Ep 9 - The GOAT (“Greatest of all Tax”) specialists - Scott T. Ditman, CPA, PFS — Consultant - Citrin Cooperman

• Integrated financial planning is crucial. Professionals from various disciplines must collaborate to create comprehensive strategies that address all aspects of a client's financial health.
• Scott Ditman highlights that effective client communication is as important as technical expertise. Explaining complex concepts in simple terms helps clients make informed decisions.
• Focus on client goals rather than arbitrary benchmarks. Aligning financial strategies with specific life objectives leads to more meaningful outcomes than chasing market performance.
• Stay informed about legislative changes. Proactive planning in anticipation of potential shifts in tax laws can significantly impact estate planning strategies.

Disclaimer: [00:00:00] The following podcast by Fusion Family Wealth, LLC Fusion is intended for general information purposes only. No portion of the podcast serves as the receipt of or is a substitute for personalized investment advice from Fusion or any other investment professional of your choosing. Please see additional important disclosure at the end of this podcast.

A copy of Fusion's current written disclosure brochure discussing our advisory [00:00:15] services and fees is available upon request or at www.fusionfamilywealth.com.

None: Welcome to The Crazy Wealthy Podcast with your host, Jonathan Blau. Whether you're just starting out or are [00:00:30] an experienced investor, join Jonathan as he seeks to illuminate and demystify the complexities of making consistently rational financial decisions. Under conditions of uncertainty, he'll chat with professionals from the advice world, [00:00:45] entrepreneurs, executives.

And more to share fresh perspectives on making sound decisions that maximize your wealth. And now here's your host.[00:01:00] 

Jonathan Blau: Welcome everybody to another episode of The Crazy Wealthy Podcast. I'm so happy today to have. Uh, a, a friend of many years, Scott Ditman. Um, we met actually, uh, today I'm 58 and I'm [00:01:15] not gonna tell you how old Scott is. You'll figure it out when I tell you the next line, but I'm 58 and Scott and I met in about 1997.

So I was about, I. Uh, 31 and Scott was about 40. And, uh, the years go by quickly. But, [00:01:30] uh, what a wonderful friendship, professional relationship and everything else. So I wanna welcome Scott Ditman, who, uh, is a consultant and former head of, of the, uh, tax estate planning, uh, group at Burden, uh, LLP, which is [00:01:45] now part of Citron Cooperman.

So Scott, welcome to the Crazy Wealthy Podcast. Thanks, Jonathan. It's great to be here. Yes, I, uh, I, um, I feel the same way. It's great for you to be here. I'm just teasing yourself. [00:02:00] So I, uh, I I thought we'd start off today. I know something you and I talk about a lot, um, as we developed our professional relationship many years ago.

We really appreciated the perspective that each of us brought to the [00:02:15] table as it related to, to working synergist, syner with synergy as it relates to all of the different disciplines from estate planning, to investment planning, to tax and cashflow planning and, and, uh, insurance planning and all of those disciplines.[00:02:30] 

And to recognize how important it was to make sure that we had a great team, that we all can't do everything. We're not the Rambo. Of investments or tax or financial planning. We need disciplinary, uh, approaches and, and to coordinate them [00:02:45] together. So why don't we talk about that? I know you have a, a very definitive perspective on the importance of that.

I'll let you talk to it. 

Scott Ditman: Yeah. It's a funny thing to me as, um, as I evolved in, you know, in working in, um. In this [00:03:00] personal wealth services area, as we call it, uh, I noticed that one of the biggest flaws in helping our clients is each of us, whether an accountant, an attorney, an investment advisor, an insurance specialist, you know, we each work [00:03:15] in our lane and we take care of what we're supposed to do.

But I noticed a lot of professionals just did their work in their lane and didn't focus on the big picture. I'm doing my job, but [00:03:30] in context, what I'm doing, how does it fit in to taking care of a client's holistic plan? And I've seen that throughout the years that that's something that's really not done nearly enough or thought about enough.

Jonathan Blau: [00:03:45] And when, when, as you, as you. Learn that experientially by seeing that it wasn't being done, uh, enough. Uh, what did you do or what we were able to do to address it, right? Because you can control, uh, your approach to that, [00:04:00] but you can't always control, particularly if, if you or I didn't, uh, coordinate or bring in the other.

Professionals in each of the discipline disciplines, uh, state, how, how did you, uh, how did you address that politically [00:04:15] in a correct, politically correct way to make sure that Hey, let's get back on the same 

Scott Ditman: page. Well, in an, I'll give you an example. Like in our space, like when you and I worked together, like I'll, um, I would, I would say to a client, you know, I think I could be helpful.[00:04:30] 

In context helping you. If I sit in on the quarterly investment advisory meetings, like for example, right before, uh, this podcast. I was on, uh, I was in a meeting, it was an hour and a half with a client. The client has [00:04:45] real estate business. The client has a lot of personal inherited wealth, and trust me, I'm not going to this meeting because I'm giving suggestions on, uh, asset allocation and picking stocks and bonds.

