Is Your Financial Plan Really Coordinated? Here’s How to Tell

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Many people that have a financial advisor may feel like they have their financial life fully coordinated. You might have an advisor, a CPA, an attorney, or other financial professionals. But oftentimes you might see that they’re working separately, not together. How do you know if your financial life is fully aligned? Let’s chat.

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My name is Gina Dieter Alamo. I’m here today with Robert Steinberg, our founder and CEO. And Robert, we’re just going to jump right into it.

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What does it look like to have your financial life aligned when working with an advisor?

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And in some respects, whenever you work with an advisor, what I would say is you’re getting some type of all in one solution.

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But really the question is to what level are you getting? Oftentimes you may meet with an advisor and they will refer you to an estate planning attorney. Perhaps I’ll refer you to a tax professional. But the real question is are they involved in that overall planning process? And the more you can have all three individuals, especially with a financial advisor leading the process, the more coordinated advice and the better chance you have of achieving your goals.

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So for someone working with a financial advisor that, like you mentioned, maybe was referred to a tax professional or an estate planning professional. What would be a red flag that they might want to look out for if they think they’re getting all these different services, but they’re truly not coordinated?

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What’s really happened is we’ve gone more and more from an advisor of being, you know, the old traditional broker that just focused on investments to much more focused on being a wealth manager.

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And that puts a lot more pressure on the advisor and the advisors ability to work with other professionals. So what I would say if your advisors never asked to look at your tax return to me, that would be a red flag, because so much of investment advice today relates to tax brackets maximizing deductions, doing charitable type contributions.

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The second thing is, if they’re not familiar with your estate plan, again, your estate plan is such a huge portion of your overall financial plan as an a wealth manager. They should have actually taken a look at a review that confirmed with you who the professionals are. So just nowadays, going from being an investment person to an overall wealth manager involved to the financial professional having much more expertise, but then working closely with the particular individuals who specialize in that area.

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So let’s go a little bit deeper into the estate planning piece, specifically for someone working with an advisor. Maybe they were referred to an attorney. They got their estate plan done. What is the missing link if those two services are not coordinated? You know, and we see this all the time, and it’s really one of the big challenges of the industry.

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Client goes meets with the estate planning attorney goes through a lengthy process, usually two, perhaps three meetings. They get an estate plan totally prepared. They have to choose professionals. They may have to choose guardians. They have to choose ages of distributions, whether there’s any special beneficiaries of any family circumstance. So all these things are involved with the attorney.

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Once the plan it’s drafted, the client usually gets a nice binder and they take it home. And oftentimes what we see is there is another step in order for the plan to be fully implemented. Work titles have to be change. Beneficiary designations have to be modified. And we just don’t see clients totally following through with it. And that’s really where if there’s an all in one solution where the attorney and the financial advisor are truly coordinated, the chances of that overall estate planning being successful are greatly increased.

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Let’s go a little bit further into the tax planning side of this. You mentioned that that’s one of the other professionals that you want to have in your corner as a coordinated effort. What does it look like from the tax side?

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The biggest challenge about being a tax professional is basically 80% of your work comes in two months.

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So oftentimes what we’re encountering is tax professionals are not doing much planning for their clients. And when you’re meeting with wealth advisors, oftentimes they’re taking the lead role. Or they should be taking the lead role. They have softwares that are a little bit more sophisticated that may help determine whether we should be doing, you know, Roth conversions and be able to demonstrate the value and over time, how that may impact your family’s net worth.

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Also, charitable type deductions, donor advised fund. So oftentimes the wealth manager is the one that’s driving the planning decisions. And they may be run by the CPA. They may not be. And oftentimes depending on what the plan was put in place, a client may at the end of the year they did a large Roth conversion. If the CPA hasn’t been involved, now all of a sudden they’re all a significant tax liability and clients upset at the CPA.

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But in many respects, the CPA wasn’t sure what was going on. So this idea of coordinating the advice and making sure each professional is on the same page and and sometimes the CPA might have slightly different opinion. So getting involvement is what’s really, really valuable. And like I say, the way the process is set up now with the IRS and you know, it’s very rare that we see many CPAs really giving much guidance just because they’re in this mad, mad rush to complete tax returns.

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Definitely. Unfortunately we see this pretty often with new prospective clients where they have a financial advisor that they think is offering them this comprehensive service. But a lot of times they have a financial product, think insurance or an annuity. And they see that as their financial plan when oftentimes it’s just a product. Do you see that often?

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And what is your thought on using a product like a plan. And how important is that planning piece? Yeah, the good thing is I think over time we’re seeing it less and less where, you know, you still get a lot of these invitations to dinner seminars and oftentimes not always, but they’re pushing various types of annuity products, products that still pay rather significant commissions.

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I think the industry has gotten better. More and more the, the the approach is really to be compensated based on values of counts, not transitions. But you’re still people out there that are looking towards products that, okay, this can generate all the income you need for you, for the rest of your life. But it’s much, much, much more complicated than that.

