Financial Opportunities Uncovered: A Keeler & Nadler Family Wealth Podcast
Come take a journey with us as we explore topics and concepts from the obscure to those hiding in plain sight, so obvious that you wonder how you missed the low lying fruit. Financial planner and host Andy Keeler and his team, thought leaders, and guests discuss everything from maximizing your money and lowering taxes to how to gain the upper hand in an auction and the math behind online gambling. We discuss wealth building strategies and wander into deeper aspects of the human mind that can improve or inhibit our ability to build wealth with confidence.
Financial Opportunities Uncovered: A Keeler & Nadler Family Wealth Podcast
If AI Skips Taxes In Creating Your Financial Plan, What Else Will It Miss?
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A free AI financial plan can feel like a shortcut, but shortcuts in retirement planning usually come with a bill later. We decided to test a popular AI financial planning tool the way a real household might use it, then compare what it produced against what we’d expect from an experienced advisor and CFP-level planning process. Mike Klubnik joins Andy to walk through what the tool asked, what it never asked, and why those omissions matter. Matter, greatly in fact!
We build a case study around a married couple (65 and 62) retiring within a year, with $1.75 million invested and spending that rises in retirement due to travel and hobbies. From there, we dig into the planning details that separate a generic projection from an actionable retirement income strategy. We also explain why “what you own” matters as much as “how you’re allocated,” including diversification risk, capital gains distributions in taxable accounts, and the way asset location can quietly raise taxes.
Then we look at the AI output and what it missed. It missed a lot and put simply — that can derail real families. The AI tool had no meaningful Social Security strategy, no long-term care planning assumptions, thin coverage of insurance and estate planning details, and recommendations that were misfits for retirees. AI can be a helpful starting point, but it cannot replace the right questions, tax-aware strategy, and implementation support that turns a plan into real life.
Subscribe for more retirement planning and tax planning conversations, share this with someone considering an AI retirement plan, and leave a review with the biggest question you still have about using AI in personal finance.
The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations.
It is only intended to provide education about finance, tax, retirement and related planning topics. To determine which investments or strategies may be appropriate for you, consult your financial, tax or legal advisor prior to implementing. Any past performance discussed during this program is no guarantee of future results.
Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.
Keeler & Nadler Family Wealth is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Keeler & Nadler Family Wealth and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Keeler & Nadler Family Wealth unless a client service agreement is in place.
Why We Tested AI Planning
SPEAKER_02Welcome back to Financial Opportunities Uncovered, the Keeler ⁇ Nether Family Wealth podcast, where we help our clients identify overlooked opportunities and avoid stupid mistakes. I'm Andy Keeler, and today we've got Mike Klubnick, an associate advisor with Keeler ⁇ Nether, joining us to talk about a topic that seems to be on everyone's mind these days: AI. Mike, welcome to the show. Thanks so much for having me, Andy. So nowadays there are two topics that come up in just about every conversation: politics and artificial intelligence. We've thrown our hands in the air on the political discussion, but AI is definitely a meaty one worth talking about. Often the conversation leads to a question: will we all lose our jobs? About a month ago, I received a clickbait feed offering an AI financial plan. It offered a plan for free with no obligation or requirement to enter personal information. However, if the client had questions about the recommendations, they could be connected to a living, breathing financial advisor. You kind of have to read between the lines here. The truth is, this AI planning tool is really a marketing engine for subscribing advisors. They pay a fee in hopes of getting a referral to a client that has more questions. Anyway, I thought we should try this thing out and see if it would replace me someday. So, Mike,
A Realistic Near-Retiree Profile
SPEAKER_02give us a quick tour of the AI landscape.
SPEAKER_01Right. So most people have heard of the various AI models out there, you know, things like Chat GPT, Claw, Gemini, and they've seen some type of AI video that you can find all over YouTube, Twitter, Instagram, or social media. But what we're talking about today is a specific AI tool that's geared towards financial planning. We decided to put together a case study to see how this AI tool would fare with the profile of a client that would not be uncommon for us to see walking through the doors here at Keeler and Nadler.
