Proposed Tax Laws And Your Future



People living their lives with a million things on their plate would want nothing but time on their side. However, getting caught up with a lot of things could also mean not having the time to prepare for retirement. Planning it before it arrives will surely afford you all the time to relax and enjoy it. For the meantime, we have to deal with proper financial education and one aspect of it is investments. Learn as the Thrive experts talk about the fallacies about the stock market that amateur investors often fall into. Discover how to find a good financial advisor that will help you reach financial goals to sustain for the best retirement.

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Proposed Tax Laws And Your Future

Karen Bezar, David Bezar and Bret Elam are here. Welcome to all. Karen, nice to have you back.

Thank you very much. It’s a pleasure to be here.

Nice to have you here as well. David, we\’re going to get into topical conversations in each one of our segments. Some of that conversation is going to deal with fallacies that trip up amateur investors, what you should be listening in your first conversation with the financial advisor. I want to give out a phone number 1-800-516-5861. I don’t want you to do anything with it other than just jot that number down as we roll with the show. There\’s going to be a lot of information. The information may prompt questions and at that point, that number will become something that you can utilize during the week by calling you, David, at the office. David, give us an insight first.

One of the things I wanted to bring up at the beginning of the show is there\’s this old saying out there that everyone knows that you can\’t buy happiness. It\’s an old saying, it\’s probably old as money as itself. Despite what decades of advertising tells us, it\’s mostly correct. We think it’s important for people to understand how to navigate retirement. At the end of the day, retirement is about happiness. One thing that we find but can\’t be bought that does cause happiness out there is time, getting time on your side. I don\’t know what the audience thinks about retirement, Joe, but for me and a lot of the folks that we have conversations with it, it\’s related to time.

Life is busy throughout our lifetime. Hopefully, the idea is when we get out to retirement, we\’re going to have some time on our side. One of the things that will create time for people is finding time-saving services that will let you avoid having to do the things that you don\’t like doing. Karen is with us and I\’ve had her fooled now for 29 years. I\’ve always said that I have allergies to grass, that\’s why I can\’t cut the grass on the weekends. I always say my time is worth so much money why we’re going to hire somebody to do that. As you\’re getting ready for retirement, you\’re probably looking forward to a time when you don\’t have to do those things that you don\’t want to do, some of the chores, like your job, your commute, your work emails and more. Retirement doesn\’t mean that those day-to-day chores, like scrubbing the bathroom and getting the dishes to disappear, they\’re going to go away.

One of the things we at Thrive can come into a family\’s life related to time is when it comes to retirement planning. We can\’t save your money for you, but we can use our expertise to design investment strategies, risk management strategies, Social Security planning strategies that can help you achieve those retirement goals. We can take that out of the equation. A lot of people do self-management on their way up to retirement but I’ve got to imagine for most people that once you\’re there, you want to kick back, you want to enjoy and you want to travel, and you won\’t have to be thinking about those things that give you that brain sprain.

[bctt tweet=\”At the end of the day, retirement really is about happiness.\” via=\”no\”]

If people are interested in learning about how to get that off their chore list, they can call us at 1-800-516-5861 or visit our website at and they can set up a complimentary consultation. We\’re in the business of letting you spend less time worrying about your finances and more time doing the things that\’ll make your retirement the happy, meaningful experience you\’ve always wanted it to be. The research out there tells us that it\’s a smart investment.

Just to follow-up to a lot of different meaningful points in there. Something as simple as handling the task or following up with the question to set up a management plan for your retirement, although sometimes it appears to be an obvious thought, we do not tend to do that. We tend sometimes to either shy away or let things go on the path that they\’re going even though we can control it. Would you say that\’s a fair statement?

It\’s the old adage that procrastination is the biggest nation out there. People are busy earning a living and versus, “I’ve got time to figure out how to get this all done.” We encourage people early, get in, get the planning. It won\’t be shocking. It won\’t take as much work and effort. Get it on autopilot at some point in your planning.

