How to Win Clients Near Retirement by Focusing on Tax Efficient Distribution Strategies Joe Cowling, Managing Director of Partnerships

Agenda Why a Tax Efficient Distribution Strategy can help you grow your practice Using the RightCapital Distribution and Conversion tool to make the client conversation an easier one How to incorporate into your practice to attract new clients

Why Tax Efficient Distribution Strategy Can Help you Grow Your Practice Differentiate yourself from other advisors The complexity of the topic has made it difficult for many advisors to effectively deliver the message to their clients and/or prospects Deliver significant new value fast The RightCapital tool is intuitive and interactive allowing you to begin conversations as soon as plans are created Most valuable for near retirement prospects Clients and prospects near retirement are most interested in tax during distribution. Executing a smart tax efficient distribution strategy will help you grow your AUM faster by allowing more assets to remain invested rather than used to pay unnecessary taxes.

Tax efficient Retirement distribution Your strategy for withdrawing retirement assets is as important as your strategy for accumulating them An thorough financial plan should illustrate: which accounts money should be taken from Taxable Tax deferred Tax free in what order what conversion opportunities exist to maximize efficiency

Three drawdown strategies to consider Pro Rata strategy Withdraw from taxable, tax deferred and tax free accounts proportionally Not optimal in most cases Sequential strategy Withdraw from taxable accounts first; then tax deferred accounts; lastly tax free The classic approach Sequential with Roth Conversion strategy Roth conversions are executed to take advantage of periods of lower tax brackets Michael Kitces’ blog post https://www.kitces.com/blog/tax-efficient-retirement-withdrawal-strategies-to-fund- retirement-spending-needs/

Using the Distribution and Conversion Tool to make the client conversation easy

Incorporate into your Practice to Attract New Clients Customizable slide deck to be used with prospects and clients in seminars/webinars High level education and case study Graphs pulled from RightCapital tool to help tell the story Slides will be mailed directly to you at conclusion of webinar

Tax efficient Retirement distribution Your strategy for withdrawing retirement assets is as important as your strategy for accumulating Not all retirement savings assets are equal from a taxability standpoint Taxable Tax deferred Tax free An thorough financial plan should illustrate which accounts money should be taken from in what order what conversion opportunities exist to maximize efficiency A customized tax efficient distribution strategy could save you significant value and extended the time horizon of your retirement assets

CASE STUDY

Meet the Bradys Mike and Amanda — married Current Ages — 56/54 Target Retirement Age — 65/65 Salary — $200K/$50K Social Security — 70 Monthly Expenses in Retirement — $9K Invested Assets — $1.0 MM qualified $100K non-qualified

Tax brackets during retirement can be surprising Surprisingly high taxable income in later years of retirement Low taxable income after retirement before age 70 RMD and social security drive up taxable income starting age 70

Large IRA Distributions Drive Up Tax Brackets Years with high tax rates Years with low tax rates

Smoothing out the tax liability out Less Taxable Income when tax rate is higher Intelligent Roth Conversion to fill up tax bracket

Take-Aways Change the conversation you are having today with clients and prospects and differentiate yourself from other advisors Utilize RightCapital’s Distribution and Conversion tool to make conversations with clients easy to understand and interactive Hold educational webinars/seminars incorporating client slides Develop customized plans for clients – revisit during annual checkup