Video Transcripts

Knoxville Financial Q&A Show Transcripts: Episode 11.

All right, welcome to episode 11 of the Knoxville Financial Q&A show. I'm your host, Paul. And I'm Brian. And as you can probably tell by the thumbnail, this one's going to be a little bit different than what we normally do. Yeah, we're we're shifting gears a little bit. We may be saying some things that might get us in trouble with some local real estate agents, but we you know wanted to try to change it up and talk about something that we've faced which is a lot of people really don't fully understand like retirement or what they want retirement to look like. And so we tried to to apply you know potentially looking at relocation either in town or if you're moving to town and try to apply where you might want to live to enjoy some of your hobbies.

This is not a knock against real estate agents. But the reality is they work with you maybe two weeks or a month. Whereas we are being a financial adviser, we we have the ability to work with clients for several years. We're looking at this from a different perspective than a real estate agent would. So, what we've decided to do is basically use real world experiences from our [clears throat] clients where school systems don't really matter anymore because they don't have kids in school at this point anymore. If you're in Knoxville, Farragate is probably going to come out as the number one spot and that's fine. I mean, they have great school systems. Yep. [clears throat]

And if you're younger and you have kids and you can afford to live in Farragut, go for it. But if you want to hike every weekend or every other weekend, Farragut isn't the best place to do that. No. But what So the way we're looking at this is you're either 5 years from retirement or already retired, just moving here possibly, or just empty neester. Maybe you're not quite to retirement yet, but the kids are grown and left. Do you still want to stay there? Yeah. So we're just basing this off of what our clients actually are doing. Yeah. We got clients that that have these conversations with us repeatedly.

I guess let's let's explore the first one, you know, like from a hobby perspective, which hobby, you know, let's start with one and then we'll go go from there on where you'd want to live.

Number one is basically a tie between boating and golfing. let's start with boating first. Yeah. So boating, I think from a boating perspective, you have a pretty wide array of costs. you can do something a little bit more cost-ffective like a pontoon and enjoy it. and you know, if you wanted to live in in or around Farragate, take advantage of a marina. Trying to think of other places that would be good just like for like a skiboat runabout or pontoon. , Jefferson Park is a great neighborhood. If you want your own dock and don't want to be at a marina, a place like Jefferson Park is great. Mallard Bay. Yep. , and these are just neighborhoods. Yeah. These are just neighborhoods that are in, in this case in West Knoxville. Yeah. Yeah. And that's that's what we were, you know, where we talk about the wide array of boating. You know, if you get into the that 40 50 60 plus foot, I think we have a couple boats around here that exceed or get close to the 100 foot, you know. Yeah. If you're trying to if you're not going to a marina that's specifically set up for that, you're going to have to have like a house on the Tennessee River on the Clinch River. And by the way, if you do have a large boat, you might already know this, but it's possible to leave Knoxville on your boat and go all the way to the Gulf of Mexico. That's true. You can and I know Gulf of America. Gulf of America. And then secondly would be golf. And we have a plethora of golf courses and golf neighborhoods. some of the local winds to West Knox, Gettysvue, Avalon, Fox Den, Holston Hills if you get outside of West Knoxville. there's couple in Oak Ridge. the one that Greg Norman designed. What was that one? Yeah. So, this is basically combining the ability to boat and golf in in [clears throat] certain neighborhoods. So, Tennessee National is Tennessee National, the place you're thinking of. And Rarity Bay, that's a we had again that has boating because it's right there on the water, too. So, Rarity Bay is now Wind River. Oh, yeah. That's right. They changed it.

So, another one would be Tellico Village, which is a huge community. for some reason there's a lot of people from like places like Michigan there. Yeah, it seems like a lot of the retirees, a lot of the Chevy retirees. There's several golf courses there. There's a couple of marinas. There's some nice restaurants. All right. So, what do you think is number three on the list?

I'd say hiking and outdoors is probably the next priority that I that I hear most often is, you know, we want to hike every weekend or we want to I got clients that fly fish. I got clients that do regular fishing, bass fishing. I got clients that, but they their general consensus is they either want to camp, hike, or spend time outdoors. I would say for hiking, if you wanted to be within like 15 to 20 minutes of a trail head at any given moment of time, I would say Townsend, Walland. there's Hall Ridge towards Oak Ridge, you could go. They're a mountain biking destination, but they also have hiking trails.

Well, speaking of mountain biking, that's probably number four. Yeah, mountain biking is just exploded here. We've become a mountain biking mecca. I'd say we battle back and forth between us and North Carolina. and yeah, if you if your goal was to mountain bike all the time, Southnox kind of ends up being the destination. There are trails everywhere else, but that's the place if you just wanted to to mountain bike all the time. That's where you'd want to live. You got Baker Creek, you got Ijams. that some of those have kind of just flowy trail rides. Some of those have pretty intense mountain biking trails. but you could between good food and mountain biking and good breweries, you'd probably occupy a good portion of your time.

Yeah. And South Knoxville is like expanding like crazy. what Brian's talking about is the whole basic area is called the Urban Wilderness. So if you Google the urban wilderness, you can see what we're talking about. It's 60 plus miles of trails. I have never ridden there. I've walked on some of the trails and there's a cool couple of quaries in that area that you can go to. You're five minutes from downtown, which is pretty incredible because I don't know of any many other downtowns that have place that has 60 miles of trails and stuff like that where you can be on the trails all day, whether it's mountain biking or riding or swimming in the quaries or or whatever and then be in in downtown a twostar Michelin dinner at what's what's that restaurant? J.C. Holdway. J.C. Holdway. Yeah, they're a two-star Michelin restaurant. So, it's a a very unique situation. I feel like we're leaving Powell out. There's some decent places in Powell too, but nothing that's going to be as extensive as what we're talking about.

Something interesting about Powell, though, and I haven't been there, so I can't really say too much about it, but they're building like a their own community. Yeah. Belltown. Belltown. Yep. Which is something that in my opinion is desperately missing here. Like a planned community. Yeah. You got good restaurants, you got shopping, you got everything. We kind of have that in the Northshore Town Center. Yeah. I just think it's cool that they're doing something like that because honestly Knoxville doesn't really have many places that are just planned like that. It's sort of just a developer comes in, buy some property and build some houses. All right. So, what do you think number five is on the list? I think the fifth one on our list is people that just want to enjoy good food living in a downtown environment, but there's lots of stuff to do in our downtown, which is seems pretty small compared to Atlanta and some of these other places. We've got Ice Bears hockey arena downtown. We've got the new Smoky's Stadium, which is apparently a destination in and of itself. So, North Knoxville and and South Knoxville. What's what's cool about those places is one, they're really like they're becoming like the hot spots. Lots of new restaurants, breweries, lots of breweries. a bunch of new condos are being built. But if you don't want a condo, there's a lot of older houses there where they're smaller. They're not these big mansions like we have in in Farragate or part of parts of West Knoxville. So, and again, we're talking about people who are retiring. Yeah. You don't want to maintain a giant house. although some of the places that we've mentioned giant houses, if you live on, you know, a place that's on the lake and has a golf course, the houses are not going to be small. Brian just said a quaint little house, you know, North Knoxville and and South Knoxville. you can find something there that's still reasonably priced compared to some of the places that we talked about. Yeah. because people are discovering.

Also, if you know, if urban living is your is your thing, downtown Knoxville has I think probably one of the most underappreciated art museums that ever existed. I would agree with that. But there's all kinds of there's Market Square downtown. Yep. And Market Square downtown, they they build an ice rink during the winter. Yep. Which is pretty cool. There's a farmers market there all summer. Mhm. Every what? Every Saturday morning, I think it is. I moved here in 1989 to go to UT. And downtown was a ghost town. Yep. There was nothing happening. TVA towers. That was about it. and then you know a couple sandwich shops and a couple other like the strip had a you know a couple restaurants on it. Yeah. But anything beyond that was pretty much just deserted.

All right. So I guess the last one number six would be sporting events here. When I say sporting events, there's one sporting event. [laughter] We're talking about the V football team.

Believe it or not, people do plan retirement around that team. And you know, there's a what's called the Vols Navy where you can boat and tie up with other boats for the for the home games and that kind of stuff. And it's a big deal. And so they're building a pretty gigantic entertainment district. Now they're building, you know, a place that's going to have it's right next to the to the stadium. Yeah. They're removing a parking garage to build a massive Yeah. And so there's going to be several restaurants and entertainment venues and all that kind of stuff. There's but there's also going to be what they're calling a condo/h hotel. and I can imagine some of those condos being $2 million plus big money. Yeah. But I think you could expand that too to basketball and the baseball. Now we have Smokies. Smoky's Stadium is all within that and and the Ice Bears all within that small area. Yeah.

You know, if you just like sporting events, that's you want to be as close to downtown as possible. Just know this though, one thing about living downtown is there isn't a grocery store. Nope. Right. So, there was a Walmart right there near campus, got shut down. The Walmart's shut down. Publix is still there, though. Okay. Okay. But it's still not like you're going to walk from your condo by the stadium to Publix. It's four miles. It's a drive. Probably four miles as the crow flies. And what are you going to do? Carry all those bags back with you? So, that's really not a realistic scenario. Of course, you can Uber or something like that. Yeah. Or have delivery. Yeah. So, I mean, you can still pull it off without a car, but Yeah. But all to tie it back to like financial stuff when we start talking about these conversations, this comes down to planning, making sure you got enough money saved because having your groceries delivered, living in downtown, which is already going to be a little bit more expensive. You know, you got to make sure you plan accordingly. You got to make sure you save accordingly. Got to make sure that you know your goals, dreams, lifestyle fits your savings, budgeting, planning.

I'm going to throw this one in as sort of a bonus. we mentioned Farragut before, mostly because of the school systems and it's just a really nice place to live in general, right? But if you have an active lifestyle, it's really hard to beat Farragate. they have built so many greenways. They continue to keep expanding them. I personally like I can leave my house. Both Brian and I live in Farragut, by the way. I [clears throat] could leave my house and do a 15 mile loop without ever going across any sort of main road. It's pretty incredible. But they also have four big parks. one of them they continue to expand which is, McFee Park. Pretty amazing place. So, there's a place called Biddle Farms that's sort of it's sort of has like a its own retail area. Yeah. It's got a little like grocery store, restaurants, kind of like that town, right, type apartment complexes and luxury condos. And now they're on the townhouse phase which are detached from each other. So, it's it's a decent little spot if you don't want to like have maintenance but want to live in Farragut. Mhm. Right. It's a cool place and they're they keep adding some more restaurants.

An area that we haven't talked about yet. I kind of feel bad about this. We're not picking on you, Harden Valley, but Harden Valley is a growing they've got a community college campus. They got a new high school, new middle school, new elementary school. it's rapidly expanding there. There's a lot of areas out there that have been built up. it's closer to that Haw Ridge.

So, I guess if you wanted to go Melton Hill Lake, Milton Hill Dam, if you wanted to be on the water, you could get to it out there. but it's predominantly just a a suburbia oasis. you know, it's got bunch of strip malls and a bunch of some restaurants. Pretty good restaurants. Yeah. it's kind of the place that you go to. It's kind of like Fargate. We have a little bit more water than they do or more access to water than they do, but still nice. Yeah, it's definitely a hot destination. Just what 10, 15 years ago, it was mostly just farmland. It's good and bad, right? You know, I used to enjoy driving through there because it was so peaceful and beautiful, and now it's houses.

Now it's houses and traffic. Like Brian said, we hadn't mentioned Harden Valley, but it is a destination where a lot of people are moving to. Yep. All right. So, in recap, you know, if golfing is your your poison, your your pick of choice, you got Tellico Village, you got Fox Den, you got Avalon, Avalon and Gettysvue. Those be your your probably top destinations there.

If your retirement goal is to be able to boat whenever you want, we're talking about Jefferson Park and Mallard Bay, but there's, you know, a whole area around Choto Road. Yeah. So, if your goal is to to hike, if your goal was to more specifically hike the Smoky Mountains and you wanted to be there quick, I'd say living in the Townsend, Walland, maybe Maryville area, you could get there within 15 minutes, maybe 20. By the way, Cade's Cove in the summertime on every Wednesday for the full day and I think Saturday mornings up until about 10, you can Cade's Cove is a loop and it's 11 miles. I think it's 11 miles, but you can bike instead of drive on and they shut it down for vehicle traffic. Yeah. No, no vehicle traffic. It's one of the most amazing experiences I think I've ever had since I've been living here. It's incredible. there's all kinds of wildlife and, it's just such a beautiful place. Incredible views of the Smokies. Whether you live here or not and you just happen to be catching this video, it's something I would I would put on your bucket list. Sure.

Brian just mentioned Maryville, which we hadn't talked about. just real quick, I mean, that place is expanding like crazy, too, with a bunch of really high quality restaurants. They have an incredible, greenway system as well.

Finally, if you love restaurants and going out and dining and all that kind of stuff, obviously it's downtown Knoxville, but like we mentioned, there's North Knoxville and South Knoxville, which aren't downtown proper, but still have that downtown feel and Sequoyah Hills and Bearden. You got like that micro area of restaurants and concentration of stuff that's almost all within walking distance.

