Risky Business: What Is Your Risk Tolerance?

Show Trancript

Jimmy Turner, MD (02:10.164)
This show Justin we are going to talk about risk tolerance and I think this is a really important topic because the markets have done so well that people don’t really have an appreciation for why this is important and how this matters when it comes to investing and to be honest with you when the markets do go down I find that people are ill prepared for that ride emotionally and so we’re gonna talk about risk tolerance and speaking of that one area where you can dramatically reduce your risk is through taking care of your number one financial task and that’s protecting your income.

So without that, none of the rest of the stuff we talk about on the show honestly matters. can’t invest or pay down debt if you don’t have an income. So unfortunately, when I went through that process of getting disability insurance, I didn’t have a source I could trust and ended up getting disability insurance denied. So I’m a firm believer that every doctor needs this stuff, but you need to be able to get it from a source you can trust. That’s why we created Money Meets Medicine Disability Insurance. So if you’re looking to get quotes from an own occupation, disability insurance policy, and want to make sure that you know, you can have your best interest kept in mind.

visit money meets medicine.com slash disability. All right, Justin, I thought a good place to start this show on risk tolerance is talking about stats. And so I looked up stats here just because I didn’t want to be getting this wrong live on the air. Cause that’s embarrassing. It’s like doing mental math, you know, publicly. And then you’re like, wait, I got that wrong. So I’m, yeah, yeah, me too. So I often ask this in lectures that I give, like how often a market correction or, know, a bear market or recession happens.

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Justin Harvey (03:26.616)
happens to me all the time.

Jimmy Turner, MD (03:37.512)
And people usually don’t know. They have no idea. And the reason why, historically from 2008 until now, like there’s been pretty much one, you could argue maybe two that were significant enough. were like, Whoa. And that was really just the pandemic. you know, what does that March of 2020? And so for those of you listening, just to put some perspective on this market corrections, which are defined as, you know, less than 20%, so 10 % to a 20 % decline, they happen on average about one of every one to two years.

And the duration is about four months. So the last time this happened, you know, September of 2023. So you may not know that you may think about the pandemic and be like, that’s the last time the market went down. That’s actually not true. It was more recent than that. And the typical decline is around 13 % based on the data for the S and P 500. But this happens on average if you take one every one and a half years. And so you can imagine if you have a 30 year investing horizon, you can expect this to happen at, you know, every

15 to 20 times over that time period. So this is not uncommon. And bear markets are interesting too, right? So the most common one that people know in recent memory is that one in 2020, it dropped over 30 % in a month. So you’re talking about a $2 million portfolio going down by $600,000. mean, it was a substantial decline.

That is going to happen once every six to 10 years. So you know that over a 30 year investing period, 60 years, if you’re including retirement, this is going to happen to you three to six times in that timeframe. So when I talk about this, I put that in perspective because I want people to realize this isn’t a question of will this happen? It’s a question of when it happens and when it happens, are you prepared for that emotionally, psychologically as you invest your money? So.

Just around some statistics there, Justin, is there anything you want to add?

Justin Harvey (05:31.788)
risk and return are a seesaw. And what you’re describing is the loss of, you know, impairment of capital might be a fancy financial way we could describe it over a period of time, meaning the value of your portfolio goes down, could be quickly like, dude, I remember 2020, there were a lot of the good news about the 2020 sell off was there were so many other things to be freaked out about that financial markets kind of took a backseat to is this like the end of civilization as we know it for a minute. So

Jimmy Turner, MD (05:42.602)
That is fancy.

Justin Harvey (06:00.322)
And it happened so fast that we very quickly, I wouldn’t even, that’s not even a traditional bear market because there was, it was like a, like a bouncing basketball, just sort of that 32 % sell off in U S equities came right back up. But, there are other types of risks that need to be acknowledged when we’re talking about risk tolerance. There’s the risk of an equity market sell off, but you might say, okay, I don’t want to deal with the equity market sell off. Let’s, you know, put everything in the checking account, for example, but there’s another risk that isn’t like your house burning down.

the way that like that 2020 sell off was, it’s more like termites eating your foundation. And I’m talking about inflation, which is insidious, in many cases invisible, but does erode the purchasing power of your dollars over time. And that is a risk against which you need to ensure, which is why having some kind of growth strategy, whether it’s equities or some insurance based product or some other thing, you need something to counteract the impact of inflation. knowing that there is no growth.

