The following is the transcript from Episode 20 of Retire Happy with Roger Gainer, a financial and business audio podcast.
Roger: I\’m trying to cut through some of the noise that\’s out there and help people develop the analytical and evaluation tools so that when you read stuff, you can figure out, A, does it apply to me? And B, is it real? And C, how do I verify that it\’s real and apply it to my situation?
Clark: You\’re listening to \”Retire Happy\” with Roger Gainer, President of Gainer Financial & Insurance Services, Inc. Thanks for joining us. I\’m your host, Clark Buckner. Over the past 30 years, the abundance of different types of investments have increased along with their complexity. In this episode, we\’re celebrating Roger\’s 30 years in business. And he takes us back in time to look at how investing has evolved into what it is today. Along the way, we\’ll discuss how advances in technology have also drastically changed how we invest. For more content like this, be sure to visit gainerfinancial.com. Enjoy the conversation. Well, Roger, I\’m so glad to have you back here. Just to kind of walk through just some of your insights and your perspectives. First, how are you doing?
Roger: I\’m doing great. I recently celebrated a milestone anniversary in my practice.
Clark: That\’s great. How many years?
Roger: Thirty years. Can you believe it? How time flies when you\’re having fun.
Clark: Yes, that\’s huge. Congrats, that\’s amazing, 30 years. So that actually is like the perfect transition. I didn\’t even realize it\’s been actually 30 years for you in the same practice because I also wanted to talk to you about what has changed in the last 30 years from what you\’ve seen in the work that you do? And there\’s a lot I know that has happened in 30 years so we\’re definitely not gonna get to all that. But if you were just to hit like the main, you know, one, two things to kind of give us context of what we\’re gonna be talking about today, what would you wanna lead with?
Roger: Well, first of all, thanks for asking. It\’s interesting how when you hit a milestone, you know, when you turn 40 or 60 or whatever, one of these round anniversaries, you start reflecting back on stuff. And certainly, over the last few weeks, I\’ve been thinking back about what it was back in the day, you know, you hate to go, \”Oh, well, when I was young…\” You know, and be one of those guys. But when I started, we didn\’t have as much paperwork as we do today, that\’s one of the big changes. I used to be able to open an account with a couple of pages at most. Now, you open accounts, it can be 60, 70, even more pages depending on what type of account or if they\’re special circumstances that have to be added in. It\’s just exploded in terms of the data that one needs to collect to open an account or even to…
Clark: It brings along security challenges, I\’m sure too, as to how to maintain that.
Roger: Yeah, and now, paperwork is gone so far that we\’re starting to be paperless, finally, the long promise of paperless. So a lot of applications now are up online with e-signatures. And, you know, we can move that data back and forth through secured networks and have somebody sign electronically. But even with that, we still have to have some stuff printed out in what they call a wet signature taken for certain transactions. But that\’s been a massive change.
Clark: Certainly. And that\’s all themed around technology, right? So we\’re gonna come back to that.
Roger: Yeah, we\’ll come back to technology, you know, investments are really different than when I was starting.
Clark: Yeah, I wanna hear it. Let\’s talk about investments. From when you started until today, what are the biggest differences you see?
Roger: Well, as I\’ve mentioned before, I started years ago as a broker and we used to fill out trade tickets on something called NCR paper. This was a big advance from carbon paper. You probably don\’t even know what carbon paper is, Clark.
Clark: Well, the carbon copy is what inspired that, right? That\’s all I know.
Roger: That\’s where carbon copies come from, yeah. And so you used to put this paper between two regular sheets of paper and when you wrote it made like a shadow marking on the second sheet of paper, and that was your carbon copy. And NCR paper did it without the carbon because the carbon paper made a mess, your hands turned black and all that stuff. But that was a huge change when we could start entering orders for investments electronically. But more so is just the change in the investments themselves. Today, we\’ve got less than 8,000 publicly traded stocks on different exchanges, yet we\’ve got, according to Morningstar, almost 30,000 different mutual funds. Add that to ETFs, add that to closed-end mutual funds, add it to partnerships and managed package investment packages, target date funds, all sorts of ways of slicing and dicing and putting these things back together, mortgage-backed securities, collateralized, accounts receivable securities. There are so many different things. Just take ETFs, for example, they\’ve exploded in popularity.
