Read The Transcript Below:

Steven (00:52):

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 this week I have a very special guest on the show with me who’s here to share his experience working directly with clients and prospects on the topic of taxes and to share some of the things that he’s been surprised to learn along the way of people he talks to who already have an advisor but have questions on taxes still. So Josh Ross, welcome to the show. Tell us a little bit about who you are and let’s get into this topic of the workshops you do.

Josh (01:26):

Thanks for having me on here, Steven. I’ll admit I’ve listened to most of your episodes and I’ve learned a lot, so this is a little bit surreal for me to be on here. Thanks for having me. 

Steven (01:37):

Happy to have you give us just a little bit of background of who you are and who you serve. And then, I mean, really I’d reached out to invite you on the podcast because of some posts you had on LinkedIn of you making a clear distinction between kind of the marketing label of, Hey, I do taxes, versus actually helping clients with taxes. And as we are getting ready to record, you mentioned some events that you do and really being able to really see that there’s a difference between somebody who has an advisor and somebody who has an advisor who really focuses on taxes.

Josh (02:06):

Yeah, absolutely. So a little background on me, as you said, I’m a financial advisor with Energized Retirement Planners. My background is I did prepare some taxes at a national chain in college, then kind of switched careers away from my finance education. So I was a career changer a few years ago, and now my niche is basically retirees with tax issues that led me down the path I am today, which is workshops and taxes and retirement, helping those people who know they have this big lean from the IRS that’s coming due eventually, and they’re just not sure how that’s going to impact them. They hear a lot of things in the news, maybe something on TikTok, Facebook, they know they should into it, but they’re just not sure how that’s done from a technical standpoint.

Steven (03:03):

Yeah. So Josh, maybe talk specifically about as you’re starting these workshops, as you’re working with people for the first time, how do you broach this subject? Because it sounds like the people you’re working with have some idea that they’re going to have a big tax build-due. Most people aren’t surprised by that, but the tricky part is, okay, where do I even start? This feels like a giant overwhelming topic.

Josh (03:23):

Right? It is. And as you being in the business that there’s so many levers to pull when it comes to taxes and you move one and then the other one moves on the other side. So it is, it’s kind of overwhelming and I have found that it is easier, simpler to lead with investment management, which a lot of advisors do because that’s something people understand more. Hey, you made this percent over here, I think you can make this over here. So, of course, a lot more nuance to that, but that’s something people can relate to. So when it comes to workshops or as you see LinkedIn and you’re active on there as well, it’s about making that as simple as possible and really helping clients prospects visualize what tax planning can mean to them and the difference it can make. And as it turns out, workshops are an excellent way to do that because you have some attention from somebody for 60 to 90 minutes and you can show them and walk them through some scenarios on how this might be, how this might impact them and their specific situation.

Steven (04:33):

Josh, this is probably my tax background, but sometimes I get hung up on the details. So talk to me a little bit more about when you say a workshop, I mean what sets this event apart? In my mind, if it’s a workshop, there’s got to be some hands-on piece that I can get in and do with you. So what does that look like? How are you helping people understand these concepts?

Josh (04:50):

So when you have a taxes and retirement workshop and you advertise that, you’re usually going to attract people, they have a pretty large, say, 401k or IRA, that’s who’s going to be worried about their taxes. So that’s what I try and customize these to a little bit and assume that these are the issues they’ll have. But even with that, you still have to start at the very basic level. And because I made the mistake at the beginning when I would do these, I’d kind of jump into it and you really have to make sure that you’re defining terms, defining what the difference is between a Roth and a traditional IRA because they’re not in this industry. So sometimes we take that for granted. So I start with that. And then even RMDs required minimum distributions. We spit that out with RMDs, but not everybody knows what those are. So I’m starting off and I’m providing them a kind of slow glide path the first 15 minutes and explaining to them, Hey, here’s going to happen if you don’t do anything different. And that really results in high required minimum distributions when they get in their seventies and a lot more taxes, potentially Medicare surcharges. And so once I show them what that could look like, then we work backward and show them ways that could a different path and save on those taxes.

