Podcast: Dana Anspach — Retirement Income Planning

Dana Anspach

The 50th NewRetirement podcast! This time, Steve Chen is joined by guest Dana Anspach — Certified Financial Planner™, author, and the founder of Sensible Money — and discusses her practice and approach to retirement income planning.

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Full Transcript of Steve Chen’s Interview with Dana Anspach

Steve: Welcome to The NewRetirement Podcast. Today, we’re going to be talking with Dana Anspach, a certified financial planner, author, and the founder of Sensible Money, about retirement income planning and what she’s learned in the course of working with hundreds of clients, building her practice. Dana and I met in Chicago, at a retirement income conference, when we were both getting started a few years ago. With that, Dana, welcome to our show. It’s great to have you join us.

Dana: Thank you so much, Steven. I love your website, NewRetirement, and I’m glad to be here today.

Steve: We appreciate the feedback you’ve given us over the years. It’s been super helpful. We’re definitely going to dive into retirement income planning, which is what our audience is definitely most interested in, but I do want to make one call-out that I thought was interesting. I saw on social media this picture of you on a Harley Davidson with all your biking gear on. I was like, “Wow, that doesn’t jive with my perception so far of Dana.” I just would love to just get a little bit into how you got into Harleys. I did learn that 20% of motorcycle riders are female, which was kind of a surprise to me.

Dana: Yeah, it is a surprise. I think it’s about the same percentage of financial advisers that are female. We’re right at about 20 to 25%, interestingly enough. But yeah, I got into motorcycle riding in 2005. Actually, I was into road cycling, pedal pedal kind. One of my best friends, who I used to cycle with, started riding dirt bikes. She put me on her dirt bike once, and I was hooked.

Dana: I owned a KTM 125 and a Honda 250 CRF, and did that for years. Then in 2010, I got my street license and ended up buying a 2013 Harley Softail Slim and absolutely love it. It’s relaxing for me. When you learn to ride in the dirt, riding on the street feels a lot safer. When I look at people who learn the other way around, it’s a really different experience. I think all those years riding in the dirt really gives you skills, where things are more automatic. Of course, I have a lot of correlations about investing and motorcycle riding, but we do everything we can to make it safe. We ride in groups, we wear helmets, all of these things that help reduce the risk. But I absolutely love it.

Steve: That’s cool. There is a big bicycle riding culture out here where we live, in Northern California. There is actually, I would say, probably very limited overlap between that and motorcycle riders, so it’s kind of interesting. But I hear you on the safety thing. I mean, it’s the same for bike riders, they ride in packs. There is risk in bicycle riding, for sure.

Dana: Of course, of course. There is risk in so many sports. There is just risk in life.

Steve: Yeah, that’s right. I had dirt bikes as a kid, and they kind of snuck back in my life a few times. There is a dirt bike, a Suzuki RM-Z 250, sitting outside my garage, that we got as a pandemic toy.

Dana: Oh wow.

Steve: But it only sort of works. It’s very hard to kickstart. Had to learn about top dead center, which is a kick style. Only my 17-year-old actually can get it started on a regular basis.

Dana: Oh wow.

Steve: Yeah, super fun but dangerous. All right, I wanted to kind of get a little background on your business and just kind of hear it in your own words. Since we met, you had this vision, you created your business, around largely retirement income and getting the most of that. You’ve learned a ton. You’re clearly building it. Also, as a women-owned female entrepreneur, I’d love to get a little bit in your own words, about how that journey as been, getting to where you are today.

Dana: Yeah, absolutely. Where do you want to start?

Steve: Just why you got started and what your vision is, where you want to take this, and what you specialize in doing.

Dana: Great. I actually started in ’95. I had a degree in communications and advertising. My dad had always said the first thing I should do is hire a financial planner. I was married at the time. I lived in Grand Junction, Colorado. I was selling ads for something called the R.L. Polk directory, which probably some people listening to this podcast will actually remember. It was somewhat of a version of the yellow pages.

Dana: I met two people who called themselves financial planners, and one recommended that we put all our discretionary income into two whole life insurance policies. The other person explained why we needed an emergency fund, why we should participate in my husband’s 401k plan to get the company match, why we should build up longterm savings, and the difference of investing longterm versus short term, in something like a money market account. I could clearly see that one person was trying to sell us something and one person was offering really good advice. So we hired the planner that was offering the advice.