SPEAKER_02So why don't we start with that client profile? What's the what do they look like?
SPEAKER_01Yeah. So we started with the married couple, ages 65 and 62, and they're looking to retire within a year. They currently make about $200,000 per year and spend $11,000 per month while saving $25,000 per year. They have two adult children that do not need any assistance from them. And in retirement, they actually expect their spending to go up and be at around $13,500 a month. They expect to do some more traveling, get more involved in their hobbies, things like that. So not something that we see all the time, but uh not terribly uncommon either. A year ahead of retirement, they've got about $1.75 million saved across all of their investment accounts. And in addition to their retirement accounts, they've got $15,000 in the bank, a home worth about $450,000, and then some additional, you know, personal uh personal belongings that bring their total assets to around $2.25 million. They currently have about $125,000 remaining on their mortgage, a $12,000 car loan, and $12,000 in credit card debt.
SPEAKER_02So as
Spending Estimates Drive Everything
SPEAKER_02you were giving me that that the I guess the fact set for this particular client, one thing that stood out is the monthly budget. This is an area, and we'll get into the the shortcomings of AI versus meeting with a real living, breathing advisor that has, you know, 10 years experience as a certified financial planner, whatever, but it's not uncommon for clients, they really don't know what they spend or what they think they spend may not necessarily be accurate. So for the AI planning tool to ask the this client, this couple, to not only give a monthly spending number now, but also to indicate what they think it's going to be when they travel and get more involved with their hobbies. That's usually a fairly in-depth conversation that an advisor would have with a client. So, you know, I think uh as we'll talk about, it's kind of garbage in, garbage out. If we're starting with um and and and monthly spending is a very important variable that really moves the needle a lot, um certainly would seem to be a shortcoming. So as you said, this would not be an uncommon client for us to work with. They have a good amount of assets to support retirement, some debts, but nothing really overwhelming. Seeing someone increase their spending in retirement isn't necessarily something we see all the time, but it is a nice wrinkle in the planning process that can make things a little more complex than they might seem at first.
SPEAKER_01Yeah, and that was kind of the idea behind the profile that we created. We wanted to, you know, create something that might have that little additional layer of complexity that we don't usually see. So after we we put everything together, um, we loaded up the II tool and then we kind of started going through, you know, its its input, which was a series of questions, uh 37 in total to help gather information for the plan it was going to create. And honestly, a lot of the questions were things we just talked about above, you know, the the spending, the investments, the assets, marital status, things like that. That probably covered a good 75% of the questions that they asked.
SPEAKER_02Aaron Powell 37 questions. I, you know, I don't know how I feel about that. It's maybe okay. Um, but equally important are the things that maybe it didn't
Account Types And Tax Data Missing
SPEAKER_02ask.
SPEAKER_01Aaron Powell The first thing that that jumped out to me is as I mentioned before, that they had $1.75 million in assets. That that was all investments that they had across all account types, but the tool itself did not ask specifically what types of accounts that they had those assets in. So for example, when we talk about retirement, you know, we really look at three types of vehicles that somebody would have to save. And you have your tax-deferred accounts like a 401k or an IRA, which I think most people are familiar with. You put money in and it grows tax deferred. And then at some point in the future, you have to start taking money out uh you know as a required minimum distribution at age 73 or 75. And then there's your Roth accounts. You know, those are Roth IRAs, Roth 401ks, you put money in those with after-tax dollars. And then the the money grows tax-free, and when you take it out in retirement, you don't pay any additional taxes on it. And then lastly, there's your after-tax brokerage accounts. Those don't necessarily get any benefits of tax deferral like your 401ks or your Roth accounts, but they do get special tax treatments for capital gains if you've held the investment for longer than one year. Usually, uh for the most part, people are going to be paying either 0% or 15% uh taxes on those, which tend to be more favorable than income tax rates. The fact that the tool didn't ask what type of account those those investments were in was something that really stood out to me.
