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Commercial (00:53):

In the age of information, how do you know that you are giving your clients the right tax information, especially with a tax law set to expire before we know it. Join us this year for the summit where financial advisors dive deep into the realm of tax knowledge and tax planning. Whether you are a tax aficionado or struggle to remember which schedule goes with what the summit is designed with you in mind and breakout sessions to meet you where you are at. Take control of your taxes today and reserve your spot@retirementtaxservices.com/summit to register to attend.

Steven (01:25):

Hello everyone and welcome to the next episode of the Retirement Tax Services podcast, Financial Professionals edition. I’m your host, Steven Jarvis CPA, and I’m excited to do something a little bit different with this episode rather than having a financial or tax professional on the call with me. I recently got introduced to Tyler Smith, who is potentially a prospect of advisors listening to this podcast. And the reason I invited Tyler to come on the show is because as we were talking about tax planning, I mentioned financial advisors. His response was something to the effect of, well f all the financial advisors, there’s no way I would work with any of them. I am extrapolating a little bit here, but it wasn’t positive. So we wanted to bring Tyler on and talk about what his experience with financial advisors has been and what it would take for him to consider working with a financial advisor in the future. So Tyler, welcome to the show.

Tyler (02:14):

Thank you. Really appreciate you having me. I’m glad I sparked some interest in our discussions.

Steven (02:19):

Yeah, absolutely. I really just appreciate open and honest feedback from people and people who are willing to share their experiences. And without getting too much into the details, this is a public podcast. We don’t need to share all of your personal information just for the advisor audience. I will tell you that on paper, Tyler looks very much like a client. Most of you would love to have this isn’t that Tyler is on day one of his career and has no money and can’t afford to pay anyone and has no complexity or anything that’s worth financial advising on. Basically no one has presented you with a value proposition that made you say, yep, I’d be willing to pay for that. Is that a pretty accurate assessment?

Tyler (02:54):

And so a little caveat I’ve said I’m willing to pay for it. What I’m not willing to do or haven’t been to do up until this point is to say, Hey, you are worth a portion of my success. I will pay you for your expertise. Please come to me. I am happy to pay you for your expertise, but I don’t understand why that would create a relationship where I am paying you forever unless you can really prove that you are going to perform that much better than just the advice that you’re giving me one time.

Steven (03:19):

Yeah. So Tyler, maybe share a little bit about past experiences you have had that have maybe informed how you think about this now and then we can dive into maybe some of the other things that I’ve seen and just get your thoughts on things that are out there.

Tyler (03:30):

Yeah, so I think a couple things. So what I do for a living is I coach entrepreneurial leadership teams.

(03:35):

And in that process I am always after being just real and raw, 100% open with all of each other all of the time. That’s what differentiates good from great in the leadership teams that I work with. And so doing so when I work with financial advisors, I am trying to achieve the same level of transparency and in working with them it has been very difficult to just 100% someone just come out of the gate and tell me every single thing that is going on, what I am paying for, how I’m paying for it, how it is impacting me on the longterm, and am I truly paying for your advice? Are you just throwing me into some system where someone else is actually doing all the work and I’m just participating in someone else’s expertise? Trying to get to that true transparency has been one of my big struggles. Oftentimes I will peel back a layer in what I find I’m not happy with. I don’t find 100% transparency open and honest. They’re getting back fees around the backside or I’m being dropped and not truly being managed by someone of the expertise level that I thought I was getting. And that has really turned me off from working with financial advisors.

Steven (04:38):

Tyler, this is exactly the reason I wanted to have you come on because probably in part because of the coaching work that you do, you’re able to articulate some of these things that I know other people feel as well. For advisors listening, this might be the first time you’ve heard someone say, Hey, wait, I’m not getting that level of transparency and it’s a huge issue. But in talking to other consumers, other taxpayers, other people feel that way. Tyler’s just bold enough to say it. So lemme make sure I’m understanding a couple of things correctly because again, you coach businesses that this isn’t just an objection in general to paying other people for their services. It’s that no one has been able to say, here’s what I’m charging you and here’s what you can expect from me. Here’s how we’re going to measure success. Here’s the results. Whether that’s six months from you now, a year from now, 10 years from now, here’s how we’re both going to know that this relationship is worthwhile. Is that a fair way to look at that?

