Jude Wilson  00:41

I’m doing well. I’m glad to see you. We’ve had a little rocky road here, but I’m glad we’re back together again.

Marc Killian  00:48

The plague is running around, man, everybody I know that’s got this thing. It just doesn’t want to die. It’s a nasty little bug that’s been going on this this first part of the year. So if you get sick, be careful out there. But you know, this happens a lot. Jude, right? You know, why do I need an advisor? Right? Well, the rules change when we get into preservation and distribution versus accumulation. So let me, let me tee us up here with this, this listener question, and then we’ll, we’ll debate it. All right, let’s do it. So the person says, I’ve managed my money successfully over the past years, and I think I’ve done pretty well. Everyone says that this point in life, I’m getting close to retirement. I need an advisor, but I’m having trouble with the concept of turning it all over to somebody else. Since I’ve proven I can do it, what is your argument, Jude, for why I should have someone else like you handle my affairs? Great question. A lot of people feel, you know, hey, you know, I’ve done pretty well with this accumulation thing, and that’s the difference. Jude it’s a completely different animal that people don’t realize until they start to get close to the retirement levers, right?

Jude Wilson  01:52

There’s basically two phases of our financial life, and I kind of like to draw a picture for clients so that they really get the concept. You can draw a picture of a mountain, let’s say. And at the base of the mountain, the first time you were able to save $1 you were in the accumulation phase, right? And so every dollar you know, got you closer and closer to the top of the mountain, which we call that financial freedom. So imagine that you’re at the top of the mountain now. You’ve saved up all this money, you’re going to start trading your money to buy back your time. You’ve got financial freedom. Well now you start the distribution phase, and the rules for going up the mountain are completely different from the rules going down the mountain.

Marc Killian  02:34

Well, I think about, you know, climbing a mountain, right? I mean, granted, I’m no mountain climber, but you know, more people, statistically, do die on the descent from like Everest, for example, right? Because you know you’re exhausted, you’re tired, you’re on your way back down. And you think about it like if you’re climbing and you trip and fall, you probably fall forward on your face, right? Your walk. You’re coming back down a mountain. You trip, you can take a header, and you’re you’re stumbling down the you’re rolling and rolling and rolling. And I think that’s kind of the analogy for your finances. We don’t there’s there’s less time. The stakes are higher, Jude, and there’s less time to make mistakes, right? You don’t want to step in the wrong place, roll your ankle, so to speak, and then be screwed up.

Jude Wilson  03:15

Absolutely. Because in the accumulation phase, the biggest thing that you have to do is just save and put and put money in.

Marc Killian  03:23

And let’s be honest, that’s a lot easier.

Jude Wilson  03:25

100%. But in the distribution phase, there’s so many more things that you have to think about. You’ve got to think about, how can these assets produce income for life, income that I can’t outlive? And then what are the tax consequences for those dollars, not only while I’m taking them out- leaving them to a spouse or to other beneficiaries, and this is really the time it to get back to the question, the core of the question, this is really the time to start to seek advice if you hadn’t sought advice previously, because that that that 10 year window, in fact, Prudential had a study many years ago called The retirement red zone, the five years previous to retirement and five years after retirement and decisions that you make there could totally change the ball game for how efficient your dollars are and how much money you have to work on for The rest of your life.

Marc Killian  04:22

Well, you know, at the sake of being cliche, and a lot of you know, things that we do as humans are definitely cliches, but you don’t know what you don’t know. And if you’ve been building the money nicely, to this listener’s question, Hey, I’ve done a good job with accumulation. That’s awesome. There’s a lot of tools, and there’s more tools out there now, even for the retirement thing, you could go do this Absolutely. If you’re a smart person, you can absolutely go do this, but what you don’t know could get you in trouble. And it’s the complexities Jude that really start to mount up with the retirement aspect, you know, the distribution phase. So let me just throw a bunch at you, and then I’ll just let you tackle them however you want, sure, but there’s social security timing. There’s Medicare. Or there’s RMDs, there’s do you do Roth conversions to deal with RMDs, there’s sequence of return risk, right? I mean, it’s like on and on, and how you pull one affects the other. And so if you’ve never done that before, and odds are you haven’t, because it’s your first retirement, how do you know how to handle this stuff?