Yep. Hopefully this helped a little bit if you're planning on retiring here and you know you're not basing your where are you moving to just on school systems, right? I guess with that said, signing off. Signing off.

Knoxville Financial Q&A Show Transcripts: Episode 10.

All right, welcome to episode 10 of the Knoxville Financial Q&A. I'm your host, Brian. I'm Paul.

And today's topic is not necessarily a question that anybody sent in, but it's something that we've been hearing more and more. Basically, can AI replace a financial advisor? And so, Brian, what do you think? Can AI replace a financial adviser?

I would say not exactly, but it makes a wonderful assistant for me. It's this. Okay.

Unfortunately, I've been through this several times, and it's never a good scenario, but basically, Mr. Jones unexpectedly passes away. Mrs. Jones comes in, she's grieving, she's crying, she doesn't understand what the heck just happened to her. She's all by herself at this moment and she just wants to know if she's going to be okay financially. Mhm.

And so I sit there. I'll hold her hand and we'll just basically let her know that she's going to be fine.

Go ahead and be with your family. Go ahead and do the things you need to take care of and let me take care of the money side of things, but just know you're going to be fine. And to me that is something that AI cannot replace.

AI can't give you a hug. Last time I checked.

Very important to understand AI is good at some things, like basic investment concepts and stuff like that. If you're wanting to learn, if you're younger and just starting out, fine. AI is good.

And you said it. I think AI is a great teacher. It's a great resource. It can help you pinpoint things. I do think that the one thing that AI kind of breaks down is it's only as good as the questions you ask or the prompts that you give it. And I think that's also where you have to know. I think we even talked about this the other day briefly.

If I go to AI and I say, "How do I replace my transmission?" and it gives me a step-by-step, it's one thing to give me the step-by-step and the pictures. It's another thing to crawl underneath the car and look at what you have to do and go take off a bolt, right? Which one? And I think that matters. I think that comes down to it's great at giving you the ideas, but execution still has a breakdown there.

If you are Mr. Jones, who in this case did the proper thing by at least working with a financial adviser and probably set up Mrs. Jones for being in a good position. And by the way, we try to include both spouses in all of our conversations, but one or the other is managing the money for the most part.

So, I think if you're doing it on your own and you're relying on AI to guide you through it and you leave your spouse in that position, you didn't plan properly.

I would agree. I read this thing, I'm going to bring it up briefly. I read this thing on social media the other day and it was like six prompts to fire your financial advisor, and I just thought this was a great little scenario. It was talking about Social Security timing on when to withdraw.

This was just one of them. It said, based on my birth year of XXX, my earnings history, and you're supposed to paste or insert your summary, my spousal situation, my health or longevity outlook, should I claim at 62, full retirement age, 70, or another age? Show the cumulative break-even points and estimated lifetime totals. Without having somebody feed you all that information, how would you know to ask that?

And that was just one. The next one was what they called a healthcare bridge plan. And all this is great information, but it was: build a year-by-year healthcare funding plan from now until Medicare begins at 65.

Include ACA subsidies, optimization, HSA contributions, estimated premiums by state, and worst-case out-of-pocket buffers. Here's my age. Here's the planned income. Paste or insert documents.

Perfect timing for this video because just yesterday on WBIR, which is our Channel 10 here in Knoxville, our NBC local news affiliate.

Yeah.

Yeah. They posted a story, and I'll put the link down below. The title of it is OpenAI Says Its AI Technology Acted on Its Own in an Unprecedented Hack of Another Company, which, by the way, just happened to be another AI company.

So AI hacked AI.

Exactly. So, if you want to load your financial documents up to AI, and by the way, OpenAI—that's ChatGPT essentially, right?

Same thing.

Yeah. You want to put your documents up there, go for it.

It kind of proves the point. All of that is really good information.

It's really good stuff. I think if you had somebody and you brought—even if your financial adviser knew to ask prompts in that detail—you probably could figure it out without having to be so detailed on the questions and probably get together a good plan. Not only that, we also have our own tools that we could use and use that as just an outside resource. But yeah, I think the majority of it is, could you do it?

Sure, maybe. I think some of that is we have a healthy distrust of government and a healthy distrust of people, but yet we trust AI.

Yeah.

I think AI is great. I think it can do... I think the biggest thing is it just helps to speed up the tasks at hand. I think if you use it for anything other than that, you're kind of missing the point. It's meant to be the assistant, not the primary.

Yeah. I think one of the biggest issues that AI can't solve is managing emotions during market volatility.

Why do we have entire segments of behavioral analysis or behavioral finance? [snorts] There's no quicker way of ruining a retirement plan or a portfolio.

It's a fact.

Yeah, it's a fact. I also think about what role should AI play in planning? I think if you're paying hourly for advice or you've got a planner that does planning only, maybe it could help you consolidate or save some of your questions to be more like, "Hey, here's what I've got. Verify it." That could be a good tool to use.

I think that's where it really plays a role. I think if you've got somebody in money management, if you're really good or you've got a pretty solid grasp on money management, you could use it to assist you with a lot of things. But yeah, as far as actual planning, you're right. Human emotions—AI probably breaks down as soon as we start having emotions. They're like, "What are you doing? What is wrong? How do you address that?"

Yeah.

Yeah. And then other issues are, is AI giving you advice in a fiduciary capacity? Can you legally hold AI responsible for bad investment advice?

There will be people that try.

For sure.

For sure. But good luck with that. If you relied on AI for your investment advice and turn around and try to sue it, then it's on you.

There's a reason why it actually says that on a lot of the prompts. We even tried some of this on some of our prompts. It basically says, "Here's my response, but verify with a professional." There's a reason why it says that because it absolves it from any liability whatsoever.

Also, AI can't coordinate attorneys and CPAs for complex planning cases when it can't transact. It can't money manage. You can't type into ChatGPT, "Hey, I need $10,000 to cover this shortfall for my retirement. Can you liquidate that $10,000 and move it into my account?"

Right.

You can do that on your own, but yet again, most people... Why are there mechanics? Why are there people that cut hair? Why are there restaurants? We're perfectly capable of creating our own dishes.

Why do we go to restaurants?

Some days I don't feel like [snorts] cooking.

Human emotion.

Some days I don't feel like cleaning dishes.

Human emotion.

So, we have entire industries built around just human emotion.

Yep.

To me, it's weird to think of that. And we tip them 20%.

All right. So, all that being said, we put together a little list of when it would be good to use AI and when it would be good to use a financial adviser.

So, when would it be good to use AI?

Yeah. Your finances are relatively straightforward.

Fair.

You want help understanding retirement accounts or investing basics.

You want to estimate how much you need to retire.

You like and have time to manage your own investments.

You're looking for a low-cost planning tool. By the way, we don't charge for planning anyway.

Yeah, it can help with estimating retirement savings. A lot of people just don't have a target to shoot at, so they either don't shoot at a target or they just flounder. So, just having a target would be helpful.

They can help model different retirement strategies as they age.

That's a good one, too.

And then comparing Roth versus traditional contributions on which one would be beneficial. That would be pretty good.

Building a withdrawal strategy. I think that's where a lot of 401(k)s break down because they offer no help whatsoever. So, just having a withdrawal strategy.

I think stress testing is important. They can stress test between inflationary environments. Most people don't even know what inflation is. I think they do now that it's been talked about more probably in the last 10 years than ever before.

And then looking at how their portfolio compares versus various market returns.

But when should they use a financial adviser?

So on this list we have: you're approaching retirement within about 10 years. Let's say you have substantial investments or multiple retirement accounts. You own a business. That brings its own bunch of complications sometimes.

You have a pension, stock options, or rental properties, which is another messy situation in some cases. Your tax situation is complicated. You're planning on an inheritance.

You and a spouse have different retirement goals. That's a big one. It's probably something you don't think of, but it's more common than you think.

Yes, for sure.

And then the last one on there is you want ongoing portfolio management.

It's only as good as the information you feed it. So it's a great assistant. This goes back to our original thought. It's a great assistant. It's probably not a good primary.

In this little conversation that we've had during making this little video here, one of the things that popped up in my mind is if you're relying on AI to basically create a portfolio for you, right?

AI is owned by tech companies, which are owned by individuals who may have certain interests in certain companies doing well.

I'm not saying this is what's happening, but it could be. I don't know for sure.

Hey, we've all watched Terminator. We know how this ends. [laughter]

But let's say the portfolio recommendations are based on those companies that these guys have major, significant holdings in.

Sure.

Yeah. It could skew information, and there's no legal recourse on those recommendations if you're using AI.

It's what we'd call a conflict of interest.

A little bit of a conflict of interest.

And that goes back to what we said before about AI not working as a fiduciary in giving investment advice, whereas we are. So again, that's a conspiracy theory in my own mind at the moment to think about, right? But it could be a possibility.

I wouldn't doubt it.

Anyway, so if you want to use AI for your financial planning, go for it. Wear it out.

Yep.

If you don't and you want some financial advisers who are willing to help you in your situation, whatever that might be, we're here.

So, I guess with that said, signing off.

Signing off.

Knoxville Financial Q&A Show Transcripts: Episode 9.

All right, welcome to episode nine of the Knoxville Financial Q&A show. I'm your host Paul and I'm Brian.

And today we're going to talk about the biggest retirement mistakes that we see most often.

Number one, I'd say, is uh taking social security too early. Uh, I'd say most people just aren't aware of like provisional income and some of the the things that come along with taking social security. And so, like I would say that that ends up being the number one. Um, you know, and if and if you don't know what provisional income is, a, you can look it up.

Um, but the biggest factor is just what's the only sources of money that you can take from to avoid that. So, if you get this idea where you're like, "All right, I'm going to retire at 61 or 62 and I'm going to start, you know, I'm going to work part-time and I'm going to start taking social security." Well, the problem is you could have 50 all the way up to 85% of your social security taxed.

Um, but the only sources that you can pull money from and live on, so during that time frame and avoid that are Roth IAS, uh, HSAs, but the caveat to that is it has to be through qualified medical expenses, which means you would have to have a pretty decent chunk saved up in an HSA. You would also have to save all your medical expenses and all your Advil and everything that you've purchased over the decade or more. and then you start taking that money in retirement to try to avoid that. Um, so there's not a lot of place.

That's the number one mistake I think I see.

Okay. And I think another issue there is if you take it at 62, you're stuck with whatever that income is at 62 and your cost of living adjustment is going to be based off of that next to nothing. It right. So instead of waiting for a little while where you're if you're getting more down the road, your cost of living adjustment could be a little bit higher versus taking it at 62.

I would say longevity risk when you start to think about too, that's something to take into consideration. If you have, you know, family history of like heart disease and most of your family is not living past 65, don't wait, right? There's no point in waiting if if there's a really high possibility of you not living that long. So, some of it I think is just kind of like this goes back to what we've said every single time we do this. It's situational based.

It's like what does your situation look like? But I still think that's a pretty common mistake.

If you have ever taken a life insurance exam, what they ask is are your parents still living? If not, what age did they pass away? If the life insurance companies are using that as uh a way of determining your life expectancy, we kind of use that also in in planning.

Uh it's not always correct obviously.

No, but it matters. And hey, if if if some uh underwriter is looking at an actuarial table, factoring that as a decision-m, it's got to be it's got to be important in some capacity.

Yeah. And another issue with uh taking it too early is as we were just talking about let's say you are healthy but you pass away anyway, right? And your spouse, your surviving spouse then is getting a reduced benefit instead of getting a higher benefit. Yeah. If you just waited to take it a little bit longer.

I think right now um full retirement age is 67 if you were born 1960 and later. Right.

And I think if you wait from 67 to 70, it increases by 8% per year. So you got 3 years of uh an 8% increase.

Mhm.

And if you can wait till 70, not everybody can, but if you can, cuz people are living longer, that's a pretty significant jump.

It is.

Yeah. So, I guess from like a financial advisor standpoint, it makes sense to tell our clients to take it early if there's a health situation, uh, a life expectancy situation, or you just flat out need it because you have to meet living expenses. Yeah. Haven't saved enough money.

So, what would you say the next one is?

Oh, it's, uh, too much cash, I would say. Um, we see that quite often, actually. We've actually seen it more since 2008 when people they basically got burned.

Yeah. Got scared, right? And they never got back in the market and they just figured let's just save some cash maybe in a high yield savings account or something like that, which back then wasn't really high yield. Now it's okay, but it's still not keeping up with inflation. Right.

Right. But the biggest factor here in my opinion is opportunity cost. Right. the money is just it's not participating in market growth.

Yeah. You look at what the market's done in the last year, year and a half, two years. And yeah, if you just had cash sitting on the sidelines at 4%, you lost big time. I mean, double digits. You know, cash is the the opportunity cost as you said, you know, cash is constantly eroding what it can buy. We see that every day in our life. Gas and everything else fluctuates, but you know, we see that everywhere. And so if your money is not earning whatever it costs, that inflation erosion is just dramatic.

It's massive.

