Ep 2: Details vs. Relationships

Ep 2: Details vs. Relationships

The Smart Take:

Unfortunately, many financial advisors fall into one camp or another. They’re either a great relationship person or they’re extremely focused on planning details. Kevin will tell us about a couple who called him recently after experiencing one of those scenarios and how it cost them a lot of money. Listen to this episode of “Retire Smarter” to find out why you should work with an advisor who respects the unique details of your situation, while also developing a strong working relationship with you. Only having both will lead to clarity and confidence in your decision making about your financial future.

Prefer to read? See below for the transcript of the show.

Subscribe To The “Retire Smarter” Podcast:

Click the below links to subscribe to the podcast with your favorite service. If you don’t see your podcast listed with your favorite service then let us know and we’ll add it!

The Host:

Kevin Kroskey – AboutContact

Introduction:                     00:03                     Welcome to Retire Smarter with Kevin Kroskey. Find answers to your toughest questions and get educated about the financial world. It’s time to Retire Smarter.

Walter Storholt:                00:15                     Welcome to another edition of Retire Smarter. I’m Walter Storholt alongside Kevin Kroskey, the President and Wealth Advisor of True Wealth Design in Northeast Ohio with an office there in Akron.

Walter Storholt:                00:26                     You can find us online and listen to past podcast episodes and tap into lots of great information at TrueWealthDesign.com. Kevin, thanks for taking some time out to join us this week. How are you, sir?

Kevin Kroskey:                  00:38                     I’m good, Walter. I’m good. We are in August now and I got some big news on a personal front. We are t-minus 13 days until daughter number two comes into my life and my wife’s life. So, pun intended, we are in the home stretch as they say.

Walter Storholt:                00:54                     That is very exciting. So, does it feel easier this time around number two compared to the first one?

Kevin Kroskey:                  00:58                     Well yeah, if I almost feel that question’s a little unfair to ask me. Probably my wife does most of the work here. Right?

Walter Storholt:                01:05                     You’re still there in a supporting role though, Kevin?

Kevin Kroskey:                  00:58                     Yeah, I put it on a couple of pounds in sympathy. So, she’s ready to get this baby into the world and to kind of be done with lugging the poundage around. So, honey, I appreciate you. I appreciate all the work you’re doing for us and our family and home stretch.

Walter Storholt:                01:21                     If your wife doesn’t mind. I’m just always curious. Has she had any bizarre cravings over the last couple of months? Like what’s been her goat to craving through the pregnancy?

Kevin Kroskey:                  01:31                     So my wife is lactose intolerant and that actually goes away while at least sometimes it can go away. So last pregnancy it was hello pizza, hello, ice cream gave me some more cheese and this time it’s kind of this fine line. It’s like, okay, did it happen again? And the only way to know if it happened and she can actually eat that food, that dairy we all love, is to go ahead and try it. And unfortunately, when she did that test, it didn’t work out so well. So actually this time it’s been more salads than she hasn’t been craving anything sweet. So in one way, it’s good because frankly, she didn’t put on as much weight with this pregnancy. And on the other hand, it’s not so good. So we’re a glass half full kind of people. So it’s all good.

Walter Storholt:                02:13                     I would love to have a craving once in my life for a salad that just sounds like a recipe for success right there.

Walter Storholt:                02:21                     Oh, that’s too funny. Well, very cool. Well, best of luck over these final few days to you guys. I’m sure everything will go smoothly and we look forward. Have you picked out a name yet or are you guys still deciding?

Kevin Kroskey:                  02:30                     Oh man, that’s a long conversation. I thought, yes, we did take out a name and my wife reneged on the name and we’re negotiating. And two days ago she pulled the card. She said, you know, I’m carrying this baby around. So ultimately I got the final say and I’m sitting there and I’m like, you know, she’s kind of right, but I can’t let her know she’s right. So we’ve got to navigate this so it’s still up for discussion, but we’ll see to be determined as of yet.

Walter Storholt:                02:54                     Well we look forward to hearing the name of baby number two on the way soon. That’s very cool. Well got a great podcast on the way for you today to talk about some of the things that’ll help you Retire Smarter, plan better for your financial future. In fact, Kevin’s lined up a really good story to tell us today. More details on that in a moment, but we’d like to get some housekeeping out of the way first, Kevin, and this is where we get to just kind of be, you know, instead of having the fast-talking car salesman disclaimer in the show, we’d like to take a little bit more personal approach. So what do people need to know before we go through today’s information?

