Drew Thomas 0:00
Fast fact, Wall Street in lower Manhattan is named after the location of a real wooden wall, built by the Dutch colonists in 1653 to protect themselves from the British and Native Americans. I'm Drew Thomas, and you're listening to Bank Chats.
Drew and Frank 0:38
Welcome to another episode of AmeriServ Presents Bank Chats. I am Thomas, your host, and we're going to talk investments today. Investing is something that I think is somewhat misunderstood, or maybe there's just not even misunderstood, maybe there's just a lack of understanding as to how investments work. And so, with us today is Frank Lapinsky. He's the President and CEO of Westchester Capital Advisors. And we're going to be talking with him and discussing all sorts of things investment related. So hi, Frank, how are you? Good. Good, Drew, thanks for having me. Absolutely. Thank you for being here. We definitely appreciate it. Because I don't know the answers to these questions.
Drew and Frank 1:16
I hope I do. Yeah. So, tell us a little bit about yourself and your background, where you're from, how you got to where you are.
Frank Lapinsky 1:24
Sure, I was, came up through the ranks of investing and managing money for over 37 years now, that started a long time ago been through many market cycles. I manage about a half a billion dollars overall, close to 500 clients, you know, and so, I've been around I've seen, I've seen a lot of different market cycles, economic issues going on. And it's something we deal with every day, every, so investing is 24/7 365. It never shuts down after we go home after 4:30pm.
Drew Thomas 1:59
Yeah. So, when you say market cycles, you're talking like you know the stock market, that sort of thing? Okay.
Frank Lapinsky 2:04
We've been through, I've been through many recessions, many inflationary type periods that we're going to know a lot of market cycles that contain wars, unfortunately, or are economic issues that come about, so you have many of them I've seen, so I've been around.
Drew Thomas 2:19
So, basically, whenever the nightly news shows us, the DOW and the NASDAQ and things like that, you actually know what the numbers mean.
Frank Lapinsky 2:25
Correct, those are the three that most people do pay attention to. And we focus most of our attention on the S&P 500 of those three, usually get the DOW the NASDAQ and the S&P 500. And so, we focus on the S&P 500 index.
Drew Thomas 2:40
Okay. And you mentioned inflation in there, too, so I wanted to kind of talk about that a little bit, too. But before we get into that, all the little details, what does an investment advisor or investment company do?
Frank Lapinsky 2:52
What we do is we take monies from our clients, and my accounts range from anywhere from $5,000, up to $69 to $70 million per account. Whenever I talk to a client, whether you have $100, you have $10 million, it's all important. So, what we try and do is when a client wants to invest monies for the future, whether it be for the personal trust account or a 401k, we sit down and we talk strategy with the client, and you see where their risk tolerance is. So, basically, somebody wants to, they've garnished some wealth, and they know they can potentially manage it on their own, because nowadays, markets are moving much faster than whenever I started 30-some years ago, so you really have to be nimble. And so, when a client sits in front of us, we sit down and we get to know him very well. And through those conversations, then we make a strategy of investing the monies for the, for the future.
Drew Thomas 3:51
Okay, so you said something like 401k. So, really, a lot of people might be affected by this just through their retirement through their employer or, or some other profession as far as that goes, right?
Frank Lapinsky 4:01
Correct. When I started back in the early 80s, where I was at my first job, we didn't have a 401k. Now, that's the limelight of investing is a 401k, for someone who's working, and everyone who has a job, I'd say nine out of ten employers have a 401k. And it's so important that all the investors have to realize that if an employer matches the money that you put in, let's say up to 3%, at all efforts, you should be putting in a 3% because you're making 100% on your monies before it even gets invested. Okay, so that's very important for all 401k participants to realize, too, and then not only that, but past the match every year, the way you can make your life simple, but yet, you could garnish a lot of monies at the end of your working career is add 1% to your 401k each and every year. So, let's say you start out 3%. Okay, next year, you put one more percent, and that's 4% and you keep going the whole way up as far as you can, the goal is to least get to 10% for an individual. So, if you have a spouse and your spouse at 10%, if you can get to 10%, that's 20%. I believe, personally, that's enough investing, because we all have bills, we all want to live a life, we don't want to put all of our money for the end of the end of our working career.
Drew Thomas 5:24
I'm eating ramen now, but I can eat, I can eat steak later.
Frank Lapinsky 5:28
There you go. So, but it's important, and most people don't realize that, you know, again, now reiterate this, whether you have $5,000 or $70 million, every dollar you have of your own is so important, you want to make it work for you and grow.
Drew Thomas 5:40
So really that's what you're doing, you're getting your money to work for you, because, generally speaking, and again, I'm gonna say this probably a couple of times throughout this, and we always have a disclaimer, but like, when you're talking investments, there's no guarantee of a return. But there are averages that you work with, and you can look at over time, right? So. So, theoretically, or practically, you're, you are getting generally some sort of a return over enough time, that you're investing your money, and you're gonna get back more than what you put in.
