since inception.

351

00:18:10,221 --> 00:18:10,911

I said, great.

352

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I said, what's the

after-tax return of that?

353

00:18:12,711 --> 00:18:15,201

Well, it's seven because it's

all short term ordinary income.

354

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The s and p has done 15 over

that same period of time.

355

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With no extra fees and

less risk, et cetera.

356

00:18:23,856 --> 00:18:27,666

after tax returns is the most important

function is the most important

357

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part of of performance, right?

358

00:18:31,146 --> 00:18:34,536

again, if you have 10% returns, but it's

all extraordinary income there at five,

359

00:18:34,536 --> 00:18:37,626

that's, then you put inflation in there

at three, you only grow any money by two.

360

00:18:37,626 --> 00:18:38,406

That's a problem.

361

00:18:39,336 --> 00:18:42,486

So when it comes to construction

of a, of a portfolio, it's really

362

00:18:42,486 --> 00:18:47,226

important to put in play ways that

you're gonna harvest losses over time.

363

00:18:48,441 --> 00:18:49,101

Number one.

364

00:18:49,341 --> 00:18:54,081

Number two, being a long-term investor,

besides the benefit of not touching

365

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your portfolio, making stupid mistakes,

and just owning great investments

366

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in great companies over long periods

of time, there's tremendous benefits

367

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in understanding that philosophy.

368

00:19:04,311 --> 00:19:05,451

By you doing that.

369

00:19:06,231 --> 00:19:09,501

You're not turning the portfolio over by

you not turning the portfolio over, you're

370

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not creating taxable events for yourself.

371

00:19:11,961 --> 00:19:16,281

So it's, it's, so, it's having a strategy

for harvesting losses is really great

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00:19:16,281 --> 00:19:20,751

strategies out, out there today that

can really help you create these losses

373

00:19:20,751 --> 00:19:26,211

to offset against gains and in being a

long-term investor and that helped defer

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your taxes over long periods of time.

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00:19:29,409 --> 00:19:33,454

Ryan: Yeah, so like you mentioned at

the opening part of Palumbo Wealth

376

00:19:33,454 --> 00:19:38,404

Management, you help your clients and

individuals, business owners exit.

377

00:19:38,824 --> 00:19:42,034

Doing a successful exit

of their businesses.

378

00:19:42,664 --> 00:19:47,224

You know, like we said, America's aging

and business owners now are more than

379

00:19:47,224 --> 00:19:50,464

ever looking for upcoming liquidity event.

380

00:19:50,524 --> 00:19:53,104

Liquidity events like

selling their business.

381

00:19:53,344 --> 00:19:58,264

What should these owners consider to

set themselves up for a successful exit?

382

00:19:58,926 --> 00:19:59,646

Phil Palumbo: A couple of things.

383

00:19:59,856 --> 00:20:04,326

Really, the, the first most important part

is if you're looking into exit, right?

384

00:20:04,476 --> 00:20:05,826

You have to give yourself time.

385

00:20:05,856 --> 00:20:08,196

You can't say, I want to exit,

and you look to sell tomorrow.

386

00:20:08,196 --> 00:20:13,491

Or you get that phone call from a private

equity company or a strategic buyer and

387

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they say, Hey, let's sit down, have a

conversation, and then you do, and they

388

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give you a certain number and you're

like, wow, that number sounds great.

389

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When the reality is, if you gave

yourself two or three years to

390

00:20:23,211 --> 00:20:26,571

clean up the, clean up the business,

professionalize the business, right?

391

00:20:26,571 --> 00:20:29,901

Build in strategic thinking

as an example, right?

392

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Take away the owner

dependence of the business.

393

00:20:31,941 --> 00:20:34,311

So just a few examples of

what I'm talking about.

394

00:20:34,731 --> 00:20:38,721

If you do those types of things, you

may turn the multiple by 2, 3, 4 times.

395

00:20:39,066 --> 00:20:41,586

So the number of somebody comes to

you, 20 million, right off the gate,

396

00:20:41,616 --> 00:20:42,996

right out right out of the gate.

