The Financial Advisor World, Retirement Planning, & How Estate Planning Meshes w/ Financial Planning

Welcome to the Good Steward Law and Wealth Podcast, where host Ledly Jennings explores law and finance to help listeners become better stewards of their wealth. Each episode covers the latest trends and strategies in estate planning, elder law, investment, and wealth management. Tune in for the knowledge and tools for financial success and security.

Yeah, welcome everybody. Good Steward Law and Wealth Podcast. Um, this is our first guest interview.. So I'm really excited, and there's one person I wanted on there, um, first, and I knew he'd bring great content. So I have my guest Ian here with Bespoke Wealth Solutions. Um, he is a financial planner. Um, thanks for being on, Ian.

Ledly Jennings, I'm excited. You didn't tell me I was the first guest. I would have dressed up for it or something.

Oh, we— you always have the best suits. So I'm— that's one thing I look forward to is what kind of— what kind of suit does Ian have today. It's always good.

I take this bespoke thing really seriously lately. So I hear you.

Um, and I wanted to have Ian on because I really don't know exactly how we met. I know it was through Twitter. Um, just, you can learn all kinds of things on Twitter, and I was in there in an active community. There's a lot of people that talk about financial advising, tax stuff, small business stuff, like that type of thing. And then Ian's name kept popping up with some creative awesome content. And then I clicked on it and sure enough, he was from Northwest Arkansas and we live in Arkansas. So eventually that resulted in us actually connecting in person. And then since then we've worked with some clients together. We've done a couple wine seminars together. So I really wanted to have him on just to talk about a lot of the stuff that blew my mind. Just the more I've talked with Ian about stuff I've never thought about. But, and I'd like to start it off, usually I say, what is something that excites you in your personal life right now? But for you, I wanted to know what new wine is exciting you right now that you're just really recently discovered and are excited about.

You know, I am such a wine snob. It's not that I don't like sharing, it's just I love to share with people that appreciate it. So I've got to say, I I really enjoy champagne right now. Bubbles, specifically champagne. I think it's so interesting. But I'm going to add a second one just as a caveat because I've been drinking a lot of Pinot Noir recently and I really, really enjoy it, particularly Pinot Noir from Germany. This may surprise some people, but German Pinot Noir is called Spätburgunder. Which is such a good fun thing to say. You can kind of lean into it there. Spätburgunder. But I've been loving some Spätburgunder recently. If I can find it, that's what I like.

I'm going to trust you didn't just make up that word.

No, no, I didn't. That's one of those fun German words like schadenfreude, which is just a good one. We'll talk about that one later as we go along.

Um, and I guess along those lines, I guess we'll start tying it into work, but what, if anything, and I didn't prep you with this question, but what excites you about your work right now? Like when you wake up each day, is there anything specifically that you're like, man, I really want to learn more about this, or I'm glad I get to do this today?

You know, there's always, there's always something that I am thinking about or learning. Uh, I really do love what I do and I love my, love my clients and even folks that don't become clients that I try to educate. At the time of this recording, we're in August of 2024 and we've got an election coming up and that, in my opinion, has some fairly significant tax implications. And so, I'm trying to say that as sensitively as I can. And so, really, that's what I've been paying attention to in the last few months, but more recently. And so, we've got a sunset law coming up in 2026 whether anything changes or not. And then, we do have some pretty, I'll say pretty interesting proposals from a lot of candidates. And so, I think there's going to be some meaningful impact for many of our clients with that. But to me, it's important to be paying attention to this because these are high-leverage decisions and high-leverage conversations. A client tomorrow. They've saved well, they retired early, and they have— it's not every client that I have that's like this, but they have $2 million in deferred accounts and IRAs and 401(k)s. And last week, I showed them how much they would be paying in taxes if we didn't take action and be proactive. And it's about $7 million conservatively. And so, if I can solve that problem for them, this is a really high leverage maneuver. And so, I really care about this stuff for folks. That's a long answer to a short question, but that's what I'm paying attention to right now.

No, that's a good thing. I've kind of been, for a while now, I've known about the sunset of especially the estate tax in my world, but slowly diving into some of the new proposals and how that comes with just a wealth tax in general and how I feel about it. And I'm just trying to really gather my thoughts around it and obviously come up with solutions for clients. But yeah, it's just a unique thing that I almost wanted to make that part of our topic to discuss today, but I'm not ready. I'm not smart enough yet to talk as much on that.

I'm going to invite myself back right now and we'll do it again. I'm sure we're going to have some more to talk about there.

So, um, but so Ian's a financial planner by trade. Um, I know you've done a lot of other things, but just generally, how did you even get into financial planning and what does your career look like now?

