What is success when it comes to your financial future? While most people see that as a destination, a better way to look at it is as a direction. And that all starts with a plan. Too often, folks meet with Michael Wallin and Stacey Andres and they have pieces of their financial future figured out, but not a cohesive plan.
Today we look at the InfoRight Process and the six pillars of financial planning - Investment, Tax, Income Planning, HealthCare, Wealth Transfer, and Estate Planning. We also have a special offer for podcast listeners. They can, for free, sign up for the LifeArc program, which allows you to input all of your information and get a projection about your financial future.
To take advantage of this plan, visit https://www.artofwealthunbroken.com/
You can also call Michael and Stacey at 855-378-1806.
Jag: Welcome in to episode number 10 of the Art of Wealth Unbroken podcast. We're here each and every week to help you better navigate during these economic times. We're here to discuss thoughts and ideas in the field of finance and retirement, as well as discuss trending topics that could impact your wealth and how long it'll last.
These discussions can help you make better informed decisions so you can make better financial choices with the wealth you've built and are continuing to grow. Our goal is to help you live the lifestyle you've imagined. Stacey Andres is a registered financial consultant and Michael Wallin is a certified financial planner.
I'm Jon "Jag" Gay. And for our topic today, we're going to revisit the topic of success as it relates to financial planning. Hello gentlemen.
Stacey: Good morning, Jag. Hello,Michael. I am excited about today's topic because I think the discussion that we're going to have on today's show, in my opinion, is the number one contributing factor for people to have happiness or feel happiness, experience happiness and retirement.
Michael: Hello, Jag, and Stacey.To your opening comment there, Stacey. I agree. I ran a survey several years ago that concluded that most retirees and those approaching retirement in the next 10 years or more afraid of running out of money that they have saved for retirement, than they were of actually dying. And that it just tells a big story about the concerns that people are facing and the level of stress that individuals are making when they go into retirement or make that decision.
Well to me, this survey shines a light on the fact that most individuals in the country are hoping for happiness in retirement, but have little in the way of a structured process to give them the highest probability of arriving at retirement with a high level of confidence and navigating those years with a high level of certainty.
Stacey: Okay. So setting a benchmark for today's show let's first start by defining what success looks like. And a lot of people believe that success is more of a destination. When really we believe that success is more of a direction. So success is accomplishing small intervals or incremental improvements that ultimately lead us in a desired direction.
And we measure those improvements often in an emotional way. For example, When the market expands and the strategy that we have selected increases, we immediately feel great about that. We feel we're on the right track, that things are going well, but the opposite is true when the market contracts. So the negative, emotional feeling has been reported to be 10 times greater than when the market has expanded and that things are going in the way that we want them to. And so this can often cause investors to make very poor long-term decisions about the
Michael: direction. We refer to this as recency bias. And the studies regarding behavioral finance are very revealing as to why we humans make or react the way we do when threats are presented.
That is a topic for another show, Stacey and JAG. We'll get back to that one, but for today's show, what we want to talk about is an outline for our listeners, is a better way of positioning themselves and have a level of comfort when these types of threats do become a reality. The solution is to have a process that is consistently followed.
From the first meeting that we have, Stacey, as you know, we sit down with our clients, we share with them who we are. We share that we are wealth advisors that work with a select group of clients that desire to have a work optional lifestyle in retirement. And I'm sure many of our listeners on the podcast today are raising their hands in the air saying, that's me.
That's me. And that's the way I want to be in retirement. I want that optional work life. You know, in retirement only if I choose to and you have to have a process to achieve the highest level of probability for those individuals to have that type of lifestyle for them to achieve their happiness in retirement.
And we follow a six step methodology. First step, you have to have establishment of rapport. You have to have trust in that individual you're going to work with. Consistently gathering accurate and complete information, analyzing the data to identify if it is a standalone or if there's an interdependency in the planning areas that we look at defining a plan that considers all areas of a concern.
And this is so often when we're meeting with clients, Stacey, and they'd come in, it's like they have a jigsaw puzzle. And they've got pieces of the puzzle in that box has puzzle pieces from one box, and then you go over and you look at the pieces and you look at it and you say, this doesn't go with this.
This has come out of a whole different puzzle. And then you'd look over at another piece of the puzzle. And it's like we're looking at a picture that's supposed to have the sky. And this is a piece of puzzle that's a part of the sea. It's so fragmented because they never have a consistent plan. And then that leads us into, how do you define a plan that considers all of those concerns?
How do you create the solution that gives the highest level of probability and then how do you monitor and adjust as necessary? This process allows us to create success for our clients. The destination is always in the future, but the direction is what we're measuring.
Stacey: Michael, both you and I have been in the industry for some time. You obviously talked about this on episode one. You a lot longer than I have, but we've spent a lot of time refining our process over the years. And we know that with clients planning that there's a lot of things that can impact those processes, the plans we put in place. We have external conditions that we have to battle against.
Those could be, market conditions. Those can be changing administrations. We see what's going on right now, just globally. And the upheaval that that's causing. We have talked about this last week again, supplying and demand conditions. And then we also have internal conditions that can impact things. A death in a family, marriage, divorce, retirement addition of children, work relationships, those things all can impact us.
And we need to be educated on the areas where improvements could be made in each area of what we're doing all too often. We hear the same conversation over and over from different clients. So it's like in a lot of ways that we're characters in a real life Groundhog Day movie, the clients have done all the big items that they were told to do.
