The SHP End-of-Year Financial Checklist for 2023 – Ep 046

Derek Gregoire: Welcome, everyone, to another edition of the SHP Retirement Road Map, brought to you, of course, by SHP Financial. I’m Derek Gregoire, joined by two other partners here, Keith Ellis and Matthew Peck. And we’re excited about today’s episode because we’re really going to look at a couple of different areas when it comes to financial planning. I think this is a good reality check or a checklist as we hit year end, beginning of year of 2024 to really go through what a true financial plan is, what a true financial planning company does for you.

And we’re also going to give some shout-outs to our team here at SHP because, again, the three of us started this 20 years ago. We had no idea we’d get to this level. But there’s so much that goes on behind the scenes that we’re so proud of. We’re proud of it for all the families of SHP, all the clients, all the folks that work here, watching them grow their careers and their lives. And I think it’s worth sharing just so everyone out there can know exactly what goes on, a little bit that goes on behind the scenes. Maybe we won’t reveal everything. That would be a little scary, but a little bit of what goes on behind the scenes here at SHP. So, with that being said, I’ll welcome Keith and Matt to the show. Everyone good?

Matthew Peck: Fantastic. I was going to say, I mean, I think today, too, is a chance to just reflect. I mean, this is the time of year that you do reflect on all the things that happened, that was accomplished, all the good news, all the bad news, all the 2023 kind of all wrapped into one. So, it’s nice to put a little bow on it, no pun intended, and happy to get going.

Keith Ellis, Jr.: Yeah, I mean, kind of a message at the holiday party we just had with our team is, we’re here to celebrate you. But Derek, you’re right, in my opinion, some of the best part of doing what we do is seeing our team members, families grow. They’re buying a new home or having a child. To me, that’s very rewarding as someone as a leader here at SHP. And that was the message that we had for them on that day.

Derek Gregoire: Yeah. And then that same day that we had the Christmas party for SHP, we also, myself and Laura, who’s on my particular team, went to Natalia’s wedding, who’s on our team. So, we got to see a beautiful wedding in Scituate, had dinner after, was kind of low key but really good time, really good quality people. So, we love seeing the celebration of how people just grow and buy houses and have children and get married. And it’s like, wow, it’s cool to be a part of that. So, I think the main thing we’re going to look at– Matt, oh, sorry, you want one thing just to throw in this?

Matthew Peck: No, I was just laughing about, again, the time of season above eggnog and Christmas vacation and whatnot. Sorry, that’s all.

Derek Gregoire: Yeah, home alone.

Matthew Peck: Yeah, right, exactly.

Keith Ellis, Jr.: Do you ever want your kids to say, again? Come to my house. Christmas vacation, again?

Derek Gregoire: Yeah, exactly. So, 2023 kind of as we recap, there’s, I think, on the outside, if I was someone who didn’t do this for a living for 20 something years. And I always assume, oh, your financial advisor, I mean, they just pick stocks and mutual funds and sell you annuities and that’s their job, right? And I think what really, a lot of our clients over the years know that we try to be a little bit different. And I think we are a little bit different here at SHP Financial.

But one of the things we look at, as you go back to last year and we get questions, to be honest with you, from clients here and there, is we noticed you guys grow a lot and you hire a lot. So, I’m counting, this year, we had 11 new team members in 2023 added to the year. And even the three of us were looking at the stats like, wow, that’s a lot of new faces and a lot of great– and the amazing thing, you look down this list, it’s amazing. Yeah, we have CFAs and folks that have been in this exact business for 15, 20, 20 years plus. We have amazing people that have been in different careers, have helped us in different roles here.

And so, I think, when you look at a true financial planning team and we’ll go through that, Keith, but think about how much goes on throughout the days, the years, the months inside SHP Financial. And as we grow, the one thing we don’t want to lose is that personal touch as well as the quality of service and product that we deliver. So, as we grow and we’re bringing on $200, $300 million of new assets in a year that has to be serviced, we want to make sure that they’re getting top quality people behind the scenes, doing planning, trading, RMDs, portfolio management. There’s so much that goes into it.

