Are the six areas of financial planning working together in your life, or are they quietly working against each other? In this episode of Wise Money, we break down the six areas of your financial life and the warning signs that they may not be integrated. From tax surprises and investment missteps to outdated insurance and estate plan gaps, we show you how small disconnects can create big problems for your financial plan.
Season 11, Episode 28
Download our FREE 5-Factor Retirement guide: https://wisemoneyguides.com/
Read our blog! https://www.korhorn.com/wise-money-blog
Listen on Podcast: https://pod.link/1040619718
Subscribe on YouTube: http://www.youtube.com/c/WiseMoneyShow
This information is for general financial education and is not intended to provide specific investment advice or recommendations. All investing and investment strategies involve risk, including the potential loss of principal. Asset allocation & diversification do not ensure a profit or prevent a loss in a declining market. Past performance is not a guarantee of future results.
Transcript: Six Areas of Financial Planning That Must Work Together
It’s time for wise money with Korhorn Financial Group with certified financial planners Kevin Korhorn, Mike Bernard, and Josh Gregory.
Segment 1: Welcome to another episode of the Wise Money Show with Korhorn Financial Group, where every week we’re helping you take your next wise step in your financial life. Thanks for being here, friends. My name is Mike Bernard. I am your host. I’m also one of the certified financial planners on the program. And with me in the KFG studios, my business partners and fellow CFPs, Kevin Korhorn and Josh Gregory. If someone was to score you on how well you’ve integrated the six areas of your financial life, what grade do you think you’d receive? On this episode of the Wise Money Show, we’re walking through the warning signs that your financial life isn’t as connected as you thought and what steps you can take to fill in those gaps. All that and more on this episode of the Wise Money Show. Josh, you got good grades in school. You were studious. Reasonable. 4.0. No, 4.2. I I didn’t start getting good grades until college, actually. Kevin 4.0. All right. All right. If you have a question for the program, we’d love to hear from you. We’re tackling questions later the second half of the program and all next week as well. You can call or text us. 574222000. That’s 574222000 online. Wismoneyshow.com is where you can find us. And then all over social media, wherever you’re at, we are there as well. Search the wise money show. There’s six areas to your financial life. And the big idea and and ah golly I mean culture sets it up so that all of these six areas are separate and distinct. Maybe have competing goals and you’re running all over the countryside or doing it yourself on and these separate areas. The truth is guys, the reality is those six areas of your financial life are actually connected. They’re actually integrated. And when you’re making financial decisions, especially the big financial decisions, you need to see how those decisions, how those choices will bring synergy and and impact the six areas of your financial life. And and the difference between good choices and great choices, the great ones are the ones that that bring positivity and synergy to as many of those six areas as possible. Uh so here’s the question. Are the six areas of your financial life integrated or or not? Are are you feeling disjointed? Are you feeling like you’re making progress in one area, but you’re not making progress in another? We’re helping with that. We’re going to share the six warning signs that your financial life may not be as integrated as it should be. But before we do, guys, let’s lay out those six areas of everyone’s financial life. What are they? Well, the first area is your present financial position. And this is uh one of the most important areas. And we like to talk about what the most important areas. one of the top six. I think it does. It makes it in that list because and the reason why is it it is foundational to all of the rest of the areas of your financial life. And it’s it’s instructive to let you know what you’re what you can and cannot do in the other areas of your financial life. I mean, think about it. Cash cash flow is the engine that drives all of the other areas of your financial life. It drives all of your goals as well. And so yeah, pre present financial position, cash flow, managing that through bank account system. Also, what what do you do with that cash flow? So net worth and tracking how many assets and the categories of them, what’s your debt load and all that sort of stuff. And tracking your financial goals. This is the the part of your financial plan where you’re listing out what are the priorities that you’re focused on in your financial life and then tracking your progress towards them. Right. and but this you know Mike scooted right past the 03 bank account system and we’ve talked about it numerous times but having an operating system and and making your financial life for the most part on autopilot so I don’t have to be thinking about it and making decisions as I go because I was just talking to a guy and um we were talking about simplifying some things on a website and he said look if I go to this website and I’ve got 30 seconds to make this decision and I look and it’s really complicated. I’m going to say I’ll do it next week. Yeah. And then will I do it next week or not? Because I was thinking about it as you were talking about, hey, let’s lay out these six areas of financial planning. I was thinking when should someone do financial planning? And it seems like there’s two groups of people that do financial planning. It’s the it’s the early folks, the folks, hey, we’re pregnant. We’re going to have our first child. We’re in our 30s. They were in our office yesterday. Yeah. and we’re going to have this child and we need to figure out what to do with all of these areas, the right structure, get the right habits in place, get going on the right track, starting early. Yeah. But if you don’t do it, if you don’t do it early, you it’s likely you