Business Innovators Radio - Interview with Eric Liriano, CFP®, Principal and Founder of Liriano Wealth Advisory Group-Tax-free Investing and Retirement for Legacy Pla

Episode Date: April 28, 2025

Eric E. Liriano, CFP®, is the Principal and Founder of Liriano Wealth Advisory Group, LLC, with over 25 years of experience in the financial planning industry. A graduate of Boston College with a degree in Business Marketing and Communications, Mr. Liriano employs a distinctive macroeconomic approach to wealth accumulation and preservation.He serves a diverse clientele, including business owners, executives, affluent families, and professionals in academia. As a sought-after speaker, he frequently leads financial planning seminars for employees of major corporations, healthcare organizations, and educational institutions.His areas of expertise include estate planning, insurance, investment strategies, employee and executive benefits, and retirement planning. Through comprehensive financial guidance, he helps individuals and businesses secure their financial futures with confidence.Learn more: http://www.lirianowealthadvisory.com/Phone: [phone]Check the background of your financial professional on FINRA’s Broker Check.https://brokercheck.finra.org/individual/summary/1905998All content in this presentation is for information purposes only. The views expressed in this video are subject to change based on market and other conditions.  Opinions expressed herein are solely those of Eric Liriano.  Material presented is believed to be from reliable sources, however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your financial advisor. Content should not be regarded as a complete analysis of the subjects discussed.Investment advisory services offered through Liriano Wealth Advisory Group LLC., an SEC Registered Investment Adviser* located in Newton, MA and its representatives are in compliance with the current registration and notice filing requirements imposed upon SEC registered investment advisers by those states in which Liriano Wealth Advisory Group LLC maintains clients. Liriano Wealth Advisory Group LLC may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements. Liriano Wealth Advisory Group LLC’s website is limited to the disseminations of general information regarding its investment advisory services to United States residents residing in states where providing such information in not prohibited by applicable law.The Living Balance Sheet® (LBS) and the LBS Logo are registered service marks of Guardian. © 2005-2023 The Guardian Life Insurance Company of America. Online Terms & Conditions – https://static.fmgsuite.com/media/documents/b73e8f1c-12a6-4dc0-ac5e-b6bb81e5bea3.pdfOnline Privacy Policy – https://static.fmgsuite.com/media/documents/36a04efa-7d6f-4790-89b6-9cbc6de8d003.pdf Important Disclosures – http://www.guardianlife.com/Disclosures/index.htmCalifornia Insurance ID # OC63111.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-eric-liriano-cfp-principal-and-founder-of-liriano-wealth-advisory-group-tax-free-investing-and-retirement-for-legacy-planning

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us, Eric Liriano, who's the principal and founder of Liriano Wealth Advisory Group, and we'll be talking about tax-free and business. investing and legacy planning. Eric, welcome back to the program. Thank you, Mike, so much. Thank you for invitation. Hey, so I know that this is a powerful topic because anytime I hear the word tax-free,

it kind of catches your attention because, you know, it's kind of like the old saying, you know, you can't get away from, you know, the only thing guaranteed in life is death and taxes. Well, we got to pay taxes. Tell us a little bit about where you begin the conversation with clients when you start talking to them about tax-free investing. What would that look like? Yes, Mike. No, it's a very important topic in the overall financial planning picture. We really spend a lot of time speaking with clients about taxes, and we take them really through an educational journey, understanding how when 401K plans and IRAs were introduced in the early 70s, a lot of people were in high tax brackets, and those high marginal tax brackets were in the 80, 90% range.

