I have some time free available between “job hunting” activities to explore different areas of interest. A few weeks ago, I got an invitation in the mail to sign up for a free retirement seminar. Normally, I would shred these without a second thought because nothing is ever free or they usually have some strings attached. In this case, I decided to sign up since it was at a convenient time and location. It was my first seminar on this topic and I knew there had to be some kind of sales pitch involved.
I have never been to one of those infamous vacation time-share seminars. I heard a few stories about how they wouldn’t let people leave the room without enduring many high-pressure closes for commitments before collecting their free “gift”, just for listening. Preparing myself for this approach, I went to the seminar with an open mind. I walked into the function room 5 minutes before the start time which was surprisingly well attended. Looking at the layout of the room, I realized that walking out when the sales pitch escalates would be a challenge as the seats closest to the door were taken. Damn, the room had only one door, and it was in the very front of the room.
The tables and chairs were not set up in the traditional classroom configuration but perpendicular to the presentation screen. Very strange as the screen was set at an angle to the room which created a tortuous path for salespeople to get through the door upon exit.
I checked in and confirmed my email address and phone number and took a bottle of water where the snacks were set up. I headed to the back of the room (“the Bach row”) and repositioned my chair. A few other latecomers came in and also repositioned their chairs to see the screen better.
I figured there were about 25 people in the room, and by appearance, well more than half already looked like they were nearing or at retirement. Without going into too much detail on the presenter or presentation. I’ll jump right into what I picked up that I either didn’t know or forgot about:
1. Income tax steps through a series of tax brackets.
2. The First 50% of your Social Security benefit is taxed above certain income thresholds.
a. If your income is between $32,000 and $44,000, up to 50% of your benefits may be taxed. (joint filers)
b. If the combined income is more than $44,000, you may be taxed up to 85% of the income amount using the tax brackets. (point 4. below)
3. Required minimum distributions (RMDs) must begin no later than age 70 1/2.
4. Without any other supplemental income, Social Security payments & pre-tax IRA withdrawals hit tax bracket triggers faster.
a. one needs to look at the tax brackets to avoid crossing over tax thresholds that would reduce your tax burden on IRA withdrawals. In other words, an educated timing of your annual IRA withdrawals is necessary to avoid increasing your tax burden on your pre-tax IRA account(s).
5. Start your plan to walk through the IRA Roth Conversion Ladder 10 years before you start taking social security to manage your tax burden on your own terms and timeline.
Check out the hyperlinks if you’re interested in more details.
Bottom Line #1:
For me, the walk-away message is point #5 and is well explained how to execute it in the Mad FIentist article. (Hit the hyperlink.)
I already started my IRA Roth Conversion Ladder process and have another 12 years of runway to plan for my tax burden. My future self will thank me for making these plans and educating myself to remain within the guidelines of the tax laws and not overpay taxes on my retirement benefits that I spent years building. If you don’t follow what goes on in Washington politics other than Twitter, the tax laws are constantly changing and it’s important to find reputable resources and professionals that keep up on these laws and tap into them before you them.
Speaking of professionals, back to the seminar. After I jotted, the five points down to research later on, we were nearing the end of the seminar. It was at this time the speaker talked about his company’s services in a very professional and informative manner without any pressure, hype or obligation. It was well done.
I promised myself that I would exit the seminar when the stupid questions started. Right, I know, there’s no such thing as a stupid question, just the wrong timing for a question that can derail a speakers rhythm on a subject. Usually, the first three or four questions are good, but not this time.
Lucky for me the first question came up that fit my criteria an hour into the seminar. After the person finished asking the question, I calmly exited across the front of the room acknowledging the speaker and their helpers near the snacks with a nod, and walked out of the room.
What was the question that prompted my departure? It was something about if social security was going to be around when “we” retire. I believe my exiting politely was justified with this question as it could only be answered with an opinion. There’s nothing wrong with that, but to me, it is a loaded question with no obvious answer.
A few days later, the company that ran the seminar sent me a nice email thanking me for my time and requesting that I complete a simple survey. I did and provided a couple of comments that my knowledge level was just slightly higher than the basic information that was provided.
Cool, no sales pitch asking for an appointment at this time in the email.
I did wonder when I was going to get a call. Well, that call came the day before we were set to leave for our ultimate road trip in the Challenger through the Dakotas on the way to Livingston, MT.
I took the call while watering the garden and it was the speaker from the seminar.
Many times during the call, he was using his client success stories, though confidentially and professionally. However, the success stories were about his high-net-worth clients, many of whom were in the legal field. These are two groups that I do not fit into nor can I identify with.
I get it, he was trying to build credibility.
A few times during his pitch, I tried to steer him away from storytelling to try and have a more meaningful experience for me, almost to the point of being blunt.
I told him that I retired on June 1 from a 33-year career in sales & marketing and looking for something else to do. I thought for sure that would be an opening for him to start “peppering” me with questions. Nothing, Nada. All I got was the setup for another client success story.
At this point, I stopped listening and was done watering the garden and started looking at weeds that I should be pulling. I needed to get off this unproductive sales pitch call.