Clark: And ETFs, give me that meaning again.
Roger: ETF stands for exchange-traded funds. So it\’s supposed to be like a mutual fund but the big advantage is that you buy and sell during the course of the day on the exchange, just like it was a stock, where an open-ended mutual fund you sell at the end of the day, you place the order during market hours, and the sale occurs at the end of the day at whatever the closing price is for that mutual fund. That\’s the kind of mutual fund most people buy. ETFs, they come and so many different sizes, shapes, and varieties. And there\’s very little standardization from one to the other. They\’re much more complex than mutual funds. An open-ended mutual fund has very strict rules. And if you understand how one of them works, you kind of understand how all of them work, you know, are organized. But ETFs each and every one of them is organized in its own way. It\’s like mortgage-backed securities, every one of them is somewhat different. And people buy and sell these things without really understanding what they are.
Gosh, 10, 15 years ago, I tried to paper trade some of these more esoteric, exotic ETFs, exchange-traded funds, and I\’d see how the market was moving. But the price movement in the ETF doesn\’t really correlate it. And I had to drill down and, frankly, it was almost impossible to understand what was going on in one of these things. So we have a lot more investment tools. You know, on one hand, it\’s great, we have variety. But on the other hand, we have a lot more complexity. A lot of that is made possible, again, through evolution and technology, just like back with the paperwork. The other thing that\’s changed about investments is the markets themselves. Back in the \’80s and \’90s, you know, we talked about hundreds of millions of shares of stock trading in a given day. Today, we talk about billions of shares of stock trading in a given day. Now, when there\’s only 8,000 publicly traded shares, that means there\’s a lot of shares being turned over multiple times in a day. And this is because of electronic trading.
It\’s very good if you\’re the New York Stock Exchange or the NASDAQ because they get paid based on the total number of shares changing hands in a given market session. So they can encourage these high-frequency traders or HFTs, these guys are in and out of stocks in nanoseconds. And there\’s been some very interesting expose on \”60 Minutes\” over the last 4 or 5 years about how these guys are really taking money from retail investors and certain institutional investors because they\’re jumping in and out. The exchange s all say it adds to liquidity. But there\’s been a lot of research recently that shows that it\’s costing investors a lot of money, but nothing\’s changing. So it makes it harder to compete if you don\’t have those kinds of computer programs to compete. You\’re seeing much more volatility. Hey, the last few weeks, we\’ve been moving thousands of DOW points in just a few short days, up and down, you can\’t do that manually, you just can\’t do that. And that volatility is because computers and computer algorithms are actually watching and initiating these trades unlike, you know, before when it was people making those decisions.
Clark: When you talk about how it\’s gone up from, you know, it\’s like 8,000 different stocks but then on top of that, there\’s I think you said 30,000 mutual funds and so many things laid on top of that, you begin to get this problem and this challenge of all the noise, all this noise that\’s being generated. And I wanna kind of shift to just this idea of communication and how that has changed, how we see, just as regular consumers, thousands of advertisements, just different messages all across the board and how has that played a role in how you\’ve seen changes over the last 30 years? And then we\’ll we\’ll return to that concept of technology. But first, communication, what\’s been your perspective on all the noise generated? Why does that matter?
Roger: Well, it matters because, you know, for a while, having all this instant access to data and information was really equally creating a more equal footing for consumers. So when you don\’t have what\’s called informational advantage, it makes markets more efficient. If everybody gets access to the same data at the same time, then at least theoretically, everybody is on equal footing and making rational decisions equally. Where 30 years ago, you had have a data terminal. And I remember in my brokerage firm, there was one data terminal and it just spit out paper all day long on this long tractor feed paper roll. It was called the Reuters machine. And it was market data, it was political data, it was weather data, it was all kinds of stuff, some pricing information, and government reports, and all of those things. And the average Joe, you know, there was no internet available to everybody.
