Are You Ready For Retirement? | Jason Greenwood

 

About Jason Greenwood

In 1999 Jason started his career in the financial services industry. While at Fidelity Investments he learned the importance of diversification and how to trade effectively. As an options trader for Client Services he became adept in the stock and derivatives markets. Desiring to become more involved with clients portfolios, Jason moved to the full service model by accepting an offer to work at Merrill Lynch. Jason began working as a Financial Advisor in 2003 at Merrill Lynch in the San Francisco bay area. At Merrill Lynch he became skilled at analyzing employee stock option strategies and comprehensive financial planning. Many of Jason’s existing clients are engineers at technology companies in the S.F. Bay Area. In 2008 Jason became a Chartered Retirement Planning Counselor ®. In 2010 Jason left Merrill Lynch (which had become a subsidiary of Bank of America) to further his career as a private practice financial advisor. Excited to have true open architecture and acting as a fiduciary, Jason continues to help clients reach their short term and long term goals. Jason and his wife Amber were married in 2003 and have two children, Calvin and Forrest. He is an active member of his church and the Boy Scouts of America. Jason earned the rank of Eagle Scout in 1991. He enjoys golf, scuba diving, skiing, tennis and sand volleyball.

 

Interview Transcript of: Are You Ready For Retirement? | Jason Greenwood

Alan
Welcome back. I’m here today with Jason Greenwood. Jason is a Senior Vice President and also a chartered retirement counselor with a major Silicon Valley firm. Jason, welcome to today’s show.

Jason
And it’s good to be here. Thank you for having me.

Alan
So Jason, give me some of your background of how you got to where you are today?

Jason
I started in the financial services industry in 1999. And about three years ago, I started my own private practice financial services firm. And prior to that I was at Merrill Lynch for over seven years as an international financial advisor. And in 2008, I became a chartered retirement planning counselor.

Alan
So chartered retirement planning counselor, what exactly do you do in that role?

Jason
Basically, helping people understand how their investments and their strategy for planning for retirement is going to enable them to live the lifestyle that they’ve grown accustomed to.

Alan
So how many years in advance should a person come? Seek your counsel of you know, prior to retirement?

Jason
If someone is able to save more, save money or spend less than they make, then they should start planning for whatever goal it is short term, and long?

Alan
And when when you’re looking at retirement? What are some of the things that she’ll help coach people along the line of feeling,

Jason
Really understanding where their sources of income come from? And how much they’re going to spend in the various areas of their life that they like spending money, so we really need to have an understanding of how their investments are going to help them live that lifestyle that they’ve grown accustomed to their whole life?

Alan
Do you see people making great mistakes that need to be adjusted once they come talk to you?

Jason
Yeah, you know, there’s a lot of mistakes that people make some, some include emotion, I mean, they, they their investment decisions are driven by their emotion or taxes. They also don’t understand how much risk they’re taking. You know, one of the reasons I got into this business, right, is because I was working as a trader at Fidelity Investments, a gentleman had one stock in his taxable account, he had the same stock in his rollover IRA account, he was all concentrated. The stock in 2000, dumped about 60%, in an span of three days, he had a margin call, he was fully leveraged, my task was to call him to let him know he needed to deposit money into his account, or we were going to be forced to liquidate. And so he didn’t have enough money to meet the margin call. Because of that situation, he ended up having to work for another 10 years, where he had actually saved up all this money, and he was ready to be sufficient self sufficient. That situation right there made me want to become an advisor to help people to set an outline for their short term and their long term goals.

Alan
The case of the client, that your your prior, you know, firm, who got heavily leveraged and had a margin call one day, what would you have done to prevent that?

Jason
For people who have big, concentrated stock positions, it doesn’t hurt them to diversify a certain percentage every year. If they’re really emotional and tied to a stock, that’s great. But there’s a lot of risk there. And so understanding how much risk A client has in their portfolio, and how that relates to them, either meeting their goals or not meeting their goals, is an important job of a financial advisor. And so that’s that’s what I take seriously, when people come and meet with me is to look at how are you invested in relation to what your goals are.

Alan
You find that there’s a lot of emotion with individuals that are tied to a single stock, trying to get them to divest that.

Jason
Huge emotion. I have a lot of clients that work at tech companies here in the San Francisco Bay Area. And one of the things that they love doing is they call it E trade therapy. There’s a firm that that’s a firm that handles most of the stock option plans in the valley here. And so what clients will do is they’ll log into their account, and they’ll look and see how much their company stock is worth. And it’ll make them feel good. The problem with that is it’s all in that company. And so what they need to do is consider what if this stock drops in half? Or even more? How does that impact them? And how’s that going to make them feel?

