The Power of Preparedness

Chad Dutcher – NPF Investment Advisors, December 23, 2024

Describe your integrated approach to helping clients protect and grow their wealth. How does NPF’s process differ from other financial services firms?

NPF Investment Advisors is different in that we do both robust financial planning and in-house investment management for our clients. We learn a lot about our clients’ circumstances through the financial planning process, and we are then able to marry the financial plan with an investment strategy that aligns with their goals and circumstances. Since we do investments in-house, we’re also able to eliminate a layer of fees for our clients since we’re not using outside investment products, which typically come with an added cost.

How does the financial planning process evolve through various phases of a client’s financial journey?

With younger clients, we’re working through optimal saving strategies and answering important questions like: Should you use the Roth or Pre-Tax 401(k)? How can you be more productive with large cash balances that have built up in savings accounts? Do you need life insurance? Have you updated your estate plan to account for unforeseen circumstances?

As clients get closer to retirement, the first thing they want to know is: “Have we built enough of a nest egg to do the things we want to do in retirement?” Ideally, this process begins at least five years before retirement. We start thinking about the proper mix of stocks and bonds, how to think about Medicare premiums, when to claim Social Security, how to manage taxes from IRA withdrawals and future required minimum distributions.

Later in life, many of our clients are thinking about the legacy they hope to leave for their family and supporting the entities they’re passionate about. It’s very common for us to meet with our clients, their estate attorney and accountant because clients don’t like playing telephone between professional advisors. This process helps ensure that everyone is rowing in the same direction for the client.

Why should tax planning always be a priority as part of a client’s investment strategies?

With very few exceptions, if you make money, you’ll owe the government something at some point. You can’t avoid the tax man forever. When you’re young, this is generally through the Roth or Traditional 401(k) decision and deferral of capital gains in high-income years. In retirement, it’s about how to tax-efficiently live off your nest egg. Sometimes, it makes sense to pay a little more now so you don’t have to pay a lot more later.

Tax planning is a multi-year process, not just a review of last year’s returns. By having a thorough understanding of our client’s financial picture, we can project what their tax situation looks like now and what it may look like in the future. At NPF, we work closely with clients and other professional advisors, like CPAs, to minimize what clients can expect to pay in taxes and maximize the amount they can expect to leave to their heirs and charitable entities.

What does multi-generational wealth planning entail?

We hear a lot in the financial media about the “generational wealth transfer” from baby boomers to millennials and how advisors need to “engage the next generation.” NPF Investment Advisors has been working with clients in West Michigan since 1933, and as you can imagine, we have many clients whose parents and grandparents have also worked with us.
We encourage clients to open the book of their financial story with their children and grandchildren — not all at once, but one chapter at a time. This process tends to help instill good savings habits early on, while providing comfort to the older generations that their children are on a good path before sharing too much information.

What’s the most important step clients can take to mitigate risks in their financial planning and wealth management strategies?

Financial plans are not static. It’s a dynamic process that evolves over time based on the client’s circumstances. A well-developed financial plan should provide comfort that you’re well-positioned to navigate a tough bear market, while at the same, well-positioned to benefit from the long-term growth that the stock market has historically provided.

By regularly reviewing the financial plan, making updates and ensuring we have the proper mix of stocks and bonds, our clients are much less likely to panic in a bear market and far more likely to ask, “When do we buy?” We want to build portfolios and plans that eliminate your worry and let you enjoy retirement.

Interviewed by Brooke Bilyj for Crain’s Content Studio. To view the interview on Crain’s website click here