That was certainly no worldwide web. And so, you know, you had to call a broker to get that kind of information if you wanted to play in that big sandbox. So, today, I can go online and I can research all kinds of things. I have a couple of websites that I go to on a pretty regular basis to research stuff. You know, if you go buy a car today, you have a lot better idea of what the car you\’re looking for should cost because you can look it up online. There\’s Kelley Blue Book and all kinds of other websites, CarMax, and all these other websites available to do that research. So prices have come down because of that equal footing that people have. So in order to recreate the informational advantage, we\’re seeing an explosion of misinformation now. Some people call it fake news but if you don\’t have…
Clark: Right. And that just instantly gets people moving.
Roger: There you go. But you need tools to cut through the crap, if you will, a little bit. It\’s one of the reasons that I blog. If you\’ve ever read my blog, and I think you have Clark, you know that I\’m not talking about specific products or selling stuff. I\’m trying to cut through some of the noise that\’s out there and help people develop the analytical and evaluation tools so that when you read stuff, you can figure out, A, does it apply to me? And B, is it real? And C, how do I verify that it\’s real and apply it to my situation? You know, we used to send out quarterly newsletter, it\’d come back from the printers, we\’d fold it, we\’d stamp it, we\’d put some postage on it and send it out, you know, in regular mail. Today, we send out a monthly newsletter electronically through email and I have a blog at our website, www.gainerfinancial.com. And we also do podcasts. This podcast is now instead of just being available on our website, it\’s on iTunes and it\’s gonna be on…
Clark: Gone worldwide.
Roger: Gone worldwide now. So getting that communication to clients and to partners and to strategic partners, associate and affiliated entities, it\’s a lot quicker and there\’s a lot more of it, certainly. You know, we\’re evaluating a new tool right now that we\’ll talk about a little bit more to help clients gather this data and curate a data and data specific to their situation. You know, because, unfortunately, with all of that increased and ease of communication, there\’s just an overwhelm. I come in every day and I have over 200 emails waiting for me just since I went home last night. And most of them, frankly, I\’m not the least bit interested in, but I can\’t seem to get rid of them. So I look and there\’s probably 50 things labeled spam in my inbox in the morning when I turn on the computer because it\’s so easy to get all that communication out there if you will. So that\’s…
Clark: I think you\’re saying that you talked about on the other side…sorry to butt in there. But one thing before I forget, when we talk about communication, you\’re walking through on the other end, there\’s someone else who\’s receiving this information. And whether that\’s through your podcast, through your newsletter, through the thought organizer that\’s also on your website we\’ll probably mention later. But there\’s this person on the other side. And I know there\’s been a lot of changes over the years for your business. But I\’ve heard you say before that it all comes down to the people. And I\’ve heard you say…I just want to kind of unpack why that\’s been kind of manifesto for you the relationship part, could you kind of share a little insight into that?
Roger: Well, I think our industry has gotten away from some of that, the human element. You know, I started out as a broker, I don\’t talk about it very much, but really, when I was a broker, even way back then, we were taught basically that clients were kind of necessary evils, if you will, they were opportunities to sell stuff. And there was one very cynical joke that was going around in my brokerage days that said three out of four people make money in the markets. And that sounds pretty good until you know that the three people are the broker, the brokerage house and the market maker. So who\’s the fourth element in that? It\’s the client, of course. And I used to fight constantly during my three years in the brokerage world to do what I thought I was supposed to be doing, which was making money for clients. And I could tell you some stories that make your hair curl.
Clark: Wow. Well, I think I may have a dedicated episode on that, probably.