Frank Lapinsky 6:11
And that is correct. And you have to stay the course, because if you watch the news, the news is mostly giving you bad news. On the air might scare you, especially in the investment world. In the investment world, you have what is called bulls and bears. A bull is somebody who's very positive on the stock market let's say, and a bear is one is the opposite, the negative. So, to make TV interesting, they usually pit both the bull and a bear against each other during a day. And it sort of confuses you. And that's why news is more entertaining, if you will, even in the investment arena, it's always very important you have a good investment advisor to guide you through these times.
Drew Thomas 6:51
Yeah, I agree with you there. I mean, no matter what the news is, the bad news sells. I mean, I hate to say it that way, but bad news sells. If it didn't, then every nightly news would be talking about the local skateboarding dog and not about some horrible cataclysmic event that has happened that day. Right? So, I get what you're coming from there. Now, you said, you know, this obviously can affect you as an individual, like through your 401k or what have you. You said 401k is the most common. Are there other retirement vehicles out there that people might be aware of?
Frank Lapinsky 7:21
Yes, well, there's what is called IRAs. And the best IRA to be in is called a Roth IRA. And also, a lot of 401k plans have Roth 401k. And what a Roth is, that you pay the tax before you invest the money. So, if you're investing $100 a pay into let's say, a Roth 401k, you pay the tax up front, and then when that money grows, and if it doubles, triples, quadruples, there is no tax whenever you take that money out, versus the way most traditional IRAs and most traditional 401ks act, is its pretax. So, if you double triple your money in an IRA or 401k by the time you retire, every dollar you take out is taxable. That's why it is better to pay the small amount of tax on your investments each and every pay, and then when you garnish that huge amount of money throughout 10, 15, 20, 30 years, everything that comes out Uncle Sam does not touch because you paid it upfront. That's the greatest investment vehicle my opinion to be in anything that says the word Roth in it.
Drew Thomas 8:32
Okay. So, you said, you know, 20, 10, 20, 30? So, essentially, there's that old adage that like, there are two best times to start investing right? 20 years ago, and today, right? That's correct. That's correct. So, can you ask your employer whether they offer a Roth 401k or a standard? Or do you have a choice?
Frank Lapinsky 8:51
Yes, you do. Most employers are offering a choice of either the standard or the Roth. And it really, and I will say this, most people when they invest their money in a 401k, it's very confusing. It's sort of like death, nobody wants to talk about it until the very end. And then sometimes that's too late. I tell all investors, whether you're a 401k investor or personal investor, if you look at your statements at least once a year, and know what's in it, if not, again, if the markets go up 20%, but your account only went up 10% because you didn't have good investments, it's very hard to get that 10% back when the markets went up so much. But yes, you should talk, talk to your employer, talk to the vendor who has the 401k and just see and it's just it takes very few minutes that you could, you could do to try and find out this information and it will really help in the long run. But again, I will tell you drew most people, unfortunately, do not pay attention enough to their investments. Yeah.
Drew Thomas 8:51
And you said about having a trusted advisor. I mean, I've seen the papers that come out that have all of the different investment that are as part of your portfolio right in your 401k. And I can tell you right now that there are a lot of them that I wouldn't know, A from B from C. So, I agree that's having somebody that you trust that you can work with and talk to matters a lot. Because unless you make this your life's work, you're not likely to know every little investment that's in there, right? I mean...
Frank Lapinsky 8:59
That's correct. It's very, unless you're novice, and he may be 1 out of 100 people that really looks at it every day and every night. But most people don't want to deal with it. Because as you said, it's very confusing. You don't know the investments. That's why even here at our company at Westchester, we offer our phone numbers 24/7 365, to all of our personal clients. And when we do educations to the 401k plans, they also get access to us 24/7. How many people honestly have done that over the last 20 plus years? I'd say about a dozen. So, again, and what people don't realize is 30, 40 years ago, when 401k weren't very popular, people weren't putting a lot of money away, while a lot of younger folks that are starting in their 20s and 30s are gonna have hundreds and millions of dollars. And it really means a lot to have good advice.
Drew Thomas 11:14
Yeah. So. So, when we talk about that, that good advice, and the people with experience, I want to touch a little bit about some of these companies that are out there now where you can do your own investing, right? They have these companies where you can, yeah, and companies like Robin Hood, and things like that, like, is it a good idea to invest a lot on your own like that? Or do you really feel like you really probably should have a past history or education in this before you, you start investing?
Frank Lapinsky 11:40
I would say yes, but I will also add one, one other concept to that or one other idea, that before you start investing on your own, you should be maximizing your 401k or your IRA, pre-retirement and once you feel that you've put enough money away, and you want to, I'll call gamble with your money by going to a Robin Hood thinking you're gonna throw a dart at a dartboard or, or you hear something really hot on TV, you want to invest in, do that with excess cash that you may have. It's sort of like use of cash that you may go to a casino with. Yeah, and you're willing to lose it. But before you do any of that you should be funding your 401k or your IRAs. And then again, there's nothing wrong with doing that, but you don't want to take all your retirement money and go to a casino.
