Presenting Income Lab to Clients Panel Discussion - February 2023

we are expecting a nice group today

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we'll get started at about three after the hour and go from there

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just

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ice

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well good morning everyone and thank you for joining our first panel webinar uh

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we'll be discussing presenting income lab to your clients and we have three wonderful financial advisors who have

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joined us we have John by JC Corrigan Andy Anderson and Ryan Townsley along

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with Justin who will be moderating on this panel discussion along the way where we'll have questions with the

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advisors and at the end we will go over any questions that you all have so we'll be saving those till the end also at the

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end we have a survey and some announcements so please hang on to the very end but with that I will pass it

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over to Justin and we'll get started all right thank you Taylor and thanks

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everybody for uh for joining us um this is by far our most requested topic um so

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I'm really excited to to bring you a panel discussion on um what it's like to to present income

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lab plans to clients how to do that um you know that the transition process for

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for people as they um as in their own practice how they

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began using income lab but also what it's like to kind of take a client um who's going into retirement and

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introduce them to guard rails and adjustments um and so on

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um you know income lab was like the point of income lab is to improve Financial outcomes and experiences

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um and and help advisors really provide amazing guidance through retirement

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um and and you know although that is you know we do a lot of webinars and and a

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lot of it is presenting kind of research backing this up this is you know really well supported

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um but I think uh a lot of you have have told us there's a change in kind of

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communication and maybe workflow and stuff that you're trying to understand trying to grasp and kind of get your you

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know the um the best practices um for for using income lab with clients

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so um I'm really pleased very happy to have um

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three advisors who uh who use income lab in their practices who are really generous with their time

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um and um and agreed to be to be part of this panel um Andy Anderson JC Corrigan and Ryan

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Townsley um so I'm gonna kind of um be the

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moderator so I'll kind of ask questions and um and and prompt and kind of you

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know it'll be a little bit organic but um but hopefully that it'll lie it'll be really useful to everybody and then if

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you want to put your questions um in the Q a we'll we'll get those at the at the end um just so that we we

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kind of keep the the flow going um so Let's uh let's begin at the beginning I

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guess um uh the first question and I think it's the

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the kind of highest level one is you know how do you present and talk about

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adjustment based or guard rails based um income lab plans to a client and

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maybe if if you have experience presenting kind of pass fail success failure uh Monte Carlo plans previously

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what was it like to kind of make that transition both for yourself and and

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with clients you know how did wooden clients um uh kind of make of this transition so

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um you know Andy maybe I'll start with you since you're on my upper left here yes so I'll just say personally

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um we worked with um e-money before so obviously using the gold planner a lot decision Center and working with these

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probability of success and I was you know I got material on income lab and I

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looked through uh the kind of the trailer on what it does and how it worked and really spoke to me just from

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a perspective of you know retirement is not static retirement is dynamic in

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nature and changes are going to be needed we know that ahead of time so being able to present it present it in a

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way to where we're saying you know we are going to let you know when changes are required to make sure that your

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retirement stays on track with just a different uh view of of the the

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presentation to the client and just from personal experience you know when we're using a probability of success you know

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we we might throw up there and say hey you've got a 93 chance of success in retirement and to us that's really

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really good good 93 chance of success is a very high rate but you know the client

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a lot of times there's kind of that Blank Stare where they're like well there's seven percent chance that I don't fail that I fail you know it's

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like they they focus on that well what if what if we run out what if we're not

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able to spend what if we lose our house you know all these bad thoughts go through their mind so adjusting from a

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success failure we don't really want to to bring up the thought of failure adjusting from that to more of a dynamic

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um adjusting over time plan has been huge for me um I can say just um anecdotally from

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the meetings I've had with clients since we started using income lab uh over a year ago now I'd say we started with

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income lab the reaction the discussion just even the non-verbal cues from

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clients has been completely different um I kind of sprained the discussion and

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say you know in the past you may have worked with advisors or maybe even with our practice you we we may have looked

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at something where we say you know there's a certain percent chance of failure or success and I kind of laid

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out and I say you know we might look and say okay there's a 93 chance of success but most of our client I kind of joke

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with them I say most of our clients don't like seeing well there's still a seven percent chance I might run out of

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money or I might fail and a lot of times I get a laugh you know I chuck all clients give me a smile they're like

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yeah we don't like thinking about that and I say the way this software is different the way we're using this now

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and the reason we like this better is because we're no longer looking at success or failure we're basically

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saying success is our goal and success is what we want to work towards and make sure we're living out so in order to

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reach that success we're going to be monitoring the plan as we go along and making changes as needed to ensure that

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that success is always at in our reach throughout retirement so just reframing

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the conversation has been huge that's awesome thank you

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JC Ryan um either of you have thoughts foreign

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steals so I'm gonna I'm gonna quote uh Dr Daniel Crosby which a bunch of people are probably familiar with he wrote in

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the behavioral investor money is the most universal and most efficient system of mutual trust ever devised so I look

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at it as notice how he said money and not probabilities and being in a place where you can have

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conversations about money which I consider more of an attribute and probabilities being more of a characteristic it leads to much deeper

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conversation so hey okay so that my spending capacity is at nine thousand

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dollars what does it take to get to ten thousand dollars or Tia I'm at nine thousand dollars there and I feel like

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I'm busting my tail feathers to keep it at 6 500 pre-retirement where's that