397

00:20:43,236 --> 00:20:45,126

That number may be 30 or 40 million.

398

00:20:45,126 --> 00:20:48,036

If you didn't, if you went

through a few steps pre-ex exit,

399

00:20:48,426 --> 00:20:49,536

that could help tremendously.

400

00:20:49,536 --> 00:20:54,186

So that's number one as it relates to the

after ta, the before tax dollars that you

401

00:20:54,186 --> 00:20:55,926

would receive after selling your business.

402

00:20:55,926 --> 00:20:59,346

And number two though, is

the, the estate planning part.

403

00:20:59,676 --> 00:21:04,206

So the estate planning part is going

through a planning process and saying

404

00:21:04,236 --> 00:21:08,286

to yourself of this sale, how much

did I put into some type of trust?

405

00:21:08,691 --> 00:21:12,231

At a discounted price that now

if I sell my business, that asset

406

00:21:12,231 --> 00:21:15,801

is now outside of my estate,

which grows outside of my estate.

407

00:21:15,801 --> 00:21:20,631

So when you die, there's no federal

estate taxes or state estate taxes

408

00:21:20,631 --> 00:21:22,221

depending on what you state you live in.

409

00:21:22,701 --> 00:21:25,641

So that alone can save

millions of dollars.

410

00:21:26,421 --> 00:21:30,381

And then post exit, you say to yourself,

well not post, but pre-ex exit.

411

00:21:30,381 --> 00:21:33,291

You say to yourself, okay, well if

I sell my business for 20 million,

412

00:21:33,501 --> 00:21:35,121

what am I gonna net in taxes?

413

00:21:35,811 --> 00:21:38,871

is that number, the number that I

need to live financially independent?

414

00:21:39,351 --> 00:21:42,651

And which strategies can I

implement to reduce my capital

415

00:21:42,651 --> 00:21:44,151

gains from selling my business?

416

00:21:44,601 --> 00:21:47,451

And there are strategies today,

which I talked about before of

417

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what we do is, is we could help

save up to 90% in capital gains.

418

00:21:52,896 --> 00:21:58,146

Would, that would give the client more

after tax dollars that they, that they

419

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could actually live on comfortably

and maintain their lifestyles.

420

00:22:01,746 --> 00:22:03,696

So these are just a couple of

things to think about that could

421

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make tremendous difference.

422

00:22:05,376 --> 00:22:07,176

But the number one question,

Brian, real quick one, one thing.

423

00:22:07,266 --> 00:22:09,096

The one number one thing that

you gotta ask yourself is

424

00:22:09,096 --> 00:22:09,771

if you think about exiting.

425

00:22:10,656 --> 00:22:13,386

Do you think your company's

operating at best in class?

426

00:22:13,386 --> 00:22:16,086

Do you really think your company's

operating at best in class?

427

00:22:16,506 --> 00:22:19,506

And if you're, and if versus your

competitors, and if you feel like you're

428

00:22:19,506 --> 00:22:23,346

not, then you gotta ask yourself is what

can I be doing to get to that level?

429

00:22:24,889 --> 00:22:26,899

Ryan: That's a great, great point.

430

00:22:26,899 --> 00:22:28,279

Great advice there.

431

00:22:28,279 --> 00:22:33,889

And do you think, like you said right

at the beginning, their PE firm walks on

432

00:22:33,889 --> 00:22:36,259

into your door, offers you $20 million.

433

00:22:36,259 --> 00:22:40,129

Do you think one of the biggest mistakes

business owners make is they just jump at

434

00:22:40,129 --> 00:22:42,949

it right away and be like, $20 million?

435

00:22:42,949 --> 00:22:43,939

Give it to me.

436

00:22:44,626 --> 00:22:44,956

Phil Palumbo: Oh my gosh.

437

00:22:44,956 --> 00:22:48,136

I get so excited about what we do here

at my firm, not to sell myself right

438

00:22:48,136 --> 00:22:50,086

now, but it's just a, it's, it's math.

