Latest / Your Estate Matters / Episode 71 - The Cash Flow Clock: Making Time Your Top Retirement Asset with Gary Preisser
Transcript
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Your Estate Matters is a podcast dedicated to everything estates, including building and preserving your legacy. If it's estate related, we'll be talking about it. We're having the conversations today t..."><meta name="google" content="notranslate"><meta name="viewport" content="width=device-width, user-scalable=no, initial-scale=1.0, minimum-scale=1.0, maximum-scale=1.0"><meta http-equiv="X-UA-Compatible" content="IE=edge;"><meta name="fragment" content="!"><meta name="referrer" content="origin"><title>YEM Gary Preisser - Google Docs</title><link rel="shortcut icon" href="https://ssl.gstatic.com/docs/documents/images/docs-favicon-2026-v2.ico"><link rel="chrome-webstore-item" href="https://chrome.google.com/webstore/detail/apdfllckaahabafndbhieahigkjlhalf"><script nonce="2-eSLbYl9DOnc7AFiPSfQw">_docs_webfonts_fontFaces = null; _docs_webfonts_iframe_fontFaces = null;DOCS_timing['wpid']=new Date().getTime();</script><style 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Your Estate Matters is a podcast dedicated to everything estates, including building and preserving your legacy. If it\u0027s estate related, we\u0027ll be talking about it. We\u0027re having the conversations today that will help Canadians protect their families, their assets and their legacies tomorrow. \n\nHello and welcome to your Estate Matters. I\u0027m Nicole Garton. On this podcast, we talk a lot about what happens to wealth at death the wills, the trusts, the taxes, the administration. But every estate plan rests on an assumption. We rarely say out loud that the money will actually have to be there when it\u0027s needed. Today we\u0027re testing that assumption. Here\u0027s the issue in one sentence, two retirees can earn the same average investment returns over 25 years, and one runs out of money, while the other one leaves a comfortable estate simply because their gains and losses arrived in a different order. Advisors call it sequence of returns risk. When markets fall early in your retirement and you\u0027re withdrawing at the same time.\n\nNicole Garton 00:01:10 Those losses can never fully recover, and fear of that outcome is exactly what keeps so many retirees awake at night, and what forces so many families to sell good assets at the worst possible moment. Regular listeners will remember our recent conversation with tax lawyer Amanda Doucette about what happens at the estate level, deemed dispositions, registered accounts, and tax consequences when a plan is not built carefully. \n\nToday\u0027s conversation is the other half of that story. What has to be true in the years before you get there? I\u0027m delighted to be joined remotely by Gary Preisser, managing partner of Stonebriar Wealth Advisors. Gary has spent more than two decades in personal and business financial planning, and he\u0027s a creator of the Cash Flow Clock, a system that organizes wealth into time based zones so that families are never forced to liquidate assets at the worst possible moment. He\u0027s the author of books on timing, tax strategy and retirement income design, and his work has been featured on Entrepreneurs on Fire, Investing.com and Reader\u0027s Digest. \n\nNicole Garton 00:02:13 One note for our audience: Gary practices in the United States, and I\u0027ll flag the Canadian specifics as we go, because the principles we\u0027re discussing today will apply on both sides of the border. \n\nSo Gary, thank you so much for joining us. And we\u0027re really lucky. You\u0027ve got 20 years of experience in financial planning and most of the industry focuses on growing wealth. And that\u0027s the exciting part. But you\u0027ve focused on withdrawals timing and income design, which I guess is the less, you know, quote unquote glamorous side of the business. So what led you to that?\n\nGary Preisser 00:02:47 Well, my experience in this financial services industry as a whole really started with tax preparation. It was small business consulting. And I found that every financial decision we make, whether it\u0027s where we live, where we work, where we vacation, where our kids go to school, what we eat is all based on cash flow. It\u0027s based on our cash flow. And yet when I got into this industry 16, 17 years ago with personal finance, personal wealth management, the focus was this piece of paper that got slid across the table that asked questions about feelings.