Some of the best educational material that we collect as advisors comes from your personal stories about investing. Real experiences are so valuable because they come with a context and background—making them an incredibly valuable tool to assist in our own decisions.

In addition to our clients’ stories, we get nearly as many from those we encounter outside of the office in our day-to-day interactions. Consider this story from a flight several years ago:

A middle-aged woman sitting next to me introduced herself when she saw one of the recent Swedroe books in my hand. She was particularly interested because she had just lost her parents and would be inheriting their estate in the coming months. One issue weighed heavily on her mind. Her parents chose to restrict access to her inheritance while giving her sister more favorable treatment. Sitting right there on that plane, she broke down.

Hers is a lesson we’ll never forget. She had one wish: If only her parents would have said something—anything—directly to her, she wouldn’t be left with so many questions about their decision. What concerns did they have? How did her sister earn their trust, and she did not? Why did they leave her to find out from an attorney?

We often say that a simple conversation with your children or other beneficiaries can create a powerful dialogue about deeper issues. One example: Is there anything they can understand about your wishes to make them better stewards of your wealth? 

As you follow the journey through the LongView process, we’ve now arrived at Mutual Commitment. This is the moment of truth for you, the prospective client, and for Hill. Having participated in both the Discovery and Planning stages, you now know a lot about Hill, as we do about you. We call it mutual because we’re both making significant commitments to each other. You are turning over your life savings for us to shepherd, and we are taking on a fiduciary obligation to act solely in your best interests. Yes. A significant commitment for both parties. This is a meaningful change for you if you’re coming from a large brokerage firm where their only obligation is suitability—meaning the broker is not required to put their interests below yours. Welcome to a higher standard.

Ultimately, your decision to make this commitment should be based on a feeling of trust and belief that all parties are better off working together than without each other. If we both agree to move forward, our team keeps it simple and as hassle-free as possible.

Click here to read a detailed summary of the entire process.

Continuing on in the tax management series, this month we’ll look at account sequencing during wealth accumulation and retirement withdrawal periods. The basic questions are:

1) When accumulating funds, what accounts (tax-deferred, taxable, etc.) should be funded first?

2) When withdrawing funds, in what order should funds be withdrawn?

Individual circumstances may constitute different strategies, but the following examples demonstrate two common approaches. The first is based on someone in the accumulation phase who pays taxes in the highest bracket, and the second is a retiree in the withdrawal phase who will leave behind some amount of inheritance:

Following logical strategies for adding and withdrawing funds ensures that you accumulate and retain the maximum after-tax amount possible.

Next month, we’ll look at matching investments with the most appropriate account types.