Podcast: Special Appearance [Intersection of Tax and Asset Management]

I was recently interviewed on the Wealth Made Simple podcast.

During this podcast, I was interviewed by Jay McFarland of Wealth Made Simple. Jay and I discussed my background and what led me to start Apprise, the types of clients I work with and what led me to focus on working with female clients, and the importance of taxes in the financial and retirement planning process.

You can listen to the podcast on Soundcloud.

You can view the podcast on YouTube.

An edited transcript follows:

Jay

Hello and welcome to the Wealth Made Simple Podcast. My name is Jay McFarland. In this podcast, we’ll dedicate our time to sharing stories of consumers and financial professionals along with their experiences within our growing community.

Now, in this series, we’ll highlight financial professionals who are committed to providing financial literacy and empowerment for all. Through this podcast and our platform, we’ll change the way consumers ask questions and how they get answers for those financial questions.

I’m very excited to introduce you to our guest today, Philip Weiss. He is the founder of Apprise Wealth Management. All right, Philip, it’s a real pleasure to talk to you today. I’d love for you to share a little bit about your background. How did you end up in your current field? I’m sure there’s a story behind that.

Philip

Yes, there is. And if you go to my website, you’ll see a blog with over 3,000 words telling the whole story.

Jay

Wow.

Philip

It’s called Confessions of a Financial Adviser. I’ve had a lot of fits and starts along the way. My firm itself has been in existence for three to four years, but I’ve been in financial services my whole career. I started as a CPA, I worked for Deloitte and specialized in taxes. Ultimately, I focused on international corporate tax planning.

I decided that wasn’t what I wanted to do as my full-time thing. So I started this transition. I was writing with the Motley Fool back when they had these online portfolios. I helped manage, it was originally Cash King, later became Rule Maker. While there, I found out about the CFA program and said, “Ah, that’s my ticket out of tax.”

So I decided to pursue the CFA designation. As I started that process, I got a job with T. Rowe Price where I worked as a writer and an editor. I finished up the CFA and said, “I want to be an analyst.” And they’re like, “Yeah, well, you got the right credentials to be an analyst, but you didn’t get them the way that we normally like people to get them. So you have to take three steps back to have a chance to do that.”

And I decided, “I have a family, that’s not going to work for me.” So I went and wrote a research report on a company, which I used to help land myself a position as an analyst. I worked for Argus Research, which is an independent research provider. I covered energy stocks, really oil and gas stocks for seven years. Then I left there and went to work for another RIA. I worked there for a little over three years. I ultimately decided that I wanted to do my own thing. And so that’s kind of how I got to where I am now.

Jay

Interesting. Interesting. So I’m curious, just going way back, I’m always curious what drives somebody to want to do taxes. Why did you think that was an avenue that you wanted to go?

Philip

I got my CPA. I’m from New Jersey, and in New Jersey, you have to have practical experience to get certified. And I just decided that the path of being an auditor was not one I wanted to take. So I did enough auditing to get certified because New Jersey had a requirement that you have some audit time.

But tax just seemed a little bit more interesting to me. I had a really good tax professor when I was in college, and I thought that would be more interesting than doing audit. Audits just seemed kind of boring to me. But if you think about it in reverse, I think going on the audit side because of what it can lead to in terms of other opportunities within companies and things like that is probably the better path.

Jay

Got it. Got it, that makes sense. And then this journey that you’ve been on and you decided to start your own firm, was that a nervous decision? Were you excited about that? Tell me about that experience, saying this is the moment when I’m going to go out on my own.

Philip

Definitely nervous, that’s definitely part of how I felt. I mean, I have four kids. I have two that are in college right now. When I started, I guess my oldest was finishing up college, so it was hard.

I talked about my history and what led me to do what I’m doing now in the Confessions of a Financial Advisor. The short story is that my background in terms of what I grew up with from the financial side was poor. I had really bad examples at home. A lot of those, I think, motivated me to try to do things a better way. And I think that’s part of how I ended up becoming a financial advisor.

I originally was going to go to medical school, and that changed. But I think that what I saw growing up motivated me to do what I did. I had a lot of ideas about what I thought should be done. So, fortunately, I had saved along the way. It was hard, but I was able to use some of those savings to bridge the gap as I tried to get my firm going.