SPEAKER_02Aaron Powell So it literally just aggregated all of their investments into one big blob? Correct. I think you you probably said tax 20 times in explaining that. Um just curious, maybe we'll get to this. Did the tool ask for any a tax return, uploading a tax return or any information related to taxes?
SPEAKER_01Aaron Powell Yeah, and and actually that that is something they did not ask for at all. And I could maybe understand the tool not saying or not having you upload your tax return specifically, but maybe asking for some of the key line line items that you would expect to see on the return to help you know drive more insights into their their overall situation.
SPEAKER_02Aaron Powell Do you itemize, do you take the standard reduction, what was your AGI, right? All of those kinds of things. I mean, that's that's uh I would say that's a monumental miss on the part of the AI tool.
SPEAKER_01Yeah, I completely agree. And that was that was my thought as well. As we start to think a little bit about how, you know, some of the things the tool didn't ask, about how the assets are split between these different types of accounts. I mean, that really plays into, you know, one of the key key areas that we help clients with is how do they take income. You know, if they have a large 401k, you know, there may be a planning opportunity to convert some of those, some of those accounts to Roth accounts early on in their retirement when you know we expect their income to be a little lower. You know, this this can have a very long-term effect on their retirement plan because as they age and and reach the point where they have to start taking required minimum distributions, if we're able to convert some of those dollars to Roth. That's going to reduce how much money they have to take out of their account as they age and then they end up paying less in taxes over their lifetime. And that, you know, that kind of has a ripple effect because that also impacts the the Irma premiums that they may have to pay on their Medicare.
SPEAKER_02It's interesting you bring up Irma. So I got a text message last night from a gentleman I met in Costa Rica about four months ago. I sent him a link to the podcast. He texted me last night and he said, How are you doing? You know, I hope you're doing well. He indicated he had been listening to the podcast, really enjoyed it. But in particular, Irma was one of the things that he mentioned as being a real sticking point for him. He didn't know anything about it. Uh for loyal listeners, we've discussed Irma ad nauseum, but for someone new to the show, can you clarify what IRMA is?
SPEAKER_01Yeah,
IRMAA Surprises And Smart Withdrawals
SPEAKER_01IRMA stands for income-related Medicare Adjustment Amounts. And basically what it is is if your income is over a certain threshold, you're gonna get an additional uh surcharge on your Medicare premium. So for a couple that's married filing jointly this year, if your income is greater than $218,000, you're gonna have to pay a little bit extra in your premium uh for Medicare. And there's there's multiple tiers for Irma. So you know, as your income continues to increase, the that premium that you have to pay continues to rise. So it's definitely something that we we try and keep an eye on for our clients.
SPEAKER_02Not to get too far into the weeds here, but if this couple needs $13,500 per month, that's $162,000 in income that they need. Um you know, one of the things we'll talk about is, and we're actually talking about this on a future podcast, the three-legged stool where your income comes from in retirement, social security will be part of that, that $162 or $13.5 per month, and and that's taxed up to 85%. Um but then you have okay, how do we make up that gap? This is again a critical flaw with the AI tool because if they have IRAs, regular IRAs or 401ks, Roth IRAs, and brokerage accounts, there's a strategic way that you would pull money from each of those so that you don't trigger that IRMA adjustment. It would seem like because they only need 162 in total income, regardless of where it comes from, they're not going to hit that second tier. But for clients that are considering using an AI tool that's free and no no obligation, um, you should be aware of those IRMA adjustments and how taking money from different buckets can impact that.
SPEAKER_01Well, and I would I would even take that a step further if what let's say the client has a a big expense that comes out of nowhere in the current year that isn't factored into their plans. Let's say they have to replace a roof or a fence on their house and that that ends up being more expensive than they initially planned. You know, where where do they take that money in a way that maybe doesn't push them over that threshold?
SPEAKER_02Because pushing them over that threshold is gonna mean one year's worth of higher Medicare premiums. Could be six thousand dollars more per year. Um, you know, it's a $15,000 roof, but you just paid an additional $6,000 in Medicare premiums because you took the money from the wrong bucket. What are some other things that were lacking in the AI planning tool?
