Is Your Retirement Advice Already Too Late? Why Proactive Planning Matters

In today’s episode, you’ll learn more about:

• What proactive financial planning actually means
• Why preparation matters in advisor meetings
• The difference between investment management and true financial planning
• How we help families navigate retirement transitions and major life decisions
• Roth conversion mistakes and tax planning coordination
• Why written recommendations and ongoing advice matter
• How taxes, investments, healthcare, and estate planning all work together

Listen Now:

The Smart Take:

Go Inside the Episode: 

0:00 – Intro

3:23 – Two Core Meetings Each Year

4:25 – Progress Meeting

12:42 – Tax & Investment Review Meeting

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The Hosts:

Kevin Kroskey, CFP®, MBA – About – Contact

Tyler Emrick, CFA®, CFP® – About – Contact

Episode Transcript:

Tyler Emrick:

One thing that still surprises me about the industry is how reactive financial planning advice still is. A lot of meetings are just investment reviews. But real retirement planning is much bigger than that. So in today’s episode, I want to walk through what proactive financial planning actually looks like, how we structure planning throughout the year, and why coordination matters so much as retirement gets closer.

Walter storholt:

Hey, it’s time to Retire Smarter. I’m Walter Storholt, alongside Tyler Emrick, chartered financial analyst, a certified financial planner, and ultimately a wealth advisor at True Wealth Design. You can find us online at truewealthdesign.com for more episodes, great information, check out the blog, all sorts of great resources there, of course.

Tyler, we’re diving in today into talking a little bit more about financial planning, of course, but really talking about advice, and making sure that we are more proactive than reactive. That’s kind of good for anything in life, is to be proactive. But I bet a lot of people would wonder, okay, that sounds great, but what does that actually look like? And that’s the crux of today’s episode.

Tyler Emrick:

You got it. Yeah. We’re continuing on this theme about the financial planning process. We’ve done a handful of episodes prior about meeting with a financial advisor at first, what a financial plan looks like. I think this is that next evolution on the ongoing advice, to your point. So we want to dive into a little bit about how we do it here at True Wealth Design and why we feel like that proactive advice really matters.

I mean, I don’t know if any of the listeners work with advisors and they feel like maybe, hey, most of our meetings are just investment conversations or them driving it or asking particular questions. Even as I look at my own career, earlier on in my career, I worked for a big broker-dealer in the industry, a wonderful company. But while I was probably handling five to seven appointments a day, Monday through Friday.

Walter storholt:

Yeah, like, breakneck speed, yeah.

Tyler Emrick:

Absolutely. And as you could imagine, my prep time for each of those meetings was short. So driving those conversations, we had things that we wanted to talk about. But anytime that it became, “Ooh, how much should I convert to a Roth? How much should I withhold in taxes?” Like, the very granular, some of those granular decisions, it really just fell short. And I think that would come through for a lot of families that, when they’re meeting with their advisor, are like, “Well, hey, do you have a meeting agenda? Do you get that meeting agenda beforehand, and you can digest and think through what are we going to talk about today? What are going to be some of the recommendations?” So you’re not just going in there cold. Do you find yourself bringing up things to your advisor as opposed to your advisor bringing them up to you and to help you navigate?

I think those are some of those tell-tale signs, but we want to kind of just go into how True Wealth does it and how we structure that process throughout the year on the podcast today, for sure.

Walter storholt:

Yeah, yeah. You should feel like the advisor’s more prepped for the meeting than you are in a way, right. If it feels like it’s the other way around … I have a feeling today’s episode’s going to be a lot about that, like, how things should feel. Maybe the things are less tangible in some areas. Hopefully you’re able to give us a few things there, but this is maybe also a listen to your gut sort of thing.

Tyler Emrick:

Oh no, absolutely. Well, and it’ll probably show through as we kind of continue through here, but we are very process oriented here. So even when we think about structuring meetings and that normal cadence with our families, most of our families don’t get just a random call from us saying, “Hey, why don’t you just come in for a meeting this year?” It’s much, much more structured than that. Most families know exactly what time of year that they’re going to come in, what we generally talk about on those meetings and how that process works. Most of our families are boiled down into a couple meeting per year cadence. So we want to kind of pull those typical meetings out here and talk about them. The first of which would be a progress meeting and the second would be a tax and investment review meeting, which progress meetings typically happen around spring, summertime and then our tax investment review meetings happen sometime in Q4 or right there in fall.