They started working and they participated in their work retirement plan. Check. They saved money and they bought a home. They met the love of their life. They got married, they had kids, they started saving for a child as occasion. Check, check, check, check. So on. And so on 40 or 50 years later, they come to when they're ready to retire.
And the problem is they've never had a plan on how everything works together. They have all the bricks, but they've never had the mortar to connect all of the financial decisions that they've made over their accumulation period of their life.
Michael: Yeah. Stacey and Jag, it would be very interesting to see a steady that captures how many pre-retirees with a wide range of ages that have met with a financial professional to build a plan in their working years. What they're missing out on is the power of compounding and the power of compounding is what builds wealth. Einstein called it the eighth wonder of the world. And let me just give you an example of what 50 basis points or one half of 1% is. One half of 1%. That's a pretty small number, right?
Jag: Sure.
Stacey: Initially.
Michael: So let's see how the small number can impact a person's happiness in retirement over a 40 year time. So for a moment, let's take a participant and their employer retirement plan. Okay. Somebody may have just came out of school, got a job. Could have been an individual that went through, got their college education.
They've just started out in their new occupation, much like what Stacey just laid out of capturing all of those bricks. Now this individual's making $50,000 a year. They're going to contribute a modest 3% of their income and their employer's gonna match it. So we got 3000 extra dollars a year going into a retirement account for this industry.
The participant's going to work for 40 years with a 5% average rate of return, which is a very conservative return over that 40 year, time period. If they accumulated on their day of retirement, they would have approximately $389,000 in a retirement. But had, they just got a 50 basis point increase instead of 5%, they averaged a 5.5% rate of return.
Over that 40 years, their account would have been $440,000. That 50 basis points actually is 51,000 more dollars in their account or a 13% more growth in their retirement. Now imagine if you actively managed your retirement account over those 40 years and achieved or exceeded the average growth rate of the broad market, what could your retirement accounts actually look like?
If it wasn't just a check box that you just arbitrarily marked off. Okay. Did it move on to the next piece? The impact is actually working with someone and not missing out on those 40 years of a person's life, actively managing those accounts. Absolutely.
Stacey: Mike, just back to your point, the truth of that difference and working with somebody who actively manage them is a lot greater than a 50% basis point. That's a pretty conservative example that you're using, but you're right. This has been a great resource that we have offered to our clients through our InfoRight process, where we look at the dependency or interdependency of our six pillars. Those are investment taxes, income planning. Healthcare, wealth transfer, and then finally a big one on a lot of people's minds always is estate. Clients that want to have the highest level of probability in retirement need to consider how each one of these areas works together in their personal lives. So in your example, above that you gave, we see that the person that has the 401k,
has been in a fragmented approach. In essence, each of the bricks in their lives have been viewed independently and not together in a holistic plan. We are multi-dimensional and our plans that bring us happiness in retirement must also be multi-dimensional in the planning.
Michael: You know, many times and Stacey kind of chuckles when we're meeting with clients because.
I always like to sharei nformation that inspires me. Well, one of the most inspirational authors that I've read is Stephen Covey and he has pinned some of the most brilliant, but simple statements and JAG, this one I share with every client and it's begin with the end in mind.
Jag: I like it.
Michael: And the other one is if you lean your ladder against the wrong wall, then every step you take is leading you in the wrong direction.
Jag: You've you've mentioned that in a previous episode, Mike, I remember the ladder. Yep.
Michael: Yeah, those are, I live by those philosophies and I share these quotes with every one of our clients every day. How does someone know that their ladder is leaning against the wrong wall? How do I know where the end is? You know, those are questions that clients often bounce back to me.
You have to have a plan that is driven to success on a consistent process. That is not one dimensional, but it's multi-dimensional in its scope.
Stacey: If any of our listeners today are saying to themselves, I'm not sure if my ladder is leaning against the correct wall, then we actually have a special gift for you.
We are making available, at the suggestion of one of our clients, this week to all of our listeners that visit our website, a free subscription to LifeArcPlan. Our website is artofwealthunbroken.Com. Again the website is artofwealthunbroken.com. In a meeting this week with a new client. They said that LifeArcPlan has been instrumental in helping them see where they currently are in relation to where they want to be in retirement. And to live that lifestyle, they have always had.
Michael: It's an incredible tool. We'll talk about it on an upcoming episode, but I'm going to close out this podcast with this thought your happiness in retirement should not be left to uncertainty. Be careful not to just check off the proverbial boxes of life, but work with a professional team that is more than just contractual. Spend quality time evaluating the professionals you're going to entrust your path to success. Do the math. Everyone has the same amount of time available to them. How many clients is the advisor currently serving? How much more capacity do they have to be able to provide you with the proper time to make your dreams a reality?
Jag: That is a really good note to end on Mike. And again, the website is arto wealthunbroken.com. If you want to make a use of that free subscription to theL ifeArcPlan that Michael and Stacey have mentioned, the website is artofwealthunbroken.com. If you want to know more about Stacey and Michael, talk to them about planning your financial future, or if you're old school want to pick up the telephone, give them a call. You can do that. And what is the number to reach you at?
Stacey: The number is 855 378 1806. 855 378 1806.
Jag: Good stuff. As always. Gentlemen, we'll talk to you again next week.
Stacey: Thank you, Jag. Thank you, Michael.
Michael: Thanks guys.