I'm in there to provide. [00:05:00] Context, I'm listening and we're trying to help, we prepare the tax returns for the individuals and the entities. So as an accountant, you have a unique perspective on what's going on because you're involved in the day-to-day, you so [00:05:15] see all the drill down information. 'cause you do the tax returns, you do cash flow modeling, you do financial statements for the businesses.

So you're in a unique spot. So I sit there in a lot of these meetings and I listen. Then if someone says, you know, we're [00:05:30] looking. Uh, to make transfers for estate planning purposes, what should we think about transferring? Because we work with the real estate on a day-to-day basis, we have a very good handle on what assets are, uh, [00:05:45] potentially going to grow.

What assets produce cash flow. So you can, you know, you can really help in this, uh, in this context when there's a lot of trust. You know, where to take distributions from, where not to. So you sit there and you [00:06:00] listen and in a very, like you said, politically correct way, you just there to help and you try to widen the conversation.

So the investment advisor is not just talking about. You know, increasing, uh, increasing wealth and how we [00:06:15] did in the quarter. We're looking at the strategic plan and how each of us is helping to take care of that. And by the way, in this, uh, in this meeting, the estate planning attorney was on the call, so it was done in a very, very positive way.[00:06:30] 

So when the other advisors really don't think this way. In a very nice way. You just try to encourage them. You talk to the client, and then I find that by being involved in these meetings, say on a quarterly basis, the client sees and [00:06:45] appreciates how one plus one equals 64 instead of each of us just doing our little thing.

And then the client's overall goals may or may not be taken care of. 

Jonathan Blau: So, so basically part of what you do is you insert, you try [00:07:00] to, where possible, insert yourself into one or other of the planning meetings. And this way as an observer who has the benefit of, of the tax, broad tax, uh, based knowledge that comes off of tax work that actually returns.

And I appreciate [00:07:15] that. As you know, uh, for the audience, I have a master's of tax, uh, in tax and, and a master of. Uh, a business in, in accounting. So, uh, my first five years was spent in tax and, and I always knew I wanted to come into the broad planning space, having learned the [00:07:30] technical issues that wealthy families learn, uh, need to deal with so that this way I wasn't just a salesperson, which I, I don't want to denigrate my industry, but I.

Many of the professionals in my industry are primarily salespeople, and there's nothing necessarily wrong with that. But I didn't want to be only a [00:07:45] salesperson. I wanted to have, uh, a much broader, uh, scope when I dealt with clients. And one of the things I admire, always admired most about you is what you said.

Um, I heard what you said. You may not remember what you said, but you said, I, I go into these meetings and I just want to help. [00:08:00] Right? And, and. Unfortunately for people, I mean, you're very modest. I know you're one of the, uh, more respected people in your space, um, and always have been, uh, not by me, but broadly in the industry by estate planning [00:08:15] firms and so forth and deservedly so.

But, but what you didn't ever do, I. As you always, you, you, you never were going into a meeting to show how smart you were, and I think that that's one of the reasons you're so effective because so many people who have your set of [00:08:30] skills and your background and, and, and your, uh, visibility in the industry, unfortunately, sometimes also have a big ego.

And they let that ego overtake the main purpose of the meeting, which is to help. I wanna show that I'm the guy [00:08:45] or the woman that knows everything and I, I don't want to just, I'm not looking to generalize, but, but you, you've seen that And I've seen it and, and that I think I. Is one of the things that makes you so effective and, uh, so, so much of a pleasure for, for people like me [00:09:00] and for your clients who we share in many cases to work with.

So, uh, uh, I just think that's important to point out. It's not just about technical skills. I'd say it's about bedside manner and you have one of the better ones I've, I've seen in, in the business. So, uh, I [00:09:15] think the audience should know that. Well, I appreciate that. 

Scott Ditman: Maybe, um, I, I'll go back to how I started out because, um, I think it might be interesting, uh, to the listeners to, uh, to know how I developed this approach.

Like, I started work. I, 

Jonathan Blau: sorry, I wanted to, you're [00:09:30] stealing my thunder, so I wanted to ask you that. So now let's do that. Let's go into that. Okay. But I think the gentleman's name, who was your mentor was Howard Misto. Yeah, correct. Right. When I'm, 

Scott Ditman: so, when I, well, when I started working at Burden about 40 years ago, [00:09:45] um, I started out, I was a tax accountant.

I, I enjoyed doing what I was doing. Uh, and I was just, um, you know, working among lots of other people. We had a tax department at that time that had about 50 people in it. And one day, Howard [00:10:00] Mistol, who was my mentor, he approached me and he said, Hey, I got a couple of estate. Tax returns that I need prepared, you wanna do it?