Tyler (05:24):

A hundred percent.

(05:25):

By the way, this is the bonus I get for doing a great job or the bonus I get for not doing a great job. I really want to understand when I work with an employee, I say, Hey, this is what you’re getting paid to do the work. If you overachieve over Excel, meet all of the goals that we’ve set when we’ve started working together, maybe you get this structured bonus program, but it has limits to it, it has an understanding, it has a relationship and a set of rules that we are going to play by. And I’m always crystal clear as to what those rules are to myself and to my staff.

Steven (05:56):

Yeah, that’s a great analogy to use with employees because a lot of financial advisors I work with, they either run their own business or they run a team. That’s a concept they can relate to of, hey, you’ve got somebody on your team, you’re incentivizing. And so of course you want to make it crystal clear so they know what to expect so that they’re motivated to do the things you need them to do so that when we get to that part where you compensate them extra, that’s how I always want to feel about it. I want to be excited to write my employees bonus checks. And I think that we’ve set it up in a way that in December I wrote a large commission check to someone on my team and I was ecstatic as Please take my money because you did the things I asked you to and I’m nothing but thrilled to write you this check. So it’s an interesting way to look at it with financial advisors because I mean I see a lot of marketing, I’ve heard prospecting, pitches, all those kinds of things, and it’s a different dynamic, but we could still have like, Hey, here’s the expectations. And that might be a really interesting question to try to ask an answer of, alright, Mr. Or Mrs. Financial advisor, how should I measure success of this relationship in a year?

Tyler (06:54):

Yeah, how should I measure success and what is the penalty other than firing you if you don’t meet the expectations that we’ve set out at the beginning?

Steven (07:01):

Interesting. So Tyler, how many conversations have you had? Because I know you’ve had some experience working with people in the financial planning space and it sounds like this isn’t something you’ve given up on entirely, but what types of questions have you tried to ask before? Do you just get no answer at all? You get unsatisfactory answers? How has that dynamic worked?

Tyler (07:20):

Yeah, so let’s talk about my last experience. It was relatively recent,

Steven (07:24):

Okay,

Tyler (07:24):

So I went out on a recommendation, found a financial advisor, began a relationship with them, said, listen, I am never going to buy anything from you. I just want to buy your advice. I just want you to look at my portfolio, look at my investments. I am a big fan of Vanguard, so love them or hate. That’s where I’ve been investing for quite some time, just very transparent, low cost, and please tell me what I should do. And so they came back and said, oh, you’re a little weighted too far this direction. You need to adjust a little bit this way and you should come with us and buy these funds. I said, okay, I appreciate the investment. I appreciate the rebalancing of what you believe my portfolio should be, but the funds that you’re recommending that you have to manage, does Vanguard have the same ETFs that you’re telling me I should go buy at a lower cost?

(08:11):

It is a emerging markets fund. Does Vanguard have an emerging markets fund? What’s the basis points of Vanguard’s emerging market fund versus working with you and your 1.5% annual rep share? I’m coming to you for financial advice, so please tell me that there is some benefit that I’m going to get by having a lookalike fund with you versus Vanguard. And I came straight out of the gate, said, I want to buy and I am paying for your advice on what to do and you’re already selling me product, so I will take the advice on how I should rebalance my portfolio, but I am not convinced that I should now work with you on, I don’t see where the improvement is to my portfolio by having you manage it. So that was part one of this relationship. Part two was a look at my life insurance policies and they said, Hey, great news, you have some whole life but you don’t have any disability and we can turn these things left and right, ups and down, whatever it is, and we can take the cash out of your whole life insurance policies and we can buy these new policies which have this disability rider said, wow, that’s super interesting.

(09:19):

That’s really great advice. Let me take it back to my insurance guy, and this was such an interesting one. So the way my family works is very close, grandparents, parents, children, just very nuclear families. And it turns out, had I moved forward with this policy, which would’ve cost me nothing out of pocket, it would’ve had a substantial impact into the way that we operate as a family where the new insurance policy would not pay any family members as caregivers, which is actually my primary caregiving solution in the way that my family works.

