Steven Jarvis, CPA (00:51)
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 joining me this week is a financial advisor and author, George Stefanou, to talk about writing a book, being a financial advisor, and how taxes weave into all this. So George, welcome to the show.

George Stefanou (01:09)
Hey, thanks for having me. I’m gonna be fanboying a little bit this episode with you. My kids are, when I explained which podcast this was, Oh, this is the one with the really cool intro. And I was like, no, it’s the second one. His brothers had all sorts of no, I’m just kidding. Both of you guys have a great, a really great intro. We jam out to it. You make taxes fun. I like it.

Steven Jarvis, CPA (01:27)
That is the goal. The least boring CPA is what I try to be. And in full disclosure, my brother Matt did write the lyrics for both parody songs. So I really, it doesn’t matter which one you like better. I still don’t get the credit for them. So parody songs aside, which are pretty amazing. So you wrote this book called Two Comma Wealth. So tell us a little bit about the premise of the book. And then I always love to know what people’s journey to getting to the point where it’s like, yeah, why don’t I commit all of the time, money and energy to write a book?

George Stefanou (01:53)
Yeah, great question. It was a journey for sure. And really, for me, I wanted to be able to have a voice within the industry. We’re doing a lot of the same stuff that you talk about on your podcast each week and putting it into context, being able to have something that I can have a demarcation out there. OK, these are things out here. it was to ironically a market that you would think would be over-served, over-solicited, but it really is underserved. I find this this up and coming new generation of wealth found, call to the commonwealth. When people’s net worth succeed a million dollars in America, it’s a very growing populace of self-made people. It’s not all silver spoons and inheritances. In fact, think we, many have talked about recently shirt sleeves to shirt sleeves. That’s really not the case as to how wealth is kind of created. It is business owners. is people that have done the tactics of saving and investing and putting away over time, but now they this nest egg and it’s well what do I do with it things have become now more nuanced and where do I go from here every direction out there is how to become a millionaire but not necessarily what to do once you have it.

Steven Jarvis, CPA (02:54)
I really like that distinction. I want to bring back to the way you phrase that over solicited, but not necessarily over served. I think that rings really true for me in tax planning in general. And I talked to financial advisors. You can get online and see endless marketing speak about advisors doing comprehensive, holistic, thorough, whatever word we want to use today. They, for most of those advisors, they’ll have some kind of tagline about, and we do tax planning. But in reality, I really like it very very well solicited at this point. It’s very well marketed, but the reality is it’s not being particularly effectively served in most cases. So that’s really interesting that you identified that you were able to look past. Sure, I see lots of headlines on this, but there’s still an opportunity here to serve people.

George Stefanou (03:37)
Yeah, absolutely. And you see that there’s lots of books even that’ll say, you know, how to get to zero tax bracket, et cetera, but really not for outside of very nuanced, you know, remedies there, but the things that we do day in and day out to help people keep what they earn and to be able to pay their taxes, still go by the code. We’re not finding any loopholes, et cetera, but really gain efficiency in there and how to do so. So the book, the full title, so to Commonwealth investment tax, and estate strategies for when your net worth exceeds a million dollars really goes to that premise. It’s okay, these are the tools now available to you. Some may apply, some may not, but here’s the things you should at least be looking at. And if you’re not looking at it, work with a professional that will help you look at it to get these things done and optimize your situation.

Steven Jarvis, CPA (04:20)
Yeah, George, I really like how you’re looking at this because if you only ever spend time on Instagram, you might assume that all, newer millionaires are people who hit it big on Bitcoin or started streaming or had some kind of once in a lifetime event that gave them a bunch of wealth. But the reality is that a lot of people who achieve that level of wealth, even from their own hard work, it’s just that it’s hard work over time. They’re willing to do things other people aren’t. But really what it comes down to is they commit to that grind over time. And then when you switch focus and say, OK, well, then what are they going to find around tax planning? If I don’t provide good content, they’re going to find this nonsense about kind of looking for these these these unicorn ideas where I never pay taxes again when in reality what they need to do is apply that same mentality of hard work over time to minimize my tax liability, not not get lost in some gimmick that’s most likely to get audited and thrown out because TikTok doesn’t actually have all the answers on taxes.