don’t do it for the next 20 or 30 years and then your financial life has become incredibly complex and you’re getting ready to retire and you have big decisions. So this is where if you start early and you have an operating system that that that almost almost ensures success. I mean that it sounds too promisory and I’m sure compliance would have a problem with that but I’m telling you I’ve never seen the people that that have a little bit of financial discipline and spend less than they earn end up in a financial problem. Yeah, that’s right. And part of that operating system you’re talking about is the visibility on where you stand financially. So what are the financial statements or the dashboards that you have available to you to just know where you stand at any given point? That’s your present financial position. Protection planning is the second area and well what is what is that? So it’s looking at the five major areas of of financial risk that we that all of us face and determining what’s the game plan for managing that risk. So, the risk of passing away when you have unfunded goals or when you’re young, that’s life insurance. Do you need it? Are you self-unded? That sort of thing. Self-insured. Um, second, the the risk of having a major medical expense, major medical uh uh problem and and needing, you know, attention and all that sort of stuff, surgeries, blah blah blah. So, health insurance, what’s the right coverage for you? What’s the right setup? The risk of causing property damage or a liability, right? Home and auto insurance, they call it property and casualty insurance. Um that’s uh that’s one of those areas as well. The risk of not being able to earn a living, needing to work but physically not being able to. So disability income insurance. And then the risk of not being able to care for yourself, long-term care, having a long-term care need, assisted living, that sort of stuff. And uh and so how do you how do you manage those five different risks? Do you transfer them? Are you self-insured? Do you want to live with the risk? What’s appropriate for you? That’s protection planning, right? And and I I as I’m listening to you, I’m thinking, yeah, does the does the trusted advisor who’s helping you make decisions as to how do I transfer the risk related to my home and my auto, do they have any idea what your net worth is, right? Do they know how much risk you’re actually facing? And have they helped you figure out ways to mitigate that risk or transfer that risk? And it’s all about making sure that you don’t unravel the progress that you’re making in your financial life, right? How how do you make sure you don’t take major steps backwards uh as your as your goals are moving forward? T tax planning is number three. At this rate, we’re we’re not going to get into any of the six uh warning. So tax planning is the third area. Okay? And so that is it’s tax season right now. So you might be thinking, well, tax planning, that’s really just tax preparation. It’s not. Tax preparation is reactive. Tax planning is proactive. What are the strategies that exist for you to pay the least amount of tax over your lifetime and optimize your tax situation? And then through the financial planning process, which of those strategies should you implement? Which of them are good ideas but not right for you right now? That’s the third area. Fourth area, investment planning would be the fourth area. This is what a lot of people think of when they hear the term financial advisor or or financial planning. It it’s really about how do you build the right portfolio of assets that can help you reach your long-term goals? How do you take the right level of risk that you’re comfortable with, but also that will provide the engine to get you where you’re trying to get? Yep. And uh retirement planning, you you took it there. That’s the fifth area. I would we’d also sneak in college planning as well. Those are what what’s the plan for your long-term goals that uh that you know, where are you today? What are your goals? What’s the path to get you there? How much do you need to be saving? And so on. And then are you on track? Are you on track? Are you on track? There’s a five factor retirement plan that you need to that you need to work and analyze and then manage the tradeoffs there. So that’s retirement planning. And then the sixth area is estate planning. Um, and most people think, well, I need a will. Well, that’s a component of estate planning, but that’s in and of itself is not estate planning. It also involves having the right supporting documents along with the will. So, it’s a full estate plan, but also having the right ownership structure and the right beneficiaries of your accounts. Those are the six areas of your financial life. I guys, I didn’t want to rush through that, but I do want to get to the six warnings. But I also I mean, we needed to share those areas. But then also show that you can probably see just hearing those that it’s very easy for them to be disjointed, disintegrated, and maybe even have competing priorities. Well, and how often do we have shows on a weekend uh on the radio where we are zooming in on just one of those six areas? And it is important to periodically just zoom back out and recognize the interrelatedness of them. You can’t make decisions in one area without having an impact in in the other. Yeah. And and and that’s precisely where some of these warning signs are going to come from. And and not that warning signs, oh, shame on you. You you should have seen this coming. No, no, no. The point is it’s very difficult to see this. And most people most people cannot. And so when you’re making decisions or even making progress in one area, is how is it impacting the other areas of of your financial life? And as you’re making decisions, are you aware of that in advance so that you’re making wise choices? We’re going to help you with that. Integrating all six areas of your financial life so you have one plan, not competing priorities, not various goals. You’ve got one plan. It’s all working together. We’re helping with that and more coming up here on the Wise Money Show with Korhorn Financial Group.