You know, it's funny. I think I was somewhat destined to do this. I know that sounds like a weird way to say it, but I found out pretty shortly after I really got interested in the business that I had a lot of family that is in the business. But I didn't, I didn't know that. I said I found out shortly when my paternal grandfather died. We were at, you know, funeral and things for him, and all these stories started to come up. And he was a trust officer in those days. This was the equivalent at some big banks in Chicagoland area. And I had kind of, I guess, known that a little bit, but some stories about some of his clients and some of the things that he did came up and I was like, oh, this is really interesting. Jesse Owens was one of his clients, the famous Olympian. He had a handful of folks like that. And I'm like, Why didn't anyone tell me about this sooner? There was a lot that I would have wanted to talk to him about. So, that was one. And then, my paternal, my dad's great-grandfather on his— or no, my dad's grandfather on his mom's side, sorry, the twists and turns here. He was a federal judge and he held the IRS in contempt of court in the '60s for what he thought was bullying an immigrant. And so, I grew up hearing that story and find him a quarter million $1,000 in the early '60s is how I understand it. And so, I grew up hearing these stories and somehow kind of ended up in this business. I started with a large mutual company for 2 weeks, worked with them for 2 weeks, decided that wasn't the culture that I wanted to— and they promised me things that they wouldn't deliver. And so, decided that was not the culture that I wanted to be in and kind of took a bit of a circuitous path but ended up as an independent advisor and now run my own firm. I have for almost 5 years now. So, I've taken a non-traditional path and I think I'm somewhat non-traditional in every way. So, take what I say with a grain of salt, but that's kind of how I got into it is getting into the family business. Yeah.

That's some cool stories, especially with the grandfather side. I bet that is pretty interesting.

I know. I wish I would have gotten to hear more of his stories and his approach to things, but Thanks, Gil.

But, and so you kind of hit on where I wanted to go next with this is just, I want you to explain the financial advisor world to me. And I guess as a background on mine, eventually I was licensed, um, well, brokerage license, and that's a whole nother thing, but similar test. But when I first got introduced to financial advising, I think I was in college and in a personal finance course, and they laid out, you know, what is a Roth IRA, showed you the power of compounding. I was like, Oh man, I gotta go start investing. And I went to Edward Jones agent in town that my parents used and got set up for all of that. And I didn't know the difference of anything really. What a— the dip, you know, in our town, there's Edward Jones, there's Ameriprise, there's a few independents, there's a bank that has a, you know, wealth management division. But I didn't know the difference in all this. So, and since then, in my time working as what I do now, I get to meet all kinds of advisors and learn that there's independent ones, learn that a lot of people charge differently, um, and how they charge and what— why you need to be educated on that. Um, so long form to say, I'd love if you could just highlight what is the financial world like, how— what's the difference in each of these big box names versus what your setup is, and then how are the various ways that advisors can charge?

