Business Innovators Radio - Interview with Financial Professional Urban Adams

Episode Date: January 31, 2025

Based in Phoenix, Arizona, Urban Adams is a seasoned financial advisor with over 25 years of experience in the financial services industry. For the past 12 years, he has been running his own independent advisory practice, focusing on providing personalized, client-focused financial planning services to clients across the country.Urban Adams is an Investment Advisor Representative with Dynamic Wealth Advisors. All investment advisory services are offered through Dynamic Wealth Advisors. Urban Adams also offers insurance brokering services, this is considered an outside business activity from Dynamic Wealth Advisors and is separate and apart from Mr. Adams’s activities as an investment advisor representative of Dynamic Wealth Advisors.Learn more: https://www.urbanadams.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-financial-professional-urban-adams

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. Influential Entrepreneurs is sponsored by Marketing Huddle, where we build an authority positioning portfolio for advisors that sells for you, so that you don't have to. This unique approach gives credibility and trust to easily attract and convert high net worth and loyal clients using podcasts and TV interviews with guaranteed press coverage

on top ABC, NBC, CBS, and Fox News affiliates. Learn more at Mike Saunders 360.com. Today we have with us financial professional Urban Adams to talk about some timely tax tips. Urban, welcome to the program. Thanks, Mike. Thanks for having me. and great to be with you today.

You're welcome, and I know you're not a tax preparer, but as a financial professional, you have some timely tax strategies that you relay to your clients so that they're better prepared for doing their taxes. So I want to dive into that, but first let's go ahead and give a little bit of your story and background, and how did you get into the industry? Yeah, I got into the industry right before Y2K,

and was on the front lines then over the course of my time, I've worked in a variety of different roles and launched my advisory practice a little more than 12 years ago and have been working on that since. Work with a great group of clients mostly in the southwestern U.S., but really work with clients all over with a planning focus. You know, it's funny you mentioned YQ because there were some misconceptions there, right? I mean, we thought the whole, you know, technology world was going to just implode and, and lo and behold, nope, it didn't. And I'm certain that there's some other misperceptions in a lot of areas financially that

people just are misinformed about. Do you take some of those approaches like what we're saying about, you know, at tax time, hey, make sure that you're aware of the following. So how do you start that conversation with your clients? Well, as it relates to the tax planning, which I'll convey that is not tax advice necessarily, but what we do is we take a large-scale approach to the overall financial plan for a client, which if we're ignoring tax planning, we're missing out on a great deal of opportunity there. And it could be anything from those who are working and still accumulating assets and being tax-efficient.

there. We're tax efficient for the future. We have our clients who we are strategic about how we're distributing their assets when they get to retirement and making sure that we're doing that in a tax efficient manner. And as I'd mentioned not long ago, I'm working on right now what I call my tax letter summaries to be sent out to clients. And this is something I send in January every year. And what we do is it summarizes the tax documents they should expect from their custodian, some of the activities, whether they made contributions to a donor advised fund, they did a Roth conversion, they made 529 contributions. You name it. If it's captured in what I, what work I'm doing for them, I provide them with this summary so that when they don't go and meet with their tax preparer,

their CPA, they're armed not only with the documents that arrived, but a summary that says, hey, here are the other things that may have not resulted in a tax form, but things that are relevant to their tax return being prepared. You know, that's so huge because I think that we all get super busy in life personally and professionally and we just do things the way we've always done them. And that can carry over to how someone would do their taxes, whether they're doing it on their own or getting information to their tax preparer.

