With Marshall Allen

The poor old middle class. You don’t qualify for government subsidies — but don’t make enough to survive all on your own. And pay a lot more for medical care.

Marshall Allen is the author of Never Pay the First Bill, a book about navigating the American health care system. He exposes the underside of the health care industry, which he says places a huge, outrageous, and completely unjustified burden on middle-class Americans who aren’t old enough for Medicare and make too much for Medicaid (which is most people). He argues that the medical system’s costs are unreasonable and could be much, much lower.

Marshall has been an investigative journalist for more than 20 years. When he started digging into the medical system, he was outraged at the clear injustices he discovered. “If you go down the wrong path with a health care encounter, it could cost you thousands of dollars more than it should. And they will still come after you for those bills. They will still send collection agencies after you. People need to be informed before they encounter the health care system so they can be protected.”

In an enlightening conversation with Kosher Money, Marshall shares some of the wisdom from his book and how to navigate the health care industry to make sure that when a bill arrives, you’re not being taken advantage of.

What led you to writing this book?

My dad suffered from dementia for eight years before he passed away. At certain points during his care, especially during his decline, my mom had to put him in a nursing home for short bouts of time. She specified during the admission that if he needed anything, she would take him out for the day and go to his own doctors. She did not want him to be treated by any physician at the nursing home.

At one point, she noticed a real decline in my dad‘s cognition. She looked on the medical bill and noticed that there had been a drug added to his regimen — prescribed by a medical provider who saw him without her consent. She looked up the drug and found that it causes cognitive problems in people with dementia.

She called the facility, they took him off the drug, and he recovered right away.

Then the billing company sent my mom a bill for this primary care visit — that she had not given consent for, that she had not approved, and which, in fact, had caused my dad harm. Obviously, we refused to pay. My mom handed the fight over to me, and while it took a lot of work, they eventually backed down.

It made me think though, how many other Americans in a similar situation would have just paid — even though they never should have. Or, they would have gone into debt because of a medical bill they could not afford.

People need to know how to navigate the system. I compare it to learning financial literacy, like balancing a checkbook. People aren’t taught how to navigate the health care system or how to protect their money from being taken unjustifiably by a doctor or a hospital or an insurance company. But it can be done.

Let’s take a step back. How did the American insurance system start off?

In the 1700s, there was a law passed that siphoned off a part of sailors’ paychecks to pay their medical services. And then in the 1800s, when the railroads and forestry companies were expanding out west, they also started taking money from their employees’ paychecks to pay for the hospitals they would build as they expanded westward.

Things really accelerated after World War II, when a wage freeze set in. To better compensate employees, employers began offering health benefits, which made them mainstream. The first health insurance plans started around that time, and things just took off from there.

Why is the medical system so broken today?

The system makes up 20 percent of our financial infrastructure, and as long as it’s making money, the various health care stakeholders will push to maintain their control. Hospitals are also huge employers. In any given small town, they’re a primary employer so it’s hard for local politicians to crack down on them. And in the United States, there’s a popular attitude that says, “If it makes money, we’re good with it,” regardless of the harm it might be causing to a lot of people.

You said the administrative complexity of the health care system is absolutely absurd. Can you elaborate?

We are wasting hundreds of billions of dollars a year in health care. So if we could save just the amount of money being wasted, we would save about a trillion dollars a year — about a fourth of what we spend.

My argument is that we need the health care system to tighten its belt, run a tight ship, improve its efficiency, stop overpaying some of its people, and make a fair profit in an efficient way, just like any other business.

Right now, instead of running things efficiently, they continue to increase the inefficiencies, increase the errors, and increase the overcharges, so that on average working people are paying two to three times more than what someone would pay if they’re on Medicare.

You said that just because you have insurance doesn’t mean you’re insured. Can you explain?

Many people fall under the category of underinsured. Even if they have benefits through their employer, their deductibles are massive and they‘re still overpaying. Deductibles are the amount you have to pay before your insurance pays anything. Deductibles to the tune of $5,000 are not unheard of these days, which means that unless you have more than $5,000 in the bank, you’re effectively uninsured.

Statistically, about half of Americans don’t have more than about $400 in their bank account at any given time. So even with something like a $1,500 deductible, you‘re going to go into debt for any bill over a few hundred dollars.

You claim that if you learn to navigate the system in a savvy way, you can save hundreds or thousands of dollars per health care encounter. What would that look like?

Everything is more expensive in the hospital. If your doctors refer you for additional testing, they’re going to refer you within their hospital network — and you’ll be charged more for it. But unless you’ve been admitted and it’s urgent, you can usually take the order elsewhere. Instead of paying $3,000 for an MRI, you could pay $300. The same is true for lab tests and any other service you might receive in a hospital setting. With this knowledge alone, you can avoid overpaying and getting hit with bills that are both exorbitant and unfair.

What’s the first step you should take when you receive a medical bill?

The first step is to get an itemized bill, which contains a breakdown of the price you’re being charged for each service. Make sure it only contains charges for things that actually occurred. Then check those prices to make sure they are fair. My book and other resources show how to do this. If you’re insured, you also need to make sure your insurance plan has processed things correctly.

If all that checks out, then you should pay the bill or work out a payment plan. But don’t pay it before you ask for a discount. Call the billing department and politely say, “Could you please give me a discount?”

Remember, these numbers are made up to begin with. So ask nicely for a discount, and hopefully they’ll give you one.

And if they say no?

If the prices are fair compared to what you’ve checked, then you don’t have a lot of leverage. But if the prices are inaccurate or unfair, then your goal is to give them the incentive they need to do the right thing. And so you’re going to need to apply some pressure. Reach out to local hospital board members or politicians. You could file complaints with your local attorney general’s office if it looks like this might be a fraudulent type of a claim. And every time you’re doing this, you want to let them know. You want to stir up enough dust in their billing office to give them the incentive they need to do the right thing, to come to the table and give you that discount.

You can file complaints on social media; you’d be surprised how much hospitals and doctors care about their public reputations. Again, all you want to do is get this escalated to a high enough level that somebody in that facility says, “Okay, let’s just give the person the discount that they need.”

You have the most power when you sue in small claims court. My book shows how to do it and it’s quite effective.

We had our first podcast conversation a while ago. How have things evolved since then?

I’m seeing a ton of momentum building. It’s becoming more and more clear to working Americans that they’re being taken advantage of by the health care system. We all believe in running a business to make a fair profit, but what’s been happening in health care is profiteering.

Encouragingly, we’re seeing policymakers get engaged on a couple of different levels that are really interesting. One is medical debt — any medical debt under $500 no longer shows up on a credit report. That’s a huge thing for patients, because studies have shown that just because someone has medical debt that doesn’t make them a credit risk. You can’t help that you got sick and then couldn’t afford your bills.

And bills over $1,000 are also not being reported to credit agencies until a year has passed. We also saw the Biden administration announce that they are pushing for all medical debt to stop showing up on people’s credit reports. If that were to happen, it would create a lot of leverage for the consumer to negotiate a fair deal and not be forced to overpay.

People in profitable positions tend to align themselves with the politicians funding their movements. Is that part of the challenge here, or can people rely on the government to help?

Some of the biggest lobbying organizations in the country are health care institutions. There are hundreds of millions of dollars being fueled into Congress.

Still, we’ve seen some encouraging signs on the policy front, like the medical debt issue mentioned above. We’ve also seen other things with price transparency that have been a huge, huge benefit for consumers. The states of Texas and Tennessee recently passed laws that allow cash payments that patients make to be applied toward an insurance deductible.

Why pay cash?

