#8 | What Are We Protecting Wealth FROM?

Jon “Jag” Gay: Welcome to episode number eight of Protecting and Preserving Wealth. I am Jon Jag Gay, joined again by Bruce Hosler of Hosler Wealth Management. Bruce, good to be with you as always.

Bruce Hosler: Jon, thank you. It’s great to be with you.

Jon: So ,we thought today we’d break down the name of the podcast. We call it Protecting and Preserving Wealth, but it might be good to clarify, protecting wealth from what? Bruce, I know there are five main areas that clients typically run into issues with when it comes to again, Protecting and Preserving their Wealth. Why don’t you give us the five areas where you see some common mistakes made.

Bruce: Jon, thank you. We love Protecting our listeners and there’s five areas where we see clients lose their Wealth the most. Taxes, inflation, financial, and estate planning mistakes. Client mistakes, and of course, poor investment management.

Jon: We’re gonna dive into each of those one by one in today’s podcast. Let’s start with the obvious one and that’s taxes.

Bruce: Yes, certainly Jon federal income taxes, state income taxes, gift taxes, estate taxes. Most all of these can be avoided or minimized with proper tax planning and preparation.

Jon: All right, next inflation. And this is a big one for 2022.

Bruce: It’s huge. This will consume your living in retirement if you don’t plan and protect your income from the ravages of inflation. So we do just that. We work with clients to give them inflation, adjusted income.

Jon: Makes sense. And we’ve seen and heard so many horror stories about the third one you mentioned, and that is financial and estate planning mistakes.

Bruce: Jon, we see these mistakes all the time. People have only lived their lives up to this moment of truth. No one has trained them or prepared them for what THEY need to do. No one has helped them understand the very important decisions that they can choose to make and told them what they need to do to title and hold their property and their accounts and how all their various assets can be arranged to work together for their benefit and for the benefit of their family.

Jon: That actually segues well into our fourth item on the list, client mistakes, right.

Bruce: Absolutely. You know, clients try to do the very best they can, but we are all human and we are fearful and we can be our worst enemies. We make emotional decisions instead of rational decisions. When the markets have dropped 20 to 30%, like they have this year, we don’t wanna lose any more money.

So we may be inclined to sell at the very worst time possible. So instead we should be being rational buying at the very moment when everything else is on sale. This is very hard for clients to try and do on their own. We hold their hand.

Jon: I can’t imagine how many phone calls you and your team Bruce have received so far in 22 of investors and clients panicked and wanting to bail.

And this is why it’s great to work with a team like yours, because when it comes to your specific money, you are emotional about it. It’s your money, it’s your livelihood. So working with a team that can look at things rationally and objectively, and be able to take that step back and say, I know you’re upset.

I know you’re scared. I know you’re filling the emotion here, but this is really what makes the most financial sense on paper to do here.

Bruce: It’s all about having someone advise you that is objective about the whole situation and about your money. Because as humans, like you said, we just can’t remain objective about losing money.

It’s very difficult.

Jon: It’s just the way our brains are naturally wired. And the fifth item on our list, poor investment management.

Bruce: Investment management involves such important concepts like diversification, not putting all of your eggs in one basket. We see clients. Find an investment that has performed well for them in the past.

And they want to just invest exclusively in that asset class. We’ve all seen investments from tech stocks that are down 30% this year, just halfway through 2022 to real estate that dropped like a rock in 2008 in the great financial crisis.

Jon: Mm-hmm

Bruce: Poor investment management requires proper diversification. Good investment management requires courage. It requires decisiveness to make changes when the markets and the economy and the world geopolitical environment call for it. And this requires someone that can be objective, who has interests that are aligned with yours as the client. And finally, good investment management requires access to all of the investment tools available for your benefit.

Some investment vehicles are not available to the public. Yet they may be the very best available. Remember the saying the rich get richer? Well, sometimes it’s true because they have access to opportunities that normally would not be available to you. We have the ability to provide access to some of those vehicles for our clients.

Jon: That segues into my next question, Bruce, which is how is your team qualified to help protect clients in all five of these areas?

Bruce: Jon, our team is made up of professionals that have training, certifications, credentials, and experience in multiple disciplines. This allows us to combine our knowledge and our experience and our expertise and competence from multiple disciplines to provide our clients with what we believe is a higher level of advice.

This advice combines to provide our clients with what they’re really looking for a one stop shop that can advise them competently. On all of their financial planning, tax, retirement investments and estate and legacy needs in one place.

Jon: Having that team on your side is so important. I know you’ve got quite a diverse team there in terms of background, right?

Bruce: We do. So we have CPAs and enrolled agents. These are tax professionals that are prepared with detailed tax plans for our clients each year. And then we prepare the tax returns for about 90% of our clients.

Jon: Okay. That’s great!