(09:52):

So these kind of misses that people were not picking up on, were not getting deep enough with me, were just trying to run me through. And when I basically said, Hey, thank you once again, great advice. I went to my existing insurance broker and we put some new insurance in place, but you could see the disappointment in their face that they didn’t get this commission on this sale. It was so clear, just literally the temperature in the room change. I said, wow, that was great. I went to my insurance guy and we redid something, but by the way, you missed this piece about me. That would’ve been really important and I would’ve been really upset had we made this change and you didn’t even pick up on it or whatever. So here’s my money, thank you for the advice and parted ways with them. So pretty interesting undertaking.

Steven (10:33):

So even that advisor that you didn’t stick with, you still paid for that time that you had spent with them. Correct. So again, this isn’t that you’re out there just searching for freebies and someone to offer you value with nothing in return, but it highlights a couple of things to me. And one thing again, I want to comment on for the audience, because I know there’s going to be some advisors listening who, well, Tyler’s too picky. He’s not my target audience. Anyways, maybe that might be true. Personality fit is really important, but something that I think advisors really need to be paying attention to is that as technology keeps overtaking more of the basic things, the relationship piece, how you differentiate is going to be more and more vital. It’s not just going to be a nice to have, it’s going to be a need to have. I mean, a really easy example is I’m always blown away when advisors still try to tout tax loss harvesting as something that separates them from Vanguard. Guess what? Vanguard does that

Tyler (11:24):

Or bond ladders. Oh

Steven (11:26):

Yeah, bond ladder, yeah. There’s all these things and your example about your family is one of the things I try to remind people of is I’m the tax guy, so I bring it back to taxes, but applies to other things too. We’ve got to make good life decisions first, then figure out the tax efficient way to do them. Same works with investing, same thing works with insurance. We’ve got to understand those goals, those life situations that might not be generic to everyone. And so that’s the advisors that I see. And this is kind of part of where our conversation kicked off before because I told you not only do I know advisors who from what I’ve seen and from the clients I’ve talked to of theirs, they’re doing a great job. They’re charging an AUM fee and actually they’re charging a premium a UM fee.

(12:05):

And part of what I see from those types of advisors who can do that and their clients love it, is that they’re getting so ingrained in that person’s life that they know right away, Hey, this is a really important aspect to Tyler, this family cohesiveness, this nuclear family aspect that they know that out of the gate and they’re never going to put something in front of you that would contradict that regardless of what it means for their commissions. And to me, and I would be curious your thoughts on this, I don’t really care how your dollar amount gets calculated that I have to pay you. It’s all just math. To your point before, I want it to be transparent. We all have subconscious conflicts of interest and biases on how we get compensated, whether that’s hourly or commission or AUM, whatever it is, humans are naturally motivated by money, but being transparent and really clear about it can change how we address those conflicts of interest. But at the end of the day, I don’t care how you can compensate as long as I’m clear on it.

Tyler (12:58):

A hundred percent. So let’s be clear. And the other thing that sells me on, you have to be my trusted advisor. So you have to get through that trusted barrier with me and show me that you understand and you care. But the other piece is expertise. Can you show me that you truly have the expertise in what I’m talking about? So the reason that we connected is I’m always looking for better tax expertise.

(13:18):

So I think I came to you and said, listen, I don’t think my CPAs truly get it. I’m paying for tax advisory services. There’s got to be a better way out here. And to the extent I should feel that you are so much smarter than me about this world that you start talking about things in tax that I’m under levered. I see it in the marketplace with my clients who go to sell their businesses and their big financial advisory firms say, just take the tax hit and then we’ll go do all the investing. And I’m like, no, no, no. That is not the advice you should be getting. You need a new person. You need a new financial advisor. This one is not, you’re about to get a 4, 5, 6, $10 million payday. The answer is not to go pay all the taxes out of the gate. And if that’s what you’re getting, you totally have the wrong person. So definitely the other thing I’d love to see is someone who’s truly at the cutting edge, the bleeding edge, fully educated, not just looking to build up their A UM, but understanding what has happened. What has the political environment, what do we think is going to happen

(14:12):

As we move forward and how are we positioning you? So a super interesting one that happened this year was taking a high deductible insurance program to utilize an HSA as a basically IRA, right? So you can actually go fund that HSA and just let it sit, never touch it, and it’s all growing tax free. Someday I’m going to need the healthcare so it’ll be there growing tax free until I need it. Super interesting stuff. I’m like, wow. That to me is what I want brought to the table from my experts, my trusted advisor experts.

