Masterclass 2.0 - Class 4: Advisor and Practice Management Efficiency Workshop

 Excellent. Well, um, welcome everybody. Good to see you again. Fourth and final for this series, um, but definitely not the final. Uh, for, I would say, you know, eternally for the series, we're gonna be doing a lot more cool stuff like this, and I'm really excited about it. I'm, I'm sharing my screen. Justin, just let me know if you can't see it, just stop me real quick.

 

But I'm should be sharing my, uh, my PowerPoint over here. Uh, masterclass one, two, and three were a lot of fun and I think we went through some really cool stuff. You know, masterclass one. Tail. Its two bear markets where we go through client responses, uh, to the different types of methodologies, whether it be planning with probability of success or with income lab, uh, and how that ultimately results in a better experience for the client and for the advisor.

 

Um, part two was all about taxes and Roth conversions and tax planning and, and, and just that wonderful value add you can do for your clients. And, you know, part three was pretty much like. Creating and presenting retirement plans and how easy it is and you know, how you can, you know, create plans relatively quickly, you know, especially for prospective clients to win new business.

 

Uh, but then present plans and add different variations in the plans so you can show, you know, just kind of empower the client to choose, you know, different options when it comes to their retirement planning. And today we're gonna talk, talk about, you know, or recap a little bit of that, like part one, two, and three, and how those things make.

 

Us as advisors more efficient. And efficiency is great for multiple reasons. And, and it could be you may have your own individual reasons to become more efficient, right? We're all looking to become more efficient and it could be so you have room to serve more clients. It could be so you are able to serve the same amount of clients you serve right now in a better capacity and less time.

 

Uh, so maybe have more time with your family, right? There's a lot of different reasons why efficiency. Can help you and your firm. So we're gonna talk about that today. And these are just like some things that I do, right? So just some ideas, you know, I know when I'm watching webinars, uh, some things I look at and say, that's amazing.

 

I'm implementing that tomorrow. I can't wait. And some things I say, you know what? That's just not for me. Um, so I'm not here trying to preach to you. I'm more just saying, okay, there's some really cool stuff that I've learned along the way, uh, over the past five years. So let's go ahead and dive in. Again, not investment tax or financial planning vice for anybody watching this.

 

It's not like a licensed professional or anything like that. But, um, I'm Ryan Townsley and I was a former nuclear power operator for 20 years. I'm not gonna go into my bio too deep, um, for the sake of time. Um, but I do run the only financial planning firm in the world for nuclear power plant professionals, and that's me standing in front of the plant that I worked in and.

 

As always, I left this in for all the masterclasses. I can't take it out. You know, the graphics are bad. Um, I, I'm not, I'm, I'm a math person. I'm being a nuclear engineer. And then, you know, ultimately making the transition to financial planning. Uh, definitely not English. There's something in here spelled wrong.

 

Um, but I think the content's pretty good. So focus on that. And I think, you know, we'll all have a good time. Masterclass one. And again, if you haven't watched these, go back and watch 'em. 'cause they really are gonna dive deep into, you know, how income lab is used, or at least how I use it as the exclusive retirement income planning tool for my clients who are in that light phase.

 

Right. Um, there are. Other planning tools out there. I still use other planning tools for people in different life phases. Right. And we talked about that and that was a, a pretty common question. So I am gonna try to also answer subscriber questions throughout this, that from all three masterclasses. But yeah, I still use other planning tools, uh, for people in different life stages.

 

You know, younger people, savers, accumulators if you will, but for retirement. Income planning for anybody who's within who can see that finish line and they're about to retire, I'll call it even a starting line, right? Because really retirement is the starting line or who is already retired and actively taking distributions.

 

It's the only thing I use. And uh, just going back to masterclass one, probability success to me equals and my clients uncertainty, ambiguity. Clients stress, sometimes confusion and ultimately questions, right? Questions are not a bad thing. It's not, I'm not, I don't want the theme of this to be, we're trying to avoid questions from our clients, but what I would say is we're trying to avoid unnecessary questions or we're trying to avoid questions in redundancy, right?

 

The redundant questions where if you could answer them as a whole to all your clients. From an efficiency standpoint, obviously that would be better than having the same conversation over and over again. So down below, the way Income Lab does planning, in my opinion, it's a defined plan, predetermined actions to protect the plan, both in timing and magnitude.

 

Meaning the line in the sand is drone with the guardrails, and it also tells you what the magnitude of that change would be. When that comes to that, we're gonna, and I'm gonna go over this, I'm actually gonna do a full. Run through later of a plan. Um, so just hang tight with me for a little while.

 

Remember we went through this in masterclass one and just this was the experience, uh, during COVID of somebody who was using probability of success and how their, their meter changed drastically. And basically this, how this could, you know, at the height or let's say the bottom of the market would lead to the height of anxiety if you saw.

 

You are if you're a client, right? And you see your probability success fall sequentially down all the way from 76% down to 38%. Um, and we went through that in depth and, and, and this is a real example from a real client from that time that I used. And I just think it just, it creates again, like what's the line in the sand, at which point we need to make a change in that retirement plan, uh, to make it sustainable, right?

 

Where when you have. These specific guardrails in place, not only does it tell you exactly where you stand, so the software says, you know, it's kind of pointing here, here's where I am, down here, below that red line. That's where my guardrail is, that's where I need to make a change. And if and when I do need to make a change, this right here, this amount per month is the amount I would need to change to make the plan sustainable.

 

And it just that it is just a, a clear. Here's where we're going to do something and here's what we're going to do, as opposed to this, which is, ah, you know, our, you know, we, we don't, you know, we should just stick through it and we should just, you know, these things happen and markets will rebound, and things like that.

