Episode 142: Building the Blueprint for What's Next.

Have you ever sat down and really thought about the best investment you ever made? Was it a business idea? A real estate venture? A hot stock? Join your hosts Matthew Grishman and Jim Gebhardt, as they reveal the best investments they’ve ever made as wealth advisors and lifelong entrepreneurs. 

Kicking off each episode with gratitude, this week the guys explore the significance these best investments have had on their business and personal lives. Hint: these life-changing investments are what ultimately brought Matthew and Jim together in business and friendship. 

The conversation shifts to how the guys help their entrepreneur clients begin building the blueprint for living Life 3.0. It starts with recognizing what you have the most control over in the world of finance and investing: risk, taxes, and cash flow. Yes, you have more control over these than you might think! 

Discover the true value of collaborating with great tax professionals who challenge conventional thinking. But beware, tax schemes loom around every corner! Matthew and Jim share valuable insight on some of the hidden taxes inside different investment products you may own inside your investment accounts. Awareness is essential for the entrepreneur seeking what’s next! 

Finally, the guys explore the nuances of how estate planning fits in to building your Blueprint. They weave together insights to craft a comprehensive blueprint for living Life 3.0, creating the legacy you want, and how you can protect the generational wealth required to see that legacy through. 

CHAPTER SUMMARIES
(00:00) Investing in Self-Gratitude
Nature's warmth in summer, investing in oneself, moving to California, adapting to new environment, personal growth and relationships.

(10:29) Strategic Tax Planning for Entrepreneurs
Collaborate with CPAs for tax planning, tailor strategies to individual circumstances, and consider future implications beyond monetary gains.

(23:57) Estate Planning and Tax Strategies
Estate planning and life insurance can prevent financial burdens, while ETFs offer tax efficiency and control in investment strategies.

(34:51) Mastering Intentional Spending and Wealth Accumulation
10-10-10 principle helps manage impulse purchases and highlights the importance of intentional spending and financial awareness.

(44:45) Building Generational Wealth Blueprint
Estate planning, margins of safety, and Life 3.0 are crucial for creating and preserving generational wealth.

You can learn more about The Whole Wealth Journey by visiting The Gebhardt Group. You can follow us on Instagram @thewholewealthjourney

Transcript

Jim Gebhardt: [00:00:00] Debt is only worthy to the extent you believe in the investment. There you go. There you go.

Welcome to the whole wealth journey. Ooh, that means it's podcast day. It is. What are we going to talk about? I don't know. What do you want to talk about today? I want to talk about the concept of being intentional with your money. Maybe like wealth with a Y and wealth with a Y. Not a funny spelling, but W H Y.

What are we doing with the money and why? 

Matthew Grishman: Well, that's a great idea. So, how about we tell people who we are and 

Jim Gebhardt: Oh, yeah. 

Matthew Grishman: Jim Gebhardt. Matthew Grishman. We are the co creators of The Whole Wealth Journey. Are you an entrepreneur who wants more from your money than just more money? If you are, you're in the right spot.

You are now part of The Whole Wealth Journey. Let's go. [00:01:00] I have a very unpopular gratitude today, I think. I'm grateful that, like, Summer's still here. I mean, when you grow up where we grew up, I know everybody's complaining that they want fall and I get it, but for a kid who grew up in upstate New York, I'm, I'm grateful for that.

So I'm betting that we're still warm in November. That's what I'm betting. It's going to be a miserably rainy 42 degree day. Did I just totally screw it up? 

Jim Gebhardt: Not at all. Because you're grateful. We record this in advance. 

Matthew Grishman: Yeah, I know. We don't 

Jim Gebhardt: record the day of. 

Matthew Grishman: I know. 

Jim Gebhardt: We have other stuff. We have clients to take care of and families to take care of and it's all good that we record in advance.

Matthew Grishman: So you're right. The reality, although I'm good at doing that where I call something and I'm grateful for this incredible warm autumn we have. You're right. What's probably going to happen is the day this episode drops, It's probably going to be like a beautiful Mother's Day in Syracuse, 42 and rainy, as you say.

I'm very grateful for the sunshine and the warmth. I just, [00:02:00] I love it. I love it. I love it. I'm grateful for where I live and the fact that I get so much sunshine and warmth. That 

Jim Gebhardt: ties in beautifully to my gratitude. What's your gratitude? So, I go to Strategic Coach every quarter and we, I just got back and we kicked off the workshop last week with a very interesting question.

And so up on the screen goes this question and, you know, I just immediately start thinking in the conventional way. And the question was, what investment has had the greatest impact on my life? And I started just thinking of network appliance in 1999, day trading Yahoo in 2000. I was like, no, no, no, no, no, no, no.

Not an investment. 

Matthew Grishman: But investment, 

Jim Gebhardt: but an investment. And then it dawned on me, speaking of California and sunshine, that it was betting on me, the best investment. I believe you have a lovely Ted [00:03:00] talk on this subject. The best investment I have ever made is in myself. 

Matthew Grishman: I'm glad you say that. 

Jim Gebhardt: And I moved, I've, I've seen it for a while.

Matthew Grishman: Okay. I haven't heard you talk about it a lot. So I'm glad you're talking about it. You 

Jim Gebhardt: already did is the fact that when I was 23, I moved to California. Yeah. After sitting in a blizzard in my basement apartment, I had a roommate who was going to law school. We had no heat, no power, no light, no nothing. I was sitting there with a little candle.

That was our light, my grandmother's kitchen table. And I'm like, what in the world? And what? No, I need to move. I'd always wanted to move to California and I did. And that was without a doubt, without a doubt, the greatest investment. That's had impact on my life because that was the singular domino that led to all the other unbelievable dominoes That has influenced my life including meeting my wife six months after I moved here.