Uh, and I said sure. So I took the tax returns, you know, over a period of a couple of weeks. I finished both of them. [00:10:15] And I went to Howard and I said, I think these things are in pretty good shape. Who do you want me to give them to review? And Howard said to me, uh, why don't you give them to me? There's no one else.

In the tax department that knows anything about state estates. So [00:10:30] a light bulb went off in my head. I said, this guy who's the head of the tax department, who by the way, was one of the most brilliant, um, tax professionals, accountants or attorneys that, uh, that I ever had the pleasure of meeting and working with.[00:10:45] 

So I said, if this guy, if he says there's no one else here but him that knows this stuff, this is a great career path for me. There's no one else here. I and I, and I really enjoyed this stuff. I, uh, I started preparing the returns and I saw this would be something that was [00:11:00] very interesting and I learned a lot from him.

Technically, he was a genius, but the first meeting that I ever went to with him. I sat down with him and I saw him explain complex [00:11:15] theoretical things to a client. Very complicated transaction in English, and I said, boy, I have to learn how to do this, because he was very patient and empathetic to the client.

Who had just lost their spouse, [00:11:30] and he was very good at explaining things, and he took the technical and he explained it in English, and I learned a lot by watching him. And this guy who was, he was smarter than almost anybody. He never threw that out at [00:11:45] a meeting. He handled everything in a, in, in a very, very.

Appropriate way. And just over the years of working with him and I had the pleasure of working with him, uh, for almost 20 years, [00:12:00] uh, I learned, I learned a lot, both technically and how to work with clients. And I remember he always told us, well, we strive for here is technical excellence and everybody working together to take care of the clients.

And I never forgot that [00:12:15] because that's always been my mantra and it's a funny thing. I noticed that by working that way, year after year with a wide variety of clients, that when you work that way and you were excellent [00:12:30] and, and technically, and you were. Easy and helpful to work with. I noticed that I was able to bring in a significant amount of business because, I mean, I didn't know anything.

I modeled myself after what this fellow [00:12:45] was doing, and I'm grateful that I had that experience. But other people like attorneys, like investment advisors like yourself. They would seek me and our firm out because they said, my goodness, most accountants don't do what [00:13:00] you do. You know, they prepare tax returns, they give it to us.

And that's very limited. They work in a very limited silo. But you, yeah, you do what you're doing and you think outside of yourself and you always think about, um, you [00:13:15] always think about how is what I'm doing impacting the client's holistic plan and. I dunno. It just, it worked so well. It's funny. I was able to generate a lot of work for the firm and bring in a lot of new [00:13:30] clients without really ever having to sell, using your words, right?

I never had to go down and say, you know what? Now it's time for marketing. The marketing always came to doing excellent work. Taking care of the clients. [00:13:45] And I, I learned that throughout, uh, throughout my career. I never worried about the money and bringing in business and, and all of that because it happened naturally when you did your job the right way.

And that's why, [00:14:00] circling back to what we talked about at first, I am very surprised that more professionals that work in our space don't think that way. A lot of them just do their job and they don't think about how the other disciplines are gonna, [00:14:15] you know, fit into the greater good. Life Insurance is another great example that you and I always talk about.

You know, insurance people, a lot of them are selling products and one of the things that I do, just like I sit in on investment advisory [00:14:30] meetings. To help provide context. Same thing with the life insurance. Like I'll tell a client I have nothing to gain or lose by this. I'm not selling anything. I'm not getting any paid one way or the other.

But I made myself become an expert in [00:14:45] that area because I wanted to be an independent source of objectivity for clients. Do I need this? Don't I need this? What fits in best with the overall strategic plan that's important to you? S Right. And that's [00:15:00] basically how I worked through, uh, and continue to work throughout my career.

Jonathan Blau: Yeah. And look, well, you, you mentioned products. I mean, in my, in my industry as you know, um, even today after what I call a large movement [00:15:15] to, from, from brokers to becoming, uh, now registered investment advisors and, and fiduciary advisors where they have to. By law have the client's best interest it. We are still an industry that was born out of the de desire to create and sell [00:15:30] products, right?

Financial products. And that's, that's embedded in our culture. And that's a problem like when you, when we, you and I work together and we bring in other team members or work with existing other team members as a group to help the client not to show, [00:15:45] uh, the group how smart either of us is, right or isn't.

Um. What that counters is, what I see going on in many, in my industry, in your industry, in generally in the device industry, which is there's not a lot of checks and balances [00:16:00] anymore. So even though all of the disciplines, we'll keep referring to estate planning, tax and cashflow planning, uh, risk and insurance planning and retirement, flink, all of those integrate and should, should coordinate together the one-on-one equals 64, but.[00:16:15] 

Sometimes the problem is people are addressing those issues as advisors because they get paid on them. So if I was the kind of financial firm where I, I wasn't a true fiduciary in all aspects and I sold insurance, for example, I. I might know about [00:16:30] insurance, but I might be bringing it up because I have the incentive.

