October 25, 2014

Preserving Income in Retirement

Dick appeared on CNBC’s “Squawk on the Street” on July 20, 2011. Dick expounded on how to preserve income in retirement and options available to retiree’s facing this situation.

Bulls and bears: How do men and women compare in investing?

  The Chicago Tribune cited Dick Van Dyke in February 2012 discussing his opinion on the differences in how gender impacts investing.


Manisha Thakor, a Santa Fe, N.M.-based personal finance expert and author; Dick van Dyke, author, retirement educator and founder of Springfield-based Dick van Dyke Financial Ltd.; and Daniela Schreier, clinical psychologist and associate professor at the Chicago School of Professional Psychology, discuss the dynamics of men and women when it comes to investing.

Q: How do men and women differ in their approach to investment research?

Thakor: Men don’t ask for directions, and women do. It’s the equivalent to driving around in circles even when the GPS says it doesn’t make sense. Today, there is a fine line between information and entertainment, which is starting to hurt men. There are so many blogs, magazines, TV stations looking for talking heads. The time devoted to those segments is so truncated, and they’re not allowed to give all the nuances to help you make an informed decision.

In the financial services industry, the default language is male-speak. Women do not feel served. You look at the advertisements, lingo, acronyms. Even the client-engagement and retention process (sales) is a male model.

According to LearnVest.com, 87 percent of women would like to work with a financial adviser, but only 17 percent do. A big part of the reason is … women don’t meet the asset threshold to work with the advisers, so they get disenfranchised.

When a financial adviser does really well for a man, it’s rare when the man runs around the golf course saying how great he did. A woman has a good experience, and she tells her friends. Why on earth would you not reach out to women, who are, for social reasons, one of the best promoters?

Schreier: Men always think they are brain-based, but the fact is they are emotional. They don’t look around themselves. For women, we are generally raised in connection with others. It’s very natural for women to hear other people’s experience, and then you place your eggs in that basket that has turned out profitable returns of people you trust.

Q: A survey by Mintel Group and Brinker Capital last year found that men tend invest in stocks, exchange-traded funds, futures and options, while women were more likely to invest in mutual funds. Why?

Thakor: Men will say, “I’m playing the market.” It sounds like a game. With women, so many of us are the primary or co-breadwinners of our families, and we’re flippin’ exhausted. We don’t have time to play the market, so we’ve tended to gravitate toward mutual funds. Ironically, women’s exhaustion may serve them better because they end up with more diversified portfolios, and they’re not trading as often.

There are two types of portfolio managers: active, where you go in every morning and try to buy and sell, and passive, where you just buy and hold your basket. Unless you want to spend 15 to 20 hours in research, you have no interest in investing in specific stocks, men or women. Men do trade more. It’s like when you’re driving down the road: Male investors are like the driver who keeps changing lanes, whereas a woman is the driver who stays in the same lane the whole time, but they both get to the toll booth at the same time. A lot of the time, it makes women look stupid and like we’re doing a lesser act, but actually it’s not a negative.

Van Dyke: Men meddle more in the process rather than handing it over. Now that the newer investment vehicles such as (exchange-traded funds are available), it works well for men and women, and it makes investing easier for them. So there is less difference now when they have more choices at lower costs.

Q: How does geography — international versus domestic — come into play?

Thakor: Often times, women end up with very healthy exposures because the mutual fund manager is splitting between domestic and international investments, whereas the men are picking individual options, futures and stocks, and they end up with asset allocation and mixes in the portfolio that are really stilted.

Schreier: If you look into the international setting, it’s much more about the level of education that women and men have, and the cultural acknowledgment of, “Can a woman be in business?” In Singapore, women are leading in their financial industry because they’re regarded as equal business partners. It’s an equal playing field because the education of men and women are equal, and the natural resources of the country are imports and exports. Whereas in India, men are still in charge of the household. In the cultural backdrop, women are the second class.

Domestically, I think it has to do with rural America versus urban life. More professional men and women are in the city than in the rural area, and that will affect how they invest. If you’re living in a city, you’re exposed to different products and clothing lines, and so you invest in what you know, what’s in front of you.

Q: In marriages, is it more common for men to do the investing? If women had been investing before marriage, do they typically continue after?