Commercial (14:44):

Even if this is your first time listening to the RTS podcast, I’m sure you can tell I’m all about taking action and doing more. But even I know that in order to do more, you’ve got to find some things to take off of your to-do list. There’s only 24 hours in the day. And the best way to take things off of your to-do list is through delegation. Luckily for me, about a year ago, I started using a virtual assistant through Belay and it has been a game changer. Belay has over a decade of experience helping busy professionals like me get partnered with fantastic virtual assistants all based here in the US. Belay does this all the time, so not only can they help you with finding someone, training them, onboarding them, and navigating how you can best use a virtual assistant, they can also help you identify what you should be delegating. 

So as a listener of the RTS podcast, you can text RTS to 55123, that’s RTS to 55123 to download Belay’s free resource, 25 Things You Should Be Delegating in 2025, and to help you get started learning more about getting a virtual assistant and leveling up by partnering with Belay. 

 

Steven (15:51):

That’s such an interesting example, Tyler, because at this time I try to reinforce to advisors all the time, the same thing that you’re talking about, being educated and knowing how to apply these things. And I’m going to say this with no disrespect to you because this isn’t what you do all day, but for me, an HSA is not a complicated tool, but what you’re highlighting is that if you’re like me or a lot of financial advisors and you do this all day, you can be really dismissive of, well, everyone knows what an HSA is, so I don’t need to talk about this. And this is where it goes back to understanding a specific person’s situation to be able to say, Hey, Tyler, it looks like you’re not involved in an HSA yet. Can we talk about how that might be a good fit for you?

(15:54):

Advisors get distracted with, I have to have something shiny and new that no one has ever heard of. And so no, no, no, you need to have a level of expertise that it’s ahead of the client that’s working with you because that’s why they came to you is for expertise. It doesn’t have to be something that no one’s heard of. Even if you can go Google what an HSA is, if I can add my expertise to say, here’s how it applies to you and here’s how you should look at it and here’s how it’s going to benefit you in the future. Now I’ve added tremendous value and I’ve started building that relationship of trust, which I would love for you to speak more about that because that trusted advisor, that relationship of trust, those are things that get talked about all the time. They’re almost buzzwords in the industry anymore. From the consumer side, what are things that actually help build that relationship of trust for you?

Tyler (16:36):

And so I was just going to hammer on this HSA one a little bit more. I knew about HSA I understand it, and FSA I think is the other one, right? But as a basically solopreneur who doesn’t have great access to healthcare other than the exchange

(16:51):

And understanding that I can go get an HSA that will use a Vanguard fund to grow, that’s not like out there common knowledge that there are these services out there. Once again, technology has come to the place that I as an individual can go sign up for this HSA, link it to my Vanguard account, move money there, get the funds I want. That part is I’m not in this world deep enough to go be tracking. Is there some new HSA technology that’s available to a solopreneur like me? So that was one. I mean that was one that blew me away in the sense I’m like, oh, you are an expert. You are out there looking at individuals like me in the situations that I face and coming up with solutions, including introducing me to the technology and not saying you should go with A or B, but just that, hey, you can now achieve this as a tax efficient means to do investment as a individual organization.

(17:42):

So yeah, it’s really, I think a big part of it for me is that like I said, that my advisors are smarter me when they talk about things, I’m like, I can conceptualize it logistically. I’m not sure. Maybe the technology will allow me to achieve it, but they’re coming back and saying, wow, even from an IRA standpoint, based on what you pay yourself and a step IRA and a traditional and a Roth and how we’re going to use it for your kids and backdoor and all this stuff, I’m like, okay, conceptually I get it. Just need you to tell me what to do. I don’t need you to help me to access the mechanisms. They’re all there. I can open an account in a second, but I need you to tell me move this much money from this account to over there and that’s going to be the most efficient way.