 

But that's not always true when it comes to somebody who has a limited timeframe, like a retiree, right? If you're a saver and you're 20 years old, you know, you, you invite. Market volatility so you can continue to contribute in 401k and buy cheaper where sequence of return risk as a retiree, especially in the early years, right, those first five to 10 years are, are, could be detrimental, right?

 

And we need to know, there has to be a point at which we need to make adjustments. And income lab is what's gonna show you, here's where you make the adjustment and here's what the adjustment's gonna be. Also, consider this. I have about 85 households in my firm. So 85 households, uh, manage about $130 million, right?

 

So. Out of those 85 households, about 60 something are retirees, and probably another 10 are going to be in the next year or two. So it's, uh, this is a, a very heavy retirement focus firm. Right. A lot of that has to do with the industry I came from. It's a, it's a seasoned industry, right? The average agent there, there's about 57, right?

 

So there's a lot of people knocking on the door of retirement. Now, let's say you have a market, market volatility. The market's going, you know, is just doing bad things like, you know, in 2020 or 22 or 2008, how do you monitor your plans if you're using a probability of success based software? How do you monitor those plans?

 

En mass? I haven't found a way to do it. I can't, I, I've never like, like there's no notification. If somebody reaches a particular probability of success number, there's no, um, there's just nothing that that will prompt you to have to do anything. So really what you find yourself doing as an advisor is maybe going through everybody's individual plan and kind of looking at their probability of success.

 

Now, there are some features in there where you can stamp someone's probability of success at different time periods, but if you fail to do that. You don't really know exactly maybe where they started pre-event and you're just kinda looking at it as it progresses. And again, you're looking at this over 80 households trying to figure out who needs to make a change and what that change might be.

 

Where really you can just do this. Right? And I just wanna make sure that I wasn't only sharing the PowerPoint. You guys can, should be able to see income lab. Justin, stop me if you're not, if you don't. But this right here, and this is just a demo, um, income lab. So don't, I only made four households, but this right here is your key to success as an advisor, being that if there's an issue with one of the plans, meaning that somebody hit a guardrail, right?

 

So if you have a bad market event, or the person overspends, or a combination of both, it could be anything, right? And this person needs to make a change in their plan because they hit that lower guardrail. This is gonna tell you. Right. It's gonna tell you what you need to do and why. So it's gonna say, okay, and just for the sake, this is not a real plan.

 

Uh, I, I forced it to kind of, you know, hit a guardrail and do this. So it's making a pretty drastic cut. 'cause I put a really drastic change in there. But just look at what it tells you, right? Due to an increase in estimated risk, the plan is calling for a decrease in income, so you don't have, once you implement a plan and implementing a plan means that you made the plan and then you go up here and you pretty much, you know, you would choose this option if I hadn't already implemented, which is basically monitored and track this plan.

 

You've implemented that plan. If you have your accounts in here automatically tracking, which you should, right? It should be linked to your custodian or wherever you might be, and I'm gonna show you a little bit of that later. Then this will automatically tell you if anyone hits a guardrail and what change you need to make.

 

So the efficiency gain from this notifying you versus going through and checking every single probability of success and seeing, okay, where do we start? Where are we at now? When do we need to make a change? What's that change? Moving the numbers around. Doing, you know, super solves and stuff, um, with the Monte Carlo to try to figure out how to get back to all of that is just, in my opinion, just, um, wasted effort and lost efficiency when really it could be, okay, let me log in, let me check my dashboard.

 

If I have multiple people in here, I want to see why. The beautiful thing about this needing attention feature too is that it's not only for market declines, right? It's for changes in pension or social security or, or somebody pays off a car and that was in the plan. Like, Hey, the car's gonna be paid off at this point or whatever.

 

It's gonna tell you that, so it's gonna prompt you. So you can go in and you can actually make that change and not have to just remember it's there or go and manually track all these down. I think that's wonderful. Uh, we also talked about this and I do think that this is a wonderful thing. For advisors to have four retirees because again, accumulator versus deac accumulator, retirees are much more sensitive to market volatility, even if it's only psychological.

 

Right? If the market goes down 10%, they in general, are gonna have a higher average anxiety and stress level than an accumulator would if the market went down 10%, especially if they just retired. I have found that retirees are very sensitive in their first year or two of retirement. Uh, 'cause they just want it to go, well, it's new territory.

 

It's the biggest life change they've made probably in four decades or so since they, you know, got married, had kids, bought a house, all those things. Right? So this downmarket plan is a scripted defined, here's what we're gonna do and when not only is this great for you as the advisor to have some structure like this.

 

But it's also a great thing for the client to know, okay, I, this is when this is gonna happen. Right. And we talked about how you can even turn this, and this was in, um, masterclass two. Uh, would highly recommend going back and watching this. How can you turn down markets into a positive experience for a client?

 

Well, number one, it's having this out there so they know what's coming. Two is changing either the speed or the timing. Maybe even the magnitude of your Roth conversions based on how far the market's down. And we talked about, and we went over the math of how much more powerful a Roth conversion is when it's done in a down market versus an up market.

 

So, um, you know, sharing this with the client, you know, you could do rebalancing at 10%. You, you know, you send out an email that's gonna refer them back to their guardrails and their video. That video is something I'm gonna show you a little bit later. That's. Great tool to save you a ton of time and just have, improve your communications with your clients a million fold.

 

Uh, you can move your Roth conversions a little further to the left. If you already plan on doing a $80,000 Roth conversion that year. You could move that up and do 40,000 of that immediately if you get a 10% drop. You could also start hosting market webinars if at a particular down market. And you can eventually get to the point where maybe you're even increasing equity for some people who either dollar cost averaging or have the um, let's say the risk tolerance to increase, but for some reason they're not at their target equity.

 

So I think this is a great thing, having this plan out there, it makes you more efficient, it makes your clients more comfortable because they're expecting what's coming, so they don't have to reach out and ask, what's coming next? What do we do next? They know this, it's publicized. It's right there for them to see.