Kevin Kroskey:                  03:26                     Sure. Think of a Retire Smarter show as helpful hints and education. You shouldn’t take advice from the show. If you need advice, you need to reach out to your financial tax or legal advisor. And if you don’t have a good advisor, visit us at TrueWealthDesign.com there’s a button on the page it says, “are we right for you?” Go ahead and click that or just give us a call at (855) TWD-PLAN and one of our Certified Financial Planners. We’ll be happy to talk to you.

Walter Storholt:                03:53                     Well, speaking of helpful hints and education, that’s what happened to you recently. A friend called you last week, Kevin, and that’s the impetus for today’s story. Tell us what happened.

Kevin Kroskey:                  04:05                     So it was actually a Saturday morning and I got a call from a friend that I had spoken to, you know, while, and it was really exciting to hear from them and when he called, unfortunately, it wasn’t exactly under the best pretenses. And what he said to me was that there was basically some things that he and his wife had concerns about and he’d been working with a financial advisor who’s also a good friend of mine. We’re all friends and the other advisor and he and his wife had been working together for years and he and his wife found something. It was a mistake and it was something that was supposed to have been done a number of years ago and wasn’t done. And ultimately it ended up costing them roughly about $20,000 and basically lost earnings. And it caused them not only to pause and reassess the relationship but just to look back and wonder, Hey, if we found that this was missed, what else is happening that hasn’t been done or hasn’t been done as well as it should have or has also been missed. And so what he asked me to do was just review everything that had been going on, review all their investments, review all their planning, but also keep it in confidence from our advisor friend. And I, of course, said that I would be happy to help.

Walter Storholt:                05:20                     And how often does that happen, Kevin? How often do you have somebody that you know, that true second opinion that they’re seeking because they’ve got this inkling that something’s not right?

Kevin Kroskey:                  05:28                     It’s a regular occurrence. You know, if you think about if you’re going to have major surgery, say you know, on your back or shoulder or whatever it may be. And you know, I had this for myself, I had a recommendation a number of years ago that I needed rotator cuff surgery. I was active, I was a baseball pitcher, quarterback, played a lot of volleyball after college and just a lot of that, you know, overarm throwing motion and a had a partial tear and had a recommendation that I needed surgery and went, got a second opinion. And the doctor that I saw for the second opinion said, you know, you probably shouldn’t be doing the over the arm stuff, you’d be fine with golf, but you know, you don’t need surgery. You may at some point, but you really don’t need it now. It’s actually been about 10 years now since that has happened and I haven’t had any recurring issues from it.

Kevin Kroskey:                  06:21                     So at least looking back over the prior 10 years, that second opinion was right and precluded me from having, you know, surgery, painful recovery, you know, sleeping in a chair is what I’ve been told and just a lot of pain and it was ultimately, I don’t want to, if I say I was completely unnecessary, but it certainly hasn’t been necessary for the last 10 years. So having a second opinion really saved me. And when it comes to financial planning, investment planning, getting ready for retirement, you know, it often makes sense. So we probably have at least a handful of those, you know, every year where somebody coming in and wants a second opinion on what they’re doing themselves, you know if they’re kind of going it alone or on what another advisor has been doing for them. So it’s just prudent. You would do the same thing if you’re having surgery and you should do the same thing before he makes a big retirement decision as well.

Kevin Kroskey:                  07:09                     That’s a great point and interesting to hear that people aren’t alone in maybe having those inklings and those feelings. Very common. And I think it’s wise to compare that to other industries like the medical community, and I’m sure we could find lots of other examples, but everybody’s got that story of somebody who went and got a second opinion and it ended up being a totally different course of action that was recommended from their first opinion, which is interesting that two professionals can be so far apart. And so when you dig into these plans, Kevin, do you find that you know, that indeed is the case as well. You started looking at it and say, Oh my gosh, how did they have you, you know, placed in this or set up this way? This is totally different from our philosophy or how we would approach it.

Kevin Kroskey:                  07:46                     Yeah, so I apologize for the deep side, but unfortunately this is I think a little bit, our profession is growing up, you know, we’re not as old and as steeped in tradition and may be as sophisticated quite frankly as the medical profession or the legal profession or the accounting profession. You know, financial planning is really probably about 40 years old, 40, 50 years old at most of this time. And frankly, it was born out of the late seventies as a way to sell more life insurance. And so it’s really not the most prestigious of beginnings, but that’s really where it emanated from. Now certainly it’s come a long way since then, but there are still many more salespeople out there than there are true advisors and true planners and the other advisor that my friend is working with and who’s a good friend of mine, I wouldn’t necessarily call him a salesperson, but he’s definitely more of a relationship person than a detailed person.