439

00:22:50,086 --> 00:22:51,286

It's the reality of things.

440

00:22:51,346 --> 00:22:52,516

You're a hundred percent right?

441

00:22:52,516 --> 00:22:52,756

Yes.

442

00:22:52,756 --> 00:22:55,906

That's like the biggest mistake because

are you le how much money are you leaving

443

00:22:55,906 --> 00:22:59,506

on the table If you waited a year or

two and be, and if you're a little bit

444

00:22:59,506 --> 00:23:06,166

patient and clean things up, may be able

to get five, $10 million more, which is

445

00:23:06,229 --> 00:23:06,409

Ryan: Mm-hmm.

446

00:23:06,526 --> 00:23:07,606

Phil Palumbo: real money.

447

00:23:08,031 --> 00:23:10,521

So that's what a lot of business

owners are leaving on the table.

448

00:23:10,521 --> 00:23:12,891

Now, listen, there are situations,

Ryan, where business owners

449

00:23:12,891 --> 00:23:15,381

may be completely exhausted.

450

00:23:15,831 --> 00:23:20,511

They could be health issues, a divorce,

which by the way are reasons, this

451

00:23:20,511 --> 00:23:22,761

is the most important thing I can

tell you about exit planning, right?

452

00:23:22,761 --> 00:23:26,931

Right now, of the reason why people

exit is because of what I just said,

453

00:23:26,931 --> 00:23:29,571

death, health issues, and divorce.

454

00:23:30,411 --> 00:23:31,221

What does that mean?

455

00:23:31,461 --> 00:23:35,871

So that means that your business should

always be operating at best in class

456

00:23:36,051 --> 00:23:41,991

in the event one of these situations

happen, which happens 50% of the time.

457

00:23:42,801 --> 00:23:44,481

That is so important.

458

00:23:44,571 --> 00:23:47,901

So if you're a business owner, listen,

just a founder and you're walking around

459

00:23:47,901 --> 00:23:52,011

and you company's not tightened up,

that be a potential issue where you're

460

00:23:52,011 --> 00:23:53,901

leaving millions of dollars on the table.

461

00:23:55,654 --> 00:23:59,824

Ryan: I, I, if I had you asked me that

question, I would've never thought

462

00:23:59,824 --> 00:24:03,904

that, you know, again, it goes back

to, you lose, it's not an option.

463

00:24:04,084 --> 00:24:06,634

In those cases, you're

forced to look to sell it.

464

00:24:06,634 --> 00:24:08,644

So you always have to be prepared, right?

465

00:24:08,644 --> 00:24:10,954

And, and probably have a plan in place.

466

00:24:14,419 --> 00:24:18,139

Continuing along with the

aging demographics theme here.

467

00:24:18,949 --> 00:24:22,399

How does, and you mentioned earlier

too, we talked about earlier on the

468

00:24:22,399 --> 00:24:23,869

investment management side, you're.

469

00:24:25,264 --> 00:24:28,444

Employ more risk, more

volatility probably.

470

00:24:28,444 --> 00:24:33,514

And you shouldn't be afraid of volatility

because of long longevity, but how

471

00:24:33,514 --> 00:24:38,194

does investment or portfolio strategy

need to shift as clients move from the

472

00:24:38,194 --> 00:24:41,824

accumulation stage to spending phases?

473

00:24:41,884 --> 00:24:46,354

Is there, and what are the biggest

risks there in that that shift

474

00:24:46,384 --> 00:24:48,214

from accumulating to spending?

475

00:24:49,146 --> 00:24:52,056

Phil Palumbo: So it's, it's the

obvious shift where clients say,

476

00:24:52,056 --> 00:24:53,286

well, I'm no longer working.

477

00:24:53,346 --> 00:24:54,486

I don't wanna take risk anymore.

478

00:24:54,486 --> 00:24:56,526

And I completely,

completely understand that.

479

00:24:57,616 --> 00:24:59,266

Listen, I'm not a robot, I'm human.

