Gary Allen on Business – Northern California Workshops

How Most People Feel About the Financial Services Industry

Dan Ackroyd

Cowbells

The reality? 

I wish I was only talking about sleazy salespeople from a classic Saturday Night Live skit, but sadly, that is not the case. Too often people have been taken advantage of by salespeople in the financial services industry that are not as easy to spot as the famous characters above. 

Over the past 18 years I have heard so many horror stories from my KNBR listeners about their situation. Often there is a common theme of expensive or inappropriate financial products often sold by people they don’t trust. The road is littered with expensive products, high fees and outrageous commissions that have damaged the financial future of many people.   

I happen to believe that most people are interested in a straight-forward, transparent relationship that is free of conflicts of interest and always in their best interest. Most financial advisers fail to deliver on these basics and rely on greed and fear to sell products.

For 18 years I have been on KNBR personally delivering straight-talk without the B.S., talking about business and investment issues that matter to most people. I want to thank my listeners for making my program so successful and popular over the years. Many people have asked why I don’t do workshops for people around the Bay Area. I have had a number of reasons not to, but after so long, I have run out of excuses not to provide them.

However, I will not compromise on my integrity and my commitment to provide my listeners with straight-talk and no B.S. So my workshops will have a very different feel from the usual provide food, sell something hard and then sell it some more events that people in my industry use to take advantage of you. 

I will deliver education and information just like I do on my radio program. At the end of the event I hope you have a better understanding of how I think you should invest and take care of your financial life. If you would like to meet me I would enjoy meeting you as well. If you want to know what my firm does and how we help people that’s fine too. But you will never and I mean never get a hard sales pitch from anyone I work with. We educate people and give you the opportunity to make your own well-informed decisions. It is your money and your life!   

CONCERN

One of my concerns is a lot of people might sign up for the event and then for whatever reason not attend. This  means other people who would like to go cannot. It also makes it very hard to manage from a numbers standpoint.  As I thought about this, just like magic, one of my listeners provided me with a great idea.

Instead of making it a free event like I planned, we will charge a nominal fee for the event and then donate every penny to charity. Each event will have a fee of $10 for an individual or $15 for a couple. And no we will not be checking to see if the couple is married, living together or whatever. Just sign up and come. Thank you Ed from Palo Alto! 

WORKSHOP LOCATIONS

I need your help. Where should I hold the workshops? Please help me out by using the form below to get on our workshop list and to let us know where you would like to see one held. By the way, please share this with your friends. Thank you in advance for helping me on this and I look forward to meeting all of you in person after all this time! 

 

 

 

Gary Allen on Business: Sunday, May 29, 2016 – Podcast Now Available

Costs Matter – The Impact of Fees on Your Retirement

Fees 3d Word Bear Trap Money Interest Late Payment Penalty

Hidden or in plan sight, fees can have a big impact on retirement

People have spent eternity trying to outguess or outsmart financial markets. Another way of looking at this is to understand that people are trying to control financial markets. However, financial markets are dynamic and resist control at any level. Ultimately, this is a fool’s errand. 

Conversely, controlling costs is something that can and should be done. On this program, I run through a study we recently prepared for a company. While simple, it shows the individual and cumulative damage that higher and unnecessary fees inflict on retirement investors.  

In the study, the impact on a small retirement plan of $5 million dollars over two decades is striking. While numbers can sometimes be hard for people to comprehend, the resulting impact changes people’s lives for the worse. By controlling costs and paying only necessary fees, it is possible for employers to have a large positive impact on their own employees. 

Later in the program, I discuss the three factors that people can use to impact their own retirement:

  1. Funding (wish I could change this)
  2. The timing of your retirement
  3. Change the way you invest

These three factors can have a positive or negative influence on your retirement. Since they are under your control or influence these are the items you should spend time on rather than worrying about trying to outsmart financial markets.

As always, thank you for listening to my program on KNBR 680. If you have questions or concerns about your own investments or would like us to review what you are doing, please contact Gary.

Contact Information

The best way to contact Gary is through email at gallen@prudentllc.com. But you can try to reach him by phone as well at 916.436.8331.

Email: gallen@prudentllc.com

Phone: 916.436.8331

 

Podcast

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Gary Allen on Business, Sunday, May 22, 2016 – Podcast Now Available

Business Alert!

California Employers Facing State Mandated Retirement Program

So far it has remained under the radar, but a major new State government program is rapidly heading towards a collision course with private employers in California. The California Secure Choice Act is a program that states private employers must offer a retirement plan to their employees or the employer will be forced to participate in a new retirement program mandated by the State of California.

