Masterclass 1.0 - Class 1: Retirement Income Planning and Client Psychology

welcome everyone we will give everyone just a few minutes to get logged in and then

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we'll get

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started

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thank you all for joining we're just giving everyone just another moment before we'll get started started here we have a packed agenda and a lot of

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excitement for this first session um just a little housekeeping item with the

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c we did get approval for CE and we will have uh CE for the remaining events here

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um for your cfp CE credit uh there are two requirements the first one is that

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you have to attend 50 minutes 5 minutes of the presentation and it is only for

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live attendance and then the second thing is at the end of this presentation we have a survey that it will ask for

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your cfp ID number or your cfp ID for you to uh submit that to get that cfp c

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credit so those two things 50 minutes and uh submitting that number at the end

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when you have that survey pop up those are the two requirements and we will get that submitted for you um with that I

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will pass it over to Justin and we'll get started all right great thank you Taylor thanks everybody for joining uh

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we'll remind you about the cfp stuff at the end hopefully I'll try to remember um and if you have questions along the

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way there is a Q&A um option on your toolbar so please um submit your

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questions we'll try to leave some time for the end and upvote any questions you'd like to see uh answered because we

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will almost certainly not get to all of them um if you have specific questions about you know a case you're working on

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in income laab software or something um we'll try to um get to those uh independently um with you as well we

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won't leave you uh hanging there Justin I'm going to hop in just one second and this is recorded we'll be sending out

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the recording and you can register for all of our upcoming sessions on our website we have all of the links and in

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the emails that we send out so you can go to incom lab. or incom labor.com and

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go find uh the blog post and we have the webinars listed there as well so there you go perfect all right so welcome

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everyone to the our first of six master classes on retirement income planning with income lab um in future sessions

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we'll just jump right in but since this is the first one I want to just go over kind of the goals of this this master

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class and there's really two two parts of the goals um theory and practice so

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we're going to spend a lot of time talking about kind of what retirement income planning is ideally in an advis

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practice and for um for our client what it can actually do for them um the

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realities of of the experiences that people have in retirement income planning um ways that you can

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differentiate your practice uh through retirement income planning and a lot

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more and so the the breakdown is it's kind of in two parts so the first three sessions are really focused on the

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retirement income planning part of it surrounding spending so how much can someone spend

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uh what what might their experience look like how to talk with clients about that question of what can I spend and what

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adjustments would I make um how to um build it into your practice building plans monitoring plans managing plans

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and so on and then in the second half we'll get to some more specialized areas especially tax smart distribution

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planning which is a huge a huge area um uh and then we'll talk a little bit more

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about kind of talking meeting clients where they are talking with them them in in ways that they uh they can understand

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and finally uh building your business with centers of influence so you can see it's every two weeks um except for uh

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one case where it's where it's a three-week Break um we'll end just as summer truly begins uh and really

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excited to have everybody on the journey with us um so I want to start out by um

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by welcoming my uh my partner in crime here my my co-host of the uh of of the

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master class Jason juel Jason juel is a partner in wealth adviser at Carson

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group um and you know he's he's um a big part of this master class because he

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really specializes on income planning tax planning and so on um I know Jason

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uh will tell us a little bit about his uh his practice here in a second but just to uh you know give you some of his

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accolades uh Jason has his RCP and aif designations and he was named to Ford's

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best in state wealth advisers list in 2022 and 2024 he's also a 2023 uh advisor Hub

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NextGen um advisor to watch um and Jason

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has a lot of experience as an adviser he's worked with lots of clients over the years and what I love is kind of his

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his real focus on the lives people really live in the real world and and

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the experiences that they have and the effect that planning um and working with clients has over time so hopefully we'll

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get uh we'll get into a lot of that today um and going forward um but Jason

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uh love it if you could take a second to just tell us a bit about yourself um you know why you became a financial adviser

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why you're so passionate about income planning and a bit about your practice absolutely yeah so 20062 2007

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was really my motivation and and why that date's relevant is unfortunately during that time my parents were

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misguided uh by a financial adviser and so you know it cost them hundreds of thousands

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of dollars off their retirement delayed their retirement by years and so I

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embarked on this journey uh in the financial industry and so since that time I've worked with about 1500

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clients uh three three different firms and ultimately seen kind of array of

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advice and how advice is delivered and so about six years ago I changed my

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focus from helping anybody and everybody whether they have $5,000 or $50 million

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to focusing on those who are in or nearing retirement that decumulation

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phase which is ultimately going to tee us up really for the next uh you know couple months here as we embark on this

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this six uh series journey and So currently serve about

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275 families and manage a little over 550 million assets under management

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perfect so yeah as you said that focus on um on retirement andc comp planning

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really gets us into this uh this first session so this first session is a

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little higher level um and it it really is kind of trying to set the ground workk the foundation for what we'll do

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in the next especially the next two sessions which will'll get a little bit more into the nuts and bolts and um

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really make you know put the master in Master Class um but uh we want to start

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by kind of setting up what what retirement planning is all about and and really why it's so hard um both for

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clients and advisers um so Jason we'll start by um kind of getting getting your

