Podcast: Speaking of Quality: Wealth Management Insights with Hank Smith
Season 4 Episode 4 Title: Wealth Planning: Building a Confident Financial Future

Episode Transcript:

Maxine Cuffe 00:02 

You are listening to Speaking of Quality: Wealth Management Insights with Hank Smith, a podcast by the Haverford Trust Company. On Speaking of Quality, Hank chats with authors, influencers, and wealth management experts to bring a sense of clarity and calm to the complexity and stress of personal finance. Here’s your host, Hank Smith.

Hank Smith 00:28

Hello, and welcome to another episode of “Speaking of Quality – Wealth Management Insights.” I’m your host, Hank Smith, Director and Head of Investment Strategy at The Haverford Trust Company. 

On this podcast, we explore topics ranging from quality investing, retirement resilience, stock market trends, estate planning, small business ownership, behavioral psychology and more.  

Today, we’re introducing a new episode format with two special guest hosts. Two of my colleagues from Haverford Trust are taking over the microphone to talk about the importance of wealth planning and how Haverford Trust helps individuals and families plan for the future. 

I hope you enjoy this special episode.

Bryan Tracy 01:11 

Hello. I’m Bryan Tracy, Vice President and Director of Wealth Planning at Haverford Trust. I’m joined by Gina Parissi, Senior Wealth Planner at Haverford Trust. We’re both honored that Hank has graciously handed over the reigns to us today to talk about a subject we’re both very passionate about – wealth planning.  

At Haverford Trust, we view wealth planning as the first step towards a more confident financial future. In our roles, Gina and I work with clients to build customized financial plans that are based on unique financial situations and goals.  

Today, we’ll discuss the ins and outs of wealth planning, its value for individuals, families, and the role of advisors. So, let’s start out by talking about what is wealth planning. We get this question from clients about really what goes into a wealth plan and it really to me is a process and approach that we take here at Haverford, which really starts with a client’s goals and objectives. We spend a lot of time within the process of going through and really understanding our clients’ goals and objectives, and also helping them determine what is important for them to be covering within their financial situation. It is a very comprehensive approach. We do sometimes joke here that individuals will think about wealth planning or say financial planning and think of budgeting or how much can I spend. Those aspects are part of the discussion, and they are variables that will go into an overall financial plan, but they’re only one small piece that is covered throughout the planning process. So, it’s really starting with those goals and objectives and really building out that financial roadmap so that a client can understand what their situation currently is and then helping them to think through various decisions that they may be making now and into the future and how that will impact the long term. 

We like to think about wealth planning as really a decision-making process. We want to build the blueprint for our clients to understand where they’re currently at, and then based off of what options or decisions they’re choosing to move forward with of how that will impact the long term. We’re part of the process the entire way and making recommendations and really educating our clients so that they can understand that there are various implications of their own decisions, but also external influences where there’s tax law changes, etc. that may impact their financial picture.  

Hank does a good job in his introduction to talk about the various topics that we talk about here on the podcast, whether it’s retirement resiliency, estate planning, small business ownership. Those are really all areas that fall within the wealth planning umbrella. One particular area around the retirement resiliency that’s really a big area we spend a lot of time discussing with clients, helping them put together the pieces of a retirement and a financial plan to then be able to use that and make decisions around what retirement may look like.  

Recently, we had a good amount of clients that had come to us and said, ‘I’m considering retirement, but I’m not necessarily sure if I’m able to. Can you help me with that?’ We really work through the numbers, their goals with them to help them make that decision. A lot of the times it ends up being more of a peace of mind thing for them that they know they can retire based off of the information we’ve collected – what we look at, what we recommended – and they’re deciding then to work longer because they enjoy what they’re doing and more just about that peace of mind that they know if they were to walk away from what they’re doing they can do that. We’re seeing that a lot and it naturally ends up being a lot of times more around trying to help clients spend more in retirement than what they’re potentially spending today because they have a capacity to do that.  

Another good example of overall wealth playing process in in various areas that we’re helping clients with is really around estate planning. I had a meeting last week with a client that was a really deep dive into what their estate plan currently is and really going through decisions that they need to make around how they’re leaving their assets to their kids, whether it’s outright or whether it’s in trusts. There’s some component there of really protecting the assets for the long term and generations over time. We had a very good conversation – a little bit of an emotional conversation – around what they wanted that to look like and also bringing the various things of their personal residence, and does that stay in the family. So, those are areas that our team here on the wealth planning side teaching with clients and helping them through those decisions.  

Gina, did you want to touch on anything when it comes to wealth planning? 

