Stress Less, Live More: A Blueprint for a Fulfilling Retirement

0:00 Today, I'm speaking with Edward Dressel. He is the president and owner of Retire Ready Solutions, which creates software solutions for advisors focused on educating individuals towards retirement readiness, focusing on federal and state employees who receive pension benefits. Ed, thanks for joining me. Thank you, Bell. It's a pleasure to be here. You have been in the business for over 30 years, and you identified a problem that advisors are facing, and can you talk a little bit about that? Yes, I think advisors love complexity, and clients love simplicity, and there's a massive tension between the two. Advisors, they get their education, they learn all these details, they're excited to share them, or they just want to share that they know them.

0:40 Clients simply want to understand the basics, and they don't understand the basics, and often advisors go, let's jump into over-analysis, and the over-analysis is not too different than when my wife sends me to the store and says, buy some toothpaste, and I stand in the aisle, look at about 50 different types of toothpaste, and I don't know what I get in the morning, but it's like, what do I do? And then the client looks at over-analysis and goes, I don't have a clue. Advisors kept it simple for clients. It helps them make decisions, helps them talk about their value system, and helps them move forward in a way that gives them confidence. When you say simplicity, what are you really getting at?

1:20 Is it the presentation? Is it the language we use? What is it? It can be all of that, depending on the advisor. When you're working with a client, are you confident that they understand what you're communicating, or is that part of the conversation? Can you turn to the client and ask them a question about the presentation that makes them respond in a way that goes, oh, I get it? Or if they answer the question incorrectly, you can steer them, say, no, that's not, let me explain something better. I must have made a mistake because you didn't, that's not what this is. I'll give you an example. It comes out of just a simple retirement years chart that we have on our software. I have two advisors that have shared how they've done this on different podcasts.

2:03 They turn to the client when there's a potential shortfall in retirement, an illustrated shortfall, and they say, how do you want to fix this? When the client sees that and responds to it, you're going to have a really good understanding of what they have. It's a very simple chart, nothing complex about it, but the response of the client is going to, it's going to tell the advisor, what do they understand and what's their value system as they're responding? And if there's outside assets, they're not disclosing, it's going to be natural, but it's advisors want to convince them. We've done all the analysis where I think where you want to start is let's get you started in a way that helps you understand. And I know that you understand what we're talking about. So walk me through an example of a time that this has actually changed the dynamic, going from that over-complexity to that more simplistic version.

2:54 Anywhere you walk into, you're an auto mechanic and you go in there and they start talking about the details on the fix that they have to do to your car. And they're giving you all sorts of details. All you want to know is it's fixed. You get a general idea that you're not getting ripped off, that you got a good product coming out. And most people don't want to be an auto mechanic walking out of the store, feel like they got trained. It's knowing the time, not knowing how the watch works. If we were going to go to a class on baking bread, we learned all about the elements, but never learned about putting it together. If I went to a class on baking bread and they just talked about wheat and yeast and butter and eggs and et cetera, and never said, Hey, let's put a basic loaf of bread together and look how it works.

3:36 And then talk about the elements. One doesn't give me any contextualization of the process. I get all the details. Advisors are good at providing lots of details and not initially providing great content. Let's get them a simple picture of what it looks like. And then we can move them forward and help them understand. So the process that an advisor uses, the key part is keep it simple upfront. And probably for most people, that's all they'll ever want. I mean, there may be a few statisticians or engineers out there that want the detail, but even more and more today, as the world gets more complex, we're attracted to simple things. I want my life to be simple. I want it to be easy to move forward. Yeah. There's the occasional person that says, Oh, I'm going to double check you.

4:18 Or I want to make sure the numbers are right. I want a sophisticated analysis on this. That's great. But for the most part, we should be engaging clients in questions that causes them to be interactive about what we're providing, helps them disclose their value system and their assets. If they have a retirement shortfall, how do they want to solve it? Here's the solutions for you. When they talk about how they want to solve a shortfall, they're providing a value system where they're talking about who they are. It's very easy for advisors to get really excited about a solution or a proposed idea that will bridge whatever gap it is. I think that you have a really good point that you have to step back and make it more about the client and what the client wants.

5:06 If you're really breaking it down, then your solution should come organically versus you pushing it on them, if that makes sense. Yeah. And then there are some great scenarios. I mean, there's some great tax strategies and those are a big part of it. But laying the foundation to get there is A, understanding what they do and don't understand, helping them fill in some of the blanks, acting as an advisor, and then working with them as you move forward into a point where they get it. Something that is so simple for advisors to understand, especially when it comes to tax planning or retirement and distributions, things like that. It seems so simple because we deal with it every day. What you don't realize, and this is the same where you're talking about with auto mechanics, it's simple to them.

