Your Portfolio Has No Purpose - Here's How to Fix That | Gary Preisser with Dan Pascone | Ep #61

TL;DR: Gary Preisser, founder of Stonebriar Wealth Advisors and author of The Differentiators of Wealth, joins Dan Pascone to make the case that purpose must come before portfolio design. When you do not know what your money is specifically for and when you need it, every portfolio decision that follows is optimized for the wrong thing. The conversation covers why most investors are unknowingly paying advisors to underperform the benchmark year after year, how asset location can add meaningful after-tax return without changing any holdings, and why the shift from accumulation to actually spending your money is the hardest and most important mindset change most high earners will ever make.

• Purpose must come before portfolio design. The question "what is the money for?" determines when each dollar is needed. When you know when it is needed, you know what it should be invested in. Without that answer, a portfolio is optimized for accumulation but has no system for serving you when it actually matters.

• Volatility and risk are not the same thing. Volatility is market movement, over long periods it is mostly beneficial. Risk is what happens when volatility collides with a cash flow need. By assigning volatility only to money that will not be touched for 10 or more years, executives can stay fully invested during down markets without ever being forced to sell.

• Most portfolios are unknowingly paying for underperformance. Gary Preisser has analyzed thousands of portfolios and can count on one hand the number that consistently generate positive alpha. If your advisor is taking the same market risk as the S&P 500 and returning less, you are paying for a drag, not a return.

• Asset location is one of the simplest and most underused tax levers available. Putting tax-inefficient, high-growth investments in a Roth IRA and tax-efficient, lower-growth investments in a traditional IRA can reduce annual tax drag by as much as 1.5% per year, without changing a single holding or risk profile.

• The accumulation to decumulation shift is a real and difficult mindset change. High earners who have spent decades building a balance sheet often need explicit permission and a clearly structured plan before they feel secure spending any of it.

• The scarcity mindset is one of the most common and costly beliefs about money. Assets are tools with value only in how they are used. An executive who ends their career with a large balance sheet but never designed it to serve a specific life is not building wealth, they are accumulating trophies.

[00:00] Dan opens: most high earners have never stopped to ask what their money is specifically for.

[01:39] Gary Preisser introduced: from tax preparation to small business consulting to 15-plus years applying a CFO mindset to personal financial planning.

[03:37] The CFO mindset applied to personal finance: every financial decision is based on cash flow, not feelings.

[05:55] Purpose before portfolio: the only way to answer "where should I put $500,000?" is to first ask what the money is for.

[06:10] The accumulation to decumulation mindset shift: assets are not trophies, they are tools.

[08:40] How to help clients feel secure spending their money: assigning specific roles to specific dollars.

[11:36] What goes wrong for high earners: earning assets without learning how to make those assets work.

[13:54] Alpha, beta, and paying for underperformance.

[14:25] Gary's volatility zone framework: volatility only assigned to money not needed for 10 or more years.

[17:29] Why individual stocks can reduce concentration risk versus overlapping mutual funds.

[19:31] Helping clients who have never thought about purpose.

[26:04] The Differentiators of Wealth introduced.

[26:52] Asset location explained: 1.5% annual tax drag eliminated without changing any holdings.

[29:43] Simon Sinek's Start With Why as the foundation of Gary's planning approach.

[32:11] The belief Gary wishes people would unlearn: that money is scarce.

Gary Preisser started his career doing tax preparation and noticed something immediately: people were excited about a $10,000 refund without realizing they had been lending that money to the IRS interest-free for a year. The gap between financial results and financial understanding was already apparent.

When he moved into small business consulting, he saw how dramatically better information changed the quality of financial decisions. When he came to personal financial planning 15 years later, he found that the same CFO-level thinking being applied to small businesses was almost entirely absent from individual wealth management.

The core problem, as Gary sees it, is that the industry gravitates toward scale and standardization. A risk questionnaire gets slid across the table, a client gets sorted into one of five generic categories, and a portfolio gets built around how they feel rather than around when they actually need their money. The result is a portfolio optimized for accumulation, but with no system for serving the client when the dollars need to show up.

Gary's alternative is to start with the question most advisors skip entirely: what is the money for? Once you know the purpose, you know the timing. Once you know the timing, you know the appropriate investment for each dollar.

The distinction Gary draws between volatility and risk is central to this framework. Volatility is market movement, largely beneficial over long time horizons. Risk is what happens when volatility collides with a cash flow need. By separating money into time bands and assigning volatility only to the long-term portion, clients can stay fully invested during a down market without ever being forced to sell.

One of the most concrete and actionable concepts in the episode is asset location. Putting a high-growth investment expected to return 10% per year into a Roth IRA, where it compounds tax-free, while keeping a lower-growth investment in a traditional IRA can reduce annual tax drag by as much as 1.5% per year. The holdings do not change. The risk profile does not change. The location changes, and the after-tax outcome is meaningfully different over time.

The episode closes on the accumulation to decumulation shift, which Gary identifies as one of the hardest transitions in a high earner's financial life. When each dollar has a specific assignment and a specific time horizon, the decision to spend from the right bucket feels like the plan working as designed, not like a risk.