And sometimes their tax preparer only works off of what. but info they were given. So when things fall through the cracks, then that that is a negative occurrence for your client. So it's great that you're doing that. I'm curious, what are some of the things that tend to fall through the cracks that you're trying to bring to their attention? What are some of those, you know, kind of obvious things as well as some of the ones that are a little bit deeper? Well, one of the things that I'm hoping to avoid for them is, is that a panicked call from their CPA's office and the CPA's asking them for this particular item or this particular document and they're scrambling to find it. So I try to get ahead of that, especially for my clients

who are very much in the front of the curve and will be meeting with their tax prepare early part of February and getting those tax returns done. And saving time. Granted, you know, I will get that occasional call and I might get a call for a clarification about something, but largely when I want to do is reduce their stress when it comes time to walk into the CPA's office with their documents. So those are the things that I want to create as that, you know, that comfort level, that peace of mind more than anything else. The form does, though, will help some of those things not fall through the cracks like 529 contributions, contributions to an HSA. You know, the 529 contributions may or may not be tax deductible in the state where certain clients live, but where it is, it's

important. We don't want to leave out that deduction. Same goes for the HSAs. Same goes with, you know, Roth contributions, deductible IRA contributions, or even the Roth conversions. So all of those, you know, and I'm not capturing the full list. I've got clients who make charitable contributions in lieu of their RMD, for instance, and that's something that the tax preparer needs to know. And any of those things that are missing that we need to go back, we certainly don't want clients completing amended returns. We want them, when their return gets submitted, it's a final return for sure.

So a couple things that you mentioned, number one is it becomes to mind that shouldn't a good CPA already be telling their client make sure you do these things? I mean, it's nice that you do it, but shouldn't their CPA be doing that? Or have you seen over the years that they're just not doing it and you're having to come to the rescue?

I've seen it. all ends of the spectrum there. And there are some that are, they are simply going to complete the tax return with the information that's provided. There's not really a great deal of advice or guidance on that end. I also, you know,

and that's where I can hopefully fill that void to help with some of the planning topics. As long as I'm in the loop on the tax returns, thus, you know, the reason why I ask for those and, you know, we'll probably talk a little bit more about that later. But the other is where there is an introduction, where there is a conversation, I am happy to work with that tax preparer, that CPA so that we are working in concert for the client. And I encourage that whenever possible so that we can be on the same page when it comes

to the tax planning part. Yeah, 100%. So you mentioned also something that caught my attention. sometimes charitable contributions are made in lieu of RMDs. And I'm not an expert, you are. But when I hear that, I would ask this question. I thought required minimum distributions must be taken, which then trigger taxes so that then when you make a charitable contribution, then that offsets it. So is it more of an offset or is it in lieu of?

Like you don't need to do an RMD if you made the charitable contribution. contribution. Great question. And yeah, I probably used some wording that wasn't quite as clear. What what clients can do when they've reached that age where they're taking their RMDs, if they are charitably inclined, one way to help mitigate some of the tax impact of having to take the RMD is by making charitable distributions. And I've got a client stands out in, you know, to mind here and it makes charitable contributions to upwards of two dozen organizations every year to fulfill a portion of their RMD. And we send it out to the same charitable organizations virtually every year.

Yeah, you have to take the distributions out, which triggers taxes. But if you have that charitable contribution strategy in place, that could offset it because you can't get around paying your taxes, but then because we have charitable contribution, you know, benefits in our tax code when you contribute, that could offset that. So, yeah, I just wanted to ask that question. I'm glad you clarified that. And you used another word that I love is mitigate because when you think about ways to become more tax efficient, it's not ways to completely eliminate your taxes. It's just ways to mitigate or lessen them because we can't get around paying your taxes, but we can be as smart as possible and lower them wherever possible.

And I think that's the big push. And if you can bring to people's mind, here's some opportunities that could be overlooked. Let's make sure you don't. So I think that's a big point, right, is to help mitigate taxes. Absolutely. In fact, there's, well, there's more than one client that comes to mind in this case, but particularly for clients who are retired, there between their, you know, maybe Social Security pension income that they've got, we've got a combination of tax deferred IRA assets.