SPEAKER_01Yeah, one
What You Hold Matters
SPEAKER_01of the things that stood out to me as well is that there's not really any questions about how your assets are invested and what they're invested in. So knowing your stock bond mix, I mean, that's really important to you know, how you formulate your plan and the types of investments that you hold, that matters a lot as well.
SPEAKER_02You said something that I'm hoping you can expand on. When you say it matters what someone is invested in versus how they're invested, what do you mean by that?
SPEAKER_01Yeah. So when I when we say you know how someone's invested, what I'm really talking about is their asset allocation. You know, how what percentage of stocks and bonds are they holding? Are they holding 80% stocks, 20% bonds, or 60% stocks, 40% bonds, whatever that mix is? When I say what they're invested in, I'm talking about the actual investments themselves, whether they're holding mutual funds, exchange traded funds, or individual stocks and bonds. You can have an investment portfolio where you're 80% stocks, 20% bonds. But if 80% of your 80% stocks is all in one stock, then as an advisor, we would look at that and say, you really need to diversify your stock holdings. If that company goes belly up, you're you're going to be in for a world of hurt. The other thing that we we would look at is, again, kind of going back to where the investments are held to, going back to that taxable brokerage account, if you're holding mutual funds in that account, one, maybe the fund has high fees associated with it, you know, one or two percent, that can be a drag on your return over time. But mutual funds also have what's called capital gains distributions, where if the portfolio managers in a mutual fund are making a lot of trades of the stocks and bonds that make up the mutual fund, you know, that has the potential to generate uh a large number of capital gains, which uh the fund managers then take those and they pass them on to the investors. If you're holding a mutual fund in a taxable account, those capital gains flow through to your income tax statement and increase your taxable income. So we're talking about Irma premiums, you know, that's something that that could also impact that, that you're not going to see if you don't have that tax return. So you know what what you're holding matters, where you're holding it, and the type of investments that you're invested in matter. And the plan didn't really ask any questions about that.
SPEAKER_02Aaron Powell Were there other omissions that stood out to you?
SPEAKER_01Aaron Powell One of the other things that that wasn't mentioned that I think can sometimes be be overlooked when it comes to building someone's financial plan is that the tool didn't ask anything about insurance or their estate plan. And I guess when I sayn didn't ask anything, it didn't ask any details. It simply asked if you'd gotten a quote for your car or home insurance in the last few years and it asked if you had a will. But it didn't ask any details about the types of coverage that you had, the level of coverage or you know, from an estate side if you had beneficiaries set up on your account or if you had powers of attorney in place. And these these are things that you know, maybe they're not as glamorous or fun as investing, but when we think about protecting our wealth and making sure that our assets are doing the things we want them to do and for the people we want them to, you know, insurance and estate documents are as critical to a financial plan as anything else. Trevor Burrus, Jr.
SPEAKER_02They're the foundation. Right. I would agree. Trevor Burrus, Jr. You know, again, it's not sexy. People want to talk about investing in cryptocurrencies or interest rates or whatever, but you gotta shore up the foundation first before addressing those kinds of things. A client's
Social Security And Long-Term Care Gaps
SPEAKER_02tax return may, in fact, be the most important document that we advisors use to help in the planning process. So it's hard to imagine that an AI planning tool could create a comprehensive financial plan without having at least some details from someone's tax return. We've been talking about what wasn't asked when the tool gathered information. What about the plan itself? What was the overall impression of the plan it generated?