So for people who were working during that time period, and then they were retiring in the 2000s in the last decade or so, they have been paying taxes in relatively lower tax brackets than what they would have been paying back then. But now we have to start thinking about this and understanding where we are and where the country is with the national debt and social security and everything else that's going on, healthcare. And we have to think to ourselves where are tax brackets going to be in 10, 20 years as we start taking money from these retirement plans. So tax planning has become very, very important. we feel that there's a good opportunity that tax brackets will be higher in the future. The government continues to change the rules, and we can find ourselves paying more taxes in the future. So when we were told to put money away in an IRA and 401k plan because we were going to be in a lower tax bracket down the line,

it may not necessarily be so that we're going to be in a lower tax bracket, right? That's a really great point. And I think that there's certain cliche phrases we've heard all of our lives, and that's one of them. Because there's no way to know what the brackets will be because they can move and also the tax rate. And I'm not in the industry like you are, but it just seems to me that the deficit that has grown and grown and grown to just astronomical amounts, the only way to tame that is to raise taxes to start covering our deficit and our deficit and our deficit. debt. And so it just stands to reason that in the future, five, 10, 15 years down the road, we're probably going to be paying more in taxes and maybe our tax brackets are going to have some adjustment. So this is a timely topic.

Oh, absolutely. Absolutely. I think that clients are understanding now. They're seeing the writing on the wall. They know that, you know, this debt has to be paid. And there's just this, you know, huge asset of 401K plans IRAs that people own and the government has to look to these for, you know, potential taxing them and taxing them at a higher rate. Absolutely. So definitely there are benefits to creating tax-free money and that enhances financial security. Talk a little bit about that. And then also what are some examples of what tax-free investing could look like? because I think that sometimes people hear the phrase tax-free investing and, you know, their eyes glaze over because it's like, I don't know what that would look like.

Yes, no, absolutely. So there are several different strategies that we use that are available to us and we spend time with clients just understanding, hey, which of these strategies would be best for you or if we can use multiple ones. But the one that's more sort of known and what a lot of people, people use as the Roth IRA. So we're encouraging clients whenever possible. If it's offered through their companies 401K, for example, to contribute to the Roth portion of the 401K and any matches that are made by the company, that they also put as much they can into the Roth portion. And sometimes

we can tell the clients, hey, you can put some in order, if they're They are high earners and they want to try to put their tax bracket down. We can maybe put some money into the traditional 401K and then some into the raw. And with that, we also advise our younger clients that they still haven't gotten to that point where they're faced out of the making Roth IRA contributions because they may earn too much money that start early, putting money into Roth IRAs. Now they're taking responsibility and really being able to say, hey, now I can command or being in charge of my future because I know I'm in a vehicle where I am not going to pay any taxes on the road by being a Roth. So those have become more important.

The other area that we're working with clients on now who maybe are close to retirement is looking for opportunities to do Roth conversions. This has been available to us for a while. Roth conversions now a lot more important. Again, we can't just do it freely with anyone. We want to be able to, the clients have to understand that they will pay the tax at that point in time. We don't want to throw them into higher tax brackets. But maybe we do them in phases so that every year we may convert a portion of their IRAs or 401 case into Roths.

So those are important. And then lastly, just speaking about Roth IRAs, the last one is doing a backdoor IRA where, again, people who don't qualify to make contributions to a Roth, they don't have one available through their 401K. They can open a traditional IRA, not deducted, and then later on convert that money to a Roth. Now they funded a Roth IRA effectively. So those are all very important in the Roth areas. and we can talk about other vehicles as well, but I just wanted to kind of cover that first, just because Roths are so important right now and so powerful. You know, I like that you brought up just the traditional approach of a Roth conversion and

Roth contributions if it's available. And then the word that jumped out at me was like, if you make too much money and you can't do that traditional way, then there could be potentially a backdoor way. So backdoor does not mean shady gray area. It just means that it's just a different approach, you know, kind of like you don't go over the hurdle. You go under the hurdle. Both ways you're fine. It's just you have to take it a different approach.

Is that an accurate description of the backdoor approach? Yes, very, very accurate. And clients get that. I've gotten a few clients. Oh, my God, is this okay? Or they'll read about it. Are you sure? Or they'll call me and say, is this okay?