Kevin Kroskey:                  08:43                     And in this business and in a relationship and serving a client, you need them both. They’re both, you know, very, very important. If he has somebody that is really light on the details but you know, makes you feel all good and fuzzy when you come in or has some client events that are fun to go to. Sure that may be great and you may have a good relationship with them, but you know what may be being missed financial planning wise, investment-wise, tax-wise. And you know, in my friend’s case it was a $20,000 mistake. We’ve seen mistakes, you know well into the six figures for other, you know, new clients that we have, mistakes that they’ve made are mistakes that other advisors have made. And whenever you have somebody coming in and looking at that, you know, we’re kind of playing Monday morning quarterback, right?

Kevin Kroskey:                  09:27                     So we do have the benefit of hindsight. However, whenever you have this relationship, the planning process should be pretty uniform from advisor to advisor. Do you need to start with a client? What’s important to them, what are their goals, what are their preferences, what is their spending look like? And then ultimately you’re going to go ahead and look at their income sources. Social Security, pensions, deferred compensation, you know, rental income that they may have from properties or something like that. And then you get down to, well, whatever’s not being met by those income sources really has to be made up by their savings and their investments. So you go ahead and you start stress-testing their plan. So that rough process really should be followed by every advisor. And that process I just described sounds simple, but there’s a lot of details that are in there.

Kevin Kroskey:                  10:16                     It’s really our job to simplify it, to explain it to our client so they can understand it and make a really informed decision. But there should be a lot of work that goes on behind the scenes that are really detailed oriented technical work to make sure that the I’s are dotted and the T’s are crossed to go ahead and provide good advice. And then you have how the advice is actually going to be implemented. And in our business that’s where you see a much wider spectrum of, you know, is it going to be a more of an insurance-based strategy where somebody going to be recommending an annuity, which we’re not necessarily big fans of or are they going to go more investment focused to go ahead and provide retirement income? Well is that investment focus going to be more index or passive based or is it going to be more active where somebody trying to make a forecast of the future or maybe somebody trying to pick stocks rather than diversifying broadly?

Kevin Kroskey:                  11:06                     So the planning process I think should really be uniform and if you’re a Certified Financial Planner, they have a process that they teach you. Now I can tell you that most people don’t follow that process and don’t go into the level of the detail that they should and I can say that because I’ve been a teacher for the retirement planning course at the Certified Financial Planner programs, one here in Northeast Ohio before and I’ve interviewed a lot of people to come and work in our business as advisors over the years. And even if they came from what I would think are reputable firms, really when you look beneath the surface, they didn’t really have the technical competency that they needed to have to be successful and provide the level of detail and service that we do here for our clients. Not that we couldn’t train them, but they were just coming in with a bit of a handicap and a gap between where they are and really where we need them to be.

Walter Storholt:                11:57                     Well, I know some people will have those red flags or those alarm bells kind of start going off in their heads like it sounds like this couple did. They said, Hey, we think something’s amiss and then wanted to follow up with a second opinion. But I think a lot of people are walking around because of that relationship aspect perhaps that you talked about thinking everything is fine, not even knowing that they need to be raising red flags or be on the lookout for some of these things. Are there any details that people can be on the lookout for to be a little bit more aware of some of the complexities that might tip them off to the fact that they don’t have the best plan in place?

Kevin Kroskey:                  12:29                     Sure. I can think of several. So it really starts with your cash flow and if you’re going into an advisor and they’re just asking you, Hey, how much do you spend? And they’re just taking that verbatim and plugging that into some financial plan and making some projections and just clicking a button and it’s kind of like a magic box and here’s your answer. That’s a big red flag. We always work under the assumption, you know, Hey trust but verify. So how do we verify, cause some of the things that we do, you know, you can easily look at somebody’s take-home pay and if all they are living on their take-home pay and you know their savings that they have down at the bank stays about the same year to year. Well, I don’t know exactly where their money’s being spent. However, I know that Hey, if they have $90,000 a take-home pay and their savings stayed about the same, then they spent $90,000.

