This interview is with Will Lane MBA, Retirement & Estate Planning Advisor, Top Rank Advisors.
Looking back, what experiences most shaped your path into wealth strategy and the way you practice today?
My parents divorced when I was 6 years old. That period was a traumatic time for me and my siblings. It started a conversation for me about the importance of money.
Since then, I’ve been fascinated with money and why some people can create it fairly easily and hold onto it, while other people struggle with it their entire lives.
I’ve studied money management not just from the numerical aspect but also from the psychological and emotional aspects as well. So, when I consult with a client, I’m not just dealing with the numbers; I’m also listening for their internal dialogue and energy concerning their finances.
Building on that, what is the first diagnostic you run with a new client to surface hidden risks or opportunities?
The first diagnostic I run is to understand how much of a handle they have on their monthly budget. I work to get them very clear on what’s coming in and what’s going out, down to the penny.
If someone isn’t aware of what’s coming in and what’s going out, then that tells me that they’re probably avoiding the matter of finances altogether. People who avoid the management of their money will almost always struggle financially in retirement, winding up in excessive debt.
Their avoidance of money suggests that there is an aspect of their finances that they’re uncomfortable with. I’ve found that a lot of people often know the statistics of their favorite sports teams better than they understand their own household budget.
Budget control is a super important aspect of retirement planning because if you’re not good with budgeting while you’re working, you’ll be ten times worse in retirement when you have more time and more opportunities to spend.
Staying with retirement income, describe one client case where you redesigned the strategy and the measurable difference it made.
I had a client who came to one of my seminars and scheduled an appointment with me afterward. He came into my office and told me that he had just turned 65 and that he couldn’t see how he could possibly retire anytime soon.
He felt like he didn’t have enough money saved up to live on without the fear of running out. We went through his budget together, and I was able to show him that, in fact, he would be able to retire comfortably in 12 months with no risk of running out of money.
It felt amazing to see the shift in his attitude once he realized that this was possible. He was grateful and referred me to several of his friends.
Most people don’t realize that there are products out there that have no risk and guarantee lifetime income. The reason they’re not aware is that most advisors are compensated more by having your retirement invested in the stock market. However, securing lifetime income makes retirement much more predictable, less stressful, and enjoyable.
Shifting to estate planning, how do you structure collaboration with attorneys and CPAs to keep plans aligned and moving?
All of our client work is collaborative. I have estate attorneys, investment advisors, and tax specialists all working together with me on each case to ensure that my recommendations have a holistic and integrative approach to each client’s needs.
I can tell you that in over 25 years of working in this industry, I’ve almost never seen an investment advisor who discusses taxes. Additionally, I’ve never seen a CPA who talks to clients about estate planning. Most advisors stay focused on their skillsets because that’s what pays the bills. However, I believe you need to have all of your financial advisors working on the same plan together, all moving in the same direction, for a successful retirement and estate plan.
For owner-led businesses, what playbook do you use to move founders past the most common stall point in succession planning?
The most common stall point is actually making the decision to sell a business and retire. In the initial conversations, I listen for what is driving my client. Are they running away from something or chasing a bigger goal?
If they are still hungry and chasing bigger goals (which is often the case), I like to ask how the “game” they are playing would look if there were more people involved in the hunt.
That question is an indirect way of introducing the idea of someone possibly coming in to help take them to the next level. Whether that’s through a sale or bringing in someone who could take over the responsibilities while they possibly stay on staff.
Either way, I have found this approach helps them to see the bigger picture and gives their nervous system a story that continues within the context of their game. This is often more tolerable than the idea of quitting, giving up control, and riding off into the unknown.
When they have a new game to play that is connected to their current game, the idea of succession becomes much easier for most owners who are control freaks.
However, the idea of this new identity still usually takes a good amount of time to develop. Being a business owner is often a psychological addiction that is hard to break unless they are just tired and want out.
When plans get tested by a market shock or life event, tell us about a time you pivoted mid-course, focusing on how you protected both cash flow and client confidence.
We all know how fast the tides can shift when it comes to the stock market. I think this is where we shine and what sets us apart. Our approach is always to establish the goals and dreams of our clients first. We never start out talking about getting our clients great returns or growing their portfolios.
After we understand how much their ideal retirement lifestyle will cost, we then build a plan around that vision, which is based on income first. Once the monthly income requirement has been established, we create a plan so that no matter what happens in the markets, there’s absolutely no threat to their monthly income.
We’re able to do this by using products that provide guaranteed lifetime income. After income has been established, we then identify their risk tolerance for long-term growth opportunities. Therefore, any money that’s invested in the markets has already been agreed upon with a long-term strategy in mind. We find that 95% of the time our clients are not as reactionary about the market because there’s never a threat of losing income or lifestyle, just like when they were working at their job and the market would take a hit.
On implementation, walk us through how you translate the output of your go-to planning tool into decisions clients actually act on.
When we implement a retirement plan, we like to show our clients that tax planning is critical to avoid surprises in retirement and how our plan has taken tax increases into consideration.
I take the time to show them how much of their retirement plan we will be able to convert over to a Roth IRA without putting them into the next tax bracket.
The goal is usually to convert as much of their funds over to Roth as possible in order to avoid RMD requirements. However, every retirement plan is different. Oftentimes, we’ve created enough distributions with their retirement income plan that RMDs have already been satisfied. Every retirement plan is unique and requires us to use different tools with each client depending on their specific situation.
Looking ahead 3–5 years, what is the first step you’re taking today to prepare clients for the most significant change you see coming?
The biggest problem with any tax-deferred retirement plan is that you never know how much of your money you will get to keep. Right now, taxes are as low as they’ve ever been; however, the U.S. debt bill is sitting at $38 trillion.
For most of us, it feels like taxes are high because inflation has slowly eaten away at our discretionary income. However, if you look at the history of taxes in this country, the highest tax bracket has been as high as 90%.
With that being said, the U.S. does not seem to be making any progress towards paying down the debt, and taxes are as low as they’ve ever been. It doesn’t take a genius to recognize that if taxes are low and you haven’t paid taxes on any of your retirement plan(s) yet, then right now might be a good time to do so.
I’m advising my clients over the next 3–5 years to convert as much of their retirement money over to Roth as possible so they don’t have to worry about the tax increases that will be coming in the future.
There are also added benefits outside of taxes to doing a Roth conversion:
- They don’t have to worry about Required Minimum Distributions.
- Your beneficiaries won’t have to worry about being forced to make taxable withdrawals if they inherit your retirement plans.