Today, we have our first guest outside of our PJS & Co. CPAs team! The founder and president of e3 Wealth, John Moriarty, joins us to talk about wealth management, different ways to look at your wealth investment story, and a free ebook that can help with one such strategy. His wealth management company focuses on helping clients think differently and we are getting an overview on different philosophies available to build your wealth.
What we cover in this episode:
- 01:00 – Intro
- 02:38 – Meet our first guest outside of PJS & Co. CPAs, John Moriarty
- 04:29 – Gap in finance education
- 07:13 – Privatized banking and free ebook
- 08:26 – Education philosophy
- 12:42 – Money is tied to emotion
- 14:20 – The importance of independence
- 16:47 – Retirement and options for investing
Meet our first guest outside of PJS & Co. CPAs, John Moriarty
We are thrilled to welcome our first guest who joins us from outside our team here at PJS & Co. CPAs. John Moriarty, founder and president of e3 Wealth, majored in finance in college where he caught the entrepreneurial bug. He joined a group where he was lucky enough to find mentors. When he began in 1995, everything was about rate of return and the stock market was a “sure thing.”
With the tech bubble and then 2007, with the impact of the great recession, there was a large shift in the wealth management industry. The industry of 1995 vs. the industry today is so vastly different. John’s philosophy is that it’s important to focus on taking control of your financial picture, rather than focusing only on rate of return or the stock market.
Gap in finance education
Before we start discussing the options available, we must address the fact that many of us aren’t setup for success when it comes to finance and building wealth. Finance is not a part of traditional education. Very few people who have started their own business know about debits, credits, assets, liabilities, income statements. As we discussed in episode #16, running a business is not the reason many business owners establish a company. More often than not, it’s the love of the service or product they provide, the control and freedom.
Our country is based on entrepreneurship. Today, we have put ourselves in a position from an economic perspective in which there are a ton of large corporations employing many individuals. This is accompanied by a cultural expectation to go to school and get a job, but we don’t understand what all that entails. For example, is there financial security in that corporate job, or is it better to own your own business?
The entrepreneur mindset is very different than that of an employee. Neither one is right or wrong but John and his consulting group have seen a trend of more people who are wanting to awaken their inner entrepreneur. So, what can you do to create financial security as an entrepreneur? Normally, financial security is not created by a corporation, their benefits or retirement plans. Financial security is created by your own actions as an individual. So, the next question becomes “How do I manage those things around me that I can control to create wealth?”
Building your own privatized banking system
One of the strategies available is to think differently about extra cash. What do you do with your safe money? Savings accounts used to offer a higher rate of return, but nowadays, you’re lucky to see a 1% return. If you have cash that you’re planning on using for big ticket items, there is a strategy known as privatized banking that allows you to earn a higher rate of return. While liquidity is affected in the short term, the ability to make your money work harder while you save is a great benefit. John has created a book that sheds light on specific types of life insurance contracts with benefits to offer a conservative saver. To learn more about this topic and how to build your own privatized banking system, you can find the free ebook here.
Why education is important
Education is crucial because it breeds confidence. By surrounding yourself with a network of professionals who are committed to teaching you various strategies, you will be empowered to make the best decision for yourself and your business. Wealth management includes components like cash flow, debt management, and tax planning and also involves attorneys, mortgage professionals, and CPAs. It’s important to have a network that allows you as an individual, your family, and your business to see the whole financial picture and build wealth over time with a long-term strategy.
In addition to learning strategies available to you, it is also important to look at risk based on how you put money to work. The traditional options available are stocks, bonds, and cash. There are alternative investments, like real estate, commodities, private equities, hedge funds, running your own business, etc. By allowing yourself to become educated, you’re not necessarily thinking outside the box but expanding the size of the box. In addition, you must look at taxes the way uncle sam looks at taxes, which changes depending on what you’re doing with your money. For example, when you’re saving money, look at how taxes work into that vs. when you start using money. What’s the purpose of your money and how to best protect it? Every asset, every investment account, anywhere that money is stored, what level of safety, and how much liquidity do you want? What’s your growth profile? Where is your money coming from? Income sources, appreciation?
By taking all of this information and coordinating these pieces of the financial picture, your network can then have a uniform conversation. The Warren Buffets of the world have been investing this way for centuries. Access to this type of education and coupling that with tax strategies is crucial for your wealth investment story.
Money is tied to emotion
Many people do not deal with money in a logical way. Money is linked to stability for yourself and your family and tied to many emotions, including fear. Money is an intangible thing that can be difficult to handle in a strictly logical, dollars and cents way. Many of us make decisions based on what makes us feel good about it. That’s why the education component is so crucial in attempting to learn more about money, investments and the various strategies available so you can attempt to make logical decisions whenever possible.