'cause I know I can make an insurance sale. And so somehow or other, I always find, and I always want your view on this, I always find that it's better to work with independent providers who don't have individual [00:16:45] incentives to gain anything other than helping the client as opposed to where it's all done in one shop and nobody has checks and balances.

How do you feel about, about that, uh, issue? Oh, I 

Scott Ditman: totally, I totally agree. It just makes a lot more sense. It's so, it's, it's [00:17:00] trickier. It can be very, uh, appealing to somebody to say, Hey, this is great. I can go to one shop and get everything done, but am I really getting objective advice? Am I only getting one firm's perspective or take, [00:17:15] you know, one of the reasons that, uh, working in my area has been so much fun for me is that, you know, you learn a lot.

You try to be technically good at what you do, but each client's situation is [00:17:30] different, and that's what makes it fun. And each client's, uh, each client's situation, I always call it, it's like a, you know, a 20 dimensional puzzle. You have to, right. And you, and the first step. Is that you have to listen to the [00:17:45] client.

And these client situations are never easy. Sometimes we're dealing with three generations of people. We have different clients and everybody has unique needs. Um, and like you and I always say, when you're putting together a [00:18:00] strategic plan, you have to start with the easy building blocks, how much money is coming in.

How much money do I need on an after-tax basis to take care of what's important to me? And then is what each of us doing contributing to [00:18:15] that? You know, you got clients that you and I work with that, you know, most of them are coming at it from two different. Life perspectives. Either they're just starting out and the planning is, um, you know, I wanna have kids, how do I provide for their education?[00:18:30] 

I wanna buy a new home. I'm thinking about retirement planning. Or you got the next level where somebody is trying to reach retirement and their lifestyle is changing, and what do they have to start thinking about? My goodness. I gotta start thinking [00:18:45] about how am I gonna draw money down from my retirement plan in a tax efficient way?

What am I going to do when the money stops coming in? And I have to figure out a way how I'm gonna take what I have and provide for the rest of my life. I. Which in a [00:19:00] lot of situations can be 25, 30 years. You know, how do I, how do I do that? And that's really the context that each of us, whether we're an investment person or an accountant or an attorney, we should all be thinking about [00:19:15] it from that take.

And that's what I think is missing. And to your point, a second ago. If everybody, if you're coming out of this from one firm, you're not getting all the perspectives of the thought. I, I could have different thoughts on things and then you [00:19:30] could come in and you could say to me, you know, that's pretty good, but what if we think about this?

And also the beauty of what we do is generally there are not necessarily right or wrong answers. Our job is to brainstorm and present our clients. [00:19:45] With different suggestions on how to do things and let them make the decisions. Um, that's when we met like 27 years ago. That's one of the things that, uh, that I picked up on right away.

Why? Um, I [00:20:00] enjoyed meeting with you, and you and I have become good friends. We approached these things from the same angle. We're not afraid to brainstorm and come up with different suggestions, and it doesn't matter whose solution is the one we end up with. Our [00:20:15] total focus is taking care of the client.

And it's also interesting, you know people, a lot of people sell stuff. Whatever discipline they're in, I find that we make more than enough money. Uh, just by doing things the [00:20:30] right way. 'cause clients appreciate that and they wanna work with us. You know, 

Jonathan Blau: I'm convinced I would, I would change what you said.

I would take out the, then enough, I bet you in the long run than most of the people we're, uh, we're, we're, we're providing services alongside of, we're probably make [00:20:45] more money. Why? Because if you're doing the right thing. Your, your, your clients are staying longer. They're referring their friends, and that compounds to me and makes up for whatever the sales that you might miss by selling some stuff.

That's just how I, I always [00:21:00] viewed 

Scott Ditman: it. No, I, to I totally agree. I don't know. It's worked for me for a long time and that's why like, I enjoy working with you like, um. One client that you and I working are working on currently is a perfect example. There was a matriarch of a real [00:21:15] estate family, and it goes back.

I got involved with them about. 25 years ago when the patriarch had just passed away and we worked together with the estate planning attorney and over time, you know, we collaborated and [00:21:30] did a lot of different things. And in this situation we had a grandparent parent, grandchildren, now great grandchildren and it's tricky to plan 'cause everybody had.

Different needs and different goals. We worked over the years, including with [00:21:45] our business valuation group, to figure out intelligent ways to transfer the real estate business down generations into tax efficient trusts that are not even gonna be included in the kids' estates. And we did it. By [00:22:00] isolating the business assets that made the most sense to transfer, like I said before, which are the ones that are, uh, cashflow producing, which are the ones that are projected to increase in value.

And over time, you know, through working with an excellent estate planning [00:22:15] attorney, we transferred a lot of assets and a lot of growth and significantly reduce the estate taxes. We also brought in life insurance, uh, where it could strategically help. Then you and I met with the, the [00:22:30] principles over time and figured strategically how to invest their assets with the overlay of the real estate business.

