Holistiplan + Income Lab: Differentiating Your Practice with Ryan Townsley (Part 2 of 2)

Well, I may just start with some intros and um you know, people will potentially miss a few of those, but I know there

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are, you know, hundreds of people already here, so I don't want to um wait

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too long on this. I'm really excited for the the webinar today uh between Income

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Lab and Holista Plan. Um, HostPlan is a a great firm that we've known now for for years. Um, and have been um, you

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know, I think we we kind of are are on a a similar road to really advance the

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kinds of tech that advisers have access to and deepen the the sorts of value

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that that advisors can bring to clients. Um, and a lot of adviserss who use

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Income Lab also use Holista Plan and vice versa. So, I think this is a really great opportunity to um kind of expose

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people who maybe are familiar with one and not the other to um the other platform. And then I what I'm most

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excited about is hearing from uh an adviser who actively, you know, from the

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sounds of it daily is using income lab and holistic plan about how um he runs

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his practice and um and giving us some some insight into that into processes

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and practice and client communication and prospecting and so on. So we're going to get to to all of those things.

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Um so first some introductions though. Um so I'm Justin Fitzpatrick. I run

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product at Income Lab and I'm one of the co-founders. Um we also have uh Laura

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Bolio uh who is uh VP of marketing at Holista Plan. Um and we have Ryan

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Townsley who's the owner and lead financial adviser at Town Capital. Um

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Ryan, I think your your story is really an interesting one. Uh Ryan spent um six

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years uh in the US naval nuclear program, 13 years in commercial nuclear

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power. Um and so long history in um in nuclear and he now owns and operates the

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only financial planning firm in the world dedicated to serving his former colleagues in the nuclear industry. Um

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and he specializes in retirement income planning and tax planning. So, obviously

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a great uh a great person to to have um on today's webinar. Um we're going to

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start out just by

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um we're going to start out uh again giving everyone a feeling for both um

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Holista Plan and Income Blab, our missions, kind of how people tend to use things. We'll do a quick sort of 10

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minutes or so on each um on each software program. Um and then we'll

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we'll get into the meat of talking with Ryan, hearing about um how he is running a practice that focuses um on those two

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things. So really excited for for the agenda and um I want to turn it over now to Laura to give us a a little bit of an

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overview of Holista Plan. Oh, I would love to. Thank you so much, Justin, for having us. We're we're thrilled to be

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here. We we saw the love, the shout out from Holistic from Kim. So, thank you for that. So, I'll go ahead and share my

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[Music] screen. Okay. Can everybody see my my

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screen of the Holistic Plan dashboard? Looking good. Okay, cool. So, Holistan is a tactical tax planning tool and our

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goal is to make tax planning achievable and attainable for all adviserss. So, we firmly believe that all clients are

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deserving of tax planning and what we want to do is really help you get up to

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speed on tax planning strategy. So, right when you land on the homepage, you'll find the recordings of how to get

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started quickly. So, we do a new user orientation once a week. We have the

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what, why, and how of tax planning, how to use the tax report, and as you scroll

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down, we have all of our upcoming webinars to get you up to speed as quickly as possible. The other thing

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you'll notice on the dashboard is right here on the right hand side, we have everything that's new. So, one thing

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about Holista Plan is we have a really deep tax team. So, we have a deep CFP team and we also have a really deep tax

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team. So, as tax updates come out to the tax code, within about a week or so,

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we're getting those rolled out into the database. So, you constantly have the freshest, most recent

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updated observations as we go into the households tab. So, here we have a

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household. We have James and Jessica Smith. I'll show you the return really

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quickly. So, you can see here, this is the return. It's about 28 pages. And the

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beauty of what Holistic Plan does is it creates a tax report within about 45 seconds. You upload it to our system and

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our OCR software scans it in and within about 45 seconds creates this really nice high-level tax report from what

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could be 30, 100 pages of a tax return. And the last thing you want to do is

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manual tax planning, right? It's prone to error. It's very complicated. It's a huge time suck. 45 seconds and this is

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the report that gets built out for you. So at the top it will be white labeled with your logo. So instead of holistic

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plan it would be your logo. It has who the tax report was prepared for, who the adviser was, if there are multiple

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adviserss on your firm and then right at the top you have the key figures. So you

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have the total income, AGI, any deductions, you have the taxable income,

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total tax as you go over, you have the filing status, marginal rate, average

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rate, if there were any carry forward losses or credits claimed. So really

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highle summary at the top. The next section that you have is the marginal tax bracket, which most homeowners have

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no idea where they actually fall. This is something that people you you'll ask them, they have absolutely no idea. So,

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this is a really nice showcase to say, "Hey, we've gone in and we've calculated this for you. This is exactly where you

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fall." We also showcase the modified adjusted gross income tiers and all of

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the planning opportunities. So, you can see the Roth IRA contributions, what the

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ranges were, and if your client was over, under, or in phase out for that specific tax planning opportunity. So,

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this is just a really nice breakout for you there as the lifetime learning credits, child tax credit,

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IRA. As we go a little bit further, we have the Medicare Part D premium, so you can see where your client falls if

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they're of um retirement age. And then the schedule B income sources. So, a lot

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of adviserss love this section because they view it as kind of a treasure chest. So, a lot of times when you're

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going through a client's um financial portfolio, they don't

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necessarily disclose everything. Sometimes it's because they forgot. Sometimes it's because they just didn't mention it. But the tax return, if it's

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on the tax return, it will show up here. And so, it really gives you full view of the share of wallet potentially that

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you could have with that client. So, that's why a lot of adviserss love this section. Down here, we have

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observations. And so this is what our system will automatically come up with depending on the type of tax return that

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you upload. So the observations will be different if you have somebody who's a high income earner versus somebody who

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is a retiree. The observations will be different because the tax planning opportunities are different. So for example, you could see

