Episode 205 - Why Timing Matters More Than Investments in Family Wealth with Gary Preisser

Speaker A: Volatility is the market going up and down and over time. Volatility isn't a threat, it's actually an opportunity to grow. But if you need that money, when a cash flow need collides with volatility, the market's down 20% and you need that money for the business or for the household, whatever that is, that's where risk comes into play. When we pay tax determines how much tax is paid. And the more forward looking we can be to look at a transition sale of a business, a liquidation of a business, even just a, uh, retirement from the business into retirement, that's going to affect us from a tax standpoint. It's going to affect income. So the first thing we need to understand as we look to that is what is the liquidity need? It's not good enough to just abdicate responsibility and accountability for your financial situation. You need to be involved. Now the financial advisor, we should be an expert, we should be a resource to give you guidance. But it's not something that you can just say they've got it covered, I don't know what's going on, we need to be involved in it.

Speaker B: Welcome to Disruptive Successor, a show for next generation leaders in family businesses and entrepreneurs who want to disrupt the status quo and take their existing business to

Speaker A: a whole new level.

Speaker C: We all know that what got us

Speaker B: here isn't going to get us there. This show will provide inspiration, advice and resources to help you create massive impact. This podcast is sponsored by myself, Jonathan Goldhill and my company, the Gold Hill Group where we provide coaching for growing companies. I'm Jonathan Goldhill and my purpose is simple. To guide entrepreneurial leaders in family businesses towards more freedom and fulfillment. I want entrepreneurs to get clarity around the changes that will make them and their businesses more successful so they can experience the same freedom I've enjoyed in my life. Our, uh, proven practices challenge business owners to think differently about their business and how they're running it and quite literally become game changers in our clients companies. Learn more@ah, thegoldhillgroup.com website where you can schedule your free strategy session.

Speaker A: Foreign.

Speaker C: Gold Hill. And welcome back to another episode of the Disruptive Successor show. Today's conversation is not about beating the market. It's about something that may be even more important for family businesses and that's timing. My guest, Gary Pricer is the co founder of Stonebriar Wealth Advisors, based out of Utah and he's the creator of the Cash Flow Clock. Gary believes many families don't get into trouble because they Made terrible investments. They get into trouble because liquidity, taxes, leadership transition and family expectations were not aligned at the right time. For family business owners, that can be the difference between a smooth succession and a crisis. So start. I would like to welcome to the show, Gary. Um, um, we've got a lot to talk about. We've had a few wealth advisors on the show in the last couple of months and you've got a different take. So I want to start with your critique of traditional wealth management.

Speaker A: All right, thanks so much for having me, Jonathan. I'm, uh, I'm really honored to be here and honored, uh, to give a chance to, to kind of share my perspective because I do think that we're missing a lot of things when it comes to the, the financial services industry as a whole. And the way that we do wealth management or the way that we start wealth management, our industry tends to start with products and with allocations and with investments. But what I believe we should start with in all things is purpose. Assets are not trophies. Businesses are not trophies. They're not something to be admired. Uh, they're tools. They're something that should be utilized and utilized across generations ideally. And if we don't, uh, consider the purpose of, uh, what the best utilization, the best function for each of our assets is, then there's really very little chance that we will be successful in our financial plan, whatever that might be.

Speaker C: So let's talk about that. The purpose, like talking about purpose, I think sort of seems foreign to a lot of folks in the wealth management industry. I know there's wealth coaches that are managing assets and portfolios and they may be talking about purpose and talking about lifetime use, but like, you're really looking at breaking things down into investments, taxes, liquidity, uh, use of the funds. So, you know, I mean, walk us through that a little bit more.