And, you know, that's, that could be a typical scenario, but also, uh, very different. And the matriarch just [00:22:45] passed away about a year ago, and now we're working from a different perspective, transitioning the business interests to the children and grandchildren. And, uh, you know, like you always say, this is a major life event change [00:23:00] where we have to sit down with the beneficiaries and figure out, okay, now what does it mean?

Um, you know, if somebody was, somebody wants to retire, you know, what are they looking for here in cash flow? What can they expect? And when you and I worked together. [00:23:15] And the attorney in our situation too. What makes it terrific is we're all working from the same perspective. We're looking at what we are primarily responsible for, but we're making sure that we're always thinking about, am I taking care of the [00:23:30] client?

Is each of these clients holistic plan being taken care of? And, you know, these things evolve over time. Like when the matriarch, uh, passed away. You can't just have a static plan. Things are gonna change, and when they change, of course, that's when [00:23:45] you have to jump in. And, uh, you know, and act and, uh, you know, rejigger the plan when the paradigm 

Jonathan Blau: changes.

Yeah. When things change, like, uh, e even even on a sub level, like for example, when the grandchild, uh, recently got [00:24:00] married and had a baby, right? That changes what the plan might have looked like if it was three years earlier that the matriarch passed away, right? So there's all of these things and what I love about the way we work together is I call you, you call me and we say, you know, why don't we hop on the phone today?

The, the meeting's in two days. [00:24:15] These are my thoughts. What are your thoughts? And, and even together to, to then let's challenge those thoughts and see if there's something either of us might be wanting to add or, or might have overlooked. The other thing I want to ask you as it relates to going back just briefly to Howard Misto, [00:24:30] because I, I, I know how wonderful you say he was, and I know you also said in the beginning of your career.

You chased him around kind of like a little puppy dog and he shoo you away once in a while. Like, I shoo my puppy dog was begging for food, but you can't, you kept going back, which is great because you knew that there was so much wisdom [00:24:45] there to, uh, to to, to have imparted on you. But there's gotta be at least one, if not more than one, um, aspect of what Howard did.

And I didn't know Howard, uh, too well, um, that you were able to enhance, right. That you were able to say. This [00:25:00] guy was great. I got all this knowledge and this is how he does this, this and this. I think if I did it this way, could even enhance it. Just I'd love you to share that if, if, if you could think of that.

Scott Ditman: Yeah. Howard. Howard was terrific, like I said, but what I [00:25:15] wanted to, I. Make sure we were doing is expanding, uh, expanding how we looked at it. You know, the chart you were referring to that had all the different spokes on it and the different aspects of financial planning. That chart was [00:25:30] something that evolved outta me, that I thought about.

'cause Howard was terrific with the clients, but he was still a bit compartmentalized. Howard mm-hmm. Was a bit mm-hmm. I don't know what the right word is, if it's shy or whatever, but like, you know, he would make a call to the estate [00:25:45] planning attorney and say, Hey, you know what? This business asset is throwing off cashflow, but this is the one that's gonna grow.

Let's look at gifting it. He would do that, but it was a little bit more limited. Howard never sat in on the investment advisory [00:26:00] meetings. He didn't wanna intrude on the space. I. He didn't, um, he didn't really, uh, go over the life insurance planning, you know, he let them do it in their own way. 

Jonathan Blau: So I kind of So you, you really enhanced it by, [00:26:15] by really emphasizing the importance and developing it the way you wanted to, of the whole holistic, of integrated approach, I mean, to everything, right.

Making sure that that was really what led the group's planning efforts. 

Scott Ditman: Yeah, absolutely. Because I never, [00:26:30] I, I'm telling you, I, when I work with a lot of different people in different areas, I am shocked at how I. Few people in different disciplines really think that way. Definitely in my, uh, in my profession, people are [00:26:45] afraid, oh, I don't do life insurance.

I, I don't know that, I don't know anything about investments. Uh, so I wanted to develop that expertise so I could help better. I felt like I could really help better, and that's why, you know, when people look at the chart, they'll [00:27:00] see that, um. And, and you know, it's interesting. Nobody really, it, it doesn't matter.

The leader sometimes in each of these situations is a different person, but it doesn't really matter if everybody checks their egos, like you said a little while ago. And they [00:27:15] really focus on helping the clients. I. This stuff really takes care of itself. You know what else I'm surprised about that you and I talk about, I am shocked how many clients worth a lot of money, even north of a hundred million dollars, are [00:27:30] just not getting taken care of the right way, because they don't have advisors that really come at it this way.

It, it, it, I guess it shouldn't surprise me, but I've been put in front of a lot of situations where these clients just. They don't have [00:27:45] really integrated strategic plans. They just don't. 