Um, but then the next part of that I think too is I think most people don't really understand that even when you come down to like CDs um or if it is earning or earning small, it still counts towards provisional income like our first mistake that we're talking about. And I think so like, you know, playing it safe, sitting there, you're losing your purchasing power and you decide to take social security, it's now counting towards your provisional income.

I know when I build a portfolio, I typically only hold 1 to 2% cash in there. And that's mostly to cover fees or expenses or something like that.

Yeah.

But you're you're paying us to manage money, not manage cash.

Yeah. So, you know, 1 to 2% of course have an emergency fund first, first and foremost, right? That's fine.

Always.

No problems there. But don't let your money just not work for you when it can be.

And that's not just a retirement mistake. That's a that's a everybody mistake. I mean, you figure my general rule of thumb is always imagine your worst 24hour period and you should have that cash on hand.

Everything beyond that needs to be invested in some capacity. It It's just Yeah, I mean that's a big mistake period.

I agree. So, I guess the the final point on this is have an emergency fund. Um if you have a large purchase that you know you're going to be making coming up, maybe keep that ha cash on hand so you don't have to liquidate anything. Maybe get some short-term or long-term capital gains. That's fine. But for the most part, let your money work for you and invest it.

Yeah.

So, Brian, what's the next one we have on the list?

Uh, next one I would say is no tax strategy. I'd say where I see this kind of come into play most of the times is people come to me and they've pulled money for a purchase, whether it was small or to pay off debts or to help out kids, grandkids, some other capacity.

They pull cash because they needed it and then they don't realize that it came with either, you know, in some cases, let's say they're, you know, 55 or 56. Not only did they get early withdrawal, you know, penalties, then they got hit with taxes and it may bump them up a tax bracket.

But I think from the retirement perspective, it's just people don't realize that most of the money that you can access still comes with taxes in some capacity. So they think, okay, well, I've had this money sitting in a CD and I've if they've deferred it or maybe an annuity, maybe they just had like a fixed index annuity or a fixed annuity and they had this deferred tax consequence or places that we see whole life insurance. We see these people that were sold a whole life policy and I say sold because that's exactly what it is.

They were sold this policy. Oh well, we can touch it. We can use it. We can borrow from it. Well, then when they have a loan to pay back, they go to retire and they go, "I don't really want to pay a loan back." So, they go to cancel their policy and it's like, "Oh, by the way, deferred taxes."

So, I'd say most, this just comes down to planning, but I'd say like having no tax strategy. They don't know where to pick money from. They don't know how to get the money, you know, correctly. Like, they don't realize that you can do first in and first out or last in, first out. It's a reporting nightmare. But, you know, there is ways to maximize withdrawing money. Um, and I think most people just aren't aware of it.

Yeah, I would say you're exactly right.

I think um what you just said, withdrawing from the wrong accounts at the wrong time in retirement can certainly increase your tax bill.

Uh, another thing I would like to add to that would be, and we've said it probably in I would say four of the eight videos we've done so far, is asset location matters. Yep.

Right. Make sure your assets are in the most tax invested in the most taxefficient manner possible.

Yeah. Is there anything else you want to add to that?

Yeah, I would say what happens if you pass away, you haven't planned properly and all this money goes to your beneficiaries in a non taxefficient manner. That happens if it's not planned correctly.

For sure.

Mhm.

All right. What's the next one on the list?

So, the next one is required minimum distributions, RMDs.

So, RMDs themselves aren't necessarily the problem. Not planning for them is definitely the problem. So, I think a lot of people don't even realize the effect that uh the RMDs can have on the amount of taxes that they're going to be paying.

And we talked about this again before like the gap years when you are you just retired, but it's you're before age 73 and you're probably in a low income tax bracket at that point. That's normally a good time to either do Roth conversions or or even if it's not a Roth conversion, just do an IRA withdrawal or taking the money and using it.

Yeah.

Um but most people don't realize like they they can be bumped up into a higher tax bracket when the RMDs are forced upon you basically at age 73.

For sure.

Right. And currently um and this is general but I think like if you're 73 uh your first withdrawal is about 3.8% something like that or the first RMD of your uh qualified portfolio. Um that could be a significant amount. So, if you got a million-doll portfolio, there's an extra $38,000 added to your income and that works its way up for they heavily, if I'm not mistaken, they heavily weight it for about five, six, seven years. So, it gets it kind of ramps up.

Yeah.

Peaks and then kind of does the trailing back off. So, it's kind of like a bell curve.

Yeah. And so that matters too because I think you know you may if you get caught blindsided by year on year one imagine what year two three four and five are going to look like and it's not fun and then yes it starts tapering down but you're still I mean above the yeah I think at like age 85 you're it's at 6 point something%.

Yeah somewhere in I was going to say I think it ramps up to almost 10% if I'm not mistaken. I want to say it it I think it obviously depends on how much money you have. They they kind of waited for that. [snorts] But yeah, it it it could be a big oh crap.

Yeah, the government's getting their money whether you like it or not. And whether you need it or not as as income, it's coming out of your account one way or another.

I think something that's probably not talked about in our profession enough is inheritance. uh as as my generation the sees like the baby boomers start to like die off. I mean, imagine if I'm 60 years old and get hit with an inheritance and I have the thanks to the secure act.

Yay.

You know, I have this 10 years to distribute this money and let's say that it's a substantial amount of money, a million, 2 million, three million, and now I have to withdraw it within 10 years. I mean, that's a I'm facing that with a client right now is, you know, like right up at that window of getting close to retirement and now I have a 10-year window to withdraw almost $2 million in cash.

It's a challenge.

And then you start to think about, okay, well, now if I earn money or turn on social security, like all these little problems start clicking and adding up. And you didn't even plan for it. And so even if you plan, I think even if you plan well, you could get hit with a oh crap, you know, now what?

And unfortunately, like we've seen it where people are required to take the RMDs and the market is doing horrible.

Oh yeah.

Right. That's like a worst case scenario.

Yep.

And but it happens. Um so you can plan the best way to plan around that is to reduce the RMDs by as much as possible before you have to take them.

All right, Brian, what's the last one on the list?

Uh, the last mistake I think I see the most often is not updating beneficiaries. Um, something I try to do with every client, um, if they've got like one or two accounts and, you know, no life insurance, it's not it, but I have a worksheet that I do with them called the beneficiary audit worksheet and I make them audit their beneficiaries. So, the 401ks, IRAs, the life insurance policies, everything.

Because I think most people don't understand is you can have a well sorted will and say I've got a will. If you didn't change the beneficiary, the beneficiary trumps the will. Um, ex-wives happen to start getting claim to 401ks or life insurance or an old IRA or whatever even though the will states that the new current family is supposed to get it.

So yeah, I see that as a and that can be not necessarily retirement, that can be just a financial mistake that is made very often.

Yeah. So like Brian said, even if you think you have a really rock-solid will, uh, if you have beneficiaries listed on the accounts as someone else that's aside from the will, they're getting the money.

Yep.

Regardless of what the will says. And I think a lot of people don't actually realize that.

So I think another mistake is naming minor children as a beneficiary that could lead to legal complications where um when they get the money is determined at a state level. And so whenever we have clients that come in and want to name their minor children as beneficiaries, we try to bring in an estate planning attorney whenever possible all the way down to like your individual accounts because we were talking about beneficiaries.

Um, I think most people don't realize like their taxable individual investment account can have what they call a TOD designation or transfer on death. That matters too. Um, I think that's an oversight that often gets looked overlooked. Um, and really is important.

I mean, yeah. I mean, it's super easy to open an individual account. They don't ask for beneficiaries or anything on the forms. And so those accounts, they just don't have any beneficiaries. That could lead to big problems down the road if you pass away.

Unless you have a trust or a will that sets up a trust, right?

Is there anything else you can think of to add to the beneficiary?

Yeah, I mean, I guess like when should beneficiaries be reviewed? As Brian mentioned before, we have a pretty solid form that can help us with that. We try to at least do that once per year when we meet with our clients, but especially after a marriage or a divorce, um, after birth of a child or even a grandchild really.

Yep.

Um, after the death of one of the beneficiaries that you already had named. I think those are all important times obviously when getting married.

Getting married.

All right. So, as we wrap this up, is there anything else you want to add?

Yeah, I mean I think going back to the first thing that we talked about, there's a ton of YouTube videos that talks about when to take SSI and um, you know, I don't necessarily agree with any of them. A lot of them seem to be when to take it.

So you say, "Okay, take it at age 62 and you'll earn this much throughout your retirement period before you die, whatever." It's like a one-size-fits-all solution. And they'll bring up charts and they'll show you all this other kind of stuff. That's for one particular person.

Yep.

Right. Everybody is different. Everybody has a different situation. And I can't understand how you can recommend this is the exact age when you need to take it without actually knowing the client or the person or their situation or anything else like that. It just doesn't make any sense to me.

Some of those guys obviously aren't securities licensed. Otherwise, they wouldn't be able to say it. Some of them are, and some of them just have faith in whatever that system is that they believe in. That's fine.

The way Brian and I do it, it's per client. Everybody's different.

Everybody's different.

So, I just wanted to throw that in at the end. And I guess we can wrap this one up.

Yeah.

So, with that said, signing off.

Signing off.

Knoxville Financial Q&A Show Transcripts: Episode 8.

All right, welcome to the Knoxville Financial Q&A show. This is episode 8.

I'm your host Paul and I'm Brian. And today we're going to talk about 10 financial tips for retirement and pre-retirement in Tennessee, more specifically Knoxville. We've had a lot of people come in from kind of out of state that we've been meeting with. people either moving here for family or other reasons, and so planning for retirement has changes. It changes from state to state and most of them aren't used to Tennessee's freedom.

Really I mean the the tax advantages in Tennessee are real, but they do require sort of a different planning strategy than if you came from a high income tax state. Sure. All right. So, let's just get into it. So the first tip is emphasize asset location over state tax avoidance.

You know most people don't take into consideration the tax implications. So you have when you you know you bring in income during a normal year, you start factoring in federal income tax, you start factoring in, you know, all your retirement savings deductions, all that stuff. Most people don't take into consideration where their investments lie. because if you have like municipal bond funds that earn income out of state and you're getting hit with state income taxes and that state's taxes. Yeah. That's not great.

Yeah. I mean, I could imagine being an adviser in a high income tax state and just spending half the time planning just for those taxes alone.

Yeah. Just for the state.

Yeah. So, and you haven't even got to the federal part yet, right? Tennessee doesn't have that issue. Yeah, we don't have and we don't have state taxes on capital gains. We don't have state taxes on distributions from any account really. Now we do have fed sales tax but different story. We'll cover that later.

So there's no taxes on wages which is I mean I used to live in Georgia and I realized I think it was 5%. I don't know what it is now, but I mean that I wasn't making much money back then, but that extra 5% coming out for taxes at a state level wasn't fun. No, it adds up, right? And there's also no estate or inheritance tax that matters. And for us from a planning perspective, you know, we focus more on the federal taxes and how we can reduce that as much as possible if possible. and doing things like Roth conversions or tax loss harvesting. Yeah. And charitable remainder trusts or charity charitable contributions donor advised funds all play into that too.

So one of the issues that we are seeing though is when clients come from other states like California, New Jersey, places like that that have high state income taxes, their whole mindset for planning is completely different than what we're used to here in Tennessee. So us as advisers have to react and adapt and help them understand that things are different here.

Yeah. What they've been doing is not what they need to keep doing. Correct.

Yeah. And I know we just talked about it, but you know, Tennessee number two is Tennessee is extremely Roth friendly, which you know, sounds cliche to say that because the Roths are are great, but I guess there's a lot of people that don't take advantage of it because they have to factor in that state tax element. And so because we have no state tax on retirement distributions, Roths are almost completely tax exempt in Tennessee. And so that matters, you know, it matters for doing Roth conversions. Well, now because we don't have state income tax and they don't have to add a state income tax on top of their federal income tax, they could do Roth conversions before retirement uh and take advantage of both while they're working and then turn around and while they're retired as well and then you know before they start doing social security taking social security like I've got current clients that we are trying to figure out that lead time of 5 10 years sometimes before they start taking social security that we're doing Roth conversions that entire time. And it's I call it maximizing your bracket. You know, if you're bringing in 90 and your tax bracket falls at 100, there's a $10,000 leftover remainder where you should just maximize that bracket and do a Roth conversion. That way, you're taking advantage of your of your bracket. You're not leaving money on the table. You do that 2, three, four years in retirement. you do that in that 5 to 10 year gap before you start taking social security that adds up.

Yeah, we've talked about this in previous videos where the point from when you retire to maybe when you take RMDs, we call it the gap years. And the gap years are basically when you might be in your lowest tax bracket that you've been in in quite some time. And that's the perfect time to do Roth conversions. biting the bullet now might pay off substantially in the long run.

Yeah. Especially if we have good performance.