Break 1: Hello YouTube. Thanks for being here. This is the Wise Money Show. What you’re watching right now is our weekly 1hour talk show that airs right here on this channel 10 a.m. Eastern time every Saturday morning and also on podcast at the same time and also on a couple local radio stations which is why the content’s structured the way that it is, broken up the way it is with segment breaks and all that sort of stuff which is uh that’s what we’re in right now. This commercial break for the radio. But we’ve got over 2,000 videos now on the YouTube channel. Not all of them are long form like this and where we banter and all that. A lot of them are sort of direct and to the point, if you will, 8 to 12 minutes long, taking one financial concept, applying it directly to your financial life from a financial planning perspective, from a one plan perspective. So, make sure you hit that subscribe button, turn on notifications so you’re aware every time we drop new content. If you like the content, like the content, leave comments below as well. We appreciate it. Sorry, guys. I wanted to make sure we hit all of those in one segment so that we could then explain that they need they need to work together. Oh, you’re good, dude. Yeah, you’re good. We’re good. So, okay. I want to know what your grades were, though. I think that was perfect. That I just We asked Kevin and he just started laughing and then we just went on with the show. That you couldn’t have scripted that better. So, uh, no, I finished with um I finished I think high school with a 3.8 and college with a 3.6. seven I think and this was just you need to uh qualify this. This is before the great inflation. Yeah. Anything over four, right? There was no over fours back in the day, right? So, and now it’s like Yeah. Gez, you got to be a 4.2 or something to be Yeah. to to get into college. Yeah. Right. So, all right. Yeah. What? I don’t understand the question. Well, because are you going to grade yourself? How would you grade yourself in in the six areas? So, okay, I got you. All right, here we go. Warning sign number one. So, we’ve got three segments left. We’ve got six. Some would require more banter than others. I would tell you each of them it might be challenging to like instantly think of examples and so we’ll need to stay connected. But I did think about that because yesterday, so I drew a picture of this for myself because I thought it was here. People hire us here or here. But actually, they hire us here or here. I I mean, but they hire us on the front end or the tail end. Not a lot in the middle unless there’s a a meaningful event. Yeah. Some sort of event. And this is where I’m thinking, oh man, it who is it that needs to hire a CFP the most? And it be because who knows about all six of the financial areas of your life? Yeah. And most people do not have a professional who knows about all six areas of their financial life and how they connect together. That’s right. Yep. All right. Here we go.
Segment 2: If you were to grade yourself on on how well you’re doing at having the six areas of your financial life, everyone’s financial life has six areas. how well they’re integrated as you make decisions. Oh, I know it’s going to improve this area and this area and this area. We should we should make that decision. How well are you doing at that and what are the warning signs that maybe there’s some work to do. We’re helping with that right now. This is the Wise Money Show with Korhorn Financial Group. Thanks for being here. My name is Mike Bernard with me in the KFG studios Kevin Korhorn and Josh Gregory. Stay up to date on all Wise Money content. Find us online Wise Money Show and uh all over social media wherever you’re at. We are there as well. Search the Wise Money Show. We share the six areas of your financial life. present financial position, protection planning, tax planning, investment planning, retirement planning, and estate planning. And the big idea is you need to be looking at how all of those are integrated. So, what are the signs that maybe they’re not? One of them, warning sign number one, is you’re winning in one area, but it’s creating problems in another area. I don’t know if you’ve ever felt that way where you hear a lot of people say, “My finances are disjointed,” or they’re they’re they’re they’re feeling complicated. often that itself is an emotion tied to this very thing. Well, I’m making progress over here, but I’m it’s creating some challenges over here. Guys, what are some examples of that? You know, I um this is part of the reason why we we review financial statements with people on a regular basis because sometimes someone’s net worth could be climbing because their their assets are building, they’re getting good rates of return, they’re paying down debt, and um on paper things are getting better, like they they look stronger, they look healthier. But then when you ask them, well, how do things feel? Um, sometimes you’ll hear a completely different report and maybe even some discouragement in their voice because often we measure how we’re doing financially on how well cash flow is feeling. How much uh choice do I have? Are we having to say no to a lot of things? Is it just a struggle each month? Because maybe you’re operating really lean with the budget. And uh so you are winning in your financial life, but it feels like a hard grind, you know. Uh I I don’t know some sometimes uh that’s just an example and and when people come in discouraged like that like man it’s it’s just a struggle it is rewarding to them or reassuring to them to be able to see well we are making progress the sacrifices are worth it um it’s it’s paying off for the long term. Yeah, I I actually I think for many people that’s just the price of admission. Like so many people when they start getting disciplined with their finances after a few years they’re seeing the progress and they say is it always going to be like this? It it might not but you’re doing it right. Right. That’s true. So okay I I I’ll share an example. We see this from time to time. a lot of retirement contributions, very very heavy retirement contributions, trying to max it out, trying to contribute as much as possible, but you’re actually got have some lingering credit card debt. You don’t have a fully funded emergency fund because so much is going towards retirement. You don’t have that financial foundation in place. So that’s that’s your your retirement planning area that’s winning but your present financial position that’s losing the o we see the opposite as well where a lot of people because that feeling of ah things are going well in my finances because my cash flow feels good and it’s because yeah we’ve got money in the bank and we’ve got cushion and we’ve got margin and then you look over at their retirement plan and and