Roger: Yeah, I was very happy to get out of that business. It\’s kind of a circuitous route that took me from that to being a financial advisor and helping people retire happy and all of that good stuff that I do today. But it sure opened my eyes as to the misalignment of incentives, if you will, in that brokerage model. So that model is even changed. You know, you used to be able to come in and say, \”Gee, I need a paycheck, I want to pay my mortgage. So who can I sell out of stuff?\” Because it used to be more transactional. Today, it\’s based usually on a percentage of assets under management. So the income for most advisors is much more consistent. And, in theory, at least you\’ve taken away the conflict of overtrading somebody\’s account to generate income for the broker. But yeah, that was a big disillusionment to me. And I feel very fortunate that I was able to find a financial planning entree into the industry to do what I\’m doing today.
Clark: All right, I know, yeah, you\’re really passionate about it. And if you had to boil down, as we\’re starting to wrap up, before we talk about technology, but when you talk about your passion, what does all that stem from? You\’ve been staying in this same practice for 30 years, what keeps you showing up the next day?
Roger: It\’s making people happy and confident. When I sit down with somebody and we go through our process, seeing their confidence grow, seeing their confidence build, and the fact that they can, in fact, have a future, that they can, in fact, retire, that they understand what their options are, it\’s great. It\’s wonderful to take people from having kind of a general idea of what\’s possible and being very frequently discouraged about those possibilities and turning that into happily retired individuals. I have a client I talked to earlier this week. When I first met her, she was a school teacher, very unhappy individual. She never smiled, she\’d come in here, she was just unhappy is the best way to describe it. And now every time I talk to her, she\’s laughing, she\’s got plans, she lives in a great town in Mexico. And she travels the world. She just told me about a trip she has planned in January, she\’s rented an apartment in Paris. And she\’s gonna be staying there for a month and then off to Turkey and New York, she\’ll be gone for a couple of months. You know, she\’s just giddy all the time. And so that\’s the stuff that really resonates with me. And there\’s so many myths and misinformation data points out there that people are following generally accepted strategies and they can\’t understand why they can\’t get ahead.
And it\’s because a lot of these things are really not in people\’s best interest. But they\’re so widely accepted and universally utilized strategies that you don\’t question it, you just go do it. And we don\’t really have time to talk about that stuff today. But I\’ve talked about in another podcast, things like 401Ks and how we finance our houses, and how we manage taxes and other purchases. Those things all add up to creating headwinds for people in their financial futures. So I made a decision, gosh, 20, 25 years ago that I wanted to work with middle-class folks. Because if I sit down with somebody who\’s worth $500 million, let\’s face it, I\’ll save them some money on taxes, I might help them to start a business or do some philanthropy or this or that but those folks are gonna be fine. They\’re not gonna be poor, they\’re not gonna be stressed out in retirement, unless they do something really, really stupid, which, you know, it does happen. But somebody who maybe, you know, doesn\’t have tens of millions of dollars and wants to live in a place like Northern California and just doesn\’t understand how that can work out, helping that person to have the lifestyle that they\’re looking for, to help them really face the future with confidence, that\’s very satisfying to me, that really resonates. And it\’s why I keep doing it. I really like. What can I say, Clark?
Clark: I like it. I like it. And one of the things you mentioned earlier, is the theme of technology. One of the things we wanna make sure we wrap here with is the thought organizer, and that\’s something that you and your team have built where you can…I\’ll let you explain it in your own words. What is the thought organizer and why is that the next step somebody needs to take?
Roger: Well, it\’s kind of like financial meditation. You know, we\’re all so busy these days, so many demands on our time, so much of this information coming at you constantly throughout every single day without respite. You know, we were talking before we started today, read a report 4 or 5 years ago that the average American is hit with 100,000 advertising messages each and every day, we don\’t even know it. And so cutting through all of that and getting a handle on what I want, as opposed to what somebody else says I should want or I should have, how white my shirt should be…that was a line in an old song by the Stones. And so the thought organizer really is so that your mind can cut through some of this stuff to yourself, to what your values are, to what your priorities are to how you feel about money. You know, one of the most common things I see on the thought organizer is people tend to be conservative by nature, but they\’ve been told over and over and over again by Wall Street, you have to take risk, you have to take a lot of risk if you wanna succeed. And that keeps people up at night. So there are elements to the thought organizer that helps you understand, what am I gonna be comfortable with? What are my priorities? And that helps. And now you mentioned technology, we\’ve changed this, we used to have to mail it out to people. Now, you can download it off our website or we send it out in a secure link that can be uploaded to us. So there\’s a big change in how we distribute this tool.