Yeah, I was homesick. Oh [00:04:00] Every college student that goes away for the first time. 

Matthew Grishman: Yeah, I 

Jim Gebhardt: have I had it too, but I was only 90 miles away I had a level of homesickness that I can still I can still feel it around October 

Matthew Grishman: when you first moved I moved 

Jim Gebhardt: here in July. 

Matthew Grishman: Yeah, 

Jim Gebhardt: it was hard to meet people. 

Matthew Grishman: Yeah, I 

Jim Gebhardt: worked with people but you know this Outside of that, it was hard to meet people.

Matthew Grishman: Yeah. 

Jim Gebhardt: Oh, wow. I still remember. I was in a men's a cappella group. And we had a reunion every year. And I used that as an excuse to get on one of those big things with the metal that sticks out the side called airplanes. Mm hmm. And go back to Rochester and get a dose of my friends. Get a dose of familiar.

Get a dose of my family. And then that kind of refueled the tank. And I could go for another couple months. And lo and behold, December 10th, 1993, three days after the infamous December 7th. Mine is more famous in the sense that I met Beth. Right. And, that's the singular greatest domino in moving to [00:05:00] California, is meeting Beth and the life that we've created and all the different things that have spawned from that.

I wouldn't be sitting here with you. I wouldn't have this business. I wouldn't, certainly wouldn't have the four children that I know of that are walking around the planet, right? 

Matthew Grishman: Yeah, yeah. 

Jim Gebhardt: So yeah, my gratitude is equally California. 

Matthew Grishman: Atta boy. Well, I appreciate the ability to witness that and see that, because although you haven't talked about it a lot, you've I haven't talked about it on the show very much.

Well, and, and, you haven't talked about it a lot. You don't. You don't talk about it a lot, but you live it. You walk it. You show it. There are a lot of things that you put out on display that you don't talk about. You just do. Hmm. Most of what You've mentored me on is not what you say. It's what you do.

Terrific. And what an 

Jim Gebhardt: episode on that 

Matthew Grishman: It's coming Relationship with self is coming. We're still in relationship with money mode. Okay, we're getting there. We're getting there. I'm sorry I'm caffeinated today. We're only you know, [00:06:00] a couple two three months out from that. We're getting there your role modeling of What you do not what you say is what allowed me to start believing that it's possible because here I watch this guy Who always seemed to believe in himself and always seemed to be comfortable in his own skin.

Oh baby, do I I know, I know, I know mister I can't. I get it. I get it, but how you would show up in the world, you always seemed to have a reasonable amount of comfort in your own skin. You learned at a young age to not apologize for your size. You didn't always necessarily believe it, but you did a really good job of living it and walking the walk.

And I do believe that's what eventually got you to believe it was walking the walk was just doing it because it helped for me and that's terrific. And that's where the TED talk came from, because I finally learned that the best investment I can make is in myself. But to do that, you have to want to do that.

You have to believe in the person that you're looking [00:07:00] at in the mirror. You have to be proud of that person. You have to love that person. You have to be willing to go into debt. You have to believe in that person and be willing to go into debt. Nice knuckle bump there, that was for Ace, good one. Well, you and I have done it too.

Absolutely. Well, there's, there's the kind of debt that you get into because you don't love what you see in the mirror and you're trying to medicate the ache away. 

Jim Gebhardt: Episodes one through 130? 

Matthew Grishman: Right, I mean, we did a whole, I mean, that's the essence of financial sobriety, right? And, and I think that the timing of that That shift from kind of putting a bow around our years of financial sobriety work and now here we are walking the whole wealth journey, I think is a testament to what you and I both see when we look in the mirror.

And that's important. That is really, really important because to believe that you are your best investment and have the willingness and the balls to go all in, burn the boats at [00:08:00] the beach, no plan B, all the debt I can get my hands on because I so believe in me. 

Jim Gebhardt: Whoo. 

Matthew Grishman: Thank you. Thank you for that 

Jim Gebhardt: debt is only worthy to the extent you believe in the investment.

There you go. There you go And if our tribe knew what you and I were investing in this podcast what you and I are investing in our individual health plans with trainers and testing and Recovery and all of that's going on there There's not a lot of original thought to this. I've just been, I've been watching it and others for a long time and trying to replicate that.

It's like, okay, you want to do something. You want to be something. You want to create something. Well, our good old friend, Tim Adams, a decade ago told me, Gebhardt, you got all the moves, baby. You got to get in shape. Yep. You don't have the engine. You can't run the miles. 

Matthew Grishman: Right, you got the paint job and you got the chrome, you don't have the engine.

[00:09:00] Because what's 

Jim Gebhardt: coming for you is going to require something that is, is you're capable, but you've got to go do it. 

Matthew Grishman: Yeah. 

Jim Gebhardt: And that landed like, okay, dad, mom, sorry. My father never told me to eat my vegetables. That was my mom's job. That was a bad thing, yeah. Bird's eye boiled. Whew, they're delicious. That landed like, you know, you got to eat your vegetables, son.

Sure. Sure. Now that I'm actually doing it, and I'm starting to feel it, and the connections with it, but 

Matthew Grishman: Well, you had to get to California to understand that vegetables could be tasty. True. They could be fresh. Well, and so could taking care of your health, right? You needed to be at that place in life, wherever that was, the quote unquote California that you're so grateful to be living in today.

You needed to be in that figurative California space. To start believing that vegetables could be delicious, too. Well, that and some blood tests that scare the 

Jim Gebhardt: ever living shit out of you will, uh, definitely, uh, as I like to say, snap a chalk line. Yeah, whatever it takes. That's what it took. And as we [00:10:00] have said many times and will continue to, this is all happening for me.

Yes. Not to me. 

