To download the printable PDF for how we helped the Steins, click here 

Full Transcript:

Benjamin Haas  00:00 (Introduction)

At the Haas Financial Group, we philosophically believe that everyone needs a financial plan, even those that are retired and may feel financially independent. We know there are more than typically 8,000 days in retirement and that can come with new challenges, new uncertainty, new scenarios that need to be considered in order to continue to feel secure, or ultimately begin to develop what we call a wealth transfer plan. So, while every client that we work with is different and comes with a different set of circumstances, our advice needs to be personalized and unique, but we know that we're going to hear typical questions and similar concerns based on the phase of life that they're in. If you happen to be wondering how we're going to help someone or a family that's already retired, now turn their focus on a wealth transfer plan, we'd love to take the opportunity to show you how. Adam, let's define what we mean by a wealth transfer plan through an example, the Steins. Let's start by sharing who they are, what phase of life they're in, and then let's talk about the typical goals or pain points that would have led them to seek us out.

Adam Werner  01:12 (Typical Legacy Planning Demographics)

As you said they're already retired, we would consider them beyond that initial honeymoon phase of retirement (those first couple of years) where they're starting to get their sea legs underneath them of what the rest of retirement may look like. They're beyond those first initial years, they're probably feeling pretty comfortable with retirement and then their goals start to shift a little. They've been working all these years to get to that end goal of retirement and now they're feeling okay and wondering what comes next? What we typically see is a lot of those “what if” type questions coming out of that. So the typical questions that we see for this age group is that they want to be charitable, they want to be philanthropic, helping either their kids or their grandkids, but they want to make sure that they're not going to outlive their current savings. So it's balancing those two things together. What if the markets aren't good for their investments? Is there anything that they should be doing differently, they're more focused on protecting their assets at this point than they are really trying to grow them to higher degree. Wondering or worrying about potential care in the future, such as medical bills, if they're going to need assistance in the future, worrying about taxes, not only worried about them now going up, but are there other strategies or other things that they can be doing now to minimize that bite from a tax standpoint, both now and moving forward into the future. I think, kind of the last thing is, if something happens to us, it's the morbid part of the conversation that we are getting older, when we pass away is everything set up so that what we to have happen can occur when we're not here?

Benjamin Haas  03:19 (Goal Planning and Pain Points)

I think you explained it really well. Part of goal planning is also trying to avoid the things that they want to avoid. Those pain points that we could see with a couple like this really may be centered around that uncertainty, those what ifs, as you said it, they're starting to see their friends age. They're discussing these items, they're hearing stories. So we need to address those fears and what ifs and that can come from fractured advice they may be getting, not only listening to friends and family, but other professionals telling them, well, this is what you need to do. Maybe they don't have the education or the background to know if that's right for them and that's why they're coming to us with some of these questions. They may no longer feel like they have proactive strategies on what to do. They may have been planning for retirement, they knew they needed to save, they may have considered where to save and now it's not feeling as proactive. So when things pop up, maybe they'll be more reactive to it but they want to get back into that camp of having a broader plan that starts to look at the big picture again and that's what we're there to do. Not only help them through that but begin to coordinate some of what they want to do, whether that's charitable giving or planning their estate with the other professionals they have. We certainly feel that when working with productive people in this situation that they end up having to spend a lot of time managing these things. They've been in meetings their whole lives and now they'd rather volunteer that time. So they may look to us or look to someone who can spend a couple of hours taking that off their plate but making sure that everything is still cohesively planned together.

Adam Werner  04:58 (Financial Profile)

And just to put a bow on that part, this is a pretty typical client for us. This stage of life, helping people get to retirement is one and now dealing with that next phase which is, you're in retirement, so now what? You said it well earlier, the advice that we're going to give here is not one size fits all. So even though the profile may be similar from client to client, the advice is going to be very specific, based off of the way they prioritize what they have going on. What their specific goals and aspirations are for this phase of their life, so let's switch gears a bit by talking about the process. How do we actually go through that? Part of that is the initial meetings of learning more about them, what they are looking to accomplish. They usually already have some idea or at least a goal or two in mind, or there may be a specific fire that needs to be put out, something they're coming to us that they want to address. Either way, our goal is to address that, give some immediate feedback, go through some education since it is one of our six core values. It's important to us to at least give some value in those first couple of meetings and from there, we'll kind of go through the questions that we want to dig a little bit deeper on.