Speaker A: It's interesting how purpose is so clearly important and vital in all aspects of our lives. But when we look at our investments, it becomes very different. Instead of thinking about how we're going to use these assets, we get a, ah, risk questionnaire slid across the table that asks us questions that aren't very clear about how we feel about how we feel about the market, how we feel about volatility, instead of when are we going to use these assets? Because once we know the purpose, then purpose determines the timing of when we're going to need the asset, how we're going to use that asset. And timing is so critical because that should determine how we design a portfolio. It comes after purpose and Timing, then we get into design and allocation. If we start with allocation without taking into account the purpose and timing, then the only way to do that is to create generic portfolios based on your age and your risk profile. Moderate, aggressive, conservative. These are terms that mean nothing because they mean different things to different people at different times in their lives. And yet we're using these terms to make decisions about investments that will have impact for years, for decades, sometimes for generations. So we have to start with that purpose and timing. Once we have that, then we can design a plan for liquidity, make sure we're assigning volatility intentionally, making sure that we understand that we want to be proactive when it comes to taxes, not just reactive. We want to have a plan for the long term, not just for last year. Uh, but it all comes down to purpose and timing first.

Speaker C: Yeah. So it's making sense to me. In the ebooks that you've written, you talk about bad timing, not bad investments. And I'm understanding what you mean by that. But let's see if we can get into an example, maybe of a family or a business owner who looked wealthy on paper, but was exposed because of the timing of the cash was wrong, or the timing of the cash needs were wrong.

Speaker A: And this happens way too often. Um, we see this a lot with generic Portfolios. With the 6040 stock bond split, I see dozens of clients or prospective clients with very vast portfolios, huge amount of assets. But what's happening in those portfolios is every time assets are withdrawn, there's any distribution for income for any reason, then typically they say, okay, it's coming out of the fixed income portion of the portfolio, the bond portfolio, whatever that may be for that individual. But what happens immediately after that, Jonathan? The portfolio gets rebalanced automatically. Not intentionally, not strategically automatically. And that's rarely a good financial, uh, decision to make is to make things automatically. So if the market is up 10%, it may be okay to sell out of your large cap growth stocks to replenish your fixed income bonds. But if the market just dropped 30%, that's the last thing that should be done. It's the most destructive thing that can be done. And it's not a matter of having bad investments. It's that they were sold at the wrong time. And so without understanding the having that purpose and timing in place, and then designing a portfolio with specific roles for each segment of that portfolio, instead of just assuming that one portfolio is going to provide income and it's going to provide growth, and it's Going to provide tax efficiency and it's going to provide, uh, protection for volatility. All of these things at once, they can't do that. But by giving different purpose to different segments, we can choose the best investment for the job and for the timing of that job.

Speaker C: Makes sense. I mean, the business may be valuable, the real estate they own may be valuable. The estate that they have may be valuable. But if the cash isn't available when taxes or distributions or a buyout or a transition happens, the family can still be in trouble.

Speaker A: Absolutely.

Speaker C: This kind of leads me to your signature framework, which is what is the cash flow clock? Um, teach it simple, simply simple.

Speaker A: I try to keep this as simple as possible. It's interesting to me, fascinating to me that every financial decision we're making, whether it's in our businesses or in our homes, is based on cash flow. Where we live, where we work, where we vacation, where our kids go to school, even what we eat is based on our cash flow. And yet again, our investments are based on how we feel about the market. And so this is why we. I, uh, created the cash flow clock because instead of a pie chart, this generic static assigned allocation that really doesn't function. It just, it's compliant, it's suitable, quote, unquote, but it's not functional.

Speaker C: Mhm.