It's a good thing for us to do. And absolutely, yeah, it's available to everyone. It's legal. It's just another road to getting to a Roth area. As long as, you know, the IRS has left it available to us. We will take advantage of it for our clients, yes. Yep. So when we think about tax-free investing and the things we've been talking about, what are some of the other misconceptions that people have about these strategies? What are you hearing them asking you? And then how do you clarify those? Yeah. So a lot of the issues, and this is something that's very legitimate in terms of whenever you enter the Roth, not only, excuse me, not only Roth IRAs, but whenever you enter the realm of tax-free investing,

there's always going to be a time frame when you have to be in these, you know, different programs. A second strategy that we use is using annuities, for example, because if even outside of a retirement plan, you can have a non-qualified annuity or non-retirement annuity where all of the interest that you're earning while you're saving is all tax deferred. And later on, yes, you're only going to pay tax on the profits, but you defer that. So you're using what would have been to government's made traditional invent, and you're letting that accumulate, and then you would pay taxes down the line. And there's one more benefit with these annuities, Mike, and that's why we use them quite a bit now with clients, is that when they start taking the money out, of course,

they're only going to pay taxes on their gains, on the profits. But the IRS allows them to take a lot of the principal first. There's something called an exclusion ratio where you're not going to pay taxes on the principal. So if someone starts taking money out of their annuity, say at age 80, they can take a lot of their principal first and then take most of their interest and gains later. So they effectively help themselves stay in a lower tax bracket by using that strategy. Yeah, that's another, I would say a misconception because I know that if you mentioned the word annuity to some people,

they automatically have certain thoughts like, oh, well, I've heard those aren't good. Well, maybe back 20 years ago, they had some flies in the ointment. But these days, that could be an option. And like we've said many times, there's never one universal solution for every single person. And so those are some good things to keep in mind. And I know another potential misconception is, you know, when people hear about life insurance, but I know that there's some ways you can use life insurance to create tax-free money. How does that work?

Yes, no, great. Yeah, a great point. So tax and life insurance go hand in hand in two ways. First of all, just like the annuities that we just talked about, life insurance policies who have cash value accumulation. And we won't get into too many details on the types, but you may know them as universal life policies or fix universal life policies or whole life policies.

But all of those policies, you get to put money into them and you pay them as premiums, as contributions. And the life insurance companies usually paying you a dividend or interest or credits. And down the line, again, that is money that you, while you're alive, you can start pulling out to either supplement your retirement or to accomplish a particular goal. And that money is also all tax deferred.

And depending on how you take it out, again, you can take your principal, the premiums that you paid first. Those come out tax-free. and then you pay taxes on the gains later on. So you could do a lot of tax management there. But another important fact about life insurance, Mike, and when clients think about legacy plans, planning for kids and the different assets that they have

and which ones should they pass to their kids, hands down the most powerful asset to give to your kids is life insurance. That's something that's always been a part of my practice in the past 30 years that I've been working, just showing clients how to set themselves up. So they have a type of life insurance policy that will be there, that doesn't go away when they leave their employer that is there and will go guaranteed and 100% tax-free to their beneficiaries.

And that is very, very powerful when, yeah, when trying to pay the least amount of taxes possible in a legal way. Yeah, I think that's a huge thing to keep in mind. You mentioned a couple things to, you know, what you just described there is a death benefit. And that's what most people think of life insurance as. When life ends, the death benefit kicks in. But with certain kinds of policies, there are other living benefits that you can access as well, which then allows you then for some tax-free, not only investing,

but even accessing some of that. Talk a little bit about some of the living benefits that that provides while you're still around and can even make some moves financially for retirement planning. Yes, absolutely. And that goes again to what we talked a little bit about before. There are a lot of people think that investing in these types programs that their hands off and that they can't touch this money. Well, a lot of these life insurance policies, if we design them properly, after five or six years, start either taking money out if they need it for a particular reason.

One of the strategies that I like to use is to take money of life insurance policies as a loan, and people can use that money to buy real estate. I have a very, very good client. They own properties along the coast where they live. And every so often, every three or four years, they'll buy another little property. They'll buy another little property. And once in a while, those properties come, before they come in the market,

they get wind that they're being sold. And it's just hard to arrange financing and so forth right away. So my clients will call me and says, hey, can I take another $600,000 to put some money together, or $800,000 from my life insurance policy, and I'll put it back in a year or two when I'm able to either refinance this property and when other things come due. And yes, we do that all the time. I've had clients when there's a market correction, hey, let's take some money from the life