Dana: I used to ask him so many questions, that he suggested that I do this as a career. That’s really how I originally got started. I was lucky to have a mentor that really taught financial planning, rather than product sales. He really mentored me to always find out about the client’s needs and the phase of life they’re in.

Dana: I remember some of the best advice he ever gave was, if you’re going to err, err on the side of conservatism. Don’t push you client in a more aggressive direction. Look at how to meet their needs.

Dana: From there, I moved around a bit. I ended up moving to Arizona and working with a CPA firm, to head up their wealth management division. At that CPA firm, it was interesting, a lot of CPAs were getting into the business at the time. They were somewhat cherry-picking their client base, to sell, again, certain high commission type products. Again, I had this disillusionment, like, “Wow, this is really financial planning?”

Dana: In I think it was 2005, early 2006, I found a like-minded individual. We joined forces and started a fee only registered investment advisory firm. We didn’t want to sell products. We really wanted to do what we called real financial planning. We had a great business for many years.

Dana: Then I really wanted to specialize in the decumulation retirement income process. It’s where my passion is. It came about, actually, from a particular couple that came into the CPA firm. They reminded me of my grandparents. They brought 10 years worth of broker statements in, and in a good 10 years in the market, their money had not grown at all. Basically what the broker had done is, any time they raised a question, he had recommended a new move. They put their money in something different, that addressed the concern that the person raised, but it didn’t educate them about the benefits of a longterm diversified portfolio.

Dana: That was just the spark for me. I got really mad. I thought, “These are like my grandparents. Their money should have doubled over this 10 years, and instead it didn’t grow at all.” Meanwhile, the broker made lots of commissions. There was no attempt at education. You can’t just react each time, to a client’s needs. Our job is to educate and explain and offer information that helps someone make better decisions, not just reactionary decisions.

Dana: That’s how it started. I became really passionate about the age 55-plus group and the fact that they couldn’t go back to work and they didn’t get any do-overs, and that the stakes were higher. I started my own firm in 2011, in which I focused on that segment of the market.

Steve: Yeah, awesome. Well, it’s great to hear how you got here. I definitely hear you on the incentives, as well. It’s so important to understand how who you’re working with is getting paid, and also, if you’re starting a company, to design the incentive structure so that you don’t get tempted to not be aligned with your end users. Especially if you’re, obviously, clearly a fiduciary, you have to do that. Even a lot of fiduciaries I think, it can get a little skewed. It’s hard.

Dana: It is, yeah. It is hard, on both sides. I’ve met a lot of great advisors. When I look at how I started in this business, I didn’t know there was such a thing as a fee only registered investment advisory firm. Depending on how someone ended up in this career, sometimes they’re working in a firm where the only thing they know are the products they sell. They have not been exposed to what a broader financial plan looks like. It’s not that they’re intentionally giving bad advice. They honestly don’t know. On the fiduciary side, I agree. You still have to be careful about people who are just trying to gather assets.

Dana: A common conflict, for example, that might come up is, “Should I pay off the mortgage?” We run all of that through an analytical spreadsheet process, so we’re getting a quantifiable answer. Whereas I have seen people that tend toward, “Oh, no, you should never pay off the mortgage. You should invest the money.” Well, that is not always the right answer. As a matter of fact, most of the time … We frame decisions off of red, yellow, or green. Red, don’t do it. Green, you’ve got to do it. Yellow is in the middle. That’s often a yellow decision, where the softer side comes in, how someone feels about it. The level of security they feel has a big impact on that decision. Yeah, there could be conflicts in any compensation model, absolutely.

Steve: Yeah. On the paying off the mortgage question, it’s come up twice for me this week, actually, with a friend and a family member, where they have a pile of money and they’re like, “Well, it feels like the market is high, and I have this mortgage.” I think there’s an argument, if you were going to put this in a fixed income anyway, which is making pretty bad returns, maybe you pay down your mortgage, or pay it down, make it confirming, and refinance it. Stuff like that.