Drew Thomas 12:26
Yeah. And that's kind of, I think, I think you're right, I think it's a good analogy, there's a certain amount of gambling associated with that. Because if you don't know the company, and you're talking to somebody on the street, or a buddy or something that says, hey, I got a hot stock tip for you, you don't really know whether that's a good investment or not, right. So, that's why a professional advisor really is where you'd want to go.
Frank Lapinsky 12:47
And that's true, because even if, even if the company is good off a hot stock tip, what happens if we break out into a bigger war that we're in right now with Russia, Ukraine, or over in Israel? Again, the company may be sound, but it's the market that will bring that company down. So, if you put too much money into one individual investment like that, again, it could be a very good company, it’s not very advisable, because you don't know what could happen when you wake up the next day.
Drew Thomas 13:13
Yeah. So, that brings me up to something that you mentioned earlier, and that I wanted to circle back to, like you said about the news, and then you're looking at the, you know, the numbers and so forth, but a lot of this stuff is affected by world events. Correct? Right. So, and even if you may, or may not be invested, if you're a self-employed person, maybe you don't have a 401k, maybe you have an IRA or something along those lines, or maybe you're just relatively young, and you haven't started investing in anything yet. This still affects you, right, because those world events affect the monetary system and things like inflation, right?
Frank Lapinsky 13:45
Correct. Correct. Yeah. It's very complicated. It's something again, that when you invest, you got to look for the long term. We are always going to have wars which have been around since the beginning of time, we're always going to have issues internationally, which has been there for quite a while. Even the weather could, we get a hurricane somewhere that could affect insurance companies, it could affect building companies. So, yeah, there's a lot of extraneous type of, of issues that you have to look at, not just at looking at an investment that you're in, it's well advised to stay diversified as much as you can with your investments.
Drew Thomas 14:22
Okay, so let's touch on that now. Let's touch on that word, right, because you hear that all the time, diversified. So, let's define that maybe break that down a little bit. What does that mean to be diversified?
Frank Lapinsky 14:31
Diversify can take on several meanings. Number one, it's always advised that if you're going to invest for your 401k, we use our 401k. Okay, don't want to pick just one mutual fund and put all your money into that fund because there again, it may work for a while but with market cycles, you may be in a fund that could get hit really hard if, if inflation is around or if oil prices skyrocket. [It] all depends on what type of fund that you're invested in. It's advised that you look at anywhere from five to 10 different mutual funds for diversification. That's what diversification is, spread your money out, you don't want to, again, you don't want to go to a casino put all your, you know, I'll use this as an analogy. If you had $100, and you went to casino, most people wouldn't put that $100 in at one spin. They would, they would try and break it up amongst many spins to try and have the odds in their favor to win. Well, this is what you do with a 401k, you don't want to put all your money into one investment one mutual fund, you want to diversify it. Now, there are investments out there that have several mutual funds underneath it like an umbrella. And that's good. A lot of them called lifecycle investing, target date investing. So, there are investments, but most people because they don't understand will like to throw their arms up and say I'm just gonna put all in this one fund. Well, there again, if the markets up 20%, but that funds only up 10%, you've left 10% on the table. And that's, that's not a good thing to do. So, that's one way of diversifying is to make sure you have multiple investments. The other way of diversifying too, is that you don't put all your money into five technology funds or five financial funds. Okay, even though that may be the hot topic on TV today will be the financials and technology, especially with AI coming up. You want to make sure that the funds that you're diversified, you stay even more diversified by looking at small cap international, large cap, just again spreading your money out to be a little safer, if you will.
Drew Thomas 16:28
So, you would have something theoretically, and then again, we're using these as examples. We're not saying this is what you should or shouldn't do. Correct. But you might have something in the medical field and then something in the technology field and then something in the services field or something along those lines.
Frank Lapinsky 16:41
That's right, that's correct. Because again, something that's very hot today could be very cold when you wake up the next day and find out that you're down 20% or 30%, your investment.
Drew Thomas 16:51
So, we had talked a little bit about the concept of you know, investing over time, and you'd said something could be you know, big today down tomorrow, or at the same time, if you're putting all your eggs in one basket, like your mom and grandma told you never to do. Right? Correct. And you say, yeah, well, this is down, you know, this is the market is up 20 but this is down to at what point and again, maybe this is where an advisor comes in where you've had experience, at what point has enough time passed, that you can make a determination that yes, this is not likely to perform as well as say something else?
