EPISODE #3 – June 15, 2020

“Be willing to think outside the box, look around the corner, see what’s coming next, try to anticipate problems and try to solve them before they happen.”

From rowboat to speedboat; Thinking outside the box.

Ride along with Kevin along the North Shore of Asharoken Beach. Where the lesson of innovation mixed with risk powered the foundation for creative thinking that Kevin Ellman, CFP has followed to this day.

Transcript:

Elizabeth D’Aleo:                 

Welcome to Work, Life and Money Insights with Kevin Elman, where Kevin shares his stories of his life as the foundation for his outlook on the economy, market and current events.

Elizabeth D’Aleo:          

Hey everyone, Elizabeth D’Aleo here. I’m with Kevin Elman and welcome to episode number three of our podcast. Today, we’re taking a trip down memory lane, literally down the streets of Long Island as Kevin shares a tale from his early childhood and I think we’re going to have some fun here.

How are you today?

Kevin Ellman, CFP:        

I’m good. We’re locked down and I haven’t gone past my driveway in months, but otherwise I’m pretty good.

Elizabeth D’Aleo:          

Good, good. Same here. I’ve done a little bit more adventuring, but not much to be honest in comparison to pre-pandemic, so glad to hear everything’s going well. So take us back to Long Island.

Kevin Ellman, CFP:        

Sure. So I grew up on the island, on the beach, actually, on Asharoken beach, and this was on the North Shore of Long Island. And I like to say this was before safety was invented.

Elizabeth D’Aleo:          

And we all know how safe you like to be.

Kevin Ellman, CFP:        

Well today everybody’s crazy about safety. You can’t do anything that might endanger your children, but in the fifties, that concept wasn’t around yet. So we lived on Asharoken beach, which at the time was like a thin strip of land. Maybe like I could imagine Fire Island and on one side was the sound, which is almost like the ocean. And then on the other side was the bay and there was a road down the middle of this long strip of land. And at that time there were only houses on the ocean side and the houses were spaced far apart. There was nothing on the bay side. So as it happens, I have a client who I went to visit them recently and they live right down the street from where I grew up. And today, as you can imagine, every square inch of this island is covered with houses. And no matter how hard I tried, I could not find my childhood home. It was probably a tear down. Somebody probably tore it down and built some beautiful mansion, but couldn’t find it.

Elizabeth D’Aleo:          

So how long ago was this that you were taking a drive down your old road and looking for your home, that all of a sudden you just brought yourself back?

Kevin Ellman, CFP:        

Well, this was last summer. So this was quite recently and so I’m standing there on the beach, looking out of the ocean and reminiscing. And since we lived in the beach, naturally, we had a boat. Now this wasn’t a big boat. We had something called a skimmar and this was like a 10 foot rowboat, but not a regular heavy row boat, a really lightweight rowboat. And you could put a motor on it or you could row it. And in the back of the boat, they had a little sign that said maximum horsepower 25. Okay. And that would have been like an appropriate amount of power to have on a boat like that. But my father was like this crazy speed demon. So he felt 25 horsepower, that’s not going to do much. Let’s put a 50 horse power motor on there. So he got what’s called a Mercury outboard motor, 50 horsepower, cranked it onto the back.

And now we had this lightweight rocket that would unfortunately it would go so fast that it might flip over. So this wasn’t a boat with like a deck and a steering wheel. This was just an empty rowboat, bare bones, nothing on it. And you’d have to sit in the back, the seat right by the back and you hold onto a handle on the motor and he would twist it to go faster and slower. And he’d push it from side to side in order to go left and right. I was like, I don’t know, two or three or four years old. I had my life preserver on. And my father used to sit between his legs and clamp his legs around me so I wouldn’t go flying out of the boat and all the weight is in the back of the boat, with this giant motor on the back. So in order to prevent us from flipping over, my father got these big sandbags and put them in the front of the boat to prevent us from flipping over. So then we were okay, we wouldn’t die.

Elizabeth D’Aleo:          

So let me just get this straight because I have this vision in my head. Before you brought the sandbags into play, I had this vision of like a 90 degree boat flying down the sound with this little tiny you in between your dad’s legs. And the motor you described, sans horsepower of course, but the motor on the back of the boat that you would use to steer, most would refer to as a trolling motor, right? It doesn’t sound like that’s what you were doing.

Kevin Ellman, CFP:        

No, this is like a racing motor.

Elizabeth D’Aleo:          

So where were you racing to?