Thakor: It is not a gender thing but an interest level thing. Once the woman is engaged in her finances, she either pilots or co-pilots with her spouse. The pure abdication of responsibility is when the woman has had no touch point in her life that has encouraged her to connect with her finances.

Van Dyke: In a husband-wife situation, the wife will win out … to what she is comfortable with.

The way things are structured in today’s retirement accounts, they almost have to be separate because of IRAs, etc. So there are almost never merging of accounts. More often than not, men and women tend to work together as husband and wife and come to some type of a compromise in their investment philosophy, yet I do find some situations where they go their own ways.

The full article is available online at The Chicago Tribune.


Pay Off Your Home or Earn Interest on The Equity…

  The Chicago Tribune cited Dick Van Dyke in July 2011 regarding his opinion on paying off your home.


Keep it

Taking precisely the opposite tack is Dick Van Dyke, president of Dick Van Dyke Financial, Ltd., with offices in Oak Brook, Springfield and St. Louis.

“From a financial planning standpoint, it rarely makes sense to pay off a home early,” he says, noting that if you can pursue “interest rate arbitrage,” earning 1 to 3 percent more on money than you’d pay in interest on a mortgage, that difference can add up to a considerable sum over 10 to 15 years.

If you take, say, $100,000, and earn 2 percent on it over 10 years, your gains are 31 percent when compounding is factored. In an average mortgage of perhaps $300,000, you’ll come out approximately $90,000 ahead with just a 2 percent interest rate arbitrage over the course of a decade, Van Dyke asserts.

The catch is that that interest rate arbitrage must be achieved in very secure investments, he says. Banks don’t pay enough, and stocks expose investors to too much risk. “So I use a modified endowment contract with an A+ rated insurer, and it’s completely liquid and it’s safe,” he says.

Over the past two years, he’s used a modified endowment contract (MEC) strategy to earn in excess of 6 percent. The gains on the principal are tax deferred, and funds can transfer tax free to heirs, he adds. “It really comes down to what the individual or couple is comfortable with,” Van Dyke says. “If they’re open to the advice of a financial manager, and willing to override the emotional aspect of paying off the home, they can benefit from having a mortgage.”

The full article is available online at The Chicago Tribune.

Area housing numbers improve as national figures sag

Tim Landis of The State Journal-Register spoke with Dick Van Dyke on August 18, 2011 about the recent stock market turmoil.



Dick Van Dyke of Dick Van Dyke Financial in Springfield said he started calling clients when the market tanked early Thursday.

“Most of their portfolios are pretty well balanced, but they have positions in stocks,” said Van Dyke. “If you’re 20 or 30, this too shall pass. But if you’re 45 or 50, let’s be real, you can’t afford to risk your life savings.

Van Dyke said clients are concerned about the long-term prospects for stocks and the economy.

“They are a conservative group, and they see the underlying debt as the big problem for the economy, the federal-government debt and the world debt,” said Van Dyke. “They are kind of afraid this is the new reality and the new economy.”


Click here for the full SJ-R article.

Agent of Change: Never Too Many Questions

In August of 2011 Aviva USA recognized Dick Van Dyke for his work with his clients and his ability to listen and explain. Read the highlight below.

Agent of Change: Never Too Many Questions

What’s the greatest financial planning tool an agent can offer? Time to listen and explain, says Dick Van Dyke.

For decades, Dick Van Dyke has been well-known to the people of Springfield, Ill. Unlike the Hollywood actor of the same name (no relation), this Dick Van Dyke earned his renown as the owner of several successful retail and service-oriented businesses in the Springfield area. While those businesses taught Van Dyke the value of being a good communicator out in public, his most recent venture—Dick Van Dyke Financial, Ltd., which he founded in 2004—has refocused his attention on the importance of communicating one-on-one. As a retirement educator and financial planner, Van Dyke spends every day connecting clients with a wide variety of financial planning tools.

“I’ve always prided myself on making sure my clients understand how everything works and that they’re comfortable with it,” says Van Dyke, who works primarily with retirees and pre-retirees between the ages of 50 and 70. “I feel it’s my job to give them a good overview of the product and a basic working knowledge. Whatever they need beyond that, I should also supply.” Sometimes that means spending extra time going over the details of a particular product, which Van Dyke recently did for a local couple that had purchased an Aviva annuity.