Yeah. So, number three, you know, there's qualified and there's non-qualified money. And qualified just means it hasn't been taxed yet for the most part. And then non-qualified means it's money that came out of your pocket, but can grow in in a brokerage account, but it's taxable. Mhm. the earnings on your investments in the taxable accounts here in Tennessee aren't taxed at the state level. They could be used more aggressively here than in other states that have a high state income tax.

Yeah. You know, you mentioned Georgia and 5%. I mean, if you slapped an extra 5% tax on your earnings on like dividend earnings for the year. Yeah. You know, if I'm making really good money and I start looking at that, I'm like, man, I'm giving up 10% to the government, 20% to the government plus, and then I'm adding another 5% in state. I could avoid that alto together. Whereas now, you come here and you're going, "Yep, I get that 5% back. That's an additional 5% savings. I'll take it." Yeah. So, long-term capital gains aren't taxed here. Qualified dividends aren't taxed here. So even though it's a taxable account, it still can be honestly tax efficient. And and also the way we do things is even in the taxable accounts, we we talked about it in step one where the asset location matters, we put things that would be taxable in sort of the the qualified accounts for the most part and try to eliminate as much taxes as possible in the non-qualified accounts. The fourth one is helping clients understand sales tax trade-off.

As we talked about before, like we're very tax friendly on the income tax side and tax friendly on all accounts, investment accounts side, but we have a pretty high sales tax. And one of the things that I talk about with all my clients leading up to retirement and in retirement is just most people spend more than they think they're going to spend in retirement. I think the biggest mistake that people make is every day becomes the weekend and I don't want to sit in my rocking chair and stare at the wall. So that all leads to kind of an increased spending habit and usually not substantially but you're going out to eat and you're doing all these other you know things taking your kids to shows or as we in in East Tennessee we have Dollywood and some of these other things that you can do with your your kids but or grandkids. And so I think that's the one thing is it can't really be overstated that you've got to kind of shift perspectives from income tax to sales spending have a sales tax 100%. 

People come here from different states like we talked about because Tennessee is an extremely tax friendly state. But that doesn't mean you're not paying taxes, right? And so just because you're not paying income tax, Tennessee relies heavily on sales tax. And as Brian mentioned, we're probably one of the highest in the country, which is cool because that allows you to pay taxes on things you want to pay taxes on.

Yeah.

So, if you do have the extra cash and you want to buy a boat, an RV, or something like that, just know that you're going to be paying a wicked amount of sales tax on that purchase, whereas you might not have in a different state. But just so you know, like you know, you think you're saving money on income tax, which you are, but if you can control your spending, you can definitely take advantage of Tennessee's favorable tax rates. For sure. For sure.

All right, that brings us to number five, which is Knoxville real estate creates wealth concentration risk. I'll pick on myself on that one. I mean, you figure, you know, if we paid $200,000 for a house in 2015, 2017, any of the good years, and then we had this massive runup of property value, and let's say my house is worth 500,000. Well, if I have a million dollar net worth and 200,000, you know, made up 20% of my and now all of a sudden it's worth a half million. Well, now 50% of my net worth just became real estate. And you figure especially as equity. And so, yeah, like multiply that times two or three or four properties if you got rental properties and other things. I think that's how 2008 people got in trouble for sure. And the problem with it really is that people think because they have these properties on top of their investments that they're diversified. Uh if we have a market crash, that diversification goes out the window. Your portfolio is going downhill pretty quick. Yeah. Right. Like 2008, I mean 2008 we had what 50% in some areas of property value drops, sometimes more than that. Yep. So if you think, oh well, real estate only makes up 20 or 30%. Well, now all of a sudden it makes up 50 or 60%. And then property value dips. Hey, it made it back down to 20, right? And we said it in a previous video, like I I I said it actually, you know, I thought Knoxville basically isn't overpriced. It just caught up to where it needed to be. Sure. But it's high. There's no doubt about it. and at some point it can't sustain this level anymore.

Number six, that brings us to number six. Number six is use Tennessee's lack of estate taxes a planning advantage. It is I mean I figure it's crazy to think about um because I've had this conversation with with a lot of my clients, you know, if they've had a loved one pass or something pass and they're calling wondering what their taxable occurrence would be and it's like it it's nothing. I mean, not unless you're inheriting a running ton of money, uh, for most people. Yep. It's it's pretty much nothing.

Again, guys, this is a state level Tennessee. This is not we're not talking federal here. Um, but a lot of states have uh taxes on they have an estate tax or an inheritance tax separate from the federal tax. And so, Tennessee doesn't have that. All right. Number seven is retirees moving to Knoxville are often underspending.

Yeah, this goes back to what we talked about kind of in a way on the sales tax thing. Most people are used to, you know, trying to avoid state income taxes. Um, and so they get that sticker shock element when they come here and it's sales tax. So then they just like don't spend at all. And it's it it trying to understand that trade-off matters. Yeah, I mean they come from a place where they basically have to budget for a certain amount of disposable income that they need for whatever they require for spending as far as groceries and all that kind of stuff. Um they come here, they don't have all those additional state income taxes, but they don't realize that they pay an additional sales taxes than, you know, probably maybe 3 to 4% higher than what they're they're used to. So, um, they don't spend as much, but it's that mindset of we have to budget because everything is so expensive and then they come here, wait a second, we don't have the state income tax and um, but then all of a sudden you have the sales tax. So, yeah, it's just something that I mean, it's not really a planning issue. We don't really plan anything around that as far as financial planning goes, but you know, it's it's something that we've noticed as far as clients coming in from out of state where their mindset it just takes them a while to to change their spending habits.

Yeah. Um leading into number eight, which is multi-state tax traps. Um, you know, I think if you live in Knoxville or live in Tennessee and you have a vacation home, whether it be in North Carolina, South Carolina, you know, beach home or something, uh, that you rent out and bring in income, that income is earned in a different state. And so I think that's people that do move here and start getting used to no state income tax don't take into consideration if they earn income outside of the state. This is something I think about all the time is maybe working three months out of the year in Hilton Head or something like that. Well, South Carolina has a 7% state income tax. And so, how is that a benefit to me? I mean, yeah, I get to be on the beach, but for the most part, is it worth 7%. [laughter] Not really.

Number nine is use donor advised funds more often. And the interesting thing about this is probably in states where there's a higher income tax state at the state level you know donor advice funds become even more important.

Yep.

They get seldom talked about in our line of work in this area because we don't have the state tax. Correct. You know a good time to maybe use them is if you did a really large Roth conversion. Yeah. Right. Or sold a business or sold like out of state rental property or sold something where you have a large windfall. Yep. Um or let's say that you've you know I've got a good instance where I had a client that um inherited some money when she was very young. That money has been doing well. It was invested properly by sheer accident. Uh and so you know that position has accumulated a very very very very large uh deferred tax value. And so, you know, if she's done well everywhere else, she could take advantage of converting that to a donor donor advised fund and just kind of washing that entire gains. And so, that would be potentially valuable, you know. Yeah, I don't I don't think that was that's her strategy, but I think she'll just take the taxes. But, it could be used in a similar fashion. Like, I have a client who has he's older. He's had a stock position that he's held on to for a long long time. he has a lot of shares, it's appreciated like crazy. And so if you ever wanted to liquidate those, that would be a good time to maybe use a donor advised fund.

And our last one, uh, we do have a bonus for business owners, but our last one, uh, is focus on the federal brackets, not the Tennessee brackets. We've already kind of glossed over this and this is a little bit redundant. matters in its own right, but but when you have the tax benefits that we have in Tennessee, it makes it super easy to plan on the retirement side because we just we focus on federal. That's our only hangup. That's the only thing that we have to kind of juggle. Um some other little nuances, but it makes it much more simple to to do what's right for the for the client. If you're in a state that has a high income tax and you ask, "What's my tax bracket?" Well, it's going to be different than what it is here in Tennessee.

Yeah.

Right. So, here you you got to say basically, "What's my federal tax bracket?" Yep. So, that was 10 tips for basically living in Tennessee, but in Knoxville in particular for some of those, especially when it came to to housing costs.

Our bonus is for our business owners.

Uh, so I get a lot of business owners that ask, you know, uh, how do I take advantage of some, they're looking for a loophole, right? They're looking for something. How can I make make some advantage? Um, and this matters. There are some caveats to this. Get with either your person or come see us. But, the biggest thing is you can hire your kids as long as they do actual work or provable work in the business. Um, and so, you know, you could, for example, have your kid do some ad administrative work, do some other stuff. Um, as long as you pay them, so let's say you pay them $8,000, you can turn around and take 7500, which is the max for Roth contributions. That $8,000 is a write off to to you, the business owner. So, you get to write that off your income. Um, standard deductions apply. So, your minor, your child, doesn't have to pay any income tax on that money. and then they can turn around and contribute 7500 to the max for the Roth IRA. And so, you know, if you only pay them 3,000, they can do all 3,000. If you pay them 5,000, they can do all 5,000 as long as they fall below that threshold. Um, but the idea there is you're basically creating a tax-free transition of money from you to them and allowing them to start funding their retirement. Um, I think that's just massive.

Yeah. Does it matter what type of corporation it is?

it does matter a little bit. So, there's some this goes back to some nuances. Um, you know, the easiest is going to be the sole proprietorship or the husband wife partnership. Um, escorp gets a little bit hairy. You lose some of the benefit because on the on the uh self-employed on your sle proprietor or um uh partnerships, they don't have to pay FICA or any of that stuff. So, when you get to the S-corp, some of it's unavoidable because you have payroll taxes and some other things. So, there will be some costs shuffled in there if you're if you fall into the S corp. Um, and then the next little bonus tip on the end of it is if you have a C-Corp, uh, you can turn around and take advantage of IRS 12, I think it's 122, 122. So, the IRS guidance 122, if you don't know what that is, look it up, come see us. But the the IRS guidance for 1202 allows you to basically um gift shares of your business that you're selling as long as it's been a C-corp for 5 years or longer. It gives you the ability to not pay taxes on millions. Uh you can donate them to your kids. It's crazy. Uh so it just allows a massive wealth transfer if you're selling a business as long as it's been a C-corp for 5 years or longer. So there are IRS nuances. just make sure that you have all your eyes dotted and your tees crossed if you decide to go down some of those paths. But we're gonna link all the um IRS resources down below.

So, I mean, this is factual like this is real from the IRS. So, we'll have all the links and you guys can check into it further if that's something that um you would like to pursue or come talk to us if you want further information on it. But, uh yeah, that's pretty cool.

Yeah.

All right. Well, I guess that's it for the episode 8 of the Knoxville Financial Q&A show. And uh with that said, signing off.

Signing off.

Knoxville Financial Q&A Show Transcripts: Episode 7.

Good afternoon. I'm your host, Brian Duncan. I'm Paul Ragone.

And welcome to the seventh episode of the Knoxville Financial Q&A. Today we had a really good question from a young couple that was really trying to seek some answers on whether they should get a Trump account or a 529. And we thought that was so good that we wanted to actually talk about it.

Yeah. So, the Trump accounts are basically brand new. The Trump account allows your kid to basically get $1,000 for free if they were born in 2025 through 2028.

Yep. 18 and under can still open an account. They just don't get the thousand bucks.

Correct. They just have to have a valid Social Security number. We can try to avoid political conversation here. I think if you just look at the account name and rule it out, you're possibly doing your child a disservice in the long run.

Sure.

Politics aside, it's a pretty darn good account.

Yeah. So, the key takeaways on the Trump account: there's a $5,000 per year contribution limit, but there is no income restriction. So, whether you make $50,000 a year or $500,000 a year, it doesn't matter. It's a deferred investment vehicle, so basically the guardian doesn't have to pay taxes on it. They get to defer that until the child becomes the age of majority, which I think is 18.Mhm.

And then what's really cool is they have the ability to convert that to a Roth, which is something probably not well known and not yet talked about much. I think that becomes one of the most valuable caveats to the Trump account.

[music] Words on screen: 
Quick note here. In general, that might be considered a good time for a Roth conversion. The conversion would be taxed at ordinary income tax rates and many 18 year olds have very little income. Some of the taxable amount may even be sheltered by the standard deduction. The exact tax costs depends on the amount of the conversion and the person's other income for that year. Consult your CPA if you consider this option.

If you don't convert it to a Roth, it's automatically going to convert to a traditional IRA.

Yeah.

So, in a Trump account, the investment selections are kind of limited, but the cool thing is it's capped at a 0.10% fee, which is extremely low.

Right.

So, you can't open a Trump account through me or Brian, right?

It's got to be done online through the IRS. Whenever you file your taxes, your tax preparer should hand you Form 4547.

4547. That's it. So, once you get that form filled out, they have one.

Interesting. I didn't know the form was named after that.

Yeah.

Okay. So, like Brian said, there's a $5,000 contribution limit per year.

That doesn't have to be directly from you. It could be from your parents, anybody. Any family member.

Realistically, I don't even know if it's classified to family members. I think anybody could contribute.

Either way, you're still going to be depositing through your own family members, but if somebody wanted to throw some cash in the pile, you could do that too.

Yeah. So even when it does convert to a traditional IRA, if you don't do the Roth, it's going to be under your kid's name. It won't be under your name.