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thoughts on this so from your point of view having worked with so many clients what what are some of the most important

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differences between accumulation planning and retirement planning yeah such a great question and

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one one we talk about often and when you think about accumulation that's ultimately growing your wealth

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right that is that is saving that is investing and ultimately having enough money at at the end of or at Bond your

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retirement in order for you to be able to to fund the lifestyle that you desire and decumulation is ultimately the opposite

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side and when you think about it decumulation is living your wealth so how do you use these resources to fund

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your retirement to do the things you you want to do when you want to do them and the way I think of it is accumulation that's wearing our hat forward

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decumulation is wearing our hat backwards so by the way that's a complete 180 and we need the appropriate

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tools uh to deliver this message to retirees and the tools that I've used in

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the in the past were more accumulation oriented and I lacked access to

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decumulation oriented tools which is ultimately why we're here today yeah that uh the the point about

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you know you talked about growing your wealth versus living your wealth hat forward versus ha backward we're going

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to get more into this but I hear so many stories of how hard it is for clients to

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make the shift so why why is it so hard for clients kind of psychologically to

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start living their wealth well I think really there's there's a couple reasons number

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one we have deeply rooted Financial experiences and beliefs

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and number two inertia so how are those how are those two things related well we

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graduate from from college quite possibly we embark on our career we

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start saving money we start investing money we start growing this nest egg with the idea of us living out

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retirement and we we are saving investing and growing our assets for an

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extended period of time I mean we're talking decades right most people work for 30 plus years and so you have 30

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years of Dee rooted experience in Saving investing and making these sacrifices

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and then you make it to the to the summit and you throw your hands in the air and it's kind of the finish line or

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what I like to call ultimately the the next book in the series and now we get

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to enjoy retirement enjoy some of the fruits of our labor and those sacrifices

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but the challenge is we've been saving and investing for 30 years and and we've

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got this this momentum this inertia moving in this direction now we're retired and we need to use these

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resources to replace our paycheck to pay ourselves in retirement and it's just it

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makes retirees who have been saving and investing they've been very frugal when

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they make it to retirement they almost tighten up the purse strings by two by five by 10 and that's the challenge is

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pivoting from this saving inertia to Now using our resources to live the life we

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deserve yeah yeah I can definitely see that I I've heard people talk about it as you know you you you got really

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welldeveloped saving muscles you know like you're you've been nailing that you've been training and saving your

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whole life and then suddenly somebody says just just kidding now spend and those muscles have totally atrophied um

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it's uh I know you have a lot of stories that we're going to get to about the effect of helping people people um you

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know kind of have permission to spend and live their life and kind of hit their goals um but before we get to that

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um I know that you make this a a focus of your practice now um and and you

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believe that's a differentiator for you I'd love to hear a little bit about how you you know frankly use your focus on

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retirement income planning to to stand out from the crowd as a as a as a

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business yeah my experience is our clients want to live life without

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regret I think that's really powerful um you know how many folks have we talked

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to that maybe lived a very long life but yet didn't fulfill some of their

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lifelong bucket list items the trip to Europe um or you know the family

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vacation what have you and so I think the challenge is with advisors we have all of this information

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at our fingertips we have all of this knowledge in our head and we want to share that knowledge and typically we

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share that knowledge in a very technical delivery when it comes to

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retirement what I have found is clients are a little they're less interested in

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the the technical facets of how you're going to generate the income and those particular

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details and it's more about them wanting to be heard them wanting to be understood them and their desire

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to have a conversation with someone like me and my neighbor in my

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garage drinking a beer right and they want it to be very conversational in nature and there are so many fears

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around them running out of money or overspending their assets that often

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times it results in them under spending their assets so that goes back to the phrase I said earlier and our clients

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does they really want to live their best life without regret but they need the confidence they need the tools they need

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the guide to help them throughout this journey to to give them the confidence

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that that they are living the life that they deserve and and can do you have any um kind of best

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practices or or suggestions for you know the advisers on this call to to get

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there to put yourself you know to be able to communicate at

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level it's it's getting comfortable being uncomfortable so what do I mean by that

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what I mean by that is I used to believe as an advisor I wanted to portray this

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image to my clients I wanted to be the expert I wanted to be philosophical I I

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just had this Vision right we all have you know maybe

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um YouTubers that we follow or podcasters that we follow Tony Robbins and his passion his delivery and I

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wanted to try to recreate uh this image but the reality is I I I am myself and I

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need to be true to myself and if I can get comfortable being uncomfortable be vulnerable with my clients help them

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understand that I I too have had Financial struggles right I graduated college making 34,000 a year with $700 a

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month student loan payment I get it I understand the pain I understand the

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challenges the adversity that we face and retirees are facing a huge adversity

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and retirees are facing a situation where they're about to embark on a journey they've never experienced before

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moving from work life to retirement and work life is very comfortable for them

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retirement there are so many unknowns how are they going to replace a

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paycheck right they've been working for their company for 20 30 years have been getting a paycheck every month that

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paycheck goes away how are they going to replace their paycheck when's the optimal Social Security election age how do pensions come into play and at the

