Exposing Retirement Planning Complaints

Plan With The Tax Man

In this episode, we’re tackling some common complaints and fears that can arise during the retirement planning process. We'll discuss which concerns are well-founded, which are based on misconceptions, and offer insight on how retirees can best navigate their financial future.

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Website: http://www.yourplanningpros.com

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Transcript:

Speaker 1:

Welcome in to another edition of the podcast. It's Plan With The Tax Man with Tony Mauro from Tax Doctor Inc. here to talk with me this week on the show. We're going to dive into exposing some retirement planning complaints, tackle some common complaints and fears people have about their financial situations during retirement, and which of these are kind of well-founded or maybe just full of misconceptions, things of that nature. So we'll have a good conversation with Tony this week on the podcast. Don't forget to subscribe to us at yourplanningpros.com. You can check out Tony's website at yourplanningpros.com, or type in Plan With The Tax Man in the search box of whatever podcasting app you like using like Apple, Google, or Spotify.

Tony, my friend, what's going on buddy? How are you?

Tony Mauro:

I'm good. As we're recording this it's state fair time here, which usually signals toward the end of the summer.

Speaker 1:

Well, it's-

Tony Mauro:

It's the last hurrah.

Speaker 1:

It's hot. It has been hot for sure.

Tony Mauro:

It's hot. Yeah, it's been hot here too.

Speaker 1:

Yeah, it was 98 like the last four days in a row, but they said it felt like 110 or something like that.

Tony Mauro:

Wow. Yeah. We got that coming again next week, so it'll be interesting.

Speaker 1:

Well drink plenty of water, right?

Tony Mauro:

Yeah. That's right.

Speaker 1:

So you don't overdo it, especially for a lot of our demographic that we talk to and listens to the show. Making sure that you have plenty of water and stay hydrated is important, that's for sure. My mom, she's 82, and she does these daily PSAs on Facebook. She's like, "Morning y'all, it's going to be real hot. Drink water."

Tony Mauro:

Uh-huh. Yeah. That's nice.

Speaker 1:

I'm like, "All right, well there you go." But anyway, we're going to talk about some retirement planning complaints this week. So I've got some pretty basic statements here that people say often, Tony. So we'll talk about whether, like I said, these are well-founded or just full of misconceptions and just offer some insight.

Tony Mauro:

Mm-hmm.

Speaker 1:

So let's start with the first one here. My advisor takes too much risk. Obviously this has been something that people have said for often when things are not going well you go, "Oh well my advisor takes too much risk." But I would challenge the question of why is that? Is that because they're taking the risk without talking to you? Or have you gone through some scenarios? What do you think?

Tony Mauro:

I hear this sometimes as well, and these first two couple topics here I can relate back to this last weekend when I was out visiting my son and my new daughter-in-law. And they're very young, 27, but she had made a comment like this, and so I asked her, "Well why? Why do you think that?" And the answer is what I get a lot, and that is, "Well it seems like my account's not going up." So I hear that a lot. I hear the fact that I'm not making as much as my neighbor, things like that. Or, like you say, when things are going down they think there's a lot of risk. And it might be the case, but it's not always. And I think, as I told her, "Well you just need to talk to them and explain what you think." And in her case, she's 27 years old, she's investing for retirement, long timeline.

Speaker 1:

She should be taking risks.

Tony Mauro:

[inaudible 00:02:58] a lot risk over the last few years. Yeah. And I looked at the funds that she's in and really they're actually very good funds, they just haven't done much the last year and a half. But I told her, I said, "That's not unusual in the market we're in." And she's not real risk averse, so I think that's one thing... I think if you just communicate with your advisor, talk about that kind of stuff. Or if-

Speaker 1:

If you're feeling like they're doing it right, you got to first of all find out why.

Tony Mauro:

Yeah.

Speaker 1:

Well, actually you mentioned account's not growing, so that's actually on my list, so I'm going to jump down to that one and pair these two together then.

Tony Mauro:

Okay. Yeah.

Speaker 1:

So they takes too much risk, or my accountant didn't grow much last year, and to me a lot of this seems like the same problem. And that problem is it's the highs and the lows. We all like the risk when it's up and nobody likes it when it's going down. And so last year obviously was a rough year '22, right? 2022 was a down year in the market. So this is probably your risk profile. To me this comes back to how are you allocated, right? So you hear somebody say, let's just make up a number, "The S&P was up 30%." All right?

Tony Mauro:

Mm-hmm.

Speaker 1:

And then you go, "But I only got 15, so my advisors not doing enough."

Tony Mauro:

Right.

Speaker 1:

Or then the inverse of that is, "The S&P was down 30%. Well phew, I only lost 15." Well, that's because of your risk portfolio, so you don't get all of it unless you're completely exposed.

