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How to Say No Without Killing a Client's Excitement · Root Ready

• 0:00
  SPEAKER_01: Welcome back to another episode of the Root Ready Podcast.
• 0:02
  SPEAKER_01: I'm your host, James, with my co-host Eden.
• 0:05
  SPEAKER_01: And today we're going to be talking about what to do in those situations where a client comes to you very excited about a particular strategy for some reason.
• 0:14
  SPEAKER_01: And you, as the advisor, know that that perhaps isn't the actual best strategy.
• 0:20
  SPEAKER_01: How do you navigate that conversation?
• 0:22
  SPEAKER_01: How do you do right by the client, even when it seems like it's going maybe against what they feel is the best direction?
• 0:29
  SPEAKER_01: So, uh, Eden, maybe to kick us off, you you we were just talking about a scenario that you and Naomi were planning through.
• 0:36
  SPEAKER_01: Do you mind sharing just some background here and then we can jump into how do you approach situations like this?
• 0:44
  SPEAKER_00: Yeah, of course.
• 0:45
  SPEAKER_00: It's something that Naomi and I have been thinking about a bit more lately.
• 0:49
  SPEAKER_00: And a prime example that we see a lot where clients come in to our kickoff meeting, and something they're really excited about is Roth conversions.
• 0:58
  SPEAKER_00: That's a prime example.
• 0:59
  SPEAKER_00: A lot of people come into us are watching your content, they're watching Ari's content, they're hearing this word, they're hearing your explanation of it, why it makes sense, the power of it.
• 1:09
  SPEAKER_00: And it's something that they're really excited about.
• 1:11
  SPEAKER_00: They want to explore it, they want to talk about it.
• 1:14
  SPEAKER_00: And a lot of times it's kind of an assumption that they have just coming in that it's gonna make sense in their situation.
• 1:20
  SPEAKER_00: And they're excited to see the impact, excited to talk about the mechanics of the strategy, the timing.
• 1:27
  SPEAKER_00: And there's a lot of reasons, it's very nuanced.
• 1:30
  SPEAKER_00: There's a lot of reasons why sometimes that doesn't look like the best strategy in a client's plan.
• 1:35
  SPEAKER_00: And we had this happen recently, just going through our process with a newer client where we knew from the get-go this is something they were interested in.
• 1:43
  SPEAKER_00: And as we discovered more about their wishes, their goals, we already kind of knew it wasn't going to make sense.
• 1:49
  SPEAKER_00: And then we went through it with the client and it really didn't financially make sense.
• 1:54
  SPEAKER_00: And she understood, she completely understood it, but still had that lingering feeling of, well, I still kind of want to do it.
• 2:01
  SPEAKER_00: And it prompted Naomi and I to think about okay, how do we manage this conversation?
• 2:06
  SPEAKER_00: Not only when the client understands it and why it doesn't work, but they still want to do it.
• 2:11
  SPEAKER_00: And also how do we mitigate that feeling of it can kind of feel like a letdown when you walk through the numbers and explain why it doesn't make sense in their case.
• 2:20
  SPEAKER_00: When you finish that explanation and wrap up and just kind of gauge how the client's feeling, we notice that it feels a little bit deflated in the room.
• 2:27
  SPEAKER_00: And it got us thinking about how do we have these conversations, maintain that enthusiasm, and also just make sure that the client feels heard and understood.
• 2:36
  SPEAKER_01: Yeah.
• 2:37
  SPEAKER_01: Yeah, I I love that you and Naomi are picking up on the fact that, like, yeah, this, this was, and I don't know all the details, but this was the right answer to say no, a Roth conversion is not actually going to happen or shouldn't it happen?
• 2:50
  SPEAKER_01: But there's you you sense the deflation.
• 2:53
  SPEAKER_01: And maybe that, oh, I was enthusiastic, I was excited, and now I feel like there's a letdown.
• 2:58
  SPEAKER_01: And how do you approach that?
• 3:01
  SPEAKER_01: Or how do you at least be mindful of that?
• 3:03
  SPEAKER_01: And as you and Naomi were talking about that, like what came to mind?
• 3:05
  SPEAKER_01: Were there specific aspects of that conversation that you said, hey, if we're if we're doing this again, even though yes is the right strategy, would you do anything different?
• 3:12
  SPEAKER_01: Or is it just a matter of that's the reality of certain types of planning combos?
• 3:20
  SPEAKER_00: For us, we kind of had a huddle after it and just talked through definitely more of the emotional side.
• 3:25
  SPEAKER_00: And we talked about kind of the juxtaposition of explaining the Roth conversions when we're in that tax meeting and we're going through that specific tab.
• 3:35
  SPEAKER_00: It's very numbers-heavy.
• 3:37
  SPEAKER_00: And the reasons why Roth conversions don't always make the most sense are very financial.
• 3:43
  SPEAKER_00: It's all so geared to the financial side and really doesn't lean too heavily into the emotional side.
• 3:49
  SPEAKER_00: You can a little bit when you get into legacy planning, thinking about what you're leaving behind for your kids and how that comes into play with Roth conversions.
• 3:56
  SPEAKER_00: But it feels like a very financial conversation.
• 4:00
  SPEAKER_00: It's very oriented around based on your goals, based on where you stand today, based on the taxes, et cetera, et cetera.