 

And of course we talked about how in Masterclass two, the efficiencies in doing tax planning with Income Lab, I think are just unparalleled. It's, it's a great visual for the client to be able to see that, especially when you do it in Life Hub. Uh, so highly recommend going back and watching that as well.

 

And then the efficiency in creating plans, right? I mean, live in masterclass three. I think I created like four or five variations of a plan. Um, but just like how easy it is to go in and make, you know, a new, a new version of a plan. So like, let's say I have this plan for a retiree and it has a slush fund in there and it has their long-term care costs built in.

 

If you're not sure of like the terms I'm using, uh, they come from the last masterclass. So, um, but what if I have a client, you know, in this version of the plan, we're planning on them taking social security at 67. They say, Ryan, can we run over like some scenarios in which I take it at 62, like I'm just not sure.

 

Uh, so it's as easy as copying a plan. You can put it SS early or SS at 62 or whatever you want to name it. Go into income and you can do this for a lot of different variables. So it's not just social security, I'm just kinda showing you and you just move the social security down to 62. You go ahead and run and you've got a new version of the plan in which they take social security early.

 

And that's gonna change not only the income, um, guardrails, things like that, but it's also gonna change the tax plan. It's also gonna change the, um, the stress test when you go through and show the stress test, right? So it's the ability to be able to now show them this new plan, and then you can go through and show 'em side by side and see.

 

Okay, like what is the difference between one and the other? And that's just the efficiency of being able to do that so quickly and so easily and be able to do this, you know, even live in a meeting, right? If a client asks you, Hey, can you show me this? I did that in 10 seconds and I can do that and then pull that on the screen and say, yeah, absolutely, I can show you that, right?

 

So, um, I just think the efficiency in creating new versions of the plan is amazing. There was a lot of, I mentioned this in a, in one or two of the masterclasses, and there was a lot of interest in this, and I could honestly go through, I could talk about this all day. Uh, but, and we may even do another class on this later.

 

Um, I use an, i a lot of my, my clients, you know, and, and I do firmly believe this too, like sequence of return risk is a real thing, and especially if you're using a front loaded plan where you're spending a little more money upfront. Detri, you know, like detriment to your portfolio in the early years.

 

Like if you, if you had a 2008 in the early years of your portfolio, not only can you mitigate that with, by following the guardrails and everything like that, that are prescribed an income lab. But I also like from a psychological standpoint and also a math standpoint, I think it makes a lot of sense to use something called time segmentation, also known as the bucket strategy.

 

Right? Um, so for me. Let's say, for example, I have a client that they don't have a really high risk tolerance. I'd like to get them more involved in the market, like I'd like them to own more equity than I think they should own right now. Especially if they have some pretty lofty spending and legacy goals and things like that.

 

How do I get them to do that? By not communicating like, Hey, you're gonna own a 50 50 or a 60 40 or something, but let's talk about the number of years we could cover in non. Like things that don't really have much principle risk, and then we can allow the rest of your portfolio to be in growth assets so they can grow for later.

 

So, you know, what I typically do is, let's say for example that I had a client and they're retiring, right? Like, you know, right at the end of December. Uh, so 2025 will be their first year. So we're gonna look at income lab. And we're gonna see, I'll go back to my old plan

 

and we'll go to cash flows, right? When you're building a time segment segmented portfolio, you're building the portfolio based off of cash flows. So if we're taking a look at the cash flow table, it's gonna show us right in 2025, we need this much. 132,000 in 2020 or, or 2025, sorry, 186,000. Now that's counting the $50,000 slush fund I had in there.

 

So I don't really have, uh, that's not super accurate. Um, then we have 138,000 141,000, 144 and so on and so forth. And then you see eventually there's withdrawals go down significantly. As other income sources kick in. So we've got a pension, we've got social security, we've got all these things, right? And we're like, how do we minimize sequence of return risk of doing these big withdrawals early in retirement?

 

Um, if we, you know, this person were to retire and have like a 2008 happen, how do we, how do we do, you know, from a portfolio perspective? So I do it like this. I take income lab, I take these numbers and I plug 'em into this little thing that I made. And it's showing, okay, what is the cash flow needed for that year?

 

So let's say they need 132,000 gross, here's the total portfolio value that they have. Here's what they're gonna get from yield and dividends. So the yield from bonds, the dividends from stocks, things like that. That's what I calculate that they're gonna get that year from a portfolio worth this. They, you know, and then I subtract the advisor fee from that.

 

So that way it's, it's very like accurate as in like, okay, even net of my fee, this is what you're gonna get in yield and dividend. That would mean that if the yield and dividends coming into the portfolio as cash and not getting reinvested, which for retirees I think they should be, they come in as cash fees already gone.

 

This is the actual dedication or thing I would need as a bucket to fund 2020 five's retirement. Then I would decide what the proper instrument for that is. And for the first year in retirement, it's probably just cash and money market, right? There's a lot of great money market funds out there paying four and 5% right now.

 

It's a perfect place to keep a year's worth of retirement cash. Well then if you look back in 2026, I need this much. I assume the portfolio didn't grow because that's the whole point of this is the market's going down while this is happening, so how? How do we have dedicated instruments with no principal risk that we can spend from, and then we need that dedication.

 

And I'm gonna use a CD for that one. And then next year we dig this. So I need this dedication and I'm gonna use a close end fund for that one. I'm gonna use a growth structured note for some of the longer term ones to get some growth out of the market. But basically what we're doing is taking sleeving each year's cash flows for whatever number of years you think is appropriate for that client, right?

 

So some people with a high risk tolerance, maybe three years. Some may be five, some may be very, very conservative and want eight or 10. So it's an easy way to say, okay, well the Great Depression was, you know, the, uh, portfolio. Like this was down for this many years, global financial crisis down for this many years.

