The Everyday Millionaire Show
Ryan Greenberg and Nick Kalfas are two Maryland based business owners and investors. Ryan and Nick discuss topics such as basics of financial literacy, building businesses, investing, and real estate. This podcast is for people looking to achieve financial freedom.
The Everyday Millionaire Show
Mastering Your Money: Tax Strategies for Everyday Millionaires with Erik Brenner
Erik Brenner pulls back the curtain on wealth management strategies that were once exclusive to the ultra-wealthy but are now accessible to everyday millionaires. With 32 years of experience operating both wealth advisory and tax accounting firms, Erik delivers practical insights that bridge the gap between financial planning and tax strategy.
Whether you're a business owner, medical professional, or high-income earner, this episode delivers actionable strategies to optimize your finances. As Erik notes, success in wealth management isn't just about making money—it's about keeping more of what you earn through intelligent planning and tax strategy.
Welcome to the Everyday Millionaire Show with Ryan Greenberg and Nick Kalfas. Hi guys, welcome back to another episode of the Everyday Millionaire Show. We are here with Eric Brenner, eric, so give us a quick little background on who you are, then we can get into some questions that I took from your bio.
Speaker 2:Yeah, sure, so I am and own and operate an independent wealth advisory firm, along with a tax and accounting firm, and I've been doing this going on my 32nd year and we work with individuals typically pre-retired, retired doctors, medical professionals and business owners on helping them make good financial decisions all the way through life, but particularly as they get closer to retirement and into retirement.
Speaker 1:All right, so the tax strategist of sorts, as well as a financial advisor as well as a financial advisor.
Speaker 2:Yeah, yeah, we do, you know, because we have the tax part of our business and we just find more and more opportunities for clients to take advantage of tax strategies that they may not know about, and so we, their mitigation strategies, you know. When it makes sense, we, you know, we will utilize those as well for clients.
Speaker 1:What are some of the most common strategies that you are advising people to save them the most amount of taxes?
Speaker 2:Yeah, so there are strategies from income offset strategies. Certainly it could be structure of entities that could save some money all the way down to creating and setting up their solar business. They get really nice tax offsets by doing that in the solar space, tax offsets by doing that in the solar space. So we really over the last few years have continued to bring kind of these mitigation strategies to folks that are not ultra high net worth. The ultra high net worth community has had and utilized these strategies for many, many years, and so that's just a piece of what we do as an overall picture.
Speaker 1:Nick, you got anything, yeah, so I've got another one.
Speaker 3:So you were a tax strategist first, and then you started incorporating, teaching people how to build wealth and how to move their money farther.
Speaker 2:It was actually the other way around. So we started in the wealth management business, financial planning, and started that way and really, as we continue to grow and work with people, then we moved into just adding this as another piece of the business. Right. And the other reason, or one of the those what I would call advanced strategies they were not available. Certainly, when I started out in the business you, they weren't available to most people. They were available to a lot of you know institutionally. And then the ultra high net worth that you know you had to qualify. The bogeys were often extremely high and it was very few people that could benefit from it. And they've just brought those strategies to. You still have to qualify in many instances, but it's not near the thresholds that you had in the past. And we found that taxes, you know, often and most often are the biggest expense for someone in their retirement years. So all of that combined, you know that's why we've integrated that as just another you know tool in our toolbox that we can help people through making those decisions.
Speaker 3:So let's say you're just starting out in wealth management, trying to grow that type of business. How do you gain trust from customers and clients who want to work with you?
Speaker 2:Yeah, it's a tough business. I've seen a lot of people come and go, a lot of people that are extremely high educated, very smart, but you do have to gain that trust and so really the business, I think, has evolved to if you want to start in that business, you probably want to establish or get with somebody that's already established like a residency program and gain some extreme knowledge. Things have gotten way more complex and then the trust of it is not just your knowledge, but how you're communicating to clients, how you're providing the advice to clients, where's your advice coming from. Those are all key components to being successful in the business.
Speaker 4:I'm going to piggyback off of that because I thought that was a great question For someone that's younger too, I'm 27,. Used to want to be a financial advisor of sorts, but I think the overall burden of saying, hey, like I'm a financial planner, I'm 27, you're advising, you know typically people that are in their 50s or 60s, they don't really want to listen to you. So what would be your advice for someone that's younger, that's thinking about getting into financial planning or advising?
