You Need To Do This Now

On this week’s Eggerss Report, Karl discusses what everyone must do right now.  Plus, the market continues to rocket higher.  Are we in the clear?

Karl Eggerss:                      Hey, good morning, everybody. Welcome to The Eggerss Report. It’s your investing playbook. Thanks for joining me. My name is Karl Eggerss. I’m your host. If you’d like to get ahold of us, 210-526-0057. Our website is,

Karl Eggerss:                      Hey, later on in the show, we’re going to be talking to Shawn Morris, our resident certified financial planner, and we’re going to give you some things that you need to be doing right now. It’s January of 2019. These are things you have to do now. This isn’t opinion. This is fact. Make sure you tune in for that. We’ll be doing that here in a bit. Again, is our website. Lots of stuff on there, so make sure you go check that out, and feel free to always share the show. There’s lots of ways to listen to this podcast as well. On iTunes, the podcast section, you can listen to it and give us a rating, give us a review. That would be great. We’re on Spotify as well. Some of you listen to Spotify for music. Our podcast is on there now also.

Karl Eggerss:                      All right, let’s jump right into it. Another strong week with this resilient stock market, and we’re now a little over the drop we saw in the fourth quarter of 2018 to where we are now. We’ve bounced about halfway back, a little more than halfway. As we get into it here, we’re going to discuss the psychology. What happens at these levels? Now that we’ve gone through this, where are we going from here? What’s kind of the mentality? I’ll give you my thoughts on that.

Karl Eggerss:                      We’ve had a couple of mergers and acquisitions announced in the last few weeks, and specifically in the gold area. Newmont bought Goldcorp. Of course, as the week went on, we continued to see the government shutdown, longest on record. Gold was pushing higher, but we saw the market down a little bit on Monday, and then we started to see things turn around. As the week went on, pretty much the news has been the improvement in the trade war. If you recall to last week’s podcast and the last several weeks, I’ve been discussing that there have been three things driving the market down, and it’s the combination of those three things that I think is really driving it down, or was driving it down.

Karl Eggerss:                      Number one was the trade war, which kind of really … I don’t want to say started this, but really last year, about a year ago, it was the Fed starting to talk about raising rates and really in more of an aggressive fashion, and then the trade war. Those two things pretty much dominated 2018. When we saw the Fed saying, “We’re going to raise rates,” everybody initially was negative on that, but as the year went on, the market kind of bounced because, hey, economy is doing fine, and so it can withstand higher rates. That was the logic most of the year, which is why you saw the market rallying most of the year. Even with the trade war, we’d get headlines here and there and tariffs, markets still kind of shook that off. What turned the markets in the fourth quarter was the combination of the Fed continuing their rhetoric that they were going to raise rates. Remember, Jerome Powell said, “We’re still below neutral,” so that indicated he’s going to continue to raise rates. The trade war was still going on.

Karl Eggerss:                      But what turned everything negative in a quick fashion was we started to get economic data that began to slow. I’ve told you for years, the combination of an aggressive Fed and a slowing economy is bad, bad news, and it turned out to be the case. What we saw in the fourth quarter was the economy slowing down, the Fed raising rates, and a trade war. That combination’s really bad for stocks. We got the big, drastic, almost 20% selloff in the indices and much, much more in a lot of stocks.

Karl Eggerss:                      I’ve been telling you that we need to see some of these things go from the negative side of the ledger to the positive, and we’ve had two of the three. We had the Fed basically capitulate. They essentially said, “Okay, we need to be patient,” and they’re putting all these people out there in, and Jerome Powell even said, “We need to be patient. We’re data-dependent.” I’m paraphrasing, but he said, “We need to be data-dependent.” That told the market, okay, they’re in touch now, they hear us. That’s when the market really turned.

Karl Eggerss:                      We have also seen some mild improvement in the trade rhetoric. We haven’t seen a lot of negatives lately, but what we got this week was some positives, and as I’ve been saying, I do not think we get a trade deal. Maybe they say they are, but there’s still going to be a multi-month, multi-year process, but we need to see things going in the right direction. That’s what we had this week. We saw rumors on Thursday that the U.S. was considering reducing the tariffs. The market jumped and then kind of gave it back, but pretty much had an upward bias to it when that came out.

Karl Eggerss:                      Then Friday we saw that China was going to increase their imports over the next six years to try to equal the trade imbalance, to reduce or eliminate the trade imbalance that China has with us. Markets jumped higher on that. These improvements in the trade war is all we need for the markets to go higher. We don’t need a signature on the dotted line to say we’ve got a trade deal. Improvements along the way will do the trick.