There’s no safe path with zero risk. That’s an important place to start because we’re going to talk about risk today, the path of safety isn’t the path of no risk. It’s the path of thoughtful risk and linking up different asset buckets with the appropriate time horizons.

Jimmy Turner, MD (07:16.8)
Yeah, we, we took Wesley and the kids to go kart racing this last weekend. So, it was, you know, Thursday was basketball wake Friday football game. Saturday we went to go karts and then Sunday was a basketball game again. But on Saturday we went and my son, was his first time ever driving a go kart. And, I was trying to explain to him like how it’s going to work and that sort of thing. And he gets in a youth cart with his, his 13 year old sister. they’re in separate cars. They’re racing and sure enough, Wesley starts out and he’s driving.

so slow. And the reason why is because he thinks it’s safer until the cars that were going faster get around the track and start coming up against him because he was the last car to get out there. And Wesley very quickly found out the first time he went go-kart racing that actually driving slowly is in fact not safer than driving fast because you cause more collisions and accidents and that sort of thing. And so it reminds me of what you’re laying down there, which is like people are like, I’m just going to take my money out and put it in the checking account.

And it’s just going to be safe because it’s not at risk and all that stuff. actually inflation does happen. And in fact, you’re guaranteeing loss of purchasing power in that situation because inflation is always going to happen. Whereas putting some money in, taking some risk, driving a little faster is actually a better way to utilize your financial resources. Just like when Wesley should have been going faster. And just to finish that story, he ended up racing on a different track second and

drove much faster. like, dad, that was so much better. And I was like, yeah, it’s because you weren’t trying to kill yourself by going two miles an hour. But that’s, you know, it reminded me of that when you’re, when you’re given that analogy.

Justin Harvey (08:51.104)
Excellent. I love the risk tolerance sort of discussion because there are so many good analogies like that This is also an area there are many areas personal finance like this and I think that The risk tolerance conversation is one where this is particularly true understanding your own sort of behavioral Handicap the the disposition that we have to not do things in our own best interest and knowing that this area in particular is where it’s like

red alert, you’re going to be faced with a lot of opportunities to fail in your decision making because of your instincts. You got to know that in advance. And when you know that you can do a lot to prepare yourself to like make it through. And a lot of that does have to do with education and understanding what is the point? How do you invest and what are the tools available? And one of the most important sort of bedrock ideas that I like to employ with clients of ours.

to help combat this, the combat, natural inclination to like hit the eject button at the wrong time is the idea of matching up your asset and the risk you’re taking with an asset to the time in which that asset is going to be needed. So to sort of bifurcate it and oversimplify for a minute, we’ve got long-term and short-term. Long-term is any retirement account and short-term is everything else. Retirement accounts you can’t access.

until you’re in your 60s and beyond by and large with some exceptions that we’re going to ignore for the moment. And then everything else would be cash checking, taxable investments and other accounts that are more accessible to you in the short to intermediate term. Anything that’s in a 401k or a Roth IRA or a SEP or any of those other long-term retirement accounts, especially if I’m in my 30s, 40s, even 50s, this is long-term money. This is money that I’m going to use a decade plus hence maybe several decades. Mentally,

As I’m thinking about how do I position myself to make decisions in my own best self interest? I want to put that like that asset on the shelf and not even think about it. And don’t even don’t even like look at your 401k statement if you don’t if you get an old void. Obviously, you got to know what’s going on and make sure you’re rebalancing periodically, but certainly not like in between cases, refreshing your screen to double check the asset pricing updates on your retirement accounts because it is immaterial and is in no way

Jimmy Turner, MD (11:00.32)
It’s untouchable.

Justin Harvey (11:19.182)
an indicator of whether or not your long-term investment approach is going to succeed.

