A Brief Conversation: Robert Baltzell

As the election approaches, what are your clients hoping for?


by P.E. Kelley, Managing Editor

LIFE&Health Advisor and L&HA e-newsLink


Robert Baltzell is the founder of RLB Financial, LLC, in Springfield MO., a financial management firm for individuals and businesses. He sat down with me for our new series, ‘A Brief Conversation,’ to explore topics of concern among today’s advisors and their clients.


PK: What are the issues your clients see as they think about voting in November?
RB: At the core, I think they’re all continuing to fight for realistic returns in a zero-interest market, as they balance the risk of doing that. Meanwhile, they’re fighting real inflation, not the inflation that the government acknowledges, and they are acutely aware of how this is eroding those struggling retirement dollars. It is a silent killer, but you can feel it whenever you go buy gas or milk.

PK: What will tip the scales for them, do you think, for either the Democratic or Republican solution?
RB: I think that the rhetoric that we’re hearing out of Washington, more than ever, is just that: rhetoric. But taxation has always been heaped upon the backs of the middles class, and they’ve always paid the bill. So, what my clients are telling me, and I agree with them, is that the debt of this country will not be reduced by simply cutting expenses or cutting the budget. It’s going to take taxes and cutting, and it’s going to hurt both ways.

PK: How will the impending 2012 sunset of certain tax benefits impact the planner and the client?
RB: That is a big question mark for all of us. My clients ask what will happen when and if the tax cuts expire and how that will impact them, but we can only agree that nobody really knows. I mean, there is the potential that we could be told that our Roth IRA will stay a Roth IRA but we cannot add any more money to it. But again, we just don’t know. If there are substantive changes to dividend interest and capital gains, that will impact the performance of stocks. This is a scary scenario, because if you’re trying achieve yield, the only way you can really do it is through dividend paying stock.

PK: Can you discern what you’re clients are thinking with regard to which candidate will best serve their needs as investors who are trying to save for retirement?
: Well, keep in mind that I’m from the mid-west, so my clientele is predominantly conservative folks. I think that they believe, generally speaking, that the tax cuts will expire and there is going to be a lot more taxation and a lot more spending, which scares a lot of people. On the other hand, they don’t know what to believe from the Republicans either. They can’t tell how much is rhetoric. The polls are saying that people are just un-trusting, and they don’t know who to believe. As planners, our job is more difficult at this moment because we just don’t know what will happen.

"... there is the potential that we could be told that our Roth IRA will stay a Roth IRA but we cannot add any more money to it."

PK: What do you think will happen?
RB: As a planner, all you do now is just bob and weave. You just don’t know. If Obama wins, will the Republicans just hunker down and fight him so hard that nothing happens? Or, if Romney wins, will he do what he says he’s going to do? And really, what is he going to do? I don’t think he’s come out with any specifics. It’s just hard to know what to do. With my high-net-worth clients, we’re in a holding pattern on things like the death tax, just to see where it goes. We may be scrambling after December 31st.

PK: How would you describe the retirement readiness of your clients?
RB: I work with older clients, and they’re pretty conservative. So, whether the market does well or not, they’re pretty much okay. They really don’t count on their savings as much as others may. What I’m doing for them is running an analysis, taking into account inflation and their desired standard of living and I come up with a rate for them to live to age 95. A lot of them come in at around 2 to 3 percent. On the other hand, there are people who come to me with a very limited amount of money and ask me to do something for them that is just impossible. Very rarely do I find anybody that falls in the middle. Usually, either they got it or they don’t. What I do see is younger folks are not doing enough to plan for retirement. Many of them are just trying to keep their head above water.

PK: Are the tools that we have for wealth building, for reasonable retirement income planning, safe from political interference?
RB: We just don’t know. And sometimes they talk out of both sides of their mouth. There’s rhetoric that we might lose the Roth, but then there is a proposal in congress now that will permit you to defer required-minimum-distributions (RMDs) through an annuity. It’s hard to understand sometime what they’re working toward. Historically, we could always kick the can down the road, but this time around everyone, even the politicians, agree that we need to do something. What I worry about, and what my clients say they worry about, is whether we can get anything done, regardless of who is elected. At a time when we need it most, will they be able to work together?