PODCAST EPISODE 134:
The 3 Key Professionals to Have in Your Corner

Hi, Chris Kowalik of ProFeds here and welcome to the FedImpact podcast where we offer candid insights on your federal retirement. Now you guys know that this show is all about helping you to get super clear on what you want retirement to look like, and taking action to make it happen.

As retirement trainers for federal employees, of course, we’re asked an awful lot of questions about how feds can use specific strategies to be able to get a leg up in retirement. And sometimes the answer is hiding in plain sight. It becomes a little bit more obvious when you know what to look for.  Today’s episode is going to be all about leveraging expertise that you can find to put you in a better position in retirement.

The 3 key professionals to have in your corner

Our session today is on the three key professionals to have in your corner and why their involvement in your retirement planning is critical to getting it right. Because for us to believe that we can do all of this on our own is crazy.

For our agenda today, we’re going to talk about who those three professionals are and how you can get started, how the advice of these professionals ends up shaping your retirement success and some roadblocks, some of those obstacles that some people face in this process and how to overcome them. There is definitely a lot to cover today. Let’s go ahead and jump right in.

I’m not going to tease you today. I’m not going to make you wait until the end to find out who the three key professionals are. We’re going to nail this right from the very beginning. Some of these you might have expected, others might be a little bit of a surprise.

The three key professionals are a financial professional and estate planning professional and a tax professional. These are the big three. Certainly, there are other types of professionals that can help you on your financial journey, but these are the three key that we see in retirement planning and making sure that all of the aspects of your financial life have been taken into account. And these three professionals help to bring all of that together.

We’re going to dive into each one of them just a bit so that we have an appreciation for the role that each of them play and why they become such a critical piece of the retirement planning itself. We’re going to start with financial professionals.

Financial professionals

These are folks who see the big picture view of your entire financial picture. They’re the ones that are helping you to set goals and develop a clear plan to be able to reach those goals. And that includes creating very specific strategies based on the plan that you want to help you reach those goals.

Financial professionals have a wide variety of tools available to them to help project in the future what things are likely to look like based on a number of parameters. They’re also great at being able to help you articulate the actual goal, what you want retirement to look like for you.

When you’re clear about the end objective, it makes it easier to understand the difference between where you are right now and where you want to be. And that’s really where those specific strategies come into play, where they’re leveraging a number of different financial products or vehicles to help you reach those goals. Again, these are high level overviews of each of these professionals, but there will be distinct differences between all three.

Estate planning professionals

These are folks that help you articulate what you want to have happen to your assets when you die or if you’re incapacitated. If you’re unable to make decisions on your own, but you’re still living what you want to have happen. These folks draft legal documents like wills, trusts, powers of attorney, all of those types of things.

This is just an example of the types of documents that they can draft. But this is all designed to ensure that your wishes are properly documented. And not only properly documented, like everyone knows what you want, but that it’s executable in your absence. Whether you have passed or you are incapacitated, that these documents have legal standing to effectuate what it is that you actually want to see happen.

Tax professionals

These are folks who help you to understand how to apply the tax law to your advantage, both the short and the long term. Here, I’m not necessarily talking about the person who prepares your taxes. I do want to be very clear on this. There’s a difference between someone who simply prepares tax returns and someone who is a strategist with respect to taxes. A strategist is going to be looking at that long term tax strategy that takes into account the goals that you have and considers the tax consequences of your legacy.

What we mean by your legacy is what you’re leaving behind when you die. There are tax consequences that your heirs will have, and it’s up to you and this tax professional to make certain that you’re being strategic about positioning your assets smartly from a tax standpoint to minimize the tax burden.

We always want to make sure we’re following tax law. We’re not looking to do anything unethical, but we also don’t need to pay any more taxes than are absolutely necessary. And if there are strategies available to you while you’re living that you can personally benefit from, as well as advantages that your family or your beneficiaries of your accounts can benefit from also, it is certainly helpful to know somebody that knows how to leverage each of those.

I want to kind of circle back to my comment about this tax professional isn’t necessarily the person who files your taxes or prepares your tax returns. I want to expand on that a little bit, because I get a number of questions about this.

Sometimes, tax preparers are simply looking to reduce the tax obligation that someone has in the current year that they are filing. And there’s nothing necessarily bad about that. We, of course, appreciate “now” tax benefits, but if we’re judging our tax preparer based on how big of a check they make us right to the IRS each year, then they’re going to do everything they can to make sure that “this year” that their filing is as low as possible. And it may be a little bit shortsighted when we’re looking at the long term tax consequences.

It’s important that we’re seeing both the short and the long term. And those tax strategists are the ones who really are looking into the things that can be done now to put you in a better tax situation later. And how we marry those two together, that now and the later part is part of the strategy.

I suppose our session today could just end right here. These are the three key professionals, financial professionals, estate planning professionals, and tax professionals. But, of course, it’s more complicated than that.

The overlap

I want to dive into a little bit of how all of these professionals work together and how they can really do that for your benefit. When we think of these three professionals, they each have their own area of expertise, but there’s overlap in all of these. And to be clear, this overlap is not a negative thing.