\n\nGary Preisser 00:03:21 How would you feel if you lost money in the market, or how would you feel if this happened? And that doesn\u0027t answer the question I\u0027ve been asking my entire career: What\u0027s the money for? Every dollar that we have is going to be spent by somebody at some point in time, and I tell my clients, it might as well be you because it\u0027s your money. But if we don\u0027t have a plan for when the money needs to be available, then no matter what growth we\u0027re getting, that is not going to function at the time that we need it. And so the only way that assets really have value, right? As I say, assets are not trophies. It\u0027s not something to show off. They are tools and their only value is in being utilized or being used. We need to understand the timing for that use, and that\u0027s what really gets me excited because that\u0027s what adds value to my clients 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The remaining $450,000 ish, whatever that is, to bring us to that $600,000, a ten year need.\n\nGary Preisser 00:13:04 We may use some index CDs. We may use some fixed index annuities. We may use a variety of products, but the key is no volatility. We still want to get as much growth as possible. I\u0027d still love to get 4 or 5-6% growth, but we cannot expose those assets to volatility. And what that allows us to do is the rest of the portfolio, whatever that is. We can feel very comfortable putting those in growth assets, and we don\u0027t have to hedge those growth assets by putting them in a balanced fund with some bonds and some international and some this and some that we can decide for each client what\u0027s the best chance for growth. Not in the next six months or ten years, but beyond that. 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DOCS_modelChunkLoadStart = new Date().getTime(); DOCS_initialLoadTiming.incrementTime('mp', DOCS_modelChunkLoadStart - DOCS_modelChunkParseStart); DOCS_warmStartDocumentLoader.loadModelChunk(DOCS_modelChunk); DOCS_modelChunk = undefined;</script><script nonce="2-eSLbYl9DOnc7AFiPSfQw">DOCS_modelChunkParseStart = new Date().getTime();</script><script nonce="2-eSLbYl9DOnc7AFiPSfQw">DOCS_modelChunk = {"chunk":[{"ty":"is","ibi":17286,"s":"\nGary Preisser 00:17:28 This is such a huge problem and we see this in our industry all the time. Let\u0027s talk even before we get to estate issues. Let\u0027s talk about taxes, right? You\u0027ve got a financial advisor, so-called, who actually is just an investment advisor. And that\u0027s all they\u0027re talking about. You have a tax advisor, so-called, who\u0027s actually just a tax preparer who\u0027s looking back at last year, and they are not communicating with each other unless the actual client is being the bridge.\n\nGary Preisser 00:17:55 You add in the estate issues, the estate attorney having those documents in place. If these three professionals are not communicating clearly, there is no way that any kind of financial plan is going to be effective to any degree. A lot of estate planning comes down to tax planning. The documents are absolutely critical, but they are almost worthless if we don\u0027t have the rest of the financial plan in place. And if we don\u0027t set proper expectations, if there\u0027s any possibility of a huge liquidity need. If either of the spouses passes, That should be incorporated in the financial plan with the financial advisor. That really isn\u0027t the estate attorney\u0027s responsibility. Now, I would hope the attorney would at least try to reach out to the advisor or educate their clients to reach out to the advisor to make sure that\u0027s in place, but it rarely happens on its own. This is why we at Stonebriar, we are holistic wealth management. We talk about taxes. We talk about the investments. We talk about the estate. Not because we want to be attorneys, but because we know how important it is that all of these decisions are coordinated.\n\nNicole Garton 00:19:07 So there\u0027s, you know, someone 60 years old, starting to get ready for retirement, wanting to do planning. Like, what do they do? How do they make sure that their people are talking to each other and dealing with these risks and potential cash flow problems?\n\nGary Preisser 00:19:23 I think a big part is, unfortunately, we can\u0027t rely on professionals to do it on their own. So we need to hold them accountable. And the only way to hold your advisors accountable is to educate yourself as much as possible. You don’t need a degree in finance. You don\u0027t need to write a book. You don\u0027t need to do all of these things, but educate yourself on some very simple principles. I\u0027ve got a book on my website called The Differentiators of Wealth. It talks about alpha. Are you outperforming the benchmark? It talks about asset location. Are your assets where they need to be from a tax standpoint to make them most efficient? Those are simple concepts that most advisors don\u0027t talk about and most clients don\u0027t even know to ask.