Webinar Transcript
00:00:00
Francisco Sirvent:
Well, good afternoon, everybody. Welcome, welcome. My name is Francisco Sirvent, if we haven’t met before. Nice to meet you. I definitely see some people on that I am familiar with, so welcome back to those of you that I have known for a while now. It’s good to see everybody here.
Today’s topic is something slightly different. Before we dive into it, I do want to do a couple quick housekeeping items.
First, this is being recorded. We are going to share this, and I will have some time for Q and A, but during the Q and A, just make sure not to ask anything that’s too much disclosure. I want to answer your questions, but I don’t want you to have to reveal anything too personal, obviously.
If you missed any of the other webinars we’ve done, we are getting them all up onto our YouTube channel. It’s easy to find — YouTube.com/keystonelawfirm. Go back and find any of our old webinars there.
00:01:49
Francisco Sirvent:
This one will be posted there as well. So if you like what you learn today, you can share it with somebody from that site really easily.
For questions, I would prefer to manage the sound so that nobody is blocked from hearing my voice. If you would send those in by chat message, you should be able to find a little messaging icon somewhere on your screen. If you hit that, you can type questions. That’s open the whole time. I’ll try to watch it and answer as we go. If I don’t catch something, I will make sure to have time at the end and go through those questions. Anything more personal, just reach out to me directly and I’ll speak with you privately.
I also want to mention — next week we have another webinar on the 25th. I’ll post the link to sign up for that if you haven’t already. We are going to talk about Keystone acting as your successor trustee if you don’t have somebody to do that for you and your family.
The Big Question: You’re Already Paying 1%, but Are You Getting Full Value?
00:02:54
Francisco Sirvent:
It’s a new service that we’re rolling out, so I’m excited to explain that in more detail next week.
So for today’s topic — the big title is: You’re already paying 1 percent, but are you getting full value for it?
This is something that has been a big focus of ours for many, many years. Back in 2012 or 2013, when we formed Keystone Law Firm and Wealth Partners, we offered everything under one roof: financial planning, tax returns, estate planning — all of it, right here in our Chandler office. That went amazingly well.
A few years ago, Keystone Wealth Partners as a separate portion was merged into another company. After that we reformed, got our feet under us, and now we have that financial planning arm inhouse again, under the brand Lifestyle Planning.
So today we’re going to talk about what I think should be included in the services you receive when you’re working with a comprehensive office that does everything under one roof.
Back when we first started — 12 or 13 years ago — we were maybe only the second firm in Arizona doing something like that.
Why Coordination Matters
00:04:18
Francisco Sirvent:
Now it’s a little more common. You see more of that happening, but it’s still not the standard. I love seeing that it’s gaining traction because I think you guys should start to expect this from your professional advisers.
The reality is that coordinating all this stuff is hard. Most people end up trying to get their lawyer to talk to their financial adviser and get everybody to talk to their CPA. One discipline says, “You’ve got to do your beneficiary designations with your adviser.” The adviser says, “We don’t give tax advice; go talk to your CPA.” Then the CPA says, “We don’t give trust advice; talk to your lawyer.”
You get all these people who want to help you, but they’re all in separate businesses and everyone wants to make sure they don’t practice outside the scope of their license.
00:05:17
Francisco Sirvent:
When it’s not all coordinated, you are the one left trying to figure everything out.
What’s really fun about what we do — we’ve worked with a lot of people who have done an excellent job being the master coordinator of all those pieces. But some people get to the point where they just don’t want to figure it out anymore. So you’ve got to look for a business that does it all under one roof.
As we review more and more people’s situations — people who are already working with an adviser — the first thing we do is review their entire financial picture. Their investments, savings, retirement accounts. We get a snapshot of the actual fees and costs being paid.
A lot of people are completely unaware of the real costs.
So I want you to walk away with a couple nuggets today. This is one of them:
If you walk away knowing how to ask the right questions, you will be able to figure out how much you’re actually spending.
