Scott McLean - What do the Three Blind Mice have to do with Your Financial Plan?

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So we put together a free report that describes what an exit plan is and what you should know. You can get it free by texting exit plan with no spaces to 44222. That's exit plan to 44222. Again, text exit plan to 44222. Welcome to the Exit Coach Radio show, the show for baby boomer business owners who are looking for cutting edge information as they plan their 3 to 10 year business succession and exit. Every week we interview top professional advisors for their best tips, strategies, and precautions. So you can be well planned. And now here's your host, the exit coach Bill Black. And thank you for listening today. I really am happy that you're here with me. We're covering all the bases today. My next guest is Scott McLean from McClean Tax Advisory group in Waretown, New Jersey, and he has an interesting book out that we're going to talk about called Three Blind Mice and how the financial planning process can lead retirees into trouble. So let's get into that, Scott. Welcome to the show. Thanks so much for joining me today. Good, thank you. Scott, tell me a little bit about you and your background in McLean Tax Advisory Group before we get into the topic of the day today. I got in the business in a couple of years ago. And uh that was 19. 82 And then start practicing in '83. So it's been a couple of years. We, uh, yeah, a couple of years. And you can always keep learning as I hear from your last uh gentleman on the line and a lot, a lot of stuff out there, a lot of cool things are happening. We took the idea since I got in the business, the more you're in the business, the more you keep learning, and the more you keep learning, the more you don't know. It's amazing. You know, you don't know what you don't know. And the idea came with the book, which was uh earlier, 2008. And then, of course, uh taking those concepts and doing workshops, seminars, working with elderly people and uh clients. And now pretty much uh having a blast, although this has been a uh a predictable, reliable source of what's happening right now, although the corona wasn't, but um just working with clients in the financial area with lawyers and accountants. And so we, I love the business. I, uh, don't see myself quitting even though I'm an older dog, but I love it. Well, you know, they say that change is your friend if you're a professional adviser of any type, and certainly we're in the midst of a lot of changes, a lot of confusion for people, whether it's how they're going to survive this or what the government's doing to help or what tax breaks there are coming forward now. So a lot going on and Um, you've written this book called Three Blind Mice. Uh, let's, let's start with the obvious question. Why did you call it 3 blind mice? Basically, the titles, I hope sums it up is how today's financial planning process leads your money to a mousetrap. And the reason why I called it that was one simple area. No one's talking to each other. It's a totally a blind hole. In other words, your tax guy does his taxes and then they do the taxes they deliver them to the clients, to your audience and uh. And your financial guy, well, he, or gal, they, of course, invest money and hopefully they make a profit. Maybe they have some losses to carry forwards. And then you have your lawyer, and then your lawyer does the will, power of attorney, living will, trust, protecting the assets with the estate. My question for your audience, they need to ask themselves this is when have all three of those professional entities gotten together and talked to them about how, how each one of those specialists work together. And I think you'd agree with me. Do you think that ever happens? I know for a fact it's very, very rare because all the advisers seem to be putting out fires as well. And we've been doing this for a couple of days now, as I said in the beginning, since 1982. And when I really honed down my business, what I find out is when the financial advisor does the investment planning, I can tell you if he or she looked at the tax returns, maybe they should be in different types of vehicles. When the financial advisor looks at the taxes and maybe there's some lost care forwards before the end of the year, maybe they should sell some winners and, and, uh, beef up their tax returns, or maybe when the advisor speaks to the the the accountant or the CPA and when they say how can we strategize to make this better? Did it, does it ever happen? And then finally, when the financial advisor, um, when the advisor, or I should say salesman, if they're just uh insurance only or whatever they're uh selling, when they do beneficiaries, I guess the question is, I'll even ask your audience and they can raise their hand up real quick at their home. When they do the beneficiaries, do they ask, by the way, who does the money go to? And the answer is usually, well, it goes my wife, it goes my husband, my goes my significant partner. OK, then who does it go to? Well, that question usually isn't asked, but if it is, goes my kids. OK. Well, most of the time, another question isn't asked. Do you have special needs children? How are your children's relationship? Did you loan your children any money? Do we have to do it, do we have to fix the books before something happens? Or is there gonna be chaos and aggravation and fighting, infighting upon your death? Or do you want to look down from heaven and say, I did the best I could to make sure that when I pass away, all the goodies, all the money is gonna go almost as best as I could. And obviously, this needs to be looked at. On a yearly basis, not on a simplistic one-time basis, and this is what was so important to our clients. We wanna ask those questions every year. By the way, how's your kids? And sometimes you'll find out, well, my daughter just had a, a child. Oh great. How's your, how is he? Well, he has Down syndrome. Oh wow, I'm so