Steven (06:18):

Yeah, that makes a lot of sense and is a really important reminder that we’ve got to start with the basics you mentioned in acronyms in the tax world, we’re super guilty of that just speaking as if everyone knows the language and that’s just not a safe assumption. And I know for me, sometimes I feel like at risk of talking down to someone or making someone feel stupid, if I sit there and say, okay, now RMD means required minimum distributions and just go down the list. But I like how you described that as a slow glide path. The other thing that I’ve found is that I’ll just inject a little bit of humor into it, and that’s some, that’s just my personality. Everybody’s got to find what works for them. And I’ll even start a lot of these conversations with Mr. And Mrs. Client, I’m sure you’ve heard this before, but just to make sure we’re starting on the same page, let’s talk through these couple of things. And so then I’m kind of giving them the out if they can say, oh, you know what, Steven, we have been through this, but it can be easy to assume that the kind of people who had come to these workshops are DIYers who are looking for someone else to help step in. But you were mentioning that you were actually surprised to kind of realize how many of these people already had advisors but had missed this whole piece of the puzzle.

Josh (07:20):

Absolutely. I had initially planned that I would have a lot of do-it-yourselfers and prepared accordingly with the background of here’s what a custodian, here’s all those initial steps. And at the end, what I ended up with, and I know this because the library where I hold these end up kicking me out because we hit closing time, but you end up with a long line of people to ask you individual questions. And what I found out just from the discussions afterward that two-thirds of the attendees already have advisors and out of the topics we cover, they’ll say, Hey, I’ve never heard that before, or This doesn’t sound familiar. And so I’ve learned that, hey, I need to incorporate that in there and show them the options with, Hey, maybe you have an investment manager. And that’s the traditional way that financial advising has been done and now that you’ve hit retirement, there’s just a lot more value when it comes to the tax planning.

(08:29):

So sometimes people think when they go there that the tax planning they’ve had done with an advisor might cover calculating your required minimum distributions. It might include something like, Hey, you can donate to charity and save on that appreciated stock. Some simple things like that. But the actual projecting out and the elephant, the room when it comes to tax planning is Roth conversions, that’s going to have a big impact. Makes sense for a lot of high-net-worth individuals. So those are the things I’m covering in a segment that I build up to in these workshops. And you can sometimes see people start writing a little more furiously when you get to some of these Roth conversions. And I found with those, I initially, you get pushback on those, and I am sure it’s the same way for you CPAs when you say, Hey, look, I want you to pay 40,000 extra this year.

(09:32):

So I have to be careful how I couch that in a workshop with people who they’re not sure how all this fits together because all they’ll hear is, oh, I have to pay 40,000 extra this year. So you back up first and you show, Hey, that 1 million in your 401k is really maybe 700,000, maybe it’s 650,000. So you need them to visualize that first, and then you back up and show, Hey, here’s how you can get some of that back. That’s when they start writing. They start looking at their own accounts in their own mind and writing down notes. Then afterward they come chat, and this is where the other advisory comes in. They say, Hey, I have an advisor, but they haven’t covered any of this because I was there so long. We just decided we’re going to show them what we could do for a complimentary review of their statements and their tax return.

(10:28):

Because if you can’t visualize it, it’s not going to go any further because people have a tendency to just not do anything in general. That’s what humans are, right? It takes some effort. You have to gather your statements, get your taxes. And so once we get that, we show them in the workshop, he hears what we’ll get back to you and it’s going to give you something to go on whether you do it yourself, whether you bring this back to your advisor or if you want to look into more on how we would help you implement that. And I’ll tell you, you become pretty knowledgeable on a lot of other firms statements by looking at a lot of these. And then you do find I’m definitely not slinging mud because sometimes I will find an advisor who, wow, they’re doing a great job and I’ll learn something from what they’re doing with one of these prospects. But then it also tells me, oh, that advisor really needs to explain to them what they’re doing. They don’t realize all this tax planning that’s going on in the background and they really don’t need to show up to this workshop. They’re handled pretty well.

Steven (11:34):

Yeah, Josh, I really appreciate the level of detail you’re going into that. So it’s so helpful to know how other people are doing this in practice. There’s a couple of things as you described that I want to draw out for the listeners though. One of ’em is that this term tax planning does not mean the same thing in every situation. And in fact, really what I down as you were talking through this is that tax planning does not inherently mean tax value because there are definitely advisors and firms out there who will tout that they do tax planning. And what they mean by tax planning is that they are going to pick an ETF for you that has told them that it’s tax efficient. And that might be the extent of their tax planning. It might be by tax planning, they mean they have a platform that automatically is going to do some tax loss harvesting, and that’s all they mean by tax planning.