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this one says income exceeds the threshold for the 3.8% net investment income tax. Consider strategies to

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reduce the taxable income and be mindful of the realized capital gains. Now, all of these are adjustable,

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so you could move them and rearrange them as you wish. You could also edit them if there was a comment that you

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wanted to add or something you wanted to flag. And if you wanted to hide them, there's a little eyeball over here that

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you could toggle on or off depending on what you wanted to show to that specific client. And the same is true with all of

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the modules on here. These are all adjustable. They're flexible. You can rearrange them as you

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wish. The next piece that I'd love to show you is the scenario analysis. So,

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I'm not going to go super deep on this part because I feel like Ryan is going to go pretty deep in here later. But, so

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this is where the tactical tax planning happens. So, if you wanted to do a model

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out for a Roth conversion, that's where this would happen. If you wanted to model out a donor adise fund, that's

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where this would happen. Essentially what you could do is we automatically upload your base case to this first

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column. You copy that into your scenarios and then as you make changes

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you can show or hide the changes as you go through the tax planning opportunities and then at the very

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bottom it will show you the difference in taxes that your clients are either

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going to owe or that they're going to pay. And then we also have a state tax module where that will that will

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showcase any of the changes there. The next piece that I would love to show you is our property and casualty

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tool. So if we go back to households really

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quick, this is something new that we just added. And so just like the tax report and the OCR technology that we

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have, we also have property and casualty which is where anything so home auto and

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umbrella insurance you can upload those policies. Our OCR software will read it

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in and it will highlight any opportunities that your clients might have for coverage. So as you know if

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your clients don't have enough coverage for their insurance, they're at risk. The last thing you want is your

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financial your client's financial portfolios to be at risk because it impacts your business, right? If they

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don't have enough financial coverage, that could be really risky for you. And so what this module does is it

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flags things that are red, need attention immediately, they're yellow,

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something that you want to consider, or green, your client is probably covered. But really, it just gives you a good

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opportunity to have a conversation to make sure that they have adequate coverage. And with that, I will hand it

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back to Justin. All right. Thank you. And Laura, we have several questions. Maybe I'll just hit

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one of them here quick. We'll have lots of time, by the way, at the end hopefully for for questions. Typically,

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we don't get to all of them, but if people want to put their questions in the Q&A and upvote any that you're

10:55

particularly interested in getting answered, um, please do. We'll try to monitor the chat as well, but uh it's it

11:00

can be a little harder to find the questions there. But someone was asking um what sorts of tax returns um you can

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analyze. You know, we saw personal 1040. If you have a business that's a separate entity, I'm assuming that might have

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been for. Are there other tax returns? Yeah. So, it's really personal tax returns. We don't do a ton of business

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tax returns. It's really personal tax returns, right? Yeah. So, anything that you would get from the government that

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can be uploaded as part of the things that our software can handle. Awesome. All right. And I'm I know we're

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we're going to get to some of the other questions I think uh when when Ryan covers things as well. So, um all right.

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Now, for just a quick um overview of Income Lab so that anyone who's

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unfamiliar um with our software knows what this is all about and is set up for

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Ryan's discussion. So, um I don't have a tongue twister for uh like tactical tax.

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Uh I'm trying to remember what it was. Try to say that 10 times fast. Um but income lab is retirement income planning

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and management software. So, it is really focused on helping you work with

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clients um to help them understand what they can spend in retirement, what would

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change that and what those changes would look like. So it's totally so it's it's a different way of looking at retirement

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income and spending. Um you will not see anywhere in income lab concepts like

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probability of success and failure. We're really focused on helping advisors

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um do what clients want most which is to figure out how to live the best life they can. Um so you know if I asked you

12:39

what um you know you're going on vacation I say oh you know what would make a really good vacation. the first thing you say to me will not be, "Well,

12:45

I hope I don't get mugged." Um, you you probably have some ideas more about like, "Oh, I'd love it to be, you know,

12:51

good experiences and fulfilling and so on." It's kind of like that with the journey of retirement. What we're trying to do is do the best we can with the

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resources that we have and the world we happen to live through. Um, right, inflation could be good or bad. Returns

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could be good or bad. That's just the world we'll live through. Let's try to help clients navigate that as best they

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can. And so that's our mission is to help advisers help their clients

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navigate uh through retirement the best they can. Um and so this is the main dashboard which is kind of the the basic

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things a client would want to see on a regular basis. Again, Income Lab is built to be used in an ongoing

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relationship with a client. So think of it more like, you know, GPS

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um with turnbyturn directions and and less as just a map. Um and so what we

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see here is um updated account balances. You can do integrations to keep these up to date. Spending capacity. This is

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monthly ability to spend. And this is not just portfolio withdrawals. It's based on all of their resources. Um this

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particular family, uh we can see what sort of resources are in the plan. um

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they have a rental property, they have a pension, um that's a 50% survivorship

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pension, they have a couple of social securities. Of course, if one person dies, one of those would go away. Um

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there's uh portfolio withdrawals. You can see that there's some kind of, you

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know, strange shapes here. That's because they're they're paying off a mortgage. They've got some extra spending on vacations. So, it's a fairly

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complex, although really not uncommon type of plan. lots of different resources, lots of goals, but all put

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together, we're just trying to answer for the question uh the client's question, what can I spend? Um, and then

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crucially, we're saying, hey, you know, we have we have ways to think about the future, but we don't know exactly what

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the future will be. So, we have guard rails which tell us, hey, you know, if your 2.75 million goes down to call it 2.2

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million, we're going to suggest tapping the brakes. um in this case from 19,600

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a month to 18,600 a month. So this is not about failure. It's typically about

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minor and often temporary adjustments to keep people going through through uh you

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know following that GPS over time. You can show clients um the different options that they would have different

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kind of reasonable range of spending and guardrail options. This particular plan is already pegged at a fairly high

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spending level. Um, but if the client, you know, really maybe they don't need that much income, maybe they're

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particularly nervous or they prefer not to have bad news, um, you know, we could put it over to the other end, spend less

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and have a a bigger gap before we would have to make uh a downward adjustment in

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spending. No right answer here, no one right answer. It's about matching um, a

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client's preferences and goals with a plan that will work for them. Um,

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another way to to evaluate um, this kind of plan is to say, look,

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there's a there's an obvious trade-off between how much you spend and the volatility of that spending. It's a lot

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like investment planning, right? So there's risk and reward. Um, so if you want more reward, you'll have to take

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more risk. And in this case, if you want to spend more, it'll be more likely you'll have to pull back from that

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spending level. You can explore that in what we call the retirement stress test.

