BONUS WEALTH STRESS TEST EPISODE – August 17, 2020

“How will your Wealth Plan actually work if and when it’s triggered?“

This is what the Wealth Stress Test does for you. It’s going to show you exactly how do your documents work, what do they say and what will happen to who and when…”

Listen in as Elizabeth D’Aleo, Director of Family Offices and Kevin Ellman CFP and CEO of at Wealth Preservation Solutions talk about what a Wealth Stress Test is and why you may want to consider having one.

Take the Stress Test Questionnaire to find out if a Stress Test is right for you.

Transcript:

Elizabeth D’Aleo:          

Welcome to Work, Life and Money Insights with Kevin Ellman, where Kevin shares his stories of his life as the foundation for his outlook on the economy, market and current events.                     

Welcome everyone. My name is Elizabeth D’Aleo, and I’m the Director of Family Offices at Wealth Preservation Solutions. Our CEO, Kevin Ellman, and I are here today to talk to you about what a stress test is and why you may want to consider having one today. Hi Kevin.

Kevin Ellman, CFP:        

Morning. How are you?

Elizabeth D’Aleo:          

I’m well, thanks. Glad we could get together like this in this unusual environment, right?

Kevin Ellman, CFP:        

It’s a little different.

Elizabeth D’Aleo:          

We’ll do our best with it.

Well, Kevin we’re here today to try to help our families understand why making a stress test or having a stress test done for them would be helpful. I think what we understand is that when families develop their wealth plan over a period of years, most work with a variety of professional advisors, would you agree?

Kevin Ellman, CFP:        

Yes, typically someone will have a lawyer, an accountant, maybe a stockbroker and an insurance person, and the thing that’s characteristic of this is that they rarely have all these people in the same room at the same time, working on their plan. Typically they meet with them over a period of years. So when they first get married, they might create a will. Of course, they’re going to meet with their CPA every year to do their taxes. Then they have someone help them with their investments, maybe they buy insurance. And things evolve over time; their families may grow, they may have children, their children may have children, businesses grow, they add businesses, they might change advisors. And of course the big one, which nobody really pays any attention to is that the tax laws are changing all the time. Every time we have a change of administration, there’s a new variation in the tax law that needs to be addressed.

The problem is nobody is really coordinating all the different advisors to make sure that they’re taking into account all these changes to make sure that the plan stays up to date.

Elizabeth D’Aleo:          

That makes sense. And having heard you actually explain it that way, it raises the question to me of how will my plan actually work if and when it’s triggered?

Kevin Ellman, CFP:        

Well, that’s really the best question. Nobody really thinks about, well, what would actually happen if one of us were to pass away and the will actually took effect? Or if you have a buy-sell agreement, what happens if one of the partners, maybe they don’t die, maybe you just disagree and you’ve decided you’re going to move on in different directions, what does the agreement say and what actually happens?

This is what the stress test does for you. It’s going to show you exactly how do your documents work, what do they say and what will happen to who and when.

Elizabeth D’Aleo:         

What documents will stress tests actually review?

Kevin Ellman, CFP:        

Well, typically we’re going to look at the will, we’re going to look at any trust that you may have and any related insurance. If you have a business, we’re certainly going to look at the buy-sell agreement. We want to make sure that all the assets are titled to coordinate with the will and the other documents. And while we’re at it, we’re going to certainly look at the investment portfolio to make sure everything’s handled properly.

I glossed over asset titling and beneficiary designations. It’s shocking how often the beneficiary designation has not been changed. Someone may have started a 401k when they were very young and maybe they made their parents as the beneficiary. Over the years they’ve created a lot of wealth, they got married and they don’t get around to changing it. So all these things have to be coordinated, otherwise it’s almost guaranteed that what you want to have happen, won’t happen.

Elizabeth D’Aleo:          

Understood. So you’re going to review all the documents and you’ll kind of get a snapshot of what’s actually happening. It’s my understanding that it’s going to highlight what the strengths are of the plan, what the weaknesses are, maybe if there’s some areas of improvement and maybe even if there’s something that needs to be addressed right now. So at that point, what choices do we have?

Kevin Ellman, CFP:        

Well, you’re exactly right. Every plan has some good things about it; not every plan is completely messed up. So we’re going to point out this works, this doesn’t work, this is a problem and you got to fix it right away, and these are the things that you can address at your leisure. So once you have this report, then you can decide maybe you’re in good shape, so maybe you don’t need to do anything.

You can always go back to your existing advisor and say, “Look, I got this report from Wealth Preservation, but I’d like to work with you. So why don’t you help me fix my plan.” Certainly, we’d be very happy to talk about working with us, and we describe how we work, what we charge, what the process looks like. It’s always an option you can work with us, but there’s absolutely no pressure. It’s completely up to you to do whatever you’re comfortable with.

Elizabeth D’Aleo:          

Well, that’s nice.

So now Kevin, we know what a stress test is. We know why it’s important, and when someone may want to consider having one done. Now, where can someone go actually to have this done today?

Kevin Ellman, CFP:        

We’ve set this up on our website, which is wealthpreservationsolutions.com. You go to the website and there’s a space where you click stress test. We’ve set it up so they’re basically 20 questions. You go through these questions and a question might be, have you reviewed your will in the last five years? That type of thing. You’re going to answer yes or no. And then at the end of it, you’re going to get a score. And depending on your score, we may come back to you and may say, “Oh, you’re in great shape, no need to do anything.” Or, “There are some areas that warrant attention, and we think you should do something about it.”

Doing something about it in our case means we’re going to give you a call and have a conversation. We’re going to talk through these are the problems, these are the strong areas, these are the weak areas, this is what we think you should do, and then it’s up to you to decide how you want to go forward. Again, absolutely no pressure whatsoever. It’s a conversation. And then you can decide if it makes sense for you.

Elizabeth D’Aleo:          

Well, that’s great. I’m really appreciative that you took the time to be able to explain what the importance is and what the opportunity is within a stress test.

We together here at Wealth Preservation Solutions, hope to meet you and your family soon and hope you have a wonderful day. Stay happy, stay healthy and stay wealthy. Bye.

Kevin Ellman, CFP:         Bye.

Elizabeth D’Aleo:

Thanks for joining us today for Work, Life and Money Insights with Kevin Ellman. For your free copy of Kevin’s book, The Seven Biggest Money Mistakes People Make And How To Avoid Them, just text, “WEALTH,” to 88799. That’s, “WEALTH,” to 88799. Everyone’s circumstances are unique and the content of this podcast should not be construed as financial, tax or legal advice. Please consult with your professional advisor or contact Kevin Ellman to learn if the complimentary personalized review or candid snapshot of your portfolio is right for you by visiting wealthpreservationsolutions.com.

Elizabeth D’Aleo:

The opinions expressed in this podcast are those of the author, and may not necessarily reflect those held by Kestra Investment Services, LLC, or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking, and should not be viewed as an indication of future results.