• 4:07
  SPEAKER_00: This is why this doesn't make sense.
• 4:08
  SPEAKER_00: And the letdown feeling, that kind of shutdown feeling that we notice in the clients is a lot more of that emotional side.
• 4:14
  SPEAKER_00: And it got us thinking about what are ways that we can lean more into the emotional side while we're going through this very tactical, strategic conversation about whether Roth conversions make sense.
• 4:26
  SPEAKER_01: Yeah.
• 4:26
  SPEAKER_01: Two things I'm going to point out here first.
• 4:29
  SPEAKER_01: One is for all advisors listening, what you and Naomi did after that meeting, you huddled and you talked about it.
• 4:36
  SPEAKER_01: I think that is the absolute best way to continue to get better and improve, especially because you and Naomi aren't both talking at the same time.
• 4:44
  SPEAKER_01: One of you is talking, which means one of you can observe.
• 4:46
  SPEAKER_01: And my guess is whoever is talking isn't maybe noticing or perceiving as much of maybe the letdown as a person who's able to observe and say, okay, I kind of see what's happening here.
• 4:54
  SPEAKER_01: So one, I think that is such an awesome thing the all advisors should be doing.
• 4:59
  SPEAKER_01: If, of course, there's there's two of you in the room, making sure that we're debriefing what went well, what could we improve on.
• 5:06
  SPEAKER_01: Number two, the second is um that the actual mechanics of how to approach it.
• 5:11
  SPEAKER_01: And it reminds me of a quote I heard.
• 5:14
  SPEAKER_01: And and I don't know why it's always stuck with me, but I think it's a really important thing for all advisors to kind of internalize.
• 5:21
  SPEAKER_01: And this quote comes from a very, very short book called The One Sentence Pers Persuasion Course.
• 5:28
  SPEAKER_01: And it's by Blair Warren.
• 5:30
  SPEAKER_01: I think it's literally like 30 pages.
• 5:32
  SPEAKER_01: Download it, read it.
• 5:33
  SPEAKER_01: It's very quick.
• 5:34
  SPEAKER_01: But there's one sentence, and I think the whole book, it's been a little while since I read it, is just like dissecting this one sentence.
• 5:39
  SPEAKER_01: But it says, People will do anything for those who encourage their dreams, justify their failures, allay their fears, confirm their suspicions, and help them throw rocks at their enemies.
• 5:53
  SPEAKER_01: Now, for better or worse.
• 5:54
  SPEAKER_01: I'm gonna read that again real quick.
• 5:55
  SPEAKER_01: People will do anything for those who encourage their dreams, justify their failures, allay their fears, confirm their suspicions, and help them throw rocks at their enemies.
• 6:03
  SPEAKER_01: That you can read that, and like that can be taken into a manipulative standpoint for a sure.
• 6:08
  SPEAKER_01: But I don't think you can deny the truth of that.
• 6:10
  SPEAKER_01: Like that as people, if we see someone who dislikes the people we dislike, we gravitate towards them.
• 6:16
  SPEAKER_01: If we see someone who's encouraging our dreams, we gravitate towards them.
• 6:19
  SPEAKER_01: If we see someone who's gonna help us justify our failures, we gravitate towards them, allay our fears, confirm our suspicions.
• 6:24
  SPEAKER_01: Those are the people that we just feel like, oh, they get it.
• 6:27
  SPEAKER_01: We need to feel closer to them.
• 6:28
  SPEAKER_01: And again, this this can absolutely be used by a psychopath for manipulation, but I think it's a good, it's reality, forget for better or worse.
• 6:37
  SPEAKER_01: And in that principle, like I think of if I were to go to my CPA and be like, hey, I just heard this thing.
• 6:44
  SPEAKER_01: I'm so excited.
• 6:44
  SPEAKER_01: I think this is a great way to like tweak some things and help save on taxes.
• 6:48
  SPEAKER_01: If they were just like, nope, James, bad idea.
• 6:50
  SPEAKER_01: This is why it can't happen and make it, oh.
• 6:53
  SPEAKER_01: Like now I feel kind of stupid.
• 6:54
  SPEAKER_01: Like I feel like a little bit of a disconnect from you because I was so excited.
• 6:58
  SPEAKER_01: And I'm who knows, there's plenty of examples with this, but think of this even on a relational level.
• 7:04
  SPEAKER_01: If you go to your spouse, if you go to your partner, if you go to your friend, you're so excited about something, and they're just like, no, this is why it won't work.
• 7:11
  SPEAKER_01: It's like, oh, I feel distant from you.
• 7:13
  SPEAKER_01: Like I feel you went right to the solution.
• 7:17
  SPEAKER_01: Whereas if I go to my CPA in that same example, and and I'm I don't even have a good example for this, but like, hey James, yeah, that thing you're talking about, it's awesome.
• 7:25
  SPEAKER_01: It can save you tons of taxes.
• 7:27
  SPEAKER_01: Here's where it really makes sense.
• 7:28
  SPEAKER_01: Let's look at where that makes, you know.
• 7:30
  SPEAKER_01: Ultimately, it's not the tactic, it's the tax savings that we're really excited about.
• 7:35
  SPEAKER_01: Ultimately, it's not the Roth conversion, it's the long-term tax savings that we're excited about.