Speaker A: Your assets move through time and the clock represents that. Assets that are going to be utilized in the next five years, they should not be exposed to any volatility at all because they need liquidity. Liquidity is the first priority for that lazy zone, as we call it. It's lazy because it, uh, doesn't keep up with inflation long term. But I don't care about inflation long term for money that we want to use in the next five years now, money that we're not going to use for maybe six to 10 years. So kind of intermediate term. I still can't afford volatility because we saw what happened in 2008. The market dropped. It took a decade to get back to where you started if you rode that volatility all the way out. Uh, we can't afford volatility even over a 10 year period. I need a little bit higher rates of return to keep up with inflation for a little bit longer period of time. So we need safe money, a little bit higher rates of return, but still no volatility. Once we've cleared the 10 year mark, that's where we can afford to take on volatility in our investments. That's where we need volatility because that's our best chance to actually grow the assets. Now the problem with volatile assets is that they will lose value. It's not, they might, they could, they will. The problem with losing value isn't the loss. It's when we have to sell out of the loss, out of desperation. So by having the lazy and safe portions of the portfolio of the cash flow clock in place, our clients never have to sell out of their volatile assets out of desperation. We've got a cushion. Now when the market is up, we may rebalance, not automatically strategically. When the market's down we actually may pull from safe or lazy assets and buy the dip. But we have an option to do that with the clock. And as time progresses, as things change, the clock moves. We shift from volatile to safe, from safe to lazy. And lazy. We spend uh, those assets and we know when to adjust it because it's based on the unique timing of each individual, not on how Most moderately conservative 65 year olds want to have their portfolio.

Speaker C: So sounds difficult to manage a little bit from ah, your standpoint. Um, do you do, do you apply the portfolio allocation strategy to each of those different clock periods? And so you have maybe three different portfolio allocation strategies?

Speaker A: We have at least three different portfolio strategies. And it sounds more complicated than it is. It is more difficult from the standpoint of uh, we are creating individual portfolios for each client. M But it is so much easier to do if we start with the right question, what is the money for? When is the money for? Then the portfolio design actually becomes very straightforward. But to your point Jonathan, we have a portion of the portfolio for lazy, a portion that's for safe. And then we may have multiple models in the volatility zone as we call it, because there's a difference between money you're going to need 15 years from now versus money that you're going to leave to your grandkids 50 or 60 years from now. You can take on more volatility the longer the timeline is. But the reality is we're creating six or seven basic models for our volatility zone. We just apply them uniquely based on the individual needs of uh, each household. So the management of the, of the models themselves is not difficult, it's just as easy as any other portfolio. But what it is is applying or, or assigning different percentages of those models based on the client's income needs.

Speaker C: Okay, that makes some sense. Let's see if we can put some practical examples to it. Um, so let's take a uh, a ah, 35 year old with a Young new family. And this, uh, the, the parents would like to set aside some money for college, um, in a section 529 plan. I, I don't know. Those are still popular given the cost of college these days. But what, so what, where would their assets be going? I mean, they've got, they might be looking at buying a house coming up in the next year or two. Maybe they already own a house. Um, they've got their kids, you know, they're young, they're maybe under the age of nine. So they've got money that needs to go into some sort of college plan and then they've got the retirement help. Help. Walk us through what you might do with that.

Speaker A: This is a great example and you're bringing up the exact questions that we should ask. Because there's no question that they need, uh, an emergency fund at least six months to a year, whatever that looks like in the laz, uh, lazy zone, uh, money market, high yield savings account, whatever that may be. It's gotta be liquid for the, their retirement funds. That's an easy thing. They're not gonna be touching that for 20, 30, maybe 50 or 60 years. They should be taking on really as much volatility as they're comfortable with. One of the things that drives me crazy about portfolios that I see for 35 year olds is they'll end up with 20 to 30% of their assets in bonds. Why do they need bonds in their retirement account when they're not going to touch that money for 20 or 30 years? It's just dragging that growth down. Right?

Speaker C: Makes no sense.