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balance in life so I think having that conversation around money where you know that what if I save 500 more how does

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that change my future or what if I save 500 less a month how has that changed my present is a place where it's really

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made a difference in a much more tangible conversation so going back to the previous comment about blank stares

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those blank stares are going away they are they're they're asking questions around a unit that they understand and

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how it impacts them so for for that conversation it sounds

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like you're really focusing on you know basically this right like just just

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focus in on the what can I spend question that is correct and at the same time they understand that that's a dynamic

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number I actually had one client tell me so is that like my personal S P 500 and I said yeah in a lot of ways it is it's

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going to go up and down based on on a multitude of factors and not just the

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the PE of various companies but your personal PE based on how things change based on your lifespan your your income

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your raises if your wife stops working we expect that number to change and

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here's where we can play with that so that you understand the impact of it based on what's in your control so you

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know if that's if that's a trade-off you're willing to make today and how that and how that is derived in a dollar

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sign versus a percentage sign I like it

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yeah Justin I work with a unique group of of clientele um my former profession

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was in nuclear power so my firm really focuses on working with people from

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nuclear power so a lot of Engineers scientists analytical clients um and you can imagine that you know with that type

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of person and that's the way I'm wired too is just questions would have always arise with probability success is

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what what is the difference what's the difference between 76 and 77 how does

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that affect my actual plan what do I do if my probability success changes you know as the market changes or my

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spending changes right like how do we how do we manage that like in a dynamic environment and changing that

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conversation over to here are your you know here's your guard rails here's

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where we have to make a change really resonated with them especially you know just working in a power plant where

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things have limits and if they go outside of limits you take action so you're not exactly worried about what is

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going to happen but if it does happen here's the exact action we're going to take to mitigate it just I mean just

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really resonated with every single person I presented to that's really interesting

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um yeah I've thought a lot about this like some metaphors for adjustment guardrails

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based um planning I hadn't thought about the uh the Power Plant Mod but I think about like once you're in retirement you

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actually want to know what to do and and you also might want to know if you don't have to do anything right hey it's fine

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six you know you're you're 76 went to 77. you will you want to be able to say don't worry about it which really means

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you you don't want them to look at that number at all right like imagine if your GPS your like Google Maps or Waze you

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know you're driving down the highway and it says you know your probability of success went from 80 to 60.

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right uh so should I get off the highway like what am I doing right so this like

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focus on like did I do I need to do something if so what all right that's yeah I would have um I actually have my

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profitability of success meter for each client Linked In Their portal so every

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time they would log in they would see it and you could imagine especially during valuable times like last year and this year that that number was changing a lot

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and that sparked a lot of conversations a lot of phone calls that as I was just you know migrating everyone over to

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income lab it just changed the anxiety level of instead of watching that meter

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of knowing exactly you know everything is fine unless we hit this point and

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things are still fine we just have to make a change it was just a different conversation right right

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um yeah again can I address and so on that probability of success um I think it changes the uh the

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expectation for the client entering retirement you know if we're talking probability of success and we say okay you know 80 success 20 failure well

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without knowing what it would take to change the plan essentially the client's going into it hoping essentially it is a

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hope saying well I hope I'm not on one of those 20 of retirement outcomes I hope it's going to play out the way I

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want it to and if not we don't know what we're going to do essentially but with this we're saying you know again we're

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wanting to make sure that you're on the track to success so in order to do that here are like you said Ryan here are the

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guard rails that will cause us to make a change and not only that but here's exactly what we would do if one of those

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guardrails is hit to make sure we get back on track so we stay in that quote-unquote success rate for

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retirement so uh kind of keeping with the same idea

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of like how do we think about it and talk about it with clients but a little more concrete um I wonder if you could each share with

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me kind of what parts of the software you most often go over with clients and

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maybe if you have kind of a talk track that you tend to use um you know are there parts that use in

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like every client presentation are there parts of the app that you go to for certain types of clients or certain

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situations certain questions they like trigger oh okay I gotta go here to answer that question

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um you know what's sort of the the process for you and it may be different for each of you

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yeah I've um I'd like to start off with just going through like so I'll open up like where the pencil is like just kind

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of verifying that all the inputs are correct with the client like we got the assets right we got liabilities and the

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search security and everything like that and don't spend a ton of time on it because they've taken the time to provide it before

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uh but then I'd like to you know notes It Up by hit finish button uh

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letting that screen pop up and then showing them what you know a moderate income setting would

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look like so um you know kind of keeping that income setting in the middle talking to him about what this means so

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what does this actual income mean how do we define guard rails uh where are the guard rails in comparison and that's

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kind of where you really see the people start to you know let their guard down and just relax a little bit when usually

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typically in a typical plan the guardrail is some ways away and when they see that you know it's so far away

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and that the likelihood of it happening even though it could happen um the likelihood of it happening is small and if it does happen the change

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that needs to be made is you also usually pretty manageable and pretty reasonable

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um that's where you really get a lot of the anxiety from them you know the what ifs and the uncertainties of entire of

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retirement really kind of uh really kind of you know die at that point and so I love this page I think this page speaks

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volumes um and then I go through uh basically cash flows just so they can get the visual of what happens like when Social

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Security and things like that again this is also an important page because you could really illustrate that they're

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spending more of their money in the early years when they're young and healthy if they're choosing to use that