• 7:39
  SPEAKER_01: So take that excitement.
• 7:42
  SPEAKER_01: Like, if if they're excited, be excited with them.
• 7:44
  SPEAKER_01: If they're nervous, be nervous with like match whatever they're feeling.
• 7:48
  SPEAKER_01: And again, not from a manipulative standpoint, but to make them feel like, yeah, Eden understands me.
• 7:53
  SPEAKER_01: Eden gets like I'm excited about this too.
• 7:56
  SPEAKER_01: And it's almost like this sometimes emotional judo you got to think through of instead of going direct and being forced in your way into here's the solutions, take the energy they're coming with, and how do we use that in re-guide it or re um redirection it and this and into what actually matters most?
• 8:21
  SPEAKER_01: Because I almost think of it as there's different layers to strongly held beliefs that people have.
• 8:28
  SPEAKER_01: Like at the top, you could think of politics and you could think of religion.
• 8:31
  SPEAKER_01: Like I don't know what your political views are, Aiden, but my guess is if we're gonna sit down for 20 minutes, like I'm not gonna convince you that you're like you're you're probably feeling like, okay, cool, like that's your opinion.
• 8:41
  SPEAKER_01: But very, very, very little is probably actually being changed, no matter how strongly I feel about whatever I'm saying.
• 8:50
  SPEAKER_01: That's probably like the top level.
• 8:52
  SPEAKER_01: I don't know if you know Roth conversions aren't that extreme, but they can still be a strongly helped belief.
• 8:58
  SPEAKER_01: Like, I think that you know, the debt-no debt crowd is a good example of this.
• 9:04
  SPEAKER_01: If you've got one client that's like, hey, I'm Dave Ramsey through and through, all debt is bad, I'll pay it off, versus another one that's like, hey, I've built my wealth using leverage and buying real estate, and I will never not do that.
• 9:15
  SPEAKER_01: What are the odds that those people ever agree on something?
• 9:20
  SPEAKER_01: It's it's zero.
• 9:21
  SPEAKER_01: And taking a direct, hey, you're wrong, no, you should use leverage, or hey, you're wrong, you should never use debt or leverage, the direct approach is just not going to be effective.
• 9:33
  SPEAKER_01: Um so my thought, and we talked about this a couple episodes ago, is this is where the ACE framework comes into play really well.
• 9:44
  SPEAKER_01: And in the way I'd think of that, yeah, and you know, one more thing.
• 9:48
  SPEAKER_01: There's a uh I don't think that this is a quote, I don't think it's from this book.
• 9:52
  SPEAKER_01: There's a book, How to Win Friends and Influence People, which is a very famous book from a while ago.
• 9:56
  SPEAKER_01: There's a quote made popular, and I don't think it came from this, but um, a man convinced against his will is still of the same opinion.
• 10:05
  SPEAKER_01: If you believe something to be true, Eden, if you really think this is the right strategy, and I convince you, but like against your will, it's like okay.
• 10:13
  SPEAKER_01: You're probably still of the same opinion.
• 10:16
  SPEAKER_01: You're probably not actually shifting this belief that's not just based upon numbers and rational thought always.
• 10:23
  SPEAKER_01: So I think those are good kind of backdrops to keep in mind of how do we do this?
• 10:30
  SPEAKER_01: How do we kind of make ourselves, how do we make ourselves seem like, hey, we're on the same side of the table as you.
• 10:35
  SPEAKER_01: We're with you.
• 10:36
  SPEAKER_01: If you're excited, we're excited.
• 10:37
  SPEAKER_01: If you're nervous, we're we're like, we're gonna meet you where you are, and then we're still gonna work through this to come to the right, uh, right outcome.
• 10:46
  SPEAKER_01: So we talked about the what was that, two episodes ago, three episodes ago?
• 10:50
  SPEAKER_01: I forget exactly when we do two a couple of weeks ago, a few weeks ago, but the ACE framework we talked about, which is acknowledge, clarify, and explain.
• 11:02
  SPEAKER_01: So if if this client comes in, it's like, hey, I'm I'm excited, I want to do Roth conversions.
• 11:07
  SPEAKER_01: And and when did you and Naomi sense that like that was actually really important to them?
• 11:13
  SPEAKER_00: We definitely knew it was something kind of on like their wish list of working with Root.
• 11:18
  SPEAKER_00: It was a big reason why they wanted to work with us, just watching some of the content around it.
• 11:22
  SPEAKER_00: So very early on in the kickoff, we knew this is a lens that we're gonna want to look through as we go through this process.
• 11:29
  SPEAKER_00: Um, so we knew pretty early on this is something that this particular client wanted to explore and was gonna be really excited about when we got to that tax meeting to discuss it.
• 11:38
  SPEAKER_01: Yeah.
• 11:39
  SPEAKER_01: Awesome.
• 11:41
  SPEAKER_01: I'm gonna go back to the quote I started with.
• 11:43
  SPEAKER_01: People will do anything for those who encourage their dreams, justify their failures, allay their fears, confirm their suspicions, help them throw rocks to their enemies.
• 11:50
  SPEAKER_01: How do we apply that to the situation?
• 11:52
  SPEAKER_01: Um, confirm their suspicions.
• 11:54
  SPEAKER_01: Like, hey, Roth conversions could absolutely be something that is really powerful when it comes to saving on taxes.