Understanding the Real Costs of Investing
00:06:32
Francisco Sirvent:
There are a lot of costs — some easy to find, some not so easy — that come out of your investments or retirement savings. That money is going to somebody, and it’s not going back into your account.
The typical one is the advisory or management fee. More and more, this is a percentage of your investments being managed. We see these range from as high as 1.75 percent down to maybe 0.5 percent. It usually depends on how much you have invested.
You’ll also see something that applies to all investments that are in groupedup funds like mutual funds or ETFs: internal expenses, sometimes called an expense ratio. You don’t see this as a line item. It’s not billed to you. You don’t write a check for it.
It comes off the top.
00:07:49
Francisco Sirvent:
We see expense ratios anywhere from 0.04 percent up to 2 percent or more.
As an example, say a fund earned 10 percent in a year. They’ll report that 10 percent to you. But if they had a 2 percent expense ratio, the fund actually earned 12 percent. You just never see that extra 2 percent because it went straight into the fund manager’s pocket.
You should always be looking at your expense ratios.
You also want to look for revenue sharing agreements. These are hard to find because they are private contracts between an investment company and the adviser’s company. But they absolutely affect the performance of your investments.
Then of course — commissions. These are more rare now, but they still exist, especially with things like variable annuities. We just reviewed one with a 2.5 percent annual fee built in as a commission.
These Costs Add Up — And You Need to Know What You’re Paying
00:09:13
Francisco Sirvent:
When you add all these things up — these are all the expenses of investing that you’re paying. So when an adviser says, “Our management fee is 1 percent,” you need to ask:
Does that include the expense ratios?
Are there revenue sharing agreements?
Are there commissions paid to you by insurance companies?
Because all of that stacks up quickly.
And remember — if on top of those costs you’re also paying a CPA out of pocket, also paying for legal services out of pocket — all of that comes out of your financial security.
So be aware.
Why Switching Advisers Feels Hard (But Shouldn’t Be)
00:14:13
Francisco Sirvent:
Before I get into the whole package, generally speaking we’re looking at legal services, tax services, and financial services. You may feel like switching from your long time adviser is a giant hurdle.
And honestly, yes — there is some work to do. But here’s what it shouldn’t be:
“Their feelings are going to get hurt.”
This is your money. Your life. Your security. Their feelings cannot be a factor in your decision.
And you’re not telling them they did a bad job. You’re telling them they did a great job for a certain stage of life.
What a Fully Integrated Plan Should Include
00:16:07
Francisco Sirvent:
Now let me get into what I believe should be included when you are working with a comprehensive planning firm that handles legal, tax, and financial services.
First, tax preparation. This should not be something separate that you pay for elsewhere. It should be part of the service. And not just tax preparation once a year. It should also include tax strategy conversations before the year ends.
Second, legal maintenance. If you have a trust, you should not be paying a lawyer every time you need something updated. Beneficiary changes, asset updates, trust reviews these things happen constantly. They should be part of your ongoing service.
Third, ongoing financial planning. This means reviewing your investments, reviewing your retirement income plan, reviewing your tax strategy, and reviewing your estate plan all as one picture.
And the important part is that all three teams talk to each other without you having to be the middleman.
Examples of Coordination Problems We See All the Time
00:18:12
Francisco Sirvent:
Let me give you a few examples.
We see trusts that have been drafted correctly, but the financial accounts were never updated to match the trust. So the trust is perfect, but it does not own anything. That means the family will still go through probate.
We see people who have great financial advisers, but those advisers put beneficiaries on accounts that conflict with the language in the trust. That means the plan does not work the way you think it will.
We see CPAs who give great tax advice, but they have no idea what the trust says, so they do not understand the intent behind certain asset decisions.
These are not bad professionals. These are great professionals working in isolated silos.
Your plan only works when everything is coordinated.
How Much Should All This Cost
00:19:55
Francisco Sirvent:
Now the title of today’s webinar was You are already paying 1 percent, but are you getting full value.
What we find is that most people are already paying around that amount in advisory fees. But then they are also paying for legal work separately, also paying for tax work separately, and sometimes paying internal fund expenses that they do not even know about.