Gina Parissi 05:39  

I think you did a great job of explaining what wealth planning is and some really good examples about what that looks like for clients. Quite often, folks come to us whether they’re expressed a need because they want to retire or they have some burning questions. That really ties back to what you said about starting the process off with their goals and objectives. But on the other hand, there often are instances where clients don’t know what their goals are, and that’s completely OK too. That should never be a barrier or inhibit somebody from wanting to work through the wealth planning process because that’s exactly what is – it’s a process and we do a lot of discovery conversations, a lot of asking questions. Oftentimes, there might be some things that our clients haven’t even thought of. What I think is really important, again, is that discovery. Those conversations and those questions that we go through as we really kick off the process. 

One of the first items that our clients will experience in working together with us is putting together a balance sheet. There’s so much information and so many conversations we have just around a simple balance sheet. Not only are we confirming the assets and liabilities that they have also understanding how those accounts may be titled, are they an individual name, are they a joint name, are they in a business, are they in a trust. So many different things come from just understanding simply what they own. So, I think it’s really helpful when our clients know that it is a process and there’s a lot of uncovering that we do through that and through that process they may discover what their goals are at that time, which is a really cool experience to see some of those light bulb moments go off. If that’s not necessarily the case, there’s often the instance where just going through that process of confirming what their current financial picture looks like. We’re able to say, ‘Hey, did you think about this?’ or, ‘Hey, maybe we should turn this on.’ Maybe there are clients contributing to their retirement account, but they haven’t made any Roth contributions. Even if client doesn’t have any particular goals in mind, there’s still a lot that we bring to the table in terms of different financial opportunities that maybe they haven’t thought about yet. And I think that’s a really great conversation that we’re often having. Part of going through that balance sheet, really the next step that often happens is looking at their investments. Not only their accounts that are at Haverford, but also our outside accounts because we want to look at that full financial picture. When we’re looking at the different investments, we want to make sure you know how are your investments working for you, but then tying them back to, are they aligning with your goals that we just talked about and we just agreed upon for right now. I think what’s really important for folks to understand is how different accounts may have different investment objectives and how some of that all comes together. 

Brian, what’s been your experience when you’ve been working through planning conversations and tying in the investments in that way? 

Bryan Tracy 08:44

It’s a very important aspect here at Haverford, and from a planning team perspective, we partner with the portfolio managers to do that deep dive on a client’s investment and overall asset allocation and aligning that with their goals and objectives. 

A valuable aspect of the planning piece, too, is even accounts that are not necessarily here at Haverford. Whether it’s, say, a retirement plan or a 401K that is at that employer. We’re taking those into account when we’re working through the overall financial plan and incorporating those into the investment decisions that we’re making in the portfolio managers making as far as how we’re investing the funds here at Haverford. 

A more recent topic that we’re talking more and more about with clients and again partnering with the portfolio management team on is really asset location. What that is is where are we making decisions within various accounts, whether it’s retirement accounts, whether it’s taxable account, or even Roth IRA accounts. Where is that equity allocation in those accounts. What’s the bond allocation and really starting big picture of what do you want or where do you really need to be from an overall asset allocation. Whether it’s 70% stocks, 30% bonds and cash. Then, making strategic decisions within those various accounts that really then align with your long term objectives as well as tax implications stay on the road of being more strategic about where we’re placing say the equity allocation or the majority of the equity allocation across those accounts. 

There’s been some recent tax law changes over the past few years that has really shifted that conversation more towards potentially the taxable side of accounts and being more equity focused there compared to more historically on the retirement account side. And there’s various reasons for that. But that is an area where the planning team and the portfolio manager team really engage together to work through that type of an analysis for a client. And then helping them to understand the reason for those decisions and then how that comes together. It really is a partnership and it’s very important to both have the wealth planning working along with the investment strategy and really having both of those as part of your overall planning, as you’re going forward. 

Gina Parissi 10:52

I think that oftentimes we’re seeing now Haverford has a lot of very long term, long standing clients. But as we’re also working with some of our new clients, oftentimes, we’re really going through the planning process before those accounts may even become invested so that the whole team really understands what we’re trying to accomplish with these assets and what is the purpose of each bucket. So certainly, we’re really seeing conversations happen in that way where it’s a true partnership with the wealth planner, the portfolio manager and the client and even some of their other outside advisors in that instance. We do that really well in terms of coordinating with folks across the team and with any outside advisors that may be working with the client as well. 