Karl Eggerss:                      What’s still missing is the part about the economy. That’s the third piece of the puzzle, the three-legged stool, is the part about the economy decelerating, because if the economy continues to decelerate, yes, the Fed’s off the table now, but if the economy’s decelerating, well, we don’t want it to decelerate too much. We don’t want a recession to get here, but the market was certainly pricing one in. We’re not quite there yet, but we need to see some things stabilize or improve. Again, it’s not, this isn’t bad. It’s just we’re decelerating. Very big distinction there.

Karl Eggerss:                      As we slow down, again, there’s people saying, “Sell the rally. Go buy bonds.” And that could be the case if the economy keeps decelerating, but right now, with what we’ve seen the last few weeks, the setup was very classic setup where you had capitulation on the part of investors. It materialized on Christmas Eve and the day after Christmas, where it just, get me out at whatever cost. Then we saw the quick reversal of not just a bounce, but one of the strongest bounces we’ve seen in years. That combination of giving up to get me in at whatever price is what we needed for a bottom and we’ve had that.

Karl Eggerss:                      Now as we move forward here, where do we go? Well, it’s interesting because, and this is a little technical, but around 2,600 on the Standard & Poor’s 500 was a really big line in the sand. I drew a picture on our website, if you’d like to go look at it, about a week ago, but as we started to fall in October, we bounced in early November. We fell in late November, and we bounced again at the second, that exact same spot, about 2,600 and we rallied until December. Then once we fell again and we broke through 2,600, so imagine a floor, the selling really intensified.

Karl Eggerss:                      Once we went back up to that level, the floor became the ceiling from a technical perspective. A lot of traders were looking at this expecting a pause. We’ve been discussing, I put it out on Twitter, that number one, the longer we stay at this 2,600 without falling, without reversing, you could see this thing break to the upside, and that’s what’s happened. So that’s the psychology of it, is that it should roll over and when it doesn’t, the people that are bearish panic.

Karl Eggerss:                      In addition, what if you have put options on the market or you’re selling short the market, you’re betting that it’s going to go down at 2,600 and it goes up to 2,610 and 2,620 and 2,630? Well, if you’re short, you’re betting against the market, you say, “I’m wrong,” and you do what? You go buy stocks to cover your short. I felt like if we went through, it would really accelerate, and that’s exactly what we saw in the last part of this past week. That’s the psychology.

Karl Eggerss:                      Where we go from here is more than likely we bounce a little higher, but if we bounce enough, perhaps 2,600 becomes the floor once again, but I would be shocked if we go back to the old highs in any short order. This type of trajectory that we’ve had since December 24th is not terribly uncommon, but if we were to go back to where we were, that would be fairly unprecedented in that short amount of time. Again, expect some pullbacks, and I’m not going to say they’re healthy. You hear people say they’d be healthy and if you’re long you never want it to pull back, but we should expect some type of pullback at some point.

Karl Eggerss:                      Again, but the longer we don’t go back down to the lows, the better chance that this thing has run its course. I do feel that given the conditions we had, I do think that that low is a good low, that we won’t break that at any point. But could we go down again, pull back 5%, maybe 5 to 7%? Absolutely, and that’s likely. What’s interesting about old markets or looking back at previous selloffs is it’s kind of interesting. The more you have a V bottom that goes straight up, the more you’re in a bear market. The more you have a market that bounces and then test the lows, so you kind of have this double bottom or it looks like a W, that tends to be in a bull market.

Karl Eggerss:                      We don’t know yet because we haven’t gone far enough out to see. But we do know that a) the economy has decelerated and the market probably overshot to the downside, b) we have the Fed rates are still low. And remember, a slowdown is not a recession, and a recession is not a financial crisis. Because we’ve seen a financial crisis, we’ve lived through it, we know what it looks like, we fear as investors, and I’m generically talking about all of us, is that we fear that ’08 comes again. Every time the economy decelerates, that’s the first thing we think of, is this another ’08? And ’08 was very rare. What’s not rare are recessions, mild recessions, where the economy contracts a little bit. It’s not the end of the world. The idea is to position yourself accordingly.

Karl Eggerss:                      Now as we’ve talked about the last several weeks, when you get these types of selloffs, there’s opportunity and there’s also an opportunity to make a bunch of mistakes. I’ve asked in the past, and you guys have sent me things, but I do want to know what you did during this time, what you didn’t do, if you were bearish. Did it not get down low enough for you to become bullish? What did you do? In general, what we did was we did, obviously, some large rebalancing where we stole from people’s income strategy and put it into the equity strategy. The bonds and the income portion had been a bigger percentage than where it should be, so we took that money and bought equities with it. That’s just called normal rebalancing.

Karl Eggerss:                      The other thing that we did was, and we mentioned this the last few weeks buzz, but in early November, we sold in our growth strategy a pretty large chunk of stocks in a ETF, and let that sit there in cash, and as the market was cascading down in December, we started to add it back and our last buy was on December 24th. I wish every trade would go that perfectly where you buy on the absolute low, but they don’t always work that way. But we did buy three times, got that money fully invested, and still have that position on.