Speaker A: There's no sense. So we should be, they should be comfortable taking more volatility in their retirement accounts because that time horizon is so much further out for that segment of their portfolio. Now with the 529s in the house, that's where it becomes very interesting and very critical that we get this right. Let's talk about the 529 first. I'd never really liked 529 until a couple of years ago when they changed the rule that allowed up, uh, to $35,000 of a 529 to get transferred into a Roth IRA account for the recipient. That changes everything. I had, I've had too many, uh, clients that have come to me or prospective clients who said, I just set up a 529 for my son, he's going to college next year. I'm so excited. I'm like, oh, you missed the, you missed the window to get the tax Benefits the tax free growth of a 529. If you're just going to use it next year for those clients, I actually say, okay, pay for college out of pocket, wait, keep the money in the 529 and can and turn that into a Roth IRA, uh, that will grow tax free for the rest of your child's life. But if we want to use it for 528, which, which is great, especially if we start early again, if they have more than 10 years before they're going to college, we want to take on as much volatility as possible, get as much tax free growth as we can. But as we get closer, under 10 years, under 5 years, under 2 years, more and more of that money needs to shift. Not into bond, but bond funds please, but into money markets or high yield savings that are going to be there no matter what happens in the market. You don't want to have to go to your child and say, sorry, you can't go to college next year because the market just dropped 30%. Uh, we want to make sure that as we get closer to that timing that the money is available and liquid. And the same thing goes with a house. If they have $200,000 in savings as an example, but you know that they're going to need to use that for a down payment and for upgrades and for furnishing a house in the next six months, well, I'm not going to put that money in Bitcoin, I'm not going to put that money in the S and P. I'm also not going to put that money in a 12 month CD. The 12 month CD may seem safe, but it's not functional because it's not going to be liquid at the time that they need it. Now if they've already got a house and they've already got plenty of savings, they have great income. Then that non qualified money, that savings account, we may take a portion of that and invest it for the long term either for retirement or for a legacy for the next generation. In that case, I don't want to pay uh, taxes on dividend income in a non qualified account for money that I'm not using. For income. I would want to use low dividend, high growth stocks so that you can get long term capital gains tax rates. And if you end up not using that money, your beneficiaries get this cost basis step up so that the transition is tax free. So these are great questions or great uh, options that we see, but each portion of this scenario that you gave me Jonathan has an answer and we can find the best answer. If we are looking at it as individual decisions, different purposes for different portions of the portfolio instead of just saying, oh, they're 35 and they told me that they were moderately aggressive. Doesn't work.

Speaker C: Yeah. You know, it's really interesting as you talk about volatility and uh, uh, contrast that with true risk. You know, in my work I often see that the biggest risks are leadership risks, communication risk, sibling risk, founder control risk, um, the lack of systems risk. And now you're adding this other layer which is timing, liquidity and tax, uh, risk. Just an interesting comment on that.

Speaker A: Yes, taxes are a big deal and I think we look at taxes as something that is just an automatic result that we can't do anything about. And if we're just looking at tax preparation, that's true because uh, we're looking at the past. We've got to look forward when it comes to taxes. Because when we pay tax determines how much tax we pay. If we pay tax on a million dollars all at once in one calendar year, the tax rate we're going to pay is going to be much different than if we pay that at $100,000 per year over a 10 year period. So we need to be intentional in planning when we pay tax. I see way too many investors uh, that are, are missing out on opportunities, room in lower tax brackets so that they can just defer tax. That 35 year old that you just talked about. In most cases they're deferring their tax. Now if they're making $400,000 a year and they're expecting that when they get to retirement tax rates will be lower, then deferring tax may make sense. But if they're in the 12 or even the 22 or 24% tax bracket and as they look forward they project that they may be in the 30s or higher down the road, then I want them to pay as much tax as possible now and avoid taxes in the future. So that would be utilizing Roth conversions and the timing of that is critical. We don't want to convert everything at once. That causes us to pay more taxes. And not everyone should convert. But the reality is that about half of retirees end up paying lower taxes in retirement. Uh, that means the other half are paying as much in taxes, if not higher in retirement. And so because it's different for each family, we have to look forward and really be intentional about tax planning so that we can keep more of those hard earned assets instead of seeing them go to the Government, either during our lifetime or even through our estate.

