Episode 517 – 7 Common Wealth Management Mistakes to Avoid

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Welcome to the Your Life Your Wealth Network, helping you find clarity and comfort for your life and wealth.

John Walker
Hey, welcome to the Your Life Your Wealth podcast. I’m John Walker, Regional Vice President at Mercer Advisors. Always a pleasure to be with you. And today, we’re gonna talk about wealth management. I know, big shock, big shock, but we’re actually gonna talk about it in terms of the most common mistakes that we see.

As advisers in the industry and, and what you could potentially do to avoid them. And when we talk about wealth management, we mean so much more than just choosing investments or reacting to the headlines in the market, right? It comprehensive wealth management in the way we think about it.

Not only connects financial planning and investment management, but also incorporates things like tax strategies and estate planning and insurance solutions into one much more coordinated, holistic approach. But

Even successful professionals and retirees can, can make common mistakes, you know, when it comes to, you know, their plan themselves, and, and it really can undermine their long-term financial security. So whether it’s, you know, allowing emotion to seep in or overlooking some really good tax opportunities, it generally comes from a lack of coordination, not a lack of resources. And so today we’re going to talk about the most common things that we see and, and give you some suggestions on how you can avoid those and to, to help me have this conversation and, and, uh, kind of talk through some of these things that we see quite a bit is my good friend and colleague, market leader and CERTIFIED FINANCIAL PLANNER®, Mr. Jason O’Meara. Jay, as always, thanks for joining me.

Jason O’Meara
As always, thanks for having me.

John Walker
Absolutely, right. And, and I think the best place for us to start, and, and it’s probably the most frequent thing we see is equating investing with financial planning, right? And, and the lack of understanding that an investment strategy, an investment plan – it’s just one spoke in the wheel of financial planning, right? It’s just one piece of a much larger picture and oftentimes without a really thorough comprehensive plan, the investment strategy may not actually even be aligned with the overall objectives.

Jason O’Meara
It’s, it’s, listen, us, us as a profession or I’m gonna call it an industry because I’m gonna go beyond just the financial planner aspect of this.

We did a really terrible job for decades of just highlighting the importance of investments and treating it as if it was everything, right? In the past they made promises that they had no ability to keep and then sent you a statement every 3 months showing you that they could not keep that promise, right? We’re going to outperform the market. We’re going to do this. We’re going to do all this. You’ll never lose money with us. Buy this stock, you know, Wolf of Wall Street stuff, right?

And it’s, and it’s really has been probably the biggest thing that we as a profession have done is moved away and has moved to the plan is the most important thing because all this stuff, it ripples, right? So you have investments and they do well, that’s great. That also could be bad because you’re going to be adding taxes if you’re buying and selling too much to try to capture every up and down peak and valley of the market.

So having this, having this investment be primary focus makes no sense if you don’t know where you’re trying to go, right? If you don’t have this plan in place.

John Walker
I say this one all the time, right? If you don’t know where you’re going, any road will get you there, right? It’s, it’s a famous music lyric, and it, but it speaks true really when it comes to planning, right, because unfortunately, you know, the legacy of that former investment style approach that the industry drove, right? It remains, even though, you know, it’s been, I mean, you and I have both been in the in the industry for decades and we’re still fighting to overcome this narrative and this idea that the measuring stick of success is how your portfolio performs, right?

And and I, I, I don’t mean to diminish it. Like you do need to have a portfolio that makes sense, that, that is aligned with your cash flow needs, and, and objectives, but even a portfolio that looks really good on paper may not be the one that’s best suited to support what your plan needs, right? And so,

Jason O’Meara
I think we’ve said this before, you want to align the risk with your, with your stated goal, with your stated need. Like if you are, excuse the football analogy, but you know, only people throwing Hail Mary’s at the end of the game is the ones who are losing. So if you’re riding in the retirement and we’ve, we’ve shown you you’re successful, you’ve made all the money you need to make. You can have this fantastic life with the money that you have. Why are we going to leave it at risk because we think we need to be earning 15% every year, right? And we’re going to take additional risk. It doesn’t make sense. It’s, it’s, it’s not, you know, appropriate as far as I’m concerned.