Karl Eggerss:                      Some of our longer-term indicators are not still, they’re not in the clear yet. We’re still in what we would consider a downtrend, and it will take some time to get into an uptrend, if that’s how it resolves itself. Because of that, right now still caution, especially at these levels. Again, going back to the psychology of investors, pretend, and some of you may be in this position, pretend that you’re sitting there in 100% money market or cash right now and you want to get back in, do you do it now? Do you do it after the markets have run 10 to 15%, depending on which index you look at? Or do you wait? That could be why the markets pause, the buying just dries up.

Karl Eggerss:                      But look at it the other way. As it goes up, is there some the-train’s-leaving-the-station mentality? I got to catch it because it’s going to keep going up, so you pile in, which gives you demand and push your stocks higher. You see this tug of war that can happen at these levels. It was hard but easy to buy on December 24th, hard because you could be wrong and it could be continued to free fall, and it’s no fun watching your equities fall. But at the same time with cash, it’s very liberating to go in there and buy, knowing that you’re buying at such a significant discount.

Karl Eggerss:                      But at these levels it doesn’t feel like as much of a discount anymore, and so it makes the buying much more difficult. So that’s why you tend to have generally a pause at this level and kind of a tug of war, and I think we will get that in this 26 to 2,700 level, maybe even 2,750 on the S&P. Watch these levels closely and

Karl Eggerss:                      … over the next few days and weeks, but again in the big picture here, we don’t think the economy is weakening enough to justify stocks falling like they did. And we still see overall health of the market from a pure technical and looking at the internals perspective, a healthy stock market. I tell you another thing I saw a stat this week that the money coming into bond ETFs, $12 billion on the first eight days of January, and $42 billion since the start of November. That was the biggest three-month inflow ever into bond funds, into bond ETFs. That is a contrarian indicator, right? It’s basically telling you people are getting money out of equities and wanting to buy bonds. Usually, when you see records like that it tends to be a contrarian indicator where it should be going the other way, so that’s good news.

Karl Eggerss:                      If you’re in the stock market, that’s good news. You want to see stats like that because it tells you that that money can come back in and be fuel for further gains in the stock market. What you wouldn’t want to see is record stock inflows because again, that tells you that everybody thinks the market’s going up, they agree it’s going up, and ultimately it couldn’t reverse the other way.

Karl Eggerss:                      We got down to some very severe levels. So we knew a bounce would come at some point, but we never know is the bounce going to have any intensity behind it? And this one has, this one has had a lot of good quality behind it. Some of the areas that have bounced the most since the bottom, energy. Oil prices have gone up quite a bit. Oil prices are probably up 20% from the low, but you’ve seen things like the energy stocks, oil and gas companies probably up 30% from just December, 24th. Pretty big move. You’ve also seen biotech up in the mid-2s, since that time. The banks, that’s been an interesting area because remember the banks as the yield curve flattened meaning long-term rates weren’t much higher than short-term rates, that squeezes the banks. That makes their profit margins go down.

Karl Eggerss:                      But the banks have been leading the rally up there up over 20% from December 24th, Christmas Eve, not that long ago. Those have been some of your kind of your bigger moves. And we’ve also seen a big move as far as indices are concerned. The Russell 2000 small-cap stocks, which got really hurt during the drop they’ve bounced very hard. So we saw a drop in small caps from high to low of about 25, 28% I mean much bigger than the overall indices. But since that time they’re about 18%. So real big moves in small caps. So those are some of the leaders. And by the way, in case you’re interested, pot stocks also did very well during that time. There’s actually been some, I think some M&A activity in there.

Karl Eggerss:                      What’s been the worst thing during this whole period has been volatility. In other words, if you’ve owned volatility through ETFs or there any type of way of doing that, volatility has dropped about 50%. We reached a level of oh, I think at the time it probably went over 30, 33 was the volatility index and in the high teens as we speak. We also seen natural gas down during this time. It had a huge run in November and it’s down about 4%, 4-1/2% since the low of December 24th.

Karl Eggerss:                      Bonds have been slightly negative. Treasuries specifically. And the Gold Miners have been, gold’s been up just a hair, Gold Miners down a little bit during this time. Nothing’s been really hurt badly during this except for volatility. For the most part, it’s been a very broad-based rally, which is a good. That’s the ingredient that we all want to see if you are long in the stock market. Now again, to sum up, though we’re not out of the woods at all. I think that again, we need to see economic improvement. It’s one of those things, the people that are cheering that the Fed has capitulated. Be careful what you wish for. The reason they capitulated is maybe they see signs that the economy is slowing down as well, and we don’t want the economy to slow down too much, so you want a modestly growing sustainable economy.