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kind of track and then I do like to do the historical analysis too because it really does add context

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so if if you were using this to use it with with everybody or is it is is there like a question that triggers you to use

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it and when you use it what how do you present this page I use it with everybody but I'm gonna

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you know position where most of my clientele are similar as in like you know very analytical and things like you

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know so I like to go through this as a normal part of the process just so they can see so I've been sure that I'm okay

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based on history look at all these times when the amount of money you could have taken out of your plan is well above the

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line right the line being what we're proposing and then there are a few times where they were below the line and those

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would be the times that would trigger where we would most likely hit a guard rail you'd have to make a change and

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then I usually flop back to the income page and show them and again that change would be this and I show them what that

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changes nice nice um do you have a preference on like on

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this one with the if you're using the retirement smile do you show it real or or nominal both both I like to show up

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both because I'll tell them you know in real dollars you know we're we're spending more of our money in the

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beginning and then statistically you're going to slow down just as you do less and you know you you become a little

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less mobile and just you know just it just naturally happens as your age progresses but then nominally we'll

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start going to keep up with inflation by giving you those cost of living raises you just may take smaller cost of living

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raise it's more none as the years go on to compensate for the fact that you're actually producing your income in

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today's dollars I like to show both

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so it's your workflow or your presentation flow like so unique clients like to be treated

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uniquely and based on their situation I tend to have three things and depending

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on what where their action drivers are I focus on those three things like for

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example the income scenarios I might have a client that wants to who's been

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talking continuously about retiring a year earlier so I can show hey our our

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current plan implemented is at 16 650 if you retire a year earlier that's 16 650

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goes to 15 800 so they know the impact of retiring a year earlier

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um we might also have a situation where okay I don't want that income to go down but I do want to

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um the I I do want to retire a year earlier so then I end up going to life Hub and I specifically go to the finflow

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diagrams and when you look in the finflow diagrams we try to figure out where that 500 might come from so this

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is beautiful because then I don't have to redo this in the sankimatic which I think a lot of people are doing today this is this is on autopilot it's a true

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north and it's fantastic um so this leads to very good conversations it's about it's about

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getting the right balance of hey this is how much you're making this is how much it's going to taxes this is how much is going to savings and everything else

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reflects your values so now are we having the conversation of this is how much you're spending on

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benefits today if you retire early and aren't on Medicare do we need to devote that much to the Health Care savings

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place or it could be and that's when we go to the tax Center we say hey if we can keep your income down to a certain

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level now all of a sudden you get the ACA tax credits and we don't have to

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actually replace that that those bet that benefit spending that you see in the difference between your gross and

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net salary um it might also be hey given the five-year Roth rule we are going to make

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it so that we don't have Roth conversions between the ages of 56 and 61 so that you kick remain qualified for

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those ACA tax credits So based on the needs of the client I try to choreograph the finflow diagram

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here the scenario is based on what triggers mean the most to them whether it's their retirement age or savings

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rate and then show the impact of the tax Center of hey how we can maximize their post-tax lifetime income

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makes sense um Andy how about you what what kinds of

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are your favorites for using with you know maybe all or most clients yeah so

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my uh flow presentation flow is very similar to Ryan's I'll start in the facts section again just to kind of make

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sure that all the numbers are correct I mean no matter how hard we try sometimes information is lost

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um in the flow there but just confirming how all the numbers are correct and that also brings up sometimes some planning

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opportunities if we hear you know oh hey I've got an extra 300 000 in cash well oh okay what's your what's your plan for

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that cash right now you know so it does bring up planning opportunities but then I also go into the income plan once I've

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got all the the facts updated and I start here

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um and start with the proposed income and say okay so this is where we're standing you know if we make no changes

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from where you are now this is where we're trending and then I historically this is probably going to be changing

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going forward but historically to this point from here I've gone into test plan

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and have actually walked through the test plan section now a lot of times as I'm sure many of you are aware when you

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test this it does take a little while so when this is running here and the the circle is spinning I use this to kind of

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explain how the software is looking at historical periods and how it's using

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the guardrails to determine when changes are needed so I'm walking them through the actual

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um the actual mechanics of the software right now I'm talking about you know going back to 1871 going on a monthly

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basis if you had retired in any given month in that time period and I'm laying that out so that there's not just dead

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air time you know while we're waiting this for this to run but once I get in here and this is what I'm saying this

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may change going forward now that there is the new retire me when feature out here um and I'll talk on that in a second but

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what I've done is essentially I've used this and said basically again this is

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not a success or failure this is saying do we meet your goal over the course of retirement environment or are we above

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or below that goal and a lot of times you know if we're setting up the plan appropriately and making any necessary

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changes we can get we can get that below plan pretty in a pretty good place you

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know maybe it's even if it's 30 below plan I say now think about it with this

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with with me this way that's not a 30 chance that you're running out of money this is saying that in order to make the

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plan work thirty percent of the time we had to make compromises and spending over time and then I go to the average

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below and I'll say you know on average when we weren't quite able to hit your goal we only missed by whatever it is

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two percent three percent so I say you know even in those times where we did not hit your goal whether

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it was something economically going on something with the market inflation whatever it was we if we made changes if

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we made the proper changes your retirement was only short your goal was only short by you know whatever four or

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five percent and that really resonates with them but I think I'd like to get away from that even further

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um because it still is using a percent number where I'm much more comfortable using a dollar number for clients

