Ep. 8 – Certified Financial Planner Susan Elser on Protecting Settlements

Susan Elser:

But you’ve got all of these emotional sides to it too, that your life has just been turned upside down. So having someone who will really listen to all the things you’re going through and help you sort out the financial details of it, I think is pretty important.

David Craig – Host:

Well, today, After The Crash, we’re excited to have Susan Elser as our guest. Susan is a certified financial planner and the president of her own company, Elser Financial Planning. This is After The Crash. I’m Attorney Dave Craig, managing partner, and one of the founders of the law firm of Craig, Kelly & Faultless. I’ve represented people who have been seriously injured, who have had a family member killed in semi or other big truck wreck for over 30 years. Following the wreck, their lives are chaos. Often, they don’t even know enough about the process to ask the right questions. It is my goal to empower you by providing you with the information you need to protect yourself and your family. In each and every episode, I will interview top experts and professionals that are involved in truck wreck cases. This is After The Crash. Let’s start off with just telling us a little bit about yourself, a little bit about your education. I know you went to IU. Why don’t you tell us a little bit about your background and I don’t think people know what it takes to be a certified financial planner?

What Does It Take To Be a Financial Planner?

Susan Elser:

Well, I have a degree in economics and I always enjoyed helping people. And to me, it was a wonderful way to match the analytical side with serving clients.

David Craig – Host:

And to be a certified financial planner, I don’t know if everybody knows. I mean you have to actually do some postgraduate work, talk to us a little bit about that.

Susan Elser:

Yeah. It’s about two years of study after a bachelor’s degree to go through the five sections of comprehensive financial planning. And then you take a test, and so it shows both experiences as well as knowledge.

David Craig – Host:

And so I mean there’s a lot of folks out there holding themselves as investment advisors or financial planners, is there a certain requirement to say that to be a financial planner, is there something you have to have?

Susan Elser:

Well, you want to see the credentials, CFP with a registered trademark, and that shows that they passed the test, they are a certified financial planner. You can take that a step further and become a member of the National Association of Personal Financial Advisors or NAPFA. Go to their net website, napfa.org to find an advisor. And those advisors are just not only CFPs, but also fee-only fiduciaries and adhere to twice the continuing education requirements of the CFP board.

David Craig – Host:

Well, and I think this is important and as I’ve told you and explained to my audience before, we do this podcast to provide information to folks that may not know. I mean I went to college for seven years. I’ve been practicing law for over 35 years, but you definitely would not want me to handle your finances. It’s not my area, it’s not my expertise.

Susan Elser:

But you’re an excellent attorney.

David Craig – Host:

And I’m smart enough to know my area of expertise and the areas that I’m not. And a lot of my clients are just like me. They don’t have any background or any idea how to go about preserving their assets and maintaining them and managing them. And I see that all too often where people go in, they get a lump sum as a result of a catastrophic event. And then in a short period of time, that money’s gone. In fact, there was a study that was published years ago, which showed that people lost those lump sum settlements relatively quickly.

Susan Elser:

Heartbreaking.

David Craig – Host:

[crosstalk 00:03:57] And they meant well and they thought they could do it, but they ended up not. And so I want my clients to be taken care of or anybody, even if they’re not my client. If they settle, I want them to be able to look in the future and be protected. And the best way to do that in my opinion, is to talk to somebody who’s qualified to do that.

Susan Elser:

I think you’re right. And there were studies that a year ago in March when the stock market fell 35%, one third of senior citizens sold all their stocks at the worst possible time. And we’ve gotten calls from some of those people who weren’t our clients at that time saying, how do I get back in? The rallies already come back. It’s hard to do it yourself. We are cold and dispassionate about managing money, undisciplined. And it helps to have someone on your side who’s been through this story before as the market goes up and down.

David Craig – Host:

And I think that is extraordinarily important in that to anticipate the future, to understand what should be done, to give that peace of mind going forward, to me is important. And when I sit down with people that are going to get a large settlement, I’m going to be gone. I mean they can always call me and my clients talk to me forever.

Susan Elser:

I know they do. [crosstalk 00:05:18]

David Craig – Host:

But that financial part of it, someone has to look out for these folks. And the worst thing I hear is, once my clients hear, or their family, their friends learn that they’re going to be in a mediation, or they’re going to go through a trial and they may get a large lump sum. It’s amazing how many people come out of the woodwork to help them.

Susan Elser:

Oh, yeah. I had seen it.