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So this takes that plan we just saw um with that you know reasonably high

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spending level um and it runs it through uh returns and inflation for that

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portfolio from November07 in this case through today. and it says, "Oh yeah, if if you are this aggressive

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um and you faced a situation like this, um you would have had a pay cut in

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February of09. Maybe not surprising. We we all kind of remember those time periods, right? Um but you would have

16:54

recovered by 2014 and then actually had some pay raises since then." You can also see how the guard rails would have

17:01

developed over that time. So we're not saying this is how the future will go, but we are saying well we remember this

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particular scenario and if you were to have lived through it uh with this plan,

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this is the kind of changes you would have had to make. Is this the kind of thing that you would uh have been happy

17:18

with or is this maybe a little too volatile for you? If it's too volatile, we could look at a different plan that's that has less volatility, can easily

17:26

build a plan that um that doesn't have uh those adjustments. For example, this

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is at a more moderate setting. And we see here we never hit the lower guardrail. We got awfully close, but we

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never hit the lower guard rail in 2009. Can look at lots of other scenarios as well. Um, you know, the dot bubble,

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stagflation, post-war period, Great Depression, lots of great ways to talk with clients about um about what they

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can spend and how what would change that. Um once you have a plan that you

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want to follow. So let's say for example it was um that first plan we were looking at. Um there's a couple more

18:07

things you can do. Um first of all you can view the plan um in what we call

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lifehub which is a really great visual for just helping clients understand the

18:17

pieces of their plan, how it fits together, how they're going to withdraw money, the the timing of things like

18:24

social security. Um it it's a great way to make sure that you have all the pieces of the plan together. For

18:30

example, you know, as Laura was mentioning, uh how that schedule B income can be a great discovery tool.

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This can be a great discovery tool as well in the sense that people want this tree to be, you know, have as many

18:42

leaves as possible. People want those numbers to be correct for them. Um, so it's it's kind of a um, you know, not

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just a balance sheet, but also uh an income statement, income expenses, it's got insurance, and this plan happens to

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have Roth conversions in it as well. So that's the last part of the software

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I'll cover. um which is once you have a plan for a certain amount of spending, it a really basic question is how am I

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going to source those portfolio withdrawals um to optimize taxes and

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should I consider Roth conversions? Uh and you can answer that question with with what we call tax lab. Um, so this

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takes that plan we were just looking at and runs it through um all kind of the most common ways to

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source withdrawals and gives you some statistics to use to help make decisions

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on what kind of approach might be good um for this household. So you can see in

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this case um Roth conversions to the 24% bracket meaning

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uh funding your retirement and then if there's any space in the 24% bracket

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doing Roth conversions to fill that up that has sort of the you know quote unquote most optimal look to it. That

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doesn't necessarily mean it's what you'll do. So for this plan we're actually set to use the 22% bracket.

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Maybe the clients didn't love the idea of huge withdrawals or maybe they um you know were a little bit worried about um

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how long it would take for there to be a break even. Um so for example um for this plan we can see the break

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even comes in um 2042. So you know not

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not uh not forever from now but also not tomorrow. Um you can also view uh and by

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the way this this particular statistics page is a is a really popular um view.

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You can you can turn these into into reports as well but to help clients understand the value of what we call

20:40

taxmart distribution planning um and not just going with kind of the rules of thumb um for you know maybe the more

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maybe some of Ryan's engineer clients or for the adviser to understand what all is going on. There's a whole explore

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section as well um to show you know tax brackets, how income is stacking up uh

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year by year, the amounts of Roth conversions and so on. It's it's um it can be um you know as as sort of simple

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or as as uh deep as you'd like to go. For example, we can see here the five years of planned Roth conversions. And I

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think I'll close by noting the the major difference between income lab and holista plan when it comes to tax

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planning is um income lab is really about long-term strategic thinking in

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terms of what you're going to spend the effects of um of strategies over the

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long term and it is less about you know getting this particular this year um you

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know down to the penny right. Uh and so I think that difference between uh uh

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strategic and tactical is probably the best way to understand um the difference

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between tax lab at income lab um and holista plan and I think it's the source of of um you know the the really great

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kind of synergy between our two um software programs and um I want to turn

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it over now to Ryan to I think talk a little bit uh more about that. So Ryan,

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thanks so much for uh joining the webinar and um I'd love to hear a bit

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about kind of how you use these platforms and how you deliver the the kind of value that you do. Yeah, my

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pleasure. Um it's good to be here and talk about my two favorite pieces of software and for a couple reasons. Uh

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can you guys hear me? See my screen? Okay. Um, you know, I I love these two

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programs and I use them every single day and they are the two that I use the most. And I'll say there's a couple

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reasons why I think they provide the most value is one, you know, individually they're amazing. Um, being

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able to tell people that they can spend more money and enjoy themselves more and not have regret, and we'll talk about that later, is huge. And then being able

22:55

to tell people that there's a good possibility we can pay the government a lot less in taxes if we make some strategic and tactical moves along the

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way. uh is also huge, right? And with that, um they are also, I would say, my

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two most effective prospecting tools when it comes to showing clients, prospective clients value. And I love

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them because that's not what they do. They're not prospecting tools. They're just great value added tools that just