 

Here's the number of years we're gonna build in, right? And then basically I'll take that and I take these dedications that I need and I'll build them into a portfolio that looks like this. So that way Cash and USFR, that's the one I usually use, are used for year one, year two, year three, year four, year five, and so on and so forth.

 

And then the rest will all be in growth assets. Now here, it's just re represented by the s and p. It wouldn't really just be the s and p, but you get the point, right? And the funny thing is, is you know, for somebody who has, let's say the risk tolerance, normally would've had 'em in 40 or 5% equity or something, when you explain it in this manner, a five year or six year bucket port or whatever it might be.

 

Then it actually can get them to have a little more market participation. But from a psychological standpoint, you can tell them, well, if you retire and the market's down that first year or even two years, or even three years, you don't really need to worry about it because you're not drawing from things that are down.

 

We're gonna give that time to recover and grow. I could talk about that literally for hours. Um, but I love that strategy. Uh, it makes a lot of sense psychologically for a lot of retirees, not for everybody. But for a lot of retirees, especially trying to get people to do participate a little more in the market.

 

Alright, so this is a tool that I use and it's probably like one of the best things that I started using a while back. It's the video retirement plan. And the video retirement plan is a way for me to share the details of a retirement plan. A, in whatever depth that needs to be shared with that particular client.

 

So you may have some clients that want high level detail. You may have some that want, just gimme the 50,000 foot view, gimme the cliff notes. Right? Um, but it's a way to share that with them and not just share like this big report. Like, so if you create this report, especially in some of the probability success, um, type of programs, the report may be 150 pages.

 

Well, although that may look impressive. For somebody, a client, an end client to read that, like it's, it's a little difficult for them, especially six months later when the market's, you know, going down, where do they look in there to see that everything's gonna be okay? And that's really all I want to know.

 

Right. So I'm actually gonna record one live for you right now and show you what does my video retirement plan look like?

 

So just bear with me. I'm gonna get it set up real quick. I've never recorded it live with like another Zoom or something like that going. I'm gonna attempt to do it. If it doesn't work, it doesn't work. Um, and then I'll just go through and talk, uh, through, through the video. But I'm actually gonna record it 'cause I'm, I'm going to, as long as it goes fine.

 

I'm gonna share that with you, everybody at the end of the webinar so you can have that and hopefully take it and prove it, adjust it to your, uh. You know, to your firm. But here's kind of what that looks like is, you know, I'll start out with a slide with something personal, like a picture, and I'll say the Dave and Diane Retiree.

 

Retiree is their last name, by the way. So that why it looks a little weird. The Dave and Diane Retiree income plan. And then I'll say, okay, so let's go ahead and let's see if this works. All right, so I use Loom and I can't use my camera. Because I'm using it for this webinar. Um, but normally I'd have the camera on and I would go ahead and just start recording

 

and lemme make sure I'm not messing this up.

 

All right. Here we are. We're recording. And you can always edit these, you can trim 'em. So like all the talking I'm doing right now, I would trim off of it, but I'd start here and I'd be like, alright Dave and Diane, I'm really excited to share with you your video retirement plan. We've got months and months and many meetings in the plan in your retirement, and I'm really excited for your retire and, uh, January of 2025.

 

So let's go ahead and go through your plan. And just some of the features that we, that we chose to incorporate into the plan. Right? So your, your first month as a retiree is gonna be January, 2025. We did add in a slush fund to $50,000 into your plan. Just remember, the Slush fund is a. Pile of money that is not counted into the calculation for this monthly income that I'm about to show you.

 

It's a pile of money in which you can reach in and spend some or all of it at will at any time when you want to and not impact any of your monthly numbers with the caveat that it's most likely would be a one-time use, but it does give you the flexibility that. Early in retirement, you want to take a trip or whatever that looks like along the, especially in the early years of retirement, you can use a slush fund as you see fit.

 

We also incorporated $80,000 per year for the last three years of your plan for long-term care costs. And of course, that $80,000 is adjusted for inflation, so it'll keep up and it'll be come, whatever the cost is in the future. Of course for your assets, we've got your 4 0 1 KIRA and a brokerage account.

 

Of course, these are all linked, so that way these numbers will track automatically as the values change, and that way I can keep track of your plan and um, always make sure that it's on track and that there's nothing that we need to make an adjustment on

 

for your income. We've got your social security in here, and right now we're planning on taking social Security at 67, but we did talk about at, when you do turn 62, uh, we are gonna have a conversation about that and just make sure nothing changed in your life, health status or anything like that. And then every six months we'll kind of revisit that.

 

But our goal is to try to get you to 67 to maximize your benefit. And of course you do have your, your, you know, your pension. That pension doesn't kick in for a few years. Uh, but that, that is incorporated into here. We've got your mortgage in here, which ends in 2034 of $1,800 a month. And of course, from an expense standpoint, right, we built in that slush fund and we built in those long-term care costs, right?

 

So if we go ahead and take a look at your retirement plan, right? Your retirement income. And remember, this income is going to be what you actually receive in your bank account. So this is net of taxes, so the money that goes into your bank. Every single month. You do not need to save for taxes or anything or make any payments or anything like that.

 

I've already withheld and I've already sent that over to the, to the government for you. So that's money for you to spend on what you need to spend on. So this is your monthly income net of taxes. You can see from a, you know, just kind of like what settings do we have. We do have a fairly. Um, I'd say moderately aggressive front load on the plan, and that's just meaning we're moving some of the, spending more towards the early years in retirement.

 

That way you can enjoy those, those early go-go years of retirement as much as you can. We've got your portfolio in here set at a, the 60 40, which is that bucket strategy that we talked about. Just to recap that, remember that we've got. The time segmented portfolio built for you. It ends up being about 60% equity, but the goal of this is to have these dedicated cash flow instruments in here so we can, um, have I'd say principle protected places to pull cash from as you progress through your years in retirement.