Kevin Ellman, CFP:        

Up and down the beach. So we tried it once and that’s exactly what happened. We went almost perpendicular and almost flipped over. So then we had to go get the sandbags immediately, but once we got it all set up and now all this power on the back of the boat was killed flat. It would really fly. And my father’s idea of fun was he used to call it tear-assing up and down the beach, racing the other boats in the neighborhood. Everybody else had fancy boats. Mahogany boats or beautiful white boats with a deck and a steering wheel and a windshield, like real boats. We had this like ridiculous little rowboat with this giant motor on the end, but we almost always won and people tell me, Oh, Kevin, you can’t possibly remember that at three years old, but I have distinct memories of passing these other boats and waving to them as we flew by them.

Elizabeth D’Aleo:          

I’m sure the people that were receiving those waves have those same memories.

Kevin Ellman, CFP:        

Yeah. I don’t think they appreciated it quite as much.

Elizabeth D’Aleo:          

So what happened if you ever encountered a time where you had to stop?

Kevin Ellman, CFP:        

Well, it wasn’t that big a deal. You just would slow down gradually. And if he didn’t slow down gradually, then the waves from the back might slosh into the boat. But that wasn’t what we did. Our fun was not stopping. So down the beach from us, and it’s still there today is this giant sandpit and these huge smoke stacks. And I can’t do the life of me, figure out what on earth they make there. Maybe they make concrete. I don’t know what it is, but in the fifties every morning, you’d see these huge barges, being towed by tug boats, up and down the beach, over to the sand pit with sand, they were delivering sand.

So my father’s idea of fun was to go flying as fast as we could between the barges while they’re moving. So now you got to imagine this giant multi-ton barge filled to sand, maybe there’s 10 feet between the barges. And we would go flying between them with this little tiny rowboat and with the slightest mistake, we would have been crushed and drowned.

Elizabeth D’Aleo:          

Oh my goodness.

Kevin Ellman, CFP:        

And laughing hysterically the whole time. So of course if this happened today, I’m sure my father would be arrested.

Elizabeth D’Aleo:          

Without a doubt.

Kevin Ellman, CFP:        

Taken away by child services.

Elizabeth D’Aleo:          

10 times over.

Kevin Ellman, CFP:        

That was his idea of fun.

Elizabeth D’Aleo:          

Was it your idea of fun?

Kevin Ellman, CFP:        

Well, I enjoyed it and I inherited his love of speed. I enjoyed it. So the one thing about my father, I will say, I like to tease about it, but he knew how to have a good time. He was always happy, always in a good mood and always up for an adventure, but he only got serious when we got back to the house. Because I guess somewhere he knew that this wasn’t a hot idea.

Elizabeth D’Aleo:          

Yes. Through those stories you’ve shared with us, he seems like a very logical smart man. And so I would imagine that would be, that he knew deep down that probably wasn’t the best idea to have his toddler on this boat.

Kevin Ellman, CFP:        

Exactly. So he’d pulled me aside and said, look, Kevin, you got to promise me no matter what you can never ever tell your mother what we do.

Elizabeth D’Aleo:          

Oh, very common conversations.

Kevin Ellman, CFP:        

So I would innocently say, Dad, what’s in it for me? And he’d say well, he’d get real serious. Well, what do you want? I’d say, well, how about a car? And he was like, what! What do you mean a car?

Elizabeth D’Aleo:          

And now today that would be one of those little motorized cars. And I think as generations go by we all have a new set of rules as far as keeping in place what our parents instilled in us. And then we also have the other set of rules of I’m never going to do it the way that my parents did it. Right. Because we think we’re going to figure out a better way to do it. And I would imagine that that’s probably not something that his parents would have ever prepared him for was a toddler asking for a car.

Kevin Ellman, CFP:        

It’s hard to know. I knew my grandfather and he was a fun guy. I don’t think it was as crazy as my father, but we had a lot of fun. And I actually have pictures of, he used to take me fishing in that same little row boat. And I used to call my grandfather dad also. So I had a great relationship with my father. I had a great relationship with my grandfather and they’re just golden memories. So a lot of fun.

Elizabeth D’Aleo:          

So Kevin, through all of this, you’ve really shared a very common theme through everything. And that’s that your dad was a real forward thinker, even innovative if you will. So you’ve talked to us about how he transformed a rowboat into a speed racer, essentially. How has that really impacted you through the years?