Jonathan Blau: Well, what's interesting is, um, the last podcast guest I had, I dunno if you had a chance to listen to it, but show Penny who created Dynasty Financial Partners.

So he was basically saying in to shorten up what [00:28:00] he, what I what relates to what you were just talking about is that the big family offices, right? They, these people who have hundreds of millions of dollars they can afford to decide. I don't wanna work with Fidelity as my custodian. I'm gonna work with, uh, with Schwab or Pershing.

They have enough [00:28:15] money to do that, right? But the average investor can't decide that, right? The average investor doesn't have the clout to, to choose their own custodian, uh, in that regard, right? They, they have to work with whoever their firm is working with. But what Cheryl Penny recognizes [00:28:30] having worked in that high net worth area at Citigroup for many years before he founded Dynasty, was well imagine if I can aggregate.

Firms like Jonathan that could get to, you know, billions of dollars right? In, in, in assets, uh, hundreds of billions of dollars in assets. Now we [00:28:45] have that power. Now every smaller client has the ability to operate as if they were family office. You know, Jonathan can choose whether he wants Pershing or Fidelity, uh, for the clients, and, and they can choose.

To have their advice coming from a place where there aren't [00:29:00] products being sold, we can go to Blackstone or Goldman Sachs or wherever you want to go, Vanguard. And so that democratized that whole, that whole um, scale that was only available to the very wealthy. But you are saying something, that's why we wanna relate to it, [00:29:15] that even the very wealthy like that oftentimes are not getting the right planning advice, uh, from whether it's me or whether it's you or whoever, whomever it is.

Well, 

Scott Ditman: you know what I see. I, I've always said that. The, the strategic planning and what [00:29:30] people need to think about. It doesn't matter if you're worth a million dollars or a hundred million dollars, you have the same issues. It's just a matter of zeros, right? How much money is coming in, how much money is going out, and what are my goals?

1. [00:29:45] What's my overall strategic plan? It's the same difference. So whether you and I are planning for someone of more modest means, or we're talking about somebody who's worth $500 million, doesn't really matter. It's the same types of [00:30:00] things. Um, and if you just, well, 

Jonathan Blau: I actually say it matters even more 'cause what you're saying now I'm gonna steal a little bit of the topic and go bring it a little bit back to behavior since that's important to, to what we're doing on the Crazy Wealthy Podcast, but also in how you and I.

[00:30:15] Practice together. You through what I've done over the last five, six years, you've really embraced it, which I'm so happy and proud of. Uh, but. When I wrote the article in the middle of 2020 that Barron's published high highlighting the behavioral, uh, [00:30:30] approach that was taken by the world's, or at least our country's wealthy investors, known as the Tiger 21 Group, uh, and Tiger 21.

1. Led by this fellow, Michael Fel, a very successful, smart entrepreneur. But what I learned by looking at their quarterly [00:30:45] publication of what as a group, now they manage over a hundred billion of their own money, what they do with their money, more cash this quarter, more hedge funds next quarter. They, they were disclosing that as a group and what I found is what I already distinctively knew, but could prove through their own published, [00:31:00] uh, data, which is that these people as wealthy, as smart as they are.

Make the same mistakes as, as the people who are less wealthy and less successful in business. But they did it with two big differences. And this goes to the point you were making. They do it with a lot more money and a lot more [00:31:15] confidence. And so the benefit, right, of the good advice to them, I would argue, is more valuable than to the smaller clients because the dollars that you're saving and helping them, uh, manage properly are much more impactful.

Right? So it's, it's, and, and, but [00:31:30] sometimes. Because they have big egos. Justifiably, I get it. Um, they don't think that it applies to them. Meaning behavioral, uh, foibles doesn't apply to them. Right? They're not human, in other words, in their mind is really what they're thinking. Um, I'm gonna bring that [00:31:45] back for a second, Scott, and this is a little bit selfish, but I've always been proud because I know.

How good you are at what you do. And our friendship developed the way it did. But I guess sometime close to 20 years ago, you called me and said, you know, I, I, I'd like [00:32:00] to talk to you about advising me on my, on my investment planning. Tell me a little bit about, uh, without, you don't have to shower me with praises, but I just want to.

You know that, that to me is so meaningful and because you have such a perspective that I respect, whether you are my client or someone else's. If you [00:32:15] told me, I think you should use this estate planner, I would respect that. Just 'cause I trust your, your judgment that way. So I'd love to hear what led to that and, and, and, um, and then I'll ask you a separate question on that.

Scott Ditman: Well, my wife [00:32:30] Nancy and I were getting to a certain point where I was thinking about, uh, scaling back, working like over the past five years, I've, um, I sort of transitioned and I'm working a lot less hours than I used to, more part-time. [00:32:45] So the money coming in is less, and I started thinking about, you know, what do I, what do I want to do here?