Jimmy Turner, MD (11:23.038)
Yeah. I think that it’s really important to mention a concept that I love talking about. I’ve mentioned it before on the show, which is myopic loss aversion, right? So condiment versky, they studied this and basically the, the too long didn’t read is the more often you look at your portfolio, the more likely you are to see it go down, the more likely you are because you hate to lose money. It’s called loss aversion. You’ll do anything you can to avoid that, that event from happening. You will in fact sell.

when things are going poorly. That’s why people who look at their portfolio more often or talk about their individual stocks in the physician lounge are more likely to actually be worse investors. And if you link that concept with another one that’s been studied over and over and over, I think business insider is the one that I’ve seen the most pictures on, but they’ve done background research over 20 year periods. And they basically say, Hey, how would you have done if you kept your money in the S and P 500 and never touched it for those 20 years and the return something like.

10%. Actually, I pulled out the charts. I’m not going to make it up. It’s 9.8 % on this specific one. $10,000 would have turned into $65,000. If you took it out for the 10 best days in the market, so you have the other 6,990 days invested and you miss out on those 10 days, it goes down to 5.6 % and so on and so forth to the point where if you miss 30 days out of 7,000, you break even. And you’re like, but hold on. I would know when the market’s going down. And so what I would do

is I would get out and then buy when the market’s high. And the follow-up caveat to this story that often doesn’t get told is that there’s a better than a 50 % chance that when you have one of the worst days in the market, it will be followed by one of the best days in the market in the next two weeks. And if you look at March of 2020, when the pandemic hit, that actually happened. It went down by a very large sum of money. And sure enough, two days later, it bounced back. It happened again in that same month.

Three days later, four days later, it bounced back. And so you had two of the worst days in the last 10 or 15 years. And then you had three of the best days in the last 10 to 15 years. And so when you try to tell yourself this story that, well, when I look at my portfolio, I’m going to see it go down. I’m going to make some adjustments. I’m going to stuff some more money under the mattress and get it back in when the market’s recovering. We are really bad at that. When you are most likely to have this angst from the risk that you’re taking and seeing your portfolio go down.

Jimmy Turner, MD (13:45.792)
You’re more likely to sell in that situation and to have an immediate followup of one of those best days that you can’t afford to miss. And so when we talk about risk tolerance, we’re talking about your need to understand financial literacy and myopic loss aversion. And that the way that you’re psychologically wired is to avoid loss of money, loss of capital, and actually stuffing that money into a 401k or a four through B and just saying, this is an untouchable thing. I will never touch it under any circumstance.

and knowing that that in fact isn’t you ignoring your finances. That is in fact knowing about myopic loss aversion and being wise. So I’m a big fan of what you’re putting down.

Justin Harvey (14:21.305)
Yes.

You can also look back to 2007 through nine and the 2008 sell off and then March 7th of 2009, which was that same like basketball bouncing off the floor moment. And if you look from March 7th of 2009 and the following six, 12, 18 months, was just stratospheric stock market performance. When, when again, it was this moment of, and I remember I was at Villanova at the time as an undergrad. And I remember listening to the, you know, the head of the department of whatever at the big insurers, they came to speak to us. And I remember this is one of those moments for me that was like a seminal.

coming of age, young financier moment where he was like, yeah, I was at my Italian villa, you know, watching C-SPAN. And I knew they were voting on this, you know, whatever package, what the relief thing, TARP Act, I think they called it back then. So I’m like, yeah, I hope this passes because if it doesn’t, American capitalism is over. And just thinking like, my gosh, that’s so dramatic. you know, but even in the midst of when things look really bad, as soon as certainty is sort of established, the US government says we’re going to backstop

Jimmy Turner, MD (15:11.37)
Ha ha ha ha.

Jimmy Turner, MD (15:16.243)
That is dramatic.

Justin Harvey (15:22.926)
you whatever and market confidence is restored, there’s market performance reflects that. So you got to stay in when it looks bad in order to be a beneficiary of that return. that’s right on the money, Jimmy.

