Smarter Money Matters | Market Insight, Insurance Tips, 401k Private Equity, & Tax-Smart Strategies

Video Transcript:

Hey everybody, welcome to once again another edition of Smarter Money Matters with your wealth doctor Jeff Camarda aided by my smarter brother Jonathan Camarda, chief investment officer of Camarda wealth and our super certified financial planners Lou and Anna.

And we’re going to begin with the market and an economy update. There’s been a lot of press, and I haven’t printed all, but a lot of press about how frothfully valued the market is, particularly the US market. This headline from the Wall Street Journal, five signs of a market bubble investors are tracking. And from the Financial Times out of London, Wall Street’s euphoria sparks bubble warnings. And there certainly is no arguing that the market has really flown once again back up into space since the tariff scares earlier this year. so Jonathan, I know you spent a lot of time perusing these articles. what’s your sense by by many valuation metrics? the the stocks are you know at pretty lofty levels and someone valued a thousand times earnings I think rather thousand times sales which is even more earlier this week. But what’s your sense? Well, not so much my sense. just kind of looking at the numbers. If you look at the S&P 500 right now, we’re at about a 22 PE ratio price to earnings. you have three sectors that are really higher than that. Elevating. you got technology at about 30. discretionary is about 28 and I think you have industrials in 24. Don’t quote me, I hope my memory, but below that you do have some that are more cheaper parts of the market. So I think what you’ve seen is is that we talk about lofty valuations, but it really is in a core small amount of stocks. Now, historically, when that’s been the case, like during ’08 and such, we’ve seen that, we’ve had hard crashes, but it’s not really happened over the last few years because of the way passive investments are, which we’re probably not going to go into here, but it is a little idiosyncratic. It’s still concentrated primarily in tech. I don’t think you mentioned that in the three segments, but that’s where the big valuation. Yeah, the MAGA stocks, maybe not even so much, but right in that range where you’re starting to get you know, your crypto, your technology, etc. Stocks that are kind of carrying the weight under performance of course have been your real estate that may change. you’ve had underperformance obviously in your consumer staples. Now, believe it or not though, consumer staples valuation wise is priced at that same 22 PE as the S&P and yet that is probably overvalued if you look a lot of them. Those are what we call value. What’s your overall sense? Because there’s a lot of data there. I’m not sure how much of it our audience will follow, but you know, a lot of folks are what are you are you what Lou and and Anna are you hearing from your your clients at Camarda Wealth that they feel valuations are stretched a little bit and concerned about that? Yeah. Yeah. Clients are definitely concerned and that’s that’s one of the you know one of the topics conversations on our on our quarterly calls right now is is certainly talking about that. Yeah. And how could you same? Yeah. Lots of questions around just how much some of these technology companies have have grown in stock price and in value in just a couple of years. a lot of concern if some of these AI related companies are actually sustainable and more and will become profitable because they’re enormously expensive to run. so, Jonathan, you know, I guess in a nutshell, because you’re, you know, such a bright guy and have so many facts and figures at your disposal, you know, you could find your way through the forest with a with a million trees, but some of us get lost. What is your overall sense of the momentum of price increase in the market? Do you think we we’re going to see see continued increases, you know, for the for the short term or you think that there may be some pitfalls ahead? Yeah. Interesting. This is generally a seasonally time weak time of year, right? we go into August and the market has continued to chug on. So I think the biggest thing that you’re going to need to see because we have seen a slow down in some of the technical internals as you mentioned cash cash flow and such and different metrics are slowing down. So I think to take that next leg up you’re going to have to see sustained momentum there. And one of the caveats is on the economic data when you look at we’ve had mixed data off of the tariffs and the such here with CPI and PPI. So even though we have had a weakening labor market, the Fed, if they don’t do if they don’t go really aggressively cutting in the fall, you could see the market potentially taking that fall and that pullback, which I think will be bought. You know, we’ll get into that later, but you could have a a pretty decent retrace and that would probably be healthy. and that would be during a season that you would expect it. So like like some of the folks here are mentioning some of the concerns, AI is a game AI is a game changer. What did he just say? They thought that we’re reaching a treacherous period. we might see u some instability in market. I think that’s what he said, right? Is that what he said? You could see some instability, but I think AI is a game changer. So, the valuations don’t apply the way they did in the past. This is a new terrain and this isn’t 1999 in a sense. The valuations weren’t there. Valuations are here and the companies that are doing this already goliaths. They’re not many like Yahoos back in the early. All right. So, I guess the distillation of that is that you’re you’re still generally bullish over the short term. Okay. Good. And the as we say into kind of the economic forecast, I think everybody will agree the economy has held up US economy a lot better than was feared with all the the changes, particularly the tariff changes. are you getting that sense, Ann or Lou, that you know, our clients are concerned about the economy? You know, labor is weakening. It’s hard to get a job out of college now. There’s a lot of signs that the labor market is is cooling off before AI is really replacing workers. you find clients are concerned or much push back on that? Not too much push back from what I’ve heard and know you can maybe speak on it. I don’t know from your perspective. I haven’t I haven’t experienced too too much of that u lately. So I think most of the clients that I’m speaking with instead of being concerned about labor more concerned about the potential for inflation because of these tariffs in their like everyday spending. obviously we haven’t seen much of that yet in the data but that is definitely a concern that they have brought up. Yeah. Well, very good. The well, that that was great, you know. So, until next week, the I think you know, we’re at least our near-term perspective is not a whole lot of choppiness, but we are entering kind of a scary time of year on top of a lot of opinions of over valuation. So, the party may not go on forever, but hopefully, you know, it’s not it’s not midnight yet.