Speaker 2:Yeah, no, I think it is a good point. And a couple things. One is that you know there's a lot of really good work that can be done with even younger generation. You know, as you were talking about and working with those folks, that you know have needs and they need to get their plan established. You know they have different needs but they get their plan established. And I would say that would is an area that you could start and you know, relate to those that you're sitting across the table from and be able to kind of guide them and give them advice along the way and then again, as you grow experience and knowledge and seeing more of it, then you can kind of gain the confidence of, you know, those older, you know that maybe are more accomplished.
Speaker 4:Right, yeah, that's a great answer.
Speaker 3:So what does and you don't have to answer this, but just in a general sense. I mean, I guess you know answer it in the way you would want to what is the compensation for, like, an average client that you would bring in? Is it, you know, commission based, Is it hourly based, or how has the structure worked out?
Speaker 2:Yeah, so well in our model because we're a fiduciary and so a fiduciary. If those that don't know that, that means that first off we must act in the best interest of the clients. Not all advisors nor advisory firms are true fiduciary firms, and so if they're not a true fiduciary firm and they're registered with their securities regulators, they may have some form of commission based. So that's how they get compensated is when they sell a product they get paid.
Speaker 2:We don't do that. How we get compensated is either assets we manage, so we get compensated based on those that we oversee, so it can be all their assets, including their retirement plans. But that's one way we get compensated and the major way or someone pays us to do the work, so that's how we get compensated. So it depends first off on your question how they're structured to be able to charge legally with the regulators, and then that determines how they're going to get compensated. As a fiduciary, you know we really say, well, look, we're not, we're in your best interest, it doesn't matter to us if you invest A, b or C, you know we're not making one dime different. You know you're paying us, we're going to do what's best for you and that's the ultimate decision. It's not swayed on what product you go into.
Speaker 2:So when you say, like the profits for you are a percentage of what those people allow you to manage, is that what yeah, that's what they call a fee-based model, where you know, we if we oversee, you know, and the asset management, investment management is just one piece, but if we oversee and help and make decisions with those, then we would charge to do so. So we do better if they do better and we do worse if they go down. So we're on the same side of the table as the client.
Speaker 3:And is it on an annual basis? So let's say you're managing a million dollars of someone's money. Do you get like a percentage of that each year, or is it just a one-time fee or what does that look like?
Speaker 2:And so it does an average. So there's an annual fee, but then it's taken out. If it's monthly, it's taken out monthly, so divided by 12. And so it's calculated on an ongoing basis and that's how it's compensated. So, again, the markets go up and down. Of course, the year the fee is going to go up and down a little bit, depending on what's happened with the overall accounts and markets. And what that does is a couple of things. One is it makes it easy for those that are paying, because it's not this one big chunk. You know it comes out of the account. And then, secondly, you know it helps us as it relates to being able to provide the advice and guidance along the way that clients need on an ongoing basis throughout the year.
Speaker 1:What's your all-around opinion on the current state of the market?
Speaker 2:Yeah, it's been interesting. Certainly the conversations we've been having is a bit of surprise, but delighted. But a lot of folks are surprised. You know, when tariffs were announced back in the spring, you know and we saw this dip in the market, kind of a pullback for a pretty short period of time I think a lot of people were thinking, ok, here we go, we're going to go into another, you know 08, 09. That didn't happen. You know, the pullback was for just a handful of weeks. The pullback was for just a handful of weeks.
Speaker 2:And so what we're saying is the underlying fundamentals right now actually are pretty solid, and so that's a good thing. Company profits have been good that's also a good thing, and so those things help drive the market. So I wouldn't call it strong, but I also wouldn't call it weak. And so if we can kind of get through this and get some more clarification on tariffs and get some more clarification as we kind of move throughout the year into the fall, then I think there's an opportunity for us to kind of, you know, grow further and even grow more on the upside.
Speaker 1:So the reason I was on the phone with my Merrill Lynch advisor today and we had, I guess, staggered a bunch of calls and I sold all my NVIDIA calls and now they're in the money, so I was figuring out how to roll those over. Is that stuff that you do like strategy wise, or do you do more like index funds and like how aggressive do you get?