It was certainly scary because you think you know what you’re doing. But I remember when I first started, and I was working with a firm to help me with marketing and somebody said, “How many of you out there are marketers?” I’m like, “That’s not me, I’ve never been a marketer in my life.” And he said, “You’re wrong. You’re all marketers because you have to market your firm or you’re never going to get clients.” So that was kind of a rude awakening to me that yeah, you really have to do this.

Jay

Yeah, it’s like people who become attorneys or doctors, they don’t realize you also have to know how to run a business and advertise, and all of these other things that you’re not getting taught about.

Philip

That’s correct. It was definitely eye-opening. And I have a coach that I work with that helps me on some of those other things that I might not have as much experience with, or he serves as a sounding board when I have a question about something, just somebody else to bounce ideas off of.

Jay

Oh, I love that. I love that you get that outside help. How long has it been since you’ve been out on your own?

Philip

My firm got approval from the State of Maryland in 2017. But I initially went back to the type of writing I had done for T. Rowe. The same person that hired me at T. Rowe hired me to do some writing. I did that as a contractor. I used that to help make ends meet while I figured things out. I mean, I wasn’t 100% sure that I was going to start my firm.

And then ultimately, I decided this is really what I want to do. And at that point, I stopped writing. That meant I basically went to having almost no income as I got started. And it was about three years ago. It was about a year after my firm got approved that I made my firm my full-time thing.

Jay

Got it. So what does your firm focus on? What do you love to do?

Philip

I love to work with people, and life planning is an important part of what I do. I want to get to know and understand the people I work with. I tell them we’re going to have this life-planning conversation. And I say part of that is because I want to get to know you. I want my clients to be more than just somebody that I work for, that I do some things for. I want to get to know what drives you, what’s important to you. And it’s going to help me get to know you better, that’s the selfish part.

But the other part is I’m going to use that to help establish what are your priorities, what really matters to you. Because those are the things that we want to make sure that when we’re doing your financial plan, that they’re in there. And when we’re doing your investing, that they’re reflected there. So that’s an important part of what I do.

I do draw on my tax background because it’s important and I tell people that taxes and investing are joined at the hip.

Jay

Absolutely.

Philip

Yeah, and we can’t make good investing decisions without taking taxes into account. I bring that real-world tax experience that I have. So that’s an important part of what I do. And then again, if I go back to that confessions blog, one of the things that I talked about in terms of my family history is my father was the one that was particularly bad with finances. My mother got cancer when she was 51. She was diagnosed with breast cancer. It ended up metastasizing to her brain and she passed at age 53.

But during those last couple of years, as we figured out how bad things had gotten because my father had tremendous debt, my parents had to move shortly after my mother got diagnosed. I was trying to help my mom. Without doing it intentionally, I discovered that about two-thirds of my client base are professional women, and that’s really where they lead the relationship. They can be married, but they still lead the planning relationship.

And I think that part of this just comes from me still trying to help my mom. I like to work with people that were in her situation. What I think about is a lot of times in a financial relationship one person takes the lead – more often than not that’s the guy, the husband. But what ends up happening is they get into their 50s and their kids are getting older, and they’re starting to try to figure out what comes next. The wife starts asking, “What are we going to do next?”

And the husband has been doing a good job of saving along the way. And she says, “Well, do we have enough? What can we do? Where are we?” And he says, “I don’t know.” She wants a little bit more planning and a little bit more understanding about what’s going on. So that’s how somebody like that finds me.

Now that also can include widows, and divorced women, and single women too. But that’s how a lot of the relationships are and that just naturally happened that way.

Jay

Wow, that’s interesting how that kind of followed your own path in life. And I can sense you have a real passion for that. Who is your typical client? Are they somebody who’s already got some type of investments and they just need help steering? Or are these people young, starting from the ground up? Do you have somebody typically who comes to you?

Philip

I created a client avatar.

Jay

Oh, okay.

Philip

And if I was to describe that avatar.

Jay

Yeah.

Philip

Her name is Linda.

Jay

Okay.