Speaker C: So, you know, maybe we're going to discuss the same thing we've just covered, or you've just covered, approaching it differently. So like, what are the risks that are not showing up on someone's brokerage statement when they're looking at it and it seems like it's not having liquidity? Maybe when the business or the family or the IRS needs it, it's the risk of the market going down. Um, what else am I missing here?

Speaker A: Anything, Anything is a liquidity first and foremost, because risk is not the market going down. That's volatility. And we do need to differentiate between volatility and risk. I think too many people just put those together. Volatility is the market going up and down and over time. Volatility isn't a threat. It's, it's actually an opportunity to grow. But if you need that money, when a, ah, cash flow need collides with volatility, the market's down 20%. And you need that money for the business or for the household, whatever that is, that's where risk comes into play. And we can't see that to your point, on a statement, we have to understand the cash flow needs of the client going forward before that that risk becomes apparent. And once that risk becomes apparent, we can actually design around that in the structure of their plan. Now the other thing that we need to, that we don't see on the statement is I see way too many people that get super excited. They've got two, three million dollars in their traditional IRA account. They don't understand that not all of that money is theirs. There is a tax liability for that money. The only way to get out of paying taxes on that money is to donate it to charity. And if you're not going to do that, if you're going to pass it to your beneficiaries, either you're going to pay tax on it or your beneficiaries are going to pay tax. There's no cost basis. Step up, uh, for traditional ira. And your beneficiaries may be paying tax at a higher rate than you would be paying tax because they have to do it within 10 years. Whereas while you're alive, you can spread it out over your entire lifetime. Now, some of my clients say, I don't care if my kids pay taxes. That's their problem. And I can appreciate that to a certain extent.

Speaker C: Right.

Speaker A: But, um, the reality is, how are they going to pay those taxes? They're going to be using your assets to pay the taxes. So for me, I don't care about whose name is on the tax return. What I care about is how many of your assets are going to the government, either during your lifetime or throughout the duration of your estate, uh, if that's the priority, and I believe that's what it should be. We want to be very intentional about paying those taxes. The other thing we want to be aware of, and I hate to bring this up, but I have to, is the widow's tax trap. Is that a term you're familiar with, Jonathan?

Speaker C: Oh, I'm not.

Speaker A: So the likelihood is that one spouse will pass before the other. I always say I'm not looking for volunteers. I'm not making, uh, predictions here, but one will pass before the other. The surviving spouse ends up with less income because they will lose at least the Social Security. They may lose a pension, they may lose, uh, wages, they may lose a lot of things, but at least the Social Security. And almost every, in every case they will end up in a higher tax bracket because now they're filing single instead of filing jointly. So that 12% tax bracket, that goes up to $100,000 of taxable income this year for married filing joint only goes up to $50,000 for single. Almost every single client that I have is at least in the 22% tax bracket. And while they're married, if they could have done conversions at the 12% tax bracket, which, uh, is an opportunity for a lot of people or Even in the 22 and 24, to avoid 32 or 35 or 37% taxes down the road, then that is allowing them to hang on to more of their assets.

Speaker C: All right, I want to take a twist here and talk about family businesses and succession planning, um, where I know that your input is that purpose, liquidity, leadership, they all need to be connected. Um, so I want to take like a case where the founder still wants income from the business. The successor, that 35 year old wants control, um, a non operating sibling wants fairness. They want, you know, either equal. Which is which in the previous episode I talked about is not fair. But they want something to come from the family estate. Um, and yet the business still needs capital to grow. So how do families coordinate financial planning with some of this like leadership transition and stickiness, um, in the transition. How do you approach that?