Dana: Yeah. There’s a great book. It’s called The Value of Debt, by Thomas Anderson. He’s a financial advisor out of Iowa. I think it offers a good perspective for higher net worth families, when you have really low interest rate debt. There can be a case for saying I’ll keep the mortgage. Particularly right now, if you can get a 30-year mortgage at under 3%. Look at my portfolio as a 30-year investment. You will probably be able to participate in that leverage. But it’s not for everyone. It’s not. For those higher net worth clients that want to use leverage, I think his book offers a really good perspective. For a lot of people, it feels better to just pay off the mortgage.

Steve: Yeah. It’s definitely a consideration. Alan Roth, we had a similar talk about how to consider it and how to frame it up. Okay, great. I definitely want to talk to you about Sensible Money and your process there. One question that occurred to me, though, when you were talking about this older couple that helped you spark this. I’ve been reading a lot, and I think we’re seeing people are living longer. This population over 50, they do have a lot of assets, but they have to fund their whole lives. Cognitive decline is a real thing. Do you have a process for working with clients as they age, and thinking through how they’ll make decisions if one spouse starts to run into maybe some issues?

Dana: Luckily, we haven’t had a lot of struggles in this area. I think what happens is, when the relationships are established in that age 55 to 65 range, I now have clients I’ve worked with for almost 20 years. I have watched people enter into cognitive decline with a spouse. Sometimes one spouse has passed, and then the remaining spouse is fine for a few years and then enters that phase. When that trusting relationship is in place, it seems that they listen to us and follow our advice. We really haven’t experienced any issues.

Dana: When there’s not that relationship in place, I have seen cases where one spouse passed away, and the surviving spouse is just lost. They didn’t know what to do, and they didn’t feel equipped to hire the right person. They were distrustful of everyone.

Dana: If that’s a concern, I do think it’s a time where working with an advisor can offer some of those intangible benefits, of peace of mind and knowing that your other half is going to be okay, or knowing that if you build up that trust to allow someone to help you with those decisions, you won’t struggle as much, when you enter that phase of life.

Steve: Yeah. We’ve definitely had some of our users that come to us for this reason. They’re like, “I want to make sure that my spouse is taken care of.” A lot of people have that. Then, “How do I do it? Can we do it through technology, or do we need someone locally that we can meet across the table with?” I think there’s a strong argument for that. There’s also a lot of family dynamics. Sometimes you have financial experts in the family that are perfectly trusted. Many times not, and then there can be misalignment. You might have multiple children, some are fiscally responsible and some are less responsible, but then they’re also potentially interested in your assets.

Dana: Yeah. I’ve seen families that are wonderful and help each other out and are trusting. Of course I’ve seen the opposite, where a few siblings kind of conspire to take all of mom’s money before she passed. You do, you see things all over the place.

Steve: Yeah, it’s a big consideration. I think structuring it and being clear about how decisions will be made. If you don’t have money, it’s not a problem. If you do have money, it can create more problems. Thinking it through and how decisions will be made. I’ve seen families blown up by this, too. It’s kind of sad. It’s like, “Hey, everything’s good.” Then now there’s a fight about money, and all the family stuff goes out the window, which is kind of tough to see. Managing that upfront is important.

Steve: Okay, I would love to talk to you about Sensible Money, kind of what you’re seeing, what do you your customers look like, what do they want, what are some of the big problems and concerns they come to you with?

Dana: Our typical client is in the age 55 to 70 range. They are about ready to retire. Ideally we’d like to see people five years out from retirement, but often times we see them about a year from that decision point. They are trying to figure out how to take this collection of stuff … We collect deferred comp, stock options, IRAs, Roth IRAs, brokerage accounts, and sometimes annuities and whole life insurance policies, and really figure out how do all these things align towards a common goal of creating reliable cashflow.

Dana: We have a very thorough planning process that we deliver, over three strategy meetings. We will not take over a portfolio. Every client goes through a planning process that is its own stand-alone service. Through that planning process, when they get through, they have the option of then working with us, on an ongoing basis. That planning process outlines all of these key decisions that someone needs to face. It involves a lot of education. It starts with, of course, data gathering.

Dana: Once we’ve gathered all the data, we use what we call a strategy one meeting, where we really focus on the big picture. Can they retire when they want to? What will the cashflow look like? Does the plan last? Does it work over their projected lifespan? Is it certain enough? You’ll hear about a Monte Carlo analysis, and yes, we do use that in strategy one. It’s the first of three retirement readiness tests that we run. Really broad, does your plan work? We find that’s what most advisors call a financial plan. They kind of stop there, and they’re done.