Flourish, prosper and success, I will continue to say those words in support of Thrive Financial Services. Don\’t be afraid to have the conversation. Don\’t be afraid to figure out the plan. Bret, I want to bring you into the dialogue because the news is the conversation about the proposed tax changes and what\’s going to take place. What will I do? What do the changes mean? So many questions out there and people don\’t have the answers, are looking for the answers, sometimes don\’t even know how to find the answers.



We saw our first version of the tax bill and they\’re trying to push it through here, starting to be publicized out there. Some of these changes that we see out there, we always say let\’s stick to the actionable, not the political. Some of these changes that we do say for our audience out there who face an alternative minimum tax, that\’s a big one out there where that\’s talking about being eliminated along with what we call the George Steinbrenner row back when he passed away. For those of us that remember it, it\’s when the estate tax went away. Those are two big changes that they\’re talking about being eliminated.

A little bit of simplicity. The talks are going from seven different tax brackets down to three, making things a little bit easier. They are talking about though, some elimination of some deductions that are out there. Some of the big ones that are being proposed are being able to write off, both your state and your local income taxes that we\’re paying. In addition to that, some of the mortgage interest at you\’re writing off or the first version that\’s being proposed out there as a cap on the amount of debt that you can have over $500,000. Some of our states like New York and California, the House and the Senate are pushing that for higher numbers as well because of how that may change.

In addition to that, we see a standard deduction. We talked about that a lot during our workshops. Standard deductions right now are $12,700 for a couple or $6,350 for an individual. Those numbers we are talking about being jumped up to $12,000 for an individual and $24,000. That\’s a big deal. We\’re going to see how it all falls out. Then once it does come out, we invite those who have come out to a tax workshop to be educated all over again when those changes do happen. It\’s the biggest way that we can derail retirement and live overall.

David, let me come back to you and tie into your opening discussion point about starting to prepare and starting to figure out a plan. Then a bump in the road comes or a change comes or a potential change comes and it\’s a pushback. It creates a barrier of understanding for us to understand which creates or should create more conversation.

That\’s up to the individual. We have people that we work with who want their plans be on autopilot. They entrust us to go through that information and if there is something that is actionable, then we\’ll certainly reach out and if it\’s not necessarily completely relevant, we\’re not going to bother them. There are people who want to know how hot dogs get made. They want to know the ingredients and the chemicals, they want to know everything. We always offer that up either through our educational workshops or phone calls. As advisors, we totally encourage the folks that we work with to come on in at least twice a year. Sometimes it\’s quarterly. We leave that up to the individuals on how much time they want to be invested. As fiduciaries, we\’re constantly watching what\’s going on out there and make sure that if there are actionable items, that we take care of that for our clients.

[bctt tweet=\”Procrastination is the biggest nation out there.\” via=\”no\”]

One more website if you’re specifically looking for great information on Social Security, is an incredible resource for our audience.

It’s an excellent resource. We put a lot of time and energy into that and have had many people comment on the value that they received by visiting it.

Bret, there was an article published in the Wall Street Journal. The subject or the headline in the article was How Financially Literate Are You?. Let\’s find out. Let\’s figure out the question. In our B block segment, I want to talk about how amateur investors should think about the stock market. There are a lot of misunderstandings under that headline, how does it work? What are some of them and how do you avoid them?

If you\’re a regular reader of the show, you probably have a little bit more knowledge about finances than the average person. You think that is going to allow us to hit it big in the stock market, but that might not necessarily be true. We went through Nobel Prize winner of economics. I\’m talking about behavioral economics and how much that plays into the day in and day out of just not having overall, I know this about this stock, that bond. It\’s putting it all together. That article you were talking about, How Financial Literate Are You Really? The gentleman\’s name was Meir Statman and what he had proposed was a new kind of financial literacy tests. We see so many people come in and they definitely know their stuff, so it\’s changing just from a knowledge standpoint, but it also goes into how people are making their decisions.

We sit down with people and it’s like, “We\’re going to take inflation into account. I understand how interest rates don’t make sense to pay off debt,” but it\’s looking at the behavioral side. We see so many times that people are making emotional decisions, not necessarily rational decisions. We talked about during our workshops so much is that we get one chance typically in our late-50s and in our 60s where we\’re making our Social Security and pension decisions. Even when we meet people for the first time and they come in and it\’s like, “Why did you make those choices?” You hear her answers all over the place. Just because we may think that we have all the answers, just trying to put those puzzle pieces together, going through what makes sense not necessarily for today, but from a long-term standpoint, that balance between the emotional side and the rational side of things.