Kevin Ellman, CFP:        

Well they’re funny stories and there are a lot of fun to tell, but there really was a lot of teaching going on here. So from the very earliest age, my father taught me to really think outside the box and don’t be limited by what others think. So here I am, I’m three years old and my father is modeling this behavior. The sign on the back of the boat clearly says maximum horsepower: 25 horsepower. Anything more than that is dangerous. And yet somehow he decided, okay, well we’re going to put 50 horsepower on anyway. So that taught me that just because the sign says so doesn’t make it so. And then of course there was a reason the sign was there because it is in fact dangerous.

Elizabeth D’Aleo:          

At least someone somewhere thinks so.

Kevin Ellman, CFP:        

Exactly. It was. Because if we had gone full throttle with that 50 horsepower motor on the back, we would have flipped over. So now we engage in creative problem solving. So He figured out, okay, I’ll just put a bunch of sand in the front and that’ll prevent us from flipping over and then we’ll be able to go faster. So those two things that just because somebody says so, doesn’t make it so, and now we have a problem, let’s be creative and solving it. I think those were really important lessons early on that I think he modeled in many ways. This is just one of the funniest ways.

Elizabeth D’Aleo:          

Sure. And problem solving is something that I hope you would agree, I would say that you do every single day.

Kevin Ellman, CFP:        

All day, every day. And I think it’s a difference between people who are successful and people who are not successful because nothing goes according to plan, nothing goes smoothly. Everything takes longer than it takes. And you’ve got to be able to solve problems, both big and small. Administrative, operational marketing, sales, financial, and that’s just the nature of being a business.

Elizabeth D’Aleo:          

It’s true. And something else that kind of speaks volumes for what you’re sharing is that perception is reality. And as a three-year-old Kevin, you thought that maybe you were going twice as fast as you actually were. And as you grew older, obviously that perspective changed and you started to connect some dots because you inserted logic where it belonged, but there was still that essence of breaking barriers. So do you incorporate that into your role as an advisor today?

Kevin Ellman, CFP:        

Well, it’s ironic because at the time that did seem very fast and very dangerous and I was three, so who really knows how fast we were really going. And it seemed like we’re flying in between barges and it was super dangerous, but for all I know maybe the barges were standing still and instead of there being 10 feet apart, maybe they were 25 feet apart. And maybe it wasn’t quite as dangerous as it appeared.

Elizabeth D’Aleo:          

That’s true. What’s interesting is that you’re able to capture these memories and really help us as your audience visualize the unique experiences that your life includes. Starting at a very, very young age. But I think it’s important for you to just take a minute and tell us how those experiences and maybe taking a little extra risk or pushing the envelope has really impacted how your approach is formed when working with clients in the wealth management arena.

Kevin Ellman, CFP:        

Well, that’s what’s so ironic about it is that even though it seemed like I grew up with a lot of risky behavior, I’m actually very conservative when it comes to managing money. And even though there’s obviously a certain amount of risk when you invest in the stock market or the bond market, and I am engaged constantly in trying to find ways to mitigate that risk by controlling the things that we can control. We can’t control the weather, we can’t control what the Fed does, we can’t control what the President does, but we can control expenses. We can control our own asset allocation. We can control rebalancing, tax harvesting. So it’s taught me to control what I can to try to manage the risks that are inherent in investing and also to be constantly on the lookout for new ways to do things.

So that might be new ways to lower expenses. It might be new ways to get better information. It might be new ways to use software so we can rebalance in a more efficient fashion. So we’re constantly on the lookout for new and better ways to do things and I think that is probably the number one takeaway that I got from my father that let’s not be hemmed in by the way we’ve always done it. Let’s be willing to think outside the box, look around the corner, see what’s coming next, try to anticipate problems and try to solve them before they happen. And then if we’re confronted with some issue, let’s use all of our creative brainpower to come up with a great solution.

Elizabeth D’Aleo:          

Perfectly said. Kevin, thank you.

Kevin Ellman, CFP:        

Thank you.

Elizabeth D’Aleo:                 

Thanks for joining us today for Work Life and Money Insights with Kevin Elman. For your free copy of Kevin’s book, The Seven Biggest Money Mistakes People Make and How to Avoid Them, just text wealth to 88799. That’s wealth to 88799. Everyone’s circumstance is unique and the content of this podcast should not be construed as financial, tax, or legal advice. Please consult with your professional advisor or contact Kevin Elman to learn if a complimentary personalized review or candid snapshot of your portfolio is right for you by visiting wealthpreservationsolutions.com.

The opinions expressed in this podcast are those of the author and may not necessarily reflect those held by Kestra Investment Services LLC, or Kestra Advisory Services LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.