Frank Lapinsky 17:25
The way you can look at that is, you should always pick an advisor that you pay a fee to for performance, and the word is performance. So, if you have an advisor, and that advisor should be gauging his or her selections of your investments against indexes, like what we see on TV at night, the DOW the S&P or NASDAQ, because once again, anybody could throw you, me, we could all go, let's call Fidelity up and buy some funds. But if you don't monitor those funds, you don't keep an eye on those funds, then if the market does go up, 20, you may be down 10. And you again, you can't get that back, once again very easily. So, find an advisor and pay that person, what they call an annual fee, not a commission, and you keep their feet to the fire, or they have to show you how well they've performed, then it's up to them to show you performance. And we do that at Westchester, that's how we operate, we're not on commission we're on, we're on an annual fee, even our 401k, all of our selections, we show performance every quarter. So, that's I think that's very important. And unfortunately Drew, most money managers cannot outperform the market year in and year out. So, the newest concept is, if I can't beat the indexes, I'm going to come up with something different and they call it goal based investing. So, what they're saying is, if you have $50,000, let's say, in retirement funds and you want to grow it to $200,000, well, then that's our goal. It may take 20 years, but if you, versus if you say okay, you have $50,000 and I want to judge you on your performance, then that'll get you to that goal, your goal much quicker. So, goal-based investing is really just looking at the market values growth over time. So, again, you can be up 10%, not 20%, but the advisor kind of slides underneath the carpet with that, with that goal base. And I've grown up just the opposite way where it's all performance based. How well are we doing for our clients and how well are the 401k participants doing? We pay a lot attention to that.
Drew and Frank 17:25
Yeah, that makes sense to me, because again, you would think there's a commercial on TV when our clients do better, we do better, right? It's the same idea, right? Correct. That's the same concept. Yes. Yeah. So, this isn't Wolf of Wall Street where you're being... no know you're right. Yeah. So, let's touch a little bit too on the concept of inflation because I think a lot of people misunderstand or, or have a bad understanding of why inflation is what It isn't how it's calculated. And how that affects the markets and so forth. Because you hear then, you know, your stuff in the news, well, the Feds gonna raise or lower interest rates based on inflation and so, so can you talk a little bit about what inflation is really?
Frank Lapinsky 20:13
Sure, inflation is basically what you pay for a product in a store. And I'm gonna use that very, at that level. So, if you went to buy a gallon of milk, and let's say it was two or three years ago, that one gallon of milk could have cost $4. Okay, today, several years later, a gallon of milk is cost $5, $5.25. So, that increase from a couple of years ago means that the producers of that milk and the stores that sell the milk is costing them more. And why is it costing more? Well, what happens is, inflation comes about a lot of times whenever we have periods in our economy of high unemployment, which means that people aren't looking for jobs. So, to produce the product, it's going to take more people, more overtime than are currently working. So, when a company has to pay more for their workers overtime than hiring another worker, then that goes to the bottom line, that's going to cost more to produce a product. Or if you have fewer people in general, then what happens is, we'll use a car manufacturer. During COVID, when everything was shut down, manufacturers weren't producing cars. So, if you wanted to go get a brand-new car on a lot, guess what you're up 20% or 30%, because they had fewer cars on the lot. Now, where we're at today, a couple years after COVID, more and more cars are being produced, so the cost of these cars are coming down. So, inflation is too much money chasing too few goods. And that's basically what it is. So, it's, it's a, it's a tough concept to sometimes grasp. And when the Fed starts to raise interest rates, again, that could be several reasons why that's going on. Because our inflation is too hot. They want to slow things down, basically, as they raise interest rates. But after COVID, COVID changed everything. It's very difficult in the investment world now to look back at the last recession we had, let's say back in '08, and say, okay, this is how it's going to turn out. Well, since COVID came about, we're writing history not reliving history.
Drew Thomas 20:24
So, there's, so you kind of go back to those market cycles you talked about, correct, right now we're kind of in a cycle that has never really been seen.
Frank Lapinsky 22:35
For a lot of economists, and I'll give you an example. Last year on TV at the beginning of 2023, every economist was calling for a recession, a hard landing, basically, we're going to crash in the stock market. And it was just the opposite. And one of the things that all the economists said they missed last year at the beginning of the year was the resilience of the consumer. Because with COVID, we had, unfortunately, so many deaths, and people are just getting all that money from the government. As the money was running out from a lot of the consumer pockets, they had to go back and get jobs. Well, because there was so many job openings, a lot of places were offering starting wages that were much higher than normal $14, $16, $18 an hour. So, what that did last year, and this is where all the economists missed. As these consumers went out to get these jobs, they were able to still continue to spend just like what they were spending with the government stimulus money. And so that pushed our economy along quite well. And that's why we had a 20+% return in the stock market. That's another reason why, when you asked earlier, when's the right time to invest, and it is today, you know, or 20 years ago. If you wait for a market crash, or you think you're gonna wait for the world to come to an end, you're too late. Yeah. And you really have to be just really religious when you're investing constantly.