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end of the day based on Mark of volatility how's that going to impact their income and I know we're going to

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get into a lot of that but that's really the core the core is sharing your

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personal vulnerability of how you've dealt with certain Financial situations and if you're uncomfortable with that

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use your client examples the clients that you've helped through retirement

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the pain that those retirees felt when they left their work and now when they're in retirement

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how it's very difficult from a financial standpoint and a psychological

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standpoint so that vulnerability I think is really important that's a great tip probably

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great tip for life um so we're going to shift now to um a little bit of a our

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first kind of theory uh section here which is um gonna guide us into the into

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the next part so so now we're going to talk about the shift um that you made um

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kind of from a more accumulation based uh way to do retirement planning um into

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something that you know kind of meets clients more where they are around what you've already mentioned a lot of this you know what can I spend um How would

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change and so on um so you know as we start that um you know kind of the I

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don't know received wisdom on how to do retirement planning the the um the main

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way most people do it is with this uh this thing called probability of success which is a you know a way to score a uh

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financial plan here specifically a retirement plan so we'll start with a silent poll if you use probability of

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success you know maybe jot these down on a on a piece of paper in front of you um

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what probability of success do you target when you're developing a new retirement plan at retirement so all of

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the uh participants answer that to yourselves and then imagine there's a market downturn and you're refreshing

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that plan rerunning it and the probability of success level is going down um you know maybe it you know it's

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down by 10 20 30 40 points during that downturn when do you think your clients

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would start to get worried and possibly a different number when would you start to get worried for your clients so just

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hold those hold those answers and we'll get back to them um okay so let's start out with

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kind of some evidence around in retiree goals um there's a lot of survey data on

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this um also you know at this point I've talked to you know probably thousands of

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financial advisers definitely hundreds in depth um about their experiences with

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retirees what their goals are and so on and they very consistently line up this way that the most important goals when

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people visualize retirement you can kind of sum it up in live the best life I can um there so

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that's sort of the positive end of it you'll hear the negative side of it too which is well I don't want to be a burden on my kids or I don't want to run

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out of money um which of course you would think are probably part of living the best life I can uh they don't mean I

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want a miracle to happen and now I can you know fly pirate Jets if I can't already afford that what they mean is I

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want to do the best I can with what I have and the life I get to live and the world I'm living through and so on so

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there's a there's a reality based part of this but it is yeah let's let's kind of you know quote unquote optimize let's

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do the best I can that typically involves especially early in retirement

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kind of a you know vacation stage sort of a you know bucket list it it all will often throughout retirement involve

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experiences with a spouse a partner kids friends uh and so on building up uh sort

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of building your legacy while you're alive right so having these experiences um and having these memories that you

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know when when you you know at the end of life someone will look back and say I'm so glad I did that um

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interestingly very low on the list tends to be leave money behind when I die by

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which I mean I it's very rare to find someone who can actually name and really really wants a particular number to

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appear on their statement when they die people understand there will be money

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left uh because they don't want to run out of money but I often hear this well whatever is left is left kind of concept

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or people you know especially because of the the the popularity of the book die with zero they'll say you know I want my

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last check to bounce not something you can actually make happen because we don't know when you're going to die but I get it that's the point is to kind of

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live the life you um you can afford um

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so that is probably why I I've heard a lot of advisers talk about having had

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this conversation uh maybe especially early in in their career uh you know

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somebody's at retirement they're getting near that's kind of the new focus of your relationship and you say okay so uh

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you know how much would you like to spend in retirement and the client will just say well what can I have because think about

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it no one's ever asked a 30 old you know who's who has a job well how much would

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you like to spend this year no they start with what do we have how are we going to use that how much should we

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save what what should go here and there but but there's already an implied amount you can afford so to hit

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retirement and suddenly pretend like no it's a it's a blank slate whatever you want let's talk about it no that the

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client is looking to continue living the the life they've already been living which is well I I want to know how much

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I can afford I knew when I was working now I need you to tell me that um and so that's why one of the key places you can

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meet a client is in not asking how much you would like but in saying you know we need to work on figuring out how much

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you can afford and there's a lot of ways to do this historically uh people used just

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regular calculator type math time value of money straight line appreciation math

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this is actually still used at a lot of big firms um and uh it essentially gets

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you to what you could call a best guess or a most likely answer to what someone can actually spend so you you take a

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look at you know what kind of resources do we have how do we think the world will work so you know we have some assumption about an average rate of

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return in this case um and because that's your best guess at the rate of

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return you're going to get the most likely or best guess amount you can spend so for example if I had a million

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portfolio and I you know as an adviser thought a 5% annual average return was

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uh was a good assumption uh 360 months 30 years I I would just I would know you

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can spend 5350 a month right so I now I got to the the best guess the most likely amount you can spend now for

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those of you who you know have moved past um kind of straight line appreciation and you understand that

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there's a lot more complexity in the world uh typically people don't you know they have much more than just a portfolio

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they'll have social security they'll have some other things we know there are risks in the world so returns will vary

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inflation will vary uh mortality will vary there's a lot of unknowns out there and so people moved to more of a

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simulation based approach to figuring out how much can someone can spend and