Dana: For us, our clients are looking for far more detail. We move into strategy two. We’re then looking at, what are the decisions that can improve the outcome? When to claim social security, when to start a pension. Should we do Roth conversions? Should we draw out of the IRA first or should we draw out of the brokerage account? Are there capital gains considerations that we have to think about, as you draw down your assets? Should you both retire at the same time, different times? Should we spread out your deferred comp? Should we use your home equity at some point? Should we downsize? Can you afford a second house?

Dana: All of these various scenarios that come up in life, are what we run through in strategy two. Figuring out, are there ways to improve the outcome of your plan, through tax optimization and through some of these decisions.

Dana: That actually leads us to a withdrawal pattern, by account. Looking at the most tax-efficient way to draw out the assets, sometimes you’ll end up with an age difference, where one spouse may be starting IRA withdrawals early, and the next spouse might not be starting for 10 years. Or it makes sense to draw out all of the brokerage account assets first and not touch the IRA for 10 years. Those accounts are invested very differently, depending on that job task that’s assigned to that account.

Dana: We do all the planning work first, to be able to very clearly see, what is the job that each of this individual account type needs to do. Then we can align the portfolio to that particular stream of cashflow. That’s what we focus on in strategy three, are different ways to build the portfolio. We use a particular process called asset liability matching, where we’re using very safe investments to cover the cashflows that are needed in the first five to ten years of retirement, and we’re using more aggressive, growth-oriented index funds for the longer term cashflow.

Dana: It’s a very thorough, comprehensive process that people love, because it lays everything out, even down to the tax withholding. It lays everything out so clearly. I think one of the questions you asked was what are pepole looking for. People are scared. When they shift from that accumulation and saving space to the decumulation space, it’s terrifying for a lot of people. That’s normal. I try to reassure people, “Yes, it’s completely normal to want to see every possible iteration of your plan, when you’re going through this phase.” The more detailed and thorough it is, the more comfortable they feel saying, “Yeah, absolutely.”

Steve: That’s awesome to hear. I love the fact that you have this very clear methodology that is so comprehensive, and also that you’re able to articulate it very clearly as well, which is so important. So many questions you hear are like, “How should I invest?” That’s really what most people ask. This is the discussion I had with Bob Burton. He was like, “The whole problem with retirement planning is everyone’s focused on wealth accumulation, and they should be focused on income.”

Steve: When you talk to a pension manager, they’re like, “Okay, what’s my funding ratio for my pension? Can I deliver the income streams that I signed up for, the liabilities that I’m on the hook for?” They’re a lot less concerned about what is my absolute AUM, or net worth number, right now. I think that’s a great way that you guys are actually thinking about asset liability matching. You’re the first advisor I’ve ever talked to that has even used those words, so that’s good.

Dana: It does come from the pension world, and it comes from the RMA designation. Which, I was in the very first class of retirement management analysts, that’s what an RMA stands for, in 2010. Absolutely love the curriculum. It really helps you think about the things that are important, in the decumulation phase, and the fact that it shouldn’t be a focus anymore on maximizing return at a given level of risk. It’s a focus on delivering reliable cashflows. It’s a different type of portfolio that accomplishes those goals.

Dana: When people bring that “I want to maximize my net worth on paper at any given day” mindset, then that goal can often be in opposition to “I want to make sure my cashflows are secure and that my lifestyle is secure for this length of time.”

Steve: Yeah. Do you ever have conversations with people, where you’re like, “Oh, you could actually spend more money now?”

Dana: Yes. Those are so fun, as well as “you can actually retire now” conversations. Some of the most rewarding things we’ve been through … I had a client that, when we initially started working together, he was seven years out from retirement. Then he earned more, his business did quite well, and the investments did well. We were thinking he was still three years out. He ended up retiring, all in all, I think three or four years after we started working together. We were able to accelerate his retirement date by three or four years. Just thrilled. Just couldn’t even believe.

Dana: I’ll never forget that meeting, where they came in. His wife had just recovered from breast cancer, and so they had been through all of that. He was like, “I’m wondering if maybe we could retire in two years, instead of another four.” I was like, “You can retire now.” Their face lit up. It was just amazing. Those are really rewarding experiences.