(18:21):

And when I see it, it’s almost like this thing I can taste. I can taste when the expertise is in the room versus someone who’s just talking something at me, oh, you need to have this flavor of the week. This silver bullet’s going to change everything for you. Versus like, no, I’ve been thinking about this. And there is a way, and I’ve seen it especially with some of my clients who are going to sell their businesses and when we meet, so I will facilitate the discussion so they’re looking, typically when we’re talking about someone selling their business, we’re talking about six new trusted advisor relationships we need to go create. So CPA and financial advisor are always two of them and how they work and interact with someone they were probably really comfortable with. Now we’re looking at a regional or national firm and trying to develop a new relationship with them and just establishing this open and honest rapport and what is important to them and are they going to get it from this firm to the extent that they need to?

(19:13):

And is the expertise enough there, the savings enough, the ability to produce whatever this outcome is. We’re talking about large numbers, virtual family offices. That’s a whole new concept. If someone can come in and talk about a virtual family office, I love my entrepreneurs, but they are not people who understand EBITDA because they don’t have to. They’re just about profits, so they don’t have to really get into the knee deep of ebitda. We say, Hey, we’re going to sell your company. It’s all about ebitda. They go, I don’t want to know about ebitda. I’m like, I get it. But when we go into the marketplace, that’s what everyone who’s buying your business wants to know about. And when we get to the really smart buyers, if we have someone on your team, they’re going to understand how we want to position the payouts to make sure that they’re not going to be upset that you’re maximizing or minimizing your tax exposure. They’re going to totally get it, and you guys are going to leverage together to create a better relationship, a yin and yang that you couldn’t have done had you not had both smart people on both sides of this. They get more of what they want, you get more of what you want, and it just starts to work together because of the expertise in the room and your ability to be open and honest with what you want as the outcome.

Steven (20:18):

That ability to be open and honest about what you want as the outcome is a really key piece. And I think for a lot of, whether it’s business owners selling their businesses or even just individuals trying to plan for the financial future, it can be hard to identify that for yourself. So part of it for me, when I’m looking at, Hey, is this a trusted advisor? Is this someone I want to build a relationship with? It’s what types of questions are they asking me and how are they helping me draw that out because I might not consciously know the outcome I’m looking for. I don’t want to get totally sidetracked on this, but I just think it’s fascinating that this HSA piece of it was such a standout moment for you because it is such a good example of how advisors can take for granted what other people know, and now you’re talking about business owners and not really understanding ebitda. Again, it comes down to the application to that specific situation and being able to demonstrate that you know how to actually execute these things because Google has all the data, Google has all the information. What counts for value is what we can take action on, and so we can’t get distracted again with those things that it doesn’t need to be something that nobody knows. It needs to be something you can help your client take action on that they wouldn’t have otherwise on their own.

Tyler (21:25):

And it’s your expertise. I am delegating this to you to handle for me because I don’t want to become an expert in it. So funny enough, the HSA thing is one, I don’t want to be an expert. Please just tell me. I get it conceptually, but as it comes to an ETF, guess what? It’s so accessible. There’s nothing there that is some magic science happening behind the screens. I can buy an ET TF all day long with no problem. Bring me the stuff that’s magic. Bring me the stuff that is a differentiator in the marketplace that truly is outside of what I want to deal with, right? ETFs I’m good with all day long.

Steven (22:01):

Well, and I also want to highlight, you mentioned in there, and you also mentioned that’s kind of why we originally connected, but I mean you have a professional tax preparer you’re working with and one of the things I’m always reinforcing to financial advisors is that by and large tax repairs are not doing any kind of tax planning, and so you cannot assume that just because Tyler works with the CPA, he must already know about HSAs and he must already know about what the contribution limits are and assume none of that. Assume that Tyler’s CPA is only filing a tax return and probably just barely. Yes. That’s not specific to you. That’s consumers in general,

Tyler (22:33):

A hundred percent.

Steven (22:34):

As a financial advisor, you’ve got kind of two options here. You can get on LinkedIn and complain about how CPAs don’t do anything and accomplish nothing, or you can see this as an opportunity to build that trusted relationship to deliver more value, to have clear ideas, clear strategies, clear examples. You can give your clients, your prospects like Tyler to say, Hey, when you pay me this fee, here are the things that we’re going to do together. Here are the outcomes that you can expect. Correct me if I’m taking the wrong assumption, but I haven’t heard you and maybe it’s because it’s a tax podcast, but I haven’t heard you say, I need you to guarantee me a certain investment return. This isn’t inherently about you have to promise me X dollars in return, but it is, I need to be clear on what it is you’re going to do for me that I couldn’t have just done on my own.

