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Speaker 1: Them and return me. Bah, I'm your captain. I'm your captain.

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Speaker 2: Who's in charge of all of the details of your

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Speaker 2: financial life, not just the stocks and bonds, but your taxes,

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Speaker 2: your will, your state, any trusts, insurance, credit line, your

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Speaker 2: real estate, anything that affects your financial health. Who's in

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Speaker 2: charge of that. A lot of us work with different

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Speaker 2: professionals across lots of different disciplines, but that means sometimes

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Speaker 2: some things can slip through the cracks. To avoid this happening,

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Speaker 2: some people use a financial quarterback, someone to captain every

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Speaker 2: aspect of their finances. I'm Barry Redults and on today's

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Speaker 2: edition of At the Money, we're going to discuss the

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Speaker 2: idea of having someone to oversee all aspects of your

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Speaker 2: financial life. To help us unpack all of this and

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Speaker 2: what it means for your finances. Let's bring in Peter Maluk.

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Speaker 2: He's the CEO of Creative Planning. The firm manages over

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Speaker 2: three hundred billion dollars in client assets. So Peter tell

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Speaker 2: us about the concept of a financial captain. Why do

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Speaker 2: we need someone to help manage our financial affairs?

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Speaker 3: You know, it's an interesting industry. Barry, like, if you

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Speaker 3: think about when you build a home, most people don't

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Speaker 3: want to be the general contractor. They just assume they're

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Speaker 3: going to mess something up. Yeah, I can get a

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Speaker 3: great plumber, I can get a great electrician. But somewhere

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Speaker 3: along the way there's somebodyho's not going to talk to

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Speaker 3: somebody as something we'll get screwed up. So you hire

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Speaker 3: a general contractor, and you pay the general contractor. You

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Speaker 3: probably wind up with a better outcome, and you probably

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Speaker 3: actually saved yourself money. If you think about the financial

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Speaker 3: services industry, I think it's been broken for a long time.

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Speaker 3: I think about the way I really got into this

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Speaker 3: as my parents going to a lawyer to do their

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Speaker 3: legal work, going to SEEPA to do their taxes, go

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Speaker 3: to the investment guy, paying somebody to put together some projections,

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Speaker 3: and of course you know one thing's not talking to

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Speaker 3: the other, it's not optimized, and kind of an aha

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Speaker 3: moment of hey, this stuff should be in one place

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Speaker 3: and you're more likely to make good decisions.

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Speaker 2: So it sounds like those are a lot of highly

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Speaker 2: paid professionals. Is this just for the wealthy or can

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Speaker 2: anyone making a moderate salary take advantage of having a

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Speaker 2: financial quarterback?

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Speaker 3: Well, I think I think that things have really changed

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Speaker 3: so creative planning. I think we've democratized this. It used

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Speaker 3: to be you had to be really wealthy have a

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Speaker 3: family office to be able to get some of these things.

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Speaker 3: And Creative Planning, as far as I can tell, was

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Speaker 3: the first firm in the United States to bring this

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Speaker 3: at scale. And I think that when you get it

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Speaker 3: at scale, one of the things that's great about capitalism

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Speaker 3: is once you have scale, you can bring prices down.

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Speaker 3: And so it's actually we're able to give top shelf

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Speaker 3: advice to its average American.

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Speaker 2: This is a middle class type of setup of services.

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Speaker 3: Yeah, we basically have a group that does work with

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Speaker 3: the ultra affluent. So it's we have this division that

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Speaker 3: it's maybe a third to forty percent of all the

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Speaker 3: private wealth that we manage for very wealthy people, but

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Speaker 3: sixty percent is for average Americans. There's the typical mass

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Speaker 3: affluent and being able to do the legal and the

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Speaker 3: tax and get them top shelf investments because we've got

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Speaker 3: the scale in place already from serving so many high

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Speaker 3: net worth families.

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Speaker 2: Huh. Really interesting. I like the idea of a captain

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Speaker 2: as the single point of contact for all financial matters.

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Speaker 2: What does this do to enhance somebody's life? What are

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Speaker 2: the problems that this can help avoid.

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Speaker 3: So let's say, for example, charitable giving. So, as you know,

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Speaker 3: Barry being in the business that most people when they

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Speaker 3: want to make a gift they write a check, so

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Speaker 3: ninety six percent of giving is in cash. But you

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Speaker 3: and I know the absolute worst way to make a

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Speaker 3: charitable gift is with cash.

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Speaker 2: You get appreciated stock. Yeah, so much more attractive. No

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Speaker 2: tax is paid, that's right.

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Speaker 3: So you give the exact same amount, but you give

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Speaker 3: appreciated stock. You get out of not just not just

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Speaker 3: reduce your income taxes, but you get out of capital

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Speaker 3: gains taxes. Now, on top of that, a lot of

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Speaker 3: people make a certain amount of gifts every year and

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Speaker 3: they wind up not being able to deduct any of

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Speaker 3: it because they don't qualify, they're not giving enough to deduct.

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Speaker 3: So instead they could set up their own charity, their

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Speaker 3: own five oh one C three or a donor advice fund.

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Speaker 3: They give the appreciated stock to that, maybe five years

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Speaker 3: worth all at once, right, and then give it out later.

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Speaker 3: But you get the deduction in the year where that

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Speaker 3: deduction is magnified now think about that very simple thing.

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Speaker 3: To really get it right, you've got a lawyer who's

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Speaker 3: going to what kind of foundation should I set up?

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Speaker 3: And setting it up, you need the CPA to tell

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Speaker 3: you which year you're going to get the biggest deduction.

