Table of Contents
Setting Yourself Up for Success
One of the best ways to succeed is to literally set yourself up so that the route to success is on autopilot. I had a request to be more specific about how to put success on autopilot.
As an example, in a recent newsletter I mentioned my wife, Cindy, and I have a trainer come to our house three days per week. Every Tuesday, Thursday, and Sunday at 8:00, the doorbell rings and the trainer and I go into our home “gym” and train for an hour. When I am done, Cindy trains from 9–10. Autopilot. No thinking, no decisions, and no options. As long as we do what the trainer says while he is in the room with us, we are fine and get great workouts. I am confident I am getting a much better workout than if I went to the gym by myself or even went to the gym and paid a trainer there. Why? Because it happens and I don’t have to think about it. No excuses, no procrastinating.
Same with diet. We put success on automatic. We have our chef do the shopping and cooking. The refrigerator is full of healthy, organic, pre-measured, balanced meals — Cindy and I don’t have to think about it, and we can focus on the things that we do want to think about.
Same with business communications. Years ago, I would send out mailings to clients whenever the mood struck or I had something important to say. Later, we switched to regular quarterly newsletters that we completely produced ourselves. Then, I decided that monthly newsletters were more appropriate, but I was worried about falling off schedule, so I hired a firm that specializes in newsletter production. They take care of the design, the mailing, and sometimes even some of the content like a puzzle. If I am even one day late submitting my materials, we hear from them immediately, and they push us until we get them everything they need to produce the newsletter. Autopilot. Setting ourselves up for success.
This may sound like heresy to advocates of choice: “I want to choose what I eat”; “I want to choose when I exercise.” If you are disciplined enough to consistently make good choices, I admire your achievement. For some of us, especially if we have identified where we would like to find success, limiting choices, imposing an external obligation, and being held accountable is the ticket.
At the risk of sounding self-serving, the same argument can be made for handling your investments. If you use our services, combined with either our active money manager, Fort Pitt Capital Group, or our low-cost index provider, DiNuzzo Index Advisors, we’ll keep you “set up for success” in such areas as asset allocation, rebalancing, tax-loss harvesting before year end, and other financial housekeeping that can easily get swept under the rug. Will you maintain the financial vigilance to attend to all these details, all the while finding success in your own career? Chances are, you will not. Of course, you have to attend the initial meetings (legal and tax preparation, too) to get started, but if you do that and also come to your review sessions with both my office and your financial planner (either DiNuzzo or Fort Pitt), everything will be taken care of for you. With your whole picture in mind, we make recommendations for spending and gifting, grandchildren’s education, Social Security, Roth IRA conversions, and estate planning. Furthermore, if you have a concern that we have not identified, all you have to do is let us know. We will set our sleuths on an answer.
If putting your finances on autopilot for success sounds attractive, give Alice a call to see if you would be a good fit for our services.
A View From the Inside
By: Shirl Trefelner, CPA
I joined Lange Financial Group, LLC (LFG) in early 2014, reeled in by Jim’s enthusiasm for what makes his organization better than others. I was excited, but skeptical. After all, I was a corporate accountant for 20 years before switching my focus to individual tax accounting. And I have been doing tax returns for high net worth individuals and their businesses for eight years now — so I’m no financial greenhorn. But after two years here at a crazy pace, I’m convinced LFG has mastered the art of long-term financial advising, retirement forecasting, income tax analysis, and estate planning.
What makes us different? Let me give you an example. As a potential investment client, your initial meeting will likely be with Jim! How many other organizations send you directly to the owner? And not only that, an owner who is an expert in his field — both a CPA and an attorney, a best-selling author, and an in-demand speaker? It’s not like he has a lot of spare time. But, if you’ve met with Jim, you know that it’s never just a handshake and a slap on the back. It’s an in-depth conversation because the better he knows you, the better we can come up with long-term strategies to suit your needs.
As a potential investment client, if you like what Jim has to say, and he feels that you may be a good fit for our team, he schedules a second meeting and sends you home with our Retire Secure Education Kit. It’s packed with books, DVDs, and other educational materials. Then we do a full analysis of your investment portfolio. We review your wills and trusts and other financial documents, and we prepare a set of recommendations that we feel will optimize your planning. Jim goes over these recommendations with you in that second meeting. Then it’s up to you to take those recommendations elsewhere to get the work done, or choose to work with us.
If you choose to work with us, our client service coordinator will arrange for you to meet with one of our excellent money managers. These days, the majority of our clients go with DiNuzzo Index Advisors, Inc. (DIA), led by P.J. DiNuzzo. Your meeting will be with P.J. himself and another of his team members. P.J uses, in my opinion, the best low-cost index funds available, Dimensional Funds Advisors, and has put together a team of CFPs, CPAs, and MBAs that have been serving their clients tirelessly since 1989. P.J.’s team analyzes your spending, taxes, and income, as well as your risk tolerance and goals, and puts together a strategic portfolio that is designed meet your short and long-term goals. Sometimes you know right away that the combination of working with both of our teams would be the best choice for you. On the other hand, we do not want to rush this very important decision of who to trust. Many clients schedule a second meeting with P.J. before a final decision is made.