Yeah. And the cool thing is you don't have to use it for retirement. So you don't have to convert it to a Roth or traditional IRA. They can actually use it and just pay taxes on it. If they wanted to buy their first house or use it to go to school or anything else, they can use it for that as well.

Yeah. And from traditional IRAs, at least the way current laws are written, you can take $10,000 out for a first-time home purchase without a tax penalty.

So, it's a good way to do both. You can use it for retirement and for your purchase.

Yeah. Okay. So that's the Trump account in a nutshell.

Pretty straightforward. And now let's talk about the 529s.

Yeah. So, a 529 is a wonderful vehicle if you know your kid is going to college. I'd say that's probably the caveat. They keep broadening the definitions. I've been doing this so long. When the 529 first started, you couldn't even use it to buy a laptop, and now they've broadened it to be much, much better.

Yeah. And it's getting to the point where it's almost worth doing no matter what at this point. We'll tell you why.

Yeah. One of the caveats here is that college degrees seem to be becoming less important.

Yep.

And now we have AI and some of these degrees are going to be kind of worthless in some ways, and you might have a whole bunch of student debt. Although the University of Tennessee has the most students they've ever had currently.

It's crazy, right?

And so, that's just something to keep in mind. I think college is important for sure, but at some point AI is going to be handling a lot of that workload and trades are going to be significantly more important. You're going to need someone to come over and fix your HVAC system, plumbing, all that kind of stuff. AI is not going to be able to do that.

Although I did see an AI-powered roofing robot thing that was pretty nuts.

Yeah, that was pretty ridiculous.

Really?

Well, I know they have AI lawnmowers too.

Maybe they'll come for trades at some point too. But for right now, no.

[laughter]

Yeah. It's just something that you have to consider if you're going to invest in a 529 plan.

The main benefit is education for sure. You put all this money into it and it comes out tax-free to pay for qualified education.

Yep.

However, in 2024, as we found out, they made some serious changes which allow you to do a Roth conversion on part of it.

Mhm.

Yeah. So let's say your kid doesn't go to college or doesn't use all of the money that's in the 529 plan. Even if they go to college, that money can be converted to a Roth IRA, which is pretty cool.

Very, very cool.

So that just happened in 2024. There's a lifetime conversion limit of $35,000, but you can't convert it all at once.

So you still have to follow the Roth IRA contribution limits. You do it over a period of years.

Yep. Up to $35,000, which is incredible.

Typical rule of thumb would have been to wait until your kid had the ability to work in a business if you owned one. Then you could pay them a wage and contribute that wage to a Roth IRA.

That's crazy because that's what you had to wait on. Now you don't have to.

Right. If you want your kid to have a Roth IRA, the only way to do that before was if your kid had income.

Yeah.

Right. So this is kind of like a loophole where you can contribute to a 529 and eventually convert that money to a Roth IRA.

Is there taxes on that Roth conversion or is it just simply you get to Roth convert?

So no, there are no taxes, but there are some caveats.

First, the 529 plan has to be open for at least 15 years.

Okay.

The last five years of contributions are not eligible to be rolled over. So they either need to be used for qualified education or spent.

Also, the Roth IRA must belong to the 529 beneficiary. So if you name your kid the beneficiary in the 529 plan, the Roth IRA has to be titled under that kid's name as well.

Can't be your Roth IRA if you have one.

Right.

What's cool about the 529 is you can roll it from child to child. Just remember, there's a $35,000 lifetime limit.

Let's say your kid doesn't go to college and you've got $50,000 in your 529 plan. Over time you convert $35,000 to a Roth and have $15,000 left. That $15,000 could also go to another beneficiary.

Right.

The biggest difference between the 529 and the Trump account is that the Trump account has a finite amount. You've got $5,000 per year until age 18, which I think is about $90,000, or $91,000 if you got the extra thousand dollars.

But the 529 doesn't have those same limitations. They have a maximum per beneficiary, which varies by state and can range from roughly $250,000 to over $600,000.

The biggest thing is just deciding what you're trying to accomplish for your child.

I would do both probably, if possible. But that's a lot of money.

If it's pick one, I don't know how you pick one. That's a tough call.

Well, it's client dependent.

Yeah.

If you are dead set on your kids going to college, the 529 plan is the way to go, especially with the Roth conversion provision they recently added. That's a game changer.

But you also get a free thousand in the Trump account. Take advantage of that even if you don't fund it.

Yep.

Even a thousand bucks is all you got.

Yeah. A thousand dollars over 18 years in a low-cost index fund is going to grow.

Make some money, right?

So take advantage of that.

If you're fortunate enough to have a high enough income to start maximizing all available savings vehicles, it would be ideal to max out the Trump account and contribute significantly to the 529.

If you could do both, that would be the ideal scenario.

From the Roth conversion standpoint, you used to need enough earned income to provide that opportunity to your kids. Now you have an avenue to do approximately $90,000 in the Trump account and $35,000 in Roth conversions from the 529.

That's a powerful combination to set your kids up with a hefty Roth IRA balance early in life.

I couldn't imagine what that looks like. With compound interest, that's probably two to two and a half million dollars by the time they're 60 or 65.

So if you're providing them with a cool two to two and a half million, they can essentially coast.

Don't tell them that. They'll spend it all.

[laughter]

But if you could do that for your kid, they could have a nice little job with a 3% matching 401(k), barely contribute, and still be in a significantly better spot than most people.

Definitely.

So, to put this in order: take advantage of the free $1,000 if your kid is born between 2025 and 2028.

Don't leave that sitting on the table.

It's free.

Use your 529 as the main college savings vehicle.

Yep.

And then, if you can, max out the Trump account for your child's future beyond college.

As Brian just mentioned, both the 529 and the Trump account can become significant amounts of money over time.

If you tell them, they're going to use it for a car or a house. So don't tell them.

[laughter]

That's the truth.

To sum this up, our clients asked us which one is better.

They're both good, and you have the ability to fund both.

Yeah.

You don't have to pick one.

If your desire is for your kids to go to college and that's really important to you, I'd probably pick the 529.

But I would not leave that $1,000 sitting out there. Take advantage of it.

So, I hope that clarifies things a little bit.

Yeah, especially with it being so new. It's a totally new phenomenon.

It's a cool little account.

And Brian's going to get to take advantage of that $1,000 here.

Only one of them. One of them will get it. Sorry about your luck.

Yep.

Anyway, with that said, signing off.

Signing off. Have a good one.

Knoxville Financial Q&A Show Transcripts: Episode 6

All right, welcome to the Knoxville Financial Q&A. This is episode six. I'm your host, Paul. I'm Brian.

Today we're going to answer three questions. Two of them are just ones that we get the most commonly asked. The third one comes from someone who sent in a question. So, let’s just get right into it.

The first question we have, Brian, is: should I pay off my mortgage or invest instead?

Yeah, that is one we get asked a lot. I think the simple answer to that one is just: can your investment returns generate more than your cost of a loan?I know it’s way more complex than that, but I feel like that’s the simplified answer.

It’s a very simple answer, but it’s correct. Five years ago, this question was almost a no-brainer, right? Interest rates were so low that it was pretty much, of course invest. It’s not the same anymore. You have to pretty much go by a client-by-client or situation-by-situation basis.

Yeah. Because if you have job changes or any sort of income shift, or a wife stops working and wants to stay at home, all those factors matter.

So would you say if your mortgage rate is at 3%, you locked in in 2015 at 3% or something like that—

Ride it to the wheels fall off. Exactly.

So the gray area becomes now what happens if it’s 6.5%?

Yeah. Then you start to think about how those amortized borrowing costs matter significantly. I think when you hit that 5.5% to 6% range, it’s almost double what your house costs on a 30-year note.

Yep. So if you buy a half-million-dollar house, you’re paying a half-million dollars in interest. That’s crazy to think about.

Most of your beginning mortgage payments are mostly geared toward interest only.

Yeah. Ninety-plus percent.

At least. So let’s say you might have five years left on your mortgage, you’re pretty much only paying principal at that point. That’s something to consider as well because it’s not really costing you as much anymore.

Right. So you’ve already paid a big bulk of the interest at that point.

Yeah. Look at factors like our real estate in Knoxville and Farragut and all the other areas around here. We’ve had such an influx of people from out of state that our real estate prices have gone way up. So you factor in that cost of real estate along with the cost of a loan, it’s brutal.

It’s a tough decision for some people. My clients are older than Brian—I say this all the time—and they’re approaching retirement. Some people just want peace of mind. They don’t want to have to deal with having a mortgage. If you don’t have a pension, you’re potentially going to be in a lower-income situation and you don’t want to deal with a mortgage payment.

Unfortunately, we’ve said this before, but you never really own your home because you always have to pay property tax on it. It would be cool if—I’m not even sure if this is being discussed in Tennessee for real—I heard they were planning on potentially eliminating property taxes.

I think Florida is pretty gung-ho on it.

But here, let’s say you paid your house off. Start there. If you pay your house off, you own it. No more property taxes. That would be a good start in my opinion. Then after that, spread it out, see how it works. There’s a reason a lot of people are moving to Florida. There’s also a reason a lot of people are moving here. It would just be nice to actually own your home.

Either way, if you’re eliminating a mortgage payment and you’re going into a lower-income situation, the peace of mind—I don’t know if you can really put a value on that. There’s no planning software that factors in, “I don’t have a stressful overhead payment this month or any month after that.”

Exactly.

What’s the next one we got?

The next one is: should I buy a rental property or invest in stocks, especially in Knoxville?

Yeah, I get asked this one quite a bit. I have friends that are successful in real estate in this area and I have friends who see that success. They always ask, “Maybe I should be doing this.”

Knoxville in particular is a little bit unique because we don’t have situations like Detroit, where all the car manufacturers moved elsewhere and the city collapsed. Knoxville doesn’t have that situation. Between the University of Tennessee and all the major facilities in Oak Ridge, the economy is always going to be pretty stable here.

If you want to talk about actual data, you can do a simple Google search on this, but the returns on rental property here in Knoxville are between 6% to 12% leveraged. The stock market has historically returned between 8% to 10%.

The question really is whether those differences in numbers are worth it if you actually want to be a landlord and have to deal with whatever goes wrong in the house that you own but don’t live in.

Everybody wants to be a landlord until you have to do landlord things.

Yeah. Quite honestly, I had several clients that came in with rental properties and they couldn’t wait to unload them. These are older clients approaching retirement, and I can understand why.

I think a good scenario for possibly owning rental properties would be if you’re empty nesters, one of you works, the other one stays home, maybe is bored, and is willing to take on the responsibility of managing those rental properties.

That’s a lot of where my conversations steer. When I start getting asked that, most of my conversations become less about returns and more about lifestyle. I have an acquaintance who owns apartment complexes and duplexes. We’re talking about $40,000-plus a month in rental income. It’s great money.

But he has a stack of three cell phones. If you can get him to a lunch appointment, which is borderline impossible, one of those phones is guaranteed to ring. Everybody wants to collect that check until the garbage disposal breaks on a Saturday morning or the dishwasher dies.

Most people that are successful in it do it because they love it. I don’t think they’re always measuring ROI. Maybe it was inherited, maybe they built into it over time, but they genuinely enjoy it.

The leverage part matters too. If I have a widget I can sell for a dollar and I only have $10,000, I buy 10,000 widgets and sell them. To maximize that, you leverage it. But borrowing money adds carrying costs and overhead. It’s not as sexy anymore.

If you love real estate and you’re destined for it, invest in real estate. Most people, though, that’s probably not the scenario.

I agree. Knoxville housing prices have increased substantially over the past few years. Add that on top of increasing mortgage rates and it’s not really a good scenario.

Right. What if you have really bad tenants? What if 2008 happens again? What if you just bought a house for half a million and now it’s worth $220,000?

Exactly.

If it was 2020 or 2021 and housing prices were where they used to be, maybe rental properties made more sense back then. But where they’re at now—and by the way, I don’t think we’re overpriced, I think we just caught up to where we should have been—if you’re looking at it right now, I personally would not want to be a landlord.

I don’t want a call at one in the morning that the hot water heater went out. I don’t care how much it’s cash-flowing, which by the way, it’s probably not cash-flowing much if you’re buying right now with current interest rates.

There is one scenario that might make sense. I’ve had this happen with clients where they move out of their existing house they’ve lived in for a while and buy a new house without selling the old one. In that case, the client knows the house. They know when the water heater was replaced, when the roof was replaced, and they can project potential expenses.

Assuming good tenants.

Assuming good tenants, right. That would be the only situation where I’d personally consider renting out a home.

That’s probably fair.

Is there anything else you can think of?

Yeah. One thing that impacts ROI is being able to write off expenses. If something goes wrong, you can write off the repair. You can also write off loan costs if you’re carrying a mortgage. So there are some tax benefits there.

If you’re not close to retirement and you just plan on diversifying your portfolio overall, rental properties are not the worst situation. I just personally wouldn’t do it right now in Knoxville.

I was reading something about the old 60/40 portfolio not working anymore. One alternative they mentioned was a 60/20/20 portfolio: 60% equities, 20% bonds or fixed income, and 20% real estate. I thought that was a cool concept because it creates more diversification.

