Presenting Income Lab to Clients Panel Discussion - April 2023

welcome everyone we are going to give our attendees a few moments to join and

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then we'll get started we have uh some amazing panelists here with us today and Justin will be moderating uh our

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presenting income lab to clients webinar and we'll get started here in just a moment

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all right thank you all for joining this is the webinar with uh we have three

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panelists Beth annelow Riley Anderson Cody Crawford just and Justin Fitzpatrick we will be having a

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discussion on presenting income lab to your clients uh before we get started just a few things we have another

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webinar coming up May 2nd with our newest feature being launched and then we also have our lab talk Tuesday next

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month so those two webinars please feel free to register for those last but not least at the end of this webinar we have

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a survey and that survey provides us with valuable information on what you would like to hear in our next webinars

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also some next steps maybe based on the webinar that you heard today so please take the time to fill that out with that

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I will pass it over to Justin and we'll get started thank you Taylor and uh thank you

Beth Riley

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everybody for joining us and especially thank you to our panelists today Beth Riley and Cody

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um these are often our our most requested uh most reviewed most valuable

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uh webinars is hearing from advisors um things about how how they use the

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software about their practice about the impact on clients so I these are really they've become my my favorite thing to

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do and I really appreciate it I know it's a uh a lot to uh to give up some

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time and jump on these so appreciate our our panelists doing that um so I I think we'll just uh Jump Right

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In so so Beth Riley and Cody have all used income lab with a variety of clients

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um over over some amount of time and I think I like to start at kind of the

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high level and just ask um maybe best we can start with you since you're you're on the left on my

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screen uh what in using income lab kind of what you have found most valuable and

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especially maybe what clients have kind of I don't know connected with or found valuable as well and maybe how that's

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changed things sure and stop me when I go on too long because on on a huge

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exactly I need the gong you know because I am such a huge fan of income lab and

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the way it allows me to speak with my clients and respond to their biggest

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concern which is have I done enough and for widows am I gonna be okay and you

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know I can feel confident showing them you know walking through an income lab

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spending plan hey look with the resources that you have you know you know tested against all these historical

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time periods this is the amount of money you could be spending and it's a dynamic plan we're going to make adjustments

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when we need to we can quantify those but there is no fail here you know

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because everyone wants to be to have this certainty which of course we can't have most of the folks that I work with

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you know have sort of lived with scarcity they've saved a lot and they're going to continue to do that in the

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retirement phase of their lives unless something really compelling shows them that they don't need to and you know it

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was sad for me before there was income lab to see my clients continuing to not

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use their resources in retirement because they were scared that they might have they might not have enough to know

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and income lab is a life changer because my clients can understand it and they're

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like oh this is you know this is where this came from wow this is compelling

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that I do have enough us and now I can make the choice if I want to to live

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differently than I did during all those years of accumulation and not to just spend the minimum you know people come

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to me and say I want to preserve all my principle well you know I work with middle income folks preserving your

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principal in retirement is not a good plan for having a knife a nice lifestyle do you know

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um or doing what you want with your resources um so it's it's been huge that's awesome

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Riley um what about you kind of what what have clients found most valuable what have you found most valuable

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yeah so we launched income lab to all of our retired or soon to be retired

Income Lab

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clients at the end of last year and we answer we introduced it for the first time and

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I've still in a lot of the language I used to talk about it from you Justin and Heather gentleman's name not come into

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my mind right now what's that Johnny probably and the other person

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um and yeah using language like Beth said like this is created to make your like this

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these guard rails essentially make your plan impossible to fail like it's not going to fail we're only going to make like small adjustments over time only

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going to make adjustments those adjustments are probably going to be small and probably the most valuable part

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maybe two parts would be using the like historical analysis and explaining in a way that people can

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understand that the reason we're so confident in your plan not failing is we've tested it

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against all these historical scenarios all of this information we have about the last one or two hundred years of

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stock market inflation data and I think that increases like the level of what

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confident we are I no longer feel like I'm just kind of pulling assumptions out of the air or based on whatever software

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said like we're using I think really solid evidence against their plan clients feel that and they

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it's a it's a little complex to get across but once you can figure out how to explain it in a simply in a more

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simple way or the level that a client can understand then they really hear that they like that and there's the

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monitoring side of it so we we definitely take advantage of the

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fact that income lab is you know monitoring their plan and their portfolio balance

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and month monthly making updates that and so we can utilize that in our

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language and and reach out to people on a monthly or quarterly basis too to let

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them know like what that what that monitoring looks like have they hit a guardrail they far from a guard rail they're on track if you're looking for

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between the guardrails you can just relax just enjoy your retirement if you haven't getting close to a guardrail

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then you have nothing to worry about you can you can do nothing essentially we got it which is great news so you said

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you stole some some things for me and Johnny but what what what of those phrases and things do you actually use and which ones like really helped

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clients understand yeah they're so there's a few like training videos

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um even the the other person on your team that does more of the support I can't remember his name but

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um the support videos all of the videos you guys have they you guys have nailed like how to explain

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these things in a few sentences um so for example like a big piece of

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our presentation last year was using the historical analysis slide where it shows you like

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here's for those of you that maybe haven't seen it it shows you like the income a client wants to have their desired income and then it also

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shows what they should have or the proposed income it could be more it could be less and it's based on like what would work

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in most situations over time and that chart can be really complex to explain like

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yeah thanks for bringing it up um but we we have a few different ways of talking about it and basically it's

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like we say something like in order to do in

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order to figure out like what your optimal spending amount is I just call it back testing we do back testing we test your your like unique financial