sorry, but, OK. Well, if you said that to me and you were my client, that tells me I need to, perhaps we need to open up a trust. We need to change the beneficiaries. We need to make sure that that child with the Down syndrome special needs is taken care of, or maybe you have a child. That is doing things they ought not do. Maybe they get $100 and they spend $200 or maybe they're drinking and drugs or something, and they need to put the money into a trust. You see, when you're blessed and you make money, you want to preserve it and protect it for all intended people, and that's the reason I really dove into this book so in depth, and I have each chapter laid out, or I say each module, how can a client take one module and improve their portfolio? And this was also written to help financial planners to say, look, I need to ask these questions. It's a good point. And you know, like, like you, I started in the early 80s uh in the financial services business when they really, um, you know, the CPA was the tax guy, the attorney was the legal guy. The the insurance guy was the insurance guy. The investment guy was the investment guy. The people really operated in silos and they tended to go deep in their silos. And then as the silos came down due to licensing changes and availabilities, all of a sudden people started doing more and more, but they didn't necessarily go deep on some of these topics you're talking about. I think it's critically important and based on your book. Um what you say is that you spend a lot of time with your clients on the educational process before they become a client. How important is that? And, and give us some examples of, you just gave us a couple of examples of the questions you might ask, but give us some examples of how you would do that. So when I meet people, um. Obviously, they think they are coming in to invest with me. And they want to or they wanna maybe put their money in some safe accounts, maybe they'll put into some guaranteed accounts. And 9 times out of 10, the questions I ask them. By the way, how's your investing been going over the past few years? Everything's going, is everything going well? What do you like? What don't you like? What could you alter or change? The, the basic questions that uh we've done uh since our career, right? But then the next question is gonna be great. Let me, let's talk about your, the difference between a, uh, advisor Aversus advisor B. Let me give you an example. Let's say I am a jet pilot fighter pilot. And you come into me and I've been a fighter pilot my 25 years in the service. And as a fighter pilot, I'm a good investor guy and I'm unbelievable. Well, My definition of aggressive may be different than your definition of aggressive. Do you follow me? In other words, to me, if I fly a fighter plane every single day, and then, of course, now I'm retired and I go flying on the weekends, my definition of aggressive is not, that's not very aggressive because I'm used to it. So when a client says I don't want to be aggressive. There's a total separation between the definitions of words. In the Greek, I studied Greek in college and one of the areas you have a word for love. You can have 5 different meanings for the word love. What does the word aggressive mean? You're aggressive may be totally, totally counterintuitive to my definition. So what I need to help our clients understand what is the definition of aggressive. Your definition of aggressive maybe I like Treasury bills versus my, my pillow. You know, so we need to understand those words, and that starts the investment process of where do we put monies or maybe I'd like to get a fixed annuity paying 4% guaranteed fixed, no fees, no cost, great company, a trip you know A plus company, great versus I'm gonna go in the stock market and buy an aggressive, uh, aggressive stock. So it really, I really need, and I think all advisors, as, as you would agree, you need to know your client. It's not what can I sell you, it's how can I help you? And that's why clients are diving and they're calling us all the time, Scotty, how can you help us? What have you been doing? How do I do my portfolio? Is my portfolio OK? For example, for example, we're facing right now. If we, if you read the book, I talk about in the area of the stock market history. History shows a lot. If you believe history has a way of repeating itself more often than not. When the price to earnings ratio is between 20 and 30, Albert Shiller went back and did a study over 200+ years. This is on the walls. It's written. And I've been telling our clients we're looking for a left hook, and it could be much worse than it already is. And what I'm saying to our clients, say, let's get safe. Let's pretend. What's the definition of safe? I clarify the definition of safe versus the definition of risk, versus when I was in the business and, and uh with the big company. Hang in there, don't worry, it'll come back. You think a 65 year old wanna hear that crap? And they see their money plummeting, so we need to educate them and walk them through, I say, walk them through the valley of shadow of death, so they don't fear. They know the tools they're investing in. They know what's happening. So if the portfolio is down, it's not down 50%. Maybe it's down 15% because a lot of tools are in this in this less risky or safer vehicles, and then the others may be in the areas to offset, of course, go up and would be the growth areas. But there's a way to communicate that a lot of different ways and I believe speaking over people's heads, the last person you had, brilliant guy. Sounds like he really loves his clients. I was impressed the way I was listening on your show. But those are fancy words out there for a lot of normal people when you're doing M&A's. And so. And I think, uh, um, I think what's happening in my world, our world, because I'm a one on one guy, or when I do 401ks, the plannings of some types of uh discussion of money. How does it work for them? Not the portfolio. How does