What’s Really Important To Southern California Retirees? Tod Lenhoff Has The Answers


When Tod Lenhoff stepped off the 727 airplane in Kotzebue, Alaska – a plane half filled with boxes of Budweiser that residents flew into the dry county from Anchorage – he looked around the town of brick, ice and corrugated metal and wondered “why would anyone live here?”

As a young financial advisor in Los Angeles, he had served the entertainment industry, major corporations, and top level executives, advising them on tax strategies, investment choices, insurance options, and retirement planning. He was excited to be flown north of the Arctic Circle by the Alaskan government which had hired him to teach the local Inupiat Eskimos how to better run the finances of their small businesses. His students arrived at the learning center by snowmobile from their disparate villages in the tundra. Between lessons on money management, Tod Lenhoff couldn’t resist asking what made them stay. They replied “it’s our home – this is where our family is.” It was his first big lesson in discovering people’s real priorities. Comforts – and warm climates – may be nice, but family is what counts.

Now in the third decade of his career, Lenhoff’s breadth of knowledge is wider than many financial advisors. He’s a CPA, a credentialed Elder Planner, Securities Registered and Insurance Licensed, in addition to being a Certified Financial Trainer. Having started his career working for the prestigious Ernst and Young firm, he has advised entertainers and athletes, and taught finance to executives at IBM, Kodak, Caterpillar, Qualcomm, and other Fortune 500 companies. But that early lesson remained with him, and as he thought about his own priorities, he realized that what he loved most was teaching. “I wanted to move into areas in which I provided the most value. I like teaching. I like being creative. I like having fun. And I like educating people,” he says. He became a trainer, and the feedback from those who attend his seminars is that his candor is refreshing. “Most people they’ve talked to [in the financial industry] are not candid,” he says.

In 1992, he founded Lenhoff Tax and Financial Services in San Diego, California where he’s an investment advisory representative for retirees, using his tax knowledge with his investment and financial planning background. It’s a job that requires him to pay close attention to his clients’ real priorities. In fact, the first thing he does when sitting down with new clients is to chat about their families, long before talking through prudent investments, tax saving strategies, estate legacies, and planning for long term care. He’s built a reputation on both his honesty and his intuition about people’s needs. He says that, fundamentally, “Clients want to be taken care of, they want someone to watch their backs and make things ok.”

Lenhoff’s extensive background allows him to identify “what’s important for people, and cut through the clutter to make things simple. The more you’ve worked in a business, the more you can simplify things and understand core needs,” he says.

The first step to cutting through the clutter is to take the time to thoroughly understand his clients’ priorities. Whereas most advisors will chat for an hour over your 401K, ask about your expenses, and spend a few minutes on your retirement goals, it’s ultimately a sales job. As Tod Lenhoff moved through his career, becoming more involved with financial planning than accounting, he began to realize “the people in this business who come in with a sales background put in little time and effort, wanting to sell things as quickly as possible. They’re not interested in building a long term relationship. They’re transactional.”

Lenhoff doesn’t even take on a new client after their first meeting, preferring instead to invest his time for free, up front, to ensure a match in values. He says his competitors tend to try and ambush their clients, inviting them into their offices for a complimentary first meeting which is spent bombarding them with pressure sales tactics. “I won’t sell anything at the first meeting. My goal is to make it valuable time for them, and teach them what I know. It’s okay if they already have an advisor. It’s okay if they don’t think they have the money to afford my services. I am still happy to share my knowledge because it builds trust,” he says, adding “and it actually does get me more clients – because that foundation of trust is there.” These informational meetings also have the added benefit of giving him time to “zero in on what their real interests are.”

During the first meeting, Lenhoff gathers the basic information on retirees’ income, assets, age, and families, following up with questions to get at their priorities. He tries to understand their level of knowledge of the stock market, but most importantly, he wants to get a sense of who they are. He says “I challenge them with questions to get them to think about what they’re doing and why. I have to get to the bottom of what they care about.”

He ends the appointment by showing these not-yet-clients what they have currently, and how it matches up with what they care about and what they would like to do. At this point, they can leave having gained valuable knowledge, or they can come back for a second appointment. Lenhoff admits, “It’s a heavy time commitment to get the business.”

In Southern California, an area known for its high cost of living, retirees have to be especially careful with their money to ensure their retirement savings lasts as long as they do. The key to helping them meet that challenge, Lenhoff says, is “to be very straightforward about their financial situation and help them prioritize their needs and objectives.” He sees the time it takes to do that as a necessary cost of doing business – or at least doing business the right way.