480

00:24:59,266 --> 00:25:05,206

And so I understand that, and I'm sure

I would feel the same way, but the, the

481

00:25:05,206 --> 00:25:08,686

client just has to educate themselves,

themselves and really understand.

482

00:25:09,136 --> 00:25:13,846

Where they stand financially and how much

risk they do need to take so they can

483

00:25:13,846 --> 00:25:15,316

continue to maintain their lifestyle.

484

00:25:15,316 --> 00:25:17,746

They really need to understand

the math behind that.

485

00:25:18,316 --> 00:25:22,486

Ryan, I say all the time that if, you

know, if you retire with 10 million as

486

00:25:22,486 --> 00:25:28,271

an example, and your spending habits

are only a hundred thousand a year, then

487

00:25:28,271 --> 00:25:30,016

you could afford to be conservative.

488

00:25:31,126 --> 00:25:37,906

'cause you're pulling 1% of the 10

million to live on, All math says 4%

489

00:25:37,906 --> 00:25:41,146

or less, you're okay even five, right?

490

00:25:41,566 --> 00:25:44,656

But if you're pulling one, and

then obviously you know, every

491

00:25:44,656 --> 00:25:47,806

year if you factor inflation, you

could put the $10 million in fixed

492

00:25:47,806 --> 00:25:50,056

income and most likely be okay.

493

00:25:50,506 --> 00:25:54,766

So it really depends on what your asset

level is, what your spending level

494

00:25:54,766 --> 00:25:57,106

is, and that dictates how much risk.

495

00:25:57,946 --> 00:25:59,086

You should be taking.

496

00:25:59,086 --> 00:26:02,086

Now you may say that client who has

10 million and spending a hundred,

497

00:26:02,356 --> 00:26:05,206

they may still want to take risks

because they want to provide legacy

498

00:26:05,206 --> 00:26:06,526

to family members, et cetera.

499

00:26:06,526 --> 00:26:08,056

So everybody's different obviously.

500

00:26:09,286 --> 00:26:13,526

risk is predicated on how much risk

you should take is predicated on

501

00:26:15,146 --> 00:26:17,456

you as an individual, number one.

502

00:26:18,116 --> 00:26:22,466

number two, what the plan

dictates and how they converge.

503

00:26:24,191 --> 00:26:28,361

really the advice of the professional

to help guide the client along.

504

00:26:30,184 --> 00:26:31,504

Ryan: That's a great point, Phil.

505

00:26:31,504 --> 00:26:35,434

It just goes back to planning too

and, and really understanding what

506

00:26:35,434 --> 00:26:40,684

you want as an individual and goes

back to making work optional too.

507

00:26:40,684 --> 00:26:43,259

What do you want, not what you're forced.

508

00:26:44,329 --> 00:26:49,369

But what do you want when you know

maybe you're working part-time

509

00:26:49,369 --> 00:26:52,639

or not working and, and what

type of lifestyle do you want?

510

00:26:52,639 --> 00:26:56,719

I know what my lifestyle is and I'm

gonna have to probably save a lot

511

00:26:56,719 --> 00:26:59,359

more Phil than what I am now, but.

512

00:27:00,069 --> 00:27:00,369

It.

513

00:27:00,369 --> 00:27:04,359

It's one of those things that's

really comes down to what you want

514

00:27:04,359 --> 00:27:07,839

and expressing that, and like you

said, having a professional help

515

00:27:07,839 --> 00:27:10,779

you address those needs to align.

516

00:27:10,779 --> 00:27:14,139

I talk a lot about alignment,

making sure your investments are

517

00:27:14,139 --> 00:27:17,559

aligned with your objectives, so

518

00:27:17,761 --> 00:27:19,201

Phil Palumbo: add one

other point if I can.

519

00:27:19,223 --> 00:27:22,493

So the, the, the part that people

get confused about is how am I gonna

520

00:27:22,493 --> 00:27:26,423

receive my income from my portfolio,

let's say 10 million, right?

521

00:27:27,473 --> 00:27:30,263

And what I try to explain to people

is that if you take 10 million and you

522

00:27:30,263 --> 00:27:34,733

put it in a CD like people did 30, 40

years ago, and you get 4%, 5%, right?