But again, it still comes back to whether you actually want to be a landlord.

Yep. I agree with that. If this was something I really focused on, it would probably be close to UT because of the amount of student housing needed. Even though they’re building like crazy, there’s still not enough.

Those properties will probably always have value for renting to students, but then you also have all the problems that come with renting to students.

Personally, I’d rather invest and not deal with any of that.

I think our next question is from Michael. His question was something like this: “I live in Farragut. I make really good money. Everything seems to be getting more expensive. What’s the deal?”

We’re going to paraphrase that for you, Michael, and say what you’re probably experiencing is what we call lifestyle inflation.

Lifestyle inflation can equate to so many different things. You always want a bigger house. Me, I always want a bigger boat or a nicer boat. The reality is sometimes it just doesn’t make financial sense.

If you have all your priorities in place—your emergency fund, retirement savings, maybe your house is close to paid off or you have a low interest rate—then maybe consider those things. But if you want to keep up with the Joneses, you’re probably going to end up hurting yourself.

You end up broke with the Joneses.

Exactly. If you save and invest properly without worrying about the Joneses, eventually the Joneses will want to keep up with you.

I’ve always used this illustration: here’s your income, here’s your expenses. The two best ways to improve quality of life are increasing your income or decreasing your expenses. Ideally, you do both.

I call that gap the “quality of life gap.” If you make really good money and keep your expenses low, you’re able to go on more vacations and do things most people can’t do.

Most people, when they get a pay raise, buy a new car or a new house instead of just investing the raise or building their emergency fund.

Lifestyle inflation is real, Michael. That’s probably more of what you’re experiencing.

I look at my own house. In 2017, $150,000 to $200,000 bought a pretty good house. That same property is now $550,000-plus. That wasn’t even ten years ago.

So if you bought a house recently and you’re experiencing lifestyle creep, it’s not just you wanting nicer things. Everything is getting more expensive.

One thing I’m most guilty of is subscription creep.

That should absolutely be a coined phrase.

I’m totally guilty of that. I don’t even know what I pay Apple every month now. Netflix, streaming services, all of it. Someone says, “Have you seen that show?” and suddenly I’m subscribed to another service.

“It’s only seven bucks a month,” right? Times ten.

Exactly. Add all those up and you’re paying a substantial amount every month.

Some of those things I probably don’t even use anymore.

Sure. And if that’s what you value and enjoy, maybe don’t skimp on it. But if you’re not using it, that’s a problem.

The other thing I’m guilty of is the boat. I have a modest boat, but the slip rental at Concord Marina is not modest. It’s a substantial expense.

It’s like a mortgage payment.

For some people, absolutely. Then on top of that, we live in a neighborhood with a pool and HOA fees.

And then there were several golf carts that started appearing in the neighborhood. For some reason, I just wanted the nicest one.

My midlife crisis was pretty modest. It’s not a Corvette. It’s just a really nice golf cart—or technically not even a golf cart. It’s a family hauler.

And I love it when we use it.

I saw a side-by-side recently that was fully enclosed with air conditioning, heat, and CarPlay. It costs more than a car in some cases.

That’s crazy to me. It’s basically not a golf cart anymore.

This all relates specifically to Knoxville and East Tennessee because of our topography. There are so many cool places here to use side-by-sides, boats, all of that. That’s why marinas are so expensive. Slip rentals are in huge demand.

We’re very blessed recreationally here between mountain biking, road biking, golf, lakes, and everything else.

This ties back to retirement. How do you want to live in retirement? Because doing all those things on weekends isn’t cheap.

If you want to do those things and it improves your quality of life, great. Just make sure you have your bases covered first.

Plan for it.

Exactly.

With that said, we’re wrapping this one up. Keep sending your questions and we’ll answer them. The best way to see our videos is just type in wealthy.com.

You can also schedule on our website or send us individual emails.

And if you go to wealthy.com, it takes you directly to the page where all the videos are hosted. As soon as you scroll down, there’s also a place where you can ask a question.

With that said, signing off.

Signing off.

Knoxville Financial Q&A Show Transcripts: Episode 5

Welcome to episode five of the Knoxville Financial Q&A. I'm your host Brian. I'm Paul. In the last video, we talked about who we can best serve and we got a response from Michael who asked, "Hey guys, my wife and I just watched your last video and really enjoyed it. My question is, what kind of difference in investment return should I expect from working with you or any adviser versus us doing it on our own? It's a good question.

What does the magic wall have to say? What does it have to say? 3%. All right. Well, that's the answer. That's it for this video. Thanks for watching.

We're kidding. Yeah, that really is the answer. We thought I thought it was a really great question because I always felt like we did provide a lot of value over what people that try to do it on their own can do, but I never try to try to quantify it in a way that there's an actual number, right? Because there's lots of things that go into financial planning. Yeah. Some of that is tangible, some of that is intangible. Yeah. You know, for sure.

Fortunately for us, Vanguard did a study and I'm going to link it. It's a PDF. I'm going to link it below. It's pretty in-depth. It's like 28 pages or something like that. So, what we've done is basically take that information and narrow it down to a couple of bullet points.

Vanguard suggests that there is a 3% difference by working with an adviser. Obviously they are talking about their own advisors, but when we go through these bullet points, they're essentially listing the same exact things that have been listed on our website for many years. So, Brian, what's the first bullet point?

Behavioral coaching. Which goes back to the first thing I said, which was, you know, call me coach. You know, I said it for accountability, but the reality is when you look at how behavioral finance is applied now, it makes all the difference. Most people make bad decisions when it comes to money. Both in when to buy, when to sell, on what to buy, what to, you know, borrowing, when to borrow and when to invest. All of those factor in. Yeah.

What does it say that that value is to making the right call and having somebody in your corner? So according to Vanguard study, that attributes to 1.5 plus or minus 1.5% or more in your returns.

I'd say that's probably fair. I mean, you figure most people, you know, if you apply the idea of like Warren Buffett, you know, when what does he say? The stock market is the only market that when everything goes on sale, everybody runs out of the store. It's a huge deal.

Yeah. Speaking of Warren Buffett, we have a quote on one of the walls in our conference rooms that says investor returns equal investment returns minus investor behavior. And that quote cannot be understated. Guys, I don't know any other way of saying this except that a lot of you make very bad decisions at the worst possible times.

I mean, you it says one and a half percent. You figure, you know, if if the average market return was 10, that means that you're making a a mistake that cost you 1 and a.5% based on just So now you're netting what, eight and a half? Yep. Just because of bad decisions of selling at the wrong time or buying at the wrong time.

And most people I've always heard it said, time in the market beats timing the market almost 100% of the time. And I it just proves that point. And what's the next bullet point?

So the next one is tax efficient investing which Vanguard says attributes to almost 3/4 of a percent or more in returns. These are things that we've actually have previously talked about in in other episodes. But what that means is asset location, tax lost harvesting, and withdrawal sequencing can materially improve after tax returns.

Yeah. You figure if you're taking money out, you know, you get if we get a customer that calls and says, "Oh, I need some money." And it's markets up, you're going to take a lot of, you know, taxes. you might as well pair that with either a negative to try to do some tax loss harvesting or you know maybe sometimes it's just talking them off the hey maybe borrow for you know a couple 30 days or so and see if we can get a better market return to try to mitigate some of that. You know most people underutilize borrowing.

Yep. just had a a client open up a line of credit secured against their you know investments to collateralize their investments so that way they don't have to worry about that. I think something like that's an underutilized tool for sure.

And as I mentioned, it is something that we've already talked about, but asset location is extremely important. And just to a quick review, all that means is you're taking assets that are tax inefficient, such as dividend paying stocks, and you're putting them inside of an IRA where the taxes are deferred, right? Versus other equities that don't pay dividends that you don't plan on on selling. you can you can put that in an individual account and you won't have a big a tax issue.

Yeah. But to your point too, you know, that the the tax efficiencies, you know, I had a a client, this is a long time ago in the state of Tennessee, we had something called the hall tax, which was anything that was dividend producing. If you made over 5,000 in dividends, you had to pay a 5% state tax. I had a client wealthy, lots of money, and they were being recommended by their CPA to get out of the dividend producing stocks because they were having to pay estate tax. And you know, it's like foregoing profit just because you don't want to pay taxes. That's a prime example of like, okay, so you don't want me to make money to avoid paying taxes. I mean, that's just crazy.

Well, we've mentioned this before, but CPAs look at this year, maybe next year, where we got to look 20 years down the road. Oh, yeah. So, Brian, what's the next bullet point?

Uh, I think it was rebalancing, uh, which was to be right around estimated 35% or a little over a quarter percent. Uh, which what's funny about that is most of that we put on autopilot by just having quarterly, annually, semiannually, but we can automatically put that on a portfolio without even have to to think about it, touch it. So that the strategy that we start with is the strategy that we end with during that year.

Basically, what rebalancing does is it allows you to sell the things that are high and buy the things that are low, which is exactly what you should be doing. Yeah. Because as as we know, not every asset class performs the same year over year. No. We see so many winners of one year become the dogs of the next.

Yeah. And so also when you know we're talking about rebalancing, we consider something called portfolio drift where you might have certain asset classes that you're invested in and we might put maybe a 2% variance in there. And if it does really well and let's say it's up at 3%, we might do a rebalance right then and there whether it's quarterly or not. But that matters. All these things matter when you add them up.

But yeah, that reminds me of that any given Sunday quote, you know, which is like football is a game with a of a matter of inches. And I feel like investment is the same way. You know, most people don't really take into account that all of those inches add up.

So the next bullet point is cost-effective implementation which Vanguard says can increase your returns by 0.45%. Plus or minus. Part of the reason they say that is because they're use Vanguard's no load funds but we also have no load fund strategies as well and we also use Vanguard.

Yeah costs get expensive. I'd say in the right strategy for the right person, making sure that you mitigate those is important. But I would also say that, you know, there's a reason why Ferraris and Bentleys exist. I've always heard it said that price is only an issue in the absence of value. You don't always want to hop on the cheapest flight, especially if you're going overseas. So, yeah, I would say that that may be one of those where it's there's a trade-off, you know, for sure.

So, Brian, what's the the last bullet point?

uh withdrawal strategies. I think when you get to retirement that matters significantly. Balancing social security income, balancing what you take from whether it's a Roth, whether it's a 401k or whether it's a a traditional or other qualified money or non-qualified money. If you've managed to to sell off property or save up, you know, each pile of money that you can pick from comes with different tax implications. And I could see how withdrawing from the wrong pile at the wrong time they say is what was it 1% or less?

According to the Vanguard study it attributes up to 1% which is that's significant significant that matters. I mean and I would say that that's actually probably fair. I mean I've seen instances where people have withdrawn money from the wrong place at the wrong time. Whether it illustrated a 1% I could see that that's reasonable. Yep.

But yeah, I could see how, you know, withdrawing from the wrong pile at the wrong time matters. You know, you just look at social security by itself. If you wait 62 to 65. That's a big time. Okay. Well, if that accounts for 1% income difference, that matters.

I mean, I don't know how you quantify this with a percentage, but what if we can help you create a strategy where you don't outlive your money, right? Is there a value that you can quantify that with? Because I don't know, it it just seems like that is something that is priceless.

It is. I mean, don't outlive your money is the the probably the number one Well, not accumulating enough, but then yeah, not accumulate enough being number one problem. And then I'd say then the second part of that is outliving your money.

So guys, basically this all adds up to 3% according to Vanguard, right? And so we obviously broke down a 28 page document in 10 minutes. So I wouldn't say that this is guaranteed in any way, shape, or form, right? It's just their study that they did. The numbers seem realistic to me. In fact, the one about the behavioral coaching where they said one and a half percent or more, I'm leaning towards the more side in all honesty. The amount of people that we've had come in who have made really poor decisions at really bad times that we could have prevented from happening would have saved them a lot more than one and a half percent. For sure.

Right. And so I think that's the biggie right there out of all the other ones. the behavioral coaching, which is something that we really focus on based on the amount of education that we put into working with our clients. To me, that stand. It's obviously the highest one on there, but it also stands out to us as being the most important with or without a Vanguard study.

All right. So, with all that said, we're not saying that we're going to outperform everyone by 3%. We know that there are some DIY investors out there who spend a lot of time, have good discipline, and and do really well on their own, and that's fine. We're just talking about, you know, the average investor that that comes in and and works with us. And we're trying to justify paying they're trying to justify paying us a fee. And this 3% number, by the way, is net of fees. if you if you read the whole study you know but most of those are statistical anomalies when you start looking at statistics and sample size you know you increase the sample size you increase the accuracy and so I would say when you start looking at those people that can do that they are the outliers those are the people that don't fall in the general public most of us kids you know baseball games softball games you know life gets busy you know it's the same reason that I always talk to clients or or potential clients and say, "Do you pay somebody to cut your hair?" You can cut your hair. Don't get me wrong. It may not be good, but you can cut your own hair. Uh, you know, why do you pay somebody 50, 100, 150? And it's just sometimes simply to outsource some of my life, buy back my life. Why do you pay somebody to mow your grass? Lots of people pay somebody to mow their grass. Not because you know you need somebody to mow your grass, but sometimes it's just better to buy your life back. So, you know, focus on your life, focus on spending time with loved ones, focus on the things that matter. You know, let somebody else handle something that, you know, we can prove that there's an advantage to.