So let’s kind of dive into each of them, talk through what’s important, why we do it and what we discuss on each of them. So the first one would be our progress meeting, which this would be what I would consider to be our core financial planning meeting. We’re having a lot of conversations, Walt, on let’s track your progress. How have things changed from the last time that we got together and let’s kind of do a full update to that good old financial plan. What life changes happened? What life changes do we have coming up that we need to evaluate for and kind of is the boat moving in the right direction? Okay. One of the best examples of kind of how these conversations can come to light is … We’re in the thick of these meetings right now. I just had one a couple of weeks ago with a family that I’ve been working with for a number of years and they’ve actually been searching for a home.

They wanted to stay in the area. They’ve been searching here in Northeast Ohio. The housing market’s still really good. Houses are going pretty quick. There’s not a lot of inventory. So they were just trying to struggling, Walt, on finding like, well, hey, this perfect place that they could kind of settle in on. And so our conversation with that bad luck, our conversation now has turned to, “Well, what if we build? And we have some extra land. What does that process look like? ” So as an advisor, since we have a plan kind of put in place, it’s very easy for me to drive that conversation and say, “Well, hey, let’s first talk a little bit about budget and how that kind of fits in the plan.” And we were able to test that plan to kind of show, “Well, yeah, you could afford X from a budget when you think about building. Have you started talking to builders?”

“Yeah, we’ve talked to it. What’s the square footage? Does that fit in?” “Yeah, great.” So that kind of checked the box like, okay, financially, we were thinking about buying a house using some of the equity of our current and making that transition, but now, hey, this whole different path, it’s possible. So now that we got that, hey, within the framework of the plan, this budget could work and this fits, now comes all those questions of, they’ve never built a house before, Walt. So, what is that like? How many builders should we talk to? Well, how’s financing work? Should we finance it? All these things as you think about this big life change that you’re coming into, they’re like, “Well, hey, let’s talk about it.” So from an advisor standpoint, we have families all the time, building houses, selling houses, changing, getting loans and all that good stuff.

So we’re able to facilitate that conversation and drive and have almost a pick list of like, “Well, hey, this is how it works. This is the first step. This is the second step. Hey, once you get this far, now we need to look at financing. Well, how does that work with our current? Where would we go for financing? Could we shop out loan rates?” So all these questions that come up with this simple like, “Hey, we’re changing course. I think we were going to try to build a house as opposed to buy ’cause we’re not.” Took up a big piece of our meeting just helping them with that big life transition. So we find our meetings, these progress meetings are a lot of that. What’s possible with the wealth that we’ve accumulated over the years and maybe we’re thinking about changing. Not every family’s building a house every year, but these can come down into, “Hey, we’re thinking about taking more vacations.

What could be an increased budget on there? Hey, we’re going to push the car purchase. We’re not going to do that, but next year we’re a little tight on our income planning. Where would we get the money from to buy that?” We just did a podcast, we just recorded it, right. It’ll be out before this one. We’re talking about what a financial plan should do for you. Well, hey, financial plans, results are looking better, let’s talk about how you’re using your wealth and how you’re spending it. So these normal yearly progress meeting updates are very much us doing a dive into your entire financial picture and trying to get a very good understanding of what changes need to be made and how can we help you through those changes.

Walter storholt:

I think it probably also highlights the type of families that you guys work with at True Wealth Design. And I think full transparency, correct me if I’m wrong, but you don’t probably have a lot of the, “Well, we’re just going to sit on the front porch and sip sweet tea in retirement for 30 years type of clients. You guys probably work with folks that may not be building a house every year, but they’ve got something in that vicinity, something in that realm going on in their lives at least every couple of years. Like, you mentioned the trips or something else or, “I’ve got some new idea I want to do. I want to help this person with this. I want to do this now or we’ve got this new goal that we have.” I imagine that makes up a big base of your clientele and the types of families that you work with.