David Craig – Host:

Yup, either they want a loan or they just want to borrow something shortly, or if they have everybody that has a brother or a family member or somebody who’s a wiz at financial planning. And so today is geared to protect people from those folks. Some of them may be good, but they need to know what to look for. So let’s start off talking about if you were a client and you were somebody who was coming into a large lump sum, let’s start off, and you’ve touched on it, but what type of financial planner should they be looking for?

Choosing the Right Type of Financial Planner

Susan Elser:

So I think there’s five key things that you want to consider. We’ve already talked about someone who’s credentialed and has a CFP, and may be even better is a member of NAPFA so that you know that they’ve taken the fiduciary oath, don’t sell any products with hidden fees. Everything is transparent and they have to work in your best interest. Third, I think you want to research, do they have a clean compliance history? And you can do that by Googling the phrase, broker search, or go to sec.org and type in your advisor’s name and location and who they’re with.

Susan Elser:

And make sure that there are no compliance issues, and that means have they been fined, sued, have they had a lawsuit? Have they had any kind of bad event happen to them? You want to be very careful if your advisor has had something like that. Fourth, Bernie Madoff died this week. And I think everyone looks back on that and says, how could I have avoided being in something like that? And the key thing is not only, I mean he said he was a financial planner, but he never had a reputable independent custodian. For example, we keep our money at Schwab. So Schwab is an independent, reputable custodian just like Fidelity.

Susan Elser:

And separately from your advisor, they’re sending you statements saying here are the investments you own, here are the transactions went through your account, here’s the fee that your advisor charged you for the quarter so you have that check and balance. And then I think lastly, you want to find someone that you feel comfortable talking with because a good advisor is not only going to take the emotion out of investing, but is really going to listen to your goals and your concerns. And you don’t want an advisor to show up and start throwing ideas at you. You want someone who listens very carefully to what your concerns are.

Independent Fee-Only Financial Plans

David Craig – Host:

And I want to go back a little bit and talk about this independent fee-only financial plan because I know that … So when I’m going to wrap up a case and I’ve actually involved you in cases before or I’ve brought you in. And the reason I picked you was, one, I knew you, knew of you, and you had a very good reputation, but also because you’re independent fee, you don’t make money off of the things you sell. And people don’t understand that, there’s a lot of people who make money off of the advice they give and the client doesn’t even really know it. And let’s talk a little bit about that.

Susan Elser:

Yeah. So there are several products that pay an advisor a fee that the client or investor never sees. So a mutual fund with a hidden sales load or a hidden 12b-1 fee, a insurance product such as an annuity can have very high … It’s one of the highest commission paying products out there. And once you get into it, you may have to wait seven years to get out of it without paying a big surrender fee to cover the commissions that they paid the insurance agent. So working with a fiduciary, a fee-only person means that everything’s transparent, either they’re going to charge you by the hour or by the project to look at everything in your situation and provide written recommendations. Or they’re going to manage your money using a transparent quarterly fee that’s on your statements and it’s disclosed to you each quarter.

David Craig – Host:

And one of the other advantages that I know like working with you is that, just like me, I have a team of people that I work with. So when my clients hire me, they’re not just getting David Craig. I mean they’re getting a team of people who I’ve handpicked. They have to have the top qualifications or they don’t work with me.

Susan Elser:

And then you train them really well.

David Craig – Host:

Yeah. And that’s important. And you want people who are smart, who can communicate, who can get along with people, but know what they’re doing. Tell me a little bit about your team over at Elser Financial Planning.

Susan Elser:

Yeah. We’ve got a great team of 10 people. Everybody here is younger and smarter than I am. We’ve got a perfectly clean compliance record. We manage about a half a billion dollars. We use Schwab as an independent verification custodian. And our job is to provide great service at modest fees and about a 99.5% client retention because of it.

David Craig – Host:

And so, one of the things that I think when I’m sitting down with a client. And I’ve had you actually come to my mediations with me, so tell me a little bit about like what do you think is important like when you’re sitting down because every case is different. I mean sometimes I have people who need medical treatment for the rest of their lives. Sometimes I have a family member who’s lost the breadwinner in their family and they have children they have to support. I mean it’s all different, sometimes they’re elderly, sometimes they’re really young. So tell us a little bit like when you come into a room and with a lawyer and the lawyers got a client, what are you looking for? How do you go about putting together recommendations for someone?