Keith Ellis, Jr.: And that’s just it. If all we did was portfolio management, you don’t need a team of 40, 45, 50 people to do that, right? It’s everything else that goes into building a holistic financial plan, looking at tax strategies, making sure estate plans are titled correctly, required minimum distribution. So, you’re right. People come in and ask me all the time, “Oh, you guys have really grown.” And what I love to hear on the backside of that is, but I feel like the product that you guys have, like you said, or I feel like you guys are still just the same people that you were when I met you five, seven, ten years ago. That’s so rewarding to me because you’re right, the last thing we want to lose and I think it’s something we’ll always have, is that personal touch, both with our team members and the families we serve.

But then also, like I said, we have to have this team in place to execute on the promises that we put forth because there is a list of things that we have to do and that we do do for our clients or at least explore for our clients. And a lot of it is timely to the end of the year. So, right now, as we do approach 2024, there are so many things we’re tightening up before the end of the year, so many boxes that need to be checked. And it’s all hands on deck to just get it done.

Matthew Peck: Well, as I say, even before we get to some of the more pressing issues that have to be done by New Year’s Eve, once that ball drops can change, yeah, when it comes to the IRS at least, which is, I think part of the reason why we’re still here 20 years in is just, and using kind of Belichick’s mantra of just continuous improvement. I mean, I love the idea of his mention about the 11 new hires and the talent that’s there, but just always trying to get better, trying to do everything well and then do it that much better the next year, the following year, whether it’s portfolio management, whether it’s a tax planning, where we brought in a new software this particular year called holistic plan just for people that are in the know.

And so, now, okay, let’s take our tax planning, let’s take that to a whole new level. Let’s take our portfolio management with the CFA, take that to a whole new level. And the customer service or just that relationship that you guys were talking about earlier, let’s take that to a new level just to make sure people never feel forgotten or never feel like they’re just a number. And I think those two things, like who we are as people, as well as with that drive of just to make ourselves better and better. I think those two things or just that mix is kind of what makes us who we are.

Derek Gregoire: I was on our website recently, which is SHPFinancial.com, and looking at some of the– even like all the testimonials that our clients went out of their way to share, that’s rewarding, too, to see the work that we’re doing is paying off for them and I think, for us, that’s more of, I think, it’s important to not sound like, “Hey, we’re bragging about SHP,” but at the same time, it’s we believe in what we do and that’s why we keep growing because we feel like people, especially like you, we’ve seen so many folks that come into our office for the first time and they’ve worked so hard over the years. They’ve raised a family. They’ve put kids through college. They’ve grinded it out and they’re getting close to that. They’re either close into retirement.

And we want to make sure that they’re not getting that half plan, that one-quarter plan, right? And I know that goes on because every time we see someone that comes into our office for the first time, when we go through a fact finder and get to know them a little bit, they end up really just having a portfolio. So, if all we do was portfolio management, we just have like five people, four people managing the portfolios and that would be the whole team, that’d be the end. But it shows you how much more it goes into it.

The portfolio, think of like five different pieces of the pie, that’s one piece. Portfolio management. You also have to worry about income, cash flow planning. You have to worry about when to take Social Security. What about taxes? Do we do Roth conversions, tax-loss harvesting? I can go on for three hours in every area.

Keith Ellis, Jr.: Exactly.

Derek Gregoire: Health care planning, Medicare, Medicare Part B, long-term care, how do you do Roth conversions where you don’t go into a new Medicare bracket, but also stay within the right tax bracket, legacy and estate planning. So, there’s a whole lot that goes into it. So, think of like I was kind of making some notes on our team here. We have an operations team that kind of helps run the show, make sure everything’s getting executed, working on hires, making sure all the goals are being kept up to date. Michelle leads that team with Mallory. There’s a whole group there. Then we have, obviously, the portfolio management and investment committee. Matt heads that up. But how many analysts are there, Matt? Four?

Matthew Peck: We’re five, including myself.

Derek Gregoire: And one of them, CFA?

Matthew Peck: Correct.

Derek Gregoire: Which is obviously not an easy thing to get. We have business development team. So, when we do these radio shows, podcast, TV shows, luckily, people do call to come in for a visit and we have folks that take those calls and schedule those appointments and work on our schedule. We have a marketing team that Evan and Jamie kind of put together and make sure the podcast is done right, the radio show, edit all our mistakes so it sounds halfway decent when it airs. All the event planning, like Jamie does.

Matthew Peck: That sip and shop, I mean, people just were so happy with that. I mean, it helps support local businesses. I mean, as I said, each one of these topics we can go and deep on, but I just want to quickly shout-out Jamie and the whole team for that sip and shop.