 

And you're not as subject to the sequence of return risk that we went over a few times. Right.

 

No particular legacy built into here. 'cause you said you didn't have anything particular you wanted to leave the kids. Here's your retirement guardrails, right? So these are very important. These are the places at which we have drawn a line in the sand at which you are either in a good way, not spending enough money, right?

 

So if your portfolio value, which is this right now, grows to be this number right here, then you're basically at that point not taking enough outta your retirement. And you can, if you want to take this $850 per month raise. Now, more importantly, as a retiree, I don't want you worrying about the markets, right?

 

We are going to see throughout a 40 year retirement, we're gonna see multiple bear markets, multiple recessions. It's not a matter of if, it's a matter of when, but when that happens, I want you to know that your portfolio would have to fall all the way down to this number, which is a 21% drop before you hit a guardrail.

 

And if you did hit that guardrail, you would have to make this $463 a month pay cut. At least for a finite period of time to make the plan sustainable. And we've already talked about that out of this number, that $463 a month would not impact your life. You already said, we have plenty of money to do all the things we want.

 

And if we took a $463 a month pay cut, we would not, um, it would not materially change our retirement. Now, of course, remember that cash flow. Is meant to be levelized, meaning that you don't get a raise when your pension kicks in and you don't get a raise when social security kicks in. You also are not gonna get a net raise when your mortgage is paid off.

 

What we're looking to do is equalize the income so that way when social security kicks in, at that point, we're just gonna take less from your investments and you're gonna maintain the same overall level net income coming into your bank account. Same thing with the mortgage. When the mortgage is paid off, we're gonna reduce your income by the amount of the mortgage.

 

Year after mortgage. Lifestyle is gonna be exactly the same, but we are gonna reduce it. And the reason why we do that, these two things is that so we can spor spend more money in the early years in anticipation of these things happening later. As you know too, you know, just like we just talked about that bear markets and things like that are going to happen.

 

Let's go ahead and stress test your plan real quick. And if you retired, you know, let's say you retire right now, January, 2025, you're super happy, retiree, you're celebrating, and in February, 2008 repeats itself all over again. This is what your income experience would be. So not only do we have a portfolio that's built to have multiple years of dedicated cash flows in them, but we also have these guardrails in here to protect.

 

If the 2008 happened again, you would take one pay cut right here, a few months in, and then a second guardrail, and that's it. So your, your reduction in income would be about $1,200. We talked about that as well. We, you know, your base load expenses are about 4,000 a month. You're gonna receive about 9,000 a month.

 

So taking yourself down to about 8,000 a month is not gonna be detrimental to your necessary expenses and also leaves you plenty of money. Now look how this. Income reduction is only temporary, right? We make small changes for a finite period of time to make the plan sustainable, and then you get the raises back and you get your money back as time goes on.

 

Right. Now, we talked a lot about taxes. Remember that our goal is to do smart tax planning. You remember that graph I showed you with the buckets of how we're gonna move some money over every single year and do Roth conversions. But then eventually we're gonna have a pile of taxable money to take advantage of the standard deduction and the low income and the low tax brackets.

 

And then we're also gonna have this pile of tax-free money in your Roth, at which point we can spend from and make up your whole income. But keep your effective, your average tax rate, very low. So as you can see over the course of time, we're gonna take your tax rate, average tax rate from 14.9% down to 5.2, which is a 9.8% saving.

 

Saving a ton of money in taxes. And then also, like you talked about, if you do wanna leave the kids something, which you do, you wanna leave them, whatever's left. A Roth IRA is a beautiful thing to leave them 'cause they inherited tax free. We're gonna do this by doing systematic Roth conversions every single year.

 

These are kind of the ones that we have planned. If you take a look, everything in the purple is a Roth conversion. So we do those in the beginning. Right. But remember that there's a lot of other factors that go into it. So we use this to go through and put everything in. We've got the little bit of wages you're gonna get in 2025 from selling back your vacation.

 

We've got your interest, your dividends, we've got everything like that in here. Now, in the first year or two of retirement, you're gonna live off that brokerage account 'cause you have a really high cost basis in there. 'cause a lot of it was in bonds and cash and things like that. So you're not gonna have a ton of taxable income.

 

You're gonna have the pension, you're gonna have the dividends, you're gonna have the capital gains we need to incur to free up that income. But really what that's gonna do is leave you a lot of room, especially in your first year or two of retirement, to get a really big head start on your Roth conversions.

 

And depending on whether we wanna stay below the Irma limit or not. Now for you, we don't need to 'cause you're only 62. But if you wanna stay below these limits, we can convert. Up into the six figures, and of course we're gonna go over this at the end of the year unless we get a down market upon which we will implement our down market plan of this and possibly pull some of those Roth conversions over to the left.

 

So remember at these. Points in your, um, in market declines. We're gonna do all of these things. Rebalance. I'm gonna reiterate, right, if the market start to get bad, I'm gonna send you out an email that says, Hey, watch this video again. 'cause this video is gonna show you all the things that you need to know to make you feel a little bit better about the market going down and how we can take advantage of it and how your stress test protects it and how the portfolio we built.

 

Is, is meant for down markets and how this plan is actually gonna help you take advantage of that. So that's exactly what this video is for. It's for you to rewatch it whenever you have a little stress, a little anxiety. It's not a substitute for a conversation with me, it's just something to be able to, uh, refer back to if you want to.

 

All right, Diane, Dave, I'm very, very happy for you. Congrats on your retirement. Of course, uh, you know, we got a lot of things logistically left to do before the end of the year to get you ready, get your, your payments and everything set up. Uh, but I'm really happy for you. I'm proud of you, and I'll talk to you soon.

 

Take care.

