5 Types of Financial Plans

By Modern Wealth Management

August 25, 2022

5 Types of Financial Plans

Key Points – 5 Types of Financial Plans

  • Not Having a Financial Plan Isn’t a Plan That’s Recommended, Especially in This Down Market
  • What Are Some of the Issues That You Can Encounter with a Set-It-and-Forget It or “Average” Financial Plan?
  • There Are A Lot of Smart Individuals Who Do Their Own Financial Planning, But Even They Can Miss Out on Some Critical Factors of Retirement Planning
  • What Does a Comprehensive Financial Plan Consist of?
  • 22 Minutes to Read | 38 Minutes to Listen

Going to the doctor for a checkup usually isn’t the most fun thing to do, but it’s necessary so that you’re up-to-date on your health situation. The same can be said about meeting with a financial planner to find out where you’re at with planning for retirement. Bud Kasper and Logan DeGraeve discuss the five types of financial plans and how a comprehensive approach to financial planning is critical to getting to and through retirement.


Show Resources:

Find links to the resources Bud and Logan mentioned on this episode below.

Logan DeGraeve Makes Another Guest Appearance

Bud Kasper: Good morning, everyone. And welcome to America’s Wealth Management Show. I’m Bud Kasper. Dean Barber is not with us this week. He’s out on a … we’ll call it a sabbatical. He’s clearing his mind, getting himself ready for the final push toward the end of the year. We all need to clear our minds with what’s been going on this year.

In studio with me as he has been many times before is Logan DeGraeve, a CERTIFIED FINANCIAL PLANNER™ Professional and advisor here at Modern Wealth Management. Welcome again.

Logan DeGraeve: Thanks, Bud. How are you?

Remembering Len Dawson

Bud Kasper: I am great. Thank you for asking. Before we get started, I want to pay respects to one of the greatest icons in Kansas City that we lost this week. That is Lenny Dawson.

I had the opportunity of meeting him probably two or three times. He’s sincerely one of the nicest men I’ve ever met. He always treated you like you were a friend once he met you. I’ve got some wonderful souvenirs that are on the walls of my house with him that he personalized for me. He was such an incredible gentleman. They called him Lenny the Cool because he was so cool when he’d get back in the pocket. He won Super Bowl IV for the Chiefs many, many years ago.

Logan DeGraeve: The photo of him having a cigarette at halftime of Super Bowl I is iconic.

Bud Kasper: It is humorous. By today’s standards, he probably was a little bit embarrassed, but at the same time chuckling to himself. He wasn’t the only one smoking a cigarette by the way.

Logan DeGraeve: Could you imagine Pat Mahomes having a cig and a beer at halftime?

Bud Kasper: I could not imagine that. But losing Len Dawson is a big loss to Kansas City. He will forever be remembered. I don’t think there’s very many people out there who don’t know who Lenny Dawson was and what he meant to this community. The fact that he made Kansas City his home is significant in and of itself. So, God bless you, Lenny.

Reviewing the Types of Financial Plans

Today, Logan and I are going to focus on something that’s extremely important to many people at this stage of what’s going on in the market and the stage that people are at in terms of preparing for retirement. We’re going to be talking about five types of financial plans. We’re going to make it exciting and intuitive for you to participate as well. We’ve broke this down into five categories.

  1. No Financial Plan
  2. The Set-It-and-Forget-It Financial Plan
  3. Your “Average” Financial Plan
  4. The DIY Financial Plan
  5. A Comprehensive Financial Plan

1. No Financial Plan

So, Logan, no financial plan. Is that a plan?

Logan DeGraeve: It’s not a plan. It’s probably more of a plan of hope. I think that this is one that we see a lot, unfortunately. So many people will say, “Social Security says I can’t retire until my full retirement age of 67.” Well, that’s just not true. A lot of people say the same thing about the Medicare age of 65.

The person that’s 45, 50, 55 can be forgetting the thing that’s critical to planning, and that’s starting early. We oftentimes hear people say that they still have 20-25 years until retirement, and they don’t think they need to start planning. That’s a problem.