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if I did a simulation Monte Carlo or historical um I would find that what I'm

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doing is is Imagining the way the world could work for you in the future could be high inflation low inflation High

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returns low returns a mix of all those things and for each of those possible ways that your retirement might go there

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is an amount of spending you could have so when we're trying to answer this question of like what can I spend we're

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looking at well in this situation you could spend this in this situation you could spend that if I line all those up

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and I get kind of a distribution of possible spending which of these levels

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is the quote unquote most likely amount someone can afford to

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spend well it's it's right here right by by definition I mean it's both it's both

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the most common in terms of the highest and it's the point at which half the time you could spend more half the time

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you could spend less this would be the place uh that you know you're most likely to to be right doesn't mean you

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will be right but you're most likely to be right um now back to probability of

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success if if instead of just viewing this kind of conceptually we ask okay so

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so this amount of spending what's the probability of success of that

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spending it's 50 by definition it's the amount of spending

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where half the time you could have spent more half the time you actually should have been spending less that's what that

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is so the most likely spending level is the one that has a 50% probability of

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success now where is 100% success on this

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graph it's way over here it's by definition at the very left side it's

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the point at which um in every single scenario which you you know based on

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your assumptions is representing the way the world could work in every single scenario this client could have spent

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more and still hit all their goals they could have not run out of money they could have you know taken that vacation to

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Europe they could have you know hit paid off their mortgage all of the the parts of their plan they're saying hey 100%

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success means uh 100% sure you're going to be under

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spending so if the best guess is at 50 uh and the 100% success is is the the

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minimum the lowest level I can even imagine you having to spend what we're saying with probability of success is um

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you will be under spending we believe you will be under spending and by potentially quite a

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bit so the problem here is that the word success already means something to

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clients and advisers we just went over it it means living the best life you can uh but probability of success uses the

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same word but it doesn't mean the same thing it means spend as little as possible spend at the very lowest end of

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the range and by the by the way be worried while you do it because success

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is the kind of thing that has an opposite which is failure so if you give somebody a 90% probability of success

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you're giving up 10% failure and that is scary it just is the problem here is

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like of optical illusion if I show you these lines and ask you which is shorter

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I guarantee it's the lower one but go ahead if you want measure it on the screen um or you can take my word for it

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they're actually the same length but just knowing that even if you measured it get out get out a ruler and do it

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just knowing that does not change the fact that your eyes and your brain make you think the lower one is shorter you

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just will it's the same with probability of success you can't convince someone

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that 60% success is better than 80 you can't convince me that and I I live this

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stuff every day um we in other words probability of success can't be saved it

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needs to be abandoned in uh because it's forcing people toward regret and

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underspending um essentially if we know that these are retirees goals the ones

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on the left we need a a tool a practice um that gets us toward those

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goals um the problem is that this very low priority goal of leaving as much

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money behind when you die as possible that is the goal that probability of success is is is pushing you toward

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pushing clients toward it's like having a compass that points South instead of North it it's it's it's fooling us into

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thinking that oh we're we're trying to get toward what the client thinks of that success but it's actually a completely different um definition of

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success and this is the point of of why uh in retirement planning that's

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done with accumulation tools you end up getting more toward the uh the regret Zone that uh that Jason was talking

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about so with that uh let's get on to some some uh some conversation about

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that kind of um you know what uh triggered you Jason to remove

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probability of success from your process with retirees and kind of what made you made you think this was a this was an

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important shift to make yeah so there's a couple components there you know the one thing that stands

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out is we live in in a world of gamification and we we live in a world

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where we strive for success and like you just said

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Justin when we're measuring probability of success and we score a client a 95

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that same client although a 95 is great they've been trained in their mind since

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a very young age to score 100 to strive for A's and so therefore even when their

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score is a 90 um and we even show them you we're going to leave behind this Nest Egg as as a a

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high probability um they're still striving for for that 100% now on the other

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side where where really what spurred me to take the guard rail approach and and

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then leverage income lab was working with the client in 2022 and you know we all have those

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clients who have relatively sensitive plans and this client was absolutely

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pursuing their retirement dreams which we encouraged and pursuit of those retirement dreams does have to do with

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the retirement smile right where you're spending more money UPF front early in your retirement later in your years when

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maybe your health isn't as good and you're in your 80s you'll have a l and then you'll have that Health event potentially at the end of life well this

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client was in the early phase of retirement and ultimately their score went from a 90 down into the the low 70s

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and so that caused a lot of pause and although that wasn't um you know wasn't

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jarring to me to them that was a failure and immediately the clients started to

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think how do I need to what do I need to do what levers do I need to pull to

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adjust my score and ultimately we know that you know markets typically recover

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and um you know as long as we continue to be dynamic and monitor that plan that score isn't necessarily a bad thing but

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when you think about a person and how they monitor their success and measure

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their success if a score declines that's going to be a negative impact and

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psychologically that takes a huge toll so that's where it made a lot of sense

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for me to evaluate other tools and that's where ultimately where the guard rails came into play which I know we're

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we're going to talk about yeah I've heard that especially about 2022 although I'm sure it was true