Tony Mauro:

And that's true. And with the whole "My accountant didn't grow last year", I got the same thing out of her. And I asked her the very same questions is, "Well, which accounts are we talking about here?" And of course it was the retirement accounts, and I quickly pointed out that, "You've got maybe 35, 40 years before you need this money." So it's easy for us as advisors, and I told her to say, "Don't worry about it." But in reality, you got to take a longer time horizon. And with your risk profile, like you said, and hers as being somewhat on the aggressive side, you can't let it be your main focus. She's focused on the wrong things. I think us as advisors got to remind them.

Speaker 1:

Yeah, I was going to say, and like a quarterback on a football team you get all the credit or all the blame. Right?

Tony Mauro:

Mm-hmm.

Speaker 1:

So it's like, "Oh man, my advisor did a great job. I made a bunch of money this year", or something like that. Well because there was an up year on the market and your portfolio was allocated properly for your risk tolerance.

Tony Mauro:

Yeah.

Speaker 1:

Conversely, if that was the case and it was down, you'd also be happy because you didn't lose as much as your neighbor or whatever the case is.

Tony Mauro:

Exactly.

Speaker 1:

So it's all about that risk profile, making sure that you're taking the right amount for your situation versus the kind of generic common complaints.

All right, so that's two of them. So let's go to my fees are too high. And the statement here to me is always the same kind of thing. Nobody likes fees, we don't want to pay more than we have to. But what are you getting for the fees? Is that worth it?

Tony Mauro:

And that's the question you have to ask, and it should be addressed when you start the relationship with your advisor, is understand how he or she's being compensated. Most are going to just be flat out and tell you, "This is how we do it." Some are asset based, which is a fancy term for taking a small percentage of the account value every year. Some are just regular fee based. It's X amount for me to help you every year, like a consulting fee, coaching fee, whatever you'd like to call it. And so as long as you feel like you're getting value for that fee that you're paying, I wouldn't tie it to investment returns. This is the fee, just like you'd pay an attorney, an accountant, anybody else to do things for you and keep you on track.

But on the flip side of that, if you're paying fees and you're not getting anything... Because one of my daughter-in-law's complaints was, "He never calls me." And I said, "Well, what would he call you about all the time? What do he want to talk about? Because you're not a stock picker, what do you want to talk about?" She just felt like, "Well, I think I should be getting talked to all the time." And I said, "Well, have you addressed that with them?" And she hadn't. I said, "Well, then they may not know that you want to do that. So your whole little fee that you're paying might be misaligned."

Speaker 1:

Yeah.

Tony Mauro:

So I think it's communication, and I think that you have to understand what you're paying for. And then the services that are provided... I mean we try to list them out in exact number of calls and what you can expect and things like that, because that way there it lessens the chance of miscommunication.

Speaker 1:

Yeah, I think the first two to me are definitely misconceptions in how you're probably working with your advisor. And if they're not, they're just straight up taking too much risk or whatever the case is that we covered on that first part and not listening to you when you say you don't want to be that far into it, well then that's obviously a problem.

Tony Mauro:

Yeah.

Speaker 1:

With the fees are too high I feel like it's the same thing. It's probably based on misconceptions. It could be a little well-founded as well, but understanding what it is that you have, because certain products are going to have higher fees than others. So just making sure that you have that conversation point.

For the next one, social security won't be enough to cover my expenses. To me, this is totally a legitimate concern, because that's correct. It's not going to be enough to cover everything. It does a great job, but it's not everything.

Tony Mauro:

No, it's not everything. And it is, that's a legitimate concern. And the easy answer to that is that's exactly why you A, need to plan, B, save and take the time. Like I said, as I told her, I keep going back to her, "You've got a lot of time, you just need to keep saving. Because a lot of people think that social security, if they haven't looked at it, is going to be enough." And like you said, it's nowhere near enough. It's a good start, good safety net, but you definitely need to plan and save. Otherwise it's going to be pretty paltry by the time you get to the end.

Speaker 1:

Yeah. Yeah, for sure. And you've got to make sure that you realize that. And I think I've shared before my mom's in this situation where she's living on social security only and it's not the ideal situation that she wanted to find herself in. Through the course of decisions it's what's happened. So avoid that by doing some proper planning ahead of time and having the right pieces in the puzzle, and being aware that while it does a lot of things for you it's not going to cover everything. Now if you strategize right, maybe the social security is that income piece that takes care of the cost of living, let's say, and then you're pulling from your nest egg for the fun stuff. It just depends, right? It depends on how you structure your income strategy, and also depends on what you as a couple might be bringing in from that versus anything else.

Tony Mauro:

Right.