George Stefanou (05:11)
And a lot of it the sage normal advice that we’re given using tax tools during our earnings years is Certainly beneficial but can lead to problems down the road. So if all we do is only put into our 401k and we always just do tax deferred because that’s what we’ve been taught to do and we have no tax Diversification we haven’t on these things I addressed that in the book talking about those things also talking about how in retirement kind of the the script flips a little bit. So we talked about tax location as opposed to you know, your investment allocation but you have tax location of assets and favorable areas in which those assets should sit. It shouldn’t just be universal across the board. It kind of is counterintuitive to what’s ingrained in everybody. Everybody says, okay, well your savings, your safe, your income-oriented investments that are taxes or near-income should be at, you know, in your brokerage, your bank, in your, you know, outside accounts and your IRA is only for the high-growth stuff. Well, the reality is in retirement that flips, right? So in the distribution year. So how should you allocate those assets in the right lanes, how to understand it from a basic concept. And so we illustrate that throughout the book in doing so. And then just thinking through some steps that they can take just really, we might seem as easy oversight. And I see it even amidst advisors. It’s really easy when you’re going to be setting up an account to set up the beneficiaries. Okay, you want 10% to go to your church. Great. That’s excellent. Awesome. So all accounts are now, each of the kids get 30%, each of the three kids, then 10 % goes to the church. We allocate it so that the church gets the IRA or the qualified assets and then not give them any of it. Why would you give it off? What a waste. When you’re looking at donor advised funds, when you’re doing all these kind of things, I talk about in the book a lot, friends don’t let friends give cash or non-appreciated assets, those kind of things. So utilize these little things that are there. And then I think a new up and comer that we talked about.

(06:55)
And I think it’s a pretty big distinction. Many people aren’t talking about it because it’s newer and not a lot of assets in it yet. But I think as the generations go on, there will be is HSA accounts and the ticking time on that occurs down the road doesn’t have to stretch how to utilize that, how to optimize it along the way. So we can get into whatever you’d like to see that.

Steven Jarvis, CPA (07:10)
Well, George, I have some questions specifically around the process to write a book because I get questions around that myself since I’ve written a book as well. But before we dive into that, let’s take it a little bit more broadly because there’s a lot of advisors listening who probably won’t ever write a book, or at least right now they’re telling themselves they won’t. But whether you write a book or you are active on social media or you write client newsletters or you just work with clients in meetings, you still have this task of going from the tax code, which is 80,000 some pages long, to saying, okay, what areas am I gonna focus on for my client base or am I gonna put in my book? So how did you decide what to prioritize? When it came to, here’s what’s gonna go in the book on tax topics.

George Stefanou (07:47)
Yeah, I mean that is definitely an area that can get carried away easily. Again, I’m not the tax pro, you are at the end of the day. CPAs, cetera, they’re tax professionals. But we do, we work hand in hand and the strategies and the education that we provide clients around things are important and they run the gambit. So what I tried to find was given the book’s premise and who it was targeting, what were the typical things that we found? So I try not to get deep into the weeds on areas that, you know, it’s not a real estate investment book. So we’re not talking about that. It’s not an insurance based books. We’re not talking about that, but the normal, what was the typical, typical onboarding look like? Where are some blind spots that I typically see or where’s that underserving occurring most? And so I tried to narrow it down to that. It was certainly helpful with the publisher to provide some guidance and direction on actually creating an outline. Because even just a few minutes into our podcast, you can see how scatterbrained I am just naturally.

(08:39)
So, narrowing that down into something that’s cohesive and can be built upon and then using some of the illustrations that I use with clients and that resonate best with them. So the publisher was able to allow me to have that kind of wall to bounce those ideas off of and then help narrow it down, especially given that they didn’t have a finance background. Okay, this is what will resonate with an average person. I found that beneficial.

