First Friday Book Synopsis

Shawn Foster has worked in financial services since 1987, helping business owners, professionals and individuals with wealth management and retirement income strategies. A lifelong North Texan, he is also active in church, charitable and civic organizations. And, Shawn has been a long-time participant, and supporter of, the First Friday Book Synopsis.

• FFBS: You’ve been in financial services since 1987. What has changed most about building wealth and preparing for retirement — and what hasn’t changed?

Shawn Foster: In October 1987, the market fell 23% in a single day and everyone was shocked. Today, investors are more accustomed to volatility, and we have more tools available to help manage risk.

The bigger change has been the move from transaction-and product-oriented recommendations toward fee-based, holistic planning. The portfolio should be a by-product of the planning, not the focus of it.

Accumulation is fairly straightforward. Distribution planning — deciding how to turn accumulated assets into sustainable retirement income — is where an advisor can add enormous value.

What hasn’t changed? Save first, spend second, understand the power of compound growth, and start young whenever possible.

• FFBS: What are some of the biggest financial mistakes you see otherwise smart, successful business owners make?

Shawn Foster: One of the biggest is having nearly all of their net worth tied up in the business, with relatively little in marketable securities.

Succession planning is another challenge — training the next generation while also having a properly funded buy-sell agreement in place in case one of the owners gets hit by the proverbial Mack truck.

• FFBS: What does a genuine financial professional bring to the process that can be difficult for someone to provide for themselves?

Shawn Foster: You can do it yourself, but it takes time, effort and expertise.

Successful business owners already outsource specialized areas such as IT, HR, accounting and legal work. Financial planning isn’t that different.

A trusted advisor does much more than investment counseling. A good advisor helps coordinate wealth accumulation, retirement income, wealth transfer, charitable giving and more — and helps the client have less to worry about.

• FFBS: People approaching retirement frequently ask, “Do I have enough?” How do you help someone determine whether they are truly prepared?

Shawn Foster: It’s more complicated than simply coming up with a number. We help clients determine not only how much they may need, but which accounts to draw from and when.

When should you claim Social Security? When should you begin IRA withdrawals? When should you use brokerage assets or real estate income? Those decisions can make a meaningful difference in how long your money lasts — and potentially how much goes to taxes versus your heirs.

• FFBS: If retirement may last 25 or 30 years, how should longevity change the way people think about investing and risk?

Shawn Foster: Most people can’t simply rely on fixed assets such as bank CDs for a retirement that may last decades. There needs to be an appropriate balance between growth-oriented assets and more stable fixed assets.

Inflation can significantly erode purchasing power over a long retirement, which is one reason many retirees need some exposure to stocks.

A good financial advisor will customize your portfolio. A great financial advisor will communicate it in plain English in spite of the complexities.

• FFBS: How should a long-term investor respond to constant uncertainty without overreacting to every headline?

Shawn Foster: Markets have historically been resilient and rewarded patient, steady investors over time. The challenge is determining how much volatility you can tolerate and still sleep well.

That’s why we like to stress-test portfolios regularly. Rather than trying to time the market, we work to determine an appropriate asset allocation for each client’s situation.

• FFBS: How is AI changing financial advice — and what can a good human financial advisor provide that AI cannot?

Shawn Foster: AI is helping advisors become more efficient and making technical information easier to find. The challenge is making sure the information is accurate, current, and applicable.

But financial advice isn’t just about information. Can AI look you in the eye and recognize whether you’re ready to sell the business you’ve spent decades building? Can it understand difficult family dynamics behind beneficiary decisions, or help you wrestle with which charitable causes matter most?

A good advisor listens, understands, counsels and helps people make difficult decisions.

• FFBS: If you could persuade every business owner and professional in their 40s, 50s and 60s to do one thing differently, what would it be?

Shawn Foster: Once the business is consistently profitable, I encourage owners to maximize their retirement plan contributions. You’d be surprised how many owners of multimillion-dollar businesses have relatively small retirement accounts.

I understand why — the business itself may have been their best investment. But systematic retirement-plan contributions can build an important source of wealth outside the company.

You’re building a financial fortress beyond the business.

• FFBS: Thank you Shawn for sharing your insights with our readers.

Shawn Foster: You are welcome.

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About Shawn Foster

Shawn Foster is an Investment Advisory Representative with Ameritas Investment Company, LLC. He holds the Chartered Financial Consultant (ChFC), Retirement Income Certified Professional (RICP) and CKA designations, along with Series 6, 7, 63, 26 and 65 securities registrations.

Visit Shawn Foster’s  web site by clicking here:  Foster Financial Group.