Tyler Emrick:

It could. Yeah, absolutely. But I would argue too, a lot of our families won’t adjust … They’ve lived well within their means. They were frugal, they saved, they prioritized saving and they found themselves in this position in retirement to where they’re, “Hey, they’ve done great.” Their plan could support a lot. And it’s very hard when you think about that transition to just you’re not going to change you. So all your life, you saved, you saved, you saved, you were smart with your money and then all of a sudden it’s not like you’re going to flip and become just this big spender in retirement. But those are fun conversations from an advisor standpoint for us to have to challenge that thought, whatever it is, right. Hey, you use the wealth that you’ve accumulated however you see fit. That’s the beauty of it. But to have an advisor that’s kind of pushing and challenging on how you’re using it, not necessarily like, “Ooh, are you sticking to the budget?”

But those ones that are really fun to have where it’s like, “Hey, you can do more. What would that look like if you did? And have you thought about it?” Because that’s a huge mindset change for a lot of families, Walt, as you think about all the good skills and habits and traits that it takes to accumulate a good nest egg, they’re tough to necessarily change and you’re not going to necessarily just change you once you make that transition into retirement. But these meetings, these progress meetings are where we’re really spending some diligent time kind of diving into that and how you’re using your wealth. Another big thing that these are doing is these are giving us insight into some of those big life transitions that might be coming up, right. Hey, are we going to apply for social security this year or not? Are we kicking the can? Is your healthcare going to be changing? What do we need to prep for?

And what are the timelines? What are the deadlines that you need to make sure that you’re aware of as you’re thinking about that switch into healthcare? All these things, this is our roadmap. This is making sure that we’re staying up on our task list and making sure that nothing kind of fits through the cracks. Certainly we’re talking about investing. Investing is important. It’s a part of basically every meeting that we have. So this progress meeting, there is some time there for investment planning. And then I would say there’s also some time for estate planning as well. I mean, estate planning is one of those things where it’s maybe not an every year kind of update and review, but at least once every handful of years we’ll go in and look at all your estate planning documents, take a look. Does there need to be any adjustments, changes?

I mean, Walt, it’s amazing how sometimes over the years they just go by and, “Oh yeah, I haven’t updated my trust or my will in the last 15 years.” “Oh, really? Has things changed? Have priorities changed? Beneficiaries changed? Any of that type of stuff that we need to look at. Is your executor still alive?” All these things as you kind of look at just those housekeeping items that we need to be mindful of, estate planning is certainly kind of in that realm and a piece of this pie as well. So we’ve had quite a few of those over the last year or two. So it’s kind of top of mind for me still is like, “Ooh, have we checked those estate plan documents and is everything updated appropriately?” That’s what’s part of that progress meeting as well, right. All that proactive planning, that’s what we’re trying to get ahead of here when we’re thinking about this meeting, for sure.

Speaker 1:

What would your life look like if you designed it around your true wealth? It’s a powerful question and one that True Wealth Design helps individuals, families and business owners answer every day. With a fully integrated approach to financial planning, tax strategy, investments and business advisory, their team can bring clarity and confidence to every part of your financial life. Take the first step toward a stronger financial future with a no cost, no obligation discovery meeting. Just click the link in today’s show description to get started.

Walter storholt:

And it really sounds to me like it’s a life meeting, right. Like, you’re looking at just how everything connects all the big picture stuff and that contrasts a little bit with your second meeting where that’s the more engineer meeting, that’s the nerd meeting, right.

Tyler Emrick:

It is. It’s more in the numbers, right. I think from an investment standpoint, the plan definitely this meeting, we drive a lot of our investment decisions and plan decisions from this ’cause hey, if the plan’s moving in a good direction, you’re accumulating assets, it’s getting better. Hey, do we need to change the way that we’re thinking about your investments? Or on the flip side of that too, right. Hey, plan results aren’t improving. Maybe we’re spending a little bit more than what we originally projected. Do we need to adjust that? Do we need to tweak it? Do we maybe need to rethink how we’re managing those investments as well? But it’s all within that framework of the plan, right. And we’re driving those plan results to help us make those decisions in the here and now. But you’re right, the year-end meeting, this tax and investment review meeting is a little bit more number heavy for sure, getting down into some of the nitty-gritty on some of the tax planning and advice.