Moving on to Timeless Wealth Wisdom. Today’s topic is what you can do when your insurance company denies your claim. A lot of folks are not aware that you have options. And increasingly insurance companies, I mean, they’re for-profit companies. They’re looking to make money. The more claim money they pay out, which affects what’s called their loss ratio, the less profitable they are. So, they certainly have an unfortunate incentive to not play pay your claims. And we found that this has actually become pretty common. So in so what do you do? You know, we recently actually Kim and I went through a situation where her mother had the the reasonable claim, I think, and after going through the the adjustment process with our not so good neighbor insurance company, the claim was denied. And a lot of people just walk away. She’s 90 years old. She doesn’t know what to do. but there is a function an important function called a public adjuster and if I and and Daniel here is a public adjuster he’ll tell us about himself in a moment. and my understanding of their function is basically to represent the insured against the insurance company understanding insurance law and what the policy says and look for opportunities to refute the claim denial and get some money for the insured. Is that right Daniel? That’s correct. So tell me about and what why don’t you state your full name and your company name so folks can look you up if they like. Yeah, of course. My name is Daniel Madden. I’m with Trust Public Adjusting Group. we’re out on Daytona Beach Shores. that’s our headquarters. I live up in Palm Coast. and we’re licensed to cover the entire state of Florida. So And you’re speaking to a national audience, by the way, but that that’s probably enough. I’m sure that we can find you. So tell us, you know, basically what is your function? What do you do? You get calls from folks like me a lot. Yeah, of course. We get calls from a lot of different types of people. we work a lot with contractors that will refer us business a lot. but you know, there’s a lot of clients out there that have you know, damage from the hurricanes or pipe breaks, fires, mold, lightning, hail, you know, the list goes on. If it’s under if it’s covered under your insurance policy, then we can go after it or should be covered. And you get a call like, you know, at the beginning of the process or at the insurance company says, “No, it’s not covered. Look at page 16A. You know, you slept too long last night. It’s not covered. Yeah. So, that’s actually a great question. we can get involved right at the beginning and we can actually file the insurance claim for you or if you are underpaid or denied, we can then step in after the fact and take over and vastly increase your insurance settlement or overturn a denial, which is what happened in my case. Actually, I’ve used public adjusters a couple times in my lifetime, most recently with you now. but where we went through the process and had them inspected by the insurance company and they sent their adjuster out there and gave us you know a not very believable reason for denying the claim. so typically is I’m guessing that’s really when people you know are motivated to come and find somebody like you. So what should they do if you know if they have similar fact pattern where Anna the one of our super CFPs finds that you know a meteorite has fallen through her roof and the claim is denied. What should she do? Well, she should definitely give me a call immediately and have me come out there, take a look at the property and, once our agreement is signed, you know, we’ll begin our process of writing our estimates. And so, what is the process of? Do you go through any due diligence or, you know, or field underwriting to see if there is legitimate claim before you do all that stuff? Yeah, of course. I I go out there first before having the client sign any contracts. it’s no money out of pocket at all. So, I’ll come out there at first we use a Matterport technology to scan the entire property inside and out and we also take a bunch of photos and within that process then I will determine whether or not this is a viable claim or not. You know, if it’s something that won’t meet the deductible and I can very much see that, you know, I’m going to be upfront and honest with the client and be like, you know, look, the damage is really just not here. But if you read the contract, say, gee whiz, this looks like it should be covered. You got denied. And then you go to work basically representing the insurer to try to get money insurance. And how frequently would you say there are unreasonable denial of claims? It’s honestly more frequent than you would think or hope. Half the cases you see more than half. I wouldn’t say half of the time. I’d say claims get unreasonably denied. Probably at least 40%. You know, 30 to 40% of the time. And one of the triggers, you know, that I remember from my my certified financial planner studies back in the the midst of the dawn of time, is that if, if you’re aware of a problem, you see that there’s a roof leak, say, and you just let it drip and drip and drip and don’t do anything to remediate it, you’re screwed. It’s when you discover, you know, you need to take action. Once you discover there’s a a potential claim, you have to contain it as best you can and and and and not wait. call the insurance company right away. Is that accurate? Yes. Well, yes and no. So, yes, you should take action immediately and either file an insurance claim or call a public adjuster immediately. but for hurricane claims specifically, you do have one year to file the insurance claim from when the hurricane hit. It used to be two years and before that was three, before that was five. But I think it’s the act of discovery that triggers it, right? If you see that, you know, you can’t just let it fester and get worse. If you’re not aware of it, it could be going on for years, but if you are not reasonably aware of it, then that claim should still be viable. Honestly, no. so it really just depends on where the water originated from. So, if you had a roof leak back in 2022 from the hurricane back then and you just noticed it now, you know, it’s not going to be covered because that claim is now that storm is too old. But if you noticed it back in October, you know, now it still can be covered because it’s within that statute of limitations. Okay. And any, you know, any concluding words again because we’re talking to people across the country and hopefully we haven’t had we don’t have concerns about hurricanes in Iowa for a little while. Tornadoes tornadoes indeed, you know, and and plane shifts on the on the West Coast. But you know you know any parting words of wisdom as to what people should be aware of and when they should call a public adjuster. Yeah. So we also do free inspections. So if you’re if you think you might have any sort of damage, just give us a call and we’ll come out and inspect completely for free. And if you’re worried about the hurricane that might be coming in the next week or so, or tornado, we can actually come out there and do an inspection before anything happens. Do you do anything with tsunamis or is that kind of added? Well, yeah, we definitely can do it 100%. I have a question. So, is your company national or they’re just in Florida? We’re licensed in the state of Florida, but the public adjust adjusters I’m sure exist everywhere. So, for those in Florida, why don’t you repeat your phone number twice, you know, so we can plug you a little bit. Yeah, of course. My number, my cell phone number is 860-3357971.That’s 8603357971. Thank you very much, D. And just, you know, the last thing I’ll say is hopefully you won’t need a public adjuster because you got to pay a portion of the of the recovery to them and often some upfront fees. Hopefully, you won’t need one. So, my suggestion is go through the claim process, see how you do. In many cases, they’ll pay it. you know, they they’ll be honestly treated. But if you think you’re getting, you know, if it’s denied, you don’t think it’s fair, by all means, reach out to a public adjuster. They’re really good at what they do. Any parting questions for Daniel? Thank you so much, sir. Always a pleasure. Hope to see you again soon.