Yep. 100%.

So, Michael, our phone number is 865-342-7766. Be sure to ask for Paul. No, I'm kidding. Brian and I work with most of our clients together anyway.

So anyway, we have we have a couple of upcoming videos planned that I think the the one about the tips and tricks is going to be a really good one. So stay tuned for that. And I think we covered all the the bases on the Vanguard document here.

All right. So the document will be linked below. It's a PDF file. You're you're welcome to download. It's going to be on our website. As I mentioned before though, if you do download it and look through it, if you're going to spend time to to read 28 pages, I invite you to spend just two or three minutes on our website and all of that same information is on there as I mentioned earlier. And it's been on there for years. So, we feel pretty confident in in being able to use this document and that 3% number as a correlation to what we do for our clients.

So with that said, signing off. Signing off.

Knoxville Financial Q&A Show Transcripts: Episode 4

Okay, everybody. Welcome back to the Knoxville Financial Q&A show. This is episode 4 and I am your host Paul. I'm Brian. And today we're going to answer a question that is basically in three parts. And so the first part of it will be when should I hire a financial adviser?

I mean there's lots of reasons to hire a financial person. You know, the biggest thing is just we all need accountability. One of the things that you think about or I think about, I correlate it to like being in fitness and I think about people going to the gym. You know, if you want to lose weight and get fit or if you're trying to build a bunch of muscle mass or you're trying, you know, you have a specific goal, having somebody to help keep you accountable, it I think far surpasses everybody knows what they need to do, you know, lift weights or do their specific exercises, you know, there's so many YouTube videos or so many access to information, but having that person to help keep you accountable, I think makes a massive difference. Yeah. So, we're basically like the gym trainer. Yeah, for your money, give me call me coach.

I mean a really quick simple answer I think would be if that thought even crosses your mind whether you need to hire one or not, you probably maybe you might need to hire one. I think another thing another time that might be appropriate would be especially if you're not used to investing and you come into a big inheritance or sale of a business or something like that where you just come into a large pile of money and you don't really know what to do with it from a tax standpoint or investment standpoint.

You nailed it. I was going to say tax efficiencies matter so much. You know a lot of that that's that is another thing I guess tax efficiencies across the board. I mean you know having something that has high turnover you get subject to taxes. So like you know when you make $2,000 it's not that big a deal but if you make 20 30 40 50 grand in the year on your investments because you have a million dollars or a half million or 100,000 that matters. But yeah I you know the other thing too which I'd love to find the data I don't remember the data point but I've seen that that you know it's behavioral finance is what it comes down to but it comes down to most people always exit at the wrong time and so that time in the market beats timing the market when everybody tries to time the market and it's it just rarely works in their favor. I agree. It may work once or twice, but I think another scenario would be you're approaching retirement. You've been investing in your 401k the whole time and you didn't really need financial advice. Maybe sometimes the 401k provider will provide that. Most of the times lately, not so much anymore. And so you're getting close to retirement and you got this big pile of money in your 401k and you don't know what to do after you retire. How where's it going to go? How to manage it? Well, sometimes even before retirement, we look at like the rise of inservice distributions. You know, people who are 50, 52, 53, 54, 55, you're getting really close. You've built this pile of money. And if that's all you've ever had is that pile of money there, you know, because of the 2008, we've built in those inservice distributions where the plan stays active, everything stays the same. You can stay contributing, but you have the ability to remove all of your money out and go get professional management. So you can try to get that active management that you know when the market dips you're not quite as low you know and so that there's I think that element there just matters significantly too. It definitely matters especially since I think maybe the very first video that we talked about a lot of the 401k plans are now just target based. Oh yeah based funds and so you you know that's not really the best case scenario. you have the ability to still work, still keep the same 401k, still contribute, take some of those assets and have them actually professionally managed with more much more diversification.

Is there any other reasons you can think of somebody might want to hire somebody?

Yeah, I think when your DIY approach is no longer working you might actually be costing yourself some money.

So, can you think of any other reasons?

You know, I think if some major life decisions happen. I mean, I I have a lot of clients get come to me and ask this question, too. You know, like, I have some money saved up. I want to buy a house. Should I put more money down or should I borrow or should I just do 100% financing? You know, I think a lot of that comes down to can your money out earn the what it costs. I think some of that matters too, having somebody a be able to break those down because a lot of people get stuck and I've seen this way more times than I care to admit, but a lot of people get stuck in that I just don't want debt or I just don't want to have a payment. And so I think a lot of people will make not necessarily the best decision financially just to avoid the debt or just to avoid but you know prime example when we had mortgage rates at like two two and a half whatever percent all the way down at that low now you can get a CD for three or four or five if you came to me and said should I pay off my mortgage or should I you know invest this extra money. It’s is a question we get all the time. Yeah, keep the mortgage and invest. And so I think, you know, a lot of a lot of people probably could find those answers with whether AI or anything else, but it comes down to if you've got somebody that you can pick up the phone and call, nine times out of 10 that will happen way more than going to Google for something. Oh, definitely 100%.

All right, so the next question, the next part of this question would be, do you have an account minimum?

Yes and no. We don't publish it on our website and we do that on purpose because everybody's situation is not just based on how much assets they can bring us to manage. We don't Brian and I don't work like that. We do gosh I mean we do a lot pretty much pro bono, right? Yeah. And and the part of that reason is because we love doing we what we do and we love like it's goodwill essentially. And sometimes basically I mean we can't work with everybody. That's just the way it is. Some people there's nothing you could do for them. But even those people we'll sit down with them and spend some time with them and try to give them the best advice possible. And in return, and I've had this happen to me personally, because we've done taken that step, we've received referrals from that person even though we couldn't even help them, but they knew that we had their best interest in in mind. And so, part that's mainly part of the reason we don't publish a a minimum. Yeah. Because every situation's different. You know, some people starting out have substantial, you know, goals and substantial income. Yep. And just because you don't have that amount of money, you shouldn't get advice. It just seems backwards to me.

Yeah. So, in Knoxville, I'm I'm fairly confident with this number. I I didn't do any research on it, but I'm I'm fairly confident in it. But I think most advisers their minimum would be 500,000 just just to talk with them. And that's great. I have no problem with that. But there's people I mean we just ran across a couple that they're both high income earners. They're just now they have low debt. They're just now able to put away a bunch of money. We gave them advice. They came back, took our advice, and you know, invested 50,000 to start and putting $5,000 in per month. Well, let's say we had 20 of those clients. So, if we had 20 of those clients doing that same thing, that's 1.2 million in assets that we'll be managing per year that we didn't have before if we put $500,000 on our website. And these are people that we want to work with. And just because they don't have $500,000 now, we're able to guide them to the point where we're giving them advice through this whole entire time, they're going to be great clients for a long time. Yeah. Right. And so, why would we not want to work with people that are high income earners, that are willing to take our advice and and invest the amounts that we tell them to, it just makes no sense.

So, we don't publish a number. There is no number for us. It's client dependent which what you just said matters more than anything. I think the biggest thing is we've all been here so this has nothing to do with financial stuff but you know people ask for advice you give advice and it could be sage advice and they don't follow it. I think that comes down to this this goes back to that like who could you help or who could most benefit the people that are genuinely looking for help with their situation that are willing to take advice and apply it. I think that is the summation of everything. I think whether you got $2 or two million, if you need some help and you're willing to apply advice, we're looking for you. Exactly. 

And then the last part of this question is, who can we serve best? I think that would be what I just Yeah, pretty much. I mean, in all honesty, like the the big majority of our clients are people that are getting close to retiring, like we mentioned earlier in the video. People that are getting close to retiring that have a big pile of money in a 401k and they don't know what to do with it. They need it managed after retirement or like you said, inservice distributions before retirement. Yeah. I mean, I see that. I see, like you said, inheritances. I see people that have gone from, I guess, what I would call 0 to 100. So, you get some, you know, people right out of school or people that got maybe got a really good career. They went from bartending to, you know, being a not saying a CEO, but you get the idea. And so, we've seen that with musicians and and, other professionals, but, you know, you go from making hardly any money to now making money. Now, what do I do? I think trying to damage control on everybody's situation is far worse than starting it correctly. And so getting that that everything in order to where there's a benefit via taxes and all the other things and work your way into it is better than showing up with the million bucks or the 2 million bucks and then it's like here's my mess, help me clean it up. I think another situation where someone can benefit from us would be if your financial situation is very complex and we have the ability here to bring in a CPA, bring in an estate planning attorney and we all meet in our conference room and at least for the initial consultation and then we're all on the same page right from the get-go. There's no making a whole bunch of different phone calls back and forth and we're all trying to communicate with each other. That's something that we, you know, we focus on a lot is being Brian and I are like the quarterback and then we have this this team of professionals that that help us navigate really complex situations. So, if if that's you, we're the answer quite honestly.

Yeah. Sale of businesses gets really messy. You know, what you said before is when you kind of come screeching into retirement with a very large 401k is not really that complex. But if you've got thrift savings plans, numerous IRA'S, you know, inheritance accounts, and all these old annuities from those inheritance accounts or inherited accounts, I mean, yeah, you can somebody can get lost in the weeds pretty quick on trying to decipher through all that and retire. All right, I just thought of something else. when it when it comes to account minimum probably should have thought of this during but you know we get certain investment vehicles that have limitations and so sometimes it's not so much as an account minimum as much as it is an investment minimum. Rules that are set forth from our what we call a custodian or rules that are set forth in our trading platform all require us to fit within certain guidelines. So, you know, this goes back to like diversification and everything. You know, if one position or two positions or three positions that we really like may require specific amount of money. So, it's not so much a a minimum, but in order to utilize the strategy that we want to utilize requires a certain amount of money. So that's something to think about, too. You know, we may be able to talk a great game when we're having the conversation, but if you don't have enough money to participate, it it kind of kind of stinks a little bit.

Yep. So, I think that sums up this video. One thing I wanted to mention is that a lot of people if they're trying to find our videos or whatever, and they go to our website, which is iws.one. some people might type in IWS.com. So what we have done is created a new domain name just to redirect to the page where all the videos are hosted on. And so that domain name is wealthyknox.com and that'll take you right to all the videos. Are you going to put it up right here? Mhm. It'll be right there. It'll be right there on this wall. All right, guys. Thanks for watching and keep sending your questions in. We appreciate it and feel free to comment, like, subscribe, whatever you want to do to our channel. But for the most part, we just want people on our website to just watch the videos and not have to do any of that stuff. We do want questions though. So send your questions. Send your questions. So with that said, we're wrapping it up, right? Signing off.

Signing off.

Knoxville Financial Q&A Show Transcripts: Episode 3

Knoxville Financial Q&A Show Transcripts: Episode 2

Alright, everybody. Welcome to episode 2 of the Knoxville Financial Q&A show. I am your host, Paul. I'm Brian. And today we are answering four questions that you guys sent in. You sent in actually quite a bit more than we expected, which is great but these have to do with taxes and since tax season's coming up, we figured this would be the perfect opportunity to answer these questions. And so, let's just get right into it. 

Mark asked, "How can high income earners reduce taxes legally?" Alright, there’s numerous ways. The biggest thing is just trying to figure out which ones impact your exact situation. So, you know, one of the first ones would be, yeah, I mean, it's an easy one. Most financial advisors should be doing it anyway, but asset location is a big deal. You hear a lot about asset allocation. You don't hear much about asset location. Asset location just means you're putting tax inefficient things like dividend paying stocks or whatever in in let's say the traditional side of your portfolio where it's tax deferred. So you're not paying taxes on those dividends. And then you put your tax efficient equities that don't pay dividends essentially in your brokerage or individual account. This way there's not a whole bunch of taxes being generated, right? 

And then you also have things like tax loss harvesting, which is a way to offset gains. It doesn't really impact it when it comes to like income taxes per se, but it helps you when it comes time to take those gains. It can it can reduce your income tax a little bit if you have, you know, it's been a really good year and you have some really good gains. Short term. Short term for sure. and you want to at least mitigate or reduce some of those gains with just by doing simple tax less harvesting. Basically tax loss harvesting is selling things that have not done well to offset some of the gains that you have incurred for the equities or whatever that have done well. 

Yeah. But when it comes to some of the high income earners and places really the the biggest is going to be like for self-employed or business owners, things like SEPs and things that allow you to basically have a separation of your business's contribution to your retirement and your contribution to retirement. You know, a lot of the high income earning W2s don't have very many places to hide. They can max out their 401ks obviously, but kind of outside of that, you're very limited on what you can do. You know, if you make over, you know, $300,000 a year, you're pretty much out of luck when it comes to hiding outside in a W2 at least. I'm trying to think of other other ways that really impact.