Bruce: Because tax is the foundation of everything financial that we are doing, we are qualified and prepared to help our clients manage their investments, their financial planning, and estate planning with an eye toward what is the best way to integrate all of this while minimizing their taxes in that process.

So we are moving forward to help our clients move to what I’m gonna call tax-free. Now that is we’re helping our clients create tax-free income, that they will be able to use in the future. And especially in retirement. This will help protect them from the higher tax rates that our country will almost assuredly have to pay because our national debt, the rising interest rates, this is gonna force our government to have to pay so much more to service that national debt.

Jon: You know, we’ve talked about that national debt in previous episodes and why our taxes are likely to go up and you can check out previous episodes on our podcast website, protectingwealthpodcast.com. Continue, I know you’ve got more points about what your team offers, Bruce.

Bruce: The other point that I wanna make is I have spent the last 12 years as a Ed Slott, Master Elite IRA Advisor, we’re able to bring all of that expertise and knowledge to bear for the benefits of our clients when it comes to their retirement plans, IRAs, conversion to tax free, Roth, IRAs and everything that all of that planning and implementation entails.

So our team is comprised of certified financial planners, financial para planners. We feel that every client needs a financial plan and that their financial plan should be updated every year to make sure they’re on track to have a successful retirement. Success in retirement is making sure you don’t run outta money before you run outta life, while still leaving your loved ones financially secure after you die.

Jon: Yes, I know that is a huge fear of investors all over the place – is outliving their money. As their money runs out, not to be CRAs about it, but their money runs out before they do. And then it’s now what, that’s their biggest fear. It’s not death. It’s running outta money before you die.

Bruce: Yes, that’s a big fear. And preparing for that. One of the things that we do is we work closely with their estate planning attorneys to help get all of their financial affairs. in order with the right set of legal documents, but we actually go much further than that for our clients. We wanna make sure that all of your planning works tax effectively, and attorneys are not able to do that with just the trust.

Jon: Mm-hmm.

Bruce: For example, if you have charitable wishes, they’re much better fulfilled through donations of your IRA than from after tax monies, like might be sitting in your trust. So we sit right there with our clients and the attorney and make sure that they get everything set up the right way for the best benefit for them and for their families after they pass away.

Jon: It’s so important.

Bruce: We work closely with clients to help them make wise decisions. Even when the world is very scary. When is the worst and the irrational fears make clients wanna sell everything and run for the hills, we are there to remind them of all the protections, like diversifications. Buffers. Floors and guaranteed vehicles we use were possible to help them track and achieve their goals and then help them not make mistakes.

Jon: That point that you just made. Bruce, I feel like my antenna or antenna antenna, antenna just went up because you’re talking about the world being scary, irrational, fear, people wanna sell and run for the hills. I’m looking at what’s happened in the market in the first half of 2022. And I feel like that is really where a lot of our listeners are at this point, because they’re nervous about what’s going on, but it all comes down to the plan. We’ve talked about that in previous episodes as well, having that plan, that accounts for the market volatility that we’ve seen in 2022, having that plan in place before the market volatility hits before black Swan events or whatever you wanna call it.

Bruce: Wars.

Jon: Wars, inflation. We could go on and on down the list, even this perfect storm we’ve seen so far in 2022. But having that plan in place before the proverbial stuff hits the fan really will put you at ease, to know that yes, things are a little Rocky right now, but we have built this into the plan.

Bruce: And the thing is, is we can pull the software up. The clients can pull the software up and they see right in front of them that even though the markets move down 20%, guess what their retirement is still on track.

Jon: Mm-hmm.

Bruce: They’re still okay. They’re gonna still be okay. And when they can see that, that builds such a ton of confidence. Finally, I want to talk about our proprietary portfolio asset sequence system, which we use for investment management to help our clients structure their investments, to create income ladders.

These income ladders can provide current income growing & intermediate income, and then the full potential for long term growth for their future income needs. To keep their investments growing in the face of this horrible inflation that we’re seeing and protect their long term retirement income needs.

Jon: This is so important. Being able to pull that up on a computer, on a phone or in your office to say, okay, things are a little bit wild right now, but zoom out, look long term. Everything is still on track. As I said, a moment ago, the plan as it comes back to the plan. Bruce, if somebody wants to come talk to you and your team at Hosler Wealth Management about anything we’ve discussed today, getting through these difficult times, planning your long-term future, what are the best ways to find you?

Bruce: They can certainly find us at the website, hoslerwm.com, H O S L E R wm.com. They can call us at one of the offices in Scottsdale (480) 994-7342 or in Prescott (928) 778-7666.

Jon: You can also check out our website for the podcast and that website is protectingwealthpodcast.com. Crucial information today, especially as I don’t wanna sound like a broken record here, Bruce, but especially the events we’ve seen so far in 2022.

Appreciate your insight as always. And we’ll talk soon.

Bruce: Thanks, Jon.