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in uh 20 you know 2009 and so on of this you know people get they they get

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anchored to their score it feels like a final exam score and then they see the score change and so now you and your you

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know your team it's all hands on deck to get these scores back up when really

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it's it's it's I mean essentially it's wasted time because that that we forced on ourselves because we told people to

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pay attention to that score we told them that's the that's the point just make sure that score is High

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um as you said we we'll kind of get to that uh the how to change how we talk

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about things but um I want to return to just the the first part of what we talked about in the last part which was

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that survey data around what retirees want you've had as you said you know over a thousand clients in your career

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does that ring true to you and and and how do clients typically talk about their hopes for

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retirement 100% that what we strive for is for clients to kind of understand the

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phrase I'm glad I did versus I wish I would have so what do I mean by that

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well last year at the tail end of last year um I actually had half a dozen clients purchase second helps and so

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three of those clients were actually still in their working years um and just

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the level set so we work with I work with clients five years pre-retirement

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through end of life so decumulation is at the top of mind we are preaching

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decumulation preaching the fact of um income replacement of your paycheck in

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the most tax efficient way possible so you can live the life that you dream and so what are those dreams well dreams in

33:45

this case for these six individuals just to own a second home and the question

33:50

was you know can I afford that home how do I pay for that home you know what's

33:56

the structure should I finance I not finance and ultimately we're able to go through a series of of exercises with

34:02

income lab to flush out all those details and ultimately when it comes to

34:08

retirement planning there's a textbook answer and and that is accurate but

34:14

there's also a psychological answer in the client's mind and so it's important to understand both and how do we help

34:21

our clients get more comfortable and move closer to the textbook answer and

34:27

in this case it boiled down to hey you've done a great job saving up until this point the future is bright you have

34:35

great confidence to know that this money is going to last you lifetime we've all had loved ones and friends that we've

34:41

lost too soon and unfortunately we don't know that tomorrow is guaranteed and with that front of Mind

34:48

top of mind that allows us to live in the present and pursue some of those

34:54

goals today versus kicking the can down the road like many people do many of us

34:59

have done that we think oh I'll get to that I'll accomplish that goal later when I have more time when I have more

35:04

money this allows us for our clients to live in the moment and be present and

35:11

enjoy the fruits of their labor yeah yeah I I I it's really interesting to um

35:18

to think about I mean you've shared with me some of these stories but people who who are able to make that shift and um I

35:26

think you've said it um you know kind of make make the impact at the best time like if you ended up leaving money to

35:32

your kids and you die in your 80s or 90s they they might get it in their 60s well

35:37

by that point they're probably fine you know it's kind of too late to make a big impact on their life it's much better if

35:45

they could get it in their 20s 30s or 40s or maybe it's uh you're charitably inclined you know I've been at some some

35:51

charity events and things and I've seen that person you know say uh $50,000 you

35:58

know match $100,000 I mean that's got to feel great much better than well I know when I die you know my executive will

36:04

will hand a check off to a charity um those are really those are the experiences and then you've talked about

36:10

this before but you know the the memory dividends that you then have of that experience and it grows and the you know

36:16

that the community around you and so on so I just think it's such a it's such a great way to think about retirement as

36:23

opposed to focusing on the negative side of it of hey let's just not run out ofy uh it's easy not to run out of money

36:29

just don't spend anything um so let's talk a little bit about your practice

36:35

and when when you kind of decided to get rid of probability of success and shift to um uh this more you know what can I

36:43

spend framing um how did you make that transition and what was it

36:49

like well Justin I'm gonna throw the script out out the the door here um and

36:55

let's just address the AL in the room it was I had a lot of anxiety about

37:01

making the shift um you know here I've got a book of about 300 families so I've

37:07

got probability success plans that have already been built and now I'm going to embark on a new process a New Journey

37:14

and so like many of you maybe I had a lot of I had a lot of hesitation and

37:20

that was around multiple things number one how am I going to find the time the capacity to build out all these other

37:27

plans and then number two which is maybe even more important and it's the initial

37:32

step of how's this information going to be received here I've been working with

37:38

these 300 families preaching probability of success for the last

37:44

decade and now we're not just moving the goalpost we're changing Sports all

37:50

together because we're doing away with probability success and now we're focused on guard rails now we're focused on spending capacity and so what was

37:58

really interesting in that process is my

38:04

fears were not reality when I delivered the very first

38:11

plan with income lab regarding guard rails and spinning capacity it was like you could see a

38:18

weight lifted off by client shoulders because here we've been

38:23

tracking their probability success they working on retirement this

38:28

Uncharted Territory and they they don't understand how their assets that they've

38:36

saved and invested can generate income and that's ultimately their number one

38:42

objective in retirement how do I replace my paycheck and how much income could I

38:49

have how much income do my resources support and ultimately after the end of

38:55

that session even though I could nonverbally see kind of this weight get lifted once again I had a conversation

39:02

like I was with my neighbor having a beer in the garage and I said I'm gonna pause there I've given you a lot of

39:08

information curious of your reaction and it was just it was this this love for oh

39:14

my gosh this software is incredible and you know ultimately I said you know you're you're embarking on on a New