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situation against every situation and history so far that we have Dad on we we have this information on the last

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200 years there's been a lot of good situations there's been a lot of bad ones there's been Wars pandemics political crisis there's also been good

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times and we want to see like how much could you spend and be okay in almost all of those scenarios

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and sometimes I just leave it at that and sometimes that's too much for people and I just end up saying you know what you're going to see a green line and a

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black line and the goal is like get those lines close together and the closer those lines together the

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better off we're going to be and for someone that's really unsophisticated that can be just having that visual

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really helps them nice Cody how about you

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um you know what uh where have your clients found things most valuable maybe

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again are there particular kind of terms of a phrase that help them understand um how you're doing it from planning

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you know I I want to Echo Beth because I'm in the same situation I mean where we're at in the Pacific Northwest

Planning

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a lot of our clients they are more affluent but because of how they were raised typically you know their parents

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were raised by people that were they were raised by people that were raised in the 20s and 30s and everything is a

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scarcity mentality and so oftentimes they're never going to run out of money ever right but we find that they are not

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spending money because they are absolutely terrified because all they've done is save money for the entirety of

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their lives and so what we've found is it's not about how much we can educate them and we don't need to bring up

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building and seminal study from the early 90s and do all this other stuff to prove to them that we are the smartest

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people in the room our job is really more behavior modification right and it's to let them know we actually have a

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process and a checklist for how to quantify these Myriad of decisions that

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they're going to have to make in the future an income lab is a lot it allows us to do that because you know what they

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want to know is that we have a plan and we have a formula and so many people don't really know what to do right and

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so the checklist is huge but it was also that you know without getting too granular to them I explained to them

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kind of the um the retirement smile right from uh Blanchette where you know

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I always make the uh example that my grandma's 89 years old and she probably has 2 800 in income and somehow she's

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got a hundred thousand bucks in the bank she does not spend money right and so kind of the the Tom hegner as well the

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go go slow go and no go years is what I framed to them to show them that every

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Fidelity calculator you've used has vastly probably overestimated what

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they're going to have to spend and they're using that as the formula for spending money in retirement and so what

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I'm able to do and and I really love the way that you guys put the new um screen on there for spending capacity

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right versus spin because we frame everything in the terms of you know I kind of say if you have you know if you

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want to spend 25 Grand a month and you have 280 Grand to your name probably going to have a bit of a tough time to

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do that right and so it's really looking at how much do we have and what is the sustainable number that I can spend for

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the rest of my life but with the highest degree of confidence in doing that and so that is where this has really been

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such a game changer is I can show this screen explain to them the you know

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here's how much you want here's how much you know the software proposes and I

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don't know if you guys have experienced this but they may only want and can live comfortably off of seven thousand or six

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thousand a month you know the capacity gives them fifteen thousand five hundred and I say look are you going to turn

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around tomorrow and start doubling your spending no probably not but what this allows us to do is have a you know a

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confidence to instill in you to know that hey if you have to spend a couple extra thousand bucks on month you don't

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have to constantly look over your shoulder every day and fear that you may just blow through your life savings at a

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clip faster than you ever thought and so it really for me is more the the behavioral modification that this

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entails that allows them to just be empowered that's been the biggest deal for us

Client Experience

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that's awesome I I do think well especially as we you know launch new

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features like this dashboard we are trying to think really hard about that behavioral side because it is about like well it's two things but it's the

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experience itself like what do I feel when I'm you know engaging with my advisor and the other is what is it what

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does it cause me to do um and really what we want to cause people to do is to have confidence and

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go live their life yeah um so yeah spending it's really complex

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right if you wanted to get deep into that you'll melt their brain and

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ultimately they're going to walk away from you not feeling good about what they just saw because they really won't understand it yeah

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so I wonder um if you could each kind of share I don't know if it's an actual client

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experience that you've had in the last I don't know a year or so or feel free to you know meld several together and

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anonymize but uh like what what would a typical kind of client engagement look

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like the ones in which you use income lab I'm imaginary somewhere you don't um and and where would you bring it in

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and and how would you use it and present it um maybe we'll start again with you Beth

Advice Only Hourly Planner

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okay so folks I am an advice only hourly planner

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um so I may use this differently than many of you but my first engagement with

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a new client um is a two-hour conversation and for

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folks who are close to retirement or in retirement I actually present income lab

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and we talk about this because it responds to their most burning question okay you know do we have enough and I'll

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tell you that most in most cases my clients could be spending

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two or three times what they are currently spending and what they're comfortable spending okay so income lab

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is a huge Aha and there's a broad

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spectrum okay of of reactions to this and you know in some cases

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just be encouraging a client to think as they go through their day about where

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the places are that they Reign themselves in just habitually because they have for their entire lives and

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might they want to rethink those in light of the fact that they really could be spending more and never have to worry

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about running out so truly for some folks it is oh I don't have to shop around for gas anymore it doesn't matter

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I can go to the most expensive station that's closest to me or in one case I got a couple where my husband does not

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want to pay someone to clean their house well you know what they could have their house clean every day for the rest of their lives you know they're finally

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making progress on something that they have argued about you know for years but and then on on the other end of the

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spectrum sometimes I get folks who write out of the gate see this and you know I'll ask them okay so you have these

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resources you can deploy in the rest of your life what is it that you think you would like to do I mean is it leaving a

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huge Legacy which is what you're gonna do if you continue to spend the way you have or are there ways that you'd like

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to use your money during your lifetime and I mean importantly for the market segment I deal with these are not folks

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who are going to be thinking about oh I'm going to increase my consumption you know dramatically like I'm gonna buy a