Alan
I’m visiting here today with Jason Greenwood. Jason is a wealth advisor and also chartered retirement specialist. Jason I need to take a quick break. And we’ll be right back after these messages.

Alan
Welcome back. I’m here today with Jason Greenwood. Jason is a wealth advisor here in Silicon Valley, and also a chartered retirement specialist. Jason with the baby boomers today, it said that starting in 2010, so we’ve already we’re already about four years into this to the year 2020. There’ll be about 80% of the workforce or 80% of these, these baby boomers that jumping out into retirement. So the fact that you’re in the midst of being an advisor, or retirement specialist is a real need in this this world today. So a person comes to you and says, Jason, I’m thinking about retiring, maybe in five years, walk me through the steps, what exactly would you do with that person?

Jason
It’s a great question. So I have actually, I had this scenario happen just the other day, I had someone come up to me and say I’m, I think I’m ready for retirement. And I’d like to retire in a few years. And so what we need to do is develop a plan for you an outline, look at your short term goals and your long term goals and understand how you’re invested to meet those goals, retirement being the forefront of their goals right now, because they’re approaching that. So we need to look at your investments, and look at your savings strategy. In each of your types of accounts, whether it’s a 401 K, an IRA, a trust account, a taxable brokerage account, whatever it is, and understand how those accounts are invested. And then run an analysis. A lot of times people use just a standard straight line analysis of growth, or what I like to use is what’s called a Monte Carlo analysis. What that does is it looks it’s dressing the portfolio and doing multiple tests to find out if your portfolio can survive down down markets, and how that’s going to impact you and understand what’s the probability of your portfolio and the growth of that portfolio to actually meet your needs in retirement to be financially independent? Because that’s what everyone’s looking for. It’s not really, I’m going to retire. But at what point will my portfolio allow for me to maintain the lifestyle that I have?

Alan
Yeah, do you find oftentimes that as you advise people, that you have to break the news alert, based on the way you’re living now, you’re not going to be able to maintain the same lifestyle, you have to change certain aspects of your life?

Jason
There’s three things that we can do, right, we can either retire later, or we can invest more aggressively, which may be detrimental. Or we can actually change how much we’re going to spend in retirement if we want to retire at a set date. And that’s a difficult question, you know, to, to really answer for people that are maybe not there yet. But doing planning early on, you can actually have a higher probability of reaching that goal that you have.

Alan
you find sometimes it’s, there’s a, there’s an aspect of Psychiatry in which you do trying to get people to mentally be prepared for, you know, getting ready for the future.

Jason
Absolutely. You know, people will often be be so emotionally tied to a particular investment or particular goal that they have, you know, and really understanding, hey, this is your goal that we’ve outlined. Every year I meet with clients, and revamp their their financial goal or their outline or their plan. And the reason we do that is because things change, and we need to understand what changes occurred and how that impacts them moving forward. And so, you know, it’s it’s, it’s an emotional thing, and people need someone to keep them on course,

Alan
When you’re looking at long term perspectives on investment, we live in a world that nothing stays the same. How important is it moving from, you know, stocks and having aspects of the part of the portfolio into fixed investments in a retirement world?

Jason
It’s a great question. You know, when I was working at Merrill Lynch Ashman Chopra, he was one of the managing managing directors, and of analytics at Merrill Lynch, and he created a white paper called Beyond Markowitz. You might be familiar with Harry Markowitz, who developed Modern Portfolio Theory,

Alan
Which based wet years in the 50s?

Jason
So one of the things about modern portfolio theory is, you know, looking at how investments work together to lower the risk of a portfolio? Well, what Ashvin Chopra did is he looked at that theory, which has some assumptions. One is that investors are not emotional, and two that markets are efficient. What Ashman did is he said, Well, let’s look at this. And let’s let’s create three areas of investment in a portfolio. One is to preserve our current basic needs of life. As far as percentage of our investments, the other area is to outpace inflation, which is takes on market risk, which is our stocks, bonds, and things that might do better than inflation. And then the other is aspirational risk, things that are hopefully going to change our lifestyle moving forward. That’s concentrated stock, that’s, you know, investment properties, things like that. Hedge funds private equity, but with those that aspirational area, those things can incur substantial loss. So really, it’s understanding how to, to create a portfolio that’s going to weather some storms, but also help the client outpace inflation.

