BASKING RIDGE, NJ - People work hard all their lives accumulating assets, but they really only understand investments at retirement, when they must start paying for their lifestyle, said Walter Pardo, in an interview in the March edition of Advisors Magazine. Pardo is a Certified Wealth Strategist and CEO of Wealth Financial Partners and WFP Tax Partners.
While most financial advisors are good at the accumulation aspect, retirees need someone to walk them through distributions, and Pardo finds many advisors deficient in that regard. If a financial advisor doesn’t understand the tax implications of distributions, “They’re really not giving a fiduciary experience,” he said.
Wealth Financial Partners are independent advisors who help families and businesses manage life transitions and protect against blind sides.
Most people are unfamiliar with tax mitigation or cash flow, said Pardo. While working, taxes were automatically withheld, and cash flow consisted of what they netted in their paychecks. In retirement, it’s reversed. People in retirement receive income before taxes, and have to be made aware they’re responsible for what’s owed to the IRS and possibly to their state.
Pardo educates clients through this transition, and manages the order of distribution for minimum taxation.
Pardo applies the "Emotional Intelligence" concept to his advising. "Financial advisors must learn to ask better questions and become better listeners," he said. He and his team figure out their client’s style so they can efficiently communicate. “If I know how the client is wired, I want to adjust my approach when interacting,” he said. For instance, an “analyzer” type of client, who requires more information and details, needs a different approach than the “motivator” type, who just wants to know the bottom line.
The first time Pardo meets with someone, he’s looking for a good fit on both sides. “If we’re sitting here three years from today, what has to have happened during those three years for you to be happy?” he asks. If the client says nothing, there is no relationship and he cuts the meeting right there. “If they give me an answer, those are the things I have to pay attention to,” he says. “They are sharing their fears. Knowing what motivates them creates opportunity.”
He sees his role as managing the transition between the working years and retirement and managing goals. “The job is to identify the gap and say 'I can help you fill the gap if you want to hire me',” he says.
Pardo feels that now is the best time to be a financial advisor. “There are fewer pensions out there. How many people have 401k with a pension on top? Not many. Now people are re-wiring and wondering how it will work out income-wise. I do a lot of that,” he said.
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