The cash price is often lower than the discounted rate that your insurance company has obtained for you. So one of the first things I recommend to anybody, even if you have insurance, is to check the cash price. See if it’s lower than your insured price. And if you’re on a high deductible health plan, it might make more sense for you to pay cash instead of running it through your insurance.

What are the changes you want to still see in the health care system?

1. Show the prices. Consumers are entitled to know the prices of services up front, and these prices should be honored, without other types of fees or hidden costs. Clinicians and hospitals need to be upfront with their prices.
2. Know why any claim has been denied. There needs to be transparency when insurance denies payments. Right now, you’re seeing millions of claims get denied, but because of limited transparency, it’s difficult to appeal, and the process is lacking integrity.
3. Accountability for mistakes. One of our leading causes of death are hospital-acquired injuries, infections, and surgical errors. And there’s very little transparency about these. The details aren’t disclosed to patients, and they aren’t accurately recorded in medical records. Patients have a right to know what happened and a right to know that it’s been corrected, so at least they can be sure that whatever harm they’ve suffered won’t happen to other people.
4. Public access to ratings and information. Right now, there’s very little reliable, quality information that’s being published for the public about the quality of health care. Doctors should be reporting their complication rates. They should be reporting the volume of procedures they perform.

I always encourage people, if you’re going to any doctor for any type of procedure, ask them how many times they have done that exact type of procedure, and ask them what their complication rate is. And honestly, if they’re even measuring their complication rate, if they even have an informed answer, that’s already a real positive, because in a lot of cases, doctors aren’t measuring their complication rates.

Unfortunately, our health care system is like a giant assembly line with very little quality control mechanism on the back end. Doctors and hospitals and insurance companies are pumping patients through without actually evaluating the cost or the quality of the care that’s being provided.

Studies show that about 100 million people have medical debt right now. So that’s about one in every three or four Americans. Would a medical provider be able to turn someone away because they have medical debt?

Not for emergencies. There’s a federal law that says if you go to a medical facility with an emergency need, they have to treat you regardless of your ability to pay, whether or not you’ve had medical debt at their facility or not. But for elective care or non-emergency care, they could turn you away.

I’m hearing more and more cases of patients who require surgery, but before the hospitals even schedule the surgery, and surely before they operate, they’re demanding the payment from the patient up front, before it’s even been processed by their insurance plan. And I think that’s a really unfair situation to put the patient in.

You’ve shared some really strong points. Do you think patients are just victims of the system, or can they do something about it?

They definitely can! I think it’s one of the great shames of our country — that we are spending twice as much on average per citizen in this country for our health care needs compared to other developed countries. And our outcomes are much, much worse.

But the flip side of this is that patients have an incredible amount of power to push back when they’re being taken advantage of. Never underestimate the impact of an individual telling his story and calling people to account for unfair treatment.

So when you have a patient who’s being billed for services that did not even happen and you can show that to the billing person, the bogus biller, you can effect change.

Even a powerful institution may actually relent when you can prove that you are being billed for services you didn’t receive, or that you’re being charged thousands of dollars more than other patients were billed for the exact same service at the same facility. It’s a compelling argument.

-You never want to delay urgent care, but you do want to make sure that the care you’re receiving right now is what you actually need.

-I define success as saving a ton of money on health care while still getting the treatment that you need.

-What kind of a business doesn’t give people a price up front? If we’re providing services to a client and they want to know what our fee is or what our rate is, we tell them so they can take it or leave it. Medical care should be no different.

(Originally featured in Mishpacha, Issue 990)

The post The System Is Sick first appeared on Mishpacha Magazine.

Selling Points with Master Salesman Andrew Singer

‘Money Talks’ — featuring exclusive bytes from the 'Kosher Money' podcast — is produced in conjunction with Living Smarter Jewish (LSJ) and Living Lchaim.

LSJ initiatives include free personal finance coaching, education geared toward young couples, referrals to financial planners, curriculum development for high schools and young adults, and video education library. 

To request help, please email: info@livingsmarterjewish.org

Living Lchaim is a podcast network dedicated to producing shows that enhance the lives of Orthodox Jews across the world. The Kosher Money podcast, created in partnership with LSJ, hosts lively dialogue around frum financial realities, facilitating awareness and educated decision-making.

The post Money Talks with Andrew Singer first appeared on Mishpacha Magazine.

A successful salesperson may have lots to say, but his success comes from knowing when to keep quiet and listen. Andrew Singer, VP at Constellation Energy — who was described by the editor at Fast Company as “a rare kind of leader and a truly engaging speaker,” and who enthralled Howard Putnam, the former CEO of Southwest Airlines with his speeches — has mastered that art. Here he shares with Kosher Money and Mishpacha some of his tried-and-true sales tips that can help you grow your business and income.

Andrew’s path to sales was a meandering one. He started as a buyer for Lord and Taylor back in 1989, then followed his mother’s advice and went to law school. After he spent a few years practicing law, the firm he was working at showed signs of folding, and Andrew began looking for a new job. When he heard about soundproof windows and realized no one in the area was selling them, he decided to grab the opportunity. He started a company, and thanks to his sales skills, it grew quickly.

But while the company was successful, Andrew found the entrepreneurial model wasn’t for him. Then he got a piece of advice he says was the best he’s ever received: “Just say no.” He closed the company and went back to grad school, before ultimately taking a position working in sales full time, and he hasn’t looked back.

“When something isn’t working out,” he says, “often the solution is not to try and fix it. It’s to walk away.”

What does a salesman need to know before a call?

You know ahead of time what you’d like to get out of the conversation. You have a blank canvas in front of you, and you know what you want it to look like at the end. Your job is to put that picture together by directing the brushstrokes and filling in the gaps of the conversation.

And you need to know how to listen. Really! The listening piece — being able to hold your tongue and let clients lead the way — is super important, and it doesn’t only apply to sales. If you can put your ego aside, if you recognize that you gain more by listening, then you’re already in a position of power.

People aren’t used to being listened to. The second you can do that, you’re already ahead. You become their friend and gain their trust.

It’s tempting in conversation to think of what you’re going to say next, but it’s crucial to realize that as soon as you start formulating your reply, all you have in your head is what you’re going to say next. As a salesperson, you need to recognize that interrupting is akin to shutting your ears off. You’ve decided that what you’re about to say is more important than the last five seconds of what the client is saying.

That’s a big mistake. As we discussed in the episode, you always want to hear what your potential customer has to say more than you want to hear your own thoughts. The information they’re giving you is 100 times more important than what you’re going to give them.

Can you tell us more about being an active listener?

You need to stay quiet when someone else is talking, without interjecting, but you also need to show through your facial expression that you’re taking in what he’s saying.

Ask follow-up questions that allow the speaker to expand on what he’s saying. Taking notes is another old-school trick that lets the speaker know you’re listening intently. And it’s often a good idea to even repeat a bit of what the speaker has said, to make sure you understand.

We tend to assume other people are on the same exact wavelength we are, and that when we ask a question, their thoughts will be the same as ours. Establishing a baseline is super critical to ensure you’re both on the same page.

When you ask a question and someone responds that he doesn’t know the answer, you have the chance to clarify that he understood the question the way you intended it — or to bring up any other underlying thoughts and address those, too.

Can you describe how a salesman might open a conversation?

You want to spend exactly 18 minutes of every hour speaking and exactly 42 minutes is listening. If you speak for longer than 18 minutes, you’re probably not going to get the sale. To get that balance, make sure you’re asking questions and not only talking. The goal is to get the prospect to schmooze.

“Hey, I noticed your building is on a fairly busy street. Does the noise bother your clients when they’re here?”

“That’s funny you should say that. Actually, it does.”