Matthew Grishman: Yes. And the way you and I, I think at times, have both had to approach this, for me at least, the frustration of not being able to just, in my own mind, flip a switch. Just change your mindset. Right? We hear this everywhere. Just change your mindset. Yeah. That doesn't work for this entrepreneur.

I had to get my body in motion to ultimately change my mindset. I had to fake my brain by doing everything my brain was telling me not to do. Because I'd look in the mirror and I'd go, You piece of shit. You're not good enough. You're not fast enough. You're not smart enough. Really? People are going to give you millions and millions of dollars to invest for them?

Come on. Who would ever want to do that? This was the internal dialogue I had in my head for years. So I had to lie to myself and look in the mirror and go, you know what? I'm proud of you. I love you. I believe in you. That was so hard to do, but that was the faking it till I made it because guess what? I believe that now.

You believe [00:11:00] that now. Yeah, that's why the investments in self Yeah, are going seamlessly without spilkas without oh my god that cost what? No, these are the most valuable investments you and I have ever made because they're in ourselves. 

Jim Gebhardt: Yeah. 

Matthew Grishman: And by making those investments in ourselves, we get to have bigger impact.

Jim Gebhardt: Well, that is a perfect segue into the concept of the things that we can control. Right. Because what we left off in the show 

Matthew Grishman: Atta boy. 

Jim Gebhardt: We talked about the concept of risk. 

Matthew Grishman: Oh, it's one of the first three controllables, right. What do we have control over in financial planning? How 

Jim Gebhardt: much risk are we taking?

How much risk do we want to take? And then how much risk should we really be taking relative to the plan, right? So we've got 182 minute episode on that one. You can go and join and devour. This was more. To get into the other, the next controllable on our list, which is a little counter to the culture in the context of tax planning.

Right. We are financial planners. We are not tax [00:12:00] preparers. We are not tax planners, but do we work in concert with CPAs all the time? God bless America. Yes, we do. And the concept of being able to explore different strategies with a thriving business owner on how, I mean, you're going to pay tax. Right. No, I mean you're okay.

There's people out there that are gonna come up with schemes and Concepts to help you pay zero tax and they get all the clicks online because it's sexy and everything But really 

Matthew Grishman: you're breaking the law I'm just gonna call it if there's a scheme and they exist 

Jim Gebhardt: or or your audit risk is through the huge Right, and you're doing 

Matthew Grishman: something that when the IRS sees it, they're gonna go.

Uh uh They're going to wave that Dikembe Mutombo finger at you and go, uh, uh, taxes plus penalties. And let's just hope it doesn't come with a jail sentence. And who wants 

Jim Gebhardt: to go through an audit on anything to do with that? No, thank 

Matthew Grishman: you. 

Jim Gebhardt: So this whole concept of being thoughtful and intentional around your taxes, it can start with super simple stuff like 401ks and deferring money into retirement [00:13:00] plans, right?

There's more sophisticated options, things like defined benefit plans. So, for Uncle Hank and his new consulting business, you know, we'll look at something like that. Sure. That is what in the, in the olden days would be called the pension plan. 

Matthew Grishman: Right. 

Jim Gebhardt: Right. Where you are, you are actually creating a pension for you and the employees of the company.

So, those are not small conversations in the way of dollars. No. 

Matthew Grishman: No, and that's 

Jim Gebhardt: true. But as a tool in the tool bag, that's an option. Then we get into gifting strategies to help reduce estate tax. And there's all, there's all kinds of estate tax planning strategies that are going to get really interesting in 2025.

Matthew Grishman: Well. We're going to, and that's what I want to spend the bulk of our time talking about today before we move into the third thing. But before we get too far down the road here, you, you talked about 401ks and defined benefits and here's my dad. We talked about this on the show last, he's the newest entrant into the world of entrepreneurial ism.

He's a new entrepreneur and it would be very easy for you and I to talk [00:14:00] to him about deferring As much of the income that he's going to be making as a business owner consultant going forward for down the road Our business our industry has done a beautiful job of selling sure this pitch called tax deferral so have we Well, we were very nicely trained monkeys for a lot a lot of years who did what we were told and Sold the concept of tax deferral, but then when you and I grew up a little bit and slowed this thing down a little bit and experienced, I don't know, a couple of two, three decades of life in this industry, we realized that tax deferral isn't a one size fits all benefit.

It can be beneficial, but it needs to be talked about individually because for some people, does it make more sense to defer our taxes 30 years or does it make more sense to pay taxes today? 

Jim Gebhardt: Well, to me, as you say that, I'm thinking of the Whenever it was created [00:15:00] in the 60s or 70s, the, you know, the, the, the food pyramid, right?

So much of this and so much of that. And you, you know, all these, all these recommendations on the shoulds, right. From a dietary standpoint, when you actually do the testing at the individual level on like food sensitivities and allergies and all of this stuff, and you start to realize that My food pyramid looks nothing like mine, yours.

Matthew Grishman: Exactly. Let 

Jim Gebhardt: alone the one that's prescribed. Right. Right. And the same applies here for qualified money, retirement money, retirement plan money, deferred compensation, whatever you want to call this. If you've been successful and you've been a good dutiful soldier socking away money into this thing, there, in our opinion, There does reach a point where you have enough in this category.

Matthew Grishman: Right. 

Jim Gebhardt: You are actually just asking for a bigger problem. If you continue to [00:16:00] be successful in your investing career with all your business and blah, blah, blah. Now with the rules at 73 with required minimum distributions. You're just asking for a bigger problem. If you're going to keep stuffing tens of thousands of dollars a year into something that is going to continue to grow and snowball.

So, you know, the, the tax planning aspect of how we like to collaborate with our clients and their CPAs is a little. Contrary to the normal 7 iron down the mill, which is stuff it all in there, take as much tax break as you can. 

Matthew Grishman: Well, that stuff has been designed, like you just said, for the majority of people.