523

00:27:35,213 --> 00:27:38,843

And so that gives you, let's say

it's 5% that gives you 500 grand.

524

00:27:38,843 --> 00:27:41,003

But let's say you need,

let's say you need 500 grand.

525

00:27:41,003 --> 00:27:43,223

If you do that over 10 and 20

years, what does that mean?

526

00:27:43,223 --> 00:27:46,373

That over 10 and 20 years, you're

getting your 10 million back every year.

527

00:27:47,573 --> 00:27:50,333

So if you go out five years, so every

five or 10 years you're buying a CD

528

00:27:51,023 --> 00:27:54,083

you're getting the same cash flow that

you've been getting from the beginning.

529

00:27:54,833 --> 00:27:56,363

not a practical way to think about it.

530

00:27:56,363 --> 00:28:00,053

So when people, clients say to me often,

well, how am I gonna receive my income?

531

00:28:00,743 --> 00:28:03,953

your income is gonna come from a

what we do, a bucket approach, a

532

00:28:03,983 --> 00:28:06,623

bucket approach, where you have

liquidity bucket, core bucket, and

533

00:28:06,623 --> 00:28:07,793

we have what's called plus bucket.

534

00:28:07,793 --> 00:28:11,573

I won't get into details of that, but, but

the bottom line is, is your income's gonna

535

00:28:11,573 --> 00:28:13,763

come from your interest, your dividends.

536

00:28:14,723 --> 00:28:18,713

Plus principle appreciation or

sometimes principle depreciation.

537

00:28:19,433 --> 00:28:22,643

But over time, as long as I'm

pulling out something less than

538

00:28:22,643 --> 00:28:24,833

4% to give you a distribution.

539

00:28:26,573 --> 00:28:26,843

Right.

540

00:28:26,873 --> 00:28:31,163

You, the, the chances of running outta

money over 30 years are extremely low.

541

00:28:31,163 --> 00:28:35,213

And that's been very well researched

and tested over long periods of time,

542

00:28:35,543 --> 00:28:39,473

and that's how people should think

about their income distribution,

543

00:28:39,473 --> 00:28:41,783

which is a big concern on people

that people think about a lot.

544

00:28:41,783 --> 00:28:44,418

Well, how am I gonna actually receive

this income from this money I have.

545

00:28:46,266 --> 00:28:50,166

Ryan: Yeah, that 4% rule, it's

amazing how it's withstood

546

00:28:50,186 --> 00:28:52,206

the, the test of time, right.

547

00:28:52,426 --> 00:28:52,646

And

548

00:28:52,783 --> 00:28:54,283

Phil Palumbo: It has, it has,

but when interest rates were

549

00:28:54,283 --> 00:28:55,513

lower, you know, that number

550

00:28:55,706 --> 00:28:55,996

Ryan: yeah.

551

00:28:56,263 --> 00:28:57,493

Phil Palumbo: Now that

rates have normalized.

552

00:28:57,493 --> 00:29:01,018

It's, it's, it's been up to, it's been,

you know, in line to where it should be.

553

00:29:01,901 --> 00:29:02,111

Ryan: Yeah.

554

00:29:02,351 --> 00:29:02,561

Yeah.

555

00:29:02,561 --> 00:29:08,771

It's nice that finally the savers are

getting benefited from, from decent,

556

00:29:08,831 --> 00:29:11,021

somewhat higher interest rates, right?

557

00:29:11,413 --> 00:29:11,773

Phil Palumbo: right.

558

00:29:11,803 --> 00:29:12,253

I agree.

559

00:29:13,451 --> 00:29:14,021

Ryan: awesome.

560

00:29:14,021 --> 00:29:14,321

Phil, you know.

561

00:29:15,386 --> 00:29:18,176

There's a lot of noise

out there in markets.

562

00:29:18,176 --> 00:29:19,436

Headline risk.

563

00:29:19,676 --> 00:29:24,566

You would think based on the headlines,

market should be in a correction.

