TMS #5 RD 2

Financial advisors do more than just invest money. They help clients set goals and create a plan to achieve them. Taxes are a big part of financial planning, and having a tax focus can make a huge difference in the success of a financial plan. Working with a financial advisor who is also a CPA can help optimize tax strategies. It's important to consider the whole picture when planning for the future, including goals, time horizon, and tolerance for market volatility. Saving and investing consistently over time is key to building wealth. Financial planning is a systematic process that involves assessing the current situation, identifying long-term goals, and creating a plan to bridge the gap. Tax planning is often overlooked but can save a significant amount of money. Different types of taxes, such as capital gains and dividends, should be considered when making investment decisions. Working with a financial advisor who can integrate tax planning into the overall financial plan can lead Today, we just wanted to get together and talk about what a financial advisor does, but I thought we would start off what we don't do because we see the movies, The Wolf of Wall Street and Wall Street, and they think it's like this huge casino where we're just dialing and gambling people's money every single day, and it's a huge misconception. That's right. I couldn't agree more. We are not sitting behind these giant computer screens watching stock tickers zoom by, and just because we work with finances does not make us accountants either. Most of our day as financial planners is client-facing. We help clients to set goals and analyze the best ways to help them achieve those goals. I once heard that a goal without a plan is just a dream, and that's where we come in. To me, it's what makes my job really exciting, that it's a lot more about looking at changing someone's life with their goals and their dreams and where they want to be, rather than just helping them look at some company and just invest into it. It makes me so excited when I feel like someone's like, hey, you know what? I'm on track for my goals, or hey, what can I do to start getting on that track? That's what makes our jobs really fulfilling, and it fits the three of our personalities really well, that we really enjoy helping people more than just doing one simple thing for them. Yeah, I mean, I second that. As a son of a CPA and being in this office, there are still people out there that think that I'm a CPA or a tax preparer, and that's just not the case. Taxes are a big part of what we do as financial advisors, but yeah, we're not burning the midnight oil like the tax and accounting team. We are truly doing financial planning and wealth management for our clients. It all goes hand in hand, but financial advising, it's really about the basic blocking and tackling to help the clients achieve their goals, but it is very fulfilling and rewarding to help clients towards their financial goals. I always say, Gavin, that it's just like sports to me. You could be a great player by yourself and get to certain places, but if you have that coach with you, especially if they're a great coach, they can help you take it to that next level. You really need both the coach and the player together, working together to win the game. It's just the exact same way we do our financial planning. If we don't have a good coach and we don't have a good player, then it kind of defeats the purpose of having a great plan. When we're able to combine the two together, we see the best results. We see people being excited and working to change their lives. Here at Parker Advisors, taking that analogy even one step further, we look at it as a team sport because it's not just the player and the coach, but it's all the players on the field. As a team of advisors, both tax and wealth management, and then some of the other valued partners that we have to be part of the team for our clients, it all comes together in the teamwork. I'm a huge baseball guy, so it makes me think we have our pitching coach, the batting coach, the manager come in on the field. It's really like we're all working together and everybody truly has a critical job to help with the client's plan and their financial future. The first thing, we covered it a little bit, why the whole picture is so important. Can't just get so focused on one thing. It's really looking at the whole thing. I always say you could be saving and investing, but if you don't know where you want to be or what your goals are, then how do you know that you're on track to hit those? You might be overshooting your goals, which is great. You're going to have a surplus of investments, but you might be under that. You might not be to where you want to be. Really starting out with, hey, what does retirement look like for me? I know it can be really difficult, especially if you're younger, trying to think 30, 40, 50 years from now. I don't know what retirement's going to look like, but if you have an idea of things you would like to get done, or hey, if you enjoy hunting or fishing and you're like, hey, when I retire one day, I want to do a lot of hunting and fishing, well, boom, right there. You already have one goal, something that you're aspiring to be. Start saving. Start investing for your own future. Design the life that you want to have in retirement. That's right. Investments, for us, are always secondary to that financial plan and what your goals are. Really, your time horizon, your tolerance for market volatility, those are all things that come into play. For us at