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happen to be, if you show people, you know, how we use them, they're, you know, they're fantastic at showing

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prospective clients where the value can come from. So, I'm going to show you just some ideas and some things I do not

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only with prospective but actual clients um using both income lab uh and holista plan and um just you know kind of what I

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do in my practice. It may not be perfect for everybody but uh as you can see um my firm works with a lot of nuclear

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power plant employees in fact exclusively with that. Um, average client one to four million dollar net

23:51

worth uh has most of their money in an IRA or 401k. So, uh, they don't have a

23:56

lot of Roths and that's just inherently based on their age and the fact that they had a pretty good income. So, they went mostly pre-tax. Uh, some have a

24:04

traditional pension and some have a cash balance pension. Uh, they also have some

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there's some with rental properties, there's some with uh occasionally a trust or this and that, but for the most part um, relatively straightforward. Um

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what they really want though is to tell them how much they can spend in retirement, right? And that is the

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inherent goal in income lab. So I made a little um kind of like a sample client.

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Um here's where they started. All right. So if we discover some basics, married couple, retired, not taking social

24:37

security yet because they're 64 and 63 and they're delaying. Uh they have two IAS little north of 1.2 2 1.3 million

24:45

and a brokerage account of about 350K. And because they didn't have a an adviser when they retired, uh they were

24:52

just using the 4% rule. So out of their 1.6 million, they're just kind of taking

24:57

out their 66k per year and they're going to adjust that for inflation every single year. And they're not doing any

25:03

tax planning so far, but they really like the idea of being able to do some proactive planning and pay less in taxes

25:09

and maybe leave whatever is left, right? They don't have any particular goals to leave anything to anyone but there'll be

25:15

something left and whatever is left they'd like to leave it in the most tax efficient manner as

25:20

possible. So as you know this this is what that spending plan looks like right if you choose a particular value and

25:27

adjust it for inflation over time from the time you retire to the end of time uh this is basically what you get. The

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only problem with this is that retirees don't spend money this way and they don't want to either, right? They want

25:38

to do more in the beginning, the early years, um, so they can enjoy themselves

25:43

when their health is at an optimal place and, you know, they don't know their longevity. There's a lot of uncertainties, right, in retirement. So,

25:49

we want to be able to shift that spending profile over a bit into something that looks a little more like

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this, right? So, this is our age-based spending path. You can see it's a relatively subtle difference. until you

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overlay the two and you realize that, you know, this blue, where the blue is on, and forgive my graphics, I'm no

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artist. These are just basic things that I use with clients to kind of get the point across. Uh, but you can see that

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where the blue is above the red, that's where they could be spending more in the early years. And where the blue is below

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the red, it's where they um they will be taking more out. That's the red. They'll be taking more out, but they won't

26:26

really need it in the later years, right? because they would have naturally just slowed down just based on a you know just a natural spending path for a

26:32

retiree and you can see where that leads you. Uh most people get into their mid70s, have more money than they ever

26:39

expected, their health is deteriorating, but some point at least their mobility statistically, and then they look back

26:44

and say, "I wish I would have done a lot more." Right? So that's what leads you to the regret zone. So we're looking at trying to optimize those early years,

26:51

right? And that's where income lab comes in. So, if we take a look at this couple that's only spending $66,000 per year,

26:59

we can go ahead and take a look at what does that look like in Holista Plan. So,

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if we look at our scenario over here, I put 2022 because that's where they would have come to us in 2022. They heard

27:11

about this great thing called income lab. They heard about Holista Plan. They said, "I want an adviser who uses these two things." Right? And we could just

27:17

kind of go through and look at what where's all the income coming from,

27:23

right? Uh you can see that there is some taxable interest. There are some dividends. This right here is a great

27:30

value at if you can look at this and say you have $3,000 in qualified dividends with 10,000 in total. Why the ratio is

27:37

is so low. That's a good place to dig into and find out why are you know the majority of these dividends not

27:43

qualified. And you can see they took out about 66,000 out of their IRA. They used

27:48

their dividends to kind of cover the taxes out of that. And then other than that, not a whole lot going on. They did

27:54

a little bit of sales of their stock. You see they incurred a little bit of short-term capital gains. Not really

27:59

paying attention to where you know what the cost basis and the date was and then a little bit of long-term capital gains.

28:05

But other than that, pretty straightforward. You can see their total income is about 82,100.

28:12

they're taking the standard deduction and all of these things are expandable, right? And that's what I love about it is you can keep it

28:18

very big picture or you can expand and add in any single thing that you need

28:23

to. And this would be prepopulated if the client or prospective client gave you a return, right? So, you would

28:30

upload this return and all of this would be pre-populated. I'm going to show you that next. And then we can just kind of

28:35

see, okay, at the end of the year, their taxable income was 54,000 and their total tax burden would have been

28:43

5,445 and so on and so forth, right? You can also do this with state tax if applicable. I live in Maryland. They tax

28:49

retirees just like they're working. So you can see that it does state tax as well, right? So the clients come in and

28:58

we their their biggest fear is that they're not spending enough that they're giving up the early year spending. So

29:05

then we go ahead and we go ahead and run them some scenarios in income

29:10

web and just some basic stuff. I kept this one very high level. Uh so for

29:15

their assets I went ahead and put those in. Their income is pretty much just

29:21

their future social security. They could have a pension in here. There could be annuity income. You can add all that in.