Understanding Social Security Claiming Strategies

Bud Kasper: Yeah. Using Logan’s Social Security example, you need to know the advantages if you were to postpone Social Security. Even when you’re eligible to take it, that money is growing while you’re not taking it. Therefore, is postponing the best solution for your plan at this stage of your life? If you don’t have a background in understanding the nuances of Social Security, you could be leaving a lot of money on the table. To better understand the many nuances of Social Security, download our Social Security Decisions Guide.

Download: Social Security Decisions Guide

Are You Starting to See How Not Having a Financial Plan Can Be Very Problematic?

Logan DeGraeve: That’s very critical, but the whole wrapper around this is if you don’t have a financial plan, how do you know what you can and can’t do? If you don’t know what you can and can’t do, that’s going to rob you of our most precious commodity, which is time.

You can do a good job of saving and not have a plan. Like I said earlier, a lot of people think they need to work until 67 because of Social Security. But maybe you don’t have to work until 67 if you build a plan and see that you are financially independent and can retire earlier. We’re going to talk more about tax planning, claiming Social Security, and your investments. That’s all important, but what are you going to do when you retire?

Looking at the Net Perspective

Bud Kasper: Exactly. Many people think that they’ve done their retirement planning because they’ve saved money. As another example, let’s say that someone is 65, which is Medicare age. That’s a big impact on retirement planning.

But when you’re looking at retirement itself, how are you going to get that money out? And when it comes out, how does it come out? I think everybody knows it’s going to come out taxable. So, do you take all of it out in lump sum? Do you take it out in conjunction with other income sources? It’s the composition of how you build the income strategy that is going to give you the net perspective that you need to have because of that three-letter word that we don’t like, which is t-a-x.

Tax Planning and Estate Planning Help Show Why Not Having a Plan Isn’t Really an Option

Logan DeGraeve: I think what is very important about that is your tax planning strategy starts with how you start saving in your 20s and 30s. What buckets are you saving in—tax-deferred, taxable, tax free? That’s going to greatly dictate how you take money out when you do retire. That’s something that you can never start thinking about too early. How are you going to forecast your buckets down the road?

Another thing that Bud and I see way too often with people who don’t have plans is the lack of an estate plan. Everyone needs to have things like guardianship provisions for kids. Unfortunately, a lot of people don’t have estate plans because they that it’s for the ultra-rich.

Bud Kasper: You’re right, Logan. Understanding how to leave your wealth to your heirs is something that part of comprehensive financial planning. We’ll touch on that more momentarily. Knowing how to efficiently do that will save your family a lot of time and angst. If you’re not prepared, then you might need to pay more tax than you need to. Having that driven into your plan is the acceptable, direct way of getting the best net result possible.

2. The Set-It-and-Forget-It Financial Plan

As we continue to discuss the five types of financial plans, next up is the set-it-and-forget-it financial plan. A lot of people want to say that they’ve done all they need to do are all they can do. And they think that should be enough.

Tackling the Big Issue of Target Date Funds

Logan DeGraeve: When I think about the set-it-and-forget-it plan, my head instantly goes to investing in a 401(k) with target date funds. Because that’s really what they were made for.

Bud Kasper: And they were taught that, weren’t they? In 401(k) plans, there’s the default mechanism of target date funds, even though people mostly don’t understand the nuances associated with that. Logan is so right from that perspective. But in retirement, it needs to be far more sophisticated.

Logan DeGraeve: If you’re retiring in five or 10 years, and you’re all your money is in a target date fund, that’s an issue. The money that you’re going to spend in five years is probably subject to more risk than you think it is. What do we hear all the time when people come in the door? “Well, I thought I was 30% stocks to bonds?”

To Bud’s point, not all target date funds are set up how you think they are. That’s what we see a lot with these impartial financial plans.

What Do You Want Your Retirement Lifestyle to Look Like?

There’s another huge issue with the set-it-and-forget-it financial plans that I also want to touch on. I ask people all the time in professional and other conversational settings, “What are you going to do when you retire? What are your goals and dreams?” And they say, “Well, we’re going to get a house in Florida or we’re going to get an RV,” whatever it may be.