you what are their goals build out that five factor retirement plan and you say you guys are not on track. Yeah. Right. because the present financial position is is working well, but it’s not connected to their goals, to their long-term goals. That that’s exactly right. I have seen folks who maybe they just zeroed in for whatever reason on paying down their debt very rapidly. Maybe they wanted their mortgage paid off really fast and that’s just sort of their indicator that we’re in a good spot financially. But as you said, that sometimes comes at the cost of the long-term goals and and lacking balance. You could be in a spot where you’re winning in one area, your present financial position, but losing in the long term. Oh gosh, Kevin, I sorry if I’m stealing anything from you here. But another example of that is we see this from time to time. Very, very aggressive on debt, very motivated. I’ve got to get this debt paid off. And so we’re we’re tightening the belt. We’re doing everything possible to get debt free. And and but it wasn’t sustainable. It’s like going on a um very very strict diet, right? And to because I got to lose the weight and then as soon as you lose the weight, you say, “Okay, well now I can eat again.” And you gain the weight right back. And so we’ve seen a lot of times where people really tighten the belt because they’ve got this hard goal with debt, which is which is fantastic, but it really wasn’t a sustainable pace. And so as soon as they achieve that milestone, a bunch of other things, you know, creep in and their financial life is out of balance. Okay. I don’t I just don’t understand how my name got mentioned in that. Well, he he was jumping right in. He’s talking about my my struggles with my weight, but thanks, Mike. I thought that was kind of private, but go ahead and air it out for the whole world to see. No, I I think that’s important. I I think of another one is I’m winning at taxes, my current tax situation, and losing at retirement flexibility. So, think about this. I’m putting everything into pre-tax. So is my spouse. So we’re loading up on pre-tax. We’re winning today on taxes, but we’re creating what Ed Slaugh would call a ticking t time tax time bomb. Uh tongue twister to the tulips. And so you you’re you’re um so this is where hey, I am winning today. It’s pot I’m potentially painting myself into a corner in retirement. I thought you were going to say I’m I’m not paying any taxes right now. I’m I’m early in retirement. We’re not paying any taxes with that ticking time bomb of RMD and out and everything out there in the future. You’re just not aware of that. Yeah. Gosh. I mean, so so warning sign number one is you’re making progress in one area, but it’s creating problems in another area. That is a sign that your finances are disjointed, that you’re not taking an integrated approach. Warning sign number two. I was just dealing with this yesterday. It your investment strategy ignores when you’re going to need money. Wow. Is this is this hard to see at the surface? Most people think, well, I’m investing to make money, so let me let me go put some money at work. Well, I was talking to someone who recently had his his mom passed away and um we’re past the grieving and and she was in a nursing home and it was it was very challenging and and she had a long life and so he’s he he was feeling good and got to see her right before she passed and so um but after we got through all of that he said well you know we’re inheriting I think he was going to inherit about a hundred,000 or something like that and he’s like well how should I invest it? They said, ‘Well, hang on a second. When are you going to need the money? And he was like, ‘Oh, yeah. I mean, well, we do have we need to do this, we need to do this, we need to do this. And I was like, you know, investing investing goes on the on the far side of those goals. Yeah. You’ve got you’ve got short-term cash needs. So, these dollars really should go there as opposed to, you know, because even the best investment is is volatile in the short term. Yeah. Right. Did you pull out the old Joshua Gregory line? He’s got a lot of them. Which one are you thinking? Already spent. Yeah. And that that is my favorite thing to hear Joshua Gregory say when we’re trying to get things moved forward. But it is a great reminder because it’s very easy to spend it not once but twice or three times. Especially if you have a a spouse who’s thinking right alongside of you and she’s thinking, “Hey, we’re going to do this.” And you’re thinking, “Hey, we’re going to do that.” and you’re like, well, hey, we’ve got 100 grand to work with and we’ve got $250,000 of initiatives to pursue. How is this going to work? And this I mean, it’s all of life, right? It’s to it’s to prioritize and go after the most important ones. But that is a risk of ha of taking too much risk in my portfolio. Yeah. And when I’m when I’m out over my skis and and I’m not comfortable and then all of a sudden I listen to one of these really smart guys on TV and you think, “Oh, I’m I must be doing this all wrong.” Or I’m I’m or you have FOMO, right? Very real. I have fear of missing out or there I mean there’s all or I’m I’m investing um and ignoring the other things in my life that should be taken care of like disability insurance or life insurance or filling the blank. Yeah. I I feel like one of the most common conversations that we have with clients, especially when they get to retirement, is this idea of um taking inventory of the things that you’re going to need money for in the near term because your decision on when to start divesting like liquidating some of those investments is a very crucial part of the game here, right? So, not only you were having the opposite conversation with the young guy inherited money. Um, when should you get this invested? Well, not until you know you’ve taken care of these shorter term things. The unraveling or the stepping away is really the the same type of question, right? What are the needs that you’re going to have on the horizon? And is now a time to start harvesting some cash because the market um has performed strongly and now would be a good time to sell. Yeah, actually we got a great question from a fan of the show. probably going to get to it next week where she’s on the doorstep at retirement, has some cash and well, I don’t really want to take a lot of risk. How should I in how should I invest this? And it sticks right to this question. It’s a question about investment risk as opposed to looking at all six areas of your financial life and are they integrated? The the solution to these couple warnings, it’s having one plan. One plan for all six areas of your financial life. All right, we’ve got more warning, signs, that and more coming up on the Wise Money Show with Korhorn Financial Group.