John Walker
And, and this, this assessment of, you know, we get introduced to a lot of new families, and one of the things, you know, let’s talk about investment performance, and we often disarm people, I think, when we say, well, why? Right? Why, what, what do, why do you need to outperform the market? Why do you need to double your money? Why do you need to continue, why? And that question is often disarming for folks because the, the entire rationale for hiring a professional is, well, I wanna, I do want to do better.

I want, and, and so we would temper that and say, yes, we, we want to be a partner who can build a portfolio that’s going to perform the way you want. Any good financial planner should. But the most effective approach starts with identifying clear goals, clear outcomes, and reverse engineering into something that makes sense for you and your family. But for it to be really effective, it needs to account for.

Things like taxes and as you said, risk management and income needs and legacy considerations. The portfolio and the investment strategy is one spoke in the wheel of a broader plan, and if you ignore those other ones, it may not be the most effective thing for your family.

Jason O’Meara
One of the reasons I think that that is, and I don’t want to belabor this point anymore, I think we, we beat this horse, beat this dead horse on this one, but I think one of the things is it’s a really easy measure stick, yeah for families to be able to say my portfolio did 15%, therefore my person is doing a good job.

John Walker
It shows up on a statement every month, right? And if you are getting performance that you’re happy with, then you may equate that with success for your, for your wealth partner, your wealth advisor. And what we often find, Jason, is when that is the only measuring stick, you very, very quickly have a different point of view with that partner when the market displays volatility or when the portfolio doesn’t perform relative to the way it was expected to perform. And we, we share with families all the time, we cannot control the markets.

The markets are their own animal altogether.

Jason O’Meara
They do what they do.

John Walker
What we can control is how you participate them in them and how they play a part within your overall strategy and, and, you know the, the other huge component of this, um, is that – and Rick Mercer was famous for saying this – that more wealth is lost through this in this country through poor tax and estate planning than the markets will ever take away from you, right? You’ve heard me say to new families we meet all the time, you know, the markets giveth and the markets taketh away, but the IRS is usually a one-way street.

And so, you know, ignoring the long-term impact of taxes can be really, really, really expensive and detrimental to family planning, right? And so for many families it’s going to be one of the largest line items on their expenses over their lifetime, and a lot of the folks we meet with and a lot of investment professionals only address them at tax season, right? You know, when, when April comes around, they’re, they’re now they’re, now we’re dealing with taxes and that oversight.

Jason O’Meara
When April comes around, it’s too late, far too late, right? Nothing you can do to improve it.

John Walker
And the failure to plan proactively for taxes, as you said, can really reduce your after-tax return, right? And so, you know, when you, if you’re only measuring stick when we talk about investments is, as you said in your earlier example, I’m up 15%. Great. How much of that did you give away?

Because of the trading you were doing in short-term and long-term capital gains. How much did you give away in, in other things? How much did you give away in inefficiencies by using the wrong or the, the less uh, optimized fixed income investment? You know, did you use tax inefficient investments?

The best example that we often show people and we’ve seen quite a bit of lately for some reason is a lot of families who have done very, very well in maybe growth-oriented, uh, mutual funds. But, but every single year come tax season, they get a distribution and they go to file their returns and they say, why do I have this, you know, why did I get a 1099 and I have this, you know, $100,000. I didn’t sell anything, right? It’s great that my, my funds are up 15% this year, but I just got a distribution of $100,000 for capital gains and dividends that I didn’t ask for and now I have to pay taxes on, right?

Yeah, and well, that’s, that’s one of those things that, that if you don’t know, you don’t know, right? You don’t know what you don’t know.

Jason O’Meara
And um I, John, I literally had this conversation yesterday, uh, same exact example. It’s actually funny we’re talking about today, um, around that of why do I use certain, certain types of investment products, you know, ETFs, mutual funds, like why would you use certain ones.