• 12:01
  SPEAKER_01: Encourage their dreams.
• 12:02
  SPEAKER_01: I don't know if I go so far as to say that doing Roth conversions is a dream of theirs.
• 12:07
  SPEAKER_01: But the same concept applies.
• 12:08
  SPEAKER_01: Like, hey, awesome.
• 12:09
  SPEAKER_01: Like, so so how do we start by acknowledging that in the ACE framework?
• 12:12
  SPEAKER_01: Acknowledge, clarify, explain.
• 12:14
  SPEAKER_01: It's Eden, yeah, absolutely.
• 12:17
  SPEAKER_01: Like, I see Roth conversions are important to you.
• 12:20
  SPEAKER_01: Those have so much potential in the right situation to save a whole bunch of money on taxes.
• 12:27
  SPEAKER_01: So I'm with you.
• 12:28
  SPEAKER_01: Like at every plan that we're gonna do, that's one of the top strategies that we're going to look at, because it's one of the top things, especially in retirement, has the potential to save you a whole bunch of money.
• 12:38
  SPEAKER_01: Now, you you can say this however you want to say this, but I think that when you start by acknowledging, as and you you enable me to do this, but as opposed to if you went right to, no, I reviewed your numbers, these aren't going to be a good fit for you.
• 12:53
  SPEAKER_01: There's just a difference in terms of, okay, I'm not driving a wedge between us.
• 12:57
  SPEAKER_01: Now they feel kind of silly for even suggesting it when I come at it like that.
• 13:00
  SPEAKER_01: I'm being, they feel like they're being talked at or preached at or whatever to at, um, as opposed to, okay, yeah, like James gets it, or Eden gets it, or Naomi gets like we're on the same side here.
• 13:13
  SPEAKER_01: They see this, like they share my excitement for this as a potential thing.
• 13:17
  SPEAKER_01: Um then I would go to clarify.
• 13:22
  SPEAKER_01: I would say, Eden, I'm curious.
• 13:23
  SPEAKER_01: There are, you know, Roth conversions, they are fantastic.
• 13:26
  SPEAKER_01: Different people have different reasons for doing them.
• 13:28
  SPEAKER_01: It could be to avoid RMDs in the future or lessen your RMDs in the future.
• 13:32
  SPEAKER_01: It could be to um pass on tax-free funds to your heirs.
• 13:39
  SPEAKER_01: It could be for uh, you know, reducing potential Irma surcharges in the future because you project that out.
• 13:44
  SPEAKER_01: It could be for just overall tax savings.
• 13:47
  SPEAKER_01: And even though I probably already have an idea what it is, I'm I'm giving them almost like a I don't want to assume that I know exactly why they're doing it.
• 13:56
  SPEAKER_01: So I'm gonna clarify.
• 13:57
  SPEAKER_01: Hey, have all those reasons, Eden, like what's what's top of mind for you?
• 14:02
  SPEAKER_01: Like which of those reasons is driving your desire to do Roth conversions?
• 14:09
  SPEAKER_01: And then I let them speak.
• 14:10
  SPEAKER_01: And did that happen to come up at all?
• 14:12
  SPEAKER_01: Like do you for this particular client?
• 14:14
  SPEAKER_01: What was her core reason for doing it?
• 14:18
  SPEAKER_00: For us, this is actually a space where as we went into this huddle and talked about, okay, like what happened there?
• 14:24
  SPEAKER_00: What what happened during this tax meeting?
• 14:27
  SPEAKER_00: This is actually a space where we felt like we should have spent more time on the clarify because we felt, you know, we did the acknowledge, yes, Roth conversions, we love them here at Root.
• 14:37
  SPEAKER_00: We love to look at them.
• 14:38
  SPEAKER_00: There's a lot of reasons why they do make sense, a lot of reasons why they don't.
• 14:42
  SPEAKER_00: But we really didn't do as much on the discovery side of what is it in particular for your situation that makes you really excited about Roth conversions?
• 14:53
  SPEAKER_00: So that's actually a really great point.
• 14:55
  SPEAKER_00: And it's something that we both felt we should have done more of.
• 14:59
  SPEAKER_00: Because I'm sitting here and you're asking me this question, I'm like, what is it about Roth conversions that this particular client really wanted to do?
• 15:05
  SPEAKER_00: And I don't really know that we spent that much time digging into it.
• 15:08
  SPEAKER_00: It ended up being more of the we kind of knew as we went through this process, okay, this is true, this is true, this is true.
• 15:16
  SPEAKER_00: Roth conversions probably aren't going to make sense.
• 15:17
  SPEAKER_00: And I think even on our own end as advisors, we acknowledge that we were already kind of going down that path before we even got to that meeting where we're like, we're like nervous about having this conversation, but honestly, did kind of skip over that dig deeper.
• 15:33
  SPEAKER_00: What is it about this that's so exciting to you and what makes you really want to do this?
• 15:38
  SPEAKER_01: Yeah.
• 15:40
  SPEAKER_01: To me, the digging deeper part, that's where the actual alignment happens.
• 15:44
  SPEAKER_01: Like the acknowledge is great.
• 15:45
  SPEAKER_01: Like, hey, let's connect.
• 15:46
  SPEAKER_01: Let's make sure that you know I share your enthusiasm for what's top of mind for you.