We've got tax-free Roth assets. We probably got also non-qualified, non-retirement assets, say in an individual account, joint account, trust account. And what I do with clients each year is determine what sort of cash flow they need from their pool that's available to them. And then I come up with a strategy between the non-retirement assets, the tax-deferred assets, and the tax-free to distribute them in such a way that manages the tax impact for clients. So maybe if we're bumping up against a particular tax bracket, we want to stay below that. We might utilize some of the Roth assets or we might use some of the non-qualified assets. So that way we can be strategic and also year to year or even within the year change those strategies to better fit the tax picture so that we're not, you know, we're not really changing.

You know, they're getting the same money that they want annually, you know, or monthly. It's just a matter of in what manner is it coming out of their accounts to be most tax efficient. Yeah. And I think that when you are working with your clients and then maybe can look at they're recently filed tax returns, there are certain areas that you will be looking for to be able to give some guidance on, right? So it might be some tax mitigation strategies. It might be, you know, hey, you've got this pile of money here. We can put it to better use. What are some of

those ways that you're looking for to give guidance? Well, I think the one that that stands out, and I mentioned a couple times thus far, is that is the Roth conversion strategy. So in other words, particularly with clients who have, you know, worked in, and particularly those who maybe worked before Roth and Roth IRA, Roth 401Ks, were a little more popular and have done a great job of accumulating assets. However, they've accumulated a lot of tax-deferred assets. And if they get to me in time or they're working with me long enough, we will have created a strategy to move from that tax-deferred,

to tax-free over time where it makes sense. So rough conversions aren't the, you know, the, the, the, the, the, the, the, the, all-end-all for everyone. However, in a lot of cases, it does, especially as clients are approaching retirement, maybe even starting retirement, but at the same time are gears away from their required minimum distribution, which right now starts at 73. If we can get some of those non-tax-deferred assets over into tax-free, give them an opportunity to grow longer, we can really, you know, we can make a difference on what that after-tax net dollars that are available to them in retirement can be. So I think that's where the largest opportunity stands.

And I want to zero in on the fact that you can't hear about this and, go, oh, let's just do this real quick, because it takes some time in advance of, you know, the retirement age, meaning I know that if you've got money in one of those qualified accounts, that money's never been taxed, we know it needs to be taxed, would it make sense to trigger a certain amount of that to be taxed now since we know the tax rate and then put it in the Roth so that it grows tax free, but you can't let it be in the Roth for 10 minutes because it won't have time to grow. So how long in advance of retirement do you? you recommend to make that potential conversion so that it has time to grow in the Roth to make it worthwhile?

I would say that we'd want that time period to be at least five years. Yeah. And there are some rules regarding the conversions and their eligibility for distribution once they've been converted. So that strategy has to be taken into consideration as well. So hence the five-year timeframe that I refer to. And I think that if someone were to Google or they've heard Roth conversion strategy sounds all great. And it's not the end all be all for every single person, every single time. So talk to someone that can look at your situation, see if it's right for you.

I think that's strong. That's the point that you're making. Also, I was thinking, too, that when you think about making tax, you know, mitigation moves, are there more opportunities for entrepreneurs, people that are a business owner in the realm of what you're, guiding them to do. Maybe are there some investment moves that might be available only to entrepreneurs versus, you know, someone that works for a company? Oh, sure. And granted, there are, they're pretty, you know, pretty sizable salary deferral options with 401Ks or any other type of employer-sponsored retirement plan. But for my, for my business owner clients, we've, you know,

will utilize whether it be a SEP IRA, if it's closely held, they might be the, you know, solo entrepreneur, or if it's small business, we might implement a simple IRA or even a, even a 401k plan for a small business. The savings opportunities for those business owners can be considerable between both their quote-unquote, you know, salary deferral as the employee of the company, as well as the matching contributions that the company can make, wearing their, uh, their, their, business owner hat, so to speak. So you can have some pretty sizable, you know, upwards of, you know, $60,000 plus that you could make. That could be tax deferred.