(12:18):

But for there to be real tax value and for this to be a differentiator, which you absolutely can because that’s one of the other things that’s standing out to me in your description is there’s a huge opportunity here if you’re doing real tax planning, if you’re helping people understand what their retirement tax bill might look like, and then more importantly, what levers they might be able to pull to have an impact on that so that they can start sanding off the rough edges of that retirement tax bill. The other side of that coin though is that if you’re listening to this, you also need to be thinking about what you’re doing for your existing clients. And you need to make sure that this isn’t also a threat to your own practice if you aren’t doing these things. Because if two thirds of Josh’s audience is people who already have an advisor, you need to step back and ask yourself the question, am I communicating this in a way?

(13:07):

Am I delivering value in a way around tax planning that my clients aren’t looking for that workshop, they’re coming to me with those questions and they know that I’ve got this covered for them. And then the last thing I’ll mention really quickly that stood out to me as you’re going through there, I don’t think I mentioned it recently on the podcast, you talked about how these concepts aren’t intuitive to people and they really aren’t. Taxes are this black box, this mystery, like how you talked about helping people visualize it. I mean, you can say to somebody, Hey, the IRS has a lien on your retirement and they’re going to come collect that someday, and that might resonate with a few people, but we’ve got to take this steps further. And it’s not enough to say, Hey, and the IRS might take 35% of that. People don’t think in percentages.

(13:47):

If you say percentages, it’s like you’re saying marshmallow, marshmallow, marshmallow. That’s not how our brains work. So taking it a step further and putting in real dollars for them as you’re reviewing their statements, I’m sure you’re doing this of, oh, Mr. And Mrs. Prospect, I see that you’re 401k has $800,000 in it. Do you realize that between federal and state, this might really only be $500,000 when you go to withdraw? And so getting people to the point where they have a frame of reference that they can come back to, that’s when you start getting people to take action. And I like talking about the IRS having a lien or the IRS having a variable rate mortgage where they get pick their percentage. There are these different analogies I like to use, but that typically isn’t what prompts people to take action. To your point, it’s the visualization. It’s getting it in real dollars of what it means for them.

Josh (14:31):

That’s a great point. And where we’ve tried to add some specific examples near the end to wrap things up at these workshops where we show examples that we’ve run into in the past so they can see, hey, this really happens in everyday life. And a couple examples I’ve run through before was I have a client who moved over from another advisor who came up to me afterward and no jokes. They said, okay, none of what you said sounds familiar. And I thought, well, there’s a lot of jargon as we talked, so they might just forget. Well, it turns out that she was widowed earlier the year prior, and her husband handled a lot of the finances. Usually one or the other of the spouses will be a little more active. And so it turned out that he was the main breadwinner and they did have great savings.

(15:24):

And they actually had a little side note, they had term life insurance that they almost gave up, but they kept, and it was going to expire two weeks after he passed. So I mean, there’s never a great time for a death, of course. But she had lots of options in some great buckets, some different tax buckets, and this is somebody who had an advisor and has a CPA. Well, when this happens, when somebody passes in March, you’re not in touch with a lot of CPAs, not everybody’s Retirement Tax Services. So when is she going to see them again? Probably February the next year. And all the advisor had done was to retitle some of the accounts from the husband over. And so by the time we looked her stuff over, because this had been in early January, we saw from their tax return, she had not a lot of income because his income wasn’t on there, but they could still file married filing joint that last year. So there was a huge missed opportunity for some Roth conversions at the zero there was even a 0% tax bracket missed and then that 10 and 12%, it’s really unfortunate that we hadn’t met her just a few weeks earlier. But that’s the kind of thing, even somebody who has two professionals, you really need somebody to put those two pieces together.

Steven (16:53):

Unfortunately, that’s the reality in so many situations because we get on podcasts like this and tell these stories, and it can be easy as a listener to say, ah, well, that’s one in a thousand. That’s one in a million. I don’t need to be worried about that, but I can’t pull stats for the entire country, but I talk to enough advisors and I see enough of these experiences that it is a large enough percentage that it is worth your time to be focusing on this for your clients and for your prospects. These are potentially huge impacts of whether this is planned effectively or not. Really what you’re describing there, that should be an easy one because there was a life event and one of the professionals in her life should have said, okay, wait, we just had this life event. What’s our checklist for what needs to be considered during this year?