29:27

You can also see that you can add other things in here like a mortgage, uh savings if they were still working and

29:33

and contributing other types of expenses like if they retire before 65, you want

29:38

to add a little extra in there for health care, you could do that, right? But I just kept this very high level. And then we can go ahead and do

29:45

the calculations like Justin was talking about and figure out, okay, what's a more reasonable number to start at for

29:52

income? And just remember, it was 66,000 a year

29:57

before taxes. That was the 4% rule. And you can now see that that number has

30:02

jumped up for to 8,961 a month after taxes, which you can go ahead and

30:09

annualize and make it $107,000 a year, right? So, I'll say

30:14

almost double, right? So, if you have a client that does not have a huge legacy

30:20

goal that really wants to find out instead of worrying about, you know, leaving someone a big amount to someone, they they are worried more about

30:27

enjoying those years, spending time with those kids and grandkids, taking them on trips, doing more things. This right

30:33

here just increased their income significantly over what you would be if you were using

30:39

like a 4% rule, static inflation adjusted type of plan, right? As Justin said, you can go ahead and look at these

30:46

guardrails. The guardrails are there to protect them. I'm not going to go into too much detail about these because there's other webinars about those. Uh,

30:52

but as you can see, this has from an income setting a pretty moderate. And I can change

30:58

this. And you can see as I change it, the amount that they would receive changes, but so do the guardrails,

31:03

right? They're more likely to hit a guardrail the higher they start their income. So all in all, just from that alone,

31:11

we've taken them from 66,000 up to over a h 100,000 in retirement income, right?

31:17

A great visual to see them too is to like where's the money coming from. Retirees love to see that. And this is a

31:23

great chart, right? It's all coming from your investments in the beginning. And this is a hard concept for a lot of

31:28

retirees to understand is what happens when they start drawing social security. Do they get a raise? Do we keep the

31:34

income the same? So you can see it's very obvious we keep it the same and we'll just reduce the amount coming from

31:40

your investments and we'll increase by social security but the net effect will be exactly the same. Right? You can go

31:47

into a lot more detail about stress testing and historical analysis. I'm going to leave that for um other webinars just because I think that um

31:53

you Justin you've covered that in detail in a lot of other ones. So then what I do is say, okay, so we've gone through,

32:02

we've looked at your income could increase significantly, right? We've talked about where the money's coming

32:08

from. Now let's go ahead and put that scenario into income lab and let's see

32:13

where that leaves us. Right? So as you can see this middle scenario 2023 income lab with no tax planning

32:20

because I'm going to show you that separately. We're going to progress through these. So, as you can see

32:26

now, we've kept the same kind of inputs for the dividends and things like that because we didn't do much with that

32:32

yet. And we went and took the IRA distributions up to 94,000. And you can

32:38

see how that's broken out. It's broken out by taxpayer 1 and two. And these numbers align

32:44

perfectly with these numbers right here. So from IRA 1, IRA 2, and then as you

32:50

can see from the taxable account, but that's not going to change our tax situation in here because it's all coming from an account that um you know

32:57

is not taxable to take out. There may be capital gains to make that happen and we'll talk about that in a

33:04

minute. So as you can see that results in a total income of

33:09

106,000 still taking the standard deduction which automatically adjusts year-toear. So holistic plan, that's a

33:15

great part about it is all of your tax values and laws and things like that are all automatically changed from year to

33:20

year and you can project out multiple years from now to see what that would look like. And as you can see the total tax

33:27

is 8511 what their bracket is. There's also state tax and everything like that. So if we just did that right and just

33:35

understanding what we do with that information. So at our firm, we do all of our clients investment management. We

33:40

do their retirement distributions. We also do all of their tax withholdings. So we calculate the amount of federal

33:47

and state tax that needs to be withheld using holistic plan and and withhold it for them including all income sources.

33:55

So whether it be from us or not. So if there's a pension, if there's social security, if there's any type of income

34:02

whatsoever, we're going to because it's a huge value ad to our clients to know this is the only place they need to come to figure out how much they need to

34:08

withhold for taxes. We don't require them to make estimated payments or anything like that. If we're doing their

34:14

tax planning, then we're doing all this for them, right? We're doing the actual withholdings and sending them to the

34:20

government. And our goal is to get them within plus or minus 200 bucks. They may owe 200, they may get the 200 back, but

34:25

to get them pretty close without a penalty. So using holistic plan to make sure. So what I would do is for this

34:32

monthly amount that we're going to be sending here, right? This is the gross

34:37

amount. Remember that income lab is going to get you the big picture. Holista plan is going to get you that

34:44

exact tactical number that you need to calculate it. Right? So if we're saying we want to send the client $89.61 61 a

34:51

month and we may round that off to $89.50 or something like that. We're going to put all those numbers in and

34:56

we're going to figure out exactly the federal tax and exactly the state tax we're going to withhold when we send them their distribution every single

35:04

month. All right. Now is where we get into the fun part. We're so assume that

35:10

we're still kind of talking to a prospect and we are we show them income lab and we showed them all the things

35:16

we're going to do with taxes but then we say okay now let's get a little proactive with your tax planning right

35:23

and let's go ahead and talk about Roth convergence and I like to bring this little graphic up and just kind of show

35:31

how taxes work. So as we get more income, you can see the bucket fills

35:37

up and eventually it spills over into the

35:44

next and so on and so forth. Right? So this is an easy way to explain how a progressive tax system works. And what

35:51

we want to show them is okay, if you are in a particular bucket, it's very likely

35:57

that you're not going to fill that bucket exactly and then stop. at least not unless you're doing it deliberately.