And that example was right there, perfect. OK, I have this, I have this actively managed mutual fund that’s a growth fund, and what you don’t see is under the hood there’s a whole bunch of buying and selling that’s going on. And those mutual funds don’t hold those, don’t keep that. That’s not their problem. They distribute it out based on how many shares you have. Each share gets a certain, gets a percentage, and you know you can have.

Worst case scenario is, it’s a down year, your portfolio is down, and they distribute gains, right, you know, and if you’re not prepared for that, that’s, that’s when you’re like, I, you know, I, I’ve had people tell me they fired advisers over things like that.

John Walker
Yeah, they’ve probably fired them for less, right? That’s often an inflection point where we meet people and say, I got to do something about my taxes, right? Because we, we are often introduced into a relationship when people become hyper-aware of the impact that that inefficiencies in tax is playing in their part.

You know, common things we also see, Jason, right? We just talked about holding tax inefficient investments. We, we see inefficiencies when it comes to asset placement, holding the wrong investments in, the wrong tax characteristics, right, in the wrong types of accounts, um, you know, overlooking tax loss harvesting opportunities, right? No one wants, no one’s like pining for down markets, but they’re gonna happen.

And you’re never gonna pick every winner and every, you know, everyone, every investment you choose is not gonna be a winner. So when you pick that dog, that’s OK. It’s OK. Use it for what it’s, what it can be used for, right? Maybe harvest some losses along the way. We find a lot of folks really struggle to do that with any kind of consistency or discipline.

Jason O’Meara
I’m sorry. Like when we talk to people, I always, it’s almost like, John, you know, it’s almost clockwork. We’re like 3 to 1, why would I want losses, right? You know, and like we have to, you have to explain that sometimes you can take those losses and offset gains, and you can take those losses and offset future gains. Doesn’t have to be within the year in which you, in which they experience, uh, those, those losses, right?

So having someone who’s going to take that holistic view of your taxes and around your investments, around distribution planning, around all these things, it’s, it’s important because uh how many times, John, do we sit there and show, show illustrations, lifetime taxes, and say, hey, we just make these couple of tweaks, watch your lifetime taxes go down. And it’s, if you’re not having a lifetime tax approach to things, you may be leaving money on the table.

John Walker
Yeah, I, I mean, I just, before we move on, I’d be remiss to not say that purposeful intentional tax planning is not about avoiding taxes entirely, right? You’re going to pay taxes, you’re going to pay taxes that that are justified. What we do is about managing when and how you pay them, right?

It’s, it’s, it’s creating more favorable tax outcomes because that allows you to, you know, we say this and it’s the simplest little adage, but, you know, every dollar you’re not paying in taxes is money that you can keep. And when we show it as a part of a broader plan, this is resources that you can allocate to other things that may be more important to you. Whether it’s a gifting strategy or a Roth conversion or your legacy, you know, planning.

It’s, it’s about balance sheet management. Jason, we’ve certainly seen this, you know, in 2026 some heightened volatility in the market. The, the, the other thing that we see quite a bit that tests the discipline of a lot of investors is this volatility, right? The fear during downturns and in the inverse, the overexuberance and confidence during good markets can often undermine a family’s long-term wealth building capacity,

Jason O’Meara
Right? Emotions, I mean, let’s call it what it is and um I spoke with a gentleman who, this is what he does. He’s a, he’s a psychologist and he studies people’s emotions and emotions and it’s how the brain works, right? And everyone knows this, but he said it and it holds true. People make the decisions emotionally and then backfill that with facts that support that emotion, right? And when the market is going all over the place, more importantly, when the market is going down over a period of time.

One, everybody knew it was coming. Everybody always says, well, we knew this market was gonna go down, but, you know, the reality of it is, there’s always a reason for the market to go down. It doesn’t mean it will. But the reality is people look to react and unfortunately when the market’s going down, it does cause pain.