5:50 But when it comes to the conversation, when you're talking to somebody else, even the terminology is hard to grasp. And having visual diagrams, breaking things down for people who are maybe not as technical is still important that they understand what's going on and how the process will work. Yeah. John Sullivan, who's the chief editor for American Retirements Association, has a great quote. I'll summarize it. That advisors often purposely go to technical because they're secure there. It's almost embarrassing like you're teaching kindergarten and I want them to know that I've got my degree and my education and I've been doing this. Really hard to keep it simple. There's a difficulty in, I'm just going to keep it simple and make it easy for them to understand.

6:35 But the appreciation that comes out of that, let me focus on the model and not our solution. But we've consistently seen people who are keeping it simple significantly increase their sales. Not about a product. It's not about a model. It's about, let me help the client understand and be able to move forward with confidence. What are their emotions as they go through this? If they have confidence walking out of that room, they're going to be a marketing tool for you. If they walk out glossy-eyed, not understanding what they've been talking about, they're not going to be pushing that forward, helping the advisor with referrals to other clients. That's a really good point. When you think about it, the pace of life has kind of picked up. People are dealing with so many things. And if you really want to have someone have confidence in your solutions, they really need to understand what's going on and how it's being done.

7:22 And the simplicity is the key there, right? Just breaking it down so that they can digest it. So you don't come here with just problems. You come here with a solution that you guys came up with. Can you talk a little bit about your software and your approach? We've been around almost 40 years, next year will be 40 years, helping advisors educate clients about retirement. That's been our goal, not how sophisticated analysis can we provide. I remember talking to a pretty high-end person at MetLife. And she said, can you do the details on Roth conversion? Back in 2011 and 12 and 13, right in that era, there was some rules in Roth conversion and some exceptions. And I said, we don't do the details. We create the concept.

8:02 Most people don't get the concept. We're the same way. You go out to social security website, they have a 70 to 100 definitions of words on their website. And you can learn all the details like the bread, all the details about one element. We put it together in a simple to understand picture where a client looks at it, understands it. We coach the advisor to say, how do you want to fix this? The answer to that question, A, tells you what they understand or they don't understand. And also allows you to go, what's the next step or how can I move it forward? Maybe they want to fix it by making 12% rate of return on their investments. Well, the advisor is going to work as an advisor at that point. A good, healthy advisor will say, that's probably not a reasonable expectation over 30 years, over five years or in retirement.

8:45 Let's talk about what we can do to get you to a successful retirement and helping them understand what their situation is and what are the parameters that they can work in to move it forward. Let me ask you this. If an advisor just wants to work with whatever they have, what's your advice on simplifying all the way through the whole process? If you're using a high-end software, any solution should be able to be interactive with the client. Not just bring in a static report. I did the analysis. Here's where we're at. The client should be able to go, what if, and very quickly change the model. Because a client's value system, their questions are going to be different. They could even be a silly question. What happens if I retired earlier?

9:25 How does that impact that? What happens if I move these pieces around? Because life isn't as static as a static report. Even if you bring five reports, a client should be able to ask for changes to the model really simply. There's an adult learning theory, which is a pretty fun theory to study at the surface level. You can get into all sorts of weeds on it. But adults need to interact on what they're hearing, not just be told something and walk away. We're more sophisticated than that. When we come up with an objection in our mind, that objection or that question sits there until we get it answered. If we have a static report, we can never have interaction on that or it's a long cycle to, let me go back and generate a report and come back to you.

10:07 The software, the solutions in front of a client should be set up so that interacting on the moving parts is simple and quick, and it can address the concerns that they're bringing to the table. I've used some software and it does allow you to make changes and you can compare it, but I think the trouble I've run into is that the reports are complex and they're not always comparing exactly what you changed. Maybe you changed the retirement date and it changes a bunch of other things that are connected to the retirement date that maybe you didn't want to change. Or maybe you need to change the retirement date, but you also need to change the withdrawal date. You also need to change when they move, all these other things. I think that's part of the problem too, is that if it doesn't feed properly, you're having to go back in there and change quite a few things to answer what should be a relatively simple question.