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um and we've actually been talking with with folks from income lab and I um I know that there's a lot of focus on

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moving that conversation to dollars from percentages but so what we're doing now actually go back go back to the income

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screen if you would Justin so what uh what we've been shifting our

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conversation to now and just because the conversation flows better from from this standpoint overall I think as we start

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here we say Okay similar to what Ryan was saying we here's your proposed income based on what we know now here's

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the guardrails where if we were to reach this point this might prompt us to make a change then I go into the retirement

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when the Justin was just in and this is a really cool feature because we're able to select whatever plan we're looking at

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and look in different environments and say well what would have actually happened was spending over time so we'll

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start with our base plan and I'll pull up these different environments and I'll say you know we can look at various

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different times throughout history that might have been a a stretch or a struggle with the portfolio with the

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overall income plan well let's see how it actually played out and many many times we'll see that actual that actual

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income is above where that planned income is wanting to be so this is

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really comforting to clients to see oh even if I retired in the Great Depression you know my my actual

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spending capacity never would have dropped below my goal um so that's really really comforting

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for them to see so I am starting to spend a lot more time in here to show you know hey even if we get a period

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like we've seen in the past it would have been um really a big stretch on the portfolio

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as long as we're making the necessary adjustments over time we're able to make sure that that this plan is is trending

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towards success more often than not yeah and I'm I my example plan is uh

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extremely conservative here so I think typically you probably will see a few spots where it's below below the

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original plan which is also a nice way to show them hey you know when we are below this is what it looks

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like this is how much and for how long um you know it's not that I think we're literally about to start the Great

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Depression again but if we did how it would behave do you have what I've seen I'm sorry Justin what I've seen in this

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a lot of times is even if it's below the planned income a lot of times you know

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if we're if we're solving for spending capacity oftentimes that spending

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capacity is above their spending goal anyway so if it's below that spending

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capacity we still have room to where it's saying you know your goal is five thousand your spending capacity is eight

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thousand yes it may dip below that in bad times like the Great Depression but we're still sitting at 6 500 compared to

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your 5 000 goals so it's really helpful in that conversation nice that's that's interesting

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um I've heard that word a few times and I know we've definitely been using it and even in uh the new version of the

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dashboard which should be out um uh in about a month uh which is kind

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of a simplification uh of this screen where we're using that term what do you

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have any experience with this shift from you know defining a budget defining you

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know the income you need and then getting a score on it versus kind of the spending capacity what can I spend

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um you know framing of retirement planning is that something you actively talk about with clients and if so how

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the thing I'm noticing is that the conversations have a lot more engagement because the proposed income or spending

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capacity actually triggers questions in their head of how much am I spending now how much is

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going to have to come out of my account after Social Security I I find the questions are much more tactical and

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engaging when you're dealing with a dollar sign versus a probability um you know going back to the previous

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thing where you're showing the Great Depression you know I have some I have some clients that are

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um airline pilots and I'm just telling them hey right now you're below Glide slope however we have this many amount

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of space before we're supposed to put wheels on the deck and this is how you know we need to make any course

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Corrections so actually showing that that proposed income is going to change and setting

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the expectation from the start that that proposed income might change as a result of scenarios like this

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um is actually it's a great way to dictate Tempo with your clients at the same time let them take the lead with

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actually having the conversations of how they spend money today

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yeah Justin I'd like to um also like just like JC said how he shows retiring

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at you know different you know times that let's say retirement a year earlier two years earlier a year later what the impact of that is if you go back to the

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income screen I also like they like present options with the client um and then talk to them you know about

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what I know about them and their personality but just some things like changing their portfolio allocation the

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income setting is huge right so when I talk to them about the income setting and tell them like hey for example you

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know if you wanted to start at a higher income but have a higher chance or you

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know greater chance that you're going to hit a guard rail or would you rather start you know at a lower income but

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have a much less chance of hitting a barber or somewhere in the middle and show them what those different plans look like like right on the spot uh that

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it kind of empowers them to make the decision themselves to be able to say I you know I I like based on my

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personality and how I know myself I I think I would feel more comfortable at this particular place right or some

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people will say I want to start as high as possible because I want to spend it early and I you know I'm willing to you

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know risk the fact that I may you know have to make a change uh earlier than some other people would so that's just a

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really good way to quickly go through uh dynamically a bunch of different options

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that makes sense and so you you'll just build you know I don't have one here but I

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would build you know a couple of plans one you know retiring 2025 another in 2024 you know one 2026 that kind of

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thing and just say hey here are options um and maybe also combine that with

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well I forget who it was he was saying it but you know if you retire earlier that may mean your spending capacity is

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a little lower but you know we can talk about adjustments right like okay well maybe maybe it's worth being just a

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little bit you know kind of loosening things up spending a bit more and accepting a

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little higher chance that I'll have to pull back from that but in exchange I get to retire earlier which is you know kind of nice absolutely

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I will say to JC's point on the discussion that this brings up

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um when you're working with spending capacity and essentially you know saying regardless of what your specific budget

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is here's what you're capable or your spending capacity in the plan that that brings up additional planning

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opportunities in there where you know sometimes we'll have a client spending capacity is maybe 15 000 bucks a month

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but really they they honestly have no desire to spend more than half that say

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seven thousand bucks a month so they say well if our spending capacity is so much higher what does that mean for us we

