From Graduation to Retirement: Andrew Harrell’s Journey as a Financial Advisor

Eric Brotman [00:00:01]:
This is Eric Brotman, the host of Don’t Retire, Graduate, a podcast that asks you what you wanna be when you grow up so you can graduate into retirement with a purpose and a passion. Welcome to our diary of Financial Advisor segment, where we interview financial advisors about their professional journeys and their passion to help others succeed. Today, I’m pleased to be joined by BFG’s own Andrew Harrell. Andrew, welcome to Diary of a Financial Advisor. Thanks for having me, Eric. So, let’s begin with the story of how you got not only into this business, but but how you became a member of the BFG team because it’s it’s timely.

Andrew Harrell [00:00:38]:
It is. It is. So I have actually known nothing else but BFG. I’ve worked here my entire career. And, matter of fact, seven years to this day is when Eric had first reached out to me to, come interview. So it’s been seven years to this point. I’ve reached out, and we we got connected. And I started here about ten days after I graduated and haven’t left.

Andrew Harrell [00:00:58]:
So Eric and I have gotten to know know each other, pretty great over

Eric Brotman [00:01:02]:
the past couple of years. So, Andrew, you you more than anyone here, and we have 20 folks here, more than anyone here, you got to work side saddle with me for a long time, Mhmm. For better or for worse. Yeah. Let’s let’s have a little fun. In what ways was that better and in what ways was that worse?

Andrew Harrell [00:01:19]:
I consider myself pretty smart, from that perspective because, you’re known here as one of the best. Don’t wanna blow up your ego. But, from from the worst standpoint, I will say, not having the exposure to other advisers and seeing different tactics. But, I I know your way and your way has been working, so, I’ll give you a lot of credit for that.

Eric Brotman [00:01:38]:
So we’re gonna talk today about your specialty area, and your specialty area is primarily retirement and income planning. Nobody knows the IRA world better than you do, I think. And, and so when you think about retirement and income planning, a lot of times people think, well, that’s something you do when you’re, you know, five years to retirement. You’re 55 or 60 or 65 or even 70. And not to put you on the spot, but you’re a young man for that, to be your specialty area. What drew you to that specific, specialty area within the firm?

Andrew Harrell [00:02:11]:
Mainly, most retirees, these days always have that in the back of their mind. They they’re always concerned about running out of money. Have they saved enough? Are they spending too much? What’s gonna happen to Social Security? Some people have mortgages and things to take into consideration, especially with taxes, depending on what type of assets they have, whether it is IRA assets at ordinary income or if they have other property like capital gains property. So trying to balance that with requirement of distributions, social securities, and if they have pensions and fitting that into their world to to make a picture for them work, and and be comfortable.

Eric Brotman [00:02:46]:
So there are a number of different strategies that can be used for retirees to to derive income and, you know, what what I tend to teach folks is that it’s based largely on the required withdrawal rate. And that, you know, rules of thumb, I don’t like. Everybody’s got one, but unfortunately, a rule of thumb is gonna be an average and averages don’t don’t work. It’s like one size fits all garments don’t fit any of us. Right? Especially you, you’re very tall. So Sounds like it’s me. So if we’re if we’re looking at that withdrawal rate, and we’re looking at the different strategies, when your withdrawal rate is under 3%, and when I mean withdrawal rate, I mean, for every million dollars you’ve been able to amass, that creates $30,000 at 3% of income. Mhmm.

Eric Brotman [00:03:28]:
Alright? How it’s taxed is a different animal, and you’re right. There are lots of of of things to think about there. But if your withdrawal rate is 3% or less, am I correct that your your risk of running out of money is is quite small so long as you’re as you’re managing it correctly?

Andrew Harrell [00:03:43]:
Yeah. I mean, that that is a very sustainable rate of withdrawal. Some would say that you could do a a total return strategy and just say, I need a $60.40 allocation for my portfolio and it needs to generate more than 3% to just live off the dividends and the interest and allow that to continue to grow and keep up with inflation.

Eric Brotman [00:04:00]:
So, so that’s one strategy and that’s ideal. That is if if if we’ve been working with somebody for for thirty years and they’ve done the things they need to do and where they’ve just showed up on our on our doorstep and they’ve done the right things and they built a nest egg and they can survive on 3%, really, they’re in phenomenal shape.

Andrew Harrell [00:04:21]:
Yeah. And ideally, they at that point, they can leave a a legacy to their children or do, other things, whether it’s philanthropy or have have the flexibility to do so.

