Welcome to Retire Smart Austin. My name is Cynthia De Fazio and I’m joined today by Phil Capriatti, senior, He is founder and CEO of Empower Wealth and Tax and to our viewers at home. This is your show today. This is all about viewer questions, and you have some great questions for Phil. He has no idea what I’m going to ask today. So please, you do not want to miss a moment of what’s to come in the next 30 minutes. Phil, how are you?
I’m good. I understand. We’re going to do the shotgun approach, right? You’re just gonna, you’re just gonna blast them out. I mean, I think it’s great. I think it’s wonderful. I’m doing fine. Thanking God every day for another day. And you know, another half $1 after taxes.
Absolutely. There you go. There you go. And I’m so thankful to be in the studio with you today. Obviously, I always look forward to our time together because your information that you provide to the viewers just really spot on so timely, so concise, and very easy to understand. And so, the viewers have loved your show so much. I think we’re on what episode 153 Before right now. It’s incredible. Yeah.
Wow, pretty special.
The questions just keep coming in for you. So, are you ready? I’m ready. All right. Now, Phil, this is a great question. This is actually Allison. And she would like to know why it’s important. Phil helped me understand when I’m interviewing a financial adviser. Why is it important for me to ask what are your qualifications and credentials? I’d like you to explain this further.
Okay, so I like to Allison, I like to use more specific questions. I like to use what we call open ended questions. I don’t want to ask yes or no questions. I want them to expand on the question. So, the first thing is, I want to know, how many portfolios how many clients? Do you see who you do tax work for? So, and, and so get them to qualify? And if they say, well, we don’t do tax work here. Ask why not? Because every registered investment advisor, okay, anyone that holds a series 665 license should not only be well versed in taxes, tax code and changes. But if they’re in the distribution phase of a of a retirement plan, meaning you’ve now retired, they need to know about taxes, and they need to know how to bring you to a 0% tax bracket. You don’t want to be paying your financial advisor more than necessary to the government. And then also the fees to manage your portfolio. So, ask them what type of value added services do you offer that qualify you to work with me? Hmm. And then let them talk?
Excellent. Phil, thank you so, so much. Another question we have is from Bob, he said, Bob, he said, Phil, my name is Bob, I love your show. Why is it important for me to know how my advisor is paid? I heard you mentioned fee-based structure commission based or a combination?
Thank you, Bob. Okay, good. Good. Good question. So, number one, you want to know whether your advisor is an investment only advisor or an insurance only advisor. Okay? You want to know whether they manage whether they work with a big box retailer, okay, a company that tells them how to set up portfolios in which funds to use or a more of a boutique, okay, like we are where we actually do planning and structure the portfolios based on your risk tolerance. You want to know if you’re with an insurance only, or a commission only advisor, and I’ve seen dozens and dozens of advisors, they call themselves advisors and they are, but they’re one dimensional. They can only advise you with respect to insurance products, life insurance, annuities, and a host of other insurance products. You want someone that understands taxes, you want someone one that understands all types of insurance products, and you want someone that also understands all types of portfolios, whether it be ETFs, stocks, bonds, you really want diversification of knowledge within that financial advisor you’re working with.
Phil, thank you so much.
That makes sense.
Excellent response. We have a question from Carol. And this is a good one. It says, Phil, I’ve heard you mentioned the importance of working with a fiduciary, does that guarantee that the person will always work in my best interest?
Yes, if it, I’ll tell you how, again, there’s no guarantees in life. First of all, let’s start with that. Any licensed fiduciary, and I’m talking about a registered, registered investment advisor or an investor or an investment advisor rep and I a are there, they’re legally obligated to act in your best interest. I talked, we had a show about annuities and so forth. Maybe it was last week or a couple weeks back. When you have a registered investment advisor that recommends an annuity product. Some of these companies will only work with licensed fiduciaries, because they know we’re obligated not only to act in the client’s best interest, but to tell the truth 100% of the time. So licensed fiduciary, I’m going to put the emphasis on licensed fiduciary because I’ve had some folks say yes, I’m a fiduciary, I always act in the best interests of my client. But they’re not obligated by their licenses to do so. So licensed fiduciary series 65 registered investment advisor IAR, CPA or an estate, an estate tax attorney and or attorney. We are all licensed fiduciaries obligated legally to always act in your best interest.
Phil, thank you so much. This is a question from David. And it actually kind of ties in with long term care insurance. He says Phil, I’ve heard you speak about long term care insurance on the show. I wanted to ask you, what is your personal opinion about this? I am 65 years old. Is it too late for me to have long term care insurance in place? 65?