the portfolio work for them in case there's a 50% correction as history indicates, we haven't had the third drop, and history shows in the bear market, which I believe we're in since 2000. I believe we're, we're headed for a little bit more uh of a uh a stomach ache. And I want my clients to know that. So you know, the problem with communication these days is it's it's just kind of like going to the doctor's office. The doctors, they're required to be in such a hurry. Sometimes they don't even look up from their iPad, you know, to look you in the eyes and communicate, and it's, it's like that in a lot of cases too with the professional services areas and you work with a lot of clients. You have to have a lot of clients if you've been doing it as long as you have. How do you work with so many clients and keep in communication with them? You know, I probably one of the best things in my practice is, uh, is not me, I would say it's my staff. Uh, my staff keeps people together. We have a whole book scheduled out. Our clients get touched, whether I have, uh, George as a CFP in the office, and he owns this, the brokerage area. Uh, each one of the young ladies and young men in my office, we have a follow-up process, whether it's a quarterly phone call. Whether it's an annual sit down, kneecap to kneecap or over the phone, and lately, it's been over the, the uh internet, the Zoom or the Skype and stuff. But we want to stay in touch with them. So that's a great question. And because just because you got a lot of clients doesn't mean you, you have to treat them like, what can I sell you? Again, the philosophy in our firm has been, well, how can I help you? How can I guide you through this, uh, jungle of investment choices? And then the jungle of how does the tax return work in in coordination with your investment portfolio, which works in coordination with your will, power of attorney, living will. And I think those tools have to be discussed on a yearly basis. For example, my phone call this morning, right before our, our call today, um, was my father, I just got corona, I just got it. He's in the nursing home, and Scotty, it doesn't look good. This was a call right before this discussion right now. I'm saying, OK, the good news, I know where he's going, he's heading to heaven, we're good to go. Good news. I know all the affairs of his finances are in line. Why? Because every single year I ask, by the way, let me ask about your sister. Do you want the money to go to the trust, not your sister? Yes, because she has a spending challenge. Great. We're gonna discuss it every year. Uh, we're gonna discuss how is your health? What's going on? We're gonna discuss, do we have the updated power of attorney, living will, um, because now he's facing some, some challenges today. And, and of course, we need to find that not just selling investments, any monkey can go to buy a couple of mutual funds and you got a good, good to go, right? But that's not the, as far as I'm concerned, that's not how you take care of your clients. That's why I think we have. Such a tremendous retention rate, probably one of the best in the industry in, in our area, I would say, is because we do spend so much time and the girls are trained when they call and what questions to ask. And if somebody calls in and they like this call we just got, they know exactly what to do, what to have. I get a phone call today, uh, uh, a texting message. One of our clients just had the 50th anniversary. I didn't know we had a beautiful process set up that we send clients uh a, a anniversary present. I'm thinking I'm getting a thank you. Why? Because the process is put in place way ahead of time and the process is put in place when I obtain a client. Are we on the same philosophy is my definition, your definition? I need to understand their definition of conservative, moderate, or risk. If I don't know that, I don't know my client and you know, as a financial perspective. If you don't know your client, you shouldn't be working with them. And, and I think anybody who works with a financial guy or gal, or they go to the bank and drops their money the first time they meet him, I just call them double dumb. They need to understand the philosophies of that, of that uh financial outfit they're working with, versus our team will take care of you. Don't worry, bull crap. And I can tell you that after 30, now going on 38 years, that is all rhetoric. It's not the truth. Scott, great, great tips and advice, and you know, listeners, you can really tell when someone cares for their clientele and really cares about what they're doing, effectively communicates and really this is, this is more than a transactional relationship. It's a, it's a professional, you know, caring relationship. So what I'd like you to do, listeners is, is go to on your web browser, go to 3 blind mice Book, spell out three T H R E E blind micebook.com, and, and read what Scott's put together here. He really knows what he's doing. He's been doing it a long time and he really cares about people and you can tell he loves to communicate. So Scott, I really appreciate you coming on and I hope that our listeners will take advantage of that. And you know, I usually in a first interview like this we just barely scratch the surface of everything that you know certainly in 20 minutes we don't even, it's not even a glint of what you know. So I appreciate you coming on and I hope that you'll reschedule and come back on in the future and and help our listeners learn some more strategies and tips about their financial future. Thank you. Thanks for letting me join you, and I appreciate it. And if they read the book and it's hard to hard to understand, give it to their adviser. And I'm not being ugly, but I'm, I'm not any better than them. If they give it to their adviser, there's a lot of tips and traps to avoid, and they will help their adviser, I promise you. Thank you for listening to Exit Coach Radio. 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