(17:38):

And those are challenging conversations to have as someone is going through mourning the loss of a loved one. These are difficult conversations, but they’re important conversations. This is why people hire professionals, is to help them through the challenging things. And so as clients are going through that, we want to give them the time and space to mourn and deal with the life things. I always tell people, when you make good life decisions, then figure out the tax efficient way to do ’em, but opportunities will get missed if there’s not somebody in their life paying attention.

Josh (18:07):

Yeah, yeah, absolutely. And working with the retirement demographic, I found when I started a lot of advisors, I did most of the talking. I was so eager to show my expertise on things they didn’t care about. Now I do, most of my work is sitting down with somebody in their living room drinking coffee, and sometimes those will go two or three hours before somebody really throws in some tidbits that are more important to them and give you some insight into, Hey, here’s their real issue. Here’s what they weren’t going to tell you at the beginning because they’re a little guarded. And when I look at taxes, you can’t do tax planning without estate planning, right? Because the heirs are going to pay taxes on these pre-tax accounts. And it was two hours into a coffee meeting, coffee date that I call it where I find out they have this one client or prospect has two kids, one is married, and they’re both partners in a law firm, and the other one’s a social worker.

(19:15):

Well, this is something, and you wouldn’t ask maybe on the very first 15-minute call, but that’s really important when it comes to beneficiaries and which of these are you going to leave to which kid and who’s going to pay the potentially 50% on that if they’re living in a high tax state. So yeah, just adding in a lot of listening has helped, and this is where I think there are so many opportunities for career changes or new advisors, is if you can structure your business model from the beginning to include this tax planning because you won’t be able to handle the two or 300 clients like some of the advisors at legacy firms. There’s just too much involved in it. But that’ll give you the opportunity to build up, increase your tax knowledge and have all these checklists in place from the beginning. I think even one of the first checklists I printed out was the RTS checklist. Is that the 37 point? I think I’ve got that right, 37. And so it’s not just accepting somebody’s tax return, that’s an easy part, or collecting it. You have to go through that and learn what it means. But if this is how you structure your business model from the beginning, that’s all really feasible and doable.

Steven (20:34):

It certainly is easier when you’re building from the ground up. What I’ve seen from advisors who are already established and are transitioning to tax planning or expanding their tax planning is it is really important to keep in mind that this is a progression. This is a process, and we talk all the time on this podcast. One of the action items I constantly give is getting tax returns. If you are an established advisor, you can do this one chunk at a time. In fact, even I worked with an advisor a couple of years ago that he sent the request to all of his clients, but it took about three years for all of his clients to follow through. So this can happen over time. I’m with you as you’re a career changer as you knew the industry, that’s the perfect time to start. But don’t let that scare you away if you’ve already got a book of business. Josh, if we change directions just a little bit here, I’m always fascinated to know people’s motivations and then experiences with doing different things within the profession. So talk about getting your enrolled agent designation.

Josh (21:26):

Yeah, so my enrolled agent, my initial thought was, okay, get that certified financial planner first. What’s most well-known? That’s what you need. But the more I looked into it, the more I realized, Hey, I’ve got CFPs on my team at the time and I don’t have as much tax expertise. So I jumped all in into the enrolled agent training and that I did have some background. As I said, I used to prepare taxes, and some said, oh, I don’t know if that enrolled agent makes sense for an advisor if you’re not going to prepare taxes. And I would say after having gone through it, I mean very valuable. Even if you are not going to prepare taxes, there’s so many things it brings to light. And on the daily I find something where I go, boy, I wouldn’t have been able to answer that if I hadn’t gone through some of that training. So well worth the time. I know there’s additional CE requirements in there, but you know what? You need those anyway. You’ve got to keep up on tax changes every year. So yeah, I would highly encourage anybody who has considering another designation or even their first one to go for the EA because you don’t need those two or three years of experience to use it.

