Your Life Policy: Involving The Rest Of Your Financial Team

Your Life Policy: Involving the Rest of Your Financial Team

We’ve got an incredible guest on the show. He’s here to talk with me about another key conversation to prepare for as you start implementing the perpetual wealth strategy, which is conversations with your accountant, your CPA, your attorney or CFO, depending on your situation. John Stewart is one of our wealth strategists here at Paradigm Life and is a deeply experienced entrepreneur. He has many years of experience working with financial professionals as an entrepreneur, an investor, and someone who actively utilizes the perpetual wealth strategy. He’s a wealth of knowledge when it comes to talking to these financial professionals about this strategy. He’s going to share his insights and advice on how you can have an effective conversation with the other financial professionals on your team.

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I’m here with my good friend, John Stewart. We’re friends before John came on to Paradigm. It’s been an honor to know him over the years. He has a wealth of knowledge. He’s been in financial services in some capacity for decades. I wanted him and his expertise because he had such a breadth of knowledge relating to the types of individuals that we get to meet with, your clients. When it comes to the other financial professional relationships that you have, there’s no one better to talk about this. Because John has had extensive experience helping other financial prevention professionals understand the perpetual wealth strategy at a level where they know how to incorporate it into your financial life. Help other financial professionals like a CFO, a CPA, a tax attorney, estate planning attorney understand the different tenets of the strategy. John, welcome. Why don’t you get into maybe a little bit more of the details of your background?

Speaking the first time we met, Paradigm Life was non-existent at that time. At that time, I had multiple companies. I had C corps, S corps, LLCs, trusts and the different investments and companies I had. I think that gives me a good understanding as I started to implement the perpetual wealth strategy and explain it to my accountant and attorneys. That’s benefited me on this side because we have clients that come in as sole proprietors, LLCs, and S-corps. Every one of those is such a different dynamic. Not only do you have the different corporation structures, but then their finances and what they’re doing with it, the income and their investments. It can all be different and unique. A lot of the questions we get can’t be answered as a blanket Q&A, which makes it fun and interesting every day.

Every situation is unique and dynamic. It requires a sense of customization for every case. You look at though the financial world and how most people are doing the same thing financially. It’s similar in the professional world as well. We’ve had great professional relationships and partnerships with other groups, Tom Wheelwright and WealthAbility, being one of them. It opened our eyes to the opportunities that exist for business owners and investors, which is always going to be changing because laws are always changing. The ability to have conversation allows us to explain a different approach to personal financial strategy, which is why you guys are reading right now as clients. Because the idea is to utilize unique insurance-related products as the foundation of your financial life, but yet it’s not the only part of financial life. John, talk about the ways in which we set up a strategy, and typically what are the exchanges that we would have with a CPA? What’s an example of that?

A lot of tenets you step back and look at where were we start. We always want to look at the tax implications. Sometimes a client may come in with a particular situation that a few tweaks to how they’re taking income or how they’re currently doing different deferred things that a CPA has maybe set up with their situation but now it’s changing. We always want to look at that. Tom Wheelwright said, “Before any investment, you want to start with what are the tax implications?” Because you can take a great investment with the wrong taxes for your situation and turn into a 401 and vice versa. That’s one where we want to start and look at where you’re at and then implement the perpetual wealth strategy into it.

I was talking with a client and his CPA advised something over here. I showed him a few things with where his taxes were at, what we were going to be doing and said, “Here are some talking points to go down and talk to your CPA.” Sometimes like any profession, there are phenomenal CPAs out there and there’s some that check the boxes just like any industry. It can either be talking points to go back and with this individual, his CPA was bringing up his attention of look at how much money you’re saving. What I was showing is how much that was costing him in the future. It was a staggering number.

That’s typically the narrative. What could you do now to pay the least amount of tax? There are some easy ways in which you can do it. However, with most of them, there are trade-offs. The trade-off is what are you giving up in the future for the benefit? That’s a conversation that I would say most don’t have because the narrative is that in the future, you’re going to have a lower income, you’re going to be in a lower tax bracket. That’s all speculation. Because of inflation, the dollar isn’t going as far. Therefore, you’re going to need more in the future. Who wants to be in a lower tax bracket when they want to not work as much? Most people want to be in a higher one because they’re making more money.

I had a client with an interesting perspective there. We were talking and I said, “Do you want to pay taxes on the seed or the harvest?” He laughed and he goes, “On the seed, but most financial plans out there make us sound like you’re going to have a few years of drought and your harvest going to be poor.” You have to pay on the harvest because of that. It was an interesting twist there. Whether it’s talking points that we give for you to go back maybe and double-check. Sometimes we have a CPA or an attorney on the call asking questions and double-checking.

Because for a lot of us, when I first heard of this, I was the only one in my circle of friends that knew anything about it. My CPA knew nothing about it. Not only was I learning the process, I was trying to teach my professionals around me. There was a lot of back and forth in getting this. That’s one of the bridges we want to assist our clients within that gap. Be a resource. We’re not CPAs or attorneys. There’s a lot of that we see and we can go back and forth and help out our clients and professionals in getting the answers.

That’s where we like the word strategy. Because strategy implies that there are many moving parts, but yet there are many ways to make something work and it successful. It requires different aspects of personal financial strategies. Strategic wealth management is not just using the perpetual wealth strategy, but it’s also using the expertise of other financial professionals like your tax professionals. Because there are thousands of pages of the tax code and there are lots of opportunities for business owners. Speaking of business owners, what would you say are good things to practice when it comes to communicating with your financial professional, your CPA, your tax attorney, your estate planning attorney? What are some good rules of thumb to use when you go about doing that and also involving Paradigm Life in the process?