our firm, it's also your tax picture. Yeah. Investing is one of the key components. There's a lot of key components, as Kelsey said, but it is one of the ones, right? You have to actually fund the account. Yeah. They say that the surest way to build wealth is slow and steady, and it does start with those contributions. You've got to contribute capital so that it can start working. The rate of return certainly will make a difference over the long run with that power of compounding, but you've got to get that account started and get that seed capital into the account and do it consistently over time. Living on less than you make and taking that surplus and setting it aside each and every month in a disciplined, systematic way for your long-term investing is the surest way to build wealth. Another point when it comes to financial planning is just it really is a very systematic process. There's not any magic to what we do with clients. It's really a three-step process. First is assessing their current situation and really getting to know the clients and their current financial situation, and then we jump ahead to their long-term goals. What are they, as you said, what are they really wanting to accomplish? What is that life that they envision building for themselves? Then we work backwards to try to bridge that gap between their current situation and their goals, and that is just the plan that we put in place to help them get there, that roadmap, if you will. It's really that simple in terms of the process that we walk our clients through. You might be driving down the street and you see XYZ Firm. Their logo on there says investments. It's about a lot more than that to us. There's a lot of components. Taxes for us, having CPAs, it's at the heart of everything that we do. Starting off with taxes and really making that the sole purpose of it, really we've seen just a huge difference in financial plans with those that have a tax focus to those that don't have a tax focus from having capital gains or having dividends being thrown off from these investments. Really looking at it from a tax-intelligent avenue is where we've seen a huge difference. That's right. If we can help position your portfolio in a tax-efficient manner and keep more money in your pocket versus Uncle Sam's over the long term, it will make a profound impact on the success of your financial plan. If your financial advisor is not incorporating tax planning into your financial plan, they are really doing you a disservice. Rates of return are variable, but taxes are guaranteed. Take for example, if you're even $1 over certain thresholds, it can cause half of your social security benefit to be taxable or it can cause you to pay increased Medicare premiums. Kind of disappointed at school. We learned all these formulas for all these investing things, but we never talked to a level of taxes and learning more on strategies and keeping more in your pocket. When most people think about taxes, they just think about the compliance work, preparation of their income tax return each year. But the tax return that we get after the fact when we're planning for the future with our clients is such a treasure trove of information that we can help plan and adjust and save on future taxes. That tax planning, that proactive element of taxes is just so often overlooked. There's such an opportunity to save money. Before we even start talking about making money and investing, we can save money by focusing more fully on taxes. One thing guys that's been really exciting to me is just the different ways that people are taxed. Is it capital gains tax? Is it ordinary income? How are they being taxed? Different things that the mutual fund might be throwing off. How are these capital gains being taxed or how are the dividends being taxed? That to me is really exciting. People don't know that. They're like, well, great. This fund's made me good money. It's a great fund. It could be a great fund, but it's throwing off this capital gains tax every single year or these dividends and you're being taxed and not knowing what to do about it. Right. Especially for the self-employed, that's a whole other area where we can help and help add value is by determining if, does it make sense to turn into an S-Corp and start paying yourself wages? Just learning how you're taxed and what the taxes are that you're paying can be beneficial. The beautiful thing about having a CPA and tax accountants and tax advisors under our roof with us is that we're able to work together to really see how we can benefit the client both in their tax situations and their financial planning situations. Really working together is going to give you a different result rather than coming to one person for investment and financial planning and then going to someone else for the tax and accounting where they're not really talking to each other or when they do, it's not on a clear communication. By having both in one roof, we're able to just keep a good traffic and really communicate for the client. Yeah, absolutely. I mean, I just add one more thing maybe that's a quote that's kind of a take on a Warren Buffett quote that I like to reference, my own spin, and it's real and lasting wealth is built with after-tax dollars. You really cannot be evaluating rates of return and making apples to apples comparisons unless you're truly looking at the net effect of taxes on that particular investment. A lot of it depends on the account type that you're using for that investment because you have pre-tax accounts, you have after-tax accounts that are taxable, you