Giving People the Right Financial Recommendations

Susan Elser:

And everything that the clients you just described share in common is that they’ve just been through an incredible emotional trauma, complete upheaval to their lives, whether it resulted in the loss of a loved one, maybe a breadwinner, a personal disability. They have to not only think about the economic consequences of that. So you’ve got lost income, you’ve got medical bills, you’ve got lost retirement savings, health care that your employer provided possibly. You may need support learning how to deal with a disability, but you’ve got all of these emotional sides to it too that your life has just been turned upside down. So having someone who will really listen to all the things you’re going through and help you sort out the financial details of it I think is pretty important.

David Craig – Host:

And the great thing about you is you listen to my clients. And you’re looking for that financial objective. I mean do we have kids that we need to put through college? Are you going to be able to go back to them and work? Are you going to have this loss of income for the rest of your life? And I think those are such … I mean like I said, every case is different and it takes you time to sit down and listen to somebody to get to know them and find out what the goals and objectives are.

Susan Elser:

You’re right.

David Craig – Host:

So let’s talk about, so when you sit down with somebody and you’re looking at that, I know with my clients, I know the cases that you’ve worked with, it’s not just a one-time thing. It’s not where you’d come in to my mediations and say, okay, here’s where you go. Like a structure settlement, I had Todd Morrow on here, and just after settlements sometimes are a good idea, sometimes they’re a bad idea, and sometimes they’re a part of the solution. But having an ability, once he does the structure, then frankly, he’s done. He’s out of the picture and the person starts getting their money whenever they’re supposed to. For me, it’s a bigger problem than just a one-time solution.

Susan Elser:

You’re right.

David Craig – Host:

And so address that a little bit about how you take somebody from the day that I get the case done on forever.

Susan Elser:

Right. Yeah. And so they’re trying to figure out a whole new way of life financially, emotionally, physically, and replacing a lot of the things that came with a job. So helping them figure out their taxes and a structured settlement can be a wonderful way to get a stream of tax-free income for the rest of your life. But it’s also important maybe to have some liquid wealth because so many things come up through life, the roof, the furnace, the car, and you don’t want to have to finance everything the rest of your life. So having some money in hand as well, but being aware of how to protect both of those things and not being tempted to sell your structured settlement when a commercial comes on TV or to loan your brother-in-law money from the settlement that you received. You have to think of a lot of different things, especially if you’ve never had a lot of money to deal with before.

David Craig – Host:

Yeah. And I’ve seen cases where I’ve settled in the tens of millions of dollars. And I’ve seen people even though in those cases, we may have structured it with four or five different companies. We put some money in trust, but it never ceases to amaze me that needs come up that are not anticipated. And if you don’t have some liquid assets, then that really puts pressure on all your other financial planning. And I assume that’s part of what you do, is you make sure that you kind of budget for or plan, that when these things come up that you can deal with it.

Susan Elser:

Right. And there’s an art to learning how to have a cow for the rest of your life and only drink the milk, and never risk sacrificing what’s going to take care of you the rest of your life. And it’s not intuitive, nobody’s born with an understanding of how to manage a pot of money. And it comes with tax implications and estate implications. And if you marry again, a prenuptial agreement. So there’s just a lot to think about when suddenly a pot of money comes to you.

What it Means to Become a Financial Planner’s Client

David Craig – Host:

So walk me through, so if someone becomes a client, so I settle a case and they become a client of yours. Walk me through how that looks, I mean for the rest of their lives, how often do you meet or what do you do?

Susan Elser:

So we like to meet with our clients every three to six months, and then of course have conversations in between. Last March, you can imagine, we were talking to a lot of clients because for them, it feels tumultuous watching the value of their accounts, watching on TV the market going up and down. For us, it was just a great day to buy with both hands. I mean the market’s down 35%, we were busy buying. But you’ve also got to help people get through that time, not looking at your investment statements is a very effective way to do it. And knowing that you’ve got someone on your side taking care of what you need to be doing, which is taking advantage of lower prices. And then every year to look at the withdrawal rate to make sure that you’re never milking the cows so hard you’re going to kill it. And there are a lot of studies on depending on how old you are, how much you can take out of your portfolio every year to make sure you never run out.

David Craig – Host:

So clients, they get ongoing regular advice from you, and then as things change or their life’s changed and they come back and you’re there to kind of help take them through the whole process and give them guidance and have that peace of mind knowing that somebody is looking out for them.

Susan Elser:

That’s why every conversation with a client begins with what’s new because there are changes.