Speaker 2:essentially, yeah, I mean it is based on the client and the risk tolerance of the client. So you know we manage things from soup to nuts all the way through pretty much. And so you know covered calls and options they're just not for everybody. So you know covered calls and options they're just not for everybody. You know portfolio stocks blended with models that have exchange traded funds within them often work very well for clients. And then we actively manage it and make adjustments and changes based on our data, you know, to make sure clients stay within their risk tolerance.
Speaker 1:How do you determine that? How do you determine?
Speaker 2:their risk? Did they tell you, or is it something that you help them with? Yeah, it's actually put together several ways. First way is that through just conversations we can get a sense of kind of where they fall risk wise. You know if they have investments already. You can get a sense of where they've invested and what their risk is.
Speaker 2:Secondly is they will take a risk analysis and it's not very long, but we do have clients take a risk analysis to help determine how they really feel about risk. To help determine how they really feel about risk. And then what we talk about is once we have that selected, you know, worst case scenario, what's the downside, what's the upside? What are you giving up by taking this risk? You know, what are you protecting by taking this risk? So, between all of that, then we get a pretty good sense of where they are and where they fall from a risk perspective. They can always change it, but they feel pretty confident, I think, going in that OK, I mean I'm within my risk tolerance, that I'm comfortable with. As you know, a client.
Speaker 3:So what's your, what's your opinion on real estate as it pertains to wealth building?
Speaker 2:Yeah, no, I think real estate has a great sense of you know, having diversification. You know diversification where it's an asset class that you know doesn't fall in the kind of stock bond. You know that that period of it, certainly, if it's structured properly and you know it's bought properly and all of that, you've got the cash flows that can come with that. You've got some great tax benefits in real estate. So you know all those pieces come into play. When it comes into, you know, individuals, then they really have to determine how active they want to be. If they don't want to be active, you know what is your future goals. So you know what's that plan? Is that going to get in the way?
Speaker 2:I have seen situations where you know people have real estate as a portion of their overall investable assets and it worked out great. And then I've seen times where they got into it and it wasn't really what they thought it would be. It's a lot of're. It's just not for them. So I think it can be a really good piece. Um, I think that, um, it just really comes down to the situation and what they want to accomplish.
Speaker 1:Yeah, that you're, cause you're talking to three guys that 90% of their wealth is all put into real estate. So that's uh, I would say, yeah, definitely well over 90%. So we're hoping that we're on that one side of the story that you just said.
Speaker 2:Yeah, yeah exactly I'm sure you are, because you're there, you know. But sometimes, as you've probably seen it, people get into it and you know they, you know it's not for everybody, but it can be a really good diversification piece.
Speaker 4:So yeah, yeah, just real quick. And I'm sure we have like a lot of business owners that are out there and this is something that, nick, you guys have probably struggled with in the past and I'm hitting it now. But when it relates to like saving on taxes and the tax benefits of real estate and not showing a profit, sometimes right and then you have these business owners or contractors that do need to buy a house and they do need to get a loan, how do you typically advise those guys on their situation?
Speaker 2:Yeah, I mean now you're getting a little bit into the tax side of it. But I will comment on a couple of things. One is that certainly is a balance. I mean you can't show a loss all the way through and then try to. You know a loss all the way through and then try to, you know, acquire right, get a loan, you know, be good and build relationships with the banks. So you know that is a balancing act in some cases. So what I would say is it can be a minimization, maybe not a zeroization, zero it out, it's a minimize it to where it makes sense.
Speaker 2:You know, often too, when we get into structure, this could be real estate, it could be other things, buying, you know, acquisition of companies, businesses and so forth. You know there's also called ad backs and so you know they can run. You know, and often run pro formas and determine on. You know, well, you're showing this amount of profit, but really, when we add back this, this, this, we add this back, what is the true cashflow of the business? Or in sense of the real estate, the real estate. So I've seen, if you get really savvy, not only investors, but also they've got good guidance and they're working with good bankers and they understand that.
Speaker 2:You know that's a sales part of it Because most business owners run stuff through the business right For the deduction all of us do it. So that's just one example. So coming up with what you know kind of true profit is and cashflow, and you know the great thing about real estate is they can attach to it right Meaning loans. They can attach to it if you default. So that's a you know that's a benefit versus them loaning money just based on cashflow or profit of a business and they don't have things to attach just in case you default.