• 15:52
  SPEAKER_01: This is where I'm just gonna make an assumption here.
• 15:56
  SPEAKER_01: Let's assume she said, okay, well, yeah, my goal is to reduce my lifetime tax bill.
• 16:03
  SPEAKER_01: I think that would be the most common goal for most people.
• 16:05
  SPEAKER_01: Like, hey, if I can reduce taxes, awesome.
• 16:08
  SPEAKER_01: Now, now what we've done is we're on the same page of the actual goal.
• 16:14
  SPEAKER_01: The Roth conversion is never the goal, it's a means to an end.
• 16:18
  SPEAKER_01: But the end is ultimately what we want to optimize for.
• 16:21
  SPEAKER_01: And if the end is minimizing lifetime taxes, I want to make sure I'm very clear and aligned with if you're my client, Eden, I want to be aligned with you on that.
• 16:33
  SPEAKER_01: Whether it's a Roth conversion that gets us there, whether it's tax loss harvesting, tax gain harvesting, qualified charitable distributions, whatever it is.
• 16:42
  SPEAKER_01: I don't actually care.
• 16:44
  SPEAKER_01: Those are just the tools to help us realize the actual outcome that we care about.
• 16:49
  SPEAKER_01: And in the clarify section, that's where it does two things.
• 16:55
  SPEAKER_01: One is like it shows us what we're actually trying to accomplish.
• 16:58
  SPEAKER_01: But number two, it forces people sometimes for the first time to actually think through this.
• 17:03
  SPEAKER_01: Of if I hit Roth conversion, Roth conversion, Roth conversion, I just think, okay, these things are awesome.
• 17:07
  SPEAKER_01: I just have to do it.
• 17:08
  SPEAKER_00: Right.
• 17:08
  SPEAKER_01: But when I'm asking you to clarify the why, it's one of those things of, again, a man convinced against his will is still the same opinion.
• 17:16
  SPEAKER_01: But if this is now as you're clarifying the why behind you, why you want to do it, you might actually start to come to your own conclusion of, well, of course, you know, I want to do it to save taxes over the course of my lifetime.
• 17:29
  SPEAKER_01: Then I think that gives you so much more permission to say, hey, that's that's exactly what I want for you as well.
• 17:35
  SPEAKER_01: And then you can start to shift to the explain, which is Eden, I'm right there with you.
• 17:43
  SPEAKER_01: Like part of our tax strategy is to make sure you are not paying a dollar more in taxes than you absolutely need to over the course of your lifetime.
• 17:52
  SPEAKER_01: Here's where I am gonna push back a little bit on what you're saying.
• 17:55
  SPEAKER_01: Or here's a here's a counter to what you're saying.
• 17:58
  SPEAKER_01: Whenever I'm looking at a Roth conversion analysis, and this is true, by the way, I am actually always looking for a good reason not to do a Roth conversion.
• 18:07
  SPEAKER_01: Because, yes, they can be so powerful, but what they are going to force you to do is it's gonna cause you, you're gonna have to front load your tax bill.
• 18:14
  SPEAKER_01: You're gonna have to be writing checks for the next few years that you otherwise wouldn't have had to write.
• 18:20
  SPEAKER_01: Those aren't gonna be small checks.
• 18:22
  SPEAKER_01: These are gonna be, in many cases, five figure plus checks, depending on your portfolio size.
• 18:28
  SPEAKER_01: And that hurts.
• 18:30
  SPEAKER_01: And so for me, again, going back to what we're actually aligned on is I want to make sure you're not paying a dollar more than you have to.
• 18:36
  SPEAKER_01: Is there a good reason not to do this?
• 18:38
  SPEAKER_01: Because we know the benefits.
• 18:40
  SPEAKER_01: Far too, far too few people actually look at the downside.
• 18:44
  SPEAKER_01: And that's where you can then go into the charts and say, hey, Eden, as we go through this, I'm with you of Roth conversion absolutely being a great thing.
• 18:52
  SPEAKER_01: But and I think you mentioned that she had what was a little bit more better situation, charitably inclined, not going to pass money to children.
• 19:00
  SPEAKER_00: Wanted to die with zero, no specific legacy goal, very charitable during life, potentially relocating overseas where Roth status may or may not be recognized.
• 19:13
  SPEAKER_00: So just lots of reasons.
• 19:15
  SPEAKER_00: And it showed, of course, in in the actual plan, um, for sure, it showed that you know, you're actually probably going to pay more in taxes over your lifetime to go about Roth conversions.
• 19:26
  SPEAKER_00: But yeah, so it was one of those where we were definitely looking at it through the financial lens for sure.
• 19:32
  SPEAKER_00: And as we're discussing this, and this is really how our Huddle discussion went too, we really did go from the A to E on that ACE framework where it's like, I'm with you, I'm excited.
• 19:42
  SPEAKER_00: We know already, kind of based on what we know about your situation, that this isn't gonna look great.
• 19:46
  SPEAKER_00: And we knew it wasn't gonna look great, and it didn't.
• 19:49
  SPEAKER_00: Even in the software, it didn't.
• 19:50
  SPEAKER_00: And it kind of went straight from A to E.
• 19:53
  SPEAKER_00: And that really was like the heart of our conversation in this huddle is we missed the mark somewhere.