Now remember folks, not all PSAs are the same. it’s important to be very cautious when hiring public adjusters, being sure to conduct due diligence and carefully review the contract before hiring, especially if you have a valuable  claim.  There is no fiduciary responsibility with public adjusters- so be sure to find one that will keep your best interests in mind. Please be careful, there is a lot of reported misconduct in this space, just like for financial advisors. While I’ve had good experiences with the 2 I’ve needed in 25 years, one of our team reports  she learned the hard way that there is  little regulation that governs this area.  She’s currently in a legal battle with the public adjusting firm she hired and reports there is a very real chance she could lose her entire home…all because she says she trusted the wrong company.

Here are some steps to help you find a trustworthy public adjuster:

1. Verify Licensing and Credentials:

• • Ensure the public adjuster is licensed in your state. You can typically verify this through your state’s Department of Financial Services or relevant licensing board.

• • In Florida, you can verify a public adjuster’s license by visiting The Florida Division of License Search.

• • Look for certifications from reputable industry organizations like the National Association of Public Insurance Adjusters (NAPIA) or, in Florida, the Florida Association of Public Insurance Adjusters (FAPIA).

2. Check their track record and reputation:

• • Online Reviews: Search for online reviews on platforms like Google, Yelp, and Facebook to gauge past client experiences.

• • References: Request and contact references from past clients, particularly those with similar claims, according to Five Star Claims Adjusting™.

• • Professional Associations: Check if the adjuster is a member of any professional organizations that require members to adhere to strict ethical standards, notes Tutwiler & Associates Public Adjusters.

3. Inquire about experience and expertise:

• • Specific Claim Type Experience: Ensure they have experience handling claims similar to yours (e.g., fire damage, water damage).

• • Years of Experience: Ask about their experience and how long they’ve been licensed as a public adjuster.