Karl Eggerss:                      And if we get that, then we could continue to be in this Goldilocks pattern. But let’s not forget what’s happening here is that we had unprecedented stimulus go into the system during the financial crisis and now the world is trying to undo that. To take that stimulus out of the system is a trick. It’s tricky to do that and it’s never been done before. So the pace at which they do that is what the market could be nervous about. So it’s not just about the economy, it’s about the economy slowing at the same time they’re removing stimulus. That combination is something that is what had investors worried. So again, we’re not out of the woods, but certainly, a very strong rally so far in a very persistent market. We’ve had some negative headlines along the way and yet the market still powered through.

Karl Eggerss:                      But we will get some back-end fill, this is not a straight V, but hopefully, you took advantage of some of the volatility or at least as we mentioned, upgraded your portfolio. Selling some stocks you wanted to sell and buy some higher quality ones.

Karl Eggerss:                      All right, we’re going to switch gears right now from the markets and we’re going to discuss financial planning. It’s a great time. We’re here in January 2019. It’s a new year. It’s a fresh year and it’s time to do some not spring cleaning because spring cleaning will take place in a few months. Right now, forget the spring cleaning. Forget the garage sales. Now, is the time to look over your financial health and wealth and where you are. It’s again, nothing’s magical about January. But now that the new year is here, it’s a good time to review this. So we’ve brought in our resident in-house certified financial planner, Shawn Morris. Welcome back to the podcast.

Shawn Morris:                  Thanks, Karl.

Karl Eggerss:                      Good, good. Well, here’s the deal. So we talk about this all the time that, unfortunately, there’re a lot of things that people are, in their financial world, that if you’re married or you have a significant other, they are, everybody’s in charge of something in the household. So you may have maybe one of the spouses pays the bills and the other one does the investments, or one has a relationship with an advisor and the other one doesn’t. Or, “We’ve done some documents, but we haven’t looked at them in seven years.” This is the time to look at that stuff. So today we’re going to give you the listeners some tips on things you should do right now in January. Check it off your list so you can be done with it. These are really, really important things to do a from … And it’s not just estate planning, it’s just these are some practical to-do’s that we’re going to give you. Shawn, let’s dive right into it here. So you were showing me before we went on air, some very kind of sobering statistics of people in their financial life. So what’s the deal here?

Shawn Morris:                  So I was looking at a Gallop Poll and only about 41% of Americans have a will or a living trust.

Karl Eggerss:                      And this isn’t fake news, right?

Shawn Morris:                  No, not, no fake news. I mean that I actually looked at another … did a survey also and there’s was 42%. I mean they’re right in line. And if you think about that, that number is probably skewed towards the elderly. They’re thinking about, “Hey, I got to pass this on or something might happen to me.” They’re not 10 foot tall and bulletproof anymore. So they start taking care of business. But think about someone in their 20s or starting a family or someone in their 30s. That’s got kids now they’re working, they’re all in. But if something happens to them, they have nothing set aside or nothing in place to make sure that their kids are taken care of.

Karl Eggerss:                      And this isn’t an estate tax issue. Back in the 90s, you and I dealt with a lot of people we were saying, “How do we prevent estate taxes?” That’s not an issue for probably 90%, 95% of the population due to the estate tax exemptions being increased so much. That’s not, we’re talking about. We’re talking about practical where does the money go and how does it get from A to B?

Shawn Morris:                  Yeah. Well, and it’s not just money, it’s money in property and all kinds of things. I’ve seen this time and time again. Someone that’s in their 50s, maybe they’re on a second marriage, they may have not have taken care of any of their wills. They’ve titled their properties, their beneficiaries might still be old beneficiaries and time and time again, the second spouse gets hung out to dry. They don’t even think anything of it, or their kids get messed up because everything goes to the second spouse and the kids get cut out. I’ve seen that happen several times.

Karl Eggerss:                      Yeah. I recently met with a lady, she has a boyfriend and they kind of, their finances are kind of being commingled and they kind of look at it at all as one. But they haven’t titled documents that way so their accounts aren’t set up so that the other one gets that that’s their wishes, that they get each other’s assets. And so I said, “Look, you’re going to rely on a judge that’s going to say ‘we’re going to give it to blood relatives first rather than your boyfriend.'”

Karl Eggerss:                      And so you have to legally do these things if you want to have your assets go where they are going to go. And then she said, “Well, on my IRAs I have the beneficiaries all set out.” And I said to, to your point, Shawn, “It’s not just about assets. Who’s going to decide if you stay alive or pull the plug?” Because again, if you have no written instructions, a living will, all these types of things, well, you’re relying on some third party to make that decision for you and they’re going to say it may be blood relatives and maybe she didn’t have a good relationship with blood relatives. She wants her boyfriend to make the decisions. It’s got to be written down.

