The Clark Howard Podcast: Episode Summary Episode Title: Ask An Advisor With Wes Moss
Release Date: May 13, 2025
Host: Krista Dibias
Guest: Wes Moss, Fiduciary Financial Advisor

Introduction to Ask An Advisor with Wes Moss

In this engaging episode of The Clark Howard Podcast, host Krista Dibias welcomes fiduciary financial advisor Wes Moss to the "Ask An Advisor" segment. Together, they delve into critical financial topics, offering listeners valuable insights and practical advice.

Market Stability and Investment Strategy

[00:52 - 02:39]
Krista begins by expressing gratitude for Wes's steady guidance amidst a tumultuous market year. She highlights the importance of staying invested to avoid missing significant market rebounds. Wes reinforces this by discussing the unpredictability of market movements, citing a dramatic 3,000-point surge in the Dow in April as a prime example of why maintaining a long-term investment strategy is beneficial.

Notable Quote:
Wes Moss ([01:44]): “Patience is really paying off.”

Understanding Investment Vehicles: ETFs, Index Funds, and Mutual Funds

[03:02 - 12:02]
Wes Moss provides a comprehensive breakdown of the differences between Exchange-Traded Funds (ETFs), index funds, and mutual funds. He traces the evolution of these investment vehicles, emphasizing the shift from actively managed mutual funds to the more cost-effective index funds pioneered by John Bogle of Vanguard. Wes highlights how ETFs, the latest iteration, offer intraday trading flexibility and lower costs, making them attractive for brokerage accounts.

Key Points:

• Mutual Funds: Actively managed with higher fees due to extensive research teams.
• Index Funds: Passively managed, tracking specific indices with significantly lower fees (e.g., from 2% to 0.02%).
• ETFs: Offer the benefits of index funds with the added advantage of being traded like stocks throughout the day.

Notable Quote:
Wes Moss ([06:15]): “The more complex we make investing, the more big mistakes can happen. Making it simple and keeping it simple as an investor really can pay off over the long run.”

Listener Questions and Expert Advice

1. Tax Efficiency and Lipper Ratings

[12:16 - 17:00]
Krista presents a question from Kristin in Michigan regarding Lipper Ratings and tax efficiency in brokerage accounts. Wes explains that Lipper Ratings assess mutual funds and ETFs across five categories, with a rating of five indicating top tax efficiency. He advises prioritizing tax-efficient funds to minimize taxable distributions, especially in taxable brokerage accounts.

Notable Quote:
Wes Moss ([13:46]): “Mutual funds pass on capital gains to investors, whereas tax-efficient ETFs minimize these distributions.”

2. Diversifying Beyond the S&P 500

[17:21 - 19:33]
Yoel from Oregon asks about the necessity of diversifying beyond the S&P 500 index fund. Wes acknowledges the S&P 500 as a solid core investment but recommends adding exposure to underrepresented sectors like energy, utilities, and real estate to reduce concentration risk, particularly the heavy weighting in technology.

Notable Quote:
Wes Moss ([18:30]): “The S&P 500 is tech-driven, so adding sectors like energy or real estate can provide better diversification.”

3. Evaluating IPO Investments

[19:33 - 22:17]
Ben from Iowa inquires about the risks of investing in IPOs compared to established stocks. Wes advises caution, noting that while investing in familiar companies can be rewarding, IPOs are inherently speculative. He emphasizes that historically, only a small percentage of IPOs outperform the market significantly.

Notable Quote:
Wes Moss ([20:30]): “Don't bet the farm on an IPO, but investing in companies you believe in can be part of a diversified strategy.”

4. Retirement Accounts vs. Brokerage Accounts

[24:04 - 30:26]
Krista and Wes discuss the fundamental differences between retirement accounts (like IRAs and 401(k)s) and taxable brokerage accounts. Wes uses analogies of a crock pot (retirement accounts) and a skillet (brokerage accounts) to illustrate the long-term, tax-sheltered nature of retirement accounts versus the flexibility and immediate tax implications of brokerage accounts. He advises utilizing both accounts strategically: maximizing retirement account contributions, especially to capture employer matches, and using brokerage accounts for additional savings and investment flexibility.

Notable Quote:
Wes Moss ([25:45]): “Retirement accounts are like a crock pot—you let them simmer over time, while brokerage accounts are like a skillet—flexible and exposed to immediate changes.”

5. Roth IRA Conversion Considerations

[30:26 - 35:46]
Michelle from Wisconsin asks about the timing of Roth IRA conversions, especially concerning high-income brackets and additional taxes. Wes explains that Roth conversions increase taxable income and can trigger higher tax rates and additional Medicare and investment taxes. He recommends careful planning to stay within desired tax brackets, potentially performing smaller conversions now and larger ones when income decreases in retirement.

Notable Quote:
Wes Moss ([31:10]): “It may make sense to do some of these smaller conversions in the next couple of years and pick it up even more when your income drops.”

6. Roth IRA Contributions Post-Retirement

[35:46 - 38:50]
Rob from Oregon seeks clarity on contributing to a Roth IRA solely from pension income. Wes clarifies that pension payments do not qualify as earned income, which is a requirement for Roth IRA contributions. He suggests alternative strategies, such as part-time work, to generate eligible income if possible.

Notable Quote:
Wes Moss ([36:00]): “Even if you receive substantial pension income, it doesn’t count as earned income for Roth IRA contributions.”

7. Linking Financial Accounts with Yodlee

[38:50 - 40:00]
JJ questions the safety of linking financial accounts through Yodlee for automatic updates in financial planning software. Wes advises against it due to security concerns and the minimal benefits of real-time updates, recommending manual updates instead to maintain data security.

Notable Quote:
Wes Moss ([39:10]): “Invasively scary world when it comes to our information... You don't need to have your financial plan updated daily.”

Conclusion

In this episode, Wes Moss provides listeners with actionable financial advice, addressing common concerns about investment vehicles, tax efficiency, retirement planning, and more. His clear explanations and practical tips empower individuals to make informed decisions to achieve their financial goals.

Final Thoughts:
Krista wraps up the session by encouraging listeners to subscribe for future episodes and thanking Wes for his invaluable insights.

Resources Mentioned:

• Clark.com/askclark – Submit your financial questions.
• Lipper Ratings: A tool for evaluating mutual funds and ETFs based on several performance metrics.
• MoneyGuide Pro: Financial planning software discussed in relation to account linking and data security.

Thank you for tuning into The Clark Howard Podcast. Join us next week for more expert advice on saving, spending wisely, and achieving financial freedom.