Welcome to how to retire on time, the show that answers your questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, How to Retire On Time, which you can grab to do on Amazon or by going to www.howtoretireontime.com. My name is Mike Decker. I'm the author of the book, How to Retire On Time, but I'm also a licensed financial adviser, insurance agent, and tax professional, which means when it comes to finance, your money, all of the above, we can pretty much talk about it all. Now that said, please remember this is just a show.

Everything you hear should be considered informational as in not financial advice. If you want financial advice, you can request your wealth analysis from my team by going to www.yourwealthanalysis.com. With me in the studio today is David Franson. David, thanks for being here. Yep.

Glad to be here.

David's gonna read your questions, and I'm gonna do my best to answer them. You can text your questions in to (913) 363-1234, or you can email us at, hey, Mike, at how to retire on time dot com. Let's begin.

Hey, Mike.

Do all financial advisers do basically the same thing?

It probably feels like that, doesn't it? Yeah. So there's different layers of financial advisers' responsibilities, objectives, and so on. So I don't wanna disparage anyone in particular, but I wanna kind of open up the purpose.

And let me tell you a quick story.

Alright.

About a year ago or so, a guy had met us in one way or the other, signed up and scheduled a call and said, well, hey. I wanna work with you. And I said, well, why is that? He says, because you do planning. I said, okay.

Are you currently working with anyone? I wanna know if there's existing relationship. And he said, yeah. Well, I've got an investment adviser. I said, okay.

How come you're chatting with us? He says, well, he just grows our assets, but I want someone that's gonna do the planning. Notice the difference in discipline. K? He has an adviser who was paying, like, 1% or whatever it was to grow the assets, and apparently, the adviser did a a pretty okay job at it.

It's been easy to grow your money since 02/2010. Everything's gone up, but, hey, good for the adviser. I don't know if the adviser did better in the performance or whatever it is. I'm not here to judge that, and I didn't know. But the point is that this person we were chatting with had someone that specialized in one objective, and that was growing your assets, but knew that there were holes in the objectives when it came to retirement.

He wanted to retire in a couple of years, and he wanted to put a plan together, which is why he was calling us for that purpose. Mhmm. So there are some advisers that are more comprehensive than others. There are some advisers that focus on a specific discipline or a specific area, and it's important to know what's what, who's who, and how they're paid. Yeah.

I don't wanna talk about the payment right now. You need to know those things, but I I wanna chat about the specialties, and I I'll let it into this. Who's the yeah. J. D.

Power and Associates. The one that Chevrolet likes to boast about. Yeah. I'm really not sure if those are legitimate awards or not. But they get touted, They get touted.

I mean and Chevrolet. Chevy's are a great, great company, but JD Power did a study on financial services.

Okay.

K. The whole independent space. And if you're not familiar with the independent space, what you need to understand is there are in this space, there are RIAs or IARs. That probably sounds like Greek.

Yeah. Tell us what that means.

It means independent. Okay? So they're supposed to be giving advice. And then you've got broker dealers, which will transact different things, and then you've got the banks, and the banks are banks. In the RIA or IAR space, the independent space, some people are truly independent, and others are kind of owned by a mutual fund company or some sort of large conglomerate, whatever it is.

Okay.

So it's really obvious to me of what they're gonna sell you based on who owns you or who doesn't own you.

Because if you're not fully independent from some other hire, whatever.

Well, it's like, hey, we own you, you can do what's right for the client, but wink wink, nudge nudge, like

Okay.

We have our products. Yeah. Right? So that information is important. And, again, I'm I'm I'm dancing around something because I don't wanna despair in something.

Sure. If you have group x y z, who's allegedly a bunch of independent advisers who are associated with fund x y z, what do you think the group's gonna offer you? A certain fund. Mhmm. What do you think their planning's gonna be around?

Making the fund work for your plan. There's this inherent conflict of interest, in my opinion. Now let's liken it unto a simple analogy. Are butchers bad people? No.

No. I love butchers. There's a butcher specifically that lives near me, or there shops near me in Fairway, love walking in their shop, and I say, hey, what's good? What's new? What's the fresh cut?

What's what's going on? I'm looking to do a cookout. You know, got my big green egg in the backyard, and love love smoking meat, love cooking meat, but meat's not the only thing we should eat, you know? Right. Eat your vegetables too.

Yeah. I'm not going to my butcher saying, hey, what veggies are in season? You know, it's wintertime. What roots? Should I be working on brussels sprouts, roots, squash?

