Preece Financial Planning, LLC

Did you know you can get organized and see a diagnostic report of your financial situation without ever even talking to a financial planner?   Try it out by going to the my website and clicking on Start a Plan. Of course, taking the steps to improve might require some conversations, but why not get it started? PreeceFP.com

Common investment sales strategy: "Buy A-share mutual funds because by paying an up-front fee and then a lower ongoing fee, your lifetime fees will be lower, AND look how well these funds that I cherry-picked performed over the past 5 years!" Here's why this typically doesn't work well for consumers. First and foremost, it can turn into a service nightmare. Think about the compensation structure for this advisor: They get a hefty commission when they get a new client, then a smaller payout moving forward. What does this mean for how these advisors often approach service? It means they're often more inclined to go find new clients than serve current clients. Think about it - you start with $100,000 when you move to your new advisor. They receive $5,000 when you move your money to them, then they get $250/year thereafter. They can get paid 20 times what you're paying them on an ongoing basis just by going and getting one new client to invest the same amount of money with them. This typically results in these advisors focusing on getting new clients and ending up with hundreds of households who invest with them. How do you think the service capabilities compare between an advisor who serves 500 households who is still focusing on getting more new clients and an advisor who serves 125 but makes the same amount of money without trying to get new clients? The other downside? A-shares are sold as being cheaper in the long-run, but they often have pretty high ongoing expense ratios - it may be that it's NOT cheaper for the client, it just pays less out to the advisor in the long-run. On top of higher expense ratios, they're often pretty tax-inefficient. The bottom line? Don't get sold on cheaper investments. You'll almost certainly get cheaper service, and you might not even save any money.

Ways to access cash value in life insurance! Complete with detail about each strategy! But first, things you should know about me: 1. I don't sell life insurance 2. I rarely recommend cash value life insurance (it just doesn't make sense for most of the people I work with) 3. I have experience with all of these strategies There are 4 main ways to access cash value in a life insurance policy. 1. Take a withdrawal 2. Take a loan against the policy 3. Surrender the policy 4. Exchange the policy for an annuity A couple of these can result in the policy lapsing unexpectedly (meaning a loss of coverage and a potential tax hit), and the others involve just getting rid of the insurance altogether. It's important to understand what the results are going to be before you proceed. Taking a withdrawal: Taking a withdrawal from your policy can decrease the death benefit, and it could be taxable, depending on your basis and how the policy was funded. But it's a simple option - you don't have to pay it back, and it's a one-time thing. Taking a loan: This can also decrease your death benefit, and you have to pay interest on the money you take from the policy. Depending on how the policy is set up, paying the loan back can be pretty simple, but it can also result in the policy lapsing if you're not careful. You won't owe taxes when you take a loan from a policy, but if the policy lapses, you will have to pay tax on any gain. This is one that often surprises people and is very misunderstood. Taking loans against a cash value policy is often sold as 'tax-free income' in retirement, but this strategy gets complex FAST. Always work with a planner (not a salesman) if you're going to use this strategy. Surrender the policy: If you don't need the insurance anymore, you can just surrender the policy. In this case, your insurance goes away, you no longer have to pay premiums, and you get the cash value (minus any surrender charges). You may have to pay taxes if there's a gain on the policy. Exchange the policy for an annuity: "But Austin, annuities are baaad!" Not really - they're just another tool that might benefit your situation. Anyone who says a financial product is always bad probably doesn't understand that product. Work with someone who understands it. Here's why annuities can be good tools for cash value in life insurance policies - if you have a large gain, you can move the cash value into an annuity without paying any tax! There are low-cost annuities out there, and you can use annuities to create another stream of guaranteed income in retirement or just to continue to defer taxes on your gains. Cash value life insurance is expensive. That's why I usually lean toward term policies. But they can be very flexible. If you already have one, you should look at all of different things you could do with it before determining whether you should get rid of it or not.

People who post things that are WRONG get a lot of traction. And that's what I can't stand about social media. Controversial posts tend to go a lot further than factual ones. What does controversial often mean on social media? Just. Plain. Wrong. When I see something that's incorrect or misleading about personal finance on social media, it's hard for me not to add context. Things like: Hating on direct indexing Touting life insurance products as better than investments Clear misunderstandings of what financial planning actually is And when you have a bunch of people trying to add context on incorrect posts, the comments blow up, and more people see the incorrect content. Lesson: Be careful what information you take from social media. Nobody on here knows you well enough to know what's best for you.