Steven Jarvis, CPA (08:59)
That is really interesting. I love talking to other people when I’m trying to narrow down my ideas. I love focusing on, OK, what am I hearing from my clients? Like the types of questions I get from my existing clients or from prospects. Those are to be a good indication of things that people are interested in and need help with. The other thing that I try to remind myself and I help remind advisors as well. So we’ve got to remember that although we’re all expected to pay taxes and a lot of people have this idea that they should be able to prepare their own taxes for the vast majority of the population, they’ve never been taught how taxes work. Like there’s this expectation that you know, but when did they ever learn and so again whether you’re writing a book or just getting ready for your next client meeting as you think about the tax topics you’re going to share you probably need to start a couple layers higher than you might have thought as far as the level of detail. And obviously, as you get to know clients better, like we’re going to go deeper and deeper with these things. But you can’t take for granted that there is a base level understanding of how taxes work.

(09:52)
I regularly will have questions from financial advisors, people who are very financially literate, who spend all their time around numbers. And they’ll still ask me questions about, Steven, could you just could you just remind me how to best articulate the difference between ordinary income tax rates and capital gains tax rates? Steven, can you remind me how the contribution limits work for IRAs versus 401Ks. And so if these are the types of questions I get from financial advisors, your clients also have those questions if you haven’t explained them before. And so we got to make sure that we don’t try to, we don’t get too carried away trying to impress everyone with how smart we are. Start with the basics. People want to be able to take action. are as much respect as I have for anybody who will take the time to write a book. For the vast majority of us, people are not going to the bookshelf or they’re not going to a shelf up at a bookstore and saying, hey, you know what? really just want to just lose myself in today as a finance book. They’re looking for how can I take action? How can this impact my life?

Commercial (10:35)
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George Stefanou (11:12)
Yeah, and you know, that’s a really good point. I start out, you know, even though it gets into some advanced strategies in there, really just disseminating information like you’re talking about, you know, what’s the difference between a qualified and a non-qualified dividend? What’s, you know, long-term versus short-term capital gains? What’s, you know, what’s an effective tax rate? What’s a marginal tax rate? You know, all those kinds of things, how the tax code works. And I find myself both in front of clients, as well as, you know, in the book, really kind of taking a step back and, and realizing I have to explain things like when Warren Buffett says that he pays a lower tax bracket than his secretary. Well, he’s talking about the same thing, right? Capital gains versus ordinary income and how that actually works, and that we’re not taxed on assets, we’re taxed at income, and what triggers income, and the tax code. unless we’re at the estate tax level and all those kind of things. So you’re right. Sometimes you have to start. And so I struggled with that a little bit in the book too, because you know, your peers are going to be reading this and how dumb down does it seem. But the reality is we all need reminders. And I had to commit to that early in my career too, committing to not remembering numbers because tax law thresholds, tax laws change, all these kind of things. I mean, I started the industry where you could do it, you know, the strategy du jour back then was put your Roth conversions in different buckets, high growth, mid growth, you know, whatever it is and whatever took off you kept everything else you could revert back. Well, that’s all gone. You couldn’t do that again. And I was still talking about that at the end of December, the year before it changed. And it was actually a newer advisor. It’s like, I just read it. I don’t think you can do that. I was like, no, I’ve been doing it for years. No, you can’t. So you can’t just commit stuff to memory either because the tax changes, so have to stay abroad to it. And that’s the tough part about the book as well, because when you’re writing it and I address it in there, I talk about the fact that this is a map and like a map, it doesn’t update. It’s a point in time. And so if the roads change and the tax roads are always changing, shifting, they’re making adjustments in there, you’re going to have to change with it. So working with a professional that has, you know, kind of your sherpa as your guide, who has that active GPS that’s up to date on what’s going on, is so imperative and so it always brings back to it and that’s what a lot of advisors have said in finding value in the book and actually even giving it to clients themselves as almost a commemoration or an acknowledgement of when they hit this to Commonwealth about the strategies available to them and the things that they can help them implement along the way. So some pretty unique areas. I signed some books this morning for advisors and I never thought that’s really not the focus of the book is for advisors but it’s turned out to be which is pretty neat.