Drew Thomas 23:58
Yeah, I think that the biggest takeaway that I've gotten from, from reading and, and even in my own personal experience, what I've had like in my retirement savings, and things like that, is just understanding that there used to be a thing back, I think it was like in the 90s it was really hot for a while, like day trading and stuff like that, like, this isn't day trading. It's called investments for a reason, you're investing your money, you're investing your time, there is a time cost to this, right that you that you have to be willing to accept, correct.
Frank Lapinsky 24:30
And the earlier you can start investing, the less you'll have to work as you get older. You know, I'm in my 60s and I'm gonna go to normal retirement, but a lot of these younger kids coming out of college now they're going to have these great matchings in their 401k. Even though security may not be the same by the time they retire, if they get good advice, good education from my investment advisor or from their employer, they won't have to work half as long as you and I are working now.
Drew Thomas 25:00
So, if I wanted to come to you as an as an investment advisor, well, I guess, let me start with this. I have a 401k through my employer, do I deal directly with my employer on that? Or do you work as an investment advisor with a company to create that 401k? Or do I go directly to you? How does that, how does that work?
Frank Lapinsky 25:17
You go through your employer for the 401k if they offer a 401k and sometimes, they call it a 403b, if you're in the government arena of investing. But yes, you go through your employer, and then your employer hires somebody like us here at the Trust Company, hires AmeriServ to manage their 401k plan, and then we go out, and we'll educate. Okay. And then we have, we have websites that they could go to, the participants, but yes, it all starts with first going through your employer.
Drew Thomas 25:45
Okay. Now, things like an IRA, which you mentioned earlier, I could do that on my own, or I get that through my employer?
Frank Lapinsky 25:50
You could do that on your own. Once again, we have IRAs that we manage for, for our customers and our clients here at the Trust Company, but that's something that the employer will not offer.
Drew Thomas 26:02
Okay. So, is there an advantage to one type of retirement vehicle, as opposed to another like, is there a 401k advantage versus an IRA advantage? Or did they have pros and cons both?
Frank Lapinsky 26:14
They both have pros and cons both. But I would suggest that if you have a 401k and there is a matching, and believe me, I use 3%, there's some companies that will match up to 10%. So, if you put in 10%, they'll put in 10%, that's your first goal in life is to get to that 10% level or whatever match it may be. Then if your employer has a Roth 401k, that usually gives you a good amount of diversification. And that's probably better before you go to an IRA. Now, if you're a more mature employee for a company, and you're maxing out your 401k, then you can start looking at your IRAs. But until you or your spouse maximize your 401k contribution from what you could put in, I would say that the 401ks are a better option at this point than an IRA.
Drew Thomas 27:04
Yeah, you've, you've mentioned it a couple of times, and I think that it's worth sort of focusing on just for a second this, this concept of a match. So, really, when you say 10%, just make this, make the numbers nice and easy. I'm making, I'm making, I'm making $100,000 a year, right? So, 10% of that is what you're saying I should be trying to put toward my 401k. Correct. And if your employer offers a match up to, in this case, say 10%, what they're doing is, they're putting that same amount in. So, so really, I'm getting double my investment.
Frank Lapinsky 27:35
You're making 100% on your money before you even put your monies to work in the stock market or bond market, wherever it may be. Yes, that's what a match is called and so again, using your own monies as a percentage coming out of your pay, and whatever. And then there's, there's a misconception that I'm only going to put as much in as the employer matches. Well, again, that goes back to my earlier comments that your first goal is to get to that match, then after that every year, if you put 1% more into your 401k, when you're younger, you will not have a paycheck shock when that is happening versus there are a lot of investors, I should say a lot investors, a lot of workers out there that wait until they're 50 to start saving their 401k. Then all of a sudden, they go out and they put a 15% withdrawal out of their account out of their every two weeks pay paycheck. Now that's a paycheck shock when you see 15% are coming out. So, again, the earlier you could start the better, but definitely get to that match for your employer.
Drew Thomas 28:35
I'm kind of reminded of that. I don't know if you've heard of this, but you probably have based on your, your, your history and what you do like, there was that, that grade school thing where someone said to you, would you rather have a penny a day doubled every day for 30 days, or would you rather have a million dollars, right? And everybody says, oh my gosh, I'd rather have the million dollars. But if you actually do the math, that penny a day, for the first two weeks, you're still only like three bucks. Right? But, but by the end, you've gotten quite a bit of money. And I think it's an interesting lesson when it comes to investing, especially things like retirement is that, it's not until you get to that last 2, 3, 4 years, where all the sudden your money is really multiplying, we're multiplying, right? Yes. But if you didn't start early enough, you'll never reach that multiplication at the end.