They're just saying, here's what's new in the meat section. Talk to someone else about the vegetables or the grains or whatever else I should be eating. I should never expect that from a butcher. So if I go to a grocery store, I've got all the options, but the quality of the ingredients also might vary. So you might operate off of a cheap or discount grocery store that might focus on prepackaged processed foods that might not be best for your health, but it's more affordable.

You can get what you want. Maybe you don't know the difference between how a healthier diet could affect you. I'm going down a bit of a rabbit hole here, but you see the nuance

of

it all.

Sure. Sure.

I believe that most people do not fully understand where they are shopping and where their advice is coming from. Mhmm. In case in point, had a fun conversation this week. This individual is working with an investment adviser. They also have a CPA, and they're kinda playing the middle bound trying to get all the advice.

And he says, I'm making a lot more money now. I wanna retire in a couple of years. What should I do? I say, well, how are you getting paid? He says w two income.

I said, well, why is that? You're a % commission. He said, well, what do you mean? I said, well, can you negotiate with your company? And he's he's probably listening to it right now.

He's a smile at this. But because he says he listens to the show every week. But if you can negotiate and be a $10.99 contractor with your same pay Yeah. Same situation, maybe you drop the benefits and you go because he's past 65, he goes to Medicare and gets a a good plan or a good situation there, saves the company money, saves him some money too. You can renegotiate your agreement, and then you're paid as a single member LLC that files as an s corp.

Mhmm. It's a lot of tax jargon, but here's what it basically means. Yeah. You put the money into an LLC. You're paying yourself a salary, and then the rest of it is profits.

You've now created a tax efficiency by paying less in FICA, which you don't really need paying more in the FICA tax when you're in your late sixties.

Right. Right.

K? You're able to negotiate then a way to put more funds into, like, a SEP IRA because you're self employed, which that's 36 or so thousand dollars that you're deferring taxes, which he wasn't able to do, and you start opening up all these different ways of becoming more tax efficient. Uh-huh. Able to put more money into the right places, able to have more control over your income, your cash flow, your taxes, and so on. And he says, no one's ever told me this.

Yeah. And so why is that? Why wouldn't his another adviser have mentioned that to him?

The CPA, who's probably a brilliant person, is doing tax preparation and is not being asked to do more work. CPAs are paid by the hour. Who wants to say, hey, CPA, let me pay more hours to just explore maybe some potential tax efficiencies knowing that you might not be able to find anything. We we don't know. Maybe the CPA doesn't realize certain things.

I mean, who knows? Yeah. The adviser probably has some sort of disclosure that says they can't offer tax advice, so they can't talk about this because many shops are set up that way. The whole problem is so easily solved if you're working with a holistic comprehensive professional, which is so far and few between. Now Mhmm.

Let me go back to the J. D. Power and Associates study.

Yeah.

They found that around 14% or so, if I remember the statistic right, of financial offices, the independent allegedly fiduciaries, are actually offering full comprehensive services. So as in if you pick a hundred shops of people that are signing up thinking they're getting full service Yeah. Only 14 of those hundred shops are actually doing full service planning and support and services. That ought to be shocking. That ought to be startling.

And so Kedric Wealth, for example, no one owns us. No one's telling us what funds we should offer. No one's telling us, hey, do this alternative investment, or this Delaware statutory trust, or hey, sell these buffered ETFs, or hey, We're a bank offering these structured notes. We can pick the products we want. No one owns us.

No one tells us. And that opens up for a much more comprehensive conversation. We do our own taxes for our clients. That opens up a more comprehensive conversation of saying, look. You keep reinvesting these dividends in your brokerage account.

Mhmm. You're creating a tax bubble that's gonna get bigger and bigger and bigger over time. Why don't we reinvest them into this, let's say, Berkshire Hathaway. You wanna grow your assets. Berkshire's not gonna be paying a dividend anytime soon, so we're growing your assets, but we're not creating a larger tax issue.

These conversations are not happening because people are trying to coordinate. I've got a butcher over here. I've got a farmer over here, and everything's just gonna work out. Mhmm. Or they're walking into a discount store, and they're not understanding, because they're not working with a dietitian, how what they're eating is making them more sick, and how their health could be better overall.

Right. And so we've kinda talked a little bit about taxes and investing. How does insurance fit into all this?

Yeah. So when you say I've got a guy and they happen to work for an insurance company, you don't really have a guy or a gal. Right. You have someone that's gonna offer you an insurance product, which is not right or wrong. Yeah.

I mean, when I wanna smoke a brisket, I need to buy a brisket from someone. Mhmm. But it's just going there and saying, hey, like, look, the brisket may not be the right thing for you. How about you do this kind of meat? You can still smoke it in this way.