You and I tend to attract and work with very unique types of entrepreneurs. People who want a little more from their money than just more money. So it begs a deeper, bigger conversation than just how do we maximize The dollar figure here The conversation like do you think [00:17:00] taxes are going to be higher or lower in the future?

Jim Gebhardt: Well Go to the u. s. Debt clock 

Matthew Grishman: dot org 

Jim Gebhardt: dot org And you tell me I haven't been there recently probably a good six months I know I bet you the numbers are higher 

Matthew Grishman: three. Yeah, I bet you the debt numbers are higher 

Jim Gebhardt: I know it's a double digit number that starts with a three And it goes up at an alarming rate as you're just spend 10 seconds on that clock.

Matthew Grishman: Yeah You 

Jim Gebhardt: And then the letter brought to you by is a T for trillion. Well, it's in the 30 plus trillion dollar category divided by all the citizens of the United States equals a lot. At some point, taxes have got to go up. 

Matthew Grishman: Well, let's, let's ask our entrepreneurial tribe here. We have goes ins and goes outs, which we're going to talk about here in a second.

We have revenue that comes in and money that goes out. Now let's put our hats on as we look at the U S balance sheet. At the money that comes in versus the money that goes out. How much control do we [00:18:00] have over cutting and trimming the money that goes out at this point? 80 percent of it's baked in. 80 percent of it is military and Entitlements.

Social Security, Medicare, Medicaid, so on and so forth. Right? There's about this much of the budget Discretionary. Cousin David and his concept of shaving ounces might start to apply to if we had the long view On getting this job done and actually reducing the national debt. If we took the long view that you and I have suggested through our financial sobriety curriculum, we might be able to make a difference.

But at this point, Bracelets are on, hands are locked. There's not much we can do. So the only thing we can do to start reducing that debt burden is raise the revenue. We got to go out and make more money. How do we make more money in this country? Taxes. Taxes go up. Yes. So it just, it begs a conversation to have a little bit more control over how we make our decisions related to when we get taxed, how we get taxed, [00:19:00] really more when that happens.

And how that happens. Right. And we have more control over that than I think we sometimes feel. Right. Or not. 

Jim Gebhardt: I agree. And I mean, here we sit, you know, rounding the corner, wrapping up 2024, and kicking into 2025, one of the interesting things that's going to happen, well, there's a lot of interesting things that will probably happen in 2025, but one that we know that's going to happen, Is a lot of the tax measures that were started a long time ago.

I can't articulate off the top of my head exactly when they started. 

Matthew Grishman: 2017. 2017 or 18. Yeah, 

Jim Gebhardt: they sunset in 2025. Yeah, the Secure Act. The original Secure Act. Thank you. Thank you very much. Yeah. And what does that mean in the context of estate planning? Well, as we roll into 2025, an individual is, is allowed to have about $14 million of assets.

So, a married couple could have about 28 million in assets. That's what the projected number is. Please don't hold me to that. But that's what it is. You're [00:20:00] close. That is what it's projected to be. So, a married couple would be able to pass 28 million worth of assets with no estate tax. 

Matthew Grishman: To a non spousal beneficiary.

Jim Gebhardt: Correct. 

Matthew Grishman: Right. Gesundheit. Yes. 

Jim Gebhardt: So, for a lot of entrepreneurs with wildly successful businesses, plus all their other investments, they will exceed that number. Right. They will have a gross estate in excess of that. And even for those that don't, but maybe, maybe they're at 15 million. So there's a lot of concern that as these tax measures, sorry, measures sunset, that that number is going to come back down to, let's say 14, 15 million for a married couple, seven and a half a piece.

Okay. Boo hoo. There's a lot of people that are like, boo hoo. You know, that's too bad. I'm sorry. You have all this money. You don't know what to do with. But for our audience. It is very meaningful because they have put their blood, sweat and tears, perhaps maybe for generations into building this wealth and creating this wealth.

And they have other things that they would like to do with it other than Give it away. Right? [00:21:00] And give it away in the way of a tax. 

Matthew Grishman: Right. Be absorbed by the machinery that doesn't know what it's doing. 

Jim Gebhardt: They would like to have much more choice and control, and there's studies on this out the wazoo. They want to have more choice and control over how those tax dollars actually happen.

So they can, they can give things away. Right. And there's tax benefits to that. But the point of the exercise, the point of the story is that there is planning that needs to happen now. And it's now, it is not in the second half. If you're starting this process, you know, post 4th of July next year, good luck finding a qualified, capable, talented estate attorney.

That's going to get it done. They'll have the 

Matthew Grishman: time to get it done. That's what I mean is their, their 

Jim Gebhardt: backlog of work is going to be, you know, outrageous. So Even if you're north of 10 million, it's worth starting to have the conversation. I mean, what's staggering is some of the stats that exist on how little estate planning is done at the entrepreneurial level.

Right? Right. 24 percent of [00:22:00] business owners in the Exit Planning Institute most recent survey of about 1, 200 businesses throughout the United States, all different sizes. 24%? 24 percent have a will. Yikes. Wow. Just let that just sit in that silence for a second. Have a will, let alone an estate plan. That's the base.

Right? 

Matthew Grishman: Yeah. 

Jim Gebhardt: And only 30 percent of those surveyed have what they would call an updated estate plan within the next, like the last handful of years, five years. Wow. So the lack of planning on the estate level, because of course we're not going to die. We're invincible entrepreneurs that are going to live forever.

Matthew Grishman: Yeah, of 

Jim Gebhardt: course. I mean, 

Matthew Grishman: come on with healthcare advances and our great cash flow. I mean, we should be living to 140 easy. 

Jim Gebhardt: So, we can't emphasize enough as a public service announcement that, you know, pick up the phone and call your estate attorney and if you don't, if you don't have a good one, you know, I don't know, send us an email and we'll try to help you find one.