Dan Pascone (00:00): I'm Dan Pascone, CEO of Tailored Wealth and host of the Making Sense of Your Money podcast, where every conversation is built around one idea. Your money is a tool to design and live your version of a rich life.

Here's a pattern I see constantly with high earners. You've worked hard, you've saved, you've built a real balance sheet, but you've never really stopped to ask: what is it all specifically for? Not a generic retirement number. What you actually want your money to do for your life, and when.

Without that answer, you end up with a portfolio optimized for accumulation that doesn't know how to serve you when it matters most. Today I'm joined by Gary Preisser, founder of Stonebriar Wealth Advisors and author of The Differentiators of Wealth. He spent over 15 years applying a business CFO mindset to personal finance. We're getting into why purpose has to come before portfolio design, why most investors are unknowingly paying their advisors to underperform, and why asset location might be one of the simplest high-impact moves you're not making.

Gary Preisser (01:44): I actually first started in the accounting world doing tax preparation. That taught me a lot about how people looked at their money. People were excited about a ten thousand dollar tax refund instead of realizing that they had been loaning that money interest-free to the government for a year. That showed me the disconnect between results and understanding.

Then I got into small business consulting and really got a sense of how much better information can make a difference in financial decisions. When I came to personal finance about 15, 17 years ago, I realized that those same concepts applied for small businesses were not being applied for individuals, at least on the investment side.

Gary Preisser (03:37): Every financial decision that we make is based on cash flow. Where we live, where we work, what we eat, where we vacation, where our kids go to school, everything is based on cash flow. And then when I got into this portion of the industry, you get a risk questionnaire slid across the table that asked them how they feel. Feelings don't really matter, and feelings change. Also, feelings should not be applied to every portion of the portfolio.

What's unique about each of us is our own cash flow, the timing of when we need the money. And that timing is determined by our purpose. Our industry focuses first on products and allocations instead of just asking: what's the money for? Once we know what the money's for, we know when it's going to be used. And if we know when it's going to be used, we know what it should be invested in.

Gary Preisser (06:10): Most of my clients are either retirees or on the verge of retirement, and they have saved their entire life. They look up to the ants from Aesop's Fables that saved the food for the winter. A big part of what I do is remind them that at the end of that story, the ants didn't just admire the food, they ate the food. Assets are not trophies. They're tools. Their only value is in how they are being utilized.

For a lot of my clients, they are shifting from accumulation only to that distribution phase. It's almost like they need permission to do that. I give my client Frank a hard time because he will come in and brag to me about how much he saved every month. I'm like, Frank, you're 94 years old. What are you saving for?

Gary Preisser (11:36): High earners spend so much time and effort to earn their money, earn their assets, but they haven't been taught and they haven't taken the time to learn how to make those assets work for them. One is taxes. The timing of tax is very important. When we pay tax determines how much tax we pay. If we're showing a million dollars of income over one year, we're going to pay a lot more in taxes than if we spread it out over ten years.

The other thing is the concept of alpha when it comes to investments. I've analyzed thousands of portfolios. I could probably count on one hand the number that consistently have positive alpha, that consistently outperform. So they're paying their advisors to underperform the benchmark year over year. And then they don't have a target. If you aim at nothing, you will hit it.

Gary Preisser (14:25): Volatility and risk are not the same thing. Volatility is movement in the market, and that is for the most part good over long periods of time. But when volatility meets cash flow needs and those collide, that's where we have risk. So for money that we know our clients are going to use in the next five or even ten years, we take volatility out of the picture completely. Volatility only comes into play for money that they're not going to touch for ten years. That means our clients never have to sell out of desperation just to meet a cash flow need.

Beta tells us: are we taking more risk than the market, more volatility than the market, less volatility? If the market's up 10 and we're taking half the volatility, then a 7 is actually a great number, because we should have expected to only get 5.

Gary Preisser (26:52): Asset location. Let's say you have a portfolio and you want half in a conservative investment you expect to earn 5%, and half in a more aggressive investment that you expect to earn 10%. And half of your money is in a tax-deferred IRA, and half is in a tax-free Roth IRA. Which investment do you want in each account?

The investment you expect to earn 10%, you want to pay zero tax on that one. I have seen those two IRA and Roth invested exactly the same: half in the aggressive, half in the conservative. It causes a tax drag of could be one and a half percent per year, which is a big deal. We're not changing the investments, we're not changing the risk profile in any way, we're just changing the location slightly, and it can make a huge difference.

Gary Preisser (32:11): The belief I wish people would unlearn: that money is scarce. Money's not a trophy, it's a tool, it's an opportunity. Its only value is in utilizing it. We do not want to bury that talent in the ground. We want to put it to use so that it adds value to our lives and to those around us.

• Gary Preisser, The Differentiators of Wealth

• Stonebriar Wealth Advisors

• IRS Topic 409: Capital Gains and Losses

• IRS: Roth IRAs Overview

• IRS: Traditional IRAs Overview

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• Tailored Wealth

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• Dan Pascone on YouTube

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