10:57 Exactly. Why does it take so long to move one piece a day? The client asks a simple question and it becomes, I now have to work for the software rather than the software working for me. Are the tools that I'm working, working for me, or are they making me work for it and not really serving the client well? What's another problem that you've seen in the industry? Advisors like working with high net worth people, but the rank and file of Americans often get overlooked. They don't get a decent analysis. They don't know where they're at. We've been working with 403b for a long time and federal employees, but 403b teachers are middle-income Americans, and most of them don't really have a clue on the value of their pension.

11:38 I've worked directly with teachers and not as an advisor, but as an educator, they don't have a clue that their pension is going to provide a couple million dollars worth of income in their retirement. If you make five or six thousand dollars a month as a teacher and you find out that your pension is going to provide a couple million dollars of income, it makes your day. It gives you confidence into financial wellness. The studies on the 401k side show there's a lot of benefit for it, but help and rank and files, one of the problems when we go back to sophisticated tools that they don't let advisors help rank and file employees, but if the tools were simple, and that's where middle-income Americans or federal employees where you can just help a person very efficiently, it provides the ability to engage a lot of people that aren't getting help, that are getting looked over.

12:26 401k side as well, I know an advisor that told me, he says, I've given up working, focusing on the high net worth people. I'm helping rank and file and having a lot of fun and doing it and making it good and living at the same time. Part of that is the sophistication of the tools. I can't do a full financial plan for a middle-income 401k person who's got three kids and is in 50 and is just working through life. They don't have the resources to pay for that plan or the assets to justify it, but if we simplify the tools, there's an opportunity to help them in a way that is efficient and helps the advisor make a decent living. I think that's a good point because even if you focus on high net worth or ultra high net worth, there's always referrals or children, neighbor or somebody they put your way that you need to help because that relationship is there and you can't just say, oh no, I don't help you.

13:15 You don't have enough money. That's a very awkward conversation to have with a client saying, I can't help your friend. They're not as wealthy as you. I like the idea that this is a way to maybe open up your book a little bit more and take less effort to provide the same level of output without the complexity because they don't need that higher level complexity. And it's fun to serve people. It's fun to see people have a smile on their face. I get stories from advisors where they get to help teachers and teachers never get to see it. Helping them put a smile and appreciate towards financial wellness, man, I didn't know my pension plan was worth that much. The peace of mind that they get, the advisor helped them with that and the advisor is going to make a decent living in the process and get good word of mouth from serving the client well.

13:59 Give me an example of how you use track in talking to maybe a 401k client. So on the 401k world, the data can be imported for participants and printed a customized gap report for each participant. What we learned in 403b, which people like paycheck analysis and gap analysis, we present in one page and they can quickly get an idea, an overview, something that most participants never get on a basic level. Where are you at? What do you need to do? You need to go visit the portal. The portal doesn't promote advisors. Most participants don't jump those hurdles and figure it out. I've yet to see, I've gone through my, I'm on my third 401k portal and I'm not happy with their analysis, not confident.

14:43 And then an advisor being proactive in the most important part of the K plan, which is not fees, funds, fiduciary and asset allocation is can you retire is the most important part to any participant about retirement, about the 401k plan. It's all purpose of the K plan. An advisor walks into the room, Jonathan Schulte, I said, ask that question to participants. What's the most important part? And he gets the industry speak from the participants. He said, no, the most important part is can you retire? And I'm going to answer that before you leave the room today. He says, they start sitting up and start listening, thinking, did he over promise, but I'm not going to miss this. It's a very engaging way to start a conversation. And the participants, you provide the report. How effective is the report you'd go?

15:24 This is a legitimate question. Matt Monroe out of Syracuse, New York, stopped by a booth one day and said, I can't believe it. Last year, I started using this, this year, when I went back, they brought both reports with them. He was mailing it to their homes. One podcast, I actually beat him up on that. I say, Matt, 10 years ago, you told me you mailed it to their homes. That seems really inefficient. He said, Ed, I work mostly with the men. The spouse gets the report. He says, the key thing I do is send it in an employer's envelope. If you get an envelope from the employer and you're the spouse, you're going to open that up as soon as you get it. I see the gap. They understand it. And the spouse knows that she's probably going to be the one outliving her husband. And she doesn't want to live on that big of a shortfall.

16:05 So she's, the contributions go up, it's engaging. And he says, they brought both reports with them second year, last year's report and this year's report. I've shared that at presentations and I've heard four or five reports coming back with them. Now, most paperwork, having a very good educational tool for people to understand where they're at engages them in a way I don't hold on to most 401k paperwork I have, but understand it in a meaningful way, simple, easy, actionable, shows them the gap and how it affects their paycheck. I am stunned that most record keepers don't provide that analysis on their portal yet. And then it's also passive. I would think that record keepers would be giving advisors the ability to be proactive in that analysis.