Speaker A: That's a great question. And it's kind of an extension of, uh, what we were talking about before. We cannot use generic allocations for households. We can't expect each asset to do everything for that for that individual or for that household. And the same thing with the succession plan. We can, we should not expect every aspect of that business, every aspect of the assets to do all of those things at once. There has to be purpose for each portion of the portfolio. So there should be a portion for that founder to generate income. The job for that asset is generate income for the founder. There should be a portion for the non operating uh, sibling to be able to participate. That's a different portion of the portfolio. There has to be a portion to keep the business going. Right. We have to have enough capital and that's going to vary based on your business. And you can't invest that capital differently or the same as for the non operating siblings, non operating sibling, they might not need that income for decades. The business needs it today. And uh, that liquidity is absolutely critical now with the actual operator. Then it becomes a matter of transitioning the leadership. And that requires a bunch of communication. I know you do a great job of talking about that aspect of uh, it that is your role. But for my role we have to look at, at the assets, the liquid assets especially and make sure that they are aligned to what the family wants to accomplish.

Speaker C: You know, I think one of the challenges that a lot of wealth managers or uh, probably maybe the individual clients that wealth managers have is that the wealth managers are typically just looking at the investable assets in terms of stocks and bonds and you know, alternative investments. But they're not looking at the real estate as part of that. Uh, that's a really big problem because a lot of people have the bulk of their assets either tied up in their business or in real estate. And you know, and then the more um, you know, lesser amount of investable assets in the stock markets. We really need to look holistically at the whole picture.

Speaker A: It's the only way to do it. I don't understand why the rest of the industry doesn't do it. And the reality is if you've got seven, if you've got lots of money, uh, 100 million in assets, maybe even 20 million in assets, you go to Goldman Sachs, Merrill Lynch, Morgan Stanley, you will get a team that's going to talk about your income, it's going to talk about your investments, going to talk about taxes, going to talk about your estate, they'll even help you with health care, they are going to look at it from a holistic standpoint. But if you have less than that, which is still a lot of money, you typically get a 26 year old kid in A cubicle that's looking at your risk profile and putting you in a generic portfolio without even considering your, your rental properties, your real estate, your business. So many people focus on what's your number for retirement, especially how much do you need in assets. That has such little bearing on the success of retirement. The success of retirement really comes down to what is your retirement income versus your expenses. And I'll give you a quick example. We got two, we talked about 35 year olds. Let's talk about two 70 year olds. Two 70 year old households. Both of them want to spend $10,000 a month. Both of them have, let's say, $5 million in liquid assets. Okay. And they both say they're conservative. The industry would invest them exactly the same. But one has several rental properties. Several, uh, several properties with real estate. And they have a business that's generating $20,000 a month in income plus Social Security. The other one only has Social Security. Their situation, their reality is so different. They're extreme opposites, and yet they're being invested exactly the same for that client that has all the income, more income than what they're spending. The investments are more about legacy, it's more about transition. It's more about what's best for the family. Uh, and for multi generational wealth. For the second 70 year old that needs to pull six to $7,000 a month from their liquid investments just to maintain their lifestyle, the investment should be completely different and yet our industry treats them the same. We have got to look at it from a holistic standpoint. I could not agree more with that, Jonathan.

Speaker C: I love that phrase. I want to go back to what you said earlier. Assets are tools, not trophies. Um, perhaps we need to revisit what that means. But I'm wondering, as sort of a follow up, do you see families holding on to assets because of ego or identity or legacy, even when those assets no longer serve the family's purpose?

Speaker A: I see that way too often. I spend actually most of my time, first of all, reminding clients that assets are not trophies. And from the standpoint of they're not just meant to be admired, look what I've accomplished. They are tools to be used. And the best way that I've found to describe this to my clients is to bring up Aesop's fable of the grasshopper and the ants. My clients really love the ants. They admire the ants. They relate to the ants. I've saved my entire career storing food for the winter. Right. What I have to remind them of though, is that in the Story in the fable, in the winter, the ants ate the food. The purpose of the food wasn't to be admired, to say, look what we accomplished. The food was meant to be used. And I think our clients forget that. Every dollar of their assets, the only value of it is how it's being utilized. It will be used by somebody at some point in time and it might as well be you because you earned it. Let's be intentional about how that's being utilized. If it's, if it needs to be utilized by the next generation, then let's not only pass on assets, let's pass on values, let's pass on education, let's pass on leadership, let's pass on training. So those assets will continue to be used for years after you're gone. Otherwise we see this. Sure, you see it all the time as well. They save, they deprive themselves. They have something that's great to look at on a statement, but then they leave it to the next generation without communicating any purpose to them at all. And those assets get wasted and squandered in a matter of years. All that hard work gone simply because they didn't understand the purpose of the asset and how it needed to be utilized.