“Well, I noticed that the glass is from 1957, according to the date on the bottom. You know that you’re probably good for a rebate with the utility company right now to update your glass?”

“No, I had no idea!”

And suddenly, you’re in conversation.

When you ask follow-up questions, ask about something you really want to know. You want people to feel like what’s taking place is a natural conversation, even though it’s within the realm of a sales call. You’re creating a conversation where none existed before — and that’s real.

What do you recommend to a salesman who finds his prospects aren’t biting?

One of the best lessons in sales is to get your prospect to say no. If they say no, you have a very good chance of actually making a sale. And it’s not a gimmick — you’re recognizing they’re really not into it.

Back in the ’70s, David Sandler, who runs one of the premier sales coach systems, used to call this technique “the pushback.”

You’re sitting and talking to somebody and you say, “Well, Mr. Customer, I have this for you.”

Their response is, “I don’t think so, I don’t know, I’m not sure….”

You look at them and you suddenly realize it’s not going to happen, so you do the pushback.

“I so appreciate your time, but I have five other appointments, so I have to go.” It’s almost desperation, and it works every single time. You’re saying it straight out, “I know you’re not going to buy from me today.” And when you get ready to leave, they usually ask you to stay.

Is there an ideal time to cold-call a business?

Yes, first thing in the morning. Before opening hours, the owner is usually there, but without a gatekeeper — no secretary. If you have the right extension, you can often get straight through.

Any advice for business owners looking to find good salespeople?

A good salesperson should immediately be able to sell you on the product of the moment — which is himself. If you’re bored within a couple of seconds of the interview, the prospect is going to be bored. If you’re not believing anything he’s saying, the prospect’s not going to believe him. But if he’s engaging and he’s made you want to speak to him for a half hour, there’s a chance he’ll be a good hire.

I was at Radio City Music Hall listening to Jack Welch, and one of the questions was, “What was the biggest challenge you ever had in your professional career?”

His response was “Hiring,” and it left everyone really surprised. He went on to explain that 50 percent of the time, you just won’t get it right. There are great workers who had lousy interviews, and worse, the great interviewees who make lousy workers. You hire them and they’re just horrible. On the other hand, some people give bad interviews, you don’t hire them, and then you read about them a year later and wish you hadn’t let them go.

What do you think about hiring someone with no sales experience?

The legend of Zappos is that on the first day of the job, they offer you $2,000 to walk away. If you take the money, then you weren’t meant to be there. And if you stay, it’s probably because you like what you see going on.

Why is the two grand worth it? Because they’re don’t want to invest in this person for six months to a year only to find out they’re not right. Imagine how much time and effort they will have wasted by then, both on the new person’s salary and the time supervisors spent training them.

It’s okay to hire someone who is new, but you want to do as much upfront work as possible to make sure the hire won’t be a waste of your time.

You mentioned the interview process. What are your best tips for people — whether for a sales job or any other field?

Working with young people on interview skills is one of my greatest passions. About 17 years ago, a rabbi in the community asked me, “You’re in sales, right? Do you interview a lot of people?”

I told him that I did, so he mentioned the name of someone in the community who had an interview coming up and asked if I could help him prepare. Since then, it’s turned into helping people with job interviews, grad school interviews, med school interviews, and other things. It’s extremely rewarding.

I always tell people that an interview has one goal. You want the person to like you.

People will argue, “Well, I want to let them know what’s on my résumé. I want to tell them why I’m good for the job.” But unless you have an insane level of talent that no one else can match, no one is going to hire you if they don’t like you.

When you go to an interview, you’re basically standing on a plateau — apart — and your goal is to walk out of the room together with the person interviewing you. Figuratively, of course. You want them to put their arms around your shoulders and show you off to the rest of the team, vouching for them to hire you.

What are some of the key mistakes a lot of people make during an interview?

I think the two biggest mistakes I see are throwing up information and the gorilla in the room.

I’ll start with throwing up. The interviewer will say something like “Nice to meet you,” then you’ll respond, and next thing you know you’re giving a full speech about why you’re there. Candidates often feel they need to get out their entire résumé and all their selling points in a very short period — whether due to nerves or lack of awareness. You’re doing a lot of talking with no listening. There’s no human interaction.

The gorilla is more subtle. It’s when you have something you don’t want to talk about, like the fact that you quit your previous job, and you’re convinced you’ll need to talk about it — but you don’t want to — so it comes up in the wrong place.

“How are you?”

“Good, and I quit my last job but I don’t want to talk about that.”

The interviewer is left thinking What just happened?

It’s like a kid who’s thinking, I hope they don’t ask about my math grades, on a loop. Then when they ask how he is, he says, “Well, I was born in New York, and I got a C in calculus.”

You’re so disjointed that you’re not listening and then you throw out the answer when it’s totally not in place. It creates discord, which you never want in an interview.

Any more tips on successfully navigating interviews?

These three things are going to give you an edge on the interview — before you even start.

Be respectful: If you picture the person interviewing you as the most respected person in your world, you will never do anything wrong socially. When you walk in the room, don’t sit down first. Don’t walk in ahead of somebody. If you see a table, don’t pick a chair until somebody else does. Many young people are not purposely disrespectful, but they don’t have the sensitivity to respect that the person interviewing them expects. If you’re respectful, there’s a higher chance they’ll like you.

Listen: Remember the advice you got before your first date. Listen. Let the other person speak.

Be in the zone: If you’re a coffee person, have coffee. If you’re a breakfast person, make sure you eat breakfast. You need to be your best self for the entire interview.

Someone once told me that a lot of his friends weren’t getting into medical schools and he was convinced it’s because they were failing at the interview stage. He started sending me people who did exceptionally well in the sciences and on their MCATs — but it was very clear that they didn’t know how to have a conversation with someone.

I explained that it doesn’t matter how smart you are. There’s probably someone else with a similar level of knowledge, and if they like the other person more, they’re going to accept that person first.

I was helping some people with their interviews for law jobs. One of them had not been successful after nine or ten interviews. I asked him to tell me the questions they asked in his last interview. He told me, then he shared his answer.

“She asked what I liked in school, so I told her, ‘yada yada,’ ” — referring to the answer he’d given.

Afterward, I asked him, “What does that woman have that you want?”

He was confused for a minute, so I explained: a job. She’s a partner at a big law firm and possibly has a job for you. You think she doesn’t know that you’re yada-yadaing in your head as you speak to her?

And I told him, “You’re repulsive.”

“Excuse me?”

“You’re a wonderful person, but you’re repelling all possible connections.”

The next interview, he was genuine and didn’t yada-yada — and he got the job.

It’s almost impossible to avoid all forms of rejection, whether getting turned down for a job or not making the sale. How can people handle that?

Rejection is a part of sales, period. What you need to understand is your hit rate. Sales is a science. You have to fill a funnel and you have to fill a pipeline. And I know those are all words that you’ll see in a sales book, but it’s the truth. Because when you fill a pipeline with 100 leads or 100 prospects, you’re hoping that at the bottom, you’ll have a percentage remaining. That’s your business. If you’re fixated on trying to get only that specific sale, you’re going to get rejected and you’re going to go home upset.

When I started in sales, a good friend of mine who was selling insurance told me the following: You need to make a rule for yourself. What’s a successful day? What allows you to basically close your computer at the end of the day? And what he told me was, “A day is successful if you either made two appointments or closed a deal.” You can’t only calculate based on sales closed.

The pause

There are effective public speaking tools that work in sales, too, like leaving a pause to allow something to sink in, or repeating a phrase to make a point. The silence is especially important. Envision the question leaving your mouth and then sailing across the room. It needs time to sink in and settle before people fully absorb it.