Break 2: All righty. We haven’t done bonus content in a while, Lindsey. You’d think me bringing that up, I would then followed up with. All right. Well, here we go. I No such luck. Uh maybe I’ll get one going for a future segment. That’s okay. We will not let any air be dead here, Mike. So, I’m I’m leaning on you guys. Okay. So, we’re doing well. We’re going into segment three and we’ve gotten two of the six. So, it’s important that we get I think you could have done one per segment. Like the I know, but my co-host decided to spend the entire show talking about the six areas of I’m just kidding. Oh, well, wait a minute. Hold on. We like talking about financial planning. What’s Can you remind me what this show is about in the first place? I know. Okay. So our you’re going to have a mutiny on your hands. Our our our our first career love is financial planning. So that we love talking about financial planning. It’s a small you get you get one sentence. What’s a small financial decision that ended up making a big difference for you or for someone you know? A small financial decision that ended up making a big difference. You get one sentence. I hate these questions. All right. It’s hate’s a strong word. We don’t use that word in this house. Uh, I don’t live in your house. I hate uh you keep talking like that. You’re never going to live in my house. So I I for me 15% into retirement. 15% in retirement. I I shared that with one of our bonus. Okay. Well, I’ve said this. Okay. So, I’ve said this many times, but I love seeing the folks in the mid4s who’ve got a half million dollars in their retirement plan and in their mid-50s who have a million and a half. And all that tells me is is is they started early and they didn’t stop and they didn’t try to outsmart the market. They just said, “Hey, I’m gonna set it and forget it.” Like Ron Poe with the uh I I’ll tell you that we’re living that right now. Uh as we approach the college years that getting started early and staying with it when it was hard or when the market wasn’t cooperating or or whatever, um now you reap the the rewards. So that’s good. All right, here we go. Third segment.
Segment 3: How how infused are tax decisions in with the rest of your financial life? Honestly, as you spend every dollar, every choice you have with with the money and the income you have is going to impact your taxes, right? it’s going to land as income on your taxes or it’s going to help you with a deduction or go into something that will in the future maybe be be uh improving your taxes taxfree. How connected are the six areas of your financial life? We’re helping with that right now. This is the Wise Money Show with Korhorn Financial Group. Thanks for being here. My name is Mike Bernard here with me in the KFG studios, Kevin Korhorn and Josh Gregory. Every episode of the Wise Money Show is on podcast wherever you listen. Just search the Wise Money Show, subscribe to it there, rate the program there as well. That’s helpful feedback for us. We’re talking about the warning signs, the six warning signs that maybe your the six areas of your financial life are not as connected as really they need to be actually not not just should be, but they need to be in order for you to make wise choices and bring synergy. That’s it’s it’s easy to have competing priorities in these six different areas. You really need one plan. You need to bring them all together and have all areas working in sync together, not competing with each other, but bringing synergy. The third warning sign that maybe that’s not happening in your financial life is you’re getting tax surprises. Tax surprises keep showing up. Guys, what are some examples of that? Well, I uh an example, I guess, would be when you start crossing certain income thresholds that trigger either new cost to you or a loss of some sort of tax benefits because maybe you didn’t realize that you were getting that close. Maybe you took some actions and and didn’t recognize the consequences. Maybe there was just a surprise event that was unpredictable. But um anytime that you’re in a spot where your tax picture is bringing surprises, often it it’s a sign that maybe there’s not enough proactive planning happening, there’s not enough checking and testing before you make your decisions. Mhm. I So, the one that stands out to me, well, there’s several, but uh this time of year, you’re getting your taxes done. You’ve got your probably golly, you’re probably getting your your brokerage 1099 if you have investments that are not inside of tax shelters. So, Roth, IAS, 401ks, you’re going to get a 1099 from for your taxable accounts. And on that, it’s going to Oh gosh, it is confusing. If you’ve ever looked at those, you might I mean, it might put you to sleep. Um, or you might just tap out and say, “I’m done with all this.” Because it’s just multiple pages, lots of numbers. One of those numbers is something called capital gain distributions. And if there ever was a tax surprise that’ll drive you crazy, it’s this one. Because if you own mutual funds, those mutual fund, you you own the mutual funds. And let’s say that you didn’t sell anything, but within that mutual fund, it owns individual investments, hundreds, maybe thousands of them. And within that fund, the manager is buying and selling. And you have no idea what they’re doing or how much of it, and whether that buying and selling is going to create a tax impact or not. You don’t know until they might announce it right at the end of the year. But even that, they do it in a per share distribution amount. So there’d be math involved. how many shares do you have? Blah blah blah. So, you really don’t know until you get this tax document that says, well, you had $23,000 of capital gain distributions that now need to land on your tax return. And that moves you from, you know, one tax situation to another. Are there any tax withholdings on those capital gain distributions? No, there are not. So, it could move you from, yeah, I should be getting a refund to, oh my goodness, I owe several thousands of dollars. And so that’s a sign that not that saving money into taxable accounts is a sign that you’re doing something wrong. I would we would want to make sure that you’ve got the right tax shelter strategy that you’re funding the right tax shelters first, but then