Eric Brotman [00:04:28]:
So now let’s talk about what if it’s not 3%? What if it’s four or four and a half or five? What is the next sort of level of strategy, that makes sense? I I’ve referred to it as asset segregation. Is that the language that you would typically use for something like that?

Andrew Harrell [00:04:44]:
I would. Matter of fact, I got that from you.

Eric Brotman [00:04:46]:
Oh, fantastic. So if

Andrew Harrell [00:04:48]:
it if it’s, 4% relatively rate of withdrawal or below, getting that 3% level, asset segregation would be that strategy and having different buckets for different, types of income to time those, accounts utilization. Once you get north of four, four and a half, and potentially five or higher, you have to look at ways to create a different level of income, outside of the portfolio, whether that’s annuitization or some other strategy that could allow for you to have, sustained income for life and not run the risk of of tapping principal.

Eric Brotman [00:05:21]:
So for a lot of, our viewers, for a lot of households, the biggest asset sometimes that people own is their home. Mhmm. It’s either their home or their four zero one k in almost every case. Right? It’s their it’s their retirement plan or their home. The retirement plan is gonna have required distributions. It’s gonna be taxes, ordinary income. The house is someplace you have to live. I’ve often argued that, your primary residence is not an investment.

Eric Brotman [00:05:45]:
It’s because it’s a cost center. It’s the money pit. Right? Yep. But there are ways to use home equity to help in retirement. And there are a lot of strategies to do that. There’s downsizing, there’s reversing a mortgage, there’s just being mortgage free, which is lovely. What are you what are you seeing in terms of retirees and their comfort levels with tapping or utilizing that equity as part of their plan. Is there still a lot of hesitation and fear, sometimes when it comes to that?

Andrew Harrell [00:06:11]:
Oh, absolutely. Not only does, in certain cases, it cost a lot to do something like that, but there are pros and cons. It it is a favorable option for those that need it. But most times when you start to bring this up, whether it’s a reverse mortgage or reverse line of credit or something like that, where just as an idea or food for thought, people have a lot of hesitation around that because they they don’t wanna leverage their home. They feel like they’ve had it paid off, or even if they haven’t had it paid off, they don’t wanna have to have debt being accumulated for for no reason if they can find somewhere else to tap into it.

Eric Brotman [00:06:42]:
How how do you as a, I’m not gonna say a new financial adviser because you are experienced now, but as a young financial adviser, how do you get folks who are 20 and 30 and 40 years your senior to have conversations around, for example, aging in place? Like that’s a, that’s a hard conversation for somebody who is nowhere near experiencing that yourself. How do you conversation for somebody who who is nowhere near experiencing that yourself. How how do you navigate

Andrew Harrell [00:07:06]:
that? Yeah. I I honestly sit across from them, and I tell them how it is. I they know just from looking at me as as you just mentioned that I have never been in that situation. I don’t know what that’s like, and I couldn’t possibly understand it. But having to be sitting there in that moment looking at them and telling them that admitting I don’t have any experience with that, but what I do have experience in is us as a team here working together. We’ve seen, hundreds of different households go through this, and there is a way to to do this together, and we can we can help them out. I can’t sit there and say that, yeah, I’ve I’ve been through this before because I have. But but sitting there admitting them, telling them the truth, look.

Andrew Harrell [00:07:44]:
I truthfully don’t know the ins and outs of all this, but, we’ve we’ve done this time and time again, and and we’re gonna help be your guide through this entire process.

Eric Brotman [00:07:52]:
We’ve had other entries in our diary, thus far, and people have said it’s different when you’re on this side of the table. And, you know, as the host of the show and as somebody who’s been preaching this don’t retire, graduate, the closer I get to where I need to reinvent myself as a professional, the more real it feels. The more it feels like, wow. This is not only the right thing, and I believe in it wholeheartedly, but it’s harder. It’s harder than it than it looks. It really is. It’s because we tie our identity to what we do. So when you’re counseling folks and helping them retire, it’s more than just financial.

Eric Brotman [00:08:29]:
It’s more just, can I afford not to work? I I imagine that you’re also getting into some of the softer conversations, the qualitative conversations about how people are gonna spend that chapter of their lives. Is that something that you that you engage in on a regular basis? What does that look like? Yeah.