Steven Jarvis, CPA (13:26)
I think there’s so much value in advisors learning from each other. Just in my experience with advisors that doesn’t surprise me that they’re seeking that out and learning from it. There’s so much power in how to effectively get these things done. It’s not just that you need to understand and have resources for verifying the technical accuracy of how this stuff works. But I think the bigger challenge for most people is how do we effectively communicate this? How do we position the value proposition so that clients are excited? You know, because a lot of these tax strategies do really come down to intentionally picking the timing of when we pay taxes. And a lot of times that can mean paying more tax now, which is never fun for anyone to just say, hey, let’s voluntarily give the IRS more money. And so it really is a testament to how effectively we’re communicating that long-term value if clients not only get on board and execute the strategy, but are excited about it.

George Stefanou (14:14)
And I think as advisors, know, we’re selling things that can’t be seen, right? So you don’t see your share. We don’t give out certificates often anymore. It’s just numbers on a statement. So how do you share real value? What is the value that provide that you can actually control? And in this case, know, taxes is a big portion of that. So there’s all kinds of things out there that advisors can do to add value, but one of the that they can add value massively. In fact, I just got back from the Exit Planning Institute’s conference and they had a study that just came out that said, you know, that most trusted advisors in a business owners relationship or their circle of influence, was always number one was the CPA and advisors were down the list. I believe at the time when they came out to it that the advisors were number three after the CPA, then the attorney.

(15:03)
And now advisors are number number five, I think, and now they’re number one. CPAs went from number one to number three. And I think it’s because of many of them are not doing what you do, Steven, and they’re not doing the proactive and the planning aspect of it. They are just filing. I know we talk about that often, but that’s the reality. So advisors are the ones kind of taking the lead with they might not be able to give the tax plan or give the give the advice, but at least illustrate the strategy and then having them circle back and partner with those CPAs, those accountants, those tax professionals to get this done. It’s amazing because I find more and more how interesting it is that working with CPAs, know, and kudos to you because the education that you provide to your listeners and the different guidance you have out there, looking at reviews and reviewing returns and finding issues and tactfully going back to the professional and pointing them out and helping them understand. And I think some of it’s our own because we can’t just set it and forget it. Know, if they’re just looking at numbers on a page too, if they didn’t understand the concepts behind it, they’re just filing the return as they see most commonly done and they might not be aware of the strategy that we’re implementing.

Steven Jarvis, CPA (16:00)
Well, I rather proudly tell people how very often how the CPA tends to be the most trusted professional in a person’s life. But I appreciate regardless, even if we are slipping a little bit, I appreciate you bringing it up because you made a comment in there about all the things that people think CPAs are doing that maybe they’re realizing, wait, maybe my CPA doesn’t actually do all those things. And that’s a huge part of what we do at Retirement Tax Services and the memberships that we offer to advisors. It really comes down to this idea of helping advisors learn how to do all the things their client wishes their CPA already did, or their client thinks their CPA is already doing. Because so often that CPA, relationship really is very historically focused. That’s honestly for me, that’s not a knock on CPAs. That’s what they’re asked to do by their clients. Hey, help me file last year’s tax return. Help me get a giant refund right now. That’s what they’re being asked to do. And so they’re doing what they’ve been asked to do. But it leaves this huge gap in expectations where for a lot of clients, they just aren’t being served in that area. And it creates a huge opportunity for advisors who are willing to dive into that.

(17:03)
And you made another comment that I want to make sure that we highlight as well of how earlier in your career you had committed all these things to memory and that that didn’t exactly pan out for you because of how things change. And that’s a really important reminder because I think advisors at times will shy away from taxes because it does feel very daunting to learn all the rules just to have them change again. But the fact that the tax rules change all the time, you should actually see as a value add because that means that you’re going to have that many more opportunities that will naturally add value to your client relationships. it makes it that much easier to just transparently tell people. I tell people all the time, hey, I don’t commit the tax code to memory. Let me double check my cheat sheet. Let me go double check my resources. And so I just really honestly tell people, yep, I don’t have that committed to memory or that’s not an area I specialize in. And it turns out I’ve never once had a client who is upset by that as long as I made that clear. Where they will get upset is if you let them just assume that you know everything and then they’re going to find out, wait, no, no, you don’t. And now we’ve created an expectations gap and we’re definitely going to make some people mad.