Benjamin Haas  06:25 (Defining goals)

I think that is part of what we'd want to articulate about this phase of life. Financial planning is about numbers, getting to retirement certainly is a lot about trying to think about maximizing things and recreating paychecks and analyzing social security numbers. This phase of life, I think, is more about the questions, the strategies, and the conceptual goals. Before we even get to that financial data, if we're meeting somebody like the Stein’s for the first time, we strongly believe that our best advice will come out of first understanding what really matters most to them. If they have all they need or they're feeling comfortable, how do they want to spend their time with the freedom from work and what fills their day? How they think and feel about money when they're thinking about this phase of life. It’s really more long-term planning on the back-end. Maybe it's going to be more about what they want to see as part of their legacy. We say the word legacy, but what do they want to leave behind? Is it money? Is it stories to share? Is it wisdom, lessons that they've learned? I think this gives us the context, the heart to really start to help them not only prioritize, for instance what to do with the resources, but really how these competing ideas of what we need to keep in my name versus transfer to somewhere else, or gift now or leave it through the estate. It helps us answer those questions, so while some of these upfront questions maybe aren't easy, or they take time to answer and they're not always comfortable, we really do believe that this is something we need to go through with them in order to understand their values and vision, therefore we can then be able to help them with their wealth. I think that the start of the process here is really more of the questions and then we'll lean into the data. So I'll maybe throw it back to you. Let's talk about how we gather that data, how we analyze that data, and then maybe give some insights into what kind of questions are we answering for a couple that's at this phase of life?

Adam Werner  08:26 (Financial Profile and Data Gathering)

Taking it from that standpoint and looking at how do we collect all of the financial data and all the financial information, part of what that looks like for this profile, they probably have pretty good pensions and Social Security. There may be different investment accounts with different investment providers, there may be some insurance policies that are still out there, looking at different estate documents to see if they have them or if they need to be updated. All of that information is helpful and we would use a tool called eMoney, that's our financial planning tool that we would leverage to help aggregate a lot of this information. Now, there is a client portal that clients can log into and link some of their accounts so that you can link your bank account, you can link investment accounts, and it's there so a client can link things up front and then not need to really do anything manually moving forward. If clients don't feel comfortable or tech savvy enough to go through that, we will certainly hold their hand if they're open to using the tool. But we absolutely still deal in the world of paper whether it's making copies of statements, or other documents, putting it in a folder, putting it in the binder. It's our job to sift through all of that and figure out what's important and what's not. We'd rather have more information than less at this point.

Benjamin Haas  09:43 (Proposal)

I think combining those two things, what we've learned about them, what matters most of them, what they provide, and now kind of analyzing the data, as you said, at the onset of this relationship. Now we're going to offer a written proposal and the purpose of that document is to start to list out those questions that either they had, or that we have. That we hope to answer through this planning process, to share some of those initial reports, to provide education but then all of that is going to lead into documenting upfront the cost to hire us and the next steps that we would take in developing this relationship. We would want the Stein’s to know the expense upfront to engage with us before hiring us and we certainly want to quantify how we're going to be able to help by starting to list those things out. Let's talk about the typical questions that we would want to answer for a couple like the Stein’s or maybe said differently, what are the strategies that you and I and the team are going to start to consider when putting this plan together?

Adam Werner  10:43 (eMoney Decision Center scenario planning)

If they're charitably inclined, one thing is, are there certain ways to either give to family or give to charities that make more sense at this point in their life? Is a charitable entity, a trust, or a donor-advised fund, is that something that makes sense just beyond direct gifting at this point? Then on that note, does it make sense to gift from cash savings or does it make sense to donate appreciated investments? Maybe there's life insurance. If they still have life insurance and they're feeling comfortable at this point, the actual insurance need may no longer be there. So are there other things that they should be doing with that insurance policy? Do we leverage that into a long-term care policy that now is more of a concern of theirs and ours? If there's potential to need care or maybe we just don't need the life insurance anymore are there other ways to deal with that cash. The taxes, what do we do about lowering taxes? Are there different strategies or options at this point, maybe it's Roth conversions, something along those lines. Going back to the gifting for family, maybe it's something like they have grandkids that are in college or getting close to that, there are different ways to essentially help cover those costs, even just paying a college tuition bill directly. It goes around the gifting rules, it doesn't show up as a taxable gift. Ownership of certain 529 plans, there's just a lot of those little things that may fit into a strategy here, if that's a goal of theirs.

Benjamin Haas  12:30 (Strategies)

Even when we think strategy, sometimes it goes back to what we would consider the fundamentals. Making sure they have all the estate documents in place that truly reflect their wishes, even something as simple as beneficiary designations. We don't like to talk about the what ifs, but I think it's prudent of us to talk about what if a child pre-deceases us, is their share going to other children (their siblings) or to the child's children? That one frequently gets missed and how that's documented. You brought up the long-term care piece, if it's not insuring, it's making sure that you've kind of bucketed a savings plan to cover that, if and when that happens. That way, you know where it's coming from and maybe it's not all liquidating taxable assets. We often get that question at what point does it make sense to consider transferring assets into my kids name so that it's out of my estate or it's not gobbled up by nursing home costs. There are just a lot of different strategies that I think we would consider or typically consider with a client like this. Even if it's just checking boxes on what we would say are kind of simple, we'd want to come back to that almost every year and make sure that it still seems to fit. I think we could interactively do some of that through the tool that you mentioned, the Decision Center within eMoney and we'd certainly want to help them understand different scenarios or we may call them trade-offs to planning so that we make sure that we've had the conversation. We figure out how we want to go through it but we've really considered all the what ifs in that process. Let's transition then to the last part of what we want to share today, some of the education that we would give and then how that kind of leads into the ongoing service.