There's— I will do as much as I can as fast as I can. This could be hours of conversation. But I want to make it simple for your listeners. I'm going to break it up into a couple segments here if that's okay. And I think my logic will make sense as we go. What most people are familiar with is a broker. And that's someone who is paid a commission to sell a product. It's not necessarily good or bad, it's just that's the way that it works. And really the reason that it happened that way is because when a lot of this financial regulation was getting put into place in the '40s, business was done differently back then. And the way to distribute access to financial products was through individuals and they were paid a commission in order to do that. It's an efficient model. A lot has changed since then and so have some laws, so have some regulations, and in my opinion, so has access to better financial advice. And so, I would make a distinction between a financial advisor and a financial planner, first of all. And I am a certified financial planner. And so, I have a professional organization that I belong to, the CFP organization. And so, the reason I bring that up is because we're trying to make that a protected title. It'll probably take a couple of years, but we're trying to make it a protected title because the contrast, a financial advisor is very broad. Just about anyone can call themselves a financial advisor. There's really not a lot of regulation around that. And I think it's important because attorneys and CPAs, they have protection in their titles. You have to actually be an attorney to call yourself an attorney as far as I understand it. And so, and same with the CPA. And so, even though sometimes those things get confused by folks. And so, that's a beginning distinction right there that I think is important. But where I really draw that distinction is from a duty perspective, a financial advisor very broadly, this could be someone that's insurance-only licensed. This could be someone that has a securities license, but their license allows them to receive commission for their their sales, or this could be someone who has the type of licensure that I have, which is a license to be able to charge a fee for managing assets. In the financial advisor world, regardless of those licenses, there's a different standard of care that's required or a different duty that's required. And very generally, I'm overgeneralizing, but that is the suitability standard. Okay. And so, here's the way that I explain this to clients. And this really applies primarily to— well, sorry, let me back up. I will get into who this applies to. But the suitability standard is let's say you walk into— let me explain it. Let's say you walk into a Men's Warehouse, for example, and you need to get a suit for your buddy's wedding. If you leave with a suit, that salesperson has fulfilled the suitability standard. Okay? I know we're saying suit a lot, but this is easy, right? Now, on my side of the aisle as a certified financial planner, regardless of the type of licensure, I am a fiduciary. I act as a fiduciary at all times. And that means that I have to act in the best interest of the client and I have to manage and disclose any material conflicts of interest. Okay? And so, that's a huge thing. And that's the standard of care. I noticed that you're calling the show The Good Steward. Podcast, which I love that language. That's really what we're talking about is stewardship here, okay? Different from suitability. And so, in my Men's Warehouse example, what that means is if you came in to get a suit, not only would you have to leave with a suit, it has to look good and it has to fit and it has to be the right color. And so, I love watching people come across people's faces as they get that. And so, some of the firms that you mentioned, are what are considered broker-dealers or hybrid firms. And so what this means is you can have different types of licensure. So the securities license that I have, it's a little different because I'm a CFP. They'll let me kind of waive the right to any of these securities licenses because of that credential, which is kind of nice. But there's really two different standards that are there. One is the fiduciary and one is the suitability standard. But these household names, Edward Jones, Merrill Lynch, Goldman Sachs, Ameriprise, these are typically, they're either a broker-dealer or a hybrid model. So, the way my firm is set up, I work with what's called an RIA, a registered investment advisor. And that's a company. And I act as the— it's always a company. An RIA is always a company. And the person who works at that company is the Investment Advisor Representative, the IAR. If that's not confusing enough, they can help you with your IRAs. So forgive— don't you love these, all of these, these little pieces here? Um, but so an RIA has a fiduciary standard, okay? And so that's important. Um, but Jones, um, Fisher— well, Fisher's interesting. I shouldn't have said that. Um, they're another— they're another thing entirely. Um, but the household names are going to be either a broker-dealer or a broker-dealer plus an RIA. Okay. And I'm explaining this to say, this is confusing stuff. And I think this is why we wanted to talk about it. This is really confusing. But someone that works at a broker-dealer, they have a suitability standard, which means that they've just got to sell you whatever roughly fits, you know, what you need. So in a financial example, let's say you want an S&P 500 fund. They could sell you one that has a 5.75% upfront fee on it. Before you make money, you give them 5.75%. Or they could sell you one that has a really low expense ratio, which is what I would sell you if I were doing this. Now, as a suitability standard, either one of those is acceptable. So, That's a really interesting thing. And so, these hybrids that have both a broker-dealer and an RIA, the client, technically they're supposed to disclose when they're acting in what capacity, but which client is reading this paperwork and who understands this? And so, this is a big challenge. And what we're driving at here is the conflicts of interest that are involved. And this is what I think is important. And so, the reason that I have set my firm up and the way that I do business the way that I do, bringing this around to your other question, is I am not willing to accept anyone else's input on what I recommend to a client. And that's kind of an interesting way to say it, but I will always do what's right for the client for no other reason than it's the right thing to do. Well, I guess for one other reason, I'm selfish. I really want to sleep good at night and I have no reason, like I want to be in this business for a long time because I love taking care of people. And so, that's why I do this. And I don't want anyone else to tell me what I can or cannot recommend to a client. And so, I'm independent for that reason. And my business is structured that way for that reason. Other firms, some of the firms that you've mentioned, the advisor, while they're always a nice guy, this is what everyone always says, their advisor's a really great guy. And of course, they are, right? This is the job is building relationships and selling stuff. Of course, they're nice. But they have a different duty. And this is what I'm going to argue is that if you're an employee of a company, your duty is to your principal, who is the company. And so this area of who is acting in whose best interest and what the conflicts are get really, really murky. And technically, especially in these hybrid firms, they're technically required to disclose when they're acting in a broker capacity and when they're acting in an RIA capacity, but it's typically done in writing. And so, the way that I explain it to people, and maybe I'm a little jaded about this, but I would rather you and your clients be thoughtful than just assume that everything's fine. What advisor is going to sit there and tell you they're not a fiduciary when they're trying to get you to sign on the dotted line? Now, I say that and I actually have a Someone that I have visited with, they have not signed with me, but they told me that their advisor told them they're not a fiduciary, which I found to be fascinating. That's the first time I've heard that. So it's somewhat food for thought, but things that are permissible in the broker-dealer world is they'll typically have a handful of different funds. So someone might listen to this and write you an email and say, "Well, Reg BI that was put into place, Regulation Best Interest, was supposed to bring everyone up to a fiduciary standard." Yeah, but I can draw drive a bus through that. And here's how it works. So, this was put into place a couple years ago. They've been litigating this stuff for the last few years. And so, I'm trying to talk conceptually because there's nuance, but your clients don't care about this. But the way that the broker-dealers get around this, they're supposed to have a fiduciary standard. Okay? Well, not really. They're supposed to have a best interest standard. Isn't that interesting? And best interest, think about it this way. So, let's say one of the firms that you mentioned earlier, that rhymes with, well, never mind, but you can put it together. What they'll have is they'll have a list of different options for you. Like when I review, for example, I'm talking about a different firm. When I review an Edward Jones portfolio, I know exactly what I'm going to see. There's about 10 fund companies that they primarily recommend. And this is a fun thing for your clients to look up. You can look up the Edward Jones revenue sharing disclosure. This is really a good one. You just find it on the website. They get additional compensation above and beyond what they're going to normally pay their agents of about $60 million a year, Edward Jones does. And so, it tells you, it breaks down by fund family how much they pay in additional fees and expenses. Can you guess which ones I see the most often, Ledly Jennings?