It's gonna be a very similar experience, but maybe change it up a little bit. You know, hey, the tri tip's on scale or whatever it is. Sure. You know? Maybe you do a a there's so many cuts of meat, which is why it's so fun.

But my point being is, unless you take that holistic experience, it's really hard to say, hey, I offer one thing. Do you want it or not? Yeah. If you're working with someone that's insurance only, they're going to make a compelling argument as to why you should buy that product. If you work with someone that's series licensed only, so they have a series 65 or a series 66 and a series seven, whatever it is, that's the investment license.

They maybe can do planning. Some of them can offer planning. Some of them can't offer planning. They can talk to you about stocks and bonds and and certain investments. But if you put money into an insurance product, they're likely to get paid less.

I see.

So that's an issue. I mean, think about it this way. Does a hedge fund want to offer you comprehensive planning? No. Hedge funds, their job is to grow money.

So do you put all of your money into a hedge fund? Probably not.

Yeah. It doesn't seem wise.

But if you have 10 plus million dollars, and you only need 5,000,000 to do the planning and cash flow and all that you need, maybe you do want to put I'm saying this not to recommend that you work with hedge funds. I'm saying this to prove a point. If you have half your assets that you don't need to touch, you're really trying to grow it as much as you can, and you have a hedge fund that you know or wanna work with, maybe you do put it in there with the intention of growth. But at the end of the day, how do you get your best quality of life? The most holistic.

You've gotta have a coach or someone that's looking at everything. Because if you don't, you could be creating a lot of inefficiencies in your plan, in your portfolio, in the coordinated effort because investments affect taxes. Taxes affect your investments. It's your investments and your taxes and how you're approaching all this will influence when you should file for Social Security, how you handle health care. Do you want to pay for more comfortable health care options, or do you not?

Do you wanna try and get by with an advantage planner to try and skirt around certain issues knowing that you're risking certain things, but you've got other benefits? It's all connected, and people gloss over the role of a financial professional for a number of reasons. One is because most of them have had horrible experiences, as in they are working with someone, they just buy a couple of funds and sit on it, and they get paid 1% for doing basically nothing, but an occasional phone call. That's that's ridiculous. You could do that on your own, and so we've we've learned the wrong way, in my opinion, to go about what this position is supposed to be.

I mean, do you really need a doctor to check up on you once you're and say, yep, you're good to go?

It's arguable.

Do do you yeah. Do you do you wanna see a dietitian that says, hey, yeah, eat your veggies, and then never follows up? When you hire the people to get more out of something, their job is to get you a better result than you would on your own. And in finance, in my opinion, it has to be more comprehensive, or else it's probably not worth the money. Let me give you one last example.

Okay. Okay.

So because my health insurance pays for me to see a doctor every year for the annual checkup

Oh, yeah.

And because my wife made me promise when we got married that I would go do the annual checkup every year, I do it. Yeah. Do you know how productive those are? It's not productive at all. I'm not trying to speak ill of my doctor.

I actually think very highly of the medical doctor that I see every year. I think he's hilarious, he's brilliant, he says things as it is, but we have a relationship in case of emergency, he knows I can call him, and he already is aware of my basic situation. Yeah. But here's what's interesting. I pay another company, a tech company, a couple hundred bucks every single year to get like 20 vials of blood.

So I have to go two different weeks to draw all of this blood. Okay. It's then sent to a lab that then runs hundreds of tests that the insurance companies won't pay for, to then run and understand what I should eat, what I shouldn't eat, the different levels of things that aren't showing up on I mean, I'm paying extra for this. To understand intolerances, to understand my genetic makeup and all of that, so that I can work with this company who then does a write up of how I should adjust my lifestyle, my workout routines, my all of this, so that I can live a happier, healthier life. I'm 37 years old right now.

K? My metabolic age, which is if you looked at my physical chemistry, would suggest I'm around 27 years old.

Okay.

I'm living a better life because I'm paying a holistic company to run their research and tell me what I need to live a healthier, happier life. So I pay less in medical expenses. I mean, I can't remember the last time I paid for any drugs Right. Any medicine. Yeah.

I've got more energy, more enthusiasm, spending more time with my kids. It's a lot of fun, but I'm paying extra for that, and then I send that back to my medical doctor so he's also aware of it.

That's interesting.

I'm getting more out of life on a physical level and a mental level because I'm paying for it. The same is true in every aspect of life, and if you want more out of your finances, you have to work with someone that is able to work on a more comprehensive level, that's running more tests, running different analyses, They are looking at all these different aspects instead of just, you're doing fine. Now stop calling me, which is unfortunately the typical response. That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcasts.

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