Steven (22:44):

Yeah, there’s some great review courses out there. In fact, this wasn’t the plan ahead of time, but on a recent episode, we had another advisor on talking about she’s got five people in her office who are currently going through the EA exam process. To your point, it’s a great way to learn. It’s a great way to get hands-on experience. It’s a great forcing mechanism to get through material that you probably wouldn’t otherwise because it’s really easy for us all to get in this trap of, oh, well, I can easily Google that or, yeah, this sounds familiar. I don’t need to spend more time on it. But there’s a big difference between experience and expertise when you take the time to really dedicate hours and hours and hours to a specific topic. And then of course, the next level from there, and it sounds like you’ve done a great job of this, is then taking that and putting it into practice with real clients and on real tax returns.

(23:27):

If I could wave a magic wand, I would probably insist that every advisor do at least some level of tax preparation, even if it’s just for one filing season. Even if it’s just a few dozen returns, you’re going to learn things from going through the mechanics that you won’t otherwise get. But short of that, if you don’t want to go back and get a P-10 and register with the IRS, I understand you absolutely have to any tax returns, you have to be reviewing those tax returns. I appreciate the shout-out on the 37-point checklist. You can go out to retirementtaxservices.com and get the checklist. We also recorded an entire masterclass that goes along with that. So those are great resources to help advisors do more around these topics.

Josh (24:05):

Absolutely. I think start with preparing your own return at the very least, right? And there’s always going to be relatives, et cetera, who would be more than happy to have you prepare those as well. I find another path that is really helpful is there’s some of those chains like H&R Block and Intuit, they have their free tax online schools, so those are great to go through as well. And those have been updated in the last year for not just the trained but sample tax returns. So a great place to start there as well.

Steven (24:40):

Yeah, it is funny how things always go kind of in trends. I have an upcoming podcast guest who, an advisor who actually went out of his way to do a season, I believe it was with H&R Block, but with one of the big preparers just to get that hands-on experience. I mean, he wants to be an advisor, he wants to focus on that. But yeah, he went through one of those courses, did a season of preparing taxes, and was just blown away by how much he learned that he felt like he was already experienced in taxes. There’s a difference in really getting your hands into this is how the returns get prepared.

Josh (25:13):

Yeah. You’ve got to see how the sausage is made when it comes to taxes.

Steven (25:18):

Absolutely. Josh, I really appreciate you coming on and sharing your expertise and insight on how these things work and the success you’re seeing with these workshops. We’ve talked about making sure that you’re getting the practice in that you are getting your hands really deep into this topic. We talked about the 37-point checklist in the masterclass out on retirementtaxservices.com. What are other action items you would recommend to people who are serious about leveling up the way they approach taxes with their clients?

Josh (25:43):

Yeah, absolutely. So we covered the enrolled agent and the tax prep courses are great avenues. You actually, it’s in the background there. Your book don’t get killed on taxes. It is really, I’ve read that. It’s a great primer. So I not trying to give you, but it is written in terms that you can get through it really fast. So I think that you did a great job on that. Thank you. Somebody could start there. I’ve attended a lot of your webinars and it’s always good when you see a webinar that applies to something your clients potentially are going to deal with. So the Roth conversion webinars, those were very helpful to me, and I think that, again, there’s a difference between reading about it and then seeing how somebody’s actually put it into action. So the more you can do that, the better off you’re going to be when you’re sitting in front of that client. 

Steven (26:34):

Josh, I certainly appreciate that. We love putting out the content that we do, and it’s always good to hear that it’s having an impact. So yes, I am partial to what we put out there, including the summit that we’re doing this fall in Phoenix. You can go to retirementtaxservices.com to learn about that as well. But whether you’re getting RTS resources or there are other great resources out there in the industry, you’ve got to commit time to this. You’ve got to put the work in if you want to have those positive outcomes with prospects and clients.

Josh (26:59):

Absolutely. Yep. Everything. It takes effort.

Steven (27:02):

So Josh, if people are interested in learning more about what you do or what you’re up to, how can people find out more about you? 

Josh (27:08):

I like causing stirs on LinkedIn occasionally. You can find me on there, Josh H Ross on there, and then my website is energizedretirement.com and you can learn more about my team on there.

Steven (27:22):

Awesome. Well, Josh, thanks for being here and to everyone listening, until next time, good luck out there. And remember to tip your server, not the IRS!