WEBVTT - Bonus: Planning for Your Financial Future

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<v Speaker 1>Pushkin.

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<v Speaker 2>I'm Jacob Goldstein, and this is a special bonus episode

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<v Speaker 2>of What's Your Problem? My guest today is Christine Chase.

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<v Speaker 2>Christine is a vice president, financial consultant at Fidelity Investments. Also,

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<v Speaker 2>I should say that today's show is sponsored by Fidelity.

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<v Speaker 2>Christine's problem is this. How do you help people come

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<v Speaker 2>up with financial plans that address their changing priorities and

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<v Speaker 2>complex needs? I was curious to learn the kinds of

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<v Speaker 2>things that Christine helps her clients figure out and to

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<v Speaker 2>see what I could learn from her that might be

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<v Speaker 2>helpful for people like me, people who don't have a

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<v Speaker 2>financial consultant but are trying to plan for the future. Christine, hi.

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<v Speaker 1>Hi, Jacob.

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<v Speaker 2>Thanks for coming on the show. I thought it would

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<v Speaker 2>be helpful to do kind of a hypothetical here where

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<v Speaker 2>we talk about what it's like when a new client

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<v Speaker 2>comes to see you for the first time. That way,

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<v Speaker 2>you know, we can talk through some of the big

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<v Speaker 2>themes that tend to come up, the main problems people

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<v Speaker 2>tend to be thinking about, things they're not thinking about

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<v Speaker 2>but maybe should be, that kind of thing. And so

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<v Speaker 2>I wonder, would it make sense for you to pick

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<v Speaker 2>a kind of hypothetical client that we could talk about?

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<v Speaker 1>Sure. Yeah, I think that's a great idea. Maybe someone...

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<v Speaker 1>potentially just got promoted maybe into the C-suite and maybe

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<v Speaker 1>their financial picture just got a little bit more complicated.

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<v Speaker 1>So maybe they're finding or trying to find a financial

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<v Speaker 1>planner to help them get organized.

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<v Speaker 2>So what's it like? Somebody's walking in, you've never met

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<v Speaker 2>with them before. Just like briefly, what is a first

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<v Speaker 2>meeting like?

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<v Speaker 1>So in that first meeting, I really just want to

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<v Speaker 1>get to know this person, right? What matters to them?

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<v Speaker 1>What are their goals? And what do their finances look like?

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<v Speaker 1>So I'm asking about their family, who's important to them,

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<v Speaker 1>I'm asking what the goals are, short, medium, long term.

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<v Speaker 1>I'm asking about their finances, income, expenses, assets, liabilities, and

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<v Speaker 1>also asking about them as an investor, understanding their strategy

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<v Speaker 1>up until now, how they feel about it, how they're

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<v Speaker 1>feeling about risk, and also a little bit about what

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<v Speaker 1>their estate plan and what their insurance planning looks like

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<v Speaker 1>as well.

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<v Speaker 2>So basically everything. You're asking basically everything. And I'm sure

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<v Speaker 2>it varies from person to person. But are there sort

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<v Speaker 2>of quick wins you often see? Are there common things

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<v Speaker 2>where you look at someone's kind of financial picture and say, oh,

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<v Speaker 2>here's a thing we can improve right away?

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<v Speaker 1>Yes. I'd say two of the biggest things I noticed

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<v Speaker 1>right away are in an investment portfolio, a lot of

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<v Speaker 1>times people lack diversification. And that could be stemming from

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<v Speaker 1>a number of issues, right? Whether it's growth in the

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<v Speaker 1>market and they're concentrated in certain parts of the market

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<v Speaker 1>or they've just never gotten exposure to international or fill

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<v Speaker 1>in the blank. So we definitely want to diversify and

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<v Speaker 1>take any sort of undue risk off the table while

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<v Speaker 1>still positioning them for growth. And the other thing I

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<v Speaker 1>tend to see is a lack of tax efficiency planning

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<v Speaker 1>in the portfolio. So that can look like people are

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<v Speaker 1>not utilizing tax advantaged accounts. They might have a taxable

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<v Speaker 1>portfolio that's incredibly inefficient and they're paying, you know, one

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<v Speaker 1>or 2% on their taxable assets every year when they

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<v Speaker 1>could be moving things around and being more intentional about

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<v Speaker 1>what they hold in that account. So that bleeds into

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<v Speaker 1>asset location. That's where we start to take a look

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<v Speaker 1>at what types of securities we hold in which accounts.