Now to be fair he did ask a few questions about where I had my retirement accounts. Like just about everyone else who worked for several companies, they were scattered amongst a few discount brokers, my main bank, and the first brokerage account that opened when I was 18 years old, which for some reason I still have today. Probably out of respect for the memory of my dad who had the foresight to set something up with my future in mind. It’s a place where I keep my dog stocks to remind me of some investment mistakes and to avoid making decisions like that in the future.
I mentioned to him that I moved my GE 401k to a managed account service because I didn’t trust GE with that nest egg. Glad I did, look at the mess that GE is in right now.
Finally, after building his case for credibility, he mentioned that his company’s management fees were much less than what I was currently paying for where one of my IRAs is being “actively” managed. I have no doubt. He offered to look at my current portfolio without any obligation but I knew where that was going to go. It’s pretty easy for any financial or portfolio advisor to find the faults, holes, and gaps in someone else plan or program.
I understood his motivations from the financial industry perspective. It’s all about increasing their asset-managing pool. You can either do that by adding more clients or making your clients rich while they collect quarterly management fees.
I learned this about twenty years ago when I reconnected with a former teammate from high school who is in the financial industry. He asked who manages my investments, and I told him. I asked why and he said something about looking for new clients to increase his asset management base. I thought to myself, great…good for you. However, he never asked me what I wanted or needed. I recall changing the conversation very quickly after realizing his interests and fees were more important than my goals. The assumed benefit to me was that I would be paying lower fees. Either way, I would not have changed as my current broker and we were doing well together. Granted, this was the pre-internet days.
I am quite certain that the gentleman who called me is an excellent and valuable financial resource. His seminar was informative and he did create some interest in the topic. However, he has disqualified himself by not focusing on me, the prospect of not meeting my evaluation and selection criteria by asking more questions about my needs and goals. I never got the chance to communicate the criteria as he was in full broadcast mode.
These kinds of interactions during the prospecting/sales process make my blood boil because of the lack of professional sales skills by the person trying to sell me something, especially infrequent big-ticket items like financial services, cars or big-screen TVs.
My vocation was science and my career was sales. During my sales career, we had extensive Professional Selling Skills training under the consultative selling methodology first created by Xerox. Years later, we adopted the Miller Heiman program which is still popular and valid today.
My first sales course was in 1988; Dale Carnegie. I still remember the framework topics of their sales training approach. (Attention, Interest, Conviction, Desire, Close). Each one of the steps had to be followed to build rapport and close the sale.
As sales professionals, selling highly technical solutions, the technical sales force that I was a part of was highly trained and very customer-focused. I learned early on the key to success was the quality of my questions which became the foundation for having engaging and productive experiences for the scientist/customer.
Finding an effective solution for the customer became the priority instead of trying to sell something to hit a sales target. We were more interested in creating a long-term customer relationship than selling something. It’s easier to keep a happy customer who trusts you than trying to find a new one to replace after a hit-and-run sales process.
With that background, I’m always delighted when I come across a customer-centric salesperson who seeks to understand my current issue well before a product or service is even mentioned.
On the other end of the spectrum, I am always dumbfounded when someone tries selling me something without really paying any attention to my need, issue or problem that I may or may not know about. These ill-trained salespeople rush through the process to get to the transaction. Thank goodness Amazon took over many of the transactional sales for a few of the things that I need.
I love working with a professional salesperson who puts my interests and needs first so that they can craft their message and offer to meet my needs. Read the story of how I purchased and built the Challenger. Not only was I trying to factory build a specific Challenger, but I was also screening salespeople during the process. I had to initially deal with lackluster salespeople who had no clue how to capture my interests or address my needs. Imagine how much better they would be able to serve a prospective customer and increase their success if they would just ask a few questions about needs and wants. I often wonder if they’ve ever taken a sales training course or read a couple of books on selling skills.
Bottom Line #2. Do we need the services of salespeople who do not add value, in this case to our cash flow, net worth, or tax planning by emphasizing the main benefit of their service on a lower fee structure? I’m not shopping on price for this kind of service, yet some salespeople take this road most of the time because they’ve made some assumptions or did not ask enough questions. Perhaps they are mostly focusing on the transaction side of the sale rather than the solutions side and think they can get to a close or commitment faster.
There are no shortcuts during the sales process. One still has to touch all the bases to get the order.
Bottom Line #3. Still interested in learning more about finances and need a place to start? Check out JL Collins who writes a very easy-to-read blog.
http://jlcollinsnh.com/manifesto/
http://jlcollinsnh.com/stock-series/
You can also read his book which covers many topics in paperback format or Kindle. I found and read a copy at my local library.
Bottom Line#4. If you do not have the means, skills or comfort level, then, by all means, look into a financial professional. Most 401k accounts offer some type of advisor service for balancing your investment portfolio against time and your goals. There’s no reason for you to do this alone, just be aware of the fee structure
Check out Part I on this topic: https://www.fromthebachrow.com/you-dont-need-a-financial-advisor/
Extremely well written. Worth my time.