The ones that probably pay better.

Surprise. That's what we see. And so, Reg BI, what that did is it said, hey, When you're acting in a broker capacity, the broker-dealer, they're supposed to act in the best interest of the client. That sounds great. That sounds great when we talk about it. What ends up happening is, let's say they have a menu of different options. We talked about wine a little bit earlier. Maybe they have 10 different options on there or 10 different fund families. And so as long as they're picking the best one off of that menu, They're satisfying their requirement. Now, in my world, I have to look at the entire available universe of products and I have to be able to say, "Hey, the reason I picked this is because I think it is objectively the best in your situation." They don't have to do that. They just have to look at whatever the best one of what they have to offer is. And so, that's like going to a restaurant that has 10 wines on the list and going, "Hey, this is the best wine in the world." It may be, probably not. It's the best wine they have available. And so, there are sneaky little conflicts that are at play here. And so, the other piece that you asked me about is fees. And I think this is part of what you want to drive to as well. This is something that I am really, really sensitive to and I try to educate folks about is fees. Typically, what people are used to is either their advisor gets a commission, the broker gets a commission, they're used to that. Typically built into the price that they're used to paying. And so they don't see it, they don't think about it. Another common way that fees are charged is as a percentage of assets under management. And so transparently, this is one way that I bill my clients. I'm not opposed to fees. I make my living on fees. But I believe that the fees that I charge have— the value that I provide has to be some multiple of what the fee that I'm charging is. Meaning, if you're paying me a fee, I have to be able to deliver more value than it costs to hire me or else I'm not acting as a fiduciary. And so, one of those ways is as a percentage of assets under management. And where that gets interesting is the human brain for average normal people, it doesn't translate dollars to percentages very well. This is what I learned. It does for me, my brain does this, but I tried to explain this to my wife and she was like, "Yeah, what are you talking about?" And I was like, "Oh, wait, normal people don't think like me." And so, what I always tell folks is, look, yeah, you might be paying 1%, 1.25%, 1.5%. Translate that to dollars. Let's translate it to dollars. And so, when I review a portfolio for someone, we always translate it into dollars and it's eye-opening. And sometimes that makes sense. And then there's other advisors will charge a flat rate. And so, sometimes I do that too. There's a lot there. I'm sorry. I tried to condense as much as I could into a short period. Is that kind of the direction you wanted to go?

Yeah, that's exactly it. And I made a lot of notes for me to look into afterward, but also a few follow-ups on that. When, um, so like when I pay my IRAs with an advisor, I'm sure they tell me. I don't even know what they charge. It's just taken out of my account whenever they take it out, and so I never see the money. Yes. But say, and I think you work with clients this way, say they don't even have the money with you. Like, they're not, you're not managing the money. You're just providing a financial plan for them. Yes. When you charge on that, does that just, you send them an invoice and say, I'll give you a plan for this fee?

Is that how it works? Yeah. So, there are some cases where I do that and think of it as a consulting agreement, you know? And so, I, I bill in both ways depending on what the client needs. And so that's one reason, um, I call my firm Bespoke Wealth is because I don't do anything cookie cutter. I just can't. I can't do it. It's just, it is not in my being to do that. And so it's taken me a while to get to the point where I can, and I'm, and I'm able to from a compliance and, and just a business perspective. But I build a plan that's customized to what the client needs. So, some of my clients, I bill them. I bill for assets under management and I do pull it out of the fees that we bill. And for them, that's convenient and it makes sense and it's an agreed-upon rate and they understand it. But even in that case, what I do is I break out what that fee is and I translate it to dollars. And I go, "Look, this is what you're paying me in dollars and cents." Because to me, transparency is so important. And it lets me actually really showcase my value, I think. You know, it's like, look, you paid me, let's say you paid me $10,000 and I save you $250,000 in taxes. That's a really good ROI, you know? And so I like to be able to show that. But other clients, I'll just bill a flat rate. And really what it's based on, Ledly Jennings Jennings Jennings, is what is it going to cost me to provide the level of service that I expect? You know, what's it going to cost me to provide A+ service? And whatever that is, that's what I charge. And so I'm really flexible in the way that I can work with my clients.