• 19:57
  SPEAKER_00: We we missed the mark and we knew we did.
• 20:00
  SPEAKER_00: We finished this tax meeting, go through all this.
• 20:02
  SPEAKER_00: She understands she's with it.
• 20:03
  SPEAKER_00: Yep, okay, it don't make sense.
• 20:05
  SPEAKER_00: A couple weeks later, we have a check-in meeting and she wants to talk about them again, wants to go through that again.
• 20:10
  SPEAKER_00: And I I want to go through this again and talk about it and revisit it.
• 20:13
  SPEAKER_00: And that's exactly what you're saying, where we didn't convince her that Roth conversions aren't a good idea.
• 20:19
  SPEAKER_00: It was something she was still thinking about, even after we had the full E explanation.
• 20:25
  SPEAKER_00: It was still something she was thinking about.
• 20:27
  SPEAKER_00: So this is nail on the head of A to E.
• 20:30
  SPEAKER_00: We totally skipped this C discovery section of understanding a bit more of where is this coming from?
• 20:36
  SPEAKER_00: Where's the drive?
• 20:36
  SPEAKER_00: And we really felt that when she reached out again specifically to talk about Roth conversions.
• 20:41
  unknown: Yeah.
• 20:42
  SPEAKER_01: Yeah.
• 20:42
  SPEAKER_01: Awesome.
• 20:44
  SPEAKER_01: I mean, very perceptive of again, I think that too in that E, if we're E explain, if we're doing the C to clarify right.
• 20:52
  SPEAKER_01: And again, we now know the actual goal isn't just Roth conversions for the sake of Roth conversions, because I think everyone would agree with that once they actually dig a little bit deeper into the why behind it.
• 21:03
  SPEAKER_01: Now we can actually come back to say, hey, Eden, what I what I heard you say is it's not necessarily the Roth conversions, it's that you want to minimize your lifetime tax bill.
• 21:11
  SPEAKER_01: We ran the numbers.
• 21:12
  SPEAKER_01: We actually, if you if you do Roth conversions and we explored a whole bunch of different options, it's probably actually gonna add to your lifetime tax bill somewhere to the tune of blank to blank, whatever it is.
• 21:23
  SPEAKER_01: Now, this is your money.
• 21:25
  SPEAKER_01: You can do what you want to do, but as your advisor, I'm gonna tell you what I think is necessary to tell you, um, regardless of any, I don't know.
• 21:37
  SPEAKER_01: Uh I'm gonna tell you what needs to be said, essentially.
• 21:41
  SPEAKER_01: But because we've now drilled into the goal isn't Texree Roth conversions, is to save on lifetime taxes.
• 21:48
  SPEAKER_01: Here's how we do think you can do that, Ethan.
• 21:50
  SPEAKER_01: Um at age 70 and a half, you can start doing qualified charitable distributions from your IRA.
• 21:54
  SPEAKER_01: And give you know the charitable goals that you shared with me, we're gonna use this.
• 21:58
  SPEAKER_01: Um, because you don't Don't have heirs, and you're going to leave your money, if any, to charity.
• 22:05
  SPEAKER_01: Um any Roth conversion you do that doesn't ultimately get spent is just taxes you would have paid that you didn't have to.
• 22:10
  SPEAKER_01: So by not and then what you can do is you can come back with an actual plan that's like, hey, between qualified charitable distributions, between the right beneficiary designations on your account, between being smart.
• 22:20
  SPEAKER_01: I don't know her situation, but if she has IRAs, Roth IRAs, brokerage accounts, how do we actually withdraw each year?
• 22:25
  SPEAKER_01: And maybe it's not just like a simple pull everything from brokerage or everything from IRA, but we can be smart about tax bracket management.
• 22:33
  SPEAKER_01: Here's how we're actually accomplishing your goal.
• 22:36
  SPEAKER_01: And you're now, you're now bringing something to the table where it's like, hey, here's some value, not necessarily where you thought it would be, but we examined the tactic, which is the Roth conversions, and don't suggest it.
• 22:47
  SPEAKER_01: But that's okay because that's not actually the goal.
• 22:50
  SPEAKER_01: The actual goal, here's how we think you're best equipped to accomplish that.
• 22:56
  SPEAKER_01: And it's a way of showing that you're not just listening to what they say, you're listening two, three, four steps deeper.
• 23:06
  SPEAKER_01: Of okay, what's the actual goal behind the goal?
• 23:09
  SPEAKER_01: What's the goal behind that?
• 23:10
  SPEAKER_01: And here's the actual delivery of that solution.
• 23:13
  SPEAKER_01: And then the one final thing I'll say to this too, and I think you referenced this, which was which was good, is the ACE framework again is acknowledge, clarify, explain.
• 23:21
  SPEAKER_01: There is some room in here to make a judgment call.
• 23:27
  SPEAKER_01: In the same way, if a client wants to own a little bit of an individual stock and we say, we might not recommend that, but who cares?
• 23:35
  SPEAKER_01: This isn't gonna be the end of the world.
• 23:36
  SPEAKER_01: We're good, we look at your plan.
• 23:38
  SPEAKER_01: Or if a client wants to pay off debt or have debt that you may personally not, okay, if it's a small amount and it's not gonna derail the plan, who cares?