Speaker C: All right, all right, I want to talk, and maybe this is going to get technical but useful still about uh, taxes and timing and how they create alpha. And you know, I'm thinking about like first, what should business owners be thinking about two or three years before a sale or transition? That seems like that's a good kind of a case of taxes and timing creating alpha. Explain what, what are we talking about here?

Speaker A: So whenever we're talking about alpha, we're talking about doing better, outperforming expectations. And one of the easiest ways is to outperform the S and P. If you have positive alpha in your investments, which not enough people do. And you can look that up on Morningstar if you don't know what I'm talking about. We want to outperform the benchmark based on the amount of, of volatility that we have now when it comes to taxes, again, when we pay tax determines how much tax is paid. And the more forward looking we can be to look at a transition, a sale of a business, a liquidation of a business, even just a retirement from the business into, into retirement, um, that's going to affect us from a tax standpoint. It's going to affect income. So the first thing we need to understand as we look to that is what is the liquidity? Need I joke with my Clients, I can create the best tax plan you've ever seen, but if it doesn't provide the liquidity and the income that you need, it's absolutely worthless. So when that sale is going to happen, how do we ensure that the founder, that that family is generating enough income and liquidity to make that sale worthwhile so they can actually get the benefit out of it? That's the first process. Then we want to look at ways to, to structure the, the actual transaction so that the timing of the taxes is as beneficial as possible. And in some cases there's no way to do that. We want to do the best we can, but if we are, if we're in a situation where there's going to be a high tax year, ah, at the time of that liquidation or the time of that transition, we want to make sure that we're trying to maintain or rather reduce taxes in all other aspects. I see. I've talked to way too many prospective clients who come to one of my seminars and they meet with me and they say, you're going to be so proud of us. We just paid off our house. And I'm like, great. How did you do that? Well, we pulled money out of our 401k to pay off our house because Susie Orman said we had to have a paid off house before we could retire. Okay, so uh, you paid off, you took $150,000 out of your 401k in the last year that you're working. When you're in the 22% tax bracket, you pay tax on every dollar of that to pay off a mortgage. What was your interest rate on that mortgage? 2.25%. That was the worst thing that they could possibly do. And it comes down to the timing. It's not that it was a bad idea, it was. Why did they do it when they were retiring? Why not wait even a year later? Their taxes would have been very different. Same thing with the sale of a business. We want to make sure all of your other income is as low as possible in that year so you're as efficient as you can be. If you can do an installment sale, if you can spread out the taxable gains from that, from that, uh, transaction, it will likely reduce your taxes. But we can't evade taxes. We want to make sure there's, we going to have to pay taxes at some point in time. Being intentional about it is going to at least help us find that tax alpha by paying less in taxes overall than we otherwise would have to.

Speaker C: Well, I don't Think that was too technical? I do think it was useful and I think it's a challenge uh, as we wrap up here like getting clients or potential clients to understand it's not about just trusting the advisor, it's about understanding the financial strategy. And you've put together a, ah, handful of books, ebooks that are really useful. Um, so I think it's what I like about it is that some of the, one of the ebooks at least is trying to educate the next generation so they're not left dark. Right. And you're educating founders and family business owners and high net worth individuals about the timing with the cash flow clock and your other tools. Tell us, just take us through some of the books that you've written and what like what are you trying to educate your, your readers, uh, about.