Yeah, that makes sense. It's similar to my world. I always tell my clients, you can get a trust done a lot cheaper elsewhere than me, but you're paying my fee for my service because it's going to be set up right. And you said sleep well at night. That's a lot of I've got to know, because I work in a community and they're going to know how to find me. I've got to know that whatever I recommend and set up is going to be done right. And when the kids, someone passes away and the kids come calling, then it's actually taken care of. Um, so I, I do, I think I got this from our, one of our mutual friends, Todd. He said when he has these complex trusts that he proposes, he may tell the client, go away for 2 weeks and think about it and then come back when you're ready, because you don't want to put a client in something overcomplicated that it may solve for a purpose, but it may not be the best for them. Um, so I, I have, I felt that when you said that and that I don't guess we're not really as an attorney, I guess we could be a fiduciary, but I lay it out in my engagement agreement. If, if I tell a client you need more than a will and they don't listen to me, they just want a will done, I lay it out in that engagement agreement saying I'm just providing you documents. But otherwise I have an engagement agreement that I'm saying I'm giving you the best advice that I think you need.

So it's huge. And I think people overlook how important that is. And they just, you know, I think on average people assume that the people that are interacting with, especially if it's community members, right, are good, honest, hardworking people. And most of the time they are, right? But I don't know that it's fair to assume that if it's okay if I say that. And it's like the way that I've always heard it said, and maybe this is something you're familiar with, is I have a lock on my front door. And, it's not because I don't trust my neighbors, I'm just keeping everybody honest. And, I think it's kind of the same thing. But, to your point about our mutual friend, another one that he says, and this is my philosophy and I think yours too, is he goes, "I'm not going to remember to duck you in Walmart. I'm not going to remember if I see you to go in the other aisle. So, I'm just going to do everything right the first time and not have to worry about it." Yeah, that's a great point.

Um, and yeah, all that to say mainly on the fee, I wanted to bring it out that people, clients just need to be aware of how people are incentivized. Um, I think it was, uh, Charlie Munger that said, if you show me an incentive, I can show you an outcome. So if you know how someone's incentivized and why they're recommending something, um, then yeah, it's just important to know that there's other ways out there.

It's true. And I think what should be an eye-opening experience for your clients and anyone that listens to this is if you've worked with an advisor for a long time, and I would trust if you did that you have a great relationship with them. And I would expect that. But I don't think it's unreasonable to go, "Hey, can you outline for me?" Send an email. "Can you outline for me what are the fees and expenses that I'm paying for your service? I just want to make sure I understand it all." watch how fast that phone rings. And it'll be an interesting experience to see how that's recounted to you. And a step further, go, hey, can we translate that to dollars and cents? I just want to make sure I'm paying attention to everything I'm doing. I'm doing a review of my finances. Boy, you're going to get high-touch service for the next 3 months. I promise you that.

Yeah. All right. Quick question. You said low expense ratio in a lot of the things you recommend. Does that mean like each little fund that you put clients' money in, they have expenses associated? So you try to pick out ones that are lower expense because that's kind of a hidden cost that people don't think about.

That is, yeah. And there's a whole other discussion about active versus sort of passive. You know, most people are used to mutual funds, and mutual funds, they're a basket of securities, sometimes stocks, sometimes bonds, other, you know, real estate, And there's generally two philosophies that are approached. One is the active management, which means there's a person somewhere at a desk that is picking what investments are in this fund. And so when you invest in that fund, when you buy those shares, you're getting a percentage of all of those, a little slice of that pie. And ultimately, the active manager is going to be more expensive than not. And so the other alternative is something like an index. And I'm not making any recommendations here. There's other nuance to talk about. But an index is a group of stocks that we can track. Really, indexes were designed to create a benchmark. I do something a little bit different than indexing, but they're designed to create a benchmark for the active manager. And so, they're going to be less expensive because there's not as much trading that's involved. And so, to your point, there are internal expenses in the products, whether it's mutual funds, ETFs, annuities, variable annuities is a really big one. There's a lot of fees and expenses in here. And so that's another piece that you have to be aware of because you may be paying your advisor a percentage of assets under management, but you're also probably, well, almost in every circumstance, you're also paying internal expenses to the fund manager. And so sometimes those can all add up to 2%, 2+%, and that's expensive. And so we need to understand that as well.

Yeah, I remember, I forget, you reviewed something for maybe as a mutual client and you just saw a lot of overlap. Like you have this in your IRA, but you also have this in your 401(k) or something like that. It was just the same exact funds, therefore you're paying double the expenses for the same thing.

This is another, this is another issue and I'll hit it briefly, but you know, When I review a portfolio and I gave the example of a particular company earlier who tends to recommend a certain set of fund families, right? What most advisors are doing is they're choosing investments that have done well in the past 5 to 10 years. And the reason they're doing that is because they want to put it on the screen and make it look really good. Now, at the bottom, they're going to say past performance is not indicative of future returns, right? That's what everyone's always going to say. But it's interesting that that's how the recommendations are made. And so what people miss is that over the last 12, 13 years, we've been in a record bull run, the longest bull run for large US companies in the history, to my knowledge, at least in the past 50 years, we've had outsized returns from large US companies. And so what happens is when I review portfolios, people's portfolios look like a bunch of those funds. And really, if we dig in deeper, there's really like in the past 10 years, like 6 or 7 companies that have driven the bulk of that performance. Your Facebook, your Apple, your Meta, your— I guess I said a couple of those twice— your Netflix, your Nvidia now, right? And so when we dig in and look at not only just what funds do you have and what the expenses are, but what do those funds own, a lot of times you might have 5, 7 different funds and they all look exactly the same when we pull back that layer. And so you're paying for all of these different funds to do exactly the same thing and you feel diversified because you got a lot of funds and you're not at all. So that's eye-opening for a lot of folks too.