David Craig – Host:

Yeah. Well, and I tell you, recently, I got people around here talking about bitcoins and all kinds of things. I don’t even know what they’re talking about. And that scares me because I’m thinking if my office, if I’ve got employees talking about those things and talking about whether they should invest in them or not, that really scares me because we’re not sophisticated financial planners or advisors. And I think what my clients are thinking, what would they do right now if they had a lump sum of money and somebody in their family who they really thought a lot of told them to go do this. And you see that all the time, I’m sure.

Susan Elser:

Oh, and you can watch on TV, there’s a company that sells gold which is not regulated as a security. And they show commercials showing a chart that if you would buy gold during this limited seven-year period, well, you would’ve made a lot of money. I would be in jail if I got on TV and did that because investments are regulated and you have to show long periods of time and the downsides as well as up. And I remember back in 2011, gold had an all time high. And I was getting calls from clients for a year before that, why aren’t we buying gold? Gold is going up, up, up. Why aren’t we buying it? And then gold fell 40% over the next seven years. And clients quit calling me and asking me why I wasn’t buying it for them.

Susan Elser:

But it just goes to show you that just because something looks like it’s a sure thing, gold doesn’t pay a dividend. It doesn’t pay interest. You’re not investing in a business that generates a profit. It’s not a bond that pays interest or a CD that’s guaranteed. So you just have to understand what it is you’re investing in. And you may want to put a little bit of money and something fun like cryptocurrency or bitcoin or gold, or whatever it is that you’re interested in. But you want to keep sure that the bulk of your portfolio is broadly diversified. You’ve got the right amount of growth assets and the right amount of stability to match your risk tolerance.

David Craig – Host:

One of the other things I see that always upsets me is that, where a lawyer will put all the money into a structured settlement.

Susan Elser:

Yeah. That worries me, too.

David Craig – Host:

Yeah. And I see that and even with the best of intentions, but then I see these clients and I’ll see comments from other lawyers on LISTSERVs that I belong to about their clients wanting to cash them because something has changed. And now things have changed dramatically, they want to sell and they get nothing, next to nothing for selling these. And like you said, there’s all these TV commercials that are enticing people to sell. And I think, oh my god, all the work that went into getting them the result, all the hardships that they endured in order to get to it and to be entitled to it and then it goes away like that.

David Craig – Host:

Whereas I like to bring in the structure people and the financial planner so that you can kind of say okay, what part of this portfolio can be in structure where it’s tax free. But unfortunately, structures, obviously the interest rate that they get is low because it’s a long-term play. And so if you are dealing with financial planners that know what they’re doing, they understand that. They understand the risks, they understand the reward, they understand the benefits. But when I’ve had you involved and there’s additional investment other than a structure, the clients don’t come back to me and say hey, let’s sell my structure. And so I assume part of what you do is make sure that if structure is part of the portfolio, that you’re protecting them so that they aren’t going to sell it for the cheap.

Susan Elser:

You’re exactly right. And part of that is a structured settlement may come with the 2% inflation rate. And if we go into a 5% or 7% inflation rate, you’re going to want to have assets like stocks, which historically are much better at keeping pace with inflation and moderate inflation. So you want to have balancing assets.

David Craig – Host:

Okay. And I’ve seen things, I like to have my clients have some flexibility. And so I’ve even had cases where a large sum has been placed in trust. And then I’ve had the trust call me and say, David, this person wants to purchase a house for he’s now married and he’s adopting children and he wants to buy a house and he’s going to fix this house up. And it’s not a good investment because this house, once he fixes it up, it will be the most expensive house in the neighborhood. It’s not good. And I remember talking to the bank. And so the client called me and said look, I’m getting married, I’m adopting these kids. And I want to stay in the house that they grew up in, so they can stay in the same school district.

David Craig – Host:

I want to expand the house, fix it up. And the bank was like, no, he can’t do that. And I’m looking at his payments and his money. And luckily, we had it diverse enough that we could do what he wanted to do. But I was thinking, boy, that would be terrible. The bank was doing its job. The bank was looking after what financially makes sense. But this kid or this adult now is going to get close to a hundred million in his lifetime. He’s certainly going to have the money to do whatever he wants to do. I understand the bank’s role, but I also understood him wanting to get … And luckily, by having a lot of different assets and a lot of different funds in different places, he was able to solve that problem. But I think it’s important to have flexibility.

Susan Elser:

I agree with you.