Wealth strategies are not a product or an investment, it’s looking at the whole picture. Share on X

The biggest thing is a lot of people don’t talk about everything to all their professionals. Even sometimes, we’ll start on a plan and we’ll get going in the cloud and come back, “I didn’t mention this over here.” Those little things can change everything. As we look at this, if the CPA has some unique strategy or the attorney that you’re doing over here, we want to make sure that everything we set up compliments what’s already been done or vice-versa. That conversation with the CPA on, “Here are some of the benefits. This strategy may not be needed or do you have anything that can complement this?” I think it’s moving as our wealth grows, as our business grows, our investments, so as our strategies. Wealth Strategy is not a product or an investment. It’s looking at the whole picture. The biggest piece most people are missing is seeing how everything they’re doing fits together.

Let’s talk about some specific things to note. They’re going to be specifics. There are more. That’s why we definitely would recommend you have a good conversation with your CPA about what you’re doing as well as involve your wealth strategists because they can fill in any potential voids. Link up with the CPA or tax professional to ensure that going forward, there’s a relationship there. The first thing to understand about the policy which we’ve discussed in a previous episode is usually after-tax contributions and then you have tax-favorable growth in the future. You’re not necessarily having the anxiety of what’s going to happen to a tax law or tax brackets in the future. However, that’s the fundamental piece. When it comes to the communication to a CPA regarding loans and what you’re using policy loans for, how have you gone about doing that in the past?

A CPA is always preparing for the audit. With any CPA or attorney, they want a paper trail, like the IRS to be able to protect you and make sure that there’s not this void. The biggest thing there is educating clients as we’re taking business loans or investment loans, that we have a proper paper trail. They want to see an amortization schedule, a payment schedule, some note if it’s a business taking, the corporate minutes to make sure that everything’s in line the way it should be.

Usually CPAs, they’re keeping it ongoing balance sheet and financial statements so they can use the proper allocation to understand that. Because loans are private, that’s where there has to be a high degree of communication, so that the CPA’s aware of exactly what’s going on, looking at some of the expertise that our wealth strategists have. The first time you’re using it were business purposes or an investment purpose that you involve them as well as your CPA. Let’s talk about the other uses of a policy when it comes to business. Because the other thing that we’ve seen quite a bit, and I know you have experience here, is the more common uses of insurance for business. Whether it’s a cross-purchase agreement, a buy-sell agreement, a stock redemption or keyman, talk about those general things. CPAs, CFOs, the professional world understands the common uses of insurance, which is more for protection. We’re talking about different types of strategies, but still, you have that protection component. Talk about those general uses and how those relate to the perpetual wealth strategy.

A lot of our business owners and investors, they come in looking at the perpetual wealth strategy on a personal side with the access to capital and the growth there. The beauty is we can use the same thing on a business side. The business can have its reserves. It can have everything inside. At the same time, facilitate what you’re talking about with the death benefit. We can take something everybody should have with the keyman or take some of the other benefits you have there. There’s also 162 plan, which is similar to a 401(k), but we can use insurance instead of a market-based account. The beauty is the same thing we do on a personal side. We can give the company the same liquidity and reserves and fulfill the coverage side that most CPAs are familiar with and bundle them together.

You’ve talked to a number of different CPAs. Sometimes we referred Tom Wheelwright’s book, Tax-Free Wealth, to help with that conversation. The importance of having these conversations sooner than later, I want to reemphasize it because it can make a huge difference. It’s not necessarily that CPAs are unaware or completely oblivious to what you’re doing. Starting that conversation sooner than later will allow for easy fluid conversation to happen when the appropriate time comes when we’re talking a transaction. John, is there anything else you want to add regarding what you’ve seen with other professionals that would be important to know?

Tax talk is always fun. An important part to involve these other members in our life. There are many different benefits looking at the big picture, looking at everything and how it fits together. As we do that, there are multiple changes that happened with someone’s wealth strategy. The biggest thing is to get in and we bring in the professionals we need to facilitate.

One of the things I’ll mention before we wrap up is, if you are in between CPAs or you are looking for a CPA or an estate planning attorney or a business attorney, we have a great strategic network. Feel free to reach out to you’re a wealth strategist to get an introduction. John, thanks a ton. This has been awesome. This is one of the most important conversations you can have when it comes to these professional relationships you have in your life. There’s no one better to talk about it than you because you’ve had much experience there.

Thank you.

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John, thanks for being here with me and for sharing your expertise. Thanks to each of your clients and readers that joined us. Communication with your financial team is a vital part of this strategy and we’re happy you’re taking the time to prepare for these important ongoing conversations. Head over to ParadigmLife.net for all of the content related to this episode as well as other helpful resources you can leverage as you start having these conversations. We’ve got two great guests joining us next time as we talk about the ins and outs of how to best manage your policies with our tenured well strategists, Chad Hanson and Will Street. Whether you’ve started a single policy or have multiple family or business policies in your strategy, Chad and Will are going to share best practices, tips and advice for ensuring they continue to provide maximum value to you, your business and family. We’ll see you next time.

Important Links:

• Tax-Free Wealth
• WealthAbility