Dana: On the flip side, sometimes we do have to tell people that they’re going to need to make some adjustments, in order to be able to retire. Either way, you’re helping someone see what the levers are, what can they do to accomplish their goals.

Steve: You have a nice summary on your site and in some of your graphics, what people can control versus what they can’t control. Also, I’d love your opinion on what are the big ones, for most people.

Dana: Well, the biggest one that everyone focuses on is, of course, short-term market volatility. This year, 2020, is such a prime example. Even though we’re building a plan for life and we show people that you have safe investments, like CDs and bonds, that will cover your cash flows, so when something happens like what we had happen in March of this year, as long as you don’t have to sell those investments while they’re down 20 or 30%, you have time. You have other, safe investments to live off of.

Dana: But that human nature factor, of looking at your statement and actually seeing that the dollar value is lower, that still is the biggest area where we have to combat the emotions, the behavioral aspect, of getting people to say, “Look, we’ve tested for this. You’re going to be fine. We need to just stick with the plan.” That’s always the big one we cannot control, the short-term market movements.

Dana: You can control the level of risk you take. We all know that if you want to potential for higher returns, you have to take more risk. We really try to help people understand, “Look, if you don’t want to experience that risk, there is an alternative. We can use a safer portfolio. It’ll be less volatile, but it’ll also likely mean you need to cut back your lifestyle or have less cashflow.”

Dana: Really framing those trade-offs. We can’t control tax rates, but you can control tax planning. We can’t control inflation, but we can understand that inflation has a different impact on different demographics. If you’re a lower income household, living on maybe $50,000 a year or less in retirement, you’re probably going to need to build in a bigger buffer for inflation, just to cover utilities, healthcare, and basics. If you’re a higher income household, living on $100,000 a year or more, you are likely not going to need your cashflow to increase at the same pace as inflation. There’s all kinds of customization that can be done to a plan, that helps you adjust around some of those things that we cannot control.

Steve: Do you find people using a bucket strategy, or do you ever encourage that? I get it psychologically, having a near term pile of money that is highly liquid, so that you can kind of ignore what’s happening in the market and keep reloading that. Although it does make your overall portfolio less efficient.

Dana: Yeah. Asset liability matching technically is a bucket strategy. Let’s say we have a money market fund that is set up as a direct deposit retirement paycheck replacement. We’re direct depositing, withholding taxes. It’s basically replacing someone’s cashflow, and there’s 12 months worth of cash there. Then you have a bond that matures. I literally think of it as a bucket that will pour into that money market fund, to replenish the cashflow at the end of the year. Then over here, you have your equity bucket. When your equity bucket overflows, we pour some out of it. When it’s not overflowing, and there’s going to be those years, we leave it alone.

Dana: I think the bucket strategy offers a lot of behavioral advantages. There’s been tons of research done that says can it guarantee a higher return or a better outcome? No. Only by looking backwards can we tell you exactly what strategy would have delivered the highest return. We don’t have that crystal ball, looking forward. But it has the potential to help people stay invested, according to their plan. We know that when people bail out at the bottom, that is going to hurt their longterm returns. If behaviorally, a certain strategy helps people stick with it, then I’m a fan of that.

Steve: Is there a certain level of certainty that your clients want to get to, before they pull the trigger? Like 95% probability I’m good, or somewhere around there?

Dana: Yeah, that is such a great question. Everyone is different. In this crazy year, I think we’ve seen our risk tolerance, we are all so different. Whether people want to wear masks, don’t wear masks, what level of risk they want to take in social interactions. When we think about simple things like that, and our tolerance … I guess that is actually not so simple, as we’ve learned, but our risk tolerance is vastly different from our neighbor’s or our brother’s or our coworker’s.

Dana: We can have clients that come in, and we run three retirement readiness tests. One is a Monte Carlo analysis, and we want to see an 85% success rate or higher in that. That is what we think of as the most stringent of our three stress tests that we run. We use a very conservative set of assumptions when we run that. We don’t need to see 100%, because it’s an 85% chance that our plan works just like we projected it, without needing to make any adjustments.