Kevin Kroskey:                  13:21                     So that may say, well Hey, we’re going to spend $90,000 in retirement. Well maybe not. You know, maybe you put $10,000 into some landscaping or a deck that you did. And that’s really a one-time expense. So you need to do some massaging of the data and back that out. Maybe you had your son or daughter got married and you gave them $5,000 or $10,000 or $20,000 for their wedding. And you know, hopefully, that’s the one-time event. Right? So you need to back that out. So then you have clients that have more sophisticated situations where you know it’s not just them spending their take-home pay. So you need to start there. And because we understand the cash flows and because we do tax planning and tax preparation work here, taxes are a big part of cash flow. So if your advisor also doesn’t understand taxes or they say, Hey, just consult your CPA on that, that’s also a big red flag.

Kevin Kroskey:                  14:08                     All of this stuff is interrelated. So if the left-hand doesn’t know what the right hand is doing, that’s not good. You want every hand working in your best interest. You know, making sure that things are integrated, making sure that you’re making the most of what you have. So if you don’t understand your cash flow and you think you do and an advisor’s not doing any double-checking, if they’re not telling you, you know how your spending is going to change over time, most likely as you age. And they’re not accounting for that. If they’re not understanding your taxes, doing tax projections and tax planning for you. And just saying, Hey, you know, talk to your CPA. Those in my mind are all major, major red flags where you definitely need a second opinion.

Walter Storholt:                14:49                     So what are those actionable for getting that second opinion, Kevin, is it as simple as picking up the phone and you know, giving somebody like you a call to start that conversation like the couple did when they had that red flag raised. And how long does that process usually take? And are you able to find successful conclusions for most folks or are some people kind of, you know, up the creek without a paddle so to speak?

Kevin Kroskey:                  15:09                     Well, you know, I don’t think anybody’s up the creek without a paddle. There’s always, you know, something you can do to make your life better. You know, tomorrow’s a new day, it’s up to you, you know what you do with it. And if you’re all set on your retirement planning, if you have a great advisor that is really good on the details, understands the cashflow, understands taxes and can take you through that retirement planning process and make sure that they’re implementing well and then keeping a close eye to make sure that you stay on track and there’s a good relationship there. They know you, they understand you, they listen to you and they made sure that the advice is really tailored to you. That’s wonderful and if you don’t have that or if you’re not sure you have that or you want a second opinion, then all you have to do is really reach out to us and we’d be happy to go ahead and explore that.

Kevin Kroskey:                  15:55                     If you visit us at TrueWealthDesign.com and click the “are we right for you” button or just give us a call at (855) TWD-PLAN, it’s (855) 893-7526 we’d be happy to schedule a short 15-minute call. One of our Certified Financial Planners would be happy to talk with you and see what we can do to help and answer some of these questions that you may have. Now in asking yourself, Hey, do I really have a good plan in place? Do I really have those details taken care of or is it more of a relationship based advisor and what may be being missed?

Walter Storholt:                16:33                     The a team at True Wealth Design has an office in Akron, a new location in Canfield now as well. If you’re out to the East, a little bit of the Akron area, very easy to start that conversation. It doesn’t start with a long drawn out commitment of you coming in for 15 meetings to talk about your situation and to get sales pitches and that kind of thing. Very simple. You’re going to schedule that 15 minute call to explore and see if there indeed are some red flags, some things that worth reviewing in more detail about your financial plan. So if you have any of those suspicions, any of those question marks surrounding your financial plan or you’re just not sure that all the details are being covered in your financial plan, it’s easy to reach out and schedule that time to meet one more time.

Walter Storholt:                17:17                     The recap of how to do that. TrueWealthDesign.com is the place to go. TrueWealthDesign.com and just click on the “are we right for you” button to schedule your 15-minute call or if you like doing it the old fashioned way, you can call in to schedule that time as well. (855) TWD-PLAN, (855) 893-7526. Kevin, another podcast in the books. Thanks, as always for your helpful guidance and information and we’ll look forward to another great episode with the next time around.

Kevin Kroskey:                  17:46                     Alright. I appreciate it, Walter. Have a good day.

Walter Storholt:                17:48                     You too. Lots of fun. That’s Kevin Kroskey, President and Wealth Advisor at True Wealth Design. I’m Walter Storholt. We’ll look forward to talking to you next time on Retire Smarter.

Disclaimer:                          17:57                     Information provided is for informational purposes only and does not constitute investment tax or legal advice. Information is obtained from sources that are deemed to be reliable, but their accurateness and completeness cannot be guaranteed. All performance references historical and not an indication of future results. Benchmark indices are hypothetical and do not include any investment fees.