Jacob Goldstein
Jacob Goldstein spent more than a decade as co-host of the Planet Money podcast. He's also the author of the book Money: The True Story of a Made-Up Thing, which the New…
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On this bonus episode of What’s Your Problem, Jacob talks to Christine Chase, a Vice President, Financial Consultant at Fidelity Investments. Christine’s problem is this: How do you help clients build a plan to achieve their financial goals? Today’s show is sponsored by Fidelity Investments.
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00:23
Speaker 2
I'm Jacob Goldstein, and this is a special bonus episode of What's Your Problem? My guest today is Christine Chase. Christine is a vice president, financial consultant at Fidelity Investments. Also, I should say that today's show is sponsored by Fidelity. Christine's problem is this. How do you help people come up with financial plans that address their changing priorities and complex needs? I was curious to learn the kinds of things that Christine helps her clients figure out and to see what I could learn from her that might be helpful for people like me, people who don't have a financial consultant but are trying to plan for the future. Christine, hi.
00:58
Speaker 1
Hi, Jacob.
01:00
Speaker 2
Thanks for coming on the show. I thought it would be helpful to do kind of a hypothetical here where we talk about what it's like when a new client comes to see you for the first time. That way, you know, we can talk through some of the big themes that tend to come up, the main problems people tend to be thinking about, things they're not thinking about but maybe should be, that kind of thing. And so I wonder, would it make sense for you to pick a kind of hypothetical client that we could talk about?
01:26
Speaker 1
Sure. Yeah, I think that's a great idea. Maybe someone... potentially just got promoted maybe into the C-suite and maybe their financial picture just got a little bit more complicated. So maybe they're finding or trying to find a financial planner to help them get organized.
01:42
Speaker 2
So what's it like? Somebody's walking in, you've never met with them before. Just like briefly, what is a first meeting like?
01:47
Speaker 1
So in that first meeting, I really just want to get to know this person, right? What matters to them? What are their goals? And what do their finances look like? So I'm asking about their family, who's important to them, I'm asking what the goals are, short, medium, long term. I'm asking about their finances, income, expenses, assets, liabilities, and also asking about them as an investor, understanding their strategy up until now, how they feel about it, how they're feeling about risk, and also a little bit about what their estate plan and what their insurance planning looks like as well.
02:20
Speaker 2
So basically everything. You're asking basically everything. And I'm sure it varies from person to person. But are there sort of quick wins you often see? Are there common things where you look at someone's kind of financial picture and say, oh, here's a thing we can improve right away?
02:33
Speaker 1
Yes. I'd say two of the biggest things I noticed right away are in an investment portfolio, a lot of times people lack diversification. And that could be stemming from a number of issues, right? Whether it's growth in the market and they're concentrated in certain parts of the market or they've just never gotten exposure to international or fill in the blank. So we definitely want to diversify and take any sort of undue risk off the table while still positioning them for growth. And the other thing I tend to see is a lack of tax efficiency planning in the portfolio. So that can look like people are not utilizing tax advantaged accounts. They might have a taxable portfolio that's incredibly inefficient and they're paying, you know, one or 2% on their taxable assets every year when they could be moving things around and being more intentional about what they hold in that account. So that bleeds into asset location. That's where we start to take a look at what types of securities we hold in which accounts. We might hold, say, your bonds or international in a tax advantage account and hold, say, long-term equities in a non-retirement account and then prioritize tax loss harvesting. when and where we have volatility.
03:44
Speaker 2
I have to admit, I actually made a mistake. like that in my life. And it's sitting there in my account now. And I should have known better, right? Like we sold, my wife and I, we sold an apartment and we had some extra money from it. And I thought I was being very responsible. I bought a target date fund, but I put it in a taxable account. And as I'm sure you know, but I didn't know, that is not a good thing to put in a taxable account. And so now I pay all these gratuitous taxes on it that if I had asked an advisor, I presume I wouldn't be paying.
04:14
Speaker 1
Yes, that's a mistake I see a lot of people make, right? Those, say, target date allocation funds, usually in their retirement accounts, so we're very well aware of them. And they do help with asset allocation management over time and risk management, but oftentimes there's a lot of turnover in the funds, which leads to distributions that are taxable to you.