We then go talk about a fallacy. This is one of my favorites just talking about averages. We hear about averages all the time. I guess there\’s something that we have to go on day in and day out. When we start talking about averages, I always start off by saying, “If we have something that goes up 50% and goes down 50%, we average zero. If we have $1 and it goes up by 50%, we have $1.50 and then it goes down by 50%, we have $0.75. It averaged zero, but we actually lost 25%.” Averages are something we’ve got to throw out the window. Where we hear that a lot is that we hear that when we start talking about active mutual funds, active managers versus index funds that are out there where we hear on average an active mutual fund beat index mutual that are out there.

Where that comes into play is that when you see these active funds out there that are doing well, it\’s normally just a couple of them. Those years where it\’s behind the indexes and it pops, it\’s what makes those averages go up overall. When we look at our real rates of return, we\’re lagging behind. That would be your number one. Number two is you need to be conscious of the fees that are involved in these actively managed funds. It\’s a big deal. When you talk about index funds out there where you can be in the 0.1% to 0.2% in terms of fees that you\’re paying out there in terms of funds or ETFs or you could have fees that are sometimes 1% to 2%. When I\’m talking 0.1% to 0.2% versus 1% to 2%, that\’s a gigantic difference in your overall rate of return. It\’s probably the number one thing that erodes people\’s long-term rates as well. When we start talking about those real rates that are being achieved and those active mutual funds, the big thing that we need to look at is timing in the market versus time in the market, if you will. It\’s a big deal.



I ask the question to the audience again, how financially literate are you really? That\’s an important question. Averages and the average that you referenced is something that some people take for granted that they understand and they know. That leads sometimes to a road full of mistakes. There are people out there who have made mistakes and have made errors and our job is to try and learn from some of those mistakes and errors, so we don\’t repeat them.

This is where it comes from. The memorable outcome is not always the likely one of a decision that we need to make. Joe, I’ve never asked, do you play golf at all?

Not anymore. I don’t have enough time.

When I play golf, I swear that I\’ll never go back and play golf, but it\’s usually that one or two amazing hits that I make in a round of eighteen that makes me make that decision to keep going back even though I shouldn\’t. We see that happen a lot of times in our investors. Before we have our conversation, we\’ll ask why did you pick this stock or that stock? Why did you pick this mutual fund or this exchange-traded fund? It usually comes down to a memory that they heard that it performed well and they wanted to get in on the bandwagon. A lot of times that\’s emotional and not necessarily logical or rational.

One of the things that we do to keep the emotion out of the equation is risk management. We\’ve got an awesome analytical tool called Riskalyze. What Riskalyze allows us to do simply is take the emotion out of the equation is we identify behaviorally what is a potential investor\’s risk profile? What\’s their tolerance level? Where does agita kick in? Are they more attracted to the upside potential? That\’s where the emotion gets high or are they more fearful of downside risk? That\’s where the emotion kicks in. Once we identify that, we assign a numerical number to it and that\’s on a scale of one to 100. The higher the number, the more speculative the person is. The more important element is we take the actual portfolio and we analyze it. We take a look at every single holding and we apply the technology to it and we come up with a numerical assessment of the portfolio.

This is where it gets interesting. Is there a difference, a discrepancy between what the investor\’s risk level is, their tolerance level and what the portfolio actually brings from a risk perspective? If that number is off by a large margin, it identifies for us two things. One, there\’s probably emotion in the decision making and two, it creates a lot of susceptibilities because they\’re buying on emotion, which means they may sell on emotion as well. It\’s not always a good timing situation. We\’re supposed to live by the old adage, buy low and sell high, but statistically, we see the mistakes that most investors make is they buy high and sell low because it\’s based on emotion.

That’s a good example of a reason to call the phone number, Riskalyze. Bret, sometimes people talk about the past and we live in the past expecting what we\’ve done to outline what our future will be.