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<v Speaker 1>We might hold, say, your bonds or international in a

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<v Speaker 1>tax advantage account and hold, say, long-term equities in a

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<v Speaker 1>non-retirement account and then prioritize tax loss harvesting. when and

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<v Speaker 1>where we have volatility.

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<v Speaker 2>I have to admit, I actually made a mistake. like

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<v Speaker 2>that in my life. And it's sitting there in my

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<v Speaker 2>account now. And I should have known better, right? Like

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<v Speaker 2>we sold, my wife and I, we sold an apartment

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<v Speaker 2>and we had some extra money from it. And I

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<v Speaker 2>thought I was being very responsible. I bought a target

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<v Speaker 2>date fund, but I put it in a taxable account.

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<v Speaker 2>And as I'm sure you know, but I didn't know,

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<v Speaker 2>that is not a good thing to put in a

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<v Speaker 2>taxable account. And so now I pay all these gratuitous

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<v Speaker 2>taxes on it that if I had asked an advisor,

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<v Speaker 2>I presume I wouldn't be paying.

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<v Speaker 1>Yes, that's a mistake I see a lot of people make, right? Those, say,

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<v Speaker 1>target date allocation funds, usually in their retirement accounts, so

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<v Speaker 1>we're very well aware of them. And they do help

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<v Speaker 1>with asset allocation management over time and risk management, but

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<v Speaker 1>oftentimes there's a lot of turnover in the funds, which

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<v Speaker 1>leads to distributions that are taxable to you.

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<v Speaker 2>So if you think about the long term, the kind

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<v Speaker 2>of bigger picture, what should the client be thinking about?

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<v Speaker 2>What should a person be thinking about?

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<v Speaker 1>So when we think about this person who recently got promoted...

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<v Speaker 1>I want to firmly understand their compensation package. To get specific,

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<v Speaker 1>this could be equity grants, for example, and there might

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<v Speaker 1>be trading restrictions on that. We could look at ways

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<v Speaker 1>to manage their new cash flow, strategies for concentrated stock positions,

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<v Speaker 1>planning for upcoming liquidity events, and certainly tax planning and

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<v Speaker 1>investment strategy. So that's a big piece of it, right?

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<v Speaker 1>Trying to figure out, are they right in their asset allocation?

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<v Speaker 1>Are we diversified as much as possible? And are we

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<v Speaker 1>being really cognizant of taxes? We also want to make

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<v Speaker 1>sure this is all integrated with their full financial picture.

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<v Speaker 1>So their estate plan, charitable giving intent, lending opportunities that

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<v Speaker 1>they might need and can get from their portfolio. And then,

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<v Speaker 1>of course, bring in anybody to the table that we

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<v Speaker 1>need to. This could be spouses. This could be their

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<v Speaker 1>kids or grandkids. And really just figuring out how I

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<v Speaker 1>can serve as that trusted advisor in the middle of

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<v Speaker 1>all that and making sure that we understand that where

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<v Speaker 1>they want to go and help build advice that's tailored

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<v Speaker 1>to them.

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<v Speaker 2>What are some other things that you often find people

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<v Speaker 2>are not thinking about that you can just say, hey,

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<v Speaker 2>you know, here's something you should pay attention to?

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<v Speaker 1>I find estate planning is probably one of the biggest

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<v Speaker 1>things that people aren't thinking about. And for obvious reasons, right?

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<v Speaker 1>We don't want to have to think about ever having

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<v Speaker 1>an estate plan go into action. But that's crucially important

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<v Speaker 1>to make sure that your loved ones are protected and

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<v Speaker 1>that the assets flow the way you wish. But even

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<v Speaker 1>in capacity planning, right, that's part of an estate plan.