Good sales is about being authentic and sincere at all moments. If somebody sniffs insincerity, you’ve killed everything. You’re dead in the water and you’re done.

Does success in sales come from personality or skill? Can it be learned?

Everyone in sales should take training, but it doesn’t mean that everyone who takes some training will do well in sales. If you explore the field and look into some of the free resources, you’ll get a sense of whether it’s for you. If you’re shy or don’t like talking to people, it isn’t.

I’ve found that most successful salespeople have some of the following traits:

1) They have above-average intelligence.

2) They have a strong EQ or empathy level and can sense what’s going on in a room. People with a sixth sense do quite well in sales, because they understand what’s going on before they hear it. They have those little treasures of insight and save them for the right part of the conversation.

3) Lastly, they’re determined; you need tenacity to persevere despite repeated rejection.

Zooming on Zoom Calls

People tend to make mistakes on Zoom calls, not taking them as seriously as they would an in-person meeting. Here’s my checklist for a Zoom sales call:

Are you in your sweatpants or dressed for work?

What’s happening in the background? Is it professional, or can people see the toys in your living room?

Are you looking at the camera? Or are your eyes moving around too much because you’re reading other things on the screen?

Can the prospect see you properly, or is the camera only on aiming at the top of your head?

Remember: Keeping attention is harder when you’re on a screen. When possible, use some media like a slide deck.

Try to keep Zoom meetings shorter than in-person ones, with a 30-minute cap.

No one is ever going to buy something from someone they don’t like.

(Originally featured in Mishpacha, Issue 977)

The post Selling Points with Master Salesman Andrew Singer first appeared on Mishpacha Magazine.

Jeff Cohen of Bergen County, New Jersey, runs JeffCohenMedia.com, whose specialty is consulting and coaching corporate and nonprofit executives to success. He also works with companies as an executive consultant to design and deliver solutions to help CEOs and senior leadership teams manage their businesses and employees successfully. Here he shares with Kosher Money and Mishpacha some of his background, and how his eventual career evolved from the parental model he’d seen at home.

Jeff is passionate about his belief that the journey to success needs to be an active one, and offers tips for anyone who wants to move over from the passenger seat and get behind the wheel.

You mentioned the parental footprint. Can you elaborate?

Sure. It’s a term that refers to the impact your parents and upbringing have on your perspectives — especially as they relate to careers, money, and finances. It’s normal when you’re young to accept what your parents say (or model) as fact. It influences your decisions.

In my case, one big footprint I absorbed was my parents’ approach to career. It went like this: Pick a track, join a company, and stay there for 40 years as you climb the corporate ladder. And it worked for my father; he was able to slowly and steadily grow his nest egg, and by the time he retired, thankfully, he had a significant amount saved.

The second footprint I credit to my parents is to always live within your means. My father pushed this message often. I particularly remember a neighbor who picked me up for car pool in a fancy sports car, decked out with all the latest features. The car was nice, but when we visited them a while later, in the heat of the summer — there was no air conditioning.

“I’m sweating,” I whispered to my dad.

He leaned over to respond and whispered back. “Take this as a lesson. When you get older and make money, you can invest it in extraneous things like a sports car, or in essential comforts like air conditioning — the choice is yours.”

The message stuck with me, and I still live with it today. My wife and I really think about this as we’re raising our own children. What are our values? Where do we prioritize our spending?

Making those decisions is crucial. Taking charge of your finances and of your career is a responsibility; don’t drop the ball.

Today you’re an executive coach, business consultant, and published author, but you didn’t start off there. Take us back to the start of your career — how did you get from there to here?

Following my parents’ parental footprint, I earned a dual degree in psychology and marketing from the University of Pennsylvania and the Wharton School of Business.

My first job was in the marketing department at American Express. I got the steady job and I’m just going to keep climbing, I told myself.

Happens to be, one of the job perks at American Express was access to a financial advisor. The counselor showed me a chart that depicted how my net worth would grow if I continued down the career path I was on — a slow and steady rise, not unlike the one my father had.

When I showed it to my father, he nodded and said, “Yep, that’s exactly how it works.”

I tried settling into the idea, because I’d been educated that it was the right thing, but I was never comfortable with it. There I was, 21 years old, and someone was saying that I needed to commit double the amount of years I’d been on Earth in order to achieve success.

Was that the only way? Maybe I could try something else?

That’s when I first realized that the corporate path might not be the only way to grow. I could take the many positive lessons I’d learned from my parents and adapt them to chart a new path.

At the time, I knew I didn’t want to climb the corporate ladder, but I didn’t know about any practical alternatives. I wasn’t raised in a family where people were starting businesses or buying real estate or writing books. Those options weren’t even on my radar. So although I knew early on that I didn’t want to stay corporate for my entire life, it took a while for my career approach and philosophy to actually evolve.

How did you eventually find your niche?

I’m very lucky that my first boss at American Express had a unique approach to leadership. When I had my first annual performance review, she said, “I can spend a full hour pointing out what you have to work on, and then we could spend the next two years focused on developing those areas. But here’s the reality. If there’s something you’re not good at, the best you’ll ever become at it is average. You’ll never be able to compete with someone who has a natural strength in that area.”

Instead of focusing on my weaknesses, she pointed out two things I’m naturally good at, writing and speaking, and encouraged me to spend the next few years becoming exceptional.

Until today, I’m grateful to her for encouraging me the way she did.

I didn’t leave right away, though. I stayed at American Express for another three years and eventually became a senior leader.

One day we had a conference, and one of the executive vice presidents got up to speak. He said something like, “I bet a lot of you sitting in your chairs today want to be me someday. So let me ask you — what do you think is the biggest factor that will determine whether you can reach this level someday?”

Someone raised a hand and said, “How the company performs.”

Someone else said, “How my team performs.”

And the EVP said, “It’s you. You can take control of your career and decide in which direction to take it.”

I remember sitting there thinking, Well, that’s obvious. But in truth, although I knew that to be true, I wasn’t actually doing it. I was moving around within the company to wherever they wanted to promote me, but not once had I taken control and said, “This is what I want.”

When did you start taking control of your career?

Again, I have to give a lot of credit to my managers. While I was still in marketing, they offered me a promotion. My manager told me about it and then put out a disclaimer. He said that the promotion would give me a lot more money, a lot more authority — but it wasn’t for me. He pointed out that he wasn’t sure I actually even liked marketing, and that every time he asked for something even loosely connected to people or human resources, I was the first to volunteer.

So my manager said that instead of giving me a promotion, he could arrange for me to transfer to another department — human resources. My manager realized, even before I did, that I really enjoyed speaking and writing in the context of helping people succeed in their jobs. That’s why I kept volunteering to run things like employee recruitment, employee satisfaction, or training and development programs for my team. Again, this was another step toward me realizing that I could take control of my career instead of my career controlling me.

Lots of people would love to feel they control their careers instead of their careers controlling them, in theory. Can you explain what that would actually look like?

I like to walk people through this exercise.

1. Make a list of the last three jobs or roles that you’ve had.
2. In the next column, write your primary responsibility at each. What were they paying you to do?
3. In the third column, answer this: Regardless of what they were paying you to do, what was your favorite thing to do?

For me, when I think about what I enjoy most — the kind of work that doesn’t feel like work — it was always helping people find their paths, develop in their careers, and reach their potential. It’s not a surprise that these topics link so closely to how I earn my income today.

If someone’s last and middle columns are not matching up, what should they do to take charge of their career?

This is a critical point. When people become aware of this discrepancy between what they’re doing and what they want to do, their first reaction is often, “Oh, so I should quit?”