 

And that's it. That's the video retirement plan. So what that does is I, I put that in. They're basically whatever version of a vault or anything you have, if you use box, if you use, uh, Orion and you share in their vault or whatever you, you know, or advise on, you end up sharing in their vault, whatever it might be.

 

But that video lives in their login when they go into their login and look at their portfolio and things like that. Right. And the reason why is because that's a lot easier to follow than going and looking at that 150 page report. It's. Very to the point. You can customize it, but it's also now a, a reference for them to go back and look at it anytime.

 

So what happens is when markets start to get a little volatile or there's anything going on in the world or anything like that, I will send an email out that says, Hey, I know things in the market are getting a little rocky. Go ahead and watch your retirement plan video and then if you have any questions, set something up with me.

 

Let's talk. And then I put the link in there for them to book a meeting. And I think in my opinion, from an efficiency standpoint, doing that drastically reduces the number of individual conversations that you need to have about the markets, which will allow you to do proactive things like host. Market webinars for all of your clients and things like that.

 

So we're not trying to avoid conversation again, we're just trying to have them very efficiently and communicate in mass answer questions in mass. That way the individual conversations we do have can be very targeted and not redundant. So for me, in conclusion then we're gonna open up for pretty, you know, look good.

 

Extended q and a Income Lab is the best tool available for retirement income planning by far. Um, like I said, I still use other tools. It's not meant to be a replacement of those tools for those people in those life stages or for those modules if you're trying to figure out insurance, things like that.

 

But for retirement income planning, I do not believe that there is anyone even close out there, uh, to be able to provide the experience and the defin from, let's say, the definitive nature of income lab versus the ambiguity of probability of success. Uh, I do believe income lab because I've seen it, I believe income lab will improve your retiree's confidence.

 

They know exactly where the line in the sand is, and they know that if they do need to take a pay cut that they can afford it, right? It, um, as opposed to a probability of success that falls from 76% down of 38%, uh, that can be, that can induce a lot of stress. Uh, income lab will make your firm more efficient, so not only in creating plans.

 

Communicating plans, making these retirement videos for people to refer back to. The monitoring feature of being able to see what plans need attention, like if somebody hit a guardrail or had a change in income and because of that. Income level earn you more business. I don't think there's a more powerful marketing tool on the planet than that, especially when you show the guardrails of how to protect the plan and then show the tax lab.

 

Those two things together, uh, have been very effective in me earning, um, new clients in a very efficient manner. So, um, yeah, that's, that's, that's how I feel about it. It's a fantastic program. Uh, Justin, go ahead and open it up for q and a.

 

Thank you, Ryan. That was, that was awesome. And we do have a bunch of questions. Um, just sticking with what you just went over, um, do you ever redo those videos, you know, years into retirement just to update 'em? Absolutely. Absolutely. So, um, yeah, I mean, that's, that is a, it's a living thing, right? And, and then you can even, you know, archive the old videos so they can see how things evolve.

 

Uh, but yeah, it's really important to, and, and that's where it gets personal, is that you, you know, you can redo the video if they have a big life change. If they, if they, uh, file for social security and you, and you, you know, you're now showing them the post social security plan. Uh, if there's a lot of different things that can happen redoing those videos for sure.

 

Right. You want to keep it up to date so that way it's something they can refer back to. And as you saw, it only takes about, you know, six or seven minutes or so. You're using Loom for that video? I use Loom for that. Yeah. It's really quick and cheap and efficient and works well. And do you, are there any deliverables, PDF deliverables or that you're sticking in that, you know, box account or, or whatever?

 

Yeah, I, I do still share all that. 'cause you know, the vast majority of my clients are engineers, nuclear, especially nuclear engineers. Um, they want to see charts, graphs, they love the, even if it's just outta intellectual curiosity, they. Love to see all of those things. But when, when things get, get stressful, like in markets and stuff, this is what they refer back to.

 

And especially, you know, there may be spouses that are wired a different way and they're not the analytical type person and they just wanna see, okay, how is everything gonna be okay? Uh, so that's, this is a really good just couple minute way for them to go back and refer to all of the wonderful work that you put in.

 

Um, so yeah, um, I do still share all that other stuff, but this kind of becomes like the anchor of the plan. Okay. And you're, you're recording those videos separately on your own time. That's not a recording of your meeting with the client, is that right? No, it's, it's separate because, um, you know, you want it to be relatively short.

 

Uh, you don't want them to have to watch back like an hour long meeting or anything. It's really after we've gone through a significant portion of the planning. We've made decisions on things like, are we gonna include a slush fund? Are we gonna plan for long-term care? How are we gonna do that? What's our portfolio gonna look like?

 

Pretty much when they're ready to retire, or even, you can make it as, okay, you're a year away from retirement. Here's all the stuff that we've done so far. Here's what, and here's what we need to do in next year. You really can customize these, uh, pretty, pretty well to fit whatever need that you have. Yeah.

 

We had a couple questions on what you're using there for the portfolio details or for market webinars, charts and things. Do you have any suggestions for people where you go for those? Quanti? K-W-A-N-T-I, quanti, that's the, um, the program, if you're referring to this one right here. Yeah, it's called Quanti.

 

It's fantastic. Cool. Had a couple questions on the, the spending, the expenses that you put in a plan. I know this was just an example plan you had, but do you have thoughts on deciding which expenses to enter as line items there? You had the mortgage and the long-term care. Um, somebody said, you know, seemed simple just to have kind of a,

 

I think Justin incredible detail. What are, what are your thoughts there? I mean it, it's the further you get into the plan, the more detail you typically have. Like if you're starting with a prospective client, keep it pretty simple and you're trying to earn the business, but then when you start to actually get into the depth of income planning, yeah, you could put in, even if it's just for reference, right?