564

00:29:24,626 --> 00:29:27,506

In a bo, in a bear market, they're not.

565

00:29:27,716 --> 00:29:31,916

What is your framework to helping

clients ignore the noise and

566

00:29:31,916 --> 00:29:33,656

focus on the long term win?

567

00:29:34,166 --> 00:29:38,576

One of the biggest risks to long-term

success is that panic selling, selling.

568

00:29:39,356 --> 00:29:44,126

During times of distress, how do you help

your clients ignore that noise and, you

569

00:29:44,126 --> 00:29:46,531

know, focus on 20, 30 years down the road?

570

00:29:47,488 --> 00:29:50,818

Phil Palumbo: Yeah, so with repetitive

communication and helping 'em understand

571

00:29:50,818 --> 00:29:53,698

that we gotta control what we can

control, so we can control is the

572

00:29:53,698 --> 00:29:57,838

diversification within your portfolio to

mitigate the risk when markets go down.

573

00:29:57,898 --> 00:30:01,228

Meaning that if s and P goes

down 20, you're not gonna go

574

00:30:01,228 --> 00:30:02,218

down 20, you're gonna go down.

575

00:30:02,218 --> 00:30:05,338

Something less than that, depending

on how we structure the portfolio

576

00:30:06,088 --> 00:30:08,938

and what we're gonna actually do when

volatility strikes is we'll take,

577

00:30:08,938 --> 00:30:10,498

we're gonna take advantage of that.

578

00:30:11,098 --> 00:30:14,758

By selling the winners at that time,

which is cash and fixed income.

579

00:30:14,758 --> 00:30:17,488

For example, gold, which we

have in a portfolio, and we have

580

00:30:17,488 --> 00:30:20,368

commodities too, you know, in this

environment that's doing well.

581

00:30:20,368 --> 00:30:24,178

And you take that and you buy more of

the stocks that we own in a portfolio

582

00:30:24,178 --> 00:30:25,978

that are down because of the volatility.

583

00:30:26,878 --> 00:30:30,358

And so that's the second thing

and really most important thing.

584

00:30:30,358 --> 00:30:33,718

So those two key things, Ryan, over time,

you're gonna have tremendous success.

585

00:30:34,513 --> 00:30:38,083

were times a perfect example of a

client during COVID that called me up

586

00:30:38,083 --> 00:30:41,083

and said, Hey, Phil, they wanted to

sell completely out of their stocks.

587

00:30:41,083 --> 00:30:43,453

And I said to them, I said, well, if

you sell outta your three and a half

588

00:30:43,453 --> 00:30:46,603

million dollars retirement account

and we go to cash, like, and, and

589

00:30:46,603 --> 00:30:48,823

things really greater, what do you

think you're gonna be able to do?

590

00:30:48,823 --> 00:30:51,643

If I give you the check of three

and half million dollars of your IRA

591

00:30:51,643 --> 00:30:53,443

account, do you think anybody to go

to bank and they can give you three

592

00:30:53,443 --> 00:30:54,493

and a half million dollars of cash?

593

00:30:54,898 --> 00:30:55,228

Right.

594

00:30:55,258 --> 00:30:57,928

They're not, you know, that's

that, that we can't even get 10.

595

00:30:57,958 --> 00:31:00,958

We can only get, like, we can only

get $10,000, you know, per day.

596

00:31:02,308 --> 00:31:05,638

So I just, people should just, you

know, you just gotta continue to educate

597

00:31:05,638 --> 00:31:08,338

them, understand and make, make sure

they understand they're long-term

598

00:31:08,338 --> 00:31:11,878

investors who we're not traders, and

what do we do when volatility strikes?

599

00:31:11,878 --> 00:31:14,278

We know we're gonna do, we're

gonna buy things cheaper and

600

00:31:14,278 --> 00:31:16,558

then sell things that made money.

601

00:31:16,738 --> 00:31:19,918

So it's buy low and sell high, which

is like the old Dodge that, you

602

00:31:19,918 --> 00:31:20,998

know, we've talked about for so long.