"We're planning on retiring next year, and we want to know what we need to do to make it happen." This sentence makes my stomach turn. And it's SO COMMON. So what happens next? Advisor gathers information, quotes them a fee, and builds a plan in which the ultimate recommendation (among some others) is a portfolio managed by Advisor. Is there value in that? Absolutely. So what's the problem? By this point, the couple with one working year left has already made most of their financial decisions - and implemented a bunch of sub-optimal ones. And Advisor can't really go back and help them fix most of those choices, so they don't even really come up in conversation ("Mr. and Mrs. Smith, you really shouldn't have done {insert poor financial decision}, but, unfortunately, there's nothing we can do about it now."). Sure, maybe they had an advisor who encouraged them to save more and buy life insurance. But it's rare that they had anyone alongside them to help with long-term tax strategy, whether to pay off the mortgage, how big of a house to buy, saving for college for their kids... So when they get to that point - starting down retirement NEXT YEAR - they are typically either over-prepared or under-prepared. By a lot. It's often the case that there's nothing they can do other than work a few more years. It also happens where they could have been done working 5 years ago but didn't know it (often the 'advisor' who was just encouraging more saving is partially to blame). So how do we fix it? We start PLANNING sooner. Not just saving and investing, but PLANNING. Planning to make sure you Don't under-save and work longer than you want Don't over-save and give up too much life now Accomplish the goals you have in mind in the timeframe you envision That's what I mean when I talk about living more life. Really good financial planning will help you get there. And it's why I started my firm to work with people who don't typically have access to good planning because of how the industry is built - people 10+ years from retirement. Don't be that couple that starts planning too late. It's worth it to start now.

Here's a trade I fear I missed out on: Buying real estate in Destin, FLORIDA!!! 🥁 🥁🥁🥁🥁🥁🥁 It's been a good week listening to #TaylorSwift, but if I'd only known she was going to call out a city like that... Would have bought up some houses! Point is, you can't predict the events that will change the future value of something - and even if you knew the events, what's the chance you'll be right about their impacts? Set it and forget it. #TTPD

Are you paying too much for car insurance? Here are things that can decrease your premiums and SAVE YOU MONEY! Increase your deductible: It's common for people to have $500 deductibles on car insurance. If you have a solid emergency fund, you can probably afford to cover a repair of up to $1,000 if you get into a fender bender. Increasing your deductible from $500 to $1,000 will DECREASE how much you pay monthly for your insurance. Do some shopping: Independent agencies will check coverage across multiple carriers to get you the best price for the coverage you need. You can also check at some captive agencies (like American Family or State Farm) to see how competitive they are. Don't do this too often, but if you haven't checked in a few years, now might be a good time to check. Drop that Collision/Comprehensive coverage! On new cars, it might make more sense to have collision/comprehensive - this is coverage that covers repairs to your car when there isn't another liable party (you rear-end someone, back into a pole, or hit a deer). Repairs on new cars can be expensive, but once your car is over 5 years old, you should consider whether the extra cost is worth it. I just dropped mine on my 2018 Hyundai, and it decreased our monthly premiums from $68 to $27. Don't pay when you're not using it: If you have a summer vehicle or a vehicle that doesn't get used often, you can take coverage off of it when it's just sitting in the garage. When it's not insured, you're not paying premiums on it. Drive a less expensive car: Think about it - if an insurance company might have to pay out $70k if you total your truck, they're going to charge you more to insure it. By driving a lower cost vehicle, you can benefit from lower premiums. Notable mentions: Improve your credit score Be a safe driver Don't get tickets, and DON'T CRASH YOUR CAR Car insurance premiums have increased a ton recently. You don't have to just grin and bear it.

"The price of anything is the amount of life you exchange for it." -Henry David Thoreau. Don't let money be your goal in life. Make life the goal, and use money to live more of it (and that means something different for everyone). Trade some life for some money (by working), then trade some money for some life. Whether that means vacations, coffee, a bigger house, a nice car, or just less work, those are the choices you give yourself. Everything has trade-offs, and sometimes those trade-offs involve money. People like me help people like you make the choices to get more out of life.

Business owners and solopreneurs - how often do you set aside time to work ON your business? I took half a day last week to work strictly ON my business. During tax season, I got a taste of what it's like to be VERY busy, and I found out that I need to get more organized and build better processes. I'm calling it the State of the Business (creative, right?), and I'm going to try to set aside a couple of hours each month to go through the same process: 1. Write down how many families I'm currently engaged with and anything significant that has changed in the past month. 2. Go through a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats). 3. Write down the things I need to be intentional about doing to utilize my strengths and take advantage of opportunities. 4. Write down what I need to do to address my weaknesses and protect against the threats to my business. 5. Create an action plan with specific tasks taken from 3 and 4. One thing I'm learning about running a business - it's about a lot more than being good at the services you offer. Is there anything I'm missing? What works for you?