36:03

Let's go ahead and let's do some Roth conversions. Let's use those pieces those those that room in the bucket to

36:10

pay some tax now, move some money over and then set ourselves up in the future to have a tax-free source. And this is

36:17

where clients may get a little confused. So then I skip over to here and I say we've got two big buckets and we can

36:24

turn the faucet on to either one. One of them has a diverter valve that automatically has to go some to the

36:29

government. That's your taxable sources, your IAS, 401ks, things like that. Non-T taxable sources are your Roths and

36:35

things like that. They go right to you, but typically the bucket with the taxable sources is very full. And most

36:42

people start retirement with not so much in the non-t taxable. So, our goal is to

36:47

figure out what's left in these so we can take some of this green

36:53

and move it over into the blue and then never pay taxes on it again after that in the future. Right? So that's like the

36:59

big picture of how we explain Roth conversions. So then we go back into

37:05

income lab and we go to the tax lab. We run the scenario. And this this right

37:11

here, what I'm about to do next, this combined with the next part in a listed plan is I would say the it's when I

37:19

usually know if somebody's going to become a client or not. Right? it it is the best um prospecting and marketing

37:25

tool that I have is this number right here. When you show a client that hey if

37:32

we do these systematic Roth conversions over time there's a potential and it's

37:37

always a potential because things like life expectancy or regulation change tax code change and things can always it can

37:43

always throw a wrench in the plan. But if things go as they have been for a very long time and we do these Roth

37:50

conversions over time, this is the amount we can potentially save in taxes. And this is typically the point where their jaw hits the floor, mine too

37:56

sometimes, and say, "Wow, this is fantastic. How do we make this

38:01

happen?" So then I'll kind of just go through and show them some different things, you know, kind of how much we're

38:08

going to convert big picture, right? How we want to do it, what are our different options, right?

38:14

We can look at our strategies and see which ones we want to use. A lot of times it'll recommend like conversions

38:20

in the 24 or 30 some% brackets. Like Justin said, clients tend to be uncomfortable in that. And I say that's

38:25

perfectly fine. Let's just do something. Let's make some kind of progress, right? And you can also

38:32

progress through the years here. So you can see I can move from 2024 to 25 and so on and so

38:40

forth. All right. Now, big picture-wise, it's telling me I should be doing a Roth

38:46

conversion of 227,000. Okay, so ballpark, that's probably pretty correct. But then I like

38:53

to say, okay, let's make sure we're 100% accurate and let's take that back

38:59

into back into Holista Plan and let's get all of our sources in here, right?

39:05

Because Income Lab doesn't know every single dividend. It doesn't know your interest rates. It doesn't know a lot of

39:10

those things, right? It's big picture. It's strategic. Now, we're going to get tactical. So, let's take a look at these

39:16

dividends. So, you can see we we up the qualified dividends by making some portfolio

39:21

improvements. We also essentially because now the way income lab is

39:27

recommending where the money will be coming

39:37

from. Let me go ahead and get to this tax planning part. You can see that

39:43

now most of the living money is coming from taxable

39:48

accounts and then the IAS are kind of going straight over in the Roth conversions, right? See that? So the IRA

39:54

comes into here, kind of goes over in the Roth and then you've got your taxable living. There's not a whole lot of taxable income anymore, but to

40:01

achieve that, to be able to take that money out of that brokerage account, we may have to incur some extra capital

40:06

gains, and those are captured right here. So then we say, okay, income lab told me

40:12

229,000. Let's see how close that is when we're looking at doing an actual Roth

40:19

conversion. So you can see they're in the 0% bracket because they essentially have minimal taxable income. So they can

40:26

convert some in the zero, some in the 10, some in the 12, and then a whole bunch into the 22. And it's 215,000. And

40:35

that's super close. 229 minus the interest minus the dividends. That gets you exactly to what your actual Roth

40:42

conversion could be, which is about 215,000 to take it right up to the edge. A lot of clients aren't comfortable

40:47

taking it right to the edge. This also brings up a great value added, your

40:53

advisor is doing their job type of scenario in that this is the time where we talk about what this dotted line is,

41:00

right? If we convert more than the Irma limit, you

41:05

can see right here where it says dotted lines equal Medicare part Bravo and Delta. Forget the phon frenetic

41:10

alphabet. I'm a Navy guy, so it's just natural. Uh, annual increases per person, right? So, if we did

41:17

convert beyond that amount and they were in the window to where this would count,

41:23

it could make their Medicare more expensive. Now, that doesn't mean we won't do it, but it should be a

41:28

deliberate conversation. That way it's never a surprise and you look and say, "Okay, I think the

41:34

benefits of this outweigh." Now, with this, if I'm looking at this, I may say, "Well, we're getting a whole lot of

41:39

conversions." And they're right about to start Medicare. We may stay below that. But if somebody's converting multiple

41:46

hundreds of thousands of dollars and, you know, a couple hundred dollars a year versus the big in the big benefit

41:53

they're going to get from doing the Roth conversion, that Roth conversion may outweigh that. So, we may just go ahead and say, "Okay, we're going to do it."

41:59

But let's just say that we're going to stay below Irma at this point. We don't want the added Medicare costs. And we're

42:04

going to do 175,000. So I can go ahead in here and I

42:11

will go down to Roth conversions and I'll go ahead and add that in. And you can see

42:19

it tells me exactly what that is going to cost me, right? What is it going to cost me in taxes? How is that going to

42:26

ch change? And you can actually even go to an explainer that's going to talk even more

42:31

about Ross in detail, which is great to be client facing

42:36

also. But then all in all, if I am actually going to physically do that conversion, I can figure out either how

42:42

much we're going to withhold from taxes or if we're going to be paying the taxes from another source. So let's say we're

42:47

converting from the IRA, but we're going to pay the taxes out of their actual brokerage account, how much we need to

42:53

do an estimated payment or something like that for. and then we'll actually get on with them and do that estimate

42:59

payment with them to help them out. So it really is like concierge retirement and tax planning allin-one.