But if they haven’t put pen to paper to figure out if they can afford them, that’s a hope. A goal is something that’s written down and we’re figuring out how we can get there.

Bud Kasper: Right. Comprehensive financial planning allows us to create the reality of retirement before you retire. How do we do that? Well, we do it through our financial planning tool. Our clients have seen first-hand how that works. We’re also giving pre-retirees and retirees who aren’t clients of ours the opportunity to use it as well from the comfort of their own home. What’s more is that you can meet with one of our CFP® professionals at no cost or obligation if you have any questions while building your plan. Our financial planning tool will help show you why the set it and forget plan is also not really an option.

A Few More Notes on Target Date Funds

Before we move on in our conversation about the five types of financial plans, I want to go back to those target date funds for just a moment. It’s important to talk about those and the problems surrounding them with the market doing what it’s doing right now. We saw painful examples of this during the Great Recession and Dot-Com Bubble as well.

Target date funds were created as a default mechanism for people who didn’t understand how they could construct a portfolio that really met their ability to get the potential growth that they want and at a risk level that they feel most comfortable with. Look at that in today’s environment with market dropping as much as it has. People are thinking, “I’m about to retire, so I’m in the target date fund of 2025. Therefore, I should have very little volatility associated with that.” But that’s not necessarily true, is it?

Don’t Wait, Act

Logan DeGraeve: It’s not at all. And it’s not just from the stock component. It’s also from the fixed income component. Depending on the maturity and duration of those bonds, the bond funds in that could be off 9% or 10% as we’ve seen so far this year. Especially when you’re five, 10, 15 years out from retirement, your plan needs to be more complex than just saving money. Saving is the hardest part, but it needs to get a little bit more complex.

It’s the same token with what you want to do with your goals. You may have a dream or goal to buy a house in Florida or wherever, but why are you waiting until retirement to know if you can do it? What happens if you could have done it 10 years sooner? Don’t wait to live is something that we talk about with our clients all the time.

Multi-Year Planning

Bud Kasper: The other thing that comes to my mind is the fact that a lot of people need to challenge themselves as to whether they need to start saving more in their Roth 401(k). That’s assuming they have that option, but most companies do right now. And you might say that doesn’t make any sense if you’re at the highest income level and therefore going to be pre-tax. In other words, you’d be paying that tax before it gets into the Roth 401(k) portion of your plan. While that’s true, it might be more beneficial for you further down the road. That’s why we refer to this as comprehensive financial planning. You can learn more about how to manage your Roth 401(k) by downloading our 401(k) Survival Guide.

Download: 401(k) Survival Guide

Logan DeGraeve: And multi-year planning. Bud mentioned taxes. A lot of times on these set it and forget or average financial plans, people think they’re doing everything right from a tax standpoint if they got a large refund last year. People, that is your money. Why are you giving the government a nine-or 10-month loan. That’s not what we want to do. It’s not just how you save. If you’re getting big refunds back, you need to work with the CPA to look at withholdings. That’s more money you could be saving each month.

Reviewing Your Financial Plan from a Tax Perspective

Bud Kasper: Exactly. At our firm, we have multiple CPAs that our clients can work with. With Logan and I being CERTIFIED FINANCIAL PLANNER™ Professionals, we work with the CPA to mitigate the tax liability that you may have every year. It’s most certainly a worthwhile endeavor to have the CPA and CFP® Professional working together on your comprehensive financial plan.

Also, a lot of people only think about their Social Security benefit once they’ve decided to retire. They’ll say, “Well, whatever Social Security is worth at that time, I’m just going to pull the trigger and do that.” That might be a big mistake.

Logan DeGraeve: That’s a huge mistake potentially for a lot of different reasons. One, Social Security is taxed differently. Two, your Social Security grows every year that you don’t take it. Three, claiming Social Security isn’t just about one person. You need to consider your spouse and longevity. Who is the higher earner between you and your spouse?

God forbid one spouse passes away because only the highest benefit stays. All that needs to be stress tested within a proper financial plan.