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house in a more expensive area I'm gonna start driving a Lamborghini that stuff doesn't appeal to them you know so yeah

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I'm going to stop Price shopping for blueberries but you know probably not I'm going to have caviar every day

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a lot of folks actually see oh wow I can be supporting the causes that I care

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about I can be traveling to visit my family as often as I want to and you

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know I shared with Justin earlier I had one client who um she

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um doesn't have kids was planning on leaving money to a variety of Charities one of them being the college where she

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went to nursing school and where she subsequently taught nursing for a number of years and when she saw the income lab

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stuff and I encouraged her to think about using resources during her lifetime she chose to start giving money to her

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nursing school now and she's actually had them create and she's endowed a program to provide

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um professional development for the faculty there something that really speaks to her heart she's doing it now

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during her lifetime she gets to see the impact that the dollars that she saved

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the resources that she grew are making in the world and you know I I just love

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this stuff wow I get paid to help people do this kind of stuff it's awesome fantastic

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um Riley how about you yeah we've had I was just so we launched

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I said we launched this in 2022 and maybe similar to Beth but not not quite like we are financial planners first and

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we we actually don't do any of the investment management in house we Outsource that to third-party investment managers and but we when we launched

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this last year when our annual reviews can our annual views contain like three main parts there's a section or like

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we're just talking about goals and their purpose and what they want to get out of retirement section where we talk about

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their we have the portfolio manager sit in and talk about what's happening and what's going on in their Investments and then we introduced this third part the

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guardrails kind of presentation and at the end of every meeting we asked our clients like what what did you what

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was the most valuable part of our meeting today in like nine out of ten said guard rails it was like it was like boom garages Guardian I was like the

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account is kind of the goal is like can we out do the portfolio management can we make that the most interesting part of the meeting that's kind of kind of

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the goal and and we have clients from all look different asset levels and so

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we have like some of our more wealthy clients we had a situation where uh

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the husband had you know been making most of the income and dealing with all of the household finances had saved a

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substantial amount of money had pensions in place had a substantial

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amount of money set aside for kids that he wasn't even planning to spend and they weren't withdrawing anything and

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they'd recently retired and we're showing them they can spend like 10 or 15 000 a month that's what the proposed

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income lab numbers are showing and they're spending essentially Zero from their portfolio

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every month and we didn't approach it so abruptly like that right away but we got

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them so like I think we got them to start spending like five thousand dollars a month uh right now and we're

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gonna review that but you could see the tension between like the the husband wanting to con he's been

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saving diligently his whole life and we have a spouse who has these kind of grand ideas to to travel back to like

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their hometowns where they grew up and take their kids on some vacations there was some tension there and this was really able to like bring them together

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like give her permission to do what she wanted to do and let him see that it was possible without ruining their financial

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situation and you know yeah ruining what he's been working so hard his whole life to create

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it also works on the other side though we've had clients where proposed income is lower than what they're spending

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they're spending too much and this has been a great tool to get that point across too hmm

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um in that situation so say like the spending capacity comes up and you know

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maybe it's they're spending I don't know 10 000 and really it's a seven or

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something like that what do you how does it work in that situation yeah it can be

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a little bit delicate because you don't want to tell them they're gonna send this feeling that things are not that

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things are terrible and you're gonna run out of money and this is it's too late to do anything about it but you also

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don't want to not send that message and make them feel more comfortable than they should be in that they're not going to change

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anything at the end of the day so I think you have to approach everyone a little bit unique but the one thing we

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do on our team is do a little bit of like good cop bad cop I guess

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so like I'm I'm the facts guy I'm presenting income I'm just saying how it is I'm not sugar coating it we have

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another partner that's in our meetings that you know translates what I'm saying to maybe something more digestible and

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it works really well in one one thing we I use an income lab um

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is in the test plan is the

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um let's see the test plan always takes like five ten seconds to like circle

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around but what what I'll do is I'll we actually take screenshots of the things

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that income lab and put them in our presentation and there's the one that shows the likelihood of adjustment I

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think it is and it's like or once in uh if you basically if you continue

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let's just let it load maybe maybe sometimes Zoom stops it from loading

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okay I'm going to just look at my picture here

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so there's there's a when you go to the test plan it'll show how many scenarios are like above the plan and how many

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scenarios are below or worse than plan and how much better they are and how much worse there so I'll run that for

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what they're doing now and what they should be doing and I can give them some contents for context for like okay this

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is what you're doing this is maybe so this would be the ones like what you should be doing you should be spending less and we'd like to see like 96 of

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your scenarios above the plant but if you keep doing what you're doing and so you create another scenario and you do this scenario with you know they're

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spending 10 instead of 7 000 it's going to show you know what 25 of your scenarios are above the plan

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75 percent or below I'm not telling you things are over for you but there's just

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a bigger chance that you're going to get a scenario that's below the plan and then in those little in the little writing underneath it tells you how much

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below that could actually be so I think that helps really put it into perspective it's a nice way to to put it

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yeah that's right it's like it like shifts it from catastrophe to like more than likely

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you're going to have to spend less at some point than you are today right you're gonna have to come in lower so man yeah what are you gonna do with that

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great uh Cody um any kind of uh

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you know examples typical client situations where income lab is used yeah I would say uh we have a practice

Panoramic Planning

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very much like Riley described I mean we are panoramic planners and a lot of the times what people end up telling me is

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you know one of the huge reasons we worked with you guys is because you also look at the tax planning you know just

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we have a lot of clients that are affluent and they absolutely need to do