George Stefanou (18:07)
100%. I completely agree with you there. Those cheat sheets that we have are imperative, especially because it seems like half the tax code now when it applies to the things that we do are all inflation adjustments. So what does that dollar amount actually change to? What got affected? What didn’t? Each under each item. So we do need to be careful with how we’re approaching that. And the cheat sheet’s your friend for sure.

Steven Jarvis, CPA (18:26)
So George, talk a little bit more about the actual process of writing a book. How did this start? Like what was the initiation down this path to get this done?

George Stefanou (18:37)
Yeah, so like I said, it started really with coming up with a detailed outline. And I started using one of the services out there that many advisors will use, which you kind of do a series of interviews and they kind of help you kind of draft some things, et cetera. The issue that I had is the more complex the topic, the harder it really is for that writer who has that skill set to actually do so. So I found myself just basically rewriting everything that was coming back. But at least it gave me some thought surround things kept it encapsulated in a way cohesive and it built upon itself Because it can kind of just become a scattered mess of all kinds of stories that don’t kind of gel and don’t resonate with the end reader. And so that was it it took a while You know as we’re talking here the unfortunate part so the initial launch the book was going to be in last October And we had some delays with some things, some out of my control, some out of the publishers control and didn’t get released, it got pushed back to the new year. Well, with the new year, now I had to push it back even further because now I’m giving numbers that no longer, you know, I don’t want to already date the book before it’s even out or seem like I didn’t know what was going on there. And it was it was difficult in this case because the publisher had a hard time understanding, hey, why are we we can’t redo this again? We just well, because that date, it was a big deal. And so it is funny how that all kind of comes full circle when it comes to writing the book, especially on a topic that changes all the time. And so I’m careful in the language in there to keep reiterating the fact that this is more conceptual. We’re gonna use real things that apply as of today, but they very well could, especially now with the new versions of Cut and Jobs Act expiring, whatever the new iteration is, we’ll see soon. Maybe a good portion of book might not be appropriate anymore, but when it comes to the tax portion of it anyways. But I still think it’s a good guide because it gets the reader to realize that there’s more value to an advisor than you might realize because I think in many people’s eyes today, they’re still thinking there’s this concept that, you’re here to beat the market. You’re here to give me a great return. And I think that’s pretty proven that that’s highly, highly unlikely, at least with any consistency or without any good luck. Where we can drive value that’s what the book hits on and it really puts the advisor back on top as far as that trusted source and hopefully as a counter to all the DIY books out there that hit on things and make it overly simple and can lead to some problems that are often overlooked. DIY is right for the right people. If they’re really going to nerd out about it and they’re going to spend all day on the bobble heads forum or whatever it’s going to be, then all power to them. But what I’ve found is our clients want to enjoy their retirement and they want to enjoy the assets that they’ve accumulated. And it talks a bit throughout the book. The big theme is about having an abundance mindset.

(21:10)
Losing that scarcity mindset because many people who have accumulated wealth really are reluctant to then spend it and they are worried about things that whether it’s taxes or squandered on just spending it all. we talk through the behavioral side, know, taxes add a lot of value, but I’d say the biggest value is still the behavioral side, keeping them invested and believing in the, you know, commerce and the economy in general and participating.

Steven Jarvis, CPA (21:33)
Well, even on the tax topic, that behavioral piece is still what makes the difference because you can have the most beautiful illustrations and reports and guides that anybody’s ever come up with, but if the clients don’t consistently execute, if doesn’t get reported, to the IRS correctly. None of that counts for anything. So while I tend to put taxes pretty high on the list of important things in life, I’m with you. That behavioral piece, getting people to execute and follow through, to see the value throughout the process, because especially when we talk about tax planning that really makes a difference for most people, it is something that you’re gonna do over time, not all at once. We’ve got to make sure that we’re helping people stay committed to that plan, not just when we first talk about it sitting in our office, but at the end of the year, in five years when we’re starting to change the plan, there’s lots of milestones along the way.