So in reality you might be paying closer to 2 percent or even more without realizing it.
What we want to show families is this. If you are already paying close to that amount, why not get the legal work, the tax work, and the planning all included.
You should get the full package for what you are already spending anyway.
What We Do Differently
00:22:08
Francisco Sirvent:
In our office, our legal team, our tax team, and our financial team all sit within twenty feet of each other. They meet. They talk. They look at your plan together.
When the legal team thinks a beneficiary designation needs to change, they walk right over to the financial team. When the tax team sees something that could save you thousands next year, they coordinate with both teams to make sure it is executed correctly.
You should not be the one trying to connect the dots. We connect the dots for you.
Most people who come to us are not having major problems. They have done a lot of things right. What they want is peace of mind that everything is coordinated and that nothing is going to fall through the cracks later.
Why Coordination Gives Peace of Mind
00:23:41
Francisco Sirvent:
Most people who work with us are not in a crisis. They have not made terrible mistakes. They are usually doing a lot of things right. What they really want is someone who can look ahead and make sure nothing gets missed in the future.
Because the truth is, most mistakes only show up when a spouse passes, or when someone becomes incapacitated, or when the family tries to access accounts and realizes a form was never updated. Those are the moments that cost families tens of thousands of dollars and months of stress.
When you get everything coordinated in advance, those moments go smoothly. You want your family to be able to grieve without legal or financial chaos layered on top of it.
Common Blind Spots People Don’t Notice
00:25:14
Francisco Sirvent:
One of the most common blind spots we see is this: people think their trust automatically controls everything. They think that if they have a trust document, they are safe.
A trust is powerful, but only if it owns your assets or if the beneficiary designations line up with it. I know I am repeating that, but it is the number one failure point we see.
Another blind spot is tax planning. Tax planning is not the same as tax preparation. Tax preparation is looking backward. Tax planning is looking forward.
Tax planning answers questions like:
Should we do Roth conversions this year
Should we shift income
Should we take capital gains while the bracket is low
Should we delay Social Security or take it now
Those decisions can save you thousands each year. But only if they are coordinated with your legal plan and your investment plan.
Why Most People Are Overpaying Without Knowing It
00:27:00
Francisco Sirvent:
Here is something else we see all the time. When we do a fee analysis for new families, most people think they are paying 1 percent. But once we include internal fund expenses, additional advisory layers, and third party costs, the real number is often closer to 1.6 percent or 1.8 percent.
And that is before legal fees and tax fees.
So you may be paying more already than what a coordinated team would cost you. The difference is in what you receive for those dollars.
If you are paying close to 2 percent but you are not getting:
tax prep
tax strategy
trust maintenance
trust funding updates
financial planning
retirement income analysis
then you are simply not getting the full value for what you are already spending.
What a Review with Us Looks Like
00:29:02
Francisco Sirvent:
When someone sits down with us for the first time, here is what we do. We run a complete tax review, a legal review, and a financial review. We show you what you have, what it costs, and where the gaps are.
If everything looks perfect, great. We will tell you that.
If there are issues, we will show them to you and explain what it would look like to fix them.
There is no pressure. There is no obligation. We simply help you see your plan in full context, maybe for the first time ever.
Sometimes people stay with their current adviser and simply take the recommendations to them. That is fine.
Sometimes people decide that having everything under one roof makes more sense.
Our job is to give you clarity, not convince you of anything.
Next Steps and Closing Thoughts
00:31:26
Francisco Sirvent:
So as we wrap up, remember the key takeaway.
You are already paying 1 percent. But the question is: are you getting full value for it
Everything in retirement and estate planning comes down to coordination. If your professionals are not talking to each other, then you are the one holding the bag.
If you want us to review your fees, your trust, your taxes, and show you the whole picture, we will happily do that. Just reach out.
Thank you all for being here today. I will open it up for questions in the chat. If your question is more personal, just message us afterward and we can schedule a private meeting.
Thank you again. I am grateful for all of you.