3. Your “Average” Financial Plan

As we continue reviewing types of financial plans, the set-it-and-forget-it financial plan and “average” financial plan are kind of similar. But let’s discuss what an “average” financial plan looks like. What Bud and I consider to be an “average” financial plan, others might consider to be a good financial plan. Let’s talk about some of the differences there.

Bud Kasper: Some people think, “OK, I’m retired. This is all the money that I’ve saved. If I die with $1 in my account, then I’m a happy person.” But there’s no longevity planning associated with that. So, you better have a plan.

Logan DeGraeve: When I think about what an average plan looks like, it’s usually something like this. Someone who is 45 to 50 years old will reach out to me and let me know that their friend is an investment advisor, and they just pick the investments that their friend suggests. They think that’s a financial plan, but there’s so much more to it.

You Don’t Need to Settle for an “Average” Financial Plan

Maybe this person has done a good job in that accumulation phase of life, but hey, you need to start thinking about the distribution phase. That’s when you need to start looking at a CFP® Professional and a firm that does comprehensive financial planning. Sometimes that “average” financial plan works, but it doesn’t work when you’re 10 or less years from retirement.

Bud Kasper: Right. The insight that you need to have about your retirement will only come from a true financial professional. That’s a person who works in a fiduciary capacity, which all CFP® Professionals must adhere to. You need to work with a CFP® Professional who has several years of experience and knowledge to create the best possible plan for you.

Remember, we’re giving you the opportunity to use the same financial planning tool that Logan and I use. If you have any questions, which you likely will since the tool is intended for professional use, our CFP® Professionals welcome you to reach out and ask away. We can explain some of the ins and outs of retirement planning and the incredible comprehensiveness associated with the overlay of tax planning, Medicare planning, etc.

The Clarity of a Comprehensive Financial Plan Compared to an “Average” Financial Plan

Logan DeGraeve: Bud, let me tell quick little story about that. I talked to a gentleman a few weeks ago that thought that he had a plan. He had been using Microsoft Excel for his planning, but he was a very sharp guy. He had started to use our financial planning tool and had some questions, so him and I had a phone call.

It was a great conversation. At the end of it, all he said was, “Thank you so much.” It wasn’t, “Oh my goodness. I feel bad.” It was confirming what he already thought he knew, but it was in a different light.

That leads me to what I think the average plan lacks the most. That’s a CPA and CFP® Professional not sitting in the same room every year. You’re missing an opportunity if you’re not doing that.

Bud Kasper: Yeah. And guess what? Things changes every year.

4. The DIY Financial Plan

We’ve been talking about the five types of financial plans. We talked about no plan and about the set-it-and-forget-it plan. We talked about the “average” financial plan. Now, we’re going to talk about the DIY (do-it-yourselfer) financial plan.

As I was thinking last night about the five types of financial plans, once I got to the do-it-yourselfer, there was a phrase I kept thinking about. The phrase is, “A man who is his own lawyer has a fool for a client.” I think the same could be said for a man who doesn’t have his own financial planner might have a fool for a client.

Don’t Lie to Yourself

Logan DeGraeve: When I first think about DIY plans, it’s a lot of lying to yourself sometimes. It’s, “How do I make this plan look good because I want to show my spouse or whoever?” You want it to look good in your head. Well, you can lie to yourself all you want, but the reality is at some point, you need to pay the piper for the financial plan that you’re going to interact.

Bud Kasper: If you haven’t put it through the lens that we have with the ability to do comprehensive financial planning and looking at the net perspective, then you’re missing it. The general goal for the do-it-yourselfers for retirement is to make sure their rate of return stays up enough so they don’t run out of money.

Double Negative Compounding … Except This Double Negative Doesn’t Result in a Positive

Well, look at the difficult time that we’re in right now. For example, if your account is suddenly down 10%, the question now is, “What do I have to make?” Well, guess what? If you’re taking distributions and you’re experiencing that decline, that’s what I call double negative compounding. I should coin that phrase.

Logan DeGraeve: Coin it.

Bud Kasper: In all seriousness, though, that is a concern.