SPEAKER_01Yeah, I mean, I I feel like we've hit on a number of things already, just kind of talking about some of the inputs, you know, the planning around required minimum distributions, IRMA surcharges, you know, how do you take money out? But one of the first reactions I had when looking at the plan itself was that it was really hard to draw conclusions reading the plan. Uh, even as an advisor, um, it was just complex for the sake of complexity, was kind of the first reaction I had when reading it. One of the other things that really stood out to me is that you know, the plan didn't talk about social security claiming at all. Um, you know, that's something that we look at pretty much with every client. You know, for some people, it makes sense to delay social security until at least full retirement age. You know, because if you claim early, your benefit gets reduced. And if you wait to age 70, well, your benefit can increase by as much as 24% compared to taking it at full retirement age. So waiting to claim your social security benefit can be a huge boon to someone's financial plan. But on the other hand, there are some cases where it makes sense for one spouse to claim early, or if somebody has a family history and they don't think they're going to live much past you know 75 or 80, maybe it makes more sense to claim your benefit earlier. No questions at all about that within the AI within the AI tool. They simply asked for what you expected your Social Security benefits to be and then included that as part of the income calculation.
SPEAKER_02Social Security claiming is definitely one of the more complex topics in retirement planning that isn't as simple as just turning it on when you want to. As you laid out, we have to consider the benefit each spouse will get when they will take it. And when the first spouse passes away, that can influence the benefit the surviving spouse receives.
SPEAKER_01Yeah, I completely agree. And kind of along those lines, uh, you know, another thing that the tool didn't really address at all is long-term care planning. Um part of our overall planning process accounts for two years of of long-term care needs at the end of somebody's plan. Those costs can be one of the main reasons that a plan you know succeeds or doesn't succeed. That doesn't mean that we're necessarily running out and telling clients to purchase long-term care insurance, but there are cases where that can make sense and we at least want the client to have some awareness of what the impact of large long-term care at the end of life could be to their overall plan.
SPEAKER_02Yeah. So we said earlier sort of the starting point, $13,500 per month is $162,000 per year at the very beginning of retirement when they're saying five years old. If they were going to go into a skilled nursing facility when they're 90, that could be $300,000 a piece. $600,000 has to come from somewhere the last two years of their life. And this tool completely overlooked that.
SPEAKER_01Yeah. And I would even say with some of our younger clients who are in in their early stages of wealth building in their, you know, maybe mid-30s, we're seeing our software project long-term care costs and skilled nursing facilities of a million dollars per year. Now, now we hope it doesn't reach that. This is just an assumption, but it just goes to show how how big of an impact that can have on a plan. Aaron Powell Okay.
SPEAKER_02So the plan hasn't talked about Social Security or long-term care. We've also talked about how it didn't ask for details on a client's tax return, how its assets were invested, or what types of accounts they were in. Was there anything else that you think is worth sharing with our listeners that was lacking from the AI plan?
SPEAKER_01Aaron Powell Yeah, I mean, we could we could probably spend another hour talking about all the things that we we felt were lacking, but I'd kind of maybe initially just kind of point back to the first comment I made is that you know the plan itself was was overly complex and it seemed filled with kind of I don't want to say made up data, but random data and language that was difficult even for you know someone who was an advisor to digest. You know, there there also weren't a ton of meaningful recommendations for somebody to act on. Like I mentioned when talking about insurance that it it simply said, hey, review your life, home, auto insurance, but it doesn't tell you what you should be looking for. It makes a generic recommendation to have a certain percentage of what it called global equities in your portfolio, but it doesn't explain what exactly is global equities. Is that just the US stock market, or is that the US stock market and international stocks? And and one thing, too, that it also kind of pointed out is it it recommended that the client have 100% of their investments in equities, global equities, until it reached around $2.1 million, which I think the tool was making the case that if you had that much in assets, you would be able to cover your income needs through an entire retirement. But I can't think of a scenario where we would sit in front of a client who is about to retire and say, put 100% of your investments in equities.
Debt Bias, Next Steps, Closing
SPEAKER_01There was also a bias I noticed towards debt. It it heavily recommended getting a home equity line of credit, which I don't think we necessarily have a problem with that. We recommend that frequently for our clients.
SPEAKER_02Like an emergency fund, standby emergency funds.