 

It's really nice to have things in there just for reference. It may not, you know, entering baseline expenses and things like that. An income lab may not generally change the outcome, but it's nice to see like. If you could go in there and see, Hey, I, I like, you know, these clients like to gift their kids $18,000 each year, or they have this expense that's really important to 'em, or, but yeah, you can enter as much or as little in there as you want.

 

So typically it starts very light. Uh, but then as we progress into them actually retirement, we put a lot of detail in there. You know, how much more is their medical gonna cost pre 65 versus post 65 that can go in there. Uh, car payments. There's all, there's all kind of things. So, yeah, that, I kept it pretty simple for this webinar, but I like, I do like to add a lot of detail.

 

Yeah. Um, this was kind of an interesting question, just getting to the, uh, you know, as time goes on, the, the, this person, uh, anonymous attendee, um, says I have at least one client who likes to budget for the year ahead and use the spending capacity. At year end to, to just forecast that. Is, is that, does that make sense to you?

 

I think the behind this, if I read on, it's basically like, well, you might hit a guardrail midyear and have to make a change, but is that okay to kinda set their expectations using that? Um, I mean, I would say yes, but I don't, I don't know if you have thoughts on that. Yeah, I don't say why not? As long as they know that, you know, there's a chance of hitting a guardrail.

 

I, I haven't had, um, I've had people come real close. I, I've, I've had. One person hit a guardrail. Um, but it was a combination. And that's the great thing about it, right? It's not just markets. It could be their spending. Um, if they, if they're spending way more than what, you know, we budgeted for whatever reason or markets or combination of both or whatever.

 

But, um, yeah, I mean, that's, spending capacity is there for a reason. It's nice for people to see what they can spend. And here's a, here's a great part about that, is if, if you just pay attention to your clients, even maybe their body language or, or. And let's say that their income's gonna be 10,000 a month and their, if they had to take a pay cut, their guardrail would be a thousand a month.

 

Right? Because they've got it really front loaded or whatever, right? If you tell them that, and they kind of squirm like, Ooh, a thousand a month from 10,000 outta 9,000. Now that would hurt. They maybe shouldn't. I either maybe should not be retiring or they should. Um, maybe we should take a deeper dive into their budget, or maybe they should still work part-time because let's say for example, opposed to somebody who's getting 10,000 a month and their baseline expenses are only four grand a month, they could easily take a thousand a month pay cut for a finite period of time.

 

But somebody who has. A mortgage, a home equity loan, a mortgage on a beach house, and you know, two cars and this, that and the other. A thousand a month may put them pretty tight and that could be an indicator that maybe they shouldn't be retiring and you need to dive deeper into their budget. So it's a really good tool that sharing the guardrail, kind of looking at their reaction is a really good way to judge if they're kind of riding the line on their necessary versus discretionary expenses.

 

Yeah, that's a really good point. That's a really good point. And what you said there also addressed another question we had, which was, you know, how do you track spending and so on. And your point is, if they're spending from their portfolio, it's gonna be caught by the, by the integration. Sounds like you, you use the integrations.

 

If you didn't have integrations or aggregations, then you would have to do a lot a, a, a little more, maybe it's once a year, maybe it's, you know, twice a year kind of checking in and making sure you kind of reconcile those balances through, you're capturing any, you know. Accidental or on purpose, uh, extra spending.

 

People are getting, um, this is an interesting question. Um, people are bad at imagining how they will react to negative markets. Um mm-hmm. I think that's probably true. Right? Especially if things are good, you can think like, oh, I'll be fine. Right. Um, so how do you explain to clients the confidence they'll feel knowing the exact market value to make a change?

 

Basically what's what? What's your approach to really getting people to think, think that through? I the, one of the most important things is making sure that the pay cut, like I just talked about, is not detrimental or else they probably should not be retiring or should consider working part-time or something like that.

 

Um, the, the, the retirement stress test and the recreation of different events really does help. People under, like when they see that. 'cause all of clients who be would be retiring right now lived through 2008. So they remember it. And even as an accumulator, it still made everybody very uncomfortable. So if you can show them as now that you're a, you're a de accumulator, you're a spender, right?

 

And there is no more 401k, there's no more income, there's no more contributions. You're living off of this. And if 2008 happens right after you retire and you only have to cut your pay by X amount for this amount of time and your plan's still sustainable for a very long time, I think that's super empowering.

 

You can, you can do that with probability success, but it only shows you needs, wants and wishes and how the meter changes. It doesn't show you the actual line in the sand. Nor does it show you what the magnitude of the change necessary to get the plan back on track. And some people might say, and I've this is these, this was a multiple question thing in the feedback for us, I want to answer is, why such a small change, how does that impact the plan?

 

Like you see it's only, you know, a couple hundred dollars a month, right? Well, one, the idea is to make small changes and not overreact. Let's make a small change. Let's reset the guardrails and then let's reevaluate for where the next one would be. Now two is just like you tell young people when they're 20 years old, a little goes a long way if you do a small pay cut, which then compounds over time.

 

A little also goes a long way in a 40 year retirement when you made the adjustments you needed to make. So, um, that's the best way I know is, and I will tell you for people who are particularly nervous risk averse, all that. We probably have three or four redundant meetings where we go over the same stuff because each time they get a little more confident.

 

Yeah, those are both, and it's not with everybody, but some people need that. Those are really good examples, and I like that in your example, you actually bumped them over to be a little bit more aggressive because that also, that made them have two pay cuts in the global financial crisis. So then they can see, oh yeah, it's, it's not, well, here's our guardrail, we hit it.

 

That's the only change you'll ever have to make. No, obviously things could keep getting worse. Right? And then you have to make multiple changes. And we did have a question about like how much you customize or adjust. Those settings for clients to kind of try to dial it in and what you're thinking about when you're deciding where to go on that scale or even getting know even more so in making even super, super customized settings.