If I stopped working and I just thought it would be good, I felt comfortable. I was handling things myself, but [00:33:00] I thought it was important to partner with somebody who could help me with that. And since Joran my philosophy was so aligned, I thought that you would be perfect to partner up with. And also, um, I was also concerned what happens if, [00:33:15] God forbid I passed away and Nancy was by herself.

Like, you know, I have a good handle on this stuff. But she doesn't, she has, she doesn't have the same kind of interest in it that I do. Right. But she would need help. And I was thinking, [00:33:30] you know, who would I want her to call if something happened to me? So based on just helping us today like you've been doing, but even more importantly, what would happen if I passed away and Nancy needed help, I thought, who better?

Um, you know, could I put in place for her to [00:33:45] call, you know, to help her with planning for the rest of her 

Jonathan Blau: life? Your trust in me for that has always meant the world to me. And uh, but I want to, I want to take a step, this again is what I said early on about you being so good at what you do, not just because [00:34:00] you're technical, which of your selflessness, because you're not going in to show how smart you are.

One of the things I tell people who come to interview us when they don't bring their spouse and they say, nah, my spouse doesn't need to do anything with this. I don't need to, you know, whoever, the money spouses don't need to come in. And I always [00:34:15] say to them, I won't work with you because. You might not be meaning to be.

So let's talk it through. 'cause if you are, I won't work with you. Period. If you're selfish and you're meaning to be, don't, I don't work with selfish people, but if you're selfish, you're not meaning to be. Lemme talk to you about why I'm telling you that because if [00:34:30] you are, even if you think you're the smartest person in the world, you made all the money, you can make all these decisions.

Even with my help, you know, your wife or doesn't, doesn't need to come in. Your, your, if you're the spouse with money, that's the wife. Your husband doesn't need to come in it. It's selfish because what happens is you may [00:34:45] or may not know all those things and, and behaviorally you're just as susceptible as everyone else, which you might not accept whoever you are.

But you may or may not know all those things, but your spouse doesn't. And if you are gonna keep them in the dark and the first time I meet them as the day, God forbid something [00:35:00] happens to you, shame on you. And so that goes back to another where you are selfless, right? You said. You said I could do some of this, but I, I wanted to have someone help me and I also wanted someone for, uh, the continuity of, God forbid something happens for my family.

And that's just so [00:35:15] important. It's such an important, to me, reason why people should hire people in, in this space that they can trust and that they do trust. So, um. One of the things I wanna also now relate back to behavior. Recently you've gone to a couple of meetings, family, uh, [00:35:30] big, big wealth, wealthy family time meetings where they're reviewing their investment, uh, plan and so forth.

And it always seems to start 'cause of the behavioral work we've done together. And you've read all my. My, uh, my, my information and podcasts and so forth, you've learned some things [00:35:45] from it. And what I love is you go to these meetings and it immediately almost starts with the same thing. Well, this did this, this for investment performed X, Y, Z, uh, versus the s and p that did this.

And they go into a dissertation for about 40 minutes and you take 'em back and [00:36:00] say, wait a minute, guys. This is all okay, but let's talk about what your objectives were as we sit here today, you know, a year ago, and let's see how far or, or, or close we are from having met them and should we make any, any, uh, changes to the plan, [00:36:15] right?

I mean, you took it back to the basic and what I, what I always find is, is that, um. When you talk about planning, what I always say about planning is someone will say, so, so you always talk about planning. Once someone once said this to me, Jonathan, so you're [00:36:30] telling me if I have a plan, I'm guaranteed to make it?

It's no, I never said that. Here's how I like to frame it. Having, having a plan is no guarantee of success. The failure to develop a plan is the closest thing I've ever seen to a guarantee of failure. That's how I put it [00:36:45] to that. Right. And, and when I, you know, that, that's, that's what I always say. And so when you go into these meetings, they forget all about a plan.

It suddenly gets focused on all the wrong things and they start performance chasing and, and miss the whole point and the, and the expertise of the people like you [00:37:00] in the room gets squandered potentially. But you don't let that happen. So you can talk about that. Well, that's 

Scott Ditman: why, that's why I said like before, that's why I like to sit in, I.

On the meetings. 'cause you can always bring it back to the overall strategic plan. You know, one thing I [00:37:15] did want to mention before we, uh, before we wrap up, is sometimes there are external factors. Not often, but sometimes there are, um, that could impact the plan. And one of them is that the 2017 tax Act [00:37:30] is set to expire at the end of this year.

One of the big things in your in my space is the current lifetime estate and gift exemption is currently pegged at 14, around 14 million a person, or 28 million [00:37:45] for a married couple. If the tax law expires and it goes back to the law before the tax act was set in, the exemption will be halved. You'll be at about 7 million or 14 million per [00:38:00] married couple.

That gives us a real opportunity to think about this. You know, in all likelihood, the tax act will get extended. I know in the house Bill that's currently out there, they're talking about raising the exemption to 15 million. Still with [00:38:15] increases to inflation over time like we have now. But what if it doesn't?