\n\nGary Preisser 00:20:04 So educate yourself as much as possible. And secondly, as the saying goes, if you aim at nothing, you will hit it as you get into retirement. We need to understand what is your purpose. It\u0027s different for every client, but if the client themselves don\u0027t understand that, and often I\u0027ll say, what\u0027s your purpose for retirement? And they\u0027ll give me this glazed over look in their eyes and like, I don\u0027t want to run out of money. Well, that\u0027s not a very inspiring purpose. Let\u0027s be more specific. Let\u0027s talk about travel. Let\u0027s talk about helping kids. Let\u0027s talk about charity. What do you want that to look like? Most people have had their head down. They\u0027ve been working so hard for retirement, they don\u0027t realize that they\u0027re here. And as you are approaching, the more you can plan for what is success? What is value to you? Then that plan can be so much more effective.\n\nNicole Garton 00:20:54 So someone 60, they\u0027re getting ready to retire, and with your cash flow plan, they need to start thinking about actual money that they\u0027re pulling out.\n\nNicole Garton 00:21:04 Rather than portfolio construction, what does that look like for your system?\n\nGary Preisser 00:21:08 The first question is always why do you have the money? What is the money for? And I remind my clients that they tend to resonate or appreciate the ants from Aesop\u0027s fable who save food for the winter. My clients have saved really well. What they don\u0027t realize is what happens at the end of that fable, and that is that the ants didn\u0027t take pictures of the food. They didn\u0027t take selfies with it. They didn\u0027t celebrate it. They ate the food. The food is meant to be eaten. The assets are meant to be utilized. So the first question should always be why? Why do you have this money? 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It starts to be relevant to their situation and it allows them. It gives them the opportunity to be so much more efficient with their assets than they otherwise could be.\n\nNicole Garton 00:22:17 So what do you do if you have a 65 year old and God forbid, we have another 2008 event, and there\u0027s a big correction and they call you and they say, Gary, sell everything and put me into cash. What do you do?\n\nGary Preisser 00:22:30 Well, that\u0027s always a tricky situation. And we\u0027ve had those situations at times. But if we have the plan structured properly then that 2008 becomes volatility. And I think a lot of people in our industry, we kind of conflate volatility with risk. Volatility is movement in the market. And that happens. Markets go up. Markets go down. Where risk comes into play is when that volatility collides with a cash flow need or a liquidity need when they have to have that money, when they have to sell out of desperation.\n\nGary Preisser 00:23:03 As long as we have that ten year cushion, then we never have to really experience risk in that way because we are selling or making adjustments out of being proactive and out of design, as opposed to out of being reactive and out of fear. Now, there may be a reason to get out of the market. Not all 65 year olds necessarily need to have any money in the market if we\u0027re experiencing that, but we don\u0027t need to overreact to the situation just because we have a poor design. And the problem I have with most portfolios, especially those 60/40 stock bond split portfolios, they may be pulling income from the bonds, but as soon as they pull that money out, what happens? It automatically gets rebalanced. It gets rebalanced to percentages. And that doesn\u0027t make sense. 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I mean, obviously we\u0027ve had periods of terrible risk like the Great Depression and 70s price shocks and things like that. But isn\u0027t there like a small number of AI companies that are responsible for almost all the growth? And there\u0027s increasing global instability, and CEOs of AI companies saying half of jobs could be gone. Like, is there more risk now than there was in the past?\n\nGary Preisser 00:25:03 I think there\u0027s definitely more volatility because things just happen so much faster. Information passes so much faster, and the overreaction to that happens so much quicker as well now.\n\nGary Preisser 00:25:14 But again, the difference is between volatility and risk due. If we expose all of our portfolio to that volatility, absolutely. We have way too much risk in the portfolio. No matter what your age is. You can\u0027t put your emergency fund in Bitcoin. Please don\u0027t do that. 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