Three Main Issues with DIY Plans

Logan DeGraeve: It’s a huge concern. There are three main issues with DIY plans. One, you’re assuming a rate of return that is probably pretty high historically. There’s no guarantee that the capital markets are going to perform the next 50-60 years like they have for the past 50-60 years. That’s a concern.

The second concern is that these DIY plans usually have inflation numbers at 1% or 2%. That’s just not sustainable. We’ve seen that rear its ugly head over the past year. If your inflation number is at 1% or 2%, good luck.

The third concern is having a proper withdrawal strategy. It’s not just what buckets you’re taking from from a tax standpoint, but what funds are you going to spend first? Let’s say that you’re taking 4% or 5%—maybe even more early on in retirement before Social Security starts—if you don’t make adjustments, you’re going to run out of money. The first five or six years of retirement planning are the most important years of distribution planning because that’s when things can go awry.

Having a Proper Distribution Strategy

Bud Kasper: Even for the people who are retired and enjoying income, they need to reevaluate the amount in this situation. If you have money that you’re not really using, but you’re still taking an income stream that consistently comes in every month, why wouldn’t you pull back? Why would you leave that money in an account that might be under pressure financially because of the market conditions we see ourselves in?

Logan DeGraeve: From an investment standpoint, the do-it-yourselfers tend to be very tech heavy in stocks. Maybe you’ve made all this money over the last 10 years in the NASDAQ index. But you can’t have all your money invested that way the closer you get to retirement.

The Three Buckets

When Bud and I start talking with clients about this, we like to have potentially three buckets of money. There’s the short-term bucket, which is money you’re spending today and tomorrow. You don’t want open your stuff up to the double negative that Bud talked about. Then, there’s the midterm bucket that can be a little bit more aggressive. And then, there’s the long-term bucket.

You can’t just say that you’re going to have a 60/40 portfolio and earn 8% for the next 30 years. That’s not going to happen.

What If You Postpone Social Security?

Bud Kasper: Right. If we turn to the next source of income when you’re retired and at the appropriate age, we’re talking about Social Security. But what if you postpone Social Security? As we mentioned earlier, Social Security grows while you’re not taking it.

We use our financial planning tool to make an assessment as to what would the postponement would it look like. If you’re not going to take Social Security, what does that mean? You’re going to have to source it from somewhere else. Is that the right thing to do? You can see how complicated this can be. That’s why it’s important to have a CFP® Professional to walk you through it.

The Complicated Tax Code Could Cause DIY Plans to Crumble

Logan DeGraeve: If you are doing it yourself and you think you’re doing a great job, it never hurts to confirm that you’re on track by consulting a CFP® Professional. One of the biggest things we see here with these DIY plans is that they tend to be very investment-based. And it may be goals-based. But where the DIY plans can falter is when taxes come in. The tax code is so complicated.

There are things like Roth conversions that Bud and I talk about a lot with our clients. Should we convert some money from a traditional IRA to a Roth IRA? You can’t do that without a multi-year tax plan. A lot of people don’t even know what Qualified Charitable Distributions and donor-advised funds are.

Tax Compliance Isn’t the Same Thing as Tax Planning

The point is that if you’re not working with the CPA on tax planning, I can almost guarantee there’s something being missed in that plan. And there’s a difference between tax compliance—getting your taxes done—and tax planning.

Bud Kasper: I agree. Because a lot of people, especially the do-it-yourselfers, just want to pay as little in taxes as possible. Well, who doesn’t? But there might be certain years where pay a little bit more in taxes one year could be beneficial because it serves your best interest further down the line.

Logan DeGraeve: That’s important because it’s not just about maybe you and your spouse either. Think about the family estate and leaving things in the most tax-efficient manner for your loved ones. Oftentimes, these DIY plans can appear as a perfect stained-glass photo of a financial plan.

What Happens to Your Tax Situation If Your Spouse Passes Away?

For example, let’s say a do-it-yourselfer is planning for them and their spouse to live until they’re 95. That would be great, but that’s not how life works sometimes. The point I’m making is that causes more stress because maybe you’re going to lose a Social Security or maybe a pension. And by the way, you’re going to become a single tax filer.