insurance policies and buy stocks that are now cheap. And a year or two, you know, the market comes back up. We sell the stocks. We have the profits. We put the money back into life insurance policy. policies. Again, very, very effective. We used to Mike 2 as a secondary or supplementary, you know, college account, a way to pay for school. Really, you know, I don't like to design it as the primary source, but if people find themselves, hey, our investments are doing really well, we don't

want to touch them. Our kids are ready to go to school. Where else? And I say, Why don't we take the money out of life insurance for a couple of years and then you put the money back there later on? Or you can effectively use it as a college savings plan also. But there are just a lot of uses. And then at the end also, I say supplemental retirement plan while people are alive. So life insurance is not only about the death benefit, but like you said, the living benefit. We can actually have the client say, you know what? Maybe our kids are doing great or there are other assets that are going to them anyway.

way we can just spend down the cash value that comes out tax advantaged and is another way to do it you can actually ask the company to annuitize it for you and they'll pay you a guaranteed amount for the rest of your life which is incredible this is a very very good product to use yeah so eric it sounds like many of these points that you're bringing up when people hear that it sound very cutting edge and fresh and unique. So what is it about your approach that differs from traditional methods? And why is that so effective for your clients? Yes, Mike. You know, good question. I find that we're really not a cookie cutter approach. We take a hard look at every individual client, understanding every situation is different. They're going to have different ones. It's different

family dynamics. So we really take time to work with clients and understanding where they are. And then we start taking a look, hey, how can we accomplish their goals? How can we make their dreams come true by using different strategies and different products? Unlike a lot of times, there are firms where they basically represent one large company. They mainly represent one product. They use one strategy, and then they try to fit that into everybody. And that's where our differences, that we really work for the clients. And then we have strategic partners out there that provide different investment vehicles for us, insurance vehicles for us, tax advantage vehicles for us, that we're able to put together

and use them effectively for our clients. So that's a big difference. You know, I tell you, Eric, this approach is, like we've said so many times, it's very fluid. You have to know all of the variables. You have to be prepared for market volatility. You have to be prepared for, you know, paying taxes and doing it in the best possible way. So I just really like your measured methodical approach to serving your clients with education and teaching them. What are some final thoughts on tax-free investing and retirement planning?

and that you would like to make, and then what's the best way people can reach out and connect with you? Sure. Real quickly, I just want to mention because I had a few clients over the last three, four years, you know, when the market has been volatile, there has been, you know, so much going on, the new cycle.

People are concerned. So I've had a few clients who have sold their businesses, and then they're saying, you know what? I'm concerned about going to the market with this new, you know, huge lump sum of money that represents my whole working life. So I've been saying, hey, you know, we have some great tax-free vehicles where we could put money in there and it's very safe. And just we use these traditional bond funds.

So municipal bond funds have actually been very, very useful for people who want almost like a holding tank. And they can, yeah, they could put the money in a CD. but if we take a look at Muni bond funds, you know, they have a great average and they're entirely tax-free, both state and federal. And when you take a look at them and compared to a CD rate, which is going to be taxable, it's really very efficient and it's a net rate of return. And so we've been using that quite a bit. I just have about three four, so three business owners who sold their business. in the last three years and then another client who they sold a large piece of real estate.

And so we've been using that as a holding pattern. And, you know, munibons, they haven't yielded in the last few years as much as in the past 10 and 20 years. But I think in the next few years, we're going to see them really come back and more and more people are going to use them. So I just want to let you know. And again, just saying how diverse we are. in solutions for our clients.

We really, again, you know, serve our clients and we go above and beyond to find strategies and products that will fit and help them solve their problems. That is excellent. Well, Eric, what's the best way that people can learn a little bit more about what you do and also reach out and connect with you? Yes, Mike. I'll leave my phone number and then my email. And my website, the phone number is 617-969-29-2933.

My email is E. Luriano at Lurianowealth.com. And then my website is Lurianowealth.com. That's how people can reach me. Excellent. Well, Eric, thank you so much for coming back on. It was a real pleasure chatting with you again today. Thank you so much, Mike. Thank you for the invitation.

It's been great speaking with you. and the listeners. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www. www. influential entrepreneursradio.com.