Well, one of them you just said max out your 401k if you can. If you're a high income earner, for 2026, it's $24,500 per year. And the good thing is over age 50, there is an additional $8,000 catch-up provision. Yeah. And between 60 and 63, you have the ability to do the super catch-up contributions, which is new, so definitely take advantage of that if you fall between the 60 and 63 years old. And that's $11,250. So if you're between 60 and 63, you can basically take $35,750 out of your taxable income. 

Well, what about deferred comp? I mean, we think about like, you know, sometimes organizations allow deferred compensation that can impact you or help. I'm trying to think if there's any other unique situations that people should be aware of. I mean, without getting too far into the weeds, like things like cash balance plans and stuff like that. Cash balance plan is a great one. Yeah. Um, got to have it, but yeah, that's not provided to everybody. That's like we're being very general here, guys and I think it's important that we make a quick disclosure that says um, you know, if if you take any advice or suggestions that we give you as tax advice, consult your CPA. We are not CPAs. Okay, consult your CPA, please. 
Maxing out the 401k like we already talked about. If they're a business owner, take advantage of an SEP, simple, or individual 401k. Health savings account. That's another good way to reduce taxes. It's not a huge amount, but it's well, they're good anyway regardless because you get the what's it called? The the triple tax benefit essentially where it's deductible. Your contribution is deductible, it grows tax free and it comes out tax free for qualified medical expenses. Well, and when you think about it too, there's there's lots of loopholes when it comes to that. I should say I use that term loosely. It's not really a loophole, but there's no law written that requires you to take your withdrawals from an HSA for healthcare expenses in the same year. So essentially you could stockpile those receipts for your health expenses and defer your withdrawals till after retirement or close to retirement and then take your withdrawals which is also a unique you know example of how you can take advantage of it. 

Alright question number two Amy asked this one might get heated here. Amy asked are backdoor Roth IRA’S worth it? The reason I said that was because Brian's in the middle of trying to do one right now and we're having a little bit of issues from the opening account opening side of things. But anyway, I would say in non-financial terms, and Brian might agree or disagree with me, if you're an organized excellent record keeper kind of person, yes. If you're not organized and you don't keep good records, I would probably avoid them. Yeah, I would I would probably agree with that. You know, the reality is they could be very very beneficial, especially when you're in the high earning situation. You know, deferring income is great, but it leads to the compounding problem of lots of what we call qualified money, which is money that is pre-tax. And when you have a very very very large nest egg at 60 65 and retirement age that you have to worry about withdrawing if you accumulate too much which is a good problem to have trying to you know avoid RMDs become a a significant challenge. So would a back door Roth be worth it? Yes. You know that there is some caveats to which is what he was talking about. I'll expand on. You know you have to make sure you have your ducks in a row. you can't have any IRA money outside of your 401k because that has to be converted first. So if you're in a situation where you have the high income earning potential and you really want to take advantage of you, you need to be good at record keeping, become really good friends with your CPA and or tax attorney because you will you will get to meet with them at least once a year and document everything to make sure that you're not going to or if you get audited that you're not going to be caught with your pants down, so to speak. Um, but are they worth it? Sure. I think it Yeah, it's a double-edged sword, but yes. 

Pam asked, "How do I create a tax efficient portfolio?" Basically, we kind of answered that already in question one, but a tax efficient portfolio would be asset location for sure. Low low turnover, low turnover. Utilize municipal bonds. Uh, municipal bonds, I think, are probably one of the best kept secrets, especially for people that have high income taxes, and thankfully in the state of Tennessee, we used to have the Hall Tax, which we don't have anymore, which yay. But yeah, I think that the location is is, you know, dividends, if you have significant dividends, you know, you can get hit there. you have there's lots of little things but yes the most tax efficient municipal bonds, stuff that has low turnover stuff that isn't dividend intensive yeah. Pam if your adviser, if you have an adviser like if your if your adviser is not doing these things for you already then you might want to ask for or search around for a different adviser whether it's us or somebody else. 

All right, final question here. John asked, "Roth or traditional 401k at 120k income?" I think you could go either way on that. That's right there at that line. It depends on if you're filing single or if you're filing married joint. But I'd say that's right there along that income level of, you know, the the ability to compound your deferred, you know, taxes could be significantly impacted. You know, the downside is we don't have a crystal ball. So, we don't know what tax situations look like 10, 20, 30 years down the road. Could be more, could be less. So, well, the other issue here is we don't know, John. None of these questions came from our current clients. it was just people that saw the video, the first video. So, we don't know John's situation. I would say like an easy answer to that would be if John is in a position where he's been at a job for a while and he doesn't expect to have a jump up in a tax bracket before he retires, then he might want to just go for the traditional. Sure. Right. and then after he retires, he could potentially be in a lower tax bracket where you might want to consider Roth conversions. By the way, we're going to do a whole episode just on Roth conversions pretty soon. So, and then if you're just starting out and you're in a low tax bracket, for sure I would contribute to the Roth 401k first. Absolutely. And you're still going to get stuck with some pre-tax traditional money no matter what because most matching is going to go towards the traditional or pre-tax side anyway. So if you contribute to your Roth 401k, the match that they that your employer contributes is going to be pre-tax. That's correct. So we just answered the four questions that you guys sent in. We appreciate it very much. continue to do so. And I hope there was some value to this one. We just kind of just blew right through this it seems like. Right. But yeah, so if you have some questions that you guys want answered, we, like I said, there was some others that you sent in that we haven't answered yet because we just wanted to do ones that had to do with taxes since April 15's coming up. So, send them in info@iws.one or the page that we host these videos on on our website also has a contact us form. So, either way is fine. You can also just call the office 865-342-7766.

With that, signing off. Signing off again. Thanks for watching.

Knoxville Financial Q&A Show Transcripts: Episode 1

All right, everybody. This is episode one of Knoxville Financial Q&A. We're your host. I'm Paul. I'm Brian. The purpose of this show is to answer your financial questions. So, since this is episode one, we don't really have any questions yet because nobody knew we were actually doing this. So, what we decided to do for this first episode was to answer the questions that we most frequently get asked when new potential clients come into our office. So, with that said, Brian, what's one of the questions that you get asked most often from new potential clients?

One of the questions I get asked most often is probably should I take advantage of my 401k at my work or should I open up or invest outside of work? One of the things that I always try to talk to them about is say, you know, 401k match, if you get a match, you know, what are the fees? Does the company pay for the fees? What are your investment options at investment vehicles provided by the 401k? But, um, you know, the biggest thing is just match. You know, if a company matches, if it's a dollar for dollar match up to like 5% per se, the idea there is every dollar, if you put in 5%, they're giving you 5%. That's a 100% rate of return that you can't really find anywhere else in the world. So, taking advantage of any employee um employer match is really probably the number one thing that I would say yes, take advantage of a 401k. Should you invest outside of work? Always, but if it's a question of one or the other, take the match. 

Speaking of 401k’s, one of the questions that I see all the time, and I'm sure Brian does too, when people come in, they want to discuss their current 401k allocations. And the reality is there's not many to choose from anymore. So, you have probably noticed in your own 401k, if you have one, that you don't have any many choices anymore. They're all sort of age-based or target-based funds. Let's talk a minute for how we got there. It was 2008 basically and the market crashed. Everybody's 401k’s just sort of depleted. And what ended up happening is people pulled out of the market at the wrong time. They didn't stay in it or they were really close to retirement and they shouldn't have been that aggressively invested anyway. Part of that problem was because the market was doing well before that and everybody sort of got greedy, right? Comfortable. Yep. And so what happened was a lot of the employers, the employees rather, ended up turning around and suing the employers who were providing the 401k benefit to them because there was no financial guidance. And that led to the creation of target-based or age-based funds because it sort of um takes the employer off the hook a little bit. It makes it easy. There's a fund manager who's doing all the allocations based on uh the date you're supposed to retire. My problem with the age-based funds is what you're planning for is not the date you're retiring. It's you should really plan for the date you might die, which I know is hard to predict, but you want your money to last a lot longer than the date you're going to retire. So, I'm not a big fan of of age-based funds. I don't know about you, Brian, but I, you know, back in the days when you had a lot of 401k choices and you had you can put together a decent allocation, 401k’s tended to to do better in my opinion. So, with that said, like I said, I'm not a I'm not a big fan of the the age based funds or the target based funds and um, but it's just the norm in in 401k’s nowadays. And so, you know, part of rolling over a 401k that we can help with is putting together a portfolio that's properly diversified for your life expectancy rather than when you're going to retire.

Yeah. And my my next question would be kind of like a followup to kind of what I said earlier, which was, you know, should I have a retirement plan outside of work? You know, I think a lot of people mistake their work plans for their only plan  instead of thinking along the lines of supplemental everything, you know, all your belongings when you leave your job or whatever you whatever job you have, you typically take those with you. Why would you not take your money? I think there's a there's an idea of, well, my work takes care of me. If you just go have a plan, Roth IRA, traditional IRA, or things outside of work, you have vehicles to move that money into and they're already established. You're already contributing to them. We're also getting to an age where, I'm sure you'd agree with this, you know, we're getting to this day and age where the the 401k matches aren't significant. We don't have pensions. We don't have all that other stuff. So, you know, having that program that you contribute to, that investment vehicle outside of whether it's retirement or external investments in general, having that plan outside of work is just icing on the cake. I think that's the second most asked question for me.

Another question that we get all the time is um are you a fiduciary? And the answer to that question is yes. Both Brian and I are fiduciaries. But I always follow that up with um how much I hate that word and the meaning behind it. Sure, it's a it's a legal term where it puts us in a position where we have to put your interest ahead of ours, but the reality is if we weren't doing that, we would have no clients. And so what I don't like is when other advisers use it sort of as as a marketing ploy almost um you know stating that they're this fiduciary and they're going to take care of you the best they can and all that. We're already doing that with or without that word. We do have that on our website though just because that's what people search for. And so if we want to show up in your Google search for us um we have to have fiduciary on our website. So yeah, we are fiduciaries, but don't put too much weight into that. Just find an adviser, if it's not us, that always puts your best interest ahead of theirs, regardless of using that word or not. Any thoughts?

No, that's pretty much spot on. The the next question that I probably get asked the most is and this falls right in line with having the supplemental program outside of work or having a you know the work should be supplemental to your plans outside of work which is should I have life insurance? If you look at like group life insurance at work a lot of people don't realize um that their benefit is age based for in five year increments. So it gets more and more and more expensive. Um it's also based on the health and wellness of the overall group that they're insuring. Uh so if there's a lot of very old people there or a lot of very unhealthy people there, the the costs are usually based on that. Um and the other as aspect of that is it's if you leave that job or if they choose not to offer it anymore and you're out of luck. Um especially if you have any health problems or have any health problems arise while you're working. So yeah, my general recommendation is almost always have some form of life insurance outside of work. I think the uh in the age of social media, I think the the the most heartbreaking thing is seeing some young people pass away and have these GoFundMe’s set up and it's, you know, when they could have had a very cheap term policy that that covers some of the basic needs. It's just heartbreaking. You know, take care of your family. It's the number one thing to do. At least that's what I would say. 

Yeah, totally.  And I will say that, you know, a lot of new clients that come in or potential new clients, I think there's some hesitancy maybe before they book an appointment because they're un unsure of how we're going to charge them or what they need to pay. And um, so Brian and I meet with a lot of clients together and we provide a lot of education even in the first meeting. That's one of the things that we're really proud of is the amount of education that we do provide for our clients, whether they're clients or not. We just want to put everybody in the best possible position for financial success. But, you know, we might go through an hour meeting and provide all kinds of information and they might, you know, you can see them um pull out their checkbook or something like that and say, you know, what do I owe you? And just so you guys know, that's not what we do. We don't charge for an initial consultation. In fact, we don't charge where you have to write us a check for anything. So basically how we get paid is by managing your assets and getting a fee from that, a percentage of that. It doesn't come out of your pocket. So if one of the reasons you might be hesitant to call us is because you're worried that you have to pay us for something, you don't. We're here to provide information to you and um and just do the right thing. So, don't let that hold you back, put it that way. 

All right, guys. So, again, this was only episode one. We don't really know exactly how this show is going to end up going, what direction it's going to go in, but we do have the premise of we want your questions. We want to answer your questions and the best way to do that would be on our website which is iws.one not .com.There's a contact us section at the bottom or you can just email us atinfo@iws.one and just make the subject “Question”. That'll basically guide the direction of this show in the future. Um, you know, we again, this being episode one, we hope to improve. We hope to make the format a lot better and just get better with experience over time. We do plan on adding a sign back here. We're, you know, we put this studio together pretty quickly and, uh, we kind of like it. It came out good, we think, but it's going to get better and so will the production and everything else. So, don't be hesitant to ask. We we really want to um provide value to you guys.

So with that said, thanks for watching. Um please ask us questions. We want to answer them. And if you would like to schedule an appointment with us, again, the website is the best place to do it. We have an online calendar, but our office number is also 865-342-7766. So, with that said, signing off. Signing off. Thanks for watching, guys.