It does, you know, it, it’s actual pain, and you are more apt to avoid pain than go towards pleasure. Right? So, uh, people say, well, we should get out of the market because everything’s going down right now.

Right, cause they’re emotional. When you have an advisor and you have a good advisor, they’re gonna hold you to that fire and say, no, now is the time to not only get stay in the market, but we should rebalance. We should look to do a couple other things to just kind of fortify the portfolio and prepare you for the return, because usually the best days in the market are right around the worst days of the market. And if you miss those best days, your investment performance will lack significantly over time.

John Walker
Yeah, I mean, selling investments after a decline, chasing performance after a rally, right? Emotional investing quite frequently locks in losses and misses recoveries,

Jason O’Meara
Right? And so you’re buying, you’re selling low and buying high, which is the exact opposite of what you’re supposed to do.  And the role of a good financial advisor who’s a fiduciary who can anchor your approach back to the long-term strategy and plan may help you preserve that capital and not make emotionally driven decisions that don’t actually align with the objectives you started from originally.

John Walker
One of the things, Jason, that I think, you know, isn’t always thought about or discussed is that saving for retirement. While important, many people overlook or underestimate how complex planning for income in retirement.

Jason O’Meara
I mean, John, that’s where we earn our money. Absolutely, because the distribution planning. The transition from a growth, a purely growth-oriented, accumulating portfolio to one that needs to distribute income in a tax-effective way that is going to be thrust upon you with things like required minimum distributions or that will be altered by when you choose Social Security, that will be really impacted by how, how that income is taxed, right?

That is something that people really, I think, really underestimate how complex that can be, right? Because it’s, it’s not so simple as just to say, I’m going to get as much money into my retirement accounts as possible, grow them as big as I possibly can, and you turn on Social Security as soon as I retire, and it’s like

John Walker
OK, but what was the purpose or intentionality behind that? Because what you fail to recognize now is, do you understand that when you start distributing from your IRA at significant levels, that that’s all going to be taxable income. How much more do you need to take now out of your retirement account to support your cash flow needs because of the, the bite that that that taxes take out of it? How, how does that Work for your family if the markets are down, but you still need to continue withdrawing at a similar level, right? That sequence of return risk we call it, because if, if you need to take $100,000 out of your IRA every year to, to pay your bills and 20 to 30% of it is going to taxes.

Now you might need to take $1,300,000 or $40,000 out every year. And what happens when the market’s down 10%? Because now you’re taking even more and more. Can you, can that pot of money that you’ve worked so hard to grow, that you’ve done all the right things to do, that you’ve had good success with. Have you thought about how you transition it to actually sustain you in retirement, right? And that is not simply just, it may not be just going along as the way you did to get there.

Jason O’Meara
Yeah, it’s a really good point because people don’t start thinking about, you know, the distribution until it’s time for distribution, absolutely, right? Um, I had a golf coach one time ask me why do I hold my hands the way I do in the club.

And I said, I, I don’t know. He’s like, exactly. He’s like, if you don’t know why you’re doing it, how do you know if it’s working? You know, and I was like, that’s absolutely fair question, fair question. So when I, when I meet with people, they’re telling me what they’re putting into retirement, how they’re doing it. I always ask why, why are you putting, why did you choose to do that versus maybe something else? And most of the time I get told, well, isn’t that just what you do? And I said, Well, you know, you’re putting money in traditional assets. What about a traditional IRA? What about a Roth? Have you considered that, right?

And, and whatnot. But the reason I’m not asking that question to tell them that they’re doing anything wrong. I just want them to start focusing on why are we doing everything that we’re doing, you know, what’s the purpose behind it? And again, if you, if you don’t know why you’re doing it, how do you know if it’s the right thing to do?

John Walker
Absolutely right. And the last thing I would share is that, you know, retirement planning has to account for not just the balances that you’re going to have in your accounts, but how do they create a sustainable level of income? How do they consider things like longevity and inflation and healthcare costs and candidly tax changes. There’s a lot of things, tax law changes, and at the end of the day, your priorities, right, your lifestyle needs, right? Those are all things. It’s not, you know, those.

