“The 5 most common things that people wish someone told them before they retired”, with David Root

An Interview With Beau Henderson

Consider the risk of outliving your money. Today, people can live in retirement for 30 years or more. Post retirement income becomes critical as well as the ability of your portfolio to alleviate the long-term risks of inflation or healthcare needs. Just because you retire doesn’t mean your money should. Hey, John D. Rockefeller retired at age 61 and had his most joyful and lucrative years after that until his death 36 years later!

I had the pleasure of interviewing David Root CFP®, founder and CEO, DBR & CO. David’s efforts are concentrated on setting the tone for the business he founded more than 25 years ago. Under David’s leadership, the firm successfully made the transition to becoming an independent RIA (Registered Investment Advisor). This has led to the firm’s growth and expansion on a national level in the core disciplines of Wealth Management and Corporate Retirement Plans. He has authored several articles and commentaries including “A Further Look” which takes a timely and often non-consensus view of the state of financial planning and asset management.

Thank you so much for doing this with us, David! Our readers would love to “get to know you” a bit better. Can you share with us the backstory about what brought you to your specific career path?

I began my career in 1983 right out of college, working for a small general life insurance agency in Pittsburgh. I was given the daunting task of reaching out to 3000 orphaned policy holders to discuss their policies. This was before the days of the internet, cell phones and certainly Google Maps. All I had was a used car and an old folded map. (I wasn’t familiar with Pittsburgh at the time) I started by making phone calls, but quickly realized it would require a face to face with these policyholders if I were going to discover what their true needs were.

This began my 36-year conviction that personally delivered advice was critical in client relationships. That’s when I learned that the concept of financial planning was important for securing the future for clients.

Can you share the most interesting story that happened to you since you started your career?

Over the years, there are a number of client stories that stand out to me. One in particular involved a first meeting with a new client and his wife. He was a real solid guy, working as a detective in a local police department. He hadn’t really done a lot of saving or investing outside of a couple small mutual funds and he was looking to retire in 4 or 5 years.

When the couple came into our office, I sensed a little tension between the two of them and it wasn’t long before the wife blurted out “We don’t have a pot to piss in!” Perhaps out of pity for this poor guy, I suggested we dig in a little to see where they actually stand with all of their various assets. I quickly discovered there was some real hidden value in what we were discussing. It turned out that he had an attractive pension as well as some natural gas royalties on some property they owned, which were about to commence in a year or two.

After running an analysis of their assets and potential income sources including social security, we determined that in fact projected cashflow streams made them millionaires. The change in the air was rather breathtaking and my new client had visibly redeemed himself in his wife’s eyes. I was still smiling long after they left my office.

Can you share a story with us about the most humorous mistake you made when you were first starting? What lesson or take-away did you learn from that?

My first year in the business, I was earning a whopping base salary of $1,000 per month and was responsible for paying my own expenses. After only six months, I was $5000 in debt. I approached my boss at the time with the conclusion that I couldn’t live on what I was earning with the expenses I was incurring.

He asked me how I thought I could make more money? After all, I met with all of my clients and learned that most have a need for larger and more comprehensive policies. I could earn more by helping them with that.

So, at that moment I had an “aha” moment. The idealist in me hadn’t realized until this conversation that I should be paid accordingly for helping people. It seems ironic now that I was trying to be a great financial planner for my clients, and I couldn’t even manage my own finances!

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

I am a third-generation financial advisor, and I would have to credit both my father and my grandmother for steering me toward a career in financial services. My grandfather started a firm, P.B. Root & Company in the 1920s in Erie, Pennsylvania. My father and my uncle ran the business for years. My father and my grandmother both suggested financial services as a viable option for my career, since it had served our family well and there were many benefits and rewards to helping others. My father told me “If you help people solve their problems you’ll never want for a job.”

What advice would you suggest to your colleagues in your industry to thrive and avoid burnout?

I would urge them to come to terms with the ‘why’ they do what they do. For me, it was always about helping people accomplish things they couldn’t do on their own. Discover your passion and keep seeking better ways to deliver for clients. It’s not about the money. If that becomes your only motivation, you will just end up coming to work to do a job. If you keep trying new ideas, you will always be excited about what we do for clients — which is helping them have their best life.

Most importantly, I would urge my colleagues to have conviction and understanding that never have we been able to provide so much value for so little cost to clients as we are able to now. Financial Planning has never been more affordable or as transparent as it is today. There really has never been a better time to be in our industry.

What advice would you give to other leaders about how to create a fantastic work culture?

Surround yourself with good people, and help them become better than you. That means creating a teaching environment and making your firm a laboratory for new ideas. As a mentor, empower and inspire your people — then get out of the way.
Ok thank you for all that. Now let’s move to the main focus of our interview.

Retirement is a dramatic ‘life course transition’ that can impact nearly every aspect of one’s life. Obviously, everyone’s experience is different. But In your experience, what are the 5 most common things that people wish someone told them before they retired?

1. Have an understanding of how Medicare and social security work and how to optimize them as tools for your retirement.
2. Know what your liability risks are and why a financial plan is important for protecting one’s assets long-term. Consider their impact on your estate or ability to live on your assets.
3. Consider the risk of outliving your money. Today, people can live in retirement for 30 years or more. Post retirement income becomes critical as well as the ability of your portfolio to alleviate the long-term risks of inflation or healthcare needs. Just because you retire doesn’t mean your money should. Hey, John D. Rockefeller retired at age 61 and had his most joyful and lucrative years after that until his death 36 years later!
4. What is your plan post-retirement? What are you retiring to?
5. Prepare for and have a mindset to experience joy in retirement instead of dread.

Let’s zoom in on this a bit. If you had to advise your loved ones about the 3 most important financial issues to keep in mind before they retire, what would you say? Can you give an example or share a story?

1. Know how to optimize government benefits
2. Have a good advisor (sounding board) to review all financial aspects of your life — planning and investments. You may be retired, but you don’t have to be alone.
3. Have a plan for long-term care while you can still qualify for and afford it.

My parents were a good example of not having a proper plan in place for long term care. They viewed it as being too expensive and unnecessary because they were in great health at age 69. My brothers and I took it upon ourselves to take on the premiums for a long-term care policy, and it proved to be a good decision. My parents were both diagnosed with Alzheimer’s and at age 73, were able to use the claims to pay for their care until they passed away at 80. Their assets would have vanished within a short period of time without the policy being in place. It would have forced myself and my brothers to pay for their care and there would not have been any estate remaining.

If you had to advise your loved ones about the 3 most important health issues to keep in mind before they retire, what would you say? Can you give an example or share a story?

1)Take care of yourself and make health a top priority. Don’t enter retirement with any forced errors regarding health.
2) Have a healthy and positive outlook.
3) Plan for the unexpected with a bullet-proof investment plan should you live longer than expected. In addition, having insurance to protect against the risk of long-term illness.

My father always told me that because he and my mother took care of themselves (eating well, going for walks) that they had control of their health. Alzheimer’s was unexpected and would have taken away everything they had. While they had 1 and 2 covered above, it was the third issue of protecting against a long-term illness that proved to be most important in allowing them to have proper care to live out their lives comfortably. Having long-term care insurance allowed me and my brothers to focus on spending time on their needs and not scrambling to take care of the cost of their care.

Thank you for all of these great insights!