If you decide that it makes sense to coordinate legal work with our investment advising, a meeting with Matt Schwartz and/or Karen Mathias will help you optimize your estate plan, Social Security benefits, and coordinate all your legacy concerns.
Assuming that you sign up for the combined services of LFG and DIA, the next part is my favorite! Either Steve Kohman or I will “run the numbers.” That is a bit of inside jargon, but also, a kind of trademark for LFG. What it means is that we sit down with you, bringing along the notes and recommendations that we received from Jim and DiNuzzo Index Advisors, Inc., and we figure out what we can do to try to stretch your funds as far as we can take them. It’s pretty unique.
The DIA team spends a considerable amount of time creating balance sheets and cash flow reports. So hopefully you have a general idea of how much you can spend out of your accounts every year without running out of money. However, Steve and I take those numbers one step further. We sit with our clients and play the “What If” game during this meeting. What if you do Roth IRA conversions? What if you take Social Security benefits early? What if you want to pay for your grandchild’s college education? What if you use money from your IRA to buy life insurance? Depending on your individual wants and needs, we devise strategies that can go in all sorts of different directions.
Once we decide together what strategies make sense in your situation, we take the numbers and drop them into our software to see how those strategies play out in real life scenarios. We also use a spreadsheet that helps us optimize Roth conversions while minimizing the income tax consequences. As any decent accountant will attest, checks and balances are essential. When we think we have it all figured out, we do one final test. We drop the projections into our Tax Preparation software to make sure that our theories work in reality. When we’ve exhausted all possibilities, we send you home with reports that show you the hypothetical balances of your accounts every year, throughout the rest of your life, implementing many of the “What If” scenarios that we created during our discussions.
But the best part about the service that Steve and I provide? I have yet to hear anyone say that their number-running session was a waste of time. Oh! And it is FREE for our investment clients.
By the time an investment client has been with us for six months, they have probably met half of our professional staff and walked away with an incredibly well-integrated plan. And if you need assistance with your taxes next year, we can help with those too!
So why does all of this personal attention and individual planning matter so much?
I’ve seen some monstrous mistakes in my career: mislabeled beneficiary forms costing heirs hundreds of thousands (if not millions) of dollars, attorneys who have drafted trusts for spouses and children that don’t provide access to funds when they are needed most, financial advisors who have made recommendations that have unintentionally increased income taxes and eliminated potential college tuition, child taxes, and dependent care credits. I’ve seen retired couples make tens of thousands of dollars in charitable contributions from after-tax accounts, as opposed to making the contributions directly from retirement accounts — again, costing thousands of dollars in unnecessary taxes. I’ve even seen wills that included charitable bequests that would have been better fulfilled through naming the charity the beneficiary of the IRA. I could go on.
How do these mistakes happen? Many professionals don’t know to look for some of the things we do. And often there is no coordination between advisors. They are all making the best recommendations that they can with the puzzle pieces that they have in front of them. Unfortunately, there are many pieces to every person’s puzzle, and one advisor rarely has them all.
That’s our strength at LFG. We are highly strategic, and we look for tax savings at every step of your planning. We take every puzzle piece into consideration. The tax team speaks to your investment advisor before finalizing Roth conversion recommendations. The estate planning team talks to your tax advisor before recommending shifting funds that might involve tax implications. Your investment advisor contacts the tax team to discuss appropriate timing for rebalancing. The communication is ongoing, all with your best interests in mind.
Our “one stop shop” concept is a powerful resource for anyone willing to test it out. Every day I am proud of the work we do and impressed with the cohesiveness of our teams. Because of that, I suspect that you will find me here for years to come.
7. The unofficial slang title for the Affordable Healthcare Act.
9. Lange Financial Group’s main website is www.__________.com.
10. The process our CPAs go through with our investment clients in order to determine their ideal retirement planning options is called “________ the numbers.” (Hint: Shirl mentions it in her article!)
1. The transfer of funds from your 401(k) to an IRA is called a __________.
2. A monetary system where a country’s currency or paper money has a value linked to gold.
3. This is America’s financial epicenter.
4. A form of financial contract sold by insurance companies that turn assets into a stream of guaranteed payments (hint: Jim calls selling them “Going to the dark side!”).
5. Transferring money from a tax-deferred Traditional IRA account to a taxfree Roth IRA account is called as Roth IRA ___________.
6. In order to contribute to a Traditional IRA or Roth IRA you must have _______ income.
8. “Don’t pay taxes now, pay taxes ______!” – Jim Lange.