Bryan Tracy 11:39
There’s one quote that I really like that I think sums up the planning process with the investment strategy and it’s, ‘If you don’t know which port you’re sailing to, no win will be beneficial.’ That really sums it up well. We really need to establish those goals and objectives, and that’s really done through the planning process, which then allows us to be more strategic of how we’re investing the funds and what that looks like overtime. 

Gina Parissi 12:03 

We jumped into the thick of it really fast. Maybe we could talk a little bit about when client should start planning. What does the process look like for them? 

Bryan Tracy 12:14 

The sooner the better. Obviously, no time is too late when you’re thinking about engaging a planning team. Everybody on a daily basis is doing some form of wealth planning in decisions that they’re making, and I think really what’s important is being more intentional about those decisions. I talked about at the beginning about really reviewing our process here at Haverford of really being a decision-making tool and laying the foundation to really provide the information and the options to allow clients to make decisions. I think that is the important aspect. We’re being intentional with helping our clients make this decision. It’s not necessarily sooner or later. Anytime is a good time to be starting and engaging going through the wall planning process and being more intentional. But it’s more about that intentional aspect. Being intentional around the decisions that you’re making and really seeking guidance around that and resources to provide a framework to help you make those decisions. 

Gina, you’ve done some really good work here at Haverford around working with the next generation of clients, and we get questions from clients around being too young to be engaging the wealth planning team or engaging within the wealth planning process. Can you talk a little bit about that and the next generation and the financial literacy concepts. 

Gina Parissi 13:31  

I get really excited talking about financial literacy because one, I think it’s perfect for kids and there’s ways to start to bring them into talking about money at a really young age. It’s not just for kids and teenagers and college kids. It’s really for everybody. 

Oftentimes, I view one of the biggest parts of our role as just being a financial translator. I was looking at a glossary index from the CFPB the other day and the index started at 16 pages of just vocabulary words. It didn’t even scratch the surface of all the different investment language that we use. So, I’m just a big advocate for financial literacy and something else that’s been really popular and we’re hearing a lot of buzz about lately is behavioral finance. I was laughing to myself about it the other day because behavioral finance is coming up a lot now, and it’s because, as adults, we’re trying to figure out how we make financial decisions because we know it doesn’t come down to just the dollars and the cents. That would be too easy, right? It comes down to our beliefs about money and our beliefs about money start from our earliest ages when we first experienced money with our parents and our families and the messages that are passed to us at that time, not explicitly, you know, very implicit messages. Just how we see money being handled in our homes. I think as parents, if we can be more conscious about the conversations we’re having about money or our behaviors around money because we know that kids are watching and listening, I think the better off the younger generations will be. 

Again, I’m a big advocate for financial literacy. I think that there’s a lot of good books out there that get you started. One is called ‘Raising Financially Fit Kids’ by Jolene Godfrey. That one starts off at really young ages, maybe around five. In terms of how to introduce different money concepts to kids. Having different jars for them like piggy bank jars that are titled, ‘spend’, ‘save’ and ‘give’ and explaining what each of those concepts means. That’s a really easy way to get kids started was talking about money. Oftentimes, we’ll work with kids who are a little older, maybe in high school, getting them started. Whether it’s an investment 101, sometimes we’ll do a trust 101 talking about what does a trust mean and what does that look like. But obviously, the investment side of it is really important for a lot of families. Not only is it an investment 101 – maybe you have a high school student, and they have their first job. Is there an opportunity for them to save into a Roth IRA. Maybe that’s a really good burning opportunity for them if they have some earned income. 

I think what’s great about financial literacy is there’s a lot of resources out there, but it can be really customized. That’s what we encourage. We try to have conversations about what these meetings may look like before we have those meetings with the younger kids, especially in high school or something like that. Oftentimes, we’re even working with college students. Maybe they’re at their first job or internship or something like that. So just starting to introduce those different financial concepts. Even on the banking side. What’s a checking account, a savings account, a credit card. They’re not really getting these lessons necessarily in school, so it’s really great for us, and we feel honored that families come to us to have these conversations with their kids. I can go on and on about this all day, but I’m a big advocate for financial literacy.  

Do you have any experiences with that? 

Bryan Tracy 17:04

Being the parent of a three and a one-year-old now, I really think about it as far as building those financial habits and really the exercises, and what things I could be putting in place with my kids today as they’re getting older to help them build these financial habits, these positive financial habits, and I can’t say enough about the clients that we work with.  