California employers with five or more employees must comply with the mandate or face heavy penalties if they do not. Critics of the state program, including myself, have identified numerous issues small and large that plague the offering. My personal opinion is employers face significant potential risk (based on the current version of the regulations (5/22/2016). Further, the program in my opinion, falls short on providing an optimal solution for employees as well. The program design is flawed and incomplete leaving many questions unanswered. 

Currently, Secure Choice is on track for a 2017 debut, but could slip into 2018. However, make no mistake about it, this program is coming soon. And even if you do offer a retirement plan to your employees that may not exempt you from the mandate. The State is working on rules that would mandate coverage for part-time or contract workers that are excluded from your existing plan.  

There is a much simpler solution for employers to avoid the California Secure Choice Act. Employers can offer a payroll deduction IRA program to their employees without cost or personal liability to the business or its owners. Payroll deduction IRAs have been around for decades and work very well for employers of any size. You can provide your employees with a simple and effective way to save for retirement without cost to you.

I am very concerned that the California Secure Choice Savings Program will turn out to be the equivalent of the Affordable Care Act (ACA) for retirement plans. You can avoid the headaches and the uncertainty by offering a private solution today. 

You can listen to more about the California Secure Choice Act in segments three and four of my show this week.

In segments one and two of the program, I discuss the flaw of retirement planning that focuses on building wealth instead of a stream of income for retirement.   

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Gary Allen on Business: Sunday, May 15, 2016 – Podcast Now Available

Jim Cramer of Booyah Fame Mainly Delivers “Boo”

Jim CramerJim Cramer of Mad Money fame on CNBC has popularized fame with his fast paced show that has its roots in the production values of the Jerry Springer show. You may laugh, but Cramer’s Mad Money show is the brainchild of Susan Krakower, the former producer of the over the top Jerry Springer show. If you think about Springer, sports talk radio and a touch of a traditional financial show, you have the secret sauce that became Mad Money.

The show has seen a ratings decline in recent years but the frenetic energy remains. Adding some spice, this weekend a new movie titled Money Monster starring George Clooney has opened across America. But the focus of my story on the show this week is a research report that also was released on Friday. That report from researchers at the Wharton School of Business look into the track record of Cramer’s stock picks.

It may come as a surprise to some, but I was not caught off guard by the results of the research report. Bottom line, Cramer has not done well compared to the S&P 500 with his charitable fund. While Cramer is just one example, he is the poster child for “smart” active management. At this point the numbers are in and Cramer like most of his peers trail the returns of the stock market.

The Living Wage Movement For A Few

Protest

Everywhere you turn these days, people are protesting for a living wage. Currently, the living wage benchmark according to the protestors and their supports is $15 per hour. However, the part of the story that most protestors are missing is who will be left working once $15 per hour becomes reality.

Fast food workers are some of the primary protestors pressuring employers to raise the minimum wage to $15. Too often companies are vilified for underpaying their workers and having profits that are too large. Are there companies that take advantage of their workers, of course, but I never remember anyone until now talking about a fast food job being a place to work to support a family of four. 

Fast food jobs and most retail jobs have traditionally been entry level positions for young and or unskilled workers to enter the workforce. In my opinion, the majority of the workers currently protesting for $15 per hour will be worse off if they achieve their goal. The reason is simple, automation will replace most of the jobs and they will be unemployed. A fraction of the current workers will be left earning $15 per hour watching customers order and pay for their own meals at self-service kiosks, while a couple folks will be left in the back feeding machines that prepare most of the food. Wendy’s this week became the first major fast food chain that said it will install these kiosks this year at all of its locations.

The problem is not $15 per hour for entry level jobs. The problem is too many low or unskilled workers who do not have access to training or education opportunities to improve themselves.  

Gary Allen on Business – Sunday, May 15, 2016 – Podcast

The Cramer story and $15 for the few highlight the show this week. Hope you enjoy the podcast. – Gary 

CONTACT GARY:

If you would like to contact Gary, the best way is through email at gallen@prudentllc.com. Or you can try to reach him at his office at 916.436.8331.

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Gary Allen on Business; April 10, 2016 – Podcast Now Available

scared-kidFinancial Gibberish

Communication is such an important thing. Countless books have been written about the subject yet we still struggle to communicate with one another. In the world of financial services, some miscommunication is unintended while some happens to be on purpose. It is hard to question the advice or the validity of an investment strategy when you cannot understand it. The real trick is to know when someone is struggling to communicate with you or if they are purposely trying to talk circles around you. The first is irritating and CAN cost you a lot of money, while the second WILL cost you a lot of money!   