Shawn Morris:                  And when we go into the hospital and things go sideways, who’s going to be the person that tells the doctor, “Yeah, this is what he wants to do,” or, “This is what she wants to do.” And if you don’t have that spelled out, the doctor’s not going to take those orders.

Karl Eggerss:                      No, they can’t take those orders. So let’s kind of break this down into bite-size pieces. Let’s start with now that we are here in January, just from a kind of a checklist standpoint, what are some main things people need to be looking at in terms of, again, a review of their own situation in January here?

Shawn Morris:                  Well, so New Year’s resolutions. I’m sure everyone’s gotten their new diet shake.

Karl Eggerss:                      I’ve lost, I think I’ve gained two pounds.

Shawn Morris:                  You’ve got your new workout regime going, so right, slide that right in after that. I think the most important is do you have a will?” Yes or no? I mean that is a yes or no question. That’s exactly where you should start.

Karl Eggerss:                      And if you don’t, by the way, this is not, you don’t … Look estate planning attorneys are very valuable. They cost a little bit and it’s worth going through the exercise, but even as a bridge you can go to an online site, LegalZoom, which I don’t have any experience with, but I’m just saying LegalZoom is a place you can go get some of these documents done, estate specific, reasonably priced. Then if you want to go to the next step but at least bridge the gap by doing something.

Shawn Morris:                  Yeah. And so you’ve got a will, you’ve got advanced healthcare directives like we were talking about. You go into a medical situation. Powers of attorney. So what happens if you’re incapacitated but you haven’t passed and no one’s on an account-

Karl Eggerss:                      Yeah, who’s paying your bills?

Shawn Morris:                  Yeah, I mean the little things, just making sure the lights stay on. Making sure the mortgage gets paid.

Karl Eggerss:                      Well, and here’s a mistake people make and I recently did a video. If you follow our blog in our website, you probably watched this video, but we’re not saying to necessarily put a child on an account or somebody on the account. You can just have them be a signer on the account. Because if you put them on the account, then you have other potential issues.

Shawn Morris:                  One of the mistakes that I’ve seen is that people make a child a joint owner on an account.

Karl Eggerss:                      That’s exactly right.

Shawn Morris:                  That is not what you want to do. What you want to do is have them listed as a power of attorney-

Karl Eggerss:                      Or just a check signer.

Shawn Morris:                  Yeah, or something of that nature. But you don’t want them to just … Then you’ve missed your estate plan all up. You’ve given them basically said that this is their assets too. And I’ve seen where, I saw recently, where an older gentleman had given joint ownership to a younger child or actually given outright ownership, trying to do some sort of planning on his own. Well, now it’s the child’s assets and he needs to go into an assisted living home and he has no assets to pay for it. And the child’s like, “No, these are my assets now. I mean I need them. Give them to me they’re mine.”

Karl Eggerss:                      So the first thing is to have a will and generally with that comes as a package. The living will, as well as medical directives, that’s a package. And if you haven’t done that or if you’ve done that even review them. Get them out, see what they say. Do you have new grandkids? Did one of your kids go through a divorce? And maybe the ex-spouse was listed on there in some form or fashion, so that needs to be updated.

Shawn Morris:                  Yeah, if there’s been any life changes, you need to go in and address, you need to go look at [crosstalk 00:30:38] beneficiaries.

Karl Eggerss:                      Death, divorce, disability.

Shawn Morris:                  You need to go look at your beneficiaries, your wills, the title on your accounts. Look at insurance. If you have any insurance to see the beneficiaries on that. One of the worst things that can happen is, and I’ve seen this happen, is you’ve got to an IRA and you’re remarried and the ex-spouse is listed as the beneficiary. That is not what you want to happen.

Karl Eggerss:                      No. No.

Shawn Morris:                  That relationship had been terminated. We don’t want to give them all your assets.

Karl Eggerss:                      Well, maybe you do. You never know. So yeah. So go through and then, while we’re on the topic of some of those documents and insurance and so forth, it’s not just life insurance. Let’s shift gears here. What are some other practical things in terms of car insurance and home insurance and all those types of things?

Shawn Morris:                  Well, I mean I think medical insurance is no fun anymore, so that’s kind of a mess.

Karl Eggerss:                      It’s almost like switching credit cards because of the bonus points you get. It’s like year-to-year-to-year you switched health plans. But I did see my premiums didn’t go up this year for the first time in … They were going up to 25% per year since 2010. And they have now plateaued at least for one year.

Shawn Morris:                  One year. Yeah, but what about

Shawn Morris:                  ,,, your deductible. That’s the one where they’re gettin’ you, now.

Karl Eggerss:                      Well that’s the thing, they don’t cover as much.

Shawn Morris:                  Yeah, they don’t cover anything anymore.

