Focus on doing the next right thing. The current discomfort won’t last forever, but we can’t “fix” it all at one time. By focusing on the next small action we need to take or the decision we need to make, we can avoid trying to make major decisions in a hyper-emotional state.
As a part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing Chip Munn.
Though he began his career as a teacher in a formal education setting, Chip quickly realized that his teaching skills could translate into a career in wealth management, and he transitioned into finance. As the CEO and Visionary of Signature Wealth, Chip has driven the expansion of the practice from a small three-person team to a regional wealth management group with 30+ team members thriving in more than 10 local communities and has seen it grow from $280M in client assets under care to almost $1.3B since 2016. In addition to serving clients, he is also the author of The Retirement Remix, a popular podcast host (The Retirement Remix and Maximum Advisor), and coach to other advisors and professionals.
Thank you for doing this with us! Before we dig in, our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?
Itook an unconventional road to a career in wealth management. After graduating from Clemson University with a degree in Education, I took a job as a sixth grade English teacher. It didn’t take long to realize that my future wasn’t in the classroom. I decided that I wanted to go to law school to become an estate planning attorney because, when I was a freshman in college, I watched my dad sell our family farm to pay the death tax after his father died. As it turns out, elementary education isn’t a preferred major for the admissions department at most law schools. I decided that I could fulfill my goal of helping other families avoid the mistakes that my granddad made, by becoming a financial advisor. At 22 years old, I read a book on mutual funds and interviewed at every investment firm in town. Convincing my first manager to hire a 22-year-old sixth grade teacher was easily the toughest sales presentation I’ve ever made.
Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or takeaway you took out of that story?
As a financial advisor, I’ve learned a lot by working with other people. One of my favorite stories is of a client who decided to “test drive” retirement. He’d turned a love of boats and a career in construction into an opportunity to build sailboats in Australia. He and his wife thought they’d like to “retire” someday, move to Florida and captain other couples on their sailboat. Eventually, the long hours of the job in Australia took a toll, but rather than quitting, my client asked for 6 months off. He and his wife used the time to test drive their retirement dream — figuring out how they’d spend their time and what it would cost to live on their boat for several months at a time. Their “retirement test drive” experience opened my eyes to the fact that there is more than one way to “do” work and retirement. Since then, I’ve taken a very different approach to planning, because I learned that for people who are willing to ask, there are unique opportunities to live more life now, while still planning for later.
Are you working on any exciting new projects now? How do you think that will help people?
I’m excited to have recently published my second book, The Retirement Remix. After twenty years of serving clients, I realized that there was often a big difference between the plans people made for retirement and what they actually wanted to do when the time came to make a transition. It’s common to plan for a day that they’ll leave our office on a vacation that will last the rest of their life. When the time comes that they planned to transition, a lot of people don’t actually want to leave the workforce. They want to work differently. They want the freedom to choose when, where and how much they work. Planning for a more gradual shift in their later working years, reduces a lot of the pressure on their younger working years, allowing them to work fewer hours and have a better life now rather than deferring some of their goals until some arbitrary date in the future. I believe that the tools and mindsets in The Retirement Remix will refocus planning discussions on helping clients build the life of their dreams — and starting to live it sooner, rather than later.
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 believe that life is a team sport and I have lots of people that I’m grateful for, but the person who’s had the biggest impact on my career has been my business partner, Scott Mitchell. After about six months as an advisor, I’d solicited all of my family and friends. Not many people were excited about turning their life savings over to a brand-new advisor, so I approached Scott about the potential to team up with him and his dad. I wanted to focus on financial planning and they had been managing investment portfolios for years. Scott embraced the idea wholeheartedly and helped convince his dad that I’d be a good team member. We’ve been together for 22 years and our partnership has been the foundation of a group that’s expanded to where we are today.
Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?
There’s no doubt that this has been a tough time for people on many levels. The most dangerous thing anyone can do right now, in my opinion, is to let their emotions guide their decisions and let short-term feelings create long-term consequences. There are three things that I would encourage anyone to do right now — for themselves and others.
First, pay attention to, and take care of yourself. You can’t pour from an empty cup and the best way to take care of others is to make sure that you remain in the best possible place yourself. Whether you use yoga, meditation, exercise or prayer to “center” yourself, taking care of yourself is a great investment of time that can drastically reduce emotional decision-making.
Next, lean on your past experience (and if you don’t have any, lean on the experience of someone you trust). While none of us have dealt with this specific situation, most of us have experience with the individual components that we are now struggling with. We’ve faced market corrections, loneliness and fears of illness before and have experience in overcoming those fears — just not all at the same time. By deconstructing our current situation into these individual issues, we can often recall similar circumstances that we have overcome.
Finally, focus on doing the next right thing. The current discomfort won’t last forever, but we can’t “fix” it all at one time. By focusing on the next small action we need to take or the decision we need to make, we can avoid trying to make major decisions in a hyper-emotional state.
Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long-term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?
