Delivered on: Thursday, July 7, 2022
3 Key Professionals to Have in Your Corner
Why their involvement in your retirement planning is critical to getting it right
- THREE PROS: who these professionals are and how to get started
- THE IMPACT: how the advice these professionals give shapes your retirement success
- ROADBLOCKS: the obstacles some face in this process and how to overcome them
Download Handouts: CLICK HERE
Register for our next short webinar: FedImpact.com/webinar
Find a comprehensive retirement workshop for your area: FedImpact.com/attend
For an introduction to a financial professional in our network: FedImpact.com/request-to-meet
Prefer to read instead? Below is a transcript from the video:
Hello, and welcome everyone to the FedImpact webinar on the three key professionals to have in your corner. So 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. Today’s episode is going to be all about leveraging expertise that you can find to put you in a better position in retirement.
Again, today’s topic is one that we get an awful lot of questions about, so I knew it would be a great session for our webinar. Our audience today, we’ve got thousands of you registered. We’re pretty excited about that. And that tells us that you all are getting value out of the types of topics that we’re bringing to you. And I love all the feedback that we get about the webinars. That tells us that we’re hitting the right chord with everyone and giving them some things to think about that perhaps hadn’t crossed their mind yet. Certainly today’s episode will be no different.
Now, Q&A, I promise we’re going to answer your questions. We do have the ProFeds support team standing by to do so. As you think of questions again, that pertain to this topic, you can submit them in the Q&A area right here in the webinar. Our team is standing by to be able to answer those. Meanwhile, I’m going to stay really focused on delivering the material today.
Handouts, we do have handouts available for download. You can either go right next to the Q&A area in the webinar portal or you can look to the bottom of the screen just below the image of the slides. And you will see a link for the handouts there as well. Now this session, like all of them, is being recorded. And that replay will be available to you. If you get distracted, if you need to simply re-listen to this, if you need your spouse to listen to this, all of that will come to you in an email shortly after our session ends. And stay until the end. We’ve got some exciting things today as far as strategies to get started and not let there be roadblocks that get in your way.
Of course, I’m your ProFeds presenter, Chris Kowalik. I’m delighted to be able to do training like this, because it takes us out of the normal structure of the federal benefits, which, of course, is important, but it allows us to help feds to recognize that the things you deal with your benefits have to fit into the rest of your financial life. It has to all come together. Today’s session is really how do you make that happen? And what relationships can you leverage to be able to do so really smoothly?
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. 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. 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. And they’re also great at being able to help you articulate the actual goal, what you want retirement to look like for you. And 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
Next up are 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. And 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.
Next step are 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. Now, 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 that 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.
And 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.
So 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. 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.
Insights & Tips
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 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.
Next up is the difference between awareness and 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. And 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. And same thing with understanding the legacy that they’re leaving behind. A financial professional would want the expertise of that estate planning attorney.
And so 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.
Next up is the importance of communication. And 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. Okay, 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. And 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!
Now, 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.
And 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!
Now, 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.
And 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. And 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.
Now, 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. The first is, not understanding the distinct roles that each of these professionals play in your financial success. 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.
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.” And 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.
So 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.
But here’s an obstacle that isn’t trying to buck the system, 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.
Like I mentioned, at the very beginning of this webinar, we deliver a lot of retirement training to federal employees throughout the country. If you’re on our newsletter list, you know that we’re constantly releasing new dates and new locations. And that has to be the place to start, because these workshops end up giving you the opportunity to see what questions you should be asking. Please attend a workshop. These are in person training sessions. There is no cost to you to attend. That’s an important piece for us, because I want to make sure that isn’t the reason that you don’t attend this session. Create the time, take a day of leave. If your agency won’t grant you the time off, which they should, but if they don’t, take the day of leave. I promise it will be the most productive day of leave you’ve ever taken if your agency doesn’t grant you the time off.
In these workshops, we cover all the federal benefits topics and those decisions to be made. And you will have an opportunity for one-on-one help following the workshop from one of our financial professionals. And again, that will be the starting point to looping in the other two professionals to get that strategy going. We have to have a starting point. And it’s hard to find them all separate from one another, but knowing one that knows the other two is going to be an important part of this journey.
You can see all of the details of our workshops, where they’re located and how to register at fedimpact.com/attend. You’ll see all the locations and dates available. I encourage you if you haven’t already attended a workshop or even if you have, and it’s been a while and you need a little bit of a refresher, get on this website and find a workshop near you so that we can start to help.
Handouts and the replay for today’s session. If you’re still listening, you, of course, can still download the handouts. If maybe you’re listening on your phone and you’re not able to download it directly to your phone and you prefer to get it to your computer, all of this will be emailed to you, the link to the handouts, the link to the replay for all of our registered participants. No worries if you aren’t able to download it right now, you’ll still have an opportunity to get all of the slides.
Now, like we always do at the end of these webinars, I want to share with you the next webinar that we will be doing on August 4. The topic is dialing in your best retirement date. It’s a review of the various factors that go into choosing an ideal date to retire from federal service. This is by far the biggest question that we get from federal employees. And I’m not going to say it’s the most important one, but it’s the one that we get most often. We want to dispel a few myths and set the record straight on choosing your retirement date based on a number of factors that ultimately affect your pension and your ability to keep all of the great benefits that the government has afforded to you.
You can sign up for that webinar right now in the same place that you signed up for today’s webinar at fedimpact.com/webinar. Well, I look forward to seeing you next month on the webinar. Of course, to find a workshop in your local area, please go to fedimpact.com/attend. And again, to find and register for the next webinar on dialing in your best retirement date, please go to fedimpact.com/webinar.
Thank you so much for joining us. And we wish you all the best in your financial journey. Finding those three key professionals to have in your corner is key to your retirement success. Good luck. And we’ll see you next month.
For an introduction to a financial professional in our network: FedImpact.com/request-to-meet
Register for our next 30-minute webinar: FedImpact.com/webinar
Find a comprehensive retirement workshop for your area: FedImpact.com/attend