that you’re also being tax efficient with your investments within those uh your your your taxable accounts so that you can prevent or minimize those capital gain distributions. That’s right. I it’s a it is the classic example of where the decisions you make in the investment realm of your financial life have an impact on the on the tax picture. Yeah. And um you might be making all your decisions because it’s all about rate of return or it’s about all about investment risk management and not paying attention to the tax consequences which can be significant at times. Yeah. I just I mean so this is a show about financial planning. I think about all the times I’ve had an idea and I’ve shared it with someone and it was maybe a good start of an idea, but it wasn’t a good idea until I got some help and I collaborated and then and then out of that came a a decent idea, at least something we could work with. And I think it’s like that in your financial life. And um if you’re not working with someone who studies this for a living, you’re you you’re going to miss something. I you know what that’s an interesting comment. And you know, so if you don’t know Kevin, well, if you’re just hearing us for the first time, one of Kevin’s strengths is is he’s an idea person. And there’s uh there’s a joke that uh Kevin is a visionary. And so visionaries have uh 20 ideas a day. Kevin has 20 ideas before breakfast and um 19 of them are either not quite ready or they’re maybe not good, right? But there’s one that’s gold. Is your financial planner an idea person? Are they bringing fresh ideas? And if you look at this and and you’re listening and digesting the show because you love doing this yourself and you are looking at the six areas and trying to self-evaluate right now, well, are all are they working? Are all of them working together? I would also ask you, are you bringing fresh ideas, right? Clarity and confidence, that’s one of the things your CFP should be bringing, but also creativity. And so, um, so those ideas from a tax planning standpoint certainly will help you optimize your tax, avoid tax surprises. I’m going to sneak one other tax surprise in here that could suggest that your finances aren’t as integrated, and that is the positive surprise. Oh, I wasn’t expecting this bigger refund. Oh my goodness, I wasn’t expecting that big tax deduction. That is a sign that maybe there’s a missed opportunity. Kevin, I think you said in maybe the first or second season of the Wise Money Show, if a if a uh if a tax planning opportunity falls in the forest, does does it make a sound? You won’t know. You you can’t know. Oh, I I got a bigger refund. That’s great. That could mean that you missed an enormous opportunity to reduce the amount of taxes you pay over your lifetime. It it felt good in the moment that that good surprise, but it’s going to be painful in the long term. Yeah. Especially right now. I mean, this they’re they’re talking about all the money that’s going to be coming back for folks that the tax laws changed in 2025. And if you didn’t make any adjustments, it’s likely you’re going to be getting some money back that you weren’t planning on. That’s great. I would make sure you’re clear on what your financial priorities are so that you can do that. And again, that money doesn’t get spent two or three times. Yeah. And then also what do you need to adjust in your current financial life so that next year it will be different. And should it be different? I don’t know. I know this. We’re not in the 0% interest rate environment anymore where you say, “Well, if I get a bunch of money back at the end of the year, who cares because I would have gotten nothing in the bank and I’m not making nothing here.” Now it matters. Now you can get something for that money. So I’d say keep your money on your side of the ledger. Hey, before we go off this topic, uh I I want to circle back to something that you said, Mike, and and hit the exclamation point on it, and that is uh you talked about the importance of having a tax shelter strategy. And I feel like, man, we we’ve been doing this long enough that we’ve watched a lot of people walk through their careers and into retirement. And over the years, we’ve watched the tax laws change so many times. and what was once the strategy for, you know, building up tax um deferred investments or tax-free investments, all of a sudden it’s it’s one law passed by Congress and and all of a sudden your strategy changes. And this is where flexibility that you build in during your working career using multiple tax shelters and having variety, diversified approach really leaves you in a position where if the tax laws change, all right, I have assets that maybe I’m going to draw off of a different bucket this year because the laws are different or there’s new incentives that I can take advantage of, new opportunities. If you are like way too concentrated or onedimensional in your tax strategies or your tax shelters that you’re using, man, the you talk about a way that someone can move your cheese real quick. Uh Congress can change the game and your whole strategy can go out the window because you just weren’t diversified. I I think they replace the cheese by now. They have been moved so many times. It’s not even cheese anymore. All right, fourth warning sign. We’re going to we’re going to sneak it in here. Insurance once purchased was never revisited. Insurance is there as a as a riskmanagement tool. As you are building your making progress in your finances, building financial uh you know building wealth, your insurance needs adjust. And here is the great news. As you’re doing that, you might need less insurance. It could mean you are overinsured and you need to make some adjustments. It could mean your deductibles are too high or excuse me too low and you need to increase those so that you can pay less in premium once you make an insurance decision and then start making progress in your financial life. You need to revisit that decision with the help of the right guide to make it to to to see how that insurance fits with the rest of your financial life to ensure you don’t need to make adjustments. We’re going to pick that idea back up as well as a couple other warning signs that more coming up here on the Wise Money Show with Korhorn Financial Group.