Jimmy Turner, MD (15:28.83)
Yeah.

Jimmy Turner, MD (15:34.944)
Yeah. One of my favorite quotes in finance, I think it was Sir John Templeton that said the most expensive words in the English language, the four most expensive words in the English language are, this time it’s different. And when you understand that and you’re like, okay, I know this is going to go down because Justin and Jimmy just taught me about the stats can happen every year and a half on average. I know that getting out of the market at that point is bad because some of the best days are soon to follow. And so all of that’s going to come back to your comfort with risk.

And so hence the topic of the show risk tolerance. And, I think a good place to start, maybe Justin is, know, the things that impact how much risk you should be taking. and one of those is financial literacy, which I think we just kind of handled that aspect of things that you do need to take risk risk is tied to reward. a second thing to think about is your time horizon that you mentioned earlier, right? So if you got the.

30 year time horizon for that four or three before. Okay. You should be taking loads of risk because you have time for the market to do what the market does. And you don’t really care if it goes down in the short term. And in fact, there are studies on this that when you were young, if you were young and listening to this, and I’m going to define young as less than 45 and the market goes down, you should not be upset. You should be in fact celebrating that because you have the opportunity to now buy stocks, index funds at a steep discount to where they were.

Where you start to worry about this really is when you get later and you’re closer to retirement, you know, you’re in that five to 10 years before retirement and the market’s kind of acting like the market, you know, it’s going to, going to go up, it’s going to go down, but now you’re, you’re getting close to the time where you want a lot of stability. And so in that situation, your risk is going to be going down, declining as you get closer to that, that stage. And the third one I’ll mention, I’ll let you jump in, Justin is just there, there is a personality component to this, but in my experience,

Some of that personality components got to be overcome by financial literacy. And, so there’s a balance there. Like if you were the most risk averse person in the world, unless you want to keep working for the rest of your life, like you’re going to have to come to grips with that from a financial literacy standpoint and overcome it. But, I’ll stop there, Justin, cause you do the real, real world in the trenches, financial planning for this stuff.

Justin Harvey (17:41.902)
There’s another thing to consider here and it’s related to that last point you just made about the sort of retiree type tapering their risk and that’s this idea of risk capacity, which is sort of the tolerance is more like the behavioral side and the capacity is more the math side of what do need my portfolio to give me in order to hit my goals or in order to, you know, sustain whatever lifestyle that I want in retirement. And those are sometimes aligned for a well-informed investor who has their

Emotions on a short leash and has their brain well informed with a lot of the history that you just described These are going to be pretty aligned if there’s a disparity between these things And often it has to do with like you need to be invested in the market because you need to grow your you need to grow your assets to turn them into more assets and also to beat inflation, but you’re so nervous about loss that you’re unwilling to expose your assets to the potential of loss that is a

sort of a malalignment of tolerance and capacity. And that’s where you need to do some work to say, well, I’m either going to get informed, work on my behavioral coaching, maybe work with a professional to help me overcome these psychological challenges to get my capacity where it needs to be, or I’m going to live with the reality of lower returns. I’m going to work longer and I’m going to have to continue to combat inflation. And, you know, I can’t tell you which is the right answer.

Because I don’t like to tell people what to do. I like to just give them all the options. And for some people that’ll be a relief. You mean I can work until age 78 and then I can use nothing but a high yield savings account? Like gosh, that’s amazing. Well, okay, cool. That’s your decision.

Jimmy Turner, MD (19:18.368)
That’s not amazing.

Yeah. Everyone’s going to have their, individual goals. And I think that’s important to consider too, because one of the ways to deal with risk and I recognize this about myself and I’ve taken a non-traditional route to this knowledge of, of the way things work, at least in my life, which is that one of the things that provides fulfillment and happiness and joy in my life as a sense of purpose. And I would be lying if I said that that didn’t come from work. Right? So a lot of my purpose.

comes from a job. And it’s interesting because having a job and it being secure is one of the safest ways to have money coming into your life. And so even if you were cutting back in your, your, your later days, you know, when you’re 50, 55, 60, 65, whatever that might look like for you, there is some money coming in there that is quote, quote, the safe part of your portfolio in a way. And you may need to draw down some money to still maintain your lifestyle. Cause you’ve cut back.