SPEAKER_01Right. And it can often be a good tool to help with home renovation projects rather than relying on a higher interest credit card. So it certainly has a place for client needs. But there also seem to be almost an inherent bias towards debt. Um, the plan at various points talked about how debt can be a way to reduce risk and increase overall returns, which when you start using language like that, that jumps out to me as a red flag that maybe you're inherently looking at some more complex investing strategies involving borrowing money or margin and then using those funds to invest, which you know, that's not something that we I I can't even imagine a scenario where we would recommend that to pretty much any client, especially someone walking into retirement, like this profile that we put together. So it just seemed really out of place.
SPEAKER_02Sure. You know, one of the things that you you've talked a little bit about is you know the fact that the recommendations were sort of overly complicated and there was lack of action steps or follow-through. I remember when I first got into the business, I'm a little bit of a nerd. And so I would write 10-page financial plans. Now the first few pages were action items. These are the things that need to be done. Action plan or recommendations, um, sort of an executive summary, but check these things off your list. But the the the remaining eight pages were um academic explanations of something you talked about earlier, which was uh embedded gains and uh you know capital gain distributions from actively traded mutual funds, or you know. Term life versus whole life, the differences. At the end of the day, this is really no different than, say, an estate plan that's you spend $2,500, $3,500 having an attorney draft an estate plan. You have a trust, a revocable living trust, and yet none of your assets are ever pointed to that trust or moved into the trust. That document just sits on a shelf. And so, you know, at the end of the day, even if this thing's free, I hate to call it junk, but I recently coached or uh judged a financial planning class at Ohio State University. And these were sophomores to seniors that presented a financial plan on a specific case study. These kids, they haven't even graduated from college, and their financial plan was a million times better than this thing.
SPEAKER_01One of the things that that you said I wanted to piggyback off of is you made the comment about essentially implementation, you know, an estate plan and a trust. If you don't do anything with it, well, then it just sits on a shelf. And I think that's one of the big challenges that you know this plan would have is somebody would have reading this plan is how do you implement what it's saying? And the plan does offer access to an AI chat bot to if you have further questions. But again, I kind of question whether or not that chat bot's going to be able to give you meaningful action steps based on kind of what we saw from the initial plan. And then the other piece of it is there were links within the plan document that directed you to the website of an advisor who could kind of help you further. So I think one of the things you mentioned when we first started talking was that this seemed like it was somewhat of a tool for marketing for an existing advisor. So I find that this plan would be very difficult for someone to implement and and maybe the larger goal is to help funnel business traffic into an existing advisor.
SPEAKER_02I guess the moral of the story here here is don't be penny wise and pound foolish. Pay a certified financial planner or an advisor that's been in the industry for 10 years that knows all the right questions to ask and helps you implement the recommendations that they make. Mike, I gotta tell you, I'm tickled because so Mike Klubnick here, um, he he's passed his CFP exam. Um he's technically not allowed to use the CFP marks for a few more months because the Certified Financial Planner Board of Standards requires that advisors have at least three years of financial planning experience before they can actually use the designation. Um Mike is almost there, but uh he's a member of our advisory team, he's an associate advisor, he's not a senior advisor, but the insights that you gave to me and our listeners are just incredible. And I'm just tickled that you're part of our team.
SPEAKER_01Oh, that thanks, Andy. I appreciate that. You're you're too kind.
SPEAKER_02So, based on your evaluation of this tool, I think we have job good job security, Mike. Thank you for joining us. And as always, we thank our faithful listeners. I'm Andy Keeler, and this is Financial Opportunities Uncovered, brought to you by KN Family Wealth. If you have questions on anything you heard in this episode or have an idea for a future episode, connect with us on LinkedIn or email me at andy.keeler at kanwealth.com.
SPEAKER_00The opinions expressed in this program are for general information purposes only and are not intended to provide specific advice or recommendations. It is only intended to provide education about finance, tax, retirement, and related planning topics. To determine which investment strategies are appropriate for you, consult your finance, tax, or legal advisor prior to implementing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always, please remember investing involves risk and possible loss of principal. Please seek advice from a licensed professional. Keeler and Nadler Family Wealth is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Keeler and Adler Family Wealth and its representatives are property licensed or exempt from licensure. No advice may be rendered by Keeler and Adler Family Wealth unless a client service agreement is in place.