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don't we're never going to spend that much and then we have the discussion well that could bring up Legacy goals

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that could bring up charitable giving goals really the fact that you have so much room in that spending capacity

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means that your portfolio can sustain a lot higher level of withdrawals than what you're actually planning so that

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means we're going to have additional discussions over time about those other goals you might have gifting to heirs to

32:32

family to friends charitable giving whatever that may be it does bring up additional conversations as well

32:39

I know we've sometimes had that question about both both in terms of hey what if

32:44

my spending capacity is a lot higher than I actually think and you you address that in a really great way

32:50

um what about the concept of adjustment I know I just saw an article by David Blanchett about you know this big survey

32:56

he did on how much people feel they can adjust certain things and it was higher than I expected I mean people were at

33:02

least in this survey and there was like 1500 people really flexible do you ever get pushed back from clients

33:08

on this idea of adjustment or does it just totally make sense to them yeah so I uh I I think the having used

33:15

the software in the last year or so it's been a perfect time to transition to the software um with what's been going on with

33:21

inflation because it's a perfect time to have that discussion with folks where I'll kind of say you know in in previous

33:27

tools or in other tools that are out there it is kind of like you know we're just setting a number and we're working

33:33

with that number throughout time and it's not really going to change it's going to just gonna just going to tell us what's the possible outcome if we

33:40

work with this number but then I have that discussion you know is that really how you guys live your your life in

33:45

reality and they'll say well no I say spending is different from month to month right and they say yeah and I say

33:50

well what even the last couple years when when groceries have gotten more expensive gas has gotten more expensive

33:56

have you guys been living the exact same lifestyle that you were two or three years ago they say no absolutely not you

34:02

know maybe we're going out to eat less or we're travel or you know we're driving less maybe we're doing something more close to home on vacations whatever

34:09

it may be they're making adjustments in life to make sure that their dollars are

34:14

going as far as they were even just two or three years ago so when they're able to see you know even in real life

34:20

recently we've made those same adjustments that we're talking about in the retirement plan it really hits home

34:25

for them to say well yeah we can make adjustments if we need to and the thought that you know if we get another

34:31

great depression or you know another Global pandemic and something happens to the markets that really changes beyond

34:38

anything we expected is it realistic to think we're just going to go along with the same behaviors the same spending

34:44

level and they they understand no it's not and they say yeah we've made changes in the last two years so what's to stop

34:50

us from expecting we could make changes in retirement as well so it's been a really a really um you know top of Mind discussion to

34:58

have especially over the last couple years that's great

35:04

um I know one other thing that now this example plan I haven't set a you know a

35:09

desired income at all which that's sometimes like is shocking to people when they first

35:14

see income lab that often think well hang on I don't have to put in anything about what I want to spend right so

35:21

um two questions about that one is you know if you do have some excess spending

35:29

capacity and maybe you've already you know made some adjustments added uh you know a legacy goal maybe you've you know

35:35

pegged your income setting down low because hey we don't have to take that much income risk and you still have some room one other thing I've heard and I

35:41

know JC you you talk about tax planning a lot is if there's space well that kind of shows that maybe there's some tax

35:48

planning Roth conversions that kind of thing that you can do um does anyone have you know uh examples

35:56

or just you know ways that you go about tax planning and talk about tax planning um with clients using income lab

36:07

at the risk of being redundant um I use it quite a bit with the ACA tax

36:13

credits for those that are retiring early um how do we maximize post tax lifetime

36:20

income and using going through the tax Center and the evaluations of hey this

36:27

is the we are proposing that we do prorata but that's not the optimal the

36:32

optimal is actually this scenario here um and the I don't know if you're

36:37

pulling that up not or not Justin but just showing clients with that post-tax value add is I find to be quite

36:45

beneficial with folks so just the uh kind of the comparison

36:51

screen yes yes so actually showing that hey all right hey I want to manage to the 24 tax

36:58

bracket well what if I told you the 32 tax bracket actually improved your post-tax lifetime income

37:05

um and this this is a great display this is this is part of my um my normal reports for this page to be

37:12

there and yeah I think editing these is is well worth everyone's time to see so you can show which one

37:20

in terms of total taxes net income and net Legacy depending on what you're trying to optimize for this is something

37:26

I use almost every time and you know one thing I think we've

37:32

also got questions about before we we put a star on the one that is you know lowest average tax rate uh lowest taxes

37:39

highest net income that kind of thing but sometimes the differences are I mean tiny not uh you know we're talking 20 30

37:46

years here now the chances these numbers actually turn out exactly that is very low right so um do you do some kind of you know

37:53

applying a little art along with the science here yeah the art comes in with how much are they making today what's

37:59

their human capital worth going forward um you know the

38:05

their mindset of where they think taxes will be in the future and if they're

38:10

they want to play that Arbitrage um that that tends to happen quite often

38:16

um and at the same time I like to say hey this is what you're paying in taxes this is what you're saving are we at

38:23

risk of having um lifestyle creep going forward because this is going to be the cost of that

38:28

lifestyle creep that you're not accounting for in your taxes so actually showing that and you know Jeff Levine

38:35

from um has talked often that a Roth conversion is tax insurance as much as

38:42

it's it's anything it's diversification and it's insurance and whether you're doing that with a Donor advised fund and

38:48

and compensating that with the Roth conversion or however that may happen it leads to just much better conversations