39:21

Journey we've been using accumulation software thus far but now you're in

39:26

retirement you're putting your hand had around backwards uh some of the processes some of the strategies are

39:31

similar but yet also decumulation is is very unique it's very

39:36

different we need the software to be able to support you on that journey and that is that is the guard rails all

39:42

Point spending capacity so you uh so your your fear

39:48

about how clients would take it was unfounded it turned out they they loved it um just from a practice management

39:55

standpoint um you know there was work to do to transition those clients I'm assum you didn't do it all at once

40:04

um what was that experience like and on the other side you know what's what changes are there in terms of

40:09

scalability and work for your team um now that those clients are more on a

40:14

spending capacity and guard rails uh approach well I'm not going to sugarcoat it there's work there's work to be done

40:21

right the way we handled it was you know ultimately we we host two Rie with each

40:28

of our clients call them wealth plans um some people call them strategy sessions call it what you want to call it two

40:34

sessions with our clients per year and as those sessions were coming up I

40:39

basically would would would build an income lab plan uh and ultimately

40:44

present that to them at their upcoming wealth plan so that took some time um

40:49

took some effort I think like anything as you embark on a new

40:56

process you start to get more comfortable and as you get

41:01

more comfortable you get more efficient and that was very much the case I can

41:06

build I mean I can build a plan in in well under 30 minutes um especially with

41:11

the the integration the aggregation tools I mean I could do a base plan for a prospect in 15 minutes um it's not

41:17

like there's this this huge time but we all work with a lot of clients and so

41:23

there is this this issue regarding time and efficiency and it does take time now

41:28

what I will tell you is the scalability was an interesting Discovery

41:37

what I mean by that is when I use probability success similar to the client that I referenced earlier 2022 we

41:44

had a market downturn their score went from 90s to the low 70s that involved a

41:50

lot of conversations that involved a lot of therapy right where we I was helping

41:56

the client get comfortable with that new score and giving them confidence to know hey here's the levers we're going to

42:02

pull to make sure that your money is still going to last you Lifetime and those conversations were

42:09

more reactive in nature because I had clients calling in um in reference to their score and the discomfort that came

42:16

from you know scores declining and even those who had scores that declin by 1%

42:22

they'd memorialized the fact that they were a 99% they were a 100% now they're

42:27

now they're 1% less and and it was causing anxiety and so as we think

42:35

about the guard rail system it sets a

42:41

precise expectation for the client there's a phrase I use and that phrase

42:47

is happiness equals reality minus

42:53

expectations okay so within this framework in retirement planning how is

42:58

that relevant well with guard rails we are setting an expectation and that

43:06

expectation is relation to two components number one it's in relation to current

43:14

balances clients want to understand the marriage between your balances their

43:21

balances in their account and the influence on their income so the the expectation is clearly

43:30

defined and that definition is indicated here as we see before us we've got a

43:36

current spending capacity based on current balances and the client understands that okay I've got these two

43:42

new targets if my portfolio grows to X

43:48

I'm eligible for Y type of a pay raise if my for portfolio Falls to X I know

43:57

this is going to be the influence to my income and frankly um most clients are

44:02

really surprised to see how the draw down of their assets might feel

44:08

substantial but the impact to their income and the spending capacity as a result is relatively minimal and so

44:16

that's really this marriage um between the balances in your account and the income and at the end of

44:24

the day that's what I found clients care the most about and so my point of all this is there's a scalability that that

44:30

is created because now that clients understand these defined balances and

44:36

income targets they're they're less

44:42

anxious they don't call in to ask questions because they see a 15% draw

44:49

down in their portfolio um and it allows me in turn to

44:55

be proactive and and be able to to to reach out to them in

45:00

advance um and to be able to prospect more and to grow the business more to

45:06

serve more families because isn't that all of our goal all of our goal is is likely if I ask most advisers what do

45:13

you like about being an adviser they would say they like to help people well the the

45:19

better the more people we can serve the more we are able to help as a

45:24

result and that's that's that's just that's that's ultimately the biggest

45:29

benefit in my mind is the scalability and I found that to be um it was it was

45:38

one component I was not expecting is how it does improve

45:43

scalability and how the clients really prefer this method this mechanism and

45:50

this system that's awesome um just by shifting their atten I away from this

45:58

score which unfortunately like you said even one a change in one point can can

46:03

kind of freak people out so I I'm sure a lot of people are wondering now kind of all right I get it what can I spend is

46:10

the point adjustments are part of it what what's behind this though so I wanted to provide not just a um you know

46:16

some talk about this but also answer this question okay what what's the framework that gets us toward this this

46:23

goal what's the way to think about it um and the nice thing is I think this is

46:28

actually already in advisor's toolbox it's just thinking about risk and

46:34

reward um instead of only risk so in a

46:39

lot of financial decision making is about balancing risk and reward right

46:44

the higher the risk the higher reward the higher the reward the higher the risk the lower the reward the lower the risk it's just how things work we are um

46:52

you know very familiar with this especially in the investment world so I think most advisers have had the

47:01

experience or at least heard about the experience of people um you know kind of coming in with a 100% cash