We have them at the end of the year, Walt, by design, the question becomes is we have that 12-31 deadline each year. What do we need to get done by the end of the year that we haven’t? A lot of things come up on that pick list, whether it’s Roth conversions, do we need to get them done for the year? How much do we need to do in Roth conversions? Do we need to realize any gains inside of your taxable brokerage account? Do we need to fund a donor-advised account and do some of that bunching strategies for the gifting? All that kind of comes in to this year-end tax and investment review meeting. You’ll hear investments are still in there, still a conversation, still discussed, very important, but on the flip side of that, this is much more of that tax-focused. And when I think about down to those recommendations and the meeting agendas that our families gets, we will literally have that recommendation in there in black and white.

We do quite a bit of tax returns here at the firm and so from time to time, we’ll have some good stories where here, hey, this family might not work with us on the wealth side. They might work with another financial advisor, but we handled their tax return. That’s not uncommon, Walt. And there’s a family this year that I won’t forget, because we had done their tax return and through that tax return, they actually had done a Roth conversion, which actually increased their income up high enough to where they were in that good old IRMA, where they had to pay more for Medicare premiums and they had a pretty substantial tax bill, which was way different than prior years when we had done their tax return. So when we called and we were starting to kind of talk to them about, “Well, hey, what changed this year? What were we trying to accomplish?”

They’re like, “Well, my financial advisor said I should probably start doing some Roth conversions. So we just did a Roth conversion.” “How’d you come up with that number?” “Oh, well, we just did a roundabout and did it.” Sometimes your advisor, if they’re giving you recommendations that are what I would consider to be a little gray, “Oh yeah, you should probably think about doing Roth conversions. Oh, you should think about doing X, Y, and Z.” That’s a little bit of a red flag for me because when you think about what you’re going to your financial advisor for, your financial advisor there should be giving you very granular specific recommendations on, “Hey, you should convert this dollar amount. Hey, you should move this investment over to the Roth. Hey, you should pay your taxes this way. This is the bill.” Those recommendations are very step by step, very detailed because we’re doing the work.

So a lot of times when we think about our recommendations, very rarely is around this amount going to work. A lot of times there’s hard cliffs, there’s very specific things that we’re trying to accomplish with those recommendations. So if your advisor is not going down into that granularity, well, I think that’s going to be a very tell tale sign to say, “Well, hey, am I working with a holistic advisor that’s taking into consideration everything that I’m doing, not just maybe my investments or just handling my tax return or whatever the case may be.” But this tax and investment review is our set dedicated time to kind of look at those year-end tax items and say, “Hey, what do we need to do and what do we need to get in for the upcoming year?”

It’s also our next time to kind of say, “Hey, we just updated the plan earlier in the year. What’s that plan have for spending next year? Where are we going to pull our money from? Hey, do we have a big car purchase? We need to know where that money’s going to come from, which account? Let’s put that on that meeting agenda. Let’s make sure our families know exactly where their money’s coming from at the end, next year. Has our income and distribution strategy changed because of some of the tax law changes? Do we need to tweak next year because you’re starting social security?” All these things we’re kind of hashing out and kind of looking at that upcoming year saying, “Hey, what’s that checklist that we need to be mindful of that could change your tax or distribution strategy?” And that’s all kind of here in this year-end tax and investment review meeting.

Walter storholt:

Excellent. Yeah, makes a lot of sense. I mean, if decisions are being made in a vacuum, red flag, ’cause again, back to our previous point, all of this fits together.

Tyler Emrick:

Oh, it does. Absolutely. And that’s a pretty general cadence that a lot of families that we work with fall on, that progress meeting, plan update, and then year-end tax and investment review. But that doesn’t mean that our families don’t have life transitions that might not line up perfectly with that. So from time to time, we’ll do just ad hoc meetings, right. “Hey, come in, we’ll handle your social security application. Hey, you’re changing healthcare, let’s come in and complete that application. Hey, you’re transitioning into retirement. That’s a big deal. Maybe we should have a retirement transition meeting to outline all the to do items that need to get done and kind of set you up to make sure that you feel comfortable with where your money’s going to be coming from to live off of for the remainder of the year.” So these ad hoc meetings come up from time to time.