Yeah, let 

Matthew Grishman: [00:23:00] us know. It is 

Jim Gebhardt: just, it's going to become its own crisis and again, for those of you. Well, we 

Matthew Grishman: know some great estate attorneys. We do. Yeah. 

Jim Gebhardt: We do. And, you know, for, for people that have spent a lifetime. And maybe, like I said, maybe multiple generations of a family building a business and creating wealth to not actually do something with it is unacceptable, right?

To plan for it, to plan for what's going on in the world today with what the tax laws allow and all this. So it's our public service announcement on, you got to take some action here. 

Matthew Grishman: In the risk conversation you and I had last episode, we were talking about one of the places that most entrepreneurs need help.

A lot of help, right? They take a lot of risk in building the business and the assets that they own. And what you and I have done is we've kind of added that third leg to the stool. And most of the entrepreneurs you and I know, they've got significant business assets. Many of them have significant real estate assets, both of which are highly illiquid.

Meaning, you can't just sell them tomorrow and convert them to cash and go to Safeway and buy a loaf of bread with it. So we [00:24:00] build this third leg of the entrepreneurial stool, which is the liquidity leg. And, and we've started exploring conversations with our clients about, you know, what, What would be the amount of liquid money you'd sleep at night better knowing that you have this and, and they've never really thought about this.

And sometimes it's the first time we're ever having that conversation. I can't help but have the story of Joe Robbie. I mean, you remember, oh yeah. Remember Joe Robbie, the guy who owned the Miami Dolphins? Yes. I mean, forever and ever and ever. The most successful run. The Dolphins ever had was under his brilliance and yet a man worth over a billion dollars, which back in the day that Joe Robbie died was actually a billion dollars, a lot of money, right?

All of his wealth dinner now, right? Well, if you want a nice steak, you do all of that wealth, all of that wealth. Was in the team and the stadium that carried his name, Joe Robbie Stadium and the Miami dolphins were his entire wealth. So when he died and [00:25:00] the kids got the 400 plus million dollar tax bill from the U S government, there was no cash to pay the tax bill.

Why is that a problem? Well, the tax bill was due nine months after dad died and the kids didn't have the cash to pay the tax bill and they were forced to sell the two assets. That dad had spent a lifetime creating. I mean, the stadium and the team was his legacy. And here were the children forced to absolutely destroy dad's legacy so they could pay a tax bill because they didn't do some very basic planning, like buying a life insurance policy.

Are you kidding me? Every entrepreneur you and I meet, there's not a single one I know who wants more from their money than just more money, who would be okay knowing that everything they worked their lifetime to build had to be taken apart just to pay a tax bill once they're gone? But yet, the I can't even put my [00:26:00] head around it.

But the statistics you sit here telling me, which I didn't know, 30%? Have done something about this. 

Jim Gebhardt: Yeah. That means that 70 percent haven't, haven't, and more than 70 percent don't even have a will. I think we're going to be 

Matthew Grishman: busy. You and I got, we should have been a state planners talking to, well, I don't want that.

No, you know what? We can hire people do that. So who do the trust? I just creating the awareness. I feel like that's something that you and I have to spend the rest of our waking hours on planet Earth, creating as much awareness as we possibly can. To have that kind of wealth just absorbed into the machinery, the inefficient machinery called government, to me is just unacceptable.

Yeah. Unacceptable. Agreed. Wow, I'm a little fired up right now. 

Jim Gebhardt: Well, in that case, we should talk a little bit more about some of the ways, some of the ways. So you're saying there's a way 

Matthew Grishman: we can have some control over this? 

Jim Gebhardt: Well, over the estate planning process [00:27:00] and planning for that, undeniably. Yes. But then you get into the mechanics of some of the different investments.

This is the pond that we swim in, right? And you talked a little bit about it on the last show with the one client that is looking to buy a house and she's recently widowed and she's got IRA money and she's got non IRA money, right? Liquid in a portfolio in her name and the name of her trust and looking at the tax decisions around what is What is the most efficient use of the money, right?

Yep. And that gets into some of our beliefs around why we use exchange traded funds as investing versus mutual funds. Right. Uh, we have lots of clients that still have individual stocks. That they have some passion around or some attachment to, uh, due to family circumstance or whatever. There is tax considerations inside of those different investment tools themselves.

So for instance, we're getting into the latter part of 2024, it's been a lovely. Lovely stock market. Hasn't this been such a lovely ride, Bob? 

Matthew Grishman: [00:28:00] For most of the year. It's been wonderful. We've had 

Jim Gebhardt: a couple of little chops, but the wind's been in our back. The sales have been up. It's been a blue sky kind of day.

Matthew Grishman: Just going to keep going up forever. That's all 

Jim Gebhardt: it does is go up in a nice smooth line. This is as close as I get to my Jim Gaffigan voice. Yeah, exactly. And the mutual fund industry, we've long departed from using mutual funds exclusively. But there are. Embedded capital gains inside of a mutual fund that if it's in your IRA, meh, not a 

Matthew Grishman: big deal.

Jim Gebhardt: Not a big deal. Your 401k, meh, not a big deal. If it's not and it's in your trust account, you're going to get a capital gains tax bill this year. That's going to be a surprise. Even though it's not stuff that you sold, It was sold for behind the Wizard of Oz screen in the mutual fund. Yeah, 

Matthew Grishman: right. That's part of what you're paying them for, right?

Is the active management inside the mutual fund. 

Jim Gebhardt: But, but don't be thinking there's no capital gains going to be due as a result of that. Right. In our desire to want to educate and elevate the conversation [00:29:00] on these different topics, we could have shows exclusively on these kinds of things. But in the context of tax planning, 

Matthew Grishman: right?