So one of the things we should be telling our clients is, let's take a look at this. Let's make sure we use the exemption up before it potentially expires, or at least look at [00:38:30] opportunities and tee up some planning so that in case we see that the tax law is not gonna get extended, we can act. You don't want to be sitting there.

And calling, uh, your estate planning attorney in November, like [00:38:45] thousands and thousands of people might do. And then who knows if you'll get, uh, you know, if you'll get to put together a plan and not waste the exemption. So that's how you use, that's why it's important to be on top of everything. And that's a important to, uh, to alert your [00:39:00] clients.

Just an example. 'cause sometimes there are external factors that impact what's gonna happen. 

Jonathan Blau: No, it's true that that's a, that's a good point to bring out, by the way. I just wanna, one of the things that relates to you, because you exemplify what I think [00:39:15] every, uh, investor should embrace as, as, as an objective, uh, to, to be able to reach, reach their goal.

What I mean by that is I. Uh, most, almost, almost every investor I ever meet, their, their objective is, let me see if I can outperform some random benchmarks, some managers, or [00:39:30] whatever it is, and it never con, consistently be done. And they failed to meet the real objective, which is whatever their goals are.

When you and I first sat down to work together, you get, I'm not gonna say what your goal was. But numerically, but you gave me a goal. You said this, Jonathan, this is what I'd like by this amount of time, and this is why I know I never have to worry. And [00:39:45] that's my, you know, that's my number. You know, I used to have the commercial, what's my number?

And I, I'm proud to say, because of your steadfastness in focusing on what's always important, you didn't meet the goal. You, you're more than twice the goal, you know, and you're still building. Um, so you know that [00:40:00] that's just something that everyone would get there if they could have your temperament. And your ability to look at it the right way.

I don't know, you know, um, how, how to get people there other than what we already do. You know, te teach them that, you know, a a a [00:40:15] goal is not beating the s and PA goal is not beating my friend's broker who, who bought Bitcoin for a goal is, I'd like to retire by X age. What's the principle sum I need to get there?

To be able to retire comfortably, stay that way and leave some legacy. Those are [00:40:30] goals. I'd like to buy my kid a first home. Those are goals. 'cause they're achievable. They're achievable. Right? You, I could say you have to work a little more. You have to spend a little, I can get you there or I could tell you we have to change something and you can't actually get to that goal.

But let's look at this goal. I want to finish by saying how I [00:40:45] define financial planning. This is just for the audience in 20 words or less. This is something I was taught by my mentor Nick Murray. Uh, it's, it's the, um. The, the ability to protect against what might go wrong in order to [00:41:00] have the luxury of investing for what can go.

Right. And that's, and, and the reason that's so important is if we don't protect, if you, to your point, insurance, whether it's, um. Home insurance, property and Catholic life, whatever it is. Then all this other [00:41:15] stuff is a waste of time because I invested and now I've gotta use it. 'cause I have to self-insure, pay for it myself.

'cause I never planned for something that could go wrong. And so it's so important just to talk to the, just to leave that thought with the audience that, that planning encompasses all of that. And then [00:41:30] whatever you'd like to add at the end, Scott? Um, please. 

Scott Ditman: No, that's fine. But like what you said, that's why.

This area is so much fun for me and it's so challenging for guys like you and me because if our focus is on helping people and [00:41:45] helping as many people as possible develop really, really good. Overall strategic holistic plans. I, I think that's, I think that's great and you know, obviously it's important to get compensated for all of this, but I [00:42:00] think if you do, like we said, excellent work, collaborate together, all the advisors to try to help clients meet their goals and we really listen to them and help them.

Uh, you know, that's a, that's, that's [00:42:15] great. That's why I want to continue to work and do what I'm doing because it's fun and there are unlimited challenges out there. I told you, like before, I see that I meet with people that are worth a lot of money, that really don't have these plans. And if one by one [00:42:30] guys like you and I can make a difference and help people, um, I think that's great and it's, and it's worthwhile to do.

Jonathan Blau: Well, thank you Scott. I, I'll say that, uh, in my industry I've noticed, I've noticed maybe sooner, but in the last roughly 10 or 15 years, [00:42:45] I've noticed a lot of firms in the industry use, throw out the term goal-based planning, right, to try and market themselves that way. And I could just say that you, um, I.

You were, in my view, a pioneer of goal-based planning, probably 35, 40 years ago. And, [00:43:00] and you practice it better than almost anyone I've seen. Uh, and it's a pleasure to work with you and, and I, I, I love calling you my friend. And thank you so much again for being here today on the podcast. Oh, you're very welcome, Jonathan.

And I thank you for having me. 

None: Stay tuned to [00:43:15] hear. 

Jonathan Blau: Amy's calling for the recap of today's episode.