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some sort of strategic Roth conversions over time and so you know it's twofold whereas we again do something similar to

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what Riley just described um both with prospects and with clients so with prospects we have something I

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call um roadmap and it's really a draft and so we go through kind of each sections of the planning that we do

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and I have a little narrative written out and then we kind of put it on the screen and start going through you know

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how we quantify those decisions that we make and a good example of what ends up happening a lot is so I had a client who

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was 61 she works at or she worked at Microsoft making a significant amount of

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money enjoying what she did but you know there were things that she had left unfinished relationally and she wanted

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to step out of that corporate life and what I always tell people is we help you

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have a permission slip to spend your money because so many people again they're just scared to do that and we

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were able to take her who was making you know three or four hundred thousand dollars a year but was and maybe

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spending eight grand nine grand a month to you know another question I ask is if

Roadmap

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we show you that you can live the life that you want to live and spend the money you want to spend with a high

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degree of certainty are you going to retire yesterday or is this something that you're going to continue to work you're fulfilled and this is just kind

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of checking the psychological box and she said I will retire yesterday and so she's now a client she did retire

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and she retired based on you know the the communication that we gave to her

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and the confidence this is a very smart woman right so it's she she checks her work and there are things that we needed

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to do to make sure that she could step out and do that but she ultimately did and she I mean she is our biggest

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cheerleader now right and she is so fulfilled she's so happy she had Parents who were in their late 80s and one of

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the things she wanted to do was spend more time with them and so I think you know we can never underestimate the

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the power of what we do for them because it really allows them to do things that

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you know maybe she would have worked her goal was to work five or six more years well what happens in six years to

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parents who are 89 years old I don't know maybe that time is forever lost right and so that's a huge part of it

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and that's a pretty typical story for the people that we work with you know they finally can step out and say okay

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you know I've got you know I've got the confirmation that I can do these things but in the same way

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you know we do that with both prospects and clients but another big part of what we do is that Tax Center is so good you

Tax Center

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know we had used income solver in the past and you know income solver is good but it is so complex and the way that

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they kind of illustrate their Concepts can be daunting right and so what we

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typically do is we frame the tax conversation the same way that we do risk and income which is you have a you

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know what you call the capacity and desire we called it you know the willingness and ability and I have a lot

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of people that come into my office to say Cody you know what we think taxes are going to go up we need to we need to do some Roth conversions we've heard

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about them and we need to get going and we want to be aggressive Perfect all right well you have the willingness it

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sounds like let's see what your ability to do conversions is and so oftentimes we're able to show this and of course

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depending on and there it is the bracket management 32 percent depending on who they are we find The Sweet Spot is 22 to

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24 often times 32 percent that will look really good but of course there's that

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willingness and ability and ultimately if we do conversions at 32 percent they're not really for you because the

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break even is so long right but if they have a desire to you know leave money the most efficiency and I once heard van

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Mueller say you know we believe our clients can spend their money better than you know the Internal Revenue

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Service assisted living facilities and hospitals so we would rather have that money go to the family but oftentimes I

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find that the 22 and the 24 conversions are the most palatable for clients

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because it's like yeah I'm I'm aggressive perfect you're going to have to write a 83 000 check this year to the

28:19

IRS well let's back that up a little bit right so it's really just communicating

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again it's not that we're so smart that we can show you 73 different Roth conversion strategies it's you have

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expressed the desire to do conversions you rightfully said I don't want to do this on my own I'm terrified I'll make a

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mistake and everybody is terrified of the Internal Revenue Service I don't call them Uncle Sam because they're not

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our family members they are the Internal Revenue Service right but this is going back to hey we have a methodology for

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quantifying why the why you're making the decisions you're making and we're here to help you look over your shoulder

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so that you don't make a mistake and ultimately once you've sent that check off you're not just you know having

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anxiety chip away at you every single day because you wondered if you did it the wrong way right so those two parts

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are what we use probably the most amount of times I think

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that last point is a really important one too I mean the difference between these three levels

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over a 20 or 30 year plan I mean I'm not I'm not throwing a parade about four

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basis points you know I mean that's uh that's a rounding error right I think

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yeah as advisors uh you know it sounds like you you feel you have permission and you should to you know this is a

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there's some art to this right like you said matching willingness and ability and so on well what you just said there

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is is so good too which is it's actually our permission slip again it goes back

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to when when I'm communicating to a client that you can step away from your

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job and start living 100 off of your savings for the first time probably in your life wow that's a big burden that's

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a big responsibility maybe I'm the only one who stays up at night making sure and checking box you know checking boxes

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in my head to make sure that I you know hopefully in that software is really accurate because we just had people make

Permission Slip

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really big decisions based on some of the things that we show right and so it is a permission slip for us as advisors

30:26

so hey we're helping you make the right decision based on math and science and not myth uh misconception and emotion

30:33

right no wait believe me we take that very seriously as well these are consequential life decisions I mean they

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are we're not you know I don't know creating a fun little uh

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game here this is real life it's not an Excel sheet

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um so I guess getting I mean you've you all have already touched on a lot of kind of

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the practicalities of um using income lab in your practice

31:04

um and a few have mentioned kind of uh you know particular screens that you like but maybe we could

31:10

um round that out with you know are there and I know a lot of this is new so maybe you haven't had as much chance to

31:15

use kind of the new dashboard and the guardrails view you know like I'd be curious if you have thoughts on you know

31:22

for those people where maybe they're they're they're spending very low you

31:27

know is this useful uh or they're spending very high is this useful are there other places maybe in that have