• 23:47
  SPEAKER_01: So like there's, I don't want to say who cares.
• 23:48
  SPEAKER_01: I should say we should care, but we should care more about maintaining that sense of momentum and excitement, that thing that can't be quantified on a spreadsheet or financial planning software, if it gives that client a sense of this plan is mine.
• 24:02
  SPEAKER_01: And I'm feeling more excited about that.
• 24:04
  SPEAKER_01: We want to carve off a small Roth conversion because we've run the numbers and we know it's not gonna change the final outcome, and it's gonna, you know, do something to make them feel more ownership of it, that is a perfectly legitimate thing to do.
• 24:18
  SPEAKER_01: You just have to balance that with if you're doing so much that's actually quite harmful to the plan, that's obviously once it becomes much more harmful.
• 24:28
  SPEAKER_01: Any any questions or any points to that that you think are still left unopened?
• 24:34
  SPEAKER_00: I would say that's a super valid approach to take.
• 24:39
  SPEAKER_00: And that is actually where we ended up with this client.
• 24:42
  SPEAKER_00: And for just more context, too, I think with her as I think about this whole situation more, as we're having this conversation, she was always a DIYer and felt that ownership over her plan.
• 24:53
  SPEAKER_00: And she's done a really great job.
• 24:55
  SPEAKER_00: Her plan is awesome.
• 24:57
  SPEAKER_00: It's in great shape.
• 24:58
  SPEAKER_00: She's worked really hard and done a great job taking ownership of her money.
• 25:02
  SPEAKER_00: And it was hard enough in the first place for her to even consider working with an advisor and having us take that off her plate.
• 25:10
  SPEAKER_00: And I mean, now she's in a great place and super happy with it, but she wanted to be involved.
• 25:14
  SPEAKER_00: She wanted to understand the why behind everything and is used to making those judgment calls herself on her own and not really having this sounding board and other people to look into the other areas that she maybe hadn't thought of before.
• 25:28
  SPEAKER_00: And we landed right where you just said with this client.
• 25:31
  SPEAKER_00: We looked at it again.
• 25:33
  SPEAKER_00: Really small conversions over the next few years isn't really gonna move the needle meaningfully in one way or the other.
• 25:39
  SPEAKER_00: If this is something that makes you feel like you have some autonomy, more skin in the game, this is your money, we're completely okay with that.
• 25:46
  SPEAKER_00: And that's where we landed, and it really helped maintain that overall enthusiasm.
• 25:52
  SPEAKER_00: Now we're achieving all these goals she set out to achieve.
• 25:55
  SPEAKER_00: We're, you know, we're looking at charitable strategies during her life, which makes her super excited.
• 25:59
  SPEAKER_00: We're gonna look at little Rothkin versions every year, which makes her super excited.
• 26:04
  SPEAKER_00: Smile on her face.
• 26:04
  SPEAKER_00: And it ended in a great place where when we finished that first tax meeting and went through it, Naomi and I were like, we just missed the mark somewhere on that.
• 26:13
  SPEAKER_00: We were missing something.
• 26:14
  SPEAKER_00: And now we feel like we've really closed that gap now that we went through kind of what you just said.
• 26:18
  SPEAKER_00: We talked through it again.
• 26:19
  SPEAKER_00: We went through the numbers, talked through it more in depth.
• 26:22
  SPEAKER_00: What are the goals?
• 26:22
  SPEAKER_00: Why do you want to do this?
• 26:23
  SPEAKER_00: And I think a lot of it is just that ownership and autonomy.
• 26:27
  SPEAKER_00: Just because they're working with an advisor doesn't mean they don't want to be involved.
• 26:31
  SPEAKER_00: They don't want to come up with strategies, work with us, collaborate with us.
• 26:35
  SPEAKER_00: And that was really the outcome for this one.
• 26:37
  SPEAKER_00: Ended up being a win.
• 26:38
  SPEAKER_00: And it's totally fine.
• 26:39
  SPEAKER_00: It like you said, it's not really moving the needle one way or the other.
• 26:44
  SPEAKER_01: Very cool.
• 26:45
  SPEAKER_01: I'm gonna I'm gonna read that quote one more time because there's a couple things you just said that tie right back to it.
• 26:49
  SPEAKER_01: So sorry if you're sick if you're in this quote by now.
• 26:51
  SPEAKER_01: But people will do anything for those who encourage their dreams, justify their failures, allay their fears, confirm their suspicions, and help them throw rocks to their enemies.
• 27:01
  SPEAKER_01: You mentioned she's been a DIYer her whole life.
• 27:03
  SPEAKER_01: Like this is the perfect, like acknowledge it.
• 27:07
  SPEAKER_01: Hey, Eni, you've done this yourself your whole life, and you have done awesome.
• 27:12
  SPEAKER_01: Like what you have here is a really incredible plan.
• 27:15
  SPEAKER_01: When it comes to something like Roth conversions or things, there's so much out there.
• 27:19
  SPEAKER_01: We put it out there.
• 27:20
  SPEAKER_01: James's stuff already says he probably heard it ad nauseum.
• 27:23
  SPEAKER_01: And and the um, it is so insanely difficult to know like when does this actually apply?
• 27:27
  SPEAKER_01: When does it not apply?
• 27:29
  SPEAKER_01: How, to what degree should it apply?