This is actually a very positive thing that your financial professional is concerned about the tax strategy. And your tax strategist or your tax professional is concerned about how this ends up taxing your heirs when you’re gone, that an estate planning professional would help you to get documented. And the estate planning professional is concerned about the financial products that are being implemented and how that ends up affecting the continued legacy that you’re leaving behind.

There’s a lot of overlap. And that is great, because if each of them are operating in your best interest, they want the input from the other two professionals, because they’re trying to find that sweet spot for you, not just to get the financial plan correct and not just to get your estate planning documents correct and not just to file your taxes correctly.

But how do we put all of that together and find the sweet spot where that overlap happens and all of them are communicating on your behalf? And again, those professionals working together is the key to your financial success.

Let’s talk about some insights and some tips. Me telling you that there are “three key professionals,” it’s like, okay, well, right, but there are a lot of things that go into that. I want to talk a little bit about those insights and tips to give you some idea of the way we think about these professionals and what they can do for you.

The role that each play

The first is the role that each of them play. We have to have the right tool for the right job. Artists don’t use chainsaws, and lumberjacks don’t use paint brushes. They’re all fine tools, it just depends on what the job is that you want to do. It’s important that we’re thinking about what is it that we’re trying to accomplish, and am I going to the right professional to do so?

I don’t go to my dentist to ask for tax planning advice. They do fine work there, but they don’t have the right tools for the job that I need. And it’s important when you’re thinking about these three professionals, especially when you’re thinking of that overlap, that we make certain that we’re going to the right person for the right thing.

Awareness vs. expertise

All of you have heard the phrase mile wide inch deep. This idea that there’s a broad understanding of how things work, but not a lot of depth, that’s okay. I tell you that’s okay, because each of these professionals understand where their role starts and stops.

Being able for them to recognize that, for instance, a financial professional has tax awareness. They are acutely aware of the tax consequences of the products that they have, those solutions that they have for their clients. But as far as how they play out in the financial and tax strategy, that long term strategy, they want the expertise of a tax professional. Same thing with understanding the legacy that they’re leaving behind. A financial professional would want the expertise of that estate planning attorney.

It’s okay to be an inch deep along all of these topics or most of these topics, but recognizing when expertise needs to be called in on a particular topic. Working with an expert is very important and we can’t expect all of them to have an expertise in all of those areas, because that’s not their role.

Importance of communication

Here, we’re specifically talking about the communication between these three professionals. Please don’t operate your financial life in a silo, meaning you’ve got all these silos that are operating, you’ve got your financial professional silo, you’ve got your estate planning silo, you’ve got your tax silo, and none of those professionals know each other exist or communicate with one another. That’s crazy.

You’re going to pay all this money to have all this great expertise, but none of it’s working together. That’s actually quite dangerous when it comes to your financial world, so we want to make certain that all of these individuals know each other exist and are communicating together for your benefit.

These folks can talk to each other perhaps on a different level than they would naturally talk with you as the consumer, because a lot of this stuff is complicated. If, for instance, a financial professional is talking with the tax professional about the strategy, they can use different lingo to really hone in on what it is that needs to happen.

Then it can be brought back into normal people language so that you can really understand what it is that you’re doing and what the strategy is that they’re suggesting. But they’re suggesting that together. And what a beautiful thing when you get professionals to work together on your behalf and get the best of all three of those areas!

Throwing red flags

With that communication comes the idea of throwing red flags. The idea of challenging a strategy to leverage different opportunities is very important. Imagine you are at a table with these three professionals. And I’m not suggesting you need to be all together in one room. That creates some logistical challenges as far as getting everyone’s schedules right and all that, but being able to be on a Zoom together or them communicating behind the scenes on your behalf is important.

But bear with me in this example here, assume that all four of you are sitting around a table. It’s you, your financial professional, your estate planning attorney and your tax professional. And the estate planning attorney comments that you should structure your assets in a certain way. And the tax professional is like, oh, well, wait a minute, that’s going to cause this to happen to the family members who are going to inherit this money.

Then the financial professional may say, well, there’s a different way to be able to get that same strategy, that same outcome without the tax problem that we have over here. How can we restructure all of this to make it work for what the client wants? Leveraging all of that different expertise is so great.

And I want to be clear that the red flags I’m talking about are not them calling each other out for giving bad advice, it’s all of them being able to contribute to the conversation from their own perspectives and their own areas of expertise to say, whoa, wait a minute, I see something that maybe the two of you don’t that I need to bring to the table. Very, very important. And how cool is it that you will have pros leveraging these opportunities on your behalf!

Avoiding friction burns

When it comes to these three professionals working together for you, one of the biggest reasons why you do this is to avoid what we call friction burns. This idea that if you’re operating in a silo for each of the different parts of your financial life without each other knowing, without the different professionals knowing about one another, that can create friction, because there’s no communication. The idea of avoiding those friction burns is them knowing each other exist.

And when you are considering taking action on something, all three of these professionals prefer a phone call that goes something like this: “Hey, I was thinking about…”. They all hate conversations that start like this: “Hey, guess what I did!?” This idea that you go to them to make certain that the decision that you’re about ready to make or the action you’re about ready to take is aligned with the bigger strategy that you have.