Yeah. Yeah, it is. All right. We could talk about this all day, but I wanted to let you flex your chops a little bit on what you're really good at. So ideally, my clients are people that have been successful at some point in their life and they've made it, you know, they've got to retirement. Or they're set up to where they will have a good retirement, whether that's in a work retirement account or IRA, or they own a business that they're liquidating and can retire off that. Um, and one thing you mentioned when we were talking about different things we wanted to hit on was what do you do in retirement? And some people think that, you know, you're just pulling out money, spending it, but you mentioned there's stuff you like to talk about tax-wise in retirement. And, uh, investing in retirement. So you can take either one of those and run with it. I don't even know what my options are with that. I know it just— it sounds like something that I'd never thought about before.

There's, there's a lot to talk about there. Um, I think the way that I will try to frame it is, in my view, I'm really focused on trying to simplify things for people because I think that's, that's the best outcome, is if I can make something really simple for you that you understand, then you can make a good decision. About it. And so, I look at the phases of someone's financial life as there's 3 different phases. There's the accumulation phase. This is when you're younger, you're building up a pile of assets. You're building up a nest egg. There's sometimes the term that's used. Then there's the preservation and distribution phase. Okay. So, that's the second phase, which we typically call retirement. How do we turn that asset or those assets, whether it's a business, whether it's a 401(k), an IRA, pension is kind of done for you a little bit, or real estate, how do we turn that into income? Because really, the question of retirement is when can you live off of your investments? When can your assets cover your expenses to where you can work on your own terms? And then, there's a final phase. So, we've got the accumulation phase, the preservation and distribution phase, which I'll talk about why I use that language. And then, I think you'll love this, what I call the legacy phase, which is if you get to the point where you're not going to spend all your money in the preservation and distribution phase, which is really the clients that we're talking about, and we'll talk about why, that money is going to go somewhere. And if we're not careful, it's going to go to our friends in Washington. And I'm going to submit to you that that's poor planning and that's actually not good stewardship. I'll say it that strongly. And so, I break it up into these three phases because The skills and the questions and the things that we need to pay attention to are different in each phase. And so, I specialize in the second two phases. I can do all of them really well. I mean, I guess this is the one moment I'll kind of toot my own horn here. Humble brag? Okay. But to me, the highest leverage is in the last two for 99% of people, the preservation and distribution phase. And a big part of that is taxes and another part of that is investments. Because if people are not careful, taxes are going to be maybe their biggest expense in retirement. And I think that surprises people, but at the same time, when I educate them about how the system works, they're shocked. And then same with the legacy phase. Taxes can be a really big impact. We kind of touched this briefly with the state taxes, but a lot of advisors and I think frankly, a lot of attorneys are asleep at the wheel on this right now. And if we're not careful, we're going to see the middle class evaporate pretty quickly, some of the stuff that they're talking about. And so, when it comes to retirement, that preservation and distribution phase, it's a different skill set than the accumulation phase. Accumulation phase is how do we use excess cash flow to be able to buy assets that are going to grow? How do we buy whether it's stocks or mutual funds or whatever or real estate? The idea is it's going to be worth more tomorrow than it is today. Pretty straightforward. And really, the metric that we use is what's our return on investment or what are our returns or typically how we look at it is what's the annualized rate of return on average over that period, right? Maybe it's 8%, okay? Which is great because we have a long timeline. We want to get that number as high as we can. Now, when we get into the preservation and distribution phase, what most people call retirement, The game changes. We're not as concerned about what the average rate of return is. We're more concerned about when the timing of those returns, because we could have a 10% return in one year, a negative 10% in another year, and be up 30% in the third year. We get an average of about a 10% return. I think my math's right there, making up in my head. But when you're in retirement, preservation and distribution, that's an important word there, the timing of those returns is more important than what the actual returns are. And the reason is there's a particular risk that's called sequence of returns risk, which simply means that if you have to sell your assets, whether it's a business, whether it's your stock portfolio, whether it's your real estate, if you have to sell that to create income, the price that you sell it at really, really matters. Whereas in the accumulation phase, really the price doesn't matter as long as the average return is high enough. And so, that's a huge thing. And getting that wrong can devastate your retirement. Now, my approach is let's figure out— first thing we need to figure out is how we're going to create income in retirement, how we're going to turn those assets into income. The second phase is how do we not get killed on taxes? When we do that. And then the third is how do we address things like long-term care? And that order of operations, in my opinion, is really important because if you run out of money, you're not going to have a tax problem, if I can just say it, if I can say it that directly, right? So, it's a triage situation. How do we make sure that you don't run out of money so that we can then address the tax issue? And that opens this whole other can of worms with stuff like Social Security, different types of taxes. Most people don't realize Social Security is taxable. And the combination of ingredients that determine the tax rate is pretty complex. You know, I'll give your listeners a good, especially if you're approaching retirement, this is the one-question test for your advisor. Okay. And the way that I say it, well, I'll give you two, but don't do this in email. Okay. Do it in your next in-person meeting. Okay. And I'm being mean to some advisors, but I really care that you get this right. So, when you're sitting down with your advisor, they're going to You're going to pull out the portfolio, you're going to look at it, they're going to say this structure did this and this did that and blah, blah, blah. And it's like they're dazzling you with a bunch of nonsense most of the time. Sorry. Sorry, other advisors who do this. And then go, hey, Steve, I got a question. I hope no one's advisor's name's Steve, but Steve, got a question. How is provisional income going to affect me in retirement? Just say those words. We probably put in the show notes or something, but how is provisional income going to affect me in retirement? And if your advisor goes blank and then goes red and then gets scared, it's time to shop for a new advisor. I don't care how nice they are because provisional income is the calculation that determines how much of your Social Security is taxable in retirement. And if they're honest, they're going to say, I don't really do much with taxes. And I find that to be shocking because that's like 50% of the equation. And so, when we're starting to figure out how do we create income in retirement, Social Security is a huge piece of this. And if Social Security becomes taxable in your retirement, that can be 10%, 15% more expensive than people plan for. And that really adds up over time. And so, So, that's a big factor. So, we have all these factors that come into place when it comes to retirement and creating income is one thing, but taxes is the other thing that I think is really important. And most advisors don't pay much attention to this because they're focused on growing assets. And so, that interplay is really important and it's not really what you earn, it's what you keep. What most people have not paid a ton of attention to, and it's okay, it's been pushed on them. They keep changing the rules, Ledly Jennings, on taxation of retirement accounts. Think 401(k)s, 403(b)s, IRAs. These are tax-deferred accounts, which means that there's a future tax liability at an unknown rate. You've got a partner in these accounts, which is our friends in Washington, the federal government, who's making their minority partner, they're making majority partner decisions, which is how much of that are you going to have to pay in taxes when you take that money out? And if we're not planning for that and we're not talking about that, that could devastate someone's retirement. And so, this is important stuff to deal with. And same if you're selling a business. I mean, one of the proposals on the table right now is increasing the capital gains rate to the top marginal bracket. Right now, the top capital gains rate is 23.8%. %. They're talking about bringing it up to 44.65%. That's going to make selling a business a lot more difficult in the next couple of years. And so really what we try to work on is not only does it matter that we invest well and that's important, but how do we make sure that we don't get killed in taxes when we're trying to retire? It's more important that you keep as much as you can rather than just focus on what you make. So that's another— sorry, I'm rambling here, but I'm trying to get the good stuff out to