These are all the kind of things in a DIY plan that can look good in Microsoft Excel, but what are you stress testing?

Bud Kasper: Yeah, exactly right. The surviving spouse goes from married filing jointly to single. That means there’s going to be more taxes that’ll come out.

Logan DeGraeve: And guess what? Those Required Minimum Distributions don’t get any smaller.

Bud Kasper: No, they don’t. Again, this is relating back to what we’re talking about with the importance of comprehensive financial planning. That’s our fifth and final type of financial plan that we’re going to discuss even more in just a second.

But if you’re a DIY or do-it-yourselfer, God bless you. May you get the best result you possibly can. But if you’re not sure about something or have questions, please reach out to us.

5. A Comprehensive Financial Plan

Logan and I have been building up to this throughout our discussion of the five types of financial plans, but I think we’ve saved the best for last. Do you agree, Logan?

Logan DeGraeve: Absolutely.

Bud Kasper: Logan and I are going to be talk about the comprehensive financial planning that we do at Modern Wealth Management. This is what Logan and I live for. It’s the creation of something that is so individualized, so special, and so incredibly defined.

Setting Up a Spending Plan

Logan DeGraeve: The first part of a comprehensive financial plan is figuring out what you want to do. Every financial plan is different. You need to take the time to figure out what you currently spend your money on and what you want to spend your money on in retirement. For instance, maybe someone wants to spend $7,000 net a month in retirement. That’s great. You have a general direction, but what makes that up? What are we doing for travel? And what does health care cost? What do all these things cost? The first step is figuring out what you want to do.

Bud Kasper: So many people then will say, “Well, what should I do for my investments?” Let’s talk about the investments later. Of course, the investments are an important part of the plan. But if you choose to consult us at Modern Wealth Management, it’s because the planning is so significant to your future success.

What’s Important to You and Your Family?

People don’t understand that unless they have a simple conversation with a CFP® Professional about comprehensive financial planning. Whether it’s for 20 minutes or an hour and a half, we’ll go through and learn about you and your family, your needs and your desires, and how much legacy is important to you. Maybe you don’t want to leave any legacy to your heirs. But all the things that are salient to life itself are brought out in these comprehensive financial plans.

Marrying the Financial Plan with the Investment Plan

Logan DeGraeve: Bud makes a great point there. Some people get frustrated with going through the process and talking about the investments last. But a good CFP® Professional marries the financial plan with the investment plan. You only need to take as much risk as you need to accomplish your goals. Maybe you don’t need to take as much risk as your neighbor, cousin, or brother does. Everyone’s goals and dreams are different. If you talk to a financial planner or investment advisor and they want to lead with investments, my question would be, how do they know how your money should be invested?

Bud Kasper: The problem is that is what the industry has done for decades. Everybody automatically says that their financial plan is their investment portfolio. Well, shame on you. If you really believe that, you’re missing a significant part of what the planning process is about.

What Do a Comprehensive Financial Plan Consist of?

There’s the integration of Social Security, the Medicare overlay, the issues that are associated with the estate planning, how you’re going to leave your money more efficiently. I could go on and on. This is why you need to meet with a CPA and CFP® Professional who work side by side on your plan. We also work with estate planning attorneys to make sure that the legacy that you’re hoping for your family is in place and reviewed.

Logan DeGraeve: Absolutely. Let’s talk about what else makes up the comprehensive financial plan. Bud and I spending lot of time on this. It’s tax planning and working with a CPA. What we do is fairly unique. At least once a year, the CPA and CFP® Professional will meet together with the client. We’re trying to see if there’s anything you need to do this year to put yourself in a better situation for the next five, 15, 30 years.

Once again, it’s not about if you’re getting a refund or owing this year. We don’t necessarily care about that. We want to know what opportunities you might be missing.

And here’s a little fun fact—your Medicare premiums depend on your taxable income. All this stuff goes into the plan. If you’re not meeting with CFP® Professional and CPA together at least once a year, I can almost guarantee you’re missing something.