Clark: Good stuff. And that can be found easily at your website.
Roger: Oh, it\’s at the bottom of the first page of the website, just scroll down and you\’ll see right there if you want a copy of the thought organizer. But technology has changed so much about what we do. You know, from having to call people all the time to get information about client accounts, to having to go to data centers to get those information because a lot of it resided in mainframe computers, then we had dial-up internet. I don\’t know if anybody remembers in the sound of my voice, but we had 24K dial-up and it took forever to get something sent out. You know, you had to be cryptic in your emails and God forbid you send somebody a picture. It freaked out the systems. So, you know, the technology that\’s available to everybody. The fact that we can share things on an encrypted basis. The fact that we have our database up in the cloud now. I resisted that move for years because I just worried if the data wasn\’t in my own office, how could I protect it? And one day my IT consultant looked at me and said, \”Look, Roger, it\’s heavily encrypted. It\’s the only way that you can truly protect your clients\’ data.\” And I said, \”What do you mean?\” He said, \”Well, you work on a server system. Do you have a cleaning service at night?\” I said, \”I do.\” He said, \”Are you there when the cleaning service is in your office?\” I said, \”No, I\’ve gone home for the day.\” Well, what\’s to stop them from walking out with your server?\” Boy, talk about a light bulb moment.
Clark: Definitely, oh, my goodness, of course.
Roger: So, you know, I didn\’t even think about, wow, somebody could take my entire business, could walk right out the door because it\’s in a box. And so we\’re constantly evaluating new technologies. In fact, we\’ve got a new communication tool that I\’m hoping is everything that it\’s been touted to be but, you know, with software packages, you really gotta vet them. I\’m always extremely cautious before I roll something out to clients. But if it passes the test, we\’re gonna have a tool to provide all of our clients with that\’s a communication tool, will help you access certain kinds of data on an instant basis on your phone or your desktop computer. You\’ll be able to monitor your accounts, not just the ones you have with me, but all of your accounts, your 401K at work, all sorts of other capabilities that will be literally in your pocket. If the market starts selling off, you\’re supposed to be able to get an alarm and a preset data point that will tell you, \”Hey, this is going on, you might wanna check and take steps now.\” So those kinds of communication tools, you know, I find it incredible what they\’ve told me that this app will do. But if it does those things, I\’m really excited to roll this out to our clients. So that\’s something to keep an eye out. And we\’ll let you know more as the testing…you know, we\’re doing beta testing. I know a few people who\’ve jumped right into this. But yeah, I wanna make sure it\’s secure before we integrate it into our client experience.
Clark: I\’m excited about that. Once you\’ve done your due diligence and all of the above, that can be a really fun dialogue in the future phone conversation. Well, Roger, I always really enjoy these, you\’re so much fun to just kind of get the chance to hear from you, just on your perspective. You\’ve seen a lot over these last 30 years so I really appreciate you sharing your insights, some of the changes in communication, some of the ways you\’re leveraging technology, make this easier for your clients. Thanks so much. I appreciate your time.
Roger: All right. Well, it\’s always good to talk to you, Clark, and we\’ll talk again real soon.
Clark: Roger L. Gainer, RICP, ChFC, California insurance license number 0754849 is licensed to sell insurance and annuity products in California, Illinois, Arizona, Nevada, and Oregon. Roger L. Gainer is an investment advisor representative providing advisory services through HFIS Inc., A registered investment advisor. Gainer Financial and Insurance Services Inc. is not owned by or affiliated with HFIS Inc. and operates independently.