Jude Wilson  05:18

Yeah. And for most people, it’s their first retirement for but for firms like ours, we’ve helped hundreds of right? We’ve, we’ve seen this ball game before, right? And, you know, kind of getting back to your point, if I’m five years or 10 years from retirement, or even longer, and I’m looking at this market, there are things I would venture to, I would venture to say most people are probably not considering right now, like right now, might be a great time to do a Roth conversion, moving money from always taxable in the future to never taxable in the future, and moving that money from that IRA while the market is down, and letting it bounce back in the Roth so that it grows even more and grows tax free.

Marc Killian  06:01

To your point on that, yeah, to your point on that, you just for context for people, depending on when you’re consuming this content, we’re taping this on April 2, and the markets had two decent days after pretty much getting hammered for the last month, right? So just for some context there, right? So it is still down, it’s starting to maybe, maybe pick back up. We’ll see how that goes. But that’s a great point about, you know, doing conversions at a certain time or again, all these different pieces. You know, the RMD question, you know, if you’ve never been there, you don’t understand the fact that you’re going to have to do this, and then you have, it’s like, I pay taxes now and all that stuff, and that changes with your income and so on and so forth. And it’s just a and then two years later, you also go, Why does my Medicare go up? Well, because you did too much stuff, and the Irma’s looking back two years, right? You didn’t know that either.

Jude Wilson  06:47

That’s a chain of events, just like you were saying that one decision could make multiple errors regarding how that how those dollars are taxed, and how your how your Medicare premiums go up. Perfect example. We had a client once who had attended our tax and retirement seminar came in for a strategy session. The gentleman had been saving for years, had a portfolio of over $3 million and once to convert all of it within the next two to three years to a wrong okay? And when we walked

Marc Killian  07:24

I thought you were gonna say one year, and I was like, Oh man, yeah, two to three is still bad enough. But one, yeah.

Jude Wilson  07:30

Exactly. But when we walked him through what the the that triggering event would do, yeah, number one, it would put him in a higher tax bracket, because he’d have to recognize that income. And Number Number two, it would trigger higher Irma, higher Medicare charges through through Irma, and so his premiums would be much higher. So that one decision, although it sounded like a very sound decision, I want to convert. I want to have tax free dollars for the rest of my life, how you do it and how you implement it makes a huge difference.

Marc Killian  08:05

Yeah, and again, you know, to this person’s question, and this is and let me get to the heart of it. We’ll wrap it up with this piece of it. We talked about a lot of the little different nuances, and we’ve done many episodes on all those different pieces that people would like to go check out some of that prior content. But we’ll focus on addressing this person’s question here and this, to me, Jude is the big piece, the fear of turning it over comment, right? That’s what a lot of people feel like when they think, okay, I need to go get a professional but I’m scared I’ve done a good job, and rightfully so. I’m afraid to trust somebody with this is my nest egg. This is my everything I built, and I get that, but you’re not turning it over. I think that’s where a mind shift needs to take place, right? Jude, this needs to be a collaborative effort. You should, as Jude Wilson, should not care more about the plan than John Smith, the client, right? You know. So it’s got to be a collaborative effort. Is that? Is that how you work with people on trying to get over that hump?

Jude Wilson  09:01

You’ve had your hand on the wheel for your entire life, but now may be a good time to think about it this way. Yes, you’re a good investor, yes, you’ve gotten good results, but it goes back to what you were saying earlier. Mark, you don’t know what you don’t know, and at this point, the added value is not having an investment matter, right, right, right. Added value is the financial planning that goes with a true wealth management firm like ours, where we’re looking at efficient distributions, we’re looking at longevity of the assets and the income. We’re looking at legacy, all of these things. If it’s just for investment management, I would say you probably have a decent argument. Yeah, but if you’re looking holistically at all of the things that affect having a successful retirement, then a professional really brings a lot of value to the table.