Anyone Can Call Themselves a Financial Planner … But There’s a Lot of Work that Goes into Being a CFP® Professional

Bud Kasper: We’re emphasizing CFP® Professionals because that’s what Logan and I are. Anybody can call themselves a financial planner. Anyone could rent an office space, put financial planner on the door, and there’s not one person that can stop you.

However, when you’re working with a CFP® Professional, you’re working with a person with at least a minimum of three years of experience. They need to go through the rigors of the board examinations. It’s no different than it is for an attorney or a CPA. If they’re not passing those and going through continued education that is required to have those designations, then you’re not working with a pro.

Too many people say that they’re working with a financial planner. Really? Are they a CFP® Professional. If not, what kind of planning have you done? Like we mentioned earlier, your investments might have done very well up until this past year, but how are they doing now?

Opportunities for Harvesting

That brings up another point. Sometimes we talk about harvesting. This is a difficult year and you should have been adjusting your portfolio for risk way back in the first quarter. But as we look at last year, we had nice amounts of profitability. Look at some of the bucketing that occurs in terms of how we access money for future income needs. Many times, when we have those great years, we get to harvest some of those gains. Put them over in that income bucket, which would be a safe bucket. Therefore, you’ve elongated the ability to access that.

Logan DeGraeve: Always spending gain. I have a tax-loss harvesting example with a client I met with this week that I want to discuss. They have a mutual fund they’ve owned forever. It had a lot of gain in it prior to this year. But what’s the issue with mutual funds? They kick off capital gain distributions that we need to pay taxes on.

Bud Kasper: Even though you don’t want them.

There’s Still Opportunity Despite a Down Market

Logan DeGraeve: Even though you don’t want them. And we can’t control those. From a tax planning standpoint, that’s very difficult. But I said to my client that they could buy an ETF that looks just like it, so they don’t need to worry about those. There’s a ton of opportunity, even in a down market. I had a client tell me that they don’t want to look at an investment because they don’t want to see the losses. Well, there’s still opportunity there.

Bud Kasper: Tax-loss harvesting is an incredible part of the financial planning process. But most financial planners are just investment advisors. They probably aren’t doing the tax-loss harvesting that is a necessity to drive off future taxes.

What Type of Financial Plan Do You Have?

Logan DeGraeve: We’re talking about a lot here with these five types of financial plans. Maybe you’re one of the people who we talked about at the beginning of our discussion who doesn’t have a financial plan. Or maybe you have a set-it-and-forget or “average” financial plan or are a do-it-yourselfer. The bottom line is that you need to have a comprehensive financial plan.

Our financial planning tool can give you a better perspective of what your comprehensive financial plan could look like. After clicking the “Start Planning” button below, you’ll be asked to start entering your information that will be key you building your plan. If anything, it can give you a baseline of where you’re at with planning for retirement.


Think of It as Going in for a Check-Up

It’s no different than going to the doctor every year for a physical. Of course, you don’t want to do it, but you need to understand where you’re at.

Don’t let anything that Bud and I are talking about be overwhelming. If you’re not at the point where you’re comfortable with talking about Roth conversions right now, that’s OK. You need to start at step A before you can get to step Z. And please know, that we’re happy to screen share with you as you start the comprehensive financial planning process and answer any questions that you might have. Our financial planning tool is intended for professional use, so there’s no shame in reaching out with questions.

Don’t Hesitate to Reach Out to Us with Questions

Bud Kasper: There are a lot of questions that get asked about Medicare, Social Security analysis. When should I take Social Security? When should my spouse take Social Security? All that integration is part of the planning process.

Logan DeGraeve: It’s a CFP® Professional’s obligation to explain things simply so that everyone understands it. We’re happy to do that if you schedule a 20-minute “ask anything” session or a complimentary consultation with one of our CERTIFIED FINANCIAL PLANNER™ Professionals.

Bud Kasper: We hope you’ve enjoyed Logan and I’s discussion on the five types of financial plans. Logan, thank you for joining me. Thanks again to everyone for joining us on America’s Wealth Management Show.

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The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.