All right. So, our next segment is something we’re calling Wealth RX, wealth prescription the which is kind of a Q&A based on input that we’ve gotten for questions from clients and others. and a really really interesting topic. You know, Wall Street big money managers have for years been trying to get the private equity and other non-publicly traded products into the huge 401k market, which is maybe the biggest investment market in the world. I don’t know, but it’s really really big. And that’s finally, you the regulators have finally permitted this to where you’re able to access private equity and other illlquid products in a 401k. So you will be coming to your to many 401ks soon if they’re not already there. So let’s first talk about, you know, the downside and some of the fear in the press and then we’ll talk about the upside, right? I’m just going to read these headlines. one, this is from the Wall Street Journal this past week. Wall Street’s big bad idea for your 401k. Recent moves by some alternative funds highlight the flaws of offering private assets to public investors. And Jason actually this is a followup from from Jonathan Wheel in the journal how one big private equity fund makes its numbers incomprehensible. So I’m going to speak briefly about actually why don’t you talk about the upsides to private equity and alternative funds which can be really really profitable bets right Jonathan what are they and and and why are they superior in some cases to publicly traded securities yeah no absolutely so I’m a little biased you know you know studying this really for years in my in my younger years there for about a half a decade and so this has always been a segment that has been reserved for the generally ultra high netw worth folks And because of the illi liquidity, and I think Jeff’s going to get into that into the negatives. And so the ili liquidity means you can’t get your money when you want it in layman’s terms creates a situation where the private markets have the ability to invest your money and not have to be controlled by timing of cash flows perhaps like an equity or bond portfolio. So the beauty of that is is that you have longer terms and you’re not as susceptible to girrations that the managers can keep that money in play. And so for folks that don’t need the liquidity, that really works out because they can just put a few million here, let that nest and grow. So that’s theoretically the positives of that. for folks that are not as well healed, the caveat is is that if they’re not quite cognizant of that ili liquidity situation, then certainly if they have a need to hit the ATM machine proverb quicker, that can be a downfall. Not the second tier downfall. The upside returns historically have been more attractive. Some of that is changing with the interest rate environment on private equity. and as such there are private credit these are different issues that you hear not to go too deep in the weeds. so while I do love the asset class for certain segments I do tend to agree although I am biased that the Kool-Aid might not be as healthy for folks that like I said or might be in sandals as opposed to high heels as far as their wealth. Jeff can segment into Yeah, there’s a there’s a lot of flavors of Kool-Aid and some of them are toxic as you know I had to make that reference lemonade the the guy back in I guess it was the 80s but but before I do you know Anna and and Lou are you getting much questions from clients about accessing alt and private equity and private lending and that kind of stuff? Not not a huge amount but you know those questions come every every once in a while. Sure. The and how about you? I’ve just had a few clients, you know, that have seen headlines ask, you know, if this will affect their 401k, but from my understanding, it’s just an asset class they can choose to invest in. They don’t necessarily have to don’t have to and and and maybe should or shouldn’t. So just the big picture is these are the sorts of things that have been restricted to wealthier investors who are presumed and not always but frequently frequently enough were presumed to be sophisticated enough to do their due diligence and see if it was an appropriate investment for them. But the due diligence is like that that that ETF I bought with SpaceX in it. I’ve been trying to buy SpaceX personally, you know, for a couple years and you