I think we all remember, many of us remember those commercials of like, what’s my number? I mean, the, the, the pivot away from that is so necessary to say everybody’s needs are going to be wildly different depending on what your lifestyle is going to look like. That is going to really, really drive that conversation.

Jason O’Meara
Because in reality, if you think about it, John, what was my priority 10 years ago? What was I, what was I looking to do 10 years ago?

And look at where you’re at now and think I changed. I know what I wanted 10 years ago is not the same as what I want right now, right? So why would 20 years in the future be exactly the same as I am today, right? So you, you kind of have to build into a plan, this, this level of wiggle room to grow and change, you know. So yeah, and there’s the only way to do that is through appropriate planning.

And not, not about what your stock to bond allocation is. It’s not about, you know what I mean, you’re, what, what, uh, you know, how you’re managing your investments or, you know, there is some level to those things. Those things are important. How do you manage, uh, risk like with insurances and whatnot, right, because, hey, a disability that, that could throw off your entire retirement plan if you don’t have it.

John Walker
So I’m glad you brought that up because that’s where I was heading next. That’s one that would probably be the, you know, on our list of seven things we’re going to share today, and I think that’s number five, Jason, of overlooking risk management and insurance plans. No one’s going to bang any of our families over the head and say, you need life insurance, you need this, you need that, you do, but good financial planning has to at least understand and protect what you’ve built so that one unexpected event doesn’t derail just years of good planning, right? So it’s, you know, evaluating your life insurance, your disability insurance, your long-term care, uh, liability coverage, right?

Like do you have what you need in the event that, as life changes, as you mentioned, where we are 10 years ago is probably not where we are today. Things like marriage, career changes, those things, you know, create new needs, and they also could create gaps or redundancies, right, that, that often go unnoticed, right? I mean, are we evaluating how all of these life changes have potentially changed what you need from a risk perspective and have we managed that appropriately, right? So no one wants to, no one’s expecting the worst thing to happen to them, right? And we don’t, we don’t position it that way. It’s simply saying, make sure that you have mitigated risk where possible and evaluated the tools and resources you have to do that.

Jason O’Meara
Right, exactly.

John Walker
Uh, Jason, I think, you know, one of the things that we see a lot as well, and I think it’s because it’s something we do internally here at Mercer Advisors, and so we get introduced to a lot of families that have this need. But a lot of folks that are listening have put off estate and legacy planning because they don’t think they need it yet, right? Uncomfortable, or largely because it’s complex and, and yeah, and it’s, it’s uncomfortable. No one wants to talk about their own mortality, right? It’s not fun to, to consider what’s going to happen if your spouse predeceases you, right? And so, you know, that brings up uncomfortable feelings and emotions that most folks don’t really want to discuss, but failing to plan can really, really unhinge all your best intentions, all your financial work, all the things that you’ve done, um.

Jason O’Meara
And it can here’s what you don’t want to have happen, and John, I think you’re just probably about to go there is. You spent your whole life amassing this fortune or whatever fortune, call it a fortune no matter how much it is, right? You spent your whole life for you, right, for you, you spent your whole life amassing this fortune and then you die. Well, what you don’t want to have happen is the state of Pennsylvania or New Jersey or New York, wherever you live, is deciding where it goes, yeah, right? Like I’ve heard, John, I’ve heard you say it, I’m gonna steal your thunder for a change, uh, you know, everybody has an estate plan. It’s just whether they know it or not.

John Walker
Yeah, it just may not be the one you want, right? And so, you know, you’re right, right? Leaving the hands of…important decisions in the hands leaving important decisions in the hands of the court system or creating massive headaches and stress for the folks you left behind, or wife and family. Like you’ve seen, we’ve seen families get torn apart. You think, oh, my kids are going to be fine. They’re mature, they’re great. Money changes people.

John Walker
It can. It absolutely can. And so…

Jason O’Meara
I’m not saying it will happen to everybody, but like you said, it could.

