Our Financial Planning Process – Analysis

Transcript

Mike:

All right. So the next step, again, this is something that’s for a lot of people, it’s pretty standard, but I want to make sure that you understand there’s some key components, things you want to be looking for. The next step is what we call analysis. And it’s really nothing more than getting your financial documents in order. So we want to gather your financial documents so we can really identify clearly where you are and what is the road you’re on? Like where are you heading with your planning? Because the first thing we want to know is can we help you? And do you want our help? Part of that is checking out the road you’re on now. So we want to know where are you heading with your current planning? Because if that is already bringing you down a path of success, well, then we’re done. What do you need to pay us for? Right Shari on a good path. Typically, we’re going to need to collect things like your investment statements, maybe your insurance statements. We want a copy of your tax return, your most recent tax return and a copy of any estate planning documents be aware. The financial advisor that only wants investment statements, be aware that person. Why, why do you think I say that Zach,

Zach:

Because a lot of cases, there are a lot of financial advisors who only focus on investments. They’re not looking at your tax picture. They’re not looking at your estate plan. They’re focused on the one area that they work with. And that’s generally just investments.

Mike:

When you, you are going to see a financial advisor, you want to have a complete plan put together, whether it’s a complete financial plan, complete retirement plan, depending on where you are in life. So when you see that person, if they’re not looking at your tax return and they’re not looking at your estate planning documents, and it’s okay to say, I don’t have any estate planning documents, right. That happens sometimes. But if they’re not looking for those things and asking about them, if they’re not asking about your insurances, like your life insurance or disability or long-term care insurance, you gotta ask yourself, Hey, if you’re not asking about these documents, why not? There must be a reason. And the reason is they don’t work in that area. So you’re not going to get a complete plan. You’re going to end up with an incomplete plan.

Mike:

So we don’t like that. Our goal is we gather all of that and we start plugging it into the financial planning system so we can identify, where are you going now? Like, where are you heading? What road are you on? And then we get together and we review that. And our purpose is simply to say, all right for example, on the investment side, let’s look at the three circles of growth, risk, and income. How much growth potential should you expect to receive on your money? The way that you have invested now, is that a number that you’re happy with? What about the risk side? How much money could you lose if the market’s turned south? Are you comfortable with that? Getting close to retirement? How much income is your portfolio generating? Is that a number that you’re happy with? And invariably, Zach, it’s pretty rare that we find someone where they’re in great shape and all those areas.

Mike:

So usually there’s, you know, the growth might be okay, but, oh my goodness. I didn’t know. I could lose that much money if the market went south, it’s been so long. If you’re getting close to retirement, the income piece, oh my goodness. People are getting close to retirement. They got a million dollars, but it’s only generating 17,000 of income that doesn’t cut it. So, you know the goal here, let’s find out the road you’re on. Is that risk comfortable or does it need to be worked on, is the income enough or does it need to be worked on, is the growth enough or does it need to be worked on, in other words, let’s find out where you’re at. Let’s find out what you’ve done. Well, and then let’s find out what areas need a little work. So that’s the investment side. Then we look at the tax picture, right?

Mike:

This is an eye-opener for a lot of people right here. But what we do is we start laying it out for you. We say, let’s take a look at your future and let’s map it out and using the current tax code, what kind of taxes are you going to be paying in your retirement or down the road? How much are you going to be paying in tax five years from now, 10 years from now, 15 years from now, what’s going to happen to the taxes for the surviving spouse. If you’re married, there’s, there’s a question. That’s something that people just, they never look at, but it’s a huge problem out there. When the other day we mapped out this couple, they were in their early sixties and we said, okay, what if the husband dies at age 85 in that final year when they’re both, you know, he’s 85, she’s a couple of years younger.

Mike:

So color 83 at that point in that final year, they were going to, oh, so right around $24,000 in tax, which already was a bad number. Yeah. Right. But the next year now, after the next year he’s gone, she’s able to still claim or she’s now a single tax payer. Her taxes went from 24,000 on the same amount of income, up to 35,000. It’s a pretty big jump. $11,000 more tax on the same income, why she was single, not married. And so we started exploring said, well, what if we, in that meeting, we’ll also often say, well, what if we did a little bit of tax planning? And we don’t go in depth at that point, it’s just more of kind of a, Hey let’s, let’s throw a couple ideas out there. And we put out a couple ideas and we were able to get their taxes in their eighties instead of being 24,000. When you know, when he was, when he was 85 and they were, she was 83, it was down to like 3000.

Zach:

I think that couple said that was probably the definition of an eye opener.

Mike:

That’s better, right? 3000 better than 24,000. And then for a surviving spouse instead of 35,000, it was like 5,000 much more reasonable. So the point is it’s important that you see those numbers. If you’re talking to a financial advisor and they’re not showing you that information in that analysis meeting, well, what the heck is that a complete plan? If they’re not showing that to you? Nope. Taxes are a big, big deal. You’ll want to make certain that your, the person you’re talking to is sharing with you, what your future’s going to look like if you stay on the road you’re on now, but also maybe start to give you some alternatives as to what could be done. Most financial advisors, they love to talk about investments and they love to show you how your income is going to last. The problem is that many times using unrealistic assumptions, they’re ignoring the impact of taxes.

Mike:

They’re ignoring the impact of long-term care. And they’re ignoring estate planning. It’s an incomplete plan. If you ignore those things, you need to have a complete financial planning, complete retirement plan. And I think this is probably a good time as we’re wrapping up the segments act to maybe put out an offer, you know, as you’re listening in, or if you’re watching us here on YouTube, if you’re sitting there and you’re thinking to yourself, boy, I don’t remember talking about taxes. When my advisor, I don’t remember about talking about long-term care estate planning. Maybe you have an incomplete plan. And if that’s you, I encourage you. In fact, I invite you, give us a call. We’d love to talk to you super easy. Here’s what happens? You give us a call. The number is 5 1 2 8 8, 6 58 50. Again, that’s (512) 886-5850. When you call that number, they set up a 15 minute phone call with my man Zack right here. And then based upon your needs, Zach connects you with either myself or one of the team members so that you can make sure that you’re getting your questions answered.

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