Dana: We feel like a 15% chance that we might have to adjust spending … In the middle of the recession, in 2008 and 2009, I had clients retired in December 2007, the worst time in modern history that you could have retired. All we did was just say, “Let’s just forgo your inflation rates for a few years, until your portfolio is back on track.” That’s what we think of as an adjustment. So 85% chance that your plan works without any adjustments, and 15% chance that we might have to make some adjustments, such as skipping an inflation raise here or there, we think that is acceptable. We have some clients that want to be at 100%.

Dana: The second retirement readiness test we run is one called fundedness. You were alluding to that. It’s the same type of test that a pension plan runs, where they might send out an annual notice that says we’re 80% funded or 90% funded. We like to see 110% funded, given a certain set of underlying assumptions that we use.

Dana: Then the third retirement readiness test is one that comes from our investment partner, Asset Dedication. It’s what’s called a critical path. It basically goes back and retires the person every single year, as of the Great Depression, and runs their project forward and says, “Okay, this is the amount of money you had, this is what you withdrew. What would have happened? How many scenarios made it, and how many scenarios ran out of money?” We want to see a 100% success rate for every scenario that started in 1940 or later. We’re not as concerned about the Great Depression because monetary policy has shifted so much since then.

Dana: Those are the retirement readiness tests we run, and we find that people just have very different comfort levels. I have some people who are completely comfortable retiring at a range that’s below what I’d like to see. They’re fine knowing that they might have to make some adjustments later. They go, “You know what? I’m going to enjoy my go-go years,” as we like to call it, the early retirement, “and if i have to cut back later, I get it.” They say that, “I understand.”

Dana: I have others that are almost the polar opposite. They want to see well over 100% success rate in all of the various stress tests that we run. They just feel really nervous and want that extra buffer for whatever might come along. So it’s hard to give a real definitive answer because everybody’s different.

Steve: Well, it’s great to frame it up that way. I can totally see why, if you can present it that, “Hey, 85% chance you’re good, no change is required, and in a worst case scenario, we might have to make these kinds of small changes,” that’s a much more comforting way to look at it. I think so many people think of it as binary, I either have a lot of money, and how much I need isn’t really clearly defined, but I’m either good or I’m not good. So many people, they’re like, “I want to retire. I wanted to get more control over my life, but I’m unwilling to pull the trigger, so I’ll work another year, another few years, and then something happens.” They’re not able to frame it up in a better way.

Dana: Yeah. It is not as black and white as some people would like it to be. That’s one of the challenges. You can’t run a plan and be done. We retest every year, and we always like the forward-looking 30 years to meet a certain set of ratios. As people live longer, we will extend the longevity of their plan. Things change. Tax laws change. We just saw RMDs change from 70 to 72. Now there’s something on the table that says they might extend them to 75, and so that presents a whole new set of planning opportunities. There’s always going to be these changes that cause adjustments to someone’s plan.

Steve: I really like the framework you laid out, and the three ways of testing, the Monte Carlo, the historical back testing, and then the funded ratio perspective. That’s awesome. I can see why people would love to see that and also kind of frame up how they can make future decisions, based on changes in those metrics. Once they’re set up and running, do you meet annually with folks? How often is it?

Dana: We have a formal process, where we update the plan and the three retirement readiness tests, every year. In the fall, we do tax projections. As we think of it, there’s a lifetime plan that will give us a broad sense of what years should we do Roth conversions, or realize gains or losses, but every year you have to finesse that. Tax rates change, deductions change, and so every year, we’re fine-tuning that with the tax projection.

Dana: Then there’s a lot of other touch points throughout the year, things that are what we call high cash notices. Cash comes into the portfolio from dividends and interest, and we’re making decisions about whether to invest that into growth or into income, into the paycheck replacement portfolio, and decisions on tax withholding. There’s so many things that change between 60 and now 72. One spouse will claim social security and then another, and then pension will start, and then a deferred comp payout. We find we’re constantly having to adjust the taxes and withholding and make sure people are prepared, if they need to make quarterly taxes. There’s a lot of touch points around those things, in the midst of the year.

Steve: That makes sense. We’re definitely believers in planning as a living thing. It’s kind of a living document. One, almost no one plans, so you’ve got to make it easier. Then two, if they do plan, it’s like a one-time experience, it’s very expensive, and it’s usually a sales process, for many versions of “financial advisors” to kind of hook your assets. I actually appreciate what you’re doing, which is, planning is a totally separate exercise, fee only, and then the user has a decision, “Okay, I do want more planning, or I do want help managing assets because I can see how it all hangs together.” Also making it a living thing, that makes a lot of sense.