That could help. You can also be more strategic as far as whether or not you elect to be an S-Corp, which, again, you know, tax advisor and consult with your financial advisor about making any moves like that. But there are a number of ways in which. Mitch those business owners can further mitigate tax impact to their business, all within, you know, in everything that I'm suggesting, of course, all well within the rules, just a matter of operating within the rules to take most advantage of your particular situation. Yeah, I think that's the biggest thing that people need to realize is sometimes you don't know

what you don't know. So when you're being made aware of some of these things, don't just. go out and Google it and go, that sounds good, click, let me set this up, whatever that might be, because it might not be right for you or it might be right for you. It needs to be set up and structured in a proper way. And I think too many times we all as humans tend to go, sounds good, give me this, let's go into the next thing. And you need to really take the big picture. So talk a little bit as we wrap up here on making sure that the ideas you hear are properly research vetted and you're working with the right person to help you make that decision.

Yeah, I think the way that I describe that is, you know, when I look at what I do for clients, I think the impression for many and many years it may have been well deserved, professionals in my role have been assumed that we're simply investment managers. We choose investments. We're looking for total return and that's pretty much it. My practice has been a holistic planning throughout, which means, yes, investment management is a very important part of it, helps drive the growth of the assets that you're accumulating, helps make sure they're sustainable through retirement. However, we have to take into consideration much of what we talked about today, tax planning and making sure that we're being as tax efficient as we can. We want to

make sure that we're managing risk through insurance, whether that's life insurance while we're accumulating or long-term care as we're aging or things like estate planning. And estate planning is very important to make sure that we've got those appropriate documents in place. Making sure that we're making the appropriate decisions as it relates to social security filing for benefits and when to elect for pensions, for those who are fortunate enough to have a pension as part of their employment. And all of those things together make for a comprehensive financial plan. And I didn't even mention health care, which is another topic that we could talk separately about. The idea is your financial plan is like building a house.

I've used that analogy before. And to ignore any one of those components would be like building that house and not putting a roof on it. So the idea. Having an unstable foundation. Exactly. Exactly. So that's, you know, that would be, yes, you could excel in any one of those components. but if you're not giving attention to the others and making it a coordinated plan, yes, it could

make for a very shaky foundation. Yeah, that's huge and it kind of is similar to like the domino effect. If you make one bad decision, it can just have this far reaching effect on other areas, all the areas you've just mentioned. So, you know, you might just, you might think that, oh, well, that's just this area. But then that affects how this, you know, it impacts you. Maybe the Social Security claiming you made one decision. but you didn't really research it with the right advisors.

And oops, I should have done it a different way. And now that affects your taxes. That affects your monthly cash flow. That affects whatever the case is. So I think that's really huge to sit down with someone and say, give me a 360 degree view. It sounds like you sit down with clients and go, oh, you already have a CPA.

Good. Let's bring them on board and make sure that we're all on the same page. So that's wonderful because if they've got their trusted advisor that already advises them on their estate plan or their, taxes, good. You can work with them on that. So I think that is so important. Urban, it's been really great chatting with you about your approach to serving your clients. And if someone is interested in learning more about what you do and reaching out and connecting with you, what's the best way that they can do that? Well, one way would be just to visit my website,

which is very simple. It's just Urban Adams.com. And they can request a meeting there. They can reach out. They can sign up for my newsletter if they want and get a twice monthly email on personal finance topics. They're welcome to reach out to me. My number, I'm based in Arizona. My number 480-721-3344. Reach out and schedule a conversation with me. And also, you know, those two ways are probably the best.

And I'm responsive. I work with a fairly modest amount of clients, but I am, you know, I'm open to those who are open to comprehensive planning conversations and relationships. And if they are and we feel like we're a good fit, you know, I'm the other one on the other, on the other end of the phone, no 800 numbers to navigate. Right. Awesome, Urban.

Well, thank you so much for coming on. It's been a real pleasure chatting with you. Thanks again, Mike. 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.