Being able to, of course, go to the right person for the right question is important. But if you’re going to use a strategy of having three key pros in your corner, you want to make sure that you are not doing things that cause friction in your own plan. We want them communicating well with each other and we want you communicating well with each of them.

When it all comes together, it’s beautiful

Here’s the beauty. When it all comes together, it is beautiful. That smooth integration with the financial planning strategy, the tax strategy, the estate strategy, when all of that comes together, the pieces just fit beautifully.

If you are serious about having an actual financial strategy in retirement, not a pretend one that you YouTubed a couple of things or you watched a couple of webinars and you’ve piece-mealed things together, but an actual professional strategy for creating the retirement that you want, we’ve got to have all three of those pieces fitting well together to make that beautiful picture in the end.

Common obstacles

Having said all of this, there are obstacles. I hear about these obstacles often. I want to cover just a couple of them with you.

Obstacle #1: Not understanding the role that each play

This is really important. Remember right tool, right job. We have to know what each of them are bringing to the table and the importance of each one of them.

Obstacle #2: Not being willing to pay these professionals

The next obstacle is not being willing to pay these professionals for their time and expertise. This is such a big one and one I think feds struggle with an awful lot, because for the most part, you’ve been able to live your financial life up to this point perhaps without really working with a lot of professionals.

But guys, the game changes in retirement. And if you want to be able to have a true strategy to make certain that the goals that you have for retirement can actually be carried out, you’ve got to work with professionals. And those professionals deserve to be compensated for their time and expertise.

I was having a conversation with one of our financial professionals a while back, and he said a comment that has just stuck with me and is so spot on. He said, “I will save you more money than you’ll ever pay me.”

I think that is so spot on, because when we’re really looking at the things that federal employees do without knowing any better and the actual losses that they take, the hits that they take to their financial strategy without even realizing it, it makes this comment, “I will save you more money than you’ll ever pay me” so perfect.

Very, very important to recognize that each of these professionals bring their own area of expertise. They deserve to be compensated just like you deserve to be compensated for your expertise, and making certain that you find actual value in the work that they’re doing on your behalf. And if you’re not willing to pay for these professionals, you don’t get the benefit of having their expertise. And that will prove to be very costly in retirement. I can almost guarantee you.

Obstacle #3: Not knowing where to start

But here’s an obstacle that isn’t trying to buck the system, it isn’t believing that these professionals have value. It’s just not knowing where to start or how to find them. Like, how do you know what financial professional to go look for or a tax strategist or an estate planning attorney? Where do you go to get started? And these are very valid questions. Of course, we work with a network of financial professionals, and that’s really where that relationship begins.

Without a financial plan, everything else kind of fizzles apart. Who cares what the tax issue is if you don’t really have a plan of where you’re going? And if you haven’t been able to amass assets and create a structure around those assets in a plan, the idea of you passing along a wealth of assets to your beneficiaries is probably pretty low. Starting with a financial professional is the first step.

And then they have their networks of tax professionals and estate planning professionals to be able to loop you in with those people, because again, the financial professional wants the expertise of the other two as well. It’s not a competition between them. Each of them have their own roles and bring value to that conversation.

Take action on your retirement

Like I mentioned earlier in today’s episode, we deliver a lot of retirement training to federal employees and this idea of leveraging professionals always tends to come up because it can be a very overwhelming topic that not a lot of feds know what to do to get started and they ask for our help to be able to know that.

The first step that I mentioned a few minutes ago is really first getting a handle on your federal benefits and knowing the types of questions to ask and then pairing with a financial professional that understands how the complexities of the government programs work.

The very best way that we can help you to get that introduction is for you to attend one of our retirement workshops.  The FedImpact workshop is a full-day training session that covers all of the main topics of the federal benefits and then at the conclusion of those workshops, you have an opportunity to meet one-on-one with a financial professional who in our network that we have personally trained and support on a day-to-day basis to help federal employees get their brains wrapped around the federal benefits and knowing what to do next to leverage them.

At that point, the financial professional of course can loop you in with the other professionals that we mentioned on today’s episode – the estate planning professionals and the tax professionals that can really bring all of this to life and make sure that you have a nice coordinated effort.

If you are interested in attending one of our workshops – if you’re listening through our website, you can scroll just below the player and you’ll see a link to be able to find a workshop in your area.

But if you happen to be listening through a more traditional podcast player like iTunes or Spotify, you can pull out your phone and text the word PODCAST to 224-444-6144 and we will send that link over right away as well as a number of other resources that you can utilize to help your understanding of federal benefits.  Again, text the word PODCAST to 224-444-6144 and we will send that right away.

Wrap-up

Just to wrap up today’s session, please don’t try to do this alone.  Planning for retirement is a big deal and we want to make sure that you have all of the resources and expertise available to help you live the retirement that you want.

So get help and make sure that the help that you get knows about one another and are communicating for your benefit!

That’s it for today, folks.  I hope you’ll stay tuned to the FedImpact podcast to get straight answers and candid insights on your federal retirement.

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