Steve: Okay, great. Last bit on this, I do think it’s cool how you guys own the outcomes. You say, “Look, we own the outcome.” We talk a lot about outcome-based healthcare. It’s like, “Hey, you’re doing health stuff because you want to have better outcomes, right?” Same thing with you, it sounds like. I’d love to hear your take on that.

Dana: Yeah. We literally tell people, “Look, the reason we are so thoroguh in this planning process is, if you hire us and we are working together on what we hope is a lifelong basis, we look at it as our responsibility to deliver that retirement paycheck that we laid out in your plan.”

Dana: We do look at that as our responsibility. Our responsibility is to get down to the nitty-gritty detail of, we will set up a direct deposit. For some clients, it’s twice a month, to replicate their paycheck. Some people, it’s once a month. We’ll take care of the tax withholding. Other people like kind of a monthly budget. Sometimes we’ll even say, “Well, your property taxes come up in June and January.” So they want an extra lump sum for that, or to pay a longterm care insurance premium. We really look at it as our job, to get down to that level of detail, and make it easy and autopilot, so that they can relax and go out and enjoy retirement.

Steve: Totally. Well, and there’s data that shows that people that have pensions are much happier. They’re like, “I get my paycheck forever. I’ve been getting paid working, and now I’m going to keep getting paid when I’m retired. I don’t have to think about it. There’s not some portfolio I have to babysit myself and worry about.” If you can reliably deliver the income or make people comfortable that it’s going to be there for as long as they need it, that’s a huge lift for most people. I think that’s really what they want. When you think about quality of life, it’s like, “I don’t have to worry about it. I have enough to meet my needs or my goals.” Versus, “I have two million dollars in an account, but I’m worried about it every night because if the market takes a 20% drop, I’m freaking out.”

Dana: Yeah. Our job is to make sure people can relax at this phase and not be stressed about it, and know that if we do need to make adjustments, that’s our job to do. You don’t have to worry about it, because we are doing the worrying and the testing. We will let you know. It won’t be an adjustment such as, “Oh my gosh, oops. We ran out of money.” That doesn’t happen in real life. When you do planning, that outcome doesn’t materialize. You’re making these tiny little adjustments along the way, to make sure that everything stays in a safe zone.

Steve: That’s awesome. You also deliver the paycheck, right? It sounds like you’re moving money between equities, the bond ladders, to cash accounts, so that people can know that the cash is coming in on a regular basis.

Dana: Yes. Yeah, so they don’t have to think about those nuances.

Steve: Yeah, the automation is cool. That’s where I think financial services is heading, in a much bigger way, more and more automation for you.

Dana: Yeah.

Steve: Appreciate that. Would love to, as we wrap up here, hear what your vision is for your business and yourself, what you think the world looks like in five years.

Dana: This has been an interesting year. I know for a lot of people working from home, it’s a big adjustment. We actually have clients in 27 states and staff spread across four different states. For us, amazingly enough, it was a pretty seamless experience. I think more and more, we will see people who are looking for an expertise, and they realize that it doesn’t have to be someone that lives in their city or town, or that they can drive to their office. We were set up for this environment, and I’m very grateful because staff and myself, we’ve all been very comfortable and able to make the decisions that make us feel safe and healthy, as we go through this.

Dana: In terms of where I see myself, I am so lucky that I love what I do. Probably one of the things I also enjoy is that I get to help people retire when they don’t love what they do. It makes me even more grateful every day, that I love what I do. I’m one of those people who happened to find that thing, where I get to look forward to coming to work every day.

Dana: We will continue to grow the firm. I am currently building out a partner track, so some of our younger staff have the ability to buy in and become partners in the firm, so that I have a longevity plan. We have an amazing team. I’ve described it the last two years as running like a Swiss watch. Everybody has voiced how much work was a safe place to be. This year it was kind of like that happy place, to come together, even virtually, and have something to focus on, outside of everything going on, in the outside world. I just see more of that. I want to continue the culture we’ve grown and the work that we do, and make it a place where everyone that’s here really likes to be here, every day that they come to work.