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Speaker 3: The investment manager or planner picks the most appreciated assets,

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Speaker 3: and the financial planner is making sure you're giving within

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Speaker 3: your means. Right, So having all these pieces talk to

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Speaker 3: each other, you're more likely to be smart about your

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Speaker 3: charitable giving. You wind up, then you can give what

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Speaker 3: From a practical element, what it means is that person

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Speaker 3: can give more if they want to and costs the same,

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Speaker 3: or they can give what they wanted to give and

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Speaker 3: still have more money left in their pocket just because

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Speaker 3: the left hand right hand each knew what the other

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Speaker 3: was doing.

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Speaker 2: Interesting, so you have somebody quarterbacking all of these different pieces.

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Speaker 2: What are the most common mistakes that this is going

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Speaker 2: to help avoid?

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Speaker 3: Well, I mean the biggest thing is people don't know

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Speaker 3: what they don't know, and a lot of advisors they

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Speaker 3: just stop right at the line of what they're supposed

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Speaker 3: to do. Right, So we know that a great CPA

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Speaker 3: is a strategist, but we know most CPAs are tax prepares, right,

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Speaker 3: A great financial planner is a strategist, but we know

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Speaker 3: most of them are just entering stuff in a financial

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Speaker 3: plan and just spitting out like a couple projections and

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Speaker 3: telling you how much to save. But really, if you've

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Speaker 3: got these people together, there's an accountability among them that

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Speaker 3: you're less likely to have that missing element along the way,

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Speaker 3: like the don'tor advice when we were talking about earlier.

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Speaker 3: Everything is more likely to be optimized. The investments coming

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Speaker 3: out of a financial plan means you're more likely to

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Speaker 3: have investments that are more probable to hit your goals

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Speaker 3: because we've started with well, what are the goals, They're

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Speaker 3: more likely to generate less taxes along the way because

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Speaker 3: we understand your tax situation. The investments in your trust

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Speaker 3: are going to be managed differently than your IRA because

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Speaker 3: we've accounted for your estate plan as part of it,

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Speaker 3: so that you really avoid a lot of mistakes. But

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Speaker 3: the main thing is capturing all the things you wouldn't

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Speaker 3: think about.

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Speaker 2: It sounds like you're trying to mitigate unexpected risks.

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Speaker 3: That's right. I think a big part of wealth management

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Speaker 3: is risk management, right, So everyone thinks about wealth management

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Speaker 3: as growth. That's obviously a very big part of it,

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Speaker 3: and the biggest motivation clients come to us for is

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Speaker 3: they want to take something that's a certain size and

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Speaker 3: make it as big as possible. But you know, part

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Speaker 3: of that's tax management. How do you avoid the delution

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Speaker 3: of taxes. Part of its risk management, how do you

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Speaker 3: not lose it or wind up with a problem you

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Speaker 3: didn't anticipate. And part of that is succession planning, is

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Speaker 3: state planning.

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Speaker 2: So how does this role evolve over time? I've watched

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Speaker 2: clients start out in their accumulation phase and then later

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Speaker 2: on they're in their deaccumulation phase. They're either retiring or

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Speaker 2: spending money. How does the concept of a financial quarterback

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Speaker 2: change across the life span of somebody's personal financial life.

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Speaker 3: This is one of the great side effect or core

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Speaker 3: purposes of having that financial captain, that financial quarterback, because

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Speaker 3: if you think about the way someone's life changes, they

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Speaker 3: start out, they're very growth oriented. The plan says, hey, stocks,

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Speaker 3: maybe private equity, real estate, things like that. You get

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Speaker 3: a little bit older, you've got kids, We're now focused

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Speaker 3: on estate planning. Who are going to be the guardians?

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Speaker 3: How are they going to inherit the money. Do I

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Speaker 3: need term life insurance to protect them? How am I

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Speaker 3: going to pay for college? And them? I'm going to set

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Speaker 3: up five twenty nine. We're in different kinds of accumulation mode,

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Speaker 3: but there's a little bit of risk management introduced you

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Speaker 3: get a little bit older. The biggest contingent liability for

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Speaker 3: most Americans is long term care. That the one person,

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Speaker 3: if they're single or one of two spouses, is going

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Speaker 3: to wind up needing care. That's the biggest liability, not

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Speaker 3: that your home will burn down, but that one of

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Speaker 3: you will need long term care. So now we get

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Speaker 3: in a real risk management phase. We're protecting its long

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Speaker 3: term care. We're setting up setting up trusts and make

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Speaker 3: sure we don't lose things in lawsuits or divorce, or

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Speaker 3: kids won't lose things and all of these we got

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Speaker 3: more money to lose now, so or much more have

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Speaker 3: a risk management mindset. You see people say, Okay, I've

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Speaker 3: got it, I don't want to lose it now. So

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Speaker 3: it's not just managing it away to not lose it,

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Speaker 3: but also having rental properties owned by limited liability companies

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Speaker 3: and things like that that improve the asset protection along

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Speaker 3: the way, so that a good financial quarterback, as your

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Speaker 3: life changes, is going to be able to anticipate your

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Speaker 3: next move and be able to make sure that you're

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Speaker 3: out in front of it instead of reacting to it.

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Speaker 2: So to sum up, having a financial quarterback keeps you

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Speaker 2: on the path towards your financial goals. It mitigates risk,

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Speaker 2: it adjusts as you progress through life, and it prevents

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Speaker 2: small errors from becoming large ones. It makes sure little

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Speaker 2: but expensive things don't slip through the cracks. I'm Barry Retults.

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Speaker 2: This is Bloomberg's at the mind.

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Speaker 1: Your captain, Have your captain. I've been a love now

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Speaker 1: days count