As Gina pointed out, doing these meetings with the next generation and doing these kind of financial literacy, investing 101 meetings, budgeting, behavioral skills around finance. Really the parents that were more engaged on the financial habits side, with their kids on the younger side and building that base are really much better prepared to have these conversations. As well as down the road, receive inheritances from their parents and not necessarily having a concern around individuals receiving significant amounts of money at a point in their lives, and especially needing to protect that. But protecting it at the beginning, creating that foundation that those individuals will be good stewards of those funds and that legacy that they would be receiving. So yes, I think it’s a very important topic. It’s very high on our values list here at Haverford to be engaging with the next generation and ensuring that the legacy and wealth continues throughout generations. 

Another question we get from clients that are maybe nearing retirement and maybe necessarily haven’t planned as much for their retirement is, is it too late for them to be going through and doing a financial plan.  

Do you want to talk a little bit about that, Gina?  

Gina Parissa 18:45  

I’m always a big proponent of planning. If somebody comes to us and they ask if a person would be a good candidate, my answer is always yes because planning applies to everyone at every age. 

Brian, you had said a little bit earlier that you’re probably already doing some of these things. Having a more formal process around it or some eyes with some additional expertise to look at these things is always helpful. To somebody who might be in retirement, and they think they’re fine. They know they’re not going to run out of money. So maybe their question is, I don’t need planning or why should I go through this process at this point in time? That’s again where the differentiator is between financial planning and wealth planning. These are the times where you know it’s a consultative approach because there may be some strategies that folks haven’t thought about or maybe they haven’t really given full thought to their legacy plans for their family. Those are really sensitive conversations for clients to have with their children. Maybe a married couple have doesn’t really even had that station amongst themselves. So, for us to be able to facilitate conversations around legacy, if we know that they’re not going to run out of money. Maybe we’re still doing some cash flow work to understand what that looks like. Maybe there’s still some tax mitigation strategy around R&Ds, different distribution schedules, but if we check the box on those at recent meetings, talking about legacy, talking about charitable goals. Oftentimes, we’re still talking with folks, and they don’t realize that they can do a qualified charitable distribution from their IRA. It meets two goals. Obviously, they’re gifting to the charity of their choice, but then also from an income tax side, it’s very favorable. I think that even if we’re not doing a full cash flow review, there’s still a lot of things that we can talk about. Maybe they haven’t updated their estate planning documents in a while. Maybe they want to talk about a donor advised fund and how they can bring their kids in to talk about family philanthropy. We always say that planning is not set it and forget it. That’s really where we can see that in these later years that there’s still opportunities to refine what their strategy may look like. Their goals may have changed over time. Maybe their family continues to expand with grandchildren, and how do they want to benefit their family. There’s still a lot of robust conversations that we’re having with clients, even if they know that they’re in a very financially sound position. With that, I said a little bit. Know it’s not set it and forget. Do you want to talk a little bit about what the process looks? 

Bryan Tracy 21:21 

It’s a very important point that our process is ongoing. We’re working with clients on an annual basis to really be making sure that as their life changes – family changes retirement – that we’re there to update the plan and be a guide and be a resource to help them make those decisions. It’s an ongoing process. We’re also working through what we talked about in our last meeting, what were the action items, what was the follow up, to make sure that we’re covering that in the next meeting. Did we implement the various things that we talked about? And when you think about retirement, you’re talking about a 30-year period now in a lot of cases. It’s a significant amount of time that you really need the plan for. It’s especially important to be meeting on a regular basis and checking in, and we really find clients value that aspect of coming back to the overall plan, making sure it’s still in good order, and that they’re on track to meet their goals and objectives. That really is throughout the entire process of their life and really then going back to engaging the next generation of working with them. 

That really leads us to the role of a trusted advisor, and we really view ourselves as trusted advisors and we want to be educators in a world. We want to really work with our clients to collect the information in a way that we then can produce tangible results around reporting and projections and really then recommendations to then allow our clients to make those decisions that are best for them and their family.  

We spend a lot of time here at Haverford as a team working on our process and collaborating together as wealth planners to make sure we’re staying current on current industry trends on various things that could impact our clients and then bringing those ideas and that information to our clients. We’re also all certified financial planners, which is a designation that requires significant experience as well as education to really act in our clients best interest when we’re making these recommendations. Going through those processes, and really those best practices on our end is trying to bring those skills around creating financial habits and behaviors that Gina talked about earlier to really help our clients get into those habits that then they’re making positive decisions on an ongoing basis and also bringing their additional family members into those discussions. I think too about our role as that trusted advisor of really being kind of a central hub for clients and their other relationships, their accountants that they’re working with, their estate planning professionals, the story I told I told earlier with the client that we had the deep dive estate planning conversation with during the meeting that their trust in the state attorney who had drafted their estate plan about eight years ago was part of that meeting and was a very valuable resource of what the current plan was, talking through how that may change based off of what the clients were telling us and then really implementing that plan after the meeting of that estate planning attorney actually putting those action items we talked about in place. There was a collaborative effort between us here at Haverford and the trust in the state attorney to really plan for that meeting, have that conversation with the clients and then really follow up on that. It’s very important for us to be communicating and collaborating with outside professionals and bringing that full service of our planning expertise to our clients so they’re able to make the best decisions they can. 