Frank Lapinsky 29:19
And that's why a lot of workers will work past Social Security, because they weren't able to save enough. Now we all have financial issues in our life. Yeah, but it's just planning, planning early, and trying to save as much as you can. Yeah. And again, these younger workers, ones that are single, maybe still living at home just to have a college, there's no marriage, there's no house yet or, so if they could put even extra in as a younger person, then when they do end up having more financial responsibilities as the years go on, then they can maybe pare that back a little bit
Drew Thomas 29:55
In your experience working with clients, how have you and how successful have you been in convincing younger people who think that it's more important to have the money now? Because I think sometimes you tend to think to yourself, like, you know, I don't know, when I was 15 years old, I wasn't going to be 50 for 100 years. I know that makes no sense, you're invincible, right? But you're 15 you're not thinking about when you're 50 years old, and suddenly 50 is like, right on top of you. So, how do you convince somebody who's younger, to maybe make that sacrifice and just put a little bit of money away? Have you, have you ever had that conversation with someone?
Drew and Frank 30:28
Yes, I mean, we have, I mean, even my son started a job, and I begged and pleaded him to put at least 10% in. And he is doing that, because once again, he is only 18 years old, and he has no responsibilities at this point in time. But you're right, there are a lot of younger workers, when they start out as paycheck to paycheck, they want a really fancy car, you know, which may cost a lot more. And again, again, it's good to have possessions like that, but it comes a lot with the company that they're at, if the company offers an education program, like we've seen with a lot of companies, people are realizing, this is the key, we are all living longer. You know, again, the average life, whenever Social Security started back in the 30s, guess what the average lifespan was, for an adult? I really don't know. 65, and guess when you were collecting Social Security, at 65. Right? They never thought we're gonna live as long as we're living now. And this is what really opens up the eyes of some of the younger investors. Oh, wait, I'm gonna live to 85, 90 now. And all of a sudden, they start thinking about this. And again, it's through the repetition of educating the participants, and that's what we do very well to trust company. We get out there, we offer our services to come once a year to a company, and usually the first year or two is like deer in the headlights to a lot of investors. But as we go back year after year, they start to retain what we're talking about, or they start paying attention a little bit more.
Drew Thomas 30:29
Have you ever had a situation where somebody insisted that they wanted their money invested in a particular place, or a particular vehicle, or particular company, and you knew it was a bad idea? What do you do in that kind of situation? Do you try to talk them out of it? Do you, are you obligated to do it anyway? How does that work?
Frank Lapinsky 32:17
Well, we try and talk to them a little bit about diversifying. I had an aunt that she would watch Jim Cramer on TV. Right when she was done watching him in the afternoon, she'd call me up say, hey, I want to buy this stock, because Jim Cramer was, was suggesting it. Yeah. Well, I talked her off the ledge. But let's say she wanted to buy 300 shares; I talked her down to 100 shares. So, again, you could give advice to people, and that's what we're in a business, we give advice. We don't know, honestly Drew, what's going to happen five minutes from now and the stock market, you know, as much as I know. Our advice is looking from a long-term investing perspective, as well as keeping your investments diversified. So, if somebody wanted to go and buy 50,000 shares of Apple, we'd be trying to talk them down a little bit. But if they wanted to do that, of course, we would, we would do that for them. But most people aren't like that, quite honestly, that gets back to the Robin Hood, investing that you talked about that a lot of people are on there. And that's more gambling because again, some there, I've seen in my career, some very prominent companies that you thought would never go bankrupt, wake up one day, and they're bankruptcy, CEOs or crook, something like that something may happen. So, it's tough out there. And getting an investment advisor is probably one of the best things you could do at a young age to listening to investment advice. Let's put it that way as well.
Drew Thomas 33:02
I think that I've read so many, you read so many stories and hear so many sports figures and things like that, too, that have, you know, they get a contract with the MLB, NFL, NBA, whatever it is WNBA, and they have more money than they know really what to do with at that point. They're young, they don't understand what's going [on], and they blow through it. And suddenly you find out that, you know, they're 35 and bankrupt and working for you know, a, a taco joint or something like that. I mean, it does happen and it's really sad, like, so again, having that person in your corner has to, has to be good. You guys also have on your website that you are a fiduciary. Can we talk a little bit about what a fiduciary is? Because I think that kind of dovetails in some of the things we've talked about already in terms of how you make your investment decisions and, and things like that, right?
Frank Lapinsky 34:28
Yes, correct. So, a fiduciary, plain and simple, is a fiduciary supposed to look out for the best interests of their client, and I'll give you an example. If I was on commission, which I am not, I've never been on commission, I may, I may get you into an investment that has a payback to me much greater, even though it may not be the best investment for you. But I'm getting a return on that investment as a commission to myself because I will try to pad my pocket more with monies, than try to make you earn more monies through what you're investing. So, that's, that's not a good fiduciary. A fiduciary is one that sets down a strategy, buys the best possible investments for the client based off their risk tolerance, you know how much they really want to involve with risk. And you're doing the best you can for the client, not taking into account your own gain, your own self gain. That's what a fiduciary is. And years and years ago, before, we had a lot of regulation that we have now, there were like any profession, you have great doctors, you may not have doctors that are so reputable, you have great investment advisors, you may have other investment advisors that are really out there just to make as much commission as possible, and not looking at the best interest of their clients. Nowadays, that is changing the SEC, the rules coming about are making investment advisors more tight with how they invest money with their clients. They're really watching over them a lot, a lot more now. So, we're, we're a fiduciary, we always work in the best interest of our clients.