38:54

of how you are making taxes which tends to be a quite a trigger with many people

39:01

to be very actionable and something that they can take control of

39:06

like that are there other screens here that you find yourself using with clients in the tax Center

39:20

some people like to see it broken down year by year so I go to the explore tab and then just kind of Click through the

39:26

different years to show them just you know what does it mean to do this type of tax management how does that progress

39:31

throughout the years and then also the um you know if you go to the life Hub and then the flows will also show you

39:38

know the Roth conversions and things like that and that really gives them a visual of um you know like where is the money

39:44

coming from where is it going to at what point are we going to start using it how does that help us with our our tax

39:49

bracket management so it's been a the tax planning module has been probably

39:55

one of if not the most powerful tool um when differentiating between me and

40:01

another advisor and Justin I need to bring this one up I just have a I have a client who's

40:08

58 and their parents just died there's the

40:14

second parent just died and now they've got a 1.8 million dollar inherit

40:19

inherited IRA so all of a sudden now I have to plan for that and think about

40:24

everything from Irma to you name it and then it really kicks in terms of the

40:31

value of how do we choreograph how we take the money out does one retire does

40:36

the one that wanted to retire early actually now retire early so that we can get some other things accomplished in

40:42

life and and know what that impact is but that the inherited IRA component I'm finding to be a place where I can really

40:48

show some value so will you kind of use the tax Center and find spots maybe where instead of a

40:55

Roth conversion you'll take some of that inherited IRA yes or for instance if they are a professor at a university and

41:04

they decide to take their sabbatical at a different time now so that they can actually take out more of that I mean

41:10

it's it's leading to those types of conversations that makes sense makes sense

41:17

um I think we had a couple of kind of pre-submitted questions from uh from

41:26

attendees I think some of these were maybe already answered but um one was kind of what's the best way

41:31

to show or summarize the parts that make up the plan kind of if they want more confidence in the plan be sure

41:37

everything's in there right um and so on I think a lot of you said you use the um you know the inputs

41:45

um I know I've heard life Hub as well what's been your experience with using life hub for that kind of thing

41:54

I actually have been using um there's actually a great report section in here if we just want a summary of what the

42:01

plan includes I've created my own template for reports that I can send to

42:07

clients so you can choose what screens what information you want to include in those reports you can have Assets in

42:14

there you can have year by year breakdown of spending versus income sources so you can create your own reports in there that'll summarize the

42:21

overall plan um and that just helps you know we have a tendency to save reports from future

42:27

years and then we can see how those have changed over time um so yeah just including a report and

42:33

there's a good way to do it um life Hub is a good I think life Hub is a good real-time

42:38

um updater for the clients so if you give clients access to login to income lab they can go into lifhub and see kind

42:46

of where they are today and where things are trending or projected to change in the future so I use both of those to

42:54

kind of give them a summary of what's happening again reports for kind of that snapshot view of what the plan looks

42:59

like over time and then uh life hub for kind of a real-time uh today's today's view of things

43:05

usually that was another question was are there particular report modules and pieces that you use a lot

43:12

um do you use the reports it sounds like you do are there kind of some favorite modules there andy yeah actually let me

43:18

I can pull up um on my and see what I have selected on there I won't share it

43:24

if that's okay Justin but let me see if I can pull it up

43:30

yeah so on those I've got the cover page I've got the balance sheet

43:35

um tax allocation long-term income Outlook and short-term income plan so those it's it's a I mean

43:42

I think it's a like a 10-page report something like that so not too much to where it's overwhelming but enough to

43:48

where they can see really all of the uh um all the information that they need to see to get an idea of what's actually

43:54

happening on a year by year breakdown great thank you anybody else on the

44:00

reports are there do you use you know PDF style reports and if so kind of what what sorts of parts do you like

44:11

I like to create a really simple report that kind of just has the you know the income and the guard rails on it and I

44:19

transfer that report over into a shared box holder for each client and so instead of them logging into their

44:26

portal and seeing like a changing probability of success which will ultimately especially you know in recent

44:32

times will spark a lot of conversation you know they could just go back and refer right back to that guardrail

44:37

report and say you know basically what most of the feedback has been is we're not anywhere close to that so I'm not

44:43

concerned and so that that's how I use it I do um make a longer form report because a

44:49

lot of my clients want that level of detail but just for the purposes of you know referring back for their income I do make a really short one just kind of

44:55

this page that makes sense I I have three templates saved I have the uh retired

45:02

template created I have the kitchen sink template created and then I have the

45:09

executive summary template created and I basically just have those three and based on the analytical promise or

45:17

um you know needs of the client those three have served me well but the fact that I can save three templates and not

45:22

have to reinvent it every single time has worked really well yeah

45:27

great um well thank you uh that's kind of the the initial part of the

45:34

conversation here this has been awesome um I know we have a whole bunch of of questions and I'm gonna

45:41

yeah one thing yeah one thing on this um for all the attendees we do have a lot of

45:47

questions in there so if you want to like them and it'll upvote them since we have so many and we can make sure that

45:53

uh the most sought out questions get uh answered and we'll maybe have some

45:59

follow-up with the remaining questions about but um Justin with that you can

46:05

see the ones that are uh liked the most if you want to tackle those

46:10

sure um so I think let's let's kind of one of the

46:17

easier um parts of this first so you know for clients that you have you're using

46:23

um a plan like this how often are you changing the client's income or letting

46:29

them know that their spending capacity could change you know or needs to change up or down is that something that's