16:51 I haven't seen that yet. Tell me about the software. It does just a straight return every year. Does it do a probability of success or how does it calculate? A straight compounding rate of return. You can use a glide path if you want and lower it as they get closer to retirement. We're keeping it simple. We're not trying to do over analysis. If you say Monte Carlo to a group of people, they're going to think if they've heard of it before, they're thinking of Las Vegas. That's probably not a good association with the K plan. Then you're having to explain something that's overly complex. I took my MBA during COVID. I loved modern portfolio theory. It was fun. I kind of geeked out on it, but most people won't. Most people will roll their eyes and go, I don't want to know about that.

17:32 I'm glad my advisor knows about it. The other key aspect that we provide in a K plan report is how does it affect their paycheck? We're going to recommend they go from 3 % to 8% contribution level. That doesn't mean anything. What's concrete is how does that impact my take on pay? We're going to illustrate that estimated on the report and then give them other solutions. What happens if you wait a year and you don't do anything? Retire a year later. Have some outside assets today or at retirement. Some moving parts for them to understand what can they do to get to retirement successfully. I really like this approach. I do wonder when it comes to disclaimers or claiming that this is going to be the return. Is that something you get some pushback from advisors where they feel like maybe this is the projections won't be understood as just projections?

18:17 That's covered in the disclaimers. Obviously it's illustrative only, but even a Monte Carlo is illustrative only. None of it took account for what happened during COVID. There was nobody in 2000 or 2019 that said, well, what happens if COVID happens next year? And all of that is, everything is illustrative that's in the future and there's good conversations to be had, but let's go back to the basics. Let's start with the basics. And then for the people that have enough resources and can justify the time and want it, we can move beyond it. The rank and file in America, the bulk of the population doesn't have a basic understanding. I think a lot of advisors are jumping into a Monte Carlo before they even got the basics covered. It's disengaging or never engaging a client.

18:58 I don't, maybe never engaging a client in a way that can get them leaning forward and them asking the questions or the advisors leading the questions. Do you want to see a statistical analysis now on this simple illustration of a compounded rate of return? Let's talk about a statistical analysis and get more sophisticated for the people that you can justify the time with. When you step back, really what this is, is a tool to increase contributions. Because I think when you're an advisor on a 401k, you see over and over again, people not wanting to bump up their contributions because they don't see the point where they think it's going to be too much. I love the idea that it's going to show you what the change in their paycheck is alongside of how this will affect what they have in retirement.

19:41 Because I think those are powerful numbers that are pretty abstract unless they're right in front of you. One of the reports that you can amend with that, that gap report is a contribution analysis report. And it's basically what happens if you take baby steps? I can get 1% this year, 2%. I can give up a couple of coffee cups, a paycheck, and then put that money in the retirement plan. As you do that year over year, people make the step up, increases. I have an advisor that one of my favorite questions that I asked him on a video, I said, tell me a fun story. And he said, third year in a row, they went to a plan sponsor in Chicago. The strategy session for the third year was they've done significant increase in referrals. We're very happy with where they're at.

20:22 We're there just to maintain. He said, third year in a row, we went there and we got a significant increase in deferrals across the board. It's because people can afford to take baby steps. If you just show them the big one, they don't do it. But we show them what is a 1%, 2%, 3% increase due to your take -home pay? And which one can you afford just to sign up today? And people sign up for it and move forward. And next year, they've reshuffled their finances. They're back to drinking the coffee, eating out. They can give one of those up. And they're looking towards a successful retirement because they made it, it's auto escalation, but in an engaged way. People know what they're sacrificing and they're moving forward and they know the cost and they understand. That's why I gave up $50. I'm okay with that.

21:02 I'm moving forward towards a successful retirement. Yeah. I really liked that approach. I think that that's a lot more palatable than pointing out, you're not saving enough. This percentage isn't high enough. They recommend you do 10, you're doing three. It just seems like having that evidence would be so much more of a motivator. Yes. Yeah. Motivator, a confidence builder, an appreciation builder for advisors to justify their fees with plan sponsors, because you're differentiating your services. There's a lot of benefits when you're educating the rank and file in a very efficient way. And I think the pleasure of just knowing you've helped a lot of Americans move forward with retirement in a successful way. I think it's good for the advisor too, because I've actually run into people who assume that the reason I want them to save more is that they're more in the plan, I get paid more.