 I spend some time on the program trying to translate financial speak into common sense. It is hard to translate but well worth it. The difference can mean thousands of extra dollars in your pocket instead of in the pocket of the person trying to sell you a product.  

The Active Management/Passive Management Debate (Case Closed)

Analysis

Analysis

Later in the program, I provide the basic facts of how active management fails to deliver on its promise of beating the market. I still wonder why so many people believe in the Wall Street Santa Claus of superior performance when study after shows that the Grinch is alive and well in the canyons of Manhattan. 

As always I hope you enjoy the show. – Gary 

CONTACT GARY

If you would like to contact Gary the best way is through email at gallen@prudentllc.com or you can try him at 916.436.8331.

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Gary Allen on Business, March 13, 2016 – Podcast Now Available

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Human Capital and Financial Capital Equals Life Cycle Investing

Unfortunately, too many people do not understand the interaction between human and financial capital. Human capital is the collective skills, knowledge, or other intangible assets that you possess in order to create economic value. A simpler way to understand human capital is your present and future earning power. Education is an investment in your human capital that pays off in terms of higher productivity. 

Our economic life cycle is driven by a balance between our human and financial capital. Early in life we have a lot of future earnings power in the form of human capital. As we work, we have a choice; to either consume our present earnings or save for future needs. That balance between consumption and savings is one of the primary drivers of our economic life. Consumption is spending, while savings is the process of turning human capital into financial capital. That financial capital becomes our investments.

In this program, I discuss the general concepts of human and financial capital and how it is crucial to understand the big picture. Hope you enjoy the program.

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CONTACT GARY

Have a question for Gary or would like to contact him? You can reach Gary at gallen@prudentllc.com. Or you can try to call him at his office at 916.436.8331.

 

 

 

 

 

 

Gary Allen on Business – Sunday, March 6, 2016 – Podcast Now Available

are you ready with related words cloud hand drawing on whiteboar

So many questions about investing and retirement…

Common Questions I Often Hear About Investing…

Is it a good time to be in the market? What about timing the market? When is a good time to get in or get out of the market?

All of these questions are somewhat similar because they are asking if I have some kind of ability to know in advance what it going to happen. Unfortunately, I don’t have that power and by the way nobody else does either. Although Andrew Bogut of the Warriors predicted a Curry 3-pointer before he dropped one in… but aside from that, no one has the ability to predict the future with any certainty.

Later in the program, I cover the total wealth equation, which is a combination of human capital and financial capital. If you can understand this basic concept, it provides you with a much clearer understanding of the trade offs in life between spending and saving.

Finally, I spend time discussing how Wall Street and most firms have been wrong about your number for so long. Most financial firms talk about building wealth and reaching for some big number. That number represents a nest egg of wealth. However, for retirement, the real number should be income. People need an income to survive. Wealth is not tied to inflation or retirement and is a difficult concept for people to understand. Next week on the program, I will dive deeper into this important concept.

I hope you enjoy the program this week. As always, thank you for listening to my program on KNBR.Thanks to my great product Justine for always doing a great job.

If you have any questions or would like to contact me, email is usually the best gallen@prudentllc.com or you can try to call, but I am often unavailable 916.436.8331.

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The Patience Principle – Surviving Rough Financial Markets

Market TumbleChina Worries Rattle World Stock Markets
The Patience Principle

“Surviving Rough Financial Markets”

Global markets are providing investors a rough ride at the moment, as the focus turns to China’s economic outlook. But while falling markets can be worrisome, maintaining a longer term perspective makes the volatility easier to handle. A typical response to unsettling markets is an emotional one. We quit risky assets when prices are down and wait for more “certainty.”

These timing strategies can take a few forms. One is to use forecasting to get out when the market is judged as “overbought” and then to buy back in when the signals tell you it is “oversold.”

A second strategy might be to undertake a comprehensive macro-economic analysis of the Chinese economy, its monetary policy, global trade and investment linkages, and how the various scenarios around these issues might play out in global markets.

In the first instance, there is very little evidence that these forecast-based timing decisions work with any consistency. And even if people manage to luck their way out of the market at the right time, they still have to decide when to get back in.

In the second instance, you can be the world’s best economist and make an accurate assessment of the growth trajectory of China, together with the policy response. But that still doesn’t mean the markets will react as you assume.

A third way is to reflect on how markets price risk. Over the long term, we know there is a return on capital. But those returns are rarely delivered in an even pattern. There are periods when markets fall precipitously and others when they rise inexorably.