47:08

portfolio um and trying to help them understand um hey we need to find the

47:13

right balance for you that fits your needs your goals and your personality which we call you know um risk tolerance

47:21

maybe there's some risk capacity right but typically almost no client is best

47:29

served by being at you know kind of at either end of this uh of this range right 100% cash or you know as as risky

47:36

as you can find typically it is about finding a balance and so what we're

47:42

talking about in figuring out what someone can spend and when they should adjust is the same exact thing it's about balancing risk and reward but in

47:48

spending so you know should they be at the lowest spending level I could ever imagine them needing to have um probably

47:57

not should they be at the highest spending level which if everything were amazing this were you know 1982 we were

48:02

about to enter a huge Bond and and stock uh bull market for 20 years no probably

48:08

neither one of these it's probably about finding somewhere in the middle as we said you know there is a best guess or a

48:14

most likely spending level um that doesn't necessarily mean that that's the best advice because really you know

48:22

below that spending level is the under spending Zone above that spending level is the overspending Zone uh people

48:28

typically don't weigh these risks equally um they're more afraid of overspending than of underspending um

48:35

and as in the example Jason was just going through often it's nice to have a pay cut be much farther away from you to

48:42

take a bigger adjustment in your account in order to actually have to take a pay cut and so you may propose spending that

48:47

is within uh the under spending Zone um kind of turning this on just just

48:54

horizontally um you'll notice that if you go back to your um questions to that

49:00

that poll earlier um let's imagine you know the situation Jason was talking about you know you had

49:06

a plan that was in the 90s it moves down to the low 70s well that client's anxiety and you

49:14

know Jason's team's work to get the plan back to 90 they're still completely in

49:19

the under spending Zone there is this is not a five alarm fire this is a you know we're we're still actually under spending yeah have we gotten closer have

49:27

we have we you know absorbed a little bit of our buer sure but there there's no reason to uh feel anxious to really

49:34

get worried about here or to make adjustments if if as time goes on a

49:40

particular spending level you know maybe it's $10,000 a month gets less and less risky it's time to give people good the

49:47

good news of hey let's spend a bit more if it's moving up that's okay we we will

49:54

monitor it and and make sure that at some point we we might make an adjustment but it's not even if it's

50:00

nearing you know 50 here in probability of success that's that's not uh important we need to be into the

50:06

overspending zone for that to matter of course you're never going to be able to

50:11

convince yourself or a client that uh you know 25% success is a good idea

50:17

right which is why again we we were talking about there's the probability of success just needs to completely go away

50:22

from this picture and it's more about this it's more about risk and reward

50:27

constantly managing that balance managing the two risks in retirement which are the risk of overspending which

50:33

we're all familiar with and the risk of underspending which is also the risk of regret it's the uh it's the risk that

50:39

that Jason's been talking about with with so many clients um so as we get

50:44

toward the end here um I I want to talk a little bit Jason about

50:51

how um you know this approach um translates with with clients

50:58

into permission to spend are there particular kind of things you say to

51:03

clients um that help them really Embrace what they are I think you said

51:09

eligible for I like that um and and understand that you know also as you said you know tomorrow is not guaranteed

51:16

so I'd love it if you could share a little bit about how you talk with clients and if you have a story or two about

51:22

that I do you know I do I do want to acknowledge just kind of planning in

51:27

general when I think of financial planning financial planning really gives

51:32

our clients confidence that their future is bright their financial future is bright that the money's going to last

51:39

them a lifetime and in turn what that allows them to do is it allows them to

51:44

live in the present it allows them to live for today

51:49

in today because we understand that tomorrow isn't guaranteed and so that brings me to a

51:57

story and that story is is is a client of mine uh a great friend and

52:04

unfortunately he passed away um in a golf cart accident it

52:11

wasn't it's it was an unfortunate scenario he was riding on the back of a golf cart where the golf clubs go um it

52:18

wasn't late at night they weren't doing any you know they weren't weren't um doing any daring type things and they're

52:25

just driving down the campground and they hit a pothole it lunged him forward he hit his head on the top of the golf

52:30

cart he fell to the ground unconscious never came back to life

52:36

so that speaks to life as short tomorrow is not guaranteed what I loved about this client and love to this day and

52:43

still talk to his family about to this day is that they made the most incredible memories together when he was

52:52

alive and our relationship was was unique and I have a unique relationship

52:57

with a lot of my clients uh we we are able to talk very candidly and so

53:03

inevitably um you know we had a financial plan in place we had all the checks and balances in place and he

53:09

would come up with some grandiose ideas like taking his family his entire family family five game seven World Series

53:16

Chicago cups love it but I was concerned about

53:22

the cost so when he calls in and talks about this this new dream and memory he

53:29

wanted to create naturally I defer to the financial plan is this affordable will it cause any derailment the answer

53:36

was no he could afford it so at that point it was a matter of what account do we withdraw from that's going to be the

53:42

most tax efficient for him to fund this goal and so fortunately he did fund that goal as well as a Disney cruise as well

53:49

as buying that fifth wheel um and it so happens it was the very first weekend

53:55

they set up the the fifth wheel that his entire family was there that he passed away but these memories created