Philip

She’s about 58 years old. She has kids that are high school, college-age. She’s a professional. That’s about right, if I look at my overall client base, the average age of my clients is a little bit younger than that but not much. So most of the people that I work with have already started to save and they’re already working towards retirement.

But I do have some, I have a couple that came to me and they had tremendous student loan debt and tremendous credit card debt and things like that. And now the credit card debt is gone and they’re working on student loan debt. I do get that side of the equation too.

But usually, it’s people that are somewhere along the path of they’ve been saving, either they need to save more or they just want to figure out how do we get from here to where we want to be? My youngest client is in her mid-20s and my oldest client is just about 80.

Jay

I love that you’ve created this avatar so you can kind of know how to hone your services and stuff. Is that something that somebody else shared with you to do or did you just do that intuitively?

Philip

I’m a member of XYPN, and I took a course that they offered on marketing. And it actually coincided well with where I was because right at about the time that I was working on that blog – I had done a shorter version once. I was talking to a friend who said to me, “You should work with more women.” I said, “Why?” And she said, “Well, you’ve been married for a really long time. I like the way you talk. I like the way you communicate.” This was a woman telling me this. And I said, “It’s funny I think that that happens.” But I thought it was a much smaller piece of my client base than it was until I actually looked at it.

And part of the XY course I took asked us to create an Avatar. That was at the direction from the course. That was the ultimate driver of my decision to try and put more shape around it.

Jay

Yeah, that’s very good. Talk a little bit more about tax preparation when it comes to wealth management. I feel like people get so focused on making the money, but they fall short on the side of keeping the money. And I’m one to pay every penny to the IRS that they are due, but I don’t want to pay them a penny more. And I know there’s a lot of people who don’t have tax planning. They’re sending more than they need to the IRS.

Philip

That’s a good way of putting it. I like to think, we should pay our fair share, but not more. It’s hard to do this yourself because if you go back to the story that I told, we spend our lives we’re saving, right? And where tax planning really starts to matter, it matters always, but it particularly matters in certain areas as you approach retirement. And there’s a lot of opportunities and that’s what we don’t know about, right?

We know how to save, we know that if we put money into our 401K or an IRA we get a tax break. But we don’t know what happens when we have to start taking money out. Some people say, “I got this money here, I’m not going to pay any tax.” Sometimes you can pay more in retirement if you’ve been a really good saver than you do while you’re working. We want to think about what should be the best way to manage the withdrawal of money from our accounts.

You want to have diversification of account types. We have taxable accounts, like a brokerage account or a savings account. We have our tax-deferred accounts, which on the one side could be an IRA or a 401k or a 403b. With those, you pay tax when you pull money out. Then we have another type of tax-deferred account, which is a Roth IRA. With that, you pay taxes on what goes into it. But you don’t pay any tax on what comes out.

And then you have the third option, which is actually the best of all if you can do it, that’s an HSA, or a health savings account, because that’s triple-tax-free. You don’t pay tax on the money that goes in, you can invest it and not pay tax on the growth, you can pull it out, and as long as you’ve had qualified medical expenses while the account is open, you won’t pay any taxes. That applies even if you don’t have that level of expenses in the particular year in which you withdraw the money. So that’s the most tax-advantaged. So, we want to think about that.

We also want to think about things like when are the times that Roth conversions can make sense? And where they can make the most sense is typically when we retire but before we have to start taking our required minimum distributions, which is at age 72. A lot of people wonder, “When should I start to take Social Security benefits?” That layers in, so there can be that period where we stop working, we need some of our retirement money to fund our lifestyle, but we might not need all of it. And doing Roth conversions at that time and thinking about what can I do now to save taxes over the long haul?

Because I think about it this way, when we’re married, we file a joint tax return. While there is a marriage penalty, you still pay less than you would with the same income as when you’re single. And for a couple, usually one predeceases the other. That means your filing status goes from married to single on your return and your income may not change that much. You’re going to lose the lower of the two Social Security benefits. If you have a pension, you may or may not lose it, depending upon how that’s been structured. But the IRA money, that money is normally going to go to the surviving spouse and all of a sudden, your marginal tax rate is going to go up.