What you own is going to be a huge 

Jim Gebhardt: part of it. And what you can control. Yep. You control how you invest the money in whether it is stocks or mutual funds or exchange traded funds. Yep. And we are passionate about exchange traded funds from the standpoint of they do not have the embedded capital gains that can be distributed.

But yet you have a lot of the benefits of owning stock in that you have the liquidity of being able to buy it or sell it at any time. Yep. And 

Matthew Grishman: You get the diversity of mutual funds without the embedded capital gains or the limit of when you can buy and sell them because they trade like 

Jim Gebhardt: stock during the day.

Yes. Right. That's 

Matthew Grishman: wonderful. I mean, imagine, reimagine if we were still mutual fund investors in 2022 and we had to deal with the tax bills that came at the end of that year after losing. Upwards of 15, 20, 25 [00:30:00] percent in the value of my mutual fund. 

Jim Gebhardt: If you were in tech funds, you might have been north of 

Matthew Grishman: 30%.

Right. And unfortunately, those money managers were dealing with redemptions. Right. People were selling their shares and their hands are tied. They have to sell stuff inside the mutual fund to create the liquidity that investors are demanding, which creates a capital gains consequence. Yes. So here we are losing our butts and we get a tax bill?

Oy vey. Yes. Not what I want. Let's take a little more control. And use things like ETFs. Yeah. 

Jim Gebhardt: Thank you. And then in the context of capital gains, there's a lot of tax planning that can be discussed around capital gains, capital losses, the concept of harvesting those losses. 

Matthew Grishman: Sure. Thankfully, you and I don't specialize in creating losses.

True. Right. True. Uh, which is always But we can take advantage of them. Well, 

Jim Gebhardt: it's always a fun conversation with clients to just be alerting them to the fact that they're going to have some capital gains coming. We try to mitigate this as much as possible. Sure. But in certain client circumstances, I'm thinking of two off the top of my head where they've [00:31:00] been using some of their capital that went beyond their cash.

Sure. In both cases, they were real estate related. They were making improvements to a home. One was actually building an ADU, uh, an alternative dwelling unit, kind of known as a guest house in the olden days, uh, on their property. And there were, there have been capital gains that have come as a result of liquidating the ETFs that we owned.

You know, there's always a little bit of a wine factor. Sure. I have to pay capital gains and I said, well, we can absolutely give you capital losses if you want them. Sure. We can make bad investments if that, if you would prefer that. So then after the little snarky, you know, ha ha, we get back to the subject at hand, which is trying to be thoughtful and intentional about capital gains, thoughtful and intentional around IRA distributions, depending on maybe you are post liquidation, maybe you have sold the business and you've retired and you're in a low tax bracket.

Oh, I got an idea. Why don't we use some of that big bag of qualified money while you're in a low tax bracket? You probably haven't been in a low [00:32:00] tax bracket since you were 16. Maybe now's the time, right? So there's all this thought and intention around your ability to, to take action in ways that may be outside of the, you know, the normal scope of, of how you're looking at it.

Right? That's one of the things that you and I love to do. 

Matthew Grishman: Yes. Yes. It brings some control back into the, back into the conversation. All right. The third thing. Oh yeah. We have some 

Jim Gebhardt: control over. Oh yeah. This is. This is. This is an easy 

Matthew Grishman: one. This is an easy one. 

Jim Gebhardt: And we, and we don't. Oh, our 97 episodes on financial 

Matthew Grishman: sobriety.

This is an easy one now. 

Jim Gebhardt: Okay. 

Matthew Grishman: Yeah. Yeah. Gotcha. We can just, we can just go. We've got so much, like you said, 97 episodes recorded on this. We have control over the goes ins and goes outs. 

Jim Gebhardt: Now that's an affectionate terminology that one of our dear long time clients who's departed Charlie introduced me to many years ago.

Yeah. And, uh, we've done episodes on the, you know, the running your, your family life and your personal finances, like a business and looking [00:33:00] at it from that standpoint of revenue, right? In the business term would be the sales coming in, the goes ins. Yep. In this case, it's going to be your salary. It's going to be your 1099 income.

It's going to be your K1 distribution from the business. It's going to be, you know, rents and royalties you may have from other things. Those are your goes ins, right? You're taking a look at it. What, what's everything that goes in the top of the funnel in the way of dollars that come into the Gebhardt family, right?

Right. And then there's the goes outs. 

Matthew Grishman: And that's where really we have A lot of control. 

Jim Gebhardt: A lot more control than the goes ins. Yes. Right? There can be a lot more variability, particularly for entrepreneurs, on the goes ins. The goes outs are the expenses. 

Matthew Grishman: Yes. 

Jim Gebhardt: Right? Simply put, the expenses that it costs you to, you know, keep the family afloat.

Matthew Grishman: Right. What you're spending your money on. And, and this is where lots of control. Most of our tribe has done very well for themselves. And the idea of being [00:34:00] on a budget just doesn't work. Sometimes makes your skin crawl. It's like, well, I don't, I don't need to see that. Well, for me always Me too. Right. I'm, I'm trying to soften it with sometimes and not always.

Right. You've taught me not to be like all or none with what we talk about. The compliance influence is working. There you go. The compliance influence. Less absolutes. Thank you. That's what I was looking for. Yes. And, and here we are with the less absolute of sometimes. You've had a lot more absolutes in the last eight years.

I have had no absolutes in the last eight years, but before that I had lots of absolutes and kettle ones and all sorts of Hendricks and fun stuff. Right. The idea of being intentional with how you use your money means something here. I mean, I was a train wreck with my spending. Until you weren't. Until I wasn't.