Break 3: Yeah, we’re going to pick that up. Yeah. And so we got to do three in segment four. Call it two and a half. And and really warning sign number six is you don’t have one plan. Mhm. So that is that is the wrap-up is warning sign number six. And and please, those of you hanging with us, that’s not just us throwing an easy one. No, no, no. Like that is the one that is the one plan. All right, here we go. Four segment. Parking the car. Raking the leaves. Okay, here we go. I’m laughing. As Michael Paul Roth Bernard would say. Yeah. Okay. I hope people watch this. I hope you’re watching. Right. that one of the things, you know, finances can be super boring and we try to make the show fun and beneficial and helpful and this has been a fun show. I don’t know I don’t know how many people can hang with us. So, well, you know, Ken and Leanne are still watching so that’s uh that’s what really matters. All right, here we go.
Segment 4: Thanks for being with us. This is the Wise Money Show with Korhorn Financial Group. My name is Mike Bernard. Here with me in the KFG studios, Kevin Korhorn and Josh Gregory. Every episode of the Wise Money Show is on the Wise Money YouTube channel. Go to YouTube, search the Wise Money Show, subscribe to it there, and uh and and and turn on notifications because there’s we I think we’re over 2,000 uh videos by now. And uh and and 60some, thousand subscribers. And we’d love for you to be a subscriber as well. When you turn on notifications, you’re made aware every time we drop new content, which we drop content all throughout the work week as well. All designed to help you take your next wise step in your financial life from a one plan perspective. Looking at all six areas of your financial life. So go to YouTube, search the wise money show, subscribe there. Okay. So the fourth warning sign that your finances aren’t as connected as they should be, aren’t as integrated as they need to be is that you purchased insurance, but then you never revisit it. And I think culture sets us up for this. You you see some fantastic commercials on the Olympics or whatever. I don’t know. Ha. It would be easy to say half the commercials you watch are for pharmaceutical. The other half are for finances or or excuse me, like insurance, right? It’s it’s one of those two. Uh, prove me wrong. Right. And the insurance ones, they’re all hilarious and focus on price. Yeah. They don’t focus on well, what are you insuring? Right. That’s the most important. price is extremely important but what you’re ensuring is the most important and as you are building wealth your needs from an insurance standpoint change. Yeah. I mean that is the question. I was just recently working with a client and he was talking about the insurance that he has and he has some older term insurance that’s really well priced and then he has some recent term insurance that he bought uh for peace of mind. But I looked at his financial life and I’m like what in the world do you have life insurance for? Like this guy is to this if this guy left the earth tomorrow his wife couldn’t spend all the money. But there’s a there’s a psychological thing that happens. And so this is this is why you want someone helping you and walking you through very objectively because, you know, you said it’s it’s pharmaceutical ads and insurance ads. And I’m like, no, there’s two more. There’s here’s how to sue your pharmaceutical company and here’s how to sue your insurance company. So there’s really four different categories. That’s only in the daytime. That’s you’re watching too much, right? So there’s four different categories there, Mike. But but insurance for the most part is something that is sold, not bought. And so you say, “Well, when why is it like that?” Because if I’m buying life insurance, I’m acknowledging that the the fact that I might die and oh, by the way, if I die with unfunded goals or some some things that are not complete financially, I might put the people that I care about the most in a terrible position. Yeah. Because it’s not because the question isn’t am I going to die, it’s am I going to die prematurely or at a time that I that is completely unplanned. Yeah. You know, one of the places where this sometimes goes on autopilot and you need to pause and revisit is uh if you’ve purchased some group insurance through your employer because it was so cheap at one point uh or it was just so easy. You know, you’re you’re given this open enrollment period during the fall. Oh, you got to sign up for your health insurance and disability and all of this. And uh I had a client uh just recently at the end of the year, he told me, “Oh, yeah. I bought some life insurance through work.” And I I was surprised honestly because he didn’t need it. Um but he just felt like he did and it was cheap in his mind. But the reality is when you do the math, it actually turned out to be incredibly expensive. It just seemed cheap because it’s a little bite-sized piece every pay period. When it all totals up to the premiums that you’re going to pay for the year and what you get for that money if you were to pass away, what your beneficiaries receive, um it actually wasn’t a great deal. And uh that’s partially because once upon a time it may have been because he was young and healthy and it was based on his age and and what band he fell in. Um he he’s not as young as he once was. if those dollars if those dollars instead of going to the life insurance that isn’t needed if they went into the 401k, what’s the tax impact? What’s the long-term compound growth impact? All right, fifth warning sign. We’re going to sneak this one in here and then get to the sixth. Your estate plan doesn’t reflect how assets are titled or how your beneficiaries are structured. We see this all the time when we’re