Derek Gregoire: Yep. And then you have the Advisory Solutions team that basically, we have plenty of advisors that work kind of with the advisors, so Keith, myself, Matt, Mark, Joe, Chase. Who am I missing? Pat. So, they all have their own teams of advisors that help support their book and so forth. And then we look at the planning team, so headed by Nick Nelson. Nick Nelson and his team, they’re constantly looking at, okay, when we’re doing a review, when we have a new client coming on board, what planning opportunities make sense? What doesn’t make sense? Does a Roth conversion make sense? Why? Does tax-loss harvesting make sense? How do you take money out of your portfolio when you retire? You don’t just randomly pull money out. There has to be an exact plan that goes with it.

So, as you can see, if I look at these 11 different folks that have entered the team in 2023, all of them are in different roles. Some are on the investment committee, some are on the operations, some are on the Advisory Solutions. All of that’s there, again, not so we can say we have the biggest local company in town of 50, whatever it is, but it’s more to make sure we’re supporting and doing exactly what we say we’re going to do and living up to our promises.

Matthew Peck: Well, that’s the whole idea, too. I mean, again, maybe it’s back to who we are as people, but I think from day one, just as I say, living up to our promises, do what you say you’re going to do. I mean, at first, that sounds kind of cliche, or you think that be common, let me put it that way, but very often, it’s not. It’s whiz-bang marketing or whatever that is. And then people’s experience after the fact doesn’t match with what they were expected or what they were told. And so, you need to hire for that. I mean, I think, and Keith, you were mentioning, but when it comes to all the things that go into a financial plan, especially when it comes to year-end things, I mean, something like required minimum distributions or RMDs, just for everyone to know, that’s the amount of money that you have to take out of your IRAs by the end of the year based on certain age.

And if you don’t, it’s like a massive tax penalty, right? So, if you have a financial plan, that’s one thing. But then if you do not have the support behind the financial plan and something like that gets missed, then you’re looking at a massive in excess and very excessive tax penalty. So, it has to be done. And I just really hope that everyone is getting it done for their behalf. If not, they should maybe give us a call.

Keith Ellis, Jr.: And I also think, like, we’re talking about today’s landscape, right? But if you look backwards over the last five years, there’s been four major laws passed. Going forward, there will be other legislation that most people out there that are retired don’t want to keep up with. They’re out doing what they should be doing, having fun, being retired, and living a great life because they put so much time and work and effort to save enough money to get to that point. That’s why they rely on a team like us to look at the law, digest the law, and then help plan with or against that law, depending on what it is. There’s just so much that can be done going forward for folks.

And most folks, Derek said it right, they come in, they have a portfolio, and they think they’re all set, right? That’s only one piece of the puzzle. You need so much more once you get to this point, once you start to accumulate. Most people do such a good job saving. They don’t think about the next step. How do I take this money out properly? Is there any better tax strategies that I should be looking at? Because it’s all about saving you money and properly planning because the more you save in your life, the more you get to keep, the more you get to pass on. It’s just this massive cascading effect that impacts both you and the next generation.

Matthew Peck: Well, the other thing I just want to say, sorry to interrupt, Derek, but just Keith kind of build on that, but also to build on the, taking 2023 in the rearview mirror is taking advantage of these interest rates.

Derek Gregoire: Right, absolutely.

Matthew Peck: I mean, these are interest rates that we haven’t seen in the past, say, 15 or maybe even 20 years. And so, talk about having a team and making sure that people are following up and making sure that all the details are watched after, all the T’s are crossed and I’s are dotted, is to make sure that we’re sitting with each of our clients and going over existing money or maybe even old money to say, “Hey, do we want to take advantage of these new rates?” Because in my opinion, they’re not going to be here for forever.

And so, maximizing that, now, on one level like, oh, I got 3% versus 6%. And so, it’s like, oh my goodness, how much of a difference does it make? Well, it does year over year. And if you don’t have an advocate and a team behind you to make sure that you’re maximizing it, then frankly, you’re just leaving money on the table. And that’s very specific to 2023 type of action that I really hope that everyone has taken, again, just to really maximize the interest rates that are out there for however long they’ll be there for.