And the answer is no. That’s not usually the responsible thing to do. Personally, when I realized that my work wasn’t offering me the self-actualization I wanted, I brokered a deal with American Express. I arranged to stay with them for another six months, but only three days per week. I used the other two days of each week to build up my coaching and consulting business — which eventually became my main source of income. It wasn’t this big leap with no safety net, but rather a methodical approach to building up alternative income streams.

Was there a tipping point that finally pushed you to stop thinking about a career change and to actually make the move?

Yes — September 11, 2001.

At the time, my wife and I were dating. She lived in New Jersey, I lived in Manhattan. In the mornings, we would both pass through Port Authority on our way to work and meet there for a quick coffee, before taking the train together from the subway station that was literally in the basement of the Twin Towers.

On that morning, the line at the coffee shop was unusually long. It took us an extra 15 minutes to set out for work.

Finally, we started walking toward the Twin Towers, and it was confusing. Everyone was running toward us. The only way I could describe it is as though you’re walking into a stadium at the start of a game only to find a stampede coming out of the stadium toward you. The scene is clearly off.

Nobody had any idea what was happening. Was it a fire? Was it a gunman in the building? As we were trying to work it all out, we looked up and watched the second plane fly above us and directly into the second tower.

B’ezras Hashem we caught one of the last cabs out of downtown New York City and sadly watched the Towers crumble in the rearview mirror. We were so close to not making it and couldn’t stop thinking about how the towers were built specifically so they shouldn’t collapse right away.

When you experience something traumatic like that, you can’t help but take stock of your life. For me, it catapulted me into realizing that I needed to finally take action and take control of my career. Within months, I gave notice to my boss, and my wife and I were married soon after.

People are scared about the possibility of another recession. Any advice for that?

First, you have to get over this idea that the only way you’re safe is if you work in a corporation. I was in the corporate world and witnessed seemingly safe companies go through major layoffs. There were times I watched 30,000 people lose their jobs overnight. I was raised with this belief that you’re untouchable as long as you’re on the ladder, but it’s not true. If all your eggs are in one basket, it’s more likely that you’ll lose all of them.

No industry or company is completely safe. If you want to recession-proof your career, focus on building skills that are irreplaceable. You want to be the kind of person who will be difficult to replace even when times get tough.

What advice would you give to people in leadership positions?

Too many leaders look at their team and wish each person was something they’re not. Instead of fixating on what you don’t have, make a plan. Think about the skills you need to supplement, then decide whether you can develop these skills inside the team or need to hire out. It’s called “buy or build.” Can you hire professionals with these skills or can you invest to develop them using the people you already have?

Another thing I focus on when I coach people in executive-level positions is flipping the script. They’ve been in uncomfortable performance reviews before, those meetings where there’s tremendous pressure and they squirm in their seats as someone across the table points out all their flaws or “areas with room for improvement.”

By the time they come to me for coaching, they’re used to harping on the three to four things they’re not great at. I’m always trying to flip the script around on them to what I was taught in the business world and at Wharton. If something is a weakness for you, you can put in hours and hours and the best you’ll ever be is average. You just can’t compete with someone who has a natural gift.

Instead, find what you’re good at and highlight it. Invest in those skills, train in those areas. If you’re naturally this good already, imagine where more development will take you.

You mentioned that you didn’t grow up frum. Are there core differences you see in the mindsets of the religious and secular communities?

So when it comes to fulfillment in the workplace, a common denominator is that people want to feel they’re fairly compensated and that they’re appreciated for their contribution. If someone feels they’re not getting those two things, that they’re underpaid or not respected, they’re going to look for change.

A huge difference, though, is the approach to volunteering and charity. In the secular world, while there is a focus on these values, they’re considered optional to many people. In the frum world, they’re a given. From an early age, people understand the importance of giving maaser and will right away take off ten percent from their paycheck for tzedakah.

I’m also really passionate about religious growth… so much so that I started my own podcast called Saturday to Shabbos, sponsored by the Orthodox Union (OU), where I interview people with inspiring stories about their journeys to Jewish observance.

That leads us to what you mentioned about doing some pro bono work. Can you tell us more?

When my oldest son started kindergarten, the rosh yeshivah told all the parents that if we want to help our children’s chinuch, we should work on being positive role models. He suggested thinking of something we’re good at, then offering to do it for free in the community.

I thought about it and decided to help people looking for jobs with résumés and interview prep, both things I’m good at. I helped a few people and word eventually spread that if someone in my community was looking to land a new job, get promoted, or make a career change, I could advise them.

Helping people privately with their parnassah can even be more satisfying than any consulting because it’s just for the love of the community. It’s enjoyable and purely a chesed — but it’s very interesting to note that several times, these volunteer stints have led to hired jobs, whether for the people themselves, their companies, or through a referral. It’s really taught me that when you volunteer from the goodness in your heart, without having any other agenda, it comes back to you in other ways.

Any more thoughts on charity and giving?

Early in our marriage, someone approached my wife and I for a large sum of money. They wanted the money as a donation, not a loan, and we weren’t sure what to do. It was a significant sum — more than we could give without feeling the lack.

We consulted with Rabbi Benjamin Yudin, and here’s what he told us.

He said there were two things we needed to ask ourselves:

1. If you give this amount, will you go bankrupt? Or will you still be able to keep the lights on?
2. Will you be able to give it without any regrets, from a full, open heart?

We thought about it and realized that while it was a large sum, we’d be okay without it. We also thought a lot about his second question and realized that, yes, we would be able to give it with no strings attached, because we wanted what’s best for this person.

To be honest, it was a huge change for me. Growing up secular, you set yourself up to be secure. This idea of giving away significant money was foreign to me. But we did it. We transferred the sum and moved on.

Two days later, my mother called me. She said that they’d just heard from a lawyer. My uncle, who had passed away, had suffered from dementia the last few years, so I’d gone to his house once a week to take care of his bills and help him with a few things around the house.

Apparently, as a gesture of appreciation, he’d left me some money in his will.

Penny for penny, it was the same amount my wife and I had just transferred.

I repeat this story not because I believe that if someone gives they’ll get every penny back, but because it’s a reminder that every good deed is recorded and remembered. You never lose out from kindness.

There’s no set trajectory. If you’re 40, there’s no point in looking back and saying, “Oh, but I should have done that when I was 25.” This is your path. Your responsibility is to meet yourself at that point and work out what to do moving forward.

The secret to a successful career path is finding the intersection of your strengths and what you enjoy doing. If you figure that out at a young age and model your career after it, the money will follow. (On the flip side, when people say they want what pays best, either they’re unhappy or their boss is unhappy.)

The most successful alternative income streams will be things that play to your natural strengths and are diversified, so one income stream can make up for another underperforming one.

Social media puts a focus on followers, but those aren’t nearly as valuable as connections. I try to invest in ten core relationships, which evolve over time, by being as helpful as possible to those people. When things went poorly in my career, these were the connections that helped me, more than any of my hundreds of followers.

Watch the bonus podcast episode exclusively at Mishpacha.com! 

Or email podcasts@mishpacha.com for a download

‘Money Talks’ is produced in conjunction with Living Smarter Jewish (LSJ) and Living Lchaim.

Initiatives of LSJ, a project of the Orthodox Union, include free personal finance coaching, education geared toward young couples, referrals to financial planners, curriculum development for high schools and young adults, and video education library. Contact LSJ via mishpacha.com/moneytalks.

Living Lchaim is a podcast network dedicated to producing shows that enhance the lives of Orthodox Jews across the world. The Kosher Money podcast, created in partnership with LSJ, hosts lively dialogue around frum financial realities, facilitating awareness and educated decision-making. 