603

00:31:21,961 --> 00:31:22,251

Ryan: Yeah.

604

00:31:22,451 --> 00:31:24,446

I love that you brought up education.

605

00:31:24,536 --> 00:31:28,856

I think it's so important, just educate

your clients, investors out there,

606

00:31:29,306 --> 00:31:33,846

the importance of staying invested

during times and, and it make it.

607

00:31:33,846 --> 00:31:35,196

It's an opportunity too.

608

00:31:35,436 --> 00:31:39,606

Valuations come down, opportunity

to buy, like you said, and also

609

00:31:39,606 --> 00:31:41,436

glad you brought up diversification.

610

00:31:41,856 --> 00:31:46,776

It's crazy this year based on headlines,

you would think, like I said, everything

611

00:31:46,776 --> 00:31:48,096

is down, but that's not the case.

612

00:31:48,096 --> 00:31:51,906

There's a lot of, you know,

sectors, areas of the market right

613

00:31:51,906 --> 00:31:56,046

now that are up year to date,

despite everything that's going on.

614

00:31:56,046 --> 00:32:00,396

So diversification is so important

despite people always just,

615

00:32:00,456 --> 00:32:02,466

you know what I want Nvidia.

616

00:32:03,261 --> 00:32:03,621

Right.

617

00:32:04,071 --> 00:32:04,611

So

618

00:32:04,928 --> 00:32:05,438

Phil Palumbo: That's right.

619

00:32:06,411 --> 00:32:11,361

Ryan: Bill, last thing, let's stay on

this Emotions be, you know, we know

620

00:32:11,551 --> 00:32:15,331

investing is very behavioral emotions.

621

00:32:15,331 --> 00:32:18,481

It's hard to control those

emotions, like you said earlier.

622

00:32:19,111 --> 00:32:23,431

Why is controlling emotions when

it comes to investing, you know,

623

00:32:23,431 --> 00:32:27,901

so important and being emotionally

prepared, so important when investing.

624

00:32:29,028 --> 00:32:31,278

Phil Palumbo: Because it's gonna,

it's gonna allow you to stay on

625

00:32:31,278 --> 00:32:33,078

track to achieving your main goal.

626

00:32:33,078 --> 00:32:36,498

So you gotta ask yourself,

why are you investing?

627

00:32:37,503 --> 00:32:41,523

I'm investing because I need my

money to keep up with inflation.

628

00:32:41,583 --> 00:32:44,913

I need my money to last

if I live a long life.

629

00:32:45,393 --> 00:32:48,573

So that's why I'm dealing with

this headaches of volatility.

630

00:32:48,573 --> 00:32:49,443

And it is a headache.

631

00:32:49,533 --> 00:32:50,433

I mean, it, it is.

632

00:32:50,433 --> 00:32:54,183

I wish clients didn't have to deal with

stocks and you know, the up and down

633

00:32:54,183 --> 00:32:57,393

movements of stocks and all this political

nonsense that's going on, that's driving

634

00:32:57,393 --> 00:33:01,503

people crazy, that's making people

ask themselves, should I be in stocks?

635

00:33:02,523 --> 00:33:04,233

So it's almost like, it's

like anything else in life.

636

00:33:04,233 --> 00:33:05,463

It's a marathon, right?

637

00:33:05,523 --> 00:33:08,763

I dunno if you ever ran a marathon, but

when you run a marathon, you know, in

638

00:33:08,763 --> 00:33:11,853

the beginning of the marathon it's okay,

you're feeling decent, all of a sudden you

639

00:33:11,853 --> 00:33:14,733

start to kind of go through hell, right?

640

00:33:14,733 --> 00:33:17,853

Because it's like mile

13 and mile 17, then 20.

641

00:33:18,333 --> 00:33:22,623

And then, but you, but you push

through it, cross the finish line

642

00:33:22,623 --> 00:33:24,093

and, and that's the best example.

643

00:33:24,093 --> 00:33:27,363

What I can give with people is

that investing is a marathon.