31:33

been around in the app for a while that you have just that you find yourself using in every single meeting with a retiree

31:42

um maybe we'll we'll reverse uh here since uh Beth you've had to go first every time

31:48

so Cody uh what what screens do you use the most

31:54

um you know the ones that you're showing so we used on the older if you go to the older the classic view

32:00

what I would always start out with um when we're looking at how much income

32:06

to spend I'd start like on our narrative on our roadmap draft we talk about here's what you desire here's the total

32:13

of your pension and social security right and then here's that Gap if there is a gap and so what we tell people is

32:20

most you know conventional wisdom kind of dictates and the advisor world that you would take money out from taxable

32:26

tax deferred and tax-free and sometimes that can be absolutely accurate but sometimes it's not and so we want to

32:33

make sure we're making that right decision but going back to what Beth has talked about and what Riley also said

32:39

and I think we all have this issue is they're so scared of spending money because they've never you know they've

32:45

lived for the last 30 years with their employer dictating everything that they do you know the health care the taxes

32:51

the income and now hey it's your turn to be your own income planner well they want to make sure they're doing it the

32:56

right way they have no knowledge of doing it so I like to kind of isolate that box the income goals in the bottom

33:02

right first and say okay here's what you said that you wanted to spend right now

33:07

the essential is if you just have to live on Top Ramen for a few years you

33:12

know this is like your minimum Baseline income if Things Fall Apart right now we hope that we never get to that that area

33:20

but you know this is what we describe as your basic living expenses here's your desired now based on your you know your

33:28

income or your assets some inflation conservative rates of return you know all of the Myriad of economic factors

33:34

that could happen over decades and decades here's what our software says or

33:40

proposes that you can spend and I wrap that in the framework of capacity right and you know ability desire and capacity

33:48

and they say wow and oftentimes the Gap is so big right and so I'll say now does

33:54

this mean you're gonna you know start tomorrow spending 12 000 a month no but it goes back to having that confidence

33:59

and then I'll kind of move up and say but let me give you an example or we have found a lot of times that people

34:05

don't really know when they can take more money off the top or when maybe they have to take a step back and so

34:12

that's when I would explain those guardrails right to say this software

34:17

we're monitoring this real time it is integrated with Charles Schwab so we're going to know if we ever surpass that

34:24

guardrail now does again does that mean if the market goes up five percent that we're automatically just going to start

34:30

spending 789 dollars more not necessarily and on the other side does

34:35

it mean we're going to have to decrease our income not necessarily it goes back to having a method for quantifying the

34:42

decisions that we make right because they don't they have no process and if we stepped into their job for one day

34:49

we'd have no idea what we were doing either right so just communicating to them that we have this systematic way to

34:56

know that hey during 2020 when the market fell apart oh my God should we

35:01

just cut back and you know Human Nature has shown that we're not just going to let our assets run out to zero because

35:08

that's not how we operate we're going to cut back we're going to stop a bunch of subscriptions and we're just going to

35:13

live you know at our minimum essential level but I love this because it allows us to tell people hey the Market's down

35:20

12 you that doesn't mean you have to go full you know Top Ramen mode

35:26

right well how do you know that well because we are monitoring this and tracking it using math and science so I

35:32

mean all of these squares I I generally would explain a pretty significant detail

35:38

right and I mean when I say detail conceptually so that they can understand how it works and why it actually applies

35:45

to their life so I mean I mean I've had many meetings guys where I just use this screen alone

35:52

and like Riley said it's so funny how we as advisors in our mind we think this is

35:59

the most important but in the client's mind it's far from it right it's

36:04

ultimately golly how can how much money can I spend and I just don't want to run out of money

36:09

I don't want to be in my elderly years with less than I ever thought possible and this helps the you know tremendously

36:16

with that that's great that's great Riley is it

36:21

similar for you do you use this this screen primarily I know you also said the historical analysis is something

Historical Analysis

36:26

that you you hit are there other ones yeah I think what was important for us

36:31

when we launched this was we so we launched like in the quarter four of last year but in the summer we

36:38

asked a few clients to beta test it with us because a lot of screens to choose from here like you got the four tabs and

36:45

the test plan has like four tabs inside of it then you've got the new uh stress testing Tab and there's a lot of cool

36:51

stuff you can show and it took us a while to figure like what do we show what do we not show

36:57

we want to show everything it's all really cool um but for us it's start first thing

37:02

that starts with outside of income lab is what we did was just calculate what

37:07

someone's spending right now we don't ask them to make a budget or anything yet we're just like we know what their

37:13

employment income is we know what they're withdrawing you know like their pension Social Security so we can pretty much calculate what they're spending if

37:20

they're we know if they're saving any of that so we can get an idea of what they're spending then we'll go over that with them like

37:26

so we're on the same page we know what you're spending do you know what you're spending do we all agree what you're sending right we make sure that's clear

37:32

then I'll present just a generic spending smile just like the shape

37:38

basically and go over like this is what you're spending now this is what we think your spending is

37:44

going to do over time we think it's going to take this kind of curve and this is why and doesn't mean you're gonna dig that curve but I'll see if

37:50

they want to debate me on that you know do they do they think their curve is going to look different for any reason or another if they don't have any good reason for

37:57

why it should be different then we'll say okay let's go with this for now then once we kind of all on the same page of

38:04

that we'll compare like okay we know what you're spending now we know what the curve is now what is what is the

38:09

what do we think you should spend based on historical analysis that would be the historical maybe that this could be the

38:15

first time we bring up income lab would be the historical analysis page showing their proposed income and their desired