(Originally featured in Mishpacha, Issue 975)

The post Put Your Best Foot Forward first appeared on Mishpacha Magazine.

Put Your Best Foot Forward

‘Money Talks’ — featuring exclusive bytes from the 'Kosher Money' podcast — is produced in conjunction with Living Smarter Jewish (LSJ) and Living Lchaim.

LSJ initiatives include free personal finance coaching, education geared toward young couples, referrals to financial planners, curriculum development for high schools and young adults, and video education library. 

To request help, please email: info@livingsmarterjewish.org

Living Lchaim is a podcast network dedicated to producing shows that enhance the lives of Orthodox Jews across the world. The Kosher Money podcast, created in partnership with LSJ, hosts lively dialogue around frum financial realities, facilitating awareness and educated decision-making.

The post Watch! Money Talks with Jeff Cohen first appeared on Mishpacha Magazine.

Yoel Yitzchok Bodek lives near Monsey, New York, and is the founder of Brokers Central, a company that offers brokers comprehensive information on all the life insurance products available on the market. He says he always loved finance, but freely admits that he initially had no desire to enter the life insurance field.

Twenty-three years ago, a MetLife recruiter picked up a résumé he had posted on an online job forum. He told the recruiter he wasn’t interested in the field at all, but let himself be convinced to come down to the Bay Ridge office for a conversation. By the end of the interview, he’d been successfully convinced to give it a try.

The team reframed the industry for him, upending his vision of agents trying to close a deal pushing a product that is difficult to sell. “It’s about financial planning, and helping families prepare for the future,” they told him.

He soon learned that life insurance isn’t a financial plan, and a financial plan that doesn’t incorporate life insurance isn’t a very sound one.

He decided to give it a try, and 23 years later, he’s still at it.

Yoel Yitzchok doesn’t actually sell life insurance to individuals; he’s a wholesaler — an interesting description for an industry in which no physical products are sold. “We don’t have warehouse stacked with boxers of insurance products,” he clarifies.

Instead, he and his team advise brokers in the field, so they can best guide their clients.

While many life insurance brokers typically deal directly with one company, sometimes a client needs something different. In cases like these, Yoel Yitzchok uses his broad knowledge of the spectrum of insurance products to guide them toward the right fit for that particular client.

Why do people need life insurance?

One word: responsibility. Prior to the Covid pandemic, people didn’t connect with the need on an immediate level. When I spoke to Rabbi Paysach Krohn, he put it this way: “Everyone thinks it only happens to the other person. But you don’t realize that to someone else, you are ‘that other person.’ ”

Covid made people realize the necessity of having a plan in place in case the worst happens, and also that things can change on a dime — pushing it off is not the right thing.

On a practical level, life insurance is financial assurance. On a broader level, it’s dignity. It’s dignity for people you love. It’s dignity for your own children. If a father or mother passes prematurely, not only is the family dealing with a terrible sorrow, they’re also exposing themselves to the shame of needing a collection.

During Covid, someone pooled all the community fundraisers and tallied them. It was about $24 million, which is incredible when you talk about individual donations. However, there were about 60 campaigns on that page. The average family walked away with only around $400,000. That’s barely enough to keep a frum family afloat for more than a couple of years.

And that’s aside from the fact that some of the fundraisers are conducted in a way that’s a modern form of torture. A child lost his father — and on top of that his face needs to be plastered on the streets? The one thing these kids need — and deserve — is a normal life. If you use their faces to fundraise, you’re stealing that from them.

People always ask, “But they need money. What should we do?”

Simple answer? Life insurance.

It’s not as exciting as a fundraiser, but any responsible family who cares about the future and dignity of their children should invest in this.

Are there any people you don’t recommend purchase life insurance? Is there any category of people you can think of who wouldn’t need it?

Of course, there are going to be instances where a person doesn’t need life insurance. Someone with no dependents, perhaps more mature families who aren’t supporting as many kids, people who have outside considerable assets, or somebody who’s single. But even in those cases, you can argue that having the right type of life insurance could still help.

The post To Life! With Yoel Yitzchok Bodek first appeared on Mishpacha Magazine.

To Life! With Yoel Yitzchok Bodek

‘Money Talks’ — featuring exclusive bytes from the 'Kosher Money' podcast — is produced in conjunction with Living Smarter Jewish (LSJ) and Living Lchaim.

LSJ initiatives include free personal finance coaching, education geared toward young couples, referrals to financial planners, curriculum development for high schools and young adults, and video education library. 

To request help, please email: info@livingsmarterjewish.org

Living Lchaim is a podcast network dedicated to producing shows that enhance the lives of Orthodox Jews across the world. The Kosher Money podcast, created in partnership with LSJ, hosts lively dialogue around frum financial realities, facilitating awareness and educated decision-making.

The post Watch! Money Talks with Yoel Yitzchak Bodek first appeared on Mishpacha Magazine.

Make Every Day a Payday with Aric Zamel  

‘Money Talks’ — featuring exclusive bytes from the 'Kosher Money' podcast — is produced in conjunction with Living Smarter Jewish (LSJ) and Living Lchaim.

LSJ initiatives include free personal finance coaching, education geared toward young couples, referrals to financial planners, curriculum development for high schools and young adults, and video education library. 

To request help, please email: info@livingsmarterjewish.org

Living Lchaim is a podcast network dedicated to producing shows that enhance the lives of Orthodox Jews across the world. The Kosher Money podcast, created in partnership with LSJ, hosts lively dialogue around frum financial realities, facilitating awareness and educated decision-making.

The post Watch! Money Talks with Aric Zamel first appeared on Mishpacha Magazine.

Aric Zamel is a managing director at UBS Financial Services Private Wealth Management in Beverly Hills.

He and his team work exclusively with clients who can invest a minimum of $2 million, and more often with clients who invest substantially more. His guiding principles, however, apply to all income brackets. In his role as a private wealth advisor, he manages his clients’ investment portfolios, helps with the financing of loans, and helps implement their retirement and estate planning as well as asset preservation strategies.

He didn’t always plan to be in the finance industry; actually, he originally set out to be a doctor. But while attending UCLA initially with a pre-med curriculum, he was introduced to the world of business and economics, and “came to love it.” He did an about-turn and graduated magna cum laude, with degrees in both Business Economics and Political Science.

Here he shares with Kosher Money what he’s learned on the job.

Let’s start with the basics. Why is investing so important?

There’s a popular misconception that if you keep money in the bank and add to your savings, that will be enough to build wealth and help ensure a comfortable retirement. What people often don’t realize is that you really can’t build real wealth over time by just keeping money in cash and CDs, and even bonds for that matter.

There’s potentially more risk to keeping money in cash over time than there is to investing it prudently, because over time, the value of cash can be eroded by inflation, and money left in cash will likely have less purchasing power as time goes by.

How can you avoid losing purchasing power on your money? Potentially, by earning a rate of return that can keep up with or exceeds the rate of inflation. You can accomplish that by owning assets that can appreciate over time. And while owning real estate can play an important role in building family wealth, I believe owning stocks and other securities that appreciate over time are equally important, if not more.

The average young person starting out doesn’t usually have the capital needed to start purchasing real estate initially, but he or she can invest in stocks with almost any amount, and with a little discipline can continue to add to those investments on a regular basis. Over time, returns compound and investments can grow into meaningful wealth for a family if invested the right way. Albert Einstein once said that compounding interest is to be regarded as “one of the most important inventions in the history of humankind.” This is because money growing at compounded rates of return can grow exponentially over time.

If you invest $1,000 a month in securities that hypothetically grow at 8 percent a year, that amount can grow to close to $1.5 million over 30 years and almost $3.5 million over 40 years.