If I can do things proactively to lower my tax rate by using Roth conversions to lower the amount of income that I have for that surviving spouse, that has a benefit. Also, if you have money left at the end, those Roth conversions can bring a lot of value to your beneficiaries because the Secure Act that passed in 2019 says your beneficiary has ten years to take money out of your retirement accounts. If it’s in an IRA, it creates like a tax bomb for your beneficiary because they have their job and now they’re taking this money from your IRA into their income, and it could really bump up their tax rate. If you do the Roth conversion, they still have ten years to pull it out, but it won’t be taxable.

It’s things like that. It’s also things like if you’re self-employed knowing that you can have self-401K or a Keogh plan or some type of plan like that, do things with that. If you have your own business thinking about how to structure it. An S-Corp can have advantages over an LLC because of how you pull income out. You want to think about things like that.

You want to think about things like when you get to age 70 and a half, maybe if you’re charitably inclined you might do things like qualified charitable distributions because those never go into your income so they’re better than taking a charitable deduction is an itemized deduction. Maybe you have stock that you want to give away, or you want to give away money to charity. Well, if I give away appreciated stock from a taxable, I don’t pay tax on the gains. I get a deduction for the fair value of the stock, but I don’t pay tax on the gain that I accrued. So you want to think about things like that.

You also want to think about – because of the fact when they changed the itemized deduction rules at the end of 2017 – there is now a reason to consider bunching your charitable deductions. If you’re close on the itemized deduction side, it might make sense to make three years of contributions this year, then none for the next two years because you can end up coming out ahead.

Just to give you a simple example, using the $24,000 limitation that was in place, it’s a little bit higher now. But if you had $20,000 in deductions and you give away $6,000 a year, if I do that each year, I get $26,000 in total itemized deductions. That’s $2,000 of excess itemized deductions each year. But if I could somehow do it so I could give away $18,000 this year, now I have $38,000 of charitable deductions this year, that gives me an excess of $14,000 versus the total of $6,000 at $2,000 a year in the first example. That’s another $8,000 that I can deduct. So there are lots of things like that that you want to think about in terms of, “How can we do things more efficiently from a tax perspective?”

Jay

Wow, I mean just hearing that there’s no way that your average everyday person is going to know all that stuff. And you can’t Google it, I mean, that’s just confusing, right? So I hope everyone watching this realizes how much is out there available to you and how it can really impact your retirement.

Philip

It really can, I think about it that if I save a dollar in taxes, that’s one more dollar that I have to either spend today or in retirement. And that’s always to my advantage to do that.

Jay

Yeah, I love that. I’m curious, are you still doing any writing? You mentioned your blog, is it still part of your life?

Philip

It absolutely is. I blog on a weekly basis.

Jay

How do people find your blog?

Philip

You can go to my website, which is www.apprisewealth.com. You can subscribe to my blog if you want. It comes out weekly, right now it’s on Fridays, that day may change, but right now it’s on Fridays. It alternates, one week – I read a lot, too – one week I write a little bit of an opening, and then I share five things that I’ve read over the last two weeks that I think are worth sharing. A curated content type thing. I also tell you a little bit about the article and why I think it’s important.

And it’s not all finance stuff either. It’s usually broken down so that the first, third, and fifth articles are about finance. The second and fourth articles are about anything else that I find interesting. Whether that has to do with self-improvement, or personal health, or family, or whatever it may be. And then on the opposite weeks, I write original, long-form content on whatever finance-related topic I think is relevant.

Jay

Sounds great. And are you taking on new clients if people are watching and they’re interested in contacting you?

Philip

Yes, absolutely. I am open for new clients. I have about a little over 50 clients right now, and there’s certainly capacity for more as I grow.

Jay

Great. And the website again?

Philip

It’s www.apprisewealth.com.

Jay

Fantastic, and we’ll put a link to that. It’s been great talking to you, I really appreciate your time and hearing your perspective. I can tell that your life experience combined with your tax experience and your wealth planning experience, I can tell you provide a great service for your clientele.

Philip

Thank you so much. And it was a pleasure being on. I appreciate the opportunity to speak today.

Jay

Once again, I want to thank Philip for joining us today and for sharing a little bit about his life, his expertise, and how he can help you with wealth management. Again, my name is Jay McFarland and this is Wealth Made Simple.