38:20

Kim and looking at how far how big of a difference are there between these lines

38:26

and explain how we calculated that then it kind of moves into that's gonna

38:33

be like the first part and then the next part would be talking about the guard rails and

38:38

I kind of separate these two and we not we now know like what you should be spending or what you want you should be

38:43

spending more or less now let's figure it tell you like when we think you should change that and for that we have

38:49

this these guard rails in place and the way that all the way that I've

38:54

explained that is I play this little game with clients it you know we played this game like 50 to 100 times now and

39:02

uh essentially it I could bring it up but it's really easy to explain essentially you've all probably seen it it's where you have two scenarios of

39:10

someone with like a million dollars withdrawing certain amount of each month and then you have the sequence of

39:16

returns reversed in each scenario and essentially in each scenario has an

39:22

average seven percent return or whatever you want to use but in the scenario where the returns you know are one way

39:27

and the other way one money in one scenario you run out of money like 15 years into retirement the other one you

39:33

end up at age 100 with like a million dollars left still and it's crazy that

39:38

just the sequence of returns can change that and so we tell people look you're gonna get a certain sequence of returns

39:45

in retirement you might get the one that you know depletes your money really fast you might get the one that leaves you

39:50

with more money if you started if you don't make any changes along the way the hard part is knowing when to make changes

39:56

and that's what the guardrails are going to do like they're going to stop either of those situations for happening they're both bad we don't want you to it

Run Out of Money

40:04

sounds great to have more money than you started with but it's actually not because you probably could have done a lot of things in your life you probably could have given money to the people you

40:11

wanted to done things with your family got on the trips you wanted to of course it's bad to run out of money we're gonna make sure that doesn't

40:16

happen but from our perspective both are bad and we're gonna and the guardrails is gonna help us avoid both

40:24

that's great I like that a lot we don't you the the main page we never use the

40:30

it's real what's really funny is we have a presentation that essentially in Google slides that animates the same

40:38

way you have this it's like you copied our presentation so now I have these 100 slide Decks that uh

40:45

essentially now you just have it in the software now so that's great I didn't know that

40:52

Beth maybe we'll uh we'll wrap up uh with you before we pick some questions

40:57

looks like we do have a bunch um are there particular you know screens visuals that that you

41:03

find yourself using so what I'm doing I'm meeting with my clients virtually so

41:09

I'm sharing my screen with income live up in real time and before I show them

41:14

anything I talk to them about why I believe in income Labs so they understand and Riley I love the way you

41:19

know that this is not a projection we have historically backtested the assets that you actually have okay

41:26

um and also just so you know you know I have clients who sometimes like yeah but

41:31

you know everything's not going to keep growing blah blah blah and you know I'll suggest to them that if they actually

41:37

believe there's going to continue to be a world with a bunch of humans on it and that we're all going to need to be fed

41:43

and clothed and we're probably going to want whatever the newest toy is and da da da that over time things are probably

41:50

going to continue to grow it's just it's not going to be straight line that makes sense to most people they don't really

41:57

think that all the humans are going to go away and the world's going to go to hell in a hand basket so I actually

42:04

walked them through in the old you know in the old view I haven't I haven't started in the new view I walk them

42:09

through the screens and this first screen we spend a bit of time on I quickly show them the cash flow screen

42:16

and talk about the spending smile and that makes sense to most people they they get that by the time I get to

42:24

historical analysis and I just show it pretty quickly they like seeing where

42:30

the line is and they already have understood in the big picture what the

42:35

back testing means and why they care about this and then the test plan and particularly

42:43

where we quantify you know this is the likelihood of the kind of changes you're going to have to make this is a screen

42:50

that gives people loads of comfort I use this with the scenarios above and below plan I take a kind of a different

42:56

approach to this I'm not trying to get my people with where all their scenarios are above plan to me that is way too

43:02

conservative I want folks to spend more than that and people get comfortable

43:08

with having lower percents of scenarios above plan when they see the next screen

43:14

which is here are the kinds of adjustments we're talking about you know you're talking about downside adjustments we're not talking about

43:20

living under the overpass you know we're talking about maybe you're not going to get a cost of living adjustment you know

43:27

um this really gives people a lot of comfort [Music] don't do I don't do a lot of detail I

43:35

don't do more detail than you know than this with Folks at least at the outset

43:40

but that's great um well thank you all that was that was

QA

43:45

just awesome some some some similarities similar experiences some differences perfect

43:53

um Taylor I don't know if you've been uh scouring our q a for the

43:58

I have questions but I think we could maybe start taking some of this yeah so

44:04

just a reminder everyone if you have uh there are some we have like 13 questions so if there's questions you want to have

44:11

answered um please like them or upvote them so we can get to the most popular ones because

44:17

I'm not sure we'll have enough time for all of these but to start us off um does it so

44:24

let's go to this one right here any best practices for explaining lifetime

44:29

experience am I correct that this experience is the average of wealth you

44:34

would be able to take over the lifetime of the plan I can take the technical question uh

44:41

that that is essentially right so this is what it's doing is saying all right here's your

44:46

it's comparing the overall income experience and it's actually in the background we uh where we mortality

44:53

adjust it so that we we care more about the income early than the income when you're 100

44:59

um and we can just compare that to the plan you set off on

45:04

which is this and we just say was it better or worse and so that's that's what you're seeing here so okay any ways

45:12

to talk about that but um next question is for Cody for Cody uh

45:18

curious if your checklist is something you could share yeah I'll share everything I have with

45:24

anybody I'm okay with that uh next question is for Riley do you

45:30

have any suggestions or things you would do different when introducing it to your existing clients we're getting ready to