Speaker A: So for new clients we often get, get told one of two things or sometimes both. I wish I had met you 20 years ago. It would have made a difference. The second one is can you teach my kids these principles? And so that's why we wrote the Essence of Wealth to really get down to what is that essence? What's the education, what's the difference between a traditional ira, a uh, Roth ira? What's the importance of living within your means, those basic things to start to pass on those values. Our big problem, I think a big problem in the industry is the lack of education. Most advisors act somewhat something like this. I know not all of them, but I'm speaking in general terms. They say trust me with your money. Don't pay attention to what we're doing here because this is too complicated, this is too technical for you to understand. And m that's not true to your point. These concepts are very simple and we have got to be involved in this planning because it needs to be customized to each individual's needs. It's not good enough to just abdicate responsibility and accountability for your financial situation. You need to be involved. Now the financial advisor, we should be an expert, we should be a resource to give you guidance. But it's not something that you can just say they've got it covered, I don't know what's going on. We need to be uh, be involved in it. And that's why some of the other books that I've written, the Differentiators of wealth. Five concepts that most advisors don't talk about. Where we we hold our assets determines how much tax we pay. When we pay tax determines how much tax we pay. The importance of positive alpha in our investments. What does true diversification look like this is just education and it applies to anybody at any level. With our high net worth clients, when we are helping them make decisions, the impact is a matter of millions or more dollars over the course of decades and generations. For our lower net worth clients, the same concepts are applied differently and the impact may not be as grand, but it is so much more critical because those clients don't have the margin for error that the high net worth clients have. And these concepts, uh, apply differently for each person. I have talked to client to individuals worth hundreds of millions of dollars that do not know what asset location is. They know what asset allocation is, but they don't know what asset location is because they've got a guy or they've got somebody who's taking care of that. They haven't taken the time to educate themselves and really be involved in this planning and there's, there's no reason for it. That's why we have the books that we have. We talked about Essence of Wealth, differentiators of wealth. We've got a book, um, on the cash flow clock and then understanding the timing of our taxes and the timing of our risk. All of these concepts can help us be more involved and actually make our financial plans more functional and more meaningful for us and for the generations to come.

Speaker C: Gary, I want to appreciate you being on the show. You are a financial systems thinker for business owning families, not merely a wealth advisor. And you know, it's clear to me how you can help entrepreneurs and multi generational families design financial systems that support resilience, transition and long term purpose. And, and then rather than just looking at only on investments, you're focused on timing, liquidity, tax coordination and the M role that money plays at each stage of a family's business and each stage of a family's, uh, life cycle. So I want to thank you for being on the show. Uh, Gary Pricer with Stonebriar Wealth Advisors. Thanks Gary.

Speaker A: Thank you, Jonathan.

Speaker C: All right folks, I hope you got some value from this show and that you will listen uh, to other episodes. Check out, uh, Gary at Stonebriar Wealth Advisors and stay tuned for future episodes of the Disruptive Successor show.

Speaker B: This podcast is sponsored by myself, Jonathan Goldhill, and my company, the Gold Hill Group, where we provide coaching for growing companies. I'm Jonathan Goldhill and my purpose is simple. To guide entrepreneurial leaders in family businesses towards more freedom and fulfillment. I want entrepreneurs to get clarity around the changes that will make them and their businesses more successful so they can experience the same freedom. I've enjoyed in my life. Our proven practices challenge business owners to think differently about the their business and how they're running it and quite literally become game changers in our clients companies. Learn more@, uh, thegoldhillgroup.com website where you can schedule your free strategy session. Thank you for joining us on the Disruptive Successor podcast. If you enjoyed today's episode, please subscribe, review and share with a friend who would benefit from the message.

Speaker C: If you're interested in picking up a

Speaker B: copy of my book Disruptive Successor, go to disruptivesuccessor.com.