 

Well, the front loading has a lot to do with personality, and we do that assessment, remember I showed you the assessment masterclass three to, and it's a specific question, right? It's very ask them about front loaded versus back loading. It's a really easy way to translate that assessment. If you haven't watched that, go back and watch.

 

Into like their front loading legacy. For the most point part, people don't want, the vast majority of my clients do not have a particular legacy goal. They wanna leave whatever's left, is left including the house. And they, maybe I see this much more popular than ever is they want to gift along the way so they can help their kids in a time where they need.

 

More money, right? Leaving your kids if you die at 90 and leave your kids, you know, whatever pile of money when they're 60 something, does that help them as much as 18? You know, 36,000, whatever it might be when they're buying a house. Probably not. Right? Um, so that's why I like all of those different customizations and adjustments.

 

And if you saw a masterclass three. I like to also present those different options. Here's what your plan looks like monthly with no slush fund. Let's add the slush fund. Here's what it looks like. Let's add slush fund and long-term care. Here's what that looks like, and just pile that on. And that also empowers the client that you're educating them and they get to choose their plan rather than you prescribing it for them, which I think is powerful.

 

Um. We only have a few more minutes here. Um, we do have a lot of questions about kind of how you were working back and forth with holistic plan there. Do you wanna address that? Some people are worried, is there like redundancy? Are they doing the same thing? Are you using 'em for different things? Um, so yeah, maybe, uh, you wanna address your, your broader tech stack here.

 

Yeah, I mean, I, I stand by the statement in that, um. We did a whole webinar on income lab and holistic plan. I highly recommend watching that. Uh, it's an hour long of me jumping back and forth between the two, but if I had to pick two, uh, pieces of, of technology to run my firm for the rest of of time, it would be income lab and whole is the plan.

 

And income lab, for the most part, has given you the broad. Client facing, here's what we should do and here's some really great ideas and things like that. And holistic plan is where you get surgical with it, which is gonna have every single detail. You can import their old tax return, you can compare that to this year, make sure you're not missing anything and right.

 

So it's, those two together are extremely powerful. So if you're doing retirement income planning and tax planning for clients at this level, using those two programs, um, yes, everything else is great. But for a retiree like that's the bread and butter. Wish I could give you a longer explanation, but I would say go back and watch that other webinar.

 

It's, it's, it's an hour long of just nothing but that. Yeah, we do have a few webinars. I think there's one with Ryan on Holistic Plan. There's some others where other advisors are talking about their tech stack. Um, you know, so much of that will depend on exactly what you do in your practice. But, um, yeah.

 

Those are good. Those are good ones. All right. Probably have time for, um, at least. One more. Um,

 

okay. Best practice question. Are you trying to get everything into the plan, all their assets, all their rental properties, homes, everything like that? Um, my guess is it might have to do with, like you said, maybe, well, if it's a prospect, it might be one thing and then it gets more more specific. But, but yeah.

 

How do you do that? I would assume it would have to do with what you want life hub to look like as well. Yeah, it, it depends on how they kinda look. You know, it, a lot of it might have to be with how that client looks at their finances, but it is nice to get everything in there so that way it makes, it makes the cash flow chart look a particular way.

 

It makes life hub look a particular way, uh, which is good. It also helps from a tax perspective how things are taxed and your, your Roth conversion stuff. So. Um, for, for like a prospect? Probably not. Um, we're just kind of going, I would probably say more high level. Let me just show you what your, your IRA and your Roth IRA can do for you.

 

And then you can add your rental income on top of that. Um, but as we, as we would actually get into planning with an actual client, an actual, like soon Tobe retiree or something, I would wanna put that in the. There, and I know you discussed this, I think it was in the first session, but how do you, if you're comparing two options, like you just said, you like to kinda layer on new things.

 

How do you, how do you compare those? What, what, what's your go-to in the app or elsewhere? Yeah, just, I just do it live right there in the app. I mean, I'm, I'm not making PowerPoints or showing, uh, PDFs or anything in a client meeting. I'm just driving through the software, like I'm just going, I'm just going right through it.

 

Doing exactly what I just showed, all of you. So if I'm here and I'm showing multiple scenarios, I'll start with this one, which is the every dollar gets count counted towards the plan, and then I go to the, let's add the slush fund in for flexibility, and then I'll show them the let's add the slush fund and the long-term care costs.

 

Now let's add the slush fund, the long-term care costs, and $500,000 to leave your kids, if that's just so you can see what that takes. Um, and then they will say, you know what? I don't want the legacy built in there 'cause it's just not for me. Um, we have particular goals. I do want to do long-term care at this amount, uh, and I do want the slush fund.

 

They can pick and choose what they're looking like and you can compare them pretty easy by going through 'em in detail. But then showing this main page where you can kind of see the spending capacity, uh, for each one of them, uh, all in one. Right, right. Right. Great. Uh, we did get through a lot of the questions.

 

I know there were some left over. We will, um, respond if, if you're, you know, logged in with an email, we'll respond to you directly on those. Um, and, uh, I mean, this is a point where if we were all together, we'd all stand and give you a, you know, a, a standing ovation here. Right. This was awesome. I really, uh, really appreciate it.

 

And I know, um, the, you know, probably I, I don't know. How many unique visitors we've had to these masterclasses, but I wouldn't be shocked if it's over a thousand. Um, and uh, yeah, it's just been, just been great. So really appreciate it, Ryan, and as you said, um, you know, we will, we'll be future. Um, thank you everyone for attending and, um, please do check out all the materials on the masterclass page.

 

Um, and, uh, you know, hope this is really, uh, helpful for your practice. Yeah, if you, um, if you have an income lab question, send it to, to Justin or to the income lab team, but if you have a practice management or how I use income lab question or just anything about the whatever, um, I have have many people send me questions that I respond to all of 'em.

 

So feel free, [email protected]. All right, thank you, Ryan. Thank you everybody. Take care, everybody. You take care.