Alan
And missing here today with Jason Greenwood and Jason is a wealth advisor here in Silicon Valley and the chartered retirement special Jason, I need to take a quick break. And we’ll be back after these messages. And I want to get into talking about how to combat inflation in the best day.

Alan
Welcome back. I’m here today with Jason Greenwood. Jason is wealth advisor here in Silicon Valley. He’s also retirement chartered retirement specialist. And we’ve been talking about getting a retirement plan together. Jason, is there a problem with a person getting to retire to say, I’m just gonna leave my money in all cash because I don’t want to lose it.

Jason
It’s a huge problem. Here’s a great example, someone in their mid 30s, who’s wanting to have $66,000 a year of money to spend, okay. When they retire at age 65, that’s going to be $241,000 after an inflation rate of 4.2%. So that $66,000 is not the number that need they need to be looking for. In order to combat that. They need to have exposure to things that run or outpace inflation, which is equities, commodities, things like that.

Alan
How does inflation have backtest for the for the layperson, what exactly would inflation do?

Jason
Perfect, perfect example, My son loves skateboarding. When I was young, a skateboard cost $40. But the other day, I just went and bought him a skateboard. And his skateboard cost me almost $150. That’s it in presets inflation.

Alan
Yeah. Now I’ll tell you how much my speed there were less point well taken. So what type of clients do you specialize in? Who should be coming to Jason?

Jason
Okay, you know, most of my clients are engineers that work at the tech companies here in the valley that work long hours, but part of their compensation is an employee stock. It’s restricted stock units, it’s non Qualls. And they work away and they never really look at their stock, unless they’re feeling down. And they want to see how much they’re worth. Those people don’t have time to create, create a financial plan or an outline or anything like that. And so they don’t understand how their stock impacts their short term and long term goals. And that’s something that I specialize in. I do sensitivity analysis on concentrated stock positions. So people that have half a million dollars or more typically come to me and they say, you know, what should I do with all this? And here are my goals, and this is what I want. But I don’t really know how to manage this.

Alan
So you call it a sensitivity analysis? Correct. What does that mean?

Jason
What that means is, let’s say someone has received four grants from their company of stock. Those different grants might, they might have access to that stock over a period of time. Well, over that period of time, the stock can go up and the stock can go down. Well as they get access to more shares that they can actually sell and take control of what happens if the stocks down? What happens if the stocks up? And every year we can see, okay, well, they can expect to have so much in cash come into their portfolio and diversify it. But what if the stocks down tremendously? Can they reach their goals? Whether it’s to pay for college, whether it’s to buy a new house, or theirs to buy their first house?

Alan
When when these RSUs are coming to you? Do you recommend for the most part that they liquidate into cash and buy other securities?

Jason
It really depends on on the situation? If someone only has a certain number of shares, and they’re not going to be receiving more than maybe yes. Or or maybe not, it depends on their assets depend on the situation. That’s why I meet with people.

Alan
Taxes, it’s a necessary evil. And, you know, I think in today’s high tax environment, you know, they recently impose a 3.8% investment tax, you know, for singles earning more than $200,000 a year or married filing joint $250,000 a year. So how does that impact what you do in retirement planning, and the type of strategy that a person should do when looking at investments? Is there a certain type of investment that they can move into to avoid that tax,

Jason
It does depend on each individual. If someone is in retirement, and they have a pile of money that they don’t know what to do with? Often the default is let’s look at municipal bonds in the state that you’re in. Because we know that the the interest that you receive from any municipal bond is federally tax free and state tax free if you own municipality in the state that you live. And so there are some opportunities out there for people to minimize their tax burden. But really, you need to sit down with a financial adviser and wealth advisor to understand how it impacts you. Because your tax bracket in retirement may or may not be lower than it was while you’re working.

Alan
All good. Oh, good advice. And I think tax is one thing that we we have to live with, I guess going forward. So a decent person needs to contact you how they go about that?

Jason
They can call me at my office at 408-856-6355 they can send me an email to JasonGreenwood@concertwm.com.

Alan
Last question, how do you define success in life?

Jason
You know, for me, success is spending time with my family. Number one, you know, and I think most of my clients want to spend time with their families and having a plan in place or an outline of how they can do that. Is is number one, hands down. And I think helping people become the best they can be and become successful is also success to me because I feel like I’m contributing to their success.

 

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This transcript was generated by software and may not accurately reflect exactly what was said.

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