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So the idea is you need to comprehensive plan, and you need to be thinking along that way for your entire life. When you’re working, planning in many respects it’s much more simple. Once you’re retired, you have different buckets of money and deciding where that those dollars make the most sense to come from for various tax reasons, is much more important than any type of single product that you may have.

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So for someone that either has an advisor and they’re not sure if that person is offering comprehensive advice, or maybe they don’t have an advisor and they’re thinking, okay, maybe it’s time to take that step to work with someone. What would be the what would you tell them to kind of audit their the service that they’re getting.

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How should they look for a financial advisor? What type of relationship should it be.

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Yeah. And really what’s what’s happened is the financial advising role has continued to expand. And the what the expectations should be from an advisor have grown. I mean, I said this earlier, but your advisor should be asking to look at your tax return each year because so much advice that somebody may give is going to be related to your individual tax circumstances.

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So that is a a big, big issue. And also, you know, from the idea of continually updating and getting new information on benefits, you know, you know, family circumstances, family plans. I mean, the, you know, the big thing is, is somebody really having a great understanding of what your family is going through and what the rest of your life looks like.

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Oftentimes, people may have a plan and all of a sudden family circumstances change. Maybe a parent’s sick, maybe a parent’s past and all of a sudden, going forward, what the plan looks like may change substantially. So the big thing is the focus of the relationship should be the plan. Modifying the plan. Looking forward to see how you can add value to that client situation, not just reviewing the investments.

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You know, so often what we find is, you know, someone goes to see their advisor and it’s really a rearview mirror type of meeting. We’re looking at what has transpired versus focusing on what the future looks like. And that’s really what you want from your financial advisor, someone who’s helping you see the future and also doing the best job to help you see the future in the most financially efficient manner.

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So we’ve been talking about this all in one solution approach. What does that look like in practice?

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Yeah. This has been kind of one of my life’s ambition as far as building out a financial advisory practice and really to take the RDA side, the investment advisory practice and add in a CPA practice and bring in a related law firm so we could offer the detail of these services all under one family of companies.

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And we have done that. So we have Bluechip partners, which is the financial planning investment arm. We have Blue Chip Tax, which prepares tax returns only for blue chip clients because we find that we don’t want our tax professionals being pulled away. We want them focused on our clients and we don’t want to run out of capacity, which is a real issue in today’s world.

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And then we set up Blue Chip Estate Planning, which is a related entity where we have a separate attorney who’s focused on preparing estate planning documents for Michigan residents. Again, law firms only compared documents in states that they have our bar registered. So what ends up happening is we’ve created this all in one solution. So a client that comes to us can receive the investment advice.

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They can have their taxes prepared. If they’re in Michigan, they can have their state plan prepared. If they’re not in Michigan, our attorney can work closely with their attorney or we can locate an attorney in their particular state. So really that all in one solution gets rid of what we used to say is, kids, you play this, telephone game where one person would be on the phone and tell somebody else and tell somebody else.

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By the time what went around the room, there was no resemblance to what was originally said originally. So by getting all these professionals under one roof, we can dramatically increase the probability of coordinated advice is what really what each client needs.

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Well, and just to go into that a little bit further, you mentioned the three kind of areas.

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So tax estate and then investment management. It’s not just investment management right. You have the comprehensive financial planning where oftentimes the financial advisors are running the longer term strategy that then people like the CPA are doing more of that annual, you know, filing or the estate plan is doing the they’re creating the plan one time. So it’s a coordinated effort.

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And I think it helps with the longer term strategy. So what does that look like for success for clients. Like how do they how do they see that. And what does that mean for them?

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I mean really because a CPA generally is a little bit more focused on the year by year, not really that long term planning and having the financial advisors, like I said earlier, they spend a lot more time being versed in tax planning, long term planning type of issues.

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And so there’s this coordination where you can run the plan by the CPA to see if they see anything. That is may not be entirely, exactly where we the advisor may think it is very rare that that would happen, but the idea is that there’s more coordinated advice. But typically, like I said, the CPA is a little bit more focused on what is taxes look like this year.

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What do they look like next year? The financial advisor and the comprehensive planning that an advisor should be doing is looking really out for the rest of your life and looking at different pivot points. When you retire, before you take Social Security, before you take required minimum distributions, that there’s different things that you should be considering there now fit everybody, but there are natural things that should be considered, and oftentimes that CPA may not be as involved in that planning process.

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Robert. Exactly. Like you said, the value of working with an advisor is having a forward looking approach in your planning.

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If that fits in your situation, please reach out to our team at Blue Chip Partners. We’d be happy to help.

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And it was a great conversation. Robert, thanks for joining me today. Thanks for having me, Gina, for being here. And thanks for watching. Can’t wait to chat again soon.