Marc Killian  09:57

And let’s not forget another piece of this juice. Do you even want to do that in retirement? Like that’s where I think a lot of DIY ers, and I know you’ve had a fair amount come across your desk as well. And I talk with advisors all across the country, people have this grand idea, I’m going to save money. I’m going to do it myself. I’m going to keep my hands on the wheel to your point. And they get into retirement and they go, I don’t want to do this. I want to play golf. I want to hang out with my grandkids or like so you got to ask that part of that question as well. And your spouse.

Jude Wilson  10:28

I was going to say two last points. One of the things that we’ve been trying to communicate more with clients is you’re not just a number. What is the why at the center of your wealth and those things like going on vacations, buying the second vacation home, or creating a significance while you’re alive, not just a legacy when you pass away, those are all things that can be planned for. And then to your last point, one of the most touching things to me is when I sit in front of a couple, and usually there’s one person who is the driver of the finances, you know, they’re really into it, and there’s another, the other spouse, although it’s important to them, sure they’re not checking, you know, CNBC every day and what the stock market is doing. And so what’s really touching to me is when, when that spouse says to me, Jude, I trust you. Because if I’m not here, I want to make sure my spouse is well taken care of, and I don’t want sharks coming around right when I’m not here. I want to build a relationship with someone that I trust, who’s going to take care of my family when and if that time happens?

Marc Killian  11:42

Yeah, I mean, that’s why it’s so important that both parties are involved. I mean, even if one party doesn’t care that much, right to your point, it’s like, okay, I know who to talk to when things get shaky. You know what I mean? And so it’s, it’s good to have that peace of mind in there as well. And so I think that’s, that’s a lot of times, the turning it over thing is, is where it’s got to. It’s the collaborative effort. You know, if you, if you’re getting together with an advisor, you that’s why you should interview a couple. Find talk to one, talk to two, talk to three. Find the right one that resonates with you, so that you can work well together. And Jude, I know you have people that also like, say, Hey, I still want to have a piece and a piece that I’m I’m managing, because I want to, I want the action, or I want to have my hands on the wheel or whatever, but I want you to make sure that you know we’re not going to be in the poor house, so to speak, right? So you handle the heavy lifting, and I’ll do a little bit of fun stuff, right, right?

Jude Wilson  12:34

Nothing wrong with that. Nothing wrong with that at all. In fact, I suggest to clients that you may want to have one to 5% of your liquid net worth, that is your go to Vegas money, you know, just however you see. Because if you make a mistake with about 5% of your liquid net worth, it’s probably not going to hurt you that much serious money should be with someone that is looking at the big picture and the plan and how it fits all together.

Marc Killian  13:03

Yeah, the tax efficiency side of that is the huge piece that most of us just don’t deal with. And do you want to stay entrenched and learn that information and up to date and the constant changes that they’re doing? Right? I mean, that’s why, again, turning to professionals in parts of life is important. So, you know, look, you’ve earned the right, you’ve done a good job this person’s question, you’ve earned the right to be skeptical Absolutely. But there’s so much stuff out there that you could take the time and learn it. But then again, you’re also opening yourself up to making mistakes you never even knew you could make. So I think this is one of those places where a lot of di wires do you do find themselves at the table of or at the corner of, yeah, maybe it’s time to get some professional help, right? I’ve done a pretty good job, but this is starting to get a little sticky, you know.

Jude Wilson  13:46

 100%. So come see us.

Marc Killian  13:49

Yeah, exactly right. Well, we’re gonna wrap it up this week. Great question. Thank you so much for sending that in. Thanks for checking out the podcast. Of course, don’t forget to subscribe to us on Apple, Spotify, YouTube, all that good stuff. If you need some help, reach out to Jude and his team. We’ll have links in the show to in the show descriptions below, so you can get some time onto the calendar, or go to the calculator, check out the tax bomb.com to look at maybe some of that raw stuff and how taxes might affect you. So lots of stuff there, but get yourself some time onto the calendar. Chat with Jude and his team, serving Florida, but all over the country as well. He’s got clients everywhere. So if you need some help, reach out to him and we’ll see you next time here on the Roth guy, thanks, buddy.

Jude Wilson  14:24

Thank you, my friend.

Walter Storholt  14:29

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