But there is, it’s going to look different for everybody. But, but I know that for me, the idea of retirement after the existential angst that I had when I went to two days a week and people were like, man, like I’m overworked and working 70, 80 hours a week. Like I just, I wish that I could work two days a week. Maybe, maybe, you know, for some people that might be great for me, it was not so great. and, that’s just, me being transparent about, about the mental health existential crisis that I went through when I had too much time on my hands. So.

All that to say your risk tolerance is going to be dictated based on a lot of things, your portfolio income that you have coming into your life from various sources. how far away you are from retirement. Like there’s, there are a lot of things that go into figuring that out, but I do think from a financial nuts and bolts standpoint, Justin, maybe it might be helpful to talk about investment strategies as it relates to risk tolerance.

Justin Harvey (21:15.746)
Yeah, so for you, I’ll start with prevailing wisdom, then we’ll sort of zoom in on different parts of this. There’s this slice of the asset management industry that is called a target year fund. So for starters, if you’re listening to this and you have no idea what to do and you want to do something that’s better than what you’re doing right now, which is everything in a high yield savings account, buy a target year fund, or at least let me say because the legal department is chirping in my ear.

Consider buying a target year fund. It may be a good fit for you, but consult a financial professional to 100 % make sure. A target year fund is approximating your understanding of your current age and your presumed retirement date. And when you’re very young, it’s like 90 plus percent stocks and 10 % bonds. And then as you age, it moves towards like a 60, 40 or 50, 50 portfolio when you’re in your 60s and 70s. This is not perfect, but it’s way better than nothing.

And it will give you the benefit of the equity focus in your younger years. And it will give you a modicum of portfolio stability in your later years. Now, realistically, if you’re in your 60s and you’re a doctor and you haven’t yet accumulated meaningful wealth, you probably need a sort of aggressive engagement at that point in order to do what you need to do. And buying the Target Year Fund as a 64 year old doctor who still has to work another 10 years to reach their goals. That’s an unsophisticated solution that is almost certainly going to be insufficient.

But if you pile into a Target Your Fund in your 30s, frankly, if you do it through your 30s and you’re a doctor who has a reasonable savings rate, you’re gonna have six, approaching seven figures of net worth by the time you’re in your 40s, probably. So the Target Your Fund is a good starting point. And the mechanics of how a Target Your Fund works acknowledges the sort of like, the capacity part of it, meaning we gotta take some risk, we gotta grow assets on the front end, and then as long as that happens, and as long as asset growth

realized we can afford to decrease portfolio risk, increase the share to fixed income, increase the stability, and take a lower expected rate of return into the future because we don’t need to get 9 % a year. In our latter years we only need 6.2 or whatever the numbers are and therefore a 60-40 approach is gonna give us as much as we need to get. Now

Jimmy Turner, MD (23:37.535)
Yeah.

Justin Harvey (23:38.968)
personal finances personal. if you are that doctor in many cases, what often happens in the real world, what I see is that when you’re successful, when you’ve been a saver, you’ve built assets, you probably have like some real estate happening, maybe you’ve got some passive income, or maybe you just have such a meaningful portfolio that your portfolio is going to give you passive income. The bulk of your assets aren’t even going to be assets that you need for your life. And so you’re now thinking intergenerationally.

to your kids and now the time horizon instead of being, okay, I’m 62 and I might use this in the next 10 years. It’s like, well, actually I’m 62 and I might bequeath this to my kids in 30 years. So I actually still have a long-term horizon for a lot of these assets and therefore I wanna sort of keep the gas pedal down and I wanna keep that 80-20 or that 90-10 or that, you know, now we’re getting into different asset classes and there’s probably some like private stuff and there’s some commercial real estate and, I wanna maintain a growth orientation because between

the income that I have, what my portfolio is going to reliably kick off, I got a social security benefit or two for one or two spouses. You’re going to have a financial plan that’s still going to work and you’re going to be able to maximize the benefit to your heirs in that context.