Tyler (23:18):

Correct. Yeah, and it is, I mean, I know we’re on a tax podcast, but tax for me is the differentiator. Everyone can earn the s and p 500, whatever it is, so let’s not get into the deep dive of are you that much better or that much worse?

(23:34):

Not everyone can find the tax savings. The mechanisms to achieve the tax savings are actually truly, I think at this point, the expertise that set a differentiation over that 10 20 year timeline. It’s just a huge number. So the returns on the investments I think are largely available pretty consistent if you’re with a ETF based methodology, but the ability to utilize tax and who owns the tax expertise, because you’re right, most CPAs are looking to file taxes as quickly as possible. Most financial advisors are not obsessed with tax, who is obsessed with utilizing and becoming an expert in the tax code and just ringing it for all it’s worth. And I’m just starting to see now CPAs who say, Hey, we’re actually tax advisors first and we’ll run your QuickBooks after we’ve done all the tax work. It’s just starting, starting to see it on the fringe.

(24:25):

I’m like, oh, maybe the CPAs are going to come back and say, Hey, we’re actually really now tax advisors and we file your taxes, but we’re actually doing the strategy. Who’s doing the strategy around taxes? And most people don’t think they need a strategy around taxes. They think they just pay them. They’re not, I don’t know what the right word is here, so it’s just some fixed fee. You go through a formula and there’s an output versus saying, wow, if I take these things, I pull these levers and I move things in this direction, I can actually really have a optimized and tax efficient solution to my financial wellness and health that is beyond what my CPA is going to do. It’s beyond what my financial advisor, it’s like this whole other room that’s like, Hey guys, what about this stuff? It’s massive. It’s major. It’s so important as to our long-term financial health, and it’s been really, really difficult to find someone who is obsessed about tax planning and strategy for a well off, but not mega millionaire type individual. I want family office level tax planning, and I am a single individual out there trying to figure out how to make it happen.

Steven (25:31):

Tyler, you’re spot on with so much of that. One of the things I want to highlight, especially for the advisors listening, is that, I mean, you’ve come to that conclusion on your own of, Hey, there is something I can do on taxes, which is usually one of the first myths I have to break down for taxpayers and a great opportunity for advisors to start this conversation with their client, with prospects of here’s how we’re going to deliver value on this fee we’re charging you.

Tyler (25:55):

Yeah

Steven (25:55):

Like you said, so many people are kind of lost in this world of, well, taxes just happen. There’s nothing I can do about it. Not only is there something you can do about it, but from the advisor standpoint, this is such a great thing for your business to become obsessed with tax planning because not only is it already complicated and an opportunity for tax savings, for tax planning, it changes all the time. You mentioned just briefly, somebody who can give you thoughts on what comes next, and my crystal ball is just as broken as the next person’s, but all of my clients know that we’re going to come alongside them, and even if I don’t have the inside scoop to tell ’em the week before what Congress is going to do, they know that as soon as Congress makes a change or as soon as it’s a little bit clearer what’s going to happen, we’re going to help them navigate what comes next.

(26:39):

I’m pretty confident that AI still has quite a bit of a hurdle to navigate that one. I’ll be glad when someday it does so that I can focus on even higher level things. But this is a huge opportunity for financial advisors. I like your wording there who are willing to be obsessed with this tax piece because it’s such a huge piece of everyone’s financial life. It doesn’t matter if you’re a business owner or a W2 employee, you’re retired, you have a family, you don’t have a family. All of us are paying lots and lots of taxes, and one of my favorite questions I get when people know I talk about taxes all the time is, well, Steven, how do you talk about taxes and not get into the politics of it all? Say it’s real easy for individuals. They always want to pay less than themselves, and I just don’t get into the conversation of how much they think somebody else should pay. There’s differences of opinion there, but I have yet to meet the person on any end of the political spectrum who thinks they personally should pay more in taxes, and anytime somebody indicates they might, I just send ’em a link to the treasury website where you can make a donation to the national debt and none of ’em ever do.