Yeah. So, it depends. Are you a smoker? Are you in good health? Do you have multiple medical conditions? If you have any of those prerequisites, I would say yes, it might still be available, but very, very expensive. We bought our long-term care plan; I actually purchased a long term care plan with my wife. And this was some years ago was about six or seven years ago, we were young, late 50s, early 60s, back when you’re not thinking about long term care, or even home health care. And between you and I know that you have to earmark an account that you can dip into to cover unexpected home health care or learn long term care expenses. Because unless you are on welfare and qualify for Medicaid, or have spent down your entire asset to where Medicaid kicks in, you’re financially responsible for it. Any financial advisor that you work with, should at the very least mention long term care and help you understand that again, you can’t buy fire insurance on a house that’s burning down. You can’t buy long term care on somebody who has multiple medical conditions. Now, there are insurance products. We mentioned it before. There are some annuity products, there are only a handful that also cover home health care and long-term care. Normally with them, you have to be receiving income for five, five years. You can’t just go and buy them in anticipation of needing that care. You’re either going to pay for it, the insurance company is going to pay for it. Or if you do not own any significant assets. No worries, the government is going to pay for it.
Phil, thank you so much. I know there’s a very special offer that you’re going to present to the viewers at home today. I want to do a dive more into the questions. But let’s take a commercial break first talking about the offer that you have.
Yeah, folks. I you know, a lot of you folks have been watching us for years and years. And I know it because I’ve had I’ve had a couple folks come in. They’re like Yeah, I saw you two times I knew I had to call you. And I’ve had other folks that say yeah, I’ve been watching him for three and a half years. We finally decided to call pick up the phone. Dial 888-818-6557 Come in. Let’s talk about how your retirement income plan is structured. And let’s talk about how your portfolios being managed. We talked about hiring and firing Investment Advisors. Maybe you’re not happy with the return maybe you’re not happy with excessive volatility when the markets up what you know 200 300 points and down. Your portfolio is gone and maybe there’s too much risk in it. Give us a call. Let us structure a comprehensive Morningstar report with a portfolio observation and, and advisory summary. It’s done professionally by our CFO He’s and certified financial analyst. You’ll be happy you did it. And we’ll be happy to meet you.
Phil, thank you so much to our viewers at home, the number to call is on your screen. 888-818-6557. We know that you had a lot of questions for Phil about how to plan your perfect retirement. It shows today in the questions that we are going through; we can’t thank you enough for your interest in this. If you don’t have your pen handy. That’s okay. Grab your phone, click on that QR code at the bottom corner of your screen that will take you right to Empower Wealth and Tax landing page. We’re going to take a very short commercial break. Don’t go anywhere we come back we’re going to address a question that came in from Ellen, and it’s regarding annuity so stay tuned, Ellen, your question is the one that we’re going to uncover. As soon as we return state.
I watched my parents work, work themselves really to the bone. I saw my father retire at 63 and pass away. Six months later, once he had stopped working. My mom looked at me and she said, You better be an accountant. You better learn the tax law. I went to a private school, got a great education, lived in the library and graduated without any debt. I realized the benefit of being debt free at a very young age. And I also realized the benefit of educating and speaking to people and I liked working with folks who actually needed help. I started my company 17 years ago, and now we employ two CPAs and two licensed tax professionals. We have a legal arm that helps folks design trusts as well as wills. We have an insurance and that offers property casualty insurance, we sell health insurance, Medicare Supplements, long term care life insurance annuities, and we have wealth management that I started to work with Ed Slott looking at tax efficient ways to have retirees or soon to be retirees retired tax free. If your accountant or CPA is not also your financial advisor, you really have a conflict of interest.
Welcome back to Retire Smart Austin. My name is Cynthia De Fazio and I’m joined today by Phil Capriatti, senior he is president and CEO of Empower Wealth and Tax and today’s show viewers is all about you. It’s all for you. These are your questions, and we’re going to address them one at a time. And Ellen, just as I promised your question is up next on the queue. This is from Ellen, and it says Phil, I really enjoy your show. I’ve heard you talk about annuities, but can you help me understand? What are the different types of annuities I’m aware of? There’s more than one types of annuities?