Jimmy Turner, MD (24:48.83)
Yeah, I think that’s an important consideration and something else just reminded me of this. People talk about asset allocations, one hack out there, right? So if you’re a do-it-yourself investor and maybe you are fresh out of training, you don’t quite want a financial planner yet, or maybe it’s just not, that’s not your cup of tea anyway. One way to hack asset allocations is to look at target date funds because there are a lot of really, really intelligent people that have constructed

those funds and have done the research and know the historical significance of different asset allocations. And you’ll look into those funds and like, well, for my age, I should be 90 % equities or stocks. I should be 10 % bonds. And of those 90 % equities, 60 % should be domestic, 40 % should be foreign. And you start diving into it and you’re like, I don’t need to figure out my asset allocation. They’ve already done it for me. And so you could just buy the target date fund and it’ll just do it for you. And it’ll, you know, it’ll rebalance and do all of the good things for you.

The problem is if you start getting outside of one account and they have different target date funds, then the math may not jive. It may become a little more difficult. And then you have questions about what do you put in a taxable brokerage account versus your 403B and all that sort of stuff. And so it does get more complicated than that. But if you’re at the stage of life where that would be appropriate for you, I encourage you actually to go look up the target date fund for your age based on the retirement date you expect and see what you think about that asset allocation. I think you’ll find it interesting.

One big caveat here is I see this in disability insurance when people are like, Hey, yeah, so I’m financially independent. you know, I’m gonna get rid of my disability insurance and just at the face of it, I’d say, Hey, that’s a great idea. If you don’t need insurance anymore, life or disability, yeah, it’s a great time to consider getting rid of it. But then they tell me that they’re like 42. And I’m like, well, so when you say you’re financially independent, let’s let’s like, exactly do you mean by that? and so if you said, I’m going go look at a target date fund.

And the year that you selected is 15 years from now because you’re in the fire crowd. That’s probably not going to be aggressive enough for you to get to your goals. And so you have to be thoughtful about what you’re doing when you do that. So, so when I say look at a target date fund, that is for the person out there who says, Hey, I’m going to, you know, 30 to 25 to 30 years from now, that’s when I’m going to retire. And then you look at it and kind of have, an interesting perspective on, on what Vanguard or fidelity or Schwab or whoever thinks about those things.

Justin Harvey (27:11.172)
That’s a great idea. And I would suggest even for the diet and the will do it yourself or a periodic check in with an investment professional as a sanity check and to give you two or three things to think about is always a good idea.

Jimmy Turner, MD (27:22.56)
100%. So I’m curious, Justin, just like the financial planning side, you’ve been through some of these markets with clients. I’d be curious to know from a in the trenches real world life experience, what it’s like navigating those conversations with clients when March of April of 2020 happens.

Justin Harvey (27:45.422)
Couple things I would say, I have a benefit of vetting this hard on the front end. So if somebody wants to be a client of APM Wealth, and before they’re even signed up, I’m gonna say, we’re gonna lose money. We’re probably gonna lose a lot of money if we work together long enough. And if you’re not okay with that, then we’re not a fit. And a commitment to a disciplined investment approach necessitates

loss when the March of 2020 happens. Yeah, mean, yeah, hopefully, like a downward fluctuation of your portfolio value. the clustered around that event is going to be the times when you’re going to get the biggest percentage gain. So we’re gonna stay in our seat with our seatbelt securely fastened. And that’s what I’m going to tell you to do. If that’s the advice that you want, then great, then we’re a good fit. If this makes you uncomfortable. I mean, then you need to like do a little reckoning with yourself to see

Jimmy Turner, MD (28:16.288)
but unrealized loss. So just to be clear.