The importance of independence
If financial professionals only focus on one area, like investing, that advisor is only compensated when an investment is made. By finding a wealth management firm that offers alternatives, you don’t have to worry about being convinced that something is the best option when it may just be the restrictions of that firm’s business model. Do your research and find the best option for yourself, your family and your business.
Retirement and options for investing
Retirement options really start with a conversation about what you are trying to accomplish. If, for example you are in a worry mindset, concerned about how you are going to pay off the house, put your kids through school, etc., retirement may not be the biggest priority. Maybe it’s time to step back and take a look at what needs to happen before you can reach that point. We have all been told about the idea of compound interest and building money up, but if you look at your situation personally like you would a business, analyzing assets, liability, cashflow, you may decide it’s better to pay down some liabilities so you can free up some cash flow. Once you’ve stored that and built up some savings, you can then diversify how you put that money to work. Maybe in this situation, the best solution wouldn’t be to tie money up in a 401k, because it may make more sense to put it into real estate. What is your 5 year plan? Is it to start your own business? This is why a conversation with a wealth management expert can be so beneficial. You are able to take a look at your goals, where you are now, and devise some strategies to achieve your goals.
Part of the wealth management picture is saving and investing, as discussed above. The other is getting strategic with tax. John talks about 5 tax strategies that are commonly utilized, which he prioritizes in the following way:
- Deductions – Taking a deduction lowers your tax liability by lowering taxable income
- Conversion – For example, converting ordinary income to portfolio income or ordinary income to a passive investor because of tax benefits
- Tax brackets – You can take a look at how you can save money on taxes by getting into a lower bracket during a certain window of time
- Other tax credits or strategies with tax code – For example, bonus depreciation with real estate
- Deferral – Refers to delaying paying taxes until a future period.
Ultimately, the goal is to go from a worry mindset to a mindset of wealth creation. Moving from worry to wealth allows you to think about what you really want your money to do for you. You are able to focus on things you can control while learning about different types of strategies. Business owners and their strategies for investing and retirement are quite a bit different than an employee and the traditional retirement route of a 401K. If you put all of your money in one place, you limit the ability to grow your money, can face tax limitations, and can limit your own flexibility with how you choose to invest.
When it comes to investing, many minds go to risk. A popular notion is that the higher the risk, the higher the return, but taking more risk is not the answer. Your goal is to figure out the best way to grow your money with the least amount of risk. Now, there IS a risk component. You can’t earn money without any risk, but the amount of risk will vary depending on your time spent with it, talent, knowledge and the capital invested.
Again, you have to consider what your end goal is and talk about the possibilities available to reach that goal. There are steps you must take to give your plan the best chance of success. A wealth management professional can help you figure out how to build in the maximum amount of flexibility, control and access of your money, which will give the best options.
If you would like to speak with John and his team at e3 Wealth, visit their website or email them at email@example.com. They would love to have a conversation and answer any questions you may have about your own wealth picture.
In our first episode welcoming a guest outside of our team here at PJS & Co. CPAs, we are talking to John Moriarty from e3 Wealth about taking control of your financial future and options for investing.
There is a gap in financial knowledge and what it takes to build wealth. Many of us go through school without learning the options available and are unaware of the various strategies one can implement to make money work for us. Unless your parents are savvy, or you are lucky enough to find a mentor, many of us struggle to find the right information and mindset.
One of the strategies available for your safe money, or extra cash, is to build your own privatized banking system. e3 Consultants Group has created a free ebook that walks you through this strategy. You can find that, here.
Education and expanding your knowledge about investing beyond the stock market gives you more confidence and options. Once you start to understand more strategies to build wealth, you are able to take action and utilize that information to make progress in your own wealth story.
Because money is tied to emotion, it can be difficult to make logical decisions when it comes to saving and investing. We do what makes us feel comfortable when it comes to money. That’s why the education component is so crucial. It is also important to find a wealth management firm that is independent, which means they are able to focus on a wider variety of strategies outside of stock, for example.
After discussing the basics above, we get into options for retirement and investing. This starts with a conversation about what you ultimately want. Again, back to your why and bigger vision, which we have covered in prior episodes. In addition to saving and investing, wealth management also involves tax strategy. The goal in working on wealth management is to move from a mindset of worry to one of wealth creation. You want to get as much information and work with a network of professionals who have the knowledge and experience to give you the highest possible chance of success.