45:36

roll out and any feedback would be helpful I would recommend like the the kind of

45:42

the beta testing we did like I'll pick a pick a few clients

45:47

um that you want to just we just told them like look we're planning on rolling out this new retirement planning tool

45:54

in the later in the year we want to get some practice discussing it and presenting it and get

46:00

your feedback on what parts you liked because everyone's circumstance probably be a bit different you know what you

46:06

showed your clients before this is probably different than ours and so and you get you get some practice explaining

46:12

the different pages and Concepts and seeing which ones resonate with clients and I just put special attention to like

Types of Clients

46:17

what what types of clients you're sharing to for us our presentations were very different when it came to people far

46:24

from retirement people really close are just retired and people that are kind of well into retirement they're essentially

46:31

like three different ways to of different screens got used different words got used to explain it and so

46:38

maybe think about like which one of those groups most of your clients in and maybe going in on those ones first

46:46

okay what are the pros in this we'll go to Beth since the other two have answered okay and maybe I don't know if

46:52

you against her as well what are the pros and cons of sharing the income lab link directly with the client

47:00

you know I I don't think there's a downside with sharing the link

47:05

I have a number of clients who didn't feel like they wanted to go in there and

47:12

do anything and um and when I do share the link with clients you know all I ask

47:19

is that they not go too crazy okay and you know one of the guys is an engineer

47:26

um you know not not disparaging Engineers but I've got another guy I shared a link with recently who's who's

47:32

really far from retirement and I just use this to do like a downside scenario for him and I told him I don't want you

47:38

to get really focused on this just keep doing what you're doing we'll talk about this when you're closer to retirement but you know I I feel free to to share

47:46

the link and actually I'm hopeful that it'll help me learn more about income

47:52

lab because my clients will go in there and be looking at stuff that I'm not usually looking at and come back with questions

47:59

right yeah I've done it for uh you know with here

48:04

Pacific Northwest we have a lot of Boeing clients like a lot of software Engineers Amazon I mean just some of the

48:10

most intelligent people at what they do that you can find and I once gave one of them a Wade Fowl

48:17

book and this guy is extremely bright and he thought he wanted it and he was like yeah that was even deep for me and

48:23

I'm like all right never doing that again and I've sent this like one or two times to people and what I've found just

48:29

like all of the things that we do is everything is in the framing of how we

48:35

position it and in the context and so if I've already kind of gone through all of the context to it maybe I'll send it but

48:42

ultimately I want them to get their talking points from me right and when they go through this without me there

48:49

that's kind of they're left to their own devices so I don't do it much

48:56

Riley yeah I've never I just put fake emails in there I I heard we don't have to put emails anymore so that's nice and

49:03

uh I've never shared the link with anyone part of it's because we're I'm in Canada too if people didn't notice and so

49:08

there's a lot of things in the software that we just have to kind of customize to make it work here for Canadians

49:16

um there's another question how do you address Legacy money left over in the

49:21

tax Center versus Legacy page many times the numbers are different

Retirement Stress Test

49:27

yeah has that ever come up I don't even know if you're aware of it so on the plan test or in uh the

49:34

uh retirement stress test so here you can kind of see okay way at the end of the plan 30 30 plus years in all right

49:41

we got this range of possible balances in today's dollars uh similar

49:47

if you go to a stress test except now you're just looking at one exact scenario let me uh

49:54

do I have a high income one and command one that's longer

50:01

so you'll see you know here's the ending balance in

50:06

this case they've started out between two and three million and they're at about a million and I think what they're

50:12

saying is but if you use life Hub it's it's more of a straight line thing

50:17

have you run into that as an issue you know here I'm at eight million

50:27

I try not to just personally you know the only time I'm really getting deep

50:34

into you know everything is in the framework of not melting their brain I want them to walk away having taken what

50:40

what I want them to take from that conversation and so oftentimes I'm not I mean most of the time I'm not even

50:46

getting deep into Legacy the only time we really discuss it is on the tax Center Page

50:52

where it has like the four boxes where it shows the the decrease in marginal rate the amount of taxes they save like

51:00

this one right here and so it's kind of saying hey conventional wisdom would tell you that if you do it this way here's the the results right and then

51:07

using a 22 or 24 bracket management it's going to you know increase or decrease

51:13

the Legacy Etc um but I have found that there's like two or three different answers sometimes

51:19

so that's why I'm not going too deep into the Legacy because the last thing I want is for them to get focused on why

51:26

is the Legacy 432 thousand dollars different over here because I don't have Justin next to me to answer that

51:33

yeah I would never go into that level of detail with my clients and even the clients who have access don't do that

51:39

and you know what if they came back and asked me why is this different you know what I would shoot off an email to Ben and say you know explain to my client

51:45

the technical reasons why this is different and I'd say and so what this a projection you're looking how you know

51:50

there are a few ways to do it not what we need to focus on and I also tell them that the minute you walk out

51:57

of the door this is all going to change because your life's going to change and anybody that had a plan in 2019 there

52:02

was a hole blown through it by 2020 right and so it's never going to work out exactly like this this is for us to

52:09

start having a framework of what it could look like yeah and I would say legacies because

52:15

they are by definition the farthest in the future point and in the plan

52:21

they are the least likely projection to be correct right I think about it as like you got a big stick in your hand if

52:27

it's really long and I move it even just a tiny bit whoa that top moved right

52:33

really far so I think that's what's going on and probably the biggest thing to know about the tax Center and