Adam Werner  14:09 (Planning Process)

Education is key for us. It's one of our six core values and it's very important to this part of the process, where we're trying to give as much information, the pros and cons of a specific strategy or a specific concern, so that the client can make that informed, confident decision on whatever that goal or aspiration may be. So the way that we kind of look at that, in this instance, is we like to approach it from a worst-case scenario standpoint. If all of the what ifs came true, in a negative sense, are they still going to be okay in their retirement? If that's the case, then we hope that that gives them enough confidence to start to implement some of that legacy plan sooner than later.

Benjamin Haas  14:55 (Key strategies continued)

It may be bucketing their assets and not looking at all their savings as one pool, but beginning to break that down into this bucket is for our cash reserve for the emergencies or things that could pop up. This is the money we plan to spend over our lifetime to meet our needs, wants and wishes, but then keeping two more buckets, one for just the certainty of uncertainty in the future, and then recognize whatever is left after, that really can be a part of implementing that legacy plan right now. We like the idea of bucketing assets for different scenarios and we talked about even investments in the terms of bucketing them. I'll turn that back to you; how do we bucket investments to then support that kind of plan B analysis?

Adam Werner  15:41 (Three Bucket Theory Review)

This would be specifically the short-term bucket is what we would call you know, one to two years’ worth of expenses, or at least what they would need to pull from their savings to help supplement income they're already getting, either pensions or social security, one to two years’ worth of that gap in a cash component that they don't have to feel like they're selling from investments to meet short-term needs. That middle bucket being what we call three to seven years; those are usually income producing assets, whether it's bonds or annuities, anything that can pay you interest or dividends over time. Again, the more stable investments in that middle bucket and then the last bucket, bucket three is your seven plus years. That's where you can really start to allocate towards your growth investments such as stocks or things that you hope not to have to touch over that seven-year period; you're giving yourself permission to take some risk with some assets and allow the market to work over time.

Benjamin Haas  16:42 (Collaboration with other professionals)

I think the last strategy or role that we would want to play in this process for a couple like this is to really be the quarterback not only between the plan and the investments, but also with their other professionals. This is a start to see how the decisions that they're making from a tax perspective or from an estate planning perspective, really the need to be integrated with the documents that they get, either from an estate attorney or their tax preparer. So we're happy to be the ones to kind of bring all of that together with those other professionals as well. With that in mind, let's kind of button this up into kind of talking about our role in our services for them and what that looks like. Then we'll summarize to finish up.

Adam Werner  17:26 (Haas Financial Group Planning Process and deliverables)

The initial conversations on the front end, it's meeting time, maybe it's a few hours of back and forth. But it's getting to know them and getting to know what they're looking to accomplish, sharing some initial feedback, using eMoney interactively either in the office or perhaps through Zoom. But we’re really trying to start to document those trade-offs, document the specific advice, and then we'll actually memorialize that in a document, either in a PDF, in a Word document, so that we can reference it over time. More importantly, it's the to-do list that comes out of those meetings; who's going to do what, by when, so that there's some accountability on both ends and there's those checklists or that to-do list, that those items are going to get crossed off. Over time, some people are happy to delegate some of those activities to us or other people, some people are more hands on and that's okay, too. So for someone like the Stein's, that comprehensive financial planning process, there's a flat fee for that as you mentioned. We throw that into the proposal, it's known, clear, and transparent on the front end and then there's always that second part of what we do which is the investment management piece. So if the Stein's choose to hire us in that way to actively manage their investments, it's two separate services. So there is a separate fee for that service. We manage accounts through LPL Financial and that's typically a percentage of the account as an asset-based management fee. So there's no commissions, there's no transaction fees, there's no surprises from that standpoint.

Benjamin Haas  19:06 (Closing)

Yet, I think what we would want to articulate both through comprehensive planning and investment management is that we say planning is an ongoing relationship and not a transaction for hopefully all the obvious reasons that we just articulated that it is ongoing questions and ongoing reassessment. It's new scenarios, it's sharing updates with each other and reviewing the parts of the plan that really need to be reviewed on an annual basis. When new grandkids come along or when beneficiary designations need to change when something didn't go right. It's going right back into that tool and having a new interactive scenario developed. We want to make sure that everyone knows, especially a couple like the Stein’s here, that constant re-evaluation means that we are building on the initial plan, but that financial planning is not a one-time thing. We look forward to helping them through this phase of life to make sure that all those wishes are met.