21:51 My salary is directly tied to how much they're putting into the plan. And they won't believe you. They just think you're a salesperson. So having that and say, Hey, look at this, just look at this real quick. This is about you, not me. Just an explanation won't cover. One of the advisors that used us, retired now, but he used to charge a premium for providing the reports. He said, well, this is my deluxe level of service. Who wants it? And when he saw that the people that were signing up for note, he said, it was really silly for me to charge 50, 75, a hundred dollars per participant per year. He's because in the long run, I was getting paid more when the contributions went up and they were rolling outside assets into the plan because they understood that it needed to be managed.

22:32 Most advisors, participants push back because they're disengaged. They're not interested. They don't want to help their advisor get richer, really counterintuitive, counterproductive for them. Versus I like, I like the way you said that now we're making it. This is really about you and your world. And if you want to live in this world, that's fine. I want to help you get out of this world. You're not just a buddy with the plan sponsor. You're helping the participants. You have a relationship with the participants in mass, even though you may not even know their names, they go that advisor really helped. And what I like about this is it's not just for 401k participants. You can actually use this for your clients because a lot of clients, even high net worth clients, really their eyes kind of gloss over when you start to produce these long reports and you have all this information and they're trying to digest it.

23:19 Sometimes they just sit back and say, well, I guess I gotta just trust you. And that's not really where you want to be as an advisor. You want to be demonstrating what you're doing, how the different options will affect their outcome and having flexible software and flexible modeling that is simplistic. I think is, it could be very valuable if you use it correctly. Exactly. And I'll give you an example in the 403b world, not a licensed advisors, but they were selling insurance products. I left an LPL conference, flew down to Dallas. And as I walked in the room, I got a round of applause because, and then I would find out and when I was doing my presentation, I hardly talked. The advisors were no longer telling them they needed a product or needed to invest this way.

24:03 They were walking them through a process showing here's where you're at. How do you want to fix it? What's the next steps? And they could justify the changes the client needed to make. And the client understood it, not just having to trust the advisor, but they had an understanding of where they were at and they could take the report home and understand the report and not have to call the advisor three times. I had an advisor tell me about their e-money report. He goes, I don't understand some of the pages. Why am I handing it to a client? He won't let me use his name because he's embarrassed, but helping them understand where they're at in a way that the advisor understands it. And the client can go home and look at the pages and go, this is where I'm at. It gives them a level of confidence. Well, and I think we've all done this where you're printing out a plan and it's hundreds of pages and it's however long of a disclosure.

24:49 Plus there's the model for this, the model for that, the numbers for this, all of this data. And you wonder when you hand them this big thing or you email them this big thing, are they going to look at it? Is it going to be overwhelming? How are they going to find, like maybe you put a tab or a highlighter, like how are they going to find what you were talking about, what they're curious about? And I think that there's something lost there that we need to really understand is really important. And the world is changing. What people are expecting from advisors is changing. It's not a relationship where we are talking above them and saying, don't worry, we'll manage your money. Now people want to be involved in the conversation. They want to understand what's going on.

25:29 This software is bridging some of that gap. For those people that don't have any understanding or just want to keep it simple, exactly. For people that want a lot of detail, we're not going to fit that world. We have tools for federal employees. And if you think of the federal pension system, it's by far the most complex pension system in the whole country. You can get a PhD on it. I mean, it's like, wow, there's so many details. It took us a long time to get it right. One of the advisors that uses us, Ann Vanderslice, she's out of Colorado, would turn to her clients and say, show them the gap, the retirement years gap report and say, how do you want to fix this? She said a client called her up two weeks later and said, Ann, why don't you try this? The client understood it in such a way that they were thinking about it for two weeks. Most people walk out and they go grab a beer.

26:11 And so I have a headache from talking to my advisor. I'm never going to look at this 200 page report again. And when they're calling Ann, it's like they understood in a way that's interactive on a very complex plan to start with. And they're moving the parts around. They're thinking two weeks later. Ann's a very successful federal advisor, helping federal employees towards retirement. It's that model of let's keep it in a way that engages them and keeps them thinking about how can they make their retirement plan successful. What is the one thing you think financial planners should know, but don't? Keep it simple. Don't add the complexities to the conversation. Keep it simple in a way that your client understands and appreciates what you've communicated and can object or ask questions in a that helps them answer the questions they have.

26:56 That's a great answer. Ed, thank you so much for joining me and talking about this simplicity problem we have and offering your solution. I really appreciate the conversation. Thank you, Beth. Why did Blockbuster really go out of business? They lost money on their renter's insurance. There is actually one Blockbuster about three hours from me. Last one is in Bend, Oregon.