Karl Eggerss:                      So you still have to … Yeah.

Shawn Morris:                  So they’re not going to charge you anymore for not covering any less.

Karl Eggerss:                      That’s so nice.

Shawn Morris:                  That’s nice of them, so you got that going for you, which is nice.

Karl Eggerss:                      But I mean, what about reviewing things like … We obviously, in south Texas had major floods last year, so review your insurance.

Shawn Morris:                  Well, and that’s what … Yeah, I think it’s really important, depending what part of the country you live in, to make sure that you are covered for … I mean, a lot of people in Houston found out, “Oh, wait a second. You mean I don’t have … You’re not going to cover me because of a flood,” even though they lived right believe a dam?

Karl Eggerss:                      Right.

Shawn Morris:                  I mean, I didn’t know that was a flood zone. I mean, and for the most part, flood insurance is regulated, and so it’s fairly reasonable. If you’re anywhere close to a floodplain, you should have flood insurance.

Karl Eggerss:                      Yeah, it’s a difficult thing, too, because the people that even had flood insurance, they were saying, “Well, it wasn’t caused by the flood. It was caused by the storms,” or whatever they-

Shawn Morris:                  Yeah. Our friends down on the coast are dealing with that. They’re like … We don’t cover wind-driven rain, but it was the wind from the hurricane that blow out the windows and ripped off the roof, and then allowed to rain come in.

Karl Eggerss:                      Sure.

Shawn Morris:                  But they’re like, “Oh yeah, we’re not going to cover that.”

Karl Eggerss:                      Yeah, yeah.

Shawn Morris:                  So you need to go through and just really understand your policies, especially if you’re in an area where you could … Higher probability of natural disaster.

Karl Eggerss:                      Yeah, I think, too, while it’s obviously legal docs, checking your insurance, those types of things. But really, most of this in this New Year’s resolutions is more about organization and I think a lot of people feel very scattered with some of this information. And they are, because our lives are very complicated when you start adding digital assets, passwords. We may have multiple … It used to be, go down to your bank, and that was your bank. Now you may have multiple bank accounts, because some of them are online.

Karl Eggerss:                      And by the way, we’re speaking with Shawn Morris, certified financial planner. So we have solutions, Shawn, that basically will consolidate some of this, because we’ve seen this before, were a lot of people, again, one person in the relationship handles certain things in the household, and if something happens to the other person, they don’t know. “How do I even log in?”

Shawn Morris:                  I think I have 15 to 20 different passwords, and they’re all different and varied. And even if you have a password manager, which I highly recommend if you don’t have one, if people don’t know that you have a password manager-

Karl Eggerss:                      Well, yeah. What’s the password to the password manager?

Shawn Morris:                  And they don’t know how to get into the password manager. Right. And then where do you store that? Do you store it-

Karl Eggerss:                      But, do you pay your bills online? Do you wait for a check, and then all of a sudden you’re getting delinquent notices, so-

Shawn Morris:                  How ‘about people that … Stuff that have an auto pay or an auto draft out of their account.

Karl Eggerss:                      Right.

Shawn Morris:                  And if something happens to you, and your spouse doesn’t know about that, or doesn’t know that money needs to be moved in a certain account to cover certain bills, you could have all kinds of things starting to go haywire.

Karl Eggerss:                      Yeah. I think having a … And this is a good time to get kids involved, too, but having kind of a family meeting and just saying … At least telling the spouse or significant other in the house, “Hey look, this is the deal. This is how … Here’s all the bills that come in.” And I had one client who had a great idea. They basically did a diary for 30 days. And everyday, wrote down what they were doing, and pretty soon, within 30 days, they covered everything. Here’s these bills that come out on auto draft, here’s the ones that come in that we wait for, here’s the ones that go on the credit card, what have you, and they got a pretty good idea, which I thought was an excellent idea. Takes some work, but it makes a lot of sense. So having that family meeting kind of discussing this, first of all, is a good way to do it.

Karl Eggerss:                      Secondly, though, there are tools we use with our clients that want it, basically we have portals we have access to that consolidate this for you. Right?

Shawn Morris:                  Right.

Karl Eggerss:                      So tell me a little bit about how that works. What is it going to do? Is it garbage in, garbage out? Is it going to prompt you to-

Shawn Morris:                  No, I mean it’s got a checklist and it’s very intuitive and it just kind of runs you through a checklist of everything that you need to be made aware of, that you need to document. And then once you document it, it’ll give you a place to securely store it, and then it allows you to handout access selectively.

Karl Eggerss:                      So if you want a child on there, they can be on there or they can also have it to where it’s turned off until something happens to you, right?