43:07

So if if just talking about Roth conversions at that point um clients prospective clients get really excited

43:14

just about the idea of this and then this is how we actually implement it right like we keep running tabs of where

43:20

all our clients are for the year where their income sources are where you know

43:26

what we're distributing to them what they're withholding them you can track all that so if you go down here you can

43:31

see all this taxpayer withholdings you can add things in here right you add

43:36

anything that from a pension or something like that that's already be automatically being withheld and if you

43:41

copy the scenarios it'll just carry over from year to year and if there's adjustments you can make those adjustments right another great thing is

43:49

you can track their IRA distributions because not every client only takes out their monthly

43:55

distribution you get a call every once in a while like I want to buy a boat I want to take the family on a vacation so

44:01

you can actually go in here and add different amounts but then add notes right you can say recurring amount is

44:07

54,000, but then they took another 20,000 out for the boat, something along those lines,

44:14

right? All right. So, that's how we we actually implement their tax planning

44:21

once they're clients and everything. We're doing all this for them. And then we collect the return still at the end

44:28

of every single year or, you know, when they file, we put it back in the holistic plan because we want to make

44:33

sure that we're right. We want to make sure that we we've got the right calculations in that our inputs are

44:38

giving us good outputs. Some examples would be, you know, an example that one client was a firefighter, a volunteer

44:44

firefighter, and they got a tax deduction and we had missed that before. So when we collect their their tax

44:50

return after that, we put it in, we see it now. Okay, we can update that for the rest of time, right? So, it really is

44:58

about doing proactive planning, saving a bunch of money in taxes, and then checking your work later, and like Laura

45:05

said, it's 45 seconds to upload a return, and you get all of this value out of there. And just kind of showing

45:12

you what that looks like is these reports are fantastic, especially the

45:18

recommendations, like less than 50% of your dividend comes from qualified dividends. these two right here. You can

45:24

either click this and go to um something called FP Pathfinder if you

45:30

subscribe to that and you can get a checklist that kind of looks like this. Or you can click and go to a kitus

45:37

article that's applicable if you subscribe to that. And this is great not just for you, but also if you're bringing on new advisors that may see

45:44

this and not really know what this means or are still learning about it, still studying for their CF, they can click this and actually get there.

45:50

And just so you know how we systematize this, we use our service calendar. And

45:56

you can see in the beginning of the year, we update all our clients retirey income plans, their guard rails, fund

46:01

their HSAs, do early Roth conversions. And what we're looking for

46:07

in the early years is a down market. We don't really know what they're going to spend yet, but just a little bit about

46:12

why you convert more in a down market. If you get an up market, you're doing the same conversion as a down market,

46:19

but then you've got all of that future growth could potentially be taxfree. So, you can convert the same, pay the same taxes, but get more potential growth on

46:26

the upside when you're doing it in the down market. And then you can see we're doing all our tax planning February

46:32

through April, collecting returns and putting them all in the holista plan in May. And then just kind of following

46:39

this calendar throughout the year. Also really great way to spread the workload throughout the year is to, you know, not

46:45

do everything, right? We're looking at raw conversions three times a year, beginning, middle, and end. All right.

46:53

So, um, I think I'm I think I'm good there. I'm going to go ahead and turn it back over to Justin or Laura, and we can

46:59

go ahead and do any questions you guys have. That was awesome. Um, I I really enjoyed

47:05

that. It's really great to see how you actually do things clicking and and and we've had so many requests for exactly

47:10

this. So, thank you. Thank you very much. You also got I don't know if you saw this, but a a ton of kudos on the uh

47:17

on the spreadsheet visuals. So, I don't know what magic you were working there, but

47:23

uh that was pretty cool. Appreciate it. Um so, I know we do have a ton of

47:31

questions. Um and there as I suggested we will there's there's no chance we

47:37

will we will get to all of these. Um so I this definitely I loved how you

47:44

ended with with process and calendar and so on there. Um we did have a question on kind of what part of this are you

47:50

going through with prospects in an initial meeting? Is it a second meeting? Is it before or after data gathering?

47:56

Like when are these things happening? So it it would be during their usually

48:01

their second meeting. So the first meeting is just learning about them and what they their goals and what they want

48:07

to do and what is retirement look like for them. And then in between the first and second meeting is where we do a lot

48:13

of data gathering. So you know quant quantitative type things 401k statements and birthdays and all that. And then the

48:20

second meeting is where we'll go through some drafts of their retirement plan.

48:25

We'll show them tax lab and then we'll give them a bit of an intro to holista plan. Um, not every client wants to see

48:32

that level detail, but ours do. They're mostly engineers, scientists, physicists, stuff like that. So, they love the detail. Um, so we show them

48:39

that all in the second meeting. Um, another question somebody was asking

48:47

kind of how you talk about it sounds like spending in the early years compared to sort of later in life goals

48:54

like maybe long-term care or legacy goal. Um, you mentioned I think this is in relation to that, you know, the graph

49:00

about about spending. Maybe you could talk a little bit more about that. Yeah. So, you know, some clients are concerned

49:07

about long-term care and some aren't, but we we make sure that they get educated on it regardless because it's important. Um, for those that um are

49:15

concerned about it or or are worried about spending down to the point where they don't, sometimes we'll use a technique called a false floor, uh,

49:22

which is where we take a particular amount of assets and we disregard them from the plan. You can also do that

49:28

using the legacy feature in income lab. And it's almost like when a fighter pilot like trains, they don't use the

49:34

real ground. It's similar, right? In that we're spending down to a fictitious

49:39

value. If we were to derail because of a health event, we we would, you know,

49:44

theoretically never spend down to zero because we had that false floor. And if they end up never using it, it's just

49:50

more money that goes to the kids. Uh we also do talk a lot about the potential for using home equity. There's a lot of

49:56

research out there about home equity for long-term care. Some clients do have policies. Um, some clients do have

50:03

hybrid policies and things like that. So, it's definitely an important part of it. And, you know, we use a bunch of different methods to talk about

50:09

long-term care. That is a great point. Uh, in in that whole what can I spend

50:16

conversation, the income lab software is always saying what can I spend given my resources and any specified things in my

50:24

plan that I thought were important enough. So, you could put in long-term care as an expense, kind of like I have

50:30

paying off your mortgage as an expense that just happens to be early on. I like the false floor um idea. Um, you know,

50:38

if anybody's watched the more recent Top Gun, I'm sure you are about that. But that's right. You can put in a legacy

50:44

goal, but you could also just it's it's basically just a way of buying some extra insurance like you say against um

50:51

you know, feeling nervous as as things go on.

