Your Discomfort Is … Misplaced Understandable

This is from the Investments & Wealth Institute’s website. It is for high-end advisors, whatever that means. I will be a guest speaker in Nashville in May (thank you to them for asking me). For them, this is a set of topics on what it takes to be competent.

It’s prettily presented, albeit intimidating, sure. It’s also not foreign. For example, GH2Unfiltered subscribers have seen panel “II”,” Portfolio Construction and Risk Management, in my description of the “glue.”

Omission = Wrong

The problem with this matrix is that tax planning and health care costs are nowhere to be found.

  • A completely separate module needed to be prior to step “I” because your health situation and dealing with health care costs affects every step thereafter. Take the simple extreme: Stage 4 55-year old pancreatic cancer patient does not have the same portfolio as never-sick 55-year old Mr Perfect, who lives next door. At best, the separate module needed to be between “V” and “VI” where the base case is altered. Those are the same thing: it is nowhere on the image at the top of this section.

  • Tax planning / tax efficiency needs to be under Investment Advice.

  • Health care cost planning needs to be under Wealth Advice

It looks like a “line” in the image, but in the real world, it’s a set of feedback loops.

The existing structure of financial advice leaves you in a place where you discover the effects, after the fact. This can be a multiple-thousand dollar, per year, mistake, that is happening in very location.

  • If you ask your stock broker about this, they will understand the that different investments will have a different tax treatment. Even then, they will likely NOT know the math of how the different taxable income levels affect your health insurance (including Medicare) premiums.

  • If you ask your health insurance broker, they will (might) understand that taxable income affects the premiums you pay for health insurance, a huge cost line item (10% of income, on average, and that sounds low for those in high-cost locations).

  • Either, independently considered, is incomplete, and that leaves YOU to figure it out the feedback loops.

Test drive on the One-Time Analysis to find out if/how large the impact might be. From there, you can decide if the Lifetime Planning service is worth it.

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