Shawn Morris:                  Yes. And so what’s nice about it, you don’t have to have … Say, for example, you want your estate planning attorney to have access to one section of it, you want your CPA to have an access, maybe, to something else that more fits with what’s in their professional expertise, and then you want to have a child that can come in and help pay bills, or making sure your spouse knows that, “Hey, this is how we log into this account.”

Karl Eggerss:                      Right.

Shawn Morris:                  There’s-

Karl Eggerss:                      Well, I’ve been doin’ this myself, and it is a lot of work, but what’s nice is it does walk you through, and it literally breaks it down into sections of your autos, for example. And you literally have a picture, where they’re located, where the title’s located, who’s the owner, all those things, picture of it, and you have all the description, there, and then are there any loans associated with it, and then it walks you through. What about the insurance on the car and who’s the agent? And it walks you through that, and so you’re building this out, and it even discussing post-death. So pallbearers, any last wishes. So this isn’t the legal framework. Like what you said, the legal documents are stored in there, but this is what I call the yellow pad of to-do in there.

Shawn Morris:                  Right.

Karl Eggerss:                      And it’s been a great comfort, because what it does is, whoever’s on there with you, let’s say it’s a spouse, they’re prompted every few months to go log in. So they’re used to logging in, and they know if something happens to me, my spouse knows to log in there, and it’s going to say whatever you want. It’s going to have the pet’s medication. It’s going to have some of the more important passwords and the things of that nature. So it’s an organizational tool, and that’s something we offer to our clients, again, when they want it. Some have their own system in place, which is fine, but there are tools nowadays to help you through this.

Shawn Morris:                  Right.

Karl Eggerss:                      So I think it’s imperative, because a big thing that’s happening is, like we said, we’re in a world now where we have so many passwords, and we have so many online places we store our photos, our digital assets that people don’t realize that that stuff goes away.

Shawn Morris:                  Well I mean-

Karl Eggerss:                      I mean, you could literally have all your pictures. Remember, we used to have shoe boxes full. Now, it’s in a cloud somewhere.

Shawn Morris:                  Right.

Karl Eggerss:                      For those that don’t understand what that is, it’s not literally a cloud, but there’s probably somebody listening that thinks it’s a cloud, but-

Shawn Morris:                  That’s not how any of this works.

Karl Eggerss:                      That’s not how any of this works. But it is stored offsite. And if you lose a password, you don’t know how to get there, you don’t know it’s there, you’ve literally lost some family photos. And we’re takin’ a lot more family photos, so it’s just a different world.

Shawn Morris:                  That’s kind of one of our New Year’s resolutions, is we have family photos scattered on multiple different computers, and my wife has asked our children and said, “Look, we want to preserve these photos. Help me get them into-“

Karl Eggerss:                      Help me help you.

Shawn Morris:                  Yeah, exactly. Well I mean, it’s just because you’re looking at 20 years, two decades worth of pictures that, if that computer goes bad, that hard drive goes bad, you’ve lost them all.

Karl Eggerss:                      Yeah.

Shawn Morris:                  They’re gone.

Karl Eggerss:                      Yeah, for sure. So but I think the thing is, too, is that I’ve seen people … And I don’t know what the rules are nowadays, but I know in the past, people would take their estate planning documents, they’d go down to the bank, they’d stick them in a safe deposit box, and then when somebody passed away, nobody knew that they were even in there, or how to get into the safe deposit box, or they were frozen, and they couldn’t get the documents out. I mean, it was just … So the digital world we’re in is scary. And like you said, you need a password manager. You need to protect yourself. But having people have access to this stuff when you want them to, or specific things, makes it so much more streamlined.

Shawn Morris:                  Well, and don’t assume that your children know everything that you have. It’s obviously that, “Okay, mom and dad have a house,” but what if you have a lake house, what if you have a ranch, what if you have rental properties?

Karl Eggerss:                      Yeah.

Shawn Morris:                  They may not understand that, and they may not know that. If something happens to you, where’re letting them know what you have?

Karl Eggerss:                      Yeah.

Shawn Morris:                  And those are … It’s one thing when you’re looking at bank accounts. They’re going to send you statements or investment accounts, but the sad thing is, those statements are going into an email, typically now, not to a mailbox. And if your survivors don’t have access to that email, how are they going to know?

Karl Eggerss:                      Right.

Shawn Morris:                  How are they going to know what you have?

Karl Eggerss:                      So give me … I don’t think we’re specific. The statistics on people … Again, people avoid this whole topic because it has to do with their mortality, and they want to-

Shawn Morris:                  And the last thing people want to think about is dying.

Karl Eggerss:                      Right. But you have to think about who’s relying on you.

Shawn Morris:                  Right.

Karl Eggerss:                      And so what are some statistics as far as … I think you gave the Gallup poll, right?

Shawn Morris:                  Right.

Karl Eggerss:                      That, what? Was it 47% die intestate?

Shawn Morris:                  Yeah, only 41% of Americans have a will.