David Craig – Host:

So the biggest problems you would foresee when you see somebody who gets a lump sum, who’s never had this kind of money at all and probably living paycheck to paycheck. What do you say some of the challenges that they face?

Susan Elser:

I could think of one client that you and I worked together with. And a young woman inherited money at an early age and she was amazingly disciplined. And that’s something that if you are raised to always want to protect money for a rainy day, retirement, or later on when you need it, it’s a lot easier to take the financial advisor’s advice to do that. To only skim up a little bit every year to supplement your settlement, enjoy life, but to make sure that you’ve always got money set aside. And if you were raised with parents who live paycheck to paycheck and preferred using money to buy things, enjoy things and never really kind of thought about saving for retirement, it’s going to be hard for you to take that advice because it’s foreign, you’ve never seen it modeled.

Susan Elser:

So one thing I keep trying to encourage my clients to do is realize, yeah, there’s that great saying that don’t worry that your kids aren’t listening to what you say, they’re watching everything you do. And if they see you defer gratification, not buy something you want to buy, look at a budget and say nope, we’ve already been out to dinner twice this week. That’s the budget. Nope, that vacation’s not going to happen because we already spent more money on the new refrigerator. They have to see those things in action to really understand delaying gratification, impulse control, saving for a rainy day.

Additional Advice for People After Settling Their Case

David Craig – Host:

What else is there? I mean as far as for people who are coming into a large sum of money through something like this, obviously, I mean you’ve sat through the mediations, you know how traumatic it is just living for these people to go through that. What advice, if any, any additional advice you might give them as far as going through the process, the lawyers, the financial planners, I mean all of that, what type of advice would you give?

Susan Elser:

Yeah. So I think the best advice you can give someone is to simply take your time, let things settle, spend the first year or two getting through the enormous upheaval that your life has occurred and take care of your estate, get your investments in order, figure out the tax planning and just not make any rushed decisions. It’s the same advice you would give someone who is recently widowed that you just take the first year and get through the grief and the upheaval before you think about what am I going to do with the money. Second thing is I would never tell anybody how much money I got, because like you said it is sadly people coming out of the woodwork with both hands trying to be opportunistic. And these may be loved ones, but it’s just so much better practice to never tell people that you received a large settlement. And to just take a few years to sit tight, don’t change your standard of living materially and get through the basics.

David Craig – Host:

And I think that’s great advice. I mean I see lawyers who publish when they get a huge result. The first thing they do is they want to publicize it, not because it helps the client, but because it helps the lawyer. I have never once published any one of my results.

Susan Elser:

I know you haven’t.

David Craig – Host:

And that’s a reason, is because putting that information out there, first of all, you have the family and friends and acquaintances. But then you also have a whole bunch of people that are bad people who also see that published and then they’re going to try to prey on these people. And that’s just sad and so we don’t do that. I would encourage clients or people out there to pick lawyers who they don’t see advertising those results. I’m happy to discuss my results if you want to talk to me, I’m proud of my results. I’ll take my results up against anybody, but they don’t need to be in the papers. They don’t need to be on TV. They don’t need to be published.

Susan Elser:

I completely agree with you.

David Craig – Host:

Yeah. It is tricky enough to try to get through one of these horrible situations, but then to have people preying on you, which there are people out there who definitely will prey on you.

Susan Elser:

And unfortunately, money sometimes brings the worst out of people.

David Craig – Host:

Yeah. And I always tell people is that the worst of times does not always bring out the best in people.

Susan Elser:

You’re right. And you really want a settlement for someone who’s been through some awful upheaval to be a blessing, and you want it to enhance their lives, to make it better, to help them rebuild, to help their children, to help them all emotionally get through this. And privacy is probably one of the best ways.

David Craig – Host:

Well, Susan, is there anything else that you want to add about yourself, your company, about financial planning at all?

Susan Elser:

No. I think you asked great questions, David, and it’s just a joy to get to talk about financial planning.

David Craig – Host:

Yeah. Well, thank you so much for being a guest, and I appreciate it. And I appreciate you taking the time.

Susan Elser:

Thank you. It’s a pleasure.

David Craig – Host:

This is David Craig, and you’ve been listening to After The Crash. If you’d like more information about me or my law firm, please go to our website, ckflaw.com, or if you like to talk to me, you can call 1-800-ASK-DAVID. If you would like a guide on what to do after a truck wreck, you pick up my book, Semitruck Wreck, A Guide for Victims and Their Families. This is available on Amazon or you can download it for free on our website, ckflaw.com.