Derek Gregoire: Yeah. And this show is all about you, watching and listening, I think for us though, we’re super excited. We celebrated our 20th year this year. So, Keith, Matt, and I started SHP Financial in 2003. And obviously, it’s a much different landscape. Even the whole world has changed, the industry has changed, and so forth. Technology has changed. But I think what we look at is the reason we do have minimums, we don’t work with everyone, well, first off, we’ve been doing it for a long time. Secondly, you have to make sure it’s the right fit because I think, when people come in, they see the amount of work that goes into a plan, especially if they’ve been with us for like a year or two, they’re like, wow, I didn’t know how this was needed in the plan. And they see the results of proper planning. That’s kind of why we work like that.

And I think, a lot of folks are also reluctant to hire a firm because they’re worried about the cost, right? I always tell everyone, as good as this is, the downside of working with us is there is a fee. There’s a fee to work with us. However, if you look, and this is total hypothetical situation, but let’s say someone with a 401(k) with $1.5 million in it, now, let’s say we built a plan out for them and it cost– and I have no idea, well, this is going to be different for everyone. Let’s say, it costs $8,000 as our advisory fee per year to manage that. Now, a lot of times, when we look under the cover of their current accounts, they might be paying $10,000 fees already and not even knowing yet within different fund costs, advisory fees, whatever it is. So, that’s first.

But let’s say they’re paying nothing. Let’s say they’re paying zero, right? And let’s say that person that saved $1.5 million, maybe they worked in their career and they made $150,000 a year with all their efforts and talent in that industry, which is a great salary. When they hit their retirement stage, a lot of them say, “Oh, I’m going to save $10,000 or $8,000 because I don’t want to hire an advisor.” But think about that. They took all their life and passion, whatever they did for work, let’s say they were an engineer and they poured all that in to make $150,000 a year, they now are going to go to retirement. Let’s say they can manage their portfolio if they can do that. That’s only one piece.

Think about how much time and effort it would take them to learn, keep up with the tax codes, learn about brackets, learn about Social Security, learn about portfolio management, when to rebalance, when to tax-loss harvest, when to convert to Roth, what accounts to draw from. I mean, I can go on.

Keith Ellis, Jr.: SECURE Act.

Derek Gregoire: Legislation, the state tax laws changes. My point is that, if they’re going to work, they’re better off making 150 than paying eight. You know what I mean? They’re going to do all that to save $8,000 to spend 25 hours a week in their retirement, if not more, to learn all that. So, when you do the math on it, it’s kind of funny when you look at it. And the way I look at it, that’s probably one account if they have a house and property and they have a $2.5, $3 million of estate. Is it worth paying $8,000 a year to make sure your I’s are dotted, T’s are crossed, and everything’s accounted for, right? Sometimes, just in tax savings, we can cover that. Never mind the rest of the plan. So, I think it’s important whether it’s with us or another good firm you’re working with, don’t underestimate the value. If someone’s doing true comprehensive planning, I think Vanguard did a study, it should be adding around 3% per year to your total plan. So, you’re paying hopefully a lot less than that. Then you should be getting value.

Last thing not to keep going on this tangent, but if you’re married and let’s say you’re the one who does all the finances, if your spouse doesn’t, think how scary that is if you don’t have something planned ahead of time. I had this amazing guy who I was really close to, passed away recently, and I love the guy. Him and I were really good friends. They had done really well, amassed $5, $6 million. His wife never dealt with anything. But I know the family, I know his children. With the one benefit and this is what we were talking about is at least she knows that one thing’s taken care of, doesn’t do anything to cover the loss of what she’s going through emotionally, but at least she knows she has a company that she can trust that her husband vetted out ahead of time.

Imagine if she didn’t, now she was thrown to the wolves. There’s bad apples and bad actors in every firm, just like financial planning. I think that’s another important part of planning is to make sure that if you’re the spouse who does all the planning, that you have someone that you can trust so that your wife or husband can then move forward afterwards. So, I’m not trying to go on the soapbox. I guess, I am, but you can see how much we believe in the true value of financial planning and you can learn all about this. We have so much information on our site, SHPFinancial.com, that you can learn about the different five worlds and go deeper. We have so much other information and podcasts and webinars that you can watch as well also.

Matthew Peck: Well, I was going to just chime in on the continuity aspect. Recently brought in a client, came on board, and it wasn’t for portfolio management. It was barely for tax planning, but it was just for that one. It was continuity. She was ill, she had been recently diagnosed with cancer and wanted to make sure, and she was single, it was just really for her sister and her family and her nieces and nephews. But it was more about, she saw the benefit of having a comprehensive financial plan and making sure that all of her ducks were in a row. So, if she lost the battle, it would be that much easier for her sister to take over.