meeting with new folks that come in and we’re getting to know them and talking about their financial goals, their financial fears, what they’re looking for, what they’re hoping for, and then it weaves around to, well, you know, how’s your financial life structure right now? What’s what’s going on here? What’s going on there? And no one says, you know, first, well, we’ve got a trust. They usually are talking about, we are saving this much, this is how much we have in the bank, and so on. And so inevitably after a 30 minute or so conversation, we have to say, “Do you have an estate plan in place?” And it’s very common if someone says, “Well, we’ve got a revocable living trust.” It’s very common then to look and realize, “Well, nothing’s actually in the trust.” The trust getting the trust set up might feel like I’ve accomplished something. It actually was step one. You then need to have assets owned by the trust or list the trust as beneficiary. That’s one of the signs that well, you got maybe a will, you got what feels like an estate plan, and so therefore you check that box, but it’s really not integrated with the rest of your financial life. Yeah. It’s not fully implemented, right? Yeah. You drafted the documents and they’re not going to do their job unless you put them to work properly. So, that does mean changing beneficiaries, changing ownership. You know, another thing that is a common mistake out there is your estate plan not growing and changing as your family structure changes. You know, h how often do we encounter or you hear stories about someone who’s no longer married to that same spouse and yet they’re still listed as the beneficiary on accounts or um named in a will or in a trust or something like that. Um, maybe you’ve been remarried and you still just haven’t restructured your estate plan. Um, maybe that relationship has you’re in your second marriage and it’s been 10 years and a lot of the precautions and and provisions that you put in place before really don’t apply anymore. Yeah. And so I I I would say just uh lack of having an estate plan that is up todate and fully implemented is what we often see. And and that’s why it is important to periodically lean into the uncomfortable conversation. What if one of us passed away? What what would happen? Would our wishes be carried out with the plans that we have in place? Yeah. And that leads right into the sixth warning sign that your finances aren’t as integrated as it should be. And that is you’ve worked with professionals in different areas. So maybe in taking that estate plan example, you worked with an attorney or or you did some some legal work, got some documents in place, but those financial professionals aren’t collaborating. They’re not they’re not talking to each other. Uh a great example of this, this is a long time ago, uh a newer client came in and we’re getting everything set up and he had a very complicated tax situation that actually involved some a big tax mess. And so, uh, later down the road, he wanted us to prepare his taxes, but he had a CPA that he was working with and and helping him unwind this mess. And I don’t know, it was maybe a year or so into working together. We had his investment set up. And his accountant, his CPA had mentioned, shouldn’t you be investing in Bitcoin? And so then he relayed that to me. Now let me mind you this investor anytime the market moved down about 3% he was panicking should we be making some changes should we get out and so on Bitcoin or cryptocurrencies or or even gold a a 50% drawdown is common that is common and so for this investor so so this is not a comment of whether Bitcoin’s a good idea good investment bad investment I’m saying it’s got to match up with the temperament and this this investor was older and also very very nervous about any fluctuations in the market and therefore the CPA to say, “Hey, shouldn’t you be investing in Bitcoin?” I love the idea. CPA, give me a call. Let’s let’s talk about it and let’s collaborate. Right. Yeah. And and the people that invest in Bitcoin and it works. They remind you constantly. Yeah. Um, but but the the big idea, Kevin, going back to, you know, 1994 when you had the vision for starting Corhorn Financial Group. You didn’t think that was the name at the time, but but the vision of you you were looking to build Mhm. a place where experts in different financial disciplines could collaborate together to to mutually serve a client. This is what is missing. And in 1994, it that was like a unicorn. Today, the financial planning world has woken up to that, but it’s still very rare. It’s still like a unicorn. And and this is the thing. So, we’ve talked about, hey, what what do you want? One plan. You want someone, if you go into their office, they should be selling you a process. Yeah. Not a product. And you can go to our website, www.korhorn.com. You don’t have to put the W’s in. Go korhorn.com and just hit the process. It’s at the top. And look at what the process is. We don’t even say, “Hey, you should hire us until the third meeting.” Yeah, that’s right. You You need one plan. You need those those different financial professionals in your life collaborating. You don’t need competing goals, conflicting goals. You need all six areas of your financial life working together. That’s the job of your CFP. All right, that’s all the time we have for today. On behalf of Josh Gregory, Kevin Korhorn, all of us at KFG. Have a great weekend. We’ll see you next Saturday for the Wise Money Show with Korhorn Financial Group. Securities offered through Silver Oak Securities member FINRA/SIPC. Advisory services offered through KFG Wealth Management LLC. Join business as Korhorn Financial Group. KFG Wealth Management LLC and Silver Oak Securities Incorporated companies are unaffiliated.