Speaker 1:

Yeah. Okay. I don't understand my financial plan. This one I think is a fairly well-founded concern because sometimes people just aren't getting it. And maybe they don't do themselves the advocacy service of saying, "Hey, you know what? I'm sorry, I know you explained this, but I'm just not getting it. Can you help me go through it again?"

Tony Mauro:

Yeah, I think you need to do that if you truly don't understand your plan. I also think that if you're in a relationship with an advisor and they are charging you fees, you should have a plan. In other words, it may not be on paper, but it should be in your portal or somewhere where you can access it. That's what we do, is we put the plan in the portal and it's all electronic. But the client can actually see, "Here are the major steps you said you wanted to tackle. First, second, third, and on and on and on. And here's what the whole plan looks like based on when we did it." And obviously then we change it over time and move goals around, but you should have that. And then it should be laid out in a way that it's not too complicated so that it's full of graphs and charts and things like that. It really should be more of, "Here are the goals, here's what we're going to do right now to try to achieve those goals", and then the progress towards those goals. And I think if you're having trouble with that then, again, requires a conversation. Ask them to explain it because it's your plan, you're paying for it. And so it's like anything else, you want to know what you've got.

Speaker 1:

Yeah. Yeah. An older gentleman, older advisor taught me this years ago. I thought it was funny, I may have shared it on here before or not. But he was like, "I like to subscribe to the rule of 11." And I was like, "I don't think I'm familiar with that one." The rule of four and rule of 72, all that kind of stuff. And he's like, "Yeah, if you get your financial plan and then you can't turn around and explain that plan to an 11-year-old, it's too complicated."

Tony Mauro:

I would agree with that.

Speaker 1:

And I love that, right? Because it's like you got to be able to re-talk it to someone else.

Tony Mauro:

Yeah. And you should be able to at least know what your major goals are and what you're doing to accomplish them. Do you need to know what the mutual fund and your retirement plan is doing and what investments they have? Maybe not, unless you're really into it. But yeah, you need to know the basics and you need to be able to explain it. Absolutely.

Speaker 1:

Yeah. Definitely. So I thought that was a cute saying. I definitely loved that one.

All right, last one here. I only hear from my advisor when they want me to buy or sell something, I don't really get advice on other things. Absolutely a legitimate concern here. But maybe you should ask yourself what kind of professional did you go to? Because they may just be doing what they do, they may not do these other pieces. And that's kind of on us, I think sometimes, by not vetting out or seeing the right kind of professional we should be working with for the time of life we're in.

Tony Mauro:

We should. And what that question is to me is saying the old days where everybody was considered a "broker". And you would see that. You'd see TV shows and movies about that kind of stuff too, but a lot of that's been moving away from transactional and more into an advisory role. And you do need to ask that question of if you've just got a broker... And some people want to do that. Although I don't know if it's as prevalent today, simply because there's so many ways to trade securities yourself now that you may or may not need that. But who knows, maybe you've got somebody that's like that. I think that that's, for most, not what you want. I think you might want more of an advisor, but you definitely should know who you're working with. And I think in our case, one of the things we do before we even take a client on is we sit them down and have them go through a questionnaire and they kind of score themselves.

But one of the landmines that I look for before working with a client is... And you can usually tell this by the way they're talking to you. Is if you just want to sit and trade stocks and have me give you recommendations and/or be the facilitator, I'm not your person because that's not what we do. You don't need us for that. You can go do that on your own. All you're going to end up doing is I think spending extra money. And then on top of that you're going to want us to give you recommendations, and then as soon as give them a bad one the blame game comes out.

Speaker 1:

Yeah.

Tony Mauro:

So I don't even engage in that. That's not what we do. There might be some advisors that do that, but I'm more focused on the long-term.

Speaker 1:

Well yeah, and to your point you're probably working with a broker only. You're working with someone who's a transactional based, commission based person. Now there's nothing wrong with that if you know what it is that you have and if that's what you're looking for. But part of this complaint is I don't get advice on other things, well then you're not probably working with an actual true planner and advisor that is talking about social security and taxation and legacy and so on and so forth. So again, part of that I think is legitimate, but I think it also is a misconception, or could be on our part, for just not finding the right professional to work with. Or not realizing that who we started with is maybe not who we need to end up with kind of thing.

Tony Mauro:

That's right. Yeah.

Speaker 1:

All right, well there you go. So that's our conversation and podcast this week with Tony Mauro on Plan With The Tax Man. Reach out to Tony if you've got some questions or concerns about your own situation and need to get down to the nitty-gritty and get on the right plan and strategy for yourself. Again, you can find him online at yourplanningpros.com for a consultation and review. Yourplanningpros.com. Tony, thanks for hanging out buddy.

Tony Mauro:

All right, well see you next time.

Speaker 1:

I'll see you next time right here on the show. This has been Plan With The Tax Man.

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