46:34

happening a lot or is it pretty infrequent

46:41

because typically the guard rails are you know a good ways away for most

46:46

people just the way that the plans are laid out that unless they have something come up like a one-time expense or you

46:52

know something that wasn't in the plan something you know that that came up like a family issue or health issue or something really not adjusting the

46:58

income so it really has reduced the workload um in that aspect and then you

47:04

know just kind of doing the normal January February like um you know Social Security and and tax bracket kind of

47:10

updates but other than that it it really has reduced the amount of time I spent in the planning software you know I'd

47:17

say probably about 50 percent yeah and I think to get a feel for how

47:22

often a plan might actually call for a change um you know you can do that in in plan

47:29

tasks for sure because it'll just say hey on average how often but another place just see like a a real example is

47:37

in um retirement when if you switch it to nominal so that includes inflation

47:43

adjustments um now you can kind of see all right here's one that began before the.com but you can just kind of see all right I got

47:49

one in 99 another one in 2000 and then another one not until end of 2001 then I

47:54

went a really long time 2004 right so it for this plan it seems to be kind of one

48:00

one to three years uh and then you have some pretty long periods right where from

48:05

09 to 14. there was nothing to do both because there wasn't much inflation at that time

48:11

right I mean that was the um you know a period from the

48:16

from the global financial crisis where inflation was negative sometimes but you

48:21

can see you know as long as I'm in the white right in the no change range between the guard rails I'm not doing anything so I know that's a question we

48:28

often get is you know okay is using income lab gonna force me to do lots and lots of stuff all the time and you know

48:34

this is just an example where No in fact what it's going to do is make sure you're not doing things unnecessarily

48:42

um Andy I know you mentioned uh and we're actually next month gonna going to talk about uh income lab kind of in your

48:48

Tech stack how it you know you use it with other kinds of software and so on but just quick question

48:53

um about kind of where you said you mentioned uz money you know how do you kind of

48:58

you know juggle those two yeah so um to be completely Frank uh

49:04

when we got on board with him with uh income lab Our intention at the time was to try to

49:11

transition all planning over to income lab so we're talking you know long-term care expenses

49:16

um we're talking life insurance needs things like that we try to do it all it's all about consolidation trying to

49:23

reduce costs so if we could get rid of e-money that would be great um but as we've found in in using the

49:29

software and actually um our team uh was out in Colorado recently and we were able to meet with

49:35

Johnny which was great and his his uh thought was you know income lab

49:41

we're going to stay in our Lane right we're a retirement income planning tool we're going to be the best at that

49:47

feature so we have actually very recently uh made the decision that we are going to integrate multiple planning

49:53

tools specifically income lab for income planning and retirement but we are still

49:59

going to be using other tools like e-money if we're doing you know a long-term care analysis or a like I

50:06

mentioned a life insurance needs analysis or knowledge planning or a lump

50:11

sum purchase things like that those more detailed items that you need to be a little bit more customizable for and a

50:18

little more detail-oriented we are using those other tools for that but income Labs specifically is our go-to absolute

50:26

best tool available for income planning so

50:31

just speaking from experience we have six advisors on on staff right now they

50:38

were having issues as far as relaying and explaining those different items in

50:44

income lab we're using a lot of workarounds and a lot of backdoor things to try to get to the final information

50:50

our planning team was having difficulty doing it and we're really thankful to Johnny for being honest and just saying

50:56

hey you know that's not our lane that's not what we're best at so we are going to be using other tools for those other

51:01

items and combining them all into an overall comprehensive planning Suite so

51:07

income lab will be specifically for income planning you know taxes as well if we're doing a Roth conversion

51:12

analysis and things like that but we want to stay in our lane with income lab to where we let it do what is absolutely

51:18

best at you know I I know I said something earlier kind of about you know if you're

51:24

if your GPS told you you're probably success in getting to your destination went down it wouldn't be very useful and

51:30

that's true right you really want to know what to do not you know getting a score but it's interesting like even a

51:35

score a success and failure score or you know to use JC's I forget the terminology you used what kind of a like

51:42

funded Ratio or you know what's my projected income like that works fine in pre-retirement if I'm in my 20s and 30s

51:49

in a way me wanting to get my score up is good it leads to good behavior it leads to more saving at least so if you

51:56

think about kind of what you're trying to um accomplish with clients in different

52:01

life phases at least from my point of view there's really nothing particularly wrong with success and failure if you're

52:07

just talking about pre-retirement saving it kind of pushes people to do the right thing the problem is it becomes not

52:13

useful at and in retirement because now I don't know what to do right so yeah I think that's interesting and it's a

52:18

story we've actually heard a lot like you said we're really just focused on retirement plan in part

52:24

um another question with a lot of votes if you don't mind yeah yeah things with

52:30

clients is that anyone that sees a range from 0 to 99 will automatically think that 99 is

52:37

better is the best right where and you're right like when you're young and saving stuff the higher you get that the

52:43

better but for people different people with different lives and different goals someone with the 50 probability of

52:50

success may be more aligned with their goals let's say for example they don't have a legacy they don't have children

52:56

they're not gonna they want to spend every dollar before their end of time but they're automatically going to try