Speaker 3:Yep, all good points. Can you name some mistakes that high-income earners make when planning for retirement?
Speaker 2:that high income earners make when planning for retirement. Yeah, I think I mean there's a couple big ones. One is that they save, but they're not saving potentially in the most efficient place. So you know, we now have tax-free investments, roths, iras and other investments that are hugely beneficial on the other end. And so when they're saving, they're working.
Speaker 2:The question was high income, so they're higher income, they're working, they're saving, but they're not thinking about the consequences on the other end. They're not thinking about the consequences on the other end. So we see the other end and we see where people retire and they have accounts that now, when they withdraw, they are 100% taxable period versus having tax-free or some split of that some taxable, some tax-free. So I think one of the mistakes we see for sure is they're just not thinking about the other end. They're thinking about the here and now. That's one.
Speaker 2:Secondly is that if they're high-income earners, okay, probably their tax is higher and they just get used to paying the tax. So most of them do not like paying tax, but they have the income to pay it and they're busy and so they just keep paying it. So it's like okay, I calculate, end it up, this is what I owe or this is what I getting back. This is my quarterly, you know. However that works out and they move on to the next year and they really do not have somebody saying, okay, let's look at planning the current year. Where are you landing? Where do you? Let's put a plan in place to see if there's anything we could change during the current year. Sounds kind of funny. They just keep paying it, but if they have the income coming in and go, well, I hate taxes, but you know what the income's coming in and supporting it. So I'm just going to keep doing my job, I'm going to pay the tax and I'm going to move on are you referring mainly to people that have like a w-2 income or?
Speaker 2:could be both. Yeah, could be both. Yeah, could be both.
Speaker 1:Sometimes, you know, we take, you know, owner distributions instead of like a true salary, and those things are not, you know, as taxable. So do you still like suggest the same thing for somebody that owns their business, rather than somebody that's a high income earner on a W-2?
Speaker 2:Yeah, I mean it's all depending on the business, correct? And so you know, ultimately it's still what ends up you know what's taxable, not taxable. That's what ends up to it. So I'm referring to kind of all aspects. You know how much you're drawing out, you know where's the bottom line land. The other thing is, it's the planning of, as I said, what's at the other end. You know it seems good today, but what's at the other end is also important.
Speaker 3:I have a general question. So should your accountant be the one helping plan or should that be separate from your accountant, Like should you have a financial planner to help plan and also work with your accountant?
Speaker 2:Yeah, no, if you have an accountant, that's proactive, that's great. So many of the accountants that we run across are reactive or they already. They're entering numbers into the box and then they tell someone that you know. In this case, if we're talking about self-employed, okay, here's your tax bill, here's the quarterlies that produced. You owe this, also on top in April of your tax bill, and then pay this amount and then I'll see you next year Versus, you know what this is the tax and then pay this amount and then I'll see you next year, versus, you know what this is the tax and the way it is.
Speaker 2:Let's meet mid-year and talk about where are you at in your business. You know anything changed. Let's talk proactively. What can we do right to reduce this current year? So if you have that in an accountant or CPA, that's great. We find a challenge often that they don't do that. They don't do a lot of planning. Advisors can drive that, so they can drive the planning part and they can integrate with the tax people and that's a great team A lot of advisors. Depending on if they work for a firm or how their situation is, they may not be able to talk much about the tax situation, but they can help drive that and getting to. Okay, you know we really need to meet with your accountant or your CPA and you know talk about strategies that could be utilized.
Speaker 1:So if you had both a financial planner and a CPA, it's a good idea to have them on meetings.
Speaker 2:Absolutely yeah, there should be a coordination, because what one does the other affects and vice versa. And plus it's gotten just so much more complex that just either one of them is not going to know at all. It's just not. It's not possible, especially if they're really really broad based, and I mean that you know they don't focus in on one area. If they're really broad based and you know they do you know the accountant does all different kinds of businesses and they're broad based it's really hard to focus in on a particular segment, and so them working together is an important piece.