Oh, that’s a good question. Ellen, that’s a great question. There are many different types of annuities. And there are many different styles and flavors. So, for instance, there is an insurance product known as a variable annuity. Now, a variable annuity is an annuity that that increases, and date decreases in value based on the growth of the stock market. Okay. So, for instance, if you’re tracking these, and I’ve had clients track them, and they’ll, they’ll say to me, Well, my annuity was doing great. Every quarter, I get the statement, it shows me how much I made and, you know, I made 8020, 1030, 1000, you know, and then one quarter I lost 40,000. How could that happen? I thought annuities don’t lose money. Well, fixed indexed annuities don’t lose money. Fixed annuities don’t lose money, but variable annuities are very, they’re not only expensive. Normally, the internal fees on these products range anywhere from two and a half percent a year, up to as much as three and a half 3.75. So, with a variable annuity, these annuities go up and down with the market. And so, I normally do not recommend them years, many, many years ago was really one of the few products that was available. We wanted to see growth in the market other than a flat 2% return or fixed return, like a CD type of thing. But I’m not a big fan there. They have high internal fees, they have market volatility, and most of them do not have increasing income. So, there’s Check one, check two, check three. So variable annuity would be one. Then other part of the, the annuities that folks do not like is called a life annuity. And, and I’ll explain why. This is where you give the insurance company up pile of money, we’ll call it a pile. Let’s say it’s 100,000 or 500,000 or a million doesn’t matter and they guarantee you lifetime is income for a certain period certain. So, if you live five years, we can go five year, certain 10 years certain, it pays for a specific period of time. Now if you outlive that time, the insurance company will continue to pay you until you reach over 100 Actually H 120. So, this is known as a life annuity. However, I am not a big fan of this particular type of annuity, because I do not like to lose control of the money that I have, I want that annuity to pay me income, I want it to increase. But if I want to surrender it, if I want to cash it out, I want to be able to access all of that money at any time. It makes sense. Okay, so many folks in annuities have sometimes gotten kind of a bad rap. Because, you know, my dad took out this annuity he lived for six years died. And he didn’t even collect what was in the account, the insurance company cap it, this would be an example of a life annuity with a five-year certain, I’m not a big fan of them as, as either. Nowadays, these newer products are amazing. In fact, they’re hard to turn them up, even turn them down even as a as a registered, registered investment advisor. Sometimes they really fit in need. The other type of annuity, a third type would be considered a fixed annuity. And it’s similar to like your CD, I want to buy this annuity for three years. And I want it to guarantee me five and a half percent interest. And I don’t want to play it pay on any of the earnings each of those years, until I either surrender it, or do something else with it take distributions. So, this is known as a fixed annuity. And they come in terms of one year term, a two-year, three-year, five-year, seven-year, sometimes as high as a 10-year term. They have early surrender charges, just like a CD will, but it’s a guaranteed return. If the market goes down, you’re going to make your set return 5% or whatever the contract states. If the market goes up, you’re not going to make more than that 5%. So, it’s kind of your steady, Freddie guaranteed. And folks, some folks like those types of annuities, and it also comes with tax deferral. For me, my primary reason that I would recommend an annuity for a client to a client is number one, a safe way to do Roth conversions, and to be able to turn on increasing tax-free income after I’ve done them. The second reason that we use annuities is for tax deferral. I have a client that has millions of dollars, and they’re not spending it and they want this they want to allow their money to have no market volatility, great gains in the market if the market does well, but they don’t want to pay taxes on any of the money that uh, that that is earned in the annuity until they either surrender it were or distributed to their beneficiaries. So, we want either tax deferral or income, they’re my primary purposes and uses for them. Other than that, we have bond funds, we have a lot of other different funds to use, but that would be known as a fixed indexed annuity with an income rider. Many of these income riders come with bonuses and guaranteed returns. Make sure folks whenever you purchase an annuity, make sure you’re purchasing it purchasing it from a licensed fiduciary someone that’s obligated to act in your best interest. I do not want to buy them over the internet. Absolutely not. And I do not want to buy them from an insurance only advisor.
Okay, basically, it has to be something that fits that client’s specific needs. Annuities are not one size fits all, with all the different types that are out there.
That’s correct. That’s exactly right.
Well, Phil, it’s time for our second commercial break in the show. And I just wanted to say we have more viewer questions to go through, but I know you have a special offer to present,
folks for the first five callers and we normally what we’ve been seeing is we’re getting seven, eight, week before last we had like 17 callers for the first five callers give us a call. A lot of folks really liked this Morningstar report and portfolio review. It helps you understand how much risk is in your portfolio. What are your internal and external fees, and how much return you can also receive. So, what we’d like to do is we’d like to offer you that portfolio. Basically, it’s an x ray. We want to look at your portfolio, make sure your risk matches your suitability, and it also comes with a portfolio analysis. We give you recommendations based on your suitability, what changes we would recommend you make in your portfolio even if do you want to continue to work with your current advisor? So, there it’s called portfolio observations and recommendations. Call today and if you need a retirement income plan and have not got bad not sat down and put it in writing will structure your social security and retirement income plan, be happy to do it? No charge complimentary and no obligation to work with us. Phil,
thank you so much to our viewers at home that number to call 888-818-6557 This is your opportunity to have that portfolio X ray. Let Phil and his team take a look at what you currently have in place it’ll be a deep dive into your entire portfolio. If you don’t have a pen, go ahead grab your smartphone, click on that QR code at the bottom corner of your screen that will take you right to the landing page for Empower Wealth and Tax. All right, Frank, your question is up next. I’m going to guide this to Phil the minute that we return so frank stay tuned. Once again. We’ll be right back momentarily on Retire Smart Austin with the Viewer’s Choice question show stay tuned.