The keyword you used is “plan.” If you created a long-term plan, chances are you took your time doing it. You outlined your goals and set out on a course that you felt confident would help you achieve them. Unless your goals have changed, which is certainly a possibility for some people, your plan should not change. I do think it’s an appropriate time to evaluate your tolerance for risk. Most people don’t know how much risk they’re comfortable with, until after they’ve already experienced it. I’d suggest using the last month or two to gauge whether or not you’re comfortable with the allocation of your portfolio. If you’re comfortable with the overall composition, I think it’s wise to keep following your plan. Often the best times to invest feel the worst. Finally, you should review the time frame for your investments. The investment strategy for retirement, college funding and saving for a house would likely be different, depending on the time horizon you have for each of the goals.
Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?
First, I’d suggest creating an overall plan for why you’re investing. As we’ve discussed, different goals will require different strategies and you want to make sure that you begin with the end in mind. By taking a longer-term view, it’s easier to stay the course if the market remains volatile for a while. The first step in preparing for a future recovery, is to stay the course and continue investing. The simple way to build wealth over time is to continue investing, but simple doesn’t mean easy. Buying quality companies after a large market correction has historically been a good decision and I can’t see any reason why this situation would be any different.
Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?
I’d caution against trying to pick stocks or sectors that stand to benefit from the current pandemic since the likelihood is that the virus will eventually be halted. Instead, I’d look for stocks that have been beaten down, but that stand to thrive in any situation. There is some overlap, as many beaten-down names will benefit not only from our current efforts, but will also rebound once we have recovered. Attention has been brought to many remote working technologies that may become more integrated in our lives. Sectors like healthcare, especially biotech, and technology are at the cutting-edge of not only how we are dealing with the virus, but also how we are now living our “normal” lives.
Are there alternative investments that you think more people should look more deeply at?
We use alternatives in different ways. Often, we’ll use a hedged equity fund, which allows us some stability in portfolios without using bonds, especially if we’re concerned about rising interest rates. But when our models indicate, we like to use managed futures or a multi-alternative fund to be less correlated. We almost always use liquid mutual funds or ETFs (Exchange Traded Funds).
If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long-term investment what would you advise them to do with it?
If they’re able and the funds are for retirement, I’d suggest they fund a Roth IRA. Right now, they could make a contribution for both 2019 and 2020. That would allow for tax-deferred growth and tax-free distribution after 59 ½ years old. Tax deferral would be a big benefit over time. Inside the Roth, I’d suggest they use a diversified, low cost mutual fund or ETF with a mandate toward growth. While they would likely want to adjust the allocation over time, younger investors with a long-term time horizon should typically favor growth-oriented investments.
Ok, thank you! Here is a more general finance question. You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?
- Create a plan with an advisor — You wouldn’t go on a trip without a map and you shouldn’t invest your money without a plan. An advisor can help chart a course and serve as a guide along the way.
- Start early — Benjamin Franklin called compound interest the eighth wonder of the world for a reason. Beginning to invest while you’re young, even if it’s not a large sum to start, can dramatically impact your long-term success.
- Diversify — There will always be temptation to chase “hot” investments. Taking a long-term view and owning a diverse portfolio of investments will make for a less volatile, more sustainable ride.
- Be consistent — The key to long-term success in anything is, doing the small things with consistency. Smart investing is no different. Executing the basic parts of your plan on a consistent basis is the best way to be confident in your results.
- Understand that things are never as good, or as bad, as you think they are. In psychology, they call this the “recency effect,” the misbelief that things will always continue in the direction they are currently going. When times are good, we feel good and we want to assume things will stay that way. When times seem bad, it can be hard to see how things will improve. Understanding that we are always on an emotional rollercoaster — whether on the incline or decline — can help us maintain our balance on our way to long-term success.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Good decisions come from experience and experience comes from bad decisions.” I heard this quote in a sermon and never forgot it. For my personal use, I typically add the sentence, “When possible, it’s faster and less expensive to benefit from the experience of others.”
One of the benefits of being a financial advisor is that I’m able to walk with people through various stages of life and learn from them. Over the years, I’ve been able to develop a process for decision-making based not only on my personal experience, but the experience I’ve gained helping others. I believe that people are meant to be in community and that we’re better together. Using the collective wisdom of my clients to benefit me and others, is a great example of that principle.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂
If I could inspire a movement, and I hope I will with my latest book, it would center on authenticity. There’s a Kenny Chesney song that says, “Be a tourist, a beach bum or a star and be as you are.” There’s simple wisdom in that.
Every day, I talk to people who are doing things that they don’t enjoy because they believe that they should, and I see the toll that it takes. Some people spend their time doing jobs they no longer enjoy to make money they don’t need so that they can impress people they don’t even like.
I would want to inspire people to imagine the life they want and to then create a plan for how they can start living it, or at least part of it, now. I believe that everyone has a gift, ability or superpower that can benefit everyone around them, but some people have limiting beliefs that keep them from exploring and sharing these gifts. A movement that brings about authenticity is a movement that will bring about freedom and, in my experience, freedom is what people want most.
Thank you for the interview. We wish you only continued success!