have tax-free accounts, and everyone's situation is a little different to determine what's best for them, but you really truly have to look at that net effect after taxes to really truly compare investments and how that's going to affect your planning over the long run. One of the things that can be difficult for retirees is flipping that switch from saver to spender, and I think it's so important, and that's why goals to me are so important because what does life look like for you once you're retired? You don't want to just sit at home and not do anything. We've talked about it with some clients, right, Kelsey, that they get so used to saving and working that once they're done, they're like, I don't know what to do. I'm bored. Do I need to go back to work? I need to find something to do, and it's like this is why it's so critical to find things that you enjoy, things that you're excited for. It's really being repurposed. What's your new purpose in life? What are the next 30, 40 years for you going to look like? It might not be work anymore, but is it volunteering? Is it traveling the world with your spouse? Is it hunting trips in Africa? I mean, there's just an endless opportunity of things, but what does that look like for you? Absolutely, and retirement income planning is one of my favorite areas to work with clients on. It's just so exciting to see people that you've worked with alongside them over the years take that leap and start their journey into retirement, so we love getting to share that experience with them. As a financial advisor, you know, we can really help you, like Ishmael said, be proactive in by starting to visualize what does retirement look like, and it can help make that transition a lot smoother. And having that financial plan just helps bring peace of mind knowing that you have reasonable expectations and a good foundation established to build on. Yeah, I'd say that, you know, we've seen a lot of clients retire over the years, been doing this going on 22 years now, and those that are successful in that transition to retirement and that repurposing, as you said, Ishmael, are not running from a job or trying to turn away from something, you know, then get away from it and something that's ending, but they're running to something new, something that they're excited about, whether it's a hobby or another interest or volunteer work or whatever they're wanting to reinvigorate themselves with in retirement, those folks that are moving towards something and not running from something have the most success in that transition to retirement. The other thing that I would add is the distribution phase, so that retirement phase and, you know, switching gears from saver to spender is much more difficult than the accumulation phase where they're saving. You're not just being disciplined about setting aside portions of your income for long-term investment and having that capital grow and be invested well, but you've got other risks and pitfalls that can jump up and get you, things like sequence of returns risk. You know, obviously inflation, taxes, all those things are still risks that are present, but that sequence of returns, you could do everything right and have the right amount saved for your needs, and yet bad timing for the markets and the economy could really impact your long-term retirement success, and so that's where needing a partner like a financial advisor to help you navigate those changes and have a more dynamic strategy in your distribution phase rather than just that systematic, you know, disciplined saving in the accumulation phase. We've got to be willing to be flexible, make adjustments, and keep that longevity and success of the retirement income on track. How great would it be if you're listening to this and you change your life by starting to invest, starting to save, starting to do financial planning for yourself, and you completely change your family tree for the next 40 years or however long you're going to work for, but then the next 40 years after that, after you're done working, you spend it with your grandkids and your great-grandkids changing their lives and telling them what you had to go through to get to where you wanted to be, and look at that, now you've lived 80 years of a fulfilled life if you make it to 100, like how awesome is that? Like who doesn't want to do that? Who doesn't want to live two great lives? An important part of that financial planning process, like we've touched on already, the investments, the tax, the retirement income planning, is having that holistic approach like we do here in our office. We try to look beyond just the direct investments that we have to manage, and that brings us to insurance. One thing we've learned is that life is unpredictable, and ensuring that your loved ones are protected against unforeseen events such as illness, disability, or death is important to ensure that that financial plan is carried through. We are insurance licensed, and we can help you with a needs assessment to ensure that you have appropriate coverage. Yeah, one of the core pillars of financial planning is risk management, which is insurance, and no one likes paying insurance premiums. It's viewed as an expense, but honestly, it's there to mitigate risk and preserve and protect your assets, and honestly, to protect the fulfillment of your plan if it's derailed by a death or disability. We do look closely in our assessment with clients at insurance and risk management, life insurance being the foremost of those, but also disability insurance. You're more likely to be