You know, going back to work after retiring is not ideal. I’m Phillip Capriati, CEO of Empower Wealth and tax if you amass the nest egg, it’s time for a financial advisor to help you reach your retirement goals. This is one of the greatest tax windows in history. Now is the time to take advantage of this tax discount while we can we specialize in retirement income planning, tax mitigation, estate planning, and so much more. So, plan your retirement right Call now for your own complimentary portfolio review and tax analysis.
Welcome back to Retire Smart Austin. My name is Cynthia De Fazio and I’m joined today by Phil Capriatti, Sr. He is founder and CEO of Empower Wealth and Tax to our viewers at home. This is your show, as you know. And Frank, I’m getting to your question next. All right, Phil, this is from Frank. It says, Phil, my advisor knows that I’ve been watching you. And to be perfectly honest with you. I think he’s jealous of you was what he said, What do you think this gentleman can offer you that I can’t?
Oh, gosh, that’s amazing. Oh, what a great question. come into the office, I want to meet you. And even if you have a relationship with your advisor, stay with your advisor. We’re good with that. So, to you and to your advisor, it comes down to the advisor question. So, first of all, Frank, my question to your advisor is, has he given you a written retirement income plan? And has he made changes in it at least once a year? So that would be service number one. Question number one. Number two, does your advisor do your tax returns? Do they understand you’re not just to read a tax return? But do they actually offer tax return licensed tax prep service? Along with that? Do they run a mock tax return to determine how much of your IRA if you own one can be converted to a Roth IRA? So, we can reduce these RMDs? ask him the question. In fact, tell him to watch the show to be honest with you. And I mean that not only that, in addition to that, is your advisor capable of selling you annuity or insurance products or life insurance products that may fit nicely into your estate plan? Or into your portfolio? Or is he a big box retailer? And when I say that, basically paid not by you, but by a firm whose rules and regulations they have to follow. So, do they work for you? Or do they really work for the company? So, this would be question number three? And I would also ask the ask them, how long and how many clients do they have? And how many of those clients have a net worth of over $1 million where they’re specializing in tax planning? Because for most advisors, you must do tax planning, especially if you are if you’re working with someone have a higher net worth. I noticed one of the advisors in Horseshoe Bay took an office right in an accounting a CPA firm And I said, that’s kind of sharp, I kind of get that. But again, there’s not a relationship. So, he asked for the adviser really can’t talk to the CPA or get a copy of the tax returns. So, at any rate, I figured that particular advisor might have been watching our show, and maybe just hasn’t gotten licensed. So, you really want an advisor that offers all the services. We want legacy planning, estate planning, wills, trusts, want to do your tax return, we want to do your Roth conversion, maximize your Social Security. And in addition to that, make sure each and every year your retirement income plan is tax efficient. All right,
thank you so much. Good question. Excellent answer to I love it. One more. I think we have time for this, as Georgia says, he says, fill this out. George says, Phil, I’ve heard you talk about Roth conversions. I have a quick question for you. Do I have to pay taxes when I do a Roth conversion?
Oh, my, my mind that is pretty funny. That’s a funny question. The only time you do not have pay taxes on income, is if you’re shielded from taxes for makeup. I won’t go I want to I’ll just let you use your imagination. So, all income is, is taxable on your tax return? And so, the answer to that is absolutely. But the difference is, you pay the taxes once and you don’t continue to pay taxes over and over and over on continuing RMDs. The key is to pay taxes once I move that money over to a Roth 401 k or a Roth IRA. And now let that let that account accumulate tax free each and every year. So, look at the Roth this way, I’m only going to pay the tax once when I put it over into the Roth or contributed to the Roth. I’m never going to pay a dime in taxes on that for as long as I live. My spouse lives and up to 10 years of my children’s lives after we’re both gone.
Excellent. You have a lot of questions that come in about Roth conversions, obviously, and I love that, but Phil I know we only have 30 seconds left of the show any final words of wisdom to our viewers at home.
God bless you all. Thank you for watching, you know, we just finished our 50th getting ready to do we’re pushing show 155 I just want to thank you for keeping us alive and keeping us in your homes. Keep the questions coming in. And remember, be safe God bless y’all. Call the office Don’t be apprehensive.
Thank you to our viewers at home. Thank you so much for watching and sending the questions in the safe be happy be blessed. We’ll see you one week from today on Retire Smart Austin with Phil Capriatti senior.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
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