53:02

to shoot for 99 which is going to be very much overly conservative thinking

53:07

that the higher the number the better so that's completely eliminated that conversation right right plan for the

53:13

right person and don't compare yourself to that number or other people's numbers definitely

53:20

um this relates to what we we did talk a little bit before but how do you use this you know the proposed income or

53:25

spending capacity the desired income the essential income goals do you use them

53:31

do you you know just just put in bottom line numbers if you do you know full budgeting how do you how do you do that

53:36

in income lab

53:44

yeah so I'll speak to that so we uh coming from e-money

53:49

um we were we definitely started with hey what's your budget what's your spending goal we want to put that in

53:55

there um we were even solving for income quite often to where we were saying this is what we want to spend what's the

54:01

above plan below plan percent um and we really started to shift from that and say really all we want to know

54:07

is what is your spending capacity and if your desired spending is below that while you're in great shape

54:13

um if it's above that well then we have to talk about different options whether it's doing a a new scenario of retiring

54:19

later or saving more or whatever that may be adjusting the income setting up or down to be more conservative or

54:25

aggressive so we did if we know what a client what their ideal budget is we'll

54:31

put that in there but we are no longer really solving for that budget it's it's more of just a

54:37

um basically a mile marker to say you know are we at or above that point and if we are then we're great then they

54:44

know you know they can go and live their life and without having to worry about am I am I spending exactly six thousand

54:50

five hundred twelve dollars a month you know if they go over a month well they don't need to worry about it because

54:55

they're spending capacity is 2 000 bucks higher so we really focus on the spending capacity and use the uh desired

55:02

income as kind of like I said just kind of like a benchmark um and really the uh essential income I

55:07

think that's the term for it we talk about that very little because a lot of times clients don't really take the time

55:14

to figure out what their essential income is um so we'll put something in there just as kind of like a a placeholder but we

55:21

focus more on spending capacity secondarily on desired income um just like I said as a benchmark

55:29

makes sense um we have a ton more questions but we're almost out of time so I apologize

55:36

to everybody who is uh will not have their answers question questions answered live

55:42

um but that said let me pick one let's get a lot of votes here

55:48

um and this would be our last question um

55:54

I'm seeing a lot of sulfur income and income yeah well there's one with nine which is okay how many of you have

56:00

actually implemented a plan versus just revisiting the analysis and it sounded

56:07

like at least in pre-retirement there's a fair amount of revisiting the analysis which by the way is that's all that is and pre-retirement

56:13

but in retirement is when when you're actually getting you know did I hit a guardrail so have any of you there may

56:18

be a different answers on this do you implement plans if so half of mine are implemented because most of my clients

56:24

are retired are very close to so about half are implemented and um I haven't had an issue with hitting a guardrail

56:30

yet um even with last year's you know Market uh market performance but yeah

56:37

about about 50 are implemented um and I'd say a bunch more would be over the next year or two and the other

56:43

half for people who are planning and adjusting and making changes and trying to get to the finish line of retirement

56:50

yeah I noticed in retirement when this was probably the experience of a lot of people who implemented a plan and call

56:56

it 2001 early 2002 is this is what you would have seen happen right we're getting a lot closer to it but in

57:03

it's remarkable uh you know how often you don't quite hit it one reason for

57:08

that by the way is if you put a a minimum change in right you say hey I'm not going to make a small change I'm

57:14

going to make five percent or more well then it won't tell you to do something right it'll just kind of push that guardrail away a little bit if the

57:19

change would be too minor to do but I think this is just to give a feel for a lot of implemented plans from 2001. yeah

57:27

they're they're getting close and they're bouncing around you know we get one more big hit on their portfolio they'll

57:33

probably have an adjustment that's right a strong Prospect uh tool too you know

57:42

when if I meet a client that is interviewing multiple advisors and the

57:48

other advisors are using a probability success meter and I'll pull up like a picture of it and say is is your advice

57:54

the other advisor you met using this and they would say yeah most of them um I would say okay for the

58:00

the probabilities that you know the 20 25 that ended in Failure what was the

58:06

exact plan that they put in place to mitigate that and adjust the plan and it usually at that point it's kind of like a Blank Stare which means that they

58:11

didn't talk about it and that means that showing them the planned income with the

58:17

guard rails and everything that we just went through is different it stands out and it really does make an impact and

58:24

that's probably one of me more business over the past year and a half than I think any other tool or tactic or

58:30

anything that I'm using that's awesome well it's a great place to to wrap this up um I want to thank

58:37

our panelists um it's just been been fantastic I think we'll do a lot more of these uh given

58:43

the uh the robust question and answer uh session so you know we'll we'll reach

58:48

out to um income lab firms users and and you know if you if you're interested in

58:54

being part of a panel let us know um but uh thank Let's uh thank the three uh who are on the panel today really

59:01

really appreciate it and thank you everyone for joining um yeah one thing on that Justin we do

59:06

have a laptop Tuesday coming up on the third Tuesday of every month and then the fourth Tuesday where next month

59:13

we're having using income lab in your Tech stack so we'll have panelists for that and then at the end of this I know

59:19

some people have already uh exited the webinar but we do have a survey obviously we got to this uh having

59:26

advisors present based on the request for it so we uh please add your feedback

59:32

to the survey at the end of this Zoom meeting as well so thank you all again and we look forward to seeing you all

59:39

next month thanks everybody