By: Brad Gotto
We had a really busy week at Fiat. I don’t say that in a negative light, in fact, I say it in a very positive light. We had an internal workshop that saw over 30 people attend, a public workshop on taxes, and too many Zoom/office visits to count. I personally thrive on pressure and things moving at top speed, so this week, which seems to be a theme here, was fun. As I sit here on a Friday afternoon writing this blog post, all has gone quiet and I get to reflect on the week a bit. That reflection led me to one thought…
My job is fun!
There are a lot of other adjectives I could use in place of “fun.” My job is rewarding, challenging, stressful, etc…, but the one that stuck out in my head today was “fun.”
To prove my point, here is a fun story for you…
This week I had the opportunity to visit with a client that I started to work with last year (you will know who you are by the end of this post, although for obvious reasons, you will remain nameless). We met at a workshop that Fiat was doing on taxes. They quickly dove into our process and since that time, we have thrown a ton of dust up in the air in an effort to position their lives for the season they are currently in. I won’t bore you with all of the details.
This visit was to discuss 2020 Roth IRA conversion opportunities for them. As an aside, if you are a current client of our firm, or have been through our process at all, you will know that we spend a significant amount of time talking about taxes. So, as I was preparing for the conversation, I was crunching numbers between 2 different planning softwares (in total we use somewhere between 5-10 softwares on each client case!!!) to try and figure out what would make the most sense for them. As I was doing this, I started to get excited! As I kept playing with the numbers and the picture became clearer, I had to push the button on my desk that changes it from a sit down desk to a stand up desk. I was getting too excited to sit down. The plan that was starting to emerge from the mess of data I was playing with was exciting! I know what you’re thinking…
- You’re a numbers nerd (touché)
- How many times can you use the word excited and explanation marks in a paragraph? (After my edit, this is half of what I wanted to use!!!!!)
- Get to the point! (fair)
The keyboard stops, I take my hand off the mouse, and I walk into the office next to me. “Matt, you have to come see this!” Matt, not nearly as excited as I, walks into my office so I could show him the analysis.
What I had put together was a 5 year plan for a client to start taking assets from their Traditional IRA’s and convert them to Roth IRA’s. I know, I know… it doesn’t sound that exciting. BUT, assuming all else was equal (assumed portfolio growth, inflation rates, etc…) if we converted or didn’t, the planned conversions made a $1,800,000 difference in the client’s ending portfolio value at their age of 100. Feel free to pick your jaw up off the floor and start to question my analysis.
The massive disclaimer here is that everyone’s situation is vastly different. But, what isn’t different on a case-by-case basis is the tax code. I regularly make the comment that my job is at the intersection of where art and science meet. There are certain things that we do for our clients that are more art, and the value is hard or impossible to quantify. For other things, it’s science. The tax code is the tax code, and part of the planning we do on behalf of our clients is to ensure that the “INVOICE” that they file with the IRS each year is not only taking into consideration their current tax liability, but any future tax liabilities as well.
Think about it. If you take out a loan on a home or a car you are making a promise to that bank or institution that you will pay them back over a period of time. Usually, when people enter into that agreement, they at least partially understand the deal they are making. What I have found with pre-tax retirement dollars is that people didn’t really understand the deal they were making or the repercussions of that decision. The end result is people retire, and the majority of the assets they have worked diligently to save over decades of their life has a lien on it. That lien is to the IRS, and the rate or amount they owe the IRS is unknown. That can be a scary place, and frankly, can be extremely expensive when/if mistakes are made.
Helping people is fun, no matter how you slice the pie. No matter what you help them with. It is really fun when you get to show them that a simple tax plan over the next 5 years can have a 7 figure impact on their retirement or legacy.
My job is fun.
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