50:56

Um, Laura, I don't know if you've been monitoring the uh the Q&A and chat as well, but if there are any uh that are

51:02

jumping out at you as good for the um the community here, please feel free to jump in. I will. I will. No, I just I

51:09

was so like thrilled to see the comments blow up when we when you showed that

51:15

interactive Excel spreadsheet. I thought that was the coolest thing.

51:20

Yeah. Who knew Excel animation is uh I've never seen anything like that. That

51:26

was really really incredible. Yeah, actually a peer advisor of mine, Jeremy, he made it for me, sent it to me. I was

51:32

like, "This is the greatest thing I've ever seen. I love it." Uh it's a great visual for clients to see that just

51:37

exactly how taxes work, right? Being, you know, spilling from one bucket to the next and how we can use the empty

51:43

space in the bucket uh to their advantage over the long term. That's awesome. Uh we got a couple

51:49

questions about state taxes. Um you mentioned a little bit uh about Maryland. I I don't know if all your

51:56

clients are there. I imagine all over the place. Um and also I guess for well

52:01

either one of you, Ryan or Laura, if you want to address kind of how you talk about state taxes or cover state

52:07

taxes just like federal. Um you know my clients are all over the place. They're Maryland, Pennsylvania, Texas, Florida,

52:14

North Carolina, you name it. So, there's a lot of different um uh state tax

52:19

rates. There's also a lot of different state tax situations. Like some states do a pension exclusion, some don't. You

52:25

know, some allow you to exclude x amount of your income if you're over 65 and all those things. So, it's really a great

52:31

way to put all of that in there for the client. Um you know, for their state taxes also.

52:38

Yeah, it makes sense in the world. You cover those aspects as well in holistic plan. Yeah. Yeah. So, for every every

52:44

state that has state taxes, it's covered. Um, and what a lot of adviserss like is that even, you know, sometimes

52:50

you collect clients who aren't necessarily in your same state, who might have different state laws. And so,

52:55

you don't necessarily need to know all of those state tax laws. We'll have that covered for you. So, we take that pressure off. Yeah. Same with with

53:03

income lab. So, especially we focus on retirement related things. So, those exclusions, pension exclusions, social

53:08

security exclusions. Um, this can definitely be an area. I don't know if Ryan if you've had this experience, but

53:14

you know just showing people what they actually pay. Um and and like it the tax

53:20

system is so complex, but people are often surprised by either high or low, right? And I think I've seen both like

53:26

wait there there's no way that could possibly be. I'm in California, I should be paying 11%. Well, you know, these

53:31

pieces come together and you don't. Yeah. The interesting thing is when somebody sees their like marginal versus

53:36

effective tax rate really is like you know they're you know you hear a lot of people say I'm in the 22% bracket. Well

53:42

that's true but your effective is 13.2%. Right? So you know overall you know and if we can do all of these wonderful

53:49

things that we just went over and do we can take your effective rate down to whatever that is right and make a big

53:54

difference over the long term. Yep. That's right. Um so somebody did ask

53:59

about coverage there. Um, also about I'm assuming this is somebody's talking about Irma. So the Medicare part B and

54:06

D. I think we did see that that's covered in Holista Plan. It's also covered in income lab. Um, so very

54:12

important. We actually just treat it as a tax which essentially it is um because it's related to your income. Um, let's

54:21

see. So many questions hard to navigate uh all of them here. Yeah, that Irma

54:27

situation is real. I mean, yeah, with my clientele, they're all, you know, 90% are retired are retiring in the next

54:33

year. Um, so they're they're of that age and us trying to navigate around whether it's worth doing the conversion or not

54:38

based on stuff. That's a real conversation. So, and it's a a lot of them did not even know that exists and

54:44

that's that's a great value ad for us. Right. Right. And I liked your example. I I like to say sometimes there's it's

54:51

it's art and science. you know, both of these software programs are obviously doing a lot of the science for you, but

54:58

you know, there's still a ton of art involved. Sure. Um, all right. We've had lots of

55:05

requests for uh sharing your uh materials, Ryan. I'll send them. Okay,

55:11

perfect. We'll we'll work on uh on distri distributing those. Um, see if we

55:17

can find um I guess I'll I'll ask sort of just to

55:25

to close up, how how often are you finding um

55:31

that you know clients and prospects that that come to you that you're able to you know add the kind of value like in your

55:37

example there is it is that you know most of your clients is it you know half of them? It's 100% and but that's

55:45

inherently, you know, based on where my clients come from. They come from a a high-paying industry with pensions, uh,

55:52

with mostly all pre-tax money. Very few of them have any Roth whatsoever just

55:58

based on their age and when Roths were, you know, came around and things like that, right? So, um, for the people that

56:03

end up coming to me just naturally coming from that industry with the level of assets they have and the complexity

56:09

and everything like that, um, it's 100%. Right now, I can't guarantee that for every single demographic, but like for

56:15

me, it's it absolutely is, right? That makes sense. Um, well, I think that's a

56:21

great place to to end. Um, this was an amazing uh demonstration. Thank you very

56:27

much, Ryan. Um, really appreciate it. I think uh our hundreds of attendees appreciate it as well. And thank you

56:34

Laura. Um this was great. Um I hope we can uh do something like this again in

56:39

the future. Yeah, of course. This was amazing. This was so much fun. Thank you, Ryan. Really the star of the show.

56:45

Well, thank you. My pleasure. I appreciate it. Yeah. If you want uh any more information on um you know, Income

56:52

Lab or Holistip Plan, please, you know, visit our websites, reach out. We will send out some follow-up materials to all

56:57

everybody who attended here and um yeah, hope to talk to everybody again soon.

57:03

Thank you. Take care everybody. Thank you. Bye.

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