52:38

the uh life up if you ever do get that question is what you're viewing here is

52:44

a plan that does not adjust now in reality we're going to adjust the reason

52:49

you don't see adjustments here is I don't want to put an adjustment in 2026 and now you think that really is going

52:54

to happen for sure right there are going to be adjustments but those adjustments are

Changes in Client Behavior

53:00

they're they're they're not predictable when they'll happen or exactly what they'll be but we're set up for them so

53:06

that's really it's you wouldn't have such a big Legacy if you actually took the upward adjustments or found ways to

53:13

you know help your favorite Charities things like that um speaking of

53:24

so this is can we can we have a brief run-through of exactly how you show this

53:30

to a client since if this is their first time seeing income lab and with that

53:35

um curious about the process that leads to actual changes in client Behavior so it's they're asking like you know we

53:42

don't want clients to have to worry about their balance day in and day out and when you show them what uh my

53:49

experience has been that the clients maintaining maintain their expending even though their capacity is higher so

53:55

how often do you have them look at it and when how do you change their behavior what do you have them look at

54:01

um to show them and see if they'll take more it's a lot go for it then when I take

54:08

the I think the the behavior change in particular um

54:13

is an interesting one any stories about someone who's actually changed their behavior or do you just make the plan

54:19

more conservative to try to match the fact that they I want to hear best answer on that and what do you show them

54:24

what are you showing them you're going to be shocked but I

54:30

actually cannot change my clients Behavior because I try you know what all

54:36

I'm trying to do is plant the seed and I will remind people over the time over time and some of them are open to

54:43

thinking about changes and they'll take some of my suggestions to examine the way they're doing things and some of

54:48

them aren't and I don't adjust their plans I just show them over time yep look you're only spending a third of what you could be so you know I as as

54:55

one client said to her husband oh so we're going to leave all this money we worked really hard for to people who

55:01

care about it less than we do um you know I think you I think you make

55:07

a really good point and yeah like everybody here that's listening to this webinar you know often times you know

55:13

you listen to the lottery winners who run out of money in four years it's usually because of their their image sees themselves as not knowing what to

55:20

do with money everybody on this webinar if you got an extra 500 000 or 100 000 or 50 000 you're probably not going to

55:27

go tomorrow and increase your monthly spend by 50 or 100 percent because you

55:33

live ingrained in your habits right so what I've found with clients is it's not so much that they're going to

55:38

immediately start spending six thousand more a month it is this this understanding and this certainty that in

55:46

six months they were thinking about going on this trip on a cruise to the Mediterranean and they didn't quite know

55:52

if they could do that or if it was sustainable in terms of their income they see these things and they say oh

55:58

man maybe we can do this and usually it's the wife turn into the husband saying trip we're going on that trip now

56:05

right and so it's really it goes back to we have the formula and a methodology

56:10

for quantifying why they need to do what they need to do or if they can do that and so usually in my experience it's

56:17

someone calling me and saying hey Cody we're thinking about I just had someone say we want to go on a trip to Israel

56:23

it's with our church it's going to cost twenty five thousand dollars I think we're okay doing that but you know how

56:30

does that affect or impact the long-term plan and can we do it right and so it's again we're giving them the permission

56:37

slip to do some of these things and you know there's it's invaluable to them so that's how we look at it not necessarily

56:43

the monthly habit change I wonder a couple things come to mind

56:48

one is and I know we have not had this for a long time but I wonder if this will be useful to you as well

56:53

this slider has the bookends on kind of now they're just defaults you can do

56:59

other things but this is you could think of it as all right this is a pretty darn

57:05

conservative plan now they're still spending a lot less than this then I mean in a way it's like well good for

57:11

you you're living well within your memes but you can see you know there's a there's a range here it's 1800 bucks a

57:17

month which annualized that's you know that's a decent difference in annual spending

57:22

um so I wonder if this will be useful to you um [Music]

57:27

so it sounds like a lot of you have this experience where people are actually living I mean almost too well within

57:34

their memes right so you'll probably end up pegging it to the left because what that does is it just moves the lower

57:39

guard rail down even farther it's going to take a lot longer if ever for them to get bad news which is probably feels

57:45

good for them right um and then what I've heard you all say which I liked a lot is making it really

57:51

specific on okay maybe they do have excess capacity what are you going to do with it

57:58

actually even the don't shop for gas don't shop around for gas is a good one I like that but but the okay is there a

58:04

trip is there uh you know I mean I got a six-year-old a three-year-old a two-year-old like I if you told me I get

58:11

an extra 10 000 bucks this year I know exactly what I would do like all right so as opposed to just I don't know buy

58:17

nicer wine or something that that's probably not as uh that's fun too though but you know it really is exactly as

58:24

Cody said like I've had folks you know who are like sweating buying a car it's like just buy the car I've had folks who

58:31

said can we really buy this RV yes you can really buy the RV and show them see

58:36

it doesn't make a difference and I've also had folks who've been willing to start putting a couple thousand dollars

58:41

a month more in their checking account because they know that's what it'll take for them to actually stop shopping for

58:47

gas you know so combination it's all Behavior right

Wrap Up

58:54

well we are at the top of the hour so again wanted to thank you all for being

58:59

our panelists uh this is you know again as Justin said one of our most popular webinars so we are very thankful for you

59:07

all for spending your time and sharing with us how you use income lab

59:12

um Riley Cody really appreciate I learned a lot from both of you so thank you very

59:19

much that was very helpful for me this this is a great conversation I really appreciated hearing how Cody you and

59:24

Riley present this it's useful stuff lots to share thanks guys thank you good

59:30

morning thanks Justin thanks Taylor