And so, over the next couple of weeks, we’ll be sitting down with her and the attorney and getting everything, all wrapped up. But there’s so much power in that because as you were saying, Derek, it doesn’t replace the emotional loss that’s there, but my goodness, if that’s one less thing that you need to worry about, I mean, just the emotional power that comes and now you can focus on the grief and the grieving as compared to, oh, did I take up my RMD that year? That should be the least of your concerns at that time.

Derek Gregoire: Yeah, even as we look back in 2023, how many wine and wisdom events did we also do, which is another, just to try to bring a different educational, we did one on cybersecurity and how crazy that’s getting, how to protect yourself. We did one on health care and how to choose the right Medicare supplement and Medicare, the cost of Medicare, and so forth. We did some on estate planning. Taxes, I believe we did.

So, there’s so much to learn in this field. Like I said, we’ve been doing this 20 something years and we’re still learning. And if you’re listening and watching and you’re not working with an advisor, a lot of you listening and watching your clients and you know kind of what I’m talking about. But if you’re not, I think it’s important to understand or to value, do we want to do this ourselves or do we want to have a professional do it for us? I know, for me, I see this all the time, if I’m retired and the way I think, I don’t want to be on a beach in Florida some day wondering, I got to get back home because I got to make sure the market opens and closes at four and I have to do some tax-loss harvesting. I want to have that taken care of.

Matthew Peck: Well, I’ll just quickly chime in on that because that came out the other day with a client or it was sort of a referral and we were walking through the fees and whatnot. And I just came up with sort of off the cuff, but just all the– I mean, the Taylor Swift’s of the world, if anyone that’s professional that’s doing very, very well, I highly, highly doubt and I can’t guarantee it. And I don’t know Taylor Swift as an example, but I highly doubt that she’s sitting– but I mean, I highly suspect that she has a professional managing her money.

People that reach a certain level of success, whatever it may be. Obviously, we’re not. She’s one in a million, one in a billion, but more so that for anyone that you reach retirement, you’ve worked your butt off, you’ve saved everything, I mean, obviously, we’re biased, but you need a professional to enjoy the time that you have sacrificed for. And I know, yes, it might be a cost, but you get time for that. What would you rather have at that point?

Derek Gregoire: Matt, I’m in the process of, currently, I’m building my house. We’re kind of in the early stages in Mattapoisett. Trust me, imagine if I try to do that myself, everyone who knows me, even though I grew up like my dad.

Keith Ellis, Jr.: I wouldn’t come visit.

Derek Gregoire: Yeah, it wouldn’t be safe to come visit.

Matthew Peck: Mine is what I mean. I would love to see what the house would look, too. It’s like you had to do it all yourself.

Derek Gregoire: It’d be like a TV with a sheet.

Keith Ellis, Jr.: It’s still going to put up correctly.

Derek Gregoire: Like a blanket over it. Even that would be sketchy. Even the tent might not go right. But that’s the thing. And it’s funny, I grew up in the trades. My dad did plastering. I grew up doing that and I’m awful. My dad can do everything and I can do nothing. So, my point is, imagine me trying to undertake that to save money on building costs. My wife would be like, “Yeah, we’re not going to do that.” So, just to point, we’re hiring a professional to make sure it’s done the right way because I might know how to do the first steps of it, but as it gets complex and we’re talking about rafters and beams and like this stuff, you have to know your limits.

Matthew Peck: I’m sorry. I’m still left with the idea of your architectural drawings are just like a square with a little triangle on top. And here’s my window. Like, kind of, what do you think?

Derek Gregoire: How do you think of that? Stand for approval? I’m going to send this into the board. This should work. But anyways, obviously, we like to have some fun as well. But as we wrap up, get in transition from 2023 to 2024, we just want to kind of share with you and we’re proud of our team. I think we’re up to 47 now of employees and 11 of them this year. So, we’re super grateful for them. We’re super grateful for you, our clients, who are listening.

And for those of you who are not clients, who want a second opinion, feel free to give us a call. Our office number right in Plymouth is 508-746-2400, or you can also go online and request a visit and learn all kinds of information about us, which is SHPFinancial.com. So, everyone, have a great Merry Christmas, Happy New Year, Happy Holidays ahead. And we’ll look forward to talking to you soon. Thank you.