[bctt tweet=\”The past does not predict the future.\” via=\”no\”]

Krause, the past does not predict the future. Who would have thought back in 1996 how much Apple is going to change the world with their computers? If you invested, you had the wherewithal to think about investing in Apple way back when you\’re obviously a millionaire. Just because Apple did well in the ‘90s doesn\’t necessarily mean it\’s going to do great today. We all have a tendency to chase those winners out there where all of a sudden, they get a little bit of hiccup, will jump off that bandwagon. We always talk about diversification. I alluded to it talking about time in the market versus timing the market. When you go back and look at the S&P 500 over the last twenty years, we\’re going to get back to that average again where you see a rate of return of almost 10%.

Talking about the diversification and staying in the market there, you miss those top 40 days, over 20 years over 5,000 trading days, over 20 years, you missed a top 40 days of the S&P 500, instead of having a rate of return of almost 10%, actually almost negative 2% just by missing it. We all think we can outsmart things going in and out. The past doesn\’t dictate what the future\’s going to hold but having the discipline of a great balanced and diversified plan, allows us to accomplish our goal.

My friends, I remind you of Thrive Financial Services, they live local, they work local, they are locally involved within the community and they are there to answer your questions. One thing I\’ve quickly learned is that David, Karen and Bret can educate you based on the information you provide, David, I want to come to you to reference the topic of Riskalyze. I want to encourage people to call if they can\’t absorb everything from the show. I want them to call you and talk about it.

They could certainly reach us at the phone number you\’ve provided. In addition to that, on our website,, under Investment Services, there\’s a self-driven tool there under Riskalyze where folks of our audience can go on there and initiate themselves a portfolio analysis. It will take them up to the point where they get that risk number. If they want to come in and try to find out where they can do it, we could work over the phone or Skype or any of these video conferencing. If they want to find out how their portfolio ranks from a risk weighting standpoint as compared to their tolerance level, we think that\’s an excellent exercise for people to go get done. It\’s a great talking point if they work with a financial advisor. How you\’re going to bring my risk in alignment with the way my portfolio is designed because this is a time, we’re hitting new highs in the market on a daily basis practically. This is not a time to be very passive, especially most members of our audience that are getting closer and closer to retirement, if not already in it.

Thrive Financial Services continues to provide a great education and great information. In this segment, as we move into our third segment of the show, we\’re going to talk about the things your financial advisor should want to know about you. Let\’s hope they want to know about you. Your financial advisor is someone that you want to stick with. Is it someone that has your best interest in mind? I\’m not quite sure how you answer that question, but I think that\’s one you should be asking. Also about the relationship, we bring Karen Bezar into the conversation. Karen, a perfect topic for you to weigh into the conversation. I almost in some ways feel as though that\’s the most important part of the process is a financial advisor who knows about you, who\’s willing to grow with you and in some ways live with you and understand your needs.

When you\’re picking a financial advisor, it is a major decision. They do need to know you and they need to understand how you feel about your investments, but also how you feel about life in general. It\’s hard for us to assess whether we\’re in good hands with someone we’re considering. When you\’re deciding whether to go with an advisor or not, it\’s important to assess the questions that they ask you, how are they getting to know you? Here are some questions that any good financial advisors should ask you the first time you meet with them. We discuss goals and it’s one of the things we talk about with our clients. It seems like an obvious question, “What are your goals?” When you\’re hiring an advisor to help you meet your financial goals, they should know what those goals are in the first place.



It’s not your goals for the way in the future, but what are your goal five years down the road, ten years down the road and in retirement? You should also listen for what information they\’re asking you about. For instance, “Are you an optimist?” “Are you a pessimist?” “What are your biggest non-financial concerns?” As an example, I met with a couple who are in their 80s. When we sat down with them, the first time we asked them is, “What is it that brought you into our office? What made you decide to come visit with us?” We also ask them, “What is your biggest financial concern at this point in your life?” What they said to us is one of their biggest concerns was outliving their money.