• 27:32
  SPEAKER_01: How long should I do it for?
• 27:34
  SPEAKER_01: Should I ever taper off?
• 27:35
  SPEAKER_01: There's so many things that need to be taken into account.
• 27:38
  SPEAKER_01: It is so difficult to know what's right for you unless you've you know, unless you spent your career building towards understanding this type of stuff.
• 27:48
  SPEAKER_01: So you're you're justifying, I don't even want to call it a failure, it's not a failure on her part.
• 27:52
  SPEAKER_01: She built an incredible plan, but to avoid any sense of making few people feel dumb or feel stupid, like, ah man, I now I feel dumb for even suggesting.
• 28:03
  SPEAKER_01: No, like I am justifying the fact that you have built an incredible plan, and it would be unreasonable to expect that you knew exactly how this Roth conversion decision, year in, year out, with all the context and the modeling software and all that stuff that goes into it.
• 28:18
  SPEAKER_01: And you're justifying it.
• 28:19
  SPEAKER_01: And she's now feeling closer to you.
• 28:22
  SPEAKER_01: Um, the first piece, encourage their dreams.
• 28:24
  SPEAKER_01: Your dreams aren't actually a Roth conversion.
• 28:26
  SPEAKER_01: It's Eden, I want you to be able to travel the world, to give charitably, to live with peace of mind and confidence.
• 28:34
  SPEAKER_01: That's frankly why you're hiring us.
• 28:36
  SPEAKER_01: We're not here just to do what you've already been doing.
• 28:40
  SPEAKER_01: Like we're here to make sure that everything in your plan is supporting that.
• 28:44
  SPEAKER_01: And so as you go towards this, it's not just enough to have the right answer.
• 28:49
  SPEAKER_01: You want to make sure there's buy-in and there's excitement that you're generating on the client's end to do that.
• 28:56
  SPEAKER_01: And I think that's what separates good financial advisors from not good financial advisors.
• 29:03
  SPEAKER_01: If going to your financial advisor feels like the dentist because you're just being told what to do and feeling like, oh, dang, it didn't floss again, it's not good.
• 29:10
  SPEAKER_01: But if you're if if going to your financial advisor feels like, ah, I'm excited here because like I've got a team that gets me, they understand my fears, they understand my dreams, they understand my whatever, we want it to feel um not like you're being lectured at when you are getting your financial advice.
• 29:29
  SPEAKER_01: Anything else that we didn't cover on this that would be helpful to go over.
• 29:35
  SPEAKER_00: I think just one thing that I would put more emphasis on that you mentioned earlier is first of all, the privilege that we have of being able to work one-on-one lead to associate advisor and having two people in that room, the importance of that post-meeting huddle.
• 29:53
  SPEAKER_00: That is such an important part of mine and Naomi's day.
• 29:56
  SPEAKER_00: You know, we don't always meet exactly after every meeting, but end of the day, we're we're gonna hop into a Zoom together and talk through how did that go?
• 30:03
  SPEAKER_00: And she'll ask me, how do you think that went?
• 30:06
  SPEAKER_00: Do you have feedback?
• 30:07
  SPEAKER_00: Did you notice anything that maybe I didn't see?
• 30:10
  SPEAKER_00: And vice versa, it's never a bad thing.
• 30:14
  SPEAKER_00: It's always a productive use of our time to do that.
• 30:17
  SPEAKER_00: And it's been really helpful for bringing up these types of conversations and giving feedback, which I think is another thing we talked about in a different episode, just being able to give feedback to each other, but also just talking about things that maybe she didn't see because she's in the weeds going through something and I'm able to watch the client's reaction and kind of feed into that side of things more.
• 30:36
  SPEAKER_00: So I would highly recommend doing that when you can with a lead or associate advisor, either way.
• 30:43
  SPEAKER_00: If you have that team structure and someone else is sitting in on those meetings, there's a super valuable person to tap into and talk through how did that go?
• 30:50
  SPEAKER_00: How do you think that went for the client?
• 30:52
  SPEAKER_00: How did they feel, et cetera, et cetera?
• 30:55
  SPEAKER_00: So I would definitely put some emphasis there that that's a super important part of all of this and helping to get better at these things.
• 31:02
  SPEAKER_00: And now we feel better the next time we go into a situation where a client really wants to do something and we kind of know already from what they're telling us that it's not gonna make a lot of sense.
• 31:11
  SPEAKER_00: We have a better approach and game plan going into that now.
• 31:15
  SPEAKER_01: Yeah.
• 31:16
  SPEAKER_01: Could not agree more.
• 31:17
  SPEAKER_01: I think that is really great perspective on all that.
• 31:20
  SPEAKER_01: So thank you, Eden.
• 31:22
  SPEAKER_01: Um, thank you, everyone who's listening and watching.
• 31:25
  SPEAKER_01: If you're enjoying it, please make sure that you subscribe.
• 31:28
  SPEAKER_01: You can watch the Root Ready podcast on YouTube.
• 31:31
  SPEAKER_01: Root Ready is the show name, or you can listen on Spotify or Apple Podcasts.
• 31:36
  SPEAKER_01: And if you're enjoying it, leave a review, subscribe, share it with someone who you think might benefit.
• 31:40
  SPEAKER_01: That is it for this time, and we'll see you all next time.