Once he lays the foundation of a long-term relationship, Lenhoff breaks down plans in the simplest possible way – a method he calls “Bucketizing.” “You have a bank account bucket, that’s your liquidity to buy a car or take a trip. Then you have a bucket for investing, long term and short term, to replenish your bank account. The third bucket is retirement plans – taxable money, IRAs, 401Ks,” he says. “Bucketizing” isn’t just to keep investing simple for those new to planning for their own income: “With creating little buckets, you create ideas about the order in which you spend money and how you invest it.” It’s one way in which Lenhoff creates safety, reliability, and a game plan everyone understands. Ultimately “It’s about balance grasshopper. It’s always about balance and erring on the side of safety so you don’t lose your money,” he says.

A large part of not losing money is understanding how taxes affect your retirement savings, and how to allocate those savings in tax-efficient ways. While most financial advisors cannot legally give tax advice, Lenhoff is qualified to combine tax practice, tax strategies, and investment strategies under one roof. “Most people don’t see their CPAs until its Tax time, and they’re not communicating with their financial advisors, so the investment choices they make are often not the best when it comes to reducing taxable income,” he says. Immediately knowing whether an investment will create more or less taxation allows him to design strategies to help retirees lighten their tax load, which is increasingly important as taxes rise.

As Benjamin Franklin said, “In this world nothing is certain but death and taxes.” Yet in this medically advanced era, living a very long time – while far from being a certainty – is a fairly safe bet. Today’s retirees have to think about the eventuality of needing long-term care, and plan for it accordingly. One of the most difficult parts of Tod Lenhoff’s job is to try and help his clients acknowledge the possibility of long term care or catastrophic illness: “Most people don’t want to face it. Dealing with it financially is too daunting, so they go into denial. But if they don’t embrace it as a real possibility, you can’t plan for it, because they don’t want to go there.” For those who are willing to think about the likelihood of needing medical care in the future, Lenhoff’s goal is to create a game plan “so they’re not blindsided with no plan for dealing with catastrophic illness. I can help them build a portfolio that grows and puts something in place so they can deal with it.”

However, planning for what may or may not come, Lenhoff says, is a luxury, and not one that should hinder retirees’ current quality of life. “You shouldn’t sacrifice your quality of life to plan for something that might not happen. Go on a cruise every year. Live safely, and without worry,” is his prescription. As he says, it’s all about balance.

No one has a crystal ball for what the future will bring, health-wise, or market-wise. Yet Tod Lenhoff sees the whole paradigm of the market changing and evolving with the new generation of Baby Boomer retirees. “The whole belief of ‘just throw money in the market and ride it out’ is changing. Younger people are less trusting of that approach, and the market has to respond. So much of the market gets moved through things that are intangible – perceptions, world events, things that are not predictable,” he says. In such a volatile and risk-averse time, products and investment structures like annuities provide as good a guarantee as any.

Whereas, Lenhoff says “Brokers from big firms are encouraged to sell their clients the investments that will make the firm the most money – whether the client’s money is protected is an afterthought,” his primary goal is to protect retirees’ savings. Using safer investments, like money market accounts, corporate and government bonds, and fixed annuities, he ensures the income his clients need to live comfortably before doing anything else. If there is money left over, he says, they can take a look at investments that may offer higher rates of return at higher risk. “There’s a trade-off there; the safer investments have lower interest rates and you won’t get the large returns you’d like to see. Yes, there are ways to capture a reasonable return through safer investments in bonds, insurance guarantees, and annuities, but there’s not a perfect answer. You can either have safety, and not make a ton, or you take a gamble, and you win or lose,” he says. In this market though, Lenhoff errs towards safety.

Yet, even following the safest approach, he promises retirees that there are still ways to meet their objectives, “enjoy life, take a vacation every year, leave money to the kids – you can have all that even in a low interest rate environment.” With safer money strategies, the upshot is peace of mind: “When you’re creating safety for someone, you can look at that person and tell them that what they want to accomplish will actually work. It’s really just a more reliable way to have a great life and do everything you want to do.”
For Lenhoff, it’s not about annuities or bonds or stocks, it’s about helping people achieve the things that are most important to them, with any approach.

When you’ve lived a long life of people trying to sell you things, you appreciate the person willing to be straightforward. That, at least, is the philosophy on which Lenhoff has built his unique business. He meets potential clients through the seminars he teaches, social events he sponsors, and through the low-cost tax preparation he volunteers to do every year to give “value” back to his community. “I’ve been in the business for thirty years, and you learn to build longer relationships rather than go for the quick money. It’s much more rewarding.” Most of Lenhoff’s business comes from happy clients referring him to their friends and relatives, proving that doing good leads to doing well. And for Tod Lenhoff, doing good is what counts.

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