Andrew Harrell [00:08:44]:
I mean, everyone everyone’s different. They have their own form of graduating, whether it’s I wanna go sit on the beach six days a week and do nothing else or and read a book. Some people want to some people want to, create a new business and do some consulting or part time work of some sort just to get them out of the house and stay engaged in the community. People volunteer. There’s a wide range of things that you can do, but the whole premise going back to your Don’t Retire Graduate segment is getting off the couch, doing something you love, have fulfillment, and have a purpose. And, if you do that, you tend to live a much more fruitful and and lastful life versus someone who just is a couch potato, so to speak, and and doesn’t really wanna do much else besides that because at that point, you’re just sitting around doing nothing and and you’re decaying.

Eric Brotman [00:09:27]:
So let’s talk about generations because as a proud Gen Xer, I like to beat on your generation, almost like sport. But the generation before us, the boomers, are are experiencing some things that that we’re on our way to. And one of them is the different regimes that that affect the retirement process. So, my grandparents, your grandparents even, they had pensions. They worked until they were 65 and life expectancy was 72. You know, they worked from 18 to 65. They had a seven year retirement and they were dead. So most of their income was coming from the pension and the Social Security.

Eric Brotman [00:10:06]:
They didn’t need to save a lot of money. Mhmm. You fast forward to Gen x. Now Gen x, there’s still some pensions out there for, government workers primarily, but rare in the private sector. There’s a certain, I think, risk around relying on Social Security. I think there’s a risk that it will someday be means tested or change in one way or another. And there’s, a need to for the first time as a generation, there’s a need to really be on our own and and make sure that we take, care of ourselves and that we build a a nest egg. But the Gen Xers were still a lot of cases working in one environment for twenty or thirty years getting the gold watch.

Eric Brotman [00:10:47]:
Your generation, there is no gold watch. No. There’s a there’s a Timex, you know, keeps time or there’s an Apple watch, but there’s no there’s no gold watch. Now you guys are free agents in a totally different way. You have to you have to have side hustles a lot of times. You know, in the fifties, ‘1 income could support a family of four. In the eighties, ‘2 incomes could support a family of four. And here we are in the twenty twenties, it’s hard for even two full time incomes to support a family of four.

Eric Brotman [00:11:16]:
And so even thinking about putting money away for retirement when you have all of those other things happening, it’s a it’s a more and more daunting, daunting version. So in your case, as you’re seeing boomers retire and you’re beginning to start to dabble in some Gen Xs who are thinking about it, and we are a proud group. Have you seen changes in the way that that narrative happens between folks who are right now 75 and folks who are right now 55? Is there a a defined change in that narrative in your opinion based on what you’ve seen so far? From a savings perspective? A savings perspective, a a philosophy perspective, a an understanding of retirement perspective. Are you seeing a profound difference between the generations already in just your neck of the of the woods here?

Andrew Harrell [00:12:02]:
Yeah. I think the as you mentioned, the the boomers right now are are used to living off of just their Social Security, and they might have a little bit saved, but it it wasn’t what they could have potentially had because they didn’t think that they needed it. And as things get more expensive for them with inflation and medical costs and everything in between, they’re starting to feel a little bit of that pressure. With long term care not being a factor as much as it was back then to what it potentially is now with with those people, having that coverage not in place is a is a big worrisome for for them. That then lends itself down to the group of 50 plus who we’re talking to and saying, hey. Look. This is, like, the prime time for you to start to explore, start to think about this type of coverage because when you wanna hang it up in ten or fifteen years, you’re gonna be glad you did this. Whether you use it or not, it’s gonna be there for you, and it’s gonna preserve some of your assets.

Andrew Harrell [00:12:49]:
So people start to to worry about that. They start to think about it. How do I save enough not only for retirement but for health care costs as well?

Eric Brotman [00:12:57]:
So since the advent of the four zero one ks, since defined benefit pensions went away and defined contribution plans became the norm, there’s been this theory that if you max your four zero one k and that’s all you do, you’re good. Why is that potentially not true?

Andrew Harrell [00:13:15]:
Because you’re capping your contributions. So if you’re you’re maxing your retirement plan every year, which is a fantastic thing if you’re able to do that. That only gets you so far because your income, whether you have cost of living adjustments or raises every year, it does continue to rise. So if you’re putting in, let’s say, $23,000 per year and your income’s a hundred grand, your savings rate’s 23%. However, if in a couple of years your income’s at $125 but you’re still putting in that 23,000, matter of fact, yeah, you’re still, saving your retirement plan contributions at the same level but your savings rate went down which means you’re essentially living one more because your raises aren’t going to those retirement plan savings. So you have to make sure that every time you’re getting a raise or an increase in pay, whether it’s an adjustment of 1% or whatever it is, just a little bit to try to keep up with the same savings rate level that you were prior to keep the maintained lifestyle going.