you. I know there's just so much to that I want to talk about, but that, that's exactly what I wanted to get at was the, it's all about what you keep. So if someone is looking at your whole picture rather than just solving for one issue, you're solving for the whole picture of the client, which I like. And you are right that everything changes with Secure 2.0. I mean, I've just been reading that forever lately. And everything has changed. And it's not only— it deals a lot with my world is the trust, inheriting in a trust. You've got to figure out how to make that most tax efficient, especially with

IRAs. That's a huge thing. That's that legacy phase that we were talking

about. Exactly. And that's probably one of my next things that we're going to deep dive in is IRAs as it gets to the legacy phase. So I definitely want to talk about that more.. But we'll have Ian on more where we'll do some just quick hitter now that we've did this introduction. You all know him, trust him, that kind of thing. But all right, last few, because we're running out of

time. Sorry, I'm long-winded, but I just, we got to get it, we got to get it

done. I know, I need to make these 2 hours turn into Joe Rogan or something. But all right, so some quick questions, and you can just do these, doesn't have to be one word, but you know, short answers that I always ask everybody. My first one is, what is the biggest myth in your industry that you— or myth, something like my answer to that is everyone says a will avoids probate and it does not. So that's my answer to estate planning. What would you say your answer is in the financial planning

world? Man, that's a great one. I think I would say that going back to what we began talking about, a financial advisor is not a financial planner. Or another way to say it is not all advisors are created equal. I don't like to talk about what I do at parties. One, because like most people, I just don't like enough to help. If I can get someone interested enough in saving money on taxes, then I have to give a bunch of time for free. You know, I can't always do that. But the other reason is like, oh, I got somebody. I'm like, you just asked me what I do. Like, I understand that your brother-in-law works for Ed Jones. Like, I appreciate that, you know? And so, not all advisors are created equal and you may have a guy, but he doesn't do what I do. And so, that's what I would

say. Yeah, that's a good one. All right, next

one. Do you have an estate plan? I do.