Justin Harvey (28:43.972)
If you want to be a long term investor, or if you want to work with something, because there are other products, the insurance world, yeah, you can buy a life insurance policy, but there’s all kinds of different flavors of customized risk return profile, zero downside, upside capture of 10 % of the S &P on the price. There’s like very fancy, you get sold a contract that’s 100 plus pages long, that’s like, instead of buying the stock market,

in the way that we’re describing, you buy this index universal life policy or variable universal life policy. And in so doing, you’re going to have some upside be protected from some downside. Those are super complicated. Some of them are good. Many of them are very expensive and I see them poorly implemented much of the time whenever I see them. They’re not universally bad, but because it’s a hundred plus page contract, it takes somebody who really knows what they’re doing to properly implement it. So you’ve got to like understand that difference, that dichotomy.

And then when I tell the person, you know, we’re going to lose money that weeds out the folks who are going to immediately try to sue us whenever we lose, whenever the market goes down, hopefully that’s part of the design. And then I know that the person who’s on our proverbial bus where we’re driving to financial independence, they’ve, they’ve made a commitment to that and they have understood to some extent the terms of engagement. Now it’s one thing to intellectually understand and it’s another to say, holy cow, my net worth had XYZ happened to it.

And so in that moment, I’m going to harken back to say like, we talked about this, we agreed, by the way, my personal portfolio and my mom’s portfolio and like, we’re all in this together. And it’s not just you, it’s happening to a lot of people right now. And then we’ll look at how much of this money is money that you need to access in the next two to four years for an upcoming expense. And we’ll say, well, zero of it, because part of what we did at the beginning was to

segment assets that are only going to be long-term assets. And then we’ll say, do we have hope that the economic engine of the United States is going to continue to churn? And we haven’t yet seen it. It probably will not go forever because all great empires do eventually fall, but we haven’t yet seen the end of it. And there’s not a good alternative at this point. So there are some things you do have to take on faith, but there’s a lot of data.

Justin Harvey (31:08.482)
and lot of history and a lot of really smart people using sophisticated tools, building products to robustly handle these market challenges and a disciplined commitment to those products over time is a really, really, really good way to attack these challenges. having said all of that, and Jimmy, I told you right before we hit record, I experience stress when my clients do. And this is true in complex financial transactions. This is true in market sell-offs.

Because I know what I know and I know this context and know that yeah, diversification is a benefit and markets recover and there’s a lot of things we’re doing right, but there’s still that moment of, my gosh, we’re going over the edge, hold on tight, that I don’t know any financial professional that’s totally immune from that. So I’m on the same roller coaster with my client and we’re going to get through it together.

Jimmy Turner, MD (32:01.704)
Yeah, I think it’s important to know that about yourself and having a conversation with a financial planner can help you sort that out. On that front, I’ll make one caveat just for the variable life, universal life conversation that that is a niche product that the vast majority of people listening are probably not going to be getting. If that is your niche situation and someone’s pitching that to you, I’m just going to say this is my opinion and Justin, you can disagree if you feel differently, but

that is one of the situations where I would highly encourage you to be working with a fee only financial planner who is not making commission from that product because that product in particular, just the, whole, that whole area of insurance world, is often pitched inappropriately to your, to your point earlier that, that oftentimes it’s, it’s done poorly. and so if you’re in that situation, please consult and Justin is a fee only planner, just to be clear, consult a fee only planner who is saying, Hey, this is what we need to do. This is the plan that you need to have.

I do think that this niche opportunity here for you, but then they’re not going to sell you the product that’s going to make them a bunch of money. I think that that in particular is an important area where fee only advisors are, I think really important.

Justin Harvey (33:12.482)
I’ll just say they need to be taken on a case by case basis.

Jimmy Turner, MD (33:15.796)
That’s fair. That’s All right, everybody. Thanks for tuning in. As we talked about risk tolerance, market history, the reason why it’s actually great when the market goes down when you’re early in your career and things to consider as you’re getting later target date funds and so much more. As always, we appreciate you sharing money meets medicine with your friends and colleagues in medicine. Before you head out, don’t forget, you can head over to money meets medicine.com to download a free copy of the physician philosophers guide to personal finance or to get an own occupation, disability insurance quote.

which is your number one financial task as a physician. Justin and I will see you soon. Cheers.