Tyler (27:37):

Yeah, I am obsessed with paying my taxes now versus the future. I think they’re still going up. So every strategy that I can find that allows me to pay for that tax now and not have to pay for it in the future, I’m obsessed with

Steven (27:50):

Tyler. I’ve really enjoyed this conversation. It’s probably mostly just confirmation bias because so many of the things that you’re coming across on your own or things that I’m talking to advisors about all the time, things I’m reinforcing with my own clients of even just that last comment there of making sure that where you can, you’re paying taxes now as opposed to in the future. That’s one of the conversations I have all the time of, Hey, are you concerned at all that tax rates might go up in the future? Back to making a personal, that’s how we inform some of the decisions we’re going to make. Do I know what tax rates are going to be in five years? No, I have no idea, but I’m feeling pretty confident. They won’t be

Tyler (28:23):

Lower. They’re not going down, right?

Steven (28:24):

Yeah,

Tyler (28:25):

They’re not going lower.

Steven (28:26):

Yeah. I can’t tell you exactly what the rate will be, but I know that personally I’m looking at how do I pay taxes now so I don’t have in the future. I look at that for my clients. That’s going to be one of those things that five years from now, back to the original question we proposed of, okay, how are we going to know if this relationship was a success as we get years down the road of a relationship like this with a financial advisor and their client say, can we point to specific actions we took that it gets really convoluted to try to put a specific dollar amount of you save $12,308 and 16 cents, but we can certainly do it in ballparks and we can point to specific actions of, Hey, we were concerned tax rates were going to go up, so here’s how we got money into after tax accounts. Great news we did. Here’s how we’ve done that over the last five years.

Tyler (29:07):

But this is a perfect example. So if you came to me today and said, listen, there’s three avenues for you to choose, okay? You have to decide, pay your taxes now, pay ’em later, whatever the third option is. But by the way, we’re going to track it after you make this decision. So if you’re looking for my recommendation, I’m here. So please tell me what you think I should do. Hey, I think you should pay your taxes now. Great. Well, we’re just going to have a line item here that says, Hey, if you had chosen road B, this is what it would’ve looked like. So every time I look at road B, if you had given me good advice, it just reinforces like you are now paying for yourself. Right? Had I not gone with road A that you recommended

(29:43):

And I had gone with road B, which was the standard, and this is what my cost us, and this is like you paying your employees saying, I’m so happy to pay you. You did such great work for us. You made so much money. This is where I’d go say, wow, I would’ve made that mistake 5, 10, 15 years ago and I would’ve paid so much money, but because you were here and you helped me make this decision, I can see the impact. If you’re not willing to put that on paper as my advisor, what are we doing together? If you’re not saying, listen, I’m a smart guy. I’m out for your best interest. I’m helping you make a decision, which I truly believe is going to be the right, I’m not going to be right a hundred percent of the time, but I’m willing to say I’m going to be rate 80% of the time, and if I’m not, you should fire me. Right? If I am not achieving what the goals you have prepared me to do, then I am bad at this job and I need to go do something else. I should be able to point out and say, listen, there was two roads to chose. We decided this one for you. It was based on my recommendation, but we just tracked the other one and that has paid for my fee for your entire life and working with me. I will never leave you as a client. Easy, easy, done.

Steven (30:41):

Yeah, what a great way to sum that up, Tyler. And it reminds me of something we like to talk about, which we call the dishwasher rule, which is making sure you’re taking credit for the work that you’re doing for people based on the idea that you only get credit with your significant other for doing the dishes if they know you did them. And so in your example, yeah, client starts five years from now, you can specifically say, Hey, when you started with us, you had $20,000 in after tax accounts. You now have a half million dollars in after tax accounts that you wouldn’t have otherwise funded. Here’s the taxes you paid and here’s what you would have to pay. Now, these are simple illustrations.

Tyler (31:13):

Hey, you were in mutual funds and we moved you to ETFs. Look at the numbers, check them out.

Steven (31:18):

Well, Tyler, I could keep going on this stuff all day. I always try to be respectful of people’s time, so I appreciate you coming on and being willing to share so openly your experience with this and how you think about it. Please take seriously the things that Tyler is saying. I mean, this is from his own experience, but I hear these kinds of themes from so many taxpayers. Tyler was just generous enough to get on and say it a lot loud. Yeah, so good luck out there and remember to tip your server and not the IRS.