really can’t get any information. you kind of just got to trust them and some are worth trusting and some aren’t. So, it’s a really treacherous space. the but the upside is that if you get a good one, they can do things that publicly traded companies can’t. And for one thing, they don’t have to look at their numbers every quarter and what is going to happen in their stock price. You know, the management focus can be much longer term than they’re very reactionary. so you got to be careful though you know and one of the things this is was today’s Wall Street Journal actually how one private equity fund makes its numbers incomprehensible and may Megan maybe you can put this up on the screen so they could see it but there’s you know the thing about private equity is you don’t know what it’s worth the valuation is based on a formula or some kind of assessment or appraisal it’s extremely elastic and as you know as somebody qualified as Jonathan as a CFA to do valuations there’s a lot of dial to come up with the number that you want, you know, so it’s not, you know, the public market, this is what somebody’s willing to pay today. It’s definitive with private equity is a lot squishier, right? So this is I’m not sure you can have to show this, right? So to to disclose what the actual valuation methodology is one fund, you can’t see this. This is a little square in a paper with micro type with just numbers and you have to read like a hundred footnotes in the article and tie them back to this footnote with nobody’s going to do that, right? It’s obfuscated which is unfortunately a popular trick at Wall Street. No, for disclosure, well, we sold them. We gave them all the numbers. Not our fault they didn’t look at it. We make it so hard nobody’s going to look at it. And it’s the same thing as not giving the numbers at all. And it was another thing where they valued in order to gain the valuations. They took, you know, say that we have a a non-public a an alt, you know, private equity fund that came out at 100 and now that there’s a secondary market and it’s trading in a market and you can buy it for 20. So there are funds that are actually buying it at 20 because that’s kind of what it’s worth on the market right now, but posting the value is 100. It’s showing this in profit which I think is chic of the highest order. So maybe you can you can show that because I I think that that that would be very illustrative. So again, at the end of the day, this is a really really rich space that is worthy of investigation. and but but as an option in a 401k, I don’t think you’re going to have enough information, you know, and certainly not the the the analytic skill to make a good decision. So if you do it, I think it’s it makes more sense to do with a private adviser who’s able hopefully do a lot more deeper due diligence. Any parting thoughts on that? No, I mean if you decide to do it maybe do like a small amount small percentage you know not not overweigh yourself in any specific class just to be diversified but but realizing Jonath’s point you know these are not liquid sometimes you cannot sell them you know or you going to you know the mechanism for what the valuation is if you got to get out or some of them like we’ll take you know we’ll s we’ll allow 10% of the fund to be liquidated per quarter and after that the gates closed you can’t get any money out you really really got to read and know what you’re doing Do you have any No, just you know reminding clients and and everyone just do your due diligence just because it looks like it’s the next new shiny thing. which there are some pros to it. Just make sure it makes sense for your situation. Absolutely. Final word, Jonathan. And I said word, not words. yeah, I mean it’s a great asset space. some of these funds may be more liquid which may water down their returns. And also you have to ask yourself you know why are they coming to these type of vendors? And I would submit that it’s for the need of an influx of capital. So the vampire translation is these these funds which are billionaire controlled by billionaires have lots of money political influence. They want to dump their product in 401ks because it’s a rich market. That that that’s the motivation just like Amazon doing now grocery delivery. They just want to expand and make more money. Yep. Well said. Thank you all you know for your input on that.