And then I got to the point where I became quite miserly with my money, where I wouldn't let a dollar out of my dead cold hand. You know, I went from one end to the other and I feel like [00:35:00] I'm kind of getting more in the middle with how I use my money and I'm getting more comfortable With using my money for things that are very much in alignment with my values and what matters most to me there was an old tool I used to love using back in my days where Money was a was a medication for me buying stuff Acquiring stuff a new shiny thing was medication When I was feeling a certain feeling whether it be good or bad and I wanted to make that feeling go away Or make it more 

Jim Gebhardt: I had that feeling yesterday.

Matthew Grishman: Oh 

Jim Gebhardt: You I had that feeling of, oh, I need to go buy something. Oh, 

Matthew Grishman: did that, so that doesn't go away. 

Jim Gebhardt: Oh, it 

Matthew Grishman: doesn't go away. It doesn't go away for me. It doesn't go away. Right. I didn't. No, it didn't go away. 

Jim Gebhardt: It didn't. Oh, no, no, no. It went away. Right. I didn't buy something. Oh, there you go. I just recognized it.

And I was like, oh, thanks for 

Matthew Grishman: being here. An impulse purchase. An 

Jim Gebhardt: impulse purchase. Sure. Yeah, we're not going to do that. Okay. We have plenty of intentional. Spending. You don't need to go [00:36:00] swipe or, you know, go swipe something. 

Matthew Grishman: Well, but it's going to happen every once in a while. 

Jim Gebhardt: Yeah. 

Matthew Grishman: There's going to be impulse spends.

Yeah. Can we do them less than we used to do them? Oh, I do them better than I used to 

Jim Gebhardt: do 

Matthew Grishman: them. Yeah, me too. Yeah. And it was practicing through our 10 10 10 principle. Yes. Right? We used to deal with those impulsive spends in very unhealthy ways, which was we just acquire and accumulate and acquire and accumulate, and there was a very temporary satisfaction That came from doing that.

But within a period of a couple of minutes to a couple of hours to a couple of days, weeks, months, the pain of regret would start to settle in because it's like, I, I bought another one of these that I didn't really need, but it felt good for a minute and with 10, 10, 10, it became that tool of when that impulse came being able to interrupt and just push pause on the impulse and the emotion driving the impulse, realizing that with a little bit of a pause, a 10 minute pause.

the actual emotional impulse could soften a little bit. 

Jim Gebhardt: [00:37:00] Well, yeah, because you've been distracted by it. And I don't mean you, that's the collective. Sure. You've been distracted by 42 things in those 10 minutes. 

Matthew Grishman: Exactly. And in some cases, my obsessive thinking wouldn't be distracted, it would be focused on I need that, I need that, I need that.

I would need ten minutes to get away from that. So sometimes I would just pick up the phone, call a friend, go do something else for ten minutes. And then I would come back to that thing, hopefully with a little less emotion there, and go, is this a thing that I really need? That I really want. That would mean something 10 weeks or 10 months from now.

And if the answer was no way, Jose, I kept going. I didn't buy it. And it just, it, it over time has saved me because I still have these impulse purchases. Every time I walk in a store, billions of dollars, the desire, yes. I want one of those. I want one of those. I want one of these. I need two of those, four of those, six of those, and set up my friend here with everything you got in the shop.

[00:38:00] But I have a healthier relationship with those impulses. Nice. And as a result, uh, I feel like I have a little bit more control on the goes outs in my life. And that's allowed me to accumulate a little bit more wealth over time and feel overall a whole bunch wealthier. 

Jim Gebhardt: Well, it's one of the reasons we're no longer sponsored by Amazon prime because you're swiping and my swiping is down.

That is really obviously not impacted Amazon stock very much. No, but, uh, we are a, uh, a nation of consumers and we continue to swipe. So if this tool. can be helpful on mitigating, amending, reducing, adjusting the swiping and making your spends more intentional. That would be awesome. You know, you talked a little bit about budget and the concept of nobody really wants that kind of like, you know, bird's eye vegetables that have been mushy.

Matthew Grishman: Right. When I hear you say the word. Ah, right. Yeah. I don't like it. 

Jim Gebhardt: Well, [00:39:00] in our experience. Many, I'm going to go so far as to say most entrepreneurs really aren't aware of what they spent. Because the benefit of a business, one of the many benefits of a business owner is there are personal expenses that end up being shifted to the business.

Things like the cost of a car. The operational cost, the insurance cost, the cell phone. There's, there's a variety of things in business that Internet, meals, wellness. Yeah, that are okay to be business expenses. And This is going way back. This is going back to the, the days of the French cuff, the white French cuffs and the white collar.

Nice. The firm that I used to work with that has the big bull. I'm not going to say their name. But the big bull is their symbol. Right. We were meeting with a client that, uh, their family had owned a, uh, A handful of locations of mortuaries and who [00:40:00] knew the dead business was a good business. Oh, 

Matthew Grishman: it's a great business, especially with baby boomers coming.

Jim Gebhardt: And they were selling this business for 25 million. Wow. On or around 1997. When 25 million was actually not your Safeway bill, right? Right. Not your Costco's bill. Yeah. And we were taking them through an exercise. I will never forget this. I remember their names. I won't say them on the show. I saw him not that long ago.

Long story short, why they didn't become clients, but we'll save that for a different day. But I mean, I was, I was up to my elbows in their personal finances and in the business and everything about their life. And when we started to show them that their lifestyle now. After they sell the business is going to require four to 500, 000 a year of spendable money.

I thought I was going to need, need the AED paddles for the husband because he had not a clue. He thought they needed like [00:41:00] 10 grand a month. Like What planet are you on with the real, with the homes that you have in the real estate that you. So the business obviously 

Matthew Grishman: absorbed a lot of their cashflow needs.

I 

Jim Gebhardt: can't speak to that, but that's a lovely assumption, your honor. And the point of this story is I've seen it time and time and time again. When you start to have the conversation of, Hey Tom, Hey Susie, you no longer have this business. It's all gone. Now you're going to live like. real people that have expenses that they have no benefits of the business.