Gina Parissi 24:51  

To that point, as you talked about our education for our team and working with different professionals – attorneys in accountants. Working with a lot of other professionals that are in this area. Oftentimes our clients will come to us asking for recommendations or referrals for other financial professionals. That’s where we can really shine because we know our clients, we’ve worked with these other professionals, we may be able to find some good fits because sometimes our clients come to us and we talk this stuff all the time. We have to realize that clients may not know how to start the process with an estate planning attorney. So, we’re resources to help our clients reach out to those professionals and get those conversations started. Sometimes they may just reach out to a general practice attorney, and that might not be the right fit to get the work done that needs to happen. Or maybe there’s a business transaction where you need a more specialized professional. What’s great about some of the educational opportunities that we have is we get to meet so many other folks in the industry and we’re able to bring that to our clients and that’s beneficial. As you can see, we could probably go on and on and on about this topic because we’re both very passionate about it.  

Bryan Tracy 26:02 

To close, what are some current trend and industry developments that we’re closely tracking here on the wealth planning side? 

Gina Parissi 26:10 

We’ve only got so much time to talk today. A hot one obviously is what’s going to happen with taxes this year. The tax cuts and job taxes scheduled to sunset at the end of 2025. It’s on everybody’s radar in the period up until this year we’ve been encouraging our clients to get their estate planning done so that there’s no quick rush at the end of the year, We’re still talking with folks about that – seeing what’s on their minds around any particular estate planning or even the income tax changes that may occur if there are extensions to the tax cuts and JOBS Act, whether it’s around the salt cap, you know where some of the corporate tax is. There are lots of changes that could or could not happen. It’s anybody’s guess. What about you? Anything on your radar lately? 

Bryan Tracy 26:54

One thing I’m really excited about is that we’re going to be doing kind of a miniseries this year with various communications reaching out to clients around philanthropic giving and charitable giving and really values in helping our clients understand what their values are around charitable giving and what’s important to them. And then really engaging that next generation in those conversations, and then ultimately helping them with various vehicles. Whether it’s donor advised funds, charitable contributions, that is really best for them within their planning that they’re doing. So, we’ll be doing a series this year on those topics and I think it’s a really important area and it’s an area that I think we can bring a lot of value to clients and I think will also be helpful within the local community here and those various things. So, really excited about that series this year and something that we’re kind of keeping an eye on. 

Gina Parissi 27:42

That’s great. Well, Brian, it has been great talking with you today about the value of wealth planning as a complement to quality investment strategy. And to our listeners, if you’re interested in hearing more about this offering, please e-mail us at wealthplanning@haverfordquality.com. We’d love to help you navigate your financial journey. 

Hank Smith 28:04 

What a great conversation between Bryan and Gina! There is great power in wealth planning, and I hope you found their conversation as insightful as I did. A big thanks to both of them for sharing their passion for wealth planning with us. 

And thank you for listening to this episode of Speaking of Quality: Wealth Management Insights. Our next episode will be released shortly.  

In the meantime, please send suggestions or questions for me or the Haverford Trust team to marketing@haverfordquality.com. And don’t forget to subscribe, rate, review and share this podcast. 

Until next time, I’m Hank Smith. Stay bullish!  

Maxine Cuffe 28:46

Thanks for listening to this episode of Speaking of Quality: Wealth Management Insights with Hank Smith. To hear future episodes of Speaking of Quality, please subscribe on Apple Podcasts, Spotify, or wherever you listen to podcasts. To learn more about the Haverford Trust Company, please visit www.haverfordquality.com. 

This podcast is provided as general commentary and market overview, and should not be relied upon as research, a forecast or investment advice, and is not a recommendation offer or solicitation to buy or sell any securities or to adopt an investment strategy. Any opinions expressed are as of the date this podcast was recorded and may change at any time, and are the opinions of that commentator not Haverford’s. Any opinion or information provided are believed by Haverford to be reliable at the time of this podcast recording but are not necessarily all inclusive or guaranteed for accuracy. Before making any financial decisions, please consult with an investment professional.