Drew Thomas 36:08
And I think that's important when you're looking for an advisor to maybe look for somebody like that, that is really, again, you do, you do well whenever we do well, it's sort of sort of a thing. Like, because it is a, as you pointed out, like five minutes from now, you don't know any better than I do, necessarily what's going to happen. There, there are trends, there are ways to look at things over time, but at the end of the day, you don't really know what's going to, like nobody really knows what's going to happen at four o'clock today when the bell rings, correct. Right. So, and you said like too, that it's not even just like it may have been where there were only a few markets that you had to follow, like, you know, when the New York Stock Exchange closes, there are stock exchanges around the world that are just opening. And so, stock is you know, now, I don't know how much that transitions. I don't know, if a company like Google, for example, do they trade on the, the Japanese stock market as well as they do on the New York Stock Market? Or how does something like that?
Frank Lapinsky 37:05
Yeah, they do. They trade on all the markets like that. And right now, as I mentioned earlier, an investment advisor, a good investment advisor as I mentioned, it's 24/7 365. Because when our markets close, like, as you mentioned, other markets are just opening. And so, when I come in the next day, like tomorrow, I'll see what the international markets have done or, again, it could be some tragedy, unfortunately, that happened abroad overnight that we have to deal with. And it's just not the markets. It's, it's the whole world. Its geopolitical. It's everything.
Drew Thomas 37:40
The way you're describing it, it kind of reminds me of this sort of like, this domino effect, or a butterfly effect of sort of things. Like, you don't think about the fact that, well, I've got myself invested in, I don't know, shipbuilding, and then a worker strike at the docks is putting a hold on, on all the assembly that's going on. So, that's going to affect you. And then that affects where they would shop and where they would spend money because they're not bringing in the money that they were bringing in before. So, just trying to keep all that straight as a novice, as a person doing it yourself, has got to be daunting, I mean because you, it's, you just can't think of how many different ways one event can, can, can possibly branch out and affect other things.
Frank Lapinsky 38:22
And that's right, and I believe that there are a lot of people out there, a lot of investors that try and do it on their own. And it's tough, and you will get, it's like winning the lottery, or going to the casino again, they'll hear that one person that hit it big. And however, you don't hear about the other 100 plus people that went out of money lost money. So, it's very tough to manage your own monies by yourself. And again, there are a lot of good investment advisors, people that could be out there, very reasonable fee. Again, my suggestion is you always pick somebody that doesn't charge any commission, but they charge you an annual fee. And then you hold their feet to the fire on performance. That's very important.
Drew Thomas 38:22
Yeah, and I think it's, it's again, one of those old adages but you don't always, nothing's free, right? Well, nothing's good, free, let's put it that way. They're very rare that you get excellent advice, or excellent service or any, an excellent product and had paid nothing for it. So, you have to probably expect that you're going to pay a little something for this if you have a good quality investment advisor. But ideally, your that's going to be again, an investment that's going to pay off for you because they're going to be watching over you and making sure that your money is taken care of. And
Frank Lapinsky 39:36
Investment Advisor also, it's not only a person who can make you money, but communicates the communication is probably about just as equal 50% to the investments that that person has for you. Because if you're not aware of how well you're doing, and they don't share their performance, then again, if you're in the dark, how do you have any faith in that person? Yeah, so it's very important that not only the investments but the communication be there as well for a good investment advisor.
Drew Thomas 40:04
Okay, so just to sort of start to put a bit of a bow on some of this stuff here, you know, what, what type of information would you ask for a client? Or what would, what do you look for if someone comes to you and says, hey, I want to, I want to invest something in? Yeah, I'm, I'm maxed out with my employer, but now I have some extra money I want to talk to you about.
Frank Lapinsky 40:23
Then we what we do is we, well as I mentioned earlier, we start to sit down and say, okay, let's say you have $100,000. What are your near-term goals for this money? Are you going to buy a new car? Are you going to remodel your house, are you gonna go buy a house down in another state? And if somebody comes to me says, you know what, Frank, I don't need the money for the next 5 to 10 years. Then after that, so we kind of get like the initial background on what their plans are, their usage for the money, if they will, if they tell me that it's just disposable money that they don't need right now, then we start to formulate, we talk about how much risk they want to take on with the risk, meaning, you want 10% in the stock market, 20%, 30%, or none at all. So, then we start to formulate a risk profile. And then from that point on, we get it invested, and then we start to report to them on a quarterly basis. Again, that's that consumer communication. And believe me, when a market from 2008, which was our last recession, basically crash in the markets, 2021, markets went basically straight up. So, all the clients, even when I was trying to call them and talk to them, oh, we're good, you don't have to call me, they, they're watching the news. And they see. But when 2022 came about, we had an unprecedented drop in both the stock market and the fixed income market, which usually doesn't happen like that, then that's when people got very nervous. So, the more that you could talk to them on a regular basis, the more they'll be prepared for something like 2022, from an investment standpoint, comes about. There again, it's not just initial meeting, getting their, you know, their goals for the money or learning their risk tolerance, it's the constant contact with them, as time goes on.