They\’re in their 80s, they\’re enjoying life, they\’re still going strong. They do have a financial advisor, but they still came to us. I feel they were interviewing us to see what we could offer them. In the conversation, they had retirement plans, something derailed their retirement. The husband is still working and he\’s in his later 80s. A concern of his is statistically speaking, he is going to pass away before his wife and he wants to make sure that she\’s taken care of for the remainder of her golden years. We did listen to them, we sat down, and they gave us their information. We gave them a red light, green light, yellow light. How are they going to do it? Are they going to outlive their money? We were concerned because a lot of their money that they had invested was all basically exposed to the market.

They had about $400,000 left. They both had Social Security income but in the conversation I was talking about, the husband is still working. Her major concern is what happens if he does pass away, “Am I going to make it?” We are concerned, and we did give them advice and we suggested maybe take some of that money that you have that\’s at risk in the market, maybe get an annuity. We showed them one that\’s perfect for them, something that works along with their needs and we had the conversation with them and that was it. We left it there and they have the opportunity now to say, “This is something that we want to do, but we\’re not pushy.” We listened to what they had to say and what their questions were and we parted ways. We shook hands and said, “Now, the ball\’s in your court and you can let us know if you want to go for it.”

It goes back to the original lead into the segment, what your financial advisor should want to know about you in the part of the conversation after the hellos. When you get down and you start, you\’re making decisions or you\’re giving input and helping people process information as well. That\’s equally important. Sometimes that gets lost. That\’s why I like to lead in personal and relationship leads to good decisions.

We are focused on educating people on the information that we\’re giving them. We\’re not just telling them, “This is what you need to do and if you don\’t do it our way, then we\’re not going to work with you and there\’s a door you can leave.” We\’re not like that. It\’s a give and take and wherever they\’re comfortable, that\’s how it works with us.

[bctt tweet=\”Buy low, sell high.\” via=\”no\”]

One thing that David and Karen referenced the last time was you growing up with a lot of your clients, which is a significant statement and a very bold statement to make. Bret, let me get you to weigh in on the same conversation, questions about financial planning. They all stem out of the same thought process that Karen started with in the conversation. Once you get into the conversation, the details are in the questions.

I would tell you probably about 70% to 75% of the people that come in and sit down with us have in a relationship, either currently or previously with a different financial advisor. A mentor of mine taught me, when we sit down and start talking with people, we always find out what they have now and then we can dig into it and say, “What do you enjoy with your current relationship? What would you alter?” There was a reason why they\’re in front of us because there\’s something that they weren\’t getting addressed or answered from their advisor where a lot of times whether they\’re hearing us here on the radio or they\’re coming to one of our workshops are like, “I\’ve never had this conversation before.” We always like to find out their previous relationship so we can make sure we can build upon it. Another question we ask people to, if we were sitting here three years from today, what needs to happen both personally and professionally to make you feel happy with these three years that just passed by?

We call that first appointment and miss a little bit of dental pain. A lot of times the dental pain that we\’re taking people down is something they didn\’t go through previously with other advisors. It\’s always, “Let\’s talk about stocks, bonds, mutual funds, annuities and all that fund stuff.” It\’s more than that. We’ve talked about putting the puzzle pieces together, taking people through that dental pain because we always say we want your plan to be your plan. We didn\’t want our plan to be your plan. It\’s a collaboration. It\’s an effort that we put all those different things together. Another question that we like to ask our clients is, “Do you like hot dogs or do you like to know how they\’re made?”

We probably find about 20% of the people we sit down with want to get into the weeds. They want to know all the absolute details. There are other people that they look at you and nod your head and they give you the two thumbs up. It\’s the same thing as well when you start talking about the future. We are always talking about the now, “How are things going to help me now?” We always talk about making those rational decisions, not those emotional decisions. We always need to make sure that your advisor\’s asking you what\’s coming up in life is it, “I want to buy a house down the shore. Do I have my children\’s weddings that are going to come up? Is it college planning? What are those major items that are out there?

It\’s a big deal to talk about those major expenses. We don\’t want to give people the two thumbs up and all of a sudden out of the blue it’s like, “My daughter is getting married. I need $100,000.” It\’s like, “We didn\’t have that in the plan.” It\’s important to go through the dental pain where if you\’re not getting all those big important questions being asked to you, we just don\’t understand how you can put a plan together for somebody.