644

00:33:27,393 --> 00:33:29,943

Unfortunately, you're gonna

go through pain at time.

645

00:33:30,393 --> 00:33:34,083

But the reason why we're going through

that pain is so we can cross that

646

00:33:34,083 --> 00:33:37,863

finish line for you and your family,

and that's why we do what we do.

647

00:33:38,073 --> 00:33:39,693

It's like anything else in life,

Ryan, and you know, nothing.

648

00:33:39,693 --> 00:33:41,313

It's, you can never get

a cake and eat it too,

649

00:33:41,433 --> 00:33:43,503

Ryan: phil, that's a great point.

650

00:33:43,533 --> 00:33:45,213

I'm really glad you brought that up.

651

00:33:45,243 --> 00:33:51,423

And diversification, focusing on

the long to term investing, like you

652

00:33:51,423 --> 00:33:53,553

said, it's not, it's not a marathon.

653

00:33:53,553 --> 00:33:55,893

One thing I talk, especially like my mom.

654

00:33:56,378 --> 00:33:57,158

Who has retired.

655

00:33:57,158 --> 00:34:02,768

It's like, put the phone down, turn

the TV off for a while, stop following

656

00:34:02,768 --> 00:34:07,658

the news for a little while, because

all the headlines, doomsday headlines,

657

00:34:07,868 --> 00:34:13,058

it just adds to, like you said, that

volatility, that angst a lot of times.

658

00:34:13,058 --> 00:34:14,678

So, Phil.

659

00:34:15,783 --> 00:34:17,973

Thank you so much for coming on this show.

660

00:34:18,003 --> 00:34:21,183

Great insight, very fun conversation.

661

00:34:21,183 --> 00:34:28,203

I loved all the information you shared and

tips to, you know, achieving, I would say

662

00:34:28,203 --> 00:34:30,933

retirement, but, or making work optional.

663

00:34:30,993 --> 00:34:31,503

I love it.

664

00:34:31,563 --> 00:34:35,253

Where can our audience get more

information about Palumbo Wealth

665

00:34:35,253 --> 00:34:40,043

Management, as well as your

podcast, the Palumbo podcast.

666

00:34:40,705 --> 00:34:46,495

Phil Palumbo: Yes, so my website is www

dot palumbo, P as in Peter, a LUM as in

667

00:34:46,495 --> 00:34:49,315

Mary, BOW like William, M like mary.com.

668

00:34:49,315 --> 00:34:51,415

You could find all

information about my firm.

669

00:34:51,804 --> 00:34:53,545

My podcast is Palumbo Pulse.

670

00:34:53,545 --> 00:34:54,625

The Palumbo Pulse.

671

00:34:54,804 --> 00:34:58,915

A you'll see that there as well,

which has some great information and

672

00:34:58,915 --> 00:35:02,365

insights and that's, that's where

you could just Google me and you

673

00:35:02,365 --> 00:35:05,665

could see various interviews I've had

on major networks and and whatnot.

674

00:35:05,665 --> 00:35:08,965

So it'd be easy to find me if you

put in my name, Philip Palumbo.

675

00:35:10,253 --> 00:35:10,643

Ryan: Perfect.

676

00:35:10,883 --> 00:35:11,333

Perfect.

677

00:35:11,873 --> 00:35:12,293

Awesome.

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00:35:12,293 --> 00:35:12,623

Phil.

679

00:35:12,773 --> 00:35:16,283

Thank you so much and thank you

everyone for listening to this episode

680

00:35:16,283 --> 00:35:18,803

of zephyr's Adjusted for Risk podcast.

681

00:35:19,013 --> 00:35:22,853

You can watch all of our other episodes

on the Zephyr YouTube channel and

682

00:35:22,853 --> 00:35:26,543

all your other channels that you

watch your favorite podcasts on.

683

00:35:26,813 --> 00:35:29,483

Please be sure to like and

subscribe to those channels

684

00:35:29,483 --> 00:35:30,953

and give us follow on LinkedIn.

685

00:35:31,313 --> 00:35:34,043

Thank you very much and have

a great rest of your week.