Those numbers can grow proportionally if you increase the amount invested, so for example, if you save $2,000 per month, you could grow to almost $3 million after 30 years and nearly $7 million after 40 years. Imagine if you could save that instead of spending it on luxuries you don’t necessarily need. Whatever you can afford to put away now can help you secure a stronger financial future for your family.

Markets can move down in any given year (on average, around three out of ten years are negative historically), but there has never been a 20-year period for US stocks with a negative return.

I once read a story about a UPS employee who started working in the 1920s when he was about 20 years old and never made more than $14,000 a year. But he saved 20 percent of his income annually and put it into his employer’s stock. By the time he got to his late retirement years, that investment was worth around $70 million. And while people should be diversified and this strategy isn’t necessarily advisable to everyone, the message is relevant and speaks to the importance of investing on a systematic basis over long periods of time.

People reading this kind of advice are often stymied. Where should they be finding extra money to invest with?

The answer to that question will vary for each person, depending on family situation, responsibilities, income, etc. But in general, you need to define a certain amount of income that you’re going to set aside to pay yourself each month. You have a portion that goes to taxes, another portion that goes to essentials like rent or a mortgage payment, food, school tuition, etc. But before you start spending on the non-essentials, people should quantify how much they’re willing to set aside for themselves to invest each month.

Financial success often comes from acting on a plan and investing money on a regular basis, and allowing it time to grow. It’s also important to note that reacting emotionally to temporary drops in the market is often a recipe for financial failure, so it’s important to be disciplined whenever investing in capital markets (i.e., stocks).

There’s a saying that you can be rich either by having more than what you need or by needing less than what you have. Spending less and really being conscious of what you’re spending is really important. Bottom line: If you want to have more cash available for investment, you need to control your spending.

There is a famous boxer who made more than anyone else in his industry at the time — nearly half a billion dollars. Yet he went bankrupt from spending beyond his means. So while having a high income is helpful, you really can only build wealth over time by making a conscious effort to invest what you save on a regular basis.

There’s a source for this in the Gemara (Maseches Chullin 84b) that a person should always eat and drink below his means, dress according to his means, and honor his wife and children above his means. It’s okay — even encouraged — to spend on family, but you have to be disciplined enough to always put something away for yourself too.

Secondly, even a small amount goes a long way. A couple who can save $100 a week by eating at home instead of going out for dinner can potentially grow that savings invested at 8 percent and compounding over 40 years to over $1.4 million.

Tell us more about exiting the rat race.

I think an underlying goal or reason why people choose to invest their money is to attain financial freedom. Most want to have enough assets and resources so that their income generated from investments exceeds their expenses, and this in turn enables them to spend more time on what’s most important to them, whether it’s time with family, learning, etc.

After kids finish yeshivah or graduate from university, they’ll often get a job or start their own business. And as their business or career grows, they typically start to have more disposable income. What happens next is important, because as their income grows, they’ll inevitably want to upgrade their lifestyle, which means spending more. And when they spend more, they may need to keep earning more to support that lifestyle.

It’s easy to get carried away and start to equate all of the really non-essential expenditures with what’s really essential, and then savings can go out the window. Most people, believe it or not, actually spend at or above their means, and save almost nothing each year. (When they get older, many realize they haven’t saved enough to retire comfortably, so the cycle continues with continuously needing to work. A high percentage of the world population today, especially in America, is probably stuck in this cycle.)

So the question is: How do you get out of this rat race?

Here are a few key steps that I suggest:

Become financially more intelligent by reading, listening, and learning.

Save each month.

Increase your earnings by making yourself more valuable in your profession.

Invest systematically.

Can you share some common pitfalls investors may face?

Here are the mistakes that I believe people tend to make:

trying to time the market

being undiversified

chasing performance

And here’s what I suggest they should do instead:

Don’t react to the market when it goes down temporarily — stay calm during market turbulence, which always passes, and try to avoid pulling out of stock investments unless you need the cash.

Diversify — people think they should pick a few stocks or sector to invest in, but buying into a broader market or index is usually a safer and more reliable bet. The Gemara (Bava Metzia 42a) explains that a person should divide his money into three: one third in land, one third in business, and one third in hand. Stocks represent ownership in businesses, and while that exact percentage won’t apply to everyone, the lesson is clear on the need to diversify your investments.

Patience — the rule of 72 states that if you take 72 and divide it by the interest rate, you’ll see how long the investment should take to double.

 

What are some of the key things to keep in mind when evaluating a possible investment opportunity?

Know who you’re investing with and understand what you’re buying.

Don’t keep large amounts of money in a bank, savings, or checking account that is not FDIC insured.

Don’t invest in things you don’t understand, but make sure to educate yourself on basic investing principles.

Be sensitive and conscious of fees because that can bleed into your return over time. This comes into play with any investment.

What would you advise someone who is risk-adverse?

A lot of people say they don’t want to invest because it’s too risky. So let’s define risk — is it a loss of capital, or is it a loss of purchasing power?

If you have money in the bank and in a few years, your dollars don’t buy as much as they did initially, is that a risk? If you see the value of your house fluctuating over time, is that a risk?

Inflation has averaged about 3 percent a year historically. Recently it’s been closer to 9 percent. Here’s the thing — some people retire in their sixties, which means they could be retired for 25 to 30 years, and that’s potentially a long time not to be working.

If inflation is at 3 percent a year, that means consumer prices could rise about 2.5 times during retirement. So every dollar could lose about 60 percent of its purchasing power, and you’ll need to come up with about $2.45 of income to purchase what a dollar buys today.

About 30 years ago, the cost of a postage stamp was about $0.25. Today it’s up to $0.63 — so it’s up about 2.5 times higher over the last 30 years — that gives you a sense of how much prices increase over time. Think about what that means when you’re retired for 30-plus years. Most people can’t really afford having their cash sit idly when prices are going up, especially if they’ve stopped working.

So to me, letting your money sit around and erode is a bigger risk than investing it.

Why are investment advisors so important? Why can’t someone just rely on a trading app?

A good financial advisor or wealth manager can add value in several areas, including overseeing and managing your investments, setting up tax qualified accounts to mitigate taxes, and keeping your overall finances organized. Many people are also in need of estate planning and asset preservation, and an advisor can play a key role in addressing these areas. People who have in excess of a few million dollars liquid should make it a priority to find both a good financial advisor and CPA.

That said, an important determinant of financial success when investing isn’t necessarily the investments you choose or even timing, but rather investment behavior — making sure you don’t make the big mistake of selling when things go down, and they will go down at some point or another, something that’s quite normal in the investment world of stocks and bonds. That factor is largely addressed by having someone else managing your investments rather than doing it by yourself — because it takes the emotions out of investing.

People are naturally inclined to react emotionally to losses more than gains, and when you’re investing on your own through an app and you see prices headed lower and quickly, many people are going to hit the sell button at exactly the time when you’re supposed to be doing the opposite. Even if you’re not an emotional person, you’re going to feel something when you’re checking and relying on your trading app daily and watching the market go through one of its inevitable hiccups that we’ve seen so many times over the years. An advisor can provide the discipline to help ensure you stay on course with your long-term plan, and avoid the often-permanent loss caused by reacting to the market at the wrong time.

In just about every other business, when something goes on sale, people run to buy. When stocks go on sale, people tend to want to run away, because they think prices will keep falling. But historically, and we have around 100-plus years of tracking the market, prices will fall on average by over 20 percent every six to eight years, and fall over 10 percent every one to two years, before recovering and ultimately making new highs. As long as the value of goods and services continually increases as it does in a normally functioning economy, market prices eventually rise over time.