The only way of getting that “average” return is to go with the flow. Think about it this way. A sign at the river’s edge reads: “Average depth: three feet.” Reading the sign, the hiker thinks: “OK, I can wade across.” But he soon discovers the “average” masks a range of everything from 6 inches to 15 feet.

Likewise, financial products are frequently advertised as offering “average” returns of, say, 8%, without the promoters acknowledging in a prominent way that individual year returns can be many multiples of that average in either direction.

Now, there may be nothing wrong with that sort of volatility if the individual can stomach it. But others can feel uncomfortable. And that’s OK too. The important point is being prepared about possible outcomes from your investment choices. Markets rarely move in one direction for long. If they did, there would be little risk in investing. And in the absence of risk, there would be no return. One element of risk, although not the whole story, is the volatility of an investment.

Look at a world stock market benchmark such as the MSCI World Index, in US dollars. In the 45 years from 1970 to 2014, the index has registered annual gains of as high as 41.9% (in 1986) and losses of as much as 40.7% (2008).
But over that full period, the index delivered an annualized rate of return of 8.9%. To earn that return, you had to remain fully invested, taking the unsettling down periods with the heartening up markets, but also rebalancing each year to return your desired asset allocation back to where you want it to be.

Timing your exit and entry successfully is a tough task. Look at 2008, the year of the global financial crisis and the worst single year in our sample. Yet, the MSCI World index in the following year registered one of its best ever gains.
Now, none of this is to imply that the market is due for a rebound anytime soon. It might. It might not. The fact is no one can be sure. But we do know that whenever there is a great deal of uncertainty, there will be a great deal of volatility.

Markets PictureSource: MSCI data © MSCI 2015, all rights reserved. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results.

Second-guessing markets means second-guessing news. What has happened is already priced in. What happens next is what we don’t know, so we diversify and spread our risk to match our own appetite and expectations.

Spreading risk can mean diversifying within equities across different stocks, sectors, industries, and countries. It also means diversifying across asset classes. For instance, while stocks have been performing poorly, often bonds have been doing well.

Markets are constantly adjusting to news. A fall in prices means investors are collectively demanding an additional return for the risk of owning equities. But for individual investors, the price decline, if temporary, may only matter if they need the money today.

If your horizon is five, 10, 15, or 20 years, the uncertainty will soon fade and the markets will worry about something else. Ultimately, what drives your return is how you allocate your capital across different assets, how much you invest over time, and the power of compounding.

But in the short term, the greatest contribution you can make to your long-term wealth is exercising patience. And that’s where Prudent Investor Advisors and its investment professionals can help you.

DATE OF FIRST USE: SEPTEMBER 1, 2015
Past performance is not a guarantee of future results. Diversification does not eliminate the risk of market loss. There is no guarantee investment strategies will be successful. International investing involves special risks such as currency fluctuation and political instability. Investing in emerging markets may accentuate these risks. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks, including changes in credit quality, liquidity, prepayments, and other factors. All expressions of opinion are subject to change. This article is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.

Prudent Investor Advisors, LLC is an investment adviser registered with the Securities and Exchange Commission.

Gary Allen on Business – Sunday, May 11, 2014 Podcast Now Available – Egnyte

Interview with Vineet Jain of Egnyte
Data Ball

Vineet Jain, Egnyte Co-Founder, CEO

Vineet Jain, Egnyte Co-Founder, CEO

The podcast of my show this past weekend featuring Vineet Jain, the CEO and co-founder of Egnyte is now available for your listening pleasure. This program features an interesting interview with Vineet who is an experienced entrepreneur and corporate executive. The interview provides an in depth look at the file sharing industry along with a deep dive into Egnyte. It was a pleasure to interview Vineet because he is willing to provide candid answers on a wide variety of subjects. That is very refreshing in this world of pat answers.

For more information on Egnyte, their website is located at www.egnyte.com

Gary Allen on Business

Gary Allen on Business

Gary Allen on Business Joins the Information Age

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After sixteen years on the air at KNBR 680 AM, I thought it was about time to launch an official website/blog for Gary Allen on Business.  People have been asking for years if there was a place to listen to replays of the program.  Shocking that listeners were not getting up each weekend to hear the program live at eight in the morning!  Here is the great news for those of you that like to sleep in a little bit on the weekends.  There are no more excuses for missing my program each week.  Now you will be able to hear the replays right here on this website.

I have been talking with the technology folks and you will be able to subscribe to the show, listen to it whenever you want and hopefully on just about any device out there.  I hope that you enjoy this site and help me turn it into a great resource for everyone.

By the way, that is yours truly in the photo above (2nd from left) with Marty Lurie at a Giants FanFest several years ago.