George Stefanou (222:22)
Great point and I couldn’t agree more.

Steven Jarvis, CPA (22:23)
So George, the other thing I’m curious about is before mechanically you started getting into the book, what would you say led you to committing to even embarking on this?

George Stefanou (22:33)
You know, having… a little bit of differentiation out there, a C financial advice. There’s a C of financial advisors, a C of, you know, as you know, podcasts and everybody’s pointing, you know, from their brother in law to their neighbor to CNBC to whatever it may be that they’re listening to all giving them this, that and the other. It really wasn’t something that I found was digestible. Even my book, had to, as I’m writing it, each chapter concludes with something that we came up with, which was SWIN lessons, Stefano wealth and investment management lessons, where it’s a recap of actionable ideas and that we’ve just discussed in that chapter because I think it’s hard you read through it is okay, That sounds all really good. How does it apply to me? So it takes a second to to pause pull back, and then okay. Here’s an example. Here’s a here’s a situation. Here’s how it worked out for them How might it apply to you ask the questions then implement it? So these prompts so that they actually adds to the activity because that was really the goal at end of the day for me was how can I write something that’s truly impactful it will actually help the readers along the way that are that are reading this to make a difference, to search out a financial advisor or go to their current advisor and ask them if they’re aware of these strategies, have they considered it. It may be applicable, may not, but they need to know of it. you know, I kind of hit it right in the nose in one of the chapters that, you know, if your advisor’s never even asked to look for your, look at your tax return, then, there’s some things that are probably a miss and that you need to consider there. So, and the advisors that I’ve had that have read the book told me, you know what, I’ve heard of a lot of the things that you’re talking about, but I don’t necessarily always do so with consistency and I need to up my game. And that’s been the comment I’ve heard time and time again with advisors reading the book, which has really been affirming to me that, okay, this is helping the clients, this is helping industry-wide already in just the few weeks of books for now.

Steven Jarvis, CPA (24:14)
Well, we can certainly wholeheartedly agree on the every every advisory meeting, every client’s tax return every single year. I was just in a room speaking to about 400 advisors just a couple of weeks ago at a conference and somebody in the audience had asked a question about backdoor Roth contributions. Hey, raise a hand. How many people are helping their clients with backdoor Roth contributions? And most of the hands went up. I said, OK, great. How many of you are getting those clients tax returns every single year? And it was a small fraction of people who are actually getting the tax returns. And I’ve started getting a lot more and more blunt with how I communicate on this because I used to try to play nice on this topic of, oh, it would be nice if advisors were getting tax returns. I’m to the point where I just think it’s irresponsible if you don’t.

(24:53)
And I’ve met enough advisors in enough different compliance situations that I also don’t I don’t accept compliance as an excuse. I know advisors in the most stringent compliance environments that you can find who are getting tax returns who are reviewing those tax returns. They might have some extra steps they’ve got to go through but don’t let compliance be an excuse. Don’t let your current knowledge be an excuse. This stuff is available. You can learn it. You can do more for your clients. So George before before we wrap up, let people know where they can find your book and where they can follow along with what you’re doing.

George Stefanou (25:26)
Yeah, it’s on Amazon, it’s on Barnes and Noble, the book’s called Two CommaWealth, and there’s also, you can look it up at the website for the book, twocommawealth.com, and connect with me there and follow where the book’s located and the journey that it’s on as well. Thank you very much, Steven.

Steven Jarvis, CPA (25:38)
That’s awesome. Of course, George, I really appreciate your time, and for everyone listening, remember that what counts is what we take action on. And so there’s a lot of interesting discussions that we can have. I appreciate getting other people’s insights, but at the end of the day, it’s what you take action on. So as this comes out near the end of May, this is a great time to be requesting those tax returns from all of your clients. And if you’re not sure what to do once you have the tax returns, get out to retirementtaxservices.com, look at the checklist and reference guides that we offer, the memberships that we offer. We will help you make you can deliver value on those tax returns. Until next time, good luck out there, and remember to tip your server, not the IRS.