That’s why systematic investing is so important. If you’re investing every month, then you start to view every drop opportunistically due to dollar cost averaging — periodic investing in securities despite fluctuating market conditions. (However, you should carefully consider your financial ability to invest through periods of low prices. There can be no assurance that dollar cost averaging will reduce your investment cost, result in a profit, or protect you against losses in a declining market.)

People react to losses emotionally. When the market goes down, even if it’s down a little bit, you get anxious. That’s normal behavior. That’s how people are wired.

On trading apps, when you don’t have an advisor overseeing every decision, it’s easy to go in and out, often at the wrong time, and you lose out on the real value of what your returns could have been.

How often do you recommend that people touch base with their financial advisor?

It depends on the person and the complexity of his wealth. For some, a quarterly call or email is enough. For others, we’re in touch every other day or every week. At minimum, you should review your accounts and your portfolio at least once a year. And I think it’s always good to check in at least quarterly.

What do you advise people who wonder if they should invest with family?

It depends on the type of investment and the experience of that family member, among other things. Just make sure that you understand what you’re investing in before you commit.

People are concerned about today’s uncertain economic climate. There’s even been speculation that we’re heading toward a repeat of the 2008 crash. What’s your take?

The 2008 crisis was very different from what we’re seeing today. The financial sector was much more highly leveraged at that time, with significantly higher exposure to the mortgage market, which ended up being toxic on bank balance sheets. Today most of the big banks are well capitalized, with much tighter risk control measures in place.

Earlier this year, there was a crisis of confidence with regard to smaller regional banks, and we saw large deposit flows moving from smaller banks to bigger banks. Still, I don’t believe that presents a systematic risk to the financial markets at this time; in fact, large amounts of money actually flowed into larger banks during that period.

Inflation and interest rates have become the focus, and there’s a concern that high rates will choke off the economy. Yet the markets are up year-to-date, partially because inflation has been coming down and the economy is still growing, thanks in large part to a strong US labor market. Rather than a financial crisis, I believe we’re seeing an economic cycle play out.

People always feel like “this time is different.” But the reality is that markets go through cycles and they generally rise over time as the economy is growing. We live in a country that has had the greatest economic success story of any nation in the world. And given the ingenuity and the people that live here in America, I believe confidently that’s going to continue. So as much as it may feel that the current crisis of the day is different, it’s really not that different after all.

If we do see another recession or major downturn anytime soon, what should people keep in mind?

Invest on a recurring basis so you get to take advantage of the downturns, and don’t try to time the market, because even the world’s smartest investors can’t time the market accurately over time. If the market takes a dip, you only need to be right once — that the market will come out of its drop and rise over time. If you sell, you need to be right twice — that the market actually keeps going down, and that when you buy back in, you’re not buying at a higher price than when you sold.

I remember when I first started in this business, I went to Manhattan for my first week of training as a financial advisor, which just happened to be the week of September 11, 2001. I got to the training floor, and everyone was just staring out the window at the North Tower of the World Trade Center, which was on fire (we later learned what happened). As we were watching, we saw the second plane crash into the South Tower and were evacuated shortly after back to the safety of our hotel rooms.

When I went back to L.A. a week later, I was making phone calls to try to get new prospective clients. Meanwhile, the market had just fallen around 7 percent, and would end up dropping down to 11 percent over the next few days. Someone on the phone asked me, “Didn’t you hear what happened in New York last week? I would never invest in anything.” Then — click — he hung up the phone.

Back then, the S&P was around 1000. Today, even after quite a few meaningful dips, it’s around 4400 (and that doesn’t include dividends reinvested). And while it’s sometimes painful to see investments go down temporarily, it’s important to put things into perspective and avoid making an emotional decision to sell when you don’t need the funds that day. Within the financial world, perhaps the only thing more painful than watching prices drop is selling when things are low, only to watch the market rise back up without you.

I have a chart in my office that shows every recession along with the market performance going back to World War II. Another chart shows every dip of 5 percent or more since the 2008-09 financial crisis. I like to look at these charts whenever the market gets choppy, because it reminds me that volatility, however dramatic it may feel at the time, is always temporary, while long-term up trends are generally permanent over time.

You mentioned that someone who’d like to leave over a large estate as an inheritance needs to plan appropriately. Can you elaborate?

When someone passes away, he is allowed to bequeath $12.92 million (in 2023) per spouse to his kids without being assessed a federal estate tax. Anything above that amount is taxed at 40 percent and is generally due within nine months. For example, if a couple’s estate is worth $100 million, and they haven’t done any estate planning, their kids will likely owe close to $30 million in federal taxes on the estate (note some states also assess their own estate tax in addition to the federal tax).

A problem is that people are not usually that liquid, which forces the kids to sell assets to pay for the taxes. An advisor can help a family plan ahead by setting up irrevocable trusts and charitable accounts, which can greatly mitigate that tax liability. If you don’t prepare properly, keep in mind that your kids will likely have to settle the bill and liquidate assets you may have never intended them to sell.

You said it’s important to keep the whole family in the loop. What did you mean?

It’s important to have all relevant family members involved in your financial planning process. From an investment standpoint, you can have one person as the main point person, but anyone who may benefit from the investments should be involved and know what’s going on at some point.

You spoke about ensuring that your money is safely stored in a reliable bank. What about the FDIC insurance of up to $250,000? What does the average investor need to know about this?

The FDIC insures up to $250,000, but there are ways to increase the amount of coverage by having multiple owners and/or beneficiaries. Once you max out your FDIC insurance, you’re at risk of losing those funds if the bank were to go out of business.

It’s usually better to hold larger balances in a brokerage account where you can own securities, such as T Bills and money market funds, which are not tied to the bank balance sheet in the event of a bank failure. Today, the rates on T Bills, which are also state tax exempt, are usually higher than what banks are paying anyway.

If there’s one thing you take from this article…

It’s to determine how much of your paycheck you’re going to keep for yourself and your family before you spend a single dollar on everything else. Given that one sets aside 10 percent of net income to tzedekah, you should also be paying yourself (i.e., saving and investing) at least that amount if not more each month.

The quotes I often think about:

On discipline: “All financial success comes from acting on a plan. A lot of financial failure comes from reacting to the market.”

—Nick Murray

On emotions: “The investor’s chief problem — even his worst enemy — is likely to be himself.”

—Benjamin Graham

On automation: “The best way to save is when you don’t see the money in the first place.”

—Burton Malkiel

Financial freedom is really defined as having a passive income that exceeds one’s spending.

Investing involves seeing your balances fluctuate, but to sit aside and opt for total stability means you’re embracing today’s comfort and safety at the risk of losing purchasing power in the future. It’s much smarter to embrace a little bit of volatility by investing today in order to help ensure comfort and financial stability down the line.

Never sell unless you need cash. Markets tend to react to news first and think later.  Investors need to always put thinking first and avoid reacting to the market.

Everyone has setbacks at one time or another — it’s how you deal with them that ultimately determines your success.

No matter what the crisis of the day is, the world (and capital markets) always seems to carry on and things generally will improve over time.

You don’t have to earn millions a year to save for your future, but what you do have to do is set formal written goals, make them date- and dollar-specific, and then invest on a consistent basis.

As people make more money, they upgrade their lifestyles. And that’s a trap. As you make more money, focus on growing your family’s long-term wealth instead.

Disclaimer: The information contained in this article is not a solicitation to purchase or sell investments, and is not intended to provide individually tailored investment advice. The views expressed herein are those of the author and may not necessarily reflect the views of UBS Financial Services Inc.

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(Originally featured in Mishpacha, Issue 971)

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Penny Saved, Penny Earned with Yitzchak Goldsmith   

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