Take Advantage of Times Like These

Thought Leadership: Wealth Management Q&A

BizTimes Milwaukee: What does the financial services industry get wrong about why people build wealth? 

Joe Maier: It assumes everyone is the same—and that we all live by the ethos of Scrooge McDuck. But in my experience working with clients, the vast majority do not care one bit about building wealth for the sake of just having more money. What they want is more impact, more happiness, more fulfillment. Also, they understand wealth is only one resource to achieve impact, happiness and fulfillment. Another resource is time. In fact, for many clients, a significant value we brought to the relationship was advice on balancing time and money. 

BizTimes Milwaukee: How should people think about down markets? 

Maier: A mentor one time told me, “Don’t ignore the opportunities inherent in any market.” While a down market is a scary thing, if we keep our heads and take advantage of its opportunities, our impact can be dramatically increased rather than lessened. 

BizTimes Milwaukee: What does that look like in practice? 

Maier: Our wealth has more impact when we buy low and sell high. When prices are dropping, instead of ruminating about the transitory value of your personal balance sheet, use it as an opportunity to grow more wealth and impact. One might think this idea is so obvious and apparent, but that is not the case. Human beings are wired, neurologically, to give into the fear of a falling market and follow the crowd—selling low rather than high. If, with the help of an experienced advisor, you can use the fear of others as a buying opportunity, these lower prices can help increase your impact.

BizTimes Milwaukee: In addition to “buying low,” are there other specific strategies that help increase impact? 

Maier: Qualified plans and traditional IRAs have been phenomenal tools to help build wealth. But from a mathematical standpoint, an even more powerful tool is a Roth IRA. Paying the cost to convert a traditional IRA to a Roth IRA is cheaper in a down market. Further, making the conversion when stock prices are low heightens the possibility of more tax-free, post-conversion growth. Many clients we work with want to make impact on people beyond themselves. One way they do that is by transferring wealth to those people, either during life (a gift) or at death (a bequest). A challenge to these transfers is they can potentially trigger a tax to the transferor. That tax is based on the value of the property given away. Therefore, it makes sense to give away property that has high appreciation potential and low value. That is the very definition of the current state of the markets. Finally, rebalancing stocks in down markets, if done correctly, can increase impact via tax savings. That helps us get more wealth to the right people, the people we care about. 

To read more about financial planning in today’s economy and meet our team of advisors: https://www.johnsonfinancialgroup.com/take-advantage

555 E. Wells    Milwaukee, WI 53202

(888) 769-3796    johnsonfinancialgroup.com

Joe has extensive experience helping high‐net worth individuals, family offices, business owners and corporate executives meet their wealth and legacy goals. His areas of specific interest and skill include business succession planning, financial and estate planning, and wealth transfer strategies.