Wealth Planning: Securing Your Financial Future with Jeremiah Johnson, AIF® Show Notes

A lot of people think that wealth planning is just about the management of money. That is part of wealth planning, but it’s far from being the only part. Modern Wealth Management Managing Director Jeremiah Johnson, AIF® is going to elaborate on that with Dean Barber on The Guided Retirement Show. Having a good understanding of what wealth planning is all about is pivotal to securing your financial future.

In this podcast interview, you’ll learn:

Wealth Planning Is More Than Managing Your Money
Why It’s Important to Have a Financial Planning Team That’s Working for You
What It’s Like to Be the CEO of Your Retirement
The Meaning of Financial Independence

What Does Wealth Planning Entail?

Wealth planning involves so much more than the investments within your 401(k) and IRAs. It involves how you’re saving to those accounts. Do you have a traditional 401(k), Roth 401(k), traditional IRAs, or Roth IRAs? And do you understand the tax implications of what you own? Risk management, estate planning, and your desired lifestyle are also critical components of wealth planning. Dean and Jeremiah both like to joke that a wealth planner should be doing everything for their client besides marriage counseling.

At Modern Wealth, we specialize in helping people get to and through retirement. Hence the name of our podcast, The Guided Retirement Show. When people come to us to get assistance with retirement planning, one of the most frequently-asked questions we receive is how they should invest their money. But we can’t answer that until we know your goals, risk tolerance, and tax situation—among other things.

“You need to look at all the different pieces. Do you have any debt? What are your goals? If I don’t know what your goals are, I have no idea how we should try to invest your dollar.” – Jeremiah Johnson, AIF®

Some people need to have more risk in their portfolio because they have higher goals. And some people don’t need to take much risk if they’ve saved more or don’t have huge goals. Your individual portfolio is what you need to have to make your own goals.

You Need a Wealth Planning Team

When it comes to wealth planning for ultrawealthy people—let’s say people with $10 million or more—many of them likely feel like they have a secure financial future. Those people typically have a team of financial professionals that comes together to work on their behalf. That team usually includes at least a few of the following:

CFP® Professional (wealth planner/advisor)
CPA
CFA
Estate Planning Specialist
Insurance Specialists

We have people in all those roles on our team of professionals at Modern Wealth. However, many of our clients don’t fall in that category of having $10 million or more. We’re oftentimes working with what we like to call “the millionaire next door.” The thing is, though, that there are so many millionaires next door that don’t realize that they have an opportunity to address their wealth planning needs, wants, and wishes with a team of professionals. We want that millionaire next door to understand that so that they also have confidence that they’re doing the right things with their money, freedom from financial stress, and time to spend doing the things they love.

“That encapsulates true wealth management. But many people believe that a wealth manager just manages their money. Nothing could be further from the truth.” – Dean Barber

Key Retirement Considerations

As you start digging into each of the wealth planning components that we mentioned, hopefully you’ll start to see that they’re intertwined. A decision with one wealth planning component tends to impact the others. It’s critical to work with a wealth planner/advisor—ideally a CFP® Professional—who is coordinating with those subject matter experts rather than working with one financial advisor is trying to take on all those responsibilities. There are too many things that can be missed by taking the DIY retirement planning approach or putting all your trust in one financial advisor.

When you’re planning for retirement, it’s important to truly understand that you’re going from working for your money to your money working for you. Once that paycheck is gone, are your assets going to be able to get you to and through retirement? There are wealth-eroding factors in retirement, especially taxes and health care costs, that need to be considered as a part of wealth planning. If you’re wanting to leave a legacy, it’s also critical to make sure that your beneficiaries receive their inheritance in a tax-efficient manner.

And maybe you have other sources of income like real estate or pensions. That all comes into play as you’re designing a financial plan that gives you the highest probability of success to do what you want to do.

Becoming the CEO of Your Retirement

When you’re going into retirement, Dean encourages people to think of themselves as being the CEO of their own retirement. That way you can have the much-needed clarity of what you want your life to look like.

Imagine if a CEO knew what they wanted their business to do, but didn’t communicate it with the chief financial officer, chief legal officer, or chief tax officer. That CEO just expected that they would know what to do to reach the corporate goals. In a sense, that’s like somebody that’s going into retirement that hasn’t clearly communicated to the wealth planner what they want their life to look like.

It then becomes the wealth planner’s job to then bring in the CPA, CFA, estate planning specialist, and insurance specialists to put it together so that individual’s retirement dreams come true.

That’s the biggest part about having a team on your side to get those things done is so you can be the CEO that’s out playing golf or whatever you want to do. You’re your own driver. They’re your bus. By having those things taken care of, you don’t have to do them. You don’t have to worry about them.

“If there’s one person that’s doing all five of those things, they’re probably not going to do them all well. They might do them OK, but they’re not going to be well. If you have individualized teams or the people that are working directly for you on each of those levels, it’s just going to make you a better overall financial plan, have clear goals, and know you’re on track to do the things you want to do.” – Jeremiah Johnson, AIF®

Achieving Financial Independence

We always talk about getting people to and through retirement. But we use the term retirement loosely because sometimes people like their job and won’t want to retire. Rather than focusing on retirement, think about how to achieve financial independence.

It’s about getting yourself in a position where you get up each day and do whatever you want to do because it’s what you want to do and not because you need a paycheck. You know that you have enough money saved and have tackled the tax, estate planning, and risk management issues. That’s financial independence.

So, if you’ve achieved financial independence and are still working because you want to keep working, that’s OK. Just know that if you ever change your mind, you can do so because you’re financially independent.

“If a person can get that into their mind and can create that wealth plan and financial security for the future—knowing that the Holy Grail is getting to that point where they do what they do on a daily basis because that’s what they want to do—that feeling is amazing.” – Dean Barber

From Accumulation Mode to Distribution Mode

Wealth planning means something different to somebody in their 30s, 40s, and 50s than it does to somebody in their 60s, 70s, and 80s. There’s a huge paradigm shift that takes place from a psychological standpoint. And there are rules that are drastically different when you’re in your accumulation phase than when you’re in your distribution phase.

If you don’t understand the difference in those rules, that’s when costly mistakes start to happen. For example, if you don’t know when your Required Minimum Distributions are supposed to come out, that can be a very unpleasant surprise. The RMD age is 73 as of January 2023, and will be 75 beginning in January 2033.

Every time Congress starts changing RMD rules and other rules that impact your retirement, Dean calls that the CFP® Professional and CPA Full Employment Act. That’s because Modern Wealth’s CFP® Professional and CPAs need to digest those complex rules and rule changes so they can help people apply those rules to their personal situation.

Beware of the Financial Salespeople

If you’re working with somebody who you think is a wealth advisor and they only ever talk to you about your investments, you’re likely not talking to a real wealth advisor. You’re likely talking to a financial salesperson. Investments are an important piece of wealth planning, but having an investment plan isn’t the same thing as having a forward-looking financial plan.

Dean and Jeremiah have never met with someone who felt like they might be looking into wealth planning too soon. But they’ve met with many people who wished they had hired a team of financial professionals to work for them much sooner. To learn more about the personalized wealth planning experience that we’ll assist you with at Modern Wealth, start a conversation with our team below.

Schedule a Meeting

We want you to be ahead of the wealth planning game and figuring out how you can achieve financial independence rather than being overwhelmed by financial stress. Let’s start securing your financial future today.

Resources Mentioned in This Article

Articles

Past Episodes of The Guided Retirement Show

Investment advisory services offered through Modern Wealth Management, LLC, an SEC Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management, LLC, an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management, LLC, 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.