And moving on to our final segment for today, which is talk a tax with the tax masters. And another disturbing article from the streets Wall Street Journal that I’m sure Jonathan has read profusely is blue states hunt for ways to ring more taxes from the wealthy. Let me say that again. Blue states hunt for more ways to ring more taxes from the wealthy. and there’s it really is just astonishing with the you know the passage of the big beautiful bill you know the the most recent tax reform of 2025 which is changing the calculus of the revenues that states are able to collect. So they’re adding on additional taxes to kind of make up the shortfalls. increasing tax rates on those making between $250,000 for an individual. the half a million dollars for a couple to offset expected federal funding losses from the federal tax law. that’s in Massachusetts. they they and they have the Massachusetts has collected and implemented income s tax those earnings over a million dollars and have collected billions of dollars on that over the past couple of years. So I guess the point is not not there’s another one called the Taylor Swift tax. I guess they’re taxing vacation homes over a certain value. and a lot of creative ways u to to pull more money out of affluent folks and you know so be viligent on this if you are in a blue state or or a state that’s got you know high taxes already and and the the the advice that I have you know I consider tax to be the master wealth skill and why is that because the amount of tax that you pay you this something I learned in CIP school in the early 90s when I actually started doing the math the amount amount of tax that you pay can be an enormous amount from sir taxes to excise taxes to income taxes, real estate tax, sales taxes. It adds up to a pile and most people are oblivious to so if you’re able to convert if you’re able to legally avoid some of that tax and I’m sure there’s a lot of opportunities in these blue states just as is with federal tax law. If you’re able to avoid some of that, you can it’s like converting lead into gold. It’s like pulling money out of the air and putting it in your pocket, you know. So tax is such an important consideration. and Lou and and and Ann, I know that in your practice with Camarda wealth clients, you spend a lot of time talking about tax. What are you know clients sensitive to this? So they appreciate that, you know, the the leverage that that tax avoidance can offer them. Yeah, absolutely. I mean tax kind of, you know, ties into into a lot of a lot of different financial planning areas. So it’s absolutely one one of one of the, you know, hot topics that we discuss at our Anything come up lately? I mean, we’ve been talking about Roth conversions and and u, you know, that type of stuff. That’s kind of the, you know, the kind of the bulk of of the conversations. But, Anna, do you have I would say, yeah, Roth conversions and then just, you know, distribution planning. Where’s the best account to take distributions from based on the client scenario? We had one yesterday saying, gee whiz, if I’ve got my taxable account, why should I put the money to an irrevocable trust, you know, and and not spend my IRA? And that was a good point. do the math to see what the least taxing, you know, transaction pattern is. But I tell you, you know, if you figure out tax, if you have the opportunities, particularly for real estate investors or business owners, you know, there’s an enormous potential to reduce tax across the board. You know, I know one of Lou’s favorite examples is the business owner that that puts his that files his business numbers on a schedule C, right? Why don’t you like that, Lou? well, there’s a couple different reasons. one, it it’s a it’s a red flag for the IRS. It’s it’s easy, you know, lowhanging fruit for the for the IRS to see that you have multiple sources of income and and you know, creates potential audit. So what you mean is that you’re putting your business numbers on your personal return, which is not required, but once if I’m an IRS, you know, examiner and I have everything right here and I connect this dot to that, you want to find out more about that. Let me give you a phone call. So you’re providing information in a convenient format that’s not required. Yeah. Yeah, I mean avoiding payroll taxes avoid I mean or or trying to limit them on on distribution of of income from business entities. I mean there’s a lot that we can do and a lot that you know Taxmaster does here for our clients as well which I think is something that smarter brother Jonathan does you know with which is typical I don’t want to speak you know for your personal tax situation so I’ll let you chime in but typically the recommendation or the prescription in a case like this is to set up an S corporation which there’s there’s no taxes in S corporation it passes through and then take a salary in the S corporation and you only pay social security and Medicare taxes, FICA taxes on your salary. whereas on a schedule C as a sole proprietorship, the way the calculation works, you’re basically paying payroll taxes on the entire amount of profit, which in in most cases you’re not legally required to do. I’ve seen some people save $50, $60,000 a year on self-employment taxes, which is the same as FICA, except if you’re on a schedule C. It’s called SECA, but it’s basically it’s tied in the same amount of payroll taxes. Anyway, that’s great. Again, you know, in closing, and we’ll have more of this, you know, in future talking tax with the tax master segments and then some special guests u that I think will blow your mind with their concentrated knowledge. Tax is one of the biggest opportunities to enhance family wealth that there is. If you know tax, the return on financial advice can be far far greater than almost anything else.

And on that note, thank you all so much. It’s been a blast hosting Smarter Money Matter Matters with the wealth doctor and his staff here at Camarda Wealth and Tax Master. Thank you so much for watching.