Speaker 3:So why don't all CPA firms just have their own in-house planners to help their business grow in that sense as well, instead of having two independent businesses trying to get together to figure out? Well, that's what he did, someone's right.
Speaker 2:Yeah, yeah, I mean there's it's a good question. There are firms that have that integrated and I I suppose there's a lot of reasons. Some of the firms that I know that don't have it. You know, again, it takes them out of focus. So they don't. You know it takes them out of focus. There are many, many advisory firms now that were started by CPAs and so they just naturally progressed over to that area. So that's a piece of it and they just didn't want the undertaking, you know. So you'd ask why CPA firms? They don't have the advisory business. The advisory business is under different regulatory bodies. You have different risk involved with that business versus the CPA business, experience and all of that. The other thing I've run across is a lot of counting tax firms. They do not want the responsibility, which I appreciate, of managing, overseeing people's assets.
Speaker 3:They just do not want that responsibility. So isn't wealth? Is wealth management and financial planning? Aren't they two different things, though, so they would take two different people to do those things.
Speaker 2:No, not necessarily. You know you can have it's, they're exchangeable words a lot of times. So wealth management, you know, specifically, could be just wealth or another just on your accounts, where financial planning is is stated or believed to be more comprehensive, right Than just wealth. So, and then they can be interchangeable.
Speaker 3:Gotcha. Yeah, my thought of it was wealth management would be more so for managing someone's money that they already have, and then financial planning would be more so, figuring out what they have to do to give them the most money in their pocket at the end of the day.
Speaker 2:Yeah, it sounds separate and it's a great point, but oftentimes they're interchangeable and you know the company or the advisor they do this. Very similar in many ways things Now there are advisors that do just wealth management. You have an account, I'll manage the account. I'm going to give you advice on that account. Okay, they don't really look at it comprehensively. So you have an estate problem or you want to talk about estate planning? That's not something I do. So there's wealth managers that's what they do, whereas there's financial planners that say, if you have an estate issue, I'm more than willing to kind of talk about what might be best, set it up, help coordinate with your attorney, making sure that everything's getting in place. But oftentimes it can be interchangeable. You really have to determine within the firm. You know what do they do and how comprehensive are they.
Speaker 3:So I guess I was thinking more terms of like tax planning. So would that be as a tax planner, then separate from a financial planner?
Speaker 2:Again, oftentimes a financial planner can be, and is, a tax planner as well and so, like our advisors, we do tax planning. And then what we do is, when we get to a point, or if we have questions or need to bring in the tax, the accountant, cpa, then we bring them in and, you know, have a discussion on the situation and kind of directionally, what you know, how are we going to, how are we going to move, how are we going to do this move going forward? So oftentimes you know, a planner can also be that really tax side of it and do some of the planning there.
Speaker 4:So question with the way technology is going and everything, do you see AI being able to replace the financial planning side and the tax strategy side for someone that maybe just has an accountant that's not, you know, as proactive as you may hope, and then you could just use chat, gpt or an AI to kind of plan your business and finances?
Speaker 2:Yeah, so I would see AI as an enhancement to be able to enhance the tools that we have to be able to give the advice, for sure, but I do not see it replacing it. For multiple reasons, like a lot of industries medical and all the other reasons that you know it still doesn't put in touch with the actual client. There's multitude of situations we still, with all the technology, even though we have today we do not have we can't put all the information of a situation in one tool and solve everything. We have to use multiple tools. Oh no, ai is pretty close and solve everything we have to use multiple.
Speaker 3:I know AI is pretty close.
Speaker 2:Yeah, but you still it can be wrong and there's just so nuanced that there's just a lot of that. You need to work with the client directly.
Speaker 2:So I'll tell you the industry has zero fear that it's being replaced If you're not utilizing it. It's one of those that you know you're going to. You're going to fall behind if you're not utilizing it as a tool. But we have much more in wealth and we have a couple tax bombs coming that are not tax laws that were just signed. Tax bombs coming on people in retirement that you know they don't. Oftentimes people don't retire now in a lower income than when they were working. They are making the same amount or more and paying more tax. So those situations need, I believe, a one-on-one advice, making sure that they're making good decisions along the way.
Speaker 1:How many employees do you have? 20. And as far as like a ratio of how much or is it how many clients versus how many advisors you need, Like what can one advisor like take on? Like how many clients do you have? I guess is the question for 20 employees?