04:32
Speaker 2
So if you think about the long term, the kind of bigger picture, what should the client be thinking about? What should a person be thinking about?
04:39
Speaker 1
So when we think about this person who recently got promoted... I want to firmly understand their compensation package. To get specific, this could be equity grants, for example, and there might be trading restrictions on that. We could look at ways to manage their new cash flow, strategies for concentrated stock positions, planning for upcoming liquidity events, and certainly tax planning and investment strategy. So that's a big piece of it, right? Trying to figure out, are they right in their asset allocation? Are we diversified as much as possible? And are we being really cognizant of taxes? We also want to make sure this is all integrated with their full financial picture. So their estate plan, charitable giving intent, lending opportunities that they might need and can get from their portfolio. And then, of course, bring in anybody to the table that we need to. This could be spouses. This could be their kids or grandkids. And really just figuring out how I can serve as that trusted advisor in the middle of all that and making sure that we understand that where they want to go and help build advice that's tailored to them.
05:40
Speaker 2
What are some other things that you often find people are not thinking about that you can just say, hey, you know, here's something you should pay attention to?
05:48
Speaker 1
I find estate planning is probably one of the biggest things that people aren't thinking about. And for obvious reasons, right? We don't want to have to think about ever having an estate plan go into action. But that's crucially important to make sure that your loved ones are protected and that the assets flow the way you wish. But even in capacity planning, right, that's part of an estate plan. So do you have, say, a will? Do you have a trust? Do you have a power of attorney set up, health care proxy, et cetera? So that's a big one that gets put on the back burner.
06:18
Speaker 2
So, OK, so we started out talking about this sort of hypothetical first meeting. You talked about all the questions you might ask somebody. As the meeting is wrapping up and the person's leaving, what's the homework? What do you send them off to do?
06:30
Speaker 1
So I'd say one thing is sometimes I'm asking folks and they don't necessarily know the answers, right? So maybe it is gathering all the information that I've requested, right? They might know some things off the top of their head, but do they understand what sort of insurance coverage they have or what their estate documents say that they wrote 30 years ago? Or they don't actually really know what their expenses are. So some of just the homework is really gathering that data and bringing it back to me so I understand where we stand today. And I think, again, that big picture stuff, right, defining success. What do we want our wealth to create for us? And a lot of times we have competing priorities, so ranking those. So a lot of times these questions come up and then they have to go down and kind of think about it, gathering, of course, the hard data, but also maybe talking to their spouse and sitting down and doing some self-reflection in terms of what we want this money to do for them and their families.
07:22
Speaker 2
So last question, kind of just a big one to leave on. What is one thing that you wish everybody knew about financial planning?
07:33
Speaker 1
One thing is I firmly believe that the earlier you start, the better you're off. I think sometimes people think that there's a certain dollar amount that they need to start financial planning. They don't have enough money yet. But think about it as, again, we're figuring out the destination and working backwards to today. And I also think having a financial planner or advisor in your corner that you trust ahead of time, kind of ahead of even needing them for big decisions is absolutely key. There are going to be things that come up, right? You get promoted to the C-suite, some good things, right? There might be some sad things like someone passes and you get an inheritance. You already want to have that foundation of trust established with somebody so that when you're in those moments, you can ask them what you should do and you trust them. You're I want people to have their wealth allow them to live the life that they want and creating a cohesive strategy across all facets of their financial life in order to do that.
08:33
Speaker 2
Thank you so much for your time. It was great to talk with you.
08:36
Speaker 1
You're welcome. Thanks for having me.
08:38
Speaker 2
Visit fidelity.com slash wealth. Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or solicitation to buy or sell any securities. The views and opinions expressed by the Fidelity speaker are his or her own, as of the date of the recording, and do not necessarily represent the views of Fidelity Investments or its affiliates. Any such views are subject to change at any time based on market or other conditions, and Fidelity disclaims any responsibility to update such views. These views should not be relied on as investment advice and, because investment decisions are based on numerous factors— Thank you. Thank you. Thank you.
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