disabled than you are to die during your working year, so insuring against disability, and then finally, long-term care. Obviously, with the demographics in the country in terms of longevity and healthcare advancement, people are living longer, and the odds of needing some type of assisted living or nursing home or other long-term care is becoming increasingly likely. Those are risks that we can talk through with our clients and help them assess and give them some options. Again, no one likes to pay insurance premiums, but to have that peace of mind and that protection is so critical to the overall planning that we do. Then the last thing that we talk about is estate planning with clients. You've worked so hard to build this, and you want to make sure that it's passed down to the next legacy of your kids and your grandkids. You want to make sure that they're in a position to receive these assets. What are going to be the tax implications of this? We've talked about it with clients, Kelsey, and you can hit a little bit on it. Some want to make sure they spend all of their assets, and then some want to try to leave some assets, and then some say, hey, if there's some left for the kids, great, but if not, then I'm going to try to use some of this up. That's right. When it comes to estate planning or financial planning in general, the more transparent and open and honest you can be with your advisor, the better. Like Ishmael said, we have some clients where legacy planning is very important. They want to leave something behind for their beneficiaries, and then we have clients that want to spend it all and let their descendants pave their own path, and that's okay. There's not a wrong or a right answer, but the more we know, the better we can help you, and that's what we're here for at the end of the day is to help you. I look at this topic as more about leaving a legacy than just that broad kind of topic of estate planning. Estate planning, certainly you need to have a will, a trust if necessary, you need to have those legal documents in place to make a smooth transition after you're gone, but to me, leaving a legacy means it's not just about the money or the assets, but it's about passing on your values and core beliefs to the next generation, and that's really just for most people, it seems that's more critical than the wealth that is left over if you're fortunate enough to have done that, and like you said, not everyone wants to pass on assets or leave a legacy. They want to spend that last nickel before they go, and that's fine to each his own, but I think this idea of values and core beliefs and making sure that that next generation or the next several generations know what you stood for, know what you're about, and that's going to outlive any monetary assets that you leave behind, so that's something that we like to touch on with our clients as well and just help them kind of develop those thoughts and that understanding if they haven't really developed that out yet. Someone told me one time that everybody dies twice. The first time is when you physically die, and then the second time is when everybody stops talking about you. So how cool would it be if your great, great, great, great grandkids are talking about this amazing life that you lived, that you built for, that now they're living because of the hard work their great, great, great grandparents put in to build this legacy for them? The thing that I always say is that we're not a 1-800 number, we're a 208 number. That's right. We are local. We are here to help. At the end of the day, if you have an advisor and they're not reaching out to you on an ongoing basis or they're not available, when you reach out to them, it might be time to reassess that relationship. If you haven't spoke with an advisor at all, I encourage you to do so. If you think you're too young, you're not. If you think you are too old, you're not. Give us a call. We'd love to help and learn your story. My favorite thing with the clients that I work with, it's when we're both having fun. When they're in here in the meeting, and even if they're more reserved people, they're still like just excited. That to me just brings so much energy that people are excited to work with you. I feel like that's the relationship you should have with your advisor. You should be excited to talk to them. It shouldn't be a hassle every time you call them to try to get them to answer your questions. It should be, hey, how are my plans going? How are my goals doing? Do we need to have a review? Maybe something changed in my life and now this goal changed or now I don't want that goal, but I want a different goal. Actually have a relationship with your advisor. Well, everyone likes to talk about themselves, right? That's what we're doing with our clients. It's about them, right? It's about their goals and what they're wanting to achieve. We're putting their interests ahead of ours. I know being a fiduciary is the buzzword nowadays, but it's just the golden rule, right? It's about taking care of them and making them feel appreciated and heard and valued and then putting together our financial advice to help them achieve their goals. That's what it's all about. If you don't feel like you're being put first in that relationship with your advisor, absolutely. Probably time to shop around. Someone's listening to this right now and is like, gosh, I'm going to call Ishmael, Gavin, and Kelsey. We're so excited to work with them. Where can they find us at? You can give us a call at 208-337-3271 or find us on our website, parker-advisors.com.