Right. We're going to need to do an exercise like we talk a lot about in the, in the land of certified exit planning, this concept of recasting your balance sheet, right? So when you're preparing the business for sale, there's a very thoughtful, somewhat exhaustive process to go through and look at your balance sheet and recast the balance sheet.

To [00:42:00] take out kind of one time ordinary expenses, unusual items, salaries that wouldn't exist if this was a business was acquired by somebody else. These roles are no longer here. This real estate's no longer here. It's a new pro forma. It's a new pro forma. That's the, that process is called recasting the P and L in the balance sheet.

Matthew Grishman: I love it. 

Jim Gebhardt: So. 

Matthew Grishman: There might be some recasting of the characters that are helping you too, because you no longer have maybe like a CFO running the business finances and chief operations officers running the operations. So we're probably doing a little more recasting than just the balance sheet. 100%. People as well.

But when 

Jim Gebhardt: it comes to the personal expenses, there's a bit of a recasting pro forma, if you will. 

Matthew Grishman: Yeah. Yeah. 

Jim Gebhardt: That. Is, is, if you're going to do it right, it's going to take some time to really get into the weeds and look at all the different expenses that you're now going to be solely responsible for. And that's part of an exercise that we call the wealth gap, which is looking [00:43:00] at what do you need, right?

So let's go, let's go pick on the mortuary folks and fast forward to today and say you need 400 grand a year spendable, right? And there's a process that we go through that, that is a bit formulaic, but it's going to come up with how much wealth, how much capital are you going to need from the sale of the business, net of expenses.

Net of transaction fees, net of capital gains, net, net, net, net, net, net, net, like what is actually wired into the bank account. Right. And that wealth gap is the difference between where that number is today with the business and what you and the, you and, and the wife, or you, you and your husband need to maintain the same lifestyle.

Matthew Grishman: So, so what you need to do to prepare the business to be able to support Life 3. 0? I have found it To make the transaction support 

Jim Gebhardt: life. I have found it to be an incredible motivator because a lot of entrepreneurs think their businesses are worth more than they actually [00:44:00] are at this stage, at this point in the conversation.

And that when there can be some real intentionality around the fact that, okay, look, you would like this much money to live on. Okay, sure, you're going to have some social security probably, maybe you have some rental income, blah, blah, blah, blah, whatever it is. But we're going to figure it out, and we're going to identify what kind of gap exists between the wealth that you want, In terms of cashflow.

And when you take all of your assets in terms of what you have and what the business is going to create to that. So it's a wonderful way to be able to get in there on the goes ins and goes outs and be a lot more thoughtful and intentional about what that's going to require. 

Matthew Grishman: That's awesome. All right.

So we've started this process of building the blueprint and there's a lot more that goes into. Building this blueprint of what life 3. 0 is ultimately going to look like we started with just getting our arms around The fact that we need to do some planning work. We need to do Not only the financial planning [00:45:00] work, but the lifestyle planning work So we're starting with the financial planning work and there are three things that we have control over There's so much we don't have control over especially in a year like this year Where everything from fiscal to monetary policy, it's all up for grabs.

We don't have control over market returns. We don't have control over interest rates, inflation. All these financial things that can affect us, we have no control over. So, it's critical that we can identify the three things we do have control over. Risk, tax planning, and identifying the goes ins and goes outs.

Right? These are three very critical pieces. To building that financial plan and building that blueprint going forward There's a lot more that goes into building the blueprint. Really? Yeah a lot more. 

Jim Gebhardt: Oh 

Matthew Grishman: Oh, we thought that was it. We still haven't talked about your chinese pencil test Oh. And creating margins of safety.

Oh. We [00:46:00] haven't talked about. 

Jim Gebhardt: We should probably make sure that's what it's called. 

Matthew Grishman: Uh huh. Well, that's what we call it. Certainly, that's what we've named it. That's what we name it. But the idea of creating family wealth preservation strategies, how we create margins of safety. generational wealth. We started talking a little bit about estate planning needs, but there's more to that conversation than just money.

So we've just started building the blueprint. We've got a lot more in the areas of how that blueprint is constructed so that we can actually not just design it, but go out and build it and see it happen and get you that much closer to what life 3. 0 can possibly be. 

Jim Gebhardt: That sounds like a lot of fun to me.

Matthew Grishman: And with that, my friend, 

Jim Gebhardt: that's a wrap. 

Matthew Grishman: Hey, thanks for joining us today on the whole wealth journey. It absolutely means the world to us that you would invest time to spend with us. If you like what you heard today, like subscribe, and please leave us a comment. We would love to hear what you thought.

about today's episode and better yet, ask us a question [00:47:00] and we'll get back to you. See you next time on the Whole Wealth Journey. 

Amy Bingham: Jim Gebhardt is a registered representative of and securities offered through Brokers International Financial Services, LLC. Member SIPC. Jim Gebhardt and Matthew Grishman are investors.

Advisor Representatives of G Hart Group Incorporated a registered investment advisor, brokers International Financial Services LLC and GEP Hart Group Incorporated are not affiliated. The opinions in this podcast are for informational purposes only and are not intended to provide specific advice or investment recommendations.

To determine which investments or financial advice may be appropriate for you, consult a financial advisor prior to investing. Any reference to market performance is based on historical information and there is no expressed or implied guarantee of future performance. Opinions expressed on this program do not necessarily reflect those of Brokers International Financial Services, LLC.

The topics discussed and opinions given are not intended to address the specific needs of any listener. Gebhardt Group Incorporated does not [00:48:00] offer legal or tax advice. Listeners are encouraged to discuss their financial needs with the appropriate professional regarding your individual circumstance.