Speaker 2:Well, I mean, the 20 is not all advisors, so there's support team and you know we do that's, you know we do other things accounting work and things like that so they're not all specifically client related. The answer, the answer really is it depends on the client, the relationship, how complex, and then the team that the advisor has put around them. So you know it could be, you know, higher network clients that take more work. You really can work with less. You can't work with more of those. You have limited numbers. So it really matters on the type of client, the type of work, what is the team around the advisor. All of that that comes into play on what's capacity.
Speaker 4:What was the hardest thing about growing your company so far?
Speaker 2:Yeah, I think one of the hardest things is that this is hard. My particular business for 30 plus years. It's hard business. Really, only 2% of those that start in the industry make it, so 98% fail. So 98% fail and so it's a hard business for the first four or five, six, maybe even seven years. It's really hard because people I've seen them come into the industry really smart, a lot of credentials, education. Bottom line is, you mentioned earlier, how do you build rapport and trust and all of that. You know you got to be able to do that, so A it's hard. Secondly, is you know figuring out, just interacting and building a team and how to build a really good team around you. You know it didn't come natural for me and it's still a work in progress in leading people. So that's hard too, because you're dealing with people. So you know those are a couple things that I just stick out. That's hard. As you know, we've grown the business and continue to grow.
Speaker 3:What percent of your income should you be investing? Let's say there's a 20-year-old out there who maybe makes 50 to 60 grand a year. They have no desire to start their own business unless they make that same amount for many years. What percent should they be putting away and what do you think the best strategy for them would be to grow their money over time?
Speaker 2:So start off with a couple kind of rules of thumb. Number one is 10%. So if you put away 10% long-term of your income, so you were saying 50, 60,000, five, $6,000 a year saved long-term. That's number one. If you put away 10% of your income over and you earn 10% over 30 years, you will replace your income. So just out of sight out of mind, so just out of sight out of mind.
Speaker 2:Secondly is if someone's out and they're working and they get a match in any type of retirement plan, you certainly want to take advantage of that. It's free money, so you don't want to overlook whatever free money match that you have which could add to your 10%. So that's important, to your 10%. So that's important. And then when they start out, if they're just starting out, what they can do is start off with a simple kind of couple index funds, stock index funds, long timeframe, long horizon, invest the money and just continue to diligently invest the money, adding the money. As that grows, diversification becomes more important. But initially you want to have it in something that you know long-term index fund is, you know, a great fund over time and a way to just start out and have foundational, a good foundation, built.
Speaker 3:Gotcha, what do you think about crypto?
Speaker 2:Yeah, I mean, I think crypto it's interesting, you know it again, it can. It's another asset class now. Really, you know the industry, our industry is trying to just figure out. Uh, well, first off, you know how, what's going to be the regulations on it, which I think still getting figured out. Um, and then the. The big thing that I've seen, um with a lot of the folks we work with is just understanding it, you know, and um, so if someone feels uncomfortable and they don't understand it, it's probably not the best investment for them, but I think it can be a good asset diversified piece that would come out with you know, okay, what's the risk tolerance? We talked about that earlier. You know, is it something that they are wanting to invest some in or a portion of it? But it's definitely an interesting asset class.
Speaker 1:All right, I think we have another podcast in a couple of minutes, so you guys have anything else for Eric?
Speaker 4:No, I think that was good.
Speaker 1:All right, eric, we appreciate your time today.
Speaker 2:Yeah, I really appreciate it. Guys, it was nice chatting with you and I just wrote a book called the Personal CFO. If people want to get a free copy, I'll send them to hilltopwealthtaxcom slash podcast. Hilltopwealthtaxcom slash podcast. You can sign up for a free copy. You can also set up a 15-minute introductory call if you've got questions for us or want to find more out about us. But the book you know talks a lot about what we're talking about and a lot more. I think it's a good read.
Speaker 1:And where are you based out of?
Speaker 2:We're based out of Indiana and we have an office in Michigan, Florida, so we have a handful of offices around the country.
Speaker 1:Awesome, all right, well, if anybody wants the book, reach out to Eric and Eric, we appreciate your time today All right, thank you so much, guys.