Karl Eggerss:                      That’s crazy.

Shawn Morris:                  The opposite of that is 59% don’t have a will. And if you’re-

Karl Eggerss:                      Carry the one. Yeah, yeah. That’s right.

Shawn Morris:                  So I mean, if you’re listening to this and you fall in that 59%, you need to do something to make sure that … Because the last thing you want to do is die intestate. And for those that don’t understand what intestate means, that means without a will.

Karl Eggerss:                      Mm-hmm (affirmative).

Shawn Morris:                  And basically, now, you’re saying you’re going to let the state decide where your assets go.

Karl Eggerss:                      Right.

Shawn Morris:                  I have a client whose spouse, who was 53 years old passed away. She was the second marriage. They had some joint accounts, but he had one very large investment account that only had his name on it. And millions of dollars of assets. Here we are, four years later, that’s still tied up. I mean, she doesn’t have access to that, and he was the sole provider.

Karl Eggerss:                      I can tell you this. It’s very comforting to go through the process and do it. It feels like a huge weight if off your shoulder to have an estate planning attorney or a financial advisor like Shawn walking you through this to go checking these things off the list. I mean, to know that that is done is very refreshing, and it takes a big weight off your shoulder.

Karl Eggerss:                      The other thing is, too, you may have these documents. But again, reviewing all of this, because it’s changing. And I’ve seen where I’ve reviewed my own, and some of the language, due to new laws or whatever, needs to be tweaked.

Shawn Morris:                  Right.

Karl Eggerss:                      So just reviewing them. Some estate planning attorneys will want to toss yours in the trashcan and redo the whole thing. The better ones will say, “We can work with what you have, let’s just tweak some of the wording,” and it’s obviously inexpensive. And the thing is, again, it doesn’t have to be thousands and thousands and thousands of dollars. There’s some very reasonable estate planning attorneys out there that will do a good job. And like I said, a first step maybe to use an online service, but if it’s a little more complicated estate, go see an estate planning attorney, preferably one that works by the job, not by the hour.

Shawn Morris:                  Well, yeah. And everyone’s situation is different. My side of our estate with my wife, is fairly simple. We have some joint accounts, we have some investment accounts, 401Ks, and that sort of thing. Her side of the ledger is substantially more complex, and so you need someone that can-

Karl Eggerss:                      Did you say you married a sugar momma?

Shawn Morris:                  Yeah, no. No. No, we’ve just-

Karl Eggerss:                      You all have known each other for a long time, so that … Yeah.

Shawn Morris:                  Yeah, yeah.

Karl Eggerss:                      Didn’t you go to high school together?

Shawn Morris:                  Yes.

Karl Eggerss:                      So, there. So, yeah.

Shawn Morris:                  Yeah. And-

Karl Eggerss:                      I know the audience was jumping to conclusions.

Shawn Morris:                  So I mean, I’m just … and just because it’s complex doesn’t meant there’s a lot of money, there.

Karl Eggerss:                      Sure.

Shawn Morris:                  It’s just complex. So there’s a lot of moving parts to it. You need … That’s where it really is beneficial to sit down with an attorney, and not try to plug and play online.

Karl Eggerss:                      Yeah.

Shawn Morris:                  Something that you’re probably not going to address in a will or with an estate planning attorney, is maybe what you want to do with your pets.

Karl Eggerss:                      Absolutely. It sounds silly, but some people like their pets more than their kids.

Shawn Morris:                  If something happens to me, I know what’s going to happen to my dog. It’s going to get given away, because no one likes that dog except for me. But you want to make sure they’re taken care of. Or, how about family recipes? You don’t want the secret … If there’s something that you definitely want to make sure and pass onto the next generation, you’ve just been doing it, and you’ve never told someone where Aunt May’s recipe is for sugar cookies-

Karl Eggerss:                      Well, and again, Shawn can help you consolidate this stuff, but I’ve been through, literally in the last year, I’ve had four client deaths, one very, very young. So again, it’s easy when somebody’s 90 years old, you start planning. 51 years old, they did some planning, but I’ve been helping the surviving spouse through that, and it’s been difficult. I also had a very high-net worth divorce. So we see it all, you and I see all these situations. And so I’ve always used this podcast to bring our experience of what we’ve seen with multiple situations, and hone it in and try to help you, as a listener, figure out what to do.

Karl Eggerss:                      So that’s a lot of information, but bottom line is do something. If you need our help, give us a call., or 210-526-0057. Again, Shawn Morris, certified financial planner can help you through some of this.

Karl Eggerss:                      Shawn, thanks for coming in. Appreciate it.

Shawn Morris:                  Thanks, Karl.

Karl Eggerss:                      All right everybody, have a great weekend. We’ll see you right back here next week on the Eggerss report, your investing playbook.

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