Looking for Answers

The Robertsons* had worked with several other financial advisors before entering Van Dyke’s office. They had even filled out the paperwork elsewhere but changed their mind and walked away at the last minute. “They wanted to be very comfortable with what they were doing and why they were doing it,” says Van Dyke, who introduced the couple to an Aviva annuity product that was a great fit for their needs.

This time, the Robertsons signed the contract, but they still wanted extra confirmation that they had done the right thing. “Since clients don’t work with this industry every day,” says Van Dyke, “they might find that, after time passes, they’ve forgotten why we did what we did.” Other times, it’s the language of the paperwork that makes clients question what they’ve done. “For legal reasons, annuities are written in fairly complex terms,” says Van Dyke. “I try to boil down the language so that people can understand what it really means.”

In this case, Van Dyke spent many hours with the Robertsons, bringing in a specialist from Aviva when necessary. The result: Today, the couple is confident in both Van Dyke and in Aviva. “I spend as much time as needed with each client,” says Van Dyke. “I believe that’s the right way to do things.”

Reviewing Your Decisions

Even if you don’t have any questions about your Aviva policy, it’s smart to touch base with your agent once in a while, especially if Aviva is part of your retirement plan. Why? The retirement planning process is not a once-and-done thing, says Van Dyke. “You initially set goals, but as time goes on, your goals may change,” he points out. That’s one reason why Van Dyke meets with clients at least annually to review their portfolio.

If you haven’t talked to your Aviva agent recently—or if you haven’t talked specifically about retirement planning—maybe now’s the time to pick up the phone. As the Robertsons found out: It never hurts to ask questions. And it just may give you peace of mind.


Click here to see the read the full article in the Aviva bestYOU section.

Daredevils Make Bad Investors, Great CEOs

Dick spoke with Joe Mont and offered his thoughts on how “Daredevils Make Bad Investors, Great CEOs” for his August 11, 2011 article which appeared on The Street’s Retirement section.

The researchers admit that their particular study fails to fully factor in female behavior, in great part because of the lack of military data. They do, however, cite other studies finding that men are typically more prone to sensation seeking and a self-inflated sense of ego. When it comes to gambling, for instance, men often gravitate toward action-oriented games such as blackjack and craps, while women frequently enjoy more passive gaming with slot machines and keno (though there are, of course, many exceptions to such a broad brushstroke).

The findings jibe with what Dick Van Dyke, author, retirement educator and founder of Dick Van Dyke Financial in Springfield, Ill., has seen with clients over the years.

“We often get husbands and wives who are at odds and, more often than not, it is the wife who is taking the conservative posture and the husband that has taken risks throughout his life and has a tendency to want to still go for it,” he says. “That’s where they get into trouble with investing. They don’t see it as a well thought out methodology. They see it as more of a hunch or knee-jerk reaction. They fall into the trap of thinking that change means a solution and whenever something happens they are reactionary to it.”

Aggressive, “Type A” personalities are often looking for a big score, rather than time-tested strategies for the long haul, Van Dyke says.

“When it comes to investing and picking companies, they tend to do it more off of a gambling perspective more than a well thought out strategy,” he says.

Such an approach is very problematic the closer an investor gets to retirement, Van Dyke says.

“This is a time in their life when they need to be much more conservative,” he says. “We tend to work off what we refer to as a ‘gain and retain’ type strategy. When you get someone who is still in that Type A mode, they’re trying to make up for lost time. They will take on even more risk sometimes at that stage in life, because they feel that they have to accomplish something in a short period of time. Usually, it is disastrous.”

The full article can be found at The Street.com.

A Financial Planner’s Tips for DIY Investors

Dick contributed to an article by Miranda Marquit of allBusiness.com about her July 18, 2011 article on investing tips for “do it yourself-ers.”

Dick Van Dyke, a financial planner and retirement educator, and the guy behind Annuity Rates Instantly, knows that technology offers plenty of opportunities for those interested in DIY investing. “It’s the day we live in,” he told me. “The Internet allows people to see that they can do it themselves. Investing used to be shrouded in mystery, and now you can do it yourself. However, sometimes it’s almost as though you have too many options. It’s like going to a restaurant and having this huge menu. How do you choose what you want?”

Before you decide on an online broker, Van Dyke suggests that you take a step back and evaluate your options. “So many investing options sound good at first, and you need to look behind the scenes a little bit.” He said that your first check should be of fees. Look at what fees are being charged for transactions, and find out more about other fees the online broker might charge.