John Walker
Just having the foundational plan that you need, right? Whether, you know, and, and doing simple things like making sure your beneficiary designations are up to date, that they’re correct, making sure that, you know, there is no lack of clarity around your intentions, right? Leaving things amorphous or undocumented or, or up to interpretation can really cause changes in family dynamics, risks, conflicts, right? And so, you know, we, we really want to make sure that as you are going through the financial planning process, whether it’s with us or anybody else, it’s so critical that your plan is documented clearly that, you know, and that it is, it aligns with what your intentions and values are, right?

Make sure that you have the right documents, things like powers, financial and medical powers of attorney, to make sure that someone is appointed to make those important decisions for you if you can’t make them for yourself. Make sure that your beneficiaries are, are reflective of who you want resources to go to.

Make sure that you have wills or trusts that further document it if appropriate, right? Don’t leave things to chance or, or up to, you know, and, and for some families, there’s also really important tax considerations as well, um, you know, make sure that what you have built is not exposed or diminished to unnecessary tax, right? Let’s ensure that the folks that you want to receive the benefit of your, you know, your legacy get so in the most tax effective way, right? That’s good financial planning. That’s good estate and legacy planning, and, you know, it’s really critical that, that you do that. And, and again, it’s, it’s, it’s not going to be reflected on your statement from your, you know, your investment account, but boy does it have a huge impact on your family’s balance sheet, right? And so, um, you know, it is, it is so critically important to make sure that that is integrated with the overall financial plan. Um, Jason, I guess the last thing, and we can, we don’t have to overdo it on this one, but we would certainly, um. We see one of the most painful mistakes is that working with advisors who are not fiduciaries.

Jason O’Meara
I’ll make it’s very easy. Ask your advisor, are you a fiduciary? If is, if the answer involves more than one word, you may want to reconsider.

John Walker
Right?

Jason O’Meara
Yeah, that one word isn’t yes. If it’s a yes, but…

John Walker
It may give you pause, right? The reality is not all advisors are held to the same standard, right? And, and a fiduciary advisor is legally obligated to put your interests first at all times with all advice, with all recommendations. That standard should reduce Any conflicts of interest they may have, and it should encourage them To provide advice and guidance that actually supports your objectives rather than the sale of one particular product or approach or solution, company or whomever or whatever, right? And, and so, you know,

It is really important we, you know, we see a lot of folks who have what could be appropriate investment solutions, but they don’t really always understand why or how they got that, that particular product or solution. And, and one of the ways that you can mitigate that, one of the ways that you can hold your partner in this to a higher standard is to work with someone who is held to that standard.

Themselves as a fiduciary, and duty bound to do what’s your, in your best interest. So, so Jason, as we think about this, it’s not about market timing. It’s not about predicting the future. It’s not always about the investment approach. It’s really about having a coordinated financial plan that’s built to evolve, as you said, with your life as it changes. Exactly. Jason O’Meara, CERTIFIED FINANCIAL PLANNER® and market leader here at Mercer Advisors, thank you so much for joining me today.

Jason O’Meara
Yeah, absolutely. This was a great, great conversation.

John Walker
And so, if you wanna learn more about, you know, how maybe Mercer Advisors does this, or if you have questions about how a real integrated plan can add value to you, you and your family, we’re always here to help. Give us a call anytime at 215-558-3500. That’s 215-558-3500. Or you can email me at jwalker@merceradvisors.com. That’s jwalker@merceradvisors.com. If you want to read more specifically about what Jason and I discussed, you can find a great article under the insights tab on mercerdvisors.com on the seven most common wealth management mistakes and how to avoid them. Really, really helpful information there as well. I’m John Walker, Regional Vice President of Mercer Advisors. Thanks so much for listening to Your Life Your Wealth podcast. See you next time.

If you’re interested in learning more about applying the principles we discussed to your personal financial circumstances, please visit Cordasco Financial Network at CFNplan.com.