Eric Brotman [00:14:04]:
What about taxes? I mean, we have all these people with these big four zero one k’s now who don’t have a lot of tax diversification and, you know, the government’s broke, Andrew. I mean, the federal government, the state, we’re running deficits here in Maryland. There are, the the the tea leaves, and none of us have the crystal ball, but the tea leaves would suggest that tax rates could go up. Does that change the narrative around the the four zero one k where it was always make your tax deductible contribution when you’re in a high tax bracket so you can enjoy the income when you’re in a low tax bracket. Is that does that even exist anymore in the absence of planning to sort of fail?

Andrew Harrell [00:14:41]:
I think so. I mean, I I think people have varieties of income, but the higher income, ideally, if you’re doing pretax contributions, it does help you from a tax perspective. But one could argue with the federal rates being where they’re at right now at relatively lower levels, it might all makes make sense if you have the Roth option to make those contributions because you’re paying taxes now at a lower rate. But if your income’s going to be the same or higher in retirement, it it does make sense for that strategy. But if your income’s going to be lower in in years those years, it does warrant does the Roth make sense for you? The pretax contribution having it at one level and being taxed at either a higher or lower rate later on does make a difference for your contribution today versus your your your withdrawals later.

Eric Brotman [00:15:24]:
So, Andrew, I gotta ask you. What is your favorite thing about being a financial adviser for a living? This is your chosen profession. It’s not a job. It’s a career. Mhmm. It’s not even a career. It’s a calling as far as I’m concerned. What do you love about this?

Andrew Harrell [00:15:38]:
I love meeting people day in and day out from all walks of life, seeing the the different options that that they’ve come to us with, whether they’re at the early stages or they’re trying to figure out if they can truly hang it up and retire and go into the next stage. I I like to have those conversations and see where people are at and the things that they’re dealing with because that not one person or a couple or or household is the same. Everybody’s different. Every plan’s different. And seeing every single suit, situation, finding out the right solution for those people and putting a smile on their face and making them feel comfortable really feels like we’re making a difference and changing lives.

Eric Brotman [00:16:11]:
Alright. Well, you can’t get off this this stage without answering the the don’t retire graduate question. Andrew, I’m gonna ask you right now, what do you want to be when you grow up?

Andrew Harrell [00:16:25]:
Well, I would say Eric Broadman, but I don’t know if I want that after, you know, seven years here, but, thanks a lot. Yeah. What I will say is, I I definitely want, to be, an advisor long term. I wanna be a part of this company long term, and, whether it’s Eric Broadman at the CEO level or just, helping others grow around me and and taking the this place to to new heights, continuing to help people along the way is is what makes a huge impact, a huge difference for me. So, ideally, me, thirty years from now, more experience and better looking potentially.

Eric Brotman [00:16:58]:
Less hair. Less hair. You will have less hair.

Andrew Harrell [00:17:01]:
I’ll probably look like you on that standpoint. Thanks a

Eric Brotman [00:17:04]:
lot. You’re not getting shorter, Andrew. They’re gonna be it’s not that much shorter.

Andrew Harrell [00:17:07]:
They’re gonna cut that one.

Eric Brotman [00:17:08]:
No. No. No. Nothing. This is going live just as is. Thanks for coming on. Thanks for doing the diary segment with us. It’s been, it’s been fun, and and keep doing good work.

Eric Brotman [00:17:17]:
It’s important what you’re doing. You’re you’re changing lives every day.

Andrew Harrell [00:17:20]:
Appreciate you having me. Thank you.

Eric Brotman [00:17:21]:
I’d like to thank all of you for listening and watching today. If you enjoy our show, please subscribe, leave a rating on your favorite podcast platform, share it with your friends and family so they can join you on your journey to financial freedom. If you’d like to send us a topic or idea we may use in a future episode of Don’t Retire, Graduate, please post it on our Facebook page or tweet us at Brotman Planning. We’ll be back next week with another engaging guest and in two weeks with our next entry in diary of a financial advisor. For now, this is your host, Eric Brotman, reminding you, don’t retire, graduate.

Unnamed Voiceover [00:17:59]:
Securities offered through Kestra investment services LLC, Kestra IS, member FINRA SIPC, investment advisory services offered through Kestra advisory services LLC. Kestra AS, an affiliate of Kestra IS. Kestra IS or Kestra AS are not affiliated with Brotman Financial or any other entity discussed.