Certainly when we make investment changes, some families want to talk to us and get on our calendar to talk about those investment changes. So we can have more than those two meetings per year and welcome to do it and talk to our families as much as we need to, but that’s generally how we think about like, well, hey, what is going to be the process that our families are going to need to follow to put them in the best situation going forward? And this two meeting cadence seems to work pretty well for the years that we’ve been doing them.

Walter storholt:

Yeah. And that coordination is probably so helpful and so important probably means you have a lot less ad hoc meetings than you otherwise would because you’re getting so much value out of those that people’s questions that might pop up during the year they’ve already covered. They’ve already had answers to it. They already have a plan leading their decision making like we talked about on the prior episode.

Tyler Emrick:

You got it. So our families, before each of these meetings, we’re reaching out to them with a little bit of a questionnaire to kind of give us some updates, what’s on their mind, what do we need to make sure is on the meeting agenda from their perspective. And we’re using that to then update our prep and do our prep for those meetings. And then we’re posting to their client, Walt, where they can kind of take a look at those meeting agendas before they come in, digest and making sure that we’re just using that time as productive as possible, because it’s amazing how many of these things kind of prop up through the year, Walt, where it’s like, “Ooh, I got to handle this. I got to handle that.” So hopefully we’re driving a lot of that and helping our families feel comfortable about the decisions they need to make.

Walter storholt:

And not every one of those meetings has to be some dramatic thing either, right? Like, you probably have a lot of families that just have very stable situations and they go on the same number of trips each year and the same amount of visiting to the grandkids and the same. So there may not be a ton of update every single year and they’re probably a little bit easier meetings and it’s more so reacting to the environment around us. There’s always that people-

Tyler Emrick:

Always a good headline to come on, right, and talk through and make sure that we’re applicable too. Right. Absolutely. And tax law changes and the like. So you’re absolutely correct. But-

Walter storholt:

If I don’t have something going on, Uncle Sam or the world is going to have something going on for us to talk about.

Tyler Emrick:

Yes. Well, and these things can be anything. It’s amazing how many things go, death in the family, kid coming, changing jobs. “Hey, what’s going on with these new Trump …” Anything that can come up, it’s fascinating how yes, there might not be something specific like, “Hey, we’re building a house this particular year.” But yeah, always a lot of good stuff to kind of talk about and make sure families feel comfortable with how they’re using their wealth.

Walter storholt:

Well, this one’s easy. If you are thinking about retirement, planning your financial future, maybe even working with a financial advisor currently, but you’re not having these kinds of meetings, they’re not this in depth, they’re not coordinated in this way, could be a red flag. Might be time to reevaluate that relationship, especially if you’ve got just a lot of areas of opportunity to maximize what you’re doing, a way to make taxes more efficient. You can just see the doors that start to open with proper planning. And if you’re not going through that, hey, let that be a little red flag. Get a second opinion of how you’re currently doing things. It all starts with a 20-minute discovery call with Tyler or Kevin or a member of the team. You can schedule that 20 minute discovery call by clicking the link in the description of today’s show or by going to truewealthdesign.com and just follow the let’s talk button from there and you’ll be all set.

But again, link in the description will take you right to the calendar, schedule that time to visit, have a conversation with Tyler or a member of the team and walk through these concerns. See if you’re a good fit to work with one another. Talk about what a true plan, what kind of difference that’s going to make in your financial life. All great conversations, and Tyler, I know we just scratched the surface today, but plenty of examples about how those doors start to fly open.

Tyler Emrick:

Yeah, no, absolutely.

Walter storholt:

Yeah. Awesome. Well, thanks for joining us everybody. We’ll see you again next time right back here on Retire Smarter.

Speaker 2:

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 reference is historical and not an indication of future results. Benchmark indices are hypothetical and do not include any investment fees.