Drew Thomas 42:18
I can truly appreciate that. Even if you take it out of the investment world and put it into some other things, you know, if you drop your car off at the mechanic, and you say, hey, just do what it needs. And then you never hear from him for a day or, a day or two, you start to wonder like what's going on, like, you know, like, I don't understand, you start to get nervous, you start to wonder. And in reality, it may be something as simple as they didn't get around to working on it yet. And there's nothing happening. On the other hand, your car could be in pieces, and there might, so that communication back and forth is very reassuring. I think for people, even in bad times the communication, the, the awareness that you know that something bad is happening too, right that you're not you're not sitting there not paying attention that I think that, that means a lot to people.
Frank Lapinsky 43:04
It does, and you know, to be quite honest, Drew, we have the same investments that an investment advisor down the street has. What it comes down to, I'd say 95% of my clients, is becoming part of their family, getting close to them, so that they could trust you. And that's the big word, trust. Because if they trust you, then you could not only retain them as a client, but they'll end up giving you potentially more monies to invest, becoming, again, a family member, if you will. And that's what I try to do with a lot of my clients, get very close, become friends, and become a family member that way. That's, that's very important in this type of line of business. Yeah.
Drew Thomas 43:43
Well, this has been incredibly enlightening. And I really hope that a lot of people are sort of, you know, expanded on their knowledge as I have been, because honestly, this has been, this has been very, very interesting to talk about. I'd love to have you, I'm sure there's probably more you could tell us, but.
Frank Lapinsky 44:01
Too much probably. Yeah, more than you want to hear.
Drew Thomas 44:03
But no, thank you very much for doing this. If you have questions or anything like that, that you would maybe like to post Frank or us, obviously go to ameriserv.com/bankchats, there's a form out there, you can fill out, you can ask questions, you can, you can give us some feedback about the show. Let us know what you think. Obviously, you know, we always encourage you to subscribe or like the podcast and you can follow us and don't miss any episodes. Frank, thank you very, very much for your time.
Frank Lapinsky 44:30
You're welcome, Drew, appreciate the opportunity.
Drew Thomas 44:40
This podcast focuses on having valuable conversations on various topics related to banking and financial health. The podcast is grounded in having open conversations with professionals and experts with the goal of helping to take some of the mystery out of financial and related topics, as learning about financial products and services can help you make more informed financial decisions. Please keep in mind that the information contained within this podcast and any resources available for download from our website or other resources relating to Bank Chats, is not intended, and should not be understood or interpreted to be financial advice. The host, guests, and production staff of Bank Chats expressly recommend that you seek advice from a trusted financial professional before making financial decisions. The host of Bank Chats is not an attorney, accountant, or financial advisor, and the program is simply intended as one source of information. The podcast is not a substitute for a financial professional who is aware of the facts and circumstances of your individual situation. People can invest in many things. We invest in our families, in our hobbies and passions, and we invest money to provide for our future. But just as having a good teacher can better help you to learn a new language, having a qualified investment advisor who can work with you to help reach your financial goals is typically better than going it alone. No one can ever guarantee a positive result, but there are people who have the experience and knowledge to help make a stronger educated guess when it comes to your 401k, IRA, or other investments. I want to thank Frank Lapinsky for joining us on the program today. You can find out more about Westchester Capital Advisors by visiting their website. The link is in the description. My thanks as always to Jeff Matevish for his editing and production skills. AmeriServ Presents: Bank Chats is produced and distributed by AmeriServ Financial Incorporated. Music by Rattlesnake, Millo, and Andrey Kalitkin. Episodes can be found wherever fine podcasts are downloaded, or by visiting ameriserv.com/bankchats. For now, Drew Thomas, so long.
Drew Thomas 46:57
West Chester Capital Advisors, Inc. (“WCCA”) is a registered investment adviser and a wholly owned subsidiary of AmeriServ Financial Bank. Keep in mind that investing in securities involves a risk of loss that you should be prepared to bear. Over time, assets will fluctuate and be worth more or less than the initial invested amount. Depending on the investment type, differing risk levels will exist. WCCA cannot offer any guarantees or promises that a client's financial goals and objectives will be met. WCCA does not provide tax advice. Recommendations on specific investment vehicles are meant to be generic in nature. You should consult your personal financial adviser to discuss the right vehicle for you. There can be no assurance that advisory services will result in any particular result, tax, or legal consequence. WCCA does not charge fees based on a share of capital gains on, or capital appreciation of, the funds of clients, but rather on the total assets under management. This fee increases as your account value increases. See WCCA’s Form ADV disclosures to understand how fees are charged along with other important information about their services.