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<v Speaker 1>So do you have, say, a will? Do you have

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<v Speaker 1>a trust? Do you have a power of attorney set up,

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<v Speaker 1>health care proxy, et cetera? So that's a big one

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<v Speaker 1>that gets put on the back burner.

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<v Speaker 2>So, OK, so we started out talking about this sort

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<v Speaker 2>of hypothetical first meeting. You talked about all the questions

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<v Speaker 2>you might ask somebody. As the meeting is wrapping up

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<v Speaker 2>and the person's leaving, what's the homework? What do you

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<v Speaker 2>send them off to do?

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<v Speaker 1>So I'd say one thing is sometimes I'm asking folks

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<v Speaker 1>and they don't necessarily know the answers, right? So maybe

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<v Speaker 1>it is gathering all the information that I've requested, right?

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<v Speaker 1>They might know some things off the top of their head,

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<v Speaker 1>but do they understand what sort of insurance coverage they

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<v Speaker 1>have or what their estate documents say that they wrote

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<v Speaker 1>30 years ago? Or they don't actually really know what

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<v Speaker 1>their expenses are. So some of just the homework is

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<v Speaker 1>really gathering that data and bringing it back to me

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<v Speaker 1>so I understand where we stand today. And I think, again,

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<v Speaker 1>that big picture stuff, right, defining success. What do we

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<v Speaker 1>want our wealth to create for us? And a lot

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<v Speaker 1>of times we have competing priorities, so ranking those. So

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<v Speaker 1>a lot of times these questions come up and then

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<v Speaker 1>they have to go down and kind of think about it, gathering,

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<v Speaker 1>of course, the hard data, but also maybe talking to

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<v Speaker 1>their spouse and sitting down and doing some self-reflection in

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<v Speaker 1>terms of what we want this money to do for

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<v Speaker 1>them and their families.

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<v Speaker 2>So last question, kind of just a big one to

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<v Speaker 2>leave on. What is one thing that you wish everybody

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<v Speaker 2>knew about financial planning?

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<v Speaker 1>One thing is I firmly believe that the earlier you start,

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<v Speaker 1>the better you're off. I think sometimes people think that

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<v Speaker 1>there's a certain dollar amount that they need to start

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<v Speaker 1>financial planning. They don't have enough money yet. But think

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<v Speaker 1>about it as, again, we're figuring out the destination and

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<v Speaker 1>working backwards to today. And I also think having a

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<v Speaker 1>financial planner or advisor in your corner that you trust

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<v Speaker 1>ahead of time, kind of ahead of even needing them

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<v Speaker 1>for big decisions is absolutely key. There are going to

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<v Speaker 1>be things that come up, right? You get promoted to

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<v Speaker 1>the C-suite, some good things, right? There might be some

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<v Speaker 1>sad things like someone passes and you get an inheritance.

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<v Speaker 1>You already want to have that foundation of trust established

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<v Speaker 1>with somebody so that when you're in those moments, you

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<v Speaker 1>can ask them what you should do and you trust them.

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<v Speaker 1>You're I want people to have their wealth allow them

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<v Speaker 1>to live the life that they want and creating a

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<v Speaker 1>cohesive strategy across all facets of their financial life in

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<v Speaker 1>order to do that.

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<v Speaker 2>Thank you so much for your time. It was great

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<v Speaker 2>to talk with you.

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<v Speaker 1>You're welcome. Thanks for having me.

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<v Speaker 2>Visit fidelity.com slash wealth. Information presented herein is for discussion

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<v Speaker 2>and illustrative purposes only and is not a recommendation or

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<v Speaker 2>an offer or solicitation to buy or sell any securities.

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<v Speaker 2>The views and opinions expressed by the Fidelity speaker are

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<v Speaker 2>his or her own, as of the date of the recording,

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<v Speaker 2>and do not necessarily represent the views of Fidelity Investments

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<v Speaker 2>or its affiliates. Any such views are subject to change

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<v Speaker 2>at any time based on market or other conditions, and

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<v Speaker 2>Fidelity disclaims any responsibility to update such views. These views

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<v Speaker 2>should not be relied on as investment advice and, because

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<v Speaker 2>investment decisions are based on numerous factors— Thank you. Thank you.

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<v Speaker 2>Thank you.