Steve: Yeah. It’s so important, right? It’s hard to build a good culture. It kind of has to come out organically, I think. You can’t really mandate it with yoga classes and stuff.

Dana: You can’t mandate it, I agree, but you can be very intentional about how you build it. That has to start at the top. For me, it’s taken a lot of internal work, and figuring out what does it take to bea good leader? I remember I had this point, maybe it was six or seven years ago now, where somebody called me the boss. I was like, “I don’t really want to be called the boss.” Then one day I realized, “Well, I am the boss, so I need to be a good boss.” That was really a shift for me, of heading down this path of what does it mean to be a good leader, and how do you intentionally set culture? How do I make this a place where everybody feels the way I do, where they love coming to work? We have been very intentional about it, and I want to make sure that, as we grow, we don’t lose any of that.

Steve: Totally, yeah. It’s super important. Do you use an executive coach at all? By the way, it feels like for a lot of financial advisors, part of their job is kind of life coaching and helping people with their own behavior, in these big decisions.

Dana: Yeah. I have used several coaches over the years, and it has always been an absolutely invaluable process. I’m part of the strategic coach program, which is a coaching program started by Dan Sullivan. It’s a program for entrepreneurs described as “how to help you build a self-managing company.” This is my fourth year now, in that program. It has really helped establish, they call it, “thinking about your thinking,” the mindset that you need to bring to the table. Anytime I’ve worked with a coach, I have found it to be well worth every dollar I paid.

Steve: Yeah. I’ve got an executive coach, and it’s been pretty helpful, as we navigate. I think especially if you have a growing organization and you’re taking on more and more leadership. You do have to lean in and kind of embrace that and be comfortable with it, kind of accept, “Hey, this is part of my responsibility, but I need to be good at it.” Otherwise, you’ve got the fate of a lot of people in your hands, and if you make bad decisions and don’t act ethically, then you’re going to have problems.

Dana: Yeah. It’s very important.

Steve: I’ll get the link for the strategic coaching program as well. Any other resources that you really have found helpful for yourself and your clients, as you build your business?

Dana: If you’re thinking in terms of resources for other advisors, or resources for consumers?

Steve: Mostly for consumers, I would say.

Dana: Yeah. For tax planning, there is a weird website, it’s called DinkyTown.com. I don’t know if you’ve ever seen their calculators.

Steve: I know the name.

Dana: There’s a story behind how it got that name. It’s some town in maybe Minnesota, where they’re based. I can’t remember. I find that can be a really good tool. You’ve added a lot of tax capabilities into NewRetirement, which we looked at, and those are awesome. When you’re getting down to the current year and trying to figure it out, I think that can be a really good tool for consumers to use, to try to do their own online tax projection and see what it might look like. That’s probably my best one for consumers, outside of, of course, NewRetirement.

Steve: And your own site, Sensible Money.

Dana: My book, I’ll have to throw that one in there, Control Your Retirement Destiny. I wrote that originally, I think it was 2012, updated it in I believe 2017. They keep changing the tax laws faster than I can keep up. I’m hoping finally in 2021 to focus on another update, but all the concepts in it are sound. It’s just the underlying marginal tax rates have changed. Everything I discuss and all the planning concepts in it are rock solid and absolutely apply in today’s environment.

Steve: Awesome. All right, I really appreciate your time, Dana. Thanks for being on our show. Thanks Davorin Robison for being our sound engineer. Anyone listening, thank you for your time. Hopefully you found this useful. You can find our tools and services at NewRetirement.com. You can find Dana’s work at SensibleMoney.com. Also check out her book, Control Your Retirement Destiny. She’s also at Twitter. I think it’s money55? Is that right?

Dana: Moneyover55 on Twitter, yes.

Steve: Okay, awesome. That’s it. A couple other thoughts. We are trying to build the audience for this podcast, so all reviews are welcome. We read them and do adjust. We got some feedback recently that I have too many verbal ticks, so I’m trying to improve that. We’ll see how this podcast ends up, because we did have the power outage in the middle. Maybe we’ll leave that as the outtakes. That’s it. Thanks again, and have a great day.

NewRetirement Planner

Do it yourself retirement planning: easy, comprehensive, reliable

NewRetirement Planner

Take financial wellness into your own hands and do it yourself retirement planning: easy, comprehensive, reliable.

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