Yes. And I won't dive into the details, although that may be fun at some

point. That would be a fun one to talk about because I am

neurotic. Yeah, I'd be very interested to know what your estate plan says. I don't know why, but I would. But generally, what was the catalyst that made you get an estate

plan? You know, I think the, I think the big thing was I'm trying to think of one catalyst. I pay a lot of attention to this stuff, but I think the way that I'll answer your question is what has driven some of my additional steps and some of the additional things I've been thinking about in my estate plan is really my kids. And something that's really important to me is passing on wealth efficiently. To my kids and doing so in a way that's not going to destroy their lives, to be very transparent. And so, I've put a lot of boundaries and restrictions around the way that they're going to be able to access that money. And that's really important to me. It's important to me that my kids don't get a couple million dollars in cash when they turn 18 in Arkansas. That would destroy their life. It would have destroyed my life. I know that for sure. And so I did not want that to happen to my kids. And so that's when I made it a lot more, a lot more intentional would be the word that I

use. Yeah, I was similar and I did this for a living, but me and my wife didn't get our estate plan until she was like 9 months pregnant and like we were about to have the kid. So kids are a big thing. Yeah. Yeah. Let's see. So you hit on this perfectly. So Good Steward Law and Wealth Podcast. Our whole philosophy is being good stewards of what we have and everything that encompasses. Partly why I wanted you on here is because you are a good steward of your profession because you pursue education and try to expand your mind and, you know, do the best you can learning for your clients. But also, you said you're a big fan of passing wealth on in an efficient manner. So that is the heart of being a good steward and why it relates to estate planning and financial planning. Is that something you have— just good stewardship in general, and you've already said the answer is yes, but something you've thought about before and try to apply to your client

relationships? This is something that's so, so important to me, Ledly Jennings, and I love that we see this the same way. You know, sometimes folks will ask me, whether it's prospective clients or— because I'm— we're, we're young, we're about the same age, you know, and just as a selling point to people that are thinking about hiring Ledly Jennings or I or both of us, we're going to be with you for a long time. So, you want to be getting to and through retirement with your advisors, right? But people ask me like, "Are you going to continue to do this?" And whether or not I need to work in a capacity in order to pay bills, I got 3 kids, they're hungry, okay? I got to feed them. I will always do this in some capacity because this issue of stewardship is so important to me. I think maybe the most important thing that I can help my clients work through is this issue of passing on wealth intentionally and efficiently. And the clients that I enjoy working with the most are the ones that want to do that. And I think these are the challenges that are the final frontier for my industry, for our industry really, and where they overlap. Is because from a technical perspective, I can do the planning really well and technically get all that stuff right. But the statistics, and I'm sure you talk about this, 90-plus percent of wealth is lost by the third generation. So, odds are 9 to 1 against that if you try to leave wealth to your kids or your grandkids, very transparently, they're going to screw it up. Odds are 9 to 1 unless you're intentional. About it. And the easy part is the technical stuff. The hard part is transferring the values and the behaviors and the why that you're doing that. And so, that's where I want to spend the bulk of my life working on that for a few select clients. And I have a few select clients I do that for now. I'll get to where I have maybe 50 households that I do that for and that'll be all that I do. So, I love this topic. This is, this is a big challenge, but it's important. It's so

important. It's everything. We're striving for the same thing because that's what you said. I can draft trust all day. The technical side is easy to set it up in a method that passes it on, but how do you pass on the values and the knowledge and the education that would enable them to be good stewards of it? So that's the real magic in it, and we're all aiming toward Yeah, so I could hit on all kinds of things. Hopefully we'll have Ian on where I can pick his brain on specific topics a little more down the road. But how do people find you? I know you have, I think, maybe two podcasts. You've got a website, you've got— you're everywhere. Twitter for entertainment and education. But how would you like people to find

you? The easiest place to find me is shoot me an email. It's ian@justretirenow.com. I answer that pretty well or the website is justretirenow.com. That's probably the easiest way to find me. It's under construction right now. We're redoing that, but that's how you can find me or you can call Ledly and if he likes you, he'll say, "Hey, I need you to talk to this person for me," and I'll do it because I love Ledly Jennings' clients. But that's the easiest way to do

it. Awesome. Well, I appreciate it. And yeah, that is the first guest episode in the books. Many more to come. This one will be hard to

top. And thank you for listening. Well, thanks for having me, Ledly

Jennings. It's always a pleasure. Thank you for tuning in to the Good Steward Law and Wealth Podcast. If you're ready to take control of your financial future, visit goodstewardlawandwealth.com. Stewardfirm.com to book a meeting and sign up for our