It’s also important, if you are planning to invest in funds, to be aware of what fees the fund charges. “Funds come with their own fees,” Van Dyke pointed out. “A run of the mill fund will run 1.5% in fees — just the upfront fees. You also have to look for transaction fees within the fund, as well as ongoing commissions to the broker. When everything is factored in, costs easily average 2%, and that can really make a difference in your overall gains over time.”

Van Dyke recommended that DIY investors consider index funds, rather than actively managed mutual funds. “Younger investors can really benefit from index funds. It’s so hard to time investments to hit it just right, but if you stay in it over a long period of time, stocks have traditionally outperformed everything else. Index funds and some ETFs can follow the broader trends of the market, and usually have much lower fees.”

If you are in doubt about your options, it might be worth it to consult a professional. “You can meet with a financial professional to chart a course, without committing to a long-term relationship,” Van Dyke said. “Many financial planners and investment advisors have a flat fee for a consultation, or an hourly rate. You can meet to chart a course for your investments, and then take that plan and implement it yourself.”

Be careful when getting advice, though. “Finding someone is sometimes hard,” Van Dyke acknowledged. “You should ask around. Find out from friends and family who they like. Your financial planner should be properly licensed and certified, and should have references that you can speak to.”

Whether you are a truly DIY investor, heading out on your own to invest, or whether you want a little direction and guidance, there are plenty of options. Technology has made it easier than ever to invest, and to earn returns that can help put you on the path to financial freedom.

The full article can be found at allBusiness.com.

Big Banks Bow Out of Reverse Mortgage Market

Meg Handley cited Dick Van Dyke in her June 29, 2011 article entitled Big Banks Bow Out of Reverse Mortgage Market.

The move comes as an increasing number of ill-prepared Americans are expected to head into retirement, which has some financial planners worried about how asset-poor seniors will make ends meet with one less option for retirement income.


“The government [has to] do something to shore up the program, to right the ship so that legitimate financial institutions will still participate,” says Dick Van Dyke, an author and retirement educator based in Springfield, Ill. “We’ve never seen anything like the amount of folks that are going to retire over the next 15 years that aren’t prepared for retirement.”


But Van Dyke doesn’t blame banks for exiting the market and says the government needs to revise the guidelines governing reverse mortgages to make the product more attractive to lenders again. Looking ahead, Van Dyke expects demand for reverse mortgages to pick up considerably, with many retirees relying on these products to be available to supplement their income stream after retirement.


Historically, the cost of reverse mortgages has been higher than conventional mortgages, but without enough lenders competing for borrowers, those costs could go even higher, Van Dyke says, further restricting the availability of the product for seniors.


“There’s nothing stopping banks from pulling out of this program,” Van Dyke says. “But as soon as the government realizes that this program has to be adjusted to work with the private sector, and the private sector really is the most efficient, they’re going to have to work hand in hand.”


“This doesn’t need to be a welfare program,” he adds. “For people who have legitimate equity in their properties, this can still be a win-win [program] if it’s designed properly.”


The full article is available online at US News & World Report.

WBBM 780 AM – Noon Business Hour

On June 1, 2011, Dick Van Dyke, inteviewed by WBBM’s Kris Kridel and Regine Schlesinger shared his thoughts on the  economy and financial markets as ADP employment numbers for May dropped way below forecasts.

Listen to a replay of the segment from WBBM 780 AM.

Eight Times When It’s Worth It to Pay for a Financial Guru

Sheryl Nance-Nash cited Dick Van Dyke in her May 10, 2011 article entitled Eight Times When It’s Worth It to Pay for a Financial Guru.

An adviser can walk you through a number of important steps, says Dick Van Dyke, founder of Dick Van Dyke Financial:  Benchmarking retirement goals and objectives, creating inflationary models, or determining how you can spend more in the early years for travel and new retirement activities while preparing for increased
future health care costs, for example.

In your 20s, you can make a few mistakes and still recover, because you have time on your side. That’s just not true later. “Retirement planning mistakes can be substantial and irreversible,” says Van Dyke. “Being forced to leave your home or suffering poverty is not pretty. A planner may be the difference between surviving and thriving.”

The full article is available online at Daily Finance.