Karen, I want to fall back on your example of an 80-year-old couple. They’re an individual, they have different scenarios, they process information differently. The importance of that start of the conversation and the right questions, I think it’s top of the list.

Asking the questions and listening to the answers is very important. What Bret said, “It\’s not our plan, it\’s a plan that fits you.”

Karen Bezar weighing on a very good topic. We\’re going to talk and share some stories and some lessons from some individuals of Thrive Financial Services who will help us get better and see the result back in a moment. David, I am sometimes stopped in my tracks about this unconditional commitment that exists at Thrive, the willingness to educate and the willingness to share so much information that will ultimately change the lives of so many people.

We love what we do. I wake up in the morning and I say to myself constantly, “I get to do this, not I have to do it. I get to do this.” We do have an impact. The impact is interesting. There are times that the impact that we have with someone who comes to us for information and that conversation is nothing other than giving them affirmation that their current plan is completely on track. A lot of times people suspect that they\’re going to come into the office and they\’re going to get a hard soul and all of that.

The reality is as fiduciaries we\’re not going to change something that\’s working. Karen referenced, we give people green lights, yellow lights or red lights. Greenlight is the affirmation that you\’re definitely on track, everything that we\’ve done, we\’ve analyzed, it looks good. Sometimes that impact is a minor correction, something small. We call them carburetor adjustments, makes the engine run a little bit better, something to think about. Unfortunately, there are times that we have to disclose to somebody that they\’re off the rails. Their current plan or the lack thereof is not going to have them reach their objectives of retirement, not enough income to retire, certainly not going to last long, may end up having to work longer than they anticipated. We love having an impact with people. We get to do that on a daily basis and it makes it fun. It makes it rewarding and we enjoy it.



Do you have a thought or an example of perhaps a client who came to you in one of those scenarios that you referenced? I don\’t know whether you ultimately gave that client at a green light, yellow light or red light.

There are literally tons of examples. We offer ourselves through our workshops, through our consultations, it\’s about education. We ask questions and certainly, the people that we ultimately want to serve ask us questions and that conversation lead down some path. I described what those are. We had a nice couple come out to one of our workshops and when I asked them why they wanted to get a complimentary consultation when they came in for their first appointment with us, they said, “Things that you talked about, we had asked our existing financial advisor and he pointed us in the direction of finding people who could answer those questions.” It just was not in his wheelhouse to discuss Medicare or tax planning, Social Security optimization or even risk management in some capacity.”

We had our first appointment, we asked the questions and they asked their questions. They decided to come back in for a second appointment. At our second appointment, it was a situation where we had to disclose that their retirement was at risk and this happened to be a couple who were in their late 50s. Not yet retired, but circling that age where it\’s going to be a thought in their mind. One of the reasons for it is that they had more than half of their overall retirement assets sitting in one individual stock and a little bit of emotion because it was money that was given to the couple of by one of the parents. What we went through and just obvious if you\’ve got that much concentration in one holding, if there was a bad report or missed earnings or whatever that caused that stock to not perform, that puts things in jeopardy. All we did was disclose that and talk about it. A couple of days later, we’ve got a phone call and a request to come back into the office and further the conversation to see about what we can do to shore up that doesn\’t become a mistake like we talked about earlier in the episode.

Brett, the example that David used is so true across the entire office, it\’s how you begin your day every day.

David just went through one example, we could probably have a three-hour show and go through the examples that we went through. It\’s what we do that puts the puzzle pieces together, give people that validation or David talked about the carburetor adjustments. We always say it, you can\’t get a second opinion from the one who gave you the first. We went through a lot here. If there\’s more that you\’d like to know, I know you\’re going to probably see the telephone number on our websites a couple more times, but we love that opportunity to give you that second opinion.

Karen, a nice job by you. It was nice to have you. I appreciate you being here, when we can get you in here. Thank you very much, Karen Bezar, David Bezar and Bret Elam weighing in. For David, Karen and Bret, I’m Joe Krause. We’ll see you next time.

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