54:04

dividends the time he spent with his family taking them to the World Series

54:09

taking them to Disney having this fifth wheel these memories paid dividends so

54:16

even when he was alive he would get together with his family they'd be at the dinner table and they'd be rehashing

54:22

their experiences together their time together and after after he's passed

54:28

those conversations continue those memories continue to pay a dividend and

54:34

that's in my mind that's a legacy that is a legacy that is going to far exceed

54:39

and outlive our lifetime and that's that's what I'm trying to create uh with

54:45

my clients and give them permission um give them the confidence

54:51

to know that here are your resources here's how much you're spending today and the reality is here's

55:00

your spending capacity so if you add an extra 5,000 a month which is pretty popular if you had an extra 5,000 a

55:07

month in in a wiggle room how would you reallocate those

55:13

dollars that's awesome and I I I know you've have a lot you've shared a lot of stories with me uh like that that this

55:20

is really you know let's let's help clients find fulfillment I even saw in the in the Q&A people talking about

55:25

people even in their working years are starting to think that way as well that you know you're you're living now too we

55:30

don't have to wait for retirement to live so I think that's a great point we have a ton of questions uh some of these

55:36

we are actually going to hit in the next uh especially the next two sessions uh so two weeks from now and four weeks

55:42

from now so uh if if we don't get to them fear not we will we have these and

55:47

and we'll be able to to hit them um I think one that specifically addresses what we uh went through today uh is some

55:56

of said the income guard rails process looks difficult to implement um could you explain the process you use how

56:02

often you evaluate uh portfolios making some income adjustments and so on maybe just talk a little bit about kind of you

56:09

know is this more difficult than what you were doing before um how does it differ and how did you do it the

56:16

difficulty is just building the plane initially uh from there it's actually

56:22

more efficient uh because we're able to focus much of our conversation in meetings is

56:30

purely around goals and I might talk performance for two three minutes I

56:37

might talk about markets for five minutes much of my meetings are specific

56:44

to the wealth my clients have amassed and how do I help them live the life

56:49

that they've dreamt and how do I give them the confidence to know that they can pursue those dreams and it's not

56:57

going to derail them financially and their money will still last a lifetime and how do I help them get confident

57:02

around pursuing their goals of maybe a legacy for their children but thinking

57:08

of Legacy in a different way and that's through these memory dividends or

57:14

gifting while they're alive and when their children likely need the money

57:19

most and when it will make the biggest impact on their children and for them to be able to view their children

57:26

um receiving the benefit how how how great is

57:32

that uh we have a few questions about I know you really only work with people

57:38

where retirement is the is the the goal so maybe you don't have thoughts on this but people are asking do you still think

57:43

probability of success is appropriate for some other phase of life um I have

57:48

some thoughts on it I don't know if I have really strong thoughts on it Jason do you I you know I think uh

57:54

accumulation the software that I used in the past probability success is specifically for accumulators I would

58:01

say um you know kind of that five years pre-retirement through end of life is typically when decumulation is front of

58:07

mind um although I think you could say it's relevant much earlier it's just

58:13

retirement is so far away for most folks they're not really thinking about the decumulation phase yet so therefore you

58:21

know I don't I don't know how valuable it would be yeah yeah because I do think you're right telling somebody hey in 30

58:27

years I think you can spend $110,000 a month well I mean what a waste of time right I'm more concerned about the next

58:33

couple years uh in my early time well I can say that but at the same time do I really care that my probability of

58:39

success of spending 10,000 a month and 30 years is 90 I I'm not sure that matters much either um on the other hand

58:46

I can see an argument that hey at least it pushes people toward good behavior savings and so on so um yeah I think uh

58:53

my jury anyway is still out on whether it's a useful at any time but the point is if you use probability of success you

58:59

are telling people what to pay attention to so no one is forcing you to use probability of success ever that's not a

59:05

requirement of the job right so you have to choose the tools that help clients get to their goals which is you know

59:11

what we talked about that's why it's so important to understand what retiree goals really are um and that in

59:17

retirement probability of success is pointing in the in the in the opposite direction from the goals um so with that

59:23

uh Taylor you want to remind people about some admin stuff yes we do for those who were looking for cfpc as well

59:30

please make sure you fill out that survey and put your cfp uh ID in there and um have attended at least 50 minutes

59:37

those are the two requirements we'll have that for each of our sessions going forward and then please uh check out

59:43

we'll send out the replay in the slides for this session but also links for the

59:49

upcoming master classes along with keep in mind for those users we have lab talk Tuesday and retirement income in Intel

59:56

all this month so a lot of information we'll be providing you um and then we have this coming up next month as well

1:00:02

so uh Justin anything further hope to see you all in two weeks we'll be diving uh much more deeply into

1:00:09

the nuts and bolts of how to build income plans what things matter and and the process around implementing this in

1:00:16

a practice so hope to see you all then thanks everybody and the key takeaways

1:00:21

uh that oh yeah we'll be sending out some takeaways as well uh to to the to attendees where you with your email

1:00:26

address thank you thank you thank you